<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarter ended April 30, 1994
OR
_____ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number 1-5276
PROLER INTERNATIONAL CORP.
(Exact name of registrant as specified in its charter.)
Delaware 74-1051251
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
4265 San Felipe, Suite 900 77027
Houston, Texas (Zip Code)
(Address of Principal Executive Offices)
Registrant's Telephone Number, Including Area Code: [713] 627-3737
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 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 the number of shares outstanding of each of the Registrant's classes of
stock, as of June 10, 1994:
Common 4,710,960
------ ---------
(Title of Class) (Number of Shares Outstanding)
<PAGE>
PROLER INTERNATIONAL CORP. AND SUBSIDIARIES
INDEX
-----
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION PAGE NO.
--------
<S> <C>
Consolidated Balance Sheet at April 30, 1994 and January 31, 1994 1
Consolidated Statement of Operations for the three months ended April 30, 1994
and 1993 2
Consolidated Statement of Cash Flows for the three months ended April 30, 1994
and 1993 3
Notes to Consolidated Financial Statements 4
Management's Discussion and Analysis of Financial Condition
and Results of Operations 8
PART II. OTHER INFORMATION 11
SIGNATURE PAGE 12
</TABLE>
<PAGE>
PART I
PROLER INTERNATIONAL CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS)
<TABLE>
<CAPTION>
ASSETS April 30, 1994 January 31, 1994
------ --------------- -----------------
(Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $12,583 $ 7,307
Accounts receivable, trade 2,308 6,443
Other receivables 128 165
Inventories 2,075 1,910
Maintenance parts 710 1,150
Prepaid expenses 655 775
------- -------
Total current assets 18,459 17,750
Investments in joint operations, at equity 28,682 26,273
Property, plant and equipment, net 16,675 18,671
Other assets 2,031 3,889
------- -------
Total assets $65,847 $66,583
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
- - -------------------------------------
Current liabilities:
Accounts payable, trade $ 2,065 $ 2,267
Accrued liabilities 1,958 2,971
Other current liabilities 200 200
------- -------
Total current liabilities 4,223 5,438
Deferred compensation 3,044 2,989
Contingencies
Stockholders' equity:
Common stock 5,351 5,351
Capital in excess of par value 192 192
Retained earnings 59,155 58,731
------- -------
64,698 64,274
Less treasury stock, at cost (6,118) (6,118)
------- -------
Total stockholders' equity 58,580 58,156
------- -------
Total liabilities and stockholders' equity $65,847 $66,583
======= =======
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
1
<PAGE>
PROLER INTERNATIONAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Three Months Ended April 30,
-----------------------------
1994 1993
--------- -------
<S> <C> <C>
Net sales $ 7,823 $ 8,169
Cost of sales 7,958 8,044
------- -------
Gross profit (loss) (135) 125
Loss from joint operations (995) (94)
General and administrative expenses (1,075) (1,035)
------- -------
Operating loss (2,205) (1,004)
------- -------
Gain on sale of assets, net 2,894 --
------- -------
Other income (expense):
Interest income 56 54
Interest expense (180) (301)
Other, net (91) (7)
------- -------
(215) (254)
------- -------
Income (loss) before income taxes and
accounting change 474 (1,258)
Provision for income taxes 50 --
------- -------
Income (loss) before accounting change 424 (1,258)
Cumulative effect of change in accounting
for income taxes -- 118
------- -------
Net income (loss) $ 424 $(1,140)
======= =======
Weighted average shares outstanding 4,711 4,711
======= =======
Income (loss) per share:
Income (loss) before accounting change $.09 $ (.27)
Cumulative effect of change in
accounting for income taxes -- .03
------- -------
Net income (loss) $.09 $ (.24)
======= =======
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
2
<PAGE>
