-----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, FjZ2f99+FNXTAEWQamDJa8DRX+rRkLvijZMy2lsOKFqMT5IDiUhpWTXNjunLKxJa VUDoowI5WTLaSIPfoGZ7Ww== 0000790730-98-000011.txt : 19980716 0000790730-98-000011.hdr.sgml : 19980716 ACCESSION NUMBER: 0000790730-98-000011 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980531 FILED AS OF DATE: 19980715 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: 98666137 BUSINESS ADDRESS: STREET 1: 245 S LOS ROBLES AVE CITY: PASADENA STATE: CA ZIP: 91101 BUSINESS PHONE: 6266834000 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, 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 91101-2894 (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 4,014,862 on June 30, 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 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 PART II. OTHER INFORMATION Item 2. Changes in Securities 13 Item 4. Submission of Matters to a Vote of Security Holders 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 Six Months Ended May 31, May 31, ------------------ ------------------ 1998 1997 1998 1997 -------- -------- -------- -------- Net Sales $136,974 $131,525 $239,500 $239,786 Cost of Sales 100,648 96,317 178,972 176,895 -------- -------- -------- -------- Gross Profit 36,326 35,208 60,528 62,891 Selling, General and Administrative Expenses 29,598 26,449 54,644 52,732 -------- -------- -------- -------- Operating Profit 6,728 8,759 5,884 10,159 Royalty, Equity and Other Income 3,692 2,326 5,463 4,945 -------- -------- -------- -------- Income before Interest and Income Taxes 10,420 11,085 11,347 15,104 Interest Income 18 70 172 155 Interest Expense 3,411 3,168 6,058 5,709 -------- -------- -------- -------- Income before Income Taxes 7,027 7,987 5,461 9,550 Provision for Income Taxes 2,537 2,717 1,911 3,342 -------- -------- -------- -------- Net Income $ 4,490 $ 5,270 $ 3,550 $ 6,208 ======== ======== ======== ======== Basic Net Income per Share $ 1.12 $ 1.32 $ 0.89 $ 1.55 ======== ======== ======== ======== Diluted Net Income per Share $ 1.09 $ 1.30 $ 0.86 $ 1.53 ======== ======== ======== ======== Weighted Average Common Shares Outstanding 4,009,773 4,002,001 4,009,773 4,002,001 ========= ========= ========= ========= Diluted Common Shares Outstanding 4,115,941 4,069,733 4,115,941 4,069,733 ========= ========= ========= ========= Cash Dividends per Share $ .32 $ .32 $ .64 $ .64 ======== ======== ======== ======== 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, 1998 1997 -------- -------- ASSETS Current Assets Cash and Cash Equivalents $ 6,078 $ 9,848 Receivables, Net 129,258 122,352 Inventories 125,993 95,752 Deferred Income Tax Benefits 7,993 9,083 Prepaid Expenses and Other 5,031 4,257 -------- -------- Total Current Assets 274,353 241,292 Investments, Advances and Equity in Undistributed Earnings of Affiliated Companies 33,689 33,777 Property, Plant and Equipment, Net 161,288 127,678 Other Assets 28,683 30,478 -------- -------- Total Assets $498,013 $433,225 ======== ======== LIABILITIES and STOCKHOLDERS' EQUITY Current Liabilities Short-Term Borrowings $ 1,311 $ 715 Current Portion of Long-Term Debt 17,645 17,654 Trade Payables 43,106 31,988 Accrued Liabilities 31,218 32,561 Income Taxes 8,627 4,347 -------- -------- Total Current Liabilities 101,907 87,265 Deferred Income Taxes 2,047 2,907 Long-Term Debt, Less Current Portion 201,117 140,917 Other Long-Term Liabilities 41,580 49,154 -------- -------- Total Liabilities 346,651 280,243 Stockholders' Equity Common Stock, Par Value $2.50 a Share, Authorized, 12,000,000 Shares, Outstanding, 4,014,862 Shares at May 31, 1998 and 4,005,487 Shares at November 30, 1997, Net of Treasury Shares 12,969 12,946 Additional Paid-In Capital 17,289 16,969 Retained Earnings 172,553 171,569 Accumulated Other Comprehensive Loss (8,670) (5,723) Treasury Stock (1,172,900 shares), at Cost (42,779) (42,779) -------- -------- Total Stockholders' Equity 151,362 152,982 -------- -------- Total Liabilities and Stockholders' Equity $498,013 $433,225 ======== ======== 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, ------------------- 1998 1997 -------- -------- Cash Flow from Operating Activities Net Income $ 3,550 $ 6,208 Adjustments to Reconcile to Net Cash Provided by (Used in) Operating Activities: Depreciation 8,179 7,847 Amortization 610 160 Equity in Earnings of Affiliated Companies (2,600) (1,319) Dividends from Affiliated Companies 2,686 2,237 Other, Net 2,901 