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, 1995
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 10, 1995, 9,577,621 common shares were outstanding.
- 1 -
AMPCO-PITTSBURGH CORPORATION
INDEX
Page No.
Part I - Financial Information:
Item 1 - Consolidated Financial Statements
Consolidated Balance Sheets -
September 30, 1995 and December 31, 1994 3
Consolidated Statements of Income -
Nine Months ended September 30, 1995
and 1994; Three Months ended
September 30, 1995 and 1994 4
Consolidated Statements of Cash Flows -
Nine Months Ended September 30, 1995
and 1994 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 6 - Exhibits and Reports on Form 8-K 10
Signatures 11
Exhibit Index 12
Exhibits
Exhibit 4
Exhibit 27
- 2 -
PART I - FINANCIAL INFORMATION
AMPCO-PITTSBURGH CORPORATION
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
September 30, December 31,
1995 1994
Assets
Current assets:
Cash and cash equivalents $ 15,287,712 $ 19,328,921
Receivables, less allowance for doubtful
accounts of $846,908 in 1995 and $483,017
in 1994 28,606,857 21,249,278
Inventories 31,249,507 30,321,705
Investments available for sale 7,506,021 5,392,694
Other 3,152,528 3,458,582
Total current assets 85,802,625 79,751,180
Property, plant and equipment, at cost 108,903,071 101,436,078
Accumulated depreciation (56,205,045) (51,692,129)
Net property, plant and equipment 52,698,026 49,743,949
Prepaid pension 14,480,452 14,962,827
Other noncurrent assets 10,840,455 7,454,131
$ 163,821,558 $151,912,087
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 7,170,117 $ 5,986,001
Accrued payrolls and employee benefits 7,837,484 7,881,752
Other 6,972,978 6,390,736
Total current liabilities 21,980,579 20,258,489
Employee benefit obligations 19,882,894 20,156,521
Deferred income taxes 7,965,276 4,382,467
Other noncurrent liabilities 3,622,514 4,143,726
Total liabilities 53,451,263 48,941,203
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 1995 and 1994 9,577,621 9,577,621
Additional paid-in capital 102,555,980 102,555,980
Retained earnings (deficit) (9,962,197) (15,104,987)
102,171,404 97,028,614
Cumulative translation adjustments 3,591,725 2,709,881
Unrealized holding gains on securities 4,607,166 3,232,389
Total shareholders' equity 110,370,295 102,970,884
$ 163,821,558 $151,912,087
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,
1995 1994 1995 1994
Net sales $105,107,649 $ 84,428,496 $ 34,956,421 $ 27,589,907
Operating costs and expenses:
Cost of products sold
(excluding depreciation) 75,820,443 61,845,036 25,173,230 19,977,617
Selling and administrative 15,129,616 12,969,382 5,344,713 4,512,150
Depreciation 4,292,111 4,124,037 1,430,651 1,367,975
95,242,170 78,938,455 31,948,594 25,857,742
Income from operations 9,865,479 5,490,041 3,007,827 1,732,165
Other income and (expense):
Gain on sale of investment - 2,554,294 - 226,635
Other income (expense) - net (164,302) (611,186) 14,975 (116,362)
Income from continuing
operations before provision
for taxes on income 9,701,177 7,433,149 3,022,802 1,842,438
Provision for taxes on income 3,870,000 2,710,000 1,310,000 710,000
Income from continuing
operations 5,831,177 4,723,149 1,712,802 1,132,438
Gain on disposal of discontinued
operation, net of an income tax
provision of $17,000 in 1995 and
$931,000 in 1994 30,300 1,728,251 30,300 -
Net income $ 5,861,477 $ 6,451,400 $ 1,743,102 $ 1,132,438
Net income per common share:
Continuing operations $ .61 $ .49 $ .18 $ .12
Discontinued operations - .18 - -
Net income $ .61 $ .67 $ .18 $ .12
Cash dividends declared per
share $ .075 $ .075 $ .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,
1995 1994
Cash flows from operating activities:
Net income $ 5,861,477 $ 6,451,400
Adjustments to reconcile net income to net
cash flows from operating activities:
Depreciation and amortization 4,292,111 4,124,037
(Gain) on sale of investment - (2,554,294)
(Gain) on discontinued operations (47,300) (2,659,251)
Deferred income taxes 3,445,000 3,304,958
Other - net 431,896 190,686
(Increase) decrease in assets:
Receivables (1,669,258) (2,414,897)
Inventories 542,243 (1,338,682)
Other assets 907,984 2,611,275
Increase (decrease) in liabilities:
Accounts payable (563,370) 627,933
Accrued payrolls and employee benefits (287,290) (401,892)
Other liabilities (1,893,470) (2,340,094)
Net cash flows from operating activities 11,020,023 5,601,179
Cash flows from investing activities:
Acquisition of Buffalo Air Handling (11,500,000) -
Purchases of property, plant and equipment (3,087,822) (2,176,112)
Proceeds from sales of investments - 4,309,579
Proceeds from disposal of discontinued
operations 49,750 3,278,070
Net cash flows from investing activities (14,538,072) 5,411,537
Cash flows from financing activities:
Repayments of long-term debt - (433,333)
Dividends paid (718,687) (718,687)
Net cash flows from financing activities (718,687) (1,152,020)
Effect of exchange rate changes on cash 195,527 208,045
Net increase (decrease) in cash (4,041,209) 10,068,741
Cash at beginning of year 19,328,921 9,550,420
Cash at end of period $ 15,287,712 $ 19,619,161
Supplemental information:
Income tax payments $ 368,003 $ 1,033,167
See Notes to Consolidated Financial Statements.
