[X]
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d)
|
|
OF
THE SECURITIES EXCHANGE ACT OF 1934
|
[ ]
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d)
|
|
OF
THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware
(State
or other jurisdiction of
incorporation
or organization)
|
|
57-0426694
(IRS
Employer
Identification
Number)
|
2155
West Croft Circle
Spartanburg,
South Carolina
(Address
of principal executive offices)
|
|
29302 (Zip
code)
|
Item
1.
|
Financial
Statements (unaudited)
|
|
Condensed
consolidated balance sheets - July 1,
2006 and December 31, 2005
|
|
Condensed
consolidated statements of income - Three and six
months ended July 1, 2006 and July 2, 2005
|
|
Condensed
consolidated statements of cash flows -
Six months ended July 1, 2006 and July 2, 2005
|
|
Notes
to condensed consolidated financial statements -
July 1, 2006
|
Item
2.
|
|
Item
4.
|
Controls
and
Procedures
|
Item
1A.
|
Risk
Factors
|
Item
2.
|
Unregistered
Sales of Equity Securities and Use of Proceeds
|
Item
6.
|
Exhibits
|
|
Signatures
and Certifications
|
Item
1. FINANCIAL STATEMENTS
|
|||||||
Synalloy
Corporation
|
|||||||
Condensed
Consolidated Balance
Sheets
|
July
1, 2006
|
Dec
31, 2005
|
|||||
|
(Unaudited)
|
(Note)
|
|
||||
Assets
|
|||||||
Current
assets
|
|||||||
Cash
and cash equivalents
|
$
|
426
|
$
|
2,379
|
|||
Accounts
receivable, less allowance
|
|||||||
for
doubtful accounts
|
20,429,002
|
21,862,852
|
|||||
Inventories
|
|||||||
Raw
materials
|
11,822,493
|
10,366,091
|
|||||
Work-in-process
|
8,955,626
|
8,560,707
|
|||||
Finished
goods
|
6,746,204
|
5,555,529
|
|||||
Total
inventories
|
27,524,323
|
24,482,327
|
|||||
Deferred
income taxes
|
1,599,000
|
1,219,000
|
|||||
Prepaid
expenses and other current assets
|
125,956
|
427,728
|
|||||
Total
current assets
|
49,678,707
|
47,994,286
|
|||||
Cash
value of life insurance
|
2,663,514
|
2,639,514
|
|||||
Property,
plant & equipment, net of accumulated
|
|||||||
depreciation
of $40,801,000 and $39,347,000
|
19,450,266
|
18,697,760
|
|||||
Deferred
charges and other assets
|
1,620,985
|
1,650,622
|
|||||
Total
assets
|
$
|
73,413,472
|
$
|
70,982,182
|
|||
Liabilities
and Shareholders' Equity
|
|||||||
Current
liabilities
|
|||||||
Current
portion of long-term debt
|
$
|
466,667
|
$
|
466,667
|
|||
Accounts
payable
|
10,510,265
|
11,191,861
|
|||||
Accrued
expenses
|
4,833,364
|
5,846,899
|
|||||
Current
portion of environmental reserves
|
154,415
|
104,199
|
|||||
Income
taxes payable
|
1,431,725
|
1,720,702
|
|||||
Total
current liabilities
|
17,396,436
|
19,330,328
|
|||||
Long-term
debt
|
10,755,077
|
8,090,554
|
|||||
Environmental
reserves
|
611,000
|
611,000
|
|||||
Deferred
compensation
|
506,087
|
541,962
|
|||||
Deferred
income taxes
|
2,468,000
|
3,112,000
|
|||||
Shareholders'
equity
|
|||||||
Common
stock, par value $1 per share - authorized
|
|||||||
12,000,000
shares; issued 8,000,000 shares
|
8,000,000
|
8,000,000
|
|||||
Capital
in excess of par value
|
38,861
|
-
|
|||||
Retained
earnings
|
49,508,568
|
47,329,620
|
|||||
Less
cost of Common Stock in treasury:
|
|||||||
1,872,956
and 1,892,160 shares
|
(15,870,557
|
)
|
(16,033,282
|
)
|
|||
Total
shareholders' equity
|
41,676,872
|
39,296,338
|
|||||
Total
liabilities and shareholders' equity
|
$
|
73,413,472
|
$
|
70,982,182
|
|||
Note:
The balance sheet at December 31, 2005 has been derived from the
audited
consolidated financial statements at that date.
|
|||||||
See
accompanying notes to condensed consolidated financial
statements.
