-----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, CS8ovn4C5ZU3hQF6BPyahoseWtIteVXpDf670oKXgFELAzH1i5pVwjsgIC4BTel4 yZtzeTRZUpNtHL43/6EIZQ== 0000790730-96-000018.txt : 19961016 0000790730-96-000018.hdr.sgml : 19961016 ACCESSION NUMBER: 0000790730-96-000018 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960830 FILED AS OF DATE: 19961015 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERON INC/DE CENTRAL INDEX KEY: 0000790730 STANDARD INDUSTRIAL CLASSIFICATION: CONCRETE GYPSUM PLASTER PRODUCTS [3270] IRS NUMBER: 770100596 STATE OF INCORPORATION: DE FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-09102 FILM NUMBER: 96643149 BUSINESS ADDRESS: STREET 1: 245 S LOS ROBLES AVE CITY: PASADENA STATE: CA ZIP: 91101 BUSINESS PHONE: 8186834000 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 / X / QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended August 31, 1996 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 No. 1 - 9102 AMERON INTERNATIONAL CORPORATION (Exact name of registrant as specified in its charter) DELAWARE 77-0100596 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 245 South Los Robles Avenue Pasadena, California 91101-2894 (Address of principal executive offices) Telephone Number (818) 683-4000 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 The number of shares outstanding of Common Stock, $2.50 par value, was 3,964,037 on September 30, 1996. No other class of Common Stock exists. Page 1 AMERON INTERNATIONAL CORPORATION INDEX Page ---- PART I. FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Statements of Income 3 Consolidated Balance Sheets 4 Consolidated Statements of Cash Flows 5 Notes to Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 10 PART II. OTHER INFORMATION Item 1. Legal Proceedings 13 Item 2. Changes in Securities 13 Item 6. Exhibits and Reports on Form 8-K 13 SIGNATURE PAGE 14 Page 2 PART I. FINANCIAL INFORMATION Item 1. Financial Statements Ameron International Corporation and Subsidiaries Consolidated Statements of Income (In thousands, except share and per share data) Three Months Ended Nine Months Ended August 31, August 31, ------------------ ------------------ 1996 1995 1996 1995 -------- -------- -------- -------- Net Sales $133,622 $137,421 $366,006 $353,978 Cost of Sales 97,402 103,990 273,571 267,379 -------- -------- -------- -------- Gross Profit 36,220 33,431 92,435 86,599 Selling, General and Administrative Expenses 26,274 25,664 73,723 71,173 -------- -------- -------- -------- Operating Profit 9,946 7,767 18,712 15,426 Royalty, Equity and Other Income 1,590 1,796 5,694 5,563 -------- -------- -------- -------- Income before Interest and Income Taxes 11,536 9,563 24,406 20,989 Interest Income 69 48 170 278 Interest Expense 2,418 3,034 7,966 9,191 -------- -------- -------- -------- Income before Income Taxes 9,187 6,577 16,610 12,076 Provision for Income Taxes 3,215 2,000 5,813 3,382 -------- -------- -------- -------- Net Income $ 5,972 $ 4,577 $ 10,797 $ 8,694 ======== ======== ======== ======== Net Income per Share $ 1.50 $ 1.16 $ 2.71 $ 2.20 ======== ======== ======== ======== Cash Dividends per Share $ .32 $ .32 $ .96 $ .96 ======== ======== ======== ======== Average Common and Equivalent Shares Outstanding 3,977,481 3,951,549 3,977,481 3,951,549 ========= ========= ========= ========= See accompanying notes to financial statements. Page 3 Ameron International Corporation and Subsidiaries Consolidated Balance Sheets (In thousands except share and per share data) Aug. 31, Nov. 30, 1996 1995 -------- -------- ASSETS Current Assets Cash and cash equivalents $ 49,440 $ 12,923 Receivables, net 108,012 105,019 Inventories 72,781 76,426 Deferred income tax benefits 7,315 7,315 Prepaid expenses and other 5,218 5,155 -------- -------- Total current assets 242,766 206,838 Investments, Advances and Equity in Undistributed Earnings of Affiliated Companies 35,330 36,197 Property, Plant and Equipment, net 114,418 114,116 Other Assets 18,536 14,230 -------- -------- Total Assets $411,050 $371,381 ======== ======== LIABILITIES and STOCKHOLDERS' EQUITY Current Liabilities Short-term borrowings $ 1,157 $ 1,718 Current portion of long-term debt 17,782 17,803 Trade payables 33,054 32,219 Accrued liabilities 37,973 37,427 Income taxes 2,009 3,213 -------- -------- Total current liabilities 91,975 92,380 Deferred Income Taxes 3,603 4,040 Long-term Debt, less current portion 121,982 91,565 Other Long-term Liabilities 51,635 48,824 -------- -------- Total liabilities 269,195 236,809 Stockholders' Equity Common stock, par value $2.50 a share, Authorized, 12,000,000 shares, Outstanding, 3,964,037 shares at August 31, 1996 and 3,956,497 shares at November 30, 1995, net of treasury shares 12,842 12,823 Additional paid-in capital 15,579 15,322 Retained earnings 153,982 146,987 Cumulative foreign currency translation adjustment 2,231 2,219 Treasury stock (1,172,900 shares), at cost (42,779) (42,779) -------- -------- Total stockholders' equity 141,855 134,572 -------- -------- Total Liabilities and Stockholders' Equity $411,050 $371,381 ======== ======== See accompanying notes to financial statements Page 4 Ameron International Corporation and Subsidiaries Consolidated Statements of Cash Flows (In thousands) Nine Months Ended August 31, ------------------- 1996 1995 -------- -------- Cash Flow from Operating Activities Net income $ 10,797 $ 8,694 Adjustments to reconcile to net cash provided by (used in) operating activities: Depreciation 12,509 11,906 Equity in earnings of affiliated companies (1,952) (2,948) Dividends from affiliated companies 2,740 4,847 Other, net (698) 440 Changes in operating assets and liabilities: Change in receivables (2,888) (19,207) Change in inventories 6,178 (12,993) Change in other current assets (52) 769 Change in trade payables and other current liabilities 606 3,734 Change in other assets and liabilities, net 3,733 2,503 -------- -------- Net cash provided by (used in) operating activities 30,973 (2,255) Cash Flow from Investing Activities Proceeds from sale of assets 987 427 Additions to property, plant and equipment, and acquisition of Centron (19,700) (11,447) Other (1,959) (1,857) -------- -------- Net cash used in investing activities (20,672) (12,877) Cash Flow from Financing Activities Net change in debt with maturities of three months or less (541) (1,249) Issuance of debt 56,706 23,809 Repayment of debt (26,085) (4,603) Dividends to common stockholders (3,802) (3,786) Issuance of common stock 88 9 -------- -------- Net cash provided by financing activities 26,366 14,180 Effect of Exchange Rate Changes on Cash and Equivalents (150) 282 -------- -------- Net Change in Cash and Equivalents 36,517 (670) Beginning Cash and Equivalents Balance 12,923 9,030 -------- -------- Ending Cash and Equivalents Balance $ 49,440 $ 8,360 ======== ======== See accompanying notes to financial statements Page 5 Ameron International Corporation and Subsidiaries Notes to Consolidated Financial Statements August 31, 1996 Note 1. Basis Of Presentation The consolidated financial statements for the interim periods included herein are unaudited, however, they contain all normal recurring accruals which, in the opinion of management, are necessary to present fairly the consolidated financial position of the Company at August 31, 1996 and the consolidated results of operations for the three- and nine-month periods ended August 31, 1996 and 1995, and cash flows for the nine-month periods ended August 31, 1996 and 1995. Accounting measurements at interim dates inherently involve greater reliance on estimates than at year end, thus the results of operations for the period presented, are not necessarily indicative of the results to be expected for the full year. Certain prior year balances have been reclassified to conform with the current year presentation. The accompanying consolidated financial statements do not include footnotes and certain financial presentations normally required under generally accepted accounting principles and, therefore, should be read in conjunction with the Annual Report on Form 10-K for the year ended November 30, 1995. Note 2. Inventories Inventories are stated at the lower of cost (principally first-in, first-out)or market. Inventories at August 31, 1996 and November 30, 1995 were comprised of the following (in thousands): Aug. 31, Nov. 30, 1996 1995 -------- -------- Finished products $ 37,652 $ 32,210 Products in process 18,999 26,128 Materials and supplies 16,130 18,088 -------- -------- Total Inventories $ 72,781 $ 76,426 ======== ======== Note 3. Other Cash Flow Information: Nine Months Ended August 31, ------------------- 1996 1995 -------- -------- Interest paid $ 5,391 $ 9,187 ======== ======== Income taxes paid $ 7,438 $ 8,198 ======== ======== Page 6 Note 4. Affiliated Companies Equity in earnings of affiliated companies is recognized in the Company's net income partly on a lag basis only to the extent that cash dividends are anticipated. Summarized operating results of affiliated companies in the Concrete and Steel Pipe Products segment follow, U.S. dollars in thousands: Three