Annual Report — Form 10-K
Filing Table of Contents
Document/Exhibit Description Pages Size
1: 10-K Annual Report 34 131K
2: EX-3 Amended By-Laws 18 39K
3: EX-4 Loan Amendment 20 70K
4: EX-10 Incentive Compensation Plan 6 17K
5: EX-10 Torbert Agreement 12 28K
6: EX-11 Earnings Per Share Calculation 2 12K
7: EX-13 1994 Annual Report 27 160K
8: EX-21 Subsidiaries of Registrant 1 6K
9: EX-23 Accountant's Consent 1 8K
10: EX-24 Powers of Attorney 8 18K
11: EX-27 Financial Data Schedule 1 9K
EX-13 — 1994 Annual Report
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FINANCIAL REVIEW
OVERVIEW
Two milestone events during 1994 will determine to a great extent Dravo
Corporation's future. The first was the completion late in the year of
negotiations to sell substantially all the assets of Dravo Basic Materials,
the company's construction aggregates business. The aggregates operations
comprised more than half of the company's assets and generated over half of
its revenues. During the past few years, however, the return on investment
from this business had fallen below acceptable levels. The opportunity to
sell the business in excess of book value allowed the company to exit a
business currently earning marginal returns while significantly strengthening
the balance sheet. The result is a highly focused, conservatively financed
lime company.
The second 1994 milestone directly involved the lime business: a 700,000-ton-
per-year expansion of the company's Black River lime production facility
neared completion. Production from this expansion will be used to meet the
450,000-ton-per-year scrubber lime requirement of American Electric Power's
Gavin station, and also to supply the Henderson Municipal Power and Light
Station operated by Big Rivers Electric Cooperative. The company will provide
the Gavin station lime tonnage under a 15-year contract. The extension of
three long-term supply commitments totaling almost 700,000 tons annually, and
the increase in lime utilization expected at existing customer locations as
utilities boost their levels of sulfur-dioxide removal, underpin revenues from
the utility segment of Dravo's lime operations into the next decade.
The Dravo Basic Materials sales transaction was not completed until year-end;
therefore, the consolidated financial results for 1994 reflect both the lime
and construction aggregates operations for the entire year. Continuing
operations pre-tax earnings of $5.5 million were notably lower than the $10.5
million posted in 1993, primarily because of price reductions given to secure
renewal of long-term lime supply contracts, unusually high weather-related
costs, and startup costs associated with the Black River expansion. Earnings
from continuing operations after tax were $4.9 million, or $.16 per share.
Dravo reported a net loss for 1994 of $10.6 million, or $.88 per share. A
charge for discontinued operations of $6.5 million was recorded in 1994 for
expected legal fees for two ongoing lawsuits and to provide for settlement of
a lawsuit brought in Venezuela for contract services provided in the mid-
1970s. Also, an extraordinary charge of $7.6 million, $.51 per share, was
recorded to reflect the write-off of fees associated with debt instruments
that were prepaid or substantially altered as a result of the Dravo Basic
Materials asset sale. A one-time charge of $1.4 million, $.09 per share,
reflects the cumulative accounting effect of the adoption of Statement of
Financial Accounting Standards No. 112, "Employers Accounting for
Postemployment Benefits."
In 1993, earnings from continuing operations were $35.1 million, or $2.20 per
share. Included in the earnings results was a $24.9 million deferred tax
benefit. Loss on discontinued operations was $35.3 million, or $2.38 per
share.
In 1992, earnings from continuing operations were $10.3 million, or $.52 per
share. Under rules in effect in 1992 governing accounting for income taxes,
an extraordinary credit of $1.6 million, or $.11 per share, resulted from the
use of loss carryforwards to offset current tax expense.
RESULTS OF OPERATIONS
CONTINUING OPERATIONS
Revenue: Revenue of $278.1 million during 1994 was up slightly over 1993's
level. Construction aggregates revenue was higher due to continued strong
demand in the Cincinnati and West Virginia areas and a much improved market in
the Southeast and Gulf Coast areas. Lime revenue of $125.7 million was down
due to price concessions granted in return for multi-year extensions of long-
term lime supply contracts and weather-related problems in the first quarter.
The impact of these items was partially mitigated, however, by very strong
demand for non-utility lime. Demand was especially strong for metallurgical
lime used in making steel and aluminum.
Revenue in 1993 of $277.6 million was up $4.6 million over 1992. The increase
was attributable to high demand for construction aggregates in the
metropolitan Cincinnati area and West Virginia. Competition along the
Mississippi River and Gulf Coast was very intense and the company was unable
to increase revenues in those areas. Lime revenue was up due to strong non-
utility demand and increased utility shipments.
Costs and Expenses: Gross profit of $44.0 million was down $5.3 million from
last year. Dravo Lime's gross profit of $30.4 million was down $4.6 million
while Dravo Basic Materials' gross profit of $13.2 million was down $644,000
from a year ago. Lime and aggregates operations located in the Ohio River
Valley were negatively affected by a severe winter that caused operating
difficulties during the first quarter. Price concessions on long-term lime
supply contracts impacted gross profit, as did an unscheduled seven-week
outage at one of the company's electric utility customer's generating
stations. Production costs at the Black River operation were higher as
personnel were added in preparation for expanded underground mining and
startup of the two new lime kilns. Also, the write-off of equipment being
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replaced as part of the plant expansion and modernization project affected
profit margins. The expansion and upgrades currently being completed at Black
River are expected to reduce production costs significantly.
Gross profit was $2.4 million lower in 1993 than 1992. An unusual number of
significant operating problems at Black River increased production costs.
Operating problems occurred at the Longview facility also, although not to the
same extent as Black River, and the company had to occasionally purchase lime
from outside sources to fill orders.
Selling expense of $7.1 million was lower than both 1993 and 1992 levels of
$7.6 million and $7.3 million, respectively. Selling expense fluctuates
primarily due to amounts of research and development expense that can be
billed to third parties. These research activities involve a variety of lime-
related technologies, with particular emphasis on air pollution control.
Depending on the project, reimbursement may be made by governmental agencies,
public utilities or private groups for all or a portion of project costs.
General and administrative expenses were reduced by more than six percent from
1993 and ten percent from 1992. The reduction reflects lower staffing levels,
employee and retiree medical expenses, and travel expenses, as well as lower
charges related to the amortization of a non-cancelable lease obligation on a
downtown Pittsburgh office building. The decrease from 1992 to 1993 was due
primarily to lower amortization charges on the non-cancelable lease and lower
medical expenses.
Equity in earnings of joint ventures includes the company's share in three 50-
percent owned joint ventures: a shell dredging operation located off the
Louisiana coast, a contract phosphate rock mining operation in Idaho and a
small contract coke operation in Wyoming. Results for the shell dredging
operation were significantly improved over last year due to a major highway
project and a contract with a state agency to place shell in water bottoms to
improve oyster habitat. The phosphate mining operation, whose profitability
varies depending on mining conditions and customer requirements, had strong
demand and improved results over 1993. The shell dredging joint venture was
sold as part of the Dravo Basic Materials asset sale.
Other income reports the gain on the sale of property, plant and equipment.
The $1.1 million gain in 1994 includes the sale of the company's airplane,
$324,000, and $487,000 from the sale, after accrued expenses, of Dravo Basic
Materials' assets. See Note 3, Dispositions, in the Notes to Consolidated
Financial Statements for a further discussion of the Dravo Basic Materials
sale transaction. In 1993, a gain was recognized on the sale of property in
Baton Rouge, Louisiana and excess floating equipment, mainly barges. Other
income in 1992 of $1.7 million resulted primarily from the sale of assets
related to the asphalt and Calcilox businesses. A gain was also recorded when
the lessee of 34 hopper barges and covers exercised an option to purchase the
equipment.
The decline in interest income over the last two years reflects a lower level
of funds available for investment and lower interest rates.
Interest expense of $12.4 million was $3.2 million higher than 1993. The
higher expense was due to higher interest rates on a prime rate-based line of
credit and fees paid to a prospective lender on the Black River financing
package whose participation was terminated by the company. Interest expense
was 13 percent lower in 1993 than 1992. The decrease was due to lower average
debt outstanding and the positive impact of an interest rate swap agreement.
Income tax expense of $597,000 includes an accrual of $300,000 for federal
alternative minimum tax from the sale of Dravo Basic Materials' assets. In
1993, a benefit for income taxes of $24.9 million was recorded under the
provisions of Statement of Financial Accounting Standards No. 109 (SFAS 109),
"Accounting for Income Taxes." Management believes that, due to the large
proportion of revenue generated by long-term supply contracts, income can be
reasonably projected for purposes of determining whether the realization of
the asset resulting from the utilization of NOLs in future years is more
likely than not. The amount of the net deferred tax asset was not adjusted in
1994 due to remaining uncertainties associated with discontinued operations.
In conjunction with the sale of Dravo Basic Materials' assets, existing loan
agreements were substantially altered, including a $35 million reduction in
the amount available under a revolving credit facility. Also, while
negotiating a $50 million financing agreement with Prudential Power Funding
for the Black River expansion, the company purchased a call option that
enabled it to prepay on May 17, 1995, without penalty, amounts outstanding
under the financing agreement. At December 31, 1994, $19.9 million was
borrowed under the agreement. Cash received from the Dravo Basic Materials
asset sale equalling the outstanding principal on the Prudential Power Funding
facility, interest through May 16, 1995 and an exit fee was placed in escrow.
The company agreed that any additional drawings on the facility would also be
escrowed. No additional drawings were made and, with Prudential Power
Funding's consent, the entire amount borrowed was prepaid on February 10,
1995. The fees associated with these agreements were written off as
extraordinary items.
