<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(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, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
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COMMISSION FILE NUMBER 1-5259
PITT-DES MOINES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
PENNSYLVANIA 25-0729430
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
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3400 GRAND AVENUE, PITTSBURGH, 15225
PENNSYLVANIA (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE
OFFICES)
412-331-3000
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
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TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
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Common Stock, no par value American Stock Exchange
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SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: NONE
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, 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 [X]
The aggregate market value of the registrant's voting stock held by non-
affiliates was at least $44,134,788 on February 28, 1995, based upon the
average between the highest and lowest sales prices of the registrant's Common
Stock as reported in the consolidated transactions reporting system.
Common Stock outstanding as of February 28, 1995--2,321,903 shares.
Documents Incorporated By Reference:
Certain portions of the documents of the Registrant listed below have been
incorporated by reference into the indicated parts of this Annual Report on
Form 10-K:
Notice of Annual Meeting of Stockholders and Proxy Statement anticipated to
be dated March 31, 1995...................................Part III, Items 10-13
Annual Report to Stockholders for fiscal year ended
December 31, 1994.............................................Part II, Item 7
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<PAGE>
PART I
Item 1. Business
General
Pitt-Des Moines, Inc. and its subsidiaries (PDM or the Company) began
conducting business in 1892 and was incorporated in Pennsylvania on February 14,
1916. The Company's principal executive offices are located at 3400 Grand
Avenue, Pittsburgh, Pennsylvania 15225, telephone number (412) 331-3000.
Effective with the discontinuance of CVI's operations during the fourth
quarter of 1994 (see Discontinued Operation Footnote), the Company is comprised
of three business segments: Engineered Construction Division, Steel Construction
and Steel Service Centers. Each segment is a profit center except the Steel
Construction business segment which is divided into three profit centers as
noted below.
A summary of the Company's products and services by business segment is set
forth below. Additional business segment information is included in Part II of
this Form 10-K.
Engineered Construction Division
In 1994, the Engineered Construction Division was reorganized into three
project groups: Water, Industrial, and International and Technology. These
market groups provide:
a) The capability to design, fabricate and erect many types of facilities
and structures; services offered include research and design, material
selection, preparation of detailed drawings, shop fabrication, field
erection and subcontract management.
b) The capability to design, fabricate and erect elevated and flat bottom
water storage tanks for water service and fire protection requirements
and treatment tanks for the purification, filtration and softening of
water. The principal purchasers of the Company's water storage tanks and
wastewater treatment facilities are government agencies and private
industry.
c) The capability to design, fabricate and erect oil and chemical storage
tanks used for storing crude oil, petroleum, gasoline and other petroleum
derivatives and chemicals. The Company has developed and patented certain
systems, parts and sealing devices which help to reduce the hazards of
fire and explosion from the stored products, as well as to decrease air
pollution and vapor loss. Additionally, the Company fabricates and erects
various vessels used in the processing of a variety of oil and chemical
products. The oil and chemical tanks, sealing devices and process vessels
are produced principally for the petroleum, petrochemical, chemical and
food processing industries as well as government agencies.
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<PAGE>
Item 1. Business (Cont'd)
d) The capability to fabricate and erect miscellaneous plate work which
includes penstocks and breechings, stacks and stack liners, scrubbers,
absorbers, flow conductors and heat exchangers for utilities and private
industry.
e) The capability to design, fabricate and erect high speed wind tunnels,
altitude test chambers, hydrospace test facilities and high vacuum and
thermal test facilities for use in connection with energy, aerospace and
defense research.
f) The capability to design and build supercritical fluid extraction
facilities for the food processing industry.
g) The capability to design and build anaerobic digesters for the
wastewater treatment industry.
Steel Construction
On September 1, 1994, the Company acquired the bridge fabricating assets of
Phoenix Steel, Inc., located in Eau Claire, Wisconsin. These assets were
combined with the bridge fabricating assets of Hartwig Mfg. Corp. (which was
merged with and into the Company on December 31, 1994) to form the PDM
Bridge Division. PDM Bridge, PDM Strocal, Inc. and PDM Chicago Steel
Construction comprise the three profit centers of Steel Construction which
provide:
a) The capability to fabricate and erect structural steel for commercial,
institutional and public sector buildings for government agencies,
private developers and general contractors.
b) The capability to fabricate structural steel for new bridges and
fabricate and erect structural steel for bridge rehabilitation for
government agencies and general contractors.
Steel Service Centers
The Steel Service Centers operate six steel service centers and three
culvert facilities located in the West and Midwest regions of the United
States. This Division processes and distributes to the end users, a general
line of carbon steel products including plates, sheets, structural shapes,
bars, tubes, pipe and other miscellaneous metal products. This Division
also manufactures and markets to the end users, corrugated metal culvert
pipe and accessories. The Steel Service Centers' primary markets include
steel fabricators, original equipment manufacturers and the mining, logging,
agricultural and road construction industries.
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<PAGE>
Item 1. Business (Cont'd)
Steel Service Centers (Cont'd)
The Company and the industry as a whole deem the maintenance of adequate
levels of inventory to be integral to the Service Center business. The
Company believes that it has adequate levels of inventory on hand to meet
current and anticipated customer demand.
Other
Several large companies compete nationally in some product lines with the
Company and there are several local and regional companies that compete in
certain product lines in specific geographic areas. The majority of the
Company's business is secured through open competitive bidding or through direct
negotiations with industry or government agencies. Competition is based
primarily on performance including the ability to provide design, engineering
and on-site field construction services in a cost-effective, timely manner. The
Steel Service Centers' volume of business is based on the price, delivery and
credit terms, and first stage preprocessing operations offered to its customers
as well as its reputation.
Earned revenue was $408 million in 1994, compared with $324 million in 1993
and $355 million in 1992. For further financial information refer to pages 16
through 37.
The principal raw materials essential to the Company's business are steel,
alloys and other metal plates and structural sections. The Company procures
these raw materials from various domestic and foreign sources including, the
mills of USX Corporation, Bethlehem Steel Corporation, Northwestern Steel and
Wire Company, Nucor Steel, British Steel and Mitsubishi International
Corporation.
The Company has a license and technical assistance agreement with Roediger, a
German corporation, which gives the Company exclusive rights in North America
and other selected countries worldwide to use the Roediger technology, a process
which utilizes anaerobic digestion in the treatment of wastewater. Revenues to
date from this technology have not been material to the Company.
Some components of the other products made and erection techniques used by the
Company are covered by patents owned or licensed by the Company. None of these
are deemed to be material to the Company from an overall financial viewpoint.
The Company had a backlog of uncompleted contracts of $194 million on December
31, 1994 compared to $190 million on December 31, 1993. Substantially all
backlog is expected to be completed during 1995.
Factors such as the type and scope of operations in progress at any given
time, including weather conditions at field sites, create fluctuations in the
employment level at PDM. On December 31, 1994, the Company employed 2,257
persons, of which 683 were salaried personnel and 1,574 were hourly personnel.
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<PAGE>
Item 1. Business (Cont'd)
International sales during 1994 were minimal as the Company continues to
concentrate on a few selected foreign projects and to negotiate additional
cooperation agreements which allow for the supply of experience and technology
without incurring overseas, on-site risk.
Item 2. Properties
Operations of the Company are conducted at both owned and leased properties.
In addition, certain owned properties of the Company are leased to third party
tenants. The following table indicates each of the Company's facilities in the
United States by: segment, location, type of facility, year operations began,
and square footage of property owned or leased on December 31, 1994:
<TABLE>
<CAPTION>
YEAR
TYPE OF OPERATIONS SQUARE
LOCATION FACILITY BEGAN FOOTAGE
<S> <C> <C> <C>
Engineered Construction Division
Birmingham, Alabama (1) Warehouse and office 1994 4,000
Fresno, California Toolhouse 1963 52,140
Clive, Iowa Fabrication plant and office 1955 176,537
Des Moines, Iowa Toolhouse 1900 29,000
Pittsburgh, Pennsylvania Office and toolhouse 1908 98,776
Warren, Pennsylvania Fabrication plant 1959 125,960
Franklin, Tennessee Toolhouse 1977 28,220
Hitchcock, Texas Toolhouse 1994 5,000
Provo, Utah Fabrication plant 1959 154,950
Steel Construction
Stockton, California Fabrication plant and office 1987 140,840
Chicago, Illinois Fabrication plant and office 1987 520,800
Eau Claire, Wisconsin Fabrication plant and office 1994 265,528
Wausau, Wisconsin Fabrication plant and office 1991 164,580
Steel Service Centers
Fresno, California Warehouse and office 1955 112,800
Santa Clara, California Warehouse and office 1947 108,528
Stockton, California Warehouse and office 1955 191,493
Cedar Rapids, Iowa Warehouse and office 1976 66,800
Sparks, Nevada Warehouse and office 1974 64,936
Tualatin, Oregon Warehouse and office 1964 31,620
Spanish Fork, Utah Warehouse and office 1977 74,280
Arlington, Washington (2) Warehouse and office 1993 13,965
</TABLE>
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<PAGE>
Item 2. Properties (Cont'd)
<TABLE>
<CAPTION>
YEAR
TYPE OF OPERATIONS SQUARE
LOCATION FACILITY BEGAN FOOTAGE
<S> <C> <C> <C>
Idle Holdings, Including Plant and Property (3)
Sacramento, California Land 1966 --
Des Moines, Iowa Fabrication plant and office 1900 339,100
Baltimore, Maryland Land 1960 --
Hilliard, Ohio Fabrication plant and office 1971 179,000
Pittsburgh, Pennsylvania Office 1908 10,234
Lubbock, Texas (4) Warehouse and office 1979 31,000
Provo, Utah Office 1959 15,731
</TABLE>
__________
(1) Company leases land from outside third party. Lease will expire March 31,
1999.
(2) Company leases land from outside third party. Lease will expire January
31, 2003.
(3) Company pursues the sale or development of all idle facilities and
regularly evaluates similar opportunities for facilities not fully
utilized.
(4) Company is leasing facility to a third party with a purchase option which
expires on December 31, 1995.
The properties listed above are utilized by the Company's business segments as
indicated. The Company's production capacity is adequate for its present needs.
The Company believes that its properties have been adequately maintained, are
generally in good condition and are suitable for the Company's business as now
conducted.
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<PAGE>
Item 3. Legal Proceedings
There are various claims and legal proceedings against the Company arising in
the normal course of business. As previously reported, in May 1984, Washington
Public Power Supply System (WPPSS) filed a complaint against the Company and its
surety in the United States District Court for the Eastern District of
Washington. Various claims in connection with retrofit work performed by the
Company at Nuclear Unit #2, Hanford, Washington, were alleged. Four alternative
damages theories were presented, ranging in amounts from $53 million to $86
million.
In January 1986, the District Court granted partial summary judgment and
dismissed some of WPPSS' claims. After a trial in June 1986, and a jury verdict
favorable to the Company, the Court entered final judgment dismissing all the
claims of WPPSS against the Company. WPPSS filed a notice of appeal to the
United States Court of Appeals for the Ninth Circuit. In May 1989, the Court of
Appeals affirmed the judgment of the District Court that the Company was not
liable for breach of warranties in connection with its construction of the
retrofit of the containment vessel at Nuclear Unit #2, Hanford, Washington.
However, the Court of Appeals remanded the case to the District Court for a
determination of whether WPPSS had released its claims against the Company for
breach of contract with respect to the Company's retrofit contract.
After several preliminary rulings in 1990 in favor of the Company, the
District Court entered an order dismissing WPPSS' complaint with prejudice on
May 1, 1991.
In an order filed January 26, 1993, the United States Court of Appeals
affirmed the judgment of the District Court in part, but reversed and again
remanded the case to the District Court for determination of whether WPPSS had
released its claims against the Company for breach of contract with respect to
the retrofit contract, including its original claims for consequential damages.
A jury trial was held in the District Court commencing June 27, 1994. On July
11, 1994, the jury returned a verdict in the Company's favor, ruling that WPPSS
has no breach of contract claims against the Company by reason of the
containment vessel retrofit. WPPSS has again filed notice of appeal to the
United States Court of Appeals for the Ninth Circuit.
Although counsel is unable to predict with certainty the ultimate outcome,
management and counsel believe the Company has significant and meritorious
defenses to any claims and intend to pursue them vigorously.
On November 3, 1993, an accident occurred at the construction site of a new
United States Post Office in Chicago where the Company's Steel Construction
business segment was in the process of fabricating and erecting the steel
structure of the building. Two men were killed and five seriously injured when
a portion of the erected steel collapsed. An investigation is being conducted
by the Federal Occupational Safety and Health Administration (OSHA) and the
Justice Department. See Accrued Liabilities note accompanying the consolidated
financial statements.
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<PAGE>
Item 3. Legal Proceedings (Cont'd)
The Company's operations, including idle facilities and other property, are
subject to and affected by federal, state and local laws and regulations
regarding protection of the environment. The Company accrues for environmental
costs where such obligations are either known or considered probable and can be
reasonably estimated.
The Company is participating as a potentially responsible party (PRP) at three
different sites pursuant to proceedings under the Comprehensive Environmental
Response, Compensation and Liability Act (CERCLA). Other parties have also been
identified as PRP's at the sites. Investigative and/or remedial activities are
ongoing. The Company believes, based upon information presently available to
it, that such future costs will not have a material effect on the Company's
financial position, results of operations or liquidity. However, the imposition
of more stringent requirements under environmental laws or regulations, new
developments or changes regarding site cleanup costs or the allocation of such
costs among PRP's or a determination that the Company is potentially responsible
for the release of hazardous substances at sites other than those currently
identified, could result in additional costs.
Management believes it is improbable that the ultimate outcome of any matter
currently pending against the Company will materially affect the financial
position of the Company; accordingly, no provision for such liability has been
recorded in the Company's consolidated financial statements in the Annual
Report.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable
Executive Officers of the Registrant
Information regarding executive officers of the Registrant is presented in
Part III following and incorporated herein by reference.
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<PAGE>
PART II
Item 5. Market for Registrants Common Equity and Related Stockholder Matters
The Company's common stock is traded on the American Stock Exchange under the
symbol "PDM". The following is the range of high and low sales prices and
quarterly dividends paid per share for fiscal 1994 and 1993 by quarters.
<TABLE>
<CAPTION>
Price Range Quarterly
------------------ Dividends
High Low Per Share
------- ------ --------
<S> <C> <C> <C>
1994
First Quarter $36 $27 $.22-1/2
Second Quarter 32-1/2 27 .22-1/2
Third Quarter 33 26 .22-1/2
Fourth Quarter 35-3/4 28-1/2 .22-1/2
--------
$.90
========
1993
First Quarter $37-1/2 $32-1/2 $.22-1/2
Second Quarter 33 24 .22-1/2
Third Quarter 30-7/8 26 .22-1/2
Fourth Quarter 28-3/4 24-1/2 .22-1/2
--------
$.90
========
</TABLE>
On February 28, 1995, there were 2,321,903 shares outstanding and approximately
448 stockholders of record of the Company's Common Stock.
