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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED MARCH 31, 2002
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM _______ TO _______
COMMISSION FILE NUMBER 1-12282
CORRPRO COMPANIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
OHIO 34-1422570
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(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
1090 ENTERPRISE DRIVE, MEDINA, OHIO 44256
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (330) 723-5082
SECURITIES REGISTERED PURSUANT SECURITIES REGISTERED PURSUANT TO
TO SECTION 12(b) OF THE ACT: SECTION 12(g) OF THE ACT:
COMMON SHARES WITHOUT PAR VALUE NONE
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(TITLE OF CLASS) (TITLE OF CLASS)
AMERICAN STOCK EXCHANGE
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(NAME OF EACH EXCHANGE ON WHICH REGISTERED)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES X NO
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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 the Registrant's 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.
The aggregate market value of Common Shares held by nonaffiliates of the
Registrant was approximately $7,785,733 at July 5, 2002. (The aggregate market
value has been computed using the closing market price of the stock as reported
by the American Stock Exchange on July 5, 2002.) For purposes of this
calculation, the Registrant deems the Common Shares held by its Directors,
executive officers and holders of 10% or more of its Common Shares to be Common
Shares held by affiliates.
8,350,987
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(Number of Common Shares outstanding as of July 5, 2002.)
DOCUMENTS INCORPORATED BY REFERENCE
The Company intends to file with the Securities and Exchange Commission a
definitive Proxy Statement pursuant to Regulation 14A of the Securities Exchange
Act of 1934 within 120 days of the close of its fiscal year ended March 31,
2002, portions of which document shall be deemed to be incorporated by reference
in Part III of this Annual Report on Form 10-K from the date such document is
filed.
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INTRODUCTORY NOTE
As previously reported by the Company, after the discovery of
accounting irregularities at the Company's Australian subsidiary, voluntary
administration proceedings were filed in Australia on behalf of the subsidiary,
which delayed the Company's ability to prepare financial statements for the
subsidiary. In addition, also as previously reported, the Australian Securities
and Investments Commission ("ASIC") and the Audit Committee of the Company's
Board of Directors are investigating the accounting irregularities. As a
consequence of the ASIC investigation, the Company and its auditors have only
recently been able to access certain records of the subsidiary which were in
ASIC's possession, which has further delayed the completion of the Company's
financial statements for the fiscal year ended March 31, 2002, and the related
audit and other disclosures. The audit of the financial statements remains in
process and is yet to be completed. The findings of the Audit Committee's
investigation could impact the disclosures to be included in the Company's
Annual Report on Form 10-K. See "Item 1 - Business - Recent Developments."
As a consequence of these events, the Company is unable at this time to
file Items 6, 7, 7A and 8 of its Annual Report on Form 10-K and certain portions
of other Items to the Form 10-K. Upon completing its financial statements, the
related audit and other disclosures necessary to comply with these respective
Items, the Company will file these Items by amendment.
PART I
ITEM 1. BUSINESS
GENERAL
Corrpro Companies, Inc. was founded in 1984 and organized under the
laws of the State of Ohio. As used in this report, the terms "Corrpro" and the
"Company" mean Corrpro Companies, Inc. and its consolidated subsidiaries unless
the context indicates otherwise.
RECENT DEVELOPMENTS
On March 20, 2002, the Company announced that it had discovered
accounting irregularities caused by apparent internal misconduct in its
Australian subsidiary. The accounting irregularities involved the overstatement
of revenues and understatement of expenses by the Australian subsidiary. The
irregularities were discovered by Corrpro management in connection with an
internal review of the subsidiary's working capital management practices and
cash flow problems inconsistent with the subsidiary's reported results. Upon
discovering the irregularities, the Company immediately began an internal
investigation conducted under the direction of the Audit Committee of its Board
of Directors. The Audit Committee subsequently retained special counsel in
connection with the investigation and retained the forensic investigation unit
of the independent accounting firm, Deloitte Touche Tohmatsu.
The Company also announced in March 2002 that its Australian subsidiary
was in the process of appointing an administrator and commencing voluntary
administration proceedings, a process under Australian law providing relief from
creditors of Australian subsidiaries. As a result of the appointment, the
Company would be required to take a charge to earnings in the fiscal fourth
quarter ended March 31, 2002 for its loss on investment related to the
subsidiary, including certain intercompany balances. The Company also stated
that, to the extent that the accounting irregularities materially affect
previously filed financial statements, the Company expected that it would have
to restate its audited financial statements for its fiscal year which ended
March 31, 2001 as well as unaudited financial information for the first nine
months through December 31, 2001 of its fiscal year ended March 31, 2002, as
previously released. Accordingly, the financial statements for affected periods
and accompanying auditor's report should no longer be relied upon.
On June 13, 2002, the Company announced that ASIC had commenced an
independent investigation of the accounting irregularities. The Company also had
voluntarily disclosed this matter to the United States Securities and Exchange
Commission ("SEC"), which commenced an informal inquiry. The ASIC investigation
and the SEC inquiry,
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which is now a formal inquiry, both continue to be ongoing and the Company has
been and intends to continue cooperating with both commissions. See "Item 3 -
Legal Proceedings." The Company also announced that the creditors of the
Australian subsidiary effective in May 2002 had approved an arrangement under
voluntary administration proceedings.
The Company also has announced that, as a result of the matters
discussed above, the Company is not in compliance with the provisions,
including certain financial covenants, of its existing senior secured credit
agreement and its senior note facility. The remedies available to these lenders
upon default by the Company, including acceleration of principal, could have a
material adverse impact on the Company's liquidity, its financial position or
its ability to operate as a going concern. The Company has continued to make
scheduled monthly interest payments on such senior debt; however, it has not
made scheduled principal payments that were due since April, 2002 on the senior
note facility. The Company is continuing to hold discussions with its bank
group and the holder of its senior notes concerning the Company's
non-compliance, operational changes and debt reduction.
If the Company is unable to satisfactorily resolve these lender
negotiations and/or access other sources of capital on a timely basis, it would
have a material adverse effect on the Company's liquidity and financial
condition and could result in the Company's inability to operate as a going
concern. If the Company is unable to operate as a going concern, it may file,
or be forced to file, bankruptcy or insolvency proceedings or pursue a sale or
sales of assets to satisfy creditors.
Subsequent to the announcement of the investigation of the accounting
irregularities at the Australian subsidiary, one purported class action lawsuit
has been filed against the Company and certain of its current and former
directors and officers. See "Item 3 - Legal Proceedings."
