<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
---------
Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934
For the Quarterly Period Ended September 30, 1997
Commission File No. 333-27665
CONTINENTAL GLOBAL GROUP, INC.
------------------------------
(Exact Name of Registrant as Specified in its Charter)
Delaware 31-1506889
-------- ----------
(State or other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
438 Industrial Drive, Winfield, Alabama 33594
--------------------------------------- -----
(Address of Principal Executive Offices) (Zip Code)
(205) 487-6492
--------------
(Registrant's Telephone Number, Including Area Code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding twelve months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes (x) No ( )
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practical date.
As of October 31, 1997, there were 100 shares of the registrant's common stock
outstanding.
<PAGE> 2
INDEX
CONTINENTAL GLOBAL GROUP, INC.
<TABLE>
<CAPTION>
Part I Financial Information Page Number
<S> <C>
Item 1 Financial Statements (Unaudited).......................................1
Condensed Consolidated Balance Sheets
September 30, 1997 and December 31, 1996...............................2
Condensed Consolidated Statements of Income
Three Months ended September 30, 1997 and 1996
Nine Months ended September 30, 1997 and 1996..........................3
Condensed Consolidated Statements of Cash Flows
Nine Months ended September 30, 1997 and 1996..........................4
Notes to Condensed Consolidated Financial Statements.................5-7
Independent Accountants' Review Report.................................8
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations.................................9-11
Part II Other Information
Item 6 Exhibits and Reports on Form 8-K......................................12
Signature...............................................................................13
</TABLE>
<PAGE> 3
Part I. Financial Information
Item 1. Financial Statements (Unaudited)
1
<PAGE> 4
CONTINENTAL GLOBAL GROUP, INC.
Condensed Consolidated Balance Sheets
<TABLE>
<CAPTION>
September 30 December 31
1997 1996
-------------------------------------
(Unaudited) (Note)
<S> <C> <C>
ASSETS:
Current Assets:
Cash and cash equivalents $ 31,472,639 $ 1,022,033
Accounts receivable, net 27,088,608 17,789,662
Inventories 26,317,045 20,536,315
Other current assets 1,565,815 1,097,211
------------- -----------
Total current assets 86,444,107 40,445,221
Property, plant and equipment 19,409,776 9,844,508
Less accumulated depreciation 8,277,062 4,944,877
------------- -----------
11,132,714 4,899,631
Goodwill 21,758,233 735,548
Other assets 5,414,808 418,484
------------- -----------
$ 124,749,862 $46,498,884
============= ===========
LIABILITIES AND OWNER'S EQUITY:
Current liabilities:
Notes payable $ 1,358,481 $12,394,541
Trade accounts payable 16,861,656 10,942,282
Accrued compensation and employee benefits 4,416,342 3,927,214
Other accrued liabilities 11,483,785 3,098,074
Current maturities of long-term obligations 1,748,510 2,557,771
------------- -----------
Total current liabilities 35,868,774 32,919,882
Senior Notes 120,000,000 -0-
Other long-term obligation, less current maturities 4,565,061 11,585,314
Owner's equity:
Partner's capital -0- 1,993,688
Stockholder's equity:
Common stock, no par value, authorized 1,500 shares,
Issued and outstanding 100 shares at stated value of $5
per share 500 -0-
Retained deficit (35,684,473) -0-
------------- -----------
(35,683,973) 1,993,688
------------- -----------
$ 124,749,862 $46,498,884
============= ===========
</TABLE>
Note: The balance sheet at December 31, 1996, has been derived from the audited
financial statements at that date but does not include all the information and
footnotes required by generally accepted accounting principles for complete
financial statements.
See notes to consolidated financial statements.
2
<PAGE> 5
CONTINENTAL GLOBAL GROUP, INC.
