-----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, REhR4cGL1/E2yM8YB4UeHipNSwLcL0OHFlwkDvXlVSMd12vrVWJ19BowdO/YfyWK FkY8pgJnSaBGsa2O03RdvQ== 0000790730-99-000007.txt : 19990716 0000790730-99-000007.hdr.sgml : 19990716 ACCESSION NUMBER: 0000790730-99-000007 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990531 FILED AS OF DATE: 19990715 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: 99665227 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 May 31, 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 91101-2894 (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 3,991,912 on June 30, 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 10 PART II. OTHER INFORMATION Item 2. Changes in Securities 12 Item 4. Submission of Matters to a Vote of Security Holders 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) (Unaudited) Three Months Ended Six Months Ended May 31, May 31, ------------------ ------------------ 1999 1998 1999 1998 -------- -------- -------- -------- Net Sales $149,468 $136,974 $272,367 $239,500 Cost of Sales (109,909) (100,648) (201,927) (178,972) -------- -------- -------- -------- Gross Profit 39,559 36,326 70,440 60,528 Selling, General and Administrative Expenses (29,543) (29,598) (59,303) (54,644) -------- -------- -------- -------- Operating Income 10,016 6,728 11,137 5,884 Royalty, Equity and Other Income 2,295 3,692 6,119 5,463 -------- -------- -------- -------- Income before Interest and Income Taxes 12,311 10,420 17,256 11,347 Interest Income 42 18 98 172 Interest Expense (3,500) (3,411) (7,025) (6,058) -------- -------- -------- -------- Income before Income Taxes 8,853 7,027 10,329 5,461 Provision for Income Taxes (2,833) (2,537) (3,305) (1,911) -------- -------- -------- -------- Net Income $ 6,020 $ 4,490 $ 7,024 $ 3,550 ======== ======== ======== ======== Basic Net Income per Share $ 1.50 $ 1.12 $ 1.75 $ 0.89 ======== ======== ======== ======== Diluted Net Income per Share $ 1.50 $ 1.09 $ 1.75 $ 0.86 ======== ======== ======== ======== Weighted Average Common Shares Outstanding 4,006,798 4,009,773 4,006,798 4,009,773 ========= ========= ========= ========= Diluted Common Shares Outstanding 4,019,270 4,115,941 4,019,270 4,115,941 ========= ========= ========= ========= Cash Dividends per Share $ .32 $ .32 $ .64 $ .64 ======== ======== ======== ======== 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) May 31, Nov. 30, 1999 1998 (Unaudited) -------- -------- ASSETS Current Assets Cash and Cash Equivalents $ 12,133 $ 16,376 Receivables, Net 132,144 136,380 Inventories 105,643 106,654 Deferred Income Tax Benefits 7,727 7,726 Prepaid Expenses and Other 8,189 6,554 -------- -------- Total Current Assets 265,836 273,690 Investments, Advances and Equity in Undistributed Earnings of Affiliated Companies 22,189 22,182 Property, Plant and Equipment, Net 150,760 157,918 Other Assets 46,795 46,429 -------- -------- Total Assets $485,580 $500,219 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Short-Term Borrowings $ 4,213 $ 3,024 Current Portion of Long-Term Debt 12,615 12,681 Trade Payables 35,716 37,273 Accrued Liabilities 48,381 50,353 Income Taxes 15,627 23,499 -------- -------- Total Current Liabilities 116,552 126,830 Long-Term Debt, Less Current Portion 162,723 165,308 Other Long-Term Liabilities 39,869 40,913 -------- -------- Total Liabilities 319,144 333,051 -------- -------- Stockholders' Equity Common Stock, Par Value $2.50 a Share, Authorized 12,000,000 Shares, Outstanding 3,991,912 Shares at May 31, 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 191,640 187,174 Accumulated Other Comprehensive Income (11,845) (8,062) Treasury Stock (1,211,100 shares at May 31, 1999 and 1,172,900 shares at November 30, 1998), at Cost (44,194) (42,779) -------- -------- Total Stockholders' Equity 166,436 167,168 -------- -------- Total Liabilities and Stockholders' Equity $485,580 $500,219 ======== ======== See accompanying notes to consolidated financial statements Page 4 Ameron International Corporation and Subsidiaries Consolidated Statements of Cash Flows (In thousands) (Unaudited) Six Months Ended May 31, ------------------- 1999 1998 -------- -------- Cash Flows from Operating Activities Net Income $ 7,024 $ 3,550 Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: Depreciation 8,852 8,179 Amortization 939 610 Equity in Earnings of Affiliated Companies (3,341) (2,600) Dividends from Affiliated Companies 3,300 2,686 Other, Net 3,872 2,901 Changes in Operating Assets and Liabilities: Change in Receivables 1,072 (6,188) Change in Inventories (733) (14,754) Change in Other Current Assets (1,991) 981 Change in Trade Payables and Other Current Liabilities (16,568) 12,602 Change in Other Assets and Liabilities, Net 6,797 (6,576) -------- -------- Net Cash Provided by Operating Activities 9,223 1,391 -------- -------- Cash Flows from Investing Activities Proceeds from Sale of Assets 1,910 326 Additions to Property, Plant and Equipment (7,828) (15,852) Business Acquisitions - (45,277) Other (3,174) (699) -------- -------- Net Cash Used by Investing Activities (9,092) (61,502) -------- -------- Cash Flows from Financing Activities Net Change in Short-Term Borrowings 1,502 612 Issuance of Debt 284 59,344 Repayment of Debt (1,741) (1,323) Dividends to Common Stockholders (2,558) (2,566) Issuance of Common Stock - 343 Purchase of Treasury Stock (1,415) - -------- -------- Net Cash (Used) Provided by Financing Activities (3,928) 56,410 -------- -------- Effect of Exchange Rate Changes on Cash and Cash Equivalents (446) (69) -------- -------- Net Change in Cash and Cash Equivalents (4,243) (3,770) Beginning Cash and Cash Equivalents Balance 16,376 9,848 -------- -------- Ending Cash and Cash Equivalents Balance $ 12,133 $ 6,078 ======== ======== See accompanying notes to consolidated financial statements Page 5 Ameron International Corporation and Subsidiaries Notes to Consolidated Financial Statements (In thousands) May 31, 1999 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 May 31, 1999, and the consolidated statements of income for the three- and six-month periods ended May 31, 1999 and 1998, and cash flows for the six-month periods ended May 31, 1999 and 1998. 