PROLER INTERNATIONAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
Three Months Ended April 30,
------------------------------
1994 1993
-------------- --------------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 424 $(1,140)
Adjustments to reconcile net income (loss) to cash:
Depreciation 302 303
Gain on sale of assets (2,894) --
Cumulative effect of accounting change -- (118)
Loss from joint operations and advances,
net of distributions (2,409) --
Decrease (increase) in assets, net of effects of assets sold:
Accounts receivable, trade 4,135 193
Other receivables (23) 168
Inventories and maintenance parts (234) (994)
Prepaid expenses 120 152
Other assets 57 17
Increase (decrease) in liabilities, net of effects of assets sold:
Accounts payable, trade (265) (585)
Accrued liabilities (1,338) 121
Deferred compensation 55 (26)
------- -------
Net cash used in operating activities (2,070) (1,909)
------- -------
Cash flows from investing activities:
Purchases of property, plant and equipment (324) (603)
Proceeds from asset sales 7,670 --
Distributions from joint operations, net of earnings (losses) and advances -- 8,579
------- -------
Net cash provided by investing activities 7,346 7,976
------- -------
Cash flows from financing activities:
Payments on bank debt -- (5,000)
------- -------
Net cash used in financing activities -- (5,000)
------- -------
Net increase in cash and cash equivalents 5,276 1,067
Cash and cash equivalents, beginning of period 7,307 7,057
------- -------
Cash and cash equivalents, end of period $12,583 $ 8,124
======= =======
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
3
<PAGE>
PROLER INTERNATIONAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1: BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements of Proler
International Corp. and subsidiaries (the "Company") have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Rule 10-01 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 only of
normal, recurring adjustments considered necessary for a fair presentation, have
been included. For further information, refer to the consolidated financial
statements and footnotes thereto for the year ended January 31, 1994, included
in the Company's 1994 Annual Report and the Annual Report on Form 10-K pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934. The results for
the three months ended April 30, 1994 are not necessarily indicative of the
results of operations for the entire year. Certain reclassifications have been
made in the prior period financial statements to conform to current
classifications.
NOTE 2: INVENTORIES
The Company's inventories are stated at the lower of cost or market using the
first-in, first-out (FIFO) method. As of April 30, 1994 and January 31, 1994
inventories were comprised of the following:
<TABLE>
<CAPTION>
April 30, 1994 January 31, 1994
--------------- ----------------
(In Thousands)
<S> <C> <C>
Processed scrap $ 1,517 $ 1,089
Unprocessed scrap and other 558 821
------- -------
$ 2,075 $ 1,910
======= =======
</TABLE>
NOTE 3: COMBINED JOINT OPERATIONS
A condensed summary of the financial position of the combined joint operations
(100% basis) is as follows:
<TABLE>
<CAPTION>
April 30, 1994 January 31, 1994
-------------- ----------------
(In Thousands)
<S> <C> <C>
Current assets $46,444 $48,593
Property and other assets, net 26,558 26,668
------- -------
$73,002 $75,261
======= =======
Current liabilities $11,198 $ 9,708
Other liabilities 639 639
Stockholders' and partners' equity 61,165 64,914
------- -------
$73,002 $75,261
======= =======
</TABLE>
Two of the 50%-owned joint operations account for inventories using the last-
in, first-out (LIFO) method while the other joint operations follow FIFO. Such
LIFO inventories are carried at $14.9 million and $16.9 million at April 30,
1994 and January 31, 1994, respectively, and the excess of replacement cost over
the LIFO value at those dates was approximately $21.2 million.
