<PAGE>
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 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)
Pennsylvania 25-0729430
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
10200 Grogan's Mill Road, Suite 300, The Woodlands, Texas 77380
(Address of principal executive offices) (Zip Code)
281-774-2200
(Registrant's telephone number, including area code)
Securities Registered Pursuant to Section 12(b) of the Act:
Title of each Class Name of each exchange on which registered
------------------- -----------------------------------------
Common Stock, no par value American Stock Exchange
Securities Registered Pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (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
----- -----
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K [ X ].
The aggregate market value of the registrant's voting stock held by non-
affiliates was at least $72,538,534 on February 27, 1998, based upon the average
between the highest and lowest sales prices of the registrant's Common Stock as
reported in the consolidated transactions reporting system.
Common Stock outstanding as of February 27, 1998 . . . . .3,515,687 shares.
Documents Incorporated by Reference:
Certain portions of the documents of the Registrant listed below have been
incorporated by reference into the indicated parts of this Annual Report on Form
10-K:
<TABLE>
<S> <C>
Proxy Statement anticipated to be dated March 31, 1998 . . . . . . . . . . . . Part III, Items 10-13
Annual Report to Stockholders for fiscal year ended December 31, 1997 . . . . . . Part I and Part II
</TABLE>
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<PAGE>
PART I
Item 1. Business
General
Pitt-Des Moines, Inc. and its subsidiaries ("PDM" or the "Company") began
conducting business in 1892 and was incorporated in Pennsylvania on February 14,
1916. The Company's principal executive offices are located at 10200 Grogan's
Mill Road, Suite 300, The Woodlands, TX 77380, telephone number (281) 774-2200.
As a result of a refinement in the Company's strategic direction, significant
acquisitions, and the closing of the Melrose Park structural steel fabricating
facility, the Company changed its reporting in 1997 to two business segments:
Engineering and Construction, and Steel Distribution.
A summary of the Company's products and services by business segment is set
forth below.
Engineering and Construction
In February of 1997, the Company announced plans to construct a new steel
fabricating facility in Eloy, Arizona. This new facility is expected to be
operational in the second quarter of 1998. Along with this plan, the Company
announced the decision to close its Melrose Park structural steel fabricating
facility in Illinois.
On March 10, 1997, the Company acquired Candraft Detailing Inc., an engineering
and drafting company, located in Vancouver, British Columbia. In June, the
Company acquired a majority ownership in Tecnologia de Almacenamiento
Industrial, TAI,S.A. (TAISA) an engineering and construction company located in
Caracas, Venezuela. In addition, in October the Company acquired Sheffield
Steel Products, a bridge fabricator located in northeastern Florida.
The Engineering and Construction business provides:
a) The capability to design, fabricate and erect oil and chemical storage
tanks used for storing crude oil, petroleum, gasoline and other petroleum
derivatives and chemicals. The Company has developed and patented certain
systems, parts and sealing devices which help to reduce the hazards of fire
and explosion from the stored products, as well as to decrease air
pollution and vapor loss. Additionally, the Company fabricates and erects
various vessels used in the processing of a variety of oil and chemical
products. The oil and chemical tanks, sealing devices and process vessels
are produced principally for the petroleum, petrochemical, chemical and
food processing industries as well as government agencies.
b) The capability to design, fabricate and erect elevated and flat bottom
water storage tanks for water service and fire protection requirements and
treatment tanks for the purification, filtration and softening of water.
The principal purchasers of the Company's water storage tanks and
wastewater treatment facilities are government agencies and private
industry.
-2-
<PAGE>
Item 1. Business (Cont'd)
c) The capability to design, fabricate and erect many types of facilities and
structures; services offered include research and design, material
selection, preparation of detailed drawings, shop fabrication, field
erection and subcontract management.
d) The capability to fabricate and erect miscellaneous plate work which
includes penstocks and breechings, stacks and stack liners, scrubbers,
absorbers, flow conductors and heat exchangers for utilities and private
industry.
e) The capability to design, fabricate and erect high speed wind tunnels,
altitude test chambers, hydrospace test facilities and high vacuum and
thermal test facilities for use in connection with energy, aerospace and
defense research.
f) The capability to design and build supercritical fluid extraction
facilities for the food processing industry.
g) The capability to design and build anaerobic digesters for the wastewater
treatment industry.
h) The capability to fabricate and erect structural steel for commercial,
institutional and public sector buildings for government agencies, private
developers and general contractors.
i) The capability to fabricate structural steel for new bridges and fabricate
and erect structural steel for bridge rehabilitation for government
agencies and general contractors.
Steel Distribution
The Company's Steel Distribution Segment operates seven steel service centers
and three culvert facilities located in the West and Midwest regions of the
United States. On January 31, 1997, the Company acquired 90% of the capital
stock of General Steel Corporation, a steel service center facility, located in
Vancouver, Washington. This acquisition will expand this segment's market area
into the Pacific Northwest. The steel service centers process and distribute to
end users a general line of carbon steel products including plates, sheets,
structural shapes, bars, tubes, pipe and other miscellaneous metal products.
This segment also manufactures and markets to end users corrugated metal culvert
pipe and accessories. The Steel Distribution's primary markets include steel
fabricators, original equipment manufacturers, mining, logging, agricultural and
road construction industries.
The Company and the industry as a whole deem the maintenance of adequate
levels of inventory to be integral to the Steel Distribution business. The
Company believes that it has adequate levels of inventory on hand to meet
current and anticipated customer demand.
-3-
<PAGE>
Item 1. Business (Cont'd)
Other
Several large companies compete nationally in some product lines with the
Company and there are several local and regional companies that compete in
certain product lines in specific geographic areas. The majority of the
Company's business is secured through open competitive bidding or through direct
negotiations with industry or government agencies. Competition is based
primarily on performance including the ability to provide design, engineering
and on-site field construction services in a cost-effective, timely manner. The
Steel Distribution Segment's volume of business is based on the price, delivery,
credit terms, and first stage preprocessing of products, offered to its
customers as well as its reputation.
The Company's earned revenue was $475 million in 1997, compared with $468
million in 1996 and $461 million in 1995. For further financial information
refer to Consolidated Financial Statements contained in PDM's 1997 Annual Report
to Stockholders and incorporated herein by reference.
The principal raw materials essential to the Company's business are steel,
alloys and other metal plates and structural sections. The Company procures
these raw materials from various domestic and foreign sources including, the
mills of USX Corporation, Bethlehem Steel Corporation, Northwestern Steel and
Wire Company, Nucor Steel, British Steel and Mitsubishi International
Corporation.
The Company has a license and technical assistance agreement with Roediger, a
German corporation, which gives the Company exclusive rights in North America
and other selected countries worldwide to use the Roediger technology, a process
which utilizes anaerobic digestion in the treatment of wastewater. Revenues to
date from this technology have not been material to the Company.
Some components of the other products made and erection techniques used by the
Company are covered by patents owned or licensed by the Company. None of these
are deemed to be material to the Company from an overall financial viewpoint.
The Company had a backlog of uncompleted contracts of $252 million on December
31, 1997 compared to $172 million on December 31, 1996. Substantially all
backlog is expected to be completed during 1998.
Factors such as the type and scope of operations in progress at any given
time, including weather conditions at field sites, create fluctuations in the
employment level at PDM. On December 31, 1997, the Company employed 2,210
persons, of which 730 were salaried personnel and 1,480 were hourly personnel.
Financial information for the Company's two business segments is included
in the Business Segment Information Section of PDM's 1997 Annual Report to
Stockholders, which section is incorporated herein by reference.
-4-
<PAGE>
Item 2. Properties
Operations of the Company are conducted at both owned and leased properties. In
addition, certain owned properties of the Company are leased to third party
tenants. The following table indicates each of the Company's facilities by:
segment, location, type of facility, year operations began, and square footage
of property owned or leased on December 31, 1997:
<TABLE>
<CAPTION>
YEAR
TYPE OF OPERATIONS SQUARE
LOCATION FACILITY BEGAN FOOTAGE
<S> <C> <C> <C>
ENGINEERING AND CONSTRUCTION
- ----------------------------
Harpersville, Alabama Warehouse and office 1996 11,500
Eloy, Arizona Fabrication plant 1998 108,450
Fresno, California Toolhouse 1963 52,140
Stockton, California Fabrication plant and office 1987 143,000
Tustin, California Office 1996 185
Palatka, Florida Fabrication plant and office 1997 130,262
Clive, Iowa Fabrication plant and office 1955 176,540
Des Moines, Iowa Toolhouse 1900 29,000
Pittsburgh, Pennsylvania Office and toolhouse 1927 98,780
Warren, Pennsylvania Fabrication plant 1959 125,960
Franklin, Tennessee Toolhouse 1977 28,220
Conroe, Texas (1) Office 1996 1,600
Hitchcock, Texas (2) Toolhouse 1994 5,000
The Woodlands, Texas (3) Office 1996 19,300
Provo, Utah Fabrication plant 1959 154,950
Eau Claire, Wisconsin Fabrication plant and office 1994 309,500
Wausau, Wisconsin Fabrication plant and office 1991 157,000
Port Coquitlam, B.C. Canada (4) Office 1997 12,300
Trenton, Ontario, Canada (5) Office 1997 800
STEEL DISTRIBUTION
- ---------------------------------
Fresno, California Warehouse and office 1955 112,800
Santa Clara, California Warehouse and office 1947 108,530
Stockton, California Warehouse and office 1967 191,500
Cedar Rapids, Iowa Warehouse and office 1976 66,800
Sparks, Nevada Warehouse and office 1974 78,940
Tualatin, Oregon Warehouse and office 1973 31,620
Spanish Fork, Utah Warehouse and office 1977 74,280
Arlington, Washington (6) Warehouse and office 1993 13,970
Vancouver, Washington (7) Warehouse and office 1997 138,600
</TABLE>
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<PAGE>
Item 2. Properties (Cont'd)
<TABLE>
<CAPTION>
YEAR
TYPE OF OPERATIONS SQUARE
LOCATION FACILITY BEGAN FOOTAGE
<S> <C> <C> <C>
IDLE HOLDINGS, INCLUDING PLANT AND PROPERTY (8)
- -----------------------------------------------
Sacramento, California Land 1966 --
Chicago, Illinois Fabrication plant and office 1987 520,800
Des Moines, Iowa Fabrication plant and office 1900 339,100
Hilliard, Ohio Fabrication plant and office 1971 179,000
Pittsburgh, Pennsylvania Office 1927 10,234
Provo, Utah (9) Office 1959 15,731
</TABLE>
__________
(1) Company leases building from outside third party. Lease will expire
October 1, 1998.
(2) Company leases land and building from outside third party. Lease will
expire July 1, 1999.
(3) Company leases building from outside third party. Lease will expire
August 31, 2006.
(4) Company leases building from outside third party. Lease will expire
November 30, 2002.
(5) Company leases building from outside third party. Lease is month-to
month.
(6) Company leases land from outside third party. Lease will expire January
31, 2003.
(7) Company leases land and building from outside third party. Lease will
expire September 1, 1999.
(8) Company pursues the sale or development of all idle facilities and
regularly evaluates similar opportunities for facilities not fully utilized.
(9) Company is leasing facility to outside third party.
The properties listed above are utilized by the Company's business segments as
indicated. The Company's production capacity is adequate for its present needs.
The Company believes that its properties have been adequately maintained, are
generally in good condition and are suitable for the Company's business as now
conducted.
Item 3. Legal Proceedings
See Contingencies note accompanying the consolidated financial statements
contained in PDM's 1997 Annual Report to Stockholders, which note is
incorporated herein by reference, except that the fourth paragraph of such note
is amended as follows:
In an order dated October 28, 1997 the District Court denied the Company's
post-trial motions in the OSHA Criminal Proceeding. A sentencing hearing was
held on March 20, 1998 and the Company was fined $1,000,250. Such fine was paid
on March 27, 1998. The Company has filed an appeal with the United States Court
of Appeals for the Seventh Circuit.
-6-
<PAGE>
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 this matter. 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.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable
Executive Officers of the Registrant
Information regarding executive officers of the Registrant is presented in
Part III of this report and is incorporated herein by reference.
-7-
<PAGE>
PART II
Information for Items 5, 6 and 7 is included in PDM's 1997 Annual Report to
Stockholders and is incorporated herein by reference (and except for these
sections, and sections incorporated herein by reference in Items 1 and 8 of this
report, PDM's Annual Report to Stockholders is not deemed to be filed as part of
this report):
ANNUAL REPORT
TO STOCKHOLDERS
ITEM NO. TITLE SECTION/TITLE
- -------------------------------------------------------------------------------
Item 5. Market for Registrant's Common Equity Common Stock Information
and Related Stockholder Matters included in Stockholders'
Reference section
Item 6. Selected Financial Data Five-Year Selected
Financial Data
Item 7. Management's Discussion and Analysis Management's Discussion
of Financial Condition and Results of and Analysis
Operations
Item 8. Financial Statements and Supplemental Data
The financial statements consisting of Consolidated Statements of Income,
Consolidated Statements of Financial Condition, Consolidated Statements of Cash
Flows, Consolidated Statements of Stockholders' Equity, Notes to Consolidated
Financial Statements, and Business Segment Information are included in the
Consolidated Financial Statements section of PDM's 1997 Annual Report to
Stockholders, which is incorporated herein by reference. The report of
independent auditors on PDM's consolidated financial statements is contained in
the Report of Independent Auditors and Management section of PDM's 1997 Annual
Report to Stockholders, which is incorporated herein by reference.
The unaudited Two Year Quarterly Results of Operations contained in PDM's 1997
Annual Report to Stockholders is incorporated herein by reference.
Item 9. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure
Not applicable
-8-
<PAGE>
PART III
Item 10. Directors and Executive Officers of the Registrant (1)
Regarding the directors of the Registrant, reference is made to the
information set forth under the caption "Election of Directors" in the Company's
definitive Proxy Statement anticipated to be dated March 31, 1998 (the "Proxy
Statement") which information is incorporated herein by reference.
The principal executive officers of the Company and their recent business
experience are as follows:
W. R. Jackson, age 89
Director since 1940;
Chairman Emeritus since 1988; formerly Chairman of the Board since 1971.
Mr. Jackson has been with the Company since 1936 and is the father of Mr.
Jackson, Jr. and Mrs. Townsend.
P. O. Elbert, age 67
Director since 1988;
Chairman of the Board of the Company since 1990; formerly President of the
Company since 1988 and President, PDM Structural Group since 1987. Mr. Elbert
joined the Company in 1987. Prior to 1987, Mr. Elbert was Vice Chairman of
Chicago Steel Corporation since 1986; formerly a partner of Elbert and McKee
Company since 1984; formerly President and Chief Executive Officer of Flint
Steel Corporation since 1979; and formerly Group Vice President of Inryco,
Inc., a subsidiary of Inland Steel Company since 1969.
Wm. W. McKee, age 59 (2)
Director since 1988;
President and Chief Executive Officer of the Company since 1990; formerly
President, PDM Plate Group since May 1987 and formerly Executive Vice
President, PDM Structural Group since April 1987. Mr. McKee joined the
Company in 1987. Prior to 1987, Mr. McKee was Secretary of Chicago Steel
Corporation since 1986; formerly a partner of Elbert and McKee Company since
1984; formerly a consultant with McKee and Associates since 1983; formerly
President of Hogan Manufacturing since 1980; and formerly President of Herrick
Corporation since 1973.
R. A. Byers, age 50 (2)
Treasurer since 1988 and Vice President, Finance and Administration since
1987; formerly Vice President, Finance since 1984; formerly Controller since
1982; formerly Assistant Controller since 1981; formerly Manager of Financial
Reporting since 1979; and formerly with Ernst & Young LLP for ten years.
