<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1994
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________to__________________
Commission File Number 1-7477
CRSS INC.
(Exact Name of registrant as specified in its Charter)
DELAWARE 74-1677382
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1177 WEST LOOP SOUTH, SUITE 800, HOUSTON, TEXAS 77027
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (713) 552-2000
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class of Common Stock Outstanding at November 7, 1994
- ----------------------------- ----------------------------------
$1 Par Value 13,034,092
<PAGE> 2
CRSS INC. AND SUBSIDIARIES
FORM 10-Q
SEPTEMBER 30, 1994
INDEX
<TABLE>
<CAPTION>
PAGE NUMBER
-----------
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
CRSS Inc.
Consolidated Balance Sheet-
September 30, 1994 and June 30, 1994 . . . . . . . . . . . . . . . . . 1
Consolidated Statement of Operations-Three
Months Ended September 30, 1994 and 1993 . . . . . . . . . . . . . . . 2
Consolidated Statement of Cash Flows-Three Months Ended
September 30, 1994 and 1993 . . . . . . . . . . . . . . . . . . . . . . 3
Equity Investment Partnerships of CRSS Inc.
Combined Balance Sheet-
September 30, 1994 and June 30, 1994 . . . . . . . . . . . . . . . . . 4
Combined Statement of Operations-Three
Months Ended September 30, 1994 and 1993 . . . . . . . . . . . . . . . 5
Combined Statement of Cash Flows-Three Months Ended
September 30, 1994 and 1993 . . . . . . . . . . . . . . . . . . . . . . 6
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations . . . . . . . . . . . . . 8
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders . . . . . . . . . . . 12
Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . . . . . . . . . . . . . 12
</TABLE>
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS
CRSS INC.
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
September 30, June 30,
(DOLLARS IN THOUSANDS) 1994 1994
---- ----
(unaudited)
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 18,283 $ 2,229
Accounts receivable 4,925 4,664
Deferred income taxes 1,959 1,959
Other current assets 6,032 5,546
Net current assets from discontinued operations 7,152 36,621
-------- ---------
Total current assets 38,351 51,019
Property, plant and equipment, net 77,218 78,043
Net noncurrent assets from discontinued operations 7,326 7,326
Other assets:
Equity investment in partnerships 65,070 61,538
Other noncurrent assets 12,840 12,746
-------- ---------
77,910 74,284
-------- ---------
$200,805 $ 210,672
======== =========
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 649 $ 946
Current portion of long-term obligations 3,113 3,096
Other current liabilities 8,022 9,510
-------- ---------
Total current liabilities 11,784 13,552
Non-recourse project financing 60,335 60,937
Other long-term obligations 7,856 7,845
Deferred income taxes 40,726 40,452
Shareholders' equity:
Preferred stock, no par value, 2,000,000 shares authorized
but unissued - -
Common stock, $1.00 par value, 50,000,000 shares
authorized; issued September 30, 1994 - 16,558,000 shares
and June 30, 1994 - 16,492,000 16,558 16,492
Additional paid-in capital 69,767 69,253
Retained earnings 20,811 29,184
-------- ---------
107,136 114,929
Treasury stock, at cost, 3,574,000 shares at
September 30, 1994 and June 30, 1994 (26,953) (26,946)
Other (79) (97)
-------- ---------
80,104 87,886
-------- ---------
$200,805 $ 210,672
======== =========
</TABLE>
See Notes to Unaudited Consolidated and Combined Financial Statements
1
<PAGE> 4
CRSS INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
September 30,
-------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) 1994 1993
---- ----
<S> <C> <C>
Revenues:
Electricity and steam sales $ 6,301 $ 6,493
Operations and administrative service fees 809 895
Other revenues 27 25
-------- --------
7,137 7,413
Costs and expenses:
Plant operations 5,523 4,768
General and administrative 2,483 1,575
Marketing and project development 366 435
-------- --------
8,372 6,778
Equity income in partnerships 4,084 2,954
-------- --------
Operating income from continuing operations 2,849 3,589
Other income (expense):
Non-operating income 265 183
Interest expense (1,797) (1,889)
Minority interest in earnings - (189)
-------- --------
(1,532) (1,895)
-------- --------
Earnings from continuing operations before income tax 1,317 1,694
Income tax expense 579 729
-------- --------
Earnings from continuing operations 738 965
Earnings (loss) from discontinued operations, net of income tax
benefit of $3,277 and expense of $148 for the three months
ended September 30, 1994 and 1993, respectively (8,723) 65
-------- --------
Net earnings (loss) $ (7,985) $ 1,030
======== ========
Primary and fully diluted earnings (loss) per common share:
Earnings from continuing operations $ 0.06 $ 0.07
Net earnings (loss) $ (0.61) $ 0.08
======== ========
Weighted average common shares outstanding 13,190 12,958
======== ========
Dividends per common share $ 0.03 $ 0.03
======== ========
</TABLE>
See Notes to Unaudited Consolidated and Combined Financial Statements.
