==============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1996
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 1-6117
SOUTHDOWN, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
LOUISIANA 72-0296500
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
1200 SMITH STREET
SUITE 2400
HOUSTON, TEXAS 77002
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (713) 650-6200
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 periods 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
At April 30, 1996 there were 17.3 million common shares outstanding.
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<PAGE>
SOUTHDOWN, INC. AND SUBSIDIARY COMPANIES
INDEX
PAGE
NO.
PART I. FINANCIAL INFORMATION
Item 1 Financial Statements (unaudited)
Consolidated Balance Sheet
March 31, 1996 and December 31, 1995 ................... 1
Statement of Consolidated Earnings
Three months ended March 31, 1996 and 1995 ............. 2
Statement of Consolidated Cash Flows
Three months ended March 31, 1996 and 1995 ............. 3
Statement of Consolidated Revenues and Operating Earnings
by Business Segment
Three months ended March 31, 1996 and 1995 ........... 4
Statement of Shareholders' Equity
Three months ended March 31, 1996 ...................... 4
Notes to Consolidated Financial Statements ............... 5
Independent Accountants' Review Report ................... 8
Item 2 Management's Discussion and Analysis of Financial Condition
and Results of Operations .............................. 9
PART II OTHER INFORMATION
Item 1 Legal Proceedings ........................................ 14
Item 6 Exhibits and Reports on Form 8-K ......................... 17
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
SOUTHDOWN, INC. AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
<CAPTION>
(IN MILLIONS)
--------------------------------------
MARCH 31, DECEMBER 31,
1996 1995
-------------- --------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 8.1 $ 7.7
Accounts and notes receivable, less allowance for doubtful
accounts of $9.7 and $8.8 70.0 68.9
Inventories (Note 3) 82.2 69.6
Deferred income taxes 10.8 11.7
Prepaid expenses and other 3.5 3.3
-------------- --------------
Total current assets 174.6 161.2
Property, plant and equipment, less accumulated depreciation,
depletion and amortization of $336.3 and $330.0 563.1 565.4
Goodwill 78.6 79.3
Other long-term assets:
Long-term receivables 20.1 21.0
Other 50.6 48.6
-------------- --------------
$ 887.0 $ 875.5
============== ==============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt $ 1.3 $ 0.7
Accounts payable and accrued liabilities 72.2 78.7
-------------- --------------
Total current liabilities 73.5 79.4
Long-term debt 207.0 174.5
Deferred income taxes 116.4 116.9
Minority interest in consolidated joint venture 29.7 30.9
Long-term portion of postretirement benefit obligation 75.6 76.8
Other long-term liabilities and deferred credits 20.4 22.0
-------------- --------------
522.6 500.5
-------------- --------------
Shareholders' equity:
Preferred stock redeemable at issuer's option (Note 4) 151.9 151.9
Common stock, $1.25 par value 21.6 21.6
Capital in excess of par value 127.1 127.0
Reinvested earnings 63.8 74.5
-------------- --------------
364.4 375.0
-------------- --------------
$ 887.0 $ 875.5
============== ==============
</TABLE>
-1-
<PAGE>
<TABLE>
SOUTHDOWN, INC. AND SUBSIDIARY COMPANIES
STATEMENT OF CONSOLIDATED EARNINGS
(UNAUDITED)
<CAPTION>
(IN MILLIONS, EXCEPT PER SHARE DATA)
------------------------------------
THREE MONTHS ENDED
MARCH 31,
------------------------------------
1996 1995
-------------- -------------
<S> <C> <C>
Revenues $ 127.4 $ 119.1
-------------- -------------
Costs and expenses:
Operating 91.9 86.4
Depreciation, depletion and amortization 10.1 9.9
Selling and marketing 3.9 3.6
General and administrative 8.5 9.4
Other income, net (0.2) (0.9)
-------------- -------------
114.2 108.4
Minority interest in earnings of consolidated joint venture 0.3 0.4
-------------- -------------
114.5 108.8
-------------- -------------
Operating earnings 12.9 10.3
Interest, net of amounts capitalized (6.0) (6.6)
-------------- -------------
Earnings before income taxes and extraordinary charge 6.9 3.7
Federal and state income tax expense (2.1) (1.2)
-------------- -------------
Earnings before extraordinary charge 4.8 2.5
Extraordinary charge, net of income taxes (Note 2) (11.4) -
-------------- -------------
Net earnings (loss) $ (6.6) $ 2.5
============== =============
Dividends on preferred stock (Note 4) $ (2.4) $ (2.4)
============== =============
Earnings (loss) per common share (Note 4 and Exhibit 11):
Earnings before extraordinary charge $ 0.14 $0.01
Extraordinary charge, net of income taxes (0.66) -
-------------- -------------
$ (0.52) $0.01
============== =============
Average shares outstanding (Exhibit 11)
Primary 17.3 17.3
============== =============
Fully diluted 17.3 17.4
============== =============
</TABLE>
-2-
<PAGE>
<TABLE>
SOUTHDOWN, INC. AND SUBSIDIARY COMPANIES
STATEMENT OF CONSOLIDATED CASH FLOWS
(UNAUDITED)
<CAPTION>
(IN MILLIONS)
--------------------------------------
THREE MONTHS ENDED
MARCH 31,
--------------------------------------
1996 1995
------------- -------------
<S> <C> <C>
Operating activities:
Earnings before extraordinary charge $ 4.8 $ 2.5
Adjustments to reconcile earnings before extraordinary charge
to net cash provided by (used in) operating activities:
Depreciation, depletion and amortization 10.1 9.9
Deferred income tax expense 0.4 0.5
Amortization of debt issuance costs 0.7 0.6
Changes in operating assets and liabilities (14.3) (24.7)
Net cash used in discontinued operations (0.5) (3.2)
------------- -------------
Net cash provided by (used in) operating activities 1.2 (14.4)
------------- -------------
Investing activities:
Additions to property, plant and equipment (9.6) (6.8)
Acquisitions, net of cash acquired - (2.0)
Proceeds from asset sales 0.5 -
Other (0.2) 0.1
Net cash used in discontinued operations - (0.9)
------------- -------------
Net cash used in investing activities (9.3) (9.6)
------------- -------------
Financing activities:
Additions to long-term debt 150.7 27.2
Reductions in long-term debt (120.3) (0.1)
Premium on early extinguishment of debt (11.6) -
Dividends (5.0) (3.3)
Securities issuance costs (3.8) -
Distributions to minority interest (1.5) -
------------- -------------
Net cash provided by financing activities 8.5 23.8
------------- -------------
Net increase (decrease) in cash and cash equivalents 0.4 (0.2)
Cash and cash equivalents at beginning of period 7.7 7.4
------------- -------------
Cash and cash equivalents at end of period $ 8.1 $ 7.2
============= =============
</TABLE>
Cash payments for income taxes totaled $100,000 and $4.3 million in the
first quarters of 1996 and 1995, respectively. In early January 1995 the Company
also paid a $7.6 million tax assessment, including interest, proposed by the
Internal Revenue Service in a preliminary audit report issued in late 1994.