Months Ended Nine Months Ended August 31, August 31, ------------------- ------------------- 1996 1995 1996 1995 -------- -------- -------- -------- Net Sales $ 10,763 $ 10,456 $ 33,192 $ 31,782 Gross Profit $ 2,595 $ 1,919 $ 8,754 $ 6,306 Net Loss $ (491) $ (1,128) $ (536) $ (1,843) Amounts shown above represent operating results for Gifford-Hill-American, Inc. for the three- and nine-month periods ended July 31, 1996 and 1995 and operating results for Ameron Saudi Arabia, Ltd. for the three- and nine-month periods ended June 30, 1996 and 1995. Summarized results of operations of Tamco, Bondstrand, Ltd., and Oasis Ameron, Ltd. follow, U.S. dollars in thousands: Three Months Ended Nine Months Ended August 31, August 31, ------------------- ------------------- 1996 1995 1996 1995 -------- -------- -------- -------- Net Sales $ 43,417 $ 40,155 $115,015 $102,509 Gross Profit $ 8,936 $ 6,402 $ 18,762 $ 16,684 Net Income $ 4,171 $ 2,170 $ 6,358 $ 5,557 Amounts shown above include operating results for Tamco for the three- and nine-month periods stated, and operating results for Bondstrand, Ltd. and Oasis Ameron, Ltd. for the three- and nine-month periods ended June 30, 1996 and 1995. Page 7 Note 5. Income Taxes The deferred tax assets and deferred tax liabilities recorded on the balance sheet as of August 31, 1996 are as follows, U.S. Dollars in thousands: Non- Current Current -------- -------- Deferred Tax Assets Self-insurance & contingency reserves $ 1,309 $ 8,290 Employee benefits 1,683 8,644 Accounts receivable 1,445 - Inventory 2,728 - Federal and State tax credits and loss carryovers - 2,347 Miscellaneous 150 781 -------- -------- Total Deferred Tax Asset 7,315 20,062 Deferred Tax Liabilities Investments - (3,000) Fixed Assets - (20,665) -------- -------- Total Deferred Tax Liability - (23,665) -------- -------- Net Deferred Tax Asset (Liability) $ 7,315 $ (3,603) ======== ======== Note 6. Debt At August 31, 1996 and November 30, 1995, the Company's long-term debt consisted of the following, U.S. Dollars in thousands: Aug. 31, Nov. 30, 1996 1995 -------- -------- Unsecured notes payable to insurance companies: 8.63% payable in annual installments of $5,000, plus accrued interest $ 15,000 $ 15,000 9.79% payable in annual installments of $12,000, plus accrued interest 60,000 60,000 7.92% payable in annual installments of $8,333 commencing in 2001, plus accrued interest 50,000 - Variable-rate unsecured bank revolving credit facilities (approximately 4.5% at August 31, 1996) 5,810 29,148 Variable-rate unsecured bank loan, payable by a consolidated subsidiary in Dutch guilders, with annual installments of approximately $782 plus accrued interest through 2002 (3.51% at August 31, 1996) 4,498 5,220 Variable-rate Industrial Development Bonds, Payable in 2016 (3.60% at August 31, 1996) 4,456 - -------- -------- 139,764 109,368 Less - Current portion 17,782 17,803 -------- -------- $121,982 $ 91,565 ======== ======== Page 8 Note 7. Contingencies Please refer to Part II, Other Information, Item I, Legal Proceedings. Note 8. Subsequent Events On August 7, Ameron entered into an agreement to acquire the worldwide Devoe marine coatings business of Imperial Chemical Industries, PLC (ICI). The North American portion of that acquisition was completed in early September. The remainder of the acquisition is expected to be completed in late October. Purchased tangible assets will consist mainly of inventories and receivables. Any amount of the purchase price greater than the fair market value of the tangible assets will be allocated to intangible assets and amortized over their economic lives, not to exceed 40 years. The acquistion will be accounted for as a purchase and the results of operations of the acquired business will be included in the Company's consolidated financial statements commencing September 1996. Page 9 PART I. FINANCIAL INFORMATION Item 2. Management's Discussion and Analysis of Financial Conditions and Results of Operations Ameron International Corporation and Subsidiaries August 31, 1996 INTRODUCTION Management's Discussion and Analysis should be read in conjunction with the same discussion included in the Company's 1995 Annual Report on Form 10-K. Reference should also be made to the financial statements included in this Form 10-Q for comparative consolidated balance sheets and statements of income and cash flows. LIQUIDITY AND CAPITAL RESOURCES During the nine month period ended August 31, 1996, the Company generated $31.0 million of cash from operations. These funds were used for capital expenditures