ASCENT INDUSTRIES CO.
10-Ks and 10-Qs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
|
x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 29, 2013 |
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 0-19687
Synalloy Corporation
(Exact name of registrant as specified in its charter)
|
Delaware
|
57-0426694
|
|
|
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification No.)
|
|
|
775 Spartan Blvd, Suite 102, P.O. Box 5627, Spartanburg, South Carolina
|
29304
|
|
|
(Address of principal executive offices)
|
(Zip Code)
|
|
|
(864) 585-3605
|
||
|
(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
¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes
x
No
¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of "large accelerated filer," "accelerated filer" and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one)
|
Large accelerated Filer
¨
|
Accelerated filer
x
|
Non-accelerated filer
¨
|
Smaller reporting company
¨
|
|
(Do not check if a smaller reporting company)
|
|||
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes
¨
No
x
The number of shares outstanding of the registrant's common stock as of August 6, 2013 wa
s 6,382,800.
1
Synalloy Corporation
Index
|
|
||
|
PART I
|
FINANCIAL INFORMATION
|
|
|
|
Item 1
.
|
Financial Statements
|
|
|
|
Condensed consolidated balance sheets - June 29, 2013 and December 29, 2012
|
|
|
|
Condensed consolidated statements of operations - Three and six month periods ended June 29, 2013 and June 30, 2012
|
|
|
|
Condensed consolidated statements of cash flows - Six months ended June 29, 2013 and June 30, 2012
|
|
Notes to condensed consolidated financial statements
|
||
|
|
Item 2.
|
Management's Discussion and Analysis of Financial Condition and Results of Operations
|
|
|
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk
|
|
Item 4.
|
Controls and Procedures
|
|
|
OTHER INFORMATION
|
||
|
Item 1.
|
Legal Proceedings
|
|
|
|
Item
1A.
|
Risk Factors
|
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
|
|
|
Item 6.
|
Exhibits
|
|
|
Signatures and Certifications
|
|
2
Synalloy Corporation
|
(Unaudited)
|
|||||||
|
|
Jun 29, 2013
|
Dec 29, 2012
|
|||||
|
Assets
|
|
||||||
|
Current assets
|
|
||||||
|
Cash and cash equivalents
|
$
|
142,808
|
|
$
|
1,085,261
|
|
|
|
Accounts receivable, less allowance for doubtful accounts of $1,277,191 and $1,312,715, respectively
|
36,381,202
|
|
31,177,526
|
|
|||
|
Inventories, net
|
57,106,370
|
|
50,163,392
|
|
|||
|
Deferred income taxes
|
2,944,434
|
|
2,981,439
|
|
|||
|
Prepaid expenses and other current assets
|
6,287,155
|
|
5,514,530
|
|
|||
|
Total current assets
|
102,861,969
|
|
90,922,148
|
|
|||
|
Cash value of life insurance
|
2,603,219
|
|
2,549,220
|
|
|||
|
Property, plant and equipment, net of accumulated
|
|||||||
|
depreciation of $42,467,203 and $40,966,957, respectively
|
29,261,908
|
|
28,034,930
|
|
|||
|
Goodwill
|
18,252,678
|
|
18,252,678
|
|
|||
|
Intangible asset, net
|
7,695,000
|
|
8,460,000
|
|
|||
|
Deferred charges, net and other non-current assets
|
459,635
|
|
287,564
|
|
|||
|
Total assets
|
$
|
161,134,409
|
|
$
|
148,506,540
|
|
|
|
Liabilities and Shareholders' Equity
|
|
||||||
|
Current liabilities
|
|
||||||
|
Current portion of long-term debt
|
$
|
2,250,000
|
|
$
|
2,274,054
|
|
|
|
Accounts payable
|
17,470,464
|
|
10,523,788
|
|
|||
|
Accrued expenses
|
9,759,204
|
|
11,633,251
|
|
|||
|
Other current liabilities
|
140,823
|
|
122,000
|
|
|||
|
Total current liabilities
|
29,620,491
|
|
24,553,093
|
|
|||
|
Long-term debt
|
41,773,859
|
|
37,593,309
|
|
|||
|
Long-term contingent consideration
|
5,794,031
|
|
5,708,831
|
|
|||
|
Deferred income taxes
|
7,645,119
|
|
7,645,119
|
|
|||
|
Other long-term liabilities
|
782,372
|
|
1,232,120
|
|
|||
|
Shareholders' equity
|
|
||||||
|
Common stock, par value $1 per share - authorized 12,000,000 shares; issued 8,000,000 shares
|
8,000,000
|
|
8,000,000
|
|
|||
|
Capital in excess of par value
|
1,544,893
|
|
1,398,612
|
|
|||
|
Retained earnings
|
80,214,872
|
|
76,836,761
|
|
|||
|
|
89,759,765
|
|
86,235,373
|
|
|||
|
Less cost of common stock in treasury:
1,617,200
and 1,643,267 shares, respectively
|
14,241,228
|
|
14,461,305
|
|
|||
|
Total shareholders' equity
|
75,518,537
|
|
71,774,068
|
|
|||
|
Commitments and contingencies – See Note 10
|
|
|
|||||
|
Total liabilities and shareholders' equity
|
$
|
161,134,409
|
|
$
|
148,506,540
|
|
|
Note: The balance sheet at December 29, 2012 has been derived from the audited consolidated financial statements at that date.
See accompanying notes to condensed consolidated financial statements.
