BY EDGAR DIRECT TRANSMISSION
September 27, 1994
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549
Re: Amendment to Annual Report for 1993
on Form 10-K
File No. 1-06124
Gentlemen:
Transmitted herewith is a copy of Form 10-K/A-2 constituting
Amendment No. 2 to Annual Report on 1993 on Form 10-K of Lone Star
Industries, Inc.
Sincerely,
William E. Roberts
WER:jam William E. Roberts
Enclosure Vice President, Chief
Financial Officer, Treasurer
and Controller
FORM 10-K/A-2
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
(Mark One)
[X] 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, 1993
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ___________ to ______________
Commission File Number 1-06124
LONE STAR INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE No. 13-0982660
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
300 First Stamford Place, P O Box 120014, Stamford, CT 06912-0014
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 203-969-8600
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which each class registered
Common Stock, par value $1 New York Stock Exchange
per share
Common Stock Purchase Warrants New York Stock Exchange
10% Senior Notes Due 2003 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 that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Yes X No
Indicate 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 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 ]
In December, 1990, registrant and certain of its wholly-owned
subsidiaries each filed voluntary petitions for relief under
Chapter 11, Title 11 of the United States Code with the United
States Bankruptcy Court for the Southern District of New York. The
registrant's Plan of Reorganization became effective on April 14,
1994 and on that date all of its old equity securities were
cancelled and new equity securities issued to holders of claims in
the Bankruptcy and holders of old equity securities.
Aggregate market value of voting stock held by non-affiliates of
the registrant at September 21, 1994: approximately $139,460,000.
The number of shares outstanding of each of the registrant's
classes of common stock as of September 21, 1994: new common stock,
par value $1 per share - 12,000,000 shares. 1
1 Includes 578,508 shares of common stock which pursuant to the Plan of
Reorganization will be distributed to pre-petition unsecured creditors and
holders of pre-petition equity interests, but which have not been issued as of
September 21, 1994. Does not include (i) 4,003,333 shares of common stock
reserved for issuance upon exercise of Lone Star Common Stock Warrants and
(ii) 750,000 shares of Common Stock reserved for issuance upon exercise of
options granted or to be granted under registrants' stock option plans.
AMENDMENT NO. 2 TO ANNUAL REPORT
FOR 1993 ON FORM 10-K
The undersigned registrant hereby amends Item 14. EXHIBITS,
FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K of its Annual
Report for 1993 on Form 10-K by the addition of a new additional
exhibit 28C and the renumbering of the present additional exhibits
28C, 28D and 28E as 28D, 28E and 28F, respectively. As so amended
Item 14 reads as follows:
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS
ON FORM 8-K.
(a) 1. Financial Statements and Schedules: See Index to
Financial Statements and Schedules on page F-1 of this
report.
2. Exhibits:
3. Articles of incorporation and by-laws:
3A. Amended and Restated Certificate of
Incorporation. Incorporated by reference
to Exhibit 19 of Lone Star's Quarterly
Report on Form 10-Q for the quarter ended
June 30, 1988.
3B. Amended By-Laws. Incorporated by reference
to Exhibit 2 of Lone Star's Report on Form 8-K,
August 20, 1992.
10. Material contracts:
10A. Form of Indemnification Agreements entered
into in 1988 with directors and certain
executive officers of Lone Star. Incorporated by
reference to Exhibit 10B of Lone Star's Annual
Report on Form 10-K for the fiscal year ended
December 31, 1992.
10B. Employment Agreement dated as of August 20,
1992, with Mr. William M. Troutman. Incorporated
by reference to Exhibit 3 of Lone Star's Report
on Form 8-K, August 20, 1992.
10C. Employment Agreement dated as of May 18,
1992, with Mr. John J. Martin. Incorporated by
reference to Exhibit 4 of Lone Star's Report on
Form 8-K, August 20, 1992.
10D. Employment Agreement dated December 12,
1990, with Mr. David W. Wallace. Incorporated by
reference to Exhibit 10P of Lone Star's Annual
Report on Form 10-K for the fiscal year ended
December 31, 1990.
10E. Order of the United States Bankruptcy Court
for the Southern District of New York dated
September 24, 1992 approving terms of a
Separation Pay and Retention Award Plan and
authorizing payments thereunder and the Plan.
Incorporated by reference to Exhibit 10F of Lone
Star's Annual Report on Form 10-K for the fiscal
year ended December 31, 1992.
10F. Settlement Agreement and Order of the
United States Bankruptcy Court for the Southern
District of New York dated October 13, 1992.
Incorporated by reference to Exhibit 1 of Lone
Star's Report on Form 8-K, October 13, 1992.
11. Statement re computation of per share earnings.
22. Subsidiaries of the registrant.
28. Additional exhibits:
28A. Voluntary Petition for Relief under Chapter
11, Title 11 of the United States Code dated
December 10, 1990. Incorporated by reference to
Exhibit 28A of Lone Star's Annual Report on Form
10-K for the fiscal year ended December 31, 1990.
28B. Separate Financial Statements for Kosmos
Cement Company, a significant subsidiary of Lone
Star, as of and for the year ended December 31,
1993.
