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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
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[X] Quarterly Report Pursuant To Section 13 or 15(d) of
The Securities Exchange Act of 1934
For the quarterly period ended June 30, 1998
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 0-23688
AMERICAN BUILDINGS COMPANY
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(Exact name of registrant as specified in its charter)
DELAWARE 63-0931058
- ------------------------------- ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
P.O. BOX 800
STATE DOCKS ROAD
EUFAULA, ALABAMA 36027
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(Address of principal executive offices)
(Zip Code)
(334) 687-2032
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(Registrant's telephone number, including area code)
NOT APPLICABLE
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(Former name, former address and former fiscal year,
if changed since last report.)
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
--- ---
APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares
outstanding of each of the issuer's classes of common stock, as of the latest
practicable date: AUGUST 6, 1998 -- 5,288,933 SHARES.
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<PAGE>
INDEX
AMERICAN BUILDINGS COMPANY AND SUBSIDIARIES
Page Number
-----------
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (Unaudited)
Condensed Consolidated Balance Sheets --
June 30, 1998 and December 31, 1997 ................. 2
Condensed Consolidated Statements of Income--
Three months ended June 30, 1998 and 1997;
Six months ended June 30, 1998 and 1997 ............. 3
Condensed Consolidated Statements of Cash Flows--
Six months ended June 30, 1998 and 1997 ............. 4
Notes to Condensed Consolidated Financial Statements .. 5
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS ................... 7
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS ..... 11
ITEM 5. OTHER MATTERS ........................................... 11
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K ........................ 12
<PAGE>
<TABLE>
<CAPTION>
AMERICAN BUILDINGS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)
June 30, December 31,
1998 1997
----------- ------------
(Unaudited)
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash (including restricted cash of $328 and $10,624 in 1998 and 1997) ....... $ 4,679 $ 16,560
Accounts receivable, net of allowance for doubtful
accounts of $4,196 and $4,375 in 1998 and 1997, respectively .............. 63,758 61,574
Inventories ................................................................. 36,009 32,159
Other ....................................................................... 8,007 5,914
-------- --------
Total current assets ...................................................... 112,453 116,207
PROPERTY, PLANT AND EQUIPMENT, net ............................................. 54,360 54,607
DEFERRED INCOME TAXES .......................................................... 892 892
GOODWILL, net .................................................................. 28,387 29,669
OTHER ASSETS, net .............................................................. 9,013 8,676
-------- --------
TOTAL ASSETS .............................................................. $205,105 $210,051
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt ........................................ $ 5,540 $ 13,866
Accounts payable ............................................................ 42,616 44,958
Accrued liabilities ......................................................... 19,737 19,109
Accrued income taxes ........................................................ 422 1,166
-------- --------
Total current liabilities ................................................. 68,315 79,099
LONG-TERM DEBT, net of current maturities ...................................... 71,565 71,407
OTHER NONCURRENT LIABILITIES ................................................... 3,904 3,749
STOCKHOLDERS' EQUITY
Preferred stock, $.01 par value; 4,000 shares authorized,
no shares issued and outstanding at 1998 and 1997 ......................... -- --
Common stock, $.01 par value; 25,000 shares authorized,
6,357 shares and 6,339 shares issued at 1998 and 1997, respectively ....... 64 63
Additional paid-in capital .................................................. 31,635 31,448
Retained earnings ........................................................... 58,073 52,736
-------- --------
89,772 84,247
Less-Treasury stock, at cost (1,069 shares at
June 30, 1998 and December 31, 1997) ....................................... (28,451) (28,451)
-------- --------
Total stockholders' equity ................................................ 61,321 55,796
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ................................ $205,105 $210,051
======== ========
</TABLE>
See notes to condensed consolidated financial statements.
