FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended March 31, 1995
Commission File Number 1-1274-2
MEDUSA CORPORATION
(Exact name of registrant as specified in its charter)
Ohio 34-0394630
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3008 Monticello Boulevard, Cleveland Heights, Ohio 44118
(Address of principal executive offices) (Zip Code)
(216) 371-4000
Registrant's telephone number, including area code
Not applicable
(Former name, former address and former fiscal year,
if changed from last report.)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports)
and (2) has been subject to such filing requirements for the past 90
days.
YES X NO
The number of shares outstanding of the issuer's classes of common
stock as of March 31, 1995:
Common Shares, Without Par Value - 16,232,579 shares
INDEX
MEDUSA CORPORATION AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
Consolidated Statements of Income - Three months ended March 31,
1995 and 1994
Consolidated Balance Sheets - March 31, 1995, March 31, 1994 and
December 31, 1994
Consolidated Statements of Cash Flows - Three months ended March
31, 1995 and 1994
Notes to consolidated financial statements
Item 2 - Management's Discussion and Analysis of Financial Condition
and Results of Operations
PART II - OTHER INFORMATION
Item 6 - Exhibits and Reports on Form 8-K
SIGNATURES
-1-
Part I - Financial Information
Item 1 - Financial Statements
Medusa Corporation and Subsidiaries
Consolidated Statements of Net Income (Loss)
(In Thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended
March 31, March 31,
1995 1994
(Unaudited)
<S> <C> <C>
Net Sales $ 45,620 $ 37,380
Costs and Expenses:
Cost of sales 36,075 31,271
Selling, general and administrative 5,772 4,514
Depreciation and amortization 2,826 2,588
44,673 38,373
Operating Profit (Loss) 947 (993)
Other Income (Expense):
Interest income 472 218
Interest expense (1,881) (1,877)
Miscellaneous - net (1) (43)
(1,410) (1,702)
Loss Before Taxes (463) (2,695)
Provision For Income Taxes (160) (906)
Net Loss $ (303) $ (1,789)
Average Common Shares Outstanding 16,016 16,483
Net Income Per Common Share:
Primary $ (.02) $ (.11)
Fully Diluted (a) $ (.11)
Cash Dividends Declared Per Common Share $ .125 $ .125
</TABLE>
(a) Fully diluted earnings per share amounts are not presented for
1995 because they are anti-dilutive.
See notes to consolidated financial statements
-2-
Part I - Financial Information
Item 1 - Financial Statements (Cont'd)
Medusa Corporation and Subsidiaries
Consolidated Balance Sheets
(In Thousands)
<TABLE>
<CAPTION>
March 31, December 31,
1995 1994 1994
(Unaudited)
Assets
Current Assets:
<S> <C> <C> <C>
Cash and short-term investments $ 29,559 $ 16,593 $ 48,487
Accounts receivable, less allowances of
$546, $517 and $519, respectively 23,374 21,865 24,036
Refundable income taxes 405 712 -
Inventories, at lower of cost,
principally LIFO, or market:
replacement cost would be higher by
approximately $7,057, $6,480 and
$7,089, respectively
Finished goods 7,541 10,651 7,987
Work in process 4,686 5,118 1,756
Raw materials and supplies 13,046 10,733 13,549
25,273 26,502 23,292
Other current assets 13,016 12,704 4,339
Total Current Assets 91,627 78,376 100,154
Property, Plant and Equipment:
Cost 343,206 329,992 337,934
Less accumulated depreciation 234,057 224,318 231,818
109,149 105,674 106,116
Intangible and Other Assets 11,339 13,953 12,330
Total Assets $ 212,115 $ 198,003 $ 218,600
</TABLE>
See notes to consolidated financial statements
-3-
Part I - Financial Information
Item 1 - Financial Statements (Cont'd)
Medusa Corporation and Subsidiaries
Consolidated Balance Sheets
(In Thousands)
<TABLE>
<CAPTION>
March 31, December 31,
1995 1994 1994
(Unaudited)
Liabilities and Shareholders' Equity
Current Liabilities:
Current maturities of
