UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2003
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-10219
VULCAN INTERNATIONAL CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 31-0810265
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
300 Delaware Avenue, Suite 1704, Wilmington, Delaware 19801
(Address of principal executive offices) (Zip Code)
(302) 427-804
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).
Yes No X
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Outstanding shares of no par value common stock at September 30, 2003:
1,004,707 shares
VULCAN INTERNATIONAL CORPORATION
INDEX
Part I. FINANCIAL INFORMATION PAGE
Item 1. FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheets 1
Condensed Consolidated Statements of Income 2
Condensed Consolidated Statements of Cash Flows 3
Schedule Supporting Net Income Per Common
Share and Dividends Per Common Share 4
Notes to Condensed Consolidated Financial
Statements 5-8
Independent Accountants' Report 9
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 10-11
Item 3. Quantitative and Qualitative Disclosures
about Market Risks 11
Item 4. Controls and Procedures 11
Part II. OTHER INFORMATION
Item 1. Legal Proceedings 12-13
Item 2. Changes in Securities and Use of Proceeds 13
Item 3. Defaults Upon Senior Securities 13
Item 4. Submission of Matters to a Vote of
Security Holders 13-14
Item 5. Other Information 13
Item 6. Exhibits and Reports on Form 8-K 13
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
VULCAN INTERNATIONAL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, December 31,
2003 2002
UNAUDITED
-ASSETS-
CURRENT ASSETS:
Cash $ 1,503,467 1,682,049
Marketable securities (At fair market value) 31,907,138 30,237,923
Accounts receivable 2,063,204 1,437,170
Inventories 777,290 702,518
Prepaid expense and other 64,418 44,825
Refundable federal income tax 623,240 -
---------- ----------
TOTAL CURRENT ASSETS 36,938,757 34,104,485
---------- ----------
PROPERTY, PLANT AND EQUIPMENT-at cost 11,697,979 11,679,978
Less-Accumulated depreciation and depletion 9,859,282 9,577,197
---------- ----------
NET PROPERTY, PLANT AND EQUIPMENT 1,838,697 2,102,781
---------- ----------
OTHER ASSETS:
Investment in joint venture 223,621 20,805
Marketable securities (At fair market value) 31,359,502 27,615,871
Deferred charges and other assets 5,906,044 5,771,763
---------- ----------
TOTAL OTHER ASSETS 37,489,167 33,408,439
---------- ----------
TOTAL ASSETS $ 76,266,621 69,615,705
========== ==========
-LIABILITIES AND SHAREHOLDERS' EQUITY-
CURRENT LIABILITIES:
Notes payable $ 4,558,542 1,861,711
Deferred income tax 9,444,721 7,133,396
Other 1,675,469 6,766,590
---------- ----------
TOTAL CURRENT LIABILITIES 15,678,732 15,761,697
---------- ----------
OTHER LIABILITIES:
Deferred income tax 10,358,723 9,641,263
Commitments and contingencies - -
Minority interest in partnership 10,864 17,304
Other liabilities 37,470 34,531
---------- ----------
TOTAL OTHER LIABILITIES 10,407,057 9,693,098
---------- ----------
SHAREHOLDERS' EQUITY:
Capital stock 249,939 249,939
Additional paid-in capital 8,253,926 8,205,825
Retained earnings 30,245,403 27,952,115
Accumulated other comprehensive income 37,671,427 34,013,394
---------- ----------
76,420,695 70,421,273
Less-Common stock in treasury-at cost 26,239,863 26,260,363
---------- ----------
TOTAL SHAREHOLDERS' EQUITY 50,180,832 44,160,910
---------- ----------
TOTAL LIABILITIES
AND SHAREHOLDERS' EQUITY $ 76,266,621 69,615,705
========== ==========
The accompanying notes to condensed consolidated financial statements are an
integral part of these statements.
-1-
PART I - FINANCIAL INFORMATION
(Continued)
Item 1. Financial Statements.
