FORM lO-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 September 30, 1994
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 1-898.
AMPCO-PITTSBURGH CORPORATION
Incorporated in Pennsylvania. I.R.S. Employer Identification No. 25-1117717.
600 Grant Street, Pittsburgh, Pennsylvania 15219
Telephone Number 412/456-4400
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 periods 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____
On November 11, 1994, 9,577,621 common shares were outstanding.
The exhibit index is located on page 12 of 37 pages.
- 1 -
AMPCO-PITTSBURGH_CORPORATION
INDEX
Page_No.
Part I - Financial Information:
Item 1 - Consolidated Financial Statements
Consolidated Balance Sheets -
September 30, 1994 and December 31, 1993 3
Consolidated Statements of Income -
Nine months ended September 30, 1994
and 1993; Three Months Ended September 30,
1994 and 1993 4
Consolidated Statements of Cash Flows -
Nine Months Ended September 30, 1994
and 1993 5
Notes to Consolidated Financial
Statements 6
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of
Operations 8
Part II - Other Information:
Item 5 Other Information 10
Item 6 Exhibits and Reports on Form 8-K 10
Signatures 11
Exhibit Index 12
Exhibit 1 13
Exhibit 2 24
Exhibit 27 37
- 2 -
PART_I_-_FINANCIAL_INFORMATION
AMPCO-PITTSBURGH_CORPORATION
CONSOLIDATED_BALANCE_SHEETS
(UNAUDITED)
September 30, December 31,
____1994_____ ____1993____
Assets
Current assets:
Cash and cash equivalents $ 19,619,161 $ 9,550,420
Receivables, less allowance for doubtful
accounts of $332,346 in 1994 and
$281,885 in 1993 20,673,045 17,864,251
Inventories 29,933,990 28,173,446
Investments available for sale, at market in
1994 6,147,671 2,839,620
Other ___1,372,842 ___4,919,124
Total current assets 77,746,709 63,346,861
Property, plant and equipment, at cost 99,888,712 96,934,530
Accumulated depreciation _(50,803,129) _(46,346,106)
Net property, plant and equipment 49,085,583 50,588,424
Prepaid pension 14,894,862 15,201,896
Other assets ___6,119,019 ___9,356,933
$147,846,173 $138,494,414
Liabilities and Shareholders' Equity
Current liabilities:
Current maturities of long-term debt $ 350,000 $ 783,333
Accounts payable 6,133,468 5,380,015
Accrued payrolls and employee benefits 4,948,738 5,272,877
Other ___8,709,422 ___9,127,459
Total current liabilities 20,141,628 20,563,684
Long-term debt 1,350,000 1,350,000
Other liabilities __24,503,080 __25,430,200
Total liabilities 45,994,708 47,343,884
Shareholders' equity:
Preference stock - no par value;
authorized 3,000,000 shares: none issued - -
Common stock - par value $1; authorized
20,000,000 shares; issued and outstanding
9,577,621 in 1994 and 1993 9,577,621 9,577,621
Additional paid-in capital 102,555,980 102,555,980
Retained earnings (deficit) _(16,464,753) _(22,197,466)
95,668,848 89,936,135
Translation and other adjustments 2,455,251 1,214,095
Unrealized holding gains on securities ___3,727,366 ______-_____
Total shareholders' equity _101,851,465 __91,150,230
$147,846,173 $138,494,114
See Notes to Consolidated Financial Statements.
