1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
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For Quarter Ended June 30, 1996 Commission File Number 0-325
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THE DURIRON COMPANY, INC.
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(Exact name of Registrant as specified in its charter)
New York
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(State or other jurisdiction of incorporation or organization)
31-0267900
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(I.R.S. Employer Identification Number)
3100 Research Boulevard, Dayton, Ohio 45420
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(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code) (513) 476-6100
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No Change
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(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
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Shares of Common Stock, $1.25 par value, outstanding as of June 30,
1996..........24,564,621
2
PART I: Financial Information
3
THE DURIRON COMPANY, INC.
Consolidated Statement of Income
Quarters Ended June 30, 1996 and 1995
(dollars in thousands except per share data)
1996 1995
-------- --------
Net sales $151,071 $131,096
Costs and expenses:
Cost of sales 88,463 78,521
Selling and administrative 36,871 33,551
Research, engineering and development 3,973 3,638
Interest 1,469 1,124
Other, net 1,343 1,356
Restructuring 5,778 --
-------- --------
137,897 118,190
Earnings before income taxes 13,174 12,906
Provision for income taxes 4,259 4,884
Net earnings $ 8,915 $ 8,022
======== ========
Earnings per share $ 0.36 $ 0.32
======== ========
(See accompanying notes)
4
THE DURIRON COMPANY, INC.
Consolidated Statement of Income
Six Months Ended June 30, 1996 and 1995
(dollars in thousands except per share data)
1996 1995
-------- --------
Net sales $300,265 $253,760
Costs and expenses:
Cost of sales 177,743 150,977
Selling and administrative 73,331 65,185
Research, engineering and development 8,242 7,300
Interest 2,863 2,449
Other, net 3,080 2,651
Restructuring 5,778 --
-------- --------
271,037 228,562
Earnings before income taxes 29,228 25,198
Provision for income taxes 10,199 9,518
-------- --------
Net earnings $ 19,029 $ 15,680
======== ========
Earnings per share $ 0.77 $ 0.63
======== ========
(See accompanying notes)
5
THE DURIRON COMPANY, INC.
Consolidated Balance Sheet
(dollars in thousands except per share data)
June 30, December 31,
ASSETS 1996 1995
--------- ---------
Current assets:
Cash and cash equivalents $ 15,675 $ 19,434
Accounts receivable 110,901 103,963
Inventories 105,342 93,155
Prepaid expenses 12,910 8,170
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Total current assets 244,828 224,722
Property, plant and equipment, at cost 252,269 247,975
Less accumulated depreciation and amortization 151,267 144,252
--------- ---------
Net property, plant and equipment 101,002 103,723
Intangibles and other assets 68,584 66,928
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Total assets $ 414,414 $ 395,373
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 31,701 $ 31,499
Notes payable 8,031 3,723
Income taxes 5,466 3,448
Accrued liabilities 47,518 44,455
Long-term debt due within one year 6,518 6,597
--------- ---------
Total current liabilities 99,234 89,722
Long-term debt due after one year 46,564 51,756
Postretirement benefits and other deferred items 59,508 58,123
Shareholders' equity:
Serial preferred stock, $1.00 par value,
no shares issued -- --
Common stock, $1.25 par value, 24,565,000
shares issued (24,405,000 in 1995) 30,706 30,506
Capital in excess of par value 8,537 6,022
Retained earnings 171,414 158,754
--------- ---------
210,657 195,282
Foreign currency and other equity
adjustments (1,549) 490
--------- ---------
Total shareholders' equity 209,108 195,772
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Total liabilities and shareholders' equity $ 414,414 $ 395,373
========= =========
(See accompanying notes)
6
THE DURIRON COMPANY, INC.
Consolidated Statement of Cash Flows
Six Months Ended June 30, 1996 and 1995
(dollars in thousands)
1996 1995
-------- --------
Increase (decrease) in cash and cash equivalents:
Operating activities:
Net earnings $ 19,029 $ 15,680
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization 10,185 9,400
Loss (gain) on the sale of fixed assets 149 94
Change in assets and liabilities net of
effects of acquisitions and
divestitures:
Accounts receivable (7,749) (5,943)
Inventories (13,069) (6,386)
Prepaid expenses (4,760) (2,178)
Accounts payable and accrued liabilities 3,764 3,462
Income taxes 2,007 1,438
Postretirement benefits and other deferred items 1,441 (489)
-------- --------
Net cash flows from operating activities 10,997 15,078
Investing activities:
Capital expenditures (8,161) (6,289)
Other (2,717) (821)
-------- --------
Net cash flows from investing activities (10,878) (7,110)
Financing activities:
Net borrowings under lines-of-credit 4,445 996
Payments on long-term debt (3,720) (2,834)
Proceeds from long-term debt 340 462
Proceeds from issuance of common stock 1,727 162
Dividends paid (6,369) (5,059)
-------- --------
Net cash flows from financing activities (3,577) (6,273)
Effect of exchange rate changes (301) (708)
-------- --------
Net increase in cash and cash equivalents (3,759) 987
Cash and cash equivalents at beginning of year 19,434 19,625
-------- --------
Cash and cash equivalents at end of period $ 15,675 $ 20,612
======== ========
Supplemental disclosures of
cash flow information:
Cash paid during year for:
Interest $ 2,270 $ 2,421
Income taxes $ 8,179 $ 11,410
(See accompanying notes)
7
THE DURIRON COMPANY, INC.