2
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<TABLE>
<CAPTION>
AMERICAN BUILDINGS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(In Thousands, Except Per Share Amounts)
Three months ended Six months ended
June 30, June 30,
------------------------- -------------------------
1998 1997 1998 1997
--------- ------- --------- ---------
<S> <C> <C> <C> <C>
NET SALES ................................................ $111,762 $78,509 $209,532 $136,113
COSTS AND EXPENSES:
Cost of sales ......................................... 94,885 64,231 178,738 113,074
Selling, general, and administrative .................. 9,623 6,928 19,607 12,999
-------- ------- -------- --------
104,508 71,159 198,345 126,073
OPERATING INCOME ......................................... 7,254 7,350 11,187 10,040
INTEREST EXPENSE ......................................... 1,234 266 2,510 491
-------- ------- -------- --------
INCOME BEFORE PROVISION FOR INCOME TAXES ................. 6,020 7,084 8,677 9,549
PROVISION FOR INCOME TAXES .............................. 2,317 2,727 3,340 3,677
-------- ------- -------- --------
NET INCOME ............................................... $ 3,703 $ 4,357 $ 5,337 $ 5,872
======== ======= ======== ========
EARNINGS PER SHARE:
Basic ............................................... $ .70 $ .82 $ 1.01 $ 1.11
======== ======= ======== ========
Diluted ............................................. $ .65 $ .77 $ .94 $ 1.04
======== ======= ======== ========
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic ............................................... 5,288 5,305 5,281 5,310
======== ======= ======== ========
Diluted ............................................. 5,695 5,658 5,666 5,661
======== ======= ======== ========
</TABLE>
See notes to condensed consolidated financial statements.
3
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<TABLE>
<CAPTION>
AMERICAN BUILDINGS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(In Thousands)
Six months ended
June 30,
---------------------
1998 1997
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income .................................................................. $ 5,337 $ 5,872
-------- -------
Adjustments to reconcile net income to net cash (used for)
provided by operating activities:
Depreciation and amortization ........................................ 4,712 2,409
Changes in assets and liabilities:
Accounts receivable, net .......................................... (3,899) 611
Inventories ....................................................... (3,850) (281)
Accounts payable .................................................. (2,219) (6,456)
Accrued liabilities and taxes ..................................... (116) 1,641
Other working capital changes ..................................... (2,093) 305
Other, net ........................................................ (205) (69)
-------- -------
Total adjustments .............................................. (7,670) (1,840)
-------- -------
Net cash (used for) provided by operating activities ........... (2,333) 4,032
-------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant, and equipment ................................. (3,969) (4,379)
Investment in China Joint Venture ........................................... (135) (525)
Cash settlement - Windsor Door purchase ..................................... 2,536 --
Other ....................................................................... -- 119
-------- -------
Net cash used for investing activities ......................... (1,568) (4,785)
-------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net change in revolving credit facility ..................................... (6,010) 1,676
Long-term debt payments ..................................................... (2,158) --
Purchase of treasury stock .................................................. -- (1,083)
Proceeds from issuance of common stock ...................................... 188 160
-------- -------
Net cash (used for) provided by financing activities ........... (7,980) 753
-------- -------
NET DECREASE IN CASH ........................................................... (11,881) --
CASH AT BEGINNING OF PERIOD .................................................... 16,560 --
-------- -------
CASH AT END OF PERIOD .......................................................... $ 4,679 $ --
======== =======
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for interest ...................................................... $ 2,219 $ 495
======== =======
Cash paid for income taxes .................................................. $ 4,060 $ 4,114
======== =======
</TABLE>
See notes to condensed consolidated financial statements.
4
<PAGE>
AMERICAN BUILDINGS COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1998
(In Thousands, Except Per Share Data)
(Unaudited)
1. The condensed consolidated financial statements included herein have been
prepared by the Company, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain information
and footnote disclosures normally included in financial statements prepared
in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations, although the
Company believes that the disclosures are adequate to make the information
not misleading. In the opinion of management, the condensed consolidated
financial statements contain all adjustments necessary to present fairly
the financial position of the Company as of June 30, 1998 and the results
of its operations and cash flows for the three and six months ended June
30, 1998 and 1997. All such adjustments are of a normal recurring nature.
