<PAGE>
=============================================================================
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, 1996
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
--------------------
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, 1996, 2,323,633 shares of Common Stock were outstanding.
===============================================================================
<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) 1996 1995
--------- ----------
<S> <C> <C>
Earned revenue $ 115,966 $ 119,242
Cost of earned revenue (101,035) (105,947)
--------- ---------
Gross profit from operations 14,931 13,295
Selling, general and administrative expenses (9,619) (9,251)
--------- ---------
Income from operations 5,312 4,044
Other income/(expense):
Interest income 240 165
Interest expense (277) (520)
Gain on sale of assets 20 9
Miscellaneous, net (85) 1
--------- ---------
(102) (345)
--------- ---------
Income before income taxes 5,210 3,699
Income taxes (2,036) (1,420)
--------- ---------
Net income $ 3,174 $ 2,279
========= =========
Per common share:
Net income per common share $ 1.35 $ .98
========= =========
Dividends paid $ .475 $ .25
========= =========
Shares used to calculate income per share 2,355 2,322
(in 000's) ========= =========
CONSOLIDATED RETAINED EARNINGS
Balance at the beginning of year $ 89,677 $ 79,202
Net income 3,174 2,279
Dividends paid (1,104) (581)
Other 38 0
--------- ---------
Balance at end of period $ 91,785 $ 80,900
========= =========
</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,
1996 1995
----------- ------------
(in thousands) (Unaudited)
<S> <C> <C>
Assets
Current Assets
Cash and cash equivalents $ 3,755 $ 9,508
Accounts receivable including retentions
(less allowances: 1996-$940; 1995-$868) 81,564 77,517
Inventories 16,265 16,418
Costs and estimated profits in excess
of billings 37,656 38,166
Deferred income taxes 4,872 4,872
Prepaid expenses 2,814 914
-------- --------
Total Current Assets 146,926 147,395
Other Assets 7,839 8,080
Net Assets of Discontinued Operations 4,527 3,916
Property, Plant and Equipment
Land 6,784 6,784
Buildings 31,107 31,025
Machinery and equipment 63,416 62,287
-------- --------
101,307 100,096
Allowances for depreciation (59,978) (58,351)
-------- --------
Net Property, Plant and Equipment 41,329 41,745
-------- --------
$200,621 $201,136
======== ========
</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,
1996 1995
----------- ------------
(in thousands) (Unaudited)
<S> <C> <C>
Liabilities
Current Liabilities
Accounts payable $ 32,136 $ 41,611
Accrued compensation, related taxes and benefits 10,767 11,739
Other accrued expenses 2,385 2,379
Billings in excess of costs and estimated profits 6,812 6,436
Income taxes 2,926 1,345
Casualty and liability insurance 9,663 8,817
-------- --------
Total Current Liabilities 64,689 72,327
Revolving Credit Facility 18,000 13,000
Deferred Income Taxes 5,601 5,601
Minority Interest 1,196 1,267
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 91,785 89,677
-------- --------
125,334 123,226
Treasury stock at cost
(1996-658,523 shares; 1995-662,523 shares) (14,199) (14,285)
-------- --------
Total Stockholders' Equity 111,135 108,941
-------- --------
$200,621 $201,136
======== ========
</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) 1996 1995
-------- --------
<S> <C> <C>
Cash Flow From Operating Activities
Net income $ 3,174 $ 2,279
Adjustments to reconcile net income to net
cash utilized by operating activities:
Depreciation 1,475 1,477
Discontinued operations (611) (1,107)
Gain on sale of assets (21) (9)
Minority interest, net of dividends paid (71) (79)
Other non-cash credits, net (60) (120)
Change in certain assets and liabilities
(using) or providing cash:
Accounts receivable (3,705) 6,057
Inventories 153 (3,163)
Prepaid expenses (1,900) (1,762)
Costs, estimated profits and billings, net 886 (25)
Accounts payable (9,475) (15,966)
Accrued liabilities (120) 822
Income taxes 1,581 1,086
------- --------
Net cash utilized by operating activities (8,694) (10,510)
Cash Flows from Investing Activities
Capital expenditures (1,062) (1,068)
Proceeds from sales of assets 24 22
Change in investments and other assets (41) 36
------- --------
Net cash utilized by investing activities (1,079) (1,010)
Cash Flows from Financing Activities
Proceeds from debt obligations 8,000 2,000
Payments of debt obligations (3,000) 0
Dividends paid (1,104) (581)
Other 124 0
------- --------
Net cash provided by financing activities 4,020 1,419
------- --------
Decrease in cash and cash equivalents (5,753) (10,101)
Cash and cash equivalents at beginning of year 9,508 11,668
------- --------
Cash and cash equivalents at end of period $ 3,755 $ 1,567
======= ========
</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, 1996 are
not necessarily indicative of the results that may be expected for the year
ending December 31, 1996. The December 31, 1995 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, 1995.
