<PAGE> FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1993; or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
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,_Suite_4600,_Pittsburgh,_Pennsylvania _15219_
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 412/456-4400
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title_of_each_class _on_which_registered__
Common stock, $1 par value New York Stock Exchange
Philadelphia Stock Exchange
Series A Preference Stock New York Stock Exchange
Purchase Rights Philadelphia Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
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 by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
As of March 18, 1994, 9,577,621 common shares were outstanding. The
aggregate market value of the voting stock of Ampco-Pittsburgh Corporation held
by non-affiliates (based upon the closing price of these shares on the New York
Stock Exchange) was approximately $70 million.
DOCUMENTS INCORPORATED BY REFERENCE: Parts I, II and IV of this report
incorporate by reference certain information from the Annual Report to
Shareholders for the year ended December 31, 1993.
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PART I
ITEM_1_-_BUSINESS
(a) GENERAL DEVELOPMENT OF BUSINESS
Ampco-Pittsburgh Corporation (the "Corporation") was incorporated in
Pennsylvania in 1929. The Corporation currently operates four businesses which
manufacture engineered equipment: Buffalo Pumps, Inc. and Aerofin Corporation,
acquired in 1981, headquartered in North Tonawanda, New York and Lynchburg,
Virginia, respectively, and Union Electric Steel Corporation and New Castle
Industries, Inc., acquired in 1984, headquartered in Carnegie and New Castle,
Pennsylvania, respectively.
In 1993, the stock of Buffalo Forge Company, including its Canadian and
Mexican subsidiaries, was sold. Management believes that this sale
strengthened the Corporation's financial position against economic
uncertainties and that the Corporation can now concentrate on those companies
that are better positioned to deal with both domestic and international
business opportunities.
Through various wholly-owned subsidiaries, the Corporation also acquires
and sells investments in other companies. In 1993, Amersham International plc
acquired United States Biochemical Corporation, a small private company in
which the Corporation owned a 20% interest. As a result of that transaction,
the Corporation received cash and stock of Amersham. Since January 1, 1993 the
Corporation has sold a portion of its investment in Northwestern Steel and Wire
Company, a public company.
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(b) FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS
The sales and operating profit of the Corporation's only segment and the
identifiable assets attributable to it for the three years ended December 31,
1993 are set forth in Note 16 (Business Segment Information) on p. 15 of the
accompanying Annual Report which is incorporated herein by reference.
(c) NARRATIVE DESCRIPTION OF BUSINESS
The Corporation produces finned tube heat exchange coils and pumps for the
construction, electric utility, chemical processing and marine defense
industries, machine parts for the plastics industry and forged hardened steel
rolls for producers of cold rolled steel, aluminum and other metals. These
products are heavily dependent on engineering, principally custom designed and
are sold to sophisticated commercial and industrial users in the United States
and, to a lesser extent, in foreign countries.
No one customer's purchases were material to the Corporation. Contracts
that may be subject to renegotiation or termination are not material to the
Corporation. The Corporation's business is not seasonal but is subject to the
cyclical nature of the industries and markets served. For additional
information on the products produced and financial information about the
business, see pp. 2 through 4 and Note 16 on p. 15 of the accompanying Annual
Report which are incorporated herein by reference.
Raw_Materials
Raw materials are generally available from many sources and the Corporation
is not dependent upon any single supplier for any raw material. Certain of the
raw materials used by the Corporation have historically been subject to
variations in price. The Corporation generally does not purchase or arrange
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for the purchase of raw materials significantly in advance of the time it
requires them.
Patents
While the Corporation holds some patents, trademarks and licenses, in the
opinion of management they are not material to the Corporation's business other
than in protecting the goodwill associated with the names under which its
products are sold.
Working_Capital
The Corporation maintains levels of inventory, which generally reflect its
normal requirements and are believed to reflect the practices of its
industries. Production is generally to custom order and requires inventory
levels of raw materials or semi-finished products with only a limited level of
finished products.
Backlog
The backlog of orders at December 31, 1993 was approximately $56,300,000
compared to a backlog for continuing operations of $64,700,000 at year end
1992. Most of those orders are expected to be filled in 1994.
Competition
The Corporation faces considerable competition from a large number of
companies. The Corporation believes, however, that it is a significant factor
in each of the principal markets which it serves.
Buffalo Pumps, Inc. produces a line of centrifugal pumps and competes with
many other producers. Competition is primarily based on quality, service,
price and delivery. Aerofin Corporation produces finned tube heat exchange
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coils and competes in commercial and industrial markets with a broad product
line. There are several major competitors in these markets. Competition is
based on quality, service and price.
Union Electric Steel Corporation is considered the largest producer of
forged hardened steel rolls in the United States. In addition to several
domestic competitors, European and Japanese manufacturers also compete in both
the domestic and foreign markets. Quality, performance, service and price are
the most important factors in the industry. New Castle Industries primarily
produces machine parts for use in the plastics industry and competes with a
number of small regional companies.
Research_and_Development
The Corporation operates in mature industries and does not expend material
amounts for research and development. The activities that are undertaken are
primarily designed to improve existing products, reduce costs and adapt
products to specific customer requirements.
Environmental_Protection_Compliance_Costs
Expenditures for environmental control matters were not material in 1993
and such expenditures in 1994 are not expected to be material. However, with
increasing regulatory activity, such expenditures may increase.
Employees
In December, 1993, the Corporation had 924 active employees, of whom 333
were sales, executive, administrative, engineering and clerical personnel. All
production and craft employees are covered by negotiated labor agreements with
various unions. Two bargaining agreements covering 212 production employees
will expire in the remainder of 1994. A contract with the International Union
of Electronic Workers (IUE), which represents 131 hourly employees at Aerofin's
plant in Lynchburg, Virginia, expired on March 12, 1994 and a work stoppage is
currently in progress.
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(d)FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS AND EXPORT
SALES
The Corporation's only foreign operation is a manufacturing plant located
in Belgium that principally serves the European markets. For financial
information relating to foreign and domestic operations see Note 16 (Business
Segment Information) on p. 15 of the accompanying Annual Report which is
incorporated herein by reference.
ITEM_2_-_PROPERTIES
The Corporation is in one segment that produces engineered products. The
location and general character of the principal locations, all of which are
owned, are as follows:
<TABLE>
<CAPTION>
Extent of
Utilization
Company and Principal Approximate Type of Based on
__Location__ ___Use____ Square_Footage Construction Normal_Capacity
<S> <C> <C> <C> <C>
Aerofin Corporation Manufacturing 146,000 on Brick 75%
4621 Murray Place facilities and 15.3 acres Concrete &
Lynchburg, VA 24506 offices Steel
Buffalo Pumps, Inc. Manufacturing 94,000 on Brick and 80%
874 Oliver Street facilities and 7 acres Cement
N. Tonawanda, NY 14120 offices Block
New Castle Industries, Manufacturing 81,600 on Sheet 70%
Inc. facilities and 18.5 acres Metal
1399 Countryline Road offices
New Castle, PA 16102
New Castle Industries, Manufacturing 31,000 Masonry 70%
Inc. facilities 5.3 acres Construction
925 Industrial Street with Steel
New Castle, PA 16102 Truss Roof
Union Electric Steel Manufacturing 186,000 on Steel 80%
Corporation plant 55 acres Sided
Route 18
Burgettstown, PA 15021
</TABLE>
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<TABLE>
<CAPTION>
Extent of
Utilization
Company and Principal Approximate Type of Based on
__Location__ ___Use____ Square_Footage Construction Normal_Capacity
<S> <C> <C> <C> <C>
Union Electric Steel Manufacturing 153,000 on Steel 80%
Corporation facilities, 5 acres Sided
726 Bell Street offices and
Carnegie, PA 15106 plant
Union Electric Steel Manufacturing 75,000 on Steel 90%
Corporation facilities 20 acres Sided
U.S. Highway 30
Valparaiso, IN 46383
Union Electric Steel, Manufacturing 66,000 on Concrete 80%
N.V. facilities and 15 acres and Steel
Industrie Park offices
B-3980 Tessenderlo
Belgium
</TABLE>
(1) The Corporation holds properties of discontinued operations for sale in
Monaca and Coraopolis, PA; Longview, TX; Putnam, CT; Plymouth, MI and
Chicago, IL.
(2) The Corporate office space is leased as are domestic sales offices. All of
the owned facilities are adequate and suitable for their respective
purposes. There were no facilities idled during 1993.
(3) Normal capacity is defined as capacity under approximately normal
conditions during 1993. Allowances were made for unavoidable
interruptions, such as lost time for repairs, maintenance, breakdowns,
set-up, failure, supply delays, labor shortages and absences, Sundays,
holidays, vacation, inventory taking, etc. The number of work shifts were
also taken into consideration.
ITEM_3_-_LEGAL_PROCEEDINGS
The Corporation has been involved in various claims and lawsuits incidental
to its business. In the opinion of management, the Corporation has meritorious
defenses in those cases and believes that, in the aggregate, any liability will
not have a material effect on the financial position of the Corporation.
Three lawsuits were commenced in May, 1991 against the Corporation and its
subsidiary, Vulcan, Inc. ("Vulcan"), arising out of the filing of a petition
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under Chapter 11 of the United States Bankruptcy Code in October, 1990 by
Valley-Vulcan Mold Company (the "Partnership"), a 50/50 partnership formed in
September, 1987 between Vulcan and Valley Mould Corporation, a subsidiary of
Microdot, Inc. Microdot and Valley are unrelated to the Corporation and are
also defendants in the lawsuits. The Partnership acquired the ingot mold
businesses of each of the partners. On June 10, 1993, Microdot also filed a
Petition under Chapter 11 of the United States Bankruptcy Code.
Dillon,_et_al_v._Ampco-Pittsburgh_Corporation,_Vulcan,_Inc.,_Microdot,_Inc.
and_Valley_Mould_Corporation. This purported class action was brought in
the United States District Court for the Northern District of Ohio by
certain retired and former salaried employees who had worked at plants
formerly operated by Microdot and, as to certain plaintiffs, who continued
with the Partnership. Plaintiffs sought the continuation of health
insurance and other employee benefits, and to compel the defendants to make
payments to certain pension plans sufficient to assure full payment of
benefits. The complaint did not specify the amount of the claimed
damages.
In 1993, a settlement was reached among the plaintiffs and the Corporation,
Vulcan and the Partnership which is more fully described in the
Corporation's quarterly reports on Form 10-Q filed in 1993. On December
14, 1993, the Bankruptcy Court authorized payment of $133,000 from the
Partnership's estate for the benefit of the Settlement Class, which funds
were subject to the Corporation's liens. Payment has been made in
accordance with the settlement.
Andras,_et_al_v._Ampco-Pittsburgh_Corporation,_Vulcan,_Inc.,_Microdot,
Inc.,_Valley_Mould_Corporation_and_Valley-Vulcan_Mold_Company. This
purported class action was brought in the United States District Court for
the Northern District of Ohio by the United Steelworkers of America
("USW"), the International Union, United Automobile, Aerospace and
Agricultural Implement Workers of America ("UAW"), UAW Local 758, and
certain retired and former hourly employees. The plaintiffs brought the
action on behalf of employees who worked at plants formerly operated by
Microdot, plants formerly operated by Vulcan, and, as to some of these
employees, who continued to work for the Partnership. The plaintiffs
sought to compel defendants to provide health insurance and other employee
benefits and to make payments to certain pension plans. Plaintiffs did not
specify the amounts of damages they sought.
This action was also settled as described in the Corporation's quarterly
reports on Form 10-Q filed in 1993. On January 11, 1994, following notice
and a hearing, the District Court entered an Order approving the fairness
and adequacy of the allocations of the $500,000 settlement amount to the
USW Settlement Class. Payment was made in March, 1994.
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Official_Unsecured_Creditors'_Committee_of_Valley-Vulcan_Mold_Company_v.
Microdot,_Inc.,_Valley_Mould_Corporation,_Ampco-Pittsburgh_Corporation_and
Vulcan,_Inc. The plaintiff, allegedly on behalf of the debtor
Partnership, filed the Adversary Proceeding in the United States Bankruptcy
Court for the Northern District of Ohio against Microdot, Valley, Vulcan
and the Corporation, seeking to set aside the Corporation's liens on the
Partnership's assets, to hold all defendants liable for the debts of the
Partnership, and return of all money received by any of the defendants from
the Partnership and out of the proceeds of a loan to the Partnership by a
third-party lender, alleged to be at least $9.35 million. The
Corporation's liens secure a guaranty that it was required to give with
respect to a Vulcan obligation that was assumed by the Partnership, and a
$500,000 loan made to the Partnership.