The results of operations for the three months and six months ended June
30, 1998 are not necessarily indicative of the results to be expected for
the year ended December 31, 1998. The accounting policies continue
unchanged from December 31, 1997. 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 fiscal year ended December 31,
1997.
2. Inventories consisted of the following:
June 30, December 31,
1998 1997
------- -----------
Raw materials ................................... $24,316 $20,511
Work in process ................................. 4,136 5,126
Finished goods .................................. 8,228 7,239
------- -------
$36,680 $32,876
Allowance to state
Inventories at LIFO cost ...................... (671) (717)
------- -------
$36,009 $32,159
======= =======
5
<PAGE>
AMERICAN BUILDINGS COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands, Except Per Share Data)
(Unaudited) -- Continued
3. Included in accrued liabilities are estimated insurance claims for the
self-insured portion of workers' compensation, property, casualty, and
health insurance plans totaling $7,031 and $5,592 at June 30, 1998 and
December 31, 1997, respectively.
4. Certain prior year amounts have been reclassified to conform with current
year presentation.
5. On December 7, 1994, the Company closed a $9,700 industrial revenue bond
transaction with the Industrial Development Authority ("IDA") of
Mecklenburg County, Virginia, for the purpose of financing its new
manufacturing facility located in Virginia. The bonds bear interest at a
variable rate which averaged 4.0% and 3.8% for the second quarter and first
half of 1998, respectively, compared to 4.1% and 3.8% for the second
quarter and first half of 1997, respectively. Additionally, the Company
pays a .25% remarketing fee on the bond balance. The bonds mature December
1, 2004 and are subject to mandatory sinking fund redemption of $970 per
year and are subject to mandatory redemption under certain circumstances.
The Company has secured its obligation with respect to the IDA bonds
through the issuance of a letter of credit. The carrying amount of the
bonds is assumed to approximate fair value due to the bonds' variable rate
structure. The balance of the IDA bonds, including current portion, was
$6,790 at June 30, 1998 and December 31, 1997.
6. On December 4, 1997, the Company completed the acquisition of certain net
assets of Windsor Door for approximately $59,000, including transaction
costs of $1,000. In June 1998, the Company finalized the working capital
adjustment contained in the Windsor Door purchase agreement. In connection
therewith, the Company received $2,536 in cash, which resulted in a
reduction of goodwill of $944. Concurrent with the Windsor acquisition, the
Company canceled its previous revolving credit facility and entered into a
comprehensive credit facility ("Credit Facility") with a bank. The Credit
Facility includes a $38,000 term loan facility and a revolving credit
facility with maximum borrowings of $75,000. The revolving credit facility
availability is based on borrowings outstanding as well as amounts
outstanding under Letters of Credit. At June 30, 1998, borrowings
outstanding on the revolving credit facility were $31,800. Interest is
payable at the Eurodollar rate plus 1% (6.6% at June 30, 1998) for the
entire revolver balance. The Company is required to pay a fee of .25% per
year for the unused portion of the facility and 1.125% per year on
outstanding Letters of Credit. The Credit Facility is collateralized by
substantially all of the Company's assets and requires the Company to
maintain certain financial ratio covenants on a quarterly basis.
6
<PAGE>
AMERICAN BUILDINGS COMPANY AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
June 30, 1998
STATEMENTS IN THIS QUARTERLY REPORT ON FORM 10-Q CONCERNING THE COMPANY'S
BUSINESS OUTLOOK OR FUTURE ECONOMIC PERFORMANCE; ANTICIPATED PROFITABILITY,
REVENUES, EXPENSES OR OTHER FINANCIAL ITEMS; AND PRODUCT LINE GROWTH TOGETHER
WITH OTHER STATEMENTS THAT ARE NOT HISTORICAL FACTS, ARE "FORWARD-LOOKING
STATEMENTS" AS THAT TERM IS DEFINED UNDER THE FEDERAL SECURITIES LAWS.
