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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Annual Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the fiscal year ended April 2, 1995,
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, WA 98134-1089 (206) 623-1635
(Address of principal executive offices)(zip code) Registrants
telephone number
Securities registered pursuant to Section 12(g) of the Act:
Name of each exchange on
Title of each class which registered
Common stock, $.01 par value per share New York Stock Exchange
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 Yes No
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of registrants knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. X Yes No
The aggregate market value of voting stock held by non affiliates
of the registrant was approximately $60 million as of June 15,
1995. There were 9,938,987 shares of the corporations $.01 par
value common stock outstanding at June 15, 1995 held by non
affiliates.
APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Indicate by check mark whether the registrant has filed all
documents and reports required to be filed by Sections 12, 13 or
15(d) of the Securities Exchange Act of 1934 subsequent to the
distribution of securities under a plan confirmed by a court.
X Yes No
TABLE OF CONTENTS
PART I
Item 1. Business.............................................
Item 2. Properties...........................................
Item 3. Legal Proceedings....................................
Item 4. Submission of Matters to a Vote of Security Holders..
PART II
Item 5. Market for the Registrants Common Equity and
Related Shareholder Matters..........................
Item 6. Selected Financial Data..............................
Item 7. Managements Discussion and Analysis of Financial
Condition and Results of Operations..................
Item 8. Consolidated Financial Statements and
Supplementary Data..................................
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.................
PART III
Item 10. Directors and Executive Officers of the
Registrant..........................................
Item 11. Executive Compensation..............................
Item 12. Security Ownership of Certain Beneficial Owners
and Management.....................................
Item 13. Certain Relationships and Related Transactions......
PART IV
Item 14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K ................................
ITEM 1. BUSINESS
INTRODUCTION
Todd Shipyards Corporation (the Company) was organized in 1916
and has operated a shipyard in Seattle, Washington (the Shipyard)
since incorporation. The Company has operated the Shipyard
through its wholly-owned subsidiary named Todd Pacific Shipyards
Corporation (Todd Pacific) since 1977. The Company, through Todd
Pacific is engaged in the repair/overhaul, conversion and
construction of commercial and military marine vessels. The
Shipyard is located on Harbor Island on approximately 46 acres of
property.
Until early in this decade, a substantial portion of the
Shipyards revenues and profits were attributable to long term
government contracts. The significant decline in the annual
shipbuilding budgets of the U.S. Navy (the Navy) has greatly
reduced the Companys bidding opportunities for such contracts and
has created excess ship construction and repair capacity. This
excess shipyard capacity, both nationally and locally, has
resulted in intense price competition. The Company has responded
to this competition by carefully reviewing its overhead,
streamlining its operations and introducing advanced shipyard
production techniques. Since completion of the last long term
government contract in fiscal year 1992, the Company has focused
on Puget Sound based repair, overhaul and construction
opportunities for commercial and governmental customers.
The Company believes that it will continue to perform a
substantial amount of maintenance and repair work on commercial
vessels engaged in various seagoing trade activities in Puget
Sound. It plans to pursue repair, maintenance, overhaul and new
construction work for the ferry fleets operated by the states of
Washington and Alaska. Additionally, the growing number of
military vessels home ported in Puget Sound waters with the
activation of the Everett, Washington Navy home port facility is
expected to provide business opportunities to Puget Sound
shipyards.
SHIPYARD OVERVIEW
The Companys repair and overhaul work ranges from relatively
minor repair to major overhauls and often involves the drydocking
of the vessel under repair. The level of repair and overhaul
business available to domestic private-sector shipyards is
impacted by the downsizing of the active Navy fleet. Also
affecting private shipyards is the regional impact of either the
establishment or closure of Navy home ports, the location of
marine accidents, the availability and scheduling of maintenance
and overhauls, and conditions within the maritime industry as a
whole.
Commercial repair and overhaul contracts are obtained by
competitive bidding, awarded by negotiation or assigned by
customers who have a preference for a specific shipyard. On jobs
which are advertised for competitive bids, owners usually furnish
specifications and plans which become the basis for an agreed
upon contract. Repair and overhaul jobs are usually contracted
on a fixed-price basis with additional work contracted on a
negotiated-price basis.
U.S. Government ship repair and overhaul work is usually awarded
through a formal bidding process. The Company also performs
repair/overhaul work for the Navy under flexibly-priced
contracts. These contracts provide for reimbursement of costs, to
the extent allocable and allowable under applicable regulations,
and payment of an incentive or award fee based on the customers
judgment of the contractors performance with respect to certain
pre-established criteria. The government regulates the methods
by which overhead costs are allocated to government contracts.
The Companys commercial and U.S. Government repair and overhaul
contracts contain terms of customer payment determined by mutual
agreement. Typically the Company is periodically reimbursed
through progress payments based on the achievement of certain
agreed to benchmarks subject to a specified level of retention.
Some vessel owners contracting for repair, overhaul and new
construction work require some form and amount of performance and
payment bonding, particularly state agencies.
The activity of the Companys operations in recent years has
included short-term repair, overhaul and phased maintenance work
on Navy vessels, as well as commercial repair, overhaul and
conversion work on container vessels, tankers, fishing industry
related vessels, cruise ships, barges, tug supply vessels and
ferries.
The approximate amount of revenues for each segment of the
Companys shipbuilding operations for each of the last three
fiscal years are summarized as follows (in millions):
1995 1994 1993
U.S. Government Vessels $ 41.2 $ 16.2 $ 29.9
Commercial Vessels 27.9 52.4 24.4
Total $ 69.1 $ 68.6 $ 54.3
Construction
The Company has not had any material ship construction revenues
for the last three fiscal years. However, in January 1995, the
Company was awarded a significant Washington State Ferry System
(Ferry System) contract for the construction of one Jumbo Mark II
Class Ferry (Jumbo Ferry), with an option for the construction of
two additional Jumbo Ferries. The Jumbo Ferries are designed to
transport 218 automobiles and 2,500 passengers on the waterways
of Puget Sound and will be the largest ferries in the Ferry
System fleet. The first Jumbo Ferry will be built under a fixed
price contract for $68 million. The contract value including the
option for the two additional Jumbo Ferries is $182 million. On
June 8, 1995 the Ferry System notified the Company of its intent
to exercise the option for two additional Jumbo Ferries.
Availability of Materials
The principal materials used by the Company in its shipyard are
steel and aluminum plate and shapes, pipe and fittings, and
electrical cable and fittings. The Company believes that each of
these items can presently be obtained in the domestic market from
a number of different suppliers. In addition, the Company
maintains a small on site inventory of these items that is deemed
sufficient for emergency ship repairs.
Competition
Competition in the domestic shipyard industry is intense. The
Company competes for commercial and government work with a number
of other northwest shipyards, some of which have more
advantageous cost structures. The Companys competitors include
non-union shipyards and shipyards with excess capacity. The
declining size of the U.S. Governments active duty fleet has
resulted in a significant decline in the total amount of
government business available to the private sector shipyards,
has created excess shipyard capacity, and has led to acute price
competition.
Commercial ship construction and, to a lesser extent, repair work
performed in certain foreign markets is less costly than domestic
ship construction and repair. Many contracts are awarded
pursuant to competitive bidding and profitability is dependent
upon effective cost controls and the ability to meet strict
schedules, among other factors. Speed in the completion of
construction and repair projects is another element of
competition. With respect to repair work, the location,
availability and technical capability of repair facilities are
important factors.
Environmental Matters
See Note 12 of the Notes to Consolidated Financial Statements.
Employees
The number of persons employed by the Company in its shipyard
operations varies considerably from time to time, averaging
approximately 700 during fiscal year 1995 and totaling
approximately 650 on April 3, 1995. During fiscal year 1995 an
average of approximately 600 of the Companys shipyard employees
were covered by a union contract at the Shipyard which expires on
July 31, 1996. At April 3, 1995 approximately 550 Company
employees were covered under this agreement. The Company
believes that its relations with its employees are good.
Backlog
At April 2, 1995 the Companys backlog consists of approximately
$76 million ($190 million including Jumbo Ferry options) of
construction, repair and overhaul work, $44 million of which is
expected to be completed in the upcoming fiscal year. This
compares with backlogs of $35 million and $40 million at April 3,
1994 and March 28, 1993 respectively. Substantially all of the
Companys firm backlog is for the construction of one Jumbo Ferry.
ACQUISITIONS
The Company has from time to time pursued opportunities to
diversify its business, in areas such as metal fabrication,
marine transportation, other marine industries and businesses
unrelated to the Shipyard. As described below, the Company
through a subsidiary signed contracts to purchase three radio
stations in May 1995. The Company continues to evaluate suitable
investment opportunities that would appropriately utilize the
Companys resources.
Subsequent to the fiscal year ending April 2, 1995, the Company
organized Elettra Broadcasting Corporation (Elettra) through its
wholly owned subsidiary, TSI Management, Inc. for the purpose of
investing in the broadcasting industry. In May 1995, Elettra
signed contracts to purchase three FM radio stations in Monterey,
California for total consideration of $3.5 million. The effect of
the transaction on Company revenue and earnings is not expected
to be material in the near term. The Company currently has no
plans to make significant additional equity contributions to
Elettra, though Elettra may investigate additional acquisition
opportunities.