Interest paid, net of amounts capitalized, was $8.1 million and $1.9 million in
1996 and 1995, respectively.
-3-
<PAGE>
<TABLE>
SOUTHDOWN, INC. AND SUBSIDIARY COMPANIES
STATEMENT OF CONSOLIDATED REVENUES AND OPERATING EARNINGS
BY BUSINESS SEGMENT
(UNAUDITED)
<CAPTION>
(IN MILLIONS)
-------------------------------------
THREE MONTHS ENDED
MARCH 31,
-------------------------------------
1996 1995
------------- -------------
<S> <C> <C>
Contributions to revenues:
Cement $ 82.6 $ 80.1
Concrete products 55.8 49.7
Intersegment sales (11.0) (10.7)
------------- -------------
$ 127.4 $ 119.1
============= =============
Contributions to operating earnings (loss) before interest expense and income
taxes:
Cement $ 17.1 $ 16.4
Concrete products 1.9 1.2
Corporate
General and administrative (5.2) (6.4)
Depreciation, depletion and amortization (0.9) (1.0)
Miscellaneous income - 0.1
------------- -------------
$ 12.9 $ 10.3
============= =============
</TABLE>
<TABLE>
SOUTHDOWN, INC. AND SUBSIDIARY COMPANIES
STATEMENT OF SHAREHOLDERS' EQUITY
(UNAUDITED)
<CAPTION>
(IN MILLIONS)
-----------------------------------------------------------------------------
CAPITAL
PREFERRED STOCK COMMON STOCK IN EXCESS OF REINVESTED
----------------------- ----------------------
SHARES AMOUNT SHARES AMOUNT PAR VALUE EARNINGS
--------- ----------- ---------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1995 4.6 $ 151.9 17.3 $ 21.6 $ 127.0 $ 74.5
NET LOSS - - - - - (6.6)
DIVIDENDS ON PREFERRED STOCK
(NOTE 4) - - - - - (2.4)
DIVIDENDS PAID ON COMMON
STOCK - - - - - (1.7)
OTHER - - - - 0.1 -
--------- ----------- ---------- --------- ----------- -----------
BALANCE AT MARCH 31, 1996 4.6 $ 151.9 17.3 $ 21.6 $ 127.1 $ 63.8
========= =========== ========== ========= =========== ===========
</TABLE>
-4-
<PAGE>
SOUTHDOWN, INC. AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS:
The Consolidated Balance Sheet of Southdown, Inc. and subsidiary
companies (the Company) at March 31, 1996 and the Statements of Consolidated
Earnings, Consolidated Cash Flows, Consolidated Revenues and Operating Earnings
by Business Segment and Shareholders' Equity for the periods indicated herein
have been prepared by the Company without audit. The Consolidated Balance Sheet
at December 31, 1995 is derived from the December 31, 1995 audited financial
statements, but does not include all disclosures required by generally accepted
accounting principles. It is assumed that these financial statements will be
read in conjunction with the audited financial statements and notes thereto
included in the Company's 1995 Annual Report on Form 10-K.
In the opinion of management, the statements reflect all adjustments
necessary for a fair presentation of the financial position, results of
operations and cash flows of the Company on a consolidated basis and all such
adjustments are of a normal recurring nature. The interim statements for the
period ended March 31, 1996 are not necessarily indicative of results to be
expected for the full year. Certain data from the prior year has been
reclassified for purposes of comparison.
NOTE 2 - CHANGES IN LONG-TERM DEBT:
On March 19, 1996, the Company issued in a private placement $125
million aggregate principal amount of 10% Senior Subordinated Notes due 2006
(the 10% Notes) pursuant to an indenture dated as of that date between the
Company and State Street Bank and Trust Company, as Trustee. Interest on the 10%
Notes will be payable semi-annually, commencing September 1, 1996. The 10% Notes
will be redeemable at the option of the Company, in whole or in part, at any
time on or after March 1, 2001 at 105% of the principal amount declining ratably
in annual increments to par on or after March 1, 2004. The 10% Notes are
subordinate in right of payment to all existing and future senior debt, as
defined, of the Company, rank on a parity with all existing and future senior
subordinated debt, as defined, of the Company, and rank senior to other existing
and future subordinated debt of the Company. The indenture includes affirmative
and negative covenants which in certain instances restrict, among other things,
incurrence of additional indebtedness, certain sales of assets, certain mergers
and consolidations and dividends and distributions. In accordance with a
Registration Rights Agreement entered at the time of the private placement, the
Company filed a registration statement with the Securities and Exchange
Commission on April 17, 1996, pursuant to which the Company proposes to exchange
all of the 10% Notes in a registered exchange offer for 10% Senior Subordinated
Notes due 2006, Series B, which will be substantially similar to the 10% Notes
and will be issued under the same indenture. The registration statement has not
yet become effective.
