SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED JUNE 30, 1996 COMMISSION FILE NUMBER 33-63044
------------- --------
VALCOR, INC.
- ------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
DELAWARE 74-2678674
- ------------------------------- -------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
5430 LBJ FREEWAY, SUITE 1700, DALLAS, TEXAS 75240-2697
- ------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (214) 233-1700
--------------
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS REQUIRED
TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING
THE PRECEDING 12 MONTHS AND (2) HAS BEEN SUBJECT TO SUCH FILING REQUIREMENTS FOR
THE PAST 90 DAYS. YES X NO
--- ---
THE REGISTRANT IS A WHOLLY-OWNED SUBSIDIARY OF VALHI, INC. (FILE NO. 1-5467) AND
MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTIONS H(1)(A) AND (B) OF FORM
10-Q FOR REDUCED DISCLOSURE FORMAT.
VALCOR, INC.
INDEX
PAGE
NUMBER
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
Consolidated Balance Sheets - December 31, 1995
and June 30, 1996 3-4
Consolidated Statements of Operations - Three months
and six months ended June 30, 1995 and 1996 5
Consolidated Statements of Cash Flows - Six months
ended June 30, 1995 and 1996 6
Consolidated Statement of Stockholder's Equity -
Six months ended June 30, 1996 7
Notes to Consolidated Financial Statements 8-11
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. 12-15
PART II. OTHER INFORMATION
Item 1. Legal Proceedings. 16
Item 6. Exhibits and Reports on Form 8-K. 16
VALCOR, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
ASSETS DECEMBER 31, JUNE 30,
1995 1996
------------ ----------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 17,618 $ 19,242
Accounts receivable 30,949 31,659
Receivable from affiliates 3,538 4,055
Inventories 36,385 31,024
Prepaid expenses 3,105 2,254
Deferred income taxes 2,409 4,826
-------- --------
Total current assets 94,004 93,060
-------- --------
Other assets:
Timber and timberlands 53,099 54,187
Intangible assets 18,145 17,261
Other 8,630 8,728
-------- --------
Total other assets 79,874 80,176
-------- --------
Property and equipment:
Land 22,290 21,836
Buildings 50,007 50,558
Equipment 184,240 186,561
Construction in progress 8,393 11,921
-------- --------
264,930 270,876
Less accumulated depreciation 111,216 129,515
-------- --------
Net property and equipment 153,714 141,361
-------- --------
$327,592 $314,597
======== ========
</TABLE>
VALCOR, INC.
CONSOLIDATED BALANCE SHEETS (CONTINUED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDER'S EQUITY DECEMBER 31, JUNE 30,
1995 1996
------------ ----------
<S> <C> <C>
Current liabilities:
Current long-term debt $ 12,383 $ 21,753
Accounts payable 19,933 18,999
Accrued liabilities 21,470 27,154
Payable to affiliates 17 81
Income taxes 2,275 2,529
-------- --------
Total current liabilities 56,078 70,516
-------- --------
Noncurrent liabilities:
Long-term debt 198,584 184,634
Deferred income taxes 24,461 17,115
Other 4,245 7,086
-------- --------
Total noncurrent liabilities 227,290 208,835
-------- --------
Stockholder's equity:
Common stock 1 1
Additional paid-in capital 520 520
Retained earnings 45,871 36,892
Adjustments:
Currency translation adjustment 30 31
Pension liabilities (2,198) (2,198)
-------- --------
Total stockholder's equity 44,224 35,246
-------- --------
$327,592 $314,597
======== ========
</TABLE>
[FN]
Commitments and contingencies (Note 1)
VALCOR, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------ ------------------
1995 1996 1995 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues and other income:
Net sales $97,434 $99,190 $202,980 $194,423
Other, net 793 550 1,713 915
------- ------- -------- --------
98,227 99,740 204,693 195,338
------- ------- -------- --------
Costs and expenses:
Cost of sales 76,215 80,087 159,037 161,077
Plant closure charge - - - 24,000
Selling, general and
administrative 6,531 6,980 14,174 14,045