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Effects of inflation: Inflation rates have been low over the past three years
and as a result have not had a significant impact on the company's operations.
In addition, Dravo Lime's long-term lime supply contracts provide for price
increases for specific production expenses, such as labor, fuel and
electricity.
DISCONTINUED OPERATIONS
The provision for discontinued operations was increased $6.6 million in 1994.
The charge was taken to cover a $4.5 million settlement involving an alleged
breach of contract by the company for work performed between 1973 and 1978 in
Venezuela. Because of the uncertainty surrounding this matter, no amount was
provided previously. Opposing counsel had alleged damages in excess of $35
million. The balance of the provision is, for the most part, estimated legal
fees for two ongoing lawsuits: Continental Energy Associates and the company's
assertion that it is entitled to a defense and indemnity under its contracts
of insurance for environmental clean-up costs in Hastings, Nebraska. See Note
8, Contingent Liabilities, in the Notes to Consolidated Financial Statements
for a further discussion of these matters.
In 1993, a $35.3 million charge was recorded. The provision was primarily to
cover a settlement agreement with the City of Long Beach, Calif., which
included the company giving up its claim to unpaid receivables and interest
totalling $18 million. The provision also recognized an increase in the
estimated environmental clean-up costs at the Hastings superfund site, write-
off of a note receivable due to an unfavorable court ruling and additional
legal fees.
FINANCIAL POSITION AND LIQUIDITY
The company completed negotiations on December 30, 1994 for the sale of
substantially all of the assets and certain liabilities of Dravo Basic
Materials to Martin Marietta Materials, Inc. (Martin Marietta) effective
January 3, 1995. The balance sheet at December 31, 1994 reflects the effect
of the sale transaction, in that the assets and liabilities sold have been
removed and a $120.5 million receivable from Martin Marietta recorded. On
January 3, 1995, cash was received for the assets.
Also on January 3, the company prepaid $65.6 million of debt, including the
revolving line of credit balance of $55.8 million. On February 10, 1995 the
Prudential Power Funding loan balance of $19.9 million was prepaid.
Accordingly, these amounts are presented as current liabilities on the
December 31, 1994 balance sheet. The company's total debt outstanding after
prepaying these loans was $42.4 million and it had available $32.5 million
under a revolving credit/letter of credit facility.
All known outstanding discontinued operations items have been classified as
current or long-term based on the estimated timing of future cash receipts and
disbursements. Despite the size of the discontinued operations liabilities,
they do not pose a threat to liquidity because cash payments needed to satisfy
them will be spread over several years.
The company has on hand and access to sufficient funds to meet its anticipated
operating and capital needs. To minimize interest charges, cash balances are
kept low through a banking arrangement that uses excess cash held in the
company's accounts to reduce the amount of overnight borrowing on a revolving
credit agreement
Cash received from the Dravo Basic Materials transaction, after payment of
debt and expenses, is being invested in short-term interest bearing
instruments.
In January, 1995 the Board of Directors approved a program whereby the company
is authorized to purchase up to 250,000 shares of its common stock on the open
market. The repurchased shares will be held in the treasury and will be used
for general corporate purposes.
A $40 million revolving credit/letter of credit facility is provided by a
consortium of lenders that includes First Alabama Bank; PNC Bank, N.A. and
Bank of America Illinois (formerly Continental Bank, N.A.). Interest on the
revolver is equal to First Alabama Bank's base lending rate plus 1.25 percent.
The credit facility expires April 30, 1996 but the company expects it to be
extended.
Obligations under the company's revolving credit facility and senior term
notes are secured by a pledge of the stock of Dravo Lime Company and Dravo
Basic Materials Company along with their accounts receivable and finished
goods inventories. Additionally, certain contract rights, patents and
mortgages on the company's Maysville, Black River and Longview plants have
been pledged as collateral. The agreements contain uniform restrictive
covenants that require the company on a consolidated basis, and Dravo Lime and
Dravo Basic Materials on a combined basis, to maintain minimum working capital
levels; restrict incurrence of debt, liens and lease obligations; restrict the
sale of significant assets; and as to Dravo Lime and Dravo Basic Materials,
limit payment of dividends or making of loans to the company. At December 31,
1994, approximately $155 million of Dravo Lime and Dravo Basic Materials net
assets were restricted as to payment of dividends or loans to the company.
These restrictions are not expected to have an adverse impact on the company's
ability to meet its cash obligations.
DIVIDENDS
The company may not declare common stock dividends until cumulative earnings
from continuing operations after September 30, 1991 exceed $40 million,
excluding gains from the sale of capital assets and the income
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impact of recording a net deferred tax asset, or cumulative losses from
discontinued operations after September 30, 1991, whichever is higher, and
then only to the extent of 50 percent of such earnings. At December 31, 1994,
cumulative losses from discontinued operations of $52.3 million exceeded
cumulative earnings from continuing operations, both since September 30, 1991,
by $25.7 million. Dividends on the $3.0875 cumulative, convertible,
exchangeable, Series D Preference Stock were declared quarterly throughout
1994, 1993 and 1992. Quarterly dividends were also declared on the $2.475
cumulative convertible Series B Preference Stock in each of the last three
years. All declared preference dividends have been paid on a timely basis.
COMMON STOCK MARKET PRICE
The principal market on which Dravo's common stock is traded is the New York
Stock Exchange under the symbol, DRV. The high and low common stock sales
prices for each quarterly period in 1994 and 1993 as reported for New York
Stock Exchange composite transactions were:
[Download Table]
1994 1993
Quarter High Low High Low
First 13 3/8 10 1/4 10 1/4 8 3/4
Second 12 1/4 10 11 3/4 8 3/4
Third 12 5/8 9 1/2 12 3/8 9 3/8
Fourth 12 9 3/4 12 1/2 10 1/8
OUTLOOK
Continuing operations: Dravo Corporation is now a company focused on one
business, lime. Five years ago Congress passed amendments to clean air
standards mandating reduced emissions from coal-fired power plants. The
effective date for the first phase of these mandated emission reductions was
January 1, 1995. In January, 1995 Dravo shipped lime to American Electric
Power's Gavin station under a 15-year supply contact. This marked the
beginning of a major expansion in the company's utility lime operations
directly attributable to the new federal clean air standards. Demand from the
steel, paper and water purification markets has exceeded the company's non-
utility lime production capacity. Additional expansions to supply this
increase in demand are anticipated. In total, Dravo now has nearly 70 percent
of its total production capacity committed under long-term utility and
merchant contracts.
The company's research and development organization is recognized as a leading
source of technical services to lime users and a major developer of lime-
related environmental technologies. The company leverages this competitive
advantage in seeking additional lime and lime-related businesses and also is
committed to commercializing and marketing its patented technologies.
Administrative costs were significantly reduced as part of the corporate
reorganization that followed the sale of Dravo Basic Materials' assets. A
much smaller corporate staff is being consolidated at Dravo's Pittsburgh
headquarters location to better support and complement Dravo Lime's
activities. Ongoing reductions in overhead expenses are a management
priority.
Discontinued operations: The company formerly operated a metal fabrication
facility in Hastings, Nebraska. The federal Environmental Protection Agency
(EPA) has notified the company it believes the company is a potentially
responsible party (PRP) for the clean-up of soil and groundwater contamination
at four subsites in the Hastings area. The company held talks with the EPA in
1992 as to the scope of clean-up required and to determine if the EPA would be
willing to accept an amount, to be paid by the company, other PRPs and the
company's insurance carriers, over time, that would discharge the company from
any further clean-up at the Colorado Avenue subsite. The company discontinued
the discussions with the EPA when its insurance carriers refused coverage
responsibility. The company has since brought legal action against its
insurance carriers whom it believes had coverage responsibility for the time
the company owned the Hastings facility. Two insurance carriers have
approached the company concerning a settlement. The one carrier, whom the
company considered having the least exposure, settled in 1994 for $500,000.
The company intends to pursue a settlement of this matter which will involve a
group of named PRPs and insurance carriers. See Note 2, Discontinued
Operations, in the Notes to Consolidated Financial Statements for further
discussion of the company's estimate of total clean-up costs and its share of
those costs.
A mediation session was held in early March, 1995 between the company and
Continental Energy Associates regarding disputes arising from the construction
of a coal gasification facility in Hazleton, Pennsylvania. Although the
session did not resolve this matter, the company is hopeful that the dialogue
will continue and ultimately lead to a fair settlement acceptable to the
company.
See Note 8, Contingent Liabilities, in the Notes to Consolidated Financial
Statements for a further discussion of these discontinued operations matters.
Management believes the provision for losses on discontinued operations is
adequate at this time. However, in establishing the provision and monitoring
it, management has estimated the cost of exiting discontinued businesses and
pursuing the company's rights through litigation. A ruling by the courts or a
settlement of the disputes that is adverse to Dravo's position, or other
unforeseen developments, could require a future additional provision for
discontinued operations.
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[Download Table]
DRAVO CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
December 31,
(In thousands) 1994 1993
ASSETS
Current assets:
Cash and cash equivalents $ 2,027 $ 808
Receivable from sale of Dravo Basic
Materials Company (Note 3) 120,464 --
Accounts receivable, net of allowance for
uncollectibles of $108 and $897 20,138 44,225
Notes receivable (Note 15) 2,803 3,318
Inventories (Note 4) 12,638 57,536
Other current assets 2,067 2,417
Total current assets 160,137 108,304
Advances to and equity in joint ventures 2,536 4,348
Notes receivable (Note 15) 5,061 6,870
Other assets 21,281 17,729
Deferred income taxes (Note 13) 24,853 24,853
Property, plant and equipment:
Land 6,127 23,673
Mine development 8,376 8,148
Building and improvements 9,722 22,830
Floating equipment -- 36,972
Machinery and other equipment 171,108 220,199
195,333 311,822
Less accumulated depreciation and amortization 101,872 201,854
Net property, plant and equipment 93,461 109,968
Total assets $307,329 $272,072
See accompanying notes to consolidated financial statements.