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<PAGE>
Item 6. Selected Financial Data
The following table summarizes information with respect to the operations of
the Company.
<TABLE>
<CAPTION>
(Dollars in thousands, except per share amounts) 1994 1993 1992 1991 1990
------------------------------------------------ ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Operating Performance (1)
Earned Revenue $408,061 $323,707 $355,043 $370,318 $346,964
Income (loss) from operations 15,508 (2,689) 4,681 11,323 15,301
Net Income (loss):
Continuing operations 11,980 567 4,080 8,315 10,031
Discontinued operations, net 80 471 820 (462) (1,604)
-------- -------- -------- -------- --------
Net income 12,060 1,038 4,900 7,853 8,427
Income (loss) per common share:
Continuing operations 5.16 .25 1.68 3.37 4.07
Discontinued operations .03 .20 .34 (.19) (.65)
-------- -------- -------- -------- --------
Net income per common share 5.19 .45 2.02 3.18 3.42
Financial Position
Total assets $214,201 $177,803 $166,074 $176,001 $167,915
Long-term debt 22,000 - - 2,135 9,926
Stockholders' equity 98,549 88,473 89,678 91,512 85,627
Other Information
For the year:
Cash provided (utilized) by operations $ (2,784) $ (3,767) $ 21,414 $ 13,871 $ 22,544
Depreciation expense 5,037 4,145 4,314 4,178 3,570
Capital expenditures 7,919 3,942 4,491 4,417 5,018
Dividends per common share .90 .90 .90 .825 .90
At year end:
Book value per common share $ 42.44 $ 38.07 $ 38.63 $ 37.36 $ 34.97
Employees 2,257 1,987 2,066 2,285 2,297
</TABLE>
(1) Restated to reflect CVI Incorporated as a discontinued operation.
Note: Refer to the Accrued Liabilities, Contingencies and Commitments notes
accompanying the consolidated financial statements which are included
in Part II of this Form 10-K.
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<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The following discussion and analysis is provided to increase understanding of,
and should be read in conjunction with, the consolidated financial statements
and accompanying notes. In addition, the following discussion and analysis
should be read in conjunction with the Review of Operations section of the
Annual Report to Stockholders for the fiscal year ended December 31, 1994 hereof
which is incorporated herein by reference. Effective October 31, 1994, the
Company accounts for CVI Incorporated as a discontinued operation, and
accordingly, the amounts included in continuing operations and the management
discussion and analysis of continuing operations exclude this business.
RESULTS OF OPERATIONS
The Company realized income from continuing operations of $12.0 million in 1994
compared with $567,000 in 1993 and $4.1 million in 1992. The related earnings
per share were $5.16 in 1994 compared with $.25 in 1993 and $1.68 in 1992.
Earned revenue increased 26 percent in 1994 compared with 1993 but decreased 8.8
percent in 1993 compared with 1992. All of the Company's business segments
increased profitability in 1994 compared with 1993. This increase may be
attributed to the upturn in the economy. Profitability decreased to a loss of
$2.7 million in 1993 when compared to 1992. The Company normally lags the
general economy and as a result the Company's overall financial performance in
1993 was affected by the recession.
Engineered Construction Division
Earned revenue for the Engineered Construction Division (ECD) was $177.3 million
in 1994 compared with $128.4 million and $187.9 million in 1993 and 1992,
respectively. ECD's earned revenue represented 43 percent of consolidated
revenues in 1994.
Operating profitability increased $12.9 million to $11.2 million in 1994
compared with a loss of $1.7 million in 1993. Income from operations in 1994 was
adversely affected by approximately $1.5 million of costs related to the WPPSS
litigation. The Company has incurred substantially all of the costs related to
the 1993 Midwest flood. At December 31, 1994, actual flood related costs were
$8.5 million and future costs are estimated to be $500,000. During 1994, the
Company re-evaluated its estimated accrual for the costs associated with the
flood and eliminated amounts that were no longer believed to be necessary. This
reduction improved net income by $.26 per share. As previously reported, these
costs were reimbursed under the Company's insurance policy. During 1994, ECD
took advantage of the recovering economy by expanding volume and realizing
higher margins on contracts. The decrease in profitability of $7.7 million in
1993 when compared to 1992, was attributed to poor economic conditions.
New awards of $199.0 million in 1994, represented a 24 percent increase over
the 1993 awards of $160.3 million. New awards were $138.8 million in 1992. The
increase over the past three years exemplifies this Division's ability to
compete in various market conditions.
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<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations (Cont'd)
Capital expenditures of $3.9 million in 1994 were primarily for a new office
building, computer and construction equipment. During 1993, expenditures of
$882,000 were for the purchase of plant and construction equipment and in 1992,
expenditures for construction and computer aided design equipment totaled $1.6
million.
Steel Construction
As described in the Notes to Consolidated Financial Statements under
Acquisitions, on September 1, 1994, the Company acquired the bridge fabricating
assets of Phoenix Steel, Inc., (Phoenix) located in Eau Claire, Wisconsin. The
total cost of this acquisition was $13.5 million, $8.0 million for working
capital and $5.5 million for property, plant and equipment. These assets were
combined with the bridge fabricating assets of Hartwig Mfg. Corp. to form the
PDM Bridge Division, a profit center in the Steel Construction business segment.
Accordingly, the consolidated statement of financial condition on December 31,
1994 includes the assets of Phoenix. The acquisition was accounted for as a
purchase and the results of operations of Phoenix are included in the
consolidated financial statements from the date of acquisition.
This segment has seen a steady increase in earned revenues over the last three
years. In 1992, revenues were $81.6 million which increased to $95.8 million in
1993, and in 1994 rose to a level of $101.9 million. The increase in 1993 was
primarily due to the substantial completion of the United States Post Office
project in Chicago. For a discussion of certain potential liabilities which may
arise from an accident which occurred at this project, see "Accrued Liabilities"
in the Notes to Consolidated Financial Statements. In 1994, the McCormick Place
Exhibition Center project accounted for almost 12 percent of consolidated
revenues. Due to the expected completion of this project, 1995 results for
Chicago Steel Construction are not expected to be at 1994 levels.
Operating profitability increased to $2.8 million in 1994 from $431,000 in
1993. The reasons for this increase are two-fold. In 1994, one major contract,
as mentioned earlier, contributed significantly to the increase in
profitability. Also, a $2.0 million non-recurring charge for insurance coverage
deductibles and future uninsured costs was recorded in 1993, thus reducing
profitability.
In 1994, new awards were $92.7 million compared with $121.3 million in 1993
and $98.9 million in 1992. The increase in 1993 was attributed to the McCormick
Place Exhibition Center contract award of $68 million.
Capital expenditures, exclusive of business acquisitions, were $661,000 in
1994 compared with $1.5 million and $1.8 million in 1993 and 1992, respectively.
During the last three years, a significant portion of capital expenditures were
for purchases of plant and construction equipment. In 1992, the Chicago facility
was renovated to expand its structural bridge fabrication capabilities.
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<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations (Cont'd)
Steel Service Centers
The Company's Steel Service Centers accounted for 32 percent of consolidated
earned revenues in 1994. Earned revenue was $128.9 million in 1994 compared with
$99.5 million in 1993 and $85.5 million in 1992. This steady increase in revenue
was primarily the result of this Division's ability to capture additional market
share through competitive pricing.
Operating profitability increased approximately 49 percent to $7.5 million in
1994, compared with $5.1 million in 1993. This increase was due to higher
volumes realized and improved margins on goods sold. The profitability was
relatively unchanged for 1993 when compared to 1992.
During 1994 and 1993, capital expenditures of $3.4 million and $1.6 million,
respectively, were primarily used for expansions of physical plants, processing
and warehouse equipment and to upgrade the delivery fleet. In 1992, $1.1 million
was used to finance expansion projects at the various plant facilities.
Other
Corporate unallocated expenses, consisting primarily of salaries, benefits,
outside professional services, taxes and insurance, were $6.0 million in 1994
compared with $6.5 million and $6.7 million in 1993 and 1992, respectively.
In 1994, the Company's interest income was $627,000 compared with $540,000 in
1993 and $685,000 in 1992. Interest income increased in 1994 reflecting the rise
in interest rates. During 1993, interest income decreased as a result of a lower
level of interest earning funds.
In 1994, interest expense increased to $898,000 as a result of the Company's
increase in net borrowings on its revolving credit facility. As of December 31,
1994, the Company had debt obligations of $22.0 million.
The gain on the sale of assets was $3.6 million in 1994 compared with $3.6
million in 1993 and $930,000 in 1992. In 1994, the Company realized gains on the
sale of PDM Saudi Arabia Ltd. (PDM SA), a joint venture, and idle properties.
The Company expects the sale of PDM SA to have no material effect on the
profitability of continuing operations. During 1993, gains realized consisted
primarily of the sale of idle properties compared with gains on the sale of
foreign marketable securities in 1992.
The effective income tax rate was 36 percent in 1994 compared with 47 percent
in 1993 and 34 percent in 1992. In 1994, the effective tax rate was favorably
impacted by the realization of a tax benefit related to the previously mentioned
sale of a foreign investment. In 1993, the effective tax rate was adversely
impacted as a result of foreign taxes of $81,000 with no corresponding tax
credit.
The Company's operations, including idle facilities and other property, are
subject to federal, state and local laws and regulations regarding protection of
the environment. The Company accrues for environmental costs where such
obligations are either known or considered probable and can be reasonably
estimated.
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<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations (Cont'd)
The Company has been notified it is a potentially responsible party (PRP) at
three waste disposal sites under the Comprehensive Environmental Response,
Compensation and Liability Act (CERCLA). Other parties have also been identified
as PRP's at the sites. Investigative and/or remedial activities are ongoing.
The Company believes, based upon the information presently available to it,
that such costs will not have a material adverse effect on the Company's
financial position, results of operations or liquidity.
However, the imposition of more stringent requirements under environmental
laws or regulations, changes in site cleanup costs or the allocation of such
costs among PRP's, or a determination that the Company is potentially
responsible for the release of waste or pollutants at sites other than those
currently identified, could result in additional costs.
Inflation and changing prices did not significantly impact the Company during
the last three years.
LIQUIDITY AND CAPITAL RESOURCES
During 1994, the Company's primary sources of liquidity included cash provided
by financing activities and cash on hand. These sources primarily financed
acquisitions, capital expenditures, working capital requirements and the payment
of dividends. On December 31, 1994, cash and cash equivalents were $11.7 million
compared with $15.9 million and $19.9 million on December 31, 1993 and 1992,
respectively. The increase in working capital in 1994 compared to 1993, was
primarily the result of an increase in accounts receivable, due to volume and
timing of payments, offset by a net increase in contract related billings over
costs.
Capital expenditures, exclusive of business acquisitions, during 1994 were
$7.9 million compared with $3.9 million and $4.5 million during 1993 and 1992,
respectively. In 1994, capital expenditures were primarily for plant and
construction equipment and a new office building in Clive, Iowa. This building
serves as the new headquarters for the Engineered Construction Division, as the
former office building was destroyed by the flood in July 1993. On September 1,
1994, the Company acquired the bridge fabricating assets of Phoenix Steel, Inc.,
a steel bridge fabricator. The total cost of this acquisition was $13.5 million.
In addition, the Company intends to continue to pursue acquisition opportunities
closely aligned with its existing core businesses.
The Company paid total cash dividends of $.90 per common share in 1994. On
February 28, 1995, the Board of Directors declared an increase to the quarterly
dividends to $.25 per common share for the first quarter of 1995. The payment of
future dividends will be evaluated based on business conditions.
The Company has on hand and access to sufficient sources of funds to meet its
anticipated operating, expansion and capital needs. These sources include cash
on hand and a $40.0 million unsecured revolving credit facility which matures on
December 31, 1996. This facility contains an annual option to renew for an
additional one-year period, subject to lender approval. On December 31, 1994,
$22.0 million of borrowings, at prime rate, and $13.0 million of stand-by
letters of credit were outstanding under this agreement. During the fourth
quarter of 1994, the revolving credit facility was increased to $40.0 million to
allow the Company to borrow for working capital requirements.
-14-
<PAGE>
Item 8. Financial Statements and Supplemental Data
Report of Independent Auditors
STOCKHOLDERS AND BOARD OF DIRECTORS
PITT-DES MOINES, INC.
We have audited the accompanying consolidated statements of financial
condition of Pitt-Des Moines, Inc. and subsidiaries as of December 31, 1994 and
1993, and the related consolidated statements of income, stockholders' equity,
and cash flows for each of the three years in the period ended December 31,
1994. Our audits also included the financial statement schedule listed in the
Index at Item 14(a). These financial statements and schedule are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements and schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Pitt-Des Moines, Inc. and subsidiaries as of December 31, 1994 and 1993, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1994, in conformity with generally
accepted accounting principles. Also, in our opinion, the related financial
statement schedule, when considered in relation to the basic financial
statements taken as a whole, present fairly in all material respects the
information set forth therein.
As discussed in the notes to the consolidated financial statements, Washington
Public Power Supply System (WPPSS) brought a complaint against the Company in
1984 seeking unspecified damages for contract work completed in a prior year.
The ultimate outcome of this matter is still uncertain and cannot be presently
determined. Accordingly, no provision for any liability that may result has
been made in the financial statements.
/s/ ERNST & YOUNG LLP
----------------------------
ERNST & YOUNG LLP
Pittsburgh, Pennsylvania
March 2, 1995
-15-
<PAGE>
PITT-DES MOINES, INC.
Consolidated Statements of Income
Years Ended December 31, 1994, 1993 and 1992
<TABLE>
<CAPTION>
1994 1993 1992
------------- ------------- -------------
<S> <C> <C> <C>
Earned revenue $408,060,623 $323,706,896 $355,042,813
Cost of earned revenue 357,639,136 293,377,923 315,734,211
------------ ------------ ------------
Gross profit from operations 50,421,487 30,328,973 39,308,602
Selling, general and administrative expenses 34,913,770 33,018,179 34,627,936
------------ ------------ ------------
Income (loss) from operations 15,507,717 (2,689,206) 4,680,666
Other income (expense):
Interest income 626,841 540,008 685,406
Interest expense (897,993) (219,752) (199,646)
Gain on sale of assets 3,576,760 3,595,414 929,296
Miscellaneous, net (157,233) (155,047) 73,983
------------ ------------ ------------
3,148,375 3,760,623 1,489,039
------------ ------------ ------------
Income from operations before taxes 18,656,092 1,071,417 6,169,705
Income tax expense 6,676,271 504,438 2,090,123
------------ ------------ ------------
Income from continuing operations 11,979,821 566,979 4,079,582
Income from discontinued operations, net of taxes 80,362 470,962 820,431
------------ ------------ ------------
Net income $ 12,060,183 $ 1,037,941 $ 4,900,013
============ ============ ============
Income per common share:
Continuing operations $ 5.16 $ 0.25 $ 1.68
Discontinued operations 0.03 0.20 0.34
------------ ------------ ------------
Net income per common share $ 5.19 $ 0.45 $ 2.02
============ ============ ============
Average common shares outstanding 2,323,651 2,323,645 2,414,670
============ ============ ============
</TABLE>
See Notes to Consolidated Financial Statements.
