x
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED JANUARY 3, 2015 |
¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Large accelerated Filer
¨
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Accelerated filer
x
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Non-accelerated filer
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Smaller reporting company
¨
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Page #
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Report of Independent Registered Public Accounting Firm
- Consolidated Financial Statements
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Report of Independent Registered Public Accounting Firm - Internal Control
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•
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the generation, use, storage, treatment, transportation, disposal and management of hazardous substances and wastes;
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•
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emissions or discharges of pollutants or other substances into the environment;
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•
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investigation and remediation of, and damages resulting from, releases of hazardous substances; and
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•
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the health and safety of our employees.
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Location
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Principal Operations
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Building Square Feet
|
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Land Acres
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Bristol, TN
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Manufacturing stainless steel pipe
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275,000
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73.1
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Fountain Inn, SC
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Chemical manufacturing and warehousing facilities
|
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136,834
|
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16.9
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Cleveland, TN
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Chemical manufacturing and warehousing facilities
|
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118,000
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10.5
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Andrews, TX
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Manufacturing liquid storage solutions and separation equipment
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109,432
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19.6
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Dalton, GA
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Warehouse facilities
(1)
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32,000
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2.0
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Houston, TX
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Cutting facility and storage yard for heavy walled pipe
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29,821
|
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10.0
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Mineral Ridge, OH
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Cutting facility and storage yard for heavy walled pipe
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12,000
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12.0
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Mineral Ridge, OH
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Storage yard for heavy walled pipe
(1)
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—
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4.6
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Spartanburg, SC
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Corporate headquarters
(1)
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6,840
|
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—
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Glen Allen, VA
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Office space for Corporate employees
(1)
|
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2,869
|
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—
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Augusta, GA
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Chemical manufacturing
(2)
|
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—
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46.0
|
(1)
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Leased facility / land.
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(2)
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Plant was closed in 2001 and all structures and manufacturing equipment have been removed.
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|
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2014
|
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2013
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||||||||||||
Quarter
|
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High
|
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Low
|
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High
|
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Low
|
||||||||
1st
|
|
$
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15.75
|
|
|
$
|
13.14
|
|
|
$
|
14.88
|
|
|
$
|
12.53
|
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2nd
|
|
16.99
|
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13.82
|
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16.00
|
|
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12.94
|
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||||
3rd
|
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18.78
|
|
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15.89
|
|
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17.38
|
|
|
14.99
|
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||||
4th
|
|
18.84
|
|
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14.67
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|
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16.75
|
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|
13.80
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*$100 invested on 12/31/09 in stock on index, including reinvestment of dividends.
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Fiscal year ending December 31.
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Source: Russell Investment Group
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12/09
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12/10
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12/11
|
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12/12
|
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12/13
|
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12/14
|
||||||||||||
Synalloy Corporation
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$
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100.00
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$
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136.23
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|
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$
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118.30
|
|
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$
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167.88
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$
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183.08
|
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$
|
213.84
|
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Russell 2000
|
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100.00
|
|
|
126.86
|
|
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121.56
|
|
|
141.43
|
|
|
196.34
|
|
|
205.95
|
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||||||
NASDAQ Non-Financial
|
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100.00
|
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117.19
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119.01
|
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139.36
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196.05
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227.38
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Selected Financial Data and Other Financial Information
|
|||||||||||||||||||
(Dollar amounts in thousands except for per share data)
|
|||||||||||||||||||
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2014
(a)
|
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2013
|
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2012
|
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2011
|
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2010
|
||||||||||
Operations
(b)
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||||||||||
Net sales
|
$
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199,505
|
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$
|
196,751
|
|
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$
|
166,162
|
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$
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139,083
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$
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111,193
|
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Gross profit
|
32,929
|
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19,798
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19,733
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14,306
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7,014
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|||||
Selling, general & administrative expense
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16,589
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16,034
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12,409
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10,581
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7,941
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|
|||||
Operating income (loss)
|
16,341
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3,764
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7,324
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3,725
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(927
|
)
|
|||||
Net income (loss) - continuing operations
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12,619
|
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|
2,898
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3,983
|
|
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2,488
|
|
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(572
|
)
|
|||||
Net (loss) income - discontinued operations
|
(7,157
|
)
|
|
(1,137
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)
|
|
252
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|
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3,310
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|
|
4,606
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|||||
Net income
|
5,462
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1,761
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4,235
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5,797
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|
4,034
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|||||
Financial Position
|
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|||||||
Total assets
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187,849
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163,260
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148,507
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98,916
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81,375
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|||||
Working capital
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64,580
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74,988
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65,919
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56,344
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43,232
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|||||
Long-term debt, less current portion
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27,255
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20,905
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37,593
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8,650
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|
219
|
|
|||||
Shareholders' equity
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109,454
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106,098
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71,774
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68,619
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63,875
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|||||
Financial Ratios
|
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Current ratio
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2.6:1
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4.0:1
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3.6:1
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4.1:1
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4.0:1
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|||||
Gross profit to net sales
(b)
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17
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%
|
|
10
|
%
|
|
12
|
%
|
|
10
|
%
|
|
6
|
%
|
|||||
Long-term debt to capital
|
20
|
%
|
|
16
|
%
|
|
34
|
%
|
|
11
|
%
|
|
0
|
%
|
|||||
Return on average assets
(b)
|
7
|
%
|
|
2
|
%
|
|
3
|
%
|
|
3
|
%
|
|
0
|
%
|
|||||
Return on average equity
(b)
|
12
|
%
|
|
3
|
%
|
|
6
|
%
|
|
4
|
%
|
|
0
|
%
|
|||||
Per Share Data (income/(loss) – diluted)
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Net income (loss) - continuing operations
(b)
|
$
|
1.45
|
|
|
$
|
0.42
|
|
|
$
|
0.62
|
|
|
$
|
0.39
|
|
|
$
|
(0.09
|
)
|
Net (loss) income - discontinued operations
(b)
|
(0.82
|
)
|
|
(0.16
|
)
|
|
0.04
|
|
|
0.52
|
|
|
0.73
|
|
|||||
Net income
|
0.63
|
|
|
0.25
|
|
|
0.66
|
|
|
0.91
|
|
|
0.64
|
|
|||||
Dividends declared and paid
|
0.30
|
|
|
0.26
|
|
|
0.25
|
|
|
0.25
|
|
|
0.50
|
|
|||||
Book value
|
12.57
|
|
|
12.21
|
|
|
11.29
|
|
|
10.85
|
|
|
10.16
|
|
|||||
Other Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Depreciation and amortization
(b)
|
$
|
5,191
|
|
|
$
|
4,672
|
|
|
$
|
2,962
|
|
|
$
|
2,225
|
|
|
$
|
2,282
|
|
Capital expenditures
(b)
|
8,066
|
|
|
5,648
|
|
|
4,542
|
|
|
3,162
|
|
|
2,191
|
|
|||||
Employees at year end
|
464
|
|
|
670
|
|
|
597
|
|
|
441
|
|
|
441
|
|
|||||
Shareholders of record at year end
|
575
|
|
|
619
|
|
|
669
|
|
|
687
|
|
|
704
|
|
|||||
Average shares outstanding - diluted
|
8,715
|
|
|
6,947
|
|
|
6,394
|
|
|
6,362
|
|
|
6,309
|
|
|||||
Stock Price
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Price range of common stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
High
|
$
|
18.84
|
|
|
$
|
17.38
|
|
|
$
|
14.97
|
|
|
$
|
15.50
|
|
|
$
|
12.25
|
|
Low
|
13.14
|
|
|
12.53
|
|
|
10.21
|
|
|
9.15
|
|
|
7.47
|
|
|||||
Close
|
17.67
|
|
|
15.53
|
|
|
13.49
|
|
|
10.27
|
|
|
12.12
|
|
|
2014
|
|
2013
|
|
2012
|
|||||||||||||||
(in thousands)
|
Amount
|
|
%
|
|
Amount
|
|
%
|
|
Amount
|
|
%
|
|||||||||
Net sales
|
$
|
134,304
|
|
|
100.0
|
%
|
|
$
|
140,233
|
|
|
100.0
|
%
|
|
$
|
114,788
|
|
|
100.0
|
%
|
Cost of goods sold
|
112,486
|
|
|
83.8
|
%
|
|
130,166
|
|
|
92.8
|
%
|
|
103,295
|
|
|
90.0
|
%
|
|||
Gross profit
|
21,818
|
|
|
16.2
|
%
|
|
10,067
|
|
|
7.2
|
%
|
|
11,493
|
|
|
10.0
|
%
|
|||
Selling, general and administrative expense
|
8,307
|
|
|
6.2
|
%
|
|
8,804
|
|
|
6.3
|
%
|
|
5,833
|
|
|
5.1
|
%
|
|||
Operating income
|
$
|
13,511
|
|
|
10.1
|
%
|
|
$
|
1,263
|
|
|
0.9
|
%
|
|
$
|
5,660
|
|
|
4.9
|
%
|
Year-end backlog - Storage tanks
|
$
|
12,229
|
|
|
|
|
$
|
11,477
|
|
|
|
|
|
not available
|
|
|
|
|
a)
|
The Company-wide cost cutting initiatives implemented in January 2014 had a favorable effect on profitability for 2014 with the average cost per pound produced decreasing seven percent.
|
b)
|
Six weeks of Specialty's operating income was included in the fourth quarter of 2014.
|
c)
|
As mentioned earlier, the severe winter weather in West Texas resulted in several lost shipping days, especially at year-end. The weather also slowed drill site development, causing several customers to delay their shipments.
|
d)
|
As mentioned above, BRISMET's product mix changed significantly in 2014. New sales pricing tools have allowed the sales department to focus on profitable sales quotes while decreasing emphasis on the lower margin business.
|
e)
|
Sales and operating income for 2013 were significantly affected by the low margin Bechtel nuclear project, which was completed in 2013. The facility successfully converted that effort to higher margin products in 2014.
|
f)
|
As a result of fluctuations in nickel prices, the Company experienced inventory losses of approximately $118,000 and $228,000 for the year and fourth quarter of 2014, respectively, compared to inventory losses of approximately $3,350,000 and $719,000, respectively, for the same periods of 2013.
|
a)
|
Palmer was acquired August 21, 2012. Its fourth quarter and full year results were included in the 2013 Metals Segment results while only 19 weeks of Palmer's results were included in the prior year. Fourth quarter 2013 operating income was adversely affected by a more prevalent holiday shutdown in 2013. There were approximately $700,000 of finished tanks that could not be shipped to the customers' work sites in December 2013. The unit also incurred warranty repairs of approximately $200,000 in the fourth quarter of 2013. Additionally, fourth quarter 2013 sales and profitability were affected by a less favorable product mix as smaller fiberglass and steel tanks were produced. The facility was nearing emission limits for the fiberglass shop which resulted in the production of smaller, lower priced, and less profitable tanks.
