<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended June 29, 1996
- -----------------------------------
Commission file number 1-6687
JOHNSTON INDUSTRIES, INC.
-------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Delaware 11-1749980
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
105 Thirteenth Street, Columbus, Georgia 31901
(Address of principal executive offices) (Zip Code)
(706) 641-3140
--------------
(Registrant's telephone number, including area code)
N/A
------------------------------------------------------------------------
(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 the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X] No [ ]
The number of shares outstanding of the Registrant's Common Stock as of June
29, 1996 was 10,362,874 shares.
<PAGE> 2
JOHNSTON INDUSTRIES, INC. AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION
INDEX
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS:
Condensed Consolidated Balance Sheets
Condensed Consolidated Statements Of Income
Condensed Consolidated Statements Of Cash Flows
Notes To Condensed Consolidated Financial Statements
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
2
<PAGE> 3
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JOHNSTON INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands of Dollars, Except Share and Per Share Amounts)
<TABLE>
<CAPTION>
JUNE 29, 1996 DECEMBER 30, 1995
------------- -----------------
(Unaudited)
ASSETS
<S> <C> <C>
Current Assets
Cash and Cash Equivalents $ 5,591 $ 1,471
Accounts and Notes Receivable
(Less Allowance for Doubtful Accounts
of $1,984 and $1,772) 45,254 42,218
Income Taxes Receivable 1,143 1,310
Inventories 58,951 52,951
Prepaid Expenses and Other 2,615 763
Deferred Income Taxes 951 919
Assets Held for Sale 5,472 5,462
Net Assets of Discontinued Operations 6,022 17,793
-------- --------
Total Current Assets 125,999 122,887
Property, Plant, and Equipment - Net 128,472 109,572
Intangible Asset - Pension 2,464 2,464
Goodwill 13,462
Other Assets 5,087 5,616
-------- --------
Total Assets $275,484 $240,539
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Current Maturities of Long-Term Debt $ 2,278 $ 206
Accounts Payable 29,528 26,901
Accrued Expenses 18,492 12,422
-------- --------
Total Current Liabilities 50,298 39,529
Long-Term Debt 141,163 110,758
Other Liabilities 14,195 13,791
Deferred Income Taxes 8,562 3,314
Commitments and Contingencies
Minority Interest in Consolidated Subsidiary 17,968
Stockholders' Equity:
Preferred Stock, par value $.01 per share;
Authorized 3,000,000 shares; Issued
325,000 shares 3
Common Stock, par value $.10 per share;
Authorized 20,000,000 shares; Issued
12,449,391 and 12,426,891 shares 1,250 1,243
Additional Paid-In Capital 23,655 17,293
Retained Earnings 48,461 46,505
-------- --------
Total 73,369 65,041
Less Treasury Stock, 2,086,517 and 1,861,912
shares at cost (10,349) (8,108)
Less Minimum Pension Liability Adjustment, Net
of Tax Benefit (1,754) (1,754)
-------- --------
Stockholders' Equity 61,266 55,179
-------- --------
Total Liabilities and Stockholders' Equity $275,484 $240,539
======== ========
</TABLE>
See notes to condensed consolidated financial statements.
3
<PAGE> 4
JOHNSTON INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(In Thousands of Dollars, Except Per Share Amounts)
<TABLE>
<CAPTION>
FOR THE THREE FOR THE SIX
MONTHS ENDED MONTHS ENDED
JUNE 29, 1996 JUNE 30, 1995 JUNE 29, 1996 JUNE 30, 1995
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Net Sales $ 81,743 $ 86,773 $ 165,773 $ 177,309
-------- -------- --------- --------
Costs and Expenses:
Cost of Sales, excluding Depreciation and Amortization 67,510 71,368 136,267 143,913
Selling, General, and Administrative 6,577 6,845 13,130 13,537
Restructuring Charges - - 2,252 -
Depreciation and Amortization 5,174 4,027 9,786 8,121
-------- -------- -------- --------
Total Costs and Expenses 79,261 82,240 161,435 165,571
-------- -------- -------- --------
Income from Operations 2,482 4,533 4,338 11,738
Other Expenses (Income):
Interest Expense 2,885 2,041 5,187 4,160
Interest Income (116) (76) (139) (101)
Other - Net (437) 1,489 (292) 1,623
-------- -------- -------- --------
Total Other Expenses 2,332 3,454 4,756 5,682
Equity in Earnings (Loss) of Equity Investments - 77 - (40)
-------- -------- -------- --------
Income (Loss) from Continuing Operations Before
Tax Provision, Minority Interest in Consolidated
Subsidiary, and Extraordinary Item 150 1,156 (418) 6,016
Provision (Benefit) for Income Taxes 244 592 (403) 2,593
Income (Loss) of Minority Interest in Consolidated
Subsidiary from Continuing Operations - (204) 1,200 (535)
-------- -------- -------- --------
Income (Loss) from Continuing Operations (94) 360 1,185 2,888
DISCONTINUED OPERATIONS:
Income from Discontinued Operations of Jupiter National
(less applicable income taxes of $839 and $1,680 for the three
months and $5,107 and $1,925 for the six months, respectively)
net of minority interest in income of $0 and $982 for the three
months and $1,083 and $1,165 for the six months, respectively 2,441 686 4,889 791
Loss on Disposal of Jupiter National, including
provision of $300 for operating losses during phase-
out period (less applicable income tax benefit of $2,801) - - (1,479) -
-------- -------- -------- --------
Income from Discontinued Operations 2,441 686 3,410 791
-------- -------- -------- --------
EXTRAORDINARY ITEM, (less applicable income taxes of
$323), - Loss on Early Extinguishment of Debt - - 527 -
-------- -------- -------- --------
Net Income 2,347 1,046 4,068 3,679
Preferred Dividends 41 - 43 -
======== ======== ======== ========
Earnings Applicable to Common Stock $ 2,306 $ 1,046 $ 4,025 $ 3,679
======== ======== ======== ========
</TABLE>
4
<PAGE> 5
JOHNSTON INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)- CONTINUED
(In Thousands of Dollars, Except Per Share Amounts)
<TABLE>
<CAPTION>
FOR THE THREE FOR THE SIX
MONTHS ENDED MONTHS ENDED
JUNE 29, 1996 JUNE 30, 1995 JUNE 29, 1996 JUNE 30, 1995
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Earnings (Loss) Per Share:
Continuing Operations $ (.01) $ .03 $ .11 $ .27
Discontinued Operations .22 .07 .31 .07
Extraordinary Item - - (.05) -
-------- ---------- ----------- --------
Total $ .21 $ .10 $ .37 $ .34
======== ========== =========== ========
Dividends Per Share $ .10 $ .10 $ .20 $ .20
======== ========== =========== ========
Weighted Average Number of Common
and Common Equivalent Shares Outstanding 10,731 10,654 10,791 10,667
======== ========== =========== ========
</TABLE>
See notes to condensed consolidated financial statements.
5
<PAGE> 6
JOHNSTON INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In Thousands of Dollars)
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED
-------------------------------------
JUNE 29, 1996 JUNE 30, 1995
----------------- ------------------
<S> <C> <C>
Cash Flows from Operating Activities:
Net Income from Continuing Operations $ 1,185 $ 2,888
--------- ---------
Adjustments to Reconcile Net Income from Continuing
Operations to Net Cash from Operating Activities:
Depreciation and Amortization 9,786 8,121
Provision for Bad Debts (19) 8
Undistributed Loss in Unconsolidated Affiliates 40
(Gain) Loss on Sales of Assets 86 (1)
(Increase) Decrease - Assets:
Accounts Receivable (5,312) (9,980)
Inventories 2,506 10,295
Deferred Income Taxes 290 -
Other Assets (1,234) (400)
Increase (Decrease) - Liabilities:
Accounts Payable 6,337 (1,232)
Accrued Expenses 4,658 (117)
Income Taxes Payable 1,734 (1,240)
Deferred Income Taxes (709)
Other Liabilities 413 2,483
(Loss) Income in Minority Interest of Consolidated Subsidiary (1,200) 535
Other - Net 52
--------- ---------
Total Adjustments 18,045 7,855
--------- ---------
Net Cash Provided by Continuing Operations 19,230 10,743
--------- ---------
Discontinued Operations:
Income from Discontinued Operations 4,889 791
Loss on Disposal of Discontinued Operations (1,479) -
Cash Provided by Discontinued Operations 27,225 2,287
Items Not Affecting Cash, Net (16,106) (5,018)
--------- ---------
Net Cash Provided by Discontinued Operations 14,529 (1,940)
--------- ---------
Net Cash Provided by Operating Activities 33,759 8,803
--------- ---------
Cash Flows From Investing Activities:
Additions to Property, Plant, and Equipment (11,227) (15,630)
Increase (Decrease) in Non-Operating Accounts Payable (4,261) 5,784
Purchase of Minority Interest in Jupiter National (37,693) -
Purchase of T. J. Beall, Net of Cash Acquired 333 -
Purchases of Investments (4,064)
--------- ---------
Net Cash Used In Investing Activities (52,848) (13,910)
--------- ---------
</TABLE>
6
<PAGE> 7
JOHNSTON INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - CONTINUED
(In Thousands of Dollars)
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED
------------
JUNE 29, 1996 JUNE 30, 1995
------------- -------------
<S> <C> <C>
Cash Flows From Financing Activities:
Principal Payments of Long-Term Debt (107,297) (4,065)
Proceeds From Issuance of Long-Term Debt 148,795 13,138
Payments Under Line-of-Credit Agreements (18,000) (18,050)
Borrowings Under Line-of-Credit Agreements 4,750 17,100
Purchase of Treasury Stock, at Cost (2,241) (180)
Proceeds from Issuance of Common Stock 164 48
Extraordinary Item, Loss on Extinguishment of Debt (850) -
Dividends Paid (2,112) (2,113)
-------- -------
Net Cash Provided by Financing Activities 23,209 5,878
-------- -------
Net Increase in Cash and Cash Equivalents 4,120 771
Cash and Cash Equivalents, Beginning of Period 1,471 3,323
-------- -------
Cash and Cash Equivalents, End of Period $ 5,591 $ 4,094
======== =======
Supplemental Disclosures of Cash Flow Information:
Interest Paid $ 3,753 $ 4,911
Income Taxes Paid $ 3,143 $ 2,103
</TABLE>
Supplemental Disclosures of Non Cash Investing Information:
On March 25, 1996, The Company acquired T. J. Beall in exchange for
325,000 shares of preferred stock at a stated value of $10 per share.
