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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 30, 2002
[ ] 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 1-5109
TODD SHIPYARDS CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 91-1506719
(State or other jurisdiction of (IRS Employer I.D. No.)
incorporation or organization)
1801- 16th AVENUE SW, SEATTLE, WASHINGTON 98134-1089
(Street address of principal executive offices - Zip Code)
Registrant's telephone number: (206) 623-1635
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. [X]
There were 5,283,222 shares of the corporation's $.01 par value common stock
outstanding at June 30, 2002.
PART I - FINANCIAL INFORMATION
"SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995
Statements contained in this Report which are not historical facts or
information are "forward-looking statements." Words such as "believe,"
"expect," "intend," "will," "should," and other expressions that indicate
future events and trends identify such forward-looking statements. These
forward-looking statements involve risks and uncertainties which could cause
the outcome to be materially different than stated. Such risks and
uncertainties include both general economic risks and uncertainties and
matters discussed in the Company's annual report on Form 10-K which relate
directly to the Company's operations and properties. The Company cautions
that any forward-looking statement reflects only the belief of the Company or
its management at the time the statement was made. Although the Company
believes such forward-looking statements are based upon reasonable
assumptions, such assumptions may ultimately prove to be inaccurate or
incomplete. The Company undertakes no obligation to update any forward-
looking statement to reflect events or circumstances after the date on which
the statement was made.
ITEM 1. FINANCIAL STATEMENTS
TODD SHIPYARDS CORPORATION
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
Quarterly Periods Ended June 30, 2002 and July 1, 2001
(In thousands of dollars, except per share data)
Quarter Ended
06/30/02 07/01/01
Revenues $49,260 $31,242
Operating expenses:
Cost of revenues 33,793 21,139
Administrative and
manufacturing overhead 12,352 8,235
Other - insurance settlements (125) -
Total operating expenses 46,020 29,374
Operating income 3,240 1,868
Investment and other income 297 901
Gain on sale of securities 29 20
Income before income taxes 3,566 2,789
Income taxes (1,260) (987)
Net income $ 2,306 $ 1,802
Net income per Common Share:
Basic $ 0.44 $ 0.19
Diluted $ 0.41 $ 0.19
Weighted Average Shares Outstanding
Basic 5,283 9,363
Diluted 5,562 9,496
Pro forma amounts assuming adoption of FAS No. 123
to previously granted stock options:
Net income $ 2,250 $ 1,745
Net income per Common Share,
Basic $ 0.43 $ 0.19
Diluted $ 0.40 $ 0.18
Retained earnings at
beginning of period $74,463 $67,445
Net income for the period 2,306 1,802
Retained earnings at
end of period $76,769 $69,247
The accompanying notes are an integral part of this statement.
TODD SHIPYARDS CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands of dollars)
06/30/02 03/31/02
(Unaudited) (Audited)
ASSETS
Cash and cash equivalents $ 7,909 $ 17,795
Securities available-for-sale 21,307 13,841
Accounts receivable, less allowance for
doubtful accounts of $150 and $100
U.S. Government 24,232 12,738
Other 1,639 3,086
Costs and estimated profits in excess of
billings on incomplete contracts 1,105 5,648
Inventory 1,336 1,489
Deferred taxes 473 126
Other current assets 204 428
Total current assets 58,205 55,151
Property, plant and equipment, net 16,172 16,595
Restricted cash 2,989 2,990
Deferred pension asset 30,823 30,823
Insurance receivable 29,555 26,798
Other long-term assets 1,340 1,323
Total assets $139,084 $133,680
LIABILITIES AND STOCKHOLDERS' EQUITY:
Accounts payable and accruals $ 7,801 $ 9,156
Accrued payroll and related liabilities 2,259 2,438
Billings in excess of costs and estimated
profits on incomplete contracts 4,066 2,864
Taxes payable other than income taxes 1,570 1,397
Income taxes payable 2,951 1,917
Total current liabilities 18,647 17,772
Environmental and other reserves 30,844 28,467
Accrued post retirement health benefits 17,254 17,404
Deferred taxes 2,730 2,646
Other non-current liabilities 1,442 1,394
Total liabilities 70,917 67,683
Commitments and contingencies
Stockholders' equity:
Common stock $.01 par value-authorized
19,500,000 shares, issued 11,956,033
shares at June 30, 2002 and March 31, 2002,
and outstanding 5,283,222 at June 30, 2002
and 5,283,222 at March 31, 2002 120 120
Paid-in capital 38,324 38,295
Retained earnings 76,769 74,463
Accumulated other comprehensive income 757 922
Treasury stock (47,803) (47,803)
Total stockholders' equity 68,167 65,997
Total liabilities and stockholders' equity $139,084 $133,680
The accompanying notes are an integral part of this statement.
