UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Quarter Ended September 30, 2003
Commission File Number 0-22206
NIAGARA CORPORATION
------------------------------
(Exact Name of Registrant as Specified in Its Charter)
Delaware
----------------------
(State or Other Jurisdiction of
Incorporation or Organization)
59-3182820
-----------------------
(I.R.S. Employer
Identification Number)
667 Madison Avenue
New York, New York 10021
----------------------------------
(Address of Principal Executive Offices)
(212) 317-1000
------------------------
(Registrant's Telephone
Number, Including Area Code)
N/A
---------------------------------------------------
(Former Name, Former Address and Former Fiscal Year,
if Changed Since Last Report.)
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____.
------
Indicate by check mark whether the registrant is an accelerated filer
(as defined in Rule 12b-2 of the Exchange Act).
Yes ____ No X
------
There were 8,238,517 shares of the registrant's Common Stock
outstanding as of September 30, 2003.
NIAGARA CORPORATION
INDEX TO SEPTEMBER 2003 FORM 10-Q
- -----------------------------------------------------------------------------
PAGE
PART I - FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED):
NIAGARA CORPORATION
CONSOLIDATED BALANCE SHEETS........................... 3
CONSOLIDATED STATEMENTS OF OPERATIONS................. 4
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY........ 6
CONSOLIDATED STATEMENTS OF CASH FLOWS................. 7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS............ 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS................................ 22
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK ..... 32
ITEM 4. CONTROLS AND PROCEDURES ........................................ 33
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS ............................................. 34
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS...................... 34
ITEM 3. DEFAULTS UPON SENIOR SECURITIES................................ 34
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS ........... 35
ITEM 5. OTHER INFORMATION ............................................. 35
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K .............................. 35
SIGNATURES.............................................................. 37
Niagara Corporation
and Subsidiaries
Consolidated Balance Sheets
- --------------------------------------------------------------------------------------------------------------------------------
December 31, September 30,
2002 2003
- --------------------------------------------------------------------------------------------------------------------------------
(unaudited)
Assets
Current:
Cash and cash equivalents $ 5,561,090 $ 1,171,448
Trade accounts receivable, net of allowance for doubtful accounts of
$1,347,000 and $1,133,000 34,283,089 39,376,764
Inventories 55,662,799 57,661,951
Deferred income taxes 1,953,000 2,040,705
Other current assets 3,146,316 3,076,664
- --------------------------------------------------------------------------------------------------------------------------------
Total current assets 100,606,294 103,327,532
Property, plant and equipment, net of accumulated depreciation and
amortization of $50,619,348 and $57,608,189 85,775,275 81,585,777
Goodwill 1,904,499 1,904,499
Deferred financing costs, net of accumulated amortization of $627,252
and $710,268 147,748 118,161
Intangible pension asset 318,000 279,000
Other assets 444,333 283,711
- --------------------------------------------------------------------------------------------------------------------------------
$ 189,196,149 $187,498,680
================================================================================================================================
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 37,656,820 $ 39,325,694
Accrued expenses 11,455,990 15,595,316
Current maturities of long-term debt 7,509,462 8,218,157
- --------------------------------------------------------------------------------------------------------------------------------
Total current liabilities 56,622,272 63,139,167
Other:
Long-term debt, less current maturities 63,816,781 54,235,662
Accrued pension cost 6,729,000 5,396,250
Accrued other postretirement benefits 4,747,067 4,790,934
Deferred income taxes 9,602,000 9,378,000
Other noncurrent liabilities 250,667 213,783
- --------------------------------------------------------------------------------------------------------------------------------
Total liabilities 141,767,787 137,153,796
- --------------------------------------------------------------------------------------------------------------------------------
Stockholders' equity:
Preferred stock, $.001 par value - 500,000 shares authorized; none
outstanding - -
Common stock, $.001 par value - 15,000,000 shares authorized;
9,997,455 issued 9,998 9,998
Additional paid-in capital 50,111,675 50,111,675
Retained earnings 13,525,271 16,084,439
Accumulated other comprehensive loss (7,968,898) (7,611,544)
- --------------------------------------------------------------------------------------------------------------------------------
55,678,046 58,594,568
Treasury stock, at cost, 1,758,938 shares (8,249,684) (8,249,684)
- --------------------------------------------------------------------------------------------------------------------------------
Total stockholders' equity 47,428,362 50,344,884
- --------------------------------------------------------------------------------------------------------------------------------
$ 189,196,149 $ 187,498,680
================================================================================================================================
See accompanying notes to financial statements.
NIAGARA CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
- ---------------------------------------------------------------------------------------------------------------------------------
Three months ended September 30, 2002 2003
- -------------------------------------------------------- -------------------------------------------- ---------------------------
NET SALES $ 67,650,129 $ 69,786,319
COST OF PRODUCTS SOLD 60,779,508 62,253,623
- -------------------------------------------------------- -------------------------------------------- ---------------------------
GROSS PROFIT 6,870,621 7,532,696
OPERATING (EXPENSES) INCOME:
Selling, general and administrative (6,618,897) (6,632,262)
Gain on sale of property 2,906,834 565,092
- -------------------------------------------------------- -------------------------------------------- ---------------------------
INCOME FROM OPERATIONS 3,158,558 1,465,526
OTHER INCOME (EXPENSE):
Interest expense (889,866) (745,742)
Other income 2,563 87,107
- -------------------------------------------------------- -------------------------------------------- ---------------------------
INCOME BEFORE INCOME TAXES 2,271,255 806,891
PROVISION FOR INCOME TAXES 880,000 240,000
- -------------------------------------------------------- -------------------------------------------- ---------------------------
NET INCOME $ 1,391,255 $ 566,891
================================================================================================================================
NET INCOME PER SHARE (BASIC AND DILUTED) $ .17 $ .07
================================================================================================================================
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
(BASIC AND DILUTED) 8,238,517 8,238,517
================================================================================================================================
See accompanying notes to consolidated financial statements.
NIAGARA CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
- -------------------------------------------------------- -------------------------------------------- ---------------------------
Nine months ended September 30, 2002 2003
- -------------------------------------------------------- -------------------------------------------- ---------------------------
NET SALES $ 197,223,228 $ 222,537,317
COST OF PRODUCTS SOLD 175,467,176 197,142,367
- -------------------------------------------------------- -------------------------------------------- ---------------------------
GROSS PROFIT 21,756,052 25,394,950
OPERATING (EXPENSES) INCOME:
Selling, general and administrative (19,029,165) (19,916,045)
Gain on sale of property 2,906,834 450,257
- -------------------------------------------------------- -------------------------------------------- ---------------------------
INCOME FROM OPERATIONS 5,633,721 5,929,162
OTHER INCOME (EXPENSE):
Interest expense (2,707,440) (2,362,242)
Other income 214,771 252,248
- -------------------------------------------------------- -------------------------------------------- ---------------------------
INCOME BEFORE INCOME TAXES 3,141,052 3,819,168
PROVISION FOR INCOME TAXES 1,825,000 1,260,000
- -------------------------------------------------------- -------------------------------------------- ---------------------------
NET INCOME 1,316,052 $ 2,559,168
================================================================================================================================
NET INCOME PER SHARE (BASIC AND DILUTED) $ .16 $ .31
================================================================================================================================
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
(BASIC AND DILUTED) 8,238,517 8,238,517
================================================================================================================================
See accompanying notes to financial statements.
NIAGARA CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(UNAUDITED)
================================================================================================================================
Nine months ended September 30, 2003
- --------------------------------------------------------------------------------------------------------------------------------
Common Stock
------------------------- Accumulated other Total
Number of Amount Additional Retained comprehensive Treasury stockholders'
shares paid-in capital earnings income (loss) stock at cost equity
- ---------------------------------------------------------------------------------------------------------------------------------
BALANCE, JANUARY 1, 2003 9,997,455 $9,998 $50,111,675 $13,525,271 $(7,968,898) $(8,249,684) $47,428,362
Comprehensive income:
Net income for the period - - - 2,559,168 - - 2,559,168
Foreign currency
translation
adjustment (Note 2) - - - - 357,354 - 357,354
- ---------------------------------------------------------------------------------------------------------------------------------
Total comprehensive income - - - - - - 2,916,522
=================================================================================================================================
BALANCE, SEPTEMBER 30, 2003 9,997,455 $9,998 $50,111,675 $16,084,439 $(7,611,544) $(8,249,684) $50,344,884
=================================================================================================================================
See accompanying notes to consolidated financial statements.
