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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________________
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2000
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____ to _____
Commission file number 1-5259
____________________
PITT-DES MOINES, INC.
(Exact name of registrant as specified in its charter)
Commonwealth of Pennsylvania 25-0729430
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1450 Lake Robbins Drive, Suite 400, The Woodlands, TX 77380
(Address of Principal Executive Offices) (Zip Code)
(281) 765-4600
(Registrant's Telephone Number, including Area Code)
____________________
Indicate by check whether the registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No _____
-----
On October 31, 2000, 7,404,596 shares of Common Stock were outstanding.
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<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE
<S> <C> <C>
Part I - Financial Information
Item 1. Financial Statements.............................................. 3
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations......................................... 12
Item 3. Quantitative and Qualitative Disclosures About Market Risk.................. 16
Part II - Other Information
Item 1. Legal Proceedings................................................. 17
Item 6. Exhibits and Reports on Form 8-K.................................. 17
SIGNATURES............................................................................. 18
</TABLE>
2
<PAGE>
Part I. Financial Information
Item 1. Financial Statements
PITT-DES MOINES, INC.
Consolidated Statements of Income
(Unaudited)
<TABLE>
<CAPTION>
For the three months For the nine months
ended September 30, ended September 30,
---------------------- -----------------------
<S> <C> <C> <C> <C>
(in thousands, except per share amounts) 2000 1999 2000 1999
-------- -------- --------- ---------
Earned revenue $ 85,534 $ 64,760 $ 245,776 $ 194,956
Cost of earned revenue (68,935) (53,882) (198,796) (162,894)
-------- -------- --------- ---------
Gross profit from operations 16,599 10,878 46,980 32,062
Selling, general and administrative expenses (6,875) (8,136) (21,167) (19,848)
-------- -------- --------- ---------
Income from operations 9,724 2,742 25,813 12,214
Other income/(expense):
Interest income 225 204 642 522
Interest expense (524) (647) (1,524) (2,344)
Gain on sale of assets 34 38 (177) 987
Miscellaneous, net (778) (125) (1,030) (564)
-------- -------- --------- ---------
(1,043) (530) (2,089) (1,399)
-------- -------- --------- ---------
Income from continuing operations
before income taxes 8,681 2,212 23,724 10,815
Income taxes (3,363) (844) (9,371) (4,184)
-------- -------- --------- ---------
Income from continuing operations 5,318 1,368 14,353 6,631
Income (loss) from discontinued operations,
net of taxes (3,591) 4,464 24 9,664
-------- -------- --------- ---------
Net income $ 1,727 $ 5,832 $ 14,377 $ 16,295
======== ======== ========= =========
Earnings (loss) per share - basic
Continuing operations $ 0.73 $ 0.19 $ 1.97 $ 0.93
Discontinued operations $ (0.49) $ 0.62 $ 0.00 $ 1.35
-------- -------- --------- ---------
Earnings per share - basic $ 0.24 $ 0.81 $ 1.97 $ 2.28
======== ======== ========= =========
Earnings (loss) per share - assuming dilution
Continuing operations $ 0.69 $ 0.18 $ 1.89 $ 0.88
Discontinued operations $ (0.46) $ 0.59 $ 0.00 $ 1.29
-------- -------- --------- ---------
Earnings per share - assuming dilution $ 0.23 $ 0.77 $ 1.89 $ 2.17
======== ======== ========= =========
Cash dividend $ 0.20 $ 0.17 $ 0.60 $ 0.51
======== ======== ========= =========
Shares used to calculate: (in thousands)
Earnings per share 7,312 7,218 7,294 7,157
======== ======== ========= =========
Earnings per share - assuming dilution 7,670 7,586 7,590 7,513
======== ======== ========= =========
CONSOLIDATED RETAINED EARNINGS
Balance at the beginning of year $ 145,391 $ 125,792
Net income 14,377 16,295
Dividends paid (4,436) (3,716)
--------- ---------
Balance at end of period $ 155,332 $ 138,371
========= =========
</TABLE>
See Notes to Consolidated Financial Statements.
3
<PAGE>
Item 1. Financial Statements (Continued)
PITT-DES MOINES, INC.
