UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[ X ] Quarterly report under Section 13 or 15 (d) of the Securities Exchange
Act of 1934
For the quarterly period ended September 30, 1999
------------------
OR
[ ] Transition report pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934
For the transition period from __________ to __________
Commission File Number 1-10659
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ROBERTSON-CECO CORPORATION
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 36-3479146
-------- ----------
(State or other jurisdiction I.R.S. Employer
of incorporation or organization) Identification No.
5000 Executive Parkway, Ste. 425, San Ramon, California 94583
- ------------------------------------------------------- ------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 925-543-7599
-----------------
Indicate by check mark whether registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
---------- ----------
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at November 6, 1999
- --------------------------------------- -------------------------------
Common Stock, par value $0.01 per share 16,111,550
<PAGE>
ROBERTSON-CECO CORPORATION
Form 10-Q
---------
For Quarter Ended September 30, 1999
------------------------------------
INDEX
-----
PART I. FINANCIAL INFORMATION:
Item 1. Financial Statements:
Condensed Consolidated Balance Sheets --
September 30, 1999 and December 31, 1998....................3
Condensed Consolidated Statements of Operations --
Three and Nine Months Ended September 30, 1999 and 1998.....5
Condensed Consolidated Statements of Cash Flows --
Nine Months Ended September 30, 1999 and 1998 ..............7
Notes to Condensed Consolidated Financial
Statements .................................................8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations .......................12
Item 3. Quantitative and Qualitative Disclosures About Market Risk ......16
PART II. OTHER INFORMATION:
Item 1. Legal Proceedings ..............................................17
Item 4. Submission of Matters to a Vote of Security Holders ............17
Item 5. Other Information .............................................17
Item 6. Exhibits and Reports on Form 8-K ...............................17
Signatures ...................................................................18
Exhibit Index ................................................................19
<PAGE>
<TABLE>
ITEM 1. FINANCIAL STATEMENTS
ROBERTSON-CECO CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
- -------------------------------------------------------------------------------------------------------------------
(In thousands)
(Unaudited)
<CAPTION>
September 30 December 31
1999 1998
-------------- ---------------
-- ASSETS--
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents.............................. $ 38,329 $ 38,203
Accounts and notes receivable, net..................... 35,425 29,878
Inventories:
Work in process.................................... 5,583 4,121
Material and supplies.............................. 12,443 7,397
------------ ------------
Total inventories.................................. 18,026 11,518
Deferred taxes, current................................ 4,346 4,476
Other current assets................................... 11,280 621
------------ ------------
Total current assets............................... 107,406 84,696
PROPERTY - at cost.......................................... 63,881 53,109
Less accumulated depreciation.......................... (25,908) (25,900)
------------ ------------
Property, net...................................... 37,973 27,209
DEFERRED TAXES.............................................. 3,388 6,543
EXCESS OF COST OVER NET ASSETS OF
ACQUIRED BUSINESSES - NET.............................. 24,334 24,955
OTHER NON-CURRENT ASSETS.................................... 1,114 758
------------ ------------
TOTAL ASSETS........................................... $ 174,215 $ 144,161
============ ============
See Notes to Condensed Consolidated Financial Statements
</TABLE>
<PAGE>
<TABLE>
ROBERTSON-CECO CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (CONT'D)
- -------------------------------------------------------------------------------------------------------------------
(In thousands, except per share data)
(Unaudited)
<CAPTION>
September 30 December 31
1999 1998
-------------- ----------------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable, principally trade.................... $ 18,232 $ 11,340
Accrued payroll and benefits........................... 7,366 8,137
Other accrued liabilities.............................. 19,700 14,156
----------- -----------
Total current liabilities.............................. 45,298 33,633
OTHER LONG-TERM LIABILITIES................................. 31,467 38,556
----------- -----------
