<PAGE>
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
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 period ended December 31, 1994
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the transition period from
__________ to __________
__________________________________
Commission file number 0-7903
I.R.S. Employer Identification Number 36-2675371
QUIXOTE CORPORATION
(a Delaware Corporation)
One East Wacker Drive
Chicago, Illinois 60601
Telephone: (312) 467-6755
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 XX NO
-------- --------
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: 7,814,466 shares of the
Company's Common Stock ($.01-2/3 par value) were outstanding as of December 31,
1994.
<PAGE>
PART I
FINANCIAL INFORMATION
QUIXOTE CORPORATION AND SUBSIDIARIES
Consolidated Condensed Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
December 31, December 31,
-------------------------------------------------------
1994 1993 1994 1993
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net sales $46,959,000 $42,835,000 $93,109,000 $82,923,000
Cost of sales 31,435,000 25,440,000 61,642,000 49,476,000
----------- ----------- ----------- -----------
Gross profit 15,524,000 17,395,000 31,467,000 33,447,000
Selling and administrative
expenses 12,169,000 10,840,000 23,069,000 21,203,000
Research and development
expenses 945,000 854,000 1,698,000 1,629,000
----------- ----------- ----------- -----------
13,114,000 11,694,000 24,767,000 22,832,000
Operating profit 2,410,000 5,701,000 6,700,000 10,615,000
Other income (expenses):
Interest income 58,000 54,000 105,000 103,000
Interest expense (934,000) (765,000) (1,797,000) (1,531,000)
Other (119,000) 387,000 (226,000) 255,000
------------ ------------ ------------ ------------
(995,000) (324,000) (1,918,000) (1,173,000)
Earnings before income taxes 1,415,000 5,377,000 4,782,000 9,442,000
Provisions for income taxes 538,000 2,151,000 1,817,000 3,777,000
----------- ----------- ----------- -----------
Net earnings $ 877,000 $ 3,226,000 $ 2,965,000 $ 5,665,000
=========== =========== =========== ===========
Net earnings per common and
common equivalent share
outstanding:
Primary $.11 $.40 $.36 $.71
==== ==== ==== ====
Fully diluted $.11 $.38 $.36 $.67
==== ==== ==== ====
Cash dividend declared per
common share $.11 $.10 $.11 $.10
==== ==== ==== ====
</TABLE>
See Notes to Consolidated Condensed Financial Statements
-2-
<PAGE>
QUIXOTE CORPORATION AND SUBSIDIARIES
Consolidated Condensed Balance Sheets
<TABLE>
<CAPTION>
December 31, June 30,
------------ ------------
Assets 1994 1994
- - - - ----------------------------------------------------------------------------
(Unaudited)
<S> <C> <C>
Current assets:
Cash & cash equivalents $ 2,590,000 $ 1,021,000
Accounts receivable, net of allowance
for doubtful accounts of $2,783,000 at
December 31 and $2,765,000 at June 30 31,563,000 33,771,000
Inventories:
Raw materials 5,617,000 4,117,000
Work in process 1,552,000 1,939,000
Finished goods 1,718,000 2,163,000
------------ ------------
8,887,000 8,219,000
Other current assets 4,234,000 3,314,000
------------ ------------
Total current assets 47,274,000 46,325,000
------------ ------------
Property, plant and equipment, at cost 118,997,000 102,451,000
less accumulated depreciation (47,436,000) (41,505,000)
------------- -------------
71,561,000 60,946,000
Other assets 15,010,000 15,518,000
------------ ------------
$133,845,000 $122,789,000
============ ============
</TABLE>
See Notes to Consolidated Condensed Financial Statements.
-3-
<PAGE>
QUIXOTE CORPORATION AND SUBSIDIARIES
Consolidated Condensed Balance Sheets
<TABLE>
<CAPTION>
December 31, June 30,
------------- ------------
Liabilities and Shareholders' Equity 1994 1994
- - - - -----------------------------------------------------------------------------
(Unaudited)
<S> <C> <C>
Current liabilities:
Accounts payable $ 7,282,000 $ 9,564,000
Accrued expenses 17,723,000 15,453,000
Income taxes payable 337,000 1,535,000
------------ ------------
Total current liabilities 25,342,000 26,552,000
------------ ------------
Long-term debt 49,000,000 38,975,000
Deferred income taxes 3,193,000 3,193,000
Shareholders' equity:
Common stock 142,000 142,000
Capital in excess of par value of stock 28,788,000 28,551,000
Retained earnings 32,853,000 30,749,000
Treasury stock, at cost (5,473,000) (5,373,000)
------------- -------------
56,310,000 54,069,000
------------ ------------
$133,845,000 $122,789,000
============ ============
</TABLE>
See Notes to Consolidated Condensed Financial Statements.
-4-
<PAGE>
QUIXOTE CORPORATION AND SUBSIDIARIES
Consolidated Condensed Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended December 31,
-----------------------------
1994 1993
----------- -----------
<S> <C> <C>
Increase (decrease) in cash and cash equivalents:
Operating activities:
Net earnings $ 2,965,000 $ 5,665,000
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation 6,014,000 5,088,000
Amortization 1,086,000 1,151,000
Provision for losses on accounts receivable 18,000 68,000
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable 2,190,000 (1,381,000)
(Increase) decrease in inventories and other
current assets (1,588,000) 112,000
Decrease in accounts payable and accrued expenses (20,000) (1,528,000)
Decrease in income taxes payable (1,198,000) (1,300,000)
------------ ------------
Net cash provided by operating activities 9,467,000 7,875,000
Investing activities:
Purchase of property, plant and equipment (16,629,000) (4,920,000)
Capitalized and purchased systems, design and software
costs (495,000) (566,000)
Net assets of businesses acquired (8,075,000)
Other (83,000) 16,000
------------ ------------
Net cash used in investing activities (17,207,000) (13,545,000)
Financing activities:
Borrowings under revolving credit agreement 10,025,000 8,300,000
Payment of semi-annual cash dividend (853,000) (758,000)
Proceeds from exercise of stock options 237,000 126,000
Repurchase of company stock for treasury (100,000)
Principal payments on long-term debt (1,197,000)
----------- -----------
Net cash provided by financing activities 9,309,000 6,471,000
Increase in cash and cash equivalents 1,569,000 801,000
Cash and cash equivalents at beginning of period 1,021,000 4,058,000
----------- -----------
Cash and cash equivalents at end of period $ 2,590,000 $ 4,859,000
=========== ===========
<FN>
Note: During the six months ended December 31, 1994, the Company made cash
payments of $3,015,000 for income taxes and paid $1,466,000 for interest.
During the same period last year the Company made cash payments of $5,116,000
for income taxes and paid $1,602,000 for interest.
</TABLE>
See Notes to Consolidated Condensed Financial Statements.
