<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------------
FORM 8-K/A-1
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report
April 17, 1996
THE SHAW GROUP INC.
(Exact name of registrant as specified in its charter)
Louisiana 0-22992 72-1106167
(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification No.)
incorporation)
11100 Mead Road, 2nd Floor, Baton Rouge, Louisiana 70816
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (504) 296-1140
Not Applicable
(Former name or former address, if changed since last report)
<PAGE> 2
AMENDMENT TO APPLICATION OR REPORT
FILED PURSUANT TO SECTION 12, 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
THE SHAW GROUP INC.
AMENDMENT NO. 1
The undersigned registrant hereby amends the following items, financial
statements, exhibit or other portions of its Current Report on Form 8-K filed
on April 17, 1996, as set forth in the pages attached hereto:
Item 7(a) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED
Item 7(b) PRO FORMA FINANCIAL INFORMATION
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this amendment to be signed on its behalf by the
undersigned hereunto duly authorized.
THE SHAW GROUP INC.
(Registrant)
Date: 06/17/96 By: /s/ Bret M. Talbot
-------------------- --------------------------------
Bret M. Talbot, Vice President
and Chief Financial Officer
<PAGE> 3
Item 7(a) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED
Unaudited Combined Balance Sheet of Alloy Piping Products, Inc. as of
January 31, 1996 and Unaudited Combined Statements of Operations and Statements
of Cash Flows of Alloy Piping Products, Inc. for the six months ended January
31, 1995 and 1996.
Combined Financial Statements for the fiscal years ended July 31, 1993,
1994 and 1995 for Alloy Piping Products Group.
<PAGE> 4
ALLOY PIPING PRODUCTS, INC.
COMBINED BALANCE SHEET
(UNAUDITED)
AS OF JANUARY 31, 1996
ASSETS
<TABLE>
<S> <C>
Current Assets:
Cash $ 2,501,937
Accounts receivable 7,201,756
Inventories 15,365,520
Prepaid expenses 273,747
------------
Total current assets 25,342,960
Property and equipment:
Transportation equipment 74,965
Furniture and fixtures 1,032,415
Machinery and equipment 12,028,021
Buildings and improvements 5,799,476
Assets acquired under capital leases 37,350
Land 708,974
------------
19,681,201
Less: Accumulated depreciation (including
amortization of assets acquired under
capital leases) (12,182,612)
------------
7,498,589
Other assets, net 514,542
------------
$ 33,356,091
============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable 1,870,206
Accrued liabilities 4,425,876
Current maturities of long-term debt 2,283,357
Revolving line of credit 5,764,387
------------
Total current liabilities 14,343,826
Long-term debt, less current maturities 4,879,385
Deferred income taxes 494,966
Shareholders' equity:
Common stock 1,000
Retained earnings 13,636,914
------------
Total shareholders' equity 13,637,914
------------
$ 33,356,091
============
</TABLE>
<PAGE> 5
ALLOY PIPING PRODUCTS, INC.
COMBINED STATEMENTS OF OPERATIONS
(UNAUDITED)
FOR THE SIX MONTHS ENDED JANUARY 31, 1995 AND 1996
1995 1996
---- ----
Income:
Sales $29,223,443 $31,532,392
Cost of sales 24,061,238 23,341,891
------------------------------
Gross profit 5,162,205 8,190,501
General and administrative
expenses 4,208,233 4,954,885
------------------------------
Operating Income (Loss) 953,972 3,235,616
Interest expense (543,817) (621,231)
Other income, net 368,105 218,278
------------------------------
(175,712) (402,953)
------------------------------
Income before income taxes 778,260 2,832,663
Provision for income taxes 230,346 996,751
------------------------------
Net Income $547,914 $1,835,912
==============================
<PAGE> 6
ALLOY PIPING PRODUCTS, INC.
COMBINED STATEMENTS OF CASH FLOWS
(UNAUDITED)
FOR THE SIX MONTHS ENDED JANUARY 31, 1995 AND 1996
1995 1996
---- ----
Cash flows from operating activities:
Net income $547,914 $1,835,912
Adjustments to reconcile net income to
Net cash provided by operating activities:
Depreciation and amortization 574,406 573,934
Bad debt expense 6,357 7,240
Provision for deferred income taxes 77,478 187,501
Changes in assets and liabilities
Decrease (increase) in
Accounts receivable (38,536) (188,386)
Inventories (1,255,278) (1,502,409)
Other current assets (117,436) (104,242)
Other assets 266,156 (225,052)
Increase (Decrease) in
Accounts payable (59,347) (1,846,728)
Accrued liabilities 1,876,503 2,824,445
------------------------------
Net cash provided by operating activities 1,878,217 1,562,215
Cash flows from investing activities:
Proceeds from sale of investment - 750,000
Purchases of property and equipment (678,869) (1,092,134)
------------------------------
Net cash used in investing activities (678,869) (342,134)
Cash flows from financing activities:
Net borrowing (repayment) under line-of-credit
agreements 1,706,870 (639,156)
Distributions to partners (45,710) (209,515)
Repayment of debt (466,213) (294,684)
------------------------------
Net cash provided by (used in) financing
activities 1,194,947 (1,143,355)
Net increase (decrease) in cash 2,394,295 76,726
Cash - beginning of period 3,443,121 2,425,211
------------------------------
Cash - end of period $5,837,416 $2,501,937
==============================
Supplemental disclosures:
Cash payments for:
Interest $543,817 $621,231
==============================
Income taxes
$290,741 $1,248,284
==============================
<PAGE> 7
ALLOY PIPING PRODUCTS GROUP
SHREVEPORT, LOUISIANA
COMBINED FINANCIAL STATEMENTS
JULY 31, 1993, 1994 AND 1995
<PAGE> 8
Alloy Piping Products Group
Shreveport, Louisiana
Table of Contents
<TABLE>
<CAPTION>
Page
No.
