ITEM 1. BUSINESS.
We believe we are the largest North American manufacturer and
distributor of metal accessories and forms used in concrete construction and of
metal accessories used in masonry construction. In many of our product lines, we
believe we are the market leader and lowest cost manufacturer competing
primarily in two segments of the construction industry: infrastructure
construction, such as highways, bridges, utilities, water and waste treatment
facilities and airport runways, and non-residential building, such as schools,
stadiums, prisons, retail sites, commercial offices and manufacturing
facilities. For the year ended December 31, 2001, our net sales were $393.7
We derive our revenue from a mix of sales of consumable products and the
sale and rental of engineered equipment. We believe that the breadth of our
product offerings and national distribution network allow us to maintain a large
customer base that prefers a "one-stop" supplier. We manufacture the substantial
majority of our 20,000 products, which we sell under a number of
well-established brand names. Our national distribution system, which we believe
is the largest in our industry, allows us to efficiently cross-sell and
distribute newly developed and acquired product lines on a nationwide basis.
Through our network of 60 service/distribution centers, we serve over 8,000
customers, comprised of independent distributors and a broad array of precast
concrete manufacturers, general contractors, subcontractors and metal
fabricators. This nationwide customer base provides us with a geographically
We currently have three principal business units, which are organized
around the following product lines:
Concrete Accessories (Dayton/Richmond(R)). We believe we are the leading
North American manufacturer of concrete accessories, which are used in
connecting forms for poured-in-place concrete walls, anchoring or bracing for
walls and floors, supporting bridge framework and positioning steel reinforcing
bars, as well as masonry products, which are placed between layers of brick and
concrete blocks and covered with mortar to provide additional strength to walls.
Masonry products also include engineered products used to repair or restore
brick and stone buildings. For the year ended December 31, 2001, our concrete
accessories business unit had net sales to external customers of $218.4 million,
or 56% of our total net sales.
Concrete Forming Systems (Symons(R)). We believe we are the leading
North American manufacturer of concrete forming systems, which are reusable,
engineered forms and related accessories used in the construction of concrete
walls, columns and bridge supports to hold concrete in place while it hardens.
Sales from concrete forming systems and related accessories represented
approximately 65% and rental revenue represented approximately 35% of Symons'
total sales in 2001. For the year ended December 31, 2001, our concrete forming
systems business unit had net revenues to external customers of $126.5 million,
or 32% of our total net sales.
Paving Products (American Highway Technology(R)). We believe we are the
leading North American manufacturer of welded dowel assemblies and dowel
baskets, which are paving products used in the construction and rehabilitation
of concrete roads, highways and airport runways to extend the life of the
pavement. These consumable products are used to transfer dynamic loads between
adjacent slabs of concrete roadway. For the year ended December 31, 2001, our
paving products business unit had net sales to external customers of $48.8
million, or 12% of our total net sales.
Each of our three principal business units also sells specialty
construction chemicals that are used in conjunction with its other products.
Although almost all of our products are used in concrete or masonry
construction, the function and nature of the products differ widely. Most of our
products are consumable, providing us with a source of recurring revenue. In
addition, while our products represent a relatively small portion of a
construction project's total cost, our products assist in ensuring the on-time,
quality completion of those projects. We continually attempt to increase the
number of products we offer by using engineers and product development teams to
introduce new products and refine existing products.
CONCRETE ACCESSORIES. Our concrete accessories business unit
manufactures and sells concrete accessories primarily under the
Dayton/Richmond(R) brand name and masonry products under the Dur-O-Wal(R) brand
name. For the year ended December 31, 2001, net sales of our concrete
accessories business unit to external customers accounted for $218.4 million, or
56% of our total net sales.
Concrete accessories include:
- WALL-FORMING PRODUCTS. Wall-forming products include shaped
metal ties and accessories that are used with modular forms to
hold concrete in place when walls are poured at a construction
site or are prefabricated off site. These products, which
generally are not reusable, are made of wire or plastic or a
combination of both materials. We generally manufacture these
products on customized high-speed automatic equipment.
- BRIDGE DECK PRODUCTS. Bridge deck products are metal assemblies
of varying designs used to support the formwork used by
contractors in the construction and rehabilitation of bridges.
- BAR SUPPORTS. Bar supports are non-structural metal, plastic, or
cementious supports used to position rebar within a horizontal
slab or form to be filled with concrete. Metal bar supports are
often plastic or epoxy coated, galvanized or equipped with
plastic tips to prevent creating a conduit for corrosion of the
- SPLICING PRODUCTS. Splicing products are used to join two pieces
of rebar together while at a construction site without the need
for extensive preparation of the rebar ends.