3
Synalloy Corporation
(Unaudited)
|
Three Months Ended
|
Six Months Ended
|
||||||||||||||
|
Jun 29, 2013
|
Jun 30, 2012
|
Jun 29, 2013
|
Jun 30, 2012
|
||||||||||||
|
Net sales
|
$
|
56,273,208
|
|
$
|
46,878,134
|
|
$
|
114,109,287
|
|
$
|
94,250,210
|
|
|||
|
Cost of sales
|
49,144,325
|
|
41,616,656
|
|
100,075,791
|
|
83,897,819
|
|
|||||||
|
Gross profit
|
7,128,883
|
|
5,261,478
|
|
14,033,496
|
|
10,352,391
|
|
|||||||
|
Selling, general and administrative expense
|
4,297,226
|
|
3,574,003
|
|
8,799,461
|
|
6,695,060
|
|
|||||||
|
Operating income
|
2,831,657
|
|
1,687,475
|
|
5,234,035
|
|
3,657,331
|
|
|||||||
|
Other (income) and expense
|
|
|
|
|
|||||||||||
|
Interest expense
|
372,402
|
|
45,792
|
|
714,227
|
|
92,023
|
|
|||||||
|
Change in fair value of interest rate swap
|
(495,430
|
)
|
—
|
|
(633,109
|
)
|
—
|
|
|||||||
|
Other, net
|
16,021
|
|
—
|
|
(194
|
)
|
(135,148
|
)
|
|||||||
|
Income before income taxes
|
2,938,664
|
|
1,641,683
|
|
5,153,111
|
|
3,700,456
|
|
|||||||
|
Provision for income taxes
|
1,026,000
|
|
552,000
|
|
1,775,000
|
|
1,273,000
|
|
|||||||
|
Net income
|
$
|
1,912,664
|
|
$
|
1,089,683
|
|
$
|
3,378,111
|
|
$
|
2,427,456
|
|
|||
|
Net income per common share:
|
|
|
|||||||||||||
|
Basic
|
$
|
0.30
|
|
$
|
0.17
|
|
$
|
0.53
|
|
$
|
0.38
|
|
|||
|
Diluted
|
$
|
0.30
|
|
$
|
0.17
|
|
$
|
0.53
|
|
$
|
0.38
|
|
|||
|
Weighted average shares outstanding:
|
|||||||||||||||
|
Basic
|
6,379,391
|
|
6,342,562
|
|
6,371,013
|
|
6,335,667
|
|
|||||||
|
Dilutive effect from stock options and grants
|
58,636
|
|
50,896
|
|
58,872
|
|
51,043
|
|
|||||||
|
Diluted
|
6,438,027
|
|
6,393,458
|
|
6,429,885
|
|
6,386,710
|
|
|||||||
See accompanying notes to condensed consolidated financial statements.
4
Synalloy Corporation
(Unaudited)
|
Six Months Ended
|
|||||||
|
|
Jun 29, 2013
|
Jun 30, 2012
|
|||||
|
Operating activities
|
|
|
|||||
|
Net income
|
$
|
3,378,111
|
|
$
|
2,427,456
|
|
|
|
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
|
|
|
|
|
|||
|
Depreciation expense
|
1,735,226
|
|
1,412,683
|
|
|||
|
Amortization expense
|
796,483
|
|
12,546
|
|
|||
|
Deferred income taxes
|
37,005
|
|
67,068
|
|
|||
|
Reduction of losses on accounts receivable
|
(35,524
|
)
|
(38,450
|
)
|
|||
|
Provision for losses on inventory
|
739,357
|
|
531,300
|
|
|||
|
Gain on sale of property, plant and equipment
|
(3,911
|
)
|
(41,724
|
)
|
|||
|
Cash value of life insurance
|
(53,999
|
)
|
(188,436
|
)
|
|||
|
Change in fair value of interest rate swap
|
(633,109
|
)
|
—
|
|
|||
|
Environmental reserves
|
18,823
|
|
12,923
|
|
|||
|
Issuance of treasury stock for director fees
|
127,989
|
|
99,995
|
|
|||
|
Employee stock option and grant compensation
|
164,887
|
|
155,684
|
|
|||
|
Changes in operating assets and liabilities:
|
|
|
|
|
|||
|
Accounts receivable
|
(5,168,152
|
)
|
(2,912,869
|
)
|
|||
|
Inventories
|
(7,682,335
|
)
|
(4,421,478
|
)
|
|||
|
Other assets and liabilities, net
|
(741,932
|
)
|
49,444
|
|
|||
|
Accounts payable
|
6,946,676
|
|
3,006,474
|
|
|||
|
Accrued expenses
|
(1,874,048
|
)
|
319,549
|
|
|||
|
Accrued income taxes
|
27,521
|
|
(177,538
|
)
|
|||
|
Net cash (used in) provided by operating activities
|
(2,220,932
|
)
|
314,627
|
|
|||
|
Investing activities
|
|
|
|
|
|||
|
Purchases of property, plant and equipment
|
(3,062,159
|
)
|
(1,327,757
|
)
|
|||
|
Proceeds from sale of property, plant and equipment
|
103,866
|
|
77,500
|
|
|||
|
Proceeds from life insurance settlement
|
—
|
|
734,206
|
|
|||
|
Net cash used in investing activities
|
(2,958,293
|
)
|
(516,051
|
)
|
|||
|
Financing activities
|
|
|
|
|
|||
|
Net borrowings from line of credit
|
5,337,965
|
|
213,209
|
|
|||
|
Payments on long-term debt
|
(1,181,469
|
)
|
—
|
|
|||
|
Proceeds from exercised stock options
|
80,276
|
|
—
|
|
|||
|
Net cash provided by financing activities
|
4,236,772
|
|
213,209
|
|
|||
|
(Decrease) increase in cash and cash equivalents
|
(942,453
|
)
|
11,785
|
|
|||
|
Cash and cash equivalents at beginning of period
|
1,085,261
|
|
110,138
|
|
|||
|
Cash and cash equivalents at end of period
|
$
|
142,808
|
|
$
|
121,923
|
|
|
|
Supplemental disclosure
|
|||||||
|
Cash paid during the year for:
|
|||||||
|
Interest
|
$
|
690,371
|
|
$
|
65,689
|
|
|
|
Income taxes
|
1,699,489
|
|
1,357,559
|
|
|||
See accompanying notes to condensed consolidated financial statements.
5
Synalloy Corporation
Notes to Condensed Consolidated Financial Statements
(Unaudited)
June 29, 2013
Unless indicated otherwise, the terms "Company," "we," "us," and "our" refer to Synalloy Corporation and its consolidated subsidiaries.
The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and notes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included as required by Regulation S-X, Rule 10-01. Operating results for the three and six-month periods ended June 29, 2013, are not necessarily indicative of the results that may be expected for the year ending December 28, 2013. For further information, refer to the consolidated financial statements and notes thereto included in the Company's annual report on Form 10-K for the year ended December 29, 2012.