-5-
<PAGE>
QUIXOTE CORPORATION AND SUBSIDIARIES
Notes to Consolidated Condensed Financial Statements
(Unaudited)
1. The interim financial statements are prepared pursuant to the
requirements for reporting on Form 10-Q. The June 30, 1994 balance sheet data
was derived from audited financial statements but does not include all
disclosures required by generally accepted accounting principles. The interim
financial statements and notes thereto should be read in conjunction with the
financial statements and notes included in the Company's latest annual report on
Form 10-K. In the opinion of management, the interim financial statements
reflect all adjustments of a normal recurring nature necessary for a fair
statement of the results for interim periods. The current period results of
operations are not necessarily indicative of results which ultimately will be
reported for the full fiscal year ending June 30, 1995.
2. Subsequent events:
On January 10, 1995, the California Court of Appeals sustained an earlier trial
judgment against Convergent Business Systems, Inc. and its BaronData division
(which division was acquired in 1990 by Stenograph Corporation, a wholly-owned
subsidiary of the Company). The Appeals Court decision requires the Company to
pay a judgment of $918,000 plus interest. The Court's decision exceeded the
Company's previously estimated loss for this matter and $685,000 was recorded as
an expense in the Company's Consolidated Condensed Statement of Operations for
the quarter ended December 31, 1994.
Also in January, 1995, Disc Manufacturing, Inc. (DMI), a wholly-owned subsidiary
of the Company, was sued by DiscoVision Associates alleging patent infringement.
The complaint seeks injunctive relief and unspecified damages, including
punitive damages against DMI. The Company believes that under the circumstances
of this case that DiscoVision should not be entitled to injunctive relief. In
the unlikely event that injunctive relief were to be granted against DMI, it
could have a material adverse effect on the Company's operations.
In a related matter, DMI filed a complaint against Pioneer Electronics Corp.,
DiscoVision Associates, and other related parties alleging violations of the
antitrust laws and acts of unfair competition based on unlawful activities and
anticompetitive tactics involving patents related to optical disc technology.
DMI's complaint seeks damages, including punitive damages and injunctive relief.
-6-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Current Year-to-Date Versus Prior Year-to-Date
- - - - ----------------------------------------------
The Company's sales in the first six months of fiscal 1995 increased 12% to
$93,109,000 from $82,923,000 in the same period last year due principally to
Disc Manufacturing, Inc. Disc Manufacturing, Inc. (DMI) sales in the current
six month period increased 13% to $45,873,000 from $40,748,000 in the same
period last year due principally to increased unit sales of both CD and CD-ROM
products. CD-ROM unit sales increased 70% in the current six month period from
the same period last year. Audio CD unit sales in the current six month period
increased 13% from the same period last year. These increases in unit volumes
were offset somewhat by declines in the average unit selling price of these
products, resulting in CD-ROM sales dollars increasing 29% and CD audio sales
dollars increasing 2% from the same period last year. Sales at Energy
Absorption Systems in the current six month period increased 14% to $22,210,000
from $19,535,000 in the same period last year due to the December 1993
acquisition of Safe-Hit Corporation, a manufacturer of flexible guide posts
which contributed sales of $2,674,000 compared to sales of $367,000 last year.
Legal Technologies, Inc. (LTI) sales for the six months increased 11% to
$25,026,000 from $22,640,000 in the same period last year. This was due
principally to the December 1993 acquisition of Litigation Sciences, Inc. (LSI),
a full service litigation consulting firm. LSI contributed $4,652,000 in sales
during the current six month period. Integrated Information Services, Inc.
(IIS), a document imaging company that assists businesses in the electronic
storage and retrieval of information, also contributed to the increase in sales
at LTI. Offsetting these sales increases at LTI was a sales decrease at
Stenograph due to a decline in unit sales of its software and hardware products.
The gross profit margin in the current six month period decreased to 33.8% from
40.3% in the same period last year due principally to margin reductions at Legal
Technologies, Inc. LTI's gross profit margin decreased due to the lower gross
profit margins at Litigation Sciences than the historical gross profit margins
at Legal Technologies. To a lesser extent, the gross profit margin at LTI also
declined as a result of declines in margin at Integrated Information Services
and Stenograph Corporation. DMI's gross profit margin decreased as a result of
a decrease in the average unit selling price of its products offset somewhat by
volume efficiencies. Energy Absorption's gross profit decreased as a result of
lower gross profit margins at Safe-Hit Corporation and also due to a change in
product mix.
Selling and administrative expenses in the current six month period increased 9%
to $23,069,000 from $21,203,000 in the same period last year attributable
principally to DMI and Energy Absorption. DMI's selling and administrative
expenses increased principally due to increases in CD-ROM selling and marketing
expenses. Energy Absorption's selling and administrative expenses increased due
to the inclusion of selling and administrative expenses at Safe-Hit Corporation.
Legal Technologies' and corporate level selling and administrative expenses
remained at a level consistent with the same period last year.
Research and development expenses in the current six month period increased 4%
to $1,698,000 from $1,629,000 in the same period last year. This was due to
increased research and development at Legal Technologies related to the
development of legal software offset somewhat by a reduction in research and
development at Energy Absorption as a result of reduced expenditures on its
sewer rehabilitation technology.
Interest income in the current six month period was $105,000 compared to
$103,000 in the same period last year. Interest expense increased 17% in the
current six month period to $1,797,000 from $1,531,000 in the same period last
year. This was due to an
-7-
<PAGE>
increase in interest rates. Other expenses in the current six month period
increased to $226,000 compared to income of $255,000 in the same period last
year principally due to a gain on the sale of a stock investment that occurred
last year.
Current Year Quarter Versus Prior Year Quarter
- - - - ----------------------------------------------
The Company's sales in the current quarter increased 10% to $46,959,000 from
$42,835,000 in the same quarter last year due principally to Disc Manufacturing,
Inc. DMI's sales in the current quarter increased 17% to $25,032,000 from
$21,315,000 in the same quarter last year due principally to increased unit
sales of both CD and CD-ROM products. CD-ROM unit sales increased 73% in the
current quarter from the same period last year. Audio CD unit sales in the
current quarter increased 17% from the same period last year. These increases
in unit volumes were offset somewhat by declines in the average unit selling
price of these products, resulting in CD-ROM sales dollars increasing 31% and CD
audio sales dollars increasing 7% from the same period last year. Legal
Technologies, Inc. sales for the current quarter increased 9% to $12,644,000
from $11,650,000 in the same quarter last year. This was due principally to the
December 1993 acquisition of Litigation Sciences, Inc. which contributed
$2,278,000 in sales during the current quarter. Offsetting this sales increase
was a sales decrease at Stenograph due to a decline in unit sales of its
software and hardware. Integrated Information Services, Inc. also experienced a
decline in sales. Sales at Energy Absorption in the current quarter decreased
6% to $9,283,000 from $9,870,000 in the same quarter last year despite the
contribution from the December acquisition of Safe-Hit Corporation, which
contributed a net sales increase of $796,000 for the current quarter. Energy's
sales decreased throughout its product lines after a general decline in sales
orders following the November elections.