2
<PAGE> 5
CRSS INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
September 30,
-------------
(DOLLARS IN THOUSANDS) 1994 1993
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Earnings from continuing operations $ 738 $ 965
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
Deferred income taxes 274 729
Depreciation and amortization 833 823
Equity income in partnerships (4,084) (2,954)
(Increase) decrease in receivables (261) 345
(Increase) decrease in other current assets (486) 1,196
Increase (decrease) in accounts payable and other current
liabilities (1,612) 2,146
Distributions from partnerships 554 1,225
Payments to discontinued operations (17,519) (1,899)
Other operating activities (102) 64
--------- ---------
Net cash provided by (used in) operating activities (21,665) 2,640
CASH FLOWS FROM INVESTING ACTIVITIES:
Increase in investments in affiliates - (30,000)
Payments from discontinued operations - 191
Proceeds from sale of discontinued operations 38,265 -
--------- ---------
Net cash provided by (used in) investing activities 38,265 (29,809)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on long-term obligations (566) (516)
Proceeds from exercise of stock options 409 45
Contributions from minority interest - 5,700
Dividends paid on common stock (389) (382)
--------- ---------
Net cash provided by (used in) financing activities (546) 4,847
--------- ---------
Net increase (decrease) in cash and cash equivalents 16,054 (22,322)
Cash and cash equivalents at beginning of period 2,229 28,220
--------- ---------
Cash and cash equivalents at end of period $ 18,283 $ 5,898
========= =========
</TABLE>
See Notes to Unaudited Consolidated and Combined Financial Statements.
3
<PAGE> 6
EQUITY INVESTMENT PARTNERSHIPS OF CRSS INC.
COMBINED BALANCE SHEET
<TABLE>
<CAPTION>
September 30, June 30,
(DOLLARS IN THOUSANDS) 1994 1994
----- ----
(unaudited)
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 51,180 $ 51,304
Accounts receivable 17,831 18,272
Accounts receivable from affiliates 2,672 2,735
Prepaid expenses and other assets 2,927 2,874
--------- ---------
Total current assets 74,610 75,185
Restricted cash 53,332 47,392
Property, plant and equipment, net 484,211 488,525
Power purchase agreement, net 58,576 60,030
Other noncurrent assets 996 1,014
--------- ---------
$ 671,725 $ 672,146
========= =========
Liabilities and Partners' Capital
Current liabilities:
Accounts payable $ 564 $ 72
Accounts and notes payable to affiliates 5,672 5,699
Current portion of long-term obligations 28,040 27,626
Operations and maintenance reserves 4,547 4,508
Other current liabilities 11,825 15,202
--------- ---------
Total current liabilities 50,648 53,107
Non-recourse project financing 453,435 460,989
Other long-term obligations 37,129 34,661
Partners' capital 130,513 123,389
--------- ---------
$ 671,725 $ 672,146
========= =========
Supplemental information:
Partners' capital $ 130,513 $ 123,389
Attributable to other partners (65,443) (61,851)
--------- ---------
CRSS' equity investment in partnerships $ 65,070 $ 61,538
========= =========
</TABLE>
See Notes to Unaudited Consolidated and Combined Financial Statements
4
<PAGE> 7
EQUITY INVESTMENT PARTNERSHIPS OF CRSS INC.
COMBINED STATEMENT OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
September 30,
-------------
(DOLLARS IN THOUSANDS) 1994 1993
---- ----
<S> <C> <C>
Electricity and steam sales $ 44,203 $ 45,072
Costs and expenses
Plant operations 23,503 26,254
General and administrative 1,302 1,129
-------- --------
24,805 27,383
-------- --------
Operating income 19,398 17,689
Interest expense (11,153) (11,777)
-------- --------
Net earnings $ 8,245 $ 5,912
======== ========
Supplemental information:
Net earnings $ 8,245 $ 5,912
Attributable to other partners (4,161) (2,958)
-------- --------
CRSS' equity income in partnerships $ 4,084 $ 2,954
======== ========
</TABLE>
See Notes to Unaudited Consolidated and Combined Financial Statements.
