UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended November 30, 1996
------------------------------------------------
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: 0-22992
The Shaw Group Inc.
(Exact name of registrant as specified in its charter)
Louisiana 72-1106167
(State of Incorporation) (I.R.S. Employer Identification Number)
11100 Mead Road, 2nd Floor, Baton Rouge, Louisiana 70816
(Address of principal executive offices) (Zip Code)
(504) 296-1140
(Registrant's telephone number, including area code)
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 (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
The number of shares outstanding of each of the issuer's classes of common stock
as of the latest practicable date, is as follows:
Common stock, no par value, 11,524,552 shares outstanding
as of December 31, 1996.
<PAGE>
FORM 10-Q
TABLE OF CONTENTS
Part I - Financial Information
Item 1. - Financial Statements
Consolidated Balance Sheets - August 31, 1996
and November 30, 1996 3 - 4
Consolidated Statements of Income - For the Three
Months Ended November 30, 1995 and 1996 5
Consolidated Statements of Cash Flows - For the
Three Months Ended November 30, 1995 and 1996 6 - 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 4. - Submission of Matters to a Vote of Security Holders 16
Item 5. - Other Information 16 - 17
Item 6. - Exhibits and Reports on Form 8-K 18
Signature Page 19
Exhibit Index
2
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PART I - FINANCIAL INFORMATION
ITEM 1. - FINANCIAL STATEMENTS
THE SHAW GROUP INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
(UNAUDITED) (UNAUDITED)
August 31, November 30,
1996 1996
----------------- -----------
Current assets:
Cash and cash equivalents $ 2,932,434 $ 3,837,297
Accounts receivable, net 71,286,099 76,587,051
Receivables from unconsolidated entities 700,479 313,955
Inventories 66,411,960 67,662,275
Prepaid expenses 2,039,182 2,715,975
Deferred income taxes 1,634,817 1,634,817
-------------- ------------
Total current assets 145,004,971 152,751,370
Investment in unconsolidated entities 1,920,880 3,714,746
Property and equipment:
Transportation equipment 4,593,249 4,762,967
Furniture and fixtures 5,895,454 7,130,951
Machinery and equipment 29,482,645 33,497,349
Buildings and improvements 16,213,648 16,663,337
Assets acquired under capital leases 896,677 361,854
Land 3,001,626 2,991,626
------------- ------------
60,083,299 65,408,084
Less: Accumulated depreciation
(including amortization of assets
acquired under capital leases) (9,194,533) (11,134,544)
------------ -------------
50,888,766 54,273,540
Note receivable from related party 625,000 625,000
Other assets, net 6,926,849 8,697,651
------------- --------------
$205,366,466 $220,062,307
============ ============
(Continued)
The accompany notes are an integral part of these statements.
3
<PAGE>
THE SHAW GROUP INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' EQUITY
(UNAUDITED) (UNAUDITED)
August 31, November 30,
1996 1996
-------------- ------------
Current liabilities:
Outstanding checks in excess
of bank balance $ 3,104,746 $ 1,952,743
Accounts payable 25,761,803 26,808,773
Accrued liabilities 8,843,391 9,680,294
Current maturities of long-term debt 3,448,670 3,620,453
Revolving line of credit 49,322,111 61,723,483
Current portion of obligations under
capital leases 68,143 52,647
Deferred revenue - prebilled 1,839,689 1,917,939
Advance billings 2,990,631 217,306
------------ -----------
Total current liabilities 95,379,184 105,973,638
Long-term debt, less current
maturities 32,112,869 33,152,598
Obligations under capital leases,
less current portion 44,696 60,766
Deferred income taxes 4,507,411 4,507,411
Shareholders' equity:
Preferred stock, no par value,
5,000,000 shares authorized; no
shares issued and outstanding --- ---
Common stock, no par value,
50,000,000 shares authorized;
16,186,218 and 16,187,468 shares issued,
issued, respectively; 9,523,302 and
9,524,552 shares outstanding, respectively 50,119,560 50,128,000
Retained earnings 30,030,581 33,067,729
Treasury stock, 6,662,916 shares (6,827,835) (6,827,835)
----------- -----------
Total shareholders' equity 73,322,306 76,367,894
----------- -----------
$205,366,466 $220,062,307
============ ============
The accompany notes are an integral part of these statements.
