<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
JULY 3, 1998 1-11781
DAYTON SUPERIOR CORPORATION
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
OHIO 31-0676346
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification No.)
7777 Washington Village Dr., Suite 130
Dayton, Ohio 45459
- --------------------------------------------------------------------------------
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, including area code: 937-428-6360
---------------
721 Richard Street, Miamisburg, OH 45342
- --------------------------------------------------------------------------------
(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
----- ----
5,953,703 Common Shares were outstanding as of July 29, 1998
<PAGE> 2
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
DAYTON SUPERIOR CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF JULY 3, 1998 AND DECEMBER 31, 1997
(Amounts in thousands)
(Unaudited)
<TABLE>
<CAPTION>
July 3, December 31,
1998 1997
--------- ---------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash $ 309 $ -
Accounts receivable, net of allowance for
doubtful accounts of $3,318 and $5,015 51,289 35,054
Inventories (Note 3) 34,632 32,873
Prepaid expenses and other current assets 2,433 3,047
Prepaid income taxes 3,222 2,087
Future tax benefits 2,341 3,657
--------- ---------
Total current assets 94,226 76,718
--------- ---------
RENTAL EQUIPMENT, NET 46,508 38,327
--------- ---------
PROPERTY, PLANT & EQUIPMENT 60,801 58,063
Less accumulated depreciation (19,666) (16,711)
--------- ---------
Net property, plant & equipment 41,135 41,352
--------- ---------
GOODWILL AND INTANGIBLE ASSETS,
net of accumulated amortization 68,570 68,590
OTHER ASSETS 1,909 1,943
--------- ---------
Total assets $ 252,348 $ 226,930
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt (Note 4) $ 32 $ 32
Accounts payable 22,997 15,753
Accrued compensation and benefits 9,464 7,480
Accrued liabilities 6,346 7,128
Accrued interest 1,046 960
--------- ---------
Total current liabilities 39,885 31,353
LONG-TERM DEBT (Note 4) 130,439 120,204
DEFERRED INCOME TAXES 8,104 8,079
OTHER LONG-TERM LIABILITIES 6,569 6,765
--------- ---------
Total liabilities 184,997 166,401
--------- ---------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Class A Common Shares 41,901 33,386
Class B Common Shares 5,360 9,749
Cumulative foreign currency translation adjustment (217) (191)
Retained earnings 20,307 17,585
--------- ---------
Total shareholders' equity 67,351 60,529
--------- ---------
Total liabilities and shareholders' equity $ 252,348 $ 226,930
========= =========
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these consolidated balance sheets.
2
<PAGE> 3
DAYTON SUPERIOR CORPORATION AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
FOR THE THREE AND SIX FISCAL MONTHS ENDED JULY 3, 1998 AND JUNE 27, 1997
(Amounts in thousands, except share and per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Fiscal Months Ended Six Fiscal Months Ended
------------------------- -----------------------
July 3, June 27, July 3, June 27,
1998 1997 1998 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
NET SALES $ 76,754 $ 39,839 $ 135,981 $ 65,819
COST OF SALES 48,313 26,906 87,286 45,178
----------- ----------- ----------- -----------
Gross profit 28,441 12,933 48,695 20,641
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 18,399 6,475 36,901 12,748
AMORTIZATION OF GOODWILL AND INTANGIBLES 537 468 1,032 925
----------- ----------- ----------- -----------
Operating income 9,505 5,990 10,762 6,968
OTHER EXPENSES:
Interest expense, net 2,821 797 5,814 1,483
Other, net (5) -- (1) 11
----------- ----------- ----------- -----------
Income before provision for income taxes 6,689 5,193 4,949 5,474
PROVISION FOR INCOME TAXES 2,958 2,242 2,227 2,363
----------- ----------- ----------- -----------
NET INCOME $ 3,731 $ 2,951 $ 2,722 $ 3,111
=========== =========== =========== ===========
Basic net income per share $ 0.64 $ 0.52 $ 0.47 $ 0.55
=========== =========== =========== ===========
Basic weighted average common shares outstanding 5,837,779 5,696,432 5,782,528 5,696,432
=========== =========== =========== ===========
Diluted net income per share $ 0.61 $ 0.51 $ 0.45 $ 0.53
=========== =========== =========== ===========
Diluted weighted average common and common equivalent
shares outstanding 6,070,936 5,838,646 6,011,089 5,829,466
=========== =========== =========== ===========
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these consolidated statements.
3
<PAGE> 4
DAYTON SUPERIOR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX FISCAL MONTHS ENDED JULY 3, 1998 AND JUNE 27, 1997
(Amounts in thousands)
(Unaudited)
<TABLE>
<CAPTION>
July 3, June 27,
1998 1997
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 2,722 $ 3,111
Adjustments to reconcile net income to net cash used in
operating activities:
Depreciation 5,055 2,098
Amortization of goodwill and intangibles 1,032 925
Deferred income taxes 201 (224)
Amortization of deferred financing costs 388 82
Gain on sales of rental equipment and property,
plant and equipment (3,509) (213)
Change in assets and liabilities, net of the effects of acquisitions:
Accounts receivable (13,081) (10,999)
Inventories (1,036) (4,381)
Prepaid income taxes (1,135) 2,510
Accounts payable 6,651 4,295
Accrued liabilities and other long-term liabilities 659 (349)
Accrued interest 86 69
Other, net 1,071 (810)
-------- --------
Net cash used in operating activities (896) (3,886)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Property, plant and equipment additions (3,130) (1,213)
Proceeds from sale of property, plant and equipment 759 10
Rental equipment additions, net (3,247) (664)
Acquisitions, net of cash acquired (Note 2) (1,267) (1,129)
Other investing activities -- (13)
-------- --------
Net cash used in investing activities (6,885) (3,009)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of long-term debt 7,990 6,908
Issuance of common stock 126 105
-------- --------
Net cash provided by financing activities 8,116 7,013
-------- --------
EFFECT OF EXCHANGE RATE CHANGES ON CASH (26) (5)
-------- --------
Net increase in cash 309 113
CASH, beginning of period -- 203
-------- --------
CASH, end of period $ 309 $ 316
======== ========
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Cash paid for income taxes $ 3,043 $ 125
Cash paid for interest 2,347 1,341
Issuance of common stock in conjunction with acquisition (Note 2) 4,000 451
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these consolidated statements
4
<PAGE> 5
DAYTON SUPERIOR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE THREE AND SIX FISCAL MONTHS ENDED JULY 3, 1998 AND JUNE 27, 1997
(Amounts in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three Fiscal Months Ended Six Fiscal Months Ended
------------------------- -----------------------
July 3, June 27, July 3, June 27,
1998 1997 1998 1997
------- ------- ------- -------
<S> <C> <C> <C> <C>
NET INCOME $ 3,731 $ 2,951 $ 2,722 $ 3,111
OTHER COMPREHENSIVE INCOME:
Foreign currency translation adjustment (32) (1) (26) (5)
------- ------- ------- -------
COMPREHENSIVE INCOME $ 3,699 $ 2,950 $ 2,696 $ 3,106
======= ======= ======= =======
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these consolidated statements.
