-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, qA4BLrpvrCnj7nw6vWptuo3/zGp5MUrDHFaZSuyPiUTc6kC2N+W5EON1s1i6/shw A2ncXra093qxkCA0pY+Cxw== 0000018172-94-000004.txt : 19941205 0000018172-94-000004.hdr.sgml : 19941205 ACCESSION NUMBER: 0000018172-94-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940930 FILED AS OF DATE: 19941109 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CASTLE A M & CO CENTRAL INDEX KEY: 0000018172 STANDARD INDUSTRIAL CLASSIFICATION: 5051 IRS NUMBER: 360879160 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-05415 FILM NUMBER: 94558227 BUSINESS ADDRESS: STREET 1: 3400 N WOLF RD CITY: FRANKLIN PARK STATE: IL ZIP: 60131 BUSINESS PHONE: 7084557111 10-Q 1 Page 1 of 9 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended September 30, 1994 Commission File Number 1-5415 A. M. Castle & Co. (Exact name of registrant as specified in its charter.) Delaware 36-0879160 (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification No.) 3400 North Wolf Road, Franklin Park, Illinois 60131 (Address of Principal Executive Offices) (Zip Code) Registrant's telephone, including area code: 708/455-7111 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 the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practical date: Common Stock No Par Value - 11,072,930 shares as of September 30, 1994. Page 2 of 9 A. M. CASTLE & CO. Part I. FINANCIAL INFORMATION Page Number Part I. Financial Information Item 1. Financial Statements . . . . . . . . . . . . 3 Condensed Balance Sheets . . . . . . . . . . 3 Comparative Statements of Cash Flows . . . . 3 Comparative Statements of Income . . . . . . 4 Notes to Condensed Financial Statements. . . 5 Item 2. Management's Discussion and Analysis of Financial Conditions and Results of Operations . . . . 6 - 7 Part II. Other Information Item 1. Legal Proceedings . . . . . . . . . . . . . . 8 Item 6. Exhibits and Reports on Form 8-K. . . . . . . 8 Page 3 of 9 A. M. CASTLE & CO. CONDENSED BALANCE SHEETS (Dollars in thousands except per share data) (unaudited) Sept 30 Dec. 31 Sept 30 Assets 1994 1993 1993 Cash. . . . . . . . . . . . . . . . .$ 4,485 $ 1,528 $ 722 Accounts receivable, net. . . . . . . 56,168 49,048 52,824 Inventories (principally on last-in, first-out basis. . . . . . . . . . . 97,783 101,572 94,647 Total current assets . . . . . .$158,436 $152,148 $148,193 Prepaid expenses and other assets . . 11,712 11,088 10,901 Fixed assets, net . . . . . . . . . . 42,007 40,974 43,062 Total assets . . . . . . . . . .$212,155 $204,210 $202,156 LIABILITIES AND STOCKHOLDERS' EQUITY Accounts payable. . . . . . . . . . .$ 63,694 $ 49,982 $ 45,423 Accrued liabilities . . . . . . . . . 12,582 9,494 8,199 Income taxes payable. . . . . . . . . 1,170 1,199 1,176 Current portion of long-term debt . . 3,944 5,435 5,509 Total current liabilities. . . . 81,390 66,110 60,307 Long-term debt, less current portion. 41,801 58,024 63,726 Deferred income taxes . . . . . . . . 7,988 8,067 7,700 Post retirement benefit obligations . 2,533 2,466 2,239 Stockholders' equity. . . . . . . . . 78,443 69,543 68,184 Total liabilities and stockholders' equity . . . . . . . . . . . . .$212,155 $204,210 $202,156 SHARES OUTSTANDING* . . . . . . . . . 11,072 10,917 10,915 BOOK VALUE PER SHARE* . . . . . . . .$ 7.08 $ 6.37 $ 6.25 WORKING CAPITAL . . . . . . . . . . .$ 77,046 $ 86,038 $ 87,886 WORKING CAPITAL PER SHARE*. . . . . .$ 6.96 $ 7.88 $ 8.05 *December, 1993 and September, 1993 Restated to Reflect a 50% Stock Dividend CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) (Dollars in thousands) For the Nine Months Ended Sept 30, Cash flows from operating activities: 1994 1993 Net income. . . . . . . . . . . . . . . . $ 10,777 $ 4,803 Depreciation. . . . . . . . . . . . . . . 3,527 3,589 Other . . . . . . . . . . . . . . . . . . 259 (501) Cash provided from operating activities before working capital changes. . . . . . . . . . . . 14,563 7,891 (Increase) decrease in working capital. . 11,607 (12,963) Net cash provided from (used by) operating activities . . . . . . . . . . . . . . . . 26,170 (5,072) Cash flows from investing activities: Capital expenditures, net of sale proceeds. . . . . . . . . . . . . . . . . (3,621) (3,499) Net cash provided from (used by) investing activities. . . . . . . . . . . . . . . . (3,621) (3,499) Page 4 of 9 Cash flows from financing activities: Long-term borrowings, net . . . . . . . . (17,714) 10,649 Dividends paid. . . . . . . . . . . . . . (2,644) (2,183) Other . . . . . . . . . . . . . . . . . . 