-----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, Hj23tAgFyfUkCd7M5t0eszZmHrGR3mmGL+xqLnO8ktj3uq9Lw/3UTMVWdLdS/dzM 9lotigj2cppgQ6P3SfoGjw== 0000790730-98-000005.txt : 19980410 0000790730-98-000005.hdr.sgml : 19980410 ACCESSION NUMBER: 0000790730-98-000005 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980228 FILED AS OF DATE: 19980409 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: 98590053 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 February 28, 1998 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 4,007,112 on March 31, 1998. 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 Statements of Comprehensive Income 4 Consolidated Balance Sheets 5 Consolidated Statements of Cash Flows 6 Notes to Consolidated Financial Statements 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 11 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) Three Months Ended February 28, ------------------- 1998 1997 -------- -------- Net Sales $102,526 $108,261 Cost of Sales 78,324 80,578 -------- -------- Gross Profit 24,202 27,683 Selling, General and Administrative Expenses 25,046 26,283 -------- -------- Operating Profit/(Loss) (844) 1,400 Royalty, Equity and Other Income 1,771 2,619 -------- -------- Income before Interest and Income Taxes 927 4,019 Interest Income 154 85 Interest Expense 2,647 2,541 -------- -------- Income/(Loss) Before Income Taxes (1,566) 1,563 Provision/(Benefit) for Income Taxes (626) 625 -------- -------- Net Income/(Loss) $ (940) $ 938 ======== ======== Basic Net Income/(Loss) per Share $ (.23) $ .23 ======== ======== Diluted Net Income/(Loss) per Share $ (.23) $ .23 ======== ======== Weighted Average Common Shares Outstanding 4,005,956 4,000,443 ========= ========= Diluted Common Shares Outstanding 4,005,956 4,067,138 ========= ========= Cash Dividends per Share $ .32 $ .32 ======== ======== See accompanying notes to financial statements. Page 3 Ameron International Corporation and Subsidiaries Consolidated Statements of Comprehensive Income (In thousands) Three Months Ended February 28, ------------------- 1998 1997 -------- -------- Net Income/(Loss) $ (940) $ 938 Other Comprehensive Income/(Loss): Foreign Currency Translation Adjustment (2,837) (3,644) -------- -------- Other Comprehensive Income/(Loss) before Tax (2,837) (3,644) Income Tax (Expense)/Benefit Related to Other Comprehensive Income 1,135 1,458 -------- -------- Other Comprehensive Income/(Loss), Net of Tax (1,702) (2,186) -------- -------- Comprehensive Income/(Loss) (2,642) (1,248) ======== ======== Page 4 Ameron International Corporation and Subsidiaries Consolidated Balance Sheets (In thousands except share and per share data) Feb. 28, Nov. 30, 1998 1997 -------- -------- ASSETS Current Assets Cash and cash equivalents $ 6,973 $ 9,848 Receivables, net 105,169 122,352 Inventories 107,958 95,752 Deferred income tax benefits 8,246 9,083 Prepaid expenses and other 5,360 4,257 -------- -------- Total current assets 233,706 241,292 Investments, Advances and Equity in Undistributed Earnings of Affiliated Companies 33,541 33,777 Property, Plant and Equipment, net 128,149 127,678 Other Assets 28,494 30,478 -------- -------- Total Assets $423,890 $433,225 ======== ======== LIABILITIES and STOCKHOLDERS' EQUITY Current Liabilities Short-term borrowings $ 585 $ 715 Current portion of long-term debt 17,635 17,654 Trade payables 35,868 31,988 Accrued liabilities 28,846 32,561 Income taxes 4,437 4,347 -------- -------- Total current liabilities 87,371 87,265 Deferred Income Taxes 1,320 2,907 Long-term Debt, less current portion 142,733 140,917 Other Long-term Liabilities 44,512 49,154 -------- -------- Total liabilities 275,936 280,243 Stockholders' Equity Common stock, par value $2.50 a share, Authorized, 12,000,000 shares, Outstanding, 4,006,362 shares at February 28, 1998 and 4,005,487 shares at November 30, 1997, net of treasury shares 12,948 12,946 Additional paid-in capital 16,998 16,969 Retained earnings 169,347 171,569 Accumulated other comprehensive income/(loss) (8,560) (5,723) Treasury stock (1,172,900 shares), at cost (42,779) (42,779) -------- -------- Total stockholders' equity 147,954 152,982 -------- -------- Total Liabilities and Stockholders' Equity $423,890 $433,225 ======== ======== See accompanying notes to financial statements Page 5 Ameron International Corporation and Subsidiaries Consolidated Statements of Cash Flows (In thousands) Three Month Ended February 28, ------------------- 1998 1997 -------- -------- Cash Flow from Operating Activities Net Income/(Loss) $ (940) $ 938 Adjustments to reconcile to net cash provided by (used in) operating activities: Depreciation 3,916 3,927 Amortization 308 156 Equity in earnings of affiliated companies (372) (531) Dividends from affiliated companies 611 1,137 Other, net 277 216 Changes in operating assets and liabilities: Change in receivables 16,310 755 Change in inventories (12,711) (11,802) Change in other current assets (281) (794) Change in trade payables and other current liabilities 707 (7,871) Change in other assets and liabilities, net (4,292) 996 -------- -------- Net cash provided by (used in) operating activities 3,533 (12,873) Cash Flow from Investing Activities Proceeds from sale of assets 58 41 Additions to property, plant and equipment (6,832) (5,290) Other (333) (253) -------- -------- Net cash used in investing activities (7,107) (5,502) Cash Flow from Financing Activities Net change in debt with maturities of three months or less (130) (32) Issuance of debt 2,312 15,452 Repayment of debt (160) (2,960) Dividends to common stockholders (1,282) (1,280) Issuance of common stock 31 566 -------- -------- Net cash provided by financing activities 771 11,746 Effect of Exchange Rate Changes on Cash and Equivalents (72) (315) -------- -------- Net Change in Cash and Equivalents (2,875) (6,944) Beginning Cash and Equivalents Balance 9,848 18,381 -------- -------- Ending Cash and Equivalents Balance $ 6,973 $ 11,437 ======== ======== See accompanying notes to financial statements Page 6 Ameron International Corporation and Subsidiaries Notes to Consolidated Financial Statements (In thousands except share and per share data) February 28, 1998 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 February 28, 1998 and the consolidated statements of income for the three-month periods ended February 28, 1998 and 1997, and cash flows for the three-month periods ended February 28, 1998 and 1997. 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, 1997. The Company adopts Statement of Financial Accounting Standards No. 128 (SFAS 128), "Earnings per Share" and No. 130 (SFAS 130), "Reporting Comprehensive Income" in its fiscal year 1998. As a result, the Company's reported earnings per share for 1997 were restated. The effect of this accounting change makes no difference on previously reported earnings per share. The full disclosure are in Note 6 and 7 below. Note 2. Inventories Inventories are stated at the lower of cost (principally first-in, first-out)or market. Inventories at February 28, 1998 and November 30, 1997 were comprised of the following: Feb. 28, Nov. 30, 1998 1997 -------- -------- Finished products $ 61,197 $ 56,989 Products in process 27,453 18,791 Materials and supplies 19,308 19,972 -------- -------- Total Inventories $107,958 $ 95,752 ======== ======== Page 7 Note 3. Other Cash Flow Information: Three Months Ended February 28, ------------------- 1998 1997 -------- -------- Interest paid $ 1,073 $ 412 ======== ======== Income taxes paid $ 333 $ 2,559 ======== ======== Note 4. Affiliated Companies Summarized operating results of affiliated companies in the Concrete and Steel Pipe Products segment follow: Three Months Ended February 28, ------------------- 1998 1997 -------- -------- Net Sales $ 19,302 $ 6,476 Gross Profit $ 5,279 $ 621 Net Income (Loss) $ 1,607 $ (1,404) Amounts shown above represent operating results for Gifford-Hill-American, Inc. for the three-month periods ended February 28, 1998 and January 31, 1997 and operating results for Ameron Saudi Arabia, Ltd. for the three-month periods ended December 31, 1997 and 1996. Summarized results of operations of Tamco, Bondstrand, Ltd., and Oasis-Ameron, Ltd. follow: Three Months Ended February 28, ------------------- 1998 1997 -------- -------- Net Sales $ 36,445 $ 33,912 Gross Profit $ 8,447 $ 6,169 Net Income $ 2,936 $ 1,874 Amounts shown above include operating results for Tamco for the three-month periods stated, and operating results for Bondstrand, Ltd. and Oasis-Ameron, Ltd. for the three-month periods ended December 31, 1997 and 1996. Page 8 Note 5. Income Taxes The deferred tax assets and deferred tax liabilities recorded on the balance sheet as of February 28, 1998 are as follows: Non- Current Current -------- -------- Deferred Tax Assets Self-insurance & contingency reserves $ 1,240 $ 7,840 Employee benefits 1,978 11,075 Accounts receivable 1,499 - Inventory 3,383 - Federal and State tax credits and loss carry forwards - 2,347 Miscellaneous 146 (307) -------- -------- Total Deferred Tax Asset 8,246 20,955 Deferred Tax Liabilities Investments - (2,704) Fixed Assets - (19,571) -------- -------- Total Deferred Tax Liability - (22,275) -------- -------- Net Deferred Tax Asset (Liability) $ 8,246 $ (1,320) ======== ======== Note 6. Comprehensive Income The Company adopts Statement of Financial Accounting Standards No. 130 (SFAS 130), "Reporting Comprehensive Income" in its fiscal year 1998. Accumulated other comprehensive income or loss is calculated as follow: Accumulated Other Comprehensive Income/(Loss) Foreign Currency Translation Adjustment: Balance at November 30, 1997 & 1996 (5,723) 1,149 Change during 1st Quarter (2,837) (3,644) -------- -------- Balance at February 28, 1998 & 1997 (8,560) (2,495) ======== ======== Page 9 Note 7. Earning Per Share The Company adopts Statement of Financial Accounting Standards No. 128 (SFAS 128), "Earnings per Share" in its fiscal year 1998. As a result, the Company's reported earnings per share for 1997 were restated. The effect of this accounting change makes no difference on previously reported earnings per share. Earning per share is calculated as follow: Per-Share Income Shares Amount -------- ---------- ---------- For Period Ended February 28, 1997 Basic Earnings per Share Income available to common