5
<PAGE> 6
DAYTON SUPERIOR CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JULY 3, 1998 AND JUNE 27, 1997
(UNAUDITED)
(AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
(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, 1997.
(2) ACQUISITIONS
(a) SYMONS CORPORATION--On September 29, 1997, the Company purchased the
stock of Symons Corporation (Symons). Symons was a private company,
which owned two divisions. The first division, Symons, a leading
manufacturer of prefabricated concrete forms, is based in the Chicago
area, and is being operated as a stand alone business unit. The second
division, Richmond Screw Anchor, is in the concrete accessories
business and is being blended with the Company's existing concrete
accessories division.
The acquisition has been accounted for as a purchase, and the results
of Symons have been included in the accompanying consolidated financial
statements since the date of acquisition. The purchase price consisted
of cash paid of approximately $32,100, a note payable to one of the
selling shareholders of $5,000 and assumed long-term debt of
approximately $47,700. The purchase agreement between the Company and
the former shareholders of Symons ("the Former Shareholders") relating
to the Acquisition ("the Purchase Agreement") provides for an
adjustment to the purchase price under certain circumstances. The
Company has advised the Former Shareholders that it believes it is
entitled to a purchase price adjustment in its favor, and the Former
Shareholders similarly advised the Company that they believe they are
entitled to a purchase price adjustment in their favor. If the Company
and the Former Shareholders are unable to resolve these differences,
the dispute will be referred to a mutually satisfactory accounting
firm, which is expected to resolve such differences, in accordance with
the Purchase Agreement. At this time, the Company can make
6
<PAGE> 7
no determination as to the amount of the adjustment, if any, that will
be made to the purchase price. The company intends to vigorously pursue
its rights under the Purchase Agreement.
The unaudited pro forma income statement as though Symons had been
acquired on January 1, 1997 is as follows:
<TABLE>
<CAPTION>
Three fiscal months Six fiscal months
ended June 27, 1997 ended June 27, 1997
----------------------- ----------------------
<S> <C> <C>
Net sales $68,658 $116,213
Gross profit 24,592 3 40,702
Net income 3,406 2 2,132
Basic net income per share 0.60 0.37
Diluted net income per share 0.58 0.37
</TABLE>
The pro forma financial information is presented for informational
purposes only and is not necessarily indicative of the operating
results that would have occurred had the Symons acquisition been
consummated as of the above date, nor are they necessarily indicative
of future operating results.
(b) CONCRETE ACCESSORIES, INC.--In May 1998, the Company purchased all of
the stock of Concrete Accessories, Inc. (CAI) for 218,158 Class A
Common Shares, plus the assumption of $2,245 of long-term debt. The
share exchange agreement between the Company and the former
shareholders of CAI provides for an adjustment to the purchase price
under certain circumstances. CAI is being operated as a part of the
Company's forming products division.
The acquisition has been accounted for as a purchase, and the results
of CAI have been included in the accompanying consolidated financial
statements since the date of acquisition. The purchase price has been
allocated based on the estimated fair values of the assets acquired and
liabilities assumed. Certain appraisals and evaluations are preliminary
and may change.
(c) IRONCO MANUFACTURING CO, INC.--In February 1997, the Company acquired
certain of the assets and assumed certain of the liabilities of Ironco
Manufacturing Co., Inc. and Birmingham Bar Coating, Inc. for $1,493,
payable in $1,147 of cash and 26,254 Class A Common Shares. These
operations are a part of the Company's paving products division.
(d) NORTHWOODS--In May 1998, the Company purchased the assets of the
Northwoods branches of Concrete Forming, Inc. for $750 in cash. The
Northwoods branches are being operated as a part of the Company's
forming products division.
7
<PAGE> 8
The acquisition has been accounted for as a purchase, and the results
of the Northwoods branches have been included in the accompanying
consolidated financial statements since the date of acquisition. The
purchase price has been allocated based on the estimated fair values of
the assets acquired. Certain appraisals and evaluations are preliminary
and may change.
(e) SECURE, INC.--In June 1998, the Company purchased substantially all of
the assets of Secure, Inc., a subsidiary of The Lofland Company, for
approximately $600 in cash. This business is being operated as a part
of the Company's paving products division.
The acquisition has been accounted for as a purchase, and the results
of the business have been included in the accompanying consolidated
financial statements since the date of acquisition. The purchase price
has been allocated based on the estimated fair values of the assets
acquired and liabilities assumed. Certain appraisals and evaluations
are preliminary and may change.
(3) 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, 1997. 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 Friday nearest to the end of March, June and
September.
