<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15 (d)
of the Securities Exchange Act of 1934
For quarter ended March 31, 1995 Commission file number 1-5951
CMI CORPORATION
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Oklahoma 73-0519810
------------------------ -----------------------------------
(State of Incorporation) (I.R.S. Employer Identification No.)
I-40 & Morgan Road, P.O. Box 1985
Oklahoma City, Oklahoma 73101
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (405) 787-6020
--------------
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 12 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 practicable date.
Common Stock, Par Value $.10 20,356,383
- ---------------------------- ----------------------------
(Title of each class) (Outstanding at May 1, 1995)
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<PAGE>
CMI CORPORATION
Index
Page
----
PART I. Financial Information
Condensed Consolidated Balance Sheets -
March 31, 1995, December 31, 1994 and
March 31, 1994 3
Condensed Consolidated Statements of Operations -
Three Months Ended March 31, 1995 and 1994 4
Condensed Consolidated Statements of Cash Flows -
Three Months Ended March 31, 1995 and 1994 5
Notes to Condensed Consolidated Financial
Statements 6-7
Management's Discussion and Analysis of
Financial Condition and Results of Operations 8-9
PART II. Other Information
Item 1. Legal Proceedings 10
Item 2. Changes in Securities 10
Item 3. Defaults Upon Senior Securities 10
Item 4. Submission of Matters to a Vote of 11
Security Holders
Item 5. Other Information 12
Item 6. Exhibits and Reports on Form 8-K 12
Signatures 13
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<PAGE>
PART I - FINANCIAL INFORMATION
CMI CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
<TABLE>
<CAPTION>
March 31 December 31 March 31
1995 1994 1994
----------- ----------- -----------
(Unaudited) * (Unaudited)
<S> <C> <C> <C>
Current assets:
Cash & cash equivalents $ 1,407 1,423 1,323
Cash equivalents - restricted 825 903 903
Receivables, net 20,232 17,226 10,768
Inventories
Finished equipment 23,375 20,278 19,197
Work-in-process 7,527 7,942 8,554
Raw materials & parts 22,092 19,344 18,138
------ ------ ------
52,994 47,564 45,889
Other 81 121 181
Deferred tax asset 9,200 9,200 -
------ ------ ------
Total current assets 84,739 76,437 59,064
Property, plant & equipment 44,932 44,361 43,070
Less accumulated depreciation 33,629 33,208 32,158
------ ------ ------
Net property, plant & equipment 11,303 11,153 10,912
Other assets 692 703 937
Long-term receivables 920 651 877
Deferred tax asset 800 800 -
------ ------ ------
$98,454 89,744 71,790
====== ====== ======
Current liabilities:
Current portion of long-term debt $ 4,457 4,222 2,071
Current portion of redeemable
preferred stock 1,381 - -
Accounts payable 11,077 8,132 11,158
Accrued liabilities 6,794 7,658 7,793
------ ------ ------
Total current liabilities 23,709 20,012 21,022
Long-term debt 25,854 21,691 22,968
Redeemable preferred stock 4,530 5,908 5,885
Common shares & other capital:
Class A common stock & common stock 2,036 2,035 2,035
Other capital 42,325 40,098 19,880
------ ------ ------
Total common shares & other capital 44,361 42,133 21,915
------ ------ ------
$98,454 89,744 71,790
====== ====== ======
* Condensed from audited financial statements.
See notes to condensed consolidated financial statements.
</TABLE>
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<PAGE>
CMI CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except share data)
<TABLE>
<CAPTION>
Three Months Ended
March 31
------------------
1995 1994
---- ----
<S> <C> <C>
Net revenues $32,671 27,863
------ ------
Costs and expenses
Cost of sales 22,799 19,258
Marketing and administrative 5,289 4,156
Engineering and product development 1,440 1,513
Interest expense 746 699
Interest income (62) (73)
Other expense (income), net (4) (3)
------ -------
30,208 25,550
------ -------
Net earnings before income taxes 2,463 2,313
Provision for income taxes 91 95
------ -------
Net earnings $ 2,372 2,218
====== =======
Net earnings per common share $ .11 .11
====== =======
See notes to condensed consolidated financial statements.
</TABLE>
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<PAGE>
CMI CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Three Months Ended
March 31
------------------
1995 1994
---- ----
<S> <C> <C>
OPERATING ACTIVITIES
Net earnings $2,372 $2,218
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation 425 360
Amortization 18 51
Gain on sale of assets (4) (160)
Change in assets and liabilities:
Increase in accounts receivable (3,006) (1,303)
Increase in inventory (5,430) (2,881)
Decrease (increase) in other current assets 118 (137)
Increase in accounts payable 2,945 1,595
Increase (decrease) in accrued liabilities (864) 1,315
Increase in long-term receivables (269) (877)
Decrease (increase) in other, non-current assets (7) 40
----- -----
Net cash provided by (used in)operating activities (3,702) 221
----- -----
INVESTING ACTIVITIES
Proceeds from sale of assets 28 168
Capital expenditures (599) (511)
----- -----
Net cash used in investing activities (571) (343)
----- -----
FINANCING ACTIVITIES
Payments on long-term debt (158) (355)
Net borrowings on revolving credit note 4,432 2,489
Net borrowings (payments) on fleet financing agreement 124 (835)
Payments of dividends on preferred stock (157) -
Stock options exercised 16 -
----- -----
Net cash provided by financing activities 4,257 1,299
----- -----
Increase(decrease) in cash and cash equivalents (16) 1,177
Cash and cash equivalents at beginning of year 1,423 146
----- -----
Cash and cash equivalents at end of period $1,407 $1,323
===== =====
See notes to condensed consolidated financial statements.
</TABLE>
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<PAGE>
CMI CORPORATION AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(1) The interim condensed consolidated financial information has
been prepared in conformity with generally accepted accounting
principles applied, in all material respects, on a basis
consistent with the consolidated financial statements included
in the annual report filed with the Securities Exchange
Commission for the preceding fiscal year. The financial
information as of March 31, 1995 and for the interim periods
ended March 31, 1995 and 1994 included herein is unaudited;
however, such information reflects all adjustments consisting
of only normal recurring adjustments, which are, in the
opinion of management, necessary to a fair presentation of the
results for the interim periods.
(2) The results of operations for the three months ended March 31,
1995 are not necessarily indicative of the results to be
expected for the full year. The Company is in a very seasonal
business, whereas normally at least 60 percent of the
Company's revenues occur in the first six months of each
calendar year.