<S> <C> <C>
1 Combined Balance Sheets Exhibit A
July 31, 1994 and 1995
2 Combined Statements of Operations Exhibit B
for the Years Ended July 31, 1993, 1994 and 1995
3 Combined Statements of Equity Exhibit C
for the Years Ended July 31, 1993, 1994 and 1995
4 Combined Statements of Cash Flows Exhibit D
for the Years Ended July 31, 1993, 1994 and 1995
5 Notes to Combined Financial Statements
July 31, 1993, 1994 and 1995
14 Independent Auditor's Report
</TABLE>
<PAGE> 9
Alloy Piping Products Group
Shreveport, Louisiana
Combined Balance Sheets Exhibit A
July 31, 1994 and 1995
<TABLE>
<CAPTION>
Assets
1994 1995
----------- -----------
<S> <C> <C>
Current Assets
Cash and Cash Equivalents $ 3,443,121 $ 2,425,211
Accounts Receivable 6,841,273 7,020,610
Note Receivable - Related Party 157,226 -
Inventories 9,181,092 13,863,111
Other Current Assets 94,959 169,505
----------- -----------
Total Current Assets 19,717,671 23,478,437
----------- -----------
Property, Plant and Equipment - Net 6,318,265 6,980,389
Investments in Limited Liability Company 750,000
Other Assets 625,388 289,490
----------- -----------
Total Assets $26,661,324 $31,498,316
=========== ===========
Liabilities and Equity
Current Liabilities
Notes Payable $ 4,320,505 $ 7,242,173
Loans from Stockholder 1,371,422 1,371,422
Accounts Payable 3,580,261 3,716,934
Accrued Payroll and Bonuses 686,215 458,319
Accrued Profit Sharing Contribution 235,250 300,000
Other Accrued Expenses 237,349 229,188
Income Taxes Payable 60,395 613,924
Deferred Income Taxes 77,478 -
----------- -----------
Total Current Liabilities 10,568,875 13,931,960
----------- -----------
Long-Term Debt 6,129,213 5,247,374
Deferred Income Taxes 455,227 307,465
----------- -----------
Total Liabilities 17,153,315 19,486,799
Equity
Common Stock, No Par Value
1,000 Shares Authorized
100 Shares Issued and Outstanding 1,000 1,000
Corporate Retained Earnings 9,361,923 11,551,614
Partners' Equity 145,086 458,903
----------- -----------
9,508,009 12,011,517
----------- -----------
Total Liabilities and Equity $26,661,324 $31,498,316
=========== ===========
</TABLE>
The accompanying Notes to Combined Financial Statements
are an integral part of this statement.
-1-
<PAGE> 10
Alloy Piping Products Group
Shreveport, Louisiana
Combined Statements of Operations Exhibit B
for the Years Ended July 31, 1993, 1994 and 1995
<TABLE>
<CAPTION>
1993 1994 1995
------------- ------------- -------------
<S> <C> <C> <C>
Sales $ 38,542,412 $ 43,593,456 $ 55,934,123
Cost of Goods Sold 30,389,989 31,318,138 37,889,698
------------- ------------- -------------
Gross Profit 8,152,423 12,275,318 18,044,425
General and Administrative Expenses 6,968,268 10,625,559 13,126,354
------------- ------------- -------------
Operating Income 1,184,155 1,649,759 4,918,071
------------- ------------- -------------
Interest Expense (1,238,096) (1,173,896) (1,372,405)
Interest Income 436,360 80,292 145,115
Gain on Sale of Assets 746,970 (4,699) -
Other Income - Net 301,799 396,300 580,118
------------- ------------- -------------
247,033 (702,003) (647,172)
------------- ------------- -------------
Income Before Income Taxes 1,431,188 947,756 4,270,899
Provision for Income Taxes 717,897 224,643 1,277,482
------------- ------------- -------------
Net Income $ 713,291 $ 723,113 $ 2,993,417
============= ============= =============
Net Income Per Share $ 7,132.91 $ 7,231.13 $ 29,934.17
============= ============= =============
</TABLE>
The accompanying Notes to Combined Financial Statements
are an integral part of this statement.
-2-
<PAGE> 11
Alloy Piping Products Group
Shreveport, Louisiana
Combined Statements of Equity Exhibit C
for the Years Ended July 31, 1993, 1994 and 1995
<TABLE>
Corporate
Common Retained Partners'
Stock Earnings Equity Total
--------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Balances,
July 31, 1992 $ 1,000 $ 8,261,605 $ - $ 8,262,605
Net Income 713,291 - 713,291
--------- ------------- ------------ -------------
Balances,
July 31, 1993 1,000 8,974,896 - 8,975,896
Net Income 387,027 336,086 723,113
Contributions by
Partners - 10,000 10,000
Distributions to
Partners - (201,000) (201,000)
--------- ------------- ------------ -------------
Balances,
July 31, 1994 1,000 9,361,923 145,086 9,508,009
Net Income 2,189,691 803,726 2,993,417
Distributions to
Partners - (489,909) (489,909)
--------- ------------- ------------ -------------
Balances,
July 31, 1995 $ 1,000 $ 11,551,614 $ 458,903 $ 12,011,517
========= ============= ============ =============
</TABLE>
The accompanying Notes to Combined Financial Statements
are an integral part of this statement.
-3-
<PAGE> 12
Alloy Piping Products Group
Shreveport, Louisiana
Combined Statements of Cash Flows Exhibit D
for the Years Ended July 31, 1993, 1994, and 1995
<TABLE>
<CAPTION>
1993 1994 1995
------------ ------------- ---------------
<S> <C> <C> <C>
Cash Flows From Operating Activities:
Net Income $ 713,291 $ 723,113 $ 2,993,417
Adjustments to Reconcile Net Income to
Net Cash Provided by Operating Activities:
Depreciation and Amortization 1,428,563 1,416,774 1,217,684
Bad Debt Expense 78,716 107,700 213,307
(Gain) Loss on Sale of Assets (746,990) 4,699 -
Deferred Income Tax Expense (Benefit) 154,404 (358,531) (225,240)
Changes in Assets and Liabilities
Decrease (Increase) in
Accounts Receivable (901,088) (1,852,577) (392,644)
Inventories 1,581,941 2,611,734 (4,682,019)
Other Current Assets (7,765) 105,944 (74,545)
Other Assets (182,645) (396,614) 309,924
Increase (Decrease) in
Accounts Payable (755,012) 1,283,884 136,673
Accrued Liabilities 111,106 74,350 (171,306)
Income Taxes Payable 50,275 7,244 553,529
----------- ------------- --------------
Total Adjustments 811,505 3,004,607 (3,114,637)
----------- ------------- --------------
Net Cash Provided by (Used in) Operating Activities 1,524,796 3,727,720 (121,220)
----------- ------------- --------------
Cash Flows From Investing Activities:
Collections on Loan to Related Party 1,346,311 360,530 157,226
Purchase of Investment - - (750,000)
Capital Expenditures (447,028) (28,919) (1,853,834)
Proceeds from Sales of Assets - 158,065 -
----------- ------------- --------------
Net Cash Provided by (Used in) Investing Activities 899,283 489,676 (2,446,608)
----------- ------------- --------------
Cash Flows From Financing Activities:
Net Borrowing (Repayment) Under
Line-of-Credit Agreements (2,617,630) (2,304,001) 2,865,150
Proceeds from Issuance of Debt 3,205,773 5,106,422 -
Principal Payments Under Debt Obligations (3,208,303) (3,778,658) (825,323)
Partners' Contribution to Equity - 10,000
Distributions to Partners - (201,000) (489,909)
----------- ------------- --------------
Net Cash Provided by (Used in) Financing Activities (2,620,160) (1,167,237) 1,549,918
----------- ------------- --------------
Net Increase (Decrease) in Cash (196,081) 3,050,159 (1,017,910)
Cash - Beginning 589,043 392,962 3,443,121
------------ ------------- ---------------
Cash - Ending $ 392,962 $ 3,443,121 $ 2,425,211
============ ============= ===============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash Paid During the Year for
Interest $ 1,238,096 $ 1,114,895 $ 1,402,407
============ ============= ===============
Income Taxes $ 553,812 $ 441,643 $ 917,901
============ ============= ===============
</TABLE>
The accompanying Notes to Consolidated Financial Statements
are an integral part of this statement.