The trial of this lawsuit was held the week of October 4, 1993 and
post-trial briefs have been filed. The Court has not yet rendered its
decision.
The Corporation is also involved in certain environmental proceedings. The
River Road Landfill in Mercer County, Pennsylvania was used by Greenville Steel
Car Company ("GSCC") when it was an operating subsidiary. GSCC has been
designated as a Potentially Responsible Party ("PRP") along with several other
companies. Waste Management, the owner of the site, has alleged that GSCC is
liable for approximately $200,000 of the cleanup cost. The PRPs are continuing
to negotiate and to date no settlement has been reached.
There are various other environmental proceedings, which all involve
discontinued operations. In some of those proceedings, the Corporation has
been designated as a PRP. However, the Corporation believes that in each
instance it is either a de minimis participant based on information known to
date and the estimated quantities of waste at these sites and/or that it is
entitled to indemnity from the successors of the operations alleged to be
involved.
ITEM_4_-_SUBMISSION_OF_MATTERS_TO_A_VOTE_OF_SECURITY_HOLDERS
No matter was submitted to a vote of security holders during the fourth
quarter.
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PART II
ITEM 5 - MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
_________MATTERS_____________________________________________________
The information called for by this item is set forth on p. 20 of the Annual
Report to Shareholders for the year ended December 31, 1993 which is
incorporated herein by reference.
ITEM_6_-_SELECTED_FINANCIAL_DATA
The information called for by this item is set forth on p. 20 of the Annual
Report to Shareholders for the year ended December 31, 1993 which is
incorporated herein by reference.
ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
__________RESULTS_OF_OPERATION__________________________________________
The information called for by this item is set forth on pp. 16 through 18
of the Annual Report to Shareholders for the year ended December 31, 1993
which are incorporated herein by reference.
ITEM_8_-_FINANCIAL_STATEMENTS_AND_SUPPLEMENTARY_DATA
The information called for by this item is set forth on pp. 5 through 15
and pp. 19 and 20 of the Annual Report to Shareholders for the year ended
December 31, 1993 which are incorporated herein by reference.
ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
__________FINANCIAL_DISCLOSURE___________________________________________
There were none.
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PART III
ITEM_10_-_DIRECTORS_and_EXECUTIVE_OFFICERS
(a) IDENTIFICATION OF DIRECTORS
Name, Age, Tenure as a Director, Position with the Corporation (1), Principal
Occupation, Business Experience Past Five Years, and Other Directorships in
Public_Companies_____________________________________________________________
Louis Berkman (age 85, Director since 1960; current term expires in 1996).
Chairman of the Executive Committee of the Corporation for more than five
years. He is also President and a director of The Louis Berkman Company (steel
products, fabricated metal products, building and industrial supplies). (2)(4)
Marshall L. Berkman (age 57, Director since 1970; current term expires in
1995). He has been Chairman of the Board of Directors and Chief Executive
Officer of the Corporation for more than five years. He is also an officer and
director of The Louis Berkman Company. (2)
Robert A. Paul (age 56, Director since 1970; current term expires in 1994). He
has been President and Chief Operating Officer of the Corporation for more than
five years. He is also an officer and director of The Louis Berkman Company
and a director of Integra Financial Corporation. (N)(2)
William D. Eberle (age 70, Director since 1982; current term expires in 1994).
He is a private investor and consultant and is Chairman of Manchester
Associates, Ltd. and Showscan, Inc. He is also a director of Mitchell Energy &
Development Co., America Service Group and Fiberboard Corporation, and was
Special Representative for Trade Negotiations with the rank of Ambassador.
(N)(3)(4)
William P. Hackney (age 69, Director since 1979; current term expires in 1996).
For more than five years prior to 1992 he had been a partner in the law firm of
Reed Smith Shaw & McClay. As of January 1, 1992, he retired and became of
counsel to the law firm. (3)
Alvin G. Keller (age 84, Director since 1961; current term expires in 1995).
He is a private investor who, prior to his retirement, served as a Vice
President of Mellon Bank, N.A. (2)(3)(4)
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Carl H. Pforzheimer, III (age 57, Director since 1982; current term expires in
1996). For more than five years he has been Managing Partner of Carl H.
Pforzheimer & Co. (member of the New York and American Stock Exchanges). (3)
Ernest G. Siddons (age 60, Director since 1981; current term expires in 1995).
He has been Senior Vice President Finance and Treasurer of the Corporation for
more than five years. (2)
_______________
(N) Nominee for election at the Annual Meeting of Shareholders to be held on
April 26, 1994.
(1) Officers serve at the discretion of the Board of Directors.
(2) Member of Executive Committee.
(3) Member (or alternate member) of Audit Committee.
(4) Member of Salary Committee.
Mr. Siddons is an executive officer of Valley-Vulcan Mold Company, a
partnership that filed for bankruptcy in October 1990. He also serves as a
director and officer of Vulcan, Inc., a wholly-owned subsidiary of the
Corporation, which is a 50% general partner in Valley-Vulcan. The other 50%
general partner is unrelated to the Corporation.
(b) IDENTIFICATION OF EXECUTIVE OFFICERS
In addition to Marshall Berkman, Louis Berkman, Robert A. Paul and Ernest
G. Siddons (see "Identification of Directors" above) the following are also
Executive Officers of the Corporation:
Name, Age, Position with the Corporation (1), Business Experience Past
Five_Years______________________________________________________________
Rose Hoover (age 38). Secretary of the Corporation since December, 1990. For
more than five years before 1990, she was a Legal Assistant for the
Corporation.
Robert F. Schultz (age 46). Vice President Industrial Relations and Senior
Counsel of the Corporation since December, 1990. From January, 1987 to
December 1990 he was Director of Industrial Relations.
_______________
(1) Officers serve at the discretion of the Board of Directors and none of the
listed individuals serve as a director of a public company.
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(c)IDENTIFICATION OF CERTAIN SIGNIFICANT EMPLOYEES
None.
(d) FAMILY RELATIONSHIPS
Louis Berkman is the father of Marshall L. Berkman and the father-in-law of
Robert A. Paul. There are no other family relationships among the Directors
and Officers.
EXECUTIVE COMPENSATION
The following table sets forth certain information as to the total
remuneration received for the past three years by the five most highly
compensated executive officers of the Corporation, including the Chief
Executive Officer (the "Named Executive Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation
____________________________________________________________________
(a) (b) (c) (d)
Name and
Principal Salary Bonus
Position_ Year __($)_ _($)_
<S> <C> <C> <C>
Marshall L. Berkman 1993 $250,000 $ 0
Chairman and Chief 1992 250,000 0
Executive Officer 1991 231,250 16,750
Robert A. Paul 1993 232,000 0
President and Chief 1992 232,000 0
Operating Officer 1991 213,250 16,750
Ernest G. Siddons 1993 214,000 0
Senior Vice President 1992 214,000 0
Finance and Treasurer 1991 195,250 16,750
Robert F. Schultz 1993 120,250 0
Vice President 1992 113,333 0
Industrial Relations 1991 88,000 6,800
and Senior Counsel
Sidney Wasser* 1993 110,750 0
Vice President 1992 110,750 0
and Controller 1991 100,500 8,000
</TABLE>
_______________
*Mr. Wasser retired on January 15, 1994. In connection with that retirement,
he will receive supplemental payments totalling $55,400 in 1994.
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(b) COMPENSATION PURSUANT TO PLANS
The Corporation has a tax qualified retirement plan applicable to the
Executive Officers, to which the Corporation makes annual contributions in
amounts determined by the Plan's actuaries. The Plan does not have an offset
for Social Security and is fully paid for by the Corporation. Under the Plan,
employees become fully vested after five years of participation and normal
retirement age under the Plan is age 65 but actuarially reduced benefits may be
available for early retirement at age 55. The benefit formula is 1.1% of the
highest consecutive five year average earnings in the final ten years, times
years of service.
The Corporation adopted a Supplemental Executive Retirement Plan (SERP) in
1988, for all officers listed in the compensation table and certain key
employees, covering retirement after completion of ten years of service and
attainment of age 55. The combined retirement benefit at age 65 provided by
the Plan and the SERP is 50% of the highest consecutive five year average
earnings in the final ten years of service. The participants are eligible for
reduced benefits for early retirement at age 55. A benefit equal to 50% of the
benefit otherwise payable at age 65 is paid to the surviving spouse of any
participant, who has had at least five years of service, commencing on the
later of the month following the participant's death or the month the
participant would have reached age 55. In addition, there is an offset for
pensions from other companies. Certain provisions, applicable if there is a
change of control, are discussed below under Termination of Employment and
Change of Control Arrangement.
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The following shows the annual pension that would be payable, without
offset, under the Plan and the SERP to the individuals named in the compensa-
tion table assuming continued employment to retirement at age 65, but no change
in level of compensation:
<TABLE>
<S> <C>
Marshall L. Berkman $125,000
Robert A. Paul $116,000
Ernest G. Siddons $107,000
Robert F. Schultz $ 60,125
Sidney Wasser $ 55,375
</TABLE>
(c) COMPENSATION OF DIRECTORS
In 1993, each Director who was not employed by the Corporation received
$1,500 for each Board meeting, and $250 for each Committee meeting attended.
In 1994, each Director who is not employed by the Corporation will receive
$2,000 for each Board meeting attended and $500 for each Committee meeting
attended. Directors will receive one-half of those amounts if not in
attendance or if participation is by telephonic connection.
(d) TERMINATION OF EMPLOYMENT AND CHANGE OF CONTROL ARRANGEMENTS
The Chairman, President, and Senior Vice President Finance have two year
contracts (which automatically renew for one year periods unless the
Corporation chooses not to extend) providing for compensation equal to five
times their annual compensation (with a provision to gross up to cover the cost
of any federal excise tax on the benefits) in the event their employment is
terminated (including a voluntary departure for good cause) and the right to
equivalent office space and secretarial help for a period of one year after a
change in control. In addition, the remainder of the officers named in the
compensation table and certain key employees have two year contracts providing
for three times their annual compensation in the event their employment is
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terminated after a change in control (including a voluntary departure for good
cause). Both types of contracts provide for the continuation of employee
benefits, for three years for the three senior executives and two years for the
others, and the right to purchase the leased car used by the covered individual
at the Corporation's then book value. The same provisions concerning change in
control that apply to the contracts apply to the SERP and vest the right to
that pension arrangement. A change of control triggers the right to a lump sum
payment equal to the present value of the vested benefit under the SERP.
(e) SALARY COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN COMPENSATION
DECISIONS
A Salary Committee is appointed each year by the Board of Directors.
Committee members abstain from voting on matters which involve their own
compensation arrangements. The Salary Committee for the year 1993 was
comprised of three Directors: Louis Berkman, Alvin G. Keller and William D.
Eberle.
Louis Berkman is an employee of the Corporation and Chairman of the
Executive Committee of the Board of Directors. He is also the President and a
Director of The Louis Berkman Company. The Corporation's Chief Executive
Officer and President are also officers and directors of The Louis Berkman
Company.
The Louis Berkman Company and William D. Eberle had certain transactions
with the Corporation which are more fully described under "Certain
Relationships and Related Transactions."
(f) SALARY COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Salary Committee approves salaries for executive officers within a
range from $150,000 up to $200,000 and increases in the salary of any executive
officer, which would result in such officer earning a salary within such range.
Salaries of $200,000 per year and above must be approved by the Board
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of Directors or its Executive Committee after a recommendation by the Salary
Committee. Salaries for executive officers below the level of $150,000 are set
by the Chairman, President and Senior Vice President of the Corporation.
Bonuses are discretionary and determined in the same manner as set forth above.
All executive compensation is reviewed by the Salary Committee at intervals
ranging between twelve and twenty-four months.
The compensation of the Chief Executive Officer of the Corporation, as well
as the other applicable executive officers, is based on an analysis conducted
by the Salary Committee in 1992 and reviewed and, to the extent provided above,
approved by the Board of Directors. The Committee does not specifically link
remuneration solely to quantitative measures of performance because of the
cyclical nature of the industries and markets served by the Corporation. In
setting compensation, the Committee also considers various qualitative factors,
including competitive compensation arrangements of other companies within
relevant industries, individual contributions, leadership ability and an
executive officer's overall performance. In this way, it is believed that the
Corporation will attract and retain quality management, thereby benefitting the
long-term interest of shareholders.