(3) Earnings per share amounts are computed by dividing the net
earnings less redeemable preferred stock dividends and
accretion of the difference between the ultimate redemption
value and the initial carrying value of the preferred stock
for the period, by the weighted average number of common and
common share equivalents outstanding during the period.
Common share equivalents are not considered in the computation
of per share amounts if their effect is anti-dilutive.
(4) Certain reclassifications have been made to the prior interim
period to conform to the 1995 presentation.
(5) There have been no material changes in related party
transactions since the annual report filed for the preceding
fiscal year.
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<PAGE>
(6) Under the provisions of Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes" (Statement
109), the benefit of tax deductions and credits not utilized
by the Company in the past is reflected as an asset only to
the extent the Company assesses that future operations will
"more likely than not" be sufficient to realize such benefits.
During 1994, the Company reduced the valuation allowance to
reflect the deferred tax assets utilized in 1994 to reduce
current income tax expense approximately $5 million and to
recognize a deferred tax asset of $10 million.
The Company has assessed its past earnings history and trends,
sales backlog, budgeted sales, and expiration dates of
carryforwards and has determined that it is more likely than
not that the $10 million of deferred tax assets will be
realized. The remaining valuation allowance of $12,245,000 is
maintained on deferred tax assets which the Company has not
determined to be more likely than not realizable at this time.
The Company will continue to review the valuation allowance on
a quarterly basis and make adjustments as appropriate.
At March 31, 1995, the tax effect of the net operating loss
carryforwards and temporary differences created a deferred tax
asset as follows (in thousands):
<TABLE>
<CAPTION>
Current Non-current
------- -----------
<S> <C> <C>
Net operating loss & other carryfowards $4,875,000 5,542,000
Waste to energy facility - 7,503,000
Other temporary differences 4,325,000 -
--------- ----------
Deferred tax assets 9,200,000 13,045,000
Less valuation allowance - 12,245,000
--------- ----------
Net deferred tax asset $9,200,000 800,000
========= ==========
Income tax expense varies from the federal statutory income tax
rate of 35 percent principally due to a $902,000 reduction in
the valuation allowance recorded against the Company's deferred
tax assets.
</TABLE>
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<PAGE>
CMI CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations
- ---------------------
The Company reported net earnings of $2,372,000 for the three months
ended March 31, 1995 compared to net earnings of $2,218,000 for the
comparable three months ended in 1994. Net revenues for the three
months ended March 31, 1995 were $32,671,000 compared to $27,863,000
for the same quarter in 1994, an increase of 17 percent.
Revenue growth of $4,808,000 for the first quarter of 1995 compared to
the first quarter of 1994 was due to strong domestic demand. Domestic
revenues increased 28 percent in the first quarter of 1995 compared to
the first quarter of 1994, while foreign revenues decreased 29 percent
during the period. However, based upon order activity and order
bookings for the export market, management expects increased shipments
later in the year.
Gross margin, as a percentage of net revenues, decreased to 30% in
1995 from 31% in 1994 for the three months ended March 31. The
reduction in the gross margin is primarily the result of the different
product mix sold in first quarter of 1995 compared to 1994, as well as
slight increases in labor and material costs. The Company has
evaluated and adjusted its product prices to allow for the increase in
manufacturing costs. In addition, the Company incurred start-up costs
of approximately $200,000 at its Oklahoma City plant related to its
trailer division that are included in cost of sales.
Marketing and administrative expenses increased $1,133,000 in the
first quarter of 1995 compared to the first quarter of 1994. This
increase is due to the Company's continued aggressive market strategy
which included customer demonstrations for new and existing products,
continued participation in industry trade shows, and an increased
sales force for both domestic and foreign locations. During the first
quarter of 1995, the Company participated in the triennial BAUMA trade
show in Munich, Germany. As a percentage of net revenues, marketing
and administrative expenses increased to 16 percent in 1995 from 15
percent in 1994 for the three months ended March 31.
Engineering and product development expenses decreased $73,000 in the
first quarter of 1995 compared to the first quarter of 1994. As a
percentage of net revenues, engineering and product development
expenses were 4 percent and 5 percent for the three months ended March
31, 1995 and 1994, respectively. The Company continues to be
committed to product development, an example of which is the RS-650
stabilizer added during the first quarter of 1995.
Interest expense increased to $746,000 in 1995 from $699,000 in 1994
for the three months ended March 31, due to increased debt levels and
interest rates.
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<PAGE>
Liquidity and Capital Resources
- -------------------------------
The Company's working capital at March 31, 1995 was $61,030,000
compared to $38,042,000 at March 31, 1994, an increase of $22,988,000.
The increase in working capital is due in part to a $9,200,000
deferred tax asset. The current ratio at March 31, 1995 was 3.57
compared to 2.81 at March 31, 1994.
Cash used in operating activities for the three months ended March 31,
1995 was $3,702,000 compared to cash provided of $221,000 for the
three months ended March 31, 1994. This increase in cash used was due
to an increase in inventory expected to be necessary to meet demand
and an increase in accounts receivable as a result of increased sales
at the end of the quarter.
Financing activities provided cash of $4,257,000 as of March 31, 1995
and $1,299,000 as of March 31, 1994, an increase of $2,958,000. Cash
provided by financing activities was utilized in part to fund the
inventory increase.
Capital expenditures are budgeted at $3 million for 1995 and will be
financed using internally generated funds and leasing programs. These
capital expenditures will be used to continue improving the Company's
manufacturing and product support efficiencies. Capital expenditures
for the three months ending March 31, 1995 were $599,000 compared to
$511,000 for the three months ending March 31, 1994.
The Company entered into a settlement agreement (the "Agreement") with
Yargo, Inc. related to the Company's 7% Series B Preferred Stock.
Under the Agreement the Company is obligated to redeem shares at a
purchase price of $1,000 per share plus accrued dividends. The
Company has the option to either pay cash or issue Class A Common
Stock to settle their obligation. See additional discussion of the
Agreement in "Item 3. Defaults Upon Senior Securities."
The Company has a revolving line of credit loan agreement with
Congress Financial Corporation which has been in place since 1991.
The current line of credit is $30,000,000. The amount outstanding at
March 31, 1995 was $17,162,000 with $804,000 reflected as current
portion of long-term debt with the remainder reflected as long-term
debt. During the fourth quarter of 1994, the due date of this credit
agreement was extended to December 1997. Other long-term debt has
maturity dates ranging from June 1995 to September 2010 and is
expected to be paid or refinanced when due.
Income Taxes
- ------------
Under the provisions of Statement 109, the benefits of tax deductions
and credits not utilized by the Company in the past are reflected as
an asset to the extent the Company assesses that future operations
will "more likely than not" be sufficient to realize such benefits.
