-----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, V1jgbczGc+F6VvzSbDOz/tp6l9TrGDmnls2qJvXbjYzNHyJdZL+/fKnltrAdeVAq LXUwaHkB6eOweXvSIaDj1g== 0000790730-99-000003.txt : 19990415 0000790730-99-000003.hdr.sgml : 19990415 ACCESSION NUMBER: 0000790730-99-000003 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990228 FILED AS OF DATE: 19990414 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: SEC FILE NUMBER: 001-09102 FILM NUMBER: 99593104 BUSINESS ADDRESS: STREET 1: 245 S LOS ROBLES AVE CITY: PASADENA STATE: CA ZIP: 91101 BUSINESS PHONE: 6266834000 MAIL ADDRESS: STREET 1: 245 S LOS ROBLES AVE CITY: PASADENA STATE: CA ZIP: 91101 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 February 28, 1999 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 91101-2820 (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 3,996,912 on March 31, 1999. 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 12 Item 6. Exhibits and Reports on Form 8-K 12 SIGNATURE PAGE 13 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 February 28, ------------------ 1999 1998 -------- -------- Net Sales $122,899 $102,526 Cost of Sales (92,018) (78,324) -------- -------- Gross Profit 30,881 24,202 Selling, General and Administrative Expenses (29,760) (25,046) Royalty, Equity and Other Income 3,824 1,771 -------- -------- Income before Interest and Income Taxes 4,945 927 Interest Income 56 154 Interest Expense (3,525) (2,647) -------- -------- Income/(Loss) before Income Taxes 1,476 (1,566) (Provision)/Benefit for Income Taxes (472) 626 -------- -------- Net Income/(Loss) $ 1,004 $ (940) ======== ======== Basic Net Income/(Loss) per Share $ .25 $ (.23) ======== ======== Diluted Net Income/(Loss) per Share $ .25 $ (.23) ======== ======== Weighted Average Common Shares Outstanding 4,016,712 4,005,956 ========= ========= Diluted Common Shares Outstanding 4,026,602 4,005,956 ========= ========= Cash Dividends per Share $ .32 $ .32 ======== ======== See accompanying notes to financial statements. Page 3 Ameron International Corporation and Subsidiaries Consolidated Balance Sheets (In thousands, except share and per share data) Feb. 28, Nov. 30, 1999 1998 -------- -------- ASSETS Current Assets Cash and Cash Equivalents $ 12,849 $ 16,376 Receivables, Net 128,378 136,380 Inventories 110,685 106,654 Deferred Income Tax Benefits 7,724 7,726 Prepaid Expenses and Other 8,141 6,554 -------- -------- Total Current Assets 267,777 273,690 Investments, Advances and Equity in Undistributed Earnings of Affiliated Companies 22,186 22,182 Property, Plant and Equipment, Net 153,165 157,918 Other Assets 46,334 46,429 -------- -------- Total Assets $489,462 $500,219 ======== ======== LIABILITIES and STOCKHOLDERS' EQUITY Current Liabilities Short-Term Borrowings $ 2,656 $ 3,024 Current Portion of Long-Term Debt 12,650 12,681 Trade Payables 33,754 37,273 Accrued Liabilities 50,485 50,353 Income Taxes 15,782 23,499 -------- -------- Total Current Liabilities 115,327 126,830 Long-Term Debt, Less Current Portion 172,358 165,308 Other Long-Term Liabilities 38,848 40,913 -------- -------- Total Liabilities 326,533 333,051 Stockholders' Equity Common Stock, Par Value $2.50 a Share, Authorized, 12,000,000 Shares, Outstanding, 3,996,912 Shares at February 28, 1999 and 4,030,112 Shares at November 30, 1998, Net of Treasury Shares 13,007 13,007 Additional Paid-In Capital 17,828 17,828 Retained Earnings 186,899 187,174 Accumulated Other Comprehensive Income (10,791) (8,062) Treasury Stock (1,206,100 shares in 1999 and 1,172,900 shares in 1998), at Cost (44,014) (42,779) -------- -------- Total Stockholders' Equity 162,929 167,168 -------- -------- Total Liabilities and Stockholders' Equity $489,462 $500,219 ======== ======== See accompanying notes to financial statements Page 4 Ameron International Corporation and Subsidiaries Consolidated Statements of Cash Flows (In thousands) Three Months Ended Feb. 28, ------------------- 1999 1998 -------- -------- Cash Flow from Operating Activities Net Income/(Loss) $ 1,004 $ (940) Adjustments to Reconcile to Net Cash Provided by (Used in) Operating Activities: Depreciation 4,449 3,916 Amortization 542 308 Equity in Earnings of Affiliated Companies (2,200) (372) Dividends from Affiliated Companies 2,200 611 Other, Net 2,193 277 Changes in Operating Assets and