In 1993, there were no changes in salary of persons who need approval of
the Salary Committee.
This report of the Salary Committee shall not be deemed incorporated by
reference by any general statement incorporating by reference this 10-K report
into any filing under the Securities Act of 1933 or under the Securities
Exchange Act of 1934, except to the extent that the Corporation specifically
incorporates this report and the information contained herein by reference, and
shall not otherwise be deemed filed under such Acts.
Louis Berkman
William D. Eberle
Alvin G. Keller
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(g) STOCK PERFORMANCE GRAPH
Comparative Five-Year Total Returns*
Ampco-Pittsburgh ("AP"), S&P 500, Peer Group
(Performance results through 12/31/93)
<TABLE>
[GRAPH APPEARS HERE]
<CAPTION>
Measurement period S&P 500 Peer Group
(Fiscal year covered) AP Index Index
- - --------------------- -- ----- -----------
<S> <C> <C> <C>
Measurement PT -
12/31/88 $100 $100 $100
FYE 12/31/89 $87.06 $131.49 $86.38
FYE 12/31/90 $51.32 $127.32 $60.81
FYE 12/31/91 $62.99 $166.21 $59.27
FYE 12/31/92 $76.30 $179.30 $64.55
FYE 12/31/93 $61.79 $197.23 $78.36
</TABLE>
Assumes $100 invested at the close of trading on the last trading day preceding
January 1 of the fifth preceding fiscal year in AP common stock, S&P 500, and
Peer Group.
*Cumulative total return assumes reinvestment of dividends.
In the above graph, the Corporation has used Value Line's Metals: Steel,
Integrated Industry for its peer comparison. The diversity of products
produced by subsidiaries of the Corporation made it difficult to match to any
one product-based peer group. The Steel Industry was chosen because it is
impacted by some of the same end markets that the Corporation ultimately
serves, such as the automotive, appliance and construction industries.
Historical stock price performance shown on the above graph is not
necessarily indicative of future price performance.
<PAGE>
<PAGE>
ITEM_12_-_SECURITY_OWNERSHIP_OF_CERTAIN_BENEFICIAL_OWNERS_AND_MANAGEMENT
(a) SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
As of March 8, 1994, Louis Berkman owned directly 159,388 shares (1.66%) of
the Common Stock of the Corporation. As of the same date, The Louis Berkman
Company, P. O. Box 576, Steubenville, OH 43952 owned beneficially and of
record 1,626,089 shares (16.98%) of the Common Stock of the Corporation. Louis
Berkman, an officer and director of The Louis Berkman Company, owns directly
63.66% of its common stock. Marshall L. Berkman, an officer and director of
The Louis Berkman Company, owns directly 18.17% of its common stock. Robert A.
Paul, an officer and director of The Louis Berkman Company, disclaims
beneficial ownership of the 18.17% of its common stock owned by his wife.
The Corporation has received two Schedules 13G filed with the Securities
and Exchange Commission disclosing that as of December 31, 1993 Norwest
Corporation, Sixth & Marquette, Minneapolis, MN 55479 (in various fiduciary and
agency capacities) owned 1,611,325 shares or 16.8% and that C.S. McKee & Co.,
Inc., One Gateway Center, Pittsburgh, PA 15222, owned 611,050 shares or 6.38% of
the Corporation's common stock. On June 7, 1989, GAMCO Investors, Inc. and
affiliates, Corporate Center at Rye, Rye, NY 10580, filed a Schedule 13D
showing they owned 1,872,875 shares or 19.55% and no further filings have been
made.
(b) SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth as of March 8, 1994 information concerning
the beneficial ownership of the Corporation's Common Stock by the Directors and
Named Executive Officers and all Directors and Executive Officers of the
Corporation as a group:
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Name of Amount and nature of Percent
beneficial_owner beneficial_ownership of_class
<S> <C> <C>
Louis Berkman 1,785,477(1)(2) 18.6
Robert A. Paul 56,656(3) .6
Marshall L. Berkman 42,000(4) .4
Alvin G. Keller 9,753(5) .1
Carl H. Pforzheimer, III 2,733(6) *
Ernest G. Siddons 1,833(7) *
William P. Hackney 433 *
William D. Eberle 200 *
Robert F. Schultz 200(7) *
Sidney Wasser 4,000(7) *
Directors and Executive
Officers as a group
(11 persons) 1,903,285(8) 19.9
</TABLE>
_______________
*less than .1%
(1) Includes 159,388 shares owned directly and 1,626,089 shares owned by The
Louis Berkman Company.
(2) The Louis Berkman Company owns beneficially and of record 1,626,089 shares
of the Corporation's Common Stock (16.98%). Louis Berkman is an officer
and director of The Louis Berkman Company and owns directly 63.66% of its
common shares. Marshall L. Berkman, an officer and director of The Louis
Berkman Company, owns directly 18.17% of its common stock. Robert A. Paul,
an officer and director of The Louis Berkman Company, disclaims beneficial
ownership of the 18.17% of its common stock owned by his wife. The number
of shares shown in the table for Marshall L. Berkman and Robert A. Paul
does not include any shares held by The Louis Berkman Company.
(3) Includes 42,889 shares owned directly and 13,767 shares owned by his wife,
in which shares he disclaims beneficial ownership.
(4) Includes 40,500 shares owned directly and 1,500 shares owned by his wife,
in which shares he disclaims beneficial ownership.
(5) Includes 5,333 shares owned directly, 3,000 shares owned jointly with his
wife, and 1,420 shares owned by his wife, in which shares he disclaims
beneficial ownership.
(6) Includes 1,000 shares owned directly, 1,600 shares held by a trust of which
he is a principal beneficiary, and 133 shares held by his daughter, in
which shares he disclaims beneficial ownership.
<PAGE>
<PAGE>
(7) The shares are owned jointly with his wife.
(8) Excludes double counting of shares deemed to be beneficially owned by more
than one Director.
Unless otherwise indicated the individuals named have sole investment and
voting power.
(c) CHANGES IN CONTROL
The Corporation knows of no arrangements which may at a subsequent date
result in a change in control of the Corporation.
ITEM_13_-_CERTAIN_RELATIONSHIPS_AND_RELATED_TRANSACTIONS
In 1993 the Corporation bought industrial supplies from, and was paid for
administration services by, The Louis Berkman Company in transactions in the
ordinary course of business amounting to approximately $926,000. Additionally,
the disinterested members of the Board of Directors authorized the sale of a
life insurance policy (on a person not affiliated with the Corporation) owned
by the Corporation to The Louis Berkman Company for the cash surrender value of
approximately $92,000. Louis Berkman, Marshall L. Berkman and Robert A. Paul
are shareholders, officers or directors in that company. These transactions
and services were at prices generally available from outside sources.
Transactions between the parties will take place in 1994.
In 1989, certain subsidiaries of the Corporation and Tertiary, Inc., a
corporation owned by the children of William Eberle, formed three 50/50
partnerships, to manage, develop and operate hotel properties and a subsidiary
of the Corporation also invested as a limited partner in one of the operating
partnerships. In 1992, Tertiary purchased two of the 50/50 partnerships. In
1993, Tertiary paid the remaining $100,000 from such purchase. Also in 1993,
one of the limited partnerships accrued a fee of $31,000 payable to William
<PAGE>
<PAGE>
Eberle for his guarantee of a mortgage loan. At December 31, 1993, there were
promissory notes outstanding from certain of the partnerships to subsidiaries
of the Corporation totalling $880,000. These notes are due in 1994; however,
it is anticipated that the maturity dates will be extended.
PART IV
ITEM_14_-_EXHIBITS,_FINANCIAL_STATEMENT_SCHEDULES_AND_REPORTS_ON_FORM_8-K
(a) 1. FINANCIAL STATEMENTS
The consolidated financial statements, together with the report there-
on of Price Waterhouse, appearing on pp. 5 through 15 of the accompanying
Annual Report are incorporated by reference in this Form 10-K Annual Report.
2. FINANCIAL STATEMENT SCHEDULES
The following additional financial data should be read in conjunction
with the consolidated financial statements in the accompanying Annual Report.
Schedules not included with this additional financial data have been omitted
because they are not applicable or the required information is shown in the
financial statements or notes thereto.
Schedule Page
_Number_ Number
Index to Ampco-Pittsburgh Corporation
Financial Data F-1
Report of Independent Accountants F-2
Amounts Receivable from Related
Parties and Underwriters,
Promoters and Employees
Other Than Related Parties II F-3
Property, Plant and Equipment V F-5
Accumulated Depreciation of Property,
Plant and Equipment VI F-6
Short-Term Borrowings IX F-7
Supplementary Income Statement
Information X F-8
<PAGE>
<PAGE>
3. EXHIBITS
Exhibit No.
(3)Articles of Incorporation and By-laws
a. Restated Articles of Incorporation
Incorporated by reference to the Quarterly Report on Form 10-Q for the
quarter ended March 31, 1983
b.Amendments to Articles of Incorporation
Incorporated by reference to the Quarterly Report on Form 10-Q
for the quarter ended March 31, 1984, the Quarterly Report on
Form 10-Q for the quarter ended March 31, 1985 and the Quarterly
Report on Form 10-Q for the quarter ended March 31, 1987
c.Amended and Restated By-laws
Incorporated by reference to Form 8-K dated April 9, 1990
d. Amendment to By-laws
Incorporated by reference to the Annual Report on Form 10-K for
fiscal year ended December 31, 1990
(4)Instruments defining the rights of securities holders
a.Rights Agreement between Ampco-Pittsburgh Corporation and
Mellon Bank, N.A. dated as of November 1, 1988
Incorporated by reference to the Quarterly Report on Form
10-Q for the quarter ended September 30, 1988
b.Revolving Credit Agreement dated as of September 30, 1993
Incorporated by reference to the Quarterly Report on Form
10-Q for quarter ended September 30, 1993
(10)Material Contracts
a.Ampco-Pittsburgh Corporation Salaried Employees' Retirement
Plan
Incorporated by reference to the Annual Report on Form 10-K
for fiscal year ended December 31, 1983
<PAGE>
<PAGE>
Part IV; Item 14 - EXHIBITS (cont')
Exhibit No.
b.1988 Supplemental Executive Retirement Plan
Incorporated by reference to the Quarterly Report on Form
10-Q for the quarter ended September 30, 1988
c.Category 1 and 2 Severance Agreements between Ampco-Pittsburgh
Corporation and certain officers and employees of Ampco-Pittsburgh
Corporation
Incorporated by reference to the Quarterly Report on Form
10-Q for the quarter ended September 30, 1988
d.Guaranty of William D. and Jeffrey L. Eberle
Incorporated by reference to the Annual Report on Form 10-K
for fiscal year ended December 31, 1989
(13) Annual Report to Shareholders for the fiscal year ended December 31,
1993
(21)Significant Subsidiaries
(b) Reports_on_Form_8-K
No reports on Form 8-K were filed in the fourth quarter of 1993.
Note:With the exception of the Corporation's 1993 Annual Report to
Shareholders, none of the Exhibits listed in Item 14 are included with this
Form 10-K Annual Report. The Corporation will furnish copies of Exhibits
upon written request to the Secretary at the address on the cover of the
Form 10-K Annual Report accompanied by payment of $3.00 for each Exhibit
requested.
<PAGE>
<PAGE>
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) 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
(Registrant)
March 21, 1994
By___s/Marshall_L._Berkman______________
Director, Chairman and Chief Executive
Officer - Marshall L. Berkman
By___s/Robert_A._Paul___________________
Director, President and Chief Operating
Officer - Robert A. Paul
By___s/Ernest_G._Siddons________________
Director, Senior Vice President Finance
and Treasurer (Principal Financial
Officer) - Ernest G. Siddons
By___s/Robert_J._Reilly_________________
Controller - Robert J. Reilly
<PAGE>
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the regis-
trant, in their capacities as Directors, as of the date indicated.