In connection with the March 28, 1996 acquisition of the Jupiter National,
Inc. minority interest, The Company issued 410,514 incentive
stock options and 99,816 non-qualified stock options with an aggregate value
of $2,958,439 in exchange for certain Jupiter options having a similar
value.
See notes to condensed consolidated financial statements.
7
<PAGE> 8
JOHNSTON INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying condensed consolidated financial statements for the six
months ended June 29, 1996 and June 30, 1995 are unaudited. The June 30,
1995 statements included the accounts of Johnston Industries, Inc.
("Johnston"), its wholly owned subsidiaries, Southern Phenix Textiles,
Inc. ("Southern Phenix") and Opp and Micolas Mills, Inc. ("Opp and
Micolas"), and its majority-owned subsidiary, Jupiter National, Inc.
("Jupiter") and Jupiter's wholly-owned subsidiaries, Wellington Sears
Company ("Wellington") and Greater Washington Investments, Inc. ("GWI").
On April 3, 1996, after the acquisition by Johnston of the minority
interest in Jupiter, Jupiter was merged into Opp and Micolas. At the
close of business on June 29, 1996, the name of Opp and Micolas was
changed to Johnston Industries Alabama, Inc. ("JI Alabama"). Southern
Phenix and Wellington were merged into JI Alabama and Johnston Industries
Composite Reinforcements, Inc. ("JICR" formerly Tech Tech Textiles, USA)
and T. J. Beall Company ("TJB") became subsidiaries of JI Alabama.
The June 29, 1996 statements include the accounts of Johnston, its direct
wholly owned subsidiary, JI Alabama and its indirect wholly owned
subsidiaries, JICR, TJB, and GWI (collectively, the "Company").
In the opinion of management, the unaudited condensed consolidated
financial statements reflect all adjustments, consisting only of normal
recurring accruals, necessary for a fair presentation of the results for
the periods presented. Operating results for the quarter and six months
ended June 29, 1996 are not necessarily indicative of the results that
may be expected for the entire year. The condensed consolidated
financial statements included herein should be read in conjunction with
the financial statements and notes thereto included in the Company's
Transition Report on Form 10-K for the period July 1, 1995 to December
30, 1995 and in the Company's Quarterly Report on Form 10-Q for the
quarter ended March 30, 1996. Reference is made to the accounting
policies of the Company described in the notes to consolidated financial
statements included in the Company's Transition Report on Form 10-K for
the period July 1, 1995 to December 30, 1995.
2. JUPITER NATIONAL
Acquisition of Minority Interest
On March 28, 1996, the Company consummated the acquisition of the
remaining outstanding shares of Jupiter at a purchase price of $33.97 per
share. Total purchase consideration was approximately $45,950,000 which
included payments of $39,000,000 to stockholders, certain holders of
options to purchase common stock and the assumption of certain Jupiter
options by Johnston. Other acquisition costs included approximately
$5,488,000 of merger related expenses paid by Jupiter less a reduction
for Johnston equity-related deferred taxes of $1,432,000. The
acquisition was accounted for under the purchase method of accounting as
a "step acquisition"
8
<PAGE> 9
resulting in a partial step-up in Jupiter's tangible assets. The Company
recorded initial goodwill of $11,762,000 which is to be amortized over 20
years.
The following represents the results of operations on a pro forma basis
assuming Johnston had owned 100% of Jupiter as of January 1, 1995. This
pro forma information is provided for information purposes only. Such pro
forma information is based on historical information and is not
necessarily indicative of the actual results that would have been achieved
had Johnston purchased the additional shares of Jupiter on January 1,
1995, nor is it indicative of future results of operations:
<TABLE>
<CAPTION>
Six Months Ended
----------------
June 29, 1996 June 30, 1995
------------- -------------
<S> <C> <C>
Net Sales $165,773,000 $177,309,000
Earnings (Loss) from Continuing Operations (421,000) 2,888,000
Earnings (Loss) from Discontinued Operations 4,647,000 (811,000)
Loss from Extraordinary Item (527,000) (527,000)
------------ ------------
Earnings Applicable to Common Stock $ 3,699,000 $ 1,550,000
============ ============
Earnings (Loss) Per Share
Continuing Operations $ (.04) $ .27
Discontinued Operations .43 .07
Extraordinary Item (.05) (.05)
------------ ------------
Total $ .34 $ .15
============ ============
</TABLE>
Discontinuance of the Venture Capital Segment
The Company's management has made the decision to discontinue the venture
capital investment segment of Jupiter's operations and plans to sell all
portfolio investments within one year. The Company's consolidated
financial statements have been modified to separate the discontinued
operations from those operations which will continue. The net assets of
the discontinued segment are reflected as a current asset on the
condensed consolidated balance sheet. The financial statements for the
prior periods have been restated in order to be on a comparable basis.
Income before taxes from discontinued operations includes net realized
and unrealized gains from investments of approximately $13,928,000 less
interest expense and operating expenses. The gains from investments are
mainly due to gains realized on the sale of the Company's investment in
EMC Corporation, Viasoft, Fuisz and Zoll Medical during the six months
ended June 29, 1996.
The loss before income taxes for the disposal of the discontinued
operations include a $4,830,000 provision for anticipated losses on
disposal of the remaining portfolio investments and related debt as well
as a $300,000 provision for future operating costs.
3. RESTRUCTURING CHARGES
In February 1996, the Company announced that it was closing Wellington's
Tarboro facility ("Tarboro") in an effort to realign and consolidate
certain operations, concentrate capital resources on more profitable
operations and better position itself to achieve its strategic corporate
objectives. All activities related to the closing are expected to be
completed within one year of the announcement. In December 1995, the
Company recorded a write down of $6,532,000 for an impairment in the
value of Tarboro's property, plant and equipment. During
9
<PAGE> 10
the six months ended June 29, 1996, the Company recorded restructuring
charges totaling $4,118,000 to cover anticipated losses including
$1,619,000 related to write-downs of accounts receivable and inventory,
$834,000 for severance costs and $1,665,000 for other costs related to the
operation. Of these costs, $1,866,000, representing the minority interest
(the portion of Wellington not owned by Johnston), has been recorded as
part of the cost of acquiring Jupiter, with the remaining $2,252,000
recorded as an expense on the consolidated statement of income.
The closing of the Tarboro facility will effect substantially all 171
employees with various job descriptions at the facility. Through June
29, 1996 approximately $456,000 have been charged to the reserves
established for the closing. These costs included $174,000 related to
severance costs and $282,000 related to other costs.
4. INVENTORIES
Inventories consisted of the following at June 29, 1996 and December 30,
1995:
<TABLE>
<CAPTION>
JUNE 29, 1996 DECEMBER 30, 1995
------------- -----------------
<S> <C> <C>
Finished Goods $23,742,000 $22,982,000
Work-In Process 12,934,000 15,595,000
Raw Materials and Supplies 22,275,000 14,374,000
----------- -----------
Total $58,951,000 $52,951,000
=========== ===========
</TABLE>
5. LONG-TERM FINANCING AND SHORT-TERM BORROWINGS
Long-term debt and short-term borrowings consisted of the following at
June 29, 1996 and December 30, 1995:
<TABLE>
<CAPTION>
JUNE 29, 1996 DECEMBER 30, 1995
------------- -----------------
<S> <C> <C>
Johnston Industries, Inc.
Lines of Credit Borrowings $ 0 $ 13,250,000
Term Loans 74,500,000 0
Revolving Credit Loans 67,174,000 45,000,000
Purchase Money Mortgage Debt 1,130,000 1,174,000
------------ ------------
142,804,000 59,424,000
Wellington Sears Company
Revolving Credit Loan 0 27,471,000
Term Loan 0 18,594,000
Equipment Loans 0 4,806,000
Amounts Due Former Affiliates
of Polylok 23,000 13,000
Other Debt 614,000 656,000
------------ ------------
637,000 51,540,000
------------ ------------
Total 143,441,000 110,964,000
Less Current Maturities (2,278,000) (206,000)
------------ ------------
$141,163,000 $110,758,000
============ ============
</TABLE>
10
<PAGE> 11
Johnston Industries, Inc.
Credit Agreement
On March 28, 1996, the Company signed a new credit agreement with a
syndicate of banks (the "Credit Agreement") to provide aggregate loans of
up to $160,000,000 to repay existing indebtedness, to provide funds used
to acquire the remaining outstanding shares of the common stock of
Jupiter and to finance working capital needs. The Credit Agreement
provides for revolving credit loans (the "Revolver") of up to
$80,000,000, a term loan for $40,000,000 ("Term Loan A") and a term loan
for an additional $40,000,000 ("Term Loan B"). Borrowings under the
Revolver and the Term Loan A mature on March 28, 2001 and Term Loan B
matures on March 28, 2003. The term loans are repayable in quarterly
installments starting in 1997.