Condensed Consolidated Statements of Income
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
1997 1996 1997 1996
----------------------------------------------------------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Net sales $52,969,560 $33,656,669 $150,482,473 $107,390,986
Cost of products sold 41,846,711 27,685,608 120,621,062 86,507,913
----------- ----------- ------------ ------------
Gross profit 11,122,849 5,971,061 29,861,411 20,883,073
Operating expenses:
Selling and engineering 3,377,020 2,247,433 9,774,879 7,155,060
General and administrative 1,923,231 873,679 5,326,059 2,756,626
Management fee 193,270 796,690 1,296,262 2,442,691
----------- ----------- ------------ ------------
Total operating expenses 5,493,521 3,917,802 16,397,200 12,354,377
----------- ----------- ------------ ------------
Operating income 5,629,328 2,053,259 13,464,211 8,528,696
Other expenses:
Interest expense, net 3,131,090 731,915 7,721,520 2,187,330
Miscellaneous, net 133,740 102,853 259,388 296,031
----------- ----------- ------------ ------------
Total other expenses 3,264,830 834,768 7,980,908 2,483,361
----------- ----------- ------------ ------------
Income before foreign income
taxes and extraordinary item 2,364,498 1,218,491 5,483,303 6,045,335
Foreign income taxes 328,642 -0- 167,046 -0-
----------- ----------- ------------ ------------
Income before extraordinary item 2,035,856 1,218,491 5,316,257 6,045,335
Extraordinary item - gain on
extinguishment of debt -0- -0- -0- 932,145
----------- ----------- ------------ ------------
Net income $ 2,035,856 $ 1,218,491 $ 5,316,257 $ 6,977,480
=========== =========== ============ ============
</TABLE>
See notes to condensed consolidated financial statements.
3
<PAGE> 6
CONTINENTAL GLOBAL GROUP, INC.
Condensed Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
Nine months ended September 30
1997 1996
----------------------------------
(Unaudited) (Unaudited)
<S> <C> <C>
Operating activities:
Net income before extraordinary item $ 5,316,257 $ 6,045,335
Depreciation and amortization 2,241,234 770,564
Changes in operating assets and liabilities 348,236 2,417,645
------------- -----------
Cash provided by operating activities 7,905,727 9,233,544
------------- -----------
Investing activities:
Purchases of property, plant, and equipment (1,140,703) (686,132)
Purchase of CC&E Pty, less cash acquired -0- 20,153
Purchase of BCE, net of notes to Seller (7,189,125) -0-
Purchase of Hewitt-Robins, including
acquisition costs (12,908,366) -0-
Purchase of Tufkon (697,673) -0-
------------- -----------
Cash used in investing activities (21,935,867) (665,979)
------------- -----------
Financing activities:
Proceeds from issuance of senior notes 120,000,000 -0-
Deferred financing costs (5,108,474) -0-
Net decrease in borrowing on notes payable (11,862,060) (2,132,308)
Principal payments on long-term obligations (13,215,514) (1,710,105)
Distributions for income taxes (2,405,906) (2,904,582)
Due to former shareholders of BCE (2,927,300) -0-
Dividends paid (40,000,000) -0-
------------- -----------
Cash provided by (used in) financing activities 44,480,746 (6,746,995)
------------- -----------
Increase in cash and cash equivalents $ 30,450,606 $ 1,820,570
============= ===========
</TABLE>
See notes to condensed consolidated financial statements.
4
<PAGE> 7
CONTINENTAL GLOBAL GROUP, INC.
Notes to Condensed Consolidated Financial Statements (Unaudited)
September 30, 1997
A. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three and nine month periods ended
September 30, 1997 are not necessarily indicative of the results that may be
expected for the year ending December 31, 1997. For further information, refer
to the consolidated financial statements and footnotes of Continental Global
Group, Inc. and subsidiaries for the year ended December 31, 1996, included in
the Form S-4 Registration Statement (Registration No. 333-27665) filed by the
Company on July 31, 1997.
B. INVENTORIES
Inventories, which consist of raw materials, manufactured and purchased parts,
and work in process are stated at the lower of cost or market. Since inventory
records are maintained on a job order basis, it is not practical to segregate
inventories into their major classes. The cost for approximately 56% and 77% of
inventories at September 30,1997 and December 31, 1996, respectively, is
determined using the last-in, first-out (LIFO) method with the remainder
determined using the first-in, first-out (FIFO) method. Had the FIFO method of
inventory (which approximates replacement cost) been used to cost all
inventories, inventories would have increased by approximately $2,250,000 and
$2,220,000 at September 30, 1997 and December 31, 1996, respectively.
5
<PAGE> 8
CONTINENTAL GLOBAL GROUP, INC.