477 Changes in Operating Assets and Liabilities: Change in Receivables (6,188) (5,033) Change in Inventories (14,754) (24,266) Change in Other Current Assets 981 (732) Change in Trade Payables and Other Current Liabilities 12,602 (9,454) Change in Other Assets and Liabilities, Net (6,576) 3,066 -------- -------- Net Cash Provided by (Used in) Operating Activities 1,391 (20,809) Cash Flow from Investing Activities Proceeds from Sale of Assets 326 355 Additions to Property, Plant and Equipment, and Acquisitions (61,129) (11,496) Other (699) (1,518) -------- -------- Net Cash Used in Investing Activities (61,502) (12,659) Cash Flow from Financing Activities Net Change in Debt with Maturities of Three Months or Less 612 (423) Issuance of Debt 59,344 37,208 Repayment of Debt (1,323) (5,510) Dividends to Common Stockholders (2,566) (2,561) Issuance of Common Stock 343 628 -------- -------- Net Cash Provided by Financing Activities 56,410 29,342 Effect of Exchange Rate Changes on Cash and Cash Equivalents (69) (354) -------- -------- Net Change in Cash and Cash Equivalents (3,770) (4,480) Beginning Cash and Cash Equivalents Balance 9,848 18,381 -------- -------- Ending Cash and Cash Equivalents Balance $ 6,078 $ 13,901 ======== ======== 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) May 31, 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 May 31, 1998, and the consolidated statements of income for the three- and six-month periods ended May 31, 1998 and 1997, and cash flows for the six-month periods ended May 31, 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. Note 2. Inventories Inventories are stated at the lower of cost (principally first-in, first-out)or market. Inventories at May 31, 1998 and November 30, 1997 were comprised of the following: May 31, Nov. 30, 1998 1997 -------- -------- Finished Products $ 80,305 $ 56,989 Products in Process 24,332 18,791 Materials and Supplies 21,356 19,972 -------- -------- Total Inventories $125,993 $ 95,752 ======== ======== Note 3. Other Cash Flow Information: Six Months Ended May 31, ------------------- 1998 1997 -------- -------- Interest Paid $ 6,422 $ 5,687 Income Taxes Paid $ 1,613 $ 3,949 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 Six Months Ended May 31, May 31, ------------------- ------------------- 1998 1997 1998 1997 -------- -------- -------- -------- Net Sales $ 19,696 $ 11,507 $ 38,998 $ 17,983 Gross Profit $ 4,349 $ 2,208 $ 9,628 $ 2,829 Net Income/(Loss) $ 719 $ (245) $ 2,326 $ (1,649) Amounts shown above represent operating results for Gifford-Hill-American, Inc. for the three- and six-month periods ended May 31, 1998 and 1997 and operating results for Ameron Saudi Arabia, Ltd. for the three- and six-month periods ended March 31, 1998 and 1997. Summarized results of operations of Tamco, Bondstrand, Ltd., and Oasis Ameron, Ltd. follow: Three Months Ended Six Months Ended May 31, May 31, ------------------- ------------------- 1998 1997 1998 1997 -------- -------- -------- -------- Net Sales $ 43,424 $ 44,166 $ 79,869 $ 78,078 Gross Profit $ 9,464 $ 7,727 $ 17,911 $ 13,896 Net Income $ 3,786 $ 2,672 $ 6,722 $ 4,546 Amounts shown above include operating results for Tamco for the three- and six-month periods ended May 31, 1998 and 1997 and operating results for Bondstrand, Ltd. and Oasis Ameron, Ltd. for the three- and six-month periods ended March 31, 1998 and 1997. Page 7 Note 5. 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 $110 and $161 for the three months ended May 31, 1998 and 1997, respectively, and losses of $2,947 and $3,805 for the six months ended May 31, 1998 and 1997, respectively. Note 6. Earnings 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. As a result, the Company's reported earnings per share for 1997 were restated. Earning per share is calculated as follow: Three Months Ended Six Months Ended May 31, May 31, ------------------ ------------------ 1998 1997 1998 1997 -------- -------- -------- -------- Income Available to Common Stockholders $4,490 $5,270 $3,550 $6,208 -------- -------- -------- -------- Weighted Average Common Shares Outstanding 4,009,773 4,002,001 4,009,773 4,002,001 Options Issued to Employees & Directors 106,168 67,732 106,168 67,732 Diluted Common Shares Outstanding 4,115,941 4,069,733 4,115,941 4,069,733 Basic Net Income per Share $ 1.12 $ 1.32 $ 0.89 $ 1.55 ======== ======== ======== ======== Diluted Net Income per Share $ 1.09 $ 1.30 $ 0.86 $ 1.53 ======== ======== ======== ======== Page 8 Note 7. Debt At May 31, 1998 and November 30, 1997, the Company's long-term debt consists of the following: May 31, 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 (3.90% at May 31, 1998) 7,200 7,200 Variable-rate unsecured bank revolving credit facilities (approximately 6.29% at May 31, 1998) 117,980 57,429 Variable-rate unsecured bank loan, payable by a consolidated subsidiary in Dutch guilders, with annual principal installments of approximately $645 (4.39% at May 31, 1998) 2,582 2,942 -------- -------- 218,762 158,571 Less - Current portion 17,645 17,654 -------- -------- $201,117 $140,917 ======== ======== Note 8. Acquisition On April 9, the Company acquired for cash totaling approximately $45,000 the worldwide industrial coatings business of United Kingdom-based Croda International Plc. The acquisition was accounted for as a purchase and its results of operations were included in the Company's consolidated financial statements from the date of acquisition in the second quarter of fiscal 1998. The acquisition's impact on earnings was immaterial for the second quarter of fiscal 1998. On April 20, the Company acquired for cash the fiberglass pipe and fittings business of Hope Composites 2000, Inc., a privately-owned company based in Atlanta, Georgia. The acquisition was accounted for as a purchase and its results of operations were included in the Company's consolidated financial statements from the date of acquisition in the second quarter of fiscal 1998. The acquisition's impact on earnings was immaterial for the second quarter of fiscal 1998. Page 9 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, 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 six-month period ended May 31, 1998, the Company generated $1.4 million of cash from operating activities compared to $20.8 million of cash used during the six-month period ended May 31, 1997. The change in working capital reflects higher inventory levels and receivables caused by the Croda Coatings acquisition and the seasonal demands of the Concrete and Steel Pipe and Protective Coatings businesses. Cash used in investing activities consisted of business acquisitions and capital expenditures for normal replacement and upgrades of machinery and equipment. Management estimates that capital expenditures during this fiscal year will be between $25.0 million and $35.0 million. Capital expenditures will be funded from existing cash balances, cash generated from operations and existing lines of credit. Additional net borrowings of $58.6 million plus $0.3 million from the issuance of common stock were used for the business acquisitions, capital expenditures, increased working capital requirements and payment of common dividends of $2.6 million. Cash and cash equivalents at May 31, 1998 totaled $6.1 million, a decrease of $3.8 million from November 30, 1997. At May 31, 1998, the Company had approximately $83.4 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 - SECOND QUARTER The Company earned $1.09 per diluted share and $1.12 per basic share on sales of $137 million for the second quarter of fiscal 1998, compared to $1.30 per diluted share and $1.32 per basic share on sales of $131.5 million for the same period last year. The decline in second quarter earnings was the result of lower sales of concrete and steel pipe and the Company's traditional protective coatings. Both the Protective Coatings and Concrete & Steel Pipe Groups were adversely affected by weather early in the quarter. Additionally, a strike at the Company's major steel pipe manufacturing facility during most of March delayed sales and reduced profitability. The Fiberglass Pipe business reported higher sales and earnings for the quarter compared to the same period in 1997, because of improvement in the Europe operation and strong demand for fuel-handling products used in service station applications throughout the United States. Results from Ameron Hawaii, the Company's construction products business, reported higher sales and earnings compared to the same period in 1997, due to the timing of projects in Hawaii and increased demand from the private sector. The domestic Pole Products business reported flat sales and lower earnings due to softness in the Southern California market. Selling, General and Administrative (SG&A) expenses were higher for the quarter compared to the same period in 1997, primarily because of the acquisitions