OPERATIONS OF AUSTRALIAN SUBSIDIARY
As discussed above, in May 2002, the creditors of the Company's
Australian subsidiary approved an arrangement under voluntary administration
proceedings, a process under Australian law providing relief from creditors of
Australian companies. As a result of such proceedings, the Company will be
required to take a charge to earnings for its loss on investment related to the
subsidiary, including certain intercompany balances. This charge will be taken
in the Company's fiscal fourth quarter ended March 31, 2002. Thereafter,
results from the subsidiary will not be included in the Company's consolidated
financial statements while the subsidiary is subject to voluntary
administration.
PRODUCTS AND SERVICES
Corrpro provides corrosion control related services, systems, equipment
and materials to the infrastructure, environmental and energy markets. Our
products and services include (i) corrosion control engineering services,
systems and equipment ("corrosion control"), (ii) coatings services ("coatings")
and (iii) pipeline integrity and risk assessment services.
CORROSION CONTROL. Corrpro's specialty in the corrosion control market is
cathodic protection. We offer a comprehensive range of services in this area,
which include the design, manufacture, installation, maintenance and monitoring
of cathodic protection systems. Cathodic protection is an electrochemical
process that prevents corrosion for new structures and stops the corrosion
process for existing structures. It can provide a cost-effective alternative to
the replacement of corroding structures. In order to understand how cathodic
protection works, it is helpful to first understand the corrosion process.
Steel, the most common metal protected by cathodic protection, is produced from
iron ore. To produce steel, the iron ore is subjected to a refining process that
adds energy. Once the steel is put back into the environment, it begins to
revert back to its original state (i.e., iron ore) by releasing the added energy
back into the surrounding environment. This process of dispersing energy is
called corrosion. Cathodic protection electrodes, called anodes, are placed
near, and connected to, the structure to be protected (i.e., the cathode).
Anodes are typically made from cast iron, graphite, aluminum, zinc or magnesium.
A cathodic protection system works by passing an electrical current from the
anode to the cathode. This process maintains the energy level on the cathode,
thus stopping it from corroding. Instead, the anode corrodes, sacrificing itself
to maintain the integrity of the structure. In order for the electrical current
to pass from the anode to the cathode, they both must be in a common
environment. Therefore, cathodic protection can only be used to protect
structures that are buried in soil, submerged in water or encased in concrete.
Structures commonly protected against corrosion by the cathodic protection
process include oil and gas pipelines, offshore platforms, above and underground
storage tanks, ships, electric power plants, bridges, parking garages, transit
systems and water and wastewater treatment equipment.
In addition to cathodic protection, our corrosion control services
include corrosion engineering, material selection, inspection services, advanced
corrosion research and testing and corrosion monitoring (including remote
monitoring).
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Remote monitoring is a technology we acquired in September 1999. In order for
cathodic protection to be most effective, the system must run continuously. To
ensure that this is happening, the cathodic protection systems need to be
monitored on a regular basis. Remote monitoring allows customers to reduce the
cost of monitoring and maintaining their cathodic protection systems by
eliminating the need to have personnel travel to various sites in order to
collect data from the cathodic protection system. Equally significant is the
continuous flow (and more frequent updates) of data that remote monitoring can
provide. This information allows problems to be identified immediately rather
than waiting for the on-site inspection interval. We also sell a variety of
materials and equipment including anodes, rectifiers and corrosion monitoring
probes used in cathodic protection and corrosion monitoring systems.
COATINGS. Corrpro offers a wide variety of coatings-related services designed to
provide our customers with longer coatings life, reduced corrosion, improved
aesthetics and lower life-cycle costs for their coated structures. Coatings
services include research, testing, evaluation and application of coatings. In
addition, we provide project management services for coatings maintenance
programs, including condition surveys, failure analysis, selection of site
surface preparation methods and selection and application of coatings. We also
provide specialized coatings application services for structures with aggressive
corrosion conditions such as the inside and outside of storage tanks and
pipelines.
PIPELINE INTEGRITY AND RISK ASSESSMENT SERVICES. Corrpro offers a comprehensive
line of pipeline integrity, risk assessment and inspection services, including
assessment, surveys, inspection, analysis, repairs and ongoing maintenance. By
offering a wide range of services, we are able to provide pipeline owners with
one-stop shopping for the preservation of their pipeline systems.
ACQUISITIONS AND DISPOSITIONS
We have broadened our business capabilities and expanded our geographic
presence through a series of acquisitions. We made twenty strategic acquisitions
between fiscal 1987 and fiscal 1999. The following table details acquisitions
made subsequent to fiscal 1999.
YEAR
ACQUISITION ACQUIRED
CSI Coatings Systems, Inc. FY 2000 Specialty coatings application services
Acquisition of remote monitoring technology FY 2000 Production line expansion - corrosion monitoring
Borza Inspections Ltd. FY 2000 Inspection services - Western Canada
Corrosion and Technical Services, WWL FY 2000 Geographic expansion - Bahrain
In March 1997, Corrpro adopted a plan to divest its anode foundry
operation in Louisiana. This disposition was completed in March 1999. In
September 1999, Corrpro divested its remaining anode foundry operations in the
United Kingdom and Asia. In fiscal 2001, we ceased certain Mexican foundry
operations and disposed of a small, non-core business unit.
The Company is continuing to consider its strategic alternatives with
respect to the future operations of the Australian subsidiary, which is
currently subject to voluntary administration in Australia, including the
possibility of selling the Australian operations.
SEGMENTS
We have organized our operations into four business segments: Domestic
Core Operations, Canadian Operations, International Operations and Other
Operations. Our business segments and a description of the products and services
they provide are described below:
DOMESTIC CORE OPERATIONS. Our Domestic Core Operations segment consists of
operations that service the United States and Central and South America.
Products and services include corrosion control, coatings, pipeline integrity,
risk assessment and inspection services. This segment provides corrosion control
products and services to a wide-range of customers in a number of industries,
including energy, utilities, water and wastewater treatment, chemical and
petrochemical, pipelines, defense and municipalities. In addition, this segment
provides coatings services to customers in the entertainment, aerospace,
transportation, petrochemical and electric power industries, as well as the
United States military. Finally, the
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Domestic Core Operations segment includes a production facility in the United
States that assembles and distributes cathodic protection products, such as
anodes, primarily to the United States market.
CANADIAN OPERATIONS. Our Canadian Operations segment provides corrosion control,
pipeline integrity and inspection services to customers in Canada which are
primarily in the oil and gas industry. These customers include pipeline
operators and petrochemical plants and refineries. The Canadian Operations
segment also includes production facilities that assemble products such as
anodes and rectifiers.
INTERNATIONAL OPERATIONS. Our International Operations segment consists of
operations in Europe, the Middle East and Asia, which provide corrosion
control products and services to customers in the petroleum, utility,
industrial, marine and offshore markets, as well as to governmental entities in
connection with their infrastructure assets. This segment had included our
Australian subsidiary until it became subject to voluntary administration.
