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 September 30, 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
September 30, 1995 - 38,295,207.
1 of 17
CBI INDUSTRIES, INC. AND SUBSIDIARIES
Table of Contents
PART I.FINANCIAL INFORMATION
Financial Statements: Page
Statements of Income
Nine Months Ended September 30, 1995 and 1994............... 3
Balance Sheets
September 30, 1995 and December 31, 1994.................... 4
Statements of Cash Flows
Nine Months Ended September 30, 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..........................................................17
2
<TABLE>
PART I - FINANCIAL INFORMATION
CBI INDUSTRIES, INC. AND SUBSIDIARIES
STATEMENTS OF INCOME
<CAPTION>
Three Months Nine Months
Thousands of dollars, except per share amounts Ended September 30,Ended September 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Revenues
Industrial Gases $254,943 $233,226 $757,719 $658,989
Contracting Services 161,674 210,701 511,451 593,717
Investments 31,998 45,264 116,546 108,358
Total Revenues 448,615 489,191 1,385,716 1,361,064
Costs of Products and Services Sold
Industrial Gases (173,668)(161,472) (518,421) (457,210)
Contracting Services (143,062)(196,979) (453,390) (522,295)
Investments (28,047) (35,744) (94,098) (86,805)
Total Costs of Products and Services Sold (344,777)(394,195) (1,065,909)(1,066,310)
Gross Profit from Operations 103,838 94,996 319,807 294,754
Selling and Administrative Expense
Industrial Gases (43,949) (36,712) (133,784) (111,241)
Contracting Services (17,445) (19,732) (53,911) (60,258)
Investments (1,417) (1,598) (4,416) (4,324)
Corporate (3,711) (4,103) (11,719) (14,293)
Total Selling and Administrative Expense (66,522) (62,145) (203,830) (190,116)
Income from Operations 37,316 32,851 115,977 104,638
Interest Expense (14,006) (11,085) (36,369) (28,887)
Income before Income Taxes and Minority Interes 23,310 21,766 79,608 75,751
Provision for Income Taxes (10,500) (9,500) (36,100) (35,200)
Income before Minority Interest 12,810 12,266 43,508 40,551
Minority Interest in Income (2,446) (2,874) (8,934) (7,915)
Net Income 10,364 9,392 34,574 32,636
Dividends on Preferred Shares (2,691) (1,521) (6,841) (4,529)
Net Income to Common Shareholders $7,673 $7,871 $27,733 $28,107
Net Income per Common Share
Primary $0.20 $0.20 $0.73 $0.74
Fully Diluted $0.19 $0.20 $0.67 $0.69
Average Common Shares Outstanding (thousands)
Primary 38,276 37,913 38,184 37,795
Fully Diluted 43,587 43,199 43,495 43,081
Dividends on Common Shares
Amount $4,595 $4,557 $13,749 $13,636
Per Share $0.12 $0.12 $0.36 $0.36
<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 September 30, December 31,
1995 1994
<S> <C> <C>
Current Assets
Cash $1,249 $14,013
Temporary Cash Investments 34,454 36,953
Accounts Receivable, less allowances
of 13,900 and 14,800 302,454 295,542
Contracts in Progress with Earned Revenues
exceeding related Progress Billings 70,046 60,143
Inventories (Note 2) 83,845 73,226
Other Current Assets 49,068 37,977
541,116 517,854
Other Assets
Notes Receivable 31,768 37,397
Real Estate Properties 25,508 26,542
Equity in and Advances to Unconsolidated Affiliates 29,886 31,082
Intangible Assets 78,863 78,783
Other Non-Current Assets 69,611 70,124
235,636 243,928
Property and Equipment 2,049,951 1,876,329
Accumulated Depreciation (702,330) (629,399)
1,347,621 1,246,930
Total Assets $2,124,373 $2,008,712
Current Liabilities
Notes Payable $66,653 $72,589
Current Maturities of Long-Term Debt (Note 3) 17,823 17,241
Accounts Payable 71,683 94,523
Dividends Payable 879 2,675
Accrued Liabilities 125,596 117,851
Contracts in Progress with Progress Billings
exceeding related Earned Revenues 46,543 42,813
Income Taxes Payable 22,441 31,360
351,618 379,052
Long-Term Debt and Other Liabilities
Long-Term Debt (Note 3) 716,331 666,730
Other Non-Current Liabilities 126,838 143,065
Deferred Income Taxes 46,530 41,687
Minority Interest in Subsidiaries 69,135 62,342
Capital Stock
Preferred Stock
Series D (Note 4) 55,000 -
Series E (Note 4) 20,000 -
Series C (Note 4) 112,905 115,244