28C. Separate Financial Statements for Hawaiian
Cement, a significant subsidiary of Lone Star, as
of June 30, 1994 and 1993 and for the years ended
June 30, 1994, 1993 and 1992.
28D. Modified Amended Disclosure Statement
Regarding Debtors' Modified Amended Consolidated
Plan of Reorganization and exhibits thereto.
Incorporated by reference to Lone Star's Form T-3
filed 14 January, 1994, File Number 1.022-22175;
except for Exhibit J to said Modified Amendment
Disclosure Statement which is incorporated by
reference to Lone Star's Annual Report on Form
10-K for the fiscal year ended December 31, 1992,
and Exhibit K to said Modified Amended Disclosure
Statement which is incorporated by reference to
Lone Star's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1993 filed 12 August 1993,
File Number 1.001-06124.
28E. Modification of Debtors' Plan Reorgani-
zation. Incorporated by reference to Exhibit 2 of
Lone Star's Report on Form 8-K, March 1, 1994;
filed 8 March 1994, File Number 1.001-06124.
28F. Order Confirming Debtors Modified Amended
Consolidated Plan of Reorganization Under Chapter
11 of The Bankruptcy Code dated February 17,
1994.
(b) Reports on Form 8-K.
During the last quarter of the fiscal year ending December 31,
1993 registrant filed the following Current Reports on Form 8-K:
1) Form 8-K, November 1, 1993 - Item 5 - Other Events.
2) Form 8-K, November 3, 1993 - Item 5 - Other Events.
3) Form 8-K, December 8, 1993 - Item 5 - Other Events.
4) Form 8-K, December 27, 1993 - Item 5 - Other Events.
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this Amendment to be signed on
its behalf by the undersigned thereunto duly authorized.
LONE STAR INDUSTRIES, INC.
(Registrant)
By: William E. Roberts
William E. Roberts
Dated: September 27, 1994 Vice President, Chief
Financial Officer, Treasurer
and Controller
LONE STAR INDUSTRIES, INC.
EXHIBITS FILED WITH
ANNUAL REPORT ON FORM 10-K/A-2
FOR THE FISCAL YEAR ENDED 1993
Item and Description
28C. Separate Financial Statements for Hawaiian Cement, a
significant subsidiary of Lone Star, as of June 30, 1994
and 1993 and for the years ended June 30, 1994, 1993 and
1992.
HAWAIIAN CEMENT
AND SUBSIDIARY
Consolidated Financial Statements
June 30, 1994, 1993 and 1992
(With Independent Auditors' Reports Thereon)
Independent Auditors' Report
To the Partners
Hawaiian Cement:
We have audited the accompanying consolidated balance sheets of Hawaiian Cement
(a partnership) and subsidiary as of June 30, 1994 and 1993, and the related
consolidated statements of income, changes in partners' capital, and cash
flows for the years then ended. These consolidated financial statements are
the responsibility of the Partnership's management. Our responsibility is
to express an opinion on these consolidated financial statements based on
our audits. The accompanying statements of income, changes in partners'
capital, and cash flows of Hawaiian Cement and subsidiary for the year ended
June 30, 1992, were audited by other auditors whose report thereon dated
August 18, 1992, expressed an unqualified opinion on those consolidated
statements.
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 1994 and 1993 consolidated financial statements referred to
above present fairly, in all material respects, the financial position of
Hawaiian Cement and subsidiary as of June 30, 1994 and 1993, and the results
of their operations and their cash flows for the years then ended in
conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Honolulu, Hawaii
August 17, 1994
REPORT OF INDEPENDENT ACCOUNTANTS
To the Partners
Hawaiian Cement
We have audited the accompanying consolidated statements of income, changes in
partners' capital and cash flows of Hawaiian Cement (a partnership) and
subsidiary for the year ended June 30, 1992. These financial statements are
the responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements 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 consolidated statements of income,
changes in parners' capital and cash flows are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the consolidated statements of income, changes in partners'
capital and cash flows. An audit also includes assesing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall presentation of the consolidated statements of income,
changes in partners' captial and cash flows. We believe that our audit of the
consolidated statements of income, changes in partners' capital and cash
flows provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated results of operations and cash flows of
Hawaiian Cement and subsidiary for the year ended June 30, 1992, in conformity
with generally accepted accounting principles.
Coopers & Lybrand
Honolulu, Hawaii
August 18, 1992
HAWAIIAN CEMENT
AND SUBSIDIARY
Consolidated Balance Sheets
June 30, 1994 and 1993
Assets 1994 1993
Current assets:
Cash $ 1,374,484 190,723
Receivables:
Trade, less allowance for doubtful
accounts of $557,543 in 1994
and $552,830 in 1993 7,689,811 9,589,348
Other 405,167 170,684
8,094,978 9,760,032
Inventories (note 2) 9,806,944 12,274,960
Prepaid expenses 975,814 529,967
Total current assets 20,252,220 22,755,682
Property, plant and equipment, net (note 3) 68,302,288 70,846,663
Goodwill, net of accumulated amortization
of $181,675 in 1994 and $153,725 in 1993 936,298 964,248
Intangible pension asset (note 7) 652,805 626,676
Other assets 366,399 506,311
$ 90,510,010 95,699,580
Liabilities and Partners' Capital
Current liabilities:
Accounts payable and accrued liabilities 6,043,649 6,634,948
Due to Lone Star Industries, Inc. (note 4) - 423,857
Current portion of notes payable (note 5) 6,100,000 8,000,000
Total current liabilities 12,143,649 15,058,805
Notes payable, excluding current
portion (note 5) 9,400,000 11,000,000
Pension liability (note 7) 1,051,909 739,993
Total liabilities 22,595,558 26,798,798
Partners' capital 67,914,452 68,900,782
Commitments and contingencies
(notes 6, 7, 8 and 9)
$ 90,510,010 95,699,580
See accompanying notes to consolidated financial statements.
