FORM 10-Q/A
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
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 1-5530
ALLIED PRODUCTS CORPORATION
---------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 38-0292230
------------------------------- -------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) Number)
10 SOUTH RIVERSIDE PLAZA, CHICAGO, ILLINOIS 60606
- -------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (312) 454-1020
Not Applicable
----------------------------------------------
(former name, former address and former fiscal
year, if changed since last report)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by section 13 or 15(d) of 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 requirement for
the past 90 days. Yes x No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: 11,927,105 common shares, $.01
par value, as of July 31, 1998.
<PAGE>
ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES
INDEX
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
INTRODUCTION
CONDENSED CONSOLIDATED BALANCE SHEETS-
June 30, 1998 and December 31, 1997
CONDENSED CONSOLIDATED STATEMENTS OF INCOME Three
and Six Months Ended June 30, 1998 and 1997
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS-
Six Months Ended June 30, 1998 and 1997
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
PART II. OTHER INFORMATION
ITEM 1. NOT APPLICABLE
ITEM 2. NOT APPLICABLE
ITEM 3. NOT APPLICABLE
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
ITEM 5. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
SIGNATURES
EXHIBIT INDEX
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES
INTRODUCTION
Subsequent to the end of 1998, the Company determined that the
accounting for certain stock option exercise transactions during 1996, 1997 and
interim reporting periods for 1998 was incorrect. Non-cash compensation expense
for certain option exercises during the above periods which was not recognized
in previously issued 10-Q's is now reflected in the accompanying restated
financial statements. The Company also determined that gross profit margins at
the Verson division were incorrectly reported in 1997 and interim reporting
periods in 1998. Reference is made to Note 13 of the Consolidated Financial
Statements in the Company's 1998 Annual Report on Form 10-K regarding the
reconciliation of the amounts previously reported to the amounts currently being
reported in the quarterly consolidated statements of income (loss) for the
periods ended June 30, 1998 and 1997. It was further determined that the Company
should have accrued for product liability claims incurred but not reported prior
to 1996. The product liability adjustment ($1,040,000 net of tax) had no impact
on operating results reported on within this report and is reflected as an
adjustment to retained earnings at December 31, 1995.
The condensed consolidated financial statements included herein (as of
June 30, 1998 and for the three and six months ended June 30, 1998 and 1997)
have been prepared by the Company, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission and reflect all
adjustments which are, in the opinion of management, necessary to present fairly
the condensed consolidated financial information required therein. All such
adjustments are of a normal, recurring nature. The information as of December
31, 1997 is derived from the audited year end balance sheet for that year.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to such rules and regulations, although
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 the notes thereto included
in the Company's latest annual report on Form 10-K.
The results of operations for the three and six month periods ended
June 30, 1998 and 1997 are not necessarily indicative of the results to be
expected for the full year.
<PAGE>
ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
ASSETS
<TABLE>
<CAPTION>
June 30, 1998 December 31,1997
------------- -----------------
<S> <C> <C>
Current Assets:
Cash and cash equivalents ........................ $ 489,000 $ 609,000
------------- -----------------
Notes and accounts receivable, less allowances of
$652,000 and $531,000, respectively ........... $ 67,724,000 $ 54,729,000
------------- ----------------
Inventories:
Raw materials .................................. $ 8,986,000 $ 6,193,000
Work in process ................................ 98,787,000 52,811,000
Finished goods ................................. 17,416,000 14,419,000
------------- ----------------
$ 125,189,000 $ 73,423,000
------------- ----------------
Deferred tax asset ................................ $ 12,773,000 $ 12,773,000
------------- ----------------
Prepaid expenses .................................. $ 533,000 $ 415,000
------------- ----------------
Total current assets ........................ $ 206,708,000 $ 141,949,000
------------- ----------------
Plant and Equipment, at cost:
Land ........................................... $ 2,170,000 $ 2,243,000
Building and improvements ...................... 51,557,000 40,750,000
Machinery and equipment ........................ 58,121,000 51,339,000
------------- ----------------
$ 111,848,000 $ 94,332,000
Less-Accumulated depreciation and amortization .. 46,285,000 48,811,000
------------- ----------------
$ 65,563,000 $ 45,521,000
------------- ----------------
Other Assets:
Deferred tax asset ............................. $ 4,631,000 $ 4,631,000
Deferred charges (goodwill), net of amortization 6,618,000 1,491,000
Other .......................................... 3,353,000 1,472,000
------------- ----------------
$ 14,602,000 $ 7,594,000
------------- ----------------
$ 286,873,000 $ 195,064,000
============= ================
</TABLE>
The accompanying notes to consolidated financial statements are an
integral part of these statements.
<PAGE>
ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
LIABILITIES AND SHAREHOLDERS' INVESTMENT
<TABLE>
<CAPTION>
June 30, 1998 December 31,1997
------------- ----------------
<S> <C> <C>
Current Liabilities:
Revolving credit agreement ................................ $ 109,200,000 $ 50,400,000
Current portion of long-term debt ......................... 388,000 268,000
Accounts payable .......................................... 35,114,000 19,923,000
Accrued expenses .......................................... 24,868,000 25,145,000
------------- ----------------
Total current liabilities .......................... $ 169,570,000 $ 95,736,000
------------- ----------------
Long-term debt, less current portion shown above ............ $ 1,235,000 $ 670,000
------------- ----------------
Other long-term liabilities ................................. $ 15,541,000 $ 10,105,000
------------- ----------------
Commitments and Contingencies
Shareholders' Investment:
Preferred stock:
Undesignated-authorized 1,500,000 shares at June 30,
1998 and December 31, 1997; none issued ........... $ -- $ --
Common Stock, par value $.01 per share; authorized
25,000,000 shares; issued 14,047,249 shares at June 30,
1998 and December 31, 1997 ........................... 140,000 140,000
Additional paid-in capital ............................... 98,872,000 98,518,000
Retained earnings ........................................ 43,626,000 32,148,000
------------- ----------------
$ 142,638,000 $ 130,806,000
Less: Treasury stock, at cost: 2,120,144 and 2,144,263
shares at June 30, 1998 and December 31, 1997,
respectively ........................................... (42,111,000) (42,253,000)
------------- ----------------
Total shareholder's equity ......................... $ 100,527,000 $ 88,553,000
------------- ----------------
$ 286,873,000 $ 195,064,000
============= ================
</TABLE>
The accompanying notes to consolidated financial statements are an
integral part of these statements.