Covenants and Restrictions
Under the terms of the Credit Agreement, substantially all assets are
pledged as collateral for the borrowings under the Credit Agreement. The
Credit Agreement requires the Company to maintain certain financial ratios
and specified levels of tangible net worth. The Credit Agreement places a
limit on the Company's level of capital expenditures and type of mergers
or acquisitions. The Credit Agreement permits the Company to pay
dividends on its Common Stock provided it is in compliance with various
covenants and provisions contained therein, which among other things limit
dividends and restrict investments to the lesser of (x) 20% of total
assets of the Company, on a fully consolidated basis, as of the date of
determination thereof, or (y) $5,000,000 for the period commencing on
January 1, 1996 and ending on December 31, 1996 or (z) $5,000,000 plus 50%
of cumulative consolidated net income for the period commencing January 1,
1997, minus 100% of cumulative consolidated net loss for the consolidated
entities for such period, as calculated on a cumulative basis as of the
end of each fiscal quarter of the consolidated entities with reference to
the financial statements for such quarter.
Prior to June 28, 1996, the Credit Agreement included a covenant which
required the Company to maintain a minimum tangible net worth of $50
million. Such covenant was entered into by the parties based on certain
assumptions with respect to the accounting treatment of the acquisition
of Jupiter. In preparing its quarterly financial information, the
Company made adjustments to its purchase accounting treatment of the
Jupiter acquisition due to certain step acquisition accounting
requirements. Such adjustments resulted in an increase in goodwill and a
decrease in tangible net worth to $45.9 million. On June 28, 1996, the
syndicate of banks amended the covenant to a minimum tangible net worth
of $44 million and waived the event of non-compliance. As of June 29,
1996, the Company is in compliance with such covenant.
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<PAGE> 12
6. FINANCIAL INSTRUMENTS
Interest Rate Swaps
In order to minimize the Company's exposure to the uncertainty of
floating interest rates, the Credit Agreement requires the Company to
maintain interest rate protection agreements covering a minimum of 50% of
the principal amount outstanding under the term loans, as long as these
loans exceed an aggregate of $40 million. Under the Credit Agreement,
the Company may elect to pay interest based on either the prime rate plus
various margins or the LIBOR rate plus various margins. Effective June
7, 1996, the Company entered into interest rate swap agreements with
several lenders whereby it exchanged its floating rate obligations under
the Credit Agreement on $38 million notional principal amount for a fixed
rate payment obligation of 6.705% for a term of three years, with an
option to renew for an additional two years. Prior to the interest rate
swap agreements, the Company was paying interest based on a floating rate
of 5.535%, based on a three month LIBOR rate.
Cotton Put Contracts
Depending on the conditions within the cotton market, the Company may
from time to time purchase cotton puts to reduce or eliminate the risk of
price fluctuation for its operations using cotton as a raw material.
During the quarter ended June 29, 1996, the Company executed two
transactions in which it bought and sold cotton puts realizing a pre-tax
profit of $626,000. The gains are included in Other-Net Income on the
condensed consolidated statements of income. At June 29, 1996, the
Company owned 900 cotton put contracts with a cost and fair value of
approximately $270,000 and maturity dates of December 6, 1996. As
sales contracts are completed, puts covering an analogous amount of raw
cotton are to be sold. The value of puts owned will be adjusted to
market value during the period such puts are outstanding.
7. EARNINGS PER SHARE
Earnings per share for the six months ended June 29, 1996 and June 30,
1995 were calculated based on the weighted average number of shares of
common and common equivalent shares outstanding during the periods.
Preferred dividends were deducted from net income to compute earnings
applicable to common stock. Additionally, earnings (loss) per share were
computed for continuing operations, discontinued operations, and
extraordinary item.
12
<PAGE> 13
8. INCOME TAXES
The provision for income taxes from continuing operations as computed
under Financial Accounting Standards Board Standard No. 109, "Accounting
for Income Taxes", is comprised of the following for the six months ended
June 29, 1996 and June 30, 1995:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Federal:
Current $ (569,000) $1,430,000
Deferred 52,000 859,000
---------- ----------
(517,000) 2,289,000
State:
Current 139,000 186,000
Deferred (25,000) 118,000
---------- ----------
114,000 304,000
Provision (benefit) for income taxes $ (403,000) $2,593,000
========== ==========
</TABLE>
The reconciliation of the Company's effective income tax rate to the
Federal statutory rate from continuing operations of 34% for the six
months ended June 29, 1996 and June 30, 1995 follows:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Federal income taxes at statutory rate $ (142,000) $2,045,000
State income taxes, net of Federal tax benefit 88,000 305,000
Equity in Income of Majority-Owned Subsidiary (508,000) 183,000
Amortization of Goodwill 55,000
Other - Net 104,000 60,000
---------- ----------
$ (403,000) $2,593,000
---------- ----------
Effective rate 96.4% 43.1%
========== ==========
</TABLE>
The significant equity loss from continuing operations has distorted the
1996 effective rate which is usually comparable with the effective rate
for the same period of the prior year.
9. COMMITMENTS AND CONTINGENCIES
Former Steel Fabrication Operations
In 1981, a subsidiary of the Company closed a steel fabricating facility
in Pennsylvania which it had operated before its closing. The facility
was purchased from the Company and again operated as a steel fabricating
facility by the new owner for approximately two years and thereafter was
purchased by the present owner who also operated it as a steel
fabricating facility for about three years. Since that time, the facility
has been closed.
In February 1994, the operators of the facility filed a complaint in the
United States District Court, Eastern District of Pennsylvania, Bethlehem
Iron Works, Inc. and Steel Structures Corp. vs. Lewis
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<PAGE> 14
Industries, Inc., Charles P. Lewis and Johnston Industries, Inc. No.
94-CV-0752, against previous owners and operators of the facility,
including the Company, claiming contamination by a former Johnston
subsidiary which had operated at the facility before its close in 1981.
The complaint seeks to hold predecessors in title and former operators at
the site responsible for costs alleged to have been incurred to remediate
the plant site by the present owners. Such costs are alleged to be $3.5
million, however, the Company disputes that such costs were incurred for
response and believes that it has presented meritorious defenses against
the imposition of such costs. A non-jury trial began in the United States
District Court for the Eastern District of Pennsylvania on July 20, 1995
and was concluded on August 25, 1995. Post trial motions and briefs by
all the parties have been filed.
In June 1995, the Company established a reserve of $1,000,000 for costs
which it believed could be incurred to resolve the dispute. Based upon
subsequent events, including the trial and the discovery that certain
co-defendants had no assets or had been through bankruptcy proceedings,
and based upon the fact that the Court has not dismissed the plaintiff's
claims, the Company's management determined to accrue an additional
$1,000,000 in the three months ended December 30, 1995, thereby
increasing the reserve to $2,000,000 as of December 30, 1995. Management
continues to dispute the apportionment of any of these costs against the
Company. The loss provision is included in Other-net in the Statement of
Operations. In addition, the Company has established a reserve in the
amount of $200,000 as an estimate of potential additional legal costs and
other costs to be incurred subsequent to December 30, 1995, in connection
with the defense of this matter. Although management believes that the
accruals described above are reasonable based upon the available facts as
of the respective balance sheet dates, and that the accrual as of June
29, 1996 is sufficient to cover the estimated costs of such matter, the
ultimate outcome of the litigation cannot presently be determined.
General
The Company is periodically involved in legal proceedings arising out of
the ordinary conduct of its business. Management does not expect that
any of these legal proceedings or the legal proceedings discussed above,
will have a material adverse effect on the Company's consolidated
financial statements or consolidated results of operations.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
GENERAL
Johnston Industries, Inc. ("Johnston") is a consolidated entity which includes
its direct wholly owned operating subsidiary, Johnston Industries Alabama,
Inc., and its indirect wholly owned subsidiaries, Johnston Industries Composite
Reinforcements, Inc. ("JICR") (formerly Tech Textiles, USA), T.J. Beall Company
("TJB"), and Greater Washington Investments, Inc. ("GWI") (collectively, the
"Company").
The June 30, 1995 consolidated financial statements included the accounts of
Johnston, its wholly owned subsidiaries, Southern Phenix Textiles, Inc.
("Southern Phenix") and Opp and Micolas Mills, Inc. ("Opp and Micolas"), and
its majority-owned subsidiary, Jupiter National, Inc. ("Jupiter") and Jupiter's
wholly-owned subsidiaries, Wellington Sears Company ("Wellington") and Greater
Washington Investments, Inc. ("GWI"), (collectively, the "Company").
On March 28, 1996, the Company acquired the outstanding minority interest in
Jupiter for a total purchase consideration of $45,950,000 which included
payments of $39,000,000 to stockholders. Thereafter, on April 3, 1996, Jupiter
was merged into Opp and Micolas. At the close of business on June 29, 1996,
the name of Opp and Micolas was changed to Johnston Industries Alabama, Inc.
("JI Alabama"), Southern Phenix and Wellington were merged into JI Alabama, and
Johnston Industries Composite Reinforcements, Inc. ("JICR" formerly Tech Tech
Textiles, USA) and T. J. Beall Company ("TJB") became subsidiaries of JI
Alabama.
Management's operating strategy calls for the divestiture of all non-textile
investments, consisting primarily of the investment portfolio acquired in the
merger, in order to allow management to focus its attention on the Company's
core textile operations. Accordingly, all non-textile investments and
operations are now held for disposition and the portfolio investment business
is in the process of being marketed and sold. Through June 30, 1996, the
Company had sold $33,456,000 of publicly traded portfolio investments. Such
investment portfolio business has been classified as discontinued operations
because such business formerly represented an operating segment of the Company.
