FORM 10-Q
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1995
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 1-7833
CBI INDUSTRIES, INC.
Incorporated in Delaware IRS Identification Number: 36-3009343
Principal Executive Offices: 800 Jorie Boulevard
Oak Brook, Illinois 60521-2268
Telephone Number: (708) 572-7000
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
_____ _____
The number of shares outstanding of a single class of common stock as of
March 31, 1995 - 38,085,211.
1 of 16
CBI INDUSTRIES, INC. AND SUBSIDIARIES
Table of Contents
PART I. FINANCIAL INFORMATION
Financial Statements: Page
Statements of Income
Three Months Ended March 31, 1995 and 1994.................. 3
Balance Sheets
March 31, 1995 and December 31, 1994........................ 4
Statements of Cash Flows
Three Months Ended March 31, 1995 and 1994.................. 5
Notes to Financial Statements............................... 6
Management's Discussion and Analysis of Operating
Performance and Financial Condition......................... 9
PART II. OTHER INFORMATION............................................ 14
SIGNATURE PAGE.......................................................... 16
2
<TABLE>
PART I - FINANCIAL INFORMATION
CBI INDUSTRIES, INC. AND SUBSIDIARIES
STATEMENTS OF INCOME
<CAPTION>
Three Months
Thousands of dollars, except per share amounts Ended March 31,
1995 1994
<S> <C> <C>
Revenues
Industrial Gases $251,769 $197,525
Contracting Services 173,995 174,484
Investments 37,539 29,874
Total Revenues 463,303 401,883
Costs of Services and Products Sold
Industrial Gases (175,602) (140,493)
Contracting Services (154,849) (147,507)
Investments (27,467) (24,209)
Total Costs of Services and Products Sold (357,918) (312,209)
Gross Profit from Operations 105,385 89,674
Selling and Administrative Expense
Industrial Gases (45,335) (32,439)
Contracting Services (18,695) (19,814)
Investments (1,544) (1,223)
Corporate (3,863) (4,766)
Total Selling and Administrative Expense (69,437) (58,242)
Income from Operations 35,948 31,432
Interest Expense (9,227) (8,146)
Income before Income Taxes and Minority Interest 26,721 23,286
Provision for Income Taxes (12,600) (11,500)
Income before Minority Interest 14,121 11,786
Minority Interest in Income (3,927) (2,113)
Net Income 10,194 9,673
Dividends on Preferred Shares (1,538) (1,501)
Net Income to Common Shareholders $8,656 $8,172
Net Income per Common Share
Primary $0.23 $0.22
Fully Diluted $0.21 $0.20
Average Common Shares Outstanding (thousands)
Primary 38,090 37,680
Fully Diluted 43,486 43,257
Dividends on Common Shares
Amount $4,570 $4,535
Per Share $0.12 $0.12
<F1>
The accompanying notes are an integral part of these financial statements.