Liabilities: Change in Receivables 6,341 16,310 Change in Inventories (5,173) (12,711) Change in Other Current Assets (1,708) (281) Change in Trade Payables and Other Current Liabilities (10,031) 707 Change in Other Assets and Liabilities, Net (488) (4,292) -------- -------- Net Cash Provided by (Used in) Operating Activities (2,871) 3,533 Cash Flow from Investing Activities Proceeds from Sale of Assets 1,069 58 Additions to Property, Plant and Equipment (3,787) (6,832) Other (2,513) (333) -------- -------- Net Cash Used in Investing Activities (5,231) (7,107) Cash Flow from Financing Activities Net Change in Debt with Maturities of Three Months or Less (324) (130) Issuance of Debt 9,055 2,312 Repayment of Debt (1,449) (160) Dividends to Common Stockholders (1,279) (1,282) Issuance of Common Stock - 31 Purchase of Treasury Stock (1,235) - -------- -------- Net Cash Provided by Financing Activities 4,768 771 Effect of Exchange Rate Changes on Cash and Cash Equivalents (193) (72) -------- -------- Net Change in Cash and Cash Equivalents (3,527) (2,875) Beginning Cash and Cash Equivalents Balance 16,376 9,848 -------- -------- Ending Cash and Cash Equivalents Balance $ 12,849 $ 6,973 ======== ======== See accompanying notes to financial statements Page 5 Ameron International Corporation and Subsidiaries Notes to Consolidated Financial Statements (In thousands, except share and per share data) February 28, 1999 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 Ameron International Corporation ("Company" or "Ameron") at February 28, 1999, and the consolidated statements of income for the three- month periods ended February 28, 1999 and 1998, and cash flows for the three-month periods ended February 28, 1999 and 1998. 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, 1998. Note 2. Inventories Inventories are stated at the lower of cost (principally first-in, first-out)or market. Inventories at February 28, 1999 and November 30, 1998 were comprised of the following: Feb. 28, Nov. 30, 1999 1998 -------- -------- Finished Products $ 64,966 $ 62,888 Products in Process 24,035 20,988 Materials and Supplies 21,684 22,778 -------- -------- Total Inventories $110,685 $106,654 ======== ======== Note 3. Other Cash Flow Information: Three Months Ended Feb. 28, ------------------- 1999 1998 -------- -------- Interest Paid $ 508 $ 1,073 Income Taxes Paid $ 7,188 $ 333 Page 6 Note 4. Unconsolidated Affiliated Companies Summarized operating results of affiliated companies in the Concrete and Steel Pipe Products segment follow: Three Months Ended Feb. 28, ------------------- 1999 1998 -------- -------- Net Sales $ 12,499 $ 19,302 Gross Profit $ 6,420 $ 5,279 Net Income $ 4,428 $ 1,607 Amounts shown above represent operating results for Ameron Saudi Arabia, Ltd., for the three-month periods ended December 31, 1998 and 1997 and Gifford-Hill- American, Inc. for the three-month period ended February 28, 1998. The Company sold its 50% ownership of Gifford-Hill-American, Inc. in late 1998. Summarized results of operations of Tamco, Bondstrand, Ltd., and Oasis Ameron, Ltd. follow: Three Months Ended Feb. 28, ------------------- 1999 1998 -------- -------- Net Sales $ 35,713 $ 36,445 Gross Profit $ 8,689 $ 8,447 Net Income $ 3,935 $ 2,936 Amounts shown above include operating results for Tamco for the three-month periods ended February 28, 1999 and 1998 and operating results for Bondstrand, Ltd. and Oasis Ameron, Ltd. for the three-month periods ended December 31, 1998 and 1997. Note 5. Net Income Per Share The Company adopted Statement of Financial Accounting Standards No. 128 (SFAS 128), "Earnings Per Share" in the first quarter of fiscal year 1998 which requires the company to disclose both basic and diluted earnings per share. The basic earnings per share is computed on the basis of the weighted average number of common shares outstanding. The diluted earnings per share is computed on the basis of the weighted average number of common shares outstanding each year, plus common stock equivalents related to diluted stock options. Page 7 Note 6. Other Comprehensive Income The Company adopted Statement of Financial Accounting Standards No. 130 (SFAS 130), "Reporting Comprehensive Income" in the first quarter of fiscal year 1998. The Company recognized unrealized foreign currency