and the acquisition of Centron of $19.7 million and the payment of common dividends of $3.8 million. Cash and cash equivalents at August 31, 1996 totaled $49.4 million, an increase of $36.5 million from November 30, 1995. The significant increase in cash occurred as a result of the Company issuing $50 million of long-term notes just prior to the close of the third quarter (see below). The Company generated cash from operating activities during the nine months ended August 31, 1996 versus using cash during the prior year period. This was the result of improved earnings versus last year, a reduction in inventory as opposed to an increase in 1995 and a smaller increase in receivables as compared to the prior year. Receivables and inventories increased significantly in 1995 due to the level of sales growth. The growth in receivables decreased in 1996 reflecting lower overall sales growth. Inventories declined in 1996 due to timing of deliveries. Cash used in investing activities consisted of capital expenditures for normal replacement and upgrades of machinery and equipment plus the acquisition of Centron, a manufacturer of fiberglass pipe for the worldwide oilfield market. Management estimates that capital expenditures by the Company during the fiscal year will be between $15.0 and $30.0 million. Capital expenditures and acquisitions will be funded from existing cash balances, cash generated from operations and existing lines of credit. On August 7, Ameron entered into an agreement to acquire the worldwide Devoe marine coatings business of Imperial Chemical Industries, PLC (ICI). The North American portion of that acquisition was completed in early September. The remainder of the acquisition is expected to be completed in late October. In addition, Ameron will manufacture and sell Devoe coatings to industrial maintenance markets in Europe, the Middle East and parts of Africa. The total Devoe business being acquired by Ameron generated sales of approximately $50 million in 1995. Page 10 During the quarter the Company obtained financing from the Industrial Development Corporation of Mineral Wells, TX to fund the purchase, construction and equipping of facilities related to the Company's acquisition of Centron. A total of $7.2 million is available at a variable interest rate with final maturity in the year 2016. Also, late in the third quarter the Company completed a $50 million private placement with two insurance companies. The final maturity of the loan is ten years with an interest rate of 7.92%. Proceeds from the loan will be used for acquisitions, capital expenditures and the repayment of other debt. At August 31, 1996 the Company had approximately $115.8 million in unused credit lines available from foreign and domestic banks. The Company believes that cash and cash equivalents on hand, anticipated cash flows from operations and funds from existing lines of credit will be sufficient to meet future operating requirements. In June of 1996 a settlement of the previously reported litigation with the City & County of San Francisco was reached by the Company. Refer to Part II, Item I., Legal Proceedings. RESULTS OF OPERATIONS - THIRD QUARTER Ameron International Corporation achieved especially strong third-quarter earnings: $1.50 per share on sales of $134 million, compared to $1.16 per share on sales of $137 million for the similar period in 1995. Sales last year were higher due mainly to the commencement of deliveries to the Los Vaqueros project in Northern California, the largest concrete pipe project in the Company's history. In addition, sales of construction products in Hawaii were lower this year, however these reductions were partially offset by increased sales of fiberglass pipe and protective coatings. Despite slightly lower sales, operating profit and net income improved over the prior year quarter, reflecting significantly improved profitability in the concrete and steel pipe, protective coatings and fiberglass pipe businesses. Quarterly earnings were up sharply for Ameron's domestic concrete and steel pipe operations. Demand for water transmission piping remains strong. Adding to the results were significant improvements in manufacturing due to an ongoing total quality management program. Ameron's worldwide protective coatings business also had higher sales and significantly improved income. Operations in the United States, Europe and Hong Kong all reported increased earnings. Operating results were positively influenced by product streamlining and higher manufacturing yields in both the