March 21, 1994 By___s/Louis_Berkman____________________
Louis Berkman
By___s/William_P._Hackney_______________
William P. Hackney
By___s/Alvin_G._Keller__________________
Alvin G. Keller
By___s/William_D._Eberle________________
William D. Eberle
By___s/Carl_H._Pforzheimer,_III_________
Carl H. Pforzheimer, III
<PAGE>
<PAGE>
INDEX_TO_AMPCO-PITTSBURGH_CORPORATION_FINANCIAL_DATA
Schedule Page
_Number_ Number
Index to Ampco-Pittsburgh Corporation Financial Data F-1
Report of Independent Accountants F-2
Amounts Receivable from Related Parties and
Underwriters, Promoters and Employees
Other Than Related Parties II F-3
Property, Plant and Equipment V F-5
Accumulated Depreciation of Property, Plant
and Equipment VI F-6
Short-Term Borrowings IX F-7
Supplementary Income Statement Information X F-8
F-1
<PAGE>
<PAGE>
Report_of_Independent_Accountants_on
Financial_Statement_Schedules
To the Board of Directors of
Ampco-Pittsburgh Corporation
Our audits of the consolidated financial statements referred to in our
report dated February 18, 1994 appearing on page 5 of the 1993 Annual Report
to Shareholders of Ampco-Pittsburgh Corporation, (which report and
consolidated financial statements are incorporated by reference in this
Annual Report on Form 10-K) also included an audit of the Financial
Statement Schedules listed in Item 14(a)2 of this Form 10-K. In our
opinion, these Financial Statement Schedules present fairly, in all material
respects, the information set forth therein when read in conjunction with
the related consolidated financial statements.
PRICE WATERHOUSE
600 Grant Street
Pittsburgh, PA 15219
February 18, 1994
F-2
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
AMPCO-PITTSBURGH_CORPORATION
SCHEDULE_II_-_AMOUNTS_RECEIVABLE_FROM_RELATED_PARTIES
_Column_B_ ___________Column_D_________
Balance at Deductions __________Column_E_________
___Column_A___ Beginning _Column_C Amounts Amounts Balance_at_end_of_period
Name_of_Debtor of_Period Additions Collected Written_Off Current Not_Current
<S> <C> <C> <C> <C> <C> <C>
Year_ended_December_31,_1993
Tertiary, Inc.(1) $ 100,000 $ -0- $ 100,000 $ -0- $ -0- $ -0-
T.A.L.P.(3) $ 905,000 $ -0- $ 25,000 $ -0- $ -0- $ 880,000
Year_ended_December_31,_1992
Tertiary, Inc.(1) $ -0- $ 100,000 $ -0- $ -0- $ 100,000 $ -0-
Tertiary, Inc.(2) $ 250,000 $ -0- $ 250,000 $ -0- $ -0- $ -0-
T.A.L.P.(3) $ 760,000 $ 145,000 $ -0- $ -0- $ -0- $ 905,000
Year_ended_December_31,_1991
Tertiary, Inc.(2) $1,000,000 $ -0- $ 750,000 $ -0- $ 250,000 $ -0-
T.A.L.P.(3) $ 325,000 $ 435,000 $ -0- $ -0- $ -0- $760,000
<FN>
General - In 1989, a subsidiary of the Corporation and Tertiary, Inc., a corporation owned by the children of
William Eberle, a director of the Corporation, formed a 50/50 partnership, to manage, develop and
operate hotel properties in the northwestern part of the United States, generally through the formation
of other partnerships. Pursuant to the partnership agreement, other subsidiaries of the Corporation and
Tertiary, also in 1989, formed two 50/50 partnerships to act as general partner of operating
partnerships for specific hotel properties. A subsidiary of the Corporation also invested as a limited
partner in one of the operating hotel partnerships. In 1989, a subsidiary of the Corporation loaned
$1,000,000 to Tertiary, which was due on December 31, 1991, and for which the subsidiary received a
mortgage and a guaranty by William Eberle and his son, Jeffrey Eberle.
In addition to the receivable amount listed in the table above at December 31, 1993, the Corporation,
through its subsidiaries, still retains a 50% interest as a general partner and a 60% interest as a
limited partner in one hotel property with a carrying value of its investment of $442,000.
</TABLE>
F-3
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
AMPCO-PITTSBURGH_CORPORATION
SCHEDULE_II_-_AMOUNTS_RECEIVABLE_FROM_RELATED_PARTIES
(continued)
<S> <C>
Note 1 - On August 21, 1992, the Corporation sold a 50% general partnership interest to its 50% partner Tertiary,
Inc. The sale resulted in proceeds of $200,000 consisting of $100,000 in cash and a $100,000 promissory
note due August 21, 1993 with interest payable monthly at one percentage point over the prime rate. The
$100,000 promissory note was paid on its due date.
Note 2 - In 1991, the Corporation received payments against a $1,000,000 loan of: $227,500 in cash; $380,000 by
an assignment of a Tertiary, Inc. receivable (in the form of promissory notes) in one of the operating
partnerships and an assignment of Tertiary's limited partnership interest in that same operating
partnership of $142,500, leaving a balance of $250,000 which was paid in cash in February, 1992.
Note 3 - In 1990, the Corporation loaned $325,000 to Tukwila Associates Limited Partnership ("T.A.L.P."), to
finance construction of a hotel. During 1991 and 1992, an additional $200,000 was loaned and the
Corporation received $380,000 of notes by assignment from Tertiary, Inc. The notes received from
Tertiary, Inc. are guaranteed by William and Jeffrey Eberle and secured by the original mortgage on the
loan. Interest has been paid monthly on the notes at prime plus 2%.
In 1994 the interest rate on the notes will be increased by 2% to 10% and the maturity will be extended
until April 1, 1995. Repayment of the loans is anticipated either through sale of the hotel property or
future operating cash flow.
</TABLE>
F-4
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
AMPCO-PITTSBURGH_CORPORATION
SCHEDULE_V_-_PROPERTY,_PLANT_AND_EQUIPMENT_(S-X_RULE_12-06)
__________Column_A__________ _Column_B_ _Column_C __Column_D_ _________Column_E__________ _Column_F_
Balance at Other (3) Balance at
Beginning Additions Sales or Translation Additions End of
_of_Period _at_Cost_ Retirements Adjustments (Deductions) __Period__
<S> <C> <C> <C> <C> <C> <C>
Year ended December 31, 1993
Land and land improvements $ 6,129,543 $ 63,649 $ (3,208,370) $ (462) $ (165,241) $ 2,819,119
Buildings 37,637,860 435,449 (20,030,908) (77,444) (1,571,697) 16,393,260
Machinery and equipment 114,242,857 2,742,337 (38,896,107) (566,904) 0 77,522,183
Construction in progress ___1,620,179 __(830,953)(1) ____(568,066) ____(21,192) __________0 _____199,968
(2)
Total $159,630,439 $2,410,482 $(62,703,451) $ (666,002) $(1,736,938) $ 96,934,530
Year ended December 31, 1992
Land and land improvements $ 6,185,643 $ 5,240 $ 0 $ (61,340) $ 0 $ 6,129,543
Buildings 37,738,048 202,760 0 (302,948) 0 37,637,860
Machinery and equipment 112,455,078 4,589,283 (1,621,494) (1,180,010) 0 114,242,857
Construction in progress ___3,001,674 (1,365,398)(1) ___________0 ____(16,097) __________0 ___1,620,179
Total $159,380,443 $3,431,885 $ (1,621,494) $ (1,560,395) $ 0 $159,630,439
Year ended December 31, 1991
Land and land improvements $ 6,373,632 $ 0 $ (190,303) $ 2,314 $ 0 $ 6,185,643
Buildings 37,316,670 419,995 (702) 2,085 0 37,738,048
Machinery and equipment 105,973,879 7,470,635 (977,496) (11,940) 0 112,455,078
Construction in progress ___3,691,882 __(683,675)(1) ___________0 _____(6,533) __________0 ___3,001,674
Total $153,356,063 $7,206,955 $ (1,168,501) $ (14,074) $ 0 $159,380,443
</TABLE>
(1) Net change.
(2) Principally related to the sale of assets of discontinued operations.
(3) Principally reclassifications.
F-5
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
AMPCO-PITTSBURGH_CORPORATION
SCHEDULE_VI_-_ACCUMULATED_DEPRECIATION_OF_PROPERTY,_PLANT_AND_EQUIPMENT_(S-X_RULE_12-07)
__________Column_A__________ _Column_B_ _Column_C __Column_D_ _________Column_E___________ _Column_F_
(1)
Additions (3)
Balance at charged to Other Balance at
Beginning costs and Sales or Translation Additions End of
_of_Period Expenses_ Retirements Adjustments (Deductions) __Period__
<S> <C> <C> <C> <C> <C> <C>
Year ended December 31, 1993
Land improvements $ 1,497,423 $ 113,670 $ (584,482) $ 17 $ 0 $ 1,026,628
Buildings 13,592,538 913,618 (8,164,433) (38,718) (877,706) 5,425,299
Machinery and equipment __63,534,648 __5,206,936 _(28,614,938) ___(232,467) _________0 __39,894,179
(2)
Total $ 78,624,609 $ 6,234,224 $(37,363,853) $ (271,168) $ (877,706) $ 46,346,106
Year ended December 31, 1992
Land improvements $ 1,357,167 $ 148,863 $ 0 $ (9,969) $ 1,362 $ 1,497,423
Buildings 12,377,596 1,328,942 0 (114,000) 0 13,592,538
Machinery and equipment __58,924,014 __6,779,435 __(1,406,498) ___(760,941) ____(1,362) __63,534,648
Total $ 72,658,777 $ 8,257,240 $ (1,406,498) $ (884,910) $ 0 $ 78,624,609
Year ended December 31, 1991
Land improvements $ 1,206,118 $ 150,792 $ 0 $ 257 $ 0 $ 1,357,167
Buildings 11,071,554 1,303,509 (702) 3,234 0 12,377,595
Machinery and equipment __52,224,385 __7,331,974 ____(669,722) _____37,377 _________0 __58,924,014
Total $ 64,502,057 $ 8,786,275 $ (670,424) $ 40,868 $ 0 $ 72,658,776
</TABLE>
(1) Includes depreciation for discontinued operations of $1,068,241 in 1993,
$3,173,355 in 1992 and $3,152,691 in 1991.
(2) Principally related to the sale of assets of discontinued operations.
(3) Principally reclassifications.
F-6
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
AMPCO-PITTSBURGH_CORPORATION
SCHEDULE_IX_-_SHORT-TERM_BORROWINGS_(S-X_RULE_12-10)
________Column_A________ __Column_B_ __Column_C___ __Column_D__ __Column_E_ __Column_F___
Maximum Average Weighted
amount amount average
Balance Weighted outstanding outstanding interest rate
Category of aggregate at end average during the during the during the
__short-term_borrowings_ _of_period_ interest_rate __period___ __period___ ___period____
(a) (b)
<S> <C> <C> <C> <C> <C>
DECEMBER 31, 1993
Notes payable to banks $ -0- - $14,000,000 $ 3,644,167 4.38%
DECEMBER 31, 1992
Notes payable to banks $13,000,000 4.23% $15,000,000 $10,045,205 4.54%
DECEMBER 31, 1991
Notes payable to banks $14,500,000 5.25% $22,500,000 $16,510,959 6.49%
</TABLE>
(a) Average amount outstanding during the period is computed by dividing the
total of daily outstanding principal balances by 360.
(b) Average interest rate for the year is computed by dividing the actual
short-term interest expense by the average short-term debt outstanding.
F-7
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Schedule_X
AMPCO-PITTSBURGH_CORPORATION
SCHEDULE_X_-_SUPPLEMENTARY_INCOME_STATEMENT_INFORMATION_(S-X_RULE_12-11)
Column_A _______________Column_B_______________
Charged to costs and expenses
________Year_ended_December_31,_______
Items 1993 1992 1991
<S> <C> <C> <C>
Maintenance and repairs (1) $ 6,272,377 $ 7,644,140 $7,926,760
Depreciation and amortization of
intangible assets, pre-operating
costs and similar deferrals * * *
Taxes, other than payroll and
income taxes * * *
Royalties * * *
Advertising costs * * *
</TABLE>
(1) 1992 and 1991 include costs for operations sold in 1993.
*Less than 1% of total sales.
F-8
<PAGE>
Exhibit 13
- - ------------------------
Union Electric Steel
Melting & Forging
Union Electric Steel's mission is to
be the world's leading manufacturer
of forged hardened steel rolls for
use by customers in the steel
and aluminum industries.
The picture to the right shows the
company's electric arc furnace at
its melting facility in Burgettstown,
Pennsylvania being tapped
into a vacuum stream degassing
system. Below, a cold mill work roll
is being forged in the operation's
3,500-ton press.