OTHER OPERATIONS. Our Other Operations segment includes our corrosion monitoring
equipment business, which assembles and sells products including corrosion
monitoring probes, instrument access fittings and remote monitoring units to
customers in the oil and gas and chemical industries. In addition, this segment
also includes our risk assessment and analysis software business, which sells or
licenses products to customers primarily in the oil and gas industry.
SALES AND MARKETING
We market our products and services in the United States and Canada
primarily through our sales personnel. The technical nature of our products and
services requires a highly trained, professional sales force, and, as a result,
many of our sales personnel have engineering or technical expertise and
experience. Due to the problem solving experience of our engineering staff,
potential and existing customers regularly seek out advice from our technical
personnel, which can result in business opportunities on an ongoing basis.
Our products and services in the Middle East, Asia, Europe and South
America are marketed by our sales personnel, as well as by independent,
locally-based sales representatives. These independent sales representatives are
used to supplement the efforts of our direct sales force and to market our
products and services to other regions of the world. The independent sales
representatives earn commissions on sales that vary by product and service type.
Certain products, including rectifiers and corrosion monitoring equipment, are
marketed through networks of both domestic and international distributors.
SOURCES AND AVAILABILITY OF RAW MATERIALS
We assemble certain components of cathodic protection systems, which
include aluminum, zinc, magnesium and other metallic anodes. We do not believe
that we are dependent upon any single outside vendor as a source of supply and
we believe that sufficient alternative sources of supply for the same, similar
or alternative products are available.
PATENTS AND LICENSES
We own patents, patent applications and licenses relating to certain of
our products and processes. While our rights under the patents and licenses are
of importance to individual components of our operations, our business as a
whole is not materially dependent on any one patent or license or on the patents
and licenses as a group.
SEASONAL TRENDS
Our business is somewhat seasonal as winter weather can adversely
impact our operations in the northern United States, Canada and the United
Kingdom. Therefore, our revenues during the fourth quarter of our fiscal year
(i.e., January through March) are typically lower than revenues during each of
the other three fiscal quarters.
FOREIGN OPERATIONS
The Company's foreign operations are subject to the usual risks of
operating in foreign jurisdictions. They include, but are not limited to,
exchange controls, currency restrictions and fluctuations, changes in local
economics and changes in political conditions.
5
CUSTOMERS
Sales are made to a broad range of customers. We do not believe that
the loss of any one customer would have a materially adverse effect on our
business.
We sell products and services to the U.S. government and agencies and
municipalities thereof, including the U.S. Navy. Our contracts with the U.S.
government contain standard provisions permitting the government to terminate
these contracts without cause. In the event of termination, we are entitled to
receive reimbursement on the basis of the work completed (cost plus a reasonable
profit). These contracts are also subject to renegotiation of profits. In
addition, government procurement programs are subject to budget cutbacks and
policy changes that could impact the revenue for, or alter the demand for, our
products or services. Accordingly, our future sales to the government are
subject to these budgetary and policy changes.
BACKLOG
We estimate that a substantial portion of our backlog of orders at
March 31, 2002 will be filled during fiscal 2003.
COMPETITIVE CONDITIONS
Within the corrosion control market, we face competition from a large
number of domestic and international companies, all of which we believe are
considerably smaller than Corrpro. Only a few of these competitors offer a broad
range of corrosion control engineering services, systems and products and we do
not believe that any of our competitors offer the comprehensive range of
products and services that we provide. In the service area, we compete
principally on the basis of quality, technical expertise and capabilities and
customer service, although price is a consideration, particularly when we are
providing construction and installation services. In the product area, we
typically compete on the basis of quality, service and price.
RESEARCH AND DEVELOPMENT
Our engineering and product development activities are primarily
directed toward designing new products and services to meet customers' specific
requirements.
GOVERNMENT REGULATIONS
We believe that our current operations and our current use of property,
plant and equipment conform in all material respects to applicable laws and
regulations. Other than as disclosed under "Item 3 - Legal Proceedings", we have
not experienced, nor do we anticipate, any material claim or material capital
expenditure in connection with environmental laws and other regulations.
EMPLOYEES
As of March 31, 2002, we had 1,283 employees, 513 of whom were located
outside the United States and 91 of whom were employed by our Australian
Subsidiary.
FACTORS INFLUENCING FUTURE RESULTS AND ACCURACY OF FORWARD LOOKING INFORMATION
This document includes certain statements that may be deemed
"forward-looking statements" within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These
forward-looking statements are based on management's expectations and beliefs
concerning future events and discuss, among other things, anticipated future
performance and revenues, expected growth and future business plans. Words such
as "anticipates," "expects," "intends," "plans," "believes," "seeks,"
"estimates" or variations of such words and similar expressions are intended to
identify such forward-looking statements. We believe that the following
factors, among others, could affect our future performance or the price and
liquidity of our Common Shares and cause our actual results to differ
materially from those results expressed or implied by forward-looking
statements: the ultimate outcome of the Audit Committee's investigation of
accounting irregularities; the ultimate outcome of the SEC's inquiry and the
Australian Securities and Investment Commission's investigation of accounting
irregularities; the results of the financial statement restatement process and
the audit of any anticipated restatement of the Company's financial statements
as a result of accounting irregularities; the impact of any litigation or
regulatory process related to the financial statement restatement process
including the class action litigation already filed; the Company's ability to
extend, amend or refinance its existing debt, including the availability to the
Company of external sources of financing and capital (the failure to receive
such financing would have a material adverse effect on the Company's results of
operations and financial
6
condition and ability to operate as a going concern) and the terms and timing
thereof; the Company's mix of products and services; the timing of jobs;
the availability and value of larger jobs; qualification requirements and
termination provisions relating to government jobs; the impact of inclement
weather on the Company's operations; the impact of energy prices on the
Company's and its customers' businesses; adverse developments in pending
litigation or regulatory matters; the impact of existing, new or changed
regulatory initiatives; the Company's ability to satisfy the listing
requirements of the AMEX or any other national exchange on which its shares
are or will be listed or otherwise provide a trading venue for its shares;
and the impact of changing global, political and economic conditions.
In addition, any forward-looking statement speaks only as of the date on which
such statement is made and we do not undertake any obligation to update any
forward-looking statements, whether as a result of new information, future
events or otherwise.
All phases of our operations are subject to a number of uncertainties,
risks and other influences, many of which are beyond our control. Any one of
such influences, or a combination, could materially affect the accuracy of the
forward-looking statements and the assumptions on which the statements are
based. Some important factors that could cause actual results to differ
materially from the anticipated results or other expectations expressed in our
forward-looking statements include the following:
OUR ABILITY TO OBTAIN EXTENSIONS, AMENDMENTS AND WAIVERS UNDER OUR DEBT
AGREEMENTS AND AVAILABILITY OF ADDITIONAL SOURCES OF FINANCING AND CAPITAL. We
had earlier announced that, as a result of matters related to the accounting
irregularities discussed above, we are not in compliance with the provisions,
including certain financial covenants, of our existing senior secured credit
agreement and senior note facility. The remedies available to these lenders upon
default by us, including acceleration of principal, could have a material
adverse impact on our liquidity, our financial position or our ability to
operate as a going concern. We have continued to make scheduled interest
payments on such senior debt; however, we have not made scheduled monthly
principal payments that were due since April 2002 on the senior note facility.