<PAGE>
ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
------------------------------ ----------------------------------------
1998 1997 1998 1997
------------- ------------ ------------- -------------
<S> <C> <C> <C> <C>
Net sales ............................. $ 88,985,000 $ 76,902,000 $ 151,816,000 $ 149,783,000
Cost of products sold ................. 69,770,000 58,565,000 113,446,000 113,188,000
------------- ------------- ------------- -------------
Gross profit ........................ $ 19,215,000 $ 18,337,000 $ 38,370,000 $ 36,595,000
------------- ------------- ------------- -------------
Other costs and expenses:
Selling and administrative expenses . $ 8,859,000 $ 8,775,000 $ 18,649,000 $ 17,355,000
Interest expense .................... 1,447,000 958,000 2,537,000 1,652,000
Other (income) expense, net ......... (1,736,000) 112,000 (1,864,000) 541,000
------------- ------------- ------------- -------------
$ 8,570,000 $ 9,845,000 $ 19,322,000 $ 19,548,000
------------- ------------- ------------- -------------
Income before taxes ................... $ 10,645,000 $ 8,492,000 $ 19,048,000 $ 17,047,000
Provision for income taxes ............ 3,544,000 3,093,000 6,617,000 6,142,000
------------- ------------- ------------- -------------
Net income and comprehensive net income $ 7,101,000 $ 5,399,000 $ 12,431,000 $ 10,905,000
============= ============= ============= =============
Earnings per common share:
Basic ............................... $ 0.60 $ 0.45 $ 1.04 $ 0.89
============= ============= ============= =============
Diluted ............................. $ 0.59 $ 0.44 $ 1.03 $ 0.88
============= ============= ============= =============
Weighted average shares outstanding:
Basic ............................... 11,923,000 12,120,000 11,924,000 12,202,000
============= ============= ============= =============
Diluted ............................. 12,099,000 12,366,000 12,105,000 12,440,000
============= ============= ============= =============
Dividends per common share ............ $ 0.04 $ 0.0333 $ 0.08 $ 0.0667
============= ============= ============= =============
</TABLE>
The accompanying notes to condensed consolidated financial statements are an
integral part of these statements.
<PAGE>
ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended June 30,
----------------------------
1998 1997
------------ ------------
<S>
Cash Flows from Operating Activities: <C> <C>
Net income ............................................................... $ 12,431,000 $ 10,905,000
Adjustments to reconcile net income to net cash
used for operating activities:
Gains on sales of operating and nonoperating assets ................... (1,972,000) (143,000)
Depreciation and amortization ......................................... 2,743,000 2,525,000
Amortization of deferred charges ...................................... 132,000 89,000
Deferred income tax provision ......................................... 5,661,000 5,394,000
Stock option compensation ............................................. 1,119,000 87,000
Changes in noncash assets and liabilities, net of noncash transactions:
(Increase) in accounts receivable .................................. (10,448,000) (22,151,000)
(Increase) in inventories .......................................... (48,830,000) (3,878,000)
(Increase) decrease in prepaid expenses ............................ (100,000) 15,000
Increase (decrease) in accounts payable and accrued expenses ...... 13,070,000 (27,000)
Other,net ............................................................. (1,455,000) 113,000
------------ ------------
Net cash used for operating activities ................................... $(27,649,000) $ (7,071,000)
------------ ------------
Cash Flows from Investing Activities
Additions to plant and equipment ......................................... $(22,060,000) $ (7,233,000)
Payment for businesses acquired .......................................... (11,290,000) --
Proceeds from sales of plant and equipment ............................... 3,383,000 404,000
------------ ------------
Net cash used for investing activities ................................... $(29,967,000) $ (6,829,000)
------------ ------------
Cash Flows from Financing Activities:
Borrowings under revolving credit agreement .............................. $ 92,400,000 $ 63,700,000
Payments under revolving credit agreement ................................ (33,600,000) (36,900,000)
Payments of short and long-term debt ..................................... (135,000) (96,000)
Purchase of treasury stock ............................................... (776,000) (12,956,000)
Dividends paid ........................................................... (478,000) (407,000)
Stock option transactions ................................................ 85,000 894,000
------------ ------------
Net cash provided from financing activities ................................. $ 57,496,000 $ 14,235,000
------------ ------------
Net increase (decrease) in cash and cash equivalents ........................ $ (120,000) $ 335,000
Cash and cash equivalents at beginning of year .............................. 609,000 833,000
------------ ------------
Cash and cash equivalents at end of period .................................. $ 489,000 $ 1,168,000
============ ============
</TABLE>
The accompanying notes to condensed consolidated financial statements are an
integral part of the statements
<PAGE>
Allied Products Corporation and Consolidated Subsidiaries
Notes to Condensed Consolidated Financial Statements
(1) Accrued Expenses
----------------
The Company's accrued expenses consist of the following:
<TABLE>
<CAPTION>
6/30/98 12/31/97
----------- -----------
<S> <C> <C>
Salaries and wages ................ $ 8,070,000 $ 5,560,000
Warranty .......................... 4,831,000 4,938,000
Self insurance accruals ........... 1,515,000 2,858,000
Pensions, including retiree health 5,052,000 6,439,000
Taxes, other than income taxes .... 1,349,000 1,158,000
Environmental matters ............. 1,463,000 1,810,000
Other ............................. 2,588,000 2,382,000
----------- -----------
$24,868,000 $25,145,000
=========== ===========
</TABLE>
(2) Earnings Per Common Share
-------------------------
During 1997, the Financial Accounting Standards Board (FASB)
issued Statement of Financial Accounting Standards No. 128 (SFAS
128)--Earnings per Share. Earnings per common share and weighted
average shares outstanding for the three and six months ended June 30,
1997 have been restated to reflect the effect of a three-for-two stock
split in 1997 and the effect of adopting the provisions of this
accounting standard. Basic earnings per common share for the periods in
1998 is based on the average number of common shares outstanding
(11,923,000 and 11,924,000 for the three and six months ended June 30,
1998, respectively). Diluted earnings per common share for the same
periods is based on the average number of common shares outstanding, as
noted above, increased by the dilutive effect of outstanding stock
options (176,000 and 181,000 for the three and six months ended June
30, 1998, respectively). Basic earnings per common share for the
periods in 1997 is based on the average number of common shares
outstanding (12,120,000 and 12,202,000 for the three and six months
ended June 30, 1997, respectively). Diluted earnings per common share
for the same periods in 1997 is based on the average number of common
shares outstanding, as noted previously, increased by the dilutive
effect of outstanding options (246,000 and 238,000 for the three and
six months ended June 30, 1997, respectively).
(3) Acquisitions
------------
During the second quarter of 1998, the Company acquired
substantially all of the assets and assumed certain liabilities of
Great Bend Manufacturing Company (Great Bend) located in Great Bend,
Kansas. Great Bend manufactures and sells tractor-mounted front-end
loaders which are used principally in agricultural applications. The
Company also acquired in the second quarter of 1998 substantially all
of the assets of Universal Turf Equipment Corporation (Universal Turf)
located in Opp, Alabama. Universal Turf manufactures and
<PAGE>
sells turf maintenance implements including reel mowers, verti-cut
mowers, reel grinders and spraying equipment. The impact of these
acquisitions on the consolidated operating results of the Company in
the second quarter and first half of 1998 is not considered
significant.
(4) Dispositions/Sales of Assets
----------------------------
"Other (income) expense, net" for the six months ended June
30, 1998 includes gains of approximately $1,972,000 ($1,957,000 in the
second quarter) primarily related to the sale of the Coldwater, Ohio
facility noted below.