-4-
<PAGE> 13
Alloy Piping Products Group
Shreveport, Louisiana
Notes to Consolidated Financial Statements
July 31, 1993, 1994 and 1995
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Alloy Piping Products, Inc. and its affiliates (the Group) manufacture and
distribute stainless and carbon steel buttweld pipe fittings and other
stainless steel pipe products. The Group has a manufacturing facility in
Shreveport, Louisiana. Distribution facilities are located in Shreveport,
Louisiana; Houston, Texas; Atlanta, Georgia; Branchburg, New Jersey; Phoenix,
Arizona; and Tulsa, Oklahoma. Sales offices are located in Shreveport,
Louisiana; Houston, Texas; Atlanta, Georgia; Branchburg, New Jersey; Phoenix,
Arizona; and Tulsa, Oklahoma.
Principles of Combination - The combined financial statements include the
accounts of a group of affiliated entities which are under the common ownership
of Mr. Dale Brown and other family members. Alloy Piping Products, Inc. (the
Company) is the primary company of the affiliated group. The entities in the
Group are as follows:
Alloy Piping Products, Inc.
APP Speedline, Inc.
Speedline Partnership
All intercompany balances and transactions have been eliminated.
Each member of the group has a July 31 fiscal year end except Speedline
Partnership, which has a fiscal year ending December 31. The financial
information of Speedline Partnership has been restated in the combined
financial statements to reflect a year end date of July 31.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Cash and Cash Equivalents - Cash and cash equivalents consist principally of
demand deposits at commercial banks and investments in overnight repurchase
agreements. Demand deposit balances, as reflected in the bank's records, are
insured by the Federal Deposit Insurance Corporation up to $100,000 for each
depositor. Balances of demand deposits, as reflected in the bank's records, in
excess of the federally insured amount are $3,560,147 and $504,343 for the
years ended July 31, 1994 and 1995, respectively. Overnight repurchase
agreements totaling $3,522,076 at July 31, 1995, are secured by mortgage backed
securities.
Concentration of Credit Risk - The Group extends unsecured credit through open
trade receivables to its customers for wholesale and retail sales of pipe
fittings. The customers are located throughout the United States and Canada.
Accounts Receivable - Accounts receivable are pledged to secure debt to LaSalle
National Bank. For financial statement purposes, an allowance for potential
bad debts is established by management based upon a specific review of accounts
and all known bad debts are charged off as they are identified. This method
does not materially depart from generally accepted accounting principles. The
allowance for potential bad debts was $-0- for the years ended July 31, 1993,
1994 and 1995. There were $78,716, $107,700 and $213,307 of bad debts charged
off for the years ended July 31, 1993, 1994 and 1995, respectively. The
Company collected $263,780, $14,413 and $10,352 of previously charged-off
receivables during the years ended July 31, 1993, 1994 and 1995, respectively.
-5-
<PAGE> 14
Inventories - Inventories consist of raw materials, work in progress, and
finished goods. All inventories are valued at the lower of cost or market.
Cost is determined using the first-in, first-out (FIFO) method.
Property, Plant and Equipment - Property, plant, and equipment are carried at
cost. Major additions and betterments are charged to the property accounts
while replacements, maintenance, and repairs which do not extend the useful
lives of the respective assets are expensed. When property is retired or
otherwise disposed of, the cost of the property is removed from the asset
account, accumulated depreciation is charged with an amount equal to the
depreciation provided, and the gain or loss, if any, is credited or charged to
income.
For financial statement purposes, assets are depreciated using the straight
line method over their estimated useful lives. For tax purposes, assets placed
in service prior to January 1, 1981, are depreciated using both double
declining and straight line methods of depreciation. Accelerated methods are
utilized for property placed in service after 1980.
Investments - Investments in entities in which the Group has a 20% to 50%
interest are accounted for under the equity method.
Loan Origination Costs - Loan origination costs are capitalized and amortized
over the term of the related loan using the straight line method.
Intangible Assets - Intangible assets are stated at acquisition cost and are
being amortized on a straight line basis over their estimated useful lives of
one to five years.
Profit Sharing Plan - The Company implemented a defined contribution profit
sharing plan covering all qualified employees in 1989. The Company makes a
discretionary contribution to the plan not to exceed 15% of eligible employee
compensation. The contributions to the profit sharing plan were $231,750,
$235,250 and $300,000 for the years ended July 31, 1993, 1994 and 1995,
respectively.
NOTE 2 INVENTORIES
Inventories are comprised of the following components at July 31, 1994 and
1995:
<TABLE>
<CAPTION>
1994 1995
---------- -----------
<S> <C> <C>
Raw Materials $ 774,033 $ 1,789,945
Work-in-Process 923,217 1,138,708
Finished Goods 7,483,842 10,934,458
---------- -----------
Total $9,181,092 $13,863,111
========== ===========
</TABLE>
Virtually all inventory is pledged to secure debt to various creditors. See
Note 6.