We are continuing to hold discussions with our bank group and the holder of our
senior notes concerning our non-compliance and our plans for operational changes
and debt reduction. If we are unable to satisfactorily resolve these lender
negotiations and/or access other sources of capital on a timely basis (as to
which we can provide no assurance), it would have a material adverse effect on
our liquidity and financial condition and could result in our inability to
operate as a going concern. If we are unable to operate as a going concern, we
may file, or be forced to file, bankruptcy or insolvency proceedings or pursue a
sale or sales of assets to satisfy creditors.
OUR REPUTATION AND FINANCIAL CONDITION COULD BE AFFECTED BY THE SECURITIES
LITIGATION AND RELATED INVESTIGATIONS AND/OR A RESTATEMENT OF FINANCIAL
STATEMENTS. On March 20, 2002, we first announced that we had become aware of
accounting irregularities caused by apparent internal misconduct in our
Australian subsidiary and that, to the extent that the accounting
irregularities materially affect previously filed financial statements, we
expected that we would have to restate our audited financial statements for our
fiscal year which ended March 31, 2001 as well as unaudited financial
information for the first nine months through December 31, 2001 of our fiscal
year ended March 31, 2002, as previously released. In addition, we will be
required to take a charge to earnings for our loss on investment related to the
subsidiary, including certain intercompany balances. This charge will be taken
in the Company's fiscal fourth quarter ended March 31, 2002. Subsequent to
this announcement, one purported class action lawsuit has been filed against
us and certain of our current and former directors and officers, asserting
claims under the federal securities laws. In addition to significant
expenditures we may have to make to defend ourselves in these actions and the
related significant financial penalties that might be imposed on us if the
plaintiffs prevail in these actions, the publicity surrounding the litigation
and the SEC inquiry of these matters could affect our reputation with our
customers and suppliers and have an impact on our financial condition.
ADVERSE DEVELOPMENTS IN PENDING LITIGATION OR REGULATORY MATTERS. From time to
time, we are involved in litigation and regulatory proceedings, including those
disclosed in "Item 3 - Legal Proceedings" of this annual report and in our
other periodic reports filed with the Securities and Exchange Commission. There
are always significant uncertainties involved in litigation and regulatory
proceedings. As to current matters in litigation, we believe that our positions
and defenses are meritorious. However, the litigation process involves
unpredictability and we cannot guarantee the result of any action. Regulatory
compliance is often complex and subject to variation and unexpected changes,
including changing interpretations and enforcement agendas affecting the
regulatory community. We may need to expend significant financial resources in
connection with legal and regulatory procedures and our management may be
required to divert attention from other portions of our business. If, as a
result of any proceeding, a judgment is rendered, decree is entered or
administrative action is taken against us or our customers, it may materially
and adversely affect our business, financial condition and results of
operations.
OUR PROFITABILITY CAN BE IMPACTED BY OUR MIX OF PRODUCTS AND SERVICES. Given
that our selling, general and administrative costs are largely fixed in terms of
dollars, our profitability is dependent upon the amount of gross profit that we
are able to realize. We typically generate higher gross profit margins on pure
engineering service jobs than on those jobs that include a material or
installation component. In addition, our gross profit margins also can be
negatively impacted when we utilize subcontractors. Therefore, a shift in mix
from engineering services to more construction and installation type work or an
increase in the amount of subcontracting costs could have a negative impact on
our operating results. In addition, certain of the products that we sell have
gross profit margins that are considerably lower than our overall average gross
profit margin. A shift in mix which results in a greater percentage of revenues
relating to these lower margin products would also have a negative impact on our
operating results.
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THE TIMING OF JOBS CAN IMPACT OUR PROFITABILITY. There are a number of factors,
some of which are beyond our control, that can cause projects to be delayed and
thus negatively impact our profitability for the related period. These factors
include the availability of labor, equipment or materials, customer scheduling
issues, delays in obtaining required permits and weather. In addition, when we
are working as a subcontractor on a project, our portion of the project can be
delayed as a result of factors relating to other contractors.
THE AVAILABILITY AND VALUE OF LARGER JOBS CAN IMPACT OUR PROFITABILITY. While
the majority of our jobs are relatively small, we can have a number of
individual contracts in excess of $1 million in progress at any particular
time. These larger contracts typically generate more gross profit dollars than
our average size jobs. Therefore, the absence of larger jobs, which can result
from a number of factors, including market conditions, can have a negative
impact on our operating results.
QUALIFICATION REQUIREMENTS AND TERMINATION PROVISIONS RELATING TO GOVERNMENT
JOBS. We derive revenues from contracts with the United States, its agencies and
other governmental entities. Government contracting is subject to competitive
bidding processes and there can be no assurance that we will be the successful
bidder for future contracts. Fluctuations in government spending also could
adversely affect our revenues and profitability. In addition, it is the policy
of the United States that certain small businesses and other concerns have the
maximum practicable opportunity to participate in performing contracts let by
any federal agency. To the extent that we do not meet applicable criteria for
government jobs, we could be limited in our ability to participate directly in
contracts being let by the United States and other governmental entities with
similar requirements. Certain contracts with governmental entities contain
provisions permitting the governmental entities to terminate the contract for
convenience prior to completion of the contract. To the extent that any of our
contracts with a government entity are so terminated, our revenues and
profitability could be adversely impacted.
OUR COMPLIANCE WITH THE LISTING STANDARDS OF THE STOCK EXCHANGE ON WHICH OUR
COMMON SHARES TRADE. We are required by the stock exchange on which we list our
common shares for trading to maintain certain listing standards in order to
remain listed on that exchange. If we fail to meet the required listing
standards and cannot within a limited time frame thereafter demonstrate
compliance, our Common Shares may not be allowed to trade on the stock exchange,
although we would pursue an alternative national trading venue. If this occurs,
it may make it more difficult for us to raise funds through the sale of our
securities. In addition, it may make it more difficult for an investor to
dispose of, or to obtain accurate quotations of, our Common Shares and
negatively impact the market price.
OUR OPERATIONS CAN BE IMPACTED BY INCLEMENT WEATHER. A large portion of our
service work is performed in the field. Therefore, excessive amounts of rain,
snow or cold, as well as other unusual weather conditions, including hurricanes
and typhoons, can result in work stoppages. Also, working under inclement
weather conditions can reduce our efficiencies, which can have a negative impact
on our profitability.
