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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1994
COMMISSION FILE NO. 1-5027
AMDURA CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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DELAWARE 41-0121800
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
900 Main Street South, Suite 2A, Building B, Southbury, CT 06488
(Address of principal executive offices) (Zip code)
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Registrant's telephone number, including area code: (203) 262-0570
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
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Common Stock, $.01 par value New York Stock Exchange
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 as 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 by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ X ]
The aggregate market value of the Common Stock, $.01 par value, held by
non-affiliates of the registrant as of the close of business on February 28,
1995, was $16,508,638 based on the closing sale price of the Common Stock on
the New York Stock Exchange of $2 per share on such date.
Indicate by check mark whether the Registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes X No
--- ---
The number of shares of the registrant's Common Stock, $.01 par
value, outstanding as of the close of business on February 28, 1995, was
24,665,160.
DOCUMENTS INCORPORATED BY REFERENCE
Part III incorporates information by reference from Registrant's definitive
Annual Meeting Proxy Statement, to be filed on or before the 120th day after
the end of Registrant's fiscal year (the "Proxy Statement").
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PART I
ITEM 1. BUSINESS
AMDURA Corporation, a Delaware corporation ("Amdura" or the "Company"),
through its subsidiaries, The Crosby Group, Inc., a Delaware corporation
("Crosby") and The Harris Waste Management Group, Inc., a Delaware
corporation ("Harris"), is a specialty manufacturer of products for the
overhead lifting and waste recycling and disposal markets. Amdura emerged from
bankruptcy under Chapter 11 of the United States Bankruptcy Code (the
"Bankruptcy Code") and its plan of reorganization, as amended and/or modified
(the "Plan") and confirmed by the United States Bankruptcy Court for the
District of Colorado (the "Bankruptcy Court"), became effective after the close
of business on October 23, 1991 (the "Amdura Effective Date"). Pursuant to the
Plan, Amdura was reorganized around Crosby and Harris, which were not included
in Amdura's Chapter 11 filing and were not in bankruptcy. See "Item 3. Legal
Proceedings" and Notes 1 and 2 of the Notes to Consolidated Financial
Statements included in Item 8 hereof.
PRODUCTS AND DISTRIBUTION
Crosby
Crosby, headquartered in Tulsa, Oklahoma, designs and manufactures
lifting equipment, hardware and accessories, including blocks, sheaves, hooks,
shackles, turnbuckles, load binders and other fittings, for use with wire rope
and chain. Crosby's lifting equipment hardware is used in energy,
construction, manufacturing, marine and transportation applications. Products
such as the Crosby ClipTM, Crosby(R) fittings, Lebus(R) load binders,
McKissick(R) blocks, National Swage fittings and Bullard(R) hooks enjoy a
reputation for unexcelled quality in their product categories.
Crosby sells its products to authorized Crosby distributors through a
sales force of 28 territorial representatives. Customers for Crosby products
include original equipment manufacturers, sling fabricators and industrial
supply houses. Currently, Crosby sells its products to approximately 2,600
distributors worldwide, of which approximately 70 percent are located in the
United States.
Harris
Harris, headquartered in Peachtree City, Georgia, is primarily engaged in
the manufacture and marketing of recycling and waste management equipment used
in the plastic, waste paper, ferrous and non-ferrous scrap metal recycling
industries and for solid waste disposal applications. Harris' major products
include large capacity, high-reduction balers (sold under the mark HRB(R)),
used for materials recovery and solid waste disposal facilities; metal shears
and balers, used for processing scrap steel; a line of small to medium capacity
balers sold under the mark Selco(R) used for baling waste materials; and a line
of balers sold under the mark Mosley(R) primarily to municipalities. Harris
also offers another related product line of high volume solid waste transfer
station compactors sold under the mark of Transpak(R).
Harris sells its products directly and through a network of distributors.
A national sales force sells scrap steel recycling equipment directly to scrap
processing companies. The Amfab(R), HRB(R) and Selco(R) product lines are sold
through a network of 21 distributors. The distributors assist customers with
the layout and installation of Harris machines as well as subsequent servicing
requirements.
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Harris employs six regional sales managers to coordinate its relationships
with distributors and to sell its product line of scrap steel recycling
equipment.
COMPETITION
Crosby
Crosby is the world's leading manufacturer of forged fittings, blocks and
sheaves for use with wire rope and chain. Crosby lifting and material handling
hardware have applications in numerous industry segments, including the
manufacturing, construction, marine, energy, transportation and government
sectors.
Although no single company competes in all of its markets, Crosby faces
significant foreign and domestic competition. In addition, effective marketing
requires a significant inventory investment to support various equipment
configurations and a custom product order capability, which requires special
design engineers and forging equipment.
Crosby's principal methods of competition include the marketing of a full
line of products through a network of nonexclusive distributors with an
emphasis on innovative product features, quality, safety and education. Since
Crosby's products are usually a critical component of the equipment used in its
application, Crosby has developed a training program whereby its distributors
and end users are educated in the proper use of its products. In 1992, Crosby
became the first American company in its industry to achieve ISO 9001
certification, an international quality assurance program.
Harris
Harris is the largest manufacturer in the world of shears and balers used
in the scrap metal and waste handling, recovery and recycling industries. In
addition, Harris accounts for approximately 50 percent of total sales to the
solid waste disposal and waste paper and materials recovery markets in the
Western Hemisphere.
The Company believes that Harris has three principal competitors. The
increased emphasis on recycling and the demand for more efficient scrap
handling and processing equipment has resulted in increased competition in
recent years. The markets for waste disposal products are primarily affected
by the economic activity in the steel and the scrap metal industries and the
secondary and solid waste processing markets.
Harris' principal methods of competition include the utilization of a
comprehensive distribution network and the frequent introduction of new product
lines, sometimes using a new product development process that is driven by the
customer. Harris employs a sales force organized around product lines; uses
interactive, real time accounting and manufacturing control systems; and
maintains an extensive file system on every piece of equipment ever
manufactured by Harris. This system supports a high quality customer service
level and provides for efficient sales of replacement parts.
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BACKLOG
The Company estimates that its order backlog was approximately
$52,333,000 ($8,246,000 at Crosby and $44,087,000 at Harris) and $20,395,000
($6,639,000 at Crosby and $13,756,000 at Harris) at December 31, 1994 and 1993,
respectively. Included in the December 31, 1994 backlog at Harris is an order
of approximately $10,700,000 from the Defense Nuclear Agency. Backlog consists
of orders received that are believed to be firm but not yet shipped. The
Company expects that substantially all the December 31, 1994 backlog will be
filled during 1995.
INVENTORY AND RAW MATERIALS PURCHASES
Principal raw materials and purchased components for the Company's Crosby
and Harris operations are obtained from numerous suppliers. Raw materials
include steel plate and bar stock, iron and steel castings and forgings. These
raw materials are readily available from multiple sources. Purchased
components include bearings, cylinders, hydraulic pumps and motors. The
Company's Crosby and Harris operations fabricate and machine a majority of the
parts used in their respective operations.
SIGNIFICANT CUSTOMERS
No single distributor or end-user accounts for a significant portion of
Crosby's or Harris' gross sales.
SEASONAL INFLUENCES
The Company's continuing manufacturing businesses generally are not
subject to seasonal variances.
PATENTS AND TRADEMARKS
Crosby
Crosby has approximately 25 U.S. patents and patent applications and 39
corresponding foreign patents and applications. Most are for unique fittings
devices although certain are directed to block and sheave products. Crosby
expects to receive additional patents, primarily as a result of its custom
manufacturing efforts. Crosby owns a number of trademarks including those for
the Crosby(R) name and for its McKissick(R), Crosby-Laughlin(R) and Lebus(R)
products. Crosby has several proprietary processes, including the technique
for "roll-forging" sheaves. Crosby aggressively defends its patents,
trademarks and other intellectual properties.
Harris
Harris has approximately 19 U.S. patents and patent applications. Most
are for unique baling designs and shearing processes. Harris expects to
receive more patents as its research and development efforts continue. Harris
owns 12 trademarks, including the following: HRB(R), Selco(R), Selco 2-Ram(R),
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Mosley(R), Amfab(R) and Transpak(R). Harris aggressively
defends its patents, trademarks and other intellectual properties.
PRODUCT RESEARCH AND DEVELOPMENT
The Company's research and development program consists of applied
engineering in the improvement of existing products and development of new
products. Additional information required by this item is set forth in Note 15
of the Notes to Consolidated Financial Statements included in Item 8 hereto.
EMPLOYEES
The Company had approximately 1,535 employees as of December 31, 1994.
Of these, Crosby employed approximately 1,020 persons and Harris employed
approximately 510 persons. Crosby is a party to three collective bargaining
agreements covering 600 North American employees which expire in 1995 and 1996.
The Company believes that its employee relations are satisfactory.
FOREIGN AND DOMESTIC OPERATIONS AND EXPORT SALES
Information concerning the Company's sales, profitability and
identifiable assets attributable to each of its geographic areas is set forth
in Note 17 of the Notes to Consolidated Financial Statements included in Item 8
hereof.
ENVIRONMENTAL MATTERS
The Company is subject to various federal, state and local requirements
for control of pollutants resulting from current operations and for remediation
of the environmental effects of past practices in the management and disposal
of industrial wastes, both at its facilities and at off-site locations. These
requirements are frequently revised, generally in a manner which broadens their
application and/or increases their stringency. The Company believes that it is
in substantial compliance with those requirements applicable to its operations
and that costs associated with such compliance will not have a material adverse
effect on its consolidated financial position, results of operations, level of
capital expenditures or competitive position.
In recent years, the Company has received notices from certain
environmental protection agencies and third parties claiming that the Company,
alone or with other parties, is or may be a party responsible for action (or
the cost of such action) to remediate environmental conditions alleged to exist
at disposal sites on various properties or on properties of third parties. See
"Item 3. Legal Proceedings - Environmental Proceedings". Although the
financial impact on the Company from any such remedial actions cannot be
determined until relevant procedures are completed and expense responsibilities
are allocated among the parties involved, the Company does not believe that the
costs thereof will have a material adverse effect on its consolidated financial
position, results of operations, level of capital expenditures or competitive
position.
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ITEM 2. PROPERTIES
The corporate offices of the Company are located at 900 Main Street
South, Suite 2A, Building B, Southbury, Connecticut 06488.
The facilities of the Company and of Crosby and Harris are of varying
ages and types of construction. Management believes that all such facilities
are adequate for the purposes for which they are being used.
Crosby owns and operates five manufacturing facilities and owns two and
leases eight distribution centers. The manufacturing facilities are located in
Tulsa, Oklahoma; Longview, Texas; Jacksonville, Arkansas; Brampton, Ontario,
Canada; and Putte, Belgium. The distribution facilities are located in
Arlington, Texas; Atlanta, Georgia; Chicago, Illinois; Harrisburg,
Pennsylvania; Seattle, Washington; Los Angeles, California; Barnsley, U.K.;
Brampton, Ontario, Canada; Putte, Belgium; and Paris, France.
Harris owns and operates manufacturing facilities in Cordele, Georgia and
Baxley, Georgia and leases and operates manufacturing facilities in Woodburn,
Oregon. Harris leases its corporate headquarters, which is located in
Peachtree City, Georgia.
ITEM 3. LEGAL PROCEEDINGS
Information concerning certain legal proceedings to which the Company and
its subsidiaries have been or are subject to is set forth below. Additional
information is set forth in Notes 1, 2 and 13 of the Notes to Consolidated
Financial Statements included in Item 8 hereof.
SECURITIES CLASS ACTIONS
In January 1990, an action styled Saul Jones, et al. vs. Amdura
Corporation. et al., Case No 90-F-167 (the "Jones Complaint") was commenced in
the United States District Court for the District of Colorado. This action
purported to be brought on behalf of a class of all persons who purchased
Amdura's old common stock during the "class period", December 27, 1988 through
November 14, 1989, and alleged, under Section 10(b) and 2b(a) of the Securities
Exchange Act of 1934, claims to the effect that Amdura's public business and
financial disclosures were materially false or misleading during this period.
The Jones complaint named Amdura and certain former directors as defendants. An
action initially styled Amtax Company. et al. vs. Amdura Corporation. et al.,
case No 90-F-500 (the "Amtax Complaint") in the same forum and based on similar
legal theories, for the "class period" December 27, 1988 through March 19,
1990, was commenced in March 1990 on behalf of holders of Amdura's old common
stock and its old preferred stock, Series D. The Amtax Complaint named the same
defendants and certain additional former Amdura directors as the Jones
Complaint. Upon its 1990 filing of a petition for reorganization under Chapter
11 of the United States Bankruptcy Code, (see "Chapter 11 Proceedings", below)
Amdura was severed from the Jones Complaint and the Amtax Complaint because of
the automatic stay of actions pending against companies that file for
bankruptcy. During the bankruptcy proceedings, both actions proceeded as to the
individual defendants, and the plaintiffs and individual defendants
subsequently reached a settlement agreement.
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As a result of the consummation of the Plan, the plaintiffs' claims
against Amdura were discharged, with their rights limited to distributions, if
any, available to them under the Plan. In this regard, prior to the
confirmation of the Plan, the Bankruptcy Court disallowed the "class claims"
filed by the plaintiffs against Amdura as part of the bankruptcy cases, thereby
leaving the individual class representatives, as opposed to the entire class,
as the only parties with possible claims against Amdura.
The plaintiffs appealed the disallowance of such "class claims" as well
as the order of the Bankruptcy Court confirming the Plan. On August 3, 1994,
the United States District Court for the District of Colorado (the "District
Court") issued an order reinstating the "class claims" which had been
disallowed by the Bankruptcy Court. The order also purported to reverse the
Bankruptcy Court's order confirming the Plan. The effectiveness of this order
was initially stayed.
On August 31, 1994, Amdura entered into a definitive Stipulation of
Settlement with the representatives of the plaintiff class in the Jones and
Amtax Complaints. On November 22, 1994, the District Court approved the
Stipulation of Settlement and dismissed the Jones and Amtax complaints; and,
on December 1, 1994, the Bankruptcy Court approved the withdrawal of the "class
claims". Pursuant to the Stipulation of Settlement, Amdura will pay $500,000
and issue 564,302 shares of its common stock in exchange for a full and final
release of all claims under those complaints. The Company anticipates the
distribution of the settlement proceeds to holders of proved claims in 1995.