NIAGARA CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
=================================================================================================================================
Nine months ended September 30, 2002 2003
- ---------------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,316,052 $ 2,559,168
- ----------------------------------------------------------------------------------------------------------------------------------
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization 6,887,718 6,953,524
Gain on sale of property (2,906,834) (450,257)
Provision for doubtful accounts (45,598) (46,315)
Deferred income taxes 414,619 (311,705)
Pension costs (999,750) (1,332,750)
Other postretirement benefits (277,877) 43,867
Changes in assets and liabilities:
Decrease (increase) in accounts receivable 1,153,705 (4,164,130)
(Increase) in inventories (6,247,464) (1,205,928)
(Increase) decrease in other assets and other current assets (819,587) 148,740
Increase in trade accounts payable, accrued
expenses and other non-current liabilities 10,091,794 4,806,478
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL ADJUSTMENTS 7,250,726 4,441,524
- ----------------------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 8,566,778 7,000,692
- ----------------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of property and equipment 3,109,050 854,068
Acquisition of property and equipment (741,302) (2,582,769)
- ----------------------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES 2,367,748 (1,728,701)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of long-term debt, net (7,948,112) (9,748,103)
- ----------------------------------------------------------------------------------------------------------------------------------
NET CASH USED IN FINANCING ACTIVITIES (7,948,112) (9,748,103)
- ----------------------------------------------------------------------------------------------------------------------------------
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS 363,627 86,470
- ----------------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 3,350,041 (4,389,642)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 1,692,070 5,561,090
- ----------------------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 5,042,111 $ 1,171,448
==================================================================================================================================
See accompanying notes to consolidated financial statements.
NIAGARA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - INFORMATION AS OF
SEPTEMBER 30, 2003 AND FOR THE PERIODS ENDED
SEPTEMBER 30, 2002 AND 2003 IS UNAUDITED.
===============================================================================
1. BASIS OF PRESENTATION BASIS OF PRESENTATION
AND CRITICAL ACCOUNTING
POLICIES The accompanying condensed consolidated
financial statements of Niagara Corporation
("Niagara") and its subsidiaries (together
with Niagara, the "Company"), Niagara
LaSalle Corporation ("Niagara LaSalle"),
LaSalle Steel Company ("LaSalle," and
together with Niagara LaSalle, "Niagara US")
and Niagara LaSalle (UK) Limited ("Niagara
UK"), are unaudited; however, in the opinion
of management, all adjustments necessary for
a fair statement of financial position and
results for the stated periods have been
included. These adjustments are of a normal
recurring nature. Selected information and
footnote disclosures normally included in
financial statements prepared in accordance
with generally accepted accounting
principles have been condensed or omitted.
Certain reclassifications have been also
made in order to conform to current year
presentation. Results for interim periods
are not necessarily indicative of the
results to be expected for an entire fiscal
year. It is suggested that these condensed
consolidated financial statements be read in
conjunction with the Company's audited
financial statements and accompanying notes
for the year ended December 31, 2002.
CRITICAL ACCOUNTING POLICIES
On December 12, 2001, the Securities and
Exchange Commission (the "SEC") issued
Financial Reporting Release No. 60 which
requires a discussion of the critical
accounting policies used by companies in the
preparation of their financial statements.
Note 1 to the Company's audited financial
statements for the year ended December 31,
2002 includes a summary of the significant
accounting policies used by the Company in
the preparation of its financial statements.
The Company believes that the following
critical accounting policies affect the
significant judgments and estimates used in
the preparation of the Company's condensed
consolidated financial statements.
The preparation of these financial
statements requires that management make
estimates and assumptions that affect the
reported amounts of assets and liabilities,
revenues and expenses and the related
disclosure of contingent assets and
liabilities. On an ongoing basis, management
evaluates these estimates, including those
related to inventory reserves, taxes,
doubtful accounts, intangible assets,
insurance, litigation, environmental
compliance and other contingencies.
Management bases its estimates on historical
data, when available, professional advice,
experience and various assumptions that are
believed to be reasonable under the
circumstances, the combined results of which
form the basis for making judgments about
the carrying values of assets and
liabilities. Actual results could differ
from these estimates.
Revenue from the sale of products is
recorded at the time the goods are shipped
and title and risk of loss has transferred.
Revenue from freight charged to customers is
recognized when products are shipped.
Provisions for discounts, customer returns
and other adjustments are provided for in
the period the related sales are recorded
based upon historical data.
The Company reviews the carrying values of
its long-lived and identifiable intangible
assets for possible impairment whenever
events or changes in circumstances indicate
that the carrying amount of the assets may
not be recoverable. The Company assesses
recoverability of these assets by estimating
future nondiscounted cash flows. Any
long-lived assets held for disposal are
reported at the lower of their carrying
amounts or fair value less cost to sell.
EFFECTS OF RECENT ACCOUNTING PRONOUNCEMENTS
In August 2001, the Financial Accounting
Standards Board (the "FASB") issued
Statement of Financial Accounting Standards
("SFAS") No. 143, "Accounting for Asset
Retirement Obligations," which addresses
financial accounting and reporting for
obligations associated with the retirement
of tangible long-lived assets and the
associated asset retirement costs. This
statement is required to be applied for
fiscal years beginning after June 15, 2002.
The adoption of this statement as of January
1, 2003 did not have an effect on the
Company's financial statements.
In April 2002, the FASB issued SFAS No. 145,
"Rescission of FASB Statements No. 4, 44 and
64, and Amendment of FASB Statement No. 13,
and Technical Corrections." This statement,
among other things, rescinds SFAS No. 4,
"Reporting Gains and Losses from
Extinguishment of Debt," which required that
all gains and losses from the extinguishment
of debt be aggregated and, if material,
classified as an extraordinary item, net of
related income tax effect. As a result, the
criteria in Accounting Principles Board
("APB") Opinion No. 30, "Reporting the
Results of Operations - Reporting the
Effects of Disposal of a Segment of a
Business, and Extraordinary, Unusual and
Infrequently Occurring Events and
Transactions," will now be used to classify
such gains and losses. SFAS No. 145 also
amends SFAS No. 13 to require that certain
lease modifications that have economic
effects similar to sale-leaseback
transactions be accounted for in the same
manner as sale-leaseback transactions. Such
provisions of SFAS No. 145 are required to
be applied in fiscal years beginning after
May 15, 2002. The adoption of this statement
as of January 1, 2003 did not have an effect
on the Company's financial statements.
In July 2002, the FASB issued SFAS No. 146,
"Accounting for Costs Associated with Exit
or Disposal Activities." This statement
requires that a liability for a cost
associated with an exit or disposal activity
be recognized when the liability is
incurred, as opposed to prior guidance which
provided that liability for such exit costs
be recognized at the date of an entity's
commitment to an exit or disposal plan. This
statement is required to be applied to exit
or disposal activities that are initiated
after December 31, 2002. The adoption of
this statement as of January 1, 2003 did not
have an effect on the Company's financial
statements.
In November 2002, the FASB issued
Interpretation No. 45, "Guarantor's
Accounting and Disclosure Requirements for
Guarantees, Including Guarantees of the
Indebtedness of Others," which interprets
the guidance in FASB Statement No. 5,
"Accounting for Contingencies," relating to
a guarantor's accounting for, and disclosure
of, certain types of guarantees.
Interpretation No. 45 requires that a
guarantor recognize, at the inception of a
guarantee, a liability for the fair value of
the obligation undertaken in issuing the
guarantee. Under Interpretation No. 45, the
recognition of the liability is required
even if it is not probable that payments
will be required under the guarantee.
Previously, SFAS No. 5 required recognition
of a liability only for a probable loss. The
recognition requirements of Interpretation
No. 45 apply to guarantees issued or
modified after December 31, 2002. The
disclosure requirements are effective for
interim and annual financial statements
ending after December 15, 2002. The adoption
of Interpretation No. 45 as of January 1,
2003 did not have an effect on the Company's
financial statements.
In December 2002, the FASB issued SFAS No.
148, "Accounting for Stock-Based
Compensation--Transition and Disclosure--an
amendment of FASB Statement No. 123," which
amends the disclosure requirements of SFAS
No. 123 to require prominent disclosures in
both annual and interim financial statements
about the method of accounting for
stock-based employee compensation and the
effect on the method used on reported
results. The adoption of this statement as
of January 1, 2003 did not have an effect on
the Company's financial statements.
The Company accounts for its stock option
plan in accordance with the provisions of
APB Opinion No. 25, "Accounting for Stock
Issued to Employees," and related
interpretations. APB No. 25 provides that
compensation expense would be recorded on
the date of grant only if the current market
price of the underlying stock exceeded the
exercise price of the option. SFAS No. 123,
"Accounting for Stock-Based Compensation,"
permits entities to recognize as expense
over the vesting period the fair value of
all stock-based awards on the date of grant.
Alternatively, SFAS No. 123 allows entities
to continue to apply the provisions of APB
No. 25 and provide pro forma net income and
pro forma earnings per share disclosures for
employee stock compensation as if the
fair-value-based method defined in SFAS No.
123 had been applied. The Company has
elected to continue to apply the provisions
of APB No. 25 and provide the pro forma
disclosures required of SFAS No. 123 for
options issued to employees.
