-----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, L0EYZjYSF2wQUUHTPmwvk3ePBohrdHxKrURJJ4zYQJAdoipHomisxgk4eSTc44qm YoHmkrUPX3o23NCJaRpr9g== 0000790730-00-000004.txt : 20000417 0000790730-00-000004.hdr.sgml : 20000417 ACCESSION NUMBER: 0000790730-00-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000229 FILED AS OF DATE: 20000414 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: 600801 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 29, 2000 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 3,991,912 on March 31, 2000. No other class of Common Stock exists. Page 1 AMERON INTERNATIONAL CORPORATION INDEX Page ---- PART I. FINANCIAL INFORMATION Item 1. Consolidated 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 Item 3. Quantitative & Qualitative Market Risk Disclosure 12 PART II. OTHER INFORMATION 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) (Unaudited) Three Months Ended February 29 and 28, ------------------ 2000 1999 -------- -------- Sales $121,365 $122,899 Cost of Sales (93,312) (92,018) -------- -------- Gross Profit 28,053 30,881 Selling, General and Administrative Expenses (27,142) (29,760) Other Income, net 3,633 3,824 -------- -------- Income before Interest and Income Taxes 4,544 4,945 Interest Income 30 56 Interest Expense (3,306) (3,525) -------- -------- Income before Income Taxes 1,268 1,476 Provision for Income Taxes (317) (472) -------- -------- Net Income $ 951 $ 1,004 ======== ======== Net Income per Share (Basic) $ .24 $ .25 ======== ======== Net Income per Share (Diluted) $ .24 $ .25 ======== ======== Weighted Average Shares(Basic) 3,991,912 4,016,712 ========= ========= Weighted Average Shares (Diluted) 4,002,853 4,026,602 ========= ========= Cash Dividends per Share $ .32 $ .32 ======== ======== See accompanying notes to consolidated financial statements. Page 3 Ameron International Corporation and Subsidiaries Consolidated Balance Sheets (In thousands, except share and per share data) Feb. 29, Nov. 30, 2000 1999 (Unaudited) -------- -------- ASSETS Current Assets Cash and Cash Equivalents $ 7,959 $ 10,521 Receivables, less allowances of $7,125 in 2000 and $6,937 in 1999 116,629 118,900 Inventories 96,079 95,488 Deferred Income Taxes 11,025 11,054 Prepaid Expenses and Other Current Assets 8,759 6,691 -------- -------- Total Current Assets 240,451 242,654 Investments, Advances and Equity in Undistributed Earnings of Affiliated Companies 20,628 23,046 Property, Plant and Equipment, Net 148,329 149,597 Other Assets 44,338 43,670 -------- -------- Total Assets $453,746 $458,967 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Short-Term Borrowings $ 3,244 $ 3,479 Current Portion of Long-Term Debt 12,570 12,595 Trade Payables 36,150 36,667 Accrued Liabilities 40,649 43,552 Income Taxes Payable 16,319 18,848 -------- -------- Total Current Liabilities 108,932 115,141 Long-Term Debt, Less Current Portion 140,373 135,237 Other Long-Term Liabilities 29,457 30,469 -------- -------- Total Liabilities 278,762 280,847 -------- -------- Stockholders' Equity Common Stock, Par Value $2.50 a Share, Authorized 12,000,000 Shares, Outstanding 3,991,912 Shares for 2000 and 1999, Net of Treasury Shares 13,007 13,007 Additional Paid-In Capital 17,857 17,857 Retained Earnings 204,010 204,336 Accumulated Other Comprehensive Loss (15,696) (12,886) Less Treasury Stock (1,211,100 shares for 2000 and 1999) (44,194) (44,194) -------- -------- Total Stockholders' Equity 174,984 178,120 -------- -------- Total Liabilities and Stockholders' Equity $453,746 $458,967 ======== ======== See accompanying notes to consolidated financial statements. Page 4 Ameron International Corporation and Subsidiaries Consolidated Statements of Cash Flows (In thousands) (Unaudited) Three Months Ended February 29 and 28, ------------------- 2000 1999 -------- -------- Cash Flows from Operating Activities Net Income $ 951 $ 1,004 Adjustments to Reconcile Net Income to Net Cash Used in Operating Activities: Depreciation 4,046 4,449 Amortization 421 542 Provision for Deferred Income Taxes 156 - Equity in Earnings of Affiliated Companies (1,765) (2,200) Dividends from Affiliated Companies 3,957 2,200 Gain from Sale of Assets (17) (218) Other, Net - 2,411 Changes in Operating Assets and Liabilities: Receivables 739 6,341 Inventories (1,607) (5,173) Prepaid Expenses and Other Current Assets (2,165) (1,708) Trade Payables, Accrued Liabilities and Income Taxes Payable (5,062) (10,031) Other Long-Term Assets and Liabilities (2,375) (488) -------- -------- Net Cash Used in Operating Activities (2,721) (2,871) -------- -------- Cash Flows from Investing Activities Proceeds from Sale of Property, Plant and Equipment 75 1,069 Additions to Property, Plant and