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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED COMMISSION FILE NUMBER
June 28, 2002 1-11781
DAYTON SUPERIOR CORPORATION
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
OHIO 31-0676346
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification No.)
7777 Washington Village Dr., Suite 130
Dayton, Ohio 45459
- ---------------------------------------- ------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 937-428-6360
NOT APPLICABLE
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed from last report)
Indicate by 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
--------- ---------
____________ Common Shares were outstanding as of August 9, 2002
PART I. -- FINANCIAL INFORMATION
ITEM 1 -- FINANCIAL STATEMENTS
Dayton Superior Corporation and Subsidiaries
Condensed Consolidated Balance Sheets
As of June 28, 2002 and December 31, 2001
(Amounts in thousands)
(Unaudited)
June 28, December 31,
2002 2001
--------------- -----------------
ASSETS
Current assets:
Cash $ 4,597 $ 4,989
Accounts receivable, net of allowances for doubtful accounts and sales
returns and allowances of $6,655 and $7,423 70,338 51,628
Inventories (Note 3) 55,360 47,900
Prepaid expenses and other current assets 7,082 9,637
Prepaid income taxes 1,959 1,225
Future income tax benefits 7,316 7,962
--------------- -----------------
Total current assets 146,652 123,341
--------------- -----------------
Rental equipment, net (Note 3) 67,345 71,323
--------------- -----------------
Property, plant and equipment 103,075 100,052
Less accumulated depreciation (42,157) (39,931)
--------------- -----------------
Net property, plant and equipment 60,918 60,121
--------------- -----------------
Goodwill and intangible assets, net of accumulated amortization (Note 3) 117,006 136,626
Other assets 4,268 5,432
--------------- -----------------
Total assets $ 396,189 $ 396,843
--------------- -----------------
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Current maturities of long-term debt (Note 4) $ 5,485 $ 5,001
Accounts payable 32,311 27,340
Accrued compensation 14,465 19,935
Other accrued liabilities 10,872 14,122
--------------- -----------------
Total current liabilities 63,133 66,398
Long-term debt, net (Note 4) 311,161 286,945
Deferred income taxes 10,167 13,365
Other long-term liabilities 12,158 13,414
--------------- -----------------
Total liabilities 396,619 380,122
--------------- -----------------
Shareholders' equity (deficit):
Common shares 102,083 102,044
Loans to shareholders (2,945) (3,030)
Treasury shares, at cost, 33,697 and 29,288 shares in 2002 and 2001, respectively (1,167) (979)
Cumulative other comprehensive loss (416) (589)
Accumulated deficit (97,985) (80,725)
--------------- -----------------
Total shareholders' equity (deficit) (430) 16,721
--------------- -----------------
Total liabilities and shareholders' equity (deficit) $ 396,189 $ 396,843
=============== =================
The accompanying notes to consolidated financial statements are an
integral part of these consolidated balance sheets.
2
Dayton Superior Corporation and Subsidiaries
Condensed Consolidated Statements of Operations
For The Three and Six Fiscal Months Ended June 28, 2002 and June 29, 2001
(Amounts in thousands)
(Unaudited)
Three Fiscal Months Ended Six Fiscal Months Ended
----------------------------- ------------------------------
June 28, June 29, June 28, June 29,
2002 2001 2002 2001
------------ ------------ ------------- -------------
Net sales $ 106,506 $ 111,064 $ 185,008 $ 194,421
Cost of sales 69,919 69,610 121,904 125,950
------------ ------------ ------------- -------------
Gross profit 36,587 41,454 63,104 68,471
Selling, general and administrative expenses 22,788 25,756 46,016 51,786
Facility closing and severance expenses (Note 7) 453 3,320 574 3,320
Amortization of goodwill and intangibles 78 1,054 151 1,991
------------ ------------ ------------- -------------
Income from operations 13,268 11,324 16,363 11,374
Other expenses
Interest expense 8,407 8,959 16,413 17,744
Other expense, net 45 (6) 150 4
------------ ------------ ------------- -------------
Income (loss) before provision (benefit) for income
taxes 4,816 2,371 (200) (6,374)
Provision (benefit) for income taxes 1,926 1,126 (80) (3,028)
------------ ------------ ------------- -------------
Net income (loss) before cumulative effect of change in
accounting principle 2,890 1,245 (120) (3,346)
Cumulative effect of change in accounting principle, net of
income tax benefit of $2,754 (Note 3) - - (17,140) -
------------ ------------ ------------- -------------
Net income (loss) $ 2,890 $ 1,245 $ (17,260) $ (3,346)
------------ ------------ ------------- -------------
The accompanying notes to consolidated financial statements are
an integral part of these consolidated statements.
3
Dayton Superior Corporation and Subsidiaries
Condensed Consolidated Statements of Cash Flows
For The Six Fiscal Months Ended June 28, 2002 and June 29, 2001
(Amounts in thousands)
(Unaudited)
June 28, June 29,
2002 2001
---------------- ----------------
Cash Flows From Operating Activities:
Net loss $ (17,260) $ (3,346)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation 10,004 10,035
Amortization of goodwill and intangibles 151 1,991
Cumulative effect of change in accounting principle (Note 3) 17,140 -
Deferred income taxes 202 (1,148)
Amortization of deferred financing costs and debt discount 1,150 1,066
Gain on sales of rental equipment and property, plant and equipment (7,959) (4,950)
Changes in assets and liabilities, net of effects of acquisitions:
Accounts receivable (18,711) (14,273)
Inventories (7,460) (4,045)
Accounts payable 4,971 6,283
Accrued liabilities and other long-term liabilities (10,237) (2,386)
Other, net 2,474 (907)
---------------- ----------------
Net cash used in operating activities (25,535) (11,680)
---------------- ----------------
Cash Flows From Investing Activities:
Property, plant and equipment additions (6,518) (4,383)
Proceeds from sales of fixed assets 1,888 -
Rental equipment additions (6,022) (10,312)
Proceeds from sales of rental equipment 11,426 7,908
Acquisitions (Note 2) - (40,163)
---------------- ----------------
Net cash provided by (used in) investing activities 774 (46,950)
---------------- ----------------
Cash Flows From Financing Activities:
Repayments of long-term debt (1,686) (30,024)
Issuance of long-term debt 25,944 85,925
Purchase of treasury shares (188) (734)
Repayment of loans to shareholders 85 -
Issuance of common shares, net of issuance costs 39 5,371
Financing costs incurred - (741)
---------------- ----------------
Net cash provided by financing activities 24,194 59,797
---------------- ----------------
Effect of Exchange Rate Changes on Cash 175 (60)
---------------- ----------------
Net increase (decrease) in cash (392) 1,107
Cash, beginning of period 4,989 1,782
---------------- ----------------
Cash, end of period $ 4,597 $ 2,889
================ ================
Supplemental Disclosures:
Cash paid (refunded) for income taxes, net $ 355 $ (3,351)
Cash paid for interest 15,557 16,486
Issuance of common shares in conjunction with acquisition - 2,842
Issuance of common shares and loans to shareholders - 309
The accompanying notes to consolidated financial statements are an
integral part of these consolidated statements.
4
Dayton Superior Corporation and Subsidiaries
Condensed Consolidated Statements of Comprehensive Income (Loss)
For The Three and Six Fiscal Months Ended June 28, 2002 and June 29, 2001
(Amounts in thousands)
(Unaudited)
Three Fiscal Months Six Fiscal Months
Ended Ended
------------------------------- -----------------------------
June 28, June 29, June 28, June 29,
2002 2001 2002 2001
------------- --------------- ------------- --------------
Net income (loss) $2,890 $1,245 $(17,260) $(3,346)
Other comprehensive income (loss):
Foreign currency translation adjustment 128 55 175 (60)
------------- --------------- ------------- --------------
Comprehensive income (loss) $3,018 $1,300 $(17,085) $(3,406)
============= =============== ============= ==============
The accompanying notes to consolidated financial statements are an
integral part of these consolidated statements.
5
DAYTON SUPERIOR CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 28, 2002 AND JUNE 29, 2001
(AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
(UNAUDITED)
(1) CONSOLIDATED FINANCIAL STATEMENTS
The interim consolidated financial statements included herein have been
prepared by the Company, without audit, and include, in the opinion of
management, all adjustments necessary to state fairly the information set
forth therein. Any such adjustments were of a normal recurring nature.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with accounting principles generally
accepted in the United States have been omitted, although the Company
believes that the disclosures are adequate to make the information
presented not misleading. It is suggested that these unaudited consolidated
financial statements be read in conjunction with the consolidated financial
statements and the notes thereto included in the Company's annual financial
statements for the year ended December 31, 2001.
(2) ACQUISITIONS
(a) AnconCCL Inc.--On June 19, 2001, the Company acquired the stock of
AnconCCL Inc., dba BarLock ("BarLock"), for approximately $9,900 in
cash, including acquisition costs. The payment was funded through the
Company's credit facility. The business is being operated as part of the
Company's concrete accessories business.
The acquisition has been accounted for as a purchase, and the results of
BarLock have been included in the accompanying financial statements
since the date of acquisition. The purchase price has been allocated
based on the fair values of the assets acquired (approximately $10,800,
including goodwill of $7,100) and liabilities assumed (approximately
$900). Pro forma financial information is not required as this was not a
significant acquisition.
