<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C., 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended Commission File
March 31, 1996 No. 0-1709
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</TABLE>
RAVENS METAL PRODUCTS, INC.
(Exact name of registrant as specified in its charter
<TABLE>
<S> <C>
Delaware 55-0398374
- ---------------------------- ------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification Number)
</TABLE>
<TABLE>
<S> <C>
P.O. Box 10002, 861 E. Tallmadge Avenue, Akron, Ohio 44310
- ---------------------------------------------------- ---------------
(Address of principal executive offices) (Zip Code)
</TABLE>
Registrant's telephone number, including area code: (330) 630-4528
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock (par value $.01 per share)
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No _______
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K.[X]
The aggregate market value of the voting stock held by non-affiliates as of
June 10, 1996, based on a bid price of $8.00 by the Registrant's market maker
was approximately $15,548,200. However, see Item 5 regarding lack of active
market for the stock.
There were 1,943,525 shares outstanding of the Registrant's common stock as of
June 25, 1996.
Documents Incorporated by Reference
None
<PAGE> 2
RAVENS METAL PRODUCTS, INC.
Index to Annual Report on Form 10-K
for the Fiscal Year Ended March 31, 1996
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<CAPTION>
PART I Pages
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Item 1 Business 3 - 6
Item 2 Properties 7
Item 3 Legal Proceedings 8
Item 4 Submission of Matters to a Vote of Security Holders 8
PART II
- -------
Item 5 Market for Registrant's Common Equity and
Related Stockholder Matters 9
Item 6 Selected Financial Data 10
Item 7 Management's Discussion and Analysis of
Financial Condition and Results of Operations 11 - 13
Item 8 Financial Statements and Supplementary Data 13 - 34
Item 9 Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 35
PART III
- --------
Item 10 Directors and Executive Officers of the Registrant 36 - 37
Item 11 Executive Compensation 38 - 39
Item 12 Security Ownership of Certain Beneficial Owners
and Management 40
Item 13 Certain Relationships and Related Transactions 41
PART IV
- -------
Item 14 Exhibits, Financial Statement Schedules, and
Reports on Form 8-K 42 - 43
</TABLE>
2
<PAGE> 3
PART I
ITEM 1. BUSINESS
Fiscal Year
The Company's fiscal year ends on March 31. References to 1996,
1995, etc. are for the fiscal years ended March 31, 1996, 1995, etc.,
respectively.
General Development of the Business
Ravens Metal Products, Inc. (the "Company") was incorporated in the
State of West Virginia on April 9, 1956 and reincorporated in the State of
Delaware on September 3, 1986. Jacob Pollock ("Pollock") acquired majority
control on May 3, 1991.
The principal business of the Company is the design and manufacture
of truck trailers, consisting of platform (flatbed) trailers, dump trailers,
and dump truck bodies. Since the late 1950s, the Company has designed and
manufactured durable, lightweight aluminum trailers and bodies which provide
the advantage of lower operating costs plus higher legal payload capacity.
Although the Company's products are primarily made with aluminum bodies and
aluminum chassis, the Company also manufactures units with steel chassis. The
Company's truck trailers are basically standardized products with a number of
optional features available; however, certain variations are made to satisfy
customers' requirements. The Company also manufactures truck and trailer
accessories, including tool boxes, side kits and boxes, bulkheads and other
optional equipment. The Company sells a wide variety of after-market parts for
trucks and trailers, including parts for its own trailers. The Company began
selling aluminum utility, snowmobile, and personal watercraft trailers in 1995.
The Company intends to design and manufacture new products related to
its current products in order to increase the growth and profitability of the
Company. The Company is considering the potential acquisition of existing
manufacturing facilities and product lines which are complementary to the
Company's business. Any such acquisition is likely to require significant
capital expenditures, but the Company does not presently have a definitive
agreement or financing to consummate any such acquisition.
The Company intends to use the remaining proceeds from the City of
Kent, Ohio industrial development revenue bonds and internally generated cash
to construct a 60,000 square foot building at its Kent, Ohio facility and
purchase equipment to cut aluminum coil into sheets for its own use and for
related and unrelated customers. The Company has not established a
commencement date for this project.
Markets
The markets for the Company's truck trailer and body product lines
are virtually all within the highway transportation industry in the U.S. with a
small amount of sales in Canada. This includes both for-hire carriers
(commercial trucking companies and owner operators) and private carriers
(manufacturers and producers delivering their own products or commodities).
Dump trailer and body applications include construction and road building
materials, agricultural and
3
<PAGE> 4
mining products, industrial and municipal waste, and a wide range of other bulk
commodities. Platform trailers are utilized in a variety of applications,
including steel and other metals, lumber, building materials, machinery,
appliances, and industrial equipment. The Company's overall business is not
generally seasonal.
The U.S. market for truck trailers and related products has
historically been somewhat cyclical and has been affected by overall economic
conditions as well as regulatory changes for the highway transportation
industry. Economic conditions in 1992 depressed demand for new trailers.
Improving economic conditions in 1993 and 1994 and regulatory changes (See
"Regulation") caused an increase in demand but not to the degree experienced
during the recovery stage from some previous recessions. Trailer industry
sales reached record levels in 1995 and 1996. Trailer sales declined in the
last few months of 1996, and 1997 sales are expected to be below 1995 and 1996
levels.
Utility trailers are multi-use vehicles that are towed by automobiles
and light trucks. The demand for these trailers has increased steadily as the
size and horsepower of the tow vehicles have decreased. Small power equipment
(lawn mowers, log splitters, roto-tillers, etc.), recreational vehicles,
camping and other outdoor gear are a few of the types of equipment transported
on utility trailers. Snowmobile and personal watercraft trailers are sold to
the recreation markets.
One dealership, Transport Truck & Trailer, Inc. in Boise, Idaho,
accounted for approximately 11% of the Company's gross sales in 1996. No sales
to any one dealership/customer accounted for more than 10% of sales in 1995 or
1994. A significant decrease in business from Transport Truck & Trailer, Inc.
could have a material adverse effect on the Company's results of operations and
financial condition.
Backlog
The Company's backlog of orders for new trailers amounted to
approximately $5,000,000 at May 31, 1996 compared to approximately $9,500,000
at June 3, 1995. The backlog is expected to be completed in the Company's
current fiscal year. The backlog at June 3, 1995 included an order from one
customer for approximately $5,900,000.
Distribution and Service
At this time, the Company sells and services truck trailers
nationally through 49 trailer dealerships located in 29 states and 2
dealerships located in Canada. The Company owns trailer and parts sales
branches located in Dover, Ohio and Parkersburg, West Virginia. In addition,
the Company has sales representatives who solicit direct sales from fleet
customers and sales through dealerships.
Service and maintenance on the Company's products are performed by
the Company's Dover, Ohio service branch. Company approved garages, repair
shops, and customers are also authorized to service the Company's products.
The Company assists in financing its trailer sales to customers by
guaranteeing the time payment notes of customers with acceptable credit
standing to a finance company. See Note 7 to the financial statements as to
contingent liabilities with respect to these notes.
4
<PAGE> 5
The Company accepts used trailers as trade-ins on sales of new
trailers and purchases used trailers for resale. The Company generally
reconditions these used trailers when necessary and holds them for resale. The
Company does not generally lease trailers.
Utility, snowmobile, and personal watercraft trailers are sold
primarily to distributors who sell to dealerships. The Company currently has
14 distributors.
Raw Materials
The principal raw materials used by the Company are aluminum
extrusions and aluminum sheet and plate; the Company also purchases components
such as tires, wheels, axles and other hardware items. The Company is not
dependent upon any single supplier for raw materials or components; however,
the Company purchases most aluminum extrusions from Wirt Aluminum Co., a
related party.
Competition
The Company competes nationally in the platform trailer and dump
trailer categories of the diverse and highly competitive truck trailer
industry. There are approximately 90 companies who manufacture aluminum,
composite (aluminum and steel), and steel platform and/or dump trailers. A
majority of these companies compete within local or regional areas. The
Company believes that approximately 10 of these companies have larger market
shares of the total platform and dump trailer markets.
The Company has developed product design, manufacturing, and
marketing expertise for aluminum platform and dump trailers. Aluminum
trailers, compared to composite and steel trailers, are lighter, enabling a
larger payload to be hauled, last longer, require less maintenance, and have
higher resale and scrap values. These factors are distinct advantages of
aluminum trailers, but the higher cost of aluminum compared to steel requires a
larger investment by the customer.
The Company, particularly, is recognized as a leading manufacturer of
aluminum platform trailers. The Company believes that there are no more than
10 manufacturers of aluminum platform trailers, of which 4 account for
approximately 90-95% of the units produced. The Company believes, based upon
1996 estimates of units registered, that the Company's market share was
approximately 32% and that East Manufacturing Corporation, Benson Truck Bodies,
Inc., and Reitnouer, Inc. had market shares of approximately 24%, 20% and 18%,
respectively. The Company strives to compete based upon product performance,
but economic conditions and competition with aluminum, composite, and steel
manufacturers have caused the importance of price to increase.
The Company commenced production of platform trailers in its Kent,
Ohio facility in June 1995. The Company believes that the increase in
production capacity and new manufacturing techniques will enable the Company to
lower its production costs and more effectively compete against other aluminum,
composite, and steel manufacturers. The Company intends to utilize its
Jacksonville, North Carolina facility to continue manufacturing dump trailers
and dump truck bodies and to increase its presence in these diverse and
fragmented markets; e.g., in 1996 the Company introduced a live-floor trailer
(a trailer which loads and unloads material with a moving floor rather than a
hoist) for the solid waste transportation industry and other markets.
5
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Utility trailers, including snowmobile and personal watercraft
trailers, are primarily constructed of aluminum or steel, with aluminum
trailers having similar performance advantages and cost disadvantage as
previously discussed for truck trailers. Major competitors for aluminum
utility trailer sales are Featherlite Mfg., Inc., Karavan Trailers, Inc. and
Triton Corporation.
Patents and Trademarks
The Company has a registered trademark for its swirl design finish on
its manufactured products. The Company believes that the swirl finish is a
cosmetic feature which favorably distinguishes the Company's trailers and
bodies from its competitors' products.
Employees
The Company currently employs approximately 215 administrative,
sales, engineering, production, and repair and service personnel. The hourly
personnel at the branch facility in Dover, Ohio are represented by the
International Association of Machinists and Aerospace Workers, AFL-CIO. The
current collective bargaining agreement expires in April 1998. The hourly
personnel at the utility trailer manufacturing facility in Dover, Ohio are
represented by the same union. The Company and union are negotiating the terms
of an initial agreement. In April 1996, hourly employees at the Kent, Ohio
facility elected to be represented by the International Association of Bridge,
Structural and Ornamental Iron Workers, AFL-CIO. The Company and union are
negotiating the terms of an initial agreement.