TOTAL LIABILITIES........................................... 76,765 72,189
----------- -----------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock, par value $0.01 per share................ 161 161
Capital surplus........................................ 178,233 178,233
Accumulated deficit ................................... (80,707) (105,654)
Deferred compensation.................................. (82) (105)
Accumulated other comprehensive income................. (155) (663)
----------- -----------
Stockholders' equity............................... 97,450 71,972
----------- -----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY...................... $174,215 $144,161
=========== ===========
See Notes to Condensed Consolidated Financial Statements
</TABLE>
<PAGE>
<TABLE>
ROBERTSON-CECO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
- -------------------------------------------------------------------------------------------------------------------
(In thousands)
(Unaudited)
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
------------------------- ---------------------
1999 1998 1999 1998
----------- ---------- --------- ---------
<S> <C> <C> <C> <C>
NET REVENUES ............... $ 78,169 $ 78,281 $ 205,669 $ 214,987
COST OF SALES .............. 60,588 61,808 162,194 170,857
--------- --------- --------- ---------
GROSS PROFIT ............... 17,581 16,473 43,475 44,130
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 7,092 6,263 18,933 18,026
--------- --------- --------- ---------
OPERATING INCOME ........... 10,489 10,210 24,542 26,104
--------- --------- --------- ---------
OTHER INCOME (EXPENSE):
Interest expense ...... (28) (370) (101) (1,017)
Other income - net .... 566 473 1,525 1,231
--------- --------- --------- ---------
538 103 1,424 214
--------- --------- --------- ---------
INCOME FROM CONTINUING
OPERATIONS BEFORE INCOME
TAXES ............... 11,027 10,313 25,966 26,318
INCOME TAXES ............... 4,275 4,028 10,012 10,006
--------- --------- --------- ---------
INCOME FROM CONTINUING
OPERATIONS ........... 6,752 6,285 15,954 16,312
GAIN ON DISCONTINUED
OPERATIONS ........... 8,993 -- 8,993 --
--------- --------- --------- ---------
NET INCOME ................. $ 15,745 $ 6,285 $ 24,947 $ 16,312
========= ========= ========= =========
See Notes to Condensed Consolidated Financial Statements
</TABLE>
<PAGE>
<TABLE>
ROBERTSON-CECO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (CONT'D)
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(In thousands, except per share data)
(Unaudited)
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
------------------------------- -------------------------
1999 1998 1999 1998
------------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
ACCUMULATED DEFICIT AT
BEGINNING OF PERIOD....................... $ (96,452) $ (118,146) $ (105,654) $(128,173)
NET INCOME..................................... 15,745 6,285 24,947 16,312
------------- -------------- ------------- ------------
ACCUMULATED DEFICIT AT
END OF PERIOD.................... $ (80,707) $ (111,861) $ (80,707) $ (111,861)
============= ============== ============= ============
BASIC/DILUTED INCOME PER
COMMON SHARE:
FROM CONTINUING
OPERATIONS.......................... $ .42 $ .39 $ .99 $ 1.02
FROM DISCONTINUED
OPERATIONS.......................... $ .56 $ - $ .56 $ -
------------- -------------- ------------- ------------
TOTAL................................... $ .98 $ .39 $ 1.55 $ 1.02
============== =============== ============== ============
WEIGHTED AVERAGE NUMBER
OF COMMON SHARES
OUTSTANDING............................ 16,063 16,060 16,063 16,060
============= ============== ============= ============
See Notes to Condensed Consolidated Financial Statements
</TABLE>
<PAGE>
<TABLE>
ROBERTSON-CECO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
- -------------------------------------------------------------------------------------------------------------------
(In thousands)
(Unaudited)
<CAPTION>
Nine Months Ended
September 30
-----------------------------------------
1999 1998
------------- ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Income from continuing operations................................. $ 15,954 $ 16,312
Adjustments to reconcile income from continuing operations
to net cash provided by (used for) operating activities:
Depreciation and amortization................................ 4,086 3,921
Deferred income taxes........................................ 8,710 10,006
Changes in assets and liabilities:
Increase in accounts and notes receivable................ (5,547) (1,121)
Increase in inventories.................................. (6,508) (1,777)
Increase (decrease) in accounts payable.................. 6,892 (591)
Net changes in other assets and liabilities.............. (7,418) (2,718)
--------- ---------
NET CASH PROVIDED BY OPERATING