Reclassifications
Certain prior year amounts have been reclassified to conform to the current year presentation in the accompanying condensed consolidated financial statements. These reclassifications had no material effect on previously reported results of operations or shareholders' equity.
In July 2012, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2012-02,
"Intangibles-Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment"
("ASU 2012-02"), which permits an entity to make a qualitative assessment of whether it is more likely than not that the fair value of a reporting unit's indefinite-lived intangible asset is less than the asset's carrying value before applying the two-step goodwill impairment model that is currently in place. If it is determined through the qualitative assessment that the fair value of a reporting unit's indefinite-lived intangible asset is more likely than not greater than the asset's carrying value, the remaining impairment steps would be unnecessary. The qualitative assessment is optional, allowing companies to go directly to the quantitative assessment. ASU 2012-02 is effective for the Company for annual and interim indefinite-lived intangible asset impairment tests performed for fiscal years beginning after September 15, 2012. The Company adopted the provisions of this ASU in the first quarter of 2013 and it did not have a material impact on its condensed consolidated financial statements.
Inventories are stated at the lower of cost (first-in, first-out method) or market. The components of inventories, net are as follows:
|
Jun 29, 2013
|
Dec 29, 2012
|
||||||
|
Raw materials
|
$
|
17,217,057
|
|
$
|
13,975,628
|
|
|
|
Work-in-process
|
19,536,498
|
|
13,773,037
|
|
|||
|
Finished goods
|
20,352,815
|
|
22,414,727
|
|
|||
|
|
$
|
57,106,370
|
|
$
|
50,163,392
|
|
|
6
Synalloy Corporation
Notes to Condensed Consolidated Financial Statements
(Unaudited)
June 29, 2013
During the first six months of 2013, stock options for
10,247
shares of common stock were exercised by officers and employees for an aggregate exercise price of approximately
$105,000
. The Company received cash of approximately
$80,000
and repurchased
1,752
shares of common stock totaling approximately
$25,000
. Stock compensation expense for the three and six month periods ended June 29, 2013 was approximately
$84,000
and
$165,000
, respectively, while stock compensation expense for the three and six month periods ended June 30, 2012 was
$77,000
and
$156,000
, respectively.
On
February 7, 2013
, the Compensation & Long-Term Incentive Committee of the Board of Directors of the Company approved stock option grants under the Company's 2011 Long-Term Incentive Stock Option Plan (the "2011 Plan"). Options for a total of
40,047
shares, with an exercise price of
$13.70
, were granted under the 2011 Plan to certain management employees of the Company. The exercise price was determined using the average of the high and low stock price on the day prior to the grant date. The per share weighted-average fair value of the stock options granted on February 7, 2013 was
$6.30
. The fair value of the option grant was estimated using the Black-Scholes option-pricing model based on a risk-free interest rate of
two percent
, an expected volatility of
53 percent
, an expected life of
seven
years and a dividend yield of
1.80 percent
. The stock options vest in
20 percent
increments annually on a cumulative basis, beginning
one year
after the date of grant. In order for the options to vest, the employee must be in the continuous employment of the Company since the date of the grant. Any portion of the grant that has not vested will be forfeited upon termination of employment. The Company may terminate any portion of the grant that has not vested upon an employee's failure to comply with all conditions of the award or the 2011 Plan.
On
April 25, 2013
, the Company issued to its non-employee directors an aggregate of
9,411
shares of its common stock in lieu of a total of
$128,000
of their annual cash retainer fees. Each director was given the option of receiving shares of common stock for all or any part of their annual Board retainer fee.
On May 30, 2013, the Company filed two Form S-8 registration statements with the Securities and Exchange Commission ("SEC") in order to register shares of the Company's common stock that may be issued under the 2011 Plan and the 1998 Long-Term Incentive Stock Plan.
The Company did not have any unrecognized tax benefits accrued at
June 29, 2013
and
December 29, 2012
. The Company and its subsidiaries are subject to U.S. federal income tax as well as income tax of multiple state jurisdictions. The Company is no longer subject to U.S. federal or state income tax examinations for years before 2008. The Company's continuing practice is to recognize interest and/or penalties related to income tax matters in income tax expense.
During 2012, the Company declared and paid a
$0.25
per share dividend on
December 10, 2012
for a total of
$1,596,000
. The Board presently plans to review at the end of each fiscal year the financial performance and capital needed to support future growth to determine the amount of cash dividend, if any, which is appropriate.
7
Synalloy Corporation
Notes to Condensed Consolidated Financial Statements
(Unaudited)
June 29, 2013
|
Three Months Ended
|
Six Months Ended
|
||||||||||||||
|
Jun 29, 2013
|
Jun 30, 2012
|
Jun 29, 2013
|
Jun 30, 2012
|
||||||||||||
|
Net sales
|
|||||||||||||||
|
Metals Segment
|
$
|
41,869,000
|
|
$
|
34,632,000
|
|
$
|
86,529,000
|
|
$
|
70,654,000
|
|
|||
|
Specialty Chemicals Segment
|
14,404,000
|
|
12,246,000
|
|
27,580,000
|
|
23,596,000
|
|
|||||||
|
$
|
56,273,000
|
|
$
|
46,878,000
|
|
$
|
114,109,000
|
|
$
|
94,250,000
|
|
||||
|
Operating income
|
|
|
|
|
|||||||||||
|
Metals Segment
|
$
|
2,087,000
|
|
$
|
1,460,000
|
|
$
|
4,048,000
|
|
$
|
3,032,000
|
|
|||
|
Specialty Chemicals Segment
|
1,596,000
|
|
1,076,000
|
|
2,889,000
|
|
2,205,000
|
|
|||||||
|
|
3,683,000
|
|
2,536,000
|
|
6,937,000
|
|
5,237,000
|
|
|||||||
|
Unallocated expenses
|
|||||||||||||||
|
Corporate
|
851,000
|
|
848,000
|
|
1,703,000
|
|
1,580,000
|
|
|||||||
|
Interest and debt expense
|
372,000
|
|
46,000
|
|
714,000
|
|
92,000
|
|
|||||||
|
Change in fair value of interest rate swap
|
(495,000
|
)
|
—
|
|
(633,000
|
)
|
—
|
|
|||||||
|
Other expense (income)
|
16,000
|
|
—
|
|
—
|
|
(135,000
|
)
|
|||||||
|
Income before income taxes
|
$
|
2,939,000
|
|
$
|
1,642,000
|
|
$
|
5,153,000
|
|
$
|
3,700,000
|
|
|||
The Company makes estimates of fair value in accounting for certain transactions, in testing and measuring impairment, and in providing disclosures of fair value in its condensed consolidated financial instruments. The Company determines the fair values of its financial instruments for disclosure purposes by maximizing the use of observable inputs and minimizing the use of unobservable inputs when measuring fair value. Fair value disclosures for assets and liabilities are grouped in three levels. The levels prioritize the inputs used to measure the fair value of the assets or liabilities. These levels are:
Level 1
- Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2
- Inputs other than quoted prices that are observable for assets and liabilities, either directly or indirectly. These inputs include quoted prices for similar assets or liabilities in active markets or quoted prices for identical or similar assets or liabilities in markets that are less active.
