<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q/A
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED COMMISSION FILE NUMBER
OCTOBER 2, 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
------------
NOT APPLICABLE
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed from 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 November 9, 1998
<PAGE> 2
The Dayton Superior Corporation Form 10-Q for the Quarter Ended October
2, 1998 is being amended hereby to correct an inadvertent error in the
Consolidated Balance Sheet of Dayton Superior Corporation and Subsidiaries as
of October 2, 1998. As a result of the correction of this error, "Inventories"
in this balance sheet has been increased to $35,876 (from $35,868) and,
accordingly, "Total current assets" has been increased to $96,232 (from
$96,224). "Rental equipment, net" has been decreased to $50,603 (from
$50,611). There was no change to "Total assets". Income taxes payable has been
reduced to $1,579 (from $3,414), and, accordingly, "Total current liabilities"
has been reduced to $43,356 (from $45,191); Total liabilities" has been reduced
to $184,517 (from $186,352); and "Total liabilities and shareholders' equity"
has been reduced to $258,049 (from $259,884) (all amounts in thousands). No
changes to the Consolidated Income Statements, Consolidated Statements of Cash
Flows, Consolidated Statements of Comprehensive Income, or Notes to
Consolidated Financial Statements, were necessary.
2
<PAGE> 3
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
DAYTON SUPERIOR CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF OCTOBER 2, 1998 AND DECEMBER 31, 1997
(Amounts in thousands)
(Unaudited)
<TABLE>
<CAPTION>
October 2, December 31,
1998 1997
--------- ---------
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash $ 18 $ -
Accounts receivable, net of allowance for
doubtful accounts of $1,703 and $5,015 54,695 35,054
Inventories (Note 3) 35,876 32,873
Prepaid expenses and other current assets 2,770 3,047
Prepaid income taxes - 2,087
Future tax benefits 2,873 3,657
--------- ---------
Total current assets 96,232 76,718
--------- ---------
RENTAL EQUIPMENT, NET 50,603 38,327
--------- ---------
PROPERTY, PLANT & EQUIPMENT 61,858 58,063
Less accumulated depreciation (20,987) (16,711)
--------- ---------
Net property, plant & equipment 40,871 41,352
--------- ---------
GOODWILL AND INTANGIBLE ASSETS,
net of accumulated amortization 69,239 68,590
OTHER ASSETS 1,104 1,943
--------- ---------
Total assets $ 258,049 $ 226,930
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt (Note 4) $ 32 $ 32
Accounts payable 23,080 15,753
Income taxes payable 1,579 -
Accrued compensation and benefits 10,175 7,480
Accrued liabilities 7,377 7,128
Accrued interest 1,113 960
--------- ---------
Total current liabilities 43,356 31,353
LONG-TERM DEBT (Note 4) 125,511 120,204
DEFERRED INCOME TAXES 7,139 8,079
OTHER LONG-TERM LIABILITIES 8,511 6,765
--------- ---------
Total liabilities 184,517 166,401
--------- ---------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Class A Common Shares 41,907 33,386
Class B Common Shares 5,360 9,749
Cumulative foreign currency translation adjustment (268) (191)
Retained earnings 26,533 17,585
--------- ---------
Total shareholders' equity 73,532 60,529
--------- ---------
Total liabilities and shareholders' equity $ 258,049 $ 226,930
========= =========
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these consolidated balance sheets.