During 1994, the Company recognized a portion of its previously
unrecognized deferred tax asset in the amount of $10 million,
primarily from the result of the Company's assessment that it is "more
likely than not" that future taxable income will be sufficient to
realize such tax benefits. The company's current assessment is based
on historical performance and expectations for continuing
-9 of 13-
<PAGE>
profitability. Recognized tax benefits of $10,000,000 and unrecognized
tax benefits of $12,245,000 at March 31, 1995 will continue to be
evaluated by the Company, and based on the likelihood of realizing
such tax benefits, in the future, the Company will adjust the
valuation allowance against its deferred tax assets as necessary.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
- --------------------------
On November 8, 1994, Yargo, Inc. ("Yargo") filed a complaint against
the Company which sought payment of $1,417,500 of dividends accrued on
4,500 shares of the Company's 7% Series B Preferred Stock, par value
$1.00 per share, and any dividends accruing after the date of the
lawsuit on such shares. In addition, Yargo sought redemption on 4,250
shares of the 4,500 shares outstanding in the amount of $4,250,000.
On March 31, 1995, the Company entered into a Stock Purchase Agreement
(the "Agreement") with Yargo. Under the terms of the Agreement, Yargo
has agreed to dismiss without prejudice all claims asserted in the
lawsuit filed against the Company on November 8, 1994. See additional
discussion of the Agreement in "Item 3. Defaults Upon Senior
Securities."
Item 2. Changes in Securities.
- -------------------------------
None.
Item 3. Defaults Upon Senior Securities.
- -----------------------------------------
(a) In connection with a 1985 acquisition, the Company issued to
Yargo, Inc. ("Yargo") 4,800 shares of the Company 7% Series B
Preferred Stock, par value $1.00 ("Preferred Stock"). The
Preferred Stock accrues dividends at the rate of $70 per share
per year. These cumulative dividends are payable each January
and July and must be fully paid or declared with funds set
aside for payment before any dividend can be declared or paid
upon any other class of the Company's stock. The Preferred
Stock carries a redemption price of $1,000 per share. The
Company did not redeem 750 shares of the Preferred Stock in
each of the years 1990 through 1994 and did not redeem 500
shares in 1989. In addition, nine semiannual dividend payments
totaling $1,417,500 have not been made, but have been accrued.
Terms of the Preferred Stock provide that if two consecutive
dividend payments or redemptions are not made, the Company's
Board of Directors may be increased by one member and Yargo
shall have the exclusive right to elect an individual to fill
such newly created directorship.
As noted in Item 1. "Legal Proceedings", on November 8, 1994,
Yargo filed suit against the Company. In this suit, Yargo
contended that the Company is required to redeem 4,250 share of
the Preferred Stock and pay the $1,417,500 of dividends accrued
on the outstanding shares of Preferred Stock. The Company
answered by denying that it is obligated to redeem the
Preferred Stock and/or pay all dividends accrued thereon.
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<PAGE>
On March 31, 1995, the Company and Yargo entered into a Stock
Purchase Agreement (the "Agreement"). The Agreement provides
that the Company will purchase all 4,500 shares of Preferred
Stock currently outstanding in a series of installments, with
all shares to be purchased by December 31, 1996. Under the
terms of the Agreement, the Company must purchase not less than
750 shares of the Preferred Stock on June 30, 1995.
Thereafter, on December 31, 1995, the Company must purchase
that number of shares of Preferred Stock necessary to reduce
the number of shares of Preferred Stock remaining outstanding
to no more than 3,450 shares. Finally, on December 31, 1996,
the Company must purchase all shares of Preferred Stock
remaining outstanding.
The purchase price to be paid by the Company to Yargo for each
share of Preferred Stock purchased will be $1,000, plus all
dividends accrued but unpaid on such share to and including the
business day immediately preceding the applicable purchase
date. At the discretion of the Company, the purchase price may
be paid in cash and/or through the issuance to Yargo shares of
the Company's Voting Class A Common Stock, $0.10 par value
("Class A Stock"). In the event shares of Class A Stock are
utilized to pay the purchase price of any of the Preferred
Shares, such shares of Class A Stock will be valued based upon
the average of the closing price of the Class A Stock as
reported by the national securities exchange upon which the
Class A Stock is then listed for each of the ten (10) trading
days next preceding the purchase date. Notwithstanding the
foregoing, provided that the purchase price for the applicable
shares of Preferred Stock is paid to Yargo in cash, the
Preferred Stock may be purchased at the option of the Company,
in whole or in part, at any time or from time to time, upon not
less than two (2) business days prior notice to Yargo.
Under the terms of the Agreement, Yargo has agreed to dismiss
without prejudice all claims asserted in the lawsuit filed
against the Company on November 8, 1994. Yargo has also agreed
that, so long as the Company fulfills its obligations under the
Agreement, (i) an aggregate dividend of not more than $300,000
may, at the Company's discretion, be declared and paid by the
Company in each of 1995 and 1996 to holders of the Class A
Stock and the Company's Voting Common Stock, $0.10 par value,
and (ii) Yargo will not attempt to exercise its right to elect
a new member to the Company's Board of Directors.
Item 4. Submission of Matters to a Vote of Security Holders.
- -------------------------------------------------------------
None.
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<PAGE>
Item 5. Other information.
- ---------------------------
None.
Item 6. Exhibits and Reports on Form 8-K.
- -----------------------------------------
(a) Exhibits required by Item 601 of Regulation S-K are as
follows:
Exhibit No.