Unamortized ESOP Debt (Note 6) (70,798) (77,106)
42,107 38,138
Common Stock
Common Stock (Note 5) 99,459 99,459
Additional Paid-in Capital 214,320 214,320
Retained Earnings 475,505 460,683
Unamortized Restricted Stock Awards (8,024) (9,780)
Unamortized ESOP Debt (Note 6) (15,762) (17,167)
Cost of Reacquired Common Stock (Note 5) (31,693) (34,676)
Cumulative Translation Adjustment (36,991) (35,141)
696,814 677,698
Total Liabilities and Capital Stock $2,124,373 $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>
Nine Months
Thousands of dollars Ended September 30,
1995 1994
<S> <C> <C>
Cash Flows from Operating Activities
Net Income $34,574 $32,636
Depreciation 88,813 78,086
123,387 110,722
(Increase) in Accounts Receivable (1,886) (3,002)
(Increase) in Contracts in Progress, net (9,740) (2,668)
(Decrease) in Accounts Payable,
Accrued Liabilities and Income Taxes Payable, net (29,217) (975)
Increase/(Decrease) in Deferred Income Taxes 3,973 (2,289)
(Increase)/Decrease in Undistributed Earnings
of Unconsolidated Affiliates (1,554) 352
Other, net (16,375) 413
Total Cash Flows from Operating Activities 68,588 102,553
Cash Flows from Capital Investment Activities
Purchase of Property and Equipment (176,143) (168,286)
Cost of Business Acquisitions, net of cash acquired (8,786) -
Disposition of Property and Equipment 6,252 11,860
Decrease in Other Assets, net 5,149 367
Other, net (2,742) 4,029
Total Cash Flows from Capital Investment Activities (176,270) (152,030)
Cash Flows from Financing and Shareholder Activities
Issuance of Debt 76,895 122,169
Repayment of Debt (32,910) (32,004)
43,985 90,165
Sale of Preferred Stock 74,239 -
Sale of Common Stock 2,969 3,978
Purchase of Common Stock (5,119) (2,012)
Dividends Paid (23,655) (21,911)
Total Cash Flows from Financing and Shareholder Activitie 92,419 70,220
(Decrease)/Increase in Cash and Temporary Cash Investments (15,263) 20,743
Cash and Temporary Cash Investments at beginning of year 50,966 23,229
Cash and Temporary Cash Investments at end of period $35,703 $43,972
The accompanying notes are an integral part of these financial statements.
</TABLE>
5
<PAGE>
CBI INDUSTRIES, INC. AND SUBSIDIARIES
Notes to Financial Statements
September 30, 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 September 30, 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 September 30, 1995:
Raw materials and supplies $36,662
Work in process 9,452
Finished goods 37,731
_______
Total inventories $83,845
=======
Average cost method $57,671
First-in, first-out method 26,174
_______
Total inventories $83,845
=======
6
(3) Long-Term Debt
Summary of long-term debt at September 30, 1995:
Commercial Paper and Other Similar Borrowings with a weighted
average quarter-end interest rate of 6.0% $257,469
Senior ESOP Notes with a quarter-end interest rate of 8.354%,
maturing in 1996 through 2002 84,759
6-1/4% Notes, $75,000 face amount, due 2000 74,784
6-5/8% Notes, $75,000 face amount, due 2003 74,544
Variable Rate Unsecured Notes with a weighted average quarter-
end interest rate of 6.5%, maturing in 1995 through 2001 150,574
Variable Rate Secured Notes with a weighted average quarter-
end interest rate of 6.7%, maturing in 1995 through 2000 58,800
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 2,224
________
734,154
Less: current maturities (17,823)
________
$716,331
========
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:
November 1 through December 31, 1995 $ 3,819
Year ending December 31, 1996 23,106
Year ending December 31, 1997 288,876
Year ending December 31, 1998 57,232
Year ending December 31, 1999 117,789
Year ending December 31, 2000 98,393
After 2000 144,939
________
$734,154
========
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 - 3,484,713 shares were issued and outstanding as Convertible
Voting Preferred Stock, Series C, at September 30, 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 and outstanding as 7.48%
Cumulative Preferred Stock, Series D, on September 30, 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 E and
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.