ACTIVITIES............................................... 16,169 24,032
--------- ---------
NET CASH USED FOR DISCONTINUED
OPERATIONS............................................... (1,559) (2,112)
--------- ---------
CASH FLOWS USED FOR INVESTING ACTIVITIES:
Capital expenditures.............................................. (14,484) (2,916)
--------- ---------
NET CASH USED FOR INVESTING ACTIVITIES (14,484) (2,916)
---------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on long-term borrowings ................................. - (15,000)
--------- ----------
NET CASH USED FOR FINANCING ACTIVITIES....................... - (15,000)
--------- ---------
NET INCREASE IN CASH AND CASH EQUIVALENTS......................... 126 4,004
CASH AND CASH EQUIVALENTS -
BEGINNING OF PERIOD.......................................... 38,203 19,461
--------- --------
CASH AND CASH EQUIVALENTS -
END OF PERIOD................................................ $ 38,329 $ 23,465
========= =========
SUPPLEMENTAL CASH FLOW DATA:
Cash payments made for:
Interest................................................. $ 88 $ 845
========= =========
Income taxes............................................. $ 1,302 $ -
========= ===============
See Notes to Condensed Consolidated Financial Statements
</TABLE>
<PAGE>
ROBERTSON-CECO CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
1. BASIS OF PRESENTATION
---------------------
In the opinion of Robertson-Ceco Corporation (the "Company"), the
accompanying unaudited Condensed Consolidated Financial Statements
contain all adjustments necessary to present fairly the financial
position as of September 30, 1999 and the results of operations and
cash flows for the periods presented. All adjustments recorded during
the period consisted of normal recurring adjustments. Certain
previously reported amounts have been reclassified to conform to the
1999 presentation.
2. TAXES ON INCOME
---------------
Under Statement of Financial Accounting Standards No. 109, "Accounting
for Income Taxes," the Company is required to recognize the portion of
its deferred tax asset which it believes will more likely than not be
realized. Management believes that the Company will be able to realize
the unreserved portion of its deferred tax asset through future
earnings. Management will continue to evaluate the level of its
deferred tax valuation allowance at each balance sheet date and adjust
the valuation reserve as warranted by changes in the Company's expected
future profitability, amounts and timing of payments related to its
retained liabilities, or other events which might affect the
realization of the Company's deferred tax asset.
<PAGE>
3. OTHER LIABILITIES
-----------------
Other accrued liabilities consisted of the following:
<TABLE>
September 30 December 31
1999 1998
---------- ------------
(In thousands)
<S> <C> <C>
Reserves related to sold or discontinued businesses-
Insurance liabilities ...................................... $ 760 $ 928
Environmental............................................... 1,750 1,750
Warranty claim settlement ................................. 1,000 1,000
Other ..................................................... 446 845
------------ ------------
3,956 4,523
------------ ------------
Warranty and backcharges...................................... 1,800 2,607
Deferred revenue.............................................. 623 500
Other ..................................................... 13,321 6,526
------------ ------------
$ 19,700 $ 14,156
============ ============
</TABLE>
Other long-term liabilities consisted of the following:
<TABLE>
<S> <C> <C>
Reserves related to sold or discontinued businesses -
Insurance liabilities ...................................... $ 3,863 $ 6,225
Environmental .............................................. 3,742 3,572
Warranty claim settlement................................... 1,250 2,000
Dispositions ............................................... 2,106 3,973
Other .................................................... 2,784 4,915
------------ ------------
13,745 20,685
------------ ------------
Warranty and backcharges ..................................... 2,080 2,399
Other ..................................................... 15,642 15,472
------------ ------------
$ 31,467 $ 38,556
============ ============
</TABLE>
See Note 5 regarding contingencies.
4. DEBT
----
Under the terms of the Company's Credit Agreement the Company has a
revolving credit and letter of credit facility of $15,000,000 maturing
December 31, 2001. Up to $12,000,000 of the revolving credit facility
can be used to support outstanding letters of credit. Interest on the
loans under the Credit Agreement is based on the prime or the
Eurodollar rate plus a factor which depends on the Company's ratio of
debt to earnings before taxes, interest, depreciation and amortization.
