Page 1 of 48
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF
1934 [Fee Required] For the fiscal year-ended: June 30, 1996
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE EXCHANGE ACT OF
1934 [No Fee Required]
Commission File Number 0-7462
CPT HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
Minnesota 41-0972129
(State of Incorporation) (I.R.S. Employer identification No.)
1430 Broadway, 13th Floor
New York, New York 10018
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (212) 382-1313
Securities registered pursuant to Section
12(b) of the Act:
NONE
Securities registered pursuant to Section
12(g) of the Act:
NONE
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 by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K [X]
As of August 30, 1996, the aggregate market value of shares of Common Stock of
the registrant held by non-affiliates was approximately $ 1,860,746.00.
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13, or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes X No ___
As of August 30, 1996, 1,510,084 shares of Common Stock were outstanding.
<PAGE>
PART I
ITEM 1. BUSINESS
General
CPT Holdings, Inc. ("CPT" or the "Company"), is a holding company
which, through its indirect operating subsidiary, J&L Structural, Inc., a
Delaware corporation ("J&L"), is a nationwide independent producer of high
quality lightweight structural steel shapes, with a leading market share in the
Northeast, Southeast and Mid-Atlantic regions. The Company's products are used
primarily in the manufactured housing, truck trailer, and highway safety systems
industries. The Company competes effectively on the basis of product quality,
customer service and price, in a number of niche markets characterized by few
competitors. The Company operates a uniquely designed mill on 33 acres in
Aliquippa, Pennsylvania which enables the Company to efficiently produce thin,
lightweight profile structural steel shapes (primarily I-Beams). The Company,
through the Brighton Electric Steel Casting Division of J&L ("Brighton"), also
has an 80 % market share in the domestic small piercer point market.
CPT, a Minnesota corporation, was incorporated in 1971 as CPT
Corporation. Its principal offices are located at 1430 Broadway, 13th Floor, New
York, New York and its telephone number is (212) 382-1313. CPT adopted its
current form as a holding company in accordance with its Amended Plan of
Reorganization (the "Reorganization Plan") approved by the U.S. Bankruptcy Court
for the District of Minnesota. The Reorganization Plan became effective as of
July 23, 1991. References to the Company are intended to include CPT and its
direct and indirect subsidiaries, unless the context provides otherwise.
On February 8, 1993, Hupp Industries, Inc., now known as H. Industries,
Inc., ("Hupp") became a majority-owned subsidiary of CPT when CPT acquired 80.1%
of the capital stock of Hupp. Hupp was also a manufacturer of heating,
ventilating and air conditioning equipment used primarily in commercial as well
as military applications. Through its wholly owned division, DCM Corporation,
Hupp was also a manufacturer of fractional horsepower electrical motors. Hupp
experienced operating difficulties in both its air conditioning and electrical
motor manufacturing businesses and in February, 1994 decided to discontinue the
manufacture of its air conditioning products. Hupp continued to experience
financial problems which caused certain defaults under its Credit and Security
Agreement with its bank. Despite efforts to bring the operations of Hupp to
profitability, Hupp was unable to eliminate its losses. As a consequence, on
October 27, 1994, Hupp's senior lender exercised its rights and conducted a
secured party sale of the assets of Hupp to an unrelated party. Hupp had no
assets and no employees subsequent to October, 1994.
On April 6, 1995, J&L, a newly incorporated, indirect, majority-owned
subsidiary of the Company, acquired substantially all of the assets of J&L
Structural, Inc. ("JLS") and Trailer Components, Inc. ("TCI"), Pennsylvania
corporations based in Aliquippa, Pennsylvania, for $50 Million plus the
assumption of certain liabilities (the "Acquisition"). JLS was a nationwide
independent producer of high quality lightweight structural steel shapes used
primarily in the manufactured housing, truck trailer and highway safety systems
industries. TCI provided secondary services to JLS which are now provided by the
Ambridge division of J&L.
As part of the Acquisition, the assets of Brighton Electric Steel
Casting Company ("BESCC"), an existing subsidiary of CPT and the direct parent
of J&L, were contributed to J&L and BESCC changed its name to J&L Holdings Corp.
("JLH"). Prior to the closing of the Acquisition, BESCC redeemed its preferred
stock from the holder thereof in consideration for the issuance by CPT of a
Deferred Purchase Money Note in the approximate amount of $475,000, said amount
equal to the stated value of the preferred stock plus the accrued dividends
thereon, bearing interest at 11 percent and due December 15, 2002.
Also as part of the Acquisition, J&L distributed as a dividend to JLH
the right (which J&L acquired from JLS) to acquire a 38-acre parcel of
undeveloped land adjacent to the JLS rolling mill in Aliquippa, Pennsylvania.
JLH, in turn, contributed the right to acquire the 38-acre parcel to Continuous
Caster Corporation, a newly- incorporated Delaware corporation, ("CCC") in
exchange for all of the common stock of CCC. Shortly thereafter, CCC acquired
title to the 38-acre parcel, using funds which JLS had placed in escrow prior to
the Acquisition.
Further information regarding the Acquisition is contained in Form 8-K
filed by the Company with the Securities and Exchange Commission on April 21,
1995, which is hereby incorporated by reference herein.
J&L Structural, Inc.
J&L is segmented into two distinct operating divisions, J&L Structural
division ("J&L Structural") and Brighton, as a result of significant differences
in both customers and products. J&L Structural is also segmented into two
separate divisions which includes the Ambridge division (formerly TCI). This
distinction is due mainly to separate labor contracts which exist among the
employees of J&L Structural. The Ambridge division provides finishing services
required for certain J&L Structural products.
The following narrative on the business will be segmented on this basis.
J&L Structural Division
Products
J&L Structural is a producer of high quality lightweight
structural steel shapes (primarily I-Beams) which are used primarily in the
manufactured housing, truck trailer, and highway safety systems industries.
J&L Structural's products are monitored, tested and inspected
throughout the manufacturing process to ensure that all aspects of quality meet
applicable industry or customer specifications. The products are also inspected
to ensure integrity of surface and dimensions.
J&L Structural's product lines are described below:
JUNIOR(R) Beams are hot rolled lightweight steel beam sections
produced by rolling heated steel billets through J&L Structural's fourteen stand
rolling mill. These sections have been accepted by designers and engineers for
over half a century as the lightest hot-rolled structurals in their size class.
JUNIOR(R) Beams are available in 3 to 12-inch depths, ranging in weight from 2.9
to 11.8 pounds per foot. A total of fourteen weights of JUNIOR(R) Beams are
currently available. JUNIOR(R) Beams are manufactured in a wide range of steel
grades including conventional and high strength steels. Strict quality control
at J&L Structural's mill assures a homogeneous product, uniform in mechanical
and chemical properties and possessing dimensions within close rolling tolerance
limits. JUNIOR(R) Beams have the strength, light weight and versatility to be
used by makers of manufactured housing and truck trailers, industrial and
commercial contractors and machinery builders. JUNIOR(R) Beams are primarily
used by the manufactured housing industry as undercarriage structural support.
Crossmembers are fabricated by the Ambridge division from
JUNIOR(R) Beams. Crossmembers are used by the truck trailer and truck body
industry in the production of trailer frames. These manufacturers space
Crossmembers along the entire length of the trailer to provide structural
support to the body and floor.
JUNIOR(R) Channels are available in four sizes and varying
weights. They generally weigh significantly less than the lightest standard
structural steel shape of equal depth, while exhibiting the characteristics of
form and constancy of dimension offered by a standard hot-rolled section.
JUNIOR(R) Channels are preferred over formed plate channels since they assure
perfect fitting square corners and true lines. These advantages permit
flexibility of design with minimum weight and lower cost without sacrificing
structural strength. JUNIOR(R) Channels offer excellent application flexibility
in architecture and construction, particularly in the construction of commercial
and industrial stairways. Additionally, truck trailer manufacturers are able to
reduce weight in their finished product through the use of JUNIOR(R) Channels as
side rails.
Wide Flange Beams offer durability and economical installation
to builders of highway safety systems as well as for general construction
applications. On a pound-per-foot basis, J&L Structural's Wide Flange Beams are
among the lightest and lowest cost hot-rolled steel structurals available for
highway guardrail posts.
Standard I-Beams are produced by J&L Structural in sections of
3" x 5.7 pounds per foot and 3" x 7.5 pounds per foot in the same variety of
grades and lengths as available for its other products. The lighter weight
three-inch section is used as a highway guardrail post section.
Split Tees (often referred to as Split Beams) are JUNIOR(R)
Beams which are split longitudinally through the web section. This process
produces two identical T-sections which are used for ship hull reinforcement.
J&L Structural's philosophy from its inception has been to
incrementally expand its product offerings and capabilities while, at the same
time, striving to maintain high levels of profitability. The Company expects to
continue to add new products, new sizes and/or serve new markets on an
"incremental" basis in the future. For example, J&L Structural is actively
pursuing the possibility of rolling certain products in a manner that would
reduce their current weight per foot and/or increase the products' engineered
efficiency. Management believes that a new rolling process would have
significant market implications, since end users are interested in cost savings
through the use of lighter weight, structurally efficient products.
Suppliers
Steel billets, J&L Structural's primary raw materials, are
purchased from several domestic mini-mills and are delivered to J&L Structural's
mill by barge, rail or truck. J&L Structural issues a billet quality standard
which must be met by all suppliers. This standard includes specifications for
billet chemistry, dimension and surface quality. J&L Structural typically
purchases billets from two main suppliers and several alternate suppliers.
Currently, over one-half of J&L Structural's semifinished steel requirements are
sourced through one of its main suppliers. The loss or reduction in capability
of this supplier would require J&L Structural to rely more heavily on their
other current sources of supply. Management maintains good relationships with
all its suppliers and would not expect any significant impact on its financial
statements or its ability to source an adequate supply of billets assuming a
need to change its supplier mix.
J&L is currently conducting a review of the feasibility of
commencing construction of a melt shop/continuous caster complex in order to
reduce its dependence on billet suppliers. Currently under consideration are two
proposals on this project, however, no firm commitments have been made to date.
While a final decision whether or not to construct a caster and melt shop has
not been made, the Company and J&L believe this is the probable course of
action.
Marketing and Distribution
J&L Structural focuses its marketing efforts directly on end
users of its products. J&L Structural's primary marketing strategy is to
position itself as a high-quality niche manufacturer of a variety of lightweight
structural steel products. Customer service and product quality are pivotal
elements of that strategy, and as a result, J&L Structural maintains close ties
with its customers and their markets. Due to its unique mill design and flexible
operating schedule, J&L Structural is able to change its mill frequently at
minimal cost. This allows for quick response to customer requirements, while
maintaining reasonable inventory levels. As a result, J&L Structural has
established a record of superior customer service which differentiates it from
its competition.
J&L Structural maintains a sales force of five salaried
employees, two of whom are stationed in the field and three in Aliquippa. In
addition, a commissioned sales agent handles sales opportunities in Mexico and
the rest of Latin America.
Over 85 % of J&L Structural's shipments go directly to an end
user rather than a service center or steel distributor. J&L Structural ships to
customers from three strategic locations: Aliquippa, Pennsylvania; Ambridge,
Pennsylvania; and Iuka, Mississippi. The Mississippi location is a down-river
public warehouse that charges J&L Structural a fee for unloading barges and for
warehousing beams prior to shipping to customers in the Southeast. J&L
Structural's location in the Mid-Atlantic region on the inland waterway system
provides good proximity to its major markets. J&L Structural's barge facility
provides low cost transportation for the bulk movement of JUNIOR(R) Beams to be
sold to the manufactured housing industry in Alabama, Mississippi, Tennessee and
other Southeastern states. Moreover, Indiana, North Carolina and Pennsylvania
are leading states in the production of manufactured homes and all are within
one day truck transportation. Additionally, Indiana leads the country in the
production of truck trailers.
Moreover, J&L Structural's location also enables it to utilize
barge, rail and truck lines to transport both its raw materials and finished
goods, thereby allowing it to be responsive to its customers. In addition, the
Company is in the process of seeking an additional distribution facility in the
Southeast in order to enhance its storage capacity. The additional storage
capacity is also expected to lower J&L Structural's freight costs, giving it the
ability to seek higher margins in that region.
Competition
J&L Structural competes effectively in all of its major
product areas on the basis of product quality, customer service and price in a
number of niche markets characterized by few competitors. Its location on the
Ohio River allows it to ship products to customers and obtain raw materials on a
very cost-effective basis in comparison to its competitors and provides it with
expanded geographic coverage in an industry which is largely regional.