-6-
<PAGE> 15
NOTE 3 PROPERTY, PLANT AND EQUIPMENT
<TABLE>
<CAPTION>
Balance Balance
August 1, July 31,
1993 Additions Deletions 1994
----------- ---------- --------- -----------
<S> <C> <C> <C> <C>
Land $ 774,224 $ $ 65,250 $ 708,974
Buildings and
Improvements 5,101,033 5,101,033
Machinery and Equipment 9,945,223 9,945,223
Furniture and Fixtures 785,958 23,391 809,349
Automotive Equipment 158,445 26,169 133,035 51,579
----------- ---------- --------- -----------
Total at Cost $16,764,883 $ 49,560 $ 198,285 $16,616,158
=========== ========== ========= ===========
Accumulated Depreciation $ 8,997,252 $1,315,521 $ 14,880 $10,297,893
=========== ========== ========= ===========
Net Book Value $ 7,767,631 $ 6,318,265
=========== ===========
<CAPTION>
Balance Balance
August 1, July 31,
1994 Additions Deletions 1995
----------- ---------- --------- -----------
<S> <C> <C> <C> <C>
Land $ 708,974 $ $ $ 708,974
Buildings and
Improvements 5,101,033 398,444 5,499,477
Machinery and Equipment 9,945,223 1,432,003 11,377,226
Furniture and Fixtures 809,349 809,349
Automotive Equipment 51,579 23,387 74,966
----------- ---------- -----------
Total at Cost $16,616,158 $1,853,834 $ - $18,469,992
=========== ========== ========= ===========
Accumulated Depreciation $10,297,893 $1,191,710 $ - $11,489,603
=========== ========== ========= ===========
Net Book Value $ 6,318,265 $ 6,980,389
=========== ===========
</TABLE>
Depreciation expense for the years ended July 31, 1993, 1994 and 1995 was
$1,393,083, $1,315,521 and $1,191,710, respectively.
Virtually all the fixed assets of the Company are pledged to secure debt.
See Note 6.
NOTE 4 NOTES RECEIVABLE
<TABLE>
<CAPTION>
1994 1995
---------- ----------
<S> <C> <C>
Note receivable from sale of common stock investment
in Canadoil Forge, Ltd. with a $1,000,000 face amount,
non interest bearing, due in an initial payment of
$105,000, then 25 monthly payments of $35,000 and a
final installment of $20,000 on December 1, 1994 (less
unamortized discount based on imputed interest rate
of 7.50% of $2,744 for 1994). $ 157,226 $ -
========== ==========
</TABLE>
-7-
<PAGE> 16
NOTE 5 OTHER ASSETS
<TABLE>
<CAPTION>
Other assets consist of the following:
1994 1995
---------- ----------
<S> <C> <C>
Certificate of Deposit pledged to Office of
Worker's Compensation through Louisiana
Department of Employment and Training $ 108,888 $ 111,924
Deposits 22,083 40,143
Loan Origination Costs, net of accumulated
amortization of $80,778 and $4,699 for
1994 and 1995, respectively 36,572 32,681
Intangible assets, net of accumulated
amortization of $96,250 and $43,333 for
1994 and 1995, respectively 78,750 56,667
Deposit on Equipment 211,775 -
Equipment not yet placed in service 167,320 48,075
---------- ----------
Total $ 625,388 $ 289,490
========== ==========
</TABLE>
Amortization expense for the years ended July 31, 1993, 1994 and 1995 was
$35,480, $101,253 and $25,974, respectively.
NOTE 6 NOTES AND MORTGAGES PAYABLE
<TABLE>
<CAPTION>
1994 1995
------------ ------------
<S> <C> <C>
Line of credit at LaSalle National Bank in the
amount of $15,000,000 payable on demand.
Advances are available to borrower equal to 85%
of the face amount of eligible trade accounts
receivable plus 50% of the lower of cost or
market value of eligible inventory or
$6,000,000, whichever is less. The line bears
interest at bank prime plus 1.50% (8.75% and
10.25% at July 31, 1994 and 1995, respectively).
The line is secured by pledge of trade accounts
receivable, note receivable, inventory and
goods, contract rights, instruments, documents
and general intangibles, and is further secured
by junior liens on certain real estate and
equipment, and the continuing guaranty of Ronald
Dale Brown, Sr., stockholder of the Company, and
Mildred Gayle O'Pry Brown. $ 3,538,393 $ 6,403,544
Promissory note to Hibernia National Bank, in
the original amount of $2,735,000 at 8.375%,
payable in 95 monthly installments of $26,935
including interest beginning July 1, 1994 with
balance due June 1, 2002. The note is secured
by a future advance mortgage covering real
estate, collateral assignment of leases and
rents, security interest in life insurance
policy on R. Dale Brown, and the continuing
guaranty of Ronald Dale Brown. 2,719,251 2,624,807
</TABLE>
-8-
<PAGE> 17
<TABLE>
<S> <C> <C>
Promissory note to Hibernia National Bank, in
the original amount of $1,000,000 at 8.375%,
payable in 95 monthly installments of $9,850
including interest beginning July 1, 1994 with
balance due June 1, 2002. The note is secured
by a future advance mortgage covering real
estate, collateral assignment of leases and
rents, security interest in a life insurance
policy on and the continuing guaranty of
Ronald Dale Brown. 994,239 959,684
Note payable to Machine Tool Finance Corporation
in the original amount of $3,000,000 at 7.95%
interest, payable in 72 monthly installments of
$52,527, including principal and interest
beginning August 1, 1993 with balance due July
1, 1999. The note is secured by a first
priority lien and security interest in equipment. 2,558,247 2,076,886
Note payable to Hibernia National Bank in the
amount of $300,000 at prime plus 0.50%, payable
in 59 monthly principal installments of $5,000,
plus interest, beginning September 11, 1992,
with balance due August 11, 1997. The note is
secured by a security interest in all deposit
accounts and certain equipment. 185,660 125,660
Note payable to Nor Am Energy Corporation in the
original amount of $349,755 at 8.0% interest,
payable in 60 monthly installments of $7,092,
including principal and interest, due July 1,
1998. The note is secured by a collateral
mortgage of real property located on Grimmett
Drive, Shreveport, Louisiana. 282,590 217,981
Notes payable to Chase Manhattan Leasing Company
in various original amounts totaling $398,245,
payable in 60 monthly installments each, ranging
from $400 to $511 a month including interest at
11.75%, due May 19, 1996 through October 19,
1996. These notes are secured by
pledge of twenty (20) forklifts. 171,338 80,985
Note payable to Dale Brown, stockholder of the
Company, due on demand, at 8% interest,
unsecured. (See Note 9). 1,371,422 1,371,422
------------- -------------
Total 11,821,140 13,860,969
Less : Current Portion (4,320,505) (7,242,173)
Loans from Stockholder (1,371,422) (1,371,422)
------------- -------------
Long-Term Debt $ 6,129,213 $ 5,247,374
============= =============
</TABLE>
-9-
<PAGE> 18
Maturities of notes and mortgages payable in fiscal years subsequent to
July 31, 1995 are as follows:
<TABLE>
<CAPTION>
Fiscal year ended July 31,
<S> <C>
1996 $ 8,613,595
1997 818,338
1998 816,185
1999 694,566
2000 204,303
Thereafter 2,713,982
--------------------
Total $ 13,860,969
====================
</TABLE>
The Company is required to maintain certain levels of working capital, net
worth and debt to equity ratios according to the terms of certain of their
loans. As of July 31, 1995, the Company was in compliance with all covenants.
