-----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, VgY0UZG07AvbCckRMdcbCVLNH6MvPCTxLxQxklsmSleFXQxdkTQLSMQUL6h8l2Q8 5XZux0/FCs2WjwclyXovwg== 0000813621-98-000009.txt : 19980424 0000813621-98-000009.hdr.sgml : 19980424 ACCESSION NUMBER: 0000813621-98-000009 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980421 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMCOL INTERNATIONAL CORP CENTRAL INDEX KEY: 0000813621 STANDARD INDUSTRIAL CLASSIFICATION: 1400 IRS NUMBER: 360724340 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-15661 FILM NUMBER: 98597764 BUSINESS ADDRESS: STREET 1: 1500 W SHURE DR SUITE 500 STREET 2: ONE NORTH ARLINGTON CITY: ARLINGTON HEIGHTS STATE: IL ZIP: 60004-7803 BUSINESS PHONE: 7083924600 MAIL ADDRESS: STREET 1: ONE N ARLINGTON STREET 2: 1500 W SHURE DR SUITE 500 CITY: ARLINGTON HEIGHTS STATE: IL ZIP: 60004-7803 FORMER COMPANY: FORMER CONFORMED NAME: AMERICAN COLLOID CO DATE OF NAME CHANGE: 19920703 10-Q 1 FORM 10-Q FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Mark One) (x) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 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 number 0-15661 AMCOL INTERNATIONAL CORPORATION (Exact name of registrant as specified in its charter) Delaware 36-0724340 (State or other jurisdiction of incorporation or organization) (IRS Employer Identification No.)
1500 West Shure Drive, Suite 500, Arlington Heights, Illinois 60004-7803 (Address of principal executive offices) (Zip Code) (847) 394-8730 (Registrant's telephone number, including area code) 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 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 Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class Outstanding at April 17, 1998 (Common stock, $.01 par value) 28,379,886 AMCOL INTERNATIONAL CORPORATION INDEX Part I - Financial Information Item 1 Financial Statements Condensed Consolidated Balance Sheet - March 31, 1998 and December 31, 1997 1 Condensed Consolidated Statement of Operations - three months ended March 31, 1998 and 1997 2 Condensed Consolidated Statement of Cash Flows - three months ended March 31, 1998 and 1997 3 Notes to Condensed Consolidated Financial Statements 4 Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations 5 Part II - Other Information Item 6 Exhibits and Reports on Form 8-K 8 Part I - FINANCIAL INFORMATION AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited) (In thousands) ASSETS
March 31, December 31, 1998 1997 --------------------- ------------------- Current assets: * Cash and cash equivalents $ 2,206 $ 3,077 Accounts receivable, net 96,311 89,611 Inventories 48,945 49,389 Prepaid expenses 4,303 5,109 Current deferred tax asset 3,035 3,084 Total current assets 154,800 150,270 Investment in and advances to joint ventures 2,910 3,035 Property, plant, equipment and mineral reserves 325,208 318,475 Less accumulated depreciation 150,505 143,151 174,703 175,324 Intangible assets, net 17,591 18,101 Other long-term assets, net 4,014 4,279 $ 354,018 $ 351,009 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Notes payable and current maturities of debt $ 15,821 $ 15,024 Accounts payable 20,967 24,902 Accrued liabilities 34,531 27,315 Total current liabilities 71,319 67,241 Long-term debt 92,747 94,425 Deferred credits and other liabilities 13,583 13,400 Stockholders' equity: Common stock 320 320 Additional paid-in capital 75,961 75,939 Foreign currency translation adjustment (1,202) (1,749) Retained earnings 113,478 111,588 Treasury stock (12,188) (10,155) 176,369 175,943 $ 354,018 $ 351,009
*Condensed from audited financial statements. The accompanying notes are an integral part of these condensed financial statements. AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited) (In thousands, except number of shares and per share data)
Three Months Ended March 31, ---------------------------------------------- 1998 1997 -------------------- -------------------- Net sales $ 121,557 $ 107,918 Cost of sales 98,022 86,107 Gross profit 23,535 21,811 General, selling and administrative expenses 15,690 14,507 Operating profit 7,845 7,304 Other income (expense): Interest expense, net (2,111) (2,162) Other income, net (331) (105) (2,442) (2,267) Income before income taxes 5,403 5,037 Income taxes 1,945 1,864 Net income $ 3,458 $ 3,173 Weighted average common shares 28,491,827 28,538,330 Weighted average common and common equivalent shares 29,115,871 29,183,102 Earnings per share Basic $ .12 $ .11 Diluted $ .12 $ .11 Dividends declared per share $ .055 $ .047
The accompanying notes are an integral part of these condensed financial statements. AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) (In thousands)