-9-
<PAGE>
Item 10. Directors and Executive Officers of the Registrant (Cont'd)
T. R. Lloyd, age 49 (2)
Secretary and General Counsel since 1990; formerly Senior Attorney of Buchanan
Ingersoll Professional Corporation, since 1989; formerly Vice President,
Secretary and General Counsel for Arch Mineral Corporation since 1984; and
formerly Director and Secretary of U.S. Steel Mining Co., Inc. since 1979.
____________________
(1) Except where otherwise indicated, all references are to positions held
with Pitt-Des Moines, Inc. Each executive officer of the Company is
elected annually by the Board of Directors until his successor is elected
and qualified, and each has served continually as an officer since first
elected.
(2) The Company has agreements with each of Messrs. McKee, Byers and Lloyd
covering, among other things, their positions as executive officers of the
Company after a change of control.
Item 11. Executive Compensation
Reference is made to the information set forth under the captions "Board of
Directors and Committees of the Board," "Executive Compensation and Other
Information," and "Compensation Committee Interlocks and Insider Participation"
appearing in the Company's Proxy Statement, which information is incorporated
herein by reference; provided, however, that the information set forth under the
captions "Compensation Committee Report on Executive Compensation" and
"Performance Graph" in the Proxy Statement shall not be deemed to be soliciting
material or to be "filed" with the Commission or subject to Regulation 14A or
14C (other than as provided in Item 402 of Regulation S-K) or to the liabilities
of Section 18 of the Securities Exchange Act of 1934, as amended.
Item 12. Security Ownership of Certain Beneficial Owners and Management
Reference is made to the information contained under the captions
"Stockholdings of Management" and "Principal Holders of Common Stock" in the
Company's Proxy Statement, which information is incorporated herein by
reference.
Item 13. Certain Relationships and Related Transactions
Reference is made to the information contained under the caption "Compensation
Committee Interlocks and Insider Participation" in the Company's Proxy Statement
which information is incorporated herein by reference.
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<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) 1. Financial Statements
The following consolidated financial statements and Report of
Independent Auditors previously incorporated by reference in Part II,
Item 8 of this report are incorporated herein by reference:
Report of Independent Auditors
Consolidated Statements of Income -- Years Ended December 31, 1997,
1996 and 1995
Consolidated Statements of Financial Condition as of December 31, 1997
and 1996
Consolidated Statements of Cash Flows -- Years Ended December 31, 1997,
1996 and 1995
Consolidated Statements of Stockholders' Equity -- Years Ended December
31, 1997, 1996 and 1995
Notes To Consolidated Financial Statements
2. Financial Statement Schedules
The following consolidated financial statement schedule of Pitt-Des
Moines, Inc. and subsidiaries is included in Item 14(d):
Schedule II. Valuation and Qualifying Accounts for years ended December
31, 1997, 1996 and 1995
All other schedules are omitted because they are not applicable or the
required information is shown in the consolidated financial statements
or notes thereto.
3. Exhibits:
3.1 Articles of Incorporation, as amended to date (filed as Exhibit 3.1 to
the Company's quarterly report on Form 10-Q for the quarter ended
September 30, 1989 and incorporated herein by reference)
3.2 Bylaws, as amended to date (filed as Exhibit 3.2 to the Company's
quarterly report on Form 10-Q for the quarter ended September 30, 1989
and incorporated herein by reference)
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<PAGE>
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(Cont'd)
4.1 Amended and Restated Credit Agreement dated as of June 30, 1992 by and
among Pitt-Des Moines, Inc. and Pittsburgh National Bank, Wells Fargo
Bank, N.A. and American National Bank (filed as Exhibit 4.1 to the
Company's annual report on Form 10-K for the year ended December 31,
1992 and incorporated herein by reference)
4.2 First Amendment dated November 23, 1992 to Credit Agreement filed as
Exhibit 4.1 hereto (filed as Exhibit 4.2 to the Company's annual report
on Form 10-K for the year ended December 31, 1992 and incorporated
herein by reference)
4.3 Second Amendment dated June 10, 1993 to Credit Agreement filed as
Exhibit 4.1 hereto (filed as Exhibit 4.1 to the Company's quarterly
report on Form 10-Q for the quarter ended June 30, 1992 and
incorporated herein by reference)
4.4 Third Amendment dated December 16, 1993 to Credit Agreement filed as
Exhibit 4.1 hereto (filed as Exhibit 4.2 to the Company's annual report
on Form 10-K for the year ended December 31, 1993 and incorporated
herein by reference)
4.5 Fourth Amendment dated June 14, 1994 to Credit Agreement filed as
Exhibit 4.1 hereto (filed as Exhibit 4.1 to the Company's quarterly
report on Form 10-Q for the quarter ended June 30, 1994 and
incorporated herein by reference)
4.6 Fifth Amendment dated December 8, 1994 to Credit Agreement filed as
Exhibit 4.1 hereto (filed as Exhibit 4.6 to the Company's annual report
on Form 10-K for the year ended December 31, 1994 and incorporated
herein by reference)
4.7 Sixth Amendment dated May 31, 1995 to Credit Agreement filed as Exhibit
4.1 hereto (filed as Exhibit 4.1 to the Company's quarterly report on
Form 10-Q for the quarter ended June 30, 1995 and incorporated herein
by reference)
4.8 Seventh Amendment dated June 30, 1996 to Credit Agreement filed as
Exhibit 4.1 hereto (filed as Exhibit 4.1 to the Company's quarterly
report on Form 10-Q for the quarter ended June 30, 1996 and
incorporated herein by reference)
4.9 Eighth Amendment dated June 30, 1997 to Credit Agreement filed as
Exhibit 4.1 hereto (filed as Exhibit 4.1 to the Company's quarterly
report on Form 10-Q for the quarter ended June 30, 1997 and
incorporated herein by reference)
10.1* Agreement executed by and between the Company and Wm. W. McKee (filed
as Exhibit 10.1 to the Company's annual report on Form 10-K for the
year ended December 31, 1990 and incorporated herein by reference)
10.2* Amendment to agreement executed by and between the Company and Wm. W.
McKee filed as Exhibit 10.1 hereto (filed herewith)
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<PAGE>
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(Cont'd)
10.3* Agreement executed by and between the Company and R. A. Byers (filed as
Exhibit 10.1 to the Company's quarterly report on Form 10-Q for the
quarter ended June 30, 1991 and incorporated herein by reference)
10.4* Amendment to agreement executed by and between the Company and R. A.
Byers filed as Exhibit 10.3 hereto (filed herewith)
10.5* Agreement executed by and between the Company and T. R. Lloyd (filed as
Exhibit 10.2 to the Company's quarterly report on Form 10-Q for the
quarter ended June 30, 1991 and incorporated herein by reference)
10.6* Amendment to agreement executed by and between the Company and T. R.
Lloyd filed as Exhibit 10.5 hereto (field herewith)
10.7* Management Incentive Plan (filed as Exhibit 10.5 to the Company's
annual report on Form 10-K for the year ended December 31, 1992 and
incorporated herein by reference)
10.8* Summary of Company 1997 Management Incentive Plan (MIP) (filed
herewith)
10.9* Retirement Plan for PDM Outside Directors as amended, effective May 26,
1994 (filed as Exhibit 10.7 to the Company's annual report on Form 10-K
for the year ended December 31, 1994 and incorporated herein by
reference)
10.10* Retirement Plan for PDM Outside Directors, effective May 26, 1994,
as amended on September 14, 1995 (filed as Exhibit 10.7 to the
Company's annual report on Form 10-K for the year ended December 31,
1995 and incorporated herein by reference)
10.11* Stock Option Plan of 1990 (filed as Exhibit 4.01 to the Company's
Registration Statement No. 33-34787 on Form S-8 filed May 7, 1990 and
incorporated herein by reference)
10.12* Investment Letter and Registration Rights Agreement dated September 21,
1993 by and between Pitt-Des Moines, Inc. and William W. McKee, Jr.
(filed as Exhibit 10.1 to the Company's quarterly report on Form 10-Q
for the quarter ended September 30, 1993 and incorporated herein by
reference)
10.13* Amendment to Investment Letter and Registration Rights Agreement dated
September 21, 1993 by and between Pitt-Des Moines, Inc. and William W.
McKee, Jr. filed as Exhibit 10.12 hereto (filed herewith)
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<PAGE>
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(Cont'd)
10.14* Investment Letter and Registration Rights Agreement dated September 21,
1993 by and between Pitt-Des Moines, Inc. and Phillip O. Elbert (filed
as Exhibit 10.2 to the Company's quarterly report on Form 10-Q for the
quarter ended September 30, 1993 and incorporated herein by reference)
10.15* Amendment to Investment Letter and Registration Rights Agreement dated
September 21, 1993 by and between Pitt-Des Moines, Inc. and P. O.
Elbert filed as Exhibit 10.14 hereto (filed herewith)
10.16* Directors Stock Plan (filed under the Company's Registration Statement
No. 333-13043 on Form S-8 dated September 30, 1996 and incorporated
herein by reference)
10.17* Stock Option Agreement executed by and between the Company and P. O.
Elbert (filed as Exhibit 10.12 to the Company's annual report on Form
10-K for the year ended December 31, 1996 and incorporated herein by
reference)
10.18* Amendment to Stock Option Agreement executed by and between the Company
and P. O. Elbert filed as Exhibit 10.17 hereto (filed herewith)
10.19* Supplemental Benefit and Supplemental Salaried Retirement Plan (filed
herewith)
13 Those portions of the Annual Report to Stockholders for fiscal year
ended December 31, 1997, which are incorporated herein by reference
(filed herewith)
21 Subsidiaries of Pitt-Des Moines, Inc. (filed herewith)
23 Consent of Independent Auditors, Ernst & Young LLP (filed herewith)
27.1 Current FDS for year ended December 31, 997
27.2 Restated FDS including columns for the prior three periods ended (March
31, 1997, June 30, 1997, September 30, 1997) and prior year end
(December 31, 1996)
27.3 Restated FDS including columns for the prior three periods ended (March
31, 1996, June 30, 1996, September 30, 1996) and prior year end
(December 31, 1995)
(b) Reports on Form 8-K:
A Form 8-K dated October 7, 1997 (Item 5 Other Events), was filed to
report the acquisition of Sheffield Steel Products, a bridge fabricator
located in Palatka, Florida.
- ------------------------
* Denotes management contract or compensatory plan or arrangement.
-14-
<PAGE>
Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
PITT-DES MOINES, INC.
March 27, 1998 By: /s/ Wm. W. McKee
----------------------------
Wm. W. McKee
President and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signatures Title Date
Principal Executive Officer:
/s/ Wm. W. McKee President, Chief March 27, 1998
- ------------------------------------ Executive Officer and
Wm. W. McKee Director
Principal Financial and Accounting Officer:
/s/ R. A. Byers Chief Financial Officer March 27, 1998
- ------------------------------------ and Chief Accounting
R. A. Byers Officer
Other Directors:
/s/ J. C. Bates Director March 27, 1998
- ------------------------------------
J. C. Bates
/s/ V. G. Beghini Director March 27, 1998
- ------------------------------------
V. G. Beghini
-15-
<PAGE>
Signatures (Cont'd)
Signatures Title Date
/s/ R. W. Dean Director March 27, 1998
- ------------------------------------
R. W. Dean
/s/ P. O. Elbert Director March 27, 1998
- ------------------------------------
P. O. Elbert
/s/ W. R. Jackson Director March 27, 1998
- ------------------------------------
W. R. Jackson
/s/ W. R. Jackson, Jr. Director March 27, 1998
- ------------------------------------
W. R. Jackson, Jr.
/s/ W. E. Lewellen Director March 27, 1998
- ------------------------------------
W. E. Lewellen
/s/ A. J. Paddock Director March 27, 1998
- ------------------------------------
A. J. Paddock
/s/ J. W. Robinson Director March 27, 1998
- ------------------------------------
J. W. Robinson
/s/ P. J. Townsend Director March 27, 1998
- ------------------------------------
P. J. Townsend
-16-
<PAGE>
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
Pitt-Des Moines, Inc.
<TABLE>
<CAPTION>
Additions Deductions(1)
--------- -------------
Balance at Charged to
Beginning of Costs and Credited Balance at End
Description Period Expenses to Asset of Period
- ----------------------------------- ------------ ---------- -------- --------------
<S> <C> <C> <C> <C>
Deducted from accounts receivable
as allowance for doubtful accounts:
Year ended December 31, 1997 $868,000 $363,233 $172,509 $1,058,724
Year ended December 31, 1996 $868,000 $ 90,000 $ 90,000 $ 868,000
Year ended December 31, 1995 $923,000 $220,000 $275,000 $ 868,000
</TABLE>
- ---------------------
(1) Write-off of accounts deemed to be uncollectible
<PAGE>
EXHIBIT INDEX
3.1 Articles of Incorporation, as amended to date (filed as Exhibit 3.1 to
the Company's quarterly report on Form 10-Q for the quarter ended
September 30, 1989 and incorporated herein by reference)
3.2 Bylaws, as amended to date (filed as Exhibit 3.2 to the Company's
quarterly report on Form 10-Q for the quarter ended September 30, 1989
and incorporated herein by reference)
4.1 Amended and Restated Credit Agreement dated as of June 30, 1992 by and
among Pitt-Des Moines, Inc. and Pittsburgh National Bank, Wells Fargo
Bank, N.A. and American National Bank (filed as Exhibit 4.1 to the
Company's annual report on Form 10-K for the year ended December 31,
1992 and incorporated herein by reference)
4.2 First Amendment dated November 23, 1992 to Credit Agreement filed as
Exhibit 4.1 hereto (filed as Exhibit 4.2 to the Company's annual report
on Form 10-K for the year ended December 31, 1992 and incorporated
herein by reference)
4.3 Second Amendment dated June 10, 1993 to Credit Agreement filed as
Exhibit 4.1 hereto (filed as Exhibit 4.1 to the Company's quarterly
report on Form 10-Q for the quarter ended June 30, 1992 and
incorporated herein by reference)
4.4 Third Amendment dated December 16, 1993 to Credit Agreement filed as
Exhibit 4.1 hereto (filed as Exhibit 4.2 to the Company's annual report
on Form 10-K for the year ended December 31, 1993 and incorporated
herein by reference)
4.5 Fourth Amendment dated June 14, 1994 to Credit Agreement filed as
Exhibit 4.1 hereto (filed as Exhibit 4.1 to the Company's quarterly
report on Form 10-Q for the quarter ended June 30, 1994 and
incorporated herein by reference)
4.6 Fifth Amendment dated December 8, 1994 to Credit Agreement filed as
Exhibit 4.1 hereto (filed as Exhibit 4.6 to the Company's annual report
on Form 10-K for the year ended December 31, 1994 and incorporated
herein by reference)
4.7 Sixth Amendment dated May 31, 1995 to Credit Agreement filed as Exhibit
4.1 hereto (filed as Exhibit 4.1 to the Company's quarterly report on
Form 10-Q for the quarter ended June 30, 1995 and incorporated herein
by reference)
4.8 Seventh Amendment dated June 30, 1996 to Credit Agreement filed as
Exhibit 4.1 hereto (filed as Exhibit 4.1 to the Company's quarterly
report on Form 10-Q for the quarter ended June 30, 1996 and
incorporated herein by reference)
<PAGE>
EXHIBIT INDEX (Cont'd)
4.9 Eighth Amendment dated June 30, 1997 to Credit Agreement filed as
Exhibit 4.1 hereto (filed as Exhibit 4.1 to the Company's quarterly
report on Form 10-Q for the quarter ended June 30, 1997 and
incorporated herein by reference)
10.1 Agreement executed by and between the Company and Wm. W. McKee (filed
as Exhibit 10.1 to the Company's annual report on Form 10-K for the
year ended December 31, 1990 and incorporated herein by reference)
10.2 Amendment to agreement executed by and between the Company and Wm. W.
McKee filed as Exhibit 10.1 hereto (filed herewith)
10.3 Agreement executed by and between the Company and R. A. Byers (filed as
Exhibit 10.1 to the Company's quarterly report on Form 10-Q for the
quarter ended June 30, 1991 and incorporated herein by reference)
10.4 Amendment to agreement executed by and between the Company and R. A.
Byers filed as Exhibit 10.3 hereto (filed herewith)
10.5 Agreement executed by and between the Company and T. R. Lloyd (filed as
Exhibit 10.2 to the Company's quarterly report on Form 10-Q for the
quarter ended June 30, 1991 and incorporated herein by reference)
10.6 Amendment to agreement executed by and between the Company and T. R.
Lloyd filed as Exhibit 10.5 hereto (field herewith)
10.7 Management Incentive Plan (filed as Exhibit 10.5 to the Company's
annual report on Form 10-K for the year ended December 31, 1992 and
incorporated herein by reference)
10.8 Summary of Company 1997 Management Incentive Plan (MIP) (filed
herewith)
10.9 Retirement Plan for PDM Outside Directors as amended, effective May 26,
1994 (filed as Exhibit 10.7 to the Company's annual report on Form 10-K
for the year ended December 31, 1994 and incorporated herein by
reference)
10.10 Retirement Plan for PDM Outside Directors, effective May 26, 1994,
as amended on September 14, 1995 (filed as Exhibit 10.7 to the
Company's annual report on Form 10-K for the year ended December 31,
1995 and incorporated herein by reference)
10.11 Stock Option Plan of 1990 (filed as Exhibit 4.01 to the Company's
Registration Statement No. 33-34787 on Form S-8 filed May 7, 1990 and
incorporated herein by reference)
<PAGE>
EXHIBIT INDEX (Cont'd)
10.12 Investment Letter and Registration Rights Agreement dated September 21,
1993 by and between Pitt-Des Moines, Inc. and William W. McKee, Jr.