-16-
<PAGE>
PITT-DES MOINES, INC.
Consolidated Statements of Financial Condition
December 31, 1994 and 1993
<TABLE>
<CAPTION>
Assets 1994 1993
------------- -------------
<S> <C> <C>
Current Assets
Cash and cash equivalents $ 11,668,341 $ 15,946,321
Accounts and notes receivable 90,731,715 60,782,038
Inventories 19,867,066 18,119,248
Costs and estimated profits in excess of billings 30,193,058 28,618,657
Deferred income taxes 5,367,748 7,938,680
Prepaid expenses 931,974 1,595,318
------------ ------------
Total current assets 158,759,902 133,000,262
Other Assets 10,330,365 6,619,911
Net Assets of Discontinued Operations 2,685,379 -
Property, Plant and Equipment
Land 6,959,818 7,350,952
Buildings 30,370,577 30,455,806
Machinery and equipment 59,264,513 59,936,962
------------ ------------
96,594,908 97,743,720
Allowances for depreciation (54,169,075) (59,560,936)
------------ ------------
Net property, plant and equipment 42,425,833 38,182,784
------------ ------------
$214,201,479 $177,802,957
============ ============
</TABLE>
See Notes to Consolidated Financial Statements.
-17-
<PAGE>
PITT-DES MOINES, INC.
Consolidated Statements of Financial Condition
December 31, 1994 and 1993
<TABLE>
<CAPTION>
Liabilities and Stockholders' Equity 1994 1993
------------- -------------
<S> <C> <C>
Current Liabilities
Accounts payable $ 47,328,315 $ 41,325,840
Accrued compensation, related taxes and benefits 10,582,861 9,082,627
Other accrued expenses 3,163,269 3,963,152
Accrued expenses related to flood 500,000 4,272,049
Billings in excess of costs and estimated profits 14,309,207 10,319,772
Income taxes 2,118,274 1,149,057
Casualty and liability insurance 8,949,713 12,608,799
------------ ------------
Total current liabilities 86,951,639 82,721,296
Revolving Credit Facility 22,000,000 -
Deferred Income Taxes 5,573,065 5,700,661
Minority Interest 1,127,755 908,080
Contingencies and Commitments
Stockholders' Equity
Preferred stock--par value $.01 per share; authorized
3,000,000 shares; issued--none
Common stock--no par value; authorized 15,000,000 shares;
issued 2,982,156 shares 33,549,255 33,549,255
Retained earnings 79,201,572 69,055,440
------------ ------------
112,750,827 102,604,695
Treasury stock at cost (1994--660,253 shares;
1993--658,178 shares) (14,201,807) (14,131,775)
------------ ------------
Total stockholders' equity 98,549,020 88,472,920
------------ ------------
$214,201,479 $177,802,957
============ ============
</TABLE>
See Notes to Consolidated Financial Statements.
-18-
<PAGE>
PITT-DES MOINES, INC.
Consolidated Statements of Cash Flows
Years Ended December 31, 1994, 1993 and 1992
<TABLE>
<CAPTION>
1994 1993 1992
------------- ------------ ------------
<S> <C> <C> <C>
Cash Flows from Operating Activities
Net income $ 12,060,183 $ 1,037,941 $ 4,900,013
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 5,036,755 4,145,385 4,314,124
Discontinued operations (1,397,613) 4,617,346 503,906
Gain on sale of assets (3,576,760) (3,595,414) (929,296)
Deferred income taxes (credits) 2,141,057 (979,567) (605,216)
Minority interest in earnings, net of dividends paid 219,675 37,150 46,649
Other non-cash credits, net (301,288) (536,498) (882,725)
Change in operating assets and liabilities
providing (using) cash:
Accounts and notes receivable (31,132,161) (7,448,578) 10,418,222
Inventories (3,396,234) (2,821,023) (3,828,788)
Prepaid expenses 663,337 (1,296,847) 1,822,326
Costs, estimated profits and billings, net 10,937,843 (3,901,538) 2,126,431
Accounts payable 6,720,222 3,372,152 4,949,623
Accrued liabilities (1,727,972) 2,909,863 660,776
Income taxes 969,217 693,051 (2,082,137)
------------ ----------- ------------
Net cash provided (utilized) by operating activities (2,783,739) (3,766,577) 21,413,908
Cash Flows from Investing Activities
Capital expenditures (7,919,020) (3,941,566) (4,491,121)
Proceeds from sale of assets 3,838,022 4,977,159 1,020,382
Insurance proceeds from flood damage - 10,000,000 -
Costs incurred related to flood damage (3,589,298) (5,727,951) -
Acquisitions, net of cash acquired (13,499,394) (1,298,174) -
Decrease in short-term investments - - 4,017,345
Change in investments and other assets (340,468) (1,122,699) (82,925)
------------ ----------- ------------
Net cash provided (utilized) by investing activities (21,510,158) 2,886,769 463,681
Cash Flows from Financing Activities
Proceeds from debt obligations 28,000,000 - 9,000,000
Payments of debt obligations (6,000,000) (875,000) (17,395,000)
Purchase of treasury stock - - (4,615,000)
Dividends paid (2,091,114) (2,091,581) (2,176,563)
Other 107,031 (151,515) 57,609
------------ ----------- ------------
Net cash provided (utilized) by financing activities 20,015,917 (3,118,096) (15,128,954)
------------ ----------- ------------
Increase (decrease) in cash and cash equivalents (4,277,980) (3,997,904) 6,748,635
Cash and cash equivalents at beginning of year 15,946,321 19,944,225 13,195,590
------------ ----------- ------------
Cash and Cash Equivalents at End of Year $ 11,668,341 $15,946,321 $ 19,944,225
============ =========== ============
</TABLE>
See Notes To Consolidated Financial Statements.
-19-
<PAGE>
PITT-DES MOINES, INC.
Consolidated Statements of Stockholders Equity
Years Ended December 31, 1994, 1993 and 1992
<TABLE>
<CAPTION>
Treasury Stock
----------------------------
Retained Number of
Common Stock Earnings Cost Shares
------------ ----------- ------------ ------------
<S> <C> <C> <C> <C>
Balance on December 31, 1991 $ 33,549,255 $67,574,680 $ (9,611,919) (532,978)
Net income 4,900,013
Cash dividends ($.90 per share) (2,176,563)
Purchase of treasury stock (4,615,000) (130,000)
Other 16,140 41,469 2,300
------------ ----------- ------------ --------
Balance on December 31, 1992 33,549,255 70,314,270 (14,185,450) (660,678)
Net income 1,037,941
Cash dividends ($.90 per share) (2,091,581)
Other (205,190) 53,675 2,500
------------ ----------- ------------ --------
Balance on December 31, 1993 33,549,255 69,055,440 (14,131,775) (658,178)
Net income 12,060,183
Cash dividends ($.90 per share) (2,091,114)
Other 177,063 (70,032) (2,075)
------------ ----------- ------------ --------
Balance on December 31, 1994 $ 33,549,255 $79,201,572 $(14,201,807) (660,253)
============ =========== ============ ========
</TABLE>
See Notes To Consolidated Financial Statements.
-20-
<PAGE>
PITT-DES MOINES, INC.
Notes To Consolidated Financial Statements
Significant Accounting Policies
Principles of Consolidation -- The consolidated financial statements include the
accounts of the Company and its subsidiaries. Intercompany accounts and
transactions are eliminated in consolidation. Certain amounts in the 1992 and
1993 consolidated financial statements and notes to consolidated financial
statements have been reclassified to conform with the 1994 presentation.
Additionally, as further described in the following Notes To Consolidated
Financial Statements, prior year amounts have been reclassified to present CVI
Incorporated as a discontinued operation.
Classifications of Current Assets and Liabilities -- The Company includes in
current assets and current liabilities amounts realizable and payable under
contracts which extend beyond one year. Other assets and liabilities are
classified as current or non-current on the basis of expected realization or
payment within or beyond one year, respectively.
Cash and Cash Equivalents -- Cash and cash equivalents are defined as cash and
short-term investments with maturities of three months or less at the time of
acquisition.
Inventories -- Inventories of raw materials and fabricated parts are principally
valued at the lower of last-in, first-out (LIFO) cost or market except for
certain inventories which are valued at the lower of first-in, first-out (FIFO)
cost or market.
Contract material inventories included in accumulated contract costs are
valued using the specific identification method.
Property, Plant and Equipment -- Land, buildings, machinery and equipment are
carried at cost. Buildings, machinery and equipment, including capitalized
leases, are depreciated by accelerated methods.
Revenue Recognition -- The Company follows the percentage of completion method
of reporting income from contracts. This method takes into account the cost,
estimated profit and earned revenue to date on contracts not yet completed.
Revenue recognized is the portion of the total contract price that the man-hours
expended to date bears to the estimated final total man-hours, based on current
estimates of man-hours to complete. Revenue recognition is not related to
progress billings to customers.
As long-term contracts extend over one or more years, revisions in estimates
of costs and estimated profits during the course of work are reflected in the
accounting period in which the facts which require the revision become known.
At the time a loss on a contract becomes known, the entire amount of the
estimated ultimate loss is recognized in the financial statements. Revenue from
change orders and claims is recognized when the settlement is probable and the
amount can be reasonably estimated. Contract costs include all direct
-21-
<PAGE>
Notes To Consolidated Financial Statements (Cont'd)
material, labor, subcontract costs and those indirect costs related to contract
performance. Costs and estimated profits in excess of billings are classified as
a current asset. Amounts billed in excess of costs and estimated profits are
classified as a current liability.
Income Taxes -- Deferred tax assets and liabilities are recognized for the
expected future tax consequences of events that have been recognized in the
Company's financial statements or tax returns.
Net Income per Share of Common Stock -- Earnings per share is based on the
weighted average number of shares outstanding during the year and include the
dilutive effect of the assumed exercise of outstanding stock options, as
computed under the treasury stock method.
Acquisitions
Cascade Culvert Corp. -- On November 30, 1993, Oregon Culvert Co., Inc., a
majority-owned subsidiary, acquired the assets and assumed certain liabilities
of Cascade Culvert Corp., a corrugated metal culvert pipe manufacturer. The
total cost of this acquisition was $1.3 million.
Phoenix Steel, Inc. -- On September 1, 1994, the Company acquired the bridge
fabricating assets of Phoenix Steel, Inc., a steel bridge fabricator. The total
cost of this acquisition was $13.5 million. In addition, $1.5 million will be
paid, and expensed as incurred, in connection with non-compete agreements,
expiring in December 1999, with the former shareholders of Phoenix Steel, Inc.
These acquisitions were accounted for as purchases and, accordingly, the
acquired assets and liabilities were recorded at their estimated fair value at
the date of their respective acquisitions. Operating results have been included
since acquisition dates but pro forma information has not been presented because
it is immaterial.
Discontinued Operation
On October 31, 1994, the Company sold substantially all of the assets of CVI
Incorporated, a wholly owned subsidiary, to Process Systems International, Inc.,
a subsidiary of Chart Industries, Inc., for consideration of $5.7 million,
consisting of $650,000 in cash and a promissory note of $5.0 million, to be paid
in installments over four years from the date of sale.
Net assets from discontinued operations in the accompanying consolidated
balance sheet is $2.7 million, composed of $236,000 of net current assets and
$2.5 million of net non-current assets as of December 31, 1994. These amounts
consist primarily of accounts receivable, contract related assets and
liabilities, property, plant and equipment and related liabilities.
-22-
<PAGE>
Notes To Consolidated Financial Statements (Cont'd)
Revenues applicable to discontinued operations were $15.1 million, $30.6
million, and $27.9 million in 1994, 1993, and 1992, respectively. Discontinued
operations, net in the accompanying consolidated statements of income is
composed of the following for the years ended December 31:
<TABLE>
<CAPTION>
Dollars in thousands 1994 1993 1992
------ ----- -----
<S> <C> <C> <C>
Income (loss) from operations, net of income tax expense
(benefit) of $(214) in 1994, $337 in 1993 and $612 in 1992. $(493) $ 471 $ 820
Gain from disposal, net of income tax expense of $383 in 1994. 573 - -
----- ----- -----
$ 80 $ 471 $ 820
===== ===== =====
</TABLE>
Accounts and Notes Receivable
On December 31, 1994 and 1993, accounts receivable included approximately $17.7
million and $15.2 million, respectively, which have been billed under retainage
provisions in contracts and will become due upon completion of the contracts.
Accounts receivable on December 31, 1994 included approximately $1.4 million
which is expected to be collected after December 31, 1995. The allowance for
doubtful accounts was approximately $1.0 million on December 31, 1994 and 1993,
respectively.
The majority of accounts receivable are from customers in various locations
and industries throughout the United States. The Company maintains adequate
reserves for potential credit losses and such losses have been minimal and
within management's estimates.
Inventories
Inventories aggregating approximately $18.3 million and $14.5 million on
December 31, 1994 and 1993, respectively, are valued at the lower of LIFO cost
or market. If these amounts had been valued on the FIFO method, which
approximates replacement cost, these amounts would have been approximately $14.7
million and $13.0 million higher than reported on December 31, 1994 and 1993,
respectively.
Inventories carried on a FIFO basis were $1.6 million and $3.6 million on
December 31, 1994 and 1993, respectively.
-23-
<PAGE>
Notes To Consolidated Financial Statements (Cont'd)
Costs and Estimated Profits on Uncompleted Contracts
Costs and estimated profits on uncompleted contracts are summarized as
follows for December 31:
<TABLE>
<CAPTION>
1994 1993
------------- -------------
<S> <C> <C>
Costs incurred on uncompleted contracts $ 533,689,497 $ 413,203,152
Estimated profits 54,272,616 45,266,904
------------- -------------
587,962,113 458,470,056
Billings to date (572,078,262) (440,171,171)
------------- -------------
$ 15,883,851 $ 18,298,885
============= =============
</TABLE>
Costs, estimated profits and billings on uncompleted contracts are included in
the accompanying Consolidated Statements of Financial Condition under the
following captions for December 31:
<TABLE>
<CAPTION>
1994 1993
------------- -------------
<S> <C> <C>
Costs and estimated profits in excess of billings $ 30,193,058 $ 28,618,657
Billings in excess of costs and estimated profits (14,309,207) (10,319,772)
------------ ------------
$ 15,883,851 $ 18,298,885
============ ============
</TABLE>
Other Assets
Other assets include prepaid pension costs, notes receivable and foreign
marketable equity securities. During 1994, the Company sold an investment in
PDM Saudi Arabia, a joint venture, and realized a gain of approximately $2.7
million. On December 31, 1994 and 1993, the Company held 11,000 shares of a
foreign marketable equity security at a cost of $1,162 with a market value of
$65,000 as of December 31, 1994. In 1992, the Company sold 133,100 shares and
realized a gain of approximately $970,000.