Consolidated Statements of Financial Condition
<TABLE>
<CAPTION>
September 30, December 31,
2000 1999
-------- --------
(in thousands) (Unaudited)
<S> <C> <C>
Assets
Current Assets
Cash and cash equivalents $ 1,258 $ 3,213
Accounts receivable including retentions
(less allowances: 2000-$790; 1999-$1,493) 48,703 40,917
Inventories 32,048 25,340
Costs and estimated profits in excess
of billings 14,712 14,317
Deferred income taxes 8,131 8,110
Prepaid expenses 4,201 997
-------- --------
Total Current Assets 109,053 92,894
Other Assets 15,686 12,475
Goodwill 4,393 4,484
Net assets of discontinued operations 108,163 91,519
Property, Plant and Equipment
Land 4,039 4,785
Buildings 27,841 30,960
Machinery and equipment 34,805 33,658
-------- --------
66,685 69,403
Allowances for depreciation (33,874) (35,016)
-------- --------
Net Property, Plant and Equipment 32,811 34,387
-------- --------
$270,106 $235,759
======== ========
</TABLE>
See Notes to Consolidated Financial Statements.
4
<PAGE>
Item 1. Financial Statements (Continued)
PITT-DES MOINES, INC.
Consolidated Statements of Financial Condition
<TABLE>
<CAPTION>
September 30, December 31,
2000 1999
-------- --------
(in thousands) (Unaudited)
<S> <C> <C>
Liabilities
Current Liabilities
Accounts payable $ 13,642 $ 23,347
Accrued compensation, related taxes and benefits 11,785 10,839
Other accrued expenses 4,709 3,703
Billings in excess of costs and estimated profits 8,577 4,862
Income taxes - 3,321
Casualty and liability insurance 12,657 8,215
-------- --------
Total Current Liabilities 51,370 54,287
Revolving Credit Facility 25,000 -
Deferred Income Taxes 8,027 8,187
Minority Interest 968 881
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 8,946,468 shares 33,549 33,549
Additional paid-in capital 8,422 6,305
Retained earnings 155,332 145,391
Accumulated other comprehensive income - -
-------- --------
197,303 185,245
Treasury stock at cost
(2000-1,542,202 shares; 1999-1,597,866 shares) (11,505) (11,784)
Unearned compensation - restricted stock (1,057) (1,057)
-------- --------
Total Stockholders' Equity 184,741 172,404
-------- --------
$270,106 $235,759
======== ========
</TABLE>
See Notes to Consolidated Financial Statements.
5
<PAGE>
Item 1. Financial Statements (Continued)
PITT-DES MOINES, INC.
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
For the nine months ended
September 30,
--------------------------
(in thousands) 2000 1999
----------- -----------
<S> <C> <C>
Cash Flow From Operating Activities
Net income $ 14,377 $ 16,295
Adjustments to reconcile net income to net
cash provided (utilized) by operating activities:
Depreciation and amortization 2,216 2,653
Discontinued operations - net assets (16,644) (3,184)
(Gain) loss on sale of assets 177 (987)
Deferred income taxes (credits) (181) (60)
Minority interest, net of dividends paid 87 38
Other non-cash credits, net (31) (952)
Change in operating assets and liabilities
(using) providing cash:
Accounts receivable (7,786) 2,357
Inventories (7,505) 8,077
Prepaid expenses (3,204) (269)
Costs, estimated profits and billings, net 3,320 20,639
Accounts payable (9,705) (13,819)
Accrued liabilities 6,394 1,122
Income taxes (3,321) (3,476)
-------- --------
Net cash provided (utilized) by operating activities (21,806) 28,434
Cash Flows from Investing Activities
Capital expenditures (3,865) (6,062)
Proceeds from sale of assets 3,146 2,966
Acquisitions, net - - (2,182)
Change in investments and other assets (11) (300)
-------- --------
Net cash utilized by investing activities (730) (5,578)
Cash Flows from Financing Activities
Proceeds from revolving credit facility 75,000 17,000
Payments of revolving credit facility (50,000) (32,000)
Dividends paid (4,436) (3,716)
Other 17 1,211
-------- --------
Net cash provided (used) by financing activities 20,581 (17,505)
-------- --------
(Decrease) increase in cash and cash equivalents (1,955) 5,351
Cash and cash equivalents at beginning of year 3,213 - -
-------- --------
Cash and cash equivalents at end of period $ 1,258 $ 5,351
======== ========
</TABLE>
See Notes to Consolidated Financial Statements.