(b) INVENTORIES--Substantially all inventories of the domestic Dayton
Superior and Dur-O-Wal operations are stated at the lower of last in,
first out (LIFO) cost or market (which approximates current cost). All
other inventories are stated at the lower of first-in, first-out (FIFO)
cost or market. Following is a summary of the components of inventories
as of July 3, 1998 and December 31, 1997:
<TABLE>
<CAPTION>
July 3, December 31,
1998 1997
----------------- ---------------------
<S> <C> <C>
Raw materials $ 8,052 $ 6,957
Finished goods and work in progress 26,580 25,916
----------------- ---------------------
34,632 32,873
LIFO reserve - -
================= =====================
$34,632 $32,873
================= =====================
</TABLE>
8
<PAGE> 9
(c) FINANCIAL INSTRUMENTS--The Company uses interest rate swaps to manage
interest rate risk associated with its floating rate borrowing. The
swap agreements are contracts to exchange floating rate for fixed
interest payments periodically over the life of the agreements without
the exchange of the underlying amounts. The differential paid or
received on the interest rate agreements is recognized as an adjustment
to interest expense. The fair value of the $50,000 of interest rate
swaps in place at July 3, 1998 is a liability of $740.
(d) NET INCOME PER SHARE--In February 1997, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards No.
128 "Earnings per Share" ("SFAS 128"). This standard was effective for
both interim and annual periods ending after December 15, 1997. As a
result, the Company's reported earnings per share for the three and six
fiscal months ended June 27, 1997 were impacted as follows:
<TABLE>
<CAPTION>
Per Share Amounts
-----------------
Three fiscal Six fiscal
months ended months ended
June 27, 1997 June 27, 1997
------------- -------------
<S> <C> <C>
Primary net income per share, as reported $0.51 $0.53
Effect of SFAS 128 0.01 0.02
----- -----
Basic net income per share, as restated $0.52 $0.55
===== =====
Fully diluted net income per share, as reported $0.51 $0.53
Effect of SFAS 128 - -
----- -----
Diluted net income per share, as restated $0.51 $0.53
===== =====
</TABLE>
A reconciliation of basic net income per share to diluted net income
per share is as follows:
<TABLE>
<CAPTION>
Net Income Shares Per Share
---------- ------ ---------
<S> <C> <C> <C>
For the three fiscal months ended July 3, 1998:
Basic net income per share $3,731 5,837,779 $0.64
==============
Effect of stock options - 233,157
--------------- --------------
Diluted net income per share $3,731 6,070,936 $0.61
=============== ============== ==============
For the six fiscal months ended July 3, 1998:
Basic net income per share $2,722 5,782,528 $0.47
==============
Effect of stock options - 228,561
--------------- --------------
Diluted net income per share $2,722 6,011,089 $0.45
=============== ============== ==============
For the three fiscal months ended June 27, 1997:
Basic net income per share $2,951 5,696,432 $0.52
==============
Effect of stock options - 142,214
--------------- --------------
Diluted net income per share $2,951 5,838,646 $0.51
=============== ============== ==============
For the six fiscal months ended June 27, 1997:
Basic net income per share $3,111 5,696,432 $0.55
==============
Effect of stock options - 133,034
--------------- --------------
Diluted net income per share $3,111 5,829,466 $0.53
=============== ============== ==============
</TABLE>
9
<PAGE> 10
(e) RECLASSIFICATIONS--Certain reclassifications have been made to the
1997 amounts to conform to their 1998 classifications.
(4) CREDIT ARRANGEMENTS
Following is a summary of the Company's long-term debt as of July 3, 1998 and
December 31, 1997:
<TABLE>
<CAPTION>
July 3, December 31,
1998 1997
----------- -----------
<S> <C> <C>
Revolving lines of credit, weighted average interest rate
of 7.3% $ 25,250 $ 15,000
Term Loan, weighted average interest rate of 8.4% 100,000 100,000
Note payable to one of the Former Shareholders, 10.5% 5,000 5,000
City of Parsons, Kansas Economic Development Loan, 7% 221 236
-------- --------
Total long-term debt 130,471 120,236
Less current portion 32 32
Long-term portion $130,439 $120,204
======== ========
</TABLE>
At July 3, 1998, $40,000 of the $40,000 Revolving Credit Facility was available,
of which $25,250 of borrowings was outstanding. Average borrowings under the
Revolving Credit Facility and its predecessors were $19,825 and $28,042 during
the first six months of 1998 and 1997, respectively, at an approximate weighted
average interest rate of 7.8% and 7.3%, respectively. The maximum borrowings
outstanding during the first six months of 1998 and 1997, respectively, were
$26,620 and $32,403, respectively.
The Credit Agreement contains certain restrictive covenants which, among other
things, require that the Company maintain a minimum fixed charge coverage ratio,
not exceed a certain leverage ratio and limit the payment of dividends on Common
Shares. The Company was in compliance with its loan covenants as of July 3,
1998.
5) 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 have been recognized. Had compensation cost for these plans been
determined consistent with Statement of Financial Accounting Standards No.123,
"Accounting for Stock-Based Compensation" ("SFAS 123"), the Company's net income
and net income per share for the three and six fiscal months ended July 3, 1998
and June 27, 1997 would have been reduced to the following pro forma amounts:
10
<PAGE> 11
<TABLE>
<CAPTION>
For the three fiscal For the six fiscal
months ended months ended
-------------------------- ---------------------------
July 3, June 27, July 3, June 27,
1998 1997 1998 1997
----------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
Net income As Reported $3,731 $2,951 $2,722 $3,111
Pro Forma 3,631 2,920 2,588 3,069
Basic net income per share As Reported 0.64 0.52 0.47 0.55
Pro Forma 0.62 0.52 0.45 0.54
Diluted net income per share As Reported 0.61 0.51 0.45 0.53
Pro Forma 0.60 0.50 0.43 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.