Three Months Ended March 31, ---------------------------------------------- 1998 1997 -------------------- -------------------- Cash flow from operating activities: Net income $ 3,458 $3,173 Adjustments to reconcile net income to net cash Provided by operating activities: Depreciation, depletion, and amortization 8,209 7,567 Other 605 390 (Increase)/decrease in current assets (5,818) 538 Increase/(decrease) in current liabilities 3,281 1,889 Net cash provided by (used in) operations 9,735 13,557 Cash flow from investing activities: Acquisition of land, mineral reserves, depreciable and intangible assets (5,540) (7,382) Other (606) 395 Net cash used in investing activities (6,146) (6,987) Cash flow from financing activities: Net change in outstanding debt (881) (3,406) Dividends paid (1,568) (1,331) Treasury stock transactions (2,033) 172 Other 22 113 Net cash provided by financing activities (4,460) (4,452) Net increase (decrease) in cash and cash equivalents (871) 2,118 Cash and cash equivalents at beginning of period 3,077 3,054 Cash and cash equivalents at end of period $ 2,206 $5,172 Supplemental disclosure of cash flows information Cash paid for: Interest $ 1,183 $ 686 Income taxes $ 298 $ 548
The accompanying notes are an integral part of these condensed financial statements. AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (In thousands) Note 1: BASIS OF PRESENTATION The financial information included herein, other than the condensed consolidated balance sheet as of December 31, 1997, has been prepared by management without audit by independent certified public accountants who do not express an opinion thereon. The condensed consolidated balance sheet as of December 31, 1997, has been derived from and does not include all the disclosures contained in the audited consolidated financial statements for the year ended December 31, 1997. The information furnished herein includes all adjustments which are, in the opinion of management, necessary for a fair statement of the results of the interim period, and all such adjustments are of a normal recurring nature. Management recommends the accompanying consolidated financial information be read in conjunction with the consolidated financial statements and related notes included in the Company's 1997 Form 10-K which accompanies the 1997 Corporate Report. The results of operations for the three-month period ended March 31, 1998, are not necessarily indicative of the results to be expected for the full year. Certain items in the 1997 consolidated financial statements have been reclassified to comply with the consolidated financial statements presentation for 1998. Note 2: INVENTORIES Inventories at March 31, 1998 have been valued using the same methods as at December 31, 1997. The composition of inventories at March 31, 1998 and December 31, 1997, was as follows:
March 31, December 31, 1998 1997 -------------------- -------------------- Crude stockpile and in-process inventories $ 35,480 $ 34,675 Other raw material, container and supplies inventories 13,465 14,714 $ 48,945 $ 49,389
Note 3: EARNINGS PER SHARE Basic earnings per share is computed by dividing net income by the weighted average number of common shares outstanding. Diluted earnings per share is computed by dividing the net income by the weighted average common shares outstanding after consideration of the dilutive effect of stock options outstanding at the end of each period. The 1997 number of shares and earnings per share have been restated to reflect the three-for-two stock split in December 1997 and the adoption of SFAS No. 128. AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) Note 4: DERIVATIVES From time to time, the Company uses financial derivatives, principally swaps, forward contracts and options in its management of foreign currency and interest rate exposures. These contracts hedge transactions and balances for periods consistent with committed exposures. As of March 31, 1998, derivatives outstanding were related to foreign currency hedging and an interest rate swap with a notional amount on $15 million of the outstanding revolving credit. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following is management's discussion and analysis of certain significant factors which have affected the Company's financial position and operating results during the periods included in the accompanying condensed consolidated financial statements. Three Months Ended March 31, 1998 vs. 1997 Net sales increased by $13.6 million, or 12.6%, and gross profits and operating profits increased by $1.7 million, or 7.9%, and $.5 million, or 7.4%, respectively. Net interest expense decreased by $.1 million, or 2.4%, as March 31, 1998 debt (both long-term and short-term, net of cash) decreased by $13.3 million, or 11.1%, from the prior-year quarter. The decrease in interest expense from the previous year was not as great as the debt reduction because the weighted average interest rate for 1998 is higher than that of 1997. Earnings per share were $.12 for the 1998 quarter compared with $.11 for the 1997 quarter. A brief discussion by business segment follows:
