<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
For the fiscal year ended Commission File
March 31, 1997 No. 0-1709
- ------------------------- ---------------
RVM INDUSTRIES, INC.
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(Exact name of registrant as specified in its charter
Delaware 31-1515410
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification Number)
P.O. Box 10002, 861 E. Tallmadge Avenue, Akron, Ohio 44310
- ---------------------------------------------------- -----------
(Address of principal executive offices) (Zip Code)
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
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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
25, 1997, based on a bid price of $4.50 by the Registrant's market maker was
approximately $8,704,148.
There were 1,934,255 shares outstanding of the Registrant's common stock as of
June 25, 1997.
Documents Incorporated by Reference
-----------------------------------
None
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RVM INDUSTRIES, INC.
Index to Annual Report on Form 10-K
for the Fiscal Year Ended March 31, 1997
PART I Pages
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Item 1 Business 3 - 8
Item 2 Properties 9
Item 3 Legal Proceedings 10
Item 4 Submission of Matters to a Vote of Security Holders 10
PART II
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Item 5 Market for Registrant's Common Equity and
Related Stockholder Matters 11
Item 6 Selected Financial Data 12
Item 7 Management's Discussion and Analysis of
Financial Condition and Results of Operations 13 - 15
Item 8 Financial Statements and Supplementary Data 16 - 43
Item 9 Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 44
PART III
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Item 10 Directors and Executive Officers of the Registrant 45 - 47
Item 11 Executive Compensation 48 - 50
Item 12 Security Ownership of Certain Beneficial Owners
and Management 51
Item 13 Certain Relationships and Related Transactions 52
PART IV
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Item 14 Exhibits, Financial Statement Schedules, and
Reports on Form 8-K 53 - 55
2
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PART I
ITEM 1. BUSINESS
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Companies
- ---------
RVM Industries, Inc. ("RVM") is a publicly held holding company.
Ravens, Inc. ("Ravens"), Albex Aluminum, Inc. ("Albex"), and Signs and Blanks,
Inc. ("SABI") are wholly owned subsidiaries of RVM. The "Company" refers to
RVM, Ravens, Albex and SABI, collectively. See Note 19 to theconsolidated
financial statements for financial information about industry segments.
Fiscal Year
- -----------
RVM's fiscal year ends on March 31. References to 1997, 1996, etc.
are for the fiscal years ended March 31, 1997, 1996, etc., respectively.
General Development of the Business
- -----------------------------------
Ravens Metal Products, Inc. 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.
On March 31, 1997, Ravens Metal Products, Inc. changed its name to
Ravens, Inc. and effected a reorganization with RVM pursuant to Section 251(g)
of the Delaware General Corporation Law. Each holder of the common stock of
Ravens became the holder of an equal number of shares of RVM, a newly created
holding company. The holders of RVM common stock have substantially the same
rights that they had as holders of the common stock of Ravens. RVM filed Form
8-B on March 31, 1997 to register the common stock shares of RVM with the
Securities and Exchange Commission.
On March 31, 1997, RVM purchased all of the common stock of Albex and
SABI which were corporations wholly owned by Pollock, the majority shareholder
of RVM. Since this is a business combination of entities under common control,
the financial statements of prior years have been restated to reflect the
combination on an "as if pooling of interests" basis.
RVM acquired Albex and SABI because these companies, like Ravens,
utilize aluminum as the major material in their products, and RVM believes that
access to capital markets and the trading value of RVM's common stock may be
enhanced by increasing the size of RVM. The purchase prices of Albex and SABI
are contingent upon future earnings of Albex and SABI. See Note 2 to the
consolidated financial statements.
Albex was incorporated in the State of Ohio on February 25 1991, as
Wirt Metal Products, Inc., relocated its operations from Elizabeth, West
Virginia to Canton, Ohio in 1996, and changed its name in 1997 to better reflect
its business of manufacturing aluminum billets and extrusions. Albex purchased
the real estate and an extrusion press in Elizabeth from Ravens prior to Pollock
purchasing a majority interest in Ravens.
SABI was founded by Pollock and incorporated in the State of Ohio on
July 10, 1989.
3
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Markets
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Ravens
------
The principal business of Ravens is the design and manufacture of
truck trailers, consisting of platform (flatbed) trailers, dump trailers, and
dump truck bodies. Since the late 1950s, Ravens has designed and manufactured
durable, lightweight aluminum trailers and bodies which provide the advantage of
lower operating costs plus higher legal payload capacity. Although Ravens'
products are primarily made with aluminum bodies and aluminum chassis, Ravens
also manufactures units with steel chassis. Ravens' truck trailers are basically
standardized products with a number of optional features available; however,
certain variations are often made to satisfy customers' requirements. Ravens
also manufactures truck and trailer accessories, including tool boxes, side kits
and boxes, bulkheads and other optional equipment. Ravens sells a wide variety
of after-market parts for trucks and trailers, including parts for its own
trailers. Ravens began selling aluminum utility, snowmobile, and personal
watercraft trailers in 1995 but exited this business in 1997.
The markets for Ravens' 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. These markets include 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 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 overall business of Ravens
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 but declined in 1997. 1998 sales are
expected to remain below 1995 and 1996 levels but at sufficient levels to
sustain Ravens' profitability.
ALBEX
-----
Albex operates three extrusion presses (1,400 ton, 2,200 ton, and
3,000 ton) for standard and custom soft alloy aluminum extruded shapes. In 1997,
Albex shipped approximately 10 million pounds of aluminum extrusions in a market
estimated to exceed 3 billion pounds. Several of aluminum's physical properties
such as tensile strength, corrosion resistance, thermal conductivity, lighter
weight than steel, and scrap value for recycling are attractive to a wide range
of markets. Albex sells to manufacturers, fabricators and distributors in the
transportation, building and construction, consumer durables, and other aluminum
extrusion markets. Most sales are to customers in the midwestern portion of the
U.S. Albex's business is not generally seasonal.
4
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Applications in the transportation market include truck trailers and
bodies, utility trailers, recreational vehicles, and railcars. Approximately
one-third of Albex's net sales from 1995 to 1997 have been to Ravens. These
sales and intercompany inventory profits have been eliminated from the
consolidated financial statements.
Primary uses in the building and construction markets are structural
beams and components for buildings, road sign supports, and components for
highway and bridge construction. Examples of consumer durables are components
for boats, sports and exercise equipment, greenhouses, and durable medical
equipment. Albex produces a wide variety of standard shapes such as angles,
bars, channels, pipes, and beams that are purchased by distributors for resale
to end users.
Having reduced Ravens portion of the extrusion business from 100% to
approximately one-third by obtaining new customers, Albex constructed an
aluminum billet casting facility in 1997 in order to recycle aluminum scrap
generated internally and purchased from suppliers into aluminum billet to be
used for producing extrusions and to sell to customers. Albex began producing
billet at the end of 1997 and expects to complete installation of raw material
(aluminum scrap) handling equipment in 1998 at which time the billet facility
will be fully operational.
SABI
----
SABI is a fully automated manufacturer of aluminum blanks; coated
traffic, warning, and street signs; and distributes sign posts to a market
approximating $350 million per year. Approximately two-thirds of SABI's sales
are to fabricator/dealers who purchase aluminum blanks, coat them with
reflective sheeting that is often silk screened, and then sell the finished
signs to governmental agencies. Approximately one third of SABI's sales are
directly to governmental agencies in the form of blanks or signs coated and silk
screened by SABI's print shop. Most sales are to customers east of the
Mississippi River with a small portion to Canada. SABI's business is not
generally seasonal.
Backlog
- -------
Ravens' backlog of orders for new trailers amounted to approximately
$5,700,000 at May 31, 1997 compared to approximately $5,000,000 at May 31, 1996.
The backlog is expected to be completed in the current fiscal year. The order
backlogs for the extrusion and sign industries are not relevant due to the
nature of the industries and customers. These backlogs tend to be low and of
short duration.
Distribution And Service
- ------------------------
Ravens
------
Ravens sells and services truck trailers nationally through 55
trailer dealerships located in 32 states and 4 dealerships located in Canada.
Ravens owns trailer and parts sales branches located in Dover, Ohio and
Parkersburg, West Virginia. In addition, Ravens has regional sales managers who
support the dealerships and solicit direct sales from fleet customers.
5
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Service and maintenance on Ravens' products are performed by its
Dover, Ohio service branch. Company approved garages, repair shops, and
customers are also authorized to service its products.
Ravens 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 6 to the consolidated financial statements as to
contingent liabilities with respect to these notes.
Ravens accepts used trailers as trade-ins on sales of new trailers
and purchases used trailers for resale. Ravens generally reconditions these used
trailers when necessary and holds them for resale. Ravens does not generally
lease trailers.
Albex
-----
Albex utilizes its own sales force and manufacturer representatives
to solicit orders from distributors and other customers. Albex also tolls metal
owned by customers into extrusions.
SABI
----
SABI solicits sales mainly through telephone contacts with customers
and through independent sales representatives.
Raw Materials
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Aluminum in the form of coil, sheet, plate, primary ingot, billet and
scrap is the principal raw material used by the Company. The Company also
purchases components such as reflective sheeting, tires, wheels, axles and other
hardware items. The Company is not dependent upon any single supplier for
aluminum or other raw materials and components; however, a significant increase
in the price or an interruption in the supply of aluminum could adversely affect
the Company.
Competition
- -----------
Ravens
------
Ravens 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.