A summary of the activity of the Company's stock option plans for the six fiscal
months ended July 3, 1998 is presented in the table below:
<TABLE>
<CAPTION>
Weighted
Average
Exercise
Number of Price Per
Shares Share
-------------- ---------------
<S> <C> <C> <C> <C>
Outstanding at December 31, 1997 276,250 $ 3.57
Exercised (2,050) 2.46
Granted 83,833 17.11
-------------- ---------------
Outstanding at July 3, 1998 357,533 $ 6.75
============== ===============
</TABLE>
11
<PAGE> 12
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
OVERVIEW
Dayton Superior Corporation (the "Company") achieved record second quarter 1998
net sales of $76.8 million, which were 93% higher than net sales in the second
quarter of 1997 of $39.8 million. The Company's quarter and year-to-date net
sales by major product category during the last two years were:
<TABLE>
<CAPTION>
DOLLARS IN MILLIONS THREE FISCAL MONTHS ENDED SIX FISCAL MONTHS ENDED
-------------------------------- -------------------------------
JULY 3, JUNE 27, JULY 3, JUNE 27,
1998 1997 1998 1997
------------- --------------- ------------ ---------------
<S> <C> <C> <C> <C>
Concrete Accessories $35.1 $23.3 $64.1 $40.6
Forming Products 28.0 - 49.3 -
Paving Products 10.2 9.2 16.2 12.8
Masonry Products 5.9 7.3 11.0 12.4
Intercompany Eliminations (2.4) - (4.6) -
============= =============== ============ ===============
Net Sales $76.8 $39.8 $136.0 $65.8
============= =============== ============ ===============
</TABLE>
- ------------------------------
The acquisition of Symons Corporation ("Symons"), a leading manufacturer of
prefabricated concrete forms, on September 29, 1997 contributed more than 80% of
the net sales growth in 1998 over 1997 for both the three and six fiscal months
ended July 3, 1998.
Income before income taxes was $6.7 million in the second quarter of 1998
compared to $5.2 million in the second quarter of 1997 due to the contribution
of Symons as well as growth of the Company's existing business, net of the
increased interest expense from the acquisition of Symons.
Net income for the second quarter of 1998 was $3.7 million, or $0.64 per basic
share and $0.61 per diluted share, compared to $3.0 million, or $0.52 per basic
share and $0.51 per diluted share, in the second quarter of 1997. Net income for
the first half of 1998 was $2.7 million, or $0.47 per basic share and $0.45 per
diluted share, compared to $3.1 million, or $0.55 per basic share and $0.53 per
diluted share, in the first half of 1997. The dilutive impact of Symons on a
year-to-date basis is primarily due to the seasonality of Symons. Symons is
expected to be accretive on a full year basis.
IMPLEMENTATION OF BUSINESS STRATEGY
On September 29, 1997, the Company purchased the stock of Symons. Symons was a
private company, which operated two divisions. The first division, Symons, is a
leading manufacturer of prefabricated concrete forms. The second division,
Richmond Screw Anchor, is in the concrete accessories business. The addition of
these two businesses provides the Company with both a complementary fourth
business platform and
12
<PAGE> 13
expansion in the concrete accessories market. The Symons division is being
operated as a stand alone business unit while the Richmond Screw Anchor business
has been blended with the Company's existing concrete accessories division.
The Company paid $34.0 million (plus acquisition costs of $3.1 million) for the
Common Stock of Symons, of which $32.1 million was paid in cash and $5.0 million
was paid by delivery of a seven year unsecured note. The purchase agreement
between the Company and the former stockholders of Symons ("the Former
Stockholders") relating to the Acquisition ("the Purchase Agreement") provides
for an adjustment to the purchase price under certain circumstances. The Company
has advised the Former Stockholders that it believes it is entitled to a
purchase price adjustment in its favor, and the Former Stockholders similarly
advised the Company that they believe they are entitled to a purchase price
adjustment in their favor. If the Company and the Former Stockholders are unable
to resolve these differences, the dispute will be referred to a mutually
satisfactory accounting firm, which is expected to resolve such differences, in
accordance with the Purchase Agreement. On June 12, 1998, the Former
Stockholders filed a lawsuit in Delaware Chancery Court seeking a determination
with respect to a limited number of issues involved in the dispute, which the
Company believes can be resolved only through arbitration. At this time, the
Company can make no determination as to the amount of the adjustment, if any,
that will be made to the purchase price. The Company intends to vigorously
pursue its rights under the Purchase Agreement.
In June 1998, the Company purchased substantially all of the assets of Secure,
Inc., a subsidiary of The Lofland Company, for $0.6 million in cash. This
business is being operated as a part of the Company's paving products division.
In May 1998, the Company purchased the stock of Concrete Accessories, Inc.
("CAI") for 218,158 Class A Common Shares, plus the assumption of $2.2 million
of long-term debt. The share exchange agreement between the Company and the
former shareholders of CAI provides for an adjustment to the purchase price
under certain circumstances. CAI is being operated as a part of the Company's
forming products division.
In May 1998, the Company purchased the assets of the two Northwoods branches of
Concrete Forming, Inc. for $0.8 million in cash. The Northwoods branches are
being operated as a part of the Company's forming products division.
In February 1997, the Company acquired certain of the assets and assumed certain
of the liabilities of Ironco Manufacturing Co., Inc. and Birmingham Bar Coating,
Inc. (collectively, "Ironco") for $1.5 million, of which $1.1 million was paid
in cash and the remainder was paid by delivery of 26,254 Class A Common Shares.
These operations are a part of the Company's paving products division.
13
<PAGE> 14
RESULTS OF OPERATIONS
The following table summarizes the Company's results of operations as a
percentage of net sales.