-24-
<PAGE>
Notes To Consolidated Financial Statements (Cont'd)
Pensions
The Company has a number of noncontributory defined benefit pension plans
covering most employees. Plans covering salaried employees provide monthly
benefits at retirement age based on the participant's monthly salary and years
of employment. Plans covering hourly employees generally provide benefits of
stated amounts for each year of service although certain of such plans provide
benefits based on the participant's hourly wage rate and years of service. The
plans permit the Company, at any time, to amend or terminate the plans subject
to union approval, if applicable.
The Company's policy is to fund the legal minimum required contributions.
Plan assets on December 31, 1994 consisted primarily of listed stocks, bonds,
investments in pooled funds and group annuity contracts of insurance carriers.
The Company also makes contributions to certain multi-employer defined benefit
pension plans for field union employees. These contributions are determined in
accordance with the provisions of negotiated labor contracts and generally are
based on the number of man-hours worked. Company contributions and cost
recognized for these plans were approximately $675,000, $521,000 and $598,000
for the years ended December 31, 1994, 1993 and 1992, respectively. The
estimated accumulated plan benefits and plan assets for these plans are not
available.
The Company sponsors defined contribution plans which cover nearly all
salaried employees, certain hourly groups in accordance with their union labor
contracts and nearly all non-union field employees. Based upon the plan, the
Company contributions represent either a stated matching percentage of the
participant's basic contribution or a stated rate per hour worked. Company
contributions and cost recognized for these plans were $1.3 million, $1.2
million and $1.8 million for the years ended December 31, 1994, 1993 and 1992,
respectively.
Net periodic pension expense (income) for the Company's continuing operations
defined benefit pension plans include the following components for the years
ended December 31:
<TABLE>
<CAPTION>
1994 1993 1992
------------ ------------ ------------
<S> <C> <C> <C>
Service cost-benefits earned during the period $ 1,287,601 $ 1,115,407 $ 1,020,083
Interest cost on projected benefit obligation 3,727,962 3,538,634 3,379,094
Actual (return) loss on plan assets 677,553 (5,581,253) (2,920,634)
Net amortization, deferral and other (6,038,666) 535,543 (2,420,376)
----------- ----------- -----------
Net periodic pension (income) $ (345,550) $ (391,669) $ (941,833)
=========== =========== ===========
</TABLE>
-25-
<PAGE>
Notes To Consolidated Financial Statements (Cont'd)
As a result of restructuring activities, curtailment losses of $218,000 are
reflected in the net amortization and deferral component of net periodic pension
expense for the year ended December 31, 1993. The following assumptions were
used in the determination of net periodic cost for the years ended December 31:
<TABLE>
<CAPTION>
1994 1993 1992
----- ----- -----
<S> <C> <C> <C>
Discount rate 7.5% 8.9% 8.9%
Rates of increase in compensation levels 6.0% 6.5% 6.5%
Expected long-term rates of return on assets 9.0% 9.0% 9.0%
</TABLE>
Interest rates used to discount actuarial liabilities to present value at
December 31, 1994 and 1993 were 8.5 percent and 7.5 percent, respectively.
The following table sets forth the status of the Company's defined benefit
pension plans:
<TABLE>
<CAPTION>
December 31, 1994 December 31, 1993
------------------------------------ -----------------------------
Plans Whose Plans Whose Plans Whose Plans Whose
Assets Exceed Accumulated Assets Exceed Accumulated
Accumulated Benefits Accumulated Benefits
Benefits Exceed Assets Benefits Exceed Assets
<S> <C> <C> <C> <C>
Actuarial present value of benefit obligations:
Vested benefit obligation $ 35,236,306 $ 4,739,165 $ 36,239,672 $ 4,847,060
============ =========== ============ ===========
Accumulated benefit obligation $ 36,166,544 $ 5,013,504 $ 37,130,744 $ 5,109,075
============ =========== ============ ===========
Plan assets at fair value $ 47,878,627 $ 3,598,344 $ 51,697,963 $ 3,604,678
Projected benefit obligation (42,565,855) (5,445,862) (44,543,929) (5,797,994)
------------ ----------- ------------ -----------
Plan assets in excess of (less than)
projected benefit obligation 5,312,772 (1,847,518) 7,154,034 (2,193,316)
Unrecognized net loss 3,149,077 250,015 2,628,690 721,312
Unrecognized net (asset) obligation (4,194,771) (65,528) (4,967,955) (4,169)
Unrecognized prior service cost 1,624,892 886,579 434,241 645,403
Adjustment to recognize minimum
liability - (711,847) - (774,134)
------------ ----------- ------------ -----------
Pension asset (liability) recognized in
Consolidated Statements of Financial Condition $ 5,891,970 $(1,488,299) $ 5,249,010 $(1,604,904)
============ =========== ============ ===========
</TABLE>
Amounts shown above for Plans Whose Accumulated Benefits Exceed Assets at
December 31, 1994 and 1993 exclude the Projected benefit obligation of $4.2
million and $4.6 million, respectively, and associated plan assets of $3.6
million and $3.3 million, respectively, relating to discontinued operations.
-26-
<PAGE>
Notes To Consolidated Financial Statements (Cont'd)
Effective January 1, 1993, the Company adopted the provisions of Statement of
Financial Accounting Standards No. 106, "Employer's Accounting for
Postretirement Benefits Other Than Pensions" (SFAS No. 106). The Company has
elected to recognize this change in accounting on a prospective recognition
basis utilizing a twenty-year amortization as permitted by SFAS No. 106. The
adoption of SFAS No. 106 did not have a material impact on the Company's
financial position or results of operations.
Accrued Liabilities
On July 11, 1993, the Company's Des Moines Steel Construction plant, and the
Engineered Construction Division's office building, both located in Des Moines,
Iowa, were severely damaged by the devastating flood in the Midwest. The
Company has completed the flood related cleanup of both facilities and has
incurred substantially all of the costs associated with the flood. Actual flood
related costs through December 31, 1994 were $8.5 million with estimated future
costs of approximately $500,000. During the fourth quarter of 1994, the Company
reversed approximately $1.0 million of anticipated flood costs since it was
determined that these costs would not be incurred. The Engineered Construction
Division now operates from a newly constructed office building located in Clive,
Iowa.
On November 3, 1993, an accident occurred at the construction site of a new
United States Post Office in Chicago where the Company's Steel Construction
business segment was in the process of erecting the steel structure of the
building. Two men were killed and five seriously injured when a portion of the
erected steel collapsed. An investigation is being conducted by the Federal
Occupational Safety and Health Administration (OSHA) and the Justice Department.
OSHA has cited the Company for safety violations and has assessed $147,000 in
fines and penalties, which the Company is contesting. The Justice Department,
as required by OSHA law, is investigating whether to institute criminal action
against the Company as a result of the accident. The Company cannot predict
whether or not such action will be instituted. If such action is commenced, and
the Company is found in violation of these laws, management believes that the
resulting fines, penalties and costs of defense, which would be uninsured, would
not be material to the Company's financial condition, although it could be
material to the Company's reported results of operations for the period in which
such payments are incurred. The Company believes that it has significant and
meritorious defenses to any such charges and intends to vigorously defend them.
Although the Company has insurance coverages containing various deductible
clauses totalling $1.5 million, the Company and its insurance carriers are
assessing the damages and related policy coverages. A charge of $2.0 million
was recorded in the fourth quarter of 1993 relating to this accident. There may
be uninsured costs relating to this accident for which PDM would be liable.
-27-
<PAGE>
Notes To Consolidated Financial Statements (Cont'd)
Employee Stock Ownership Plan
The Company has a noncontributory Employee Stock Ownership Plan (ESOP) which
provides salaried employees, who have at least one year of continuous service,
an opportunity to own Company Common Stock and to accumulate additional
retirement benefits. The Company's contributions, whether in cash or in stock,
are determined annually by the Board of Directors in an amount not to exceed the
maximum allowable as an income tax deduction. Company contributions are 100
percent vested after five years of continuous service. The ESOP contribution is
allocated to the participant's account based upon the actual salary paid to the
participant during that year. The Company's contributions, recorded as
compensation expense, were approximately $507,000, $543,000 and $557,000 for the
years ended December 31, 1994, 1993 and 1992, respectively.
Revolving Credit Facility
The Company has an unsecured revolving credit agreement with several banks from
which it may borrow up to $40 million. This agreement matures on December 31,
1996, at which time all borrowings must be repaid in full. This agreement
contains an annual option to renew for an additional one-year period, subject to
lender approval. The agreement provides for various interest rate options at
the Company's election. A commitment fee of one-fourth of one percent per annum
is charged on any unused amount of this revolving credit commitment. This
agreement contains restrictive financial covenants that require minimum levels
of net worth and maintenance of specific financial ratios. On December 31,
1994, $22.0 million of borrowings, at the prime rate, and $13.0 million of
stand-by letters of credit were outstanding under this agreement.
The Company made cash payments of interest totaling $613,000 for the year
ended December 31, 1994 and $385,000 and $562,000 for the years ended December
31, 1993 and 1992, respectively.
-28-
<PAGE>
Notes To Consolidated Financial Statements (Cont'd)
Income Taxes
The income tax expense (benefit) included in the Consolidated Statements of
Income is as follows for the years ended December 31:
<TABLE>
<CAPTION>
1994 1993 1992
---------- ----------- -----------
<S> <C> <C> <C>
Current:
Federal $3,415,816 $1,558,663 $2,947,596
State 800,000 141,166 560,598
Foreign 408,048 94,837 23,309
---------- ---------- ----------
Total current 4,623,864 1,794,666 3,531,503
Deferred:
Federal 1,716,378 (736,852) (640,770)
State 504,752 (216,693) (188,462)
---------- ---------- ----------
Total deferred 2,221,130 (953,545) (829,232)
---------- ---------- ----------
Total income tax expense $6,844,994 $ 841,121 $2,702,271
========== ========== ==========
</TABLE>
The income tax expense (benefit) applicable to continuing and discontinued
operations is as follows for the years ended December 31:
<TABLE>
<CAPTION>
1994 1993 1992
---------- ----------- -----------
<S> <C> <C> <C>
Provision for continuing operations:
Current $4,535,213 $1,484,005 $2,695,384
Deferred 2,141,058 (979,567) (605,261)
---------- ---------- ----------
Total provision for continuing operations 6,676,271 504,438 2,090,123
Provisions for discontinued operations:
Current 88,651 310,661 836,164
Deferred 80,072 26,022 (224,016)
---------- ---------- ----------
Total provision for discontinued operations 168,723 336,683 612,148
---------- ---------- ----------
Total income tax expense $6,844,994 $ 841,121 $2,702,271
========== ========== ==========
</TABLE>
-29-
<PAGE>
Notes To Consolidated Financial Statements (Cont'd)
Income Taxes (Cont'd)
A reconciliation of statutory federal income tax to the income tax expense on
the income from continuing operations is as follows for the years ended December
31:
<TABLE>
<CAPTION>
1994 1993 1992
----------- --------- -----------
<S> <C> <C> <C>
Statutory federal income tax expense $6,343,072 $364,282 $2,097,700
Increase (decrease) in taxes resulting from:
Tax benefit from sale of PDM Saudi Arabia (525,936) - -
State taxes less federal benefit 521,482 68,090 341,427
Other, net 337,653 72,066 (349,004)
---------- -------- ----------
Income tax expense-continuing operations $6,676,271 $504,438 $2,090,123
========== ======== ==========
</TABLE>
Deferred taxes reflected the tax effects of differences between the amounts
recorded as assets and liabilities for financial reporting purposes and the
amounts recorded for income tax purposes. The tax effects of significant
temporary differences giving rise to deferred tax assets and liabilities are as
follows for December 31:
<TABLE>
<CAPTION>
1994 1993
---------- ----------
<S> <C> <C>
Deferred tax assets:
Casualty and liability insurance $2,851,135 $4,503,964
Contract related amounts 156,233 553,450
Inventory 369,115 569,402
Employee benefits 1,644,065 1,486,094
Accounts receivable allowance 347,200 390,320
Accrued expenses related to flood - 435,450
---------- ----------
Total deferred tax assets $5,367,748 $7,938,680
========== ==========
Deferred tax liabilities:
Accelerated depreciation $3,016,078 $3,432,995
Pensions 2,210,302 2,070,754
Other 346,685 196,912
---------- ----------
Total deferred tax liabilities $5,573,065 $5,700,661
========== ==========
</TABLE>
Income taxes paid for the years ended December 31, 1994, 1993 and 1992 were
approximately $3.7 million, $1.1 million and $5.6 million, respectively.
-30-
<PAGE>
Notes To Consolidated Financial Statements (Cont'd)
Stock Plan
The Stock Option Plan of 1990 (Plan) provides for grants of incentive stock
options to officers and key employees. The Plan is administered by a committee
consisting of at least three directors of the Company, none of whom are eligible
to participate in the Plan. A total of 200,000 shares of the Company's Common
Stock may be issued pursuant to the Plan. Grant prices are determined by the
committee and are established at the fair market value of the Company's Common
Stock at the date of grant. Options vest over a four-year period in equal
annual amounts, or over such other period as the committee shall determine, and
may be accelerated in the event of certain other circumstances such as death or
disability of the optionee. These options generally expire within ten years
after the date of grant.
The following table summarizes option activity for the two years ended
December 31, 1994:
<TABLE>
<CAPTION>
Option Price Range
Shares Per Share
---------- ------------------
<S> <C> <C>
Outstanding on December 31, 1992 76,500 $30.75-$37.25
------- -------------
Exercised (2,500) $30.75
Surrendered (8,500) $30.75
------- -------------
Outstanding on December 31, 1993 65,500 $30.75-$37.25
======= =============
Outstanding on December 31, 1994 65,500 $30.75-$37.25
======= =============
Exercisable:
December 31, 1993 43,625 $30.75-$37.25
December 31, 1994 61,500 $30.75-$37.25
======= =============
Available for future grant:
December 31, 1993 130,000
December 31, 1994 130,000
=======
</TABLE>
-31-
<PAGE>
Notes To Consolidated Financial Statements (Cont'd)
Contingencies
There are various claims and legal proceedings against the Company arising from
the normal course of business. As previously reported, in May 1984, Washington
Public Power Supply System (WPPSS) filed a complaint against the Company and its
surety in the United States District Court for the Eastern District of
Washington. Various claims in connection with retrofit work performed by the
Company at Nuclear Unit #2, Hanford, Washington, were alleged. Four alternative
damages theories were presented, ranging in amounts from $53 million to $86
million.
In January 1986, the District Court granted partial summary judgment and
dismissed some of WPPSS' claims. After a trial in June 1986, and a jury verdict
favorable to the Company, the Court entered final judgment dismissing all the
claims of WPPSS against the Company. WPPSS filed a notice of appeal to the
United States Court of Appeals for the Ninth Circuit. In May 1989, the Court of
Appeals affirmed the judgment of the District Court that the Company was not
liable for breach of warranties in connection with its construction of the
retrofit of the containment vessel at Nuclear Unit #2, Hanford, Washington.