VULCAN INTERNATIONAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
UNAUDITED
For the nine months ended For the three months ended
September 30, September 30,
2003 2002 2003 2002
REVENUES:
Net sales $7,665,565 6,873,944 2,930,246 2,293,461
Dividends and
interest 1,737,609 1,723,113 589,282 577,080
--------- --------- --------- ---------
TOTAL REVENUES 9,403,174 8,597,057 3,519,528 2,870,541
--------- --------- --------- ---------
COST AND EXPENSES:
Cost of sales 7,255,299 6,311,195 2,741,839 2,150,874
General and
administrative 1,513,311 1,423,529 569,753 478,846
Interest expense 35,702 131,872 (29,079) 38,858
--------- --------- --------- ---------
TOTAL COST AND
EXPENSES 8,804,312 7,866,596 3,282,513 2,668,578
--------- --------- --------- ---------
Income related to
Re-Solve Settlement 1,448,119 - 1,448,119 -
EQUITY IN JOINT
VENTURE INCOME
AND MINORITY
INTEREST 201,952 209,039 62,503 69,047
--------- --------- --------- ---------
INCOME BEFORE
GAIN ON SALE OF
ASSETS 2,248,933 939,500 1,747,637 271,010
NET GAIN ON SALE OF
PROPERTY, EQUIPTMENT
AND SECURITIES 849,456 784,402 165,690 216,012
--------- --------- --------- ---------
INCOME FROM
CONTINUING
OPERATIONS BEFORE
INCOME TAXES 3,098,389 1,723,902 1,913,327 487,022
INCOME TAX PROVISION 654,395 235,164 517,685 74,220
--------- --------- --------- ---------
NET INCOME $2,443,994 1,488,738 1,395,642 412,802
========= ========= ========= =========
NET INCOME PER SHARE $ 2.43 1.36 1.39 .38
========= ========= ========= =========
DIVIDENDS PER
COMMON SHARE $ .15 .60 .05 .20
========= ========= ========= =========
The accompanying notes to condensed consolidated financial statements are an
integral part of these statements.
-2-
PART I - FINANCIAL INFORMATION
(Continued)
Item 1. Financial Statements.
VULCAN INTERNATIONAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the six months ended
UNAUDITED
September 30, September 30,
2003 2002
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from customers $ 7,033,877 6,191,072
Cash paid to suppliers and employees and
United States EPA (12,109,287) (7,867,171)
Dividends received 1,737,609 1,723,113
Interest paid (85,928) (15,298)
Income taxes paid (185,000) (205,000)
---------- ---------
NET CASH FLOWS FROM OPERATING ACTIVITIES (3,608,729) (173,284)
---------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of property, equipment
and securities 837,680 796,734
Purchase of property and equipment (42,752) (347,125)
Cash distribution from joint venture - 400,000
Collections on notes receivable and other 89,094 90,346
---------- ---------
NET CASH FLOWS FROM INVESTING ACTIVITIES 884,022 939,955
---------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings (repayments) under credit
agreements 2,696,831 -
Sale of treasury shares - 19,885
Purchase of common shares - (825,393)
Cash dividends paid (150,706) (657,168)
---------- ---------
NET CASH FLOWS FROM FINANCING ACTIVITIES 2,546,125 (1,462,676)
---------- ---------
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (178,582) (696,005)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 1,682,049 2,493,733
---------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,503,467 1,797,728
========== =========
RECONCILIATION OF NET INCOME TO
NET CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 2,443,994 1,488,738
Adjustments-
Depreciation and amortization 300,509 258,579
Deferred income taxes 1,144,343 3,484
Equity in joint venture income and
minority interest (201,952) (209,039)
Net gain on sale of property, equipment
and securities (849,456) (784,402)
(Increase) in accounts receivable (631,688) (682,872)
(Increase) in inventories (74,772) (120,169)
(Decrease) in accounts payable,
accrued expenses and other assets (5,739,707) (127,603)
---------- ---------
NET CASH FLOWS FROM OPERATING ACTIVITIES $(3,608,729) (173,284)
========== =========
The accompanying notes to condensed consolidated financial statements are an
integral part of these statements.