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[Download Table]
DRAVO CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
December 31,
(In thousands) 1994 1993
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term notes (Notes 5 and 15) $ 85,077 $ 4,488
Accounts payable - trade 36,257 28,622
Accrued insurance 2,265 3,049
Accrued retirement contribution 2,388 2,101
Net liabilities of discontinued operations (Note 2) 13,547 4,454
Other current liabilities 14,264 6,136
Total current liabilities 153,798 48,850
Long-term notes (Notes 5 and 15) 42,440 88,520
Other liabilities 5,900 3,033
Net liabilities of discontinued operations (Note 2) 8,445 22,130
Redeemable preference stock (Notes 6 and 15):
Par value $1, issued 200,000 shares:
cumulative, convertible, exchangeable Series D
(entitled in liquidation to $20.0 million) 20,000 20,000
Shareholders' equity (Notes 6 and 12):
Preference stock, par value $1, authorized
1,878,870 shares: Series B, $2.475 cumulative,
convertible, issued 28,386 and 32,386 shares
(entitled in liquidation to $1.6 million and
$1.8 million); Series D, reported above 28 32
Common stock, par value $1, authorized 35,000,000
shares: issued 14,985,839 and 14,967,824 shares 14,986 14,968
Other capital 63,554 63,260
Retained earnings 18 13,119
Treasury stock at cost;
common shares 119,221 (1,840) (1,840)
Total shareholders' equity 76,746 89,539
Total liabilities and shareholders' equity $307,329 $272,072
See accompanying notes to consolidated financial statements.
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[Download Table]
DRAVO CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations
Years ended December 31,
(In thousands, except per share data) 1994 1993 1992
Revenue $278,052 $277,590 $272,979
Cost of revenue 234,018 228,266 221,232
Gross profit 44,034 49,324 51,747
Selling expenses 7,116 7,602 7,258
General and administrative expenses 22,497 24,058 24,914
Earnings from operations 14,421 17,664 19,575
Other income (expense):
Equity in earnings (loss) of joint ventures 1,672 (18) 411
Other income 1,088 692 1,683
Interest income 754 1,327 1,598
Interest expense (12,408) (9,194) (10,548)
Net other expense (8,894) (7,193) (6,856)
Earnings before taxes from continuing operations 5,527 10,471 12,719
Income tax expense (benefit) (Note 13) 597 (24,655) 2,401
Earnings from continuing operations 4,930 35,126 10,318
Loss on discontinued operations (Note 2) 6,554 35,303 --
Earnings (loss) before extraordinary item
and cumulative accounting change (1,624) (177) 10,318
Extraordinary item (Notes 13 and 14) (7,572) -- 1,573
Cumulative effect of accounting change (Note 10) (1,361) -- --
Net earnings (loss) (10,557) (177) 11,891
Preference dividends 2,544 2,554 2,561
Net earnings (loss) available for common stock $(13,101) $ (2,731) $ 9,330
Weighted average shares outstanding 14,859 14,835 14,833
Primary earnings (loss) per share:
Continuing operations $ 0.16 $ 2.20 $ 0.52
Discontinued operations (0.44) (2.38) --
Extraordinary item (0.51) -- 0.11
Cumulative effect of accounting change (0.09) -- --
Net earnings (loss) $ (0.88) $ (0.18) $ 0.63
See accompanying notes to consolidated financial statements.
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DRAVO CORPORATION AND SUBSIDIARIES
[Download Table]
Consolidated Statements of Retained Earnings
Years ended December 31,
(In thousands, except per share data) 1994 1993 1992
Retained earnings at beginning of year $ 13,119 $ 15,850 $ 6,520
Net earnings (loss) (10,557) (177) 11,891
2,562 15,673 18,411
Dividends declared: 1994 1993 1992
Series B preference stock $ 2.475 $ 2.475 $ 2.475 74 84 91
Series D preference stock 12.350 12.350 12.350 2,470 2,470 2,470
2,544 2,554 2,561
Retained earnings at end of year $ 18 $13,119 $15,850
See accompanying notes to consolidated financial statements.
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[Download Table]
DRAVO CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(In thousands) Years ended December 31,
1994 1993 1992
Cash flows from operating activities:
Earnings from continuing operations $ 4,930 $ 35,126 $ 10,318
Adjustments to reconcile earnings from
continuing operations to net cash provided by
continuing operations activities:
Depreciation and amortization 17,626 17,985 18,595
Change in accounting principle (1,361) -- --
Gain on sale of assets (1,088) (692) (1,683)
Equity in joint ventures (116) (2,155) 49
Changes in assets and liabilities, net of
effects from DBM disposition:
Decrease (increase) in accounts receivable (143) (5,410) 1,638
Decrease (increase) in notes receivable 464 1,008 (647)
Decrease (increase) in inventories 3,909 6,311 (4,197)
Decrease (increase) in other current assets (869) 721 (400)
Increase in other assets (6,302) (2,373) (680)
Increase in deferred income taxes -- (24,853) --
Increase (decrease) in accounts payable
and accrued expenses 7,873 947 (5,322)
Increase (decrease) in income taxes payable 329 (20) (575)
Increase in other liabilities 3,178 71 329
Total adjustments 23,500 (8,460) 7,107
Net cash provided by continuing
operations activities 28,430 26,666 17,425
Loss from discontinued operations (6,554) (35,303) --
Decrease in net liabilities of
discontinued operations (4,592) 21,647 (15,009)
Proceeds from repayment of notes receivable from
sale of discontinued operations 1,600 1,992 2,631
Net cash used by discontinued operations activities (9,546) (11,664) (12,378)
Net cash provided (used) by extraordinary item (7,572) -- 1,573
Net cash provided by operating activities 11,312 15,002 6,620
Cash flows from investing activities:
Proceeds from sale of assets 2,148 1,249 5,591
Additions to property, plant and equipment (44,757) (13,646) (8,454)
Other, net 509 (553) (363)
Net cash used by investing activities $(42,100) $(12,950) $ (3,226)
See accompanying notes to consolidated financial statements.
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DRAVO CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
[Download Table]
(In thousands) Years ended December 31,
1994 1993 1992
Cash flows from financing activities:
Net borrowing under revolving credit agreements $ 19,300 $ 4,600 $ 3,700
Principal payments under long-term notes (4,736) (4,446) (5,702)
Principal payments under capital lease obligations -- (306) (142)
Proceeds from issuance of long-term notes 19,945 391 122
Proceeds from borrowing under capital lease
obligations -- -- 388
Proceeds from issuance of common stock 42 101 63
Dividends (2,544) (2,554) (2,561)
Net cash provided (used) by financing activities 32,007 (2,214) (4,132)
Net increase (decrease) in cash and cash equivalents 1,219 (162) (738)
Cash and cash equivalents at beginning of year 808 970 1,708
Cash and cash equivalents at end of year $ 2,027 $ 808 $ 970
Supplemental disclosures of cash flow information:
Cash paid (received) during the year for:
Interest (net of amount capitalized) $ 12,408 $ 9,195 $ 10,722
Income tax (143) 487 1,333
See accompanying notes to consolidated financial statements.
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DRAVO CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Note 1: Summary of Significant Accounting Policies
Description of Business: The consolidated financial statements include the
accounts of Dravo Corporation and its majority-owned subsidiaries (the
company). The principal subsidiaries are Dravo Lime Company, one of the
nation's largest lime producers, and Dravo Basic Materials Company, Inc.
(DBM). The company completed a transaction on December 30, 1994 in which it
sold substantially all the assets and certain liabilities of DBM. The assets
and liabilities sold have been removed from the company's December 31, 1994
balance sheet. The December 31, 1994 statement of operations includes the
results of DBM for the entire year.
Principles of Consolidation: Significant intercompany balances and
transactions have been eliminated in the consolidation process.
Cash and Cash Equivalents: For purposes of reporting cash flows, the company
considers all highly liquid debt instruments purchased with a maturity of
three months or less to be cash equivalents.
Inventories: Inventories are valued at average production cost or market,
whichever is lower. The cost of products produced includes raw materials,
direct labor and operating overhead.
Property, Plant, Equipment and Depreciation: Property, plant and equipment
are stated at cost. The cost of buildings, equipment and machinery is
depreciated over estimated useful lives on a straight-line basis. For income
tax purposes, depreciation is calculated principally on an accelerated basis.
Expenditures for maintenance and repairs which do not materially extend the
lives of assets are expensed currently. The asset cost and accumulated
depreciation are removed from the accounts for assets sold or retired, and any
resulting gain or loss is included in other income and expense.
Intangible Assets: Intangible assets include agreements, goodwill, and
unrecognized prior service cost on the company's pension plans. Amortization
is on a straight line basis, generally five to ten years, over estimated
useful lives, or in the case of unrecognized prior service costs, the average
future service period.
Income Taxes: Effective January 1, 1993, the company adopted the provisions
of Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes." The statement requires that deferred income taxes reflect the tax
consequences on future years of differences between the tax bases of assets
and liabilities and their financial reporting amounts. Prior to 1993,
provisions were made for deferred income taxes where differences existed
between the time transactions affected taxable income and the time those
transactions entered into the determination of income for financial statement
purposes.
Earnings Per Share: Primary earnings per share are based on net earnings less
preference dividends declared in the year, divided by the weighted average sum
of common shares outstanding during the year and common share equivalents.