All prior period financial information has been restated in order to reflect
Jupiter and GWI as discontinued operations.
While no assurances can be given, management believes the acquisition of the
minority interest in Jupiter, tactical acquisitions (such as TJB acquisition),
the shutdown of Wellington's unprofitable Tarboro facility (discussed below),
and the disposition of all non-textile operations, combined with continued
implementation of the Company's core operating strategy of product innovation,
capital investment, and aggressive marketing, will result in operational
synergies and will enhance the Company's growth and performance potential. The
effect of such operational synergies will, however, be realized over time.
RESULTS OF OPERATIONS
Results for the three months and six months ended June 29, 1996 improved from
the transition period ended December 30, 1995, but declined as compared to the
comparable periods ended June 30, 1995. Such results for the three months and
six months ended June 29, 1996 reflected continued weakness in certain segments
of the economy, which resulted in comparatively weak sales versus the prior
quarterly period and slightly higher fixed costs as a percent of sales. The
improvement compared to the transition period primarily reflected some
stabilization of raw material costs. Results for the six months ended June 29,
1996 were also
15
<PAGE> 16
adversely affected by restructuring charges in connection with the shut down of
Wellington's Tarboro facility which were recorded in the quarter ended March 30,
1996.
Net sales for the three months ended June 29, 1996 were $81,743,000 compared to
$86,773,000 for the same period in the prior year. The decrease was mainly
attributable to a net decline in sales. Sales declines of $6,936,000 and
$2,094,000 for the Industrial and Home Products groups, respectively, were
partially offset by sales gains of $1,470,000 and $1,944,000 in
Upholstery/Furniture and Specialty Markets (see discussion of JICR below with
respect to Specialty Markets). Net sales for the six months ended June 29,
1996 were $165,773,000 compared to $177,309,000 for the six months ended June
30, 1995. The underlying changes by fabric market group included declines in:
Automotive - $1,368,000; Industrial - $11,194,000 and Apparel - $1,754,000
which were partially offset by gains in: Specialty Markets - $1,079,000. The
decline in sales of Industrial fabrics resulted from weakness in demand for
abrasives and the Company's decision to exit markets for duck and filtration
fabrics which were produced at JI Alabama's Langdale Plant. The duck and these
particular filtration fabrics were low margin products manufactured on looms
with old fly shuttle technology. Exiting these markets is in keeping with
management's core operating strategy of product innovation, and capital
investment in state-of-the-art technology, and focus on higher margin markets.
Discontinued production of these particular fabrics is not expected to have a
material impact on the Company's operations at the Langdale facility.
Consistent with the foregoing, sales of low margin Apparel fabrics continue to
decline and now represent less than 2 1/2% of the Company's sales. The
Company's management continues to de-emphasize fabrics and markets with low
margins, such as duck and Apparel while focusing on expanding sales of the high
margin products and designs in the decorative fabrics sector of the home
furnishings markets.
Specialty markets sales included, net sales of $2,407,000 and
$4,729,000 for JICR were recorded respectively in the three months and six
months ended June 29, 1996. Such latter period is reflective of the full
consolidation of JICR into the Company's operations during the transition
period ended December 30, 1995. At June 29, 1996, the sales backlog of the
Company was approximately $ 73,964,000 compared to sales backlog of
approximately $64,399,000 at December 30, 1995 and $63,254,000 at June 30,
1995. The backlog at June 29, 1996 includes approximately $12,914,000 for T.J.
Beall which would not be reflected in the June and December 1995 amounts since
these periods preceded the acquisition of T.J. Beall. Management believes the
comparable decrease in sales backlog (after excluding the T.J. Beall backlog)
is representative of continued softness in the markets served by the Company.
Cost of sales decreased in the three months ended June 29, 1996 to $67,510,000
from $71,368,000 for the comparable 1995 period primarily as a result of
decreased sales discussed above. Gross margin was approximately 17.4% for the
three months ended June 29, 1996 compared to approximately 17.8% for the three
months ended June 30, 1995 and was approximately 17.8% for the six months ended
June 29, 1996 compared to approximately 18.8% for the six months ended June 30,
1995. This decrease was primarily the result of two factors. Decreased sales
caused reduced productivity and utilization of plant and equipment and resulted
in slightly lower margins. To a lesser degree, the price of raw materials used
during the three and six months ended June 29, 1996 were slightly higher than
the respective periods in 1995 but have stabilized relatively in comparison to
the volatility experienced during mid-late year in 1995. The Company has
generally been unable to pass such increased costs on to its customers.
However, management continues to be encouraged by the improvement in gross
margin during the three months and six months ended June 29, 1996 (17.4% and
17.8% respectively) versus the transition period ended December 30, 1995 gross
margin of 14%. This approximate 4% increase is due to raw material costs
(although still high) receding from their record levels in July 1995.
Selling, general, and administrative expenses of $6,577,000 for the three
months and $13,130,000 for the six months ended June 29, 1996 decreased by
$268,000 and $407,000, respectively, compared to the same
16
<PAGE> 17
periods in the prior year. While no assurances can be given, management
believes that synergies expected to be achieved upon integration of Johnston and
Jupiter operations will result in further reductions in selling, general, and
administrative expenses. The full impact of the synergies and operational
integration on selling, general, and administrative expenses is not expected to
be completely realized until 1997.
In February 1996, the Company announced that it was closing Wellington's
Tarboro plant in an effort to realign and consolidate certain operations,
concentrate capital resources on more profitable operations, and better
position itself to achieve its strategic corporate objectives. As a result of
closing this facility, the Company recorded a $6,532,000 non-recurring
impairment charge during the transition period ended December 30, 1995 and a
further $2,252,000 non-recurring restructuring charge to operations during the
six months ended June 29, 1996. Through June 29, 1996, approximately $456,000
of costs have been charged to reserves established for closing of the Tarboro
facility. (See Note 3 of the condensed consolidated financial statements for
further discussion.)
Depreciation and amortization expense for the three months ended June 29, 1996
increased $1,147,000 compared to the three months ended June 30, 1995 and
depreciation and amortization expense increased $1,665,000 for the six months
ended June 29, 1996 as compared to the six months ended June 30, 1995. The
increased depreciation resulted from additional depreciation based on the
Company's capital investment program to upgrade machinery and equipment to
state-of-the-art levels, and to move into new, more profitable, markets and
additional depreciation related to the Company's step-up in basis of property,
plant, and equipment in connection with the Jupiter acquisition.
Interest expense for the three months and six months ended June 29, 1996 was
$2,885,000 and $5,187,000 reflecting increases of $844,000 and $1,027,000
respectively as compared to the three months and six months ended June 30,
1995. Such increases were reflective of higher average borrowings through the
Company's credit facilities during the three months and six months ended June
29, 1996. The majority of the increased borrowings were deployed to complete
the acquisition of the minority interest in Jupiter.
The provision for income taxes was $244,000 for the three months ended June 29,
1996. The benefit for income taxes of $403,000 for the six months ended June
29, 1996 largely reflects a tax benefit related to the indirect majority owned
subsidiary, Wellington, which was recorded during the first quarter of 1996.
Conversely, for the three and six months ended June 30, 1995, the Company
recorded income tax provisions of $592,000 and $6,016,000 respectively. The
effective tax rates for the three and six months are 51.2% and 43.1%
respectively due to the impact of the tax provision on equity investments.
The income/loss on the minority interest in consolidated subsidiary from
continuing operations reflects the minority shareholders' proportionate share
in the earnings (losses) for the applicable periods of Wellington through March
28, 1996, the merger date. Only the proportionate interest in Wellington is
applicable because Wellington represents the continuing textile operations of
Jupiter.
As discussed above, the portfolio investment business of Jupiter and GWI is in
the process of being marketed and sold. Since this business formerly was
treated as an operating segment, such operation has now been classified as a
discontinued operation. Accordingly, the three months ended June 30, 1995 have
been restated reflecting income from such discontinued operations of $686,000
net of taxes of $1,680,000 and minority interest in income of $982,000.
Additionally, the six months ended June 30, 1995 have been restated reflecting
income from such discontinued operations of $791,000 net of taxes of $1,925,000
and minority interest in income of $1,165,000. For the three months ended
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<PAGE> 18
June 29, 1996, income from the discontinued operations was $2,441,000 net of
applicable taxes of $839,000 and for the six months ended June 29, 1996,
income from discontinued operations was $4,889,000 net of income taxes of
$5,107,000 and minority interest in income of $1,083,000. Income from
discontinued operations is mainly reflective of gains on the sale of the
Company's investment in EMC Corporation and Viasoft during the quarter ended
March 30, 1996 and gains on the sale of Fuisz and Zoll Medical during the
quarter ended June 29, 1996. During the quarter ended March 30, 1996, and in
connection with the classification of the investment portfolio business as
discontinued operations, the Company recorded a loss on disposal of Jupiter of
$1,479,000 net of the applicable income tax benefit of $2,801,000. This loss
is mainly reflective of the write-down of the remaining portfolio investments
from the values previously established by Jupiter's Board of Directors. Such
write-down was recorded to reduce the investments to their estimated fair value
which is expected to be realized upon the sale of such investments within one
year versus the value of these investments held on a long-term basis.
MATERIAL CHANGES IN FINANCIAL CONDITION
As a result of the merger of Jupiter into a subsidiary of Johnston, the Company
has revalued certain Jupiter assets, mainly inventories and property, plant,
and equipment. Due to Johnston's previous ownership interest in Jupiter, the
acquisition of the remaining outstanding interest is accounted for as a "step
acquisition" resulting in a partial step-up in Jupiter assets. The Company
recorded such partial step-up in basis on such assets and has recorded goodwill
of $11,762,000 which is to be amortized over 20 years.