</TABLE>
3
<PAGE>
<TABLE>
CBI INDUSTRIES, INC. AND SUBSIDIARIES
BALANCE SHEETS
<CAPTION>
Thousands of dollars March 31, Dec. 31,
1995 1994
<S> <C> <C>
Current Assets
Cash $4,080 $14,013
Temporary Cash Investments 47,323 36,953
Accounts Receivable, less allowances
of 14,900 and 14,800 265,306 295,542
Contracts in Progress with Earned Revenues
exceeding related Progress Billings 63,037 60,143
Inventories (Note 2) 80,311 73,226
Other Current Assets 43,463 37,977
503,520 517,854
Other Assets
Notes Receivable 36,900 37,397
Real Estate Properties 26,194 26,542
Equity in and Advances to Unconsolidated Affiliates 28,433 31,082
Intangible Assets 79,124 78,783
Other Non-Current Assets 78,651 70,124
249,302 243,928
Property and Equipment 1,932,682 1,876,329
Accumulated Depreciation (644,327) (629,399)
1,288,355 1,246,930
Total Assets $2,041,177 $2,008,712
Current Liabilities
Notes Payable $76,890 $72,589
Current Maturities of Long-Term Debt (Note 3) 17,333 17,241
Accounts Payable 75,735 94,523
Dividends Payable 661 2,675
Accrued Liabilities 120,267 117,851
Contracts in Progress with Progress Billings
exceeding related Earned Revenues 45,936 42,813
Income Taxes Payable 32,158 31,360
368,980 379,052
Long-Term Debt and Other Liabilities
Long-Term Debt (Note 3) 644,010 666,730
Other Non-Current Liabilities 151,904 143,065
Deferred Income Taxes 41,631 41,687
Minority Interest in Subsidiaries 63,738 62,342
Capital Stock
Preferred Stock
Series D (Note 4) 55,000 -
Series C (Note 4) 114,749 115,244
Unamortized ESOP Debt (Note 6) (75,003) (77,106)
39,746 38,138
Common Stock
Common Stock (Note 5) 99,459 99,459
Additional Paid-in Capital 214,320 214,320
Retained Earnings 464,762 460,683
Unamortized Restricted Stock Awards (10,785) (9,780)
Unamortized ESOP Debt (Note 6) (16,698) (17,167)
Cost of Reacquired Common Stock (Note 5) (35,585) (34,676)
Cumulative Translation Adjustment (39,305) (35,141)
676,168 677,698
Total Liabilities and Capital Stock $2,041,177 $2,008,712
The accompanying notes are an integral part of these financial statements.
</TABLE>
4
<TABLE>
CBI INDUSTRIES, INC. AND SUBSIDIARIES
STATEMENTS OF CASH FLOWS
<CAPTION>
Three Months
Thousands of dollars Ended March 31,
1995 1994
<S> <C> <C>
Cash Flows from Operating Activities
Net Income $10,194 $9,673
Depreciation 27,209 24,837
37,403 34,510
Decrease in Accounts Receivable 30,756 36,119
Decrease in Contracts in Progress, net 229 531
(Decrease) in Accounts Payable,
Accrued Liabilities and Income Taxes Payable, net (17,889) (14,794)
Increase/(Decrease) in Deferred Income Taxes 1,708 (2,174)
Decrease in Undistributed Earnings
of Unconsolidated Affiliates 545 111
Other, net (31) 3,608
Total Cash Flows from Operating Activities 52,721 57,911
Cash Flows from Capital Investment Activities
Purchase of Property and Equipment (62,285) (67,540)
Cost of Business Acquisitions, net of cash acquired (6,427) -
Disposition of Property and Equipment 1,669 2,216
(Increase)/Decrease in Other Assets, net (7,789) 1,681
Other, net (1,737) 3,101
Total Cash Flows from Capital Investment Activities (76,569) (60,542)
Cash Flows from Financing and Shareholder Activities
Issuance of Debt 42,511 44,809
Repayment of Debt (61,079) (19,191)
(18,568) 25,618
Sale of Preferred Stock and Common Stock 55,822 2,328
Purchase of Common Stock (4,376) (264)
Dividends Paid (8,593) (8,730)
Total Cash Flows from Financing and Shareholder Activities 24,285 18,952
Increase in Cash and Temporary Cash Investments $437 $16,321
The accompanying notes are an integral part of these financial statements.
</TABLE>
5
<PAGE>
CBI INDUSTRIES, INC. AND SUBSIDIARIES
Notes to Financial Statements
March 31, 1995
Thousands of dollars
(1) Additional Information
The consolidated financial statements included herein have been prepared
by CBI Industries, Inc. and Subsidiaries (CBI), without audit, pursuant
to the rules and regulations of the Securities and Exchange Commission.
Certain information and footnote disclosures, normally included in
financial statements prepared in accordance with generally accepted
accounting principles, have been condensed or omitted pursuant to such
rules and regulations, although CBI believes that the disclosures are
adequate to make the information presented not misleading. These
consolidated financial statements should be read in conjunction with the
consolidated financial statements and the notes thereto included in the
1994 annual report on Form 10-K of CBI.
In the opinion of CBI, all adjustments necessary to present fairly the
financial position of CBI as of March 31, 1995 and the results of its
operations and cash flows for the period then ended have been included.