(5) Contingent Liabilities
----------------------
The Company is involved in a number of legal proceedings as a
defending party, including product liability and environmental matters
for which additional liability is reasonably possible. However, after
consideration of relevant data (consultation with legal counsel and
review of insurance coverage, accruals, etc.), management believes that
the eventual outcome of these matters will not have a material adverse
effect on the Company's financial position or its ongoing results of
operations.
Reference is made to Note 10 of Notes to Consolidated
Financial Statements in the Company's 1997 Annual Report on Form 10-K
as it relates to a note receivable taken in connection with the sale of
the business and assets of the former Littell division. Collections
from this note in the six months ended June 30, 1998 totaled $390,000
($195,000 in the second quarter) and were included in "Other (income)
expense."
Reference is made to Note 10 of Notes to Consolidated
Financial Statements in the Company's 1997 Annual Report on Form 10-K
as it relates to the sale by the Company of a site in Coldwater, Ohio
that was contingent on the issuance by the State of Ohio, Ohio
Environmental Protection Agency, of a covenant not to sue. On March 31,
1998, the Ohio Environmental Protection Agency issued the covenant not
to sue. The Company closed on the sale of this facility for cash of
$3,156,000 on May 13, 1998.
At June 30, 1998, the Company was contingently liable for
approximately $1,048,000 primarily relating to outstanding letters of
credit.
(6) Income Taxes
------------
The provision for income taxes in the first half of 1998 and
1997 is based upon the Federal statutory rates adjusted for items that
are not subject to taxes. See Note 4 of Notes to Consolidated Financial
Statements in the Company's 1997 Annual Report on Form 10-K for a
further discussion related to income taxes.
<PAGE>
(7) Summary of Other (Income) Expense
---------------------------------
Other (income) expense for the three and six month periods
ended June 30, 1998 and 1997 consists of the following:
<TABLE>
<CAPTION>
For the three months ended For the six months ended
-------------------------- ------------------------
6/30/98 6/30/97 6/30/98 6/30/97
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Interest income ......... $ (41,000) $ (23,000) $ (87,000) $ (40,000)
Goodwill amortization ... 87,000 45,000 132,000 89,000
Net (gain) loss on sales
of operating and non-
operating assets ...... (1,957,000) (18,000) (1,972,000) (143,000)
Litigation
settlements/insurance
provision ............. 569,000 115,000 569,000 557,000
Payments received
long-term notes
receivable reserved for
as uncollectible ...... (195,000) (500,000) (390,000) (500,000)
Other miscellaneous .... (199,000) 493,000 (116,000) 578,000
----------- ----------- ----------- ---------
$(1,736,000) $ 112,000 $(1,864,000) $ 541,000
=========== =========== =========== =========
</TABLE>
(8) Financial Arrangements
----------------------
On June 30, 1998 the Company entered into an amendment to the
Amended and Restated Credit Agreement. The amendment provides for up to
$145,000,000 (from $125,000,000) of borrowings and/or letters of credit
at either a floating prime or fixed LIBOR (with the rate dependent in
the ratio of Funded Debt to Operating Cash Flow) rate. The funds may be
used for future working capital needs of the Company, fixed asset
additions and possible acquisitions.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
OPERATING RESULTS
- -----------------
During the second quarter of 1998, the Company acquired substantially
all of the assets and assumed certain liabilities of Great Bend Manufacturing
Company (Great Bend) located in Great Bend, Kansas. Great Bend manufactures and
sells tractor-mounted front-end loaders which are used principally in
agricultural applications. The Company also acquired in the second quarter of
1998 substantially all of the assets of Universal Turf Equipment Corporation
(Universal Turf) located in Opp, Alabama. Universal Turf manufactures and sells
turf maintenance implements including reel mowers, verti-cut mowers, reel
grinders and spraying equipment. The impact of these acquisitions on the
consolidated operating results of the Company in the second quarter and first
half of 1998 is not considered significant.
During the fourth quarter of 1997, the Company sold for cash
substantially all of the assets of its Coz division. The purchaser also assumed
certain specified liabilities associated with this division.
First Half of 1998 Compared to First Half of 1997
- -------------------------------------------------
Net sales in the first half of 1998 were $151,816,000 compared to net
sales of $149,783,000 reported in the first half of 1997. Increased sales at the
Bush Hog division more than offset the loss of revenues associated with the
Company's former Coz division, which was sold in the fourth quarter of 1997.
Income before taxes in the first half of the current year was $19,048,000
compared to income before taxes of $17,047,000 reported in the first half of the
prior year. Income before taxes in the first half of 1998 included gains of
approximately $1,972,000 primarily related to the sale of the Coldwater, Ohio
facility - See Note 4 of Notes to Condensed Consolidated Financial Statements.
Net income was $12,431,000 ($1.04 per common share-basic) in the first half of
1998 compared to net income of $10,905,000 ($.89 per common share-basic) in the
first half of 1997. "Earnings per common share" and "Weighted average shares
outstanding" have been restated for the three and six months ended June 30, 1997
to reflect the effect of a three-for-two stock split in 1997 and the effect of
adopting Statement of Financial Accounting Standards (SFAS) No. 128-Earnings per
Share.
At the Bush Hog and Great Bend divisions, net sales increased 18% in
the first half of 1998 compared to the first half of 1997. The majority of the
increase was associated with the cutter products line at the Bush Hog division.
Cutter sales have benefitted from the end of the cattle herd liquidation cycle
in the spring of 1997. Cattle ranchers use the cutters for grazing pasture
maintenance. Cutter sales in 1998 were also favorably affected by new/redesigned
products for the turf and landscaping market for utilization by commercial turf
(sod) growers and for golf course
<PAGE>
maintenance. Loader sales have also increased in the current year, with the
majority of the increase in this product line related to the acquisition of the
Great Bend division, as noted above. Sales of the Great Bend division represent
approximately 25% of the overall increase in agricultural product sales in the
first half of 1998 compared to the first half of 1997. Gross profits and gross
profit margins increased in the first half of the current year due to the
effects of favorable manufacturing variances which resulted from increased
facility utilization (production) including longer production lot sizes and
increased labor efficiencies. The impact of increased sales volume also resulted
in increased gross profits in 1998.
Severe weather conditions in the southwestern United States as well as
some local flooding in the central part of the country are anticipated to result
in lower than expected sales for the Company's agricultural products in the
third quarter. Some cattle herd liquidation has taken place in the southwest as
a result of drought conditions. Commodity prices have also decreased in the
first half of 1998. As a result, the Bush Hog division expects to scale back
production schedules in the third quarter of 1998 to adjust to market
conditions.
Net sales at the Verson division increased by 8% in the first half of
1998 compared to the first half of 1997. Revenue and profits are recognized on a
percentage of completion basis for press production at this division. The
increase in net sales was primarily related to increased press orders received
during the second quarter of 1998 including the recently announced major orders
for presses of approximately $80,000,000. Gross profits and gross profit margins
decreased at the Verson division in the first half of 1998 compared to the same
six month period of 1997. Margins have been negatively impacted by manufacturing
constraints associated with insufficient manufacturing causing the division to
out source an increased level of production, resulting in increased costs. The
mix of production has also resulted in inefficiencies. Production in the first
half of 1998 included newly designed presses for each of the major U.S. auto
manufacturers. Some of the engineering requirements related to these and other
orders have also been subcontracted out. These manufacturing problems have led
to the delayed shipment of certain presses. Warranty costs have also increased
in 1998 due to the increased sales volume and mix of products manufactured.
