-----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, Ofzvh8ZsQ0xsTks8ivieV0AR+PqL7RLThizXzTIdGd7bLAAi+JTXFJqjnKT4ahr5 nD7h8x7O7RWBwbLZdyIA1Q== 0000790730-97-000013.txt : 19971015 0000790730-97-000013.hdr.sgml : 19971015 ACCESSION NUMBER: 0000790730-97-000013 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970831 FILED AS OF DATE: 19971014 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: SEC FILE NUMBER: 001-09102 FILM NUMBER: 97694466 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 August 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 4,004,862 on September 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 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 Nine Months Ended August 31, August 31, ------------------ ----------------- 1997 1996 1997 1996 -------- -------- -------- ------- Net Sales $146,323 $133,622 $386,109 366,006 Cost of Sales 107,833 97,402 284,728 273,571 -------- -------- -------- ------- Gross Profit 38,490 36,220 101,381 92,435 Selling, General and Administrative Expenses 27,375 26,274 80,107 73,723 -------- -------- -------- -------- Operating Profit 11,115 9,946 21,274 18,712 Royalty, Equity and Other Income 3,128 1,590 8,073 5,694 -------- -------- -------- -------- Income before Interest and Income Taxes 14,243 11,536 29,347 24,406 Interest Income 36 69 191 170 Interest Expense 3,432 2,418 9,141 7,966 -------- -------- -------- -------- Income before Income Taxes 10,847 9,187 20,397 16,610 Provision for Income Taxes 3,797 3,215 7,139 5,813 -------- -------- -------- -------- Net Income $ 7,050 $ 5,972 $ 13,258 $10,797 ======== ======== ======== ======== Net Income per Share $ 1.72 $ 1.50 $ 3.25 $ 2.71 ======== ======== ======== ======== Cash Dividends per Share $ .32 $ .32 $ .96 $ .96 ======== ======== ======== ======== Average Common and Equivalent Shares Outstanding 4,082,831 3,977,481 4,082,831 3,977,481 ========= ========= ========= ========= See accompanying notes to financial statements. Page 3 Ameron International Corporation and Subsidiaries Consolidated Balance Sheets (In thousands except share and per share data) August 31, Nov. 30, 1997 1996 -------- -------- ASSETS Current Assets Cash and cash equivalents $ 22,502 $ 18,381 Receivables, net 112,336 105,534 Inventories 106,683 84,971 Deferred income tax benefits 10,977 9,741 Prepaid expenses and other 3,903 4,996 -------- -------- Total current assets 256,401 223,623 Investments, Advances and Equity in Undistributed Earnings of Affiliated Companies 34,129 33,722 Property, Plant and Equipment, net 126,430 125,687 Other Assets 30,059 28,634 -------- -------- Total Assets $447,019 $411,666 ======== ======== LIABILITIES and STOCKHOLDERS' EQUITY Current Liabilities Short-term borrowings $ 1,368 $ 1,242 Current portion of long-term debt 17,639 17,753 Trade payables 31,346 36,715 Accrued liabilities 41,362 41,102 Income taxes 2,525 4,953 -------- -------- Total current liabilities 94,240 101,765 Deferred Income Taxes 717 2,727 Long-term Debt, less current portion 154,407 112,598 Other Long-term Liabilities 49,425 49,778 -------- -------- Total liabilities 298,789 266,868 Stockholders' Equity Common stock, par value $2.50 a share, Authorized, 12,000,000 shares, Outstanding, 4,004,737 shares at August 31, 1997 and 3,985,112 shares at November 30, 1996, net of treasury shares 12,944 12,895 Additional paid-in capital 16,830 16,212 Retained earnings 166,736 157,321 Cumulative foreign currency translation adjustment (5,501) 1,149 Treasury stock (1,172,900 shares), at cost (42,779) (42,779) -------- -------- Total stockholders' equity 148,230 144,798 -------- -------- Total Liabilities and Stockholders' Equity $447,019 $411,666 ======== ======== 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, ------------------- 1997 1996 -------- -------- Cash Flow from Operating Activities Net income $ 13,258 $ 10,797 Adjustments to reconcile to net cash (used in) provided by operating activities: Depreciation and amortization 11,884 12,509 Equity in earnings of affiliated companies (2,749) (1,952) Dividends from affiliated companies 2,787 2,740 Other, net 1,692 (698) Changes in operating assets and liabilities: Change in receivables (12,497) (2,888) Change in inventories (24,545) 6,178 Change in other current assets (391) (52) Change in trade payables and other current liabilities (5,200) 606 Change in other assets and liabilities, net (872) 3,733 -------- -------- Net cash (used in) provided by operating activities (16,633) 30,973 Cash Flow from Investing Activities Proceeds from sale of assets 532 987 Additions