In addition, the Company pays a commitment fee on the unused amounts of
the credit facility. Availability under the revolving credit facility
<PAGE>
is based on eligible accounts receivable and inventory. As of September
30, 1999, the borrowing base was approximately $36.7 million. As
collateral under the Credit Agreement, the Company has granted the
lenders a security interest in all of the assets of the Company and its
Restricted Subsidiaries. The Credit Agreement contains certain
financial covenants restricting dividend payments, repurchase of stock
and the issuance of additional debt, amongst other matters. Under the
terms of the Company's debt agreement, $45.4 million was available for
dividends or repurchase of stock at September 30, 1999. The Company is
in compliance with the provisions of the Credit Agreement.
As of September 30, 1999, the Company had outstanding letters of credit
of approximately $5.7 million used principally to support insurance and
bonding programs.
5. COMMITMENTS AND CONTINGENCIES
-----------------------------
There are various proceedings pending against or involving the Company
which are ordinary or routine given the nature of the Company's
business. The Company has recorded a liability related to litigation
where it is both probable that a loss will be incurred and the amount
of the loss can be reasonably estimated.
The Company has been identified as a potentially responsible party by
various state and Federal authorities for clean-up and monitoring costs
at waste disposal sites related to discontinued operations. Due to
various factors, it is difficult to estimate future environmental
related expenditures. The Company has engaged third parties to perform
feasibility studies and assist in estimating the cost of investigation
and remediation. At September 30, 1999, the Company had recorded
reserves of approximately $5.5 million, representing management's and
the third parties' best estimate of future costs to be incurred. The
majority of these expenditures are expected to be incurred in the next
four years. In addition, the Company continues to be liable for other
costs associated with sold or discontinued businesses prior to their
sale or disposition including, in certain instances, liabilities
arising from Company self-insurance programs, pension liabilities,
warranty and rectification claims and unresolved litigation arising in
the normal course of the former business activities. Management has
made estimates as to the amount and timing of the payment of such
liabilities which are reflected in the accompanying consolidated
financial statements. Given the subjective nature of many of these
liabilities, their ultimate outcome cannot be predicted with certainty.
However, based upon currently available information, management does
not expect that the ultimate outcome of such matters will have a
material effect on the condensed consolidated financial statements. See
Note 6.
With respect to the environmental clean-up matters, the Company claimed
coverage under its insurance policies for past and future clean-up
costs related to certain sites for which the Company believes it is
entitled to defense and indemnification under the policies. The insurer
refused to admit or deny coverage. As a result, the Company filed a
complaint against the insurer seeking to recover past and future
clean-up costs. During the third quarter of 1999, the Company reached a
settlement with its insurance carrier. See Note 6.
<PAGE>
6. GAIN ON DISCONTINUED OPERATIONS
-------------------------------
During the third quarter of 1999, the Company recorded a gain on
discontinued operations in the amount of $12.3 million before income
taxes of $3.3 million. Included in the gain is a cash recovery related
to the Company's Canadian defined benefit pension plan. The plan was
terminated and the excess pension assets were distributed to the
Company and the participants. Also included is an amount representing
the portion of a settlement with one of the Company's environmental
insurance carriers related to various past expenditures for
environmental liabilities pertaining to certain activities of the
former H.H. Robertson Company. The Company reached an agreement with
that insurance carrier that will result in a lump sum payment to the
Company in exchange for a release to the insurance carrier of any
further liability related to most of such liabilities. The Company
reevaluated various reserves for warranty, worker's compensation,
general liability and other contingencies related to these sold or
discontinued businesses and adjusted the reserves downward to more
accurately reflect the Company's continuing exposure for these matters.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
------------------------------------------------
Results Of Operations
- ---------------------
Revenues for the third quarter of 1999 were $78.2 million, a slight decrease
from the third quarter of 1998. For the nine months ended September 30, 1999,
revenues were $205.7 million compared to $215.0 million in 1998, a decrease of
$9.3 million, or 4.3%. Most of the nine month decline occurred in the first two
quarters when strong orders experienced in the Southeast and East were offset by
a shortfall of orders in the Midwest and Canada. Order rates in the Midwest and
Canada regions slowed late last year with several large snowfalls slowing
incoming business. In the third quarter of 1999, Hurricane Floyd caused reduced
shipments to the Eastern region. However, as builders worked off their backlogs,
the Company has seen incoming orders increase to more satisfactory levels. As of
September 30, 1999, the backlog of unfilled orders believed to be firm was
approximately $103.0 million, $12.2 million higher than at the same date last
year.