(b) Aztec Concrete Accessories, Inc.--On January 4, 2001, the Company
acquired the stock of Aztec Concrete Accessories, Inc. ("Aztec") for
approximately $32,800, including acquisition costs. The payment of the
purchase price consisted of cash of approximately $29,900 and 105,263
common shares valued at approximately $2,900. The cash portion was
funded through the issuance of 189,629 common shares valued at
approximately $5,100 to Odyssey Investment Partners, LLC ("Odyssey"),
and an increase of approximately $24,800 to the credit facility. The
business is being operated as part of the Company's concrete accessories
business.
6
The acquisition has been accounted for as a purchase, and the results of
Aztec have been included in the accompanying consolidated financial
statements since the date of acquisition. The purchase price has been
allocated based on the fair values of the assets acquired (approximately
$44,000, including goodwill of approximately $35,400) and liabilities
assumed (approximately $11,200, including a deferred compensation
liability of approximately $7,700). Pro forma financial information is
not required as this was not a significant acquisition.
(3) ACCOUNTING POLICIES
The interim consolidated financial statements have been prepared in accordance
with the accounting policies described in the notes to the Company's
consolidated financial statements for the year ended December 31, 2001. While
management believes that the procedures followed in the preparation of interim
financial information are reasonable, the accuracy of some estimated amounts is
dependent upon facts that will exist or calculations that will be made at year
end. Examples of such estimates include changes in the deferred tax accounts and
management bonuses. Any adjustments pursuant to such estimates during the fiscal
quarter were of a normal recurring nature.
(a) Fiscal Quarter--The Company's fiscal year end is December 31. The
Company's fiscal quarters are defined as the periods ending on the
Friday nearest to the end of March, June and September.
(b) Inventories--The Company values all inventories at the lower of
first-in, first-out ("FIFO") cost or market. The Company provides net
realizable value reserves which reflect the Company's best estimate of
the excess of the cost of potential obsolete and slow moving inventory
over the expected net realizable value. Following is a summary of the
components of inventories as of June 28, 2002, and December 31, 2001:
June 28, December 31,
2002 2001
---------------- -------------
Raw materials $ 14,091 $ 11,581
Work in progress 4,973 3,624
Finished goods and work in progress 38,105 34,639
---------------- -------------
57,169 49,844
Net realizable value reserve (1,809) (1,944)
---------------- -------------
$ 55,360 $ 47,900
================ =============
(c) Rental Equipment--Rental equipment is manufactured or purchased by the
Company for resale and for rent to others on a short-term basis. Rental
equipment is recorded at the lower of FIFO cost or market and is
depreciated over the estimated useful life of the equipment, three to
fifteen years, on a straight-line basis. The balances as of June 28,
2002 and December 31, 2001 are net of accumulated depreciation of
$23,064 and $20,002, respectively. Rental revenues and cost of sales
associated with rental revenue are as follows:
7
Three Fiscal Months Six Fiscal Months
Ended Ended
----------------------- -----------------------
June 28, June 29, June 28, June 29,
2002 2001 2002 2001
----------- --------- ---------- ----------
Rental revenue $10,685 $13,068 $21,516 $25,273
Cost of sales 3,360 2,508 6,698 6,984
---------- --------- ---------- ----------
Gross profit $ 7,325 $10,560 $14,818 $18,289
========== ========= ========== ==========
Effective January 1, 2002, the Company changed its accounting estimates
relating to the depreciable life of a portion of its rental fleet. The
change was based upon a study performed by the Company that showed that
the useful life of certain items within the rental fleet was shorter
than the fifteen-year life previously assigned. The study showed that a
three-year life was more appropriate based upon the nature of these
products. These products include smaller hardware and accessories that
accompany steel forms and the recently introduced European forming
systems. As a result of the change, the Company recorded incremental
depreciation of approximately $1,000 in the three months ended June 28,
2002 and approximately $2,100 in the first six months of 2002, which is
reflected in cost of goods sold in the accompanying June 28, 2002
consolidated statement of operations.
Effective January 1, 2001, the Company changed its accounting estimates
relating to the depreciable life of a portion of its rental fleet. The
change was based upon a study performed by the Company that showed that
the renovation of the plywood surface of certain products within the
rental fleet extended the useful life beyond normal repair and
maintenance. Accordingly, the Company began capitalizing rather than
expensing these renovation related expenditures. Simultaneously, the
useful lives of the plywood surface was reduced from fifteen years to
three years to match the useful life of the renovation. As a result of
the change, the Company recorded incremental depreciation of
approximately $2,300 in the six months ended June 29, 2001, which is
reflected in cost of goods sold in the accompanying June 28, 2001
consolidated statement of operations.
(d) New Accounting Pronouncements--In June 2001, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards
("SFAS") No. 141, "Business Combinations" and No. 142 "Goodwill and
Other Intangible Assets." SFAS No. 141 revises the accounting for future
business combinations to only allow the purchase method of accounting.
In addition, the two statements preclude amortization of goodwill for
periods beginning after December 15, 2001. Instead, an annual review of
the recoverability of the goodwill and intangible assets is required.
Certain other intangible assets continue to be amortized over their
estimated useful lives.
The Company adopted SFAS No. 142 effective January 1, 2002. As a result
of adopting SFAS No. 142, the Company recorded a non-cash charge in the
first quarter of 2002 of $17,140 ($19,894 of goodwill, less an income
tax benefit of $2,754), which is reflected as a cumulative effect of
change in accounting principle. This amount does not affect the
Company's ongoing operations. The goodwill arose from the acquisitions
of Dur-O-Wal in 1995, Southern Construction Products in 1999, and
Polytite in 2000, all of which manufacture and sell metal accessories
used in
8
masonry construction. The masonry products market has experienced weaker
markets and significant price competition, which has had a negative
impact on the product line's earnings and fair value.
The following is a reconciliation from reported net income/(loss) to
net income/(loss) adjusted for the amortization of goodwill:
Three Fiscal Months Six Fiscal Months
Ended Ended
-------------------------- --------------------------
June 28, June 29, June 28, June 29,
2002 2001 2002 2001
----------- ---------- ---------- ----------
Net income (loss) before cumulative effect of
change in accounting principle, as reported $2,890 $ 1,245 $ (120) $(3,346)
Amortization of goodwill, net of tax benefit - 933 - 1,688
--------- --------- --------- ---------
Net income (loss) before cumulative effect of
change in accounting principle, as adjusted $2,890 $ 2,178 $ (120) $(1,658)
========= ========= ========= =========
(e) Reclassifications--Certain reclassifications have been made to the 2001
amounts to conform to their 2002 classifications.
(4) CREDIT ARRANGEMENTS
Following is a summary of the Company's long-term debt as of June 28, 2002 and
December 31, 2001:
June 28, December 31,
2002 2001
------------- --------------
Revolving credit facility, weighted average interest rate of 5.2% $ 27,925 $ 2,000
Acquisition credit facility, weighted average interest rate of 4.7% 9,250 9,250
Term Loan Tranche A, weighted average interest rate of 4.8% 21,053 22,161
Term Loan Tranche B, weighted average interest rate of 5.2% 98,008 98,500
Senior Subordinated Notes, interest rate of 13.0% 170,000 170,000
Debt discount on Senior Subordinated Notes (10,836) (11,297)
Debentures previously held by Dayton Superior Capital Trust,
interest rate of 9.1%, due on demand 1,144 1,214
City of Parsons, Kansas Economic Development Loan, interest
rate of 7.0% 102 118
------------ -----------
Total long-term debt 316,646 291,946
Less current maturities (5,485) (5,001)
------------ -----------
Long-term portion $ 311,161 $ 286,945
============ ===========
As of June 28, 2002, the Company's credit facility consisted of (i) a $50,000
revolving credit facility maturing June 2006, (ii) a $30,000 acquisition
facility, converting from revolving loans into term loans three years from the
closing and maturing June 2006 and (iii) term loan facilities in an aggregate
principal amount of $122,000, consisting of a $23,500 tranche A facility
maturing June 2006 and a $98,500 tranche B facility maturing June 2008.
9
The credit facility provides that the Company will repay (i) the tranche A
facility in quarterly installments commencing March 2002, (ii) the tranche B
facility in quarterly installments, commencing March 2002 and (iii) the
acquisition facility, in equal quarterly installments commencing in June 2004.
The credit facility has several interest rate options, which reprice on a
short-term basis.
At June 28, 2002, the Company had outstanding letters of credit of approximately
$6,300, and the Company had available borrowings of approximately $15,800 under
its revolving credit facility.
The average borrowings, maximum borrowings, and weighted average interest rates
on the revolving credit facility and its predecessor for the periods indicated
were as follows:
Three Fiscal Months Six Fiscal Months
Ended Ended
------------------------ --------------------
June 28, June 29, June 28, June 29,
2002 2001 2002 2001
----------- ----------- ---------- --------
Revolving Credit Facility:
Average borrowing $19,713 $15,323 $14,448 $13,376
Maximum borrowing 29,275 26,425 29,275 26,425
Weighted average interest rate 5.8% 9.1% 6.5% 9.6%
The credit facility contains certain restrictive covenants, which require that,
among other things, the Company maintain a minimum interest coverage ratio, not
exceed a certain leverage ratio, maintain a minimum EBITDA, as defined, and
limit its capital expenditures. The Company was in compliance with its loan
covenants as of June 28, 2002.