Regulation
Truck trailer length, height, width, maximum capacity and other
specifications are regulated by the U.S. Government and State Governments. The
U.S. Government also regulates certain safety features incorporated in the
design of truck trailers.
Environmental Matters
The Company's facilities are subject to the environmental laws and
regulations of the jurisdictions in which they are located. The Company
believes that the environmental standards maintained at such locations meet
applicable regulatory requirements. The Company's operations, like those of
other competitors in basic industries, have in recent years become subject to
increasingly stringent legislation and regulations with regard to protection of
human health and the environment. More rigorous policies and requirements may
be imposed in the future. Although the Company is not aware of any specific
measures or expenditures that will be required, compliance with such laws,
regulations or policies may require expenditures in the future.
6
<PAGE> 7
ITEM 2. PROPERTIES
The Company's corporate offices are located in Akron, Ohio. The
Company leases approximately 3,600 square feet of office space in Akron from a
corporation in which Richard D. Pollock, a Director, is a shareholder. See
Item 13.
The Company has a manufacturing facility on an 8 acre site in
Jacksonville, North Carolina. This facility is comprised of a prestressed
concrete building that contains approximately 43,200 square feet of fabrication
area and a concrete block building with approximately 3,000 square feet of
space for washing and painting trailers.
The Company commenced production in June 1995 at a 19.6 acre site in
Kent, Ohio. The building consists of approximately 60,000 square feet of steel
construction plus approximately 15,000 square feet of concrete block additions.
The Company believes that the production capacity at the Jacksonville
and Kent facilities is sufficient to meet current and projected demand for
current products.
The branch in Dover, Ohio is housed in three buildings of cement
block construction with approximately 25,000 square feet of floor area on 3.5
acres of land. This property is utilized for trailer sales, service, and
repairs. The building contains offices, storage space, and shop space. Yard
area is utilized for storage of new and used trailers and trailers in process
of repair and maintenance. The Company owns the land and buildings.
The Company also owns land and buildings situated on approximately
9.2 acres adjacent to the branch facility in Dover, Ohio. The Company is
utilizing the buildings, constructed primarily of concrete block and totalling
approximately 36,000 square feet, for manufacturing of utility, snowmobile, and
personal watercraft trailers.
The branch in Parkersburg, West Virginia sells trailers and parts
from a metal building with approximately 17,500 square feet situated on
approximately 4.9 acres of land. The Company owns the land and building.
Certain owned property of the Company is subject to mortgages and is
collateral for the note payable - bank and a letter of credit. (See Notes 5
and 6 to the financial statements).
7
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ITEM 3. LEGAL PROCEEDINGS
Various claims, lawsuits, and complaints arising in the ordinary
course of business have been filed or are pending against the Company or may
arise in the future involving allegations of negligence, product defects,
breach of warranty, and breach of contract, among other allegations. Some of
the foregoing matters involve or may involve compensatory or punitive damages
in very large amounts. Litigation is subject to many uncertainties, the
outcome of individual litigated matters is not predictable with assurance, and
it is possible that some of the foregoing matters could be decided unfavorably
to the Company. Although the liability, if any, associated with these matters
was not determinable at March 31, 1996, it is the opinion of management of the
Company that all such matters are adequately accrued for or are adequately
covered by insurance or, if not so covered, are without merit or are of such
kind, or involve such amounts, as would not have a significant effect on the
financial position and results of operations and cash flows of the Company if
disposed of unfavorably.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders in the
quarter ended March 31, 1996.
8
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PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The Registrant's stock (trading symbol "RVMP") is traded
over-the-counter and reported on the OTC Bulletin Board and on "pink sheets"
which are published periodically. The best knowledge and belief of the Company
is that the stock has not actively traded during the last two years. The
Company is aware that a small number of transactions occurred between $.40 and
$8.50 per share. J. C. Bradford & Co., Nashville, Tennessee, Telephone
1-800-522-1927, began making a market in the common stock in May 1996. Their
bid-ask quotation on June 10, 1996 was $8.00-$10.00 per share.
The Company has not paid dividends in the last two years and is
restricted from paying dividends by its loan agreements. Payment of dividends
is within the discretion of the Company's Board of Directors and will depend
on, among other factors, earnings, capital requirements and the operating and
financial condition of the Company. The Company does not presently intend to
pay dividends in the future.
There were approximately 4,000 holders of record of the Registrant's
common stock as of June 10, 1996. See also Item 12.
9
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ITEM 6. SELECTED FINANCIAL DATA FOR THE YEARS ENDED MARCH 31
This information should be read in conjunction with the financial statements
and the related notes in Item 8 and Management's Discussion and Analysis of
Financial Condition and Results of Operations in Item 7.
<TABLE>
<CAPTION>
1996 1995 1994 1993 1992
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<S> <C> <C> <C> <C> <C>
Net sales $40,238,755 $42,036,058 $25,114,351 $19,921,093 $14,593,834
Income (loss) from operations 807,419 2,955,391 1,213,445 1,004,701 (217,808)
Unusual income items 0 0 565,000 0 0
Income (loss) before income taxes
and extraordinary items 305,511 2,762,033 1,605,868 683,985 (640,002)
Extraordinary items 0 0 0 531,032 (2) 0
Net income (loss) 194,538 1,801,233 2,029,068 931,017 (640,002)
Net income (loss) per common share:
Before extraordinary items $.10 $.93 $1.04 $0.90 $(2.62)
Extraordinary items 0 0 0 1.20 0
----- ----- ----- ------ --------
Total (1) $.10 $.93 $1.04 $2.10 $(2.62)
==== ==== ===== ===== ======
Average number of shares used in
computation of per share amounts (1) 1,943,525 1,943,525 1,943,525 442,348 244,431
Supplementary income (loss) per share data:
Before extraordinary items $.10 $.93 $1.04 $.27 $(.26)
Extraordinary items 0 0 0 .27 0
----- ----- ------- ----- ------
Total (1)(3) $.10 $.93 $1.04 $.54 $(.26)
==== ==== ===== ==== =====
Number of shares used in computation of
supplementary per share data (1) 1,943,525 1,943,525 1,943,525 1,943,525 1,943,525
Cash dividends declared per common
share $ 0 $ 0 $ 0 $ 0 $ 0
Total assets 21,886,535 19,405,237 8,420,275 7,168,679 5,477,552
Total long-term obligations 12,397,447 10,047,807 3,575,599 4,264,463 1,582,877
Working capital/(deficit) 5,900,027 3,682,967 2,568,807 1,424,402 (3,550,207)
Shareholders' equity (deficit) 3,440,090 3,267,061 1,373,330 (496,442) (2,948,236)
</TABLE>
(1) All per share amounts and number of shares have been restated to
reflect a one-for-four reverse stock split effected on December 26,
1995.
(2) Gain of $144,032 from retirement of subordinated debentures and
$387,000 from utilization of tax loss carryforwards.
(3) Interest expense of $114,370 and $128,281 in 1993 and 1992,
respectively, on debt to Pollock which was converted to equity in 1993
was added to income and deducted from loss before extraordinary items
in 1993 and 1992, respectively, to compute supplementary data.
10
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
The Company had cash and cash equivalents of $441,890 and $394,019 at
March 31, 1996 and 1995, respectively. The Company could have borrowed
approximately $1,140,000 more than the $6,707,986 owed to the bank at March 31,
1996 on a line of credit which expires on August 31, 1997.
The Company intends to use the remaining proceeds from the City of
Kent, Ohio industrial development revenue bonds and internally generated cash
to construct a 60,000 square foot building at the Kent facility and purchase
equipment to cut aluminum coil into sheets for its own use and for related and
unrelated customers; however, the Company has not begun this project.
Although no assurances are possible, the Company believes that its
cash resources, credit arrangements, and internally generated funds will be
sufficient to meet its operating and capital expenditure requirements for
existing operations and to service its debt in the next 12 months and the
foreseeable future.
Based upon historical patterns and projections by truck trailer
industry analysts, record demand for truck trailers in 1995 and 1996 peaked,
and a decrease in truck trailer demand is projected in 1997. The Company is
increasing its efforts to offset a projected decline in trailer industry sales
by selling more flatbed trailers to fleets. The Kent facility was built and
the Eclipse II flatbed trailer was introduced in 1996, among other competitive
reasons, to make the Company's aluminum flatbed trailer more attractive to
fleets who might otherwise purchase composite or steel trailers.
Based upon sales for early 1997, a sales order backlog approximating
$5,000,000 at May 31, 1996, and a moderate downturn in the truck trailer
industry, the Company is projecting sufficient sales to maintain profitability
and meet its debt covenants in 1997.
1996
Net cash used for operating activities was $1,864,230 with
significant uses being an increase in inventories due mainly to the startup of
the Kent facility and payment of income taxes. Capital expenditures include
approximately $1,375,000 for the Kent facility which commenced production of
flatbed trailers in June 1995. Capital expenditures were financed with
proceeds from the industrial development revenue bonds and increase in note
payable - bank. Bank borrowings were used to finance the net cash used for
operating activities. Working capital increased to $5,900,027 at March 31,
1996 from $3,682,967 at March 31, 1995.
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1995
Net cash provided from operating activities was $685,289. Increases
in receivables, inventories and accounts payable were primarily due to
increased sales and manufacturing activity. The increase in accrued income
taxes was due to the Company owing income taxes, having utilized net operating
loss carryforwards and generating taxable income. $4,900,000 of industrial
development revenue bonds were issued for a building, improvements to the
existing building, and equipment at the Kent facility. Approximately
$2,900,000 of cash was used for capital expenditures for the Kent facility.
Working capital increased to $3,682,967 at March 31, 1995 from $2,568,807 at
March 31, 1994.
1994
Cash flow provided from operating activities of $1,235,508 in 1994
included $500,000 of life insurance proceeds received upon the death of the
previous Chairman of the Company, Rodney E. Wilson. Increases in receivables,
inventories and accounts payable were due to increased sales and manufacturing
activity. The increase in accrued pension costs and unrecognized pension
liability was due mainly to a decrease in the assumed discount rate from 8.0%
to 7.25%. The cash provided from operations was used to reduce debt and for
capital expenditures for improvement of the Company's facilities and the
startup of the utility trailer facility.
RESULTS OF OPERATIONS
Years Ended March 31, 1996 and 1995
Gross profit declined 28.1% to $4,512,444 in 1996 from $6,276,019 in
1995 and gross profit margin declined to 11.2% in 1996 from 14.9% in 1995
mainly due to the startup of the Kent facility, conversion of the Jacksonville,
North Carolina facility to a dedicated dump trailer and body manufacturing
facility, losses at the utility trailer division, and a decline in demand for
trailers leading to reduced margins on fleet sales. The startup of production
in Kent resulted in higher costs because new employees were gaining experience
and production levels during most of 1996 were below the level needed to cover
overhead costs.