OUR BUSINESS IS IMPACTED BY CHANGES IN ENERGY PRICES. The products and services
we provide to our customers in the energy markets are, to some extent,
deferrable in the event that these customers reduce their capital and
discretionary maintenance expenditures. The level of spending on these types of
expenditures can be influenced by oil and gas prices and industry perceptions of
future prices. Our experience indicates that our energy customers react to
declining oil and gas prices by reducing their capital and discretionary
maintenance expenditures. This reaction has in the past, and may in the future,
have a negative impact on our business. We are unable to predict future oil and
gas prices. However, we believe that a prolonged period of low energy prices
could have a negative impact on our business. Typically, there is a delay
between the time prices decline and when we start to experience a negative
impact on our results of operations. Conversely, there is also a delay between
the time energy prices increase and when we start to experience a positive
impact on our results of operations.
THE IMPACT OF CHANGING GLOBAL, POLITICAL AND ECONOMIC CONDITIONS. Changing
political and economic conditions on a regional or worldwide basis can adversely
impact our business. Deteriorating political and general economic conditions may
result in customers delaying or canceling contracts and orders for our products
and services, difficulties and inefficiencies in the performance of our services
including work stoppages, and difficulties in collecting payment from our
customers. As a result, such conditions can negatively impact our results of
operations and our cash flows.
8
EXISTING, NEW OR CHANGED REGULATORY INITIATIVES CAN IMPACT OUR BUSINESS. Corrpro
and its customers are subject to federal, state and local environmental and
other laws and regulations. These laws and regulations affect our operations by
imposing standards for the protection of health, welfare and the environment.
Such laws and regulations, and applicable interpretations thereof, could expose
us to liability for acts which are or were in compliance at the time such acts
were performed. We cannot predict whether future legislative or regulatory
developments may occur which would have an adverse effect on Corrpro.
These risks must be considered by any investor or potential investor in
the Company.
9
ITEM 2. PROPERTIES
As of March 31, 2002, we owned eight of our locations. In addition,
over sixty locations were leased from unrelated third parties. Certain property
locations may contain multiple operations, such as an office and warehouse
facility. Owned and leased facilities with greater than 5,000 square feet are
listed below.
Location Segment Description Owned/Leased
- -------- ------- ----------- ------------
Bakersfield, California Domestic Core Office and Warehouse Facility Leased
Belle Chasse, Louisiana Domestic Core Office and Warehouse Facility Leased
Brampton, Ontario Canadian Ops. Office and Warehouse Facility Leased
Brisbane, Australia International Office and Warehouse Facility Leased
Conyers, Georgia Domestic Core Office and Warehouse Facility Leased
Dammam, Saudi Arabia International Production and Warehouse Facility Leased
Dorval, Quebec Canadian Ops. Office and Warehouse Facility Leased
Durley, Southampton, UK International Office and Warehouse Facility Leased
Edmonton, Alberta Canadian Ops. Office, Production and Warehouse Facility Owned
Nisku, Alberta Domestic Core Office and Warehouse Facility Owned
Estevan, Saskatchewan Canadian Ops. Office and Warehouse Facility Owned
Glendale, Arizona Domestic Core Office and Warehouse Facility Leased
Houston, Texas Domestic Core Office and Warehouse Facility Leased
Jakarta, Indonesia International Office and Warehouse Facility Leased
Medina, Ohio Corporate Corporate Headquarters Owned
Medina, Ohio Domestic Core Office and Warehouse Facility Owned
Melbourne, Australia International Office and Warehouse Facility Leased
Ocean City, New Jersey Domestic Core Office Facility Leased
Perth, Australia International Office and Warehouse Facility Leased
San Leandro, California Domestic Core Office, Production and Warehouse Facility Leased
Sand Springs, Oklahoma Domestic Core Office, Production and Warehouse Facility Leased
Santa Fe Springs, California Domestic Core Office, Production and Warehouse Facility Leased
and Other
Schaumburg, Illinois Domestic Core Office and Warehouse Facility Owned
Sharjah, UAE International Office and Production Facility Leased
Singapore International Office Facility Leased
Stockton-on-Tees, UK International Office, Production and Warehouse Facility Owned
Sydney, Australia International Office and Warehouse Facility Leased
West Chester, Pennsylvania Domestic Core Office and Warehouse Facility Leased
We consider the properties owned or leased by us to be generally
sufficient to meet our requirements for office, production and warehouse space.
We do not consider any one of our properties to be significant, since we believe
that if it becomes necessary or desirable to relocate any of our office,
production and warehouse facilities, other suitable properties could be found.
Our owned properties are subject to mortgages or other security interests under
our senior secured credit agreement and senior note facility and other bank
credit arrangements. OUR AUSTRALIAN OPERATION IS LEASED SUBJECT TO VOLUNTARY
ADMINISTRATION PROCEEDINGS.
10
ITEM 3. LEGAL PROCEEDINGS
As previously reported, in January 2000, the Michigan Department of
Environmental Quality ("MDEQ") issued an administrative decision which
effectively limited the scope of MDEQ's 1995 approval of certain assessment
methodologies utilized by Corrpro in determining whether certain underground
storage tanks meet Michigan's regulatory requirements for upgrade by means of
cathodic protection. The MDEQ decision also would have required us to conduct
further assessments and provide certain information. The assessment
methodologies at issue have been and remain recognized by the Environmental
Protection Agency ("EPA") and the other states in which we utilized such
methodologies for virtually identical purposes. We believed that MDEQ's decision
was in error and on January 24, 2000, filed a complaint and claim of appeal in
the Circuit Court for the County of Ingham, Michigan seeking declaratory relief
and appealing the decision on several grounds. In its November 14, 2000 ruling,
the Ingham Circuit Court reversed MDEQ's decision that directed we take certain
actions and provide certain information, however, the court also found that MDEQ
had not approved the full use of the assessment methodologies we utilized in
Michigan.
We believed that the circuit court's finding that MDEQ had not approved
full use of the methodologies was not supported by the evidence, and was
contradicted by evidence contained in the administrative record. On December 5,
2000, we filed, in the Michigan Court of Appeals, an application for leave to
appeal the circuit court's finding that MDEQ did not approve the full use of the
assessment methodologies we utilized in Michigan. By order dated February 14,
2001, the Michigan Court of Appeals denied our application for leave to appeal
the circuit court's finding. On March 7, 2001, we filed an application for leave
to appeal with the Supreme Court of the State of Michigan. On August 28, 2001,
the Michigan Supreme Court denied our application for leave to appeal.