The Senior Subordinated Notes (the "Notes") have a principal amount of $170,000
and mature in June 2009. The Notes were issued at a discount, which is being
accreted to the face value using the effective interest method and is reflected
as interest expense. The Notes were issued with warrants that allow the holder
to purchase 117,276 of the Company's Common Shares for $0.01 per share. The
Company's wholly-owned domestic subsidiaries (Aztec Concrete Accessories, Inc.;
Trevecca Holdings, Inc.; Dayton Superior Specialty Chemical Corp.; Symons
Corporation; and Dur-O-Wal, Inc.) have guaranteed the Notes. The wholly-owned
foreign subsidiaries of the Company are not guarantors of the Notes and do not
have any credit arrangements senior to the Notes. Following are the supplemental
consolidating condensed balance sheets as of June 28, 2002 and December 31,
2001, as well as the supplemental consolidating condensed statements of
operations for the three and six fiscal months ended June 28, 2002 and June 29,
2001 and cash flows for the six fiscal months ended June 28, 2002 and June 29,
2001.
10
Dayton Superior Corporation And Subsidiaries
Supplemental Consolidating Condensed Balance Sheet
As of June 28, 2002
Dayton
Superior Guarantor Non Guarantor
Corporation Subsidiaries Subsidiaries Eliminations Consolidated
------------- -------------- --------------- -------------- -------------
ASSETS
Cash $ 4,791 $ (1,184) $ 990 $ - $ 4,597
Accounts receivable, net 36,540 32,185 1,613 - 70,338
Inventories 27,916 26,507 937 - 55,360
Intercompany 64,511 (64,318) (193) - -
Other current assets 8,547 7,642 168 - 16,357
----------- ------------ ------------ ------------- -------------
TOTAL CURRENT ASSETS 142,305 832 3,515 - 146,652
Rental, net 5,997 61,293 55 - 67,345
Property, plant and equipment, net 25,843 34,878 197 - 60,918
Investment in subsidiaries 123,041 - - (123,041) -
Other assets 55,428 65,846 - - 121,274
----------- ------------ ------------ ------------- -------------
TOTAL ASSETS $352,614 $ 162,849 $3,767 $(123,041) $396,189
=========== ============ ============ ============= =============
LIABILITIES AND SHAREHOLDERS'
EQUITY (DEFICIT)
Current maturities of long-term debt $ 5,485 $ - $ - $ - $ 5,485
Accounts payable 15,360 16,550 401 - 32,311
Accrued liabilities 15,430 9,701 206 - 25,337
----------- ------------ ------------ ------------- -------------
TOTAL CURRENT LIABILITIES 36,275 26,251 607 - 63,133
Long-term debt, net 311,161 - - - 311,161
Other long-term liabilities 1,505 20,625 195 - 22,325
Total shareholders' equity (deficit) 3,673 115,973 2,965 (123,041) (430)
----------- ------------ ------------ ------------- -------------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY (DEFICIT) $352,614 $ 162,849 $3,767 $(123,041) $396,189
=========== ============ ============ ============= =============
11
Dayton Superior Corporation And Subsidiaries
Supplemental Consolidating Condensed Balance Sheet
As of December 31, 2001
Dayton
Superior Guarantor Non Guarantor
Corporation Subsidiaries Subsidiaries Eliminations Consolidated
------------- -------------- --------------- -------------- ------------
ASSETS
Cash $ 2,714 $ 832 $1,443 $ - $ 4,989
Accounts receivable, net 20,014 30,516 1,098 51,628
Inventories 23,030 23,925 945 - 47,900
Intercompany 58,692 (58,584) (108) - -
Other current assets 9,046 9,594 184 - 18,824
------------ ------------- ------------- ------------ ------------
TOTAL CURRENT ASSETS 113,496 6,283 3,562 - 123,341
Rental equipment, net 6,256 65,009 58 - 71,323
Property, plant and equipment, net 23,708 36,222 191 - 60,121
Investment in subsidiaries 122,864 - - (122,864) -
Other assets 55,899 86,159 - - 142,058
------------ ------------- ------------- ------------ ------------
TOTAL ASSETS $322,223 $193,673 $3,811 $(122,864) $396,843
============ ============= ============= ============ ============
LIABILITIES AND SHAREHOLDERS'
EQUITY (DEFICIT)
Current maturities of long-term debt $ 5,001 $ - $ - $ - $ 5,001
Accounts payable 12,579 14,548 213 - 27,340
Accrued liabilities 20,004 13,742 311 - 34,057
------------ ------------- ------------- ------------ ------------
TOTAL CURRENT LIABILITIES 37,584 28,290 524 - 66,398
Long-term debt, net 286,945 - - - 286,945
Other long-term liabilities 4,461 22,132 186 - 26,779
Total shareholders' equity (deficit) (6,767) 143,251 3,101 (122,864) 16,721
------------ ------------- ------------- ------------ ------------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $322,223 $193,673 $3,811 $(122,864) $396,843
============ ============= ============= ============ ============
12
Dayton Superior Corporation And Subsidiaries
Supplemental Consolidating Condensed Statement of Operations
Three Fiscal Months Ended June 28, 2002
Dayton
Superior Guarantor Non Guarantor
Corporation Subsidiaries Subsidiaries Consolidated
------------- -------------- --------------- --------------
Net sales $47,256 $57,594 $1,656 $106,506
Cost of sales 28,868 40,203 848 69,919
---------- ----------- ---------- -----------
Gross profit 18,388 17,391 808 36,587
Selling, general and administrative
expenses 10,049 12,378 361 22,788
Facility closing and severance expenses 364 89 - 453
Amortization of goodwill and intangibles 73 5 - 78
Management fees (75) - 75 -
---------- ----------- ---------- -----------
Income (loss) from operations 7,977 4,919 372 13,268
Other expenses
Interest expense 8,207 200 - 8,407
Other expense (income), net 187 (78) (64) 45
---------- ----------- ---------- -----------
Income (loss) before provision (benefit)
for income taxes (417) 4,797 436 4,816
Provision (benefit) for income taxes (167) 1,919 174 1,926
---------- ----------- ---------- -----------
Net loss $ (250) $ 2,878 $ 262 $ 2,890
========== =========== ========== ===========
13
Dayton Superior Corporation And Subsidiaries
Supplemental Consolidating Condensed Statement of Operations
Three Fiscal Months Ended June 29, 2001
Dayton
Superior Guarantor Non Guarantor
Corporation Subsidiaries Subsidiaries Consolidated
------------- -------------- --------------- --------------
Net sales $ 53,705 $54,575 $2,784 $111,064
Cost of sales 35,260 32,571 1,779 69,610
---------- ---------- ----------- -----------
Gross profit 18,445 22,004 1,005 41,454
Selling, general and administrative
expenses 10,126 15,139 491 25,756
Facility closing and severance expenses 1,935 1,385 - 3,320
Amortization of goodwill and intangibles 454 600 - 1,054
Management fees (110) - 110 -
---------- ---------- ----------- -----------
Income (loss) from operations 6,040 4,880 404 11,324
Other expenses
Interest expense 8,777 182 - 8,959
Other expense (income), net (9) 2 1 (6)
---------- ---------- ----------- -----------
Income (loss) before provision (benefit)
for income taxes (2,728) 4,696 403 2,371
Provision (benefit) for income taxes (1,299) 2,229 196 1,126
---------- ---------- ----------- -----------
Net Income (loss) $(1,429) $ 2,467 $ 207 $ 1,245
========== ========== =========== ===========
14
Dayton Superior Corporation And Subsidiaries
Supplemental Consolidating Condensed Statement of Operations
Six Fiscal Months Ended June 28, 2002
Dayton
Superior Guarantor Non Guarantor
Corporation Subsidiaries Subsidiaries Consolidated
------------- -------------- --------------- --------------
Net sales $78,150 $104,184 $2,674 $185,008
Cost of sales 47,389 73,126 1,389 121,904
---------- ----------- ---------- -----------
Gross profit 30,761 31,058 1,285 63,104
Selling, general and administrative
expenses 20,349 24,901 766 46,016
Facility closing and severance expenses 485 89 - 574
Amortization of goodwill and intangibles 141 10 - 151
Management fees (150) - 150 -
---------- ----------- ---------- -----------
Income from operations 9,936 6,058 369 16,363
Other expenses
Interest expense 16,087 326 - 16,413
Other expense, net 109 12 29 150
---------- ----------- ---------- -----------
Income (loss) before provision (benefit)
for income taxes (6,260) 5,720 340 (200)
Provision (benefit) for income taxes (2,504) 2,288 136 (80)
---------- ----------- ---------- -----------
Net Income (loss) before cumulative effect of