Shares exercisable as employee stock options and stock appreciation rights are
considered common share equivalents except when their inclusion would be anti-
dilutive. Primary common share equivalents are calculated based on the
average common stock price for the year. Fully diluted earnings per share are
based on net earnings, divided by the sum of the weighted average number of
common shares outstanding during the year, weighted average number of shares
resulting from the assumed conversion of issued preference shares to common
shares and common share equivalents. Fully diluted common share equivalents
are calculated based on the higher of the average or ending common stock price
for the year. Fully diluted earnings per share are anti-dilutive in 1994,
1993 and 1992 and are not presented.
Note 2: Discontinued Operations
In December, 1987, Dravo's Board of Directors approved a major restructuring
program which concentrated the company's future direction exclusively on
opportunities involving its natural resources business. An additional charge
of $6.5 million was taken in 1994 for discontinued operations.
The company filed an action in 1981 to collect on a promissory note issued by
Meladuras Portuguesa, C. A. (Melaport) and its principal, Alberto Caldera
(Caldera). In 1985, Melaport and Caldera filed a counterclaim for damages
alleging the company breached a contract between Melaport and the company
relating to engineering and procurement services rendered between 1973 and
1978 for a sugar cane processing facility. A local Venezuelan court ruled
partially in favor of Melaport's counterclaim. The ruling was upheld by a
Venezuelan appeals court on September 25, 1992 and by the Venezuelan Supreme
Court on July 8, 1993. The court ruling did not specify damages to be paid
but rather identified three categories of damages to which Caldera and
Melaport would be entitled. The amount of damages was to have been
established by an appraisal process conducted by the trial court. Opposing
counsel asserted that the damages would be in excess of $35 million. The 1994
discontinued operations provision includes $4.5 million for the settlement
amount agreed to by the parties to conclude all disputes related to the
Venezuelan matter.
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Also, an additional amount was provided for estimated legal fees anticipated
to pursue various lawsuits and claims, the most significant of which are the
Hastings insurance litigation and Continental Energy Associates (CEA) matters
discussed in Note 8, Contingent Liabilities.
No loss provision has been made for the CEA dispute because it is not possible
to determine the outcome of this matter or to estimate with any degree of
probability the range of potential costs which may be involved. Claims
against the company, which management believes are grossly overstated, exceed
$10 million.
A $35.3 million provision for discontinued operations expenses was recorded in
1993. The provision covered the write-off of receivables and accrual of a
settlement relating to a resource recover facility built in Long Beach,
Calif.; updated estimates of the potential costs to clean up soil and
groundwater contamination at a former operation located in Hastings, Nebraska;
write-down of a receivable from a Portland, Maine utility to reflect a jury
award; and estimated legal fees.
The company received cash proceeds of $1.6 million in 1994, $2.0 million in
1993 and $2.6 million in 1992 from the repayment of notes received from the
previous sales of discontinued businesses.
The remaining discontinued operations' assets and liabilities for the
respective years ended December 31 relate to non-cancelable leases,
environmental, insurance, legal and other matters associated with exiting the
engineering and construction business and are presented below:
[Download Table]
(In thousands) 1994 1993
Current assets:
Accounts and retainers receivable $ 24 $ 23
Other -- 3,512
Total current assets 24 3,535
Accounts and retainers receivable 444 472
Other 5,121 309
Total assets $ 5,589 $ 4,316
Current liabilities:
Accounts and retainers payable $ 63 $ 178
Accrued loss on leases 2,315 2,448
Other 11,193 5,363
Total current liabilities 13,571 7,989
Accounts and retainers payable -- 4,745
Accrued loss on leases 5,632 7,854
Other 8,378 10,312
Total liabilities $ 27,581 $ 30,900
Net liabilities and accrued loss
on leases of discontinued operations $(21,992) $(26,584)
Note 3: Dispositions
The company completed a transaction on December 30, 1994 in which it sold to
Martin Marietta Materials, Inc. (Martin Marietta), effective January 3, 1995,
substantially all the assets of its construction aggregates business. Assets
sold included the assets, properties and leases of Dravo Basic Materials
Company, Inc. (DBM), a wholly-owned subsidiary of the company, and Atchafalaya
Mining Company, Inc. (AMC), a wholly-owned subsidiary of DBM, used in the
production, marketing, distribution and sale of various aggregate products.
Also sold was the capital stock of Dravo Bahama Rock Limited (DBR), a wholly-
owned foreign subsidiary of DBM.
The significant terms of the transaction called for Martin Marietta to
purchase substantially all of DBM's and AMC's assets at their December 31,
1994 book value plus a premium of $2.0 million. Assets excluded from the sale
included cash in banks; the capital stock of two subsidiary companies, Dravo
Natural Resources Company and Tideland Industries, Inc.; amounts due from
affiliated companies; notes receivable and certain properties located near
Cincinnati, Ohio and Lake Charles, Louisiana. The company is required to buy
back accounts receivable that are unpaid at May 3, 1995.
Martin Marietta also paid the company $8.0 million in consideration of (i) a
non-competition and non-disclosure agreement and (ii) distributorship
agreements for crushed limestone aggregates produced at Dravo Lime's
Maysville, Black River and Longview facilities.
The company, DBM and AMC retained substantially all obligations and
liabilities which arose from or in connection with operations prior to the
sales transaction. The sales price was reduced for liabilities assumed by
Martin Marietta which included accrued vacations and wages for transferred
employees, liabilities of DBR and land reclamation obligations.
Actual and estimated expenses related to the sale totaled $9.5 million and
included transaction costs, benefit plan curtailment expenses, environmental
clean-up costs, severance pay and various wind-down costs. A net $487,000
pre-tax gain on the transaction was recorded in other income.
The assets and liabilities sold to Martin Marietta have been removed from the
company's December 31, 1994 balance sheet and a corresponding receivable from
the sale of DBM of $120.5 million has been recorded. The December 31, 1994
statement of operations includes the results of DBM for the entire year.
Pro forma data is provided below for comparative purposes only and does not
purport to be indicative of the
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results which actually would have been obtained if the disposition had been
effected on the pro forma dates, or of the results which may be obtained in
the future.
The following pro forma statement of operations presents the results of
operations assuming the disposition had been completed as of the beginning of
1994. Adjustments have been made to exclude the results of DBM, to decrease
interest expense for loans prepaid in early 1995 from the sale proceeds, and
to record interest income at overnight investment rates for cash received in
excess of liabilities paid.
(Unaudited, in thousands,
except earnings per share)
[Download Table]
December 31, 1994
Historical Pro Forma
Revenue $ 278,052 $ 125,661
Gross profit 44,034 30,802
Selling expenses 7,116 4,530
General and administrative expenses 22,497 12,872
Other income 3,514 3,041
Interest expense (12,408) (5,717)
Earnings before taxes 5,527 10,724
Income tax expense 597 489
Earnings from continuing operations 4,930 10,235
Earnings per share, continuing operations 0.16 0.52
Cash from the sale of DBM's assets was received on January 3, 1995 and certain
debt obligations were prepaid from the proceeds. The following pro forma
balance sheet is presented to show the financial condition of the company at
December 31, 1994 if these transactions had occurred at the balance sheet
date.
[Download Table]
(Unaudited, in thousands) December 31, 1994
Historical Pro Forma
Cash and cash equivalents $ 2,027 $ 15,502
Receivable from sale of DBM 120,464 --
Accounts receivable, net 20,138 20,280
Other current assets 17,508 17,508
Total current assets 160,137 53,290
Long-term assets 147,192 147,192
Total assets $ 307,329 $ 200,482
Current portion of long-term notes 85,077 112
Accounts payable - trade 36,257 19,638
Net liabilities of discontinued operations 13,547 9,340
Other current liabilities 18,917 18,036
Total current liabilities 153,798 47,126
Long-term notes $ 42,440 $ 42,265
Net liabilities of discontinued operations 8,445 8,445
Other liabilities 5,900 5,900
Redeemable preference stock 20,000 20,000
Shareholders' equity 76,746 76,746
Total liabilities and shareholders' equity $ 307,329 $ 200,482
In March, 1992, the company sold its asphaltic concrete operation in Loxley,
Alabama to Mobile Asphalt Company (MAC). During the second quarter of 1992,
MAC completed the terms of the sales agreement by purchasing certain assets
related to the company's asphalt operation in Mobile, Alabama. A pre-tax gain
of $894,000 was recognized for these transactions.
Note 4: Inventories
Inventories for the respective years ended December 31 are classified as
follows:
[Download Table]
(In thousands)
1994 1993
Finished goods $ 1,834 $40,660
Work in process -- 3,092
Materials and supplies 10,804 13,784
Net inventories $12,638 $57,536
Note 5: Notes Payable
Notes payable at December 31 include the following:
[Download Table]
(In thousands)
1994 1993
Short-term:
Current portion of long-term notes $ 85,077 $ 4,488
Total short-term 85,077 4,488
Long-term:
Variable rate revolving line of credit 55,800 36,500
Variable rate note 6,297 8,139
9.95% notes 2,800 5,200
10.13% notes 19,944 --
11.21% notes, payable through 2002 41,800 41,800
Other notes, payable through 2000 876 1,369
127,517 93,008
Deduct: Current portion of notes 85,077 4,488
Total $ 42,440 $ 88,520
The following is a description of the terms and conditions of the company's
major debt instruments:
The $55.8 million note payable was borrowed under a $75.0 million revolving
credit/letter of credit facility with First Alabama Bank; PNC Bank, N.A.; Bank
of America Illinois (formerly Continental Bank, N.A.) and The Prudential
Insurance Company of America. Interest on the revolver equals First Alabama
Bank's base lending rate plus 1.25 percent. The entire amount borrowed under
the revolving line of credit was repaid on January 3, 1995 from the Dravo
Basic Materials asset sale proceeds. On the same date, the total amount
available for revolving credit/letter of credit requirements under the
facility was reduced to $40.0 million. The interest rate remained unchanged.