NOTE 7 LEASES
The Company leases sales offices in Houston, Atlanta, New Jersey, Phoenix and
Tulsa under operating leases. Rent expense for these offices totaled $498,887,
$497,140 and $402,890 for the years ended July 31, 1993, 1994, and 1995,
respectively, and is included in operating expense.
The Company also leased certain equipment under non-cancelable operating
leases. Lease payments for equipment for the years ended July 31, 1993, 1994
and 1995 totaled $52,971, $55,414 and $51,847, respectively, and are included
in cost of goods sold.
Following is a summary of operating leases and future options:
<TABLE>
<CAPTION>
Location of Expiration
Property Date of Lease Future Options
- - ---------------------- ------------------ ---------------------------------------
<S> <C> <C>
Houston, Texas January 31, 1999 None
Atlanta, Georgia September 30, 1994 Option to renew for three years at
$5,700 per month.
Branchburg, New Jersey January 14, 1998 None
Phoenix, Arizona July 31, 1998 None
Tulsa, Oklahoma May 3, 1995 Option to renew for one year at $2,600
per month.
Shreveport, Louisiana May 1, 1997 Option to purchase at end of lease term
for fair market value of the equipment.
Shreveport, Louisiana May 1, 1997 Option to purchase at end of lease
term for fair market value of the
equipment.
Shreveport, Louisiana June 21, 1997 Option to purchase at end of lease term
for $41,309
Shreveport, Louisiana June 22, 1997 Option to purchase at end of lease term
for $40,616
</TABLE>
-10-
<PAGE> 19
Minimum future rentals under these leases for subsequent fiscal years is as
follows:
<TABLE>
<CAPTION>
<S> <C>
Fiscal year ended July 31,
1996 $362,532
1997 353,280
1998 221,827
1999 46,700
2000 7,473
--------
Total $991,812
========
</TABLE>
NOTE 8 INCOME TAXES
Provision for income taxes for the years ended July 31 is as follows:
<TABLE>
<CAPTION>
1993 1994 1995
-------- ---------- ----------
<S> <C> <C> <C>
Federal Income Tax $508,760 $ 509,421 $1,317,405
State Income Tax 54,733 73,753 185,316
Deferred Income Tax Expense (Benefit) 154,404 (358,531) (225,239)
-------- ---------- ----------
$717,897 $ 224,643 $1,277,482
======== ========== ==========
</TABLE>
A reconciliation of Federal statutory and effective income tax rates for the
years ended July 31 is as follows:
<TABLE>
<CAPTION>
1993 1994 1995
---- ---- ----
<S> <C> <C> <C>
Federal Statutory Rate 34% 34% 34%
State Taxes Provided 5 4 4
Foreign Income Taxes 3 - -
Partnership Earnings - (13) (7)
Other 8 (1) (1)
--- --- ---
50% 24% 30%
=== === ===
</TABLE>
Speedline Partnership is not a tax paying entity for income tax purposes, and
thus no income tax expense related to its income has been recorded in the
statements. Income from the partnership is taxed to the partners in their
individual returns.
Deferred income taxes arise from temporary differences resulting from income
and expense items reported for financial accounting and tax purposes in
different periods. Deferred taxes are classified as current or noncurrent,
depending on the classification of the assets and liabilities to which they
relate. Deferred taxes arising from timing differences that are not related to
an asset or liability are classified as current or noncurrent depending on the
periods in which the timing differences are expected to reverse. The principal
temporary differences relate to the use of accelerated methods of depreciation
and installment gains for income tax purposes. Deferred income tax liabilities
as of July 31 are as follows:
<TABLE>
<CAPTION>
1994 1995
-------- --------
<S> <C> <C>
Excess Tax Over Financial Reporting
Asset Basis $455,227 $307,465
Installment Gains Deferred for Tax Purposes 77,478 -
-------- --------
Total 532,705 307,465
Less Current Portion 77,478 -
-------- --------
Long-Term Portion $455,227 $307,465
======== ========
</TABLE>
-11-
<PAGE> 20
NOTE 9 RELATED PARTY TRANSACTIONS
The Company purchased inventory from Canadoil Forge, Ltd. (a related party) in
the amount of $3,882,939 and $2,589,439 during the years ended July 31, 1993
and 1994, respectively.
The Company holds notes receivable from Canadoil Forge, Ltd. with a balance of
$157,226 as of July 31, 1994. Interest income recognized on these notes
receivable during the years ended July 31, 1993 and 1994, totaled $401,015 and
$24,470, respectively.
Interest expense on the notes payable to the stockholder was $113,222, $204,076
and $129,282 during 1993, 1994 and 1995, respectively.
NOTE 10 COMMITMENTS AND CONTINGENCIES
In the opinion of management, there are no contingent claims or litigation
against the Group which would materially affect its financial position.
At July 31, 1995, the Company had $500,000 of available letters of credit with
a bank to be drawn upon as needed. Included in this amount is an outstanding
irrevocable letter of credit for foreign purchases in the amount of $112,512.
This letter of credit is unsecured and has not been presented for payment as
of July 31, 1995.
The Company also had an outstanding letter of credit reserve for inventory
purchases in the amount of $173,537 at July 31, 1995. This letter of credit
reserve is secured by pledge of trade accounts receivable, inventory and goods,
contract rights, instruments, documents and general intangibles, and is further
secured by junior liens on certain real estate and equipment, and the
continuing guaranty of Ronald Dale Brown, Sr., stockholder of the Company, and
Mildred Gayle O'Pry Brown. See Note 6.
The Company adopted a self-insured workers' compensation plan in 1990 with
stop-loss insurance administered by a third party. Contributions are made on
an as-needed basis to an escrow account from which claims are paid. Claims paid
for the years ended July 31, 1993, 1994 and 1995 of $72,317, $109,063 and
$44,761, respectively, have been included in insurance expense. Balances on
deposit to cover statutorily required deposits and expense are $178,019,
$182,414 and $263,955 at July 31, 1993, 1994 and 1995, respectively.