Gross profits increased $1.1 million and decreased $.7 million for the three and
nine months ended September 30, 1999, respectively, from the same periods in
1998. Gross margin increased to 22.5% in the third quarter of 1999 from 21.0% in
1998. For the nine months ended September 30, 1999, the gross margin increased
.6% from the same period in 1998 to 21.1%. Increased margins in 1999 are the
result of favorable material costs.
Selling, general and administrative expenses increased $.8 million and $.9
million during the three and nine month period in 1999 from the same periods in
1998. The Company continues to use temporary resources to complete several high
priority systems projects. These costs were partially offset by lower bad debt
expense and the income generated in the buyout of retiree life benefits.
Operating income was $10.5 million for the three months ended September 30,
1999, compared to $10.2 million in 1998, a 2.7% increase. For the nine months
ended September 30, 1999 operating income was $24.5 million compared to $26.1
million for the same period ended 1998, a 6.0% decrease. The nine month decline
in operating income was principally volume driven.
Interest expense declined $.3 million for the three months ended September 30,
1999 from the prior year to approximately $28,000. For the nine months ended
September 30, 1999 interest expense declined $.9 million from the same period
ended 1998 to $.1 million. All debt, other than the outstanding letters of
credit, was repaid in September, 1998. The interest cost in 1999 relates to the
Company's letters of credit. Other income-net consists almost entirely of
interest income and remained fairly constant for the three month period ended
September 30, 1998 and 1999, and increased $.3 million for the nine months ended
September 30, 1999 from the same period in 1998. This increase is the direct
result of higher average cash balances between years.
Income from continuing operations was $6.8 million, $.42 per share, during the
three months ended September 30, 1999 compared to $6.3 million, $.39 per share,
in the same period in 1998. For the nine months ended September 30, 1999 and
1998, income from continuing operations was $16.0 million and $16.3 million, or
$.99 per share and $1.02 per share, respectively. Favorable material and net
<PAGE>
interest costs caused the three month period ended September 30, 1999 to be
favorable compared to the same period last year. Decreased revenues caused
income from continuing operations for the nine month period ended 1999 to be
less than the same period in 1998.
In September, 1999 the Company recorded gains on discontinued operations of $9.0
million, or $.56 per share. This gain represents reserve adjustments and other
issues related to discontinued operations which are nonrecurring. See Note 6.
Net income was $15.7 million, $.98 per share, for the three months ended
September 30, 1999 compared to $6.3 million, $.39 per share, in the same period
in 1998. For the nine months ended September 30, 1999 and 1998, net income was
$24.9 million, or $1.55 per share, and $16.3 million, or $1.02 per share,
respectively.
Backlog of Orders
- -----------------
At September 30, 1999, the backlog of unfilled orders believed to be firm was
approximately $103.0 million compared to a backlog of $90.8 million at September
30, 1998 and $69.3 million at December 31, 1998.
Litigation
- ----------
There are various proceedings pending against or involving the Company which are
ordinary or routine given the nature of the Company's business. The Company has
recorded a liability related to litigation where it is both probable that a loss
has been incurred and the amount of the loss can be reasonably estimated. While
the outcome of the Company's legal proceedings cannot at this time be predicted
with certainty, management does not expect that these matters will have a
material adverse effect on the consolidated financial condition or results of
operations of the Company.