These increased costs were partially offset by the settlement of a claim against
a third party, which negatively impacted periods prior to 1997.
Selling and administrative expenses increased in the first half of 1998
to $18,649,000 (12.3% of net sales) from $17,355,000 (11.6% of net sales) in the
first half of 1997. Selling expense increases were primarily related to
increased commissions at the Bush Hog division (associated with increased
sales), costs related to the establishment of an international sales and
marketing department at the Verson division (primarily salaries and travel
costs) and the acquisition of the Great Bend division as noted above. These
increases were partially offset by decreased costs associated with the sale of
the Coz division in the fourth quarter of 1997. Administrative costs have also
increased in
<PAGE>
the first half of 1998. Corporate administrative costs increased in the first
half of 1998 primarily due to the effect of compensation expense recognized
($1,119,000 in the first half of 1998 compared to $87,000 in the first half of
the prior year) in relation to stock options exercised in each period. The
effect of this increase was partially offset by the impact of corporate staff
retirements in the last half of 1997. Other cost increases related to staff
expansion and legal fees associated with the settlement of a claim at the Verson
division and the acquisition of the Great Bend division were partially offset by
the impact of the sale of the Coz division.
Interest expense in the first half of 1998 was $2,537,000 compared to
interest expense of $1,652,000 reported in the first half of the prior year.
Increased borrowing needs were related to higher consolidated receivable levels
(primarily associated with Bush Hog's increased sales volume) and increased
inventory levels (primarily associated with the Verson division where shipment
delays have occurred). Other borrowing needs included fixed asset additions over
the past twelve months, including the Verson plant expansion, the impact of
decreased customer deposits and progress payments against press orders at the
Verson division, and the acquisitions of Great Bend and Universal Turf in the
second quarter of 1998. Interest expense in the first half of 1998 was partially
offset by the interest cost capitalized relating to the Company's building
expansion project at the Verson division.
Reference is made to Note 7 of Notes to Condensed Consolidated
Financial Statements for an analysis of Other (income) expense in the first half
of 1998 and 1997.
Second Quarter of 1998 Compared to Second Quarter of 1997
- ---------------------------------------------------------
Net sales in the second quarter of 1998 were $88,985,000 compared to
net sales of $76,902,000 reported in the second quarter of 1997. Income before
taxes in the second quarter of the current year was $10,645,000 compared to
income before taxes of $8,492,000 reported in the second quarter of the prior
year. Income before taxes in the second quarter of 1998 included gains of
approximately $1,972,000 primarily related to the sale of the Coldwater, Ohio
facility - See Note 4 of Notes to Condensed Consolidated Financial Statements.
Net income was $7,101,000 ($.60 per common share-basic) in the second quarter of
1998 compared to net income of $5,399,000 ($.45 per common share-basic) in the
second quarter of 1997. Reference is made to the restatement of "Earnings per
common share" and "Weighted average share outstanding" noted above.
At the Bush Hog and Great Bend divisions, net sales increased 27% in
the second quarter of 1998 compared to the same quarter of the prior year, with
approximately one-third of this increase related to the acquisition of Great
Bend. The majority of the increase was related to Bush Hog's cutter product
lines. Loader sales also increased during the period at the Bush Hog division.
Sales during the period benefitted from the effects of favorable spring planting
conditions. Gross profits improved at the Bush Hog division in the second
quarter of 1998 primarily due to increased sales
<PAGE>
volume noted above. Gross profit margins also improved compared to the second
quarter of the prior year. Favorable manufacturing variances resulted from
increased production lot sizes and increased labor efficiencies.
At the Verson division, sales increased 28% in the second quarter of
1998 compared to the second quarter of the prior year. The entire increase was
related to increased press production. As noted above, major press orders were
received during the second quarter of 1998. Production has begun on these orders
in order to meet delivery date deadlines. Gross profits and gross profit margins
have decreased at the Verson division in the second quarter of the current year
compared to the same quarter of 1997. Margins have been pressured by the impact
of increased outsourcing of production and engineering services, increased
warranty provisions and lack of adequate manufacturing capacity. The division is
in the process of expanding its assembly area and construction will be completed
in the last quarter of this year. Some press shipments have been delayed due to
production problems. While no significant penalties have been incurred with
these late shipments, the excess number of presses in the assembly and other
manufacturing areas have led to manufacturing inefficiencies.
Selling and administrative expenses have increased slightly in the
second quarter of 1998 to $8,859,000 from $8,775,000 reported in the second
quarter of 1997. As a percent of net sales, these costs have decreased to 10.0%
in the second quarter of this year compared to 11.4% of net sales in the second
quarter of the prior year. Increases in selling expenses at the Bush Hog
division were primarily related to commissions associated with the increased
sales volume. At the Verson division, increases were related to costs associated
with the establishment of an international sales and marketing department. Great
Bend (acquired in the second quarter of 1998) selling expenses also added to the
consolidated increase in these costs. Administrative expenses decreased in the
second quarter of 1998. The impact of Corporate Office retirements in the last
half of 1997 was the main cause of this decrease.
Interest expense in the second quarter of 1998 was $1,447,000 compared
to interest expense of $958,000 reported in the second quarter of 1997.
Increased borrowing needs were related to increased receivable levels of the
Bush Hog division, increased inventory levels at the Verson division, fixed
asset additions at both the Bush Hog and Verson divisions and the acquisitions
of Great Bend and Universal Turf. Interest expense was partially offset by the
interest cost capitalized relating to the Company's building expansion project
at the Verson division.
Reference is made to Note 7 of Notes to Condensed Consolidated
Financial Statements for an analysis of Other (income) expense in the second
quarter of 1998 and 1997.
<PAGE>
FINANCIAL CONDITION AND LIQUIDITY
- ---------------------------------
Working capital at June 30, 1998 was $37,138,000 (current ratio of 1.22
to 1.0) compared to working capital of $46,213,000 (current ratio of 1.48 to
1.0) at December 31, 1997. Net receivables increased by $12,995,000 since the
end of 1997. The majority of the increase was associated with the Bush Hog
division where cash collections are dependent upon the retail sale of the
product by the dealer. Sales, which are typically strong in the first quarter of
the year or just prior to the use season by the farmer, continued to be strong
in the second quarter of 1998. Extended payment terms are offered to dealers in
the form of floor plan financing which is customary in the industry. Receivables
also increased with the acquisition of the Great Bend division. On a
consolidated basis, inventory levels have increased $51,766,000 since the end of
1997. The majority of the increase was related to the Verson division and was
the direct result of the number and extent of jobs in process, the impact of
decreased customer deposits and progress payments against press orders and the
effects of delivery date extensions. Inventory levels have also increased at the
Bush Hog division where record first half sales have occurred in 1998. The
acquisition of Great Bend also resulted in increased consolidated inventories.
