UNITED STATES
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 SEPTEMBER 30, 2000
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 1-8009
ROHN INDUSTRIES, INC.
(DELAWARE)
6718 West Plank Road
Peoria, Illinois 61604
IRS Employer Identification Number 36-3060977
TELEPHONE NUMBER (309) 697-4400
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
--- ---
<TABLE>
<CAPTION>
Shares Outstanding
as of November 10, 2000
-----------------------
<S> <C>
Common Stock $.01 par value........................ 52,815,836
</TABLE>
-1-
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1.FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
ROHN INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
(UNAUDITED)
Three Months Ended Nine Months Ended
------------------------- -------------------------
September 30, September 30, September 30, September 30,
2000 1999 2000 1999
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net sales $ 63,956 $ 36,855 $169,357 $ 96,085
Cost of products sold 48,573 27,214 129,196 74,365
-------- -------- -------- --------
Gross profit 15,383 9,641 40,161 21,720
Operating expenses:
Selling expenses 2,094 1,706 6,423 5,831
General and administrative expenses 4,067 2,617 12,103 8,191
-------- -------- -------- --------
Operating income 9,222 5,318 21,635 7,698
Interest income 264 219 903 678
Interest expense 181 207 542 649
Other expense ---- ---- ---- 1,600
-------- -------- -------- --------
Income before income taxes 9,305 5,330 21,996 6,127
Income tax provision 941 2,000 5,658 2,250
Equity loss of corporate joint venture ---- 298 ---- 355
-------- -------- -------- --------
Net income $ 8,364 $ 3,032 $ 16,338 $ 3,522
======== ======== ======== ========
Earnings per share - basic and diluted $ 0.16 $ 0.06 $ 0.31 $ 0.07
======== ======== ======== ========
Weighted average number of shares outstanding
Basic 52,816 52,752 52,727 52,784
======== ======== ======== ========
Diluted 53,340 52,964 53,275 52,869
======== ======== ======== ========
</TABLE>
The accompanying notes to the unaudited consolidated financial statements are an
integral part of these statements.
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<PAGE>
ROHN INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
ASSETS September 30, December 31,
2000 1999
(unaudited)
-------------- ------------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 18,899 $ 27,634
Accounts, notes and other receivables, less allowance
for doubtful accounts of $1,740 in 2000 and $1,246 in 1999 52,260 34,051
Inventories 33,074 25,885
Deferred income taxes 3,659 2,900
Prepaid expenses 644 1,271
--------- ---------
TOTAL CURRENT ASSETS 108,536 91,741
--------- ---------
Property, plant and equipment 59,009 51,905
Less: accumulated depreciation (27,038) (24,815)
--------- ---------
TOTAL PROPERTY, PLANT AND EQUIPMENT 31,971 27,090
--------- ---------
Other assets 858 1,337
Long-term assets of discontinued operations 1,988 1,680
--------- ---------
TOTAL ASSETS $ 143,353 $ 121,848
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current portion of long-term debt $ 937 $ 1,066
Accounts payable 18,065 11,474
Accrued liabilities & other 13,317 15,463
Deferred revenue 971 808
Liabilities of discontinued operations 1,319 1,157
--------- ---------
TOTAL CURRENT LIABILITIES 34,609 29,968
Long-term debt 8,502 9,164
Nonpension post retirement benefits 2,800 2,300
--------- ---------
TOTAL LIABILITIES 45,911 41,432
--------- ---------
STOCKHOLDERS' EQUITY
Common stock, $0.01 par value, shares authorized - 80,000;
shares issued - September 30, 2000: 53,412; December 31,
1999: 53,387 534 534
Capital surplus 13,166 12,815
Retained earnings 87,863 71,743
Treasury stock, at cost - September 30, 2000: 598; December
31, 1999: 635 (3,667) (3,896)
Unearned portion of restricted stock (454) (780)
--------- ---------
TOTAL STOCKHOLDERS' EQUITY 97,442 80,416
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 143,353 $ 121,848
========= =========
</TABLE>
The accompanying notes to the unaudited consolidated financial statements are an
integral part of these statements.