|
Synalloy
Corporation
|
|||||||||||||
Condensed
Consolidated Statements of
Operations
|
|||||||||||||
(Unaudited)
|
Three
Months Ended
|
Six
Months Ended
|
|||||||||||
July
1, 2006
|
July
2, 2005
|
July
1, 2006
|
July
2, 2005
|
||||||||||
Net
sales
|
$
|
36,728,508
|
$
|
31,484,323
|
$
|
72,891,980
|
$
|
64,811,787
|
|||||
Cost
of goods sold
|
31,459,968
|
27,222,930
|
63,623,755
|
55,411,839
|
|||||||||
Gross
profit
|
5,268,540
|
4,261,393
|
9,268,225
|
9,399,948
|
|||||||||
Selling,
general and
|
|||||||||||||
administrative
expense
|
2,716,861
|
2,581,335
|
5,469,172
|
5,350,974
|
|||||||||
Operating
income
|
2,551,679
|
1,680,058
|
3,799,053
|
4,048,974
|
|||||||||
Other
(income) and expense
|
|||||||||||||
Interest
expense
|
199,889
|
216,363
|
346,942
|
450,672
|
|||||||||
Other,
net
|
(50
|
)
|
(22,847
|
)
|
(589
|
)
|
(31,739
|
)
|
|||||
Income
from continuing
|
|||||||||||||
operations
before income taxes
|
2,351,840
|
1,486,542
|
3,452,700
|
3,630,041
|
|||||||||
Provision
for income taxes
|
854,000
|
443,000
|
1,257,000
|
1,089,000
|
|||||||||
Net
income from
|
|||||||||||||
continuing
operations
|
1,497,840
|
1,043,542
|
2,195,700
|
2,541,041
|
|||||||||
Loss
from discontinued operations
|
-
|
(12,159
|
)
|
-
|
(73,413
|
)
|
|||||||
Benefit
from income taxes
|
-
|
(1,000
|
)
|
-
|
(22,000
|
)
|
|||||||
Net
loss from discontinued operations
|
-
|
(11,159
|
)
|
-
|
(51,413
|
)
|
|||||||
Net
income
|
$
|
1,497,840
|
$
|
1,032,383
|
$
|
2,195,700
|
$
|
2,489,628
|
|||||
Net
income (loss) per basic common share:
|
|||||||||||||
Income
from continuing operations
|
$
|
.24
|
$
|
.17
|
$
|
.36
|
$
|
.42
|
|||||
Loss
from discontinued operations
|
-
|
-
|
-
|
($.01
|
)
|
||||||||
Net
income
|
$
|
.24
|
$
|
.17
|
$
|
.36
|
$
|
.41
|
|||||
Net
income (loss) per diluted common share:
|
|||||||||||||
Income
from continuing operations
|
$
|
.24
|
$
|
.17
|
$
|
.35
|
$
|
.41
|
|||||
Loss
from discontinued operations
|
-
|
-
|
-
|
($.01
|
)
|
||||||||
Net
income
|
$
|
.24
|
$
|
.17
|
$
|
.35
|
$
|
.40
|
|||||
Average
shares outstanding
|
|||||||||||||
Basic
|
6,122,679
|
6,053,999
|
6,115,834
|
6,040,018
|
|||||||||
Dilutive
effect from stock options
|
112,720
|
149,301
|
111,853
|
136,849
|
|||||||||
Diluted
|
6,235,399
|
6,203,300
|
6,227,687
|
6,176,867
|
|||||||||
See
accompanying notes to condensed consolidated financial
statements.