However, the Court of Appeals remanded the case to the District Court for a
determination of whether WPPSS had released its claims against the Company for
breach of contract with respect to the Company's retrofit contract.
After several preliminary rulings in 1990 in favor of the Company, the
District Court entered an order dismissing WPPSS' complaint with prejudice on
May 1, 1991.
In an order filed January 26, 1993, the United States Court of Appeals
affirmed the judgment of the District Court in part, but reversed and again
remanded the case to the District Court for determination of whether WPPSS had
released its claims against the Company for breach of contract with respect to
the retrofit contract, including its original claims for consequential damages.
A jury trial was held in the District Court commencing June 27, 1994. On July
11, 1994, the jury returned a verdict in the Company's favor, ruling that WPPSS
has no breach of contract claims against the Company by reason of the
containment vessel retrofit. WPPSS has again filed notice of appeal to the
United States Court of Appeals for the Ninth Circuit.
Although counsel is unable to predict with certainty the ultimate outcome,
management and counsel believe the Company has significant and meritorious
defenses to any claims, and intend to pursue them vigorously.
The Company's operations, including idle facilities and other property, are
subject to and affected by federal, state and local laws and regulations
regarding the protection of the environment. The Company accrues for
environmental costs where such obligations are either known or considered
probable and can be reasonably estimated.
-32-
<PAGE>
Notes To Consolidated Financial Statements (Cont'd)
The Company is participating as a potentially responsible party (PRP) at three
different sites pursuant to proceedings under the Comprehensive Environmental
Response, Compensation and Liability Act (CERCLA). Other parties have also been
identified as PRP's at the sites. Investigative and/or remedial activities are
ongoing. The Company believes, based upon information presently available to
it, that such future costs will not have a material effect on the Company's
financial position, results of operations or liquidity. However, the imposition
of more stringent requirements under environmental laws or regulations, new
developments or changes regarding site cleanup costs or the allocation of such
costs among PRP's or a determination that the Company is potentially responsible
for the release of hazardous substances at sites other than those currently
identified, could result in additional costs.
Management believes it is improbable that the ultimate outcome of any matter
currently pending against the Company will materially affect the financial
position of the Company; accordingly, no provision for such liability has been
recorded in the accompanying financial statements.
Commitments
On April 19, 1990, the Company entered into agreements with members of the
Jackson family, principal stockholders, to purchase shares of the Company's
Common Stock upon the stockholder's death. Consummation of the transactions
with the estates of such shareholders were, in each case, contingent upon the
amount of such estate's holdings in shares of the Company's Common Stock. The
requirements to purchase these shares have not been met.
-33-
<PAGE>
<TABLE>
<CAPTION>
Business Segment Information Years ended December 31,
1994 1993 1992
------------ ------------ ------------
<S> <C> <C> <C>
Earned Revenue
Engineered Construction Division $177,337,825 $128,444,623 $187,926,709
Steel Construction 101,871,144 95,755,727 81,610,826
Steel Service Centers 128,851,654 99,506,546 85,505,278
------------ ------------ ------------
$408,060,623 $323,706,896 $355,042,813
============ ============ ============
Income (Loss) from Operations
Engineered Construction Division $ 11,180,896 $ (1,716,243) $ 5,964,269
Steel Construction 2,767,438 430,963 394,589
Steel Service Centers 7,528,151 5,068,260 5,032,076
Corporate and other (5,968,768) (6,472,186) (6,710,268)
------------ ------------ ------------
$ 15,507,717 $ (2,689,206) $ 4,680,666
============ ============ ============
Identifiable Assets
Engineered Construction Division $ 61,826,921 $ 49,564,994 $ 49,092,935
Steel Construction 75,024,678 48,941,685 44,828,049
Steel Service Centers 41,421,278 33,221,009 25,648,817
Corporate and other 33,243,223 33,904,461 30,723,794
------------ ------------ ------------
Continuing operations 211,516,100 165,632,149 150,293,595
Discontinued operations 2,685,379 12,170,808 15,780,805
------------ ------------ ------------
$214,201,479 $177,802,957 $166,074,400
============ ============ ============
Capital Expenditures
Engineered Construction Division $ 3,868,223 $ 881,772 $ 1,576,912
Steel Construction 660,540 1,493,362 1,783,155
Steel Service Centers 3,375,412 1,561,748 1,120,754
Corporate and other 14,845 4,684 10,300
------------ ------------ ------------
Continuing operations 7,919,020 3,941,566 4,491,121
Discontinued operations 23,987 158,920 181,246
------------ ------------ ------------
$ 7,943,007 $ 4,100,486 $ 4,672,367
============ ============ ============
Depreciation
Engineered Construction Division $ 1,906,768 $ 1,543,513 $ 1,722,082
Steel Construction 1,902,787 1,674,637 1,628,400
Steel Service Centers 1,192,176 883,991 911,584
Corporate and other 35,024 43,244 52,058
------------ ------------ ------------
Continuing operations 5,036,755 4,145,385 4,314,124
Discontinued operations 593,254 631,520 619,159
------------ ------------ ------------
$ 5,630,009 $ 4,776,905 $ 4,933,283
============ ============ ============
</TABLE>
-34-
<PAGE>
In 1994, Steel Construction's earned revenue includes $48.3 million related to
the McCormick Place Exhibition Center. In 1993, Steel Construction's earned
revenue included $39.5 million related to the United States Post Office project.
For the year ended 1992, neither any single customer, nor any customer outside
the United States, accounted for 10 percent or more of total earned revenue.
-35-
<PAGE>
Two Year Quarterly Results of Operation
As indicated in the Notes To Consolidated Financial Statements, during the
fourth quarter of 1994, the Company sold a substantial portion of CVI
Incorporated. The results of operations have been restated to report CVI as a
discontinued operation as follows:
<TABLE>
<CAPTION>
Quarters ended
----------------------------------------------------
March 31, June 30, September 30, December 31,
---------- --------- -------------- -------------
<S> <C> <C> <C> <C>
1994
Earned revenue as reported $98,483 $105,818 $111,861 $106,980
Less discontinued operations 3,261 5,160 4,357 2,304
------- -------- -------- --------
Earned revenue from continuing operations 95,222 100,658 107,504 104,676
------- -------- -------- --------
Gross profit as reported 9,680 12,004 13,513 17,678
Less discontinued operations 440 825 718 471
------- -------- -------- --------
Gross profit from continuing operations 9,240 11,179 12,795 17,207
------- -------- -------- --------
Income before taxes as reported 604 3,695 6,801 7,805
Less discontinued operations (628) (113) (83) 1,073
------- -------- -------- --------
Income before taxes from continuing operations 1,232 3,808 6,884 6,732
------- -------- -------- --------
Income from continuing operations 758 2,300 4,805 4,117
Income (loss) from discontinued operations (388) (70) (51) 589
------- -------- -------- --------
Net income $ 370 $ 2,230 $ 4,754 $ 4,706
======= ======== ======== ========
Net income (loss) per share:
Continuing operations $ .33 $ .99 $ 2.06 $ 1.77
Discontinued operations (.17) (.03) (.02) .25
------- -------- -------- --------
Net income per share $ .16 $ .96 $ 2.04 $ 2.02
======= ======== ======== ========
1993
Earned revenue as reported $81,909 $ 90,374 $ 92,320 $ 89,744
Less discontinued operations 7,674 8,861 6,706 7,399
------- -------- -------- --------
Earned revenue from continuing operations 74,235 81,513 85,614 82,345
------- -------- -------- --------
Gross profit as reported 8,082 7,379 10,716 9,546
Less discontinued operations 1,889 1,262 1,058 1,185
------- -------- -------- --------
Gross profit from continuing operations 6,193 6,117 9,658 8,361
------- -------- -------- --------
Income (loss) before taxes as reported (1,419) (1,857) 4,773 382
Less discontinued operations 767 256 (10) (205)
------- -------- -------- --------
Income (loss) before taxes from continuing operations (2,186) (2,113) 4,783 587
------- -------- -------- --------
Income (loss) from continuing operations (1,353) (1,245) 2,852 313
Income (loss) from discontinued operations 474 158 (6) (155)
------- -------- -------- --------
Net income (loss) $ (879) $ (1,087) $ 2,846 $ 158
======= ======== ======== ========
Net income (loss) per share:
Continuing operations $ (.58) $ (.54) $ 1.22 $ .14
Discontinued operations .20 .07 0.00 (.07)
------- -------- -------- --------
Net income (loss) per share $ (.38) $ (.47) $ 1.22 $ .07
======= ======== ======== ========
</TABLE>
-36-
<PAGE>
A separate computation of earnings per share is made for each quarter presented.
The dilutive effect on earnings per share resulting from the assumed exercise of
stock options is included in each quarter in which dilution occurs. The
earnings per share computation for the year is a separate annual calculation.
Accordingly, the sum of the quarterly earnings per share amounts will not
necessarily equal the earnings per share for the year.
Item 9. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure
Not applicable
-37-
<PAGE>
PART III
Item 10. Directors and Executive Officers of the Registrant (1)
Regarding the directors of the Registrant, reference is made to the
information set forth under the caption "Election of Directors" in the Company's
definitive Proxy Statement anticipated to be dated March 31, 1995 (Proxy
Statement) which information is incorporated herein by reference.
The principal executive officers of the Company and their recent business
experience are as follows:
W. R. Jackson, age 86
Director since 1940;
Chairman Emeritus since 1988; formerly Chairman of the Board since 1971.
Mr. Jackson has been with the Company since 1936.
P. O. Elbert, age 64 (2)
Director since 1988;
Chairman of the Board of the Company since 1990; formerly President of the
Company since 1988 and President, PDM Structural Group since 1987. Mr. Elbert
joined the Company in 1987. Prior to 1987, Mr. Elbert was Vice Chairman of
Chicago Steel Corporation since 1986; formerly a partner of Elbert and McKee
Company since 1984; formerly President and Chief Executive Officer of Flint
Steel Corporation since 1979; and formerly Group Vice President of Inryco,
Inc., a subsidiary of Inland Steel Company since 1969.
W. W. McKee, age 56 (3)
Director since 1988;
President and Chief Executive Officer of the Company since 1990; formerly
President, PDM Plate Group since May 1987 and formerly Executive Vice
President, PDM Structural Group since April 1987. Mr. McKee joined the
Company in 1987. Prior to 1987, Mr. McKee was Secretary of Chicago Steel
Corporation since 1986; formerly a partner of Elbert and McKee Company since
1984; formerly a consultant with McKee and Associates since 1983; formerly
President of Hogan Manufacturing since 1980; and formerly President of Herrick
Corporation since 1973.
R. A. Byers, age 47 (3)
Treasurer since 1988 and Vice President, Finance and Administration since
1987; formerly Vice President, Finance since 1984; formerly Controller since
1982; formerly Assistant Controller since 1981; formerly Manager of Financial
Reporting since 1979; and formerly with Ernst & Young LLP for ten years.
-38-
<PAGE>
Item 10. Directors and Executive Officers of the Registrant (Cont'd)
T. R. Lloyd, age 46 (3)
Secretary and General Counsel since 1990; formerly Senior Attorney of Buchanan
Ingersoll Professional Corporation, since 1989; formerly Vice President,
Secretary and General Counsel for Arch Mineral Corporation since 1984; and
formerly Director and Secretary of U.S. Steel Mining Co., Inc. since 1979.
____________________
(1) Except where otherwise indicated, all references are to positions held with
Pitt-Des Moines, Inc. Each executive officer of the Company is elected
annually by the Board of Directors until his successor is elected and
qualified, and each has served continually as an officer since first
elected.
(2) The Company has a severance agreement with Mr. Elbert.
(3) The Company has agreements with each of Messrs. McKee, Byers and Lloyd
covering, among other things, their positions as executive officers of the
Company after a change of control.
Item 11. Executive Compensation
Reference is made to the information set forth under the captions "Board of
Directors and Committees of the Board," "Executive Compensation and Other
Information," "Compensation Committee Interlocks and Insider Participation"
appearing in the Company's Proxy Statement, which information is incorporated
herein by reference; provided, however, that the information set forth under the
captions "Compensation Committee Report on Executive Compensation" and
"Performance Graph" in the proxy Statement shall not be deemed to be soliciting
material or to be "filed" with the Commission or subject to Regulation 14A or
14C (other than as provided in Item 402 of Regulation S-K) or to the liabilities
of Section 18 of the Securities Exchange Act of 1934, as amended.
Item 12. Security Ownership of Certain Beneficial Owners and Management
Reference is made to the information contained under the captions
"Stockholdings of Management" and "Principal Holders of Common Stock" in the
Company's Proxy Statement which information is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions
Reference is made to the information contained under the caption "Compensation
Committee Interlocks and Insider Participation" in the Company's Proxy Statement
which information is incorporated herein by reference.
-39-
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) Documents filed as part of this Report:
1. The following consolidated financial statements of Pitt-Des Moines, Inc.
and subsidiaries are included in Item 8:
Page Number
in This Report
--------------
Report of Independent Auditors 15
Consolidated Statements of Income -- Years Ended
December 31, 1994, 1993 and 1992 16
Consolidated Balance Sheets as of
December 31, 1994 and 1993 17-18
Consolidated Statements of Cash Flows -- Years Ended
December 31, 1994, 1993 and 1992 19
Consolidated Statements of Stockholders' Equity --
Years Ended December 31, 1994, 1993 and 1992 20
Notes To Consolidated Financial Statements 21-37
2. The following consolidated financial statement schedule of Pitt-
Des Moines, Inc. and subsidiaries is included in Item 14(d):
II. Valuation and Qualifying Accounts for years ended
December 31, 1994, 1993 and 1992 46
-40-
<PAGE>
Item 14. Exhibits, Financial Statement Schedules and Reports on form 8-K
(Cont'd)
All other schedules are omitted because they are not applicable or
the required information is shown in the consolidated financial
statements or notes thereto.