The results of operations for such interim periods are not necessarily
indicative of the results for the full year.
(2) Inventories
Inventories by component and valuation method at March 31, 1995:
Raw materials and supplies $34,293
Work in process 4,951
Finished goods 41,067
_______
Total inventories $80,311
=======
Average cost method $54,140
First-in, first-out method 26,171
_______
Total inventories $80,311
=======
6
(3) Long-Term Debt
Summary of long-term debt at March 31, 1995:
Commercial Paper and Other Similar Borrowings with a weighted
average quarter-end interest rate of 6.4% $189,884
Senior ESOP Notes with a quarter-end interest rate of 8.354%,
maturing in 1995 through 2002 89,710
6-1/4% Notes, $75,000 face amount, due 2000 74,765
6-5/8% Notes, $75,000 face amount, due 2003 74,521
Variable Rate Unsecured Notes with a weighted average quarter-
end interest rate of 7.5%, maturing in 1995 through 2001 137,388
Variable Rate Secured Notes with a weighted average quarter-
end interest rate of 6.7%, maturing in 1995 through 2000 61,400
Fixed Rate Medium-Term Notes, Series A, with a weighted average
quarter-end interest rate of 7.7%, maturing in 1999 and 2004 31,000
Other 2,675
________
661,343
Less: current maturities (17,333)
________
$644,010
========
Commercial paper and other similar borrowings, which would normally be
classified as current debt, have been classified as long-term debt since
this debt is supported by unused commitments under an existing $300,000
unsecured three-year extendible revolving credit agreement. The
agreement has a present termination date of December 31, 1997,
extendible annually for one additional year by mutual consent. Amounts
borrowed under the agreement may be prepaid under certain options and a
commitment fee is payable on any unused portion.
Minimum annual principal payments of long-term debt are as follows:
April 1 through December 31, 1995 $ 11,996
Year ending December 31, 1996 20,338
Year ending December 31, 1997 215,998
Year ending December 31, 1998 56,801
Year ending December 31, 1999 113,715
Year ending December 31, 2000 98,379
After 2000 144,116
________
$661,343
========
7
(4) Preferred Stock - $1.00 par value; authorized - 20,000,000 shares.
Series A - No shares have been issued. 800,000 shares are reserved as
Series A Junior Participating Preferred Stock.
Series C - 3,541,636 shares were issued as Convertible Voting Preferred
Stock, Series C, at March 31, 1995 and 3,556,918 shares at December 31,
1994. The annual dividend is $2.27 per share, payable semi-annually.
Series D - 550,000 shares were issued as 7.48% Cumulative Preferred
Stock, Series D, on March 31, 1995. CBI sold these shares on March 31,
1995 at $100 per share. The annual dividend is $7.48 per share, payable
quarterly. No dividends may be paid on CBI's Common Stock or Series A
Junior Participating Preferred Stock, unless all dividends payable on
outstanding shares of Series D Preferred Stock have been paid, and shall
rank on parity with the Series C Preferred Stock as to payment of
dividends. The holders of shares of Series D Preferred Stock have no
voting rights. The Series D Preferred Stock is mandatorily redeemable
on, but not prior to, April 1, 2000 at a price of $100 per share.
(5) Common Stock
Common stock - $2.50 par value; authorized - 120,000,000 shares at
March 31, 1995; issued - 39,783,614 shares at March 31, 1995 and
December 31, 1994.
Reacquired stock - The number of reacquired shares of common stock was
1,698,403 at March 31, 1995 and 1,686,650 at December 31, 1994.
(6) Employee Stock Ownership Plan (ESOP)
Unamortized ESOP debt - The Senior ESOP Notes, which were issued in
1988, in an amount of $125,000, were initially offset by a like amount
of unamortized ESOP debt in capital stock. As company contributions
plus the dividends on the shares held by the ESOP are used to meet
interest and principal payments on the loan over its 14-year term,
shares acquired with the loan proceeds are allocated to eligible
employees. As of March 31, 1995, 709,751 common shares and 1,787,917
Series C preferred shares are subject to future allocation.