Notes to Consolidated Financial Statements
(dollars presented in tables in thousands except per share data)
1. Inventories.
The amount of inventories and the method of determining costs for the
quarter ended June 30, 1996 and the year ended December 31, 1995 were as
follows:
Domestic Foreign
inventories inventories Total
(LIFO) (FIFO) inventories
------------------------------------------------
June 30, 1996
Raw materials $ 3,154 $ 3,898 $ 7,052
Work in process and finished goods 57,824 40,466 98,290
----------- ----------- -------------
$ 60,978 $ 44,364 $ 105,342
=========== =========== =============
December 31, 1995
Raw materials $ 2,642 $ 3,282 $ 5,924
Work in process and finished goods 48,857 38,374 87,231
----------- ----------- -------------
$ 51,499 $ 41,656 $ 93,155
=========== =========== =============
LIFO inventories at current cost are $37,904,000 and $36,127,000 higher
than reported at June 30, 1996 and December 31, 1995, respectively.
2. Shareholders' equity. There are authorized 60,000,000 shares of $1.25 par
value common stock and 1,000,000 shares of $1.00 par value preferred stock.
Changes during the six months ended June 30, 1996 and 1995 were as follows:
Capital in Foreign Currency Total
Common excess of Retained & Other Equity shareholders'
stock par value earnings adjustments equity
--------------------------------------------------------------------------------
Balance at December 31, 1994 $ 30,427 $ 5,577 $ 138,837 $ (488) $ 174,353
Net earnings 15,680 15,680
Cash dividends (5,059) (5,059)
Retirement of common stock (3,433 shares) (4) (14) (21) (39)
Net shares issued (37,251) under stock 47 199 35 281
plans
Foreign currency translation adjustment 1,455 1,455
---------- ---------- ----------- ----------- -------------
Balance at June 30, 1995 $ 30,470 $ 5,762 $ 149,437 $ 1,002 $ 186,671
========== ========== =========== =========== =============
Balance at December 31, 1995 $ 30,506 $ 6,022 $ 158,754 $ 490 $ 195,772
Net earnings 19,029 19,029
Cash dividends (6,369) (6,369)
Net shares issued (159,621) under stock 200 2,515 (988) 1,727
plans
Foreign currency translation adjustment (1,051) (1,051)
---------- ---------- ----------- ----------- -------------
Balance at June 30, 1996 $ 30,706 $ 8,537 $ 171,414 $ (1,549) $ 209,108
========== ========== =========== =========== =============
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As of June 30, 1996, 1,227,221 shares of common stock were reserved for
exercise of stock options and grants of restricted shares.
3. Dividends.
Dividends paid during the quarters ended June 30, 1996 and 1995 were
based on 24,547,672 and 24,364,974, respectively, common shares
outstanding on the applicable dates of record.
4. Earnings per share.
Earnings per share for the six months ended June 30, 1996 and 1995 were
based on average common shares and common share equivalents outstanding
of 24,824,170 and 24,705,231, respectively.
5. Contingencies.
The Company is involved as a "potentially responsible party" at five
former public waste disposal sites which may be subject to remediation
under pending government procedures. The sites are in various stages of
evaluation by federal and state environmental authorities. The
projected cost of remediating these sites, as well as the Company's
alleged "fair share" allocation, is uncertain and speculative until all
studies have been completed and the parties have either negotiated an
amicable resolution or the matter has been judicially resolved. At each
site, there are many other parties who have similarly been identified,
and the identification and location of additional parties is continuing
under applicable federal or state law. Many of the other parties
identified are financially strong and solvent companies which appear
able to pay their share of the remediation costs. Based on the
Company's preliminary information about the waste disposal practices at
these sites and the environmental regulatory process in general, the
Company believes that it is likely that ultimate remediation liability
costs for each site will be apportioned among all liable parties,
including site owners and waste transporters, according to the volumes
and/or toxicity of the wastes shown to have been disposed of at the
sites.
The Company is a defendant in numerous pending lawsuits (which include,
in many cases, multiple claimants) which seek to recover damages for
alleged personal injury allegedly resulting from exposure to asbestos
containing products formerly manufactured and distributed by the
Company. A high percentage of these claims was assumed by the Company
in 1995 as the result of the merger of Durametallic Corporation. All
such products were used within self-contained process equipment, and
management does not believe that there was any emission of ambient
asbestos fiber during the use of this equipment. As of December 31,
1995, the Company has resolved numerous claims at an average of about
$120 per claim, the cost of which was fully paid by insurance. The
Company continues to have a substantial amount of available insurance
from financially solvent carriers to cover the cost of both defending
and resolving the claims.
The Company is also a defendant in several other products liability
lawsuits which are insured, subject to the applicable deductibles, and
certain other non-insured lawsuits received in the ordinary course of
business. The Company has fully accrued the estimated loss reserve for
each such lawsuit. No insurance recovery has been projected for any of
the insured claims because management currently believes that all will
be resolved within applicable deductibles.