TODD SHIPYARDS CORPORATION
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
Quarterly Periods Ended June 30, 2002 and July 1, 2001
(in thousands of dollars)
Period Ended
06/30/02 07/01/01
OPERATING ACTIVITIES:
Net income $ 2,306 $ 1,802
Adjustments to reconcile net income to net
cash used in operating activities:
Depreciation 756 768
Environmental reserves 2,377 (117)
Post retirement health benefits (150) (150)
Deferred income taxes (263) 1,087
Decrease (increase) in operating assets:
Costs and estimated profits in excess of
billings on incomplete contracts 4,543 1,342
Inventory 153 121
Accounts receivable (10,047) (1,484)
Environmental receivable (2,757) 404
Other (net) 207 (471)
Increase (decrease) in operating liabilities:
Accounts payable and accruals (1,355) (12,772)
Accrued payroll and related liabilities (131) 260
Billings in excess of costs and estimated
profits on incomplete contracts 1,202 465
Income taxes payable 1,034 (250)
Other (net) 173 37
Net cash used in operating activities (1,952) (8,958)
INVESTING ACTIVITIES:
Purchases of marketable securities (9,381) (2,000)
Maturities of marketable securities - 2,150
Sales of marketable securities 1,750 2,000
Capital expenditures (333) (544)
Other 29 (247)
Net cash provided by (used in) investing
activities (7,935) 1,359
FINANCING ACTIVITIES:
Restricted cash 1 (550)
Net cash provided by (used in)
financing activities 1 (550)
Net decrease in cash and cash equivalents (9,886) (8,149)
Cash and cash equivalents at beginning of period 17,795 11,901
Cash and cash equivalents at end of period 7,909 3,752
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest - 5
Income taxes $ 400 $ 250
The accompanying notes are an integral part of this statement.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Todd Shipyards Corporation (the "Company") filed its Consolidated Financial
Statements for the fiscal year ended March 31, 2002 with the Securities and
Exchange Commission on Form 10-K. The Consolidated Financial Statements,
Notes to Consolidated Financial Statements and Management's Discussion and
Analysis contained in that report should be read in connection with this Form
10-Q.
1. BASIS OF PRESENTATION
The accompanying Consolidated Financial Statements are unaudited but in the
opinion of management reflect all adjustments necessary for a fair
presentation of the Company's financial position and results of operations in
accordance with accounting principles generally accepted in the United States
applied on a consistent basis.
2. NEW ACCOUNTING POLICIES
Beginning in fiscal year 2003, the Company has elected to apply the expense
recognition provisions of Financial Accounting Standards Board Statement No.
123 (FAS No. 123), "Accounting for Stock-Based Compensation." The recognition
provisions are applied to stock option grants awarded subsequent to March 31,
2002. The Company has adopted FAS No. 123 as it is designated as the
preferred method of accounting for stock-based compensation.
During the quarter the Company did not grant any new stock options and
therefore there is no expense recorded under FAS No. 123. The income
statement includes pro forma information as if the expense recognition
provisions of FAS No. 123 were applied to stock option grants for all periods
presented, based on the valuation of the option as of the date of the grants.
Previously, the Company had applied the disclosure only provisions of FAS No.
123 and accounted for stock-based compensation using the intrinsic value
method prescribed by Accounting Principles Board Opinion No. 25 (APB No. 25),
"Accounting for Stock Issued to Employees" and related interpretations. Under
APB No. 25, compensation cost for stock options is measured as the excess, if
any, of the fair value of the Company's common stock at the date of grant over
the stock option price.
Since the expense recognition provisions of FAS No. 123 apply to stock options
granted subsequent to March 31, 2002, the Company cannot presently determine
the financial impact that this change will have on its future results of
operations or financial condition.