Selling, general and administrative expenses increased to 9.2% from
7.9% of net sales as net sales decreased while expenses increased 11.6% mainly
due to increased marketing expenditures for the introduction of the Eclipse II
flatbed trailer and live-floor trailer and for the utility trailer division
which began the production and sale of utility, snowmobile, and personal
watercraft trailers during the year ended March 31, 1995. Interest expense
increased mainly due to more debt outstanding during the period 1996 versus
1995.
A one-for-four reverse stock split was effected on December 26, 1995
in order to increase the market price of the common stock to promote more
active trading; although, there can be no assurance that an active market for
the common stock will develop merely because of an increase in the price of
each share. All per share amounts and number of shares have been restated to
reflect the reverse stock split.
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Years Ended March 31, 1995 and 1994
Net sales increased 67.4% to $42,036,058 in 1995 from $25,114,351 in
1994 and income from operations increased 143.6% to $2,955,391 from $1,213,445
primarily due to an increase in volume in existing products, as the economy and
transportation industry continued at a strong level, and the Company's ability
to increase its manufacturing volume.
Gross profit margin declined to 14.9% in 1995 from 17.8% in 1994 due
to the startup of the utility trailer facility and increased sales of trailers
to fleets, which generally pay lower margins, and the subsequent sales of
trade-in trailers which are generally sold at lower margins than new trailers.
Selling, general and administrative expense declined to 7.9% from 13.0% of net
sales as net sales increased at a higher rate than expenses. In addition, 1994
expense included approximately $150,000 for bad debt expense, primarily for one
dealership, which was reversed in 1995 due to collections and deemed
collectibility of the balance due the Company. 1994 expense also included
approximately $270,000 of legal and professional fees to successfully litigate
certain claims. See Note 8 to the financial statements for a discussion of
income taxes.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
<TABLE>
<CAPTION>
Financial Statements: Pages
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Report of Independent Accountants 14
Balance Sheets, March 31, 1996 and 1995 15 - 16
Statements of Operations for the years ended
March 31, 1996, 1995 and 1994 17
Statements of Changes in Shareholders' Equity (Deficit)
for the years ended March 31, 1996, 1995 and 1994 18
Statements of Cash Flows for the years ended
March 31, 1996, 1995 and 1994 19
Notes to Financial Statements 20 - 33
Financial Statement Schedules:
II - Valuation and Qualifying Accounts and Reserves
for the years ended March 31, 1996, 1995 and 1994 34
</TABLE>
All other schedules are omitted because they are not applicable or
the required information is presented in the financial statements or the notes
thereto.
13
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REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Directors
Ravens Metal Products, Inc.:
We have audited the financial statements and financial statement
schedule of Ravens Metal Products, Inc. listed in Item 8 of this Form 10-K.
These financial statements and financial statement schedule are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements and financial statement schedule based
on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Ravens Metal
Products, Inc. as of March 31, 1996 and 1995 and the results of its operations
and its cash flows for each of the three years in the period ended March 31,
1996 in conformity with generally accepted accounting principles. In addition,
in our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly, in all material respects, the information required to be
included therein.
/S/ COOPERS & LYBRAND L.L.P.
Akron, Ohio
June 4, 1996
14
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RAVENS METAL PRODUCTS, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
March 31
----------------------------------
ASSETS 1996 1995
----------- -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 441,890 $ 394,019
Receivables:
Trade, net of allowance for doubtful
accounts of $85,000 and $60,000
in 1996 and 1995 4,678,629 4,438,799
Inventories 6,356,353 4,502,357
(Excess of replacement or current cost
over stated values was $2,051,000
and $2,087,000 in 1996 and 1995)
Refundable income taxes 42,639 0
Deferred income taxes 329,818 334,100
Other current assets 99,696 104,061
------------- -----------
Total current assets 11,949,025 9,773,336
Property, plant and equipment, net 6,984,989 5,896,806
Funds held by trustee for capital expenditures 2,711,104 3,489,400
Other assets 241,417 245,695
------------- -------------
Total assets $21,886,535 $19,405,237
=========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
15
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RAVENS METAL PRODUCTS, INC.
BALANCE SHEETS, Continued
<TABLE>
<CAPTION>
March 31
----------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY 1996 1995
----------- -----------
<S> <C> <C>
Current liabilities:
Accounts payable - trade $ 3,942,899 $ 3,727,288
Accrued liabilities:
Compensation 560,763 521,787
Product warranty 485,000 425,000
Income taxes 11,851 809,021
Other 394,520 403,962
Current installments on term debt 653,965 203,311
------------ ------------
Total current liabilities 6,048,998 6,090,369
Note payable - bank 6,707,986 3,781,556
Term debt 5,287,010 5,934,529
Accrued pension costs 230,293 244,822
Deferred income taxes 172,158 86,900
------------ ------------
Total liabilities 18,446,445 16,138,176
----------- -----------
Commitments and contingent liabilities
Shareholders' equity:
Common stock, $.01 par value; authorized 3,000,000
shares at March 31, 1996 and 10,000,000 shares
at March 31, 1995; issued 1,943,525 shares at
March 31, 1996 and 7,769,392 shares at
March 31, 1995 19,435 77,694
Additional capital 3,419,732 3,361,473
Retained earnings 216,585 22,047
------------ ------------
3,655,752 3,461,214
Unrecognized pension liability (215,662) (194,153)
------------ ------------
Total shareholders' equity 3,440,090 3,267,061
------------ ------------
Total liabilities and shareholders' equity $21,886,535 $19,405,237
=========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
16
<PAGE> 17
RAVENS METAL PRODUCTS, INC.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the years ended March 31, 1996 1995 1994
- ----------------------------- ----------- ----------- -----------
<S> <C> <C> <C>
Net sales $40,238,755 $42,036,058 $25,114,351
Cost of sales 35,726,311 35,760,039 20,642,318
----------- ----------- -----------
Gross profit 4,512,444 6,276,019 4,472,033
Selling, general and administrative expenses 3,705,025 3,320,628 3,258,588
----------- ------------ -----------
Income from operations 807,419 2,955,391 1,213,445
Other income 114,129 124,567 118,226
Interest expense (616,037) (317,925) (290,803)
Unusual income items 0 0 565,000
-------------- --------------- ------------
Income before income taxes 305,511 2,762,033 1,605,868
Provision (benefit) for income taxes 110,973 960,800 (423,200)
----------- ------------ ------------
Net income $ 194,538 $ 1,801,233 $ 2,029,068
=========== =========== ===========
Net income per common share $0.10 $0.93 $1.04
===== ===== =====
</TABLE>
The accompanying notes are an integral part of the financial statements.
17
<PAGE> 18
RAVENS METAL PRODUCTS, INC.
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT)
for the years ended March 31, 1996, 1995 and 1994
<TABLE>
<CAPTION>
Unearned Un-
Common Retained Employee recognized
Common Stock Additional Earnings Benefits Pension
Shares Amount Capital (Deficit) ESOP Liability Total
--------- -------- ---------- ------------ ---------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at March 31, 1993 7,769,392 $77,694 $3,361,473 $(3,808,254) $(39,989) $ (87,366) $ (496,442)
Net income 2,029,068 2,029,068
Change in unearned employee
benefits - ESOP 39,989 39,989
Change in unrecognized
pension liability (199,285) (199,285)
---------- ------- ---------- ----------- -------- --------- ----------
Balance at March 31, 1994 7,769,392 77,694 3,361,473 (1,779,186) 0 (286,651) 1,373,330
Net income 1,801,233 1,801,233
Change in unrecognized
pension liability 92,498 92,498
---------- ------- ---------- ----------- -------- --------- ----------
Balance at March 31, 1995 7,769,392 77,694 3,361,473 22,047 0 (194,153) 3,267,061
Net income 194,538 194,538
Change in unrecognized
pension liability (21,509) (21,509)
One-for-four reverse
stock split (5,825,867) (58,259) 58,259 0
---------- ------- ---------- ----------- -------- --------- ----------
Balance at March 31, 1996 1,943,525 $19,435 $3,419,732 $ 216,585 $0 $(215,662) $3,440,090
========== ======= ========== ========== ======== ========= ==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
18
<PAGE> 19
RAVENS METAL PRODUCTS, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the years ended March 31, 1996 1995 1994
- ----------------------------- ---------- ----------- -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 194,538 $1,801,233 $2,029,068
Adjustments to reconcile net income to net cash provided
from (used for) operating activities:
Depreciation and amortization . . . . . . . . . . . . . . . . . . 519,290 390,813 351,076
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . 89,540 74,500 (516,700)
Contribution to the ESOP returned to Company as
repayment of promissory note . . . . . . . . . . . . . . . . . 0 0 39,989
Deferred compensation arrangement . . . . . . . . . . . . . . . . 0 0 (150,011)
Increase (decrease) in accrued product warranty . . . . . . . . . 60,000 175,000 25,000
Increase (decrease) in provision for losses on accounts receivable 25,000 (115,000) 140,000
Loss (gain) on disposition of property, plant and equipment . . . 4,606 0 (724)
Increase (decrease) in cash from changes in:
Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . (264,830) (1,797,183) (359,521)
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,853,996) (2,079,520) (600,593)
Other current assets . . . . . . . . . . . . . . . . . . . . . . . 4,365 (11,182) 15,137
Accounts payable - trade . . . . . . . . . . . . . . . . . . . . . 215,611 1,492,437 634,330
Refundable and accrued income taxes . . . . . . . . . . . . . . . (839,809) 737,407 71,614
Accrued and other current liabilities . . . . . . . . . . . . . . 29,534 113,553 (429,814)
Accrued pension costs . . . . . . . . . . . . . . . . . . . . . . (14,529) (201,360) 157,356
Unrecognized pension liability . . . . . . . . . . . . . . . . . . (21,509) 92,498 (199,285)
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (12,041) 12,093 28,586
------------ ------------ ------------
Net cash provided from (used for) operating activities . . . . . . (1,864,230) 685,289 1,235,508
----------- ----------- -----------
Cash flows from investing activities:
Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . (1,588,445) (3,588,977) (298,768)
Proceeds from disposal of fixed assets . . . . . . . . . . . . . . . 0 0 7,488
Investment of proceeds and income from industrial development
revenue bonds with trustee . . . . . . . . . . . . . . . . . . (164,769) (4,971,845) 0
Sale of investments and release of funds held by trustee . . . . . . 943,065 1,482,445 0
----------- ----------- --------------
Net cash provided from (used for) investing activities . . . . . . (810,149) (7,078,377) (291,280)
----------- ----------- -----------
Cash flows from financing activities:
Payments on term debt . . . . . . . . . . . . . . . . . . . . . . . (204,180) (106,288) (238,454)
Proceeds from (payments on) note payable - bank, net . . . . . . . . 2,926,430 1,585,516 (687,394)
Proceeds from industrial development revenue bonds, net of
issuance costs . . . . . . . . . . . . . . . . . . . . . . . . . . 0 4,701,794 0
-------------- ----------- --------------
Net cash provided from (used for) financing activities . . . . . . 2,722,250 6,181,022 (925,848)
----------- ----------- -----------
Net increase (decrease) in cash and cash equivalents . . . . . . . . . 47,871 (212,066) 18,380
Cash and cash equivalents at beginning of year . . . . . . . . . . . . 394,019 606,085 587,705
----------- ----------- -----------
Cash and cash equivalents at end of year . . . . . . . . . . . . . . . $ 441,890 $ 394,019 $ 606,085
========== ========== ==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
19
<PAGE> 20
RAVENS METAL PRODUCTS, INC.