Ronald Dale Brown, Sr., stockholder of the Company, has guaranteed debt of up
to $4,000,000 for International Extruded Products, L.L.C. and Northland Avenue
Properties, L.L.C., in which the Company holds a 45% interest.
On June 3, 1993, the Company acquired certain of the assets of Oil Capitol
Supply Co., Inc. The total cost of the acquisition was $808,300, which
included intangible assets totaling $175,000 to be amortized over the
straight-line method over 1 - 5 years.
NOTE 11 INVESTMENT IN LIMITED LIABILITY COMPANIES
On May 8, 1995, the Company purchased a 45% interest in International Extruded
Products, L.L.C., also a manufacturer of stainless and carbon steel pipe
products, and Northland Avenue Properties, L.L.C. for $750,000. The investment
is accounted for using the equity method, as management believes this method
appropriately accounts for the activities of the acquired entities. The
difference between the amount at which the investment is carried by the
Company and the amount of underlying equity in the net assets of the acquired
entities is not significant.
-12-
<PAGE> 21
NOTE 12 SUBSEQUENT EVENTS
On August 23, 1995, the Company acquired all of the outstanding shares of stock
of Multi Metals, Inc., a North Carolina corporation. The total cost of the
acquisition, $1,725,026, is payable by promissory note due in twelve equal
monthly principal installments with accrued interest thereon at eight percent
interest per year with the balance due in one year. The note is secured by a
first security interest in the inventory of Multi Metals, Inc. For the six
months ended July 31, 1995, Multi Metals, Inc. had net sales of $1,987,983,
operating income of $381,645, and net income of $232,156.
In December, 1995, the Company divested its interest in International Extruded
Products, LLC and Northland Avenue Properties, LLC with no gain or loss
recognized.
Effective March 1, 1996, all of the outstanding stock of Alloy Piping Products,
Inc. and the assets of Speedline, a Louisiana partnership, were sold to a
company registered with the Securities and Exchange Commission.
-13-
<PAGE> 22
INDEPENDENT AUDITOR'S REPORT
The Board of Directors
Alloy Piping Products Group
Shreveport, Louisiana
We have audited the accompanying combined balance sheets of Alloy Piping
Products Group as of July 31, 1994 and 1995, and the related combined
statements of operations, equity, and cash flows for the three years ended
July 31, 1993, 1994 and 1995. These financial statements are the
responsibility of the Group's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Alloy Piping Products Group
as of July 31, 1994 and 1995, and the results of its operations and its cash
flows for the three years ended July 31, 1993, 1994 and 1995 in conformity
with generally accepted accounting principles.
/s/ ROBERTS, CHERRY AND COMPANY
ROBERTS, CHERRY AND COMPANY
A Corporation of
Certified Public Accountants
Shreveport, Louisiana
June 14, 1996
-14-
<PAGE> 23
Item 7(b) PRO FORMA FINANCIAL INFORMATION
INTRODUCTION TO PRO FORMA FINANCIAL STATEMENTS (UNAUDITED)
The accompanying unaudited pro forma financial statements reflect the
financial position of The Shaw Group Inc. and Subsidiaries ("Shaw") as of
February 29, 1996 and the related results of operations for the year ended
August 31, 1995, and the six months ended February 29, 1995 and 1996. These
unaudited pro forma financial statements (i) give effect to the acquisition
(the Word Acquisition) of certain assets and the assumption of certain
liabilities of Word Industries Pipe Fabricating, Inc. and certain of its
affiliates, T.S.& M. Corporation and T.N. Word as discussed in further detail
in Shaw's previously filed Current Report on Form 8-K dated January 30, 1996 as
amended by Amendment No. 1 on Form 8-K/A-1; (ii) give effect to acquisition
(the APP Acquisition) of all the outstanding capital stock of Alloy Piping
Products, Inc. (APP) and the assets of an APP-related entity, Speedline, a
Louisiana partnership (Speedline, which collectively with APP and another APP
affiliate, shall be referred to herein as Alloy Piping Products Group) as
discussed in further detail in Shaw's Current Report on Form 8-K (the "Form
8-K") dated April 17, 1996; and (iii) should be read in conjunction with the
Historical Financial Statements of Alloy Piping Products Group included in this
Amendment No. 1 to the Form 8-K and Shaw's historical Consolidated Financial
Statements contained in Shaw's Annual Report on Form 10-K for the fiscal year
ended August 31, 1995, and Shaw's Quarterly Reports on Form 10-Q for the
quarters ended November 30, 1995 and February 29, 1996.
The accompanying unaudited pro forma balance sheet has been prepared as if
the APP Acquisition had occurred on February 29, 1996. The Word Acquisition
occurred on January 30, 1996 and is included as part of Shaw's historical
balance sheet. The accompanying unaudited pro forma statements of income and
cash flows have been prepared as if both the Word Acquisition and APP
Acquisition had occurred on September 1, 1994. The unaudited pro forma
financial statements are not necessarily indicative of the actual financial
results of operations or cash flows had the above transactions taken place on
the dates indicated, nor do they purport to indicate the future financial
position, operating results, or cash flows of Shaw.
<PAGE> 24
THE SHAW GROUP INC. AND SUBSIDIARIES
PRO FORMA BALANCE SHEET
(UNAUDITED)
AS OF FEBRUARY 29, 1996
<TABLE>
<CAPTION>
ASSETS
PRO FORMA
COMBINED PRO FORMA CONSOLIDATED
SHAW APP HISTORICAL ADJUSTMENTS RESULTS
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Current Assets:
Cash $4,367,401 $3,017,706 $7,385,107 (1) ($423,814) $6,961,293
Accounts receivable 63,303,281 6,750,622 70,053,903 70,053,903
Receivables from unconsolidated
entities 1,883,555 - 1,883,555 1,883,555
Inventories 35,297,471 15,684,049 50,981,520 (1) 139,314 51,120,834
Prepaid expenses 1,872,441 273,077 2,145,518 (1) (5,325) 2,140,193
Deferred income taxes 857,400 - 857,400 857,400
----------------------------------------------------------------------------
Total current assets 107,581,549 25,725,454 133,307,003 (289,825) 133,017,178
Investment in unconsolidated entities 1,947,611 - 1,947,611 1,947,611
Property and equipment:
Transportation equipment 1,055,447 74,965 1,130,412 (1) (23,387) 1,088,360
(3) (18,665)
Furniture and fixtures 4,170,487 932,414 5,102,901 (3) (515,588) 4,587,313
Machinery and equipment 15,829,141 12,028,021 27,857,162 (3) (4,769,496) 23,087,666
Buildings and improvements 10,683,894 5,799,476 16,483,370 (3) (3,727,130) 12,756,240
Assets acquired under capital leases 2,891,818 - 2,891,818 2,891,818
Land 1,952,936 1,028,599 2,981,535 (3) 35,105 3,016,640
----------------------------------------------------------------------------
36,583,723 19,863,475 56,447,198 (9,019,161) 47,428,037
Less: Accumulated depreciation (including
amortization of assets acquired under
capital leases) (7,568,129) (12,269,209) (19,837,338) (3) 12,269,209 (7,568,129)
----------------------------------------------------------------------------
29,015,594 7,594,266 36,609,860 3,250,048 39,859,908
Other assets, net 4,489,694 691,999 5,181,693 (2) (369,647) 7,212,046
(3) (100,000)
(7) 2,500,000
----------------------------------------------------------------------------
$143,034,448 $34,011,719 $177,046,167 $4,990,576 $182,036,743
============================================================================
</TABLE>
See notes and assumptions to unaudited pro forma balance sheet.