(filed as Exhibit 10.1 to the Company's quarterly report on Form 10-Q
for the quarter ended September 30, 1993 and incorporated herein by
reference)
10.13 Amendment to Investment Letter and Registration Rights Agreement dated
September 21, 1993 by and between Pitt-Des Moines, Inc. and William W.
McKee, Jr. filed as Exhibit 10.12 hereto (filed herewith)
10.14 Investment Letter and Registration Rights Agreement dated September 21,
1993 by and between Pitt-Des Moines, Inc. and Phillip O. Elbert (filed
as Exhibit 10.2 to the Company's quarterly report on Form 10-Q for the
quarter ended September 30, 1993 and incorporated herein by reference)
10.15 Amendment to Investment Letter and Registration Rights Agreement dated
September 21, 1993 by and between Pitt-Des Moines, Inc. and P. O.
Elbert filed as Exhibit 10.14 hereto (filed herewith)
10.16 Directors Stock Plan (filed under the Company's Registration Statement
No. 333-13043 on Form S-8 dated September 30, 1996 and incorporated
herein by reference)
10.17 Stock Option Agreement executed by and between the Company and P. O.
Elbert (filed as Exhibit 10.12 to the Company's annual report on Form
10-K for the year
ended December 31, 1996 and incorporated herein by reference)
10.18 Amendment to Stock Option Agreement executed by and between the Company
and P. O. Elbert filed as Exhibit 10.17 hereto (filed herewith)
10.19 Supplemental Benefit and Supplemental Salaried Retirement Plan (filed
herewith)
13 Those portions of the Annual Report to Stockholders for fiscal year
ended December 31, 1997, which are incorporated herein by reference
(filed herewith)
21 Subsidiaries of Pitt-Des Moines, Inc. (filed herewith)
23 Consent of Independent Auditors, Ernst & Young LLP (filed herewith)
27.1 Current FDS for year ended December 31, 1997
27.2 Restated FDS including columns for the prior three periods ended
(March 31, 1997, June 30, 1997, September 30, 1997) and prior year end
(December 31, 1996)
27.3 Restated FDS including columns for the prior three periods ended
(March 31, 1996, June 30, 1996, September 30, 1996) and prior year end
(December 31, 1995)
<PAGE>
Exhibit 10.2
Amendment to Agreement
----------------------
This Amendment is made by and between Pitt-Des Moines, Inc. ("Company") and
William W. McKee ("Employee") as of the date last written below.
Whereas the Company and Employee entered into an agreement dated January 24,
1991, a copy of which is attached hereto;
Whereas the Company declared a 3 for 2 stock split effective March 28, 1997 as
to its shares of common stock which may have an effect on the above-referenced
agreement; and
Whereas the Board of Directors of the Company, in effecting said stock split,
directed that the value and number of shares provided for in such agreements be
amended to reflect said stock split.
Now therefore, intending to be legally bound, the parties hereto agree as
follows:
A. The number 2,447,578 in Section 7.01 of the above-referenced agreement
shall be restated to be 3,671,367.
B. The price of Thirty Dollars ($30.00) in Section 7.01 of the above-
referenced agreement shall be restated to be Twenty Dollars ($20.00).
C. The number Fifty Thousand (50,000) in Section 7.01 of the above
referenced agreement shall be restated to be 75,000.
D. The above-referenced agreement is otherwise unchanged and remains in full
force and effect.
Witness the signatures of the parties. Executed in Duplicate.
Attest: Pitt-Des Moines, Inc.
/s/ T. R. Lloyd /s/ R. A. Byers
- ---------------- ----------------
By: By:
Witness:
/s/ J. M. Snyder /s/ Wm. W. McKee
- ----------------- -------------------
William W. McKee
Dated: September 3, 1997
---------------------
<PAGE>
Exhibit 10.4
Amendment to Agreement
----------------------
This Amendment is made by and between Pitt-Des Moines, Inc. ("Company") and
Richard A. Byers ("Employee") as of the date last written below.
Whereas the Company and Employee entered into an agreement dated May 9, 1991,
a copy of which is attached hereto;
Whereas the Company declared a 3 for 2 stock split effective March 28, 1997 as
to its shares of common stock which may have an effect on the above-referenced
agreement; and
Whereas the Board of Directors of the Company, in effecting said stock split,
directed that the value and number of shares provided for in such agreements be
amended to reflect said stock split.
Now therefore, intending to be legally bound, the parties hereto agree as
follows:
A. The number 2,447,578 in Section 7.01 of the above-referenced agreement
shall be restated to be 3,671,367.
B. The price of Thirty Dollars ($30.00) in Section 7.01 of the above-
referenced agreement shall be restated to be Twenty Dollars ($20.00).
C. The number Fifteen Thousand (15,000) in Section 7.01 of the above
referenced agreement shall be restated to be 22,500.
D. The above-referenced agreement is otherwise unchanged and remains in full
force and effect.
Witness the signatures of the parties. Executed in Duplicate.
Attest: Pitt-Des Moines, Inc.
/s/ R. F. Gisler /s/ T. R. Lloyd
- ----------------- ----------------
By: By:
Witness:
/s/ L Russell /s/ R. A. Byers
- --------------- ----------------
Richard A. Byers
Dated: September 3, 1997
---------------------
<PAGE>
Exhibit 10.6
Amendment to Agreement
----------------------
This Amendment is made by and between Pitt-Des Moines, Inc. ("Company") and
Thomas R. Lloyd ("Employee") as of the date last written below.
Whereas the Company and Employee entered into an agreement dated May 9, 1991,
a copy of which is attached hereto;
Whereas the Company declared a 3 for 2 stock split effective March 28, 1997 as
to its shares of common stock which may have an effect on the above-referenced
agreement; and
Whereas the Board of Directors of the Company, in effecting said stock split,
directed that the value and number of shares provided for in such agreements be
amended to reflect said stock split.
Now therefore, intending to be legally bound, the parties hereto agree as
follows:
A. The number 2,447,578 in Section 7.01 of the above-referenced agreement
shall be restated to be 3,671,367.
B. The price of Thirty Dollars ($30.00) in Section 7.01 of the above-
referenced agreement shall be restated to be Twenty Dollars ($20.00).
C. The number Seven Thousand Five Hundred (7,500) in Section 7.01 of the
above referenced agreement shall be restated to be 11,250.
D. The above-referenced agreement is otherwise unchanged and remains in full
force and effect.
Witness the signatures of the parties. Executed in Duplicate.
Attest: Pitt-Des Moines, Inc.
/s/ R. F. Gisler /s/ R. A. Byers
- ----------------- ----------------
By: By:
Witness:
/s/ L. Russell /s/ T. R. Lloyd
- -------------- -----------------
Thomas R. Lloyd
Dated: September 3, 1997
---------------------
<PAGE>
Exhibit 10.8
SUMMARY OF COMPANY'S 1997 MANAGEMENT INCENTIVE PLAN (MIP)
Pitt-Des Moines, Inc.
Under the terms of the MIP, a minimum rate of return of (threshold) on
stockholders' equity must be achieved before bonuses can be awarded. The
threshold for executive officers was established at the after-tax cost of
capital on the assumption that returns in excess of the threshold would lead to
increases in stockholder value. Once this criteria is met, the total amount of
bonus available for distribution to eligible executive officers, including the
Company's Chief Executive Officer ("CEO") under the MIP is based on a percentage
in excess of the minimum return on stockholders' equity. Individual bonus
amounts paid to the Company's executive officers for services rendered in 1997,
including the CEO, were based on a pre-determined percentage limitation on each
individual's base salary (in no case does the applicable limit exceed 100% of
base salary) and the percentage of the overall MIP target achieved. These pre-
determined percentages were established by the Compensation Committee.
Under the terms of the MIP, the Company's eligible executive officers were
entitled to receive and were awarded bonuses under the MIP for the year ended
December 31, 1997.
<PAGE>
Exhibit 10.13
Amendment to Investment Letter and Registration Rights Agreement
----------------------------------------------------------------
This Amendment is made by and between Pitt-Des Moines, Inc. ("Company") and
William W. McKee, Jr. ("Stockholder") as of the date last written below.
Whereas the Company and Stockholder entered into an Investment Letter and
Registration Rights Agreement dated September 21, 1993, a copy of which is
attached hereto;
Whereas the Company declared a 3 for 2 stock split effective March 28, 1997 as
to shares subject to the above-referenced agreement; and
Whereas the Board of Directors of the Company, in effecting said stock split,
directed that the value and number of shares subject to such agreement be
amended to reflect said stock split.
Now therefore, intending to be legally bound, the parties hereto agree as
follows:
A. The number of shares of the Company common stock subject to the above
referenced agreement shall be restated to be 1,500 shares as of the date hereof.
B. The agreement referenced herein is otherwise unchanged and remains in full
force and effect.
Witness the signatures of the parties. Executed in Duplicate.
Attest: Pitt-Des Moines, Inc.
/s/ T. R. Lloyd /s/ R. A. Byers
- ---------------- ----------------
By: By:
Witness:
/s/ J. M. Snyder /s/ Wm. W. McKee
- ----------------- -------------------
William W. McKee
Dated: September 3, 1997
---------------------
<PAGE>
Exhibit 10.15
Amendment to Investment Letter and Registration Rights Agreement
----------------------------------------------------------------
This Amendment is made by and between Pitt-Des Moines, Inc. ("Company") and
P.O. Elbert ("Stockholder") as of the date last written below.
Whereas the Company and Stockholder entered into an Investment Letter and
Registration Rights Agreement dated September 3, 1993, a copy of which is
attached hereto;
Whereas the Company declared a 3 for 2 stock split effective March 28, 1997 as
to shares subject to the above-referenced agreement;
Whereas, on the date hereof, of the 10,000 shares originally subject to the
above-referenced agreement there remain 3,555 shares (pre-split) subject thereto
by reason of Stockholder's earlier sale of 6,455 shares (pre-split) pursuant to
the terms of the above-referenced agreement; and
Whereas the Board of Directors of the Company, in effecting said stock split,
directed that the value and number of shares subject to such agreement be
amended to reflect said stock split.
Now therefore, intending to be legally bound, the parties hereto agree as
follows:
A. The number of shares of the Company common stock subject to the above
referenced agreement shall be restated to be 5,332.5 shares as of the date
hereof.
B. The agreement referenced herein is otherwise unchanged and remains in full
force and effect.
Witness the signatures of the parties. Executed in Duplicate.
Attest: Pitt-Des Moines, Inc.
/s/ T. R. Lloyd /s/ R. A. Byers
- ---------------- ----------------
By: By:
Witness:
/s/ J. M. Snyder /s/ P. O. Elbert
- ----------------- -----------------
P.O. Elbert
Dated: September 3, 1997
---------------------
<PAGE>
Exhibit 10.18
PITT-DES MOINES, INC.
Amendment to Stock Option Agreement
-----------------------------------
This Amendment is made by and between Pitt-Des Moines, Inc. ("Company") and
P.O. Elbert ("Optionee") as of the date last written below, under the Company's
Stock Option Plan of 1990 ("Plan").
Whereas the Company and Optionee entered into stock option agreements dated
June 26, 1990, February 16, 1995 and May 2, 1996, copies of which are attached
hereto;
Whereas the Company declared a 3 for 2 stock split effective March 28, 1997 as
to shares subject to the above-referenced option agreements; and
Whereas the Board of Directors of the Company, in effecting said stock split,
directed that the value and number of shares subject to such agreements be
amended to reflect said stock split.
Now therefore, intending to be legally bound, the parties hereto agree as
follows:
A. The number of shares of the Company common stock subject to the June 26,
1990 option agreement shall be restated to be 11,250 shares, at the price of
$20.50 per share.
B. The number of shares of the Company common stock subject to the February
16, 1995 option agreement shall be restated to be 11,250 shares, at the price of
$23.17 per share.
C. The number of shares of the Company common stock subject to the May 2,
1996 option agreement shall be restated to be 37,500 shares, at the price of
$28.50 per share.
D. The option agreements referenced herein are otherwise unchanged and remain
in full force and effect.
E. All terms and conditions of the Plan are incorporated herein as if fully
set out in this Amendment and in the event of any conflict between the terms
herein or those in the Plan, those of the Plan shall control.
Witness the signatures of the parties. Executed in Duplicate.
Attest: Pitt-Des Moines, Inc.
/s/ T. R. Lloyd /s/ R. A. Byers
- ---------------- ----------------
By: By:
Witness:
/s/ J. M. Snyder /s/ P. O. Elbert
- ----------------- -----------------
P.O. Elbert
Dated: September 3, 1997
---------------------
<PAGE>
Exhibit 10.19
PITT-DES MOINES, INC.
SUPPLEMENTAL BENEFIT AND
SUPPLEMENTAL SALARIED RETIREMENT PLAN
ARTICLE I
OBJECTIVE AND DEFINITIONS
-------------------------
1.01 Establishment. Pursuant to authority granted by the Board of Directors
-------------
of Pitt-Des Moines, Inc. ("Corporation"), the Compensation Committee of the
Board of Directors ("Committee") has established the Supplemental Benefit and
Supplemental Salaried Retirement Plan of Pitt-Des Moines, Inc. effective as of
January 1, 1997.
1.02 Objectives. The objective of the Plan is to provide retirement benefits
----------
to Participants according to the pension benefit formula of the Corporation's
qualified, funded Salaried Retirement Plan ("Salaried Retirement Plan") without
regard to certain artificial Internal Revenue Code ("IRC") rules that limit the
amount of pensionable earnings that can be counted by a qualified plan and to
provide supplemental benefit accounts to make up for additional contributions
which would have been made to a Participant pursuant to the terms and conditions
of the Corporation's Employee Stock Ownership Plan ("ESOP") and which would have
been made to a Participant pursuant to the terms and conditions of, and the
Participant's contributions to, the Corporation's Savings & Investment Plan (the
"Savings Plan"), but for certain artificial Internal Revenue Code rules that
limit the amount of such contributions which can be accepted by qualified plans.