-3-
PART I - FINANCIAL INFORMATION
(Continued)
Item 1. Financial Statements.
VULCAN INTERNATIONAL CORPORATION
SCHEDULE SUPPORTING NET INCOME PER COMMON SHARE
AND DIVIDENDS PER COMMON SHARE
UNAUDITED
EXHIBIT 1
Nine months ended Three months ended
September 30, September 30,
2003 2002 2003 2002
a) Net income $2,443,994 1,488,738 1,395,642 412,802
========= ========= ========= =========
b) Cash
dividends
on common
shares $ 150,706 657,168 50,235 216,325
========= ========= ========= =========
Weighted Average
Shares:
c) Common shares
issued 1,999,512 1,999,512 1,999,512 1,999,512
d) Common
treasury
shares 994,842 902,375 994,805 911,524
--------- --------- --------- ---------
e) Common shares
outstanding 1,004,670 1,097,137 1,004,707 1,087,988
========= ========= ========= =========
f) Income per
common
share (a/e): $ 2.43 1.36 1.39 .38
g) Dividends
per common
share $ .15 .60 .05 .20
The accompanying notes to condensed consolidated financial statements are an
integral part of these statements.
-4-
PART I - FINANCIAL INFORMATION
(Continued)
Item 1. Financial Statements.
VULCAN INTERNATIONAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the nine months ended September 30, 2003 and 2002
UNAUDITED
The accompanying condensed consolidated financial statements reflect all
adjustments that are, in the opinion of management, necessary to reflect a
fair presentation of financial position, results of operations and cash flows
for the interim periods. All such adjustments are of a normal recurring
nature.
USE OF ESTIMATES
The preparation of financial statements in conformity with U.S. generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
INVENTORIES
SEPTEMBER 30, DECEMBER 31,
2003 2002
UNAUDITED
Inventories consisted of:
Finished goods $296,059 506,240
Work in process 161,125 33,983
Raw materials 320,106 162,295
------- -------
Total inventories $777,290 702,518
======= =======
LEGAL MATTERS
On September 2, 2003 the claims of the United States against the Company for
past and future clean-up cost and expenses with respect to the Re-Solve, Inc.
Superfund Site in North Dartmouth, Massachusetts have been resolved by the
docketing of a settlement agreement in the Federal District Court of
Massachusetts approved by Senior Federal Judge Robert Keeton. The settlement
provided that the Company pay to the U.S. Department of Justice the amount of
$3,800,000 plus interest from November 1, 2002. The total settlement of
$3,846,831 was paid on September 2, 2003. The approved settlement agreement
resolves all matters involved in this case.
The Company had accrued an estimated liability of $3,522,000, net of
$1,814,000 tax, for the judgment, accrued interest for the past costs and a
discounted present value for estimated future costs in connection with the
site. The Company recognized income related to the settlement of $955,000,
net of $493,000 tax, for the nine months and three month ended September 30,
2003 as compared to expense of $77,000 and $26,000, after tax for the nine
months and three months ended September 30, 2002, for accrued interest and
amortization of estimated future costs related to this matter.
-5-
PART I - FINANCIAL INFORMATION
(Continued)
Item 1. Financial Statements.
VULCAN INTERNATIONAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the nine months ended September 30, 2003 and 2002
UNAUDITED
(Continued)
There may be other potential clean-up liabilities at other sites of which
the Company has no specific knowledge.
The Company has an interest in a partnership, CCBA, that owns certain
real estate. On August 13, 1999 a Complaint for money damages in excess
of $25,000, based upon breach of fiduciary duty was filed by the other
partner in the Court of Common Pleas in Hamilton County, Ohio. The
plaintiff had claimed that it was entitled to 45.24% of $827,000 and
additional damages. On October 24, 2003 the case was dismissed in the
Court of Common Pleas in Hamilton County, Ohio.