5
<PAGE> 8
EQUITY INVESTMENT PARTNERSHIPS OF CRSS INC.
COMBINED STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
September 30,
-------------
(DOLLARS IN THOUSANDS) 1994 1993
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 8,245 $ 5,912
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
Depreciation and amortization 7,300 6,953
Decrease in receivables 504 4,061
Increase in prepaid expenses and other assets (35) (1,012)
Increase (decrease) in accounts payable and other current
liabilities (2,878) 6,968
------- -------
Net cash provided by operating activities 13,136 22,882
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions property, plant and equipment (1,532) (3,522)
Increase in restricted cash (5,940) (457)
------- -------
Net cash used in investing activities (7,472) (3,979)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on non-recourse project financing (7,140) (32,753)
Proceeds from non-recourse project financing - 1,870
Increase (decrease) in other long-term obligations 2,468 (872)
Contributions from partners - 30,000
Distributions to partners (1,116) (2,449)
------- -------
Net cash used in financing activities (5,788) (4,204)
------- -------
Net increase (decrease) in cash and cash equivalents (124) 14,699
Cash and cash equivalents at beginning of period 51,304 11,926
------- -------
Cash and cash equivalents at end of period $51,180 $26,625
======= =======
</TABLE>
See Notes to Unaudited Consolidated and Combined Financial Statements.
6
<PAGE> 9
CRSS INC.
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1. BASIS OF PRESENTATION
The Consolidated Financial Statements include the accounts of CRSS Inc.
("CRSS") and its wholly-owned subsidiary, CRSS Capital, Inc. ("CRSS Capital"),
collectively referred to herein as the "Company".
The Combined Financial Statements include the accounts of the four less than
majority-owned power and cogeneration limited partnerships in which CRSS
Capital has equity interests ranging from 47.5 percent to 50 percent: Hopewell
Cogeneration Limited Partnership ("Hopewell"), Naheola Cogeneration Limited
Partnership ("Naheola"), Appomattox Cogeneration Limited Partnership
("Appomattox"), and Westwood Energy Properties Limited Partnership
("Westwood"), collectively referred to herein as the "Partnerships".
In the opinion of management, the accompanying unaudited Consolidated and
Combined Financial Statements contain all adjustments necessary to present
fairly the respective financial positions of the Company and the Partnerships
as of September 30, 1994, the results of operations and cash flows for the
three months ended September 30, 1994 and 1993. All adjustments are of a normal
recurring nature. These unaudited Consolidated and Combined Financial
Statements should be read in conjunction with the audited Consolidated and
Combined Financial Statements included in the June 30, 1994 Annual Report to
Shareholders. The results of operations for the three months ended September
30, 1994 are not necessarily indicative of the results to be expected for the
full fiscal year. Certain amounts in the prior period Consolidated Financial
Statements have been reclassified to conform to the current year presentation.
NOTE 2. DISCONTINUED OPERATIONS
As of June 30, 1994, the design, engineering and construction management
segment was reflected as discontinued operations in conjunction with the
Company's plan to dispose of this business.
On July 21, 1994, the Company sold CRSS Architects, Inc. to Hellmuth, Obata &
Kassabaum, Inc. ("HOK"). Total consideration amounted to $6.8 million,
consisting of $4.8 million in cash at closing and a $2.0 million sharing of
future net cash distributions from the Peace Shield project, of which $0.4
million was received during the three months ended September 30, 1994.
On July 29, 1994, the Company sold its engineering and construction management
operations, consisting primarily of CRSS Constructors, Inc. and certain assets
and liabilities of CRS Sirrine Engineers, Inc. to Jacobs Engineering Group,
Inc. ("Jacobs"). Total consideration paid by Jacobs was $33.5 million in cash,
representing $14.0 million over the aggregate book value at June 30, 1994 of
the business acquired. An additional purchase price adjustment for an increase
in the aggregate book value of the businesses acquired between June 30, 1994
and the closing date of July 29, 1994 has not yet been finalized.