3. Exhibits:
3.1 Articles of Incorporation, as amended to date (filed as Exhibit
3.1 to the Company's quarterly report on Form 10-Q for the quarter
ended September 30, 1989 and incorporated herein by reference)
3.2 Bylaws, as amended to date (filed as Exhibit 3.2 to the Company's
quarterly report on Form 10-Q for the quarter ended September 30, 1989
and incorporated herein by reference)
4.1 Amended and Restated Credit Agreement dated as of June 30, 1992
by and among Pitt-Des Moines, Inc. and Pittsburgh National Bank,
Wells Fargo Bank, N.A. and American National Bank (filed as Exhibit
4.1 to the Company's annual report on Form 10-K for the year ended
December 31, 1992 and incorporated herein by reference)
4.2 First Amendment dated November 23, 1992 to Credit Agreement filed
as Exhibit 4.1 hereto (filed as Exhibit 4.2 to the Company's annual
report on Form 10-K for the year ended December 31, 1992 and
incorporated herein by reference)
4.3 Second Amendment dated June 10, 1993 to Credit Agreement filed as
Exhibit 4.1 hereto (filed as Exhibit 4.1 to the Company's quarterly
report on Form 10-Q for the quarter ended June 30, 1992 and
incorporated herein by reference)
4.4 Third Amendment dated December 16, 1993 to Credit Agreement filed as
Exhibit 4.1 hereto (filed as Exhibit 4.2 to the Company's annual
report on Form 10-K for the year ended December 31, 1993 and
incorporated herein by reference)
4.5 Fourth Amendment dated June 14, 1994 to Credit Agreement filed as
Exhibit 4.1 hereto (filed as Exhibit 4.1 to the Company's quarter
report on Form 10-Q for the quarter ended June 30, 1994 and
incorporated herein by reference)
4.6 Fifth Amendment dated December 8, 1994 to Credit Agreement filed
as Exhibit 4.1 hereto (filed herewith)
10.1* Agreement executed by and between the Company and W. W. McKee (filed as
Exhibit 10.1 to the Company's annual report on Form 10-K for the year
ended December 31, 1990 and incorporated herein by reference)
10.2* Agreement executed by and between the Company and R. A. Byers
(filed as Exhibit 10.1 to the Company's quarterly report on Form 10-Q
for the quarter ended June 30, 1991 and incorporated herein by
reference)
-41-
<PAGE>
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(Cont'd)
10.3* Agreement executed by and between the Company and T. R. Lloyd
(filed as Exhibit 10.2 to the Company's quarterly report on Form 10-Q
for the quarter ended June 30, 1991 and incorporated herein by
reference)
10.4* Severance Pay Agreement executed by and between the Company and
P. O. Elbert (filed as Exhibit 10.3 to the Company's quarterly report
on Form 10-Q for the quarter ended June 30, 1991 and incorporated
herein by reference)
10.5* Management Incentive Plan (filed as Exhibit 10.5 to the Company's
annual report on Form 10-K for the year ended December 31, 1992 and
incorporated herein by reference)
10.6* Summary of Company's 1994 Management Incentive Plan (MIP) (filed
herewith)
10.7* Retirement Plan for PDM Outside Directors as amended, effective
May 26, 1994 (filed herewith)
10.8* Stock Option Plan of 1990 (filed as Exhibit 4.01 to the Company's
Registration Statement No. 33-34787 on Form S-8 filed May 7, 1990 and
incorporated herein by reference)
10.9* Investment Letter and Registration Rights Agreement dated
September 21, 1993 by and between Pitt-Des Moines, Inc. and William W.
McKee, Jr. (filed as Exhibit 10.1 to the Company's quarterly report on
Form 10-Q for the quarter ended September 30, 1993 and incorporated
herein by reference)
10.10* Investment Letter and Registration Rights Agreement dated
September 21, 1993 by and between Pitt-Des Moines, Inc. and Phillip O.
Elbert (filed as Exhibit 10.2 to the Company's quarterly report on
Form 10-Q for the quarter ended September 30, 1993 and incorporated
herein by reference)
11 Computation of Per Share Earnings (filed herewith)
13 "Review of Operations" from Annual Report to Stockholders for
fiscal year ended December 31, 1994 (filed herewith)
21 Subsidiaries of Pitt-Des Moines, Inc. (filed herewith)
23 Consent of Independent Auditors, Ernst & Young LLP (filed herewith)
27 Financial Data Schedule
-42-
<PAGE>
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(Cont'd)
(b) Reports on Form 8-K:
There were no reports on Form 8-K filed during the quarter ended December
31, 1994.
------------------------
* Denotes management contract or compensatory plan or arrangement.
-43-
<PAGE>
Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
PITT-DES MOINES, INC.
March 29, 1995 By: /s/ Wm. W. McKee
----------------------------
Wm. W. McKee
President
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signatures Title Date
Principal Executive Officer:
/s/ Wm. W. McKee President, Chief March 29, 1995
------------------------------------ Executive Officer and
Wm. W. McKee Director
Principal Financial and Accounting Officer:
/s/ R. A. Byers Chief Financial Officer March 29, 1995
------------------------------------ and Chief Accounting
R. A. Byers Officer
Other Directors:
/s/ J. C. Bates Director March 29, 1995
------------------------------------
J. C. Bates
/s/ R. W. Dean Director March 29, 1995
------------------------------------
R. W. Dean
-44-
<PAGE>
Signatures (Cont'd)
Signatures Title Date
/s/ P. O. Elbert Director March 29, 1995
------------------------------------
P. O. Elbert
/s/ W. R. Jackson Director March 29, 1995
------------------------------------
W. R. Jackson
/s/ W. R. Jackson, Jr. Director March 29, 1995
------------------------------------
W. R. Jackson, Jr.
/s/ W. E. Lewellen Director March 29, 1995
------------------------------------
W. E. Lewellen
/s/ J. H. Long Director March 29, 1995
------------------------------------
J. H. Long
/s/ A. J. Paddock Director March 29, 1995
------------------------------------
A. J. Paddock
/s/ P. J. Townsend Director March 29, 1995
------------------------------------
P. J. Townsend
-45-
<PAGE>
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
Pitt-Des Moines, Inc.
<TABLE>
<CAPTION>
Additions Deductions(1)
------------ --------------
Balance at Charged to
Beginning of Costs and Credited Balance at End
Description Period Expenses to Asset of Period
----------- ------------ ---------- ---------- --------------
<S> <C> <C> <C> <C>
Deducted from accounts receivable
as allowance for doubtful accounts:
Year ended December 31, 1994 $975,000 $209,000 $261,000 $923,000
Year ended December 31, 1993 $1,011,000 $911,000 $947,000 $975,000
Year ended December 31, 1992 $1,013,000 $157,000 $159,000 $1,011,000
</TABLE>
---------------------
(1) Write-off of accounts deemed to be uncollectible
-46-
<PAGE>
EXHIBIT INDEX
3.1 Articles of Incorporation, as amended to date (filed as Exhibit 3.1 to
the Company's quarterly report on Form 10-Q for the quarter ended
September 30, 1989 and incorporated herein by reference)
3.2 Bylaws, as amended to date (filed as Exhibit 3.2 to the Company's
quarterly report on Form 10-Q for the quarter ended September 30, 1989
and incorporated herein by reference)
4.1 Amended and Restated Credit Agreement dated as of June 30, 1992 by and
among Pitt-Des Moines, Inc. and Pittsburgh National Bank, Wells Fargo
Bank, N.A. and American National Bank (filed as Exhibit 4.1 to the
Company's annual report on Form 10-K for the year ended December 31, 1992
and incorporated herein by reference)
4.2 First Amendment dated November 23, 1992 to Credit Agreement filed as
Exhibit 4.1 hereto (filed as Exhibit 4.2 to the Company's annual report
on Form 10-K for the year ended December 31, 1992 and incorporated herein
by reference)
4.3 Second Amendment dated June 10, 1993 to Credit Agreement filed as
Exhibit 4.1 hereto (filed as Exhibit 4.1 to the Company's quarterly
report on Form 10-Q for the quarter ended June 30, 1992 and incorporated
herein by reference)
4.4 Third Amendment dated December 16, 1993 to Credit Agreement filed as
Exhibit 4.1 hereto (filed as Exhibit 4.4 to the Company's annual report
on Form 10-K for the year ended December 31, 1993 and incorporated herein
by reference)
4.5 Fourth Amendment dated June 14, 1994 to Credit Agreement filed as
Exhibit 4.1 hereto (filed as Exhibit 4.1 to the Company's quarterly
report on Form 10-Q for the quarter ended June 30, 1994 and incorporated
herein by reference)
4.6 Fifth Amendment dated December 8, 1994 to Credit Agreement filed as
Exhibit 4.1 hereto (filed herewith)
10.1 Agreement executed by and between the Company and W. W. McKee (filed as
Exhibit 10.1 to the Company's annual report on Form 10-K for the year
ended December 31, 1990 and incorporated herein by reference)
10.2 Agreement executed by and between the Company and R. A. Byers (filed
as Exhibit 10.1 to the Company's quarterly report on Form 10-Q for the
quarter ended June 30, 1991 and incorporated herein by reference)
10.3 Agreement executed by and between the Company and T. R. Lloyd (filed
as Exhibit 10.2 to the Company's quarterly report on Form 10-Q for the
quarter ended June 30, 1991 and incorporated herein by reference)
-47-
<PAGE>
EXHIBIT INDEX (Cont'd)
10.4 Severance Pay Agreement executed by and between the Company and P. O.
Elbert (filed as Exhibit 10.3 to the Company's quarterly report on Form
10-Q for the quarter ended June 30, 1991 and incorporated herein by
reference)
10.5 Management Incentive Plan (filed as Exhibit 10.5 to the Company's
annual report on Form 10-K for the year ended December 31, 1992 and
incorporated herein by reference.
10.6 Summary of Company's 1994 Management Incentive Plan (MIP) (filed
herewith)
10.7 Retirement Plan for PDM Outside Directors as amended, effective May
26, 1994 (filed herewith)
10.8 Stock Option Plan of 1990 (filed as Exhibit 4.01 to the Company's
Registration Statement No. 33-34787 on Form S-8 filed May 7, 1990 and
incorporated herein by reference)
10.9 Investment Letter and Registration Rights Agreement dated September
21, 1993 by and between Pitt-Des Moines, Inc. and William W. McKee, Jr.
(filed as Exhibit 10.1 to the Company's quarterly report on Form 10-Q for
the quarter ended September 30, 1993 and incorporated herein by
reference)
10.10 Investment Letter and Registration Rights Agreement dated September
21, 1993 by and between Pitt-Des Moines, Inc. and Phillip O. Elbert
(filed as Exhibit 10.2 to the Company's quarterly report on Form 10-Q for
the quarter ended September 30, 1993 and incorporated herein by
reference)
11 Computation of Per Share Earnings (filed herewith)
13 "Review of Operations" from Annual Report to Stockholders for fiscal
year ended December 31, 1994 (filed herewith)
21 Subsidiaries of Pitt-Des Moines, Inc. (filed herewith)
23 Consent of Independent Auditors, Ernst & Young LLP (filed herewith)
27 Financial Data Schedule
-48-
<PAGE>
Exhibit 4.6
FIFTH AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT
THIS FIFTH AMENDMENT ("Fifth Amendment") made as of December 8, 1994, by
and among PITT-DES MOINES, INC., a Pennsylvania corporation, as borrower (the
"Borrower"), PNC BANK, NATIONAL ASSOCIATION (formerly Pittsburgh National Bank),
WELLS FARGO BANK, N.A. and AMERICAN NATIONAL BANK, as lenders (individually
"PNC", "Wells" and "American" and a "Bank" and collectively the "Banks"), PNC
BANK, NATIONAL ASSOCIATION (formerly Pittsburgh National Bank) as agent for the
Banks (in such capacity the "Agent"), and PNC BANK, NATIONAL ASSOCIATION
(formerly Pittsburgh National Bank), as the issuer of Letters of Credit (in such
capacity the "Issuing Bank"), amends certain provisions of that certain Amended
and Restated Credit Agreement dated as of June 30, 1992 as previously amended by
the First Amendment to Amended and Restated Credit Agreement dated as of
November 10, 1992, the Second Amendment to Amended and Restated Credit Agreement
dated as of June 10, 1993, the Third Amendment to Amended and Restated Credit
Agreement dated as of December 16, 1993 and the Fourth Amendment to Amended and
Restated Credit Agreement dated as of June 24, 1994 (said Credit Agreement as
amended from time to time herein the "Original Credit Agreement").
WITNESSETH:
WHEREAS, the Borrower, the Banks, the Issuing Bank and the Agent wish to
amend the Original Credit Agreement as provided herein.
NOW, THEREFORE, in consideration of the mutual promises and the mutual
covenants made herein and in the Original Credit Agreement and other valuable
consideration and with the intent to be legally bound hereby, the parties hereto
agree as follows:
ARTICLE I
AMENDMENTS TO ORIGINAL CREDIT AGREEMENT
Section 1.01 Amendment to Subsection 1.1a of the Original Credit
---------------------------------------------------
Agreement. Section 1.1a of the Original Credit Agreement is hereby amended (i)
---------
to delete the reference to "Thirty Million Dollars ($30,000,000)" in the first
sentence and substitute in place thereof a reference to "Forty Million Dollars
($40,000,000)" and (ii) to delete the reference to "$30,000,000" in the second
sentence and substitute in place thereof a reference to "the Revolving Credit
Commitment".
<PAGE>
Exhibit 4.6 (Cont'd)
FIFTH AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT (Cont'd)
Section 1.02 Amendment to Subsection 1.1b of the Original Credit
---------------------------------------------------
Agreement. Section 1.1b of the Original Credit Agreement is hereby amended to
---------
delete the chart set forth therein and to substitute in place thereof the
following chart:
<TABLE>
<CAPTION>
=====================================================================
Maximum Dollar Amount On and After the
Name Pro Rata Share Fifth Amendment Effective Date to and
Including the Maturity Date
<S> <C> <C>
---------------------------------------------------------------------
PNC 40% $16,000,000
---------------------------------------------------------------------
Wells 40% $16,000,000
---------------------------------------------------------------------
American 20% $ 8,000,000
=====================================================================
</TABLE>
Section 1.03 Amendment to Subsection 1.2a of the Original Credit
---------------------------------------------------
Agreement. Section 1.2a of the Original Credit Agreement is hereby amended to
---------
delete the reference to "$30,000,000" and to substitute in place thereof a
reference to "the Revolving Credit Commitment".
Section 1.04 Amendment to Section 3.4 of the Original Credit Agreement.
---------------------------------------------------------
Section 3.4 of the Original Credit Agreement is hereby amended to delete the
reference to "the Borrower's Form 10-K filed with the Securities and Exchange
Commission on or about March 30, 1992" and substitute in place thereof a
reference to "the Borrower's Form 10-Q filed with the Securities and Exchange
Commission on or about November 14, 1994".
Section 1.05 Amendment to Section 3.09(xi) of the Original Credit
----------------------------------------------------
Agreement. Section 3.09(xi) of the Original Credit Agreement shall be amended
---------
and restated in its entirety as follows:
Except and to the extent reflected in the Borrower's consolidated
balance sheet, no Benefit Arrangement provides post-retirement benefits
other than pensions which would be required to be accounted for in the
income statement, balance sheet and footnotes of the financial report of
the Borrower or any ERISA Affiliate in the manner described in the
Financing Accounting Standards Board, Proposed Statement of Financial
Accounting Standards, Employer's Accounting for Post-Retirement Benefits
--------------------------------------------------
Other Than Pensions, if the same were effective for the current fiscal
--------------------
year of the Borrower or any ERISA affiliate.