CCBA appealed a real estate tax assessment from 1999 that had increased the
annual real estate tax by approximately $96,000. The local school board has
appealed the revision and reduced its initial appraised value of the property.
During 2001, the partnership received a $96,000 refund of the additional tax
paid in 1999. CCBA has recorded a liability of approximately $123,000
related to this issue based on the revised value asserted by the local school
board. If CCBA is successful, this liability will be recognized as income.
The Company is involved in other litigation matters and claims which are
normal in the course of operations. Management believes that the resolution
of these matters will not have a material effect on the Company's business or
financial condition.
COMPREHENSIVE INCOME
During the nine months ended September 30, 2003 and 2002 total other
comprehensive income (loss) was as follows:
Nine months ended Three months ended
September 30, September 30,
2003 2002 2003 2002
Net income $2,443,994 1,488,738 1,395,642 412,802
Other comprehensive
income (loss), net of tax:
Unrealized gain (loss)
on marketable securities 3,943,198 (15,313,434) (1,409,361)(9,753,985)
Less: reclassification
adjustment for gains
included in net income (285,165) (58,313) (43,808) -
--------- ---------- --------- ---------
Total comprehensive
income (loss) $6,102,027 (13,883,009) (57,527)(9,341,183)
========= ========== ========= =========
Accumulated comprehensive income consists of unrealized holding gains on
securities available for sale of $37,671,427 at September 30, 2003 and
$34,013,394 at December 31, 2002.
-6-
PART I - FINANCIAL INFORMATION
(Continued)
Item 1. Financial Statements.
VULCAN INTERNATIONAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the nine months ended September 30, 2003 and 2002
UNAUDITED
(Continued)
STOCK OPTIONS
Options to purchase not more than 50,000 shares of treasury stock at $33.20
per share, that were granted to the President of the Company in 2001 will
expire in 2008. The options were changed to decrease the option exercise
price to $33.20 per share. The closing price of the stock at September 30,
2003 was $38.90. As a result, the Company accrued an additional compensation
expense liability of $285,000 related to the stock options.
BUSINESS SEGMENT INFORMATION
Reportable segments for the nine months and three months ended September 30,
2003 are as follows:
Nine months ended Three months ended
September 30 September 30
2003 2002 2003 2002
NET SALES FROM CONTINUING
OPERATIONS:
Rubber and Foam Products $5,764,958 4,830,187 2,060,748 1,338,715
Bowling Pins 1,799,196 1,776,811 862,874 888,078
Real Estate Operations 619,509 659,786 176,258 194,640
Intersegment net sales (229,661) (104,568) (99,683) (56,209)
--------- --------- --------- ---------
7,954,002 7,162,216 3,000,197 2,365,224
Timber sales reported in
gain on sale of property
and equipment (288,437) (288,272) (69,951) (71,763)
--------- --------- --------- ---------
TOTAL SALES FROM
CONTINUING OPEATIONS $7,665,565 6,873,944 2,930,246 2,293,461
========= ========= ========= =========
OPERATING PROFIT (LOSS)
FROM CONTINUING OPERATIONS:
Rubber and Foam Products $ (327,159) (310,086) (95,575) (206,009)
Bowling Pins 73,174 202,128 9,170 121,492
Real Estate Operations 158,309 240,705 8,242 47,527
--------- --------- --------- ---------
TOTAL OPERATING
PROFIT (LOSS) FROM
CONTINUING OPERATIONS (95,676) 132,747 (78,163) (36,990)
Interest expense - net (35,702) (131,872) 14,580 (38,858)
Income-Re-Solve settlement 1,448,119 - 1,448,119 -
Other unallocated corporate
income - net 1,781,648 1,723,027 528,791 562,870
Income tax provision (654,395) (235,164) (517,685) (74,220)
--------- --------- --------- ---------
NET INCOME $2,443,994 1,488,738 1,395,642 412,802
========= ========= ========= =========
-7-
PART I - FINANCIAL INFORMATION
(Continued)
Item 1. Financial Statements.