|
b)
|
Associated with the acquisition of Palmer, an intangible asset of $9,000,000 was recorded for the customer base acquired by the Company. This asset is amortized on an accelerated basis which resulted in an amortization charge of $1,530,000 for the entire year and $382,000 for the fourth quarter of 2013 compared to $540,000 of amortization for both the entire year and fourth quarter of 2012.
|
c)
|
Pricing and margins at BRISMET during the first nine months of the year were negatively impacted by foreign imports. Stainless steel pipe imports from Malaysia, Vietnam and Thailand entered the country at significantly reduced prices. This factor forced BRISMET to reduce prices accordingly to retain market share. On May 16, 2013, BRISMET, along with several other domestic manufacturers of stainless steel pipe, filed an antidumping petition with the U.S. Department of Commerce ("Commerce") and the U.S. International Trade Commission ("USITC") alleging that
|
d)
|
Profits at BRISMET were negatively impacted for the fourth quarter of 2013 by significant third party contract services associated with the Bechtel project, and an unfavorable sales mix which was heavily weighted toward less than six-inch diameter pipe that has very low to negative gross margins. Labor costs were also above targeted levels for the quarter as we were slow to bring staffing back to pre-Bechtel levels.
|
e)
|
Relatively stable nickel prices during the last half of 2013 resulted in lower inventory losses in 2013. For 2013 and 2012, inventory losses were approximately $3,103,000 and $4,645,000, respectively. For the fourth quarter of 2013, inventory losses were approximately $581,000 compared to an inventory loss of approximately $1,150,000 in the fourth quarter of 2012.
|
f)
|
Throughout the Metals Segment, production manpower was higher than optimal operating levels. In late December and early January 2014, personnel reductions were implemented across all three business units.
|
|
2014
|
|
2013
|
|
2012
|
|||||||||||||||
(Amounts in thousands)
|
Amount
|
|
%
|
|
Amount
|
|
%
|
|
Amount
|
|
%
|
|||||||||
Net sales
|
$
|
65,201
|
|
|
100.0
|
%
|
|
$
|
56,518
|
|
|
100.0
|
%
|
|
$
|
51,374
|
|
|
100.0
|
%
|
Cost of goods sold
|
54,089
|
|
|
83.0
|
%
|
|
46,786
|
|
|
82.8
|
%
|
|
43,134
|
|
|
84.0
|
%
|
|||
Gross profit
|
11,112
|
|
|
17.0
|
%
|
|
9,732
|
|
|
17.2
|
%
|
|
8,240
|
|
|
16.0
|
%
|
|||
Selling, general and administrative expense
|
4,982
|
|
|
7.6
|
%
|
|
3,989
|
|
|
7.1
|
%
|
|
3,397
|
|
|
6.6
|
%
|
|||
Operating income
|
$
|
6,130
|
|
|
9.4
|
%
|
|
$
|
5,743
|
|
|
10.1
|
%
|
|
$
|
4,843
|
|
|
9.4
|
%
|
(Amounts in thousands)
|
|
|
Payment Obligations for the Year Ended
|
||||||||||||||||||||||||
|
Total
|
|
2015
|
|
2016
|
|
2017
|
|
2018
|
|
2019
|
|
Thereafter
|
||||||||||||||
Obligations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Revolving credit facility
|
$
|
885
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
885
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Term loans
|
30,905
|
|
|
4,701
|
|
|
4,534
|
|
|
4,534
|
|
|
4,497
|
|
|
4,258
|
|
|
8,381
|
|
|||||||
Interest payments
|
4,061
|
|
|
965
|
|
|
816
|
|
|
677
|
|
|
538
|
|
|
404
|
|
|
661
|
|
|||||||
Contingent consideration
|
7,500
|
|
|
4,750
|
|
|
2,750
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Operating leases
|
913
|
|
|
449
|
|
|
241
|
|
|
182
|
|
|
26
|
|
|
15
|
|
|
—
|
|
|||||||
Deferred compensation
(1)
|
353
|
|
|
51
|
|
|
51
|
|
|
51
|
|
|
21
|
|
|
21
|
|
|
158
|
|
|||||||
Total
|
$
|
44,617
|
|
|
$
|
10,916
|
|
|
$
|
8,392
|
|
|
$
|
6,329
|
|
|
$
|
5,082
|
|
|
$
|
4,698
|
|
|
$
|
9,200
|
|
(1)
|
For a description of the deferred compensation obligation, see Note 6 to the Consolidated Financial Statements included in Item 8 of this Form 10-K.
|
•
|
$885,000 under a $40,000,000 revolving line of credit expiring on November 21, 2017 with a variable interest rate of 1.77 percent.
|
•
|
$17,250,000 under a term loan expiring August 21, 2022 with a variable interest rate of 2.42 percent.
|
•
|
An interest rate swap contract with a notional amount of $17,250,000 which fixes the term loan interest rate at 3.74 percent. The fair value of the interest rate swap contract was an asset to the Company of $11,000.
|
•
|
$3,654,000 under a term loan expiring August 19, 2023 with a variable interest rate of 2.16 percent.
|
•
|
An interest rate swap contract with a notional amount of $3,654,000 which fixes the term loan interest rate at 4.83 percent. The fair value of this interest rate swap contract was a liability to the Company of $215,000.
|
•
|
$10,000,000 under a term loan expiring November 21, 2019 with a variable interest rate of 2.07 percent.
|
•
|
$19,500,000 under a term loan expiring August 21, 2022 with a variable interest rate of 2.41 percent.
|
•
|
An interest rate swap contract with a notional amount of $19,500,000 which fixes the term loan interest rate at 3.74 percent. The fair value of the interest rate swap contract was an asset to the Company of $301,000.
|
•
|
$3,939,000 under a term loan expiring August 19, 2023 with a variable interest rate of 2.17 percent.
|
•
|
An interest rate swap contract with a notional amount of $3,939,000 which fixes the term loan interest rate at 4.83 percent. The fair value of this interest rate swap contract was a liability to the Company of $80,000.
|
|
2014
|
|
2013
|
||||
Assets
|
|
|
|
||||
Current assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
26,623
|
|
|
$
|
1,773,743
|
|
Accounts receivable, less allowance for doubtful accounts of $1,114,814 and $1,079,288 respectively
|
29,229,927
|
|
|
29,923,485
|
|
||
Inventories, net
|
|
|
|
||||
Raw materials
|
38,405,587
|
|
|
16,557,350
|
|
||
Work-in-process
|
7,128,602
|
|
|
16,041,141
|
|
||
Finished goods
|
22,140,481
|
|
|
18,897,421
|
|
||
Total inventories
|
67,674,670
|
|
|
51,495,912
|
|
||
Deferred income taxes
|
2,921,654
|
|
|
3,776,647
|
|
||
Prepaid expenses and other current assets
|
5,460,344
|
|
|
4,091,489
|
|
||
Current assets held for sale
|
—
|
|
|
8,550,076
|
|
||
Total current assets
|
105,313,218
|
|
|
99,611,352
|
|
||
|
|
|
|
||||
Cash value of life insurance
|
2,046,512
|
|
|
2,007,419
|
|
||
Property, plant and equipment, net
|
39,937,466
|
|
|
32,665,281
|
|
||
Goodwill
|
23,250,201
|
|
|
17,252,678
|
|
||
Intangible assets, net
|
17,001,525
|
|
|
6,930,000
|
|
||
Deferred charges, net and other non-current assets
|
300,308
|
|
|
575,546
|
|
||
Assets held for sale
|
—
|
|
|
4,218,095
|
|
||
|
|
|
|
||||
Total assets
|
$
|
187,849,230
|
|
|
$
|
163,260,371
|
|
|
|
|
|
||||
Liabilities and Shareholders' Equity
|
|
|
|
||||
Current liabilities
|
|
|
|
||||
Accounts payable
|
$
|
21,388,298
|
|
|
$
|
11,440,573
|
|
Accrued expenses
|
14,684,686
|
|
|
9,182,369
|
|
||
Current portion of long-term debt
|
4,533,908
|
|
|
2,533,908
|
|
||
Current portion of environmental reserves
|
126,000
|
|
|
147,500
|
|
||
Current liabilities held for sale
|
—
|
|
|
1,318,876
|
|
||
Total current liabilities
|
40,732,892
|
|
|
24,623,226
|
|
||
|
|
|
|
||||
Long-term debt, less current portion
|
27,255,442
|
|
|
20,904,708
|
|
||
Long-term environmental reserves
|
450,000
|
|
|
478,500
|
|
||
Long-term deferred compensation
|
209,500
|
|
|
219,794
|
|
||
Long-term contingent consideration
|
2,596,516
|
|
|
3,362,031
|
|
||
Deferred income taxes
|
6,438,146
|
|
|
7,573,999
|
|
||
Long-term pension liability from the closure of Bristol Fab
|
713,181
|
|
|
—
|
|
||
|
|
|
|
||||
Shareholders' equity
|
|
|
|
||||
Common stock, par value $1 per share - authorized 12,000,000 shares; issued 10,300,000 shares