United States and Europe. Ameron's worldwide fiberglass pipe business reported appreciable improvements in sales and earnings for the quarter, primarily because of positive performance by U.S. operations. While still quite profitable, Ameron Hawaii, the construction products business, continued to report substantially lower sales and earnings than in 1995 because of the ongoing economic slowdown in the Islands. Results from Ameron's domestic pole products business were slightly lower for the quarter. Page 11 RESULTS OF OPERATIONS - YEAR TO DATE The Company earned $2.71 per share on sales of $366 million during the nine months ended August 31, 1996, which compares favorably to earnings of $2.20 per share on sales of $354 million during the prior year period. The improved results can be attributed to continuing deliveries of concrete and steel pipe to jobsites in the western states. Demand for water transmission piping remains strong in the western United States as water agencies continue long-term expansion of water transmission pipelines. This increased demand coupled with manufacturing cost reductions and improved efficiencies has had a favorable impact on this segment's margins. Sales and earnings increased for the Company's global protective coatings business, which was severely impacted last year by higher raw material costs that affected the entire coatings industry. Increased sales and production volume coupled with product streamlining had a favorable impact this year on earnings in both the United States and Europe. Sales of Ameron's PSX line of patented "engineered siloxane" products continued to grow worldwide. The Company's worldwide fiberglass pipe business posted higher sales and earnings as compared to last year due principally to positive results by U.S. operations. However, European results, which were impacted by project delays and market sluggishness were down from last year. Results from the construction products business in Hawaii continued to be substantially lower than in 1995. Sales and earnings from the pole products business improved slightly for the year-to-date period. Net interest expense for the nine-month period was lower than the same period last year due primarily to reduced borrowing levels. Interest expense will increase in the fourth quarter of fiscal 1996 as compared to the first three quarters as a result of the $50 million loan obtained by the Company as disclosed above. Page 12 Part II. OTHER INFORMATION Item 1. Legal Proceedings As previously reported, in July 1992 the Company was served with a complaint in an action brought by the City and County of San Francisco in Superior Court of the State of California against the Company and two co-defendants, in connection with a pipeline referred to as the San Andreas Pipeline No. 3, a water transmission pipeline, which was installed between 1980 and 1982. The Company furnished the pipe used in that pipeline. The amounts claimed by the plaintiff were substantial. In June of 1996 a settlement of this litigation was reached by the Company. The terms of this settlement were considered by management to be favorable to the Company, and did not have a material effect on the Company's financial position or its results of operations. Item 2. Changes in Securities Terms of lending agreements place restrictions on cash dividends, borrowings, investments and guarantees, and require maintenance of specified minimum working capital and certain current ratios. Under the most restrictive provisions of these agreements, approximately $17.4 million of consolidated retained earnings was not restricted at August 31, 1996. Item 6. Exhibits and Reports on Form 8-K A report on Form 8-K was filed on June 28, 1996, related to a news release disclosing the Company's financial results for the second quarter, which ended May 31, 1996. A report on Form 8-K was filed on August 9, 1996, related to a news release announcing that the Company signed an agreement to acquire the Devoe marine coatings business from Imperial Chemical Industries, PLC. Page 13 Signature Page 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. Ameron International Corporation Date: October 14, 1996 /s/ Gary Wagner _________________________________ Gary Wagner Senior Vice President, Chief Financial Officer and Treasurer Page 14 EX-27 2
5 1,000 9-MOS NOV-30-1996 AUG-31-1996 49,440 0 108,012 0 72,781 242,766 114,418 0 411,050 91,975 0 0 0 12,842 129,013 411,050 366,006 366,006 273,571 0 73,723 0 7,966 16,610 5,813 10,797 0 0 0 10,797 2.71 0
-----END PRIVACY-ENHANCED MESSAGE-----