NOTES TO FINANCIAL STATEMENTS
1. Description of Business and Summary of Significant Accounting Policies:
Description of Business:
Ravens Metal Products, Inc. (the "Company") designs, manufactures,
and sells aluminum truck trailers and bodies, including dump
trailers, dump bodies and flatbed trailers used in the highway
transportation industry throughout the U.S. with a small amount of
sales in Canada. These principal products are sold direct and
through a nationwide network of dealerships. The Company currently
has operating facilities in North Carolina, Ohio, and West Virginia.
The Company also sells a wide variety of after-market parts for
trucks and trailers, including parts for its own trailers.
Fiscal Year:
The Company's fiscal year ends on March 31. References to 1996,
1995, etc. are for the years ended March 31, 1996, 1995, etc.,
respectively.
Use of Estimates:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results
could differ from those estimates.
Cash Equivalents:
The Company considers all highly liquid investments with a maturity
of three months or less when purchased to be cash equivalents.
Inventories:
Inventories are carried at the lower of cost or market. The cost of
substantially all inventories is determined under the last-in,
first-out (LIFO) method with the cost of the remainder of the
inventories determined under the first-in, first-out (FIFO) method.
20
<PAGE> 21
NOTES TO FINANCIAL STATEMENTS, Continued
1. Description of Business and Summary of Significant Accounting Policies,
continued:
Depreciation and Amortization:
Depreciation and amortization of property, plant and equipment,
including assets under capital lease obligations, are computed using
the straight-line method based on the estimated useful lives of the
assets. Accelerated depreciation methods are used for tax purposes.
Property, plant and equipment which has become fully depreciated or
amortized is retained in the accounts as long as it is used in the
Company's operations. Property, plant and equipment disposed of is
removed from the asset and related allowance accounts at the amounts
included therein. Profit or loss on such dispositions is included in
the statements of operations. Repairs and maintenance costs are
charged to expense as incurred.
Debt Discount and Expense:
Debt discount and expense are amortized on a straight-line basis,
which does not differ materially from the interest method, by charges
to expense over periods from date of issue to date of maturity.
Product Warranty Costs:
Anticipated costs related to product warranty are expensed when the
products are sold.
Revenue Recognition:
Sales and related cost of sales for trailers are recorded when the
trailers are available for pick-up or delivery as ordered. Sales and
related cost of sales for goods and services other than trailers are
recorded when goods are shipped and services are rendered to
customers.
Advertising Costs:
Costs incurred for producing and communicating advertising are
expensed when incurred.
Income Taxes:
The Company provides for income taxes based upon earnings reported
for financial statement purposes. Deferred tax assets and
liabilities are established for temporary differences between
financial statement and tax accounting bases using currently enacted
tax rates in effect for the years in which the differences are
expected to reverse. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in the provision
for income taxes in the period that includes the enactment date. A
valuation allowance is established for any deferred tax asset for
which realization is not likely.
21
<PAGE> 22
NOTES TO FINANCIAL STATEMENTS, Continued
1. Description of Business and Summary of Significant Accounting Policies,
continued:
Reclassifications:
Certain amounts in previously issued financial statements were
reclassified to conform to the 1996 presentation.
New Accounting Pronouncements:
During 1996, the Company adopted the provisions of Statement of
Financial Accounting Standards "SFAS" No. 121 - "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be
Disposed Of". The adoption of SFAS No. 121 had no significant effect
on the financial statements.
In October 1995, the Financial Accounting Standards Board issued SFAS
No. 123 - "Accounting for Stock-Based Compensation" effective for
transactions entered into after December 15, 1995. The Company has
adopted the disclosure-only option of SFAS No. 123. The adoption of
this standard did not have a material impact on the financial
statements.
2. Unusual Income Items:
On June 30, 1993, the Company reached a settlement with the previous
Chairman of the Company, Rodney E. Wilson, of all disputes and
obligations. The settlement resulted in a gain to the Company of
approximately $95,000.
Mr. Wilson died on July 25, 1993. The Company realized a gain of
approximately $470,000 ($500,000 of proceeds less $30,000 of cash
surrender value previously recorded) from a life insurance policy on Mr.
Wilson.
3. Inventories:
<TABLE>
<CAPTION>
March 31 1996 1995
------------ ------------
<S> <C> <C>
Raw materials $3,858,163 $2,775,219
Work in process 484,620 338,140
Finished goods 2,013,570 1,388,998
---------- ----------
$6,356,353 $4,502,357
========== ==========
</TABLE>
Approximately 93% and 89% of total inventories at March 31, 1996 and
1995, respectively, were valued on a LIFO basis. The reserve to reduce
the carrying value of inventories from current cost to the LIFO basis
amounted to approximately $2,051,000 and $2,087,000 at March 31, 1996 and
1995, respectively.
22
<PAGE> 23
NOTES TO FINANCIAL STATEMENTS, Continued
4. Property, Plant and Equipment, at Cost:
<TABLE>
<CAPTION>
March 31 1996 1995
------------ ------------
<S> <C> <C>
Buildings and improvements $5,289,865 $4,559,504
Machinery and equipment 3,216,704 2,700,812
Office equipment 676,376 575,697
Automotive equipment 399,258 281,982
---------- ----------
9,582,203 8,117,995
Less accumulated depreciation
and amortization 2,859,626 2,438,289
---------- ----------
6,722,577 5,679,706
Land 262,412 217,100
---------- ----------
$6,984,989 $5,896,806
========== ==========
</TABLE>
Approximately $1,375,000 and $3,394,000 of capital expenditures were
incurred in 1996 and 1995, respectively, for a new production facility in
Kent, Ohio. These capital expenditures include capitalized interest
expense net of capitalized interest income of $58,951 and $64,238 in 1996
and 1995, respectively.
Rent expense was approximately $50,000, $32,000 and $26,000 in 1996, 1995
and 1994, respectively.
5. Notes Payable:
On June 26, 1995, the Company entered into a loan and security agreement
with First National Bank of Ohio ("FNBO"). The agreement provides for
borrowings under a line of credit up to $8,000,000 based on eligible
accounts receivable and inventories and expires on August 31, 1997.
Interest is at FNBO's prime rate (8.25% at March 31, 1996) minus 1/2%.
The Company could have borrowed approximately $1,140,000 more than the
$6,707,986 owed to FNBO at March 31, 1996.
The agreement is collateralized by cash, accounts receivable,
inventories, equipment and intangibles as well as the real estate at the
Kent facility. The agreement is cross-collateralized with the
reimbursement agreement described in Note 6 and contains covenants
relating to the payment of dividends, acquiring treasury stock, the
creation of additional indebtedness, minimum tangible net worth, and cash
flow coverage. The Company was not in compliance with the cash flow
coverage covenant at March 31, 1996. FNBO waived the covenant violation
through March 31, 1996. Based upon its projections for 1997, the Company
believes that it will
23
<PAGE> 24
NOTES TO FINANCIAL STATEMENTS, Continued
5. Notes Payable, Continued:
comply with these covenants. If the Company does not comply with these
covenants, it will be required to seek a waiver of noncompliance or
amendment to the agreement in order to continue borrowing under the
agreement and to avoid potential acceleration of repayment of the
borrowings.
Prior to June 26, 1995, the Company had a loan and security agreement
with PNC Bank, National Association ("PNC"). Interest was at PNC's prime
rate (9% at March 31, 1995) plus 1%.
6. Term Debt:
<TABLE>
<CAPTION>
March 31 1996 1995
------------ ------------
<S> <C> <C>
City of Kent,Ohio (a) $4,900,000 $4,900,000
7% subordinated debentures, payable in 2004,
net of unamortized discount of $62,730
and $70,176 424,270 417,824
6% loan, payable in monthly installments
through 2001 (b) 22,444 26,043
4% promissory note, payable in monthly
installments through 2001 (b) 62,054 72,656
Variable prime rate promissory note, payable
in monthly installments through 2001 (b) 34,650 41,317
4% promissory note, payable in quarterly
installments through 2000 (c) 72,000 90,000
Variable rate loan, payable in monthly
installments through 1999 (c) 225,557 290,000
7% promissory notes, payable in annual
installments through 1998 to sellers of
real estate at the Kent facility 200,000 300,000
---------- ----------
5,940,975 6,137,840
Less current installments 653,965 203,311
---------- ----------
$5,287,010 $5,934,529
========== ==========
</TABLE>
24
<PAGE> 25
NOTES TO FINANCIAL STATEMENTS, Continued
6. Term Debt, continued:
(a) On December 12, 1994, the Company entered into a loan agreement
with the City of Kent, Ohio dated December 1, 1994 pursuant to
which the Company borrowed $4,900,000 for capital expenditures for
the Kent facility. The loan agreement requires annual principal
payments of $450,000 in 1997 through 2001, $500,000 in 2002
through 2005, $150,000 in 2006 through 2008, and $100,000 in 2009
and 2010.
In connection with the loan, the City of Kent issued and sold
$4,900,000 of its City of Kent, Ohio Variable Rate Demand
Industrial Development Revenue Bonds, Series 1994 (Ravens Metal
Products, Inc. Project). The Company's interest and principal
payments will be used to satisfy obligations to the bondholders.
Payment to bondholders is guaranteed by a letter of credit in an
amount equal to outstanding principal plus specified interest
($4,996,660 at March 31, 1996) expiring December 15, 1996 issued
by First National Bank of Ohio at a rate of 1% per annum and
collateralized by all equipment owned by the Company and by the
real estate at the Kent facility and cross-collateralized with the
line of credit as described in Note 5. The interest rate on the
bonds varies weekly and was 3.70% and 4.35% at March 31, 1996 and
1995, respectively. Proceeds from the loan agreement are held by
a trustee and released to the Company for approved capital
expenditures at the Kent facility. $2,711,104 and $3,489,400 held
by the trustee at March 31, 1996 and 1995, respectively, was
invested in short-term commercial paper and a money market fund.
