<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED COMMISSION FILE NUMBER
JUNE 27, 1997 1-11781
DAYTON SUPERIOR CORPORATION
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
OHIO 31-0676346
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(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification No.)
721 Richard Street
Miamisburg, Ohio 45342
---------------- -----
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, including area code: 937-866-0711
------------
NOT APPLICABLE
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(Former name, former address and former fiscal year,
if changed since last report)
Indicate by 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
--------- ---------
5,712,562 Common Shares were outstanding as of JULY 22, 1997
<PAGE> 2
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
DAYTON SUPERIOR CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
June 28, June 27,
1996 1997
----------- -----------
(Unaudited) (Unaudited)
<S> <C> <C>
ASSETS (Amounts in thousands)
CURRENT ASSETS:
Cash $638 $316
Accounts Receivable, net of allowance for
doubtful accounts of $720 and $447 21,413 23,669
Inventories (Note 2) 15,538 18,855
Prepaid expenses 657 885
Prepaid income taxes 427 0
Future tax benefits 1,393 988
----------- -----------
Total current assets 40,066 44,713
----------- -----------
RENTAL EQUIPMENT, NET 1,587 2,807
----------- -----------
PROPERTY, PLANT & EQUIPMENT: 30,258 33,438
Less accumulated depreciation (11,650) (14,957)
----------- -----------
Net property, plant & equipment 18,608 18,481
GOODWILL AND INTANGIBLE ASSETS,
net of accumulated amortization 58,180 56,705
OTHER ASSETS 0 363
----------- -----------
Total assets $118,441 $123,069
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt (Note 3) $3,282 $3,282
Accounts payable 13,965 12,202
Accrued compensation and benefits 4,114 4,428
Accrued liabilities 3,391 3,881
Due to Ripplewood Holdings LLC 611 0
Accrued interest 14 143
----------- -----------
Total current liabilities 25,377 23,936
LONG-TERM DEBT (Note 3) 37,602 38,395
DEFFERED INCOME TAXES 2,663 2,470
OTHER LONG-TERM LIABILITIES 3,186 1,824
----------- -----------
Total liabilities 68,828 66,625
----------- -----------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Class A Common Shares 31,800 33,102
Class B Common Shares 10,123 9,749
Cumulative foreign currency translation adjust (141) (150)
Excess pension liability (50) 0
Retained earnings 7,881 13,743
----------- -----------
Total shareholders' equity 49,613 56,444
----------- -----------
Total liabilities and shareholders' equity $118,441 $123,069
=========== ===========
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these consolidated statements
<PAGE> 3
<TABLE>
<CAPTION>
DAYTON SUPERIOR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Fiscal Months Ended Six Fiscal Months Ended
------------------------- -----------------------
June 28, June 27, June 28, June 27,
1996 1997 1996 1997
----------- ----------- ----------- -----------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
(Amounts in thousands, except share and per share amounts)
<S> <C> <C> <C> <C>
NET SALES $36,461 $39,839 $60,076 $65,819
COST OF SALES 24,911 26,906 41,057 45,178
----------- ----------- ----------- -----------
Gross profit 11,550 12,933 19,019 20,641
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 5,818 6,475 11,447 12,748
AMORTIZATION OF GOODWILL AND INTANGIBLES 426 468 832 925
----------- ----------- ----------- -----------
Operating income 5,306 5,990 6,740 6,968
OTHER EXPENSES:
Interest expense, net 1,594 797 3,179 1,483
Other, net (24) 0 (16) 11
----------- ----------- ----------- -----------
Income before income taxes and extraordinary
item 3,736 5,193 3,577 5,474
PROVISION FOR INCOME TAXES (1,470) (2,242) (1,712) (2,363)
----------- ----------- ----------- -----------
Net income before extraordinary item $2,266 $2,951 $1,865 $3,111
----------- ----------- ----------- -----------
EXTRAORDINARY LOSS ON DEBT EXTINGUISHMENT
(Note 6) ($2,314) $0 ($2,314) $0
----------- ----------- ----------- -----------
NET INCOME/(LOSS) ($48) $2,951 ($449) $3,111
=========== =========== =========== ===========
Income per share before extraordinary item $0.64 $0.51 $0.54 $0.53
----------- ----------- ----------- -----------
Extraordinary item per share ($0.65) $0.00 ($0.67) $0.00
----------- ----------- ----------- -----------
Net income/(loss) per share ($0.01) $0.51 ($0.13) $0.53
=========== =========== =========== ===========
Weighted average common and common equivalent
shares outstanding 3,562,794 5,838,646 3,449,278 5,829,466
=========== =========== =========== ===========
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these consolidated statements.
<PAGE> 4
DAYTON SUPERIOR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six Months Ended June 28, 1996 and June 27, 1997
<TABLE>
<CAPTION>
June 28, June 27,
1996 1997
----------- -----------
(Unaudited) (Unaudited)
(Amounts in thousands)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) ($449) $3,111
Adjustments to reconcile net income (loss) to net cash used in
operating activities:
Extraordinary loss on debt extinguishment 2,314 0
Depreciation 1,872 2,098
Amortization of goodwill and intangibles 832 925
Deferred income taxes (118) (224)
Amortization of debt discount and deferred finanancing costs 136 82
Loss (gain) on sales of assets (6) 0
Change in assets and liabilities, net of the effects of acquisitions:
Accounts receivable (7,455) (10,999)
Inventories (2,267) (4,381)
Rental equipment (539) (877)
Accounts payable 4,626 4,295
Accrued liabilities (180) (349)
Income tax payable (82) 2,510
Accrued interest (2,049) 69
Due to Ripplewood Holdings LLC 611 0
Other, net 564 (810)
----------- -----------
Net cash provided by/(used in) operating activities (2,190) (4,550)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Property, plant and equipment additions (1,255) (1,213)
Proceeds from sales of assets 5 10
Other, net 0 (13)
Acquisition of the net assets of Ironco Manufacturing and
Steel Structures, Inc. (Notes 4 & 5) (3,800) (1,129)
----------- -----------
Net cash used in investing activities (5,050) (2,345)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of long-term debt, net 27,293 7,745
Repayment of long-term debt (40,000) (837)
Prepayment premium on extinguishment of long-term debt (2,400) 0
Financing costs and fees (235) 0
Issuance of common stock 22,579 105
----------- -----------
Net cash provided by financing activities 7,237 7,013
----------- -----------
EFFECT OF EXCHANGE RATE CHANGES ON CASH (2) (5)
----------- -----------
Net increase/(decrease) in cash (5) 113
CASH, beginning of period 643 203
----------- -----------
CASH, end of period $638 $316
=========== ===========
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Cash paid for income taxes $502 $125
Cash paid for interest 5,091 1,341
Issuance of common stock in conjunction with acquisition (Note 4) 0 451
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these consolidated statements
<PAGE> 5
DAYTON SUPERIOR CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 28, 1996 AND JUNE 27, 1997
(Amounts in thousands, except for share amounts)
(Unaudited)
(1) Consolidated Financial Statements
The interim consolidated financial statements included herein have been
prepared by the Company, without audit, and include, in the opinion of
management, all adjustments necessary to state fairly the information set forth
therein. Any such adjustments were of a normal recurring nature. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
omitted, although the Company believes that the disclosures are adequate to make
the information presented not misleading. It is suggested that these unaudited
consolidated financial statements be read in conjunction with the consolidated
financial statements and the notes thereto included in the Company's annual
financial statements for the year ended December 31, 1996.
(2) Accounting Policies
The interim consolidated financial statements have been prepared in
accordance with the accounting policies described in the notes to the Company's
consolidated financial statements for the year ended December 31, 1996. While
management believes that the procedures followed in the preparation of interim
financial information are reasonable, the accuracy of some estimated amounts is
dependent upon facts that will exist or calculations that will be accomplished
at year end. Examples of such estimates include changes in the LIFO reserve
(based upon the Company's best estimate of inflation to date) and management
bonuses. Any adjustments pursuant to such estimates during the fiscal quarter
were of a normal recurring nature
(a) Fiscal Quarter - The Company's fiscal quarters are defined as
the periods ending on the last Friday in March, June and
September.
(b) Inventories - Substantially all finished products and raw
materials are stated at the lower of last in, first out (LIFO)
cost or market (which approximates current cost). Following is a
summary of the components of inventories as of June 28, 1996 and
June 27, 1997:
<TABLE>
<CAPTION>
June 28, June 27,
1996 1997
------- -------
<S> <C> <C>
Raw materials ........................... $ 5,095 $ 4,916
Finished goods .......................... 10,443 13,939
------- -------
15,538 18,855
LIFO reserve ............................ --- ---
------- -------
$15,538 $18,855
======= =======
</TABLE>
(3) Credit Arrangements
On June 17, 1996, the Company entered into an Amended Credit Facility
(as so amended, the "Amended Credit Facility") with Bank One, Dayton, NA and
Bank of America Illinois (collectively, the "Banks"). The Amended Credit
Facility provided for a Term Loan and a Revolving Credit Facility, each of
<PAGE> 6
which will be secured by substantially all the assets of the Company. At June
27, 1997, $37,000 was available under the Revolving Credit Facility, of which
$30,863 was outstanding at a weighted average interest rate of 7.3%.
Average borrowings under the Revolving Credit Facility and its
predecessors were $28,042 and $17,637 during the six fiscal months ended June
27, 1997 and June 28, 1996, respectively, at an approximate weighted average
interest rate of 7.3% and 8.3%, respectively. The maximum borrowings outstanding
during the six fiscal months ended June 27, 1997 and June 28, 1996, was $32,403
and $27,600, respectively.