4
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THE SHAW GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
Three Months Ended
November 30,
1995 1996
------------- --------------
Income:
Sales $ 38,784,247 $ 67,603,615
Cost of sales 31,598,761 53,703,530
----------- ------------
Gross profit 7,185,486 13,900,085
General and administrative expenses 4,329,346 8,004,179
----------- ------------
Operating income 2,856,140 5,895,906
Interest expense (517,283) ( 1,593,915)
Other income, net -- 30,514
----------- ------------
(517,283) (1,563,401)
Income before income taxes 2,338,857 4,332,505
Provision for income taxes 751,134 1,445,373
----------- ------------
Income before earnings from
unconsolidated entities 1,587,723 2,887,132
Earnings from unconsolidated entities 94,971 150,018
----------- ------------
Net income $ 1,682,694 $ 3,037,150
============ ============
Earnings per common share $ .20 $ .31
============ ============
The accompany notes are an integral part of these statements.
5
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THE SHAW GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Ended
November 30,
1995 1996
--------------- ----------
Cash flows from operating activities:
Net income $1,682,694 $3,037,150
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Depreciation and amortization 580,757 1,384,434
(Earnings) from unconsolidated entities (94,971) (150,018)
Changes in assets and liabilities,
net of effect of acquisitions:
(Increase) decrease in receivables 2,310,700 (4,096,682)
(Increase) decrease in inventories (3,770,304) ( 873,703)
(Increase) decrease in prepaid expenses (467,761) (568,489)
(Increase) decrease in other assets (8,446) 6,356
Increase (decrease) in accounts payable 2,843,830 903,711
Increase (decrease) in deferred revenue
- prebilled 1,322,274 78,250
Increase (decrease) in advanced billings (1,485,163) (2,773,325)
Increase (decrease) in accrued liabilities (1,983,724) 332,749
------------ -----------
Net cash provided by (used in) operating
activities 929,886 (2,719,567)
Cash flows from investing activities:
Investment in unconsolidated entities -- (1,643,848)
Investment in subsidiaries, net of
cash received -- (2,493,763)
Purchase of property and equipment (1,264,710) (4,406,126)
----------- -----------
Net cash used in investing activities (1,264,710) (8,543,737)
---------- -----------
(Continued)
The accompanying notes are an integral part of these statements.
6
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(UNAUDITED)
Three Months Ended
November 30,
1995 1996
--------------- ----------
Cash flows from financing activities:
Net increase (decrease) in outstanding checks
in excess of bank balance 247,070 (1,152,003)
Net proceeds on revolving credit agreement 1,682,167 12,401,372
Proceeds from issuance of debt -- 2,105,000
Repayment of debt and leases (578,139) (1,194,642)
Issue common stock -- 8,440
---------- ------------
Net cash provided by financing activities 1,351,098 12,168,167
---------- ------------
Net increase in cash and cash equivalents 1,016,274 904,863
Cash and cash equivalents - beginning of period 766,319 2,932,434
---------- ------------
Cash and cash equivalents- end of period $1,782,593 $ 3,837,297
========== ============
Supplemental disclosures:
Cash payments for:
Interest $ 518,619 $ 1,432,596
========== ============
Income taxes $2,764,271 $ 899,984
========== ============
Noncash investing and financing activities:
Property and equipment acquired
through issuance of debt $2,523,951 $ --
========== ============
The accompanying notes are an integral part of these statements.
7
<PAGE>
THE SHAW GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Unaudited Financial Information -
The financial information for the three months ended November 30, 1995
and 1996 and as of August 31, 1996 and November 30, 1996 included herein
is unaudited; however, such information reflects, in the opinion of
management, all adjustments (consisting solely of normal recurring
adjustments) that are necessary to present fairly the results of
operations for such periods. Results of operations for the interim period
are not necessarily indicative of results of operations that will be
realized for the fiscal year ending August 31, 1997.