-3-
<PAGE>
ROHN INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION> NINE MONTHS ENDED
September 30,
--------------------
2000 1999
--------- ----------
<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES
Net income $ 16,338 $ 3,522
Adjustments for noncash items included in net income:
Depreciation and amortization 2,977 3,086
Restricted stock earned 389 328
Non pension post retirement benefits 500 459
Operating requirements:
Accounts receivable (increase)/decrease (18,209) 3,332
Inventories (increase)/decrease (7,189) 1,384
Deferred income taxes (increase)/decrease (759)
Prepaid expenses decrease 861 976
Deferred revenue increase/(decrease) 163 (705)
Accounts payable increase/(decrease) 6,591 (4,402)
Accrued liabilities and other decrease (2,146) 398
Net discontinued operations (decrease)/increase (146) 612
Other 77 17
-------- --------
Net cash (used for)/provided by operating activities (553) 9,007
-------- --------
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of plant and equipment, net of proceeds (7,357) (3,558)
Equity investment decrease 0 3,129
Other (44) 83
-------- --------
Net cash used for investing activities (7,401) (346)
-------- --------
CASH FLOW FROM FINANCING ACTIVITIES
Repayment of debt (791) (799)
Issuance/(cancellation) of common stock, including treasury 68 0
shares reissued
Purchase of treasury shares (58) 0
-------- --------
Net cash used for financing activities (781) (799)
-------- --------
Net (decrease)/increase in cash and cash equivalents (8,735) 7,862
Cash & cash equivalents, beginning of period 27,634 19,690
-------- --------
Cash & cash equivalents, end of period $ 18,899 27,552
======== ========
Cash paid during the period for interest 541 206
Cash paid during the period for income taxes 10,712
</TABLE>
The accompanying notes to the unaudited consolidated financial statements
are an integral part of these statements.
-4-
<PAGE>
ROHN INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(1) BASIS OF REPORTING FOR INTERIM FINANCIAL STATEMENTS
The Company, pursuant to the rules and regulations of the Securities and
Exchange Commission, has prepared the unaudited financial statements included
herein. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been omitted pursuant to such rules and regulations, although
the Company believes that the disclosures are adequate to make the information
presented not misleading. It is suggested that these financial statements be
read in conjunction with the financial statements and notes thereto included in
the Company's Annual Report on Form 10-K for the year ended December 31, 1999.
The financial statements presented herewith reflect all adjustments
(consisting of only normal and recurring adjustments) which, in the opinion of
management, are necessary for a fair presentation of the results of operations
for the three-month and nine-month periods ended September 30, 2000 and 1999.
The results of operations for interim periods are not necessarily indicative of
results to be expected for an entire year.
Certain reclassifications have been made to prior year amounts to conform
to the current year presentation.
(2) REVENUE RECOGNITION
The Company's products are manufactured according to stringent customer
specifications and engineering design, and are available for immediate delivery
according to the schedule requested by the customer. Revenue is generally
recognized when the product is shipped. Many times, however, the Company's
customers experience delays due to weather, zoning approvals, and other similar
circumstances, and request that the Company hold their inventory. In these
situations, the Company recognizes revenue for its Tower Structures segment
prior to the time a product is shipped if each of the following conditions are
met:
1. The risks of ownership have passed to the customer;
2. The customer has a fixed commitment to purchase the goods;
3. The customer, not the Company, has requested that the shipment of the
product be delayed and that the transaction be on a bill and hold
basis;
4. There is a fixed schedule for delivery of the product;
5. The Company has not retained any specific performance obligations with
respect to the product such that the earnings process is not complete;
6. The ordered product has been segregated from the Company's inventory
and is not subject to being used to fill other orders;
7. The product is complete and ready for shipment; and
8. The customer agrees to pay for the goods under the Company's standard
credit terms.