Series E - 200,000 shares were issued and outstanding as 6.75%
Cumulative Preferred Stock, Series E, on September 30, 1995. CBI sold
these shares on September 5, 1995 at $100 per share. The annual dividend
is $6.75 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 E Preferred Stock
have been paid, and shall rank on parity with the Series D and Series C
Preferred Stock as to payment of dividends. The holders of shares of
Series E Preferred Stock have no voting rights. The Series E Preferred
Stock is mandatorily redeemable on, but not prior to, September 5, 2002
at a price of $100 per share.
(5) Common Stock
Common stock - $2.50 par value; authorized - 240,000,000 shares at
September 30, 1995; issued - 39,783,614 shares at September 30, 1995
and December 31, 1994.
Reacquired stock - The number of reacquired shares of common stock was
1,488,407 at September 30, 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 September 30, 1995, 699,166 common shares and
1,735,325 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 three months ended September 30,
1995 amounted to $10.4 million ($0.20 per common share) as compared to net
income in the third quarter of 1994 of $9.4 million ($0.20 per common share).
Consolidated revenues in the third quarter of 1995 totaled $448.6 million.
Through the first nine months of 1995, net income totaled $34.6 million ($0.73
per common share) as compared to $32.6 million ($0.74 per common share)
reported in the comparable period last year. Year-to-date revenues in 1995
amounted to $1.4 billion.
Consolidated gross profit for the nine months ended September 30, 1995 rose by
8.5% to $319.8 million (23.1% of revenues) from the $294.8 million (21.7% of
revenues) reported for the same period last year, as a result of the advances
posted by Industrial Gases. Year-to-date 1995 selling and administrative
expenses increased by 7.2%, primarily reflecting non-recurring start-up costs
associated with the expansion of Liquid Carbonic's business activities.
Through the first nine months ended September 30, 1995, consolidated cash flow
from operations totaled $203.1 million.
Consolidated operating performance, before interest and taxes, for the
comparative three and nine month periods ending September 30, 1995 and 1994,
is as follows: (Dollars in Thousands)
Three Months Nine Months
____________________ ____________ _________
1995 1994 1995 1994
____ ____ ____ ____
Revenues $448,615 $489,191 $1,385,716 $1,361,064
Costs (344,777) (394,195) (1,065,909) (1,066,310)
________ ________ ___________ __________
Gross profit 103,838 94,996 319,807 294,754
Gross profit - % 23.1% 19.4% 23.1% 21.7%
Selling and administrative (66,522) (62,145) (203,830) (190,116)
________ ________ __________ __________
Income from operations 37,316 32,851 115,977 104,638
Income from operations - % 8.3% 6.7% 8.4% 7.7%
Depreciation 30,892 27,303 88,813 78,086
Other non-cash charges (2,974) (6,395) (1,655) 18,624
________ ________ __________ __________
Cash flow from operations $ 65,234 $ 53,759 $ 203,135 $ 201,348
======== ======== ========== ==========
9
INDUSTRIAL GASES. The operating results for the three and nine months ended
September 30, 1995 and 1994 are as follows: (Dollars in Thousands)
Three Months Nine Months
____________________ ____________________
1995 1994 1995 1994
____ ____ ____ ____
Revenues $254,943 $233,226 $757,719 $658,989
Costs (173,668) (161,472) (518,421) (457,210)
________ ________ ________ ________
Gross profit 81,275 71,754 239,298 201,779
Gross profit - % 31.9% 30.8% 31.6% 30.6%
Selling and administrative (43,949) (36,712) (133,784) (111,241)
________ ________ ________ ________
Income from operations $ 37,326 $ 35,042 $105,514 $ 90,538
Income from operations - % 14.6% 15.0% 13.9% 13.7%
======== ======== ======== ========
Liquid Carbonic's revenues increased 9.3% in the third quarter and 15.0%
through the first nine months of 1995. In the United States, year-to-year
revenues advanced as a result of improving carbon dioxide pricing, double-
digit growth in atmospheric gas volumes and increased sales of hydrogen and
carbon monoxide. Internationally, revenue growth was principally achieved by
increasing the volumes of carbon dioxide sold in Brazil, Colombia and
Thailand, and atmospheric gases sold in Canada, Poland, Spain and Venezuela.
