<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended
March 31, 1999
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
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.)
680 Fifth Avenue, 8th Floor
New York, New York 10019
(Address of principal executive office) (Zip code)
Registrant's telephone number, including area code: (212) 931-5260
1430 Broadway, 13th Floor, New York, New York, 10018
----------------------------------------------------
Former Address
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
---
As of May 1, 1999 1,510,084 shares of Common Stock were issued and outstanding.
- ------------------------------------------------------------------------------
1
<PAGE>
PART 1. FINANCIAL INFORMATION
ITEM 1: Financial Statements
CPT HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(000's Except Per Share Amounts)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
March 31, March 31,
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales $ 24,972 $ 28,370 $ 75,977 $ 81,948
Cost of sales 20,866 24,250 65,127 70,135
------------ ----------- ------------ ------------
Gross profit 4,106 4,120 10,850 11,813
Selling, general and administrative 1,883 1,881 5,448 5,169
------------ ----------- ------------ ------------
Operating income 2,223 2,239 5,402 6,644
Other expense (income):
Interest expense 1,779 1,859 5,506 5,734
Minority interest 170 101 208 296
Other, net 5 130 10 318
------------ ----------- ------------ ------------
Income (loss) before income taxes 269 149 (322) 296
Provision for income taxes - 43 - 137
------------ ----------- ------------ ------------
Net income (loss) $ 269 $ 106 $ (322) $ 159
============ =========== ============= ============
Earnings per common share:
Basic $ 0.18 $ 0.07 $ (0.21) $ 0.11
============ =========== ============ ===========
Diluted $ 0.09 $ 0.02 $ (0.30) $ (0.02)
============ =========== ============ ============
Weighted average common shares
outstanding 1,510 1,510 1,510 1,510
============ =========== ============ ===========
Weighted average common and common
equivalent shares outstanding 1,510 2,150 1,510 1,510
============ =========== ============ ===========
</TABLE>
See Notes to Unaudited Consolidated Financial Statements
2
<PAGE>
CPT HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
($000's)
<TABLE>
<CAPTION>
March 31, June 30,
ASSETS 1999 1998
- ------ ---- ----
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 80 $ 37
Receivables - net of allowances 7,816 8,946
Inventories 10,792 12,722
Other current assets 258 194
--------- ---------
Total current assets 18,946 21,899
Property, plant and equipment - net 39,476 41,364
Deferred financing costs, net 1,199 1,522
Goodwill 1,201 1,271
Other assets 348 349
--------- ----------
Total assets $61,170 $66,405
======= =======
LIABILITIES & SHAREHOLDERS' DEFICIT
Current liabilities:
Accounts payable $ 9,070 $10,507
Accrued expenses 6,725 6,230
Current portion of long-term debt 4,594 4,321
--------- ---------
Total current liabilities 20,389 21,058
Long-term debt, net of current portion 48,919 53,371
Other long-term obligations 200 200
Minority interest in consolidated subsidiaries 3,064 2,856
Shareholders' deficit:
Common stock authorized 30,000,000 shares of $.05 par value each,
1,510,084 shares issued and outstanding 76 76
Additional paid-in capital 5,737 5,737
Accumulated deficit (17,215) (16,893)
--------- ---------
Total shareholders' deficit (11,402) (11,080)
--------- ---------
Total liabilities and shareholders' deficit $61,170 $66,405
======= =======
</TABLE>
See Notes to Unaudited Consolidated Financial Statements
3
<PAGE>
CPT HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
($000's)
<TABLE>
<CAPTION>
Nine Months Ended
March 31,
1999 1998
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (322) $ 159
------- ---------
Adjustments to reconcile net income (loss) to net
cash provided by operations:
Minority interest in earnings of subsidiaries 208 296
Depreciation and amortization 3,459 3,314
Changes in working capital:
Decrease in receivables 1,130 255
(Increase) decrease in inventories 1,930 (2,222)
Increase in other current assets (64) (433)
Increase (decrease) in accounts payable and accrued expenses (942) 2,164
------- ---------
Net cash provided by operating activities 5,399 3,533
------- ---------
Cash flows from investing activities:
Capital expenditures (1,019) (689)
------- ---------
Net cash used by investing activities (1,019) (689)
------- ---------
Cash flows from financing activities:
Repayment on long-term obligations (3,208) (2,412)
Net repayments under revolving credit facility (1,129) (52)
------- ---------
Net cash used by financing activities (4,337) (2,464)
------- ---------
Net increase in cash and cash equivalents 43 380
Cash and cash equivalents:
Beginning of period 37 61
------- ---------
End of period $ 80 $ 441
======= =========
Supplemental data - cash paid during the period for:
Interest $ 4,235 $ 4,576
======= =========
Income taxes $ - $ -
======= =========
</TABLE>
See Notes to Unaudited Consolidated Financial Statements
4
<PAGE>
CPT HOLDINGS, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
The accompanying financial statements include the accounts of CPT
Holdings, Inc. and its direct and indirect majority-owned subsidiaries
(the "Company" or "CPT"), J&L Structural, Inc. ("J&L"), J&L Holdings Corp.