The net proceeds of the 10% Notes and other funds were used to
repurchase $120.2 million in principal amount of the Company's 14% Senior
Subordinated Notes due 2001, Series B (the 14% Notes) for $131.8 million plus
accrued interest of $7.2 million and to pay related costs and expenses. The
Company recorded a $11.4 million net of tax charge in the first quarter of 1996
to reflect the prepayment premium and other costs incurred on the early
retirement of the 14% Notes.
-5-
<PAGE>
NOTE 3 - INVENTORIES:
<TABLE>
<CAPTION>
(UNAUDITED, IN MILLIONS)
MARCH 31, DECEMBER 31,
1996 1995
----------- ------------
<S> <C> <C>
Finished goods $ 22.0 $ 18.6
Work in progress 23.5 14.6
Raw materials 6.8 6.5
Supplies 29.9 29.9
----------- -----------
$ 82.2 $ 69.6
=========== ===========
</TABLE>
Inventories stated on the LIFO method were $41.7 million of total
inventories at March 31, 1996 and $30.4 million of total inventories at December
31, 1995 compared with current costs of $50.6 million and $39.1 million,
respectively.
NOTE 4 - CAPITAL STOCK:
COMMON STOCK
At March 31, 1996, a total of 17,304,000 shares of common stock were
issued and outstanding. A quarterly dividend of $0.10 per share of common stock
was paid on March 1, 1996.
PREFERRED STOCK REDEEMABLE AT ISSUER'S OPTION
SERIES A PREFERRED STOCK - The Company had 1,994,000 shares of
Preferred Stock, $0.70 Cumulative Convertible Series A (Series A Preferred
Stock) outstanding at March 31, 1996, December 31, 1995 and March 31, 1995. The
Series A Preferred Stock (a) has a stated value and liquidation preference of
$10 per share, plus accrued and unpaid dividends, (b) carries a cumulative
dividend of $.70 per year, payable quarterly, and entitles the holders of a
majority thereof to elect two directors if dividends are in arrears for at least
540 days, (c) is initially convertible into one-half of a share of Common Stock
for each share of Series A Preferred Stock, subject to adjustment and (d) is
redeemable at the option of the Company at 105% of the $10 stated value thereof
through April 30, 1997 (declining to 100% of the stated value thereafter) plus
accrued and unpaid dividends. Dividends paid on the Series A Preferred Stock
were approximately $350,000 during each of the three-month periods ended March
31, 1996 and 1995.
SERIES B PREFERRED STOCK - The Company had 914,360 shares of Preferred
Stock, $3.75 Convertible Exchangeable Series B (Series B Preferred Stock)
outstanding at March 31, 1996, December 31, 1995, and March 31, 1995. The Series
B Preferred Stock (a) has a stated value and liquidation preference of $50 per
share, plus accrued and unpaid dividends, (b) carries a cumulative dividend of
$3.75 per year, payable semi-annually, and entitles the holders of a majority
thereof to elect two directors if dividends are in arrears for at least 180
days, (c) is initially convertible into two and one-half shares of Common Stock
for each share of Series B Preferred Stock, subject to adjustment and (d) is
redeemable at the option of the Company at 100% of the $50 stated value thereof
plus accrued and unpaid dividends. Dividends accrued on the Series B Preferred
Stock were approximately $860,000 during the three-month periods ended March 31,
1996 and 1995, respectively.
SERIES D PREFERRED STOCK - The Company had 1,725,000 shares of
Preferred Stock, $2.875 Cumulative Convertible Series D (Series D Preferred
Stock) outstanding at March 31, 1996, December
-6-
<PAGE>
31, 1995, and March 31, 1995. The Series D Preferred Stock (a) has a stated
value and liquidation preference of $50 per share, plus accrued and unpaid
dividends, (b) carries a cumulative annual dividend of $2.875 per share, payable
quarterly, (c) is initially convertible into 1.511 shares of Common Stock for
each share of Series D Preferred Stock, subject to adjustment, (d) may be
converted at the option of the Company, in whole but not in part, at any time on
and after January 27, 1997 and until January 27, 2001, if for at least 20
trading days within a period of 30 consecutive trading days, including the last
trading day of such 30 trading day period, the closing price of the Common Stock
equals or exceeds 130% of the conversion price, into 1.511 shares of Common
Stock, subject to adjustment and (e) is redeemable at the option of the Company
at 100% of the stated value thereof plus accrued and unpaid dividend on and
after January 27, 2001. Dividends accrued on the Series D Preferred Stock were
approximately $1.2 million during the three-month periods ended March 31, 1996
and 1995.
NOTE 5 - CONTINGENCIES:
See Item 2. "Management's Discussion and Analysis of Financial Condition
and Results of Operations - Liquidity and Capital Resources - Known Events,
Trends and Uncertainties" for discussion of certain contingencies.
NOTE 6 - NEW ACCOUNTING PRONOUNCEMENTS:
Effective January 1, 1996, the Company adopted two new accounting
principles as mandated by the Financial Accounting Standards Board (FASB):
(i) In March 1995, the FASB issued Statement No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of"
(SFAS No. 121). SFAS No. 121 requires that certain long-lived assets and
intangibles be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. The adoption of SFAS No. 121 had no effect on the Company's
financial statements.
(ii) In October 1995, the FASB issued Statement No. 123, "Accounting for
Stock-Based Compensation" (SFAS No. 123). SFAS No. 123 allows companies either
to continue to measure compensation cost based on the method prescribed by
Accounting Principles Board Opinion No. 25 (APB No. 25) or adopt a "fair value"
method of accounting for all employee stock-based compensation. The Company
elected to continue utilizing the accounting for stock issued to employees
prescribed by APB No. 25 and, therefore, the required adoption of SFAS No. 123
will have no impact on the financial position or results of operations of the
Company.