The Equipment Enclosures segment differs from Tower Structures segment in
that enclosures are generally ordered by the customer in multiple units on a
project basis and are not necessarily site specific. Therefore, the revenue
recognition policy for Equipment enclosures segment, in addition to the
requirements of the Towers Structure segment, also requires that actual payment
be received.
(3) PRINCIPLES OF CONSOLIDATION
The financial statements include the consolidated accounts of ROHN
Industries, Inc. and its subsidiaries ("ROHN" or the "Company"). All significant
inter-company transactions have been eliminated in consolidation. The Company
accounted for its 49% interest in ROHN BrasilSat, a corporate joint venture in
Brazil, under the equity method until its disposition in September 1999.
-5-
<PAGE>
(4) NET INCOME PER SHARE
Basic earnings per share were computed by dividing net income by the
weighted average number of shares outstanding during each period. Diluted
earnings per share were calculated by including the effect of all dilutive
securities. For the nine months ended September 30, 2000 and 1999, the number of
potentially dilutive securities, including stock options and unvested restricted
stock, was 547,400 and 84,500, respectively. For the three months ended
September 30, 2000 and 1999, the number of potentially dilutive securities,
including stock options and unvested restricted stock, was 524,100 and 211,000,
respectively. The Company had additional outstanding stock options as of
September 30, 2000 and 1999 of 790,000 and 745,000, respectively, which were not
included in the computation of diluted earnings per share because the options'
exercise price was greater than the average market price of the common shares.
(5) INVENTORIES
Inventories are stated at the lower of cost or market. Cost is determined
using the first-in, first-out (FIFO) method. Inventory costs include material,
labor and factory overhead.
TOTAL INVENTORIES
(IN THOUSANDS)
<TABLE>
<CAPTION>
September 30, December 31,
2000 1999
-------------- --------------
<S> <C> <C>
Finished goods $13,724 $11,632
Work-in-process 11,229 7,883
Raw materials 8,121 6,370
------- -------
Total Inventories $33,074 $25,885
======= =======
</TABLE>
(6) INVESTMENT IN JOINT VENTURE
In December 1997, the Company formed a corporate joint venture, ROHN
BrasilSat, S.A., with BrasilSat Harald, S.A., Brazil's largest tower
manufacturer and installer, to serve the growing telecommunications
infrastructure industry in Brazil and the rest of South America. In September
1999, after re-evaluating its investment, the Company sold its 49% interest in
ROHN BrasilSat to its joint venture partner, BrasilSat Harald, S.A. ROHN
accounted for the corporate joint venture under the equity method until its
disposition in September 1999. The Company recorded a loss of $298,000 in the
third quarter of 1999 and a loss of $355,000 for the nine months ended September
30, 1999.
(7) NEW ACCOUNTING STANDARDS
The Company has recognized revenue during the quarter and nine months ended
September 30, 2000 in accordance with its historical practice. In December 1999,
the Securities and Exchange Commission issued Staff Accounting Bulletin No. 101,
"Revenue Recognition in Financial Statements" (SAB 101). The Company is
evaluating the effects, if any, the adoption of SAB 101, effective January 1,
2000, may have on the results of operations or financial position of the
Company. The Company will adopt SAB 101 during the fourth quarter 2000.
(8) INCOME TAXES
During the quarter ended September 20, 2000, the Company made a one-time,
non-cash non-operational adjustment of $2.5 million to the Company's tax
reserves which was related to the expiration of the 1996 Statue of Limitations
for examination of the Company's 1996 federal income tax return.
-6-
<PAGE>
(9) BUSINESS SEGMENT INFORMATION
The Company operates in two business segments: Tower Structures and
Equipment Enclosures. The segments are managed as strategic business units due
to their distinct manufacturing processes and potential end-user application.
The Tower Structures segment includes manufacturing plants in Peoria, Illinois
and Frankfort, Indiana. The Equipment Enclosures segment includes manufacturing
plants in Bessemer, Alabama and Casa Grande, Arizona.