Fixed asset additions in the first half of 1998 (excluding
acquisitions) totaled $22,060,000. The majority of these additions were
represented by construction costs associated with a $28,000,000 expansion
project at the Verson division. This project will more than double the size of
Verson's assembly facility and increase the division's capacity by approximately
35%. This, combined with the division's focused factory concept and the overall
strengthening of its infrastructure, should help alleviate capacity constraints
at this operation. Expenditures for production machinery and equipment at all
manufacturing divisions were also made in the first half of 1998. It is
anticipated that the equipment will result in reduced manufacturing costs and
improvements in product quality.
Net borrowings under the Company's Amended and Restated Credit
Agreement increased by $58,800,000 since the end of 1997. These borrowings were
used to finance working capital needs and fixed asset additions noted above.
As of June 30, 1998, the Company had cash balances of $489,000 and
additional funds of $33,963,000 available under its Amended and Restated Credit
Agreement. Significant capital will be required to complete the expansion
project at the Verson division as noted above. At the end of the second quarter
of 1998, the Company entered into an amendment to the Amended and Restated
Credit Agreement. The amendment provides for up to $145,000,000 (from
$125,000,000) of borrowings and/or letters of credit at either a floating prime
or fixed LIBOR (with the rate dependent on the ratio of Funded Debt to Operating
Cash Flow) rate. These funds may be used for future working capital needs of the
Company, fixed asset additions and acquisitions. The Company believes the cash
flow from operations and funds available under the Amended and Restated Credit
<PAGE>
Agreement are adequate to finance its operations and capital expenditures in the
near future. During the first half of 1998, the Company has been in compliance
with all provisions of loan agreements in effect.
IMPACT FROM NOT YET EFFECTIVE RULES
- -----------------------------------
In June 1997, the Financial Accounting Standards Board (FASB) issued
SFAS No. 131 Disclosures about Segments of an Enterprise and Related
Information. This statement establishes standards for the way that public
business enterprises report information about operating segments in interim
financial reports issued to shareholders subsequent to initial annual financial
statements disclosure. It also establishes standards for related disclosures
about products and services, geographic areas and major customers. This
statement is effective on an annual basis for financial statements for periods
beginning after December 15, 1997. Interim reporting requirements begin in 1999.
Comparative information for earlier years is also to be presented.
In February 1998, the FASB issued SFAS No. 132 -Employers' Disclosures
about Pensions and Other Postretirement Benefits. This statement revises
employers' disclosures about pension and other postretirement benefit plans. It
does not change the measurement or recognition of these plans. It standardizes
the disclosure requirements for pension and other postretirement benefits to the
extent practicable, requires additional information on changes in the benefit
obligations and fair values of plan assets that will facilitate financial
analysis, and eliminates certain disclosures that are no longer as useful as
they were when other related SFAS were issued. The Company is in the process of
evaluating the impact of these statements on its financial reporting.
In June 1998, the FASB issued SFAS No. 133 - Accounting for Derivative
Instruments and Hedging Activities. This statement establishes accounting and
reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts, (collectively referred to as
derivatives) and for hedging activities. The Company at this time does not
participate in any transactions covered under the provisions of SFAS No. 133,
which would be effective July 1, 1999.
SAFE HARBOR STATEMENT
- ---------------------
Statements contained within the Management Discussion and Analysis of
Financial Condition and Results of Operations that relate to future operating
periods are subject to risks and uncertainties that could cause actual results
to differ from management's projections. Operations of the Company include the
manufacturing and sale of agricultural and industrial machinery. In relation to
the Bush Hog and Great Bend divisions, forward-looking statements involve
certain factors that are subject to change. These elements encompass
interrelated factors that affect farmers
<PAGE>
and cattle ranchers' confidence, including demand for agricultural products,
grain stock levels, commodity prices, weather conditions, crop and animal
diseases, crop yields, farm land values and government farm programs. Other
factors affecting all operations of the Company include actions of competitors
in the industries served by the Company, production difficulties including
capacity and supply constraints, labor relations, interest rates and other risks
and uncertainties. The Company's outlook is based upon assumptions relating to
the factors discussed above.
<PAGE>
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
On May 20, 1998 the Registrant held its annual meeting of
shareholders. Copies of the related proxy statement have been previously filed
with the Securities and Exchange Commission.
The following item was voted on by the Company's shareholders:
Election of Three Directors. Proxies for the meeting were solicited
-----------------------------
pursuant to Regulation 14A. There was no solicitation in opposition to the
management's nominees as listed in the proxy statement. The nominees received
the following number of votes:
Class B Directors - Terms expire in 2001 - Mr. L.A. Drexler,
-------------------------------------------------------------
Mr. John E. Jones and Mr. Stanley J. Goldring
---------------------------------------------
For Mr. Drexler - 10,498,910; withheld from Mr. Drexler - 20,848.
For Mr. Jones - 10,507,749; withheld from Mr. Jones - 12,009.
For Mr. Goldring - 10,508,912; withheld from Mr. Goldring - 10,846
The terms of the following directors continued after the meeting:
Class C Directors - Terms expire in 1999
----------------------------------------
Mr. William D. Fischer and Mr. S.S. Sherman
Class A Directors - Terms expire in 2000
-----------------------------------------
Mr. Richard A. Drexler, Mr. John Puth and Mr. Michell I.Quain
.
Approximately 1,397,000 shares held by brokers and nominees were not
voted in the election of directors.
1999 Annual Meeting. After February 23, 1999, notice to the Company of
--------------------
a Shareholder proposal submitted for consideration at the 1999 Annual Meeting of
Shareholders which is not submitted for inclusion in the Company's proxy
Statement and form of proxy, will be considered untimely and the persons named
in the proxies solicited by the Company may exercise discretionary voting power
with respect to any such proposal.
<PAGE>
Item 5 Other Information
-----------------
Reference is made to Note 8 Financial Arrangements of " Notes
to Condense Consolidated Financial Statements" and Exhibit 10 for information
related to the Amendment to the Amended and Restated Credit Agreement.
Item 6. Exhibit and Reports on Form 8-K
-------------------------------
(a) Exhibits - See Exhibit Index included herein.
(b) Reports on Form 8-K - there were no reports on Form 8-K for the
three months ended June 30, 1998.
<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.
ALLIED PRODUCTS CORPORATION
---------------------------
(REGISTRANT)
August 3,1999 /s/ Robert J. Fleck
- ------------- -----------------------------------------------
Robert J. Fleck
Vice President- Accounting and Chief Accounting
& Administrative Officer
August 3, 1999 /s/ Mark C. Standefer
- -------------- -----------------------------------------------
Mark C. Standefer
Vice President, General Counsel & Secretary
<PAGE>
ALLIED PRODUCTS CORPORATION
INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION OF EXHIBITS
-----------------------------------
10 Material Contract - Amendment No. 3 to the Credit Agreement
27 Financial Data Schedules
AMENDMENT NO. 3 TO CREDIT AGREEMENT, DATED AS OF AUGUST 23, 1996
This Amendment No. 3 (this "Amendment"), dated as of June 30,
1998, is made by and among ALLIED PRODUCTS CORPORATION, a Delaware corporation
(the "Company"), the financial institutions party hereto (the "Banks"), and Bank
of America National Trust and Savings Association (as successor by merger to
Bank of America Illinois), as agent for the Banks (in such capacity, the
"Agent"). Terms defined in the Credit Agreement shall have the same respective
meanings when used herein and the provisions of Section 13 of the Credit
Agreement shall apply, mutatis mutandis, to this Amendment.