- PRECAST AND PRESTRESSED CONCRETE CONSTRUCTION PRODUCTS. Precast
and prestressed concrete construction products are metal
assemblies of varying designs used in the manufacture of precast
concrete panels and prestressed concrete beams and structural
members. Precast concrete panels and prestressed concrete beams
are fabricated away from the construction site and transported
to the site. Precast concrete panels are used in the
construction of prisons, freeway sound barrier walls, external
building facades and other similar applications. Prestressed
concrete beams use multiple strands of steel cable under tension
embedded in concrete beams to provide rigidity and bearing
strength, and often are used in the construction of bridges,
parking garages and other applications where long, unsupported
spans are required.
- TILT-UP CONSTRUCTION PRODUCTS. Tilt-up construction products
include a complete line of inserts, lifting hardware and
adjustable beams used in the tilt-up method of construction, in
which the concrete floor slab is used as part of a form for
casting the walls of a building. After the cast walls have
hardened on the floor slab, a crane is used to "tilt-up" the
walls, which then are braced in place until they are secured to
the rest of the structure. Tilt-up construction generally is
considered to be a faster method of constructing low-rise
buildings than conventional poured-in-place concrete
construction. Some of our tilt-up construction products can be
rented as well as sold.
- FORMLINER PRODUCTS. Formliner products include plastic and
elastomeric products that adhere to the inside face of forms to
provide shape to the surface of the concrete.
- CHEMICAL PRODUCTS. Chemical products sold by our concrete
accessories business unit include a broad spectrum of chemicals
for use in concrete construction, including form release agents,
bond breakers, curing compounds, liquid hardeners, sealers,
water repellents, bonding agents, grouts and epoxies, and other
chemicals used in the pouring and placement of concrete.
- MASONRY PRODUCTS. Masonry products are wire products sold under
the Dur-O-Wal(R) name that improve the performance and longevity
of masonry walls by providing crack control, greater elasticity
and higher strength to withstand seismic shocks and better
resistance to rain penetration. Our masonry product line
consists primarily of masonry wall reinforcement products,
masonry anchors, engineered products and other accessories used
in masonry construction and restoration to reinforce brick and
concrete walls, anchor inner to outer walls and provide avenues
for water to escape. We also sell other masonry products which
connect one form of masonry to another or masonry to a building
We have the in-house ability to produce hot-dipped zinc
galvanized finishes on masonry wall reinforcement products.
Hot-dipped galvanized finishes are considered to provide
superior protection against corrosion compared to alternative
finishes. In recent years, model building codes in a number of
regions of the country in which masonry construction is used
have been amended to require use of hot-dipped galvanized
masonry wall reinforcement products.
CONCRETE FORMING SYSTEMS. Our concrete forming systems business unit
manufactures, sells and rents reusable modular concrete forming systems
primarily under the Symons(R) name. These products include standard and
specialty concrete forming systems, shoring systems and accessory products. To
capitalize on the durability and relatively high unit cost of prefabricated
forming equipment, we also rent forming products. For the year ended December
31, 2001, net sales of our concrete forming systems business unit to external
customers accounted for $126.5 million, or 32% of our total net sales.
Our concrete forming system products include:
- CONCRETE FORMING SYSTEMS. Concrete forming systems are reusable,
engineered modular forms which hold liquid concrete in place on
concrete construction jobs while it hardens. Standard forming
systems are made of steel and plywood and are used in the
creation of concrete walls and columns. Specialty forming
systems consist primarily of steel forms that are designed to
meet architects' specific needs for concrete placements. Both
standard and specialty forming systems and related accessories
are sold and rented for use.
- SHORING SYSTEMS. Shoring systems, including aluminum beams and
joists, post shores and shoring frames are used to support deck
and other raised forms while concrete is being poured.
- ARCHITECTURAL PAVING PRODUCTS. Architectural Paving Products are
used to apply decorative texture and coloration to concrete
surfaces while concrete is being poured.
- CONSTRUCTION CHEMICALS. Construction chemicals sold by the
concrete forming systems business unit include form release
agents, sealers, water repellents, grouts and epoxies and other
chemicals used in the pouring, stamping and placement of
PAVING PRODUCTS. Our paving products business unit sells products,
primarily consisting of welded dowel assemblies and dowel baskets, used in the
construction and rehabilitation of roads, highways and airport runways to extend
the life of the pavement. This business unit sells paving products primarily
under the American Highway Technology(R) name, but we also offer some paving
products under the Dayton/Richmond(R) name. We manufacture welded dowel
assemblies primarily using automated and semi-automated equipment. For the year
ended December 31, 2001, net sales of paving products accounted for $48.8
million, or 12% of our total net sales.