HAWAIIAN CEMENT
AND SUBSIDIARY
Consolidated Statements of Income
Years ended June 30, 1994, 1993 and 1992
1994 1993 1992
Sales, net of freight of $5,880,962
in 1994, $5,427,719 in 1993
and $6,475,000 in 1992 $ 84,004,812 98,942,036 101,055,573
Cost of goods sold 64,202,510 76,422,486 78,141,715
Gross profit 19,802,302 22,519,550 22,913,858
Operating expenses:
General and administrative 4,931,767 4,360,884 3,999,542
Selling 940,361 1,016,158 968,422
5,872,128 5,377,042 4,967,964
Income from operations 13,930,174 17,142,508 17,945,894
Other income (expense):
Interest expense (1,243,202) (1,476,017) (1,361,021)
Interest income 70,890 72,192 115,742
Loss on abandonment of Waikapu
Quarry (note 3) - - (1,088,652)
Other, net 410,067 651,590 398,241
(762,245) (752,235) (1,935,690)
Net income $ 13,167,929 16,390,273 16,010,204
See accompanying notes to consolidated financial statements.
HAWAIIAN CEMENT
AND SUBSIDIARY
Consolidated Statements of Changes
in Partners' Capital
Years ended June 30, 1994, 1993 and 1992
Adelaide
Brighton Lone Star
Cement KCOR Hawaii Cement
(Hawaii),Inc. Corporation Corporation Total
Balance, July 1, 1991 $ 28,622,075 28,049,633 572,441 57,244,149
Net income 8,005,102 7,845,000 160,102 16,010,204
Distributions to partners (5,250,000) (5,145,000) (105,000) (10,500,000)
Additional pension liability
(note 7) (134,335) (131,648) (2,686) (268,669)
Balance, June 30, 1992 $ 31,242,842 30,617,985 624,857 62,485,684
Partnership interest,
June 30, 1992 50% 49% 1% 100%
Balance, July 1, 1992 31,242,842 30,617,985 624,857 62,485,684
Net income 8,195,136 8,031,234 163,903 16,390,273
Distributions to partners (5,046,200) (4,930,322) (115,878) (10,092,400)
Additional pension liability
(note 7) 58,613 57,440 1,172 117,225
Balance, June 30, 1993 $ 34,450,391 33,776,337 674,054 68,900,782
Partnership interest,
June 30, 1993 50% 49% 1% 100%
Balance, July 1, 1993 34,450,391 33,776,337 674,054 68,900,782
Net income 6,583,965 6,490,612 93,352 13,167,929
Distributions to partners (7,000,000) (6,900,000) (100,000) (14,000,000)
Additional pension liability
(note 7) (77,130) (77,129) - (154,259)
Transfer of 1% interest
from Lone Star Hawaii Cement
Corporation to KCOR Corporation - 667,406 (667,406) -
Balance, June 30, 1994 $ 33,957,226 33,957,226 - 67,914,452
Partnership interest,
June 30, 1994 50% 50% -% 100%
See accompanying notes to consolidated financial statements.
HAWAIIAN CEMENT
AND SUBSIDIARY
Consolidated Statements of Cash Flows
Years ended June 30, 1994, 1993 and 1992
1994 1993 1992
Cash flows from operating activities:
Cash received from customers $ 85,669,866 99,467,676 102,077,162
Cash paid to suppliers, employees
and others (61,300,294) (75,166,025) (73,796,082)
Interest received 70,890 72,192 115,742
Interest paid (1,220,941) (1,471,990) (1,511,269)
Net cash provided by operating
activities 23,219,521 22,901,853 26,885,553
Cash used in investing activities -
capital expenditures for property,
plant and equipment (4,535,760) (9,684,636) (22,895,749)
Cash flows from financing activities:
Proceeds from borrowings 1,000,000 1,000,000 48,000,000
Principal payments on borrowings (4,500,000) (6,000,000) (42,000,000)
Distributions to partners (14,000,000) (10,092,400) (10,500,000)
Net cash used in financing activities (17,500,000) (15,092,400) (4,500,000)
Net increase (decrease) in cash 1,183,761 (1,875,183) (510,196)
Cash at beginning of year 190,723 2,065,906 2,576,102
Cash at end of year $ 1,374,484 190,723 2,065,906
Reconciliation of net income to net cash provided by
operating activities:
Net income 13,167,929 16,390,273 16,010,204
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 7,108,085 7,047,290 6,110,851
Loss on abandonment of Waikapu Quarry - - 1,088,652
Changes in:
Receivables 1,665,054 525,640 606,348
Inventories 2,468,016 2,378,497 (164,650)
Prepaid expenses (445,847) 145,556 (215,453)
Intangible pension asset (26,129) 43,681 (173,779)
Other assets 139,912 52,985 (405,831)
Accounts payable and accrued liabilities (591,299) (3,363,761) 4,157,107
Due to Lone Star Industries, Inc. (423,857) 31,633 (301,180)
Pension liability 157,657 (349,941) 173,284
Net cash provided by operating
activities $ 23,219,521 22,901,853 26,885,553
See accompanying notes to consolidated financial statements.