<S> <C> <C> <C>
long-term debt $ 35,000 $ - $ 35,000
Accounts payable 11,967 10,532 15,257
Accrued compensation and
payroll taxes 4,422 4,328 6,161
Other accrued liabilities 9,755 8,910 8,635
Income taxes payable 466 62 1,817
Total Current Liabilities 61,610 23,832 66,870
Long-Term Debt 61,300 96,300 61,300
Accrued Postretirement Health
Benefit Cost 27,468 27,236 27,342
Accrued Pension, Reserves and
Other Liabilities 3,520 3,215 3,115
Shareholders' Equity:
Preferred shares - - -
Common shares 1 1 1
Paid in capital 20,804 17,590 19,724
Retained earnings 60,123 36,958 62,455
Unvested restricted common shares (6) (6) (26)
Unearned restricted common shares (4,049) (2,759) (3,511)
Currency translation adjustment (1,087) (1,051) (1,101)
Total Paid in Capital and
Retained Earnings 75,786 50,733 77,542
Less Cost of Treasury Shares (17,569) (3,313) (17,569)
Total Shareholders' Equity 58,217 47,420 59,973
Total Liabilities and Shareholders'
Equity $ 212,115 $ 198,003 $ 218,600
</TABLE>
See notes to consolidated financial statements
-4-
Part I - Financial Information
Item 1 - Financial Statements (Cont'd)
Medusa Corporation and Subsidiaries
Consolidated Statements of Cash Flows
(In Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31, March 31,
1995 1994
Cash Provided From (Used By) Operating Activities:
<S> <C> <C>
Net loss $ (303) $ (1,789)
Adjustments to reconcile net loss to net cash
used by operating activities:
Depreciation and amortization 2,826 2,588
Provision for deferred income taxes 415 65
Postretirement health benefit cost 126 402
Increase in operating working capital (15,394) (11,478)
Gain on sale of capital assets (23) (8)
Net Cash Used By Operating Activities (12,353) (10,220)
Cash Provided From (Used By) Investing Activities:
Capital expenditures (5,649) (2,360)
Proceeds from sale of capital assets 23 8
Net Cash Used By Investing Activities (5,626) (2,352)
Cash Provided From (Used By) Financing Activities:
Purchase of treasury shares - (501)
Dividends paid (2,029) (2,092)
Stock options exercised 493 508
Issuance of restricted shares 587 63
Other - (31)
Net Cash Used By Financing Activities (949) (2,053)
Decrease In Cash And Short-Term Investments (18,928) (14,625)
Cash And Short-Term Investments At Beginning
Of Period 48,487 31,218
Cash And Short-Term Investments At End Of Period $ 29,559 $ 16,593
</TABLE>
See notes to consolidated financial statements
-5-
Part I - Financial Information
Item 1 - Financial Statements (Cont'd)
Medusa Corporation and Subsidiaries
Notes to Consolidated Financial Statements
1. The accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with generally
accepted accounting principles for interim financial information
and with instructions to Form 10-Q and Article 10 of Regulation
S-X. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of
management all normal recurring adjustments considered necessary
for a fair presentation have been included. Operating results
for the three months ended March 31, 1995 are not necessarily
indicative of the results that may be expected for the year
ended December 31, 1995. For further information, refer to the
consolidated financial statements and footnotes thereto included
in the company's annual report on Form 10-K for the year ended
December 31, 1994.
2. The provision for income taxes in both years reflects a credit
due principally to pretax losses.
3. Use of the percentage depletion method and other permanent tax
adjustments reduced the company's effective tax rate for the
first three months of 1995 and 1994 to 34.6% and 33.6%,
respectively, from the federal statutory rate of 35%.
4. At both March 31, 1995 and December 31, 1994, 50,000,000 common
shares, without par value were authorized. At March 31, 1995,
16,232,579 shares were outstanding (16,162,302 at December 31,
1994).