Paving products include:
- WELDED DOWEL ASSEMBLIES AND DOWEL BASKETS. Welded dowel
assemblies and dowel baskets are used to transfer dynamic loads
between two adjacent slabs of concrete roadway. Metal dowels are
part of a dowel basket design that is imbedded in two adjacent
slabs to transfer the weight of vehicles as they move over a
- CORROSIVE-PREVENTING EPOXY COATINGS. Corrosive-preventing epoxy
coatings are used for infrastructure construction products and a
wide range of industrial and construction uses.
- CONSTRUCTION CHEMICALS. Construction chemicals sold by our
paving products business unit include curing compounds used in
concrete road construction.
We manufacture the substantial majority of the products we sell. Most
of our concrete accessories and paving products are manufactured in 18
facilities throughout the United States, although a majority of our
service/distribution facilities also can produce smaller lots of some products.
Our production volumes enable us to design and build or custom modify much of
the equipment we use to manufacture these products, using a team of experienced
manufacturing engineers and tool and die makers.
By developing our own automatic high-speed manufacturing equipment, we
believe we generally have achieved significantly greater productivity, lower
capital equipment costs, lower scrap rates, higher product quality, faster
changeover times, and lower inventory levels than most of our competitors. In
addition, our concrete accessories business unit's ability to "hot-dip"
galvanize masonry products provides it with an advantage over many competitors'
manufacturing masonry wall reinforcement products, which lack this internal
capability. We also have a flexible manufacturing setup and can make the same
products at several locations using short and discrete manufacturing lines.
We manufacture our concrete forming systems at two facilities in the
United States. These facilities incorporate semi-automated and automated
production lines, heavy metal presses, forging equipment, stamping equipment,
robotic welding machines, drills, punches, and other heavy machinery typical for
this type of manufacturing operation.
We generally operate our manufacturing facilities on two shifts per
day, five days per week (six days per week during peak months and, in some
instances, three shifts), with the number of employees increasing or decreasing
as necessary to satisfy demand on a seasonal basis.
We distribute our products through over 3,000 independent distributors,
and our own network of 60 service/distribution centers located in the United
States and Canada. Twenty-eight of the service/distribution centers are
associated with our manufacturing plants.
Distribution centers by segment are as follows:
Concrete Accessories 29
Concrete Forming Systems 26
Paving Products 5
Some locations carry more than one of our product lines. We ship most of our
products to our service/distribution centers from our manufacturing plants;
however, a majority of our centers also are able to produce smaller batches of
some products on an as-needed basis to fill rush orders.
We have an on-line inventory tracking system for the concrete
accessories and paving products businesses, which enables our customer service
representatives to identify, reserve and ship inventory quickly from any of our
locations in response to telephone orders.
Our system provides us with a competitive advantage since our service
representatives are able to answer customer questions about availability and
shipping dates while still on the telephone. We primarily use third-party common
carriers to ship our products.
We also use our distribution system to sell products which are
manufactured by others. These products usually are sold under our brand names
and often are produced for us on an exclusive basis. Sales of these products
allow us to utilize our distribution network to increase sales without making
significant capital investments. We believe there is an increasing trend among
our distributors to consolidate into larger entities, which could result in
increased price competition.
SALES AND MARKETING
We employ approximately 300 sales and marketing personnel, of whom
approximately 60% are field sales people and 40% are customer service
representatives. Sales and marketing personnel are located in all of our
locations. We produce product catalogs and promotional materials that illustrate
certain construction techniques in which our products can be used to solve
typical construction problems. We promote our products through seminars and
other customer education efforts and work directly with architects and engineers
to secure the use of our products whenever possible.
We consider our engineers to be an integral part of the sales and
marketing effort. Our engineers have developed proprietary software applications
to conduct extensive pre-testing on both new products and construction projects.
We have over 8,000 customers, over 50% of which purchase our products
for resale. Our customer base is geographically diverse, with no customer
accounting for more than 5% of net sales in 2001. Our ten largest customers
accounted for less than 15% of our net sales in 2001. Customers who purchase our
products for resale generally do not sell our products exclusively.