Interest 4,908 4,914 9,881 9,825
------- ------- -------- --------
87,654 91,981 183,092 208,947
------- ------- -------- --------
Income (loss) before taxes 10,573 7,759 21,601 (13,609)
Income taxes (benefit) 3,843 3,187 8,118 (5,013)
------- ------- -------- --------
Net income (loss) $ 6,730 $ 4,572 $ 13,483 $ (8,596)
======= ======= ======== ========
</TABLE>
VALCOR, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1995 AND 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
1995 1996
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 13,483 $ (8,596)
Depreciation, depletion and amortization 9,978 10,091
Plant closure charge - noncash portion - 15,200
Deferred income taxes (1,576) (9,883)
Other, net 564 1,020
-------- --------
22,449 7,832
Change in assets and liabilities:
Accounts receivable (1,922) (1,357)
Inventories (3,904) 4,452
Accounts payable and accrued liabilities 3,228 4,464
Accounts with affiliates 539 (453)
Other, net (194) 3,421
-------- --------
Net cash provided by operating activities 20,196 18,359
-------- --------
Cash flows from investing activities:
Capital expenditures (13,249) (12,191)
Other, net 23 411
-------- --------
Net cash used by investing activities (13,226) (11,780)
-------- --------
Cash flows from financing activities:
Indebtedness:
Borrowings 21,636 16,256
Principal payments (25,920) (20,836)
Dividends (6,236) (383)
Government grants 2,916 -
-------- --------
Net cash used by financing activities (7,604) (4,963)
-------- --------
Net increase (decrease) (634) 1,616
Currency translation 190 8
Cash and equivalents at beginning of period 23,256 17,618
-------- --------
Cash and equivalents at end of period $ 22,812 $ 19,242
======== ========
Supplemental disclosures - cash paid for:
Interest, net of amounts capitalized $ 8,739 $ 9,191
Income taxes 9,524 5,100
</TABLE>
VALCOR, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDER'S EQUITY
SIX MONTHS ENDED JUNE 30, 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
ADDITIONAL
COMMON PAID-IN RETAINED
STOCK CAPITAL EARNINGS
------ ----------- --------
<S> <C> <C> <C>
Balance at December 31, 1995 $1 $520 $45,871
Net loss - - (8,596)
Dividends - - (383)
Other, net - - -
-- ---- -------
Balance at June 30, 1996 $1 $520 $36,892
== ==== =======
</TABLE>
<TABLE>
<CAPTION>
ADJUSTMENTS
------------------------
CURRENCY TOTAL
TRANSLATION PENSION STOCKHOLDER'S
ADJUSTMENT LIABILITIES EQUITY
----------- ----------- --------------
<S> <C> <C> <C>
Balance at December 31, 1995 $30 $(2,198) $44,224
Net loss - - (8,596)
Dividends - - (383)
Other, net 1 - 1
--- ------- -------
Balance at June 30, 1996 $31 $(2,198) $35,246
=== ======= =======
</TABLE>
VALCOR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 -BASIS OF PRESENTATION:
The consolidated balance sheet at December 31, 1995 has been condensed from
the Company's audited consolidated financial statements at that date. The
consolidated balance sheet at June 30, 1996 and the consolidated statements of
operations, cash flows and stockholder's equity for the interim periods ended
June 30, 1995 and 1996 have been prepared by the Company, without audit. In the
opinion of management, all adjustments necessary to present fairly the
consolidated financial position, results of operations and cash flows have been
made. The results of operations for the interim periods are not necessarily
indicative of the operating results for a full year or of future operations.
Certain information normally included in financial statements prepared in
accordance with generally accepted accounting principles has been condensed or
omitted. The accompanying consolidated financial statements should be read in
conjunction with the Company's Annual Report on Form 10-K for the year ended
December 31, 1995 (the "1995 Annual Report"). Commitments and contingencies are
discussed in Note 8, "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the 1995 Annual Report.