change in accounting principle (3,756) 3,432 204 (120)
Cumulative effect of change in accounting
principle, net of income tax benefit of
$2,754 - (17,140) - (17,140)
---------- ----------- ---------- -----------
Net income (loss) $(3,756) $(13,708) $204 $(17,260)
========== =========== ========== ===========
15
Dayton Superior Corporation And Subsidiaries
Supplemental Consolidating Condensed Statement of Operations
Six Fiscal Months Ended June 29, 2001
Dayton
Superior Guarantor Non Guarantor
Corporation Subsidiaries Subsidiaries Consolidated
------------- -------------- --------------- --------------
Net sales $ 93,483 $96,488 $4,450 $194,421
Cost of sales 61,839 61,289 2,822 125,950
---------- ----------- ----------- -----------
Gross profit 31,644 35,199 1,628 68,471
Selling, general and administrative
expenses 20,015 30,891 880 51,786
Facility closing and severance expenses 1,935 1,385 - 3,320
Amortization of goodwill and intangibles 913 1,078 - 1,991
Management fees (150) - 150 -
---------- ----------- ----------- -----------
Income from operations 8,931 1,845 598 11,374
Other expenses
Interest expense 17,418 326 - 17,744
Other expense (income), net (3) 7 - 4
---------- ----------- ----------- -----------
Income (loss) before provision (benefit)
for income taxes (8,484) 1,512 598 (6,374)
Provision (benefit) for income taxes (4,030) 718 284 (3,028)
---------- ----------- ----------- -----------
Net income (loss) $(4,454) $ 794 $ 314 $(3,346)
========== =========== =========== ===========
16
Dayton Superior Corporation And Subsidiaries
Supplemental Consolidating Condensed Statement of Cash Flows
Six Fiscal Months Ended June 28, 2002
Dayton
Superior Guarantor Non Guarantor
Corporation Subsidiaries Subsidiaries Consolidated
------------- -------------- --------------- --------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (3,756) $(13,708) $ 204 $(17,260)
Adjustments to reconcile net income (loss)
to net cash used in operating activities:
Depreciation and amortization 3,614 7,667 24 11,305
Cumulative effect of change in
accounting principle - 17,140 - 17,140
Deferred income taxes 202 - - 202
Gain on sales of rental equipment and
fixed assets (675) (7,274) (10) (7,959)
Change in assets and liabilities (12,315) (15,735) (913) (28,963)
----------- ----------- ----------- ------------
Net cash used in operating activities (12,930) (11,910) (695) (25,535)
----------- ----------- ----------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Property, plant and equipment additions (4,408) (2,081) (29) (6,518)
Proceeds from sales of fixed assets 1,036 852 - 1,888
Rental equipment additions (346) (5,670) (6) (6,022)
Proceeds from sales of rental equipment 350 11,059 17 11,426
----------- ----------- ----------- ------------
Net cash provided by (used in)
investing activities (3,368) 4,160 (18) 774
----------- ----------- ----------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of long-term debt, net 24,258 - - 24,258
Redemption of Class A common shares and
purchase of treasury shares (188) - - (188)
Repayment of loans to shareholders 85 - - 85
Issuance of common shares 39 - - 39
Intercompany (5,819) 5,734 85 -
----------- ----------- ----------- ------------
Net cash provided by financing
activities 18,375 5,734 85 24,194
----------- ----------- ----------- ------------
EFFECT OF EXCHANGE RATE CHANGES ON CASH - - 175 175
----------- ----------- ----------- ------------
Net increase (decrease) in cash 2,077 (2,016) (453) (392)
CASH, beginning of period 2,714 832 1,443 4,989
----------- ----------- ----------- ------------
CASH, end of period $ 4,791 $ (1,184) $ 990 $ 4,597
=========== =========== =========== ============
17
Dayton Superior Corporation And Subsidiaries
Supplemental Consolidating Condensed Statement of Cash Flows
Six Fiscal Months Ended June 29, 2001
Dayton
Superior Guarantor Non Guarantor
Corporation Subsidiaries Subsidiaries Consolidated
------------- ------------- --------------- --------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (4,454) $ 794 $ 314 $ (3,346)
Adjustments to reconcile net income (loss)
to net cash provided by (used in)
operating activities:
Depreciation and amortization 4,178 8,891 23 13,092
Deferred income taxes (1,148) - - (1,148)
Gain on sales of rental equipment and
fixed assets (307) (4,584) (59) (4,950)
Change in assets and liabilities, net of
the effects of acquisitions (16,022) 3,059 (2,365) (15,328)
----------- ------------ ---------- -----------
Net cash provided by (used in)
operating activities (17,753) 8,160 (2,087) (11,680)
----------- ------------ ---------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Property, plant and equipment additions (1,560) (2,802) (21) (4,383)
Rental equipment additions (759) (9,514) (39) (10,312)
Proceeds from sale of rental equipment 727 7,065 116 7,908
Acquisitions, net (40,163) - - (40,163)
----------- ------------ ---------- -----------
Net cash provided by (used in)
investing activities (41,755) (5,251) 56 (46,950)
----------- ------------ ---------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of long-term debt, net 55,901 - - 55,901
Purchase of treasury shares (734) - - (734)
Issuance of common shares 5,371 - - 5,371
Financing costs incurred (741) - - (741)
Intercompany (1,783) (59) 1,842 -
----------- ------------ ---------- -----------
Net cash provided by (used in)
financing activities 58,014 (59) 1,842 59,797
----------- ------------ ---------- -----------
EFFECT OF EXCHANGE RATE CHANGES ON CASH - - (60) (60)
----------- ------------ ---------- -----------
Net increase (decrease) in cash (1,494) 2,850 (249) 1,107
CASH, beginning of period 1,603 (825) 1,004 1,782
----------- ------------ ---------- -----------
CASH, end of period $ 109 $ 2,025 $ 755 $ 2,889
=========== ============ ========== ===========
18
(5) STOCK OPTION PLANS
The Company has a stock option plan, which provides for an option exercise price
equal to the stock's market price on the date of grant. The options are
accounted for under APB Opinion No. 25, under which no compensation costs have
been recognized. Had compensation cost for these plans been determined
consistent with Statement of Financial Accounting Standards No.123, "Accounting
for Stock-Based Compensation" ("SFAS 123"), the Company's net income (loss) for
the three and six fiscal months ended June 28, 2002 and June 29, 2001 would have
been reduced to the following pro forma amounts:
Three Fiscal Months Six Fiscal Months
Ended Ended
------------------------ --------------------------
June 28, June 29, June 28, June 29,
2002 2001 2002 2001
------------ ---------- ------------ ------------
Net income (loss) As Reported $2,890 $1,245 $(17,260) $(3,346)
Pro Forma 2,844 1,061 (17,357) (3,725)
Because the SFAS 123 method of accounting has not been applied to options
granted prior to January 1, 1995, the resulting pro forma compensation cost may
not be representative of that to be expected in future years.
A summary of the activity of the Company's stock option plans for the six fiscal
months ended June 28, 2002 is presented in the table below:
Weighted
Average
Number of Exercise Price
Shares Per Share
------------- -----------------
Outstanding at December 31, 2001 541,258 $ 24.17
Granted 7,839 27.50
Exercised (3,050) 2.29
Cancelled (4,865) 24.08
------------- -----------------
Outstanding at June 28, 2002 541,182 $ 24.34
============= =================
(6) SEGMENT REPORTING
The Company operates in three segments: concrete accessories, concrete forming
systems, and paving products. The segments are differentiated by their products
and services, all of which serve the construction industry.
Sales between segments are recorded at normal selling price by the selling
division and at cost for the buying division, with the profit recorded as an
intersegment elimination. Segment assets include accounts receivable;
inventories; property, plant, and equipment; rental equipment; and an allocation
of goodwill. Corporate and unallocated assets include cash, prepaid income
taxes, future tax benefits, and financing costs. Export sales and sales by
non-U.S. affiliates are not significant.
