SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Quarter Ended June 30, 1999
Commission File Number 0-22206
NIAGARA CORPORATION
----------------------------------------------------
(Exact name of Registrant as specified in its charter)
Delaware 59-3182820
----------------------------- --------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
667 Madison Avenue
New York, New York 10021
--------------------------------------
(Address of principal executive offices)
(212) 317-1000
----------------------
(Registrant's telephone
number, including area code)
N/A
-------------------------------
(Former name, former address and
former fiscal year, if
changed since last report.)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. YES X . NO .
Number of shares of Common Stock outstanding at June 30, 1999
Common Stock, par value $.001 per share 9,511,575
--------------------------------------- -------------------------
(Class) (Number of Shares)
NIAGARA CORPORATION
INDEX TO JUNE 1999 FORM 10-Q
- -------------------------------------------------------------------------------
PAGE
PART I - FINANCIAL INFORMATION
FINANCIAL STATEMENTS (UNAUDITED):
NIAGARA CORPORATION
BALANCE SHEETS......................................... 3
STATEMENTS OF OPERATIONS............................... 4-5
STATEMENT OF STOCKHOLDERS' EQUITY...................... 6
STATEMENTS OF CASH FLOWS............................... 7
NOTES TO FINANCIAL STATEMENTS.......................... 8-14
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS...........................................15-21
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK ............ 22
CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF
THE PRIVATE SECURITIES REFORM ACT OF 1995........................... 22
PART II - OTHER INFORMATION.............................................. 23
SIGNATURES............................................................... 26
<TABLE>
<CAPTION>
NIAGARA CORPORATION
AND SUBSIDIARIES
BALANCE SHEETS
=======================================================================================================================
December 31, June 30,
1998 (a) 1999 (b)
- -----------------------------------------------------------------------------------------------------------------------
(unaudited)
ASSETS
CURRENT:
<S> <C> <C>
Cash and cash equivalents $ 440,654 $ 2,325,327
Trade accounts receivable, net of allowance for doubtful accounts of
$789,000 and $860,000 13,360,290 41,117,982
Inventories 30,131,877 53,042,606
Deferred income taxes 494,000 -
Other current assets 1,446,130 1,119,060
- -----------------------------------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 45,872,951 97,604,975
PROPERTY, PLANT AND EQUIPMENT, NET OF ACCUMULATED DEPRECIATION OF
$13,371,116 AND $16,962,543 89,748,881 103,446,108
GOODWILL, NET OF ACCUMULATED AMORTIZATION OF $225,545 AND $264,311 2,099,593 2,060,827
DEFERRED FINANCING COSTS, NET OF ACCUMULATED AMORTIZATION OF $184,480
AND $239,824 590,520 535,176
INTANGIBLE PENSION ASSET 526,000 526,000
OTHER ASSETS, NET OF ACCUMULATED AMORTIZATION OF $414,213 AND
$499,164 591,075 1,715,645
- -----------------------------------------------------------------------------------------------------------------------
$ 139,429,020 $ 205,888,731
=======================================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT:
Accounts payable $ 14,106,608 $ 40,434,454
Accrued expenses 6,555,103 6,743,023
Current maturities of long-term debt 4,797,209 5,280,673
- -----------------------------------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 25,458,920 52,458,150
Long-term debt, less current maturities 41,572,250 79,101,860
Accrued pension cost 4,664,337 4,391,035
Accrued post-retirement welfare benefits 5,638,639 5,685,563
Deferred income taxes 7,357,000 7,485,790
Other noncurrent liabilities 207,331 150,976
- -----------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 84,898,477 149,273,374
- -----------------------------------------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY:
Preferred stock, $.001 par value - 500,000 shares authorized; none
outstanding - -
Common stock, $.001 par value - 15,000,000 shares authorized;
9,997,455 issued 9,998 9,998
Additional paid-in capital 50,111,675 50,111,675
Retained earnings 8,384,835 10,736,462
Accumulated other comprehensive income (1,076,000) (1,342,813)
- -----------------------------------------------------------------------------------------------------------------------
57,430,508 59,515,322
Treasury stock, at cost, 485,880 shares (2,899,965) (2,899,965)
- -----------------------------------------------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY 54,530,543 56,615,357
- -----------------------------------------------------------------------------------------------------------------------
$ 139,429,020 $ 205,888,731
=======================================================================================================================
(a) Includes the balance sheets of Niagara Corporation, Niagara LaSalle Corporation and LaSalle Steel Company.
(b) Includes the balance sheets of Niagara Corporation, Niagara LaSalle Corporation, LaSalle Steel Company
and Niagara LaSalle (UK) Limited.
See accompanying notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
NIAGARA CORPORATION
AND SUBSIDIARIES
STATEMENT OF OPERATIONS
(UNAUDITED)
=======================================================================================================================
Three months ended June 30, 1998 (a) 1999 (b)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
NET SALES $ 55,249,764 $ 61,618,459
COST OF PRODUCTS SOLD 47,263,580 53,628,529
GROSS PROFIT 7,986,184 7,989,930
OPERATING EXPENSES:
Selling, general and administrative 4,070,811 5,395,644
INCOME FROM OPERATIONS 3,915,373 2,594,286
OTHER INCOME (EXPENSE):
Interest income 20,548 7,434
Interest expense (1,022,794) (1,082,059)
Other income - 3,212
INCOME BEFORE TAXES 2,913,127 1,522,873
TAXES ON INCOME 1,158,000 590,000
- -----------------------------------------------------------------------------------------------------------------------
NET INCOME $ 1,755,127 $ 932,873
- -----------------------------------------------------------------------------------------------------------------------
EARNINGS PER SHARE (BASIC) $ .18 $ .10
- -----------------------------------------------------------------------------------------------------------------------
EARNINGS PER SHARE (DILUTED) $ .17 $ .10
=======================================================================================================================
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
BASIC 9,997,455 9,511,575
DILUTED 10,505,281 9,768,498
=======================================================================================================================
(a) Includes the results of Niagara Corporation, Niagara LaSalle Corporation and LaSalle Steel Company for the entire period.
(b) Includes the results of Niagara Corporation, Niagara LaSalle Corporation and LaSalle Steel Company for the entire period
and the results of Niagara LaSalle (UK) Limited from May 22, 1999.