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 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 financial statements and notes included in 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 were comprised of the following: May 31, Nov. 30, 1999 1998 -------- -------- Finished Products $ 61,223 $ 62,888 Products in Process 23,950 20,988 Materials and Supplies 20,470 22,778 -------- -------- Total Inventories $105,643 $106,654 ======== ======== Note 3. Other Cash Flow Information: Six Months Ended May 31, ------------------- 1999 1998 -------- -------- Interest Paid $ 6,585 $ 6,422 Income Taxes Paid $ 9,982 $ 1,613 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, ------------------- ------------------- 1999 1998 1999 1998 -------- -------- -------- -------- Net Sales $ 10,036 $ 19,696 $ 22,535 $ 38,998 Gross Profit $ 5,519 $ 4,349 $ 11,939 $ 9,628 Net Income/(Loss) $ 3,616 $ 719 $ 8,044 $ 2,326 Amounts shown above represent operating results for Ameron Saudi Arabia, Ltd. for the three- and six-month periods ended March 31, 1999 and 1998 and Gifford-Hill-American, Inc. for the three- and six-month periods ended May 31, 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 Six Months Ended May 31, May 31, ------------------- ------------------- 1999 1998 1999 1998 -------- -------- -------- -------- Net Sales $ 41,976 $ 43,424 $ 77,689 $ 79,869 Gross Profit $ 10,017 $ 9,464 $ 18,706 $ 17,911 Net Income $ 4,549 $ 3,786 $ 8,484 $ 6,722 Amounts shown above include operating results for Tamco for the three- and six- month periods ended May 31, 1999 and 1998 and operating results for Bondstrand, Ltd. and Oasis Ameron, Ltd. for the three- and six-month periods ended March 31, 1999 and 1998. Note 5. Earnings Per Share The basic earnings per share is computed on the basis of the weighted average number of common shares outstanding each year. 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 dilutive stock options. Page 7 Note 6. Other Comprehensive Income The Company recognized unrealized foreign currency translation losses of $1,054 and $110 for the three months ended May 31, 1999 and 1998, and losses of $3,783 and $2,947 for the six months ended May 31, 1999 and 1998, respectively. Accumulated other comprehensive income included $502 minimum pension liability as of May 31, 1999 and November 30, 1998. Note 7. Debt The Company's long-term debt consists of the following: May 31, 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 (3.35% at May 31, 1999) 7,200 7,200 Variable-rate unsecured bank revolving credit facilities (approximately 5.27% at May 31, 1999) 92,294 94,406 Variable-rate unsecured bank loan, payable by a consolidated subsidiary in Dutch guilders, with annual principal installments of approximately $615 (4.17% at May 31, 1999) 1,844 2,383 -------- -------- Total Long-Term Debt 175,338 177,989 Current portion 12,615 12,681 -------- -------- Long-Term Debt, Less Current Portion $162,723 $165,308 ======== ======== Note 8. Business Restructuring For the six months ended May 31, 1999, $974 was charged to the 1998 restructuring reserve. The remaining reserve for business restructuring at May 31, 1999 was $348. 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 May 31, 1999 INTRODUCTION Management's Discussion and Analysis should be read in conjunction with the 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 six-month period ended May 31, 1999, the Company generated $9.2 million of cash from operating activities compared to $1.4 million of cash generated during the six-month period ended May 31, 1998. The improved cash position was a result of improved earnings and lower working capital requirements. Cash used by investing activities included 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. Cash generated from operating activities was used for capital expenditures, payment of common dividends of $2.6 million and repurchase of the Company's shares of $1.4 million. Cash and cash equivalents at May 31, 1999 totaled $12.1 million, a decrease of $4.2 million from November 30, 1998. At May 31, 1999, the Company had approximately $108 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. RESULTS OF OPERATIONS - SECOND QUARTER The Company earned $1.50 per diluted share on sales of $149.5 million during the second quarter of fiscal 1999, compared to $1.09 per diluted share on sales of $137.0 million for the same period last year. The improvement was attributed primarily to higher sales of the Concrete and Steel Pipe Group. Sales of the Concrete and Steel Pipe business significantly increased because of the healthy backlog and the relatively mild weather during the second quarter of 1999. The Company's second quarter of 1998 was adversely impacted by unusually wet weather and a strike at the Company's major steel pipe facility. Operating profit in 1999 increased proportionally to the sales increase. Page 9 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 because of the depressed oil industry. 