8
Management's Discussion and Analysis
of Operating Performance and Financial Condition
The following discussion and analysis should be read in conjunction with the
consolidated financial statements and accompanying notes.
OPERATING PERFORMANCE
OVERVIEW. Consolidated net income for the quarter ended March 31, 1995 was
$10.2 million ($0.23 per common share), as compared to $9.7 million ($0.22 per
common share) for the first quarter of 1994.
Revenues in the current quarter were $463.3 million, up 15.3% from the $401.9
million recorded in the prior year. In the second quarter of 1994, Liquid
Carbonic consolidated for the first time the financial results of certain of
its Canadian distributors (the "Canadian consolidation"). Excluding the
Canadian consolidation and a related adjustment, revenues for the current
quarter would have been $444.0 million, resulting in a 10.5% increase in
revenues between years.
Gross profit for the first quarter of 1995 of $105.4 million (22.7% of
revenues) was 17.5% greater than 1994's $89.7 million (22.3% of revenues).
Excluding the Canadian consolidation, gross profit would have increased 10.7%
over the comparable periods. Gross margins improved from 1994 in the
Industrial Gases and Investments segments, but declined in the Contracting
Services segment. Selling and administrative expenses of $69.4 million
increased $11.2 million from the first quarter of 1994, of which $5.3 million
was attributable to the Canadian consolidation. Excluding the effect of that
consolidation, selling and administrative expenses would have increased 10.1%
between years. CBI's income from operations of $35.9 million (7.8% of
revenues) in the first quarter of 1995 represented a 14.4% improvement from
the $31.4 million (also 7.8% of revenues) recorded in 1994. Cash flow from
operations for the first quarters of 1995 and 1994 were $66.9 million and
$68.9 million, respectively.
CBI's comparative operating performance, before interest and taxes, for the
first quarters of 1995 and 1994, was as follows (dollars in thousands):
Three Months
____________
1995 1994
____ ____
Revenues $ 463,303 $ 401,883
Costs (357,918) (312,209)
_________ _________
Gross profit 105,385 89,674
Gross margin-% 22.7% 22.3%
Selling and administrative (69,437) (58,242)
_________ _________
Income from operations 35,948 31,432
Operating margin-% 7.8% 7.8%
Depreciation 27,209 24,837
Other non-cash charges 3,748 12,592
_________ _________
Cash flow from operations $ 66,905 $ 68,861
========= =========
9
INDUSTRIAL GASES. Liquid Carbonic's performance for the quarters ending
March 31, 1995 and 1994 was as follows (dollars in thousands):
Three Months
____________
1995 1994
____ ____
Revenues $ 251,769 $ 197,525
Costs (175,602) (140,493)
_________ _________
Gross profit 76,167 57,032
Gross margin-% 30.3% 28.9%
Selling and administrative (45,335) (32,439)
_________ _________
Income from operations $ 30,832 $ 24,593
Operating margin-% 12.2% 12.5%
========= =========
Liquid Carbonic's revenues for the first quarter of 1995 were 27.5% greater
than in the same 1994 quarter. Excluding the effect of the Canadian
consolidation, revenues in the current quarter would have been $232.5 million,
producing a revenue increase of 17.7%. Although all geographical sectors
showed double-digit improvement, revenue growth outside the United States and
Canada, particularly in Brazil, was especially strong, increasing more than
30% from a combination of greater volumes and higher average selling prices in
U.S. dollar terms. The devaluation of the Mexican peso during the first
quarter of 1995 had a negligible effect on Liquid Carbonic's revenues and
operating income. Revenues in the United States increased more than 10%
between periods due mainly to increased production of methanol and
formaldehyde by the Process Plants division of Liquid Carbonic, from increased
prices and increased sales volumes of carbon dioxide, and from greater sales
volumes of atmospheric gases.