Ravens 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.
6
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Ravens, particularly, is recognized as a leading manufacturer of
aluminum platform trailers. Ravens 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. Ravens believes, based upon 1997
estimates of units registered, that Ravens' market share was approximately 35%
and that East Manufacturing Corporation, Benson Truck Bodies, Inc., and
Reitnouer, Inc. had market shares of approximately 20%, 14% and 23%,
respectively. Ravens 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.
Ravens commenced production of platform trailers in its Kent, Ohio
facility in June 1995 and in October 1996 introduced the FleetHawk, a platform
trailer designed to compete more effectively against composite trailers sold to
the more cost conscious fleet customer. The FleetHawk is heavier but less
expensive than the Eclipse II Classic. Ravens believes that the higher initial
cost of the FleetHawk can be more than recovered through lighter weight and
lower operating costs than the composite trailer offered by competitors. Ravens
also introduced an aluminum flatbed truck body with the same features as the
Eclipse II Classic flatbed (platform) trailer.
Albex
-----
The aluminum extrusion industry is highly competitive with over 100
companies participating in North America. Large, vertically integrated producers
of primary aluminum such as Alumax, Inc. and Kaiser Aluminum Corp. dominate the
industry. Major independent aluminum extruders such as Easco, Inc. operate
multiple facilities on a nationwide basis. Competition is based upon the ability
to supply a quality product at a competitive price but is primarily regional in
nature due to shipping costs. Albex is able to compete well within a 400 mile
radius of its facility due to its ability to cast billet, provide short customer
order to shipment times, and provide a wide variety of shapes.
SABI
----
SABI believes that it is one of the five largest companies who
together account for approximately 25% of the sign market and that its market
share approximates 5-6%. The other four companies are AmSign Corporation, Hall
Signs, Inc., Newman Traffic Signs, Inc. ("Newman"), and Vulcan, Inc. Newman
competes against SABI in all geographic markets, whereas the others are strong
in particular geographic areas. A large number of other manufacturers,
fabricator/dealers, and governmental sign shops account for the other 75% of the
sign market.
Patents and Trademarks
- ----------------------
Ravens has a registered trademark for its swirl design finish on its
manufactured products. Ravens believes that the swirl finish is a cosmetic
feature which favorably distinguishes its trailers and bodies from competitors'
products.
7
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Employees
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The Company currently employs approximately 375 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 under an
agreement which expires in April 1998. 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. The United Steelworkers
of America represent the hourly employees at the Canton, Ohio facility under an
agreement which expires in May 1998. SABI's hourly employees are represented
under an agreement expiring in December 1997 with The Glass Molders Pottery
Plastics and Allied Workers International Union, AFL-CIO.
Regulation
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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. RVM 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 RVM 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.
8
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ITEM 2. PROPERTIES
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Ravens' corporate offices are located in Akron, Ohio. Ravens 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.
Ravens owns 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.
Ravens commenced production in June 1995 at a 22 acre site owned by
Ravens 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.
RVM believes that Ravens has sufficient production capacity at the
Jacksonville and Kent facilities to meet current and projected demand for its
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. Ravens owns the land and buildings.
Ravens also owns land and buildings situated on approximately 9.2
acres adjacent to the branch facility in Dover, Ohio. In 1995 to 1997, Ravens
utilized 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. Ravens owns the land and building.
Albex owns a 47 acre site in Canton, Ohio. The extrusion operation
and administrative offices are located in a 250,000 square foot building
constructed primarily of brick. A 36,000 square foot prefabricated steel
building houses the billet casting operation. RVM believes that Albex has
sufficient production capacity to meet current and projected demand for its
products.
SABI operates in a 64,000 square foot predominantly steel and
concrete block building in Akron, Ohio. This is the same building that houses
Ravens' corporate offices. RVM believes that SABI has sufficient production
capacity to meet current and projected demand for its products.
Certain owned property of the Company is subject to mortgages and is
collateral for lines of credit and a letter of credit. (See Note 5 to the
consolidated financial statements).
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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. It is the opinion of management of RVM 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, 1997.
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PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
-----------------------------------------------------------------
MATTERS
-------
RVM's common stock (trading symbol "RVMI") 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 RVM is that the stock did not
actively trade until J. C. Bradford & Co., Nashville, Tennessee, telephone
1-800-522-1927, began making a market in the common stock in May 1996. The
bid-ask quotation ranged from $4.00 - $9.375 per share and was $4.50 - $6.50 per
share on June 25, 1997.
RVM 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 RVM's Board of Directors and will depend on, among other factors,
earnings, capital requirements and the operating and financial condition of the
Company. RVM 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 25, 1997. See Item 12.
11
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ITEM 6. SELECTED FINANCIAL DATA FOR THE YEARS ENDED MARCH 31
-----------------------
This information should be read in conjunction with the consolidated 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>
1997 1996 1995 1994 1993
-------- -------- -------- -------- ------
<S> <C> <C> <C> <C> <C>
Net sales $61,638,221 $61,793,870 $61,333,643 $42,569,932 $33,142,197
Income (loss) from operations 1,949,864 (5) (274,507) 2,624,801 1,375,988 689,199
Unusual (expense) income items (390,015) (6) 0 0 565,000 (4) 0
Income (loss) before income taxes
and extraordinary items 586,401 (1,354,680) 2,215,896 1,626,830 361,294
Extraordinary items 0 0 0 0 531,032 (2)
Net income (loss) 80,939 (1,465,653) 1,255,096 2,050,030 608,326
Pro forma net income (loss) per common share:
Before extraordinary items $.19 $(.45) $.72 $1.05 $ .45
Extraordinary items 0 0 0 0 1.20
----- ----- ----- ------ --------
Total (1) $.19 $(.45) $.72 $1.05 $1.65
==== ====== ==== ===== =====
Average number of shares used in
computation of per share amounts (1) 1,938,140 1,943,525 1,943,525 1,943,525 442,348
Supplementary pro forma income (loss)
per share data:
Before extraordinary items $.19 $(.45) $.73 $1.05 $.11
Extraordinary items 0 0 0 0 .27
----- ----- ------- ------ ------
Total (1)(3) $.19 $(.45) $.73 $1.05 $.38
==== ====== ==== ===== ====
Number of shares used in computation of
supplementary per share data (1) 1,938,140 1,938,140 1,938,140 1,938,140 1,938,140
Cash dividends declared per common share $ 0 $ 0 $ 0 $ 0 $ 0
Total assets 38,567,375 39,211,709 31,535,760 16,468,598 12,593,757
Total long-term obligations 18,440,498 17,853,851 13,226,854 8,771,310 6,307,693
Working capital 2,326,244 2,008,050 3,005,724 4,471,922 1,229,297
Shareholders' equity (deficit) 6,056,225 5,796,700 3,164,038 1,003,244 (246,034)
</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 in 1993 on debt to Pollock which was converted
to equity in 1993 was added to income before extraordinary items in 1993 to
compute supplementary data.
(4) Gain of $470,000 from a life insurance policy on the previous Chairman of
the Company, Rodney E. Wilson, and a gain of $95,000 for the settlement of
all disputes and obligations with Mr. Wilson.
(5) Includes loss of $371,768 for impairment of long-lived assets.
(6) Loss on pension settlement.
12
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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 $468,572 and $471,161 at
March 31, 1997 and 1996, respectively. The Company could have borrowed
approximately $1,645,000 more on lines of credit at March 31, 1997.
Albex expects to incur capital expenditures in 1998 of approximately
$2,000,000 to complete an aluminum billet casting facility and related material
handling equipment at its plant to be financed by lines of credit and cash
provided from operating activities.
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. Cautionary statements: Demand for the Company's products is
subject to changes in general economic conditions and in the specific markets in
which the Company competes. The Company's liquidity could be adversely affected
if Albex is not successful in completing the casting facility and generating
sufficient sales of billet.
Based upon sales for early 1998 and a sales order backlog for new
trailers approximating $5,700,000 at May 31, 1997, the Company is projecting
sufficient sales to maintain profitability and meet debt covenants in 1998.
However, see the cautionary statements in the above paragraph which indicate
items which could adversely affect profitability. The order backlogs for the
extrusion and sign industries are not relevant due to the nature of the
industries and customers. These backlogs tend to be low and of short duration.
1997
- ----
Net cash provided from operating activities of $2,454,394 and
$2,900,000 from a note payable to Jacob Pollock were used for capital
expenditures, mainly at the Albex facility, and to reduce other long-term debt.
Working capital increased to $2,326,244 at March 31, 1997 from $2,008,050 at
March 31, 1996. As discussed in Note 2 to the consolidated financial statements,
the purchase prices for Albex and SABI are not determinable until Albex's and
SABI's earnings for the year ended March 31, 2000 are known. The impact on the
Company's liquidity is not yet estimatable.
1996
- ----
Net cash used for operating activities of $594,296 and capital
expenditures at the Albex facility and at the Kent facility of Ravens were
financed by the proceeds of long-term debt, contributed capital from Pollock,
and lines of credit. Working capital decreased to $2,008,050 at March 31, 1996
from $3,005,724 at March 31, 1995.
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1995
- ----
Net cash provided from operating activities of $1,096,509 and
borrowings were used to finance capital expenditures, mainly for the Kent
facility. Working capital decreased to $3,005,724 at March 31, 1995 from
$4,471,922 at March 31, 1994.