<PAGE> 25
THE SHAW GROUP INC. AND SUBSIDIARIES
PRO FORMA BALANCE SHEET
(UNAUDITED)
AS OF FEBRUARY 29, 1996
<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
PRO FORMA
COMBINED PRO FORMA CONSOLIDATED
SHAW APP HISTORICAL ADJUSTMENTS RESULTS
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Current liabilities:
Outstanding checks in excess of
bank balance $3,430,042 - $3,430,042 $ $3,430,042
Accounts payable 21,565,802 7,303,010 28,868,812 28,868,812
Accrued liabilities 4,134,144 386,718 4,520,862 (1) 15,000 4,535,862
Current maturities of long-term debt 1,095,732 2,066,203 3,161,935 (1) (1,293,633) 2,368,302
(7) 500,000
Revolving line of credit 28,041,293 4,854,537 32,895,830 (4) 10,894,000 43,789,830
Current portion of obligations under
capital leases 386,411 - 386,411 386,411
Deferred revenue - prebilled 1,157,637 - 1,157,637 1,157,637
Advanced billings 6,799,039 - 6,799,039 6,799,039
-----------------------------------------------------------------------------
Total current liabilities 66,610,100 14,610,468 81,220,568 10,115,367 91,335,935
Long-term debt, less current maturities 12,634,234 5,016,783 17,651,017 (7) 2,000,000 19,651,017
Obligations under capital leases, less
current portion 542,594 - 542,594 542,594
Deferred income taxes 2,379,593 494,966 2,874,559 2,874,559
Shareholders' equity:
Common stock 42,933,334 248,911 43,182,245 (6) (248,911) 49,698,046
(5) 6,764,712
Retained earnings 24,762,428 13,640,591 38,403,019 (6) (13,640,592) 24,762,427
Treasury stock (6,827,835) - (6,827,835) (6,827,835)
-----------------------------------------------------------------------------
Total shareholders' equity 60,867,927 13,889,502 74,757,429 (7,124,791) 67,632,638
-----------------------------------------------------------------------------
$143,034,448 $34,011,719 $177,046,167 $4,990,576 $182,036,743
=============================================================================
</TABLE>
See notes and assumptions to unaudited pro forma balance sheet.
<PAGE> 26
THE SHAW GROUP INC. AND SUBSIDIARIES
NOTES AND ASSUMPTIONS TO UNAUDITED PRO FORMA BALANCE SHEET
AS OF FEBRUARY 29, 1996
The following notes describe the adjustments to the combined historical results
of The Shaw Group Inc. and Subsidiaries (Shaw) and Alloy Piping Products, Inc.
(APP) and an APP-related entity Speedline, a Louisiana partnership (Speedline)
to reflect the acquisition (the APP Acquisition) by Shaw of all the
outstanding capital stock of APP and the assets of Speedline.
(1) To record elimination of assets and liabilities from Speedline not
acquired in conjunction with the APP Acquisition.
(2) To remove prior goodwill on APP's books in conjunction with the
APP Acquisition.
(3) To allocate the purchase price paid for fixed assets based upon their
appraised fair market values.
(4) To record the draw on Shaw's line of credit to fund the cash portion of
the consideration paid in connection with the APP Acquisition.
(5) To record the issuance of 541,177 shares of Shaw's common stock in
connection with the APP Acquisition.
(6) To record elimination of APP's shareholders' equity.
(7) To record an asset and liability associated with a covenant not to compete
made in connection with the APP Acquisition.
<PAGE> 27
THE SHAW GROUP INC. AND SUBSIDIARIES
PRO FORMA STATEMENT OF INCOME
(UNAUDITED)
FOR THE SIX MONTHS ENDED FEBRUARY 29, 1996
<TABLE>
<CAPTION>
SIX MONTHS SIX MONTHS SIX MONTHS
ENDED ENDED ENDED PRO FORMA
2/29/96 2/29/96 2/29/96 COMBINED PRO FORMA CONSOLIDATED
SHAW WORD APP HISTORICAL ADJUSTMENTS RESULTS
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Income:
Sales $88,375,248 $12,181,680 31,086,221 $131,643,149 $ - $131,643,149
Cost of sales 72,468,267 11,553,600 24,565,143 $108,587,010 (5) (163,000) 108,424,010
-----------------------------------------------------------------------------------------
Gross profit 15,906,981 628,080 6,521,078 23,056,139 163,000 23,219,139
(1) 8,537
(2) (77,500)
General and administrative (5) (8,639)
expenses 9,628,994 1,651,050 4,428,596 15,708,640 (6) 250,000 15,881,038
-----------------------------------------------------------------------------------------
Operating Income (Loss) 6,277,987 (1,022,970) 2,092,482 7,347,499 (9,398) 7,338,101
Interest expense (1,174,079) (6,680) (708,641) (1,889,400)(7) (468,000) (2,357,400)
Other income, net - 40,812 518,132 558,944 - 558,944
-----------------------------------------------------------------------------------------
(1,174,079) 34,132 (190,509) (1,330,456) (468,000) (1,798,456)
-----------------------------------------------------------------------------------------
Income before income taxes 5,103,908 (988,838) 1,901,973 6,017,043 (477,398) 5,539,645
Provision for income taxes 1,718,726 - 658,928 2,377,654 (3) (456,660) 1,920,994
-----------------------------------------------------------------------------------------
Income before earnings (losses)
from unconsolidated entities 3,385,182 (988,838) 1,243,045 3,639,389 (20,738) 3,618,651
Earnings (losses) from unconsolidated
entities 123,163 - - 123,163 - 123,163
-----------------------------------------------------------------------------------------
Net income $3,508,345 ($988,838) $1,243,045 $3,762,552 ($20,738) $3,741,814
=========================================================================================
Net Income per Share $0.41 $0.39
=========== =========
Common Shares Outstanding 8,638,347 9,478,178(4)
=========== =========
</TABLE>
See notes and assumptions to unaudited pro forma statement of income.