("JLH"), Continuous Caster Corporation ("CCC") and H. Industries, Inc.
("Hupp") All material intercompany transactions have been eliminated in
consolidation.
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 manufacturing, highway construction, service center and
construction 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.
The accompanying unaudited consolidated financial statements have been
prepared in accordance with the instructions for Form 10-Q and Article 10
of Regulation S-X and do not include the information and footnotes
required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments
(including normal recurring accruals) considered necessary for a fair
presentation have been included. The results of operations for any interim
period are not necessarily indicative of the results for the year. Certain
amounts included in the prior periods' financial statements have been
reclassified to conform with the current periods' presentation. These
unaudited consolidated financial statements should be read in conjunction
with the consolidated financial statements and related notes included in
the Company's Annual Report on Form 10-K for the year ended June 30, 1998.
2. Inventories
Inventories consisted of the following (in $000's):
March 31, June 30,
1999 1998
---- ----
Raw materials $ 2,529 $ 3,401
Finished goods 8,263 9,321
-------- --------
$ 10,792 $ 12,722
======== ========
5
<PAGE>
3. Long-Term Debt
Long-term debt consisted of the following (in $000's):
March 31, June 30,
1999 1998
------------- -------------
Senior term loan $ 13,859 $ 16,920
Subordinated term notes 23,000 23,000
Revolving loan facility 8,784 9,843
Fixed rate 13% debenture 6,730 6,730
Unsecured revolving credit facility 1,000 1,000
Deferred purchase money note 475 475
State loans 586 733
------------- -------------
54,434 58,701
Less current portion of long-term debt 4,594 4,321
Less discounts on long-term debt 921 1,009
------------- -------------
Total $ 48,919 $ 53,371
============= =============
4. Litigation, Contingencies and Commitments
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, an 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. On September 17, 1997, in response to
CPT's appeal, the District Court vacated in part, and confirmed in part
the arbitrator's award. In its judgement, the District Court reduced the
award in favor of the Plan from approximately $870,000 to $62,696. The
Plan subsequently appealed the District Court's ruling to the United
States Court of Appeals for the Sixth Circuit. On December 8, 1998, the
Sixth Circuit reversed the decision of the District Court and reinstated
the original arbitration award. On January 21, 1999, the Sixth Circuit
denied CPT's petition for a rehearing, rendering the decision final. No
future appeal has been or will be pursued by CPT. CPT has made payments
aggregating approximately $741,000 to the Plan and has fully accrued the
amount of the outstanding claim less payments made through that date.
J&L's former workers' compensation insurance program provided for self
insurance with stop-loss protection. Under this arrangement to cover
potential claims relating to the policy years 1993 to 1997, J&L was
required to issue a letter of credit in the name of the insurance company.
