<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 June 30, 1997
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 1-5259
____________________
PITT-DES MOINES, INC.
(Exact name of registrant as specified in its charter)
Commonwealth of Pennsylvania 25-0729430
(State or other jurisdiction of (I.R.S. Employer
incorporation or 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 June 30, 1997, 3,498,706 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 12
Part II - Other Information
Item 1. Legal proceedings 16
Item 4. Submission of matters to a vote of security holders 16
Item 6. Exhibits and reports on Form 8-K 16-17
Signatures 18
Exhibit Index 19
-2-
<PAGE>
Part I. Financial Information
Item 1. Financial Statements
PITT-DES MOINES, INC.
Consolidated Statements of Income
(Unaudited)
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30,
--------------------- ----------------------
(in thousands, except per share amounts) 1997 1996 1997 1996
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Earned revenue $ 119,235 $ 121,649 $ 228,816 $ 237,615
Cost of earned revenue (101,763) (105,971) (197,240) (207,006)
--------- --------- --------- ---------
Gross profit from operations 17,472 15,678 31,576 30,609
Selling, general and administrative expenses (11,430) (10,133) (22,122) (19,752)
--------- --------- --------- ---------
Income from operations 6,042 5,545 9,454 10,857
Other income/(expense):
Interest income 159 203 353 443
Interest expense (160) (314) (232) ( 591)
Gain on sale of assets 16 262 53 282
Miscellaneous, net (185) (90) (311) (175)
--------- --------- --------- ---------
(170) 61 (137) (41)
--------- --------- --------- ---------
Income before income taxes 5,872 5,606 9,317 10,816
Income taxes (2,302) (2,180) (3,646) (4,216)
--------- --------- --------- ---------
Net income $ 3,570 $ 3,426 $ 5,671 $ 6,600
========= ========= ========= =========
Per common share:
Net income per common share $1.01 $.97 $1.61 $1.87
========= ========= ========= =========
Dividends paid $.275 $.18 $.55 $.50
========= ========= ========= =========
Shares used to calculate income per share
(in 000's) 3,543 3,531 3,532 3,528
========= ========= ========= =========
CONSOLIDATED RETAINED EARNINGS
Balance at the beginning of year $ 99,344 $ 89,677
Net income 5,671 6,600
Dividends paid (1,920) (1,743)
Other 125 38
--------- ---------
Balance at end of period $ 103,220 $ 94,572
========= =========
</TABLE>
See Notes to Consolidated Financial Statements.
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<PAGE>
Item 1. Financial Statements (Continued)
PITT-DES MOINES, INC.
Consolidated Statements of Financial Condition
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
--------- -------------
(in thousands) (Unaudited)
Assets
Current Assets
<S> <C> <C>
Cash and cash equivalents $ 10,245 $ 16,815
Accounts receivable including retentions
(less allowances: 1997-$1,018; 1996-$868) 78,411 72,424
Inventories 18,329 18,192
Costs and estimated profits in excess
of billings 40,793 36,831
Deferred income taxes 4,475 4,475
Prepaid expenses 1,931 822
-------- --------
Total Current Assets 154,184 149,559
Other Assets 13,192 8,300
Property, Plant and Equipment
Land 7,274 7,274
Buildings 36,024 35,213
Machinery and equipment 67,732 65,457
-------- --------
111,030 107,944
Allowances for depreciation (69,474) (65,918)
-------- --------
Net Property, Plant and Equipment 41,556 42,026
-------- --------
$208,932 $199,885
======== ========
</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>
June 30, December 31,
1997 1996
----------- -------------
(in thousands) (Unaudited)
<S> <C> <C>
Liabilities
Current Liabilities
Accounts payable $ 38,630 $ 41,593
Accrued compensation, related taxes and benefits 10,954 12,005
Other accrued expenses 3,168 2,064
Billings in excess of costs and estimated profits 7,631 10,731
Income taxes 622 494
Casualty and liability insurance 8,521 7,133
-------- --------
Total Current Liabilities 69,526 74,020
Revolving Credit Facility 9,000 0
Deferred Income Taxes 5,745 5,699
Minority Interest 1,950 1,546
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 4,473,234 shares 33,549 33,549
Retained earnings 103,220 99,344
-------- --------
136,769 132,893
Treasury stock at cost
(1997-974,528 shares; 1996-990,233 shares) (14,058) (14,273)
-------- --------
Total Stockholders' Equity 122,711 118,620
-------- --------
$208,932 $199,885
======== ========