3. CONTRACTS
Auxiliary Oiler Explosive ("AOE") Contract
During the first quarter of fiscal year 2002, the Company was awarded a six-
year, sole source cost-type contract for phased maintenance repairs to four
Department of Navy AOE class supply ships. This was the fourth consecutive,
multi-year contract awarded to the Company by the Navy on the AOE class
vessels. The notional value of this new contract is expected to be
approximately $180 million if all options are exercised. Work on this
contract is being performed primarily in the Company's Seattle shipyard.
During the first quarter of fiscal year 2003, the Navy announced its intention
to decommission AOE 7 and AOE 10 for transfer to the Military Sealift Command
in 2003 and 2004, respectively. The Company is currently unable to determine
what impact this may have on its ability to maintain these vessels in the
future.
Combatant Maintenance Team ("CMT") Contract
During the first quarter of fiscal year 2001, the Company was awarded, by the
Department of the Navy on a sole source basis, a five year, cost-type contract
for the repair and maintenance of six surface combatant class vessels
(frigates and destroyers) stationed in the Puget Sound area. Although the
Navy has not released a notional value of the maintenance work, the Company
believes that the value may be approximately $60 million to $75 million if all
options are exercised. Work on this contract is being performed primarily in
the Company's Seattle shipyard.
Planned Incremental Availability ("PIA")
During the fourth quarter of fiscal year 1999, the Department of the Navy
awarded the Company a five-year cost-type contract for phased maintenance on
three CVN class aircraft carriers. The notional value for this five-year
contract is approximately $100 million if all options are exercised. Work on
this contract is currently being performed at the Puget Sound Naval Shipyard,
located in Bremerton, Washington.
Contract Revenue
The Company's first quarter revenue of $49.3 million reflects an increase of
$18.0 million (58%) from fiscal year 2002 first quarter levels. This increase
is primarily due to the simultaneous execution of repair and overhaul work
under the Company's three U.S. Navy phased maintenance contracts during the
first quarter of fiscal year 2003. The Company believes that the large
concentration of work volumes experienced during the first quarter will not be
indicative of work volumes planned for in each of the remaining quarters of
the fiscal year.
4. ENVIRONMENTAL AND OTHER RESERVES
As discussed in the Company's Form 10-K for the fiscal year ended March 31,
2002, the Company faces potential liabilities in connection with the alleged
presence of hazardous waste materials at its Seattle shipyard and at several
sites used by the Company for disposal of alleged hazardous waste. The
Company has also been named as a defendant in civil actions by parties
alleging damages from past exposure to toxic substances at Company facilities.
The Company continues to analyze environmental matters and associated
liabilities for which it may be responsible. No assurance can be given as to
the existence or extent of any environmental liabilities until such analysis
has been completed. The eventual outcome of all environmental matters cannot
be determined at this time, however, the analyses of some matters have
progressed sufficiently to warrant establishment of reserve provisions in the
accompanying consolidated financial statements.
Harbor Island Site
In fiscal year 2001, the Company entered into a 30-year agreement with an
insurance company that provides broad-based insurance coverage for the
remediation of the Company's operable units at the Harbor Island Superfund
Site.
The agreement provides coverage for the known liabilities in an amount not to
exceed policy limits. These limits currently exceed the Company's current
booked reserves of approximately $20.4 million. Additionally, the Company
entered into a 15-year agreement for coverage of any new environmental
conditions discovered at the Seattle shipyard property that would require
environmental remediation.
During the first quarter of fiscal year 2003, the Company submitted to the
Environmental Protection Agency the Conceptual Design Report ("Report") for
the Todd Shipyards Sediment Operable unit of the Harbor Island Superfund Site
in Seattle. The Report presents a preliminary conceptual design for dredging,
capping, and habitat enhancement actions for the site. The Report calls for
cleanup construction to begin in the later part of calendar year 2003 upon the
entering of the consent decree, input from the natural resource trustees, and
the completion of design approvals.
Based on the design concepts presented in the Report, the Company has
estimated that the remediation costs associated with this cleanup will be
approximately $20.4 million, an increase of $3.2 million from previous
estimates. This increase is reflected in the environmental reserves and is
matched by a similar increase in the Company's environmental insurance
receivable. The recognition of these increases did not impact the Company's
financial results or stockholders' equity.