Accounting policies for measuring segment assets and earnings before
interest and taxes are substantially consistent with those described in Note 1.
The Company evaluates segment performance based on earnings before interest and
taxes. Transfers between segments, which are not material in nature, are
recorded at cost.
<TABLE>
<CAPTION>
Tower Equipment
Structures Enclosures
For the three months ended September 30, Segment Segment Total
------- ------- -----
<S> <C> <C> <C>
2000
Net sales $ 42,787 $ 21,169 $63,956
Operating income 5,422 3,800 9,222
Depreciation and amortization 865 154 1,019
Segment assets $123,966 $ 19,387 $143,353
1999
Net sales $ 25,478 $ 11,377 $36,855
Operating income 3,445 1,873 5,318
Depreciation and amortization 871 158 1,029
Segment assets $ 81,115 $ 32,163 $113,278
<CAPTION>
Tower Equipment
Structures Enclosures
For the nine months ended September 30, Segment Segment Total
------- ------- -----
<S> <C> <C> <C>
2000
Net sales $116,708 $ 52,649 $169,357
Operating income 12,805 8,830 21,635
Depreciation and amortization 2,518 459 2,977
Segment assets $123,966 $ 19,387 $143,353
1999
Net sales $ 68,051 $ 28,034 $96,085
Operating income 3,036 4,662 7,698
Depreciation and amortization 2,613 473 3,086
Segment assets $ 81,115 $ 32,163 $113,278
</TABLE>
-7-
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
OVERVIEW
The following discussion summarizes the significant factors affecting the
consolidated operating results and financial condition of ROHN for the three
months and nine months ended September 30, 2000 and 1999. This discussion should
be read in conjunction with the consolidated financial statements and notes to
the consolidated financial statements contained in Item 1 above and the
consolidated financial statements and related notes included in the Company's
Annual Report on Form 10-K for the year ended December 31, 1999.
RESULTS OF OPERATIONS
ROHN is a leading manufacturer and installer of telecommunications
infrastructure equipment for the wireless and fiber optic industry including
cellular, PCS, fiber optic networks for the internet, radio and television
broadcast markets. The Company's products include towers, equipment
enclosures/shelters, cabinets, poles and antennae mounts. The following table
sets forth, for the fiscal periods indicated, the percentage of net sales
represented by certain items reflected in the Company's consolidated statements
of income.
<TABLE>
<CAPTION>
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales 100.0% 100.0% 100.0% 100.0%
Cost of sales 75.9 73.8 76.3 77.4
----- ----- ----- -----
Gross profit 24.1 26.2 23.7 22.6
S,G&A expense 9.6 11.7 10.9 14.6
----- ----- ----- -----
Operating income 14.5 14.5 12.8 8.0
Interest income 0.4 0.6 0.5 0.7
Interest expense 0.3 0.6 0.3 0.7
Other expense 0.0 0.0 0.0 1.7
----- ----- ----- -----
Income before income taxes 14.6 14.5 13.0 6.3
Income tax provision 1.5 5.4 3.3 2.3
Equity loss of corporate joint venture 0.0 0.8 0.0 0.4
----- ----- ----- -----
Net income from continuing operations 13.1% 8.3% 9.7% 3.6%
===== ===== ===== =====
</TABLE>
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2000 COMPARED TO THE THREE MONTHS ENDED
SEPTEMBER 30, 1999
Net sales for the third quarter ended September 30, 2000 were $64.0 million
compared to $36.9 million in the third quarter of 1999, an increase of $27.1
million or 73.4%. The increase in sales by business segment was as follows:
<TABLE>
<CAPTION>
Dollar Percentage
For the three months ended September 30, 2000 1999 Increase Increase
---------------------------------------- ----- ----- -------- --------
<S> <C> <C> <C> <C>
Tower Structures $42.8 $25.5 $17.3 67.8%
Equipment Enclosures 21.2 11.4 9.8 86.0%
------ ---- ------ ------
Total $64.0 $36.9 $27.1 73.4%
===== ===== ===== ======
</TABLE>
The increase in sales in the Tower Structures segment was primarily the
result of demand for towers due to the continued build-out of
infrastructure for wireless communications systems and increased sales from the
Company's construction and installation business. The increase in sales in the
Equipment Enclosures segment was primarily due to continued demand for product
related to the fiber optics market.