NOTE 2 -BUSINESS SEGMENT INFORMATION:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------ ------------------
1995 1996 1995 1996
---- ---- ---- ----
(IN MILLIONS)
<S> <C> <C> <C> <C>
Net sales:
Building products - Medite
Corporation $49.4 $48.1 $108.0 $ 94.6
Hardware products - National
Cabinet Lock, Inc. 19.3 21.7 39.4 42.9
Fast food - Sybra, Inc. 28.8 29.3 55.6 56.9
----- ----- ------ ------
$97.5 $99.1 $203.0 $194.4
===== ===== ====== ======
Operating income:
Building products:
Before restructuring charge $ 8.3 $ 5.6 $ 18.6 $ 7.1
Plant closure charge - - - (24.0)
----- ------ ------ ------
8.3 5.6 18.6 (16.9)
Hardware products 5.1 5.0 10.6 9.4
Fast food 1.8 2.4 2.9 4.0
----- ------ ------ ------
Total operating income (loss) 15.2 13.0 32.1 (3.5)
Interest expense (4.9) (4.9) (9.9) (9.8)
General corporate, net .3 (.3) (.6) (.3)
----- ------ ------ ------
Income (loss) before taxes $10.6 $ 7.8 $ 21.6 $(13.6)
===== ===== ====== ======
</TABLE>
NOTE 3 -INVENTORIES:
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1995 1996
------------ ----------
(IN THOUSANDS)
<S> <C> <C>
Raw materials:
Building products $12,404 $ 8,663
Hardware products 1,927 1,916
Fast food 1,379 1,238
------- -------
15,710 11,817
------- -------
In process products:
Building products 2,187 2,844
Hardware products 4,320 4,628
------- -------
6,507 7,472
------- -------
Finished products:
Building products 6,131 3,913
Hardware products 2,921 2,902
------- -------
9,052 6,815
------- -------
Supplies 5,116 4,920
------- -------
$36,385 $31,024
======= =======
</TABLE>
NOTE 4 -ACCRUED LIABILITIES:
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1995 1996
------------ ----------
(IN THOUSANDS)
<S> <C> <C>
Current accrued liabilities:
Employee benefits $ 7,894 $ 7,477
Plant closure costs - 4,613
Interest 3,636 3,838
Insurance claims and expenses 2,357 2,736
Other 7,583 8,490
------- -------
$21,470 $27,154
======= =======
Other noncurrent liabilities:
Insurance claims and expenses $ 1,066 $ 1,166
Environmental costs 750 3,650
Accrued pension and OPEB costs 957 957
Other 1,472 1,313
------- -------
$ 4,245 $ 7,086
======= =======
</TABLE>
NOTE 5 - LONG-TERM DEBT:
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1995 1996
------------ ----------
(IN THOUSANDS)
<S> <C> <C>
Valcor - 9 5/8% Senior Notes Due 2003 $100,000 $100,000
-------- --------
Medite:
Bank term loans 73,770 72,128
Bank working capital facilities 10,830 10,357
Other 4,117 4,004
-------- --------
88,717 86,489
-------- --------
Other:
Sybra bank credit agreements 16,770 14,860
Sybra capital leases 5,382 4,963
National Cabinet Lock capital leases 98 75
-------- --------
22,250 19,898
-------- --------
210,967 206,387
Less current maturities 12,383 21,753
-------- --------
$198,584 $184,634
======== ========
</TABLE>
Medite has entered into interest rate swaps to mitigate the impact of
changes in interest rates for $26 million of bank debt due in 1998-2000 that
result in a weighted average fixed interest rate of 7.6% for such borrowings.
At June 30, 1996, the fair value of the interest rate swaps, based upon quotes
obtained from the counter party financial institution, is a $.7 million
receivable, representing the estimated amount Medite would receive if it were to
terminate the swap agreements at that date.