Additionally, during the first quarter of fiscal year 2003, the Company
received a reimbursement from a certain Harbor Island potentially responsible
party for certain past environmental costs incurred by the Company. This
reimbursement in the amount of $0.1 million is reflected in the consolidated
statements of income as Other - insurance settlements.
Other Environmental Remediation Matters
During the first quarter of fiscal year 2003, the Company made final payments
pursuant to consent decrees, which ended the Company's participation in two
other Superfund sites. Final payments were made on the Operating Industries,
Inc. site located in Monterey Park, California and the Western Processing site
located in Kent, Washington. These payments in the amount of $0.4 million
were charged against existing environmental remediation reserves and did not
impact the Company's financial results or stockholders' equity.
Asbestos-Related Claims
During the first quarter of fiscal year 2003, the Company experienced
relatively minor changes in its bodily injury liabilities and insurance
receivables. As of June 30, 2002, the Company has recorded a bodily injury
liability reserve of $9.6 million and a bodily injury insurance receivable of
$7.1 million. This compares to a previously recorded bodily injury reserve
and insurance receivable of $9.4 and $7.1, respectively, at March 31, 2002.
These bodily injury liabilities and receivables are classified within the
Company's Consolidated Balance Sheets as environmental and other reserves, and
insurance receivables, respectively.
5. COMPREHENSIVE INCOME
Comprehensive income was $2.1 million for the quarter ended June 30, 2002,
which consisted of net income of $2.3 million offset by the change in net
unrealized gains on available-for-sale marketable securities of $0.2 million,
which is recorded in accumulated other comprehensive income. For the quarter
ended July 1, 2001, the Company reported comprehensive income of $2.0 million,
which consisted of net income of $1.8 million and the change in net unrealized
gains on available-for-sale marketable securities of $0.2 million, which is
recorded in accumulated other comprehensive income.
ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The Notes to Consolidated Financial Statements are an integral part of
Management's Discussion and Analysis of Financial Condition and Results of
Operations and should be read in conjunction herewith.
The Company filed its Consolidated Financial Statements for the fiscal year
ended March 31, 2002 with the Securities and Exchange Commission on Form 10-K.
The Consolidated Financial Statements, Notes to Consolidated Financial
Statements and Management's Discussion and Analysis contained in that report
should be read in connection with this Form 10-Q.
OPERATING RESULTS
All comparisons within the following discussion are with the corresponding
periods in the previous year, unless otherwise stated.
Revenue - The Company's first quarter revenue of $49.3 million reflects an
increase of $18.0 million (58%) from fiscal year 2002 first quarter levels.
This increase is primarily due to the simultaneous execution of repair and
overhaul work under the Company's three U.S. Navy phased maintenance contracts
during the first quarter of fiscal year 2003. The Company believes that the
large concentration of work volumes experienced during the first quarter will
not be indicative of work volumes planned for in each of the remaining
quarters of the fiscal year.
Cost of Revenue - Cost of revenue during the first quarter of fiscal year 2003
was $33.8 million, or 69% of revenue. Cost of revenue during the first
quarter of fiscal year 2002 was $21.1 million, or 68% of revenue. The $12.7
million increase in cost of revenue during the first quarter of fiscal year
2003 is attributable to the significant volume increases experienced during
the first quarter. Cost of revenue as a percentage of revenue during the
first quarter of fiscal year 2003 remained relatively unchanged from the
previous first quarter of fiscal year 2002.
Administrative and manufacturing overhead expense - Overhead costs for
administrative and manufacturing activities were $12.4 million, or 25% of
revenue, for the first quarter of fiscal year 2003 and $8.2 million, or 26% of
revenue, for the first quarter of fiscal 2002. The $4.1 million increase in
administrative and manufacturing overhead cost during the first quarter of
fiscal year 2003 is attributable to the significant volume increases
experienced during the first quarter as well as planned maintenance expenses
and Company initiated process improvement costs. Administrative and
manufacturing overhead expense as a percentage of revenue during the first
quarter of fiscal year 2003 remained relatively unchanged from the previous
first quarter of fiscal year 2002.
Investment and other income - Investment and other income for the first
quarter of fiscal year 2003 was $0.3 million. During the first quarter of
fiscal year 2002, the Company recorded $0.9 million in investment and other
income. The decrease in fiscal year 2003 investment and other income from
prior year levels primarily reflects the reduction in available funds for
investment purposes as a result of the Company's Dutch Auction share
repurchase of 4.1 million shares of its common stock that occurred during the
second quarter of the prior fiscal year, as well as lower investment yields
generally available in the market.