6
<PAGE>
Item 1. Financial Statements (Continued)
PITT-DES MOINES, INC.
Notes to Consolidated Financial Statements
(Unaudited)
Note A. Significant Accounting Policies
Basis of Presentation
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the nine months ended September 30, 2000
are not necessarily indicative of the results that may be expected for the year
ending December 31, 2000. The December 31, 1999 Consolidated Statement of
Financial Condition was derived from audited financial statements. For further
information, refer to the consolidated financial statements and footnotes
thereto included in the Company's Annual Report on Form 10-K for the year ended
December 31, 1999.
Reclassifications
Certain prior-year amounts have been reclassified to conform to the current-year
presentation. The primary cause of the reclassifications is the transfer of
several businesses to discontinued operations (Note D).
Note B. Earnings Per Share
The following table sets forth the computation of earnings per share and
earnings per share assuming dilution:
<TABLE>
<CAPTION>
Three months Nine months
ended September 30, ended September 30,
-------------------- -------------------
<S> <C> <C> <C> <C>
(in thousands, except per share amounts) 2000 1999 2000 1999
------- ------ ------- -------
Numerator:
Income from continuing operations $ 5,318 $1,368 $14,353 $ 6,631
Income (loss) from discontinued operations (3,591) 4,464 24 9,664
------- ------ ------- -------
Net Income $ 1,727 $5,832 $14,377 $16,295
======= ====== ======= =======
Denominator:
Weighted-average shares 7,312 7,218 7,294 7,157
Employee stock options and restricted stock 358 368 296 356
------- ------ ------- -------
Weighted-average shares-assuming dilution 7,670 7,586 7,590 7,513
======= ====== ======= =======
</TABLE>
7
<PAGE>
Item 1. Financial Statements (Continued)
Note B. Earnings Per Share (Continued)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Earnings (loss) per share - basic
Continuing operations $ 0.73 $0.19 $1.97 $0.93
Discontinued operations $(0.49) $0.62 $0.00 $1.35
------ ----- ----- -----
Net income $ 0.24 $0.81 $1.97 $2.28
====== ===== ===== =====
Earnings (loss) per share - assuming dilution
Continuing operations $ 0.69 $0.18 $1.89 $0.88
Discontinued operations $(0.46) $0.59 $0.00 $1.29
------ ----- ----- -----
Net income $ 0.23 $0.77 $1.89 $2.17
====== ===== ===== =====
</TABLE>
Note C. Costs and Estimated Profits on Uncompleted Contracts
Costs and estimated profits on uncompleted contracts are summarized as follows:
<TABLE>
<CAPTION>
September 30, December 31,
(in thousands) 2000 1999
--------- --------
<S> <C> <C>
Costs incurred on uncompleted contracts $ 99,969 $ 75,398
Estimated profits 28,384 15,280
--------- --------
128,353 90,678
Less: Billings to date (122,218) (81,223)
--------- --------
$ 6,135 $ 9,455
========= ========
</TABLE>
Costs, estimated profits and billings on uncompleted contracts are included in
the accompanying Consolidated Statements of Financial Condition under the
following captions:
September 30, December 31,
(in thousands) 2000 1999
------- -------
Costs and estimated profits in excess of billings $14,712 $14,317
Billings in excess of costs and estimated profits (8,577) (4,862)
------- -------
$ 6,135 $ 9,455
======= =======
8
<PAGE>
Item 1. Financial Statements (Continued)
Note D. Discontinued Operations
On November 3, 2000, the Company sold all the stock of PDM Strocal, Inc. and
Candraft Detailing, Inc., both wholly-owned subsidiaries, to David L. Long, the
president of the structural steel fabrication and erection business unit. Total
consideration was $29.1 million consisting of $18.8 million in cash and the
assignment of $10.3 million of PDM Strocal accounts receivable to the Company.
The sale was effective August 31, 2000.
On August 29, 2000, the Company signed a Letter of Intent to sell its Engineered
Construction and Water Storage divisions to Chicago Bridge and Iron Company.
Execution of the sale, which is anticipated in the fourth quarter of 2000, is
subject to reaching a definitive Purchase Agreement.