NOTE 6 - PROVISION FOR INCOME TAXES:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
-----------------
1995 1996
---- ----
(IN MILLIONS)
<S> <C> <C>
Expected tax expense (benefit) $ 7.6 $(4.8)
Non-U.S. tax rates (2.5) -
Incremental tax on non-U.S. earnings 2.8 .5
State income taxes and other, net .2 (.7)
----- -----
$ 8.1 $(5.0)
===== =====
</TABLE>
NOTE 7 - INTANGIBLE AND OTHER NONCURRENT ASSETS:
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1995 1996
------------ ----------
(IN THOUSANDS)
<S> <C> <C>
Intangible assets:
Goodwill $ 5,162 $ 5,078
Franchise fees 5,605 5,151
Other 7,378 7,032
------- -------
$18,145 $17,261
======= =======
Other assets:
Deferred financing costs $ 3,003 $ 2,771
Prepaid pension cost 1,501 1,567
Property held for sale 3,920 3,676
Other 206 714
------- -------
$ 8,630 $ 8,728
======= =======
</TABLE>
NOTE 8 -PLANT CLOSURE CHARGE:
As previously reported, Medite recorded a pre-tax restructuring charge of
$24 million in the first quarter of 1996 based upon the estimated costs of
permanently closing its New Mexico medium density fiberboard (`MDF'') plant.
Approximately $15 million of such charge represents non-cash costs, most of
which relate to the net carrying value of property and equipment in excess of
estimated net realizable value. These non-cash costs were deemed utilized upon
adoption of the closure plan. Approximately $9 million of the charge represents
workforce, environmental and other estimated cash costs associated with closure
of this facility, of which approximately $1.6 million had been paid at June 30,
1996.
On August 1, 1996, Medite completed the sale of substantially all of the
building and equipment of the New Mexico facility for $5.5 million cash, which
approximates the previously estimated net realizable value. Dismantlement and
removal by the purchaser could take up to a year for the buyer to complete.
Medite retains responsibility for any necessary site cleanup and remediation.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
RESULTS OF OPERATIONS:
OVERVIEW
The Company reported a net loss of $8.6 million for the first six months of
1996, which includes a $15 million first quarter after-tax charge to close
Medite's New Mexico MDF operations, as discussed below. Net income was $13.5
million in the six months of 1995.
The statements in this Quarterly Report on Form 10-Q relating to matters
that are not historical facts, including, but not limited to, statements found
in this ``anagement's Discussion and Analysis of Financial Condition and
Results of Operations,''are forward looking statements that involve a number of
risks and uncertainties. Factors that could cause actual future results to
differ materially from those expressed in such forward looking statements
include, but are not limited to, future supply and demand for the Company's
products (including cyclicality thereof), general economic conditions,
competitive products and substitute products, customer and competitor
strategies, the impact of pricing and production decisions, environmental
matters, government regulations and possible changes therein, and the ultimate
resolution of pending litigation and possible future litigation.
BUILDING PRODUCTS
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, % JUNE 30, %
------------------ ------------------
1995 1996 CHANGE 1995 1996 CHANGE
---- ---- ------ ---- ---- ------
(IN MILLIONS) (IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
Net sales:
Medium density fiberboard $37.5 $34.7 - 7% $ 83.0 $ 71.6 -14%
Traditional timber products 12.2 13.8 +14% 25.8 23.6 - 8%
Eliminations (.3) (.4) (.8) (.6)
----- ----- ------ ------
$49.4 $48.1 - 3% $108.0 $ 94.6 -12%
===== ===== ====== ======
Operating income:
Medium density fiberboard:
Before restructuring charge $ 7.2 $ 4.1 $ 16.8 $ 5.6
Plant closure cost - - - (24.0)
----- ----- ------ ------
7.2 4.1 16.8 (18.4)
Traditional timber products 1.1 1.5 1.8 1.5
----- ----- ------ ------
$ 8.3 $ 5.6 $ 18.6 $(16.9)
===== ===== ====== ======
</TABLE>
MDF sales and operating income (excluding the first quarter 1996 plant
closure charge) declined in the first six months of 1996 compared to 1995 as a
9% increase in year-to-date MDF sales volume was more than offset by an 18%
reduction in average selling prices. MDF prices generally peaked in the second
quarter of 1995 and thereafter declined. Second quarter 1996 average prices
approximated first quarter 1996 levels. Increases in European industry capacity
and slower economic growth in North America and Europe contributed to the lower
MDF prices. These factors, along with additional North American capacity
additions expected during the last half of 1996, are currently expected to
continue MDF price pressure. MDF earnings in 1996 were favorably impacted by
lower raw material costs, due in part from improved raw material conversion
rates in the U.S. and lower resin costs in Ireland. Fluctuations in foreign
exchange rates, principally a weakening of the U.K. Pound Sterling, along with a
lower mix of higher-margin specialty MDF products diluted 1996 operating
margins. The closed New Mexico operations accounted for approximately $5.2
million of second quarter 1996 sales compared to $7.4 million in the 1995
quarter, with related operating losses of $.5 million and $1.3 million,
respectively.