Following is a summary of the Company's long-term debt as of June 28,
1996 and June 27, 1997:
<TABLE>
<CAPTION>
June 28, June 27,
1996 1997
------- -------
<S> <C> <C>
Revolving lines of credit $27,600 $30,863
Term Loan, bearing a weighted average 13,000 10,562
interest rate of 7.43%
City of Parsons, KS Economic Development Loan 284 252
------- -------
Total long-term debt 40,884 41,677
Less current portion (3,282) (3,282)
------- -------
Long-term portion $37,602 $38,395
======= =======
</TABLE>
(4) Acquisition of the Net Assets of Ironco Manufacturing Co., Inc. and
Birmingham Bar Coating Inc.
On February, 21, 1997, the Company acquired certain of the assets and
assumed certain of the liabilities of Ironco Manufacturing Co., Inc. and
Birmingham Bar Coating Inc., privately held concrete paving products
manufacturers. The purchase price, including acquisition related costs of $74,
is $1,493 and was paid in cash of $1,147 and 26,254 Class A Common Shares. The
acquisition has been accounted for as a purchase. The cash cost of the
acquisition was funded through draws under the Revolving Credit Facility. This
purchase price has been allocated on the basis of the agreed upon fair value of
the assets acquired and liabilities assumed.
(5) Acquisition of the Net Assets of Steel Structures, Inc.
On April 29, 1996, the Company purchased, certain of the assets and
assumed certain of the liabilities of Steel Structures, Inc., a privately held
regional concrete paving products manufacturer based in Kankakee, IL. Steel
Structures was an epoxy coater and fabricator of paving products and, prior to
the acquisition, was both a major supplier of epoxy coating to the Company and
competitor in its concrete paving product line. Certain of the Company's
existing paving manufacturing equipment has been relocated from another plant to
the former Steel Structures facility in Kankakee. The acquisition is being
operated by the Company under the name American Highway Technology.
As of June 27, 1997, the Company has paid $5,201 of the $5,601 purchase
price with the balance due by April 1998. The acquisition has been accounted for
as a purchase and the results of American Highway Technology have been included
in the accompanying consolidated financial statements since the date of
acquisition. The cost of the acquisition was funded through draws under the
Revolving Credit Facility. This purchase price has been allocated on the basis
of appraised fair value of the assets acquired of $6,113, including goodwill of
$1,374, and liabilities assumed of $512.
<PAGE> 7
(6) Extraordinary loss on Debt Extinguishment
In June 1996, the Company extinguished its $40,000 of unsecured
promissory notes. In conjunction therewith, the Company paid a prepayment
premium of $2,400 and expensed unamortized finance costs and debt discount of
$795 and $538, respectively. The Company recorded an extraordinary loss of
$2,314, net of an income tax effect of $1,419. The Company funded this repayment
with $22,358 in proceeds from its public stock offering and its Amended Credit
Facility.
(7) Public Offering of Company Shares
On June 20 ,1996, the Company completed an initial public offering of
Company 1,974,750 shares of Class A Common Shares and received proceeds of
$22,654, net of expenses.
On July 16, 1996, the underwriters of the Company's initial public
offering of Class A Common Shares exercised a portion of their over-allotment
option pursuant to which the Company issued 56,200 shares of Class A Common
Shares and Ripplewood Holdings LLC converted 56,200 shares of its Class B Common
Shares into Class A Common Shares and sold those shares. The Company's proceeds
of $683 from the issuance of those shares were used to reduce the outstanding
balance of the Revolving Credit Facility.
(8) Stock Option Plans
The Company has five stock option plans all of which provide for an
option exercise price equal to the stock's market price on the date of grant and
all of which are accounted for under APB Opinion No. 25, under which no
compensation costs has been recognized. Had compensation cost for these plans
been determined with Statement of Financial Accounting Standards No.123,
"Accounting for Stock-Based Compensation" ("SFAS 123"), the Company's net income
and earnings per share for the six fiscal months of 1996 and 1997 would have
been reduced to the following pro forma amounts:
<TABLE>
<CAPTION>
Three fiscal months Six fiscal months
------------------- -----------------
ended ended
----- -----
June 28, June 27, June 28, June 27,
-------- -------- -------- --------
1996 1997 1996 1997
---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net Income As Reported ($48) $2,951 ($449) $3,111
Pro Forma ( 53) 2,920 ( 460) 3,069
Income per Share As Reported ($0.01) $0.51 ($0.13) $0.53
Pro Forma ( 0.01) 0.50 ( 0.13) 0.53
</TABLE>
Because the SFAS 123 method of accounting has not been applied to
options granted prior to January 1, 1995, the resulting pro forma compensation
cost may not be representative of that to be expected in future years.
<PAGE> 8
The Company may grant options of up to 40,000 shares under the 1997
Nonemployee Directors Stock Option Plan and up to 240,000 shares under the 1997
Stock Option and Restricted Stock Plan. A summary of the status of the Company's
stock option plans for the six months ended June 27, 1997 is presented in the
table below:
<TABLE>
<CAPTION>
Weighted Average Exercise
Number of Shares Price Per Share
<S> <C> <C>
Outstanding at 12/31/96 297,750 $ 3.11
Granted 6,000 12.63
----- -----
Outstanding at 06/27/97 303,750 $ 3.30
======= ======
</TABLE>
(9) Recent Accounting Pronouncements
In February 1997, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards No. 128 "Earnings per Share."
This standard is effective for both interim and annual periods ending after
December 15, 1997. If the earnings per share were calculated in accordance with
SFAS 128, the Company's income (loss) per share would be as follows:
<TABLE>
<CAPTION>
Three fiscal months ended Six fiscal months ended
------------------------- -----------------------
June 28, 1996 June 27, 1997 June 28, 1996 June 27, 1997
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Basic ($0.01) $0.52 ($0.13) $0.55
Diluted ( 0.01) 0.51 ( 0.13) 0.53
</TABLE>
<PAGE> 9
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Dayton Superior Corporation (the "Company") achieved record second quarter 1997
net sales of $39.8 million, which were 9.0% higher than net sales in the second
quarter of 1996. The Company's second quarter sales by major product category
during the last two years were:
<TABLE>
<CAPTION>
DOLLARS IN MILLIONS THREE FISCAL MONTHS ENDED SIX FISCAL MONTHS ENDED
- ------------------- ------------------------- -----------------------
JUNE 27, 1997 JUNE 28, 1996 JUNE 27, 1997 JUNE 28, 1996
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Concrete Products $23.3 $21.5 $40.6 $37.0
Paving Products 9.2 7.6 12.8 10.7
Masonry Products 7.3 7.4 12.4 12.4
--- --- ---- ----
Net Sales $39.8 $36.5 $65.8 $60.1
===== ===== ===== =====
</TABLE>
Net sales of concrete products increased by $1.8 million, or 8.4%, to $23.3
million in the second quarter of 1997 due to strong market demand, especially in
the rental and tilt-up markets. Net sales of paving products increased $1.6
million, or 21.1%, to $9.2 million in the second quarter of 1997 due to the
acquisition of Ironco Manufacturing Co., Inc. in February 1997 and higher than
expected customer demand. Net sales of masonry products decreased slightly in
the second quarter compared to last year, with a 1.4% decrease. The masonry
product market is currently very price competitive, particularly in the hot
dipped and mill galvanized masonry wall reinforcement markets.
Income before taxes and extraordinary item was $5.2 million in the second
quarter of 1997 compared to $3.7 million in the second quarter of 1996. Interest
expense decreased by $0.8 million, or 50.0%, in the second quarter of 1997 from
the same period last year as the Company used the proceeds from its initial
public offering in June 1996 to reduce debt levels and to negotiate favorable
interest rates.
Net income for the second quarter of 1997 was $3.0 million, or $0.51 per share,
compared to a loss of $0.05 million, or $0.01, per share in the second quarter
of 1996.
IMPLEMENTATION OF BUSINESS STRATEGY
To strengthen its position in concrete paving products, in February 1997, the
Company acquired the principal assets of Ironco Manufacturing Co., Inc. and
Birmingham Bar Coating, Inc. Operations remained in Birmingham, AL under the
name Ironco Manufacturing, as part of the Company's American Highway Technology
division.
On May 9, 1997, Dayton Superior announced a definitive agreement to acquire
Symons Corporation for an estimated total purchase price of $79 million. Symons
is comprised of two divisions, Symons and Richmond Screw Anchor. Symons is a
leading manufacturer of prefabricated concrete forms, while Richmond Screw
Anchor is a manufacturer of concrete accessories. These businesses complement
and broaden the
<PAGE> 10
Company's product lines. See Part II, Item 1 of this report.
RESULTS OF OPERATIONS
The following table summarizes the Company's results of operations as a
percentage of net sales.
<TABLE>
<CAPTION>
THREE FISCAL MONTHS SIX FISCAL MONTHS
------------------- -----------------
ENDED ENDED
----- -----
JUNE 27, JUNE 28, JUNE 27, JUNE 28,
-------- -------- -------- --------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales 100.0 100.0 100.0 100.0
Cost of goods sold 67.5 68.3 68.7 68.3
-------- -------- -------- -------
Gross profit 32.5 31.7 31.3 31.7
Selling, general and administrative expenses 16.3 16.0 19.4 19.1
Amortization of goodwill and intangibles 1.2 1.2 1.4 1.4
-------- -------- -------- -------
Operating income 15.0 14.5 10.5 11.2
Interest expense, net 2.0 4.4 2.2 5.3
Other, net -- (0.1) -- (0.1)
-------- -------- -------- -------
Income before income taxes 13.0 10.2 8.3 6.0
Provision for income taxes 5.6 4.0 3.6 2.9
-------- -------- -------- -------
Net income before extraordinary item 7.4 6.2 4.7 3.1
Extraordinary item -- (6.3) -- (3.8)
-------- -------- -------- -------
Net income/(loss) 7.4 (0.1) 4.7 (0.7)
======== ======== ======== =======
</TABLE>
- ------------------------------
COMPARISON OF THREE FISCAL MONTHS ENDED JUNE 27, 1997 AND JUNE 28, 1996
NET SALES
Net sales increased $3.3 million, or 9.0%, from $36.5 million in the second
quarter of 1996 to $39.8 million in the second quarter of 1997. Net sales of
concrete products increased by 8.4% from $21.5 million in the second quarter of
1996 to $23.3 million in the second quarter of 1997, due to strong performance
in our rental and tilt-up product lines, and, to a lesser extent, new product
sales. Net sales of paving products increased $1.6 million, or 21.1% from the
second quarter of 1996 to the second quarter of 1997. The acquisition of the
assets of Ironco Manufacturing Co., Inc. in February 1997 and strong demand from
customers drove the increase. Net sales of masonry products decreased $0.1
million, to $7.3 million in the second quarter of 1997 compared to the second
quarter 1996 levels. Competition continues at a high level in the hot dipped and
mill galvanized masonry wall reinforcement product markets.