FORWARD-LOOKING STATEMENTS ARE SUBJECT TO RISKS, UNCERTAINTIES, AND OTHER
FACTORS WHICH COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE STATED
IN SUCH STATEMENTS. SUCH RISKS, UNCERTAINTIES, AND FACTORS INCLUDE, BUT ARE NOT
LIMITED TO, INDUSTRY CYCLICALITY, FLUCTUATIONS IN CUSTOMER DEMAND AND ORDER
PATTERNS, THE SEASONAL NATURE OF THE BUSINESS, CHANGES IN PRICING OR OTHER
ACTIONS BY COMPETITORS, AND GENERAL ECONOMIC CONDITIONS AS WELL AS OTHER RISKS
DETAILED IN THE COMPANY'S FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION,
INCLUDING ITS ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1997.
RESULTS OF OPERATIONS
QUARTER ENDED JUNE 30, 1998 COMPARED TO QUARTER ENDED JUNE 30, 1997
Net sales for the quarter ended June 30, 1998 increased 42.4% to $111.8 million
from $78.5 million in the same period a year ago. Gross margins decreased to
15.1% in the current quarter from 18.2% in the corresponding quarter of 1997
primarily as a result of a loss at the American Modular Technologies (AMT)
division as a result of inadequate volume, compared to a profit in the second
quarter of 1997, higher depreciation in the Construction Products Group, the
addition of Windsor Door ("Windsor") in December 1997, which operates at lower
gross margins in the first and second quarters of the year due to the normal
seasonality of its business, and higher material costs and, to a lesser extent,
higher labor and burden costs in the Construction Products Group. Backlog at
June 30, 1998 was $131.1 million, up 31.6% over backlog of $99.6 million at June
30, 1997. Backlog excluding Windsor was $128.5 million at June 30, 1998, which
is an increase of 29.0% over the second quarter of 1997. Selling, general and
administrative expenses increased by 38.9% to $9.6 million in the second quarter
of 1998 from $6.9 million in the second quarter of 1997. The increase is
primarily the result of the acquisition of Windsor (including its normal
selling, general and administrative expenses as well as amortization of the
goodwill associated with the purchase) and higher commission costs and certain
other volume-related costs resulting from the higher sales volume in the second
quarter of 1998 compared to a year ago. As a percent of net sales, these
expenses improved to 8.6% in 1998 compared to 8.8% in the second quarter of
1997. Operating income decreased 1.3% to $7.3 million in the second quarter of
1998 compared to $7.4 million in the same quarter of 1997. The Company had
interest expense of $1.2 million for the second quarter of 1998 compared to $.3
million in the corresponding quarter of last year. The increase in interest
expense resulted primarily from the Company's financing of the Windsor Door
acquisition in December 1997. Net income for the current quarter was $3.7
million compared to $4.4 million in the second quarter of last year.
7
<PAGE>
AMERICAN BUILDINGS COMPANY AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
SIX MONTHS ENDED JUNE 30, 1998 COMPARED TO SIX MONTHS ENDED JUNE 30, 1997
Net sales for the six months ended June 30, 1998 increased 53.9% to $209.5
million from $136.1 million in the first half of 1997. Gross margins decreased
to 14.7% from 16.9% in the comparable period of 1997 for the same reasons
previously discussed.
Operating income in the first half of 1998 increased 11.4% to $11.2 million from
$10.0 million for the same period last year. Interest expense for the first six
months of 1998 was $2.5 million compared to $.5 million in the first half of
1997 primarily due to the financing of the Windsor Door acquisition in December
1997. Net income for the first six months of 1998 was $5.3 million compared to
$5.9 million in the same period last year.
LIQUIDITY AND CAPITAL RESOURCES
The Company has historically funded its operations from cash flow from
operations, bank borrowings and sales of its debt and equity securities.
Net cash (used for) provided by operating activities was ($2.3) million in the
first half of 1998 compared to $4.0 million in the first half of 1997. Net
income plus depreciation and amortization was $10.0 million and $8.3 million in
the same periods, respectively. The decrease for 1998 resulted primarily from
the increase in the Company's investment in working capital required to support
its higher volumes.