The following table illustrates the effect
on net income (loss) and net income (loss)
per share if the Company had applied the
fair value recognition provisions of SFAS
No. 123, as amended by SFAS No. 148, to
stock-based employee compensation:
- -------------------------------------------------------------------------------
Three months ended September 30, 2002 2003
---------------------------------------------- ------------------------ -------------------
Net income, as reported $1,391,255 $ 566,891
Deduct: Total stock-based compensation
expense determined under fair-value based
method for all awards, net of related tax
effects (94,531) (44,637)
---------------------------------------------- ------------------------ -------------------
Pro-forma net income $1,296,724 $ 522,254
---------------------------------------------- ------------------------ -------------------
Net income per share (basic and diluted):
As reported $ .17 $ .07
Pro forma .16 .06
---------------------------------------------- ------------------------ -------------------
Nine months ended September 30, 2002 2003
---------------------------------------------- ------------------------ -------------------
Net income, as reported $1,316,052 $2,559,168
Deduct: Total stock-based compensation
expense determined under fair-value based
method for all awards, net of related tax
effects (283,593) (133,910)
---------------------------------------------- ------------------------ -------------------
Pro-forma net income $1,032,459 $2,425,258
---------------------------------------------- ------------------------ -------------------
Net income per share (basic and diluted):
As reported $ .16 $ .31
Pro forma .13 .29
---------------------------------------------- ------------------------ -------------------
In January 2003, the FASB issued
Interpretation No. 46, "Consolidation of
Variable Interest Entities, an
interpretation of Accounting Research
Bulletin (ARB) No. 51" which defines when a
business enterprise must consolidate a
variable interest entity. Interpretation No.
46, as amended, applies in the first fiscal
year or interim period beginning after
December 15, 2003 to entities in which an
enterprise holds a variable interest that it
acquired before February 1, 2003 and applies
immediately to variable interest entities
created after January 31, 2003. The Company
did not have any variable interest entities
as of September 30, 2003.
In April 2003, the FASB issued SFAS No. 149,
"Amendment of Statement 133 on Derivative
Instruments and Hedging Activities." SFAS
No. 149 amends SFAS No. 133 for certain
decisions made by the FASB and is effective
for contracts entered into or modified after
June 30, 2003 and for hedging relationships
designated after June 30, 2003. SFAS No. 149
is to be applied prospectively. The
provisions of SFAS No. 149 that relate to
SFAS No. 133 implementation issues that have
been effective for fiscal quarters that
began prior to June 15, 2003 continue to be
applicable in accordance with their
respective effective dates. The adoption of
this statement as of July 1, 2003 did not
have an effect on the Company's financial
statements.
In May 2003, the FASB issued SFAS No. 150,
"Accounting for Certain Financial
Instruments with Characteristics of both
Liabilities and Equity" which establishes
standards for classifying and measuring
certain financial instruments with
characteristics of both a liability and
equity. SFAS No. 150 is effective for
financial instruments entered into or
modified after May 31, 2003, and is
otherwise effective at the beginning of the
first interim period beginning after June
15, 2003. The adoption of this statement as
of July 1, 2003 did not have an effect on
the Company's financial statements.
2. FOREIGN CURRENCY Niagara UK, an English company, uses British
TRANSLATION AND pounds sterling ("(pound)") as its
TRANSACTIONS functional currency and its accounts are
translated to United States dollars in
conformity with SFAS No. 52, "Foreign
Currency Translation." Assets and
liabilities of this subsidiary are
translated at the exchange rate in effect at
the balance sheet dates and the related
revenues and expenses have been translated
at the average rates for the periods.
Translation adjustments arising from the use
of different exchange rates from period to
period are included as accumulated other
comprehensive income (loss) within the
Statement of Stockholders' Equity. Gains and
losses resulting from foreign currency
transactions are included in other income
within the Statements of Operations.
3. INVENTORIES Inventories consisted of the following:
December 31, September 30,
2002 2003
------------------------------------------------------------------------------------------
Raw materials $14,749,119 $19,553,647
Work-in-process 4,071,318 4,326,534
Finished goods 36,842,362 33,781,770
------------------------------------------------------------------------------------------
$55,662,799 $57,661,951
------------------------------------------------------------------------------------------
At September 30, 2003, Niagara US inventories were $36,823,497 determined using the LIFO
method and Niagara UK inventories were $20,838,454 determined using the FIFO method.
4. LONG-TERM DEBT At the Company's request, a number of
amendments were made to the Company's credit
facilities during August 2003. These
amendments included (i) the extension of the
maturity dates on Niagara UK's revolving
credit facility and secured invoice discount
agreement to July 31, 2005, (ii) a reduction
in the size of Niagara UK's revolving credit
facility from(pound)2.5 million
(approximately $4.1 million) to (pound)1.25
million (approximately $2.1 million) and
(iii) the extension of the maturity dates on
Niagara US's term loan and revolving credit
facility to July 31, 2006.
5. CONTINGENCIES Niagara US and Niagara UK are subject to
extensive environmental laws and regulations
concerning, among other matters, water and
air emissions and waste disposal. Under such
laws, including the Comprehensive
Environmental Response, Compensation and
Liability Act of 1980 as amended, Niagara US
and Niagara UK may be responsible for parts
of the costs required to remove or remediate
previously disposed wastes or hazardous
substances at the locations they own or
operate or at the locations which they
arranged for disposal of such materials. The
costs expended through September 30, 2003
have been largely covered by insurance.
Management believes that the resolution of
these matters will not have a material
adverse effect on the Company's financial
position or results of operations.
Under the Company's insurance programs,
coverage is obtained for catastrophic
exposures as well as those risks required to
be insured by law or contract. In connection
with these programs, Niagara US has provided
certain insurance carriers with irrevocable
standby letters of credit totaling
$1,545,000 as of September 30, 2003. It is
the policy of the Company to retain a
portion of certain expected losses. These
relate primarily to workers' compensation,
physical loss to property, business
interruption resulting from such loss, and
comprehensive general, product, vehicle,
medical and life benefits and liability.
Provisions for losses expected under these
programs are recorded based upon the
Company's estimates of the aggregate
liability for claims. Such estimates utilize
certain actuarial assumptions followed in
the insurance industry and are included in
accrued expenses.
6. SEGMENTS AND The Company operates in two reportable
RELATED INFORMATION segments: (i) Niagara US which has
operations in the United States and (ii)
Niagara UK which has operations in the
United Kingdom. Management operates these
segments as separate strategic business
units and measures their performance based
on earnings before interest, taxes,
depreciation and amortization ("Adjusted
EBITDA"). Management believes that Adjusted
EBITDA provides the best measurement of
segment performance, in as much as it is
based on a widely accepted measure of
financial performance and cash flows, and
management regularly calculates Adjusted
EBITDA in order to determine compliance with
financial covenants in the Company's credit
facilities.
Niagara UK uses British pounds sterling as
its functional currency and its accounts are
translated to United States dollars in
conformity with SFAS No. 52, "Foreign
Currency Translation." Assets and
liabilities of this subsidiary have been
translated at the exchange rates in effect
on September 30, 2002 and 2003, and the
related revenues and expenses have been
translated at average rates for the periods.
Niagara US sells its products primarily to
customers in the United States.
Of Niagara UK's sales to unaffiliated
customers during the nine months ended
September 30, 2003, approximately 68% were
within the United Kingdom with 19% to
continental Europe and 13% to the rest of
the world. These amounts were 68%, 17% and
15%, respectively, for the nine months ended
September 30, 2002. Niagara UK's sales to
any one foreign country, other than the
United States, for these periods represented
less than 5% of its total sales.