Gross profit increased by 22.8% (after adjusting for the Canadian
consolidation) from the increase in revenues and from efficiencies in
production costs which were realized in a number of countries. The gross
margin benefitted from new plant capacity as well as from a favorable product
mix. Selling and administrative expenses were higher for three principal
reasons, a $5.3 million increase due to the Canadian consolidation, a $5.0
million increase in Brazil (half of which is due to the increased value of the
Brazilian currency), and approximately $0.7 million arising from recently
acquired companies in Latin America. Selling and administrative expenses in
the United States declined on a year-to-year basis despite an increased number
of facilities and higher volumes of gases sold.
Liquid Carbonic's income from operations increased 25.4% between years,
although its operating margin declined slightly due to the accounting effects
of the Canadian consolidation. Excluding the Canadian consolidation, the
operating margin would have been 12.9% in the first quarter of 1995.
Operating income outside the United States and Canada improved because of
revenue growth. Operating margins increased due to Liquid Carbonic's ability
to adjust prices outside of North America to more than offset the rate of cost
inflation, to enhanced production efficiencies, and to greater revenue growth
in countries which enjoy higher operating margins. Operating income in the
United States increased 6.1% year-over-year, but the U.S. operating margin was
slightly lower than that of the previous year which benefitted from the
inclusion in 1994 of gains from the sale of certain retail operations.
10
CONTRACTING SERVICES. The operating results of Chicago Bridge and Iron
Company for the quarters ending March 31, 1995 and 1994 were as follows
(dollars in thousands):
Three Months
____________
1995 1994
____ ____
Revenues $ 173,995 $ 174,484
Costs (154,849) (147,507)
_________ _________
Gross profit 19,146 26,977
Gross margin-% 11.0% 15.5%
Selling and administrative (18,695) (19,814)
_________ _________
Income from operations $ 451 $ 7,163
Operating margin-% 0.3% 4.1%
========= =========
Revenues for the Contracting Services segment in the first quarter of 1995
were level with those of the prior year in total, although revenues increased
about $16 million in the United States and declined a like amount
internationally. Approximately 64% of revenues during the first quarter of
1995 was derived from within the United States, as compared to approximately
54% in the first quarter of 1994. The increase in the United States reflects
the execution of a greater volume of repair and maintenance work than was
available to the company one year previously. The decline in revenues outside
the United States is measured against a high level of work put in place during
the first quarter of 1994, principally in Africa, Southeast Asia and the
Caribbean, as compared to the current quarter.
Operating and gross margins for the segment declined during the current
quarter, as compared to the first quarter of 1994 mainly due to the margin
benefit in the first quarter of 1994 from the results of favorable resolutions
of certain international contract claims and the gain from the sale of
property to the U.S. Navy. In addition, the first quarter of 1995 was
adversely affected by weather-related and operational factors on several
domestic construction projects and by continuing expenses arising from the
reconfiguration of the contracting company's domestic operations. Margins for
Chicago Bridge are expected to remain under pressure until its level of work
increases and the mix of its activities reflects an increased level of new
vessel fabrication and international revenues.
New contract awards for the first quarter of 1995 totalled $232.1 million, a
4.6% improvement from the comparable quarter of 1994, and up 16.7% from the
final quarter of 1994. The order flow in the quarter was strongly domestic
and reflected continued growth of Chicago Bridge's service activities. The
three largest orders, all domestic, totalled approximately $70 million. The
backlog of work to be executed in the future increased to $348.4 million as of
March 31, 1995, up from $287.5 million at the end of 1994, but lower than the
$475.7 million at March 31, 1994.
11
INVESTMENTS. The operating results of Statia Terminals and the contributions
from financial investments, which together comprise the Investments segment,
were as follows for the quarters ending March 31, 1995 and 1994 (dollars in
thousands):
Three Months
____________
1995 1994
____ ____
Revenues $ 37,539 $ 29,874
Costs (27,467) (24,209)
________ ________
Gross profit 10,072 5,665
Gross margin-% 26.8% 19.0%
Selling and administrative (1,544) (1,223)
________ ________
Income from operations $ 8,528 $ 4,442
Operating margin-% 22.7% 14.9%
======== ========
Revenues for the first quarter of 1995 increased 25.7% due to a 45% growth in
bunkering revenues at the St. Eustatius facility, with both volumes and prices
increasing 20% over the previous year, and to $3.5 million in revenues from a
new five-million-barrel facility at St. Eustatius which became operational
during the first quarter. Revenues and operating income, however, were less
than anticipated due to a slower than expected pace of activity at the
company's Point Tupper Terminal as demand for storage and blending capacity
associated with reformulated fuel requirements in the United States did not
meet expectations.