W I T N E S S E T H:
--------------------
WHEREAS, the parties hereto are parties to that certain
Amended and Restated Credit Agreement, dated as of August 23, 1996, (as amended
or modified and in effect on the date hereof, the "Existing Credit Agreement"
and as amended and modified by this Amendment, the "Credit Agreement");
WHEREAS, the Company has requested that the Banks and the
Agent agree to amend and modify the Existing Credit Agreement as described
herein; and
WHEREAS, the Banks and the Agent are willing to amend and
modify the Existing Credit Agreement on the terms and conditions contained
herein;
NOW, THEREFORE, in consideration of the premises, the mutual
covenants herein contained and other good and valuable consideration (the
receipt, adequacy and sufficiency of which is hereby acknowledged), the parties
hereto, intending legally to be bound, hereby agree as follows:
1. Amendments. Subject to the satisfaction of the
-----------
conditions precedent set forth in Section 5 below, the Existing
Credit Agreement is hereby amended as follows:
(a) Section 1.1.3 of the Existing Credit Agreement shall be
amended by deleting each reference to $125,000,000 contained therein
and replacing it with $145,000,000.
(b) Section 5.3 is deleted in its entirety and replaced with
the following:
<PAGE>
"SECTION 5.3 Upper Usage Fee. The Company agrees to
---------------
pay an upper usage fee of 1/8 of 1% per annum on the amount by
which the average daily used amount of the total Commitment
exceeds $75,000,000 and an upper usage fee of 1/4 of 1% per
annum on the amount by which the average daily used amount of
the total Commitment exceeds $125,000,000. Any such upper
usage fee shall be payable in arrears on the last day of each
Fiscal Quarter and on the Revolving Termination Date for any
period then ending for which such upper usage fee shall not
have been theretofore paid. Any upper usage fee shall be
computed for the actual number of days elapsed on the basis of
a year of 360 days."
(c) Section 6.1 of the Existing Credit Agreement shall be
amended by (i) inserting "(a)" at the beginning thereof and replacing
the "." at the end thereof with "; and" and (ii) adding a new paragraph
(b) thereto which shall read in its entirety as follows:
"(b) the aggregate Commitments of the Banks shall be
automatically and permanently reduced, pro rata, in an amount
sufficient to reduce the aggregate Commitments of the Banks to
$100,000,000 on March 1, 1999."
(d) Section 10.6 of the Existing Credit Agreement is deleted
in its entirety and replaced with the following:
"SECTION 10.6 Funded Debt/Operating Cash Flow Ratio.
--------------------------------------
Not permit the ratio ("Funded Debt/Operating Cash Flow Ratio")
of (x) Consolidated Total Funded Debt to (y) Consolidated
Operating Cash Flow during any period of four consecutive
Fiscal Quarters to exceed the ratio of 3.25:1:00 for any
Fiscal Quarter ending on or prior to March 31, 1999, and
3.00:1.00 for each Fiscal Quarter thereafter."
(e) Section 10.19 of the Existing Credit Agreement is amended
by deleting the number $75,000,000 therefrom and replacing it with
$100,000,000.
(f) The definition of Revolving Termination Date set forth in
Section 13 of the Existing Credit Agreement shall be deleted in its
entirety and replaced with the following:
"Revolving Termination Date shall mean September 30,
----------------------------
2000; provided that such date may be extended by the Banks, in
their sole and absolute discretion, until September 30, 2001
upon the written request by the Company to the Agent no later
than June 30, 2000.
<PAGE>
Nothing contained herein shall be deemed to require the
Banks to extend the Revolving Termination Date."
(g) Exhibit A to the Existing Credit Agreement is deleted in
its entirety and replaced with Exhibit A attached hereto.
2. Documents Remain in Effect. Except as amended and modified
--------------------------
by this Amendment, the Existing Credit Agreement remains in full force and
effect and the Company confirms that its representations, warranties, agreements
and covenants contained in, and obligations and liabilities under, the Credit
Agreement and each of the other Loan Documents are true and correct in all
material respects as if made on the date hereof, except where such
representation, warranty, agreement or covenant speaks as of a specified date.
3. References in Other Documents. References to the Existing
------------------------------
Credit Agreement in any other document shall be deemed to include a reference to
the Credit Agreement, whether or not reference is made to this Amendment.
4. Representations. The Company hereby represents and warrants
---------------
to the Banks and the Agent that:
(a) The execution, delivery and performance of this Amendment
and the Restated Notes (as hereinafter defined) are within the
Company's corporate authority, have been duly authorized by all
necessary corporate action, have received all necessary consents and
approvals (if any shall be required), and do not and will not
contravene or conflict with any provision of law or of the Certificate
of Incorporation or By-laws of the Company or its Subsidiaries, or of
any other agreement binding upon the Company or its Subsidiaries or
their respective property;
(b) This Amendment and the Restated Notes constitute the
legal, valid, and binding obligations of the Company, enforceable
against the Company in accordance with its terms; and
(c) no Default has occurred and is continuing or will result
from this Amendment or the Restated Notes.
5. Conditions Precedent. The effectiveness of this Amendment
---------------------
is subject to the receipt by the Agent of each of the following, each
appropriately completed and duly executed as required and otherwise in form and
substance satisfactory to the Agent:
<PAGE>
(a) Certified copies of resolutions of the Board of Directors
of the Company authorizing or ratifying the execution, delivery and
performance by the Company of this Amendment and the Restated Notes;
(b) A certificate of the President or a Vice- President of the
Company that all necessary consents or approvals with respect to this
Amendment and the Restated Notes have been obtained;
(c) A certificate of the Secretary or Assistant Secretary of
the Company, certifying the name(s) of the officer(s) of the Company
authorized to sign this Amendment, the Restated Notes and the documents
related hereto on behalf of the Company;
(d) Restated Revolving Notes, in the form attached hereto as
Exhibit B, payable to the order of each Bank in principal amount equal
to such Bank's aggregate Commitment;
(d) An opinion of Mark Standefer covering those matters set
forth in clauses (a) and (b) of Section 4 and such other legal matters
as the Agent or its counsel may request; and
(e) Such other instruments, agreements and documents as the
Agent may reasonably request, in each case duly executed as required
and otherwise in form and substance satisfactory to the Banks.
6. Miscellaneous.
--------------
(a) Section headings used in this Amendment are for
convenience of reference only, and shall not affect the construction of this
Amendment.