The letter of credit called for quarterly step-ups in the amounts
available for draw with the maximum aggregate amount of $1,000,000 being
available under the letter. During the first quarter of fiscal 1999, the
face value of the form of the letter of credit was reevaluated by the
underwriter and has been reduced to $750,000. No other forms of collateral
are maintained relating to the workers compensation program.
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. Beginning with its policy in
1997 and through the present, J&L is insured under a fixed cost, fully
insured workers' compensation program.
6
<PAGE>
In 1995, J&L signed a contract for turnkey development, fabrication, and
installation of a new reheat furnace. Furnace startup took place in July
1996, with the entire project having a total cost of approximately $8.5
million. Of this amount, $7.1 million has been disbursed through March 31,
1999, and the remaining amount of $1.4 million representing the retention
on the original project has not been paid and remains recorded in accounts
payable. At March 31, 1999, J&L was in the process of arbitration with the
furnace builder regarding the final payment as the Company believed
performance testing results did not meet contract specifications. On April
20, 1999, the arbitrators found in favor of the furnace builder and made a
net award to them of $1.1 million. The Company intends to pay the award
during the fourth quarter of fiscal 1999.
The Company is involved in various legal actions arising in the normal
course of business. While it is not possible to determine with certainty
the outcome of these matters, in the opinion of management, the eventual
resolution of the claims and actions outstanding will not have a material
adverse effect on the Company's financial position or operating results.
5. Earnings Per Share
The following table sets forth the computation of basic and diluted
earnings per common share (in $000's, except per share amounts):
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
March 31, March 31,
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Numerator:
Net income (loss) $ 269 $ 106 $ (322) $ 159
Dilution on earnings resulting from subsidiary
warrants (129) (63) (129) (183)
------------- ---------- ----------- ------------
Net income (loss) available to common
shareholders $ 140 $ 43 $ (451) $ (24)
============= ========== =========== ============
Denominator:
Denominator for basic earnings
per share-weighted average shares 1,510,084 1,510,084 1,510,084 1,510,084
Effect of dilutive securities:
Warrants - 639,456 - -
Denominator for diluted earnings
per share-adjusted weighted-average
shares and assumed conversion 1,510,084 2,149,540 1,510,084 1,510,084
============= ========== =========== ============
Basic earnings (loss) per common share $ 0.18 $ 0.07 $ (0.21) $ 0.11
============= ========== =========== ============
Diluted earnings (loss) per common share $ 0.09 $ 0.02 $ (0.30) $ (0.02)
============= ============ =========== ============
</TABLE>
7
<PAGE>
On April 1, 1995, the Company issued warrants exercisable for 2,000,000 shares
of the Company's common stock for a period of ten years from the date of
issuance at $1 per share.
On February 1, 1996, the Company issued a warrant exercisable for 300,000
shares of the Company's common stock, for a period of ten years from the date
of issuance at $4 per share. These warrants, which could potentially dilute
earnings per share in the future, were not included in the diluted computation
because the weighted average price per share for the three and nine months
ended March 31, 1999 and 1998 did not exceed the exercise price.
ITEM 2: Management's Discussion and Analysis of Financial
Condition And Results Of Operations
CPT Holdings is a holding company with no independent operations outside of its
operating company, J&L Structural, Inc. which operates in the steel industry
through two segments, J&L Structural and Brighton Electric Steel Casting
Company ("Brighton"). J&L Structural operates through two separate divisions
which includes the Aliquippa division and the Ambridge division. 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 which are produced at the
Aliquippa division.
Results of Operations
Net Sales
Net sales for the three month and nine month periods ended March 31, were:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
March 31, March 31,
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
J&L Structural $ 23,957,000 $ 26,478,000 $ 72,966,000 $ 77,078,000
Brighton 1,015,000 1,892,000 3,011,000 4,870,000
------------- ------------- ------------- -------------
Total $ 24,972,000 $ 28,370,000 $ 75,977,000 $ 81,948,000
============ ============ ============ ============
</TABLE>
Net sales for J&L Structural during 1999 decreased in comparison to the prior
year amounts primarily due to reduced shipping levels throughout the year and
reductions in average selling price during the quarter ended March 31, 1999.