to property, plant and equipment, and acquisitions (17,607) (19,700) Other (2,277) (1,959) -------- -------- Net cash used in investing activities (19,352) (20,672) Cash Flow from Financing Activities Net change in debt with maturities of three months or less 128 (541) Issuance of debt 51,653 56,706 Repayment of debt (7,705) (26,085) Dividends to common stockholders (3,843) (3,802) Issuance of common stock 667 88 -------- -------- Net cash provided by financing activities 40,900 26,366 Effect of Exchange Rate Changes on Cash and Equivalents (794) (150) -------- -------- Net Change in Cash and Equivalents 4,121 36,517 Beginning Cash and Equivalents Balance 18,381 12,923 -------- -------- Ending Cash and Equivalents Balance $ 22,502 $ 49,440 ======== ======== See accompanying notes to financial statements Page 5 Ameron International Corporation and Subsidiaries Notes to Consolidated Financial Statements August 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 August 31, 1997, and the consolidated statements of income for the three- and nine-month periods ended August 31, 1997 and 1996, and cash flows for the nine-month periods ended August 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 August 31, 1997 and November 30, 1996 were comprised of the following (U.S. dollars in thousands): August 31, Nov. 30, 1997 1996 -------- -------- Finished products $ 55,046 $ 44,577 Products in process 28,845 17,467 Materials and supplies 22,792 22,927 -------- -------- Total Inventories $106,683 $ 84,971 ======== ======== Note 3. Other Cash Flow Information (U.S. dollars in thousands): Nine Months Ended August 31, ------------------- 1997 1996 -------- -------- Interest paid $ 6,703 $ 5,391 ======== ======== Income taxes paid $ 10,694 $ 7,438 ======== ======== 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 Nine Months Ended August 31, August 31, ------------------- ------------------- 1997 1996 1997 1996 -------- -------- -------- -------- Net Sales $ 18,104 $ 10,763 $ 36,087 $ 33,192 Gross Profit $ 3,679 $ 2,595 $ 6,508 $ 8,754 Net Income/(Loss) $ 428 $ (491) $ (1,221) $ (536) Amounts shown above represent operating results for Gifford-Hill-American, Inc. for the three- and nine-month periods ended August 31, 1997 and July 31, 1996 and operating results for Ameron Saudi Arabia, Ltd. for the three- and nine-month periods ended June 30, 1997 and 1996. 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, ------------------- ------------------- 1997 1996 1997 1996 -------- -------- -------- -------- Net Sales $ 49,509 $ 43,417 $127,587 $115,015 Gross Profit $ 8,568 $ 8,936 $ 22,464 $ 18,762 Net Income $ 3,286 $ 4,171 $ 7,832 $ 6,358 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, 1997 and 1996. Page 7 Note 5. Income Taxes The deferred tax assets and deferred tax liabilities recorded on the balance sheet as of August 31, 1997 are as follows (U.S. dollars in thousands): Non- Current Current -------- -------- Deferred Tax Assets Self-insurance & contingency reserves $ 1,435 $ 8,139 Employee benefits 2,497 9,008 Accounts receivable 3,389 - Inventory 2,959 - Federal and State tax credits and loss carryovers - 2,347 Miscellaneous 697 286 -------- -------- Total Deferred Tax Asset 10,977 19,780 Deferred Tax Liabilities Investments - (60) Fixed Assets - (20,437) -------- -------- Total Deferred Tax Liability - (20,497) -------- -------- Net Deferred Tax Asset (Liability) $ 10,977 $ (717) ======== ======== Note 6. Debt At August 31, 1997 and November 30, 1996, the Company's long-term debt consists of the following (U.S. dollars in thousands): Aug. 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 (3.45% at August 31, 1997) 7,200 7,200 Variable-rate unsecured bank revolving credit facilities (approximately 5.85% at August 31, 1997) 53,812 11,009 Variable-rate unsecured bank loan, payable by a consolidated subsidiary in Dutch guilders, with annual principal installments of approximately $639 (4.01% at August 31, 1997) 3,034 4,142 -------- -------- 172,046 130,351 Less - Current portion 17,639 17,753 -------- -------- $154,407 $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 August 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 nine-month period ended August 31, 1997, the Company used $16.6 million of cash for operating activities (compared to generating $31 million during the nine-month period ended August 31, 1996), principally as a result of higher working capital requirements. The change in working capital reflects higher inventory levels and receivables caused by increased sales volume in the Protective