[Photo of electric arc furnace]
[Photo of cold mill roll]
2
<PAGE>
---------------------------
Union Electric Steel
Finishing
The large roll to the left is in the
rough machining operation at Union
Electric's finishing plant in Carnegie,
Pennsylvania. The photo at the
bottom left shows a full coil static
induction hardening unit at the
Valparaiso, Indiana finishing plant,
while the photo next to its shows
flame hardening of journals at the
company's European facility in
Tessenderlo, Belgium.
[Photo of Union Electric finishing plant]
[Photo of Valparaiso finishing plant] [Photo of Tessenderlo, Belgium facility]
3
<PAGE>
- - -----------------------------------
Aerofin
A large return bend cooling coil
facricated at Aerofin's Lynchburg,
Virginia plant has just undergone
testing and awaits shipment to a
pulp and paper mill.
[Photo of large bend return coil]
- - -----------------------------------
Buffalo Pumps
Shown to the right is a vertical
centrifugal lube oil pump
manufactured at the company's
plant in North Tonawanda,
New York. It will be used in a
service application for the
electrical turbine industry.
[Photo of a oil pump]
- - ------------------------------------
New Castle Industries
This 15-inch diameter feed
screw being readied for shipment
from the company's New Castle,
Pennsylvania plant is destined for a
polymer manufacturer where it will
mix additives to enhance the
polymer's basic properties.
[Photo of feed screw]
4
<PAGE>
Financial Report
Table of Contents
<TABLE>
<CAPTION>
Page
<S> <C>
Consolidated Balance Sheets....................................... 6
Consolidated Statements of Income................................. 7
Consolidated Statements of Retained
Earnings (Deficit)............................................. 7
Consolidated Statements of Cash Flows............................. 8
Notes to Consolidated Financial Statements........................ 9
Management's Discussion and Analysis
of Financial Condition
and Results of Operations...................................... 16
Quarterly Information............................................. 19
Five-Year Summary of Selected Financial Data...................... 20
</TABLE>
Report of Independent Accountants
[Logo of Price Waterhouse]
To the Board of Directors
and Shareholders of
Ampco-Pittsburgh Corporation
In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of income and retained earnings and of cash flows
present fairly, in all material respects, the financial position of
Ampco-Pittsburgh Corporation and its subsidiaries (the Corporation) at December
31, 1993 and 1992, and the results of their operations and their cash flows for
each of the three years in the period ended December 31, 1993, in conformity
with generally accepted accounting principles. These financial statements are
the responsibility of the Corporation's management; our responsibility is to
express an opinion on these financial statements based on our audits. We
conducted our audits of these statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
As discussed in Note 1, in 1992 the Corporation adopted Statement of Financial
Accounting Standards (SFAS) No. 106, "Employers' Accounting for Postretirement
Benefits other than Pensions and SFAS No. 109, "Accounting for Income Taxes."
/s/ Price Waterhouse
600 Grant Street
Pittsburgh, Pennsylvania 15219
February 18, 1994
5
<PAGE>
Consolidated Balance Sheets
<TABLE>
<CAPTION>
December 31,
1993 1992
---- ----
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents.......................................................... $ 9,550,420 $ 3,566,072
Receivables, less allowance for doubtful accounts
of $281,885 in 1993 and $836,832 in 1992......................................... 17,864,251 35,805,065
Inventories........................................................................ 28,173,446 45,641,972
Other.............................................................................. 4,919,124 2,663,400
---------------- ----------------
Total current assets.......................................................... 60,507,241 87,676,509
Property, plant and equipment, at cost:
Land and land improvements......................................................... 2,819,119 6,129,543
Buildings.......................................................................... 16,393,260 37,637,860
Machinery and equipment............................................................ 77,522,183 114,242,857
Construction in progress........................................................... 199,968 1,620,179
---------------- ----------------
96,934,530 159,630,439
Accumulated depreciation........................................................... (46,346,106) (78,624,609)
---------------- ----------------
Net property, plant and equipment............................................. 50,588,424 81,005,830
Prepaid pension......................................................................... 15,201,896 12,645,889
Other assets............................................................................ 12,196,553 11,963,462
---------------- ----------------
$ 138,494,114 $ 193,291,690
================ ================
Liabilities and Shareholders' Equity
Current liabilities:
Notes payable to bank.............................................................. $ -- $ 13,000,000
Current maturities of long-term debt............................................... 783,333 1,483,333
Accounts payable................................................................... 5,380,015 10,483,058
Accrued payrolls and employee benefits............................................. 5,272,877 6,209,457
Other.............................................................................. 9,127,459 11,522,168
---------------- ----------------
Total current liabilities..................................................... 20,563,684 42,698,016
Long-term debt.......................................................................... 1,350,000 27,272,869
Other liabilities....................................................................... 25,430,200 29,012,215
---------------- ----------------
Total liabilities............................................................. 47,343,884 98,983,100
Contingent liabilities (Note 13)........................................................ -- --
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 shares....................... 9,577,621 9,577,621
Additional paid-in capital......................................................... 102,555,980 102,555,980
Retained earnings (deficit)........................................................ (22,197,466) (16,244,136)
---------------- ----------------
89,936,135 95,889,465
Translation and other adjustments.................................................. 1,214,095 (1,580,875)
---------------- ----------------
Total shareholders' equity.................................................... 91,150,230 94,308,590
---------------- ----------------
$ 138,494,114 $ 193,291,690
================ ================
</TABLE>
See Notes to Consolidated Financial Statements.
6
<PAGE>
Consolidated Statements of Income
<TABLE>
<CAPTION>
For The Year Ended December 31,
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Net sales......................................................... $ 108,846,416 $ 104,308,304 $ 113,298,563
---------------- ---------------- ----------------
Operating costs and expenses:
Cost of products sold (excluding depreciation)............... 79,410,645 73,386,538 78,160,316
Selling and administrative................................... 18,571,174 19,861,111 19,705,698
Depreciation................................................. 5,165,983 5,083,885 5,633,584
---------------- ---------------- ----------------
103,147,802 98,331,534 103,499,598
---------------- ---------------- ----------------
Income from operations............................................ 5,698,614 5,976,770 9,798,965
Other income and (expense):
Gain (loss) on sale of investments........................... 6,489,738 -- (1,292,276)
Interest expense............................................. (925,627) (2,424,063) (3,526,721)
Other income (expense)--net.................................. (671,385) (717,673) (476,304)
---------------- ---------------- ----------------
Income from continuing operations
before taxes on income and cumulative
effect of accounting changes.................................... 10,591,340 2,835,034 4,503,664
(Benefit) provision for taxes on income........................... (1,380,000) (31,000) 3,600,000
---------------- ---------------- ----------------
Income from continuing operations before cumulative effect of
accounting changes.............................................. 11,971,340 2,866,034 903,664
Discontinued operations:
Loss from operations, including income tax
provisions of $69,000 in 1993, $531,000 in 1992 and
$1,475,000 in 1991......................................... (596,306) (5,082,714) (9,271,452)
Gain (loss) on disposal, net of an income
tax benefit of $4,600,000 in 1993 and
$2,700,000 in 1991......................................... (15,890,990) 291,071 (5,300,000)
Cumulative effect of accounting changes:
Postretirement benefits other than pensions.................. -- (6,638,000) --
Accounting for income taxes.................................. -- (6,200,000) --
---------------- ---------------- ----------------
Net income (loss) $ (4,515,956) $ (14,763,609) $ (13,667,788)
================ ================ ================
Net income (loss) per common share:
Continuing operations........................................ $ 1.25 $ .30 $ .09
Discontinued operations...................................... (1.72) (.50) (1.52)
Cumulative effect of accounting changes...................... -- (1.34) --
---------------- ---------------- ----------------
Net income (loss)................................................. $ (.47) $ (1.54) $ (1.43)
================ ================ ================
Weighted average number of common shares
outstanding..................................................... 9,577,621 9,577,621 9,577,621
================ ================ ================
</TABLE>
Consolidated Statements of Retained Earnings (Deficit)
<TABLE>
<CAPTION>
For The Year Ended December 31,
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Retained earnings (deficit) at beginning of year.................... $ (16,244,136) $ 1,154,429 $ 17,696,990
Net income (loss)................................................... (4,515,956) (14,763,609) (13,667,788)
--------------- --------------- ---------------
(20,760,092) (13,609,180) 4,029,202
Cash dividends declared, $.15 per share in 1993, $.275 per share in
1992 and $.30 per share in 1991................................... (1,437,374) (2,634,956) (2,874,773)
--------------- --------------- ---------------
Retained earnings (deficit) at end of year.......................... $ (22,197,466) $ (16,244,136) $ 1,154,429
=============== =============== ===============
</TABLE>
See Notes to Consolidated Financial Statements.
7
<PAGE>
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
For The Year Ended December 31,
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss.................................................................. $ (4,515,956) $ (14,763,609) $ (13,667,788)
Adjustments to reconcile net loss to net cash flows from
operating activities:
Depreciation and amortization........................................... 6,295,985 8,312,828 8,832,598
(Gain) loss on sale of investments...................................... (6,489,738) -- 1,292,276
(Gain) loss on discontinued operations.................................. 20,490,990 (291,071) 19,003,011
Deferred income taxes................................................... (7,500,000) 2,400,000 (424,000)
Cumulative effect of accounting changes................................. -- 12,838,000 --
Other--net.............................................................. 248,898 628,580 467,220
(Increase) decrease in assets:
Accounts receivable.................................................. 1,942,788 5,604,927 (4,110,626)
Inventories.......................................................... 4,564,449 1,521,115 5,252,103
Other assets......................................................... 60,282 (1,268,204) 32,757
Increase (decrease) in liabilities:
Accounts payable..................................................... (2,036,533) (2,044,261) (2,637,865)
Accrued payrolls and employee benefits............................... 1,660,565 (962,113) (345,962)
Other liabilities.................................................... (2,491,232) (8,652,490) (5,511,379)
--------------- --------------- ---------------
Net cash flows from operating activities.................................. 12,230,498 3,323,702 8,182,345
--------------- --------------- ---------------
Cash flows from investing activities:
Proceeds from disposals of discontinued operations........................ 30,668,962 3,178,676 --
Collection of receivables resulting from sale of discontinued
operations.............................................................. -- 242,000 1,593,887
Proceeds from sales of investments........................................ 6,695,418 100,000 3,541,589
Purchase of investments................................................... -- (202,709) (120,000)
Purchases of property, plant and equipment................................ (2,410,482) (3,431,885) (7,047,116)
Proceeds from sales of property, plant and equipment...................... 136,265 471,101 220,998
--------------- --------------- ---------------
Net cash flows from investing activities.................................. 35,090,163 357,183 (1,810,642)
--------------- --------------- ---------------
Cash flows from financing activities:
Repayments of notes payable to bank....................................... (13,000,000) (1,500,000) --
Repayments of long-term debt.............................................. (26,622,869) (483,334) (1,251,114)
Dividends paid............................................................ (1,676,692) (2,874,770) (2,874,770)
--------------- --------------- ---------------
Net cash flows from financing activities.................................. (41,299,561) (4,858,104) (4,125,884)
--------------- --------------- ---------------
Effect of exchange rate changes on cash........................................ (36,752) 155,498 (8,331)
--------------- --------------- ---------------
Net increase (decrease) in cash and cash equivalents........................... 5,984,348 (1,021,721) 2,237,488
Cash and cash equivalents at beginning of year................................. 3,566,072 4,587,793 2,350,305
--------------- --------------- ---------------
Cash and cash equivalents at end of year....................................... $ 9,550,420 $ 3,566,072 $ 4,587,793
=============== =============== ===============
Supplemental information:
Interest payments......................................................... $ 951,495 $ 2,399,211 $ 3,571,286
Income tax payments (refunds)--net........................................ (120,162) 20,215 2,270,047
</TABLE>
See Notes to Consolidated Financial Statements.
8
<PAGE>
Notes to Consolidated Financial Statements
(DOLLARS STATED IN THOUSANDS)
Note 1--Accounting Policies:
Ampco-Pittsburgh Corporation's accounting policies conform to generally accepted
accounting principles. A summary of the significant accounting policies followed
by the Corporation is presented below to assist the reader in evaluating the
financial statements. Certain amounts for preceding periods have been
reclassified for comparability with the 1993 presentation.