VULCAN INTERNATIONAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the nine months ended September 30, 2003 and 2002
UNAUDITED
(Continued)
There were no securities of the Registrant sold by the Registrant during the
nine months ended September 30, 2003, that were not registered under the
Securities Act of 1933, in reliance upon an exemption from registration
provided by Section 4(2) of the Act.
REVIEW BY INDEPENDENT ACCOUNTANTS
The condensed consolidated financial statements at September 30, 2003, and
for the nine month period then ended have been reviewed, prior to filing, by
the Registrant's independent accountants, J.D. Cloud & Co. L.L.P., whose
report covering their review of the financial statements is included in
this report.
-8-
INDEPENDENT ACCOUNTANTS' REPORT
To the Board of Directors
Vulcan International Corporation
Wilmington, Delaware
We have reviewed the accompanying condensed consolidated balance sheet of
Vulcan International Corporation and subsidiaries as of September 30, 2003,
and the related condensed consolidated statements of income and cash flows
for the nine month and three month periods ended September 30, 2003 and 2002.
These financial statements are the responsibility of the Company's
management.
We conducted our review in accordance with Statements on Standards for
Accounting and Review Services issued by the American Institute of Certified
Public Accountants. A review of interim financial information consists
principally of applying analytical procedures to financial data and making
inquiries of persons responsible for financial and accounting matters. It
is substantially less in scope than an audit conducted in accordance with
U.S. generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the accompanying condensed consolidated financial
statements for them to be in conformity with U.S. generally accepted
accounting principles.
We have audited, in accordance with U.S. generally accepted auditing
standards, the consolidated balance sheet of Vulcan International Corporation
and subsidiaries as of December 31, 2002, and the related consolidated
statements of income, shareholders' equity, and cash flows for the year then
ended (not presented herein); and in our report dated February 11, 2003, we
expressed an unqualified opinion on those consolidated financial statements.
In our opinion, the information set forth in the accompanying condensed
consolidated balance sheet as of December 31, 2002, is fairly stated, in all
material respects, in relation to the consolidated balance sheet from which
it has been derived.
J.D. CLOUD & CO. L.L.P.
Certified Public Accountants
Cincinnati, Ohio
November 5, 2003
-9-
PART I - FINANCIAL INFORMATION
(Continued)
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Net sales revenue for the nine months ended September 30,2003, increased
$791,621 or 11.5% over the corresponding period in 2002. The increase in
sales was due mainly to the increase in the Rubber and Foam Products
segment. Cost of sales increased $944,104 or 15.0% during the nine months
ended September 30, 2003 compared to the corresponding nine month period
in 2002. The increased cost of sales is due mainly to the increased cost
of raw materials in the Rubber and Foam Products and Bowling Pins segments.
Net sales revenue for the third quarter of 2003 increased $636,785 or 27.8%
and cost of sales increased $590,965 or 27.5% compared to the corresponding
quarter in 2002. These changes are due to increased sales and costs in the
Company's Rubber and Foam Products segment.
General and administrative expenses increased $89,782 or 6.3% in the nine
months ended September 30, 2003, as compared to the corresponding nine month
period in 2002. General and administrative expenses for the third quarter of
2003 increased $90,907 or 19.0% compared to the corresponding quarter in
2002. The increase in general and administrative expenses in the nine months
and three months of 2003 over the corresponding period of 2002 was the result
of recognizing the increased liability for the stock options that were
issued to the President and Chairman of the Board.
Interest expense for the nine months ended September 30, 2003 decreased
$96,170. Interest expense for the three months ended September 30, 2003
decreased $67,937. The decreases are primarily due to decreased interest
rates and the settlement of the EPA liability that resulted in a decrease in
the interest accrued during the year.