(b) These borrowings are collateralized by the Parkersburg, West
Virginia facility.
(c) These borrowings are collateralized by the Jacksonville, North
Carolina facility. The variable rate loan is at the bank's prime
rate (8.25% and 9% at March 31, 1996 and 1995, respectively) plus
1%.
Maturities for the term debt are: 1997, $653,965; 1998, $654,674; 1999,
$555,367; 2000, $523,900; 2001, $474,465; and thereafter, $3,078,604.
7. Commitments and Contingent Liabilities:
Various claims, lawsuits, and complaints arising in the ordinary course
of business have been filed or are pending against the Company or may
arise in the future involving allegations of negligence, product defects,
breach of warranty, and breach of contract, among other allegations.
Some of the foregoing matters involve or may involve compensatory or
punitive damages in very large amounts. Litigation is subject to many
uncertainties, the outcome of individual litigated matters is not
predictable with assurance, and it is possible that some of the foregoing
matters could be decided unfavorably to the Company. Although the
liability, if any, associated with these matters was not determinable at
March 31, 1996, it is the opinion of management of the Company that all
such matters are adequately accrued for or are
25
<PAGE> 26
7. Commitments and Contingent Liabilities, Continued:
adequately covered by insurance or, if not so covered, are without merit
or are of such kind, or involve such amounts, as would not have a
significant effect on the financial position and results of operations
and cash flows of the Company if disposed of unfavorably.
At March 31, 1996 and 1995, the Company was contingently liable as
guarantor on certain sales contracts of customers in the amount of
approximately $515,000 and $499,000, respectively, which are
collateralized by the units sold. No reserve for losses has been
provided because the Company has incurred an insignificant amount of
losses related to guaranteed sales contracts which generally have
maturities less than five years. The Company guarantees 10-20% of the
outstanding balance owed to the finance company by the customers. The
Company recognizes revenue at the time the trailers are sold.
The Company and certain other persons and business entities affiliated
with the Company and Wirt Aluminum Co. ("Wirt") have jointly and
severally guaranteed approximately $2,115,000 of State of Ohio Economic
Development Revenue Bonds (Ohio Enterprise Bond Fund) Series 1995-2 (Wirt
Aluminum Co.) and approximately $2,500,000 of State of Ohio "Section 166
Project Funds".
8. Income Taxes:
The provision (benefit) for income taxes consists of the following:
<TABLE>
<CAPTION>
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
Current:
Federal $ 14,064 $854,000 $ 84,000
State 7,369 32,300 9,500
Deferred 89,540 74,500 (516,700)
-------- -------- --------
$110,973 $960,800 $(423,200)
======== ======== =========
</TABLE>
26
<PAGE> 27
NOTES TO FINANCIAL STATEMENTS, Continued
8. Income Taxes, Continued:
The sources of temporary differences which make up the deferred tax
balances are as follows:
<TABLE>
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
Depreciation and amortization $(336,130) $(313,287)
Warranty 184,426 161,585
Vacation 49,427 47,085
Pension 29,163 58,464
Deferred interest and amortization of
discount on debentures 65,623 62,908
Allowance for doubtful accounts 32,322 22,812
Inventory 16,466 38,082
Federal and state tax loss carryforwards 91,262 100,373
Other 25,101 69,178
-------- --------
$157,660 $247,200
======== ========
</TABLE>
A reconciliation of the federal statutory tax rate to the effective rate
follows:
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
Amount Percent Amount Percent Amount Percent
------ ------- ------ ------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Statutory amount and rate $103,874 34.0% $939,091 34.0% $ 545,995 34.0%
Effect of:
State taxes (net of utilization of
tax loss carryforwards) 7,369 2.4 32,300 1.2 9,500 0.6
Non-deductible expense 5,606 1.8 5,121 0.2 1,779 0.1
Taxable life insurance proceeds 0 0.0 0 0.0 (159,848) (10.0)
Reversal of deferred tax valuation
allowance 0 0.0 0 0.0 (661,038) (41.1)
Benefit from utilization of federal
tax loss carryforwards 0 0.0 0 0.0 (222,546) (13.9)
Provision for alternative minimum tax 0 0.0 0 0.0 84,000 5.2
Other (5,876) (1.9) (15,712) (0.6) (21,042) (1.3)
-------- ---- -------- ---- --------- -----
$110,973 36.3% $960,800 34.8% $(423,200) (26.4)%
======== ==== ======== ==== ========= =====
</TABLE>
27
<PAGE> 28
NOTES TO FINANCIAL STATEMENTS, Continued
8. Income Taxes, Continued:
The cumulative tax operating loss carryforward as of March 31, 1996 is
approximately $3,423,000. On May 3, 1991, there was a change in the
controlling interest of the Company. Pursuant to the Internal Revenue
Code, this transaction significantly limits the ability of the Company to
utilize the remaining cumulative tax operating loss carryforward of
approximately $3,423,000 which existed at the time of the ownership
change. Management believes the Company will, at a minimum, be able to
utilize annually tax operating loss carryforwards of approximately
$24,000 until expiration of these losses which would result in the
utilization of $240,000 of loss carryforwards subsequent to March 31,
1996. The tax loss carryforwards expire in years through 2007.
A full valuation allowance was required for the first three quarters in
1994 under SFAS No. 109 -"Accounting for Income Taxes" primarily due to
uncertainty regarding the utilization of future deductible temporary
differences and federal and state tax loss carryforwards. As a result of
completion of two years of profits, after three years of losses totalling
$6,675,065, an increase in the Company's sales order backlog from
approximately $2,500,000 in the first three quarters of 1994 to
approximately $9,800,000 at May 31, 1994, and projected results for 1995,
the valuation allowance of $516,700 was eliminated as of March 31, 1994
due to the expected realizability of the deferred income tax assets.
9. Retirement Plans:
The Company has defined benefit pension plans covering hourly employees
at the Company's service facility in Dover, Ohio and former hourly
employees at the former Elizabeth, West Virginia facility. The plans
provide benefits of specified amounts for each year of service. The
Company's funding policy is based on an actuarially determined cost
method allowable under statutory regulations.
Net pension cost for the years ended March 31, 1996, 1995 and 1994 is
comprised of, based on plan assets and obligations as of January 1, 1995,
1994 and 1993, respectively, the following components:
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Service costs - benefits earned during the year $ 12,837 $ 14,286 $ 10,812
Interest cost 120,887 117,246 108,499
Actual return on assets (287,563) (33,042) (81,581)
Net amortization and deferral 208,208 (40,528) 9,435
-------- -------- ---------
Net pension cost $ 54,369 $ 57,962 $ 47,165
======== ======== ========
</TABLE>
28
<PAGE> 29
NOTES TO FINANCIAL STATEMENTS, Continued
9. Retirement Plans, Continued:
The funded status of the plans as of January 1, 1996 and 1995 is
reconciled to accrued pension cost on the Company's balance sheet at
March 31, 1996 and 1995 as follows:
<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
Accumulated benefit obligation, including
vested benefits of $1,745,869 and
$1,477,571 $1,778,148 $1,501,980
Effect of future salary increases 0 0
---------- ----------
Projected benefit obligation 1,778,148 1,501,980
Plan assets at fair value, primarily
U.S. government obligations, fixed
income investments and equity
securities 1,396,367 1,098,606
---------- ----------
Projected benefit obligation in excess
of plan assets 381,781 403,374
Unrecognized prior service cost (2,509) (3,136)
Unamortized transition liability (17,345) (24,986)
Unrecognized net loss (215,662) (194,153)
Unrecognized additional minimum
liability (A) 235,516 222,275
---------- ----------
Accrued pension cost $ 381,781 $ 403,374
========== ==========
</TABLE>
(A) The unrecognized additional minimum liability included in accrued
pension cost was offset by an intangible asset of $19,854 and
$28,122 and by a reduction in shareholders' equity of $215,662 and
$194,153 at March 31, 1996 and 1995, respectively.
Significant assumptions used in determining net pension cost and related
pension obligations as of January 1, 1996, 1995 and 1994 are:
<TABLE>
<CAPTION>
1996 1995 1994
------ ------ ------
<S> <C> <C> <C>
Discount rate 7.25% 8.25% 7.25%
Expected long-term rate of return on assets 8.0 8.0 8.0
</TABLE>
Effective July 1, 1996, the Company will terminate the defined benefit
pension plan covering the former hourly employees at the former
Elizabeth, West Virginia facility. The Company will contribute
approximately $250,000 so that there are sufficient plan assets to pay
the benefit obligations.
29
<PAGE> 30
NOTES TO FINANCIAL STATEMENTS, Continued
9. Retirement Plans, Continued:
The Company also has a defined contribution plan covering salaried and
non-union hourly employees. The purpose of this plan is to provide
financial security during retirement by providing employees with an
incentive to make regular savings. Effective January 1, 1994, employee
contributions of not more than 1% of employee pre-tax compensation are
matched by the Company. The cost of such company contributions
approximated $11,337, $15,470 and $3,696 for 1996, 1995 and 1994,
respectively.
10. Employee Stock Ownership Plan:
Effective January 1, 1984, the Company established a noncontributory
Employee Stock Ownership Plan (ESOP) covering all salaried employees.
Employer contributions and participant forfeitures vest 20% for each year
of service with full vesting after five years of service. Distributions
are made to participants upon the earlier of termination of employment or
retirement. During 1984, the Company loaned $399,989 to the ESOP
pursuant to a promissory note agreement. The ESOP purchased 94,115
shares with the proceeds from the loan. The promissory note was at an
interest rate of 9% per year and was payable in annual installments of
$40,000, including principal and interest, through 1994. Annual
contributions to the ESOP and expense recorded was $39,989 for 1994. The
Company has received a favorable determination for termination of the
ESOP effective December 31, 1993 from the Internal Revenue Service.
Distributions will be made to participants in 1997.
11. Series Preferred Stock:
The Company is authorized to issue 300,000 shares of series preferred
stock, $.01 par value, none of which was issued as of March 31, 1996.
The features of the preferred stock may vary, among other things, as to
the rate of dividend, conversion privilege and liquidation rights, based
upon the resolution of the Board of Directors at the time of issuance.
12. Earnings (Loss) Per Common Share and Reverse Stock Split:
Earnings per common share are based on net income divided by the weighted
average number of common and common stock equivalent shares outstanding.
Loss per common share is based on net loss divided by the weighted
average number of common shares outstanding. Weighted average number of
common shares outstanding was 1,943,525 in 1996, 1995 and 1994, adjusted
for a one-for-four reverse stock split effected on December 26, 1995.
All per share amounts and number of shares have been restated to reflect
the reverse stock split.