While J&L Structural has competition in all of its major
product lines, the thin, lightweight sections J&L Structural manufactures are
difficult to produce and therefore, the number of competitors producing these
items is limited. The unique design and relatively small size of J&L
Structural's mill enables it to efficiently produce thin, lightweight profiles.
Under existing industry configurations and considering the aggregate demand for
its niche products, the Company believes that replication of J&L Structural's
unique mill design by other companies wishing to compete in these markets would
not be economical. J&L Structural's small powerful mill is better suited to
produce the items in its product line than larger mills operated by competitors
that produce a broader range of products.
J&L Structural's commitment to providing a focused product
line that is keyed off customer needs differentiates it from its competitors. In
particular, J&L Structural: (i) provides superior service and consistently high
quality products to its customers, many of which purchase all or substantially
all of their requirements for lightweight steel shapes from J&L Structural, (ii)
maintains adequate inventories and a flexible operating schedule which makes it
more responsive to customer needs and market conditions, (iii) focuses its
marketing directly on end users, (iv) relative to its competitors, produces a
narrow, more focused range of products, and (v) provides value-added finishing
services to meet specific customer needs.
Foreign manufacturers do not play a significant role in the domestic structural
markets which J&L Structural serves.
Employees
As of August 31, 1996, J&L Structural employed a total of 283
employees. The United Steelworkers of America represents approximately 189
employees at J&L Structural (excluding the Ambridge division) under a labor
agreement that expires in September, 2000. The Ambridge division of J&L
Structural and its 52 unionized employees are also represented by the United
Steelworkers of America on a five-year labor agreement, expiring in October,
1999. The Company believes that it has an excellent relationship with both union
locals. J&L Structural has never experienced a work stoppage, has experienced
few employee grievances and has very little employee turnover.
Backlog
The backlog of unfilled orders for J&L Structural typically
averages less than 60 days. This remains the case even in strong markets due to
frequent product rollings and adequate finished inventory levels that allow J&L
Structural's customers to work within short lead times. As of August 31, 1996,
J&L Structural had firm open orders totaling $7,040,000. This compares with a
backlog of $8,677,000 at the same date in 1995. The reduction in backlog in
comparison to the previous year is due mainly to the continued slowdown in the
truck/trailer manufacturing industry.
The winter months are generally slower activity months for J&L
Structural due to the seasonality of the manufactured housing consumer markets
and significant seasonal reductions in highway construction and repair programs.
Environmental Compliance
U.S. steel producers, including J&L Structural, are subject to
stringent Federal, state and local environmental laws and regulations
concerning, among other things, air emissions, waste water discharge, and solid
and hazardous waste disposal. The Company can be expected to spend substantial
amounts for compliance with these environmental laws and regulations in the
future.
No significant environmental problems have arisen concerning
the use or operation of J&L Structural's facilities or the conduct of its
business.
Brighton Electric Steel Casting Division
Products
The principal product manufactured by Brighton is piercer
points, which are disposable tooling used by the steel industry in the
production of seamless steel tubes. Piercer points are bullet-shaped castings
which are driven into the core of heated steel billets and, therefore, are
central in the manufacturing process of seamless steel tubing products.
Generally, seamless tubes are required in applications where welded seamed tubes
lack rigidity and structural strength. Seamless tubing has a multitude of
applications ranging from oil production to bearings used in the automotive
industry.
The Company believes that Brighton is the largest producer of
small piercer points (1 to 250 pounds) in the United States. Brighton also
produces piercer points up to 400 pounds. In addition to piercer points,
Brighton supplies high alloy grate bars used by the steel industry, as well as
hi-mill castings and equalizer plates used in the suspension systems of railway
cars. Brighton's manufacturing capabilities provide it with the opportunity to
develop new markets for its molded alloy steel castings.
The manufacturing process at Brighton begins with the
production of a pattern. Brighton relies to a great extent on an outside pattern
shop. Once a pattern is produced a mold is manufactured at Brighton's
facilities. Molten metal is then poured into the mold, allowed to cool and then
"shaken" free of the mold to complete the finished product. From this step
Brighton may heat the molded metal product in one of its annealing ovens after
which it is machined to final tolerances.
The piercer points are usable by customers for only a limited
amount of production before they become too worn for the process. In some
processes, two piercer points are used for larger seamless tubes. Depending on
the process and materials used to manufacture seamless tubing, a piercer point
generally has a useful life of between two to 750 manufacturing runs before it
must be replaced. Used piercer points are then returned to Brighton for
remolding into other piercer points.
Suppliers
Brighton purchases a variety of raw materials, including
alloys (such as chrome, nickel, molybdenum and tungsten), foundry sand and
grinding materials. Brighton currently has strong and established relationships
with all of its major suppliers of raw materials. Brighton has not experienced
any problems in obtaining an adequate supply of raw materials at reasonable
prices and it expects the availability of future supplies to be sufficient.
Nevertheless, limited supplies of these raw materials and/or extraordinary high
prices for such materials could cause Brighton to, among other things, lose
business by failing to meet demand, squeeze its profit margins and/or encourage
the use of substitute products.
Marketing and Distribution
Brighton has 80% of the small piercer points business in the
United States and excels in providing quality service and products. However,
Brighton's customer base is limited. Essentially, the customer base consists of
several major accounts which account for approximately 90% of Brighton's
revenues. A major loss of one or more of its accounts or a significant reduction
in demand by the steel industry would have a significant adverse impact on
Brighton's profitability.
Brighton sells to and services its customers directly with its
own personnel. In its effort to expand beyond its piercer-point business,
Brighton has in recent years engaged two manufacturing representative firms. The
diversification effort has increased its new non-piercer point sales from 15% of
total sales in fiscal year 1989 to approximately 26% of total sales for the
division in fiscal year 1996. In addition, the enhanced sales and marketing
effort has created an increased market awareness of Brighton's capabilities in
producing specialty high alloy steel castings.
Competition
Brighton has limited competition in the small piercer point (1
to 250 pounds) market. Its only competition is Columbiana Foundry ("Columbiana")
based in Columbiana, Ohio which produces a wide variety of castings, including
piercer points.
In the past, Columbiana has focused its efforts on producing larger piercer
points.
Employees
As of August 31, 1996, Brighton employed a total of 24
employees. Most of Brighton's personnel are represented by the United
Steelworkers of America under a contract which expires in December 1997. The
Company considers its employee relations at Brighton to be good.
Backlog
Brighton typically ships products within 30 days of receipt of
an order. Therefore, Brighton does not maintain a significant backlog of
unshipped orders. As of August 31, 1996, Brighton had firm open orders totaling
$435,000. This compares to a backlog of $416,000 at the same date in 1995.
Brighton does not consider its business to be seasonal.
Environmental Compliance
Brighton operates with several environmental permits issued by
the Pennsylvania Department of Environmental Protection. No significant
environmental problems have arisen concerning the use or operation of Brighton's
facilities or the conduct of its business. However, a change in the law or
regulations at either the federal, state or local level could adversely impact
the operations of Brighton.
Financial Information Regarding Industry Segments and Foreign and Domestic
Operations
Financial information about the Company's various industry segments and
its foreign and domestic operations and export sales is contained in Note 14 of
the Notes to the Consolidated Financial Statements of the Company contained in
item 8 of this Form 10-K. The Company's continuing operations do not currently
have significant export sales or any foreign operations.
ITEM 2. PROPERTIES
CPT's principal executive offices were formerly located at 1140
Connecticut Avenue, N.W., Suite 1201, Washington, D.C. in approximately 2,000
square feet of office space, for which a lease existed with a term expiring in
May 1998. On November 1, 1994 the Company moved its executive offices to 1430
Broadway, 13th Floor, New York, New York. The New York offices are occupied
under a subleasing arrangement on a month to month lease. In December 1995, a
settlement was reached with the landlord of CPT's former offices which released
the Company from any future obligations under the lease.
The Company's facilities include:(i) J&L Structural - a reheat furnace,
a unique close-tolerance fourteen stand continuous rolling mill, a hot bed,
straighteners, and sawing, stacking and bundling facilities located on
approximately 33 acres on the Ohio River in Aliquippa, Pennsylvania, with over
265,000 square feet under roof and an adjacent barge loading facility; (ii) J&L
Structural's Ambridge division - a fabricating facility located in a leased
facility in Ambridge, Pennsylvania, approximately five miles from the main
facilities; and (iii) Brighton's headquarters and manufacturing plant, a 25,000
square foot facility, located in Beaver Falls, Pennsylvania, approximately 10
miles from J&L Structural. J&L Structural's Aliquippa facility is secured by
mortgages to its senior and subordinated lenders.
CCC holds title to 38 acres of undeveloped land adjacent to J&L
Structural in Aliquippa, Pennsylvania. The property was acquired subject to an
agreed order between CCC and the Pennsylvania Department of Environmental
Protection which required CCC to perform certain environmental remediation which
has been completed at a cost totaling $52,000. Under the agreement by which this
parcel was acquired, the Beaver County Corporation for Economic Development has
a right of first refusal to repurchase the parcel for an amount approximating
the purchase price plus all environmental testing and remediation costs incurred
by CCC and its affiliates if CCC or its affiliates attempt to sell or transfer
the property to a third party whose intent is other than to ultimately construct
a melt shop and continuous caster on the property.
ITEM 3. LEGAL PROCEEDINGS
The Industrial and Allied Employees Union Local No. 73 Pension Plan
(the "Plan") issued a claim for payment of withdrawal liability totaling
approximately $870,000 under Section 4219 of ERISA against Hupp, CPT and all
"controlled group members", as a result of Hupp's cessation of contributions to
the Plan following the discontinuance of Hupp's business in October 1994. On
July 10, 1996, the arbitrator sustained the Plan's claim of withdrawal liability
against CPT. Pursuant to ERISA, CPT subsequently appealed the arbitration
decision to the U.S. District Court for the Northern District of Ohio. As of
August 31, 1996, CPT has made payments aggregating approximately $446,000 to the
Plan and as of June 30, 1996, has fully accrued the amount of the outstanding
claim less payments made through that date. The Company will continue to make
monthly payments to the Plan of approximately $25,000 against the remaining
obligation under this claim.
The Company is a party to several lawsuits arising in the ordinary
course of its business. The Company's management and legal counsel believe that
there are valid defenses to the claims being asserted. While the Company's
ultimate liability with respect to these lawsuits cannot be determined at this
time, management believes the resolution thereof will not have a material
adverse effect on the financial position or results of operations of the
Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
NONE
<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANTS' COMMON EQUITY AND RELATED STOCKHOLDERS MATTERS
Between September 1992 and August 1994, CPT's Common Stock was included
in the NASDAQ Small Cap Market, also known as the NASDAQ System. In August of
1994, the Common Stock of CPT was delisted from the Small Cap Market for failure
to meet the minimum bid price of $1.00. Since August of 1994, the Company's
Common Stock has traded over-the-counter with quotations for the stock available
in the "pink sheets" or through the over-the-counter Bulletin Board of the
National Association of Securities Dealers, Inc.
The following table sets forth for each of the periods indicated, the
range of the high and low bid prices for CPT's common stock, rounded to the
nearest 1/64 of a dollar, based on quotations obtained from the NASDAQ Small Cap
Market and through the over-the-counter bulletin board.
<TABLE>
Fiscal 1996
High Low
<S> <C> <C>
First Quarter (7/1-9/30/95) $ 4.75 $ 1.87
Second Quarter (10/1-12/31/95) 5.25 3.12
Third Quarter (1/1-3/31/96) 4.75 2.12
Fourth Quarter( 4/1-6/30/96) 4.37 2.62
Fiscal 1995
High Low
First Quarter (7/1-9/30/94) $ 1.25 $ .38
Second Quarter (10/1-12/31/94) 1.13 .25
Third Quarter (1/1-3/31/95) 1.13 .50
Fourth Quarter( 4/1-6/30/95) 3.25 .56
</TABLE>
The quoted bid prices reflect inter-dealer prices without retail
mark-ups, mark-downs, or commissions and may not necessarily reflect actual
transactions. As of August 31, 1996, there were approximately 1,763 common
stockholders.
Dividend Policy
CPT has not paid any cash dividends on its common stock within the last
two fiscal years and has no plan to pay any dividends in the foreseeable future.