|
10,300,000
|
|
|
10,300,000
|
|
||
Capital in excess of par value
|
34,054,374
|
|
|
33,657,714
|
|
||
Retained earnings
|
79,167,323
|
|
|
76,337,597
|
|
||
|
123,521,697
|
|
|
120,295,311
|
|
||
Less cost of common stock in treasury: 1,589,698 and 1,612,200 shares, respectively
|
14,068,144
|
|
|
14,197,198
|
|
||
Total shareholders' equity
|
109,453,553
|
|
|
106,098,113
|
|
||
Commitments and contingencies – See Note 11
|
|
|
|
||||
|
|
|
|
||||
Total liabilities and shareholders' equity
|
$
|
187,849,230
|
|
|
$
|
163,260,371
|
|
|
2014
|
|
2013
|
|
2012
|
||||||
Net sales
|
$
|
199,504,628
|
|
|
$
|
196,751,175
|
|
|
$
|
166,162,142
|
|
|
|
|
|
|
|
||||||
Cost of sales
|
166,575,146
|
|
|
176,953,036
|
|
|
146,429,581
|
|
|||
|
|
|
|
|
|
||||||
Gross profit
|
32,929,482
|
|
|
19,798,139
|
|
|
19,732,561
|
|
|||
|
|
|
|
|
|
||||||
Selling, general and administrative expense
|
16,588,684
|
|
|
16,034,428
|
|
|
12,408,581
|
|
|||
Operating income
|
16,340,798
|
|
|
3,763,711
|
|
|
7,323,980
|
|
|||
Other (income) and expense
|
|
|
|
|
|
|
|
|
|||
Interest expense
|
1,091,694
|
|
|
1,357,328
|
|
|
600,893
|
|
|||
Acquisition related costs
|
301,715
|
|
|
264,186
|
|
|
880,583
|
|
|||
Change in fair value of interest rate swap
|
425,543
|
|
|
(740,832
|
)
|
|
113,648
|
|
|||
Palmer earn-out adjustment
|
(3,476,197
|
)
|
|
—
|
|
|
—
|
|
|||
Gain on bargain purchase, net of taxes
|
—
|
|
|
(1,077,332
|
)
|
|
—
|
|
|||
Other, net
|
(6,744
|
)
|
|
(147,687
|
)
|
|
(148,028
|
)
|
|||
Income before income taxes
|
18,004,787
|
|
|
4,108,048
|
|
|
5,876,884
|
|
|||
Provision for income taxes
|
5,386,000
|
|
|
1,210,000
|
|
|
1,894,000
|
|
|||
|
|
|
|
|
|
||||||
Net income from continuing operations
|
12,618,787
|
|
|
2,898,048
|
|
|
3,982,884
|
|
|||
|
|
|
|
|
|
||||||
Net (loss) income from discontinued operations, net of tax
|
(7,156,524
|
)
|
|
(1,137,484
|
)
|
|
252,028
|
|
|||
|
|
|
|
|
|
||||||
Net income
|
$
|
5,462,263
|
|
|
$
|
1,760,564
|
|
|
$
|
4,234,912
|
|
|
|
|
|
|
|
||||||
Net income per common share from continuing operations:
|
|
|
|
|
|
||||||
Basic
|
$
|
1.45
|
|
|
$
|
0.42
|
|
|
$
|
0.63
|
|
Diluted
|
$
|
1.45
|
|
|
$
|
0.42
|
|
|
$
|
0.62
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
||||||
Net (loss) income per diluted common share from discontinued operations:
|
|
|
|
|
|
|
|
|
|||
Basic
|
$
|
(0.82
|
)
|
|
$
|
(0.16
|
)
|
|
$
|
0.04
|
|
Diluted
|
$
|
(0.82
|
)
|
|
$
|
(0.16
|
)
|
|
$
|
0.04
|
|
|
Common Stock
|
|
Capital in Excess of
Par Value
|
|
Retained Earnings
|
|
Cost of Common Stock in Treasury
|
|
Total
|
||||||||||
Balance at December 31, 2011
|
$
|
8,000,000
|
|
|
$
|
1,153,889
|
|
|
$
|
74,198,151
|
|
|
$
|
(14,733,139
|
)
|
|
$
|
68,618,901
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income
|
—
|
|
|
—
|
|
|
4,234,912
|
|
|
—
|
|
|
4,234,912
|
|
|||||
Payment of dividends, $0.25 per share
|
—
|
|
|
—
|
|
|
(1,596,302
|
)
|
|
—
|
|
|
(1,596,302
|
)
|
|||||
Issuance of 19,089 shares of common stock from the treasury
|
—
|
|
|
(113,071
|
)
|
|
—
|
|
|
167,990
|
|
|
54,919
|
|
|||||
Stock options exercised for 11,800 shares, net
|
—
|
|
|
20,044
|
|
|
—
|
|
|
103,844
|
|
|
123,888
|
|
|||||
Employee stock option and grant compensation
|
—
|
|
|
337,750
|
|
|
—
|
|
|
—
|
|
|
337,750
|
|
|||||
Balance at December 29, 2012
|
8,000,000
|
|
|
1,398,612
|
|
|
76,836,761
|
|
|
(14,461,305
|
)
|
|
71,774,068
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income
|
—
|
|
|
—
|
|
|
1,760,564
|
|
|
—
|
|
|
1,760,564
|
|
|||||
Payment of dividends, $0.26 per share
|
—
|
|
|
—
|
|
|
(2,259,728
|
)
|
|
—
|
|
|
(2,259,728
|
)
|
|||||
Issuance of 17,572 shares of common stock from the treasury
|
—
|
|
|
(33,545
|
)
|
|
—
|
|
|
154,741
|
|
|
121,196
|
|
|||||
Stock options exercised for 13,495 shares, net
|
—
|
|
|
28,660
|
|
|
—
|
|
|
109,366
|
|
|
138,026
|
|
|||||
Employee stock option and grant compensation
|
—
|
|
|
331,362
|
|
|
—
|
|
|
—
|
|
|
331,362
|
|
|||||
Issuance of 2,300,000 shares of common stock
|
2,300,000
|
|
|
31,932,625
|
|
|
—
|
|
|
—
|
|
|
34,232,625
|
|
|||||
Balance at December 28, 2013
|
10,300,000
|
|
|
33,657,714
|
|
|
76,337,597
|
|
|
(14,197,198
|
)
|
|
106,098,113
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income
|
—
|
|
|
—
|
|
|
5,462,263
|
|
|
—
|
|
|
5,462,263
|
|
|||||
Payment of dividends, $0.30 per share
|
—
|
|
|
—
|
|
|
(2,632,537
|
)
|
|
—
|
|
|
(2,632,537
|
)
|
|||||
Issuance of 14,522 shares of common stock from the treasury
|
—
|
|
|
(8,341
|
)
|
|
—
|
|
|
127,881
|
|
|
119,540
|
|
|||||
Stock options exercised for 7,980 shares, net
|
—
|
|
|
40,844
|
|
|
—
|
|
|
1,173
|
|
|
42,017
|
|
|||||
Employee stock option and grant compensation
|
—
|
|
|
364,157
|
|
|
—
|
|
|
—
|
|
|
364,157
|
|
|||||
Balance at January 3, 2015
|
$
|
10,300,000
|
|
|
$
|
34,054,374
|
|
|
$
|
79,167,323
|
|
|
$
|
(14,068,144
|
)
|
|
$
|
109,453,553
|
|
|
2014
|
|
2013
|
|
2012
|
||||||
Operating activities
|
|
|
|
|
|
||||||
Net income
|
$
|
5,462,263
|
|
|
$
|
1,760,564
|
|
|
$
|
4,234,912
|
|
Loss (income) from discontinued operations, net of tax
|
7,156,524
|
|
|
1,137,484
|
|
|
(252,028
|
)
|
|||
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
|
|
|
|
|
|
|
|
|
|||
Depreciation expense
|
3,724,757
|
|
|
3,074,369
|
|
|
2,394,298
|
|
|||
Amortization expense
|
1,466,395
|
|
|
1,597,578
|
|
|
567,693
|
|
|||
Deferred income taxes
|
796,916
|
|
|
(1,325,781
|
)
|
|
164,774
|
|
|||
Bargain gain on acquisition of CRI, net of taxes
|
—
|
|
|
(1,077,332
|
)
|
|
—
|
|
|||
Palmer earn-out adjustment
|
(3,476,197
|
)
|
|
—
|
|
|
—
|
|
|||
Provision for (reduction of) losses on accounts receivable
|
72,100
|
|
|
(229,230
|
)
|
|
105,918
|
|
|||
Provision for losses on inventories
|
2,548,196
|
|
|
169,810
|
|
|
463,824
|
|
|||
Loss (gain) on sale of property, plant and equipment
|
26,800
|
|
|
8,044
|
|
|
(107,970
|
)
|
|||
Cash value of life insurance
|
(39,093
|
)
|
|
(161,530
|
)
|
|
(190,996
|
)
|
|||
Change in fair value of interest rate swap
|
425,543
|
|
|
(740,832
|
)
|
|
113,648
|
|
|||
Environmental reserves
|
(50,000
|
)
|
|
(14,000
|
)
|
|
—
|
|
|||
Issuance of treasury stock for director fees
|
110,501
|
|
|
127,989
|
|
|
99,995
|
|
|||
Employee stock option and grant compensation
|
364,157
|
|
|
331,362
|
|
|
337,750
|
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|||
Accounts receivable
|
3,448,709
|
|
|
642,125
|
|
|
(894,385
|
)
|
|||
Inventories
|
(3,298,982
|
)
|
|
(2,659,949
|
)
|
|
(2,615,218
|
)
|
|||
Other assets and liabilities, net
|
(1,164,297
|
)
|
|
(303,959
|
)
|
|
(1,661,047
|
)
|
|||
Accounts payable
|
7,820,957
|
|
|
879,632
|
|
|
(3,971,870
|
)
|
|||
Accrued expenses
|
3,995,534
|
|
|
(2,316,263
|
)
|
|
1,189,805
|
|
|||
Accrued income taxes
|
(1,287,007
|
)
|
|
(863,495
|
)
|
|
(754,713
|
)
|
|||
Net cash provided by (used in) continuing operating activities
|
28,103,776
|
|
|
36,586
|
|
|
(775,610
|
)
|
|||
Net cash provided by (used in) discontinued operating activities
|
785,249
|
|
|
(5,578,384
|
)
|
|
2,410,473
|
|
|||
Net cash provided by (used in) operating activities
|
28,889,025
|
|
|
(5,541,798
|
)
|
|
1,634,863
|
|
|||
Investing activities
|
|
|
|
|
|
|
|
|
|||
Purchases of property, plant and equipment
|
(8,065,992
|
)
|
|
(5,648,290
|
)
|
|
(4,542,150
|
)
|
|||
Proceeds from sale of property, plant and equipment
|
8,000
|
|
|
136,297
|
|
|
148,500
|
|
|||
Acquisition of Palmer
|
—
|
|
|
—
|
|
|
(27,895,209
|
)
|
|||
Cash received from Palmer acquisition
|
—
|
|
|
—
|
|
|
1,389,054
|
|
|||
