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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended March 31, 1994
Commission File Number 1-5415
A. M. Castle & Co.
(Exact name of registrant as specified in its charter.)
Delaware 36-0879160
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
3400 North Wolf Road, Franklin Park, Illinois 60131
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone, including area code: 708/455-7111
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 issuer's
classes of common stock, as of the latest practical date:
Common Stock No Par Value - 7,340,214 shares as of April 30, 1994.
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A. M. CASTLE & CO.
Part I. FINANCIAL INFORMATION
Page
Number
Part I. Financial Information
Item 1. Financial Statements . . . . . . . . . . . . 3
Condensed Balance Sheets . . . . . . . . . . 3
Comparative Statements of Cash Flows . . . . 3
Comparative Statements of Income . . . . . . 4
Notes to Condensed Financial Statements. . . 5
Item 2. Management's Discussion and Analysis of Financial
Conditions and Results of Operations . . . . 6 - 7
Part II. Other Information
Item 1. Legal Proceedings . . . . . . . . . . . . . . 8
Item 4. Submission of Matters to a Vote of Security
Holders . . . . . . . . . . . . . . . . . . . 8
Item 6. Exhibits and Reports on Form 8-K. . . . . . . 8
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A. M. CASTLE & CO.
CONDENSED BALANCE SHEETS
(Dollars in thousands except per share data)
(unaudited) Mar. 31 Dec. 31 Mar. 31
Assets 1994 1994 1994
Cash. . . . . . . . . . . . . . . . .$ 2,770 $ 1,528 $ 773
Accounts receivable, net. . . . . . . 55,510 49,048 54,335
Inventories (principally on last-in,
first-out basis. . . . . . . . . . . 94,068 101,572 92,488
Total current assets . . . . . .$152,348 $152,148 $147,596
Prepaid expenses and other assets . . 10,919 11,088 10,077
Fixed assets, net . . . . . . . . . . 40,570 40,974 43,132
Total assets . . . . . . . . . .$203,837 $204,210 $200,805
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable. . . . . . . . . . .$ 48,054 $ 49,982 $46,765
Accrued liabilities . . . . . . . . . 9,598 9,494 7,310
Income taxes payable. . . . . . . . . 2,946 1,199 2,357
Short-term debt . . . . . . . . . . . - - -
Current portion of long-term debt . . 5,010 5,435 5,532
Total current liabilities. . . . 65,608 66,110 61,964
Long-term debt, less current portion. 54,903 58,024 62,285
Deferred income taxes . . . . . . . . 8,034 8,067 7,870
Post retirement benefit obligations . 2,528 2,466 2,197
Stockholders' equity. . . . . . . . . 72,764 69,543 66,489
Total liabilities and stockholders'
equity . . . . . . . . . . . . .$203,837 $204,210 $200,805
SHARES OUTSTANDING. . . . . . . . . . 7,323 7,278 7,276
BOOK VALUE PER SHARE. . . . . . . . .$ 9.94 $ 9.56 $ 9.14
WORKING CAPITAL . . . . . . . . . . .$ 86,740 $ 86,038 $ 85,632
WORKING CAPITAL PER SHARE . . . . . .$ 11.84 $ 11.82 $ 11.77
CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)
(Dollars in thousands) For the Three Months
Ended March 31,
Cash flows from operating activities: 1994 1993
Net income. . . . . . . . . . . . . . . . $ 3,642 $ 1,754
Depreciation. . . . . . . . . . . . . . . 1,186 1,188
Other . . . . . . . . . . . . . . . . . . 556 79
Cash provided from operating
activities before working
capital changes. . . . . . . . . . . . 5,384 3,021
(Increase) decrease in working capital. . (331) (10,309)
Net cash provided from (used by) operating
activities . . . . . . . . . . . . . . . . 5,053 (7,288)
Cash flows from investing activities:
Capital expenditures, net of sale
proceeds. . . . . . . . . . . . . . . . . 156 (1,118)
Net cash provided from (used by) investing
activities. . . . . . . . . . . . . . . . 156 (1,118)
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Cash flows from financing activities:
Long-term borrowings, net . . . . . . . . (3,546) 9,231
Dividends paid. . . . . . . . . . . . . . (876) (728)
Other . . . . . . . . . . . . . . . . . . 455 (17)
Net cash provided from (used by) financing
activities. . . . . . . . . . . . . . . . (3,967) 8,486
Net increase (decrease) in cash . . . . . . 1,242 80
Cash - beginning of year. . . . . . . . . 1,528 693
Cash - end of period. . . . . . . . . . . $ 2,770 $ 773
Supplemental disclosure on cash flow information:
Cash paid (received) during the period:
Interest . . . . . . . . . . . . . . . $ 1,372 $ 1,464
Income taxes . . . . . . . . . . . . . $ 560 $ 505
A. M. CASTLE & CO.
COMPARATIVE STATEMENTS OF INCOME
(Dollars in thousands, except tonnage and per share data)
For the Three Months Ended
(Unaudited) March 31,
1993 1992
Net sales . . . . . . . . $133,848 $119,869
Cost of material sold . . 97,501 89,816
Gross profit on sales . 36,347 30,053
Operating expenses. . . . 28,371 25,022
Depreciation expense. . . 1,186 1,188
Interest expense, net . . 874 989
Total . . . . . . . . . . 30,431 27,199
Income before taxes . . . 5,916 2,854
Income Taxes:
Federal . . . . . . . . 1,836 885
State . . . . . . . . . 438 215
2,274 1,100
Net income. . . . . . . . 3,642 1,754
Net income per share. . . $ .50 $ .24
Financial Ratios:
Return on sales . . . . 2.72% 1.46%
Asset turnover. . . . . 2.63 2.39
Return on assets. . . . 7.15% 3.49%
Leverage factor . . . . 2.93 3.07
Return on opening
stockholders' equity . 20.95% 10.71%
Other Data:
Cash dividends paid . . $ 876 $ 728
Dividends per share . . .12 .10
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Average number of shares
outstanding. . . . . . 7,300 7,276
Tons sold . . . . . . . 86,734 77,117
Inventory determination under the LIFO method can only be made at the
end of each fiscal year based on the inventory levels and costs at that
time. Accordingly, interim LIFO determinations, including those at
March 31, 1994, and March 31, 1993, must necessarily be based on
management's estimates of expected year end inventory levels and costs.
Since future estimates of inventory levels and costs are subject to
certain forces beyond the control of management, interim financial
results are subject to fiscal year end LIFO inventory valuations.
Current replacement cost of inventories exceeds book value by $46.0
million, $45.6 million, and $44.7 million at March 31, 1994, December
31, 1993 and March 31, 1993 respectively. Taxes on income would become
payable on any realization of this excess from reductions in the level
of inventories.
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A. M. CASTLE & CO.
Notes to Condensed Financial Statements
1. Condensed Financial Statements
The condensed financial statements included herein are unaudited,
except for the balance sheet at December 31, 1993, which is
condensed from the audited financial statements at that date. The
Company believes that the disclosures are adequate to make the
information not misleading; however, certain information and
footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to the rules and
regulations of the Securities and Exchange Commission. In the
opinion of management, the unaudited statements, included herein,
contain all adjustments (consisting of only normal recurring
adjustments) necessary to present fairly the financial position,
the cash flows, and the results of operations for the periods then
ended. It is suggested that these condensed financial statements
be read in conjunction with the financial statements and the notes
thereto included in the Company's latest annual report on Form 10-
K. The 1994 interim results reported herein may not necessarily be
indicative of the results of operations for the full year 1994.
2. Common Stock and Per Share Information
Net income per share computations are based on the weighted average
number of shares of common stock outstanding during the respective
periods.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations _____________________
Operating results for the first quarter of 1994 were significantly
improved as compared to the first quarter of 1993. First quarter
1994 net income was approximately $3.6 million as compared to $1.8
million for the first quarter of 1993. The primary reasons for the
better performance were achievement of a double digit gain in sales
volume; an increase in gross profit percent; and continued
aggressive management of expenses.
First quarter sales increased by 11.7% as compared to the first
quarter of 1993, while unit volume, expressed in tons sold,
increased by 12.5% over the same period. As a point of comparison,
service center industry shipments for the first three months of
1994 were 8.9% ahead of the comparable period last year. This
indicates that the Company's sales gains are the result of
increased market share as well as the product of a stronger
economy.
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Gross margin percentage increased to 27.2% from 25.1% for the first
quarter of last year. The major factors contributing to the 2.1%
increase in the margin percent over the first quarter of last year
were pricing "gains" generated from our margin improvement program,
and cost savings as a result of favorable sourcing arrangements.
In terms of dollars, total gross profit increased by approximately
$6.3 million over the first quarter of last year. Of this amount,
approximately $4.2 million was due to the higher sales volume and
the balance was due to pricing and cost savings.
Operating expenses were up by $3.3 million (13.2%) over the
comparable period last year. As a percentage of sales, operating
expenses increased slightly to 21.2% as compared to 20.9% during
the first quarter of 1993. The expense increase was due to
increases in volume driven and profit related expense categories.
As discussed above, unit sales volume increased by 12.5%. This
increase led to increases in expense categories such as warehouse
wages, trucking expenses, repairs and maintenance, and
communications. The severe winter and the start up operation at
H-A Industries resulted in higher utilities expense; and the 107%
increase in income before taxes resulted in significantly higher
provisions for incentive and profit sharing expense.
Depreciation expense continues to remain relatively constant from
last year as capital additions were primarily aimed at improving
existing facilities, and maintaining property and equipment in good
working order.
First quarter net interest expense decreased by $115,000 (11.6%) as
compared to the first quarter of 1993. Lower interest rates and
lower debt levels were responsible for the decrease in expense over
the prior year.
Liquidity and Capital Resources _______________________________
Current assets rose by $4.7 million in support of the higher sales
volume. Accounts receivable were up $1.2 million (2.2%) and
inventories were up $1.6 million (1.7%). The percentage increase
in these accounts was favorable when compared to the 11.7% increase
in sales volume. Total bank and long term borrowing decreased by
$7.9 million as compared to the prior year quarter.
The Company has unused committed and uncommitted lines of bank
credit of $104.2 million as of March 31, 1994 as compared to $106.9
million as March 31, 1993.
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Part II. OTHER INFORMATION
Item 1. Legal Proceedings
There are no material legal proceedings other than ordinary
routine litigation incidental to the business of the
Registrant.
Item 4. Submission of Matters to a Vote of Security Holders
(a) None
Item 6. Exhibits and Reports of Form 8-K
(a) None
(b) No reports on Form 8-K have been filed during the quarter
for which this report is filed.
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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.
A. M. Castle & Co.
(Registrant)
Date: May 6, 1994 By: /ss/ J. A. Podojil
J. A. Podojil
Treasurer/Controller
(Mr. Podojil is the Chief Accounting
Officer and has been authorized to
sign on behalf of the Registrant).