Operating results also benefitted from recent acquisitions in Costa Rica and
Paraguay.
Industrial Gases' operating income contribution increased by 6.5% in the three
months and by 16.5% in the nine months ended September 30, 1995, primarily
reflecting new production facilities coming on-stream, improved domestic
carbon dioxide results and operating efficiencies realized through internal
restructuring. The rate of growth in income from operations trails the
advances posted in gross profit due to non-recurring start-up costs associated
with the expansion of business activities, particularly in international
markets where growth opportunities are most dramatic and where Liquid
Carbonic's competitive positions are very strong. With the exception of
operations located in Argentina and Mexico, which have nevertheless performed
well under very difficult economic conditions, year-to-year earnings increased
in each major market where Liquid Carbonic serves growing customer needs for
carbon dioxide and industrial gases.
10
CONTRACTING SERVICES. The operating results for the three and nine months
ended September 30, 1995 and 1994 are as follows: (Dollars in Thousands)
Three Months Nine Months
____________________ ____________________
1995 1994 1995 1994
____ ____ ____ ____
Revenues $161,674 $210,701 $511,451 $593,717
Costs (143,062) (196,979) (453,390) (522,295)
________ ________ ________ ________
Gross profit 18,612 13,722 58,061 71,422
Gross profit - % 11.5% 6.5% 11.4% 12.0%
Selling and administrative (17,445) (19,732) (53,911) (60,258)
________ ________ ________ ________
Income from operations $ 1,167 $ (6,010) $ 4,150 $ 11,164
Income from operations - % .7% (2.9)% .8% 1.9%
======== ======== ======== ========
New business taken in the third quarter and first nine months of 1995
aggregated $170.0 million and $586.7 million, respectively, in comparison to
new business of $149.9 million in the third quarter and $508.6 million in the
first three quarters of 1994. Additionally, early in October 1995, Chicago
Bridge & Iron received a $40 million order to construct certain scientific
test facilities in the United States. Customer demand in the current nine
months, which is up 15.4%, has been stronger domestically, where approximately
70% of the new contract awards were realized. The current level of customer
inquiries remains encouraging. The backlog of work to be executed is improving
and stood at $361.9 million at September 30, 1995, up 25.9% from the $287.5
million reported at the end of calendar 1994 and 11.2% higher than the $325.5
million backlog at September 30, 1994.
Revenues in 1995 trail the amounts reported in 1994, by 23.3% and 13.9% for
the three and nine months ended September 30, 1995. This reduced level of
revenues is a direct result of the level of new business awarded in 1994 and
the historically low backlog at December 31, 1994. Gross profit and operating
income contributions have been negatively impacted by: (1) lower revenues,
which has contributed to under-absorbed overheads, (2) competitive pricing
conditions and more challenging project requirements, which has limited
opportunities for margin improvement, and (3) the mix of work executed, which
has been more focused on service type work as opposed to more traditional tank
and vessel construction. With continuing improvement in customer demand, and
as further benefits are realized from the on-going efforts of Chicago Bridge &
Iron to improve work processes and better align costs and expenses, returns
are targeted to advance to acceptable levels in 1996.
