[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
|
|
57-0426694
|
(State
or other jurisdiction of
incorporation
or organization)
|
(IRS
Employer
Identification
Number)
|
|
2155
West Croft Circle
Spartaanburg, South Carolina |
|
29302
|
(Address
of principal executive
offices)
|
(Zip
code)
|
Larger accelerated Filer o | Accelerated filer o | Non-accelerated filer x |
Item
1.
|
Financial
Statements (unaudited)
|
|
Condensed
consolidated balance sheets - September 30, 2006
and December 31, 2005
|
|
Condensed
consolidated statements of income
- Three and nine months ended September 30, 2006 and October
1,
2005
|
|
Condensed
consolidated statements of cash flows
- Nine months ended September 30, 2006 and October 1,
2005
|
|
Notes
to condensed consolidated financial statements
- September 30, 2006
|
Item
2.
|
|
Item
4.
|
|
|
|
Item
1A.
|
|
Item
2.
|
|
Item
6.
|
|
|
Signatures
and Certifications
|
Item
1. FINANCIAL STATEMENTS
|
|||||||
Synalloy
Corporation
|
|||||||
Condensed
Consolidated Balance Sheets
|
Sep
30, 2006
|
Dec
31, 2005
|
|||||
(Unaudited)
|
(Note)
|
||||||
Assets
|
|||||||
Current
assets
|
|||||||
Cash
and cash equivalents
|
$
|
560
|
$
|
2,379
|
|||
Accounts
receivable, less allowance
|
|||||||
for
doubtful accounts
|
22,856,441
|
21,862,852
|
|||||
Inventories
|
|||||||
Raw
materials
|
15,317,620
|
10,366,091
|
|||||
Work-in-process
|
9,535,232
|
8,560,707
|
|||||
Finished
goods
|
6,756,216
|
5,555,529
|
|||||
Total
inventories
|
31,609,068
|
24,482,327
|
|||||
Deferred
income taxes
|
1,491,000
|
1,219,000
|
|||||
Prepaid
expenses and other current assets
|
153,546
|
427,728
|
|||||
Total
current assets
|
56,110,615
|
47,994,286
|
|||||
Cash
value of life insurance
|
2,675,514
|
2,639,514
|
|||||
Property,
plant & equipment, net of accumulated
|
|||||||
depreciation
of $38,285,000 and $39,347,000
|
18,769,837
|
18,697,760
|
|||||
Deferred
charges and other assets
|
1,602,068
|
1,650,622
|
|||||
Total
assets
|
$
|
79,158,034
|
$
|
70,982,182
|
|||
Liabilities
and Shareholders' Equity
|
|||||||
Current
liabilities
|
|||||||
Current
portion of long-term debt
|
$
|
466,667
|
$
|
466,667
|
|||
Accounts
payable
|
14,172,854
|
11,191,861
|
|||||
Accrued
expenses
|
5,990,134
|
5,846,899
|
|||||
Current
portion of environmental reserves
|
200,053
|
104,199
|
|||||
Income
taxes payable
|
1,563,382
|
1,720,702
|
|||||
Total
current liabilities
|
22,393,090
|
19,330,328
|
|||||
Long-term
debt
|
8,677,161
|
8,090,554
|
|||||
Environmental
reserves
|
611,000
|
611,000
|
|||||
Deferred
compensation
|
488,149
|
541,962
|
|||||
Deferred
income taxes
|
2,884,000
|
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