</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 six months ended
June 30,
------------------------
(in thousands) 1997 1996
--------- -----------
<S> <C> <C>
Cash Flow From Operating Activities
Net income $ 5,671 $ 6,600
Adjustments to reconcile net income to net
cash utilized by operating activities:
Depreciation 3,082 2,977
Gain on sale of assets (53) (282)
Minority interest, net of dividends paid (46) 3
Other non-cash credits, net (120) (120)
Change in operating assets and liabilities
(using) providing cash:
Accounts receivable (3,478) (13,795)
Inventories 2,777 (550)
Prepaid expenses (1,095) (788)
Costs, estimated profits and billings, net (6,997) 5,347
Accounts payable (5,295) (7,917)
Accrued liabilities 1,162 180
Income taxes (52) 745
------- --------
Net cash utilized by operating activities (4,444) (7,600)
Cash Flows from Investing Activities
Capital expenditures (2,359) (1,775)
Proceeds from sale of assets 137 304
Acquisitions, net of cash acquired (8,342) 0
Change in investments and other assets 1,018 (21)
------- --------
Net cash utilized by investing activities (9,546) (1,492)
Cash Flows from Financing Activities
Proceeds from revolving credit facility 9,000 8,000
Payments of revolving credit facility 0 (3,000)
Dividends paid (1,920) (1,743)
Other 340 124
------- --------
Net cash provided by financing activities 7,420 3,381
------- --------
Decrease in cash and cash equivalents (6,570) (5,711)
Cash and cash equivalents at beginning of year 16,815 9,508
------- --------
Cash and cash equivalents at end of period $10,245 $ 3,797
======= ========
</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 six months ended June 30, 1997 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 1997. The December 31, 1996 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, 1996.
Note B. Acquisitions
General Steel Corporation - On January 31, 1997, the Company acquired 90% of the
stock of General Steel Corporation, a steel service center, located in
Vancouver, Washington.
Candraft Detailing, Inc. - On March 10, 1997, the Company acquired the stock of
Candraft Detailing, Inc., an engineering and drafting company, located in
Vancouver, British Columbia.
These acquisitions were accounted for as purchases and, accordingly, the assets
acquired and liabilities assumed were recorded at their fair value at the date
of acquisition. The total costs of these acquisitions were $8.3 million.
-7-
<PAGE>
Item 1. Financial Statements (Continued)
Note C. Costs and Estimated Profits on Uncompleted Contracts
Costs and estimated profits on uncompleted contracts are summarized as follows:
<TABLE>
<CAPTION>
June 30, December 31,
(in thousands) 1997 1996
---------- -------------
<S> <C> <C>
Costs incurred on uncompleted contracts $ 570,823 $ 646,534
Estimated profits 67,798 88,729
--------- ---------
638,621 735,263
Less: Billings to date (605,459) (709,163)
--------- ---------
$ 33,162 $ 26,100
========= =========
</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>
June 30, December 31,
(in thousands) 1997 1996
--------- -------------
<S> <C> <C>
Costs and estimated profits in excess of billings $40,793 $ 36,831
Billings in excess of costs and estimated profits (7,631) (10,731)
------- --------
$33,162 $ 26,100
======= ========
</TABLE>
Included in costs and estimated profits in excess of billings on uncompleted
contracts was approximately $6.5 million at June 30, 1997 and December 31, 1996,
respectively, relating to an unapproved change order arising from a dispute over
design and specification changes.
On May 14, 1996, the Company filed an action in the United States District Court
for the Northern District of Illinois (Eastern Division) captioned PITT-DES
MOINES, INC. V. METROPOLITAN PIER & EXPOSITION AUTHORITY ET AL. seeking
reimbursement in excess of $15.0 million for additional work and making other
claims in connection with an unapproved change order arising from a dispute over
design and specification changes. On June 4, 1996, certain of the defendants in
said action made counterclaims against the Company in amounts approximating $3.5
million. While counsel believes that the Company has a basis for the claim,
neither management nor counsel is able to predict with certainty the ultimate
resolution of this matter. As additional information becomes available, the
Company may revise its estimate of potential recovery, which could result in a
material adjustment to the results of operations in future periods.