19
Information about the income (loss) of each segment and the reconciliations to
the consolidated amounts for the three and six fiscal months ended June 28, 2002
and June 29, 2001 follows:
Three Fiscal Months Six Fiscal Months
Ended Ended
------------------------- ------------------------
June 28, June 29, June 28, June 29,
2002 2001 2002 2001
----------- ----------- ----------- -----------
Concrete Accessories $ 57,337 $ 61,341 $ 103,503 $ 109,890
Concrete Forming Systems 30,211 34,846 55,149 59,807
Paving Products 18,958 14,877 26,356 24,724
---------- ---------- ---------- ----------
Net sales to external customers $ 106,506 $ 111,064 $ 185,008 $ 194,421
========== ========== ========== ==========
Concrete Accessories $ 1,480 $ 1,467 $ 2,638 $ 2,565
Concrete Forming Systems 2,312 2,132 4,022 3,430
Paving Products 695 878 1,195 1,295
---------- ---------- ---------- ----------
Net sales to other segments $ 4,487 $ 4,477 $ 7,855 $ 7,290
========== ========== ========== ==========
Concrete Accessories $ 10,155 $ 7,471 $ 14,739 $ 11,835
Concrete Forming Systems 4,590 5,780 6,083 4,135
Paving Products 2,711 2,355 2,664 2,634
Corporate (1,609) (1,650) (3,070) (3,238)
Intersegment Eliminations (2,579) (2,632) (4,053) (3,992)
---------- ---------- ---------- ----------
Income from operations $ 13,268 $ 11,324 $ 16,363 $ 11,374
========== ========== ========== ==========
Concrete Accessories $ 2,734 $ 3,277 $ 5,518 $ 6,438
Concrete Forming Systems 4,676 4,967 9,181 9,980
Paving Products 997 715 1,714 1,326
---------- ---------- ---------- ----------
Interest expense $ 8,407 $ 8,959 $ 16,413 $ 17,744
========== ========== ========== ==========
Concrete Accessories $ 7,311 $ 4,200 $ 9,079 $ 5,393
Concrete Forming Systems (21) 813 (3,111) (5,845)
Paving Products 1,714 1,640 955 1,308
Corporate (1,609) (1,650) (3,070) (3,238)
Intersegment Eliminations (2,579) (2,632) (4,053) (3,992)
---------- ---------- ---------- ----------
Income (loss) before income taxes $ 4,816 $ 2,371 $ (200) $ (6,374)
========== ========== ========== ==========
Concrete Accessories $ 1,037 $ 1,326 $ 2,244 $ 2,608
Concrete Forming Systems 3,509 2,309 6,924 6,763
Paving Products 365 275 708 549
Corporate 73 53 128 115
---------- ---------- ---------- ----------
Depreciation $ 4,984 $ 3,963 $ 10,004 $ 10,035
========== ========== ========== ==========
Concrete Accessories $ 23 $ 862 $ 83 $ 1,688
Concrete Forming Systems 10 148 10 210
Paving Products 45 44 58 93
---------- ---------- ---------- ----------
Amortization of goodwill and intangibles $ 78 $ 1,054 $ 151 $ 1,991
========== ========== ========== ==========
20
Information regarding capital expenditures by segment and the reconciliation to
the consolidated amounts for the three and six fiscal months ended June 28, 2002
and June 29, 2001 is as follows:
Three Fiscal Months Six Fiscal Months
Ended Ended
--------------------- ---------------------
June 28, June 29, June 28, June 29,
2002 2001 2002 2001
---------- --------- ---------- ---------
Concrete Accessories $ 1,386 $ 1,460 $ 2,135 $ 2,481
Concrete Forming Systems 417 685 1,333 1,295
Paving Products 822 283 3,004 485
Corporate 46 122 46 122
-------- -------- -------- --------
Property, Plant and Equipment Additions $ 2,671 $ 2,550 $ 6,518 $ 4,383
======== ======== ======== ========
Concrete Accessories $ 166 $ 483 $ 426 $ 812
Concrete Forming Systems 1,598 4,685 5,596 9,500
-------- -------- -------- --------
Rental Equipment Additions $ 1,764 $ 5,168 $ 6,022 $10,312
======== ======== ======== ========
Information regarding each segment's assets and the reconciliation to the
consolidated amounts as of June 28, 2002 and December 31, 2001 is as follows:
As of
------------------------
June 28, December 31,
2002 2001
--------- -----------
Concrete Accessories $191,720 $212,008
Concrete Forming Systems 134,230 135,302
Paving Products 41,843 24,858
Corporate and Unallocated 28,396 24,675
--------- ----------
Total Assets $396,189 $396,843
========= ==========
21
(7) FACILITY CLOSING AND SEVERANCE EXPENSES
During the second quarter of 2002, the Company approved and began implementing
plans to exit one of its distribution facilities and to reduce overall Company
headcount in order to keep its cost structure in alignment with its net sales.
The total anticipated cost of the facility closure and severance was $440, and
was to encompass approximately eight employee terminations. The total estimated
exit costs are comprised of approximately $190 related to employee involuntary
termination benefits, approximately $220 related to lease termination costs, and
approximately $30 related to other post-closing maintenance costs. Accordingly,
the Company recorded a facility closing and severance expense of approximately
$440 in the second quarter of 2002. Of the amounts accruable at the time of the
plan's approval, approximately $334 is included in "Other Accrued Liabilities"
in the accompanying June 28, 2002 consolidated balance sheet.
At the end of the second quarter of 2002, plans were also being developed to
further reduce employee headcount throughout the Company. Since these plans were
not yet fully developed, no facility closing and severance costs were reflected
at the end of the second quarter of 2002, but these will be reflected in the
third quarter results for 2002.
During 2001, the Company approved and began implementing two plans to exit
certain manufacturing and distribution facilities and to reduce overall Company
headcount. As a result of the continued implementation of the plans, the Company
has incurred $134 of facility closing and severance expense in 2002, which is
related primarily to facility relocation activities. Of the amounts accruable at
the time of the plans' approval, approximately $1,102 is included in "Other
Accrued Liabilities" in the accompanying June 28, 2002 consolidated balance
sheet.
Below is a summary of the amounts charged against the facility closing and
severance reserves in 2002:
Six Fiscal
Months Ended
June 28, 2002
---------------
Balance at December 31, 2001 $2,900
Facility Closing and Severance Expense 574
Items Charged Against Reserve:
Involuntary Termination Costs (901)
Lease Termination Costs (295)
Other Post-Closing Costs (842)
-------------
Balance at June 28, 2002 $1,436
=============
22
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
OVERVIEW
We believe we are the largest North American manufacturer and distributor of
metal accessories and forms used in concrete construction and of metal
accessories used in masonry construction. Although almost all of our products
are used in concrete or masonry construction, the function and nature of the
products differ widely. As of June 28, 2002, we have three principal operating
divisions, which are organized around the following product lines:
- Concrete Accessories;
- Concrete Forming Systems; and
- Paving Products.
ACQUISITIONS
We have completed and integrated two acquisitions since the beginning of 2001.
These acquisitions are summarized in the following table:
Purchase Price
Date Business Acquired Division (In millions)
---- ----------------- -------- -------------
January 2001 Aztec Concrete Accessories Concrete Accessories $32.8
June 2001 BarLock Concrete Accessories 9.9
23
RESULTS OF OPERATIONS
The following table summarizes our results of operations as a percentage of net
sales.
Three Fiscal Months Six Fiscal Months
Ended Ended
June 28, June 29, June 28, June 29,
2002 2001 2002 2001
---------- ---------- --------- ---------
Net sales 100.0% 100.0% 100.0% 100.0%
Cost of sales 65.6 62.7 65.9 64.8
---------- ---------- --------- ---------
Gross profit 34.4 37.3 34.1 35.2
Selling, general and administrative expenses 21.4 23.2 24.9 26.6
Facility closing and severance expenses 0.4 3.0 0.3 1.7
Amortization of goodwill and intangibles 0.1 0.9 0.1 1.0
---------- ---------- --------- ---------
Income from operations 12.5 10.2 8.8 5.9
Interest expense, net 7.9 8.1 8.8 9.1
Other expense, net 0.1 - 0.1 0.1
---------- ---------- --------- ---------
Income (loss) before provision (benefit) for
income taxes 4.5 2.1 (0.1) (3.3)
Provision (benefit) for income taxes 1.8 1.0 - (1.6)
---------- ---------- --------- ---------
Net before cumulative effect of change in accounting
principle 2.7 1.1 (0.1) (1.7)
Cumulative effect of change in accounting principle - - (9.2) -
---------- ---------- --------- ---------
Net loss 2.7% 1.1% (9.3)% (1.7)%
========== ========== ========= =========
COMPARISON OF THREE FISCAL MONTHS ENDED JUNE 28, 2002 AND JUNE 29, 2001
NET SALES
Net sales decreased $4.6 million, or 4.1%, to $106.5 million in the second
quarter of 2002 from $111.1 million in the second quarter of 2001. The following
table summarizes net sales by segment:
Three Fiscal Months Ended
-------------------------------------------------------
June 28, 2002 June 29, 2001
-------------------------- --------------------------
(In thousands)
Net Sales % Net Sales % % Change
------------- --------- ------------ --------- -----------
Concrete accessories $ 58,817 55.2% $ 62,808 56.5% (6.4)%
Concrete forming systems 32,523 30.5 36,978 33.3 (12.0)
Paving products 19,653 18.5 15,755 14.2 24.7
Intersegment eliminations (4,487) (4.2) (4,477) (4.0) 0.2
------------- --------- ------------ ---------
Net sales $106,506 100.0% $111,064 100.0% (4.1)%
============= ========= ============ =========
24
Net sales of concrete accessories decreased $4.0 million, or 6.4%, to $58.8
million in the second quarter of 2002 from $62.8 million in the second quarter
of 2001. This was due to unfavorable volume and pricing as the concrete
accessories markets were weaker in the second quarter of 2002 compared to 2001.
This was partially offset by increased sales as a result of the BarLock
acquisition, which contributed $1.4 million.
Net sales of concrete forming systems decreased 12.0% to $32.5 million for the
second quarter of 2002 compared to $37.0 million in the second quarter of 2001.
This was also due to unfavorable volume and pricing as the concrete forming
systems markets were weaker in the second quarter of 2002 compared to 2001.
Net sales of paving products increased $3.9 million, or 24.7%, in the second
quarter of 2002 compared to the second quarter of 2001. In the first quarter of
2002, state funding for highway construction projects was down as a result of
the recession and continued delays in activity on some larger airport runway
projects as a result of the September 11, 2001 terrorist attacks. During the
second quarter of 2002, state funding was released for these projects, and
accordingly the paving products division benefited from this increased volume.
GROSS PROFIT
Gross profit for the second quarter of 2002 was $36.6 million, a decrease of
$4.9 million from $41.5 million in the second quarter of 2001. This was due to
the unfavorable sales volume and pricing discussed previously, as well as $1.0
million of additional depreciation expense from the change in accounting
estimate in 2002. These factors were offset partially by the cost savings
realized from the implementation of the 2001 and 2002 facility closing and
severance plans.