ITEM 2. PROPERTIES
The Company has one operating shipyard in Seattle, Washington.
The Shipyard is comprised of piers, building ways, drydocks,
buildings, cranes, machinery, tools and related equipment and is
capable of performing all types of ship conversion and
repair/overhaul work. In addition the Shipyard is capable of
constructing a wide variety of vessels up to 500 feet in length
and is licensed by two European manufacturers to repair large
marine diesel engines.
The Company owns or leases property aggregating approximately 46
acres at the locations set forth below:
Acreage
Location Owned Leased Date of Lease Expiration
Seattle, WA 27 19 2001, 2003, 2012
The Company has three drydocks, two steel and one wood, all of
which are located at the Shipyard. The design capacities of such
drydocks are as follows:
Year Type Max.Displacement Date of Lease
Name Built Owned Leased Capacity(in tons) Expiration
Emerald Sea 1970 Steel 40,000 -
YFD-70 1945 Steel 17,500 12/17/95
YFD-54 1943 Wood 5,700 9/30/99
The Company is required to maintain Navy certification on its
drydocks and cranes in order to qualify its facilities to bid on
and perform work under certain Navy and United States Coast Guard
(Coast Guard) contracts. The Companys current certification for
the drydocks listed above are 30,000 tons, 14,000 tons and 4,205
tons, respectively. While such certification is less than the
maximum design capacity, it is sufficient to allow the Company to
perform work on most Navy and all Coast Guard vessels. The
Company also maintains certification of its cranes.
The Company believes that its owned and leased properties at the
Shipyard are in reasonable operating condition given their age
and usage, although, from time to time, the Company has been
required to incur substantial expenditures to ensure the
continuing serviceability of its owned and leased machinery and
equipment.
ITEM 3. LEGAL PROCEEDINGS
See Notes 12 of the Notes to Consolidated Financial Statements.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders, through
solicitation of proxies or otherwise, during the fourth quarter
of fiscal year 1995.
PART II
ITEM 5. MARKET FOR THE REGISTRANTS COMMON EQUITY AND RELATED
SHAREHOLDER MATTERS
The Companys stock is listed on the New York Stock Exchange (the
NYSE). The following table sets forth for the fiscal quarters
indicated the high and low composite sales prices of the stock as
reported by the NYSE.
Quarter Ended High Low
June 27, 1993 5.50 4.50
September 26, 1993 4.75 4.25
January 2, 1994 4.38 4.00
April 3, 1994 4.50 4.00
July 3, 1994 4.50 4.13
October 2, 1994 4.88 4.13
January 1, 1995 5.75 4.38
April 2, 1995 5.88 5.00
On June 15, 1995 the high and low prices of the Companys common
stock on the NYSE were $6.00 and $5.88, respectively.
At June 15, 1995 there were approximately 2,290 holders of record
of the outstanding shares of common stock. The Company does not
presently anticipate the declaration of dividends.
ITEM 6. SELECTED FINANCIAL DATA (In thousands of dollars,
except per share data)
April 2, April 3, March 28, March 29, March 31,
1995 1994 1993 1992 1991
Revenue $69,096 $68,552 $54,278 $147,500 $187,230
Income (loss)
from operations 1,102 (6,724) (14,018) 22,206 29,437
Income (loss)
before cumulative
effect of change
in accounting
principles(1) 3,402 (2,714) (11,802) 29,021 6,782
Cumulative effect
of change in
accounting
principles(3) 438
Net income(loss)(1) 3,840 (2,714) (11,802) 29,021 6,782
Per share of common stock
Income (loss)
before cumulative
effect of change
in accounting
principles 0.32 (0.24) (0.99) 2.43 0.66
Income (loss)
before cumulative
effect of change
in accounting
principles
proforma(2) 0.57
Cumulative effect
of change in
accounting
principles(3) 0.04
Net income (loss)(1) 0.36 (0.24) (0.99) 2.43 0.66
Net income(loss)
proforma(2) 0.57
Financial position:
Working capital 50,704 52,337 57,311 67,195 38,632
Fixed assets 24,552 24,001 24,636 27,192 28,656
Total assets 110,924 111,447 129,287 138,988 117,588
Stockholders
equity 62,433 63,740 70,700 83,240 54,219
per common share 6.28 5.83 5.99 6.96 4.54
pro forma per
share(2) 4.53
(1) For the fiscal year ended March 31, 1991, includes a
reduction of net income of approximately $23.5 million
resulting from the Company adopting Statement 106
Employers Accounting for Post Retirement Benefits Other
Than Pensions and electing to recognize the total
accumulated obligation in fiscal year 1991.
(2) Calculated assuming the shares issued in the Companys
January 1991 bankruptcy reorganization were outstanding
since the beginning of fiscal year 1991.
(3) Effective April 4, 1994 the Company changed its method of
accounting for general and administrative costs from
recognizing these expenses as contract costs to recognizing
them as incurred which reflects the change, over time, in
the Companys business from predominately longer term
Department of Defense contracts to predominately shorter
term commercial and government contracts. This change has
been applied to general and administrative costs of prior
years and results in a cumulative effect credit of $438
thousand ($0.04 per share).
ITEM 7. MANAGEMENTS DISCUSSION & ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The Notes to Consolidated Financial Statements are an integral
part of Managements Discussion and Analysis of Financial
Condition and Results of Operations and should be read in
conjunction herewith.
The Company continues to respond to the increasingly competitive
shipbuilding and repair industry. The Companys Shipyard is
focusing on profitably serving its government and commercial
customers. To accomplish this goal Shipyard management has
worked to selectively increase business volume and reduce
operating costs. The Shipyards award of the Jumbo Ferry
construction program increased business backlog to $76 million.
The Shipyards ongoing production and administrative process
review projects have shown favorable results. These projects are
designed to enhance production efficiency and reduce overhead
costs.
During the Companys fourth quarter, the Ferry System awarded the
Shipyard a contract to build one Jumbo Ferry. The contract is
for one vessel, valued at $68 million, with a contract option for
two additional vessels. The Jumbo Ferry contract is valued at
$182 million with the exercise of the contract option. The
Companys Jumbo Ferry engineering efforts began in January 1995;
construction is expected to begin in the fall of 1995. Company
management expects government and commercial revenue to decrease
substantially in the first and second quarters of fiscal year
1996 as compared to fourth quarter 1995 results. Revenue for the
third and fourth quarters of fiscal year 1996 is expected to
benefit from Jumbo Ferry construction efforts, scheduled Navy
activity and continuing commercial work.
The Companys future profitability depends largely on the ability
of the Shipyard to maintain an adequate volume of ship repair,
overhaul and conversion business. The variables affecting the
Companys business volume include subsidies provided to competing
northwest shipyards, excess west coast shipyard capacity,
governmental legislation and regulatory issues, activity levels
at the Everett Navy Homeport and foreign competition. There is no
assurance that the Company will be successful in winning adequate
additional work to assure continued profitability.
Year to year comparisons:
1995 Compared with 1994
Revenues
Revenues for the fiscal year ended April 2, 1995 increased $.5
million (1%) compared to the prior fiscal year. The increase in
sales was primarily attributable to a high level of activity on a
Navy contract. The increase in Navy revenues was largely offset
by prior year activity on two major commercial contracts: a
contract to convert two container ships to an open-cargo
configuration (the Conversion Contract) and a contract to
overhaul a Ferry System Evergreen Class ferry (the Overhaul
Contract).
Operating Expenses
Operating expenses decreased $7.3 million (10%) compared to the
prior fiscal year. The decrease in operating expenses was
primarily due to the high costs incurred performing the
Conversion Contract in the prior year. Direct costs improved to
65% of revenue in 1995 compared to 88% of revenue in 1994. Prior
year performance reflected difficulties experienced on the
Conversion Contract and the Overhaul Contract.
Administrative expenses were $23.7 million in 1995 down $1.7
million (7%) compared to $25.4 million in 1994. The Company
attributes this reduction in cost to its streamlining efforts
($2.6 million) partially offset by increased bid and proposal
costs of $.9 million. In 1995, the Company utilized $1.0 million
in contract loss reserves compared to $10.2 million in 1994.
Provision for Environmental Reserves
In fiscal year 1995, the Company added $2.0 million in provisions
for environmental liabilities for sites and circumstances where
it was possible to make reasonable estimates of the Companys
potential liability. In fiscal year 1994 the Company established
environmental reserves of $6.5 million.
Closed Facilities Adjustments
Galveston - Upon the December 1993 disposition of the Galveston
facility, the Company reversed the $3.1 million deferred credit
for estimated Galveston facility closure costs.
Los Angeles - During the third quarter of fiscal year 1994, the
Company reduced the Los Angeles facility closure provision by
$2.5 million to reflect adequate funding of the Los Angeles
Pension Fund.
