-----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, Hq1wjDM/BA1u0RQbVBNMp1biXFAoyQCih3DCUhBG5tdS7Cn2IRXRL9uOgs3kZs4g /9B1j77HmtYtp18anxafYA== 0000826619-98-000016.txt : 19980203 0000826619-98-000016.hdr.sgml : 19980203 ACCESSION NUMBER: 0000826619-98-000016 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19980202 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: GREEN A P INDUSTRIES INC CENTRAL INDEX KEY: 0000826619 STANDARD INDUSTRIAL CLASSIFICATION: STRUCTURAL CLAY PRODUCTS [3250] IRS NUMBER: 430899374 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: SEC FILE NUMBER: 001-13359 FILM NUMBER: 98519565 BUSINESS ADDRESS: STREET 1: GREEN BLVD CITY: MEXICO STATE: MO ZIP: 65265 BUSINESS PHONE: 5734733626 MAIL ADDRESS: STREET 1: GREEN BLVD CITY: MEXICO STATE: MO ZIP: 65265 FORMER COMPANY: FORMER CONFORMED NAME: A P GREEN INDUSTRIES INC DATE OF NAME CHANGE: 19900619 10-Q/A 1 AMENDED QUARTERLY REPORT FOR QUARTER ENDED 6/30/97 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 --------------- FORM 10-Q/A QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 --------------- For the quarter ended June 30, 1997 Commission File No. 0-16452 ------------- ------- A. P. GREEN INDUSTRIES, INC. ---------------------------- (Exact name of registrant as specified in its charter) Delaware 43-0899374 -------- ---------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) Green Boulevard, Mexico, Missouri 65265 --------------------------------- ----- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (573) 473-3626 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 Indicate the number of shares outstanding of each of the registrant's classes of common stock as of the latest practicable date: As of August 13, 1997, 8,059,056 shares of Common Stock, $1 par value, were outstanding. Page 1 of 14 A. P. GREEN INDUSTRIES, INC. PART I. FINANCIAL INFORMATION Item 1. FINANCIAL STATEMENTS ADJUSTED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (UNAUDITED) June 30, December 31, 1997 1996 -------- ----------- (Dollars in thousands, except per share data) ASSETS Current Assets Cash and cash equivalents $ 6,129 $ 9,477 Receivables (net of allowances - -- 1997, $1,732; 1996, $1,701) 43,865 42,084 Reimbursement due on paid asbestos claims -- 3,898 Inventories 55,217 53,674 Deferred income tax asset 2,685 3,374 Other 7,619 7,030 ------- ------- Total current assets 115,515 119,537 Property, plant and equipment, net 106,386 107,394 Projected insurance recovery on asbestos claims 108,437 110,374 Pension assets 9,106 9,044 Intangible assets, net 4,601 4,132 Other assets 4,363 4,648 ------- ------- Total assets $348,408 $355,129 ======= ======= LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Accounts payable $ 16,798 $ 20,408 Accrued expenses Payrolls 6,121 6,267 Taxes other than on income 1,934 1,860 Insurance reserves 4,103 3,574 Other 6,942 6,528 Current maturities of long-term debt 4,120 4,168 Income taxes 1,183 1,191 ------- ------- Total current liabilities 41,201 43,996 Deferred income taxes 8,533 10,228 Long-term non-pension benefits 17,258 16,583 Long-term pensions 12,652 12,449 Long-term debt 37,710 40,109 Projected asbestos claims 108,437 111,966 ------- ------- Total liabilities 225,791 235,331 ------- ------- Minority Interests 2,648 2,088 Stockholders' Equity Preferred stock - $1 par value; authorized: 2,000,000 shares; issued and outstanding: none -- -- Common stock - $1 par value; authorized: 10,000,000 shares; issued: 8,980,092 in 1997 and 8,975,442 in 1996 8,980 8,975 Additional paid-in capital 68,334 68,309 Retained earnings 63,003 60,477 Less: Deferred foreign currency translation (3,172) (2,875) Treasury stock of 953,934 shares in 1997 and 1996, at cost (9,498) (9,498) Note receivable-ESOT (6,941) (6,941) Minimum pension liability adjustment, net of tax (737) (737) ------- ------- Total stockholders' equity 119,969 117,710 ------- ------- Total liabilities and stockholders' equity $348,408 $355,129 ======= ======= See accompanying notes to adjusted consolidated financial statements. 2 A. P. GREEN INDUSTRIES, INC. ADJUSTED CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED) Three months ended June 30, -------------------------- (Dollars in thousands, except per share data) 1997 1996 --------- --------- Net sales $ 71,853 $ 69,538 Cost of sales 58,239 55,913 --------- --------- Gross profit 13,614 13,625 Expenses and other income Selling & administrative expenses 9,176 9,211 Interest expense 812 791 Interest income (251) (285) Minority interest in loss of partnership (89) (7) Other income, net (50) (125) --------- --------- Earnings before income taxes 4,016 4,040 Income tax expense 1,435 1,588 Equity in net income of affiliates (15) (199) Minority interest in income of consolidated subsidiaries 85 80 --------- --------- Net earnings $ 2,511 $ 2,571 ========= ========= Net earnings per common share $ 0.31 $ 0.32 ========= ========= Weighted average number of common shares 8,025,629 8,030,739 ========= ========= Dividends per common share $ 0.040 $ 0.035 ========= ========= See accompanying notes to adjusted consolidated financial statements. 