See accompanying notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
NIAGARA CORPORATION
AND SUBSIDIARIES
STATEMENTS OF OPERATIONS
(UNAUDITED)
=======================================================================================================================
Six months ended June 30, 1998 (a) 1999 (b)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
NET SALES $ 118,020,443 $ 110,998,612
COST OF PRODUCTS SOLD 100,588,556 95,768,065
- -----------------------------------------------------------------------------------------------------------------------
GROSS PROFIT 17,431,887 15,230,547
OPERATING EXPENSES:
Selling, general and administrative 8,279,149 9,500,312
- -----------------------------------------------------------------------------------------------------------------------
INCOME FROM OPERATIONS 9,152,738 5,730,235
OTHER INCOME (EXPENSE):
Interest income 157,065 14,761
Interest expense (2,301,153) (1,977,839)
Other income 115,177 74,470
- -----------------------------------------------------------------------------------------------------------------------
INCOME BEFORE TAXES 7,123,827 3,841,627
TAXES ON INCOME 2,800,000 1,490,000
- -----------------------------------------------------------------------------------------------------------------------
NET INCOME $ 4,323,827 $ 2,351,627
- -----------------------------------------------------------------------------------------------------------------------
EARNINGS PER SHARE (BASIC) $ .43 $ .25
- -----------------------------------------------------------------------------------------------------------------------
EARNINGS PER SHARE (DILUTED) $ .41 $ .24
=======================================================================================================================
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
BASIC 9,997,455 9,511,575
DILUTED 10,475,821 9,721,901
=======================================================================================================================
(a) Includes the results of Niagara Corporation, Niagara LaSalle Corporation and LaSalle Steel Company for the
entire period.
(b) Includes the results of Niagara Corporation, Niagara LaSalle Corporation and LaSalle Steel Company for the
entire period and the results of Niagara LaSalle (UK) Limited from May 22, 1999.
See accompanying notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
NIAGARA CORPORATION
AND SUBSIDIARIES
STATEMENT OF STOCKHOLDERS' EQUITY
(Unaudited)
===============================================================================================================================
Six Months ended June 30, 1999
- -------------------------------------------------------------------------------------------------------------------------------
Common Stock Accumulated Other
Number of Additional Retained Comprehensive Treasury stock
shares Amount paid-in capital Earnings Income at cost Total
- -------------------------------------------------------------------------------------------------------------------------------
BALANCE, JANUARY 1,
1999
<S> <C> <C> <C> <C> <C> <C> <C>
9,997,455 $9,998 $50,111,675 $8,384,835 $(1,076,000) $(2,899,965) $54,530,543
Net income for the
period - - - 2,351,627 - - $ 2,351,627
- -------------------------------------------------------------------------------------------------------------------------------
FOREIGN CURRENCY
TRANSLATION
ADJUSTMENTS (Note 2) - - - - (266,813) - (266,813)
================================================================================================================================
BALANCE, JUNE 30, 1999 9,997,455 $9,998 $50,111,675 $10,736,462 $(1,342,813) $(2,899,965) $56,615,357
================================================================================================================================
See accompanying notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
NIAGARA CORPORATION
AND SUBSIDIARIES
Statements of Cash Flows
(Unaudited)
=======================================================================================================================
Six months ended June 30, 1998 (a) 1999 (b)
- -----------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net income $ 4,323,827 $ 2,351,627
- -----------------------------------------------------------------------------------------------------------------------
Adjustments to reconcile net income to net cash provided by
(used in) operating activities:
Depreciation and amortization 3,283,980 3,770,488
Accrued post-retirement welfare benefits (1,174) 46,924
Provision for doubtful accounts 51,270 66,939
Deferred income taxes 726,907 794,000
Accrued pension costs (624,486) (273,302)
Changes in assets and liabilities:
Decrease (increase) in accounts receivable 1,873,990 (22,182,632)
Decrease (increase) in inventories 1,301,448 (1,845,129)
Decrease (increase) in other assets, net 433,105 (1,051,534)
Increase (decrease) in trade accounts payable and accrued
expenses (2,726,092) 20,530,778
- -----------------------------------------------------------------------------------------------------------------------
TOTAL ADJUSTMENTS 4,318,948 (143,468)
- -----------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 8,642,775 2,208,159
- -----------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Payment of amount to Quanex (1,371,000) -
Acquisition of Steel Bar Business, net of cash acquired - (34,315,823)
Acquisition of fixed assets (3,716,290) (4,481,681)
- -----------------------------------------------------------------------------------------------------------------------
NET CASH USED IN INVESTING ACTIVITIES (5,087,290) (38,797,504)
- -----------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term debt - 38,474,018
Repayment of long-term debt (13,869,909) -
- -----------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (13,869,909) 38,474,018
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (10,314,424) 1,884,673
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 13,207,077 440,654
- -----------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 2,892,653 $ 2,325,327
=======================================================================================================================
(a) Includes the cash flows of Niagara Corporation, Niagara LaSalle Corporation and LaSalle Steel Company for the
entire period.
(b) Includes the cash flows of Niagara Corporation, Niagara LaSalle Corporation and LaSalle Steel Company for the
entire period and the cash flows of Niagara LaSalle (UK) Limited from May 22, 1999.
See accompanying notes to financial statements.
</TABLE>
NIAGARA CORPORATION
AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS - INFORMATION AS OF
JUNE 30, 1999 AND FOR THE PERIODS ENDED
JUNE 30, 1998 AND 1999 AND 1999 IS UNAUDITED.
============================================================================
1. BASIS OF PRESENTATION The accompanying financial statements are
unaudited; however, in the opinion of
management, all adjustments necessary for
a fair statement of financial position and
results for the stated periods have been
included. These adjustments are of a
normal recurring nature. Selected
information and footnote disclosures
normally included in financial statements
prepared in accordance with generally
accepted accounting principles have been
condensed or omitted. Results for interim
periods are not necessarily indicative of
the results to be expected for an entire
fiscal year. It is suggested that these
condensed financial statements be read in
conjunction with the audited financial
statements and accompanying notes for the
year ended December 31, 1998.
2. FOREIGN CURRENCY Niagara LaSalle (UK) Limited ("Niagara UK"),
TRANSLATION AND an English company and a subsidiary of
TRANSACTIONS Niagara Corporation ("Niagara"), uses
British pounds sterling ("(pound)") as its
functional currency. Assets and
liabilities of this subsidiary are
translated from British pounds sterling to
United States dollars at the exchange rate
in effect on June 30, 1999. Statements of
Operations and Cash Flows are translated
at the average of the rate of exchange
during the period from May 22, 1999 to
June 30, 1999. Translation adjustments
arising from the use of different exchange
rates from period to period are included
as a component of shareholders' equity as
"Accumulated other comprehensive income".
Gains and losses resulting from foreign
currency transactions are included in
other income (expense).
3. ACQUISITION OF On April 18, 1997, Niagara LaSalle
LASALLE Corporation (formerly Niagara Cold Drawn
Corp.) ("Niagara LaSalle"), a subsidiary of
Niagara, purchased from Quanex Corporation
("Quanex") all of the outstanding shares
of capital stock of LaSalle Steel Company
("LaSalle," and, collectively with
Niagara, Niagara LaSalle and Niagara UK,
the "Company"), one of the largest
domestic producers of cold drawn steel
bars. In consideration for the sale of
such shares, Niagara LaSalle paid Quanex
$65,500,000 in cash at the closing and an
additional $1,371,000, which amount was
paid on January 26, 1998, based on changes
in LaSalle's stockholder's equity between
October 31, 1996 and March 31, 1997.