Income from operations for the segment was up more than 90% year-over-year,
due mainly to earnings from the increase in revenues for Statia Terminals, and
to income from other assets included in the Investments segment, net of
foreign exchange effects.
12
OTHER INCOME STATEMENT MATTERS. Interest expense for the first quarter of
1995 amounted to $9.2 million, as compared to $8.1 million for the comparable
1994 period, as a result of higher levels of debt and an increase in interest
rates. The effective income tax rate for the current quarter was 47.2%. In
the first quarter of 1994, the effective income tax rate was 49.4%, but this
rate was reduced in subsequent quarters, resulting in an effective rate of
46.5% for all of 1994. CBI's effective income tax rate continues to be
greater than the statutory U.S. tax rate because its taxable domestic earnings
are low relative to earnings from its international operations.
Fully diluted earnings per common share, assuming the conversion of the
company's Series C Convertible Voting Preferred Stock, as required by
accounting disclosure rules, was $0.21 for the first quarter of 1995, compared
to $0.20 in 1994's first quarter.
FINANCIAL CONDITION
BALANCE SHEET. Cash and short-term investments totalled $51.4 million at
March 31, 1995, about the same as at December 31, 1994. Working capital
declined slightly from $138.8 million at the end of 1994 to $134.5 million at
March 31, 1995. Total debt (notes payable plus current and non-current long-
term debt) was reduced from $756.6 million as of December 31, 1994 to $738.2
million for the current quarter as a result of the issuance of $55 million in
preferred stock on March 31, 1995, the proceeds from which were applied to
debt. The ratio of total debt to total capitalization (total debt plus
capital stock) declined from 51.4% at December 31, 1994 to 48.9% as of March
31, 1995. With CBI's ESOP debt considered as equity, which will occur as the
common and preferred shares held by the ESOP Trust are allocated to eligible
employees, debt as a percent of capitalization was 45.0% at December 31, 1994
and 43.0% at March 31, 1995.
CAPITAL EXPENDITURES. Expenditures for new plant and equipment during the
first quarter of 1995 were $62.3 million, compared to $67.5 million in 1994's
first quarter. Of the expenditures in the current year, $41.2 million
represented investments in increased capacity.
13
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
MARATHON/TEXAS CITY LITIGATION. On October 30, 1987, CBI Na-Con, Inc.
("CBI Na-Con") was working in the Marathon Petroleum Company refinery in
Texas City, Texas. While a lift was being made by a crane supplied and
operated by others, the crane became unstable, causing the operator to
drop the load on a hydrofluoric acid tank which released part of its
contents into the atmosphere. The community surrounding the refinery was
evacuated after the incident and a substantial number of persons
evacuated sought medical attention. CBI Na-Con has reached settlements
with all but about 4 of the 4,300 (approximate) third-party plaintiffs
who brought suit as a result of the incident.
After CBI's insurers declined to indemnify CBI for this incident based
on their interpretation of certain pollution exclusions contained in
CBI's insurance policies, CBI filed suit in Harris County, Texas against
its insurers seeking a court ruling that the policies covered the
incident. The Trial Court, on the insurers' preliminary motion,
sustained the insurers' position that coverage did not exist. The Texas
Court of Appeals reversed the Trial Court and found that CBI should be
allowed to proceed with its lawsuit and related discovery against the
insurers. The insurers immediately appealed the Court of Appeals
decision in CBI's favor to the Texas Supreme Court, which accepted the
case for review. On March 2, 1995 the Texas Supreme Court reversed the
Court of Appeals and affirmed the judgment of the Trial Court that
coverage did not exist. CBI filed a motion asking the Supreme Court to
reconsider its decision, which is pending. CBI's management presently
believes that its reserves are adequate to cover remaining potential
liabilities resulting from the occurrence at Texas City.