Gross margin was 34.4% in the second quarter of 2002, decreasing from 37.3% in
the same quarter of 2001. This was due to the unfavorable sales volume and
unfavorable pricing, both of which are attributable to our markets being weaker
in 2002 compared to 2001. Gross margins were also unfavorably impacted by a
shift in the mix of products sold, as paving products have lower gross margins.
These were offset partially by the cost savings realized from the implementation
of the 2001 and 2002 facility closing and severance plans.
OPERATING EXPENSES
Selling, general, and administrative expenses ("SG&A expenses") decreased $3.0
million to $22.8 million in the second quarter of 2002, from $25.8 million in
the second quarter of 2001, primarily due to the cost savings realized from the
implementation of the 2001 and 2002 facility closing and severance plans and the
receipt of approximately $0.4 million, net of recovery expenses, from Royal
Surplus Lines Insurance Co. to cover certain costs related to the EFCO
litigation. These factors were offset partially by the increased SG&A expenses
as a result of the BarLock acquisition.
During the second quarter of 2002, we approved and began implementing plans to
exit one of our distribution facilities and to reduce overall headcount in order
to keep our cost structure in alignment with our net sales. The total
anticipated cost of the facility closure and severance is $0.4 million, and is
to encompass approximately eight employee
25
terminations. The total estimated exit costs are comprised of approximately $0.2
million related to employee involuntary termination benefits, and approximately
$0.2 million related to lease termination costs and other post-closing
maintenance costs. Accordingly, we recorded a facility closing and severance
expense of approximately $0.4 million in the second quarter of 2002. Of the
amounts accruable at the time of the plan's approval, approximately $0.3 million
is included in "Other Accrued Liabilities" in the accompanying June 28, 2002
consolidated balance sheet.
At the end of the second quarter of 2002, plans were also being developed to
further reduce employee headcount throughout the Company. Since these plans were
not yet fully developed, no facility closing and severance costs were reflected
at the end of the second quarter of 2002, but these will be reflected in the
third quarter results for 2002.
During 2001, we approved and began implementing two plans to exit certain
manufacturing and distribution facilities and to reduce overall headcount. As a
result of the continued implementation of the plans, we incurred $0.1 million of
facility closing and severance expense in 2002, which is related primarily to
facility relocation activities. Of the amounts accruable at the time of the
plans' approval, approximately $1.1 million is included in "Other Accrued
Liabilities" in the accompanying June 28, 2002 consolidated balance sheet.
Below is a summary of the amounts charged against the facility closing and
severance reserves in 2002:
Three Fiscal
Months Ended
June 28, 2002
-------------
Balance at March 29, 2002 $1.8
Facility Closing and Severance Expense 0.5
Items Charged Against Reserve:
Involuntary Termination Costs (0.4)
Lease Termination Costs (0.1)
Other Post-Closing Costs (0.4)
-------------
Balance at June 28, 2002 $1.4
=============
Amortization of goodwill and intangibles decreased to $0.1 million in the second
quarter of 2002 from $1.1 million in the second quarter of 2001 due to the
adoption of Statement of Financial Accounting Standards ("SFAS") No. 142
"Goodwill and Other Intangible Assets." This statement precludes amortization of
goodwill for periods beginning after December 15, 2001. Instead, an annual
review of the recoverability of the goodwill and intangible assets is required.
Certain other intangible assets continue to be amortized over their estimated
useful lives. The adoption of the new accounting standard will result in a
reduction in annual amortization expense of approximately $3.7 million. The
amount of amortization expense recognized in the second quarter of 2001, which
was not recognized in the second quarter of 2002 was approximately $1.0 million.
26
OTHER EXPENSES
Interest expense decreased to $8.4 million in the second quarter of 2002 from
$9.0 million in the second quarter of 2001 due to lower interest rates in the
second quarter of 2002 compared to 2001, offset partially by increased long-term
debt resulting from the acquisition of BarLock in June 2001.
INCOME BEFORE INCOME TAXES
Income before income taxes in the second quarter of 2002 was $4.8 million as
compared to $2.4 million in the second quarter of 2001 and was comprised of the
following:
Three Fiscal Months Ended
-------------------------------------
June 28, June 29,
2002 2001
---------------- -----------------
Concrete accessories $7,311 $4,200
Concrete forming systems (21) 813
Paving products 1,714 1,640
Corporate (1,609) (1,650)
Intersegment eliminations (2,579) (2,632)
------------ -------------
Income before income taxes $4,816 $2,371
============ =============
Concrete accessories' income before income taxes of $7.3 million in the second
quarter of 2002 increased from $4.2 million in the second quarter of 2001. This
was due to the benefit of the cost reduction initiatives implemented by
management, the benefit provided from the acquisition of BarLock, the reduction
in amortization expense with the adoption of SFAS No. 142, and lower interest
expense as a result of lower interest rates. In addition, the facility closing
and severance charge recorded in the second quarter of 2001 was $2.9 million
compared to $0.4 million in the second quarter of 2002. These were offset
partially by the decreased sales volume, unfavorable pricing and unfavorable mix
in the existing business due to weaker markets in 2002 compared to 2001.
Concrete forming systems was virtually break-even in the second quarter of 2002
compared to income of $0.8 million in the second quarter of 2001. This was due
to the decreased sales volume, unfavorable pricing and unfavorable mix, as well
as $1.0 million of additional depreciation expense from the change in accounting
estimate in 2002. These were offset partially by the benefit of the cost
reduction initiatives implemented by management, and lower interest expense as a
result of lower interest rates.
Income before income taxes from paving products increased to $1.7 million in the
second quarter of 2002 from $1.6 million in the second quarter of 2001. This was
due to the increased net sales volume in the second quarter of 2002, offset
partially by increased interest expense as a result of average borrowings being
higher in 2002. The increase in average borrowings was due primarily to an
inventory build as a result of the first quarter 2002 delays in releasing state
funding for highway construction projects and delays in activity on some larger
airport runway projects, and increased spending on the construction of a new
facility in Birmingham, AL.
Corporate expenses in the second quarter of 2002 decreased slightly from the
second quarter of 2001 as a result of the cost reduction initiatives implemented
by management.
Elimination of profit on intersegment sales was virtually flat between periods
at $2.6 million.
27
NET INCOME
The effective tax rate decreased to 40.0% in the second quarter of 2002 from
47.5% in the second quarter of 2001. The reduction in the effective tax rate is
due to the adoption of SFAS No. 142, which eliminated non-deductible goodwill
amortization in the second quarter of 2002. Net income for the second quarter of
2002 was $2.9 million compared to $1.2 million in the second quarter of 2001 due
to the factors described above.
COMPARISON OF SIX FISCAL MONTHS ENDED JUNE 28, 2002 AND JUNE 29, 2001
NET SALES
Net sales decreased $9.4 million, or 4.8%, to $185.0 million in the first half
of 2002 from $194.4 million in the first half of 2001. The following table
summarizes net sales by segment:
Six Fiscal Months Ended
--------------------------------------------------------
June 28, 2002 June 29, 2001
--------------------------- ---------------------------
Net Sales % Net Sales % % Change
------------- ------------ -------------- ----------- ------------
Concrete accessories $106,141 57.4% $112,455 57.8% (5.6)%
Concrete forming systems 59,171 32.0 63,237 32.5 (6.4)
Paving products 27,551 14.9 26,019 13.4 5.9
Intersegment eliminations (7,855) (4.3) (7,290) (3.7) 7.8
------------- ------------ -------------- -----------
Net sales $185,008 100.0% $194,421 100.0% (4.8)%
============= ============ ============== ===========
Net sales of concrete accessories decreased $6.3 million, or 5.6%, to $106.1
million in the first half of 2002 from $112.4 million in the first half of 2001.
This was due to unfavorable volume and pricing as the concrete accessories
markets were weaker in the first half of 2002 compared to 2001. This was
partially offset by increased sales as a result of the BarLock acquisition,
which contributed $3.2 million.
Net sales of concrete forming systems decreased 6.4% to $59.2 million for the
first half of 2002 compared to $63.2 million in the first half of 2001. This was
also due to unfavorable volume and pricing as the concrete forming systems
markets were weaker in the first half of 2002 compared to 2001.
Net sales of paving products increased $1.5 million, or 5.9%, in the first half
of 2002 compared to the first half of 2001 due to an increase in volume as a
result of the Transportation Equity Act for the 21st Century, known as TEA-21.
GROSS PROFIT
Gross profit for the first half of 2002 was $63.1 million, a decrease of $5.4
million from $68.5 million in the first half of 2001. This was due to the
unfavorable sales volume and pricing discussed previously, offset partially by
the cost savings realized from the implementation of the 2001 and 2002 facility
closing and severance plans.
28
Gross margin was 34.1% in the first half of 2002, decreasing from 35.2% last
year. This was due to the unfavorable sales volume and unfavorable pricing, both
of which are attributable to our markets being weaker in 2002 compared to 2001.
Gross margins were also unfavorably impacted by a shift in the mix of products
sold, as paving products have lower gross margins. These were offset partially
by the cost savings realized from the implementation of the 2001 and 2002
facility closing and severance plans.