Gain on sale of available-for-sale securities - During the first quarter of
fiscal year 2003, the Company recorded a gain from the sale of available-for-
sale securities of $29,000. During the first quarter of fiscal year 2002, the
Company recorded a gain from the sale of available-for-sale securities of
$20,000.
LIQUIDITY AND CAPITAL RESOURCES
Based upon its current cash, marketable securities position, anticipated
fiscal year 2003 cash flow, access to credit facilities and capital markets,
the Company believes it has sufficient liquidity to fund operations for this
fiscal year. Accordingly, shipyard capital expenditures are expected to be
financed out of working capital. A change in the composition or timing of
projected work could cause capital expenditures and repair and maintenance
expenditures to be impacted either favorably or unfavorably.
Working Capital
Working capital at June 30, 2002 was $39.6 million, an increase of $2.2
million (6%) from the working capital reported at the end of fiscal year 2002.
This increase is primarily due to an increase in accounts receivable of $10.1
million, offset by a net decrease in cash and marketable securities of $2.4
million, a decrease in costs and estimated profits in excess of billings on
incomplete contracts of $4.5 million and an increase in income taxes payable
of $1.0 million.
Unbilled Receivables
As of June 30, 2002, unbilled items on completed contracts totaled $1.1
million compared with $1.2 million at the beginning of fiscal year 2003.
Capital Expenditures
Capital expenditures for the first quarter of fiscal 2003 were $0.3 million
compared to $0.5 million in the first quarter of fiscal year 2002. The
decrease in capital expenditures during the first quarter of fiscal year 2003
when compared to last fiscal year reflects fluctuations in the timing of
projects. However, the Company anticipates total capital expenditures for
fiscal year 2003 to be slightly lower than fiscal year 2002 levels.
Credit Facility
Todd Pacific Shipyards Corporation ("Todd Pacific"), a wholly owned subsidiary
of the Company has a $10.0 million revolving credit facility available for its
working capital requirements. Todd Pacific had no outstanding borrowings as
of June 30, 2002 and July 1, 2001, respectively.
ENVIRONMENTAL MATTERS AND OTHER CONTINGENCIES
The Company has provided total aggregate reserves of $30.8 million as of June
30, 2002 for its contingent environmental and bodily injury liabilities. Due
to the complexities and extensive history of the Company's environmental and
bodily injury matters, the amounts and timing of future expenditures is
uncertain. As a result, there can be no assurance that the ultimate
resolution of these environmental and bodily injury matters will not have a
material adverse effect on the Company's financial position, cash flows or
results of operations.
The Company has various insurance policies and agreements that provide
coverage on the costs to remediate environmental sites and for the defense and
settlement of bodily injury cases. These policies and agreements are
primarily with two insurance companies. Based upon the current credit rating
of both of these companies, the Company anticipates that both parties will be
able to perform under their respective policy or agreement. As of June 30,
2002, the Company has recorded an insurance receivable of $29.6 million to
reflect the contractual arrangements with several insurance companies to share
costs for certain environmental and other matters.
Ongoing Operations
Recurring costs associated with the Company's environmental compliance program
are not material and are expensed as incurred. Capital expenditures in
connection with environmental compliance are not material to the Company's
financial statements.
Past Activities
The Company faces significant potential liabilities in connection with the
alleged presence of hazardous waste materials at its Seattle shipyard and at
several sites used by the Company for disposal of alleged hazardous waste.
The Company has also been named as a defendant in civil actions by parties
alleging damages from past exposure to toxic substances at Company facilities.
During the first quarter of fiscal year 2003, the Company submitted to the
Environmental Protection Agency the Conceptual Design Report ("Report") for
the Todd Shipyards Sediment Operable unit of the Harbor Island Superfund Site
in Seattle. The Report presents a preliminary conceptual design for dredging,
capping, and habitat enhancement actions for the site. The Report calls for
cleanup construction to begin in the later part of calendar year 2003 upon the
entering of the consent decree, input from the natural resource trustees, and
the completion of design approvals.