3 A. P. GREEN INDUSTRIES, INC. ADJUSTED CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED) Six months ended June 30, ------------------------ (Dollars in thousands, except per share data) 1997 1996 --------- --------- Net sales $ 136,669 $ 133,772 Cost of sales 112,253 108,655 --------- --------- Gross profit 24,416 25,117 Expenses and other income Selling & administrative expenses 18,398 18,217 Interest expense 1,646 1,577 Interest income (499) (606) Minority interest in loss of partnership (85) (41) Other income, net (116) (268) --------- --------- Earnings before income taxes 5,072 6,238 Income tax expense 1,793 2,374 Equity in net income of affiliates (30) (379) Minority interest in income of consolidated subsidiaries, net 155 68 --------- --------- Net earnings 3,154 4,175 ========= ========= Net earnings per common share $ 0.39 $ 0.52 ========= ========= Weighted average number of common shares 8,024,431 8,054,090 ========= ========= Dividends per common share $ 0.08 $ 0.07 ========= ========= See accompanying notes to adjusted consolidated financial statements. 4 A. P. GREEN INDUSTRIES, INC. ADJUSTED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Six months ended June 30, ------------------------ (Dollars in thousands) 1997 1996 ---------- ---------- Cash flows from operating activities Net earnings $ 3,154 $ 4,175 Adjustments for items not requiring (providing) cash Depreciation, depletion and amortization 5,985 5,205 Stock compensation to directors 29 28 Provision for losses on accounts receivable 363 333 (Loss) gain on sale of assets (39) 110 Equity in earnings of affiliates, net of dividends received (30) (191) Minority interest in income of consolidated subsidiaries and partnerships,net 70 27 Decrease (increase) in assets Trade receivables (2,144) (4,234) Asbestos claim and fee reimbursements received 15,162 5,144 Inventories (1,543) 247 Receivable and prepaid taxes 45 336 Other current assets (761) (806) Increase (decrease) in liabilities Accounts payable and accrued expenses (2,739) (3,123) Asbestos claims paid (12,855) (4,968) Pensions 203 (65) Income taxes (9) 109 Deferred income taxes (1,006) (234) Long-term non-pension benefits 675 575 ------ ------ Net cash provided by operating activities 4,560 2,668 ------ ------ Cash flows from investing activities Capital expenditures (4,001) (7,047) Increase in other long-term assets (467) (204) Decrease (increase) in pension assets (62) 52 Proceeds from sales of assets 208 69 ------ ------ Net cash used in investing activities (4,322) (7,130) ------ ------ Cash flows from financing activities Repayments of debt (11,151) (107) Proceeds from borrowings 8,000 225 Dividends paid (642) (563) Capital contributions from minority partner 490 -- Purchase of common stock for treasury -- (480) Tax benefit on dividends paid to ESOT 14 14 ------ ------ Net cash used in financing activities (3,289) (911) ------ ------ Effect of exchange rate changes (297) (348) ------ ------ Net decrease in cash and cash equivalents (3,348) (5,721) Cash and cash equivalents at beginning of year 9,477 9,284 ------ ------ Cash and cash equivalents at end of period $ 6,129 $ 3,563 ====== ====== See accompanying notes to adjusted consolidated financial statements. 5 A. P. GREEN INDUSTRIES, INC. NOTES TO ADJUSTED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. MANAGEMENT'S COMMENTS REGARDING ADJUSTMENTS AND RESULTS OF ---------------------------------------------------------- OPERATIONS ---------- In the opinion of management, the accompanying consolidated financial statements include all adjustments of a normal and recurring nature necessary for a fair presentation of the financial position and results of operations for the periods presented. These financial statements should be read in conjunction with the Company's Annual Report on Form 10-K for the year ended December 31, 1996. The results for the quarter and six-month period ended June 30, 1997 are not necessarily indicative of the results which may occur for the full year. All per share amounts have been restated to reflect the two-for-one stock split effective September 20, 1996. Certain prior year amounts have been reclassified to conform to the 1997 presentation. 