- ------------------------------------------------------------------------------
The following tables set forth certain performance and other
information by each of the Company's reportable segments:
At and for the three months ended September 30, 2002
Corporate/
Niagara US Niagara UK Eliminations Consolidated
------------------------------------------------------------------------------------------------------------------------
Net sales $ 47,352,893 $ 22,154,078 $ (1,856,842) $ 67,650,129
Intersegment sales - 1,856,842 (1,856,842) -
Net sales to unaffiliated customers 47,352,893 20,297,236 - 67,650,129
Segment profit (loss) (Adjusted EBITDA) 3,404,235 (422,556) (416,431) 2,565,248
Depreciation and amortization 1,864,029 372,650 19,332 2,256,011
Interest expense 486,691 403,175 - 889,866
Net income (loss) 425,586 1,157,302 (191,633) 1,391,255
Accounts receivable, net 17,439,501 20,854,058 - 38,293,559
Long-lived assets 73,792,470 11,170,622 495,286 85,458,378
Goodwill 1,904,499 - - 1,904,499
Segment assets 133,662,947 54,104,236 1,078,934 188,846,117
Acquisition of property and equipment 76,932 14,300 14,860 106,092
------------------------------------------------------------------------------------------------------------------------
At and for the nine months ended September 30, 2002
Corporate/
Niagara US Niagara UK Eliminations Consolidated
------------------------------------------------------------------------------------------------------------------------
Net sales $135,057,871 $ 67,539,572 $ (5,374,215) $197,223,228
Intersegment sales - 5,374,215 (5,374,215) -
Net sales to unaffiliated customers 135,057,871 62,165,357 - 197,223,228
Segment profit (loss) (Adjusted EBITDA) 11,775,076 (821,247) (1,139,537) 9,814,292
Depreciation and amortization 5,565,754 1,253,984 67,980 6,887,718
Interest expense 1,526,272 1,181,168 - 2,707,440
Net income (loss) 2,447,635 (1,013,253) (118,330) 1,316,052
Accounts receivable, net 17,439,501 20,854,058 - 38,293,559
Long-lived assets 73,792,470 11,170,622 495,286 85,458,378
Goodwill 1,904,499 - - 1,904,499
Segment assets 133,662,947 54,104,236 1,078,934 188,846,117
Acquisition of property and equipment 504,047 235,400 1,855 741,302
------------------------------------------------------------------------------------------------------------------------
At and for the three months ended September 30, 2003
Corporate/
Niagara US Niagara UK Eliminations Consolidated
------------------------------------------------------------------------------------------------------------------------
Net sales 46,967,120 $25,311,385 $ (2,492,186) $ 69,786,319
Intersegment sales - 2,492,186 (2,492,186) -
Net sales to unaffiliated customers 46,967,120 22,819,199 - 69,786,319
Segment profit (loss) (Adjusted EBITDA) 3,660,077 (207,168) (302,917) 3,149,992
Depreciation and amortization 1,865,500 364,058 20,000 2,249,558
Interest expense 396,358 349,384 - 745,742
Net income (loss) 700,172 218,878 (352,159) 566,891
Accounts receivable, net 15,870,654 23,506,110 - 39,376,764
Long-lived assets 72,568,765 9,970,925 (273,042) 82,266,648
Goodwill 1,904,499 - - 1,904,499
Segment assets 130,462,524 57,217,910 (181,754) 187,498,680
Acquisition of property and equipment, net 1,650,420 363,449 (844,687) 1,169,182
------------------------------------------------------------------------------------------------------------------------
At and for the nine months ended September 30, 2003
Corporate/
Niagara US Niagara UK Eliminations Consolidated
------------------------------------------------------------------------------------------------------------------------
Net sales $147,255,857 $83,967,176 $ (8,685,716) $222,537,317
Intersegment sales - 8,685,716 (8,685,716) -
Net sales to unaffiliated customers 147,255,857 75,281,460 - 222,537,317
Segment profit (loss) (Adjusted EBITDA) 11,613,321 2,030,723 (1,211,615) 12,432,429
Depreciation and amortization 5,596,570 1,296,954 60,000 6,953,524
Interest expense 1,262,722 1,099,520 - 2,362,242
Net income (loss) 2,436,201 881,328 (758,361) 2,559,168
Accounts receivable, net 15,870,654 23,506,110 - 39,376,764
Long-lived assets 72,568,765 9,970,925 (273,042) 82,266,648
Goodwill 1,904,499 - - 1,904,499
Segment assets 130,462,524 57,217,910 (181,754) 187,498,680
Acquisition of property and equipment 2,922,284 833,120 (1,172,635) 2,582,769
------------------------------------------------------------------------------------------------------------------------
The following tables provide a reconciliation of the Company's segment
profit (loss) (Adjusted EBITDA) for the three and nine month periods
ending September 30, 2002 and 2003, to the respective net income (loss)
for such periods attributable to each reportable segment:
Three months ended September 30,
2002 2003
--------------------------------------- -------------------------------------
Niagara US Niagara UK Niagara US Niagara UK
---------------------------------------------------------------------------------------------------------------------
Segment profit (loss) (Adjusted EBITDA) $ 3,404,235 $ (422,556) $ 3,660,077 $ (207,168)
Depreciation and amortization (1,864,029) (372,650) (1,865,500) (364,058)
Gain on sale of property - 2,906,834 - 565,092
Intercompany gain on sale of property - - - 574,396
Interest expense (486,691) (403,175) (396,358) (349,384)
Intercompany interest income (expense) 6,104 (6,104) - -
Other income 2,563 - 87,107 -
Provision for doubtful accounts (27,000) (31,209) - -
Management fees (337,500) 216,765 (337,500) -
(Provision) benefit for income taxes (272,096) (730,603) (447,654) -
---------------------------------------------------------------------------------------------------------------------
Net income (loss) $ 425,586 $ 1,157,302 $ 700,172 $ 218,878
---------------------------------------------------------------------------------------------------------------------
Nine months ended September 30,
2002 2003
--------------------------------------- -------------------------------------
Niagara US Niagara UK Niagara US Niagara UK
---------------------------------------------------------------------------------------------------------------------
Segment profit (loss) (Adjusted EBITDA) $ 11,775,076 $ (821,247) $ 11,613,321 $ 2,030,723
Depreciation and amortization (5,565,754) (1,253,984) (5,596,570) (1,296,954)
Gain on sale of property - 2,906,834 - 450,257
Intercompany gain on sale of property - - - 796,822
Interest expense (1,526,272) (1,181,168) (1,262,722) (1,099,520)
Intercompany interest income (expense) 208,195 (208,195) - -
Other income 214,771 - 252,248 -
Provision for doubtful accounts (81,000) (118,687) - -
Management fees (1,012,500) - (1,012,500) -
(Provision) benefit for income taxes (1,564,881) (336,806) (1,557,576) -
---------------------------------------------------------------------------------------------------------------------
Net income (loss) $ 2,447,635 $ (1,013,253) $ 2,436,201 $ 881,328
---------------------------------------------------------------------------------------------------------------------
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
OVERVIEW
Niagara was organized in April of 1993. In August 1995, Niagara
acquired Niagara LaSalle. With plants in Buffalo, New York and Chattanooga,
Tennessee, Niagara LaSalle was an established cold finished steel bar producer
in the northeast and southeast regions of the United States.
In January 1996, Niagara LaSalle acquired Southwest Steel Company,
Inc. ("Southwest"), the leading cold drawn steel bar producer servicing the
southwest region of the United States. During 1996, Southwest completed
construction of a new plant in Midlothian, Texas and relocated its Tulsa,
Oklahoma operations to this new facility.
In April 1997, Niagara LaSalle acquired LaSalle, which had plants in
Hammond and Griffith, Indiana. This acquisition gave Niagara LaSalle a strong
market position in the midwest region of the United States and broadened
Niagara LaSalle's product range by adding thermal treated and chrome plated
bars. With this acquisition, Niagara US became the largest independent producer
of cold drawn steel bars in the United States.
On May 21, 1999, Niagara UK purchased the equipment, inventory and
certain other assets of the eight steel bar businesses of Glynwed Steels
Limited ("Glynwed Steels"). These steel bar businesses are engaged in hot
rolling, cold finishing and distribution and represent the largest independent
steel bar concern in the United Kingdom.
In November 1999 and September 2001, the Company announced
restructuring plans for its hot rolling operations in the United Kingdom. Under
the 1999 plan, Niagara UK closed its Ductile Hot Mill facility in Willenhall,
terminated its lease of the real property, transferred most of the production
from this facility to its W Wesson facility in Moxley (which was renamed
Ductile Wesson) and invested approximately $1.5 million in its remaining hot
rolling businesses. During the same period, Niagara UK reorganized the
management structures in each of its three operating divisions (hot rolling,
cold finishing and distribution). Under the 2001 plan, Niagara UK closed its
Dudley Port hot rolling facility in Tipton and transferred most of its
production to its two other hot rolling facilities. On March 15, 2002, Niagara
UK entered into an agreement to sell this leased property for (pound)3,600,000
($5,413,572), which Niagara UK had an option to purchase for (pound)1,495,000
($2,248,136). On September 30, 2002, Niagara UK completed this transaction. In
connection with this transaction, Niagara UK purchased a parcel of land in the
fourth quarter of 2002 which it subsequently sold during this period to the
purchaser of the property. These sales resulted in a pre-tax gain of
(pound)2,063,022 ($3,102,311).
In the fourth quarter of 2002, Niagara LaSalle completed significant
purchases of equipment and related assets from two companies after having
prevailed at auctions held in connection with such companies' bankruptcy
proceedings. On October 8, 2002, Niagara LaSalle purchased certain production
equipment and related assets of Moltrup Steel Products Company for $375,000.
Niagara US has relocated the majority of these assets to its other operating
facilities. On November 19, 2002, Niagara LaSalle purchased from Republic
Technologies International, LLC ("Republic") all of the equipment and supplies
located at Republic's Harvey, Illinois facility for $2,225,000. Management has
not yet determined where this equipment will be deployed.
