<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- - --- EXCHANGE ACT OF 1934
For the quarterly period ended June 30,1994
------------
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- - --- EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ________________ to _________________.
Commission File Number : 1-4323
------
GIANT GROUP, LTD.
(Exact name of registrant as specified in its charter)
Delaware 23-0622690
------------------------ -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation) Identification No.)
Highway 453, P.O. Box 218, Harleyville, South Carolina 29448
------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (803) 496-7880
-------------
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
----- -----
Indicate the number of shares outstanding of each of the issuer's classes
of common stock as of the date of this filing.
Common Stock, $.01 Par Value 5,180,000 Shares
---------------------------------------------
(Not including 1,786,000 shares held by the Company as treasury shares)
Page 1 of 16
Exhibit Index on Page 14
<PAGE>
GIANT GROUP, LTD.
INDEX
PART I FINANCIAL INFORMATION
- - ----------------------------
PAGE NO.
--------
Item 1. Financial Statements
Condensed Consolidated Statements of Operations - Three
and Six-Month Periods Ended June 30, 1994 and 1993............ 3
Condensed Consolidated Balance Sheets - June 30, 1994
and December 31, 1993......................................... 4
Condensed Consolidated Statements of Cash Flows - Six-
Month Periods Ended June 30, 1994 and 1993.................... 5
Notes to Consolidated Financial Statements.................... 6-8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations........................... 9-12
PART II OTHER INFORMATION
- - -------------------------
Item 1. Legal Proceedings............................................. 13
Item 4. Submission of Matters to a Vote of Security Holders........... 13
Item 5. Other Information............................................. 14
Item 6. Exhibits and Reports on Form 8-K.............................. 14
(a)Exhibits................................................... 14
(b)Report on Form 8-K......................................... 14
2
<PAGE>
<TABLE>
<CAPTION>
GIANT GROUP, LTD.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
for the three and six-month periods ended June 30, 1994 and 1993
(Unaudited)
Three Months Ended Six Months Ended
------------------ ----------------
1994 1993(1) 1994 1993 (1)
---- ---- ---- ----
<S> <C> <C> <C> <C>
Operating revenues:
Product sales $23,780,000 $19,881,000 $36,773,000 $31,478,000
Resource recovery services 3,484,000 3,550,000 6,004,000 6,458,000
----------- ----------- ----------- -----------
Total revenues 27,264,000 23,431,000 42,777,000 37,936,000
Operating costs and expenses:
Cost of sales and services 19,848,000 18,361,000 34,374,000 32,407,000
Selling, general and administrative 2,802,000 2,325,000 5,345,000 4,929,000
----------- ----------- ----------- -----------
Operating income 4,614,000 2,745,000 3,058,000 600,000
Other income (expense):
Interest expense (1,417,000) (1,447,000) (2,845,000) (2,824,000)
Investment income 135,000 319,000 461,000 750,000
Equity in earnings (loss) of affiliate (490,000) 850,000 (1,340,000) 1,275,000
Gain (loss) on investments (448,000) 108,000 (1,062,000) 483,000
Other, net (205,000) 29,000 (66,000) (42,000)
----------- ----------- ----------- -----------
Income (loss) before taxes 2,189,000 2,604,000 (1,794,000) 242,000
Provision (credit) for income taxes 744,000 885,000 (610,000) 82,000
----------- ----------- ----------- -----------
Net income (loss) $ 1,445,000 $ 1,719,000 $(1,184,000) $ 160,000
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Per common share:
Primary $ .23 $ .29 $ (.23) $ .03
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Fully diluted $ .22 $ .26 $ * $ *
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Weighted average common shares:
Primary 6,463,000 6,413,000 5,180,000 5,180,000
Fully diluted 8,691,000 8,641,000 * *
<FN>
*Not presented, antidilutive.
(1) Reclassified to conform with 1994 presentation.