Participating institutions in the revised revolving credit/letter of credit
facility are First Alabama Bank;
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PNC Bank, N.A. and Bank of America Illinois. The facility expires April 30,
1996 but the company expects it to be extended.
The variable rate note and 9.95 percent promissory notes were prepaid on
January 3, 1995.
The 10.13 percent construction notes provided for borrowing up to $50 million
for the Black River plant expansion. An amount sufficient to retire these
notes was escrowed from a portion of the Dravo Basic Materials sale proceeds.
The notes were prepaid on February 10, 1995.
The 11.21 percent term notes require quarterly interest payments and annual
principal repayments in the amount of $6.0 million beginning January, 1996.
Obligations under the revised revolving credit/letter of credit facility and
the 11.21 percent term notes are secured by a pledge of the stock of Dravo
Lime Company and Dravo Basic Materials Company along with their accounts
receivable and finished goods inventories. Additionally, certain contract
rights, patents and mortgages on the company's Maysville, Black River and
Longview plants have been pledged as collateral. The agreements contain
uniform restrictive covenants that require the company on a consolidated
basis, and Dravo Lime and Dravo Basic Materials on a combined basis, to
maintain minimum working capital levels; restrict incurrence of debt, liens
and lease obligations; restrict the sale of significant assets and as to Dravo
Lime and Dravo Basic Materials, limit payment of dividends or making of loans
to the company. The company may not declare common stock dividends until
cumulative earnings from continuing operations after September 30, 1991 exceed
$40.0 million, excluding gains from the sale of capital assets and the income
impact of recording a net deferred tax asset, or cumulative losses from
discontinued operations after September 30, 1991, whichever is higher, and
then only to the extent of 50 percent of such earnings. At December 31, 1994,
cumulative losses from discontinued operations of $52.3 million exceeded
cumulative earnings from continuing operations, both since September 30, 1991,
by $25.7 million.
At December 31, 1994, approximately $155 million of Dravo Lime and Dravo Basic
Materials' net assets were restricted as to payment of dividends or loans to
the company. Assets pledged under certain notes and leases had a book value
of $228.2 million at December 31, 1994.
In February, 1993, the company entered into an interest rate swap agreement
with Continental Bank, N.A. on the $41.8 million fixed rate long-term notes
payable. The transaction was accounted for as a hedge of those notes. On
December 30, 1994, the company paid $1.4 million to unwind the swap agreement.
Amounts payable on long-term debt due in 1995 and thereafter are: 1995, $29.3
million; 1996, $6.2 million; 1997, $6.2 million; 1998, $6.1 million; 1999,
$6.0 million; and after 1999, $17.9 million.
Note 6: Redeemable Preference Stock
The company has outstanding 200,000 shares of cumulative, convertible,
exchangeable, Series D Preference Stock. Cumulative dividends of $3.0875 per
share are payable quarterly. Each share of preference stock may be converted,
at the option of the holder, into 8.0 shares of common stock. The stock is
also exchangeable, at the option of the company, for 12.35 percent Senior
Subordinated Convertible notes due September 21, 2001. The 12.35 percent
senior subordinated notes would contain the same conversion rights,
restrictions and other terms as the preference stock.
The company may redeem the stock, in whole or in part, after January 21, 1996
for $100 per share plus accrued dividends, provided that the market price of
common stock as of the date of the decision to redeem the shares, as defined
in the Certificate of Designations, Preferences and Rights for the Series D
Preference Stock, shall be at least equal to 175 percent of the conversion
price for the preference stock. Mandatory annual redemption of the lesser of
50,000 shares or the number of shares then outstanding begins September 21,
1998 at $100 per share plus accrued dividends. In the event of liquidation of
the company, the holders of outstanding Series D Preference Stock shall be
entitled to receive a distribution of $100 per share plus accrued dividends.
The company had outstanding 28,386 and 32,386 shares of cumulative,
convertible Series B Preference Stock on December 31, 1994 and 1993,
respectively. Cumulative annual dividends of $2.475 per share are payable
quarterly. Each share of Series B Preference Stock may be converted at the
option of the holder to 3.216 shares of common stock. In the event of the
company's liquidation, the holders of the Series B Preference Stock are
entitled to $55 per share plus all accumulated and unpaid dividends.
Note 7: Commitments
Total rental expenses for 1994, 1993 and 1992 were $35.2 million, $34.4
million and $33.1 million, respectively. The minimum rentals under non-
cancelable operating leases for these years were $17.3 million, $17.5 million
and $18.9 million, respectively. The minimum future rentals under non-
cancelable operating leases and future rental receipts from subleases to third
parties as of December 31, 1994 are indicated in the following table. Of the
$15.9 million net minimum payments, $7.9 million has been expensed in
connection with discontinued operations.
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Minimum Future Rentals and Rental Receipts
[Download Table]
(In thousands)
1995 $ 12,619
1996 12,104
1997 11,746
1998 3,701
1999 --
After 1999 --
Total minimum payments required 40,170
Less: Sublease rental receipts (24,279)
Net minimum payments $ 15,891
At December 31, 1994 and 1993, the company had outstanding letters of credit
totaling $7.5 million and $10.0 million, respectively.
Note 8: Contingent Liabilities
The company has been notified by the federal Environmental Protection Agency
(EPA) that the EPA believes the company is a potentially responsible party
(PRP) for the clean-up of soil and groundwater contamination at four subsites
in Hastings, Nebraska. The Hastings site is one of the EPA's priority sites
for taking remedial action under the Comprehensive Environmental Response,
Compensation and Liability Act (CERCLA).
At one of these subsites, a municipal landfill, the company believes it could
not have disposed of hazardous wastes at the particular subsite because the
landfill was closed prior to the time the company and its predecessor
initiated the operation which generated the type of hazardous substances found
at this subsite. Other PRPs, including the local municipality, have agreed to
perform the remedial investigation and to design soil and groundwater remedies
at this subsite.
The company has also been notified by EPA that EPA considers it a PRP at
another municipal landfill in Hastings. At least three other parties
(including the City of Hastings) are considered by EPA to be PRPs at this
second subsite. At this subsite, the company has concluded that the City of
Hastings is responsible for a proper closure of the landfill and the
remediation of any release of hazardous substances. In January, 1994, EPA
invited the company and the other PRPs to make an offer to conduct a remedial
investigation and feasibility study (RI/FS) of this subsite and stated that
the EPA was in the process of preparing a work plan for the RI/FS. None of
the PRPs has volunteered to undertake the RI/FS.
With respect to the third subsite, the company and two other PRPs have been
served with administrative orders directing them to undertake soil remediation
and interim groundwater remediation at that subsite. The company is currently
complying with these orders while reserving its right to seek reimbursement
from the United States for its costs if it is determined it is not liable for
response costs or if it is required to incur costs because of arbitrary,
capricious or unreasonable requirements imposed by the EPA.
The EPA has taken no legal action with respect to its demand that the company
and the other PRPs pay its past response costs. A total of five parties have
been named by the EPA as PRPs at this subsite, but two of them have been
granted de minimis status. The company believes other persons should also be
named as PRPs.
The fourth subsite is a former naval ammunition depot which was subsequently
converted to an industrial park. The company and its predecessor owned and
operated an HVAC facility in this industrial park. To date the company's
investigation indicates that it did not cause the release of hazardous
substances in this subsite during the time it owned and operated the
facility. The United States has undertaken to conduct the remediation of
this subsite.
In addition to subsite clean-up, the EPA is seeking a clean-up of area-wide
contamination associated with all of the subsites in and around Hastings,
Nebraska. The company, along with other Hastings PRPs, has recommended that
the EPA adopt institutional controls as the area-wide remedy in Hastings.
EPA has indicated some interest in this proposal but has decided to first
conduct an area-wide remedial investigation before choosing a remedy.
On August 10, 1992 the company filed suit in the Alabama District Court
against its primary liability insurance carriers and one of its
predecessor's insurers, seeking a declaratory judgment that the company is
entitled to a defense and indemnity under its contracts of insurance
(including certain excess policies provided by one of the primary carriers)
with regard to the third Hastings subsite. The company recently settled the
claim against its predecessor's insurer, but the case against the company's
insurers is still in litigation. An award of punitive damages is also being
sought against the company's insurers for their bad faith in failing to
investigate the company's claim and/or denying the company's claim. The
company has notified its primary and excess general liability carrier, as
well as the excess carrier of its predecessor, of the receipt of its notice
of potential liability at the first, second and fourth subsites.
Estimated total clean-up costs, including capital outlays and future
maintenance costs for soil and groundwater remediation of approximately $18
million, are based on independent engineering studies. Included in the
discontinued operations provision is the company's estimate that it will
participate in 33 percent of these remediation costs. The company's
estimated share of the costs is based on its assessment of the total clean-
up costs, its potential exposure, and the viability of other named PRPs.