On May 30, 2003, Niagara UK entered into an agreement to sell its GB
Longmore property in Darlaston. Production at this site had previously been
shifted to GB Longmore's Willenhall facility. On September 19, 2003, Niagara UK
completed this transaction receiving (pound)925,000 ($1,490,591) for the sale
of this leased real property after payment of (pound)413,000 ($665,529) to the
landlord under an option to purchase the property. After related costs, the
sale of this property resulted in a pre-tax gain of (pound)483,520 ($779,170),
which gain was partially offset by losses on the sale of equipment during the
three and nine months ended September 30, 2003.
During the nine months ended September 30, 2003, Niagara's
subsidiaries transferred certain equipment to each other to more effectively
meet the market conditions and requirements of their respective operations.
These transfers resulted in Niagara UK recognizing intercompany gains of
(pound)494,475 ($796,822) for the period. These amounts have been eliminated in
the consolidated financial statements.
RESULTS OF OPERATIONS
The Company's results of operations for the three months ended
September 30, 2003 declined when compared to the comparable period in 2002. Net
income attributable to the Company's U.S. operations improved, due primarily to
modest price increases on certain of its products. This was offset, however, by
a decline in net income attributable to the Company's U.K. operations for the
third quarter of 2003, due primarily to a larger gain recorded on the sale of
property in the third quarter of last year. Niagara UK's operating results were
negatively impacted by disadvantageous exchange rates, very competitive pricing
and increased raw material costs during the three months ended September 30,
2003.
As previously discussed, results for the three and nine months ended
September 30, 2003 were favorably impacted by the sale of Niagara UK's
Darlaston property resulting in a pre-tax gain of (pound)483,520 ($779,170) and
results for the three and nine months ended September 30, 2002 were favorably
impacted by the sale of Niagara UK's Tipton property resulting in a pre-tax
gain for the period of (pound)1,963,414 ($2,906,834).
Three months ended September 30, 2003 compared with September 30, 2002
The Company's net sales for the three months ended September 30, 2003
were $69,786,319, representing an increase of $2,136,190, or 3.2%, over the
same period in 2002. Net sales by the Company's U.S. operations for the period
decreased by $385,773 or 0.8%, and net sales by the Company's U.K. operations
for the period increased by $2,521,963 or 12.4%. The decrease in net sales
attributable to the Company's U.S. operations was due primarily to a decrease
in sales volume (5.1%) which was partially offset by an increase in prices
(3.1%). The increase in net sales attributable to the Company's U.K. operations
was due primarily to an increase in sales volume (1.3%) and an increase in
prices (4.1%). Net sales by the Company's U.K. operations also reflect a 4.0%
increase in the value of the British pound relative to the U.S. dollar for the
three months ended September 30, 2003, as compared to the same period in 2002.
The Company's U.K. operations use British pounds as its functional currency and
its net sales were translated from British pounds into U.S. dollars at higher
relative levels for the three months ended September 30, 2003 as compared to
the same period in 2002 as a result of this change in value.
Cost of products sold for the three months ended September 30, 2003
increased by $1,474,115 to $62,253,623, representing an increase of 2.4% over
the same period in 2002. Cost of products sold attributable to the Company's
U.K. operations increased by $2,288,037. The increases incurred by the
Company's U.K. operations were primarily attributable to an increase in the
price of raw materials and, to a lesser extent, an increase in sales volume.
Cost of products sold attributable to the Company's U.S. operations decreased
by $813,922. The decrease incurred by the Company's U.S. operations was
primarily attributable to a decrease in sales volume.
Gross margins for the three months ended September 30, 2003 increased
by 0.6% compared to the same period in 2002. Gross margins attributable to the
Company's U.S. operations increased by 0.9% due to an increase in selling
prices. This increase was partially offset by a 0.3% decrease in gross margins
attributable to the Company's U.K. operations as a result of rising raw
material costs.
Selling, general and administrative expenses for the three months
ended September 30, 2003 increased $13,365 to $6,632,262, or 9.5% of net sales,
as compared to 9.8% of net sales for the same period in 2002. The decrease as a
percentage of net sales was primarily attributable to the increase in net sales
by the Company's operations.
The Company realized smaller gains on the sale of property and
equipment to third parties during the three months ended September 30, 2003
($565,092), as compared to the same period in 2002 ($2,906,834).
Interest expense for the three months ended September 30, 2003
decreased by $144,124 to $745,742, due to decreased levels of borrowing and
lower interest rates.
The Company's net income for the three months ended September 30, 2003
was $566,891, compared to net income of $1,391,255 for the comparable period in
the prior year. Net income attributable to the Company's U.S. operations for
the three months ended September 30, 2003 was $698,425, an increase of $464,472
over the same period in 2002. This increase was primarily due to an increase in
gross margins attributable to such operations. Net income attributable to the
Company's U.K. operations for the three months ended September 30, 2003 was
$218,878, a decrease of $938,424 as compared to net income of $1,157,302 for
the three months ended September 30, 2002. This decrease was primarily due to
the Company's U.K. operations realizing smaller gains on the sale of property
and equipment to third parties for the three months ended September 30, 2003
($565,092) as compared to the same period in 2002 ($2,906,834).
Net income attributable to the Company's U.S. operations for the three
months ended September 30, 2002 and 2003 reflects statutory tax rates applied
against income before income taxes. For the three months ended September 30,
2002, net income attributable to the Company's U.K. operations reflects a tax
rate higher than the statutory rate as a result of a reduction in Niagara UK's
deferred tax asset given the uncertainty of its realization. Net income
attributable to the Company's U.K. operations for the three months ended
September 30, 2003 reflects no tax provision. The taxes that would have
otherwise been provided against Niagara UK's income before income taxes for
this period have reduced the deferred tax valuation allowance.
Nine months ended September 30, 2003 compared with September 30, 2002
The Company's net sales for the nine months ended September 30, 2003
were $222,537,317, representing an increase of $25,314,089, or 12.8%, over the
same period in 2002. Net sales by the Company's U.S. operations for the period
increased by $12,197,986 or 9.0%, and net sales by the Company's U.K.
operations for the period increased by $13,116,103 or 21.1%. The increase in
net sales attributable to the Company's U.S. and U.K. operations was due
primarily to an increase in sales volume (4.4% and 4.0%, respectively) and, to
a lesser extent, an increase in prices (3.5% and 5.5%, respectively). Net sales
by the Company's U.K. operations also reflect an 8.8% increase in the value of
the British pound relative to the U.S. dollar for the nine months ended
September 30, 2003, as compared to the same period in 2002. The Company's U.K.
operations use British pounds as its functional currency and its net sales were
translated from British pounds into U.S. dollars at higher relative levels for
the nine months ended September 30, 2003 as compared to the same period in 2002
as a result of this change in value.
Cost of products sold for the nine months ended September 30, 2003
increased by $21,675,191 to $197,142,367, representing an increase of 12.4%
over the same period in 2002. Cost of products sold attributable to the
Company's U.S. and U.K. operations increased by $11,742,698 and $9,932,493,
respectively. This increase was primarily attributable to the increase in sales
volume by the Company's operations, and to a lesser extent, a 1.5% increase in
raw material costs incurred by the Company's U.S. operations for the nine
months ended September 30, 2003 as compared to the same period in 2002.
Gross margins for the nine months ended September 30, 2003 increased
by 0.4% compared to the same period in 2002. Gross margins attributable to the
Company's U.K. operations increased by 1.8% due to an increase in sales volume
and prices. This increase was partially offset by a 0.6% decrease in gross
margins for the Company's U.S. operations, primarily as a result of an increase
in the price of raw materials.
Selling, general and administrative expenses for the nine months ended
September 30, 2003 increased by $886,880 to $19,916,045, or 9.0% of net sales,
compared to 9.6% of sales for the same period in 2002. The increase in dollar
amount and the decrease as a percentage of net sales were primarily
attributable to the increase in net sales by the Company's operations.
The Company realized smaller gains on the sale of property and
equipment to third parties during the nine months ended September 30, 2003
($450,257), as compared to the same period in 2002 ($2,906,834).
Interest expense for the nine months ended September 30, 2003
decreased by $345,198 to $2,362,242, due to decreased levels of borrowing and
lower interest rates.
The Company's net income for the nine months ended September 30, 2003
was $2,559,168, compared to net income of $1,316,052 for the comparable period
in the prior year. Net income attributable to the Company's U.K. operations for
the nine months ended September 30, 2003 was $881,328, an increase of
$1,894,580 as compared to the net loss of $1,013,252 incurred by such
operations during the nine months ended September 30, 2002. This improvement
was primarily due to the higher sales volume in 2003 as compared to 2002, which
was partially offset by Niagara UK realizing smaller gains on the sale of
property and equipment to third parties for the nine months ended September 30,
2003 ($450,257) as compared to the same period in 2002 ($2,906,834). Net income
attributable to the Company's U.S. operations for the nine months ended
September 30, 2003 was $2,250,662, a decrease of $78,643 over the same period
in 2002, which was due primarily to a reduction in gross margins attributable
to such operations.