As a result of these proceedings, the MDEQ's administrative decision
finding that certain of our assessment methodologies were not approved in full
was upheld, but the MDEQ was found not to have jurisdiction to enforce its
decision against us. We have recently been informed by the MDEQ that it plans to
send underground storage tank owners or operators who may have relied on our
method of assessment a notice informing them that certain of such owners and
operators' tanks may not have been eligible to upgrade with cathodic protection
alone, that such owners and operators are to provide evidence that they have
conducted state required tank tightness testing, and certain of such tanks may
have to be internally inspected. Depending on the results of the tests and
inspections, MDEQ then may order the owners and operators to cease using the
tanks and remove them from the ground. There can be no assurance that the MDEQ
will not take further action against underground storage tank owners or
operators, nor can there be any assurance that those owners or operators would
not take action against us.
During fiscal 2001, the Company discovered that a former employee used
an incorrect assessment standard in connection with the evaluation of whether
certain underground storage tanks located at as many as 67 sites were eligible
for upgrade using cathodic protection. Such evaluations were done using one of
the approved assessment methodologies. The tanks at these sites, which are
located in five states, were subsequently upgraded using cathodic protection
which arrests corrosion. These tanks are also subject to ongoing leak detection
requirements. Based on the Company's review of available information and
governmental records, the Company believes that there have not been any
releases from the affected tanks as a result of the actions of the former
employee. The Company has contacted, and in October and November 2000 met with,
officials from the EPA and officials from the corresponding environmental
protection agencies of the five states involved to discuss this matter. It is
the Company's understanding that none of the states or the EPA intend to take
any enforcement action as a result of the use of the inaccurate standard by the
former employee. The Company is currently working with the states and the EPA
to develop and implement field investigation procedures to assess the current
status of the affected sites. Based on currently available information, the
Company does not believe that the cost of field investigation procedures for
this matter will have a material effect on the future operations, financial
position or cash flows of the Company.
The Company is a defendant in a purported class action suit filed on
June 24, 2002, in the United States District Court, Northern District of Ohio,
Eastern Division by Russell J. Stambaugh. The complaint also names certain
former and current officers and a director of the Company. The Complaint was
purportedly filed on behalf of all persons who purchased Corrpro Common Shares
during the period April 1, 2000 through March 20, 2002 and alleges violations of
the federal securities laws resulting in artificially inflated prices of the
Company's Common Shares during the class period. The
11
complaint relates to the Company's announcement that it had discovered
accounting irregularities caused by apparent internal misconduct in its
Australian subsidiary. The plaintiff seeks a declaration declaring the action to
be a proper class action and certifying plaintiff as class representative. The
plaintiff also seeks unspecified compensatory damages, fees and expenses.
Company management discovered accounting irregularities at the
Australian subsidiary in early 2002 and upon discovery immediately began an
internal investigation, which has been conducted under the direction of the
Audit Committee of its Board of Directors. The Australian Securities and
Investments Commission has commenced an independent investigation of the
accounting irregularities. Corrpro voluntarily disclosed this matter to the SEC,
which is also conducting an inquiry. Corrpro is cooperating with both
commissions.
The Company is subject to other legal proceedings and claims which
arise in the ordinary course of business.
12
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders during
the fourth quarter of fiscal 2002.
ITEM 4A. EXECUTIVE OFFICERS OF THE COMPANY
The following table sets forth the names of all executive officers of
the Company as of March 31, 2002 and certain other information relating to their
position held with the Company and other business experience.
EXECUTIVE OFFICER AGE RECENT BUSINESS EXPERIENCE
- ----------------- --- --------------------------
Joseph W. Rog 62 Chairman of the Board of Directors since
June 1993 and Chief Executive Officer
since the Company's formation in 1984.
President of the Company since June 1995
and from January 1984 to June 1993.
Michael K. Baach 47 Executive Vice President since April 1993
and Senior Vice President from 1992 until
April 1993. Prior to that, Mr. Baach was
Vice President of Sales and Marketing since
the Company's formation in 1984.
George A. Gehring, Jr. 58 Executive Vice President since April 1993
and Senior Vice President from 1991 until
April 1993. Prior to that, Mr. Gehring
served as President of Ocean City Research
Corporation, a wholly-owned subsidiary of
the Company, since 1987.
David H. Kroon 52 Executive Vice President since April 1993
and Senior Vice President from the Company's
formation in 1984 to April 1993.
Barry W. Schadeck 51 Executive Vice President since June 1995
and President of Corrpro Canada, Inc., a
wholly-owned subsidiary of the Company,
since its formation in May 1994. Prior to
that, Mr. Schadeck served as President since
April 1993 and Chief Financial Officer since
1979 of Commonwealth Seager Group, a
wholly-owned subsidiary of the Company,
since 1993.
Michael R. Tighe 51 Executive Vice President since July 1999.
Senior Vice President from January 1994
until July 1999. Prior to that, Mr. Tighe
was President and General Manager of Elgard
Corporation, an anode manufacturer.
Ted Bojanowski 45 Senior Vice President, Marketing and Strategic
Planning since December 1999. Prior to that,
Mr. Bojanowski spent 18 years with Coltec
Industries, an industrial manufacturing firm
servicing the oil, gas and energy markets,
in sales, marketing and operational roles of
increasing responsibility. His most recent
position was Senior Vice President of
Marketing and Sales for Coltec's Garlock
Sealing Technologies, Inc. subsidiary.
Robert M. Sloan 46 Senior Vice President and Chief Financial
Officer since March 2002. Prior to that,
Mr. Sloan served six years as Vice President for
Blue Coral Slick 50, a manufacturer and marketer
of automotive appearance and additive and a
subsidiary of Pennzoil-Quaker State Corporation.
Mr. Sloan also served for three years as Vice
President of Finance for a subsidiary of Park
Corporation, a manufacturer of machinery and
components for the steel and energy-related
industries and 11 years with Arthur Andersen.
13
Robert M. Mayer 39 Vice President and Corporate
Controller since August 2000 and
Assistant Treasurer since January
2002. Assistant Corporate
Controller from January 1998 until
August 2000. Prior to that, Mr.
Mayer was with Premier Farnell PLC,
an industrial distributor of
electronic components, most
recently as Director of Finance.
Mr. Mayer had prior experience with
Ernst & Young, where he was an
Audit Manager.
John D. Moran 44 General Counsel since December
1996, Secretary since January 2002,
Senior Vice President since July
2000, Assistant Secretary from
December 1996 to January 2002 and
Vice President from October 1998
until July 2000. Prior to that, Mr.
Moran was in-house counsel for
Sealy Corporation, a mattress
manufacturer, for 10 years and
served as Secretary. Mr. Moran also
has prior experience with Grant
Thornton.
14
PART II
ITEM 5. MARKET FOR COMPANY'S COMMON EQUITY AND RELATED STOCK HOLDER MATTERS
PRICE RANGE OF COMMON SHARES
Our Common Shares are listed on the American Stock Exchange ("AMEX")
under the symbol "CO." Prior to February 13, 2002, our Common Shares were listed
on the New York Stock Exchange ("NYSE") under the symbol "CO."