stockholders $938,000 4,000,443 $ .23 Options issued to employees & directors 66,695 Diluted Earnings per Share $938,000 4,067,138 $ .23 For Period Ended February 28, 1998 Basic Earnings per Share Net (Loss) to common stockholders ($940,000) 4,005,956 ($ .23) Options issued to employees & directors* 0 Diluted Earnings per Share ($940,000) 4,005,956 ($ .23) *Potentially dilutive securities that were not included in the computation of diluted EPS because to do so would have been antidilutive. At February 28, 1998 and November 30, 1997, the Company's long-term debt consisted of the following: Feb. 28, Nov. 30, 1998 1997 -------- -------- Fixed-rate unsecured notes payable: 8.63%, payable in annual principal installments of $5,000 $ 5,000 $ 5,000 9.79%, payable in annual principal installments of $12,000 36,000 36,000 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 February 28, 1998) 7,200 7,200 Variable-rate unsecured bank revolving credit facilities (5.90% at February 28, 1998) 59,469 57,429 Variable-rate unsecured bank loan, payable by a consolidated subsidiary in Dutch guilders, with annual principal installments of approximately $635(4.01% at February 28, 1998) 2,699 2,942 -------- -------- 160,368 158,571 Less current portion 17,635 17,654 -------- -------- $142,733 $140,917 ======== ======== Page 10 PART I. FINANCIAL INFORMATION Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Ameron International Corporation and Subsidiaries February 28, 1998 INTRODUCTION Management's Discussion and Analysis should be read in conjunction with the same discussion included in the Company's 1997 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 1998 the Company generated $3.5 million of cash from operating activities, principally as a result of lower receivables that was partially offset by an increase in inventory. Cash and cash equivalents at February 28,1998 totaled almost $7 million, a decrease of $2.9 million from November 30,1997. 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, which will be funded from existing cash balances, cash generated from operations and existing lines of credit. At February 28, 1998, the Company had approximately $67 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. Page 11 RESULTS OF OPERATIONS - First Quarter The Company reported a loss of 23 cents per share on sales of $102.5 million for the first quarter of fiscal 1998. For the similar period in 1997, the company reported earnings of 23 cents per share on sales of $108.2 million. The loss was attributed primarily to project delays caused by severe weather in major domestic markets. The Protective Coatings and Concrete and Steel Pipe businesses reported lower sales and earnings from last year because of the severe El Nino-related weather. The military buildup in the Arabian Gulf, which delayed scheduled drydockings and maintenance for U.S. Navy ships, contributed to a shortfall in the Company's marine coatings business. A strike at the Company's main steel fabrication plant in Southern California also delayed shipments of welded steel pipe at the end of the quarter. The strike ended on March 25, 1998. The Fiberglass Pipe business reported higher sales and earnings for the quarter compared to the same period in 1997, because of an improvement in the European operation and continued growth of the Centron operation. Results from Ameron Hawaii, the Company's construction product business, reported higher sales and earnings for the quarter compared to the same period in 1997, because of the timing of projects and higher efficiency as a result of a reorganization that was implemented during the second half of 1997. The outlook for the construction sector in Hawaii remains sluggish. The domestic Pole Products business reported lower sales and earnings than last year due to a softness in the Southern California market. 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. In addition, 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. Actual results could differ materially, and, as a result, the reader is cautioned not to rely on these forward looking statements. The Company disclaims, however, 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,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 $3.4 million of consolidated retained earnings was not restricted at February 28, 1998. Item 6. Exhibits and Reports on Form 8-K A report on Form 8-K was filed on February 2, 1998, related to a news release disclosing the Company's financial results for the year, which ended November 30, 1997. 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 8, 1998 /s/ Gary Wagner _______________________________ Gary Wagner Senior Vice President, Chief Financial Officer and Treasurer Page 14 EX-27 2
5 3-MOS 3-MOS NOV-30-1998 NOV-30-1997 FEB-28-1998 FEB-28-1997 6,973 11,437 0 0 105,169 101,174 0 0 107,958 95,177 233,706 223,145 128,149 124,220 0 0 423,890 410,202 87,371 92,628 0 0 0 0 0 0 12,948 12,937 0 0 423,890 410,202 102,526 108,261 102,526 108,261 78,324 80,578 0 0 25,046 26,283 0 0 2,647 2,541 (1,566) 1,563 (626) 625 (940) 938 0 0 0 0 0 0 (940) 938 (0.23) 0.23 (0.23) 0.23
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