-----------
10 Stock Purchase Agreement
11 Computation of Earnings Per Share
27 Financial Data Schedule
(b) The Company did not file any report on a Form 8-K during the
fiscal quarter ended March 31, 1995.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
Date: May 2, 1995 /s/Jim D. Holland
-------------- -----------------------------------
Jim D. Holland
Senior Vice President,
Chief Financial Officer & Treasurer
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<PAGE>
EXHIBIT 10
STOCK PURCHASE AGREEMENT
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
SECTION 1 PURCHASE OF PREFERRED SHARES ..................... 1
SECTION 2 DIVIDENDS ON OUTSTANDING PREFERRED SHARES ........ 3
SECTION 3 REPRESENTATIONS AND WARRANTIES OF YARGO .......... 3
3.1 Title to Preferred Shares ........................ 4
3.2 Authority ........................................ 4
3.3 Access to Information ............................ 4
3.4 Investment Experience and Investment Advice ...... 4
SECTION 4 REPRESENTATIONS AND WARRANTIES OF CMI ............ 4
4.1 Corporate Existence; Qualification ............... 5
4.2 Authority ........................................ 5
4.3 No Conflict ...................................... 5
4.4 Issuance of Shares of Common ..................... 5
SECTION 5 COVENANTS ........................................ 5
5.1 Notification of Material Events .................. 6
5.2 Negative Covenants ............................... 6
5.3 Legend on Preferred Stock Certificates ........... 6
SECTION 6 CONDITIONS TO OBLIGATIONS OF THE PARTIES ......... 6
6.1 Conditions to the Obligations of Yargo ........... 6
6.2 Conditions to the Obligations of CMI ............. 7
SECTION 7 PURCHASE DATE DELIVERIES ......................... 8
7.1 Deliveries by Yargo .............................. 8
7.2 Deliveries by CMI ................................ 8
7.3 Time and Location of Deliveries .................. 8
SECTION 8 GENERAL .......................................... 9
8.1 Notices .......................................... 9
8.2 Integrated Agreement ............................. 9
8.3 Construction ..................................... 10
8.4 Invalidity ....................................... 10
8.5 Binding Effect ................................... 10
8.6 Counterpart Execution ............................ 11
8.7 Amendment and Waiver ............................. 11
8.8 Time of Essence .................................. 11
8.9 Survival of Representations and Warranties ....... 11
8.10 Release by Yargo ................................. 11
8.11 Dismissal of Lawsuit ............................. 11
8.12 Expenses ......................................... 12
8.13 Modification of Obligations ...................... 12
8.14 Breach ........................................... 12
8.15 Tolling of Limitations ........................... 12
8.16 Nonwaiver ........................................ 12
8.17 Costs and Attorneys' Fees ........................ 13
<PAGE>
STOCK PURCHASE AGREEMENT
------------------------
This Stock Purchase Agreement (the "Agreement"), is made and
entered into this 31st day of March, 1995, by and between CMI
CORPORATION, an Oklahoma corporation ("CMI"), and YARGO, INC., a
Minnesota corporation ("Yargo").
WHEREAS, Yargo is the owner, of record and beneficially, of
4,500 shares (the "Preferred Shares") of CMI's 7% Preferred
Stock, Series B, $1.00 par value (the "Preferred Stock");
WHEREAS, certain dividend payments on the Preferred Shares
have not been made and, as a result, cumulative dividends of
approximately $1,417,500 ($315 per share) have accrued but have
not been paid on the Preferred Shares;
WHEREAS, a lawsuit has been filed by Yargo against CMI with
respect to the Preferred Shares;
WHEREAS, the parties desire to resolve this dispute by
establishing a definitive timetable for CMI's repurchase of the
Preferred Shares;
NOW, THEREFORE, in consideration of the premises and mutual
representations, warranties, covenants and agreements herein
contained, the parties agree as follows:
1
PURCHASE OF PREFERRED SHARES
----------------------------
Notwithstanding anything to the contrary in CMI's Amended and
Restated Certificate of Incorporation (the "Certificate"), upon the
terms and conditions contained in this Agreement, the parties agree
that:
(a) On June 30, 1995, CMI shall purchase from Yargo, and
Yargo shall sell, transfer, assign and deliver to CMI, not less
than 750 shares of the Preferred Stock.
1
<PAGE>
(b) On December 29, 1995, CMI shall purchase from Yargo,
and Yargo shall sell, transfer, assign and deliver to CMI, that
number of shares of Preferred Stock necessary to reduce the
number of Preferred Shares remaining outstanding immediately
following such purchase to no more than 3,450 shares.
(c) On December 31, 1996, CMI shall purchase from Yargo,
and Yargo shall sell, transfer, assign and deliver to CMI, all
Preferred Shares remaining outstanding.
(d) For purposes of this Agreement, June 30, 1995,
December 29, 1995, December 31, 1996 and each purchase date
established by CMI pursuant to subparagraph (f) below are each
referred to herein as a "Purchase Date."
(e) The price (the "Purchase Price") to be paid by CMI
to Yargo for each share of Preferred Stock purchased hereunder
shall be $1,000.00, plus all dividends accrued but unpaid on
such share to and including the business day immediately
preceding the Purchase Date. The parties acknowledge and agree
that, at CMI's sole discretion, the Purchase Price may be paid
in cash and/or through the issuance to Yargo of shares of CMI's
Voting Class A Common Stock, par value $.10 per share ("Common
Stock"); provided, however, that the certificates representing
such shares of Common Stock issued to Yargo shall not bear any
restrictive legend other than the legends set forth on Exhibit
"A" attached hereto or legends substantially similar thereto.
In the event shares of Common Stock are utilized to pay the
Purchase Price for any Preferred Shares purchased hereunder,
such shares of Common Stock shall be valued based upon the
average of the closing price of the Common Stock as reported by
the American Stock Exchange or any other national securities
exchange upon which the Common Stock is then listed for each of
the ten (10) trading days next preceding the Purchase Date.
Notwithstanding the foregoing, CMI shall be required to pay the
Purchase Price in cash unless all shares of Common Stock to be
used for such purpose are listed on the American Stock Exchange
or such other national securities exchange on which the Common
Stock is then listed.
(f) Notwithstanding anything to the contrary in this
Section 1, provided that the Purchase Price for such Preferred
Shares is paid to Yargo in cash, the Preferred Shares may be
purchased at the option of CMI, in whole or in part, at any
time or from time to time, upon not less than two business
days' prior notice to Yargo. Such notice shall specify (i) the
number of Preferred Shares to be purchased, and (ii) the date
upon which the purchase of such Preferred Shares shall occur.
2
<PAGE>
(g) The parties acknowledge and agree that CMI may, at
its discretion, increase (but not decrease) the number of
Preferred Shares to be purchased on any Purchase Date by giving
not less than two business days' prior notice to Yargo. Such
notice shall specify the number of Preferred Shares to be
purchased by CMI on the applicable Purchase Date.
(h) Provided that CMI fulfills in a timely manner all of
its obligations under subparagraph (a) of this Section 1, CMI
may, at its discretion, declare and pay in 1995 a cash dividend
on the Common Stock and the CMI Voting Common Stock, par value
$.10 per share ("Old Common Stock"); provided, however, that in
no event shall the aggregate amount of such dividend exceed
$300,000. Likewise, provided that (i) CMI fulfills in a timely
manner all of its obligations under subparagraph (b) of this
Section 1, and (ii) all dividends then required to be paid in
1996 under Section 2 hereof shall have been paid in full, CMI
may, at its discretion, declare and pay in 1996 a cash dividend
on the Common Stock and the Old Common Stock; provided,
however, that in no event shall the aggregate amount of such
dividend exceed $300,000.