OPERATING EXPENSES
Selling, general, and administrative expenses ("SG&A expenses") decreased $5.8
million to $46.0 million in the first half of 2002, from $51.8 million in the
first half of 2001, primarily due to the cost savings realized from the
implementation of the 2001 and 2002 facility closing and severance plans and the
receipt of approximately $0.4 million, net of recovery expenses, from Royal
Surplus Lines Insurance Co. to cover certain costs related to the EFCO
litigation. These factors were offset partially by the increased SG&A expenses
as a result of the BarLock acquisition.
During the second quarter of 2002, we approved and began implementing plans to
exit one of our distribution facilities and to reduce overall headcount in order
to keep our cost structure in alignment with our net sales. The total
anticipated cost of the facility closure and severance is $0.4 million, and is
to encompass approximately eight employee terminations. The total estimated exit
costs are comprised of approximately $0.2 million related to employee
involuntary termination benefits, and approximately $0.2 million related to
lease termination costs and other post-closing maintenance costs. Accordingly,
we recorded a facility closing and severance expense of approximately $0.4
million in the first half of 2002. Of the amounts accruable at the time of the
plan's approval, approximately $0.3 million is included in "Other Accrued
Liabilities" in the accompanying June 28, 2002 consolidated balance sheet.
At the end of the second quarter of 2002, plans were also being developed to
further reduce employee headcount throughout the Company. Since these plans were
not yet fully developed, no facility closing and severance costs were reflected
at the end of the second quarter of 2002, but these will be reflected in the
third quarter results for 2002.
During 2001, we approved and began implementing plans to exit certain
manufacturing and distribution facilities and to reduce overall headcount in
order to keep our cost structure in alignment with our net sales. The total
anticipated cost of the facility closures and severance was $4.7 million, and
was to encompass approximately 200 employee terminations. Of this amount,
approximately $3.3 million was expensed during the second quarter of 2001. The
total estimated exit costs were comprised of approximately $1.7 million related
to employee involuntary termination benefits, approximately $0.7 million related
to lease termination costs, approximately $1.0 million related to relocation
activities and approximately $1.2 million related to other post-closing
maintenance costs. As a result of the continued implementation of the plans, we
incurred approximately $0.2 million of facility closing and severance expense in
2002, which is related primarily to facility relocation activities. Of the
amounts accruable at the time of the plans' approval, approximately $1.1 million
is included in "Other Accrued Liabilities" in the accompanying June 28, 2002
consolidated balance sheet.
29
Below is a summary of the amounts charged against the facility closing and
severance reserves in 2002:
Six Fiscal
Months Ended
June 28, 2002
---------------
Balance at December 31, 2001 $2.9
Facility Closing and Severance Expense 0.6
Items Charged Against Reserve:
Involuntary Termination Costs (0.9)
Lease Termination Costs (0.3)
Other Post-Closing Costs (0.9)
---------------
Balance at June 28, 2002 $1.4
===============
Amortization of goodwill and intangibles decreased to $0.2 million in the first
half of 2002 from $2.0 million in the first half of 2001 due to the adoption of
Statement of Financial Accounting Standards ("SFAS") No. 142 "Goodwill and Other
Intangible Assets." This statement precludes amortization of goodwill for
periods beginning after December 15, 2001. Instead, an annual review of the
recoverability of the goodwill and intangible assets is required. Certain other
intangible assets continue to be amortized over their estimated useful lives.
The adoption of the new accounting standard will result in a reduction in annual
amortization expense of approximately $3.7 million. The amount of amortization
expense recognized in the first half of 2001, which was not recognized in the
first half of 2002 was approximately $1.8 million.
OTHER EXPENSES
Interest expense decreased to $16.4 million in the first half of 2002 from
$17.7 million in the first half of 2001 due to lower interest rates in the first
half of 2002 compared to 2001, offset partially by increased long-term debt
resulting from the acquisition of BarLock in June 2001.
LOSS BEFORE INCOME TAXES
Loss before income taxes in the first half of 2002 was $0.2 million as compared
to a loss of $6.4 million in the first half of 2001 and was comprised of the
following:
Six Fiscal Months Ended
---------------------------------
June 28, June 29,
2002 2001
---------------- ---------------
Concrete accessories $ 9,079 $ 5,393
Concrete forming systems (3,111) (5,845)
Paving products 955 1,308
Corporate (3,070) (3,238)
Intersegment eliminations (4,053) (3,992)
---------------- ---------------
Income before income taxes $ (200) $(6,374)
================ ===============
30
Concrete accessories' income before income taxes of $9.1 million in the first
half of 2002 increased from $5.4 million in the first half of 2001. This was due
to the benefit of the cost reduction initiatives implemented by management, the
benefit provided from the acquisition of BarLock, the reduction in amortization
expense with the adoption of SFAS No. 142, and lower interest expense as a
result of lower interest rates. In addition, the facility closing and severance
charge recorded in the first half of 2001 was $2.9 million compared to $0.4
million in the first half of 2002. These were offset partially by the decreased
sales volume, unfavorable pricing and unfavorable mix in the existing business
due to weaker markets in 2002 compared to 2001.
Concrete forming systems' loss before income taxes was $3.1 million in the first
half of 2002 compared to a loss of $5.8 million in the first half of 2001. This
was due to the benefit of the cost reduction initiatives implemented by
management and lower interest expense as a result of lower interest rates. These
were offset partially by the decreased sales volume, unfavorable pricing and
unfavorable mix in the existing business due to weaker markets in 2002 compared
to 2001.
Income before income taxes from paving products decreased to $1.0 million in the
first half of 2002 from $1.3 million in the first half of 2001. This was due
primarily to an unfavorable mix of product sales, as well as higher interest
expense as a result of higher average borrowings in 2002. The increase in
average borrowings was due primarily to an inventory build as a result of the
first quarter 2002 delays in releasing state funding for highway construction
projects and delays in activity on some larger airport runway projects, and
increased spending on the construction of a new manufacturing facility in
Birmingham, AL. These were partially offset by the benefit of increased net
sales volume in the first half of 2002.
Corporate expenses decreased to $3.1 million in the first half of 2002 from $3.2
million in the first half of 2001 as a result of the cost reduction initiatives
implemented by management.
Elimination of profit on intersegment sales was $4.1 million in the first half
of 2002 compared to $4.0 million in the first half of 2001.
NET LOSS BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE
The effective tax rate decreased to 40.0% in the first half of 2002 from 47.5%
in the first half of 2001. The reduction in the effective tax rate is due to the
adoption of SFAS No. 142, which eliminated non-deductible goodwill amortization
in the first half of 2002. Net loss before cumulative effect of change in
accounting principle for the first half of 2002 was $0.1 million compared to a
loss of $3.3 million in the first half of 2001 due to the factors described
above.
31
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE
In June 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 141, "Business Combinations" and
No. 142 "Goodwill and Other Intangible Assets." SFAS No. 141 revises the
accounting for future business combinations to only allow the purchase method
of accounting. In addition, the two statements preclude amortization of
goodwill for periods beginning after December 15, 2001. Instead, an annual
review of the recoverability of the goodwill and intangible assets is required.
Certain other intangible assets continue to be amortized over their estimated
useful lives.
We adopted SFAS No. 142 effective January 1, 2002. As a result of adopting SFAS
No. 142, we recorded a non-cash charge in the first half of 2002 of $17.1
million ($19.9 million of goodwill, less an income tax benefit of $2.8 million),
which is reflected as a cumulative effect of change in accounting principle.
This amount does not affect our ongoing operations. The goodwill arose from the
acquisitions of Dur-O-Wal in 1995, Southern Construction Products in 1999, and
Polytite in 2000, all of which manufacture and sell metal accessories used in
masonry construction. The masonry products market has experienced weaker markets
and significant price competition, which has had a negative impact on the
product line's earnings and fair value.
The following is a reconciliation from reported net loss to net loss adjusted
for the amortization of goodwill:
Six Fiscal Months Ended
-------------------------
June 28, June 29,
2002 2001
----------- ------------
Net loss before cumulative effect of change in
accounting principle, as reported $(120) $(3,346)
Amortization of goodwill, net of tax benefit - 1,688
----------- ----------
Net loss before cumulative effect of change in
accounting principle, as adjusted $(120) $(1,658)
=========== ============
NET LOSS
The net loss for the first half of 2002 was $17.3 million compared to a loss of
$3.3 million in the first half of 2001 due to the factors described above.
32
LIQUIDITY AND CAPITAL RESOURCES
Our key statistics for measuring liquidity and capital resources are net cash
provided by operating activities, capital expenditures, amounts available under
the revolving credit facility and cash gap, which is used to control working
capital. Cash gap is defined as the number of days of outstanding accounts
receivable, plus the number of days of inventory on hand, less the number of
days of outstanding accounts payable.
Our capital requirements relate primarily to capital expenditures, debt service
and the cost of acquisitions. Historically, our primary sources of financing
have been cash from operations, borrowings under our revolving line of credit
and the issuance of long-term debt and equity.