ANTITRUST MATTERS. Liquid Carbonic Industries Corporation ("Liquid
Carbonic") has been or is currently involved in civil litigation and
governmental proceedings relating to antitrust matters. In this regard,
since April 1992, several lawsuits have been filed against Liquid
Carbonic and various competitors. These cases have been consolidated in
the United States District Court for the Middle District of Florida,
Orlando Division. The lawsuits allege generally that, beginning not
later than 1968 and continuing through October 1992, defendants
conspired to allocate customers, fix prices and rig bids for carbon
dioxide in the United States in violation of the antitrust laws. On
April 19, 1993, the court certified a class in the consolidated cases
consisting of direct purchasers of carbon dioxide from defendants in the
continental United States for the period from January 1, 1968, to and
including October 26, 1992.
Plaintiffs seek from defendants unspecified treble damages, civil
penalties, injunctive relief, costs and attorneys' fees. In addition,
suits have been brought against Liquid Carbonic and others under the
antitrust laws of the States of Alabama and California based upon the
foregoing allegations. The suit in the State of Alabama was settled
during the first quarter. The company believes that the allegations made
against Liquid Carbonic in the remaining lawsuits are without merit and
Liquid Carbonic intends to defend itself vigorously. Liquid Carbonic
and its subsidiaries also, from time to time, furnish documents and
witnesses in connection with governmental investigations of alleged
violations of the antitrust laws.
In 1994, several claims were filed against Liquid Carbonic, Inc., a
wholly owned Canadian subsidiary of Liquid Carbonic, and various
competitors generally alleging that for the period 1954 to 1990 the
defendants conspired to fix prices for bulk and cylinder gas oxygen in
Canada in violation of the Canadian competition laws. The complainants
consist mainly of hospitals located in the Provinces of British Columbia
and Ontario. The company believes that the damages sought by the
plaintiffs are wholly without merit and the company intends to
vigorously defend against these claims.
14
Item 1. Legal Proceedings (Continued)
While the outcome of any particular lawsuit or governmental
investigation cannot be predicted with certainty, the company believes
that these antitrust matters will not have a materially adverse effect
on its operations or financial condition.
ENVIRONMENTAL LITIGATION. Chicago Bridge & Iron Company ("Chicago
Bridge") was a minority shareholder from 1934 to 1954 in a company which
owned or operated at various times several wood treating facilities at
sites in the United States, some of which are currently under
investigation, monitoring or remediation under various environmental
laws. Chicago Bridge is involved in litigation concerning environmental
liabilities, which are currently undeterminable, in connection with
certain of those sites. Chicago Bridge denies any liability for each
site and believes that the successors to the wood treating business are
responsible for cost of remediation of the sites. Chicago Bridge has
reached settlements for environmental clean-up at most of the sites. The
company believes that any remaining potential liability will not have a
materially adverse effect on its operations or financial condition.
CORPORATE LITIGATION. A purported class action on behalf of all
holders of CBI common stock is pending in the Chancery Court of Delaware
against the company and certain of its Directors. This lawsuit, WILLIAM
STEINER V. CBI INDUSTRIES, et al, was commenced on December 22, 1994. It
alleges that the defendants breached their fiduciary duty to
shareholders by rejecting proposals by Airgas, Inc. for the company to
either merge with Airgas or to sell Liquid Carbonic to Airgas, and by
amending the Amendment and Restatement of Rights Agreement dated as of
August 8, 1989, between the company and First Chicago Trust Company of
New York, as Rights Agent, as amended (the "Rights Agreement").
Plaintiff seeks to (a) enjoin the Directors to carry out their fiduciary
duties; (b) declare the Rights Agreement null and void; (c) enjoin the
company and its Directors from erecting unlawful barriers to the
acquisition of the company; and (d) recover from defendants unspecified
monetary damages sustained by shareholders of CBI as a result of the
alleged acts of the Board of Directors. The company intends to
vigorously defend against this action.