Note 2 - Inventories -
The major components of inventory consist of the following:
(UNAUDITED) (UNAUDITED)
August 31, November 30,
1996 1996
------------------ -----------
Finished goods $23,138,238 $24,726,685
Raw materials 32,972,692 33,165,368
Work in process 10,301,030 9,770,222
----------- -----------
$66,411,960 $67,662,275
=========== ===========
Note 3 - Earnings Per Common Share -
Earnings per common share is calculated based on the weighted average
number of shares outstanding, including dilutive common stock equivalents
when material, during the periods. The weighted average number of shares
outstanding for the quarters ended November 30, 1995 and 1996 were
8,552,000 and 9,877,224, respectively.
Note 4 - Acquisitions -
On January 16, 1996, the Company's newly-formed, wholly-owned
subsidiary, Word Industries Fabricators, Inc. (Word), purchased certain
assets and assumed certain liabilities from Word Industries Pipe
Fabricating, Inc. (WIPF), TS&M Corporation and T. N. Word and certain of
his family members (T.N. Word). The acquisition was completed through the
issuance of 385,000 shares of the Company's Common Stock valued at
$3,442,000 and cash of $503,000. Acquisition costs of $246,000 were
incurred by the Company. The purchase method was used to account for
8
<PAGE>
the acquisition. The operating results of Word have been included in the
consolidated statements of income of the Company from the date of
acquisition.
Effective March 1, 1996, the Company purchased all of the
outstanding capital stock of Alloy Piping Products, Inc. (APP), a leading
U.S. manufacturer of specialty stainless and carbon steel pipe fittings
and other stainless pipe products, and the assets of an APP-related
entity, Speedline, a Louisiana partnership (Speedline). The acquisition
was completed through the issuance of 541,177 shares of the Company's
Common Stock valued at $6,765,000 and cash of $11,280,000. Acquisition
costs of $366,000 were incurred by the Company. The purchase method was
used to account for the acquisitions. The operating results of APP have
been included in the consolidated statements of income from the effective
date of acquisition.
Effective October 1, 1996, the Company acquired all of the
outstanding capital stock of Pipe Shields Incorporated ("Pipe Shields"),
an industrial pipe insulation company located in Vacaville, California,
for approximately $2.5 million in cash, net of cash received. The
purchase method was used to account for the acquisition. The excess of
cost over the estimated fair value of the assets acquired was
approximately $1.5 million, which is included in other assets and is
being amortized on a straight-line basis over 20 years. The operating
results of Pipe Shields have been included in the consolidated statements
of income of the Company from the effective date of acquisition. The
proforma effect of the acquisition of Pipe Shields, had it occurred on
September 1, 1995, is not significant to the operations of the Company.
The following summarized income statement data reflects the impact
that the WIPF, TS&M Corporation, T. N. Word, APP and Speedline
acquisitions would have had on the Company's results of operations had
the transactions taken place on September 1, 1995:
(UNAUDITED)
Proforma Results for the
Three Months Ended
November 30,
1995
Gross revenue $ 62,736,083
============
Net income $ 1,383,672
============
Earnings per common share .15
============
Shaw has entered into an agreement to acquire NAPTech, Inc.
(NAPTech), a fabricator of industrial piping systems and engineered
piping modules located in Clearfield, Utah. Pursuant to the
acquisition agreement as it is presently proposed to be amended, the
Company expects to issue up to an aggregate of 467,122 shares of the
Company's Common Stock in exchange for NAPTech and the 335,000 square
foot facility that NAPTech currently leases from a related entity. The
acquisition of NAPTech is subject to various conditions, including,
without limitation,
9
<PAGE>
the approval of Shaw's Board of Directors and NAPTech's shareholders,
as well as any necessary regulatory approvals. If consummated, the
acquisition of NAPTech will be accounted for as a pooling of interests
and, accordingly, will result in a restatement of the Company's
financial statements for all periods presented. Although there can be
no assurance that the acquisition of NAPTech will be completed, the
Company currently anticipates that the acquisition will be consummated
on or before January 31, 1997.