13-32
In 1990, the company filed an action now pending in Luzerne County,
Pennsylvania alleging breach of contract and unjust enrichment arising out
of the termination of a construction contract for the Hazleton Gasification
Facility Expansion. The suit named as defendants Continental Energy
Associates (CEA), the project owner; Continental Cogeneration Corporation
(CCC), the general partner of CEA; and Swiss Bank Corporation, the project
lender. CEA and CCC filed a separate suit against the company which, as
amended, seeks damages for breach of contract, negligent design and
construction, negligent misrepresentation, fraud and tortious interference
with the contract of surety. The two suits, along with a third action
commenced by CEA and CCC against the company's surety, the Insurance Company
of North America, have been consolidated. Documents produced by CEA and CCC
during the course of discovery allege claims at an amount from approximately
$10 million to approximately $35 million. However, the construction
contract contains a provision limiting damages to the value of the contract
(a net of approximately $10 million) which the company would seek to have
specifically enforced. The company continues to vigorously assert its
claims and to deny any liability.
In late 1994, both CEA and CCC filed for protection from creditors under
Chapter 11 of the United States Bankruptcy Code. In January 1995, the
Bankruptcy Court entered an order approving non-binding mediation of the
dispute with the company. An initial mediation session held early in March,
1995 did not resolve the dispute.
If the lawsuit discussed above is sustained against the company, material
charges would be recorded in the company's financial statements. However,
based upon the knowledge the company has of the lawsuit, management believes
the ultimate disposition of this matter will not result in material charges
to earnings in excess of amounts recorded in the financial statements.
Other claims and assertions made against the company will be resolved, in
the opinion of management, without material additional charges to earnings.
The company has asserted claims that management believes to be meritorious,
but no estimate can be made at present of the timing or the amount of
recovery.
Note 9: Retirement Plans
The company has several defined benefit plans covering substantially all
employees. Benefits for the salaried plan are based on salary and years of
service, while hourly plans are based on negotiated benefits and years of
service. The company's funding policy is to make contributions as are
necessary to provide assets sufficient to meet the benefits to be paid to
plan members in accordance with the requirements of the Employee Retirement
Income Security Act of 1974. Plan assets are composed primarily of
government securities and corporate debt and equities.
The status of combined employee pension benefit plans as of December 31,
1994 and 1993 is shown below:
[Enlarge/Download Table]
1994 1993
Plans which have Plans which have Plans which have Plans which have
funded assets in accumulated funded assets in accumulated
(In thousands) excess of benefit excess of benefit
accumulated obligations accumulated obligations
benefit in excess of benefit in excess of
obligations funded assets obligations funded assets
Actuarial present
value of projected
benefit obligation:
Vested employees $147,801 $ 21,567 $161,662 $ 22,109
Non-vested employees 284 1,710 397 2,859
Accumulated benefit
obligation 148,085 23,277 162,059 24,968
Effect of projected
future salary
increases 2,130 398 4,241 1,051
Total projected
benefit obligation 150,215 23,675 166,300 26,019
Plan assets 148,303 18,357 168,699 20,360
Assets in excess of
(less than) projected
benefit obligation (1,912) (5,318) 2,399 (5,659)
Unamortized net (asset)
liability existing
at transition date (687) 367 (1,375) 897
Unrecognized net loss
from actuarial
experience 20,888 2,755 8,836 4,186
Adjustment to recognize
minimum liability -- (2,922) -- (4,225)
Prepaid (accrued)
pension expense $ 18,289 $ (5,118) $ 9,860 $ (4,801)
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The sale of Dravo Basic Materials' assets resulted in the termination of
employment for essentially all Dravo Basic Materials employees and certain
executive and administrative employees of a subsidiary company. As a result,
the company recognized a charge in 1994 for pension curtailment and special
termination benefits expense. The components of 1994, 1993 and 1992 net
periodic pension (income) expense are as follows:
[Download Table]
(In thousands) Years ended December 31,
1994 1993 1992
Service cost of benefits earned during the year $ 1,023 $ 901 $ 900
Interest cost on projected benefit obligation 13,981 14,431 14,101
Actual (return) loss on plan assets 14,570 (30,951) (12,540)
Net amortization (deferral) (29,521) 15,566 (3,028)
Curtailment and special termination
benefits expense 921 -- --
Net pension (income) expense for year $ 974 $ (53) $ (567)
The following assumptions were used for the valuation of the pension
obligations as of December 31:
[Download Table]
1994 1993 1992
Discount rate 8.55% 7.5% 8.5%
Expected long-term rate of return on assets 8.0% 8.0% 9.0%
Rate of increase in compensation levels 5.0% 5.0% 6.0%
Note 10: Postretirement and Postemployment Benefits
The company and certain subsidiaries provide health care and life insurance
benefits for retired employees. Employees may become eligible for certain
benefits if they meet eligibility qualifications while working for the
company. Currently, the company pays all cost increases for employees who
retired prior to 1985 and who have not elected to participate in a plan in
which they pay cost increases, in exchange for expanded benefits, in excess of
a specified amount. For employees retiring after 1984, the company's
liability is limited to a fixed contribution amount for each participant or
dependent. This amount is reduced significantly when the participant becomes
eligible for Medicare coverage. The company has made no commitment to adjust
the amount of its contributions.
The company adopted the provisions of Statement of Financial Accounting
Standards No. 106, "Employers' Accounting for Postretirement Benefits Other
Than Pensions" (SFAS 106) effective January 1, 1993. The statement requires
that an accrual be made for the expected cost of providing postretirement
benefits to the employee and the employee's beneficiaries and covered
dependents during the years that an employee renders employment services.
Prior to adoption of SFAS 106, the company expensed postretirement benefits on
a pay-as-you-go basis. The cost of postretirement benefits other than
pensions was $5.0 million in 1994, $4.9 million in 1993 and $4.5 million in
1992. Expense in 1994 includes a $471,000 curtailment loss resulting from the
termination of essentially all Dravo Basic Materials employees and certain
executive and administrative employees of a subsidiary company due to the
Dravo Basic Materials asset sale.
No funds are segregated for future postretirement obligations. The company is
amortizing its accumulated postretirement benefit obligation (APBO) over a 20
year period. The APBO was calculated using a discount rate of 8.55 percent
and a health care cost trend rate of 9.5 percent in 1995, gradually declining
to 6.5 percent in 2001. An increase in the health care cost trend rate of one
percent would increase the APBO at December 31, 1994 by $1.1 million and the
total service and interest rate components of the 1994 postretirement benefit
cost by $109,000.
Postretirement benefit cost for 1994 and 1993 includes the following
components:
[Download Table]
(In thousands)
1994 1993
Service cost - benefits earned during the period $ 105 $ 177
Interest cost on accumulated postretirement
benefit obligation 2,659 2,887
Amortization of accumulated postretirement
benefit obligation 1,789 1,789
Curtailment loss 471 --
Postretirement benefit cost $ 5,024 $ 4,853
The postretirement benefit plans funded status reconciled with the amount
included in the company's consolidated balance sheets at December 31 is as
follows:
[Download Table]
(In thousands)
1994 1993
Accumulated postretirement benefit obligation:
Retirees and related beneficiaries $ 30,248 $ 34,190
Other fully eligible participants 1,601 888
Other active participants not fully eligible 747 4,887
Accumulated postretirement benefit obligation 32,596 39,965
Unrecognized transition obligation (30,822) (33,994)
Unrecognized loss (134) (5,136)
Accrued postretirement benefit liability $ 1,640 $ 835
13-34
The company adopted the provisions of Statement of Financial Accounting
Standards No. 112, "Employers' Accounting for Postemployment Benefits" (SFAS
112) effective January 1, 1994. SFAS 112 requires accrual of the estimated
cost of benefits provided by the employer to former or inactive employees,
including their beneficiaries and covered dependents, after employment but
before retirement. A charge of $1.4 million was recorded in the first quarter
as a cumulative effect for a change in accounting principle to recognize the
company's estimated liability for postemployment benefits covered by SFAS 112.
Note 11: Stock Options, Stock Appreciation Rights and Performance Shares
Prices per share of outstanding common stock options and stock appreciation
rights (collectively, rights) at December 31, 1993 were $5.94 to $19.31.
During 1994 grants were awarded at a price of $11.69, rights were exercised at
$7.94 and $11.25 and rights were forfeited at $11.25. Rights outstanding at
December 31, 1994 are exercisable at prices ranging from $5.94 to $19.31 per
share.
Under the 1978, 1988 and 1994 Plans for executives and key employees, options
may be granted either alone or in tandem with related stock appreciation
rights, or stock appreciation rights may be granted separately. The 1983 Plan
provides for the granting of options, stock appreciation rights (either
separate or in tandem with a related option) and performance shares. The
price of stock options and the basis of stock appreciation rights so granted
is the fair market value on the date of grant. Rights cannot be exercised
until one year after the grant date and expire ten years from date of grant.
Any incremental value of stock appreciation rights and performance shares
granted is recognized as expense, while a decline in the market value of the
stock is recognized as a reduction in expense to the extent previously
recognized. There was no change in the incremental value during the last
three years. The exercise of options does not necessitate a charge or credit
to income.
No additional grants can be made from the 1978 or 1983 Plans, both of which
have expired. There were no performance shares outstanding at December 31,
1994 and 1993.