-8-
<PAGE>
Gross profit margin for the third quarter of 2000 was $15.4 million versus
$9.6 million in the third quarter of 1999, an increase of 60.4%. The increase in
gross profit margin is attributable to the increase in sales. As a percentage to
sales, gross profit margin was 24.1% for the third quarter of 2000 in comparison
to 26.0% for the same period a year ago. Gross profit margins were negatively
impacted in the third quarter 2000 as compared to 1999 due to the increase, as a
percentage to sales, in revenue derived from the Company's construction and
installation business which is comprised of lower margin installation and civil
engineering work. This type of business has historically had significantly lower
margins than those of the Company's tower and equipment enclosure products. It
is expected that the overall Company gross profit margins will continue to
decrease slightly as the portion of total revenue derived from construction
related revenue increases.
Gross profit margin for the Company's Tower Structures segment was 25.3%
for the third quarter of 2000 versus 28.5% for the same quarter in 1999. The
downward pressure on Tower Structure gross profit margins is the result of a
greater portion of Tower Structure revenue being derived from installation and
civil engineering work, which yield margins that are significantly lower than
the margins on the Company's tower products. Gross profit margins for the
Company's Tower Structures segment benefited in the third quarter of 2000,
however, from reduced raw material costs and more effective manufacturing
expense control. For the third quarter of 2000, material costs as a percentage
of revenue for the Tower Structures manufacturing facilities were 37.3% versus
42.7% for the same period a year ago.
Gross profit margin for the Company's Equipment Enclosures segment was
21.4% for the third quarter of 2000 versus 21.1% for the same period in 1999.
Equipment Enclosure margins increased slightly in the third quarter 2000 as a
result of upward pricing pressures caused by increasing demand for equipment
enclosure products for the fiber optic market. Equipment Enclosure margins in
the third quarter were negatively affected, however, by start-up costs related
to the new equipment enclosure manufacturing facility located in Casa Grande,
Arizona.
Selling, general and administrative ("SG&A") expenses were $6.2 million in
the third quarter of 2000 versus $4.3 million in the third quarter of 1999. This
is an increase of $1.9 million, or 44.2%. The increase in SG&A expenses in the
third quarter of 2000 as compared to 1999 was mainly the result of additional
expenses required to support a 73.4% increase in sales, plus additional expenses
in the Company's construction group related to the administration of the State
of Pennsylvania contract, and additional expenses for administration of the
Company's Mexican operation due to the strong growth in sales related to Mexico.
As a percentage of sales, SG&A expenses were 9.6% of sales for the quarter ended
September 30, 2000 versus 11.7% for the same period in 1999.
Net earnings in the third quarter 2000 include the effect of a $2.5 million
($0.05/share) one-time, non-cash non-operational adjustment to the Company's tax
reserves related to the expiration of the 1996 Statue of Limitations for
examination of the Company's 1996 federal income tax return.
Earnings per share (basic and diluted) in the third quarter of 2000 were
$0.16 versus $0.06 in the third quarter of 1999. Earnings per share in the third
quarter 2000 include the effect of a one time, non-cash, non-operational tax
benefit of $0.05 per share.