Net cash used in operating activities in the first half of 2002 was $25.5
million and was comprised of the following:
Net loss $ (17.3) Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation 10.0
Amortization of goodwill and intangibles 0.2
Cumulative effect of change in accounting principle 17.1
Deferred income taxes 0.2
Amortization of deferred financing costs and debt discount 1.2
Gain on sales of rental equipment and property, plant and equipment (8.0)
Changes in assets and liabilities, net of effects of acquisitions:
Accounts receivable (18.7)
Inventories (7.5)
Accounts payable 5.0
Accrued liabilities and other long-term liabilities (10.2)
Other, net 2.5
--------
Net cash used in operating activities $ (25.5)
========
Our investing activities consisted of net proceeds from the sales of fixed
assets and rental equipment of $0.8 million in the first half of 2002,
compared to net capital expenditures of $6.8 million in the first half of 2001.
As of June 28, 2002, we had long-term debt of $316.6 million, comprised of: (a)
$170.0 million in principal amount of Senior Subordinated Notes, with a net book
value of $159.2 million, (b) $156.2 million outstanding of a $202.0 million
credit facility, which consists of a $50.0 million revolving credit facility, a
$30.0 million acquisition facility, a $23.5 million term loan under the tranche
A facility and a $98.5 million term loan under the tranche B facility, (c) $1.1
million of debentures previously held by the Dayton Superior Capital Trust, and
(d) a $0.1 million note to the City of Parsons, Kansas.
At June 28, 2002, we had outstanding letters of credit of $6.3 million, and we
had available borrowings of $15.8 million under our revolving credit facility.
Approximately $9.3 million of the $30.0 million acquisition facility, $21.1
million of the $23.5 million tranche A facility, and $98.0 million of the $98.5
million tranche B facility were outstanding.
33
Our net borrowings for the first six months of 2002 were $24.3 million, which
was primarily due to the seasonal build in working capital.
At June 28, 2002, working capital was $83.5 million, compared to $56.9 million
at December 31, 2001. The increase in working capital is attributable to normal
seasonal working capital growth.
For the first half of 2002, our average cash gap days were 73, which is five
days unfavorable from the 68 days reported in the first half of 2001. This is
primarily due to increased inventory in the paving products segment because of
the early 2002 delays in activity on some highway construction and airport
runway projects. We expect this paving inventory to return to 2001 levels by
year-end 2002.
We believe our liquidity, capital resources and cash flows from operations are
sufficient to fund planned capital expenditures, working capital requirements
and debt service in the absence of additional acquisitions. As previously
discussed in the "Results of Operations," we have experienced weakness in demand
for some of our products as a result of general economic conditions. If
economic conditions do not improve in the second half of 2002, we may elect to
seek approval from the lenders under our credit facility to modify the financial
ratios applicable to future periods.
We intend to fund future acquisitions with cash, securities, or a combination of
cash and securities, to the extent we use cash for all or part of any
acquisitions. We expect to raise such cash from operations or from borrowings
under our credit facility or, if feasible and attractive, issuances of long-term
debt or additional common shares.
SEASONALITY
Our operations are seasonal in nature with approximately 55% of sales
historically occurring in the second and third quarters. Working capital and
borrowings fluctuate with sales volume.
INFLATION
We do not believe inflation had a significant impact on our operations over the
past two years. In the past, we have been able to pass along all or a portion of
the effect of increases in the price of steel, our principal raw material. There
can be no assurance we will be able to continue to pass on the cost of such
increases in the future. The United States has recently imposed tariffs on
certain steel imported into the United States, which may have the effect of
increasing steel prices. At this point, we are unable to determine the impact
that these tariffs will have on our results of operations.
FORWARD-LOOKING STATEMENTS
This Form 10-Q includes, and future filings by us on Form 10-K, Form 10-Q, and
Form 8-K, and future oral and written statements by us and our management may
include certain forward-looking statements, including (without limitation)
statements with respect to anticipated future operating and financial
performance, growth opportunities and growth rates, acquisition and divestitive
opportunities and other similar forecasts and statements of expectation. Words
such as "expects," "anticipates," "intends," "plans," "believes," "seeks,"
"estimates" and "should," and variations of these words and similar expressions,
are intended to identify these forward-looking statements. Forward-looking
statements by us and our management are based on estimates, projections, beliefs
and assumptions of management and are not guarantees of future performance. We
disclaim any obligation to
34
update or revise any forward-looking statement based on the occurrence of future
events, the receipt of new information, or otherwise.
Actual future performance, outcomes and results may differ materially from those
expressed in forward-looking statements made by us and our management as the
result of a number of important factors. Representative examples of these
factors include (without limitation) the cyclical nature of nonresidential
building and infrastructure construction activity, which can be affected by
factors outside our control such as weakness in the general economy, a decrease
in governmental spending, interest rate increases, and changes in banking and
tax laws; our ability to successfully identify, finance, complete and integrate
acquisitions; increases in the price of steel (our principal raw material) and
our ability to pass along such price increases to our customers; the effects of
weather and seasonality on the construction industry; increasing consolidation
of our customers; the mix of products we sell; the competitive nature of our
industry; and the amount of debt we must service. This list is not intended to
be exhaustive, and additional information can be found in our annual report on
Form 10-K for the year ended December 31, 2001. In addition to these factors,
actual future performance, outcomes and results may differ materially because of
other, more general, factors including (without limitation) general industry and
market conditions and growth rates, domestic economic conditions, governmental
and public policy changes and the continued availability of financing in the
amounts, at the terms and on the conditions necessary to support our future
business.
35
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
At June 28, 2002, we had financial instruments that were sensitive to changes in
interest rates. These financial instruments consist of $170.0 million of
principal amount of fixed rate Senior Subordinated Notes, with a book value of
$159.2 million, a $202.0 million credit facility, of which $156.2 million was
outstanding, and $1.2 million in other fixed-rate, long-term debt.
The Senior Subordinated Notes bear interest at 13.0% on the $170.0 million of
principal and mature in 2009. The estimated fair value of the notes approximates
the face value.
Our credit facility has several interest rate options, which re-price on a
short-term basis. Accordingly, the fair value of the credit facility
approximates its $156.2 million face value. The interest rates at June 28, 2002
range from 4.7% to 5.2%.
Other long-term debt consists of a.) $1.1 million of debentures previously held
by the Dayton Superior Capital Trust, with a fair value of $1.8 million and b.)
a $0.1 million, 7.0% loan due in installments of $32 thousand per year with an
estimated fair value of $0.1 million.
In the ordinary course of our business, we also are exposed to price changes in
raw materials (particularly steel bar and rod and steel flat plate) and products
purchased for resale. The prices of these items can change significantly due to
changes in the markets in which our suppliers operate. We generally do not use
financial instruments to manage our exposure to changes in commodity prices.
36
PART II. -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
As described in Dayton Superior's Annual Report on Form 10-K for the year ended
December 31, 2001, Dayton Superior's Symons Corporation subsidiary is a
defendant in a declaratory judgment action filed in the California Superior
Court in San Francisco by Royal Surplus Lines Insurance Co., Symons' primary
insurance carrier, and Symons' excess insurance carriers. The insurance carriers
are seeking a declaration that Symons is not entitled to insurance coverage
under their policies for the claims made by Symons to recover certain defense
costs and damages paid by Symons in 1999 in a civil action brought by EFCO Corp.
The excess insurance carriers have not asserted claims that would entitle them
to the award of damages against Symons.
In June 2002, Symons settled its claims against Royal. In addition to the $0.2
million partial payment that Royal had paid to Symons in 1999 in the defense of
the underlying EFCO case, Royal paid an additional approximately $1.9 million
($1.1 million net of recovery costs) to Symons in the fourth quarter of 2001,
after deducting the self-insured retention required under the insurance policy.
In June of 2002, Royal paid an additional approximately $0.8 million ($0.4
million net of recovery costs) to Symons in final settlement of its defense and
indemnity obligations under its primary insurance policies. Under the terms of
the final settlement, Royal gave up its right to reclaim any amounts it has paid
to Symons. Symons is proceeding against the excess insurance carriers in this
lawsuit to recover certain amounts it paid in the EFCO case.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits. See Index to Exhibit following the signature page to this report
for a list of Exhibits.
(b) Reports on Form 8-K. During the quarter ended June 28, 2002, we filed the
following Current Reports on Form 8-K:
Current Report on Form 8-K dated June 10, 2002, reporting under Item 4
(Changes in Registrant's Certifying Accountant) the dismissal of Arthur
Andersen LLP as our independent accountants and the engagement of Deloitte &
Touche LLP as our independent accountants for the year ending December 31,
2002.
Current Report on Form 8-K dated June 21, 2002, reporting under Item 5
(Other Events) announcing the naming of Stephen R. Morrey as chief executive
officer, effective July 15, 2002.
37
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DAYTON SUPERIOR CORPORATION
DATE: August 9, 2002 BY: /s/ Alan F. McIlroy
-------------- -----------------------
Alan F. McIlroy
Vice President and
Chief Financial Officer
38
INDEX TO EXHIBITS
-----------------
Exhibit No. Description
- ----------- -----------
(10) Material Contracts
10.1 Form of Amended and Restated Stock Option Agreement entered into
between Dayton Superior Corporation and certain of its executive
officers
10.2 Employment Agreement dated and effective June 12, 2002 by and
between Dayton Superior Corporation and Stephen R. Morrey
(99) Additional Exhibits
99.1 Sarbanes-Oxley certification of President and Chief
Executive Officer.
99.2 Sarbanes-Oxley certification of Vice President and Chief
Financial Officer.
39