Acquisition of CRI
|
—
|
|
|
(4,527,762
|
)
|
|
—
|
|
|||
Acquisition of Specialty
|
(31,490,433
|
)
|
|
—
|
|
|
—
|
|
|||
Cash received from Specialty acquisition
|
12,960
|
|
|
—
|
|
|
—
|
|
|||
Proceeds from life insurance settlement
|
—
|
|
|
703,331
|
|
|
734,206
|
|
|||
Net cash used in continuing investing activities
|
(39,535,465
|
)
|
|
(9,336,424
|
)
|
|
(30,165,599
|
)
|
|||
Net cash provided by (used in) discontinued investing activities
|
3,589,064
|
|
|
(115,472
|
)
|
|
(192,228
|
)
|
|||
Net cash used in investing activities
|
(35,946,401
|
)
|
|
(9,451,896
|
)
|
|
(30,357,827
|
)
|
|||
Financing activities
|
|
|
|
|
|
|
|
|
|||
Net borrowings from (payments on) line of credit
|
884,637
|
|
|
(18,060,894
|
)
|
|
9,410,463
|
|
|||
Borrowings from long-term debt
|
10,000,000
|
|
|
4,033,250
|
|
|
22,500,000
|
|
|||
Payments on long-term debt
|
(2,533,903
|
)
|
|
(2,401,103
|
)
|
|
(759,962
|
)
|
|||
Payments on pension liability from the closure of Bristol Fab
|
(449,958
|
)
|
|
—
|
|
|
—
|
|
|||
Proceeds from notes receivable
|
—
|
|
|
—
|
|
|
20,000
|
|
|||
Proceeds from sale of common stock
|
—
|
|
|
34,232,625
|
|
|
—
|
|
|||
Proceeds from exercised stock options
|
42,017
|
|
|
138,026
|
|
|
123,888
|
|
|||
Dividends paid
|
(2,632,537
|
)
|
|
(2,259,728
|
)
|
|
(1,596,302
|
)
|
|||
Net cash provided by financing activities
|
5,310,256
|
|
|
15,682,176
|
|
|
29,698,087
|
|
|||
(Decrease) increase in cash and cash equivalents
|
(1,747,120
|
)
|
|
688,482
|
|
|
975,123
|
|
|||
Cash and cash equivalents at beginning of year
|
1,773,743
|
|
|
1,085,261
|
|
|
110,138
|
|
|||
Cash and cash equivalents at end of year
|
$
|
26,623
|
|
|
$
|
1,773,743
|
|
|
$
|
1,085,261
|
|
|
|
Level 3 Inputs
|
||
Balance at December 29, 2012
|
|
$
|
8,208,831
|
|
Interest expense charged during the year
|
|
153,200
|
|
|
Payment to Palmer sellers
|
|
(2,500,000
|
)
|
|
Balance at December 28, 2013
|
|
5,862,031
|
|
|
Present value of contingent consideration liability associated with the Specialty acquisition
|
|
4,773,620
|
|
|
Interest expense charged during the year
|
|
96,933
|
|
|
Change in fair value of contingent consideration liability associated with the Palmer acquisition
|
|
(3,476,197
|
)
|
|
Balance at January 3, 2015
|
|
$
|
7,256,387
|
|
|
2014
|
|
2013
|
||||
Land
|
$
|
1,742,213
|
|
|
$
|
652,213
|
|
Land improvements
|
714,398
|
|
|
662,521
|
|
||
Buildings
|
21,371,594
|
|
|
18,586,308
|
|
||
Machinery, fixtures and equipment
|
56,651,197
|
|
|
50,239,409
|
|
||
Construction-in-progress
|
5,494,166
|
|
|
5,014,348
|
|
||
|
85,973,568
|
|
|
75,154,799
|
|
||
Less accumulated depreciation
|
46,036,102
|
|
|
42,489,518
|
|
||
Property, plant and equipment, net
|
$
|
39,937,466
|
|
|
$
|
32,665,281
|
|
|
2014
|
|
2013
|
||||
$ 40,000,000 Revolving line of credit, due November 21, 2017
|
$
|
884,637
|
|
|
$
|
—
|
|
$10,000,000 Term loan, due November 21, 2019
|
10,000,000
|
|
|
—
|
|
||
$22,500,000 Term loan, due August 21, 2022
|
17,250,000
|
|
|
19,500,000
|
|
||
$4,033,250 Mortgage, due August 19, 2023
|
3,654,713
|
|
|
3,938,616
|
|
||
|
31,789,350
|
|
|
23,438,616
|
|
||
Less current portion
|
4,533,908
|
|
|
2,533,908
|
|
||
Long-term debt, less current portion
|
$
|
27,255,442
|
|
|
$
|
20,904,708
|
|
|
2014
|
|
2013
|
||||
Salaries, wages and commissions
|
$
|
2,814,279
|
|
|
$
|
1,224,856
|
|
Current portion of contingent consideration
|
4,659,871
|
|
|
2,500,000
|
|
||
Facility closing reserves
|
1,570,399
|
|
|
—
|
|
||
Uncertain tax positions
|
1,504,146
|
|
|
—
|
|
||
Advances from customers
|
1,027,123
|
|
|
1,617,298
|
|
||
Insurance
|
859,151
|
|
|
1,229,440
|
|
||
Current portion of pension liability from the closure of Bristol Fab
|
780,595
|
|
|
—
|
|
||
Taxes, other than income taxes
|
470,456
|
|
|
795,015
|
|
||
Benefit plans
|
212,352
|
|
|
530,603
|
|
||
Interest
|
56,922
|
|
|
31,015
|
|
||
Professional fees
|
194,065
|
|
|
302,304
|
|
||
Interest rate swap liability
|
215,188
|
|
|
80,498
|
|
||
Current portion of deferred compensation
|
51,000
|
|
|
51,000
|
|
||
Other accrued items
|
269,139
|
|
|
820,340
|
|
||
Total accrued expenses
|
$
|
14,684,686
|
|
|
$
|
9,182,369
|
|
|
Weighted
Average
Exercise
Price
|
|
Options
Outstanding
|
|
Weighted
Average
Contractual
Term
(in years)
|
|
Intrinsic
Value of
Options
|
|
Options
Available
|
||||||
At December 31, 2011
|
$
|
11.28
|
|
|
120,800
|
|
|
8.0
|
|
$
|
6,448
|
|
|
250,000
|
|
Granted February 9, 2012
|
$
|
11.35
|
|
|
36,740
|
|
|
|
|
|
|
(36,740
|
)
|
||
Granted August 21, 2012
|
$
|
12.73
|
|
|
75,000
|
|
|
|
|
|
|
(75,000
|
)
|
||
Exercised
|
$
|
10.50
|
|
|
(11,800
|
)
|
|
|
|
|
|
|
|
|
|
Expired
|
$
|
—
|
|
|
—
|
|
|
|
|
|
|
|
—
|
|
|
At December 29, 2012
|
$
|
11.82
|
|
|
220,740
|
|
|
8.4
|
|
$
|
367,937
|
|
|
138,260
|
|
Granted February 7, 2013
|
$
|
13.70
|
|
|
40,594
|
|
|
|
|
|
|
|
(40,594
|
)
|
|
Exercised
|
$
|
10.69
|
|
|
(15,247
|
)
|
|
|
|
|
|
|
|
|
|
Expired
|
$
|
12.70
|
|
|
(83,351
|
)
|
|
|
|
|
|
|
83,351
|
|
|
At December 28, 2013
|
$
|
11.95
|
|
|
162,736
|
|
|
7.5
|
|
$
|
582,894
|
|
|
181,017
|
|
Granted February 20, 2014
|
$
|
14.76
|
|
|
13,790
|
|
|
|
|
|
|
(13,790
|
)
|
||
Exercised
|
$
|
11.23
|
|
|
(17,074
|
)
|
|
|
|
|
|
|
|||
Expired
|
$
|
13.70
|
|
|
(2,157
|
)
|
|
|
|
|
|
2,157
|
|
||
At January 3, 2015
|
$
|
12.25
|
|
|
157,295
|
|
|
6.9
|
|
852,810
|
|
|
169,384
|
|
|
Exercisable options
|
$
|
11.73
|
|
|
56,787
|
|
|
6.4
|
|
$
|
337,467
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Options expected to vest:
|
|
|
|
|
|
|
|
|
Grant Date Fair Value
|
|
|
|
|||
At December 29, 2012
|
$
|
11.97
|
|
|
191,740
|
|
|
8.9
|
|
$
|
6.40
|
|
|
|
|
Granted February 7, 2013
|
$
|
13.70
|
|
|
40,594
|
|
|
|
|
$
|
6.30
|
|
|
|
|
Vested
|
$
|
11.49
|
|
|
(27,347
|
)
|
|
|
|
|
|
|
|
||
Forfeited unvested options
|
12.71
|
|
|
(82,842
|
)
|
|
|
|
|
|
|
||||
At December 28, 2013
|
$
|
12.18
|
|
|
122,145
|
|
|
7.8
|
|
$
|
7.19
|
|
|
|
|
Granted February 20, 2014
|
$
|
14.76
|
|
|
13,790
|
|
|
|
|
$
|
6.70
|
|
|
|
|
Vested
|
$
|
11.98
|
|
|
(33,702
|
)
|
|
|
|
|
|
|
|||
Forfeited unvested options
|
$
|
13.70
|
|
|
(1,725
|
)
|
|
|
|
|
|
|
|||
At January 3, 2015
|
$
|
12.54
|
|
|
100,508
|
|
|
7.2
|
|
$
|
6.76
|
|
|
|
Range of Exercise Prices
|
|
Outstanding Stock Options
|
|
Exercisable Stock Options
|
||||||||||||||
|
Shares
|
|
Weighted Average
|
|
Shares
|
|
Weighted Average Exercise Price
|
|||||||||||
|
|
Exercise Price
|
|
Remaining Contractual Life in Years
|
|
|
||||||||||||
$
|
11.55
|
|
|
82,342
|
|
|
$
|
11.55
|
|
|
6.05
|
|
42,342
|
|
|
$
|
11.55
|
|
$
|
11.35
|
|
|
27,996
|
|
|
$
|
11.35
|
|
|
7.09
|
|
8,912
|
|
|
$
|
11.35
|
|
$
|
13.70
|
|
|
33,167
|
|
|
$
|
13.70
|
|
|
8.09
|
|
5,533
|
|
|
$
|
13.70
|
|
$
|
14.76
|
|
|
13,790
|
|
|
$
|
14.76
|
|
|
9.13
|
|
—
|
|
|
|
|
|
|
|
|
157,295
|
|
|
|
|
|
|
|
56,787
|
|
|
|
|
|
Shares
|
|
Weighted Average
Grant Date Fair Value
|
|||
Outstanding at December 31, 2011
|
43,572
|
|
|
$
|
11.39
|
|
Vested
|
(11,099
|
)
|
|
$
|
12.60
|
|
Forfeited
|
—
|
|
|
|
|
|
Outstanding at December 29, 2012
|
32,473
|
|
|
$
|
10.98
|
|
Vested
|
(8,161
|
)
|
|
$
|
11.06
|
|
Forfeited
|
(5,060
|
)
|
|
10.20
|
|
|
Outstanding at December 28, 2013
|
19,252
|
|
|
$
|
11.15
|
|
Granted October 16, 2014
|
31,080
|
|
|
$
|
15.69
|
|
Granted November 21, 2014
|
23,665
|
|
|
$
|
15.85
|
|
Vested
|
(7,434
|
)
|
|
$
|
10.60
|
|
Forfeited
|
(160
|
)
|
|
$
|
13.34
|
|
Outstanding at January 3, 2015
|
66,403
|
|
|
$
|
15.00
|
|
(Amounts in thousands)
|
2014
|
|
2013
|
||||
Deferred tax assets:
|
|
|
|
||||
Inventory valuation reserves