766 84 Net cash provided from (used by) financing activities. . . . . . . . . . . . . . . . (19,592) 8,550 Net increase (decrease) in cash . . . . . . 2,957 29 Cash - beginning of year. . . . . . . . . 1,528 693 Cash - end of period. . . . . . . . . . . $ 4,485 $ 722 Supplemental disclosure on cash flow information: Cash paid (received) during the period: Interest . . . . . . . . . . . . . . . $ 2,977 $ 3,731 Income taxes . . . . . . . . . . . . . $ 7,057 $ 3,948 A. M. CASTLE & CO. COMPARATIVE STATEMENTS OF INCOME (Dollars in thousands, except tonnage and per share data) For the Three For the Nine Months Ended Months Ended Sept 30, Sept 30, 1994 1993 1994 1993 Net sales . . . . . . . . $132,187 $117,118 $397,856 $358,029 Cost of material sold . . 96,288 86,645 290,712 266,760 Gross profit on sales . 35,899 30,273 107,144 91,269 Operating expenses. . . . 27,662 25,625 83,363 76,769 Depreciation expense. . . 1,152 1,195 3,527 3,589 Interest expense, net . . 804 941 2,528 2,922 Total . . . . . . . . . 29,618 27,761 89,418 83,280 Income before taxes . . . 6,281 2,512 17,726 7,989 Income Taxes: Federal . . . . . . . . 2,021 864 5,618 2,559 State . . . . . . . . . 478 212 1,331 627 2,499 1,076 6,949 3,186 Net income. . . . . . . . 3,782 1,436 10,777 4,803 Net income per share* . . $ .34 $ .13 $ .98 $ .44 Financial Ratios: Return on sales . . . . 2.87% 1.23% 2.71% 1.34% Asset turnover. . . . . 2.49 2.32 2.50 2.36 Return on assets. . . . 7.13% 2.84% 6.78% 3.16% Leverage factor . . . . 3.05 3.09 3.05 3.09 Return on opening stockholders' equity . 21.76% 8.77% 20.67% 9.78% Page 5 of 9 Other Data: Cash dividends paid . . $ 885 $ 728 $ 2,644 $ 2,183 Dividends per share*. . .08 .07 .24 .20 Average number of shares outstanding* . . . . . 11,066 10,915 11,018 10,915 Tons sold . . . . . . . 82,932 75,451 253,880 231,977 Inventory determination under the LIFO method can only be made at the end of each fiscal year based on the inventory levels and costs at that time. Accordingly, interim LIFO determinations, including those at September 30, 1994, and September 30, 1993, must necessarily be based on management's estimates of expected year end inventory levels and costs. Since future estimates of inventory levels and costs are subject to certain forces beyond the control of management, interim financial results are subject to fiscal year end LIFO inventory valuations. Current replacement cost of inventories exceeds book value by $49.9 million, $45.6 million, and $45.4 million at September 30, 1994, December 31, 1993 and September 30, 1993 respectively. Taxes on income would become payable on any realization of this excess from reductions in the level of inventories. Page 6 of 9 A. M. CASTLE & CO. Notes to Condensed Financial Statements 1. Condensed Financial Statements The condensed financial statements included herein are unaudited, except for the balance sheet at December 31, 1993, which is condensed from the audited financial statements at that date. The Company believes that the disclosures are adequate to make the information not misleading; however, certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission. In the opinion of management, the unaudited statements, included herein, contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the financial position, the cash flows, and the results of operations for the periods then ended. It is suggested that these condensed financial statements be read in conjunction with the financial statements and the notes thereto included in the Company's latest annual report on Form 10-K. The 1994 interim results reported herein may not necessarily be indicative of the results of operations for the full year 1994. 2. Common Stock and Per Share Information Net income per share computations are based on the weighted average number of shares of common stock outstanding during the respective periods. On July 28, 1994, the Company declared a 50% stock dividend, which was effected as a 3 for 2 stock split. The additional shares were distributed August 28, 1994 to shareholders of record August 12, 1994. All per share amounts presented have been restated to reflect the effect of the 50% stock dividend. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations _____________________ Operating results for 1994 continue to improve. Third quarter 1994 net income was approximately $3.8 million as compared to $1.4 million for the third quarter of 1993. Year-to-date net income through nine months was approximately $10.8 million as compared to $4.8 million for the first nine months of 1993. The primary contributions to the improved earnings were a stronger economy; an increase in gross margin percentage; aggressive management of all expenses; and an upward trend in price levels. Prices for the third quarter were up an average of 6.4% over the comparable quarter last year. Page 7 of 9 Third quarter sales increased by 12.9% as compared to the third quarter of 1993, while unit volume, expressed in tons sold, increased by 9.9% over the same period. Year-to-date, sales are up 11.1% in dollars, and up 9.4% in tonnage. Gross margin percentage increased to 27.2% from the 25.8% for the third quarter of last year. The Company's focus on margin improvement was primarily responsible for the increased percentage. In total, gross profit increased by approximately $5.6 million over the third quarter of 1993. Of this amount, $3.3 million was due to the higher physical sales volume, and $2.3 million was due to higher pricing. Year-to-date, total gross profit is up by approximately $15.9 million. The gross margin percentage for the first nine months of 1994 is 26.9% as compared with 25.5% for the first three quarters of 1993. Increased physical volume, pricing "gains" generated from our margin improvement program, and cost savings from favorable sourcing arrangements all have contributed significantly to the increase in gross margin dollars. Operating expenses have been aggressively controlled. Third quarter 1994 operating expenses were up by approximately $2.0 million (7.9%) over the comparable period last year. As a percentage of sales, however, third quarter operating expenses decreased to 20.9% from 21.9% in the third quarter of 1993. The higher expenses for the quarter were attributable to increases in volume-driven expense categories such as overtime, truck expenses, commercial freight, sales, discounts taken, and repairs and maintenance. In addition, profit related expense categories, such as incentive and profit sharing expense, showed significant increases due to the higher earnings level. Operating expenses are up by approximately $6.6 million (8.6%) over the first three quarters of 1993. As a percentage of sales, 1994 operating expenses decreased slightly to 21.0% from 21.4% for the first nine months of 1993. As with the third quarter comparison, expense increases occurred in the volume-driven and profit related expense categories due to the increase in physical volume and profitability from last year. Depreciation expense continues to remain relatively constant from last year as capital additions were primarily aimed at improving existing facilities, and maintaining property and equipment in good working order. Third quarter net interest expense decreased by $137,000 (14.6%) as compared to the third quarter of 1993. Lower debt levels were responsible for the decrease in expense over the prior year. Page 8 of 9 Liquidity and Capital Resources _______________________________ The Company has managed to reduce working capital needs despite the upward pressure generated from the increase in business activity. Accounts receivable were up $3.3 million (6.3%) due to the increased sales volume, while inventories were down by approximately $3.1 million (3.3%). Total accounts payable increased by $18.3 million as a result of deferred terms negotiated with several vendors. Total bank and other long term borrowings decreased by $23.5 million as compared to September 30, 1993. The Company has unused committed and uncommitted lines of bank credit of $117.0 million as of September 30, 1994 as compared to $100.0 million at September 30, 1993. Part II. OTHER INFORMATION Item 1. Legal Proceedings There are no material legal proceedings other than ordinary routine litigation incidental to the business of the Registrant. Item 6. Exhibits and Reports of Form 8-K (a) None (b) No reports on Form 8-K have been filed during the quarter for which this report is filed. Page 9 of 9 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. A. M. Castle & Co. (Registrant) Date: May 6, 1994 By: /ss/ J. A. Podojil J. A. Podojil Treasurer/Controller (Mr. Podojil is the Chief Accounting Officer and has been authorized to sign on behalf of the Registrant). -----END PRIVACY-ENHANCED MESSAGE-----