- 3 -
AMPCO-PITTSBURGH_CORPORATION
CONSOLIDATED_STATEMENTS_OF_INCOME
(UNAUDITED)
Nine_Months_Ended_Sept._30, _Three_Months_Ended_Sept._30,
1994 1993 1994 1993
Net sales $_84,428,496 $_81,921,467 $_27,589,907 $_23,699,768
Operating costs and expenses:
Cost of products sold
excluding depreciation 61,845,036 60,438,503 19,977,617 17,211,377
Selling and administrative 12,969,382 13,809,096 4,512,150 4,077,723
Depreciation ___4,124,037 ___3,999,658 ___1,367,975 ___1,306,322
__78,938,455 __78,247,257 __25,857,742 __22,595,422
Income from operations 5,490,041 3,674,210 1,732,165 1,104,346
Other income and (expense):
Gain on sale of investment 2,554,294 6,489,738 226,635 -
Interest expense (160,244) (857,182) (49,646) (52,086)
Other income (expense) - net ____(450,942) ____(365,318) _____(66,716) _____(48,707)
Income from continuing
operations before provision for
taxes on income 7,433,149 8,941,448 1,842,438 1,003,553
Provision for taxes on income ___2,710,000 _____340,000 _____710,000 _____100,000
Income from continuing operations 4,723,149 8,601,448 1,132,438 903,553
Discontinued operations:
Loss from operations - (596,306) - -
Gain (loss) on disposal, net
of an income tax provision
of $931,000 in 1994 ___1,728,251 _(15,490,990) _______-_____ _______-____
Net income (loss) $ 6,451,400 $ (7,485,848) $ 1,132,438 $ 903,553
Net income (loss) per common share:
Continuing operations $ .49 $ .90 $ .12 $ .09
Discontinued operations _________.18 _______(1.68) ___________- ___________-
Net income (loss) $ .67 $ (.78) $ .12 $ .09
Cash dividends declared per
share $ .075 $ .125 $ .025 $ .025
Weighted average common shares
outstanding 9,577,621 9,577,621 9,577,621 9,577,621
See Notes to Consolidated Financial Statements
- 4 -
AMPCO-PITTSBURGH_CORPORATION
CONSOLIDATED_STATEMENTS_OF_CASH_FLOWS
(UNAUDITED)
Nine Months Ended Sept. 30,
_____1994____ ____1993____
Cash flows from operating activities:
Net income (loss) $ 6,451,400 $ (7,485,848)
Adjustments to reconcile net income (loss) to
net cash flows from operating activities:
Depreciation and amortization 4,124,037 5,067,899
(Gain) on sale of investment (2,554,294) (6,489,738)
(Gain) loss on disposal of discontinued
operations (2,659,251) 15,490,990
Deferred income taxes 3,304,958 -
Other - net 190,686 144,465
(Increase) decrease in assets:
Accounts receivable (2,414,897) 2,434,931
Inventories (1,338,682) 3,483,069
Other assets 2,611,275 205,112
Increase (decrease) in liabilities:
Accounts payable 627,933 (1,331,033)
Accrued payrolls and employee benefits (401,892) 1,782,112
Other liabilities __(2,340,094) __(3,126,955)
Net cash flows from operating activities ___5,601,179 __10,175,004
Cash flows from investing activities:
Proceeds from disposal of discontinued
operations 3,278,070 30,668,962
Proceeds from sales of investments 4,309,579 6,720,746
Purchases of property, plant and equipment (2,195,365) (2,046,547)
Proceeds from sale of property, plant and
equipment ______19,253 _____132,429
Net cash flows from investing activities ___5,411,537 __35,475,590
Cash flows from financing activities:
Repayments of notes payable to bank - (13,000,000)
Repayments of long-term debt (433,333) (26,046,527)
Dividends paid ____(718,687) __(1,437,131)
Net cash flows from financing activities __(1,152,020) _(40,483,658)
Effect of exchange rate changes on cash _____208,045 _____(25,288)
Net increase in cash 10,068,741 5,141,648
Cash at beginning of year ___9,550,420 ___3,566,072
Cash at end of period $ 19,619,161 $ 8,707,720
Supplemental information:
Interest payments $ 158,490 $ 904,597
Income tax payments (refunds) - net 1,033,167 (222,463)
See Notes to Consolidated Financial Statements.
- 5 -
AMPCO-PITTSBURGH_CORPORATION
NOTES_TO_CONSOLIDATED_FINANCIAL_STATEMENTS
1. Unaudited_Consolidated_Financial_Statements
Certain amounts for preceding periods have been reclassified for
comparability with the 1994 presentation.
The condensed consolidated balance sheet as of September 30, 1994, the
consolidated statements of income for the three and nine month periods
ended September 30, 1994 and 1993 and the consolidated statements of cash
flows for the nine month periods then ended have been prepared by the
Corporation without audit. In the opinion of management, all adjustments
necessary to present fairly the financial position, results of operations
and cash flows for the periods presented have been made.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. It is suggested that these
consolidated financial statements be read in conjunction with the
consolidated financial statements and notes thereto included in the
Corporation's annual report to shareholders for the year ended December 31,
1993. The results of operations for the periods ended September 30, 1994
are not necessarily indicative of the operating results for the full year.
2. Investments
On April 2, 1993, Amersham International PLC (Amersham) acquired United
States Biochemical Corporation (Biochem), including Ampco-Pittsburgh
Corporation's investment therein. The proceeds to the Corporation were
comprised of: cash $6,500,000 and common shares of Amersham valued at
$2,300,000. The Corporation recorded a gain of $6,490,000 with respect to
this transaction in the second quarter of 1993.
In January 1994, the Corporation received a payment of $1,598,000 from
Amersham, composed of cash of $814,000 and 52,466 shares of Amersham valued
at $784,000 in satisfaction of a contingent purchase price in connection
with their 1993 purchase of the Corporation's 20% interest in Biochem. As
no value was assigned previously to the contingent purchase price, the
settlement was recorded as a gain.