-8-
<PAGE>
Item 1. Financial Statements (Continued)
Note D. Contingencies
There are various claims and legal proceedings against the Company arising from
the normal course of business. 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. Additionally, amounts
reflected in results of operations and in the statements of financial condition
during the three years ended December 31, 1996, have also not been material.
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.
As previously reported, 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. Various personal injury claims
had been asserted against the Company, and others, as a result of the accident
(the "Personal Injury Cases"). As of December 31, 1996, the Company's insurance
carriers have settled all of the claims against the Company in the Personal
Injury Cases in which the Company was a defendant without the Company incurring
any additional cost.
An investigation of the November 3, 1993 accident was 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. The Company contested the assessment
(the "Civil Penalty Proceeding") and in an order dated April 28, 1995, an
administrative law judge dismissed OSHA's case assessing civil penalties. OSHA
appealed that dismissal and in an order dated March 24, 1997, the Occupational
Safety and Health Review Commission reversed the dismissal and entered an order
staying any further proceedings in the Civil Penalty Proceeding pending
disposition of the OSHA Criminal Proceeding (See below.)
-9-
<PAGE>
Item 1. Financial Statements (Continued)
Note D. Contingencies (Continued)
As a result of the OSHA/Justice Department investigation, on August 23, 1996,
the Company was served with an indictment issued by a grand jury for the United
States District Court for the Northern District of Illinois (the "OSHA Criminal
Proceeding"). The indictment alleges that the Company is guilty of two
misdemeanors for violations of the Occupational Safety Health Act (and
regulations promulgated thereunder) concerning the erection of structural steel
members around the time of the November 3, 1993 accident and that such
violations caused the deaths of the two men killed in the accident.
In the OSHA Criminal Proceeding, a jury trial commenced on July 15, 1997 and on
July 31, 1997 the jury returned a verdict of guilty against the Company for two
counts of misdemeanor violations of OSHA regulations resulting in the deaths of
two men killed in the accident. The Department of Justice has reported that the
maximum criminal fines and penalties which can be assessed, as a result of the
conviction, is $1.0 million.
The Company intends to seek a new trial in this matter and/or perfect an appeal
of the jury verdict, by filing various post-trial motions which are due by
September 12, 1997. The Department of Justice will have until October 10, 1997
to respond to the Company's motions. If a new trial is not granted, the Company
will file an appeal with the United States Court of Appeals for the Seventh
Circuit.
Management and counsel believe that the Company has significant and meritorious
points entitling the Company to a new trial in this matter.
Any criminal fines or penalties to be assessed against the Company in this
matter will be the subject of a sentencing hearing, yet to be scheduled.
Management believes that any fines, penalties and costs of defense in this
matter, which are uninsured, will not be material to the Company's financial
condition, although they could be material to the Company's reported results of
operations for the period in which such payments are incurred. As a result of
the Justice Department's actions, other claims, actions, or proceedings may be
instituted against the Company. While the Company has no reason to believe that
any such claim, action or proceeding will be instituted against it, the Company
cannot predict the likelihood of such a claim, action or proceeding being
instituted against it, and cannot assess the availability of any insurance
coverage or the possibility or materiality of an adverse result in the event of
any such claim, action or proceeding in advance of a claim, action or proceeding
being instituted.
On June 20, 1996 the Company was served with a subpoena to appear and produce
documents before the Grand Jury of the United States District Court for the
Western District of Wisconsin in connection with the United States Department of
Justice Antitrust Division's investigation of bid rigging and other criminal
violations in the steel bridge fabrication industry. The Company has been
informed that it is not presently the target of the investigation but that it
and other companies in the steel bridge fabrication industry are the subjects of
the investigation.
-10-
<PAGE>
Item 1. Financial Statements (Continued)
Note D. Contingencies (Continued)
The Company has no reason to believe that it will become a target of the
investigation or that a criminal action will be instituted against it in these
matters. If the Company became a target or a criminal investigation were
instituted, the Company believes that it has significant and meritorious
defenses to any such charges and intends to vigorously defend them.