2
DIVIDENDS ON OUTSTANDING PREFERRED SHARES
-----------------------------------------
CMI hereby covenants and agrees that, so long as any
Preferred Shares remain outstanding, each January 15th and July 15th
CMI will pay in cash a dividend on all then outstanding Preferred
Shares at the rate of $35.00 per share.
3
REPRESENTATIONS AND WARRANTIES OF YARGO
---------------------------------------
In order to induce CMI to enter into this Agreement, Yargo
represents, warrants and covenants to CMI, effective as of the date
of this Agreement and again as of each Purchase Date, each of the
following:
3
<PAGE>
.1 Title to Preferred Shares. Yargo possesses good title
to the Preferred Shares and all accrued but unpaid dividends
thereon, of record and beneficially, free and clear of all liens,
pledges, security interests, claims, contract restrictions and
encumbrances of any kind or nature. None of the Preferred Shares
are subject to any buy-sell agreement or any other contractual
right or restriction.
.2 Authority. Yargo has full legal right, power and
authority to execute and deliver this Agreement and to consummate
the transactions contemplated hereby. This Agreement has been duly
executed and delivered by Yargo and constitutes the valid and
legally binding agreement of Yargo, enforceable against it in
accordance with its terms.
.3 Access to Information. Yargo has investigated the
business and affairs of CMI and understands the risks of, and other
considerations relating to, its acquisition of any shares of Common
Stock that may be issued to it hereunder. Yargo (i) has been
furnished a copy of all materials and information requested by
Yargo relating to CMI and its activities and proposed activities,
and (ii) has been afforded access and the opportunity to obtain any
and all information which Yargo deems relevant and material to make
an informed decision as to its acquisition of shares of Common
Stock, and to ask questions from and get answers from the officers,
directors and employees of CMI.
.4 Investment Experience and Investment Advice. Yargo
has sufficient knowledge and experience in business and financial
matters to be capable of utilizing the information available to it
to fully and completely evaluate the merits and risks of owning
shares of Common Stock. Yargo has not relied upon CMI or anyone
acting on CMI's behalf or on any investment advisor other than its
own attorneys, accountants and personal business and investment
advisors in connection with evaluating such risks and merits.
4
REPRESENTATIONS AND WARRANTIES OF CMI
-------------------------------------
In order to induce Yargo to enter into this Agreement, CMI
represents, warrants and covenants to Yargo, effective as of the
date of this Agreement and again as of each Purchase Date, each of
the following:
4
<PAGE>
.1 Corporate Existence; Qualification. CMI is a corporation
duly organized, validly existing and in good standing under the
laws of the State of Oklahoma and is qualified or licensed and in
good standing in all jurisdictions in which the nature of its
business or the properties owned by it require it to be qualified
or licensed to do business, except where the failure to be so
qualified or licensed will not have a material adverse effect on
it.
.2 Authority. CMI has full legal right, power and authority
to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. This Agreement has been duly
executed and delivered by CMI and constitutes the valid and
legally binding agreement of CMI, enforceable against it in
accordance with its terms, except as the enforceability thereof
may be limited as to payment of dividends by 18 Okla. Stat. 1049.
.3 No Conflict. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated
hereby will violate, conflict with, or result in a breach of or
constitute a default (or an event which, with the giving of
notice or lapse of time, or both, would constitute a default)
under any of the terms, conditions or provisions of any
agreement, indenture or instrument to which CMI is a party or by
which any of its properties or assets is bound, or result in the
violation of any order, judgment or decree of any court or
governmental agency having jurisdiction over CMI.
.4 Issuance of Shares of Common Stock. All shares of
Common Stock issued to Yargo hereunder shall be duly authorized
and, when issued pursuant to the terms hereof, will be validly
issued, fully paid and non-assessable and, excepting the
restrictions on transfer described in the legends to be set forth
on the certificates evidencing such shares, free and clear of all
liens, claims or encumbrances.
5
COVENANTS
---------
CMI and Yargo hereby covenant and agree as follows:
.1 Notification of Material Events. Each party shall
promptly notify the other in writing of the occurrence of any
event which will or could reasonably be expected to result in its
failure to satisfy any of the representations, warranties,
covenants or conditions specified in this Agreement.
5
<PAGE>
.2 Negative Covenants. So long as CMI is not in default of
any of its obligations hereunder, Yargo shall not (i) exercise
its rights under subparagraph (E)(e)(ii) of Article Sixth of the
Certificate, or (ii) except as provided herein, sell, assign,
mortgage, pledge, gift or otherwise transfer any of the Preferred
Shares.
.3 Legend on Preferred Stock Certificates.
Contemporaneously with the execution of this Agreement, all
certificates representing the Preferred Shares shall be imprinted
with the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE
TRANSFERABLE ONLY IN ACCORDANCE WITH THE PROVISIONS OF
THAT CERTAIN STOCK PURCHASE AGREEMENT, DATED MARCH 31,
1995, BETWEEN THE ISSUER AND YARGO, INC. A COPY OF
SUCH AGREEMENT IS ON FILE WITH THE SECRETARY OF THE
ISSUER.
6
CONDITIONS TO OBLIGATIONS OF THE PARTIES
----------------------------------------
.1 Conditions to the Obligations of Yargo. Each and every
obligation of Yargo under this Agreement shall be subject to the
satisfaction, as of each Purchase Date, of each of the following
conditions, each of which may be waived by Yargo, but only in
writing:
(a) Accuracy of Representations and Warranties. All of
the representations and warranties of CMI contained in this
Agreement shall be true and correct as of the date hereof
and shall be deemed to have been made again at each Purchase
Date and shall be true and correct as of such Purchase Date.
(b) Performance of Covenants. Each of the covenants
and other obligations of CMI to be performed by it on or
before the applicable Purchase Date pursuant to the terms
hereof shall have been duly performed and complied with in
all material respects.
6
<PAGE>
(c) No Adverse Proceedings or Events. No suit, action
or other proceeding shall be pending before any court or
governmental agency in which any person or entity not a
party to this Agreement, or an affiliate of a party to this
Agreement, seeks to restrain or prohibit any of the
transactions contemplated by this Agreement or to obtain
damages or other relief in connection with this Agreement
or the transactions contemplated hereby.
(d) Deliveries at Closing. All documents or
instruments reasonably required to be delivered by CMI at
the applicable Purchase Date shall have been tendered at
such Purchase Date.