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE>
<TABLE>
<CAPTION>
GIANT GROUP, LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
June 30, December 31,
1994 1993
------------ ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 1,734,000 $ 4,123,000
Marketable securities 13,000 16,945,000
Accounts receivable, less allowance of
$1,136,000 in 1994 and $1,123,000 in 1993
for discounts and doubtful accounts 14,969,000 11,375,000
Inventories 13,181,000 13,414,000
Other current assets 1,908,000 1,348,000
------------ ------------
Total current assets 31,805,000 47,205,000
------------ ------------
Restricted cash equivalents 1,462,000 -
------------ ------------
Investment in affiliate 42,366,000 43,706,000
------------ ------------
Property, plant and equipment, at cost 123,409,000 119,961,000
Less accumulated depreciation 70,973,000 67,590,000
------------ ------------
52,436,000 52,371,000
------------ ------------
Deferred charges and other assets 3,318,000 3,463,000
------------ ------------
Total assets $131,387,000 $146,745,000
------------ ------------
------------ ------------
LIABILITIES
Current liabilities:
Accounts payable $ 5,735,000 $ 6,789,000
Short-term borrowings 5,169,000 16,742,000
Accrued expenses 7,460,000 7,825,000
Current maturities of long-term debt 10,798,000 1,797,000
------------ ------------
Total current liabilities 29,162,000 33,153,000
Long-term debt, net of current maturities 42,311,000 52,004,000
Accrued pension and postretirement benefits 10,818,000 10,489,000
Deferred income taxes 2,783,000 3,603,000
Other liabilities 30,000 29,000
------------ ------------
Total liabilities 85,104,000 99,278,000
------------ ------------
Contingent liabilities (Note 5)
SHAREHOLDERS' EQUITY
Common stock, $.01 par value; authorized
12,500,000 shares in 1994 and 25,000,000
shares in 1993, issued 6,966,000 shares $ 69,000 $ 69,000
Capital in excess of par value 33,508,000 33,508,000
Retained earnings 30,473,000 31,657,000
------------ ------------
64,050,000 65,234,000
Less common stock in treasury; 1,786,000
shares, at cost 15,763,000 15,763,000
Reduction for additional pension liability 2,004,000 2,004,000
------------ ------------
Total shareholders' equity 46,283,000 47,467,000
------------ ------------
Total liabilities and
shareholders' equity $131,387,000 $146,745,000
------------ ------------
------------ ------------
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE>
<TABLE>
<CAPTION>
GIANT GROUP, LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
for the six-month periods ended June 30, 1994 and 1993
(Unaudited)
1994 1993
---- ----
<S> <C> <C>
Operations:
Net income (loss)............................ $(1,184,000) $ 160,000
Depreciation and depletion................... 3,771,000 3,701,000
(Gain) loss on investments................... 1,062,000 (483,000)
Equity in (earnings) loss of affiliate....... 1,340,000 (1,275,000)
Amortization of deferred charges and other... 371,000 317,000
Changes in operating assets and liabilities:
Receivables.................................. (3,594,000) (3,206,000)
Inventories.................................. 233,000 240,000
Other current assets......................... (422,000) 1,253,000
Accounts payable............................. (447,000) 1,119,000
Accrued expenses............................. (855,000) 157,000
------------ -----------
Net cash provided by operations.......... 275,000 1,983,000
------------ -----------
Investing:
Sales of marketable securities............... 15,577,000 2,593,000
Purchase of property, plant and equipment.... (4,318,000) (2,821,000)
Increase in restricted cash equivalents...... (1,462,000) -
------------ -----------
Net cash provided (used) by investing.... 9,797,000 (228,000)
------------ -----------
Financing:
Proceeds from (repayment of) short-term
borrowings................................. (11,573,000) 414,000
Repayment of long-term debt.................. (888,000) (859,000)
------------ -----------
Net cash used by financing............... (12,461,000) (445,000)
------------ -----------
Increase (decrease) in cash and
cash equivalents................. (2,389,000) 1,310,000
Cash and Cash Equivalents:
Beginning of period.......................... 4,123,000 1,064,000
------------ -----------
End of period................................ $ 1,734,000 $ 2,374,000
------------ -----------
------------ -----------
Supplemental Information:
Cash (paid) received for:
Interest................................ $(2,758,000) $(2,863,000)
Income taxes............................ (220,000) 1,503,000
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE>
GIANT GROUP, LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION
The accompanying condensed consolidated financial statements have been
prepared in accordance with the requirements for interim financial
statements and, accordingly, they are condensed and omit disclosures which
would substantially duplicate those contained in the most recent annual
report to stockholders. The financial statements as of June 30, 1994 and
for the interim periods ended June 30, 1994 and 1993 are unaudited and, in
the opinion of management, include all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation. Due to
the seasonal nature of the Company's business, operating results for the
interim period ended June 30, 1994 are not necessarily indicative of the
results that may be expected for the full year.