Overall tonnage shipped decreased by 5.0% and 3.8% over the comparable three
and nine month periods in the prior year, respectively. The reduction in
tonnage shipped was primarily due to lower construction industry demand.
Average sales price per ton decreased by approximately 4.8% and 1.9% during the
three months and nine months ended March 31, 1999 from the comparable periods
in the prior year due to competitive pricing. Management believes the current
reduction in average sales prices is predominantly due to the slowdown in
construction demand both domestically and abroad. As a result, structural steel
exports have been reduced and structural steel imports have increased driving
both scrap and finished product prices down. Management further believes that
this is forcing large structural suppliers to look for other distribution
outlets, such as the manufactured housing market. Management expects to
encounter continued pricing pressure in the near term.
Brighton's sales decrease for the current three and nine month periods
reflects a reduction in demand for its core product, piercer points. The
piercer points are primarily used in oil drilling and exploration
8
<PAGE>
industry activities which have been curtailed due to the current worldwide
excess oil supply. These market conditions are expected to continue into the
foreseeable future.
Gross Margins
Gross margins for the three month and nine month periods ended March 31, were:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
March 31, March 31,
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
J&L Structural 16.2% 13.1% 13.9% 13.5%
Brighton 22.3% 34.4% 23.8% 28.6%
----- ----- ----- -----
Total 16.4% 14.5% 14.3% 14.4%
===== ===== ===== =====
</TABLE>
Gross margins for J&L Structural improved during fiscal 1999 in comparison to
the prior year due mainly to lower billet costs. Billet costs, which comprise
approximately 65% of J&L Structural's manufacturing costs, have decreased on
average by approximately 20.2% and 10.6% for the three and nine month periods
ended March 31, 1999, respectively, compared to the prior year. The favorable
impact from the reduction in raw material prices was offset by poor
productivity experienced during the first quarter of the fiscal year.
Brighton's gross margins for the three and nine month periods decreased
significantly, primarily due to the sharp reduction in volume for reasons
mentioned above.
Selling, General and Administrative Expenses:
- ---------------------------------------------
Selling, general and administrative expenses remained constant for the three
months ended March 31, 1999 as compared to the comparable period in the prior
year. The increase in selling, general, and administrative expenses for the
nine months ended March 31, 1999 as compared to the comparable period in the
prior year was due primarily to nonrecurring consulting fees and legal costs
associated with the arbitration with the furnace builder.
Other Income / Expense
- ----------------------
Prior year costs reflect certain expenditures such as professional costs which
were incurred relating to an attempted acquisition of Steel of West Virginia.
Liquidity and Capital Resources
- -------------------------------
Cash flows from operations for the nine months ended March 31, 1999 and 1998
totaled $5,399,000 and $3,533,000, respectively. The increase in cash flows for
the nine month period ending March 31, 1999 compared to the same period in the
prior year was attributed primarily to improved management of inventory levels.
The Company's investing activities for the three and nine months ended March
31, 1999 and 1998 primarily reflect maintenance capital spending.
Financing activities for the nine months ended March 31, 1999 included
scheduled repayments of $3,208,000 on the senior term loan and state loans.
Additionally, net repayments of $1,129,000 took place under the senior lender's
revolving credit facility for the nine months ended March 31, 1999. Outstanding
debt as of March 31, 1999 totaled $57,147,000 with related interest expense of
$5,183,000
9
<PAGE>
for the nine months ended March 31, 1999 represented an average borrowing rate
approximating 11.9% over the period excluding the yield impact from
amortization of deferred financing costs.