HAWAIIAN CEMENT
AND SUBSIDIARY
Notes to Consolidated Financial Statements
June 30, 1994, 1993 and 1992
(1) Summary of Significant Accounting Policies
Organization and Operations
Hawaiian Cement (Partnership) was formed as a Hawaii partnership on May 7, 1985,
by Lone Star Hawaii Cement Corporation, a wholly-owned subsidiary of Lone
Star Industries, Inc., Adelaide Brighton Cement (Hawaii), Inc. (ABC) and
Angaston Holdings, Ltd. (Angaston) for the purpose of quarrying and selling
aggregates and manufacturing and selling cement and ready mix concrete in
Hawaii. The partnership agreement stipulates a term of 30 years and
provides for the allocation of profits and losses in accordance with the
respective partners' percentage of ownership.
In December 1989, Angaston Holdings, Ltd. and Lone Star Hawaii Cement
Corporation transferred 14 percent and 35 percent interests in the
Partnership, respectively, to KCOR Corporation, a wholly-owned subsidiary of
Lone Star Industries, Inc. In April 1994, Lone Star Hawaii Cement
Corporation transferred its remaining 1 percent interest in the Partnership to
KCOR Corporation.
Principles of Consolidation
The consolidated financial statements include the accounts of the Partnership
and its wholly-owned subsidiary, M. Funes Concrete, Inc. All significant
intercompany balances and transactions have been eliminated in consolidation.
Inventories
Inventories are stated at the lower of cost or market. Cost of finished goods
and work in process inventories is determined using standard costs which
approximate average costs. Cost of cement raw materials, supplies, and fuels
is determined using the first-in, first-out method. Cost of raw material
used for concrete and stores inventories is determined by the average cost
method.
Property, Plant and Equipment
Property, plant and equipment are stated at cost. Depreciation on plant and
equipment is calculated on the straight-line method over the following
estimated useful lives:
Buildings 5 - 40 years
Machinery and equipment 5 - 20 years
Automobiles and trucks 3 - 10 years
Significant expenditures which extend the useful life of existing assets are
capitalized. Maintenance and repair costs are charged to operations.
Goodwill
Goodwill consists of the excess of purchase price over the fair value of net
assets of businesses acquired and is amortized on a straight-line basis over
40 years. The Partnership assesses the recoverability of goodwill by
determining whether the amortization of the goodwill balance over its
remaining life can be recovered through future operating cash flows of the
acquired operation.
Income Taxes
Partnership income or loss is included in the individual partners' income tax
returns and, accordingly, income taxes are not provided for in the
accompanying consolidated financial statements. The Partnership files its
tax returns on a calendar year basis.
Reclassifications
Certain 1992 amounts have been reclassified to conform with presentation in
1994 and 1993. Such reclassifications did not impact previously reported net
income or partners' capital.
(2) Inventories
Inventories consisted of the following at June 30, 1994 and 1993:
1994 1993
Finished goods $ 2,823,589 2,947,434
Work in process and raw materials 2,760,304 5,214,362
Stores 2,230,942 2,240,823
Supplies and fuels 1,992,109 1,872,341
$ 9,806,944 12,274,960
(3) Property, Plant and Equipment
Property, plant and equipment consisted of the following at June 30, 1994 and
1993:
1994 1993
Land $ 14,095,252 13,095,130
Leasehold interest 614,326 614,326
Buildings and equipment 87,511,393 83,048,070
Automobiles and trucks 12,173,875 12,690,097
Construction in progress 1,931,593 2,913,669
116,326,439 112,361,292
Less accumulated depreciation and
amortization (48,024,151) (41,514,629)
$ 68,302,288 70,846,663
During fiscal 1992, the Partnership abandoned a quarry located in Waikapu, Maui
and expensed the then remaining unamortized value of the license of
approximately $814,000 and other costs related to the abandonment of the
quarry of approximately $275,000.
(4) Related Party Transactions
Due to Lone Star Industries, Inc. as of June 30, 1993 consists principally of
insurance premiums paid by Lone Star Industries, Inc. on behalf of the
Partnership.
The Partnership purchased raw materials amounting to approximately $4,500,000,
$5,500,000 and $1,200,000, in 1994, 1993 and 1992, respectively, from
Adelaide Brighton Cement, Ltd. Terms and conditions of these purchases were
consistent with those provided by unrelated parties.
(5) Notes Payable
Notes payable consisted of the following at June 30, 1994 and 1993:
1994 1993
Borrowings under a $15,000,000 unsecured
revolving credit facility with interest
payable at maturity of each advance
(LIBOR rate of 5.688% at June 30, 1994).