that took place in the quarter. These higher costs were partially offset by lower pension expenses. Royalty, Equity and Other Income was higher because of higher equity income from affiliated companies. RESULTS OF OPERATIONS - YEAR TO DATE The Company earned 86 cents per diluted share and 89 cents per basic share on sales of $239.5 million during the first half of fiscal 1998, compared to earnings of $1.53 per diluted share and $1.55 per basic share on sales of $239.8 million during the prior-year period. The decline for the first half of 1998 was due primarily to lower sales of concrete and steel pipe and the Company's traditional protective coatings as a result of bad weather and a strike at the Company's major steel pipe manufacturing facility in Fontana, California. Protective Coatings sales and earnings declined in the first half of 1998 due to U.S. weather-related problems, a slowdown in Europe caused by the continuing decline in oil prices and delays in orders from Eastern Europe and the former Soviet Union and competitive pressures in industrial maintenance markets in the U.S. and Europe. The Fiberglass Pipe business reported substantially higher sales and earnings which came primarily from Centron and operations in the Netherlands. Page 11 Concrete and Steel Pipe reported sales significantly below last year due to the timing of project deliveries and impact of weather and the strike. Profits were negatively impacted by the reduced sales volume. The construction products business in Hawaii posted higher sales and earnings because of the timing of projects and increased demand from the private sector. Earnings improved also because of 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 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. 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, borrowings, investments and guarantees and require maintenance of specified minimum working capital. Under the most restrictive provisions of these agreements, approximately $11 million of consolidated retained earnings was not restricted at May 31, 1998. Item 4. Submission of Matters to a Vote of Security Holders The Company's Annual Meeting of Stockholders was held on March 25, 1998. Represented at the meeting, in person or by proxy, were 3,372,090 shares of common stock (84.2% of the total shares outstanding). Stockholders voted on the following matters at this meeting: 1. Election of Directors The three nominees for directors named in the Company's proxy statement, Messrs. J. Michael Hagan, Terry L. Haines, and Alan L. Ockene, received the greatest number of votes cast and were elected; each receiving not less than 3,339,206 votes. Other directors whose terms of office continued after the meeting are: Stephen W. Foss, A. Frederick Gerstell, John F. King, James S. Marlen, Richard J. Pearson and David L. Sliney. 2. Proposal to Ratify the Appointment of Auditors 3,355,116 shares (99.5% of the shares represented at the meeting or 83.7% 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 1998. Of the shares represented at the meeting, 11,236 shares (0.3%) voted against the proposal. 3. Approval of Key Executive Long-Term Cash Incentive Plan 3,182,179 shares (94.4% of the shares represented at the meeting or 79.4% of the shares outstanding) voted in favor of the proposal to approve the Key Executive Long-Term Cash Incentive Plan. Of the shares represented at the meeting, 119,899 shares (3.6%) voted against the proposal. Item 6. Exhibits and Reports on Form 8-K A Form 8-K was filed on April 2, 1998 to report the Company's first quarter 1998 sales and earnings. A Form 8-K was also filed on April 16, 1998 to report the acquisition through certain of the Company's wholly-owned subsidiaries, of the worldwide industrial coatings business of U.K.- based Croda International PLC. 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: July 14, 1998 /s/ Gary Wagner _________________________________ Gary Wagner Senior Vice President, Chief Financial Officer Page 14 EX-27 2
5 6-MOS 6-MOS NOV-30-1998 NOV-30-1997 MAY-31-1998 MAY-31-1997 6,078 13,901 0 0 129,258 106,743 0 0 125,993 107,553 274,353 243,506 161,288 125,853 0 0 498,013 432,967 101,907 90,490 0 0 0 0 0 0 12,969 12,941 0 0 498,013 432,967 239,500 239,786 239,500 239,786 178,972 176,895 0 0 54,644 52,732 0 0 6,058 5,709 5,461 9,550 1,911 3,342 3,550 6,208 0 0 0 0 0 0 3,550 6,208 0.89 1.55 0.86 1.53
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