Note 5 - Investment in Unconsolidated Entities -
During the three months ended November 30, 1996, the Company
invested an additional $1.6 million in Shaw-Nass Middle East, W.L.L.,
the Company's Bahrain joint venture (Shaw-Nass) and recognized
earnings of $150,018.
In addition, as of August 31, 1996 and November 30, 1996, the
Company had outstanding receivables from Shaw-Nass totaling $700,479
and $313,955 respectively. These receivables relate primarily to
inventory and equipment sold to the entity.
Note 6 - Commitments and Contingencies-
For the year ended August 31, 1996, approximately 58% of the
Company's labor force was covered by collective bargaining agreements,
92% of which will expire in the fiscal year ending August 31, 1997.
Of this amount, approximately 24% were covered by the collective
bargaining agreement between the Company's subsidiary in Laurens,
South Carolina and the local affiliate of the United Association of
Journeymen and Apprentices of the Plumbing and Pipefitting Industry of
the United States and Canada, AFL-CIO (the "Union"), which was to have
expired on November 30, 1996. The agreement was extended indefinitely,
with the Company's subsidiary or the Union affiliate having the right
to terminate the agreement by giving ten working days prior written
notice. On January 10, 1997, the members of the Union affiliate in
Laurens, South Carolina approved a proposed new agreement, which has
not yet been executed by the respective parties. The effect of the new
agreement is not expected to have a material adverse impact on the
Company's results of operations or financial position.
Approximately 30% of the workforce were covered by collective
bargaining agreements between the Company's subsidiaries in Walker,
Louisiana and Prarieville, Louisiana and the local affiliate of the
Union which were to have expired on December 31, 1996. The agreements
have been extended indefinitely, with the Company's subsidiaries or
the Union affiliate having the right to terminate the agreements by
giving ten working days prior written notice. The Company does not
expect that the renewal of the agreements will have a material adverse
impact on the Company's results of operation or financial position.
10
<PAGE>
The remaining 4% of the workforce covered by collective
bargaining agreements are under contracts expiring subsequent to the
fiscal year ending August 31, 1997.
See Note 4 regarding the Company's proposed acquisition of
NAPTech.
Note 7 - Subsequent Event -
On December 23, 1996, the Company closed the sale of 2,000,000
shares of its common stock, no par value (the "Common Stock"), in an
underwritten public offering at a price of $21.00 per share, less
underwriting discounts and commissions. On January 10, 1997, the
underwriters for such offering exercised an option to purchase an
additional 398,000 shares of Common Stock from the Company pursuant to
such terms to cover over-allotments, and the closing of such sale is
anticipated to occur on January 15, 1997. The net proceeds to the
Company, less underwriting discounts and commissions and other
expenses of the offering, from the issuances of the 2,398,000 shares
of Common Stock will total approximately $47.2 million and will be
used to repay outstanding amounts on the Company's line of credit,
which has been used generally to provide working capital and fund
fixed asset purchases and acquisitions.
11
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 2. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Introduction
The discussion which follows summarizes the Company's financial position
at November 30, 1996, and the results of its operations for the three-month
period then ended, and should be read in conjunction with the financial
statements and notes thereto included elsewhere in this Form 10-Q.
"Safe Harbor" Statement under the Private Securities Litigation Reform
Act of 1995: The statements in this quarterly report that are not historical
facts may be forward looking statements. The forward looking statements are
subject to certain risks and uncertainties, including without limitation those
identified below, which could cause actual results to differ materially from
historical results or those anticipated. Readers are cautioned not to place
undue reliance on these forward looking statements, which speak only as of their
dates. The Company undertakes no obligation to publicly update or revise any
forward looking statements, whether as a result of new information, future
events or otherwise. The following factors could cause actual results to differ
materially from historical results or those anticipated: adverse economic
conditions, the impact of competitive products and pricing, product demand and
acceptance risks, the presence of competitors with greater financial resources,
costs and financing difficulties, the results of financing efforts, delays or
difficulties in the production by the Company or its suppliers, and delivery or
installation of products.