Level 3
- Unobservable inputs that are supported by little or no market activity for assets or liabilities and includes certain pricing models, discounted cash flow methodologies and similar techniques.
Estimates of fair value using levels 2 and 3 may require judgments as to the timing and amount of cash flows, discount rates, and other factors requiring significant judgment, and the outcomes may vary widely depending on the selection of these assumptions. The Company's most significant fair value estimates as of June 29, 2013 and December 29, 2012, respectively, related to purchase accounting adjustments in the Palmer acquisition (as described further in Note 9 below), including the measurement of the contingent consideration, estimating the fair value of the reporting units in testing goodwill for impairment, estimating the fair value of the interest rate swap and providing disclosures of the fair values of financial instruments.
As of June 29, 2013 and December 29, 2012, respectively, the carrying amounts for cash and cash equivalents, accounts receivable, accounts payable and borrowings under the Company's line of credit and term loan, which are based on variable interest rates, approximate their fair value.
The Company does not currently have any Level 1 financial assets or liabilities. The Company has one Level 2 financial asset and liability. The fair value of the interest rate swap resulted in an asset of
$183,000
at
June 29, 2013
and a liability of
$450,000
at
December 29, 2012
. The interest rate swap was priced using discounted cash flow techniques which are corroborated by using
8
Synalloy Corporation
Notes to Condensed Consolidated Financial Statements
(Unaudited)
June 29, 2013
non-binding market prices. Changes in its fair value were recorded in current assets or liabilities, as appropriate, with corresponding offsetting entries to other income (expense). Significant inputs to the discounted cash flow model include projected future cash flows based on projected one-month
LIBOR
and the average margin for companies with similar credit ratings and similar maturities. These are classified as Level 2 as they are not actively traded and are valued using pricing models that use observable market inputs.
The contingent consideration liability ("earn-out"), discussed in Note 9, is classified as Level 3. The amount of the total earn-out liability to the former shareholders of Palmer was determined using management's best estimate of earnings before interest, taxes, depreciation and amortization ("EBITDA") for the
three
-year period from the acquisition date which will determine the amount of the ultimate payment to be made. Factors such as volume increases, selling price increases and inflation were used to develop a base projection. Additional projected costs to improve employee turnover, safety, internal controls, etc. were deducted in order to determine projected EBITDA. The Company's cost of borrowing at inception was used to determine the present value of these expected payments. Each quarter-end, the Company will re-evaluate their assumptions and adjust to the estimated present value of the expected payments to be made.
The following table presents a summary of changes in fair value of the Company's Level 3 liabilities measured on a recurring basis for the six-month period ended
June 29, 2013
:
|
Level 3 Inputs
|
||||
|
Balance at December 29, 2012
|
$
|
8,208,831
|
|
|
|
Interest expense charged during the year
|
85,200
|
|
||
|
Change in fair value of contingent consideration liability
|
—
|
|
||
|
Balance at June 29, 2013
|
$
|
8,294,031
|
|
|
There were no transfers of assets or liabilities between Level 1, Level 2 and Level 3 in the six-month period ended
June 29, 2013
or year ended
December 29, 2012
. During the first six months of 2013, there have been no changes in the fair value methodologies used by the Company.
On
August 21, 2012
, the Company completed the purchase of all of the outstanding shares of common stock of Lee-Var, Inc., doing business as Palmer of Texas ("Palmer"). Palmer is a manufacturer of liquid storage solutions and separation equipment for the petroleum, municipal water, wastewater, chemical and food industries. The Company viewed the Palmer acquisition as an excellent complement to the Metals Segment as both companies service many of the same markets and the Company has the ability to drive Palmer efficiencies in purchasing and operations. Palmer's results of operations since the acquisition date are reflected in the Company's condensed consolidated statements of operations. Effective January 22, 2013, Lee-Var, Inc.'s name was changed to Palmer of Texas Tanks, Inc.
The purchase price for the acquisition was
$25,575,000
. The adjustment for working capital increased the purchase price to
$26,951,000
. In addition, the amount of maintenance capital expenditures over the
18
-month period following closing and the final cost of a production expansion capital project currently underway could also result in purchase price adjustments. Currently, the Company does not expect to realize any material purchase price adjustments from these two items. The former shareholders of Palmer will also have the ability to receive earn-out payments ranging from
$2,500,000
to
$10,500,000
if the business unit achieves targeted levels of EBITDA, as defined in the stock purchase agreement related to the Palmer transaction, over a
three
-year period following closing; and the Company will have the ability to claw-back portions of the purchase price over a
two
-year period following closing if EBITDA falls below baseline levels. Palmer had recorded liabilities of approximately
$1,200,000
related to certain contingencies for which the former Palmer shareholders have agreed to indemnify the Company. Accordingly, the Company has carried over these liabilities in its condensed consolidated financial statements and has recorded an asset of approximately
$1,200,000
in prepaid expenses reflecting the indemnification against these potential payments.