GROSS PROFIT
Gross profit for the second quarter of 1997 was $12.9 million, a 11.2% increase
over $11.6 million from the second quarter of 1996. As a percent of net sales,
gross margin was 32.5% in the second quarter of this year, up from 31.7% last
year. The increase in gross margin was caused by the following primary factors:
a favorable mix within the concrete products category to higher margin products
and higher margins on paving and masonry products.
<PAGE> 11
OPERATING EXPENSES
SG&A expenses (excluding the amortization of goodwill and intangibles) were up
slightly as a percent of net sales from 16.0% in the second quarter of last
year, to 16.3% in the second quarter of this year. SG&A expenses increased $0.7
million, or 12.1%, from $5.8 million in the second quarter of 1996, to $6.5
million in the second quarter of 1997. The increase resulted from incurring
costs associated with being a publicly owned company and building and
strengthening the new American Highway Technology Division. American Highway
Technology locations in Kankakee, IL and Birmingham, AL were added in April 1996
and February 1997.
Interest expense decreased $0.8 million from $1.6 million in the second quarter
1996, to $0.8 million in the second quarter 1997. The Company used the proceeds
from its initial public offering in June 1996 to reduce debt levels which also
facilitated more favorable interest rates.
Income before income taxes and extraordinary item increased $1.5 million to $5.2
million in the second quarter 1997 compared to $3.7 million in the second
quarter of 1996. The difference in effective tax rates from statutory rates is
due to nondeductible goodwill amortization.
COMPARISON OF SIX FISCAL MONTHS ENDED JUNE 27, 1997 AND JUNE 28, 1996
NET SALES
For the first six months of 1997, net sales were a record $65.8 million, a 9.5%
increase from $60.1 million in 1996. Net sales of concrete products increased by
$3.6 million, or 9.7%, to $40.6 million in 1997 due to strong heavy construction
activity in the U.S. and to a lesser extent, new product sales of concrete
accessories. Net sales of paving products increased $2.1 million, or 19.6%, in
the first half from $10.7 million in 1996 to $12.8 million in 1997. The
acquisition of Ironco Manufacturing Co., Inc. in February 1997 and the strong
demand from customers drove the increase. Net sales of masonry products were
flat at $12.4 million for both periods. Competition is strong in the hot dipped
and mill galvanized masonry wall reinforcement product markets.
GROSS PROFIT
Gross profit for the first half of 1997 was $20.6 million, a 8.4% increase over
$19.0 million for the first half of 1996. As a percent of net sales, gross
margin was 31.3% in the first half of 1997, compared to 31.7% in the first half
of 1996. The gross margin decreased slightly as a result of lower margins on the
masonry products and increasing paving product sales, which traditionally
command a lower margin than concrete products.
OPERATING EXPENSES
SG&A expenses (excluding the amortization of goodwill and intangibles) were up
slightly as a percent of net sales from 19.1% in the first half of 1996 to 19.4%
in the first half of 1997. SG&A expenses increased $1.3 million, or 11.4% from
$11.4 million in the
<PAGE> 12
six months of 1996 to $12.7 million in the first half of 1997. The increase
resulted from incurring costs associated with being a publicly owned company and
costs to build and strengthen a new division-American Highway Technology.
INTEREST AND OTHER EXPENSES
Interest expense decreased $1.7 million from $3.2 million in the first half of
1996 to $1.5 million in the first half of 1997. The Company used the proceeds
from the initial public offering in June 1996 to reduce debt levels which also
facilitated more favorable interest rates.
NET INCOME
Income before income taxes and extraordinary item increased $1.9 million to $5.5
million in the first half of 1997 compared to $3.6 million in the first half of
1996. The difference in effective tax rates from statutory rates is due to
nondeductible goodwill amortization.
Net income in the first half of 1997 was $3.1 million, or $0.53, per share
compared to a loss $0.5 million, or $0.13, per share in the first half of 1996.
LIQUIDITY AND CAPITAL RESOURCES
The Company's capital requirements relate primarily to capital expenditures,
debt service and the cost of acquisitions. Historically, the Company's primary
sources of financing have been cash from operations, borrowings under its
revolving line of credit and the issuance of long-term debt and equity.
Net cash used in operating activities in the first half of 1997 was $4.6
million. Net income before non-cash charges of depreciation, amortization and
deferred taxes provided $5.9 million of operating cash flow. Working capital
growth used $10.5 million of operating cash flow. Significant working capital
uses included seasonal increases in accounts receivable and inventory of $11.0
million and $4.4 million, net of acquisitions, respectively. Accounts payable
grew by $4.3 million in the first half of 1997 due to normal seasonal expansion.
Net cash generated from draws on the line of credit funded the seasonal
increases in operating activities, investments in property, plant and equipment,
the acquisition of the principal assets of Ironco Manufacturing Co., Inc., and
Birmingham Bar Coating Inc., and the scheduled term loan repayments.
At June 27, 1997, working capital was $20.8 million, compared to $14.7 million
at June 28, 1996. The growth in working capital is primarily attributable to
acquisitions and growth in the base business.
In June 1996, the Company entered into an Amended Credit Facility to provide for
term loans to the Company and Dur-O-Wal (together, the "Term Loan") and
revolving credit facilities for the Company and Dur-O-Wal (together, the
"Revolving Credit Facility"), each of which is secured by substantially all the
assets of the Company and Dur-O-Wal. At June 27, 1997, $37.0 million of the
$37.0 million Revolving Credit Facility was
<PAGE> 13
available, of which $30.9 million of borrowings were outstanding. The Term Loan
had an outstanding balance at June 27, 1997 of $10.6 million. At June 27, 1997,
the Company had $41.7 million of long-term debt outstanding, of which $3.3
million was current. Net borrowings during the first half of 1997 were $6.9
million. The Company's debt to total capitalization ratio decreased from 43.1%
in June 1996 to 40.5% in June 1997 primarily as a result of increased equity
from earnings.
The Company invested $1.2 million in property, plant and equipment additions
during the first six months of 1997, consistent with the investment in the first
six months of 1996. Significant investments were made in equipment to further
improve efficiencies and expand capacity in the concrete paving product line,
concrete chemical product line and masonry accessory product line.
On February 21, 1997, the Company acquired certain of the assets of Ironco
Manufacturing Co., Inc. and Birmingham Bar Coating Inc., privately held concrete
paving products manufacturers. The purchase price, including acquisition related
costs, was $1.5 million and was paid in cash and Class A Common Shares. The
acquisition was accounted for as a purchase. The cash cost of the acquisition
was funded through draws under the Revolving Credit Facility. The purchase price
was allocated on the basis of the agreed upon fair value of the assets acquired
and liabilities assumed.
The Company believes its liquidity, capital resources and cash flows from
operations are sufficient to fund planned capital expenditures, working capital
requirements and debt service in absence of additional acquisitions.
The Company intends to fund future acquisitions with cash, securities or a
combination of cash and securities. To the extent the Company uses cash for all
or part of any such acquisitions, it expects to raise such cash primarily from
cash generated from operations, borrowings under the Amended Credit Facility or,
if feasible and attractive, issuances of long-term debt or additional Class A
Common Shares.
SEASONALITY
The Company's operations are seasonal in nature with approximately 60% of sales
historically occurring in the second and third quarters. Working capital and
borrowings fluctuate with sales volume. Historically more than 50% of cash flow
from operations is generated in the fourth quarter.
INFLATION
The Company does not believe inflation had a significant impact on its
operations over the past three years. In the past, the Company has been able to
pass along all or a portion of the effects of steel price increases. There can
be no assurance the Company will be able to continue to pass on the cost of such
increases in the future.
RECENTLY ISSUED ACCOUNTING STANDARDS
In October 1996, the American Institute of Certified Public Accountants issued
<PAGE> 14
Statement of Position 96-1, "Environmental Remediation Liabilities" ("SOP
96-1"). As described in footnote 2(f) of the December 31, 1996 consolidated
financial statements, the Company adopted the provisions of SOP 96-1 on January
1, 1997. The adoption did not have a material impact on the Company's financial
position or results of operations.
In February 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 128 "Earnings per Share." This
standard is effective for both interim and annual periods ending after December
15, 1997.
FORWARD-LOOKING STATEMENTS
This Form 10-Q includes, and future filings by the Company on Form 10-K, Form
10-Q and Form 8-K and future oral and written statements by the Company and its
management may include, certain forward-looking statements, including (without
limitation) statements with respect to anticipated future operating and
financial performance, growth opportunities and growth rates, acquisition and
divestitive opportunities and other similar forecasts and statements of
expectation. Words such as "expects," "anticipates," "intends," "plans,"
"believes," "seeks," "estimates" and "should," and variations of these words and
similar expressions, are intended to identify these forward-looking statements.
Forward-looking statements by the Company and its management are based on
estimates, projections, beliefs and assumptions of management and are not
guarantees of future performance. The Company disclaims any obligation to update
or revise any forward-looking statement based on the occurrence of future
events, the receipt of new information, or otherwise.
