<PAGE>
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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
----- -----
Commission file number I-5259
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PITT-DES MOINES, INC.
(Exact name of registrant as specified in its charter)
Commonwealth of Pennsylvania 25-0729430
(State of other jurisdiction of (I.R.S. Employer
incorporation of organization) Identification No.)
3400 Grand Avenue, Pittsburgh, PA 15225
(Address of Principal Executive Offices) (Zip Code)
(412) 331-3000
(Registrant's Telephone Number, including Area Code)
---------------------
Indicate by check whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
----- -----
On March 31, 1995, 2,321,903 shares of Common Stock were outstanding.
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<PAGE>
TABLE OF CONTENTS
Page
Part I - Financial Information
Item 1. Financial statements 3
Item 2. Management's discussion and analysis of
financial condition and results of operations 10
Part II - Other Information
Item 1. Legal proceedings 12
Item 6. Exhibits and reports on Form 8-K 12
Signatures 13
Exhibit Index 14
-2-
<PAGE>
Part I. Financial Information
Item 1. Financial Statements
PITT-DES MOINES, INC.
Consolidated Statements of Income
(Unaudited)
<TABLE>
<CAPTION>
For the three months ended
March 31,
--------------------------
(in thousands, except per share amounts) 1995 1994
------------ ------------
<S> <C> <C>
Earned revenue $ 119,242 $ 95,222
Cost of earned revenue (105,947) (85,982)
--------- --------
Gross profit from operations 13,295 9,240
Selling, general and administrative expenses (9,251) (8,085)
--------- --------
Income from operations 4,044 1,155
Other income/(expense):
Interest income 165 136
Interest expense (520) (61)
Gain (loss) on sale of assets 9 (4)
Miscellaneous, net 1 6
--------- --------
(345) 77
--------- --------
Income from continuing operations before taxes 3,699 1,232
Income taxes 1,420 474
--------- --------
Income from continuing operations 2,279 758
Loss from discontinued operations, net of taxes 0 (388)
--------- --------
Net income $ 2,279 $ 370
========= ========
Per Share
Continuing operations $ .98 $ .33
Discontinued operations .00 (.17)
--------- --------
Net income per common share $ .98 $ .16
========= ========
Dividend paid $ .25 $ .225
Average common shares outstanding (in 000's) 2,322 2,324
CONSOLIDATED RETAINED EARNINGS
Balance at the beginning of year $ 79,202 $ 69,056
Net income 2,279 370
Dividends paid (581) (523)
--------- --------
Balance at end of period $ 80,900 $ 68,903
========= ========
</TABLE>
See Notes to Consolidated Financial Statements.
-3-
<PAGE>
Item 1. Financial Statements (Continued)
PITT-DES MOINES, INC.
Consolidated Statements of Financial Condition
<TABLE>
<CAPTION>
March 31, December 31,
1995 1994
----------- -------------
(in thousands) (Unaudited)
<S> <C> <C>
Assets
Current Assets
Cash and cash equivalents $ 1,567 $ 11,668
Accounts receivable including retentions
(less allowances: 1995-$932; 1994-$868) 84,675 90,732
Inventories 23,030 19,867
Costs and estimated profits in excess
of billings 29,681 30,193
Deferred income taxes 5,368 5,368
Prepaid expenses 2,694 932
-------- --------
Total Current Assets 147,015 158,760
Other Assets 10,414 10,330
Net Assets of Discontinued Operations 3,792 2,685
Property, Plant and Equipment
Land 6,960 6,960
Buildings 30,322 30,370
Machinery and equipment 60,141 59,265
-------- --------
97,423 96,595
Allowances for depreciation (55,419) (54,169)
-------- --------
Net Property, Plant and Equipment 42,004 42,426
-------- --------
$203,225 $214,201
======== ========
</TABLE>
See Notes to Consolidated Financial Statements.
-4-
<PAGE>
Item 1. Financial Statements (Continued)
PITT-DES MOINES, INC.