translation losses of $2,729 and $2,837 for the three months ended February 28, 1999 and 1998. Accumulated other comprehensive income included $502 minimum pension liability as of February 28, 1999 and November 30, 1998. Note 7. Debt At February 28, 1999 and November 30, 1998, the Company's long-term debt consists of the following: Feb. 28, Nov. 30, 1999 1998 -------- -------- Fixed-rate unsecured notes payable: 9.79% payable in annual principal installments of $12,000 $ 24,000 $ 24,000 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 (2.90% at Feb. 28, 1999) 7,200 7,200 Variable-rate unsecured bank revolving credit facilities (approximately 5.18% at Feb. 28, 1999) 101,694 94,406 Variable-rate unsecured bank loan, payable by a consolidated subsidiary in Dutch guilders, with annual principal installments of approximately $650 (4.17% at Feb. 28, 1999) 2,114 2,383 -------- -------- Total Long-Term Debt 185,008 177,989 Current portion 12,650 12,681 -------- -------- Long-Term Debt, Less Current Portion $172,358 $165,308 ======== ======== Note 8. Business Restructuring For the three months ended February 28, 1999, $388 was charged to the 1998 restructuring reserve. The remaining reserve for business restructuring at February 28, 1999 was $934. 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 February 28, 1999 INTRODUCTION Management's Discussion and Analysis should be read in conjunction with the same discussion included in the Company's 1998 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 first quarter of fiscal 1999 the Company used $2.9 million of cash for operating activities, principally as a result of higher working capital requirements. The change in working capital reflected the increased sales volume in the Coatings and Concrete and Steel Pipe businesses, and the payment of income taxes. Cash used in investing activities consisted of capital expenditures for normal replacement and upgrades of machinery and equipment. Management estimates that capital expenditures during this fiscal year will be between $15.0 million and $25.0 million. Capital expenditures will be funded from existing cash balances, cash generated from operations and existing lines of credit. Additional net borrowings of $7.3 million were used for capital expenditures, increased working capital requirements, payment of common dividends of $1.3 million and the repurchase of the Company's shares of $1.2 million. Cash and cash equivalents at February 28, 1999 totaled $12.8 million, a decrease of $3.5 million from November 30, 1998. At February 28, 1999 the Company had approximately $96.3 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 - FIRST QUARTER The Company earned 25 cents per diluted share on sales of $122.9 million for the first quarter of fiscal 1999, compared to a loss of 23 cents per diluted share on sales of $102.5 million for the same period last year. The improvement was attributed primarily to higher sales of the Concrete and Steel Pipe Group and greater profitability from all businesses. Sales of the Concrete and Steel Pipe business significantly increased because of the healthy backlog at the start of the year and the relatively mild weather during the first quarter of 1999. The Company's first quarter of 1998 was adversely impacted by unusually wet weather and a strike at a major steel pipe facility. Operating profit in 1999 increased proportionally to the sales increase. The near-term outlook for Concrete and Steel Pipe remains strong. The Company's worldwide Fiberglass-Composite Pipe business had slightly lower sales than in the same quarter of 1998, as the business continued to suffer from depressed oil prices. Pipe sales to the U.S. fuel-handling market were stronger than expected. Additionally, sales from Ameron's Asian operations continued to strengthen. Profits from sales of fiberglass-composite pipe improved in spite of the sales decline because of the cost reduction steps taken in 1998 and improved productivity worldwide. The Company's worldwide Coatings businesses had higher sales and profitability than in the first quarter of 1998. The sales increase came from the former Croda Coatings businesses in England, Australia and New Zealand, which were acquired in April 1998. The worldwide market for Ameron's coatings remains soft because of depressed