<TABLE>
<CAPTION>
THREE FISCAL MONTHS ENDED SIX FISCAL MONTHS ENDED
----------------------------- -----------------------------
JULY 3, JUNE 27, JULY 3, JUNE 27,
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net sales 100.0% 100.0% 100.0% 100.0%
Cost of goods sold 62.9 67.5 64.2 68.6
------------ ------------ ------------ ------------
Gross profit 37.1 32.5 35.8 31.4
Selling, general and administrative expenses 24.0 16.3 27.1 19.4
Amortization of goodwill and intangibles 0.7 1.2 0.8 1.4
------------ ------------ ------------ ------------
Operating income 12.4 15.0 7.9 10.6
Interest expense, net 3.7 2.0 4.3 2.3
------------ ------------ ------------ ------------
Income before income taxes 8.7 13.0 3.6 8.3
Provision for income taxes 3.8 5.6 1.6 3.6
============ ============ ============ ============
Net income 4.9% 7.4% 2.0% 4.7%
============ ============ ============ ============
</TABLE>
- ------------------------------
COMPARISON OF THREE FISCAL MONTHS ENDED JULY 3, 1998 AND JUNE 27, 1997
NET SALES
Net sales increased $37.0 million, or 93%, to $76.8 million in the second
quarter of 1998 from $39.8 million in the second quarter of 1997. Net sales of
concrete accessories increased by 51% to $35.1 million in the second quarter of
1998 from $23.3 million in the second quarter of 1997, due primarily to the
addition of the Richmond Screw Anchor division of Symons. Forming product net
sales were $28.0 million for the second quarter of 1998 due to the acquisition
of Symons. Net sales of paving products increased $1.0 million, or 11%, from the
second quarter of 1997 to the second quarter of 1998 due to market share gain.
Net sales of masonry products decreased $1.4 million, or 19%, due to a high
level of competition in the hot dipped and mill galvanized masonry wall
reinforcement product markets and a shift to higher margin engineered products.
GROSS PROFIT
Gross profit for the second quarter of 1998 was $28.4 million, more than double
the $12.9 million from the second quarter of 1997, due primarily to the Symons
acquisition. As a percent of net sales, gross margin was 37.1% in the second
quarter of this year, up from 32.5% last year. The gross margin increased
primarily as a result of the acquisition of Symons, as forming products have
higher gross margins than other product lines.
14
<PAGE> 15
OPERATING EXPENSES
Selling, general, and administrative expenses, including amortization of
goodwill and intangibles ("SG&A expenses"), increased $12.0 million to $18.9
million in the second quarter of 1998, from $6.9 million in the second quarter
of 1998. The acquisition of Symons resulted in approximately 80% of the
increase. SG&A expenses were up as a percent of net sales from 17.5% in the
second quarter of 1997 to 24.7% in the second quarter of 1998, due to forming
products having a higher percentage of SG&A expenses to net sales. This reflects
the additional distribution and service costs associated with the management of
the Symons' rental equipment fleet.
INTEREST EXPENSE
Interest expense increased to $2.8 million in the second quarter of 1998 from
$0.8 million in the second quarter of 1997 due to the increased long-term debt
resulting from the acquisition of Symons.
NET INCOME
Income before income taxes was $6.7 million in the second quarter of 1998
compared to $5.2 million in the second quarter of 1997, primarily due to the
contribution of Symons, net of the increased interest expense. The difference in
effective tax rates from statutory rates is due to nondeductible goodwill
amortization and state taxes. Net income for the second quarter of 1998 was $3.7
million, or $0.64 per basic share and $0.61 per diluted share, compared to $3.0
million, or $0.52 per basic share and $0.51 per diluted share, in the second
quarter of 1997.
COMPARISON OF SIX FISCAL MONTHS ENDED JULY 3, 1998 AND JUNE 27, 1997
NET SALES
Net sales increased $70.2 million to $136.0 million in the first half of 1998,
more than double the $65.8 million in the first half of 1997. Net sales of
concrete accessories increased by 58% to $64.1 million in the first half of 1998
from $40.6 million in the first half of 1997, due primarily to the addition of
the Richmond Screw Anchor division of Symons. Forming product net sales were
$49.3 million for the first half of 1998 due to the acquisition of Symons. Net
sales of paving products increased $3.4 million, or 27%, from the first half of
1997 to the first half of 1998, due to market share gain, a program to increase
winter sales and a full six month of sales from Ironco, acquired in February
1997. Net sales of masonry products decreased 11%, or $1.4 million, due to a
high level of competition in the hot dipped and mill galvanized masonry wall
reinforcement product markets and a shift to higher margin engineered products.
GROSS PROFIT
Gross profit for the first half of 1998 was $48.7 million, more than double the
$20.6 million from the first half of 1997, due primarily to the Symons
acquisition. As a percent of net sales, gross margin was 35.8% in the first half
of 1998, up from 31.4% in 1997.
15
<PAGE> 16
The gross margin increased primarily as a result of the acquisition of Symons,
as forming products have higher gross margins than other product lines.
OPERATING EXPENSES
Selling, general, and administrative expenses, including amortization of
goodwill and intangibles ("SG&A expenses"), increased $24.3 million to $37.9
million in the first half of 1998, from $13.6 million in the first half of 1997.
The acquisition of Symons resulted in approximately 80% of the increase. SG&A
expenses were up as a percent of net sales from 27.9% in the first half of 1998,
from 20.8% in the first half of 1997, due to the forming products division
having a higher percentage of SG&A expenses to net sales. This reflects the
additional distribution and service costs associated with the management of the
Symons' rental equipment fleet.
INTEREST EXPENSE
Interest expense increased to $5.8 million in the first half of 1998 from $1.5
million in the first half of 1997 due to the increased long-term debt resulting
from the acquisition of Symons.
NET INCOME
Income before income taxes was $4.9 million in the first half 1998 compared to
$5.5 million in the first half of 1997, primarily due to the increased interest
expense from the acquisition of Symons, net of the contribution to operating
income from Symons and from growth of the existing business. The difference in
effective tax rates from statutory rates is due to nondeductible goodwill
amortization and state taxes. Net income for the first half of 1998 was $2.7
million, or $0.47 per basic share and $0.45 per diluted share, compared to $3.1
million, or $0.55 per basic share and $0.53 per diluted share, in the first half
of 1997.
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 1998 was $0.9 million
as compared to $3.9 million in the first half of 1997 due to improved working
capital management. Net income before non-cash charges of depreciation,
amortization, deferred taxes, and gain on sales of rental equipment and
property, plant and equipment provided $5.9 million of operating cash flow in
the first half of 1998 as compared to $5.8 million in the first half of 1997.