(b) This Amendment and any amendment hereof or supplement
hereto may be executed in any number of counterparts and by the different
parties on separate counterparts and each such counterpart shall be deemed to be
an original, but all such counterparts shall together constitute but one and the
same agreement.
(c) This Amendment shall be a contract made under and governed
by the internal laws of the State of Illinois, without giving effect to
principles of conflicts of laws.
(d) All obligations of the Company and rights of the Banks and
the Agent, that are expressed herein, shall be in
<PAGE>
addition to and not in limitation to those provided by applicable
law.
(e) Whenever possible, each provision of this Amendment and
the Restated Notes shall be interpreted in such manner as to be effective and
valid under applicable law; but if any provision of this Amendment or the
Restated Notes shall be prohibited by or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining provisions
of this Amendment or the Restated Notes.
(f) This Amendment and the Restated Notes shall be binding
upon the Company, the Banks and the Agent and their respective successors and
assigns, and shall inure to the benefit of the Company, the Banks and the Agent
and their respective successors and assigns.
* * *
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused the
execution and delivery hereof by their respective representatives thereunto duly
authorized as of the date first herein appearing.
ALLIED PRODUCTS CORPORATION
By: /S/ Richard A. Drexler
---------------------------
Name: Richard A. Drexler
-------------------------
Title: Chairman & CEO
------------------------
BANK OF AMERICA NATIONAL
TRUST AND SAVINGS
ASSOCIATION (as successor
by merger to Bank of
America Illinois), as Agent
By: /S/ David A. Johanison
---------------------------
Name: David A. Johanison
-------------------------
Title: Vice President
------------------------
BANK OF AMERICA NATIONAL
TRUST AND SAVINGS
ASSOCIATION (as successor
by merger to Bank of
America Illinois), in its
individual corporate capacity
By: /S/ Rob Ritter
---------------------------
Name: Rob Ritter
-------------------------
Title: Vice President
------------------------
LASALLE NATIONAL BANK
By: /S/ Mary Lou Bartlett
---------------------------
Name: Mary Lou Bartlett
-------------------------
Title: Vice President
------------------------
<PAGE>
EXHIBIT A
COMMITMENT LIMITS AND PERCENTAGES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Column I: Column II: Column III: Column IV:
Amount of Amount of Letter Total Amount of
Name of Bank Revolving Loan of Credit Commitments Percentage
Commitment Commitment
BANK OF AMERICA ..................... $101,500,000 $ 14,000,000 $101,500,000 70%
NATIONAL TRUST AND
SAVINGS ASSOCIATION
LASALLE NATIONAL BANK ............... $ 43,500,000 $ 6,000,000 $ 43,500,000 30%
------------ ------------ ------------ ----------
TOTALS $145,000,000 $ 20,000,000 $145,000,000 100%
</TABLE>
<PAGE>
EXHIBIT B
FORM OF
RESTATED REVOLVING NOTE
$ __________________ June __, 1998
Chicago, Illinois
On or before the Revolving Termination Date (as defined in the Credit
Agreement referred to below), the undersigned, for value received, promises to
pay to the order of __________________ at the principal office of
__________________________ (the "Bank"), in Chicago, Illinois _______________
Dollars ($_______) or, if less, the aggregate unpaid amount of all Revolving
Loans made by the payee to the undersigned pursuant to the Credit Agreement (as
shown in the records of the payee or, at the payee's option, on the schedule
attached hereto and any continuation thereof).
The undersigned further promises to pay interest on the unpaid
principal amount of each Revolving Loan evidenced hereby from the date of such
Revolving Loan until such Revolving Loan is paid in full, payable at the rate(s)
and at the time(s) set forth in the Credit Agreement. Payments of both principal
and interest are to be made in lawful money of the United States of America.
This Restated Revolving Note evidences indebtedness incurred under, and
is subject to the terms and provisions of, the Amended and Restated Credit
Agreement, dated as of August 23, 1996, as amended (herein, as further amended
or otherwise modified from time to time, called the "Credit Agreement"), between
the undersigned, various banks (including the payee) and Bank of America
National Trust and Savings Association, as agent for the Banks, to which Credit
Agreement reference is hereby made for a statement of the terms and provisions
under which this Restated Revolving Note may or must be paid prior to its due
date or may have its due date accelerated. Terms used but not otherwise defined
herein are used herein as defined in the Credit Agreement.
In addition to and not in limitation of the foregoing and the
provisions of the Credit Agreement, the undersigned further agrees, subject only
to any limitation imposed by applicable law, to pay all reasonable expenses,
including reasonable attorneys' fees and legal expenses, incurred by the holder
of this Restated Revolving Note in endeavoring to collect any amounts payable
hereunder which are not paid when due, whether by acceleration or otherwise.
This Restated Revolving Note is made under and governed by the internal
laws of the State of Illinois.
<PAGE>
This Restated Revolving Note is issued in replacement of a Revolving
Note issued pursuant to the Credit Agreement. The indebtedness evidenced by this
Note represents an extension and renewal of indebtedness owing to the payee.
ALLIED PRODUCTS CORPORATION
By: ___________________________
Title: ________________________
<PAGE>
Schedule Attached to Restated Revolving Note dated June 30, 1998 of THE COMPANY
payable to the order of
Date and Amount Date and Amount
of Revolving of Repayment or
Loan or of of Conversion
Conversion from into another Unpaid Notation Made
another type of type of Interest Principal by
Revolving Loan Revolving Loan Period Balance
1. FLOATING RATE LOANS
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
2. EURODOLLAR LOANS
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
<PAGE>
RESTATED REVOLVING NOTE
$ 101,500,000 June 30, 1998
Chicago, Illinois
On or before the Revolving Termination Date (as defined in the Credit
Agreement referred to below), the undersigned, for value received, promises to
pay to the order of Bank of America National Trust and Savings Association (the
"Bank"), at its office located at 231 South LaSalle Street, Chicago, Illinois,
One Hundred One Million Five Hundred Thousand Dollars ($101,500,000) or, if
less, the aggregate unpaid amount of all Revolving Loans made by the payee to
the undersigned pursuant to the Credit Agreement (as shown in the records of the
payee or, at the payee's option, on the schedule attached hereto and any
continuation thereof).
The undersigned further promises to pay interest on the unpaid
principal amount of each Revolving Loan evidenced hereby from the date of such
Revolving Loan until such Revolving Loan is paid in full, payable at the rate(s)
and at the time(s) set forth in the Credit Agreement. Payments of both principal
and interest are to be made in lawful money of the United States of America.
This Restated Revolving Note evidences indebtedness incurred under, and
is subject to the terms and provisions of, the Amended and Restated Credit
Agreement, dated as of August 23, 1996, as amended (herein, as further amended
or otherwise modified from time to time, called the "Credit Agreement"), between
the undersigned, various banks (including the payee) and Bank of America
National Trust and Savings Association, as agent for the Banks, to which Credit
Agreement reference is hereby made for a statement of the terms and provisions
under which this Restated Revolving Note may or must be paid prior to its due
date or may have its due date accelerated. Terms used but not otherwise defined
herein are used herein as defined in the Credit Agreement.