5. Primary net income per share is computed by dividing net income
by the weighted average number of shares of common stock and
common stock equivalents (options) outstanding during the
period. Fully diluted net income per share is computed based on
the weighted average number of shares of common stock and common
stock equivalents outstanding during the period, as if the
convertible subordinated notes were converted into common stock
at the beginning of the period after giving retroactive effect
to the elimination of interest expense, net income tax effect,
applicable to the subordinated notes.
- - -6-
Item 2 - Management's Discussion and Analysis of Financial Condition
and Results of Operations
Results of Operations
Three Months Ended March 31, 1995 Compared With Three Months
Ended March 31, 1994
Net sales for the first quarter of 1995 increased 22% to $45.6
million from $37.4 million in 1994. Cement net sales rose 23%
over last years' first quarter. Cement unit volume for the
quarter increased by 9% due to continued strong demand. Some of
the increased volume in the 1995 quarter may also reflect
customer purchases in advance of price increases implemented on
April 1, 1995. In addition, production start-up problems after
a harsh winter shutdown, especially at Charlevoix, curtailed
early 1994 volume. Price increases implemented April 1 and
August 1, 1994, resulted in 14% higher cement prices over 1994.
Aggregate operations' sales improved 15% over last years' first
quarter due principally to 43% higher sales at the company's
industrial materials subsidiary. In addition, the quarter
reflected higher sales for the company's highway and safety
construction operation.
Cost of sales as a percent of sales fell to 79.1% in the first
quarter of 1995 compared to 83.7% in same period of 1994 due
primarily to increased cement prices. Cement capacity
utilization was 70.2% in 1995 compared to 60.1% in 1994. The
aforementioned winter shutdown problems in 1994 also contributed
to last years' higher unit production costs.
Depreciation and amortization expense increased $0.2 million
from $2.6 million in 1994. The increase was due to the high
levels of capital expenditures in both 1994 and 1995, as well
as, higher units of production depreciation resulting from
higher volume.
Selling, general and administrative expense as a percent of
sales increased to 12.6% in 1995 from 12.1% in 1994. Higher
salaries, wages, payroll taxes, fringes and other inflationary
pressures caused this overall increase.
Operating profit for the first quarter of 1995 of $947,000
compares to a loss of $993,000 in 1994. The improvement in
operating results can be attributed to the reasons discussed
above.
- - -7-
Item 2 - Management's Discussion and Analysis of Financial Condition
and Results of Operations (cont'd)
Interest income increased by $254,000 to $472,000 due to higher
levels of cash and short-term investments during the first
quarter of 1995 than 1994. Interest expense was approximately
the same for both periods.
The provision for income taxes reflects a credit for both
periods due to pretax losses during the quarter. The company's
effective tax rate of 34.6% for the first quarter of 1995 was
lower than the federal statutory rate of 35% principally due to
our percentage depletion deduction. The effective tax rate for
the first quarter of 1994 was 33.6%. The increase in 1995 is
due to lower percentage depletion deductions partially offset by
lower effective state tax rates.
The net loss for the first quarter of 1995 of $303,000, or $.02
per common share, compares to a net loss of $1.8 million, or
$.11 per common share, in 1994.
The company's business is highly seasonal and particularly
sensitive to weather conditions. Interim results, particularly
for the first quarter, are not indicative of annual results.
Liquidity and Capital Resources
At March 31, 1995, the company had $29.6 million of cash and
short-term investments. The company has available an unsecured
$20.0 million five-year revolving credit facility for short-term
seasonal working capital needs that expires December 31, 1996,
and unsecured bank lines of credit totaling $15.0 million. At
March 31, 1995, no amounts were outstanding under any of these
facilities.
Working capital at March 31, 1995, was $24.5 million less than
at March 31, 1994, due principally to $35.0 million of 10%
unsecured Senior Notes coming due on December 15, 1995,
partially offset by higher balances of cash and short-term
investments. The ratio of current assets to current liabilities
was 1.5:1 at March 31, 1995, and December 31, 1994, and 3.3:1 at
March 31, 1994.