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
(in thousands except per share data)
Selected Income Statement Data (1)(2):
<TABLE>
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Total net revenue $ 101,011 $ 31,208 $ 5,785 $ 3,739 $ 1,353
(Loss) income from continuing
operations after income taxes (1,909) 410 232 (199) (75)
(Loss) income from operations
of discontinued subsidiaries - (553) (2,201) (2,009) (1,893)
Net gain (loss) on disposal of
discontinued subsidiaries 2,220 2,129 (6,371) 1,600 -
(Loss) income before income
taxes and extraordinary items 311 1,986 (8,340) (608) (1,968)
Gain on extraordinary item 3,527 - - -
Net income (loss) 311 5,513 (8,340) (608) (1,968)
Earnings (loss) per share assuming full dilution:
From continuing operations $ (.58) $ .23 $ .15 $ (.13) $ (.06)
From discontinued operations .69 .81 (5.67) (.28) (1.61)
Extraordinary items - 1.82 - - -
------------------------------------------------------------
Net earnings (loss) per share $ .11 $ 2.86 $ (5.52) $ (.41) $ (1.67)
Fully-diluted common and
common equivalent shares
outstanding (000) 3,208 1,935 1,510 1,510 1,174
Selected Balance Sheet Data (2):
Total current assets $ 19,623 $ 19,951 $ 5,045 $ 6,957 $ 5,929
Total assets 68,584 61,203 8,431 14,311 8,052
Current liabilities 15,709 16,041 11,857 9,280 3,659
Long-term obligations, net of
current portion 59,288 52,339 2,500 2,448 1,502
Redeemable preferred stock -- -- 350 350 350
Common shareholders equity
(deficit) (8,984) (9,671) (6,472) 1,868 2,538
</TABLE>
(1) As a result of the final discontinuance of operations for Hupp as
of October 27, 1994, the consolidated statements of operations for fiscal years
ended June 30, 1996, 1995, 1994 and 1993 have reflected the results of
operations of Hupp as discontinued operations. In addition, certain secured and
unsecured liabilities associated with the operations of Hupp have been treated
as forgiven in the year ended June 30, 1995 based on the outcome of certain
bankruptcy proceedings and a secured party asset sale. See Note 1 to the
Consolidated Financial Statements.
(2) On April 6, 1995, J&L, an indirect, majority-owned subsidiary of
the Company, acquired the business and substantially all of the assets of JLS
and TCI as discussed in Note 1 to the Consolidated Financial Statements. The
Acquisition was accounted for as a purchase and the results of operations for
the acquired assets from the date of acquisition (April 6, 1995) through June
30, 1995, were included in the Company's consolidated statement of operations
for the fiscal year ended June 30, 1995.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Significant Events
On October 27, 1994, due to continuing operating losses,
Hupp's senior lender proceeded with a secured party sale of the assets of Hupp
to an unrelated party. As a result, all operations of Hupp and its wholly-owned
division DCM were discontinued shortly thereafter. The loss from the final
discontinuation of operations has been reflected in the year-end financial
statements and results for the previous fiscal years ended June 30, 1994 and
1993 have been restated to show the discontinuation. In addition, on July 24,
1995, a final decree was issued by the Bankruptcy Court for the Northern
District of Ohio closing the Chapter 11 case filed by Hupp prior to the
Company's acquisition of Hupp. As a result, certain notes payable, unsecured
creditor obligations and administrative claims relating to the Chapter 11 filing
and totaling approximately $3,527,000 were forgiven. Certain other unsecured
liabilities of Hupp which remained outstanding subsequent to the secured party
sale of assets discussed above which totaled approximately $2,220,000, were
written off during the year ended June 30, 1996. The $2,220,000 and $3,527,000
have been recorded in the Company's consolidated statement of operations as a
gain from discontinued operations and an extraordinary item for the fiscal years
ended ended June 30, 1996 and 1995, respectively.
On April 6, 1995, J&L, an indirect majority-owned subsidiary
of the Company, acquired the business and substantially all of the assets of JLS
and TCI as discussed in Note 1 to the Consolidated Financial Statements. JLS and
TCI were specialty manufacturers of high quality, lightweight structural steel
shapes used primarily in the manufactured housing, truck trailer and highway
safety systems industries. The results of operations for the acquired assets
from the date of acquisition (April 6, 1995) through June 30, 1995, were
included in the consolidated statement of operations for the fiscal year ended
June 30, 1995. The assets of BESCC were also contributed to J&L on the
acquisition date, and therefore, the results of operations for BESCC subsequent
to April 6, 1995 are reported as a division (Brighton) within the newly formed
subsidiary, J&L.
Results of Operations
Net Sales
The Company recorded net sales of $101,011,000 for the fiscal
year 1996 which compares to net sales of $31,208,000 and $5,785,000 recorded for
the fiscal years ending June 30, 1995 and 1994, respectively. Comparability of
the periods is impacted primarily by the Acquisition on April 5, 1995. For
fiscal 1996, $94,609,000 of total net sales were attributable to J&L Structural
while $6,402,000 were attributable to Brighton. Domestic trailer orders for
truck/trailer manufacturers have declined sharply over the year, while severe
winter weather curtailed highway construction and certain manufactured housing
operations for longer periods than anticipated. Certain of our customers in the
manufactured housing industry, however, have experienced in excess of 20% growth
in sales dollar volume over the last year. Comparing Brighton/BESCC net sales
for fiscal 1996 to net sales for fiscal 1995 and 1994 totaling $6,060,000 and
$5,785,000 indicates increases of 5.6% and 4.8%, respectively.
The Company recorded net sales of $25,205,000 and $26,699,000
for the three month periods ended June 30, 1996 and 1995, respectively. The
three month net sales for June 30, 1996 and 1995, are comprised of $23,457,000,
$1,748,000, $25,148,000 and $1,551,000 for J&L Structural and Brighton,
respectively. The decrease in J&L Structural revenues of 6.7% from the prior
year's quarterly performance resulted from a decrease in both tonnage shipped
and average price realized per ton. Shipments of crossmembers, which represent
the Company's highest priced product per ton, to truck/trailer customers and
wide flange beams used in highway guard rail construction were down 57.2% and
42.9%, respectively, compared to the same period in the prior year. Poor
crossmember and wide flange shipments, however, were partially offset by an
increase in JUNIOR(R) beam shipments to the manufactured housing business by
17.0% in comparison to the same period in fiscal 1995.
Gross Margins
Gross margins as a percentage of total net sales were 12.9%,
16.9% and 26.7%, respectively for fiscal years 1996, 1995 and 1994. Gross
margins for J&L Structural for the year ending June, 1996 were 11.4% while
margins for Brighton during that period were 24.4%. Gross margins for 1996 were
reduced overall at J&L Structural due to two major reasons, unfavorable
productivity and yield performance and higher than anticipated billet costs with
little improvement in sales pricing. Unfavorable productivity and yield
performance have negatively impacted margins for fiscal 1996. The Company's
management feels that the reduced productivity resulted from the relative
inexperience of its work force. In late January 1995, a decision was made, based
on sales demand and forecast, to begin a second shift of operations. This
decision resulted in the hourly work force increasing from 153 at January 1,
1995, to 244 as of September 30, 1995, representing a 59% increase in the
production workforce. Management implemented a productivity improvement program
during the second fiscal quarter which includes employee orientation, training
and feedback, establishment of continuing direct responsibilities and increased
supervision and oversight. Productivity and yield data began to improve during
the second half of the fiscal year ended June 30, 1996. Billet costs are driven
mainly by the cost of scrap steel, its primary raw material component, which has
been at record high cost levels due to the overall strength of the steel
industry during this fiscal year. Gross margin improvement through sales price
increases did not materialize due to competitive market conditions. Margins at
Brighton were consistent with the overall gross margin for the prior fiscal
year.
Gross margins as a percentage of total net sales for the three
months ended June 30, 1996 and 1995, were 14.5%, 32.9%, 14.9%, and 25.1% for J&L
Structural and Brighton, respectively. The decrease in gross margin for J&L
Structural for the comparable periods was due mainly to reduced volume which was
partially offset by increased productivity. The increase in gross margin for
Brighton for the comparable periods was due mainly to a shift in production mix
to higher margin products.
Selling, General and Administrative Expenses
Selling, general and administrative expenses totaled
$7,075,000, $3,169,000 and $1,466,000 for fiscal years 1996, 1995 and 1994,
respectively. As a percentage of net revenue, these expenses represented 7.0%,
10.2% and 25.3% of net revenues. During fiscal 1996, approximately $600,000 was
related to additional expense necessary to support a contingency related to
litigation with a Hupp pension plan sponsor (see Note 12 to the Consolidated
Financial Statements). During fiscal 1995, approximately $500,000 related to a
one time charge to J&L Structural relating to Acquisition costs, and
approximately $300,000 related to expense necessary at CPT to support the Hupp
pension plan litigation referred to above.
Other Expenses
Other expense for the fiscal year ended June 30, 1996 reflects
an $828,000 charge relating to the signing of a new 58 month labor contract with
J&L Structural's United Steelworkers of America local union on December 3, 1995.
This charge was comprised of a signing bonus of $1,500 per employee amounting to
approximately $295,000 in aggregate, coupled with a retroactive bonus charge for
calendar 1995 computed using the newly negotiated profit sharing computation
totaling $533,000.
Liquidity and Capital Resources
The Company's cash flows from operating activities totaled
$1,866,000, $3,056,000, and $368,000 for the fiscal years ended June 30, 1996,
1995, and 1994, respectively. The decrease in cash flows from operations between
fiscal 1996 and 1995 resulted mainly from a buildup of inventories from less
than optimum levels in the prior year. The significant improvement in cash flows
from operations between fiscal 1995 and 1994 was due mainly to the
discontinuance of Hupp operations and the Acquisition.
J&L completed the installation of a new reheat furnace which
was placed into service on July 26, 1996. The final cost of the project is
estimated at approximately $8.5 million of which $6.7 million has been expended
through June 30, 1996. This project has been financed through June 30, 1996 from
borrowings of $2 million under the senior lender capital expenditure facility
and from excess availability which existed under its revolving credit facility
also with the senior lender. Subsequent to June 30, 1996, additional funding for
the project includes $1.0 million of borrowings under the senior lender capital
expenditure facility, and loans from state and county sources totaling
approximately $1,350,000 which have been approved and are expected to close by
October 31, 1996.
The successful operation of the new reheat furnace is expected
to yield significant improvement in throughput and yield performance. As with
any startup to a significant segment of a production facility, a ramp-up period
is anticipated whereby realization of the equipment's full potential will not
occur immediately. Management expects that this initial start-up phase could
last through the second quarter of fiscal 1997.
The Company's cash flows from financing and investing
activities for fiscal 1996 included the financing of capital spending in the
amount of approximately $9.6 million, of which the reheat furnace described
above, as well as an annealing furnace for Brighton totaling $800,000, comprised
the majority of this investment. In both instances, the replaced furnaces were
outdated technologically and were experiencing greater levels of maintenance and
downtime in recent years. Management believes that productivity will be
significantly improved as a result of these equipment upgrades. The Company's
cash flows from financing and investing activities for fiscal 1995 were
comprised almost exclusively of sources and uses of cash relating to the
Acquisition. See the Company's Consolidated Statements of Cash Flows included in
the Consolidated Financial Statements.
Cash and cash equivalents totaled $174,000, $972,000, and
$294,000 as of June 30, 1996, 1995, and 1994, respectively. Although the
Company's total equity represents a deficit of approximately $8,984,000, this
position is due largely to the poor performance of previously discontinued
operations and the basis adjustment for the leveraged Acquisition during fiscal
1995 (refer to the Statement of Changes in Shareholder's Equity (Deficiency) in
the Consolidated Financial Statements). Management expects that cash flows from
operations will continue to satisfy the Company's requirements to fund operating
expenses, debt service and capital expenditures in the future.
Readers should be aware that the foregoing paragraphs
contained forward looking statements regarding management's expectations for the
reheat furnace and cash flows, which forward looking statements may not be
realized. Several important factors could cause the Company's actual results of
operations to differ materially from those expressed in the foregoing forward
looking statements, including: a significant downturn in manufactured housing
construction and sales may occur, the reheat furnace specifications may not be
realized, or billet costs may increase and the Company may not have the ability
to pass such costs to customers.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA
INCLUDED IN ITEM 14
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
On May 6, 1996, the Board of Directors of CPT approved Deloitte &
Touche LLP as its independent accountant for the year ending June 30, 1996, and,
simultaneously, management of CPT informed the former accountant, Grant Thornton
LLP, that it had been dismissed. CPT did not have any disagreements with Grant
Thornton regarding any matter of accounting principles or practices, financial
statement disclosure or auditing scope or procedure. Refer to Form 8-K dated May
6, 1996, as filed by the registrant with the Securities Exchange Commission on
May 10, 1996 and Exhibit 1 thereto, incorporated herein by reference.
