-----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, JQzP7Y2u4TpliIX8ZwBkBV6bK9a4EZbKymAcujJ7EEZ0HH8gCVoqQVfhbwf0GHhH 6rRFjKD3Xrpj58+gBTGSnA== 0000006176-98-000005.txt : 19980812 0000006176-98-000005.hdr.sgml : 19980812 ACCESSION NUMBER: 0000006176-98-000005 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19980810 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMPCO PITTSBURGH CORP CENTRAL INDEX KEY: 0000006176 STANDARD INDUSTRIAL CLASSIFICATION: PUMPS & PUMPING EQUIPMENT [3561] IRS NUMBER: 251117717 STATE OF INCORPORATION: PA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-00898 FILM NUMBER: 98680946 BUSINESS ADDRESS: STREET 1: 600 GRANT ST STE 4600 CITY: PITTSBURGH STATE: PA ZIP: 15219 BUSINESS PHONE: 4124564400 FORMER COMPANY: FORMER CONFORMED NAME: SCREW & BOLT CORP OF AMERICA DATE OF NAME CHANGE: 19710518 10-Q 1 FORM 1O-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Mark one) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1998 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 1-898. AMPCO-PITTSBURGH CORPORATION Incorporated in Pennsylvania. I.R.S. Employer Identification No. 25-1117717. 600 Grant Street, Pittsburgh, Pennsylvania 15219 Telephone Number 412/456-4400 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 periods 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 On August 10, 1998, 9,577,621 common shares were outstanding. - 1 - AMPCO-PITTSBURGH CORPORATION INDEX Page No. Part I - Financial Information: Item 1 - Consolidated Financial Statements Consolidated Balance Sheets - June 30, 1998 and December 31, 1997 3 Consolidated Statements of Income - Six Months Ended June 30, 1998 and 1997; Three Months Ended June 30, 1998 and 1997 4 Consolidated Statements of Cash Flows - Six Months Ended June 30, 1998 and 1997 5 Notes to Consolidated Financial Statements 6 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations 9 Part II - Other Information: Item 6 - Exhibits and Reports on Form 8-K 12 Signatures 13 Exhibits Exhibit 27 - 2 -
PART I - FINANCIAL INFORMATION AMPCO-PITTSBURGH CORPORATION CONSOLIDATED BALANCE SHEETS (UNAUDITED) June 30, December 31, 1998 1997 Assets Current assets: Cash and cash equivalents $ 31,029,744 $ 21,695,512 Receivables, less allowance for doubtful accounts of $672,218 in 1998 and $629,677 in 1997 32,878,689 35,024,843 Inventories 36,348,529 35,452,494 Other 4,792,328 4,530,430 Total current assets 105,049,290 96,703,279 Property, plant and equipment, at cost 144,035,254 139,249,677 Accumulated depreciation (70,509,278) (66,714,835) Net property, plant and equipment 73,525,976 72,534,842 Unexpended industrial revenue bond proceeds 992,954 2,218,317 Prepaid pension 13,679,592 13,679,592 Other noncurrent assets 11,830,322 11,709,131 $205,078,134 $196,845,161 Liabilities and Shareholders' Equity Current liabilities: Accounts payable $ 8,127,160 $ 8,638,073 Accrued payrolls and employee benefits 8,401,893 7,747,474 Other 8,585,076 7,373,110 Total current liabilities 25,114,129 23,758,657 Employee benefit obligations 16,468,367 16,755,483 Industrial revenue bond debt 12,586,000 12,586,000 Deferred income taxes 11,699,635 11,329,110 Other noncurrent liabilities 2,787,996 3,000,124 Total liabilities 68,656,127 67,429,374 Shareholders' equity: Preference stock - no par value; authorized 3,000,000 shares: none issued - - Common stock - par value $1; authorized 20,000,000 shares; issued and outstanding 9,577,621 in 1998 and 1997 9,577,621 9,577,621 Additional paid-in capital 102,555,980 102,555,980 Retained earnings 23,760,335 16,602,063 Accumulated other comprehensive income 528,071 680,123 Total shareholders' equity 136,422,007 129,415,787 $205,078,134 $196,845,161
See Notes to Consolidated Financial Statements. - 3 -
AMPCO-PITTSBURGH CORPORATION CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) Six Months Ended June 30, Three Months Ended June 30, 1998 1997 1998 1997 Net sales $ 95,371,010 $ 83,925,317 $ 46,772,660 $ 43,091,163 Operating costs and expenses: Cost of products sold (excluding depreciation) 64,553,691 57,549,037 31,756,046 29,688,005 Selling and administrative 13,633,703 11,849,597 6,826,824 5,929,734 Depreciation 3,851,920 3,336,127 1,932,505 1,664,923 82,039,314 72,734,761 40,515,375 37,282,662 Income from operations 13,331,696 11,190,556 6,257,285 5,808,501 Other income (expense): Gain on sale of investments - 936,575 - 721,910 Other income (expense)-net 255,548 409,647 108,838 131,035 Income before income taxes 13,587,244 12,536,778 6,366,123 6,661,446 Income taxes 4,705,000 4,410,000 2,140,000 2,330,000 Net income $ 8,882,244 $ 8,126,778 $ 4,226,123 $ 4,331,446 Basic earnings per share $ .93 $ .85 $ .44 $ .45 Cash dividends declared per share $ .18 $ .12 $ .09 $ .06 Weighted average number of common shares outstanding 9,577,621 9,577,621 9,577,621 9,577,621