|
52,030
|
-
|
|||||
Retained
earnings
|
51,917,412
|
47,329,620
|
|||||
Less
cost of Common Stock in treasury:
|
|||||||
1,871,949
and 1,892,160 shares
|
(15,864,808
|
)
|
(16,033,282
|
)
|
|||
Total
shareholders' equity
|
44,104,634
|
39,296,338
|
|||||
Total
liabilities and shareholders' equity
|
$
|
79,158,034
|
$
|
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
|
Nine
Months Ended
|
|||||||||||
|
Sep
30, 2006
|
Oct
1, 2005
|
Sep
30, 2006
|
Oct
1, 2005
|
|||||||||
Net
sales
|
$
|
39,096,599
|
$
|
30,674,672
|
$
|
111,988,579
|
$
|
95,486,459
|
|||||
Cost
of goods sold
|
32,887,726
|
27,172,807
|
96,511,481
|
82,584,646
|
|||||||||
Gross
profit
|
6,208,873
|
3,501,865
|
15,477,098
|
12,901,813
|
|||||||||
Selling,
general and
|
|||||||||||||
administrative
expense
|
2,810,061
|
2,528,932
|
8,279,233
|
7,879,906
|
|||||||||
Operating
income
|
3,398,812
|
972,933
|
7,197,865
|
5,021,907
|
|||||||||
Other
(income) and expense
|
|||||||||||||
Gain
from sale of property and plant
|
(595,600
|
)
|
-
|
(595,600
|
)
|
-
|
|||||||
Interest
expense
|
182,600
|
228,749
|
529,542
|
679,421
|
|||||||||
Other,
net
|
(32
|
)
|
-
|
(621
|
)
|
(31,739
|
)
|
||||||
Income
from continuing
|
|||||||||||||
operations
before income taxes
|
3,811,844
|
744,184
|
7,264,544
|
4,374,225
|
|||||||||
Provision
for income taxes
|
1,403,000
|
219,000
|
2,660,000
|
1,308,000
|
|||||||||
Net
income from
|
|||||||||||||
continuing
operations
|
2,408,844
|
525,184
|
4,604,544
|
3,066,225
|
|||||||||
Loss
from discontinued operations
|
-
|
-
|
-
|
(73,413
|
)
|
||||||||
Benefit
from income taxes
|
-
|
-
|
-
|
(22,000
|
)
|
||||||||
Net
loss from discontinued operations
|
-
|
-
|
-
|
(51,413
|
)
|
||||||||
Net
income
|
$
|
2,408,844
|
$
|
525,184
|
$
|
4,604,544
|
$
|
3,014,812
|
|||||
Net
income (loss) per basic common share:
|
|||||||||||||
Income
from continuing operations
|
$
|
.39
|
$
|
.09
|
$
|
.75
|
$
|
.51
|
|||||
Loss
from discontinued operations
|
-
|
-
|
-
|
($.01
|
)
|
||||||||
Net
income
|
$
|
.39
|
$
|
.09
|
$
|
.75
|
$
|
.50
|
|||||
Net
income (loss) per diluted common share:
|
|||||||||||||
Income
from continuing operations
|
$
|
.39
|
$
|
.09
|
$
|
.74
|
$
|
.50
|
|||||
Loss
from discontinued operations
|
-
|
-
|
-
|
($.01
|
)
|
||||||||
Net
income
|
$
|
.39
|
$
|
.09
|
$
|
.74
|
$
|
.49
|
|||||
Average
shares outstanding
|
|||||||||||||
Basic
|
6,127,077
|
6,087,108
|
6,119,582
|
6,055,715
|
|||||||||
Dilutive
effect from stock options
|
115,951
|
77,512
|
111,678
|
73,446
|
|||||||||
Diluted
|
6,243,028
|
6,164,620
|
6,231,260
|
6,129,161
|
|||||||||
See
accompanying notes to condensed consolidated financial
statements.