4
<PAGE>
PROLER INTERNATIONAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
The Company's investment in the joint operations and its percentage interest
in their assets and liabilities as of April 30, 1994 and January 31, 1994 are
set forth below:
<TABLE>
<CAPTION>
April 30, 1994 January 31, 1994
--------------- -----------------
(In Thousands)
<S> <C> <C>
Current assets $22,303 $23,432
Property and other assets, net 11,728 11,752
Liabilities (5,641) (4,948)
Adjustment to conform reporting periods 292 (3,963)
------- -------
Net investment $28,682 $26,273
======= =======
A summary of the results of operations of the combined joint operations is as
follows (in thousands):
Combined 100% Basis:
Three months ended April 30,
---------------------------
1994 1993
-------- -------
Net sales $69,999 $70,393
======= =======
Gross profit (loss) $ (855) $ 2,118
======= =======
Earnings (loss) $(2,299) $ (46)
======= =======
Company Percentage Interest:
Three months ended April 30,
----------------------------
1994 1993
-------- -------
Net sales $33,141 $33,286
======= =======
Gross profit (loss) $ (329) $ 924
======= =======
Earnings (loss) $ (995) $ (94)
======= =======
</TABLE>
NOTE 4: ASSET SALES
Effective February 28, 1994, Prolerized Steel Corporation, a wholly-owned
subsidiary of the Company, sold substantially all of its assets used in
connection with the operation of a scrap metal processing facility located in
Kansas City, Kansas. The assets were sold to an unrelated third party for a
purchase price of approximately $5.1 million. Also, on April 29, 1994, the
Company's Vinton, Texas scrap processing facility was sold to an unrelated third
party for approximately $2.6 million. The Company recorded a gain on the sale
of these assets of $2.9 million.
The Company recorded net sales of $4.5 million and $5.2 million attributable
to the operations at the Kansas City and Vinton plants for the three months
ended April 30, 1994 and 1993, respectively, and an operating loss of $0.1
million for both quarterly periods.
NOTE 5: INCOME TAXES
Effective February 1, 1993, the Company adopted the provisions of Statement of
Financial Accounting Standards No. 109 ("SFAS No. 109"), "Accounting for Income
Taxes." The cumulative effect on prior years of the adoption of SFAS No. 109
decreased net loss by $118,000 or $.03 per share for the three months ended
April 30, 1993.
The provision for income taxes for the quarter ended April 30, 1994 is for
alternative minimum taxes payable. The provision for federal income taxes
otherwise payable was eliminated by the utilization of net operating loss
carryforwards.
5
<PAGE>
PROLER INTERNATIONAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
NOTE 6: BANK CREDIT FACILITIES
As of April 30, 1994, no borrowings were outstanding under the Company's $15
million revolving line of credit and $5.4 million of letters of credit were
outstanding under the $7 million letter of credit facility. Under the terms of
the agreement with the bank, the Company is required to maintain, among other
things, a minimum net worth and other specified financial covenants. In
addition, the Company is restricted as to the payment of cash dividends, limited
as to incurring additional indebtedness and limited as to incurring capital
expenditures in excess of certain amounts.
NOTE 7: CONTINGENCIES
Certain materials resulting from the Company's operations must be handled
consistent with federal and state environmental laws and regulations.
Compliance with such laws and regulations were an area of concern to the Company
as questions were being raised as to whether automobile shredder residue ("ASR"
or "fluff") contains excessive concentrations of certain heavy metals,
polychlorinated biphenyls ("PCB's") and other contaminants. A 1988
Environmental Protection Agency ("EPA") study released in 1990 concerning
potential contamination in ASR indicated that the potential risk depends on the
constituent make up of the fluff and the management practices at the sites where
the fluff is generated. Pending further study, the EPA recognized that
shredding operations that are well managed and conducted in an environmentally
sound manner provide valuable environmental benefits. The Company successfully
implemented source control programs to identify and to reduce the sources of
lead and certain other heavy metals in ASR. Tests of ASR generated by the
Company indicate that levels of PCB's, lead, cadmium, and other contaminants are
generally within acceptable levels under EPA and state procedures. The Company
continues to evaluate additional methods of further reducing contaminants in
ASR. As with any business that produces significant amounts of industrial
wastes, the Company could face substantial additional costs if past disposal
practices would no longer be deemed acceptable by the EPA or state regulatory
agencies, although this result is not currently expected.