Amdura recognized a one-time special charge of $1,875,000 in the third quarter
of 1994 as a result of this settlement.
ENVIRONMENTAL PROCEEDINGS
Since its inception, Amdura and certain of its subsidiaries have engaged
in various manufacturing operations and have owned or operated a number of
manufacturing facilities. Amdura and these subsidiaries, including Crosby and
Harris, are subject to environmental laws and regulations and, in the ordinary
course of business, deal with various regulatory agencies concerning
environmental issues that may arise in connection with their operations.
Prior to the filing of its petition in the Bankruptcy Proceeding, Amdura
and several of its subsidiaries were identified, generally by regulatory
agencies, as potentially responsible parties with respect to the costs of
remediating problems at various sites which Amdura or the subsidiary involved
owned or operated or to which allegedly hazardous substances allegedly
generated by Amdura or a subsidiary were alleged to have been transported.
During the Bankruptcy Proceeding there were some sites for which no
claims were filed, at other sites unsecured claims were filed and for certain
sites both unsecured and administrative claims were filed. With one exception,
if no claim was filed in the Bankruptcy Proceeding, then Amdura's potential
liability was discharged. However, at the Portland Plant site, Amdura's
obligations under an administrative order and consent were allegedly unaffected
by the Bankruptcy Proceeding even though no claim was filed. Pursuant to such
order, Amdura complied with a request to monitor groundwater conditions until
certain criteria were met. The cost of such monitoring was minimal. Payment
of claims filed against the estate in the Bankruptcy Proceeding in connection
with such sites is governed by the Plan. Under the Plan, all of the unsecured
claims remain solely the responsibility of the Amdura Liquidating Trust, and
Amdura has no further liability to unsecured creditors for acts occurring prior
to the date it filed its bankruptcy petition under the Bankruptcy Code. With
respect to administrative claims filed against the estate in the Bankruptcy
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Proceeding, the Plan provides that all allowed administrative claims
must be paid in full by Amdura. At this point in Amdura's Bankruptcy
Proceeding, all of the environmentally related administrative claims have been
disallowed or settled in a manner that completely discharges Amdura from
liability, except for the claims discussed below.
Amdura settled the administrative claim filed by the Minnesota Pollution
Control Agency ("MPCA") with respect to the CAP/SKB Landfill by agreeing to
perform certain remedial activities. During 1994, Amdura disbursed $621,000 on
remediation activities at this site, and completed the construction phase of
the remediation. According to the settlement with the MPCA, Amdura will
perform monitoring activities at the site for two years after completion of the
construction, after which time the MPCA will assume responsibility for
monitoring activities. The Company estimates that its costs to perform
monitoring procedures will be approximately $200,000.
Recent court decisions indicate that a discharge in bankruptcy may not
release the debtor from liabilities for environmental damages arising before
the bankruptcy petition was filed. In these cases, claims were allowed due to
insufficient notice of the bankruptcy to surrounding landowners, residents,
subsequent titleholders, etc., or due to regulatory agencies' ability to assert
nondischargable claims pursuant to injunctive provisions. It is the Company's
position that remediation costs at sites which were subject to proper
notification of its bankruptcy should be considered unsecured claims subject to
discharge in its bankruptcy proceeding. Also, court decisions have indicated
that a debtor may be required to participate in an environmental site for
damages which occurred prior to the filing of the bankruptcy but which were not
identified until after the debtor's reorganization plan was confirmed. Based
on the limited number of such claims received since the effective date of the
Plan, the Company believes that, if any such additional claims are asserted and
adversely determined against the Company, there would be no material adverse
effect on the Company's financial condition or results of operations as a
result of such claims.
Crosby has been identified as potentially responsible for the costs of
remediating environmental problems at five sites to which Crosby is alleged to
have transported allegedly hazardous substances. At two of such sites, Crosby
has entered into agreements with appropriate environmental agencies and
affected third parties pursuant to which it has already paid its identified
share of the total remediation costs associated with the sites. Based on the
Company's knowledge of the status and total estimated cost of the remediation
and of amounts that have been paid to date, the Company expects that any future
cost to Crosby associated with these sites will be immaterial. At two other of
such sites, Crosby has made payments but its remaining liability has not been
fixed, although based on past payments, any future obligations should not be
material. At the fifth of such sites, Crosby has been identified as a
potential generator, but no requests for payments have been received, and there
have been no communications regarding this site directed to Crosby for several
years.
ORDINARY LITIGATION INCIDENTAL TO THE BUSINESS
Amdura and its subsidiaries from time to time are presented with claims
arising out of their current and former manufacturing and other operations,
including claims asserting personal injury arising out of the manufacture, sale
and use of the products of those businesses based on various theories of
recovery for products liability and for workers compensation. Amdura believes
these claims will not have a material impact on the financial position and
results of operations of the Company. Amdura and its subsidiaries vigorously
defend all product liability claims, and believe that their products are safe
and suitable for their intended uses. Crosby and Harris also have implemented
product information practices to further reduce their exposure to such
contingent liabilities. Amdura and/or its subsidiaries have comprehensive
general liability insurance under various programs which may afford total or
partial coverage for certain product claims. Pre-petition claims identifying
Amdura
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and any of the other debtors as a defendant were subject to the
automatic stay under the Bankruptcy Code, and, to the extent provided therein,
to discharge in bankruptcy. Claims against Crosby and Harris and other
non-bankrupt subsidiaries were not stayed and have not been affected by
confirmation of the Plan.
Under the terms of the agreement by which Amdura sold certain assets of
its crane businesses to The American Crane Corporation ("American Crane"),
American Crane agreed to indemnify Amdura for certain liabilities of such
businesses which might otherwise be asserted against Amdura. Included among
such liabilities are two environmental site matters and several product
liability matters (including one group of a large number of related matters).
If such indemnity were to become ineffective for any reason (including due to
American Crane's financial condition), then the liabilities covered thereby
could revert to Amdura.
CHAPTER 11 PROCEEDINGS
Amdura and certain of its subsidiaries each filed a voluntary petition
for bankruptcy under Chapter 11 of the Bankruptcy Code with the Bankruptcy
Court on April 2, 1990. Amdura's Plan was confirmed by the Bankruptcy Court on
September 19, 1991, and became effective on October 23, 1991.
In connection with the Amdura bankruptcy cases (the "Bankruptcy Cases"),
the Bankruptcy Court entered a bar date order establishing January 10, 1991, as
the date by which claimants or interest holders were required to have filed a
proof of claim or interest in the bankruptcy cases, setting forth the nature
and amount of that claim or interest. Substantial claims were filed through
the bar date in respect of the debtors' bankruptcy estates. Generally, claims
against Amdura and the other debtors fell into four categories: priority and
administrative claims, secured claims, unsecured claims (including certain
contingent or unliquidated claims) and equity claims.
As a result of the confirmation and consummation of the Plan pursuant to
the Bankruptcy Code, except as otherwise provided in the bankruptcy plan
confirmation orders entered into in connection with the Bankruptcy Cases or the
Bankruptcy Code, Amdura has been discharged of and from each and every debt (as
the term "debt" is defined in the Bankruptcy Code) and claim that arose against
Amdura before September 19, 1991.
There remains pending against Amdura one administrative claim for which
the parties have reached a settlement agreement subject to approval by the
Bankruptcy Court. Amdura has a liability recorded in its financial statements
equal to the amount it will be required to pay pursuant to this settlement
agreement.
Parties holding claims that have been disallowed or ruled by the
Bankruptcy Court to be unsecured may attempt to reassert their claims as
administrative or priority claims, and some creditors may attempt to assert
that their claims are not discharged and should continue as post-bankruptcy
obligations of the Company. Based on the limited number of such claims
received since the effective date of the Plan, the Company believes that, if
any such additional claims are asserted and adversely determined against the
Company, there would be no material adverse effect on the Company's financial
condition or results of operations as a result of such claims.
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OTHER LITIGATION INCIDENTAL TO THE BANKRUPTCY CASES
In March 1992, Amdura National Distribution Company (f/k/a Farwell,
Ozmun, Kirk & Co.) ("Andco"), a liquidating estate and former subsidiary of
Amdura which filed suit in a voluntary petition for bankruptcy at the same time
as the Company, filed suit in the Bankruptcy Court against Amdura seeking the
recovery of approximately $1,050,000 then held in Amdura's former concentration
account with Continental Bank, N.A. Such suit also requested the entry of a
temporary restraining order and, after an appropriate hearing, a preliminary
injunction enjoining Amdura's use of such funds until the ownership of such
funds could be determined at a trial on the merits. In the suit Andco alleges
that based on certain pre-petition payments made by it into such account, such
funds belong to it, and not to Amdura. The Bankruptcy Court initially entered
the temporary restraining order against Amdura, but following the preliminary
injunction hearing the Bankruptcy Court dissolved the order. In its opinion
dated April 9, 1992, denying Andco's request for a preliminary injunction, the
Bankruptcy Court noted that it was not substantially likely that Andco's claim
would be successful on the merits at a full trial, which is a procedural
finding required to be made by a court granting a preliminary injunction.
Subsequent to the issuance of the Bankruptcy Court's opinion, Andco filed a
motion requesting a stay to maintain the status quo pending appeal of the order
denying the preliminary injunction. Such motion was denied by the Bankruptcy
Court at a hearing held on May 1, 1992 and by order dated May 9, 1992.
Subsequent to that ruling, Andco filed a motion in the Federal District Court
for the District of Colorado (the "District Court") requesting a stay of the
Court's earlier ruling. On October 20, 1992, the Bankruptcy Court's denial was
sustained by the District Court by its denial of Andco's motion for leave to
appeal. On July 2, 1993, Amdura filed a motion for summary judgment. Andco
filed its response and cross-motion for summary judgment on July 26, 1993. On
September 13, 1993, the Bankruptcy Court issued its findings of fact and
conclusions of law granting summary judgment in favor of Amdura and denying
Andco's cross-motion for summary judgment. On September 22, 1993 Andco
appealed the Bankruptcy Court's Findings of Fact and Conclusions of Law which
granted summary judgment in favor of Amdura to the District Court. In
December 1993, both Amdura and Andco filed briefs in connection with the
appeal. On April 11, 1994, the District Court issued a judgment for Amdura
and against Andco, affirming the Bankruptcy Court's earlier decisions. On May
10, 1994, Andco appealed the District Court's judgment in the United States
Court of Appeals for the Tenth Circuit, and, in September 1994, both Amdura and
Andco filed briefs in the United States Court of Appeals for the Tenth Circuit.
Amdura intends to continue its vigorous defense of its rights in this case.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
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PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS
The Company's Common Stock is listed for trading on the New York Stock
Exchange.
At February 15, 1995, 24,665,160 shares of Common Stock, par value $.01
per share (the "Common Stock") were issued and outstanding and held by
approximately 2,200 holders of record.
Since the Amdura Effective Date, the Company has not paid any cash
dividends on the Common Stock. The Company is allowed to pay dividends on the
Common Stock, subject to restrictions under its loan agreements.
Additional information required by this item is in Note 18 of the Notes
to Consolidated Financial Statements included in item 8 hereto.
ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
(Dollars in thousands, except
per share data) SUCCESSOR COMPANY PREDESSOR COMPANY
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YEAR YEAR YEAR TWO MONTHS TEN MONTHS YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1994 1993 1992 1991 1991 1990
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INCOME STATEMENT DATA:
Operating revenues $ 145,159 $ 129,769 $ 127,250 $ 19,919 $ 125,760 $ 158,928
Income (loss) from continuing
operations before
extraordinary item $ 1,617 $ 2,805 $ (18,052) $ (1,624) $ 23,103(1) $ (17,036)
Net income (loss) from
continuing operations, per
common and common equivalent
share $ 0.06 $ 0.11 $ (1.45) $ (0.14) $ (2) $ (2)
BALANCE SHEET DATA
(AT PERIOD END):
Cash and cash equivalents $ 3,765 $ 4,377 $ 6,909 $ 7,561 $ 7,311 $ 5,069
Working capital $ 33,556 $ 26,529 $ 23,300 $ 24,395 $ 26,602 $ 22,602
Total assets $ 127,766 $ 112,501 $ 118,533 $ 149,728 $ 148,601 $ 284,428
Long-term liabilities $ 33,367 $ 34,855 $ 36,692 $ 61,685 $ 62,344 $ 393,309
Stockholders' capital
(deficit) $ 54,562 $ 46,420 $ 46,102 $ 39,092 $ 40,500 $ (158,526)
<FN>
(1) Income from continuing operations for the ten months ended October
31, 1991, was increased by $26,799,000 of fresh start adjustments and
interest income, net of professional fees and other expenses related to the
Company's bankruptcy reorganization.
(2) Net income (loss) per common share for the Predessor Company is not
meaningful due to debt discharge pursuant to the Plan, the issuance of
additional common stock pursuant to the reorganization plan, and the
adoption of fresh start reporting.
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with the
Selected Financial Data and the Consolidated Financial Statements, included in
Items 6 and 8 hereof, respectively.
FINANCIAL CONDITION
REORGANIZATION, RESTRUCTURING AND REFINANCING
On April 2, 1990, Amdura Corporation (the "Company" or "Amdura") filed a
voluntary petition for bankruptcy under Chapter 11 of the United States
Bankruptcy Code. According to the Fifth Amended Joint Plan of Reorganization
of Amdura (the "Plan"), which became effective October 23, 1991, Amdura and its
wholly-owned subsidiaries, The Crosby Group, Inc. ("Crosby") and the Harris
Waste Management Group, Inc. ("Harris"), which were not in bankruptcy, jointly
issued $50,000,000 aggregate principal amount of term notes to Amdura's secured
creditors (the "Bank Group"). The Bank Group was also issued approximately 86
percent of Amdura's post reorganization common stock. Effective December 31,
1992, Amdura, Crosby, Harris and the Bank Group entered into a restructuring
whereby the unpaid interest and approximately 50 percent of the outstanding
principal were converted into 11,966 shares of Series A Preferred Stock, which
was in turn automatically converted into 11,966,159 shares of common stock in
1993. The remaining approximately 50 percent of outstanding term notes were
converted to senior and subordinated secured debt. Effective September 30,
1994, the outstanding senior and subordinated secured debt were refinanced with
a group of non-stockholder lenders.