RESULTS OF OPERATIONS
Years Ended March 31, 1997 and 1996
- -----------------------------------
Gross profit increased 43.0% to $8,655,193 in 1997 from $6,051,726 in
1996, and gross profit margin increased to 14.0% in 1997 from 9.8% in 1996 due
to improvements at all of the subsidiaries. Ravens and Albex did not have the
relocation and startup costs in 1997 that were incurred in 1996, and they began
to realize the cost savings and quality improvements resulting from the
construction of more efficient facilities. SABI increased its gross profit on
the same level of sales by concentrating on more profitable customers and
lowering costs. Gross profit at Ravens was adversely affected by losses at the
utility trailer division which was closed in 1997. In 1997, Albex recognized a
loss of $371,768 for the impairment of long-lived assets, mainly machinery and
equipment, and Ravens incurred a loss of $390,015 for the settlement of the
defined benefit pension plan for the former employees of the former Elizabeth,
West Virginia facility. See Note 7 to the consolidated financial statements for
a discussion of income taxes.
Years Ended March 31, 1996 and 1995
- -----------------------------------
Gross profit declined 26.0% to $6,051,726 in 1996 from $8,174,445 in
1995, and gross profit margin declined to 9.8% in 1996 from 13.3% 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 of Ravens, 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. Albex relocated its production facility from Elizabeth, West
Virginia to Canton, Ohio in 1996. In addition to the relocation and startup
costs, some customers switched their business to competitors because of their
concern about maintaining an uninterrupted supply of extrusions.
Selling, general and administrative expenses increased to 10.2% from
9.0% of net sales 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. Albex incurred additional marketing expenditures to retain current
customers and obtain new customers as well as expenses related to the relocation
of the Albex facility. Interest expense increased mainly due to more debt
outstanding during 1996 versus 1995.
14
<PAGE> 15
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; however, 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.
ACCOUNTING PRONOUNCEMENT
RVM is required to implement Statement of Financial Accounting
Standards No. 128, "Earnings per Share", in the third quarter of 1998. RVM
expects that the implementation of this pronouncement will not have a material
impact on its calculation of earnings per share.
15
<PAGE> 16
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
-------------------------------------------
Financial Statements: Pages
-----
Report of Independent Accountants 17
Consolidated Balance Sheets, March 31, 1997 and 1996 18 - 19
Consolidated Statements of Operations
for the years ended March 31, 1997, 1996 and 1995 20
Consolidated Statements of Changes in Shareholders'
Equity for the years ended
March 31, 1997, 1996 and 1995 21
Consolidated Statements of Cash Flows
for the years ended March 31, 1997, 1996 and 1995 22
Notes to Consolidated Financial Statements 23 - 42
Financial Statement Schedule:
II - Valuation and Qualifying Accounts and Reserves
for the years ended March 31, 1997, 1996 and 1995 43
All other schedules are omitted because they are not applicable or the
required information is presented in the financial statements or the notes
thereto.
16
<PAGE> 17
REPORT OF INDEPENDENT ACCOUNTANTS
---------------------------------
To the Shareholders and Board of Directors
RVM Industries, Inc.:
We have audited the consolidated financial statements and financial
statement schedule of RVM Industries, Inc. and Subsidiaries listed in Item 8 of
this Form 10-K. These consolidated financial statements and financial statement
schedule are the responsibility of the Company's management. Our responsibility
is to express an opinion on these consolidated 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 consolidated financial statements referred to
above present fairly, in all material respects, the consolidated financial
position of RVM Industries, Inc. and Subsidiaries as of March 31, 1997 and 1996
and the consolidated results of their operations and their cash flows for each
of the three years in the period ended March 31, 1997 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.
Cleveland, Ohio
June 6, 1997
17
<PAGE> 18
RVM INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31
-------------------
ASSETS 1997 1996
------ -------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 468,572 $ 471,161
Receivables:
Trade, net of allowance for doubtful
accounts of $112,000 and $103,000
in 1997 and 1996 6,506,008 6,928,495
Related party 120,008 23,897
Inventories 8,677,160 9,322,875
(Excess of replacement or current cost
over stated values was $1,955,000
and $2,051,000 in 1997 and 1996)
Refundable income taxes 0 42,639
Deferred income taxes 413,500 329,818
Other current assets 211,648 450,323
----------- -----------
Total current assets 16,396,896 17,569,208
Property, plant and equipment, net 19,021,289 16,698,911
Funds held by trustees for capital expenditures 2,762,242 4,523,347
Other assets 386,948 420,243
----------- -----------
Total assets $38,567,375 $39,211,709
=========== ===========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
18
<PAGE> 19
<TABLE>
<CAPTION>
RVM INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS, Continued
March 31
-------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY 1997 1996
----------- --------
<S> <C> <C>
Current liabilities:
Accounts payable - trade $ 6,151,924 $ 7,169,249
- related parties 382,338 93,168
Accrued expenses and liabilities:
Compensation 746,156 669,207
Product warranty 540,000 485,000
Income taxes 94,750 11,851
Other 937,071 824,830
Current portion of long-term debt 5,218,413 6,307,853
------------ ------------
Total current liabilities 14,070,652 15,561,158
Long-term debt 14,238,548 16,025,400
Notes payable - related parties 3,974,450 1,381,000
Other 0 275,293
Deferred income taxes 227,500 172,158
------------ ------------
Total liabilities 32,511,150 33,415,009
------------ ------------
Commitments and contingent liabilities
Shareholders' equity:
Common stock, $.01 par value; authorized shares,
3,000,000; issued 1,934,255 shares at
March 31, 1997 and 1,943,525 shares at
March 31, 1996 19,343 19,435
Additional capital 4,985,020 5,812,469
Retained earnings 1,051,862 180,458
------------ ------------
6,056,225 6,012,362
Unrecognized pension liability 0 (215,662)
------------ ------------
Total shareholders' equity 6,056,225 5,796,700
------------ ------------
Total liabilities and shareholders' equity $ 38,567,375 $ 39,211,709
============ ============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
19
<PAGE> 20
<TABLE>
<CAPTION>
RVM INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
For the years ended March 31, 1997 1996 1995
- ----------------------------- ----------- ----------- --------
<S> <C> <C> <C>
Net sales $ 61,638,221 $ 61,793,870 $ 61,333,643
Cost of sales 52,983,028 55,742,144 53,159,198
------------ ------------ ------------
Gross profit 8,655,193 6,051,726 8,174,445
Selling, general and administrative expenses 6,333,561 6,326,233 5,549,644
Impairment of long-lived assets 371,768 0 0
------------ ------------ ------------
Income (loss) from operations 1,949,864 (274,507) 2,624,801
Other income 131,074 140,117 121,027
Interest expense (1,061,336) (1,070,684) (529,932)
Loss on pension settlement (390,015) 0 0
Loss on disposal of property, plant and equipment (43,186) (149,606) 0
------------ ------------ ------------
Income (loss) before income taxes 586,401 (1,354,680) 2,215,896
Provision (benefit) for income taxes 505,462 110,973 960,800
------------ ------------ ------------
Net income (loss) $ 80,939 $ (1,465,653) $ 1,255,096
============ ============ ============
Pro forma income data:
Net income (loss) as reported $ 80,939 $ (1,465,653) $ 1,255,096
Pro forma income tax expense (benefit) (295,937) (599,976) (151,200)
------------ ------------ ------------
Pro forma net income (loss) $ 376,876 $ (865,677) $ 1,406,296
============ ============ ============
Pro forma net income (loss)
per common share $ .19 $ (.45) $ .72
============ ============ ============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
20
<PAGE> 21
<TABLE>
<CAPTION>
RVM INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
for the years ended March 31, 1997, 1996 and 1995
Un-
Common Retained recognized
Common Stock Additional Earnings Pension
Shares Amount Capital (Deficit) Liability Total
----------- -------- ------------ ----------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance at March 31, 1994 7,769,392 $77,694 $3,057,547 $(1,845,346) $(286,651) $1,003,244
Net income 1,255,096 1,255,096
Contributed capital 813,200 813,200
Change in unrecognized pension liability 92,498 92,498
Reclassification of undistributed net loss
of S-corporations (491,008) 491,008 0
----------- -------- ------------ ----------- ------------- -------------
Balance at March 31, 1995 7,769,392 77,694 3,379,739 (99,242) (194,153) 3,164,038
Net loss (1,465,653) (1,465,653)
Contributed capital 4,119,824 4,119,824
Change in unrecognized pension liability (21,509) (21,509)
Reclassification of undistributed net loss
of S-corporations (1,745,353) 1,745,353 0
One-for-four reverse stock split (5,825,867) (58,259) 58,259 0
---------- -------- --------------------------- ------------- -------------
Balance at March 31, 1996 1,943,525 19,435 5,812,469 180,458 (215,662) 5,796,700
Net income 80,939 80,939
Change in unrecognized pension liability 215,662 215,662
Reclassification of undistributed net loss
of S-corporations (811,139) 811,139 0
Treasury stock purchased and retired (9,270) (92) (16,310) (20,674) (37,076)
----------- -------- ------------ ----------- ------------- -----------
Balance at March 31, 1997 1,934,255 $19,343 $4,985,020 $1,051,862 $ 0 $6,056,225
========== ======= ========== ========== ============ ==========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
21
<PAGE> 22
<TABLE>
<CAPTION>
RVM INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended March 31, 1997 1996 1995
- ----------------------------- ---------- ----------- --------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) ................................................. $ 80,939 $(1,465,653) $ 1,255,096
Adjustments to reconcile net income (loss) to net cash provided
from (used for) operating activities:
Depreciation and amortization .................................. 1,376,096 1,212,212 934,880
Deferred income taxes .......................................... (28,340) 89,540 74,500
Increase (decrease) in accrued product warranty ................ 55,000 60,000 175,000
Increase (decrease) in allowance for doubtful accounts ......... 9,000 6,000 (123,100)
Loss (gain) on disposition of property, plant and equipment .... 54,094 149,606 3,540