The gross profit margin in the current quarter decreased to 33.1% from 40.6% in
the same quarter last year. Legal Technologies, Inc.'s gross profit margin
decreased due to the lower gross profit margins at Litigation Sciences than the
historical gross profit margins at Legal Technologies. In addition, the gross
profit margin at LTI also declined as a result of a decline in margin at
Integrated Information Services. Slightly offsetting these gross profit margin
decreases was an increase in margin at Stenograph. DMI's gross profit margin
decreased as a result of a decrease in the average unit selling price of its
products offset somewhat by volume efficiencies. Energy Absorption's gross
profit margin decreased as a result of lower gross profit margins at Safe-Hit
Corporation than Energy Absorption's historical gross profit margins and also
due to the lower sales volume than in the same quarter last year.
Selling and administrative expenses in the current quarter increased 12% to
$12,169,000 from $10,840,000 in the same quarter last year attributable
principally to DMI and Energy Absorption. DMI's selling and administrative
expenses increased principally due to an increase in CD-ROM selling and
marketing expenses. Energy Absorption's selling and administrative expenses
increased due to the inclusion of selling and administrative expenses of Safe-
Hit Corporation. Legal Technologies' selling and administrative expenses
increased due to the inclusion of expenses from Litigation Sciences offset
somewhat by a decrease in selling and administrative expenses at Stenograph and
Discovery Products.
Research and development expenses in the current quarter increased 11% to
$945,000 from $854,000 in the same quarter last year. This was due to increased
research and development at Legal Technologies related to the development of
legal software offset somewhat by a reduction in research and development at
Energy Absorption as a result of reduced expenditures on its sewer
rehabilitation technology.
-8-
<PAGE>
Interest income in the current quarter was $58,000 compared to $54,000 in the
same quarter last year. Interest expense increased 22% in the current quarter
to $934,000 from $765,000 in the same quarter last year. This was due to an
increase in interest rates on the Company's revolving credit facility. Other
expenses in the current quarter increased to $119,000 compared to income of
$387,000 in the same quarter last year principally due to a gain on the sale of
a stock investment that occurred last year.
Liquidity and Capital Resources
- - - - -------------------------------
The Company had cash of $2,590,000 and additional funds of $30,975,000 available
under its revolving credit facility at December 31, 1994. Operating activities
were a source of cash for the Company during the six month period providing
$9,467,000.
Cash of $17,207,000 was used during the current six month period for investing
activities. The Company's primary investing activity was the purchase of
assets, mostly at DMI as part of its three year expansion program to double
capacity to 200 million discs annually. Among other purchases during the
current six month period, DMI acquired a 218,000 square foot building in
Anaheim, California as a replacement for its existing facility located nearby.
Financing activities provided cash of $9,309,000 principally from borrowings
under the Company's revolving credit facility of $10,025,000 increasing the note
to $29 million at December 31, 1994.
The Company anticipates approximately $20,000,000 in additional capital
expenditures will be made during fiscal 1995 related principally to the DMI
expansion as described above. In addition, the Company may consider acquiring
additional businesses that complement its existing operating segments. Also,
each of the Company's operating segments will require additional investments in
working capital to maintain growth. These expenditures will be financed either
through cash generated from operations or from borrowings on the Company's
revolving credit facility. The Company believes its cash generated from
operations and funds available under its existing credit facility are sufficient
for all planned operating and capital requirements.
-9-
<PAGE>
PART II
OTHER INFORMATION
Item I. Legal Proceedings
- - - - --------------------------
1. REPETITIVE STRESS INJURY LITIGATION. During the Company's second quarter,
three additional repetitive stress injury cases were filed against Stenograph
and the Company, bringing to twenty-four the total number of such cases filed to
date. See the Company's Form 10-K Report for the fiscal year ended June 30,
1994, Item 3, for additional information.
2. CONVERGENT BUSINESS SYSTEMS v. LINDA CHAVEZ. On January 10, 1995, the
California Court of Appeals sustained an earlier trial judgment against
Convergent Business Systems, Inc., a division of which was acquired by a Quixote
subsidiary in 1990, in a case identified as CONVERGENT BUSINESS SYSTEMS v. LINDA
CHAVEZ, ET AL., Superior Court of California for Alameda County, No. H14783-5.
At the time of the acquisition, Quixote agreed to assume the possible liability,
if any, for the lawsuit, which was then in litigation. The Appeals Court
decision requires Quixote to pay a judgment of approximately $918,000, plus
interest. To account for the unaccrued portion of the expense of the judgment,
$685,000, representing $0.05 per share after tax, has been recorded as an
expense in the Company's fiscal quarter ended December 31, 1994. See the
Company's Form 10-K Report for the fiscal year ended June 30, 1994, Item 3, for
additional information relating to this litigation.
3. DISCOVISION ASSOCIATES v. DISC MANUFACTURING, INC. In January, 1995, Disc
Manufacturing, Inc. ("DMI") was served in an action entitled DISCOVISION
ASSOCIATES v. DISC MANUFACTURING, INC., Case No. 95-21, U.S. District Court for
the District of Delaware. The complaint alleges that DMI is infringing six
DiscoVision patents and seeks injunctive relief and unspecified damages,
including punitive damages, against DMI. The case has been referred to the
Company's patent counsel.
4. DISC MANUFACTURING, INC. v. PIONEER AND DISCOVISION. In January, 1995 DMI
filed a complaint against Pioneer Electronic Corp., Pioneer Electronics (USA)
Inc., Pioneer Capital Inc., and DiscoVision Associates in the U.S. District
Court for the Central District of California, Case No. 95-0306, alleging
violations of the antitrust laws and acts of unfair competition based on
unlawful activities and anticompetitive tactics involving patents related to
optical disc technology. DMI's complaint seeks damages, including punitive
damages, and injunctive relief.
5. ESTATE OF THIEL v. ENERGY ABSORPTION SYSTEMS, INC. In December, 1994,
Energy Absorption Systems, Inc. ("Energy") was served in an action entitled
FREDERICK W. THIEL AND MAUREEN THIEL v. SLATTERY ASSOCIATES ET AL., Superior
Court of New Jersey, Docket No. MRS-L-1431-94. The complaint arises from a
March, 1992 accident in which the decedent lost control of his car and allegedly
struck one of Energy's crash cushions. The complaint seeks unspecified damages
from Energy and numerous defendants, including the State of New Jersey, the U.S.
Federal Highway Administration and various other governmental entities. The
Company has referred the case to its insurance carrier.
-10-
<PAGE>
Item 2. Changes in Securities
- - - - ------------------------------
None.
Item 3. Default upon Senior Securities
- - - - ---------------------------------------
None.
Item 4. Submission of Matters to a Vote of Security Holders
- - - - ------------------------------------------------------------
The Company's Annual Meeting of Shareholders was held on November 8, 1994.
The matters voted on at the Annual Meeting were as follows:
(i) The election of James H. DeVries and Lawrence C. McQuade to serve as
directors.
(ii) The approval of Coopers & Lybrand, L.L.P. as independent auditors for the
Company.