11
INVESTMENTS. The operating results for the three and nine months ended
September 30, 1995 and 1994 are as follows: (Dollars in Thousands)
Three Months Nine Months
____________________ ____________________
1995 1994 1995 1994
____ ____ ____ ____
Revenues $31,998 $45,264 $116,546 $108,358
Costs (28,047) (35,744) (94,098) (86,805)
_______ _______ ________ ________
Gross profit 3,951 9,520 22,448 21,553
Gross profit - % 12.3% 21.0% 19.3% 19.9%
Selling and administrative (1,417) (1,598) (4,416) (4,324)
_______ _______ ________ ________
Income from operations $ 2,534 $ 7,922 $ 18,032 $ 17,229
Income from operations - % 7.9% 17.5% 15.5% 15.9%
======= ======= ======== ========
Statia Terminals' operations in the Caribbean were negatively impacted by
hurricanes Iris, Luis and Marilyn during the months of August and September
1995. Although the physical damage to the facilities on St. Eustatius was
insured, and operations were largely restored by the beginning of October, the
severe weather significantly disrupted normal ship traffic. The $13.3 million
reduction in third quarter 1995 revenues primarily reflects lower bunker and
product sales and lower blending, storage and ancillary service activities
caused by the hurricanes. Resulting operating income contributions declined.
During the current quarter, and in-part offsetting the earnings consequences
of the storms, Statia Terminals adjusted the lives used to depreciate its
storage tanks and wharfs to achieve consistency with industry norms.
Operating income comparisons, particularly in the quarter, were also
negatively impacted by lower returns from other financial investments
primarily due to lower cash balances and effective interest rates in the
international countries where the cash balances are maintained.
12
OTHER INCOME STATEMENT MATTERS. Interest expense through the nine months
ended September 30, 1995 increased to $36.4 million, reflecting higher average
debt levels and higher U.S. variable interest rates. The year-to-date
effective income tax rates were 45.3% in 1995 and 46.5% in 1994.
Fully diluted earnings per share, which assumes the conversion of the
company's Series C Convertible Voting Preferred Stock as required by
accounting disclosure rules, was $0.19 in the three months and $0.67 in the
nine months ended September 30, 1995 as compared to $0.20 in the third quarter
of 1994 and $0.69 in the first nine months of 1994.
FINANCIAL CONDITION
BALANCE SHEET. Cash and short-term investments aggregated $35.7 million at
September 30, 1995 and totaled $51.0 million at December 31, 1994. Working
capital amounted to $189.5 million at September 30, 1995 as compared to $138.8
million at the end of calendar 1994. The increase in working capital arose
primarily as a result of higher inventories to support increasing Industrial
Gases sales and the payment of international tax liabilities. Total debt
(notes payable plus current and non-current long-term debt) was $800.8 million
at the end of the third quarter of 1995 as compared to $756.6 million at
December 31, 1994. On March 31 and September 5, 1995, CBI issued $55 million
of Series D and $20 million of Series E preferred stock, the proceeds of which
were used to reduce borrowings.
The ratio of debt to total capitalization (total debt plus capital stock) was
49.6% at September 30, 1995 as compared to 51.4% at December 31, 1994. With
CBI's ESOP debt considered as equity, which is occurring as the common and
preferred shares held by the ESOP Trust are allocated to eligible employees,
debt as a percent of total capitalization was 44.3% at September 30, 1995 as
compared to 45.0% at December 31, 1994.
CAPITAL EXPENDITURES. Expenditures for new plant and equipment totaled $176.1
million in the first nine months of 1995 as compared to $168.3 million in the
comparable period in 1994.
13
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Marathon/Texas City Litigation. On October 5, 1995, the Texas Supreme
Court denied CBI's motion to reconsider the Court's March 2, 1995,
decision that insurance coverage did not exist under CBI's insurance
policies for the previously reported crane accident which occurred in
Texas City, Texas, on October 30, 1987.