Environmental Matters
- ---------------------
The Company's current and prior manufacturing activities have generated and
continue to generate materials classified as hazardous wastes. The Company
devotes considerable resources to compliance with legal and regulatory
requirements relating to (a) the use of these materials, (b) the proper disposal
of such materials and (c) the protection of the environment. These requirements
include clean-ups at various sites. The Company's policy is to accrue
environmental and clean-up related costs of a non-capital nature when it is
probable that a liability has been incurred and such liability can be reasonably
estimated. However, no assurance can be given that discovery of new facts and
the application of the legal and regulatory requirements to those facts would
not change the Company's estimate of costs it could be required to pay in any
particular situation. Based upon currently available information, including the
reports of third parties, management does not believe resolution of these
matters will have a material adverse effect on the consolidated financial
condition or results of operations of the Company.
<PAGE>
Liquidity and Capital Resources
- -------------------------------
Continuing Operations -
During the nine months ended September 30, 1999, the Company generated $16.2
million of cash from its operating activities compared to $24.0 million during
the same period ended 1998. Operating cash flow in 1999 declined from 1998 due
to payments made for state income tax totaling $1.3 million and deposits made
totaling $5.9 million (reflected in other current assets) related to equipment
for the Tennessee plant. The equipment deposits will be reimbursed when
operating leases are put in place later in the year. Increased seasonal working
capital requirements included increased receivables and inventory partially
offset by an increase in payables.
Cash spent for additions to the Company's plant and equipment was $14.5 million.
Capital spending in 1999 and the next few years is expected to be at higher
levels than the Company has experienced in recent years as the Company moves
forward with the new Tennessee plant and upgrades and improves existing
equipment. Capital expenditures for the new plant for the nine months ended
September 30, 1999 were $3.2 million.
The Company paid down $2.5 million of debt during the nine months ended
September 30, 1998 per the terms of the Credit Agreement. In September, 1998,
the remaining term loan balance of $12.5 million was paid in full and
availability under the revolving credit was reduced to $15.0 million. See Note
4.
Cash and cash equivalents increased $.1 million during the first nine months
ended September 30, 1999 and increased $4.0 million during the same period ended
1998. At September 30, 1999 and 1998 the Company had $38.3 million and $23.5
million of cash and cash equivalents, respectively.
Discontinued Operations -
During the nine months ended September 30, 1999, the Company expended
approximately $1.6 million, net, related to discontinued operations compared to
$2.1 million during the same period in 1998. These payments relate to cleanup of
environmental sites and resolving worker's compensation and general liability
cases from sold businesses. During the third quarter of 1999, the Company
recorded adjustments to reserves related to sold or discontinued businesses and
other items in the amount of $12.3 million before income taxes of $3.3 million.
Management reevaluated various reserves for warranty, worker's compensation,
general liability and other contingencies related to these sold or discontinued
businesses and adjusted the reserves downward to more accurately reflect the
Company's continuing exposure for these matters. Included in this amount is a
cash recovery related to the Company's Canadian defined benefit pension plan.
The plan was terminated and the excess pension assets distributed to the Company
and the participants. Also included is an amount representing the portion of a
settlement with one of the Company's environmental insurance carriers related to
various past expenditures for environmental liabilities pertaining to certain
activities of the former H.H. Robertson Company. Expenditures related to
discontinued operations are dependent on several factors including construction
activity at the clean up sites and the ability of the company to settle
<PAGE>
litigation on favorable terms. Management will continue to pursue resolution of
these matters where possible and where favorable results can be accomplished.
Year 2000
- ---------
The "Year 2000" issue is the result of computer programs being written using two
digits rather than four to define the applicable year. Specifically,
computational errors are a known risk with respect to dates after December 31,
1999. The Company has assessed its computer equipment and business computer
systems as well as its manufacturing equipment and facilities with embedded
systems to prepare for the Year 2000.
The Company has modified its business computer systems to enable proper
processing of transactions relating to the Year 2000 and beyond. At this point,
all programming and software upgrade tasks have been completed and implemented.
The anticipated date of completion of the final testing of the last software
modified is November 1999. Assessments of manufacturing equipment and facilities
has been completed, and any required upgrades to Year 2000 compliance status
have been executed. Expenditures for these processes approximate $3.4 million to
date. Any additional costs related to Year 2000 compliance are expected to be
minimal.