7
<PAGE> 10
Net assets from discontinued operations at September 30, 1994 consists
primarily of the assets and liabilities of the retained power plant contracts,
NaTec's investment in the White River Nahcolite Minerals joint venture,
deferred taxes, legal claims reserves and accrued discontinuance costs.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
GENERAL
Electricity sales, steam sales and plant operations expense included in the
Company's Consolidated Statement of Operations consist of the revenues and
costs associated with the three Viking cogeneration facilities. These projects
are wholly-owned by CRSS Capital. Equity income in partnerships includes CRSS
Capital's interest in cogeneration facilities that are less than majority-owned
and are accounted for using the equity method. These partnerships include the
Hopewell, Naheola, Westwood, and Appomattox facilities. Operations and
administrative service fees arise from management services provided by CRSS
Capital to each project in which it maintains an ownership interest. Costs
associated with providing these services are included in general and
administrative expense. In addition to the components discussed previously,
costs and expenses included general and administrative overhead costs as well
as expenses related to the Company's project development efforts.
CONTINUING OPERATIONS
Consolidated earnings from continuing operations for the three months ended
September 30, 1994 were $0.7 million, or $0.06 per share, compared to $1.0
million, or $0.07 per share, for the three months ended September 30, 1993.
Total revenues for the three months ended September 30, 1994 of $7.1 million
were 4 percent lower than the corresponding period of the prior year. The
decrease was primarily due to a scheduled maintenance outage during September
at one of the Viking projects.
An increase in current year wood fuel costs resulted in an increase in plant
operations costs of $0.7 million for the first quarter of fiscal year 1995 as
compared to the first quarter of fiscal year 1994. Difficulties in procuring
adequate wood supplies have resulted in higher wood fuel prices in the current
year.
General and administrative expenses for the first quarter ended September 30,
1994 of $2.5 million, were $0.9 million higher than the prior year amount of
$1.6 million. The increase is due to the prior year amount including
expense reimbursements of $1.6 million related to a developmental project.
Excluding the effect of this reimbursement, general and administrative expenses
for the three months ended September 30, 1994 would have been lower than the
prior year. Marketing and project development costs of $0.4 million for the
three months ended September 30, 1994 were consistent with the prior year.
Non-operating income for the three months ended September 30, 1994 was $0.3
million compared to $0.2 million for the three months ended September 30, 1993.
The increase is due to higher cash balances available for investment in
addition to higher rates of interest during the current year. Interest
expense, which is primarily related to the long-term non-recourse debt used to
finance the Viking cogeneration facilities, was $0.1 million lower for the
8
<PAGE> 11
quarter ended September 30, 1994 as compared to the first quarter of fiscal
year 1994. The decrease is due to reductions in the outstanding principal
balances on the non-recourse debt.
Minority interest in earnings of $0.2 million for the three months ended
September 30, 1993 represents the minority interest in CRSS Capital previously
owned by Paribas North America, Inc. ("Paribas"). The Company (via redemption
by CRSS Capital) repurchased all of the common stock of CRSS Capital owned by
Paribas on January 31, 1994 resulting in CRSS Capital becoming wholly-owned by
the Company.
EQUITY INCOME IN PARTNERSHIPS
Equity income in partnerships reflects CRSS Capital's 50 percent interest in
the Hopewell, Naheola, and Appomattox power and cogeneration facilities and the
47.5 percent interest in the Westwood facility.
Equity income in affiliates increased from $3.0 million for the three months
ended September 30, 1993 to $4.1 million for the three months ended September
30, 1994, an increase of $1.1 million, or 38 percent. The increase is
primarily related to the Westwood project, which experienced an unscheduled
outage during the first quarter of the prior fiscal year. Also contributing to
the increase was higher results at the Hopewell cogeneration facility due to a
retroactive fuel credit received in the current year.
The following represents a proforma condensed combining balance sheet and
statement of operations of the Company assuming the less than majority-owned
partnerships are combined with the Company (dollars in thousands):
Proforma Condensed Combining Balance Sheet
as of September 30, 1994
<TABLE>
<CAPTION>
Unconsolidated Combined
CRSS Inc. Projects CRSS Inc.