Consolidation
All subsidiaries are wholly owned and are included in the consolidated financial
statements. Intercompany accounts and transactions are eliminated. Minority
investments in other entities over which the Corporation exercises significant
influence are accounted for by the equity method.
Cash and Cash Equivalents
Securities with purchased original maturities of three months or less are
considered to be cash equivalents. The Corporation maintains cash and cash
equivalents at various financial institutions which may exceed federally insured
amounts.
Inventories
Inventories are valued at cost, which is lower than market. Cost of domestic raw
materials, work-in-process and finished goods inventories is determined by the
last-in, first-out (LIFO) method. Cost of domestic supplies and foreign
inventories is determined by the first-in, first-out method.
Property, Plant and Equipment
Property, plant and equipment are recorded at cost with depreciation computed on
the straight-line method over the estimated useful lives of the asset groups.
Expenditures that extend economic useful lives are capitalized. Gains or losses
are recognized on retirements or disposals. Routine maintenance is charged to
operating results.
Postretirement Benefits
Effective January 1, 1992, the Corporation changed the method of accounting for
postretirement benefits for its continuing operations in accordance with the
Statement of Financial Accounting Standards (SFAS) No. 106, "Accounting for
Postretirement Benefits Other than Pensions." This standard requires that the
expected cost of retiree health and life insurance benefits be charged to
expense during the years in which the employees render service rather than the
Corporation's past practice of recognizing these costs on a cash basis. See Note
8 regarding the impact of adoption.
Taxes on Income
Effective January 1, 1992, the Corporation adopted the method of accounting for
income taxes in accordance with SFAS No. 109, "Accounting for Income Taxes."
SFAS No. 109 changed the criteria for measuring the provision for income taxes
and recording deferred tax assets and liabilities on the consolidated balance
sheet. See Note 11 regarding the impact of adoption.
Earnings Per Share
Net income per common share is computed on the basis of a weighted average
number of shares of stock outstanding during each period.
Note 2--Discontinued Operations:
Air Handling Group (AHG)
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. The transaction resulted in a pre-tax loss of $15,491.
The net sales of the AHG were $32,993 for the short period ended May 6, 1993,
$86,035 for 1992 and $108,049 for 1991. The net sales and related cost and
expenses were excluded from the Corporation's income from continuing operations
for the periods presented.
Northwestern Steel and Wire Company (Northwestern)
In 1992, the Corporation announced its intention to dispose of its interest in
Northwestern and consequently accounted for Northwestern as a discontinued
operation.
The Corporation originally owned 2,001,000 shares of Northwestern, acquired at a
cost of approximately $6,000 in 1988, representing a 24% interest that was
accounted for on the equity method. As a result of Northwestern's losses and
credit problems, which became apparent during 1991, the Corporation wrote down
its equity investment in 1991 by $5,426 in addition to recording its pro rata
share of Northwestern's losses of $5,577. In 1992, Northwestern found a
substantial new investor and, as part of a resulting recapitalization, the
Corporation sold 794,669 of its shares at $4.00 per share providing proceeds of
$3,179 and a gain on disposal of discontinued business assets of $2,791. In
1993, Northwestern exercised its option to purchase 100,000 of its shares from
the Corporation resulting in proceeds of $400
9
<PAGE>
Note 2--Discontinued Operations
(continued)
and a gain of $351. In June 1993, Northwestern completed a public offering of
additional common stock at $8.00 per share, at which time the Corporation's
remaining shares were restricted from sale until December 1993.
At December 31, 1993, the Corporation had 1,106,331 shares of Northwestern at a
carrying value of $540. The Corporation intends to sell its shares in an orderly
manner, depending on market conditions. Subsequent to year end, through February
18, 1994, 243,500 shares have been sold, realizing proceeds of $2,779.
Northwestern is traded in the over-the-counter market and as of February 18,
1994 was quoted at $12.875 per share.
General
The Corporation periodically reevaluates the adequacy of its accruals for
liabilities of discontinued businesses and the realizability of remaining
assets. The Corporation increased its loss provision relating to previously
discontinued businesses by $5,000 in 1993. The provision is primarily due to
increases in estimates for costs of holding and preparing plant properties for
sale, workmen's compensation and legal costs. In 1992, a gain of $2,791 from the
sale of Northwestern shares was credited to discontinued operations partially
offset by a provision of $2,500. In 1991, a provision of $8,000 was made.
Management believes that the reserves at December 31, 1993, of $15,450 (of which
approximately $4,000 is in current liabilities) are sufficient to cover the
present value of costs anticipated and currently measurable. Payment in respect
of workmen's compensation and retiree health insurance is expected to be made
over an extended number of years. Although the Corporation believes it has
meritorious defenses, the outcome of litigation concerning a discontinued
business remains uncertain and no provision has been made (see Note 13).
Note 3--Investments:
On April 2, 1993, Amersham International PLC (Amersham) acquired United States
Biochemical Corporation (Biochem), including the Corporation's interest therein.
The Corporation owned a 20% interest in Biochem, which was accounted for by the
equity method. Amersham is an English public company whose major businesses are
engaged in life science, healthcare and industrial quality and safety assurance.
The proceeds to the Corporation were composed of cash of $6,500 and 212,861
common shares of Amersham valued at $2,300 and a contingent purchase price which
was not assigned a value. The Corporation recorded a gain of $6,490 with respect
to this transaction.
On January 19, 1994, Amersham agreed to make an immediate payment to satisfy
fully its obligation with respect to the contingent purchase price. The
Corporation, as a former Biochem shareholder, received cash of $814 and 52,466
shares of Amersham valued at $784 pursuant to this settlement. All of the
settlement proceeds will be recorded as a gain in the first quarter 1994.
On January 20, 1994, the Corporation sold 15,740 shares of Amersham for their
approximate carrying value of $240. The remaining 249,587 Amersham shares owned
by the Corporation are subject to sale restrictions with respect to 212,861
shares which cannot be sold prior to April 2, 1994 and 36,726 shares which
cannot be sold prior to April 30, 1996. The market value of the Amersham stock,
which trades in London, England, was equivalent to approximately $15.50 per
share on February 18, 1994.
Note 4--Inventories:
<TABLE>
<CAPTION>
1993 1992
---- ----
<S> <C> <C>
Raw materials.......................... $ 4,541 $ 9,565
Work-in-process........................ 16,081 26,341
Finished goods......................... 5,614 7,039
Supplies............................... 1,937 2,697
---------- ----------
$ 28,173 $ 45,642
========== ==========
</TABLE>
The reduction in inventories in 1993 was due principally to the inventories
included in the Corporation's sale of the AHG (see Note 2).
Inventories valued on the LIFO method are approximately the same as current cost
at December 31, 1993 and 1992. Approximately 83% of the inventory was valued
using the LIFO method in 1993 and 78% in 1992.
Note 5--Borrowing Arrangements:
<TABLE>
<CAPTION>
1993 1992
---- ----
<S> <C> <C>
Payable to banks under the revolving
credit agreement (RCA)................. $ -- $ 24,000
Industrial development revenue bonds..... 2,133 4,756
--------- ----------
2,133 28,756
Less current maturities.................. 783 1,483
--------- ----------
Long-term debt........................... $ 1,350 $ 27,273
========= ==========
</TABLE>
10
<PAGE>
Note 5--Borrowing Arrangements
(continued)
The Corporation prepaid and terminated its RCA on May 6, 1993, using the
proceeds of the sale of the AHG. On September 30, 1993, the Corporation arranged
for a new RCA, which provides for a four year bank commitment of up to $15,000.
In addition, the Corporation maintains short-term lines of credit of
approximately $7,000.
Interest rate terms of the RCA are at the option of the Corporation and are
based principally at the prime rate or the London Inter-Bank Offered Rate or the
Federal Funds Rate plus 75 basis points and can include a combination of the
above. In addition, the Corporation also incurs a facility fee of .25% and a
commitment fee of .125% per year on the unused portion of the available credit
provided by the RCA. The weighted average interest rate, prior to the new RCA,
was 5.1% in 1993 and 5.3% in 1992.
The Corporation's RCA requires, among other things, the maintenance of certain
financial covenants including minimum net worth and ratios of interest coverage
and debt to equity. The Corporation is in compliance with the applicable bank
covenants as of December 31, 1993.
The industrial development authorities retain security interests relating to the
assets funded by the respective loans. The maturities of the Corporation's
industrial development revenue bonds are $783 in 1994 and $1,350 in 2002.
Note 6--Operating Leases:
The Corporation leases office space and certain production machinery and
computer equipment. Operating lease payments were $1,721 in 1993, $948 in 1992
and $1,063 in 1991. Operating lease payments for subsequent years are as
follows:
<TABLE>
<S> <C>
1994 $1,840 1997 $1,378
1995 1,796 1998 948
1996 1,477 Thereafter 1,511
</TABLE>
Note 7--Employee Pension Plans:
The Corporation has noncontributory defined benefit pension plans covering
substantially all of its employees. Generally, the benefits are based on years
of service multiplied by either a fixed amount or a percentage of compensation.
The Corporation's funding policy with respect to the corporate-sponsored pension
plans covered by the Employee Retirement Income Security Act of 1974 (ERISA) is
to fund each year's pension expense on a basis that satisfies the maximum
amortization periods of ERISA, plus any additional amounts that the Corporation
may determine to be appropriate.
The net pension cost for the corporate-sponsored pension plans consists of the
following components:
<TABLE>
<CAPTION>
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Service cost................. $ 1,042 $ 1,399 $ 1,362
Interest cost on projected
benefit obligation......... 5,620 7,815 7,641
Return on plan assets........ (6,772) (9,082) (8,638)
Net amortization and
deferral................... 418 122 148
--------- --------- ---------
Net pension cost............. $ 308 $ 254 $ 513
========= ========= =========
</TABLE>
The reconciliation of the funded status, for pension plans in which assets
exceed the projected benefit obligation, is as follows:
<TABLE>
<CAPTION>
1993 1992
---- ----
<S> <C> <C>
Actuarial present value of:
Vested benefit obligation......... $ 55,021 $ 80,780
========== ==========
Accumulated benefit obligation.... $ 57,228 $ 86,824
========== ==========
Projected benefit obligation...... $ 60,347 $ 90,534
Plan assets at fair value.............. 69,132 113,529
---------- ----------
Plan assets in excess of
projected benefit obligation......... 8,785 22,995
Unrecognized loss (gain)............... 6,417 (10,349)
---------- ----------
Prepaid pension........................ $ 15,202 $ 12,646
========== ==========
</TABLE>
Assumptions used for the Corporation's defined benefit plans for the three years
ended December 31, 1993 include:
<TABLE>
<CAPTION>
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Discount rate for projected
benefit obligation.............. 7.5% 9.0% 9.0%
Expected long-term rate of return
on assets....................... 9.0% 10.0% 10.0%
Rate of increases in
compensation.................... 3.0% 4.5% 4.5%
</TABLE>
The changes in the above pension assumptions for 1993 are expected to increase
pension expense in 1994 by $650.
11
<PAGE>
Note 7--Employee Pension Plans
(continued)
The pension plans' assets principally comprise:
<TABLE>
<CAPTION>
(Percent)
1993 1992
---- ----
<S> <C> <C>
United States and Canadian
government obligations..................... 7.2 13.6
Industrial and financial obligations......... 23.2 22.8
Preferred and common stocks.................. 67.5 61.7
Miscellaneous and temporary
investments................................ 2.1 1.9
----- -----
100.0 100.0
===== =====
</TABLE>
The 1993 sale of the AHG included the transfer of pension assets of $36,298 and
caused an increase in the prepaid pension of $2,600 due to the settlement and
curtailment of employee pension obligations.
The reconciliation of the funded status, for a pension plan in which the
projected benefit obligation exceeds assets, is as follows:
<TABLE>
<CAPTION>
1993 1992
---- ----
<S> <C> <C>
Actuarial present value of:
Vested benefit obligation............ $2,041 $1,194
====== ======
Accumulated benefit obligation....... $2,158 $1,282
====== ======
Projected benefit obligation......... $2,447 $1,718
Plan assets............................... -- --
------ ------
Projected benefit obligation in excess of
plan assets............................. 2,447 1,718
Unrecognized loss......................... (289) (436)
------ ------
Accrued pension cost included in other
noncurrent liabilities.................. $2,158 $1,282
====== ======
</TABLE>
Note 8--Postretirement Benefits Other Than Pensions:
The Corporation provides postretirement health care benefits principally to the
bargaining groups of one subsidiary (the Plan). The Plan covers participants and
their spouses and/or dependents who retire under the existing pension plan on
other than a deferred vested basis and at the time of retirement have also
rendered 15 or more years of continuous service irrespective of age. Other
health care and life insurance benefits are provided to retirees under other
plans no longer being offered by the Corporation. Retiree life insurance is
still being provided to substantially all retirees. Postretirement benefits with
respect to health care are subject to certain Medicare offsets.