Liquidity and Capital Resources:
Net cash used in operations was $2.7 million for the three months ended
November 30, 1996, compared to cash provided by operations of $.9 million for
the same period of the previous fiscal year. For the three months ended November
30, 1996, net cash used in operations resulted primarily from an increase of
$4.1 million in receivables and a decrease of $2.8 million in advance billings,
offset by earnings adjusted for depreciation and unconsolidated entity activity
totaling $4.3 million. The increase in accounts receivable and decrease in
advance billings primarily resulted from minor collection delays and billing
provisions on certain contracts.
Net cash used in investing activities was $8.5 million for the three months
ended November 30, 1996, compared to $1.3 million for the same period of the
last fiscal year. During the three months ended November 30, 1996 the Company
purchased $4.4 million of property and equipment. These additions consisted of a
$2.1 million pipe bending machine for the Company's subsidiary in Tulsa,
Oklahoma and $2.3 million of other purchases. The Company also purchased all of
the capital stock of Pipe Shields Incorporated ("Pipe Shields") for
approximately $2.5 million, net of cash received (See Note 4 to Notes to
Consolidated Financial Statements). Additionally, the Company invested an
additional $1.6 million in its Bahrain joint venture (See Note 5 to Notes to
Consolidated Financial Statements).
12
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Net cash provided by financing activities was $12.2 million for the
three-month period ended November 30, 1996, compared to $1.4 million provided
for the three months ended November 30, 1995. For the three months ended
November 30, 1996, $12.4 million of cash was provided from the Company's
revolving line of credit agreement with its commercial lenders. The revolving
line of credit facility has been used generally to provide working capital and
fund fixed asset purchases and acquisitions. In addition, during the three
months ended November 30, 1996, the Company borrowed $2.1 million in term debt
to purchase a pipe bending machine for the Company's subsidiary in Tulsa,
Oklahoma.
Material Changes in Financial Condition:
The Company's current assets increased $7.8 million from $145.0 million
as of August 31, 1996 to $152.8 million as of November 30, 1996. The increase
resulted primarily from an increase in accounts receivable of $5.3 million. At
November 30, 1996 receivables attributable to the newly acquired Pipe Shields
subsidiary accounted for $.7 million of this increase in receivables. The
remaining increase of $4.6 million relates to minor collection delays.
Property and equipment increased by $5.3 million to $65.4 million as of
November 30, 1996 from $60.1 million as of August 31, 1996. This increase
resulted primarily from the purchase of a pipe bending machine for $2.1 million
for the Company's subsidiary in Tulsa, Oklahoma, $.9 million of assets acquired
in the acquisition of the Pipe Shields subsidiary and $2.3 million of other
asset purchases.
The Company's current liabilities increased $10.6 million from $95.4
million at August 31, 1996 to $106.0 million at November 30, 1996. The increase
was due primarily to increases of $12.4 million in the revolving line of credit
offset by a decrease of $2.8 million in advance billings.
13
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Results of Operations
The following table sets forth for the periods indicated the percentages
of the Company's net sales that certain income and expense items represent:
(Unaudited)
Three-Months Ended
November 30,
1995 1996
Sales 100.0% 100.0%
Cost of sales 81.5 79.4
----- -----
Gross profit 18.5 20.6
General and administrative expenses 11.2 11.9
----- -----
Operating income 7.3 8.7
Interest expense (1.3) (2.4)
Other income, net -- .1
----- -----
(1.3) (2.3)
Income before income taxes 6.0 6.4
Provision for income taxes 1.9 2.1
----- -----
Income before earnings (loss) from
unconsolidated entities 4.1 4.3
Earnings (loss) from unconsolidated
entities .2 .2
---- -----
Net income 4.3% 4.5%
====== ======
Sales increased 74.3% to $67.6 million for the three months ended
November 30, 1996 as compared to $38.8 million for the same period in the prior
year. These increases are due primarily to the Word and APP acquisitions which
contributed approximately $6 million and $14 million, respectively, in sales for
the first quarter ended November 30, 1996, as well as increased sales for
projects in the domestic chemical and the international power sectors partially
offset by a decline in sales for projects in the domestic refinery sector.