The following table sets forth the high and low sale prices for the
Common Shares on the AMEX and NYSE for the fiscal periods indicated.
FISCAL 2002 FISCAL 2001
----------- ----------
HIGH LOW HIGH LOW
---- --- ---- ---
First Quarter $ 3.95 $ 1.20 $ 4.88 $ 3.06
Second Quarter 2.90 1.80 4.38 3.12
Third Quarter 2.80 1.50 4.12 2.81
Fourth Quarter 3.15 1.01 3.12 1.57
HOLDERS OF RECORD
On July 5, 2002, there were 222 holders of record of our Common Shares.
DIVIDENDS
We have not paid any cash dividends on our Common Shares. We currently
anticipate that we will retain all future earnings for use in our business and
do not anticipate paying any cash dividends in the foreseeable future.
Provisions within our senior secured credit agreement and senior notes facility
limit our ability to pay cash dividends.
EQUITY COMPENSATION PLAN INFORMATION
The following table provides certain information with respect to all of
the Company's equity compensation plans in effect as of March 31, 2002.
EQUITY COMPENSATION PLAN INFORMATION TABLE
NUMBER OF SECURITIES TO WEIGHTED-AVERAGE NUMBER OF SECURITIES
BE ISSUED UPON EXERCISE EXERCISE PRICE OF REMAINING AVAILABLE FOR
OF OUTSTANDING OPTIONS, OUTSTANDING OPTIONS, ISSUANCE UNDER EQUITY
PLAN CATEGORY WARRANTS AND RIGHTS WARRANTS AND RIGHTS COMPENSATION PLANS
------------- ------------------- ------------------- ------------------
Equity compensation plans approved by 1,303,381 $3.7013 344,858
shareholders
Equity compensation plans not approved by 0 0 0
shareholders
1,303,381 $3.0713 344,858
Total
15
ITEM 6. SELECTED FINANCIAL DATA
To be filed by amendment.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
To be filed by amendment.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
To be filed by amendment.
ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
To be filed by amendment.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information appearing under the captions "Election of Directors"
and "Section 16(a) Beneficial Ownership Reporting Compliance" in the
registrant's definitive proxy statement to be used in connection with the 2002
Annual Meeting of Shareholders ( the "2002 Proxy Statement") is incorporated
herein by reference. Information regarding executive officers of the registrant
is set forth in Part I, Item 4A of this form 10-K.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this item is incorporated herein by
reference to "Election of Directors," "Executive Compensation and Other
Information" and "Compensation Committee Interlocks and Insider Participation"
in the 2002 Proxy Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information regarding the Company's equity compensation plans is set
forth in Part II, Item 5 of this Form 10-K. The additional information required
by this item is incorporated herein by reference to "Corrpro Share Ownership"
in the 2002 Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this item is incorporated herein by
reference to "Compensation Committee Interlocks and Insider Participation" in
the 2002 Proxy Statement.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) (1) The following consolidated financial statements are included in
Part II, Item 8:
To be filed by amendment.
(a) (2) Financial Statement Schedules:
To be filed by amendment.
(a) (3) INDEX TO EXHIBITS:
EXHIBIT
NO. EXHIBIT
--- -------
3.1 Amended and Restated Articles of Incorporation of the Company. (1)
3.2 Amended and Restated Code of Regulations of the Company. (2)
4.1 Specimen certificate for the Common Shares. (3)
4.2 Amended and Restated Credit Agreement dated as of June 9, 2000 among
Corrpro Companies, Inc., CSI Coating Systems, Inc. and the Lenders
Party thereto. Other long-term debt agreements of the Company, except
for Note Purchase Agreement, are not filed pursuant to Item
601(b)(4)(iii)(A) of Regulation S-K. The Company will furnish copies of
any such agreements to the Securities and Exchange Commission upon its
request. (4)
4.3 First Amendment to Credit Agreement dated October 19, 2000 relating to
the Amended and Restated Credit Agreement dated as of June 9, 2000
among Corrpro Companies, Inc., CSI Coating Systems, Inc. and the
Lenders Party thereto. (12)
16
4.4 Letter Agreement dated October 19, 2000 relating to the Amended and
Restated Credit Agreement dated as of June 9, 2000 among Corrpro
Companies, Inc., CSI Coating Systems, Inc. and the Lenders Party
thereto. (12)
4.5 Second Amendment to Credit Agreement dated as of June 29, 2001 relating
to the Amended and Restated Credit Agreement dated as of June 9, 2000
among Corrpro Companies, Inc., CSI Coating Systems, Inc. and the
Lenders Party thereto. (12)
4.6 Third Amendment to Credit Agreement dated as of August 10, 2001
relating to the Amended and Restated Credit Agreement dated as of June
9, 2000 among Corrpro Companies, Inc., CSI Coating Systems, Inc. and
the Lenders Party thereto. (13)
4.7 Fourth Amendment to Credit Agreement dated as of November 12, 2001
relating to the Amended and Restated Credit Agreement dated as of June
9, 2000 among Corrpro Companies, Inc., CSI Coating Systems, Inc. and
the Lenders Party thereto. (14)
4.8 Fifth Amendment to Credit Agreement dated as of February 11, 2002
relating to the Amended and Restated Credit Agreement dated as of June
9, 2000 among Corrpro Companies, Inc., CSI Coating Systems, Inc. and
the Lenders Party thereto. (15)
4.9 Corrpro Companies Inc. 2001 Non-Employee Directors' Stock Appreciation
Rights Plan and form of Award Agreement.
4.10 Note Purchase Agreement dated as of January 21, 1998 by and among the
Company and the Purchaser herein. (5)
4.11 Rights Agreement dated as of July 23, 1997 between the Company and
Fifth Third Bank, successor Rights Agent. (6)
4.12 Amendment dated June 9, 2000 to Note Purchase Agreement dated January
21, 1998. (4)
4.13 Amendment dated October 18, 2000 to Note Purchase Agreement dated
January 21, 1998. (12)
4.14 Letter Agreement dated October 18, 2000 by and between The Prudential
Insurance Company of America and the Company relating to the Note
Purchase Agreement dated as of January 21, 1998. (12)
4.15 Amendment dated as of June 29, 2001 by and between The Prudential
Insurance Company of America and the Company relating to the Note
Purchase Agreement dated as of January 21, 1998. (12)
*4.16 1997 Long-Term Incentive Plan of Corrpro Companies, Inc. (7)
*4.17 Amendment to 1997 Long-Term Incentive Plan of Corrpro Companies, Inc.