Coatings business due to the Devoe and Valspar acquisitions and the seasonal demands of the Concrete and Steel Pipe business. Additional net borrowings of $44.1 million plus $0.7 million from the issuance of common stock were used for capital expenditures, increased working capital requirements and payment of common dividends of $3.8 million. Cash and cash equivalents at August 31, 1997 totaled $22.5 million, an increase of $4.1 million from November 30,1996. Cash used in investing activities consisted primarily of capital expenditures for normal replacement and upgrades of machinery and equipment and a new fiberglass pipe plant in Malaysia. Management estimates that capital spending by the Company during this fiscal year will be between $20.0 million and $30.0 million. Capital expenditures will be funded from existing cash balances, cash generated from operations and existing lines of credit. At August 31, 1997, the Company had approximately $72 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 - THIRD QUARTER The Company earned $1.72 per share on sales of $146.3 million for the third quarter of fiscal 1997, which compares favorably to earnings of $1.50 per share on sales of $133.6 million for the same period last year. The quarterly earnings improvement came primarily from increased profitability from the worldwide Protective Coatings business. 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. The Fiberglass Pipe business reported lower sales and earnings for the quarter compared to the same period in 1996, because of a decline in international operations. During the quarter, the European operation completed a reorganization and trimmed staff to reduce future costs. Additionally, during the quarter, two domestic fiberglass pipe plants were consolidated into one manufacturing facility. A smaller plant in Spartanburg, South Carolina, was closed and its equipment relocated to a larger plant in Burkburnett, Texas. The Concrete and Steel Pipe business reported slightly higher sales and lower earnings. The earnings decline resulted from increased repair costs and a change in sales mix. 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. During the quarter, a major reorganization was completed in Hawaii, including a 20% reduction in salaried staff, to reduce future costs. The domestic Pole Products business reported slightly higher sales and earnings. RESULTS OF OPERATIONS - YEAR TO DATE The Company earned $3.25 per share on sales of $386.1 million during the nine months ended August 31, 1997, which compares favorably to earnings of $2.71 per share on sales of $366 million during the prior year period. The improvements resulted from substantial increases in sales and profits by Protective Coatings and improved efficiencies by Fiberglass Pipe. Protective Coatings year-to-date sales and earnings increased significantly because of the Devoe acquisition, the Valspar acquisition and an increase in sales of traditional Ameron coatings. The Fiberglass Pipe business reported lower sales 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 weather-related and customer-requested delays that affected deliveries. Profits were negatively impacted by the reduced sales volume. Page 10 The construction products business in Hawaii posted a decline in sales and earnings due to the depressed Hawaiian construction market. Sales from the Pole Products business improved slightly for the year-to-date; however, earnings declined because of a change in product mix and plant utilization. Net interest expense for the nine-month period was higher than the same period last year due primarily to increased borrowings to fund working capital requirements to support increased sales volume in the Protective Coatings business and higher Concrete and Steel Pipe inventory. Page 11 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 $6.5 million of consolidated retained earnings was not restricted at August 31, 1997. Item 6. Exhibits and Reports on Form 8-K A report on Form 8-K was filed on June 26, 1997, related to a news release disclosing the Company's financial results for the second quarter, which ended May 31, 1997. 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: October 10, 1997 /s/ Gary Wagner _________________________________ Gary Wagner Senior Vice President, Chief Financial Officer EX-27 2
5 9-MOS NOV-30-1997 AUG-31-1997 22,502 0 112,336 0 106,683 256,401 126,430 0 447,019 94,240 0 0 0 12,944 0 447,019 386,109 386,109 284,728 0 80,107 0 9,141 20,397 7,139 13,258 0 0 0 13,258 3.25 0
-----END PRIVACY-ENHANCED MESSAGE-----