14
<PAGE>
The Company's sales by geographic region for the periods indicated
were as follows:
Three-Months Ended November 30,
1995 1996
----------------------- --------------------
Geographic Region (in millions) % (in millions) %
- ----------------- ------------ ------ ------------- ----
U.S.A. $26.4 68% $40.9 61%
Far East/Pacific Rim 7.4 19 17.9 26
Middle East 2.7 7 4.8 7
Latin America 1.5 4 1.7 3
Europe -- -- 1.1 1
Other .8 2 1.2 2
------- ----- ----- ---
$38.8 100% $67.6 100%
===== ===== ===== =====
The Company's sales by industry sector for the periods indicated were
as follows:
Three-Months Ended November 30,
1995 1996
----------------------- --------------------------
Industry Sector (in millions) % (in millions) %
- --------------- ------------- ----- ------------- ----
Power $15.9 41% $28.5 42%
Refining 14.0 36 11.6 17
Chemical 8.5 22 22.3 33
Other .4 1 5.2 8
----- ---- ----- ----
$38.8 100% $67.6 100%
===== ==== ===== ====
The gross profit percentage for the three-month period ended November
30, 1996 increased to 20.6% from 18.5% for the same period the prior year. The
increase was primarily attributable to increased sales and gross profits from
the Company's Venezuelan facility (which historically has achieved higher profit
margin percentages than the Company's domestic subsidiaries) and higher profit
margins on international projects and from the APP subsidiary.
General and administrative expenses were $8.0 million for the quarter
ended November 30, 1996, compared to $4.3 million for the same period of the
prior year. The $3.7 million change is due primarily to the integration of Word
and APP into Shaw's business and to the variable costs associated with the
increased sales.
Interest expense for the quarter ended November 30, 1996 was $1.6
million, up from the $517,000 incurred in the first quarter of the last fiscal
year primarily due to increased borrowing resulting from the expansion of
business and the APP and Word acquisitions during fiscal 1996.
The Company's effective tax rates for the quarters ended November 30,
1995 and 1996 were 32.1% and 33.4%, respectively. The increase in the tax
rate is primarily due to an increase in income generated in higher tax
paying jurisdictions.
Total backlog increased to $161 million at November 30, 1996 compared
to $108 million at November 30, 1995. The increased backlog reflects continued
strong momentum in overseas power project bookings and improved domestic
chemical and refinery market conditions.
15
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PART II - OTHER INFORMATION
ITEM 4. - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the fiscal quarter ended November 30, 1996, there were
no matters submitted to a vote of security holders by the Company.
ITEM 5. - OTHER INFORMATION
On December 23, 1996, the Company closed the sale of 2,000,000
shares of its common stock, no par value (the "Common Stock"), in an
underwritten public offering at a price of $21.00 per share, less
underwriting discounts and commissions. In addition, certain selling
shareholders of the Company sold an aggregate of 659,118 shares of
Common Stock in such offering. On January 10, 1997, the underwriters
for such offering exercised an option to purchase an additional 398,000
shares of Common Stock from the Company pursuant to such terms to cover
over-allotments, and the closing of such sale is anticipated to occur
on January 15, 1997. The net proceeds to the Company, less underwriting
discounts and commissions and other expenses of the offering, from the
issuances of the 2,398,000 shares of Common Stock total approximately
$47.2 million and will be used to repay outstanding amounts on the
Company's line of credit, which is generally used by the Company for
working capital purposes.
The collective bargaining agreement between the Company's
subsidiary in Laurens, South Carolina and the local affiliate of the
United Association of Journeymen and Apprentices of the Plumbing and
Pipefitting Industry of the United States and Canada, AFL-CIO (the
"Union"), was to have expired on November 30, 1996. The agreement was
extended indefinitely, with the Company's subsidiary or the Union
affiliate having the right to terminate the agreement by giving ten
working days prior written notice. On January 10, 1997, the members of
the Union affiliate in Laurens, South Carolina approved a proposed new
agreement, which has not yet been executed by the respective parties.