Niagara LaSalle also paid Quanex an amount
based on cash activity in the intercompany
account between Quanex and LaSalle from
April 1, 1997 through April 18, 1997.
The acquisition of LaSalle was accounted
for as a purchase. The purchase price,
including acquisition costs and other
estimated liabilities as of the
acquisition date, was approximately
$68,000,000. The purchase price exceeded
LaSalle's stockholder's equity by
approximately $56,000,000, and based on an
appraisal, the excess was primarily
allocated to property, plant and
equipment.
The acquisition of LaSalle and the
refinancing of existing Niagara LaSalle
indebtedness was financed pursuant to (i)
a revolving credit and term loan agreement
with Niagara LaSalle and LaSalle
(guaranteed by Niagara), providing for a
$50,000,000 three-year revolving credit
facility and a $40,000,000 eight-year term
loan and (ii) the issuance and sale of
$20,000,000 aggregate principal amount of
12.5% senior subordinated notes of Niagara
LaSalle due April 18, 2005 (the
"Subordinated Notes"). In connection with
the subordinated debt portion of this
financing, the purchasers of the
Subordinated Notes were issued 285,715
shares of Niagara Common Stock.
4. ACQUISITION OF THE On May 21, 1999, pursuant to a Sale of
STEEL BAR BUSINESSES Business Agreement dated April 16, 1999
OF GLYNWED STEELS among Niagara, Niagara UK, Glynwed
LIMITED International plc, an English company
("Glynwed"), and Glynwed Steels Limited,
an English company and a subsidiary of
Glynwed ("Glynwed Steels"), Niagara UK
purchased the equipment, inventory and
certain other assets of the steel bar
businesses of Glynwed Steels for
(pound)21,202,000 (approximately $34
million), subject to a post closing
adjustment based upon the value of the net
assets transferred (see Note 9). These
steel bar businesses (collectively, the
"Steel Bar Businesses") which are engaged
in hot rolling, cold finishing and
distribution, consist of the following
unincorporated trading units: Ductile Hot
Mill, Dudley Port Rolling Mills, GB Steel
Bar, George Gadd & Company, Longmore
Brothers, Macreadys, Midland Engineering
Steels and W Wesson.
In connection with the execution of this
Sale of Business Agreement, Niagara and
Niagara UK entered into property
agreements with subsidiaries of Glynwed
contemplating that Niagara UK will lease
or sublease 10 operating facilities and
accept assignments of the leases for 5
sales offices. Pursuant to these property
and related agreements (i) the initial
term of the lease would be 10 years for 9
of the operating facilities and 5 years
for the remaining operating facility at
aggregate rents of (pound)50,000
(approximately $80,000) for the first two
years; (pound)850,000 (approximately $1.3
million) for years 3-6; and (pound)
1,000,000 (approximately $1.6 million) for
years 7-10, (ii) each operating facility
lease could be terminated by Niagara UK on
one year's notice and (iii) Niagara UK
would have the option to purchase any or
all of the 7 primary operating facilities
at prices fixed for 10 years (which prices
total (pound)9,468,000 (approximately
$15.1 million)), or to renew the leases
with respect thereto for an additional
term of 15 years at commercial market
rates.
The purchase of the Steel Bar Businesses
was financed in part pursuant to a bank
facilities agreement entered into on May
21, 1999 by Niagara UK. This agreement
provides for a (pound)10 million
(approximately $16 million) seven-year
term loan and a (pound)9.8 million
(approximately $15.7 million) three-year
revolving credit facility. The obligations
of Niagara UK under this agreement are
secured by standby letters of credit and
substantially all of the assets of Niagara
UK (for the benefit of the issuer of such
letters of credit). Niagara UK's agreement
to reimburse the issuer of such letters of
credit for drawdowns thereunder is
guaranteed by Niagara, Niagara LaSalle and
LaSalle, which guarantees are secured by
substantially all of the assets of Niagara
LaSalle and LaSalle.
The purchase of the Steel Bar Businesses
was also financed pursuant to (i)
a(pound)3.75 million (approximately $6
million) equity investment by Niagara in
Niagara UK, (ii) a(pound)3.75 million
(approximately $6 million) subordinated
loan from Niagara to Niagara UK which
accrues interest at 7.5% per annum and
(iii) a(pound)2.5 million (approximately
$4 million) non-interest bearing
short-term loan from Niagara to Niagara
UK, each of which was financed by
borrowings under a revolving credit and
term loan agreement dated April 18, 1997,
as amended, with Niagara LaSalle and
LaSalle and guaranteed by Niagara and
Niagara UK (see Note 3).
Pro forma results of operations, assuming
the acquisition of the Steel Bar
Businesses had occurred on January 1, 1998
are unaudited and detailed below. Pro
forma adjustments primarily include
reductions in depreciation and
amortization based on changes in the
useful lives of the assets acquired,
additional interest expense relating to
the debt incurred in connection with the
acquisition, and changes in rent expense
based on property leases entered into in
connection with the acquisition.
<TABLE>
<CAPTION>
Six Months ended June 30, 1998 June 30, 1999
-------------------------------------------------------------------
<S> <C> <C> <C>
Net Sales $223,567,257 $171,287,792
Net Income (Loss) $7,058,467 $(3,527,084)
Net Income (Loss) per share $.71 $(.37)
(basic)
Net Income (Loss) per share $.67 $(.36)
(diluted)
-------------------------------------------------------------------
5. INVENTORIES Inventories consisted of the following:
December 31,
1998 June 30,1999
------------------------------------------------------------------
Raw materials $7,824,023 $20,128,016
Work-in-process 4,588,895 6,154,390
Finished goods 17,718,959 26,760,200
$30,131,877 $53,042,606
===================================================================
</TABLE>
At June 30, 1999, inventories totaling
$31,975,406 and owned by Niagara LaSalle
and LaSalle are stated using the LIFO
method and inventories totaling
$21,067,200 and owned by Niagara UK are
stated using the FIFO method.
6. COLLECTIVE BARGAINING On July 19, 1998, following a nine-week
AGREEMENT strike, the hourly workers at LaSalle's
Hammond, Indiana facility voted to accept
a new three-year collective bargaining
agreement. Among other things, this
agreement provides for a curtailment of
certain pension costs and other
post-retirement benefits. The net effect
of these curtailments was to reduce the
Company's obligations by $4,949,000 for
1998.