Net cash used for investing activities was $1.6 million for the six months ended
June 30, 1998 compared to $4.8 million for the six months ended June 30, 1997.
In the 1998 period, the Company invested $4.0 million in additions to property,
plant and equipment, increased its investment in its joint venture in the
People's Republic of China by $.1 million, bringing its total capital investment
in the joint venture to $4.5 million, and received $2.5 million in final
settlement of the working capital acquired at the time of closing of the Windsor
Door acquisition. In the 1997 period, the Company invested $4.4 million in
additions to property, plant and equipment and increased its investment in its
joint venture in the People's Republic of China by $.5 million.
Net cash (used for) provided by financing activities was ($8.0) million for the
six months ended June 30, 1998 compared to $.8 million for the six months ended
June 30, 1997. In 1998, this was primarily the result of net Revolver repayments
of $6.0 million and scheduled long-term debt repayments of $2.2 million. At
December 31, 1997, the Company had restricted cash of $10.6 million which
represented funds held by its prior lender to collateralize letters of credit
which had been issued by that lender until replacement letters of credit could
be issued by its new lender. During the first half of 1998, $10.3 million of
this collateral was returned to the Company as the replacement letters of credit
were issued and the Revolver was reduced accordingly. The Company also borrowed
approximately $4.3 million
8
<PAGE>
AMERICAN BUILDINGS COMPANY AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
under the Revolver to finance its operating needs during the six months ended
June 30, 1998. Net cash provided by financing activities in the 1997 period was
primarily the result of net Revolver borrowings of $1.7 million and treasury
stock purchases of $1.1 million for 39,000 shares of the Company's Common Stock
pursuant to the Board of Directors' authorization.
At June 30, 1998, the Company's outstanding debt (including current portion) was
$77.1 million, consisting primarily of $38.0 million of borrowings outstanding
under its Term loan, $31.8 million of borrowings under the revolving portion of
its credit facility and $6.8 million of Industrial Revenue Bonds which are
subject to mandatory sinking fund requirements of approximately $1.0 million per
year through December 1, 2004.
The Company currently has budgeted an aggregate of $11.6 million for capital
expenditures in 1998, consisting of $2.0 million for the new technical and
business systems, $.4 million to complete the Virginia manufacturing facility
and $9.2 million primarily for machinery and equipment at its other existing
facilities, including the Windsor Door facilities purchased in December 1997, of
which $4.0 million was spent in the first half of 1998. The Company expects to
be able to fund these expenditures from cash provided by operations and
borrowings under its Credit Facility described below. There can be no assurance
that budgeted capital expenditures will be made as planned or that additional
capital expenditures will not be required.
In December 1997, the Company purchased certain net assets of Windsor Door
("Windsor") for $59.0 million, including transaction costs of $1.0 million.
Pursuant to the terms of the purchase agreement, the purchase price was subject
to further adjustment once a final determination was made for the amount of
working capital transferred as of the date of closing. Cash of $2.5 million was
received by the Company during the second quarter of 1998 in settlement of the
working capital acquired upon the Windsor acquisition, bringing the adjusted
purchase price to $56.5 million. The transaction was accounted for as a purchase
and the cost of the acquisition was allocated to the assets and liabilities
based on their estimated respective fair values. The adjusted total cost of the
acquisition, which was financed by proceeds from the Company's Credit Facility,
exceeded the fair value of net assets acquired by $28.8 million, which was
assigned to goodwill and is being amortized over forty years.
Concurrent with the purchase of Windsor in December 1997, the Company replaced
its previous revolving credit facility with a revolving credit and term loan
facility ("Credit Facility") with Canadian Imperial Bank of Commerce ("CIBC"),
as administrative agent, and certain other lenders. The Credit Facility included
a $40 million term loan facility and a revolving credit facility ("Revolver")
with maximum borrowings of $75 million, including a $30 million letter of credit
sub-facility and a $5 million swingline sub-facility. On December 4, 1997, the
full amount of the term loan was borrowed to finance part of the Windsor
acquisition. The term loan requires semiannual principal payments commencing
July 1998 of $2 million to $9 million, with a final payment due January 2003.