Actual future performance, outcomes and results may differ materially from those
expressed in forward-looking statements made by the Company and its management
as the result of a number of important factors. Representative examples of these
factors include (without limitation) the cyclical nature of nonresidential
building and infrastructure construction activity, which can be affected by
factors outside the Company's control such as the general economy, governmental
expenditures and changes in banking and tax laws; the Company's ability to
successfully identify, finance, complete and integrate acquisitions; the mix of
products sold by the Company; the Company's ability to successfully develop and
introduce new products; increases in the price of steel (the principal raw
material in the Company's products) and the Company's ability to pass along such
price increases to its customers; and the seasonality of the construction
industry. In addition to these factors, actual future performance, outcomes and
results may differ materially because of other, more general, factors including
(without limitation) general industry and market conditions and growth rates,
domestic economic conditions, governmental and public policy changes and the
continued availability of financing in the amounts, at the terms and on the
conditions necessary to support the Company's future business.
<PAGE> 15
PART II-OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On April 22, 1997, the Company announced it had entered into a letter of intent
to acquire all of the outstanding stock of Symons Corporation ("Symons"). Symons
and the Company filed Notification and Report Forms with respect to the
acquisition with the Federal Trade Commission and the Antitrust Division of the
Department of Justice by April 24, 1997, and the thirty day waiting period under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
ACT"), began on April 24, 1997. On May 9, 1997, the Company, Symons and the
stockholders of Symons entered into a definitive agreement with respect to the
previously-announced acquisition. On May 23, 1997, the Company received a
request from the Antitrust Division of the United States Department of Justice
for additional information and documents with respect to the acquisition
pursuant to the HSR Act. This request extends the waiting period under the HSR
Act, during which the acquisition may not be consummated, for 20 days from the
date the requested materials are provided. The Company currently is responding
to this request.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Annual Meeting of Shareholders of DAYTON SUPERIOR CORPORATION was held on
May 8, 1997.
The following votes were cast by the holders of Class A Common Shares and Class
B Common Shares for the nominees listed below to hold the office of director and
such nominees were elected:
<TABLE>
<CAPTION>
VOTES FOR VOTES WITHHELD
- -----------------------------------------------------------------------------
<S> <C> <C>
William F. Andrews 17,599,642 53,200
John A. Ciccarelli 17,599,642 53,200
Timothy C. Collins 17,599,642 53,200
Matthew O. Diggs, Jr. 17,599,642 53,200
Matthew M. Guerreiro 17,599,642 53,200
Robert B. Holmes 17,599,642 53,200
</TABLE>
The following votes were cast by the holders of Class A Common Shares and Class
B Common Shares with respect to approval of the 1997 Stock Option and Restricted
Stock Plan:
<TABLE>
<CAPTION>
VOTES FOR VOTES AGAINST VOTES ABSTAINED UNVOTED
- -----------------------------------------------------------------------------------
<S> <C> <C> <C>
16,928,418 393,620 58,750 272,054
</TABLE>
The following votes were cast by the holders of Class A Common Shares and Class
B Common Shares with respect to approval of the 1997 Nonemployee Director Stock
Option Plan:
<TABLE>
<CAPTION>
VOTES FOR VOTES AGAINST VOTES ABSTAINED UNVOTED
- -----------------------------------------------------------------------------------
<S> <C> <C> <C>
17,126,573 201,420 58,700 266,149
</TABLE>
<PAGE> 16
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
(a) See Exhibit Index following the signature page to this report.
(b) Reports on Form 8-K. The Company filed the following Current Reports on Form
8-K during the quarter ended June 27, 1997:
<TABLE>
<CAPTION>
DATE OF REPORT ITEMS REPORTED
<S> <C>
April 21, 1997 Execution of a letter of intent dated April
21, 1997 with repect to the acquisition by the
Company of Symons Corporation.
April 24, 1997 Execution on May 9, 1997 of definitive
agreement with respect to the acquisition by
the Company of Symons Corporation and receipt
of a request for additional information and
documents with respect to the acquisition by
the Antitrust Division of the United States
Department of Justice pursuant to the
Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended.
</TABLE>
<PAGE> 17
SIGNATURES
- ----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
REgistrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DAYTON SUPERIOR CORPORATION
---------------------------
DATE: July 22, 1997 BY: /s/ Vinod M. Khilnani
-------------------------- ------------------------
Vinod M. Khilnani
Vice President and Chief Financial
Officer
(Principal Financial Officer)
/s/ Richard L. Braswell
------------------------
Richard L. Braswell
Vice President Finance and Treasurer
(Principal Accounting Officer)
<PAGE> 18
INDEX TO EXHIBITS
-----------------
(10) Material Contracts
10.1 1997 Stock Option and Restricted Stock Plan
10.2 1997 Nonemployee Director Stock Option Plan
10.3 Nonemployee Directors Compensation Program
(11) Statement Re: Computation of Earnings Per Share:
11.1 Computation of Earnings Per Share
(27) Financial Data Schedule
______________________
<PAGE> 1
Exhibit 10.1
DAYTON SUPERIOR CORPORATION
1997 STOCK OPTION AND RESTRICTED STOCK PLAN
-------------------------------------------
1. PURPOSE. The purpose of the Plan is to enable the Company to continue
to attract, retain and motivate those officers and other key employees of the
Company whose substantial contributions are essential to the growth and success
of the Company's business with a long-term incentive that effectively is tied to
the performance of the Company and shareholder value.
2. DEFINITIONS. For purposes of this Plan:
"AGREEMENT" means a written agreement between the Company and a
Holder evidencing the grant of an Option and setting forth the terms and
conditions of the Option or evidencing the grant of Restricted Shares and
setting forth the terms and conditions of the Restricted Shares.
"BOARD" means the Board of Directors of the Company.
"CAUSE" means (i) the willful neglect by the Holder of, or the
refusal by the Holder to perform, the Holder's duties or responsibilities,
or any willful act by the Holder which materially impairs the ability of
the Holder to perform the Holder's duties or responsibilities and which
act continues after being brought to the attention of the Holder (other
than any such failure resulting from the Holder's incapacity due to
physical or mental illness), or (ii) any willful act or failure to act by
the Holder which is materially injurious to the Company.
"CHANGE IN CAPITALIZATION" means any increase, reduction or change
or exchange of Shares for a different number or kind of shares or other
securities of the Company by reason of a reclassification,
recapitalization, merger, consolidation, reorganization, issuance of
warrants or rights, stock dividend, stock split or reverse stock split,
combination or exchange of shares, repurchase of shares, change in
corporate structure or otherwise.
"CHANGE OF CONTROL" means a change of control after the date this
Plan becomes effective of a nature that would be required to be reported
in response to Item 6(e) of Schedule 14 of Regulation 14A promulgated
under the Exchange Act or any similar successor disclosure provisions.
Without limiting the foregoing, a Change of Control shall be deemed to
have occurred for purposes of the Plan regardless of the provisions of the
Exchange Act, if (i) any "person," as such term is used in Sections 13(d)
and 14(d)(2) of the Exchange Act (excluding, for this purpose, the
Company, any subsidiary of the Company, any employee benefit plan of the
Company or any such subsidiary, Ripplewood or any affiliate of
Ripplewood), including any "group" of persons, becomes the beneficial
owner (as determined in
<PAGE> 2
accordance with Rule 13d-3 promulgated under the Exchange Act), directly
or indirectly, of securities of the Company which, together with any other
securities of the Company theretofore directly or indirectly beneficially
owned by such person, represent 20% or more of the combined voting power
of the Company's then outstanding securities; or (ii) at any election or
series of elections, persons not proposed for nomination or nominated by
the Board are elected as directors of the Company and together constitute
50% or more of the Board.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMITTEE" means the Compensation and Benefits Committee or other
committee of the Board to which the Board has delegated administration of
the Plan or, in the absence of such delegation, the Board.
"COMMON SHARES" means any class of common shares of the Company.
"COMPANY" means Dayton Superior Corporation, an Ohio corporation;
provided, however, that when used herein in connection with the employment
of any Person, "COMPANY" also shall include any subsidiary of the Company.
"DISABILITY" has the meaning ascribed to such term in the Company's
disability program as in effect at the time.
"ELIGIBLE EMPLOYEE" means any officer or other key employee of the
Company designated by the Committee as eligible to receive Options or
Restricted Shares subject to the conditions set forth herein.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"FAIR MARKET VALUE" means the average of the highest sale price and
the lowest sale price of a Share on the date the value of a Share is to be
determined, as reported on the New York Stock Exchange and published in
the WALL STREET JOURNAL or, if no sale is reported for such date, then on
the next preceding date for which a sale is reported or, if the Shares no
longer are traded on the New York Stock Exchange, such value as shall be
determined by the Committee in good faith.
"HOLDER" means a Person to whom an Option or Restricted Shares have
been granted or any permitted transferee of any such Option or Restricted
Shares under the terms of the Plan.
"INCENTIVE STOCK OPTION" means an Option granted under the Plan
which qualifies as an incentive stock option under Section 422 of the
Code.
"NONQUALIFIED OPTION" means an Option granted under the Plan which
by its terms does not qualify as an Incentive Stock Option.
<PAGE> 3
"OPTION" means a right to purchase Shares granted under the Plan. An
Option may be a Nonqualified Option or an Incentive Stock Option.
"PERSON" means a corporation, an association, a partnership, an
organization, a business, an individual, a government or a subdivision
thereof or a governmental agency.
"PLAN" means this 1997 Stock Option and Restricted Stock Plan, as
amended from time to time.
"QUALIFIED DOMESTIC RELATIONS ORDER" means a qualified domestic
relations order as defined in Section 414(p)(1)(B) of the Code which
satisfies the conditions of Section 414(p)(1)(A) of the Code.
"RESTRICTED SHARES" means Shares granted under the Plan which are
subject to a risk of forfeiture and which may not be sold, transferred,
assigned, pledged or otherwise encumbered or disposed of until certain
conditions specified by the Committee have been satisfied.
"RETIREMENT" has the meaning ascribed to such term in the Company's
retirement program as in effect at the time.