CHANGES IN FINANCIAL CONDITION
The financial condition of Amdura improved in 1994, as shown by an increase in
income from operations of over 13 percent, from $5,012,000 to $5,673,000 for
the years ended December 31, 1993 and 1994, respectively. Net income, however,
decreased from $2,805,000 in 1993 to $1,347,000 in 1994, primarily due to an
increase in income tax expense, caused by a change in Amdura's domestic tax
position, and net special charges as explained in Results of Operations, below.
Total revenues increased 12 percent, resulting in increased accounts receivable
and trade accounts payable. The Company also achieved increased sales by
acquiring certain assets and manufacturing operations of companies engaged in
similar businesses as discussed in the notes to consolidated financial
statements. Also, during 1994, Amdura's Harris Waste Management Group was
awarded a contract with the Defense Nuclear Agency to manufacture three
baler-shears for the Russian government. The total sales price for these
baler-shears is approximately $10,700,000, and the shipments will occur after
December 31, 1994. These factors have resulted in an increase to inventories
of 40 percent from December 31, 1993 to 1994.
Matters remaining from Amdura's 1991 bankruptcy proceedings have also
influenced the Company's financial condition. In 1994, Amdura made total
contributions of $2,497,000 to the defined benefit pension plans in accordance
with the settlement with the Pension Benefit Guaranty Corporation ("PBGC") and
also paid $621,000 for environmental remediation of the CAP/SKB Landfill. At
December 31, 1994, the Company had an accrued liability of $1,586,000 (the
majority of which will be satisfied by the issuance of common stock) related to
the settlement of certain class action claims which remained from the
bankruptcy proceedings. These factors, in addition to increases in operations
11
<PAGE> 13
discussed above, have resulted in a 14 percent increase in accrued
expenses from December 31, 1993 to 1994.
The Company incurred a total of $2,132,000 of interest expense in 1994,
$1,384,000 of which was paid to the Bank Group through September 30, 1994, when
this long-term debt was refinanced as discussed below.
LIQUIDITY REQUIREMENTS AND CAPITAL RESOURCES
Effective September 30, 1994, Amdura refinanced its long-term debt. The
related loan agreements provide for a $45,000,000 facility, which was limited
to $35,000,000 at December 31, 1994.
The loan agreements provide for $11,000,000 in Term Loans, which mature on
October 1, 2001, accrue interest at a floating rate which is due monthly and
require quarterly principal payments of $393,000 commencing April 1, 1995.
The loan agreements also provide for Revolving Credit Facilities, which had a
total outstanding balance of $15,823,000 and an available balance of $6,987,000
at December 31, 1994. The Revolving Credit Facilities accrue floating rate
interest which is due monthly, mature on October 1, 1997 and are subject to
extension at the option of the lenders. Finally, the loan agreements provide
for CAPEX Loans to be used solely for the purchase of equipment or real
property, none of which were outstanding nor were unavailable at December 31,
1994.
In addition to the foregoing indebtedness, Amdura's foreign subsidiaries had
working capital indebtedness of $1,886,000 as of December 31, 1994. These
foreign subsidiaries have secured revolving credit lines with banks which
provide for borrowings aggregating $5,186,000.
As of December 31, 1994, current assets of Amdura exceeded current liabilities
by $33,556,000. The Company believes that cash flow from current operations is
sufficient to meet liquidity requirements for its continuing operations. As
noted above, the Company has access to a total of $12,173,000 in domestic and
foreign revolving credit facilities to meet short-term liquidity requirements
should the need arise.
The Company is the sponsor to certain defined benefit pension plans which have
been frozen, and which were the subject of a settlement with the PBGC at the
bankruptcy reorganization. At December 31, 1994, the estimated net underfunded
liability of these plans was $3,310,000, $1,736,000 of which is estimated to be
required to be contributed to the plans in 1995. The PBGC settlement also
established the PBGC Grantor Trust, which had assets available for
contributions to these plans of $1,747,000 at December 31, 1994, $860,000 of
which are estimated to be disbursed in 1995. According to the terms of the
PBGC settlement, Amdura is obligated to make contributions to these frozen
plans of 50 percent of the required minimum funding contributions, up to
$1,200,000 per year, while the PBGC Grantor Trust has assets. After the PBGC
Grantor Trust assets have been fully utilized, the Company will be obligated to
make 100 percent of the required minimum funding contributions. Amdura
anticipates having adequate liquidity from current operations and other sources
described above to meet the Company's contribution requirements of these
pension plans.
Amdura estimates that expenditures to address environmental matters will be
approximately $250,000 in 1995. The Company disbursed $774,000 and $2,392,000
on environmental matters in 1994 and 1993, respectively.
During 1994, the Company reached a settlement with the representatives of the
plaintiff class in certain securities class action litigation which had been
pending since 1990. The terms of the settlement
12
<PAGE> 14
require Amdura to pay $500,000 and issue 564,302 shares of its common
stock. Amdura anticipates that the payment of cash and issuance of stock will
occur in the second quarter of 1995.
Where the Company is able to estimate the results of legal proceedings and
environmental and other claims, appropriate accruals have been established
(which are recorded at the gross amount estimated to be paid, and not net of
estimated insurance or other proceeds). However, with respect to certain legal
proceedings and certain environmental and other claims, the Company is unable
to estimate the eventual outcome and impact on the consolidated financial
statements and no provision for any loss that may result from resolution of
these matters has been made. In any event, the Company believes that current
accruals and established sources of cash from operations and other sources are
adequate to meet the requirements of reasonably expected payments regarding
legal proceedings and environmental and other claims, and that these payments
will have no material adverse effect on the Company's financial condition or
results of operations.
At December 31, 1994, the Company had significant net operating loss
carryforwards which originated prior to November 1, 1991. However, due to
certain change of ownership requirements of the Internal Revenue Code,
utilization of the net operating loss carryforwards is limited to approximately
$39,000,000 at the rate of $2,734,000 per year through 2005. In addition, the
Company has net operating loss carryforwards generated subsequent to October
31, 1991 of approximately $25,400,000 which expire through 2008. The
utilization of these net operating loss carryforwards may be limited if changes
in the Company's stock ownership, as defined in the Internal Revenue Code,
exceed 50 percent of the value of the Company's stock during any three year
period. The calculation of the limitation is based on the fair value of the
Company, the federal long-term interest rate and the expiration periods of the
existing net operating loss carryforwards. The calculation at December 31,
1994 reflects a change in ownership of approximately 45 percent during the
previous three year period.
RESULTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1994
Total revenues for 1994 were $145,159,000, consisting of $97,421,000 at Crosby
and $47,738,000 at Harris. This increase in revenues of 12 percent over 1993
(nine percent at Crosby and 17 percent at Harris) is a result of the strong
North American economies, the beginning of recovery in Europe from its recent
recession and the addition of product lines from acquisitions.
Cost of products sold were $113,930,000 for 1994, compared to $103,832,000 for
1993. This ten percent increase is due to the growth in sales volume noted
above. Gross margin increased $5,292,000, or 20 percent, over 1993. Gross
margin as a percentage of revenues was 22 percent for 1994 and 20 percent for
1993, reflecting the realization of increased operating efficiencies at higher
usage levels of manufacturing capacity.
Selling and administration expenses for 1994 were $24,053,000, or 15 percent
higher than 1993 due to the increase in sales volume. These increased expenses
were partially offset by a favorable resolution of certain matters related to
the Amdura bankruptcy reorganization which occurred during the second quarter
of 1994. As a percentage of total revenues, selling and administration
expenses were 17 percent in 1994 and 16 percent in 1993.
13
<PAGE> 15
During 1994, Amdura recorded net special charges of $1,503,000. This resulted
from the recognition of $1,875,000 in expense from the settlement of class
action litigation, offset by $372,000 in income related to the reversion of
assets to the Company from certain terminated pension plans.
Interest expense was $2,132,000 for 1994, an increase of three percent from
1993. This small increase was due to rising interest rates on floating rate
loans experienced during 1994.
Income tax expenses for 1994 were $1,924,000, compared to $145,000 for 1993.
Due to a change in the Company's domestic tax position at the beginning of
1994, Amdura was required to record deferred U.S. federal income taxes, even
though net operating loss carryforwards provided that these taxes would not be
required to be paid to the federal government. Foreign income taxes increased
$233,000 and U.S. state income taxes increased $115,000 due to increased
profitability of the Company's operations.
In 1994, the Company recorded a cumulative effect of change in accounting
principle in conjunction with its implementation of Statement of Financial
Accounting Standards No. 112, "Employers' Accounting for Postemployment
Benefits," of $270,000, net of a related income tax benefit of $166,000.
Net income for the year ended December 31, 1994 was $1,347,000, compared to
$2,805,000 for the prior year. The reason for this change was principally due
to an increase in gross margin of $5,292,000, partially offset by increases in
selling and administration expenses of $3,128,000, net special charges in 1994
of $1,503,000, an increase in income taxes of $1,779,000 and the 1994
recognition of a cumulative effect of change in accounting principle of
$270,000.
YEAR ENDED DECEMBER 31, 1993
Total revenues for 1993 were $129,769,000, consisting of $88,976,000 at Crosby
and $40,793,000 at Harris. Compared to 1992, revenues increased two percent,
due primarily to a four percent increase in sales at Crosby, offset by a two
percent decrease in sales at Harris. Factors contributing to these changes
included improved North American sales for Crosby and softening in the demand
for scrap metal recycling equipment for Harris.
Cost of products sold were $103,832,000 for 1993, representing a reduction of
two percent from that of the previous year. As a result, gross margin of
$25,937,000 was 20 percent higher in 1993 than in 1992. This improvement was
due to the overall increase in sales volume noted above (which allowed for
higher levels of manufacturing efficiencies) and the realization of a full
year's benefit from cost reduction measures implemented mid-year 1992.
Selling and administration expenses for 1993 were $20,925,000, or 16 percent of
total revenues, compared to 17 percent for 1992. After taking into account the
expense related to the amortization of the fresh start intangible asset
recognized in these two years, selling and administration expenses as a percent
of revenues were substantially the same in 1993 and 1992.
Interest expense for the year ended December 31, 1993 was $2,062,000,
representing a reduction of 54 percent from that of the previous year. This
decline was primarily due to the restructuring as of December 31, 1992, wherein
approximately 50 percent of Amdura's long-term debt was converted to equity.
14
<PAGE> 16
Net income for the year ended December 31, 1993 was $2,805,000, compared to a
net loss of ($18,052,000) for the year ended December 31, 1992. The 1992 net
loss included an intangible asset adjustment of $10,029,000 and nonrecurring
costs of $3,441,000.
YEAR ENDED DECEMBER 31, 1992
Total revenues for 1992 were $127,250,000, consisting of $85,754,000 at Crosby
and $41,496,000 at Harris. Cost of products sold were $105,591,000 in 1992,
resulting in a gross margin of $21,659,000, or 17 percent of total revenues.
Selling and administration expenses for 1992 were $21,543,000.
The Company recorded a $10,029,000 intangible asset adjustment in 1992
resulting from revisions to estimated discounted cash flows from projected
future operations and $3,441,000 of nonrecurring costs associated with
bankruptcy related matters, the suspension of certain pension plans and the
relocation of Harris' corporate offices. Interest expense for 1992 was
$4,507,000. The consolidated net loss for 1992 was ($18,052,000).
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page in this
Annual Report
on Form 10-K
--------------------
<S> <C>
Report of Independent Public Accountants - Arthur Andersen LLP . . . . . . . . . . . 16
Independent Auditors' Report - Deloitte & Touche LLP . . . . . . . . . . . . . . . . 17
Consolidated Balance Sheets as of December 31, 1994 and 1993 . . . . . . . . . . . . 18
Consolidated Statements of Operations for the years ended
December 31, 1994, 1993 and 1992 . . . . . . . . . . . . . . . . . . . . . . . . . 20
Consolidated Statements of of Cash Flows for the years ended
December 31, 1994, 1993 and 1992 . . . . . . . . . . . . . . . . . . . . . . . . . 21
Notes to Consolidated Notes to Financial Statements for the years
ended December 31, 1994, 1993 and 1992 . . . . . . . . . . . . . . . . . . . . . . 22
</TABLE>
15
<PAGE> 17
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders
of AMDURA Corporation:
We have audited the accompanying consolidated balance sheet of AMDURA
Corporation (a Delaware corporation) and subsidiaries (the "Company") as of
December 31, 1994, and the related consolidated statements of operations and
cash flows for the year then ended. These financial statements and the schedule
referred to below are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
schedule based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of AMDURA Corporation
and subsidiaries as of December 31, 1994, and the results of its operations and
its cash flows for the year then ended in conformity with generally accepted
accounting principles.
As discussed in Note 11 to the accompanying financial statements,
the Company is subject to certain claims not necessarily discharged during the
bankruptcy proceedings. The ultimate outcome of these matters cannot be
presently determined, and accordingly, except as indicated in Note 11, no
provision for any additional loss that may result upon resolution of these
matters has been made in the accompanying financial statements.
As discussed in Note 10 to the accompanying financial statements, effective
January 1, 1994, the Company changed its method of accounting for
postemployment benefits.
Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The schedule included in Item 14 of this Form 10-K
is presented for purposes of complying with the Securities and Exchange
Commission's rules and is not part of the basic financial statements. The
amounts for the year ended December 31, 1994, included in the schedule have
been subjected to the auditing procedures applied in the audit of the basic
financial statements and, in our opinion, fairly state in all material respects
the financial data required to be set forth therein in relation to the basic
financial statements taken as a whole.
ARTHUR ANDERSEN LLP
New York, N.Y.
February 17, 1995
16
<PAGE> 18
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders
of AMDURA Corporation:
We have audited the accompanying consolidated balance sheet of AMDURA
Corporation (the "Company" or "Amdura") and subsidiaries as of December 31,
1993 and the related consolidated statements of operations and cash flows for
the years ended December 31, 1993 and 1992. Our audits also included the
financial statement schedule for 1993 and 1992 listed in the Index at Item 14.
These financial statements and the financial statement schedule are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements and the financial statement
schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Amdura and
subsidiaries at December 31, 1993 and the results of their operations and their
cash flows for the years ended December 31, 1993 and 1992 in conformity with
generally accepted accounting principles. Also, in our opinion such financial
statement schedule for 1993 and 1992, when considered in relation to the basic
consolidated financial statements taken as a whole, presents fairly in all
material respects the information set forth therein.