On September 15, 2000, the Company signed a Letter of Intent to sell its Culvert
Operations to Contech Construction Products, Inc. The proposed transaction
would include the sale of all of the stock of Oregon Culvert Company, Inc., a
wholly-owned subsidiary, and certain assets of the Company's Stockton Culvert
operation. Execution of the sale, which is anticipated in the fourth quarter of
2000, is subject to reaching a definitive Purchase Agreement.
The aforementioned operations are all being reported as discontinued operations
in the accompanying financial statements. The Company does not anticipate
reporting a loss on the disposition of these businesses. Net assets from
discontinued operations in the accompanying balance sheet of $108.2 million
includes $91.5 million of net current assets and $16.7 million of net non-
current assets as of September 30, 2000. These amounts consist primarily of
accounts receivable, contract related assets and liabilities, property, plant
and equipment and related liabilities.
Revenues applicable to discontinued operations were $280.6 million and $264.7
million for the nine months ended September 30, 2000 and 1999, respectively.
For the three months ended September 30, 2000 and 1999, revenues applicable to
discontinued operations were $85.7 million and $95.6 million, respectively.
Note E. Contingencies
As previously reported, in a decision dated February 18, 1999, the United States
Court of Appeals for the Seventh Circuit affirmed the Company's July 31, 1997
conviction for two misdemeanor violations of federal Occupational Safety and
Health Administration regulations. As a result of that conviction, other
claims, actions, or proceedings may be instituted against the Company. 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.
9
<PAGE>
Item 1. Financial Statements (Continued)
Note E. Contingencies (Continued)
Various claims and legal proceedings are brought 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 properties, 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, and has been requested to participate as a PRP at one
additional site, 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 the cost of such future activities 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, 1999 and during
the nine months ended September 30, 2000 for investigative and/or remedial
activities 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 such outcome could be material to the reported results of
operations for the period in which it occurs.
10
<PAGE>
Item 1. Financial Statements (Continued)
Note F. Business Segment Information
The Company has two reportable operating segments; Heavy Construction and Steel
Distribution. Heavy Construction, as reported in this 10-Q, specializes in the
engineering and design, procurement and fabrication of steel bridges, while the
Steel Distribution segment processes and distributes a full line of heavy carbon
steel products. The accounting policies of the reportable segments are the same
as those described in the summary of significant accounting policies in the
Company's 1999 Annual Report except that inventory is accounted for on a First-
In, First-Out basis at the segment level compared to a Last-In, First-Out (LIFO)
basis at the consolidated level, and the Company does not allocate certain items
to its segments including general corporate expenses, incentive stock plan
charges, other income (expense), income tax expense and adjustments to the LIFO
inventory reserve.
<TABLE>
<CAPTION>
Three months Nine months
ended September 30, ended September 30,
--------------------- -----------------------
2000 1999 2000 1999
------- ------- -------- --------
<S> <C> <C> <C> <C>
Earned Revenue:
Heavy Construction $28,043 $19,187 $ 80,241 $ 64,578
Steel Distribution 57,491 45,573 165,535 130,378
------- ------- -------- --------
$85,534 $64,760 $245,776 $194,956
======= ======= ======== ========
Income (Loss) from Operations:
Heavy Construction $ 8,706 $ 3,452 $ 22,259 $ 9,678
Steel Distribution 3,828 3,259 13,163 9,776
Corporate and Other (2,810) (3,969) (9,609) (7,240)
------- ------- -------- --------
$ 9,724 $ 2,742 $ 25,813 $ 12,214
======= ======= ======== ========
</TABLE>
11
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 2000 COMPARED WITH THREE MONTHS ENDED SEPTEMBER
30, 1999.
The Company reported net income of $1.7 million, or $0.23 per diluted share, for
the quarter ended September 30, 2000. The net income consisted of $5.3 million
of income from continuing operations, on earned revenue of $85.5 million, and a
net loss from discontinued operations of $3.6 million. These results compare
with net income of $5.8 million, or $0.77 per diluted share, for the third
quarter of 1999. The prior year net income consisted of $1.4 million of income
from continuing operations, on earned revenue of $64.8 million, and income from
discontinued operations of $4.5 million.
HEAVY CONSTRUCTION
Heavy Construction posted earned revenue of $28.0 million, representing an
increase of $8.9 million over the prior year quarter. The growth is
attributable to favorable market conditions stemming from strong federal and
state infrastructure spending.