During the second and third quarters of 1994, the Corporation sold 212,861
shares of its holdings in Amersham, realizing proceeds of $3,256,000 and a
pre-tax gain of $957,000 (including $227,000 in the third quarter). The
Corporation has remaining 36,726 shares of Amersham which are restricted
from sale until May 1996.
During the first quarter of 1994, the Corporation sold 243,500 shares of
its interest in Northwestern Steel and Wire Company (Northwestern),
realizing proceeds of $2,779,000 and a pre-tax gain of $2,659,000.
Consistent with the previous accounting for Northwestern, this gain was
reflected in discontinued operations net of a deferred tax provision of
$931,000. At September 30, 1994, the Corporation owns 862,831 shares of
Northwestern.
- 6 -
The Northwestern shares held by the Corporation have been reclassified as
"available for sale" in accordance with SFAS No. 115 and reported at fair
value, with the unrealized gain included in shareholders' equity. The
excess of market value over carrying value of $3,727,000 at September 30,
1994, net of a deferred tax charge of $2,000,000, has been included in
shareholders' equity.
3. Disposition
On May 6, 1993, the Corporation sold its air handling operations in the
United States, Canada and Mexico to Howden Group, PLC for a cash purchase
price of $34,250,000. The transaction resulted in a loss of $15,491,000.
4. Litigation
The Corporation had previously reported on litigation against it in
connection with the Chapter 11 filing of Valley-Vulcan Mold Company
(Valley), of which a subsidiary of the Corporation is a 50% partner. On
April 4, 1994, the Bankruptcy Court issued a favorable judgment denying all
claims against the Corporation. No reserve had been established for the
outcome of this litigation based on the Corporation's belief that it had
meritorious defenses. The plaintiff in the case, the unsecured creditors
committee of Valley, has filed a notice of appeal from the Court's
decision.
In addition to the litigation noted above, the Corporation is from time to
time subject to routine litigation incidental to its business. The
Corporation believes that the results of the above noted litigation and
other pending legal proceedings will not have a materially adverse effect
on the Corporation's financial condition or results of operation.
5. Inventory
Inventories are comprised of the following:
September 30, December 31,
____1994____ ____1993____
Raw materials $ 5,433,202 $ 4,541,169
Work-in-process 17,385,313 16,081,343
Finished goods 4,919,441 5,614,401
Supplies ___2,196,034 ___1,936,533
$ 29,933,990 $ 28,173,446
6. Provision_for_taxes_on_income
The difference in tax provisions from statutory rates for 1993 were due
principally to the capital gain on the sale of Biochem being more than
offset by the capital loss from the sale of the air handling operations.
7. Net_Income_Per_Common_Share
Net income per common share is computed on the basis of a weighted number
of shares of Ampco-Pittsburgh Corporation's common stock outstanding, which
has remained unchanged at 9,577,621 shares, for the periods presented.
- 7 -
AMPCO-PITTSBURGH_CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL_CONDITION_AND_RESULTS_OF_OPERATIONS
Operations for the Nine and Three Month
Periods_Ended_September_30,_1994_and_1993
Net sales for the nine months ended September 30, 1994 increased by $2,507,000
or 3% over 1993. Net sales for the third quarter increased by $4,013,000
or 17% compared to 1993 reflecting improved volume for all operations.
The order backlog at September 30, 1994 was $59,800,000 compared with
$56,200,000 at December 31, 1993 and $58,500,000 at September 30, 1993.
The cost of products sold relationships for the nine and three months ended
September 30, 1994 were 73.3% and 72.4%, respectively. This compares with the
prior comparable periods at 73.8% and 72.6%, respectively. Year-to-date
margins have improved modestly; however, further improvement was impacted by a
strike at Aerofin which also resulted in a reduction in first quarter
shipments and subsequent replacement of a major portion of the labor force.
Aerofin is now fully operational.
Selling and administrative expenses declined by $840,000 or 6% for the
year-to-date period. The decline was primarily due to a combination of staff
and expense reductions and increased fee income for services provided by the
Corporation to others. Selling and administrative expenses increased by
$434,000 or 11% for the third quarter compared to 1993 due principally to
increased commissions as a result of the higher sales level.
Due to the above, the income from operations was $5,490,000 and $1,732,000 for
the nine and three month periods ended September 30, 1994, respectively. This
compares with prior year comparable periods at $3,674,000 and $1,104,000,
respectively.
For a discussion on the gain on sales of investments, see Notes to Financial
Statements - Note 2.
Interest expense was lower in the year-to-date 1994 period due to the
prepayment of bank debt in the second quarter of 1993 following the sale of the
air handling group (AHG).