Quarter Ended March 31, ------------------------------------------------------------------------------------- 1998 1997 1998 vs. 1997 ------------------------- ---------------------- --------------------------- Absorbent Polymers (Dollars in Thousands) $ Change % Change Net sales $ 54,656 100.0% $ 45,161 100.0% $ 9,495 21.0% Cost of sales 44,032 80.6% 35,568 78.8% Gross profit 10,624 19.4% 9,593 21.2% 1,031 10.7% General, selling and Administrative expenses 3,090 5.7% 3,015 6.7% 75 2.5% Operating profit 7,534 13.7% 6,578 14.5% 956 14.5%
Revenues increased by $9.5 million, or 21.0%, over the prior-year period. Approximately 43% of the 1998 sales revenue growth was acquisition related. The gross profit margin in the 1998 quarter includes lower margin business associated with the acquisition. AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
Quarter Ended March 31, ------------------------------------------------------------------------------------- 1998 1997 1998 vs. 1997 ------------------------- ---------------------- --------------------------- Minerals (Dollars in Thousands) $ Change % Change Net sales $ 44,388 100.0% $ 39,258 100.0% $ 5,130 13.1% Cost of sales 37,069 83.5% 33,153 84.4% Gross profit 7,319 16.5% 6,105 15.6% 1,214 19.9% General, selling and Administrative expenses 4,333 9.8% 3,875 9.9% 458 11.8% Operating profit 2,986 6.7% 2,230 5.7% 756 33.9%
Sales increased by $5.1 million, or 13.1%, over the prior-year period. Approximately 70% of the revenue growth in the 1998 quarter was attributable to the European cat litter acquisition. The gross profit margin improved from the prior year, however there was little margin associated with the European cat litter acquisition as the material was still being manufactured on a toll processed basis. The margin is expected to improve with the integration of these products into the Company's processing operations during the second quarter. Without the cat litter acquisition in the first quarter of 1998, the gross profit would have been 17.9% compared to 15.6% in the prior year period. On April 20, the Company closed the sale of its Mounds, IL plant and mineral reserves, as well as the sale of its other fullers' earth mineral reserves in Paris, TN and Rock Springs, NV. The divestiture is expected to result in a loss of sales of approximately $15 million with little adverse impact on the gross profit. The Company will no longer sell agricultural carrier products, oil and grease absorbents or traditional cat litter, other than to the specialty pet and farm and fleet market.
Quarter Ended March 31, ------------------------------------------------------------------------------------- 1998 1997 1998 vs. 1997 ------------------------- ---------------------- --------------------------- Environmental (Dollars in Thousands) $ Change % Change Net sales $ 15,695 100.0% $ 16,565 100.0% $ (870) (5.3)% Cost of sales 10,934 69.7% 11,327 68.4% Gross profit 4,761 30.3% 5,238 31.6% (477) (9.1)% General, selling and Administrative expenses 4,707 30.0% 4,309 26.0% 398 9.2% Operating profit 54 .3% 929 5.6% (875) (94.2)%
Sales decreased by $.9 million, or 5.3%, from the prior-year period. Favorable weather conditions for the installation of liner products and strong performance from the international sector during the 1997 quarter contrasted sharply with the situation in 1998. Sales to the Asian market were down approximately 75% from the prior year quarter as a result of the Asian financial crisis. Liner product sales suffered from extremely wet weather in the warm climates, where construction activity generally occurs during the first quarter. General, selling and administrative expenses increased by 9.2%, primarily related to the European unit. AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Environmental (continued) Generally, business in this segment accelerates during the second quarter and peaks in the third quarter. The current outlook is for improved sales and earnings in this area over those of the previous year. Weather conditions, however, are a significant factor in the timing of many of the projects involving the Company's products.