7. CONTINGENCIES Niagara LaSalle, LaSalle and Niagara UK
are subject to environmental laws and
regulations concerning, among other
things, water and air emissions and waste
disposal. Under applicable state and
federal laws, including the Comprehensive
Environmental Response, Compensation and
Liability Act of 1980 as amended
("CERCLA"), Niagara LaSalle, LaSalle and
Niagara UK may be responsible for parts of
the costs required to remove or remediate
previously disposed wastes or hazardous
substances at the locations they own or
operate or at the locations which they
arranged for disposal of such materials.
The costs incurred through June 30, 1999
have been largely covered by insurance.
Management believes any resolution of
these matters will not have a material
adverse effect on the Company's financial
position.
Under the Company's insurance programs,
coverage is obtained for catastrophic
exposures as well as those risks required
to be insured by law or contract. It is
the policy of the Company to retain a
portion of certain expected losses related
primarily to workers' compensation,
physical loss to property, business
interruption resulting from such loss, and
comprehensive general, product, vehicle,
medical and life benefits and liability.
Provisions for losses expected under these
programs are recorded based upon the
Company's estimates of the aggregate
liability, actual and estimated, for
claims. Such estimates utilize certain
actuarial assumptions followed in the
insurance industry and are included in
accrued expenses.
8. SEGMENTS AND RELATED Niagara operates in two reportable segments:
INFORMATION (i) Niagara LaSalle and LaSalle which have
operations in the United States and (ii)
Niagara UK which has operations in the
United Kingdom. Niagara operates these
segments as separate strategic business
units and measures the segment performance
based on earnings before interest, taxes,
depreciation and amortization at the
subsidiary level ("EBITDA"). Niagara UK
uses British pounds sterling as its
functional currency. Assets and
liabilities are translated at the exchange
rate in effect on June 30, 1999.
Statements of Operations and Cash Flows
are translated at the average rate of
exchange during the period from May 22,
1999 to June 30, 1999.
<TABLE>
<CAPTION>
Niagara LaSalle / Niagara UK
LaSalle
------------------------------------------------------------------
Three months ended June 30, 1999
------------------------------------------------------------------
<S> <C> <C>
Net Sales $47,369,224 $14,249,235
Segment Profit (EBITDA) $4,807,070 $258,989
Six months ended June 30, 1999
------------------------------------------------------------------
Net Sales $96,749,377 $14,249,235
Segment Profit (EBITDA) $10,229,671 $258,989
Segment Assets $148,155,531 $57,733,200
------------------------------------------------------------------
</TABLE>
Prior to the acquisition of the Steel Bar
Businesses, the Company had one segment as
all of its operations were in the United
States.
9. SUBSEQUENT EVENT Pursuant to the Sale of Business Agreement
for the Steel Bar Businesses, Glynwed
Steels or Niagara UK, as the case may be,
will pay the other an amount based on
certain changes in the value of the net
assets transferred. On July 9, 1999,
Niagara and Niagara UK submitted to
Glynwed and Glynwed Steels draft
completion accounts for the Steel Bar
Businesses as of May 21, 1999 and a
statement of the net assets transferred.
Such completion accounts and statement
reflect reductions in the purchase price
for plant and equipment and inventory, and
an increase in liabilities assumed, in the
aggregate amount of (pound)3,425,000
(approximately $5.5 million). On August 6,
1999, Glynwed and Glynwed Steels disputed
an aggregate amount of (pound)756,000
(approximately $1.2 million) of such
adjustments. Any dispute concerning the
value of the net assets transferred is
subject to binding arbitration by an
independent accounting firm. There is no
assurance that the disputed adjustments
will be resolved in favor of Niagara UK.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
Niagara was organized in April of 1993. With the acquisition of
Niagara LaSalle in August 1995, Niagara entered the cold drawn steel bar
industry. With plants in Buffalo, New York and Chattanooga, Tennessee,
Niagara LaSalle had an established position in the northeast and southeast
regions of the United States cold drawn steel bar market.
In January 1996, Niagara LaSalle acquired Southwest Steel Company,
Inc. ("Southwest"). During 1996, Southwest completed construction of a new
plant in Midlothian, Texas, relocated its Tulsa, Oklahoma operations to
this new facility and was merged into Niagara LaSalle. With this
acquisition, Niagara gained an established position in the southwest region
of the United States because Southwest was the leading cold drawn steel bar
producer servicing that area.
In April 1997, Niagara LaSalle acquired LaSalle, which had plants
in Hammond and Griffith, Indiana. This acquisition gave Niagara LaSalle a
strong market position in the midwest region of the United States and
broadened Niagara LaSalle's product range by adding thermal treated and
chrome plated bars.
With the acquisition of LaSalle, Niagara became the largest
independent producer of cold drawn steel bars in the United States. The
geographic position of Niagara's plants in the United States creates
competitive advantages because of freight savings and the ability to supply
efficiently multiple locations of steel service centers.
During the fourth quarter of 1997, nearly all of Niagara's
6,050,000 Redeemable Common Stock Purchase Warrants ("Warrants") were
exercised resulting in approximately $33.2 million in gross proceeds to
Niagara. This significantly strengthened the Company's balance sheet at
December 31, 1997 by enabling it to prepay, with approximately $21.8
million of such proceeds, the Subordinated Notes in their entirety and by
increasing total stockholders' equity to approximately $52 million at year
end. During the first quarter of 1998, the Company used another $10 million
of such proceeds to reduce the balance due under a revolving credit
facility.
On May 21, 1999, Niagara UK purchased the equipment, inventory and
certain other assets of the Steel Bar Businesses of Glynwed Steels for
(pound)21,202,000 (approximately $33.9 million), subject to a post-closing
adjustment based upon the value of the net assets transferred. These Steel
Bar Businesses (consisting of Ductile Hot Mill, Dudley Port Rolling Mills,
GB Steel Bar, George Gadd & Company, Longmore Brothers, Macreadys, Midland
Engineering Steels and W Wesson) are engaged in hot rolling, cold finishing
and distribution and represent the largest independent steel bar concern in
the United Kingdom.
RESULTS OF OPERATIONS
During the second half of 1998 and through the second quarter of
1999, the Company experienced competitive pressures due to a marked decline
in prices and weakened demand for its products. Management believes that
such developments were due to overcapacity in the industry and the
continuation of low-priced imports, primarily from Asia and Eastern
European countries.
On July 19, 1998, following a nine-week strike, the hourly workers
at LaSalle's Hammond, Indiana facility voted to accept a new three-year
collective bargaining agreement. Among other things, this agreement
provides for a curtailment of certain pension costs and other
postretirement benefits. Management believes that operating costs at the
Hammond facility have been reduced under the new agreement.
The results of operations for the quarter and six months ended
June 30, 1999 include the results of Niagara UK from May 22, 1999.