Impairment of long-lived assets ................................ 371,768 0 0
Increase (decrease) in cash from changes in:
Receivables - trade ............................................ 413,488 1,209,221 (2,210,906)
Receivable - related party ..................................... (96,111) 5,934 (21,044)
Inventories .................................................... 645,715 (495,509) (4,746,130)
Other current assets ........................................... 38,675 151,533 (138,780)
Other assets ................................................... 7,128 (15,352) 13,414
Accounts payable - trade ....................................... (1,017,325) 839,924 4,566,712
Accounts payable - related parties ............................. 289,170 (1,482,897) 460,323
Refundable and accrued income taxes ............................ 125,538 (839,809) 737,407
Accrued expenses and other current liabilities ................. 189,190 48,162 193,289
Other long-term liabilities .................................... (275,293) (45,699) (170,190)
Unrecognized pension liability ................................. 215,662 (21,509) 92,498
----------- ----------- -----------
Net cash provided from (used for) operating activities ......... 2,454,394 (594,296) 1,096,509
----------- ----------- -----------
Cash flows from investing activities:
Capital expenditures .............................................. (3,820,601) (8,444,054) (4,968,664)
Grants (expended) received for capital expenditures ............... (375,000) 375,000 0
Proceeds from disposal of property, plant and equipment ........... 304,731 1,000 0
Investment of proceeds and income from long-term debt with trustees (166,957) (4,759,043) (4,971,845)
Sale of investments and release of funds held by trustees ......... 1,928,062 3,725,096 1,482,445
----------- ----------- -----------
Net cash provided from (used for) investing activities ......... (2,129,765) (9,102,001) (8,458,064)
----------- ----------- -----------
Cash flows from financing activities:
Payments on long-term debt ........................................ (1,585,217) (565,342) (200,331)
Proceeds from (payments on) notes payable - bank, net ............. (1,354,925) 3,641,539 3,593,676
Proceeds from notes and accounts payable to related parties ....... 2,900,000 0 0
Payments on notes and accounts payable to related parties ......... (250,000) (19,000) (1,953,791)
Proceeds from long-term debt, net of issuance costs ............... 0 4,479,491 4,911,103
Purchase of treasury stock ........................................ (37,076) 0 0
Contributed capital ............................................... 0 2,217,047 813,200
----------- ----------- -----------
Net cash provided from (used for) financing activities ......... (327,218) 9,753,735 7,163,857
----------- ----------- -----------
Net increase (decrease) in cash and cash equivalents ................. (2,589) 57,438 (197,698)
Cash and cash equivalents at beginning of year ....................... 471,161 413,723 611,421
----------- ----------- -----------
Cash and cash equivalents at end of year ............................. $ 468,572 $ 471,161 $ 413,723
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
22
<PAGE> 23
RVM INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS
----------
1. Description of Business and Summary of Significant Accounting Policies:
-----------------------------------------------------------------------
Reorganization:
---------------
On March 31, 1997, Ravens Metal Products, Inc. changed its name to
Ravens, Inc. ("Ravens") and effected a reorganization with RVM
Industries, Inc. ("RVM") pursuant to Section 251(g) of the Delaware
General Corporation Law. Each holder of the common stock of Ravens
became the holder of an equal number of shares of RVM, a newly created
holding company. The holders of RVM common stock have substantially
the same rights that they had as holders of the common stock of
Ravens. RVM filed Form 8-B on March 31, 1997 to register the common
stock shares of RVM with the Securities and Exchange Commission. RVM
is now a publicly held holding company, and Ravens is a private
company wholly owned by RVM.
Acquisitions and Basis of Presentation:
---------------------------------------
On March 31, 1997, RVM purchased all of the common stock of Albex
Aluminum, Inc. ("Albex") and Signs and Blanks, Inc. ("SABI") which
were S-corporations. See Note 2. This is a business combination by
entities under the common control of Jacob Pollock ("Pollock"). The
financial statements of prior years have been restated to reflect the
combination on an "as if pooling of interests" basis. The
undistributed net loss of the S-corporations was reclassified from
accumulated deficit to additional capital. All significant
intercompany accounts and transactions have been eliminated.
References to "the Company" refer to RVM and its subsidiaries: Ravens,
Albex and SABI.
Description of Business:
------------------------
Ravens 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. and Canada.
These principal products are sold direct and through a nationwide
network of dealerships. Ravens currently has operating facilities in
North Carolina, Ohio, and West Virginia. Ravens also sells a wide
variety of after-market parts for trucks and trailers, including parts
for its own trailers.
Albex manufactures and sells custom and standard aluminum extruded
products to manufacturers, fabricators, and distributors in the
transportation, building and construction, consumer durables, and
other markets located mainly in the midwestern portion of the U.S.
Albex operates a production facility located in Canton, Ohio.
SABI manufactures and sells aluminum blank and finished traffic
control signs to fabricators, distributors, and governmental agencies
located throughout the U.S. and Canada. Its production facility is in
Akron, Ohio.
23
<PAGE> 24
NOTES TO FINANCIAL STATEMENTS, Continued
----------
1. Description of Business and Summary of Significant Accounting
-------------------------------------------------------------
Policies, Continued:
---------
Fiscal Year:
------------
The fiscal year of RVM and Ravens ends on March 31. References to
1997, 1996, etc. are for the years ended March 31, 1997, 1996, etc.,
respectively. Albex's and SABI's fiscal year ends on December 31.
Their financial statements for the years ended December 31 were
included in these consolidated statements because undue expense and
effort would have been required to prepare audited financial
statements through March 31. Significant intervening transactions and
events between January 1 and March 31 have been included in the
financial statements or disclosed in the notes to the financial
statements. Albex incurred a net loss of approximately $275,000
(unaudited) in the quarter ended March 31, 1997. This loss has not
been included in the Consolidated Statements of Operations.
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
approximately 60% and 69% of the inventories in 1997 and 1996,
respectively, was 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.
Property, Plant and Equipment:
------------------------------
Property, plant and equipment is stated at cost. Grants received from
state and local governmental units are deducted in arriving at the
carrying amount of the respective assets. Major additions and
betterments are capitalized while maintenance and repairs which do not
improve or extend the lives of the respective assets are expensed
currently. When property, plant and equipment is retired or otherwise
disposed of, the cost of the property, plant and equipment is removed
from the asset account, accumulated depreciation is charged with an
amount equivalent to the depreciation provided, and the difference is
charged or credited to income.
24
<PAGE> 25
NOTES TO FINANCIAL STATEMENTS, Continued
----------
1. Description of Business and Summary of Significant Accounting Policies,
-----------------------------------------------------------------------
Continued:
Property, Plant and Equipment, Continued:
-----------------------------
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.
The estimated useful lives of the assets for financial statement
purposes are as follows:
Buildings and improvements 31.5 to 40 years
Machinery and equipment 3 to 20 years
Office equipment 5 to 10 years
Vehicles 3 to 5 years
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.
25
<PAGE> 26
NOTES TO FINANCIAL STATEMENTS, Continued
----------
1. Description of Business and Summary of Significant Accounting
-------------------------------------------------------------
Policies, Continued:
--------
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.
Reclassifications:
-----------------
Certain amounts in previously issued financial statements were
reclassified to conform to the 1997 presentation.
2. Acquisitions:
------------
On March 31, 1997, RVM purchased all the issued and outstanding shares of
capital stock of Albex and SABI from Jacob Pollock, the owner of all of
the shares of Albex and SABI and an officer, director, and the largest
shareholder (holding 87.16% of the outstanding common stock) of RVM.
The purchase price of the Albex and SABI shares will be that dollar
amount equal to seven times the average earnings of Albex and SABI,
computed for each company, before interest and taxes (plus depreciation
and amortization and less capital expenditures) for the fiscal years
ending March 31, 1999 and March 31, 2000, less all interest bearing debt,
all determined in accordance with generally accepted accounting
principles (the "Albex and SABI Purchase Prices").
Neither the Albex Purchase Price nor the SABI Purchase Price can be
determined until the respective earnings of Albex and SABI for the fiscal
year ending March 31, 2000 are known. Payment of the respective Purchase
Prices will be recorded as dividends to Pollock at that time.
The Albex and SABI Purchase Prices each will be paid over a five-year
term, with interest thereon, at the rate of eight percent (8%) per annum,
accruing from and after July 1, 2000. In each case a payment of principal
only will be due on July 1, 2000, and a payment of principal and interest
will be due on August 1, 2000 and on the first day of each month
thereafter, until both the Albex Purchase Price (and all interest
thereon) and the SABI Purchase Price (and all interest thereon) have been
paid in full.
26
<PAGE> 27
NOTES TO FINANCIAL STATEMENTS, Continued
----------
3. Inventories:
-----------
<TABLE>
<CAPTION>
March 31 1997 1996
------------ --------
<S> <C> <C>
Raw materials $5,314,901 $5,020,045
Work in process 430,650 648,286
Finished goods 2,931,609 3,654,544
---------- ----------
$8,677,160 $9,322,875
========== ==========
</TABLE>
The reserve to reduce the carrying value of inventories from current cost
to the LIFO basis amounted to approximately $1,955,000 and $2,051,000 at
March 31, 1997 and 1996, respectively.