The financial information as of December 31, 1993 has been derived from the
audited financial statements as of that date. For further information,
refer to the financial statements and notes included in the Company's 1993
Annual Report to Shareholders.
2. INVENTORIES
<TABLE>
<CAPTION>
June 30, December 31,
1994 1993
---- ----
<S> <C> <C>
Finished goods $ 2,914,000 $ 2,698,000
In process 886,000 1,512,000
Raw materials 1,040,000 1,026,000
Supplies, repair parts and fuel 8,341,000 8,178,000
----------- -----------
$13,181,000 $13,414,000
----------- -----------
----------- -----------
</TABLE>
3. INVESTMENTS IN AFFILIATES
Summarized unaudited financial information for Rally's Hamburgers, Inc.,
the Company's 38% owned affiliate, follows:
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
July 3, 1994 July 4, 1993
------------ ------------
<S> <C> <C>
Revenues $52,103,000 $45,407,000
Operating income 945,000 4,834,000
Net income (loss) (931,000) 2,606,000
Company's share of net income
(loss) and amortization of
excess purchase cost $ (490,000) $ 850,000
<CAPTION>
Six Months Six Months
Ended Ended
July 3, 1994 July 4, 1993
------------ ------------
<S> <C> <C>
Revenues $94,908,000 $82,281,000
Operating income 453,000 7,274,000
Net income (loss) (2,793,000) 4,022,000
Company's share of net income
(loss) and amortization of
excess purchase cost $(1,340,000) $ 1,275,000
</TABLE>
6
<PAGE>
GIANT GROUP, LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The quoted market value of the Company's investment in Rally's at June 30,
1994 was $27,117,000 and declined to $18,489,000 at July 29, 1994. The
Company believes that the decline in the market value of its investment in
Rally's is temporary. Accordingly, the Company has not adjusted the
carrying value of its investment in Rally's to reflect a decline in value.
4. ACCRUED EXPENSES
<TABLE>
<CAPTION>
June 30, December 31,
1994 1993
---- ----
<S> <C> <C>
Compensation $ 1,481,000 $ 1,500,000
Pension plan contributions 1,674,000 2,069,000
Interest 805,000 789,000
Income taxes 365,000 544,000
Other 3,135,000 2,923,000
------------ ------------
$ 7,460,000 $ 7,825,000
------------ ------------
------------ ------------
</TABLE>
5. CONTINGENT LIABILITIES
On March 31, 1992, as a result of Keystone's voluntary disclosure to the
Pennsylvania Department of Environmental Resources (DER) of possible
violations of its waste fuel substitution permits, the DER undertook a
preliminary investigation of Keystone's waste fuel substitution rates from
1989 through early 1992. The DER subsequently issued an Order charging
Keystone with numerous violations of its air quality permits, relating to
alleged burning of hazardous waste fuels in quantities in excess of permit
limits and suspending Keystone's permits to burn waste fuels. In addition,
the DER referred the matter to the Pennsylvania Attorney General for
potential criminal prosecution. In August 1993, the Attorney General of
the State of Pennsylvania charged Keystone with one criminal count of
altering computer records and one count of falsifying records relating to
the burning of hazardous wastes in late 1991 and early 1992. The maximum
penalty to Keystone for both counts is a fine of $25,000. There were no
allegations or charges by the Attorney General that Keystone violated any
environmental laws or that there was any harm to the environment or to
anyone's health. Violations of the terms of the permits are additionally
subject to civil penalties under the Pennsylvania Air Pollution Control Act
and related statutes. Keystone has filed an appeal of the DER Order before
the Pennsylvania Environmental Hearing Board. Keystone also filed, and has
been granted, a motion for supersedeas to stay the DER Order and reinstate
the permits until such time as the appeal can be adjudicated.