The revolving period expires on December
31, 1995. The Partnership has the option
to convert the revolving credit facility to
a term note commencing on January 1, 1996
(to mature in December 1999).Under the term
note, interest payments continue as structured
in the revolving period; principal is payable
in 16 quarterly installments. $ 4,500,000 8,000,000
8.7% unsecured senior notes with interest
payable quarterly. Annual principal payments
due as follows: $1,600,000 in March 1995 and
1996; $1,300,000 annually in March from 1997
through 2002. 11,000,000 11,000,000
Total notes payable 15,500,000 19,000,000
Current portion of notes payable 6,100,000 8,000,000
Notes payable, excluding current portion $ 9,400,000 11,000,000
Principal payments required on notes payable for each of the five years
subsequent to June 30, 1994 and thereafter are summarized as follows:
1995 $ 6,100,000
1996 1,600,000
1997 1,300,000
1998 1,300,000
1999 1,300,000
Thereafter 3,900,000
$ 15,500,000
The Partnership's $15,000,000 unsecured revolving credit facility and 8.7
percent unsecured senior notes contain various covenants including the
maintenance of a specified tangible net worth, debt to tangible net worth
ratio, current ratio, and debt service ratio. These agreements also contain
restrictions on the incurrence of long-term debt, liens on assets, sale of
assets, change in ownership structure and on distributions or loans to
partners. The 8.7 percent unsecured senior notes place additional
restrictions on the Partnership's ability to engage in sale and lease-back
transactions and certain transactions with affiliates.
At June 30, 1994, the Partnership has available a $15,000,000 shelf credit
facility. The facility is unsecured with various expiration dates as
provided for by the shelf credit facility agreement.
(6) Leases
Minimum rental commitments under noncancelable operating leases, principally
pertaining to land, including quarries, buildings, and a barge are as follows:
1995 $ 1,337,000
1996 1,337,000
1997 1,328,000
1998 1,058,000
1999 1,091,000
Thereafter to 2038 17,968,000
$24,119,000
Rental expense in 1994, 1993 and 1992 approximated $1,291,000, $1,813,000 and
$2,007,000, respectively, including $111,000 in 1992 for the lease of a
barge from Lone Star Industries, Inc. On August 13, 1992, Lone Star
Industries, Inc. assigned its chartering rights relative to the barge to
Pompano Marine Chartering, Inc., an unrelated company.
In addition to minimum rent, certain leases provide for the payment of
executory costs such as property taxes, maintenance, and royalties on
minerals extracted from quarries. For 1994, 1993 and 1992, total royalties
amounted to approximately $1,041,000, $1,035,000 and $962,000, respectively,
and are included in cost of goods sold in the accompanying consolidated
financial statements. Certain leases include options for renewal of the
leased property.
The Partnership's quarry leases provide that certain restorations be made to
the quarries at the end of the respective lease terms. Amounts expensed in
1992 relating to future restoration costs of these quarries approximated
$291,000. No similar amounts were expensed in 1994 or 1993.
(7) Employee Benefit Plans
Pension Plans
Benefits provided under the Partnership's defined benefit pension plan for
salaried employees are based on years of service and average final
compensation. The Partnership's policy is to fund amounts as necessary on
an actuarial basis to provide assets sufficient to meet the benefits to be
paid to plan members in accordance with the requirements of ERISA.
Contributions for salaried employees amounted to approximately $461,000,
$519,000 and $246,000, in 1994, 1993 and 1992, respectively.
The Partnership has established separate defined benefit pension plans for the
union employees of its Cement and Maui divisions. Benefits are based on
years of service and monthly benefit rates established by the respective
union agreements. The Partnership's funding policy is to contribute annually
the amount required to provide for benefits attributed to service to date and
also for benefits expected to be earned in the future. Contributions to the
Cement division plan amounted to approximately $243,000 in 1993 and $240,000
in 1992 (nil in 1994). Contributions made to the Maui division pension plan
amounted to approximately $80,000 in 1994, $66,000 in 1993, and $94,000 in
1992.