Gains on the sale of property, equipment and securities were $849,456 for the
nine months ended September 30, 2003, as compared to $786,402 for the
corresponding period in 2002. Gains in 2003 and 2002 were primarily the
result of the sale of marketable securities and timber.
The Company has a 50% interest in a joint venture, Vulcan Brunswick Bowling
Pin Company (VBBPC) which manufactures bowling pins in Antigo, Wisconsin for
Brunswick and the Company. The Company's investment in VBBPC is included in
other assets at September 30, 2003.
Summarized income statement information for VBBPC consists of the following:
Nine Months Ended Three Months ended
September 30, September 30,
2003 2002 2003 2002
Net sales $4,461,960 4,636,356 1,379,816 1,530,288
Costs and expenses 4,056,327 4,214,866 1,254,378 1,391,168
--------- --------- --------- ---------
Net income $ 405,633 421,490 125,438 139,120
========= ========= ========= =========
Company's 50% equity
in net income $ 202,816 210,745 62,719 69,560
========= ========= ========= =========
-10-
PART I - FINANCIAL INFORMATION
(Continued)
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations. (Continued)
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash requirements during the third quarter of 2003 were funded
in part through earnings, short-term borrowings and noncash charges such as
depreciation and amortization and from the sale of timber, equipment and
marketable securities. The cash from these transactions was primarily used
in operations. The Company expects to continue, when necessary, to use
short-term borrowings to meet cash requirements not fully provided by
earnings, depreciation and amortization. The Company funded the settlement
regarding the Re-Solve, Inc. Superfund Site by accessing its existing line of
credit. There were approximately $26,400 of commitments for capital
expenditures as of September 30, 2003.
During the nine months ended September 30, 2003, 2,000 shares of treasury
stock valued at $68,600 were issued to the President as bonus compensation.
Item 3. Quantitative and Qualitative Disclosures about Market Risks.
MARKETABLE SECURITIES
The fair value of marketable securities has increased $11,967,723 from
December 31, 2002 to October 31, 2003. At October 31, 2003 the fair value
of marketable securities was $69,821,517 as compared to $63,266,641 at
September 30, 2003.
The net unrealized holding gain at October 31, 2003 was approximately
$42,000,000 net of deferred taxes of approximately $21,600,000. The
Company is subject to the risk that fair value securities could decline.
Item 4. Controls and Procedures
a) Disclosure controls and procedures. The Chief Executive Officer and the
Principal Financial Officer have carried out an evaluation of the
effectiveness of the Company's disclosure controls and procedures that are
designed to ensure that information relating to the Company required to be
disclosed by the Company in the reports that it files or submits under the
Securities and Exchange Act of 1934, as amended, is recorded, processed,
summarized and reported within the time periods specified in the Securities
and Exchange Commission's rules and forms. Based upon this evaluation, these
officers have concluded, that as of September 30, 2003, the Company's
disclosure controls and procedures were adequate.
b) Changes in internal control over financial reporting. During the period
covered by this report, there were no changes in the Company's internal
control over financial reporting that have materially affected, or are
reasonably likely to materially affect, the Company's internal control over
financial reporting.
-11-
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
On March 1, 1990 the United States of America filed a Complaint against the
Company and others in the United States District Court for the District
of Massachusetts claiming that the Company was a potentially responsible
party with respect to the Re-Solve, Inc. Superfund Site in North Dartmouth,
Massachusetts seeking to recover response costs incurred and to be incurred
in the future in connection with this Site.
Although the Company had engaged counsel to represent it in that action,
the Company was first informed on March 28, 2001 that the Court had
entered, pursuant to prior rulings, an unopposed "Final Judgment" against
the Company on September 22, 1999. The "Final Judgment" awarded damages
against the Company in favor of the United States in the amount of
$3,465,438, plus interest, for unreimbursed response costs, plus any
additional past unreimbursed response costs, interest and certain future
costs the United States incurs at the site. The United States filed a
notice of lien in certain jurisdictions on real property of the Registrant
and its subsidiary Vulcan Corporation in the dollar amount of the judgment,
plus interest.