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
C. ACQUISITIONS
On January 7, 1997, the Company purchased the assets of BCE Holding
Company Pty. Ltd. in Australia (BCE), a major manufacturer and supplier
of conveyor equipment with net sales in 1996 of $32.6 million. The
purchase price was $11,946,000. In addition, the Company contributed
$3,512,000 in capital to BCE after the acquisition. Financing consisted
of an advance on the revolving credit line of approximately $6,800,000,
an addition to the existing term loan of approximately $4,500,000, and
approximately $4,800,000 in seller financing. The transaction was
accounted for as a purchase. The summarized financial position of BCE
(which is not a guarantor of the Senior Notes as discussed in Note D),
as of September 30, 1997, and results of operations for BCE for the
nine months ended September 30, 1997 are as follows:
<TABLE>
<S> <C>
Current assets $ 12,662,673
Property plant and equipment-net 5,418,321
Goodwill 9,359,492
Current liabilities 11,260,383
Long term debt 3,463,753
Net sales $ 25,651,093
Gross profit 4,292,878
Operating income 903,488
Income before income taxes 659,755
</TABLE>
On April 1, 1997, the Company acquired substantially all of the assets
of the Hewitt-Robins Conveyor Components Division of W.S. Tyler,
Incorporated, a manufacturer of idlers (Hewitt-Robins). The purchase
price for Hewitt-Robins, after working capital adjustments, was
approximately $12,900,000 in cash plus assumption of approximately
$1,100,000 of liabilities. The Company has recorded approximately
$12,100,000 of goodwill related to the acquisition. The results of
operations since the date of acquisition have been included in the
consolidated financial statements.
On August 8, 1997, the Company acquired substantially all of the assets
of the Tufkon Conveyor Components Division of Wyko, Inc. The purchase
price for Tufkon was approximately $698,000 in cash. The Company has
recorded approximately $350,000 of goodwill related to the acquisition.
The results of operations since the date of acquisition have been
included in the consolidated financial statements and are not material.
6
<PAGE> 9
CONTINENTAL GLOBAL GROUP, INC.
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
D. DEBT ISSUANCE
On April 1, 1997, the Company issued $120 million of 11% Series A Notes
due 2007. On September 3, 1997, the Company completed an exchange of
all of the Series A Notes for 11% Series B Senior Notes due 2007
(Series B Notes or Senior Notes). The terms of the Series B Notes are
the same as the Series A Notes except that the Series B Notes have been
registered under the Securities Act of 1933, as amended. Interest on
the notes is payable semi-annually in cash in arrears. The Senior Notes
are redeemable at the option of the Company, in whole or in part, any
time on or after 2002 subject to certain call premiums. The Senior
Notes are guaranteed by the domestic subsidiaries of the Company and
contain various restrictive covenants that, among other things, place
limitations on the sale of assets, payment of dividends, and incurring
additional indebtedness and restrict transactions with affiliates. The
proceeds of the Notes were utilized as follows:
<TABLE>
<S> <C>
Gross proceeds of Series A Notes $ 120,000,000
Dividend to stockholder (40,000,000)
Repayment of note payable (18,876,684)
Repayment of term loan (16,459,711)
Repayment of subordinated notes (650,000)
Acquisition of Hewitt-Robins (12,908,366)
Fees (5,073,000)
-----------
Excess cash from proceeds $ 26,032,239
===============
</TABLE>
Summarized pro forma financial information reflecting the acquisition
of BCE and Hewitt-Robins and issuance of Senior Notes is as follows:
<TABLE>
<CAPTION>
For the Nine Months For the Year Ended
Ended September 30, 1997 December 31, 1996
------------------------ -----------------
<S> <C> <C>
Net sales $ 154,216 $ 191,143
Gross profit 31,832 42,462
Net income before extraordinary item 3,662 5,376
</TABLE>
E. INCOME TAXES
The Company's United States operations are not subject to income tax as
separate entities. The Company's United States income is included in
the income tax returns of the stockholder. The Company's Australian
subsidiary is subject to Australian income taxes.
F. SUBSEQUENT EVENT
On October 17, 1997, the Company completed the acquisition of the MECO
Belts Group from Joy Mining Machinery, a subsidiary of Harnischfeger
Industries. MECO Belts is an international conveyor equipment company
with operations in the United States, United Kingdom, South Africa, and
Australia. The purchase price was approximately $7,200,000, including
the issuance of a note payable for $5,244,000, plus the assumption of
approximately $5,000,000 of liabilities. The addition of MECO Belts
will broaden the Company's product lines and worldwide markets.
7
<PAGE> 10
INDEPENDENT ACCOUNTANTS' REVIEW REPORT
Stockholder and Board of Directors
Continental Global Group, Inc.