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 a favorable change in product mix. The Company's worldwide Coatings business had lower sales and profitability than in the same quarter of 1998. The decline reflected the condition of the worldwide, industrial coatings market, which remains soft because of the depressed oil industry and low commodity prices. Ameron's Construction and Allied Products business reported higher sales and profits. The improvement came from Ameron's pole business, which benefitted from the mild weather and strong development in the western U.S. Ameron's Hawaiian operations declined because of the continued impact of the Asian economic situation on the Hawaiian economy. Selling, General and Administrative (SG&A) expenses were flat for the quarter compared to the same period in 1998. Royalty, Equity and Other Income was lower because of lower equity income from affiliated companies. RESULTS OF OPERATIONS - YEAR TO DATE The Company earned $1.75 per diluted share on sales of $272.4 million during the first half of fiscal 1999, compared to earnings of 86 cents per diluted share on sales of $239.5 million during the same prior-year period. The improvement in sales for the first half of 1999 was due primarily to higher sales of the Concrete and Steel Pipe Group and the acquisition of the Croda Coatings operations in April 1998. The profitability of all businesses improved in the first half of 1999, compared to the first half of 1998. 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 half of 1999. The Company's first six-months of 1998 were adversely impacted by unusually wet weather and a strike at the Company's major steel pipe facility. Operating profit increased proportionally to the sales increase. The Fiberglass-Composite Pipe business reported lower sales than in the same period of 1998, as the business continued to suffer because of the depressed oil industry. 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. Coatings reported higher sales and earnings in the first half of 1999 than in the same period of 1998. The increase came from the former Croda Coatings businesses in England, Australia and New Zealand. The worldwide market for Ameron's coatings remains soft. Ameron's Construction and Allied Products business reported slightly higher sales and higher profits. Hawaiian operations declined 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. Page 10 Selling, General and Administrative expenses were higher compared to the same period in 1998, primarily because of the Croda Coatings acquisition and higher insurance, employee benefit and product warranty costs. 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. Overall remediation efforts are estimated at approximately 95 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. 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. The Company believes its most reasonably likely worst-case scenario is that its operations will experience delays because of failures by third parties, such as suppliers of utilities and major raw materials, to correct Y2K problems. The Company is developing contingency plans that are designed to mitigate, in part, the impact on its operations of certain Y2K problems. These plans, however, can not cover all eventualities, such as power outages. The Company expects these plans to be in place by the fourth quarter of 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 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 $10 million of consolidated retained earnings was not restricted at May 31, 1999. Item 4. Submission of Matters to a Vote of Security Holders The Company's Annual Meeting of Stockholders was held on March 24, 1999. Represented at the meeting, in person or by proxy, were 3,116,208 shares of common stock (77.9% of the total shares outstanding). Stockholders voted on the following matters at this meeting: 1. Election of Directors The two nominees for directors named in the Company's proxy statement, Messrs. Stephen W. Foss and James S. Marlen having received the greatest number of votes cast, were re-elected to serve for another term with each receiving not less than 3,082,752 votes. Other directors whose terms of office continued after the meeting are: J. Michael Hagan, Terry L. Haines, John F. King, Alan L. Ockene, and Richard J. Pearson. 2. Proposal to Ratify the Appointment of Auditors 3,105,493 shares (99.7% of the shares represented at the meeting or 77.7% 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 1999. Of the shares represented at the meeting, 6,042 shares (0.2%) voted against the proposal. Item 6. Exhibits and Reports on Form 8-K No report on Form 8-K was filed for the Company in the second quarter of 1999. 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: July 14, 1999 /s/ Gary Wagner _________________________________ Gary Wagner Senior Vice President, Chief Financial Officer EX-27 2
5 6-MOS 6-MOS NOV-30-1999 NOV-30-1998 MAY-31-1999 MAY-31-1998 12,133 6,078 0 0 132,144 129,258 0 0 105,643 125,993 265,836 274,353 150,760 161,288 0 0 485,580 498,013 116,552 101,907 0 0 0 0 0 0 13,007 12,969 153,429 138,393 485,580 498,013 272,367 239,500 272,367 239,500 201,927 178,972 0 0 59,303 54,644 0 0 7,025 6,058 10,329 5,461 3,305 1,911 7,024 3,550 0 0 0 0 0 0 7,024 3,550 1.75 0.89 1.75 0.86
-----END PRIVACY-ENHANCED MESSAGE-----