At the end of each year (based on the acquisition date) for the first
three
years after acquisition, if EBITDA for the year is below
$5,825,000
, there will not be an earn-out paid for that year. If EBITDA for the year is greater than
$5,825,000
but less than
$6,825,000
, the former shareholders of Palmer will be paid
$2,500,000
for that year. If EBITDA exceeds
$6,825,000
for the year,
9
Synalloy Corporation
Notes to Condensed Consolidated Financial Statements
(Unaudited)
June 29, 2013
the earn-out would be
$3,500,000
. At the conclusion of the
three
-year earn-out period, in the event that the cumulative EBITDA for the earn-out period is more than
$17,475,000
, the former shareholders of Palmer will receive an additional earn-out payment, if any, as follows. In the event that the cumulative EBITDA for the earn-out period is greater than
$17,475,000
but less than
$20,475,000
, the Company will make an additional earn-out payment so that the total cumulative earn-out payments for the
three
-year earn-out period equals
$7,500,000
. If the cumulative EBITDA exceeds
$20,475,000
, the Company will make an additional earn-out payment so that the total cumulative earn-out payments for the
three
-year period equals
$10,500,000
. The Company is currently forecasting earn-out payments totaling
$8,500,000
, which was discounted at acquisition date to a present value of
$8,152,000
using our incremental borrowing rate of
two percent
.
$2,500,000
of this liability was classified as a current liability since the first payment is expected to be made within the year. The various assumptions and projections used in the earn-out projections were reviewed at
June 29, 2013
with no additional adjustments required. Any future changes to the projected earn-out payments as a result of our quarterly review of forecasted EBITDA would be reflected as an adjustment to earnings in that period.
The Company is from time-to-time subject to various claims, possible legal actions for product liability and other damages, and other matters arising out of the normal conduct of the Company's business.
Management is not currently aware of any asserted or unasserted matters which could have a material effect on the financial condition or results of operations of the Company.
The Company performs an evaluation of events that occur after the balance sheet date but before financial statements are issued for potential recognition or disclosure of such events in its financial statements. The Company evaluated subsequent events through the date that the financial statements were issued.
10
The following is management's discussion of certain significant factors that affected the Company during the three and six-month periods ended June 29, 2013.
Consolidated net sales for the second quarter of 2013 increased
20 percent
to
$56,273,000
compared to
$46,878,000
for the second quarter of 2012. Net income for the
second
quarter of
2013
was
$1,913,000
or
$0.30
per share, up
76 percent
over net earnings of
$1,090,000
, or
$0.17
per share for the same quarter in the prior year. For the first
six
months, net sales for
2013
were
$114,109,000
, an increase of
21 percent
from
$94,250,000
for the same period in the prior year. Net income was
$3,378,000
or
$0.53
per share for the first
six
months of
2013
, up
39 percent
over net income of
$2,427,000
, or
$0.38
per share for the first
six
months of
2012
.
Earnings before interest, change in fair value of interest rate swap, income taxes, depreciation and amortization ("Adjusted EBITDA"), a non-GAAP measure of earnings, was
$4,017,000
in the
second
quarter of
2013
, or
$0.62
per share. This was an increase of
67 percent
over the
second
quarter of
2012
when Adjusted EBITDA was
$2,400,000
, or
$0.38
per share. For the first
six
months of
2013
, Adjusted EBITDA was
$7,765,000
or $
1.21
per share compared with
$5,218,000
or $
0.82
per share for
2012
, which represents a year-over-year increase of
49 percent
.
Metals Segment
Net sales during the
second
quarter of
2013
totaled
$41,869,000
, an increase of
21 percent
from
$34,632,000
for the same quarter last year. Operating income was
$2,087,000
and
$1,460,000
for the
second
quarters of
2013
and
2012
, respectively, an increase of
$627,000
or
43 percent
. The Company purchased 100 percent of the common stock of Lee-Var, Inc, doing business as Palmer of Texas ("Palmer"), on August 21, 2012. Excluding Palmer's sales results, sales for the
second
quarter of
2013
would have been
one percent
lower
than the same quarter of the prior year. The net sales decrease resulted from a three percent decrease in unit volumes partially offset by a two percent increase in average selling prices. In the second quarter, the Segment experienced commodity unit volumes increasing eleven percent while non-commodity unit volume decreased 22 percent. Selling prices for commodity pipe decreased 15 percent while selling prices for non-commodity pipe increased 31 percent. Shipments of carbon steel pipe associated with the Bechtel nuclear plant remained strong in the second quarter of 2013. The Company classifies carbon steel pipe sales as non-commodity. Shipments of stainless steel pipe in the second quarter of 2013 were constrained as distributors continued to monitor nickel prices and kept their large re-stocking buys on hold, while surcharges decreased each month. The Segment remains focused on international sales efforts which show year-over-year growth. Special alloy bookings, backlog and shipments were strong in the
second
quarter of 2013. Fabrication bookings and sales have improved covering the full range of markets for pipe fabrication with power, chemicals, petro-chemicals and mining showing considerable improvement.
Net sales for the first
six
months of
2013
increased
22 percent
to
$86,529,000
and operating income for the first
six
months of
2013
was
$4,048,000
, up
34 percent
from net sales and operating income of
$70,654,000
and
$3,032,000
, respectively, for the same period of
2012
. Excluding Palmer's net sales for the first
six
months of
2013
, net sales for the Metals Segment for
2013
approximated prior year levels. The two percent decrease in unit volumes was completely offset by a two percent increase in average selling prices.