As previously reported, Medite recorded a $24 million pre-tax charge ($15
million net of income tax benefits) related to closure of its New Mexico MDF
plant. See Note 8 to the Consolidated Financial Statements.
Medite allocates timber harvested from its fee timberlands between log
sales and its traditional timber products conversion facilities depending upon
prevailing market conditions. Traditional timber products results in 1996 were
impacted by higher volumes of logs sold and higher selling prices for lumber,
offset by lower prices for veneer and chips.
HARDWARE PRODUCTS
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, % JUNE 30, %
------------------ ------------------
1995 1996 CHANGE 1995 1996 CHANGE
---- ---- ------ ---- ---- ------
(IN MILLIONS) (IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
Net sales $19.3 $21.7 +13% $39.4 $42.9 + 9%
Operating income 5.1 5.0 - 1% 10.6 9.4 -11%
</TABLE>
Sales increased primarily from higher volumes in the Company's
officeworkstation components and drawer slide lines. Changes in product mix
diluted margins, particularly early in the year, as lower-margin operations
acquired in August 1995 were being integrated.
FAST FOOD
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, % JUNE 30, %
------------------ ------------------
1995 1996 CHANGE 1995 1996 CHANGE
---- ---- ------ ---- ---- ------
(IN MILLIONS) (IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
Net sales $28.8 $29.3 + 2% $55.6 $56.9 + 2%
Operating income 1.8 2.4 +32% 2.9 4.0 +37%
</TABLE>
Comparable store sales increased 3% in both the second quarter and year-to-
date periods. Operating income and margins also improved due to successful
promotions, reduced training and recruiting costs associated with the slower
rate of opening new stores in 1996 and the closure of certain under-performing
stores.
A significant portion of Sybra's restaurant employees work on a part-time
basis and are paid at rates related to the minimum wage rate. Restaurant labor
costs currently approximate 30% of sales. Congress has passed a bill which
provides for a two-step, 90-cent increase in the minimum wage rate starting
October 1, 1996. President Clinton is expected to sign the bill. Such increase
in the minimum wage rate will increase Sybra's labor costs. In addition, Sybra
believes agricultural market factors may result in higher beef costs in the
relatively near future. Although Sybra's competitors would likely experience
similar increases, there can be no assurance that Sybra or its competitors will
be able to increase sales prices to offset future increases in these costs.
Sybra operated 153 restaurants at June 30, 1996, closed three
underperforming stores thus far in the third quarter and may close three to five
more underperforming stores by the end of the year.
OTHER
At June 30, 1996, approximately $148 million of the Company's indebtedness
bears interest at fixed rates averaging 9.1%. The weighted average interest
rate on the $58 million of variable rate borrowings outstanding at June 30,
1996 was 7.2% (7.5% at December 31, 1995 and 7.8% at December 31, 1994).
Income tax rates vary by jurisdiction (country and/or state) and relative
changes in the geographic source of the Company's pre-tax earnings, and in the
related availability and usage of foreign tax credits, can result in
fluctuations in the effective income tax rate. See Note 6 to the Consolidated
Financial Statements.
LIQUIDITY AND CAPITAL RESOURCES:
Cash flows from operating activities. Cash flow from operating activities
before changes in assets and liabilities in the first six months of 1996
declined from that of the same period in 1995, reflecting the decline in
earnings. Changes in working capital levels generated cash in 1996 and used
cash in 1995 in large part due to relative changes in MDF inventories. MDF
sales volumes exceeded production levels in 1996, thus reducing inventories,
while production exceeded sales during the first half of 1995. The New Mexico
plant closure also contributed to changes in asset and liability levels.