Net income attributable to the Company's U.S. operations for the nine
months ended September 30, 2002 and 2003 reflects statutory tax rates applied
against income before income taxes. For the nine months ended September 30,
2002, net income attributable to the Company's U.K. operations reflects a tax
rate higher than the statutory rate as a result of a reduction in Niagara UK's
deferred tax asset given the uncertainty of its realization. Net income
attributable to the Company's U.K. operations for the nine months ended
September 30, 2003 reflects no tax provision. The taxes that would have
otherwise been provided against Niagara UK's income before income taxes for
this period have reduced the deferred tax valuation allowance.
LIQUIDITY AND CAPITAL RESOURCES
The Company's short-term liquidity requirements for day-to-day
operating expenses has been, and is expected to continue to be, funded by cash
provided by operations, borrowings under its revolving credit facilities and
advances under its invoice discounting agreement. The Company's principal
long-term liquidity requirement has been, and is expected to continue to be,
the repayment of debt and the funding of capital expenditures to modernize,
improve and expand its facilities, machinery and equipment. Capital
expenditures for the nine months ended September 30, 2003 totaled $2,582,769,
as compared to $741,302 for the same period in 2002. This increase was
primarily attributable to increased purchases of machinery and equipment by the
Company's U.S. operations.
Cash flows provided by operating activities were $7,000,692 for the
nine months ended September 30, 2003, a decrease of $1,566,086 as compared to
cash flows provided by operating activities of $8,566,778 for the same period
in 2002. This decrease was largely attributable to a smaller increase in
accounts payable, accrued expenses and other non-current liabilities in 2003 as
compared to 2002 (an increase of $4,806,478 in 2003 as compared to an increase
of $10,091,794 in 2002), an increase in accounts receivable in 2003 as compared
to a decrease in 2002 (an increase of $4,164,130 in 2003 as compared to a
decrease of $1,153,705 in 2002). These were partially offset by a smaller
increase in inventories as compared to 2002 (an increase of $1,205,928 in 2003
as compared to an increase of $6,247,464 in 2002), a smaller gain on sale of
property in 2003 as compared to 2002 ($450,257 as compared to $2,906,834 in
2002) and an increase in net income (net income of $2,559,168 in 2003 as
compared to net income of $1,316,052 in 2002). Cash and cash equivalents at
September 30, 2003 were $1,171,448, a decrease of $4,389,642 as compared to
December 31, 2002. This decrease was primarily attributable to the timing of
customer cash collections at December 31, 2002 and September 30, 2003. Such
funds are used for working capital and other corporate purposes.
On April 18, 1997 and in connection with the acquisition of LaSalle,
Niagara US entered into a revolving credit and term loan agreement (as amended,
the "Credit Agreement") and Niagara LaSalle terminated its previously existing
credit agreements. The other parties to the Credit Agreement are Manufacturers
and Traders Trust Company ("M&T"), Comerica Bank, Citizens Bank of
Pennsylvania, and PNC Bank. The obligations of Niagara US under the Credit
Agreement are guaranteed by Niagara and secured by substantially all of the
assets and a pledge of all outstanding capital stock of Niagara US.
At the Company's request, a number of amendments were made to the
Credit Agreement effective September 1, 2002. As a result of these amendments,
the revolving credit facility was reduced from $50,000,000 to $35,000,000 and
the balance owed under the term loan was increased from $14,333,356 to
$18,000,000. Principal payments under the term loan were reduced to $375,000
from $666,666 per month. In addition, the maturity date of the term loan and
revolving credit loans made pursuant to the Credit Agreement was extended to
July 31, 2004. Effective September 1, 2003, these maturity dates were further
extended to July 31, 2006. Principal payments under the term loan will continue
at $375,000 per month.
Interest on the term loan is payable in monthly installments either at
the LIBOR rate (for a period specified by Niagara US from time to time) plus
2.85%, or M&T's prime rate plus 1.00% (effective rate of 4.04% at September 30,
2003). Revolving credit loans made pursuant to the Credit Agreement are based
on a percentage of eligible accounts receivable and inventory. Interest on such
loans is payable in monthly installments at a rate that is either 2.50% above
the LIBOR rate (for a period specified by Niagara US from time to time) or
M&T's prime rate plus 0.75% (effective rate of 3.67% at September 30, 2003).
The Credit Agreement carries restrictions on, among other things,
indebtedness, liens, capital expenditures, dividends, asset dispositions,
cross-defaults and changes in control of Niagara and Niagara US, and requires
minimum levels of net worth through maturity. Also included in this agreement
are requirements regarding the ratio of consolidated current assets to
consolidated current liabilities, the ratio of net income before interest,
taxes, depreciation and amortization ("EBITDA") to debt service and capital
expenditures, and the ratio of senior secured indebtedness to EBITDA. Niagara
US was in compliance with all of these requirements as of September 30, 2003.
On May 20, 1998, Niagara's Board of Directors authorized the
repurchase, from time to time, of up to one million shares of Niagara Common
Stock in open market and privately negotiated transactions. On October 6, 1999,
Niagara's Board authorized the repurchase of an additional one million Niagara
shares. Such repurchases are subject to market and other conditions and are
financed with internally generated funds and borrowings under the Company's
credit facilities. Shares of Niagara Common Stock repurchased are held as
treasury stock and are available for use in the Company's benefit plans and for
general corporate purposes. As of September 30, 2003, Niagara had repurchased
1,758,938 shares of its Common Stock at a cost of $8,249,684. No shares were
repurchased during the nine months ended September 30, 2003.
On May 21, 1999 and in connection with the acquisition of the steel
bar businesses from Glynwed Steels, Niagara UK entered into a bank facilities
agreement (the "Facilities Agreement") with National Westminster Bank Plc
("National Westminster") providing for a (pound)10 million (approximately $16.7
million) term loan and a (pound)9.8 million (approximately $16.3 million)
revolving credit facility. The obligations of Niagara UK under the Facilities
Agreement are secured by standby letters of credit issued by M&T to National
Westminster (respectively, the "Term Letter of Credit" and the "Revolving
Letter of Credit," and, together, the "Letters of Credit") and substantially
all of the assets of Niagara UK (for the benefit of M&T). Niagara UK's
agreement to reimburse M&T for drawdowns under the Letters of Credit is
guaranteed by Niagara and Niagara US, which guarantees are secured by
substantially all of the assets of Niagara US on a second priority basis. As
consideration for the issuance of the Letters of Credit, Niagara UK paid M&T a
total of (pound)178,400 (approximately $285,440) at the time of issuance and
agreed to pay further annual fees (in monthly installments) of 2.5% and 2.75%
in respect of the Revolving and Term Letters of Credit, respectively.
Principal of the term loan under the Facilities Agreement amortizes in
monthly installments commencing on May 31, 2000 and ending on August 31, 2005.
The principal repayment installments on the term loan escalate from
(pound)125,000 to (pound)213,333 (approximately $206,000 to $356,000)
throughout its term. Revolving credit loans made pursuant to the Facilities
Agreement are based upon a percentage of eligible inventory. On August 8, 2003,
the maturity date on these revolving credit loans was extended to July 31,
2005. Interest on the term and revolving credit loans under the Facilities
Agreement accrue at the BBA LIBOR rate (for periods specified by Niagara UK
from time to time) plus 0.15% (effective rate of 3.85% at September 30, 2003)
and is payable at the conclusion of such interest periods.
The purchase of the U.K. steel bar businesses was also financed
pursuant to (i) a (pound)3.75 million (approximately $6 million) equity
investment by Niagara in Niagara UK (the "Equity Investment"), (ii) a
(pound)3.75 million (approximately $6 million) subordinated loan from Niagara
to Niagara UK which accrued interest at 7.5% per annum (the "Subordinated
Loan") and (iii) a (pound)2.5 million (approximately $4 million) non-interest
bearing short-term loan from Niagara to Niagara UK (the "Short-Term Loan"). The
Equity Investment, the Subordinated Loan and the Short-Term Loan were financed
by borrowings under the Credit Agreement. The Short-Term Loan was repaid in
1999. The Subordinated Loan was capitalized to equity during the fourth quarter
of 2002.
On August 23, 1999, Niagara UK entered into an Invoice Discounting
Agreement (the "Discount Agreement") with Royal Bank of Scotland Invoice
Discounting Limited ("RBID") (formerly known as Lombard Natwest Discounting
Limited) providing for advances to Niagara UK based upon a formula tied to the
receivables purchased by RBID. The obligations of Niagara UK under the Discount
Agreement are guaranteed by Niagara and secured by substantially all of the
assets of Niagara UK. In connection with the execution of the Discount
Agreement, the Revolving Letter of Credit and the revolving credit facility
under the Facilities Agreement were reduced to (pound)4.9 million
(approximately $8.1 million) and subsequently reduced to (pound)2.5 million
(approximately $4.1 million) as of December 31, 1999 and (pound)1.25 million
(approximately $2.1 million) on August 8, 2003.