The following summary shows the changes in outstanding rights:
[Download Table]
1978 1983 1988 1994
Plan Plan Plan Plan Total
Outstanding at
December 31, 1993 53,200 258,450 987,300 -- 1,298,950
Granted -- -- -- 12,000 12,000
Exercised -- (6,300) (5,000) -- (11,300)
Forfeited -- (13,100) -- -- (13,100)
Outstanding at
December 31, 1994 53,200 239,050 982,300 12,000 1,286,550
Rights exercisable:
December 31, 1993 53,200 188,450 836,800 -- 1,078,450
December 31, 1994 53,200 239,050 919,800 -- 1,212,050
Shares available for
future grant:
December 31, 1993 -- -- -- -- --
December 31, 1994 -- -- -- 988,000 988,000
13-35
Note 12: Shareholders' Equity
Shareholders' equity at December 31 is presented below:
[Download Table]
Preference Common Other Treasury
(In thousands) Stock Stock Capital Shares
Balance, January 1, 1992 $ 39 $14,933 $65,930 $(1,904)
Common shares issued through:
Retirement of Series B
preference stock (12,864) (4) 12 (9)
Common stock options
exercised (4,000) 64
Recognition of minimum liability
on pension plan 39
Balance, December 31, 1992 $ 35 $14,945 $65,960 $(1,840)
Common shares issued through:
Retirement of Series B
preference stock (9,648) (3) 10 (7)
Common stock options
exercised (12,700) 13 88
Recognition of minimum liability
on pension plan (2,781)
Balance, December 31, 1993 $ 32 $14,968 $63,260 $(1,840)
Common shares issued through:
Retirement of Series B
preference stock (12,864) (4) 13 (9)
Common stock options
exercised (5,151) 5 37
Recognition of minimum liability
on pension plan 266
Balance, December 31, 1994 $ 28 $14,986 $63,554 $(1,840)
Note 13: Income Taxes
Income before taxes and provisions for income tax expense (benefit) from
continuing operations at December 31 are:
[Download Table]
(In thousands) 1994 1993 1992
Income before taxes $ 5,527 $ 10,471 $12,719
Current federal income taxes $ 350 $ -- $5,237
Deferred federal income taxes -- (24,853) (3,664)
Current state income taxes 247 198 828
Total $ 597 $(24,655) $2,401
The actual income tax expense attributable to earnings from continuing
operations for the years ended December 31, 1994, 1993 and 1992 differed from
the amounts computed by applying the U. S. federal tax rate of 34 percent to
pretax earnings from continuing operations as a result of the following:
[Download Table]
(In thousands) 1994 1993 1992
Computed "expected" tax expense $ 1,879 $ 3,560 $ 4,325
Alternative minimum tax 300 -- --
Percentage depletion (1,880) (3,374) (2,641)
State income taxes, net of federal
income tax benefit 163 131 546
Other items 135 (119) 171
Benefit of operating loss carryforwards -- (24,853) --
Provision (benefit) for income tax $ 597 $(24,655) $ 2,401
The significant components of the deferred income tax benefit attributable to
income from continuing operations for the years ended December 31 are as
follows:
[Download Table]
(In thousands) 1994 1993
Deferred tax expense (exclusive of the effects
of other components listed below) $ 1,340 $(2,431)
Decrease in balance of the valuation
allowance for deferred tax assets (1,340) (22,422)
Total $ -- $(24,853)
For the year ended December 31, 1992, a deferred income tax benefit of $3,664
results from timing differences in the recognition of income and expense for
income tax and financial reporting purposes. The sources and tax effects of
those timing differences are presented below:
[Download Table]
(In thousands) 1992
Book depreciation in excess of tax depreciation $(4,783)
Differences in book and tax basis for inventories 695
Pension contribution in excess of book expense 755
State income taxes 177
Expenses allowable for taxes when paid (589)
Other 81
Total $(3,664)
13-36
The tax effects of temporary differences that give rise to significant portions
of the deferred tax assets and deferred tax liabilities at December 31 are as
follows:
[Download Table]
1994 1993
Deferred tax assets:
Provision for discontinued operations $ 7,477 $ 9,039
Accounts receivable, principally due
to allowance for doubtful accounts 296 439
Inventories, principally due to additional
costs inventoried for tax purposes
pursuant to the Tax Reform Act of 1986 215 214
Compensated absences, principally due to
accrual for financial reporting purposes 745 758
Net operating loss carryforwards 61,713 59,313
Investment tax credit carryforward 2,543 2,992
Other 721 2,025
Total gross deferred tax assets 73,710 74,780
Less valuation allowance (30,323) (31,663)
Net deferred tax assets 43,387 43,117
Deferred tax liabilities:
Properties and equipment, principally due
to depreciation 13,682 15,603
Pension accrual 4,682 2,647
Other 170 14
Total gross deferred tax liabilities 18,534 18,264
Net deferred tax asset $ 24,853 $24,853
The net change in the total valuation allowance for the years ended December
31, 1994 and 1993 was a decrease of $1.3 million and $22.4 million,
respectively.
The company adopted Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes," (SFAS 109) effective January 1, 1993. The
statement requires that deferred income taxes reflect the tax consequences on
future years of differences between the tax bases of assets and liabilities
and their bases for financial reporting purposes. In addition, SFAS 109
requires the recognition of future tax benefits, such as net operating loss
carryforwards (NOLs), to the extent that realization of such benefits are more
likely than not. There was no cumulative effect of this accounting change at
the time of adoption.
The company had NOLs of approximately $181.5 million at December 31, 1994
because of losses associated with discontinued businesses. These
carryforwards, which management expects will be fully utilized, expire as
follows:
[Download Table]
(In thousands)
2002 $ 18,039
2003 76,662
2004 39,012
2005 17,428
2006 7,336
2007 2,744
2008 13,228
2009 7,061
Under the provisions of SFAS 109, NOLs represent temporary differences that
enter into the calculation of deferred tax assets and liabilities. At January
1, 1993, primarily as a result of the NOLs, the company was in a net deferred
tax asset position under SFAS 109. The full amount of the deferred tax asset
was offset by a valuation allowance due to uncertainties associated with
unresolved issues related to discontinued operations.
In the fourth quarter of 1993, the company reduced its valuation allowance
resulting in a net deferred tax asset of $24.9 million. Two factors
contributed to the reduction in the valuation allowance. First was the
resolution of long-standing litigation between the company and the City of
Long Beach, Calif. regarding a waste-to-energy plant the company built for the
city and the ability to quantify, relying upon advice of legal counsel, the
potential financial impact of the remaining uncertainties associated with
previously discontinued operations. Second, the company was awarded a
contract to supply American Electric Power's Gavin plant with 450,000 tons of
lime annually for 15 years commencing in 1995. In addition, the company had
pending the renewal of existing contracts which were finalized in 1994 and
raised utility lime sales backlog to $800 million. With these contracts in
place, nearly 65 percent of the company's annual revenue will be generated by
long-term contracts. As a result, the company believes that revenues and
income from its lime subsidiary can be reasonably projected over the life of
its long-term contracts for purposes of determining whether the realization of
the asset resulting from the utilization of NOLs in future years is more
likely than not.
Income projections for the contract lime business were based on historical
information adjusted for contract terms. In 1993, the company projected
future income for its aggregates business based on the previous three year's
results, a period of low profitability for Dravo Basic Materials. The
aggregates business assets were sold in 1994.
In assessing the valuation allowance, estimates were made as to the potential
financial impact on the company should adverse judgments be rendered in the
remaining substantive uncertainties associated with discontinued operations.
The significant uncertainties involve the
13-37
CEA litigation related to contract claims and environmental matters and are
discussed more fully in Note 8, Contingent Liabilities. Management's position
in these cases is to vigorously pursue its claims and to contest the asserted
contract claims and liability for environmental clean-up. In determining the
appropriate valuation allowance, however, management has used the upper limit
of the potential financial impact estimated for these matters. The claims
against the company in the CEA matter, which management believes are grossly
overstated, exceed $10 million.
Supported by the company's forecast that it will generate sufficient future
taxable income to realize the entire deferred tax asset prior to expiration of
any NOLs results in the assessment that the realization of a $24.9 million net
deferred tax asset is more likely than not. In order to fully realize the net
deferred tax asset, the company will need to generate future taxable income of
approximately $73.2 million prior to the expiration of the NOLs.
Historically, Dravo Lime's cumulative taxable earnings for the past five years
total $64.8 million. There can be no assurance, however, that the company
will generate any earnings or any specific level of continuing earnings.
The amount of the net deferred tax asset was not adjusted in 1994 due to
remaining uncertainties associated with the discontinued operations.
Resolution of the Melaport litigation should, however, positively impact the
realization of the net deferred tax asset.
Tax benefits of $7.5 million for investment tax credits expiring in 1995 and
later are also being carried forward.
The company recorded an extraordinary credit of $1.6 million for the year
ended December 31, 1992, representing the recognition of income tax benefits
resulting from the utilization of net operating loss carryforwards for
financial reporting purposes.
Note 14: Extraordinary Item
In conjunction with the sale of Dravo Basic Materials' assets, existing loan
agreements were substantially altered, including a $35 million reduction in
the amount available under a revolving credit facility. Also, while
negotiating a $50 million financing agreement with Prudential Power Funding
for the Black River expansion, the company purchased a call option that
enabled it to prepay on May 17, 1995, without penalty, amounts outstanding
under the financing agreement. At December 31, 1994, $19.9 million was
borrowed under the agreement. Cash received from the Dravo Basic Materials
asset sale equalling the outstanding principal on the Prudential Power Funding
facility, interest through May 16, 1995 and an exit fee was placed in escrow.
The company agreed that any additional drawings on the facility would also be
escrowed. No additional drawings were made and, with Prudential Power
Funding's consent, the entire amount borrowed was prepaid on February 10,
1995. The fees associated with these agreements were written off as
extraordinary items.
Note 15: Fair Value of Financial Instruments
The fair value of financial instruments without extended maturities equals
their carrying values. The estimated fair value of financial instruments with
extended maturities at December 31 are presented below:
[Download Table]
(In thousands)
1994 1993
Carrying Fair Carrying Fair
Value Value Value Value
Notes payable $127,517 $126,220 $93,008 $95,659
Series D Preference Stock 20,000 21,347 20,000 23,544
Off-balance sheet financial
instrument:
Interest rate swap --- --- --- 123
The carrying amounts of notes receivable approximate fair value. The fair
value of notes payable and the Series D Preference Stock is based upon the
amount of future cash flows associated with each instrument discounted using
the company's estimated borrowing rate for similar debt instruments of
comparable maturity. The Preference Stock fair value also includes an
estimated factor to value the conversion feature. The fair value of the
interest rate swap at December 31, 1993 is the estimated amount the company
would have received if it had terminated the agreement on that date. The swap
was terminated in December, 1994. The company does not intend to enter into
hedging transactions in the future.