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The names, ages and positions of the directors and executive
officers of CPT as of August 31, 1996 are as follows:
Name Age Positions
Richard L. Kramer 47 Chairman of the Board, Director and Secretary of CPT
William L. Remley 45 President, Treasurer and Director of CPT
John D. Mazzuto 46 Director of CPT
Richard C. Hoffman 48 Assistant Secretary
Mr. Kramer has served as Chairman of the Board, a Director, and Secretary of the
Company since January 3, 1992. For more than the past five years, Mr. Kramer has
served as Chairman of the Board, a Director, and as a director of Republic
Properties Corporation, a private real estate development firm. Since 1988, Mr.
Kramer served as Chairman of the Board of Sunderland Industrial Holdings
Corporation, a private holding company in various industrial manufacturing
businesses. Mr. Kramer is also Chairman of the Board of Weldotron Corporation,
Chairman of the Board of Texfi Industries, Inc., and Chairman of the Board, a
Director and Secretary for Mentmore Holdings Corporation ("Mentmore"). Mr.
Kramer is also Chairman of the Board, a Director, Vice President and Secretary
for Trinity Investment Corp. ("Trinity"), Ascott Wing, Inc. ("Ascott Wing") and
Halton House Limited.
Mr. Remley has served as a Director, President and Treasurer
of CPT since January 3, 1992. Since 1988, Mr. Remley has served as Vice Chairman
of Sunderland Industrial Holdings Corporation, a private holding company in
various industrial manufacturing businesses. Mr. Remley is also Vice Chairman
and Chief Executive Officer of Weldotron Corporation; Vice Chairman, Chief
Executive Officer and President and a Director of Texfi Industries, Inc.; a
Director, President and Treasurer of Trinity; a Director, President and
Treasurer of Ascott Wing; a Trustee for The A.J. 1989 Trust and a Director,
President and Treasurer of Mentmore.
Mr. Mazzuto has served as a Director of CPT since January 1993. Mr. Mazzuto is
Chairman of Greystone Partners which provides investment banking services
focused on clients' capital structuring or restructuring needs. Before becoming
Chairman of Greystone, Mr. Mazzuto was President and Chief Executive Officer of
North American operations of Asian Oceanic Group ("AOG"). Prior to joining AOG,
Mr. Mazzuto was a Managing Director of Corporate Finance at Chemical Bank. Mr.
Mazzuto also serves as Chairman of Communications Group, Inc. Mr. Mazzuto is a
Director of Weldotron Corporation and Texfi Industries, Inc. Mr. Hoffman is a
licensed attorney who has served as General Counsel of the Company since
January, 1995 and Assistant Secretary since July, 1995. He is also President of
InterUrban Management, Inc., a real estate brokerage and management company in
Dallas, Texas. He is currently practices law as Richard C. Hoffman P.C. in
Greenwich, Connecticut.
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION
The following table sets forth the compensation paid to Mr. William L. Remley
for the fiscal years 1994, 1995 and 1996, as the only paid executive officer of
the Company.
<TABLE>
Annual Compensation
<S> <C> <C> <C> <C>
Name and Salary Bonus Other Annual
Principal Position Year ($) ($) Compensation
(a) (b) (c) (d) (e)
1996 -0- -0- $12,000
William L. Remley 1995 $25,000(1) -0- -0-
President 1994 $50,000 -0- -0-
</TABLE>
In fiscal 1995, no director received fees for the attendance at Company
Board meetings. However, beginning July 1995, all directors of the Company
received director's fees totaling of $12,000.00 annually.
(1) Reflects the period from July 1, 1994 through December 31, 1994.
Mr. Remley ceased receiving compensation thereafter.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Norwest Bank Minnesota, N.A. ("Norwest") serves as escrow agent of
certain shares of the Company's Common Stock for the benefit of holders of
"Allowed Claims" and for the benefit of stockholders of CPT Corporation,
pursuant to the Reorganization Plan. As escrow agent, Norwest held approximately
378,571 shares of Common Stock for the benefit of such persons as of August 30,
1996.
The following table sets forth certain information, as of August 30,
1996, with respect to the beneficial ownership of Common Stock by each person
who is known by the Company to own beneficially more than 5% of outstanding
shares of CPT's Common Stock, by each director of CPT, and by all officers and
directors as a group:
<TABLE>
Number of Shares Percent of
Beneficially Common
<S> <C> <C>
Name Owned (1) Stock
---- --------- ----------
Richard L. Kramer -0- -0-
William L. Remley -0- -0-
John D. Mazzuto -0- -0-
Ascott Wing, Inc. (2) 604,586 17.22%
Trinity Investment Corp. (3)(4) 2,072,500 59.04%
Halton House Limited (2)(4)(5) 2,677,086 76.27%
The Halton Declaration of Trust (2)(4)(5) 2,677,086 76.27%
Bahamas Protectors Ltd., a Bahamian
corporation (2)(4)(5) 2,677,086 76.27%
All Directors and Officers as a group 2,677,086 76.27%
(4 persons including those named above) (4)(5)(6)
</TABLE>
(1) The Persons named in the table have sole voting and investment
power with respect to all shares of Common Stock shown as beneficially owned by
each of them, subject to community property laws, where applicable, and the
information contained in other footnotes to the table.
(2) The principal offices of Ascott Wing, are at 1430 Broadway, 13th
Floor, New York, New York 10018. Halton House Limited, owns all of the
outstanding stock of Ascott. Halton House Limited's principal offices are
located at c/o Coutts and Company (Bahamas) LTD., P.O. Box N7788, West Bay
Street, Nassau, Bahamas. William L. Remley and Richard L. Kramer are directors
and executive officers of Halton House Limited. The Halton Declaration of Trust
("Halton Trust") whose principal address is c/o Coutts and Company (Bahamas)
LTD, P.O. Box N7788, West Bay Street, Nassau, Bahamas, is the majority owner of
Halton House Limited. All powers with respect to investment voting securities
beneficially owned by Halton Trust are exercisable by Bahamas Protectors Ltd., a
Bahamian corporation, protector under the constituent documents of Halton Trust.
Bahamas Protectors Ltd.'s business address is c/o Private Trust Corp., Charlotte
House, Charlotte Street, Nassau, Bahamas.
(3) The principal offices of Trinity are at 1430 Broadway, 13th Floor,
New York, New York 10018. Halton House Limited owns all of the outstanding stock
of Trinity (see Note 2 above). William L. Remley and Richard L. Kramer are
directors and executive officers of Trinity.
(4) Includes 2,000,000 shares that could be acquired upon
exercise of a Warrant at an exercise price of $1.00 per share.
(5) Includes shares owned by Ascott and shares subject to a
Warrant owned by Trinity (see Note 4 above).
(6) Includes shares over which Mr. Remley and Mr. Kramer may be
deemed to share voting and investment power (seeNotes 2 and 3 above).
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On February 1, 1996, Trinity and CPT entered into an unsecured line of
credit agreement totaling $1 million and bearing interest at 13% payable with
interest only semi-annually beginning April 1, 1996, until due in December,
2002. This line of credit was established to satisfy debt service at the holding
company level. In conjunction with the execution of the line of credit, 300,000
warrants for CPT stock have been issued to Trinity for a period of ten years
with an exercise price of $4.00 per warrant.
On April 1, 1995, CPT entered into a Credit Agreement and Security
Agreement with Trinity wherein Trinity agreed to loan CPT the principal amount
of $6,730,000 for the purpose of making a required $5,000,000 equity capital
infusion to JLH in order to consummate the Acquisition of the assets of JLS and
TCI, to retire the existing Variable Rate Debenture of CPT to Trinity in the
amount of $900,000 dated February 5, 1993 and to satisfy and retire certain
other short-term obligations of CPT plus accrued interest. Included within the
Credit Agreement was the following:
1. A fixed rate Debenture of CPT dated April 1, 1995 under which CPT
promises to pay Trinity, or any subsequent holder of the Debenture, the
principal sum of $6,730,000, plus accrued and unpaid interest at the
fixed rate of 13% per annum and costs provided therein, on or before
December 15, 2002.
2. A Warrant Purchase Agreement dated April 1, 1995 by and between CPT
and Trinity, in which (i) CPT granted to Trinity Warrants to purchase
up to 2,000,000 shares of the common stock of CPT at an exercise price
of $ 1.00 per share, (ii) CPT made certain representations to Trinity
regarding its capitalization, the shares of Common Stock outstanding,
the authorization of the Warrant and the continued truth and accuracy
of representations of CPT in the Credit Agreement and Security
Agreement, (iii) Trinity made certain representations to CPT, including
representations regarding the status of the Warrant (and the underlying
shares of Common Stock, if issued) as "restricted securities" due to
the anticipated issuance of such securities pursuant to exemptions from
registration under the Securities Act of 1933, as amended, and (iv) CPT
granted Trinity certain rights to receive financial information and
reports of the Company and to inspect the assets, properties, books and
records of the Company and its subsidiaries.
3. Security Agreement dated April 1, 1995, between CPT and Trinity in
which CPT pledged all of its shares of JLH to Trinity as collateral for
the performance of its obligations under the new Credit Agreement.
Trinity has its principal business and executive offices at 1430
Broadway, 13th Floor, New York, New York 10018. Trinity is engaged in the
investment business. Richard L. Kramer is Chairman of the Board, a Director,
Vice President and Secretary of Trinity, and William L. Remley is a Director,
President and Treasurer of Trinity.
Halton House Limited, a Bahamian Corporation, owns all of the
outstanding capital stock of Trinity and Ascott Wing. Halton House Limited is a
holding company with interests in investment and industrial/
manufacturing/technology companies. Richard L. Kramer is Chairman of the Board,
a Director, Vice President and Secretary of Halton House Limited, and William L.
Remley is a Director, President and Treasurer of Halton House Limited. Halton
House Limited is owned beneficially by The Halton Declaration of Trust which is
a trust created under the laws of the Bahamas. As of August 31, 1996, all powers
with respect to investment or voting securities beneficially owned by The Halton
Declaration of Trust are currently exercisable by Bahamas Protectors Ltd., a
Bahamian corporation, protector under the constituent documents of The Halton
Declaration of Trust.
Ascott Wing has its principal business and executive offices at 1430
Broadway, 13th Floor, New York, New York 10018. Ascott Wing is engaged in the
investment business. Richard L. Kramer is Chairman of the Board, a Director,
Vice President and Secretary of Ascott Wing, and William L. Remley is a
Director, President and Treasurer of Ascott Wing. The preferred stock redemption
obligation to Ascott Wing including accrued dividends through March 15, 1995,
totaling $475,204 was converted to a deferred purchase money note bearing
interest at a rate of 11% and payable interest only annually beginning March 15,
1996 and due December, 2002.
A management agreement exists between CPT and J&L whereby CPT or its
designated affiliate provides executive management advisory services to J&L. The
contract term of the agreement is for a period of six years through March, 2001
and is subject to being automatically renewed annually thereafter, unless
terminated by either party to the agreement. Annual compensation to CPT under
this agreement totals $600,000 which includes out-of-pocket expenses incurred by
CPT of up to $150,000 annually. CPT exercised its right under the agreement to
designate Mentmore as the management advisory service provider and as a result
has assigned all fees to which CPT is entitled under this agreement to Mentmore.
Management fee expense paid to Mentmore for the years ended June 30, 1996 and
1995 under this agreement totaled $600,000 and $150,000, respectively. Richard
L. Kramer is Chairman of the Board, a Director and Secretary of Mentmore, and
William L. Remley is a Director, President and Treasurer of Mentmore.
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
A. Documents to be filed as part of this Report.
1. The following financial statements of the Company and the report of
its independent auditors are filed herewith:
Page of this Report
Independent Auditors' Report of Deloitte & Touche LLP 22
Independent Auditors' Report of Grant Thornton LLP 23
Financial Statements
Consolidated Balance Sheets as of June 30, 1996 and 1995 24
Consolidated Statements of Operations for the Years Ended
June 30, 1996, 1995, 1994 25
Consolidated Statements of Changes in Shareholders' Equity
(Deficiency)for the Years Ended June 30, 1996, 1995, 1994 26
Consolidated Statements of Cash Flows for the Years Ended
June 30, 1996, 1995, 1994 27
Notes to Consolidated Financial Statements 29
2. The following financial statement schedules of the Company and the
related reports of independent auditors are filed herewith:
Page of this Report
Independent Auditors' Report of Deloitte & Touche LLP on Schedules 44
Independent Auditors' Report of Grant Thornton LLP on Schedules 45
Financial Statement Schedules
I - Condensed Financial Information of Registrant 46
II - Valuation and Qualifying Accounts 47
Exhibit 11 - Computation of Earnings Per Share 48
Exhibit 27 - Financial Data Schedule 49
Schedules other than those listed above are omitted because of the absence of
the conditions under which they are required or because the information required
is included in the financial statements or the notes thereto.