Three Months ended June 30, 1999 compared with June 30, 1998
Net sales for the three months ended June 30, 1999 were
$61,618,459, representing an increase of $6,368,695, or 11.5%, over the
same period in 1998. This increase was attributable to the inclusion of
$14,249,235 of Niagara UK sales, which was offset in part by a decrease in
sales from U.S. operations due to weakened demand for products and a
decline in prices.
Cost of sales for the three months ended June 30, 1999 increased
by $6,364,949 to $53,628,529, representing an increase of 13.5% over the
same period in 1998. This increase was primarily attributable to the
inclusion of Niagara UK's cost of products sold, which was offset in part
by reduced raw material costs as a result of the lower sales volume and, to
a lesser extent, reduced operating costs in the U.S.
Gross margins for the three months ended June 30, 1999 decreased
by 1.5% over the same period in 1998, due to the decline in prices which
was partially offset by a decrease in raw material prices and the Company's
greater emphasis on higher margin value-added products.
Selling, general and administrative expenses for the three months
ended June 30, 1999 increased by $1,324,833 to $5,395,644, or 8.8% of
sales, compared to 7.4% of sales for the same period in 1998. Both the
increase in dollar amount and increase as a percentage of sales were due to
the inclusion of Niagara UK's expenses for a portion of the quarter, which
was offset in part by reduced selling, general, administration expenses
from the Company's U.S. operations due to their decrease in sales.
Net interest expense for the three months ended June 30, 1999
increased by $59,265 to $1,082,059, due primarily to increased levels of
borrowing resulting from the acquisition of the Steel Bar Businesses.
Net income for the three months ended June 30, 1999 was $932,873,
a decrease of $822,254, or 46.8%, as compared to the net income for the
three months ended June 30, 1998. This decrease resulted primarily from the
marked decline in prices and weakened demand for the Company's products.
Net income for the three months ended June 30, 1999 included a loss of
$16,726 at Niagara UK for the period May 22 through June 30, 1999.
Six Months ended June 30, 1999 compared with June 30, 1998
Net sales for the six months ended June 30, 1999 were
$110,998,612, representing a decrease of $7,021,831, or 5.9%, over the same
period in 1998. This decrease was due primarily to a reduction of sales
from the Company's U.S. operations which was partially offset by the
inclusion $14,249,235 of Niagara UK sales for the period.
Cost of sales for the six months ended June 30, 1999 decreased by
$4,820,491 to $95,768,065, representing a decrease of 4.8% over the same
period in 1998. This decrease was primarily attributable
to the decrease in volume.
Gross margins for the six months ended June 30, 1999 decreased by
1.0% over the same period in 1998, due to the decline in prices, which was
partially offset by a decrease in raw material prices and the Company's
greater emphasis on higher margin value-added products.
Selling, general and administrative expenses for the six months
ended June 30, 1999 increased by $1,221,163 to $9,500,312, or 8.6% of
sales, compared to 7.0% of sales for the same period in 1998. Both the
increase in dollar amount and increase as a percentage of sales were due to
the inclusion of Niagara UK's expenses for a portion of the period, which
was offset in part by reduced selling, general, administration expenses
from the Company's U.S. operations due to their decrease in sales.
Net interest expense for the six months ended June 30, 1999
decreased by $323,314 to $1,977,839. This decrease resulted from reduced
levels of borrowing at Niagara LaSalle and LaSalle which was offset in part
by borrowings by Niagara UK.
Net income for the six months ended June 30, 1999 was $2,351,627,
a decrease of $1,972,200, or 45.6%, as compared to the net income for the
six months ended June 30, 1998. This decrease resulted primarily from the
marked decline in prices and weakened demand for the Company's products
during the six months ended June 30, 1999. Net income for the six months
ended June 30, 1999 included a loss of $16,726 at Niagara UK for the period
May 22 through June 30, 1999.
On a pro forma basis, and as disclosed in Note 4 to the financial
statements, net loss for the six months ended June 30, 1999 would have been
$3,527,084 compared to net income of $7,058,467 for the same period in
1998. This decrease is attributable to reduced sales of approximately
$52,000,000 and an inventory adjustment of approximately $5,700,000 to
estimated net realizable value at Niagara UK during the first quarter of
1999.
LIQUIDITY AND CAPITAL RESOURCES
The Company's short-term liquidity requirement for day-to-day
operating expenses has been, and is expected to continue to be, funded by
operations and borrowings under its revolving credit facilities. The
Company's principal long-term liquidity requirement has been, and is
expected to continue to be, the funding of capital expenditures to
modernize, improve and expand its facilities, machinery and equipment.
Capital expenditures for the six months ended June 30, 1999 totaled
$4,481,681 as compared to $3,716,290 for the same period in 1998. This
increase in expenditures was largely due to the purchase of production
equipment and certain leasehold improvements.
Cash flows provided by operations were $2,208,159 for the six
months ended June 30, 1999, a decrease of $6,434,616 as compared to cash
flows provided by operations of $8,642,775 for the same period in 1998.
This decrease is attributable primarily to a decrease in net income of
$1,972,200 and an increase in accounts receivable of $22,182,632, which was
offset in part by an increase in accounts payable and accrued expenses of
$20,530,778, largely resulting from the acquisition of the Steel Bar
Businesses. At June 30, 1999, the Company had $2,325,327 in cash and cash
equivalents. Such funds are used for working capital and other corporate
purposes.
On April 18, 1997 and in connection with the acquisition of
LaSalle, Niagara LaSalle and LaSalle entered into a revolving credit and
term loan agreement (the "Credit Agreement") with Manufacturers and Traders
Trust Company ("M&T"), CIBC Inc., National City Bank, National Bank of
Canada and the Prudential Insurance Company of America, and Niagara LaSalle
terminated its previously existing credit agreements with M&T. The Credit
Agreement provides for a $50,000,000 three-year revolving credit facility
and a $40,000,000 eight-year term loan. The obligations of Niagara LaSalle
and LaSalle under the Credit Agreement are guaranteed by Niagara and
Niagara UK and secured by substantially all of the assets and a pledge of
all outstanding capital stock of Niagara LaSalle and LaSalle.
Principal of the term loan under the Credit Agreement amortizes in
monthly installments that commenced on November 1, 1997 and end on April 1,
2004. The principal repayment installments on the term loan escalate
throughout its term. Interest on the term loan is payable in monthly
installments either at the LIBOR rate (for a period specified by Niagara
LaSalle from time to time) plus 210 basis points, or M&T's prime rate plus
50 basis points. Revolving credit loans made pursuant to the Credit
Agreement are based on a percentage of eligible accounts receivable and
inventory and will mature on April 17, 2000. Interest on such loans is
payable in monthly installments and is either 175 basis points above the
LIBOR rate (for a period specified by Niagara LaSalle from time to time) or
M&T's prime rate plus 25 basis points.