Management believes that the ultimate outcome of any matter currently pending
against the Company will not materially affect the financial position of the
Company although they could be material to the reported results of operations
for the period in which they occur.
This quarterly report on Form 10-Q contains certain forward-looking statements
as to the outcome of various claims and legal proceedings. Actual results may
differ with respect to such claims and proceedings as a result of factors over
which the Company does not have any control, including, but not limited to, new
developments, changes in the laws or regulations and the positions taken by the
opposing parties, the courts or the finders of fact.
-11-
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1997 COMPARED WITH THREE MONTHS ENDED JUNE 30, 1996.
The Company reported net income of $3.6 million, or $1.01 per share, on earned
revenue of $119.2 million for the quarter ended June 30, 1997. These results
compare with net income of $3.4 million, or 97 cents per share, on earned
revenue of $121.6 million for the same quarter last year. Earned revenue for
the current quarter decreased $2.4 million when compared with the previous year
quarter. The most significant impact on earned revenue was attributable to the
closure of the Melrose Park, Illinois fabrication facility. Income from
operations increased 9% on the strong performance of the Steel Service Centers.
The Engineered Construction Division reported a 4.6 percent decrease in earned
revenue when compared with the same period in 1996. Income from operations
remained relatively unchanged at $1.6 million while selling, general and
administrative (SG&A) expense, as a percentage of earned revenue, increased from
8.2 percent to 9.5 percent currently. This increase was attributed to a lower
volume of earned revenue along with an increase in estimating costs due to pre-
bid engineering activity. New awards for the quarter of $64 million increased
$3.8 million from $60.2 million for the quarter ended June 30, 1996. This
resulted in a strong backlog level of $147 million at June 30, 1997 versus $107
million at June 30, 1996.
For the current quarter, Steel Construction reported earned revenue of $24.8
million and income from operations of $1.9 million. These results compare with
earned revenue of $33.5 million and income from operations of $2.9 million for
the quarter ended June 30, 1996. SG&A expense, as a percentage of earned
revenue, increased to the current level of 6.8 percent from 4.7 percent from the
previous year quarter. The most significant impact on current results was the
closure of the Melrose Park structural steel fabricating facility. This
facility contributed approximately 38% to Steel Construction earned revenue and
positively impacted income from operations during the second quarter of 1996.
For the current quarter, this facility reported a decrease in earned revenue and
reported an operating loss due to reduced volume and exit costs related to the
closure when compared with the same quarter in 1996. New awards for the quarter
of $4.8 million represent a significant decrease when compared with new awards
for the same quarter in 1996. The decrease, primarily in building contracts,
resulted in a lower but respectable backlog level of $49.5 million at June 30,
1997 versus $73.7 million at June 30, 1996. As indicated in "Costs and
Estimated Profits on Uncompleted Contracts" in Notes to Consolidated Financial
Statements, included in costs and estimated profits in excess of billings on
uncompleted contracts at June 30, 1997 was approximately $6.5 million relating
to an unapproved change order arising from a dispute over design and
specification changes on a project currently under construction.
-12-
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (Continued)
RESULTS OF OPERATIONS (Continued)
THREE MONTHS ENDED JUNE 30, 1997 COMPARED WITH THREE MONTHS ENDED JUNE 30, 1996.
(Continued)
Steel Service Centers earned revenue for the current quarter of $48.9 million
represents a 22 percent improvement from 1996 and also represents 41 percent of
PDM's consolidated earned revenue for the second quarter of 1997. Additionally,
income from operations of $4.7 million increased 49 percent when compared with
the second quarter of 1996. A significant portion of these increases,
particularly in earned revenue, can be attributed to the first quarter
acquisition of General Steel Corporation. SG&A expense, as a percentage of
earned revenue, remained relatively unchanged.
Other expense of $170,000 for the current quarter compares with other income of
$61,000 for the same quarter in 1996. The change was primarily the result of a
gain realized on the sale of a foreign investment during the second quarter of
1996.
SIX MONTHS ENDED JUNE 30, 1997 COMPARED WITH SIX MONTHS ENDED JUNE 30, 1996.
