Document mpL06br5ZL6qvkq5xMdRzJrKb

48 Financial Statements Notes to Financial Statements Oecember 31. 1978 and 1977 Koppers Company. Inc. and Subsidiaries 1. Accounts Receivable Receivables include the following amounts applicable to long-term construction contracts: Biiiec or biiiaoie 1978 1977 S66.045.000 $78,834 000 Retamage: Due after one year S 4.507.000 Due within one year 17.407.000 S 5.520.000 7.305.000 Total S2I.914.000 S-.2.825.000 2. Inventories Product inventories, including work in proc ess. used in the calculation of cost of sales before deducting progress billings amounted to S 122.797.000. S134.180.000 and 5129.643.000 at December 31. 1978. 1977 and 1976. respectively. 3. Investment In Cutler-Hammer, Inc. During 1978, the Company acquired ap proximately 21 % of the stock of CutlerHammer. Inc. On December 14, 1978. the stockholders of Cutler-Hammer. Inc. ap proved an agreement of merger with another company under which Koppers received 580.765.000 (S58 per snare) on January 4, 1979. , The Company has recognized pretax profit of Si5.118.000 on the investment, as follows: During 1977. the Company established an Employee Stock Ownership Plan (ESOP) retroactive to January 1. 1976 for the benefit of employees upon retirement. Contributions to the ESOP are offset by additional invest ment tax credit. 5. Leases ' The Company has entered into various lease arrangements covering land, buildings, ma chinery and equipment. In compliance with Statement of Financial Accounting Standards No. 13. Accounting for Leases, the financial statements have been restated as of January 1, 1976 to reflect as capital leases certain leases previously classified as operating leases, it was not practicable to restate periods prior to 1976. The effect of this change increased retained earnings at Jan uary 1. 1977 by 5741,000 and increased net income by S211.000 in 1977 and SI82.000 in 1978. The following is an analysis of the lease property under capital leases: 1978 1977 Land ana buildings S 15.056.000 $15,056,000 Machinery and equip- meni 14.441.000 14.441.000 Less: Accumulated amortization 29.497.000 29.497.000 12.852.000 11.121.000 SI 6.645.000 $18,376,000 Proceeds from sale Cost of stock purcnaseo Expenses associated with investment Interest Legal ana otner 3.992.000 528.000 Dividends received during 1978 S30.765.000 62.102.000 18.663.000 4.520.000 14.143.000 975.000 S1S.118.000 4. Retirement Plans Total pension expense in 1978 was 524,556,000. as compared with S20,325.000 in 1977. Pension expense in creased as a result of benefit improvements, additional participants and differences be tween actuarial assumptions and actual experience. The unfunded prior service costs under all plans at December 3.1. 1978 amounted to $47,432,000. The actuarialiy computed value of vested benefits for all plans exceeded pen sion fund assets as cf the latest valuation date by approximately S23.960.000. The amortization of leased property for 1978 and 1977 has been included in depre ciation. depletion and amortization. The following is a schedule by years of future minimum lease payments under capi tal leases together with the present value of the net minimum lease payments as of December 31. 1978: 1979 1980 1981 1982 1983 1984 and later Total minimum lease payments Less: Amount representing execu- lory costs Net minimum lease payments Less: Amount representing interest Present value of net minimum lease payments (including $2,081,000 classified as current obligations under caoitai leases) S 3.143.000 2.926.CC0 1.486.000 1.256.000 952.000 15.864 000 25,627.000 97,000 25.530.000 11.083.000 S 14 44? 000