Messrs. DeVries and McQuade were elected and all other matters were approved as
follows:
<TABLE>
<CAPTION>
VOTES
For Against Abstain No Vote
--------- ------- ------- ---------
<S> <C> <C> <C> <C>
Election of Directors
James H. DeVries 6,677,518 114,019
Lawrence C. McQuade 6,749,276 42,261
Approval of Coopers and 6,753,254 11,277 27,056
Lybrand, L.L.P.
</TABLE>
Item 5. Other Information
- - - - --------------------------
None.
Item 6. Exhibits and Report on Form 8-K
- - - - ----------------------------------------
(a) Exhibits
10(a) Fifth Amendment to Loan Agreement dated as of December 1, 1994 by
and among the Company, Energy Absorption Systems, Inc., Disc Manufacturing,
Inc., Stenograph Corporation, Legal Technologies, Inc., Discovery Products,
Inc., Spin-Cast Plastics, Inc., Court Technologies, Inc., Composite Components,
Inc., Integrated Information Services, Inc., Litigation Sciences, Inc., Safe-Hit
Corporation and The Northern Trust Company in its own right and as agent for NBD
Bank and LaSalle National Bank, filed herewith. (Doc 2, pp 1-9)
-11-
<PAGE>
10(b) Fifth Amendment to Letter Agreement dated as of August 1, 1994 to
Letter Agreement by and between Stenograph Corporation and Sanwa Business Credit
Corporation ("Sanwa"); Rider to Letter Agreement dated October 28, 1994 by and
between Stenograph and Sanwa, all filed herewith. (Doc 3, pp 1-6)
11. Statement regarding computation of earnings per share.
27. Financial data schedules.
(b) On January 17, 1995, the Company filed a report on Form 8-K dated January
10, 1995 reporting in Item 5 "Other Events" a California Court of Appeals
decision in a case entitled CONVERGENT BUSINESS SYSTEMS v. CHAVEZ ET AL.,
Superior Court of California for Alameda County, No. H14783-5. No financial
statements were filed. See Item 1 of this Form 10-Q for additional information
relating to this litigation.
-12-
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Quarterly Report on Form 10-Q for the quarter
ended December 31, 1994 to be signed on its behalf by the undersigned thereunto
duly authorized.
QUIXOTE CORPORATION
DATE: February 8, 1995 /s/Myron R. Shain
--------------------------- ---------------------------------
MYRON R. SHAIN
EXECUTIVE VICE PRESIDENT - FINANCE
(Chief Financial & Accounting Officer)
-13-
<PAGE>
RIDER TO LETTER AGREEMENT
This Rider to Letter Agreement (this "Rider") is entered into by and between
Stenograph Corporation ("Stenograph") and Sanwa Business Credit Corporation
("SBCC") this 28 day of October, 1994. Unless otherwise defined herein, terms
used herein shall have the meaning given them in the Letter Agreement.
WHEREAS, Stenograph and SBCC entered into a letter agreement dated as of June
30, 1985 which amended and restated a February 21, 1980 letter agreement;
WHEREAS, Stenograph and SBCC on June 26, 1986, on May 29, 1990, on June 29,
1990, in January, 1991, and again on August 31, 1994 entered into amendments of
the letter agreement dated as of June 30, 1985 (the June 30, 1985 letter
agreement, as amended, being hereinafter known as the "Letter Agreement");
WHEREAS, the Letter Agreement describes the terms and conditions applicable to
SBCC's purchase from Stenograph of conditional sales contracts or leases;
WHEREAS, Stenograph has entered into and plans to enter into conditional sales
contracts and leases with Canadian Obligors, and for business reasons does not
desire to sell such conditional sales contracts and leases to SBCC, but to
obtain loans from SBCC collateralized by such conditional sales contracts or
leases;
WHEREAS, Stenograph and SBCC now desire to provide for SBCC's making loans to
Stenograph collateralized by the Canadian conditional sales contracts and leases
pursuant to the representations, warranties, indemnities, covenants and other
terms of the Letter Agreement, subject to such changes as are necessary to
reflect that the transactions are loans and not purchases and that the Obligors
are Canadians;
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
Stenograph and SBCC agree as follows:
1. The following definitions shall be applicable to the transactions covered by
this Rider:
"Canadian Contract" means any Contract in which the purchaser or lessee of
the Equipment which is the subject of the Contract is a Canadian
entity.
"Loan" means a transaction in which SBCC lends money to Stenograph against
the primary security of a Canadian Contract, all Payments thereunder,
all Obligor Guaranties in connection therewith, the Equipment covered
thereby, and all proceeds of all of the foregoing.
<PAGE>
"Mandatory Prepayment Amount" means, at any time, with respect to a Loan
made in respect of a Canadian Contract, the Principal Balance of the
Note evidencing such Loan, plus any and all accrued interest and
unpaid interest on such Principal Balance (including interest on
overdue payments) at such time.
"Note" means the promissory note, in the form attached hereto as
Exhibit A, evidencing a Loan from SBCC to Stenograph.
"Principal Balance" means, for any Loan made in respect of a Canadian
Contract, the principal balance of the Note evidencing the Loan which
remains outstanding at a particular point in time, after taking into
account the application of all Payments received by SBCC.
2. The representations, warranties, covenants, indemnities, and other
agreements contained in the Letter Agreement, and the rights and remedies
arising under the Letter Agreement shall govern the Loans that SBCC makes to
Stenograph collateralized by Canadian Contracts, except that:
(a) The transactions contemplated by this Rider are loans against
collateral security and not purchases of chattel paper secured by certain
collateral. Accordingly, all references in the Letter Agreement to purchases of
Contracts shall be read, for purposes of the transactions contemplated by this
Rider, to mean Loans against the security of Canadian Contracts and references
to Contracts purchased under the Letter Agreement shall be read to mean Canadian
Contracts against which SBCC has made Loans.
(b) All collateral in which SBCC is or has been granted a security
interest under section 3 of the Letter Agreement shall continue to be security
for all of Stenograph's obligations under the Letter Agreement (including this
Rider), including the Loans. Each Loan is primarily secured by, and Stenograph
hereby grants SBCC a security interest in, the Canadian Contracts, all Payments
thereunder, all Obligor Guaranties in connection therewith, the Equipment
covered thereby, and all proceeds of all of the foregoing. The foregoing
collateral security also secures Stenograph's other obligations to SBCC under
the Letter Agreement.
(c) References to the Repurchase Price, the Default Repurchase Price or
the Standard Repurchase Price shall be read, for purposes of the transactions
contemplated by this Rider, to mean the Mandatory Prepayment Amount.