Although none of the aforementioned gives rise to any additional
liability that can now be reasonably estimated, it is possible that the
Company could incur additional costs in the range of $250,000 to
$1,000,000 over the upcoming five years to fully resolve these matters.
Although the Company has accrued the minimum end of this range as a
precaution, management has no current reason to believe that any such
increase is probable or quantifiable. The Company will continue to
evaluate these contingent loss exposures and, if they develop,
recognize expense as soon as such losses can be reasonably estimated.
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6. Merger.
On November 30, 1995, the Company merged with Durametallic Corporation.
The acquisition was accounted for under the pooling of interests method
of accounting, and accordingly, the accompanying consolidated financial
statements have been restated for all periods prior to the acquisition
to include the financial position, results of operations and cash flows
of Durametallic.
7. Restructuring
The Company recognized a restructuring charge of $5.8 million, or $.12
per share after tax, during the second quarter of 1996 to consolidate
Duriron and its rectntly acquired Durametallic operations in Europe and
Australia. The restructuring charge resulted in termination costs of
$3.2 million and exit costs of $2.6 million.
---------------------------------------------
The financial information contained in this report is unaudited, but,
in the opinion of the Company, all adjustments (consisting of normal
recurring accruals) which are necessary for a fair presentation of the
operating results for the period have been made.
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Management's Discussion and Analysis
of Financial Condition and Results of Operations
Capital Resources and Liquidity - Six Months Ended June 30, 1996
The Company's capital structure, consisting of long-term debt, deferred
items and shareholders' equity, continues to enable the Company to finance
short-and long-range business objectives. At June 30, 1996, long-term debt
was 14.8% of the Company's capital structure, compared to 16.9% at December
31, 1995. Based upon annualized 1996 results, the interest coverage ratio
of the Company's indebtedness was 11.2 at June 30, 1996, compared with 10.7
for the twelve months ended December 31, 1995.
The return on average net assets at June 30, 1996 was 13.1% based upon
1996 annualized results, compared to 11.5% at December 31, 1995. Annualized
return on average shareholders' equity was 18.8% at June 30, 1996, compared
to 16.6% at December 31, 1995. Increases in these returns, despite the
impact of a restructuring charge in the second quarter of 1996, reflect the
Company's improved level of profitability. Management continues to focus on
improving its performance in these areas.
Capital spending in 1996 is expected to be approximately $17.5 million,
compared with $13.3 million in 1995. The 1996 expenditures will be invested
in new and replacement products, international market development and
general manufacturing equipment upgrades.
The Company's liquidity position is reflected in a current ratio of 2.5
to 1 at June 30, 1996. This compares to 2.5 to 1 at December 31, 1995. Cash
in excess of current requirements was invested in high-grade, short-term
securities. Cash and amounts available under borrowing arrangements will be
adequate to fund operating needs and capital expenditures through the
coming year.
On July 26, 1996, the Company announced that its Board of Directors had
authorized the purchase in the open market and through negotiated
transactions of up to 2.4 million of its shares of Common Stock at an
aggregate purchase price not to exceed $50 million. It is the Company's
intent to repurchase the shares quickly and as long as market conditions
remain favorable. The maximum number of shares covered by the authorization
represents up to almost 10% of the number of outstanding shares. It is
anticipated that the repurchase program will be funded with excess cash,
existing lines of credit and additional external borrowings.
Results of Operations - Six Months Ended June 30, 1996
Net sales for the six months ended June 30, 1996 were a record of
$300.3 million. This compares with net sales of $253.8 million in the same
period in 1995. The 18% increase in net sales reflects strong global
shipments from all business units and across all geographic regions.
Foreign contributions to consolidated net sales were 33.4% and 33.0% for
the six month periods ended June 30, 1996 and 1995, respectively. Total net
sales to foreign customers including export sales from the U.S. were 40.7%
and 37.8% for the first six months of 1996 and 1995,
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respectively. The increase in foreign contributions reflects higher levels
of shipments into the European, Asian and Latin American markets.
Incoming business was a record $310.3 million for the first six months
of 1996. This reflects an increase of 15% over the same period in 1995. The
record level of incoming business is expected to continue through 1996. The
1996 incoming business level reflected strong activity throughout the
global organization. Incoming business in the international markets was
particularly strong during the first half of 1996 compared with 1995.
Backlog at June 30, 1996 was $110.9 million, compared with a backlog of
$101.4 million at December 31, 1995. The Company remains committed to its
program of reducing throughput time and meeting customer request dates for
deliveries.
The gross profit margin was 40.8% for the six months ended June 30,
1996. This compares to 40.5% for the same period in 1995. The improvement
in the margin reflects improved pricing and the impact of the Company's
continued emphasis on cost control. In addition, burden absorption improved
due to the higher levels of plant utilization.
Selling and administrative expenses as a percentage of net sales for
the six months ended June 30, 1996 were 24.4%, compared to 25.7% for the
same period in 1995. The decrease in expense as a percentage of net sales
is consistent with the Company's plan to further leverage expense in 1996
while continuing to invest in the development and growth of international
operations. Selling and administrative expense in dollars increased between
periods due to higher commission payments on large project shipments,
global market development and general wage increases.