|
$
|
303
|
|
|
$
|
794
|
|
Allowance for doubtful accounts
|
85
|
|
|
100
|
|
||
Inventory capitalization
|
1,504
|
|
|
3,089
|
|
||
Environmental reserves
|
206
|
|
|
224
|
|
||
Interest rate swap
|
41
|
|
|
128
|
|
||
Back charge accrual
|
23
|
|
|
203
|
|
||
Deferred compensation
|
93
|
|
|
97
|
|
||
Accrued bonus
|
739
|
|
|
—
|
|
||
Facility closing reserves
|
568
|
|
|
—
|
|
||
State net operating loss carryforwards
|
206
|
|
|
142
|
|
||
Other
|
370
|
|
|
253
|
|
||
Total deferred tax assets
|
4,138
|
|
|
5,030
|
|
||
Deferred tax liabilities:
|
|
|
|
|
|
||
Tax over book depreciation and amortization
|
6,804
|
|
|
8,021
|
|
||
Prepaid expenses
|
825
|
|
|
749
|
|
||
Other
|
26
|
|
|
57
|
|
||
Total deferred tax liabilities
|
7,655
|
|
|
8,827
|
|
||
Net deferred tax liabilities
|
$
|
(3,517
|
)
|
|
$
|
(3,797
|
)
|
(Amounts in thousands)
|
2014
|
|
2013
|
|
2012
|
||||||
Current:
|
|
|
|
|
|
||||||
Federal
|
$
|
3,933
|
|
|
$
|
2,192
|
|
|
$
|
1,493
|
|
State
|
656
|
|
|
344
|
|
|
236
|
|
|||
Total current
|
4,589
|
|
|
2,536
|
|
|
1,729
|
|
|||
Deferred:
|
|
|
|
|
|
|
|
|
|||
Federal
|
964
|
|
|
(1,113
|
)
|
|
250
|
|
|||
State
|
(167
|
)
|
|
(213
|
)
|
|
(85
|
)
|
|||
Total deferred
|
797
|
|
|
(1,326
|
)
|
|
165
|
|
|||
Total
|
$
|
5,386
|
|
|
$
|
1,210
|
|
|
$
|
1,894
|
|
(Amounts in thousands)
|
2014
|
|
2013
|
|
2012
|
|||||||||||||||
Amount
|
|
%
|
|
Amount
|
|
%
|
|
Amount
|
|
%
|
||||||||||
Tax at U.S. statutory rates
|
$
|
6,302
|
|
|
35.0
|
%
|
|
$
|
1,397
|
|
|
34.0
|
%
|
|
$
|
1,998
|
|
|
34.0
|
%
|
State income taxes, net of federal tax benefit
|
324
|
|
|
1.8
|
%
|
|
74
|
|
|
1.8
|
%
|
|
106
|
|
|
1.8
|
%
|
|||
Palmer earn-out adjustment
|
(1,217
|
)
|
|
(6.8
|
)%
|
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|||
Bargain gain on CRI acquisition
|
—
|
|
|
—
|
%
|
|
(366
|
)
|
|
(8.9
|
)%
|
|
—
|
|
|
—
|
%
|
|||
Manufacturing exemption
|
(458
|
)
|
|
(2.5
|
)%
|
|
(138
|
)
|
|
(3.4
|
)%
|
|
(180
|
)
|
|
(3.1
|
)%
|
|||
Stock issuance costs
|
—
|
|
|
—
|
%
|
|
101
|
|
|
2.5
|
%
|
|
—
|
|
|
—
|
%
|
|||
Stock option compensation
|
91
|
|
|
0.5
|
%
|
|
85
|
|
|
2.1
|
%
|
|
38
|
|
|
0.6
|
%
|
|||
Uncertain tax positions
|
139
|
|
|
0.8
|
%
|
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|||
Other, net
|
205
|
|
|
1.1
|
%
|
|
57
|
|
|
1.4
|
%
|
|
(68
|
)
|
|
(1.1
|
)%
|
|||
Total
|
$
|
5,386
|
|
|
29.9
|
%
|
|
$
|
1,210
|
|
|
29.5
|
%
|
|
$
|
1,894
|
|
|
32.2
|
%
|
|
2014
|
|
2013
|
|
2012
|
||||||
Numerator:
|
|
|
|
|
|
||||||
Net income from continuing operations
|
$
|
12,618,787
|
|
|
$
|
2,898,048
|
|
|
$
|
3,982,884
|
|
Net (loss) income from discontinued operations, net of tax
|
$
|
(7,156,524
|
)
|
|
$
|
(1,137,484
|
)
|
|
$
|
252,028
|
|
Denominator:
|
|
|
|
|
|
|
|
|
|||
Denominator for basic earnings per share - weighted average shares
|
8,702,094
|
|
|
6,941,794
|
|
|
6,341,856
|
|
|||
Effect of dilutive securities:
|
|
|
|
|
|
|
|
|
|||
Employee stock options and stock grants
|
13,008
|
|
|
5,610
|
|
|
52,488
|
|
|||
Denominator for diluted earnings per share - weighted average shares
|
8,715,102
|
|
|
6,947,404
|
|
|
6,394,344
|
|
|||
|
|
|
|
|
|
||||||
Earnings per share from continuing operations
|
|
|
|
|
|
|
|
|
|||
Basic
|
$
|
1.45
|
|
|
$
|
0.42
|
|
|
$
|
0.63
|
|
Diluted
|
$
|
1.45
|
|
|
$
|
0.42
|
|
|
$
|
0.62
|
|
|
|
|
|
|
|
||||||
Loss (earnings) per share from discontinued operations
|
|
|
|
|
|
||||||
Basic
|
$
|
(0.82
|
)
|
|
$
|
(0.16
|
)
|
|
$
|
0.04
|
|
Diluted
|
$
|
(0.82
|
)
|
|
$
|
(0.16
|
)
|
|
$
|
0.04
|
|
(Amounts in thousands)
|
2014
|
|
2013
|
|
2012
|
||||||
Net sales
|
|
|
|
|
|
||||||
Metals Segment
|
$
|
134,304
|
|
|
$
|
140,233
|
|
|
$
|
114,788
|
|
Specialty Chemicals Segment
|
65,201
|
|
|
56,518
|
|
|
51,374
|
|
|||
|
$
|
199,505
|
|
|
$
|
196,751
|
|
|
$
|
166,162
|
|
Operating income
|
|
|
|
|
|
|
|
|
|||
Metals Segment
|
$
|
13,511
|
|
|
$
|
1,263
|
|
|
$
|
5,660
|
|
Specialty Chemicals Segment
|
6,130
|
|
|
5,743
|
|
|
4,843
|
|
|||
|
19,641
|
|
|
7,006
|
|
|
10,503
|
|
|||
Less unallocated corporate expenses
|
3,292
|
|
|
3,243
|
|
|
3,165
|
|
|||
Operating income
|
16,349
|
|
|
3,763
|
|
|
7,338
|
|
|||
Acquisition related costs
|
302
|
|
|
264
|
|
|
881
|
|
|||
Interest expense
|
1,092
|
|
|
1,357
|
|
|
601
|
|
|||
Change in fair value of interest rate swap
|
426
|
|
|
(741
|
)
|
|
114
|
|
|||
Palmer earn-out adjustment
|
(3,476
|
)
|
|
—
|
|
|
—
|
|
|||
Gain on bargain purchase, net of taxes
|
—
|
|
|
(1,077
|
)
|
|
—
|
|
|||
Other income, net
|
—
|
|
|
(148
|
)
|
|
(135
|
)
|
|||
Income before income taxes
|
$
|
18,005
|
|
|
$
|
4,108
|
|
|
$
|
5,877
|
|
|
|
|
|
|
|
||||||
Identifiable assets
|
|
|
|
|
|
|
|
|
|||
Metals Segment
|
$
|
145,558
|
|
|
$
|
111,952
|
|
|
|
||
Specialty Chemicals Segment
|
32,504
|
|
|
28,041
|
|
|
|
||||
Corporate
|
9,787
|
|
|
10,499
|
|
|
|
||||
Assets held for sale
|
—
|
|
|
12,768
|
|
|
|
||||
|
$
|
187,849
|
|
|
$
|
163,260
|
|
|
|
||
Depreciation and amortization
|
|
|
|
|
|
|
|
|
|||
Metals Segment
|
$
|
4,078
|
|
|
$
|
3,809
|
|
|
$
|
2,339
|
|
Specialty Chemicals Segment
|
974
|
|
|
659
|
|
|
435
|
|
|||
Corporate
|
139
|
|
|
204
|
|
|
188
|
|
|||
|
$
|
5,191
|
|
|
$
|
4,672
|
|
|
$
|
2,962
|
|
Capital expenditures
|
|
|
|
|
|
|
|
|
|||
Metals Segment
|
$
|
3,123
|
|
|
$
|
4,194
|
|
|
$
|
3,353
|
|
Specialty Chemicals Segment
|
4,913
|
|
|
1,397
|
|
|
1,066
|
|
|||
Corporate
|
30
|
|
|
57
|
|
|
123
|
|
|||
|
$
|
8,066
|
|
|
$
|
5,648
|
|
|
$
|
4,542
|
|
Geographic sales
|
|
|
|
|
|
|
|
|
|||
United States
|
$
|
191,032
|
|
|
$
|
189,447
|
|
|
$
|
156,795
|
|
Elsewhere
|
8,473
|
|
|
7,304
|
|
|
9,367
|
|
|||
|
$
|
199,505
|
|
|
$
|
196,751
|
|
|
$
|
166,162
|
|
(Amounts in thousands except for per share data)
|
First Quarter
|
|
Second Quarter
|
|
Third Quarter
|
|
Fourth Quarter
|
||||||||
2014
|
|
|
|
|
|
|
|
||||||||
Net sales from continuing operations
|
$
|
49,796
|
|
|
$
|
52,688
|
|
|
$
|
48,452
|
|
|
$
|
48,569
|
|
Gross profit from continuing operations
|
7,603
|
|
|
8,952
|
|
|
8,127
|
|
|
8,247
|
|
||||
Net income from continuing operations
|
2,250
|
|
|
5,783
|
|
|
3,177
|
|
|
1,409
|
|
||||
(Loss) income from discontinued operations, net of tax
|
(473
|
)
|
|
(5,383
|
)
|
|
(1,899
|
)
|
|
598
|
|
||||
Net income
|
1,776
|
|
|
400
|
|
|
1,279
|
|
|
2,007
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Per common share from continuing operations
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic
|
0.26
|
|
|
0.66
|
|
|
0.36
|
|
|
0.16
|
|
||||
Diluted
|
0.26
|
|
|
0.66
|
|
|
0.36
|
|
|
0.16
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Per common share from discontinued operations
|
|
|
|
|
|
|
|
||||||||
Basic
|
(0.05
|
)
|
|
(0.62
|
)
|
|
(0.22
|
)
|
|
0.07
|
|
||||
Diluted
|
(0.05
|
)
|
|
(0.62
|
)
|
|
(0.22
|
)
|
|
0.07
|
|
||||
|
|
|
|
|
|
|
|
||||||||
2013
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net sales from continuing operations
|
$
|
50,652
|
|
|
$
|
50,485
|
|
|
$
|
49,212
|
|
|
$
|
46,402
|
|
Gross profit from continuing operations
|
6,111
|
|
|
5,751
|
|
|
5,166
|
|
|
2,770
|
|
||||
Net income (loss) from continuing operations
|
1,229
|
|
|
1,285
|
|
|
1,481
|
|
|
(1,097
|
)
|
||||
Income (loss) from discontinued operations, net of tax
|
236
|
|
|
628
|
|
|
(19
|
)
|
|
(1,982
|
)
|
||||
Net income
|
1,465
|
|
|
1,913
|
|
|
1,461
|
|
|
(3,079
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Per common share from continuing operations
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic
|
0.19
|
|
|
0.20
|
|
|
0.23
|
|
|
(0.13
|
)
|
||||
Diluted
|
0.19
|
|