Working capital growth used $6.8 million of operating cash flow as compared to
$9.7 million in the first half of 1997. Significant working capital uses in 1998
included seasonal increases in accounts receivable and inventory of $11.5
million and $1.0 million, respectively. Accounts payable growth provided $6.7
million in the first half of 1998 due to normal seasonal expansion. The Company
invested $5.6 million in property, plant and equipment and
16
<PAGE> 17
rental equipment additions, net of proceeds on sales, during the first half of
1998. Significant investments were made in growth of the forming rental fleet
and in equipment for the concrete accessories and paving products divisions to
further improve efficiencies. The three acquisitions in the second quarter of
1998 used $1.3 million in cash in addition to the assumption of $2.2 million of
debt. Additional draws on the line of credit of $8.0 million funded the seasonal
increases in working capital, the investments in property, plant and equipment
and rental equipment, and the acquisitions.
At July 3, 1998, working capital was $53.4 million, compared to $44.8 million at
December 31, 1997. The growth in working capital is primarily attributable to
seasonal growth for the summer construction season.
At July 3, 1998, all of the $40.0 million Revolving Credit Facility was
available, of which $25.3 million of borrowings was outstanding. The Term Loan
had an outstanding balance at July 3, 1998 of $100.0 million. At July 3, 1998,
the Company had $130.5 million of long-term debt outstanding, of which $32
thousand was current. The Company's debt to total capitalization ratio decreased
to 66.0% as of July 3, 1998 from 66.5% as of December 31, 1997.
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 Revolving 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 75% 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 increases in the price of steel,
its principal raw material. There can be no assurance the Company will be able
to continue to pass on the cost of such increases in the future.
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
17
<PAGE> 18
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.
18
<PAGE> 19
PART II. - OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds
(c) On May 22, 1998, the Company issued 218,158 of its Class A Common
Shares, without par value ("Shares"), to the former shareholders of CAI, a
privately-held corporation, in exchange for all of the outstanding shares of
CAI, subject to a possible subsequent adjustment to the number of Shares issued
based upon a closing audit of CAI. The Shares were issued in reliance upon the
exemption from registration set forth in Section 4(2) of the Securities Act of
1933, as amended, for transactions not involving a public offering. The former
shareholders of CAI have certain registration rights with respect to such
Shares.
Item 4. Submission of Matters to a Vote of Security Holders
The Annual Meeting of Shareholders of the Company was held on May 7,
1998. The only matter voted on at such Annual Meeting of Shareholders was the
election of directors. The following is the number of votes cast for or withheld
from each nominee for election as a director:
<TABLE>
<CAPTION>
Nominee For Withheld
------- --- --------
<S> <C> <C>
William F. Andrews 12,411,182 4,865
John A. Ciccarelli 12,411,197 4,850
Timothy C. Collins 12,411,197 4,850
Matthew O. Diggs, Jr. 12,411,197 4,850
Matthew M. Guerreiro 12,411,197 4,850
Robert B. Holmes 12,411,197 4,850
</TABLE>
Item 5. Other Information
A shareholder proposal intended for consideration at the Company's 1999
Annual Meeting of Shareholders which is submitted outside of the processes of
the Securities and Exchange Commission's Rule 14a-8 will be considered to be
untimely if submitted after February 22, 1999.
Item 6. Exhibits and Reports on Form 8-K.
(a) See Exhibit Index following signature page.
19
<PAGE> 20
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: August 13, 1998 BY: /s/ Alan F. McIlroy
-------------------- ------------------------------
Alan F. McIlroy
Chief Financial Officer
20
<PAGE> 21
INDEX TO EXHIBITS
-----------------
(4) Instruments defining the Rights of Security Holders, Including
Indentures
4.1 Third Amendment to Credit Agreement
(10) Material Contracts
10.1 Amended Nonemployee Director Compensation Program *
(27) Financial Data Schedule
27.1 Financial Data Schedule
- -------------------
*Compensatory plan, contract, or arrangement in which one or more directors or
named executive officers participates.
21
<PAGE> 1
Exhibit 4.1
[EXECUTION COPY]
THIRD AMENDMENT TO
THE CREDIT AGREEMENT
This THIRD AMENDMENT, dated as of June 26, 1998 (this "AMENDATORY
AGREEMENT"), to the Existing Credit Agreement (as defined below), is made among
DAYTON SUPERIOR CORPORATION, an Ohio corporation (the "BORROWER"), the various
financial institutions signatories hereto as Revolving Lenders (the "REVOLVING
LENDERS"), DLJ CAPITAL FUNDING, INC., as syndication agent (the "SYNDICATION
AGENT"), BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as
documentation agent (the "DOCUMENTATION AGENT"), BANKERS TRUST COMPANY, as
administrative agent (the "ADMINISTRATIVE AGENT") and BANK ONE, N.A., as
facility agent (the "FACILITY AGENT").
WITNESSETH
----------
WHEREAS, the Borrower, the Lenders, and the Agents are parties to a
Credit Agreement, dated as of September 29, 1997, as amended by Amendment No. 1
and Amendment No. 2 thereto (as so amended, the "EXISTING CREDIT AGREEMENT");
WHEREAS, the Borrower has requested that the Revolving Lenders amend
the Existing Credit Agreement in certain respects; and
WHEREAS, the Revolving Lenders have agreed, subject to the terms and
conditions hereinafter set forth, to amend the Existing Credit Agreement in
certain respects as provided below (the Existing Credit Agreement, as so amended
by this Amendatory Agreement, being referred to as the "CREDIT AGREEMENT");
NOW, THEREFORE, in consideration of the agreements herein contained,
the parties hereto agree as follows:
PART I
DEFINITIONS
SUBPART 1.1 - CERTAIN DEFINITIONS. The following terms (whether or not
underscored) when used in this Amendatory Agreement shall have the following
meanings (such meanings to be equally applicable to the singular and plural form
thereof):
"ADMINISTRATIVE AGENT" is defined in the PREAMBLE.
<PAGE> 2
"AMENDATORY AGREEMENT" is defined in the PREAMBLE.