The effect of the new agreement is not expected to have a material
adverse impact on the Company's results of operations or financial
position.
The collective bargaining agreements between the Company's
subsidiaries in Walker, Louisiana and Prairieville, Louisiana and the
local affiliate of the Union were to have expired on December 31,
1996. The agreements have been extended indefinitely, with the
Company's subsidiaries or the Union affiliate having the right to
terminate the agreements by giving ten working days prior written
notice. The Company does not expect that the renewal of the agreements
will have a material adverse impact on the Company's results of
operation or financial position.
16
<PAGE>
Shaw has entered into an agreement to acquire NAPTech, Inc.
("NAPTech"), a fabricator of industrial piping systems and engineered
piping modules located in Clearfield, Utah. Pursuant to the
acquisition agreement as it is presently proposed to be amended, the
Company expects to issue up to an aggregate of 467,122 shares of the
Company's Common Stock in exchange for NAPTech and the 335,000 square
foot facility that NAPTech currently leases from a related entity. For
the fiscal years ended March 31, 1995 and March 29, 1996, NAPTech
reported revenues of $21.7 million and $24.9 million, respectively,
and net losses of $224,000 and $3.1 million, respectively. In
addition, at October 31, 1996, NAPTech had an accumulated deficit of
$5.9 million and, for the seven months ended October 31, 1996, a net
loss of $1.2 million. Though NAPTech has experienced historical
operating and liquidity difficulties, the Company does not expect such
difficulties to continue after the NAPTech acquisition due in part to
the Company's materials purchasing power and fabrication expertise.
The Company expects benefits from the acquisition of NAPTech to
include, among other things, increased fabrication capacity and
additional induction pipe bending capabilities. In addition, NAPTech
estimates it had a backlog of approximately $35.0 million at November
30, 1996, which primarily consisted of a large mining industry
project. The acquisition of NAPTech is subject to various conditions,
including, without limitation, the approval of Shaw's Board of
Directors and NAPTech's shareholders, as well as any necessary
regulatory approvals. If consummated, the acquisition of NAPTech will
be accounted for as a pooling of interests and, accordingly, will
result in a restatement of the Company's financial statements for all
periods presented. Although there can be no assurance that the
acquisition of NAPTech will be completed, the Company currently
anticipates that the acquisition will be consummated on or before
January 31, 1997.
17
<PAGE>
ITEM 6. - EXHIBITS AND REPORTS ON FORM 8-K
A. Exhibits
Exhibit Number Description
11 Computation of Earnings per Share
B. During the fiscal quarter ended November 30, 1996, no reports on
Form 8-K were filed by the Company.
18
<PAGE>
SIGNATURE
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, thereunto duly authorized.
THE SHAW GROUP INC.
Dated: January 14, 1997 /s/ Bret M. Talbot
-------------------
Vice President
and Chief Financial Officer
(Duly Authorized Officer)
19
<PAGE>
THE SHAW GROUP INC.
EXHIBIT INDEX
Form 10-Q Quarterly Report for the Quarterly Period ended November 30,
1996.
Exhibit Number Description
11 Computation of Earnings per Share
<PAGE>
EXHIBIT 11
Computation of Earnings Per Share
Three Months Ended
November 30,
1995 1996
---- ----
PRIMARY (1):
Weighted average shares outstanding 8,552,000 9,524,387
Net effect of dilutive stock options
based on the Treasury Stock method
using average market price * 352,837
--------- ---------
8,552,000 9,877,224
========= =========
Net income $1,682,694 $3,037,150
========== ==========
Per share amount $ .20 $ .31
========== ==========
* Outstanding stock options did not materially affect earnings per share
for the three months ended November 30, 1995.
(1) Fully diluted earnings per share amounts are not presented in this
exhibit since they are not materially different from the primary
earnings per share amounts.
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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<FISCAL-YEAR-END> AUG-31-1997
<PERIOD-START> SEP-01-1996
<PERIOD-END> NOV-30-1996
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<PAGE>
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