The following table sets forth the Plan's funded status and amounts recognized
in the Partnership's consolidated balance sheets at June 30, 1994 and 1993:
Cement Maui Salaried
Employees Employees Employees Total
1994:
Actuarial present value of benefit
obligations:
Vested benefit obligation $ 1,985,000 969,000 2,617,000 5,571,000
Accumulated benefit
obligation $ 2,390,000 1,367,000 3,332,000 7,089,000
Projected benefit obligation
for service rendered to date (2,390,000) (1,367,000) (4,323,642) (8,080,642)
Plan assets at fair value,
principally listed stock and
U. S. government obligations 2,272,085 1,063,766 2,701,240 6,037,091
Projected benefit obligation
in excess of plan assets (117,915) (303,234) (1,622,402) (2,043,551)
Unrecognized net (benefit)
obligation existing at
inception being recognized
over 15 years for Cement
employees and 16 years for
Maui employees 99,125 (75,194) - 23,931
Unrecognized prior service
cost existing at July 1, 1990,
amortized over 15 years for
Cement employees and 13 years
for Maui employees. For the
salaried employees, the
unrecognized prior service cost
existing at July 1, 1991 is
amortized over 9 years
320,625 61,291 384,020 765,936
Unrecognized net loss (gain)
resulting from difference
betweem actual and expected
asset values (212,256) 367,422 1,041,571 1,196,737
Additional liability
(207,494) (353,519) (433,949) (994,962)
Accrued pension liability $ (117,915) (303,234) (630,760) (1,051,909)
Cement Maui Salaried
Employees Employees Employees Total
1993:
Actuarial present value of
benefit obligations:
Vested benefit obligation $ 2,052,000 860,000 2,167,000 5,079,000
Accumulated benefit
obligation $ 2,471,000 1,213,000 2,759,000 6,443,000
Projected benefit obligation
for service rendered to
date (2,471,000) (1,213,000) (3,659,033) (7,343,033)
Plan assets at fair value,
principally listed stock
and U. S. government
obligations 2,284,080 976,219 2,442,708 5,703,007
Projected benefit obligation
in excess of plan assets
(186,920) (236,781) (1,216,325) (1,640,026)
Unrecognized net (benefit)
obligation existing at
inception being recognized
over 15 years for Cement
employees and 16 years for
Maui employees 109,560 (82,356) - 27,204
Unrecognized prior service
cost existing at July 1,
1990, amortized over 15
years for Cement employees
and 13 years for Maui
employees. For the salaried
employees, the unrecognized
prior service cost existing
at July 1, 1991 is amortized
over 9 years 349,773 71,212 448,024 869,009
Unrecognized net loss (gain)
resulting from difference
between actual and expected
asset values (204,780) 270,254 752,920 818,394
Additional liability
(254,553) (259,110) (300,911) (814,574)
Accrued pension liability $ (186,920) (236,781) (316,292) (739,993)
Statement of Financial Accounting Standards No. 87, "Employers' Accounting for
Pensions" requires recognition in the balance sheet of a minimum pension
liability for underfunded plans. As a result of a change in actuarial
assumptions, an additional liability was required in 1994 and 1993. The
projected benefit obligation in 1994 and 1993 was increased to reflect future
contractual benefit increases.
Net pension cost for 1994, 1993 and 1992 included the following components:
Cement Maui Salaried
Employees Employees Employees
1994:
Service cost representing benefits
earned during the period $ - 32,265 377,091
Interest cost on projected benefit
obligation 170,198 84,789 254,315
Return on plan assets (6,696) (8,450) 4,076
Net amortization and deferral (137,144) (54,266) (98,716)
Net pension cost $ 26,358 54,338 536,766
1993:
Service cost representing benefits
earned during the period - 31,220 313,652
Interest cost on projected benefit
obligation 202,034 72,219 190,198
Return on plan assets (312,734) (72,734) (228,180)
Net amortization and deferral 204,198 13,521 154,667
Net pension cost $ 93,498 44,226 430,337
1992:
Service cost representing benefits
earned during the period 84,498 34,748 246,537
Interest cost on projected benefit
obligation 163,334 61,895 152,555
Return on plan assets (171,015) (67,747) (77,823)
Net amortization and deferral 103,304 21,417 28,829
Net pension cost $ 180,121 50,313 350,098
For the salaried pension plan, the assumed discount rate, expected long-term
rate of return on plan assets, and rate of increase in future compensation
levels were 7 percent, 8 percent and 5 percent, respectively, in 1994, 7.5
percent, 8 percent and 5 percent, respectively, in 1993, and 8 percent, 8
percent and 5 percent, respectively, in 1992. For both the Cement and Maui
employees' plans, the assumed discount rate was 7 percent, 7.5 percent and 8
percent, respectively, for 1994, 1993 and 1992, and expected long-term rate
of return on plan assets was 8 percent for 1994, 1993 and 1992. There is no
assumed rate of increase in future compensation levels for the cement and
Maui employees' plans as benefits are based on years of service.
Beginning in 1992, participants in the Cement Employees Pension Plan were
voluntarily transferred to a union administered plan resulting in no service
cost in 1994 and 1993.
The Partnership participates in a union administered defined contribution
pension plan for union employees of its cement and Oahu and Hawaii (Big
Island) concrete and aggregate divisions which provides for stipulated
contributions for each eligible employee hour worked. Partnership
contributions amounted to approximately $876,000, $1,042,000 and $623,000 in
1994, 1993 and 1992, respectively.
Savings Plan
Substantially all nonbargaining salaried employees are eligible to participate
in the Partnership's salaried employees savings plan which provides for the
Partnership to match stipulated employee contributions. Partnership
contributions amounted to approximately $106,000, $127,000 and $107,000 in
1994, 1993 and 1992, respectively.
Postretirement Benefits
In December 1990, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions," (Statement No. 106) which
changes the current practice of accounting for postretirement benefits on a
cash basis by requiring accrual, during the years that the employee renders
the service, of the expected cost of providing those benefits to an employee
and to certain employees' beneficiaries and covered dependents. Statement
No. 106 is effective for the Partnership beginning in fiscal 1996. The
initial liability may be recognized immediately upon adoption or amortized
prospectively. The Partnership has not determined the effect of adoption
of Statement No. 106 on its results of operations or financial condition. The
Partnership currently provides postretirement medical and life insurance
benefits, the cost of which is recognized as paid.
Postemployment Benefits
The Partnership does not offer postemployment benefits as defined in Statement
of Financial Accounting Standards No. 112, "Employers' Accounting for
Postemployment Benefits."