As discussed in Note 11 to the accompanying consolidated financial statements,
the Company is subject to certain claims not necessarily discharged during the
bankruptcy proceedings. The ultimate outcome of these matters cannot be
presently determined, and accordingly, except as indicated in Note 11, no
provision for any additional loss that may result upon resolution of these
matters has been made in the accompanying 1993 and 1992 consolidated financial
statements.
DELOITTE & TOUCHE LLP
Tulsa, Oklahoma
February 17, 1994
17
<PAGE> 19
AMDURA CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousands Except Share Amounts)
<TABLE>
<CAPTION>
December 31,
--------------------------
ASSETS 1994 1993
----------- -----------
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 3,765 $ 4,377
Accounts and notes receivable, less allowance
for uncollectible accounts of $712 and $1,120 19,628 16,676
Inventories 46,628 33,179
Other current assets 3,372 3,523
------------ ------------
Total current assets 73,393 57,755
Property, plant and equipment, net 38,977 38,240
Other Assets:
Reorganization value in excess of amounts allocable
to identifiable assets, net of accumulated
amortization of $3,653 and $2,806 9,481 11,824
Costs in excess of net assets acquired, net of
accumulated amortization of $132 and -0- 2,325 -
PBGC Trust 887 1,747
Other 2,703 2,935
------------ ------------
15,396 16,506
------------ ------------
Total assets $ 127,766 $ 112,501
============ ============
</TABLE>
(Continued)
18
<PAGE> 20
AMDURA CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Share Amounts)
<TABLE>
<CAPTION>
December 31,
--------------------------
LIABILITIES AND STOCKHOLDERS' CAPITAL 1994 1993
----------- ------------
<S> <C> <C>
Current Liabilities:
Notes payable $ 1,886 $ 2,062
Trade accounts payable 13,779 8,468
Accrued expenses 22,875 20,001
Current maturities of long-term debt:
Related party Bank Group - 507
Other 1,297 188
------------ ------------
Total current liabilities 39,837 31,226
Long-Term Debt:
Related party Bank Group - 24,583
Other 25,878 89
Other long-term liabilities 7,489 10,183
------------ ------------
Total liabilities 73,204 66,081
------------ ------------
Commitments and contingencies
Stockholders' Capital:
Preferred stock, par value, $.01 per share
(authorized 2,500,000 shares; issued 2,151
and -0- shares; aggregate liquidation preference of
$5,377,500) 5,378 -
Common stock, par value, $.01 per share
(authorized 75,000,000 shares; issued 24,665,160 and
24,495,686 shares in 1994 and 1993, respectively) 247 245
Additional capital 67,064 66,728
Accumulated deficit (15,686) (16,871)
Cumulative translation adjustments (1,791) (1,811)
Excess pension liability (650) (1,871)
------------ ------------
Total stockholders' capital 54,562 46,420
------------ ------------
Total liabilities and stockholders' capital $ 127,766 $ 112,501
============ ============
</TABLE>
See notes to consolidated financial statements
19
<PAGE> 21
AMDURA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Amounts)
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------------------
Revenues: 1994 1993 1992
----------- ------------ ------------
<S> <C> <C> <C>
Net sales $ 144,791 $ 129,427 $ 126,819
Other 368 342 431
------------ ------------- ------------
Total revenues 145,159 129,769 127,250
Cost of products sold 113,930 103,832 105,591
------------ ------------- ------------
Gross margin 31,229 25,937 21,659
Selling and administration 24,053 20,925 21,543
Intangible asset adjustment - - 10,029
Special charges, net 1,503 - 3,441
------------ ------------- ------------
Income (loss) from operations 5,673 5,012 (13,354)
------------ ------------- ------------
Interest:
Related party Bank Group 1,384 1,782 4,065
Other 748 280 442
------------ ------------- ------------
Total interest 2,132 2,062 4,507
------------ ------------- ------------
Income (loss) before income taxes 3,541 2,950 (17,861)
Income taxes 1,924 145 191
------------ ------------- ------------
Income (loss) before change in
accounting principle 1,617 2,805 (18,052)
Cumulative effect of change in
accounting principle (270) - -
------------ ------------- ------------
Net income (loss) $ 1,347 $ 2,805 $ (18,052)
============ ============= ============
Net income (loss) per common and
common equivalent share:
Income (loss) before change in
accounting principle $ .06 $ .11 $ (1.45)
Cumulative effect of change in
accounting principle (.01) - -
------------ ------------- ------------
Net income (loss) per share $ .05 $ .11 $ (1.45)
============ ============= ============
Weighted average number of common
and common equivalent shares used in computing
net income (loss) per share 26,214 25,198 12,438
============ ============= ============
</TABLE>
See notes to consolidated financial statements
20
<PAGE> 22
AMDURA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
<TABLE>
<CAPTION>
December 31,
-------------------------------------------
Operating Activities: 1994 1993 1992
------------- ------------- -----------
<S> <C> <C> <C>
Net income (loss) $ 1,347 $ 2,805 $ (18,052)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization 6,336 6,138 7,024
Special charges, net 1,503 - 3,441
Provision for deferred income taxes 1,482 - -
Cumulative effect of change in
accounting principle 270 - -
Accrued interest converted to preferred stock - - 2,858
Fresh start and valuation adjustment - - 10,029
Change in operating assets and liabilities:
Accounts and notes receivable (2,952) (2,448) 946
Inventories (9,590) 2,558 6,655
Trade accounts payable 5,311 949 (2,320)
Accrued expenses (450) (5,526) (12,399)
Other (295) (3,674) 6,433
------------- ------------- -------------
Net cash provided by operating activities 2,962 802 4,615
------------- ------------ -------------
Investing Activities:
Short-term investments - - 536
Capital expenditures (4,359) (3,302) (2,423)
Acquisitions (1,250) - -
Other 226 357 550
------------- ------------ -------------
Net cash used in investing activities (5,383) (2,945) (1,337)
------------- ------------- -------------
Financing Activities:
Proceeds from issuance of long term
debt and notes payable 27,156 556 -
Principal payments of long-term debt
and notes payable (25,524) (1,022) (2,023)
Preferred stock dividends (162) - -
Proceeds from exercise of warrants 339 77 -
Payment for costs of debt exchanged
for preferred stock - - (1,371)
------------- ------------ -------------
Net cash provided by (used in) financing activities 1,809 (389) (3,394)
------------- ------------ -------------
Decrease in cash and cash equivalents (612) (2,532) (116)
Cash and cash equivalents at beginning of period 4,377 6,909 7,025
------------- ------------ -------------
Cash and cash equivalents at end of period $ 3,765 $ 4,377 $ 6,909
============= ============ =============
Supplemental Information:
Cash payments for:
Interest $ 1,941 $ 2,062 $ 1,563
Income taxes 456 122 212
Reorganization professional fees - - 1,103
</TABLE>
See notes to consolidated financial statements
21
<PAGE> 23
AMDURA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
1. REORGANIZATION PROCEEDINGS AND BASIS OF PRESENTATION
On April 2, 1990, AMDURA Corporation (the "Company" or "Amdura") and certain of
its wholly-owned subsidiaries, each filed a voluntary petition for bankruptcy
under Chapter 11 of the United States Bankruptcy Code with the United States
Bankruptcy Court for the District of Colorado (the "Bankruptcy Court"). The
subsidiaries that filed the voluntary petition were those related to the
hardlines distribution businesses. Amdura and such subsidiaries are sometimes
referred to as "Debtors."
The Company's heavy manufacturing units, The Crosby Group, Inc. ("Crosby") and
The Harris Waste Management Group, Inc. ("Harris"), and its vacuum coating
unit, Vac-Tec Systems, Inc. were not included in the Chapter 11 filings and
were not in bankruptcy. Since the Chapter 11 filings, the Company has divested
itself of its hardlines distribution businesses through the sale of certain
assets and of its vacuum coating unit through a conveyance to one of the
liquidating trusts established for the benefit of Amdura's prepetition
unsecured creditors.
During 1991 Amdura filed a Fifth Amended Joint Plan of Reorganization (the
"Plan") with the Bankruptcy Court. Under the Plan, Amdura retained and
reorganized around its wholly-owned subsidiaries, Crosby and Harris. On
September 19, 1991, the Bankruptcy Court entered an order confirming the Plan
which became effective after the close of business on October 23, 1991 (the
"Effective Date").
The consolidated financial statements have been prepared on a going concern
basis which contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business and, where applicable, in
conformity with Statement of Position 90-7, "Financial Reporting by Entities in
Reorganization Under the Bankruptcy Code," ("SOP 90-7") issued in November
1990, by the American Institute of Certified Public Accountants.
In accordance with the provisions of SOP 90-7, the Company adopted fresh start
reporting as of October 31, 1991, since the reorganization value (approximate
fair value at the date of reorganization) was less than the total of all post
petition liabilities and allowed prepetition claims, and holders of existing
voting shares before the Effective Date received less than 50 percent of the
voting shares of the emerging entity. All assets and liabilities at October
31, 1991, were restated to reflect their reorganization value in accordance
with procedures specified in Accounting Principles Board Opinion 16 "Business
Combinations" ("APB 16") as required by SOP 90-7. The portion of the
reorganization value that could not be attributed to specific tangible or
identified intangible assets was classified as reorganization value in excess
of amounts allocable to identifiable assets which is being amortized over
fifteen years. In addition, the accumulated deficit of the Company was
eliminated and its capital structure was recast in conformity with the Plan.
22
<PAGE> 24
2. REORGANIZATION
Under the Plan, as of the Effective Date, all shares of existing common stock
and existing preferred stock and all common stock options and preferred stock
purchase rights were cancelled. On the Effective Date, the Company filed a
restated certificate of incorporation which authorized the issuance of
25,000,000 shares of common stock and 1,000,000 shares of preferred stock. As
of the Effective Date, the Company issued 12,500,000 shares of common stock to
certain creditors, previously existing stockholders and other equity claimants
in accordance with the Plan.
Terms of the Plan stipulate that substantially all assets of Amdura, except for
Amdura's investment in its wholly-owned subsidiaries Coast, Coast America,
Coast Holdings, Intertrade, Andco, Crosby and Harris be placed in a liquidating
trust (the "Liquidating Trust") for the benefit of Amdura's prepetition
unsecured creditors. The proceeds of the Liquidating Trust will be used for
partial payment of Amdura's prepetition liabilities discharged by the
bankruptcy proceedings. The Liquidating Trust is being governed and managed by
a trustee unrelated to Amdura. Amdura continues to be responsible for the
payment of its post petition liabilities.
Terms of the Coast and Andco Plans stipulate that assets of these companies
will be liquidated and used solely for the purposes of partial payment of their
prepetition liabilities discharged by the bankruptcy proceedings and certain of
their post petition liabilities. Coast and Andco are being governed by boards
of directors that consist of designees of Coast's and Andco's unsecured
creditors and, with respect to Coast, designees of members of a group of banks
led by Continental Bank, N.A., to which Amdura and its subsidiaries owed
$220,800,000, prior to the bankruptcy filings (the "Bank Group").
The disposition of Amdura assets transferred to the Liquidating Trust and all
Coast and Andco assets are governed by bankruptcy proceedings which stipulate
that they be used solely for the purpose of paying discharged prepetition
liabilities. These liabilities will be settled only with the proceeds
resulting from liquidating such assets. Because of these factors and because
Amdura does not control the Liquidating Trust, Coast or Andco, the remaining
assets and liabilities of the Liquidating Trust, Coast and Andco have been
removed from the consolidated financial statements of Amdura.
Under the Plan, in partial settlement of prepetition amounts due to the Bank
Group, Amdura issued $50,000,000 in term notes to the Bank Group. Due to the
inability of the Company to meet the required principal and interest payments
on the $50,000,000 in term notes, in the fourth quarter of 1992 the Company
converted $24,910,000 in term notes payable to the Bank Group and $2,858,000 in
related accrued interest into 11,966 shares of newly issued Series A
Convertible Preferred Stock which were converted into 11,966,159 shares of
newly issued common stock in 1993. In connection with this restructuring, the
Company incurred costs of $1,371,000 which were charged directly to capital.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CONSOLIDATION - The consolidated financial statements include the accounts of
the Company, Crosby and Harris. All significant intercompany accounts and
transactions have been eliminated in consolidation.
23
<PAGE> 25
CASH AND CASH EQUIVALENTS - Cash and cash equivalents include all cash and
liquid debt instruments with maturities of three months or less at the date of
purchase.
ACCOUNTS RECEIVABLE - Crosby and Harris grant credit to their customers
generally in the form of short-term trade accounts receivable. The
creditworthiness of customers is evaluated prior to the sale of inventory and
advance payments are frequently received by Harris on large manufacturing
orders prior to sale in an effort to minimize credit risk. There are no
significant customer concentrations of credit risk at Crosby and Harris.
INVENTORIES - Inventories are stated at the lower of cost or market. Cost
for domestic inventories is determined by the last-in, first-out, ("LIFO")
method. For foreign inventories, cost is determined by the first-in, first-out
("FIFO") method.
PROPERTY, PLANT AND EQUIPMENT - Property, plant and equipment is stated at fair
value at the Effective Date, plus additions at cost thereafter, less
accumulated depreciation. For financial reporting purposes, depreciation is
provided using the straight-line method over the estimated useful lives of the
various classes of assets.
COSTS IN EXCESS OF NET ASSETS ACQUIRED - Costs in excess of net assets acquired
are amortized on a straight-line basis over periods not exceeding 40 years. In
evaluating the value and future benefits of these costs, the recoverability
from operating income is measured. Under this approach, the carrying value
would be reduced if it is probable that management's best estimate of future
operating income from related operations before amortization will be less than
the carrying amount over the remaining amortization period.
ADVANCES FROM CUSTOMERS - Advances received from customers are offset against
inventories to the extent costs are incurred. Advances in excess of costs
incurred are included in accrued expenses.
WARRANTIES AND PRODUCT LIABILITY - The accruals for potential product liability
and warranty claims are based on the Company's known claims and historical
claims' experience. Such costs are accrued as revenue is recognized.
FOREIGN EXCHANGE - Balance sheet accounts of foreign subsidiaries are
translated into U.S. dollars at the year-end exchange rate and revenue and
expense accounts are translated at the weighted average exchange rate in effect
throughout each reporting period. Adjustments resulting from translation of
financial statements are reflected as a separate component of stockholders'
capital.
REVENUE RECOGNITION - Revenues from the sale of inventories are generally
recognized upon shipment of products, whether to distributors or the end user.