Fair value estimates are made at a specific point in time, based on relevant
market information and information about the financial instrument. These
estimates are subjective in nature and involve uncertainties and matters of
significant judgment and therefore cannot be determined with precision.
Changes in assumptions could significantly affect the estimates.
Note 16: Research and Development
Research and development activity for the years ended December 31 is as
follows:
[Download Table]
(In thousands) 1994 1993 1992
Total research and development expense $4,393 $4,166 $3,833
Billings to third parties 2,361 1,915 1,804
Net research and development expense $2,032 $2,251 $2,029
13-38
Note 17: Interim Financial Information
[Download Table]
(Unaudited, in millions, First Second Third Fourth
except earnings per share) Quarter Quarter Quarter Quarter
1994
Revenue $57.7 $72.6 $75.3 $72.5
Gross profit 7.6 12.6 12.7 11.1
Earnings before taxes from
continuing operations (1.3) 3.8 3.7 (0.7)
Provision (benefit) for income taxes -- 0.6 (0.2) 0.2
Earnings from continuing operations (1.3) 3.2 3.9 (0.9)
Discontinued operations -- -- -- (6.5)
Earnings (loss) before extraordinary
item and cumulative accounting change (1.3) 3.2 3.9 (7.4)
Extraordinary item -- -- -- (7.5)
Cumulative effect of accounting change (1.4) -- -- --
Net earnings (loss) (2.7) 3.2 3.9 (14.9)
Earnings (loss) per share:
Continuing operations (0.13) 0.17 0.22 (0.10)
Discontinued operations -- -- -- (0.44)
Extraordinary item -- -- -- (0.51)
Cumulative accounting change (0.09) -- -- --
Net earnings (loss) (0.22) 0.17 0.22 (1.05)
1993
Revenue $61.8 $70.2 $76.1 $69.5
Gross profit 10.3 13.9 13.9 11.2
Earnings before taxes from
continuing operations 0.4 4.0 4.5 1.6
Provision (benefit) for income taxes -- 0.3 0.2 (25.1)
Earnings from continuing operations 0.4 3.7 4.3 26.7
Discontinued operations -- -- -- (35.3)
Net earnings (loss) 0.4 3.7 4.3 (8.6)
Earnings (loss) per share:
Continuing operations (0.02) 0.21 0.24 1.77
Discontinued operations -- -- -- (2.38)
Net earnings (loss) (0.02) 0.21 0.24 (0.61)
13-39
Management's Report
The consolidated financial statements and other financial information
appearing in this Annual Report were prepared by the management of Dravo
Corporation, which is responsible for their integrity and objectivity. These
financial statements have been prepared in conformity with generally accepted
accounting principles and include amounts that are based on informed judgments
and estimates of the expected effects of events and transactions.
Dravo maintains a system of internal controls to provide reasonable assurance
as to the reliability of the financial records and the protection of assets.
This internal control system is supported by written policies and procedures
that communicate the details of the control system, by careful selection and
training of qualified personnel, and by a broad program of internal audits.
In addition, the company's business ethics policy requires employees to
maintain the highest level of ethical standards in the conduct of the
company's business and their compliance is regularly monitored.
The company's financial statements have been audited by KPMG Peat Marwick LLP,
independent certified public accountants. As stated in their report, their
audit was made in accordance with generally accepted auditing standards and
included such study and evaluation of the company's system of internal
accounting controls as they considered necessary to determine the nature,
timing and extent of the auditing procedures required for expressing an
opinion on the company's financial statements.
The Board of Directors, acting through its Audit Committee composed
exclusively of outside directors, reviews and monitors the company's financial
reports and accounting practices. The Board of Directors, upon the
recommendation of the Audit Committee, appoints the independent certified
public accountants subject to ratification by the shareholders. The Audit
Committee meets periodically with management, the internal auditors and the
independent auditors. These meetings include discussions of internal
accounting control, results of audit work and the quality of financial
reporting. Financial management as well as the internal auditors and
independent auditors have full and free access to the Audit Committee.
Independent Auditors' Report
The Board of Directors and Shareholders
Dravo Corporation:
We have audited the accompanying consolidated balance sheets of Dravo
Corporation and subsidiaries as of December 31, 1994 and 1993, and the related
consolidated statements of operations, retained earnings and cash flows for
each of the years in the three-year period ended December 31, 1994. These
consolidated financial statements are the responsibility of the company's
management. Our responsibility is to express an opinion on these consolidated
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 consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Dravo
Corporation and subsidiaries at December 31, 1994 and 1993, and the results of
their operations and their cash flows for each of the years in the three-year
period ended December 31, 1994, in conformity with generally accepted
accounting principles.
As discussed in Notes 10 and 13 to the consolidated financial statements, the
company adopted the method of accounting for postemployment benefits
prescribed by Statement of Financial Accounting Standards No. 112 in 1994 and
the methods of accounting for postretirement benefits other than pensions and
income taxes prescribed by Statements of Financial Accounting Standards Nos.
106 and 109, respectively, in 1993.
As discussed in Note 8 to the consolidated financial statements, a lawsuit and
certain claims and assertions have been brought against the company for
contract disputes and environmental costs, the outcome of which presently
cannot be determined.
KPMG Peat Marwick LLP
New Orleans, Louisiana
February 10, 1995
13-40
[Enlarge/Download Table]
Five-Year Summary
(Amounts in millions, except per share Years ended December 31,
data and average mineral resource prices) 1994 1993 1992 1991 1990
Summary of operations:
Revenue $278.1 $277.6 $273.0 $295.7 $295.9
Gross profit 44.0 49.3 51.7 57.7 59.3
Interest expense 12.4 9.2 10.5 11.2 9.8
Depreciation expense 17.6 18.0 18.6 17.7 16.2
Earnings before taxes from continuing operations 5.5 10.5 12.7 16.1 19.7
Provision (benefit) for income taxes 0.6 (24.6) 2.4 3.9 3.9
Earnings from continuing operations 4.9 35.1 10.3 12.2 15.8
Loss from discontinued operations, net
of income taxes (6.5) (35.3) -- (38.5) --
Extraordinary item (7.5) -- 1.6 -- 3.9
Cumulative accounting change (1.4) -- -- -- --
Net earnings (loss) (10.5) (0.2) 11.9 (26.3) 19.7
Preferred dividends declared 2.5 2.6 2.6 2.6 2.6
Capital expenditures 44.8 13.6 8.5 19.7 34.1
Employees at year-end 768 1,416 1,421 1,556 1,713
Summary of financial position:
Total assets $307.3 $272.1 $268.5 $271.8 $299.8
Working capital 6.3 59.5 60.1 45.6 10.0
Long-term obligations and redeemable
preference stock 62.4 108.5 108.1 109.7 74.7
Total debt and redeemable preference stock 147.5 113.0 112.8 114.4 128.7
Property, plant and equipment, net 93.5 110.0 114.9 128.5 127.9
Shareholders' equity 76.7 89.5 95.0 85.5 114.3
Per common share data:
Earnings from continuing operations $ 0.16 $ 2.20 $ 0.52 $ 0.65 $ 0.90
Loss from discontinued operations (0.44) (2.38) -- (2.60) --
Extraordinary item (0.51) -- 0.11 -- 0.26
Cumulative accounting change (0.09) -- -- -- --
Net earnings (loss) (0.88) (0.18) 0.63 (1.95) 1.16
Book value 5.06 6.15 6.27 5.63 7.57
Shareholders at year end 3,192 3,442 3,736 3,893 4,079
Mineral resources (in millions of tons):
Proven and probable reserves
Total reserves 502.1 1,121.2 1,142.1 1,074.7 1,102.7
Tons mined 23.2 22.8 25.4 24.7 26.6
Average market price $ 5.80 $ 6.01 $ 5.85 $ 6.31 $ 6.01
13-41
Board of Directors Principal Executives
Carl A. Gilbert Carl A. Gilbert
President and Chief Executive President and
Officer, Chief Executive Officer
Dravo Corporation
E. Eugene Bishop Ernest F. Ladd III
Chairman of the Board, Executive Vice President,
Morrison Restaurants, Inc. Chief Financial Officer
Arthur E. Byrnes Marshall S. Johnson
Chairman, Vice President,
Deltec Asset Management Corporation Operations and Engineering
Jack Edwards John R. Major
Senior Partner, Vice President,
Hand, Arendall, Bedsole, Greaves Administration
& Johnston
James C. Huntington, Jr. James J. Puhala
Retired Senior Vice President, Vice President,
American Standard, Inc. General Counsel and Secretary
Willard L. Hurley Donald H. Stowe, Jr
Retired Chairman and Vice President,
Chief Executive Officer, Sales and Technology
First Alabama Bancshares, Inc.
William E. Kassling Larry J. Walker
Chairman, Chief Executive Officer Controller
and President,
Westinghouse Air Brake Company Gregory H. Welch
Treasurer
William G. Roth
Retired Chairman,
Dravo Corporation
Konrad M. Weis
Retired President and
Chief Executive Officer,
Bayer USA, Inc.
Robert C. Wilburn
President and Chief Executive Officer,
The Colonial Williamsburg Foundation
13-42
Dates Referenced Herein and Documents Incorporated by Reference
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