-----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, gfeFfg69RsKOFR7YUiq1G6pM7LIOefM3AvUrBUi2OQDQ/1aqaRKb2f4KlIRBXpvn VQqlt58YDZHPiW9WeI2/uQ== 0000018172-94-000002.txt : 19940519 0000018172-94-000002.hdr.sgml : 19940519 ACCESSION NUMBER: 0000018172-94-000002 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940331 FILED AS OF DATE: 19940511 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: 94527173 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 March 31, 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 - 7,340,214 shares as of April 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 4. Submission of Matters to a Vote of Security Holders . . . . . . . . . . . . . . . . . . . 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) Mar. 31 Dec. 31 Mar. 31 Assets 1994 1994 1994 Cash. . . . . . . . . . . . . . . . .$ 2,770 $ 1,528 $ 773 Accounts receivable, net. . . . . . . 55,510 49,048 54,335 Inventories (principally on last-in, first-out basis. . . . . . . . . . . 94,068 101,572 92,488 Total current assets . . . . . .$152,348 $152,148 $147,596 Prepaid expenses and other assets . . 10,919 11,088 10,077 Fixed assets, net . . . . . . . . . . 40,570 40,974 43,132 Total assets . . . . . . . . . .$203,837 $204,210 $200,805 LIABILITIES AND STOCKHOLDERS' EQUITY Accounts payable. . . . . . . . . . .$ 48,054 $ 49,982 $46,765 Accrued liabilities . . . . . . . . . 9,598 9,494 7,310 Income taxes payable. . . . . . . . . 2,946 1,199 2,357 Short-term debt . . . . . . . . . . . - - - Current portion of long-term debt . . 5,010 5,435 5,532 Total current liabilities. . . . 65,608 66,110 61,964 Long-term debt, less current portion. 54,903 58,024 62,285 Deferred income taxes . . . . . . . . 8,034 8,067 7,870 Post retirement benefit obligations . 2,528 2,466 2,197 Stockholders' equity. . . . . . . . . 72,764 69,543 66,489 Total liabilities and stockholders' equity . . . . . . . . . . . . .$203,837 $204,210 $200,805 SHARES OUTSTANDING. . . . . . . . . . 7,323 7,278 7,276 BOOK VALUE PER SHARE. . . . . . . . .$ 9.94 $ 9.56 $ 9.14 WORKING CAPITAL . . . . . . . . . . .$ 86,740 $ 86,038 $ 85,632 WORKING CAPITAL PER SHARE . . . . . .$ 11.84 $ 11.82 $ 11.77 CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) (Dollars in thousands) For the Three Months Ended March 31, Cash flows from operating activities: 1994 1993 Net income. . . . . . . . . . . . . . . . $ 3,642 $ 1,754 Depreciation. . . . . . . . . . . . . . . 1,186 1,188 Other . . . . . . . . . . . . . . . . . . 556 79 Cash provided from operating activities before working capital changes. . . . . . . . . . . . 5,384 3,021 (Increase) decrease in working capital. . (331) (10,309) Net cash provided from (used by) operating activities . . . . . . . . . . . . . . . . 5,053 (7,288) Cash flows from investing activities: Capital expenditures, net of sale proceeds. . . . . . . . . . . . . . . . . 156 (1,118) Net cash provided from (used by) investing activities. . . . . . . . . . . . . . . . 156 (1,118) Page 4 of 9 Cash flows from financing activities: Long-term borrowings, net . . . . . . . . (3,546) 9,231 Dividends paid. . . . . . . . . . . . . . (876) (728) Other . . . . . . . . . . . . . . . . . . 455 (17) Net cash provided from (used by) financing activities. . . . . . . . . . . . . . . . (3,967) 8,486 Net increase (decrease) in cash . . . . . . 1,242 80 Cash - beginning of year. . . . . . . . . 1,528 693 Cash - end of period. . . . . . . . . . . $ 2,770 $ 773 Supplemental disclosure on cash flow information: Cash paid (received) during the period: Interest . . . . . . . . . . . . . . . $ 1,372 $ 1,464 Income taxes . . . . . . . . . . . . . $ 560 $ 505 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, 1993 1992 Net sales . . . . . . . . $133,848 $119,869 Cost of material sold . . 97,501 89,816 Gross profit on sales . 36,347 30,053 Operating expenses. . . . 28,371 25,022 Depreciation expense. . . 1,186 1,188 Interest expense, net . . 874 989 Total . . . . . . . . . . 30,431 27,199 Income before taxes . . . 5,916 2,854 Income Taxes: Federal . . . . . . . . 