For the first half of 1997, net income totaled $5.7 million, or $1.61 per share,
on earned revenue of $228.8 million. These results compare with net income of
$6.6 million, or $1.87 per share, on earned revenue of $237.6 million for the
same period of last year. As previously reported, a one-time event, the closure
of our Melrose Park structural steel fabricating facility, had a negative impact
on the 1997 first half results.
For the six months ended June 30, 1997, Engineered Construction reported earned
revenue of $89 million and income from operations of $2 million. These results
compare with earned revenue of $94.2 million and income from operations of $3.5
million for the same period in 1996. New awards of $134.3 million increased
$25.7 million from $108.6 million for the six months ended June 30, 1996. SG&A
expense, as a percentage of earned revenue, for the previous year's six month
period was eight percent and increased to 9.4 percent for the current six month
period. This increase was primarily the result of an increase in sales and
estimating costs due to pre-bid engineering activity.
Steel Construction reported earned revenue of $49.8 million and income from
operations of $3.4 million for the six months ended June 30, 1997. These
results compare with earned revenue of $67 million and income from operations of
$6.2 million for the same period in 1996. The most significant impact on
results for the Steel Construction business segment was the previously reported
closure of the Melrose Park structural steel fabricating facility.
-13-
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (Continued)
RESULTS OF OPERATIONS (Continued)
SIX MONTHS ENDED JUNE 30, 1997 COMPARED WITH SIX MONTHS ENDED JUNE 30, 1996.
(Continued)
Steel Service Centers earned revenue was $90.4 million in the first six months
of 1997 compared with $77.7 million for the same period in 1996. Income from
operations of $8.0 million currently increased from $6.0 million when compared
with the first six month period in 1996. SG&A expense, as a percentage of
earned revenue, was 7.5 percent for the current six months when compared with
7.3 percent for the previous year's six months. A significant portion of the
increases in earned revenue and SG&A expenses was attributed to the acquisition
of General Steel Corporation during the first quarter of 1997.
In February 1997, the Financial Accounting Standards Board issued Statement No.
128, "Earnings Per Share" which is required to be adopted by the Company for the
year ended December 31, 1997. The impact of Statement 128 on the calculation of
earnings per share for the Company is not expected to be material.
As indicated in the "Contingencies" section of the Notes to Consolidated
Financial Statements, the Company's future results of operations could be
materially adversely affected by the Company's conviction on July 31, 1997 of
two misdemeanors for violations of the Occupational Safety Health Act (and
regulations promulgated thereunder)(see Note D "Contingencies" Notes to
Consolidated Financial Statements).
-14-
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (Continued)
LIQUIDITY AND CAPITAL RESOURCES
During the six months ended June 30, 1997, the Company's primary sources of
liquidity were cash and cash equivalents and proceeds from the revolving credit
facility which were used for investing activities and to fund the growth in
working capital. Working capital increased $9.2 million from $75.5 million on
December 31, 1996 to $84.7 million currently. On June 30, 1997, cash and cash
equivalents were $10.2 million compared with $16.8 million on December 31, 1996.
Net cash utilized by operating activities of $4.4 million decreased by $3.2
million when compared with the same period in 1996. Changes in operating assets
and liabilities, primarily accounts receivable and costs, estimated profits and
billings (net), accounted for the net decrease. These components are affected
by the mix, stage of completion and commercial terms of contracts.
The acquisition of General Steel Corporation on January 31, 1997, accounted for
a substantial portion of the cash utilized by investing activities. The Company
intends to continue to evaluate and selectively pursue opportunities for growth
or expansion of its business. Capital expenditures, exclusive of acquisitions,
of $2.4 million for the six months ended June 30, 1997 were primarily for plant
machinery and equipment and the previously announced construction of a new
structural steel fabricating facility in Eloy, Arizona. This facility is slated
to be operational by the first quarter of 1998. Capital expenditures of $1.8
million were primarily for computer equipment and plant machinery and equipment
during the six months ended June 30, 1996. Total expenditures for the year
ending December 31, 1997 should approximate $5.7 million.
Cash provided by financing activities was primarily from proceeds from the
revolving credit facility. The Company paid cash dividends of $1.9 million ($.55
per share) during the period ended June 30, 1997. Cash dividends of $1.7 million
($.50 per share) were paid during the same period in 1996. 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 the unused portion of a $40.0 million unsecured revolving credit
facility which matures December 31, 1999. This facility contains an annual
option to renew for an additional one-year period, subject to lender approval.