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 COMPARED TO THE NINE MONTHS ENDED
SEPTEMBER 30, 1999
Net sales for the nine months ended September 30, 2000 were $169.4 million
compared to $96.1 million in the same nine month period a year ago, an increase
of $73.3 million or 76.3%. The increase in sales by business segment was as
follows:
-9-
<PAGE>
<TABLE>
<CAPTION>
Dollar Percentage
For the nine months ended September 30, 2000 1999 Increase Increase
--------------------------------------- ------ ------ -------- --------
<S> <C> <C> <C> <C>
Tower Structures $116.7 $ 68.1 $48.6 71.4%
Equipment Enclosures 52.7 28.0 24.7 88.2%
------ ------ ----- -----
Total $169.4 $ 96.1 $73.3 76.3%
====== ====== ===== =====
</TABLE>
The increase in sales in the Tower Structures segment was primarily the
result of continued demand for towers due to the build-out of infrastructure for
wireless communications systems and increased sales from the Company's
construction and installation business. The increase in sales in the Equipment
Enclosures segment was due to continued strong demand for product related to the
fiber optics market.
Gross profit margin for the first nine months of 2000 was $40.2 million
versus $21.7 million in the same period in 1999, an increase of 85.3%. The
increase in gross profit margin is attributable to the increase in sales. Gross
profit margin in 1999 was negatively affected by a $1.5 million charge for
excess and obsolete inventory and by a $1 million charge for severance payments
related to a reduction in workforce (of which $250,000 affected gross profit
margin). As a percentage to sales, gross profit margin was 23.7% for the first
nine months of 2000 in comparison to 22.6% for the same period in 1999. Without
the impact of the severance and excess and obsolete inventory charges taken in
the first nine months of 1999, gross profit margin for this period would have
been 24.4%. Gross profit margins were negatively impacted in the first nine
months of 2000 as compared to 1999 due to the increase, as a percentage of
sales, in revenue derived from the Company's construction business, which is
comprised of lower margin installation and civil engineering work. This type of
business has historically had significantly lower margins than those of the
Company's tower and enclosure products. It is expected that overall Company
gross profit margins will continue to decrease slightly as the portion of total
revenue derived from construction related revenue increases.
Selling, general and administrative ("SG&A") expenses were $18.5 million in
the first nine months of 2000 versus $14.0 million for the same period a year
ago. This represents a $4.5 million increase in SG&A expenses, or a 32.1%
increase. The increase in SG&A expense reflects additional expenses necessary to
support the 76.3% growth in sales, and includes additional expenses related to
the Company's construction group for the administration of the State of
Pennsylvania contract, additional expenses for administration of the Company's
Mexican operation due to the strong growth in sales related to Mexico, and a
$1.2 million charge for expenses related to the departure of certain management
employees at the Company's Equipment Enclosures Segment. These expenses were
partially offset by a $600,000 favorable adjustment of an employee bonus accrual
related to 1999. SG&A expenses for the first nine months of 1999 includes
$750,000 of the $1 million charge for severance costs relating to a reduction in
workforce. As a percentage of sales, SG&A expenses were 10.9% of sales for the
first nine months of 2000 versus 14.6% for the same period in 1999.
Other expense of $1.6 million for the nine months ended September 30, 1999
relates to fees and expenses in connection with the proposed merger with PiRod
Holdings, Inc. which was terminated on March 31, 1999.
Earnings per share (basic and diluted) for the first nine months of 2000
were $0.31 versus $0.07 in the same period in 1999. Earnings per share for 2000
include a one time, non-cash, non-operational tax benefit of $0.05 per share.
LIQUIDITY AND CAPITAL RESOURCES
The following table sets forth selected information concerning the
Company's financial condition:
<TABLE>
<CAPTION>
(DOLLARS IN THOUSANDS)
September 30, December 31,
2000 1999
----------------------------------
<S> <C> <C>
Cash $18,899 $27,634
Working capital 73,927 61,773
Total debt 9,439 10,230
Current ratio 3.14:1 3.06:1
</TABLE>
The Company's working capital was $73.9 million at September 30, 2000
compared to $61.8 million at December 31, 1999, an increase of $12.1 million.
The increase in working capital is mainly the result of an increase in trade
receivables and inventory related to the increase in sales.