Research, engineering and development expense as a percentage of net
sales the six months ended June 30, 1996 was 2.7%, compared with 2.9% for
the same period in 1995. The expense level during the first half of 1996
reflects the Company's continued investment in new products and production
processes.
Other expense was $3.1 million for the six month period ended June 30,
1996, compared to $2.7 million for the same period in 1995. The increase in
expense reflects higher levels of long and short term incentive
compensation expense as the Company achieved record financial results.
The Company recognized a restructuring charge of $5.8 million before
income taxes, or $.12 per share after tax, during the second quarter of
1996 to consolidate Duriron and its recently acquired Durametallic
operations in Europe and Australia. Durametallic operations in Belgium,
Germany, Italy, France and Australia will be combined with larger and more
efficient Duriron facilities during the second half of 1996. The
restructuring was a part of the plan to obtain positive synergies between
the two companies. The savings associated with the plan will be immediate
since the facilities had been unprofitable for many years and fixed
operating costs will be permanently reduced. Annual savings associated with
the personnel reductions alone will amount to approximately $1.5 million.
The restructuring plan is expected to result in the termination of
approximately 55 employees at a cost of $3.2 million. In addition, exit
costs associated with the plant closings are estimated at $2.6 million. The
restructuring activities are expected to be funded with operating cash
flows. Additional costs to fully implement the reorganization plan of
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approximately $.02-$.03 per share will be recorded as period costs and
categorized into cost of sales and administrative expense in the second
half of 1996. These future costs relate to moving equipment and
cross-training employees to support ongoing operations at the Duriron
facilities.
The effective tax rate for the six months ended June 30, 1996 was
34.9%, compared with 37.8% in 1995. The lower 1996 effective tax rate
includes benefits associated with restructuring the Company's German
entities and other tax benefits of the aforementioned restructuring.
Excluding the tax impact on the restructuring, the tax rate for the 1996
was 37.0%. The reduction in the 1996 tax rate excluding the impact of the
restructuring reflects the recognition of tax loss carryforwards in the
Company's Asia Pacific and European operations.
Earnings from operations for the six months ended June 30, 1996 were a
record $22.0 million, or $.89 per share, before the restructuring of $3.0
million after tax, or $.12 per share. This reflects a 41% increase in
profits over 1995 earnings of $15.7 million, or $.63 per share. Including
the restructuring, net earnings of $19.0 million remained at a record level
and exceeded the prior year by 21%. The increase in profits reflects the
combination of strong business and leveraging of expenses. The impact of
the merger with Durametallic continued to be accretive to earnings per
share in the second quarter of 1996.
Results of Operations - Three Months Ended June 30, 1996
Net sales for the three months ended June 30, 1996 were a record of
$151.1 million, compared to net sales of $131.1 million for the same period
in 1995. The 15% increase in net sales reflects strong global shipments
from all operations and across all geographic regions. Foreign
contributions to consolidated net sales were 33.4% and 32.9% for the three
month periods ended June 30, 1996 and 1995, respectively. Total net sales
to foreign customers including export sales from the U.S. were 41.2% and
37.2% for the second quarter of 1996 and 1995, respectively. The increase
in foreign contributions reflects higher levels of export sales and
shipments into the Asian and Latin American markets.
Incoming business was $153.3 million in the second quarter of 1996.
This reflects an increase of 7% over a prior record incoming business level
of $143.7 million during the same period in 1995. The 1996 incoming
business level reflected strong activity throughout the global
organization. Incoming business in the European and Latin American markets
was particularly strong during the second quarter of 1996 compared with
1995. Backlog at June 30, 1996 was $110.9 million, compared with a backlog
of $101.4 million at December 31, 1995.
The gross profit margin was a record 41.4% for the three months ended
June 30, 1996. This compares to 40.1% for the same period in 1995. The
improvement in the margin reflects better pricing, improved burden
absorption related to higher levels of plant utilization and the impact of
the Company's continued emphasis on cost control.
Selling and administrative expenses as a percentage of net sales for
the three months ended June 30, 1996 were 24.4%, compared to 25.6% for the
same period in 1995. The decrease in expense as a percentage of net sales
is consistent with the Company's plan to further leverage
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expense in 1996 while continuing to invest in the development and growth of
international operations. Selling and administrative expense in dollars
increased between periods due to higher commission payments on large
project shipments and global market development.
Research, engineering and development expense for the three months
ended June 30, 1996 was $4.0 million, compared with $3.6 million for the
same period in 1995. The expense level during the second quarter of 1996
reflects the Company's continued investment in new products and production
processes.
The Company recognized a restructuring charge of $5.8 million before
income taxes, or $.12 per share after tax, during the second quarter of
1996 to consolidate Duriron and its recently acquired Durametallic
operations in Europe and Australia. For further information, reference the
previous paragraph on the same topic located in the review of operations
for the first six months of 1996.
The effective tax rate for the second quarter of 1996 was 32.3%,
compared with 37.8% in 1995. The lower second quarter 1996 tax rate
includes benefits associated with restructuring the Company's German fiscal
entities and other tax benefits of the aforementioned restructuring.