On June 30, 1997, $9.0 million of borrowings and $12.0 million of stand-by
letters of credit were outstanding under this credit facility.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not applicable.
-15-
<PAGE>
Part II - Other Information
Item 1. Legal Proceedings
Refer to Part I Item 1, Notes C and D of the Notes to Consolidated
Financial Statements for information, which information is incorporated
herein by reference.
Item 4. Submission of Matters to a Vote of Security Holders
On May 1, 1997, the Company held its annual stockholders meeting. Only
holders of common stock of record at the close of business on March 10,
1997 were entitled to notice of and to vote at the Annual Meeting. As
of that date, the Company had outstanding 2,322,001 shares of common
stock. The two matters voted upon at the Annual Meeting were the
election of four directors and the ratification of the appointment of
Ernst & Young LLP as auditors for the year ending December 31, 1997.
Each of the Company's nominees for director was reelected at the Annual
Meeting. The total number of votes cast for the election of directors
was 2,109,004. Following is a separate tabulation with respect to each
director:
<TABLE>
<CAPTION>
Votes For Votes Withheld
--------- --------------
<S> <C> <C>
J. C. Bates 2,092,967 16,037
P. O. Elbert 2,093,807 15,197
Wm. W. McKee 2,093,807 15,197
J. W. Robinson 2,093,807 15,197
</TABLE>
The total number of votes cast for the ratification of the appointment
of Ernst & Young LLP as auditors for the year ending December 31, 1997,
was 2,109,004 with 2,091,880 votes for, 15,420 votes against and 1,704
votes abstained.
There were no broker non-votes with respect to the two matters voted
upon.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 4.1 - Eighth Amendment to Amended and Restated Credit Agreement
dated June 30, 1997.
Exhibit 11.1 - Computation of earnings per share for the three months
ended June 30, 1997 and 1996.
-16-
<PAGE>
Part II - Other Information (Cont'd)
Item 6. Exhibits and Reports on Form 8-K (continued)
Exhibit 11.2 - Computation of earnings per share for the six months
ended June 30, 1997 and 1996.
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 June 30, 1997.
-17-
<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: August 14, 1997 By: /s/ Wm. W. McKee
----------------------------
Wm. W. McKee
(President and
Chief Executive Officer)
Principal Financial Officer:
Date: August 14, 1997 By: /s/ R. A. Byers
----------------------------
R. A. Byers
(Vice President
Finance and Treasurer)
-18-
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number
- -------
<S> <C>
4.1 Eighth Amendment to Amended and Restated Credit Agreement dated June 30, 1997
11.1 Computation of earnings per share for the three months ended
June 30, 1997 and 1996.
11.2 Computation of earnings per share for the six months ended
June 30, 1997 and 1996.
27 Financial Data Schedule.
</TABLE>
-19-
<PAGE>
Exhibit 4.1
EIGHTH AMENDMENT TO
AMENDED AND RESTATED CREDIT AGREEMENT
THIS EIGHTH AMENDMENT ("Eighth Amendment") made as of June 30, 1997 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, the Fourth Amendment to Amended and
Restated Credit Agreement dated as of June 24, 1994, the Fifth Amendment to
Amended and Restated Credit Agreement dated as of December 8, 1994 and, the
Sixth Amendment to Amended and Restated Credit Agreement dated as of May 31,
1995 and the Seventh Amendment to Amended and Restated Credit Agreement dated as
of June 30, 1996 (said Amended and Restated Credit Agreement as so amended
herein referred to as 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 Amendments to Subsection 9.1 of Original Credit
-----------------------------------------------
Agreement. (i) The following definition set forth in Subsection 9.1 of the
- ---------
Original Credit Agreement is hereby amended and restated as follows:
<PAGE>
"Governmental Person" means the government of the United States, the
government of Canada or the government of any state or locality therein,
any political subdivision or any governmental, quasi-governmental,
judicial, public or statutory instrumentality, authority, body or entity,
or other regulatory bureau, authority, body or entity of the United States
or any state or locality therein, including the Federal Deposit Insurance
Company, the Comptroller of the Currency or the Board of Governors of the
Federal Reserve System, any central bank or any comparable authority.