Operating income, which increased
$627,000
for the
second
quarter of
2013
when compared to the same quarter of
2012
, and increased
$1,016,000
for the first
six
months of
2013
when compared to the same period of the prior year, was impacted by the following factors:
|
a)
|
Palmer was acquired August 21, 2012. Its
second
quarter and first
six
months results were included in the
2013
Metals Segment results while Palmer's results were not included during the same periods of the prior year. The Company is encouraged with the performance of Palmer since the acquisition. The majority of the integration plan has been completed and the Company believes it has an excellent management team in place at Palmer.
|
|
b)
|
Associated with the acquisition of Palmer, an intangible asset of $9,000,000 was recorded for the customer base acquired by the Company. This asset is amortized on an accelerated basis which resulted in an amortization charge of
$383,000
in the
second
quarter and
$765,000
for the first
six
months of
2013
. This additional amortization, net of taxes, reduced
second
quarter and first
six
months of
2013
earnings per share by
$0.04
per share and
$0.08
per share, respectively.
|
|
c)
|
Margins were affected in the
second
quarter and first
six
months of
2013
by foreign imports. Stainless steel pipe received from Malaysia, Vietnam and Thailand are entering the country at significantly reduced prices. This factor forced the Segment to reduce prices accordingly to retain market share. Recently, Bristol Metals, LLC, a member of the Metals Segment, along with several other domestic manufacturers of stainless steel pipe, filed an antidumping petition with the United States International Trade Commission ("USITC") alleging dumping of welded stainless steel pipe in the United States market by Malaysia, Thailand and Vietnam. The USITC determined on June 28, 2013 that there is a reasonable indication that imports of welded stainless steel pipe from these countries sold into the
|
11
United States at less than fair value materially injured a United States industry. Accordingly, all six commissioners of the USITC hearing the petition voted in favor of the petitioners. As a result of the USITC decision, margins on stainless steel piping should improve in the third and fourth quarters of 2013 as we await the preliminary ruling which is currently set for October, 2013.
|
d)
|
Declining nickel prices resulted in inventory losses in the
second
quarter of this year of approximately
$824,000
compared to an inventory loss of
$1,303,000
in the
second
quarter of
2012
. For the first
six
months of
2013
and
2012
, inventory losses were
$1,389,000
and
$2,210,000
, respectively. The impact to reported earnings was a favorable swing of approximately
$0.06
per share and
$0.09
per share for the
second
quarter and first
six
months of
2013
.
|
|
e)
|
The fabrication units operating margins improved during the
second
quarter of
2013
as a result of higher labor rate projects in our facilities.
|
Demand for manufactured pipe remains relatively strong, and the fabrication unit has begun to see an improvement in quote requests and orders. See the Outlook Section for further discussion.
Specialty Chemicals Segment
Net sales for the Specialty Chemicals Segment in the
second
quarter of
2013
were
$14,404,000
, which represented an
18 percent
increase from
$12,246,000
when compared to the same quarter of
2012
. Overall selling prices decreased twelve percent in the second quarter of 2013 when compared to
2012
due in part to a significant increase in usage of a lower cost raw material that is reflected in the selling price. Pounds sold increased 33 percent during the second quarter when compared to the same period for
2012
. With the increase in pounds sold and produced, the additional production volume had a favorable effect on fixed operating costs per pound of product produced, which decreased by 18 percent during the second quarter of 2013 when compared to the same period of 2012. Operating income for the
second
quarter of
2013
and
2012
was
$1,596,000
and
$1,076,000
, respectively, an increase of
48 percent
. This increase resulted from the Segment increasing contract or tolling sales and strengthening sales to direct customers. The Segment continues to focus on changing the product mix to higher-priced/higher-margin products and controlling operating and support costs.
Specialty Chemicals Segment net sales for the first
six
months of
2013
were
$27,580,000
, up
$3,984,000
or
17 percent
from
$23,596,000
for the same period of
2012
. Operating income for the first
six
months of
2013
for the Specialty Chemicals Segment was
$2,889,000
compared to
$2,205,000
for the first
six
months of
2012
, an increase of
31 percent
. The additional Ashland defoamer sales, which began in the third quarter of 2012 and as described in our previous SEC filings, contributed to the increase in operating results for this segment.
Other Items
Consolidated selling, general and administrative expenses increased
$723,000
to
$4,297,000
or
eight percent
of sales from
$3,574,000
or
eight percent
of sales for the second quarter of 2013 compared to 2012, respectively. For the first six months of 2013 compared to the same period of 2012, the expenses increased
$2,104,000
to
$8,799,000
or
eight percent
of sales from
$6,695,000
or
seven percent
of sales. Approximately
$843,000
and
$1,852,000
of the increase arose from including Palmer's selling, general and administrative expenses in the three and six month periods ended June 29, 2013, respectively, without any comparable costs for 2012. The remainder of the increase resulted from higher sales salaries and commissions associated with the sales increase experienced in the first six months of 2013 combined with higher administrative salaries, professional fees, repairs and maintenance and bad debt expense. These increases were partially offset by lower incentive bonus expense for the first six months of 2013 compared to the same period of 2012.
Interest expense for the second quarter of 2013 was
$372,000
compared to $
46,000
for the second quarter of 2012. Interest expense increased
$622,000
to
$714,000
for the first
six
months of
2013
compared to
$92,000
for the same period of
2012
. Higher interest expense resulted from the additional borrowings associated with the purchase of Palmer in August, 2012 and core business growth. Also, as a result of higher interest rates during
2013
, the fair value of the interest rate swap contract improved, and the Company increased other income by
$495,000
and
$633,000
during the second quarter and first
six
months of
2013
, respectively, to record the change in its fair value.
Other income of
$135,000
for the first
six
months of
2012
was on account of life insurance proceeds received in excess of its cash surrender value for a former officer of the Company.
The Company's cash balance decreased
$942,000
during the first
six
months of
2013
from
$1,085,000
at the end of
2012
to
$143,000
as of
June 29, 2013
. As a result of the Company's sales increasing six percent during the
second
quarter of
2013
compared to the fourth quarter
2012
, with the majority of the second quarter sales occurring in June
2013
, net accounts receivable
12
resulted in a use of cash since it increased at
June 29, 2013
by
$5,203,000
from the 2012 year end. Net inventories increased
$6,943,000
as of the end of the
second
quarter
2013
compared to the balance at December 29,
2012
in support of the Bechtel nuclear project and projected sales increases for both segments. The Company generated cash during the first
six
months of
2013
as accounts payable increased
$6,946,000
as of the end of the
second
quarter of
2013
. Accrued expenses decreased or used
$1,876,000
of cash as the
2012
management incentive bonuses were paid in February 2013 and some of the cash deposits received from our customers were utilized to offset their product shipments during the first
six
months of 2013. Capital expenditures for the first
six
months of
2013
were $3,062,000. These items contributed to the Company borrowing
$4,157,000
, net, during the first
six
months of
2013
, resulting in
$44,024,000
of bank debt outstanding as of
June 29, 2013
.