LIQUIDITY AND CAPITAL RESOURCES
Working capital at June 29, 1996 was $75,701,000 representing a ratio of
current assets to current liabilities of 2.5 to 1.
On March 28, 1996, the Company signed a new credit agreement with a syndicate
of banks (the "Credit Agreement") to provide aggregate loans of up to
$160,000,000 to repay existing indebtedness, to provide funds used to acquire
the remaining outstanding shares of the common stock of Jupiter and to finance
working capital needs. The Credit Agreement provides for revolving credit
loans (the "Revolver") of up to $80,000,000, a term loan for $40,000,000 ("Term
Loan A") and a term loan for an additional $40,000,000 ("Term Loan B").
Borrowings under the Revolver and the Term Loan A mature on March 28, 2001 and
Term Loan B matures on March 28, 2003. The term loans are repayable in
quarterly installments starting in 1997.
Under the terms of the Credit Agreement, substantially all assets are pledged
as collateral for the borrowings under the Credit Agreement. The Credit
Agreement requires the Company to maintain certain financial ratios and
specified levels of tangible net worth. The Credit Agreement places a limit on
the Company's level of capital expenditures and type of mergers or
acquisitions. The Credit Agreement permits the Company to pay dividends on its
Common Stock provided it is in compliance with various covenants and provisions
contained therein, which among other things limit dividends and restrict
investments to the lesser of (x) 20% of total assets of the Company, on a fully
consolidated basis, as of the date of determination thereof, or (y) $5,000,000
for the period commencing on January 1, 1996 and ending on December 31, 1996 or
(z) $5,000,000 plus 50% of cumulative consolidated net income for the period
commencing January 1, 1997, minus 100% of cumulative consolidated net loss for
the consolidated entities for such period, as calculated on a cumulative basis
as of the end of each fiscal quarter of the consolidated entities with
reference to the financial statements for such quarter.
In March 1996, the Company borrowed $144,028,000 under these facilities and
liquidated the Johnston line-of-credit and revolving credit loans and also the
Wellington revolving credit loans, term loans, and
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<PAGE> 19
equipment loans. In connection with this refinancing, the Company wrote off
deferred financing costs of $287,000 and paid a prepayment penalty of $563,000
on the early extinguishment of the Wellington loans. As a result, the Company
recorded an extraordinary loss for the early extinguishment of debt of $527,000
net of applicable income taxes of $323,000.
Prior to June 28, 1996, the Credit Agreement included a covenant which required
the Company to maintain a minimum tangible net worth of $50 million. Such
covenant was entered into by the parties based on certain assumptions with
respect to the accounting treatment of the acquisition of Jupiter. In
preparing its quarterly financial information, the Company made adjustments to
its purchase accounting treatment of the Jupiter acquisition due to certain
step acquisition accounting requirements. Such adjustments resulted in an
increase in goodwill and a decrease in tangible net worth to $45.9 million. On
June 28, 1996, the syndicate of banks amended the covenant to a minimum
tangible net worth of $44 million and waived the event of non-compliance. As
of June 29, 1996, the Company was in compliance with such covenant.
Management believes that funds generated from operations and borrowings under
the Credit Agreement (as described above) will be sufficient to meet the needs
of the Company's current operations for at least the next 12 months.
OTHER MATTERS
The Company is involved in litigation. (See Item I - Legal Proceedings and
Note 9 to condensed consolidated financial statements).
The Company is periodically involved in legal proceedings arising out of the
ordinary conduct of business. Management does not expect that they will have a
material adverse effect on the Company's consolidated financial position or
results of operations.
RISKS AND UNCERTAINTIES
Except for historical information contained herein, the matters set forth in
this report are forward looking statements which are subject to certain risks
and uncertainties that could cause actual results to differ materially from
those in, or which could be expected based on, such forward looking statements.
The Company's expectations regarding future sales and profits assume, among
other things, reasonable continued growth in the general economy which affects
demand for the Company's products, and reasonable stability in raw materials
pricing, changes in which affect customer purchasing decisions as well as the
Company's prices and margins. The costs and benefits of the Company's
discontinuance of Jupiter and GWI portfolio investments and the Tarboro
disposition may vary from the Company's expectations due to various factors
such as: higher or lower than anticipated proceeds from the sale of assets;
the extent of management's ability to control duplication of costs,
inefficiencies and overhead during the period of phasing out operations; and
the difficulties inherent in forecasting the operating results of an operating
mode different from that which exists at the time the forecast is made. For a
further discussion of risks and uncertainties associated with the Company's
business, readers are referred to the cautionary statement set forth in Item 1
of the Company's annual report on Form 10-K for the transition period ended
December 30, 1995, which cautionary statement is incorporated by reference
herein.
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<PAGE> 20
JOHNSTON INDUSTRIES, INC. AND SUBSIDIARIES
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
No reportable legal proceedings arose in the quarter ended June 29, 1996.
There have been no material developments in the legal proceedings reported in
the Company's Form 10-K for the Transition Period ended December 30, 1995.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
3.2(a) By-Laws of Johnston Industries, Inc.
3.2(b) Amendment to By-Laws of Johnston Industries, Inc.
3.2(c) Amendment to By-Laws of Johnston Industries, Inc.
11 Statements of Computation of Per Share Earnings
27.1 Financial Data Schedule (Filed Electronically)
27.2 Financial Data Schedule (Filed Electronically)
(b) Reports on Form 8-K
(I) None.
20
<PAGE> 21
JOHNSTON INDUSTRIES, INC. AND SUBSIDIARIES
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the undersigned has duly caused this report to be filed on its behalf by the
undersigned hereto duly authorized.
JOHNSTON INDUSTRIES, INC.
Dated: August 13, 1996 By: /s/John W. Johnson
------------------
John W. Johnson
Vice President
Chief Financial Officer
By: /s/John W. Johnson
------------------
John W. Johnson
(Principal Accounting Officer)
21
<PAGE> 1
EXHIBIT 3.2(A)
BY-LAWS
OF
JOHNSTON INDUSTRIES, INC.
Section 1.1. Registered Office. The registered office of the Corporation
shall be at 100 West Tenth Street, City of Wilmington, County of New Castle,
State of Delaware, or at such other office as the Board of Directors may from
time to time designate.
Section 1.2. Principal Office. The principal office of the Corporation
shall be at 30 Rockefeller Plaza, New York, New York 10020, or at such other
office as the Board of Directors may from time to time designate.
Section 1.3. The Other Offices. The Corporation may also establish and
maintain such other offices, within and without the State of Delaware, as the
Board of Directors may from time to time designate or as the business of the
Corporation may require.
STOCKHOLDERS
Section 2.1. Place of Meetings of Stockholders. The meetings of the
stockholders shall be held at such place or places, either within or without
the State of Delaware, as may be fixed from time to time by the Board of
Directors.
Section 2.2. Annual Meeting of Stockholders. The Annual Meeting of the
Stockholders for the election of directors and for the transaction of such
other business as may properly be brought before the meeting shall be held on
the second Friday in November of each year, if not a legal holiday, and if that
day be a legal holiday, then on the next succeeding business day, at 11:00
o'clock a.m., or at such other time and date as shall be fixed from time to
time by the Board of Directors, and stated in the notice of the meeting.
Section 2.3. Special Meeting of Stockholders. Special meeting of the
stockholders for any purpose or purposes, unless otherwise prescribed by law,
may be called by the Board of Directors or by the President or upon the written
request (stating the purpose or purposes of the meeting) of the holders of at
least 33 1/3% of the outstanding shares entitled to vote.
Section 2.4. Fixing the Record Date. The Board of Directors may fix, in
advance, a date as the record date for the purpose of determining the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, or to express consent to corporate action in writing
without a meeting, or to receive any dividend or distribution or the allotment
of any rights, or for the purpose of any other action.
Section 2.5. Notice of Meetings of Stockholders; Waiver of Notice.
Written notice of all meetings of stockholders shall be given to each
stockholder entitled to vote at the meeting, except that it shall not be
necessary to give notice to any stockholder who waives notice or to whom notice
is not required as provided in Sections 9.2 and 9.4 of these By-Laws. Each
notice shall be given personally or by mail not less than ten nor more than
sixty days before the date of such meeting and shall state the place, date and
hour of the meeting and, in the case of special meetings, the purpose or
purposes for which the meeting is called.
Section 2.6. Adjourned Meetings. The stockholders present in person or
by proxy at any meeting of stockholders and entitled to vote thereat may
adjourn the meeting despite the absence of a quorum. When
a determination of stockholders entitled to notice of or to vote at any meeting
of stockholders has been
<PAGE> 2
made, such determination shall apply to any adjournment thereof unless the Board
elects to fix a new record date for the adjourned meeting. Except as required
by law, when the meeting is adjourned to another time or place, it shall not be
necessary to give any notice of the adjourned meeting if the time and place to
which the meeting is adjourned are announced at the meeting at which the
adjournment is taken. At the adjourned meeting at which a quorum is present any
business may be transacted, which might have been transacted on the original
date of the meeting.
Section 2.7. List of Stockholders at Meeting. A list of stockholders as
of the record date, prepared in accordance with Section 5.4 of these By-Laws,
shall be produced and kept at every meeting of stockholders.
Section 2.8. Quorum. A majority of the shares entitled to vote, present
in person or represented by proxy, at any meeting of stockholders shall
constitute a quorum, except as otherwise provided by law, by the Certificate of
Incorporation or by these By-Laws. When a quorum is once present to constitute
a meeting, it is not broken by the subsequent withdrawal of any stockholders.