Gain on sale of facility
During the second quarter of fiscal year 1995, the State of
California released its interest in the Companys Alameda,
California property, allowing the Company to sell its property to
the U.S. Government for $.6 million. The Company recognized a
net gain on the sale of $.5 million in the second quarter of
fiscal year 1995. The Company sold its Galveston shipyard
facilities in December 1993 to Galveston Wharves for $6 million,
consisting of $.6 million cash with the balance financed with
special revenue bonds issued to the Company. The Company is
recognizing the gain on the sale as the bond payments are
received. The Company received initial proceeds from the
Galveston facility and equipment sale in 1994 and recognized a
net gain of $.6 million. Included in 1995 other income was a
gain of $.2 million reflecting a current period bond principal
payment.
Investment and Other Income
Investment and other income decreased $.2 million compared to
fiscal year 1994 results. Current year activity benefited from
Galveston bond interest income and principal payments of $.7
million, unclaimed bankruptcy distributions of $.4 million and
increased interest income of $.6 million. Prior year activity
included a $1.8 million gain from the settlement of a dispute
with a former insurer.
Income Taxes
For fiscal year 1995 the Company recognized no income tax expense
as the expense was offset by a reduction in the deferred tax
valuation reserve. The prior year income tax benefit of $.3
million represents a refund of fiscal year 1993 estimated tax
payments.
Cumulative Effect of Change in Accounting Principles
Effective April 4, 1994 the Company changed its method of
accounting for general and administrative costs from recognizing
these expenses as contract costs to recognizing them as incurred
which reflects the change, over time, in the Companys business
from predominately longer term Department of Defense contracts to
predominately shorter term commercial and government contracts.
This change has been applied to general and administrative costs
of prior years and resulted in a cumulative effect credit of $.4
million, which was included in income of the first quarter of
fiscal year 1995. The effect of the change was to decrease
fiscal year 1995 income before the cumulative effect of the
accounting change by $1.3 million ($.12 per share) There was no
income tax effect as a result of the change.
1994 Compared with 1993
Revenues
Revenues for the fiscal year ended April 3, 1994 increased $14.3
million (26%) compared to the prior fiscal year. The increase in
revenues was primarily due to two commercial projects, partially
offset by a decrease in government revenue due in part to a lower
level of activity on a multiple year Navy contract.
Operating Expenses
Operating expenses increased $7.0 million (10%) compared to the
prior fiscal year despite a 26% increase in sales. The increase
in operating expenses was primarily due to the increased level of
activity at the Shipyard. Direct costs increased to 88% of
revenue in fiscal year 1994 compared to 58% of revenue in fiscal
year 1993 as 1994 performance reflected difficulties on the
Conversion Contract and the Overhaul Contract. Administrative
costs were $25.4 million in 1994 compared to $25.7 million in
1993. Administrative costs in fiscal year 1994 reflected the
early benefits of the Companys streamlining programs.
Administrative costs in 1993 benefited from the reversal of a
$1.3 million executive compensation provision. Increases in the
Shipyards total 1994 operating expenses were largely offset by a
$21.2 million decrease in net operating expenses due to contract
loss reserve activity. Fiscal year 1993 activity resulted in the
establishment of loss reserves in 1993 of $12.5 million offset by
the reversal of a $1.5 million contract loss reserve. Fiscal
year 1994 included net loss reserves utilization of $10.2
million.
Provision for Environmental Reserves
During the third quarter of fiscal year 1994 the Company recorded
provisions totaling $6.5 million for sites where it was possible
to make reasonable estimates of the Companys environmental
liability.
Closed Facilities Adjustments
Galveston - Upon the December 1993 disposition of the Galveston
facility, the Company reversed the $3.1 million deferred credit
for estimated Galveston facility closure costs.
Los Angeles - During the third quarter of fiscal year 1994, the
Company reduced the Los Angeles facility closure provision by
$2.5 million to reflect adequate funding of the Los Angeles
Pension Fund.
Gain on sale of facility
Fiscal year 1994 activity increased over the prior year as 1994
includes a $.6 million net gain on the sale of its Galveston
shipyard to Galveston Wharves compared to no facility sales
activity in 1993.
Investment and Other Income
Investment and other income increased $1.7 million compared to
the prior fiscal year. The increase was due primarily to a $1.8
million gain from the settlement of a dispute with a former
insurer offset by decreased investment income due to a decrease
in market interest rates.
Income Taxes
For fiscal year 1994 the income tax benefit of $.3 million
represents a refund of fiscal year 1993 estimated tax payments.
For fiscal year 1993 the income tax expense of $.1 million
reflects the limitation of the recognition of tax credits
attributable to net operating losses and other miscellaneous
adjustments.
Liquidity, Capital Resources and Working Capital:
During fiscal year 1995, working capital decreased modestly by
$1.7 million to $50.7 million at April 2, 1995 which includes
restricted and unrestricted cash, cash equivalents and marketable
securities of $54.2 million. The decrease in working capital is
attributable to fixed asset additions and common stock
repurchases.
Expenditures for property, plant and equipment in fiscal year
1995 were $3.3 million compared to $2.7 million for the prior
fiscal year and were attributable to Shipyard equipment
purchases. These expenditures are in addition to ongoing repair
and maintenance expenditures in the Shipyard of $3.7 million,
$3.8 million, and $2.7 million in fiscal years 1995, 1994 and
1993, respectively. The Company anticipates increased property,
plant and equipment expenditures and repair and maintenance
expenditures in fiscal year 1996 to prepare for construction of
the Jumbo Ferries. The future business plans of the Shipyard are
not expected to require substantial additional capital
expenditures beyond those related to the Jumbo Ferry contract.
Capital expenditures are expected to be financed out of working
capital.
The Company is required on some of its projects to provide
customers with performance, contract and payment bonds. On
December 28, 1994 Todd Pacific entered into an agreement with a
surety pursuant to which the surety will provide a contract bond
for the Jumbo Ferry contract. The contract bond is secured by
Todd Pacifics machinery, equipment, inventory and trade accounts
receivable on certain bonded jobs. Since December 1994 this
surety has also bonded commercial repair jobs totaling
approximately $5.7 million.
Todd Pacific established an annually renewable, $3 million
revolving credit facility secured by a first lien on certain
trade receivables. Outstanding borrowings under the credit
facility may not exceed certain percentages of Todd Pacifics
trade receivables.
ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND
SUPPLEMENTARY DATA
See following page.
REPORT OF ERNST & YOUNG LLP INDEPENDENT AUDITORS
The Board of Directors and Stockholders
Todd Shipyards Corporation
We have audited the accompanying consolidated balance sheets of
Todd Shipyards Corporation and subsidiaries (the Company) as of
April 2, 1995 and April 3, 1994 and the related consolidated
statements of operations, stockholders equity and cash flows for
each of the three years in the period ended April 2, 1995. Our
audits also included the financial statement schedule listed on
the index at item 14(a). The financial statements and schedule
are the responsibility of the Companys management. Our
responsibility is to express an opinion on the financial
statements and schedule 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 and schedule 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 consolidated
financial position of Todd Shipyards Corporation and subsidiaries
at April 2, 1995 and April 3, 1994 and the consolidated results
of its operations and its cash flows for each of the three years
in the period ended April 2, 1995 in conformity with generally
accepted accounting principles. Also, in our opinion, the
related financial statements schedule, when considered in
relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set
forth therein.
As more fully described in Note 12 to the financial statements,
the Company faces significant potential liabilities in connection
with the alleged presence of hazardous waste materials at certain
sites. In addition the Company has been named as a defendant in
civil actions by parties alleging damages from past exposure to
toxic substances at Company facilities. The Company may have
insurance coverage and has provided reserves for these contingent
liabilities, however the ultimate amount of liability cannot be
determined at this time.
As more fully described in Note 1 to the financial statements,
the Company changed its method of applying general and
administrative costs on contracts.
ERNST & YOUNG LLP
Seattle, Washington
May 19, 1995
TODD SHIPYARDS CORPORATION
CONSOLIDATED BALANCE SHEETS
APRIL 2, 1995 and APRIL 3, 1994
(in thousands of dollars)
1995 1994
ASSETS:
Cash and cash equivalents $ 11,966 $ 3,787
Restricted cash 313 5,719
Securities available for sale 41,901 48,480
Accounts receivable, less allowance for
losses of $548 and $653, respectively
U.S. Government 435 3,395
Other 6,331 4,748
Costs and estimated profits in excess of
billings on incomplete contracts 6,392 3,063
Inventories 1,063 932
Other 61 985
Total current assets 68,462 71,109
Property, plant and equipment, at cost 61,129 61,854
Less accumulated depreciation 36,577 37,853
24,552 24,001
Deferred pension asset 15,564 13,937
Other 2,346 2,400
Total assets $110,924 $111,447
LIABILITIES AND STOCKHOLDERS EQUITY:
Accounts payable and accruals $ 7,076 $ 7,266
Payrolls and vacations 3,596 3,552
Stock purchases payable 2,525 -
Accrual for loss on contracts - 2,267
Other 323 334
Taxes other than income taxes 1,136 1,370
Income taxes 3,102 3,952
Total current liabilities 17,758 18,741
Environmental reserves 8,423 6,500
Accrued post retirement health benefits 22,310 22,466
Stockholders equity:
Common stock ($.01 par value) 120 120
Additional paid-in capital 38,181 38,181
Retained earnings 33,576 29,788
71,877 68,089
Less treasury stock 9,444 4,349
Total stockholders equity 62,433 63,740
Total liabilities and stockholders
stockholders equity $110,924 $111,447
The accompanying notes are an integral part of this statement.