Outlook
The Metals Segment's business is highly dependent on its customers' capital expenditures. We are seeing improvements in this area with increased quoting activity, new project start-ups and "on hold" projects being released for completion. Shipments for the Bechtel nuclear job, as described in our previous SEC filings, were strong in the second quarter of 2013. Sales on the Bechtel project are expected to remain favorable throughout the third quarter of 2013 with the project being completed early in the fourth quarter. The Metals Segment is experiencing an upward trend on the level of inquiries, especially from the chemical industry. Profit margins on new project activity are better than we experienced in the fourth quarter 2012 and first quarter 2013. Stainless steel surcharges, which affect our cost of raw materials, declined steadily from March to September 2012 (in the range of 26 percent). In the fourth quarter of 2012, surcharges were basically steady. For the first quarter of 2013, surcharges increased in the range of ten percent, but have declined since April by 18 percent. The declining nickel prices continue to hold back sales as distributors are waiting for the prices to level out before placing large restocking orders. Our inventory gains and losses are determined by a number of factors including sales mix and the holding period of particular products. As a consequence, there may not be a direct correlation between the direction of stainless steel surcharges and inventory profits or losses at a particular point in time. Our experience has been that over the course of a business cycle, this volatility has tended towards zero. We believe we are the largest and most capable domestic producer of non-commodity stainless steel pipe and an effective producer of commodity stainless steel pipe, which should serve us well in the long run. Our market position remains strong in the commodity pipe market and we are experiencing an upswing in special alloy demand. International quoting activity for our stainless steel pipe remains strong, especially for Canadian oil sands projects. Quoting activity has increased in Europe, Middle East and Asia, which follows our marketing development strategies. We also continue to be optimistic about the fabrication business over the long-term. Management anticipates continued strong sales of fiberglass and steel tanks as oil drilling continues to grow in the Permian Basin and Eagle Ford Shale areas of Texas. During the remainder of
2013
, we will continue to focus on gaining production efficiencies and eliminating bottlenecks at Palmer to increase tank production.
The pipe fabrication backlog has increased during
2013
as the volume of quote activity has strengthened, with many projects utilizing special alloy pipe. Approximately 64 percent of fabrication's current backlog comes from chemical projects and an additional 24 percent is from water / wastewater projects. Total fabrication backlog was
$25,621,000
at
June 29, 2013
, $19,254,000 at December 29, 2012 and
$20,027,000
at
June 30, 2012
.
Specialty Chemicals Segment's sales are expected to continue to show improvement into the third quarter of
2013
when compared to the prior year. Sales of the defoamer product line for applications in the water and paint industries achieved targeted levels in the third quarter of 2012 and therefore the large year-over-year sales increases that the Specialty Chemicals Segment experienced over the past several quarters will tighten. The Company still expects sales levels to continue to improve throughout the remainder of
2013
as the result of aggressive product pricing, increased growth in sales to direct customers and identifying new sales opportunities for product offerings that have available production capacity. Management expects operating margins to hold steady at current levels in spite of the anticipation of raw material price increases over the next quarter.
Non-GAAP Financial Information
Statements included in this report include non-GAAP (Generally Accepted Accounting Principles) measures and should be read along with the accompanying tables which provide a reconciliation of non-GAAP measures to GAAP measures. Adjusted EBITDA is a non-GAAP measure and excludes interest, change in fair value of interest rate swap, income taxes, depreciation and amortization expenses from net income. Management believes that these non-GAAP measures provide additional useful information to allow readers to compare the financial results between periods. Non-GAAP measures should not be considered as an alternative to any measure of performance or financial condition as promulgated under GAAP, and investors should consider the Company's performance and financial condition as reported under GAAP and all other relevant information when assessing the performance or financial condition of the Company. Non-GAAP measures have limitations as analytical tools, and investors should not consider them in isolation or as a substitute for analysis of the Company's results or financial condition as reported under GAAP.
13
|
Reconciliation of Net Income to Adjusted EBITDA
|
Three Months Ended
|
Six Months Ended
|
||||||||||||||
|
Jun 29, 2013
|
Jun 30, 2012
|
Jun 29, 2013
|
Jun 30, 2012
|
|||||||||||||
|
(unaudited)
|
||||||||||||||||
|
Reconciliation of net income to Adjusted EBITDA:
|
||||||||||||||||
|
Net income
|
$
|
1,913,000
|
|
$
|
1,090,000
|
|
$
|
3,378,000
|
|
$
|
2,427,000
|
|
||||
|
Adjustments:
|
||||||||||||||||
|
Interest expense
|
372,000
|
|
46,000
|
|
714,000
|
|
92,000
|
|
||||||||
|
Change in fair value of interest rate swap
|
(495,000
|
)
|
—
|
|
(633,000
|
)
|
—
|
|
||||||||
|
Income taxes
|
1,026,000
|
|
552,000
|
|
1,775,000
|
|
1,273,000
|
|
||||||||
|
Depreciation
|
798,000
|
|
706,000
|
|
1,735,000
|
|
1,413,000
|
|
||||||||
|
Amortization
|
403,000
|
|
6,000
|
|
796,000
|
|
13,000
|
|
||||||||
|
Adjusted EBITDA
|
$
|
4,017,000
|
|
$
|
2,400,000
|
|
$
|
7,765,000
|
|
$
|
5,218,000
|
|
||||
|
Adjusted EBITDA per share, diluted
|
$
|
0.62
|
|
$
|
0.38
|
|
$
|
1.21
|
|
$
|
0.82
|
|
||||
14
Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995
This quarterly report on Form 10-Q includes "forward-looking statements" within the meaning of the federal securities laws. All statements that are not historical facts are "forward-looking statements." The words "estimate," "project," "intend," "expect," "believe," "should," "anticipate," "hope," "optimistic," "plan," "outlook," "should," "could," "may" and similar expressions identify 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. In conjunction with our 2012 Palmer acquisition, our expectations for future sales and profits which were included in our financial projections were our best estimates at the time and actual results could be significantly different. Readers are cautioned not to place undue reliance on these forward-looking statements. 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; raw material and other increased costs; raw materials availability; employee relations; ability to maintain workforce by hiring trained employees; customer delays or difficulties in the production of products; new fracking regulations; a prolonged decrease in oil prices; risks associated with mergers, acquisitions, dispositions and other expansion activities; financial stability of our customers; environmental issues; unavailability of debt financing on acceptable terms and exposure to increased market interest rate risk; inability to comply with covenants and ratios required by our debt financing arrangements; ability to weather an economic downturn; loss of consumer or investor confidence and other risks detailed from time-to-time in the Company's Securities and Exchange Commission filings. The Company assumes no obligation to update the information included in this quarterly report on Form 10-Q.