-------- -------- ---------
<S> <C> <C> <C>
Assets
Current assets $ 38,351 $ 74,610 $112,961
Restricted cash - 53,332 53,332
Property, plant and equipment, net 77,218 484,211 561,429
Power purchase agreement, net - 58,576 58,576
Equity investment in partnerships 65,070 - -
Other noncurrent assets 20,166 996 21,162
-------- -------- --------
$200,805 $671,725 $807,460
======== ======== ========
Liabilities and Shareholders' Equity
Current liabilities $ 11,784 $ 50,648 $ 62,432
Non-recourse project financing 60,335 453,435 513,770
Other long-term obligations 7,856 37,129 44,985
Deferred income taxes 40,726 - 40,726
Minority interest in partnerships - - 65,443
Shareholders' equity 80,104 130,513 80,104
-------- -------- --------
$200,805 $671,725 $807,460
======== ======== ========
</TABLE>
9
<PAGE> 12
Proforma Condensed Combining Statement
of Operations
For the Three Months Ended September 30, 1994
<TABLE>
<CAPTION>
Unconsolidated Combined
CRSS Inc. Projects CRSS Inc.
--------- -------- ---------
<S> <C> <C> <C>
Revenues $ 7,137 $ 44,203 $ 51,340
Costs and expenses 8,372 24,805 33,177
Equity income in partnerships 4,084 - -
------- -------- --------
Operating income from continuing operations 2,849 19,398 18,163
Other income (expense), net (1,532) (11,153) (12,685)
Minority interest in earnings of partnerships - - (4,161)
------- -------- --------
Earnings from continuing operations
before income tax 1,317 8,245 1,317
Income tax expense 579 - 579
------- -------- --------
Earnings from continuing operations $ 738 $ 8,245 $ 738
======= ======== ========
</TABLE>
DISCONTINUED OPERATIONS
Earnings from discontinued operations for the three months ended September 30,
1993 reflect the operating results of the design, engineering and construction
management segment which was classified as discontinued operations as of June
30, 1994, in conjunction with the Company's plan to dispose of this business.
As further discussed below under "Liquidity and Capital Resources", the Company
sold its primary subsidiaries related to this business segment during the first
quarter of fiscal year 1995. As part of the sale transactions, CRSS retained
certain assets and liabilities, the majority of which relate to four power
plant engineering, procurement, and construction contracts which were
substantially complete or in the later stages of completion. Additionally, the
Company agreed to indemnify the purchasers against certain legal claims.
During the three months ended September 30, 1994, the Company recorded an
additional reserve of $9.5 million for the discontinued design, engineering and
construction management segment related to changes in the estimates to complete
these power plant contracts and for additional legal claims reserves.
The Company is continuing discussions with several parties for the disposition
of its holdings in NaTec Resources, Inc. ("NaTec"), the discontinued acid
rain/pollution control segment. Based on these discussions, the Company has
increased its provision for the estimated loss on disposal of NaTec by an
additional $2.5 million during the three months ended September 30, 1994.
CONSOLIDATED RESULTS
Consolidated net loss for the three months ended September 30, 1994, was $8.0
million or, $0.61 per share versus net earnings of $1.0 million, or $0.08 per
share for the corresponding period of the prior year.
LIQUIDITY AND CAPITAL RESOURCES
Working capital at September 30, 1994, totalled $26.6 million, which included
$18.2 million in cash and cash equivalents. As of June 30, 1994, working
capital was $37.5 million, which included cash and cash equivalents of $2.2
million. The $16.0 million increase in cash and cash equivalents for the
period from June 30, 1994 to September 30, 1994 is primarily due to
10
<PAGE> 13
the sale of the discontinued design, engineering and construction management
segment as further discussed below.
On July 21, 1994, the Company sold CRSS Architects, Inc. to Hellmuth, Obata &
Kassabaum, Inc. ("HOK"). Total consideration amounted to $6.8 million,
consisting of $4.8 million in cash at closing and a $2.0 million sharing of
future net cash distributions from the Peace Shield project, of which $0.4
million was received during the three months ended September 30, 1994.
On July 29, 1994, the Company sold its engineering and construction management
operations, consisting primarily of CRSS Constructors, Inc. and certain assets
and liabilities of CRS Sirrine Engineers, Inc., to Jacobs Engineering Group,
Inc. ("Jacobs"). Total consideration paid by Jacobs was $33.5 million in cash,
representing $14.0 million over the aggregate book value at June 30, 1994 of
the business acquired. An additional purchase price adjustment for an increase
in the aggregate book value of the businesses acquired between June 30, 1994
and the closing date of July 29, 1994 has not yet been finalized.