7
<PAGE>
GIANT GROUP, LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Based upon the current status of settlement negotiations with the DER, the
Company estimates its potential liabilities relating to settlement of the
Order range from $500,000 to $750,000, of which $500,000 has been accrued.
The Company intends to vigorously defend itself with respect to the
allegations in the Order if it is unable to reach an acceptable alternative
resolution of this matter through settlement negotiations with the DER.
Based on the current stage of negotiations with the DER, the Company
believes that the ultimate outcome of this matter will not have a material
effect on the consolidated financial position of the Company or its results
of operations, after consideration of the charges incurred or accrued to
date.
In January 1994, two class action lawsuits were filed on behalf of the
shareholders of Rally's Hamburgers, Inc. in the United States District
Court, Western District of Kentucky, against Rally's, its controlling
shareholders, the Company and Burt Sugarman, Chairman of the Company and
former Chairman of Rally's, and certain of Rally's officers and directors.
The Complaints allege violations of the Securities Exchange Act of 1934
with respect to Rally's common stock and seek unspecified damages.
Management is unable to predict the outcome of this matter at the present
time or whether or not certain available insurance coverages will apply.
Rally's and the Company are defending themselves vigorously in this matter.
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
GENERAL
The Company's cement operations are directly related to the construction
industry. The regional markets in which the Company operates, the Middle-
Atlantic and South-Atlantic regions, are highly cyclical, experiencing peaks and
valleys in demand corresponding to regional and national construction cycles.
Additionally, the demand for cement is seasonal because construction activity
diminishes during the winter months of December, January and February. The
seasonal impact can be particularly acute in the Company's Middle-Atlantic
market. In addition, the Company performs a substantial portion of its routine
annual major maintenance projects during the period of low plant utilization,
typically the first quarter of its fiscal year, which results in significant
additional expense during this period. The Company believes that the routine
annual maintenance performed in the first quarter results in lower maintenance
costs throughout the remainder of the year, however, the Company expenses these
costs as incurred. Accordingly, the Company has historically experienced its
lowest levels of revenue and gross profit during the first quarter and thus the
results for the interim period ended June 30, 1994 are not necessarily
indicative of the results that may be expected for the full year.
The Company derives revenues from the sales of products, primarily cement and
construction aggregates, as well as from the provision of resource recovery
services. Resource recovery services revenue is primarily derived from third
parties that pay the Company to utilize their waste as fuel, which additionally
reduces the cost of traditional fossil fuels used in the manufacture of cement.
Due to the nature of the Company's operations and the fact that the burning of
waste-derived fuels is inseparable from the manufacture of cement, it is
impractical to disaggregate the costs of sales and services by revenue
classification.
RESULTS OF OPERATIONS
Operating revenues increased 16.4% to $27,264,000 and 12.8% to $42,777,000 for
the three and six-month periods ended June 30, 1994, respectively. Revenues
from product sales increased $3,899,000 or 19.6% to $23,780,000 and $5,295,000
or 16.8% to $36,773,000 for the three and six-month periods respectively, as a
result of increased shipping volumes and net selling prices of cement. Cement
shipping volumes increased 8.7% and 5.7% for the three and six-month periods
ended June 30, 1994, respectively, compared to the comparable periods in 1993.
Cement shipping volumes in the Company's South-Atlantic markets increased as a
result of particularly strong demand in the region, which has resulted in
shortages of supply. The Company's shipping volumes in the Middle-Atlantic
markets declined in the first quarter of 1994 as a result of the unusually harsh
winter. However, the Company's cement shipping volumes in its Middle-Atlantic
markets exceeded 1993 levels in the second quarter of 1994 and equalled 1993
levels for the six months ended June 30, 1994.
9
<PAGE>
The Company's average selling price per ton of cement increased 12.1% for the
quarter and 13.4% for the six-month period ended June 30, 1994, compared to the
comparable periods in 1993, as a result of price increases implemented in the
second and third quarters of 1993 and in the second quarter of 1994. The
Company realized greater price increases in its South-Atlantic markets where
demand and the Company's ability to increase prices were particularly strong.