Hugo Neu-Proler Company ("HNP"), a 50% owned joint operation of the Company,
is involved in discussions with the Port of Los Angeles and the California
Regional Water Quality Control Board (the "RWQCB") concerning proposals for
remediation by HNP of certain environmental conditions at that location. HNP and
the Port have also been negotiating a renewal of the Company's lease, which is
due to expire on August 30, 1994. The Port is in the completion stages of
developing an Environmental Impact Report of HNP activities and site conditions
in connection with the lease renewal. Under the current lease, HNP would be
responsible for remediating certain environmental conditions on the property
caused by HNP, the extent and cost of which are uncertain. Currently, HNP
estimates that it will incur capital expenditures of a minimum of $4.0 million
to $5.0 million in connection with environmental control facilities at the
Terminal Island location over the next six-year period. In December 1992, HNP
signed a Memorandum of Understanding with the Port relating to the lease renewal
and in fiscal 1994 provided letters of credit totaling $7.9 million ($3.95
million each from the Company and HNP's other owner) to secure HNP's remediation
obligations under the lease. HNP is required to provide additional letters of
credit and/or incur additional costs of up to $2.0 million (or $1.0 million by
each joint owner) in connection with such environmental obligations by
September, 1994. HNP has accrued approximately $0.7 million to cover the costs
of anticipated remediation at this site as of April 30, 1994.
As reported earlier, the EPA contacted the Company in August 1989 regarding
testing for possible contamination at a site in Tampa, Florida previously
operated by MRI Corporation, a wholly-owned subsidiary of the Company. The
Company and the EPA took split soil and groundwater samples from the site for
analysis. The Company has learned that in late 1990, an EPA consultant issued a
report recommending that further consideration be given to the possibility of
ranking this site using the EPA's hazardous ranking package. Based on that
recommendation the EPA took additional samples at the site in 1992. The Company
had previously conducted extensive clean-up operations at the Tampa site when it
was closed in 1988. The financial implications of the Company's current
investigation or any agency action are uncertain at this time and the Company is
continuing to evaluate whether any further corrective action is necessary or
appropriate.
MRI Corporation has been notified that it may be a potentially responsible
party ("PRP") with respect to three sites in Hillsborough County, Florida. In
addition, in October 1992, Hillsborough County filed an action seeking
contribution, response cost recovery, and damages from PRP's at one of these
sites and named the Company, among others, as a defendant in this action. Based
on information provided to the Company, management believes that MRI
Corporation's involvement
6
<PAGE>
PROLER INTERNATIONAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
is de minimis and amounts ultimately payable, if any, will not have a material
adverse effect on the Company's financial position or results of operations.
As reported earlier, the Company and its chairman, among others, were named as
defendants in a lawsuit brought by a former manager of a joint operation
alleging causes of action arising out of his termination of employment. On
April 22, 1993, the parties entered into an agreement under which the Company
would pay the plaintiff a total of $450,000 in settlement of this matter, of
which at least $175,000 would be covered by the Company's insurance. The
settlement agreement with the Company was contingent upon the implementation of
a global settlement agreement between the plaintiff and certain other
defendants. On May 18, 1994, the plaintiff and other defendants consummated the
global settlement agreement. Accordingly, the Company is required to remit
$450,000 to plaintiff by June 25, 1994 and will be given a general release of
any and all claims with respect to this matter.
The Company is also subject to certain other litigation and claims arising in
the ordinary course of business. In the opinion of management, the ultimate
resolution of these claims and lawsuits will not have a material adverse effect
on the Company's financial position or results of operations.
NOTE 8: PER SHARE INFORMATION
Per share calculations are based on the average number of common shares
outstanding during the period. The per share calculations do not include the
common equivalent shares attributable to the assumed exercise of outstanding
stock options since the effect was not significant for all periods presented.
7
<PAGE>
PROLER INTERNATIONAL CORP. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
GENERAL
The Company is primarily engaged, directly and through its subsidiaries and
its corporate and unincorporated joint operations, in buying, processing for
recycling and selling ferrous and other scrap metals. While the Company sells
products from its consolidated operations primarily to domestic markets, the
joint operations primarily export scrap to foreign markets. The Company's and
its joint operations' business is characterized by cyclical fluctuations in
profitability depending upon the availability and price of raw scrap and the
demand and prices for processed scrap by the iron and steel industries and the
non-ferrous metals industries.