.2 Conditions to the Obligations of CMI. Each and every
obligation of CMI under this Agreement shall be subject to the
satisfaction, as of each Purchase Date, of each of the following
conditions, each of which may be waived by CMI, but only in
writing:
(a) Accuracy of Representations and Warranties. All of
the representations and warranties of Yargo contained in
this Agreement shall be true and correct as of the date
hereof and shall be deemed to have been made again at each
Purchase Date and shall be true and correct as of such
Purchase Date.
(b) Performance of Covenants. Each of the covenants
and other obligations of Yargo to be performed by it on or
before the applicable Purchase Date pursuant to the terms
hereof shall have been duly performed and complied with in
all material respects.
(c) No Adverse Proceedings or Events. No suit, action
or other proceeding shall be pending before any court or
governmental agency in which any person or entity not a
party to this Agreement, or an affiliate of a party to this
Agreement, seeks to restrain or prohibit any of the
transactions contemplated by this Agreement or to obtain
damages or other relief in connection with this Agreement or
the transactions contemplated hereby.
(d) Deliveries at Closing. All documents or
instruments reasonably required to be delivered by Yargo at
the applicable Purchase Date shall have been tendered at
such Purchase Date.
7
<PAGE>
7
PURCHASE DATE DELIVERIES
------------------------
.1 Deliveries by Yargo. On each Purchase Date, Yargo shall
deliver to CMI all stock certificates evidencing Yargo's
ownership of the Preferred Shares to be purchased on such
Purchase Date, together with stock powers duly executed in blank
and all other good and sufficient instruments of transfer and
conveyance as may be necessary in CMI's reasonable opinion to
vest in CMI good title to such Preferred Shares and all accrued
but unpaid dividends thereon, free and clear of all liens,
pledges, security interests, claims, contract restrictions and
encumbrances of any kind or nature.
.2 Deliveries by CMI. On each Purchase Date, CMI shall
deliver to Yargo the aggregate Purchase Price for the number of
Preferred Shares to be purchased on such Purchase Date. In the
event the Purchase Price is being satisfied through the issuance
of shares of Common Stock, CMI shall deliver to Yargo fully
executed and completed certificates in such denominations as
Yargo may reasonably request representing the appropriate number
of shares of Common Stock registered in the name of Yargo, which
certificates shall not bear any restrictive legend other than the
legends set forth on Exhibit "A" attached hereto or legends
substantially similar thereto. If the Purchase Price is being
paid in cash, the funds shall be wired to such account as shall
be designated in writing by Yargo.
.3 Time and Location of Deliveries. The deliveries
described in this Section 7 shall be made at 10:00 a.m., Oklahoma
City time, on the applicable Purchase Date at the offices of
Hartzog Conger & Cason, 1600 Bank of Oklahoma Plaza, 201 Robert
S. Kerr, Oklahoma City, Oklahoma 73102 or at such other time and
place as the parties may mutually agree in writing.
8
<PAGE>
8
GENERAL
-------
.1 Notices. All notices required or permitted herein must
be in writing and shall be deemed to have been duly given the
first business day following the date of service if served
personally or by telecopier, telex or other similar communication
to the party to whom notice is to be given, or on the third
business day after mailing if mailed to the party to whom notice
is to be given by registered or certified mail, return receipt
requested, postage prepaid, at the address set forth below or to
such other addresses as either party hereto may designate to the
other by notice from time to time for this purpose.
Yargo: Yargo, Inc.
Perryville Corporate Park
Clinton, New Jersey 08809-4000
Attn: Mr. Robert D. Iseman
Telecopier No.: (908) 236-4054
With a copy to:
McAfee & Taft
Two Leadership Square, 10th Floor
Oklahoma City, Oklahoma 73102
Attn: Jerry A. Warren
Telecopier No.: (405) 235-0439
CMI: CMI Corporation
P. O. Box 1985
Oklahoma City, Oklahoma 73101
Attn: Mr. Jim D. Holland
Telecopier No.: (405) 491-2380
With a copy to:
Hartzog Conger & Cason
1600 Bank of Oklahoma Plaza
201 Robert S. Kerr
Oklahoma City, Oklahoma 73102
Attn: John D. Robertson
Telecopier No.: (405) 235-7329
.2 Integrated Agreement. This Agreement contains and
constitutes the entire agreement between and among the parties
hereto and supersedes all prior agreements and understandings
9
<PAGE>
between the parties hereto relating to the subject matter hereof.
There are no agreements, understandings, restrictions, warranties
or representations among the parties relating to the subject
matter hereof other than those set forth or referred to herein.
This Agreement is not intended to have any legal effect
whatsoever, or to be a legally binding agreement or any evidence
thereof, until it has been signed by all parties hereto.
.3 Construction. This Agreement shall be construed,
enforced and governed in accordance with the laws of the State of
Oklahoma. In the event any party hereto institutes any legal
action in connection with any matter contained herein, that legal
action shall be instituted in the District Court of Oklahoma
County, Oklahoma, if in state court, and if in federal court,
then in the U.S. District Court for the Western District of
Oklahoma, sitting in Oklahoma City, Oklahoma. Each party hereto
irrevocably waives any objection which it may have at any time to
the venue of any suit, action or proceeding arising out of or
relating to this Agreement brought in any such court and,
further, irrevocably waives any claim that any such suit, action
or proceeding brought in any such court has been brought in an
inconvenient forum. Each party hereto further irrevocably waives
the right to object, with respect to any suit, action or
proceeding brought in any such court, that such court does not
have jurisdiction over such party. All pronouns and any
variations thereof shall be deemed to refer to the masculine,
feminine or neuter gender thereof or to the plurals of each, as
the identity of the person or persons or the context may require.
The descriptive headings contained in this Agreement are for
reference purposes only and are not intended to describe,
interpret, define or limit the scope, extent or intent of this
Agreement or any provision contained herein. This Agreement has
been reviewed by the parties hereto and their respective counsel.
As a result, this Agreement shall be given a fair and reasonable
interpretation, without consideration or weight being given to
its having been drafted by either party or its counsel.
.4 Invalidity. If any provision contained in this
Agreement shall for any reason be held to be invalid, illegal,
void or unenforceable in any respect, such provision shall be
deemed modified so as to constitute a provision conforming as
nearly as possible to such invalid, illegal, void or
unenforceable provision while still remaining valid and
enforceable, and the remaining terms or provisions contained
herein shall not be affected thereby.
.5 Binding Effect. This Agreement shall be binding upon,
inure to the benefit of and be enforceable by the parties hereto
hereto and their respective successors and assigns.
10
<PAGE>
.6 Counterpart Execution. This Agreement may be executed in
two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute but one and
the same instrument.