At the Company's request, a number of amendments were made to the
Discount Agreement effective August 23, 2002. These amendments included (i) a
reduction in the maximum amount of advances to Niagara UK from (pound)20
million (approximately $33.0 million) to (pound)15.0 million (approximately
$25.0 million), (ii) a reduction in the interest rate applicable to such
advances from 2.25% to 2.0% above Royal Bank of Scotland's base rate (effective
rate of 5.15% at September 30, 2003) and (iii) the extension of the maturity
date on such advances to July 31, 2004. In connection with these amendments,
Niagara and Niagara UK agreed to capitalize the Subordinated Loan, which
occurred during the fourth quarter of 2002. On August 11, 2003, the maturity
date for advances made pursuant to the Discount Agreement was further extended
to July 31, 2005.
The Facilities and Discount Agreements carry restrictions on, among
other things, security interests, borrowed money, asset dispositions,
dividends, transactions with affiliates, capital expenditures, cross-defaults,
changes in control of Niagara UK and mergers and acquisitions. Also included in
these agreements are requirements regarding tangible net worth, the ratio of
earnings before interest, taxes, depreciation and amortization to fixed charges
and the ratio of current assets to current liabilities. Niagara UK was in
compliance with all of these requirements as of September 30, 2003.
In connection with the execution of the Facilities and Discount
Agreements, Niagara and Niagara UK entered into intercreditor agreements which,
among other things restrict the payment of dividends in respect of the Niagara
UK shares.
As a result of depressed conditions in the manufacturing sector in the
United Kingdom including within the overall steel industry, and conditions
within the insurance industry following the events of September 11, 2001, the
market for credit insurance in the United Kingdom has deteriorated. This
necessitated Niagara guaranteeing certain trade payables of Niagara UK in the
aggregate amount of up to (pound)7.15 million (approximately $11.9 million) in
order to ensure an orderly supply of raw materials.
At September 30, 2003, the Company had borrowed or been advanced
$41,442,000 under its revolving credit facilities and the Discount Agreement
and had approximately $14,500,000 in available credit thereunder, and the
outstanding balance of its term loans was $20,375,000. Working capital of the
Company at September 30, 2003 was $40,188,365.
CRITICAL ACCOUNTING POLICIES
On December 12, 2001, the SEC issued Financial Reporting Release No.
60 which requires a discussion of the critical accounting policies used by
companies in the preparation of their financial statements. Note 1 to the
Company's audited financial statements for the year ended December 31, 2002
includes a summary of the significant accounting policies used by the Company
in the preparation of its financial statements. The Company believes that the
following critical accounting policies affect the significant judgments and
estimates used in the preparation of the Company's condensed financial
statements.
The discussion and analysis of the Company's financial condition and
results of operations are based upon the Company's condensed consolidated
financial statements, which have been prepared in accordance with accounting
principles generally accepted in the United States of America. The preparation
of these financial statements requires that management make estimates and
assumptions that affect the reported amounts of assets and liabilities,
revenues and expenses and the related disclosure of contingent assets and
liabilities. On an ongoing basis, management evaluates these estimates,
including those related to inventory reserves, taxes, doubtful accounts,
intangible assets, insurance, litigation, environmental compliance and other
contingencies. Management bases its estimates on historical data, when
available, professional advice, experience and various assumptions that are
believed to be reasonable under the circumstances, the combined results of
which form the basis for making judgments about the carrying values of assets
and liabilities. Actual results could differ from these estimates.
Revenue from the sale of products is recorded at the time the goods
are shipped and title and risk of loss has transferred. Revenue from freight
charged to customers is recognized when products are shipped. Provisions for
discounts, customer returns and other adjustments are provided for in the
period the related sales are recorded based upon historical data.
The Company reviews the carrying values of its long-lived and
identifiable intangible assets for possible impairment whenever events or
changes in circumstances indicate that the carrying amount of the assets may
not be recoverable. The Company assesses recoverability of these assets by
estimating future nondiscounted cash flows. Any long-lived assets held for
disposal are reported at the lower of their carrying amounts or fair value less
cost to sell.
EFFECTS OF RECENT ACCOUNTING PRONOUNCEMENTS
In August 2001, the FASB issued SFAS No. 143, "Accounting for Asset
Retirement Obligations," which addresses financial accounting and reporting for
obligations associated with the retirement of tangible long-lived assets and
the associated asset retirement costs. This statement is required to be applied
for fiscal years beginning after June 15, 2002. The adoption of this statement
as of January 1, 2003 did not have an effect on the Company's financial
statements.
In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB
Statements No. 4, 44 and 64, and Amendment of FASB Statement No. 13, and
Technical Corrections." This statement, among other things, rescinds SFAS No.
4, "Reporting Gains and Losses from Extinguishment of Debt," which required
that all gains and losses from the extinguishment of debt be aggregated and, if
material, classified as an extraordinary item, net of related income tax
effect. As a result, the criteria in APB Opinion No. 30, "Reporting the Results
of Operations - Reporting the Effects of Disposal of a Segment of a Business,
and Extraordinary, Unusual and Infrequently Occurring Events and Transactions,"
will now be used to classify such gains and losses. SFAS No. 145 also amends
SFAS No. 13 to require that certain lease modifications that have economic
effects similar to sale-leaseback transactions be accounted for in the same
manner as sale-leaseback transactions. Such provisions of SFAS No. 145 are
required to be applied in fiscal years beginning after May 15, 2002. The
adoption of this statement as of January 1, 2003 did not have an effect on the
Company's financial statements.
In July 2002, the FASB issued SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities." This statement requires that a
liability for a cost associated with an exit or disposal activity be recognized
when the liability is incurred, as opposed to prior guidance which provided
that liability for such exit costs be recognized at the date of an entity's
commitment to an exit or disposal plan. This statement is required to be
applied to exit or disposal activities that are initiated after December 31,
2002. The adoption of this statement as of January 1, 2003 did not have an
effect on the Company's financial statements.
In November 2002, the FASB issued Interpretation No. 45, "Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Guarantees of
the Indebtedness of Others," which interprets the guidance in FASB Statement
No. 5, "Accounting for Contingencies," relating to a guarantor's accounting
for, and disclosure of, certain types of guarantees. Interpretation No. 45
requires that a guarantor recognize, at the inception of a guarantee, a
liability for the fair value of the obligation undertaken in issuing the
guarantee. Under Interpretation No. 45, the recognition of the liability is
required even if it is not probable that payments will be required under the
guarantee. Previously, SFAS No. 5 required recognition of a liability only for
a probable loss. The recognition requirements of Interpretation No. 45 apply to
guarantees issued or modified after December 31, 2002. The disclosure
requirements are effective for interim and annual financial statements ending
after December 15, 2002. The adoption of Interpretation No. 45 as of January 1,
2003 did not have an effect on the Company's financial statements.
In December 2002, the FASB issued SFAS No. 148, "Accounting for
Stock-Based Compensation--Transition and Disclosure--an amendment of FASB
Statement No. 123," which amends the disclosure requirements of SFAS No. 123 to
require prominent disclosures in both annual and interim financial statements
about the method of accounting for stock-based employee compensation and the
effect on the method used on reported results. The adoption of this statement
as of January 1, 2003 did not have an effect on the Company's financial
statements.
In January 2003, the FASB issued Interpretation No. 46, "Consolidation
of Variable Interest Entities, an interpretation of Accounting Research
Bulletin (ARB) No. 51" which defines when a business enterprise must
consolidate a variable interest entity. Interpretation No. 46, as amended,
applies in the first fiscal year or interim period beginning after December 15,
2003 to entities in which an enterprise holds a variable interest that it
acquired before February 1, 2003 and applies immediately to variable interest
entities created after January 31, 2003. The Company did not have any variable
interest entities as of June 30, 2003.
In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement
133 on Derivative Instruments and Hedging Activities." SFAS No. 149 amends SFAS
No. 133 for certain decisions made by the FASB and is effective for contracts
entered into or modified after June 30, 2003 and for hedging relationships
designated after June 30, 2003. SFAS No. 149 is to be applied prospectively.
The provisions of SFAS No. 149 that relate to SFAS No. 133 implementation
issues that have been effective for fiscal quarters that began prior to June
15, 2003 continue to be applicable in accordance with their respective
effective dates. The adoption of this statement as of July 1, 2003 did not have
an effect on the Company's financial statements.
In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity"
which establishes standards for classifying and measuring certain financial
instruments with characteristics of both a liability and equity. SFAS No. 150
is effective for financial instruments entered into or modified after May 31,
2003, and is otherwise effective at the beginning of the first interim period
beginning after June 15, 2003 The adoption of this statement as of July 1, 2003
did not have an effect on the Company's financial statements.