1.03 Defined Terms. As used herein, unless the context requires otherwise:
-------------
"Acquisition" and "Acquisition Consideration" have the meanings set forth in
(S)6.04(c).
"Committee" means the Compensation Committee of the Corporation's Board of
Directors.
"Contribution Difference" has the meaning set forth in Section 3.02.
<PAGE>
"Corporation" means Pitt-Des Moines, Inc.
"ESOP" means Pitt-Des Moines, Inc.'s Employee Stock Ownership Plan.
"IRC" means the Internal Revenue Code as it may be amended from time to time.
"401(a)(17) Limit" has the meaning set forth in (S)2.01.
"Monthly Benefit Difference" has the meaning set forth in (S)2.02.
"Participant" means an employee who qualifies for participation in this Plan.
Participation in the Plan shall be limited to individuals who are, on or after
January 1, 1997, employees of the Corporation who qualify for participation in
the Salaried Retirement Plan, the ESOP or the Savings Plan and whose benefits
under any such plans are in fact restricted by the 401(a)(17) Limit.
"Phantom Share" and "Phantom Share Account" have the meanings set forth in
(S)3.04.
"Phantom Share Allocation" has the meaning set forth in (S)3.03.
"Plan" means the Supplemental Benefit and Supplemental Salaried Retirement
Plan of Pitt-Des Moines, Inc. as set forth in this instrument as it may be
amended from time to time.
"Salaried Retirement Plan" means the Retirement Plan for Salaried Employees of
Pitt-Des Moines, Inc., a tax-qualified defined benefit pension plan.
"Savings Plan" means Pitt-Des Moines, Inc.'s Savings & Investment Plan.
"Vice President Finance" means the individual from time to time holding the
office of Vice President Finance of the Corporation.
ARTICLE II
SUPPLEMENTAL SALARIED RETIREMENT BENEFITS,
-------------------------------------------
VESTING, PAYMENTS AND FORFEITURE
--------------------------------
2.01 Background. A Participant's Accrued Benefit under the Salaried
----------
Retirement Plan is determined under a formula based on the Participant's Monthly
Plan Compensation and years of Service. However, as required by IRC
(S)401(a)(17), the Salaried Retirement Plan, in determining Monthly Plan
Compensation, must ignore the Participant's Compensation in excess of an amount
determined pursuant to IRC (S)401(a)(17) (such amount being referred to
hereinafter as the "401(a)(17) Limit").
<PAGE>
2.02 Determination of Monthly Benefit Difference. Should the administrator of
-------------------------------------------
the Salaried Retirement Plan determine, upon application of a Participant,
Eligible Spouse or Beneficiary for commencement of benefits, that the benefit
payable under the Salaried Retirement Plan must be restricted by the 401(a)(17)
Limit, the administrator shall promptly apprise the Vice President Finance in
writing of the following:
(a) The name of the person(s) (i.e., Participant, Eligible Spouse or
Beneficiary) to whom the benefit is payable under the Salaried Retirement
Plan;
(b) The amount of the monthly benefit payable to such person(s), the form in
which such benefit shall be paid (e.g., Single Life Annuity, Qualified
Joint and 50% Survivor Annuity, Ten-Year Certain and Life Annuity, etc.)
and the Benefit Commencement Date;
(c) The additional amount(s) that would have been payable monthly to such
person(s) in such form of payment according to the provisions of the
Salaried Retirement Plan but for the application of the 401(a)(17) Limit
(such additional amount being hereinafter referred to as the "Monthly
Benefit Difference"); and
(d) Such additional information as the Vice President Finance may reasonably
require.
2.03 Payment of Monthly Benefit Difference. The Vice President Finance shall
-------------------------------------
cause the Corporation to pay the Monthly Benefit Difference to the Participant,
Eligible Spouse or Beneficiary, as the case may be, each month beginning on the
annuity starting date for the related benefit under the Salaried Retirement
Plan, in the form of payment elected, and continuing for the period during which
benefits are payable to such person, under the Salaried Retirement Plan.
However, the Vice President Finance, in his or her sole discretion, may direct
the payment, instead of small monthly benefits, of a single cash lump sum
representing the present value of the annuity benefit, calculated by the use of
such reasonable interest and actuarial factors as the Vice President shall from
time to time determine.
<PAGE>
2.04 Vesting and Forfeiture of Benefits. The vesting and forfeiture
----------------------------------
provisions of the Salaried Retirement Plan are incorporated herein by reference
as to any benefit payable pursuant to Article II of this Plan. Accordingly, a
Participant who earns vested rights under the Salaried Retirement Plan shall
likewise have vested rights under Article II of this Plan, subject to Article V.
Similarly, a Participant who severs from service without vested rights under the
Salaried Retirement Plan, thereby forfeiting his or her benefits thereunder,
shall forfeit benefits under Article II of this Plan as well. Any Eligible
Spouse or Beneficiary claiming under this Plan through a Participant shall be
bound by the vested or nonvested status of the Participant.
ARTICLE III
PHANTOM SHARE ACCOUNTS, VESTING, PAYMENT
----------------------------------------
AND FORFEITURE
--------------
3.01 Background. Contributions to Participants' accounts administered under
----------
the ESOP, if any are made by the Corporation, are limited pursuant to IRC
(S)401(a)(17) which requires the Corporation to ignore Participants'
Compensation in excess of the 401(a)(17) Limit. Contributions by the
Corporation to Participants' accounts administered under the Savings Plan are
similarly limited.
3.02 Annual Determination of Contribution Difference. Commencing March 31,
-----------------------------------------------
1998, and Annually, on or before March 31, of each year thereafter during the
existence of this Plan, the administrator of the ESOP and the administrator of
the Savings Plan shall apprise the Vice President Finance in writing of the
following:
(a) The additional amounts, if any, that would have been contributed by the
Corporation to a Participant's accounts under the ESOP and the Savings
Plan on account of the preceding calendar year, but for the application
of the 401(a)(17) Limit (such amount being hereinafter referred to as the
"Contribution Difference"); and
(b) Such additional information as the Vice President Finance may reasonably
request.
The Vice President Finance shall verify and determine the Contribution
Difference.
3.03 Allocation of Contribution Difference. Commencing May 31, 1998 and
-------------------------------------
annually on or before May 31, of each year thereafter during the existence of
this Plan, the Vice President Finance shall determine the number of shares
(including fractions thereof) of the Corporation's common stock which would have
a fair market value on the day after the immediately preceding Annual Meeting of
the Corporation's Shareholders equal to a Participant's Contribution Difference,
if any, for the preceding calendar year (such amount of shares being hereinafter
referred to as the "Phantom Share Allocation"). The fair market value of shares
used to compute the Phantom Share Allocation and/or any distributions under this
Plan shall be determined in the manner provided under the Corporation's
Directors Stock Plan.
<PAGE>
3.04 Phantom Share Account. The Vice President Finance shall maintain, on
---------------------
behalf of each Participant who has received a Phantom Share Allocation, records
of an account balance reflecting all Phantom Share Allocations (such shares
being hereinafter referred to as "Phantom Shares" and such account being
hereinafter referred to as the "Phantom Share Account").
3.05 Distributions of Phantom Share Accounts. At such time as a Participant's
---------------------------------------
service with the Corporation is severed for purposes of the ESOP, the plan
administrator of the ESOP shall advise the Vice President Finance in writing of
such severance, along with the name of the recipient of distributions, if any,
due a Participant under the ESOP, and the Vice President Finance shall determine
the fair market value of the Participant's Phantom Share Account for the date of
such severance and shall cause such amount to be paid in cash to the recipient
of the Participant's distributions, if any, due under the ESOP.
3.06 Determination of Contribution Difference for Years Prior to 1997. On or
----------------------------------------------------------------
before May 31, 1997, the administrator of the ESOP and administrator of the
Savings Plan shall apprise the Vice President Finance in writing of the
additional amounts which would have been contributed to Participants' accounts,
pursuant to (S)3.02 above and the terms, conditions, elections and contributions
made under such plans by Participants on account of calendar years 1994, 1995
and 1996, had this Plan been in effect on January 1, 1994, and the Vice
President Finance shall establish Phantom Share Accounts for Participants as
soon as practicable after receipt of such notices from the ESOP and Savings Plan
administrators, acting as if pursuant to (S)(S)3.02, 3.03 and 3.04 of this Plan,
but using the date of the day after the Corporation's Annual Meeting of
Shareholders held in 1997 to establish the fair market value of the
Corporation's common stock for purposes of the Phantom Share Allocations on
account of the years 1994-1996, inclusive.
3.07 Vesting and Forfeiture. The vesting and forfeiture provisions of the
----------------------
ESOP are incorporated herein by reference as to any benefit payable pursuant to
Article III of this Plan. Accordingly, a Participant who earns vested rights
under the ESOP shall likewise have vested rights under Article III of this Plan,
subject to Article V. Similarly, a Participant who severs from service without
vested rights made under the ESOP, thereby forfeiting his or her benefits
thereunder, shall forfeit benefits under Article III of this Plan as well,
provided, however, that in the event of a forfeiture of part or all of any
Phantom Share Account there shall be no allocation to other Participant(s) of
any such forfeiture under this Plan. Anyone claiming under this Plan through a
Participant shall be bound by the vested or nonvested status of the Participant.
ARTICLE IV
ADMINISTRATION
--------------
4.01 Administrator. The Vice President Finance shall act as the administrator
-------------
of the Plan and shall have complete authority to take any steps the Vice
President Finance in his or her sole discretion, deems necessary or appropriate
to carry out the purposes of the Plan. The Vice President shall have sole,
absolute and complete discretion to interpret the provisions of the Plan as they
apply to particular facts and circumstances. Without limiting the generality of
the foregoing, the Committee may prescribe interpretive rules, procedures and
forms for the
<PAGE>
administration of the Plan. Notwithstanding the foregoing, where the Vice
President Finance would have to act under this Article IV, or otherwise under
the Plan, with respect to his or her own benefits, the Chief Executive Officer
of the Corporation shall act in the place of the Vice President Finance with
respect to the latter's benefits.
4.02 Claims Procedure
----------------
(a) All claims for benefits shall be in writing and shall be filed with the
Vice President Finance.
(b) If the Vice President Finance wholly or partially denies a Participant's
or Beneficiary's claim for benefits, the Vice President Finance shall
within 90 days after the Plan's receipt of the claim give the claimant
written notice setting forth in understandable language:
(i) the specific reason(s) for the denial;
(ii) specific reference to pertinent Plan provisions on which the denial
is based;
(iii) a description of any additional material or information which must
be submitted to perfect the claim, and an explanation of why such
material or information is necessary, and
(iv) an explanation of the Plan's review procedure.
The claimant shall have 60 days after the day on which such written notice of
denial is handed or mailed to claimant, in which to apply (in person or by
authorized representative) to the Vice President Finance in writing for a full
and fair review of the denial of the claim. In connection with such review, the
claimant (or authorized representative) shall be afforded reasonable opportunity
to review pertinent documents and may submit issues and comments in writing.
The Vice President Finance shall issue his or her decision on review promptly
and within 60 days after the Plan's receipt of the request for review, unless
special circumstances require an extension to not later than 120 days after
receipt of the request for review. (Written notice of any such extension shall
be furnished to the claimant before the commencement of such extension.) The
decision shall be in writing and shall in understandable language set forth
specific reasons for the decision and specific references to pertinent Plan
provisions on which the decision is based.
ARTICLE V
AMENDMENT AND TERMINATION
-------------------------
5.01 Amendment. Except as provided below, the Committee shall have full
---------
authority to amend the Plan prospectively or retroactively in any respect
without the consent of any Participant, Eligible Spouse or Beneficiary.
However, the Committee may not amend the Plan to affect adversely either: (a)
benefits which are in pay status; or (b) other benefits which have already
accrued and are vested, subject to the limits of (S)5.04.
<PAGE>
5.02 Termination by Operation of Law. In the event that the IRC (S)401(a)(17)
-------------------------------
Limit is repealed or removed by legislation, regulation or otherwise such that a
Participant's Compensation is not limited for purposes of contributions under
the ESOP or the Savings Plan, or for purposes of determining the Accrued Benefit
under the Salaried Retirement Plan, and subject to the rights of Participants
and Beneficiaries whose benefits are already in pay status and the rights of
Participants whose benefits have already accrued and are vested, whose benefits
subject to (S)5.04 may not be adversely affected, this Plan shall terminate by
operation of law, effective with written confirmations from each of the
administrators of the Salaried Retirement Plan, the ESOP and the Savings Plan to
the Vice President Finance that the 401(a)(17) Limit is no longer applicable to
such plans.
5.03 Termination. Subject to the rights of Participants and Beneficiaries
-----------
whose benefits are already in pay status, and the rights of Participants whose
benefits have already accrued and are vested, whose benefits subject to (S)5.04
may not be adversely affected by such action, the Committee, in its sole,
absolute and complete discretion, may discontinue and terminate the Plan at any
time without the consent of any Participant, Eligible Spouse or Beneficiary, who
shall have no further right to benefits under the Plan, except as expressly
noted above.
5.04 Accrued Vested Benefit Preserved on Vesting or Termination. In the case
----------------------------------------------------------
of vested Participants who have accrued benefits under this Plan which are not
in pay status at the time of an amendment or termination which causes the
cessation or reduction of future accruals, such Participant's accrued benefit
preserved under (S)(S)5.01, 5.02 or 5.03, as the case may be, shall be:
(a) under the Salaried Retirement Plan the lesser of:
(1) the Participant's Monthly Benefit Difference at the time of such
amendment or termination; or
(2) the Participant's Monthly Benefit Difference calculated at the time
of actual commencement of benefits under the Salaried Retirement
Plan; and
(b) under the ESOP or Savings Plan:
(1) the fair market value of the Participant's Phantom Share Account on
the date of such amendment or termination.
ARTICLE VI
MISCELLANEOUS
-------------
6.01 Effect on employment rights. Nothing contained in this Plan shall be
---------------------------
deemed to give any Participant or employee the right to be retained in the
service of the Corporation or to interfere with the right of the Corporation to
discharge any Participant or employee at any time regardless of the effect which
such discharge shall have upon him or her as a Participant in the Plan.
<PAGE>
6.02 Plan unfunded. Benefits under the Plan are unfunded and unsecured. The
-------------
rights of a Participant, Eligible Spouse or Beneficiary shall be solely those of
an unsecured general creditor of the Corporation. Should the Corporation choose
to invest in insurance contracts or other specific assets with a view towards
providing an informal source of funds to pay benefits hereunder, any such asset
shall be held in the Corporation's name and subject to the claims of its general
creditors, and no Participant, Eligible Spouse or Beneficiary shall have any
special claim or lien on any such asset. No trust or security interest is
intended to be created by this document.
6.03 Shareholder Rights. Participants shall have no rights as a shareholder
------------------
with respect to Phantom Shares allocated under this Plan.
6.04 Adjustment Provisions.
---------------------
(a) Dilution in Value of Shares. If the Corporation shall at any time change
---------------------------
the number of issued shares of its common stock without new consideration
to the Corporation (such as by stock dividend, stock split,
recapitalization, reorganization, exchange of shares, liquidation,
combination or other change in corporate structure affecting the shares)
or make a distribution of cash or property which has a substantial impact
on the value of issued shares, the number of Phantom Shares allocated
pursuant to the Plan shall be appropriately adjusted so that the value of
such shares shall not be changed.