Gross margin improved over the third quarter of the prior year due to a change
in the mix of contracts and realization of operating efficiencies. Selling,
general and administrative (S,G&A) expense as a percentage of earned revenue
decreased 1.6 percentage points to 2.8 percent, compared with 4.4 percent in the
third quarter of 1999. Income from operations rose $5.3 million to $8.7 million
for the third quarter, due to the earned revenue growth and leverage of the
operating expense lines over the prior year.
New awards were $30.6 million for the quarter ended September 30, 2000. Backlog
was down slightly from year-end 1999 levels, totaling $70.9 million at September
30, 2000.
STEEL DISTRIBUTION
Steel Distribution's earned revenue increased $11.9 million, or 26 percent,
quarter-to-quarter from $45.6 million to $57.5 million in 2000. Strong market
activity, coupled with the favorable impact of new and expanded steel service
center operations, contributed to the growth in volume.
S,G&A expense as a percentage of earned revenue improved 1.0 percentage point to
6.3 percent. Income from operations increased $0.6 million, to $3.8 million, as
a result of the growth in earned revenue and leverage of the S,G&A expense line.
12
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (Continued)
OTHER
Corporate unallocated expenses, consisting of salaries, benefits, outside
professional services, taxes and insurance, were $2.8 million in the third
quarter of 2000 compared with $4.0 million for the prior year quarter. The
decrease from 1999 relates primarily to compensation expense recognized under a
management incentive program and increased net periodic pension income.
Interest expense of $0.5 million in 2000 compares with $0.6 million in the
prior-year quarter. Interest expense is directly related to the level of net
borrowings the Company maintains throughout the period. On September 30, 2000,
the Company had $25 million of outstanding debt under its revolving credit
facility, compared with $20 million at September 30, 1999.
NINE MONTHS ENDED SEPTEMBER 30, 2000 COMPARED WITH NINE MONTHS ENDED SEPTEMBER
30, 1999.
The Company reported net income of $14.4 million, or $1.89 per diluted share,
for the nine months ended September 30, 2000. The net income consisted of $14.4
million of income from continuing operations, on earned revenue of $245.8
million. These results compare with net income of $16.3 million, or $2.17 per
diluted share, for the first nine months of 1999. The prior year net income
consisted of $6.6 million of income from continuing operations, on earned
revenue of $195.0 million, and income from discontinued operations of $9.7
million.
HEAVY CONSTRUCTION
The Heavy Construction segment reported a 24 percent increase in earned revenue
from $64.6 million to $80.2 million for the first nine months of 2000. The
growth is attributable to favorable market conditions stemming from strong
federal and state infrastructure spending.
Gross margin improved over the prior year due to a change in the mix of
contracts and realization of operating efficiencies. S,G&A expense as a
percentage of earned revenue dropped to 2.8 percent for the first nine months of
2000, from 3.6 percent for the period ended September 30, 1999. Income from
operations increased $12.6 million to $22.3 million for the first nine months of
2000.
New awards were $71.8 million for the first nine months of 2000, compared with
$91.0 million in the prior year.
13
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (Continued)
STEEL DISTRIBUTION
Steel Distribution reported earned revenue of $165.5 million, a 27 percent
increase from $130.4 million in earned revenue for the nine months ended
September 30, 1999, due to an increase in tonnage shipped. Strong market
activity, coupled with the favorable impact of new and expanded steel service
center operations, contributed to the growth in volume.
S,G&A expense as a percentage of earned revenue decreased to 6.5 percent, from
7.3 percent a year ago. Income from operations rose $3.4 million, or 35
percent, to $13.2 million in 2000 as a result of the strong earned revenue
growth and leverage of the S,G&A expense line.
OTHER
Corporate unallocated expenses, consisting of salaries, benefits, outside
professional services, taxes and insurance, were $9.6 million in the first nine
months of 2000 compared with $7.2 million for the comparable period of 1999.
The increase from 1999 relates primarily to adjustments to inventory reserves,
attributable to higher average material costs.
Interest expense of $1.5 million for the first nine months of 2000 compares with
$2.3 million in the prior year.
The loss on sale of assets of $0.2 million in 2000 relates to the write-down of
an idle property to the estimated net realizable value. The gain on sale of
assets was $1.0 million in 1999, attributable to the sale of idle property.