INCOME TAXES - The Company files consolidated Federal and state income tax
returns. In 1992, the Company adopted Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes" ("SFAS No. 109"), which
requires recognition of deferred tax assets and liabilities based on
differences between the financial statement carrying amounts and income tax
basis of assets and liabilities and the tax effects of income tax net operating
loss carryforwards at currently enacted income tax rates. Valuation
allowances are established when necessary to reduce deferred tax assets to
the amount expected to be realized.
Income tax expense reflects the taxes payable in Federal, state and foreign tax
jurisdictions for the period and the change during the period in deferred tax
assets and liabilities. Income taxes are not
24
<PAGE> 26
provided on unremitted earnings of foreign subsidiaries, as it is
intended that such earnings will be permanently invested or are expected to be
remitted free of income taxes.
NET INCOME (LOSS) PER SHARE - Net income (loss) per share is based on the
weighted average number of common and common equivalent shares outstanding
during each year, adjusted by assuming conversion of preferred stock, warrants
and stock options, when such conversion is not anti- dilutive.
RECLASSIFICATIONS - Certain reclassifications have been made to the 1993 and
1992 consolidated financial statements to conform to the classifications used
in 1994.
4. INVENTORIES
Inventories are valued at the lower of cost or market and consist of the
following:
<TABLE>
<CAPTION>
December 31,
--------------------------
(In Thousands) 1994 1993
-------------- ----------- ------------
<S> <C> <C>
Finished goods $ 19,072 $ 15,822
Work-in-progress 18,618 11,855
Raw materials 10,688 6,216
------------ ------------
48,378 33,893
Allowance to adjust the carrying value
of certain inventories to LIFO basis (283) (138)
------------ ------------
Total before advance payments by customers 48,095 33,755
Less advance payments by customers (1,467) (576)
------------ ------------
Total $ 46,628 $ 33,179
============ ============
</TABLE>
Inventories valued using the LIFO method comprised 85.7 percent and 81.1
percent of inventories at December 31, 1994 and 1993, respectively.
5. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consists of the following:
<TABLE>
<CAPTION>
December 31,
--------------------------
(In Thousands) 1994 1993
-------------- ----------- ------------
<S> <C> <C>
Land $ 2,371 $ 2,430
Buildings (depreciated over 15 to 40 years) 12,303 12,019
Equipment (depreciated over 2 to 20 years) 38,777 33,400
------------ ------------
53,451 47,849
Less accumulated depreciation and amortization 14,474 9,609
------------ ------------
Total $ 38,977 $ 38,240
============ ============
</TABLE>
25
<PAGE> 27
Included in the above amounts are equipment under capital leases of $517,000
and $202,000 at December 31, 1994 and 1993, respectively. Accumulated
amortization related to equipment under capital leases was $172,000 and $85,000
at December 31, 1994 and 1993, respectively.
6. ACCRUED EXPENSES
Accrued expenses consist of the following:
<TABLE>
<CAPTION>
December 31,
--------------------------
(In Thousands) 1994 1993
-------------- ------------ ------------
<S> <C> <C>
Warranty and product liability $ 5,213 $ 6,780
Wages and withheld taxes 4,487 3,527
Advance payments by customers 2,740 417
Employee benefits 2,169 1,983
Contributions to frozen pension plans 1,736 2,497
Environmental claims 1,403 2,069
Class action settlement 1,586 -
Other 3,541 2,728
------------ ------------
Total $ 22,875 $ 20,001
============ ============
</TABLE>
7. NOTES PAYABLE AND LONG-TERM DEBT
The Company's foreign subsidiaries have secured revolving credit lines with
banks which provide for borrowings aggregating $5,186,000. The borrowings
under the lines of credit bear interest at various floating rates, as defined.
At December 31, 1994 and 1993, the interest rates ranged from 6.1 to 9.5
percent, and 8.1 to 8.5 percent, respectively, on borrowings of $1,886,000 and
$1,816,000, respectively.
Information concerning notes payable and outstanding balances drawn on lines of
credit is as follows:
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------------------
(Dollars in Thousands) 1994 1993 1992
---------------------- -------------- ------------- -----------
<S> <C> <C> <C>
Weighted monthly average
interest rate during the period 9.0% 10.5% 11.7%
Maximum outstanding $ 2,014 $ 3,198 $ 3,885
Weighted monthly
average outstanding $ 1,665 $ 2,643 $ 3,048
Weighted average
interest rate at
end of period 6.6% 7.9% 9.0%
Balance at end of period $ 1,886 $ 2,062 $ 2,607
</TABLE>
26
<PAGE> 28
Long-term debt consists of the following:
<TABLE>
<CAPTION>
December 31,
--------------------------
(In Thousands) 1994 1993
-------------- ----------- ------------
<S> <C> <C>
Revolving Credit Facility and Term
and CAPEX Loans $ 26,823 $ -
Senior and subordinated debt
under term loan agreements - 25,090
Capital lease obligations 352 277
------------ ------------
27,175 25,367
------------ ------------
Less current maturities:
Revolving Credit Facility and Term
and CAPEX Loans 1,178 -
Senior and subordinated debt under
term loan agreements - 507
Capital lease obligations 119 188
------------ ------------
1,297 695
------------ ------------
Total $ 25,878 $ 24,672
============ ============
</TABLE>
Effective September 30, 1994, Amdura refinanced $25,090,000 in long-term debt
with Sanwa Business Credit Corporation, as Agent, and Bank of Oklahoma, N.A.
(the "Lenders"). The previous group of lenders was composed of a group of
certain stockholders of the Company which owned approximately 68 and 69 percent
of the common stock of the Company at September 30, 1994 and December 31, 1993,
respectively. Proceeds from the Loan Agreements, which were entered into by
Crosby and Harris, with Amdura as guarantor were used to pay the outstanding
principal and interest under the former Amended and Restated Senior and
Subordinated Term Loan Agreements, loan closing fees and other costs incidental
to the borrowing.
Each of the Crosby and Harris Loan Agreements provide for a Revolving
Credit Facility, a Term Loan and a CAPEX Loan. At the selection of the borrower,
the loans may be divided into (a) Base Rate Loans, which accrue interest at
one-half of one percent, for the Revolving Loan, and one percent, for the Term
and CAPEX Loans, over the highest "prime rate of interest" quoted, from time to
time, by The Wall Street Journal; or (b) LIBOR Rate Loans, which accrue interest
at two percent, for the Revolving Loan, and two and one-half percent, for the
Term and CAPEX Loans, over the London interbank offered rates for deposits in
U.S. dollars quoted by selected banks. The Loan Agreements also require the
payment of a 0.5 percent fee on the average unused available Revolving Loan
balance and other annual fees. Interest and fees on the Revolving, Term and
CAPEX Loans are generally payable monthly.
The total availability under the Loan Agreements is $45,000,000. This
availability is subject to limitations such that, until such time as an
additional financial institution(s) satisfactory to the Lenders and the Company
shall commit at least $10,000,000 to the loans, the draws against the loans
shall be limited to: (a) $24,000,000 on the Revolving Loans; (b) $11,000,000 on
the Term Loans; and (c) $-0- on the CAPEX Loans.
27
<PAGE> 29
According to the Loan Agreements, the maximum allowable balances on the
Revolving Loans are $16,000,000 and $14,000,000 for Crosby and Harris,
respectively, but in total are currently limited to $24,000,000. The Revolving
Loans are also subject to restrictions based on eligible accounts receivable
and inventory, as defined by the Loan Agreements, and are also limited by
outstanding letters of credit issued thereunder. As of December 31, 1994, the
outstanding balances in the Revolving Loans for Crosby and Harris were
$8,323,000 and $7,500,000, respectively, and the total available balance was
$6,987,000. The Revolving Loans mature on October 1, 1997, and are subject to
extension at the option of the Lenders.
According to the Loan Agreements, the maximum allowable balances on the Term
Loans are $8,000,000 and $3,000,000 for Crosby and Harris, respectively. As of
December 31, 1994, these loans were fully utilized. The maturity date of the
Term Loans is October 1, 2001, and the Loan Agreements provide for quarterly
principal payments, which commence April 1, 1995, of $286,000 for Crosby and
$107,000 for Harris.
According to the Loan Agreements, advances under the CAPEX Loans shall be used
solely for the purchase of equipment or real property, subject to limitations
provided by the Loan Agreements. There were no balances outstanding on the
CAPEX Loans as of December 31, 1994. Each advance under the CAPEX Loans shall
be evidenced by separate installment notes and require repayment in 24 equal
quarterly installments commencing six months or less from the date of advance.
The long-term debt is secured by substantially all of the assets of Amdura,
Crosby and Harris. Covenants contained in the Loan Agreements require minimum
consolidated tangible net worth, limit the total amount of funded debt and
require that consolidated cash flow be sufficient to cover debt service. The
Company, Crosby and Harris are in compliance with these covenants.
Prior to September 30, 1994, the Company had outstanding $10,145,000 of
floating rate senior secured term debt, bearing interest at 8.75 percent at
September 30, 1994; and $14,945,000 of fixed rate secured subordinated debt,
bearing interest at 6.01 percent at September 30, 1994. Interest on the senior
secured term debt and the secured subordinated debt was payable quarterly.
Interest of $1,282,000, $1,626,000, and $1,207,000 was paid to the Bank
Group during the years ended December 31, 1994, 1993 and 1992, respectively.
Fees of $102,000, $156,000, and $75,000 were paid to the Bank Group during the
years ended December 31, 1994, 1993 and 1992, respectively.
8. STOCKHOLDERS' CAPITAL
Effective April 1, 1994, the Company issued 2,151 shares of Series B Cumulative
Convertible Preferred Stock ("Series B Preferred Stock"), par value $.01 per
share, in exchange for certain assets of a company engaged in similar
manufacturing operations. Each share of Series B Preferred Stock is
convertible into 1,000 shares of common stock at the option of the holder; any
outstanding shares of Series B Preferred Stock will be automatically converted
into common stock at that rate on April 1, 1997. Holders of Series B Preferred
Stock are entitled to receive, and the Company has paid, cumulative quarterly
cash dividends at an annual rate of $100 per share. The holders of Series B
Preferred Stock have no voting rights other than that required by law, except
in the event of a default in the payment of dividends or other events as
defined in the Certificate of Designations of the Series B Preferred Stock. In
the event of a liquidation, dissolution or winding up of the Company, the
holders of Series B Preferred Stock are entitled to receive out of the assets
28
<PAGE> 30
of the Company $5,377,500 plus any accrued but unpaid dividends before any
payment or distribution of assets is made to the holders of common stock.
Effective December 23, 1992, the Company issued 11,966 shares of Series A
Convertible Preferred Stock, par value $.01 per share which were automatically
converted into 11,966,159 newly issued shares of common stock in 1993. Also,
effective December 23, 1992, the Company issued in the form of a dividend, and
at no cost to its non-Bank Group stockholders, one warrant for each share of
common stock held by non-Bank Group stockholders at the close of business on
January 8, 1993. Warrants related to a total of 2,176,982 shares of common
stock were issued. Each warrant entitled the holders thereof to acquire 1.116
shares of common stock at an exercise price of $2.00 per share. Unexercised
warrants expired on July 9, 1994. During 1994 and 1993, warrants relating to a
total of 169,023 and 38,222 shares of common stock were exercised, and the
Company received $338,000 and $76,000 in proceeds, respectively.
Changes in Stockholders' Capital are summarized as follows:
<TABLE>
<CAPTION>
Cumulative Excess
Preferred Common Additional Accumulated Translation Pension
Stock Stock Capital Deficit Adjustments Liability
---------- ---------- ----------- ------------ ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1992 $ - $ 120 $ 40,380 $ (1,624) $ 216 $ -
Net loss - - - (18,052) - -
Conversion of Debt to
Equity with Bank Group - - 26,397 - - -
Other 5 (5) (1,335)
---------- ---------- ----------- ---------- ---------- -----------
Balance, December 31, 1992 - 125 66,772 (19,676) (1,119) -
Net income - - - 2,805 - -
Conversion of Series A
Convertible Preferred
Stock to common stock - 120 (120) - - -
Exercise of Warrants - - 76 - - -
Other - - - - (692) (1,871)
---------- ---------- ----------- --------- ---------- -----------
Balance, December 31, 1993 - 245 66,728 (16,871) (1,811) (1,871)
Net income - - - 1,347 - -
Issuance of Series B
Preferred Stock 5,378 - - - - -
Exercise of Warrants - 2 336 - - -
Cash dividends declared
on Preferred Stock - - - (162) - -
Other - - - - 20 1,221
---------- ---------- ----------- ---------- ---------- -----------
Balance, December 31, 1994 $ 5,378 $ 247 $ 67,064 $ (15,686) $ (1,791) $ (650)
========== ========== =========== ========== ========== ===========
</TABLE>
During 1992 the Board of Directors approved the 1992 Stock Option Plan which
reserved options to purchase a total of 3,655,863 shares of the Company's
common stock to be granted to key employees and directors. Options are granted
at an exercise price per share of not less than the fair market value of the
Company's stock at their respective dates of grant, are generally exercisable
in
29
<PAGE> 31
20 percent annual increments and must be exercised within ten years from
date of grant. All options granted under the 1992 Stock Option Plan expire no
later than ten years after their dates of grant. At December 31, 1994, options
covering 2,181,325 shares of common stock at $1.87 to $3.00 per share were
outstanding and options to purchase 1,474,538 shares of common stock were
available for grant.
The following represents option activity during the last three years:
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------------
1994 1993 1992
---------- ------------ ------------
<S> <C> <C> <C>
Options outstanding,
beginning of year 1,696,595 1,476,411 -
Options granted 1,065,000 2,238,934 1,476,411
Options exercised - - -
Options cancelled
or expired (580,270) (2,018,750) -
------------- ------------- -------------
Options outstanding,
end of year 2,181,325 1,696,595 1,476,411
============= ============ ============
</TABLE>
9. FOREIGN OPERATIONS
Operations include foreign currency transaction gains of $30,000, $41,000 and
$36,000 for the years ended December 31, 1994, 1993 and 1992, respectively.
Net foreign assets were $11,140,000 and $11,767,000 at December 31, 1994 and
1993, respectively.