In addition to and not in limitation of the foregoing and the
provisions of the Credit Agreement, the undersigned further agrees, subject only
to any limitation imposed by applicable law, to pay all reasonable expenses,
including reasonable attorneys' fees and legal expenses, incurred by the holder
of this Restated Revolving Note in endeavoring to collect any amounts payable
hereunder which are not paid when due, whether by acceleration or otherwise.
This Restated Revolving Note is made under and governed by the internal
laws of the State of Illinois.
<PAGE>
This Restated Revolving Note is issued in replacement of a Restated
Revolving Note issued pursuant to the Credit Agreement on December 31, 1997. The
indebtedness evidenced by this Note represents an extension and renewal of
indebtedness owing to the payee.
ALLIED PRODUCTS CORPORATION
By: ___________________________
Title: ________________________
<PAGE>
Schedule Attached to Restated Revolving Note dated June 30, 1998 of THE COMPANY
payable to the order of Bank of America National Trust and Savings Association
Date and Amount Date and Amount
of Revolving of Repayment or
Loan or of of Conversion
Conversion from into another Unpaid Notation Made
another type of type of Interest Principal by
Revolving Loan Revolving Loan Period Balance
1. FLOATING RATE LOANS
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
2. EURODOLLAR LOANS
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
<PAGE>
RESTATED REVOLVING NOTE
$ 43,500,000 June 30, 1998
Chicago, Illinois
On or before the Revolving Termination Date (as defined in the Credit
Agreement referred to below), the undersigned, for value received, promises to
pay to the order of LaSalle National Bank (the "Bank"), at its offices located
at 120 South LaSalle Street, Chicago, Illinois 60603, Forty-Three Million Five
Hundred Thousand Dollars ($43,500,000) or, if less, the aggregate unpaid amount
of all Revolving Loans made by the payee to the undersigned pursuant to the
Credit Agreement (as shown in the records of the payee or, at the payee's
option, on the schedule attached hereto and any continuation thereof).
The undersigned further promises to pay interest on the unpaid
principal amount of each Revolving Loan evidenced hereby from the date of such
Revolving Loan until such Revolving Loan is paid in full, payable at the rate(s)
and at the time(s) set forth in the Credit Agreement. Payments of both principal
and interest are to be made in lawful money of the United States of America.
This Restated Revolving Note evidences indebtedness incurred under, and
is subject to the terms and provisions of, the Amended and Restated Credit
Agreement, dated as of August 23, 1996, as amended (herein, as further amended
or otherwise modified from time to time, called the "Credit Agreement"), between
the undersigned, various banks (including the payee) and Bank of America
National Trust and Savings Association, as agent for the Banks, to which Credit
Agreement reference is hereby made for a statement of the terms and provisions
under which this Restated Revolving Note may or must be paid prior to its due
date or may have its due date accelerated. Terms used but not otherwise defined
herein are used herein as defined in the Credit Agreement.
In addition to and not in limitation of the foregoing and the
provisions of the Credit Agreement, the undersigned further agrees, subject only
to any limitation imposed by applicable law, to pay all reasonable expenses,
including reasonable attorneys' fees and legal expenses, incurred by the holder
of this Restated Revolving Note in endeavoring to collect any amounts payable
hereunder which are not paid when due, whether by acceleration or otherwise.
This Restated Revolving Note is made under and governed by the internal
laws of the State of Illinois.
<PAGE>
This Restated Revolving Note is issued in replacement of a Restated
Revolving Note issued pursuant to the Credit Agreement on December 31, 1997. The
indebtedness evidenced by this Note represents an extension and renewal of
indebtedness owing to the payee.
ALLIED PRODUCTS CORPORATION
By: ___________________________
Title: ________________________
<PAGE>
Schedule Attached to Restated Revolving Note dated June 30, 1998 of THE COMPANY
payable to the order of LaSalle National Bank
Date and Amount Date and Amount
of Revolving of Repayment or
Loan or of of Conversion
Conversion from into another Unpaid Notation Made
another type of type of Interest Principal by
Revolving Loan Revolving Loan Period Balance
1. FLOATING RATE LOANS
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
2. EURODOLLAR LOANS
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS STATEMENT CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AT JUNE 30, 1998 AND THE CONSOLIDATED STATEMENT OF
INCOME AND THE CONSOLIDATED STATEMENT OF CASH FLOW FOR THE SIX MONTHS ENDED JUNE
30, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<CIK> 0000003941
<NAME> ALLIED PRODUCTS CORPORATION
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<EXCHANGE-RATE> 1.000
<CASH> 489
<SECURITIES> 0
<RECEIVABLES> 68,376
<ALLOWANCES> 652
<INVENTORY> 125,189
<CURRENT-ASSETS> 206,708
<PP&E> 111,848
<DEPRECIATION> 46,285
<TOTAL-ASSETS> 286,873
<CURRENT-LIABILITIES> 169,570
<BONDS> 1,235
0
0
<COMMON> 140
<OTHER-SE> 100,387
<TOTAL-LIABILITY-AND-EQUITY> 286,873
<SALES> 151,816
<TOTAL-REVENUES> 151,816
<CGS> 113,446
<TOTAL-COSTS> 113,446
<OTHER-EXPENSES> 19,322
<LOSS-PROVISION> 103
<INTEREST-EXPENSE> 2,537
<INCOME-PRETAX> 19,048
<INCOME-TAX> 6,617
<INCOME-CONTINUING> 12,431
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,431
<EPS-BASIC> 1.04
<EPS-DILUTED> 1.03
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
***RESTATED FINANCIAL DATA SCHEDULE***
- --------------------------------------
THIS STATEMENT CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AT JUNE 30, 1997 AND THE CONSOLIDATED STATEMENT OF
INCOME AND THE CONSOLIDATED STATEMENT OF CASH FLOW FOR THE SIX MONTHS ENDED JUNE
30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<CIK> 0000003941
<NAME> ALLIED PRODUCTS CORPORATION
<MULTIPLIER> 1,000
<CURRENCY> U.S.DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<EXCHANGE-RATE> 1.000
<CASH> 1,168
<SECURITIES> 0
<RECEIVABLES> 75,669
<ALLOWANCES> 680
<INVENTORY> 60,668
<CURRENT-ASSETS> 151,533
<PP&E> 94,698
<DEPRECIATION> 51,865
<TOTAL-ASSETS> 202,972
<CURRENT-LIABILITIES> 101,468
<BONDS> 393
0
0
<COMMON> 94
<OTHER-SE> 90,577
<TOTAL-LIABILITY-AND-EQUITY> 202,972
<SALES> 149,783
<TOTAL-REVENUES> 149,873
<CGS> 113,188
<TOTAL-COSTS> 113,188
<OTHER-EXPENSES> 19,548
<LOSS-PROVISION> 76
<INTEREST-EXPENSE> 1,652
<INCOME-PRETAX> 17,047
<INCOME-TAX> 6,142
<INCOME-CONTINUING> 10,905
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,905
<EPS-BASIC> .89
<EPS-DILUTED> .88
</TABLE>