TODD SHIPYARDS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
Years Ended April 2, 1995, April 3, 1994, March 28, 1993
(In thousands of dollars)
1995 1994 1993
REVENUES $ 69,096 $ 68,552 $ 54,278
OPERATING EXPENSES:
Direct labor and benefits 29,045 36,293 18,982
Materials and other 16,189 23,787 12,605
Administrative expenses 23,740 25,428 25,726
Contract loss reserves (980) (10,232) 10,983
Subtotal 67,994 75,276 68,296
OPERATING INCOME (LOSS) 1,102 (6,724) (14,018)
Provision for environmental
reserves (2,000) (6,500) -
Closed facilities adjustment
Galveston - 3,131 -
Los Angeles - 2,522 -
Gain on sale of facility 505 613 -
Investment and other income 3,795 3,981 2,266
INCOME (LOSS) BEFORE INCOME
TAXES AND CUMULATIVE EFFECT OF
CHANGE IN ACCOUNTING PRINCIPLE 3,402 (2,977) (11,752)
INCOME TAX PROVISION (BENEFIT) - (263) 50
INCOME (LOSS) BEFORE CUMULATIVE
EFFECT OF CHANGE IN ACCOUNTING
PRINCIPLE 3,402 (2,714) (11,802)
CUMULATIVE EFFECT TO APRIL 3,
1994 OF ACCOUNTING CHANGE,
NET OF TAX 438 - -
NET INCOME (LOSS) $ 3,840 $ (2,714) $(11,802)
NET INCOME (LOSS) PER COMMON SHARE:
Income (loss), before cumulative
effective of change in accounting
principle $ 0.32 $ (.24) $ (.99)
Cumulative effect of change
in accounting principle 0.04 - -
Net income (loss) $ 0.36 $ (.24) $ (.99)
PROFORMA AMOUNTS, ASSUMING THE NEW
ACCOUNTING METHOD IS APPLIED
RETROACTIVELY:
Net income (loss) $ 3,402 $ (4,034) $ (7,136)
Net income (loss) per share .32 (.35) (.60)
WEIGHTED AVERAGE NUMBER OF SHARES
(THOUSANDS) 10,740 11,540 11,943
The accompanying notes are an integral part of this statement.
TODD SHIPYARDS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended April 2, 1995, April 3, 1994, March 28, 1993
(in thousands of dollars)
1995 1994 1993
OPERATING ACTIVITIES:
Net income (loss) $ 3,840 $ (2,714) $(11,802)
ADJUSTMENTS TO RECONCILE NET INCOME
(LOSS) TO NET CASH PROVIDED BY
(USED IN) OPERATING ACTIVITIES:
Affect of change in accounting
principle (438) - -
Depreciation and amortization 3,078 3,173 3,291
Increase in environmental
reserve 1,923 6,500 -
Increase (decrease) in accrued
loss on contracts (980) (10,232) 12,499
Los Angeles facility closure
adjustment (35) (2,636) -
Galveston facility closure
adjustment (50) (3,246) -
CHANGES IN OPERATING ASSETS AND
LIABILITIES
Decrease (increase) in costs
and estimated profits in
excess of billings on
incomplete contracts (4,178) 2,479 (715)
Decrease (increase) in
deferred pension asset (1,627) (1,925) 1,150
Increase in accounts
receivable 1,377 9,460 16,372
Decrease (increase) in other
current assets 924 739 (526)
Decrease in income taxes (850) (27) (1,817)
Increase (decrease) payrolls
and vacations 44 (1,105) (3,183)
Increase (decrease) in
accounts payable (190) 438 (932)
Other (841) (1,379) (3,332)
Net cash - operating activities 1,997 (475) 11,005
INVESTING ACTIVITIES:
Purchases of securities
available for sale $(10,297) $(46,278) $(77,484)
Maturities of securities
available for sale 15,358 16,487 44,494
Sales of securities
available for sale 1,466 9,756 3,909
Purchases of property, plant
and equipment (3,287) (2,655) (901)
Other 106 648 (756)
Net cash - investing activities 3,346 (22,042) (30,738)
FINANCING ACTIVITIES:
Decrease (increase) in
restricted cash 5,406 5,242 (8,877)
Purchases of treasury stock (2,570) (3,611) (738)
Net cash - financing activities 2,836 1,631 (9,615)
NET CHANGE IN CASH AND CASH
EQUIVALENTS 8,179 (20,886) (29,348)
BEGINNING CASH AND CASH EQUIVALENTS 3,787 24,673 54,021
ENDING CASH AND CASH EQUIVALENTS $ 11,966 $ 3,787 $ 24,673
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest $ 3 $ 26 $ 105
Income taxes 900 27 1,867
Noncash financing activities:
Common stock purchases payable 2,525 - -
The accompanying notes are an integral part of this statement
TODD SHIPYARDS CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
Years Ended April 2, 1995, April 3, 1994, March 28, 1993
(in thousands of dollars/shares)
Additional
Common Paid-in Retained Treasury Total
Stock Capital Earnings Stock Equity
Balance at
March 29, 1992 $ 120 $ 38,181 $44,939 $ - $83,240
Purchase of common
shares for treasury (738) (738)
1993 Net loss (11,802) (11,802)
Balance at
March 28, 1993 120 38,181 33,137 (738) 70,700
Purchase of common
shares for treasury (3,611) (3,611)
Unrealized losses on
marketable securities
available-for-sale (635) (635)
1994 Net loss (2,714) (2,714)
Balance at
April 3, 1994 120 38,181 29,788 (4,349) 63,740
Purchase of common
shares for treasury (5,095) (5,095)
Unrealized losses on
marketable securities
available-for-sale (52) (52)
1995 Net income 3,840 3,840
Balance at
April 2, 1995 $ 120 $ 38,181 $33,576 $(9,444) $62,433
SHARES ISSUED AND OUTSTANDING:
Common Total
Stock Treasury Shares
Issued Stock Outstanding
Balance at
March 29, 1992 11,956 - 11,956
Purchase of common
shares for treasury (148) (148)
Balance at
March 28, 1993 11,956 (148) 11,808
Purchase of common
shares for treasury (871) (871)
Balance at
April 3, 1994 11,956 (1,019) 10,937
Purchase of common
shares for treasury (998) (998)
Balance at
April 2, 1995 11,956 (2,017) 9,939
The accompanying notes are an integral part of this statement.
TODD SHIPYARDS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended April 2, 1995, April 3, 1994, March 28, 1993
1. PRINCIPAL ACCOUNTING POLICIES
(A) Basis of Presentation - The consolidated financial
statements include the accounts of Todd Shipyards Corporation
(the Company) and its wholly-owned subsidiaries Todd Pacific
Shipyards Corporation (Todd Pacific) and TSI Management, Inc.
All intercompany transactions have been eliminated. The Companys
policy is to end its fiscal year on the Sunday nearest March 31.
Certain reclassifications with the consolidated financial
statements have been made to conform to the current year
presentation.
(B) Depreciation and Amortization - Depreciation and amortization
are determined on the straight-line method based upon estimated
useful lives or lease periods; however, for income tax purposes,
depreciation is determined on both the straight-line and
accelerated methods, and on shorter periods where permitted.
(C) Revenues - Revenues consist of the estimated realizable value
of work performed under construction, repair and conversion
contracts. Profits on major contracts, those in excess of $3
million and six months duration, are recorded on the percentage-
of-completion method (determined based on direct labor hours).
Profits on all other contracts, generally short-term, are
recorded upon collection. Losses on contracts are reported when
first estimated. Revisions to contract estimates are recorded as
the estimating factors are refined. The effect of these
revisions is included in income in the period the revisions are
made.
(D) Changes in Accounting Principles - Effective April 4, 1994
the Company changed its method of accounting for general and
administrative costs from recognizing these expenses as contract
costs to recognizing them as incurred which reflects the change,
over time, in the Companys business from predominately longer
term Department of Defense contracts to predominately shorter
term commercial and government contracts. This change has been
applied to general and administrative costs of prior years and
results in a cumulative effect credit of $.4 million, which is
included in income of the first quarter of fiscal year 1995. The
effect of the change was to decrease income before the cumulative
effect of the accounting change by $1,314 ($.12 per share) for
the fiscal year ended April 2, 1995. There was no income tax
effect as a result of the change.
(E) Income Taxes - Effective March 29, 1993 the Company adopted
Statement of Financial Accounting Standards (Statement) No. 109
Accounting for Income Taxes. As permitted by Statement 109, the
Company elected not to restate the financial statements of prior
years. There was no cumulative effect on income of adopting
Statement 109.
(F) Inventories - Inventories, consisting of materials and
supplies, are valued at lower of cost (principally average) or
replacement market.