The Credit Agreement carries restrictions on, among other things,
indebtedness, liens, capital expenditures, dividends, asset dispositions
and changes in control of Niagara LaSalle and LaSalle, and requires minimum
levels of net worth through maturity. Also included in this agreement are
requirements regarding the ratio of consolidated current assets to
consolidated current liabilities and the ratio of net income before
interest, taxes, depreciation and amortization to cash interest expense.
Niagara LaSalle was in compliance with all of these requirements as of June
30, 1999.
On October 31, 1997, Niagara exercised its right to redeem all of
its then outstanding and unexercised Warrants. Each outstanding Warrant
entitled the holder to purchase from Niagara, prior to the exercise
deadline, one share of Niagara Common Stock at an exercise price of $5.50.
Of the 6,050,000 Warrants outstanding prior to the call for redemption,
6,042,990 were exercised resulting in $33,236,445 in gross proceeds to
Niagara and the issuance of 6,042,990 shares of Niagara Common Stock.
During the fourth quarter of 1997, the Company used approximately $21.8
million of such proceeds to prepay in their entirety, at 107% plus accrued
interest, the Subordinated Notes. During the first quarter of 1998, the
Company used another $10 million of such proceeds to reduce the balance due
under its revolving credit facility.
On March 20, 1998, Niagara's Board of Directors authorized the
repurchase, from time to time, of up to one million shares of Niagara
Common Stock in open market and privately negotiated transactions. Such
repurchases are subject to market and other conditions and financed with
internally generated funds or borrowings under the Company's revolving
credit facilities. Shares of Niagara Common Stock repurchased are held as
treasury stock and are available for use in the Company's benefit plans and
for general corporate purposes. As of June 30, 1999, Niagara had
repurchased 485,880 shares of its Common Stock at a cost of $2,899,965. All
of such repurchases were made during 1998.
On May 21, 1999 and in connection with the acquisition of the
Steel Bar Businesses from Glynwed Steels, Niagara UK entered into a bank
facilities agreement (the "Facilities Agreement") with National
Westminister Bank Plc ("National Westminister"). The Facilities Agreement
provides for a (pound)10 million (approximately $16 million) seven-year
term loan and a (pound)9.8 million (approximately $15.7 million) three-year
revolving credit facility. The obligations of Niagara UK under the
Facilities Agreement are secured by standby letters of credit issued by M&T
to National Westminster (respectively, the "Term Letter of Credit" and the
"Revolving Letter of Credit," and, together, the "Letters of Credit") and
substantially all of the assets of Niagara UK (for the benefit of M&T).
Niagara UK's agreement to reimburse M&T for drawdowns under the Letters of
Credit is guaranteed by Niagara, Niagara LaSalle and LaSalle, which
guarantees are secured by substantially all of the assets of Niagara LaSalle
and LaSalle on a second priority basis. As consideration for the issuance
of the Letters of Credit, Niagara UK paid M&T a total of (pound)178,400
(approximately $285,440) at the time of issuance and agreed to pay further
annual fees (in monthly installments) of 3% and 2.75% in respect of the
Revolving and Term Letters of Credit, respectively.
Principal of the term loan under the Facilities Agreement
amortizes in monthly installments commencing on May 31, 2000 and ending on
April 30, 2006. The principal repayment installments on the term loan
escalate throughout its term. Revolving credit loans made pursuant to the
Facilities Agreement are based upon a percentage of eligible accounts
receivable and inventory and will mature on May 21, 2002. Interest of the
term and revolving credit loans under the Facilities Agreement accrue at the
LIBOR rate (for periods specified by Niagara UK from time to time) plus 15
basis points and is payable at the conclusion of such interest periods.
The Facilities Agreement carries restrictions on, among other
things, security interests, borrowed money, asset dispositions, dividends,
transactions with affiliates, capital expenditures, changes in control and
mergers and acquisitions. Also included in this agreement are requirements
regarding tangible net worth, the ratio of profit before interest and taxes
to interest and the ratio of current assets to current liabilities. Niagara
UK was in compliance with all of these requirements as of June 30, 1999.
The purchase of the Steel Bar Businesses was also financed
pursuant to (i) a (pound)3.75 million (approximately $6 million) equity
investment (the "Equity Investment") by Niagara in Niagara UK, (ii) a
(pound)3.75 million (approximately $6 million ) subordinated loan from
Niagara to Niagara UK which accrues interest at 7.5% per annum (the
"Subordinated Loan") and (iii) a (pound)2.5 million (approximately $4
million ) non-interest bearing short-term loan from Niagara to Niagara UK
(the "Short-Term Loan"). The Equity Investment, the Subordinated Loan and
the Short-Term Loan were financed by borrowings under the Credit Agreement.
In connection with the execution of the Facilities Agreement,
Niagara, Niagara UK and National Westminister entered into an intercreditor
agreement dated May 21, 1999 which, among other things (i) restricts the
payment of dividends in respect of the Niagara UK shares, (ii) prohibits
the repayment of the Subordinated Loan until after the discharge of all of
Niagara UK's liabilities under the Facilities Agreement and (iii) permits
the repayment of the Short-Term Loan upon demand unless payments of
principal or interest under the Facilities Agreement are owing, certain
financial covenants in the Facilities Agreement have not been met or an
event of default under the Facilities Agreement has occurred and is
continuing.
At June 30, 1999, the Company had borrowed $33,858,750 under its
revolving credit facilities and had approximately $16,300,000 in available
credit thereunder, and the outstanding balance of its term loans was
$49,601,676. Working capital of the Company at June 30, 1999 was
$45,146,825 as compared to $20,414,031 on December 31, 1998.
YEAR 2000 READINESS DISCLOSURE
The Company could be adversely affected if the computer and other
systems, machinery, equipment and applications which it or its suppliers,
customers or service providers use does not properly accommodate the "Year
2000" dating changes necessary to permit the recording of year dates for
2000 and later years. Management does not anticipate any material
disruption in the Company's operations as a result of this issue. However,
because of the reliance on and involvement of a great many third parties in
this regard, disruptions in the Company's operations could occur which may
have a material effect on the Company's results of operations.
The Company has inquired into the Year 2000 readiness status of
its suppliers, customers and essential service providers and, based on
their responses, contingency plans have been or are being formulated to
prepare for any Year 2000 related issues they identify.
Based on current assessments, management does not expect that
total costs associated with the Company's Year 2000 program will be
material to the Company's results of operations. The Company has budgeted
an additional $100,000 on Year 2000 remediation through 1999.
Information Technology
In 1998, the Company upgraded its internal computer systems in
four of its five plants in the U.S. at a cost of approximately $1,000,000.
This upgrade allowed Niagara LaSalle and LaSalle to centralize all of its
internal business functions. Based on assurances from the manufacturers of
the upgraded system's hardware and software and independent tests performed
by the Company's personnel, management does not expect that this system
will suffer any interruption or performance degradation as a result of the
Year 2000.