4. Property, Plant and Equipment:
-----------------------------
<TABLE>
<CAPTION>
March 31 1997 1996
------------ --------
<S> <C> <C>
Buildings and improvements $ 6,716,255 $ 5,913,511
Machinery and equipment 11,117,062 7,545,376
Office equipment 994,512 895,901
Vehicles 434,317 421,119
Construction in progress 5,395,659 6,514,482
------------ ------------
24,657,805 21,290,389
Less accumulated depreciation
and amortization 6,022,428 4,977,390
------------ ------------
18,635,377 16,312,999
Land 385,912 385,912
------------- -------------
$19,021,289 $16,698,911
=========== ===========
</TABLE>
Approximately $2,664,000 and $5,991,000 of capital expenditures were
incurred in 1997 and 1996, respectively, for a new production facility
and casting house in Canton, Ohio. These capital expenditures include
capitalized interest of $10,440 and $178,137 in 1997 and 1996,
respectively.
In addition, during 1996, Albex received a grant from the State of Ohio
aggregating $375,000 which was deducted from the cost of purchased
machinery and equipment. This grant was required to be used for the
purchase of machinery and equipment to be used at the Canton, Ohio
facility. The terms of the grant also require Albex to employ a specified
number of employees at this facility.
27
<PAGE> 28
NOTES TO FINANCIAL STATEMENTS, Continued
----------
4. Property, Plant and Equipment, Continued:
-----------------------------
Approximately $233,000, $1,375,000 and $3,394,000 of capital expenditures
were incurred in 1997, 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 $238,000, $205,000 and $152,000 in 1997,
1996 and 1995, respectively.
28
<PAGE> 29
<TABLE>
<CAPTION>
NOTES TO FINANCIAL STATEMENTS, Continued
----------
5. Notes Payable and Long-term Debt:
--------------------------------
March 31 1997 1996
------------ --------
<S> <C> <C>
City of Kent, Ohio (a) $4,450,000 $4,900,000
Line of credit - Ravens (b) 6,358,179 6,707,986
Line of credit - Albex (c) 2,426,937 2,885,279
Line of credit - SABI (d) 1,154,944 1,701,719
Department of Development of
the State of Ohio (e) 2,311,105 2,500,000
State of Ohio Economic Development
Revenue Bonds (f) 1,840,000 2,115,000
Albex and SABI Purchase Prices (g)
Notes payable to related parties (h) 4,031,000 1,381,000
7% subordinated debentures, payable in 2004,
net of unamortized discount of $55,252
and $62,730 430,248 424,270
Other debt 428,998 1,098,999
------------ ------------
23,431,411 23,714,253
Less current portion 5,218,413 6,307,853
------------ ------------
$18,212,998 $17,406,400
=========== ===========
</TABLE>
29
<PAGE> 30
NOTES TO FINANCIAL STATEMENTS, Continued
----------
5. Notes Payable and Long-term Debt, Continued:
--------------------------------
(a) City of Kent, Ohio Variable Rate Demand Industrial Development
Revenue Bonds due in annual principal payments of $450,000 in 1998
through 2001, $500,000 in 2002 through 2005, $150,000 in 2006
through 2008, and $100,000 in 2009 and 2010. Interest is payable
monthly and the rate varies weekly (3.80% and 3.70% at March 31,
1997 and 1996, respectively). Payment to bondholders is guaranteed
by a letter of credit in an amount equal to outstanding principal
plus specified interest ($4,537,781 at March 31, 1997) expiring
December 15, 1998 issued by First National Bank of Ohio at a rate
of 1% per annum and collateralized by all equipment owned by
Ravens and by the real estate at the Kent facility and
cross-collateralized with the lines of credit described below.
Proceeds from the loan agreement are held by a trustee and
released to Ravens for approved capital expenditures at the Kent
facility. $2,740,558 and $2,711,104 held by the trustee at March
31, 1997 and 1996, respectively, was invested in short-term
commercial paper and a money market fund.
(b) Line of credit for $8,000,000 is with First National Bank of Ohio
("FNBO") and expires on August 31, 1998. Interest is payable
monthly at FNBO's prime rate (8.50% and 8.25% at March 31, 1997
and 1996, respectively) minus 0.5%.
(c) Line of credit for $4,500,000 is with FNBO and expires on August
29, 1997. Interest is payable monthly at FNBO's prime rate (8.50%
and 8.25% at March 31, 1997 and 1996, respectively) plus 0.5%.
(d) Line of credit for $2,500,000 is with FNBO and expires on January
31, 1998. Interest is payable monthly at FNBO's prime rate (8.50%
and 8.25% at March 31, 1997 and 1996, respectively).
(b,c,d) Borrowings on the lines of credit are based on eligible trade
receivables and inventories. The lines of credit are
collateralized by cash, accounts receivable, inventories,
equipment and intangibles as well as the real estate at the Kent
facility and are cross-collateralized with the letter of credit
agreement described above. There are 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 could have borrowed approximately $1,645,000
more than the amount owed at March 31, 1997.
(e) Chapter 166 direct loan payable to the Department of Development
of the State of Ohio, due in monthly installments of $33,033
including interest at 3.0%, plus a monthly service fee of .02%.
The loan matures December 2002 and is collateralized by
substantially all machinery and equipment of Albex and the
personal guarantee of Jacob Pollock. Principal payments were
deferred for the period August 1996 to February 1997. Payments
have been adjusted for the period March 1997 to February 1998 in
order to maintain the original maturity date.
30
<PAGE> 31
NOTES TO FINANCIAL STATEMENTS, Continued
----------
5. Notes Payable and Long-term debt, Continued:
--------------------------------
(f) State of Ohio Economic Development Revenue Bonds. Interest of 5.6%
is payable semiannually on June 1 and December 1 of each year,
plus a monthly service fee of .02%. The bonds are subject to a
mandatory semiannual redemption schedule which requires monthly
escrow payments of principal amounting to $22,500. The bonds
mature June 1, 2002 and are collateralized by substantially all
machinery and equipment of Albex and the personal guarantee of
Pollock.
(g) See Note 2.
(h) Albex is the obligor on a note payable to Pollock in the principal
amount of $2,900,000 ("Albex Note"), and SABI is the obligor on a
note payable to J. Pollock & Company, wholly owned by Pollock, in
the principal amount of $1,131,000 ("SABI Note"). Albex will repay
the Albex Note, and SABI will repay the SABI Note over a five-year
term, with interest thereon, at the rate of seven percent (7%) per
annum, accruing from and after April 1, 1997. A payment of
interest only on the Albex Note and on the SABI Note will be due
on May 1, 1997 and on the first day of each month thereafter
through December 1, 1997; a payment of principal in the amount of
$48,333 and interest on the Albex Note and in the amount of
$18,850 and interest on the SABI Note will be due on January 1,
1998 and on the first day of each month thereafter, until the
principal amount (and all interest thereon) of each Note has been
paid in full; provided, however, that no payment of principal on
either Note will be due during the period that RVM is making
payments with respect to the Albex and SABI Purchase Prices.
However, interest will continue to accrue and be paid during any
period in which no principal payments are being made with respect
to the Notes. $1,381,000 was owed to J. Pollock & Company at March
31, 1996.
Payments with respect to the Albex and SABI Purchase Prices, the
Albex Note and the SABI Note are subordinated to the repayment of
substantially all other notes payable and long-term debt.
Maturities for the long-term debt are: 1998, $5,218,413; 1999,
$8,228,219; 2000, $2,016,884; 2001, $1,993,888; 2002, $2,059,077; and
thereafter, $3,914,930.
31
<PAGE> 32
NOTES TO FINANCIAL STATEMENTS, Continued
----------
6. 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. It is the opinion of
management of RVM 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.
At March 31, 1997 and 1996, Ravens was contingently liable as guarantor
on certain sales contracts of customers in the amount of approximately
$454,000 and $515,000, respectively, which are collateralized by the
units sold. No reserve for losses has been provided because Ravens has
incurred an insignificant amount of losses related to guaranteed sales
contracts which generally have maturities less than five years. Ravens
guarantees 10-20% of the outstanding balance owed to the finance company
by the customers. Ravens recognizes revenue at the time the trailers are
sold.
The Company and certain other persons and business entities affiliated
with the Company have jointly and severally guaranteed approximately
$1,840,000 of State of Ohio Economic Development Revenue Bonds and
approximately $2,311,000 of State of Ohio "Section 166 Project Funds"
borrowed by Albex.