NOTE 7 - REVIEW BY INDEPENDENT ACCOUNTANTS:
The unaudited financial information presented in this report has been
reviewed by the Company's independent public accountants. The review was limited
in scope and did not constitute an audit of the financial information in
accordance with generally accepted auditing standards such as is performed in
the year-end audit of financial statements. The report of Deloitte & Touche LLP
relating to its limited review of the financial information as of March 31, 1996
and for the three-month periods ended March 31, 1996 and 1995 follows.
-7-
<PAGE>
INDEPENDENT ACCOUNTANTS' REVIEW REPORT
TO THE SHAREHOLDERS AND
BOARD OF DIRECTORS OF
SOUTHDOWN, INC.
HOUSTON, TEXAS
We have reviewed the accompanying consolidated balance sheet of
Southdown, Inc. and subsidiary companies as of March 31, 1996, and the related
consolidated statements of earnings and cash flows for the three months ended
March 31, 1996 and 1995 and the consolidated statement of shareholders' equity
for the three months ended March 31, 1996. These financial statements are the
responsibility of the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of the interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications
that should be made to such financial statements for them to be in conformity
with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted
auditing standards, the consolidated balance sheet of Southdown, Inc. and
subsidiary companies as of December 31, 1995 and the related consolidated
statements of earnings, shareholders' equity and cash flows for the year then
ended (not presented herein); and in our report dated February 14, 1996, we
expressed an unqualified opinion on those consolidated financial statements. In
our opinion, the information set forth in the accompanying consolidated balance
sheet as of December 31, 1995 is fairly stated, in all material respects, in
relation to the consolidated balance sheet from which it has been derived.
Deloitte & Touche LLP
Houston, Texas
April 24, 1996
-8-
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
Management's Discussion and Analysis of Financial Condition and
Results of Operations included on pages 21 through 35 of the Company's Annual
Report on Form 10-K for the year ended December 31, 1995 should be read in
conjunction with the discussion contained herein.
RESULTS OF OPERATIONS
CONSOLIDATED FIRST QUARTER EARNINGS
Operating earnings for the first quarter of 1996 were $12.9 million
compared with $10.3 million in the prior year quarter. Earnings before
extraordinary charge for the first quarter of 1996 were $4.8 million, $0.14 per
share, compared with $2.5 million, $0.01 per share, for the prior year quarter.
The extraordinary charge of $11.4 million, $0.66 per share, reflects prepayment
premium and other costs incurred on the early retirement of $120.2 million of
14% Senior Subordinated Notes.
Consolidated revenues in the first quarter of 1996 increased 7% over
the same period of the prior year primarily because of improved sales prices in
both the Cement and Concrete Products segments and higher ready-mixed concrete
sales volume from the Concrete Products segment. First quarter 1996 operating
earnings improved $2.6 million over the same quarter of the prior year
reflecting improvements in both operating segments and lower Corporate expenses.
The Cement segment benefited from an improvement in sales prices, partially
offset by higher per unit cost of sales. The Concrete Products segment's
continued improvement resulted primarily from higher ready-mixed concrete sales
prices and sales volumes also partially offset by higher per unit operating
costs.
Interest expense for the three months ended March 31, 1996 declined
compared with the prior year quarter, reflecting lower borrowings on the
Company's Revolving Credit Facility.
SEGMENT OPERATING EARNINGS
CEMENT
Operating earnings of the Cement segment for the three month period
ended March 31, 1996 were $17.1 million compared with $16.4 million in the prior
year quarter. A $2.26 per ton improvement in average cement sales prices,
reflecting price increases implemented at several locations, resulted in a
$700,000 increase in cement earnings. Sales volumes in the first quarter of 1996
were adversely impacted by unusually severe weather in the Ohio Valley region.
Per unit operating costs were higher primarily because of: (i) the timing of the
planned annual maintenance at two of the cement plants; and (ii) various
unscheduled maintenance at other cement plants. Company purchases of imported
cement for the first quarter of 1996 declined 55% compared with the prior year
quarter.
-9-
<PAGE>
Sales volumes, average unit price and cost data and unit operating
profit margins relating to the Company's cement plant operations appear in the
following table:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
--------------------------
1996 1995
-------- --------
<S> <C> <C>
Tons of cement sold (thousands) 1,219 1,216
======== ========
Weighted average per ton data:
Sales price (net of freight) $ 60.42 $ 58.16
Cost of sales 1 46.20 44.60
-------- --------
Margin $ 14.22 $ 13.56
======== ========
--------------
(1) Includes fixed and variable manufacturing costs, cost of
purchased cement, selling expenses, plant general and
administrative costs, other plant overhead and miscellaneous
costs.
</TABLE>
CONCRETE PRODUCTS
Operating earnings for the Concrete Products segment increased $700,000
or 58% over the prior year quarter. A $2.69 per yard improvement in ready-mixed
concrete sales prices combined with an 8% increase in ready-mixed sales volumes
more than offset higher per unit ready-mixed operating costs. The improvement in
sales volumes primarily reflects increased construction activity and favorable
weather in Florida. In contrast, inclement weather in California during the
first quarter of 1996 offset most of the increase in ready-mixed concrete sales
volume resulting from the Company's second quarter 1995 acquisition of
additional southern California ready-mixed concrete operations. Higher per unit
operating costs were principally attributable to the additional fixed costs
related to the acquired southern California ready-mixed concrete operations.
The segment's operating results also include the block, resale and fly
ash operations in Florida and aggregate operations in southern California which
combined totalled $1.4 million of operating earnings in the 1996 period compared
with $1.8 million in the 1995 period.
Sales volumes, unit price and cost data and unit operating margins
relating to the Company's sales of ready-mixed concrete appear in the following
table:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
--------------------------
1996 1995
-------- --------
<S> <C> <C>
Yards of ready-mixed concrete
sold (thousands) 858 791
======== =======
Weighted average per cubic yard data:
Sales price $ 52.72 $ 50.03
Operating costs 1 51.83 50.58
-------- -------
Margins 2 $ 0.89 $ (0.55)
======== ========
--------------
(1) Includes variable and fixed plant costs, delivery, selling,
general and administrative and miscellaneous operating costs.