10. RETIREMENT AND EMPLOYEE BENEFITS PLANS
The Company and its subsidiaries were contributing sponsors of three defined
benefit pension plans which covered the domestic union and certain non-union
hourly employees. The plans provided for benefits based upon a specified
monthly amount for each year of service. Effective December 31, 1992, these
plans were suspended and in February 1993, the Company settled the vested and
non-vested benefit portion of the projected benefit obligation of $5,212,000
through the purchase of nonparticipating annuity contracts. As a result, the
Company reduced a portion of the prepaid pension cost and recognized a special
charge of $907,000 for the year ended December 31, 1992, determined as follows:
<TABLE>
<CAPTION>
Before Effect of
(In Thousands) Settlement Settlement
-------------- ----------- -----------
<S> <C> <C>
Assets and obligations:
Vested benefit obligation $ (5,069) $ 5,069
Non-vested benefits (143) 143
------------ -------------
Accumulated and projected
benefit obligation (5,212) 5,212
Plans assets at fair value 6,563 6,119
------------ -------------
Prepaid pension cost (loss) $ 1,351 $ (907)
============ =============
</TABLE>
30
<PAGE> 32
During 1994, assets remaining after the purchase of nonparticipating annuity
contracts of $192,000 were transferred to the trustees of certain defined
contribution retirement savings plans to be used for future contributions for
the former participants of the three defined benefit pension plans which had
been terminated. An additional $577,000 of assets remaining after the purchase
of nonparticipating annuity contracts was returned by the trustee of the plans
to the Company, resulting in a reduction of special charges of $372,000 in
1994.
In addition, at December 31, 1993, the Company sponsored eight defined benefit
pension plans for former employees of many of its discontinued operations.
These plans have been frozen by the Company and its funding policy is to make
minimum quarterly contributions as required by applicable regulations. The
assets of the plans are primarily invested in money market, bond and equity
funds. During 1994, four of these plans were merged to realize certain
efficiencies over the administration of the five remaining plans.
The following sets forth the funded status and amounts recognized in the
Company's consolidated balance sheets at December 31, 1994 and 1993 of the
remaining frozen plans:
<TABLE>
<CAPTION>
(In Thousands) Fund Assets Accumulated
-------------- Exceed Benefits
Accumulated Exceed
1994 Benefits Fund Assets
---- ----------- ------------
<S> <C> <C>
Actuarial present value of benefit obligations:
Accumulated benefit obligation (fully vested) $ (9,116) $ (21,914)
============== ==============
Projected benefit obligation $ (9,116) $ (21,914)
Fair value of plan assets 9,736 17,532
-------------- --------------
Projected benefit obligation (in excess of)
less than plan assets 620 (4,382)
Unrecognized net loss 708 394
Additional minimum liability (650)
-------------- --------------
Prepaid pension cost (pension liability) recognized
in the consolidated balance sheet $ 1,328 $ (4,638)
============== ==============
1993
----
Accumulated benefit obligation (fully vested) $ (7,695) $ (28,056)
============== ==============
Projected benefit obligation $ (7,695) $ (28,056)
Fair value of plan assets 8,568 19,682
-------------- --------------
Projected benefit obligation (in excess of)
less than plan assets 873 (8,374)
Unrecognized net loss 583 1,871
Additional minimum liability - (1,871)
-------------- --------------
Prepaid pension cost (pension liability) recognized
in the consolidated balance sheet $ 1,456 $ (8,374)
============== ==============
</TABLE>
31
<PAGE> 33
The Company's assumptions used as of December 31, 1994 and 1993 in determining
the pension liabilities shown above were as follows:
<TABLE>
<CAPTION>
1994 1993
-------- --------
<S> <C> <C>
Discount Rate 8.50% 7.00%
Long-term rate of return an assets 9.00% 9.00%
</TABLE>
The increase in discount rate used in the computation of the pension liability,
from 7.00 to 8.50 percent as of December 31, 1994 was based on the Company's
analysis of the future benefit payment obligations of the defined benefit
pension plans, discounted at actual spot rates available at December 31, 1994
on Aa3 industrial sector bonds. In accordance with the provisions of SFAS No.
87, "Employers' Accounting for Pensions", this change in discount rate resulted
in a decrease to the additional minimum pension liability and an increase of
stockholders' capital of $1,221,000 as of December 31, 1994. The remaining
future costs of $650,000 will be amortized over the average remaining life
expectancy of the inactive participants.
Net pension costs for both the suspended and frozen plans consist of:
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------------------
(In Thousands) 1994 1993 1992
-------------- ----------- ------------- ------------
<S> <C> <C> <C>
Service cost-benefits
earned during the period $ 201 $ 208 $ 430
Interest cost on projected
benefit obligation 2,397 2,537 2,925
Actual return on plan assets (27) (2,025) (2,336)
Net amortization and deferral (2,474) (458) (681)
------------ ------------- -------------
Net periodic pension cost $ 97 $ 262 $ 338
============ ============= =============
</TABLE>
The Company's assumptions used as of January 1, 1994 and 1993, in determining
the pension costs shown above were as follows:
<TABLE>
<CAPTION>
1994 1993 1992
--------- --------- ---------
<S> <C> <C> <C>
Discount rate 7.00% 7.75% 7.75%
Long-term rate of return on assets 9.00% 9.00% 9.00%
</TABLE>
During the Company's bankruptcy proceedings, pursuant to a settlement with the
Pension Benefit Guaranty Corporation (the "PBGC") in 1991, the Company
established an irrevocable grantor trust ("PBGC Trust") to fund past due and
certain future contributions. In January 1992, the Company caused the PBGC
Trust to pay $3,946,000, which represented all contributions due to the pension
plans prior to 1992. In addition, the Company made contributions to these
plans from the PBGC Trust and operating funds totalling $1,401,000, $1,825,000
and $1,327,000 during 1994, 1993 and 1992, respectively. At December 31, 1994
and 1993, the value of assets in the PBGC Trust was $1,747,000 and $3,122,000,
respectively; of which $860,000 and $1,375,000, respectively, were reported as
other current assets on the Company's consolidated balance sheets.
Amdura adopted Statement of Financial Accounting Standards No. 115, "Accounting
for Certain Investments in Debt and Equity Securities" ("SFAS No. 115"),
effective January 1, 1994. The adoption of this standard did not have a
material effect on the Company's results of operations or financial position.
32
<PAGE> 34
During the period the PBGC Trust has assets, the Company will contribute to the
pension plans during each calendar year commencing after 1992, an aggregate
amount equal to the lesser of $1,200,000 or 50 percent of each required minimum
funding contribution due with respect to the pension plans, subject to further
limitations based on net cash flow of the Company as defined by the PBGC
settlement. At the direction of the Company, the PBGC Trust will pay the
balance of each required minimum funding contribution due with respect to the
pension plans after taking into account the contributions made by the Company.
After the PBGC Trust ceases to have assets, the Company will make such
contributions to the pensions plans as may be necessary to satisfy the minimum
funding requirements of ERISA.
In addition to the above frozen defined benefit plans, the Company has defined
contribution retirement savings plans. Certain plans cover substantially all
employees and provide for a matching contribution by the Company of amounts,
limited to 3 percent of compensation, contributed by the plans' participants.
Certain other plans provide for quarterly contributions ranging from 1 to 15
percent of a participant's eligible compensation based on the participant's age
and years of service. The Company's contribution expense related to its
defined contribution plans was $1,772,000, $1,003,000 and $745,000 for the
years ended December 31, 1994, 1993 and 1992, respectively.
With respect to Crosby and Harris, in conjunction with the adoption of fresh
start reporting, the Company followed the provisions of APB 16 which required
the establishment of a $5,822,000 liability to provide certain post retirement
health care and life insurance benefits to retired employees and to current
employees, to the extent such benefits have been earned. With the
establishment of this liability, the Company effectively adopted the provisions
of Statement of Financial Accounting Standards No. 106 "Employer's Accounting
for Post Retirement Benefits other than Pensions" ("SFAS No. 106").
These benefits provide certain health care and life insurance benefits for
certain retired employees. Covered employees may become eligible for those
benefits if they reach normal retirement age while working for the Company.
The major provisions and assumptions used in developing the post retirement
health care and life insurance liabilities are as follows:
- -- The Company pays for certain hospital and physicians' benefits for
non-Medicare retirees. The Company's retiree health care costs are reduced
when the retiree enters the Medicare program at age 65. The Company also
provides life insurance coverage for certain employees and retirees.
- -- There is no prefunding for post retirement health and life insurance
benefits. Payments of benefits are dependent on cash flows from operations.
- -- The medical trend cost rates assumed an inflation rate of 11 percent
for 1994 which decreases through 2015 and remains at six percent in 2016 and
thereafter.
- -- The trend of increasing health care costs continues to adversely
affect the Company's cost of providing benefits to employees and retirees.
To illustrate, the effect of a one percentage point increase in assumed
health care cost trend rates for each future year on the aggregate of the
service and interest cost would approximate $24,000 whereas the total
accumulated post retirement obligation for health and life insurance
benefits would increase by approximately $315,000 using the same one percent
factor.
33
<PAGE> 35
- -- A weighted-average discount rate of 8.5 percent and 7.0 percent at
December 31, 1994 and 1993, respectively, was used to present value all
future health care and life insurance liabilities.
- -- A table of expected retirement ages was developed which reflects the
experience of the Company. This table had low retirement age beginning at 55
with all employees assumed to retire by age 65. The 1983 Group Annuity
Forecast Mortality Table was also used.
At December 31, 1994 and 1993, the Company had $5,640,000 and $5,412,000
accrued for liabilities under SFAS No. 106, respectively. During the years
ended December 31, 1994, 1993 and 1992, respectively, the Company recorded
service and interest costs of $523,000, $514,000, and $693,000 respectively,
and paid claims of $271,000, $212,000, and $707,000, respectively. Previously
the Company had recorded the cost of such benefits on a pay-as-you-go basis
which was allowed by generally accepted accounting principles.
The Company adopted the provisions of Statement of Financial Accounting
Standards No. 112, "Employers' Accounting for Postemployment Benefits" ("SFAS
No. 112"), in the first quarter of 1994. SFAS No. 112 requires the
establishment of a liability for certain benefits provided by an employer to
former or inactive employees after employment but before retirement.
At December 31, 1994, the Company had $439,000 accrued for liabilities under
SFAS No. 112. The effects of adopting the provisions of SFAS No. 112 resulted
in the recording of a cumulative effect of change in accounting principle of
$270,000, net of a related income tax benefit of $166,000 as of January 1,
1994.
11. COMMITMENTS AND CONTINGENCIES
During the course of the Bankruptcy Proceedings, numerous priority,
administrative and secured claims were filed against the Company by various
third parties. Under the Plan, certain allowed priority, administrative and
secured claims which were approved became the liability of Amdura. At December
31, 1994, there was one pending administrative claim outstanding, for which a
settlement agreement had been reached, and for which the parties were awaiting
approval of the settlement by the Bankruptcy Court. The amount of this claim
and other resolved and unpaid claims are accrued at December 31, 1994. Parties
holding claims that have been disallowed or ruled by the Bankruptcy Court to be
unsecured may attempt to reassert their claims as administrative or priority
claims, and, some creditors may attempt to assert that their claims are not
discharged and should continue as post bankruptcy obligations of Amdura. Based
on the limited number of such claims received since the effective date of the
Plan, the Company believes that, if any such additional claims are asserted and
adversely determined against the Company, there will be no material adverse
effect on the its financial condition or results of operations as a result of
such claims.
During the Bankruptcy Proceedings, numerous administrative and priority claims
were filed against the Company regarding the costs of remediating problems at
numerous sites which the Company or its subsidiaries owned or operated or to
which alleged hazardous substances generated by the Company or its subsidiaries
were allegedly transported. Amdura has substantially completed remediation of
the sites relating to those allowed claims which became the Company's
responsibility pursuant to the Plan, and has accrued any estimated remaining
costs thereof at December 31, 1994. Subsequent to the effective date of the
Plan, Amdura has been advised of one site for which the Company is alleged to
be responsible for remediation costs for which it believes the claim has been
discharged in the Bankruptcy proceeding. Amdura is vigorously defending its
rights to be
34
<PAGE> 36
discharged from this claim, and it is the Company's position that
remediation costs of this and other sites which were subject to proper
notification of the bankruptcy should be considered unsecured claims subject to
discharge in the Bankruptcy Proceeding. Based on the limited number of such
claims received since the effective date of the Plan, the Company believes
that, if any such additional claims are asserted and adversely determined
against the Company,there will be no material adverse effect on the its
financial condition or results of operations as a result of such claims.
During 1992 Amdura National Distribution Company ("Andco"), a liquidating
estate and former subsidiary of Amdura which filed a voluntary petition of
bankruptcy at the same time as the Company, filed a lawsuit against the Company
in Bankruptcy Court seeking approximately $1,050,000 previously held in a cash
concentration account. During September 1993, the Bankruptcy Court granted
summary judgement in favor of Amdura and denied Andco's cross motion for
summary judgement. Andco subsequently appealed the Bankruptcy Court's decision
in Federal District Court for the District of Colorado (the "District Court").
During May 1994, the District Court issued a judgement for Amdura and against
Andco, affirming the Bankruptcy Court's earlier decisions. In September 1994,
both Amdura and Andco filed briefs in the United States Court of Appeals for
the Tenth Circuit. Amdura intends to continue vigorously defending its rights
to such funds. Liability, if any, to the Company for repayment of the funds is
presently not determinable.
Prior to Amdura's bankruptcy filing, two class action suits were filed against
the Company and certain former directors. It was Amdura's position that the
claims of the plaintiffs have been discharged pursuant to the Plan, with the
rights of the plaintiffs limited to distributions, if any, available to them
under the Plan. The Bankruptcy Court disallowed the "class claims" filed by
such plaintiffs against Amdura as part of the Bankruptcy Cases, thereby leaving
the individual class representatives, as opposed to the entire class, as the
only parties with possible claims against Amdura. The plaintiffs appealed such
disallowances as well as the order of the Bankruptcy Court confirming the Plan.
During August 1994, the District Court issued an order reinstating the "class
claims" which had been disallowed by the Bankruptcy Court. The order also
purported to reverse the Bankruptcy Court's order confirming the Plan. The
effectiveness of this order was immediately stayed, and, upon the parties'
reaching of the settlement discussed below, the order was vacated.
On August 31, 1994, Amdura entered into a definitive Stipulation of Settlement
with the representatives of the plaintiff class in the two class action suits,
and the District Court approved the Stipulation of Settlement in November 1994.