7. Income Taxes:
------------
The provision (benefit) for income taxes consists of the following:
<TABLE>
<CAPTION>
1997 1996 1995
-------- -------- ------
<S> <C> <C> <C>
Current:
Federal $499,639 $ 14,064 $854,000
State 34,163 7,369 32,300
--------- --------- ---------
533,802 21,433 886,300
Deferred (28,340) 89,540 74,500
--------- --------- ---------
$505,462 $110,973 $960,800
======== ======== ========
</TABLE>
32
<PAGE> 33
NOTES TO FINANCIAL STATEMENTS, Continued
----------
7. Income Taxes, Continued:
------------
The sources of temporary differences which make up the deferred tax
balances are as follows:
<TABLE>
<CAPTION>
1997 1996
-------- ------
<S> <C> <C>
Depreciation and amortization $(345,444) $(336,130)
Warranty 215,028 184,426
Vacation 57,057 49,427
Pension (11,437) 29,163
Deferred interest and amortization of
discount on debentures 71,494 65,623
Allowance for doubtful accounts 29,865 32,322
Inventory 23,964 16,466
Federal and state tax loss carryforwards 86,011 91,262
Non-deductible accruals 59,730 0
Other (268) 25,101
--------- ---------
$ 186,000 $ 157,660
========= =========
</TABLE>
A reconciliation of the federal statutory income tax rate to the
effective rate follows:
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
Amount Percent Amount Percent Amount Percent
------ ------- ------ ------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Statutory amount and rate $486,190 34.0% $103,874 34.0% $939,091 34.0%
Effect of:
State taxes (net of utilization of
tax loss carryforwards) 19,714 1.4 7,369 2.4 32,300 1.2
Non-deductible expenses 5,917 0.4 5,606 1.8 5,121 0.2
Other (6,359) (0.5) (5,876) (1.9) (15,712) (0.6)
-------- ----- -------- ----- -------- -----
$505,462 35.3% $110,973 36.3% $960,800 34.8%
======== ===== ======== ===== ======== =====
</TABLE>
The cumulative tax operating loss carryforward as of March 31, 1997 is
approximately $3,399,000. On May 3, 1991, there was a change in
controlling interest of the Company. Pursuant to the Internal Revenue
Code ("IRC"), this transaction significantly limits the ability of the
Company to utilize the remaining cumulative tax operating loss
carryforward of approximately $3,399,000 which existed at the time of the
ownership change. Management believes that 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 $216,000 of loss carryforwards subsequent to March
31, 1997. The loss carryforwards expire in years through 2007.
33
<PAGE> 34
NOTES TO FINANCIAL STATEMENTS, Continued
----------
7. Income Taxes, Continued:
-------------
In accordance with code section 368 of the IRC, for tax purposes, the
reorganization of RVM and Ravens represents a tax free exchange.
Albex and SABI (See Note 2) have calendar year ends, were operated as
S-corporations, and, as such, were not liable for federal or state income
taxes. Effective April 1, 1997, both Albex and SABI will no longer be
treated as S-corporations and will be subject to all corporate federal,
state and local income taxes. Accordingly, for informational purposes,
the consolidated statements of operations include unaudited pro forma
adjustments for income taxes which would have been recorded if Albex and
SABI had been taxed as C-corporations, based on the tax laws in effect
during those periods.
Unaudited pro forma income tax expense (benefit) for each of the periods
presented is as follows:
<TABLE>
<CAPTION>
Unaudited
-----------------------------------------------
1997 1996 1995
---------- -------- ------
Deferred provision (benefit):
<S> <C> <C> <C>
Federal $(250,036) $(586,174) $(135,582)
State (45,901) (13,802) (15,618)
----------- ----------- -----------
Total $(295,937) $(599,976) $(151,200)
========== ========== ==========
</TABLE>
The differences between unaudited pro forma income taxes at the federal
statutory income tax rate and unaudited pro forma income taxes are as
follows:
<TABLE>
<CAPTION>
Unaudited
------------------------------------------------------------------
1997 1996 1995
---- ---- ----
Amount Percent Amount Percent Amount Percent
------ ------- ------ ------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Statutory amount and rate $(275,787) (34.0)% $(593,420) (34.0)% $(142,224) (34.0)%
Effect of:
State taxes (net of utilization of
tax loss carryforwards) (22,415) (2.7) (9,167) (0.5) (10,337) (2.4)
Other 2,265 0.3 2,611 0.1 1,361 0.3
---------- ------- ---------- ------- ---------- -------
$(295,937) (36.4)% $(599,976) (34.4)% $(151,200) (36.1)%
========== ======= ========== ======= ========== =======
</TABLE>
34
<PAGE> 35
NOTES TO FINANCIAL STATEMENTS, Continued
----------
8. Retirement Plans:
----------------
Ravens has defined benefit pension plans covering hourly employees at its
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 funding policy is based
on an actuarially determined cost method allowable under statutory
regulations.
Net pension cost for the years ended March 31, 1997, 1996 and 1995 is
comprised of, based on plan assets and obligations as of January 1, 1996,
1995 and 1994, respectively, the following components:
<TABLE>
<CAPTION>
1997 1996 1995
------ ------ -----
<S> <C> <C> <C>
Service costs - benefits earned during the year $ 16,859 $ 12,837 $ 14,286
Interest cost 126,110 120,887 117,246
Actual return on assets (167,314) (287,563) (33,042)
Net amortization and deferral 63,649 208,208 (40,528)
--------- -------- --------
Net pension cost $ 39,304 $ 54,369 $ 57,962
======== ======== ========
</TABLE>
35
<PAGE> 36
NOTES TO FINANCIAL STATEMENTS, Continued
----------
8. Retirement Plans, Continued:
-----------------
The funded status of the plans as of January 1, 1997 and 1996 is
reconciled to accrued pension cost on the balance sheet at March 31, 1997
and 1996 as follows:
<TABLE>
<CAPTION>
1997 1996
------------ --------
<S> <C> <C>
Accumulated benefit obligation, including
vested benefits of $ 494,952 and
$1,745,869 $ 528,091 $1,778,148
Effect of future salary increases 0 0
----------- ----------
Projected benefit obligation 528,091 1,778,148
Plan assets at fair value, primarily
U.S. government obligations, fixed
income investments and equity
securities 562,128 1,416,992
----------- ----------
Plan assets in excess of projected
benefit obligation (34,037)
Projected benefit obligation in excess
of plan assets 361,156
Unrecognized prior service cost (1,882) (2,509)
Unamortized transition liability ( 9,704) (17,345)
Unrecognized net gain (loss) 21,319 (215,662)
Unrecognized additional minimum
liability (A) 0 235,516
---------- ----------
(Prepaid) accrued pension cost $ (24,304) $ 361,156
========== ==========
</TABLE>
(A) The unrecognized additional minimum liability included in accrued
pension cost was offset by an intangible asset of $19,854 and by a
reduction in shareholders' equity of $215,662 at March 31, 1996.
36
<PAGE> 37
NOTES TO FINANCIAL STATEMENTS, Continued
----------
8. Retirement Plans, Continued:
----------------
Significant assumptions used in determining net pension cost and related
pension obligations as of January 1, 1997, 1996 and 1995 are:
<TABLE>
<CAPTION>
Dover plan: 1997 1996 1995
------ ------ -----
<S> <C> <C> <C>
Discount rate 7.75% 7.25% 8.25%
Expected long-term rate of return on assets 8.00% 8.00% 8.00%
Elizabeth plan:
Discount rate 7.25% 7.25% 8.25%
Expected long-term rate of return on assets 8.00% 8.00% 8.00%
</TABLE>
Effective July 1, 1996, Ravens terminated the defined benefit pension
plan covering the former hourly employees at the former Elizabeth, West
Virginia facility. Ravens contributed approximately $460,000 to the plan
and recorded a settlement loss of $390,015 for the termination of the
plan.
SABI participates in the GMP and Employers Pension Fund, a multi-employer
defined benefit pension plan, that covers all of its hourly bargaining
unit employees. Pension expense under this plan amounted to $19,020,
$25,162 and $20,561 in 1997, 1996 and 1995, respectively.
RVM has defined contribution plans covering salaried and non-union hourly
employees of the Company. The purpose of the plans are to provide
financial security during retirement by providing employees with an
incentive to make regular savings. Contributions of participating
employees are matched on the basis of the percentages specified in the
respective plans. The cost of such employer contributions approximated
$28,110, $45,436 and $53,726 for 1997, 1996 and 1995, respectively.
9. Employee Stock Ownership Plan:
-----------------------------
Ravens terminated its noncontributory Employee Stock Ownership Plan
covering all salaried employees on December 31, 1993. In 1997, 9,270
shares of common stock were purchased by Ravens from participants and
retired in exchange for $37,076.
37
<PAGE> 38
NOTES TO FINANCIAL STATEMENTS, Continued
----------
10. Series Preferred Stock:
----------------------
RVM is authorized to issue 300,000 shares of series preferred stock, $.01
par value, none of which was issued as of March 31, 1997. 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.
11. 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 1,938,140 in 1997 and 1,943,525 in 1996 and
1995, 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. RVM is required to implement
Statement of Financial Accounting Standards No. 128, "Earnings per
Share", in the third quarter of 1998. RVM expects that the implementation
of this pronouncement will not have a material impact on its calculation
of earnings per share.
12. Related Party Transactions:
--------------------------
J. Pollock & Company, wholly owned by Jacob Pollock, a Director and
majority shareholder of RVM, purchases materials and provides or
contracts for certain administrative services for the Company and charges
the Company at its cost. Such transactions totalled $348,417, $236,357
and $7,140,191 in 1997, 1996 and 1995, respectively. J. Pollock & Company
provides management services to the Company. The Company paid $428,000,
$314,000 and $250,000 in 1997, 1996 and 1995, respectively, for these
services. $37,721 and $54,887 was owed at March 31, 1997 and 1996.
The Company leases office and manufacturing space from a corporation in
which Richard Pollock and Bruce Pollock are shareholders. The leases are
for five years expiring December 31, 1999 at a monthly base rent of
$8,000 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 approximately
$114,000, $113,000 and $111,000 in 1997, 1996 and 1995, respectively.