Consolidated Statements of Financial Condition
<TABLE>
<CAPTION>
March 31, December 31,
1995 1994
(in thousands) ------------ ----------
(Unaudited)
<S> <C> <C>
Liabilities
Current Liabilities
Accounts payable $ 31,362 $ 47,328
Accrued compensation, related taxes and benefits 10,480 10,583
Other accrued expenses 3,814 3,163
Accrued expenses related to flood 202 500
Billings in excess of costs and estimated profits 13,772 14,309
Income taxes 3,204 2,118
Casualty and liability insurance 9,522 8,950
--------- --------
Total Current Liabilities 72,356 86,951
Revolving Credit Facility 24,000 22,000
Deferred Income Taxes 5,573 5,573
Minority Interest 1,049 1,128
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 33,549
Retained earnings 80,900 79,202
-------- --------
114,449 112,751
Treasury stock at cost
(1995 and 1994 - 660,253 shares) (14,202) (14,202)
-------- --------
Total Stockholders' Equity 100,247 98,549
-------- --------
$203,225 $214,201
======== ========
</TABLE>
See Notes to Consolidated Financial Statements.
-5-
<PAGE>
Item 1. Financial Statements (Continued)
PITT-DES MOINES, INC.
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
For the three months ended
March 31,
---------------------------
(in thousands) 1995 1994
------------ --------
<S> <C> <C>
Cash Flow From Operating Activities
Net income $ 2,279 $ 370
Adjustments to reconcile net income to net
cash utilized by operating activities:
Depreciation 1,477 1,102
Discontinued operations (1,107) 771
(Gain)/Loss on sale of assets (9) 4
Minority interest, net of dividends paid (79) (61)
Other non-cash credits, net (120) (120)
Change in certain assets and liabilities
(using) or providing cash:
Accounts receivable 6,057 (6,664)
Inventories (3,163) (1,625)
Prepaid expenses (1,762) (1,013)
Costs, estimated profits and billings, net (25) 5,801
Accounts payable (15,966) (13,673)
Accrued liabilities 822 1,806
Income taxes 1,086 351
-------- --------
Net cash utilized by operating activities (10,510) (12,951)
Cash Flows from Investing Activities
Capital expenditures (1,068) (720)
Proceeds from sales of assets 22 18
Change in investments and other assets 36 (4)
-------- --------
Net cash utilized by investing activities (1,010) (706)
Cash Flows from Financing Activities
Proceeds from debt obligations 2,000 6,000
Payments of debt obligations 0 (6,000)
Dividends paid (581) (523)
-------- --------
Net cash provided (utilized) by financing activities 1,419 (523)
-------- --------
Decrease in cash and cash equivalents (10,101) (14,180)
Cash and cash equivalents at beginning of year 11,668 15,946
-------- --------
Cash and cash equivalents at end of period $ 1,567 $ 1,766
======== ========
</TABLE>
See Notes to Consolidated Financial Statements.
-6-
<PAGE>
Item 1. Financial Statements (Continued)
PITT-DES MOINES, INC.
Notes to Consolidated Financial Statements
(Unaudited)
Note A. Basis of Presentation
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three months ended March 31, 1995 are
not necessarily indicative of the results that may be expected for the year
ending December 31, 1995. The December 31, 1994 Consolidated Statement of
Financial Condition was derived from audited financial statements. For further
information, refer to the consolidated financial statements and footnotes
thereto included in the Company's Annual Report on Form 10-K for the year ended
December 31, 1994.
Note B. Costs and Estimated Profits on Uncompleted Contracts
Costs and estimated profits on uncompleted contracts are summarized as
follows:
<TABLE>
<CAPTION>
March 31, December 31,
(in thousands) 1995 1994
------------- ------------
<S> <C> <C>
Costs incurred on uncompleted contracts $ 601,828 $ 533,689
Estimated profits 63,969 54,273
--------- ---------
665,797 587,962
Less: Billings to date (649,888) (572,078)
--------- ---------
$ 15,909 $ 15,884
========= =========
</TABLE>
Costs, estimated profits and billings on uncompleted contracts are included in
the accompanying Consolidated Statements of Financial Condition under the
following captions:
<TABLE>
<CAPTION>
March 31, December 31,
(in thousands) 1995 1994
----------- -----------
<S> <C> <C>
Costs and estimated profits in excess of billings $ 29,681 $ 30,193
Billings in excess of costs and estimated profits (13,772) (14,309)
-------- --------
$ 15,909 $ 15,884
======== ========
</TABLE>
-7-
<PAGE>
Item 1. Financial Statements (Continued)
Note C. 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.
