-----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, FlmjjsyvWdAbuLnD7o0ySOFc1QAbtiL8Adi72iFpJSnLQZsYuV6acn+RpwIiuQGd 7Jix7D7vbd1eXvU/UOKTIA== 0000790730-97-000007.txt : 19970715 0000790730-97-000007.hdr.sgml : 19970715 ACCESSION NUMBER: 0000790730-97-000007 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970531 FILED AS OF DATE: 19970714 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERON INTERNATIONAL CORP 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: 97639872 BUSINESS ADDRESS: STREET 1: 245 S LOS ROBLES AVE CITY: PASADENA STATE: CA ZIP: 91101 BUSINESS PHONE: 8186834000 FORMER COMPANY: FORMER CONFORMED NAME: AMERON INC/DE DATE OF NAME CHANGE: 19920703 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 May 31, 1997 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 (626) 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 4,003,862 on June 30, 1997. 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 9 PART II. OTHER INFORMATION Item 2. Changes in Securities 11 Item 4. Submission of Matters to a Vote of Security Holders 11 Item 6. Exhibits and Reports on Form 8-K 11 SIGNATURE PAGE 12 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 Six Months Ended May 31, May 31, ------------------ ------------------ 1997 1996 1997 1996 -------- -------- -------- -------- Net Sales $131,525 $120,632 $239,786 $232,384 Cost of Sales 96,317 89,780 176,895 176,169 -------- -------- -------- -------- Gross Profit 35,208 30,852 62,891 56,215 Selling, General and Administrative Expenses 26,449 23,626 52,732 47,449 -------- -------- -------- -------- Operating Profit 8,759 7,226 10,159 8,766 Royalty, Equity and Other Income 2,326 2,132 4,945 4,104 -------- -------- -------- -------- Income before Interest and Income Taxes 11,085 9,358 15,104 12,870 Interest Income 70 48 155 101 Interest Expense 3,168 2,714 5,709 5,548 -------- -------- -------- -------- Income before Income Taxes 7,987 6,692 9,550 7,423 Provision for Income Taxes 2,717 2,342 3,342 2,598 -------- -------- -------- -------- Net Income $ 5,270 $ 4,350 $ 6,208 $ 4,825 ======== ======== ======== ======== Net Income per Share $ 1.30 $ 1.09 $ 1.53 $ 1.21 ======== ======== ======== ======== Cash Dividends per Share $ .32 $ .32 $ .64 $ .64 ======== ======== ======== ======== Average Common and Equivalent Shares Outstanding 4,069,733 3,978,323 4,069,733 3,978,323 ========= ========= ========= ========= See accompanying notes to financial statements. Page 3 Ameron International Corporation and Subsidiaries Consolidated Balance Sheets (In thousands except share and per share data) May 31, Nov. 30, 1997 1996 -------- -------- ASSETS Current Assets Cash and cash equivalents $ 13,901 $ 18,381 Receivables, net 106,743 105,534 Inventories 107,553 84,971 Deferred income tax benefits 10,185 9,741 Prepaid expenses and other 5,124 4,996 -------- -------- Total current assets 243,506 223,623 Investments, Advances and Equity in Undistributed Earnings of Affiliated Companies 33,949 33,722 Property, Plant and Equipment, net 125,853 125,687 Other Assets 29,659 28,634 -------- -------- Total Assets $432,967 $411,666 ======== ======== LIABILITIES and STOCKHOLDERS' EQUITY Current Liabilities Short-term borrowings $ 815 $ 1,242 Current portion of long-term debt 17,677 17,753 Trade payables 35,677 36,715 Accrued liabilities 35,306 41,102 Income taxes 1,015 4,953 -------- -------- Total current liabilities 90,490 101,765 Deferred Income Taxes 4,346 2,727 Long-term Debt, less current portion 142,863 112,598 Other Long-term Liabilities 50,000 49,778 -------- -------- Total liabilities 287,699 266,868 Stockholders' Equity Common stock, par value $2.50 a share, Authorized, 12,000,000 shares, Outstanding, 4,003,787 shares at May 31, 1997 and 3,985,112 shares at November 30, 1996, net of treasury shares 12,941 12,895 Additional paid-in capital 16,794 16,212 Retained earnings 160,968 157,321 Cumulative foreign currency translation adjustment (2,656) 1,149 Treasury stock (1,172,900 shares), at cost (42,779) (42,779) -------- -------- Total stockholders' equity 145,268 144,798 -------- -------- Total Liabilities and Stockholders' Equity $432,967 $411,666 ======== ======== See accompanying notes to financial statements Page 4 Ameron International Corporation and Subsidiaries Consolidated Statements of Cash Flows (In thousands) Six Months Ended May 31, ------------------- 1997 1996 -------- -------- Cash Flow from Operating Activities Net income $ 6,208 $ 4,825 Adjustments to reconcile to net cash (used in) provided by operating activities: Depreciation 7,847 8,167 Equity in earnings of affiliated companies (1,319) (1,207) Dividends from affiliated companies 2,237 1,807 Other, net 637 306 Changes in operating assets and liabilities: Change in receivables (5,033) 4,637 Change in inventories (24,266) 2,245 Change in other current assets (732) (185) Change in trade payables and other current liabilities (9,454) (10,451) Change in other assets and liabilities, net 3,066 1,488 -------- -------- Net cash (used in) provided by operating activities (20,809) 11,632 Cash Flow from Investing Activities Proceeds from sale of assets 355 486 Additions to property, plant and equipment, and acquisitions (11,496) (16,207) Other (1,518) (1,090) -------- -------- Net cash used in investing activities (12,659) (16,811) Cash Flow from Financing Activities Net change in debt with maturities of three months or less (423) 32 Issuance of debt 37,208 7,605 Repayment of debt (5,510) (392) Dividends to common stockholders (2,561) (2,534) Issuance of common stock 628 83 -------- -------- Net cash provided by financing activities 29,342 4,794 Effect of Exchange Rate Changes on Cash and Equivalents (354) (260) -------- -------- Net Change in Cash and Equivalents (4,480) (645) Beginning Cash and Equivalents Balance 18,381 12,923 -------- -------- Ending Cash and Equivalents Balance $ 13,901 $ 12,278 ======== ======== See accompanying notes to financial statements Page 5 Ameron International Corporation and Subsidiaries Notes to Consolidated Financial Statements May 31, 1997 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 May 31, 1997, and the consolidated statements of income for the three- and six-month periods ended May 31, 1997 and 1996, and cash flows for the six-month periods ended May 31, 1997 and 1996. Accounting measurements at interim dates inherently involve greater reliance on estimates than at year end, thus the results of operations for the periods presented are not necessarily indicative of the results to be expected for the full year. 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, 1996. Note 2. Inventories Inventories are stated at the lower of cost (principally first-in, first-out)or market. Inventories at May 31, 1997 and November 30, 1996 were comprised of the following (U.S. dollars in thousands): May 31, Nov. 30, 1997 1996 -------- -------- Finished products $ 56,669 $ 44,577 Products in process 26,719 17,467 Materials and supplies 24,165 22,927 -------- -------- Total Inventories $107,553 $ 84,971 ======== ======== Note 3. Other Cash Flow Information (U.S. dollars in thousands): Six Months Ended May 31, ------------------- 1997 1996 -------- -------- Interest paid $ 5,687 $ 4,922 ======== ======== Income taxes paid $ 7,768 $ 3,949 ======== ======== Page 6 Note 4. Unconsolidated Affiliated Companies Summarized operating results of affiliated companies in the Concrete and Steel Pipe Products segment follow (U.S. dollars in thousands): Three Months Ended Six Months Ended May 31, May 31, ------------------- ------------------- 1997 1996 1997 1996 -------- -------- -------- -------- Net Sales $ 11,507 $ 10,781 $ 17,983 $ 22,429 Gross Profit $ 2,208 $ 3,123 $ 2,829 $ 6,159 Net Loss $ (245) $ (133) $ (1,649) $ (45) Amounts shown above represent operating results for Gifford-Hill-American, Inc. for the three- and six-month periods ended May 31, 1997 and April 30, 1996 and operating results for Ameron Saudi Arabia, Ltd. for the three- and six-month periods ended March 31, 1997 and 1996. Summarized results of operations of Tamco, Bondstrand, Ltd., and Oasis Ameron, Ltd. follow (U.S. dollars in thousands): Three Months Ended Six Months Ended May 31, May 31, ------------------- ------------------- 1997 1996 1997 1996 -------- -------- -------- -------- Net