(b) Transactions Where the Corporation is the Survivor. Notwithstanding any
--------------------------------------------------
other provision of the Plan, and without affecting the number of Phantom
Shares allocated pursuant to the Plan, the Committee shall authorize
continuance of the Plan or provide for other equitable adjustments after
changes resulting from any merger, consolidation, sale of assets,
acquisition of property or stock, recapitalization, reorganization or
similar occurrence in which the Corporation is the continuing or
surviving corporation, upon such terms and conditions as the Committee
may deem necessary to preserve Participants' rights under the Plan.
(c) Acquisition of the Corporation. In the case of any sale of assets,
------------------------------
merger, consolidation or combination of the Corporation with or into
another corporation, other than a transaction in which the Corporation is
the continuing or surviving corporation (an "Acquisition"), any
Participant shall have the right (subject to the provisions of the Plan)
thereafter to receive an allocation of the value equivalent to the
Acquisition Consideration (as defined below) to be allocated upon the
Acquisition by a holder of the number of shares equal to the number of
Phantom Shares held in the Participant's Phantom Share Account on the
Acquisition date. The term "Acquisition Consideration" shall mean the
kind and amount of shares of the surviving or new corporation, cash,
securities, evidence of indebtedness other property or any combination
thereof receivable in respect of one share of the Corporation upon
consummation of an Acquisition.
6.05 No salary reduction. The Plan does not involve a reduction in salary for
-------------------
the Participant or the forbearance of an increase in future salary by the
Participant.
<PAGE>
6.06 Retired Participant not an employee. A retired Participant shall not be
-----------------------------------
considered an employee for any purposes.
6.07 Nonalienation. Except insofar as this provision may be contrary to
-------------
applicable law, no sale, transfer, alienation, assignment, pledge,
collateralization, or attachment of any accounts or benefits under this Plan
shall be valid or recognized under the Plan.
6.08 Binding on successors. This Plan shall be binding upon and inure to the
---------------------
benefit of the Corporation, its successors and each Participant and his or her
heirs, executors, administrators and legal representatives.
6.09 Governing law. This Plan shall be governed by the internal laws of the
-------------
Commonwealth of Pennsylvania. This Plan is solely between the Corporation and
the Participant. The Participant and his or her Eligible Spouse or Beneficiary
shall have recourse only against the Corporation for enforcement of the Plan in
accordance with its terms.
By order of the Compensation Committee of the Board of Directors of Pitt-Des
Moines, Inc., this instrument is executed on June 16, 1997 but is effective as
of January 1, 1997.
PITT-DES MOINES, INC.
By: /s/ R. A. Byers
------------------------------------
R. A. Byers
Vice President Finance
<PAGE>
Exhibit 13
Portions of the 1997 Annual Report to Stockholders
Pitt-DesMoines, Inc.
Five Year Selected Financial Data
<TABLE>
<CAPTION>
Years ended December 31, 1997 1996 1995 1994 1993
-------- -------- -------- -------- --------
(Dollars in thousands, except per share amounts)
<S> <C> <C> <C> <C> <C>
Operating Performance
Earned revenue $474,568 $468,274 $461,274 $408,061 $323,707
Income (loss) from operations 24,950 20,588 22,077 15,508 (2,689)
Net Income:
Continuing operations 14,400 12,551 13,019 11,980 567
Discontinued operations -- -- -- 80 471
-------- -------- -------- -------- --------
Net Income $ 14,400 $ 12,551 $ 13,019 $ 12,060 $ 1,038
======== ======== ======== ======== ========
Earnings per share:
Continuing operations $ 4.12 $ 3.60 $ 3.74 $ 3.44 $ 0.16
Discontinued operations -- -- -- 0.02 0.14
-------- -------- -------- -------- --------
$ 4.12 $ 3.60 $ 3.74 $ 3.46 $ 0.30
======== ======== ======== ======== ========
Earnings per share -- assuming dilution:
Continuing operations $ 4.05 $ 3.56 $ 3.72 $ 3.43 $ 0.16
Discontinued operations -- -- -- 0.02 0.14
-------- -------- -------- -------- --------
$ 4.05 $ 3.56 $ 3.72 $ 3.45 $ 0.30
======== ======== ======== ======== ========
Financial Position
Total assets $231,424 $199,885 $201,136 $214,201 $177,803
Long-term debt 11,000 -- 13,000 22,000 --
Stockholders' equity 129,663 118,619 108,942 98,549 88,473
Other Information
For the year:
Cash provided (utilized)
by operations $ 10,578 $ 24,749 $ 14,630 $ (2,784) $ (3,767)
Depreciation expense 5,784 5,681 5,662 5,037 4,145
Capital expenditures 10,607 4,153 5,304 7,919 3,942
Dividends per common share 1.10 0.86 0.66 0.60 0.60
At year end:
Book value per
common share $ 36.98 $ 34.06 $ 31.31 $ 28.30 $ 25.38
Employees 2,210 2,006 2,082 2,257 1,987
</TABLE>
<PAGE>
Management's Discussion and Analysis
The following discussion and analysis is provided to increase understanding of,
and should be read in conjunction with, the consolidated financial statements
and accompanying notes.
Results of Operations
As a result of a refinement in the Company's strategic direction, significant
acquisitions, and the closing of the Melrose Park structural steel fabricating
facility, the Company changed its reporting Segments to Engineering and
Construction, and Steel Distribution Segments during 1997. The Engineering and
Construction Segment specializes in the engineering and design, procurement,
fabrication, erection, and rehabilitation of steel products such as liquid and
cryogenic storage and processing systems, water storage systems, bridges and
buildings.
The Steel Distribution Segment distributes a full line of heavy carbon steel
products and provides value-added processing services while the culvert
facilities manufacture and market corrugated metal culvert pipe and accessories.
The Company realized net income of $14.4 million in 1997 compared with $12.6
million in 1996 and $13.0 million in 1995. The related earnings per share were
$4.05 in 1997 compared with $3.56 in 1996 and $3.72 in 1995. Earned revenue
increased $6.3 million in 1997 compared with 1996 and increased $7.0 million in
1996 when compared with 1995. Income from operations of $25.0 million in 1997
increased $4.4 million from $20.6 million in 1996 and decreased $1.5 million in
1996 when compared with $22.1 million in 1995. In 1997, the increase in earned
revenue and income from operations can be primarily attributed to Steel
Distribution and an improvement in margins in Engineering and Construction.
During the fourth quarter of 1997, adjustments were made to insurance accruals
which increased net income by $0.34 per share. For additional discussion on the
results of operations refer to the individual business segment narratives below.
<PAGE>
Engineering and Construction
The following table sets forth earned revenue and new awards for the years ended
December 31, 1997, 1996 and 1995.
<TABLE>
<CAPTION>
1997 1996 1995
(Dollars in thousands) -------- -------- --------
<S> <C> <C> <C>
Earned Revenue
Liquid & Cryogenic
Storage $121,168 $129,415 $121,653
Water Storage 68,736 63,684 69,126
Steel Bridges 47,628 44,396 52,786
Steel Buildings 47,949 69,887 66,904
-------- -------- --------
$285,481 $307,382 $310,469
======== ======== ========
New Awards
Liquid & Cryogenic
Storage $188,441 $133,135 $ 98,171
Water Storage 80,424 68,603 76,718
Steel Bridges 62,846 43,983 53,767
Steel Buildings 33,458 51,632 72,809
-------- -------- --------
$365,169 $297,353 $301,465
======== ======== ========
</TABLE>
The economic conditions and competitive environments in which Engineering and
Construction competes vary independently from market to market and year to year.
These external factors, outside of management's control, impact financial
results. The decrease in earned revenue of $21.9 million in 1997 was primarily
the result of the closure of its structural steel fabricating facility in
Illinois. In 1996, the decrease in earned revenue was primarily the result of
the decline in availability of large bridge contracts which is directly related
to federal and state infrastructure spending.
Selling, general and administrative (S,G&A) expense as a percentage of earned
revenue was 9%, 8.3% and 7.5% for 1997, 1996 and 1995, respectively. In 1996,
the increase in S,G&A expenses can be attributed to costs associated with the
relocation of PDM-EC headquarters to Houston, Texas. In 1997, S,G&A expenses
remained unchanged but as a percentage of revenue, increased as a result of the
closure of the Company's structural steel fabricating facility in Illinois,
which reduced earned revenue.
New awards in 1997 increased, reflecting a significant contract for a liquid
natural gas (LNG) import terminal to be constructed in Puerto Rico.
The decrease in 1997 and 1996 in new awards for steel buildings was primarily
the result of the lack of building construction awards in the Chicago area,
which ultimately caused management to decide to exit from this specific
geographic location.
<PAGE>
Income from operations was $15.1 million in 1997 compared with $14.3 million and
$16.7 million in 1996 and 1995, respectively. The increase in 1997 was primarily
due to improvements in margins. In 1996, the most significant impact on income
from operations was the increase in S,G&A expenses associated with the
relocation of PDM-EC headquarters to Houston, Texas that occurred during 1996.
This move was made to promote future growth opportunities in a geographic market
area where many existing and potential customers are located.
As previously indicated, in 1997, the Company announced plans to close its
structural steel fabricating facility in Melrose Park, Illinois as a result of a
shrinking market for large-scale construction projects in the Chicago area.
During 1996 and 1995, this facility accounted for 11.2% and 9.5%, respectively,
of Engineering and Construction's earned revenue. The costs associated with this
shutdown were reflected in the 1997 first quarter financial statements and were
not material.
During 1997, the Company also began construction of a new structural steel
fabricating facility in Eloy, Arizona. This expands the Company's capabilities
to fabricate and erect structural steel buildings in the west coast and
southwest markets, where the demand for such products is currently strong. This
new facility will be operational in early 1998.
Additionally, in March 1997, the Company announced the acquisition of Candraft
Detailing, Inc., an engineering drafting company located in Vancouver, British
Columbia. While this acquisition will enhance the drafting capabilities for our
steel bridges and building projects, it is not expected to have a significant
impact on earned revenue.
As indicated in "Costs and Estimated Profits on Uncompleted Contracts" in the
Notes to Consolidated Financial Statements, costs and estimated profits in
excess of billings on uncompleted contracts includes approximately $6.5 million
at December 31, 1997 and 1996, relating to an unapproved change order arising
from a dispute over design and specification changes on a project.
<PAGE>
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 this matter. 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.
Capital expenditures, exclusive of business acquisitions, were $7.8 million in
1997 compared with $3.0 million and $3.2 million in 1996 and 1995, respectively.
The increase in capital expenditures was primarily attributable to the
construction of the new structural steel fabricating facility in Arizona. During
1996 and 1995, capital expenditures were for plant and construction equipment.
Steel Distribution
Steel Distribution's earned revenue was $189.1 million in 1997 compared with
$160.9 million and $150.8 million 1996 and 1995, respectively. Income from
operations was $16.6 million in 1997 compared with $13.1 million and $11.9
million in 1996 and 1995, respectively. Increases in income from operations was
primarily attributable to increases in earned revenue. Additionally, S,G&A
expenses as a percent of earned revenue held steady at approximately 7.4% for
the three years ended 1997. The increases experienced over the past three years,
in terms of earned revenue and income from operations, have been primarily the
result of a higher volume of sales due to a combination of increased demand as a
result of the ongoing economic recovery across the western United States and the
benefit of strategic capital expansion programs. These capital expansion
programs have facilitated growth by providing capacity to capture additional
market share. During 1997, the Company acquired 90% of the stock of General
Steel Corporation located in Vancouver, Washington. The acquisition of this
steel service center expands this segment into the Pacific Northwest. This
acquisition contributed to this segment's continued improvement in performance
in 1997.
Capital expenditures, exclusive of the business acquisition, were $1.6 million
in 1997 compared with $1.0 million and $2.1 million in 1996 and 1995,
respectively. During the last three years, capital expenditures were for plant
equipment.
<PAGE>
Other
Corporate unallocated expenses, consisting primarily of salaries, benefits,
outside professional services, taxes and insurance, were $6.8 million in 1997
compared with $6.8 million and $6.5 million in 1996 and 1995, respectively.
In 1997, the Company's interest income was $753,000 compared with $1.3 million
in 1996 and $1.3 million in 1995. Interest income increased in 1996 and 1995 as
a result of increased levels of short-term interest-bearing funds and interest
on long-term notes receivable.
Interest expense of $847,000 in 1997 compares with $1.3 million in 1996 and $1.9
million in 1995. Interest expense is directly related to the level of net
borrowings the Company maintains throughout each year. On December 31, 1997 the
Company had $11 million outstanding debt obligations under its revolving credit
facility compared with $13 million debt obligations at December 31, 1995. The
Company had no outstanding debt obligations under the revolving credit facility
at December 31, 1996.
The gains on sale of assets were $438,000, $560,000 and $95,000 in 1997, 1996
and 1995, respectively. In all three years, gains on the sale of idle properties
were recognized. In addition to the sale of idle properties, in 1996 the Company
realized a gain on the sale of a foreign investment.
The effective tax rate was 39.9 percent in 1997 compared with 39 percent in 1996
and 1995.
Inflation and changing prices did not significantly impact the Company during
the last three years.
The Company initiated a review of its software systems in 1997 in view of the
fact that certain systems will not properly recognize dates after the year 1999,
which could cause those systems to produce invalid results. This is commonly
referred to as "the Year 2000 problem." The Company has substantially completed
the assessment phase of all major systems and, in some cases, has made the
required changes. Based upon the results of the work done to date, the Company
believes that the remaining work will be completed in a timely manner and that
the overall cost of such work will not be material. The Company expenses such
costs when incurred. There can be no assurance, however, that further work will
not identify issues which could change the Company's present assessment of the
cost of addressing this issue.
<PAGE>
Liquidity and Capital Resources
The decrease in cash provided by operating activities in 1997 when compared with
1996, is due primarily to increases in operating assets and liabilities
(excluding the effects of acquisitions), related to an increase in the volume of
work performed. The changes in operating assets and liabilities from year to
year are affected by the mix, stage of completion and commercial terms of
contracts. During 1997, increases in inventories and increases in costs incurred
on contracts were only partially offset by increases in contract related short-
term liabilities.
The increase in cash utilized by investing activities in 1997, compared with
1996 and 1995, is primarily attributable to increased acquisitions and capital
expenditures.
During 1997, the Company completed the following acquisitions:
> General Steel Corporation (90% interest acquired), a steel service center
located in Vancouver, Washington.
> Sheffield Steel Products, a bridge fabricator located in Palatka, Florida.
> Candraft Detailing, Inc., an engineering and drafting company located in
Vancouver, British Columbia.
> Tecnologia de Almacenamiento Industrial, TAI,S.A. (60% interest acquired), an
engineering and construction company located in Caracas, Venezuela.
The total cost of these acquisitions was $13.7 million and was financed
primarily from proceeds under the Company's revolving credit facility. The
Company intends to continue to evaluate and selectively pursue opportunities for
growth or expansion of its business through investment in or acquisition of
complementary businesses. Acquisition and investment candidates are evaluated
based on various criteria in a process which includes due diligence, management
reviews and board approval. Management anticipates that investment and/or
acquisition opportunities will be available to the Company and intends to
investigate those opportunities for future growth and expansion of its business.
The Company expects that any such acquisitions will be financed from cash on
hand or available under the Company's revolving credit facility. In certain
cases, acquisitions may be funded using stock or pursuant to stand-alone credit
facilities. Capital expenditures, exclusive of business acquisitions, in 1997
were $10.6 million compared with $4.2 million and $5.3 million in 1996 and 1995,
respectively. The increase in capital expenditures in 1997 was attributable to
the construction of a new fabrication facility in Eloy, Arizona.