B. Reports on Form 8-K
Form 8-K filed by the Company on May 10, 1996 - Change in
Accountants Form 8-K filed by the Company on May 30, 1996 -
Second Amendment to Credit Agreements
with Senior and Subordinated Lenders
to Cure Financial Covenant Violations
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) 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.
Dated: September 30, 1996 CPT HOLDINGS. INC.
By: /s/William L. Remley
William L. Remley, President
Pursuant to the requirements of the Securities Exchange Act of 1934,
this Report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Signature Title Date
/s/ Richard L. Kramer Chairman of the Board, September 30, 1996
- - ---------------------
Richard L. Kramer Secretary and Director
/s/ William L. Remley President, Treasurer September 30, 1996
William L. Remley and Director (Principal
Executive, Accounting and
Financial Officer)
/s/ John D. Mazzuto Director September 30, 1996
- - -------------------
John D. Mazzuto
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors
CPT Holdings, Inc. and Subsidiaries
We have audited the accompanying consolidated balance sheet of CPT Holdings,
Inc. and Subsidiaries as of June 30, 1996, and the related consolidated
statements of operations, changes in shareholders' equity (deficiency) and cash
flows for the year then ended. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, such consolidated financial statements referred to above present
fairly, in all material respects, the financial position of CPT Holdings, Inc.
and Subsidiaries as of June 30, 1996 and the results of their operations and
their cash flows for the year then ended in conformity with generally accepted
accounting principles.
DELOITTE & TOUCHE LLP
Pittsburgh, Pennsylvania
September 5, 1996
<PAGE>
Report of Independent Certified Public Accountants
Board of Directors
CPT Holdings, Inc. and Subsidiaries
We have audited the accompanying consolidated balance sheet of CPT
Holdings, Inc. and Subsidiaries as of June 30, 1995, and the related
consolidated statements of operations, changes in shareholders' equity
(deficiency) and cash flows for each of the two years in the period ended June
30, 1995. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of CPT
Holdings, Inc. and Subsidiaries as of June 30, 1995 and the consolidated results
of their operations and their consolidated cash flows for each of the two years
in the period ended June 30, 1995 in conformity with generally accepted
accounting principles.
GRANT THORNTON LLP
Pittsburgh, Pennsylvania
September 26, 1995,
except for Note 7, to which the date is October 12, 1995.
<PAGE>
CPT Holdings, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
June 30,
ASSETS
<TABLE>
(in thousands of dollars)
<S> <C> <C>
1996 1995
Current assets
Cash and cash equivalents $ 174 $ 972
Receivables, net 8,506 10,770
Inventories 10,813 8,009
Other current assets 130 200
-------- --------
Total current assets 19,623 19,951
Property, plant and equipment, net 44,500 36,860
Goodwill, net of accumulated amortization of $424 and $330,
respectively 1,460 1,554
Deferred financing costs, net of accumulated
amortization of $525 and $81, respectively 2,374 2,218
Other assets 627 620
-------- --------
Total assets $ 68,584 $ 61,203
====== ======
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities
Current portion of long-term obligations $2,776 $ 2,116
Accounts payable 8,881 10,368
Accrued liabilities 4,052 3,257
Accrued income taxes - 300
----------- -------
Total current liabilities 15,709 16,041
------ ------
Long-term obligations, net of current portion 58,888 52,339
Other long-term obligations 400 -
Commitments and contingencies
Minority interest in consolidated subsidiaries 2,571 2,494
Common shareholders' deficiency
Common stock - authorized 30,000,000 shares of $0.05 par value each;
1,510,084 shares issued and
outstanding 76 76
Additional paid-in capital 5,737 5,361
Accumulated deficit (14,797) (15,108)
-------- ------
Total common shareholders' deficiency (8,984) (9,671)
--------- ------
Total liabilities and common shareholders'
deficiency $ 68,584 $ 61,203
======= ==========
The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE>
CPT Holdings, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS
Years ended June 30,
<TABLE>
(in thousands of dollars, except share amounts)
1996 1995 1994
<S> <C> <C> <C>
Net Sales $ 101,011 $ 31,208 $ 5,785
Costs of sales 88,016 25,929 4,238
----------------------------------------------------------
Gross profit 12,995 5,279 1,547
Selling, general and administrative 7,075 3,169 1,466
----------------------------------------------------------
Operating income 5,920 2,110 81
Other (income) expense:
Interest expense - net 7,193 2,070 18
Minority interest 77 26 (169)
Other (income) expense, net 659 (7) -
------------------------------------------------------
Income (loss) from continuing
operations before income taxes (2,009) 21 232
Income tax benefit 100 389 -
------------------------------------------------------
Income (loss) from continuing operations (1,909) 410 232
Discontinued operations
Loss from operations of discontinued subsidiaries - (553) (2,201)
Net gain (loss) on disposal of discontinued
subsidiaries 2,220 2,129 (6,371)
----------------------------------------------------------
Income (loss) before extraordinary item 311 1,986 (8,340)
Extraordinary item
Gain from extinguishment of debt of
discontinued operation 3,527 -
Net income (loss) $ 311 $ 5,513 $ (8,340)
============= =============== ===============
Primary earnings (loss) per share
From continuing operations $ (.58) $ .27 $ .15
From discontinued operations .69 1.04 (5.67)
From extraordinary item - 2.34 -
-----------------------------------------------------
Total $ .11 $ 3.65 $ (5.52)
=========== ============== ===============
Weighted average common shares outstanding 3,208,067 1,510,084 1,510,084
============= =============== ==============
Fully-diluted earnings (loss) per share:
From continuing operations $ (.58) $ .23 $ .15
From discontinued operations .69 .81 (5.67)
From extraordinary item - 1.82 -
-----------------------------------------------------
Total $ .11 $ 2.86 $ (5.52)
=========== ============== ===============
Fully-diluted common and common equivalent
shares 3,208,067 1,934,580 1,510,084
========== ============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
CPT Holdings, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIENCY)
Years ended June 30, 1996, 1995, 1994
<TABLE>
(in thousands of dollars, except share amounts)
Additional
Common Stock Paid-In Accumulated
Shares Amount Capital Deficit
<S> <C> <C> <C> <C>
Balance at June 30, 1993 1,510,084 $ 76 $ 4,368 $ (2,576)
Net loss - - - (8,340)
----------------------------------- ---------------------------
Balance at June 30, 1994 1,510,084 76 4,368 (10,916)
Basis Adjustment for
Leveraged Acquisition
(See Note 1) - - - (9,705)
Fair value of warrants issued with
Amended Credit Agreement - - 840 -
Fair value of warrants issued with
Subordinated Term Note - - 153 -
Net income - - - 5,513
-------------- -------------- ------------- --------------
Balance at June 30, 1995 1,510,084 76 5,361 (15,108)
Fair value of warrants issued with
unsecured line of credit agreement - - 376 -
Net income - - - 311
-------------- -------------- ------------- --------------
Balance at June 30, 1996 1,510,084 $ 76 $ 5,737 $ (14,797)
========= ========== ========== ============
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
CPT Holdings, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended June 30,
<TABLE>
(in thousands of dollars)
1996 1995 1994
Cash flows from operating activities:
Net income (loss)
<S> <C> <C> <C>
From continuing operations $ (1,909) $ 410 $ 232
From discontinued operations 2,220 1,576 (8,572)
From extraordinary item - 3,527 -
------------ ----------- ----------
311 5,513 (8,340)
Adjustments to reconcile net income (loss) to net cash from operating
activities:
Minority interest in earnings of subsidiaries 77 26 (169)
Loss (gain) on discontinued operations (2,220) (2,129) 3,322
Gain on extinguishment of debt - (3,527) -
Depreciation and amortization 3,333 900 478
Deferred taxes - (710) -
Provision for restructuring, reorganization
and other unusual items - - 106
Write-off of reorganization value in excess
of amounts allocable to identifiable assets - - 960
Changes in assets and liabilities, net of divestiture
effects of Hupp and effects from purchase and
contribution of the assets of J&L and Brighton:
Decrease in accounts receivable 2,264 540 591
Decrease (increase) in inventory (2,804) 1,935 870
Decrease (increase) in other current assets 70 (128) 36
Increase (decrease) in accounts payable
and accrued liabilities 881 4,237 (386)
Increase (decrease) in accrued loss
on sale of assets - (3,049) 3,049
Decrease in other current liabilities (46) (552) (149)
------------- ------------ -----------
Net cash provided by operating activities 1,866 3,056 368
------------- ------------ -----------
Cash flows from investing activities:
Proceeds used to purchase the assets of
J&L Structural, Inc. - (54,659) -
Proceeds from the sale of assets of Hupp - 1,934 -
Increase in other non-current assets (72) -
Capital expenditures (9,973) (751) (146)
------------- ------------ -----------
Net cash used in investing activities (9,973) (53,548) (146)
------------- ------------ -----------
</TABLE>
(CONTINUED)
<PAGE>
CPT Holdings, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
Years ended June 30,
<TABLE>
(in thousands of dollars)
1996 1995 1994
Cash flows from financing activities:
<S> <C> <C> <C>
Proceeds from issuance of long-term debt $ 2,000 $ 50,000 $ 649
Deferred financing costs - (2,277) -
Sale of common stock of subsidiary - 2,469 -
Net borrowings under Revolving Credit Facility 6,659 3,656 -
Borrowings under unsecured line of credit 966 - -
Payments on long-term debt (2,116) (2,678) (641)
Other (200) - -
-----------------------------------------------------
Net cash provided by financing
activities 7,309 51,170 8
------------ ------------ -----------
Net increase (decrease) in cash and cash equivalents (798) 678 230
Cash and cash equivalents:
Beginning of year 972 294 64
----------------- ------------- ------------
End of year $ 174 $ 972 $ 294
============ ============ ===========
Supplemental Data - Cash paid during the period for:
Interest, net of capitalized amounts $ 7,565 $ 650 $ 379
============ ============ ===========
Income taxes $ 169 $ 21 $ -
============= =========== ==========
</TABLE>
Information regarding non-cash investing and financing activities:
Reduction in equity and property, plant & equipment totaling $9,705,000 due to
the basis adjustment for the leveraged Acquisition during fiscal 1995.
The accompanying notes are an integral part of these statements
<PAGE>
NOTE 1 - BASIS OF PRESENTATION
Consolidated Accounts
The accompanying consolidated financial statements include the accounts of
CPT Holdings, Inc., a Minnesota corporation and its direct and indirect
majority-owned subsidiaries (the "Company"), J&L Structural, Inc. ("J&L"),
a Delaware Corporation, J&L Holdings Corp. ("JLH"), a Delaware Corporation,
Continuous Caster Corporation ("CCC"), a Delaware Corporation and H.
Industries, Inc. ("Hupp.") All material intercompany transactions have been
eliminated in consolidation. Certain reclassifications have been made to
prior year amounts to conform to the 1996 presentation.
Acquisitions
On April 6, 1995, J&L, a newly incorporated, indirect, majority-owned
subsidiary of the Company, acquired substantially all of the assets of
J&L Structural, Inc. ("JLS") and Trailer Components, Inc. ("TCI"),
Pennsylvania corporations based in Aliquippa, Pennsylvania, for $50
Million plus the assumption of certain liabilities (the "Acquisition").
The Acquisition was accounted for as a purchase effective April 6,
1995, and accordingly, at such date the Company recorded the assets and
liabilities assumed at their estimated fair values, adjusted for the
impact of the continuing residual interest of predecessor owners.
Consequently, the accompanying financial statements for fiscal 1995
reflect the results of operations and cash flows of J&L from the period
from the Acquisition (April 6, 1995) to June 30, 1995. Because the
Acquisition qualified as a highly leveraged transaction and a portion
of the predecessor ownership will remain as indirect stockholders of
J&L, application of the guidance in Emerging Issues Task Force (EITF)
Issue No. 88-16 - "Basis in Leveraged Buyout Transactions" resulted in
a reduction of property, plant and equipment and common shareholders'
equity in the amount of $9,705,000.