30
<PAGE> 31
NOTES TO FINANCIAL STATEMENTS, Continued
13. Supplemental Cash Flow Information:
(A) Cash payments for interest: 1996 - $572,094; 1995 - $310,190; and
1994 - $614,541.
(B) Cash payments for income taxes: 1996 - $861,242; 1995 - $141,450;
and 1994 - $17,500.
(C) Noncash investing and financing activities: In 1995, $300,000 of
the purchase price of the real estate in Kent, Ohio was financed
by a note payable to the sellers.
14. Related Party Transactions:
On August 14, 1995, the Company entered into a supply agreement expiring
on August 14, 2002 with Wirt Aluminum Co. (formerly Wirt Metal Products,
Inc.)("Wirt"), pursuant to which the Company has the right to purchase
from Wirt, at competitive prices, up to 60% of the Company's requirements
for aluminum extrusions manufactured to the Company's specifications and
used by the Company in the manufacture of its aluminum truck and utility
trailers. Jacob Pollock ("Pollock") is a Director of the Company and
owns approximately 86.7% of the common stock of the Company and is a
principal shareholder of Wirt. Richard Pollock, a Director of the
Company, is the President of Wirt.
The Company purchased aluminum extrusions totalling $4,618,400,
$5,795,355 and $2,733,866 in 1996, 1995 and 1994, respectively, from
Wirt. The Company owed Wirt $425,000 and $738,901 at March 31, 1996 and
March 31, 1995 for these purchases. The Company sold aluminum scrap to
Wirt in 1996, 1995 and 1994 totalling $177,089, $197,602 and $54,089,
respectively, of which $12,531 and $19,140 was owed to the Company at
March 31, 1996 and 1995. See Note 7.
J. Pollock & Company, wholly owned by Pollock, purchases materials and
provides or contracts for certain administrative services for the Company
and charges the Company at its cost. Such transactions totalled $99,164,
$187,626 and $69,193 in 1996, 1995 and 1994, respectively, of which
$21,772 and $45,791 was owed at March 31, 1996 and 1995. Effective April
1, 1994, the Company entered into a management agreement whereby J.
Pollock & Company provides general management services for an annual
management fee of $150,000 payable in monthly installments of $12,500.
The Company leases office space from a corporation in which Richard
Pollock and Bruce Pollock are shareholders. The lease is for five years
expiring December 31, 1996 at a monthly base rent of $1,500 with annual
increases determined by the change in the Consumer Price Index, plus the
Company's share of utilities, real estate taxes, insurance, and property
maintenance. The Company paid $25,546, $23,550 and $22,513 in 1996, 1995
and 1994, respectively. Richard Pollock and Bruce Pollock are sons of
Jacob Pollock.
31
<PAGE> 32
NOTES TO FINANCIAL STATEMENTS, Continued
14. Related Party Transactions, Continued:
Nicholas T. George, a Director of the Company, is a member of the law
firm of Nicholas T. George & Associates which is counsel to Jacob
Pollock, J. Pollock & Company, and the Company. The Company incurred
legal fees approximating $1,300, $25,000 and $246,000 to Nicholas T.
George & Associates in 1996, 1995 and 1994, respectively.
The Company purchased aluminum materials from The Aluminum Warehouse,
Inc., of which Richard Pollock is a principal shareholder, totalling
$103,083 and $104,534 in 1996 and 1995. $10,984 was owed at March 31,
1996.
The Company hired temporary personnel from Flex-Team, Inc., of which
Pollock is a principal shareholder, totalling $613,882 and $120,799 in
1996 and 1995, of which $0 and $51,106 was owed at March 31, 1996 and
1995.
The Company purchased and paid for raw materials from Signs & Blanks,
Inc., wholly owned by Pollock, totalling $7,892 and $117,042 in 1996 and
1995.
15. Stock Options:
The Company's 1993 Stock Option Plan provides for the granting of options
to acquire up to 50,000 shares of the Company's common stock. The Plan
authorizes the granting of incentive stock options to employees of the
Company and nonqualified stock options to employees, officers and
directors, whether or not on the Company's payroll or otherwise paid for
services. The Plan provides that the option price shall not be less than
100% of the current market price of the stock on the date of the grant,
that the option is exercisable when granted, and that the term of the
option shall be fixed at the date of the grant and shall not exceed ten
years. The Plan terminates on July 7, 2003.
<TABLE>
<CAPTION>
Stock
Option
Shares Price
---------------- -------
1996 1995
------ ------
<S> <C> <C> <C>
Outstanding at beginning of year 10,250 0 $4.00
Granted 0 10,750 4.00
Exercised 0 0
Canceled (250) (500) 4.00
------- -------
Outstanding and exercisable at end of year 10,000 10,250 4.00
====== ======
</TABLE>
All outstanding options expire on April 7, 1999.
16. Advertising Costs:
Advertising costs included in selling, general and administrative expense
were $256,276, $124,052 and $94,499 in 1996, 1995 and 1994, respectively.
32
<PAGE> 33
NOTES TO FINANCIAL STATEMENTS, Continued
17. Concentrations:
Financial instruments which potentially subject the Company to
concentrations of credit risk consist primarily of accounts receivable.
The Company performs ongoing credit evaluations of its customers and does
not usually require collateral. The Company maintains a reserve for
potential credit losses.
The Company's largest customer accounted for approximately 11% of the
Company's gross sales in 1996. No sales to any one customer accounted
for more than 10% of gross sales in 1995 or 1994.
The principal raw material used by the Company is aluminum. The Company
purchases aluminum from several suppliers and believes that there are
ready supplies of aluminum available for its needs at acceptable prices.
A significant increase in the price or an interruption in the supply of
aluminum could have a material adverse effect on the Company's operating
results.
In April 1996, hourly employees at the Kent, Ohio flatbed trailer
manufacturing facility elected to be represented by the International
Association of Bridge, Structural and Ornamental Iron Workers, AFL-CIO.
The Company is negotiating the terms of an initial contract but cannot
predict the outcome of such negotiations.
18. Fair Value of Financial Instruments:
The carrying amounts reported in the balance sheets for cash and cash
equivalents, accounts receivable, funds held by trustee for capital
expenditures, note payable, and accounts payable approximate their fair
market values.
The fair value of the Company's term debt was estimated using quoted
market rates for similar debt or a discounted cash flow analysis based
upon the Company's estimated incremental borrowing rates for similar
types of debt. The fair value of the term debt at March 31, 1996 was
estimated to approximate the carrying amount reported in the balance
sheets.
33
<PAGE> 34
RAVENS METAL PRODUCTS, INC.
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
for the years ended March 31, 1996, 1995 and 1994
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E
-------- -------- -------- -------- --------
Additions
----------------------------
Balance at Charged to Charged to
Beginning Cost and Other Balance at
Description of Period Expenses Accounts Deductions(A) End of Period
----------- ---------- ---------- ---------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Allowance for doubtful accounts
Period ended:
March 31, 1996 $ 60,000 $ 36,969 0 $ 11,969 $ 85,000
March 31, 1995 175,000 38,833 0 153,833 60,000
March 31, 1994 35,000 154,653 0 14,653 175,000
</TABLE>
(A) Uncollectible accounts written off, subsequently collected or deemed
collectible.
34
<PAGE> 35
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
There was no change in independent accountants between April 1,
1995 and the date of this filing.
35
<PAGE> 36
Part III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The directors and executive officers of the Company are listed
below:
<TABLE>
<CAPTION>
Name Age Since Position
- ---- --- ----------- ----------------
<S> <C> <C> <C>
Jacob Pollock 71 May 3, 1991 Chairman of the Board, Chief
(term expires in 1996) Executive Officer, and Treasurer
Nicholas T. George 51 May 3, 1991 Secretary and Director
(term expires in 1997)
David A. Simia 54 May 3, 1991 Assistant Treasurer, Assistant
(term expires in 1997) Secretary, and Director
Richard D. Pollock 40 May 3, 1991 Director
(term expires in 1998)
C. Stephen Clegg 45 May 3, 1991 Director
(term expires in 1998)
Lowell P. Morgan 61 July 1, 1991 President
John J. Stitz 40 July 22, 1991 Chief Financial Officer and
Vice President
</TABLE>
Mr. Jacob Pollock has been Chairman of the Board of Directors, Chief
Executive Officer, and Treasurer since May 3, 1991, the date he acquired
controlling interest in the Company. He has been Chairman of the Board and
President of J. Pollock & Company, a company principally engaged in the sale of
aluminum, private investment, and consulting, since April 1989. He was Chief
Executive Officer of Barmet Aluminum Corporation, an aluminum company, from
1949-1989. He serves as a Director of Mid-West Spring Manufacturing Company,
Inc., Diamond Home Services, Inc. and several nonpublic companies.
Mr. George, an Attorney, has been President of the law firm of Nicholas T.
George & Associates since 1979. He is a Director of Summit Bank.
Mr. Simia, a Certified Public Accountant, has served as Vice President
Finance of J. Pollock & Company since September 1989 and as Vice President of
Wirt Aluminum Co. since May 1991. He was a partner with Kopperman & Wolf, CPAs
from 1983-1989 and Touche Ross & Co., CPAs from 1976-1983.
36
<PAGE> 37
Mr. Richard Pollock has served as President of Wirt Aluminum Co. since May
1991 and as a Vice President of J. Pollock & Company since February 1990.
Prior to joining J. Pollock & Company, he was employed as a Vice President and
then President of Barmet Aluminum Corporation for more than five years.
Richard Pollock is the son of Jacob Pollock.
Mr. Clegg is President of Clegg Industries, Inc., a private investment
firm founded by C. Stephen Clegg in September 1988 for the purpose of enabling
certain investors to make equity investments in leveraged buyout transactions.
Prior to founding Clegg Industries, Inc., he served from 1978-1988 as Managing
Director of AEA Investors, Inc., a firm involved in organizing business
mergers, acquisitions and leveraged buyouts. He is Chairman of the Board of
Directors of Mid-West Spring Manufacturing Company, Inc. and Diamond Home
Services, Inc. and a Director of Birmingham Steel Corporation.
Mr. Morgan had previously been employed by the Company from 1959 to 1983.
During his former tenure with the Company, he served as an officer and director
for many years. Subsequently, he was Product Manager for East Manufacturing
Corporation from 1983-1990 and Vice President of Travis Body and Trailer, Inc.
from 1990-1991. All of his former employers manufactured truck trailers.
Mr. Stitz, a Certified Public Accountant, received an M.B.A. degree from
the Wharton School of the University of Pennsylvania in 1988 and a B.S. degree
in Accounting from Wake Forest University in 1978. He served as Chief
Financial Officer of Environmental Tectonics Corporation, a manufacturer, from
1988-1989 and as Assistant to the Chairman of Strick Companies, a manufacturer
and lessor of truck trailers, in 1990. He was employed by Coopers & Lybrand,
CPAs from 1978-1984.