|
Condensed
Consolidated Statements of Cash
Flows
|
|||||||
(Unaudited)
|
Nine
Months Ended
|
||||||
Sep
30, 2006
|
Oct
1, 2005
|
||||||
Operating
activities
|
|||||||
Net
income
|
$
|
4,604,544
|
$
|
3,014,812
|
|||
Adjustments
to reconcile net income to net cash
|
|||||||
provided
by operating activities:
|
|||||||
Loss
from discontinued operations, net of tax
|
-
|
51,413
|
|||||
Depreciation
expense
|
2,199,535
|
2,161,154
|
|||||
Amortization
of deferred charges
|
41,193
|
28,800
|
|||||
Deferred
income taxes
|
(500,000
|
)
|
(770,000
|
)
|
|||
Provision
for losses on accounts receivable
|
360,519
|
453,837
|
|||||
(Gain)
loss on sale of property, plant and equipment
|
(602,350
|
)
|
10,550
|
||||
Cash
value of life insurance
|
(36,000
|
)
|
(36,000
|
)
|
|||
Environmental
reserves
|
95,854
|
(733,703
|
)
|
||||
Issuance
of treasury stock for director fees
|
81,226
|
125,005
|
|||||
Employee
stock option compensation
|
56,718
|
-
|
|||||
Changes
in operating assets and liabilities:
|
|||||||
Accounts
receivable
|
(1,354,108
|
)
|
(4,122,435
|
)
|
|||
Inventories
|
(7,126,741
|
)
|
(876,604
|
)
|
|||
Other
assets and liabilities
|
(172,270
|
)
|
90,386
|
||||
Accounts
payable
|
2,980,993
|
4,856,302
|
|||||
Accrued
expenses
|
143,235
|
1,127,199
|
|||||
Income
taxes payable
|
(157,320
|
)
|
1,769,155
|
||||
Net
cash provided by continuing operating activities
|
615,028
|
7,149,871
|
|||||
Net
cash provided by discontinued operating activities
|
-
|
3,982,643
|
|||||
Net
cash provided by operating activities
|
615,028
|
11,132,514
|
|||||
Investing
activities
|
|||||||
Purchases
of property, plant and equipment
|
(2,487,242
|
)
|
(1,963,493
|
)
|
|||
Proceeds
from sale of property, plant and equipment
|
817,980
|
3,350
|
|||||
Proceeds
from note receivable
|
400,000
|
-
|
|||||
Net
cash used in investing activities
|
(1,269,262
|
)
|
(1,960,143
|
)
|
|||
Financing
activities
|
|||||||
Net
proceeds from (payments on) long-term debt
|
586,607
|
(5,565,268
|
)
|
||||
Proceeds
from exercised stock options
|
65,808
|
105,330
|
|||||
Net
cash provided by (used in) continuing operations
|
|||||||
financing
activities
|
652,415
|
(5,459,938
|
)
|
||||
Net
cash used in discontinued operations
|
|||||||
financing
activities
|
(4,000,000
|
)
|
|||||
Net
cash provided by (used in) financing activities
|
652,415
|
(9,459,938
|
)
|
||||
Decrease
in cash and cash equivalents
|
(1,819
|
)
|
(287,567
|
)
|
|||
Cash
and cash equivalents at beginning of period
|
2,379
|
292,350
|
|||||
Cash
and cash equivalents at end of period
|
$
|
560
|
$
|
4,783
|
|||
See
accompanying notes to condensed consolidated financial
statements.
|
Three
Months Ended
|
|
Year
to Date
|
|||||||||||
Sep
30, 2006
|
Oct
1, 2005
|
Sept
30, 2006
|
Oct
1, 2005
|
||||||||||
Net
sales
|
|||||||||||||
Specialty
Chemicals Segment
|
$
|
12,725,000
|
$
|
11,102,000
|
$
|
38,158,000
|
$
|
33,934,000
|
|||||
Metals
Segment
|
26,372,000
|
19,573,000
|
73,831,000
|
61,552,000
|
|||||||||
$
|
39,097,000
|
$
|
30,675,000
|
$
|
111,989,000
|
$
|
95,486,000
|
||||||
Segment
income
|
|||||||||||||
Specialty
Chemicals Segment
|
$
|
647,000
|
$
|
382,000
|
$
|
2,235,000
|
$
|
1,374,000
|
|||||
Metals
Segment
|
3,308,000
|
1,038,000
|
6,720,000