Price increases of $5 per ton and $3 per ton were implemented effective April 1,
1994 in the Company's South-Atlantic and Middle-Atlantic markets, respectively.
The Company has announced another $5 per ton price increase effective August 1,
1994 in its South-Atlantic market. There can be no assurance, however, that
this price increase will be realized.
Resource recovery services revenues decreased $66,000 or 1.9% to $3,484,000 for
the quarter and $454,000 or 7.0% to $6,004,000 year to date primarily as a
result of lower quantities of waste fuels utilized at Giant in 1994 compared to
the record levels processed in the first half of 1993, offset somewhat by
slightly higher utilization and pricing of waste fuels at Keystone. Pricing for
resource recovery services at Giant in 1994 was level with that of 1993.
Gross profit increased 46.3% to $7,416,000 for the quarter and 52.0% to
$8,403,000 for the six-month period ended June 30, 1994, as a result of higher
operating revenues. The Company's gross margins increased from 21.6% and 14.6%
in 1993 to 27.2% and 19.6% in 1994 for the three and six-month periods,
respectively. In 1994, cost of sales and services increased $1,487,000 or 8.1%
for the quarter and $1,967,000 or 6.1% year to date primarily as the result of
higher shipping volumes and higher repair and maintenance costs incurred during
the 1994 winter overhaul of the Company's plant and equipment.
Selling, general and administrative expenses increased $477,000 to $2,802,000
for the quarter and increased $416,000 to $5,345,000 for the six-month period
ended June 30, 1994, but declined as a percentage of operating revenues year to
date, from 13.0% in 1993 to 12.5% in 1994, as a result of the increase in
operating revenues. The expense increase primarily related to increased
employee benefit costs and increased bad debt expense.
Interest costs decreased $30,000 for the quarter to $1,417,000 and increased
$21,000 to $2,845,000 for the six-month period ended June 30, 1994. Margin
borrowings of $14,594,000 were repaid in the second quarter of 1994, however the
resulting interest savings were partially offset by higher average borrowings
and interest rates on the Company's term loan and revolving credit facilities.
Investment income for the quarter and year to date decreased $184,000 and
$289,000, respectively, as a result of lower average amounts of funds invested
compared to the comparable periods in 1993.
Declines in the fair market value of the Company's marketable securities in 1994
resulted in losses of $448,000 for the quarter and $1,062,000 year to date. The
losses were the result of the general decline in the market value of fixed
income securities in 1994, which was due to an increase in prevailing interest
rates.
10
<PAGE>
Equity in earnings of affiliate decreased from earnings of $850,000 and
$1,275,000 in 1993 to a loss of $490,000 and $1,340,000 in 1994 for the three
and six-month periods ended June 30, 1994, respectively, as a result of losses
incurred by the Company's 38% owned affiliate Rally's Hamburger's, Inc.
("Rally's").
The income tax provisions recorded for the three and six-month periods ended
June 30, 1994 and 1993, relate to federal and state income taxes and have been
recorded at an estimated annual effective rate of 34%.
Net income for the second quarter of 1994 was $1,445,000 as compared to
$1,719,000 for the second quarter of 1993. For the six-month period ended June
30, 1994, net loss was $1,184,000 compared to net income of $160,000 for the
comparable period in 1993. The decreases in net income for the quarter and six
months were a result of the aforementioned marketable securities losses in 1994
and the Company's share of Rally's losses in 1994 compared to its share of
income in 1993.
LIQUIDITY AND CAPITAL RESOURCES
The Company's liquidity requirements arise primarily from the funding of capital
expenditures, debt service obligations and working capital needs. The Company
has historically met these needs through internal generation of cash and
borrowings on revolving credit facilities. The Company's borrowings have
historically increased during the first half of the year because of the
seasonality of its business and the annual plant maintenance performed in the
first quarter.