CONCRETE ACCESSORIES. Our concrete accessories business unit has
approximately 5,700 customers, consisting of distributors, rebar fabricators,
precast and prestressed concrete manufacturers, brick and concrete block
manufacturers, general contractors and sub-contractors. We estimate that
approximately 70% of the customers of this business unit purchase our products
for resale. The largest customer of the business unit accounted for 7% of the
business unit's 2001 net sales. The business unit's top ten customers accounted
for 30% of its 2001 net sales.
Our concrete accessories business unit has instituted a certified
dealer program for those dealers who handle our tilt-up construction products.
This program was established to educate dealers in the proper use of our tilt-up
products and to assist them in providing engineering assistance to their
customers. Certified dealers are not permitted to carry other manufacturers'
tilt-up products, which we believe are incompatible with ours and, for that
reason, could be unsafe if used with our products. The business unit currently
has 100 certified tilt-up construction product dealers.
CONCRETE FORMING SYSTEMS. Our concrete forming systems business unit
has approximately 2,700 customers, consisting of distributors, precast and
prestressed concrete manufacturers, general contractors and subcontractors. We
estimate that approximately 89% of the customers of this business unit are the
end-users of its products, while approximately 11% of those customers purchase
its products for resale or re-rent. This business unit's largest customer
accounted for 8% of the business unit's 2001 net sales and its ten largest
customers accounted for 26% of its 2001 net sales.
PAVING PRODUCTS. Our paving products business unit has approximately
200 customers, consisting primarily of distributors of construction supplies
and, to a lesser extent, general contractors and subcontractors. This business
unit's largest customer accounted for 18% of the business unit's 2001 net sales
and its ten largest customers accounted for 65% of its 2001 net sales.
Our principal raw materials are steel wire rod, steel hot rolled bar,
metal stampings and flat steel, aluminum sheets and extrusions, plywood, cement
and cementitious ingredients, liquid chemicals, zinc, plastic resins and
injection-molded plastic parts. Steel, in its various forms, constitutes
approximately 35% of our cost of sales. We currently purchase materials from
over 2000 vendors and are not dependent on any single vendor or small group of
vendors for any significant portion of our raw material purchases. The U.S.
Government has recently imposed tariffs on certain imported steel. At this
point, we are unable to determine the impact that these tariffs will have on our
results of operations.
Our industry is highly competitive in most product categories and
geographic regions. We compete with a limited number of full-line national
manufacturers of concrete accessories, concrete forming systems and paving
products, and a much larger number of regional manufacturers and manufacturers
with limited product lines. We believe competition in our industry is largely
based on, among other things, price, quality, breadth of product lines,
distribution capabilities (including quick delivery times) and customer service.
Due primarily to factors such as freight rates, quick delivery times and
customer preference for local suppliers, some local or regional manufacturers
and suppliers may have a competitive advantage over us in a given region. We
believe the size, breadth and quality of our product lines provide us with
advantages of scale in both distribution and production relative to our
TRADEMARKS AND PATENTS
We sell most products under the registered trade names Dayton
Superior(R), Dayton/Richmond(R), Symons(R), Dur-O-Wal(R) and American Highway
Technology(R), which we believe are widely recognized in the construction
industry and, therefore, are important to our business. Although some of our
products (and components of some products) are protected by patents, we do not
believe these patents are material to our business. We have approximately 126
trademarks and 139 patents.
As of December 31, 2001, we employed approximately 800 salaried and
1,400 hourly personnel, of whom approximately 700 of the hourly personnel and
five of the salaried personnel are represented by labor unions. Employees at our
Miamisburg, Ohio; Parsons, Kansas; Des Plaines, Illinois; New Braunfels, Texas;
Tremont, Pennsylvania; Long Beach, California; and Aurora, Illinois
manufacturing/distribution plants and our service/distribution centers in
Atlanta, Georgia and Santa Fe Springs, California are covered by collective
bargaining agreements. We believe we have good employee and labor relations.
Our operations are seasonal in nature, with approximately 56% of our
sales historically occurring in the second and third quarters. Working capital
and borrowings fluctuate with sales volume.
We typically ship most of our products, other than paving products and
most specialty forming systems, within one week and often within 24 hours after
we receive the order. Other product lines, including paving products and
specialty forming systems, may be shipped up to six months after we receive the
order, depending on our customer's needs. Accordingly, we do not maintain
significant backlog, and backlog as of any particular date is not representative
of our actual sales for any succeeding period.
Refer to Management's Discussion and Analysis of Financial Condition and Results
of Operations, Comparison of Years Ended December 31, 2001 and 2000, Operating
Expenses for discussions regarding recent developments.