FORWARD-LOOKING STATEMENTS
The Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" for certain forward-looking statements. Some of the statements in this
Form 10-Q, including, without limitation, in "MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS," may constitute
forward-looking statements. When used in this Form 10-Q, the words "may,"
"will," "should," "could," "expects," "plans," "anticipates," "intends,"
"believes," "estimates," "predicts," "projects," "potential," "likely" or
"continue" and other similar expressions are intended to identify such
forward-looking statements. These statements involve known and unknown risks,
uncertainties and other factors, many of which are beyond the control of the
Company, that may cause the Company's actual results to be materially different
from those expressed or implied by such forward-looking statements, in future
filings by Niagara with the SEC, in the Company's press releases or in oral
statements made by authorized officers of the Company. The factors discussed
under "CAUTIONARY STATEMENT FOR PURPOSES OF THE `SAFE HARBOR' PROVISIONS OF THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995" in Niagara's Report on Form
10-K for the fiscal year ended December 31, 2002, among others, could cause
actual results to differ materially from those contained in forward-looking
statements made in this Form 10-Q.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company's primary market risks include fluctuations in interest
rates, variability in interest rate spreads (i.e., prime to LIBOR spreads),
exchange rate variability, the credit risk of its customers and the
availability to its suppliers of credit insurance on their receivables from the
Company. The Company does not trade in derivative financial instruments.
Substantially all of the Company's non-trade indebtedness relates to loans made
pursuant to the Credit and Facilities Agreements and advances under the
Discount Agreement. Interest on the term loan under the Credit Agreement
accrues at either the LIBOR rate (for a period specified by Niagara US from
time to time) plus 2.85%, or M&T's prime rate plus 1.00%. Interest on revolving
credit loans made pursuant to such agreement accrues at either 2.50% above the
LIBOR rate (for a period specified by Niagara US from time to time) or M&T's
prime rate plus 0.75%. Interest on the term and revolving credit loans under
the Facilities Agreement accrues at the BBA LIBOR rate (for a period specified
by Niagara UK from time to time) plus 0.15%. Interest on advances under the
Discount Agreement accrues at Royal Bank of Scotland's base rate plus 2.0%.
Management attempts to reduce market risks associated with the fluctuations in
interest rates through the selection of LIBOR periods under the Credit and
Facilities Agreements and advance amounts under the Discount Agreement (see
"MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS -- Liquidity and Capital Resources").
The Company sells its products primarily to customers in North America
and Europe. Revenues from sales by Niagara US are collected exclusively in U.S.
dollars. Niagara UK's revenues are generally collected in the local currency of
its customers. In order to reduce its exposure to fluctuations in exchange
rates, Niagara UK purchased foreign exchange contracts in amounts and with
expiration dates in line with customer orders. Niagara UK discontinued this
practice in February 2002. Following the adoption of the Euro and through
September 30, 2003, Niagara UK borrowed funds in foreign currencies and amounts
in line with its export sales, and repaid such borrowings upon receipt of funds
from its foreign customers.
The Company is subject to the economic conditions affecting its
customers. The Company's exposure to losses on trade accounts receivable is
principally dependent on each customer's financial condition. The Company
monitors its exposure for credit losses and maintains allowances for
anticipated losses after giving consideration to current delinquency data,
historical loss experience, and economic conditions impacting steel service
centers and original equipment manufacturers. Management continuously reviews
information concerning the financial condition of the Company's customers and
believes that the Company's allowance for doubtful accounts is sufficient to
cover such risks. In addition, Niagara UK has insured substantially all of its
accounts receivable to further reduce its customer credit risk. Generally,
these insurance policies provide for payments to Niagara UK of 80% of the
unpaid invoiced amounts.
As a result of depressed conditions in the manufacturing sector in the
United Kingdom including within the overall steel industry, and conditions
within the insurance industry following the events of September 11, 2001, the
market for credit insurance in the United Kingdom deteriorated. This
necessitated Niagara guaranteeing certain trade payables of Niagara UK in the
aggregate amount of up to (pound)7.15 million (approximately $11.9 million) in
order to ensure an orderly supply of raw materials.
ITEM 4. CONTROLS AND PROCEDURES
(a) Disclosure Controls and Procedures. The Company's management, with
the participation of the Company's Chief Executive Officer and Chief Financial
Officer, has evaluated the effectiveness of the Company's disclosure controls
and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under
the Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of
September 30, 2003. Based on such evaluation, the Company's Chief Executive
Officer and Chief Financial Officer have concluded that, as of September 30,
2003, the Company's disclosure controls and procedures are effective at the
reasonable assurance level in recording, processing, summarizing and reporting,
on a timely basis, information required to be disclosed by the Company in the
reports that it files or submits under the Exchange Act.
(b) Internal Control Over Financial Reporting. There have not been any
changes in the Company's internal control over financial reporting (as such
term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during
the three months ended September 30, 2003 that have materially affected, or are
reasonably likely to materially affect, the Company's internal control over
financial reporting.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
Niagara US and Niagara UK are subject to extensive environmental laws
and regulations concerning, among other matters, water and air emissions and
waste disposal. Under such laws, including the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended ("CERCLA"),
Niagara US and Niagara UK may be responsible for parts of the costs required to
remove or remediate previously disposed wastes or hazardous substances at
locations they own or operate or at locations owned or operated by third
parties where they, or a company from which they acquired assets, arranged for
the disposal of such materials. Claims for such costs have been made against
LaSalle with respect to six such third-party sites. Management believes that,
in five cases, the volumes of the waste allegedly attributable to LaSalle and
the share of costs for which it may be liable are de minimis. In three of these
cases, LaSalle has entered into de minimis settlement agreements resolving the
pending claims of liability. In connection with the fourth site, the United
States Environmental Protection Agency (the "EPA") has notified LaSalle that it
does not intend to seek cost recovery from it at this time. In the one non-de
minimis case, LaSalle has entered into an agreement with a group of other
companies alleged to be responsible for remediation of the site in an effort to
share proportionately the costs of remediation. LaSalle and this group of
companies have also signed an Administrative Order on Consent with the EPA and
performed a limited remediation at the site. LaSalle has received insurance
settlements in amounts that largely cover the financial contributions it has
made for these sites through September 30, 2003. Because liability under CERCLA
and analogous state laws is generally joint and several, and because further
remediation work may be required at these sites, LaSalle may be required to
contribute additional funds. However, based on its volumetric share of wastes
disposed and the participation of other potentially liable parties, management
believes that LaSalle's share of the additional costs will not have a material
adverse effect on the Company's financial position or results of operations.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS.
(a) An Annual Meeting of Niagara's Stockholders was held on July
15, 2003.
(b) Michael J. Scharf, Gilbert D. Scharf, Frank Archer, Gerald L.
Cohn, Andrew R. Heyer and Douglas T. Tansill were elected as directors of
Niagara at the Annual Meeting.
(c) The matters voted upon at the Annual Meeting were (i) the
election of Michael J. Scharf, Gilbert D. Scharf, Frank Archer, Gerald L. Cohn,
Andrew R. Heyer and Douglas T. Tansill to hold office until the next Annual
Meeting of Stockholders or until their respective successors have been duly
elected and qualified, the vote as to which was 7,732,846 for and 61,174
withheld for each of Messrs. Michael Scharf and Gilbert Scharf, 7,735,446 for
and 58,574 withheld for Mr. Archer, 7,735,646 for and 58,374 withheld for Mr.
Cohn, 7,735,846 for and 58,174 withheld for Mr. Heyer, and 7,749,746 for and
44,274 withheld for Mr. Tansill, and (ii) the ratification of Deloitte & Touche
LLP as Niagara's independent accountants for 2003, the vote as to which was
7,788,220 for, 2,600 against and 3,200 abstentions.
ITEM 5. OTHER INFORMATION.
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits.
4.1 Thirteenth Amendment to the Revolving Credit and
Term Loan Agreement by and among Niagara LaSalle
Corporation, LaSalle Steel Company, Manufacturers
and Traders Trust Company (individually and as
Agent), Citizens Bank of Pennsylvania, PNC Bank,
N.A., and Comerica Bank, effective as of September
1, 2003.
31.1 Certification of Chief Executive Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
31.2 Certification of Chief Financial Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
32.1 Certification of Chief Executive Officer pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
32.2 Certification of Chief Financial Officer pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
(b) Reports on Form 8-K.
During the quarter ended September 30, 2003, Niagara filed three
Current Reports on Form 8-K. The first report, dated July 21,
2003, announced the results of Niagara's 2003 Annual Meeting of
Stockholders and the appointment of new officers. The second
report, dated August 14, 2003, related to the announcement of the
Company's results of operations for the three and six months
ended June 30, 2003. The third report, dated September 24, 2003,
related to the announcement of the completion of the sale of
Niagara UK's GB Longmore property in Darlaston.
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.
NIAGARA CORPORATION
(Registrant)
Date: November 14, 2003 /s/ Michael Scharf
------------------------------------------
Michael Scharf, Chairman, President &
Chief Executive Officer
Date: November 14, 2003 /s/ Anthony J. Verkruyse
------------------------------------------
Anthony J. Verkruyse, Vice President, Treasurer
& Chief Financial Officer