Quarter Ended March 31, ------------------------------------------------------------------------------------- 1998 1997 1998 vs. 1997 ------------------------- ---------------------- --------------------------- Transportation (Dollars in Thousands) $ Change % Change Net sales $ 6,818 100.0% $ 6,934 100.0% $ (116) (1.7)% Cost of sales 5,987 87.8% 6,059 87.4% Gross profit 831 12.2% 875 12.6% (44) (5.0)% General, selling and Administrative expenses 485 7.1% 504 7.3% (19) (3.8)% Operating profit 346 5.1% 371 5.3% (25) (6.7)%
Net sales decreased by $.1 million, or 1.7%, as a result of lower shipments of environmental products in 1998 compared with 1997. During the 1997 quarter, this unit benefited from the temporary shift of rail shipments to truck shipments. Lower gross profit margin in the 1998 quarter was a result of lower brokerage business.
Quarter Ended March 31, ------------------------------------------------------------------------------------- 1998 1997 1998 vs. 1997 ------------------------- ---------------------- --------------------------- Corporate (Dollars in Thousands) $ Change % Change General, selling and Administrative expenses $ 3,075 $ 2,804 $271 9.7% Operating loss (3,075) (2,804) (271) 9.7%
Corporate costs include management information systems, human resources, investor relations and corporate communications, corporate finance and corporate governance costs. The start-up of the nanocomposite business is also included in the corporate costs. More than 60% of the increase in costs is attributable to the development and market launch of the Company's nanocomposite technology. AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Liquidity and Capital Resources At March 31, 1998, the Company had outstanding debt of $108.6 million (including both long-term and short-term debt) and cash of $2.2 million compared with $109.4 million in debt and $3.1 million in cash and cash equivalents at December 31, 1997. The long-term debt represented 34.5% of total capitalization at March 31, 1998, compared with 34.9% at December 31, 1997. The Company had a current ratio of 2.17-to-1 at March 31, 1998, with approximately $83.5 million in working capital compared with 2.23-to-1 and $83.0 million, respectively, at December 31, 1997. During the first quarter of 1998, the Company paid dividends of $1.6 million, and acquired property, plant and equipment totaling $5.5 million. The Company had approximately $50.4 million in unused, committed credit lines at March 31, 1998. These credit facilities, in conjunction with funds generated from operations, are adequate to fund the capital expenditure program approved by the board of directors at this time. Forward Looking Statements This filing contains certain forward-looking statements regarding the company's expected performance for future periods and actual results for such periods may materially differ. Such forward-looking statements are subject to uncertainties, which include, but are not limited to, actual growth in AMCOL's various markets, utilization of the company's plants and factories, customer concentration in the absorbent polymers segment, operating costs, raw material prices, weather, and delays in development production and marketing of new products, and other factors detailed from time to time in the company's annual report and other reports filed with the Securities and Exchange Commission. PART II - OTHER INFORMATION Item 6: Exhibits and Reports on Form 8-K (a) See Index to Exhibits immediately following the signature page. (b) No reports on Form 8-K have been filed during the quarter ended March 31, 1998. SIGNATURES 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. AMCOL INTERNATIONAL CORPORATION Date: April 20, 1998 /s/ John Hughes John Hughes President and Chief Executive Officer Date: April 20, 1998 /s/ Paul G. Shelton Paul G. Shelton Senior Vice President and Chief Financial Officer INDEX TO EXHIBITS Exhibit Number 3.1 Restated Certificate of Incorporation of the Company (5), as amended (10) 3.2 Bylaws of the Company (10) 4 Article Four of the Company's Restated Certificate of Incorporation (5) 10.1 AMCOL International Corporation 1983 Incentive Stock Option Plan (1); as amended (3) 10.2 Executive Medical Reimbursement Plan (1) 10.3 Lease Agreement for office space dated September 29, 1986, between the Company and American National Bank and Trust Company of