Equipment (4,126) (3,787) Other - (2,513) -------- -------- Net Cash Used in Investing Activities (4,051) (5,231) -------- -------- Cash Flows from Financing Activities Net Decrease of Debt with Maturities of Three Months of Less (217) (324) Issuance of Debt 6,700 9,055 Repayment of Debt (1,142) (1,449) Dividends on Common Stock (1,277) (1,279) Purchase of Treasury Stock - (1,235) -------- -------- Net Cash Provided by Financing Activities 4,064 4,768 -------- -------- Effect of Exchange Rate Changes on Cash and Cash Equivalents 146 (193) -------- -------- Net Change in Cash and Cash Equivalents (2,562) (3,527) Cash and Cash Equivalents at Beginning of Period 10,521 16,376 -------- -------- Cash and Cash Equivalents at End of Period $ 7,959 $ 12,849 ======== ======== See accompanying notes to consolidated financial statements. Page 5 Ameron International Corporation and Subsidiaries Notes to Consolidated Financial Statements (In Thousands) (Unaudited) Note 1. Basis Of Presentation The consolidated financial statements for the interim periods included herein are unaudited; however, they contain all adjustments, including 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 29, 2000, and its consolidated results of operations and its consolidated cash flows for the three months ended February 29, 2000 and February 28, 1999. Accounting measurements at interim dates inherently involve greater reliance on estimates than at year- end. The results of operations for the periods presented are not necessarily indicative of the results to be expected for the full year. The consolidated financial statements do not include certain footnote disclosures and financial information normally included in consolidated financial statements prepared in accordance with generally accepted accounting principles and, therefore, should be read in conjunction with the consolidated financial statements and notes included in Ameron's Annual Report on Form 10-K for the year ended November 30, 1999. Note 2. New Accounting Pronouncement In 1998, Statement of Financial Accounting Standards No. 133 ("SFAS 133"), "Accounting for Derivative Instruments and Hedging Activities," was issued. Ameron is required to adopt SFAS 133 beginning December 1, 2000. The Company is currently evaluating the impact of adopting SFAS 133. Note 3. Inventories Inventories are stated at the lower of cost (principally first-in, first-out)or market. Inventories were comprised of the following: Feb. 29, Nov. 30, 2000 1999 -------- -------- Finished Products $ 61,091 $ 56,122 Products in Process 14,066 17,382 Materials and Supplies 20,922 21,984 -------- -------- Total Inventories $ 96,079 $ 95,488 ======== ======== Note 4. Supplemental Disclosure of Cash Flow Information Three Months Ended Feb. 29 and 28, ------------------- 2000 1999 -------- -------- Interest Paid $ 1,795 $ 508 Income Taxes Paid $ 2,351 $ 7,188 Page 6 Note 5. Unconsolidated Affiliated Companies Operating results of affiliated companies, which were accounted for by the equity method, were as follows: Three Months Ended Feb. 29 and 28, ------------------- 2000 1999 -------- -------- Net Sales $ 55,404 $ 48,212 Gross Profit $ 17,985 $ 15,109 Net Income $ 7,905 $ 8,363 Amounts shown above represent the operating results of Ameron Saudi Arabia, Ltd., Bondstrand, Ltd. and Oasis-Ameron, Ltd. for the three months ended December 31, 1999 and 1998 and TAMCO for the three months ended February 29, 2000 and February 28, 1999. Ameron's equity in earnings of affiliated companies is included in other income. Note 6. Earnings Per Share ("EPS") The net income per basic share is computed on the basis of the weighted average number of common shares outstanding each period. The net income per diluted share is computed on the basis of the weighted average total of common shares outstanding each period plus the effect of outstanding stock options, excluding those that would be anti-dilutive, using the treasury stock method. The following table is a reconciliation of the weighted average number of shares used in the computation of basic and diluted EPS: Three Months Ended Feb. 29 and 28, ------------------- 2000 1999 --------- --------- Basic Average Common Shares Outstanding 3,991,912 4,016,712 Dilutive Effect of Stock Options 10,941 9,890 --------- --------- Diluted Average Common Shares Outstanding 4,002,853 4,026,602 ========= ========= Page 7 Note 7. Other Comprehensive Income Comprehensive loss was computed as follows: Three Months Ended Feb. 29 and 28, ------------------- 2000 1999 -------- -------- Net Income $ 951 $ 1,004 Foreign Currency Translation Adjustment, Net of Tax (2,810) (2,729) -------- -------- Comprehensive Loss $ (1,859) $ (1,725) ======== ======== Note 