Cash and cash equivalents totalled $1,734,000 at June 30, 1994 compared to
$4,123,000 at December 31, 1993. At June 30, 1994 and December 31, 1993 the
Company had working capital of $2,643,000 and $14,052,000, with current ratios
of 1.1 and 1.4, respectively. The decrease in working capital was primarily due
to the current maturity classification of the $8,950,000 14.5% Subordinated
Notes, due April 15, 1995. Accounts receivable increased $3,594,000 or 31.6% to
$14,969,000 at June 30, 1994 as a result of higher cement revenues in June 1994
compared to December 1993. Inventories decreased $233,000 or 1.7% to
$13,181,000 at June 30, 1994. Marketable securities declined $16,932,000 to
$13,000 at June 30, 1994 as a result of the Company's sale of all of its
marketable debt securities during the first six months of 1994. The proceeds
from the sales of marketable securities were used primarily to repay margin
loans to brokerage firms. Total current liabilities decreased $3,991,000 or
12.0% to $29,162,000 at June 30, 1994, primarily as a result of the repayment of
$11,573,000 of short-term borrowings from stockbrokers and banks, offset by the
reclassification to current of the 14.5% Subordinated Notes.
11
<PAGE>
Cash provided by operations for the six-month period ended June 30, 1994 was
$275,000 compared to $1,983,000 for the comparable 1993 period. The decrease in
cash provided by operations was primarily the result of income tax payments of
$220,000 in 1994, compared to a refund of $1,503,000 received in 1993, and the
reduction of accounts payable and accrued expenses in 1994. Net cash provided
(used) by investing activities increased from $228,000 used in 1993 to
$9,797,000 provided in 1994 as a result of increased sales of marketable
securities in 1994 versus 1993, offset by increased capital additions in 1994.
Net cash used by financing activities increased from $445,000 in 1993 to
$12,461,000 in 1994 as a result of short-term borrowings repaid during 1994.
At June 30, 1994 cash equivalents of $1,462,000, in addition to a substantial
portion of the Company's Rally's common stock, were pledged as collateral for
loans totalling $10,594,000.
At June 30, 1994 the quoted market value of the Company's investment in Rally's
common stock was $27,117,000 and declined to $18,489,000 at July 29, 1994. The
Company believes that the decline in the market value of its investment in
Rally's is temporary. Accordingly, the Company has not adjusted the carrying
value of its investment in Rally's to reflect a decline in value.
On April 28, 1994, the Company's indirect wholly-owned subsidiary Giant Cement
Holding, Inc. filed a registration statement with the Securities and Exchange
Commission for an initial public offering of 10,000,000 shares of Giant Cement
Holding Common Stock. Giant Cement Holding was formed to hold the cement
facilities and resource recovery operations of the Company and to engage in the
public offering. Of the shares to be offered, 9,500,000 shares, comprising all
of the presently outstanding shares of Giant Cement Holding, will be sold by KCC
Delaware Company, a wholly-owned subsidiary of the Company, and 500,000 shares
will be sold by Giant Cement Holding. After the offering, GIANT GROUP would
have no further interest in the cement business. Should the initial public
offering be consummated, the Company intends to utilize a portion of the net
proceeds to prepay its $8,950,000 14.5% Subordinated Notes, due April 15, 1995
and its $34,350,000 7% Convertible Subordinated Debentures, due April 15, 2006.
The Company intends to refinance the $8,950,000 14.5% Subordinated Notes due
April 15, 1995, should they not be repaid as a result of the offering of Giant
Cement Holding stock. Exclusive of the refinancing, the Company believes that
its existing credit facilities, together with internally generated funds will be
sufficient to meet its working capital needs for the foreseeable future.
12
<PAGE>
GIANT GROUP, LTD.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
For information regarding environmental proceedings and legal matters, see Note
5 of the Notes to Consolidated Financial Statements elsewhere herein and see
Item 3 "Legal Proceedings" as reported in the Company's Annual Report on Form
10-K for the year ended December 31, 1993.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) On May 9, 1994, the Company held its 1994 Annual Meeting of
Stockholders.
(b) Not applicable.