"Maturity Date" means December 31, 1999 or such later date as is
ultimately determined in accordance with Subsection 1.1g hereof.
"Significant Subsidiaries" means collectively General, Oregon and
Strocal.
(ii) The following new definition is inserted into Section 9.1 of the
Original Credit Agreement in alphabetical order:
"Eighth Amendment" shall mean that Eighth Amendment to Amended and
Restated Credit Agreement dated as of June 30, 1997 between the Borrower,
the Banks, the Agent and the Issuing Bank.
"General" means General Steel Corporation, a Washington corporation
and a Subsidiary of the Borrower.
Section 1.02 Amendments to Section 5.7(vi) of the Original Credit
----------------------------------------------------
Agreement. Section 5.7 (vi) of the Original Credit Agreement is hereby amended
- ---------
to delete the reference to $7,500,000 and substitute in place thereof a
reference to $10,000,000.
Section 1.03 Amendments to Schedules to the Original Credit Agreement.
--------------------------------------------------------
Schedule 3.1b and Schedule 3.9 to the original Credit Agreement are deleted and
Schedule 3.1b and Schedule 3.9 attached to this Eighth Amendment are substituted
in place thereof.
Section 1.04 No Other Amendments. The amendments to the Original Credit
-------------------
Agreement set forth in Sections 1.01 through 1.03 hereof do not either
implicitly or explicitly alter, waive or amend, except as expressly provided in
this Eighth Amendment, the provisions of the Original Credit Agreement. The
amendments set forth in Sections 1.01 through 1.03 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 Eighth Amendment hereunder, the Borrower represents and warrants that:
<PAGE>
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 Eighth Amendment.
ARTICLE III
MISCELLANEOUS
Section 3.01 Ratification of Terms. This Eighth Amendment shall be
---------------------
construed in connection with and as part of the Original Credit Agreement; and
the Original Credit Agreement is hereby amended and modified to include this
Eighth Amendment. Except as expressly amended by prior Amendments to the Credit
Agreement and this Eighth 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 Eighth 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 Eighth Amendment by
telecopier shall be effective as of delivery of a manually executed counterpart
of this Eighth 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.
Section 3.04 Conditions Precedent. This Eighth 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 Eighth Amendment;
(B) A certificate of the chief financial officer of the Borrower
certifying that, as of the date of this Eighth 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 Eighth Amendment;
(C) A certified copy of the corporate action of the Borrower
authorizing the execution and delivery of the performance under this Eighth
Amendment;
(D) A good standing certificate for the Borrower issued by the
Secretary of State of the state of its incorporation and of the jurisdiction of
its principal place of business;
<PAGE>
(E) A lien certificate for the Borrower issued by the Department of
Revenue of the state of its incorporation and of the jurisdiction of its
principal place of business;
(F) A certificate of the secretary or assistant secretary of the
Borrower certifying the names of the persons authorized to sign this Eighth
Amendment and all other documents and certificates delivered hereunder together
with the true signatures of such persons;
(G) 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 Original Credit Agreement. 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.
Section 3.06 Entire Agreement. This Eighth 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
------------
Eighth Amendment shall be interpreted in such manner as to be effective and
valid under applicable law but if any provision of this Eighth 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 Eighth Amendment.
Section 3.08 Governing Law. THIS EIGHTH 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 Eighth Amendment are for
--------
purposes of reference only and shall not limit or otherwise affect the meaning
thereof.
Section 3.10 References. All notices, communications, agreements,
----------
certificates, documents or other instruments executed and delivered after the
execution and delivery of this Eighth Amendment may refer to the Original Credit
Agreement without making specific reference to this Eighth Amendment, but
nevertheless all such references shall include this Eighth Amendment unless the
context requires otherwise.
Section 3.11 Taxes. The Borrower hereby agrees (i) to pay any and all
-----
stamp and other taxes and fees payable or determined to be payable in connection
with the execution, delivery, filing and recording of this Eighth Amendment and
such other documents, and (ii) to save each of the Banks, the Issuing Bank and
the Agent harmless from and against any and all
<PAGE>
liabilities with respect to or resulting from any delay in paying or omission to
pay such taxes and fees.