<PAGE> 28
THE SHAW GROUP INC. AND SUBSIDIARIES
NOTES AND ASSUMPTIONS TO UNAUDITED PRO FORMA STATEMENT OF INCOME
FOR THE SIX MONTHS ENDED FEBRUARY 29, 1996
The following notes describe the adjustments to the combined historical results
of The Shaw Group Inc. and Subsidiaries (Shaw), Word Industries, Inc. and
affiliates (Word), and Alloy Piping Products, Inc. (APP) and Speedline, a
Louisiana partnership (Speedline) to reflect (i) the acquisition (the Word
Acquisition) by Shaw of certain assets and the assumption of certain
liabilities of Word; and (ii) the acquisition (the APP Acquisition) by Shaw of
all the outstanding capital stock of APP and the assets of Speedline.
(1) For the Word Acquisition, represents adjustments to record additional
depreciation on the assets acquired based on their adjusted value per the
purchase price allocation.
(2) For the Word Acquisition, to eliminate intercompany rent expense due to
the acquisition of the plant and office building from an affiliated entity.
(3) To adjust the provision for income taxes for the net loss from the Word
Acquisition, the effect of pro forma adjustments, and the income of
Speedline.
(4) Common Shares Outstanding include 385,000 and 541,177 shares of Shaw
common stock issued in connection with the Word Acquisition and the APP
Acquisition, respectively.
(5) For the APP Acquisition, represents adjustments to record additional
depreciation on the assets acquired based on their adjusted value per the
purchase price allocation.
(6) To adjust compensation for certain APP employees to conform with
contractual agreements entered into in connection with the APP Acquisition.
(7) To record additional interest expense due to the net increase in debt
resulting from the APP Acquisition.
Interest income related to the loan agreement associated with the Word
Acquisition is immaterial to the pro forma statement of income for the six
months ended February 29,1996.
<PAGE> 29
THE SHAW GROUP INC. AND SUBSIDIARIES
PRO FORMA STATEMENT OF INCOME
(UNAUDITED)
FOR THE YEAR ENDED AUGUST 31, 1995
<TABLE>
<CAPTION>
YEAR YEAR YEAR
ENDED ENDED ENDED PRO FORMA
8/31/95 8/31/95 8/31/95 COMBINED PRO FORMA CONSOLIDATED
SHAW WORD APP HISTORICAL ADJUSTMENTS RESULTS
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Income:
Sales $135,264,643 $19,808,938 $58,730,187 $213,803,768 $ - $213,803,768
Cost of sales 110,578,027 17,288,856 44,620,586 172,487,469 (5) (285,500) 172,201,969
-------------------------------------------------------------------------------------------
Gross profit 24,686,616 2,520,082 14,109,601 41,316,299 285,500 41,601,799
(1) 17,076
(2) (155,000)
General and administrative (5) (15,080)
expenses 15,022,595 2,992,448 8,425,698 26,440,741 (6) (1,125,000) 25,162,737
-------------------------------------------------------------------------------------------
Operating Income (Loss) 9,664,021 (472,366) 5,683,903 14,875,558 1,563,504 16,439,062
Interest expense (2,828,968) (34,333) (1,295,557) (4,158,858)(7) (936,000) (5,094,858)
Other income, net 235,619 - 541,097 776,716 - 776,716
-------------------------------------------------------------------------------------------
(2,593,349) (34,333) (754,460) (3,382,142) (936,000) (4,318,142)
-------------------------------------------------------------------------------------------
Income before income taxes 7,070,672 (506,699) 4,929,443 11,493,416 627,504 12,120,920
Provision for income taxes 2,217,058 - 1,672,600 3,889,658 (3) 87,153 3,976,811
-------------------------------------------------------------------------------------------
Income before earnings (losses)
from unconsolidated entities 4,853,614 (506,699) 3,256,843 7,603,758 540,351 8,144,109
Earnings (losses) from unconsolidated
entities (587,569) - - (587,569) - (587,569)
-------------------------------------------------------------------------------------------
Net income $4,266,045 ($506,699) $3,256,843 $7,016,189 $540,351 $7,556,540
===========================================================================================
Net Income per Share $0.50 $0.80
============ =========
Common Shares Outstanding 8,552,001 9,478,178 (4)
============ =========
</TABLE>
See notes and assumptions to unaudited pro forma statement of income.
<PAGE> 30
THE SHAW GROUP INC. AND SUBSIDIARIES
NOTES AND ASSUMPTIONS TO UNAUDITED PRO FORMA STATEMENT OF INCOME
FOR THE YEAR ENDED AUGUST 31, 1995
The following notes describe the adjustments to the combined historical results
of The Shaw Group Inc. and Subsidiaries (Shaw), Word Industries, Inc. and
affiliates (Word), and Alloy Piping Products, Inc. (APP) and an APP-related
entity Speedline, a Louisiana partnership (Speedline) to reflect (i) the
acquisition (the Word Acquisition) by Shaw of certain assets and the assumption
of certain liabilities of Word; and (ii) the acquisition (the APP Acquisition)
by Shaw of all the outstanding capital stock of APP and the assets of Speedline.
(1) For the Word Acquisition, represents adjustments to record additional
depreciation on the assets acquired based on their adjusted value per the
purchase price allocation.
(2) For the Word Acquisition, to eliminate intercompany rent expense on Word
due to the acquisition of the plant and office building from an affiliated
entity.
(3) To adjust the provision for income taxes for the net loss from the Word
Acquisition, the effect of pro forma adjustments, and the income of
Speedline.
(4) Common Shares Outstanding include 385,000 and 541,177 shares of Shaw
common stock issued in connection with the Word Acquisition and the APP
Acquisition respectively.
(5) For the Word Acquisition, represents adjustments to record additional
depreciation on the assets acquired based on their adjusted value per the
purchase price allocation.
(6) To adjust compensation for certain APP employees to conform with
contractual agreements entered into in connection with the APP Acquisition.
(7) To record additional interest expense due to the net increase in debt
resulting from the APP Acquisition.
Interest income related to the loan agreement associated with the Word
Acquisition is immaterial to the pro forma statement of income for the year
ended August 31, 1995.