Excluding the tax impact on the restructuring, the tax rate for the second
quarter was 37.0%. The reduction in tax rate from 1995 excluding the
impacts of the restructuring reflects the recognition of tax loss
carryforwards in the Company's Asia Pacific and European operations.
Earnings from operations for the three months ended June 30, 1996 were
a record $11.9 million, or $.48 per share, before the restructuring of $3.0
million after tax, or $.12 per share. This reflects a 49% increase in
profits over 1995 earnings of $8.0 million, or $.32 per share. Including
the restructuring, 1996 net earnings of $8.9 million were 11% above the
prior year earnings. The increase in profits reflects the combination of
strong business and leveraging of expenses. The impact of the merger with
Durametallic continued to be accretive to earnings per share in the second
quarter of 1996. Net earnings for future quarters of 1996 and thereafter
are uncertain and dependent on general worldwide economic conditions in the
Company's major markets and their strong impact on the level of incoming
business activity.
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PART II
OTHER INFORMATION
ITEM 1 Not Applicable During Reporting Period
ITEM 2 On July 26, 1996, the Board of Directors of the Company
approved an amendment (the "Amendment") to the Company's
Rights Agreement which has the effect of extending the
expiration date of this Rights Agreement from August 13,
1996 to August 13, 2006. The Amendment also made several
other technical modifications to the Rights Agreement. The
Amendment has the effect of extending the rights (the
"Rights") of holders of the Company's common stock to
purchase a series of Participating Preferred Stock to be
newly issued by the Company if an "Acquiring Person" takes
certain defined steps without approval of the Company's
Board of Directors, which could lead to a change of control
of the Company, all as subject to and as more clearly
defined in the Rights Agreement. A copy of the Amendment is
filed as Exhibit 4.5 hereto. The Amendment could have
certain anti-takeover effects since the issuance of the
Rights will cause substantial dilution to a person or group
who attempts to acquire the Company on terms not approved by
the Company's Board of Directors.
ITEM 3 Not Applicable During Reporting Period
ITEM 4 On April 25, 1996, the 1996 Annual Meeting of Shareholders was
held. The following directors were reelected at
this meeting in accordance with the following shareholder
voting results:
Name of Director Votes For Votes Withheld
---------------- --------- --------------
J.S. Haddick 21,833,097 32,545
K.E. Sheehan 21,830,153 35,488
J.S. Ware 21,836,217 29,425
R.E. White 21,832,589 33,053
Shareholders also approved the appointment of Ernst & Young
LLP as the Company's independent auditors for 1996 by the
following vote tabulation: 21,755,890-for; 77,277-against;
and 32,474-abstain. Other directors whose term of office
continued after the meeting are R.E. Frazier, D.C. Harris,
W.M. Jordan, H.K. Coble, E. Green, R.L. Molen and J.F.
Schorr.
ITEM 5 Not Applicable During Reporting Period
ITEM 6 Exhibits and Reports on Form 10K
(a) The following Exhibits are attached hereto:
4.5 Amendment to Rights Agreement dated
August 1, 1996
27.1 Financial Data Schedule
All other Exhibits are incorporated by
reference
(b) Not applicable during reporting period
15
INDEX TO EXHIBITS
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(4) INSTRUMENTS DEFINING THE RIGHTS OF SECURITY HOLDERS, INCLUDING
INDENTURES:
4.1 Lease agreement, indenture of mortgage and deed of trust, and
guarantee agreement, all executed on June 1, 1978 in
connection with 9-1/8% Industrial Development Revenue Bonds,
Series A, City of Cookeville, Tennessee........................................ +
4.2 Lease agreement, indenture of trust, and guaranty agreement,
all executed on June 1, 1978 in connection with 7-3/8%
Industrial Development Revenue Bonds, Series B, City of
Cookeville, Tennessee.......................................................... +
4.3 Lease agreement, indenture of mortgage and
agreement, lessee guaranty agreement, and
letter of representation and indemnity
agreement, all dated as of December 1, 1983
and executed in connection with the Industrial
Development Revenue Bonds (1983 The Duriron
Company, Inc. Project), Erie Company,
New York Industrial Development Agency
were filed with the Commission as Exhibit
4.4 to the Company's Report on Form 10-K
for the year ended December 31, 1983........................................... *
4.4 Form of Rights Agreement dated as of August 1,
1986 between The Duriron Company, Inc. and Bank
One, Indianapolis, National Association, as
Rights Agent was filed as an Exhibit to the
Company's Form 8-A dated August 13, 1986....................................... *
4.5 Amendment to Rights Agreement dated August 1, 1996............................. 23
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4.6 Loan Agreement, dated as of March 19, 1987, between The
Duriron Company, Inc. and Metropolitan Life Insurance Company,
including the form of Promissory Note delivered in connection
therewith, was filed with the Commission as Exhibit 7 to the
Company's Current Report on Form 8-K dated April 6, 1987....................... *
4.7 The Credit Agreement between The Duriron
Company, Inc. and Bank One, Dayton, N.A.,
dated as of November 30, 1989.................................................. +
4.8 Interest Rate and Currency Exchange Agreement between the
Company and Barclays Bank dated November 17, 1992 PLC in the
amount of $25,000,000 was filed as Exhibit 4.9 to Company's
Report of Form 10-K for year ended December 31, 1992........................... *
4.9 Loan Agreement in the amount of $25,000,000 between the
Company and Metropolitan Life Insurance Company dated November