Officers serve at the pleasure of the Board of Directors without specific
terms of office.
Compliance with Section 16(a) of the Exchange Act
Based solely upon a review of copies of Forms 3, 4 and 5 furnished to the
Company during or with respect to the fiscal year ended March 31, 1996, the
Company is not aware of any person subject to Section 16 of the Securities
Exchange Act of 1934 with respect to the Company that failed to file on a
timely basis reports required by Section 16(a) during the most recent fiscal
year or prior fiscal years.
37
<PAGE> 38
ITEM 11. EXECUTIVE COMPENSATION
Jacob Pollock, Chief Executive Officer, has not received any cash or
noncash compensation since acquiring control of the Company on May 3, 1991.
Effective April 1, 1994, the Company entered into a management agreement
whereby J. Pollock & Company provides general management services for an annual
management fee of $150,000 payable in monthly installments of $12,500.
The following table discloses compensation in excess of $100,000 awarded
to, earned by or paid to any executive officer during the fiscal year ended
March 31, 1996; no executive officer of the Company, other than Jacob Pollock,
received compensation in excess of $100,000 during the fiscal years ended March
31, 1995 and 1994:
<TABLE>
<CAPTION>
Name and Principal All Other
Position Year Salary Bonus Compensation (1)
------------------ ---- ------ ----- ----------------
<S> <C> <C> <C> <C>
Lowell P. Morgan 1996 $82,300 $21,945 $1,042
President
</TABLE>
(1) Amount contributed to Mr. Morgan's account in the Company's 401(k)
plan.
In 1993, the Company adopted a Stock Option Plan which provides for the
granting of options to acquire up to 50,000 shares of the Company's common
stock. The Plan authorizes the granting of incentive stock options to
employees of the Company and nonqualified stock options to employees, officers
and directors, whether or not on the Company's payroll or otherwise paid for
services. The Plan provides that the option price shall not be less than 100%
of the current market price of the stock on the date of the grant and that the
term of the option shall be fixed at the date of the grant. The Plan
terminates on July 7, 2003. Jacob Pollock and Richard Pollock are not eligible
to participate in the Stock Option Plan.
In 1995, Lowell P. Morgan and David A. Simia were each granted options to
purchase 2,500 shares of common stock and C. Stephen Clegg and Nicholas T.
George were each granted options to purchase 250 shares of common stock. The
options have an exercise price of $4.00 per share and expire on April 7, 1999.
Directors of the Company are paid $1,000 for Board of Directors meetings
which they attend. Additional compensation is not paid for committee meetings.
38
<PAGE> 39
Compensation Committee Interlocks and Insider Participation
The Compensation Committee of the Company's Board of Directors consists of
Jacob Pollock, Chief Executive Officer, and C. Stephen Clegg. Mr. Pollock is a
Director and Mr. Clegg is Chairman of the Board of Directors of Mid-West Spring
Manufacturing Company, Inc. and Diamond Home Services, Inc., public companies,
and Globe Building Products, Inc., a nonpublic company. Mr. Pollock is a
member of the Compensation and Benefits Committee of the Board of Directors of
Mid-West Spring Manufacturing Company, Inc.
Report of Compensation Committee
The Company has not provided compensation for services performed by Jacob
Pollock, except pursuant to the management agreement with J. Pollock & Company
described above. Mr. Pollock hopes that the value of his shareholdings in the
Company will increase. The Committee has not formulated policies for
compensation to Mr. Pollock or other executive officers which relate
compensation to corporate performance. The compensation of each executive
officer is determined by negotiation between the executive officer and Mr.
Pollock subject to the approval of the Committee and the Board of Directors.
By: Jacob Pollock, Chairman
C. Stephen Clegg
A performance graph is not provided because it has not been established
that there has been a cumulative total shareholder return on the Company's
common stock. See Item 5.
39
<PAGE> 40
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The only owner of record or holder, to the knowledge of the Company as of
June 25, 1996, of more than 5% of the Company's Common Stock is set forth in
the following table:
<TABLE>
<CAPTION>
Amount and Nature
Title of Name and address of of Beneficial Percent
Class Beneficial Owner Ownership of Class
----- ---------------- --------------------- --------
<S> <C> <C> <C>
Common Jacob Pollock 1,685,803(1) 86.74%
Stock 861 E. Tallmadge Avenue
Akron, Ohio 44310
</TABLE>
(1) Jacob Pollock has sole voting and investment power with respect to the
listed shares.
The following shows the ownership of the Company's Common Stock
beneficially owned directly or indirectly by each director and nominee, and by
all directors and officers of the Company as a group as of June 25, 1996:
<TABLE>
<CAPTION>
Amount and Nature
Title of Name of of Beneficial Percent
Class Beneficial Owner Ownership of Class
----- ---------------- --------------------- --------
<S> <C> <C> <C>
Common Jacob Pollock 1,685,803(2) 86.74%
Stock Nicholas T. George 30,000(3) 1.54%
C. Stephen Clegg 0 0.00%
David A. Simia 253(2) 0.01%
Richard D. Pollock 40,000(3) 2.06%
All directors and
officers as a group
(7 persons). 1,726,056 88.81%
</TABLE>
(2) Each person has sole voting and investment power with respect to the
listed shares.
(3) 30,000 shares are held in an irrevocable trust for the benefit of
Richard Pollock's children. Richard Pollock and Nicholas T. George, as
co-trustees, equally share voting and investment power with respect to these
shares. The remaining 10,000 shares listed for Richard Pollock are owned by
his spouse; Mr. Pollock disclaims beneficial ownership of these shares.
No preferred stock is currently outstanding.
40
<PAGE> 41
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On August 14, 1995, the Company entered into a supply agreement expiring
on August 14, 2002 with Wirt Aluminum Co. (formerly Wirt Metal Products,
Inc.)("Wirt"), pursuant to which the Company has the right to purchase from
Wirt, at competitive prices up to 60% of the Company's requirements for
aluminum extrusions manufactured to the Company's specifications and used by
the Company in the manufacture of its aluminum truck and utility trailers.
Jacob Pollock ("Pollock") is a Director of the Company and owns approximately
86.7% of the common stock of the Company and owns 75% of Wirt. His wife owns
25% of Wirt. Richard Pollock, a Director of the Company, is the President of
Wirt. The Company purchased aluminum extrusions totalling $4,618,400 in 1996
from Wirt of which $425,000 was owed Wirt at March 31, 1996. The Company sold
aluminum scrap to Wirt in 1996 totalling $177,089 of which $12,531 was owed to
the Company at March 31, 1996.
The Company and certain other persons and business entities affiliated
with the Company and Wirt have jointly and severally guaranteed approximately
$2,115,000 of State of Ohio Economic Development Revenue Bonds (Ohio Enterprise
Bond Fund) Series 1995-2 (Wirt Aluminum Co.) and approximately $2,500,000 of
State of Ohio "Section 166 Project Funds".
J. Pollock & Company, wholly owned by Pollock, purchases materials and
provides or contracts for certain administrative services for the Company and
charges the Company at its cost. Such transactions totalled $99,164 in 1996 of
which $21,772 was owed at March 31, 1996. J. Pollock & Company provided
general management services in 1996 for an annual management fee of $150,000
payable in monthly installments of $12,500.
The Company leases office space from a corporation in which Richard
Pollock and Bruce Pollock are shareholders. The lease is for five years
expiring December 31, 1996 at a monthly base rent of $1,500 with annual
increases determined by the change in the Consumer Price Index, plus the
Company's share of utilities, real estate taxes, insurance, and property
maintenance. The Company paid $25,546 in 1996. Richard Pollock and Bruce
Pollock are sons of Jacob Pollock.
The Company purchased aluminum materials from The Aluminum Warehouse,
Inc., of which Richard Pollock owns 40% and a trust for the benefit of Bruce
Pollock and the children of Richard Pollock owns 60%, totalling $103,083 in
1996, of which $10,984 was owed at March 31, 1996. Nicholas T. George, a
Director of the Company, is the trustee of the trust.
The Company hired and paid for temporary personnel from Flex-Team, Inc.,
of which Pollock is a principal shareholder, totalling $613,882 in 1996.
The Company purchased and paid for raw materials from Signs & Blanks,
Inc., wholly owned by Pollock, totalling $7,892 in 1996.
Management believes that amounts incurred by the Company for the above
transactions are reasonable in light of market conditions.
41
<PAGE> 42
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) 1. The financial statements and notes thereto listed in Item 8, page 13
are incorporated herein by reference.
(a) 2. The financial statement schedules listed in Item 8, page 13 are
incorporated herein by reference.
(a) 3. Exhibits:
Exhibit No. Item
3 (i) Restated Certificate of Incorporation.
3 (ii) Registrant's By-laws as amended were filed as
Exhibit 3(iv) to Registrant's Annual Report on
Form 10-K for the fiscal year ended March 31,
1992 and are incorporated herein by reference.
10 (i) Management Agreement dated April 1, 1994 between
J. Pollock & Company and Registrant was filed as
Exhibit 10(vii) to Registrant's Quarterly Report
on Form 10-Q for the quarter ended December 31,
1994 and is incorporated herein by reference.
10 (ii) Loan Agreement dated as of December 1, 1994
between the Registrant and City of Kent, Ohio was
filed as Exhibit 10(a) on Form 8-K dated December
12, 1994 and is incorporated herein by reference.
10 (iii) Promissory Note dated December 13, 1994 from the
Registrant to the City of Kent, Ohio was filed as
Exhibit 10(b) on Form 8-K dated December 12, 1994
and is incorporated herein by reference.
10 (iv) Loan Agreement dated June 26, 1995 between the
Registrant and First National Bank of Ohio was
filed as Exhibit 10(iv) to Registrant's Annual
Report on Form 10-K for the fiscal year ended
March 31, 1995 and is incorporated herein by
reference.
10(v) Reimbursement Agreement dated June 26, 1995
between the Registrant and First National Bank of
Ohio was filed as Exhibit 10(v) to Registrant's
Annual Report on Form 10-K for the fiscal year
ended March 31, 1995 and is incorporated herein
by reference.
42
<PAGE> 43
10 (vi) Supply Agreement dated as of August 14, 1995
between Wirt Aluminum Co. and Ravens Metal
Products, Inc. was filed as Exhibit 99(a) on Form
8-K dated August 21, 1995 and is incorporated
herein by reference.
10 (vii) Guaranty Agreement dated as of July 1, 1995 and
executed by the Company on August 14, 1995 among
Wirt Aluminum Co., J. Pollock & Company, Ravens
Metal Products, Inc., Signs And Blanks, Inc.,
Jacob Pollock, Gertrude Pollock, Richard D.