The Company's U.K. operations have undertaken an assessment of
their internal computer systems. Replacements and upgrades required as a
result of the Year 2000 have been substantially completed. Based on
suppliers' warranties and standardized confirmation testing in the U.K.,
management does not anticipate any significant Year 2000 compliance
failures or performance degradations.
Operating Equipment and Systems
The Company's personnel, together with outside engineering firms,
have assessed the machinery, equipment, and other non-information
technology systems of its U.S. operations for Year 2000 readiness.
Management is taking all appropriate steps to correct the problems
identified by this assessment or to minimize the impact of any
interruptions or performance degradations caused by the Year 2000.
The Company's U.K. operations have reviewed their non-information
technology systems for Year 2000 compliance. Businesses and health and
safety concerns have been identified and testing has been conducted.
Required replacements and upgrades have been substantially completed.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company's primary market risks include fluctuations in
interest rates, variability in interest rate spreads (i.e., prime to LIBOR
spreads) and exchange rate variability. The Company does not trade in
derivative financial instruments. Substantially all of the Company's
non-trade indebtedness relates to loans made pursuant to the Credit and
Facilities Agreements. Interest on the term loan under the Credit Agreement
accrues at either the LIBOR rate (for a period specified by Niagara LaSalle
from time to time) plus 210 basis points, or M&T's prime rate plus 50 basis
points. Interest on revolving credit loans made pursuant to such agreement
accrues at either 175 basis points above the LIBOR rate (for a period
specified by Niagara LaSalle from time to time) or M&T's prime rate plus 25
basis points. Interest on the term and revolving credit loans under the
Facilities Agreement accrues at the LIBOR rate (for a period specified by
Niagara UK from time to time) plus 15 basis points. Management attempts to
reduce market risks associated with the fluctuations in interest rates
through the selection of LIBOR periods.
The Company sells its products to customers in various foreign
countries in North and South America, Europe, the Middle East, Asia and
Australia. Niagara UK's revenues are generally collected in the local
currency of its customers. To substantially reduce the Company's
sensitivity to fluctuations in exchange rates, Niagara UK purchases foreign
exchange contracts in amounts and with expiration dates in line with
customer orders. Revenues from sales by Niagara LaSalle and LaSalle are
collected exclusively in U.S. dollars.
CAUTIONARY STATEMENT FOR PURPOSES OF THE" SAFE HARBOR" PROVISIONS OF
THE PRIVATE SECURITIES REFORM ACT OF 1995
The Private Securities Reform Act of 1995 provides a "safe harbor"
for certain forward-looking statements. The factors discussed under
"CAUTIONARY STATEMENTS FOR PURPOSES OF THE 'SAFE HARBOR' PROVISIONS OF THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995" in Niagara's Report on
Form 10-K for the fiscal year ended December 31, 1998, among others, could
cause actual results to differ materially from those contained in
forward-looking statements made in this Form 10-Q, including, without
limitation, in "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS," in future filings by Niagara with the
Securities and Exchange Commission, in the Company's press releases and in
oral statements made by authorized officers of the Company. The words
"may," "will," "should," "could," "expects," "plans," "anticipates,"
"intends," "believes," "estimates," "predicts," "projects," "potential," or
"continue" and other similar expressions are intended to identify such
forward- looking statements.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
Under applicable laws, including the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended ("CERCLA"),
Niagara LaSalle, LaSalle and Niagara UK may be responsible for costs
required to remove or remediate previously disposed wastes or hazardous
substances at locations owned or operated by them or at locations owned or
operated by third parties where they, or a company from which they acquired
assets, arranged for the disposal of such materials. Claims for such costs
have been made against LaSalle with respect to five such third-party sites.
Management believes that, in four cases, the volumes of the waste allegedly
attributable to LaSalle and the share of costs for which it may be liable
are de minimis. At two of these sites, LaSalle has entered into de minimis
settlement agreements resolving the pending claims of liability. In the
fifth case, LaSalle has entered into an agreement with a group of other
companies alleged to be responsible for remediation of the site in an
effort to share proportionately the cost of remediation. LaSalle and this
group of companies have also signed an Administrative Order on Consent with
the United States Environmental Protection Agency and agreed to perform a
limited remediation at the site. LaSalle has received an insurance
settlement in an amount that largely covers the financial contributions it
has been required to make for these sites through June 30, 1999. Because
liability under CERCLA and analogous state laws is generally joint and
several, and because further remediation work may be required at these
sites, LaSalle may be required to contribute additional funds. However,
based on its volumetric share of wastes disposed and the participation of
other potentially liable parties, management does not believe that
LaSalle's share of the additional costs will have a material adverse effect
on the Company's financial position or results of operations.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS.
(a) An annual meeting of Niagara Stockholders was held on June 8,
1999.
(b) Michael J. Scharf, Gilbert D. Scharf, Frank Archer, Gerald L.
Cohn, Andrew R. Heyer and Douglas T. Tansill were elected as directors of
Niagara at the Annual Meeting.
(c) The matters voted upon at the Annual Meeting were (i) the
election of Michael J. Scharf, Gilbert D. Scharf, Frank Archer, Gerald L.
Cohn, Andrew R. Heyer and Douglas T. Tansill to hold office until the next
Annual Meeting of Stockholders or until their respective successors have
been duly elected and qualified, the vote as to which was 8,626,712 for and
5,600 withheld for each of Messrs. Michael Scharf, Gilbert Scharf and
Archer, 8,624,912 for and 7,400 withheld for Mr. Cohn, 8,626,312 for and
6,000 withheld for Mr. Heyer and 8,626,012 for and 6,300 withheld for Mr.
Tansill, (ii) the approval of the performance-based bonus provision of the
Company's Employment Agreement with Michael Scharf, the vote as to which
was 8,336,223 for, 134,889 against and 161,200 abstentions and (iii) the
ratification of BDO Seidman LLP as independent accountants for 1999, the
vote to which was 8,613,412 for, 9,300 against and 9,600 abstentions.
ITEM 5. OTHER INFORMATION.
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) EXHIBITS
+3.1 Registrant's Restated Certificate of Incorporation, as
amended on May 16, 1996.
*3.2 Registrant's By-laws.
*4.1 Form of Common Stock Certificate.
!!!!!4.2 Revolving Credit and Term Loan Agreement, dated as of
April 18, 1997, by and among Niagara Cold Drawn Corp.,
LaSalle Steel Company, Manufacturers and Traders Trust
Company (individually and as Agent), CIBC Inc. and
National City Bank (the "Credit Agreement").
+++4.3 First Amendment to the Credit Agreement, dated as of
September 4, 1997.
+++4.4 Second Amendment to the Credit Agreement, effective as
of December 31, 1997.