See Notes to Consolidated Financial Statements - 4 -
AMPCO-PITTSBURGH CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Six Months Ended June 30, 1998 1997 Cash flows from operating activities: Net income $ 8,882,244 $ 8,126,778 Adjustments to reconcile net income to net cash flows from operating activities: Depreciation 3,851,920 3,336,127 Gain on sale of investments - (936,575) Deferred income taxes 735,000 89,300 Other - net 222,131 105,983 (Increase) decrease in assets: Receivables 2,378,580 2,520,563 Inventories (979,227) (298,731) Other assets (150,338) 79,132 Increase (decrease) in liabilities Accounts payable (922,789) (171,973) Accrued payrolls and employee benefits 684,287 89,990 Other liabilities 140,846 714,315 Net cash flows from operating activities 14,842,654 13,654,909 Cash flows from investing activities: Purchases of property, plant and equipment (5,395,235) (8,004,687) Proceeds from sales of property, plant and equipment 397,707 - Unexpended industrial revenue bond proceeds 1,225,363 5,640,147 Proceeds from sales of investments - 1,258,613 Net cash flows from investing activities (3,772,165) (1,105,927) Cash flows from financing activities: Dividends paid (1,723,971) (2,107,077) Net cash flows from financing activities (1,723,971) (2,107,077) Effect of exchange rate changes on cash (12,286) (143,454) Net increase in cash 9,334,232 10,298,451 Cash at beginning of year 21,695,512 25,510,231 Cash at end of period $ 31,029,744 $ 35,808,682 Supplemental information: Income tax payments $ 3,255,674 $ 3,397,744 Interest payments 364,856 268,623
See Notes to Consolidated Financial Statements. - 5 - AMPCO-PITTSBURGH CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. Unaudited Consolidated Financial Statements The consolidated balance sheet as of June 30, 1998, the consolidated statements of income for the six and three month periods ended June 30, 1998 and 1997 and the consolidated statements of cash flows for the six month periods then ended have been prepared by the Corporation without audit. In the opinion of management, all adjustments, consisting of only normal recurring adjustments, necessary to present fairly the financial position, results of operations and cash flows for the periods presented have been made. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. It is suggested that these consolidated financial statements be read in conjunction with the consolidated financial statements and notes thereto included in the Corporation's annual report to shareholders for the year ended December 31, 1997. The results of operations for the periods ended June 30, 1998 are not necessarily indicative of the operating results for the full year. 2. Inventory Inventories, principally valued on the LIFO method, are comprised of the following: (in thousands) June 30, December 31, 1998 1997 Raw materials $ 6,209 $ 6,214 Work-in-process 24,504 23,905 Finished goods 3,651 3,440 Supplies 1,985 1,893 $ 36,349 $ 35,452
3. Comprehensive Income The Corporation adopted Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive Income", effective January 1, 1998. This Statement establishes standards for reporting and display of comprehensive income and its components in the financial statements. The Corporation's comprehensive income for the six and three months ended June 30, 1998 and 1997 consisted of: - 6 -
(in thousands) Six Months Ended Three Months Ended June 30, June 30, 1998 1997 1998 1997 Net income $8,882 $8,127 $4,226 $4,331 Foreign currency translation (152) (1,357) 102 (455) Unrealized holding losses on securities - (758) - (91) Comprehensive income $8,730 $6,012 $4,328 $3,785