(2) Does not include profits from sale of aggregates, concrete
block and other related products.
</TABLE>
-10-
<PAGE>
CORPORATE
Corporate general and administrative expenses were $5.2 million in the
first quarter of 1996 compared with $6.4 million in the prior year quarter.
Corporate general and administrative expenses decreased primarily because of:
(i) lower costs recognized with respect to post retirement benefits and (ii)
lower legal expenses.
LIQUIDITY AND CAPITAL RESOURCES
In March 1996, the Company realized approximately $122 million in net
proceeds from the issuance of $125 million of 10% Notes. The net proceeds
combined with borrowings under the Company's Revolving Credit Facility were
utilized to repurchase $120.2 million of the 14% Notes and to pay the related
prepayment premium and other costs. Other borrowings under the Company's
Revolving Credit Facility during the first quarter of 1996 were utilized to
invest approximately $9.6 million in property, plant and equipment and pay
dividends on capital stock.
In the first quarter of 1995, borrowings under the Company's Revolving
Credit Facility were utilized to (i) fund working capital requirements, (ii)
invest approximately $8.8 million in property, plant and equipment and (iii) pay
dividends on preferred stock.
The Company's Revolving Credit Facility totals $200 million and matures
in October 2000. The terms of the facility also permit the issuance of standby
letters of credit up to a maximum of $95 million in lieu of borrowings. The
Company's ownership interest in five cement manufacturing facilities and the
Company's joint venture interest in Kosmos Cement Company are pledged to secure
this facility. At March 31, 1996, $37 million of borrowings and $51.3 million of
letters of credit were outstanding under the Revolving Credit Facility, leaving
$111.7 million of unused and unrestricted capacity.
CHANGES IN FINANCIAL CONDITION
The change in the financial condition of the Company between December
31, 1995 and March 31, 1996 reflects borrowings under the Company's Revolving
Credit Facility to complete the repurchase of $120.2 million of the 14% Notes
and fund capital expenditures and capital stock dividends. The increase in
inventories reflects the seasonal build-up in cement inventories in preparation
for the peak selling months in the second and third quarters and weather related
delays in certain cement sales volumes in several market areas. Accounts payable
and accrued liabilities decreased because of the timing of payments on normal
trade and other obligations.
KNOWN EVENTS, TRENDS AND UNCERTAINTIES
ENVIRONMENTAL MATTERS
The Company is subject to extensive, stringent and complex Federal,
state and local laws, regulations and ordinances pertaining to the quality and
the protection of the environment. These constantly changing laws regulate water
discharges and air emissions, as well as the handling, use and disposal of
hazardous and non-hazardous waste materials and may require the Company to
remove or mitigate the environmental effects of the disposal or release of
certain substances at the Company's various operating facilities or elsewhere.
Industrial operations have been conducted at some of the Company's
cement manufacturing facilities for almost 100 years. In the past, the Company
disposed of various materials used in its cement
-11-
<PAGE>
manufacturing and concrete products operations in onsite and offsite facilities.
Some of these materials, if discarded today, might be classified as hazardous
wastes. Several of the Company's previously and currently owned facilities at
several locations have become the subject of various local, state and federal
environmental proceedings and inquiries, including being named a potentially
responsible party with regard to Superfund sites, primarily at several locations
to which they are alleged to have shipped materials for disposal. While some of
these matters have been settled for de minimis amounts, others are in their
preliminary stages and final results may not be determined for years. Based on
the information the Company has developed to date, the Company has no reason to
believe it will be required to spend significant sums with regard to these
locations either individually or in the aggregate. However, until it is
determined what, if any, contribution the Company made to these locations and
until all environmental studies, investigations, remediation work and
negotiations with or litigation against potential sources of recovery have been
completed, it is impossible to determine the ultimate cost of resolving these
environmental matters.
A by-product of the cement manufacturing process, cement kiln dust
(CKD) that is infused with water may produce a leachate with an alkalinity high
enough to be classified as hazardous and may also leach certain hazardous trace
metals present therein. The Company has recorded charges totaling approximately
$13.3 million as the estimated remediation cost for one inactive CKD disposal
site in Ohio. Approximately $12 million of the reserved amount had been expended
through March 31, 1996.
On a voluntary basis, the Company is also investigating two other
inactive Ohio CKD disposal sites. The two additional sites in question were part
of a cement manufacturing facility that was owned and operated by a now
dissolved cement company from 1924 to 1945 and by a division of USX Corporation
(USX) from 1945 to 1975. The Company believes that USX is a responsible party
because it owned and operated the larger of the two sites (USX Site) at the time
of disposal of the hazardous substances, arranged for the disposal of the
hazardous substances and transported the hazardous substances to the USX Site.
Therefore, based on the advice of counsel, the Company believes there is a
reasonable basis for the apportionment of cleanup costs relating to the USX Site
between the Company and USX with USX shouldering substantially all of the
cleanup costs because, based on the facts known at this time, the Company itself
disposed of no CKD at the USX Site and is potentially liable only because of its
current ownership of the USX Site. In late September 1993, the Company filed a
complaint against USX, alleging that USX is a potentially responsible party
under Federal and under applicable Ohio law, and therefore, jointly and
severally liable for costs associated with cleanup of the USX Site. The Company
and USX have held settlement discussions with respect to this matter and are
currently jointly funding the initial project of a phased approach to
investigating and remediating the problems at the USX Site.
Based on the limited information available, the Company has received
two preliminary estimates of the potential magnitude of the remediation costs
for the USX Site, $8 million and $32 million, depending on the assumptions used.
No regulatory agency has directly asserted a claim against the Company as the
owner of the USX Site requiring it to remediate the property, and no cleanup of
the USX Site has yet been initiated. Under Federal and applicable Ohio law, a
court generally applies equitable principles in determining the amount of
contribution which a potentially responsible party must provide with respect to
a cleanup of hazardous substances and such determination is within the sole
discretion of the court.