Cash utilized by financing activities consisted primarily of dividend payments
and payment of debt obligations. The Company paid cash dividends of $3.8 million
($1.10 per share) in 1997 compared with $3.0 million ($.86 per share) in 1996
and $2.3 million ($.66 per share) in 1995.
On February 19, 1998, the Board of Directors declared a 9% increase in its
quarterly dividend to $.30 per share. The payment of future dividends will be
evaluated based on business conditions.
<PAGE>
The Company has on hand and access to sufficient sources of funds to meet its
anticipated operating, expansion and capital needs. These sources include the
unused portion of a $40.0 million unsecured revolving credit facility which
expires on December 31, 1999 and contains an annual option to renew for an
additional one-year period, subject to lender approval. On December 31, 1997,
$8.4 million of stand-by letters of credit were outstanding under this credit
facility. The Company expects to borrow under the credit facility for working
capital requirements in 1998.
Forward-Looking Statements
Any of the comments in this annual report that refer to the Company's estimated
or future results, margins on existing or future projects, long-term
profitability and demand and growth trends for Pitt-Des Moines, Inc., are
forward-looking and reflect the Company's current analysis of existing trends
and information. Actual results may differ materially from current expectations
or projections based on a number of factors affecting the Company's businesses.
The Company's estimates of future performance depend on, among other things, the
likelihood of receiving certain new awards. While these estimates are based on
the good faith judgment of management, these estimates frequently change based
on new facts which become available. In addition, the timing of receipt of
revenue by the Company from engineering and construction projects can be
affected by a number of factors outside the control of the Company. The
Company's businesses are also subject to fluctuations in demand and to changing
global economic and political conditions which are beyond the control of the
Company and may cause actual results to differ from the forward-looking
statements contained in this annual report.
These forward-looking statements represent the Company's judgment only as of the
date of this annual report. As a result, the reader is cautioned not to rely on
these forward-looking statements. The Company disclaims any intent or obligation
to update these forward-looking statements.
<PAGE>
Business Segment Information
<TABLE>
<CAPTION>
Years ended December 31, 1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
Earned Revenue
Engineering and Construction $285,480,862 $307,381,491 $310,468,725
Steel Distribution 189,087,094 160,892,019 150,805,331
------------ ------------ ------------
$474,567,956 $468,273,510 $461,274,056
============ ============ ============
Income (Loss) from Operations
Engineering and Construction $ 15,138,837 $ 14,332,366 $ 16,696,082
Steel Distribution 16,639,556 13,078,895 11,927,971
Other (6,828,010) (6,823,541) (6,547,366)
------------ ------------ ------------
$ 24,950,383 $ 20,587,720 $ 22,076,687
============ ============ ============
Identifiable Assets
Engineering and Construction $139,046,038 $119,939,913 $129,048,388
Steel Distribution 59,026,908 42,993,504 40,809,816
Other 33,351,451 36,951,967 31,278,073
------------ ------------ ------------
$231,424,397 $199,885,384 $201,136,277
============ ============ ============
Capital Expenditures
Engineering and Construction $ 7,833,424 $ 2,967,717 $ 3,216,009
Steel Distribution 1,604,404 1,014,284 2,065,521
Other 1,169,475 170,930 22,124
------------ ------------ ------------
$ 10,607,303 $ 4,152,931 $ 5,303,654
============ ============ ============
Depreciation
Engineering and Construction $ 4,012,214 $ 4,118,398 $ 4,071,327
Steel Distribution 1,664,531 1,519,868 1,442,272
Other 107,449 42,711 148,588
------------ ------------ ------------
$ 5,784,194 $ 5,680,977 $ 5,662,187
============ ============ ============
</TABLE>
For the years ended 1997, 1996 and 1995, neither any single customer, nor any
customer outside the United States, accounted for 10 percent or more of total
earned revenue.
Amounts for 1995 and 1996 for Engineering and Construction have been restated to
include results for the Engineered Construction Division and Steel Construction
business segments, which the Company combined in 1997.
<PAGE>
Consolidated Statements of Income
<TABLE>
<CAPTION>
Years ended December 31, 1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
Earned revenue $474,567,956 $468,273,510 $461,274,056
Cost of earned revenue 402,532,030 403,799,573 398,731,887
------------ ------------ ------------
Gross profit from operations 72,035,926 64,473,937 62,542,169
Selling, general and administrative
expenses 47,085,543 43,886,217 40,465,482
------------ ------------ ------------
Income from operations 24,950,383 20,587,720 22,076,687
Other income (expense):
Interest income 752,638 1,320,422 1,234,367
Interest expense (847,334) (1,269,500) (1,927,010)
Gain on sale of assets 437,935 559,581 95,044
Miscellaneous, net (1,330,472) (569,197) (223,620)
------------ ------------ ------------
(987,233) 41,306 (821,219)
------------ ------------ ------------
Income before income taxes 23,963,150 20,629,026 21,255,468
Income tax expense 9,562,750 8,077,805 8,236,008
------------ ------------ ------------
Net income $ 14,400,400 $ 12,551,221 $ 13,019,460
============ ============ ============
Earnings per share $4.12 $3.60 $3.74
Earnings per share --
assuming dilution $4.05 $3.56 $3.72
============ ============ ============
Shares used to calculate:
Earnings per share 3,499,349 3,484,600 3,482,287
Earnings per share --
assuming dilution 3,556,398 3,526,152 3,495,510
============ ============ ============
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
Consolidated Statements of Financial Condition
<TABLE>
<CAPTION>
December 31, 1997 1996
------------ ------------
<S> <C> <C>
Assets
Current Assets
Cash and cash equivalents $ 12,036,908 $ 16,814,884
Accounts and notes receivable 78,216,135 72,423,871
Inventories 26,236,138 18,192,154
Costs and estimated profits in excess of billings 46,493,184 36,830,613
Deferred income taxes 4,526,701 4,475,749
Prepaid expenses 1,085,823 822,020
------------ ------------
Total current assets 168,594,889 149,559,291
Other Assets 7,794,113 8,097,180
Goodwill 6,171,570 202,959
Property, Plant and Equipment
Land 7,610,688 7,273,815
Buildings 41,631,446 35,212,608
Machinery and equipment 69,971,046 65,457,202
------------ ------------
119,213,180 107,943,625
Allowances for depreciation (70,349,355) (65,917,671)
------------ ------------
Net property, plant and equipment 48,863,825 42,025,954
------------ ------------
$231,424,397 $199,885,384
============ ============
</TABLE>
<PAGE>
Consolidated Statements of Financial Condition
<TABLE>
<CAPTION>
December 31, 1997 1996
------------ ------------
<S> <C> <C>
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable $ 48,812,440 $ 41,593,198
Accrued compensation, related taxes and benefits 12,491,759 12,005,337
Other accrued expenses 2,283,178 2,063,670
Billings in excess of costs and estimated profits 9,905,559 10,732,270
Income taxes 2,888,966 493,568
Casualty and liability insurance 6,040,734 7,132,397
------------ ------------
Total current liabilities 82,422,636 74,020,440
Revolving Credit Facility 11,000,000 --
Deferred Income Taxes 5,802,223 5,698,945
Minority Interest 2,536,773 1,546,645
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 33,549,255 33,549,255
Retained earnings 110,095,151 99,343,523
------------ ------------
143,644,406 132,892,778
Treasury stock at cost (1997--966,547 shares;
1996 -- 990,233 shares) (13,981,641) (14,273,424)
------------ ------------
Total stockholders' equity 129,662,765 118,619,354
------------ ------------
$231,424,397 $199,885,384
============ ============
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
Years ended December 31, 1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
Cash Flows from Operating Activities
Net income $ 14,400,400 $ 12,551,221 $ 13,019,460
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation 5,784,194 5,680,977 5,662,187
Gain on sale of assets (437,935) (559,581) (95,044)
Deferred income taxes 52,336 493,889 523,991
Minority interest in earnings,
net of dividends paid 473,194 279,715 139,175
Other non-cash credits, net (824,396) (547,440) (309,023)
Change in operating assets and liabilities providing (using) cash:
Accounts and notes receivable (139,306) 5,798,778 14,991,156
Inventories (4,928,286) (1,774,334) 3,449,246
Prepaid expenses (65,197) 91,569 18,385
Costs, estimated profits and billings, net (8,879,535) 5,632,331 (15,846,823)
Accounts payable 3,422,738 (17,781) (5,717,336)
Accrued liabilities (495,818) (2,028,861) (431,779)
Income taxes 2,215,687 (851,427) (773,280)
------------ ------------ ------------
Net cash provided by operating activities 10,578,076 24,749,056 14,630,315
Cash Flows from Investing Activities
Capital expenditures (10,607,303) (4,152,931) (5,303,654)
Proceeds from sale of assets 655,397 1,459,907 508,286
Acquisitions, net of cash acquired (13,657,216) -- --
Change in non-current assets 610,059 1,124,410 (368,499)
------------ ------------ ------------
Net cash utilized by investing activities (22,999,063) (1,568,614) (5,163,867)
Cash Flows from Financing Activities
Proceeds from revolving credit facility 17,000,000 8,000,000 4,000,000
Payments of revolving credit facility (6,000,000) (21,000,000) (13,000,000)
Dividends paid (3,849,127) (3,020,275) (2,321,336)
Other 492,138 146,902 (305,638)
------------ ------------ ------------
Net cash provided (utilized) by
financing activities 7,643,011 (15,873,373) (11,626,974)
------------ ------------ ------------
(Decrease) increase in cash and
cash equivalents (4,777,976) 7,307,069 (2,160,526)
Cash and cash equivalents at
beginning of year 16,814,884 9,507,815 11,668,341
------------ ------------ ------------
Cash and Cash Equivalents at End of Year $ 12,036,908 $ 16,814,884 $ 9,507,815
============ ============ ============
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
Consolidated Statements of Stockholders' Equity
<TABLE>
<CAPTION>
Treasury stock
-----------------------------
Retained Number of
Common stock earnings Cost shares
------------ ------------ ------------ --------------
<S> <C> <C> <C> <C>
Balance on
December 31, 1994 $33,549,255 $ 79,201,572 $(14,201,807) (990,380)
Net income 13,019,460
Cash dividends
($0.66 per share) (2,321,336)
Other (222,216) (83,422) (3,405)
------------ ------------ ------------ --------------
Balance on
December 31, 1995 33,549,255 89,677,480 (14,285,229) (993,785)
Net income 12,551,221
Cash dividends
($0.86 per share) (3,020,275)
Other 135,097 11,805 3,552
------------ ------------ ------------ --------------
Balance on
December 31, 1996 33,549,255 99,343,523 (14,273,424) (990,233)
Net income 14,400,400
Cash dividends
($1.10 per share) (3,849,127)
Other 200,355 291,783 23,686
------------ ------------ ------------ --------------
Balance on
December 31, 1997 $ 33,549,255 $110,095,151 $(13,981,641) (966,547)
============ ============ ============ ==============
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
Notes to Consolidated Financial Statements
Significant Accounting Policies
Nature of Business Segments
PDM is a diversified engineering and construction company that also processes
and distributes a broad range of carbon steel products.
The Engineering and Construction Segment specializes in the engineering and
design, procurement, fabrication, erection, and rehabilitation of steel products
such as liquid and cryogenic storage and processing systems, water storage
systems, bridges and buildings.
The Steel Distribution Segment distributes a full line of heavy carbon steel
products and provides value-added processing services while the culvert
facilities manufacture and market corrugated metal culvert pipe and accessories.
Basis of Presentation
The consolidated financial statements include the accounts of Pitt-Des Moines,
Inc. and its subsidiaries (the "Company"). Intercompany accounts and
transactions have been eliminated in consolidation.
The preparation of the Company's consolidated financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent liabilities at the balance sheet dates
and the reported amounts of revenue and expenses during the reporting periods
for long-term contracts.
Reclassifications
Certain amounts in the 1995 and 1996 consolidated financial statements and notes
to consolidated financial statements have been reclassified to conform with the
1997 presentation.
Classifications of Current Assets and Liabilities
The Company includes in current assets and current liabilities amounts
realizable and payable under contracts which extend beyond one year. Other
assets and liabilities are classified as current or non-current on the basis of
expected realization or payment within or beyond one year, respectively.
Cash and Cash Equivalents
Cash and cash equivalents are defined as cash and short-term investments with
maturities of three months or less at the time of acquisition.
<PAGE>
Inventories
Inventories of raw materials and fabricated parts are principally valued at the
lower of last-in, first-out (LIFO) cost or market, except for certain
inventories which are valued at the lower of first-in, first-out (FIFO) cost or
market.
Contract material inventories included in accumulated contract costs are valued
using the specific identification method.
Depreciation and Amortization
Land, buildings, machinery and equipment are carried at cost. Buildings,
machinery and equipment, including capitalized leases, are depreciated by
accelerated methods.
At December 31, 1997, $7.6 million of long-lived assets to be disposed of, were
included in Property, Plant and Equipment.
Goodwill is amortized on the straight-line method over periods not longer than
forty years.
Revenue Recognition
The Company follows the percentage of completion method of reporting income from
contracts. This method takes into account the cost, estimated profit and earned
revenue to date on contracts not yet completed. Revenue recognized is the
portion of the total contract price that the man-hours expended to date bears to
the estimated final total man-hours, based on current estimates of man-hours to
complete. Revenue recognition is not related to progress billings to customers.
As long-term contracts extend over one or more years, revisions in estimates of
costs and estimated profits during the course of work are reflected in the
accounting period in which the facts which require the revisions become known.
At the time a loss on a contract becomes known, the entire amount of the
estimated ultimate loss is recognized in the financial statements.
The Company has a history of making reasonably dependable estimates of the
extent of progress towards completion, contract revenues, and contract costs on
its long-term contracts. However, due to uncertainties inherent in the
estimation process, actual results could differ materially from those estimates.
Revenue from change orders and claims is recognized when the settlement is
probable and the amount can be reasonably estimated. Contract costs include all
direct material, labor, subcontract costs and those indirect costs related to
contract performance. Costs and estimated profits in excess of billings are
classified as a current asset. Amounts billed in excess of costs and estimated
profits are classified as a current liability.
<PAGE>
Income Taxes
Income taxes are accounted for under the liability method. Deferred tax assets
and liabilities are determined based on differences between financial reporting
and tax bases of assets and liabilities and are measured using the enacted tax
rates and laws that will be in effect when the differences are expected to
reverse.
Stock Options
For stock options granted at exercise prices not less than the fair market value
of common stock on the date of grant, no compensation expense is recognized.
Earnings Per Common Share
Effective December 31, 1997, the Company adopted Statement of Financial
Accounting Standards No. 128, "Earnings per Share" (SFAS No. 128). The
provisions of SFAS No. 128 required replacement of the previously reported
primary and fully diluted earnings per share for all periods presented.
Basic earnings per share is calculated by dividing net income by the weighted-
average number of shares of common stock outstanding.
Diluted earnings per share is calculated by dividing net income by the weighted-
average number of shares outstanding, increased by the number of shares of
common stock which would be issued assuming the exercise of stock options. Such
adjustment to the weighted-average number of shares of common stock outstanding
are made only when such adjustments dilute earnings per common share.
Recent Accounting Pronouncements
Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive
Income" (SFAS No. 130), is effective for fiscal years beginning after December
15, 1997. This Statement establishes standards for reporting and display of
comprehensive income and its components. Comprehensive income includes net
income and all other changes in stockholders' equity except those resulting from
investments and distributions to owners.
Statement of Financial Accounting Standards No. 131, "Disclosures about Segments
of an Enterprise and Related Information" (SFAS No. 131), establishes new
standards for reporting information about operating segments in interim and
annual financial statements. This statement is effective for 1998. Management
has not completed its review of SFAS No. 131, but does not anticipate that the
adoption of this statement will have a significant effect on the Company's
reported segments.