"RIPPLEWOOD" means Ripplewood Holdings L.L.C., a Delaware limited
liability company.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SHAREHOLDER AGREEMENT" means that certain Amended and Restated
Shareholder Agreement, as amended, among the Company, Ripplewood and
certain other shareholders of the Company, as the same may be further
amended from time to time.
"SHARES" means the Class A Common Shares, without par value, of the
Company (including any new, additional or different shares or securities
resulting from a Change in Capitalization).
"TAX DATE" means the date as of which the amount of a withholding
tax payment with respect to the exercise of an Option or with respect to
Restricted Shares is calculated.
3. ADMINISTRATION. (a) The Plan shall be administered by the Committee. A
majority of the members of the Committee shall constitute a quorum, and the act
of a majority of the members of the Committee shall constitute the act of the
Committee. Any action reduced to writing and signed by all of the members of the
Committee shall be as fully effective as if it had been taken at a meeting.
<PAGE> 4
(b) Subject to the express terms and conditions set forth in the Plan, the
Committee shall have the power from time to time:
(i) to determine those Eligible Employees to whom Options and
Restricted Shares are granted under the Plan and the number of Options
and/or Restricted Shares to be granted to each and to prescribe the terms
and conditions (which need not be identical) of each Option, including the
exercise price per Share of each Option, and of each Restricted Share;
(ii) to construe and interpret the terms of the Plan, the Options
and the Restricted Shares including, without limitation, to correct any
defect or omission or to reconcile any inconsistency in the Plan or in any
Agreement and to establish, amend and revoke rules and regulations for the
administration of the Plan, in the manner and to the extent the Committee
deems necessary or advisable to make the Plan fully effective (and all
decisions and determinations by the Committee in the exercise of this
power shall be final and binding upon the Company and each Holder);
(iii) to determine the duration and permitted purposes for any leave
of absence which may be granted to a Holder without constituting a
termination of the Holder's employment for purposes of the Plan;
(iv) to authorize the payment to a Holder, but only with the consent
of the Holder, in exchange for the cancellation of all or part of an
Option held by the Holder, of cash in an amount not to exceed the
difference between the aggregate Fair Market Value of the Shares with
respect to which the Option is being canceled (as of the effective date of
such cancellation) and the aggregate exercise price of the Option being
cancelled; and
(v) generally, to exercise such powers and to perform such acts as
the Committee deems necessary or advisable to promote the best interests
of the Company with respect to the Plan.
4. SHARES SUBJECT TO THE PLAN. (a) The maximum number of Shares that may
be issued or delivered pursuant to Options granted under the Plan or granted as
Restricted Shares under the Plan is 240,000, subject to adjustment as provided
in Section 9. Such Shares may be authorized but unissued Shares or Shares held
in treasury. The Company shall reserve, for purposes of the Plan, out of its
authorized but unissued Shares or treasury Shares, or partly out of each, such
number of Shares as shall be determined by the Board.
(b) Whenever any outstanding Option or any portion of an outstanding
Option expires, is canceled or otherwise terminates (other than by exercise) or
whenever any Restricted Share is forfeited, the Shares subject to the
unexercised portion of the Option which has expired, been canceled or has
terminated or the Restricted Share which is forfeited again shall be available
for the grant of Options and Restricted Shares hereunder without reducing the
number of Shares otherwise
<PAGE> 5
available under the Plan. Shares which have been surrendered to or withheld by
the Company to satisfy all or a portion of the purchase price of an Option or a
tax withholding obligation with respect to an Option or Restricted Shares
thereafter shall not be available under the Plan.
5. OPTIONS. The terms and conditions of each Option granted under the Plan
shall be set forth in an Agreement. The terms of any Option may differ from the
terms of other Options granted under the Plan at the same time or at any other
time. The Committee may grant more than one Option to a Person during the term
of the Plan, either in addition to, or in substitution for, one or more Options
previously granted to that Person; provided, however, that the maximum aggregate
number of Shares as to which Options may be granted under the Plan to any Person
during the term of the Plan is 50,000. Each Option and Agreement shall be
subject to the following conditions:
(a) EXERCISE PRICE. No Option may be granted under the Plan with an
exercise price per Share which is less than the Fair Market Value of a
Share on the date the Option is granted.
(b) DURATION. Options shall be for such term as the Committee
determines at the time the Option is granted; provided, however, that no
Option shall be exercisable for a period of more than ten years from the
date the Option is granted. Subsequent to the granting of an Option with a
term of less than ten years, the Committee may extend the term of the
Option to any date before the tenth anniversary of the date of grant.
(c) NON-TRANSFERABILITY. Unless otherwise provided in the Agreement
with respect to an Option, no Option granted under the Plan shall be
pledged, assigned, hypothecated or transferred by the Holder other than by
will or the laws of descent and distribution. Nonqualified Options also
may be transferred pursuant to a Qualified Domestic Relations Order.
Options may be exercised during the lifetime of a Holder only by the
Holder or the Holder's guardian or legal representative. With the consent
of the Committee, a Holder may designate a person or persons to receive,
in the event of such Holder's death, an Option or portion of an Option
held by the Holder at the time of death or any amount payable with respect
thereto to which the Holder then would be entitled.
(d) EXERCISABILITY. Subject to acceleration as provided in Section
5(e), at the time an Option is granted the Committee may provide that the
Option may be exercised in full or in part only after the passage of a
specified period or periods of time following the date of grant or only if
specified conditions have been satisfied. The Committee may accelerate the
exercisability of any Option or any portion of an Option at any time.
Subject to the ten-year limitation set forth in Section 5(b), the
Committee may waive or modify at any time, either before or after an
Option is granted, any condition, limitation or restriction with respect
to the exercise of such Option imposed by or pursuant to this Section 5 or
Section 6 in such circumstances as the Committee, in its discretion, may
deem appropriate; provided, however, that any such waiver or modification
with respect to an outstanding Option shall be subject to the limitations
applicable to amendments to outstanding Options set forth in Section 5(j).
<PAGE> 6
(e) ACCELERATION OF EXERCISABILITY. Notwithstanding Section 5(d),
unless otherwise provided in the Agreement with respect to an Option, each
Option shall become immediately exercisable upon a Change of Control, upon
the death or Disability of the Holder of the Option or upon the Retirement
of the Holder of the Option, if at the time of such Retirement the Holder
is age 65 or older.
(f) TERMINATION OF EMPLOYMENT. (i) Unless otherwise set forth in the
Agreement with respect to an Option, if the original Holder of an Option
ceases to be employed by the Company, all Options held by the Holder or
any permitted transferee shall terminate as follows:
(A) If the termination of the Holder's employment is due to death,
Disability or Retirement, each Option held by the Holder shall continue
to be exercisable (to the extent exercisable at the time the Holder's
employment terminates, including as a result of any acceleration in
accordance with Section 5(e)) by the Holder, the Holder's estate or any
person who acquired the right to exercise the Option by bequest,
inheritance or designation permitted by Section 5(c) for a period of one
year following such termination of employment (but, in no event, beyond
the original term of the Option), at the end of which period the Option
shall terminate in full;
(B) If the termination of the Holder's employment is for any reason
other than death, Disability, Retirement or Cause, each Option held by
the Holder shall continue to be exercisable (to the extent exercisable
at the time the Holder's employment terminates) for a period of 90 days
following such termination of employment (but, in no event, beyond the
original term of the Option), at the end of which period the Option
shall terminate in full;
(C) If the Holder's employment is terminated by the Company for
Cause, each Option held by the Holder, whether exercisable or not, shall
be terminated in full upon such termination of employment; and
(D) If the Holder dies following termination of the Holder's
employment but during the period in which an Option held by the Holder
continues to be exercisable in accordance with this Section 5(f), such
Option shall continue to be exercisable (to the extent exercisable at
the time of Holder's death) by the Holder's estate or by the person who
acquired the right to exercise the Option by bequest, inheritance or
designation permitted by Section 5(c) for a period of one year following
the date of the Holder's death (but, in no event, beyond the original
term of the Option).
Notwithstanding the foregoing, the Committee may provide, at the time an
Option is granted or thereafter, that an Option may be exercised after the
periods provided for in this Section 5(f) (but, in no event, beyond the
original term of the Option).
(ii) At any time that a Holder has the right to exercise an Option
during a period following termination of employment in accordance with
clause (A), (B) or (D) of Section 5(f)(i),
<PAGE> 7
the Company shall have the right to cancel the Option by so notifying the
Holder in writing and agreeing to pay to the Holder, within 10 days, an
amount equal to the number of Shares subject to the Option multiplied by
the amount, if any, by which the Fair Market Value of a Share determined
as of the date the Company gives such notice exceeds the exercise price
per Share of the Option.
(g) EXERCISE OF OPTION. (i) An Option may be exercised only by a
written notice delivered to the Secretary of the Company at the Company's
principal executive office, specifying the number of Shares to be
purchased and accompanied by payment therefor and otherwise in accordance
with the Agreement. The exercise price for the Shares to be purchased
pursuant to the exercise of an Option shall be paid in full upon such
exercise in cash, by check, or, at the discretion of the Committee and
upon such terms and conditions as the Committee may approve, by
transferring Shares to the Company or by the retention by the Company of
Shares to be issued upon the exercise of such Option, or any combination
thereof. Any Shares transferred to the Company or retained by the Company
as payment of the exercise price of an Option shall be valued at their
Fair Market Value on the date the Option is exercised. If required by the
Committee, the Holder shall deliver the Agreement evidencing the Option to
the Secretary of the Company, who shall endorse on the Agreement a
notation of such exercise and shall return such Agreement to the Holder.
Any exercise of an Option for fewer than all of the Shares covered by the
Option shall be for at least ten Shares. No fractional Shares shall be
issued upon the exercise of an Option.