Antitrust Matters. Liquid Carbonic Industries Corporation ("Liquid
Carbonic") has been or is currently involved in various legal
proceedings relating to antitrust matters.
Liquid Carbonic and its subsidiaries from time to time furnish documents
and witnesses in connection with governmental investigations of alleged
violations of the antitrust laws. While the outcome of any particular
governmental investigation cannot be predicted with certainty, Liquid
Carbonic believes that these investigations and the results thereof will
not have a materially adverse effect on its operations or financial
condition.
Since April 1992, several lawsuits have been filed against Liquid
Carbonic and various competitors which 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 as part of 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 treble damages, civil penalties,
injunctive relief, costs and attorney's fees. The management of Liquid
Carbonic believes that the allegations made against Liquid Carbonic in
this litigation are without merit and that the damages alleged are
exaggerated and do not have sound economic and business support. Trial
is set for early 1996. Liquid Carbonic intends to defend itself
vigorously in this lawsuit and believes that it will either prevail or
that the ultimate outcome will not have a material adverse effect on its
operations or financial condition. However, litigation is unpredictable,
and an unexpected adverse jury verdict and judgment on that verdict in
an amount approximating the amount of damages alleged by the plaintiffs
would have a severe adverse financial effect on CBI and Liquid Carbonic.
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 without merit and the company intends to vigorously
defend against these claims. While the outcome of any particular
lawsuit cannot be predicted with certainty, Liquid Carbonic believes
that these Canadian antitrust claims 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
14
Item 1. Legal Proceedings (Continued)
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. On December 22, 1994, a CBI shareholder
commenced litigation against CBI and certain of its Directors in the
Court of Chancery of the State of Delaware (the "Chancery Court"),
alleging that defendants have violated their fiduciary duties to CBI
shareholders by: (a) rejecting proposals by Airgas, Inc. ("Airgas") for
CBI to either merge with Airgas or to sell Liquid Carbonic to Airgas;
and (b) amending the Amendment and Restatement of Rights Agreement dated
as of August 8, 1989, between CBI and First Chicago Trust Company of New
York, as Rights Agent (the "Rights Plan") to lower the stock ownership
threshold sufficient to trigger a distribution of Rights to 10% of CBI's
shares. The complaint seeks relief on behalf of a class consisting of
all holders of CBI stock. The complaint seeks (a) injunctive relief
directing the defendants to carry out their fiduciary duties to CBI
shareholders and prohibiting defendants from erecting unlawful barriers
to the acquisition of CBI by any third party, (b) a declaratory judgment
that defendants have breached their fiduciary duties to CBI shareholders
and that the amendment to the Rights Plan is void, (c) an award of
damages to the alleged class, and (d) an award of attorneys' fees.
Defendants have answered the complaint, denying all allegations of
wrongdoing and asserting various affirmative defenses. On October 30,
1995, Plaintiff moved for leave to file an amended complaint which is
identical in form to one of the shareholder complaints described below.
Defendants intend to vigorously defend against this action.
On October 30, 1995, Praxair, Inc. ("Praxair") commenced litigation in
the Chancery Court against CBI and certain of its Directors, alleging
that the defendants have violated their fiduciary duties to CBI's
shareholders by failing to pursue a possible transaction with Praxair
and employing the Rights Plan to prevent Praxair from acquiring CBI.
Praxair's complaint seeks (a) injunctive relief requiring defendants to
redeem the Rights associated with the Rights Plan or to amend the Rights
Plan so as to make the Rights inapplicable to any acquisition proposal
which equals or exceeds Praxair's October 27, 1995 proposal to acquire
CBI at a price of $32 per share in cash (the "Praxair Proposal"), (b)
injunctive relief enjoining the defendants from taking any action to
interfere with the Praxair Proposal or any other such proposal, and (c)
a declaratory judgment that the defendants have breached their fiduciary
duties to CBI's shareholders by continuing to deploy the Rights Plan.
Defendants have not yet responded to Praxair's complaint, but intend to
vigorously defend against this action.