Sales $ 44,166 $ 38,136 $ 78,078 $ 71,598 Gross Profit $ 7,727 $ 3,993 $ 13,896 $ 9,826 Net Income $ 2,672 $ 443 $ 4,546 $ 2,187 Amounts shown above include operating results for Tamco for the three- and six- month periods stated and operating results for Bondstrand, Ltd. and Oasis Ameron, Ltd. for the three- and six-month periods ended March 31, 1997 and 1996. Page 7 Note 5. Income Taxes The deferred tax assets and deferred tax liabilities recorded on the balance sheet as of May 31, 1997 are as follows (U.S. dollars in thousands): Non- Current Current -------- -------- Deferred Tax Assets Self-insurance & contingency reserves $ 1,442 $ 8,158 Employee benefits 2,497 7,847 Accounts receivable 2,797 - Inventory 2,963 - Federal and State tax credits and loss carryovers - 2,347 Miscellaneous 486 198 -------- -------- Total Deferred Tax Asset 10,185 18,550 Deferred Tax Liabilities Investments - (2,398) Fixed Assets - (20,498) -------- -------- Total Deferred Tax Liability - (22,896) -------- -------- Net Deferred Tax Asset (Liability) $ 10,185 $ (4,346) ======== ======== Note 6. Debt At May 31, 1997 and November 30, 1996, the Company's long-term debt consisted of the following (U.S. dollars in thousands): May 31, Nov. 30, 1997 1996 -------- -------- Fixed-rate unsecured notes payable: 8.63% payable in annual principal installments of $5,000 $ 10,000 $ 10,000 9.79% payable in annual principal installments of $12,000 48,000 48,000 7.92% payable in annual principal installments of $8,333, commencing in 2001 50,000 50,000 Variable-rate Industrial Development Bonds, Payable in 2016 (4.00% at May 31, 1997) 7,200 7,200 Variable-rate unsecured bank revolving credit facilities (approximately 6.85% at May 31, 1997) 41,954 11,009 Variable-rate unsecured bank loan, payable by a consolidated subsidiary in Dutch guilders, with annual principal installments of approximately $677 (4.01% at May 31, 1997) 3,386 4,142 -------- -------- 160,540 130,351 Less - Current portion 17,677 17,753 -------- -------- $142,863 $112,598 ======== ======== Page 8 PART I. FINANCIAL INFORMATION Item 2. Management's Discussion and Analysis of Financial Conditions and Results of Operations Ameron International Corporation and Subsidiaries May 31, 1997 INTRODUCTION Management's Discussion and Analysis should be read in conjunction with the same discussion included in the Company's 1996 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 six-month period ended May 31, 1997, the Company used $20.8 million of cash for operating activities (compared to generating $11.6 million during the six-month period ended May 31, 1996), principally as a result of higher working capital requirements. The change in working capital reflects higher inventory levels caused by increased sales volume in the Protective Coatings business and the seasonal demands of the Concrete and Steel Pipe business. Additional net borrowings of $31.3 million plus $0.6 million from the issuance of common stock were used for capital expenditures, increased working capital requirements and payment of common dividends of $2.6 million. Cash and cash equivalents at May 31,1997 totaled $13.9 million, a decrease of $4.5 million from November 30,1996. Cash used in investing activities consisted of capital expenditures for normal replacement and upgrades of machinery and equipment. Management estimates that capital spending by the Company during this fiscal year will be between $15.0 million and $30.0 million. Capital expenditures will be funded from existing cash balances, cash generated from operations and existing lines of credit. At May 31, 1997, the Company had approximately $84.9 million in unused committed and uncommitted 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. Page 9 RESULTS OF OPERATIONS - SECOND QUARTER The Company earned $1.30 per share on sales of $131.5 million for the second quarter of fiscal 1997, which compares favorably to earnings of $1.09 per share on sales of $120.6 million for the same period last year. The quarterly earnings improvement came primarily from increased profitability from the worldwide Protective Coatings and