|
0.20
|
|
|
0.23
|
|
|
(0.13
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Per common share from discontinued operations
|
|
|
|
|
|
|
|
||||||||
Basic
|
0.04
|
|
|
0.10
|
|
|
0.00
|
|
|
(0.23
|
)
|
||||
Diluted
|
0.04
|
|
|
0.10
|
|
|
0.00
|
|
|
(0.23
|
)
|
Sources of funds:
|
|
||
Cash on hand
|
$
|
21,490,433
|
|
Proceeds of term loan
|
10,000,000
|
|
|
Total sources of funds
|
$
|
31,490,433
|
|
|
|
|
|
Uses of funds:
|
|
|
|
Acquisition of Specialty's common stock
|
$
|
27,496,000
|
|
Cash paid to escrow agent for potential future claims, to be settled within 18 months
|
3,248,500
|
|
|
Cash paid for a portion of the seller's investment banker fee
|
745,933
|
|
|
Total uses of funds
|
$
|
31,490,433
|
|
|
As recorded by Specialty
|
|
Purchase accounting and fair value adjustments
|
|
As recorded by Synalloy
|
||||||
Cash
|
$
|
12,960
|
|
|
$
|
—
|
|
|
$
|
12,960
|
|
Accounts receivable, net
|
2,827,251
|
|
|
—
|
|
|
2,827,251
|
|
|||
Inventories, net
|
17,041,660
|
|
|
(1,516,888
|
)
|
|
15,524,772
|
|
|||
Fixed assets
|
3,018,416
|
|
|
(67,924
|
)
|
|
2,950,492
|
|
|||
Goodwill
|
—
|
|
|
5,993,705
|
|
|
5,993,705
|
|
|||
Intangible asset - customer base
|
—
|
|
|
11,457,000
|
|
|
11,457,000
|
|
|||
Contingent consideration
|
—
|
|
|
(4,773,620
|
)
|
|
(4,773,620
|
)
|
|||
Other liabilities assumed
|
(2,502,127
|
)
|
|
—
|
|
|
(2,502,127
|
)
|
|||
|
$
|
20,398,160
|
|
|
$
|
11,092,273
|
|
|
$
|
31,490,433
|
|
Pro-Forma (Unaudited)
|
|||||||
|
2014
|
|
2013
|
||||
Pro-forma revenues from continuing operations
|
$
|
228,647,000
|
|
|
$
|
224,570,000
|
|
Pro-forma net income from continuing operations
|
8,928,000
|
|
|
6,459,000
|
|
||
Earnings per share from continuing operations:
|
|
|
|
||||
Basic
|
$
|
1.85
|
|
|
$
|
0.93
|
|
Diluted
|
$
|
1.85
|
|
|
$
|
0.93
|
|
Sources of funds:
|
|
||
Proceeds from term loan
|
$
|
4,033,250
|
|
Proceeds from line of credit
|
516,750
|
|
|
Total sources of funds
|
$
|
4,550,000
|
|
|
|
|
|
Uses of funds:
|
|
|
|
Acquisition of CRI Facility
|
$
|
3,450,000
|
|
Acquisition of certain CRI assets, net of assumed liabilities
|
1,100,000
|
|
|
Amount received by Company for pro-rated property taxes at close
|
$
|
(22,000
|
)
|
Total uses of funds
|
$
|
4,528,000
|
|
|
As recorded by CRI
|
|
Purchased CRI Facility
|
|
Purchase accounting and fair value adjustments
|
|
As recorded by Synalloy
|
||||||||
Accounts receivable, net
|
$
|
623,539
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
623,539
|
|
Inventories, net
|
232,771
|
|
|
—
|
|
|
—
|
|
|
232,771
|
|
||||
Prepaid expenses
|
11,695
|
|
|
—
|
|
|
—
|
|
|
11,695
|
|
||||
Building and land
|
—
|
|
|
3,450,000
|
|
|
650,000
|
|
|
4,100,000
|
|
||||
Equipment, net
|
614,998
|
|
|
—
|
|
|
1,028,082
|
|
|
1,643,080
|
|
||||
Accounts payable
|
(365,898
|
)
|
|
—
|
|
|
—
|
|
|
(365,898
|
)
|
||||
Accrued liabilities
|
(17,105
|
)
|
|
—
|
|
|
—
|
|
|
(17,105
|
)
|
||||
Deferred tax liability
|
—
|
|
|
—
|
|
|
(600,750
|
)
|
|
(600,750
|
)
|
||||
|
$
|
1,100,000
|
|
|
$
|
3,450,000
|
|
|
$
|
1,077,332
|
|
|
$
|
5,627,332
|
|
|
|
||
Fair value of net assets acquired
|
$
|
5,627,332
|
|
Total consideration paid
|
(4,550,000
|
)
|
|
Bargain purchase gain, net of taxes
|
$
|
1,077,332
|
|
|
As recorded by Palmer
|
|
Purchase accounting and fair value adjustments
|
|
As recorded by Synalloy
|
||||||
Cash and cash equivalents
|
$
|
1,389,054
|
|
|
$
|
—
|
|
|
$
|
1,389,054
|
|
Accounts receivable, net
|
4,969,030
|
|
|
—
|
|
|
4,969,030
|
|
|||
Inventories, net
|
5,678,368
|
|
|
—
|
|
|
5,678,368
|
|
|||
Prepaid expenses
|
75,804
|
|
|
1,536,000
|
|
|
1,611,804
|
|
|||
Net fixed assets
|
4,799,692
|
|
|
2,691,370
|
|
|
7,491,062
|
|
|||
Goodwill
|
—
|
|
|
15,897,948
|
|
|
15,897,948
|
|
|||
Intangible asset - customer base
|
—
|
|
|
9,000,000
|
|
|
9,000,000
|
|
|||
Contingent consideration
|
—
|
|
|
(8,152,031
|
)
|
|
(8,152,031
|
)
|
|||
Other liabilities assumed
|
(6,833,315
|
)
|
|
(3,156,711
|
)
|
|
(9,990,026
|
)
|
|||
|
$
|
10,078,633
|
|
|
$
|
17,816,576
|
|
|
$
|
27,895,209
|
|
|
2014
|
|
2013
|
|
2012
|
||||||
Net sales
|
$
|
21,963,078
|
|
|
$
|
23,998,379
|
|
|
$
|
31,496,732
|
|
(Loss) income before income taxes
|
$
|
(10,963,524
|
)
|
|
$
|
(1,949,484
|
)
|
|
$
|
464,028
|
|
(Benefit from) provision for income taxes
|
(3,807,000
|
)
|
|
(812,000
|
)
|
|
212,000
|
|
|||
Net (loss) income from discontinued operations
|
$
|
(7,156,524
|
)
|
|
$
|
(1,137,484
|
)
|
|
$
|
252,028
|
|
|
|
December 28,
2013
|
|||
Assets
|
|
|
|||
Cash
|
|
$
|
3,020
|
|
|
Accounts receivable, net
|
|
4,165,879
|
|
||
Inventories, net
|
|
4,360,891
|
|
||
Prepaid expenses
|
|
20,286
|
|
||
Current assets held for sale
|
|
8,550,076
|
|
||
Property, plant and equipment, net
|
|
3,218,095
|
|
||
Goodwill
|
|
1,000,000
|
|
||
Assets held for sale
|
|
4,218,095
|
|
||
Total assets held for sale
|
|
$
|
12,768,171
|
|
|
|
|
|
|||
Liabilities
|
|
|
|||
Accounts payable
|
|
$
|
989,717
|
|
|
Advances from customers
|
|
209,212
|
|
||
Accrued expenses
|
|
119,947
|
|
||
Current liabilities held for sale
|
|
$
|
1,318,876
|
|
Plan Category
|
|
Number of securities to be issued upon exercise of outstanding options, warrants and rights
(a)
|
|
Weighted average exercise price of outstanding options, warrants and rights (b)
|
|
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
(1)
(c)
|
||||
Equity compensation plans approved by security holders
|
|
157,295
|
|
|
$
|
12.25
|
|
|
346,120
|
|
Equity compensation plans not approved by security holders
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Total
|
|
157,295
|
|
|
$
|
12.25
|
|
|
346,120
|
|
(1)
|
Represents shares remaining available for issuance under the 2005 Stock Awards Plan and the 2011 Plan.
|
(a)
|
The following documents are filed as a part of this report:
|
1.
|
Financial Statements: The following consolidated financial statements of Synalloy Corporation are included in Part II, Item 8:
|
2.
|
Financial Statements Schedules: The following consolidated financial statements schedule of Synalloy Corporation is included in Item 15:
|
3.
|
Listing of Exhibits:
|
Column A
|
|
Column B
|
|
Column C
|
|
Column D
|
|
Column E
|
||||||||
Description
|
|
Balance at Beginning of Period
|
|
Charged to (Reduction of) Cost and Expenses
|
|
Deductions
|
|
Balance at End of Period
|
||||||||
Year ended January 3, 2015
|
|
|
|
|
|
|
|
|
||||||||
Deducted from asset account:
|
|
|
|
|
|
|
|
|
||||||||
Allowance for doubtful accounts
|
|
$
|
1,079,000
|
|
|
$
|
667,000
|
|
|
$
|
(632,000
|
)
|
|
$
|
1,114,000
|
|
|
|
|
|
|
|
|
|
|
||||||||
Year ended December 28, 2013
|
|
|
|
|
|
|
|
|
||||||||
Deducted from asset account:
|
|
|
|
|
|
|
|
|
||||||||
Allowance for doubtful accounts
|
|
$
|
1,313,000
|
|
|
$
|
(192,000
|
)
|
|
$
|
(42,000
|
)
|
|
$
|
1,079,000
|
|
|
|
|
|
|
|
|
|
|
||||||||
Year ended December 29, 2012
|
|
|
|
|
|
|
|
|
||||||||
Deducted from asset account:
|
|
|
|
|
|
|
|
|
||||||||
Allowance for doubtful accounts
|
|
$
|
1,203,000
|
|
|
$
|
928,000
|
|
|
$
|
818,000
|
|
|
$
|
1,313,000
|
|
|
|
|
|
|
|
|
|
|
By
/s/ Craig C. Bram
Craig C. Bram
Chief Executive Officer
|
March 17, 2015
Date
|
|
|
By
/s/ Richard D. Sieradzki
Richard D. Sieradzki
Chief Financial Officer and
Principal Accounting Officer
|
March 17, 2015
Date
|
By
/s/ Murray H. Wright
Murray H. Wright
Chairman of the Board
|
March 17, 2015
Date
|
|
|
By
/s/ Anthony A. Callander
Anthony A. Callander
Director
|
March 17, 2015
Date
|
|
|
By
/s/ Amy J. Michtich
Amy J. Michtich
Director
|
March 17, 2015
Date
|
|
|
By
/s/ James W. Terry, Jr.
James W. Terry, Jr.