1,836 885 State . . . . . . . . . 438 215 2,274 1,100 Net income. . . . . . . . 3,642 1,754 Net income per share. . . $ .50 $ .24 Financial Ratios: Return on sales . . . . 2.72% 1.46% Asset turnover. . . . . 2.63 2.39 Return on assets. . . . 7.15% 3.49% Leverage factor . . . . 2.93 3.07 Return on opening stockholders' equity . 20.95% 10.71% Other Data: Cash dividends paid . . $ 876 $ 728 Dividends per share . . .12 .10 Page 5 of 9 Average number of shares outstanding. . . . . . 7,300 7,276 Tons sold . . . . . . . 86,734 77,117 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, 1994, and March 31, 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 $46.0 million, $45.6 million, and $44.7 million at March 31, 1994, December 31, 1993 and March 31, 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. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations _____________________ Operating results for the first quarter of 1994 were significantly improved as compared to the first quarter of 1993. First quarter 1994 net income was approximately $3.6 million as compared to $1.8 million for the first quarter of 1993. The primary reasons for the better performance were achievement of a double digit gain in sales volume; an increase in gross profit percent; and continued aggressive management of expenses. First quarter sales increased by 11.7% as compared to the first quarter of 1993, while unit volume, expressed in tons sold, increased by 12.5% over the same period. As a point of comparison, service center industry shipments for the first three months of 1994 were 8.9% ahead of the comparable period last year. This indicates that the Company's sales gains are the result of increased market share as well as the product of a stronger economy. Page 7 of 9 Gross margin percentage increased to 27.2% from 25.1% for the first quarter of last year. The major factors contributing to the 2.1% increase in the margin percent over the first quarter of last year were pricing "gains" generated from our margin improvement program, and cost savings as a result of favorable sourcing arrangements. In terms of dollars, total gross profit increased by approximately $6.3 million over the first quarter of last year. Of this amount, approximately $4.2 million was due to the higher sales volume and the balance was due to pricing and cost savings. Operating expenses were up by $3.3 million (13.2%) over the comparable period last year. As a percentage of sales, operating expenses increased slightly to 21.2% as compared to 20.9% during the first quarter of 1993. The expense increase was due to increases in volume driven and profit related expense categories. As discussed above, unit sales volume increased by 12.5%. This increase led to increases in expense categories such as warehouse wages, trucking expenses, repairs and maintenance, and communications. The severe winter and the start up operation at H-A Industries resulted in higher utilities expense; and the 107% increase in income before taxes resulted in significantly higher provisions for incentive and profit sharing expense. 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. First quarter net interest expense decreased by $115,000 (11.6%) as compared to the first quarter of 1993. Lower interest rates and lower debt levels were responsible for the decrease in expense over the prior year. Liquidity and Capital Resources _______________________________ Current assets rose by $4.7 million in support of the higher sales volume. Accounts receivable were up $1.2 million (2.2%) and inventories were up $1.6 million (1.7%). The percentage increase in these accounts was favorable when compared to the 11.7% increase in sales volume. Total bank and long term borrowing decreased by $7.9 million as compared to the prior year quarter. The Company has unused committed and uncommitted lines of bank credit of $104.2 million as of March 31, 1994 as compared to $106.9 million as March 31, 1993. Page 8 of 9 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 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-----