For a discussion on the provision for taxes on income, see Notes to Financial
Statements - Note 6.
Discontinued operations include a gain in 1994 from the partial disposition of
shares held in Northwestern Steel and Wire Company (Northwestern). (See Notes
to Financial Statements - Note 2). The 1993 amounts represent the operating
results and loss on sale of the AHG.
As a result of all of the above, the Corporation had net income for the nine
and three months ended September 30, 1994 of $6,451,000 and $1,132,000,
respectively. This compares with a net loss in 1993 for the nine month period
of $(7,486,000) and net income for the three month period of $904,000.
- 8 -
Liquidity_and_Capital_Resources
Net cash flow from operating activities was positive for the nine months
ended September 30, 1994 at $5,601,000 and compares with positive cash
flows of $10,175,000 for the comparable period 1993. Net cash outflow
for working capital changes and payments associated with discontinued
operations was $3,256,000 in 1994 compared to net cash inflows of
$3,447,000 in 1993. The 1994 net cash outflow reflects an increased
level of trade receivables compared to 1993 due to the increased sales
activity in the third quarter. The 1993 net cash inflow included a
reduction in working capital for the air handling operations prior to
sale. Net cash flow from operating activities in 1994 includes a
recovery of $2,200,000 from the Chapter 11 estate of Valley-Vulcan Mold
Company in connection with the Corporation's lien in respect of a
previously paid industrial revenue bond guarantee. (See Notes to
Financial Statements - Note 4.
The net cash inflow for investing activities in 1994 includes proceeds
from the sale of Amersham and Northwestern shares and the contingent
purchase price receipt from Amersham.
Capital expenditures for 1994 totaled $2,195,000 compared to $2,047,000
in 1993. Capital appropriations carried forward from September 30, 1994
total $1,452,000. Capital requirements are expected to be financed from
funds internally generated.
The Corporation maintains short-term lines of credit and a revolving
credit agreement in excess of the cash needs of its businesses. The
total available at September 30, 1994 was $22,000,000.
At September 30, 1994, the Corporation owned 862,831 shares of
Northwestern which had a market value of $6,148,000. The Corporation
intends to sell its shares in Northwestern in an orderly manner,
depending on market conditions. The Corporation also owned 36,726 shares
of Amersham which are restricted from sale until May 1996.
With respect to environmental concerns, the Corporation has been named a
potentially responsible party at several sites by federal, state and
local authorities. The Corporation has accrued for costs of remedial
actions it would likely be required to take. In addition, the
Corporation has provided for environmental clean-up costs related to
preparing its discontinued business facilities for sale. While it is not
possible to quantify with certainty the potential of actions regarding
environmental matters, particularly any future remediation and other
compliance efforts, in the opinion of management, compliance with the
present environmental protection laws will not have a material adverse
effect on the financial condition or results of operations of the
Corporation.
- 9 -
PART_II_-_OTHER_INFORMATION
AMPCO-PITTSBURGH_CORPORATION
Items 1-4 None
Item 5 Other_Information
On September 8, 1994, Marshall L. Berkman, Chairman and Chief
Executive Officer, and Ronald L. Cale, Manager of Tax, died as
a result of the crash of U.S. Air Flight 427. On September 20,
1994, the Board of Directors elected Louis Berkman as Chairman
of the Board, Robert A. Paul as President and Chief Executive
Officer, Ernest G. Siddons as Executive Vice President and
Chief Operating Officer, and Robert J. Reilly as Treasurer and
Controller. Winifred Jones was named Manager of Tax.
Item 6 Exhibits and Reports on Form 8-K
(a) Exhibits
1. Amended and Restated by-laws (3)
2. Category 1 Severance Agreement between Ampco-Pittsburgh
Corporation and Louis Berkman (10)
27. Financial Data Schedule
(b) Reports on Form 8-K
None
- 10 -
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.
AMPCO-PITTSBURGH CORPORATION
DATE: November_11,_1994 BY:s/Robert_A._Paul_____________
Robert A. Paul
President and
Chief Executive Officer
DATE: November_11,_1994 BY:s/Ernest_G._Siddons__________
Ernest G. Siddons
Executive Vice President and
Chief Operating Officer
- 11 -
AMPCO-PITTSBURGH_CORPORATION
EXHIBIT_INDEX
Page_No.
Exhibit 1 - Amended and restated by-laws (3) 13 of 37 pages
Exhibit 2 - Category I Severance Agreement between 24 of 37 pages
Ampco-Pittsburgh Corporation and Louis
Berkman (10)
Exhibit 27 - Financial Data Schedule (FDS) 37 of 37 pages
- 12 -