(d) With respect to Canadian Contracts, subpart (iii) of subsection 1(m),
"Obligor Default", is hereby amended and restated in its entirety as follows:
(iii) insolvency of any Obligor, inability of any Obligor to pay its
debts as they mature, the making by any Obligor of an assignment for
the benefit of creditors, or institution of any proceeding by or
against any Obligor under the United States Bankruptcy Code or the
Canadian Bankruptcy and Insolvency Act or any similar law of the
United States, Canada, or any state, province, or other competent
political subdivision of either, alleging that the Obligor is
insolvent or unable to pay its debts as they mature if such
proceeding is not withdrawn or dismissed within sixty (60) days
after its institution;
(e) With respect to Canadian Contracts, the following additional
paragraph shall apply with respect to the billing and collection procedures
described in Paragraph 8 of the Letter Agreement:
<PAGE>
SBCC will also use reasonable efforts to invoice and collect any
applicable withholding tax due the Canadian government based on
interest income earned with respect to the Canadian Contracts. SBCC
will use reasonable efforts to remit the appropriate amounts of such
withholding tax to the Canadian government, and to file reports with
the appropriate Canadian taxing jurisdictions, provided, however,
that if at any time SBCC determines that the above-described
procedure is inappropriate in any jurisdiction, it may, at its
discretion, notify Stenograph of such determination and Stenograph
shall promptly thereafter invoice, collect and remit such taxes and
file such reports itself. In no event will SBCC be liable or
responsible for the collection or payment of any taxes (including,
without limitation, any Canadian goods and services tax) with
respect to the Canadian Contracts, the Payments, the Equipment or
any lease, sale, transfer, assignment or other disposition of any
Canadian Contract or any Equipment other than to remit to the
pertinent taxing jurisdictions those monies actually collected by
SBCC from Obligors under the Canadian Contracts and which are
designated by such Obligors for payment of Canadian withholding
taxes. Stenograph agrees to indemnify SBCC from any liability it
may incur from claims by the Canadian government, or any political
subdivision thereof, asserting that SBCC is responsible for the
payment or remittance of taxes in excess of the funds actually
collected from and designated by the Obligors as described above.
3. Except where they conflict with the terms of this Rider, all terms and
provisions of the Letter Agreement shall remain in full force and effect.
4. Except as expressly provided for herein, this Rider will in no way affect
the existing rights of SBCC and Stenograph nor in any way be construed as a
waiver of any such rights.
5. This Rider shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and assigns. This Rider shall
be governed by and construed in accordance with the internal laws (as opposed to
the conflicts of law provisions) of the State of Illinois.
IN WITNESS WHEREOF, Stenograph and SBCC have executed this Rider on the date
first set forth above and the provisions set forth herein shall be effective as
of Oct. 28, 1994.
STENOGRAPH CORPORATION ("STENOGRAPH")
By: /s/ Robert J. Panfil
---------------------------------
Title: Senior Vice President-Finance
------------------------------
<PAGE>
SANWA BUSINESS CREDIT CORPORATION ("SBCC")
By: /s/ Paul Omohundro
---------------------------------
Title: Vice President
------------------------------
CONSENT OF GUARANTORS
The undersigned guarantor of the obligations of Stenograph Corporation
under the above-referenced Letter Agreement hereby acknowledges and consents to
the above Rider to Letter Agreement and agrees that its obligations under its
Guaranties dated May 11, 1981, May 31, 1982, and December 28, 1988,
respectively, remain in full force and effect.
QUIXOTE CORPORATION
By: /s/ James H. DeVries
-----------------------------
Title: Executive Vice President
--------------------------
The undersigned guarantor of the obligations of Stenograph Corporation
under the above-referenced Letter Agreement hereby acknowledges and consents to
the above Rider to Letter Agreement and agrees that its obligations under its
Guaranty dated August 31, 1994 remain in full force and effect.
LEGAL TECHNOLOGIES, INC.
By: /s/ Robert J. Panfil
-----------------------------
Title: Chief Financial Officer
---------------------------
<PAGE>
FIFTH AMENDMENT TO LETTER AGREEMENT
This Fifth Amendment to Letter Agreement (the "Amendment") is entered into by
and between Stenograph Corporation ("Stenograph") and Sanwa Business Credit
Corporation ("SBCC") as of the 31st day of August, 1994.
WHEREAS, Stenograph and SBCC entered into a letter agreement dated as of June
30, 1985 which amended and restated a February 21, 1980 letter agreement;
WHEREAS, Stenograph and SBCC on June 26, 1986, on May 29, 1990, on June 29,
1990, and again in January, 1991 entered into amendments of the letter agreement
dated as of June 30, 1985 (the June 30, 1985 letter agreement, as amended, being
hereinafter known as the "Letter Agreement");
WHEREAS, Stenograph and SBCC desire to revise the Loss limitation provisions of
paragraph 11 to provide that the maximum amount of Loss will be calculated on an
annual rather than a quarterly basis;
WHEREAS, Stenograph and SBCC now desire to amend the Letter Agreement to provide
for amendments consistent with the foregoing desire;
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
Stenograph and SBCC agree as follows:
1. The Letter Agreement is amended effective August 31, 1994 as follows:
a. Subparagraph 11(b) of the Letter Agreement is hereby amended and restated
in its entirety as follows:
(b) The maximum amount of Loss which you will be required to bear on
account of repurchases of Contracts under paragraph 11(a) of this
Agreement (regardless of when such Loss is realized) shall be
determined, except as set forth in paragraph 11(e), in accordance
with this paragraph 11(b).
(i) Contracts other than Transferred Contracts.
(A) For calendar years prior to 1985, the maximum amount of Loss
shall be determined pursuant to the terms of the
1980 Agreement.
(B) For each calendar year ending after December 31, 1984, the
maximum amount of Loss you shall be required to
bear with respect to the
<PAGE>
repurchase of Contracts under paragraph 11(a) of
this Agreement shall be an amount equal to ten
percent (10%) of the aggregate Balance of Payment
(determined as of the last day of the immediately
preceding calendar year) of all Unpaid Contracts
(as defined below) then assigned to us by you
pursuant to this Agreement.
(C) In making the foregoing computations, (A) a Loss with respect
to a Contract shall be deemed to have occurred on
the date we demand that you repurchase such
Contract regardless of the date when the
calculation of the amount of such Loss was
accomplished, (B) the maximum amount of Loss
that you shall be required to bear for any
calendar year shall be calculated without taking
into consideration the amount of Loss that you may
have sustained for any other calendar year, and
(C) the term "Unpaid Contracts" as used in this
paragraph 11(b) shall mean Contracts which have
not been repurchased by you under this Agreement
and which have one or more Payments remaining
unpaid.
(D) Notwithstanding any other provision of this paragraph
11(b)(i), in no event will your maximum liability
for Losses be less than $1,000,000 in any year.
(ii) TRANSFERRED CONTRACTS. After you have established a Loss with
respect to a Transferred Contract in accordance with paragraph 11(c) below,
you shall request reimbursement for such Loss. We will follow the procedures
set forth in paragraph 11(d)(ii) with respect to reimbursing you for such Loss
and/or debiting the Reserve Account in the amount of such Loss.
b. Subparagraphs 11(d) of the Letter Agreement is hereby amended and
restated in its entirety as follows:
(d) (i) In the event that the performance of your obligations to
repurchase Contracts other than Transferred Contracts
under paragraph 11(a) of this Agreement causes your
aggregate Loss for any calendar year to exceed the
maximum amount of Loss which has been computed in
accordance with paragraph 11(b) of this Agreement for a
calendar year, we will refund the excess amount within
ten (10) days after receipt of your invoice for the
amount of excess Loss (provided the invoice shows the
calculations of the excess Loss).