(G) Cash and Cash Equivalents - The Company considers all highly
liquid debt instruments purchased with an original maturity of
three months or less to be cash equivalents. Cash equivalents
consist primarily of money market instruments, investment grade
commercial paper and U.S. Government securities. The carrying
amounts reported in the balance sheet are stated at cost which
approximates fair value.
(H) Securities Available for Sale - The Company considers all
debt instruments purchased with a maturity of more than three
months to be securities available for sale. Securities available
for sale consist primarily of U.S. Government securities and
investment grade commercial paper and are valued based upon
market quotes.
In 1994, the Company adopted Statement of Financial Accounting
Standards (Statement) No. 115 Accounting for Certain Investments
in Debt and Equity Securities. In accordance with Statement 115
Company management determines the appropriate classification of
debt securities at the time of purchase and reevaluates such
designation as of each balance sheet date. All of the Companys
short-term and long-term investments are classified as available-
for-sale as of the balance sheet date and are reported at fair
value, with unrealized gains and losses recorded as a component
of stockholders equity.
2. RESTRICTED CASH AND SURETY LINE
On December 28, 1994 Todd Pacific entered into an agreement with
a surety pursuant to which the surety will provide a contract
bond for a contract to build three ferries for the Washington
State Ferry System. The contract bond is secured by Todd
Pacifics machinery, equipment, inventory and trade accounts
receivable on certain bonded jobs. Since December 1994 this
surety has also bonded commercial repair jobs totaling
approximately $5.7 million.
Prior to December 1994, Todd Pacific utilized a cash
collateralized surety arrangement or posted cash in lieu of a
performance bond. The amount being used for surety arrangements
totaled approximately $.1 million and $.8 million on April 2,
1995 and April 3, 1994 and is classified as other current assets
on the Companys balance sheet. The deposits together with other
retainage amounts posted in cash are classified as restricted
cash on the Companys balance sheet.
3. SECURITIES AVAILABLE FOR SALE
The Company implemented Statement No. 115 Accounting for Certain
Investments in Debt and Equity Securities on March 29, 1993. The
following is a summary of available-for-sale securities:
Amort- Gross Gross Estimated
ized Unrealized Unrealized Fair
(In thousands) Cost Gains Losses Value
April 2, 1995
U.S. Treasury securities
and agency obligations $21,417 $ - $ 357 $21,060
U.S. corporate securities 4,021 2 66 3,957
Mortgage-backed
securities 15,724 - 538 15,186
Total debt securities 41,162 2 961 40,203
Equity securities 1,426 272 - 1,698
$42,588 $ 274 $ 961 $41,901
Amort- Gross Gross Estimated
ized Unrealized Unrealized Fair
(In thousands) Cost Gains Losses Value
April 3, 1994
U.S. Treasury securities
and agency obligations $24,435 $ - $ 145 $24,290
U.S. corporate securities 3,027 - 45 2,982
Mortgage-backed
securities 21,653 6 451 21,208
$49,115 $ 6 $ 641 $48,480
The Company had no gross realized gains on sales of available-for-
sale securities for the fiscal year ending April 2, 1995. Gross
realized gains on sales of available-for-sale securities were $19
thousand for the fiscal year ending April 3, 1994. The Company
had no realized losses on sales of available-for-sale securities
in fiscal years 1995 or 1994.
The amortized cost and estimated fair value of the Companys
available-for-sale debt and mortgage-backed securities are shown
below:
Estimated
Amortized Fair
(In thousands) Cost Value
April 2, 1995
Due in one year or less $11,989 $11,852
Due after one year through three years 13,449 13,165
25,438 25,017
Mortgage-backed securities 15,724 15,186
Equity securities 1,426 1,698
$42,588 $41,901
Estimated
Amortized Fair
(In thousands) Cost Value
April 3, 1994
Due in one year or less $ 5,037 $ 5,026
Due after one year through three years 22,425 22,246
27,462 27,272
Mortgage-backed securities 21,653 21,208
$49,115 $48,480
4. CONTRACTS
Unbilled Receivables - Certain unbilled items on completed
contracts included in accounts receivable were approximately $2.7
million at April 2, 1995 and $.9 million at April 3, 1994.
Retainages - Costs and estimated profits in excess of billings on
incomplete contracts include $0 million in retainages at April 2,
1995 and $1.0 million at April 3, 1994 (after deducting progress
billings of $154 million and $157 million at April 2, 1995 and
April 3, 1994, respectively). Retainages are generally due upon
completion or acceptance of the contracted work and completion of
related warranty periods.
Customers - The Company currently operates in one business
segment, shipbuilding, which includes the construction,
repair/overhaul and conversion of marine vessels. Revenues from
the U.S. Government were $41.2 million (60%), $16.2 million (24%)
and $29.9 million (55%) in fiscal years 1995, 1994 and 1993,
respectively. Revenues from the Washington State Ferry System
were $8.3 million (12%), $18.5 million (26%) and $1.9 million
(3%) in fiscal year 1995, 1994 and 1993, respectively.
5. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment and accumulated depreciation at
April 2, 1995 and April 3, 1994 consisted of the following:
1995 1994
Land $ 1,151 $ 1,208
Buildings 8,555 7,980
Piers, shipways and drydocks 25,992 25,260
Machinery and equipment 25,431 27,406
Total plant and equipment, at cost 61,129 61,854
Less accumulated depreciation 36,577 37,853
Plant, property and equipment, net $24,552 $24,001
6. EMPLOYEE BENEFIT PLANS
Union Pension Plans - Operating Shipyard- The Company
participates in several multi-employer plans, which provide
defined benefits to the Companys collective bargaining employees
at its Shipyard. The expense for these plans totaled $1.8
million, $2.2 million and $1.2 million, for fiscal years 1995,
1994 and 1993, respectively.
Union Pension Plans - Previously Operated Shipyards- The Company
is a sponsor of several union pension plans due to the prior
operation of other shipyards. The ongoing operation and
management of these plans is the responsibility of boards of
trustees made up of equal numbers of employer and union
representatives.
Nonunion Pension Plans - The Company sponsors the Todd Shipyards
Corporation Retirement System (the Retirement System), a
noncontributory defined benefit plan under which substantially
all nonunion employees are covered. The benefits are based on
years of service and the employees compensation before
retirement. The Companys funding policy is to fund such
retirement costs as required to meet allowable deductibility
limits under current Internal Revenue Service regulations. New
membership in the Retirement System was frozen on July 1, 1993.
The components of net periodic pension cost (benefit) for the
Retirement System defined benefit plan in fiscal years 1995, 1994
and 1993 are as follows (in thousands):
1995 1994 1993
Service cost-benefit earned during
the time period $ 248 $ 333 $ 502
Interest cost on projected benefit
obligation 2,179 2,325 2,439
Actual return on plan asset (2,367) (1,981) (3,436)
Net amortization and deferral (3,093) (4,098) (2,986)
Subtotal (3,033) (3,421) (3,481)
Liability for early retirement
incentive - - 3,243
Net periodic pension benefit before
OBRA 90 (3,033) (3,421) (238)
Transfer of assets for payment of
retiree medical benefits
(401(h) Plan) 1,406 1,496 1,388
Net periodic pension cost (benefit) $ (1,627) $(1,925) $ 1,150
For fiscal years 1993 through 1995 the weighted average discount
rate, rate of increase in future compensation levels and the
expected long-term rate of return on assets used in determining
the actuarial present value of the projected benefit obligation
were 8.0%, 5.0% and 6.5%, respectively.
The following table sets forth the Retirement System plans funded
status and amounts recognized in the Companys consolidated
balance sheets at April 2, 1995 and April 3, 1994 for the
Retirement System defined benefit plan (in thousands):
1995 1994
Actuarial present value of benefit obligation:
Accumulated benefit obligations,
fully vested $27,566 $27,357
Projected benefit obligation 28,651 28,756
Plans assets at fair value 49,932 52,443
Plans assets in excess of projected
benefit obligation 21,281 23,687
Unrecognized net loss 8,771 7,152
Unrecognized net transition asset being
recognized over 15 years (14,488) (16,902)
Deferred pension asset $15,564 $13,937
The Retirement System plan assets consist principally of common
stocks and U.S. government and corporate obligations.
Under a provision of the Omnibus Budget Reform Act of 1990 (OBRA
90) the Company transferred approximately $1.4 million in excess
pension assets from its Retirement System into a fund to pay
fiscal year 1995 retiree medical benefit expenses. OBRA 90, was
modified by the Retirement Protection Act of 1994 to extend
annual excess asset transfers through the fiscal year ending
March 2001.
Savings Investment Plan
The Company sponsors a Savings Investment Plan (the Savings
Plan), under Internal Revenue Code Section 401, covering
substantially all non-union employees. Under the Savings Plan,
the Company at its sole discretion can contribute an amount equal
to up to 6% of each participants annual salary depending on the
participants Savings Plan contributions, and the Companys profits
and performance. The Company has made no contributions to the
Savings Plan during the last three years.
Post Retirement Group Health Insurance Program - The Company
sponsors a defined benefit retirement health care plan that
provides post retirement medical benefits to full-time exempt
employees, and their spouses, who met specified criteria. The
Company terminated post retirement health benefits for any
employees retiring subsequent to May 15, 1988. The retirement
health care plan contains cost-sharing features such as
deductibles and coinsurance. These benefits are funded monthly
through the payment of group health insurance premiums.