As part of the Acquisition, the assets of Brighton Electric Steel
Casting Company ("BESCC"), an existing subsidiary of CPT and the direct
parent of J&L, were contributed to J&L and as of the date of the
Acquisition operate as a distinct division of J&L ("Brighton"). BESCC
simultaneously changed its name to J&L Holdings Corp. ("JLH"). Prior to
the closing of the Acquisition, BESCC redeemed its preferred stock from
the holder thereof in consideration for the issuance by the Company of
a Deferred Purchase Money Note in the approximate amount of $475,000,
said amount equal to the stated value for the preferred stock plus the
accrued dividends thereon, bearing interest at 11% and due December 15,
2002.
The purchase price and related expenses were funded as follows: (1) a
$25 Million 6-year Senior Term Loan bearing interest at prime plus 2%
and secured by a first lien on the assets of J&L; (2) $23 Million of
Subordinated Term Notes, each bearing interest at 13%, secured by a
junior lien on the assets of J&L and including a grant of warrants
equal in the aggregate to 15.3% of the common stock ownership of J&L
(on a fully-diluted basis), exercisable at $.01 per share and subject
to certain exercise restrictions; (3) a $15 Million Revolving Line of
Credit bearing interest at prime plus 1.5% having an initial term of 5
years followed by a 1 year right of renewal at the lender's discretion;
(4) a capital contribution of approximately $2.5 Million by the
shareholders of JLS and TCI in return for the issuance of common
<PAGE>
NOTE 1 - BASIS OF PRESENTATION - (CONTINUED)
stock representing 19.8% of JLH, which was in turn contributed to J&L; and
(5) a $5 Million capital contribution from the Company to JLH which was, in
turn, contributed by JLH to J&L.
Also as part of the Acquisition, J&L distributed as a dividend to JLH
the right (which J&L acquired from JLS) to acquire a 38-acre parcel of
undeveloped land adjacent to the JLS rolling mill in Aliquippa,
Pennsylvania. JLH, in turn, contributed the right to acquire the
38-acre parcel to CCC in exchange for all of the common stock of CCC.
Shortly thereafter, CCC acquired title to the 38-acre parcel, using
funds which JLS had placed in escrow prior to the Acquisition.
Discontinued Operations and Extraordinary Item
On October 27, 1994, Hupp, its senior lender and the Company entered
into a secured party asset sale agreement under which the senior lender
and the Company sold to a third party, for approximately $1,780,000,
their interests in substantially all of Hupp's assets. Pursuant to a
sharing arrangement, the Company received $75,000 from the senior
lender from these proceeds. Additionally, the bank and the Company
agreed separately upon a sharing arrangement in all payments received
on Hupp's $213,000 note receivable in which both held perfected
security interests. Under the arrangement, the Company received a
maximum of $75,000 and all remaining amounts were retained by the
senior lender. Subsequent to the secured party sale, Hupp's historical
operations ended, and Hupp was left with virtually no assets from which
to pay its remaining unsecured obligations, including approximately
$1,275,000 to the senior lender. This transaction was estimated to
result in a loss totaling $3,049,000 which was recorded as an accrued
loss on sale of assets at June 30, 1994. The actual loss incurred as a
result of the asset sale totaled approximately $920,000. The difference
between the actual and estimated loss was due to changes in estimates
with regard to certain contingencies and changes in financial position
with regard to certain working capital items.
As a result of the submission of a final decree on July 24, 1995, which
closed Hupp's Chapter 11 case filed prior to the Company's acquisition
of Hupp stock in February 1993, certain outstanding notes payable,
unsecured creditor obligations and administrative claims of Hupp
totaling approximately $3,527,000 have been recognized as an
extraordinary gain on extinguishment of debt for the fiscal year ended
June 30, 1995. Additionally, during fiscal 1996, the remaining
liabilities of Hupp were written off, resulting in $2,220,000 of income
from discontinued operations in the year ended June 30, 1996. There are
no remaining assets or liabilities of Hupp existing on its balance
sheet as of June 30, 1996.
<PAGE>
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. The Business
The Company's operations include two distinct business
segments within its single indirect operating subsidiary, J&L:
J&L Structural and Brighton. J&L Structural manufactures and
fabricates lightweight structural steel shapes which are
distributed principally to the manufactured housing, tractor
trailer construction and ship building industries. Brighton
designs, manufactures and sells steel piercer points which
represent disposable tooling used in the production of
seamless steel tubes used in the petrochemical industry. CCC
is a majority-owned, indirect subsidiary which holds title to
38 acres of undeveloped land adjacent to J&L in Aliquippa,
Pennsylvania.
b. Inventories
The Company's inventories are valued at the lower of cost
(first-in first-out basis) or market value.
c. Cash Equivalents
For purposes of cash flows reporting, all investments
purchased with maturities of 90 days or less are treated as
cash equivalents.
d. Property and Depreciation
Property and equipment are stated at cost. Expenditures for
additions, renewals and improvements of property and equipment
are capitalized, and expenditures for repairs and maintenance
and gains or losses on disposals are included in results of
operations. Depreciation was computed using primarily the
straight-line method over the following estimated lives:
Building 30 years
Machinery and equipment 7 - 20 years
Furniture and fixtures 5 - 7 years
Office equipment 5 years
Roll inventory 3 years
e. Goodwill
The goodwill associated with acquisitions is amortized on a
straight-line basis over a period of 20 years.
On an ongoing basis, management reviews the valuation and
amortization of goodwill. As part of the review, the Company
estimates the value and future benefits of the net income
generated by the related subsidiaries to determine that no
impairment has occurred.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
f. Deferred Financing Costs
Amortization of deferred financing costs is charged to
interest expense on a periodic basis using a straight-line
method over the average term of the Company's senior and
subordinated loan facilities with independent lenders.
g. Revenue Recognition
Revenue is recognized when product is shipped to dealers,
distributors and direct customers.
h. Research and Development
All product development costs are expensed as incurred.
Product development costs of $268,000 were included in
discontinued operations in fiscal 1994.
i. Insurance
J&L provides health insurance and workers' compensation
coverages to its employees under separate self-insurance
programs that include certain stop-loss coverages. Insurance
expense is recognized based on estimated losses incurred under
the program. Components of insurance expense include paid
claims, incurred but not paid claims and estimated incurred
but not reported claims.
j. Income Taxes
The Company accounts for income taxes utilizing the asset and
liability method as prescribed by Statement of Financial
Accounting Standards No. 109 - Accounting for Income Taxes.
Deferred income taxes are recognized for the tax consequences
of temporary differences between the financial statement
carrying amounts and the tax bases of existing assets and
liabilities by applying enacted statutory tax rates applicable
to future years. Deferred tax assets are reduced by a
valuation allowance if it is more likely than not that such
benefits will not be realized, based upon available evidence.
k. Earnings Per Share
The computation of primary earnings per share does not
include certain outstanding stock warrants as common stock
equivalents in the circumstance that the average stock price
for the period is below the warrant exercise price making the
warrants antidilutive.
i. Management Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those
estimates.
NOTE 3 - ACCOUNTS RECEIVABLE
<TABLE>
Accounts receivable consisted of the following at June 30:
(in thousands of dollars)
1996 1995
<S> <C> <C>
Trade receivables $ 8,467 $ 10,593
Other 346 505
---------- ----------
8,813 11,098
Less allowance for doubtful accounts 206 244
Less allowance for discounts and returns 101 84
---------- ----------
Accounts receivable, net $ 8,506 $ 10,770
========== ==========
NOTE 4 - INVENTORIES
Inventories consisted of the following at June 30:
(in thousands of dollars)
1996 1995
Raw materials $ 1,971 $ 2,427
Finished goods 8,842 5,582
---------- ----------
Total $ 10,813 $ 8,009
========== ==========
</TABLE>
<PAGE>
NOTE 5 - PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consisted of the following at June 30:
<TABLE>
(in thousands of dollars)
1996 1995
<S> <C> <C>
Land and land improvements $ 291 $ 267
Building 1,082 1,051
Machinery and equipment 36,599 35,375
Furniture and fixtures 350 326
Office equipment 302 192
Roll inventory 802 178
Construction-in-process 8,503 180
------------ ----------
47,929 37,569
Less accumulated depreciation 3,429 709
------------ ----------
Total $ 44,500 $ 36,860
=========== ==========
</TABLE>
Included within construction-in-process as of June 30, 1996 is
approximately $694,000 of costs incurred by J&L related to the possible
construction of a caster and melt shop, which would produce billets to be
processed by J&L. J&L currently buys billets for its operations from
third party vendors. While a final decision whether or not to construct a
caster and melt shop has not been made, J&L and the Company believe this
is the probable course of action.
NOTE 6 - ACCRUED LIABILITIES
<TABLE>
Accrued liabilities consisted of the following at June 30:
(in thousands of dollars)
1996 1995
<S> <C> <C>
Salaries, commissions and benefits payable $ 1,741 $ 881
Interest 536 1,186
Property tax 66 42
Outstanding Hupp unsecured accrued liabilities - 485
Hupp pension contingency 424 200
Other liabilities 1,285 463
---------- ----------
Total $ 4,052 $ 3,257
=========== ==========
</TABLE>
<PAGE>
NOTE 7 - LONG-TERM OBLIGATIONS
<TABLE>
Long-term obligations consisted of the following at June 30: 1996 1995
(in thousands of dollars)
<S> <C> <C>
Senior Term Loan, $25,000,000 principal amount, interest at prime plus
2.0%, payable in monthly installments, beginning August 1, 1995, with final
payment due April 1, 2001, senior position collateralized by all the
assets, contracts, real property
and common stock of J&L. $21,884 $22,000
Revolving Loan Facility, $15,000,000 principal amount,
interest at prime plus 1.5%, payable April 1, 2000, with a one
year renewal option, senior position collateralized by all the assets,
contracts, and real property and common stock of J&L. Borrowings
are based on accounts receivable trade amounts and inventory values. 9,880 3,229
Subordinated Term Notes, $23,000,000 principal amount, interest at the
fixed rate of 13%, payable interest only quarterly beginning June 30, 1995
through March 31, 2002 and then quarterly principal payments of $1,500,000
plus interest until due in June, 2005, subordinated position to the senior
debt with respect to collateralization by all the assets, contracts, real
property and common stock of J&L. The Notes have been discounted $153,000
at the date of issuance for financial statement reporting purposes as a
result of the fair value
attributed to their related warrants (see Note 1). 23,000 23,000
Fixed rate 13% debenture agreement with a related investment company,
$6,730,000 principal amount, payable semi-annually interest only beginning
October 1, 1995 and due December 2002, secured by the Company's stock held
in JLH. The debenture has been discounted $840,000 at the date of issuance
for financial statement reporting purposes as a result of the fair value
attributed to the
related warrants (see below). 6,730 6,730
Deferred purchase money note payable to a related holding company, interest
fixed at 11%, payable annually interest only
beginning March 15, 1996 and due December 2002. 475 475
Unsecured line of credit to $1,000,000 with a related investment company,
bearing interest at 13% and payable with interest only semi-annually
beginning April 1, 1996 until due in March, 2002. The line of credit has
been discounted $376,000 at the date of issuance for financial statement
reporting purposes as a result of
the fair value attributed to the related warrants (see below). 966 --
------- -----------
<PAGE>
NOTE 7 - LONG-TERM OBLIGATIONS -(CONTINUED)
Total 62,935 55,434
Less-current maturities 2,776 2,116
Less-discounts on long term obligations 1,271 979
-------- ---------
Long-term obligations, net $58,888 $52,339
====== ======
</TABLE>
At June 30, 1996, the following table sets forth the scheduled
maturities of the long-term debt of the Company (in thousands of
dollars):
June 30,
1997 $ 2,776
1998 3,133
1999 3,792
2000 14,034
2001 8,030
Thereafter 29,899
$ 61,664
J&L capitalized interest on capital projects during their construction
period in fiscal 1996 totaling approximately $262,000.
Included within the $25,000,000 Senior Term Loan, above, the lender is
providing a Capital Expenditure Line of Credit in the principal amount
of $3,000,000. This facility, which bears interest at the same rate as
the Senior Term Loan, is available for a thirty-six month period and
terminates as of April 30, 1998. At June 30, 1996, $2,000,000 had been
borrowed against this facility. Any borrowings made under this Line of
Credit are payable in equal monthly installments beginning May 1, 1998
with the final payment to be made April 1, 2001.
Under the terms of the Revolving Loan, the Company used $500,000 of its
credit availability to issue a Letter of Credit. This Letter has been
issued to an insurance company collateralizing the costs of certain
insurance programs (see Note 12).
