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, 1996
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 14, 1996, 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, 1996 and December 31, 1995 3
Consolidated Statements of Income -
Nine Months Ended September 30, 1996
and 1995; Three Months Ended September 30,
1996 and 1995 4
Consolidated Statements of Cash Flows -
Nine Months Ended September 30, 1996
and 1995 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 11
Signatures 12
Exhibits
Exhibit 27
- 2 -
PART I - FINANCIAL INFORMATION
AMPCO-PITTSBURGH CORPORATION
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
September 30, December 31,
1996 1995
Assets
Current assets:
Cash and cash equivalents $ 22,008,201 $ 15,553,263
Receivables, less allowance for
doubtful accounts of $706,706 in
1996 and $633,036 in 1995 30,445,766 28,734,492
Inventories 32,575,594 33,509,644
Investments available for sale 4,718,070 6,969,878
Deferred income taxes 1,991,759 5,530,994
Other 1,943,484 1,663,337
Total current assets 93,682,874 91,961,608
Property, plant and equipment,
at cost 117,518,055 112,139,533
Accumulated depreciation (61,190,386) (56,987,783)
Net property, plant and equipment 56,327,669 55,151,750
Unexpended industrial revenue bond
proceeds 10,217,815 -
Prepaid pension 14,153,839 14,296,588
Other noncurrent assets 9,118,954 10,013,744
$183,501,151 $171,423,690
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 7,336,100 $ 8,279,435
Accrued payrolls and employee
benefits 7,846,305 7,878,148
Other 7,379,884 8,861,133
Total current liabilities 22,562,289 25,018,716
Employee benefit obligations 17,970,308 18,621,697
Industrial revenue bond debt 12,586,000 1,350,000
Deferred income taxes 10,829,327 10,929,725
Other noncurrent liabilities 2,348,774 3,368,503
Total liabilities 66,296,698 59,288,641
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 1996
and 1995 9,577,621 9,577,621
Additional paid-in capital 102,555,980 102,555,980
Retained earnings (deficit) (282,148) (7,491,711)
111,851,453 104,641,890
Cumulative translation and other
adjustments 2,557,860 3,234,345
Unrealized holding gains on
securities 2,795,140 4,258,814
Total shareholders' equity 117,204,453 112,135,049
$183,501,151 $171,423,690
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,
1996 1995 1996 1995
Net sales $120,362,625 $105,107,649 $ 38,497,160 $ 34,956,421
Operating costs and expenses:
Cost of products sold
(excluding
depreciation) 85,428,707 75,820,443 27,523,055 25,173,230
Selling and
administrative 17,730,565 15,129,616 5,643,073 5,344,713
Depreciation 4,710,696 4,292,111 1,560,215 1,430,651
107,869,968 95,242,170 34,726,343 31,948,594
Income from operations 12,492,657 9,865,479 3,770,817 3,007,827
Other income (expense) -
net 205,229 (117,002) 18,331 62,275
Income before taxes 12,697,886 9,748,477 3,789,148 3,070,102
Provision for taxes on
income 4,770,000 3,887,000 1,420,000 1,327,000
Net income $ 7,927,886 $ 5,861,477 $ 2,369,148 $ 1,743,102
Net income per common
share $ .83 $ .61 $ .25 $ .18
Cash dividends declared
per share $ .075 $ .075 $ .025 $ .025
Weighted average number of
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,
1996 1995
Cash flows from operating activities:
Net income $ 7,927,886 $ 5,861,477
Adjustments to reconcile net income to net
cash flows from operating activities:
Depreciation and amortization 4,710,696 4,292,111
Deferred income taxes 4,017,000 3,445,000
Other - net 206,082 384,596
(Increase) decrease in assets:
Receivables (2,155,837) (1,669,258)
Inventories 698,994 542,243
Other assets 93,023 907,984
Increase (decrease) in liabilities:
Accounts payable (802,984) (563,370)
Accrued payrolls and employee benefits (161,359) (287,290)
Other liabilities (2,111,497) (1,893,470)
Net cash flows from operating activities 12,422,004 11,020,023
Cash flows from investing activities:
Purchases of property, plant and equipment (6,264,422) (3,087,822)
Unexpended industrial revenue bond
proceeds (10,217,815) 0
Proceeds from sales of investments 582,122 49,750
Acquisition of Buffalo Air Handling 0 (11,500,000)
Net cash flows from investing activities (15,900,115) (14,538,072)
Cash flows from financing activities:
Increase in industrial revenue bond debt 11,236,000 0
Dividends paid (1,197,203) (718,687)
Net cash flows from financing activities 10,038,797 (718,687)
Effect of exchange rate changes on cash (105,748) 195,527
Net increase (decrease) in cash 6,454,938 (4,041,209)
Cash at beginning of year 15,553,263 19,328,921
Cash at end of period $ 22,008,201 $ 15,287,712
Supplemental information:
Income tax payments $ 1,656,931 $ 368,003
See Notes to Consolidated Financial Statements.
- 5 -
AMPCO-PITTSBURGH CORPORATlON
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Unaudited Consolidated Financial Statements
The condensed consolidated balance sheet as of September 30,
1996, the consolidated statements of income for the nine and
three month periods ended September 30, 1996 and 1995 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, 1995. The results of operations for
the periods ended September 30, 1996 are not necessarily
indicative of the operating results for the full year.
Certain amounts for preceding periods have been reclassified
for comparability with the 1996 presentation.