Also on December 4, 1997, $19.0 million of the Revolver was borrowed to finance
the balance of the Windsor acquisition and $10.6 million of the Revolver was
borrowed to cash collateralize outstanding letters of credit which had
9
<PAGE>
AMERICAN BUILDINGS COMPANY AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
been issued by the Company's prior lender until replacement letters of credit
could be issued by CIBC. As of June 30, 1998, $.3 million of Revolver proceeds
remain as restricted cash on the accompanying Condensed Consolidated Balance
Sheets. The Credit Facility expires on January 3, 2003 and bears interest at a
rate equal to, at the option of the Company, either: (1) in the case of
Eurodollar loans, the sum of the interest rate in the London interbank market
for loans in an amount substantially equal to the amount of borrowing and for
the period of borrowing selected by the Company plus a margin of between
one-half percent and one and one-half percent, depending on the Company's
consolidated leverage and interest coverage ratios (as defined in the credit
agreement) or (2) the higher of (a) CIBC's prime or base rate or (b) one-half
percent plus the latest overnight federal funds rate. At June 30, 1998 all
borrowings under the Credit Facility of $69.8 million were at the Eurodollar
rate of 6.6%. Interest is payable quarterly in the case of base rate loans and
on maturity dates or every three months, whichever is shorter, in the case of
Eurodollar loans. The Company is required to pay a fee of .25% per year for the
unused portion of the Credit Facility and 1.125% per year on outstanding letters
of credit. At June 30, 1998 there were $9.3 million of outstanding letters of
credit, including a $6.9 million letter of credit in favor of the Trustee for
the IDA bonds. The Credit Facility is guaranteed by all of the Company's
domestic subsidiaries and collateralized by substantially all of the Company's
assets, and requires the Company to maintain certain financial ratio covenants.
The Credit Facility limits the Company's ability to incur debt, to sell or
dispose of assets, to create or incur liens, to make additional acquisitions, to
pay dividends, to purchase or redeem the Company's stock and to merge or
consolidate with any other entity and provides the lender with the right to
require the payment of all amounts outstanding under the Credit Facility if a
change in control of the Company occurs.
The Company believes that cash generated from operations and borrowings under
the revolving credit facility will be sufficient to meet its working capital and
capital expenditure needs for the foreseeable future. There can be no assurance
that liquidity would not be impacted by a decline in general economic conditions
and higher interest rates which would affect the Company's ability to obtain
external financing.
10
<PAGE>
PART II -- OTHER INFORMATION
ITEM 4. Submission of Matters to a Vote of Security Holders
a. The Annual Meeting of Stockholders was held on April 28, 1998.
b. Not Applicable.
c. (i) The following persons, comprising the entire Board of Directors,
were elected at the Annual Meeting pursuant to the following vote
tabulations:
VOTES FOR VOTES WITHHELD
--------- ---------------
Robert T. Ammerman 4,786,415 225,422
William L. Selden 4,786,437 225,400
Harold Levy 4,786,437 225,400
Douglas L. Newhouse 4,786,437 225,400
Ralph S. Saul 4,786,137 225,700
Robert F. Shapiro 4,786,437 225,400
Kendrick R. Wilson, III 4,786,437 225,400
(ii) In addition to the election of Directors, a proposal to amend the
American Buildings Company 1994 Stock Option Plan to increase the
number of shares of Common stock which may be issued thereunder
from 580,000 shares to 880,000 shares was approved, with
3,393,603 shares voted in favor, 499,878 voted against, 670,258
shares abstained and 448,098 broker non votes.
iii In addition to the election of Directors and amendment to the
American Buildings Company 1994 Stock Option Plan, proposals to
amend the American Buildings Company Stock Option Plan for
Non-Employee Directors to increase the number of options a
Non-Employee Director receives on each anniversary date of his or
her initial election to the Board from 1,500 shares to 5,000
shares and to increase the number of shares of common stock which
may be issued thereunder from 160,000 shares to 260,000 shares
were approved with 2,864,913 in favor, 993,568 against and
705,258 abstained and 448,098 broker non votes.