Fiberglass Pipe businesses. Coatings sales volume increased substantially, in part because of the acquisition of the worldwide Devoe marine coatings business in late 1996 and Valspar maintenance coatings business in March 1997. Increased profitability from the fiberglass pipe business resulted from improved operational efficiencies. The Concrete and Steel Pipe business reported lower sales and income from last year because of timing of project deliveries. Order backlog for this business increased by $45 million during the first half, and sales for the second half of the fiscal year are expected to be stronger. Results from Ameron Hawaii, the Company's construction products business, continued to be substantially less than last year due to the ongoing economic slowdown in Hawaii. The domestic Pole Products business reported higher sales and earnings than last year. RESULTS OF OPERATIONS - YEAR TO DATE The Company earned $1.53 per share on sales of $239.8 million during the first half of fiscal 1997, which compares favorably to earnings of $1.21 on sales of $232.4 million during the prior-year period. The improvements for the first six months of 1997 were based on substantial increases in sales and profits by Protective Coatings and improved efficiencies by Fiberglass Pipe. Protective Coatings sales increased in the first half because of the Devoe acquisition, the Valspar acquisition and an increase in sales of traditional Ameron coatings. The higher sales produced substantially higher earnings. The Fiberglass Pipe business reported sales about even compared to last year, but was able to achieve higher earnings through operational improvements. Concrete and Steel Pipe reported sales significantly below last year due to the timing of project deliveries and impact of weather. Profits were negatively impacted by the reduced sales volume. The construction products business in Hawaii posted a decline in sales and earnings due to the depressed Hawaiian construction market. Sales for domestic Pole Products were about even with last year; however, profits were down due to unfavorable plant utilization in the first quarter of 1997. Page 10 Part II. OTHER INFORMATION 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. Under the most restrictive provisions of these agreements, approximately $6.3 million of consolidated retained earnings was not restricted at May 31, 1997. Item 4. Submission of Matters to a Vote of Security Holders The Company's Annual Meeting of Stockholders was held on March 26, 1997. Represented at the meeting, in person or by proxy, were 3,636,666 shares of common stock (91.0% of the total shares outstanding). Stockholders voted on the following matters at this meeting: 1. Election of Directors The five nominees for directors named in the Company's proxy statement, Messrs. A. Frederick Gerstell, Terry L. Haines, John F. King, Richard J. Pearson and David L. Sliney, received the greatest number of votes cast and were elected; each receiving not less than 3,607,802 votes. Other directors whose terms of office continued after the meeting are: Stephen W. Foss, J. Michael Hagan, James S. Marlen, Alan L. Ockene and F. H. Fentener van Vlissingen. 2. Proposal to Ratify the Appointment of Auditors 3,622,377 shares (99.6% of the shares represented at the meeting or 90.5% of the shares outstanding) voted in favor of the proposal to ratify the appointment of Arthur Andersen LLP as independent public accountants of the Company for fiscal year 1997. Of the shares represented at the meeting, 6,248 shares (0.2%) voted against the proposal. Item 6. Exhibits and Reports on Form 8-K No report on Form 8-K was filed for the Company in the second quarter of 1997. Page 11 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: July 14, 1997 /s/ Gary Wagner _________________________________ Gary Wagner Senior Vice President, Chief Financial Officer Page 12 EX-27 2
5 6-MOS NOV-30-1997 MAY-31-1997 13,901 0 106,743 0 107,553 243,506 125,853 0 432,967 90,490 0 12,941 0 0 0 432,967 239,786 239,786 176,895 0 52,732 0 5,709 9,550 3,342 6,208 0 0 0 6,208 1.53 0
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