(8) Sales Agreements
The Partnership has executed a sales agreement with a cement customer that
provides for minimum and maximum purchase volumes. Total sales under this
agreement amounted to approximately $17,865,000, $19,288,000 and $21,894,000
in 1994, 1993 and 1992, respectively.
(9) Contingencies
The Partnership is party to various claims and legal actions arising in the
ordinary course of business. In the opinion of management, the ultimate
disposition of these matters will not have a material adverse effect on the
Partnership's consolidated financial position, results of operations or
liquidity.
As of June 30, 1994, the Partnership has issued a standby letter of credit in
the amount of approximately $251,000 on behalf of Lone Star Industries, Inc.
This letter of credit was issued as a guarantee of certain insurance premiums
owed to Lone Star Industries, Inc.
(10) Concentration of Credit Risk
Substantially all of the Partnership's business activity is with customers
located in the state of Hawaii. Substantially all of the financial
instruments reflected on the consolidated balance sheets are based in the
state of Hawaii.
Independent Auditors' Report
To the Partners
Hawaiian Cement:
Under date of August 17, 1994, we reported on the consolidated balance sheets
of Hawaiian Cement (a partnership) and subsidiary as of June 30, 1994 and
1993, and the related consolidated statements of income, changes in partners'
capital, and cash flows for the years then ended, as contained in the annual
report on Form 10-K filed by Lone Star Industries, Inc. In connection with
our audits of the aforementioned consolidated financial statements, we also
audited the related 1994 and 1993 consolidated financial statement schedules
contained in the annual report on Form 10-K filed by Lone Star Industries,
Inc. These financial statement schedules are the responsibility of the
Partnerships' management. Our responsibility is to express an opinion on
these financial statement schedules based on our audits. The consolidated
statements of income, changes in partners' capital, and cash flows of
Hawaiian Cement and subsidiary for the year ended June 30, 1992, and the related
financial statement schedules were audited by other auditors whose report
thereon dated August 18, 1992, expressed an unqualified opinion on those
consolidated statements and financial statement schedules.
In our opinion, such 1994 and 1993 financial statement schedules, when
considered in relation to the basic consolidated financial statements taken
as a whole, present fairly, in all material respects, the information set
forth therein.
KPMG Peat Marwick LLP
Honolulu, Hawaii
August 17, 1994
REPORT OF INDEPENDENT ACCOUNTANTS
Our report on the 1992 consolidated financial statements of Hawaiian Cement
(a partnership) is included in this Form 10-K/A. In connection with our audit
of such 1992 financial statements, we have also audited the 1992 financial
statement Schedules V, VI, VIII, IX and X included in the Form 10-K/A.
In our opinion, the 1992 finanical statement schedules referred to above,
when considered in relation to basic financial statements taken as a whole,
present fairly, in all material respects, the information required to be
included therein.
Coopers & Lybrand
Honolulu, Hawaii
August 18, 1992
Schedule V
HAWAIIAN CEMENT
AND SUBSIDIARY
Property, Plant and Equipment
Years Ended June 30, 1994 and 1993 and 1992
Balance at Balance at
Beginning Additions Other End
of Year at Cost Retirements Changes of Year
Classification
1994:
Land $ 13,095,130 1,000,122(1) - - 14,095,252
Leasehold
Interest 614,326 - - - 614,326
Buildings and
Equipment 83,048,070 3,903,054 (129,955) 690,224 (3) 87,511,393
Automobiles
and Trucks 12,690,097 332,024 (158,022) (690,224)(3) 12,173,875
Construction
in Progress 2,913,669 3,499,425(4) - (4,481,501)(4)(5) 1,931,593
$ 112,361,292 8,734,625 (287,977) (4,481,501) 116,326,439
1993:
Land 13,095,130 - - - 13,095,130
Leasehold
Interest 614,326 - - - 614,326
Buildings and
Equipment 72,276,824 11,999,923 (1,228,677) - 83,048,070
Automobiles
and Trucks 12,030,407 881,756 (222,066) - 12,690,097
Construction
in Progress 6,447,547 5,681,653(4) - (9,215,531)(4)(5) 2,913,669
$ 104,464,234 18,563,332 (1,450,743) (9,215,531) 112,361,292
HAWAIIAN CEMENT
AND SUBSIDIARY
Property, Plant and Equipment, Continued
Balance at Balance at
Beginning Additions Other End
of Year at Cost Retirements Changes of Year
Classification
1992:
Land $ 3,140,000 9,955,130(1) - - 13,095,130
Leasehold
Interest 1,814,326 - (1,200,000)(2) - 614,326
Buildings and
Equipment 64,564,371 8,084,563 (366,101) (6,009) 72,276,824
Automobiles
and Trucks 11,247,378 790,143 (13,123) 6,009 12,030,407
Construction
in Progress 2,586,058 8,146,453(4) - (4,284,964)(4)(5) 6,447,547
$ 83,352,133 26,976,289 (1,579,224) (4,284,964) 104,464,234
(1) Represents purchase of land at Campbell plant at cost.
