-----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, HQDbG2UZ2p7vhtZmJdC9ZM268KJVi2PP954hbqP26MvwLtFXV9KHaJYOi4IcnuH7 F1k3UieCCudne4JZDh+LTQ== 0000018172-94-000003.txt : 19940822 0000018172-94-000003.hdr.sgml : 19940822 ACCESSION NUMBER: 0000018172-94-000003 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940630 FILED AS OF DATE: 19940812 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: 94543335 BUSINESS ADDRESS: STREET 1: 3400 N WOLF RD CITY: FRANKLIN PARK STATE: IL ZIP: 60131 BUSINESS PHONE: 7084557111 10-Q 1 age 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 June 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 - 7,367,735 shares as of June 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) June 30 Dec. 31 June 30 Assets 1994 1993 1993 Cash. . . . . . . . . . . . . . . . .$ 1,062 $ 1,528 $ 778 Accounts receivable, net. . . . . . . 57,459 49,048 54,053 Inventories (principally on last-in, first-out basis. . . . . . . . . . . 87,336 101,572 91,270 Total current assets . . . . . .$145,857 $152,148 $146,101 Prepaid expenses and other assets . . 10,987 11,088 10,693 Fixed assets, net . . . . . . . . . . 41,191 40,974 42,997 Total assets . . . . . . . . . .$198,035 $204,210 $199,791 LIABILITIES AND STOCKHOLDERS' EQUITY Accounts payable. . . . . . . . . . .$ 48,915 $ 49,982 $43,616 Accrued liabilities . . . . . . . . . 12,332 9,494 8,701 Income taxes payable. . . . . . . . . 1,101 1,199 911 Current portion of long-term debt . . 4,835 5,435 5,484 Total current liabilities. . . . 67,183 66,110 58,712 Long-term debt, less current portion. 44,858 58,024 63,849 Deferred income taxes . . . . . . . . 7,971 8,067 7,717 Post retirement benefit obligations . 2,500 2,466 2,099 Stockholders' equity. . . . . . . . . 75,523 69,543 67,414 Total liabilities and stockholders' equity . . . . . . . . . . . . .$198,035 $204,210 $199,791 SHARES OUTSTANDING. . . . . . . . . . 7,368 7,278 7,277 BOOK VALUE PER SHARE. . . . . . . . .$ 10.25 $ 9.56 $ 9.26 WORKING CAPITAL . . . . . . . . . . .$ 78,674 $ 86,038 $ 87,389 WORKING CAPITAL PER SHARE . . . . . .$ 10.68 $ 11.82 $ 12.01 CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) (Dollars in thousands) For the Six Months Ended June 30, Cash flows from operating activities: 1994 1993 Net income. . . . . . . . . . . . . . . . $ 6,995 $ 3,367 Depreciation. . . . . . . . . . . . . . . 2,375 2,394 Other . . . . . . . . . . . . . . . . . . 622 (563) Cash provided from operating activities before working capital changes. . . . . . . . . . . . 9,992 5,198 (Increase) decrease in working capital. . 5,977 (12,238) Net cash provided from (used by) operating activities . . . . . . . . . . . . . . . . 15,969 (7,040) Cash flows from investing activities: Capital expenditures, net of sale proceeds. . . . . . . . . . . . . . . . . (1,654) (2,189) Net cash provided from (used by) investing activities. . . . . . . . . . . . . . . . (1,654) (2,189) Page 4 of 9 Cash flows from financing activities: Long-term borrowings, net . . . . . . . . (13,766) 10,747 Dividends paid. . . . . . . . . . . . . . (1,759) (1,455) Other . . . . . . . . . . . . . . . . . . 744 22 Net cash provided from (used by) financing activities. . . . . . . . . . . . . . . . (14,781) 9,314 Net increase (decrease) in cash . . . . . . (466) 85 Cash - beginning of year. . . . . . . . . 1,528 693 Cash - end of period. . . . . . . . . . . $ 1,062 $ 778 Supplemental disclosure on cash flow information: Cash paid (received) during the period: Interest . . . . . . . . . . . . . . . $ 1,002 $ 2,273 Income taxes . . . . . . . . . . . . . $ 4,644 $ 3,120 A. M. CASTLE & CO. COMPARATIVE STATEMENTS OF INCOME (Dollars in thousands, except tonnage and per share data) For the Three For the Six Months Ended Months Ended June 30, June 30, 1994 1993 1994 1993 Net sales . . . . . . . . $131,821 $121,042 $265,669 $240,911 Cost of material sold . . 96,923 90,099 194,424 179,915 Gross profit on sales . 34,898 30,943 71,245 60,996 Operating expenses. . . . 27,330 26,122 55,701 51,144 Depreciation expense. . . 1,189 1,206 2,375 2,394 Interest expense, net . . 850 992 1,724 1,981 Total . . . . . . . . . 29,369 28,320 59,800 55,519 Income before taxes . . . 5,529 2,623 11,445 5,477 Income Taxes: Federal . . . . . . . . 1,761 810 3,597 1,695 State . . . . . . . . . 415 200 853 415 2,176 1,010 4,450 2,110 Net income. . . . . . . . 3,353 1,613 6,995 3,367 Net income per share. . . $ .45 $ .22 $ .95 $ .46 Financial Ratios: Return on sales . . . . 2.54% 1.33% 2.63% 1.40% Asset turnover. . . . . 2.66 2.42 2.68 2.41 Return on assets. . . . 6.77% 3.23% 7.06% 3.37% Leverage factor . . . . 2.85 3.05 2.85 3.05 Return on opening stockholders' equity . 