Cash and cash equivalents increased from $37,000 to $80,000 for the nine months
ended March 31, 1999. Although the Company's total equity represents a deficit
of approximately $11,402,000, this position is due largely to the poor
performance of previously discontinued operations and a basis adjustment for
the carried predecessor interest in the acquisition of J&L during fiscal 1995
totaling $9,705,000. The Company's scheduled requirements for cash from
operations during the next twelve months include approximately $4,594,000 of
principal repayments under the senior term loan and various state loans. In
addition, as discussed in note 4 to the unaudited financial statements, the
arbitration with the furnace builder and the Hupp pension claim were concluded.
On April 20, 1999, the arbitrators found in favor of the furnace builder and
made a net award to them of $1.1 million. This amount will accrue interest at
an annual rate of 6% until paid, which is expected during the fourth quarter of
fiscal 1999. The final payments determined as part of the Hupp pension claim
will total approximately $188,000 and will be disbursed during the balance of
calendar 1999.
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.
Recent Accounting Standards
- ---------------------------
In June of 1997, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 130, Reporting
Comprehensive Income, which establishes standards for the reporting and display
of comprehensive income and its components in a full set of general-purpose
financial statements. On July 1, 1998 the Company adopted SFAS No. 130. The
implementation of this standard had no impact on the Company's financial
statements.
In June of 1997, the FASB issued SFAS No. 131, Disclosures about Segments of an
Enterprise and Related Information, which changes the way that public business
enterprises report information about operating segments in annual financial
statements and requires that those enterprises report selected information
about reportable segments in interim financial reports issued to shareholders.
In accordance with SFAS No. 131, the Company will be required to make expanded
disclosure relating to its products and markets. The standard is effective for
the Company for the fiscal year ending June 30, 1999.
In February 1998, the FASB issued SFAS No. 132, Employer's Disclosure about
Pensions and Other Post-retirement Benefits, which standardizes the disclosure
requirements for pensions and other post-retirement benefits. The
implementation of SFAS No.132 is not expected to have an impact on the
Company's financial statements. The standard will be effective for the Company
for the fiscal year ending June 30, 1999.
In June 1998, the FASB issued SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities, which provides a comprehensive and
consistent standard for the recognition and measurement of derivatives and
hedging activities. Because of the Company's minimal use of derivatives, the
Company does not anticipate that the adoption of the new Statement will have a
significant effect on earnings or the financial position of the Company. The
standard will be effective for the Company for the fiscal year ending June 30,
2000.
The Year 2000 Issue
- -------------------
The Year 2000 problem concerns the inability of information systems to
recognize properly and process date-sensitive information beyond January 1,
2000.
10
<PAGE>
State of Readiness: During 1998, the Company initiated a comprehensive
enterprise-wide analysis exercise to identify and to resolve Year 2000 related
issues. The scope of the program includes the investigation of all Company
functions and products, including embedded systems in what are not
traditionally considered information technology systems. The detection phase of
the program is currently estimated to be 90 percent complete. The corrective
action phase of the program began during the second quarter of fiscal 1999, and
is anticipated to be completed during the fourth quarter of fiscal 1999. Upon
completion, the Company will execute a testing program to assess its state of
readiness. Also, J&L is assessing the preparedness of critical suppliers for
Year 2000 through a thorough inquiry process.
Costs To Address Year 2000 Issues: Total cost at completion of the program is
currently estimated to approximate $100,000. These costs are being expensed as
incurred.
Risks Associated With Year 2000 Issue: While the Company expects to resolve all
Year 2000 risks without material adverse impact on results of operations,
liquidity or financial condition, there can be no assurances as to the ultimate
success of the program. Uncertainties exist as to the Company's ability to
detect all Year 2000 problems as well as its ability to achieve successful and
timely resolution of all Year 2000 issues. Uncertainties also exist concerning
the preparedness of the Company's critical suppliers in order to avoid Year
2000 related service and delivery interruptions.
A "reasonably likely worst case" scenario of Year 2000 risks could include
isolated performance problems with manufacturing or administrative systems at
J&L, isolated interruption of deliveries from critical suppliers and product
liability issues. The consequences of these issues may include increases in
manufacturing and administrative costs until the problems are resolved, lost
revenues, and lower cash receipts. However, the Company is unable to quantify
the potential effect, which could be material, of these items on results of
operations, liquidity or financial condition, should some or a combination of
these events come to pass.