|
Synalloy
Corporation
|
|||||||
Condensed
Consolidated Statements of Cash
Flows
|
|||||||
(Unaudited)
|
Six
Months Ended
|
||||||
|
July
1, 2006
|
July
2, 2005
|
|||||
Operating
activities
|
|||||||
Net
income
|
$
|
2,195,700
|
$
|
2,489,628
|
|||
Adjustments
to reconcile net income to net cash
|
|||||||
(used
in) provided by operating activities:
|
|||||||
Loss
from discontinued operations, net of tax
|
-
|
51,413
|
|||||
Depreciation
expense
|
1,454,288
|
1,434,436
|
|||||
Amortization
of deferred charges
|
27,462
|
19,200
|
|||||
Deferred
income taxes
|
(1,024,000
|
)
|
(491,000
|
)
|
|||
Provision
for losses on accounts receivable
|
225,588
|
304,261
|
|||||
Gain
on sale of property, plant and equipment
|
-
|
(3,350
|
)
|
||||
Cash
value of life insurance
|
(24,000
|
)
|
(24,000
|
)
|
|||
Environmental
reserves
|
50,216
|
(522,672
|
)
|
||||
Issuance
of treasury stock for director fees
|
81,226
|
125,005
|
|||||
Employee
stock option compensation
|
37,812
|
-
|
|||||
Changes
in operating assets and liabilities:
|
|||||||
Accounts
receivable
|
1,208,262
|
(4,012,367
|
)
|
||||
Inventories
|
(3,041,996
|
)
|
4,638,074
|
||||
Other
assets and liabilities
|
(131,929
|
)
|
(95,908
|
)
|
|||
Accounts
payable
|
(681,596
|
)
|
605,014
|
||||
Accrued
expenses
|
(1,013,535
|
)
|
1,834,655
|
||||
Income
taxes payable
|
(288,977
|
)
|
1,327,578
|
||||
Net
cash (used in ) provided by continuing
|
|||||||
operating
activities
|
(925,479
|
)
|
7,679,967
|
||||
Net
cash provided by
|
|||||||
discontinued
operating activities
|
-
|
3,982,643
|
|||||
Net
cash (used in) provided by operating activities
|
(925,479
|
)
|
11,662,610
|
||||
Investing
activities
|
|||||||
Purchases
of property, plant and equipment
|
(2,206,794
|
)
|
(993,404
|
)
|
|||
Proceeds
from sale of property, plant and equipment
|
-
|
3,350
|
|||||
Proceeds
from note receivable
|
400,000
|
-
|
|||||
Net
cash used in investing activities
|
(1,806,794
|
)
|
(990,054
|
)
|
|||
Financing
activities
|
|||||||
Net
proceeds from (payments on) long-term debt
|
2,664,523
|
(7,063,552
|
)
|
||||
Proceeds
from exercised stock options
|
65,797
|
105,318
|
|||||
Net
cash provided by (used in) continuing
|
|||||||
operations
financing activities
|
2,730,320
|
(6,958,234
|
)
|
||||
Net
cash used in discontinued
|
|||||||
operations
financing activities
|
-
|
(4,000,000
|
)
|
||||
Net
cash provided by (used in) financing activities
|
2,730,320
|
(10,958,234
|
)
|
||||
Decrease
in cash and cash equivalents
|
(1,953
|
)
|
(285,678
|
)
|
|||
Cash
and cash equivalents at beginning of period
|
2,379
|
292,350
|
|||||
Cash
and cash equivalents at end of period
|
$
|
426
|
$
|
6,672
|
|||
See
accompanying notes to condensed consolidated financial
statements.
|
Three
Months Ended
|
Year
to Date
|
||||||||||||
July
1, 2006
|
July
2, 2005
|
July
1, 2006
|
July
2, 2005
|
||||||||||
Net
sales
|
|||||||||||||
Specialty
Chemicals Segment
|
$
|
12,545,000
|
$
|
11,194,000
|
$
|
25,433,000
|
$
|
22,832,000
|
|||||
Metals
Segment
|
24,184,000
|
20,290,000
|
47,459,000
|
41,980,000
|
|||||||||
$
|
36,729,000
|
$
|
31,484,000
|
$
|
72,892,000
|
$
|
64,812,000
|
||||||
Segment
income
|
|||||||||||||
Specialty
Chemicals Segment
|
$
|
787,000
|
$
|
243,000
|
$
|
1,588,000
|
$
|
991,000
|
|||||
Metals
Segment
|
2,292,000
|
1,911,000
|
3,412,000
|
4,060,000
|
|||||||||
3,079,000
|
2,154,000
|
5,000,000
|
5,051,000
|
||||||||||
Unallocated
expenses
|
|||||||||||||
Corporate
|
527,000
|
474,000
|
988,000
|
1,002,000
|
|||||||||
Plant
relocation costs
|
-
|
-
|
213,000
|
-
|
|||||||||
Interest
expense
|
200,000
|
216,000
|
347,000
|
451,000
|
|||||||||
Other
(income) expense
|
-
|
(23,000
|
)
|
(1,000
|
)
|
(32,000
|
)
|
||||||
Income from continuting operations before income tax |
$
|
2,352,000
|
$
|
1,487,000
|
$
|
3,453,000
|
$
|
3,630,000
|
Weighted
|
Weighted
|
||||||||||||
Average
|
Average
|
Intrinsic
|
|||||||||||
Exercise
|
Options
|
Contractual