2. RESERVE FOR PLANT CLOSINGS -------------------------- The Company has a reserve for estimated exit costs and termination benefits in connection with the shutdown of certain facilities in the U.S. and Canada. Three of the plants acquired in the acquisition of the refractories assets of General Refractories Company and its affiliated companies ("General") were closed during 1994, a $3.6 million reserve for which was established at the time of acquisition and included on the opening balance sheet. During 1995 the reserve was increased by approximately $700,000 due to the closing of the Weston, Ontario plant, which was sold in December 1995, and revised estimates of U.S. employee termination benefits resulting from the sale of these facilities taking longer than anticipated. Substantially all employees at these facilities have been terminated and approximately $3.2 million of termination benefits and plant closing costs have been charged against the reserve to date. The U.S. facilities are held for sale at their estimated net realizable value. 6 3. INVENTORIES ----------- June 30, 1997 December 31, 1996 ------------- ----------------- Finished goods & work-in-process Valued at LIFO: FIFO cost $ 32,721 $31,278 Less LIFO reserve (14,272) (14,907) ------- ------- LIFO cost 18,449 16,371 Valued at FIFO 13,127 13,225 ------- ------- TOTAL 31,576 29,596 ------- ------- Raw materials and supplies Valued at LIFO: FIFO cost 17,131 17,702 Less LIFO reserve (6,012) (6,129) ------- ------- LIFO cost 11,119 11,573 Valued at FIFO 12,522 12,505 ------- ------- TOTAL 23,641 24,078 ------- ------- $55,217 $53,674 ======= ======= 4. LITIGATION ---------- Asbestos-related Claims - Personal Injury ----------------------------------------- A. P. Green is among numerous defendants in lawsuits pending as of June 30, 1997 that seek to recover compensatory, and in many cases, punitive damages for personal injury allegedly resulting from exposure to asbestos-containing products. A. P. Green is a member of the Center for Claims Resolution (the Center), an organization of twenty companies (Members) who were formerly distributors or manufacturers of asbestos-containing products. The Center administers, evaluates, settles, pays and defends all of the asbestos-related personal injury lawsuits involving its Members. Under the terms of the Center Agreement, each Member's portion of the liability payments and defense costs are based upon, among other things, the number and type of claims brought against it. Claims activity for the Company for each of the years ended December 31, 1996, 1995 and 1994 was as follows: 7 ----------------------------------------------------------------------- 1996 1995 1994 ----------------------------------------------------------------------- Claims pending at January 1 48,367 50,920 52,122 Claims filed 29,702 12,560 14,836 Cases settled, dismissed or otherwise resolved (19,184) (15,113) (16,038) ------ ------ ------ Claims pending at December 31 58,885 48,367 50,920 ====== ====== ====== Average settlement amount per claim(1) $ 1,582 $ 1,778 $ 1,816 ======================================================================= (1)Substantially all settlements are covered by the Company's insurance program. On January 15, 1993, the Members were named as defendants in a class action lawsuit brought on behalf of all persons who have been occupationally exposed to asbestos-containing products of the Members and who have unasserted claims for such exposure (the Class) pursuant to Federal Rule of Civil Procedure 23(b)(3) in the Federal District Court for the Eastern District of Pennsylvania. At the same time, a settlement (the Settlement) between the Members and the Class was filed with the court. On June 25, 1997, after a favorable ruling in the Federal District Court for the Eastern District of Pennsylvania and a reversal of that ruling by the Third Circuit Court of Appeals, the United States Supreme Court upheld the ruling of the Third Circuit. The result of such ruling is that the class action lawsuit and the Settlement are of no effect. In December 1996, the Company and a former subsidiary, The E. J. Bartells Company, reached a comprehensive settlement agreement with all insurance carriers except one. Under the terms of this settlement agreement, such carriers have agreed to pay (subject to applicable policy limits) on behalf of the insureds, liabilities arising out of asbestos personal injury claims. The Company will pursue coverage litigation against the non-settling carrier. As the Settlement established a numerical cap on the number of claims that could be processed each year during the ten years of the Settlement and because the Settlement provided for a range of payments for different disease categories, it was possible to estimate the aggregate amount of liability for the Company through 2004 and related insurance recoveries. The amounts reported for projected asbestos claims and projected insurance recovery on asbestos claims in the consolidated statements of financial position as of June 30, 1997 and December 31, 1996 were determined based upon