The actuarially calculated components of net periodic post
retirement health care benefit cost for the defined benefit plan
in fiscal years 1995, 1994 and 1993 are as follows (in
thousands):
1995 1994 1993
Service costs $ - $ - $ -
Interest cost on projected
benefit obligation 1,343 1,533 1,907
Return on plan assets - - -
Net amortization of gain (182) (200) -
Net period postretirement benefit
cost $ 1,161 $ 1,333 $ 1,907
Current year plan contributions $ 1,467 $ 1,551 $ 1,593
Since such benefit obligations do not accrue to current employees
of the Company there is no current year service cost component of
the accumulated post retirement health benefit obligation.
For fiscal years 1993 and 1994 the weighted average discount rate
and rate of increase in the per capita cost of covered benefits
(i.e., health care cost trend) used in determining the actuarial
present value of the accumulated health benefit obligation were
8% and 12% grading down to 5% over 21 years, respectively. The
health care cost trend rate assumption has a significant effect
on the amounts reported. For fiscal year 1995 the Company changed
the weighted average discount rate and rate of increase in the
per capita cost of covered benefits to 7% and 8% respectively to
reflect changes in economic conditions and the expectation that
long term medical cost trends will not stay at current levels.
In accordance with 106, Employers Accounting for Post retirement
Benefits Other Than Pensions, retirement health care plan gains
or losses exceeding 10% of the benefit obligation are amortized
over the beneficiaries average remaining life expectancy (11
years). Increasing the assumed health care cost trend rate by
one percentage point in each year would increase the accumulated
post retirement health benefit obligation as of April 2, 1995 by
$2.1 million and the interest cost component of net periodic post
retirement benefit cost for 1995 by $.1 million.
The following table sets forth the amounts recognized in the
Companys consolidated balance sheet at April 2, 1995 and April 3,
1994 for the post retirement health benefit obligation (in
thousands):
1995 1994
Accumulated post retirement health benefit
obligation $19,877 $19,910
Plan assets - -
Accumulated post retirement health benefit
obligation in excess of plan assets 19,877 19,910
Unrecognized net gain 3,887 4,160
Accrued post retirement health benefits 23,764 24,070
Less estimated current portion of obligations
classified as accrued expenses 1,454 1,604
Long-term portion of accrued post retirement
health benefits $22,310 $22,466
7. INCOME TAXES
The provision for income taxes consists of the following (in
thousands):
1995 1994 1993
Current: federal $ - $ (263) $ 1,990
state and local - - -
Deferred: federal - - (1,940)
state and local - - -
Total income tax provision $ - $ (263) $ 50
Upon adoption of Statement 109 in fiscal year 1994 there was no
cumulative effect on income as the Company had significant
business credit carryforwards for tax purposes. The Company
recorded these deferred tax benefits on the balance sheet net of
a valuation reserve due to the lack of reasonable assurance that
they will be realized.
The provision (benefit) for income taxes differs from the amount
of tax determined by applying the federal statutory rate for the
following reasons (in thousands):
Liability Liability Deferred
Method Method Method
1995 1994 1993
Tax provision (benefit) at
federal statutory tax rate $ 1,344 $(1,042) $(3,996)
Increase (decrease) in valuation
allowance (908) 1,261 -
Tax rate differential - (232) -
Limitation on recognition of net
operating loss carryforward - - 3,996
Other - net (436) (250) 50
$ - $ (263) $ 50
Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used
for income tax purposes. Significant components of the Companys
deferred income tax assets and liabilities at April 2, 1995 and
April 3, 1994 were as follows (in thousands):
1995 1994
Deferred income tax assets:
Business credit carryforwards $8,092 $9,429
Alternative minimum tax credit carryforwards 2,874 2,874
Accrued employee benefits 1,597 2,351
Environmental reserve 2,815 2,138
Contract deferrals 958 1,442
Deferred gain on sale of facility 627 847
Securities available-for-sale 241 -
Reserve for doubtful accounts 192 228
Other 802 607
Total deferred income tax assets 18,198 19,916
Valuation reserve for deferred tax assets (7,026) (7,934)
Net deferred tax assets 11,172 11,982
Deferred income tax liabilities:
Accelerated depreciation 5,488 6,344
Deferred pension income 5,447 4,878
Completed contracts - 703
Other 237 57
Total deferred income tax liabilities 11,172 11,982
Net deferred taxes $ - $ -
Major components of the deferred income tax benefit for fiscal
years ending March 28, 1993 are as follows (in thousands):
1993
Accelerated depreciation $(1,064)
Completed contract method of accounting (8,244)
Decrease (increase) in nondeductible
reserves (2,996)
Decrease in shipyard closures reserves 436
Limitation of the recognition of net
operating loss 9,501
Other - net 427
$(1,940)
The Company utilized $1.3 million in general business credits
during fiscal year 1995. The Company had, for federal income tax
purposes, tax credit carryforwards of $8.1 million and $9.4
million at April 2, 1995 and April 3, 1994 respectively. If not
utilized, these carryforwards will expire in fiscal years 1996
through 2001. The Company had tax credit carryforwards for
financial statement purposes at March 28, 1993 of approximately
$9.1 million.
In addition, the Company has paid approximately $2.9 million of
alternative minimum taxes on alternative minimum taxable income
from fiscal years 1988 through 1992, which will be allowed as a
credit carry forward against regular federal income taxes in
future years in the event regular federal income taxes exceed the
alternative minimum tax.
The Companys U.S. income tax for fiscal year 1991 is presently
under examination by the Internal Revenue Service. Management
believes that previously established tax provisions will be
adequate to provide for adjustments, if any, that may result from
this examination.
8. LEASES
Operating lease payments charged to expense were $.5 million, $.7
million, and $.8 million for fiscal years 1995, 1994 and 1993,
respectively. Certain leases contain renewal options and
escalation clauses. Minimum lease commitments at April 2, 1995
are summarized below (in thousands):
Operating
Leases
1996 $ 217
1997 155
1998 155
1999 155
2000 150
Thereafter 1,313
Total minimum lease commitments $ 2,145
9. INCENTIVE STOCK OPTION PLAN
On September 23, 1993 Company shareholders approved an incentive
stock compensation plan under which key employees may be granted
stock purchase options, restricted stock and stock appreciation
rights. The purpose of the plan is to encourage the acquisition
of the Companys common stock by key employees who perform
significant services for the benefit of the Company and to serve
as a means of attracting and retaining outstanding employees.
There are five hundred thousand shares of common stock of the
Company reserved for award under this plan. Stock option awards
require, among other things, that the key employee remain an
employee of the Company during the period of the stock option,
subject to certain provisions, and that the stock option price
will not be less than 100% of the fair market value of the common
stock on the date of the grant.
A summary of the Company stock options issued and outstanding is
as follows:
Exercise
Shares Price
Outstanding at March 28, 1993
and April 3, 1994 - -
Granted 210,000 $4.25-$4.50
Outstanding at April 2, 1995 210,000 $4.25-$4.50
Available for award at April 2, 1995 290,000
Options totaling 134,500 shares were exercisable at April 2, 1995
at prices ranging from $4.25 to $4.50 per share. As of April 2,
1995 there have been no awards of restricted stock or stock
appreciation rights.
10. OTHER CONTINGENCIES
The Company is subject to various risks and is involved in
various claims and legal proceedings arising out of the ordinary
course of its business. These include complex matters of contract
performance specifications, environmental protection and
Government procurement regulations. Only a portion of these
risks and legal proceedings involving the Company are covered by
insurance, since the availability and coverage of such insurance
generally has declined or the cost has become prohibitive.
11. FINANCING ARRANGEMENTS
In March 1995 Todd Pacific finalized an annually renewable, $3
million revolving credit facility secured by a first lien on
certain trade receivables. Outstanding borrowings under the
credit facility may not exceed certain percentages of Todd
Pacifics trade receivables. There were no balances outstanding
at April 2, 1995.
12. ENVIRONMENTAL MATTERS
The Company faces significant potential liabilities in connection
with the alleged presence of hazardous waste materials at certain
of its closed shipyards, at its Shipyard and at several sites
used by the Company for disposal of alleged hazardous waste. 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 significant
environmental liabilities until such analysis has been fully
completed. The overall eventual outcome of environmental matters
cannot be determined at this time, however, several site
investigations have progressed sufficiently to warrant
establishment of reserve provisions in the accompanying
consolidated financial statements.
The Company has been named as a potentially responsible party
(PRP) by the Environmental Protection Agency (EPA) pursuant to
the Comprehensive Environmental Response, Compensation, and
Liability Act (CERCLA) in connection with the documented release
or threatened release of hazardous substances, pollutants and
contaminants at the Harbor Island Superfund Site (the Site), upon
which the Shipyard is located. The Company, along with a number
of other Harbor Island PRPs, received a Special Notice Letter
from the EPA on May 4, 1994 pursuant to section 122 (e) of
CERCLA. The Company entered into a Consent Decree for the Soil
and Groundwater Operable Unit (first of two units) in September
1994 under which the Company has agreed to remediate the
designated TPH contamination on its property. Said remediation
is scheduled to begin late 1995. The parties are currently
negotiating the extent and methodology of that remediation. The
Sediments Operable Unit (second of two units) continues to
undergo testing by the EPA and a third party consultant retained
by the PRPs. The current schedule indicates the release of the
Record of Decision in late December 1995. Any remediation
required is not expected to begin prior to mid 1997. The
established reserve discussed below does not include any estimate
for the Sediments Operable Unit.