On October 30, 1995, four CBI shareholders commenced litigation in the
Chancery Court against CBI and certain of its directors, asserting
claims that are similar to the claims asserted by Praxair. A fifth such
shareholder complaint was filed on October 31 and a sixth was filed on
November 1. Each of these complaints seeks relief on behalf of a
purported class consisting of all holders of CBI common stock. In
addition to injunctive and declaratory relief, the shareholder
plaintiffs seek to recover damages on behalf of the alleged class and an
award of attorneys' fees. Defendants have not yet responded to these
complaints, but intend to vigorously defend against these actions.
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.
Reserves for Legal Proceedings. 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.
15
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
4. Instruments Defining the Rights of Security Holders,
Including Indentures
4.1 Description of 6.75% Cumulative Preferred Stock, Series E
can be found in CBI's Form 8-K dated September 5, 1995
and is incorporated herein by reference.
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 September 5, 1995.
16
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/ Alan J. Schneider
______________________________
Alan J. Schneider
Vice President - Finance
and Chief Financial Officer
Date: November 14, 1995
17
<TABLE>
EXHIBIT 11
CBI INDUSTRIES, INC. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER COMMON SHARE
<CAPTION>
Three Months Nine Months
Thousands of dollars and shares, except per share amounts Ended September 30, Ended September 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Primary Earnings Per Common Share
Net income to common shareholders $7,673 $7,871 $27,733 $28,107
Weighted average number of common shares outstanding 38,276 37,913 38,184 37,795
Primary net income per common share $0.20 $0.20 $0.73 $0.74
Fully Diluted Earnings Per Common Share
Net income to common shareholders $7,673 $7,871 $27,733 $28,107
Add back expenses included in net income that pertain to ESOP
Series C preferred dividends 1,967 2,035 5,928 6,153
Common dividends on unallocated reverted shares - 7 - 31
Company contributions (after utilization of common dividends
of $203, $202, $607, $608 charged to retained earnings) 2,240 1,981 6,828 6,004
ESOP debt amortization - (212) - (636)
Tax effect included in net income related to debt service (1,714) (1,551) (5,187) (4,696)
Net income adjusted to exclude ESOP debt service 10,166 10,131 35,302 34,963
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 - (23) - (83)
Company contribution (after utilization of common dividends
of $820, $822, $2,483, $2,487 charged to retained earnings) (3,590) (3,375) (10,880) (10,226)
ESOP debt amortization - 212 - 636
Tax effect included in net income related to debt service 1,591 1,406 4,809 4,258
Fully diluted net income to common shareholders $8,167 $8,351 $29,231 $29,548
Weighted average number of common shares outstanding 38,276 37,913 38,184 37,795
Add common stock equivalents of stock option plan 84 111 84 111
Add common stock equivalents of Series C preferred shares 5,227 5,175 5,227 5,175
Fully diluted weighted average number of common shares outstanding 43,587 43,199 43,495 43,081
Fully diluted net income per common share $0.19 $0.20 $0.67 $0.69
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AS OF SEPTEMBER 30, 1995 AND THE INCOME STATEMENT FOR THE NINE MONTHS
ENDED SEPTEMBER 30, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> $35,703
<SECURITIES> 0
<RECEIVABLES> 316,354
<ALLOWANCES> (13,900)
<INVENTORY> 83,845
<CURRENT-ASSETS> 541,116
<PP&E> 2,049,951
<DEPRECIATION> (702,330)
<TOTAL-ASSETS> 2,124,373
<CURRENT-LIABILITIES> 351,618
<BONDS> 716,331
<COMMON> 313,779
75,000
42,107
<OTHER-SE> 383,035
<TOTAL-LIABILITY-AND-EQUITY> 2,124,373
<SALES> 0
<TOTAL-REVENUES> 1,385,716
<CGS> 0
<TOTAL-COSTS> 1,065,909
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 36,369
<INCOME-PRETAX> 79,608
<INCOME-TAX> 36,100
<INCOME-CONTINUING> 34,574
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 27,733
<EPS-PRIMARY> .73
<EPS-DILUTED> .67
</TABLE>