(8)
*4.18 1997 Non-Employee Directors' Stock Option Plan. (7)
4.19 Corrpro Companies, Inc. Employee Stock Purchase Plan. (9)
*4.20 December 2000 Stock Option Agreement Surrender form. (12)
*10.1 Form of Indemnification Agreement for Officers and Directors of the
Company. (10)
10.2 Consulting Agreement dated April 1, 1997 by and between Commonwealth
Seager Holdings Ltd. and Corrtech Consulting Group. (11)
*10.3 Employment Agreement effective November 2, 2000 by and between the
Company and Joseph W. Rog. (12)
*10.4 Form of Executive Officer Employment Agreement by and between the
Company and certain executive officers and schedule thereto. (10)
*10.5 Stock Option Agreement dated as of June 15, 1992 and November 15, 1992
by and between the Company and C. Richard Lynham, Michael K. Baach,
George A. Gehring, Jr., David H. Kroon, and Joseph W. Rog. (3)
*10.6 Company Incentive Option Plan as amended. (3)
*10.7 Company Deferred Compensation Plan. (12)
17
*10.8 Consulting Agreement dated January 26, 2001 by and between the Company
and Neal R. Restivo. (12)
*10.9 Form of Change in Control Agreement entered into between the Company
and certain of its executive officers and schedule thereto. (10)
23.1 Consent of KPMG LLP (16)
21.1 Subsidiaries of the Company. (4)
99.1 Press Release, dated March 20, 2002.
99.2 Press Release, dated June 13, 2002.
99.3 Press Release, dated July 2, 2002.
- ----------
* Management contract or compensatory plan or arrangement identified pursuant
to Item 14(a)(3) of this Annual Report on Form 10-K.
(1) A copy of this exhibit filed as Exhibit 3.1 to the Company's Report on
Form 10-Q for the quarterly period ended December 31, 1998 is
incorporated herein by reference.
(2) A copy of this exhibit filed as Exhibit 4.2 to the Company's
Registration Statement on Form S-8 (Registration No. 33-74814) is
incorporated herein by reference.
(3) Copies of the exhibits to which this footnote applies were filed,
respectively, as Exhibits 4.1 (Stock certificate specimen), 10.13,
10.19, 10.20, 10.22, and 10.23 (Stock Option Agreements), and 10.25
(Incentive Option Plan) of the Company's Registration Statement on Form
S-1 (Registration No. 33-64482) and are hereby incorporated by
reference.
(4) Copies of the exhibits to which this footnote applies were filed,
respectively, as Exhibits 4.3 (Amended and Restated Credit Agreement),
4.6 (Note Purchase Agreement Amendment), and 21.1 (Subsidiaries) to the
Company's report on Form 10-K for the period ended March 31, 2000 and
are hereby incorporated by reference.
(5) A copy of this exhibit filed as Exhibit 4.2 to the Company's report on
Form 10-Q for the quarterly period ended December 31, 1997 is
incorporated herein by reference.
(6) A copy of this exhibit filed as Exhibit 1.1 to the Company's
Registration Statement on Form 8-A filed August 7, 1997 is
incorporated herein by reference.
(7) Copies of the exhibits to which this footnote applies were filed,
respectively, as Exhibits 4.4 (1997 Long-Term Inventive Plan) and 4.5
(1997 Non-Employee Directors' Stock Option Plan) to the Company's
Registration Statement on Form S-8 filed October 24, 1997 (SEC File No.
333-38767), and are hereby incorporated by reference.
(8) A copy of this exhibit filed as Exhibit 4.5 to the Company's
Registration Statement on Form S-8 filed January 19, 2000 (SEC File No.
333-94989) is incorporated herein by reference.
(9) A copy of this exhibit contained in Corrpro's Definitive Proxy
Statement on Schedule 14A filed with the Securities and Exchange
Commission on June 16, 1999 is incorporated herein by reference.
(10) Copies of the exhibits to which this footnote applies were filed,
respectively, as Exhibits 10.2 (Change in Control Agreement) and 10.3
(Indemnification Agreement) to the Company's report on Form 10-Q for
the quarterly period ended December 31, 2000, and are hereby
incorporated by reference.
18
(11) A copy of this exhibit filed as Exhibit 10.2 to the Company's report on
Form 10-K for the period ended March 31, 1998 is hereby incorporated by
reference.
(12) Copies of the exhibits filed to which this footnote applies were filed,
respectively, as Exhibits 4.3 (First Amendment to Credit Agreement),
4.4 (Letter Agreement), 4.5 (Second Amendment to Credit Agreement),
4.9 (Amendment to Note Purchase Agreement), 4.10 (Letter Agreement),
10.3 (Employment Agreement), 10.7 (Deferred Compensation Plan) and
10.8 (Consulting Agreement) to the Company's report on Form 10-K for
the period ended March 31, 2001 is hereby incorporated by reference.
(13) A copy of this exhibit was filed as Exhibit 4.3 to the Company's report
on Form 10-Q for the quarterly period ended June 30, 2001 and is
incorporated herein by reference.
(14) A copy of this exhibit was filed as Exhibit 4.2 to the Company's report
on Form 10-Q for the quarterly period ended September 30, 2001 and is
incorporated herein by reference.
(15) A copy of this exhibit was filed as Exhibit 4.2 to the Company's report
on Form 10-Q for the quarterly period ended December 31, 2001 and is
incorporated herein by reference.
(16) To be filed by amendment
(b) REPORTS ON FORM 8-K:
During the quarter ended March 31, 2002, the Company filed one
current report on Form 8-K. A current report on Form 8-K, dated
March 20, 2002, furnished a press release pursuant to
Regulation FD.
(c) EXHIBITS
See "Index to Exhibits" at Item 14(a) above.
19
SIGNATURES
Pursuant to the requirements of Section 13 of 15(d) of the Securities
and Exchange Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
CORRPRO COMPANIES, INC.
July 16, 2002 By: /s/ Joseph W. Rog
--------------------------------------
Joseph W. Rog
Chairman of the Board of Directors,
President and Chief Executive Officer
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.
July 16, 2002 /s/ Joseph W. Rog
--------------------------------------
Joseph W. Rog
Chairman of the Board of Directors,
President and Chief Executive Officer
(Principal Executive Officer)
July 16, 2002 /s/ Robert M. Sloan
--------------------------------------
Robert M. Sloan
Executive Vice President,
Chief Financial Officer,
(Principal Financial and
Accounting Officer)
July 16, 2002 /s/ Michael K. Baach
--------------------------------------
Michael K. Baach, Director
July 16, 2002
--------------------------------------
David H. Kroon, Director
July 16, 2002 /s/ C. Richard Lynham
--------------------------------------
C. Richard Lynham, Director
July 16, 2002
--------------------------------------
Neal R. Restivo, Director
July 16, 2002 /s/ Warren F. Rogers
--------------------------------------
Warren F. Rogers, Director
July 16, 2002 /s/ Harry W. Millis
--------------------------------------
Harry W. Millis, Director
20