While the Company believes that its efforts will adequately address its internal
Year 2000 concerns, there are key risk factors associated with the Year 2000
that the Company cannot directly control, primarily the readiness of its
customers, key suppliers, public infrastructure suppliers and other vendors. The
Company has communicated with key third parties to assess their Year 2000
readiness. Responses therefrom indicate that the vast majority are, or expect to
be, Year 2000 compliant. Because the market for the Company's products is
comprised of numerous customers with a variety of sizes and levels of
sophistication, the noncompliance with Year 2000 of any one would not have a
detrimental impact on the Company's financial position or results of operations.
Although the Company and its key third parties are anticipated to be Year 2000
compliant before December 31, 1999, the Company will establish contingency plans
which will involve identifying alternative sources of supply, developing
business resumption plans, and evaluating alternative manual processes. Actions
may be as simple as locating an alternative material vendor, or as complex as
curtailing operations in one or more locations due to lack of electrical power.
The Company cannot predict the likelihood of a significant disruption of its
customers' or suppliers' businesses or of the economy as a whole, either of
which could have a material adverse impact on the Company.
This is a Year 2000 Readiness Disclosure Statement within the meaning of the
Year 2000 Information and Readiness Disclosure Act (P.L.105-271).
<PAGE>
"Safe Harbor" Provisions
- ------------------------
The Company may from time to time make written or oral forward-looking
statements, including statements contained in the Company's filings with the
Securities and Exchange Commission and its reports to stockholders. This
Quarterly Report contains forward-looking statements made in good faith by the
corporation pursuant to these "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995. In connection with these "safe harbor"
provisions, the Company identifies important factors that could cause actual
results to differ materially from those contained in any forward-looking
statements made by or on behalf of the Company. Any such statement is qualified
by reference to the following cautionary statements.
The Company's business operates in a highly competitive market and is subject to
changes in general economic conditions, intense competition, changes in consumer
preferences, foreign exchange rate fluctuations, the degree of acceptance of new
product introductions, the uncertainties of litigation, as well as other risks
and uncertainties detailed from time to time in the Company's Securities and
Exchange Commission filings.
Developments in any of these areas, which are more fully described in the
Company's filings with the Securities and Exchange Commission, including its
Annual Report on Form 10-K for the year ended December 31, 1998, could cause the
Company's results to differ materially from results that have been or may be
projected by or on behalf of the Company.
The Company cautions that the foregoing list of important factors is not
inclusive. The Company does not undertake to update any forward-looking
statement that may be made from time to time by or on behalf of the Company.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
-----------------------------------------------------
RISK
----
Not Applicable
<PAGE>
PART II
OTHER INFORMATION
-----------------
Item 1. Legal Proceedings
Information describing certain of the Company's legal
proceedings and environmental matters is included in Part 1,
Item 1, in Note 5 to the "Notes to Condensed Consolidated
Financial Statements," and in Part 1, Item 2, in "Management's
Discussion and Analysis of Financial Condition and Results of
Operations" under the captions "Litigation" and "Environmental
Matters," and is hereby incorporated by reference.
Item 5. Other Information
Shareholders wishing to bring a proposal before the 2000 Annual
Meeting of the Shareholders (but not include it in the Company's
Proxy Statement) must cause written notice of the proposal to be
received by the Company at the principal executive offices at
5000 Executive Parkway, Suite 425, San Ramon, CA 94583 by no
later than March 10, 2000.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 3.1 - Registrant's Second Restated Certificate
of Incorporation, effective July 23,
1993, filed as Exhibit 3 to Registrant's
report on Form 8-K dated July 14, 1993
(File No. 1-10659), and incorporated
herein by reference thereto
Exhibit 3.2 - Bylaws of Registrant, effective November
8, 1990, and as Amended on November 12,
1991, August 27, 1992 and December 16,
1993, filed as Exhibit 3.2 to
Registrant's Annual Report on Form 10-K
for the fiscal year ended December 31,
1993 (File No. 1-10659), and
incorporated herein by reference thereto
Exhibit 11 - Computation of Earnings per Common
Share, filed herewith
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K:
None
.