On September 2, 2003 the claims of the United States against the Company for
past and future clean-up cost and expenses with respect to the Re-Solve, Inc.
Superfund Site in North Dartmouth, Massachusetts have been resolved by the
docketing of a settlement agreement in the Federal District Court of
Massachusetts approved by Senior Federal Judge Robert Keeton. The settlement
provided that the Company pay to the U.S. Department of Justice the amount of
$3,800,000 plus interest from November 1, 2002. The total settlement of
$3,846,831 was paid on September 2, 2003. The approved settlement agreement
resolves all matters involved in this case.
The Company had accrued an estimated liability of $3,522,000, net of
$1,814,000 tax, for the judgment, accrued interest for the past costs and a
discounted present value for estimated future costs in connection with the
site. The Company recognized income related to the settlement of $955,000,
net of $493,000 tax, for the nine months and three month ended September 30,
2003 as compared to expense of $77,000 and $26,000, after tax for the nine
months and three months ended September 30, 2002, for accrued interest and
amortization of estimated future costs related to this matter.
There may be other potential clean-up liabilities at other sites of which
the Company has no specific knowledge.
The Company has an interest in a partnership, CCBA, that owns certain
real estate. On August 13, 1999 a Complaint for money damages in excess
of $25,000, based upon breach of fiduciary duty was filed by the other
partner in the Court of Common Pleas in Hamilton County, Ohio. The
plaintiff had claimed that it was entitled to 45.24% of $827,000 and
additional damages. On October 24, 2003 the case was dismissed in the
Court of Common Pleas in Hamilton County, Ohio.
CCBA appealed a real estate tax assessment from 1999 that had increased the
annual real estate tax by approximately $96,000. The local school board
has appealed the revision and reduced its initial appraised value of the
property. During 2001, the partnership received a $96,000 refund of the
additional tax paid in 1999. CCBA has recorded a liability of approximately
$123,000 related to this issue based on the revised value asserted by the
local school board. If CCBA is successful, this liability will be
recognized as income.
-12-
PART II - OTHER INFORMATION
(Continued)
Item 1. Legal Proceedings. (Continued)
The Company is involved in other litigation matters and claims which are
normal in the course of operations. Management believes that the resolution
of these matters will not have a material effect on the Company's business or
financial condition.
Item 2. Changes in Securities and Use of Proceeds - Not Applicable
Item 3. Defaults Upon Senior Securities - Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders - Not Applicable
Item 5. Other Information - Stanley I. Rafalo, O.D. passed away July 30,
2003. Mr. Rafalo was a member of the audit and compensation
committee and had been a member of the board of directors for forty
years.
Item 6. Exhibits and Reports on Form 8-K.
a. Exhibits
Exhibit 11 - Statement regarding computation of per share
earnings included in Part 1, Item 1 of this Form 10Q, page 4.
Exhibit 31.1 - Rule 13a-14(a)/15d-14(a) Certification of Benjamin
Gettler.
Exhibit 31.2 - Rule 13a-14(a)/15d-14(a) Certification of Vernon E.
Bachman.
Exhibit 32 - Section 1350 Certifications
b. The Company filed Form 8-K for the quarter
ended September 30, 2003.
Exhibit 99.1 - Settlement of Litigation
Exhibit 99.2 - Appointment to the Board of Directors and
announcement of a regular quarterly dividend
-13-
PART II - OTHER INFORMATION
(Continued)
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.