Pollock, The Provident Bank, as trustee, and The
Director of Development of the State of Ohio was
filed as Exhibit 99(b) on Form 8-K dated August
21, 1995 and is incorporated herein by reference.
23 Consent of Independent Accountants
27 Financial Data Schedule
Executive Compensation Plans and Arrangements
The Registrant's executive compensation plans and arrangements
required to be filed as exhibits are listed under Exhibit 10 above.
(b) Reports on Form 8-K:
No reports on Form 8-K were filed in the quarter ended March 31,
1996.
43
<PAGE> 44
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
Date June 27, 1996 RAVENS METAL PRODUCTS, INC.
----------------------
By: /S/ Jacob Pollock
------------------------------
(Jacob Pollock, Chief
Executive Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the date indicated.
<TABLE>
<S> <C> <C>
Date June 27, 1996 /S/ Jacob Pollock
--------------------- ----------------------------------
Jacob Pollock, Director and
Chief Executive Officer
Date June 27, 1996 /S/ Nicholas T. George
--------------------- --------------------------------
Nicholas T. George, Director
Date
--------------------------- -----------------------------------------
C. Stephen Clegg, Director
Date June 27, 1996 /S/ David A. Simia
--------------------- ----------------------------------
David A. Simia, Director
Date June 27, 1996 /S/ Richard D. Pollock
--------------------- --------------------------------
Richard D. Pollock, Director
Date June 27, 1996 /S/ Lowell P. Morgan
--------------------- -------------------------------
Lowell P. Morgan, President
Date June 27, 1996 /S/ John J. Stitz
--------------------- ----------------------------------
John J. Stitz, Chief Financial
Officer and Chief Accounting
Officer
</TABLE>
44
<PAGE> 1
EXHIBIT 3(i)
RESTATED CERTIFICATE OF INCORPORATION
OF RAVENS METAL PRODUCTS, INC.
Pursuant to Section 245 of the
General Corporation Law of the State of Delaware
I, Lowell P. Morgan, do hereby certify as follows:
1. Ravens Metal Products, Inc. (the "Company") was organized as a
corporation under the laws of the State of Delaware by the
filing of an original Certificate of Incorporation with the
Secretary of State of the State of Delaware on September 3,
1986. The Company's name has remained unchanged throughout
the term of its existence.
2. This Restated Certificate of Incorporation has been duly
adopted by the Board of Directors of the Company, in
accordance with Section 245 of the General Corporation Law of
the State of Delaware.
3. This Restated Certificate of Incorporation only restates and
integrates and does not further amend the provisions of the
Company's Certificate of Incorporation, as heretofore amended
or supplemented (by instruments filed with the Secretary of
State of the State of Delaware), and there is no discrepancy
between those provisions and the provisions of this Restated
Certificate of Incorporation.
4. This Restated Certificate of Incorporation is set forth as
follows:
ARTICLE 1
The name of the corporation (the "Corporation") is Ravens Metal
Products, Inc.
ARTICLE 2
The address of the registered office in Delaware of the Corporation is
1209 Orange Street, Wilmington, New Castle County, Delaware 19801. The name
and address of the registered agent of the Corporation are The Corporation
Trust Company, Corporation Trust Center, 1209 Orange Street, Wilmington, New
Castle County, Delaware 19801.
45
<PAGE> 2
ARTICLE 3
The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of Delaware, including, without limitation, the fabrication of equipment,
goods and merchandise, and the design and development of the means and
equipment for improved fabricating methods, and in general the buying and
selling, designing, developing and manufacturing of products, goods,
equipments, wares and merchandise.
ARTICLE 4
The Corporation may have and maintain offices at such places within
and without Delaware as the Board of Directors of the Corporation may determine
from time to time.
ARTICLE 5
The aggregate number of shares which the Corporation shall have
authority to issue is Three Million Three Hundred Thousand (3,300,000) shares,
of which Three Million (3,000,000) shares shall be Common Stock having a par
value of One Penny ($.01) per share, and Three Hundred Thousand (300,000)
shares shall be Preferred Stock having a par value of One Penny ($.01) per
share.
The Board of Directors of the Corporation is authorized, subject to
limitations prescribed by law and the provisions of this Article, to provide
for the issuance of shares of Preferred stock in series, and by filing a
certificate pursuant to the applicable law of the State of Delaware, to
establish from time to time the number of shares to be included in each such
series, and to fix the designation, powers, preferences and rights of the
shares of each such series and the qualifications, limitations or restrictions
thereof.
The authority of the Board of Directors with respect to each series
shall include all rights conferred by the General Corporation Law upon
directors, including, but not limited to, determination of the following:
(a) The number of shares constituting that series and the
distinctive designation of that series;
(b) The dividend rate on the shares of that series, whether
dividends shall be cumulative, and, if so, from which date or
dates, and the relative rights or priorities, if any, of
payment of dividends on shares of that series;
(c) Whether the shares of that series shall have voting rights in
addition to the voting rights provided by law, and, if so, the
terms of such voting rights;
(d) Whether the shares of that series shall have conversion
privileges, and, if so, the terms and conditions of such
privileges, including provision for adjustment of conversion
rate(s) in relation to such events as the Board of Directors
shall determine;
46
<PAGE> 3
(e) Whether the shares of that series shall be redeemable, and, if
so, the terms and conditions of such redemption, including the
date or dates upon or after which they shall be redeemable,
and the amount per share payable in case of redemption, which
amount may vary under different conditions and at different
redemption dates;
(f) Whether there shall be a sinking fund for the redemption or
purchase of shares of that series, and, if so, the terms and
amount of such sinking fund;
(g) The rights of the shares of that series in the event of
voluntary or involuntary liquidation, dissolution or winding
up of the Corporation, and the relative rights of priority, if
any, of payment of shares of that series; and
(h) Any other relative rights, preferences and limitations of that
series now or hereafter permitted by law.
Dividends declared on outstanding shares of Preferred Stock shall be
set apart for payment or paid before any dividend shall be declared or set
apart for payment or paid on the Common Stock with respect to the same dividend
period.
If upon any voluntary or involuntary liquidation, dissolution or
winding up of the Corporation, the assets available for distribution to holders
of shares of Preferred Stock of all series shall be insufficient to pay such
holders the full preferential amount to which they are entitled, then such
assets shall be distributed ratably among the shares of all series of Preferred
Stock in accordance with the respective preferential amounts (including unpaid
cumulative dividends, if any) payable with respect thereto.
ARTICLE 6
One-third of the shares entitled to vote, represented in person or by
proxy, shall constitute a quorum at a meeting of stockholders. If voting by
classes is required, this provision shall apply with respect to each such
class.
ARTICLE 7
In addition to the powers conferred under the General Corporation Law,
the Board of Directors of the Corporation shall have power to adopt, amend, or
repeal the by-laws of the Corporation, subject to the right of the stockholders
of the Corporation entitled to vote with respect thereto to amend and repeal
by-laws adopted by the Board of Directors.
ARTICLE 8
The election of directors need not be by written ballot unless the
by-laws of the Corporation shall so provide.
47
<PAGE> 4
ARTICLE 9
Notwithstanding any other provision of this Certificate of
Incorporation or the by-laws of the Corporation (subject to this Article and in
addition to any other vote that may be required by law, this Certificate of
Incorporation or the by-laws of the Corporation), the affirmative vote of the
holders of at least two-thirds of the outstanding shares of the stock of the
Corporation entitled to vote shall be required (i) to amend, alter or repeal
any provision of this Certificate of Incorporation; (ii) to amend, alter or
repeal any by-law of the Corporation at any meeting of shareholders; (iii) for
the merger or consolidation of the Corporation with or into any other
corporation or business entity; (iv) for the sale, lease, exchange, mortgage,
pledge, transfer or other disposition (in one transaction or a series of
related transactions) of all or substantially all of the assets of the
Corporation; and (v) for the voluntary dissolution or liquidation of the
Corporation; provided, however, that the foregoing requirement shall not apply
if the Board of Directors of the Corporation has approved or consented to such
amendment, merger, consolidation, sale or other disposition of assets,
dissolution or liquidation.
ARTICLE 10
Except as otherwise provided in Section 102(b)(7) of the General
Corporation Law, as amended from time to time, or in any analogous provision of
any successor law, no director of the Corporation shall have personal liability
to the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director.
ARTICLE 11
The Corporation reserves the right to amend, alter, change or repeal
any provision contained in this Certificate of Incorporation, in the manner now
or hereafter prescribed by law, and all rights conferred herein upon
stockholders and directors are granted subject to this reservation.
48
<PAGE> 5
I, THE UNDERSIGNED, being the President hereinbefore named, do make,
file and record this Restated Certificate of Incorporation, do certify that the
facts herein stated are true and, accordingly, have hereunto set my hand this
22 day of February 1996.
/S/ Lowell P. Morgan
--------------------
Lowell P. Morgan, President
ATTESTED BY:
/S/ John J. Stitz
- ---------------------------------
John J. Stitz, Vice President and
Chief Financial Officer
49
<PAGE> 1
EXHIBIT 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statement of
Ravens Metal Products, Inc. on Form S-8 filed June 6, 1994 of our report dated
June 4, 1996 on our audits of the financial statements and financial statement
schedule of Ravens Metal Products, Inc. as of March 31, 1996 and 1995, and for
each of the years ended March 31, 1996, 1995 and 1994, which report is included
in this Annual Report on Form 10-K.
/S/ COOPERS & LYBRAND L.L.P.
Akron, Ohio
June 24, 1996
50
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-K
FOR THE FISCAL YEAR ENDED MARCH 31, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-START> APR-01-1995
<PERIOD-END> MAR-31-1996
<CASH> 441,890
<SECURITIES> 0
<RECEIVABLES> 4,763,629
<ALLOWANCES> 85,000
<INVENTORY> 6,356,353
<CURRENT-ASSETS> 11,949,025
<PP&E> 9,844,615
<DEPRECIATION> 2,859,626
<TOTAL-ASSETS> 21,886,535
<CURRENT-LIABILITIES> 6,048,998
<BONDS> 11,994,996
0
0
<COMMON> 19,435
<OTHER-SE> 3,420,655
<TOTAL-LIABILITY-AND-EQUITY> 21,886,535
<SALES> 40,238,755
<TOTAL-REVENUES> 40,352,884
<CGS> 35,726,311
<TOTAL-COSTS> 35,726,311
<OTHER-EXPENSES> 3,705,025
<LOSS-PROVISION> 36,969
<INTEREST-EXPENSE> 616,037
<INCOME-PRETAX> 305,511
<INCOME-TAX> 110,973
<INCOME-CONTINUING> 194,538
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 194,538
<EPS-PRIMARY> .10
<EPS-DILUTED> .10
</TABLE>
