-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, U4NasiHwb7YY9rxzIMQtfHYed1QalJhfHXXqB8XVb0Y5yzoiu0/08sVxbWykax+V feoR0tp6LSEQvOScCYMfWA== 0000018172-96-000001.txt : 19960515 0000018172-96-000001.hdr.sgml : 19960515 ACCESSION NUMBER: 0000018172-96-000001 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960514 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CASTLE A M & CO CENTRAL INDEX KEY: 0000018172 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-METALS SERVICE CENTERS & OFFICES [5051] IRS NUMBER: 360879160 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-05415 FILM NUMBER: 96563409 BUSINESS ADDRESS: STREET 1: 3400 N WOLF RD CITY: FRANKLIN PARK STATE: IL ZIP: 60131 BUSINESS PHONE: 7084557111 10-Q/A 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 March 31, 1996 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: 847/455-7111 None (Former name, former address and former fiscal year, if changed since last year) 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 - 11,189,159 shares as of March 31, 1996. 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 - 6 Item 2. Management's Discussion and Analysis of Financial Conditions and Results of Operations . . . . 7 - 8 Part II. Other Information Item 1. Legal Proceedings . . . . . . . . . . . . . . 9 Item 4. Submission of Matters to a Vote of Security Holders . . . . . . . . . . . . . . . . . . . 9 Item 6. Exhibits and Reports on Form 8-K. . . . . . . 9 Page 3 of 9 A. M. CASTLE & CO. CONDENSED BALANCE SHEETS (Dollars in thousands except per share data) (unaudited) Mar. 31 Dec. 31 Mar. 31 Assets 1996 1995 1995 Cash. . . . . . . . . . . . . . . . .$ 649 $ 667 $ 3,419 Accounts receivable, net. . . . . . . 77,371 63,408 74,282 Inventories (principally on last-in, first-out basis. . . . . . . . . . . 107,736 97,766 96,990 Total current assets . . . . . .$185,756 $161,841 $174,691 Prepaid expenses and other assets . . 23,263 16,245 12,957 Fixed assets, net . . . . . . . . . . 48,947 44,463 42,220 Total assets . . . . . . . . . .$257,966 $222,549 $229,868 LIABILITIES AND STOCKHOLDERS' EQUITY Accounts payable. . . . . . . . . . .$ 72,744 $ 60,969 $ 73,403 Accrued liabilities . . . . . . . . . 11,498 12,776 11,983 Income taxes payable. . . . . . . . . 4,749 958 7,492 Current portion of long-term debt . . 3,174 2,756 3,768 Total current liabilities. . . . 92,165 77,459 96,646 Long-term debt, less current portion. 43,145 28,015 33,837 Deferred income taxes . . . . . . . . 10,190 10,893 7,696 Post retirement benefit obligations . 2,970 2,819 2,558 Stockholders' equity. . . . . . . . . 109,496 103,363 89,131 Total liabilities and stockholders' equity . . . . . . . . . . . . .$257,966 $222,549 $229,868 SHARES OUTSTANDING. . . . . . . . . . 11,189 11,156 11,081 BOOK VALUE PER SHARE. . . . . . . . .$ 9.79 $ 9.27 $ 8.04 WORKING CAPITAL . . . . . . . . . . .$ 93,591 $ 84,382 $ 78,045 WORKING CAPITAL PER SHARE . . . . . .$ 8.36 $ 7.56 $ 7.04 CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) (Dollars in thousands) For the Nine Months Ended March 31, Cash flows from operating activities: 1996 1995 Net income. . . . . . . . . . . . . . . . $ 7,622 $ 8,246 Depreciation. . . . . . . . . . . . . . . 1,235 1,092 Other . . . . . . . . . . . . . . . . . . (669) 1,005 Cash provided from operating activities before working capital changes. . . . . . . . . . . . 8,188 10,343 (Increase) decrease in working capital. . ( 9,796) 256 Net cash provided from (used by) operating activities . . . . . . . . . . . . . . . . ( 1,608) 10,599 Cash flows from investing activities: Investments and acquisitions. . . . . . . ( 8,181) - Capital expenditures, net of sale proceeds. . . . . . . . . . . . . . . . . ( 4,214) (2,122) Net cash provided from (used by) investing activities. . . . . . . . . . . . . . . . (12,395) (2,122) Page 4 of 9 Cash flows from financing activities: Long-term borrowings, net . . . . . . . . 15 474 ( 4,757) Dividends paid. . . . . . . . . . . . . . ( 1,674) ( 1,331) Other . . . . . . . . . . . . . . . . . . 185 54 Net cash provided from (used by) financing activities. . . . . . . . . . . . . . . . 13,985 ( 6,034) Net increase (decrease) in cash . . . . . . (18) 2,443 Cash - beginning of year. . . . . . . . . 667 976 Cash - end of period. . . . . . . . . . . $ 649 $ 3,419 Cash paid (received) during the period: Interest . . . . . . . . . . . . . . . $ 915 $ 1,082 Income taxes . . . . . . . . . . . . . $ 2,056 $ 294 Page 5 of 9 A. M. CASTLE & CO. COMPARATIVE STATEMENTS OF INCOME (Dollars in thousands, except tonnage and per share data) For the Three Months Ended (Unaudited) March 31, 1995 1994 Net sales . . . . . . . . $175,047 $169,056 Cost of material sold . . 126,042 121,757 Gross profit on sales . 49,005 47,299 Operating expenses. . . . 34,231 31,825 Depreciation expense. . . 1,235 1,092 Interest expense, net . . 773 747 Total . . . . . . . . . . 36,239 33,664 Income before taxes . . . 12,766 13,635 Income Taxes: Federal . . . . . . . . 4,104 4,336 State . . . . . . . . . 1,040 1,053 5,144 5,389 Net income. . . . . . . . 7,622 8,246 Net income per share. . . $ 0.68 $ 0.74 Financial Ratios: Return on sales . . . . 4.35% 4.88% Asset turnover. . . . . 2.71 2.94 Return on assets. . . . 11.82% 14.35% Leverage factor . . . . 2.50 2.80 Return on opening stockholders' equity . 29.50% 40.15% Other Data: Cash dividends paid . . $ 1,674 $ 1,331 Dividends per share . . $ 0.15 $ 0.12 Average number of shares outstanding. . . . . . 11,173 11,080 Tons sold . . . . . . . 88,163 94,901 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 March 31, 1996, and March 31, 1995, 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 $64.2 million, $66.3 million, and $58.1 million at March 31, 1996, December 31, 1995 and March 31, 1995 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, 1995, 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 1995 interim results reported herein may not necessarily be indicative of the results of operations for the full year 1995. 