VULCAN INTERNATIONAL CORPORATION
By: /s/ Benjamin Gettler
----------------------------------
Date November 12, 2003 Benjamin Gettler
Chairman of the Board, President
and Chief Executive Officer
By: /s/ Vernon E. Bachman
-----------------------------------
Date November 12, 2003 Vernon E. Bachman
Vice President, Secretary-Treasurer
and Principal Accounting Officer
-14-
Exhibit 31.1
CERTIFICATIONS
In connection with the Quarterly Report of Vulcan International Corporation
on Form 10-Q for the period ending September 30, 2003, as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), I,
Benjamin Gettler, Chairman of the Board and Chief Executive Officer of
Vulcan International Corporation, certify, that:
(1) I have reviewed this report on Form 10-Q of Vulcan International
Corporation;
(2) Based on my knowledge, this report does not contain any
untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading
with respect to the period covered by this report;
(3) Based on my knowledge, the financial statements, and other
financial information included in this report, fairly present in
all material respects the financial condition, results of
operations, and cash flows of the registrant as of, and for, the
periods presented in this report;
(4) The Registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures, as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e), for the
Registrant and have:
a. Designed such disclosure controls and procedures, or caused
such disclosure controls and procedures to be designed under
our supervision, to ensure that material information relating
to the registrant, including its consolidated subsidiaries, is
made known to us by others within those entities, particularly
during the period in which this report is being prepared;
b. Evaluated the effectiveness of the registrant's disclosure
controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls
and procedures, as of the end of the period covered by this
report based on such evaluation; and
c. Disclosed in this report any change in the registrant's
internal control over financial reporting that occurred during
the registrant's most recent fiscal quarter (the registrant's
fourth fiscal quarter in the case of an annual report) that
has materially affected, or is reasonably likely to materially
affect, the registrant's internal control over financial
reporting.
(5) The Registrant's other certifying officer(s) and I have disclosed,
based on our most recent evaluation of internal control over
financial reporting, to the Registrant's auditors and the audit
committee of the Registrant's board of directors(or persons
performing the equivalent functions):
a. All significant deficiencies and material weaknesses in the
design or operation of internal control over financial
reporting which are 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.
/s/ Benjamin Gettler
-------------------------------------
Benjamin Gettler
Chairman of the Board and
Chief Executive Officer
November 12, 2003
-15-
Exhibit 31.2
CERTIFICATIONS
In connection with the Quarterly Report of Vulcan International Corporation
on Form 10-Q for the period ending September 30, 2003, as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), I,
Vernon E. Bachman, Vice President and Secretary-Treasurer of Vulcan
International Corporation, certify, that:
(1) I have reviewed this report on Form 10-Q of Vulcan International
Corporation;
(2) Based on my knowledge, this report does not contain any
untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading
with respect to the period covered by this report;
(3) Based on my knowledge, the financial statements, and other
financial information included in this report, fairly present in
all material respects the financial condition, results of
operations, and cash flows of the registrant as of, and for, the
periods presented in this report;
(4) The Registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures, as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e), for the
Registrant and have:
a. Designed such disclosure controls and procedures, or caused
such disclosure controls and procedures to be designed under
our supervision, to ensure that material information relating
to the registrant, including its consolidated subsidiaries, is
made known to us by others within those entities, particularly
during the period in which this report is being prepared;
b. Evaluated the effectiveness of the registrant's disclosure
controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls
and procedures, as of the end of the period covered by this
report based on such evaluation; and
c. Disclosed in this report any change in the registrant's
internal control over financial reporting that occurred during
the registrant's most recent fiscal quarter (the registrant's
fourth fiscal quarter in the case of an annual report) that
has materially affected, or is reasonably likely to materially
affect, the registrant's internal control over financial
reporting.
(5) The Registrant's other certifying officer(s) and I have disclosed,
based on our most recent evaluation of internal control over
financial reporting, to the Registrant's auditors and the audit
committee of the Registrant's board of directors(or persons
performing the equivalent functions):
a. All significant deficiencies and material weaknesses in the
design or operation of internal control over financial
reporting which are 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.
/s/ Vernon E. Bachman
-------------------------------------
Vernon E. Bachman
Vice President and
Secretary-Treasurer
November 12, 2003
-16-