The Company's joint operations are structured so that the participants advance
and withdraw funds equally. In general, policy decisions of the joint
operations require the unanimous consent of the participants. As a result, the
Company's control over its joint operations is limited and must be exercised in
concert with its partners in those operations. The Company has made advances to
the joint operations, on a regular basis, primarily for the purchase of
inventory and for operating costs. The Company receives periodic distributions
from its joint operations, primarily from sales of inventory. During the first
quarter of fiscal 1995, the Company's advances to joint operations exceeded
distributions from joint operations by $3.4 million.
The terms of the agreements covering the HPI and HPNJ joint operations expired
May 25, 1994. The Company's future involvement with these joint ventures is
uncertain at this time; however, in the event of their dissolution, management
anticipates that the Company's share of the carrying value of the underlying
assets of approximately $6 million would be recovered.
The Company continues to implement the business plan described in its 1994
Annual Report on Form 10-K with the goals of restructuring, selling or otherwise
disposing of certain underperforming and unproductive assets, and supplementing
its core commodity metals business by investing in technologies that profit from
processing and recycling waste materials. The Company believes that if it is
successful in implementing this business plan, it will be able to make a
transition from its current participation in the highly cyclical scrap
processing business primarily through joint operations over which it exercises
limited control, to a recycling company engaged in environmental services and
metals recovery with majority control over its significant assets. As previously
reported, the Company completed the planned divestiture of its domestic scrap
steel operations in April, 1994. Accordingly, the Company's principal scrap
steel processing business will be conducted through its joint operations. In
fiscal 1995, the Company plans to continue to develop and test new waste
processing and recovery technologies through its two subsidiaries, Proler
Recycling, Inc. ("Proler Recycling") and Proler Environmental Services, Inc.
("Proler Environmental"). See 1994 Annual Report on Form 10-K.
LIQUIDITY, FINANCING AND CAPITAL RESOURCES
As of April 30, 1994, the Company had net working capital of $14.2 million.
During the quarter, the Company received proceeds of $7.7 million from the sale
of Kansas City, Kansas and Vinton, Texas scrap processing plants. Capital
expenditures of $0.3 million in the first quarter of fiscal 1995 were primarily
for the replacement and improvement of plant and equipment. The Company has
budgeted $6.0 million for new plant and equipment in its Proler Recycling
subsidiary for the latter half of fiscal 1995. The Company's share of joint
operations' capital expenditures for the first quarter of fiscal 1995 was $0.8
million. As discussed in Note 7 to consolidated financial statements, the
Company expects to provide an additional letter of credit and/or incur
additional costs of $1.0 million in fiscal 1995 in connection with its Los
Angeles joint operation facility.
The Company is engaged in ongoing proceedings and communications with
regulatory authorities concerning environmental matters. An adverse outcome in
these proceedings, or any significant additional expenditures that may be
required in order for the Company or its joint operations to operate in
accordance with environmental laws and regulations, or to clean up sites now or
formerly used by them, could affect the Company's financial position.
8
<PAGE>
PROLER INTERNATIONAL CORP. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (continued)
RESULTS OF OPERATIONS
Consolidated net sales and cost of sales decreased 4% and 1%, respectively,
during the quarter ended April 30, 1994 as compared to the prior year's quarter.
These decreases were principally due to the sale of the Company's Kansas City
plant effective February 28, 1994. The Company recorded net sales and cost of
sales of $3.7 million for the three months ended April 30, 1993 attributable to
the Kansas City plant. The first quarter of fiscal 1995 included $1.9 million
in net sales and $2.0 million in cost of sales attributable to the Kansas City
plant.
Excluding the Kansas City and Vinton plants from the results of operations,
the following table highlights the more significant operating statistics and
percentage changes of the remaining Company-operated plants (dollars in
thousands):
<TABLE>
<CAPTION>
For the three months
ended April 30,
--------------------
1994 1993 % Change
------- ------- ---------
<S> <C> <C> <C>
Sales volumes (gross tons).. 22,007 21,538 2 %
Net sales................... $ 3,342 $ 2,978 12 %
Cost of sales............... 3,176 2,710 17 %
------- -------
Gross profit................ $ 166 $ 268
======= =======
</TABLE>
Approximately 45% of the increase in net sales is attributable to price
increases on precipitation iron between the comparative quarters, and
approximately 15% of the increase is attributable to volume increases. The
remainder of the quarterly increase in sales (40%) is attributable to increased
volume sales of tin. The increase in cost of sales is primarily attributable to
increases in expenditures for research and development by Proler Environmental
and Proler Recycling.