(ii) If the Plan or any law, regulation or interpretation requires
the Company to take any action regarding the Shares before the Company
issues certificates for the Shares being purchased, the Company may delay
delivering the certificates for the Shares for the period necessary to
take such action; provided, however, that the Company shall use its
reasonable best efforts to promptly take any such action. The certificate
or certificates representing Shares acquired upon the exercise of an
Option may bear a legend restricting the transfer of such Shares to the
extent required by applicable law, regulation or interpretation, and the
Company may impose stop transfer instructions to implement such
restrictions, if applicable.
(h) RIGHTS OF HOLDER. No Holder shall be deemed for any purpose to
be the owner of any Shares subject to an Option unless and until the
Option has been validly exercised, the Company has issued and delivered
certificates for the Shares to the Holder, and the Holder's name has been
entered as a shareholder of record on the books of the Company.
(i) SHAREHOLDER AGREEMENT. Unless otherwise expressly provided in
the Agreement at the time an Option is granted, if a Holder who is not
bound by the terms of the Shareholder Agreement exercises an Option, the
Holder shall become a party to, and shall become bound by, the Shareholder
Agreement and shall execute any instrument which the Committee reasonably
determines is necessary for such purpose. Upon the exercise of an Option
by a Holder who is already bound by the terms of the Shareholder
Agreement, the Shares acquired by the Holder shall be subject to the
Shareholder Agreement, and the Holder shall execute any instrument which
the Committee reasonably determines is necessary for such purpose.
<PAGE> 8
(j) AMENDMENT OF OPTIONS. Subject to the terms and provisions of the
Plan, the Committee may amend any outstanding Option in any respect;
provided, however, that (i) no such amendment shall reduce the exercise
price of the Option (except to set forth an adjustment in the exercise
price made pursuant to Section 9), and (ii) the consent of the Holder of
the Option to such amendment must be obtained if the amendment would
adversely affect the rights of the Holder under the Option.
(k) CERTAIN OPTION EXERCISES PROHIBITED. No Holder of an Option
shall make any elective contribution or employee contribution (as defined
for purposes of Treasury Regulation Section 1.401(k)-1(d)(2)(iv)(B)(4)) to
the Plan (i.e., an exercise of an Option with cash or check) during the
12- month period after the Holder's receipt of a deemed hardship
distribution (as defined for purposes of Treasury Regulation Section
1.401(k)-1(d)(2)(iv)) from a plan of the Company (or of a related party,
as defined for purposes of Code Section 414(b), (c), (m) or (o)) which
contains a cash or deferred arrangement under Section 401(k) of the Code;
provided, however, that the foregoing shall not apply if and to the extent
that the Committee determines it is not necessary to qualify any such plan
as a cash or deferred arrangement under Section 401(k) of the Code.
6. ADDITIONAL PROVISIONS APPLICABLE TO INCENTIVE STOCK OPTIONS. (a) The
following additional terms and provisions shall apply to all Incentive Stock
Options granted under the Plan, notwithstanding any provision of Section 5 to
the contrary:
(i) No Incentive Stock Option shall be granted to an officer or
other employee who holds, directly or indirectly (as provided in Section
424(d) of the Code), at the time of grant more than 10% of the combined
voting power of all classes of capital shares of the Company or any
subsidiary unless (i) the exercise price is at least 110% of the Fair
Market Value of the Shares subject to the Incentive Stock Option on the
date the Incentive Stock Option is granted, and (ii) the Incentive Stock
Option is not exercisable after the expiration of five years from the date
of grant;
(ii) The aggregate Fair Market Value (determined as of the time an
Incentive Stock Option is granted) of Shares with respect to which
Incentive Stock Options are exercisable for the first time by any
individual in any calendar year shall not exceed $100,000, or such other
maximum amount permitted by the Code; and
(iii) No Incentive Stock Option may be granted after March 16, 2007.
(b) The Committee may grant Incentive Stock Options from time to time to
employees of the Company who formerly were employed by a corporation with which
the Company has entered into a transaction described in Section 424(a) of the
Code in substitution for incentive stock options held by such persons. Any
Incentive Stock Options so granted shall be on such terms and conditions as may
be necessary for the grant to be treated as a substitution under Section 424(a)
of the Code. To the extent contemplated by Section 424(a) of the Code, any
Incentive Stock Options so granted need not comply with the restrictions set
forth in Section 5(a) and 6(a) above.
<PAGE> 9
7. RESTRICTED SHARES. The terms and conditions of Restricted Shares
granted under the Plan (including, without limitation, the restrictions
applicable to the Restricted Shares) shall be set forth in an Agreement. The
Committee may grant more than one Restricted Share to a Holder during the term
of this Plan. Each Restricted Share shall be subject to the following
conditions:
(a) RESTRICTIONS. At the time Restricted Shares are granted, the
Committee shall specify the restrictions applicable to such Restricted
Shares and the conditions under which the Restricted Shares will be
forfeited to the Company and the conditions under which the restrictions
applicable to the Restricted Shares will lapse. The conditions with
respect to lapse and forfeiture applicable to the Restricted Shares
granted under the Plan shall be intended to create a risk of forfeiture,
as determined for purposes of the Code. Such conditions may include,
without limitation, passage of a specified period of time during which
the Holder must remain employed by the Company and/or satisfaction of
specified performance objectives within a specified period of time. The
restrictions and the conditions with respect to lapse and forfeiture
applicable to Restricted Shares need not be uniform for all Restricted
Shares granted under the Plan or for all Restricted Shares granted to any
Person under the Plan.
(b) RIGHTS OF HOLDERS OF RESTRICTED SHARES. Except as otherwise
provided the Plan or in the Agreement with respect to Restricted Shares,
a Holder of Restricted Shares granted under the Plan shall have all of
the rights of a beneficial owner of such Shares (including, without
limitation, the right to receive dividends with respect to such
Restricted Shares and to vote such Restricted Shares) unless and until
the Restricted Shares are forfeited in accordance with the terms of the
Plan and the Agreement with respect to such Restricted Shares.
Notwithstanding the foregoing, however, a Holder of Restricted Shares
shall not be entitled to receive a certificate with respect to the
Restricted Shares prior to the time the restrictions with respect to such
Restricted Shares lapse. The Company, however, shall issue a certificate
or certificates with respect to Restricted Shares in the name of the
Holder, which it shall pending lapse of the restrictions with respect to
such Restricted Shares or forfeiture of such Restricted Shares or shall
issue the Restricted Shares in the Holder's name in uncertificated form.
(c) TRANSFERABILITY. Restricted Shares shall not be sold,
transferred, assigned, pledged or otherwise encumbered or disposed of
prior to the time the restrictions with respect to such Restricted Shares
lapse, and any attempt by the Holder of the Restricted Shares to do any
of the foregoing shall be void..
(d) LAPSE OF RESTRICTIONS. Upon satisfaction of all conditions to
the lapse of the restrictions with respect to Restricted Shares specified
in the Plan or the Agreement with respect to such Restricted Shares, or
at such earlier time as is provided in Section 7(f), all restrictions
with respect to the Restricted Shares shall lapse (and all rights of the
Holder of such Restricted Shares immediately will vest), and the Company
shall deliver to the Holder (or the Holder's beneficiary or estate) a
certificate or certificates representing the Shares that formerly were
Restricted Shares, free of all restrictions imposed pursuant to the
Agreement and this Section 8 (other than as provided in Section 7(g)).
<PAGE> 10
(e) FORFEITURE OF RESTRICTED SHARES. If, prior to the time that
the restrictions with respect to Restricted Shares lapse in accordance
with Section 7(d), a Holder of Restricted Shares ceases to be employed by
the Company for any reason other than death, Disability or Retirement at
age 65, or in such other circumstances as are specified in the Agreement
with respect to the Restricted Shares, the Restricted Shares shall be
forfeited, unless the Committee otherwise determines prior to the
forfeiture.
(f) ACCELERATION OF VESTING. Notwithstanding the restrictions
imposed under Section 7(a) with respect to Restricted Shares, unless
otherwise provided in the Agreement with respect to Restricted Shares,
all restrictions with respect to Restricted Shares shall lapse (and all
rights of the Holder of such Restricted Shares immediately shall vest)
upon a Change of Control, upon the death or Disability of the Holder of
the Restricted Shares or upon the Retirement of the Holder of the
Restricted Shares, if at the time of such Retirement the Holder is age 65
or older
(g) SHAREHOLDER AGREEMENT. Unless otherwise expressly provided in
the Agreement at the time Restricted Shares are granted, a Person to whom
Restricted Shares are granted who is not bound by the term of the
Shareholder Agreement shall become a party to, and shall become bound by,
the Shareholder Agreement at the time of such grant and shall execute any
instrument which the Committee reasonably determines is necessary for
such purpose. If a Person who already is bound by the terms of the
Shareholder Agreement is granted Restricted Shares, the Restricted Shares
shall be granted subject to the Shareholder Agreement, and the Holder
shall execute any instrument which the Committee reasonably determines is
necessary for such purpose.
8. TAX WITHHOLDING. With the approval of the Committee, the Holder of an
Option or Restricted Shares as to which the restrictions have lapsed may elect
to have the Company retain from the Shares to be issued upon the exercise of an
Option or from the certificate with respect to the formerly Restricted Shares to
be delivered to the Holder, or may deliver to the Company, a number of Shares
having a Fair Market Value on the Tax Date equal to all or any part of the
federal, state and local withholding tax payments (whether mandatory or
permissive) to be made on behalf of the Holder with respect to the exercise of
the Option or the lapse of the restrictions with respect to such Restricted
Shares (up to a maximum amount determined by the Holder's top marginal tax rate)
in lieu of making such payments in cash. The Committee may establish rules or
limitations with respect to the exercise of the rights described in this Section
8 from time to time; provided, however, that any such election made by a person
subject to Section 16 of the Exchange Act must be made in accordance with any
applicable rules established thereunder.