12, 1992 was filed as Exhibit 4.10 to the Company's Annual
Report on Form 10-K for the year ended
December 31, 1992 ............................................................. *
4.10 Revolving Credit Agreement between the
Company and Fifth Third Bank dated
November 23, 1992 in the amount of
$10,000,000 ................................................................... +
4.11 Revolving Credit Agreement between the Company
and First of America Bank - Michigan, N.A. in the
amount of $20,000,000 and dated August 22, 1995................................ +
(10) MATERIAL CONTRACTS: (See Footnote "a")
10.1 The Duriron Company, Inc. Incentive Compensation
Plan (the "Incentive Plan") for Senior Executives,
as amended and restated effective January 1, 1994,
was filed as Exhibit 10.1 to the Company's Annual Report
on Form 10-K for the year ended December 31, 1993.............................. *
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10.2 Amendment No. 1 to the Incentive Plan was filed as
Exhibit 10.2 to the Company'Annual Report on Form
10-K for the year ended December 31, 1995...................................... *
10.3 The Duriron Company, Inc. Supplemental Pension
Plan for Salaried Employees was filed with the Commission as
Exhibit 10.4 to the Company's Annual Report on Form 10-K for
the year ended December 31, 1987............................................... *
10.4 The Duriron Company, Inc. amended and
restated Director Deferral Plan was filed as Attachment A to
the Company's definitive 1996 Proxy Statement filed with the
Commission on March 10, 1996................................................... *
10.5 Form of Employment Agreement ("Employment
Agreement") between The Duriron Company, Inc.
and each of the current officers was filed as
Exhibit 10.4 to the Company's Annual Report
on Form 10-K for year ended December 31, 1992.................................. *
10.6 Form of Amendment No. 1 to Employment
Agreement was filed as Exhibit 10.6 to the Company's
Annual Report on Form 10-K for the year ended
December 31, 1995.............................................................. *
10.7 The Duriron Company, Inc. First Master Benefit
Trust Agreement dated October 1, 1987 was filed
as Exhibit 10.24 to the Company's Annual Report on
Form 10-K for the year ended December 31, 1987................................. *
10.8 Amendment #1 to the first Master Benefit Trust Agreement dated
October 1, 1987 was filed as Exhibit 10.24 to the Company's
Annual Report on Form 10-K for the year ended December 31,
1993........................................................................... *
10.9 Amendment #2 to First Master Benefit Trust
Agreement was filed as Exhibit 10.25 to the
Company's Annual Report on Form 10-K for the
year ended December 31, 1993................................................... *
18
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10.10 The Duriron Company, Inc. Second Master Benefit
Trust Agreement dated October 1, 1987 was filed
as Exhibit 10.12 to the Company's Annual Report on
Form 10-K for the year ended December 31, 1987................................. *
10.11 First Amendment to Second Master Benefit Trust Agreement was
filed as Exhibit 10.26 to the Company's Annual Report on Form
10-K for the year ended December 31, 1993...................................... *
10.12 The Duriron Company, Inc. Long-Term Incentive
Plan (the "Long-Term Plan"), as amended and
restated effective November 1, 1993 was filed as
Exhibit 10.8 to the Company's Annual Report on
Form 10-K for the year ended December 31, 1993................................. *
10.13 Amendment No. 1 to the Long-Term Plan was filed
as Exhibit 10.13 to the Company's Annual Report
on Form 10-K for the year ended December 31,
1995........................................................................... *
10.14 The Duriron Company, Inc. 1989 Stock Option Plan
as amended and restated April 23, 1991 was filed
as Exhibit 10.11 to the Company's Annual Report
on Form 10-K for the year ended December 31,
1991 .......................................................................... *
10.15 The Duriron Company, Inc. 1989 Restricted Stock
Plan (the "Restricted Stock Plan") as amended and
restated effective April 23, 1991, was filed as Exhibit
10.12 to the Company's Annual Report on Form
10-K for the year ended December 31, 1991 ..................................... *
10.16 Amendment #1 to the Restricted Stock Plan was filed as Exhibit
10.20 to the Company's Annual Report on Form 10-K for the year
ended December 31, 1992........................................................ *
10.17 Amendment #2 to the Restricted Stock Plan was filed as Exhibit
10.27 to the Company's Annual Report on Form 10-K for the year
ended December 31, 1994........................................................ *
19
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10.18 Amendment #3 to the Restricted Stock Plan was filed as Exhibit
10.18 to the Company's Annual Report on Form 10-K for the year
ended December 31, 1995........................................................ *
10.19 Amendment #4 to the Restricted Stock Plan was filed as Exhibit
10.19 to the Company's Annual Report on Form 10-K for the year
ended December 31, 1995........................................................ *
10.20 The Duriron Company, Inc. Retirement
Compensation Plan for Directors ("Director
Retirement Plan") was filed as Exhibit 10.15 on
the Company's Annual Report to Form 10-K for
the year ended December 31, 1988............................................... *
10.21 Amendment No. 1 to Director Retirement Plan
was filed as Exhibit 10.21 to the Company's
Annual Report on Form 10-K for the year ended
December 31, 1995.............................................................. *
10.22 Reserved