.7 Amendment and Waiver. This Agreement may be amended at
any time, but only by an instrument in writing executed by both
parties hereto. A party hereto may waive any requirement to be
performed by the other party, provided that such waiver shall be
in writing and executed by the party waiving the requirement.
.8 Time of Essence. Time shall be of the essence with
respect to the performance by the parties hereto of their
respective obligations hereunder.
.9 Survival of Representations and Warranties. The parties
agree that the representations, warranties, covenants and
agreements contained in this Agreement will survive the Purchase
Dates and any closings pursuant thereto.
.10 Release by Yargo. After CMI has fulfilled in all
material respects each and every of its obligations hereunder,
Yargo shall fully release, acquit and forever discharge CMI and
its respective successors, assigns, officers, directors, agents,
employees, attorneys and representatives, past and present (all
of such released parties being hereinafter collectively referred
to as the "Released Parties") from any and all claims, demands,
liabilities, grievances and causes of action of any kind
whatsoever, whether known or unknown at the present time,
contingent or not contingent, which Yargo may have had, may now
have or may hereafter have against the Released Parties or any of
them arising out of or in any way connected with or related to
Yargo's ownership of the Preferred Shares. Yargo hereby
represents and warrants to the Released Parties that Yargo has
not sold, assigned or transferred to any person or entity any
claim, demand, liability, grievance or cause of action of any
kind or nature whatsoever, known or unknown, which Yargo has had,
may now have or may hereafter have against the Released Parties
or any of them.
.11 Dismissal of Lawsuit. Within five (5) days after the
date hereof, Yargo shall take all actions necessary to dismiss
without prejudice all claims asserted by Yargo in that certain
lawsuit currently pending in the United States District Court for
the Western District of Oklahoma, styled Yargo, Inc. v. CMI
Corporation; Case No. CIV-94-1846-R.
11
<PAGE>
.12 Expenses. Each of the parties to this Agreement shall be
responsible for its own expenses incurred in connection with the
preparation and negotiation of this Agreement and the
consummation of the transactions contemplated by this Agreement.
.13 Modification of Obligations. The parties hereby
acknowledge and agree that (i) this Agreement modifies CMI's
obligations with respect to the purchase of the Preferred Shares
and the payment of dividends thereon, and (ii) in the event of
any conflict or inconsistency between the provisions of this
Agreement and the provisions of Article Sixth of the Certificate,
this Agreement shall control.
.14 Breach. Anything in this Agreement to the contrary
notwithstanding, in the event of a breach or inaccuracy of any of
CMI's representations and warranties in any material respect, or
CMI's failure to observe or perform in any respect any of its
covenants and agreements contained herein, at the sole option of
Yargo, CMI shall be obligated to and shall upon receipt of five
days' prior written notice from Yargo (i) immediately purchase in
cash all Preferred Shares remaining outstanding, and (ii)
immediately pay in cash all previously unpaid dividends accrued
on such Preferred Shares. Interest shall accrue from the sixth
day after such notice and be payable on all sums due hereunder at
the then "prime rate" as reported in The Wall Street Journal plus
three percent (3%).
.15 Tolling of Limitations. During the term of this
Agreement and in the event of a termination hereof as a result of
a breach by CMI, and for a period of ninety (90) days thereafter,
CMI agrees that all statutes of limitation which may otherwise be
applicable shall be tolled and may not be asserted as a defense
to any claims in any subsequent litigation brought by Yargo or
its assigns to enforce against CMI any rights inuring to the
benefit of Yargo under this Agreement, the Preferred Shares or
the Certificate.
.16 Nonwaiver. No failure or delay on the part of either
party in exercising any of its rights and remedies hereunder or
otherwise shall constitute a waiver thereof, and no single or
partial waiver by either party of any default or other right or
remedy which it may have shall operate as a waiver of any other
default, right or remedy or of the same default, right or remedy
on a future occasion.
12
<PAGE>
.17 Costs and Attorneys' Fees. If CMI breaches this
Agreement as set forth in Section 8.14, CMI agrees that, in
addition to such other amounts to which it is obligated to pay
hereunder, it will pay all of Yargo's costs, expenses and
attorneys' fees reasonably incurred by Yargo in attempting to
enforce its rights hereunder in any respects against CMI, whether
suit is actually filed or not.
13
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed below.
YARGO:
YARGO, INC., a Minnesota
corporation
By: /s/Robert D. Iseman
------------------------------
Name: Robert D. Iseman
-------------------------
Title: President
------------------------
CMI: CMI CORPORATION
By: /s/Jim D. Holland
------------------------------
Name: Jim D. Holland
-------------------------
Title: Senior Vice President
------------------------
14
<PAGE>
EXHIBIT "A"
Legend on Front of Certificate
- ------------------------------
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT
TO CERTAIN RESTRICTIONS ON TRANSFERS SET FORTH IN
ARTICLE SIXTH OF THE CORPORATION'S AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION, THE TEXT OF WHICH IS
SUMMARIZED ON THE REVERSE SIDE OF THIS CERTIFICATE.
ANY ATTEMPT TO ACQUIRE VOTING CLASS A COMMON STOCK OF
THE CORPORATION IN VIOLATION OF SUCH RESTRICTIONS SHALL
BE NULL AND VOID AND MAY RESULT IN FINANCIAL LOSS TO
THE PERSON OR ENTITY ATTEMPTING SUCH ACQUISITION.