9. ADJUSTMENT UPON CHANGES IN CAPITALIZATION. In the event of a Change in
Capitalization, the Board or the Committee shall determine the appropriate
adjustments, if any, to the maximum number and class of shares with respect to
which Options or Restricted Shares may be granted under the Plan, the number and
class of shares subject to outstanding Options granted under the Plan and the
exercise price thereof, if applicable, and the number and class of outstanding
Restricted Shares granted under the Plan as to which the restrictions have not
lapsed, and any such determination by the Board or the Committee shall be
conclusive. Any additional Restricted Shares issued pursuant to an adjustment
made under this section with respect to outstanding Restricted Shares shall be
<PAGE> 11
subject to the same restrictions and conditions with respect to lapse of such
restrictions and forfeiture as the outstanding Restricted Shares with respect to
which the additional Restricted Shares are issued.
10. TERMINATION AND AMENDMENT OF THE PLAN. Unless earlier terminated by the
Board, the Plan shall terminate on March 17, 2007, and no Options or Restricted
Shares thereafter may be granted under the Plan. The Board may terminate the
Plan at any time and may amend the Plan and outstanding Agreements from time to
time; provided, however, that no such amendment shall be effective unless
approved by the shareholders of the Company, if such shareholder approval is
required (a) so that transactions hereunder will be exempt under Rule 16b-3
under the Exchange Act or (b) to comply with any other applicable law,
regulation or stock exchange rule. The rights and obligations of a Holder with
respect to any Option or Restricted Shares outstanding at the time of any such
amendment to the Plan or any Agreement shall not be adversely altered or
impaired by such amendment, except with the consent of such Holder.
11. GOVERNING LAW; APPROVALS. (a) The Plan and the rights of all persons
claiming hereunder shall be construed and determined in accordance with the laws
of the State of Ohio without giving effect to the choice of law principles
thereof.
(b) The obligation of the Company to sell or deliver Shares with respect to
Options granted under the Plan and the grant of Restricted Shares under the Plan
shall be subject to all applicable laws, rules and regulations, including all
applicable federal and state securities laws and the rules of any stock exchange
on which the Shares are listed.
(c) If at any time the Committee determines, in its absolute discretion,
that the listing, registration or qualification of Shares issuable pursuant to
the Plan is required by any securities exchange or under any state or federal
law, or the consent or approval of any governmental regulatory body is necessary
or desirable as a condition of, or in connection with, the grant of an Option or
Restricted Shares or the issuance of Shares upon the exercise of an Option, no
Option or Restricted Shares shall be granted or payment made or Shares issued,
in whole or in part, unless such listing, registration, qualification, consent
or approval has been effected or obtained free of any conditions not acceptable
to the Committee.
12. EFFECTIVE DATE. The Plan was approved by the Board on March 17, 1997,
subject to approval by the affirmative vote of the holders of Common Shares
entitling them to a majority of the voting power of the Company present in
person or by proxy at the Annual Meeting of Shareholders of the Company to be
held on May 8, 1997. The Plan shall become effective upon the approval of Plan
by the holders of Common Shares entitling them to exercise a majority of the
voting power of the Company present at the Annual Meeting of Shareholders in
person or in proxy.
<PAGE> 1
Exhibit 10.2
DAYTON SUPERIOR CORPORATION
1997 NONEMPLOYEE DIRECTOR STOCK OPTION PLAN
-------------------------------------------
1. PURPOSE. The purpose of the Plan is to promote the interests of the
shareholders of the Company by increasing the identity of interests among the
directors of the Company who are not employees of the Company and the
shareholders of the Company.
2. DEFINITIONS. For purposes of the Plan:
"AGREEMENT" means a written agreement between the Company and a
Nonemployee Director evidencing the grant of an Option and setting forth
the terms and conditions of the Option.
"BOARD" means the Board of Directors of the Company.
"CHANGE IN CAPITALIZATION" means any increase, reduction or change or
exchange of Shares for a different number or kind of shares or other
securities of the Company by reason of a reclassification,
recapitalization, merger, consolidation, reorganization, issuance of
warrants or rights, stock dividend, stock split or reverse stock split,
combination or exchange of shares, repurchase of shares, change in
corporate structure or otherwise.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMON SHARES" means any class of common shares of the Company.
"COMPANY" means Dayton Superior Corporation, an Ohio corporation.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"FAIR MARKET VALUE" means the average of the highest sale price and
the lowest sale price of a Share on the date the value of a Share is to be
determined, as reported on the New York Stock Exchange and published in the
WALL STREET JOURNAL or, if no sale is reported for such date, then on the
next preceding date for which a sale is reported or, if the Shares no
longer are traded on the New York Stock Exchange, the determination of such
value as shall be determined by the Board in good faith.
"NONEMPLOYEE DIRECTOR". means a director of the Company who is not an
employee of the Company or any subsidiary of the Company; provided,
however, that the Board, in its discretion, from time to time may further
limit the directors who constitute Nonemployee Directors for purposes of
the Plan.
<PAGE> 2
"OPTION" means a right to purchase Shares granted under the Plan.
Options granted under the Plan are not intended to qualify as incentive
stock options under Section 422 of the Code.
"PLAN" means this 1997 Nonemployee Director Stock Option Plan, as
amended from time to time.
"QUALIFIED DOMESTIC RELATIONS ORDER" means a qualified domestic
relations order as defined in Section 414(p)(1)(B) of the Code which
satisfies the conditions of Section 414(p)(1)(A) of the Code.
"RIPPLEWOOD" means Ripplewood Holdings L.L.C., a Delaware limited
liability company.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SHARES" means the Class A Common Shares, without par value, of the
Company (including any new, additional or different shares or securities
resulting from a Change in Capitalization).
3. ADMINISTRATION. The Plan shall be administered by the Board. Subject to
the express terms and conditions set forth in the Plan, the Board shall have the
power from time to time: (i) to construe and interpret the terms of the Plan and
the Options including, without limitation, to correct any defect or omission or
to reconcile any inconsistency in the Plan or in any Agreement and to establish,
amend and revoke rules and regulations for the administration of the Plan, in
the manner and to the extent the Board deems necessary or advisable to make the
Plan fully effective (and all decisions and determinations by the Board in the
exercise of this power shall be final and binding upon the Company and each
Nonemployee Director), and (ii) generally, to exercise such powers and to
perform such acts as the Board deems necessary or advisable to promote the best
interests of the Company with respect to the Plan.
4. SHARES SUBJECT TO THE PLAN. (a) The maximum number of Shares that may be
issued or delivered pursuant to Options granted under the Plan is 40,000,
subject to adjustment as provided in Section 9. Such Shares may be authorized
but unissued Shares or Shares held in treasury. The Company shall reserve, for
purposes of the Plan, out of its authorized but unissued Shares or treasury
Shares, or partly out of each, such number of Shares as shall be determined by
the Board.
(b) Whenever any outstanding Option or any portion of an outstanding Option
expires, is canceled or otherwise terminates (other than by exercise), the
Shares subject to the unexercised portion of the Option which has expired, been
canceled or has terminated again shall be available for the grant of Options
hereunder without reducing the number of Shares otherwise available under the
Plan. Shares which have been surrendered to or withheld by the Company to
satisfy all or a portion of the purchase price of an Option or a tax withholding
obligation with respect to an Option thereafter shall not be available under the
Plan.
<PAGE> 3
5. GRANT OF OPTIONS. During the term of the Plan: (i) each Person who is a
Nonemployee Director immediately following each Annual Meeting of Shareholders
of the Company, commencing with the 1997 Annual Meeting of Shareholders,
automatically shall be granted an Option to purchase 2,000 Shares, effective as
of the date that such Annual Meeting of Shareholders is concluded, and (ii) each
person who, after the effective date of the Plan, first becomes a Nonemployee
Director at any time other than at an Annual Meeting of Shareholders of the
Company shall be granted an Option to purchase a number of Shares (rounded to
the nearest whole Share) determined by multiplying 2,000 by a fraction, the
numerator of which is twelve less the number of months (rounded to the nearest
whole month) from the most recent Annual Meeting of Shareholders of the Company
to the date such Person first becomes a Nonemployee Director and the denominator
of which is twelve, effective as of the date such Person first becomes a
Nonemployee Director. Except as set forth in this Section 5, no Options may be
granted under the Plan.
6. TERMS OF OPTIONS. The terms and conditions of each Option granted under
the Plan shall be set forth in an Agreement. Each Option and Agreement shall be
subject to the following conditions:
(a) EXERCISE PRICE. The exercise price per Share of each Option shall
be the Fair Market Value of a Share on the date the Option is granted.
(b) DURATION. Each Option shall have a term of ten years from the date
the Option is granted.
(c) EXERCISABILITY. Each Option granted under the Plan shall be fully
exercisable at the time the Option is granted.
(d) NON-TRANSFERABILITY. No Option granted under the Plan shall be
pledged, assigned, hypothecated or transferred by the Nonemployee Director
other than by will or the laws of descent and distribution or pursuant to a
Qualified Domestic Relations Order. Options may be exercised during the
lifetime of a Nonemployee Director only by the Nonemployee Director or the
Nonemployee Director's guardian or legal representative or the transferee
under a Qualified Domestic Relations Order. A Nonemployee Director may
designate a person or persons to receive, in the event of such Nonemployee
Director's death, an Option or portion of an Option held by the Nonemployee
Director at the time of death or any amount payable with respect thereto to
which the Nonemployee Director then would be entitled.
(e) EXERCISE OF OPTION. (i) An Option may be exercised only by a
written notice delivered to the Secretary of the Company at the Company's
principal executive office, specifying the number of Shares to be purchased
and accompanied by payment therefor and otherwise in accordance with the
Agreement. The exercise price for the Shares to be purchased pursuant to
the exercise of an Option shall be paid in full upon such exercise in cash,
by check or by transferring Shares to the Company or by the retention by
the Company of Shares to be issued upon the exercise of such Option, or any
combination thereof. Any Shares transferred to the Company or retained by
the Company as payment of the exercise price of an Option shall be valued
at their Fair Market Value on the date the Option is exercised. If required
by the Board,
<PAGE> 4
the Nonemployee Director shall deliver the Agreement evidencing the Option
to the Secretary of the Company, who shall endorse on the Agreement a
notation of such exercise and shall return such Agreement to the
Nonemployee Director. Any exercise of an Option for fewer than all of the
Shares covered by the Option shall be for at least ten Shares. No
fractional Shares shall be issued upon the exercise of an Option.