the Settlement. However, without the Settlement the Company can only estimate the liability and related insurance recoveries associated with known claims. The Company is assessing the impact of the recent Supreme Court ruling on its projected asbestos liability and insurance recoveries. In doing so, the Company will review its insurance policies, historical settlement amounts and the number of cases pending against it. Management believes the outcome of this assessment will not have an effect on the 8 consolidated earnings of the Company. It is anticipated that future projections of asbestos liabilities and insurance recoveries and related adjustments to the amounts reported in the Company's statement of financial position will be based primarily on known claims and cases, as unreported claims cannot be estimated with a reasonable degree of accuracy. Management does not anticipate that the Company will be required to make any payments for these claims. While management understands the inherent uncertainty in litigation of this type and the possibility that past costs may not be indicative of future costs, management does not believe that these claims and cases will have any additional material adverse effect on the Company's consolidated financial position or results of operations. In addition to asbestos-related personal injury claims asserted against A. P. Green, a number of claims have been asserted against Bigelow-Liptak Corporation (now known as A. P. Green Services, Inc.), a subsidiary of the Company. These claims have been and are currently being handled by such subsidiary's insurance carriers. Except for deductible amounts or retentions provided for under insurance policies, no claim for reimbursement of defense or indemnity payments has been made against the Company or such subsidiary by any such carriers. Asbestos-related Claims - Property Damage ----------------------------------------- A. P. Green is also among numerous defendants in a property damage class action suit pending in South Carolina. A. P. Green previously has been dismissed from a number of property damage cases and believes that it should be dismissed from the South Carolina case based on the end uses of its products. A similar suit pending in the State of Oregon involves a former wholly owned subsidiary of the Company and is being defended by the Company's insurance carrier. Based upon the Company's history in these asbestos-related property damage claims, management does not believe that the ultimate resolution of these matters will have a material adverse effect on the Company's consolidated financial position or results of operations. Environmental ------------- The EPA or other private parties have named the Company or one of its subsidiaries as a potentially responsible party in connection with two superfund sites in the United States. The Company is a de minimis party with respect to one of the sites and expects to arrive at a settlement agreement and consent decree with respect to it for an amount which is not expected to be material. With respect to the second, involving a wholly owned subsidiary of the Company, there does not appear to be any evidence of delivery to the site of hazardous material by the subsidiary. An estimate has been made of the costs to be incurred in these matters and the Company has recorded a reserve respecting those costs. Other ----- From time to time, A. P. Green is subject to claims and other lawsuits that arise in the ordinary course of business, some of which may seek damages in substantial amounts, including punitive or extraordinary damages. Reserves for these claims and lawsuits are 9 recorded to the extent that losses are deemed probable and are estimable. In the opinion of management, the disposition of all current claims and lawsuits will not have a material adverse effect on the consolidated financial position or results of operations of A. P. Green. 5. SUBSEQUENT EVENT ---------------- The Company acquired a 51% ownership interest in Lanxide ThermoComposites, Inc. and Subsidiary (LTI) on December 31, 1995, at which date total stockholders' equity of LTI was $196,078. LTI has incurred quarterly net losses since the acquisition. Accounting Research Bulletin No. 51, "Consolidated Financial Statements" (ARB51), requires that "...In the unusual case in which losses applicable to the minority interest in a subsidiary exceed the minority interest in the equity capital of the subsidiary, such excess and any further losses applicable to the minority interest shall be charged against the majority interest..." The Company did not become aware of this requirement until recently and, as such, as been charging 49% of all LTI losses against the minority interest. In order to correct its prior accounting treatment, the Company has adjusted its