Richard Pollock and Bruce Pollock are sons of Jacob Pollock.
Nicholas T. George, a Director of RVM, 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 $19,500, $32,300 and $32,100 to Nicholas T. George &
Associates in 1997, 1996 and 1995, respectively.
38
<PAGE> 39
NOTES TO FINANCIAL STATEMENTS, Continued
----------
12. Related Party Transactions, Continued:
---------------------------
The Company purchased aluminum materials from The Aluminum Warehouse,
Inc., of which Richard Pollock is a principal shareholder, totalling
$54,593, $103,083 and $104,534 in 1997, 1996 and 1995, respectively.
$9,793 and $38,287 was owed at March 31, 1997 and 1996.
The Company hired temporary personnel from Flex-Team, Inc., of which
Jacob Pollock is a principal shareholder, totalling $245,233, $832,628
and $203,094 in 1997, 1996 and 1995, respectively.
See Notes 2 and 5 regarding acquisitions from and notes payable to
related parties.
13. Stock Options:
-------------
RVM'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. The Company has selected the
disclosure-only option of Statement of Financial Accounting Standards
"SFAS" No. 123, "Accounting for stock-based Compensation". In accordance
with SFAS No. 123, RVM accounts for its Stock Option Plan in accordance
with Accounting Principles Board Opinion No. 25, "Accounting for Stock
Issued to Employees" and related Interpretations.
<TABLE>
<CAPTION>
Stock
Option
Shares Price
------------------------- -------
1997 1996
<S> <C> <C> <C>
Outstanding at beginning of year 10,000 10,250 $4.00
Granted 0 0 4.00
Exercised 0 0
Canceled ( 0) (250) 4.00
-------- -------
Outstanding and exercisable at end of year 10,000 10,000 4.00
====== ======
</TABLE>
All outstanding options expire on April 7, 1999.
39
<PAGE> 40
NOTES TO FINANCIAL STATEMENTS, Continued
----------
14. Advertising Costs:
-----------------
Advertising costs included in selling, general and administrative expense
were $198,653, $292,758 and $176,760 in 1997, 1996 and 1995,
respectively.
15. 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 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.
16. 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 long-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 long-term debt at March 31, 1997 was
estimated to approximate the carrying amount reported in the balance
sheets.
40
<PAGE> 41
NOTES TO FINANCIAL STATEMENTS, Continued
----------
17. Impairment of Long-Lived Assets:
--------------------------------
In accordance with Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of", the Company reviewed its assets associated
with its production facilities and determined that various assets would
no longer be used in the business. These assets consisted primarily of
dies and various machinery and equipment. Additionally, Albex reduced the
value of certain equipment to better reflect the estimate of future cash
flows expected to result from the use of the respective equipment and
recorded an impairment loss of $371,768 during 1997.
18. Supplemental Cash Flow Information:
-----------------------------------
(A) Cash payments for interest: 1997 - $1,097,542; 1996 - $796,936;
and 1995 - $524,927.
(B) Cash payments for income taxes: 1997 - $408,264; 1996 - $861,242;
and 1995 - $141,450.
(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. In 1996, a note payable to Jacob
Pollock amounting to $1,452,777 was converted to additional
capital, and real estate was contributed to the Company by Jacob
Pollock with $450,000 recorded as additional capital. In 1996,
$200,000 was included in other current assets as the amount to be
received for the sale of real estate.
41
<PAGE> 42
NOTES TO FINANCIAL STATEMENTS, Continued
----------
19. Business Segments:
------------------
Each of RVM's subsidiaries operates in one business segment. See Note 1
for a descrip- tion of the segments. Substantially all the assets are
identifiable in segments. Intersegment sales generally are priced at
prevailing market prices.
<TABLE>
<CAPTION>
Ravens Albex SABI Eliminations Consolidated
------ ----- ---- ------------ ------------
1997
----
<S> <C> <C> <C> <C> <C>
Sales to customers $41,652,421 $8,693,952 $11,291,848 $61,638,221
Intersegment sales 0 4,495,653 2,774 (4,498,427) 0
----------- ---------- ----------- ------------ -----------
Net sales $41,652,421 $13,189,605 $11,294,622 $(4,498,427) $61,638,221
=========== =========== =========== ============ ===========
Income (loss) from operations $ 2,369,057 $ (907,807) $ 513,038 $ (24,424) $ 1,949,864
Depreciation and amortization 556,126 653,853 166,117 1,376,096
Capital expenditures 372,325 3,391,541 56,735 3,820,601
Identifiable assets 19,908,167 15,103,090 3,556,118 38,567,375
1996
----
Sales to customers $40,238,755 $10,108,780 $11,446,335 $61,793,870
Intersegment sales 0 4,324,623 9,102 (4,333,725) 0
----------- ---------- ----------- ------------ -----------
Net sales $40,238,755 $14,433,403 $11,455,437 $(4,333,725) $61,793,870
=========== =========== =========== ============ ===========
Income (loss) from operations $ 807,419 $(1,085,599) $ (81,489) $ 85,162 $ (274,507)
Depreciation and amortization 519,290 529,118 163,804 1,212,212
Capital expenditures 1,588,445 6,839,349 16,260 8,444,054
Identifiable assets 21,830,801 12,959,743 4,421,165 39,211,709
1995
----
Sales to customers $42,036,058 $ 8,341,645 $10,955,937 $61,333,640
Intersegment sales 0 5,927,482 118,168 (6,045,650) 0
----------- ---------- ----------- ------------ -----------
Net sales $42,036,058 $14,269,127 $11,074,105 $(6,045,650) $61,333,640
=========== =========== =========== ============ ===========
Income (loss) from operations $ 2,955,391 $ (32,451) $ (243,010) $ (55,129) $ 2,624,801
Depreciation and amortization 390,813 368,864 175,203 934,880
Capital expenditures 3,588,977 1,316,786 62,901 4,968,664
Identifiable assets 19,259,513 6,900,996 5,375,251 31,535,760
</TABLE>
42
<PAGE> 43
<TABLE>
<CAPTION>
RVM INDUSTRIES, INC.
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
for the years ended March 31, 1997, 1996 and 1995
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
----------- ---------- ---------- ---------- ------------- -------------
Allowance for doubtful accounts
<S> <C> <C> <C> <C> <C>
Period ended:
March 31, 1997 $103,000 $154,630 0 $145,630 $112,000
March 31, 1996 97,000 102,742 0 96,742 103,000
March 31, 1995 220,100 103,849 0 226,949 97,000
</TABLE>
(A) Uncollectible accounts written off, subsequently collected or deemed
collectible.
43
<PAGE> 44
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
---------------------------------------------------------------
FINANCIAL DISCLOSURE
--------------------
There was no change in independent accountants between April 1,
1996 and the date of this filing.
44
<PAGE> 45
Part III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
--------------------------------------------------
The directors and executive officers of the Registrant are listed below:
<TABLE>
<CAPTION>
Name Age Since Position (1)
- ---- --- ----------- ----------------
<S> <C> <C> <C>
Jacob Pollock 72 May 3, 1991 Chairman of the Board, Chief
(term expires in 1999) Executive Officer, and Treasurer
Nicholas T. George 52 May 3, 1991 Secretary and Director
(term expires in 1997)
David A. Simia 55 May 3, 1991 Assistant Treasurer, Assistant
(term expires in 1997) Secretary, and Director
Richard D. Pollock 41 May 3, 1991 Director
(term expires in 1998)
C. Stephen Clegg 46 May 3, 1991 Director
(term expires in 1998)
Lowell P. Morgan 62 July 1, 1991 President
John J. Stitz 41 July 22, 1991 Chief Financial Officer and
Vice President
</TABLE>
(1) As described in Part I of this Form 10-K, the Registrant, prior to
March 31, 1997, was Ravens Metal Products, Inc. ("Ravens"). Effective March 31,
1997, the Registrant is RVM Industries, Inc. ("RVM"). The Directors of Ravens
became the Directors of RVM with the same terms. The officer positions are the
same for RVM as Ravens except for the following changes effective on March 31,
1997 for RVM: Mr. Richard Pollock is the President of RVM, Mr. Morgan is not an
officer, Mr. Simia is a Vice President, and Mr. Stitz is designated as the
principal financial officer and principal accounting officer but does not have
the title of Chief Financial Officer.
45
<PAGE> 46
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
Albex since May 1991. He was a partner with Kopperman & Wolf, CPAs from
1983-1989 and Touche Ross & Co., CPAs from 1976-1983.
Mr. Richard Pollock has served as President of Albex 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.
46
<PAGE> 47
Section 16(a) Beneficial Ownership Reporting Compliance
- --------------------------------------------------------
Based solely upon a review of copies of Forms 3, 4 and 5 furnished to RVM
during or with respect to the fiscal year ended March 31, 1997, RVM is not aware
of any person subject to Section 16 of the Securities Exchange Act of 1934 with
respect to RVM that failed to file on a timely basis reports required by Section
16(a) during the most recent fiscal year or prior fiscal years.
47
<PAGE> 48
ITEM 11. EXECUTIVE COMPENSATION
----------------------
Jacob Pollock, Chief Executive Officer, did not receive any cash or
noncash compensation in 1997, 1996 or 1995. The Company paid $428,000, $314,000
and $250,000 in 1997, 1996 and 1995, respectively, to J. Pollock & Company for
general management services.