(ii) After you have performed your obligations to repurchase a
Contract under paragraph 11(a) which is a Transferred
Contract, and have established a Loss in accordance with
paragraph 11(c) with respect to such Contract, you may request
reimbursement from us of the Loss. After receipt from you of
your invoice for the amount of the Loss (showing the
calculations necessary to
<PAGE>
arrive at the Loss) we will, in our discretion, either refund
to you the amount of the Loss from the Reserve Account or from
our other funds.
2. All capitalized terms used in this Amendment and not defined herein shall
have the meaning given to them in the Letter Agreement. Except where they
expressly conflict with the terms of this Amendment, all terms and provisions of
the Letter Agreement shall remain in full force and effect.
3. Except as expressly provided for herein, this Amendment will in no way
affect the existing rights of SBCC and Stenograph nor in any way be construed as
a waiver of any such rights.
4. This Amendment shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and assigns. This Amendment
shall be governed by and construed in accordance with the internal laws (as
opposed to the conflicts of law provisions) of the State of Illinois.
<PAGE>
IN WITNESS WHEREOF, Stenograph and SBCC have executed this Amendment on the date
first set forth above and the amendments set forth herein shall be effective as
of August 31, 1994.
STENOGRAPH CORPORATION ("STENOGRAPH")
By: /s/ Robert J. Panfil
---------------------------------
Title: Senior Vice President-Finance
------------------------------
SANWA BUSINESS CREDIT CORPORATION ("SBCC")
By: /s/ Paul Omohundra
---------------------------------
Title: Vice President
------------------------------
CONSENT OF GUARANTORS
The undersigned guarantor of the obligations of Stenograph Corporation under
the above-referenced Letter Agreement hereby acknowledges and consents to the
above Fifth Amendment to Letter Agreement and agrees that its obligations under
its Guaranties dated May 11, 1981, May 31, 1982, and December 28, 1988,
respectively, remain in full force and effect.
QUIXOTE CORPORATION
By: /s/ James H. DeVries
-----------------------------
Title: Executive Vice President
--------------------------
The undersigned guarantor of the obligations of Stenograph Corporation under
the above-referenced Letter Agreement hereby acknowledges and consents to the
above Fifth
<PAGE>
Amendment to Letter Agreement and agrees that its obligations under its Guaranty
dated August 31, 1994 remain in full force and effect.
LEGAL TECHNOLOGIES, INC.
By: /s/ Robert J. Panfil
-----------------------------
Title: Chief Financial Officer
--------------------------
<PAGE>
FIFTH AMENDMENT TO LOAN AGREEMENT
THIS FIFTH AMENDMENT TO LOAN AGREEMENT ("Fifth Amendment"), dated as
of December __, 1994, is by and among QUIXOTE CORPORATION, a Delaware
corporation ("Quixote"), ENERGY ABSORPTION SYSTEMS, INC., a Delaware corporation
("EAS"), DISC MANUFACTURING, INC., a Delaware corporation ("DMI"), LEGAL
TECHNOLOGIES, INC., a Delaware Corporation ("LTI"), STENOGRAPH CORPORATION, a
Delaware corporation ("Stenograph"), DISCOVERY PRODUCTS, INC. f/k/a STENOGRAPH
LEGAL SERVICES, INC., a Delaware corporation ("SLS"), SPIN-CAST PLASTICS, INC.,
an Indiana corporation ("Spin-Cast"), COURT TECHNOLOGIES, INC., a Delaware
corporation ("Court"), COMPOSITE COMPONENTS, INC., a Delaware corporation
("CCI"), INTEGRATED INFORMATION SERVICES, INC., a Delaware corporation ("IIS"),
LITIGATION SCIENCES, INC., a Delaware corporation ("LSI"), and SAFE-HIT
CORPORATION, a Nevada corporation (Safe-Hit"), the lenders ("Lenders") named in
the Loan Agreement referred to below, and THE NORTHERN TRUST COMPANY, an
Illinois banking corporation ("Northern"), as agent for the Lenders (Northern,
in such capacity, being "Agent"). Quixote, EAS, DMI, LTI, Stenograph, SLS,
Spin-Cast, Court, CCI, IIS, LSI, and Safe-Hit are individually and collectively
referred to herein as "Borrower".
RECITALS
A. Quixote, EAS, DMI, Stenograph, SLS, Spin-Cast, Court, CCI, IIS,
LTI, LSI, Safe-Hit, Agent and Lenders are parties to a certain Loan Agreement
dated as of June 26, 1992, as amended by a First Amendment to Loan Agreement
dated as of June 30, 1992, as further amended by a Second Amendment to Loan
Agreement dated as of May 28, 1993, as further amended by a Third Amendment to
Loan Agreement dated as of June 26, 1993, and as further amended by a Fourth
Amendment to Loan Agreement dated as of May 31, 1994 (as so amended the "Loan
Agreement").
B. Pursuant to the terms of the Loan Agreement, and at the request
of Borrower, the parties wish to further amend the Loan Agreement.
C. In consideration of the mutual agreements contained herein, and
subject to the terms and conditions hereof, the parties hereto agree as follows:
1. AMENDMENT
1.1 Section 1 of the Loan Agreement is amended by inserting the
following definitions in alphabetical order:
"Level I Status" exists at any date if, at such time, the Consolidated
Funded Debt to Adjusted Capitalization Percentage of Borrower is
greater than 50%.
"Level II Status" exists at any date if, at such time, the
Consolidated Funded Debt to Adjusted Capitalization Percentage of
Borrower is less than or equal to 50% but greater than 25%.
<PAGE>
"Level III Status" exists at any date if, at such time, the
Consolidated Funded Debt to Adjusted Capitalization Percentage of
Borrower is less than or equal to 25%.
1.2 Section 1 of the Loan Agreement is amended by deleting clause
(iii) of the definition of "Certificate of Deposit Rate" and inserting the
following in its stead:
"(iii) (A) for any day on which Level I Status exists, one and six
hundred twenty-five thousandths percent (1.625%) with respect to the
Revolving Credit Loan, and one and eight hundred seventy-five
thousandths percent (1.875%) with respect to the Term Loan, (B) for
any day on which Level II Status exists, one and three hundred seventy
five thousandths percent (1.375%) with respect to the Revolving Credit
Loan, and one and six hundred twenty-five thousandths percent (1.625%)
with respect to the Term Loan, and (C) for any day on which Level III
Status exists, one and one hundred twenty-five thousandths percent
(1.125%) with respect to the Revolving Credit Loan, and one and three
hundred seventy-five thousandths percent (1.375%) with respect to the
Term Loan; provided that the Level Status shall change, if necessary,
only upon the dates that Borrower delivers its calculation of its
Consolidated Funded Debt to Adjusted Capitalization Percentage to
Agent."