OTHER LITIGATION. In addition to the above lawsuits, CBI is a
defendant in a number of other lawsuits arising from the conduct of its
business. While it is impossible at this time to determine with
certainty the ultimate outcome of these other lawsuits, CBI's management
believes that adequate provisions have been made for probable losses
with respect thereto as best as can be determined at this time and that
the ultimate outcome, after provisions therefor, will not have a
material adverse effect on the financial position of CBI. The adequacy
of reserves applicable to the potential costs of being engaged in
litigation and potential liabilities resulting from litigation are
reviewed as developments in the litigation warrant.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
11. Computation of Earnings per Common Share
27. Financial Data Schedule
(b) Reports on Form 8-K
A Form 8-K was filed under Item 5, Other Events and Item 7, Financial
Statements, Pro Forma Financial Information and Exhibits. The date of
that report was April 5, 1995.
A Form 8-K was filed under Item 5, Other Events and Item 7, Financial
Statements, Pro Forma Financial Information and Exhibits. The date of
that report was April 21, 1995.
15
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.
CBI INDUSTRIES, INC.
BY /s/ George L. Schueppert
_________________________________
George L. Schueppert
Executive Vice President - Finance
and Chief Financial Officer
Date: May 12, 1995
16
<TABLE>
EXHIBIT 11
CBI INDUSTRIES, INC. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER COMMON SHARE
<CAPTION>
Three Months
Thousands of dollars, except per share amounts Ended March 31,
1995 1994
<S> <C> <C>
Primary Earnings Per Common Share
Net income to common shareholders $8,656 $8,172
Weighted average number of common shares outstanding 38,090 37,680
Primary net income per common share $0.23 $0.22
Fully Diluted Earnings Per Common Share
Net income $8,656 $8,172
Add back expenses included in net income that pertain to ESOP
Series C preferred dividends 1,977 2,093
Common dividends on unallocated reverted shares - 16
Company contributions (after utilization of common dividends
of $199, $202 charged to retained earnings) 2,332 2,004
ESOP debt amortization - (212)
Tax effect included in net income related to debt service (1,747) (1,582)
Net income adjusted to exclude ESOP debt service 11,218 10,491
Adjustments to reflect the servicing of ESOP debt (required for this
calculation), based on the assumption all Series C preferred shares
were converted to common shares:
Common dividends on unallocated reverted shares - (34)
Company contribution (after utilization of common dividends
of $829, $838 charged to retained earnings) (3,679) (3,443)
ESOP debt amortization - 212
Tax effect included in net income related to debt service 1,618 1,435
Fully diluted net income to common shareholders $9,157 $8,661
Weighted average number of common shares outstanding 38,090 37,680
Add common stock equivalents of stock option plan 84 190
Add common stock equivalents of Series C preferred shares 5,312 5,387
Fully diluted weighted average number of common shares outstanding 43,486 43,257
Fully diluted net income per common share $0.21 $0.20
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AS OF MARCH 31, 1995 AND THE INCOME STATEMENT FOR THE THREE MONTHS ENDED
MARCH 31, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> $51,403
<SECURITIES> 0
<RECEIVABLES> 280,206
<ALLOWANCES> (14,900)
<INVENTORY> 80,311
<CURRENT-ASSETS> 503,520
<PP&E> 1,932,682
<DEPRECIATION> (644,327)
<TOTAL-ASSETS> $2,041,177
<CURRENT-LIABILITIES> $368,980
<BONDS> 644,010
<COMMON> 313,779
55,000
39,746
<OTHER-SE> 362,389
<TOTAL-LIABILITY-AND-EQUITY> $2,041,177
<SALES> 0
<TOTAL-REVENUES> $463,303
<CGS> 0
<TOTAL-COSTS> $357,918
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 9,227
<INCOME-PRETAX> 26,721
<INCOME-TAX> 12,600
<INCOME-CONTINUING> 10,194
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,656
<EPS-PRIMARY> .23
<EPS-DILUTED> .21
</TABLE>
