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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 June 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 August 10, 1994, 9,577,621 common shares were outstanding.
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AMPCO-PITTSBURGH_CORPORATION
INDEX
Page_No.
Part I - Financial Information:
Item 1 - Consolidated Financial Statements
Consolidated Balance Sheets -
June 30, 1994 and December 31, 1993 3
Consolidated Statements of Income -
Six months ended June 30, 1994 and 1993;
Three Months Ended June 30, 1994
and 1993 4
Consolidated Statements of Cash Flows -
Six Months Ended June 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 1 - Litigation 10
Signatures 11
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PART_I_-_FINANCIAL_INFORMATION
AMPCO-PITTSBURGH_CORPORATION
CONSOLIDATED_BALANCE_SHEETS
(UNAUDITED)
June 30, December 31,
____1994_____ ____1993____
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 15,776,373 $ 9,550,420
Receivables, less allowance for doubtful
accounts of $329,117 in 1994 and
$281,885 in 1993 20,859,745 17,864,251
Inventories 30,279,208 28,173,446
Investments available for sale, at market in
1994 7,226,733 2,839,620
Other ___5,190,660 ___4,919,124
Total current assets 79,332,719 63,346,861
Property, plant and equipment, at cost 98,965,138 96,934,530
Accumulated depreciation _(49,360,089) _(46,346,106)
Net property, plant and equipment 49,605,049 50,588,424
Prepaid pension 14,826,896 15,201,896
Other assets ___7,210,834 ___9,356,933
$150,975,498 $138,494,414
Liabilities and Shareholders' Equity
Current liabilities:
Current maturities of long-term debt $ 350,000 $ 783,333
Accounts payable 7,242,707 5,380,015
Accrued payrolls and employee benefits 4,847,515 5,272,877
Other ___9,987,060 ___9,127,459
Total current liabilities 22,427,282 20,563,684
Long-term debt 1,350,000 1,350,000
Other liabilities __24,055,305 __25,430,200
Total liabilities 47,832,587 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) _(17,357,628) _(22,197,466)
94,775,973 89,936,135
Translation and other adjustments 2,131,569 1,214,095
Unrealized holding gains on securities ___6,235,369 ______-_____
Total shareholders' equity _103,142,911 __91,150,230
$150,975,498 $138,494,114
See Notes to Consolidated Financial Statements.
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AMPCO-PITTSBURGH_CORPORATION
CONSOLIDATED_STATEMENTS_OF_INCOME
(UNAUDITED)
_Six_Months_Ended_June_30,_ _Three_Months_Ended_June_30,_
1994 1993 1994 1993
<S> <C> <C> <C> <C>
Net sales $_56,838,589 $_58,221,699 $_29,732,613 $_29,385,361
Operating costs and expenses:
Cost of products sold
excluding depreciation 41,867,419 43,227,126 22,038,869 21,597,562
Selling and administrative 8,457,232 9,731,373 4,145,130 4,669,461
Depreciation ___2,756,062 ___2,693,336 ___1,374,231 ___1,310,358
__53,080,713 __55,651,835 __27,558,230 __27,577,381
Income from operations 3,757,876 2,569,864 2,174,383 1,807,980
Other income and (expense):
Gain on sale of investment 2,327,659 6,489,738 730,150 6,489,738
Interest expense (110,598) (805,096) (59,640) (265,630)
Other income (expense) - net ____(384,226) ____(316,611) ____(204,989) ____(191,026)
Income from continuing
operations before provision for
taxes on income 5,590,711 7,937,895 2,639,904 7,841,062
Provision for taxes on income ___2,000,000 _____240,000 _____900,000 _____181,000
Income from continuing operations 3,590,711 7,697,895 1,739,904 7,660,062
Discontinued operations:
Loss from operations - (596,306) - (780,333)
Gain (loss) on disposal, net
of an income tax provision
of $931,000 in 1994 ___1,728,251 _(15,490,990) _______-_____ _(15,490,990)
Net income (loss) $ 5,318,962 $ (8,389,401) $ 1,739,904 $ (8,611,261)
Net income (loss) per common share:
Continuing operations $ .38 $ .80 $ .18 $ .80
Discontinued operations _________.18 _______(1.68) ___________- _______(1.70)
Net income (loss) $ .56 $ (.88) $ .18 $ (.90)
Cash dividends declared per
share $ .05 $ .10 $ .025 $ .05
Weighted average common shares
outstanding 9,577,621 9,577,621 9,577,621 9,577,621
See Notes to Consolidated Financial Statements
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AMPCO-PITTSBURGH_CORPORATION
CONSOLIDATED_STATEMENTS_OF_CASH_FLOWS
(UNAUDITED)
Six Months Ended June 30,
_____1994____ ____1993____
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 5,318,962 $ (8,389,401)
Adjustments to reconcile net income to
net cash flows from operating activities:
Depreciation and amortization 2,756,062 3,808,121
(Gain) on sale of investment (2,327,659) (6,489,738)
(Gain) loss on disposal of discontinued
operations (2,659,251) 15,490,990
Deferred income taxes 2,710,464 -
Other - net 128,002 84,921
(Increase) decrease in assets:
Accounts receivable (2,679,475) 2,400,955
Inventories (1,815,360) 2,205,236
Other assets (6,438) 477,767
Increase (decrease) in liabilities:
Accounts payable 1,809,113 (1,101,753)
Accrued payrolls and employee benefits (483,567) 1,523,361
Other liabilities ____(708,214) __(1,377,912)
Net cash flows from operating activities ___2,042,639 ___8,632,547
Cash flows from investing activities:
Proceeds from disposal of discontinued
operations 2,898,566 30,268,962
Proceeds from sales of investments 3,512,045 6,970,418
Purchases of property, plant and equipment (1,452,818) (1,239,898)
Proceeds from sale of property, plant and
equipment ______18,505 _____132,452
Net cash flows from investing activities ___4,976,298 __36,131,934
Cash flows from financing activities:
Repayments of notes payable to bank - (13,000,000)
Repayments of long-term debt (433,333) (25,963,195)
Dividends paid ____(479,125) ____(958,005)
Net cash flows from financing activities ____(912,458) _(39,921,200)
Effect of exchange rate changes on cash _____119,474 _____(18,213)
Net increase in cash 6,225,953 4,825,068
Cash at beginning of year ___9,550,420 ___3,566,072
Cash at end of period $ 15,776,373 $ 8,391,140
Supplemental information:
Interest payments $ 113,090 $ 860,233
Income tax payments 699,757 86,806
See Notes to Consolidated Financial Statements.