10.23 The Company's Benefit Equalization Pension
Plan ("Equalization Plan") was filed as Exhibit
10.16 to the Company's Annual Report on Form
10-K for the year ended December 31, 1989...................................... *
10.24 Amendment #1 dated December 15, 1992 to the Equalization Plan
was filed as Exhibit 10.18 to the Company's Annual Report on
Form 10-K for the year ended December 31, 1992................................. *
10.25 The Company's Equity Incentive Plan as amended and restated
effective July 21, 1995 was filed as Exhibit 10.25 to the
Company's Annual Report on Form 10-K for the year ended December 31, 1995...... *
10.26 Supplemental Pension Agreement between the
Company and William M. Jordan dated
January 18, 1993 was filed as Exhibit 10.15
to the Company's Annual Report on Form 10-K
for the year ended December 31, 1992........................................... *
20
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10.27 1979 Stock Option Plan, as amended and restated April 23,
1991, and Amendment #1 thereto dated December 15, 1992, was
filed as Exhibit 10.17 to the Company's Annual Report on Form
10-K for the year ended December 31, 1992 ..................................... *
10.28 Deferred Compensation Plan for Executives was filed as Exhibit
10.19 to the Company's Annual Report on Form 10-K for the year
ended December 31, 1992 ....................................................... *
10.29 Executive Life Insurance Plan of The Duriron
Company, Inc. was filed as Exhibit 10.29 to the
Company's Annual Report on Form 10-K for the
year ended December 31, 1995................................................... *
10.30 Executive Long-Term Disability Plan of The
Duriron Company, Inc. was filed as Exhibit 10.30
to the Company's Annual Report on Form 10-K for
the year ended December 31, 1995............................................... *
10.31 Consulting Agreement between James S. Ware and Durametallic
Corporation dated April 21, 1991 was filed as Exhibit 10.31 to
the Company's Annual Report on Form 10-K for the year ended
December 31, 1995.............................................................. *
10.32 Senior Executive Death Benefit Agreement
between James S. Ware and Durametallic
dated April 12, 1991 was filed as Exhibit 10.32 to
the Company's Annual Report on Form 10-K for
the year ended December 31, 1995............................................... *
10.33 Executive Severance Agreement between
James S. Ware and Durametallic Corporation dated
January 6, 1994 was filed as Exhibit 10.33 to the
Company's Annual Report on Form 10-K for the
year ended December 31, 1995................................................... *
21
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10.34 Agreement between James S. Ware and the Company
dated September 11, 1995 was filed as Exhibit 10.34 to
the Company's Annual Report on Form 10-K for the
year ended December 31, 1995................................................... *
10.35 Agreement and Plan of Merger Among The Duriron Company, Inc.,
Wolverine Acquisition Corporation and Durametallic
Corporation, dated as of September 11, 1995 was filed as Annex
A on the Form S-4 Registration Statement filed by the Company
on September 11, 1995.......................................................... *
10.36 Split-Dollar Life Insurance Agreement between the
Company and James S. and Sheila D. Ware Irrevocable
Trust II signed March 6, 1996 was filed as Exhibit 10.36 to the
Company's quarterly report on Form 10-Q for the quarter ended
March 31, 1996................................................................. *
(27) FINANCIAL DATA SCHEDULE
27.1 Financial Data Schedule (submitted for the SEC's
information)..................................................................
- ---------------
"*" Indicates that the exhibit is incorporated by reference into this quarterly
report on form 10-Q from a previous filing with the Commission. The
Company's file number with the Commission is "0-325".
"+" Indicates that the document relates to a class of indebtedness that does
not exceed 10% of the total assets of the Company and subsidiaries and that
the Company will furnish a copy of the document to the Commission upon
request.
"a" The documents identified under Item 10 include all management contracts and
compensatory plans and arrangements required to be filed as exhibits.
22
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
THE DURIRON COMPANY, INC.
(Registrant)
/s/ Bruce E. Hines
---------------------------------
Bruce E. Hines
Senior Vice President
Chief Administrative Officer
Date: August 13, 1996
1
AMENDMENT TO RIGHTS AGREEMENT
THIS AMENDMENT, made and entered into as of this 1st day of August, 1996, by
and between THE DURIRON COMPANY, INC. (the "Company") and KEYBANK NATIONAL
ASSOCIATION ("Key") is being executed under the following circumstances:
A. The Company and Bank One, Dayton, N.A. ("Bank One") entered into a
Rights Agreement dated August 1, 1986 ("Rights Agreement"), pursuant to
which Bank One was appointed to act as a rights agent (the "Rights
Agent") under the Rights Agreement. Bank One gave notice of its
resignation as Rights Agent under the Rights Agreement in 1987 with the
Company appointing an affiliate of Bank One as successor Rights Agent
pursuant to Section 21 of the Rights Agreement. Effective October 1,
1995 such affiliate of Bank One gave notice of its resignation of Rights
Agent. The Company, in accordance with Section 21 of the Rights
Agreement and in compliance with other provisions thereof, appointed
Society National Bank ("Society") as successor Rights Agent effective
October 1, 1995, and Society accepted the appointment of the position as
successor Rights Agent effective on October 1, 1995. Effective June 17,
1996, Key became the successor by merger to Society, and Key now serves
as Rights Agent.