The Senior Term Loan, Revolving Loan Facility and the Subordinated Term
Notes include certain provisions which, among other things, provide
that J&L will maintain certain financial ratios, limit the amount of
annual capital expenditures, maintain a minimum tangible net worth and
limit the amount of shareholder distributions. As of June 30, 1996, J&L
was not in violation of any existing loan covenants under its amended
credit agreements with its senior and subordinated lenders.
As of March 31, 1996 and December 31, 1995, J&L was not in compliance
with its operating cash flow to total debt service ratio covenant and
its capital expenditures limitation covenant. On May 30, 1996, J&L
successfully negotiated a second amendment to the credit agreements
with its senior and subordinated lenders which adjusted the measurement
levels of certain financial covenants and cured the violations
referred to above.
<PAGE>
NOTE 7 - LONG-TERM OBLIGATIONS -(CONTINUED)
As of June 30, 1995, J&L was not in compliance with the minimum net
worth requirement of the Senior Term Loan and Subordinated Term Notes
due mainly to the application of EITF No. 88-16, the effects of which
on the Company's financial statements had not been determined at the
time of the closing of the Acquisition. The provisions of EITF No.
88-16 require that certain continuing shareholder interests be valued
at their predecessor basis rather than at fair value to the extent of
the lesser of their predecessor interest in the purchased company or
continuing interest in the acquiring company. Application of EITF No.
88-16 had the effect of reducing property, plant and equipment and
shareholder's equity; however, it had no cash impact to the financial
statements. As a result, on October 12, 1995, J&L's lenders amended the
Senior Term Loan and Subordinated Term Notes to ignore the effects of
EITF No. 88-16 in computing minimum tangible net worth effective as of
June 30, 1995.
The fair market value of J&L's fixed rate long-term debt on June 30,
1996, including current maturities, approximates its book value. The
fair market value estimate was based on a stable interest rate
environment over the period since the Acquisition and management's
assessment of the market environment for private placement mezzanine
funding. Management is not aware of any significant factors that would
alter this estimate after that date.
On February 1, 1996, the Company entered into an unsecured line of
credit agreement with Trinity Investment Corp. ("Trinity") for
$1,000,000. As part of this agreement, a stock warrant purchase
agreement was executed whereby Trinity was issued 300,000 warrants to
purchase the same number of common stock shares of the Company at an
exercise price of $4.00 per warrant for a period of ten years. These
warrants have been valued at $376,000 as of the date of issuance
utilizing the Black Scholes option pricing model as a basis for the
measurement. The value of the warrants has been recorded as an increase
in additional paid-in capital of the Company.
On April 1, 1995, the Company entered into a Credit Agreement ("Amended
Credit Agreement") with Trinity which agreed to lend an aggregate of
$6,730,000 in order to repay and satisfy the following, as well as to
fund a $5,000,000 capital contribution to JLH:
a) variable rate debenture in the original principal amount of
$900,000 together with accrued interest thereon totaling
approximately $185,000;
b) certain intercompany advances plus accrued interest totaling
approximately $270,000;
c) promissory note payable to The A.J. 1989 Trust which originated
in February 1994 in the original principal amount of $200,000
together with accrued interest thereon totaling approximately
$22,000; and
d) certain non-interest bearing intercompany advances from The A.J.
1989 Trust totaling approximately $150,000.
Additionally, as part of the Amended Credit Agreement, a stock warrant
purchase agreement was executed whereby Trinity was issued 2,000,000
warrants to purchase the same number of common stock shares of the
Company at an exercise price of $1 per warrant for a period of ten
years. These warrants have been valued at $840,000 as of the date of
issuance utilizing the Black Scholes option pricing
<PAGE>
NOTE 7 - LONG-TERM OBLIGATIONS -(CONTINUED)
model. The value of the warrants has been recorded as an increase in
additional paid-in capital of the Company.
On March 15, 1995, BESCC redeemed its preferred stock from Ascott Wing,
Inc., a related party, in consideration for the issuance by the Company
of a Deferred Purchase Money Note in the approximate amount of
$475,000, said amount equal to the stated value for the preferred stock
plus the accrued dividends thereon.
On February 8, 1993, the Company entered into a Credit Agreement (the
"Credit Agreement") with Trinity, and Trinity agreed to loan the
Company the principal amount of $900,000 for the purposes of making the
Hupp acquisition. Included within the Credit Agreement is a variable
rate debenture agreement, a warrant purchase agreement and a security
agreement. An aggregate of 302,000 warrants for the purchase of common
stock of the Company at an exercise price of $1.25 per warrant were
issued in conjunction with the Credit Agreement. These warrants were
irrevocably cancelled without consideration by Trinity in March of
1995.
NOTE 8 - INCOME TAXES
For the years ended June 30, 1996, 1995, and 1994 the provision for income
taxes consisted of the following:
<TABLE>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Federal income tax provision $ (100,230) $ 135,000 $ -
State income tax provision - 236,600 -
Deferred tax provision - (760,000) -
------------- ------------- -------------
Total $ (100,230) $ (388,400) $ -
============== ============= =============
The effective income tax rate on income from continuing operations
differs from the statutory federal income tax rate for the fiscal year
ended June 30, 1996, 1995, and 1994, as follows:
(in thousands)
1996 1995 1994
---- ---- ----
Income tax at U.S. Federal
statutory rate of 34% $ (683) $ 7 $ 79
Acquisition expenses 199
State income taxes 165
Utilization of net operating loss
carryforwards and other 583 (760) (79)
-------------- -------------- ---------------
Income tax benefit $ (100) $ (389) $ -0-
============== ============= ==============
</TABLE>
Management has calculated its net operating loss carryforward at June
30, 1996 to be approximately $73 million. Such losses can be carried
forward and expire in the tax years ending June 30, 2002 through 2011.
Temporary differences between financial statement carrying amounts and
tax bases of assets and liabilities at June 30, 1996 and 1995 were as
follows:
<TABLE>
Current deferred taxes: 1996 1995
---- ----
Assets
------
<S> <C> <C>
Accrued expenses $ 315,200 $ -
Bad debt allowance 82,400 87,000
Other - 8,000
Valuation allowance (397,600) (95,000)
--------------- -----------------
Net current deferred tax asset $ -0- $ -0-
================ ===========
Non-current deferred taxes:
Assets
Net operating loss carryforward $ 25,394,000 $ 21,000,000
Basis difference in tax assets acquired 236,900 5,000,000
Valuation allowance (25,630,900) (26,000,000)
----------- ----------
Net non-current deferred tax asset $ -0- $ -0-
================ ===========
</TABLE>
Management has recorded a valuation allowance against the deferred tax
assets due to their belief that recovery of these future deductions
against future taxable income is less than likely.
<PAGE>
NOTE 9 - CAPITAL STOCK
Preferred Stock
The preferred stock redemption obligation including accrued dividends
through March 15, 1995 totaling $475,204 was converted to a deferred
purchase money note payable to a related holding company (see Note 7).
Warrants
Warrants for 300,000 shares of Company common stock were issued to
Trinity in conjunction with the unsecured line of credit agreement
executed on February 1, 1996. The warrants are exercisable for a period
of ten years at $4.00 per warrant.
Warrants for 2,000,000 shares of Company common stock were issued to
Trinity in conjunction with the Amended Credit Agreement executed on
April 1, 1995. These warrants are exercisable for a period of ten years
at $1.00 per warrant.
Warrants for 302,000 shares of Company common stock were issued to
Trinity in conjunction with the Credit Agreement executed on February
8, 1993. These warrants were irrevocably cancelled without
consideration by Trinity in March 1995.
NOTE 10 - BENEFIT PLANS
J&L maintains a defined contribution (money purchase) plan for
substantially all employees whereby J&L makes contributions, at
designated rates, based on hours worked. All contributions required
under the plan have been funded as of June 30, 1996. Pension expense
for this plan for the year ended June 30, 1996 and for the period from
the date of Acquisition (April 6, 1995) to June 30, 1995, was
approximately $486,000 and $90,000, respectively.
J&L participates in the National Industrial Group Pension Plan (NIGPP)
which is a multi-employer defined benefit pension plan covering all
employees of Brighton's collective bargaining unit. All contributions
required under the plan have been funded as of June 30, 1996. A
withdrawal from the plan would trigger an obligation to the plan for a
portion of the unfunded benefit obligation. Pension expense for this
plan for the year ended June 30, 1996, and for the period from the date
of Acquisition (April 6, 1995) to June 30, 1995, was approximately
$40,000 and $11,000.
J&L provides a profit sharing plan for substantially all employees. The
amount available for profit sharing is based on a return on sales
formula using defined levels of pretax income. For those employees
compensated under terms of collective bargaining agreements,
distributions are calculated and paid quarterly. For other eligible
employees, calculations and distributions are made at J&L's fiscal year
end. Such amounts have been reflected as current liabilities in the
accompanying consolidated balance sheets. Profit sharing expense for
the year ended June 30, 1996 and for the period from the date
<PAGE>
NOTE 10 - BENEFIT PLANS - (CONTINUED)
of Acquisition (April 6, 1995) to June 30, 1995, was approximately
$1,238,000 and $189,000, respectively.
J&L also maintains separate 401(k) or salary deferral plans for
substantially all of its employees. Participation in these plans is
based on hours of service. Both plans provide for employee
contributions up to 20% of wages subject to certain adjustments. The
plan associated with the collective bargaining agreement provides for
discretionary company contributions. For the periods ended June 30,
1996 and 1995, no employer contributions had been made.
In connection with its collective bargaining agreement with the
Industrial and Allied Employees Union Local No. 73 (the "Union"), Hupp
participated in a multi-employer defined benefit pension plan. The plan
covered all of Hupp's employees who were members of the Union. Pension
expense approximated $99,000, and $38,000 for the fiscal years ended
June 30, 1995 and 1994, respectively. As a result of the secured party
asset sale on October 27, 1994, described in Note 1, Hupp was deemed to
have withdrawn from the plan. This withdrawal triggered a demand for
payment of withdrawal liability by the Union (see Note 12).
Hupp had a profit-sharing plan covering all employees not covered by a
collective bargaining agreement. Under this plan, eligible employees
were permitted to defer a portion of their gross compensation up to a
maximum amount as provided for by the plan or pursuant to Section
401(k) of the Internal Revenue Code. Hupp matched a portion of each
employee's contribution subject to plan limitations. Contributions by
Hupp approximated $11,000 for the year ended June 30, 1994. In
conjunction with the secured party asset sale and discontinuance of
Hupp operations, the plan has been terminated and final distributions
to participants have occurred.
NOTE 11 - LITIGATION, COMMITMENTS AND CONTINGENCIES
The Industrial and Allied Employees Union Local No. 73 Pension Plan
(the "Plan") issued a claim for payment of withdrawal liability
totaling approximately $870,000 under Section 4219 of ERISA against
Hupp, CPT and all "controlled group members", as a result of Hupp's
cessation of contributions to the Plan following the discontinuance of
Hupp's business in October 1994. On July 10, 1996, the arbitrator
sustained the Plan's claim of withdrawal liability against CPT.
Pursuant to ERISA, CPT subsequently appealed the arbitration decision
to the U.S. District Court for the Northern District of Ohio. As of
August 31, 1996, CPT has made payments aggregating approximately
$446,000 to the Plan and as of June 30, 1996, has fully accrued the
amount of the outstanding claim less payments made through the June 30,
1996 date. The Company will continue to make monthly instalment
payments to the plan of approximately $25,000 against the remaining
obligation under this claim.
The Company is a party to several lawsuits arising in the ordinary
course of its business. The Company's management and legal counsel
believe that there are valid defenses to the claims being asserted.
While the Company's ultimate liability with respect to these lawsuits
cannot be determined at this time, management believes the resolution
thereof will not have a materially adverse effect on the financial
position or results of operations of the Company.
NOTE 11 - LITIGATION, COMMITMENTS AND CONTINGENCIES - (CONTINUED)
J&L's workers compensation insurance program provides for self
insurance with stop-loss protection. Under this arrangement, for the
policy year November 1995-1996, J&L was required to issue a $500,000
letter of credit in the name of the insurance company. J&L is
financially responsible for the face value of this letter of credit.
The face value of this letter of credit reduces the availability under
the Revolving Line of Credit facility described in Note 7. For the
policy years November, 1995-1996 and 1994-1995, J&L elected to place on
deposit with the insurance company an amount equal to $340,000 and
$330,000, respectively. On June 30, 1996 and 1995, approximately
$279,000 and $266,000, respectively, remained on deposit with the
insurance company, and is reflected as an Other Asset in the
accompanying balance sheets.