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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 June 30, 1994, the
consolidated statements of income for the three and six month periods ended
June 30, 1994 and 1993 and the consolidated statements of cash flows for
the six 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 June 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 quarter of 1994, the Corporation sold 160,000 shares of
its holdings in Amersham, realizing proceeds of $2,458,000 and a pre-tax
gain of $730,000. The Corporation has remaining 89,587 shares of Amersham,
of which 36,726 shares 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 June 30, 1994, the Corporation owns 862,831 shares of
Northwestern.
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The Northwestern and unrestricted Amersham 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 gains included in
shareholders' equity. The excess of market value over carrying value of
$6,235,000 at June 30, 1994 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
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Inventories are comprised of the following:
June 30, December 31,
____1994____ ____1993____
<S> <C> <C>
Raw materials $ 4,985,833 $ 4,541,169
Work-in-process 17,161,098 16,081,343
Finished goods 6,048,700 5,614,401
Supplies ___2,083,577 ___1,936,533
$ 30,279,208 $ 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.
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AMPCO-PITTSBURGH_CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL_CONDITION_AND_RESULTS_OF_OPERATIONS
Operations for the Six and Three Month
Periods_Ended_June_30,_1994_and_1993__
Net sales of $29,733,000 in the second quarter of 1994 were comparable to
sales of $29,385,000 in the same period of the prior year. Net sales for the
first half of 1994 are lower by 2.4% compared to 1993 due principally to the
first quarter impact of a strike at Aerofin's heat exchange coil business.
The order backlog at June 30, 1994 was $62,900,000 compared with $56,200,000
at December 31, 1993 and $59,200,000 at June 30, 1993.
The cost of products sold relationships for the six and three months ended
June 30, 1994 were 73.7% and 74.1%, respectively. This compares with the
prior comparable periods at 74.2% and 73.5%, respectively. Year-to-date
margins have improved modestly; however, further improvement was impacted by
increased costs of the Aerofin labor dispute.
Selling and administrative expenses declined by $1,275,000 or 13% for the
year-to-date period and $524,000 or 11% for the second quarter, both compared
to the prior year. 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.
Due to the above, the income from operations was $3,758,000 and $2,174,000
for the six and three month periods ended June 30, 1994, respectively. This
compares with prior year comparable periods at $2,570,000 and $1,808,000,
respectively.
For a discussion on the gains on sales of investments, see Notes to Financial
Statements - Note 2.
Interest expense was lower in the 1994 periods 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 six
and three months ended June 30, 1994 of $5,319,000 and $1,740,000,
respectively. This compares with net losses for the prior year comparable
periods of $8,389,000 and $8,611,000, respectively.
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As a result of replacing part of the former workforce at Aerofin, the labor
dispute, although ongoing, is expected to have less of an impact on earnings
during the second half of the year.
Liquidity_and_Capital_Resources
Net cash flow from operating activities was positive for the six months ended
June 30, 1994 at $2,043,000 and compares with positive cash flows of
$8,633,000 for the comparable period 1993. Net cash outflow for working
capital changes and payments associated with discontinued operations was
$3,884,000 in 1994 compared to net cash inflows of $4,128,000 in 1993. The
1994 net cash outflow reflects an increased level of trade receivables
compared to 1993 due to timing of sales within the quarter. The 1993 net
cash inflow included a reduction in working capital for the air handling
operations prior to sale.
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 $1,453,000 compared to $1,240,000 in
1993. Capital appropriations carried forward from June 30, 1994 total
$1,784,000. 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 June 30, 1994 was $22,000,000.
At June 30, 1994, the Corporation owned 862,831 shares of Northwestern which
had a market value of $6,471,000. The Corporation intends to sell its shares
in Northwestern in an orderly manner, depending on market conditions. The
Corporation also owned 89,587 shares of Amersham of which 36,726 shares are
restricted from sale until May 1996. Subsequent to the end of the second
quarter, the 52,861 unrestricted shares of Amersham were sold realizing
proceeds of $798,000 and a gain of $227,000.
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.
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PART_II_-_OTHER_INFORMATION
AMPCO-PITTSBURGH_CORPORATION
Item 1 Litigation
Update to Item 3 of Form 10-K for the fiscal year ended
December 31, 1993.
There have been no significant developments in the matters
described in Item 3 of Form 10-K for the fiscal year ended
December 31, 1993 since the matters reported in the 10-Q filed
for the quarter ended March 31, 1994.
Items 2 - 5 None
Item 6 Exhibits and Reports on Form 8-K
(a) Exhibits
None
(b) Reports on Form 8-K
None
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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.
AMPCO-PITTSBURGH CORPORATION
DATE: August_10,_1994 BY:s/Marshall_L._Berkman________
Marshall L. Berkman
Chairman and
Chief Executive Officer
DATE: August_10,_1994 BY:s/Ernest_G._Siddons__________
Ernest G. Siddons
Senior Vice President Finance
and Treasurer
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