"AMENDMENT NO. 3" is defined in SUBPART 3.1.
"BORROWER" is defined in the PREAMBLE.
"CREDIT AGREEMENT" is defined in the THIRD RECITAL.
"DOCUMENTATION AGENT" is defined in the PREAMBLE.
"EXISTING CREDIT AGREEMENT" is defined in the FIRST RECITAL.
"FACILITY AGENT" is defined in the PREAMBLE.
"THIRD AMENDMENT EFFECTIVE DATE" is defined in the SUBPART 3.1.
"REVOLVING LENDERS" is defined in the PREAMBLE.
"SYNDICATION AGENT" is defined in the PREAMBLE.
SUBPART 1.2 OTHER DEFINITIONS. Terms for which meanings are provided in
the Existing Credit Agreement are, unless otherwise defined herein or the
context otherwise requires, used in this Amendatory Agreement with such
meanings.
PART II
AMENDMENTS TO THE
EXISTING CREDIT AGREEMENT
Effective on (and subject to the occurrence of) the Third Amendment
Effective Date, the Existing Credit Agreement is hereby amended in accordance
with this Part II. Except as so amended, the Existing Credit Agreement shall
continue in full force and effect in accordance with its terms.
SUBPART 2.1. AMENDMENTS TO SECTION 1.1. Section 1.1 of the Existing
Credit Agreement is hereby amended by inserting the following definitions in
such Section in the appropriate alphabetical sequence:
"AMENDMENT NO. 3" means the Third Amendment to the Credit
Agreement, dated as of June 26,1998, among the Borrower, the Revolving
Lenders signatory thereto, and the Agents.
-2-
<PAGE> 3
"THIRD AMENDMENT EFFECTIVE DATE" is defined in Subpart 3.1 of
Amendment No. 3.
SUBPART 2.2. CLAUSE (b) of Section 7.2.4 of the Existing Credit
Agreement is hereby amended to read in its entirety as follows:
(b) FIXED CHARGE COVERAGE RATIO. The Borrower will not permit
the Fixed Charge Coverage Ratio as of the end of any Fiscal Quarter to
be less than the ratio of 1.30:1; PROVIDED, that for purposes of
computing the Fixed Charge Coverage Ratio for any period commencing
with the Fiscal Quarter ending June 30, 1998, "CAPITAL EXPENDITURES"
shall not include any expenditures for the purchase of Rental Equipment
made during such period which, in accordance with GAAP, would be
classified as capital expenditures.
SUBPART 2.3. Section 7.2.7 of the Existing Credit Agreement is hereby
amended to read in its entirety as follows:
SECTION 7.2.7. CAPITAL EXPENDITURES, ETC. The Borrower will
not, and will not permit any of its Subsidiaries to, make or commit to
make Capital Expenditures in any Fiscal year, except Capital
Expenditures which do not aggregate in excess of 8% of the total
consolidated revenues of the Borrower and its Subsidiaries for the
immediately preceding Fiscal Year (with the revenues of any Subsidiary
of the Borrower acquired during such Fiscal Year to include all
revenues of such Subsidiary for the portion of such Fiscal Year
preceding such acquisition); PROVIDED, HOWEVER, that to the extent the
amount of Capital Expenditures permitted to be made in any Fiscal year
pursuant to this Section exceeds the aggregate amount of Capital
Expenditures actually made during such Fiscal Year, up to 50% of such
excess amount may be carried forward to (but only to) the next
succeeding Fiscal Year (any such amount to be certified by the Borrower
to the Agents in the Compliance Certificate delivered for the last
Fiscal Quarter of such Fiscal Year, and any such amounts carried
forward to a succeeding Fiscal Year shall to be deemed to be used
prior to the Borrower and its Subsidiaries using the amount of
Capital Expenditures permitted by this Section without giving
effect to such carry-forward).
SUBPART 2.4. Clause (c) of Section 7.2.9 of the Existing Credit
Agreement is hereby amended to read in its entirety as follows:
(c) so long as no Default has occurred and is continuing or
would occur after giving effect thereto, the Borrower or any of its
Subsidiaries may purchase all or substantially all of the assets of any
Person, or acquire such Person by merger, if permitted (without
duplication) by SECTION 7.2.5 to be made as an Investment.
-3-
<PAGE> 4
PART III
CONDITIONS TO EFFECTIVENESS
SUBPART 3.1. THIRD AMENDMENT EFFECTIVE DATE. This Amendatory Agreement
(and the amendments and modifications contained herein) shall become effective,
and shall thereafter be referred to as "AMENDMENT NO. 3", on the date (the
"THIRD AMENDMENT EFFECTIVE DATE") when all of the conditions set forth in this
SUBPART 3.1 have been satisfied.
SUBPART 3.1.1, EXECUTION OF COUNTERPARTS. The Facility Agent shall have
received counterparts of this Amendatory Agreement, duly executed and delivered
on behalf of the Borrower and each of the Required Revolving Lenders.
SUBPART 3.1.2. EXECUTION OF LOAN DOCUMENTS, ETC. The Facility Agent
shall have received counterparts of a supplement to the Subsidiary Guaranty and
a supplement to the Subsidiary Security Agreement duly executed and delivered by
Concrete Accessories, Inc. and the Facility Agent, together with (i)
certificates representing all of the issued and outstanding shares of Capital
Stock of Concrete Accessories, Inc. owned by the Borrower, along with undated
stock powers for such certificates, executed in blank, and (ii) acknowledgment
copies of Uniform Commercial Code financing statements executed and delivered by
Concrete Accessories, Inc., as debtor, and the Facility Agent, as secured party,
filed under the UCC in all jurisdictions necessary or, in the reasonable opinion
of the Agent, desirable to perfect the security interest of the Facility Agent
pursuant to the Subsidiary Security Agreement.