1.3 Section 1 of the Loan Agreement is amended by deleting the last
clause of the definition of "LIBOR" and inserting the following in its stead:
"PLUS (A) for any day on which Level I Status exists, one and six
hundred twenty-five thousandths percent (1.625%) with respect to the
Revolving Credit Loan, and one and eight hundred seventy-five
thousandths percent (1.875%) with respect to the Term Loan, (B) for
any day on which Level II Status exists, one and three hundred seventy
five thousandths percent (1.375%) with respect to the Revolving Credit
Loan, and one and six hundred twenty-five thousandths percent (1.625%)
with respect to the Term Loan, and (C) for any day on which Level III
Status exists, one and one hundred twenty-five thousandths percent
(1.125%) with respect to the Revolving Credit Loan, and one and three
hundred seventy-five thousandths percent (1.375%) with respect to the
Term Loan; provided that the Level Status shall change, if necessary,
only upon the dates that Borrower delivers its calculation of its
Consolidated Funded Debt to Adjusted Capitalization Percentage to
Agent."
1.4 Section 7.9 of the Loan Agreement is hereby amended by deleting
it and inserting the following in its stead:
"7.9 CAPITAL EXPENDITURES. For the Fiscal Year ending June 30,
1995, Borrower shall not and shall not permit any of its Subsidiaries
to make Capital
-2-
<PAGE>
Expenditures that, in the aggregate, shall exceed the product of (i)
1.3 and (ii) the sum (such sum being hereafter referred to as "Capex
Cash Flow") of (A) Quixote's and its Subsidiaries Consolidated Net
Income and (B) Quixote's and its Subsidiaries depreciation and
amortization (as determined in accordance with GAAP) for such Fiscal
Year. In each subsequent Fiscal Year, Borrower shall not and shall
not permit any of its Subsidiaries to make Capital Expenditures that,
in the aggregate, shall exceed Capex Cash Flow for such Fiscal Year."
1.5 Section 8 of the Loan Agreement is hereby amended by deleting it
in its entirety and inserting the following in its stead:
"The agreement of Lenders to extend Revolving Credit Loans to Borrower
and of Borrower to borrow money from Lenders pursuant to this
Agreement and the Revolving Credit Notes shall continue for a period
ending on October 31, 1997 ("Original Term") and on each October 31,
commencing October 31, 1994, shall be subject to extension for
successive one-year periods ("Renewal Terms") with the consent of all
the Lenders and the Borrower."
2. REPRESENTATION AND WARRANTIES. In order to induce the Lenders to
enter into this Fifth Amendment, each Borrower represents and warrants that:
2.1 The representations and warranties set forth in Section 4 of the
Agreement, as hereby amended, are true, correct and complete on the date hereof
as if made on and as of the date hereof and that there exists no Default or
Event of Default on the date hereof.
2.2 The execution and delivery by each Borrower of this Fifth
Amendment has been duly authorized by proper corporate proceedings of each
Borrower and this Fifth Amendment, and the Agreement, as amended by this Fifth
Amendment, each constitute a valid and binding obligation of each Borrower.
2.3 Neither the execution and delivery by each Borrower of this Fifth
Amendment, nor the consummation of the transactions herein contemplated, nor
compliance with the provisions hereof will violate any law, rule, regulation,
order, writ, judgment, injunction, decree or award binding on any Borrower or
any Borrower's articles or certificate of incorporation or by-laws or the
provisions of any indenture, instrument or agreement to which any Borrower is a
party or is subject, or by which it or its property, is bound, or conflict with
or constitute a default thereunder.
-3-
<PAGE>
3. EFFECTIVE DATE. This Fifth Amendment shall become effective as of the
date first above written (the "Effective Date") upon receipt by the Agent of (i)
four (4) copies of this Amendment duly executed by each Borrower, the Agent and
all Lenders, (ii) copies for each Lender of a certificate executed by each
Borrower certifying incumbency.
4. REFERENCE TO LOAN AGREEMENT. From and after the Effective Date
hereof, each reference in the Loan Agreement to "this Agreement", "hereof", or
"hereunder" or words of like import, and all references to the Loan Agreement in
any and all agreements, instruments, documents, notes, certificates and other
writings of every kind and nature shall be deemed to mean the Loan Agreement, as
amended by this and all previous Amendments.
5. MISCELLANEOUS
5.1 Except as specifically set forth herein, the Loan Agreement and
all provisions contained therein shall remain and continue in full force and
effect.
5.2 The execution delivery and effectiveness of this Fifth Amendment
shall not, except as expressly provided for herein, operate as a waiver of (i)
any right, power or remedy of the Lenders or the Agent under the Loan Agreement,
or (ii) any Default or Event of Default under the Loan Agreement.
5.3 This Fifth Amendment shall be governed by, and construed and
enforced in accordance with, the laws of the State of Illinois applicable to
contracts made and performed in such State, without regard to the principles
thereof regarding conflict of laws.
5.4 This Fifth Amendment may be executed in any number of separate
counterparts, each of which shall, collectively and separately, constitute one
agreement.
IN WITNESS WHEREOF, this Fifth Amendment has been duly executed as of
the date first written above.
QUIXOTE CORPORATION THE NORTHERN TRUST COMPANY,
as Agent and as Lender
By: /s/ Myron R. Shain By: /s/ Robert T. Jank
---------------------- ------------------------
Name: Myron R. Shain Name: Robert T. Jank
Title: Executive Vice Title: Vice President
President - Finance
-4-
<PAGE>
ENERGY ABSORPTION SYSTEMS, INC. LA SALLE NATIONAL BANK,
as Lender
By: /s/ Myron R. Shain By: /s/ Betty T. Latson
---------------------- ------------------------
Name: Myron R. Shain Name: Betty T. Latson
Title: Vice President Title: First Vice President
DISC MANUFACTURING, INC. NBD BANK, as Lender
By: /s/ Myron R. Shain By: /s/ Peter K. Gillespie
---------------------- ------------------------
Name: Myron R. Shain Name: Peter K. Gillespie
Title: President Title: Vice President
STENOGRAPH CORPORATION LEGAL TECHNOLOGIES, INC.
By: /s/ Myron R. Shain By: /s/ Myron R. Shain
---------------------- ------------------------
Name: Myron R. Shain Name: Myron R. Shain
Title: Vice President Title: Vice President
DISCOVERY PRODUCTS INTEGRATED INFORMATION SERVICES,
INC.
By: /s/ Myron R. Shain By: /s/ Myron R. Shain
---------------------- ------------------------
Name: Myron R. Shain Name: Myron R. Shain
Title: Vice President Title: Vice President
SPIN-CAST PLASTICS, INC. LITIGATION SCIENCES, INC.
By: /s/ Myron R. Shain By: /s/ Myron R. Shain
------------------------ ------------------------
Name: Myron R. Shain Name: Myron R. Shain
Title: Vice President Title: Vice President
-5-
<PAGE>
COURT TECHNOLOGIES, INC. SAFE-HIT CORPORATION
By: /s/ Myron R. Shain By: /s/ Myron R. Shain
---------------------- ------------------------
Name: Myron R. Shain Name: Myron R. Shain
Title: Vice President Title: Vice President
COMPOSITE COMPONENTS, INC.