Director
|
March 17, 2015
Date
|
|
|
By
/s/ Henry L. Guy
Henry L. Guy
Director
|
March 17, 2015
Date
|
|
|
By
/s/ Craig C. Bram
Craig C. Bram
Chief Executive Officer and Director
|
March 17, 2015
Date
|
Exhibit No.
from
Item 601 of
Regulation S-K
|
|
Description
|
|
1.1
|
|
|
Underwriting Agreement dated September 24, 2013, incorporated by reference to Registrant's Form 8-K filed September 24, 2013
|
3.1
|
|
|
Restated Certificate of Incorporation of Registrant, as amended, incorporated by reference to Registrant's Form 8-K filed August 13, 2007
|
3.2
|
|
|
Bylaws of Registrant, as amended, incorporated by reference to Registrant's Form 10-Q for the period ended March 31, 2001 (the "first quarter 2001 Form 10-Q")
|
4.1
|
|
|
Form of Common Stock Certificate, incorporated by reference to the first quarter 2001 Form 10-Q
|
10.1
|
|
|
Synalloy Corporation 1998 Long-Term Incentive Stock Plan, incorporated by reference to the first quarter 2001 Form 10-Q
|
10.2
|
|
|
Synalloy Corporation 2005 Stock Awards Plan, incorporated by reference to the Proxy Statement for the 2005 Annual Meeting of Shareholders
|
10.3
|
|
|
Amendment 1 to the Synalloy Corporation 2005 Stock Awards Plan incorporated by reference to Registrant's Form 10-K for the year ended December 29, 2007
|
10.4
|
|
|
Amendment 2 to the Synalloy Corporation 2005 Stock Awards Plan
|
10.5
|
|
|
2011 Long-Term Incentive Stock Option Plan, incorporated by reference to Registrant's Proxy Statement for the 2011 Annual Meeting of Shareholders
|
10.6
|
|
|
2012 Short-Term Cash Incentive and Options Plan, incorporated by reference to Registrant's Form 10-K for the year ended December 29, 2012
|
10.7
|
|
|
2013 Short-Term Cash Incentive and Options Plan, incorporated by reference to Registrant's Form 10-K for the year ended December 28, 2013
|
10.8
|
|
|
2014 Short-Term Cash Incentive and Options Plan
|
10.9
|
|
|
Agreement between Registrant's Bristol Metals, LLC subsidiary and the United Steelworkers of America Local 4586, dated January 31, 2010, incorporated by reference to Registrant's Form 10-K for the year ended January 1, 2011
|
10.10
|
|
|
Agreement between Registrant's Specialty Pipe & Tube, Inc. subsidiary and the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union Local 4564-07, dated July 1, 2014
|
10.11
|
|
|
Agreement between Registrant's Bristol Metals, LLC subsidiary and the United Association of Journeymen and Apprentices of the Plumbing and Pipe Fitting Industry of the United States and Canada Local Union No. 538, dated February 16, 2009, incorporated by reference to Registrant's Form 10-K for the year ended January 1, 2011
|
10.12
|
|
|
Agreement between Registrant's Bristol Metals, LLC subsidiary and the Teamsters Local Union No. 549, dated March 5, 2010, incorporated by reference to Registrant's Form 10-K for the year ended January 1, 2011
|
10.13
|
|
|
Loan Agreement, dated as of June 30, 2010, between Registrant and Branch Banking and Trust (“BB&T”), incorporated by reference to Registrant's Form 10-K for the year ended January 1, 2011
|
10.14
|
|
|
First Amendment to First Amended and Restated Loan Agreement, dated August 21, 2012, between Registrant and Branch Banking and Trust (“BB&T”), incorporated by reference to Registrant's Form 10-K for the year ended December 29, 2012
|
10.15
|
|
|
First Amendment to First Amended and Restated Loan Agreement, dated October 22, 2012, between Registrant and Branch Banking and Trust (“BB&T”), incorporated by reference to Registrant's Form 10-K for the year ended December 29, 2012
|
10.16
|
|
|
Second Amendment to First Amended and Restated Loan Agreement, dated August 9, 2013, between Registrant and Branch Banking and Trust ("BB&T"), incorporated by reference to Registrant's Form 10-K for the year ended December 28, 2013.
|
10.17
|
|
|
Third Amendment to First Amended and Restated Loan Agreement, dated January 2, 2014, between Registrant and Branch Banking and Trust ("BB&T"), incorporated by reference to Registrant's Form 10-K for the year ended December 28, 2013
|
10.18
|
|
|
Fourth Amendment to First Amended and Restated Loan Agreement, dated as of November 21, 2014, between Registrant and Branch Banking and Trust ("BB&T), incorporated by reference to Registrant's Form 8-K filed on November 25, 2014
|
A.
|
Section 6.B of the Plan is deleted in its entirety and replaced as follows:
|
B.
|
Section 6.B of the Plan shall be amended to state that 100% of the total number of unvested shares would vest in the event of (i) and (ii) to read as follows:
|
C.
|
Reaffirmation.
The Plan shall remain otherwise in full force and effect and unchanged.
|
1.
|
Purpose
. This Short-Term Cash Incentive and Options Plan (the “Incentive Plan”) is intended to provide key executive employees of Synalloy Corporation (the “Company”, which term shall include Synalloy Corporation and any of its affiliates or subsidiaries) the opportunity to participate in the Company’s profitability, future prosperity and growth. The purpose of the Incentive Plan is to provide short and long-term incentive for gain through outstanding service to the Company and its shareholders, and to assist in attracting and retaining executives of ability and initiative.
|
2.
|
Administration
. The Incentive Plan shall be administered by the Company’s Compensation & Long Term Incentive Committee (the “Committee”). The same restrictions set forth in the Company’s 2011 Long-Term Incentive Stock Option Plan (the “Stock Option Plan”), previously approved by the Company’s Board of Directors and shareholders, applicable to Committee members shall also apply under this Incentive Plan. To the extent this Incentive Plan differs from or is inconsistent with the Stock Option Plan, the terms and provisions of the Stock Option Plan shall govern. The Committee shall have complete authority and discretion to interpret all provisions of this Incentive Plan consistent with law and the Stock Option Plan, to prescribe the form of instruments evidencing the stock options that may be granted under this Incentive Plan and pursuant to the Stock Option Plan, to adopt, amend, and rescind general and special rules and regulations for its administration, and to make all other determinations necessary or advisable for the administration of the Incentive Plan. No member of the Committee shall be liable for any action or determination in respect thereto, if made in good faith, and shall be entitled to indemnification by the Company with respect to all matters arising from his service on the Committee to the fullest extent allowable under the Company’s charter documents and applicable law.
|
3.
|
Eligibility
. Any salaried employee of the Company who in the judgment of the Committee occupies a management position in which his or her efforts contribute to the profit and growth of the Company may be eligible to participate in the Incentive Plan. The named participants to this Incentive Plan shall be recommended by the division Presidents and the CEO, and approved by the Committee. The key metric used to measure management performance in a particular division or the Company as a whole, as the case may be, is “Adjusted EBITDA” defined as operating income before interest, change in fair value of interest rate swap, income taxes, depreciation and amortization, excluding inventory profits and losses, acquisition costs and costs associated with raising capital.” The Adjusted EBITDA target ranges described herein are derived from the Company’s annual budget approved by the Company’s Board of Directors and are exclusive of and calculated prior to allocation of the cash and stock option incentives payable to all executives participating in the Incentive Plan.
Exhibit A
to this Incentive Plan, as may be amended from time to time by the Committee, sets forth the annual Adjusted EBITDA target range and named participants’ assigned percentage of the cash and stock option incentives. The Committee, upon recommendation from the Company’s CEO, shall have the discretion to determine to what extent, if any, persons employed on a part-time or consulting basis will be eligible to participate in the Incentive Plan.
|
4.
|
Cash Incentive Pool
. At the beginning of the year, for each division, including Corporate, the division Presidents will identify the executives whom they recommend to participate in each division’s cash incentive pool with input from the CEO, and the CEO will recommend the executives who will participate in the Corporate division’s cash incentive pool. Additionally, each recommended participant will be allocated a percentage of the division’s cash incentive pool. The recommended allocations will be completed at the beginning of each year by the division Presidents, with input and review from the CEO. The CEO will prepare the recommended allocation for the Corporate division. These recommendations will be submitted to the Committee no later than two weeks prior to the February Board of Director’s meeting. The Committee will review and approve, amend or reject the recommendations of the division Presidents and the CEO. The CEO’s incentive calculation will be handled separately from the Corporate division and will be approved by the Committee.
|
A.
|
Adjusted EBITDA Allocations
. At the beginning of each year, the Company’s Board of Directors will approve the upcoming year’s budget that shall include the Adjusted EBITDA target range for each division and for the Company as a whole (each, a “Target Range”). The applicable Target Range for each division, as approved by the Board of Directors, is set forth on
Exhibit A
attached hereto. Each division cash incentive pool shall equal a designated percentage of Adjusted EBITDA achieved by that division, or in the case of the Corporate division, achieved by the Company as a whole. Upon the division Presidents and CEO’s recommendation, the Committee will establish the percentage of Adjusted EBITDA that will comprise the cash incentive pool for each division and the Company as a whole (each, an “Incentive Pool Percentage”). The applicable Incentive Pool Percentages for each division are set forth below. Each Target Range will include four levels with corresponding Incentive Pool Percentages: (i) Below Target-no cash incentive; (ii) Below Target with cash incentive; (iii) On Target; and, (iv) Above Target. Wherever Adjusted EBITDA falls (Below Target with cash incentive, On Target, or Above Target), the Incentive Pool Percentage for that applicable Target Range will apply to all dollars of profit beginning with the first dollar, computed using the applicable Incentive Pool Percentage. No cash incentive will be paid if Adjusted EBITDA falls below the lowest threshold ((i) Below Target-no cash incentive).
|
B.
|
Cash Incentive Pool Percentages (excluding inventory adjustments):
See Exhibit A attached hereto for complete details.:
|
|
|
Below Target/
|
|
Below Target
|
|
|
|
|
|
|
No Cash
|
|
w/ Cash
|
|
|
|
|
Division
|
|
Incentive
|
|
Incentive
|
|
On Target
|
|
Above Target
|
K. Pennington - Metals Segment
|
|
—%
|
|
0.50%
|
|
1.00%
|
|
1.40%
|
BRISMET & Synalloy Fab
|
|
—%
|
|
1.25%
|
|
2.50%
|
|
3.50%
|
Palmer of Texas
|
|
—%
|
|
1.75%
|
|
3.50%
|
|
5.00%
|
MCC
|
|
—%
|
|
2.25%
|
|
4.50%
|
|
6.50%
|
CRI Tolling
|
|
—%
|
|
2.25%
|
|
4.50%
|
|
6.50%
|
Corporate
|
|
—%
|
|
0.75%
|
|
1.50%
|
|
2.00%
|
CEO
|
|
—%
|
|
0.625%
|
|
1.25%
|
|
1.75%
|
C.
|
Downward Adjustments to the Cash Incentive Pool
. Each division President, upon approval by the CEO, has the authority to reduce an individual executive’s cash incentive bonus for material underperformance against personal goals.
|
i.
|
For every lost time accident during the year, the cash incentive pool for that division will be reduced by 5%; however, the Committee will be the final arbiter of whether lost time claims rise to the level of penalty imposition. Ten (10) percent of the CEO’s cash incentive is tied to achieving two or fewer lost-time accidents across the entire Company.