|
5,098,000
|
|||||||||
3,955,000
|
1,420,000
|
8,955,000
|
6,472,000
|
||||||||||
Unallocated
expenses
|
|||||||||||||
Corporate
|
556,000
|
447,000
|
1,545,000
|
1,451,000
|
|||||||||
Plant
relocation costs
|
-
|
-
|
213,000
|
-
|
|||||||||
Gain
on sale of plant &
property
|
(596,000
|
)
|
-
|
(596,000
|
)
|
-
|
|||||||
Interest
expense
|
183,000
|
229,000
|
529,000
|
679,000
|
|||||||||
Other
(income) expense
|
-
|
-
|
(1,000
|
)
|
(32,000
|
)
|
|||||||
Income
from continuing operations before income taxes
|
$
|
3,812,000
|
$
|
744,000
|
$
|
7,265,000
|
$
|
4,374,000
|
Weighted
|
Weighted
|
|||||||||||||||
Average
|
Average
|
Intrinsic
|
||||||||||||||
Exercise
|
Options
|
Contractual
|
Value
of
|
Options
|
||||||||||||
Price
|
Outstanding
|
Term
|
Options
|
Available
|
||||||||||||
Outstanding
at
|
(in
years)
|
|||||||||||||||
December
31, 2005
|
$
|
9.64
|
331,550
|
$
|
740,000
|
199,100
|
||||||||||
Granted
|
0
|
0
|
||||||||||||||
Exercised
|
||||||||||||||||
First
quarter
|
$
|
4.65
|
(4,800
|
)
|
$
|
46,000
|
||||||||||
Second
quarter
|
$
|
5.54
|
(7,850
|
)
|
$
|
58,000
|
||||||||||
Third
quarter
|
$
|
4.65
|
(1,500
|
)
|
$
|
15,000
|
||||||||||
First
nine months
|
(14,150
|
)
|
$
|
119,000
|
||||||||||||
Cancelled
|
||||||||||||||||
First
quarter
|
0
|
0
|
||||||||||||||
Second
quarter
|
$
|
4.65
|
(8,000
|
)
|
8,000
|
|||||||||||
Third
quarter
|
0
|
0
|
||||||||||||||
First
nine months
|
(8,000
|
)
|
8,000
|
|||||||||||||
Expired
|
||||||||||||||||
First
quarter
|
0
|
0
|
||||||||||||||
Second
quarter
|
$
|
18.88
|
(14,500
|
)
|
0
|
|||||||||||
Third
quarter
|
0
|
0
|
||||||||||||||
First
nine months
|
(14,500
|
)
|
0
|
|||||||||||||
Outstanding
at
|
||||||||||||||||
September
30, 2006
|
$
|
9.54
|
294,900
|
4.3
|
$
|
1,458,000
|
207,100
|
|||||||||
Exercisable
options
|
$
|
9.44
|
239,044
|
3.3
|
$
|
1,216,000
|
||||||||||
Options
expected to vest
|
$
|
9.96
|
55,856
|
8.3
|
$
|
241,856
|
Third
Quarter
|
Year
to Date
|
||||||
Oct
1, 2005
|
Oct
1, 2005
|
||||||
Net
income reported
|
$
|
525,000
|
$
|
3,015,000
|
|||
Compensation
expense, net of tax
|
(69,000
|
)
|
(212,000
|
)
|
|||
Pro
forma net income
|
$
|
456,000
|
$
|
2,803,000
|
|||
Basic
income per share
|
$
|
.09
|
$
|
.50
|
|||
Compensation
expense, net of tax
|
($.01
|
)
|
($.04
|
)
|
|||
Pro
forma basic income per share
|
$
|
.08
|
$
|
.46
|
|||
Diluted
income per share
|
$
|
.09
|
$
|
.49
|
|||
Compensation
expense, net of tax
|
($.01
|
)
|
($.03
|
)
|
|||
Pro
forma diluted income per share
|
$
|
.08
|
$
|
.46
|
Date
Issued
|
Class
of Purchasers
|
Number
of Shares Issued
|
Aggregate
Exercise Price
|
|||||||
9/27/2006
|
Officers
and Employees
|
1,500
|
$
|
6,975
|
||||||
Item
6.
|
|
|
|
|
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
|
SIGNATURES
|
||
Pursuant
to the requirements of the Securities Exchange Act of 1934, the
registrant
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
|
||
SYNALLOY
CORPORATION
|
||
(Registrant)
|
||
|
|
|
Date:
November
10, 2006
|
By:
|
/s/ Ronald
H.
Braam
|
|
|
Ronald
H. Braam
|
|
|
President
and Chief Executive Officer
|
|
|
|
Date: November
10, 2006
|
By:
|
/s/ Gregory
M.
Bowie
|
|
|
Gregory
M. Bowie
|
|
|
Vice
President Finance and Chief Financial Officer
|
|
|
|