Cash flows from investing and financing activities. Capital expenditures
for calendar 1996 are expected to approximate $21 million, down from the $26
million spent in 1995 due primarily to lower planned spending by Sybra for new
stores, and are expected to be financed primarily from the respective unit's
operations or credit facilities.
Net repayments of indebtedness in both 1995 and 1996 relate principally to
relative changes in revolving credit facilities. At June 30, 1996, unused
credit available under existing subsidiary credit agreements aggregated
approximately $34 million.
Other. Valcor's operations are conducted through its subsidiaries (Medite,
National Cabinet Lock and Sybra). Accordingly, Valcor's long-term ability to
meet its parent company level obligations (principally debt service on the
Senior Notes) is largely dependent on the receipt of dividends or other
distributions from its subsidiaries. Various subsidiary credit agreements
contain customary limitations on the payment of dividends, typically a
percentage of net income or cash flow. Valcor has not guaranteed any
indebtedness of its subsidiaries. The Company believes that future
distributions from its subsidiaries will be sufficient to enable Valcor to meet
its obligations. Valcor dividends to Valhi are generally limited to 50% of
consolidated net income, as defined in the Senior Note Indenture. At June 30,
1996, no amounts were available for dividends.
The Company routinely compares its liquidity requirements and alternative
uses of capital against the estimated future cash flows to be received from its
subsidiaries and the estimated sales value of those units. As a result of this
process, the Company may seek to raise additional capital, refinance or
restructure indebtedness, modify its dividend policy, consider the sale of
interests in subsidiaries, business units or other assets, or take a combination
of such steps or other steps, to increase liquidity, reduce indebtedness and
fund future activities. The Company also evaluates acquisitions of interests
in, or combinations with, companies related to its current businesses and, in
connection therewith, may consider issuing additional equity securities and/or
increasing indebtedness. In this regard, the Senior Note Indenture contains
limitations on the Company's ability to incur additional indebtedness or hold
noncontrolling interests in business units.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
In July 1996, Medite filed a complaint in U.S. District Court in New Mexico
(Medite Corporation v. Public Service Company of New Mexico, CIV96-0929LH)
regarding termination of the electricity supply contract for its New Mexico MDF
facility permanently closed in May 1996. The compliant seeks, among other
things, to declare the contract terminated under New Mexico common law and/or
the force majeure provisions of the agreement. The Company does not expect the
resolution of this matter to have a material adverse impact on its consolidated
results of operations, financial position or liquidity.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
27.1 - Financial Data Schedule for the six-month period ended June 30,
1996.
(b) Reports on Form 8-K
Reports on Form 8-K for the quarter ended June 30, 1996 and the month
of July 1996:
April 23, 1996 - Reported Items 5 and 7.
July 25, 1996 - Reported Items 5 and 7.
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.
VALCOR, INC.
---------------------------------
(Registrant)
Date August 2, 1996 By /s/ William C. Timm
------------------ ------------------------------
William C. Timm
Vice President - Finance and
Treasurer
(Chief Financial Officer)
Date August 2, 1996 By /s/ J. Thomas Montgomery, Jr.
------------------ -----------------------------
J. Thomas Montgomery, Jr.
Vice President and Controller
(Chief Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM VALCOR, INC'S
CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED JUNE 30, 1996, AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH CONSOLIDATED FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 19,242
<SECURITIES> 0
<RECEIVABLES> 32,837
<ALLOWANCES> 1,287
<INVENTORY> 31,024
<CURRENT-ASSETS> 93,060
<PP&E> 270,876
<DEPRECIATION> 129,515
<TOTAL-ASSETS> 314,597
<CURRENT-LIABILITIES> 70,516
<BONDS> 184,634
0
0
<COMMON> 1
<OTHER-SE> 35,245
<TOTAL-LIABILITY-AND-EQUITY> 314,597
<SALES> 194,423
<TOTAL-REVENUES> 194,423
<CGS> 161,077
<TOTAL-COSTS> 161,077
<OTHER-EXPENSES> 24,000
<LOSS-PROVISION> 224
<INTEREST-EXPENSE> 9,825
<INCOME-PRETAX> (13,609)
<INCOME-TAX> (5,013)
<INCOME-CONTINUING> (8,596)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
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</TABLE>