In January 1990, the Company was notified that it was a PRP in an
action brought by the National Oceanic and Atmospheric
Administration (NOAA) for alleged damages caused to the coastal
and marine natural resources in the Duwamish River and Elliott
Bay off the Harbor Island Site. Subsequent to this notification,
NOAA brought suit against the City of Seattle and the
Governmental agency responsible for sewage treatment in the
Seattle area (Metro) for their contributions of hazardous
materials to the Duwamish River and Elliott Bay. This litigation
was settled between the parties. While NOAA, the City of Seattle
and Metro retain the right to bring suit against all the other
named PRPs, including the Company, the Company has not been
contacted since the January 1990 notification.
In November 1987, the Company was identified as a PRP by the EPA
in conjunction with the cleanup of the Operating Industries, Inc.
(OII) hazardous materials disposal site at Monterey Park,
California. In July 1994, the Company, a nonsettling PRP, was
sued in Superior Court in Los Angeles, California by the settling
PRPs for contribution. The Companys general liability insurer is
defending the suit but has not agreed to indemnify the Company
for any judgment entered against it.
The Company was identified as a PRP in 1986 as a generator of
materials deposited at the Maxey Flats Disposal Site in Fleming
County, Kentucky and specifically has been identified as a de
minimis contributor based on its volume of less than .25% of the
total site makeup. These materials were allegedly generated from
work the Company performed for the United States Navy (Navy) on
the nuclear ship NS SAVANNAH during the 1960s and 1970s. The EPA
invited the Company to participate with the de minimis
coordinating committee to resolve its alleged liability on a
volume contribution basis and as a result, the Company has agreed
to settle its potential liability in this matter for a cash
payment of $158,287 during fiscal year 1996.
The Company was identified in 1983 as a generator of materials
deposited at the Western Processing Site in Kent, Washington.
Since that time the Company has executed, along with several
hundred other PRPs, a Consent Decree committing to its
proportionate share of the cleanup to take place at the site.
While it is not possible to predict the entire liability due
under the terms of the Consent Decree, the known costs to the
Company are included in the below stated reserve.
The Company has been notified by the EPA that the Casmalia
Resources Hazardous Waste Management Facility in Santa Barbara
County, California is undergoing remediation and closure under
the Resource Conservation and Recovery Act (RCRA). It is alleged
that the Los Angeles Division of Todd Pacific deposited certain
production wastes and by-products at this disposal site
throughout the 1980s. The Company has been participating in
settlement discussions with other PRPs and the EPA as a member of
the Steering Committee. Investigation continues on this site.
In June 1989, the Company was notified by the City of Hoboken,
New Jersey (the City) that a volume of oil had been discovered on
the surface of the property that had been owned and operated as
the Hoboken Division of the Company. In June 1992, the City and
the Company were named as PRPs by the State of New Jersey (the
State). The City has undertaken a clean-up of the property. The
State has issued a Notice of Violation against the Company
pursuant to the New Jersey Spill Act (Spill Act). The City and
the State allege that the Company abandoned three underground
storage tanks in 1969 when the property was sold to the City and
that the discovered surface oil spilled from those tanks. In
April 1994 the City of Hoboken initiated a civil action against
the Company entitled City of Hoboken v. Todd et al. for
contribution under the Spill Act seeking reimbursement for all
monies expended for the cleanup of the Hoboken property. Also
named in the suit is the developer who allegedly trespassed onto
the property and caused the oil spill and several insurance
companies who allegedly issued comprehensive general liability
insurance policies in favor of the City of Hoboken covering the
property. The Company is vigorously defending this action.
The Company was named as a PRP by the California Department of
Toxic Substances Control regarding the Environmental Protection
Corp. hazardous waste site located outside Bakersfield,
California in March 1995. The site operated from 1971 through
1985, accepting a variety of industrial wastes. Company
management is unaware of the nature and quantity of any materials
allegedly delivered to the site. Investigation continues with no
estimation of potential liability possible at this time.
The Company was served notice in April 1995 of its status as a
PRP on the Tulalip Landfill Superfund Site located above
Marysville, Washington on the Tulalip Indian Reservation. This
landfill accepted materials from approximately 350 Seattle-area
businesses in the 1970s. The Company has no records of directly
delivering any material to the site however it did business with
a number of the transporters also named as PRPs. The Company is
unaware of the nature and quantity of any materials allegedly
delivered to the site. The Companys investigation continues with
no estimation of potential liability possible at this time.
Todd Pacific has been notified by the California Environmental
Protection Agency that it may be considered a potentially
responsible party for the cleanup of the Omega Chemical
Corporation site (Omega Site) in Whittier, California. It is
alleged that the Los Angeles Division of Todd Pacific caused
certain production wastes and by-products to be transported to
this hazardous waste treatment and storage facility between 1976
and 1991. The California Department of Toxic Substances Control
is pursuing the clean up of the Omega Site pursuant to state and
federal regulations. The Company is investigating these
allegations. No estimation of potential liability is currently
available.
The Company has been named as a defendant in civil actions by
parties alleging damages from past exposure to toxic substances
at Company facilities. The Company and its insurers are
vigorously defending these actions. There are no certainties
regarding the outcome of such actions, nor is there agreement by
the insurers to indemnify the Company in the event a judgment is
entered against it.
During the fiscal year ended April 2, 1995 the Company continued
to analyze the most recent data available from the EPA and other
sources regarding the Harbor Island Superfund Site and several
other sites and has estimated costs for their respective
remediations. Additionally the Company has estimated potential
losses related to the personal injury civil actions. The Company
has provided aggregate reserves of $8.5 million for these
contingent liabilities; no amount has been taken into
consideration for the possible recovery of some or all of these
amounts through various insurance contracts and/or right of
contribution actions against prior landowners and others who may
have been responsible for the alleged damage to the various
sites. No assurance can be given that the $8.5 million reserve
is adequate to cover all potential remediation costs and related
expenses or awards the Company could incur.
13. ACQUISITIONS
Subsequent to the fiscal year ending April 2, 1995, the Company
organized Elettra Broadcasting Corporation (Elettra) through its
wholly owned subsidiary, TSI Management, Inc. for the purpose of
investing in the broadcasting industry. In May 1995, Elettra
signed contracts to purchase three FM radio stations in Monterey,
California for total consideration of $3.5 million. The effect of
the transaction on Company revenue and earnings is not expected
to be material in the near term.
14. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
Financial results by quarter for the fiscal years ended April 2,
1995 and April 3, 1994 are as follows (in thousands):
Cumulative
Operating effect of Net
income Income accounting income
Revenues (loss) (loss) change (loss)
1st Qtr 1995 $ 14,469 $ (1,963) $(1,013) $ 438 $ (575)
2nd Qtr 1995 10 372 ( 499) 1,117 - 1,117
3rd Qtr 1995 15,551 337 1,250 - 1,250
4th Qtr 1995 28,704 3,227 2,048 - 2,048
$ 69,096 $ 1,102 $ 3,402 $ 438 $ 3,840
1st Qtr 1994 $ 14,280 $ (2,649) $ (171) $ - $ (171)
2nd Qtr 1994 13 688 (5,071) (3,847) - (3,847)
3rd Qtr 1994 20,870 2,001 1,804 - 1,804
4th Qtr 1994 19,714 (1,005) (500) - (500)
$ 68,552 $ (6,724) $(2,714) $ - $(2,714)
Earnings per share of common stock:
Cumulative
effect of Net
Income accounting income
(loss) change (loss)
1st Qtr 1995 $ (0.09) $ 0.04 $ (0.05)
2nd Qtr 1995 0.10 - $ 0.10
3rd Qtr 1995 0.12 - $ 0.12
4th Qtr 1995 0.19 - $ 0.19
1st Qtr 1994 $ (0.01) $ - $ (0.01)
2nd Qtr 1994 (0.33) $ - $ (0.33)
3rd Qtr 1994 0.15 $ - $ 0.15
4th Qtr 1994 (0.05) $ - $ (0.05)
The cumulative effect of changes in accounting principles amount
is net of income tax effect. Fiscal year 1994 first quarter net
income includes a $1.8 million insurance adjustment. Fiscal year
1994 third quarter and fiscal year 1995 fourth quarter net income
includes Navy contract activity accomplished during each
respective period.