(ii) If the Plan or any law, regulation or interpretation requires the
Company to take any action regarding the Shares before the Company issues
certificates for the Shares being purchased, the Company may delay
delivering the certificates for the Shares for the period necessary to take
such action; provided, however, that the Company shall use its reasonable
best efforts to promptly take any such action. The certificate or
certificates representing Shares acquired upon the exercise of an Option
may bear a legend restricting the transfer of such Shares to the extent
required by applicable law, regulation or interpretation, and the Company
may impose stop transfer instructions to implement such restrictions, if
applicable.
(f) RIGHTS OF NONEMPLOYEE DIRECTOR. No Nonemployee Director shall be
deemed for any purpose to be the owner of any Shares subject to an Option
unless and until the Option has been validly exercised, the Company has
issued and delivered certificates for the Shares to the Nonemployee
Director, and the Nonemployee Director's name has been entered as a
shareholder of record on the books of the Company.
(g) AMENDMENT OF OPTIONS. Subject to the terms and provisions of the
Plan, the Board may amend any outstanding Option in any respect; provided,
however, that (i) no such amendment shall reduce the exercise price of the
Option (except to set forth an adjustment in the exercise price made
pursuant to Section 9), and (ii) the consent of the Nonemployee Director of
the Option to such amendment must be obtained if the amendment would
adversely affect the rights of the Nonemployee Director under the Option.
7. ADJUSTMENT UPON CHANGES IN CAPITALIZATION. In the event of a Change in
Capitalization, the Board shall determine the appropriate adjustments, if any,
to the maximum number and class of shares with respect to which Options may be
granted under the Plan, the number and class of shares subject to outstanding
Options granted under the Plan and the exercise price thereof, if applicable,
and any such determination by the Board shall be conclusive.
8. TERMINATION AND AMENDMENT OF THE PLAN. Unless earlier terminated by the
Board, the Plan shall terminate on March 17, 2007 (or such earlier date as of
which the maximum number of Shares which may be issued or delivered upon the
exercise of Options granted under the Plan have been so issued or delivered),
and no Options thereafter shall be granted under the Plan. The Board may
terminate the Plan at any time and may amend the Plan and outstanding Agreements
from time to time; provided, however, that no such amendment shall be effective
unless approved by the shareholders of the Company, if such shareholder approval
is required (a) so that transactions hereunder will be exempt under Rule 16b-3
under the Exchange Act or (b) to comply with any other applicable law,
regulation or stock exchange rule. The rights and obligations of a Nonemployee
Director with respect to any Option outstanding at the time of any such
amendment to the Plan or
<PAGE> 5
any Agreement shall not be adversely altered or impaired by such amendment,
except with the consent of such Nonemployee Director.
9. GOVERNING LAW; APPROVALS. (a) The Plan and the rights of all persons
claiming hereunder shall be construed and determined in accordance with the laws
of the State of Ohio without giving effect to the choice of law principles
thereof.
(b) The obligation of the Company to sell or deliver Shares with respect to
Options granted under the Plan shall be subject to all applicable laws, rules
and regulations, including all applicable federal and state securities laws and
the rules of any stock exchange on which the Shares are listed.
(c) If at any time the Board determines, in its absolute discretion, that
the listing, registration or qualification of Shares issuable pursuant to the
Plan is required by any securities exchange or under any state or federal law,
or the consent or approval of any governmental regulatory body is necessary or
desirable as a condition of, or in connection with, the grant of an Option or
the issuance of Shares upon the exercise of an Option, no Option shall be
granted or payment made or Shares issued, in whole or in part, unless such
listing, registration, qualification, consent or approval has been effected or
obtained free of any conditions not acceptable to the Board.
10. EFFECTIVE DATE. The Plan was approved by the Board on March 17, 1997,
subject to approval by the affirmative vote of the holders of Common Shares
entitling them to a majority of the voting power of the Company present in
person or by proxy at the Annual Meeting of Shareholders of the Company to be
held on May 8, 1997. The Plan shall become effective upon the approval of Plan
by the holders of Common Shares entitling them to exercise a majority of the
voting power of the Company present at the Annual Meeting of Shareholders in
person or in proxy.
<PAGE> 1
Exhibit 10.3
NONEMPLOYEE DIRECTORS COMPENSATION PROGRAM
------------------------------------------
RESOLUTION ADOPTED BY DIRECTORS ON APRIL 26, 1997:
RESOLVED, that the Corporation pay each director of the Corporation
who is not an employee of the Corporation or Ripplewood Holdings L.L.C. an
annual retainer in the amount of $20,000, payable in Class A Common Shares.
RESOLUTIONS ADOPTED BY DIRECTORS ON MARCH 17, 1997:
WHEREAS, at a meeting held on April 26, 1996, the Board of Directors
approved a compensation program for the directors of the Corporation who
are not employees of the Corporation or Ripplewood Holdings L.L.C.
("Ripplewood") under which each such director is entitled to an annual
retainer in the amount of $20,000, payable in Class A Common Shares,
without par value, of the Corporation ("Class A Shares"); and
WHEREAS, at the time such program was approved, the timing of the
payment of the annual retainer was not determined, and no retainer payments
have yet been made;
NOW, THEREFORE, IT HEREBY IS RESOLVED, that the $20,000 annual
retainer payable to each director who is not an employee of the Corporation
or Ripplewood shall be paid at or as soon as practicable after the date of
each Annual Meeting of Shareholders to each such director who continues as
a director following such meeting, by the issuance by the Corporation of
Class A Shares with a value (based on the closing price of a Class A Share
on the last trading day prior to such Annual Meeting) of $20,000, rounded
to the nearest whole share.
FURTHER RESOLVED, that if a director who is not an employee of the
Corporation or Ripplewood is elected to the Board of Directors at any time
other than at an Annual Meeting of Shareholders, such director shall
receive as soon as practicable after such election a retainer payable by
the issuance by the Corporation of Class A Shares with a value equal to
$20,000, prorated for the period from the date of such election until the
next Annual Meeting of Shareholders (based on the closing price of a Class
A Share on the last trading day prior to such election), rounded to the
nearest whole share.
FURTHER RESOLVED, that the Corporation also shall issue to Messrs.
Andrews, Diggs and Holmes, on or as soon as practical after the date of the
1997 Annual Meeting of Shareholders, a number of Class A Shares with a
value equal to $20,000, prorated for the period from the earlier of the
date he was elected as a director of the Corporation or April 26, 1996
until the date of the 1997 Annual Meeting of Shareholders (based on the
closing price of a Class A Share on the last trading day prior to the 1997
Annual Meeting of Shareholders), rounded to the nearest whole share.
<PAGE> 1
Exhibit 11.1
DAYTON SUPERIOR CORPORATION
EXHIBIT 11 - COMPUTATION OF EARNINGS
PER COMMON AND COMMON EQUIVALENT SHARE
(Amounts in thousands, except share and per share amounts)
<TABLE>
<CAPTION>
Three Fiscal Months Ended Six Fiscal Months Ended
------------------------- -----------------------
June 28, June 27, June 28, June 27,
1996 1997 1996 1997
------------------------- -----------------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Weighted average number of common
shares outstanding during the period 3,517,584 5,696,432 3,404,068 5,686,648
Common equivalent shares outstanding (a) 45,210 142,214 45,210 142,818
Weighted average common and common ------------------------- -----------------------
equivalent shares outstanding 3,562,794 5,838,646 3,449,278 5,829,466
Income before income taxes and extraordinary
item $2,266 $2,951 $1,865 $3,111
Extraordinary item (2,314) 0 (2,314) 0
------------------------- -----------------------
Income (loss) per share before extraordinary
item ($48) $2,951 ($449) $3,111
========================= ========================
Income per share before extraordinary item $0.64 $0.51 $0.54 $0.53
Extraordinary item (0.65) 0.00 (0.67) 0.00
------------------------- -----------------------
Net income (loss) per share ($0.01) $0.51 ($0.13) $0.53
========================= ========================
Fully diluted earnings per share are not significantly different from primary earnings per share.
- --------------------
Notes:
<FN>
(a) Common equivalent shares are shares issuable upon the exercise of stock options
and warrants, less the shares that could be purchased with the proceeds from the
exercise of the options and warrants, based on the company's average trading
price for 1996 and the company's ending trading price for 1997.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000854709
<NAME> DAYTON SUPERIOR CORPORATION
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> MAR-29-1997
<PERIOD-END> JUN-27-1997
<EXCHANGE-RATE> 1
<CASH> 316
<SECURITIES> 0
<RECEIVABLES> 23,669
<ALLOWANCES> 447
<INVENTORY> 18,855
<CURRENT-ASSETS> 44,713
<PP&E> 33,438
<DEPRECIATION> 14,957
<TOTAL-ASSETS> 123,069
<CURRENT-LIABILITIES> 23,936
<BONDS> 38,395
<COMMON> 42,851
0
0
<OTHER-SE> 13,593
<TOTAL-LIABILITY-AND-EQUITY> 123,069
<SALES> 39,839
<TOTAL-REVENUES> 39,839
<CGS> 26,906
<TOTAL-COSTS> 26,906
<OTHER-EXPENSES> 6,943
<LOSS-PROVISION> (3)
<INTEREST-EXPENSE> 797
<INCOME-PRETAX> 5,193
<INCOME-TAX> 2,242
<INCOME-CONTINUING> 2,951
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,951
<EPS-PRIMARY> 0.51
<EPS-DILUTED> 0.51
</TABLE>