These standards, when implemented, are not expected to materially impact the
reported financial position or results of operations of the Company.
<PAGE>
Acquisitions
During 1997, the Company completed the following acquisitions:
> General Steel Corporation (90% interest acquired), a steel service center
located in Vancouver, Washington.
> Sheffield Steel Products, a bridge fabricator located in Palatka, Florida.
> Candraft Detailing, Inc., an engineering and drafting company located in
Vancouver, British Columbia.
> Tecnologia de Almacenamiento Industrial, TAI,S.A. (60% interest acquired), an
engineering and construction company located in Caracas, Venezuela.
The total cost of acquisitions in 1997 was $13.7 million. All acquisitions have
been accounted for as purchases and, accordingly, operating results have been
included in the Company's consolidated financial statement since the date of
acquisition. The excess of purchase price over the fair market value of net
assets acquired of approximately $6.0 million is being amortized over periods
not longer than forty years. Pro forma information has not been presented
because it is immaterial.
Accounts and Notes Receivable
Accounts and notes receivable at December 31, 1997 and 1996, were approximately
$18.5 million and $17.1 million, respectively, which amounts have been billed
under retainage provisions in contracts and will become due upon completion of
the contracts. The allowance for doubtful accounts was approximately $1.1
million and $900,000 on December 31, 1997 and 1996, respectively.
The majority of accounts receivable are from customers in various locations and
industries throughout the United States. The Company maintains adequate
allowances for potential credit losses and such losses have been minimal and
within management's estimates.
Inventories
Inventories aggregating approximately $21.3 million and $16.8 million on
December 31, 1997 and 1996, respectively, are valued at the lower of LIFO cost
or market. If these amounts had been valued on the FIFO method, which
approximates replacement cost, these amounts would have been approximately $15.3
million and $15.5 million higher than reported on December 31, 1997 and 1996,
respectively.
Inventories carried on a FIFO basis were $5.0 million and $1.4 million on
December 31, 1997 and 1996, respectively.
<PAGE>
Costs and Estimated Profits on Uncompleted Contracts
Costs and estimated profits on uncompleted contracts are summarized as follows:
<TABLE>
<CAPTION>
December 31, 1997 1996
------------- -------------
<S> <C> <C>
Costs incurred on uncompleted contracts $ 679,157,138 $ 646,533,535
Estimated profits 91,177,830 88,728,735
------------- -------------
770,334,968 735,262,270
Billings to date (733,747,343) (709,163,927)
------------- -------------
$ 36,587,625 $ 26,098,343
============= =============
</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>
December 31, 1997 1996
----------- ------------
<S> <C> <C>
Costs and estimated profits in excess of billings $46,493,184 $ 36,830,613
Billings in excess of costs and estimated profits (9,905,559) (10,732,270)
----------- ------------
$36,587,625 $ 26,098,343
=========== ============
</TABLE>
Included in costs and estimated profits in excess of billings on uncompleted
contracts was approximately $6.5 million at December 31, 1997 and 1996, relating
to an unapproved change order arising from a dispute over design and
specification changes on a project currently under construction.
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 to a project under construction. 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.
Other Assets
Other assets include prepaid pension costs and notes receivable.
<PAGE>
Pensions
The Company has a number of noncontributory defined benefit pension plans
covering most employees. Plans covering salaried employees provide monthly
benefits at retirement age based on the participant's monthly salary and years
of employment. Plans covering hourly employees generally provide benefits of
stated amounts for each year of service although certain of such plans provide
benefits based on the participant's hourly wage rate and years of service. The
plans permit the Company, at any time, to amend or terminate the plans subject
to union approval, if applicable.
The Company's policy is to fund the legal minimum required contributions. Plan
assets on December 31, 1997 consisted primarily of listed stocks, bonds,
investments in pooled funds and group annuity contracts of insurance carriers.
The Company also makes contributions to certain multi-employer defined benefit
pension plans primarily for field union employees. These contributions are
determined in accordance with the provisions of negotiated labor contracts and
generally are based on the number of man-hours worked. Company contributions and
cost recognized for these plans were approximately $791,000, $664,000 and
$738,000 for the years ended December 31, 1997, 1996 and 1995, respectively. The
estimated accumulated plan benefits and plan assets for these plans are not
available.
The Company sponsored or contributed to union sponsored defined contribution
plans which cover nearly all salaried employees, certain hourly groups in
accordance with their union labor contracts and nearly all non-union field
employees. Based upon the respective plans, the Company contributions represent
either a stated matching percentage of the participant's basic contribution or a
stated rate per hour worked. Company contributions and costs recognized for
these plans were $1.8 million, $1.6 million and $1.6 million for the years ended
December 31, 1997, 1996 and 1995, respectively.
Net periodic pension (income) expense for the Company's defined benefit pension
plans included the following components:
<TABLE>
<CAPTION>
Years ended December 31, 1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
Service cost-benefits earned during the period $ 1,520,237 $ 1,475,183 $ 1,169,634
Interest cost on projected benefit obligation 4,617,668 4,311,399 4,258,907
Actual (return) loss on plan assets (17,897,373) (10,163,666) (14,100,076)
Net amortization, deferral and other 11,034,959 3,842,415 8,812,612
------------ ------------ ------------
Net periodic pension (income) expense $ (724,509) $ (534,669) $ 141,077
============ ============ ============
</TABLE>
<PAGE>
As a result of restructuring activities, curtailment losses of $99,887 are
reflected in the net amortization and referral component of net periodic pension
income for the year ended December 31, 1997.
The following assumptions were used in the determination of net periodic cost:
<TABLE>
<CAPTION>
Years ended December 31, 1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Discount rate 7.5% 7.5% 8.5%
Rates of increase in compensation levels 5.5% 5.5% 6.5%
Expected long-term rates of return on assets 9.0% 9.0% 9.0%
</TABLE>
The interest rate used to discount actuarial liabilities to present value at
December 31, 1997 and 1996 was 7.0% and 7.5%, respectively.
The following table sets forth the status of the Company's defined benefit
pension plans:
<TABLE>
<CAPTION>
December 31, 1997 December 31, 1996
---------------------------------- ---------------------------------
Plans whose Plans whose Plans whose Plans whose
assets exceed accumulated assets exceed accumulated
accumulated benefits accumulated benefits
benefits exceed assets benefits exceed assets
-------------- ----------------- ------------- -----------------
<S> <C> <C> <C> <C>
Actuarial present value of benefit obligations:
Vested benefit obligation $ 55,016,737 $ 3,940,711 $ 48,440,023 $ 3,440,538
============ =========== ============ ===========
Accumulated benefit
obligation $ 56,463,347 $ 4,080,830 $ 49,873,918 $ 3,626,261
============ =========== ============ ===========
Plan assets at fair value $ 84,992,311 $ 3,187,039 $ 70,953,591 $ 2,290,079
Projected benefit obligation (66,099,199) (4,080,830) (57,835,463) (3,626,261)
------------ ----------- ------------ -----------
Plan assets in excess of
(less than) projected
benefit obligation 18,893,112 (893,791) 13,118,128 (1,336,182)
Unrecognized net (gain) loss (10,622,608) 174,094 (5,527,306) 251,355
Unrecognized net (asset)
obligation (2,150,906) 26,082 (2,871,426) 34,777
Unrecognized prior
service cost 1,577,608 433,079 1,776,666 485,219
Adjustment to recognize
minimum liability -- (633,255) -- (771,351)
------------ ----------- ------------ -----------
Pension asset (liability)
recognized in Consolidated
Statements of Financial
Condition $ 7,697,206 $ (893,791) $ 6,496,062 $(1,336,182)
============ =========== ============ ===========
</TABLE>
<PAGE>
Employee Stock Ownership Plan
The Company has a noncontributory Employee Stock Ownership Plan (ESOP) which
provides salaried employees, who have at least one year of continuous service,
an opportunity to own Company Common Stock and to accumulate additional
retirement benefits. The Company's contributions, whether in cash or in stock,
are determined annually by the Board of Directors in an amount not to exceed the
maximum allowable as an income tax deduction. Company contributions are 100
percent vested after five years of continuous service. The ESOP contribution is
allocated to the participant's account based upon the actual salary paid to the
participant during that year. The following table sets forth the status of the
Company's ESOP:
<TABLE>
<CAPTION>
Years ended December 31, 1997 1996 1995
---------- ---------- ----------
<S> <C> <C> <C>
Contributions $ 682,000 $ 663,000 $ 639,000
Dividends paid on ESOP shares $ 125,474 $ 83,000 $ 55,000
Number of shares held by ESOP 111,152 94,860 76,644
Plan assets at market value $4,100,000 $2,600,000 $2,000,000
</TABLE>
Revolving Credit Facility
The Company has an unsecured revolving credit agreement (the "Credit Agreement")
with several banks from which it may borrow up to $40 million. The Credit
Agreement matures on December 31, 1999, at which time all borrowings must be
repaid in full, and contains an annual option to renew for an additional one-
year period, subject to lender approval. Borrowings under the Credit Agreement
bear interest at the prime rate or at rates based on the London Interbank
Offered Rate (LIBOR), or other rates which are mutually acceptable to the banks
and the Company. A commitment fee of one-fourth of one percent per annum is
charged on any unused amount of this revolving credit commitment. The Credit
Agreement contains restrictive financial covenants that require minimum levels
of net worth and maintenance of specific financial ratios. On December 31, 1997,
$8.4 million of stand-by letters of credit were outstanding under the credit
commitment.
The Company made cash payments of interest totaling $725,000 for the year ended
December 31, 1997 and $1.2 million and $2.7 million for the years ended December
31, 1996 and 1995, respectively.
<PAGE>
Stock Plan
The Stock Option Plan of 1990 (the "SOP") provides for grants of incentive stock
options to officers and key employees. The SOP is administered by a committee
consisting of at least three directors of the Company, none of whom are eligible
to participate in the SOP. A total of 300,000 shares of the Company's Common
Stock may be issued pursuant to the SOP. Grant prices are determined by the
committee and are established at the fair market value of the Company's Common
Stock at the date of grant. Options vest over a four-year period in equal annual
amounts, or over such other period as the committee shall determine, and may be
accelerated in the event of certain other circumstances such as death or
disability of the optionee. These options generally expire within ten years
after the date of grant. The following table summarizes option activity for the
three year period ended December 31, 1997:
<TABLE>
<CAPTION>
Weighted-average
Shares exercise price
------- ----------------
<S> <C> <C>
Outstanding on December 31, 1994 98,250 $21.22
Granted 108,750 $23.17
Surrendered (10,500) $24.74
-------
Outstanding on December 31, 1995 196,500 $22.11
Granted 60,000 $28.06
Exercised (6,000) $20.50
-------
Outstanding on December 31, 1996 250,500 $23.57
Exercised (24,750) $22.93
Surrendered (3,750) $23.17
-------
Outstanding on December 31, 1997 222,000 $23.65
=======
Exercisable:
December 31, 1995 113,437 $21.31
December 31, 1996 140,625 $21.80
December 31, 1997 146,813 $22.06
Available for future grant:
December 31, 1995 96,750
December 31, 1996 36,750
December 31, 1997 40,500
</TABLE>
Stock options outstanding at December 31, 1997 of 222,000 shares at option
prices ranging from $20.50 to $28.50, had a weighted-average remaining
contractual life of seven years.
<PAGE>
Pro Forma Net Income and Earnings Per Share
Pro forma information regarding net income and earnings per share has been
determined as if the Company had accounted for its employee stock options under
the fair value method. The fair value for these options was estimated at the
date of grant using a Black-Scholes option pricing model with the following
weighted-average assumptions for 1996 and 1995. There were no stock options
granted in 1997 under the SOP.
<TABLE>
<CAPTION>
December 31, 1996 1995
---- ----
<S> <C> <C>
Risk-free interest rate 6.39% 6.29%
Dividend yield 3.41% 3.41%
Volatility factor .190 .190
Weighted-average expected life 10 10
</TABLE>
The Black-Scholes option valuation model was developed for use in estimating the
fair value of traded options which have no vesting restriction and are fully
transferable. In addition, option valuation models require the input of highly
subjective assumptions including the expected stock price volatility. Because
changes in the subjective input assumptions can materially affect the fair value
estimate, in management's opinion, the existing models do not necessarily
provide a reliable single measure of the fair value of the Company's employee
stock options.
For purposes of pro forma disclosures, the estimated fair value of the option is
amortized to expense over the options' vesting period. The Company's pro forma
net earnings and earnings per share were as follows:
<TABLE>
<CAPTION>
Years ended December 31, 1997 1996 1995
------- ------- -------
<S> <C> <C> <C>
(Dollars in thousands, except per share amounts)
Net income -- as reported $14,400 $12,551 $13,019
Net income -- pro forma 14,270 12,456 12,939
======= ======= =======
Earnings per share -- as reported:
Earnings per share 4.12 3.60 3.74
Earnings per share -- assuming dilution 4.05 3.56 3.72
======= ======= =======
Earnings per share -- pro forma:
Earnings per share 4.08 3.57 3.72
Earnings per share -- assuming dilution 4.01 3.53 3.70
======= ======= =======
Weighted-average fair value of options granted
during the year N/A 10.07 8.20
</TABLE>
<PAGE>
Income Taxes
The income tax expense included in the Consolidated Statements of Income is as
follows:
<TABLE>
<CAPTION>
Years ended December 31, 1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
Current:
Federal $ 7,481,146 $ 5,887,905 $ 6,148,312
State 1,600,000 1,250,000 1,300,000
Foreign 429,268 446,011 263,705
----------- ----------- -----------
Total current 9,510,414 7,583,916 7,712,017
Deferred:
Federal 42,272 332,447 263,186
State 10,064 161,442 260,805
----------- ----------- -----------
Total deferred 52,336 493,889 523,991
----------- ----------- -----------
Total income tax expense $ 9,562,750 $ 8,077,805 $ 8,236,008
=========== =========== ===========
</TABLE>
A reconciliation of U.S. statutory federal income tax to the income tax expense
on income before income taxes is as follows:
<TABLE>
<CAPTION>
Years ended December 31, 1997 1996 1995
---------- ---------- ----------
<S> <C> <C> <C>
U.S. statutory federal income tax expense $8,387,103 $7,220,159 $7,226,859
Increase in taxes resulting from:
State taxes less federal benefit 1,040,000 812,500 858,000
Other, net 135,647 45,146 151,149
---------- ---------- ----------
Income tax expense $9,562,750 $8,077,805 $8,236,008
========== ========== ==========
</TABLE>
<PAGE>
Deferred taxes reflect the tax effects of differences between the amounts
recorded as assets and liabilities for financial reporting purposes and the
amounts recorded for income tax purposes. The tax effects of significant
temporary differences giving rise to deferred tax assets and liabilities are as
follows:
<TABLE>
<CAPTION>
December 31, 1997 1996
---------- ----------
<S> <C> <C>
Deferred tax assets:
Casualty and liability insurance $1,651,068 $1,997,372
Contract related amounts 18,800 127,900
Inventory 573,122 185,513
Employee benefits 1,880,027 1,817,764
Accounts receivable allowance 403,684 347,200
---------- ----------
Total deferred tax assets $4,526,701 $4,475,749
========== ==========
Deferred tax liabilities:
Accelerated depreciation $2,768,588 $3,058,632
Pension 3,057,081 2,727,323
Other (23,446) (87,010)
---------- ----------
Total deferred tax liabilities $5,802,223 $5,698,945
========== ==========
</TABLE>
Income taxes paid for the years ended December 31, 1997, 1996 and 1995 were
approximately $7.1 million, $8.2 million and $7.1 million, respectively.