Section 2.9. Vote of Stockholders. Except as otherwise required by law,
by the Certificate of Incorporation or by these By-Laws, all matters coming
before any meeting of stockholders other than the election of directors shall
be decided by the affirmative vote of the majority of the shares present in
person or by proxy and entitled to vote thereat. Directors shall be elected by
a plurality of the votes of the shares present in person or by proxy and
entitled to vote on the election of directors. Unless otherwise provided by
the Certificate of Incorporation, each stockholder of record shall be entitled
to one vote in person or by proxy for each share of the capital stock held by
such stockholder and registered in his name on the books of the Corporation at
the record date fixed for determining stockholders entitled to vote at such
meeting.
Section 2.10. Proxies. Each stockholder entitled to vote at any meeting
of stockholders or to express consent or dissent to corporate action in writing
without a meeting may authorize another person or persons to act for him by
proxy. Every proxy shall be in writing subscribed by the stockholder or his
duly authorized attorney-in-fact and shall be filed with the Secretary of the
Corporation. Unless and until voted, every proxy shall be revocable at the
pleasure of the person who executed it or of his legal representatives or
assigns, except in those cases where an irrevocable proxy permitted by statute
is given. No proxy shall be voted or acted upon after expiration of three
years from the date thereof unless the proxy provides for a longer period.
Section 2.11. Inspectors at Stockholders' Meeting. The Board of
Directors, in advance of any meeting of stockholders, may appoint one or more
inspectors to act at the meeting or any adjournment thereof. If inspectors are
not so appointed, the presiding officer may appoint one or more inspectors.
Each inspector, before entering upon the discharge of his duties, shall take
and sign an oath to execute faithfully the duties of inspector at such meeting
with strict impartiality and according to the best of his ability. No
candidate for the office of director shall be appointed as an inspector.
Section 2.12. Action by Stockholders Without a Meeting. In addition to,
and not in limitation of, the provisions of the General Corporation Law of the
State of Delaware, any action required or permitted to be taken at any annual
or special meeting of stockholders may be taken without a meeting, without
prior notice and without a vote, if a consent in writing, setting forth the
action so taken, shall be signed by the holders of outstanding stock having not
less than the minimum number of votes that would be necessary to authorize or
take such action at a meeting at which all shares entitled to vote thereat were
present and voted. Prompt notice of the taking of the corporate action without
a meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing.
<PAGE> 3
DIRECTORS
Section 3.1. Powers of the Board of Directors. The business and affairs
of the Corporation shall be managed by or under the direction of the Board of
Directors (sometimes hereinafter referred to as the "Board").
Section 3.2. Number, Election, Tenure and Qualifications of Directors.
The Board of Directors shall consist of not less than three nor more than
fifteen directors. The exact number of directors shall be fixed from time to
time by resolution of the Board or by the stockholders, provided, however, that
no decrease may shorten the term of any incumbent director. Each director
shall hold office until his successor has been elected and qualified, unless he
shall sooner resign, die or be removed as hereinafter provided.
Section 3.3. Newly Created Directorships and Vacancies. Except as
otherwise provided in the Certificate of Incorporation, newly created
directorships resulting from an increase in the authorized number of directors
and vacancies occurring in the Board through death, resignation, removal,
disqualification or for any other reason may be filled by the vote of a
majority of the directors then in office, although less than a quorum.
Section 3.4. Resignations. Any director may resign at any time upon
written notice to the Board or the Secretary.
Section 3.5. Removal. Except as otherwise provided in the Certificate of
Incorporation, the holders of a majority of the shares then entitled to vote at
an election of directors may, at a special meeting for which notice specifying
the intention to pass such resolution has been given, remove any or all of the
directors with or without cause. Any director may be removed for cause by a
majority vote of the whole Board.
Section 3.6. Place and Time of Meetings of the Board. A regular meeting
of each newly elected Board shall be held immediately following the Annual
Meeting of Stockholders and at the place of such meeting, or as soon as
practicable thereafter at such place as shall have been previously fixed for
that purpose by resolution of the Board. Other regular meetings of the Board
may be held at such times and places as the Board may from time to time
determine or as may be specified in the notice of the meeting. Special
meetings of the Board shall be held whenever called by order of the Board, by
the President or by any of the directors, and at such place or places as may be
fixed by the Board or specified in the notice of the meeting.
Section 3.7. Notice of Meetings of the Board of Directors. Notice of
regularly scheduled meetings of the Board of Directors need not be given.
Unless notice is waived or not required as provided in Sections 9.3 and 9.4 of
these By-Laws, notice of the time and place of every special meeting of the
Board of Directors shall be given to each director by oral, telegraphic,
telecopy or written notice at least one day before the meeting. Except as
otherwise provided by law or by these By-Laws, any notice of meeting need not
specify the purpose of the meeting. Notice of an adjourned meeting need not be
given other than by announcement at the meeting at which the adjournment is
taken.
Section 3.8. Quorum. A majority of the directors then comprising the
Board shall constitute a quorum for the transaction of business. If at any
meeting of the Board there shall be less than a quorum present, a majority of
the directors present may, without further notice, adjourn the meeting from
time to time until a quorum is obtained.
Section 3.9. Action of the Board of Directors. Except as otherwise
provided in the Certificate of Incorporation or these By-Laws, the act or vote
of a majority of the directors present at any meeting at which a quorum is
present shall be the act of the Board.
<PAGE> 4
Section 3.10. Action by the Board and Committees Without a Meeting. Any
action required or permitted to be taken at any meeting of the Board of
Directors or any committee thereof may be taken without a meeting, if a written
consent to such action is signed by all members of the Board or of such
committee, as the case may be, and such written consent is filed with the
minutes of proceedings of the Board or such committee.
Section 3.11. Telephone Meetings. Any or all members of the Board or any
committee of the Board may participate in a meeting of the Board or of the
committee by means of a conference telephone or similar communications
equipment allowing all persons participating in the meeting to hear each other.
Participation by such means shall constitute presence in person at the
meeting.
Section 3.12. Compensation and Reimbursement of Directors. The Board may
fix the compensation of directors for services in any capacity, and may allow
directors a fixed sum and expenses of attendance, if any, for attendance at
each directors' meeting. Members of committees may be allowed similar
compensation and reimbursement for their services as such. No such payment
shall preclude any director or committee member from serving the Corporation in
any other capacity and receiving compensation therefor.
Section 3.13. Executive Committee. The Board of Directors may, from time
to time, by resolution passed by a majority of the whole Board, designate an
Executive Committee consisting of three or more directors of the Corporation.
The Executive Committee shall have and exercise all of the powers of the Board
of Directors in the management of the business and affairs of the Corporation
except as otherwise provided in the resolution or by law, and may authorize the
seal of the Corporation to be affixed to all papers which may require it. Such
Committee shall serve at the pleasure of the Board, which shall have power at
any time to change the members thereof, to fill vacancies therein and to
discharge such committee, with or without cause.
Section 3.14. Other Committees. The Board may, from time to time, by
resolution passed by a majority of the whole Board, designate other committees,
to serve at the Board's pleasure, with such powers and duties as the Board
determines.
Section 3.15. Committee Members. The Board of Directors may designate
one or more directors as alternate members of any committee, who may replace
any absent or disqualified member at any meeting of the committee, and, in
addition, in the absence or disqualification of any member of a committee, the
member or members thereof present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may unanimously appoint
another member of the Board of Directors to act at the meeting in the place of
any such absent or disqualified member.
Section 3.16. Reliance. A member of the Board of Directors, and a member
of any committee thereof, shall be fully protected in relying on good faith
upon the records of the Corporation or upon such information, opinion, reports,
or statements presented to the Corporation by any of its officers and employees
or committees of the Board, or by any other person as to matters the Board or
committee member reasonably believes are within such other person's
professional or expert competence and who has been selected with reasonable
care by or on behalf of the Corporation.
OFFICERS
Section 4.1. Authorized Officers. The officers of the Corporation shall
be a Chairman of the Board, a Vice-Chairman of the Board, a President, one or
more Senior Vice-Presidents and Vice-Presidents (including an Executive
Vice-President, if the Board so determines), a Treasurer and a Secretary. One
person may hold more than one office, and if the same person holds both the
office of Secretary and the office of Treasurer, he may be known as the
Secretary-Treasurer. The Board may from time to time appoint such subordinate
or assistant officers (including Assistant Secretaries and Assistant
Treasurers), agents or employees, with such terms of office, powers and duties,
as it may deem desirable, and may from
<PAGE> 5
time to time authorize any officer or committee to appoint and remove such
subordinate or assistant officers and prescribe their terms of office, powers
and duties.
Section 4.2. Election or Appointment and Term of Office. The officers of
the Corporation, other than subordinate or assistant officers, shall be elected
or appointed annually by the Board at its first meeting held after each Annual
Meeting of Stockholders. Each officer shall hold office until his successor
has been elected or appointed and qualified or until the office is declared
vacant by the Board of Directors, unless he shall sooner die, resign or be
removed as hereinafter provided.
Section 4.3. Removal. Any officer of the Corporation elected or
appointed by the Board or appointed by an officer or a committee may be
removed, with or without cause, by the Board, or by the officer or committee
upon whom the power to appoint the officer may have been conferred.
Section 4.4. Resignation. Any officer may resign at any time by giving
written notice to the Board of Directors, the President or the Secretary. Any
such resignation shall take effect at the time specified therein, and unless
otherwise specified therein the acceptance of such resignation shall not be
necessary to make it effective.
Section 4.5. Vacancies. A vacancy in any office because of death,
resignation, removal or otherwise may be filled by the Board, or by any officer
or committee upon whom the power to appoint persons to such office may have
been conferred.
Section 4.6. Security. The Board may require any officer, employee or
agent to give security for the faithful performance of his duties. Such
security may be in the form of a bond in such amount and form and with such
surety or sureties as the Board may determine.