The Corporation also provides benefits to former employees of discontinued
operations. This obligation had been estimated at the time of disposal and was
included as a component of the liability for discontinued operations. See Note
2--Discontinued Operations.
The Corporation adopted SFAS No. 106 effective January 1, 1992, and recorded
the cumulative effect of the accounting change as a one-time, non cash charge
against earnings of $6,638, which was net of a tax benefit of $3,800. This
cumulative adjustment represented the after tax discounted present value of
future retiree health and life insurance benefits attributed to employees'
service rendered prior to that date.
The Corporation's postretirement health care and life insurance plans are
unfunded.
The Corporation's accumulated postretirement benefit obligation (APBO) consists
of the following:
<TABLE>
<CAPTION>
1993 1992
---- ----
<S> <C> <C>
APBO attributable to:
Current retirees.................. $ 5,359 $ 5,998
Fully eligible active plan
participants.................... 1,368 1,216
Other plan participants........... 4,605 4,139
------- -------
Total APBO............................. 11,332 11,353
Unrecognized loss...................... (882) --
------- -------
Accrued retiree benefits............... $10,450 $11,353
======= =======
</TABLE>
Accrued retiree benefits are principally classified in other noncurrent
liabilities. During 1993, approximately $1,600 of accrued retiree benefits were
transferred with the sale of the AHG.
The net postretirement benefit cost consists of the following components:
<TABLE>
<CAPTION>
1993 1992
---- ----
<S> <C> <C>
Immediate recognition of
transition obligation................ $ -- $10,438
Service cost........................... 245 259
Interest on APBO....................... 804 937
------ -------
Net postretirement benefit cost........ $1,049 $11,634
====== =======
</TABLE>
The following assumptions were utilized for measurement purposes of the APBO.
<TABLE>
<CAPTION>
1993 1992
---- ----
<S> <C> <C>
Medical inflation rate..................... 13.0% 15.0%
Gradual reduction to the year 2001 and
to remain level thereafter.......... 5.5% 7.0%
Discount rate.............................. 7.5% 9.0%
</TABLE>
12
<PAGE>
Note 8--Postretirement Benefits Other
Than Pensions (continued)
The 1993 change in assumptions will have minimal impact on the annual benefit
expense.
A 1% change in the medical inflation rate would impact the APBO and the annual
benefit expense by approximately $1,000 and $300.
Note 9--Authorized and Issued Shares:
Each outstanding share of common stock carries one Preference Share Purchase
Right (a Right). The Rights are designed to assure that all shareholders receive
equal treatment in the event of an acquisition of the Corporation or a change in
control. Under certain circumstances, each Right entitles the shareholder to buy
1/100 of a share of Series A Preference Stock at a $36.00 exercise price. The
Rights are exercisable only if a party acquires beneficial ownership of 20% or
more (or offers to acquire 30% or more) of the Corporation's common stock.
After the Rights become exercisable, if anyone acquires 30% or more of the
Corporation's stock or assets, merges into the Corporation or engages in certain
other transactions, each Right may be used to purchase shares of the
Corporation's common stock (or, under certain conditions, the acquirer's common
stock) worth twice the exercise price. The Corporation may redeem the Rights,
which expire in November 1998, for five cents per Right under certain
circumstances. At December 31, 1993, there are 3,000,000 shares of unissued
preference stock, of which 100,000 shares have been designated as Series A
Preference Stock for issuance in connection with these Rights.
Note 10--Fair Value of Financial Instruments:
The Corporation's financial instruments are composed principally of investments
in Northwestern (see Note 2) and Amersham (see Note 3). The fair market value of
these investments, based on quoted trading prices at December 31, 1993, was
approximately $14,300, with carrying values aggregating $2,840.
The fair value of other financial instruments classified as current assets or
current liabilities approximates their carrying values due to the short-term
maturities of these instruments.
Note 11--Taxes on Income:
As indicated in Note 1, the Corporation adopted SFAS No. 109 effective January
1, 1992 and recorded the accounting change as a one-time non cash charge of
$6,200.
In 1991, the Corporation accounted for income taxes using Accounting Principles
Board Opinion No. 11. Accordingly, the tax provision principally reflected a
charge in lieu of income taxes for that year.
The (benefit) or provision for taxes on income from continuing operations
consists of the following:
<TABLE>
<CAPTION>
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Current:
Federal.................... $ 946 $ (358) $ 823
State and local............ 425 155 400
Foreign.................... 149 172 375
--------- --------- ---------
1,520 (31) 1,598
Deferred federal................ (2,900) -- 2,002
--------- --------- ---------
$ (1,380) $ (31) $ 3,600
========= ========= =========
</TABLE>
The total (benefit) or provision for taxes on income, including the effect of
accounting changes in 1992, consists of the following:
<TABLE>
<CAPTION>
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Current:
Federal................... $ 946 $ (358) $ 823
State and local........... 425 155 400
Foreign................... 218 703 1,576
--------- --------- ---------
1,589 500 2,799
Deferred federal............... (7,500) 2,400 (424)
--------- --------- ---------
$ (5,911) $ 2,900 $ 2,375
========= ========= =========
</TABLE>
The deferred federal tax benefit of $2,900 recorded in 1993 in continuing
operations resulted from an adjustment to the beginning of the year valuation
allowance because of a change in judgment, principally with regard to the
Corporation's ability to realize certain capital gains in the future. These
factors also led management to conclude that a portion of the income tax
benefits attributed to the loss on the sale of the AHG in 1993 should be
recognized. Such benefits were recorded in the fourth quarter of 1993 in the
loss on disposal of discontinued operations.
13
<PAGE>
Note 11--Taxes on Income
(continued)
Deferred tax assets and liabilities comprise the following:
<TABLE>
<CAPTION>
Assets 1993 1992
---- ----
<S> <C> <C>
Net operating loss
carryforward........................ $ 6,099 $ 12,682
Employment-related liabilities........ 5,846 5,267
Capital loss carryforward............. 9,962 6,444
Discontinued operations accrual....... 6,801 4,448
Tax credits carryforward.............. 2,571 2,216
Inventories........................... 313 995
Accruals in advance of tax
deductions.......................... 360 430
Other................................. -- 67
---------- ----------
Gross deferred tax assets............. 31,952 32,549
Valuation allowance................... (6,909) (10,401)
---------- ----------
25,043 22,148
---------- ----------
</TABLE>
<TABLE>
<CAPTION>
Liabilities
- - -----------
<S> <C> <C>
Depreciation.......................... (13,956) (16,692)
Prepaid pension....................... (6,631) (4,706)
Deferred intercompany gains........... -- (3,794)
Foreign deferred tax.................. (1,046) (1,095)
---------- ----------
Gross deferred tax liabilities........ (21,633) (26,287)
---------- ----------
Net deferred tax asset
(liability)......................... $ 3,410 $ (4,139)
========== ==========
</TABLE>
The net deferred tax asset for 1993 is principally classified in other current
assets. The net deferred tax liability for 1992 is prinicipally classified in
other noncurrent liabilities.
For federal income tax purposes, the Corporation has the following unused
carryforwards at December 31, 1993:
<TABLE>
<CAPTION>
Expiration
Type Amount Dates
- - ---- ------ ----------
<S> <C> <C>
Regular tax net operating loss...... $ 17,425 2001-2007
Alternative minimum tax net
operating loss.................... 13,161 2001-2007
Capital loss........................ 23,567 1998
Investment tax credit............... 1,478 1996-2000
Alternative minimum tax credit...... 1,076 unlimited
</TABLE>
The income (loss) from continuing operations before income taxes and cumulative
effect of accounting changes was as follows:
<TABLE>
<CAPTION>
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
U.S. Operations............... $ 10,680 $ 2,057 $ 3,476
Foreign operations............ (89) 778 1,028
---------- --------- ---------
$ 10,591 $ 2,835 $ 4,504
========== ========= =========
</TABLE>
The tax provision reflects the effective rates of the various taxes on income
based on its source (foreign or domestic). The difference between the U.S.
federal income tax statutory rate and the Corporation's effective income tax
rate on continuing operations is as follows:
<TABLE>
<CAPTION>
(Percent)
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Computed at statutory rate............ 35.0 34.0 34.0
Foreign income taxes.................. 1.4 8.7 0.6
Net operating loss
carryforward........................ -- (34.0) --
Federal tax benefit................... -- (15.3) --
Capital loss.......................... -- -- 9.8
State income taxes.................... 4.0 5.5 5.9
Permanent differences................. -- -- 9.7
Valuation reserve..................... (63.2) -- --
Other--net............................ 9.8 -- 20.0
----- ----- ----
(13.0) (1.1) 80.0
===== ===== ====
</TABLE>
The deviation in tax provision from the statutory rate in 1993 was due
principally to the use of operating and capital loss carryforwards against the
1993 income from continuing operations. In addition, a tax benefit related to
other loss and credit carryforwards was recognized because of a change in
judgment, principally with regard to the Corporation's ability to realize
certain capital gains in the future.
Note 12--Foreign Currency Translation Adjustments:
Assets and liabilities of foreign operations are translated at the current
year-end exchange rate and the statements of income are translated at the
average exchange rate for the year. Gains or losses resulting from translating
foreign currency financial statements are accumulated as a separate component of
shareholders' equity until the entity is sold or substantially liquidated.
Cumulated translation adjustments included as a component of shareholders'
equity are as follows:
<TABLE>
<CAPTION>
Increase
(decrease)
----------
<S> <C>
December 31, 1990............................... $ (121)
1991 translation adjustment................ 372
-------
December 31, 1991............................... 251
1992 translation adjustment................ (1,832)
-------
December 31, 1992............................... (1,581)
Sale of discontinued businesses............ 4,372
1993 translation adjustment................ (1,361)
-------
December 31, 1993............................... $ 1,430
=======
</TABLE>
14
<PAGE>
Note 13--Litigation:
The Corporation's subsidiary, Vulcan Inc. (Vulcan), is a 50% general partner in
Valley-Vulcan Mold Company (Valley), a partnership, which filed under Chapter 11
of the U.S. Bankruptcy Code in 1990. Valley, in connection with its formation,
assumed certain obligations of each of the partners, including Vulcan's
obligation to pay an industrial revenue bond. A portion of the latter
obligation, however, has been paid by the Corporation pursuant to a guaranty
given at the time of Valley's formation, which guaranty was secured by all of
Valley's assets. There is pending against the Corporation and its subsidiary, as
well as others, an adversary proceeding brought by the unsecured creditors
committee to set aside the Corporation's liens, to hold the Corporation and
Vulcan liable for debts of Valley, and for return of certain funds received in
connection with Valley's formation. The trial with respect to this matter was
held the week of October 4, 1993 and post-trial briefs have been filed. The
court has not yet rendered its decision. The Corporation and its legal counsel
believe it has meritorious defenses to this action. Management does not believe
that the resolution of the litigation will have a material effect on the
Corporation's financial position.
Note 14--Environmental Matters:
There are various environmental proceedings which involve discontinued
operations. In some of those proceedings, the Corporation has been designated as
a potentially responsible party; however, the Corporation believes that in each
instance it is a de minimis participant based on information known to date.
The Corporation has various discontinued operation plant sites which are held
for sale. As part of the reserves for discontinued operations (see Note 2), an
estimated liability of $2,000 has been recorded for anticipated site restoration
costs.
While it is not possible to quantify with certainty the potential of actions
regarding environmental matters, in the opinion of management, compliance with
the present environmental protection laws will not have a material adverse
effect on the financial condition of the Corporation.
Note 15--Related Party Transactions:
The Corporation bought industrial supplies from, and was paid for administrative
services by, The Louis Berkman Company in the total of $926 in 1993, $590 in
1992 and $469 in 1991. Louis Berkman, Marshall L. Berkman and Robert A. Paul are
shareholders, officers and directors in that company as well as of the
Corporation. Transactions between the parties will take place in 1994.
Note 16--Business Segment Information:
The Corporation is in one business segment that manufactures and sells
engineered products, manufactured and sold by Union Electric Steel Corporation,
Aerofin Corporation, Buffalo Pumps, Inc. and New Castle Industries, Inc.