!!!4.5 Third Amendment to the Credit Agreement, effective
May 15, 1998.
**4.6 Fourth Amendment to the Credit Agreement, effective as
of December 1, 1998.
****4.7 Fifth Amendment to the Credit Agreement, effective as of
May 21, 1999.
!!!!!4.8 Stockholders Agreement, dated as of April 18, 1997, among
the Registrant, Niagara Cold Drawn Corp., Michael J.
Scharf, The Prudential Insurance Company of America, The
Equitable Life Assurance Society of the United States and
United States Fidelity and Guaranty Company.
**4.9 Amended and Restated Promissory Note, dated December 15,
1998, made by Gilbert D. Scharf in favor of Niagara
Corporation.
****4.10 Bank Facilities Agreement, dated May 21, 1999 between
National Westminster Bank Plc and Niagara LaSalle (UK)
Limited.
****4.11 Intercreditor Agreement, dated May 21, 1999, between
National Westminster Bank Plc, Niagara Corporation
and Niagara LaSalle (UK) Limited.
***10.1 Employment Agreement, dated as of January 1, 1999, by and
among Niagara Corporation, Niagara LaSalle Corporation
and Michael Scharf.
**10.2 Employment Agreement, dated August 16, 1995, between
International Metals Acquisition Corporation,
Niagara Cold Drawn Corp. and Frank Archer.
**10.3 Employment Agreement, dated August 16, 1995, between
International Metals Acquisition Corporation,
Niagara Cold Drawn Corp. and Raymond Rozanski.
!10.4 Amended and Restated Promissory Note made by Southwest
Steel Company, Inc. in favor of the Cohen Family
Revocable Trust, u/t/a dated June 15, 1988, in the
principal amount of $898,000, dated January 31, 1996.
!10.5 Guaranty, made by the Registrant in favor of the Cohen
Family Revocable Trust, u/t/a dated June 15, 1988,
dated January
31, 1996.
!!10.6 International Metals Acquisition Corporation 1995 Stock
Option Plan.
!!!!10.7 First Amendment to the International Metals Acquisition
Corporation 1995 Stock Option Plan, dated October 5, 1996.
++10.8 Second Amendment to the Niagara Corporation 1995 Stock
Option Plan, dated June 8, 1998.
++10.9 Niagara Corporation Employee Stock Purchase Plan.
**10.10 First Amendment to Lease, dated May 4, 1998, between
Niagara LaSalle Corporation and North American
Royalties, Inc.
*****10.11 Sale of Business Agreement, dated April 16, 1999, between
Glynwed Steels Limited, Glynwed International
plc, Niagara LaSalle (UK) Limited and Niagara Corporation
*****10.12 Property Agreement, dated April 16, 1999, between Glynwed
Property Management Limited, Glynwed Properties Limited,
Niagara LaSalle (UK) Limited, Niagara Corporation and
Glynwed International plc.
*****10.13 Agreement For Lease of Unit 6-8 Eagle Industrial Estate,
dated April 16, 1999, between Glynwed Property Management
Limited, Glynwed Properties Limited, Niagara LaSalle (UK)
Limited and Niagara Corporation.
27 Financial Data Schedule.
- --------------------------
+ Incorporated by reference to exhibit 3.1 filed with the Registrant's
Report on Form 10-Q for the quarter ended June 30, 1996.
++ Incorporated by reference to Annexes to the Registrant's Proxy
Statement for the Annual Meeting of Stockholders held on July
7, 1998.
+++ Incorporated by reference to exhibits filed with the
Registrant's Report on Form 10-K for the fiscal year ended
December 31, 1997.
* Incorporated by reference to exhibits filed with the
Registrant's Registration Statement on Form S-1, Registration
No. 33-64682.
** Incorporated by reference to exhibits filed with the
Registrant's Report on Form 10-K for the fiscal year ended
December 31, 1998.
*** Incorporated by reference to exhibit 10.1 filed with the
Registrant's Report on Form 10-K/A for the fiscal year
ended December 31, 1998.
**** Incorporated by reference to exhibits filed with the Registrant's
Report on Form 8-K, dated June 4, 1999.
***** Incorporated by reference to exhibits filed with the Registrant's
Report on Form 8-K, dated April 27, 1999.
! Incorporated by reference to exhibits filed with the
Registrant's Report on Form 10-K for the year ended December 31,
1995.
!! Incorporated by reference to Annex A to the Registrant's Proxy
Statement for the Annual Meeting of Stockholders held on May 16,
1996.
!!! Incorporated by reference to exhibit 4.8 to the Registrant's Report
on Form 10-Q for the quarter ended June 30, 1998.
!!!! Incorporated by reference to exhibit 10.10 to the Registrant's
Report on Form 10-K for the fiscal year ended December 31, 1996.
!!!!! Incorporated by reference to exhibits filed with the
Registrant's Report on Form 8-K, dated May 2, 1997.
(b) Reports on Form 8-K.
The Registrant filed its Report on Form 8-K, dated June 4, 1999,
reporting under Items 5 and 7 the closing of the acquisition of the Steel
Bar Businesses and the financing arrangements with respect to such
acquisition.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: August 13, 1999 NIAGARA CORPORATION
(Registrant)
/s/ Michael Scharf
-------------------------------
Michael Scharf, President
Date: August 13, 1999 /s/ Raymond Rozanski
--------------------------------
Raymond Rozanski, Vice President
and Treasurer
EXHIBIT INDEX
Exhibit No. Description Page No.
- ----------- ----------------------- --------
27 Financial Data Schedule 28
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE UNAUDITED QUARTERLY
FINANCIAL STATEMENTS OF NIAGARA
CORPORATION AND SUBSIDIARIES FOR THE
SIX MONTHS ENDED JUNE 30, 1999 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 2,325,327
<SECURITIES> 0
<RECEIVABLES> 41,977,982
<ALLOWANCES> 860,000
<INVENTORY> 53,042,606
<CURRENT-ASSETS> 97,604,975
<PP&E> 120,408,651
<DEPRECIATION> 16,962,543
<TOTAL-ASSETS> 205,888,731
<CURRENT-LIABILITIES> 52,458,150
<BONDS> 79,101,860
<COMMON> 9,998
0
0
<OTHER-SE> 56,605,359
<TOTAL-LIABILITY-AND-EQUITY> 205,888,731
<SALES> 110,998,612
<TOTAL-REVENUES> 110,998,612
<CGS> 95,768,065
<TOTAL-COSTS> 95,768,065
<OTHER-EXPENSES> 9,500,312
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,977,839
<INCOME-PRETAX> 3,841,627
<INCOME-TAX> 1,490,000
<INCOME-CONTINUING> 2,351,627
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,351,627
<EPS-BASIC> .25
<EPS-DILUTED> .24
</TABLE>