No substantial investigative work has been undertaken at the Company's
other CKD sites in Ohio. Several of the Company's other inactive CKD disposal
sites around the country are under study to determine if remedial action is
required and, if so, the extent of remedial action necessary, or are in the
preliminary stages of evaluation for inclusion as a "Superfund site" on the
National Priorities List. These studies may take some time to complete.
Thereafter, remediation plans, if required, will have to be devised and
implemented, which could take several additional years.
-12-
<PAGE>
CLAIMS FOR INDEMNIFICATION
Prior to the sale of the Company's then oil and gas subsidiary, Pelto
Oil Company (Pelto) in 1989 to Energy Development Corporation (EDC), Pelto
entered into certain gas settlement agreements, including one with Tennessee Gas
Pipeline Company (Tennessee Gas). The Minerals Management Service (MMS) of the
Department of the Interior has reviewed the 1988 agreement Pelto entered into
with Tennessee Gas to determine whether a payment to Pelto thereunder is
associated with Federal or Indian leases and whether, in its view, any
additional royalties may be due as a result of that payment. In late October
1995, the MMS's Houston Compliance Division advised EDC that it had determined
that a lump sum payment made by Tennessee Gas to Pelto was, for several alleged
reasons, royalty bearing. The MMS advised EDC of a preliminary determination of
underpayment of royalties in the amount of $1.35 million attributable to these
proceeds. In 1994, the Company timely filed its notice of appeal and its
statement of reasons supporting its appeal regarding an earlier similar MMS
determination of royalty underpayment, in an amount unspecified, with respect to
a separate $5.9 million gas settlement payment from Transcontinental Gas Pipe
Line Corporation (Transco) to Pelto. The Company has been notified by EDC that
EDC was exercising its indemnification rights under the 1989 stock purchase for
Pelto with respect to both of these matters. The Company disagrees with MMS'
preliminary determinations, however, if the determinations as to the payments to
Pelto are ultimately upheld, the Company could have liability for royalties on
those sums, plus late payment charges. Such expenditures would result in a
charge to discontinued operations.
DISCONTINUED ENVIRONMENTAL SERVICES SEGMENT
The Company has both given environmental and other indemnifications to
and received environmental and other indemnifications from others for properties
previously owned although some courts have held that indemnification for such
environmental liabilities is unenforceable. No estimate of the extent of
contamination, remediation cost or recoverability of cost from prior owners, if
any, is presently available regarding these discontinued operations.
DISCLOSURE REGARDING FORWARD LOOKING STATEMENTS
Part I, Item 2 and Part II, Item 1 of this document include forward
looking statements within the meaning of Section 27A of the Securities Act of
1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. Although the Company believes that the expectations reflected in such
forward looking statements are based upon reasonable assumptions, it can give no
assurance that its expectations will be achieved. Important factors that could
cause actual results to differ materially from the Company's expectations are
disclosed in conjunction with the forward looking statements included herein
(Cautionary Disclosures). Subsequent written and oral forward looking statements
attributable to the Company or persons acting on its behalf are expressly
qualified in their entirety by the Cautionary Disclosures.
-13-
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
(a) The information appearing under "Management's Discussion and Analysis of
Financial Condition and Results of Operations - Liquidity and Capital
Resources - Known Events, Trends and Uncertainties Environmental Matters"
is incorporated hereunder by reference, pursuant to Rule 12b-23.
(b) The Company owns two inactive CKD disposal sites in Ohio that were
formerly owned by a division of USX Corporation (USX). In late July 1993, a
citizens environmental group brought suit in U.S. District Court for the
Southern District of Ohio, Western Division (Greene Environmental
Coalition, Inc. (GEC) v. Southdown, Inc., Case No. C-3-93-270) alleging the
Company is in violation of the Clean Water Act by virtue of the discharge
of pollutants in connection with the runoff of stormwater and groundwater
from the larger of these two sites (USX Site) and is seeking injunctive
relief, unspecified civil penalties and attorney's fees, including expert
witness fees (GEC case). In December 1994, GEC agreed to a separate
out-of-court settlement which included a cash payment by the Company to GEC
and a covenant by the Company not to store, burn or dispose of hazardous
wastes at the Ohio cement plant. As a result of the settlement, the GEC
case has been stayed until January 3, 1997 pending possible resolution.
In September 1993, the Company filed a complaint against USX alleging that
with respect to the USX Site, USX is a potentially responsible party under
CERCLA and, therefore, jointly and severally liable for costs associated
with cleanup of the USX Site. (Southdown, Inc. vs. USX Corporation, Case
No. C-3-93-354, U.S. District Court, Southern District of Ohio Western
Division) (USX Case). In late September 1995, the Company and USX entered
into a partial settlement agreement wherein the Company dismissed its claim
for response costs incurred prior to September 29, 1995 and USX agreed to
pay the Company a specified amount representing half of certain costs
already incurred by the Company at the USX Site. The Company and USX are
jointly funding the initial project of a phased approach to investigating
and remediating the problems at the USX Site. The court granted a jointly
requested stay of litigation until October 6, 1995 and has subsequently
extended the previously ordered stay of proceedings until April 3, 1996. On
April 4, 1996, the Company and USX filed a joint status report with the
court indicating that the parties would continue to engage in settlement
discussions and suggested that another joint status report be filed with
the court on or before June 1, 1996 to inform the court as to the status of
settlement and whether the matter should be scheduled for trial. The court
has not yet responded to the parties' April 4, 1996 joint status report.
(c) On November 17, 1992, Region IV of the U.S. EPA advised the
Company of certain alleged violations of the National Pollution Discharge
Elimination System (NPDES) permit issued to a ready-mixed concrete facility
operated by the Company in Tallahassee, Florida. The letter requested that
Company representatives attend a meeting on December 15, 1992 to show cause
why an enforcement action should not be commenced on account of the alleged
violations. U.S. EPA officials indicated at the meeting that they would
evaluate the information provided by the Company and would determine what,
if any, enforcement action they believe is warranted. The Company
voluntarily terminated operations at the facility in the Spring of 1993
and, in October 1993, the property was sold.