8. Debt The Company's long-term debt consisted of the following: Feb. 29, Nov. 30, 2000 1999 -------- -------- Fixed-rate unsecured notes payable: 9.79%, payable in annual principal installments of $12,000 $ 12,000 $ 12,000 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 (3.90% at February 29, 2000) 7,200 7,200 Variable-rate unsecured bank revolving credit facilities (approximately 6.22% at February 29, 2000) 82,462 77,144 Variable-rate unsecured bank loan, payable by a consolidated subsidiary in Dutch guilders, with annual principal installments of approximately $569 (4.14% at February 29, 2000) 1,281 1,488 -------- -------- Total Long-Term Debt 152,943 147,832 Less Current portion ( 12,570) ( 12,595) -------- -------- Long-Term Debt, Less Current Portion $140,373 $135,237 ======== ======== Page 8 Note 9. Segment Information The Company provides certain information about operating segments in accordance with Statement of Financial Accounting Standards No. 131 ("SFAS 131"), "Disclosure about Segments of an Enterprise and Related Information." In accordance with SFAS 131, the Company has determined that is has four operating segments: The Coating Group, the Fiberglass-Composite Pipe Group, the Concrete & Steel Pipe Group, and the Construction & Allied Products Group. Each of these segments has a dedicated management team and is managed separately, primarily because of differences in products. In accordance with SFAS 131, the following table presents information related to each operating segment included in, and in a manner consistent with, internal management reports: Three Months Ended February 29 and 28, ------------------- 2000 1999 -------- -------- Sales Coatings $ 41,700 $ 44,875 Fiberglass-Composite Pipe 21,577 23,021 Concrete & Steel Pipe 33,391 30,840 Construction & Allied Products 24,731 24,357 Eliminations ( 34) ( 194) -------- -------- Total Sales $121,365 $122,899 ======== ======== Income (Loss) Before Interest and Income Taxes Coatings $ (428) $ 33 Fiberglass-Composite Pipe 1,369 3,335 Concrete & Steel Pipe 4,507 2,739 Construction & Allied Products 2,495 2,816 Corporate & Unallocated (3,399) (3,978) -------- -------- Total Income Before Interest and Income Taxes $ 4,544 $ 4,945 ======== ======== Assets Coatings $140,611 $171,122 Fiberglass-Composite Pipe 121,614 113,333 Concrete & Steel Pipe 102,392 119,016 Construction & Allied Products 58,436 55,716 Corporate & Unallocated 158,013 161,698 Eliminations (127,320) (131,423) -------- -------- Total Assets $453,746 $489,462 ======== ======== Investments Coatings $ 2,145 $ 2,135 Fiberglass-Composite Pipe 3,784 3,784 Concrete & Steel Pipe - - Construction & Allied Products - - Corporate & Unallocated 14,699 16,797 -------- -------- Total Investments $ 20,628 $ 22,716 ======== ======== Page 9 PART I. FINANCIAL INFORMATION Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Ameron International Corporation and Subsidiaries February 29, 2000 INTRODUCTION Management's Discussion and Analysis should be read in conjunction with the same discussion included in the Company's 1999 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 2000 the Company used $2.7 million of cash for operating activities, principally for the payment of accrued liabilities and 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 fiscal 2000 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 $5.3 million were used to finance operations, capital expenditures, and payment of common stock dividends of $1.3 million. Cash and cash equivalents at February 29, 2000 totaled approximately $8.0 million, a decrease of $2.6 million from November 30, 1999. At February 29, 2000 the Company had approximately $110.0 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 10 RESULTS OF OPERATIONS - FIRST QUARTER The Company earned 24 cents per diluted share on sales of $121.4 million for the first quarter of fiscal 2000, compared to earnings of 25 cents per diluted share on sales of $122.9 million for the same period in 1999. The slight decrease was attributed primarily to lower sales and profitability of the Coatings and Fiberglass-Composite Pipe businesses, offset by the higher sales and profitability of the Concrete & Steel Pipe business and the continued strength from Ameron's joint venture, TAMCO. Sales of Concrete & Steel Pipe increased $2.6 million in the first quarter of 2000, compared to the same period of 1999. Sales increased because of favorable weather conditions and continued demand for pipe products. Profitability increased $1.8 million in the first quarter of 2000, compared to the first quarter of 1999, as a result of higher sales and improved product mix and plant utilization. Concrete & Steel Pipe entered 2000 with a lower