- 5 -
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, 1995 and 1994
Net sales for the nine and three month periods of 1995 were $105,108,000 and
$34,956,000 compared to $84,428,000 and $27,590,000 for the same periods of
the prior year. Excluding the additional sales from the acquisition of
Buffalo Air Handling on May 1, 1995, sales increased by 14% and 9% for the
first nine months and third quarter of 1995, respectively, compared to the
prior year. Each operation continues to experience higher shipment levels
over the prior year due to improved economic activity in all of the markets
served. The order backlog at September 30, 1995 of $87,600,000 declined
slightly during the third quarter compared to the backlog of $90,900,000 at
June 30, 1995. Excluding the impact of Buffalo Air Handling, the
backlog at September 30, 1995 is 11% and 30% above the comparable totals at
December 31, 1994 and September 30, 1994, respectively.
The cost of products sold relationships for the nine and three months ended
September 30, 1995 were 72.1% and 72.0%, respectively. This compares with
the prior comparable periods at 73.3% and 72.4%, respectively. The margin
improvement is primarily a result of a more favorable product mix and higher
production levels in 1995. Despite the overall increase in order levels
noted in the backlog figures above, competitive pricing pressures are
continuing.
Selling and administrative expenses increased by $2,160,000 for the year-to-date
period and $833,000 for the third quarter, both compared to the prior year.
Excluding the impact of Buffalo Air Handling, these costs increased by 8%
year-to-date and by 3% for the quarter, both compared to the prior year.
The higher spending resulted from increased business levels.
As a result of the higher levels of production and shipments, income from
operations increased 80% for the nine month period to $9,865,000 and 74% for
the three month period to $3,008,000, both compared to the prior year.
Gain on sale of investment was $2,554,000 in the first nine months of 1994 and
$227,000 in the third quarter of 1994. (See Notes to Financial Statements -
Note 3).
Other income (expense) - net was $(164,000) in the first nine months of 1995
compared to $(611,000) in 1994. The improvement is principally due to an
increase in interest rates on invested cash balances.
Discontinued operations in 1995 and 1994 include gains, net of deferred taxes,
of $30,000 and $1,728,000 from the partial disposition of shares of
Northwestern Steel and Wire Company (Northwestern). (See Notes to Financial
Statements - Note 3).
As a result of all of the above, the Corporation had net income for the nine
and three months ended September 30, 1995 of $5,861,000 and $1,743,000,
respectively. This compares with net income for the prior year comparable
periods of $6,451,000 and $1,132,000, respectively.
- 8 -
Liquidity and Capital Resources
Net cash flow from operating activities was positive for the nine months ended
September 30, 1995 at $11,020,000 and compares with positive cash flows of
$5,601,000 for the comparable period 1994. Net cash outflow for working
capital increases was $2,963,000 in 1995 compared with $3,256,000 in 1994.
The increased cash flow in 1995 resulted primarily from higher operating
earnings.
The net cash outflow from investing activities in 1995 includes $11,500,000 for
the purchase of Buffalo Air Handling. The net cash inflow for investing
activities in 1994 includes proceeds from the sales of Northwestern and
Amersham shares and the contingent purchase price receipt
from Amersham.
Capital expenditures for 1995 totaled $3,088,000 compared to $2,176,000 in
1994. Capital appropriations carried forward from June 30, 1995 total
$1,600,000. Capital requirements are expected to be financed from funds
internally generated.
During the third quarter, the Corporation chose to reduce the amount available
under its revolving credit agreement from $15,000,000 to $7,500,000. The
total borrowing available from all sources, including short-term lines of
credit, is now $14,500,000 which is considered in excess of the cash needs
of the Corporation's businesses.