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. 3. Acquisitions On January 2, 1996, the Company acquired Total Plastics, Inc., a Michigan based plastics distributor; and on March 11, 1996, Total Plastics, Inc. purchased the net assets of Pontiac Plastics, a Detroit area plastics distributor. Both acquisitions have been accounted for by the purchase method of accounting and accordingly, the purchase price has been allocated to assets acquired and liabilities assumed. The results of operations of Total Plastics, Inc. are included in the Company's financial statements as of the acquisition date. Pro-forma results are not presented as the amounts do not significantly differ from historical results. 4. Subsequent Events - Acquisitions On April 1, 1996, the Company acquired Cutter Precision Metals, Inc., a Washington based metals distributor. The acquisition will be accounted for as a purchase and accordingly, the results of operations will be included in the Company's consolidated financial statements commencing April 1, 1996. Page 7 of 9 On May 1, 1996, this Company along with Duferco Steel, Inc., through their joint venture Depot Metals, L.L.C., purchased a two- thirds interest in Kreher Steel Co., Inc., a Chicago based metals distributor. The Company's interest in the joint venture will be accounted for using the equity method and the Company's share of the operating results of the joint venture will be included in the Company's consolidated financial statements commencing May 1, 1996. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations _____________________ Operating results for the first quarter of 1996 were off 8% from the first quarter of 1995. The $7.6 million earned in the first quarter of 1996 represents the second best three month period in the Company's history. The record $8.2 million ($0.74 per share) earned in the first quarter of 1995 was achieved as a result of a significant upturn in prices and a strong level of sales volume, producing a 128% earnings gain over the previous year's earnings. First quarter sales totaled $175.0 million, a 3.5% increase over the first quarter of 1995's sales of $169.1 million. Sales unit volume, expressed in tons sold, decreased by 7.1% compared to the same period last year. The higher sales dollars were primarily due to two factors; the acquisition of Total Plastics, Inc. and a 4.6% increase in average prices compared to the first quarter last year. These factors helped offset the decrease in tonnage. Gross margin percentage remained very strong at 28.0% for the first quarter of 1996, identical to the margin percentage of 28.0% for the first quarter last year. In terms of dollars, total gross profit increased by $1.7 million over the first quarter of last year. Higher prices and the addition of Total Plastics, Inc. were primarily responsible for the incremental gross profit over last year's first quarter. First quarter operating expenses were up by approximately $2.4 million (7.6%) over the comparable period last year. As a percentage of sales, first quarter 1996 operating expenses increased to 19.6% from 18.8% for the first quarter of 1995. The operating expense increases experienced during the quarter were primarily due to the acquisition of Total Plastics, Inc. and the aggressive expansion of value-added services from a year ago. Excluding Total Plastics, Inc., minor expense increases were seen in payroll, equipment rentals, communications and utilities. Increases in these areas occurred primarily in Company locations with expanded processing operations. The severe winter also had an adverse impact on utilities expense. Page 8 of 9 Depreciation expense increased by $0.14 million (13.2%) primarily as a result of the acquisition of Total Plastics, Inc. and the expansion of processing capabilities at H-A Industries (the Company's value-added bar processing center in Hammond, Indiana). Interest expense was relatively unchanged from the first quarter of 1995. Slightly higher average debt levels were offset by lower average borrowing rates. Liquidity and Capital Resources _______________________________ Accounts receivables increased by $3.1 million and net inventory has increased by $10.7 million as compared to March 31, 1995. The receivable increase is due to the addition of Total Plastics, Inc. The inventory increase is primarily related to the expansion of certain product initiatives which should provide incremental revenues as the year develops. Total bank and long term borrowing as of March 31, 1996 increased by $8.7 million as compared to the balance of March 31, 1995. As a result of the strong earnings performance, net worth has increased by $20.4 million (22.8%) from March 31, 1995. The Company has unused committed and uncommitted lines of bank credit of $145.3 million as of March 31, 1996, as compared to $137.0 million at March 31, 1995. 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 4. Submission of Matters to a Vote of Security Holders (a) None 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 10, 1996 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). EX-27 2 WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
5 QTR-1 YEAR DEC-31-1996 DEC-31-1996 MAR-31-1996 MAR-31-1996 614 0 35 0 78,120 0 (749) 0 107,736 0 185,756 0 111,641 0 (62,694) 0 257,966 0 92,165 0 43,146 0 26,160 0 0 0 0 0 83,336 0 257,966 0 175,047 175,047 175,047 175,047 (126,042) (126,042) (35,358) (35,358) 0 0 (108) (108) (773) (773) 12,766 12,766 (5,144) (5,144) 7,622 7,622 0 0 0 0 0 0 7,622 7,622 0.68 0.68 0.68 0.68
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