|
Value
of
|
||||||||||
Price
|
Outstanding
|
Term
|
Options
|
||||||||||
|
(in
years)
|
|
|||||||||||
Outstanding
at December 31, 2005
|
$
|
9.64
|
331,550
|
$
|
740,000
|
||||||||
Granted
|
-
|
||||||||||||
Exercised
|
|||||||||||||
First quarter
|
$
|
4.65
|
(4,800
|
)
|
$
|
46,000
|
|||||||
Second quarter
|
$
|
5.54
|
(7,850
|
)
|
$
|
58,000
|
|||||||
First six months
|
$
|
5.20
|
(12,650
|
)
|
$
|
104,000
|
|||||||
Cancelled
|
|||||||||||||
First quarter
|
-
|
||||||||||||
Second quarter
|
$
|
4.65
|
(8,000
|
)
|
|||||||||
First six months
|
$
|
4.65
|
(8,000
|
)
|
|||||||||
Expired
|
|||||||||||||
First quarter
|
-
|
||||||||||||
Second quarter
|
$
|
18.88
|
(14,500
|
)
|
|||||||||
First six months
|
$
|
18.88
|
(14,500
|
)
|
|||||||||
|
|||||||||||||
Outstanding
at July 1, 2006
|
$
|
9.51
|
296,400
|
9.5
|
$
|
1,196,000
|
|||||||
Exercisable
options
|
$
|
9.41
|
240,544
|
3.6
|
$
|
1,024,000
|
|||||||
Options
expected to vest
|
$
|
9.96
|
55,856
|
8.6
|
$
|
172,000
|
Second
Quarter
|
Year
to Date
|
||||||
July
2, 2005
|
July
2, 2005
|
||||||
Net
income reported
|
$
|
1,032,000
|
$
|
2,490,000
|
|||
Compensation
expense, net of tax
|
(74,000
|
)
|
(143,000
|
)
|
|||
Pro
forma net income
|
$
|
959,000
|
$
|
2,347,000
|
|||
Basic
income per share
|
$
|
.17
|
$
|
.41
|
|||
Compensation
expense, net of tax
|
($.01
|
)
|
($.02
|
)
|
|||
Pro
forma basic income per share
|
$
|
.16
|
$
|
.39
|
|||
Diluted
income per share
|
$
|
.17
|
$
|
.40
|
|||
Compensation
expense, net of tax
|
($.01
|
)
|
($.02
|
)
|
|||
Pro
forma diluted income per share
|
$
|
.16
|
$
|
.38
|
Item
2
|
Management’s
Discussion and Analysis of Financial Condition
and Results of Operations
|
Item
2
|
Management’s
Discussion and Analysis of Financial Condition and Results of Operations
-
continued
|
Item
2
|
Management’s
Discussion and Analysis of Financial Condition and Results of Operations
-
continued
|
Date
Issued
|
Class
of Purchasers
|
Number
of Shares Issued
|
Aggregate
Exercise Price
|
4/24/2006
|
Officers
and Employees
|
2,400
|
$11,160
|
5/4/2006
|
Officers
and Employees
|
3,200
|
$14,880
|
5/4/2006
|
Officers
and Employees
|
2,250
|
$17,438
|
7,850
|
$43,478
|
A.
|
The
Annual Meeting of Shareholders was held April 27, 2006 at the Company's
Bristol Metals subsidiary, Bristol, Tennessee.
|
||
B.
|
The
following individuals were elected as directors at the Annual
Meeting:
|
||
Name
|
Votes
For
|
Votes
Withheld
|
|
Sibyl
N. Fishburn
|
5,063,599
|
40,913
|
|
James
G. Lane, Jr.
|
4,784,112
|
320,400
|
|
Ronald
H. Braam
|
5,072,516
|
11,996
|
|
Craig
C. Bram
|
5,093,810
|
11,145
|
|
Carroll
D. Vinson
|
5,072,665
|
31,847
|
|
Murray
H. Wright
|
5,087,987
|
16,525
|
Item
6.
|
Exhibits
|
|
|
The
following exhibits are included herein:
|
|
31
|
Rule
13a-14(a)/15d-14(a) Certifications of Chief Executive Officer and
Chief
Financial Officer
|
|
32
|
Certifications
Pursuant to 18 U.S.C. Section 1350
|
|
The
Company filed a Form 8-K on April 24, 2006 pursuant to Items 2.02
and
9.01.
|
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SYNALLOY
CORPORATION
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(Registrant)
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Date:
August
11, 2006
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By:
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/s/ Ronald
H. Braam
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Ronald
H. Braam
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President
and Chief Executive Officer
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Date: August
11, 2006
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By:
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/s/ Gregory
M.
Bowie
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Gregory
M. Bowie
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Vice
President Finance and Chief Financial Officer
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