consolidated statements of earnings for the year ended December 31, 1996 and the first three quarters of 1997. The impact on the three-month and six-month periods ended June 30, 1997 and 1996 was as follows: Three months ended Six Months Ended June 30, June 30, (Dollars in thousands, ------------------ ---------------- except per share data) 1997 1996 1997 1996 ------------------ ---------------- Net earnings As reported $2,651 $2,837 $3,462 $4,568 As adjusted 2,511 2,571 3,154 4,175 Net earnings per common share As reported .33 .36 .43 .57 As adjusted .31 .32 .39 .52 In accordance with ARB 51, for future periods in which LTI has earnings the Company, as majority stockholder, will be credited with 100% of those earnings until such time as total stockholders' equity of LTI is positive. 10 A. P. GREEN INDUSTRIES, INC. PART I. FINANCIAL INFORMATION ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION The Company acquired a 51% ownership interest in Lanxide ThermoComposites, Inc. and Subsidiary (LTI) on December 31, 1995, at which date total stockholders' equity of LTI was $196,078. LTI has incurred quarterly net losses since the acquisition. ARB 51 requires that "...In the unusual case in which losses applicable to the minority interest in a subsidiary exceed the minority interest in the equity capital of the subsidiary, such excess and any further losses applicable to the minority interest shall be charged against the majority interest..." The Company did not become aware of this requirement until recently and, as such, has been charging 49% of all LTI losses against the minority interest. In order to correct its prior accounting treatment, the Company has adjusted its consolidated statements of earnings for the year ended December 31, 1996 and the first three quarters of 1997. The impact on the quarter and six months ended June 30, 1997 was to increase minority interest in income of consolidated subsidiaries by approximately $140,000 and $308,000, respectively, through the elimination of the minority interest in all LTI losses for the quarter and six-month period, which reduced net income by the same amounts, or $.02 and $.04 per share, respectively. The impact on the quarter and six months ended June 30, 1996 was to increase minority interest in income of consolidated subsidiaries by approximately $266,000 and $393,000, respectively, which reduced net income by the same amounts, or $.04 and $.05 per share, respectively. In addition, on the adjusted consolidated statements of financial position minority interests was increased and retained earnings reduced by approximately $982,000 as of June 30, 1997 and approximately $393,000 and $674,000 as of June 30, 1996 and December 31, 1996, respectively. These adjustments are reflected in the adjusted consolidated financial statements included herein under Item 1., as well as wherever these items appear in or impact the supplementary data. In accordance with ARB 51, for future periods in which LTI has earnings the Company, as majority stockholder, will be credited with 100% of those earnings until such time as total stockholders' equity of LTI is positive. 11 FINANCIAL CONDITION - ------------------- Summary Information (Dollars in thousands) June 30, ------------------ December 31, 1997 1996 1996 ------ ------ ------------ Working capital $ 74,314 $ 79,471 $ 75,541 Current ratio 2.8:1 3.0:1 2.7:1 Total assets $348,408 $367,260 $355,129 Current maturities of long-term debt 4,120 2,867 4,168 Long-term debt 37,710 34,341 40,109 Stockholders' equity (adjusted) 119,969 116,825 117,710 Debt to total capitalization(1)(adjusted) 25.9% 24.2% 27.3% (1) Calculated as total Debt (long-term debt including current maturities) divided by total stockholders' equity plus total Debt. 12 A. P. GREEN INDUSTRIES, INC. PART II. OTHER INFORMATION Item 6. EXHIBITS AND REPORTS ON FORM 8-K -------------------------------- (a) Exhibits: --------- Exhibit No. ----------- 27 Financial Data Schedule as of and for the Six Months Ended June 30, 1997, as adjusted 13 SIGNATURE --------- 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. A. P. Green Industries, Inc. (Registrant) By: /s/Gary L. Roberts -------------------------------- Gary L. Roberts Vice President, Chief Financial Officer and Treasurer Date: February 2, 1998 ---------------- 14 EX-27 2 FDS FOR SIX MONTHS ENDED 6/30/97
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE A. P. GREEN INDUSTRIES, INC. ADJUSTED QUARTERLY REPORT ON FORM 10-Q/A AS OF AND FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH ADJUSTED REPORT. 1,000 6-MOS DEC-31-1997 JUN-30-1997 6,129 0 45,597 1,732 55,217 115,515 106,386 0 348,408 41,201 41,830 0 0 8,980 110,989 348,408 136,669 136,669 112,253 112,253 0 0 1,646 5,072 1,793 3,154 0 0 0 3,154 .39 0
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