Capital expenditures for the first quarter of 1995 were $5.6
million compared to $2.4 million in the first quarter of 1994.
The higher expenditures relate to capital improvements to expand
clinker capacity, enhance productivity and reduce operating
costs.
- - -8-
Item 2 - Management's Discussion and Analysis of Financial Condition
and Results of Operations (cont'd)
The high levels of domestic construction activity in 1994, which
pushed cement consumption to record levels last year, have
continued on into 1995. The company expects its cement plants
will continue to run full out in 1995 to meet the strong demand.
The company's full year 1995 cement unit volume is currently
expected to be limited to 2% higher than last year due to
production constraints and low inventories. During the year,
the company expects to begin to reap the initial benefits of a
three-year program to expand clinker capacity by about 6-8%.
While there is insufficient U.S. production capacity to meet
rising demand (forcing imports to increase), tight supplies and
localized shortages are expected to continue to develop.
On April 1, 1995 cement price increases of up to $8 per ton
became effective in most of the company's southern markets and
from $3.50 to $6.00 per ton in northern markets. In addition,
the company has recently placed its southern customers on
allocation due to strong demand. The company recently announced
a further price increase of $4 per ton in selected northern
markets to become effective on September 1, 1995.
- - -9-
Part II - Other Information
Item 6 - Exhibits and Reports on Form 8-K
No reports on Form 8-K were filed for the first quarter of 1995.
Exhibit 11 - Statements Re Computation of Per Share Earnings
Computation of Primary and Fully Diluted Income Per Common Share
(In thousands, except per share)
<TABLE>
<CAPTION>
Three Months Ended
March 31
1995 1994
Primary
<S> <C> <C>
Earnings-Net income $ (303) $(1,789)
Shares
Weighted average number of common
shares outstanding 16,016 16,483
Additional shares
assuming conversion of:
stock options 124 (b)
Average common shares
outstanding and equivalents 16,140 16,483
Primary income per
common share $ (.02) $ (.11)
Fully Diluted (a)
Earnings
Net income $(1,789)
Interest on convertible
subordinated notes,
net of taxes -
Pro forma net income
available to common
stock $(1,789)
Shares
Weighted average number of common
shares outstanding 16,483
Additional shares
assuming conversion of:
stock options (b)
convertible notes -
Average common shares
outstanding and equivalents 16,483
Fully diluted income
per common share $ (.11)
(a) Fully diluted earnings per share amounts are not presented for
1995 because they are anti-dilutive.
(b) Amounts not restated, not dilutive under 3% test.
</TABLE>
- - -10-
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed of its behalf
by the undersigned thereunto duly authorized.
MEDUSA CORPORATION
REGISTRANT
Date May 4, 1995 By George E. Uding, Jr.
George E. Uding, Jr.
President and Chief
Operating Officer
Date May 4, 1995 By R. Breck Denny
R. Breck Denny
Vice President-
Finance and Treasurer
- - -11-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM MEDUSA
CORPORATION AND SUBSIDIARIES' STATEMENT OF INCOME AND BALANCE SHEET AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<CIK> 0000064674
<NAME> MEDUSA CORPORATION
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 29559
<SECURITIES> 0
<RECEIVABLES> 23920
<ALLOWANCES> 546
<INVENTORY> 25273
<CURRENT-ASSETS> 91627
<PP&E> 343206
<DEPRECIATION> 234057
<TOTAL-ASSETS> 212115
<CURRENT-LIABILITIES> 61610
<BONDS> 0
<COMMON> 1
0
0
<OTHER-SE> 58216
<TOTAL-LIABILITY-AND-EQUITY> 212115
<SALES> 45620
<TOTAL-REVENUES> 45620
<CGS> 36075
<TOTAL-COSTS> 44673
<OTHER-EXPENSES> (471)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1881
<INCOME-PRETAX> (463)
<INCOME-TAX> (160)
<INCOME-CONTINUING> (303)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (303)
<EPS-PRIMARY> (.02)
<EPS-DILUTED> 0
</TABLE>