B. NOW, THEREFORE, the Company and Key hereby amend the Rights Agreement as
follows, pursuant to Section 26 of the Rights Agreement:
1. The second sentence of Section 4 of the Rights Agreement is
amended by changing the figure "$30.00" to "$90.00".
2. Section 7(a) and Section 7(b) of the Rights Agreement are
amended and restated to read as follows:
EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF
RIGHTS.
(a) The Rights shall become exercisable
following the close of business on the Distribution
Date. The Rights may be exercised to purchase Preferred
Stock, except as otherwise provided herein, in whole or
in part at any time after the Distribution Date upon
surrender of the Right Certificate, with the form of
election to purchase on the reverse side thereof duly
executed (with such signature duly guaranteed), to the
Rights Agent at the Securityholder Services Department
of the Rights Agent in Cleveland, Ohio, together with
payment of the Purchase Price with
2
respect to each Right exercised, subject to adjustment as
hereinafter provided, at or prior to the close of business on
the earlier of (i) August 13, 2006 ("Final Expiration Date"), or
(ii) the time at which the Rights are redeemed as provided in
Section 23 hereof (such earlier date being herein referred to as
the "Expiration Date").
(b) The Purchase Price for each one one-hundredth
(1/100) of a share of Preferred Stock issued pursuant to the
exercise of a Right shall initially be $90.00. The Purchase
Price and the number of shares of Preferred Stock or other
securities to be acquired upon exercise of a Right shall be
subject to adjustment from time to time as provided in Sections
11 and 13 hereof. The Purchase Price shall be payable in lawful
money of the United States of America, in accordance with
paragraph (c) below.
3. New Sections 7(e), 7(f) and 7(g) are added to the Rights Agreement and
shall read as follows:
(e) At any time after any Person becomes an
Acquiring Person, a majority of the members of the Board of
Directors who were in office at the time the Person became an
Acquiring Person (with such members being called "Continuing
Directors" hereafter) may, at their option, exchange all or part
of the then outstanding and exercisable Rights (exclusive of any
Rights that are or were at any time on or after the earlier of
the Stock Acquisition Date or the Distribution Date acquired or
beneficially owned by any Acquiring Person or any Associate or
Affiliate of any such Acquiring Person, or any transferee of
such Rights) (such excluded rights being hereinafter referred to
as the "Excluded Rights") for shares of Common Stock at an
exchange ratio of one share of Common Stock per Right,
appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the Distribution
Date (such exchange ratio being hereinafter referred to as the
"Exchange Ratio").
(f) Immediately upon the action of the Continuing
Directors electing to exchange any Rights pursuant to Section
7(e) and without any further action and without any notice, the
right to exercise such Rights will terminate and thereafter the
only right of a holder of such Rights shall be to receive that
number of shares of Common Stock equal to the numbers of such
3
Rights held by such holder multiplied by the Exchange Ratio. The
Company shall promptly thereafter give notice of such exchange
to the Rights Agent and the holders of the Rights to be
exchanged in the manner set forth in Section 24; provided that
the failure to give, or any defect in, such notice shall not
affect the validity of such exchange. Any notice which is mailed
in the manner herein provided shall be deemed given, whether or
not the holder receives the notice. Each such notice of exchange
will state the method by which the exchange of shares of Common
Stock for Rights will be effected and, in the event of any
partial exchange, the number of Rights which will be exchanged.
Any partial exchange shall be effected pro rata based on the
number of Rights (other than Excluded Rights) held by each
holder of Rights.
(g) In any exchange pursuant to this Section 7, the
Company, at its option, may substitute another security (having
rights approximately equivalent to those then carried by a share
of Common Stock, such other security being hereinafter referred
to as a "Common Stock Equivalent") for shares of Common Stock
exchangeable for Rights, at the rate of one Common Stock
equivalent for each share of Common Stock, so that each Common
Stock Equivalent delivered in lieu of each share of Common Stock
shall have essentially the same dividend, liquidation and voting
rights as one share of Common Stock then has.
4. Exhibit B (Form of Right Certificate) is amended by changing the figure
"$30.00" to "$90.00".
The remainder of the Plan shall remain unchanged, and the Plan, as so amended
above, shall remain in full force and effect.
IN WITNESS WHEREOF, the parties have duly executed this Amendment to the Rights
Agreement as of the day and year first above written.
THE DURIRON COMPANY, INC. KEYBANK NATIONAL ASSOCIATION
By: Ronald F. Shuff By: Caroline Lukez-Byrne
Title: Vice President- Title: Assistant Vice President
Secretary & General Counsel
5
1,000
6-MOS
DEC-31-1996
JAN-01-1996
JUN-30-1996
15,675
0
110,901
1,509
105,342
244,828
252,269
151,267
414,414
99,234
46,564
30,706
0
0
178,402
414,414
300,265
300,265
177,743
259,316
8,858
0
2,863
29,228
10,199
19,029
0
0
0
19,029
.77
.77