<PAGE>
Exhibit 4.6 (Cont'd)
FIFTH AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT (Cont'd)
Section 1.06 Amendment to Subsection 9.1 of Original Credit Agreement.
---------------------------------------------------------
(i) The following definitions set forth in Subsection 9.1 of the Original Credit
Agreement are hereby amended and restated as follows:
"Revolving Credit Commitment" means the several undertakings by
the Banks to make a $40,000,000 revolving credit facility available to
the Borrower as set forth in Section 1.1 hereof.
"Revolving Credit Note" means any individual promissory note of
the Borrower evidencing Indebtedness of the Borrower under the Revolving
Credit Commitment, which note is in the form attached as Exhibit "A" to
this Agreement, and all extensions, renewals, amendments, substitutions
or replacements of such promissory notes, including, any Second Amended
and Restated Revolving Credit Note.
(ii) The following new definitions are inserted into Section 9.1 of the
Original Credit Agreement in alphabetical order:
"Amended and Restated Revolving Credit Note" means any Amended and
Restated Revolving Credit Note, substantially in the form of Exhibit "A"
and dated December 8, 1994.
"Fifth Amendment" shall mean that Fifth Amendment to Amended and
Restated Credit Agreement dated as of December 8, 1994 between the
Borrower and the Banks.
"Fifth Amendment Effective Date" shall mean the date when all of the
conditions set forth in Section 3.04 of the Fifth Amendment are satisfied
or waived.
Section 1.07 Amendment to the Exhibits to the Original Credit Agreement.
----------------------------------------------------------
Exhibit "A" to the Original Credit Agreement shall be deleted and Exhibit "A"
attached to the Fifth Amendment shall be substituted in place thereof.
Section 1.08 Amendments to Schedules to the Original Credit Agreement.
--------------------------------------------------------
Schedule 3.1b, Schedule 3.9 and Schedule 3.16 to the Original Credit Agreement
are deleted and Schedule 3.1b, Schedule 3.9 and Schedule 3.16 attached to this
Fifth Amendment are substituted in place thereof.
<PAGE>
Exhibit 4.6 (Cont'd)
FIFTH AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT (Cont'd)
Section 1.09 No Other Amendments. The amendments to the Original Credit
-------------------
Agreement set forth in Sections 1.01 through and including Section 1.08 do not
either implicitly or explicitly alter, waive or amend, except as expressly
provided in this Fifth Amendment, the provisions of the Original Credit
Agreement. The amendments set forth in Sections 1.01 through and including
Section 1.08 hereof do not waive, now or in the future, compliance with any
other covenant, term or condition to be performed or complied with nor do they
impair any rights or remedies of the Banks, the Issuing Bank or the Agent under
the Original Credit Agreement with respect to any such violation.
ARTICLE II
BORROWER'S SUPPLEMENTAL REPRESENTATIONS
As an inducement to the Banks, the Issuing Bank and the Agent to enter
into this Fifth Amendment hereunder, the Borrower represents and warrants that:
Section 2.01. Incorporation by Reference. Borrower hereby incorporates
--------------------------
herein by reference and repeats herein for the benefit of the Banks, the Issuing
Bank and the Agent the representations and warranties made by it in Sections 3.1
through 3.20, both inclusive, of the Original Credit Agreement and for purposes
hereof such representations and warranties, shall be deemed to extend to and
cover this Fifth Amendment and any loan document related thereto.
ARTICLE III
MISCELLANEOUS
Section 3.01 Ratification of Terms. This Fifth Amendment shall be
---------------------
construed in connection with and as part of the Original Credit Agreement.
Except as expressly amended by prior Amendments to the Credit Agreement and this
Fifth Amendment, the Original Credit Agreement and each and every
representation, warranty, covenant, term and condition contained therein is
specifically ratified and confirmed.
Section 3.02 Counterparts. This Fifth Amendment may be executed in any
------------
number of counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be an original,
but all of which together shall constitute one and the same instrument.
Delivery of an executed counterpart of a signature page to this Fifth Amendment
by telecopier shall be effective as of delivery of a manually executed
counterpart of this Fifth Amendment.
Section 3.03 Capitalized Terms. Except for proper nouns and as
-----------------
otherwise defined herein, capitalized terms used herein shall have the meanings
ascribed to them in the Original Credit Agreement, as amended hereby.
<PAGE>
Exhibit 4.6 (Cont'd)
FIFTH AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT (Cont'd)
Section 3.04 Conditions Precedent. This Fifth Amendment shall become
--------------------
effective (the "Amendment Effective Date") on the date on which Borrower shall
provide to the Banks, the Issuing Bank and the Agent the following:
(A) A duly executed counterpart original of this Fifth Amendment;
(B) A duly executed original Second Amended and Restated Revolving
Credit Note for each Bank;
(C) Updated Schedules to the Original Credit Agreement, as necessary;
(D) A certificate of the chief financial officer of the Borrower
certifying that, as of the date of this Fifth Amendment, no Event of Default
shall have occurred and be continuing and no event, condition, act or omission
has occurred and is continuing which, with the passage of time, the giving of
notice or both, would constitute a Event of Default, or would result from the
execution of this Fifth Amendment;
(E) A certified copy of the corporate action of the Borrower
authorizing the execution and delivery of the performance under this Fifth
Amendment;
(F) A certificate of incumbency that certifies the names of the
officers of the Borrower authorized to sign this Agreement and all supplemental
documentation and which contains a true signature of each such officer;
(G) A certificate, duly certified as of the date hereof by the
secretary of assistant secretary of the Borrower stating that (i) the Articles
of Incorporation of the Borrower delivered to the Agent on June 29, 1990 remain
in full force and effect on the date hereof and have not been amended or
modified in any manner and (ii) the by-laws of the Borrower delivered to the
Agent on June 29, 1990 remain in full force and effect on the date hereof and
have not been amended or modified in any manner;
(H) A good standing certificate from the Secretary of State of
Pennsylvania;
(I) Such other instruments, documents and opinions of counsel as the
Agent shall reasonably require, all of which shall be satisfactory in form and
content to the Agent and its special counsel, Tucker Arensberg, P.C.
Section 3.05 Effective Date. From and after the Amendment Effective
--------------
Date, all references in the Original Credit Agreement to the Original Credit
Agreement shall be deemed to be references to the Original Credit Agreement as
amended hereby.
<PAGE>
Exhibit 4.6 (Cont'd)
FIFTH AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT (Cont'd)
Section 3.06 Entire Agreement. This Fifth Amendment contains the entire
----------------
agreement between the parties relating to the subject matter hereof; there are
merged herein all prior representations, promises and conditions, whether oral
or written, in connection with the subject matter hereof, and any
representation, promise or condition not incorporated herein shall not be
binding upon the parties.
Section 3.07 Severability. Whenever possible each provision of this
------------
Fifth Amendment shall be interpreted in such manner as to be effective and valid
under applicable law but if any provision of this Fifth Amendment or any part of
such provision shall be prohibited by or invalid under applicable law, such
provision of part thereof shall be ineffective to the extent of such prohibition
or invalidity without invalidating the remainder of such provision or the
remaining provisions of this Fifth Amendment.
Section 3.08 Governing Law. THIS FIFTH AMENDMENT AND THE RIGHTS AND
-------------
OBLIGATIONS HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE
LAWS OF THE COMMONWEALTH OF PENNSYLVANIA WITHOUT REGARD TO THE PROVISIONS
THEREOF REGARDING CONFLICTS OF LAW.
Section 3.09 Headings. The headings of this Fifth Amendment are for
--------
purposes of reference only and shall not limit or otherwise affect the meaning
thereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
Exhibit 4.6 (Cont'd)
FIFTH AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT (Cont'd)
IN WITNESS WHEREOF, the parties hereto, with the intent to be legally
bound hereby have caused this Fifth Amendment to be duly executed by their
proper and duly authorized officers as of the day and year first above written.
ATTEST: (SEAL) PITT-DES MOINES, INC.
/s/ Thomas R. Lloyd /s/ Richard A. Byers
---------------------- ----------------------------------
Name: Thomas R. Lloyd Name: Richard A. Byers
Title: Secretary Title: Vice President Finance
and Administration
PNC BANK, NATIONAL ASSOCIATION
(formerly Pittsburgh National
Bank) as a Bank, as the Issuing
Bank and as the Agent
/s/ Louann E. Tronsberg
----------------------------------
Name: Louann E. Tronsberg
Title: Vice President
WELLS FARGO BANK, N.A.
/s/ Stephen M. Smith
----------------------------------
Name: Stephen M. Smith
Title: Assistant Vice President
AMERICAN NATIONAL BANK
/s/ James Popp
----------------------------------
Name: James Popp
Title:
----------------------------
<PAGE>
Exhibit 10.6
SUMMARY OF COMPANY'S 1994 MANAGEMENT INCENTIVE PLAN (MIP)
Pitt-Des Moines, Inc.
Under the terms of the MIP, a minimum rate of return of (threshold) on
stockholders' equity must be achieved before bonuses can be awarded. The
threshold for executive officers was established at the after-tax cost of
capital on the assumption that returns in excess of the threshold would lead to
increases in stockholder value. Once this criteria is met, the total amount of
bonus available for distribution to eligible executive officers, including the
Company's Chief Executive Officer ("CEO") under the MIP is based on a percentage
in excess of the minimum return on stockholders' equity. Individual bonus
amounts paid to the Company's executive officers for services rendered in 1994,
including the CEO, were based on a pre-determined percentage limitation on each
individual's base salary (in no case does the applicable limit exceed 100% of
base salary) and the percentage of the overall MIP target achieved. These pre-
determined percentages were established by the Compensation Committee.
Under the terms of the MIP, the Company's eligible executive officers were
entitled to receive and were awarded bonuses under the MIP for the year ended
December 31, 1994.
<PAGE>
Exhibit 10.7
RETIREMENT PLAN FOR PDM NON-EMPLOYEE DIRECTORS
(Effective for Directors retired or deceased after May 26, 1994.)
Pitt-Des Moines, Inc.
1. Definition
This Retirement Plan is for the benefit of present and future Directors who,
after attainment of age 65, resign from the Board of Directors or die while
serving as a member of the Board of Directors, and who have completed five years
of service as a non-employee Director, and who do not have a vested right to a
benefit under any pension plan of the Company or any subsidiary of the Company.
Such person shall be referred to for the purpose of this Pension Plan as a
Qualifying Director.
2. Benefits
A Qualifying Director will be entitled to receive a percentage (payable
quarerly) of the annual directorship retainer (excluding fees or retainers for
committee membership or for attendance at any meeting) in effect on the date of
his/her resignation or retirement. After five years of service, the entitlement
is 50 percent and this entitlement will increase 10 percent for each completed
year of service up to and including 100 percent. No further increase in the
percentage of entitlement will occur after 10 years of service, and there is no
entitlement if retirement or resignation occurs prior to five years of service
as a Board Member. The retirement benefit will continue for the life of the
Director. Past service of present Qualifying Directors shall be counted in
determining length of service.
3. Other Provisions
If a Qualifying Director dies while serving on the Board and has a surviving
spouse, 50 percent of the benefit to which he/she would then be entitled to, if
he/she had been retired at time of deat, will be paid to the spouse as long as
he/she lives.
If a Qualifying Director dies while receiving a benefit under this Retirement
Plan, and the Qualifying Director has a surviving spouse at the time of death,
the spouse will receive 50 percent of the benefit as long as he/she lives.
4. Ineligibility for Benefits
A Director removed for "conduct detrimental" to the Company shall be
ineligible for benefits under this Plan. For the purpose of this Plan, a
Director shall be considered removed for "conduct detrimental" to the Company if
in the sole opinion of no less than 75 percent of
<PAGE>
Exhibit 10.7 (Cont'd)
RETIREMENT PLAN FOR PDM NON-EMPLOYEE DIRECTORS (Cont'd)
all the Directors of the Board of Directors of the Company, evidenced by a duly
adopted resolution of the Board of Directors, the removal of such Director from
the Board of Directors is the result of conduct materially and demonstrably
injurious to the Company or is the result of any other conduct that adversely
reflects on the Directors' fitness to serve on the Board of Directors.
5. Funding
No funds shall be set aside for the purpose of making payments under this
Retirement Plan and said payments shall be considered as general operating
expense.
6. Administration
The Plan shall be administered by the Board of Directors and it will decide
all matters involving interpretation and application of the Plan.
7. Amendments or Termination of Plan
The Board of Directors shall have the right to amend or terminate this Plan at
any time at its sole discretion. However, no such amendment or termination
shall adversely affect the rights of any Qualifying Director who, at the time of
such amendment or termination, is either receiving benefits pursuant to the
terms of this Plan or who would be eligible to receive such benefits if such
Director had resigned from the Board of Directors immediately prior to such
amendment or termination. This Plan shall not give any Qualifying Director the
right to continue as a Member of the Board of Directors.
8. Effective Date
This Plan replaces that certain Retirement Plan of PDM Outside Directors which
was effective as to non-employee Directors retired or deceased between October
1, 1987 and May 26, 1994, and is effective for non-employee Directors who die or
retire after May 26, 1994 in accordance with the above terms and conditions.
<PAGE>
Exhibit 11
STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
Pitt-Des Moines, Inc.
<TABLE>
<CAPTION>
Years Ended December 31,
1994 1993 1992
----------- ---------- ----------
<S> <C> <C> <C>
Primary
Average shares outstanding 2,323,651 2,323,645 2,414,670
Dilutive stock options based on
treasury stock method using
average market price 1,699 2,002 10,841
----------- ---------- ----------
2,325,350 2,325,647 2,425,511
=========== ========== ==========
Income from continuing operations 11,979,821 566,979 4,079,582
Income from discontinued operations, net of taxes 80,362 470,962 820,431
----------- ---------- ----------
Net income $12,060,183 $1,037,941 $4,900,013
=========== ========== ==========
Income per common share:
Continuing operations $5.16 $0.25 $1.68
Discontinued operations .03 .20 .34
----------- ---------- ----------
Net income per common share $5.19 $ .45 $2.02
=========== ========== ==========
Fully Diluted
Average shares outstanding 2,323,651 2,323,645 2,414,670
Dilutive stock options based on treasury stock
method using greater of year-end or average
market price 1,699 2,002 11,444
----------- ---------- ----------
2,325,350 2,325,647 2,426,114
=========== ========== ==========
Income from continuing operations 11,979,821 566,979 4,079,582
Income from discontinued operations, net of taxes 80,362 470,962 820,431
----------- ---------- ----------
Net income $12,060,183 $1,037,941 $4,900,013
=========== ========== ==========
Income per common share:
Continuing operations $5.16 $0.25 $1.68
Discontinued operations .03 .20 .34
----------- ---------- ----------
Net income per common share $5.19 $ .45 $2.02
=========== ========== ==========
</TABLE>
<PAGE>
Exhibit 13
REVIEW OF OPERATIONS
ENGINEERED CONSTRUCTION DIVISION
In January 1994, the Engineered Construction Division was reorganized into three
project groups, each focusing on specific customers: Industrial, International
and Technology and Water. This new focus, combined with a growing economy and
continuing efforts to increase quality and productivity, brought substantial
improvement in financial results for 1994. Demand was better than anticipated
with higher revenues across all markets.