19.29% 9.85% 20.12% 10.28% Page 5 of 9 Other Data: Cash dividends paid . . $ 883 $ 727 $ 1,759 $ 1,455 Dividends per share . . .12 .10 .24 .20 Average number of shares outstanding. . . . . . 7,352 7,277 7,330 7,277 Tons sold . . . . . . . 84,214 79,409 170,948 156,526 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 June 30, 1994, and June 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 $48.0 million, $45.6 million, and $45.1 million at June 30, 1994, December 31, 1993 and June 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. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations _____________________ Operating results for 1994 continue to be significantly improved as compared to 1993. Second quarter 1994 net income was approximately $3.4 million as compared to $1.6 million for the second quarter of 1993. Year-to-date net income through six months was approximately $7.0 million as compared to $3.4 million for the first six months of 1993. The primary reasons for the better quarterly performance were a stronger economy contributing to a gain in physical sales volume; an increase in gross margin percentage; and continued aggressive management of all expenses and asset levels. Second quarter sales increased by 8.9% as compared to the second quarter of 1993, while unit volume, expressed in tons sold, increased by 6.1% over the same period. Year-to-date, sales are up 10.2% in dollars, and up 9.2% in tonnage. Page 7 of 9 Gross margin percentage increased to 26.5% from the 25.6% recorded for the second quarter of last year. The Company has continued to focus on margin improvement with positive results being generated. In total, gross profit showed an increase of approximately $4.0 million over the second quarter of 1993. Of this increase, $2.8 million was due to the increased physical sales volume, with the balance being primarily due to pricing. Gross margin percentage for the first six months of 1994 was 26.8% as compared with 25.3% for the first half of 1993. Increase 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 continue to be well controlled. Second quarter 1994 operating expenses were up by approximately $1.2 million (4.6%) over the comparable period last year. The expense increase for the quarter was almost entirely attributable to increased provisions in accruals for incentives and profit sharing resulting from the improved operating results. As a percentage of sales, second quarter operating expenses decreased to 20.7% from 21.6% for the second quarter of 1993. Year-to-date expenses are up by approximately $4.6 million (8.9%) over the first half of 1993. As a percentage of sales, 1994 operating expenses decreased slightly to 21.0% from 21.2% for the first half of 1993. 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. Second quarter net interest expense decreased by $142,000 (14.3%) as compared to the second quarter of 1993. Lower debt levels were responsible for the decrease in expense over the prior year. Liquidity and Capital Resources _______________________________ The Company has managed to reduce working capital needs in spite of the overall increase in business activity. Current assets decreased by $0.2 million as compared to the balance at June 30, 1993. Accounts receivable were up $3.4 million (6.3%) due to the increased sale volume, while inventories were down by approximately $4.0 million (4.4%) as the Company continued to reduce inventories per plan. Total bank and long term borrowing decreased by $19.4 million as compared to June 30, 1993. The Company has unused committed and uncommitted lines of bank credit of $113.9 million as of June 30, 1994 as compared to $103.9 million at June 30, 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) The Annual Meeting of Stockholders of the Registrant was held on Thursday, April 28, 1994 at 10:00 a.m. local time, at 3400 North Wolf Road, Franklin Park, Illinois. (b) The eleven (11) management nominees were elected to the Board of Directors, and reference is hereby made to the Proxy Statement and Notice of Annual Meeting filed pursuant to Rule 14(a)-6 of the Securities and Exchange Commission. (c) The Stockholders at the Annual Meeting adopted an amendment to the Registrant's Certificate of Incorporation increasing the number of shares of common stock, no par value, which the Registrant is authorized to issue to 15,000,000 shares. Reference is hereby made to the Proxy Statement and Notice of Annual Meeting filed pursuant to Rule 14(a)-6 of the Securities and Exchange Commission for details of the amendment. The vote of the Stockholders on the amendment was 6,430,917 for adoption, 57,090 against adoption and 61,482 abstained. Shareholders also approved the appointment of Arthur Andersen & Co. as independent public accountants for the year 1994. 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-----