The following table discloses compensation in excess of $100,000 awarded
to, earned by or paid to any executive officer during 1997 and 1996; no
executive officer of the Company, other than Jacob Pollock, as described above,
received compensation in excess of $100,000 during 1995:
<TABLE>
<CAPTION>
Name and Principal All Other
Position Year Salary Bonus Compensation (1)
----------------------- ---- ------ ----- ----------------
<S> <C> <C> <C> <C>
Lowell P. Morgan 1997 $82,975 $20,836 $1,038
President, Ravens, Inc. 1996 82,300 21,945 1,042
</TABLE>
(1) Amount contributed to Mr. Morgan's account in the Company's 401(k) plan.
In 1993, RVM adopted a Stock Option Plan which provides for the granting
of options to acquire up to 50,000 shares of its 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 RVM are paid $1,000 for Board of Directors meetings which
they attend. Additional compensation is not paid for committee meetings.
48
<PAGE> 49
Compensation Committee Interlocks and Insider Participation
- -----------------------------------------------------------
The Compensation Committee of RVM'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 services with J. Pollock & Company
described above. Mr. Pollock hopes that the value of his shareholdings in RVM
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
Performance Graph
- -----------------
The following line graph shows a comparison of cumulative total returns,
assuming reinvestment of dividends, for a hypothetical investment of $100 made
on March 31, 1992 in the common stock of RVM, the NASDAQ Composite Index, and an
index of peer companies ("peer group") selected by RVM. The peer group consists
of the following companies: Dorsey Trailers, Inc., Featherlite Mfg., Inc.,
Fruehauf Trailer Corp., Miller Industries, Inc./TN, and Wabash National Corp.
Companies in businesses related to Ravens were selected for the peer group
because cumulative returns on RVM's common stock for the five years ended March
31, 1997 are based solely on the performance of Ravens and not on the restated
RVM financial statements reflecting the acquisitions of Albex and SABI on March
31, 1997. RVM believes that the large return in 1997 is due to J.C. Bradford &
Co. making a market in RVM's common stock beginning in May 1996. Prior to May
1996, RVM's common stock did not actively trade, but a market maker quoted bid
prices and traded shares infrequently.
49
<PAGE> 50
<TABLE>
<CAPTION>
RVM NASDAQ
Industries, Composite Peer
Inc. Index Group
----------- ------------ -------
<S> <C> <C> <C>
3/31/92 100.00 100.00 100.00
3/31/93 100.00 114.96 82.43
3/31/94 1,000.00 124.09 103.87
3/31/95 2,500.00 138.04 111.04
3/31/96 1,875.00 187.42 76.18
3/31/97 13,750.00 208.33 88.80
</TABLE>
50
<PAGE> 51
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
--------------------------------------------------------------
The only owner of record or holder, to the knowledge of RVM as of June 26,
1997, of more than 5% of RVM'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) 87.16%
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 RVM's Common Stock beneficially owned
directly or indirectly by each director and nominee, and by all directors and
officers of RVM as a group as of June 26, 1997:
<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) 87.16%
Stock Nicholas T. George 30,000(3) 1.55%
C. Stephen Clegg 0 0.00%
David A. Simia 253(2) 0.01%
Richard D. Pollock 40,000(3) 2.07%
All directors and
officers as a group
(7 persons). 1,726,056 89.24%
</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.
51
<PAGE> 52
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
----------------------------------------------
J. Pollock & Company, wholly owned by Jacob Pollock, a Director and
majority shareholder of RVM, purchases materials and provides or contracts for
certain administrative services for the Company and charges the Company at its
cost. Such transactions totalled $348,417 in 1997. J. Pollock & Company provides
management services to the Company. The Company paid $428,000 in 1997 for these
services. $37,721 was owed at March 31, 1997.
The Company leases office and manufacturing space from a corporation in
which Richard Pollock and Bruce Pollock are shareholders. The leases are for
five years expiring December 31, 1999 at a monthly base rent of $8,000 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 approximately $114,000 in 1997. Richard Pollock
and Bruce Pollock are sons of Jacob Pollock.
The Company purchased aluminum materials from The Aluminum Warehouse,
Inc., of which Richard Pollock is a principal shareholder, totalling $54,593 in
1997. $9,793 was owed at March 31, 1997.
The Company hired temporary personnel from Flex-Team, Inc., of which
Jacob Pollock is a principal shareholder, totalling $245,233 in 1997.
See Notes 2 and 5 to the consolidated financial statements regarding
acquisitions from and notes payable to related parties.
52
<PAGE> 53
<TABLE>
<CAPTION>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
-----------------------------------------------------------------
<S> <C>
(a) List of documents filed as part of this report: Pages
-----
(1) Financial Statements:
Report of Independent Accountants 17
Consolidated Balance Sheets, March 31, 1997 and 1996 18 - 19
Consolidated Statements of Operations for the years ended
March 31, 1997, 1996 and 1995 20
Consolidated Statements of Changes in Shareholders' Equity
for the years ended March 31, 1997, 1996 and 1995 21
Consolidated Statements of Cash Flows for the years ended
March 31, 1997, 1996 and 1995 22
Notes to Consolidated Financial Statements 23 - 42
(2) Financial Statement Schedule:
II - Valuation and Qualifying Accounts and Reserves
for the years ended March 31, 1997, 1996 and 1995 43
All other schedules are omitted because they are not applicable or
the required information is presented in the financial statements or
the notes thereto.
(3) Exhibits required by Item 601 of Regulation S-K:
</TABLE>
Exhibit No. Item
---------- ----
2 (i) Agreement and Plan of Reorganization among Ravens
Metal Products, Inc., RVM Industries, Inc. and
Ravens, Inc. was filed as Exhibit 2 to Form 8-B
filed March 31, 1997 and is incorporated herein by
reference.
2 (ii) Stock Purchase Agreement for common stock of Albex
Aluminum, Inc. and Signs and Blanks, Inc. was filed
as Exhibit 2.1 to Form 8-K filed on March 31, 1997
and is incorporated herein by reference.
53
<PAGE> 54
3 (i) Certificate of Incorporation of RVM was filed as
Exhibit 3.1 to Form 8-B filed March 31, 1997 and is
incorporated herein by reference.
3 (ii) RVM's By-laws were filed as Exhibit 3.2 to Form 8-B
filed March 31, 1997 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 Quar- terly 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.
10 (vi) Guaranty Agreement dated as of July 1, 1995 and
executed by the Company on August 14, 1995 among
Albex Aluminum, Inc., 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
54
<PAGE> 55
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:
A Form 8-K was filed on March 31, 1997 describing the reorganization
of the Registrant's legal structure and the acquisitions of Albex
Aluminum, Inc. and Signs and Blanks, Inc. These events which
occurred on March 31, 1997 have been described in this Form 10-K.
The financial statements required by this Form 8-K were filed on
Form 8-K/A on June 16, 1997.
55
<PAGE> 56
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, 1997 RVM INDUSTRIES, 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.
Date June 27, 1997 /S/ Jacob Pollock
--------------------- -------------------------------
Jacob Pollock, Director and
Chief Executive Officer
Date
--------------------- -------------------------------
Nicholas T. George, Director
Date
--------------------- -------------------------------
C. Stephen Clegg, Director
Date June 27, 1997 /s/ David A. Simia
--------------------- -------------------------------
David A. Simia, Director
Date June 27, 1997 /s/ Richard D. Pollock
--------------------- -------------------------------
Richard D. Pollock, Director
Date June 27, 1997 /s/ John J. Stitz
--------------------- -------------------------------
John J. Stitz, principal financial
officer and principal accounting
officer
56
<PAGE> 1
EXHIBIT 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statement of
RVM Industries, Inc. and Subsidiaries, as reporting company successor to Ravens
Metal Products, Inc., on Form S-8 filed June 6, 1994 of our report dated June 6,
1997 on our audits of the consolidated financial statements and financial
statement schedule of RVM Industries, Inc. as of March 31, 1997 and 1996, and
for each of the years ended March 31, 1997, 1996 and 1995, which report is
included in this Annual Report on Form 10-K.
/s/ COOPERS & LYBRAND L.L.P.
Cleveland, Ohio
June 26, 1997
57
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-K
FOR THE FISCAL YEAR ENDED MARCH 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-START> APR-01-1996
<PERIOD-END> MAR-31-1997
<CASH> 468,572
<SECURITIES> 0
<RECEIVABLES> 6,738,016
<ALLOWANCES> 112,000
<INVENTORY> 8,677,160
<CURRENT-ASSETS> 16,396,896
<PP&E> 25,043,717
<DEPRECIATION> 6,022,428
<TOTAL-ASSETS> 38,567,375
<CURRENT-LIABILITIES> 14,070,652
<BONDS> 18,212,998
<COMMON> 19,343
0
0
<OTHER-SE> 6,036,882
<TOTAL-LIABILITY-AND-EQUITY> 38,567,375
<SALES> 61,638,221
<TOTAL-REVENUES> 61,769,295
<CGS> 52,983,028
<TOTAL-COSTS> 52,983,028
<OTHER-EXPENSES> 7,138,530
<LOSS-PROVISION> 154,630
<INTEREST-EXPENSE> 1,061,336
<INCOME-PRETAX> 586,401
<INCOME-TAX> 505,462
<INCOME-CONTINUING> 80,939
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 80,939
<EPS-PRIMARY> .04
<EPS-DILUTED> .04
</TABLE>