Although the Company no longer owns the property involved in the alleged
violation, on September 13, 1994, the United States Department of Justice,
acting on behalf of U.S. EPA, brought an action against the Company in the
United States District Court for the Northern District of Florida alleging
NPDES Clean Water Act violations and seeking the statutory maximum penalty
of $25,000 per day of violation. Discovery in preparation for potential
trial is in progress. However, the parties continue
-14-
<PAGE>
to engage in negotiations to settle this matter. The court has rescinded a
tentative trial date of March 12, 1996 to allow for discovery and
settlement negotiations to proceed. The court has ordered a June 6, 1996
deadline for closure of discovery. The Department of Justice asserted that
it believes a penalty in excess of one million dollars is appropriate. The
Company and its counsel believe that a substantially lower aggregate
penalty, if any, is appropriate. Following several months of extensive
settlement negotiations with U.S. EPA and the Department of Justice, a
tentative agreement in principle between the parties was reached in April
1996. Although the paperwork for this agreement has not been finalized,
management believes, based on advice of counsel, that the remaining tasks
for finalizing the agreement in principle will not alter the significant
terms of the agreement, which stipulate the payment by the Company of a
significantly reduced penalty.
(d) In late August 1993, the Company was notified by Energy
Development Corporation (EDC), the 1989 purchaser of the common stock of
the Company's then oil and gas subsidiary, Pelto Oil Company (Pelto), that
EDC was exercising its indemnification rights under the 1989 stock purchase
agreement with respect to a Department of Energy (DOE) Remedial Order
regarding the audit of crude oil produced and sold during the period
September 1973 through January 1981 from an offshore, federal waters field
in which the Company's oil and gas subsidiary owned an interest. The DOE
alleged certain price overcharges and sought to recover a total of $68
million in principal and interest from Murphy Oil Corporation (Murphy), as
operator of the property. Murphy estimated the Company's share of this
total to be approximately $4.2 million. On January 24, 1994, the presiding
Administrative Law Judge at the Federal Energy Regulatory Commission (FERC)
rendered a favorable decision for Murphy, materially reducing the amount it
potentially owed to the DOE. This decision also had the effect of
precluding the DOE from recovering from Murphy for any alleged overcharges
attributable to Pelto's "in-kind" production. In mid-1994, Murphy notified
the Company that it had settled with the DOE by agreeing to pay $10.7
million and that it would contact the Company later concerning the
Company's alleged share of this amount. The Company advised Murphy that it
does not accept liability for any portion of the settlement amount paid to
the DOE other than its pro rata share of attorney's fees, which the Company
has paid. On April 10, 1995, Murphy filed a complaint against the Company
in the U.S. District court for the Southern District of Texas, Houston
Division (Murphy Exploration & Production Company v. Southdown, Inc. - Case
No. H-95-1049) alleging that the Company is liable for the Company's pro
rata share of the $10.7 million payment made to the DOE by Murphy in its
capacity as operator of the property. Murphy alleges this amount is
$634,487 plus interest from October 15, 1994 and also seeks attorney's
fees. Both Murphy and the Company filed motions for partial summary
judgment in this matter, but the trial court denied both those motions on
April 19, 1996. The case is set for trial during September 1996.
(e) In late 1988, Southern Prestressed, Inc. (SPI), a wholly owned subsidiary
of Lohja, Inc., was designated the Buyer in an Agreement for Sale of
Properties (Agreement) whereby certain prestressed concrete product plants
owned and operated by the Company were acquired. On June 30, 1995, SPI
filed suit against the Company (Southern Prestressed, Inc. v. Florida
Mining & Materials Concrete Corp. and Southdown, Inc., Case No. C95-2217,
Thirteenth Judicial Circuit Court, Hillsborough County, Florida) alleging
environmental contamination at certain of the facilities SPI acquired from
the Company and seeking compensation under the indemnification provisions
of the Agreement.
(f) In Jack Blair, et al. vs. Ideal Basic Industries, Inc., United
Cement, Lime, Gypsum and Allied Workers International Union, and Dixie
Cement Company (Chancery Court of Knox County, Tennessee, No.
03A1-CH-00029), the plaintiffs are fifteen former employees of Ideal Basic
Industries, Inc. (Ideal), and the defendants are Ideal, Dixie Cement
Company (Dixie) (a subsidiary of Moore McCormack Resources Inc. which was
acquired by the Company in 1988), and the United Cement, Lime, Gypsum and
Allied Workers International Union (Union). The plaintiffs' claims arise
out of a December 1983
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<PAGE>
transaction in which Dixie purchased a cement plant from Ideal. Among other
things, the plaintiffs allege that they were not hired by Dixie because of
their ages, that their retirements were not voluntary because they were
induced to retire through factual misrepresentations made by Ideal
employees, allegedly acting as agents of Dixie, as to their retirement
benefits and Dixie's plans to rehire former Ideal employees, and that Dixie
induced Ideal to breach its collective bargaining agreement with the Union.
Dixie has assumed the defense of Ideal with respect to the claim under
Section 301 of the National Labor Relations Act based on the
indemnification provision of the agreement pursuant to which the Knoxville
plant was acquired. The plaintiffs are seeking compensatory damages
(including back pay and benefits), liquidated damages (under the federal
age discrimination statute), punitive damages, treble damages (under the
same statute prohibiting interference with contracts), interest and
attorney's fees.
In December 1992, the trial court granted summary judgment in favor of
Dixie on all claims against Dixie. However, in November 1994, the Tennessee
Court of Appeals reversed the summary judgment order, and remanded the case
to the trial court. In January 1995, Dixie filed an application for an
appeal by permission to the Supreme Court of Tennessee. In early May 1995,
the Supreme Court of Tennessee denied Dixie's application and the case will
be returned to the Chancery Court of Knox County, Tennessee for trial.