ITEM 5.1 Other Matters
On August 5, 1998, the Company acquired through Windsor Door, Inc.,
its wholly-owned subsidiary, Rescom Overhead Doors, Inc., of Arcadia,
California. Rescom is one of the largest residential overhead door
distributors in the Southern California market and a long time
customer of Windsor.
Pursuant to newly adopted rules of the Securities and Exchange
Commission, any stockholder who intends to present a proposal at the
Company's 1999 Annual Meeting of Stockholders without requesting the
Company to include
11
<PAGE>
such proposal in the Company's proxy statement should be aware that he
must notify the Company not later than February 9, 1999 of his
intention to present the proposal. Otherwise, the Company may exercise
discretionary voting with respect to such stockholder proposal
pursuant to authority conferred on the Company by proxies to be
solicited by the Board of Directors of the Company and delivered to
the Company in connection with the meeting.
ITEM 6. Exhibits and Reports on Form 8-K
(a.) Exhibits
11.0 Computation of Earnings Per Share
27.0 Financial Data Schedule
(b) The Company did not file any reports on form 8-K during the three
months ended June 30, 1998.
12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AMERICAN BUILDINGS COMPANY
Date August 11, 1998 /s/ ROBERT T. AMMERMAN
---------------------------- -------------------------------------
Robert T. Ammerman
Chief Executive Officer
Date August 11, 1998 /s/ R. CHARLES BLACKMON, JR.
---------------------------- -------------------------------------
R. Charles Blackmon, Jr.
Executive Vice President
Chief Financial Officer
13
<TABLE>
<CAPTION>
AMERICAN BUILDINGS COMPANY AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1998 AND 1997
(In Thousands, Except Per Share Data)
(Unaudited)
Three months ended Six months ended
June 30, June 30,
------------------ -----------------
1998 1997 1998 1997
------ ------ ------ ------
<S> <C> <C> <C> <C>
Net income ............................................................. $3,703 $4,357 $5,337 $5,872
====== ====== ====== ======
Weighted Average Shares Outstanding - Basic ............................ 5,288 5,305 5,281 5,310
Add - Dilutive effect of outstanding options (as determined
by the application of the treasury stock method) .................. 407 353 385 351
------ ------ ------ ------
Weighted Average Shares Outstanding - Diluted .......................... 5,695 5,658 5,666 5,661
====== ====== ====== ======
Earnings per share:
Basic .............................................................. $ 0.70 $ 0.82 $ 1.01 $ 1.11
====== ====== ====== ======
Diluted ............................................................ $ 0.65 $ 0.77 $ 0.94 $ 1.04
====== ====== ====== ======
</TABLE>
14
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED BALANCE SHEETS AND THE CONDENSED CONSOLIDATED STATEMENTS
OF INCOME AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 4679
<SECURITIES> 0
<RECEIVABLES> 67954
<ALLOWANCES> 4196
<INVENTORY> 36009
<CURRENT-ASSETS> 112453
<PP&E> 101987
<DEPRECIATION> 47627
<TOTAL-ASSETS> 205105
<CURRENT-LIABILITIES> 68315
<BONDS> 71565
0
0
<COMMON> 64
<OTHER-SE> 61257
<TOTAL-LIABILITY-AND-EQUITY> 205105
<SALES> 209532
<TOTAL-REVENUES> 209532
<CGS> 178738
<TOTAL-COSTS> 198345
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 333
<INTEREST-EXPENSE> 2510
<INCOME-PRETAX> 8677
<INCOME-TAX> 3340
<INCOME-CONTINUING> 5337
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5337
<EPS-PRIMARY> 1.01
<EPS-DILUTED> 0.94
</TABLE>