Section 3.12 Costs and Expenses. The Borrower hereby agrees to pay
------------------
all costs and expenses of the Banks, the Issuing Bank and the Agent (including,
without limitation, the reasonable fees and the disbursements of the Agent's
special counsel, Tucker Arensberg, P.C.) in connection with the preparation,
execution and delivery of this Eighth Amendment and the related documents.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
IN WITNESS WHEREOF, the parties hereto, with the intent to be legally bound
hereby have caused this Eighth Amendment to be duly executed by their proper and
duly authorized officers as of the day and year first above written.
<TABLE>
<CAPTION>
ATTEST: (SEAL) PITT-DES MOINES, INC.
<S> <C> <C>
By /s/ Thomas R. Lloyd By /s/ Richard A. Byers
--------------- ---------------------------
Name: Thomas R. Lloyd Name: Richard A. Byers
Title: General Counsel & 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
By /s/ Lawrence W. Jacobs
----------------------------
Name: Lawrence W. Jacobs
Title: Vice President
WELLS FARGO BANK, N.A.
By /s/ Judy Pallios
---------------------------
Name: Judy Pallios
Title: Vice President
AMERICAN NATIONAL BANK
By /s/ James R. Popp
---------------------------
Name: James R. Popp
Title: Vice President
</TABLE>
<PAGE>
Exhibit 11.1
PITT-DES MOINES, INC.
Computation of Earnings Per Share
(Unaudited)
<TABLE>
<CAPTION>
Three months ended
June 30,
------------------------------
1997 1996
---------- ----------
<S> <C> <C>
Primary
Average shares outstanding 3,495,652 3,485,449
Dilutive stock options based on treasury stock
method using average market price 47,006 45,592
---------- ----------
3,542,658 3,531,041
========== ==========
Net income $3,569,706 $3,425,512
========== ==========
Per common share:
Net income per common share $ 1.01 $ .97
========== ==========
Fully Diluted
Average shares outstanding 3,495,652 3,485,449
Dilutive stock options based on treasury stock method
using greater of period-end or average market price 64,000 45,592
---------- ----------
3,559,652 3,531,041
========== ==========
Net income $3,569,706 $3,425,512
========== ==========
Per common share:
Net income per common share $ 1.00 $ .97
========== ==========
</TABLE>
<PAGE>
Exhibit 11.2
PITT-DES MOINES, INC.
Computation of Earnings Per Share
(Unaudited)
<TABLE>
<CAPTION>
Six months ended
June 30,
----------------------------
1997 1996
---------------- ----------
<S> <C> <C>
Primary
Average shares outstanding 3,489,309 3,484,296
Dilutive stock options based on treasury stock
method using average market price 43,112 43,572
---------- ----------
3,532,421 3,527,868
========== ==========
Net income $5,671,228 $6,599,842
========== ==========
Per common share:
Net income per common share $ 1.61 $ 1.87
========== ==========
Fully Diluted
Average shares outstanding 3,489,309 3,484,296
Dilutive stock options based on treasury stock method
using greater of period-end or average market price 56,306 47,692
---------- ----------
3,545,615 3,531,988
========== ==========
Net income $5,671,228 $6,599,842
========== ==========
Per common share:
Net income per common share $ 1.60 $ 1.87
========== ==========
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 10,245
<SECURITIES> 0
<RECEIVABLES> 79,429
<ALLOWANCES> 1,018
<INVENTORY> 18,329
<CURRENT-ASSETS> 154,184
<PP&E> 111,030
<DEPRECIATION> 69,474
<TOTAL-ASSETS> 208,932
<CURRENT-LIABILITIES> 69,526
<BONDS> 9,000
0
0
<COMMON> 33,549
<OTHER-SE> 89,162
<TOTAL-LIABILITY-AND-EQUITY> 208,932
<SALES> 228,816
<TOTAL-REVENUES> 228,816
<CGS> 197,240
<TOTAL-COSTS> 197,240
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 232
<INCOME-PRETAX> 9,317
<INCOME-TAX> 3,646
<INCOME-CONTINUING> 5,671
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,671
<EPS-PRIMARY> 1.61
<EPS-DILUTED> 1.60
</TABLE>