(2) Included in leasehold interest at June 30, 1991 is a license to quarry
in Waikapu, Maui, acquired in the purchase of Maui Concrete and Aggregate in
1988. The purchase price assigned to the quarry of $1,200,000 was being
amortized on a per ton of aggregates-produced basis over the life of the
lease which expires in 1999. The unamortized allocated purchase price at
June 30, 1991 was $856,000. During fiscal 1992, the Partnership abandoned
the quarry. Accordingly, the Partnership wrote off the remaining unamortized
value of the license of approximately $814,000 and other costs related to the
abandonment of the Waikapu Quarry of approximately $275,000.
(3) Represents the reclassification of assets.
(4) Construction in progress accounts are used as "cost accumulation" accounts
prior to capitalizing and reclassifying items as property, plant or equipment.
(5) Represents amortization of stripping costs. Quarry development (stripping)
costs are deferred and amortized based on tons produced. Net quarry
development costs are included in construction in progress.
Schedule VI
HAWAIIAN CEMENT
AND SUBSIDIARY
Accumulated Depreciation, Depletion
and Amortization of Property, Plant and Equipment
Years Ended June 30, 1994, 1993 and 1992
Balance at Changes to Balance at
Beginning Cost and Other End
of Year Expenses Retirements Changes of Year
Classification
1994:
Leasehold
Interest $ 125,432 15,357 - - 140,789
Buildings and
Equipment 33,167,970 5,420,371 (129,955) - 38,458,386
Automobiles and
Trucks 8,221,227 1,361,771 (158,022) - 9,424,976
Construction in
Progress - 282,636(1) - (282,636)(1) -
$ 41,514,629 7,080,135 (287,977) (282,636) 48,024,151
1993:
Leasehold
Interest 110,072 15,360 - - 125,432
Buildings and
Equipment 28,791,723 5,613,703 (1,237,456) - 33,167,970
Automobiles and
Trucks 7,439,411 995,103 (213,287) - 8,221,227
Construction in
Progress - 336,835(1) - (336,835)(1) -
$ 36,341,206 6,961,001 (1,450,743) (336,835) 41,514,629
HAWAIIAN CEMENT
AND SUBSIDIARY
Accumulated Depreciation, Depletion
and Amortization of Property, Plant and Equipment, Continued
Balance at Changes to Balance at
Beginning Cost and Other End
of Year Expenses Retirements Changes of Year
Classification
1992:
Leasehold
Interest $ 438,771 57,317 (386,016) - 110,072
Buildings and
Equipment 23,550,252 5,333,058 (91,587) - 28,791,723
Automobiles and
Trucks 7,067,606 384,928 (13,123) - 7,439,411
Construction in
Progress - 204,430(1) - (204,430)(1) -
$ 31,056,629 5,979,733 (490,726) (204,430) 36,341,206
(1) Represents amortization of stripping costs. Quarry development (stripping)
costs are deferred and amortized based on tons produced. Net quarry
development costs are included in construction in progress.
Schedule VIII
HAWAIIAN CEMENT
AND SUBSIDIARY
Valuation and Qualifying Accounts
Years Ended June 30, 1994, 1993 and 1992
Additions
Balance at Charged to Charged Balance at
Beginning Costs and to Other End of
of Year Expenses Accounts(2) Deductions(1) Year
1994:
Allowance for
doubtful accounts
deducted from
trade accounts
receivable $ 552,830 48,370 - 43,657 557,543
1993:
Allowance for
doubtful accounts
deducted from
trade accounts
receivable $ 425,000 114,300 15,330 1,800 552,830
1992:
Allowance for
doubtful accounts
deducted from
trade accounts
receivable $ 408,000 101,000 29,000 113,000 425,000
(1) Deductions in 1994, 1993 and 1992 represent accounts charged off.
(2) Represents reserves related to service charges.
Schedule IX
HAWAIIAN CEMENT
AND SUBSIDIARY
Short-Term Borrowings
Years Ended June 30, 1994, 1993 and 1992
Maximum Average Weighted
Weighted Amount Amount Average
Balance Average Outstanding Outstanding Interest
at end of Interest During the During the Rate During
Year Rate Year Year (2) the Year (3)
Category
1994:
Bank Loans (1) $ 4,500,000 5.688% $ 8,000,000 5,300,000 5.38%
1993:
Bank Loans(1) $ 8,000,000 4.125% $ 13,000,000 10,500,000 4.92%
1992:
Bank Loans(1) $13,000,000 4.9375% $ 24,000,000 17,750,000 6.09%
(1) Represents certain borrowings under lines of credit or bank notes which
have maturities of three months or less.
(2) Average amount outstanding during the year is computed by dividing the
total outstanding at each month-end by twelve.
(3) Average interest rate for the year is computed by dividing short-term
interest expense by the average short-term debt outstanding.
Schedule X
HAWAIIAN CEMENT
AND SUBSIDIARY
Supplementary Income Statement Information
For the Years Ended June 30, 1994, 1993 and 1992
Charged to
Description Costs and Expenses
1994 Maintenance and Repairs $ 3,270,674
1993 Maintenance and Repairs $ 4,119,924
1992 Maintenance and Repairs $ 4,620,655
Other items requiring disclosure are not shown as they individually are less
than 1 percent of net sales except for depreciation and amortization expense
which is presented in the consolidated statements of cash flows.