2. Inventory
Inventories are comprised of the following:
September 30, December 31,
1996 1995
Raw materials $ 5,109,356 $ 5,603,277
Work-in-process 21,363,856 21,327,076
Finished goods 4,175,980 4,803,917
Supplies 1,926,402 1,775,374
$ 32,575,594 $ 33,509,644
3. Industrial Revenue Bond Debt
During the third quarter of 1996, the Corporation completed
the sale of two series of tax-exempt, long-term Industrial
Revenue Bonds totalling $11,236,000. The presently
unexpended proceeds of this debt, incurred for the purpose
of financing expansion and equipment at Union Electric
Steel's Pennsylvania facilities, are presented as a non-
current asset on the balance sheet. As required by the Trust
- 6 -
Indenture Agreement, these funds have been invested in
liquid, highly rated securities, and are carried at cost
which approximates market. The terms of the bond issues are
twenty-four and thirty years, with principal payable at
maturity. Interest on these bonds, and a previous issue for
$1,350,000 which is due in 2002, are at floating rates which
ranged between 3.7% and 4.0% during the quarter.
4. 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, 1996 and 1995
Net sales for the nine and three month periods of 1996 were
$120,363,000 and $38,497,000 compared to $105,108,000 and
$34,956,000 for the same periods of the prior year. Excluding
the impact of the previous year acquisitions of Buffalo Air
Handling and Bimex Industries, which were not included for the
full 1995 periods, sales increased approximately 5% for the
first nine months of 1996 and 6% for the third quarter, both
compared to the prior year. The increases reflect principally
continued growth of export sales. The order backlog at
September 30, 1996 was $113,000,000 compared to $96,800,000 at
December 31, 1995. The growth in the backlog is due primarily
to an increase in forged steel roll orders.
The cost of products sold relationships for the nine and three
month periods ended September 30, 1996 were 71.0% and 71.5%,
respectively. This compares with the prior comparable periods
at 72.1% and 72.0%, respectively. The margin improvement in
1996 resulted from improved pricing and more favorable product
mix.
Selling and administrative expenses in 1996 increased by
$2,601,000 for the year-to-date period and $298,000 for the
third quarter, both compared to the prior year. Excluding the
impact of the acquisitions, these costs increased by
approximately $1,000,000 and $100,000, or 7% and 2% for the
first nine months and third quarter, respectively. This
increase is principally due to increased commission costs on
higher sales and a mix change towards sales on which commission
is payable. The relationship of selling and administrative
expenses to net sales was 14.7% in the first nine months of 1996
compared to 14.4% for the comparable period in 1995.
Depreciation expense of $4,711,000 and $1,560,000 for the nine
and three months ended September 30, 1996 increased
approximately 10% compared to the prior year due principally to
the full period impact of the acquisitions.
Income from operations increased 27% for the nine month period
to $12,493,000 and 25% for the three month period to $3,771,000,
both compared to the prior year. These increases are
principally a result of higher sales, improved margins and the
benefit of the prior year acquisitions.
- 8 -
The Corporation had net income for the nine and three months
ended September 30, 1996 of $7,928,000 and $2,369,000,
respectively. This compares with net income for the prior year
comparable periods of $5,861,000 and $1,743,000, respectively.
Liquidity and Capital Resources
Net cash flow from operating activities was positive for the
nine months ended September 30, 1996 at $12,422,000 and compares
with positive cash flows of $11,020,000 for the comparable
period 1995. The improvement in cash flow was due to an
increase in income from operations of $2,628,000 in 1996, offset
to some extent by higher working capital requirements.
Capital expenditures for 1996 totaled $6,264,000 compared to
$3,088,000 in 1995. Capital appropriations carried forward from
September 30, 1996 total $12,800,000 with the major expenditure
being for expansion of capacity at Union Electric Steel's plants
to be completed by 1998. During the third quarter, the
Corporation completed the sale of two series of tax-exempt,
long-term Industrial Revenue Bonds totalling $11,236,000. At
September 30, 1996, approximately $10,218,000 of these funds are
unspent, and have been temporarily invested to be drawn down as
expenditures are made for expansion and equipment at Union
Electric Steel's Pennsylvania facilities (also see Notes to
Consolidated Financial Statements - Note 3). Funds generated
internally will be sufficient to finance the balance of the
expansion program.
During the second quarter of 1996, the Corporation sold its
remaining shares of Amersham for $582,000, recognizing a small
gain. Net cash outflows from investing activities in 1995
included $11,500,000 for the purchase of Buffalo Air Handling
Company.
Cash flows from financing activities in 1996 include the
Industrial Revenue Bonds issued and payment of an additional
prior year-end dividend of $480,000, or $.05 per share.
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, 1996,
exclusive of the Industrial Revenue Bond financing noted above,
was $14,500,000.
With respect to environmental concerns, the Corporation has been
named a potentially responsible party at certain third party
sites. The Corporation has accrued its share of the estimated
cost of remedial actions it would likely be required to
contribute. 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 cost of
- 9 -
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 brings 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.
- 10 -
PART II - OTHER INFORMATION
AMPCO-PITTSBURGH CORPORATION
Items 1-5. None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27. Financial Data Schedule
(b) Reports on Form 8-K
None
- 11 -
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 14, 1996 BY: s/Robert A. Paul
Robert A. Paul
President and
Chief Executive Officer
DATE: November 14, 1996 BY: s/Robert J. Reilly
Robert J. Reilly
Treasurer and Controller
(Principal Financial Officer)
- 12 -