Based on the design concepts presented in the Report, the Company has
estimated that the remediation costs associated with this cleanup will be
approximately $20.4 million, an increase of $3.2 million from previous
estimates. This increase is reflected in the environmental reserves and is
matched by a similar increase in the Company's environmental insurance
receivable. The recognition of these increases did not impact the Company's
financial results or stockholders' equity.
Additionally, during the first quarter of fiscal year 2003, the Company
received a reimbursement from a certain Harbor Island potentially responsible
party for certain past environmental costs incurred by the Company. This
reimbursement in the amount of $0.1 million is reflected in the consolidated
statements of income as Other - insurance settlements.
In other environmental remediation matters during the first quarter of fiscal
year 2003, the Company made final payments pursuant to consent decrees, which
ended the Company's participation in two other Superfund sites. Final
payments were made on the Operating Industries, Inc. site located in Monterey
Park, California and the Western Processing site located in Kent, Washington.
These payments in the amount of $0.4 million were charged against existing
environmental remediation reserves and did not impact the Company's financial
results or stockholders' equity.
During the first quarter of fiscal year 2003, the Company experienced
relatively minor changes in its bodily injury liabilities and insurance
receivables. As of June 30, 2002, the Company has recorded a bodily injury
liability reserve of $9.6 million and a bodily injury insurance receivable of
$7.1 million. This compares to a previously recorded bodily injury reserve
and insurance receivable of $9.4 and $7.1, respectively, at March 31, 2002.
These bodily injury liabilities and receivables are classified within the
Company's Consolidated Balance Sheets as environmental and other reserves, and
insurance receivables, respectively.
BACKLOG
At June 30, 2002 the Company's firm shipyard backlog consists of approximately
$23 million of repair and overhaul work. The Company's repair and overhaul
work generally is of short duration with little advance notice. The Company's
backlog at July 1, 2001 was approximately $32 million.
LABOR RELATIONS
The Company's current collective bargaining agreement with the Puget Sound
Metal Trades Council ("Unions"), the bargaining umbrella for all unions at
Todd Pacific Shipyards was scheduled to expire on July 31, 2002. However,
prior to expiration, the Company and the Unions reached a tentative agreement
for a new three-year collective bargaining agreement. That agreement is
subject to a ratification vote by the Union membership. Until ratification,
the Company and the Unions will continue to operate under the terms and
conditions of the 1999 collective bargaining agreement through an extension
agreed to by both parties. That extension may be terminated by either party
with a five day notice.
FUTURE SHIPYARD OPERATIONS
The Company's future profitability depends largely on the ability of the
shipyard to maintain an adequate volume of repair and overhaul business. The
Company competes with other northwest and west coast shipyards, some of which
have more modern facilities, lower labor cost structures, or access to greater
financial resources.
NEW ACCOUNTING POLICIES
Beginning in fiscal year 2003, the Company has elected to apply the expense
recognition provisions of Financial Accounting Standards Board Statement No.
123 (FAS No. 123), "Accounting for Stock-Based Compensation." The recognition
provisions are applied to stock option grants awarded subsequent to March 31,
2002. The Company has adopted FAS No. 123 as it is designated as the
preferred method of accounting for stock-based compensation.
During the quarter the Company did not grant any new stock options and
therefore there is no expense recorded under FAS No. 123. The income
statement includes pro forma information as if the expense recognition
provisions of FAS No. 123 were applied to stock option grants for all periods
presented, based on the valuation of the option as of the date of the grants.
Previously, the Company had applied the disclosure only provisions of FAS No.
123 and accounted for stock-based compensation using the intrinsic value
method prescribed by Accounting Principles Board Opinion No. 25 (APB No. 25),
"Accounting for Stock Issued to Employees" and related interpretations. Under
APB No. 25, compensation cost for stock options is measured as the excess, if
any, of the fair value of the Company's common stock at the date of grant over
the stock option price.
Since the expense recognition provisions of FAS No. 123 apply to stock options
granted subsequent to March 31, 2002, the Company cannot presently determine
the financial impact that this change will have on its future results of
operations or financial condition.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
No. 99 Certification Pursuant to 18 U.S.C. Section 1350 as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
(b) Reports on Form 8-K.
None
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) 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.
TODD SHIPYARDS CORPORATION
Registrant
By:
Scott H. Wiscomb
Chief Financial Officer and Treasurer
August 13, 2002