|
ii.
|
An inventory turn target will be established for each division, where applicable, and will be set forth on
Exhibit A
. These inventory turn targets will be established by the CEO and division Presidents and approved by the Committee. If the inventory turns come in less than the target, the applicable division’s cash incentive pool shall be reduced by 10%.
|
iii.
|
Fifteen percent of the CEO’s cash incentive, as determined by the Committee, and 25% of the CFO’s cash incentive, as determined by the CEO, is tied to achieving certain targets based on the cash flow budget. The targets with respect to the cash flow budget are as follows (assuming the Company pays a dividend to shareholders in December 2014 totaling $2.39 million, or $0.27 per share): (i) total capital expenditures in 2014 will equal $7.81 million or less ($4.3 million for CRI and the Code Vessel shop, and $3.51 million in non-growth related cap ex), (ii) cash flow from operations in 2014 will equal $12.28 million or more, (iii) cash on the balance sheet at the end of 2014 will equal $1.32 million or more, and (iv) total debt (total debt is term debt plus the line of credit) at the end of 2014 will equal $20.91 million or less. The Committee and the CEO, acting in their discretion, shall use these targets as a guide to judge the CEO’s and the CFO’s level of success in achieving the Company’s cash flow goals and shall award all, some portion or none of the cash incentive tied to cash flow management based on the Company’s success in achieving these targets.
|
D.
|
Inventory Profits or Losses
. The Adjusted EBITDA calculations shall exclude any inventory profits or losses applicable to the BRISMET division as set forth in this section. Adjusted EBITDA calculations for the BRISMET division will be reduced on a dollar-for-dollar basis by the amount of inventory profits in that division, and the appropriate Target Range will be selected based on such reduced Adjusted EBITDA calculation. Likewise, Adjusted EBITDA calculations for the BRISMET division will be increased on a dollar-for-dollar basis by the amount of inventory losses in that division. The Committee will determine the correct Target Range before inventory losses are added back to the Adjusted EBITDA calculation and the correct Target Range after inventory losses are added back to the Adjusted EBITDA calculation. Under no circumstances shall any applicable executive move more than one Target Range as a result of this inventory loss add back. For example, if the CEO is in the Below Target Range before inventory losses are added back, and in the Above Target Range after inventory losses are added back, the CEO shall be permitted to move up one Target Range only into the On Target Range. The CEO shall not be permitted in this example to move up two Target Ranges into the Above Target Range.
|
5.
|
Stock Options (Long-Term Incentives)
. To the extent stock options are available under the Stock Option Plan previously approved by the shareholders, stock options of Company stock will be issued as provided herein. All terms, conditions and
|
6.
|
Stock Options Schedule
. Stock options shall be granted based on the schedule below. The percentages set forth below represent a percentage of each particular executive’s base salary (i.e., base salary exclusive of bonuses) for the year under consideration.
|
Position
|
|
Below Target
|
|
On Target
|
|
Above Target
|
CEO
|
|
—%
|
|
25.00%
|
|
37.50%
|
CFO
|
|
—%
|
|
20.00%
|
|
30.00%
|
DIV PRES
|
|
—%
|
|
20.00%
|
|
30.00%
|
SEC/HR
|
|
—%
|
|
15.00%
|
|
22.50%
|
Others
|
|
—%
|
|
10.00%
|
|
15.00%
|
7.
|
Mid-Year Acquisition Adjustments
. The Company, from time to time, may acquire another business or operating division mid-year, which acquisition will not be budgeted or accounted for in the Target Ranges that are established at the beginning of the fiscal year. Upon consultation with the CEO and division Presidents, the Committee shall amend the applicable Target Ranges to account for any and all mid-year acquisitions. Specifically, the Committee will update the applicable Target Ranges to account for the pro-forma Adjusted EBITDA expected from each acquisition for the remainder of the current calendar year. The Company’s practice is to allocate unbudgeted one-time expenses associated with a mid-year acquisition to the Corporate division only. In determining the actual year-end Adjusted EBITDA calculation for the Corporate division and the CEO, the Committee will add back the one-time costs associated with each acquisition incurred during the year in question but not previously budgeted. The amount of one-time expenses to be added back will be approved by the Committee and will include only those expenses that were incurred as a direct result of completing the acquisition. In the event these one-time expenses extend from one calendar year to the next, the accrued one-time expenses associated with the acquisition from each year will be added back to the applicable year’s Adjusted EBITDA calculations for the Corporate division and the CEO.
|
8.
|
General Provisions
. Neither the adoption of this Incentive Plan nor its operation, nor any document describing or referring to this Incentive Plan, or any part thereof, shall confer upon any employee any right to continue in the employ of the Company or any subsidiary, or shall in any way affect the right and power of the Company to terminate the employment of any employee at any time with or without assigning a reason therefor to the same extent as the Company might have done if this Incentive Plan had not been adopted. In light of the importance of promoting long-term relationships and a long-term commitment to the ongoing success of the Company, in order to receive any payments or stock options under this Plan, an employee must be employed by the Company on the last day of the applicable fiscal year; provided, however, that if termination of employment occurs as a result of death, disability (unable to work for 12 consecutive months), or retirement (with a minimum of 5 years of employment with the Company), payment of the cash bonus and/or the grant of options will be determined as otherwise provided in this Incentive Plan but shall be prorated to reflect that portion of the prior year in which the employee was an employee of the Company. Eligible employees must have entered into a confidentiality and non-competition agreement in a form acceptable to the CEO of the Company in order to receive any benefits under this Incentive Plan. Payments under this Incentive Plan will be made on or about March 15th of the year following the Company’s fiscal year end. This Incentive Plan shall be governed by the laws of the state of South Carolina.
|
▪
|
July 1, 2014: increase by 2%
|
▪
|
July 1, 2015: increase by 2%
|
▪
|
July 1, 2016: increase by 2%
|
▪
|
July 1, 2014 : increase by 1.0%
|
▪
|
July 1, 2015: increase by .5%
|
▪
|
July 1, 2016: increase by .5%
|
_________________________________
|
________________________________
|
Steve Baroff
|
David Jett
|
1)
|
Term - From July 1, 2010 to June 30, 2013
|
2)
|
Wages
|
•
|
Effective 7/01/2010 Wage increase by 2.0%
|
•
|
Effective 7/01/2011 Wage increase by 2.0%
|
•
|
Effective 7/01/2012 Wage increase by 1.5%
|
3)
|
Pension 401(k) - Company's 7% contribution remains fixed for the term of the agreement
|
•
|
Effective 7/01/2010 16.5%
|
•
|
Effective 7/01/2011 17.5%
|
•
|
Effective 7/01/2012 18.0%
|
AGREEMENT
|
|
1
|
ARTICLE I
|
PURPOSE
|
1
|
ARTICLE II
|
RECOGNITION
|
1
|
ARTICLE III
|
UNION SHOP
|
1
|
ARTICLE IV
|
CHECK-OFF
|
2
|
ARTICLE V
|
NON-DISCRIMINATIN
|
2
|
ARTICLE VI
|
MANAGEMENT
|
2
|
ARTICLE VII
|
RESPONSIBIITIES of the PARTIES
|
3
|
ARTICLE VIII
|
ADJUSTMNET of GREIVANCES and ARBITRATION
|
3
|
ARTICLE IX
|
EXPEDITED ARBITRATION
|
5
|
ARTICLE X
|
SUSPENSION and DISCHARGE CASES
|
6
|
ARTICLE XI
|
SENIORITY
|
7
|
ARTICLE XII
|
MILITARY SERVICE
|
8
|
ARTICLE XIII
|
HOURS of WORK and OVERTIME
|
8
|
ARTICLEXIV
|
REPROTING PAY
|
9
|
ARTICLE XV
|
VACATIONS
|
9
|
ARTICLE XVI
|
HOLIDAYS and ATTENDANCE BONUS
|
10
|
ARTICLE XVII
|
RATES of PAY and JOB CLASSIFICATIONS
|
10
|
ARTICLE XVIII
|
PENSION, HEALTH and WELFARE
|
11
|
ARTICLE XIX
|
LEAVE of ABSENCE
|
12
|
ARTICLE XX
|
JURY DUTY
|
12
|
ARTICLE XXI
|
FUNERAL TIME
|
12
|
ARTICLE XXII
|
WORK RULES
|
12
|
ARTICLE XXIII
|
WAGES and JOB SECURITY
|
13
|
ARTICLE XXIV
|
TERMINATION
|
13
|
ARTICLE XXV
|
P.A.C. CHECK-OFF
|
13
|
SIGNATURE PAGE
|
|
15
|
Years of Service
|
Duration of Vacation
|
Vacation Pay
|
1 but less than 2
|
1 week
|
40 hrs. at base rate
|
2 but less than 8
|
2 weeks
|
80 hrs. at base rate
|
8 but less than 15
|
3 weeks
|
120 hrs. at base rate
|
15 years or more
|
4 weeks
|
160 hrs. at base rate
|
30 years or more
|
5 weeks
|
200 hrs. at base rate
|
New Year’s Day
|
Friday after Thanksgiving
|
Good Friday
|
Christmas Day
|
Memorial Day
|
Personal Holiday/Sick Day (One after six (6) mo).
|
Fourth of July
|
Personal Holiday/Sick Day (Two after one (1) Yr.)
|
Labor Day
|
Thanksgiving Day
|
Floating Holiday (date to be determined by Company)
|
Effective 7/1/07
|
10%
|
Effective 7/1/08
|
12.5%
|
Effective 7/1/09
|
15%
|
JOB TITLE
|
EFFECTIVE 7/1/14
|
EFFECTIVE 7/1/05
|
EFFECTIVE 7/1/06
|
OPERATOR
|
$51.24
|
$52.78
|
$54.34
|
MAINTENANCE REPAIR
|
$51.24
|
$52.78
|
$54.34
|
TRUCK DRIVER
|
$51.24
|
$52.78
|
$54.34
|
LABORER
|
$48.63
|
$50.09
|
$51.57
|
2004
|
2005
|
2006
|
|||
Family
|
$75.00
|
Family
|
$75.00
|
Family
|
$75.00
|
Couple
|
$65.00
|
Couple
|
$65.00
|
Couple
|
$65.00
|
Single
|
$40.00
|
Single
|
$40.00
|
Single
|
$40.00
|
a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date:
|
March 17, 2015
|
/s/ Craig C. Bram
|
|
|
Craig C. Bram
|
|
|
Chief Executive Officer
|
a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date:
|
March 17, 2015
|
/s/ Richard D. Sieradzki
|
|
|
Richard D. Sieradzki
|
|
|
Chief Financial Officer and Principal Accounting Officer
|
Date:
|
March 17, 2015
|
/s/ Craig C. Bram
|
|
|
Craig C. Bram
|
|
|
Chief Executive Officer
|
|
|
|
|
|
/s/ Richard D. Sieradzki
|
|
|
Richard D. Sieradzki
|
|
|
Chief Financial Officer and Principal Accounting Officer
|