Cash payments related to the discontinued operations during the three months
ended September 30, 1994 of $17.5 million consisted of working capital
requirements of the businesses prior to the sale, severance and other employee
related costs, legal fees and settlements, costs related to the retained power
plant engineering, procurement, and construction contracts, and closing costs.
The Company maintains an unsecured revolving credit facility with four banks.
The facility may be used to fund draws under outstanding letters of credit
issued thereunder, which totalled $32.2 million at September 30, 1994, in
addition to $5.0 million for general corporate purposes. The credit facility,
which is available through December 30, 1994 is subject to certain restrictive
covenants including, among others, liquidity ratio, tangible net worth, debt
and cash flow ratios and limitations on capital investments.
The Company's non-recourse project financing represents long-term non-recourse
debt related to the Viking projects. The notes provide for interest payments
at 11.15 percent per annum due in quarterly installments of principal and
interest through the year 2009. The Company has entered into negotiations with
the lenders for the restructuring of the debt.
At September 30, 1994 cash totalling $0.4 million has been reserved for plant
maintenance on the Viking projects in accordance with the terms of the
non-recourse project financing. An additional $0.7 million is reserved for
debt service.
Subsequent to September 30, 1994, the Company received a formal call notice on
its interest in the Naheola partnership from its partner, James River
Corporation, for fair value. The project, which includes a chemical recovery
boiler and cogeneration assets located at James River's Naheola Mill in
Pennington, Alabama, has been in operation since March 1993. The timing and
the actual call price has not yet been determined, pending a formal update of
the financial projections and operating assumptions remaining in the project,
which runs through 2013.
Management believes that existing cash, cash flow from operations and existing
credit facilities will be sufficient to meet the ongoing requirements of the
operations of the Company. In addition, the above sources can be supplemented
with other external sources of funds to meet additional cash requirements if
necessary.
11
<PAGE> 14
PART II. - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders:
The Company's annual meeting of shareholders was held in the
Company's offices in Houston, Texas on Thursday, October 27,
1994. The following nominees were elected to serve as
directors for the ensuing year:
<TABLE>
<CAPTION>
Votes For Votes Withheld
--------- --------------
<S> <C> <C>
Bruce W. Wilkinson 10,753,826 608,679
Thomas A. Bullock 10,763,788 598,717
C. Herbert Paseur 10,767,199 595,306
Mike A. Myers 10,344,114 1,018,391
John M. Seidl 10,954,206 408,299
Ben R. Stuart 10,954,295 408,210
Larry E. Temple 10,955,739 406,766
</TABLE>
A proposal to adopt amendments to the Company's 1990 Long-Term
Incentive Compensation Plan was also approved with 7,162,532
shares voted for, 3,707,664 shares voted against, and 492,309
shares withheld.
Item 6. Exhibits and Reports on Form 8-K:
(a) Exhibits
27.1 Financial data schedule.
(b) Report on Form 8-K
None
12
<PAGE> 15
CRSS INC. AND SUBSIDIARIES
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.
CRSS Inc.
------------
(Registrant)
Date November 7, 1994 /s/ Bruce W. Wilkinson
-----------------------------
Bruce W. Wilkinson
Chief Executive Officer and
Chairman of the Board
Date November 7, 1994 /s/ William J. Gardiner
-----------------------------
William J. Gardiner
Senior Vice President/Chief
Financial Officer and
Treasurer (Principal
Financial and Accounting
Officer)
<PAGE> 16
EXHIBIT INDEX
Exhibit No.
27.1 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-END> SEP-30-1994
<CASH> 18,283
<SECURITIES> 0
<RECEIVABLES> 4,925
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 38,351
<PP&E> 95,574
<DEPRECIATION> 18,357
<TOTAL-ASSETS> 200,805
<CURRENT-LIABILITIES> 11,784
<BONDS> 60,335
<COMMON> 16,558
0
0
<OTHER-SE> 63,546
<TOTAL-LIABILITY-AND-EQUITY> 200,805
<SALES> 6,301
<TOTAL-REVENUES> 7,137
<CGS> 0
<TOTAL-COSTS> 5,523
<OTHER-EXPENSES> 2,849
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 17,797
<INCOME-PRETAX> 1,317
<INCOME-TAX> 579
<INCOME-CONTINUING> 738
<DISCONTINUED> (8,723)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (7,985)
<EPS-PRIMARY> (.61)
<EPS-DILUTED> (.61)
</TABLE>