SUBPART 3.1.3. LEGAL DETAILS ETC. All documents executed or submitted
pursuant hereto shall be satisfactory in form and substance to the Agents and
their counsel. The Agents and their counsel shall have received all information
and such counterpart originals or such certified or other copies or such
materials, as the Agents or their counsel may reasonably request, and all legal
matters incident to the transactions contemplated by this Amendatory Agreement
shall be satisfactory to the Agents and their counsel.
PART IV
MISCELLANEOUS
SUBPART 4.1. CROSS-REFERENCES. References in this Amendatory Agreement
to any Part or Subpart are, unless otherwise specified or otherwise required by
the context, to such Part or Subpart of this Amendatory Agreement.
SUBPART 4.2. LOAN DOCUMENT PURSUANT TO EXISTING CREDIT AGREEMENT. This
Amendatory Agreement is a Loan Document executed pursuant to the Existing Credit
Agreement and shall be construed, administered and applied in accordance with
all the terms and provisions of the Existing Credit Agreement.
-4-
<PAGE> 5
SUBPART 4.3. COMPLIANCE WITH WARRANTIES, NO DEFAULT, ETC. The Borrower
represents and warrants on the Third Amendment Effective Date for its
Subsidiaries and itself, both before and after the effect to this Amendatory
Agreement, as follows:
(a) the representations and warranties set forth in Article VI
of the Credit Agreement (excluding those contained in Section 6.7
thereof) and in each other Loan Document are, in each case, true and
correct in all material respects (unless stated to relate solely to an
earlier date, in which case such representations and warranties were
true and correct in all material respects as of such earlier date);
(b) no adverse development has occurred in any litigation,
action, proceeding, labor controversy, arbitration or governmental
investigation disclosed pursuant to Section 6.7 of the Credit Agreement
which could reasonably be expected to have a Material Adverse Effect;
(c) the sum of (A) the aggregate outstanding principal amount
of all Revolving Loans and (B) the aggregate amount of all Letter of
Credit Outstandings does not exceed the lesser of (c) the Revolving
Loan Commitment Amount and (y) the Borrowing Base Amount; and
(d) no Default has occurred and is continuing, and neither the
Borrower, any other Obligor, nor any of its Subsidiaries are in
material violation of any law or governmental regulation or court order
or decree.
SUBPART 4.4. SUCCESSORS AND ASSIGNS. This Amendatory Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns.
SUBPART 4.5. COUNTERPARTS. This Amendatory Agreement may be executed by
the parties hereto in several counterparts, each of which when executed and
delivered shall be deemed to be an original and all of which shall constitute
together but one and the same agreement.
SUBPART 4.6. GOVERNING LAW. THIS AMENDATORY AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.
-5-
<PAGE> 6
DLJ CAPITAL FUNDING, INC., as
Syndication Agent
By:
--------------------------------------
Title:
BANKERS TRUST COMPANY, as
Administrative Agent
By:
--------------------------------------
Title:
<PAGE> 7
IN WITNESS WHEREOF, the parties hereto have caused this Amendatory
Agreement to be executed by their respective officers thereunto duly authorized
as of the day and year first above written.
DAYTON SUPERIOR CORPORATION
By: /s/ John M. Rutherford
--------------------------------------
Title: Treasurer
BANK ONE, N.A., as Facility Agent and a
Revolving Leader
By: /s/ Susan M. Lipowicz
--------------------------------------
Title: Vice President
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as
Documentation Agent and a Revolving Leader
By: /s/ Christine M. Tierney
--------------------------------------
Title: Senior Vice President
NATIONAL CITY BANK OF DAYTON, as
a Revolving Lender
By: /s/ Neal J. Hinker
--------------------------------------
Title: Vice President
<PAGE> 1
Exhibit 10.1
NONEMPLOYEE DIRECTOR COMPENSATION PROGRAM
(effective May 7, 1998)
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: (i) $50,000, in
the case of the Chairman of the Board, and (ii) $20,000, in the case of
each such director other than the Chairman of the Board, plus an
additional $2,000 for each Committee of the Board of Directors of which
such director other than the Chairman of the Board serves as chairman.
FURTHER RESOLVED, that the annual retainer payable to each
director who is not an employee of the Corporation or Ripplewood
Holdings L.L.C. 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, without par value of the Corporation
("Shares"), with a value (based on the closing price of a Share on the
last trading day prior to such Annual Meeting) equal to the amount of
the annual retainer, rounded to the nearest whole Share.
FURTHER RESOLVED, that if a director who is not an employee of
the Corporation or Ripplewood Holdings L.L.C. 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
Shares with a value determined as provided in the preceding
resolutions, prorated for the period from the date of such election
until the next Annual Meeting of Shareholders (based on the closing
price of a Share on the last trading day prior to such election),
rounded to the nearest whole Share.
FURTHER RESOLVED, that the Corporation also pay each director
of the Corporation who is not an employee of the Corporation or
Ripplewood Holdings L.L.C. a fee of $500, payable in cash, for each
meeting of the Board of Directors or Committee of the Board of
Directors attended by such director in person or by telephone.
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000854709
<NAME> DAYTON SUPERIOR CORPORATION
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUL-03-1998
<CASH> 309
<SECURITIES> 0
<RECEIVABLES> 51,289
<ALLOWANCES> 3,318
<INVENTORY> 34,632
<CURRENT-ASSETS> 94,226
<PP&E> 60,801
<DEPRECIATION> 19,666
<TOTAL-ASSETS> 252,348
<CURRENT-LIABILITIES> 39,885
<BONDS> 130,439
0
0
<COMMON> 47,261
<OTHER-SE> 20,090
<TOTAL-LIABILITY-AND-EQUITY> 252,348
<SALES> 135,981
<TOTAL-REVENUES> 135,981
<CGS> 87,286
<TOTAL-COSTS> 87,286
<OTHER-EXPENSES> 37,932
<LOSS-PROVISION> 185
<INTEREST-EXPENSE> 5,814
<INCOME-PRETAX> 4,949
<INCOME-TAX> 2,227
<INCOME-CONTINUING> 2,722
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,722
<EPS-PRIMARY> 0.47
<EPS-DILUTED> 0.45
</TABLE>