commodity and oil prices. Profits improved because of the cost reduction steps taken in 1998. Ameron's Construction and Allied Products business reported lower sales but higher profits. Hawaiian operations declined in the first quarter because of the continued impact of the Asian economic situation on the Hawaiian economy. The decline in Hawaii was offset by an improvement in Ameron's pole business, which benefitted from the mild weather in the western U.S. Selling, General and Administrative expenses were higher for the quarter compared to the same period in 1998, primarily due to the Croda acquisition that took place in the second quarter of 1998 and higher insurance costs. Royalty, Equity and Other Income was higher because of higher dividends from an affiliated company. YEAR 2000 The Company's efforts to address Year 2000 (Y2K) issues began in 1997. In addressing the issues, the Company has employed a five-step process consisting of 1) conducting a company-wide inventory, 2) assessing Y2K compliance, 3) remediating non-compliant hardware and software, 4) testing remediated hardware and software and 5) certifying Y2K compliance. Personnel from operations and from functional disciplines, as well as information technology professionals, are involved in the process. Outside consultants have also been retained to participate in the inventory and assessment process, provide support resources on a company-wide basis and minimize duplication of efforts. Inventory and assessment activities are completed. The data are continuously Page 10 updated as new information becomes available and we expect this to continue. Overall remediation efforts are estimated at approximately 85 percent complete. Communication with customers and suppliers to determine the extent of their Y2K efforts is an integral part of the program. Costs for Y2K efforts are not being accumulated separately. The costs are being expensed or capitalized as part of normal operation. Overall, the costs are not expected to have a significant effect on the Company's financial position or results of operations. The Company believes it will not have significant exposure to Y2K issues and that the risk to its operations and financial condition is not material. CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 Any of the above statements that refer to the Company's estimated or anticipated future results are forward-looking and reflect the Company's current analysis of existing trends and information. Actual results may differ from current expectations based on a number of factors affecting Ameron's businesses, including competitive conditions and changing market conditions. Matters affecting the economy generally, including the state of economies worldwide, can affect the Company's results. These forward-looking statements represent the Company's judgment only as of the date of this report. Since actual results could differ materially, the reader is cautioned not to rely on these forward- looking statements. Moreover, the Company disclaims any intent or obligation to update these forward looking statements. Page 11 Part II. OTHER INFORMATION Item 2. Changes in Securities Terms of lending agreements place restrictions on cash dividends, stock repurchases, borrowings, investments and guarantees and require maintenance of specified minimum working capital. Under the most restrictive provisions of these agreements, approximately $5.7 million of consolidated retained earnings were not restricted at February 28, 1999. Item 6. Exhibits and Reports on Form 8-K A Form 8-K was filed on February 2, 1999 to report the Company's financial results for the year which ended November 30, 1998. Page 12 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: April 14, 1999 /s/ Gary Wagner _________________________________ Gary Wagner Senior Vice President, Chief Financial Officer Page 13 EX-27 2
5 3-MOS 3-MOS NOV-30-1999 NOV-30-1998 FEB-28-1999 FEB-28-1998 12,849 6,973 0 0 128,378 105,169 0 0 110,685 107,958 267,777 233,706 153,165 128,149 0 0 489,462 423,890 115,327 87,371 0 0 0 0 0 0 13,007 12,948 149,922 135,006 489,462 423,890 122,899 102,526 122,899 102,526 92,018 78,324 0 0 29,760 25,046 0 0 3,525 2,647 1,476 (1,566) 472 (626) 1,004 (940) 0 0 0 0 0 0 1,004 (940) 0.25 (0.23) 0.25 (0.23)
-----END PRIVACY-ENHANCED MESSAGE-----