backlog, and the business is expected to moderate in 2000. Sales of the Company's worldwide Fiberglass-Composite Pipe business declined $1.4 million in the first quarter of 2000, compared to the first quarter of 1999, primarily because of the lingering impact of oil and commodity prices. Oil and commodity prices declined in 1998 and early 1999, reducing the general level of spending for maintenance and capital projects in a number of the Company's markets. Additionally, in the first quarter of 1999, the Fiberglass- Composite Pipe business benefited from higher sales of fuel-handling piping associated with government-mandated conversions of gas stations. Profits declined in the first quarter of 2000, primarily because of lower sales of higher-margin, fuel-handling piping. Overall, the outlook for Fiberglass- Composite Pipe is expected to improve in the second half of 2000. Coatings' sales declined $3.2 million in the first quarter of 2000, compared to the first quarter of 1999. The market factors which affected Fiberglass- Composite Pipe similarly affected Coatings. Coatings' profits declined primarily due to lower sales. An improvement in Coatings is also expected in the second half of 2000. Construction & Allied Products had flat sales, but profits declined primarily due to a strike at one of Ameron's operations in Hawaii. Ameron's pole business made up much of the shortfall in Hawaii, benefiting from strong construction spending for new housing and roadways. Selling, General and Administrative expenses were lower in the first quarter of 2000, compared to the first quarter of 1999, primarily due to the higher insurance costs in 1999. The effective tax rate was 25% in the first quarter of 2000, compared to 32% for the same period in 1999. The effective tax rates give effect to the anticipated income taxes on income from domestic operations, as well as foreign operations and joint ventures, which are taxed at rates lower than the U.S. marginal tax rate. Page 11 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 updated as new information becomes available, and we expect this to continue. Remediation efforts are estimated to be 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 operations. Overall, such costs have not had and are not expected to have a significant effect on the Company's financial position or results of operations. In the event of the failure to correct all compliance issues related to manufacturing control systems, the Company's plants have the ability, in most instances, to continue operations mechanically, rather than electronically. Following the arrival of the Year 2000, the Company has not experienced any problems, with devices and raw materials manufactured and/or supplied by third parties. There was no interruption in the Company's ability to manufacture and deliver its products and transact business with its suppliers and customers. The Company has received no notification from customers regarding Year 2000 issues related to products it has sold. The Company continues to monitor its systems, suppliers and products for any unanticipated issues that may arise. Although the Company believes it has taken the appropriate steps to address Y2K readiness, there is no guarantee that the Company's efforts will prevent a material adverse impact on the results of operations and financial condition. Item 3. Quantitative and Qualitative Market Risk Disclosure No material changes have occurred in the quantitative and qualitative market risk disclosure of the Company as presented in Ameron's Annual Report on Form 10-K for the year ended November 30, 1999. 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 12 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 $10.0 million of consolidated retained earnings were not restricted at February 29, 2000. Item 6. Exhibits and Reports on Form 8-K A Form 8-K was filed on February 25, 2000 to report the Company's financial results for the year ended November 30, 1999, as reported in press releases dated January 31, 2000 and February 17, 2000. 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: April 14, 2000 /s/ Gary Wagner _________________________________ Gary Wagner Senior Vice President, Chief Financial Officer EX-27 2
5 3-MOS 3-MOS NOV-30-2000 NOV-30-1999 FEB-29-2000 FEB-28-1999 7,959 12,849 0 0 123,754 133,552 7,125 5,174 96,079 110,685 240,450 267,777 350,960 353,820 202,631 200,655 453,746 489,462 108,931 115,327 140,373 172,358 0 0 0 0 13,007 13,007 161,977 149,922 453,746 489,462 121,365 122,899 121,365 122,899 93,312 92,018 93,312 92,018 27,142 29,760 188 68 3,306 3,525 1,268 1,476 317 472 951 1004 0 0 0 0 0 0 951 1,004 .24 .25 .24 .25
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