Todd Shipyards Corporation
Schedule II - Valuation and Qualifying Reserves
For years ending April 2, 1995, April 3, 1994 and March 28, 1993
(in thousands)
Reserves deducted from assets to which they apply - Allowance for
doubtful accounts:
Balance Reductions Deduction Balance
beginning credited from at close
of period to income reserves of period
(1) (2)
Year ended April 2, 1995 $ 653 $ 100 $ 5 $ 548
Year ended April 3, 1994 1,807 604 550 653
Year ended March 28, 1993 2,035 0 228 1,807
Notes:
(1) The Company recognized no additions to the allowance for
doubtful accounts during years ended April 2, 1995, April 3, 1994
and March 28, 1993. Reductions to the allowance were credited to
other income and primarily reflect changes in the Companys
business volume.
(2) Deductions from reserves represent uncollectible accounts
written off less recoveries.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCED DISCLOSURE
None
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
**
ITEM 11. EXECUTIVE COMPENSATION
**
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
**
ITEM 13. CERTAIN RELATIONSHIPS AND TRANSACTIONS
**
** The information for the above items will be provided in the
1995 Proxy Statement.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND
REPORTS ON FORM 8-K
(a) 1 & 2. Financial Statements
The financial statements and financial statement schedule
listed in the accompanying index to financial statements and
financial statement schedules are filed as part of this annual
report.
3. Exhibits
The exhibits listed on the accompanying Index to Exhibits are
filed as part of this annual report.
(b) Reports on Form 8-K
The Company filed the following reports on Form 8-K during the
fourth quarter ended April 2, 1995.
On February 1, 1995, the Company filed an 8-K Current Report
announcing that Todd Pacific signed a contract with the
Washington State Ferries, a division of the Washington State
Department of Transportation, for the construction of one Jumbo
Mark II Class Ferry.
On March 28, 1995, the Company filed an 8-K Current Report
announcing the departure of the Companys Chief Financial Officer.
TODD SHIPYARDS CORPORATION
INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
COVERED BY REPORT OF INDEPENDENT AUDITORS
Items 14(a) 1 & 2
Report of Ernst & Young LLP Independent Auditors
Consolidated Balance Sheets at April 2, 1995and April 3, 1994
Consolidated Statements of Operations
For the years ended April 2, 1995,
April 3, 1994 and March 28, 1993
Consolidated Statements of Cash Flows
For the years ended April 2, 1995,
April 3, 1994 and March 28, 1993
Consolidated Statements of Stockholders Equity
For the years ended April 2, 1995,
April 3, 1994 and March 28, 1993
Notes to Consolidated Financial Statements
For the years ended April 2, 1995,
April 3, 1994 and March 28, 1993
Supplementary Information:
Quarterly Financial Data (unaudited)
Consolidated Financial Statement Schedule:
II-Valuation and Qualifying Reserves
TODD SHIPYARDS CORPORATION INDEX TO EXHIBITS
Item 14(a)3
Exhibit
Number
3-1 Certificate of Incorporation of the Company *
dated November 29, 1990, filed in the Companys
Form 8-B Registration Statement dated January
15, 1991 Exhibit 3-1.
3-2 By-Laws of the Company dated November 29, 1990, *
as amended October 1, 1992 filed in the Companys
Form 10-K Report for 1993 as Exhibit 3-2.
10-1 Lease Agreement of floating drydock YFD-70 dated #
May 15, 1981 between the Company and amendments
thereto.
10-2 Lease Agreement of floating drydock YFD-54 dated #
April 1, 1987 between the Company and NAVSEA and
amendments thereto.
10-3 Collective Bargaining Agreement between Todd *
Pacific, Seattle Division and the Metal Trades
Dept. of the A.F.L.- C.I.O., the Pacific Coast
Metal Trades District Council, the Seattle Metal
Trades Council and the International Unions
signatory thereto dated April 1, 1993 filed in the
Companys Form 10-K Annual Report for 1994 as
Exhibit 10-4.
10-4 Project Agreement between Todd Pacific, Seattle #
Division and the Metal Trades Dept. of the A.F.L.
- C.I.O., the Pacific Coast Metal Trades District
Council, the Seattle Metal Trades Council and the
International Unions signatory thereto dated August
1994.
10-5 Unsigned executed copy of Harbor Area Lease #
Agreement No. HA-2202 dated March 21, 1985 between
the Company and the State of Washington Dept. of
Natural Resources.
10-6 Harbor Area Lease Agreement No. 2590 dated #
December 13, 1982 between the Company and the State
of Washington Dept. of Natural Resources.
10-7 Harbor Area Lease Agreement No. 22-090038 dated #
September 1, 1986 between the Company and the State
of Washington Dept. of Natural Resources.
10-8 Harbor Area Lease Agreement No. 22-090039 dated #
September 1, 1986 between the Company and the State
of Washington Dept. of Natural Resources.
10-9 Savings Investment Plan of the Company effective #
April 1, 1989.
10-10 Todd Shipyards Corporation Retirement System Plan #
and Amendments thereto.
10-11 Contracts for the Modification and Repair of the *
SS Kauai and for the SS Maui for the Matson
Navigation Company, Inc. by Todd Pacific dated
February 4, 1993 filed in the Companys Form 10-K
Annual Report for 1994 as Exhibit 10-12.
10-12 Contract with the State of Washington for repair *
of the MV Tillikum by Todd Pacific dated May 10,
1993 filed in the Companys Form 10-K
Annual Report for 1994 as Exhibit 10-13.
10-13 Purchase and Sale Agreement and Deed of Trust *
relating to the sale of the Companys Galveston
facility to the Galveston Wharves dated December
16, 1993 filed in the Companys Form 10-K
Annual Report for 1994 as Exhibit 10-14.
10-14 Employment contract between Todd Pacific and Roland #
H. Webb dated December 27, 1994.
10-15 Contract between Todd Pacific and the Washington #
State Ferries, a division of the Washington State
Department of Transportation for the construction of
one Jumbo Mark II Class Ferry dated January 30, 1995.
10-16 Contract No. N000024-91-C-8503 between Todd Pacific #
and the Department of the Navy for the maintenance
and repair of supply ships.
10-17 Documents pertaining to the bonding arrangements of #
Todd Pacific relating to the Ferry Contract (Exhibit
10-16): Underwriting and Continuing Indemnity Agreement,
Security Agreement, Pledge Agreement, Intercompany
Credit Agreement, Preferred Mortgage of vessel
EMERALD SEA, UCC-1 Financing Statement, and UCC-2
Fixture Statement.
10-18 Documents pertaining to revolving line of credit #
agreement between Todd Pacific and U.S. Bank of
Washington, National Association: Security Agreement,
Commercial Guaranties, Corporate Resolution to Borrow,
Corporate Resolutions to Guaranty/Grant Collateral,
Business Loan Agreement, Disbursement Request and
Authorization Agreement, Accounts Receivable Collateral
Parameters Agreement, Promissory Note, and UCC-1
Financing Agreement.
10-19 Todd Shipyards Corporation Incentive Stock #
Compensation Plan effective October 1, 1993, approved
by the shareholders of the Company at the 1994 Annual
Meeting of Shareholders.
10-20 Grants of Incentive Stock Option dated June 24, 1994 #
and September 29, 1994 to certain officers of the
Company and Todd Pacific pursuant to the Incentive
Stock Compensation Plan (Exhibit 10-19).
10-21 Separation Agreement between the Company and David #
K. Gwinn dated March 3, 1995.
18-1 Letter dated 8/17/94 from Ernst & Young, LLP *
regarding changes in accounting principles.
22-1 Subsidiaries of the Company. #
27 Financial Data Schedule #
28-1 Unsigned unexecuted copy of Indemnity Agreement #
between the Company and ACSTAR Insurance Company.
28-2 Letters dated April 25, May 7 and June 8, 1990 *
between the Company and ACSTAR Insurance Company
in respect to the terms of the Surety Agreement
between the parties and the Court order dated
July 2, 1990 authorizing the Company to enter into
the Surety Agreement and the Indemnity Agreement
(Exhibit 28-3), filed in the Companys Form 10-K
Annual Report for 1991 as Exhibit 28-4(a).
Note: All Exhibits are in SEC File Number 1-5109.
* Incorporated herein by reference.
# Filed herewith.
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the
Securities Exchange Act of 1934 the registrant has duly caused
this Annual Report to be signed on its behalf by the undersigned,
thereunto duly authorized.
TODD SHIPYARDS CORPORATION
Registrant
By: /s/ Stephen G. Welch
Stephen G. Welch
Vice President, Chief Financial
Officer and Treasurer
June 16, 1995
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons
on behalf of the registrant and in the capacities and on the
dates indicated:
/s/ Brent D. Baird /s/ Steven A. Clifford
Brent D. Baird, Director Steven A. Clifford, Director
June 19, 1995 June 19, 1995
/s/ Patrick W.E. Hodgson /s/ Joseph D. Lehrer
Patrick W.E. Hodgson, Joseph D. Lehrer, Director
Chairman, Chief Executive June 16, 1995
Officer, and Director
June 16, 1995
/s/ Philip N. Robinson /s/ John D. Weil
Philip N. Robinson, Director John D. Weil, Director
June 16, 1995 June 19, 1995
/s/ Stephen G. Welch
Stephen G. Welch
Vice President, Chief Financial
Officer and Treasurer
Principal Financial Officer and
Principal Accounting Officer
June 16, 1995