<PAGE>
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.
ROBERTSON-CECO CORPORATION
---------------------------------------
(Registrant)
By: /s/ Patrick G. McNulty
-----------------------------
Patrick G. McNulty
Corporate Controller
November 12, 1999
- -----------------
<PAGE>
ROBERTSON-CECO CORPORATION
EXHIBIT INDEX
-------------
EXHIBIT 11 - Computation of Earnings Per Common Share
EXHIBIT 27 - Financial Data Schedule
EXHIBIT 11
<TABLE>
ROBERTSON-CECO CORPORATION
COMPUTATION OF BASIC EARNINGS PER COMMON SHARE
----------------------------------------------
(In thousands, except per share data)
(Unaudited)
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
------------------------ -------------------------
1999 1998 1999 1998
----------- ---------- --------- ---------
<S> <C> <C> <C> <C>
BASIC:
Income:
From Continuing Operations ........................... $ 6,752 $ 6,285 $ 15,954 $ 16,312
From Discontinued Operations........................... 8,993 - 8,993 -
---------- ----------- ---------- ---------
Total ................................................ $ 15,745 $ 6,285 $ 24,947 $ 16,312
======== ======== ======== ========
Shares:
Average Number of Common
Shares Outstanding................................... 16,063 16,060 16,063 16,060
========= ======== ======== =========
Earnings Per Share:
From Continuing Operations............................. $ .42 $ .39 $ .99 $ 1.02
From Discontinued Operation............................ .56 - .56 -
------------ ------------ ------------ ------------
Total ................................................ $ .98 $ .39 $ 1.55 $ 1.02
=========== =========== ========== ==========
</TABLE>
EXHIBIT 11
<PAGE>
<TABLE>
ROBERTSON-CECO CORPORATION
COMPUTATION OF DILUTED EARNINGS PER COMMON SHARE
------------------------------------------------
(In thousands, except per share data)
(Unaudited)
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
------------------------ -------------------------
1999 1998 1999 1998
----------- ---------- --------- --------
<S> <C> <C> <C> <C>
DILUTED:
Income:
From Continuing Operations ............................ $ 6,752 $ 6,285 $ 15,954 $ 16,312
From Discontinued Operations........................... 8,993 - 8,993 -
--------- ---------- ---------- ----------
Total ................................................ $ 15,745 $ 6,285 $ 24,947 $ 16,312
========== ========== ========== ==========
Shares:
Average number of common
shares outstanding................................. 16,063 16,060 16,063 16,060
Incremental shares to reflect dilutive
effect of deferred compensation plan............... 24 37 23 37
---------- ---------- ---------- ----------
Total number of common shares
assuming dilution ................................. 16,087 16,097 16,086 16,097
========= ========== =========== ==========
Earnings Per Share:
From Continuing Operations............................. $ .42 $ .39 $ .99 $ 1.02
From Discontinued Operations........................... .56 - .56 -
---------- ---------- ---------- ----------
Total ................................................ $ .98 $ .39 $ 1.55 $ 1.02
========== ========== ========== ==========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 38,329
<SECURITIES> 0
<RECEIVABLES> 36,973
<ALLOWANCES> (1,548)
<INVENTORY> 18,026
<CURRENT-ASSETS> 107,406
<PP&E> 63,881
<DEPRECIATION> (25,908)
<TOTAL-ASSETS> 174,215
<CURRENT-LIABILITIES> 45,298
<BONDS> 0
0
0
<COMMON> 161
<OTHER-SE> 97,450
<TOTAL-LIABILITY-AND-EQUITY> 174,215
<SALES> 0
<TOTAL-REVENUES> 205,669
<CGS> 162,194
<TOTAL-COSTS> 181,127
<OTHER-EXPENSES> (1,525)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 101
<INCOME-PRETAX> 25,966
<INCOME-TAX> 10,012
<INCOME-CONTINUING> 15,954
<DISCONTINUED> 8,993
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 24,947
<EPS-BASIC> 1.55
<EPS-DILUTED> 1.55
</TABLE>