Cautionary Statement on Forward-Looking Statements
This report contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Investors are cautioned that
any forward-looking statements, including statements regarding the intent,
belief, or current expectations of the Company or its management, are not
guarantees of future performance and involve risks and uncertainties, and that
actual results may differ materially from those in the forward-looking
statements as a result of various factors including, but not limited to (i) a
significant downturn in manufactured housing construction and sales and (ii)
billet costs and other raw material costs may rise as a result of increasing
scrap metal pricing and J&L may not have the ability to pass such costs to
customers.
11
<PAGE>
PART II - OTHER INFORMATION
ITEM 1: 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, an 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. On September 17, 1997, in response to
CPT's appeal, the District Court vacated in part, and confirmed in part
the arbitrator's award. In its judgement, the District Court reduced the
award in favor of the Plan from approximately $870,000 to $62,696. The
Plan subsequently appealed the District Court's ruling to the United
States Court of Appeals for the Sixth Circuit. On December 8, 1998, the
Sixth Circuit reversed the decision of the District Court and reinstated
the original arbitration award. On January 21, 1999, the Sixth Circuit
denied CPT's petition for a rehearing, rendering the decision final. No
future appeal has been or will be pursued by CPT. CPT has made payments
aggregating approximately $741,000 to the Plan and has fully accrued the
amount of the outstanding claim less payments made through that date.
In 1995, J&L signed a contract for turnkey development, fabrication and
installation of a new reheat furnace. Furnace startup took place in July
1996, with the entire project having a total cost of approximately $8.5
million. Of this amount, $7.1 million has been disbursed through March 31,
1999, and the remaining amount of $1.4 million representing the retention
on the original project has not been paid and remains recorded in accounts
payable. At March 31, 1999, J&L was in the process of arbitration with the
furnace builder regarding the final payment as the Company believed
performance testing results did not meet contract specifications. On April
20, 1999, the arbitrators found in favor of the furnace builder and made a
net award to them of $1.1 million. The Company intends to pay the award
during the fourth quarter of fiscal 1999.
The Company is involved in various legal actions arising in the normal
course of business. While it is not possible to determine with certainty
the outcome of these matters, in the opinion of management, the eventual
resolution of the claims and actions outstanding will not have a material
adverse effect on the Company's financial position or operating results.
ITEM 2: Changes in Securities
None
ITEM 3: Defaults Upon Senior Securities
None
ITEM 4: Submission of Matters to a Vote of Security Holders
None
12
<PAGE>
ITEM 5. Other Information
None
ITEM 6: Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit 27: Financial Data Schedule for Third Quarter 10-Q
(b) Reports on Form 8-K: None
13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CPT HOLDINGS, INC.
Dated: May 17, 1999 By: /s/ William L. Remley
---------------------------
William L. Remley,
President & Treasurer
14
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-END> MAR-31-1999
<CASH> 80
<SECURITIES> 0
<RECEIVABLES> 8,330
<ALLOWANCES> 514
<INVENTORY> 10,792
<CURRENT-ASSETS> 18,946
<PP&E> 53,058
<DEPRECIATION> 13,582
<TOTAL-ASSETS> 61,170
<CURRENT-LIABILITIES> 20,389
<BONDS> 0
0
0
<COMMON> 76
<OTHER-SE> (11,478)
<TOTAL-LIABILITY-AND-EQUITY> 61,170
<SALES> 24,972
<TOTAL-REVENUES> 24,972
<CGS> 20,866
<TOTAL-COSTS> 22,749
<OTHER-EXPENSES> 6
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,779
<INCOME-PRETAX> 269
<INCOME-TAX> 0
<INCOME-CONTINUING> 269
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 269
<EPS-PRIMARY> 0.18
<EPS-DILUTED> 0.09
</TABLE>