Legend on Back of Certificate
- -----------------------------
No share of Voting Class A Common Stock shall be
transferable or assignable in any respect, either of record or
beneficially, unless such transfer or assignment is permitted
under the following provisions:
(a) Until the earliest of January 1, 2006, such date
as the Corporation shall no longer have any unutilized
federal income tax net operating loss carryovers or capital
loss carryovers, whether or not such carryovers are
currently in existence (the "Carryforwards") or such date
after which Section 382 of the Internal Revenue Code of
1986, as amended (the "Code"), is repealed or so
substantially modified such that, in the opinion of counsel
to the Corporation, the restrictions on transfer described
herein are no longer necessary to accomplish their intended
purpose: (1) any attempted sale, transfer, assignment or
other disposition (including the granting of any option
(within the meaning of Section 382 of the Code and the
income Tax Regulations as now in effect or hereafter
promulgated pursuant thereto (the "Regulations")) (any such
option being referred to hereinafter as an "Option") or
entering into of any agreement for the sale, transfer or
other disposition), whether voluntary or involuntary,
whether of record or beneficially and whether by operation
of law or otherwise (a "Transfer"), of any share or shares
of the Voting Class A Common Stock of the Corporation or of
any Option to acquire such stock, to any person or entity or
group of persons or entities acting in concert (a
"Transferee") who or which owns or owned, directly,
indirectly or by application of the constructive ownership
rules set forth in Sections 382 and 318 of the Code and the
Regulations, or in any other manner representing "ownership"
under any circumstances for purposes of Section 382 of the
Code and the Regulations (collectively, "Owns" or "Owned"),
at any time during the 3-year period ending on the day of
the Transfer, an aggregate number of shares of the
Corporation's stock (taking into account for this purpose
all interests in the Corporation that are treated as stock
for purposes of Section 382(g)(1) of the Code and no other
interests in the Corporation (any interest that is so
treated being referred to hereinafter as "Stock")) having a
fair market value equal to or greater than 4.75 percent of
the fair market value of the Corporation's then outstanding
Stock shall be void ab initio insofar as it purports to
transfer ownership to such Transferee of any shares of
Voting Class A Common Stock or any Option to acquire Voting
Class A Common Stock and (2) any attempted Transfer of any
share or shares of the Voting Class A Common Stock of the
Corporation or of any Option to acquire Voting Class A
Common Stock to any Transferee not described in clause (1)
hereof who or which would Own, as a result of the Transfer
or as a result of a subsequent Transfer of any share or
shares of the Corporation's Stock or of any Option to
acquire the Corporation's Stock, an aggregate number of
shares of the Corporation's Stock, having a fair market
value equal to or greater than 4.75 percent of the aggregate
fair market value of all of the Corporation's Stock then
<PAGE>
outstanding, shall, as to the number of shares representing
such excess over 4.75 percent, be void ab initio insofar as
it purports to transfer ownership to such Transferee of any
shares of Voting Class A Common Stock or any Option to
acquire Voting Class A Common Stock.
(b) The restrictions contained in paragraph (a) of
this Section D of this Article Sixth have been included
herein for the purpose of reducing the risk of occurrence of
an "ownership change" within the meaning of Section 382(g)
of the Code and the Regulations that would result in the
disallowance or limitation of the Corporation's utilization
of the Carryforwards and to maintain the tax advantage of
the Corporation associated with the Carryforwards.
(c) Neither clause (1) nor clause (2) of paragraph
(a) of this Section D of this Article Sixth shall restrict
any Transfer of Voting Class A Common Stock of the
Corporation if (1) the prior written approval of the Board
of Directors of the Corporation (based on a majority vote of
the Board of Directors) shall have been obtained with
respect to such Transfer and (2) if so requested by the
Board of Directors, counsel to the Corporation shall have
delivered its opinion that such Transfer would not result in
an "ownership change" within the meaning of Section 382(g)
of the Code and the Regulations that would result in the
elimination or limitation of the Corporation's utilization
of the Carryforwards. The Board of Directors shall have the
authority, in its sole discretion, to adopt procedures for
the orderly and effective administration and implementation
of this Section D and, in deciding whether to approve any
proposed Transfer of Voting Class A Common Stock of the
Corporation, the Corporation acting through any officer may
request all relevant information, as well as an opinion of
counsel in form and substance reasonably satisfactory to the
Board of Directors. No employee or agent of the Corporation
shall be permitted to record any attempted or purported
Transfer of Voting Class A Common Stock of the Corporation
made in violation of this Article Sixth and no Transferee of
Voting Class A Common Stock of the Corporation effected in
violation of this Article Sixth shall be deemed to have
acquired ownership of Voting Class A Common Stock for any
purpose. Such intended Transferee shall not be entitled to
any rights as a shareholder of the Corporation with respect
to such Voting Class A Common Stock including, but not
limited to, the right to vote such Voting Class A Common
Stock or to receive any distributions in respect thereof,
whether as dividends or in liquidation.
Note: The foregoing is a summary of certain restrictions on
transfer set forth in Article Sixth of the Corporation's Amended
and Restated Certificate of Incorporation. This summary is
necessarily selective and incomplete and is qualified in its
entirety by reference to the full text of said Article Sixth.
THE CORPORATION WILL FURNISH WITHOUT CHARGE TO EACH
SHAREHOLDER WHO SO REQUESTS THE POWERS, DESIGNATIONS, PREFERENCES
AND RELATIVE, PARTICIPATING, OPTIONAL OR OTHER SPECIAL RIGHTS OF
EACH CLASS OF THE CORPORATION'S STOCK OR SERIES THEREOF AND THE
QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS OF SUCH PREFERENCES
AND/OR RIGHTS.
<PAGE>
EXHIBIT (11)
CMI CORPORATION
COMPUTATION OF EARNINGS PER SHARE
(in thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended
March 31
------------------
1995 1994
---- ----
<S> <C> <C>
PRIMARY EARNINGS PER SHARE
Net income per statement of operations $ 2,372 2,218
Deduct dividends on preferred stock 157 -
Deduct accretion of preferred stock discount 3 7
------ ------
Net income applicable to common stock $ 2,212 2,211
====== ======
Weighted average common shares outstanding 20,353 20,352
Add dilutive effect of outstanding stock options
(as determined using the treasury stock method) 560 694
------ ------
Weighted average common shares outstanding, as
adjusted 20,913 21,046
====== ======
Primary earnings per share .11 .11
====== ======
FULLY DILUTED EARNINGS PER SHARE
Net income applicable to common stock as shown in
primary computation above $ 2,212 2,211
------ ------
Weighted average common shares outstanding 20,353 20,352
Add fully dilutive effect of outstanding stock
options (as determined using the treasury
stock method) 566 694
------ ------
Weighted average common shares outstanding,
as adjusted 20,919 21,046
====== ======
Fully diluted earnings per share $ .11 .11
====== ======
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<CASH> 2,232
<SECURITIES> 0
<RECEIVABLES> 20,232
<ALLOWANCES> 0
<INVENTORY> 52,994
<CURRENT-ASSETS> 84,739
<PP&E> 44,932
<DEPRECIATION> 33,629
<TOTAL-ASSETS> 98,454
<CURRENT-LIABILITIES> 23,709
<BONDS> 25,854
<COMMON> 2,036
5,911
0
<OTHER-SE> 42,325
<TOTAL-LIABILITY-AND-EQUITY> 98,454
<SALES> 32,671
<TOTAL-REVENUES> 32,671
<CGS> 22,799
<TOTAL-COSTS> 29,528
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 746
<INCOME-PRETAX> 2,463
<INCOME-TAX> 91
<INCOME-CONTINUING> 2,372
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,372
<EPS-PRIMARY> .11
<EPS-DILUTED> .11
</TABLE>