4. Basic Earnings Per Share Basic earnings per share is computed on the basis of the weighted number of shares of Ampco-Pittsburgh Corporation's common stock outstanding, which has remained unchanged at 9,577,621 shares for the periods presented. Currently there are no potentially dilutive securities; accordingly, basic earnings per share and dilutive earnings per share are equivalent. 5. Recently Issued Accounting Standards In September 1997, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 131, "Disclosures about Segments of an Enterprise and Related Information". SFAS No. 131 requires certain disclosures about segment information in interim and annual financial statements and related information about products and services, geographic areas and major customers. Generally, financial information is required to be reported on the basis that it is used internally for evaluating segment performance and deciding how to allocate resources to segments. The Corporation must adopt the provisions of SFAS No. 131 for its consolidated financial statements for the year ending December 31, 1998. The adoption of SFAS No. 131 will not effect the measurement of the Corporation's financial position, results of operations or cash flows; the Corporation is reviewing possible changes in disclosures that may be necessary. In March 1998, the American Institute of Certified Public Accountants issued Statement of Position 98-1, "Accounting for the Costs of Computer Software Developed or Obtained for Internal Use" ("SOP 98-1"). SOP 98-1 addresses costs incurred in connection with the implementation of internal-use software, and specifies the circumstances under which such costs should be - 7 - capitalized or expensed. The Corporation will be required to adopt SOP 98-1 in the first quarter of 1999. Adoption of SOP 98-1 will not have a material impact on the financial position, results of operations or cash flows of the Corporation. In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities". This pronouncement requires all derivative instruments to be reported at fair value on the balance sheet; depending on the nature of the derivative instrument, changes in fair value will be recognized either in net income or as an element of comprehensive income. SFAS No. 133 is first effective for the Corporation for the year ending December 31, 2000. The Corporation does not engage in significant activity with respect to derivative instruments or hedging activities and management does not anticipate adoption of SFAS No. 133 will have a material impact on the financial position, results of operations or cash flows of the Corporation. - 8 - AMPCO-PITTSBURGH CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Operations for the Six and Three Month Periods Ended June 30, 1998 and 1997 Net sales for the six and three month periods of 1998 were $95,371,000 and $46,773,000 compared to $83,925,000 and $43,091,000 for the same periods of the prior year. Excluding the impact of the previous year acquisitions of F. R. Gross and Atlantic Grinding and Welding, which were not included in the first half of 1997, overall sales increased by 5.1% for the first half and declined by 0.8% for the second quarter compared to the prior year. In addition to the modest decline in shipments during the second quarter, several operations experienced a slowdown in orders, principally due to the turmoil in Asia and the strength of the dollar impacting the Corporation's export markets. The order backlog stood at $107,900,000 at June 30, 1998 compared to $115,200,000 at December 31, 1997. The reduction in the backlog is due primarily to a decrease in forged hardened steel roll orders from overseas customers. The cost of products sold relationships for the six and three months ended June 30, 1998 were 67.7% and 67.9%, respectively. This compares with the prior comparable periods at 68.6% and 68.9%, respectively. A more profitable sales mix resulted in improved ratios of cost of products sold to sales in 1998. Selling and administrative expenses in 1998 increased by $1,784,000 for the year-to-date period and $897,000 for the second quarter, both compared to the prior year. The increase is principally due to the inclusion of the acquired companies in 1998. The relationships of selling and administrative expenses to net sales for the six and three months ended June 30, 1998 were 14.3% and 14.6%, respectively. This compares with the prior comparable periods at 14.1% and 13.8%, respectively. Depreciation expense of $3,852,000 and $1,933,000 for the six and three months ended June 30, 1998 increased approximately 16.0% compared to the prior year due principally to increased capital spending and the inclusion of the acquired businesses. - 9 - Income from operations increased 19% for the six month period to $13,332,000 and 8% for the three month period to $6,257,000, both compared to the prior year. These increases