-10-
<PAGE>
At September 30, 2000, the Company had long-term indebtedness of
approximately $9.4 million including current maturities of long-term debt. The
Company's long-term indebtedness was related to mortgage notes payable and
capital leases.
The Company has remaining capital commitments of $9.6 million for the
purchase of equipment and for the expansion of its Equipment Enclosures
manufacturing facility in Casa Grande, Arizona. The Company also has capital
comittments of $4.95 million for the purchase of land and for the construction
of a tapered steel pole manufacturing facility in Peoria, Illinois. The Company
expects that it will meet its ongoing working capital and capital expenditure
requirements from operating cash flows. In addition, the Company believes that
its strong balance sheet allows it substantial financial flexibility.
INFLATION
Inflation has not had a material effect on the Company's business or
results of operation.
SEASONALITY
The operations of the Company are generally not subject to seasonal
fluctuations. However, in the past, the Company has seen disruptions in its
customers ability to accept shipments due to unusual and prolonged
weather-related construction delays.
The Company has periodically experienced and expects to continue to
experience significant fluctuations in its quarterly results. The Company
believes that this quarterly fluctuation is due to the capital budgeting cycle
of many of its customers who often purchase a disproportionately higher share of
the Company's products at the end of the calendar year. The Company expects that
fluctuations in quarterly results could become more significant in the future as
customers move to a more centralized purchasing environment and as the
consolidation of wireless communication service providers and build-to-suit
customers continues.
RECENT DEVELOPMENTS
On August 2, 2000, the Company announced the appointment of Paul Grove, as
Vice President, General Manager, Tower Division.
On September 18, 2000, the Company announced that the Board of Director's
approved an additional investment of $13 million in the Casa Grande, Arizona
Equipment Enclosure facility.
On October 18, 2000, the Company announced that the Board of Director's
approved plans to build a new $10 million tapered steel pole facility in Peoria,
Illinois, expanding the Company's Tower Division.
YEAR 2000 COMPLIANCE
The Company believes material implications and risks related to the Y2K
issue have expired, and therefore, does not anticipate experiencing any
additional effects related to this issue. The Company did not experience any
significant increase in customer demand for its products as a result of the Y2K
issue, nor did it experience any problems with its key vendors. The Company
incurred Y2K costs of approximately $100,000 in 1999.
FORWARD-LOOKING INFORMATION
Matters discussed in this report may contain forward-looking statements
which reflect management's current judgment. Many factors, some of which are
discussed elsewhere in this document, could affect the future financial results
of the Company and could cause those results to differ materially from those
expressed in the forward-looking statements contained in this document. These
factors include operating, legal and regulatory risks,
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<PAGE>
economic, political and competitive forces affecting the telecommunications
and equipment business, and the risk that the Company's analyses of these risks
and forces could be incorrect or that the strategies developed to address them
could be unsuccessful. Additional information concerning factors that could
cause actual results to materially differ from those in the forward-looking
statements is contained in Exhibit 99.1 to the Company's Securities and Exchange
Commission filings.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS ON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
11. The computation can be determined from the report.
27. Financial data schedule.
99.1 Cautionary Statement for purposes of the "Safe Harbor" Provisions
of the Private Litigation Reform Act of 1995 (incorporated herein
by reference to Exhibit 99.1 to ROHN's Form 10-K for the fiscal
year ended December 31, 1999).
(b) Reports on Form 8-K
On September 18, 2000 the Company filed a report on Form 8-K,
reporting under Items 7 and 9. The Form 8-K also included as an exhibit the
Company's press release issued September 18, 2000 and a slide presentation
furnished to certain analysts in connection with a conference call held on
September 18, 2000.
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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.
ROHN INDUSTRIES, INC.
DATED: NOVEMBER 14, 2000 /S/ LESTER H. NELSON, III
------------------------- -------------------------
Lester H. Nelson, III
Corporate Controller and Principal Accounting
Officer
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