LIQUIDITY AND CAPITAL RESOURCES
During the nine months ended September 30, 2000, the Company's primary source of
liquidity was proceeds from its revolving credit facility which were used to
fund the growth in working capital. Working capital increased $19.1 million
from $38.6 million at December 31, 1999 to $57.7 million at September 30, 2000.
Net cash utilized by operating activities increased $50.2 million when compared
with the $28.4 million of cash provided in the first nine months of 1999. The
increase is partially attributable to a net increase in operating assets and
liabilities associated with discontinued operations. The increase is also due
to increases in accounts receivable and net costs incurred on contracts. The
changes in operating assets and liabilities vary from period to period and are
affected by the mix, stage of completion and commercial terms of contracts.
Net cash utilized by investing activities of $0.7 million for the nine months
ended September 30, 2000, consisted of $3.9 million in capital expenditures and
the realization of $3.2 million in proceeds from the sale of idle property. The
Company anticipates that capital expenditures for fiscal year 2000 will be
approximately twice the level of depreciation and amortization, although there
can be no assurance that such levels will not increase or decrease.
14
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (Continued)
LIQUIDITY AND CAPITAL RESOURCES (Continued)
On July 10, 2000, the Company announced it has engaged the firm of Tanner & Co.,
Inc., as the Company's financial advisor, to assist the Board of Directors'
consideration of strategic alternatives to enhance shareholder value, including
the potential sale or other disposition of part or all of the Company.
As previously noted, the Company sold the stock of PDM Strocal, Inc. and
Candraft Detailing, Inc. for total consideration of approximately $29.1 million
consisting of $18.8 million in cash and the assignment of accounts receivable.
The Company also signed letters of intent for two other transactions which, if
consummated, may have a favorable impact on the Company's liquidity.
The Company, jointly with Tanner & Co., continues to evaluate strategic
alternatives for the remaining businesses.
Cash provided by financing activities consisted primarily of proceeds from the
Company's revolving credit facility. The Company paid cash dividends of $4.4
million, or $0.60 per share, compared with $3.7 million, or $0.51 per share,
during the nine months ended September 30, 2000 and 1999, respectively.
The Company has on hand and access to sufficient sources of funds to meet its
anticipated operating, expansion and capital needs. These sources include cash
on hand and the unused portion of a $70.0 million unsecured revolving credit
facility which expires on January 31, 2002. On November 10, 2000, $15.0 million
of borrowings and $5.7 million of stand-by letters of credit were outstanding
under this credit facility.
FORWARD-LOOKING STATEMENTS
Any of the comments in this quarterly 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 quarterly report.
15
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Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (Continued)
FORWARD-LOOKING STATEMENTS (Continued)
These forward-looking statements represent the Company's judgment only as of the
date of this quarterly 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.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Due to current conditions in the credit markets and considering the favorable
terms of the Company's credit facility, management believes interest rate
exposure is minimal.
The Company has limited operations outside the United States. As such, there is
limited exposure to the Company's future earnings due to changes in foreign
currency exchange rates. A 10 percent appreciation of the United States dollar
against the related currencies would not have a significant effect on the future
earnings of the Company.
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Part II - Other Information
Item 1. Legal Proceedings
Refer to Part I Item 1, Note E of the Notes to Consolidated Financial
Statements for information, which information is incorporated herein by
reference.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(2.1) Stock Purchase Agreement (excluding exhibits and schedules to
such agreement which are described on the exhibit index thereto
and which will be provided to the Securities and Exchange
Commission on request), dated as of November 3, 2000, by and
among Pitt-Des Moines, Inc., David L. Long, Candraft Detailing,
Inc., and PDM Strocal, Inc.
(27) Financial Data Schedule.
(b) Reports on Form 8-K.
The Registrant filed a Form 8-K dated July 10, 2000, reporting a press
release under "Item 5. Other Events". The press release announced the
Company has engaged the investment banking firm of Tanner & Co., Inc.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Pitt-Des Moines, Inc.
-------------------------------
(Registrant)
Principal Executive Officer:
Date: November 14, 2000 By: /s/ Wm. W. McKee
--------------------------------
Wm. W. McKee
(President and
Chief Executive Officer)
Principal Financial Officer:
Date: November 14, 2000 By: /s/ R. A. Byers
-------------------------------
R. A. Byers
(Vice President
Finance and Treasurer)
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