On August 28, 1995, after a hearing in the Chancery Court of Knox County,
Tennessee, the Chancery Court granted Dixie's motion to reopen discovery as
to all issues, including damages issues, ordered Plaintiffs to respond to
outstanding discovery requests within thirty days thereafter, and denied
the motion of Ideal seeking reconsideration of the Court's July 7, 1992
order setting aside a summary judgment order previously entered in favor of
Ideal. On November 13, 1995, the Court heard argument on a motion by the
Union seeking to dismiss the Plaintiffs' state law claims against the
Union, but has not yet ruled on that motion. Discovery has recommenced and
depositions of the Plaintiffs are expected to be taken after Plaintiffs
have complied with written discovery obligations as to the damages issues.
At the hearing on August 28, 1995, the Court indicated that the case would
be tried in the fall of 1996; however, the parties have not received notice
of a specific trial date.
-16-
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
4.1 Indenture dated as of March 19, 1996, between the Registrant and
State Street Bank and Trust Company, as Trustee, relating to the
Registrant's 10% Senior Subordinated Notes due 2006 and 10% Senior
Subordinated Notes due 2006, Series B - incorporated by reference
from Exhibit 4.1 to the Company's Registration Statement on Form
S-4 (Registration No. 333-02585) filed April 17, 1996.
4.2 Registration Rights Agreement dated as of March 19, 1996, among the
Registrant, Lehman Brothers, Inc., and Merrill Lynch, Pierce,
Fenner & Smith Incorporated - incorporated by reference from
Exhibit 4.2 to the Company's Registration Statement on Form S-4
(Registration No. 333-02585) filed April 17, 1996.
10.1 Letter Agreement dated February 29, 1996, amending the Third
Amended and Restated Credit Agreement as of November 3, 1995, among
the Registrant and the banks party thereto incorporated by
reference from Exhibit 99.2 to the Company's Registration Statement
on Form S-4 (Registration No. 333-02585) filed April 17, 1996.
11 Statement of Computation of Per Share Earnings
27 Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended March 31, 1996.
-17-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SOUTHDOWN, INC.
(Registrant)
Date: May 15, 1996 By: JAMES L. PERSKY
------------------------------
James L. Persky
Executive Vice President-Finance & Administration
(Principal Financial Officer)
Date: May 15, 1996 By: ALLAN KORSAKOV
----------------------------
Allan Korsakov
Corporate Controller
(Principal Accounting Officer)
-18-
<TABLE>
EXHIBIT 11
----------
SOUTHDOWN, INC. AND SUBSIDIARIES
STATEMENT OF COMPUTATION OF PER SHARE EARNINGS
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS - UNAUDITED)
---------------------------------------------------
<CAPTION>
QUARTER ENDED
MARCH 31,
--------------------------------------
1996 1995
--------------- ---------------
<S> <C> <C>
Earnings (loss) for primary earnings per share:
Earnings before extraordinary charge and
preferred stock dividends $ 4.8 $ 2.5
Preferred stock dividends (2.4) (2.4)
--------------- ---------------
Earnings before extraordinary charge 2.4 0.1
Extraordinary charge, net of income taxes (11.4) -
--------------- ---------------
Net earnings (loss) for primary earnings per share $ (9.0) $ 0.1
=============== ===============
Earnings (loss) for fully diluted earnings per share:
Earnings before extraordinary charge and
preferred stock dividends $ 4.8 $ 2.5
Antidilutive preferred stock dividends (2.4) (2.4)
--------------- ---------------
Earnings before extraordinary charge 2.4 0.1
Extraordinary charge, net of income taxes (11.4) -
--------------- ---------------
Net earnings (loss) for fully diluted earnings per share $ (9.0) $ 0.1
=============== ===============
Average shares outstanding:
Common stock and primary earnings per share 17.3 17.3
Other potentially dilutive securities:
- additional common stock equivalent from assumed
conversion of stock options and warrants at ending
market price 0.1 0.1
- assumed conversion of Series A convertible
preferred stock at one-half share of common stock 1.0 1.0
- assumed conversion of Series B convertible
preferred stock at 2.5 shares of common stock 2.3 2.3
- assumed conversion of the Series D convertible
preferred stock at 1.51 shares of common stock 2.6 2.6
--------------- ---------------
Total for fully diluted earnings per share 23.3 23.3
Less: Antidilutive securities
Stock options and warrants (0.1) -
Series A preferred stock (1.0) (1.0)
Series B preferred stock (2.3) (2.3)
Series D preferred stock (2.6) (2.6)
--------------- ---------------
17.3 17.4
=============== ===============
Earnings (loss) per share:
Primary
Earnings before extraordinary charge $ 0.14 $ 0.01
Extraordinary charge, net of income taxes (0.66) -
--------------- ---------------
$ (0.52) $ 0.01
=============== ===============
Fully diluted
Earnings before extraordinary charge $ 0.14 $ 0.01
Extraordinary charge, net of income taxes (0.66) -
--------------- ---------------
$ (0.52) $ 0.01
=============== ===============
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Company's consolidated balance sheet as of March 31, 1996 and the
related statement of consolidated earnings and is qualified in its
entirety by reference to such statements.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 8
<SECURITIES> 0
<RECEIVABLES> 80
<ALLOWANCES> 10
<INVENTORY> 82
<CURRENT-ASSETS> 175
<PP&E> 899
<DEPRECIATION> 336
<TOTAL-ASSETS> 887
<CURRENT-LIABILITIES> 74
<BONDS> 207
<COMMON> 22
0
152
<OTHER-SE> 191
<TOTAL-LIABILITY-AND-EQUITY> 887
<SALES> 127
<TOTAL-REVENUES> 127
<CGS> 101
<TOTAL-COSTS> 115
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6
<INCOME-PRETAX> 7
<INCOME-TAX> 2
<INCOME-CONTINUING> 5
<DISCONTINUED> 0
<EXTRAORDINARY> (11)
<CHANGES> 0
<NET-INCOME> (7)
<EPS-PRIMARY> (0.52)
<EPS-DILUTED> (0.52)
</TABLE>