We have reviewed the accompanying condensed consolidated balance sheet of
Continental Global Group, Inc. and subsidiaries as of September 30, 1997 and the
related condensed consolidated statements of income for the three-month and
nine-month periods ended September 30, 1997 and 1996, and the condensed
consolidated statements of cash flows for the nine-month periods ended September
30, 1997 and 1996. These financial statements are the responsibility of the
Company's management.
We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data, and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, which will be performed
for the full year with the objective of expressing an opinion regarding the
financial statements taken as a whole. Accordingly, we do not express such an
opinion.
Based on our reviews, we are not aware of any material modifications that should
be made to the accompanying condensed consolidated financial statements referred
to above for them to be in conformity with generally accepted accounting
principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of Continental Global Group, Inc. and
subsidiaries as of December 31, 1996, and the related consolidated statements of
income, owner's equity, and cash flows for the year then ended not presented
herein and in our report dated March 7, 1997, we expressed an unqualified
opinion on those consolidated financial statements. In our opinion, the
information set forth in the accompanying condensed consolidated balance sheet
as of December 31, 1996, is fairly stated, in all material respects, in relation
to the consolidated balance sheet from which it has been derived.
ERNST & YOUNG LLP
November 5, 1997
8
<PAGE> 11
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The following discussion should be read in conjunction with the Consolidated
Financial Statements and related notes included in the Company's Form S-4
Registration Number 333-27665, dated July 31, 1997, relating to the exchange of
the Company's Series B Senior Notes for Series A Senior Notes.
GENERAL
The Company believes it is a leading international manufacturer and supplier of
conveyor equipment for use in the coal mining industry. The Company estimates it
has a 40% share of the United States market for idlers used in above ground
conveyor equipment and a significantly higher share of the United States
underground coal mining conveyor equipment market. The Company has increased its
market share through several recent acquisitions. In January 1997, the Company
consummated the acquisition of BCE, a group of conveyor equipment companies in
Australia, and on April 1, 1997, the Company completed the acquisition of
Hewitt-Robins, a United States manufacturer of conveyor components.
RESULTS OF OPERATIONS
Three months ended September 30, 1997, compared to three months ended September
30, 1996:
Net Sales
- ---------
Net sales increased $19.3 million, or 57%, from $33.7 million in 1996 to $53.0
million in 1997. The acquisitions of BCE and Hewitt-Robins account for $10.9
million and $3.1 million, respectively, of this increase. Net sales in the
Company's mining equipment and engineered systems businesses increased by $5.2
million. Net sales in the remaining businesses increased by $0.1 million.
Gross Profit
- ------------
Gross profit increased $5.1 million, or 86%, from $6.0 million in 1996, to $11.1
million in 1997. The acquisitions of BCE and Hewitt-Robins increased gross
profit by $2.1 million and $1.1 million, respectively. Gross profit in the
Company's mining equipment and conveyor component businesses increased by $1.9
million primarily attributable to increased volumes and more efficient
operations.
Operating Expenses
- ------------------
Operating expenses increased $1.6 million, or 40%, from $3.9 million in 1996, to
$5.5 million in 1997. This increase is the result of a $2.2 million increase in
selling, engineering, general, and administrative (SG&A) expenses and a $0.6
million decrease in management fees. The acquisitions of BCE and Hewitt-Robins
resulted in increased SG&A expenses of $1.3 million and $0.3 million,
respectively; SG&A expenses at the Company's remaining subsidiaries increased by
$0.7 million. The decrease in management fees is the result of a change in the
agreement that defines the calculation of management fees.
Operating Income
- ----------------
Operating income increased $3.5 million, or 174%, from $2.1 million in 1996, to
$5.6 million in 1997. The increase is the result of the $5.1 million increase in
gross profit, offset by the $1.6 million increase in operating expenses.
9
<PAGE> 12
RESULTS OF OPERATIONS
Nine months ended September 30, 1997, compared to nine months ended September
30, 1996:
Net Sales
- ---------
Net sales increased $43.1 million, or 40% from $107.4 million in 1996 to $150.5
million in 1997. The acquisitions of BCE and Hewitt-Robins account for $25.7
million and $6.3 million, respectively, of this increase. Higher sales volumes
in the Company's mining equipment and conveyor components businesses resulted in
sales increases of $14.8 million. Net sales in the engineered systems, textile,
and mobile home businesses decreased by $3.7 million.