At September 30, 1995, the Corporation owned 857,831 shares of Northwestern
which had a market value of $7,506,000. 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, with a market value of
approximately $500,000, which are restricted from sale until May 1996.
With respect to environmental matters, the Corporation has been named a
potentially responsible party at certain sites. 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 and the potential liability for
all environmental proceedings will not have a material adverse effect on
the financial condition, results of operations or liquidity of the Corporation.
The nature and scope of the Corporation's business bring it into regular
contact with a variety of persons, businesses and government agencies in the
ordinary course of business. Consequently, the Corporation and its
subsidiaries from time to time are named in various legal actions. The
Corporation does not anticipate that its financial condition, results of
operations or liquidity will be materially affected by the costs of known,
pending or threatened litigation.
- 9 -
AMPCO-PITTSBURGH CORPORATlON
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Unaudited Consolidated Financial Statements
Certain amounts for preceding periods have been reclassified for
comparability with the 1995 presentation.
The condensed consolidated balance sheet as of September 30, 1995, the consolidated
statements of income for the nine and three month periods ended September 30, 1995 and
1994 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, 1994. The
results of operations for the periods ended September 30, 1995 are not necessarily indicative
of the operating results for the full year.
2. Acquisition of Buffalo Air Handling
On May 1, 1995 the Corporation acquired Buffalo Air Handling Company located in
Amherst, VA ("Buffalo") for $11,500,000 in cash. Buffalo is a manufacturer of large
custom air handling systems for industrial and commercial customers with sales of $22
million last year. The acquisition was accounted for as a purchase transaction. The excess
of the purchase price over the estimated fair value of the tangible net assets acquired is
being amortized over a preliminarily determined period of thirty years using the straight-line
method. The results of operations of Buffalo from May 1, 1995 have been included in the
consolidated financial statements.
The consolidated results of operations on a pro forma basis as though Buffalo had been
acquired as of January 1, 1994 are as follows (in thousands except for per share
information):
Three Months Nine Months
Ended September 30, Ended September 30,
1995 1994 1995 1994
Net sales $ 34,956 $ 33,126 $112,873 $ 99,460
Net income $ 1,743 $ 1,256 $ 6,206 $ 7,010
Net income per
share $ .18 $ .13 $ .65 $ .73
The pro forma financial information is not necessarily indicative either of results of
operations that would have occurred had the purchase been made at the beginning of the
period, or of future results of operations of the combined companies. The 1994 periods
include gains from investments (see Note 3).
- 6 -
3. Investments
In January 1994, The Corporation received a payment of $1,597,509 from Amersham
International PLC (Amersham), composed of cash of $813,654 and 52,466 shares of
Amersham valued at $783,855, in satisfaction of a contingent purchase price in
connection with their 1993 purchase of the Corporation's 20% interest in United States
Biochemical Corporation. As no value was assigned previously to the contingent
purchase price, the settlement was recorded as a gain in 1994.
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).
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 $2,659,251. Consistent with the previous accounting for
Northwestern, this gain was reflected in discontinued operations net of a deferred tax
provision of $931,000. An additional 5,000 shares of Northwestern were sold at a gain
during the third quarter of 1995.
4. Inventory
Inventories are comprised of the following:
September 30, December 31,
1995 1994
Raw materials $ 4,994,633 $ 5,016,745
Work-in-process 20,004,923 18,287,381
Finished goods 4,624,298 5,025,790
Supplies 1,625,653 1,991,789
$ 31,249,507 $30,321,705
5. 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.
6. Post Balance Sheet Event
On October 1, 1995 the Corporation acquired Bimex Corporation, a manufacturer of
bimetallic liners and barrels for the plastic molding machinery industry, located in Wales,
WI. The acquisition, for approximately $4,000,000 cash, will be accounted for as a
purchase transaction in the year end financial statements.
- 7 -
PART II - OTHER INFORMATION
AMPCO-PITTSBURGH CORPORATION
Items 1-5. None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
4. Amendment No. 1 to Revolving Credit Agreement dated as of
September 30, 1993.
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 10, 1995 BY: s/Robert A. Paul
Robert A. Paul
President and
Chief Executive Officer
DATE: November 10, 1995 BY: s/Robert J. Reilly
Robert J. Reilly
Treasurer and Controller
(Principal Financial Officer)
- 11 -
AMPCO-PITTSBURGH CORPORATION
EXHIBIT INDEX
Exhibit 4 - Amendment No. 1 to Revolving Credit Agreement dated as of
September 30, 1993.
Exhibit 27 - Financial Data Schedule (FDS)
- 12 -