3
<PAGE> 4
DAYTON SUPERIOR CORPORATION AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
FOR THE THREE AND NINE FISCAL MONTHS ENDED OCTOBER 2, 1998 AND
SEPTEMBER 26, 1997
(Amounts in thousands, except share and per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Fiscal Months Ended Nine Fiscal Months Ended
------------------------- ------------------------
October 2, September 26, October 2, September 26,
1998 1997 1998 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
NET SALES $ 82,809 $ 42,592 $ 218,790 $ 108,411
COST OF SALES 48,635 28,211 135,921 73,389
----------- ----------- ----------- -----------
Gross profit 34,174 14,381 82,869 35,022
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 19,567 7,113 56,468 19,861
AMORTIZATION OF GOODWILL AND INTANGIBLES 497 467 1,529 1,392
----------- ----------- ----------- -----------
Operating income 14,110 6,801 24,872 13,769
OTHER EXPENSES:
Interest expense, net 2,967 823 8,781 2,306
Other, net (177) 9 (178) 20
----------- ----------- ----------- -----------
Income before provision for income taxes 11,320 5,969 16,269 11,443
PROVISION FOR INCOME TAXES 5,094 2,576 7,321 4,939
----------- ----------- ----------- -----------
NET INCOME $ 6,226 $ 3,393 $ 8,948 $ 6,504
=========== =========== =========== ===========
Basic net income per share $ 1.05 $ 0.59 $ 1.53 $ 1.14
=========== =========== =========== ===========
Basic weighted average common shares outstanding 5,953,803 5,714,188 5,839,008 5,695,964
=========== =========== =========== ===========
Diluted net income per share $ 1.01 $ 0.57 $ 1.47 $ 1.10
=========== =========== =========== ===========
Diluted weighted average common and common equivalent
shares outstanding 6,193,038 5,949,092 6,073,046 5,930,576
=========== =========== =========== ===========
</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 CASH FLOWS
FOR THE NINE FISCAL MONTHS ENDED OCTOBER 2, 1998 AND SEPTEMBER 26, 1997
(Amounts in thousands)
(Unaudited)
<TABLE>
<CAPTION>
October 2, September 26,
1998 1997
---------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 8,948 $ 6,504
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation 7,888 3,076
Amortization of goodwill and intangibles 1,529 1,392
Deferred income taxes (1,263) (342)
Amortization of deferred financing costs 593 130
Gain on sales of rental equipment and property,
plant and equipment (5,690) (5)
Change in assets and liabilities, net of the effects of acquisitions:
Accounts receivable (15,818) (11,433)
Inventories (1,911) (2,288)
Prepaid income taxes and income taxes payable 3,666 2,808
Accounts payable 6,734 3,908
Accrued liabilities and other long-term liabilities 3,285 (40)
Accrued interest 153 131
Other, net 375 (905)
-------- --------
Net cash provided by operating activities 8,489 2,936
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Property, plant and equipment additions (3,894) (1,847)
Proceeds from sale of property, plant and equipment 759 10
Rental equipment additions, net (6,537) (1,271)
Acquisitions, net of cash acquired (Note 2) (1,602) (2,081)
Other investing activities - (13)
-------- --------
Net cash used in investing activities (11,274) (5,202)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of long-term debt 2,748 3,588
Issuance of common stock 132 237
-------- --------
Net cash provided by financing activities 2,880 3,825
-------- --------
EFFECT OF EXCHANGE RATE CHANGES ON CASH (77) (12)
-------- --------
Net increase in cash 18 1,547
CASH, beginning of period - 203
-------- --------
CASH, end of period $ 18 $ 1,750
======== ========
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Cash paid for income taxes $ 4,053 $ 2,443
Cash paid for interest 8,035 2,072
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
5
<PAGE> 6
DAYTON SUPERIOR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE THREE AND NINE FISCAL MONTHS ENDED OCTOBER 2, 1998 AND
SEPTEMBER 26, 1997
(Amounts in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three Fiscal Months Ended Nine Fiscal Months Ended
------------------------- ------------------------
October 2, September 26, October 2, September 26,
1998 1997 1998 1997
---------- ------------- ---------- -------------
<S> <C> <C> <C> <C>
NET INCOME $ 6,226 $ 3,393 $ 8,948 $ 6,504
OTHER COMPREHENSIVE INCOME:
Foreign currency translation adjustment (51) (7) (77) (12)
------- ------- ------- -------
COMPREHENSIVE INCOME $ 6,175 $ 3,386 $ 8,871 $ 6,492
======= ======= ======= =======
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these consolidated statements.
6
<PAGE> 7
DAYTON SUPERIOR CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 2, 1998 AND SEPTEMBER 26, 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 businesses. The first business, Symons, a leading
manufacturer of prefabricated concrete forms, is based in the Chicago
area, and is being operated by the Company as a stand alone unit. The
second business, Richmond Screw Anchor, manufactures and sells concrete
accessories and has been combined 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 $32,300, 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. On June 12, 1998, the Former
7
<PAGE> 8
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. On October 28, 1998, the Court granted the Company's
motion to dismiss with respect to certain of these issues (as to which
the Company intends to proceed with arbitration) and retained
jurisdiction with respect to the remainder of the issues. 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.
The unaudited pro forma income statement as though Symons had been
acquired on January 1, 1997 is as follows:
<TABLE>
<CAPTION>
Three fiscal months Nine fiscal months
ended Sept. 26, 1997 ended Sept. 26, 1997
----------------------- ----------------------
<S> <C> <C>
Net sales $77,112 $ $193,325
Gross profit 28,603 69,305
Net income 4,285 6,417
Basic net income per share 0.75 1.13
Diluted net income per share 0.72 1.08
</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 valued at $4,000, plus the assumption of $2,245 of
long-term debt. In accordance with the share exchange agreement between
the Company and the former shareholders of CAI, the purchase price has
been increased by $259 and will be paid with a combination of cash and
Class A Common Shares. CAI is being operated as a part of the Company's
concrete forming systems 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
8
<PAGE> 9
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
concrete forming systems division.