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) 1996 1995
---------- -----------
<S> <C> <C>
Costs incurred on uncompleted contracts $ 593,857 $ 542,631
Estimated profits 81,589 69,861
--------- ---------
675,446 612,492
Less: Billings to date (644,602) (580,762)
--------- ---------
$ 30,844 $ 31,730
========= =========
</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) 1996 1995
--------- -----------
<S> <C> <C>
Costs and estimated profits in excess of billings $37,656 $38,166
Billings in excess of costs and estimated profits (6,812) (6,436)
------- -------
$30,844 $31,730
======= =======
</TABLE>
-7-
<PAGE>
Item 1. Financial Statements (Continued)
Note B. Costs and Estimated Profits on Uncompleted Contracts (Continued)
Included in costs and estimated profits in excess of billings on uncompleted
contracts at March 31, 1996 was approximately $6.0 million relating to an
unapproved change order arising from a dispute over design and specification
changes on a project currently under construction.
Negotiations to obtain reimbursement for this additional work have commenced.
Management believes that amounts recognized will be realized. However, this
estimate of recovery could change as the negotiations continue. As additional
facts are learned, the Company may revise the estimate of potential recovery,
which could result in a material adjustment to the results of operations in
future periods.
Note C. Contingencies
There are various claims and legal proceedings against the Company arising
from the normal course of business. 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. 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
as required by OSHA law. OSHA has cited the Company for safety violations and
has assessed $147,000 in civil penalties. In an order dated April 28, 1995, an
administrative law judge dismissed OSHA's case assessing civil penalties. OSHA's
appeal of this decision is pending before the Occupational Safety and Health
Review Commission.
-8-
<PAGE>
Item 1. Financial Statements (Continued)
Note C. Contingencies (Continued)
The Justice Department continues to investigate whether to institute criminal
action against the Company as a result of the accident, and has convened a grand
jury proceeding in the United States District Court for the Northern District of
Illinois. The Company cannot predict whether or not a criminal 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.
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.
-9-
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
RESULTS OF OPERATIONS
Three months ended March 31, 1996 compared with three months ended March 31,
1995.
The Company reported net income of $3.2 million or $1.35 per share on earned
revenue of $116.0 million for the quarter ended March 31, 1996. These results
compare with net income of $2.3 million or $.98 per share on earned revenue of
$119.2 million for the quarter ended March 31, 1995.
During the first quarter of 1996, income from operations increased 31 percent to
$5.3 million when compared with the first quarter of 1995. All of the Company's
business segments contributed to the overall profitability for the period ended
March 31, 1996 while Steel Construction and Steel Service Centers reported
improvements in profitability for 1996 compared with 1995.
New awards for the period ended March 31, 1996 were $101.3 million compared to
$84.6 million for the quarter ended March 31, 1995. This resulted in a backlog
of $167.6 million on March 31, 1996 when compared with $156.4 million for the
same period in 1995.
The Engineered Construction Division realized a decrease in earned revenue from
$50.4 million to $46.1 million for the periods ended March 31, 1995 and 1996,
respectively. Earned revenue was down from 1995 levels due in part to poor
weather conditions which hampered construction activities during the first
quarter of 1996. However, gross margins improved to 12.8 percent from 11.7
percent for the first quarter of 1995 as a result of the mix and stages of
completion of current contracts. The decrease in volume and increase in margins
resulted in income from operations of $1.9 million for the current period, down
from $2.4 million for the same period in 1995. New awards increased 11 percent
for the current period when compared with the same period in 1995.