Earnings Per Share
The following table sets forth the computation of earnings per share and
earnings per share assuming dilution:
<TABLE>
<CAPTION>
Years ended December 31, 1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
Numerator:
Net income $14,400,400 $12,551,221 $13,019,460
=========== =========== ===========
Denominator:
Weighted-average shares 3,499,349 3,484,600 3,482,287
Employee stock options 57,049 41,552 13,223
----------- ----------- -----------
Weighted-average shares -- assuming dilution 3,556,398 3,526,152 3,495,510
=========== =========== ===========
Earnings per share $4.12 $3.60 $3.74
Earnings per share -- assuming dilution $4.05 $3.56 $3.72
</TABLE>
Contingencies
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 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. 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 pending final disposition of the OSHA Criminal
Proceeding.
<PAGE>
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 alleged 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
amount of criminal fines and penalties which can be assessed as a result of the
conviction is $1.0 million.
In an order dated October 28, 1997 the District Court denied the Company's post-
trial motions in the OSHA Criminal Proceeding and a sentencing hearing has been
scheduled for March 20, 1998. The Company will file an appeal within ten days
after sentencing, with the United States Court of Appeals for the Seventh
Circuit.
Management and counsel believe that the Company has significant and meritorious
points for sustaining the Company's appeal in the OSHA Criminal Proceeding.
Management believes that the fines, penalties and costs of defense resulting
from the Company's conviction of the two misdemeanors would not be material to
the Company's financial condition, although they are uninsured and 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 a 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 the target of the investigation at present but that it
and other companies in the steel bridge fabrication industry are the subjects of
the investigation.
<PAGE>
While the investigation remains pending, the Company does not believe it will
become a target of the investigation or that a criminal action will be
instituted against it in these matters. If the Company becomes a target or a
criminal investigation were instituted, the Company believes that it would have
significant and meritorious defenses to any such charges and would vigorously
defend against them.
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, 1997, 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.
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.
Business Segment Information
For business segment information for years ended December 31, 1997, 1996 and
1995, see page 28.
<PAGE>
Report of Independent Auditors and Management
Report of Independent Auditors
Stockholders and Board of Directors
Pitt-Des Moines, Inc.
We have audited the accompanying consolidated statements of financial condition
of Pitt-Des Moines, Inc. and subsidiaries as of December 31, 1997 and 1996, and
the related consolidated statements of income, stockholders' equity, and cash
flows for each of the three years in the period ended December 31, 1997. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Pitt-
Des Moines, Inc. and subsidiaries at December 31, 1997 and 1996, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1997, in conformity with generally
accepted accounting principles.
/s/ Ernst & Young LLP
Pittsburgh, Pennsylvania
March 2, 1998
<PAGE>
Report of Management
The management of Pitt-Des Moines, Inc. and its subsidiaries is responsible for
preparing the financial statements and for ensuring that other information
included in this annual report is consistent therewith. Estimates and judgments
are necessary ingredients in the preparation of the financial statements.
Management is considerate of these estimates and judgments and believes that the
financial statements and other financial information included herein have been
prepared, in all material respects, in conformity with accounting principles
that are generally accepted, appropriate in the circumstances and consistently
applied. The financial statements have been audited by Ernst & Young LLP,
independent auditors.
In order to prepare the financial statements, Pitt-Des Moines, Inc. maintains
and relies upon a system of internal accounting control. This system is designed
to provide reasonable assurance that assets are safeguarded, transactions are
executed in accordance with management's authorization and transactions are
recorded properly. This system is tested and evaluated by Pitt-Des Moines,
Inc.'s internal auditors. Ernst & Young LLP evaluates the system of internal
accounting control to determine the extent and timing of the procedures they
deem necessary to express an opinion on the financial statements, taken as a
whole.
Oversight of the audit process is provided by the Audit Committee of the Board
of Directors. The Audit Committee meets with the internal auditors and the
independent auditors to discuss and review audit scope and audit findings. The
internal and independent auditors have free access to the Audit Committee;
management is not present during these discussions unless requested by the Audit
Committee. The Audit Committee also recommends to the Board of Directors the
appointment of the independent auditors.
Management recognizes its responsibility for fostering a strong ethical climate
so that the business of Pitt-Des Moines, Inc. is conducted according to the
highest standard of corporate conduct.
/s/ Wm. W. McKee
Wm. W. McKee
President and Chief Executive Officer
/s/ R. A. Byers
R. A. Byers
Vice President Finance and Treasurer
<PAGE>
Two Year Quarterly Results of Operations
(unaudited)
The following is a summary of the quarterly results of operations:
<TABLE>
<CAPTION>
Quarters ended March 31, June 30, September 30, December 31,
-------- -------- ------------ ------------
(Dollars in thousands, except per share amounts)
<S> <C> <C> <C> <C>
1997 (1)
Earned revenue $109,581 $119,235 $114,662 $131,090
Gross profit from operations 14,104 17,472 15,693 24,767
Income before income taxes 3,445 5,872 5,308 9,338
Net income 2,101 3,570 3,198 5,531
Earnings per share $ 0.60 $ 1.02 $ 0.91 $ 1.58
Earnings per share --
assuming dilution $ 0.60 $ 1.01 $ 0.89 $ 1.54
======== ======== ======== ========
1996 (2)
Earned revenue $115,966 $121,649 $120,795 $109,864
Gross profit from operations 14,931 15,678 16,686 17,179
Income before income taxes 5,210 5,606 5,137 4,676
Net income 3,174 3,426 3,103 2,848
Earnings per share $ 0.91 $ 0.98 $ 0.89 $ 0.82
Earnings per share --
assuming dilution $ 0.90 $ 0.97 $ 0.88 $ 0.81
</TABLE>
A separate computation of earnings per share is made for each quarter presented.
The dilutive effect on earnings per share resulting from the assumed exercise of
stock options is included in each quarter in which dilution occurs. The earnings
per share computation for the year is a separate annual calculation.
Accordingly, the sum of the quarterly earnings per share amounts will not
necessarily equal the earnings per share for the year.
(1) During the fourth quarter of 1997, adjustments were made to insurance
accruals which increased net income by $0.34 per share.
(2) During the fourth quarter of 1996, adjustments were recorded to increase
contract costs which reduced net income by $0.31 per share.
<PAGE>
Stockholders' Reference
Common Stock Information
The following table sets forth, for the periods indicated, the high and low
stock prices of the Common Stock and the dividends paid per share of Common
Stock.
<TABLE>
<CAPTION>
Price range Quarterly
---------------------- dividends
High Low per share
------- ---------- ---------
<S> <C> <C> <C>
1997
First Quarter $31 $26 $.275
Second Quarter 33 1/8 26 .275
Third Quarter 37 1/2 30 .275
Fourth Quarter 38 3/8 33 11/16 .275
-----
$1.10
=====
1996
First Quarter $31 1/8 $26 $ .32
Second Quarter 30 1/8 27 1/4 .18
Third Quarter 29 5/8 28 1/8 .18
Fourth Quarter 28 3/8 26 7/8 .18
-----
$ .86
=====
</TABLE>
On February 27, 1998, there were 3,515,687 shares outstanding and approximately
435 stockholders of record of the Company's Common Stock.
Stock Trading
The Company's Common Stock is traded on the American Stock Exchange (symbol
PDM).
<PAGE>
Exhibit 21
SUBSIDIARIES OF THE COMPANY
Percentage of Jurisdiction of
Name of Subsidiary Ownership Incorporation
Canadian Des Moines Industries Ltd. 100 Canada
Candraft Detailing Inc. (1) 100 Canada
Construcciones Pitt-Des Moines Venezuela, C.A. 100 Venezuela
General Steel Corporation (2) 90 Washington
Hammond Latino Americana, S.A. 100 Panama
HyCon, Inc. 100 Alabama
Hydrostorage, Inc. 100 Tennessee
Oregon Culvert Co., Inc. 81 Oregon
d/b/a Washington Culvert Co.
PDM Argentina, SA 100 Argentina
PDM Bahamas Ltd. 100 Bahamas
PDM Bonaire, N.V. 100 Netherlands Antilles
PDM Bridge Corp. 100 Delaware
PDM Chile Limitada 100 Chile
PDM El Salvador, S.A. de C.V. 100 El Salvador
PDM International Ltd. 100 Delaware
PDM Latin America Ltd. 100 Georgia
PDM Ohio, Inc. 100 Ohio
PDM Strocal, Inc. 100 Pennsylvania
PDM-TAI,S.A. 60 Venezuela
PDM Venezuela, C.A. 100 Venezuela
PDM Virgin Islands, Ltd. 100 Virgin Islands
Pittsburgh-Des Moines Sdn. Bhd. (PDM Malaysia) 100 Malaysia
P.T. Perkasa Daya Megah (PDM Indonesia) 100 Indonesia
- --------------
(1) Acquired March 10, 1997
(2) Acquired January 31, 1997
<PAGE>
Exhibit 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Annual Report (Form 10-K)
of Pitt-Des Moines, Inc. of our report dated March 2, 1998, included in the
Pitt-Des Moines, Inc. 1997 Annual Report.
Our audit also included the financial statement schedule of Pitt-Des Moines,
Inc. listed in Item 14(a). This schedule is the responsibility of the Company's
management. Our responsibility is to express an opinion based on our audits.
In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
present fairly in all material respects the information set forth therein.
We also consent to the incorporation by reference in the Registration Statements
on Form S-8 (No. 33-34787) pertaining to the Stock Option Plan of 1990 of Pitt-
Des Moines, Inc.; Form S-8 (No. 333-13043) pertaining to the Pitt-Des Moines,
Inc. Directors Stock Plan of our report dated March 2, 1998, with respect to the
consolidated financial statements incorporated herein by reference, and our
report included in the preceding paragraph with respect to the financial
statement schedule included in this Annual Report (Form 10-K) of Pitt-Des
Moines, Inc.
Pittsburgh, Pennsylvania
March 27, 1998
/s/ ERNST & YOUNG LLP
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ANNUAL
REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1997 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 12,037
<SECURITIES> 0
<RECEIVABLES> 79,275
<ALLOWANCES> 1,059
<INVENTORY> 26,236
<CURRENT-ASSETS> 168,595
<PP&E> 119,213
<DEPRECIATION> 70,349
<TOTAL-ASSETS> 231,424
<CURRENT-LIABILITIES> 82,423
<BONDS> 11,000
0
0
<COMMON> 33,549
<OTHER-SE> 96,114
<TOTAL-LIABILITY-AND-EQUITY> 231,424
<SALES> 474,568
<TOTAL-REVENUES> 474,568
<CGS> 402,532
<TOTAL-COSTS> 402,532
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 847
<INCOME-PRETAX> 23,963
<INCOME-TAX> 9,563
<INCOME-CONTINUING> 14,400
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 14,400
<EPS-PRIMARY> 4.12
<EPS-DILUTED> 4.05
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
RESTATED FDS INCLUDING COLUMNS FOR THE PRIOR THREE PERIODS ENDED (MARCH 31,
1997, JUNE 30, 1997, SEPTEMBER 30, 1997) AND PRIOR YEAR END (DECEMBER 31, 1996)
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS 9-MOS YEAR
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1997 DEC-31-1997 DEC-31-1996
<PERIOD-START> JAN-01-1997 JAN-01-1997 JAN-01-1997 JAN-01-1996
<PERIOD-END> MAR-31-1997 JUN-30-1997 SEP-30-1997 DEC-31-1996
<CASH> 5,724 10,245 15,379 16,815
<SECURITIES> 0 0 0 0
<RECEIVABLES> 80,264 79,429 84,967 73,292
<ALLOWANCES> 917 1,018 1,075 868
<INVENTORY> 17,822 18,329 18,211 18,192
<CURRENT-ASSETS> 145,091 154,184 160,318 149,559
<PP&E> 109,279 111,030 111,915 107,944
<DEPRECIATION> 67,954 69,474 69,362 65,918
<TOTAL-ASSETS> 199,667 208,932 215,407 199,885
<CURRENT-LIABILITIES> 63,115 69,526 65,425 74,020
<BONDS> 9,000 9,000 17,000 0
0 0 0 0
0 0 0 0
<COMMON> 33,549 33,549 33,549 33,549
<OTHER-SE> 86,224 89,162 91,594 85,070
<TOTAL-LIABILITY-AND-EQUITY> 199,667 208,932 215,407 199,885
<SALES> 109,581 228,816 343,478 468,274
<TOTAL-REVENUES> 109,581 228,816 343,478 468,274
<CGS> 95,477 197,240 296,209 403,800
<TOTAL-COSTS> 95,477 197,240 296,209 403,800
<OTHER-EXPENSES> 0 0 0 0
<LOSS-PROVISION> 0 0 0 0
<INTEREST-EXPENSE> 72 232 428 1,270
<INCOME-PRETAX> 3,445 9,317 14,625 20,629
<INCOME-TAX> 1,344 3,646 5,756 8,078
<INCOME-CONTINUING> 2,101 5,671 8,869 12,551
<DISCONTINUED> 0 0 0 0
<EXTRAORDINARY> 0 0 0 0
<CHANGES> 0 0 0 0
<NET-INCOME> 2,101 5,671 8,869 12,551
<EPS-PRIMARY> .60 1.62 2.54 3.60
<EPS-DILUTED> .60 1.60 2.50 3.56
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
RESTATED FDS INCLUDING COLUMNS FOR THE PRIOR THREE PERIODS ENDED (MARCH 31,
1996, JUNE 30, 1996, SEPTEMBER 30, 1996) AND PRIOR YEAR END (DECEMBER 31, 1995)
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS 9-MOS 12-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1996 DEC-31-1996 DEC-31-1995
<PERIOD-START> JAN-01-1996 JAN-01-1996 JAN-01-1996 JAN-01-1995
<PERIOD-END> MAR-31-1996 JUN-30-1996 SEP-30-1996 DEC-31-1995
<CASH> 3,755 3,797 4,743 9,507
<SECURITIES> 0 0 0 0
<RECEIVABLES> 82,504 93,603 93,914 78,385
<ALLOWANCES> 940 1,220 1,126 868
<INVENTORY> 16,265 16,968 17,644 16,418
<CURRENT-ASSETS> 146,926 153,488 153,469 147,395
<PP&E> 101,307 101,998 102,471 100,096
<DEPRECIATION> 59,978 61,477 62,478 58,351
<TOTAL-ASSETS> 200,621 205,075 204,632 201,136
<CURRENT-LIABILITIES> 64,689 66,282 66,226 72,327
<BONDS> 18,000 18,000 15,000 13,000
0 0 0 0
0 0 0 0
<COMMON> 33,549 33,549 33,549 33,549
<OTHER-SE> 77,586 80,373 82,837 75,393
<TOTAL-LIABILITY-AND-EQUITY> 200,621 205,075 204,632 201,136
<SALES> 115,966 237,615 358,410 461,274
<TOTAL-REVENUES> 115,966 237,615 358,410 461,274
<CGS> 101,035 207,006 311,115 398,732
<TOTAL-COSTS> 0 207,006 311,115 0
<OTHER-EXPENSES> 0 0 0 0
<LOSS-PROVISION> 0 0 0 0
<INTEREST-EXPENSE> 277 591 906 1,927
<INCOME-PRETAX> 5,210 10,816 15,953 21,255
<INCOME-TAX> 2,036 4,216 6,250 8,236
<INCOME-CONTINUING> 3,174 6,600 9,703 13,019
<DISCONTINUED> 0 0 0 0
<EXTRAORDINARY> 0 0 0 0
<CHANGES> 0 0 0 0
<NET-INCOME> 3,174 6,600 9,703 13,019
<EPS-PRIMARY> .91 1.89 2.78 3.74
<EPS-DILUTED> .90 1.87 2.75 3.72
</TABLE>