Chicago; (1) First Amendment dated June 2, 1994 (8); Second Amendment dated June 2, 1997 (13) 10.4 AMCOL International Corporation 1987 Non-Qualified Stock Option Plan (2); as amended (6) 10.5 Change in Control Agreement dated April 1, 1997, by and between Registrant and John Hughes (12) 10.6 Change in Control Agreement dated April 1, 1997, by and between Registrant and Paul G. Shelton (12) 10.7 Change in Control Agreement dated February 16, 1998, by and between Registrant and Lawrence E. Washow (14) 10.8 Change in Control Agreement dated February 7, 1996, by and between Registrant and Roger P. Palmer (10) 10.9 Change in Control Agreement dated April 1, 1997, by and between Registrant and Peter L. Maul (12) 10.10AMCOL International Corporation Dividend Reinvestment and Stock Purchase Plan (4); as amended (6) 10.11AMCOL International Corporation 1993 Stock Plan, as amended and restated (10) 10.12Credit Agreement by and among AMCOL International Corporation and Harris Trust and Savings Bank, individually and as agent, NBD Bank, LaSalle National Bank and the Northern Trust Company dated October 4, 1994, (7); as amended, First Amendment to Credit Agreement dated September 25, 1995 (9), as amended, Second Amendment to Credit Agreement dated March 28, 1996, and Third Amendment to Credit Agreement dated September 12, 1996 (11) 10.13Note Agreement dated October 1, 1994, between AMCOL International Corporation and Principal Mutual Life Insurance Company, (7); as amended, First Amendment of Note Agreement dated September 30, 1996 (11) 10.14Change in Control Agreement dated August 21, 1996 by and between Registrant and Frank B. Wright, Jr. (11) 10.15Change in Control Agreement dated February 17, 1998 by and between Registrant and Gary L. Castagna (14) 21 Subsidiaries of the Company 27 Financial Data Schedule (1) Exhibit is incorporated by reference to the Registrant's Form 10 filed with the Securities and Exchange Commission on July 27, 1987. (2) Exhibit is incorporated by reference to the Registrant's Form 10-K filed with the Securities and Exchange Commission for the year ended December 31, 1988. (3) Exhibit is incorporated by reference to the Registrant's Form 10-K filed with the Securities and Exchange Commission for the year ended December 31, 1993. (4) Exhibit is incorporated by reference to the Registrant's Form 10-K filed with the Securities and Exchange Commission for the year ended December 31, 1992. (5) Exhibit is incorporated by reference to the Registrant's Form S-3 filed with the Securities and Exchange Commission for the year ended September 15, 1993. (6) Exhibit is incorporated by reference to the Registrant's Form 10-K filed with the Securities and Exchange Commission for the year ended December 31, 1993. (7) Exhibit is incorporated by reference to the Registrant's Form 10-Q filed with the Securities and Exchange Commission for the quarter ended September 30, 1994. (8) Exhibit is incorporated by reference to the Registrant's Form 10-K filed with the Securities and Exchange Commission for the year ended December 31, 1994. (9) Exhibit is incorporated by reference to the Registrant's Form 10-Q filed with the Securities and Exchange Commission for the quarter ended September 30, 1995. (10) Exhibit is incorporated by reference to the Registrant's Form 10-K filed with the Securities and Exchange Commission for the year ended December 31, 1995. (11) Exhibit is incorporated by reference to the Registrant's Form 10-K filed with the Securities and Exchange Commission for the year ended December 31, 1996. (12) Exhibit is incorporated by reference to the Registrant's Form 10-Q filed with the Securities and Exchange Commission for the quarter ended March 31, 1997. (13) Exhibit is incorporated by reference to the Registrant's Form 10-Q filed with the Securities and Exchange Commission for the quarter ended June 30, 1997. (14) Exhibit is incorporated by reference to the Registrant's Form 10-K filed with the Securities and Exchange Commission for the year ended December 31, 1997. EX-27 2 FDS --
5 (Replace this text with the legend) 0000813621 AMCOL International Corporation 1,000 USD 3-MOS DEC-31-1998 JAN-1-1998 MAR-31-1998 1.00 2,206 0 99,275 2,964 48,945 154,800 325,208 150,505 354,018 71,319 0 0 0 320 0 354,018 121,557 121,557 98,022 113,712 331 0 2,111 5,403 1,945 3,458 0 0 0 3,458 .12 .12
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