Loss from joint operations in the first quarter of fiscal 1995 was $1.0
million, compared to $0.1 million in the first quarter of fiscal 1994. Sales
prices increased in the first quarter of fiscal 1995 by approximately 26% (from
$104 to $131 per ton) as compared to the first quarter of fiscal 1994; however,
tonnage shipped decreased by approximately 21% and average cost of sales per ton
increased by 32%. Tonnage shipped in the first quarter of fiscal 1995 totaled
535,000 tons as compared to 674,000 tons shipped in the same period in fiscal
1994, and the average cost of sales per ton of scrap sold for the quarter ended
April 30, 1994 was $133, compared to $101 for the comparable period in 1993.
General and administrative expenses in the first quarter of fiscal 1995
increased by 4% compared to the same period in fiscal 1994. The increase in
general and administrative expenses is primarily due to increases in personnel
related costs.
Interest expense decreased 40% in the first quarter of fiscal 1995 compared to
the first quarter of fiscal 1994 due to the decrease in outstanding indebtedness
between such quarters. The reduction in interest costs was partially offset by
the inclusion of approximately $0.1 million of interest costs associated with
the payment of a tax dispute in the first quarter of fiscal 1995.
Effective February 1, 1993, the Company changed its method of accounting for
income taxes as more fully described in Note 5 to consolidated financial
statements.
ENVIRONMENTAL MATTERS
The Company and its joint operations are subject to environmental laws and
regulations and are involved in ongoing proceedings and communications with
regulatory authorities concerning environmental matters. It is possible that,
as a result
9
<PAGE>
PROLER INTERNATIONAL CORP. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (continued)
of these proceedings and communications, the Company may in the future incur
additional costs to assure compliance with environmental laws and regulations,
or it may be required to modify or curtail operations. In the past, the
Company has incurred significant environmental costs in connection with the
clean-up and handling of materials at sites operated by the Company. See Note 7
to consolidated financial statements.
10
<PAGE>
PART II
OTHER INFORMATION
Item 1 Legal Proceedings:
As reported earlier, the Company and its chairman, among others, were named as
defendants in a lawsuit brought by a former manager of a joint operation
alleging causes of action arising out of his termination of employment. On
April 22, 1993, the parties entered into an agreement under which the Company
would pay the plaintiff a total of $450,000 in settlement of this matter, of
which at least $175,000 would be covered by the Company's insurance. The
settlement agreement with the Company was contingent upon the implementation of
a global settlement agreement between the plaintiff and certain other
defendants. On May 18, 1994, the plaintiff and other defendants consummated the
global settlement agreement. Accordingly, the Company is required to remit
$450,000 to plaintiff by June 25, 1994 and will be given a general release of
any and all claims with respect to this matter.
Items 2 through 6(a) are Not Applicable.
Item 6(b) Reports on Form 8-K:
The Company filed reports on Form 8-K dated March 14, 1994 and May 9, 1994
regarding the dispositions of certain assets at the Company's Kansas City,
Kansas and Vinton, Texas locations. The report dated May 9, 1994 contained pro
forma financial statements reflecting such dispositions.
11
<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.
PROLER INTERNATIONAL CORP.
--------------------------
(Registrant)
Date: June 14, 1994 /s/ Herman Proler
------------- ----------------------------------------------------
Herman Proler
Chairman of the Board
(Principal Executive Officer)
Date: June 14, 1994 /s/ Michael F. Loy
------------- ----------------------------------------------------
Michael F. Loy
Vice President-Finance and Chief Financial Officer
(Principal Financial and Accounting Officer)
12