Pursuant to the Stipulation of Settlement, Amdura will pay $500,000 in cash and
issue 564,302 shares of its common stock in exchange for a full and final
release of all claims under the complaints. The Company recognized a one-time
special charge of $1,875,000 in the third quarter of 1994 as a result of this
settlement.
The Company and its subsidiaries from time to time are presented with claims
arising out of their current and former manufacturing and other operations,
including claims asserting personal injury arising out of the manufacture, sale
and use of the products of those businesses based on various theories of
recovery for product liability and for workers compensation. The Company
believes that no one such outstanding claim or group of related claims is
material to the consolidated financial position of Amdura. Amdura and its
subsidiaries vigorously defend all product liability claims, and believe that
their products are safe and suitable for their intended uses. Amdura and its
subsidiaries have comprehensive general liability insurance under various
programs which may afford total or partial coverage for certain product claims.
Prepetition claims identifying Amdura and any of the other Debtors as a
defendant were subject to the automatic stay under the Bankruptcy Code and to
35
<PAGE> 37
discharge in bankruptcy. Claims against Crosby and Harris were not stayed and
have not been affected by confirmation of the Plan.
Under the terms of the agreement by which Amdura sold certain assets of its
crane businesses to The American Crane Corporation ("American Crane"), American
Crane agreed to indemnify Amdura for certain liabilities of such businesses
which might otherwise be asserted against Amdura. Included among such
liabilities are various environmental site and product liability matters
(including one group of a large number of related matters). If such indemnity
were to become ineffective for any reason (including due to American Crane's
financial condition), then the liabilities covered thereby could revert to
Amdura.
The Company is a defendant in three personal injury lawsuits that have been
filed in Minnesota in 1994. The plaintiffs in each suit allege exposure to
asbestos-containing products of various manufacturers. The Company has been
named in each suit as an alleged successor-in-interest to another business
entity. The Company purchased substantially all of the assets of the
predecessor entity in 1967 and sold substantially all of the assets of the
subject product line in 1969. The Company's liability in the three pending
suits is allegedly predicated on the Company's having assumed the liabilities
of the predecessor entity for acts that occurred prior to the asset
acquisition. Based on a review of the facts currently available to the Company
and of its defenses to the allegations of the lawsuits, the Company believes
that the disposition of these lawsuits is not likely to have a material adverse
effect on its financial condition or results of operations.
Where the Company is able to estimate the results of legal proceedings and
environmental and other claims, appropriate accruals have been established.
The Company had $7,961,000 at December 31, 1994, accrued for such items.
However, with respect to certain legal proceedings, certain environmental and
other claims and certain contingent liabilities, the Company is unable to
estimate the eventual outcome and impact on the consolidated financial
statements and no provision for any loss that may result from resolution of
these matters has been made. In any event, the Company believes that current
accruals and established sources of cash from operations and other sources are
adequate to meet the requirements of reasonably expected payments regarding
legal proceedings and environmental and other claims, and that these payments
will not have a material adverse effect on the Company's financial condition or
results of operations.
The Company has noncancellable commitments for rental of equipment under both
capital and operating leases which expire at various dates through 2001.
The following is a schedule by year of future minimum lease commitments under
all noncancellable leases:
<TABLE>
<CAPTION>
(In Thousands) Operating Capital
-------------- ----------- -----------
<S> <C> <C>
1995 $ 647 $ 148
1996 300 126
1997 231 76
1998 121 54
1999 31 11
Thereafter 30 -
------------ ------------
Total minimum lease commitments $ 1,360 415
============
Less amount representing interest 63
------------
Present value of net minimum lease
payments $ 352
============
</TABLE>
36
<PAGE> 38
Certain of the operating leases require the payment of real estate taxes and
insurance. Total rent expense was $1,358,000, $1,184,000, and $1,282,000 for
the years ended December 31, 1994, 1993 and 1992, respectively.
12. INCOME TAXES
As discussed in Note 3, the Company adopted SFAS No. 109 in 1992. There was no
cumulative effect of this change to record in 1992.
The provision for income taxes related to continuing operations consists of the
following:
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------------------
(In Thousands) 1994 1993 1992
-------------- ------------ ------------- -------------
<S> <C> <C> <C>
Federal $ 1,431 $ - $ -
State 265 50 13
Foreign 228 95 178
------------- ------------- -------------
Total $ 1,924 $ 145 $ 191
============= ============ =============
</TABLE>
The tax effects of net operating loss carryforwards and the temporary
differences between the financial statement carrying amounts and the tax bases
of assets (liabilities), are as follows:
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------------------
(In Thousands) 1994 1993 1992
-------------- ------------ ------------- -------------
<S> <C> <C> <C>
Current:
Allowance for uncollectible
accounts receivable $ 198 $ 393 $ 1,245
Inventory obsolescence reserves 1,125 1,046 1,231
Reserve for LIFO inventories (913) (927) (1,013)
Warranty, insurance and other reserves 3,415 3,498 3,756
Environmental reserves 533 786 1,808
Other 488 549 1,196
Less: valuation allowance (4,846) (5,345) (8,223)
------------- ------------- -------------
- - -
------------- ------------ -------------
Noncurrent:
Property, plant and equipment,
net (7,412) (7,900) (7,458)
Income tax loss carryforwards 24,510 25,429 22,130
Pension and post retirement
benefit accrual 3,106 4,095 4,449
Other 60 57 855
Less: valuation allowance (20,264) (21,681) (19,976)
------------- ------------ -------------
- - -
------------- ------------ -------------
Total $ - $ - $ -
============= ============ =============
</TABLE>
37
<PAGE> 39
In connection with the adoption of fresh start accounting, net deferred
tax assets, including tax loss carryforwards, were offset by a valuation
allowance due to the uncertainty of future realization. SFAS No. 109 and SOP
90-7 require that a charge to income tax expense be made as these future tax
benefits are realized, and the related reversal of the valuation allowance will
be used first to reduce reorganization value in excess of amounts allocable to
identifiable assets and other intangibles until exhausted and thereafter, be
reported as a direct addition to capital. During 1994, the Company reduced
reorganization value in excess of amounts allocable to identifiable assets by
approximately $1,500,000. The future tax benefits to be realized from the
utilization of deferred deductible temporary differences and net operating loss
carryforwards will correspondingly reduce future tax payments to the Internal
Revenue Service.
A valuation allowance is provided when it is more likely than not that some
portion or all of the deferred tax assets will not be realized. The Company
has established a valuation allowance for the deferred tax assets to the extent
it is not offset by deferred tax liabilities due to the uncertainty surrounding
the Company's ability to generate sufficient taxable income in order to realize
these assets during the carryforward period.
A reconciliation setting forth the difference between income taxes at the 34
percent Federal statutory rate and the Company's effective income tax rate on
continuing operations is summarized as follows:
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------------------
(In Thousands) 1994 1993 1992
-------------- ------------- ----------- -----------
<S> <C> <C> <C>
Computed income tax
expense (benefit) at
statutory rates $ 1,204 $ 1,003 $ (6,072)
Increase (decrease)
as a result of:
Intangible asset adjustment - - 3,409
Intangible asset amortization 375 375 734
Reversion of pension assets 115 - -
Increase (decrease) in
valuation allowance - (1,111) 1,194
Other items, net 230 (122) 926
------------- ------------ -------------
Provision for
income taxes $ 1,924 $ 145 $ 191
============= ============ ============
</TABLE>
At December 31, 1994, the Company had significant net operating loss
carryforwards which originated prior to November 1, 1991. However, due to
certain change of ownership requirements of the Internal Revenue Code,
utilization of the net operating loss carryforwards is limited to approximately
$39,000,000 at the rate of $2,734,000 per year through 2005. In addition, the
Company has net operating loss carryforwards generated subsequent to October
31, 1991 of approximately $25,400,000 which expire through 2008.
The utilization of these net operating loss carryforwards may be limited if
changes in the Company's stock ownership, as defined in the Internal Revenue
Code, exceed 50 percent of the value of the Company's stock during any three
year period. The calculation of the limitation is based on the fair
38
<PAGE> 40
value of the Company, the Federal long-term interest rate and the
expiration periods of the existing net operating loss carryforwards. The
calculation at December 31, 1994 reflects a change in ownership of approximately
45 percent during the previous three year period.
13. ACQUISITIONS
During 1994, in two separate transactions, the Company acquired certain assets
and assumed certain liabilities of companies engaged in similar manufacturing
operations. The aggregate purchase price, including assumed liabilities of
$1,460,000, was $6,628,000 and was allocated to the acquired assets based upon
their fair value at the purchase dates with the excess of $2,457,000 being
recorded as costs in excess of net assets acquired. The purchase price
consisted of $1,250,000 and 2,151 shares of Series B Preferred Stock.
14. INTANGIBLE ASSET ADJUSTMENT
As discussed in Note 2, in the fourth quarter of 1992, the Bank Group exchanged
$27,768,000 in debt for additional stock in the Company. This debt
restructuring was caused by reduced cash flows resulting from the negative
impact of soft domestic and foreign economies and increased competition in
certain markets. In connection with the exchange of stock for debt, and to
reflect the impact of other changes in projected sales volume and cost
structure, the Company revised the estimate of discounted cash flows from
projected future operations originally prepared upon emergence from bankruptcy
and determined that the revised discounted cash flows were not sufficient to
support the recorded amount of the reorganization value in excess of amounts
allocable to identifiable assets. Accordingly, the Company recorded a
valuation adjustment in 1992 of $10,029,000 or $0.81 per share for the
write-down of this intangible asset.
15. COSTS AND EXPENSES
The Company incurred product research and development costs of $737,000,
$498,000 and $1,136,000 for the years ended December 31, 1994, 1993, and 1992,
respectively.
The Company incurred product advertising costs of $2,284,000, $1,621,000 and
$1,337,000 for the years ended December 31, 1994, 1993 and 1992, respectively.
The Company recorded a $600,000 reduction of selling and administrative
expenses as a result of the favorable resolution of certain matters related to
the Amdura bankruptcy reorganization which occurred during the second quarter
of 1994.
The Company recorded nonrecurring costs associated with bankruptcy related
matters, suspension of certain pension plans, the relocation of Harris'
corporate offices and other items totalling $3,441,000 in 1992.
16. FINANCIAL INSTRUMENTS
The carrying amount of Amdura's financial instruments approximates fair value
due to the short term maturity of cash and cash equivalents, the classification
of PBGC Trust assets as trading
39
<PAGE> 41
securities pursuant to SFAS No. 115 and the refinancing of the Company's
long-term debt on September 30, 1994.
17. OPERATIONS BY GEOGRAPHIC AREA AND EXPORT SALES
Net sales by geographic area consist of:
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------------------
(In Thousands) 1994 1993 1992
-------------- ------------- ------------- -----------
<S> <C> <C> <C>
United States $ 131,823 $ 116,604 $ 112,930
Other Western Hemisphere 12,726 10,609 10,026
Europe 18,947 17,757 19,302
Elimination of transfers between geographic
areas:
United States (10,562) (8,714) (9,794)
Other Western Hemisphere (3,070) (2,223) (2,141)
Europe (5,073) (4,606) (3,504)
------------- ------------ -------------
Total $ 144,791 $ 129,427 $ 126,819
============= ============ =============
</TABLE>
Income (loss) before income taxes by geographic area consists of:
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------------------
(In Thousands) 1994 1993 1992
-------------- ------------- ------------- -----------
<S> <C> <C> <C>
United States $ 8,477 $ 6,504 $ 1,486
Other Western Hemisphere 563 69 526
Europe 125 453 47
Corporate administration, interest
reorganization items and other (5,624) (4,076) (19,920)
------------- ------------ -------------
Total $ 3,541 $ 2,950 $ (17,861)
============= ============ =============
</TABLE>
Identifiable assets by geographic area consist of:
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------------------
(In Thousands) 1994 1993 1992
-------------- ------------- ------------- -----------
<S> <C> <C> <C>
United States $ 108,906 $ 92,402 $ 94,228
Other Western Hemisphere 6,585 7,534 7,173
Europe 9,864 8,822 11,314
Corporate and other 2,411 3,743 5,818
------------- ------------ -------------
Total $ 127,766 $ 112,501 $ 118,533
============= =========== =============
</TABLE>
40
<PAGE> 42
U.S. export sales to unaffiliated customers by destination of sale consist of:
<TABLE>
<CAPTION>
Year Ended December 31,
------------------------------------------
(In Thousands) 1994 1993 1992
-------------- ------------- ------------- -----------
<S> <C> <C> <C>
Western Hemisphere $ 5,984 $ 4,482 $ 3,464
Far East 4,829 4,449 3,637
Europe and other 1,239 1,318 1,348
------------- ------------ -------------
Total $ 12,052 $ 10,249 $ 8,449
============= ============ =============
</TABLE>
18. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
<TABLE>
<CAPTION>
Year Ended December 31, 1994
------------------------------------------------------------
(In Thousands, Except 1st 2nd 3rd 4th
Per Share Amounts) Quarter Quarter Quarter Quarter
------------------ ------------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
Net sales $ 31,380 $ 34,796 $ 39,041 $ 39,574
Gross margin 6,520 7,508 8,150 9,051
Income tax (credit) 119 823 (125) 1,107
Income (loss) before change in
accounting principle $ 415 $ 1,028 $ (652) $ 826
Cumulative effect of change in
accounting principle (270) - - -
------------- ------------- ------------- -------------
Net income (loss) $ 145 $ 1,028 $ (652) $ 826
============= ============= ============= =============
Net income (loss) per common and
common equivalent share:
Income (loss) before change in
accounting principle $ .02 $ .04 $ (.03) $ .03
Cumulative effect of change in
accounting principle (.01) - - -
------------- ------------- ------------- -------------
Net income (loss) $ .01 $ .04 $ (.03) $ .03
============= ============= ============= =============
Common stock prices:
High 2-5/8 2-3/8 2-1/8 2
Low 2 1-7/8 1-1/2 1-1/2
</TABLE>
41
<PAGE> 43
<TABLE>
<CAPTION>
Year Ended December 31, 1993
------------------------------------------------------------
(In Thousands, Except 1st 2nd 3rd 4th
Per Share Amounts) Quarter Quarter Quarter Quarter
------------------ ------------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net sales $ 32,040 $ 35,476 $ 31,105 $ 30,806
Gross margin 6,832 6,870 6,335 5,900
Income tax (credit) (5) 92 89 (31)
Net income 918 965 526 396
Net income per common and
common equivalent share .04 .04 .02 .02
Common stock prices:
High 3-3/4 3-3/8 3 2-1/2
Low 2 2-3/8 1-7/8 1-7/8
</TABLE>
<TABLE>
<CAPTION>
Year Ended December 31, 1992
------------------------------------------------------------
(In Thousands, Except 1st 2nd 3rd 4th
Per Share Amounts) Quarter Quarter Quarter Quarter
------------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net sales $ 30,763 $ 32,910 $ 33,080 $ 30,006
Gross margin 5,407 5,946 5,498 4,377
Income tax (credit) 59 131 42 (41)
Loss from continuing
operations (1,070) (696) (1,357) (14,929)
Net loss per common and
common equivalent share (.09) (.05) (.11) (1.20)(1)
Common stock prices:
High 5-3/8 8 5 3-1/8
Low 2-1/2 1-7/8 2-3/4 1-7/8
</TABLE>
Fully diluted per share data is not presented because it would be
anti-dilutive.