Section 4.7. Compensation. The Board shall have power to fix the
compensation of all officers of the Corporation. It may authorize any officer
or committee upon whom the power to appoint subordinate or assistant officers
may have been conferred to fix the compensation of such subordinate or
assistant officers.
Section 4.8. Chairman of the Board. The Chairman of the Board shall,
when present, preside at all meetings of the stockholders and of the Board, and
shall have such other powers and duties as the Board assigns to him from time
to time.
Section 4.9. Vice-Chairman. In the absence of the Chairman of the Board
and the President, the Vice-Chairman shall preside at all meetings of the
stockholders and of the Board, and he shall have such other powers and duties
as the Board assigns to him from time to time.
Section 4.10. President. The President shall be the chief executive
officer of the Corporation and shall have such other powers and duties as the
Board assigns to him from time to time. He shall, in the absence of the
Chairman of the Board, preside at all meetings of the stockholders and of the
Board. He may sign, with the Secretary or any other proper officer of the
Corporation thereunto authorized by the Board, certificates representing shares
of the Corporation, and deeds, mortgages, bonds, contracts, or other
instruments which the Board has authorized to be executed, except in cases
where the signing and execution thereof shall be expressly delegated by the
Board or by these By-Laws to some other officer or agent of the Corporation, or
shall be required by law to be otherwise signed or executed.
Section 4.11. Vice-Presidents. Except as otherwise provided by these
By-Laws, in the absence of the President or in the event of his death or
inability to act, the Executive Vice-President and in his absence or disability
the Senior Vice-President and in his absence or disability the Vice-President
(or in the event there be more than one Senior Vice-President or
Vice-President, in the respective orders designated at the time of their
election, or in the absence of any designation, first the Senior
Vice-Presidents and then the Vice-Presidents in the respective orders of their
seniority) shall perform the duties of the President, and when so acting, shall
have all the authority of and be subject to all the restrictions upon the
President. Any Vice-
<PAGE> 6
President may sign, with the Secretary or any other proper officer of the
Corporation thereunto authorized by the Board, certificates representing shares
of the Corporation and shall perform such other duties as from time to time may
be assigned to him by the President or by the Board.
Section 4.12. Secretary. The Secretary shall record the minutes of the
meetings of the stockholders, of the Board and of the Executive Committee in
books provided for the purpose. He shall see that all notices are duly given
in accordance with the provisions of these By-Laws or as required by law. He
shall be custodian of the corporate records and of the seal of the Corporation.
He shall see that the corporate seal is affixed to all documents, the
execution of which on behalf of the Corporation under its seal is duly
authorized, and when so affixed may attest the same. In general, he shall
perform all duties incident to the office of Secretary, and such other duties
as from time to time may be assigned to him by the President or by the Board.
In the absence of the Secretary from any meeting, the minutes shall be recorded
by the person appointed for that purpose by the presiding officer.
Section 4.13. Treasurer. The Treasurer shall have charge and custody of
the books and records of account of the Corporation. In general, he shall
perform all the duties incident to the office of Treasurer and such other
duties as from time to time may be assigned to him by the President or by the
Board.
Section 4.14. Assistant Secretaries and Assistant Treasurers. The
Assistant Secretary and Assistant Treasurer or, if there be more than one, the
Assistant Secretaries and Assistant Treasurers in the order determined by the
Board, shall, in the absence or disability of the Secretary or the Treasurer,
perform the duties and exercise the powers of the Secretary and the Treasurer,
respectively, and shall perform such other duties and have such other powers as
from time to time may be assigned to them or any of them by the President or by
the Board.
SHARES AND STOCKHOLDERS
Section 5.1. Certificates. Each stockholders shall be entitled to a
certificate or certificates in a form to be approved by the Board, certifying
the number of shares owned by him, signed by the Chairman or Vice Chairman of
the Board or the President or a Vice-President and by the Treasurer or an
Assistant Treasurer or the Secretary or an Assistant Secretary and sealed with
the seal of the Corporation or a facsimile thereof. Any or all the signatures
on the certificate may be a facsimile. In case any officer, transfer agent or
registrar who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer, transfer agent or registrar
before such certificate is issued, it may be issued by the Corporation with the
same effect as if he were such officer, transfer agent or registrar at the date
of issue.
Section 5.2. Transfer of Shares. Transfer of record of shares of stock
of the Corporation shall be made only on the books of the Corporation upon the
surrender of the certificate representing the shares to be transferred properly
endorsed and bearing the requisite amount of stock transfer stamps, if any,
duly canceled. The Board of Directors may prescribe such additional rules and
regulations as it may deem appropriate relating to the issue, transfer and
registration of securities of the Corporation.
Section 5.3. Lost, Mutilated or Destroyed Certificates. In case any
certificate of stock is lost, stolen, mutilated or destroyed, the Board may
authorize the issue of a new certificate in place thereof upon such terms and
conditions as it may deem advisable. The Board may require satisfactory surety
before issuing a new certificate to replace a certificate claimed to have been
lost, stolen or destroyed.
Section 5.4. Record of Stockholders. The Secretary of the Corporation,
or the registrar or transfer agent appointed by the Board of Directors shall
prepare, at least ten days prior to every meeting of stockholders, a complete
list containing the names and addresses of all stockholders entitled to vote
thereat, and the number of shares registered in the name of each such
stockholder. Such list shall be open to inspection by any stockholder, for any
purpose germane to the meeting, during ordinary business hours, for a period of
at least ten days prior to such meeting, at a place designated in the notice of
such meeting or at
<PAGE> 7
the place where the meeting is to be held. The Corporation shall be entitled to
recognize the persons in whose names shares stand on the record of stockholders
as the owners thereof for all purposes.
INDEMNIFICATION
Section 6.1. Right to Indemnification. Each person who was or is made a
party or is threatened to be made a party to or is involved in any threatened,
pending or completed action, suit, or proceeding, including an action or suit
by or in the right of the Corporation, whether civil, criminal, administrative
or investigative (hereinafter a "Proceeding"), by reason of the fact that he,
or a person of whom he is the legal representative, is or was a director or an
officer of the Corporation or, while a director or officer is or was serving at
the request of the Corporation as a director, officer, employee, or agent of
another corporation or of a partnership, joint venture, trust, or other
enterprise, including service with respect to employee benefit plans, whether
the basis of the Proceeding is alleged action in an official capacity as a
director or an officer or in any other capacity while serving as a director or
an officer, shall be indemnified and held harmless by the Corporation to the
fullest extent authorized by the Delaware General Corporation Law, as the same
exists or may hereafter be amended (but no amendment or repeal of any provision
of law shall adversely affect any right to indemnification provided hereunder
arising prior to such amendment or repeal) against all expenses, liability, and
loss (including attorneys' fees, judgments, fines, ERISA excise taxes or
penalties, and amounts paid or to be paid in settlement) actually and
reasonably incurred or suffered by such person in connection therewith;
provided, however, that in any action to enforce any indemnification right
conferred by these By-Laws, the Corporation shall indemnify any such person
seeking indemnification in connection with a Proceeding (or part thereof)
initiated by such person only if the Proceeding (or part thereof) was
authorized by the Board of Directors of the Corporation. The right to
indemnification conferred in these By-Laws is a contract right.
Section 6.2. Authority to Advance Expenses. Expenses incurred (including
attorneys' fees) by any person indemnified under these By-Laws in defending a
Proceeding shall be paid by the Corporation in advance of the final disposition
of such Proceeding, provided, however, that if required by the Delaware General
Corporation Law, as amended, such expenses shall be advanced only upon delivery
to the Corporation of an undertaking by or on behalf of such person to repay
such amount if it shall ultimately be determined that he is not entitled to be
indemnified by the Corporation as authorized in these By-Laws or otherwise.
Section 6.3. Provisions Nonexclusive. The indemnification rights
conferred on any person by these By-Laws shall not be exclusive of any other
rights that such person may have or hereafter acquire under any statute,
provision of the Certificate of Incorporation, agreement, vote of stockholders
or act of the Board of Directors or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office.
Section 6.4. Authority to Insure. The Corporation may purchase and
maintain insurance to protect itself and any person indemnified under these
By-Laws or under any statute, provision of the Certificate of Incorporation,
agreement, vote of stockholders or act of the Board of Directors or otherwise,
against any liability, expense, or loss asserted against or incurred by such
person, whether or not the Corporation would have the power to indemnify him
against such liability, expense, or loss under applicable law or the provisions
of these By-Laws.
Section 6.5. Survival of Rights. The indemnification rights provided by
these By-Laws shall continue as to a person who has ceased to be a director or
an officer, and shall inure to the benefit of the heirs, executors, and
administrators of such a person.
Section 6.6. Effect of Amendment. Any amendment or repeal of the
indemnification provisions of these By-Laws shall not adversely affect any
right or protection of any director or officer existing at the time of such
amendment or repeal.
<PAGE> 8
Section 6.7. Authority to Enter into Indemnification Agreements. The
Corporation may enter into indemnification agreements with the directors and
officers of the Corporation and with employees and agents of the Corporation in
any form authorized by resolution of the Board of Directors.
FISCAL YEAR
Section 7. The fiscal year of the Corporation shall end on June 30th of
each year.
SEAL
Section 8. The Board shall provide a suitable seal having inscribed
thereon the name of the Corporation, the year of incorporation and such other
appropriate legend as may from time to time be determined by the Board. If
deemed advisable by the Board, a duplicate seal or seals and facsimile seals
may be provided and used for the necessary purposes of the Corporation.