are principally a result of higher sales, including the contribution from acquired businesses, and a product mix providing better than average profit margins. Gains of $937,000 and $722,000 were recognized in the six and three month periods ended June 30, 1997, respectively, from the sale of investments. The Corporation had net income for the six and three months ended June 30, 1998 of $8,882,000 and $4,226,000, respectively. This compares with net income for the prior year comparable periods of $8,127,000 and $4,331,000, respectively. Liquidity and Capital Resources Net cash flow from operating activities was positive in 1998 and 1997 at $14,825,000 and $13,655,000, respectively. The increased cash flow in 1998 resulted primarily from a $2,141,000 increase in income from operations partially offset by greater working capital requirements. Capital expenditures for 1998 totaled $5,395,000 compared to $8,005,000 in 1997. Capital appropriations carried forward from June 30, 1998 total $9,500,000 and unexpended industrial revenue bond proceeds of $993,000 are available to fund a portion of this capital program. Funds generated internally are expected to be sufficient to finance the balance of the capital expenditures. Cash outflows with respect to financing activities in 1998 reflect an increase in the quarterly dividend rate to $.09 per share compared to $.06 per share in 1997. Included in 1997 is an additional prior year-end dividend of $960,000 or $.10 per share. The Corporation maintains short-term lines of credit and a revolving credit agreement in excess of the cash needs of its businesses. The total available at June 30, 1998 was $14,500,000. With respect to environmental concerns, the Corporation has been named a potentially responsible party at certain third party sites. The Corporation has accrued its share of the estimated cost of remedial actions it would likely be required to contribute. While it is not possible to quantify with certainty the potential cost of actions regarding environmental matters, particularly any future remediation and other compliance efforts, in the opinion of - 10 - management, compliance with the present environmental protection laws and the potential liability for all environmental proceedings will not have a material adverse effect on the financial condition, results of operations or liquidity of the Corporation. The nature and scope of the Corporation's business brings it into regular contact with a variety of persons, businesses and government agencies in the ordinary course of business. Consequently, the Corporation and its subsidiaries from time to time are named in various legal actions. The Corporation does not anticipate that its financial condition, results of operations or liquidity will be materially affected by the costs of known, pending or threatened litigation. Impact of Year 2000 The Corporation and its subsidiaries continue their progress in identifying, modifying and/or replacing non- compliant business computer systems, equipment and other devices that utilize date-oriented software or computer chips. Replacement software, where necessary, has been purchased and is in the process of being implemented. The modifications being handled in-house to internally developed systems are progressing on schedule. Management believes, based on a current review and the ongoing effort, that all relevant computer systems will be Year 2000 compliant by the second quarter of 1999. Management believes that the cost of this project will not be material to the Corporation's financial condition or results of operations. - 11 - PART II - OTHER INFORMATION AMPCO-PITTSBURGH CORPORATION Items 1-5.None Item 6. Exhibits and Reports on Form 8-K (a) Exhibits 27. Financial Data Schedule (b) Reports on Form 8-K None - 12 - 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. AMPCO-PITTSBURGH CORPORATION DATE: August 10, 1998 BY: s/Robert A. Paul Robert A. Paul President and Chief Executive Officer DATE: August 10, 1998 BY: s/Robert J. Reilly Robert J. Reilly Vice President - Finance and Treasurer - 13 - EX-27 2
EXHIBIT 27 EXHIBIT 27
5 6-MOS DEC-31-1998 JUN-30-1998 31,029,744 0 33,550,907 672,218 36,348,529 105,049,290 144,035,254 70,509,278 205,078,134 25,114,129 12,586,000 0 0 9,577,621 126,844,386 205,078,134 95,371,010 95,987,662 64,553,691 82,039,314 0 0 361,104 13,587,244 4,705,000 8,882,244 0 0 0 8,882,244 .93 .93
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