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.
9
<PAGE> 10
(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 October 2, 1998 and December 31, 1997:
<TABLE>
<CAPTION>
October 2, December 31,
1998 1997
----------------- ------------------
<S> <C> <C>
Raw materials $7,594 $6,957
Finished goods and work in progress 28,282 25,916
----------------- ------------------
35,876 32,873
LIFO reserve - -
----------------- ------------------
$35,876 $32,873
================= ==================
</TABLE>
(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 interest rate swaps in place
at October 2, 1998 is a liability of $1,762.
(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
nine fiscal months ended September 26, 1997 were impacted as follows:
<TABLE>
<CAPTION>
Per Share Amounts
-----------------
Three fiscal months Nine fiscal months
ended ended
Sept. 26, 1997 Sept. 26, 1997
-------------- --------------
<S> <C> <C>
Primary net income per share, as reported $0.57 $1.09
Effect of SFAS 128 0.02 0.05
-------------- --------------
Basic net income per share, as restated $0.59 $1.14
-------------- --------------
Fully diluted net income per share, as reported $0.57 $1.09
Effect of SFAS 128 - 0.01
-------------- --------------
Diluted net income per share, as restated $0.57 $1.10
============== ==============
</TABLE>
10
<PAGE> 11
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 Oct. 2, 1998:
Basic net income per share $6,226 5,953,803 $1.05
==============
Effect of stock options - 239,235
--------------- --------------
Diluted net income per share $6,226 6,193,038 $1.01
=============== ============== ==============
For the nine fiscal months ended Oct. 2, 1998:
Basic net income per share $8,948 5,839,008 $1.53
==============
Effect of stock options - 234,038
--------------- --------------
Diluted net income per share $8,948 6,073,046 $1.47
=============== ============== ==============
For the three fiscal months ended Sept. 26, 1997:
Basic net income per share $3,393 5,714,188 $0.59
==============
Effect of stock options - 234,904
--------------- --------------
Diluted net income per share $3,393 5,949,092 $0.57
=============== ============== ==============
For the nine fiscal months ended Sept. 26, 1997:
Basic net income per share $6,504 5,695,964 $1.14
==============
Effect of stock options - 234,612
--------------- --------------
Diluted net income per share $6,504 5,930,576 $1.10
=============== ============== ==============
</TABLE>
(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 October 2, 1998 and
December 31, 1997:
<TABLE>
<CAPTION>
October 2, December 31,
1998 1997
--------- ---------
<S> <C> <C>
Revolving lines of credit, weighted average interest rate
of 7.4% $ 20,330 $ 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% 213 236
--------- ---------
Total long-term debt 125,543 120,236
Less current portion 32 32
--------- ---------
Long-term portion $125,511 $120,204
======== ========
</TABLE>
11
<PAGE> 12
At October 2, 1998, $40,000 of the $40,000 Revolving Credit Facility was
available, of which $20,330 of borrowings was outstanding. Average borrowings
under the Revolving Credit Facility and its predecessors were $20,712 and
$28,222 during the first nine months of 1998 and 1997, respectively, at an
approximate weighted average interest rate of 7.7% and 7.4%, respectively. The
maximum borrowings outstanding during the first nine 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 October 2,
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 nine fiscal months ended October 2,
1998 and September 26, 1997 would have been reduced to the following pro forma
amounts:
<TABLE>
<CAPTION>
For the three fiscal For the nine fiscal
months ended months ended
---------------------------- ----------------------------
Oct. 2, Sept. 26, Oct. 2, Sept. 26,
1998 1997 1998 1997
------------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Net income As Reported $6,226 $3,393 $8,948 $6,504
Pro Forma 6,170 3,344 8,758 6,412
Basic net income per share As Reported 1.05 0.59 1.53 1.14
Pro Forma 1.04 0.59 1.50 1.13
Diluted net income per share As Reported 1.01 0.57 1.47 1.10
Pro Forma 1.00 0.56 1.45 1.08
</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.
12
<PAGE> 13
A summary of the activity of the Company's stock option plans for the nine
fiscal months ended October 2, 1998 is presented in the table below:
<TABLE>
<CAPTION>
Weighted
Average
Exercise
Number of Price Per
Shares Share
-------------- ---------------
<S> <C> <C>
Outstanding at December 31, 1997 276,250 $ 3.57
Exercised (2,050) 2.46
Granted 83,833 17.11
============== ===============
Outstanding at October 2, 1998 358,033 $ 6.75
============== ===============
</TABLE>
13
<PAGE> 14
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: December 1, 1998 BY: /s/ Alan F. McIlroy
--------------------- ---------------------------
Alan F. McIlroy
Chief Financial Officer
14