Industrial Projects Group
The Industrial Projects Group experienced an exceptional year in 1994. Revenues
exceeded forecasts and new bookings were running at improved levels through year
end.
The Wilmington Liquid Bulk Terminal facility was completed several months
ahead of schedule, demonstrating this group's ability to complete complex liquid
storage projects within demanding time and cost constraints. The Wilmington
facility involved the design, engineering, fabrication, project management and
construction of a complete terminal expansion on a turnkey basis. PDM is one of
few companies having the technology, experience and management expertise to
undertake and accomplish a project of this complexity.
In Tucson, Arizona, six flat bottom storage tanks will be the showcase for a
new PDM/CoreTank(R) engineering innovation. This design features double bottom
steel tanks integrated with electronic leak detection systems, providing
customers with superior protection against the risk of potential spills. In
addition, the Industrial Projects Group is performing tank repair and
maintenance activities at Tosco's refinery in Martinez, California. Similar work
extending the life of older tanks is becoming a significant market opportunity
for the Industrial Projects Group.
Finally, the Industrial Projects Group and the International and Technology
Projects Group teamed together to obtain four separate contracts in thermal
energy storage systems. These systems will enable commercial, industrial and
institutional facilities to take advantage of technology in heat transfer to
reduce the cost of heating and cooling by shifting electrical load to off-peak
hours.
International and Technology Projects Group
The International and Technology Projects Group revenues increased from sales to
customers in Latin America and the Caribbean, and from increased liquid natural
gas (LNG) activity in both the international and domestic markets.
Internationally, PDM's global reputation for quality design, safety, and
construction of LNG work resulted in new projects being secured in Qatar and
Argentina. Storage tank maintenance work emerged as an important market for the
International and Technology Projects Group as well, with Amerada-Hess calling
on PDM to perform the ongoing tank maintenance and repair at its St. Croix
refinery in the Virgin Islands.
<PAGE>
Exhibit 13 (Cont'd)
REVIEW OF OPERATIONS (Cont'd)
In 1994 PDM completed work on the fluidized bed iron carbide reactor for
Nucor in Trinidad. In addition to the reactor vessel and internals, PDM
constructed cyclones, ore silos and associated tanks. Latin America and the
Caribbean will continue to be an area of concentration for 1995, with continued
growth anticipated. As energy demand increases, natural gas is seen as an
increasingly attractive, environmentally safe fuel, encouraging the development
of LNG import/export terminals. PDM excels at turnkey LNG projects, handling all
aspects of design, engineering, fabrication and construction.
A resurgence of LNG activity was also seen on the domestic side. Long-lead
equipment procurement and engineering began for a turnkey LNG liquefaction plant
at Cove Point, Maryland. This project highlights PDM's close strategic
relationship with Air Products and Chemicals, widely recognized as the world
leader in LNG liquefaction technology.
The International and Technology Projects Group contracted to complete a
third autoclave system for Boeing at their Frederickson, Washington plant. Pitt-
Des Moines, Inc. received an award for "Fabricated Product of the Year" for 1993
from the Steel Plate Fabricators Association for design and engineering work on
the two Boeing Autoclave systems previously completed. In addition, PDM
completed construction of a vacuum test chamber for laser experiments at TRW's
San Juan Capistrano test site.
Water Projects Group
The Water Projects Group revenues exceeded budget as the housing market remained
relatively stable despite the rise in interest rates. PDM, an industry leader in
elevated water tanks for decades, took new strides in 1994 with the purchase of
a majority interest in HyCon, Inc., a foundation and painting company. This
purchase has added to PDM's product line the capability to construct Composite
Elevated Tanks (CET's) which are welded elevated steel tanks supported by
reinforced concrete rather than steel pedestals. This purchase also enhances the
foundation and painting capabilities of the Engineered Construction Division.
Noteworthy projects for 1994 included an ornamental reservoir in Columbus,
Ohio that will feature artwork designed by local art students, and new awards of
2.0 million gallon hydropillars in Warren County, Ohio and Niagara Falls, New
York, and a 1.5 million gallon hydropillar in Moon Township, Pennsylvania.
During 1995 the Water Projects Group will complete the erection of three 1.5
million gallon hydropillars in Bowie, Maryland.
PDM was honored with three "Steel Tank of the Year" awards for 1993 from
the Steel Plate Fabricators Association. Award winning projects were two 5
million gallon reservoirs with ellipsoidal roofs in Birmingham, Alabama, a
standpipe in Attleboro, Massachusetts, and two anaerobic egg-shaped digesters in
Appleton, Wisconsin.
<PAGE>
Exhibit 13 (Cont'd)
REVIEW OF OPERATIONS (Cont'd)
Divisional
PDM's long-standing reputation for quality work continues to be recognized by
customers and strategic partners alike. The division was named a preferred
supplier of Bechtel and continued to build on its existing preferred supplier
relationships with Praxair and Air Products and Chemicals.
Construction of a new office building in Clive, Iowa has been completed. This
building replaces the office which was damaged beyond repair in the 1993 Des
Moines flood. With a strong backlog already in place for 1995, the Engineered
Construction Division is well positioned for 1995.
STEEL CONSTRUCTION
Well positioned as a low-cost producer, Steel Construction returned to
profitability in 1994, in spite of difficult business conditions, and increased
its market share as a result of strategic acquisitions.
PDM BRIDGE
Effective September 1, 1994, the Company acquired the bridge fabricating assets
of one of its primary Midwestern competitors, Phoenix Steel, Inc. located in Eau
Claire, Wisconsin. This acquisition presented a strategic opportunity to replace
the loss of capacity caused by the flood of 1993 and the related closing of
PDM's Des Moines, Iowa structural facility. These assets were combined with the
bridge fabrication assets of Hartwig Mfg. Corp., Wausau, Wisconsin, to form the
PDM Bridge Division. The Phoenix acquisition added capabilities which
complemented the existing strengths of Hartwig. The newly acquired facilities
provide capability for the fabrication of deeper, heavier bridge components, and
its state-of-the-art paint shop expands PDM's ability to meet the growing
demands throughout the bridge industry for sophisticated multi-coat paint
systems. Operating together, these facilities have the equipment and experience
to bid the complete range of bridge projects, from the most complex movable and
truss bridges to simple plate girder work. Furthermore, the acquisition of
Phoenix expanded PDM's market area from twelve states to over twenty, reaching
markets from the East Coast to the Rockies.
Two significant new projects for 1995, the St. Croix River Crossing in
Hudson, Wisconsin, and the Dartmouth Project in Minneapolis, Minnesota,
highlight the teamwork between the two plants. Both of these new projects will
be jointly fabricated, with the large welded plate girders to be handled at Eau
Claire, while Wausau simultaneously completes smaller components. Although PDM
Bridge anticipates a year in which the federal and state infrastructure spending
will remain flat, margins are expected to gradually improve. As we enter 1995,
PDM Bridge has a healthy backlog with reasonable gross margins, a position
unique in the industry, and one that reinforces its position as a low-cost,
high-quality bridge fabricator.
<PAGE>
Exhibit 13 (Cont'd)
REVIEW OF OPERATIONS (Cont'd)
CHICAGO STEEL CONSTRUCTION
Chicago Steel Construction's activities in 1994 were dominated by the
fabrication and erection of one of the nation's largest structural steel
projects: The McCormick Place Expansion in Chicago. When complete, the
McCormick Place structure will contain over 40,000 tons of steel, six times as
much as a typical 50-story office building. The scale of this project and the
expertise with which it has been accomplished, exemplifies the reason Chicago
Steel Construction is considered a key player in major structural steel
projects.
The tight schedule for McCormick Place was intensified by ongoing design
changes. In order to ensure that material could be continuously furnished for
erection by the three jobsite cranes, Chicago Steel Construction implemented
computerized production software which enabled PDM managers to reduce the time
required to design and fabricate a beam by over 60 percent. This software was an
adaptation of that utilized at another PDM location, an example of sharing
information and experience across PDM's operating units.
Chicago Steel Construction is faced with a shrinking backlog which could
produce layoffs in 1995. However, its flexibility to compete, not only in
private and public sector building construction, but also in bridge fabrication,
could lead to new opportunities in 1995.
PDM STROCAL, INC.
PDM Strocal's management strength and excellent competitive position combined to
post the third straight year of profitability, despite continued weakness in the
building market in California and project delays associated with the Northridge
earthquake. The Northridge earthquake caused the delay of both in-process work
and bid activity as the industry awaited results of earthquake testing programs.
This resulted in the further consolidation of the industry in the region, with
Strocal seeing 50 percent fewer competitors today than three years ago.
Backlog entering 1995 is dramatically higher than last year's depressed
levels. Equally important, the average tonnage of these new projects is more
appropriately sized to Strocal's capabilities. Strocal is looking forward to
improved profitability in 1995.
STEEL SERVICE CENTERS
"Service, When and Where You Need It." That philosophy has helped PDM's Steel
Service Center Division achieve three consecutive years of record sales and
profits. The Steel Service Center Division capitalized on a three-year strategic
expansion plan to achieve record sales. Revenues improved 29 percent, and pre-
tax profits increased 60 percent, as the market demand for steel products grew
vigorously through all of 1994. Tons shipped rose 23 percent to a record 192,000
tons.
<PAGE>
Exhibit 13 (Cont'd)
REVIEW OF OPERATIONS (Cont'd)
Capital improvements undertaken as part of the Division's three-year
strategic expansion were critical to achieving these results. The expansion
program included additions to facilities and delivery fleet at all service
center locations to accommodate greater volumes. Plasma cutting machines were
also added at all service center locations, increasing the efficiency of
operations, and enhancing the Division's ability to deliver value for customers
through pre-processing of standard products.
The Division's computer software system was upgraded to improve
responsiveness to customers and streamline operations. New imaging software
allows for archiving of mill test reports in digital form. These reports can be
instantly retrieved for transmittal to customers. Software improvements were
made to purchasing systems, enabling the Division to better manage inventory and
improve return on investment. As a result of these and other initiatives, the
Division was once again ranked in the upper quartile of performance in a
nationwide comparison published by the Steel Service Center Institute.
Beyond the growing economy, several trends contributed to the Steel Service
Centers' heightened demand in 1994. Due to the extended lead times at many
mills, manufacturers turned to steel service centers to complete their needs.
Also, supplies of light gauge sheet and plate steel were limited, due to
increased construction demand and the strong auto market. The long-time
strategic relationships which the PDM Steel Service Center Division enjoys with
several mills were critical in this market environment, allowing PDM to continue
to supply customers' requirements.
Strategic acquisitions also contributed to the 1994 results. The purchase of
the inventory and delivery fleet of a former competitor, Industrial Tube Company
in San Jose, California, added profitability at all California locations. 1994
also marked the first full year of operation for the former Cascade Culvert
facility as a unit of the Division's Oregon Culvert operation. This location was
able to achieve a 25 percent increase in sales for the year. As expected, this
acquisition has improved the Company's ability to serve customers in the culvert
markets of the Northwest and Alaska. Both Oregon and Washington Culvert
operations experienced excellent growth in 1994.
Most elements of the Division's three-year strategic plan are implemented and
the personnel are in place to handle higher sales volumes. The Steel Service
Center Division looks forward to another exceptional year in 1995.
<PAGE>
Exhibit 21
SUBSIDIARIES OF THE COMPANY
Pitt-Des Moines, Inc.
December 31, 1994
<TABLE>
<CAPTION>
%
Subsidiaries Owned Incorporated Operations
<S> <C> <C> <C>
Canadian Des Moines Industries Ltd. 100 Canada Inactive
Hammond Latino Americana, S.A. 100 Panama Inactive
HyCon, Inc. 81 Alabama Foundation &
painting
contractor
Hydrostorage, Inc. 100 Tennessee Inactive
Oregon Culvert Co., Inc. 81 Oregon Culvert Mfg.
d/b/a Washington Culvert Co.
PDM Argentina, SA 100 Argentina Steel Fab.
PDM Australia Pty. Ltd. 100 Australia Inactive
PDM International Ltd. 100 Delaware Inactive
PDM Latin America Ltd. 100 Georgia Inactive
Construcciones Pitt-Des Moines Venezuela, C.A. 100 Venezuela Steel Fab.
PDM Services A.G. 100 Liechtenstein Inactive
PDM Strocal, Inc. 100 Pennsylvania Steel Fab.
PDM Virgin Islands, Ltd. 100 Virgin Islands Inactive
P.T. Perkasa Daya Megah (PDM Indonesia) (1) 100 Indonesia Inactive
PDM Bonaire, N.V. 100 Bonaire Inactive
Pittsburgh-Des Moines Sdn. Bhd.(PDM Malaysia) 100 Malaysia Inactive
PDM Bridge Corporation 100 Delaware Inactive
PDM Ohio 100 Ohio Cryogenic &
High Vacuum
Component &
Fabrication
</TABLE>
NOTES OF EXPLANATION
(1) Managed by PDM Services A.G.
<PAGE>
Exhibit 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement (Form
S-8 No. 33-34787) pertaining to the Stock Option Plan of 1990 of Pitt-Des
Moines, Inc. of our report dated March 2, 1995, with respect to the consolidated
financial statements and schedule of Pitt-Des Moines, Inc. included in the
Annual Report (Form 10-K) for the year ended December 31, 1994.
ERNST & YOUNG LLP
Pittsburgh, Pennsylvania
March 28, 1995
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM *THE ANNUAL
REPORT TO SHAREHOLDERS FOR FISCAL YEAR ENDED DECEMBER 31, 1994 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
*IDENTIFY THE FINANCIAL STATEMENT(S) TO BE REFERENCED IN THE LEGEND: SEE ABOVE
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<CASH> 11,668,341
<SECURITIES> 0
<RECEIVABLES> 91,731,715
<ALLOWANCES> 1,000,000
<INVENTORY> 19,867,066
<CURRENT-ASSETS> 158,759,902
<PP&E> 96,594,908
<DEPRECIATION> 54,169,075
<TOTAL-ASSETS> 214,201,479
<CURRENT-LIABILITIES> 86,951,639
<BONDS> 22,000,000
<COMMON> 33,549,255
0
0
<OTHER-SE> 64,999,765
<TOTAL-LIABILITY-AND-EQUITY> 214,201,479
<SALES> 408,060,623
<TOTAL-REVENUES> 408,060,623
<CGS> 357,639,136
<TOTAL-COSTS> 357,639,136
<OTHER-EXPENSES> 37,164,152
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 897,993
<INCOME-PRETAX> 18,656,092
<INCOME-TAX> 6,676,271
<INCOME-CONTINUING> 11,979,821
<DISCONTINUED> 80,362
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,060,183
<EPS-PRIMARY> 5.19
<EPS-DILUTED> 5.19
</TABLE>