(1) Loss per share for the fourth quarter of 1992 included a valuation
adjustment of ($.81) related to the write-down of the reorganization value
in excess of amounts allocable to identifiable assets as discussed in Note
14, and a special charge of ($.07) related to the suspension of three
defined benefit pension plans as discussed in Note 10.
* * * * *
42
<PAGE> 44
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information required by this item is incorporated by reference to the
information under the caption "Election of Directors" in the Proxy Statement.
ITEM 11. EXECUTIVE COMPENSATION
Information required by this item is incorporated by reference to the
information under the caption "Executive Compensation" in the Proxy Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information required by this item is incorporated by reference to the
information under the caption "Security Ownership of Certain Beneficial Owners
and Management" in the Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information required by this item is incorporated by reference to the
information under the caption "Certain Relationships and Related Transactions"
in the Proxy Statement.
43
<PAGE> 45
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K
(a)(1) The financial statements required to be filed by "Item 8--Financial
Statements and Supplementary Data" of this Annual Report on Form 10-K
are included as part of Item 8 hereto. See the Index to Consolidated
Financial Statements included as part of Item 8 here to which is hereby
incorporated by reference herein.
(2) The list of financial statement schedules required to be filed by
"Item 8--Financial Statements and Supplementary Data" of this Annual
Report on Form 10-K is as follows:
Page
----
Schedule II--Valuation and Qualifying Accounts . . . . . . . . 47
All other schedules of the Company for which provision is made in the
applicable accounting regulations of the Securities and Exchange
Commission are not required under the related instructions or are
inapplicable, and therefore have been omitted.
(3) The list of exhibits required to be filed with this Annual Report on
Form 10-K is set forth in Item 14(c) hereof.
(b) During the fourth quarter of 1994, Amdura filed the following current
report on Form 8-K:
Current Report on Form 8-K, dated October 13, 1994, filed with respect
to items 5 and 7 on October 14, 1994.
(c) The following exhibits are filed herewith or are incorporated herein by
reference:
Exhibit
No. Description
- ------- -----------
2.1 Debtors' Fifth Amended Joint Plan of Reorganization, filed with the
Bankruptcy Court on June 12, 1991. (Incorporated by reference to Exhibit
2.3 of the Form 10-K filed by Amdura with the Commission on July 11,
1991.)
3.1 Restated Certificate of Incorporation of Amdura Corporation as currently
in effect. (Incorporated by reference to Exhibit 3.1 to the Form 10-K
filed by Amdura with the Commission on March 30, 1994.)
3.2 Amdura Corporation Bylaws and all amendments thereto as currently in
effect. (Incorporated by reference to Exhibit 3.2 to the Form 10-K filed
by Amdura with the Commission on March 30, 1994.)
10.1 Parent Guaranty (excluding the schedules and exhibits thereto), dated as
of September 30, 1994, by Amdura Corporation in favor of Sanwa Business
Credit Corporation (Incorporated by reference to Exhibit 10.1 to the Form
10-Q filed by Amdura with the Commission on November 14, 1994.)
44
<PAGE> 46
Exhibit
No. Description
- ------- -----------
10.2 Loan Agreement (excluding the schedules and exhibits thereto), dated as
of September 30, 1994, among The Crosby Group, Inc. as Borrower, the
Lenders named therein and Sanwa Business Credit Corporation, as agent
(Incorporated by reference to Exhibit 10.2 to the Form 10-Q filed by
Amdura with the Commission on November 14, 1994.)
10.3 Loan Agreement (excluding the schedules and exhibits thereto), dated as
of September 30, 1994, among The Harris Waste Management Group, Inc. as
Borrower, the Lenders named therein and Sanwa Business Credit
Corporation, as agent (Incorporated by reference to Exhibit 10.3 to the
Form 10-Q filed by Amdura with the Commission on November 14, 1994.)
10.4 Amdura Corporation 1992 Stock Option Plan, as amended (Compensatory
Plan). (Incorporated by reference to Exhibit 10.5 to the Form 10-K filed
by Amdura with the Commission on March 30, 1994.)
10.5 Registration Rights Agreement dated as of December 23, 1992, among Amdura
Corporation and the Subordinated Term Loan Lenders. (Incorporated by
reference to Exhibit 10.6 to the Form 8-K filed by Amdura with the
Commission on December 28, 1992.)
10.6 Amdura's Bonus Plan, general description. (Incorporated by reference to
Exhibit 10.24 to the Form 10-K filed by Amdura with the Commission on
December 11, 1990.) (Compensatory Plan).
10.7 (i) Amdura Liquidating Trust Agreement No. 1 dated as of October 23,
1991, between Amdura and Tom H. Connolly, as Trustee; (ii) Amdura
Liquidating Trust Agreement No. 2 dated as of October 23, 1991, between
Amdura and Tom H. Connolly, as Trustee; (iii) Amdura Liquidating Trust
Agreement No. 3 dated as of October 23, 1991, between Amdura and Tom H.
Connolly, as Trustee; (iv) Amdura Liquidating Trust Agreement No. 4 dated
as of October 23, 1991, between Amdura and Tom H. Connolly, as Trustee;
(v) Amdura Liquidating Trust Agreement No. 5 dated as of October 23,
1991, between Amdura and Tom H. Connolly, as Trustee. (Incorporated by
reference to Exhibit 10.8 to the Form 10-K filed by Amdura with the
Commission on May 19, 1992.)
10.8 (i) Indemnity Agreement between Amdura and James A. Bach effective as of
March 24, 1992; (ii) Indemnity Agreement between Amdura and Marvin L.
Dimond effective as of March 24, 1992; (iii) Indemnity Agreement between
Amdura and Mark M. Metz effective as of March 24, 1992; (iv) Indemnity
Agreement between Amdura and Paul C. Meyer effective as of March 24,
1992; (v) Indemnity Agreement between Amdura and Larry L. Postelwait
effective as of March 24, 1992; (vi) Indemnity Agreement between Amdura
and C. David Bushley effective as of July 8, 1993; (vii) Indemnity
Agreement between Amdura and John W. Gildea effective as of July 8, 1993;
(viii) Indemnity Agreement between Amdura and Tracey L. Rudd effective as
of July 8, 1993; (ix) Indemnity Agreement between Amdura and Robert
LeBuhn effective as of October 8, 1993; (x) Indemnity Agreement between
Amdura and Frederick W. Whitridge, Jr. effective as of February 28, 1994.
(Except for the parties thereto and the addresses of such parties for
notice purposes, the above-referenced Indemnity Agreements are identical
in all material respects. Accordingly, Amdura has filed a copy of only
one such agreement). (Incorporated by reference to Exhibit 10.9 to the
Form 10-K filed by Amdura with the Commission on May 19, 1992.)
45
<PAGE> 47
Exhibit
No. Description
- ------- -----------
10.9 (i) Registration Rights Agreement between Amdura and the Amdura
Liquidating Trust No. 1 dated as of November 30, 1991; (ii) Registration
Rights Agreement between Amdura and Continental Bank, N.A. dated as of
November 30, 1991; (iii) Registration Rights Agreement between Amdura and
Seattle-First National Bank dated as of November 30, 1991; (iv)
Registration Rights Agreement between Amdura and Norwest Bank Minnesota,
N.A. dated as of November 30, 1991; (v) Registration Rights Agreement
between Amdura and Patricia Investments, Inc. dated as of November 30,
1991; (vi) Registration Rights Agreement between Amdura and
Internationale Nederlanden Bank N.V. (a/k/a NMB Postbank Group N.V.)
dated as of November 30, 1991; (vii) Registration Rights Agreement
between Amdura and Generale Bank dated as of November 30, 1991; (viii)
Registration Rights Agreement between Amdura and Pilgrim Prime Rate
Trust dated as of November 30, 1991. (Except for the parties thereto,
the above-referenced Registration Rights Agreements are identical in all
material respects. Accordingly, Amdura has filed a copy of one such
agreement). (Incorporated by reference to Exhibit 10.10 to the Form 10-K
filed by Amdura with the Commission on May 19, 1992.)
11.1 Calculation of Net Income (Loss) per Common Share and Common Equivalent
Share.
22.1 Subsidiaries of the Registrant. (Incorporated by reference to Exhibit
22.1 to the Form 10-K filed by Amdura with the Commission on March 30,
1994.)
27.1 Financial Data Schedule.
46
<PAGE> 48
AMDURA CORPORATION AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
(In Thousands)
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E
--------- -------- ------------------------ -------- --------
Additions
------------------------
Charged Charged
Balance at to Costs to Balance
Beginning and Other at End
Classification of Period Expenses Accounts Deductions of Period
-------------- --------- -------- -------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Deductions from assets
to which they apply:
Allowance for
uncollectible accounts:
Year ended
December 31, 1994 $ 1,120 $ 260 $ 41 $ 709 $ 712
Year ended
December 31, 1993 975 617 18 490 1,120
Year ended
December 31, 1992 630 578 - 233 975
Reorganization value in
excess of amounts
allocable to
identifiable
assets - accumulated
amortization:
Year ended
December 31, 1994 $ 2,806 $ 847 $ - $ - $ 3,653
Year ended
December 31, 1993 1,891 915 - - 2,806
Year ended
December 31, 1992 246 1,645 - - 1,891
Costs in excess of net
assets acquired -
accumulated
amortization:
Year ended
December 31, 1994 $ - $ 132 $ - $ - $ 132
Year ended
December 31, 1993 - - - - -
Year ended
December 31, 1992 - - - - -
</TABLE>
47
<PAGE> 49
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
AMDURA CORPORATION
Date: March 15, 1995 By /s/ James A. Bach
-----------------------
James A. Bach, President
and Chief Operating Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Date: March 15, 1995 /s/ Frederick W. Whitridge, Jr.
--------------------------------
Frederick W. Whitridge, Jr.,
Chairman of the Board
Date: March 15, 1995 /s/ James A. Bach
--------------------------------
James A. Bach, Director,
President and
Chief Operating Officer
Date: March 15, 1995 /s/ C. David Bushley
--------------------------------
C. David Bushley, Senior Vice
President, Finance and
Administration and
Chief Financial Officer
(Principal Financial and
Accounting Officer)
Date: March 15, 1995 /s/ Marvin L. Dimond
--------------------------------
Marvin L. Dimond, Director
Date: March 15, 1995 /s/ John W. Gildea
--------------------------------
John W. Gildea, Director
Date: March 15, 1995 /s/ Robert LeBuhn
--------------------------------
Robert LeBuhn, Director
Date: March 15, 1995 /s/ Paul C. Meyer
--------------------------------
Paul C. Meyer, Director
Date: March 15, 1995 /s/ Tracey L. Rudd
--------------------------------
Tracey L. Rudd, Director
48
<PAGE> 50
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBER DESCRIPTION NUMBERED PAGE
- -------------- ----------- -------------
<S> <C> <C>
11.1 Calculation of Net Income (Loss) per Common 50
Share and Common Equivalent Share.
27.1 Financial Data Schedule 51
</TABLE>
49
<PAGE> 1
EXHIBIT 11.1
AMDURA CORPORATION AND SUBSIDIARIES
CALCULATION OF NET INCOME (LOSS) PER COMMON SHARE
AND COMMON EQUIVALENT SHARE
(Unaudited)
(In Thousands Except Per Share Amounts)
<TABLE>
<CAPTION>
Year-Ended December 31,
-------------------------------------------------------
1994 1993 1992
------------------ ----------------- ----------------
<S> <C> <C> <C>
Primary and fully diluted net
income (loss) per common share
and common equivalent share:
Net income (loss) $ 1,347 $ 2,805 $ (18,052)
----------------- ----------------- -----------------
Less: dividend requirements on
Series B Preferred Stock 162 - -
----------------- ----------------- -----------------
Net income (loss) available to
common stock 1,185 2,805 (18,052)
----------------- ----------------- -----------------
Weighted average number of
common shares outstanding 24,593 18,268 12,438
Add: Common equivalent shares
outstanding:
Shares available upon conversion
of Preferred Stock:
Series A - 6,196 -
Series B 1,621 - -
Shares available upon exercise
of Warrants - 440 -
Shares available upon exercise
of Stock Options - 294 -
----------------- ----------------- -----------------
Weighted average number of common
and common equivalent shares used
in computing net income (loss) per share 26,214 25,198 12,438
----------------- ----------------- -----------------
Net income (loss)
per common share and common
equivalent share $ .05 $ .11 $ (1.45)
================= ================= =================
</TABLE>
50
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<CASH> 3,765
<SECURITIES> 0
<RECEIVABLES> 20,340
<ALLOWANCES> 712
<INVENTORY> 46,628
<CURRENT-ASSETS> 73,393
<PP&E> 53,451
<DEPRECIATION> 14,474
<TOTAL-ASSETS> 127,766
<CURRENT-LIABILITIES> 39,837
<BONDS> 0
0
0
<COMMON> 247
<OTHER-SE> 54,315
<TOTAL-LIABILITY-AND-EQUITY> 127,766
<SALES> 144,791
<TOTAL-REVENUES> 145,159
<CGS> 113,930
<TOTAL-COSTS> 24,053
<OTHER-EXPENSES> 1,503
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,132
<INCOME-PRETAX> 3,541
<INCOME-TAX> 1,924
<INCOME-CONTINUING> 1,617
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> (270)
<NET-INCOME> 1,347
<EPS-PRIMARY> .05
<EPS-DILUTED> .05
</TABLE>