Gross Profit
- ------------
Gross profit increased $8.9 million, or 43%, from $20.9 million in 1996 to $29.8
million in 1997. The acquisitions of BCE and Hewitt-Robins account for $4.3
million and $2.2 million, respectively, of this increase. Gross profit in the
Company's mining equipment business increased $3.3 million, primarily because of
increased sales, and gross profit of the remaining businesses decreased by $0.8
million.
Operating Expenses
- ------------------
Operating expenses increased $4.0 million, or 33% from $12.4 million in 1996 to
$16.4 million in 1997. This increase is the result of a $5.2 million increase in
selling, general, and administrative (SG&A) expenses and a $1.2 million decrease
in management fees. The acquisitions of BCE and Hewitt-Robins account for $3.6
million and $0.6 million, respectively, of the increase in SG&A expenses; SG&A
expenses at the Company's remaining businesses increased by $1.0 million. The
decrease in management fees is the result of a change in agreement that defines
the calculation of management fees.
Operating Income
- ----------------
Operating income increased $4.9 million, or 58% from $8.5 million in 1996 to
$13.4 million in 1997. The increase is attributable to the $9.0 million increase
in gross profit, offset by the increase in operating expenses of $4.1 million.
Extraordinary Item
- ------------------
The extraordinary gain of $0.9 million in 1996, resulted from the early
extinguishment of a subordinated promissory note with a carrying value of $1.4
million.
Backlog
- -------
Backlog at September 30, 1997, was $49.5 million, an increase of $20.8 million,
or 72%, from $28.7 million at December 31, 1996. The increase is attributable to
the acquisitions of BCE and Hewitt-Robins, which had backlogs of $23.7 million
and $1.6 million, respectively, at September 30, 1997. The backlogs of the
Company's remaining businesses declined by $4.5 million. Approximately 70% of
the backlog is expected to be shipped in 1997.
10
<PAGE> 13
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities was $7.9 million and $9.2 million for
the nine months ending September 30, 1997 and 1996, respectively. The decline in
net cash from operations is primarily attributable to an increase in interest
expense on acquisition debt and increased accounts receivable and inventory
levels as a result of increased business volumes.
Net cash used in investing activities was $21.9 million and $0.7 million for the
nine months ending September 30,1997 and 1996, respectively. The significant
increase is the result of the recent acquisitions of BCE for $7.2 million,
Hewitt-Robins for $12.9 million, and Tufkon for $0.7 million. The balance of
expenditures for investing activities, $1.1 million in 1997, and $0.7 million in
1996, represent purchases of property, plant, and equipment.
Net cash provided by (used in) financing activities was $44.5 million and $(6.7)
million for the nine months ending September 30, 1997 and 1996, respectively.
The net cash provided by financing activities in 1997, is the result of the
issuance of $120.0 million of senior notes. At the time of the debt offering,
the Company paid dividends to its shareholder in the amount of $40.0 million and
paid financing fees in the amount of $5.1 million. In connection with the BCE
acquisition in 1997, $2.9 million was paid to former shareholders of BCE.
Borrowings on notes payable and long-term obligations were reduced by $11.9
million and $13.2 million, respectively, in 1997, and by $2.1 million and $1.7
million, respectively, in 1996. The Company paid distributions for income taxes
in the amount of $2.4 million in 1997, and $2.9 million in 1996.
The Company expects current financial resources (working capital) and funds from
continuing operations to be adequate to meet current cash requirements. At
September 30, 1997, the Company had cash and cash equivalents of $31.4 million
and an unused credit facility line of $30.0 million.
11
<PAGE> 14
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits - See index of exhibits
(b) No reports on Form 8-K were filed during the quarter
ended September 30, 1997
12
<PAGE> 15
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CONTINENTAL GLOBAL GROUP, INC.
/s/ Jimmy L. Dickinson
--------------------------------------
JIMMY L. DICKINSON
Vice President and Chief Financial
Officer (As duly authorized
representative and as Principal
Financial and Accounting Officer)
Date: November 12, 1997
13
<PAGE> 16
CONTINENTAL GLOBAL GROUP, INC.