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.
-8-
<PAGE>
Item 1. Financial Statements (Continued)
Note C. Contingencies (Continued)
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.
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. On April 28, 1995 an Administrative Law Judge dismissed
the citation, fines and penalties. OSHA has 30 days in which to appeal the
dismissal. 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.
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.
-9-
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
RESULTS OF OPERATIONS
Three months ended March 31, 1995 compared with three months ended March 31,
1994.
The Company reported net income of $2.3 million or $.98 per share on earned
revenue of $119.2 million for the quarter ended March 31, 1995. These results
compare with net income of $370,000 or $.16 per share on earned revenue of $95.2
million for the quarter ended March 31, 1994.
During the first quarter of 1995, all of the Company's business segments
realized increases in earned revenue and operating profitability compared with
the same period in 1994.
New awards of $84.6 million were reported for the period ended March 31, 1995 as
compared to $89.7 million for the quarter ended March 31, 1994. The Company's
backlog was $156.4 million on March 31, 1995, down from $193.9 million at
December 31, 1994. This decline was primarily the result of Steel Construction,
however, awards anticipated in the second quarter of 1995 are likely to improve.
Other expense of $345,000 during the first quarter of 1995, was primarily the
result of interest expense associated with borrowings under the revolving credit
facility.
During the first quarter of 1995, the Engineered Construction Division
capitalized on their backlog as of December 31, 1994. This resulted in an
increase of 30 percent in earned revenue and an improvement in profitability as
gross profit and operating profitability increased 49 percent and 147 percent,
respectively, for the first quarter in 1995 when compared with the same quarter
in 1994. New awards for the current period were not at the same level as the
previous year period.
Steel Construction experienced a 26 percent increase in revenue for the quarter
ended March 31, 1995, when compared to the same period in 1994. Even though
building construction represented the majority of revenue, bridge fabrication
accounted for the increase. Additionally, gross profit and operating
profitability for the current period increased 39 percent and 67 percent,
respectively, when compared with the same period in 1994. PDM Bridge Division,
starting its first full year of operation within Steel Construction, has made
significant contributions to earned revenue and profitability. PDM has
capitalized on emerging bridge fabrication opportunities while pursuing
available building construction projects.
The Steel Service Centers recorded an 18 percent increase in earned revenue for
the first quarter of 1995, when compared with the same quarter in 1994. A
combination of an aggressive sales effort and the availability of a broad range
of inventory has allowed Steel Service Centers to achieve increases above prior
year results in volume, margin and tonnage shipped. During the period ended
March 31, 1995, gross profit and operating profitability increased 26 percent
and 54 percent, respectively, when compared with the same period in 1994.
-10-
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (Continued)
LIQUIDITY AND CAPITAL RESOURCES
During the first quarter of 1995, the Company's primary source of liquidity was
cash and cash equivalents which financed working capital requirements. On March
31, 1995, cash and cash equivalents were $1.6 million compared with $11.7
million on December 31, 1994.
For the three months ended March 31, 1995, cash and cash equivalents decreased
$10.1 million primarily due to cash utilized by operating activities. Working
capital increased $2.9 million from $71.8 million at December 31, 1994 to $74.7
million for the period ended March 31, 1995.
The cash utilized by operating activities of $10.5 million for the period ended
March 31, 1995, was primarily the result of a decrease in accounts payable of
$16.0 million offset by a decrease in accounts receivable of $6.1 million.
Capital expenditures primarily for plant machinery and equipment of $1.1 million
for the quarter ended March 31, 1995, were the major use of cash in investing
activities. For the three months ended March 31, 1994, capital expenditures of
$720,000 were primarily for computer and construction equipment. Total
expenditures for the year ending December 31, 1995, which are expected to be
internally financed, should approximate $7.1 million for plant machinery and
equipment. In addition, the Company intends to continue to pursue acquisition
opportunities closely aligned with the existing core business.