Information about the Company's exposure to market risk was disclosed in its Annual Report on Form 10-K for the year ended December 29, 2012, which was filed with the Securities and Exchange Commission on March 12, 2013. There have been no material quantitative or qualitative changes in market risk exposure since the date of that filing.
Based on the evaluation required by 17 C.F.R. Section 240.13a-15(b) or 240.15d-15(b) of the Company's disclosure controls and procedures (as defined in 17 C.F.R. Sections 240.13a-15(e) and 240.15d-15(e)), the Company's chief executive officer and chief financial officer concluded that such controls and procedures, as of the end of the period covered by this quarterly report, were effective. The Company is currently evaluating the internal controls over financial reporting at Palmer and will include them in its internal control testing in 2013.
There has been no change in the Company's internal controls over financial reporting during the last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.
It is not unusual for us and our subsidiaries to be involved in various unresolved legal actions, administrative proceedings and claims in the ordinary course of business involving, among other things, product liability, commercial, employment, workers' compensation, intellectual property claims and environmental matters. We establish reserves in a manner that is consistent with accounting principles generally accepted in the United States for costs associated with such matters when liability is probable and those costs are capable of being reasonably estimated. We cannot predict with any certainty the outcome of these unresolved legal actions or the range of possible loss or recovery. Based on current information, however, we believe that the eventual outcome of these unresolved legal actions, either individually or in the aggregate, will not have a material adverse effect on our financial position, results of operations or cash flows.
There were no material changes in our assessment of risk factors as discussed in Part I, Item 1A in the Company's Annual Report on Form 10-K for the fiscal year ended December 29, 2012.
15
During the quarter ended June 29, 2013, the Company issued shares of common stock to the following class of persons in lieu of cash for services rendered. Issuance of these shares was exempt from registration pursuant to Section 4(2) of the Securities Act of 1933 because the issuance did not involve a public offering.
|
Date Issued
|
Class of Purchasers
|
Number of Shares Issued
|
Consideration
|
|||
|
04/05/13
|
Non-Employee Directors
(1)
|
9,411
|
Director Services
|
|||
(1) Each non-employee director was given the option of receiving shares of restricted stock for all or any part of his annual retainer fee for the 2013-14 year. The Company issued an aggregate of 9,411 shares of restricted stock in lieu of $128,000 of the non-employee directors' annual cash retainer fees. The number of restricted shares issued was determined by the average of the high and low stock price on the day prior to the Company's Annual Meeting of Shareholders. The shares granted to the non-employee directors are not registered under the Securities Act of 1933 and are subject to forfeiture in whole or in part upon the occurrence of certain events. The number of shares in the table is the aggregate number of shares directors are entitled to receive at the end of the Company’s second quarter of 2014 and would be prorated should a director not fulfill their elected term.
|
Exhibit No.
|
Description
|
||
|
31.1
|
|
Rule 13a-14(a)/15d-14(a) Certifications of Chief Executive Officer
|
|
|
31.2
|
|
Rule 13a-14(a)/15d-14(a) Certification of the Chief Financial Officer
|
|
|
32
|
|
Certifications Pursuant to 18 U.S.C. Section 1350
|
|
|
101.INS*
|
|
XBRL Instance Document
|
|
|
101.SCH*
|
|
XBRL Taxonomy Extension Schema
|
|
|
101.CAL*
|
|
XBRL Taxonomy Extension Calculation Linkbase
|
|
|
101.LAB*
|
|
XBRL Taxonomy Extension Label Linkbase
|
|
|
101.PRE*
|
|
XBRL Taxonomy Extension Presentation Linkbase
|
|
|
101.DEF*
|
|
XBRL Taxonomy Extension Definition Linkbase
|
|
|
*
|
|
In accordance with Regulation S-T, the XBRL-related information in Exhibit 101 to this Quarterly Report on Form 10-Q shall be deemed "furnished" and not "filed."
|
|
16
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.
|
|
|
|
|
SYNALLOY CORPORATION
|
||
|
(Registrant)
|
||
|
|
|
|
|
|
|
|
|
Date: August 6, 2013
|
By:
|
/s/ Craig C. Bram
|
|
|
|
Craig C. Bram
|
|
|
|
President and Chief Executive Officer
|
|
(principal executive officer)
|
||
|
|
|
|
|
Date: August 6, 2013
|
By:
|
/s/ Richard D. Sieradzki
|
|
|
|
Richard D. Sieradzki
|
|
|
|
Vice President, Finance and Chief Financial Officer
|
|
|
|
(principal accounting and financial officer)
|
17
TABLE OF CONTENTS
Part IItem 1. Financial StatementsNote 1--basis Of PresentationNote 2--recently Adopted Accounting StandardsNote 3--inventoriesNote 4--stock Options and Restricted StockNote 5--income TaxesNote 6--payment Of DividendsNote 7--segment InformationNote 8--fair Value Of Financial InstrumentsNote 9--acquisitionNote 10--contingenciesNote 11--subsequent EventsItem 2. Management's Discussion and Analysis Of Financial Condition and Results Of OperationsItem 3. Quantitative and Qualitative Disclosures About Market RisksItem 4. Controls and ProceduresPart IIItem 1. Legal ProceedingsItem 1A. Risk FactorsItem 2. Unregistered Sales Of Equity Securities and Use Of ProceedsItem 6. Exhibits