FORM 10-Q
INDEX OF EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit
- ------ ----------------------
<S> <C> <C>
3.1 Certificate of Incorporation of Continental Global Group, Inc., as currently *
in effect
3.2 By-Laws of Continental Global Group, Inc., as currently in effect *
4.1 Indenture, dated as of April 1, 1997, among Continental Global Group, Inc. *
Continental Conveyor & Equipment Company, Goodman Conveyor Company,
and the Trustee (containing, as exhibits, specimens of the Series A Notes and the
Series B. Notes)
4.2 Purchase Agreement, dated as of March 26, 1997, among Continental Global *
Group, Inc., Continental Conveyor & Equipment Company, Goodman Conveyor
Company, and Donaldson, Lufkin & Jenrette Securities Corporation, as Initial
Purchaser, relating to the Series A Notes.
4.3 Registration Rights Agreement, dated as of April 1, 1997, among Continental *
Global Group, Inc., Continental Conveyor & Equipment Company, Goodman Conveyor
Company, and Donaldson, Lufkin & Jenrette Securities Corporation, as Initial Purchaser
10.1 Revolving Credit Facility, dated as of Sept 14, 1992, as amended by *
Amendment I, II, and III, among Continental Conveyor & Equipment Company,
Goodman Conveyor Company, and Bank One, Cleveland, NA
10.2 Share Sale Agreement dated as of November 8, 1996, as amended by First and *
Second Supplementary Deeds, among Continental Pty. Ltd. and various Australian
sellers, relating to the BCE Acquisition
10.3 Asset Purchase Agreement, dated as of March 3, 1997, among Continental * Conveyor &
Equipment Company, Process Technology Holdings, Inc., and W.S. Tyler Incorporated,
relating to the Hewitt-Robins acquisition
10.4 Management Agreement, dated as of April 1, 1997, between Continental Global *
Group, Inc. and Nesco Inc.
10.5 Tax Payment Agreement, dated as of April 1, 1997, among Continental Global *
Group, Inc., Continental Conveyor & Equipment Company, Goodman Conveyor
Company, and NES Group, Inc.
12 Statement regarding computation of ratio of earnings to fixed charges
27 Financial Data Schedule (filed electronically only)
<FN>
* Incorporated by reference from Form S-4 Registration Number 333-27665 filed
under the Securities Act of 1933, as amended
</TABLE>
14
<PAGE> 1
Exhibit 12
CONTINENTAL GLOBAL GROUP, INC.
Computation of Ratio of Earnings to Fixed Charges
(In thousands, except for ratios)
<TABLE>
<CAPTION>
Three Months Ending Nine Months Ending
September 30 September 30
1997 1996 1997 1996
-------------------------------------------
<S> <C> <C> <C> <C>
Computation of Earnings:
Income before extraordinary
item and foreign income taxes 2,364 1,218 5,483 6,045
Add:
Interest expense 3,013 732 7,485 2,187
Amortization of deferred
financing costs 118 7 237 20
Portion of rent expense
representative of an interest
factor 129 97 361 295
----- ----- ------ -----
Earnings 5,624 2,054 13,566 8,547
===== ===== ====== =====
Computation of Fixed Charges:
Interest expense 3,013 732 7,485 2,187
Amortization of deferred
financing costs 118 7 237 20
Portion of rent expense representative
of an interest factor 129 97 361 295
----- ----- ------ -----
Fixed Charges 3,260 836 8,083 2,502
===== ===== ====== =====
Ratio of Earnings to Fixed Charges 1.73 2.46 1.68 3.42
----- ----- ------ -----
</TABLE>
15
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS LISTED ON PAGES 2 AND 3 OF THIS FORM 10-Q AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0001039785
<NAME> CONTINENTAL GLOBAL GROUP, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 31,473
<SECURITIES> 0
<RECEIVABLES> 27,089
<ALLOWANCES> 0
<INVENTORY> 26,317
<CURRENT-ASSETS> 86,444
<PP&E> 19,410
<DEPRECIATION> 8,277
<TOTAL-ASSETS> 124,750
<CURRENT-LIABILITIES> 35,869
<BONDS> 120,000
0
0
<COMMON> 0
<OTHER-SE> (35,684)
<TOTAL-LIABILITY-AND-EQUITY> 124,750
<SALES> 150,483
<TOTAL-REVENUES> 150,483
<CGS> 120,621
<TOTAL-COSTS> 120,621
<OTHER-EXPENSES> 1,296
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,722
<INCOME-PRETAX> 5,483
<INCOME-TAX> 167
<INCOME-CONTINUING> 5,316
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,316
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