J&L has signed a contract for turnkey development, fabrication and
installation of a new reheat furnace. The total estimated cost of the
project is approximately $8,500,000 of which $6,700,000 has been
incurred through June 30, 1996.
The project was completed and placed in service in late July 1996.
NOTE 12 - RELATED PARTY TRANSACTIONS
A management agreement exists between the Company and J&L whereby the
Company or its designated affiliate provides executive management
advisory services to J&L. The contract term of the agreement is for a
period of six years through March 2001 and is subject to being
automatically renewed annually thereafter, unless terminated by any
party to the agreement. Annual amounts due to the Company under this
agreement total $600,000 which includes out-of-pocket expenses incurred
by the Company of up to $150,000 annually. The Company exercised its
right under the agreement to designate Mentmore Holdings Corporation
("Mentmore") as the management advisory service provider and as a
result has assigned all fees the Company is entitled to under this
agreement to Mentmore. Management fee expense paid to Mentmore for the
years ended June 30, 1996 and 1995 under this agreement totaled
$600,000 and $150,000, respectively.
Mentmore engages in investment banking and corporate management
services. An investment banking fee totaling $500,000 was paid to
Mentmore by J&L during fiscal 1995 in conjunction with the Acquisition.
Richard L. Kramer is Chairman of the Board, a Director and Secretary of
Mentmore. William L. Remley is a director and President of Mentmore.
The Chairman of the Board of the Company is also the Chairman of the
Board, a Director, Vice President and Secretary of Trinity and Ascott
Wing. The President and Treasurer of the Company is also a Director,
President and Treasurer of Trinity and Ascott Wing, and a Trustee for
The A.J. 1989 Trust. Various lending and stock purchase warrant
agreements have been executed by the Company with Trinity (see Notes 7
and 9). Various loans to the Company had been made by The A.J. 1989
Trust, and a Deferred Purchase Money Note exists in consideration for
BESCC preferred stock redeemed on March 15, 1995 (see Note 7).
Long-term employment contracts exist with three executives at J&L,
formerly owners of JLS. These employment contracts extend for five year
periods each through March, 2000.
<PAGE>
NOTE 13 - SEGMENT INFORMATION
The Company's continuing operations include two distinct business
segments within its single operating subsidiary, J&L. J&L Structural
manufactures and fabricates lightweight structural steel shapes which
are distributed principally to the manufactured housing, tractor
trailer construction and ship building industries. Brighton designs,
manufactures and sells steel piercer points which represent disposable
tooling used in the production of seemless steel tubes used in the
petrochemical industry. The remaining operations of Hupp were
discontinued on October 27, 1994, as a result of a secured party sale
of all of its assets (see Note 1). Results of operations for Hupp have
been included in discontinued operations for all fiscal years
presented. Hupp manufactured heating, ventilating and air conditioning
equipment used primarily in commercial applications and fractional
horsepower electrical motors and mobile products used primarily in the
heavy duty and off-road truck markets.
<TABLE>
Financial information for continuing operations by business segment for
the fiscal years ended June 30, is as follows:
(in thousands of dollars)
1996 1995 1994
---- ---- ----
Sales to unaffiliated customers:
<S> <C> <C> <C>
BESCC/Brighton $ 6,402 $ 6,060 $ 5,785
J&L Structural 94,609 25,148 -
-----------------------------------------------
Total $ 101,011 $ 31,208 $ 5,785
============ =========== ========
Depreciation and amortization:
CPT Holdings, Inc. $ 75 $ 14 $ -
BESCC/Brighton 140 134 13
J&L Structural 3,118 752 -
------------ ----------- --------
Total $ 3,333 $ 900 $ 13
============ =========== ========
Operating income:
CPT Holdings, Inc. $ (1,227) $ (972) $ (1,107)
BESCC/Brighton 996 1,083 1,188
J&L Structural 6,151 1,999 -
------------------------------------------------------
Total $ 5,920 $ 2,110 $ 81
============ =========== ========
Identifiable assets:
CPT Holdings, Inc. $ 95 $ 436
BESCC/Brighton 4,025 3,299
J&L Structural 64,116 57,120
Continuous Caster Corp. 348 348
------------ -----------
Total $ 68,584 $ 61,203
============ ===========
Capital expenditures:
CPT Holdings, Inc. $ - $ -
BESCC/Brighton 786 36
J&L Structural 9,187 715
-------------------------------
Total $ 9,973 $ 751
============ ===========
</TABLE>
BESCC/Brighton's revenue was generated by five customers that
comprised 77%, 73% and 82% of its total revenue in 1996, 1995, and
1994, respectively.
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors
CPT Holdings, Inc. and Subsidiaries
We have audited the consolidated financial statements of CPT Holdings, Inc. and
Subsidiaries as of June 30, 1996 and for the year then ended, and have issued
our report thereon dated September 5, 1996; such report is included elsewhere in
this Form 10-K. Our audit also included the financial statement schedules of CPT
Holdings, Inc. and Subsidiaries as of and for the year ended June 30, 1996,
listed in Item 14. These financial statement schedules are the responsibility of
the Company's management. Our responsibility is to express an opinion based on
our audit. In our opinion, such financial statement schedules, when considered
in relation to the basic consolidated financial statements taken as a whole,
present fairly in all material respects the information set forth therein.
DELOITTE & TOUCHE LLP
Pittsburgh, Pennsylvania
September 5, 1996
<PAGE>
Report of Independent Certified Public Accountants
Board of Directors
CPT Holdings, Inc. and Subsidiaries
In connection with our audit of the consolidated financial statements of CPT
Holdings, Inc. and Subsidiaries referred to in our report dated September 26,
1995, which is included in the 1995 Annual Report to Shareholders, we have also
audited Schedules I & II and Exhibit II as of and for each of the two year
periods ended June 30, 1995. In our opinion, these schedules present fairly, in
all material respects, the information required to be set forth therein.
GRANT THORNTON LLP
Pittsburgh, Pennsylvania
September 26, 1995
except for Note 7, to which the date is October 12, 1995
<PAGE>
CPT HOLDINGS, INC.
SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
June 30,
($000's)
<TABLE>
Balance Sheets
Assets 1996 1995 1994
------ ---- ---- ----
<S> <C> <C>
Cash and cash equivalents $ 91 $ 436
Note receivable - -
Prepaid expenses 4 -
EITF 88-16 basis adjustment (9,705) (9,705)
Investment in subsidiary 8,795 8,783
----------------------
Total assets $ (815) $ (486)
========== =========
Liabilities and Shareholders' Equity
Accrued liabilities $ 1,125 $ 551
Due from subsidiaries - -
Long-term obligations 7,044 6,379
Accounts payable - 35
Common stock: authorized 30,000,000 shares
at $0.05 par value each; 1,510,084 shares
issued and outstanding 76 76
Capital in excess of par value 5,737 5,361
EITF 88-16 basis adjustment (9,705) (9,705)
Accumulated deficit (5,092) (3,183)
---------- ---------
Total shareholders' equity (8,984) (7,451)
----------- ----------
Total liabilities and shareholders' equity $ (815) $ (486)
========== ----=====
Statements of Cash Flows
Cash flows from operating activities $ (1,610) $ 91 $ 17
Cash flows from investing activities 299 (4,672) -
Cash flows from financing activities 966 5,000 -
---------- --------- --------
Increase (decrease) in cash and cash equivalents (345) 419 17
Cash and cash equivalents
Beginning of year 436 17 -
---------- --------- ----------
End of year $ 91 $ 436 $ 17
========= ======== =========
Statements of Loss
Earnings in subsidiary $ (311) $ (104)
Other income (80) (7) $ (259)
Interest expense (income), net 1,073 470 (2)
Operating expenses 1,227 631 737
---------- --------- ----------
Net loss $ 1,909 $ 990 $ 476
========= ======== ========
</TABLE>
<PAGE>
CPT HOLDINGS, INC. AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
For the years ended June 30, 1995, 1994 and 1993
($000's)
<TABLE>
Column A Column B Column C Column D Column E Column F
------------------------------- ------------------ --------------- ------------------- -------------------- ----------------
Description Balance at Charges to Retirements (1) Other charges Balance
beginning of costs & add (deduct) at end of
period expenses period
------------------------------- ------------------ --------------- ------------------- -------------------- ----------------
1996
Allowance for Doubtful
Accounts in Accounts
<S> <C> <C> <C> <C> <C>
Receivable $244 $ 76 $114 $ - $ 206
==== ===== ==== ============== ========
Allowance for Sales Discounts
and Claims $ 84 $ 329 $312 $ - $ 101
===== ==== ==== ============== ========
1995
Allowance for Doubtful
Accounts in Accounts
Receivable $ 124 $ 67 $ 161 $ 214 $ 244
======== ======== ======== ============ =========
Allowance for Sales
Discounts and Claims $ - $ - $ 19 $ 103 $ 84
=========== ======== ========= ============ =========
1994
Allowance for Doubtful
Accounts In Accounts
Receivable $ 106 $ 18 $ - $ - $ 124
========= ======== ========= =========== =======
------------------------------- ------------------ --------------- ------------------- -------------------- ----------------
</TABLE>
(1) Represents write-offs of uncollectable accounts or realized sales discounts
and claims.
<PAGE>
EXHIBIT 11
CPT Holdings, Inc. and Subsidiaries
COMPUTATION OF EARNINGS PER SHARE
Years ended June 30,
<TABLE>
(in thousands of dollars, except share amounts)
1996 1995 1994
Income (loss) before discontinued operations
<S> <C> <C> <C>
items extraordinary items $ (1,909) $ 410 $ 232
Earnings impact of subsidiary common
stock equivalents (47) (16) -
Gain from discontinued operations 2,220 1,576 (8,572)
Gain on extraordinary items - 3,527 -
------------- ------------- ------------
Net income (loss) $ 264 $ 5,497 $ (8,340)
============ ============ ===========
Primary Shares:
Weighted average number of shares
outstanding during period 1,510,084 1,510,084 1,510,084
Shares issuable on exercise of all dilutive
stock warrants, less shares assumed
repurchased from proceeds 1,697,983 - -
------------- ------------- ------------
Total 3,208,067 1,510,084 1,510,084
============= ========= =========
Primary earnings (loss) per share before
discontinued operations and
extraordinary items $ (.58) $ .27 $ .15
Primary earnings (loss) per share on
discontinued operations .69 1.04 (5.67)
Primary earnings per share on
extraordinary items - 2.34 -
------------ ------------ -------
Primary earnings (loss) per share $ .11 $ 3.65 $ (5.52)
============ =========== =========
Assuming Full Dilution:
Weighted average number of shares
outstanding during period 1,510,084 1,510,084 1,510,084
Shares issuable on exercise of all dilutive
stock warrants, less shares assumed
repurchased from proceeds 1,697,983 424,496 -
------------- ------------- ------
Total fully-diluted common
and equivalent shares 3,208,067 1,934,580 1,510,084
============= ============= ============
Earnings (loss) per share before discontinued
operations and extraordinary items
assuming full dilution $ (.58) $ .23 $ .15
Earnings (loss) per share on discontinued
operations assuming full dilution .69 .81 (5.67)
Earnings per share on extraordinary
items assuming full dilution - 1.82 -
------------ ------------ -------
Net earnings (loss) per share assuming
full dilution $ .11 $ 2.86 $ (5.52)
============ =========== ==========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> Jun-30-1996
<PERIOD-END> Jun-30-1996
<CASH> 174
<SECURITIES> 0
<RECEIVABLES> 8,813
<ALLOWANCES> 307
<INVENTORY> 10,813
<CURRENT-ASSETS> 19,623
<PP&E> 47,929
<DEPRECIATION> 3,429
<TOTAL-ASSETS> 68,584
<CURRENT-LIABILITIES> 15,709
<BONDS> 0
<COMMON> 76
0
0
<OTHER-SE> (9,060)
<TOTAL-LIABILITY-AND-EQUITY> 68,584
<SALES> 101,011
<TOTAL-REVENUES> 101,011
<CGS> 88,016
<TOTAL-COSTS> 88,016
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 76
<INTEREST-EXPENSE> 7,193
<INCOME-PRETAX> (2,009)
<INCOME-TAX> (100)
<INCOME-CONTINUING> (1,909)
<DISCONTINUED> 2,220
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 311
<EPS-PRIMARY> .11
<EPS-DILUTED> .11
</TABLE>