By: /s/ Myron R. Shain
------------------------
Name: Myron R. Shain
Title: Vice President
-6-
<PAGE>
EXHIBIT 11
QUIXOTE CORPORATION AND SUBSIDIARIES
Computation of Net Earnings Per Average Common
and Common Equivalent Share
<TABLE>
<CAPTION>
For the Three Months Ended
December 31, 1994
--------------------------
Fully
Primary Diluted
---------- ----------
<S> <C> <C>
Net earnings as reported $877,000 $ 877,000
Add interest expense and deferred charge
amortization (net of income taxes) 245,000 (1)
-------- ----------
Adjusted net earnings for computation (A) $877,000 $1,122,000
======== ==========
Average common shares outstanding would be
adjusted for the additional shares that
would be issued assuming conversion of the
debentures and exercise of stock options
as follows:
Weighted average shares outstanding 7,815,798 7,815,798
Shares assumed issued upon conversion of
debentures 1,051,316
Incremental shares outstanding assuming
exercise of stock options using the
treasury stock method 365,388 365,388
--------- ---------
Average common and common equivalent shares
outstanding (B) 8,181,186 9,232,502
========= =========
Net earnings per common and common
equivalent share (A/B) $.11 $.12
==== ====
Notes:
<FN>
(1) Net earnings for the fully diluted calculation are adjusted for interest
expense and deferred charge amortization, assuming exercise of the conversion
privilege on the 8% convertible debentures.
(2) Given the anti-dilutive effect of this calculation, the amount disclosed in
the Consolidated Condensed Statements of Operations for fully diluted earnings
per share is the same as primary earnings per share.
</TABLE>
-14-
<PAGE>
EXHIBIT 11
QUIXOTE CORPORATION AND SUBSIDIARIES
Computation of Net Earnings Per Average Common
and Common Equivalent Share
<TABLE>
<CAPTION>
For the Three Months Ended
December 31, 1993
--------------------------
Fully
Primary Diluted
---------- ----------
<S> <C> <C>
Net earnings as reported $3,226,000 $3,226,000
Add interest expense and deferred charge
amortization (net of income taxes) 245,000 (1)
---------- ----------
Adjusted net earnings for computation (A) $3,226,000 $3,471,000
========== ==========
Average common shares outstanding would be
adjusted for the additional shares that
would be issued assuming conversion of the
debentures and exercise of stock options
as follows:
Weighted average shares outstanding 7,605,014 7,605,014
Shares assumed issued upon conversion of
debentures 1,052,632
Incremental shares outstanding assuming
exercise of stock options using the
treasury stock method 343,429 428,759
Shares issuable for retirement plan 34,679 34,679
--------- ---------
Average common and common equivalent shares
outstanding (B) 7,983,122 9,121,084
========= =========
Net earnings per common and common
equivalent share (A/B) $.40 $.38
========= =========
Notes:
<FN>
(1) Net earnings for the fully diluted calculation are adjusted for interest
expense and deferred charge amortization, assuming exercise of the conversion
privilege on the 8% convertible debentures.
</TABLE>
-15-
<PAGE>
EXHIBIT 11
QUIXOTE CORPORATION AND SUBSIDIARIES
Computation of Net Earnings Per Average Common
and Common Equivalent Share
<TABLE>
<CAPTION>
For the Six Months Ended
December 31, 1994
-------------------------
Fully
Primary Diluted
---------- ----------
<S> <C> <C>
Net earnings as reported $2,965,000 $2,965,000
Add interest expense and deferred charge
amortization (net of income taxes) 491,000 (1)
---------- ----------
Adjusted net earnings for computation (A) $2,965,000 $3,456,000
========== ==========
Average common shares outstanding would be
adjusted for the additional shares that
would be issued assuming conversion of the
debentures and exercise of stock options
as follows:
Weighted average shares outstanding 7,813,127 7,813,127
Shares assumed issued upon conversion of
debentures 1,051,316
Incremental shares outstanding assuming
exercise of stock options using the
treasury stock method 365,388 365,388
--------- ---------
Average common and common equivalent shares
outstanding (B) 8,178,515 9,229,831
========= =========
Net earnings per common and common
equivalent shares (A/B) $.36 $.37
==== ====
Notes:
<FN>
(1) Net earnings for the full diluted calculation are adjusted for interest
expense and deferred charge amortization, assuming exercise of the conversion
privilege on the 8% convertible debentures.
(2) Given the anti-dilutive effect of this calculation, the amount disclosed in
the Consolidated Condensed Statements of Operations for fully diluted earnings
per share is the same as primary earnings per share.
</TABLE>
-16-
<PAGE>
EXHIBIT 11
QUIXOTE CORPORATION AND SUBSIDIARIES
Computation of Net Earnings per Average Common
and Common Equivalent Share
<TABLE>
<CAPTION>
For the Six Months Ended
December 31, 1993
-------------------------
Fully
Primary Diluted
---------- ----------
<S> <C> <C>
Net earnings as reported $5,665,000 $5,665,000
Add interest expense and deferred charge
amortization (net of income taxes) 491,000 (1)
---------- ----------
Adjusted net earnings for computation (A) $5,665,000 $6,156,000
========== ==========
Average common shares outstanding would be
adjusted for the additional shares that
would be issued assuming conversion of the
debentures and exercise of stock options
as follows:
Weighted average shares outstanding 7,618,684 7,618,684
Shares assumed issued upon conversion of
debentures 1,052,632
Incremental shares outstanding assuming
exercise of stock options using the
treasury stock method 343,429 428,759
Shares issuable for retirement plan 34,679 34,679
--------- ---------
Average common and common equivalent shares
outstanding (B) 7,996,792 9,134,754
========= =========
Net earnings per common and common
equivalent shares (A/B) $.71 $.67
==== ====
Notes:
<FN>
(1) Net earnings for the full diluted calculation are adjusted for interest
expense and deferred charge amortization, assuming exercise of the conversion
privilege on the 8% convertible debentures.
</TABLE>
-17-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-START> JUL-01-1994
<PERIOD-END> DEC-31-1994
<CASH> 2,590,000
<SECURITIES> 0
<RECEIVABLES> 34,346,000
<ALLOWANCES> 2,783,000
<INVENTORY> 8,887,000
<CURRENT-ASSETS> 47,274,000
<PP&E> 118,997,000
<DEPRECIATION> 47,436,000
<TOTAL-ASSETS> 133,845,000
<CURRENT-LIABILITIES> 25,342,000
<BONDS> 49,000,000
<COMMON> 142,000
0
0
<OTHER-SE> 56,168,000
<TOTAL-LIABILITY-AND-EQUITY> 133,845,000
<SALES> 93,109,000
<TOTAL-REVENUES> 93,109,000
<CGS> 61,642,000
<TOTAL-COSTS> 61,642,000
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</TABLE>