NOTICES
Section 9.1. Manner of Written Notice. Whenever by law, the Certificate
of Incorporation or these By-Laws written notice is required or permitted to be
given to any stockholder, director, officer or member of a committee, such
notice may be given by depositing same in a United States post office, letter
box or chute, postage prepaid and addressed to such person at his or her
address as the same appears on the records of the Corporation, and the time
when the same shall be so deposited shall be deemed to be the time of the
giving of such notice.
Section 9.2. Waiver of Notice to Stockholders. Notice of a meeting need
not be given to any stockholder who submits a signed waiver of notice in person
or by proxy, whether before or after the meeting. The attendance of any
stockholder at a meeting, in person or by proxy, except for the express purpose
of objecting at the beginning of the meeting to the transaction of any business
on the ground that the meeting is not lawfully called or convened, shall
constitute a waiver of notice by him. A waiver of notice need not specify
either the business to be transacted at, or the purpose of, any regular or
special meeting of the stockholders.
Section 9.3. Waiver of Notice to Directors. Notice of a meeting need not
be given to any director who submits a signed waiver of notice whether before
or after the meeting, or who attends the meeting without protesting, prior
thereto or at its commencement, the lack of notice to him. A waiver of notice
need not specify either the business to be transacted at, or the purpose of,
any regular or special meeting of the Board.
Section 9.4. When Notice or Lapse of Time Unnecessary. Whenever by law,
the Certificate of Incorporation or these By-Laws, the Corporation or the Board
is authorized to take any action after notice to any person or persons, such
action may be taken without notice to each person for whom notice is not, or no
longer, required by law or if at any time before or after such action is
completed the person, or in the case of a stockholder, his attorney-in-fact,
submits a signed waiver of notice.
AMENDMENT AND REPEAL
Section 10.1. Mode of Amendment or Repeal. These By-Laws may be amended,
repealed or new By-Laws adopted, by vote of a majority of the whole Board, or
by the stockholders entitled to vote thereon at any annual meeting or special
meeting of stockholders called for that purpose.
<PAGE> 1
EXHIBIT 3.2(B)
AMENDMENT TO
BY-LAWS
OF
JOHNSTON INDUSTRIES, INC.
BE IT RESOLVED that the Bylaws of the Corporation be, and they hereby are,
amended to change the principal office of the Corporation from New York, New
York to Columbus, Georgia, to change the fiscal year of the Corporation for all
business purposes to a variable period ending on the Saturday nearest to
December 31st of each year, and to provide that the annual shareholders meeting
shall be held at such time as the directors shall determine from time to time,
by deleting Sections 1.2, 2.2 and 7 of the Bylaws and inserting the following
in lieu thereof:
Section 1.2. Principal Office. The principal office of the Corporation
shall be at 105 Thirteenth Street, Columbus, Georgia 31901 or at such other
office as the Board of Directors may from time to time designate.
Section 2.2. Annual Meeting of Stockholders. The Annual Meeting of the
Stockholders for the election of directors and for the transaction of such
other business as may properly be brought before the meeting shall be held on
the last Thursday in April of each year, if not a legal holiday, and if that
day be a legal holiday, then on the next succeeding business day, at 11:00
a.m., or at such other time and date as shall be fixed from time to time by the
Board of Directors, and stated in the notice of the meeting.
Section 7. The fiscal year of the Corporation shall be a variable period
ending on the Saturday nearest to December 31st of each year.
<PAGE> 1
EXHIBIT 3.2(C)
AMENDMENT TO
BY-LAWS
OF
JOHNSTON INDUSTRIES, INC.
BE IT RESOLVED that the Bylaws of the Corporation be, and they hereby are,
amended to change the provisions relating to the positions of Chairman and
President, by deleting Sections 4.8 and 4.10 of the Bylaws and inserting the
following in lieu thereof:
Section 4.8. Chairman of the Board. The Chairman of the Board shall
preside at all meetings of the Board (except the audit committee and committees
responsible for executive compensation and benefits) and shall be Chairman of
the Executive Committee. He shall be an executive officer but shall not have
specific line responsibility or authority but be concerned with policy matters.
He shall, to the extent he requests (either specifically or generally) be kept
fully advised of all corporate activities and issues and his advice and counsel
shall be sought by the President and Chief Executive Officer prior to any major
or non-ordinary course decision but the authority of the President and Chief
Executive Officer thereafter to make such decisions as he alone determines
appropriate shall not be impaired.
Section 4.10. President. The president shall also have the title Chief
Executive Officer and shall have all such powers and duties as chief executive
officers of corporations customarily have. He shall, to the extent the
Chairman of the Board shall request (either specifically or generally), cause
the Chairman to be kept fully advised of all corporate activities and issues
and shall seek his advice and counsel prior to any major or non-ordinary course
decision, but notwithstanding such advice and counsel, the sole decision-making
authority shall remain with the President and Chief Executive Officer.
<PAGE> 1
JOHNSTON INDUSTRIES, INC. AND SUBSIDIARIES
EXHIBIT 11 - STATEMENT OF COMPUTATION OF PER SHARE EARNINGS
The weighted average number of common and common share equivalents on a primary
basis is as follows:
<TABLE>
<CAPTION>
For the Three Months Ended For the Six Months Ended
June 29, 1996 June 30, 1995 June 29, 1996 June 30, 1995
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Weighted average common shares outstanding 10,355,135 10,563,356 10,463,192 10,564,389
Shares issued from assumed exercise of
incentive stock options 265,001 -0- 242,859 -0-
Shares issued from assumed exercise of
nonqualified stock options(1) 110,950 90,773 85,361 102,643
----------- ------------ ----------- -----------
Weighted average number of shares
outstanding, as adjusted 10,731,086 10,654,129 10,791,412 10,667,032
=========== ============ =========== ===========
Income (Loss) from Continuing Operations $ (94,000) $ 360,000 $ 1,185,000 $ 2,888,000
----------- ------------ ----------- -----------
Income from Discontinued Operations 2,441,000 686,000 3,410,000 791,000
----------- ------------ ----------- -----------
Extraordinary Loss -- -- 527,000 --
----------- ------------ ----------- -----------
Net Income 2,347,000 1,046,000 4,068,000 3,679,000
Preferred Dividends 41,000 -- 43,000 --
----------- ------------ ----------- -----------
Earnings Applicable to Common Stock $ 2,306,000 $ 1,046,000 4,025,000 3,679,000
=========== ============ =========== ===========
Earnings (Loss) per share
Continuing Operations $ (.01) $ .03 $ .11 $ .27
Discontinued Operations .22 .07 .31 .07
Extraordinary Item (.05)
----------- ------------ ----------- -----------
Total $ .21 $ .10 $ .37 $ .34
=========== ============ =========== ===========
</TABLE>
(1) Shares issued from assumed exercise of options included the number of
incremental shares which result from applying the "treasury stock method"
for options.
Note: Fully diluted earnings per share are not presented because the
difference from primary earnings per share is insignificant for all
periods presented.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE JOHNSTON
INDUSTRIES, INC. AND SUBSIDIARIES FINANCIAL STATEMENTS AS OF JUNE 29, 1996 AND
FOR THE SIX MONTHS THEN ENDED IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-29-1996
<CASH> 5,591,000
<SECURITIES> 0
<RECEIVABLES> 47,238,000
<ALLOWANCES> 1,984,000
<INVENTORY> 58,951,000
<CURRENT-ASSETS> 125,999,000
<PP&E> 223,925,000
<DEPRECIATION> 95,453,000
<TOTAL-ASSETS> 275,484,000
<CURRENT-LIABILITIES> 50,298,000
<BONDS> 141,163,000
0
3,000
<COMMON> 1,250,000
<OTHER-SE> 60,013,000
<TOTAL-LIABILITY-AND-EQUITY> 275,484,000
<SALES> 165,773,000
<TOTAL-REVENUES> 165,773,000
<CGS> 136,267,000
<TOTAL-COSTS> 136,267,000
<OTHER-EXPENSES> 12,038,000
<LOSS-PROVISION> (19,000)
<INTEREST-EXPENSE> 5,187,000
<INCOME-PRETAX> (418,000)
<INCOME-TAX> (403,000)
<INCOME-CONTINUING> 1,185,000
<DISCONTINUED> 3,410,000
<EXTRAORDINARY> 527,000
<CHANGES> 0
<NET-INCOME> 4,068,000
<EPS-PRIMARY> .37
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE JOHNSTON
INDUSTRIES, INC., AND SUBSIDIARIES FINANCIAL STATEMENTS AS OF JUNE 30, 1995 AND
FOR THE SIX MONTHS THEN ENDED AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 4,094,000
<SECURITIES> 0
<RECEIVABLES> 44,352,000
<ALLOWANCES> 1,113,000
<INVENTORY> 46,224,000
<CURRENT-ASSETS> 110,685,000
<PP&E> 190,879,000
<DEPRECIATION> 79,076,000
<TOTAL-ASSETS> 232,402,000
<CURRENT-LIABILITIES> 43,573,000
<BONDS> 83,560,000
0
0
<COMMON> 1,243,000
<OTHER-SE> 62,184,000
<TOTAL-LIABILITY-AND-EQUITY> 232,402,000
<SALES> 177,309,000
<TOTAL-REVENUES> 177,309,000
<CGS> 143,913,000
<TOTAL-COSTS> 143,913,000
<OTHER-EXPENSES> 8,121,000
<LOSS-PROVISION> 8,000
<INTEREST-EXPENSE> 4,160,000
<INCOME-PRETAX> 6,016,000
<INCOME-TAX> 2,593,000
<INCOME-CONTINUING> 2,888,000
<DISCONTINUED> 791,000
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,679,000
<EPS-PRIMARY> .34
<EPS-DILUTED> 0
</TABLE>