The net cash provided by financing activities of $1.4 million for the three
months ended March 31, 1995, was the result of $2.0 million borrowed under the
revolving credit facility and payments of cash dividends of $523,000. On
February 28, 1995 the Board of Directors declared an increase in quarterly
dividends to $.25 per share of common stock, payable March 31, 1995. Payment of
future dividends will be evaluated based upon business conditions. Borrowings
under the revolving credit facility of $2.0 million during the first quarter of
1995, were primarily used for working capital components. Subsequently, for the
same reason, the Company borrowed an additional $2.0 million under the revolving
credit facility on April 25, 1995.
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 March 31, 1995,
$24.0 million of borrowings and $12.5 million of stand-by letters of credit were
outstanding under this agreement.
-11-
<PAGE>
Part II - Other Information
Item 1. Legal Proceedings
Refer to Part I Item 1, "Note C - Contingencies" of the Notes to
Consolidated Financial Statements for information, which information
is incorporated herein by reference.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 11.1 - Computation of earnings per share for the three months
ended March 31, 1995 and 1994.
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K.
There have been no reports on Form 8-K filed by the Company during the
quarter ended March 31, 1995.
-12-
<PAGE>
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Pitt-Des Moines, Inc.
-------------------------------
(Registrant)
Principal Executive Officer:
Date: May 12, 1995 By: /s/ Wm. W. McKee
----------------
Wm. W. McKee
(President and
Chief Executive Officer)
Principal Financial Officer:
Date: May 12, 1995 By: /s/ R. A. Byers
---------------
R. A. Byers
(Vice President
Finance and Treasurer)
-13-
<PAGE>
EXHIBIT INDEX
Exhibit
Number
- -------
11.1 Computation of earnings per share for the three
months ended March 31, 1995 and 1994
27 Financial Data Schedule
-14-
<PAGE>
Exhibit 11.1
PITT-DES MOINES, INC.
Computation of Earnings Per Share
(Unaudited)
<TABLE>
<CAPTION>
For the three months ended
March 31,
--------------------------
1995 1994
--------------------------
<S> <C> <C>
Primary
Average shares outstanding 2,321,903 2,323,978
Dilutive stock options based on treasury stock
method using average market price 6,120 3,683
---------- -----------
2,328,023 2,327,661
========== ===========
Income from continuing operations $2,279,246 $ 758,526
Income (loss) from discontinued operations, net of taxes 0 (388,168)
---------- -----------
Net income $2,279,246 $ 370,358
========== ===========
Income (loss) per common share:
Continuing operations $ .98 $ .33
Discontinued operations 0 (.17)
---------- -----------
Net income per common share $ .98 $ .16
========== ===========
Fully Diluted
Average shares outstanding 2,321,903 2,323,978
Dilutive stock options based on treasury stock method
using greater of period-end or average market price 7,985 3,683
---------- -----------
2,329,888 2,327,661
========== ===========
Income from continuing operations $2,279,246 $ 758,526
Income (loss) from discontinued operations, net of taxes 0 (388,168)
---------- -----------
Net income $2,279,246 $ 370,358
========== ===========
Income (loss) per common share:
Continuing operations $ .98 $ .33
Discontinued operations 0 (.17)
---------- -----------
Net income per common share $ .98 $ .16
========== ===========
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1995 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<CASH> 1,567
<SECURITIES> 0
<RECEIVABLES> 85,607
<ALLOWANCES> 932
<INVENTORY> 23,030
<CURRENT-ASSETS> 147,015
<PP&E> 97,423
<DEPRECIATION> 55,419
<TOTAL-ASSETS> 203,225
<CURRENT-LIABILITIES> 72,356
<BONDS> 24,000
<COMMON> 33,549
0
0
<OTHER-SE> 66,698
<TOTAL-LIABILITY-AND-EQUITY> 203,225
<SALES> 119,242
<TOTAL-REVENUES> 119,242
<CGS> 105,947
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 520
<INCOME-PRETAX> 3,699
<INCOME-TAX> 1,420
<INCOME-CONTINUING> 2,279
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,279
<EPS-PRIMARY> .98
<EPS-DILUTED> .98
</TABLE>