(c) The stockholders approved the following matters:
(1) A vote was conducted by ballot on the election of directors
for the forthcoming year, and the nominees listed below received
the vote of the holders of the number of shares of Common Stock
as set forth below:
<TABLE>
<CAPTION>
Nominee For Against Abstain
------- --- ------- -------
<S> <C> <C> <C>
Burt Sugarman 4,758,471 109,289 93,015
Dean M. Boylan 4,851,486 16,274 0
Edward Brodsky 4,851,239 16,521 247
David Gotterer 4,851,336 16,424 150
Robert L. Jones 4,851,389 16,371 97
</TABLE>
(2) Coopers & Lybrand was ratified as the Company's independent
auditors for fiscal 1994 (4,809,480 shares for, 53,267 against,
5,013 abstain).
(2) An amendment to the Company's Restated Certificate of
Incorporation to reduce the authorized Common Stock to 12,500,000
shares, $.01 par value, from 25,000,000 shares, $.01 par value
(4,841,634 shares for, 12,285 against 13,841 abstain).
13
<PAGE>
ITEM 5. OTHER INFORMATION
On April 29, 1994, the Company filed a Form S-1 Registration Statement (File No.
33-78260) with the Securities and Exchange Commission, registering securities
for the initial public offering of 100% of the Company's interest in Giant
Cement Holding, Inc., a newly-formed wholly owned subsidiary of the Company,
which in turn wholly owns Giant Cement Company, Keystone Cement Company and
Giant Resource Recovery Company. On July 29, 1994, the Company filed Amendment
No. 2 to the Form S-1 Registration Statement with the Securities and Exchange
Commission. See Management's Discussion and Analysis of Financial Condition and
Results of Operations - Liquidity and Capital Resources.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
11. Earning per share calculations.
(b) Reports on Form 8-K
During the quarter ended June 30, 1994, the Company did not file
any reports on Form 8-K.
14
<PAGE>
SIGNATURE
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.
GIANT GROUP, LTD. - Registrant
By: /s/ Terry L. Kinder
---------------------------------------
Terry L. Kinder
Vice President
Secretary-Treasurer
By: /s/ Bratton Fennell
---------------------------------------
Bratton Fennell
Principal Accounting Officer
Date: August 11, 1994
15
<PAGE>
GIANT GROUP, LTD.
EARNINGS PER SHARE
Exhibit 11
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
1994 1993 1994 1993
---- ---- ---- ----
<S> <C> <C> <C> <C>
PRIMARY EARNINGS PER SHARE
Net income (loss) $1,445,000 $1,719,000 $(1,184,000) $ 160,000
Add: Interest expense reduction,
net of tax (3) 62,000 117,000 - -
----------- ----------- ------------- -----------
$1,507,000 $1,836,000 $(1,184,000) $ 160,000
----------- ----------- ------------- -----------
----------- ----------- ------------- -----------
Weighted average number
of common shares
outstanding (1) ** 6,463,000 6,413,000 5,180,000 5,180,000
Net income (loss) per common
share $ .23 $ .29 $ (.23) $ .03
----------- ----------- ------------ -----------
----------- ----------- ------------ -----------
FULLY DILUTED EARNINGS PER SHARE
Net income (loss) $1,445,000 $1,719,000 $(1,184,000) $ 160,000
Add: Interest expense on
subordinated debentures
assumed converted, net
of tax 396,000 396,000 793,000 793,000
Add: Interest expense reduction,
net of tax (3) 62,000 117,000 - -
----------- ----------- ------------- -----------
Net income (loss) for fully
diluted shares $1,903,000 $2,232,000 $ (391,000) $ 953,000
----------- ----------- ------------- -----------
----------- ----------- ------------- -----------
Fully diluted weighted average
number of common shares
outstanding (1) (2) ** 8,691,000 8,641,000 7,409,000 7,409,000
Net income (loss) per common
share $ .22 $ .26 $ (.05) $ .13
----------- ----------- ------------- -----------
----------- ----------- ------------- -----------
<FN>
(1) Includes incremental common shares issuable upon exercise of outstanding
options, if dilutive.
(2) Includes common shares issuable upon conversion of the 7% convertible
subordinated debentures.
(3) Reduction of interest expense, net of tax on the Company's 14 1/2%
Subordinated Notes assumed retired with option exercise proceeds in excess
of that amount required to retire twenty percent of the Company's
outstanding stock.
** Actual common shares outstanding at June 30, 1994 and 1993 were 5,180,000.
</TABLE>
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