Steel Construction also reported a slight decrease of $1.5 million in earned
revenue to $33.2 million for the current quarter when compared with the prior
year quarter. However, income from operations improved to $3.3 million from $1.0
million for the period ended March 31, 1995. Both bridge fabrication and
building construction contracts contributed to the current operating
profitability, while the latter was particularly responsible for the improvement
over 1995. Additionally, new awards for the current period increased
dramatically over the prior year period and was primarily the result of building
construction projects.
For the three months ended March 31, 1996, Steel Service Centers realized
increases in both earned revenue and income from operations when compared with
the same period in 1995. Earned revenue improved 10 percent to $37.6 million and
income from operations increased 19 percent to $2.9 million. This segment
continues to benefit from the economic growth realized in many of the geographic
areas in which it competes.
-10-
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
During the first quarter of 1996, the Company's primary sources of liquidity
were cash and cash equivalents and proceeds from debt obligations. On March 31,
1996, cash and cash equivalents were $3.8 million compared with $9.5 million on
December 31, 1995. Working capital increased $7.1 million from $75.1 million at
December 31, 1995 to $82.2 million at March 31, 1996.
The net cash utilized by operating activities decreased by $1.8 million for the
first three months of 1996 when compared with the same period in 1995. In 1995
and 1996, cash was used in operating activities primarily to reduce accounts
payable.
Capital expenditures of $1.1 million for both quarters ended March 31, 1996 and
1995 were the major components in investing activities. Expenditures were
primarily for plant and computer equipment and, plant and machinery equipment in
1996 and 1995, respectively. Total expenditures for the year ended December 31,
1996, which are expected to be internally financed, should approximate $5.5
million. In addition, the Company intends to continue to pursue acquisition
opportunities beneficial to the Company.
The net cash provided by financing activities of $4.0 million for the three
months ended March 31, 1996, was primarily the result of net borrowings of $5.0
million and payment of cash dividends of $1.1 million. Net borrowings of $5.0
million under the revolving credit facility during the first quarter of 1996,
were used to finance working capital growth. On May 2, 1996, the Board of
Directors declared a quarterly dividend of $.275 per share of common stock
payable June 28, 1996 to shareholders of record on June 14, 1996.
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 the unused portion of a $40.0 million unsecured revolving credit
facility which matures on December 31, 1997. This facility contains an annual
option to renew for an additional one-year period, subject to lender approval.
On March 31, 1996, $18.0 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, 1996 and 1995.
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, 1996.
-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 13, 1996 By: /s/ Wm. W. McKee
----------------------------
Wm. W. McKee
(President and
Chief Executive Officer)
Principal Financial Officer:
Date: May 13, 1996 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, 1996 and 1995
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,
--------------------------
(in thousands) 1996 1995
---------- ----------
<S> <C> <C>
Primary
Average shares outstanding 2,322,095 2,321,903
Dilutive stock options based on treasury stock
method using average market price 27,587 6,120
---------- ----------
2,349,682 2,328,023
========== ==========
Net income $3,174,330 $2,279,246
========== ==========
Per common share:
Net income per common share $ 1.35 $ .98
========== ==========
Fully Diluted
Average shares outstanding 2,322,095 2,321,903
Dilutive stock options based on treasury stock method
using greater of period-end or average market price 33,195 7,985
---------- ----------
2,355,290 2,329,888
========== ==========
Net income $3,174,330 $2,279,246
========== ==========
Per common share:
Net income per common share $ 1.35 $ .98
========== ==========
</TABLE>
-15-
<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, 1996 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-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 3,755
<SECURITIES> 0
<RECEIVABLES> 82,504
<ALLOWANCES> 940
<INVENTORY> 16,265
<CURRENT-ASSETS> 146,926
<PP&E> 101,307
<DEPRECIATION> 59,978
<TOTAL-ASSETS> 200,621
<CURRENT-LIABILITIES> 64,689
<BONDS> 18,000
0
0
<COMMON> 33,549
<OTHER-SE> 77,586
<TOTAL-LIABILITY-AND-EQUITY> 200,621
<SALES> 115,966
<TOTAL-REVENUES> 115,966
<CGS> 101,035
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 277
<INCOME-PRETAX> 5,210
<INCOME-TAX> 2,036
<INCOME-CONTINUING> 3,174
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,174
<EPS-PRIMARY> 1.35
<EPS-DILUTED> 1.35
</TABLE>