Included in the segment information are U.S. and non-U.S. operations. Non-U.S.
operations consist of a wholly-owned subsidiary in Belgium. The following table
has been adjusted to include continuing operations only with the exception of
identifiable assets which include the AHG in 1992 and 1991 (see Note 2).
<TABLE>
<CAPTION>
U.S. Non-U.S.
Total operations operations
-------- ---------- ----------
<S> <C> <C> <C>
1993
- - ----
Net sales *............. $108,846 $101,281 $13,321
Identifiable assets..... 138,494 125,896 12,598
Capital expenditures.... 1,977 1,768 209
Depreciation............ 5,166 4,775 391
Contributions to
operating income...... 5,699 5,524 175
1992
- - ----
Net sales*.............. $104,308 $ 92,575 $17,781
Identifiable assets..... 193,292 161,716 31,576
Capital expenditures.... 2,678 1,681 997
Depreciation............ 5,084 4,641 443
Contributions to
operating income...... 5,977 4,755 1,222
1991
- - ----
Net sales*.............. $113,299 $104,339 $17,036
Identifiable assets..... 209,978 173,650 36,328
Capital expenditures.... 4,627 3,332 1,295
Depreciation............ 5,634 5,136 498
Contributions to
operating income...... 9,799 8,242 1,557
</TABLE>
*Total net sales exclude intercompany sales of: $5,756 in 1993, $6,048 in 1992
and $8,076 in 1991.
Included in identifiable assets of U.S. operations are amounts attributable to
either investments or discontinued operations of $10,112 in 1993, $10,787 in
1992 and $13,660 in 1991. The Corporation entered into operating leases for
certain domestic production machinery with a total value of $2,800 in 1993 and
$2,900 in 1992.
15
<PAGE>
Management's Discussion and Analysis of Financial
Condition and Results of Operations
1993 Compared to 1992
Financial Condition
As compared to year-end 1992, all balance sheet amounts have changed
significantly due principally to the sale of the Corporation's air handling
group (AHG) to Howden Group, PLC and the sale of the Corporation's investment in
United States Biochemical Corporation (Biochem). See Notes to Consolidated
Financial Statements--Notes 2 and 3.
Current assets decreased by $27,169,000 due principally to the disposed assets
(other than cash) of the AHG of $28,896,000. Cash and cash equivalents were
increased by $5,984,000 due to cash flows from operating activities and certain
of the proceeds from the sale of the AHG and Biochem after debt liquidation.
Current liabilities decreased by $22,134,000 due principally to reductions in
notes payable and current maturities of long-term debt of $13,700,000, resulting
from the application of certain of the proceeds from the sale of the AHG and the
reduction in the current liabilities of $8,991,000 assumed by the Howden Group
in that same transaction.
Property, plant and equipment decreased by $30,417,000, of which $24,942,000 was
due to the divestiture of the AHG, with the balance due principally to
provisions for depreciation in excess of capital expenditures and the
reclassification of properties held for sale of $859,000.
The AHG transaction created an increase in the prepaid pension of approximately
$2,600,000 due to the settlement and curtailment of the AHG employee pension
obligations, see Notes to Consolidated Financial Statements--Note 7.
Long-term debt was reduced by $25,923,000 principally as a result of prepayment
of the Corporation's revolving credit agreement from the AHG proceeds.
The change in translation and other adjustments included in shareholders' equity
of $2,795,000 was principally due to the disposition of the Canadian and Mexican
operations of the AHG; see Notes to Consolidated Financial Statements--Note 12.
1993 Compared to 1992
Operations
In 1993, the Corporation sold its air handling group (AHG) to Howden Group, PLC
(see Notes to Financial Statements--Note 2). The operating results were restated
to reflect continuing operations.
Net sales for 1993 of $108,846,000 compare with $104,308,000 for 1992. Sales of
domestic operations increased 10.0%. However, shipments of the Corporation's
Belgian roll-making operation were $4,460,000 lower than in the prior year
reflecting weaker economic conditions in Europe. The order backlog at December
31, 1993 of $56,300,000 is $8,400,000 lower than at the end of the prior year.
Management believes that the reduction principally reflects shorter lead-time
ordering patterns of customers.
The cost of products sold, excluding depreciation, in relationship to net sales
was 73.0% in 1993 and 70.4% in 1992. The increase in 1993 was in part due to
reduced margins as a result of continuing competitive pricing pressures. In
addition, planned inventory reductions resulted in lower production levels and
the consequential lower fixed cost absorption.
Selling and administrative expenses were 6.5% lower in 1993. Selling expenses in
particular benefitted from elimination of charges for services previously
provided by the AHG. This was in part offset by an increase in the Corporation's
volume of commissionable sales. Administrative expenses were lower as a result
of increased fee income received for services provided by the Corporation to
others.
Depreciation expense of $5,166,000 in 1993 compares with $5,084,000 in 1992.
Due to the above, income from operations was $5,699,000 in 1993 and $5,977,000
in 1992. The reduction in income from operations for 1993 occurred even though
sales increased for the period due principally to the increase in the product
cost relationship to sales discussed above and lower earnings from the Belgian
roll-making operation.
For a discussion of the gain on sale of Biochem in 1993, see Notes to
Consolidated Financial Statements--Note 3.
Interest expense was $926,000 in 1993 compared with $2,424,000 in 1992. The
reduction in 1993 was due principally to the use of proceeds from dispositions
to prepay bank debt.
Other income (expense)--net was $(671,000) in 1993 as compared with $(718,000)
in 1992. Included in other income (expense)--net are charges of $(1,000,000) in
1993 and $(800,000) in 1992 for the
16
<PAGE>
Management's Discussion and Analysis of Financial
Condition and Results of Operations
(continued)
accretion, from present values, on long-term discontinued business reserves.
Also reflected in 1993 are interest earnings from invested cash balances.
For a discussion concerning the benefit for taxes on income in 1993, see Notes
to Consolidated Financial Statements--Note 11.
For a discussion regarding discontinued operations, see Notes to Consolidated
Financial Statements--Note 2.
For a discussion with respect to the cumulative effect of accounting changes,
see Notes to Consolidated Financial Statements--Notes 1, 8 and 11.
As a result of all of the above, the Corporation had a net loss of $4,516,000 in
1993 compared with a net loss of $14,764,000 in 1992.
Liquidity and Capital Resources
As previously discussed, the Corporation received $34,250,000 and $6,500,000
cash, respectively, from the sales of the AHG and its investment in Biochem (see
Notes to Consolidated Financial Statements--Notes 2 and 3). The sale of the AHG
was a stock transaction which included cash balances of businesses sold of
$3,981,000, resulting in net cash to the Corporation of $30,269,000. The
proceeds were principally applied to prepay bank debt.
Net cash flows from operating activities were positive for 1993 at $12,230,000
and compare with positive cash flows of $3,324,000 for 1992. Included in 1993
were cash inflows from working capital changes net of payments associated with
discontinued operations of $3,700,000, compared with a net cash outflow of
$5,800,000 in 1992.
The net cash flows from investing activities of $35,090,000 in 1993 were due to
sale of the AHG and Biochem, previously discussed, partially offset by purchases
of equipment.
Cash outflows with respect to financing activities of $41,300,000 reflect the
application of proceeds from the AHG and Biochem transactions to the prepayment
of bank debt and dividends.
As a result of all of the above, cash and cash equivalents increased by
$5,984,000 in 1993.
Capital expenditures for 1993 totaled $2,410,000 compared with $3,432,000 for
1992. The capital expenditures include payments with respect to the AHG of
$434,000 in 1993 and $754,000 in 1992. The Corporation entered into operating
leases for certain production machinery with a total value of $2,800,000 in 1993
and $2,900,000 in 1992. Depreciation expense for continuing operations was
$5,166,000 for 1993 and $5,084,000 for 1992. Capital appropriations carried
forward from 1993, which principally comprise normal replacements, upkeep of
assets and improvements, total $1,157,000.
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
December 31, 1993 was $22,000,000--see Notes to Consolidated Financial
Statements--Note 5.
See Notes to Consolidated Financial Statements--Notes 2 and 3 for discussion
relative to the stock held in Northwestern Steel and Wire and Amersham.
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 for sale its discontinued
business facilities. 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 of the Corporation (also see
Notes to Consolidated Financial Statements--Note 14).
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 will be materially affected by the costs of known,
pending or threatened litigation (also see Notes to Consolidated Financial
Statements--Note 13).
Accounting Standards
Effective January 1, 1994, corporations are required to adopt SFAS No. 112,
"Employers Accounting for Postemployment Benefits." The adoption of this
statement in 1994 will not have a significant effect on the Corporation's income
or financial position.
Effective January 1, 1994, corporations are required to adopt SFAS No. 115,
"Accounting for Certain
17
<PAGE>
Management's Discussion and Analysis of Financial
Condition and Results of Operations
(continued)
Investments in Debt and Equity Securities." The new standard will change the
carrying basis for certain equity and debt securities. The Corporation intends
to adopt SFAS 115 in 1994, consistent with the required adoption period.
Among its provisions, SFAS 115 requires certain equity securities to be
classified as "trading securities" with unrealized gains and losses included in
earnings. The Corporation maintains no trading securities. Certain other equity
securities are to be classified as "available-for-sale" and reported at fair
value, with unrealized gains and losses to be shown as a separate component of
shareholders' equity. The Northwestern and Amersham shares held by the
Corporation will be classified as "available for sale" (see Notes to
Consolidated Financial Statements--Note 10).
1992 Compared to 1991
Operations
The results for 1992 and 1991 were restated due to the sale of the AHG.
Accordingly, the comparisons below are to continuing operations.
Net sales for 1992 of $104,308,000 compare with $113,299,000 for 1991. The 8.0%
reduction of $8,991,000 results from continued weakness in the markets served by
the Corporation. The Corporation was affected by reduction in demand from
domestic steel producers. The order backlog at December 31, 1992 of $64,700,000
is slightly higher than at the end of 1991 of $62,100,000. The Corporation's
business is cyclical in nature and tends to lag a general upturn in the economy
by a considerable period of time.
The cost of products sold, excluding depreciation, in relationship to net sales
was 70.4% in 1992 and compares with 69.0% in 1991. The erosion of margins
principally results from the reduction in sales and severe pricing competition
that impacted the ability of the Corporation to recover cost increases. An
additional expense of $800,000, approximating 0.7% of margin, was charged to
cost of products sold in 1992 for health and life insurance benefits as a result
of adoption of SFAS 106 (see Notes to Consolidated Financial Statements--Note
8).
Selling and administrative expenses were $19,861,000 in 1992 and $19,706,000 in
1991.
Depreciation expense of $5,084,000 in 1992 compares with $5,634,000 in 1991. The
decrease in 1992 was due principally to a change in accounting estimate of the
useful lives of machinery and equipment.
Due to the above, income from operations was $5,977,000 in 1992 and $9,799,000
in 1991.
In 1991, the Corporation incurred a further loss on the final disposition of its
investment in Midway Airlines, Inc. of $1,292,000.
Interest expense in 1992 was reduced by $1,103,000, to $2,424,000, due
principally to lower interest rates in 1992.
For a discussion concerning the cumulative effects of accounting changes, see
Notes to Consolidated Financial Statements--Notes 8 and 11.
For a discussion concerning discontinued operations, see Notes to Consolidated
Financial Statements-- Note 2.
As a result of all of the above, the Corporation had a net loss of $14,764,000
for 1992, compared to a net loss of $13,668,000 in 1991.
Statement of Cash Flows
Net cash flow from operating activities decreased to $3,324,000 in 1992 from
$8,182,000 in 1991. This decrease was attributable to lower operating income
experienced during 1992. Net cash outflow from working capital changes and
payments associated with discontinued operations was $3,400,000 in 1992 compared
to $7,745,000 in 1991.
The cash flow from investing activities of $357,000 principally was composed of
proceeds from the sale of shares in Northwestern Steel and Wire Company (see
Notes to Consolidated Financial Statements-- Note 2) of $3,179,000 plus $610,000
of other items, partially offset by purchases of equipment of $3,432,000.
The cash outflow from financing activities consisted of repayment of debt of
$1,983,000 and dividend payments of $2,875,000.
After favorable exchange rate changes on cash of $155,000, the effect of the
above was to decrease cash and cash equivalents by $1,022,000.
18
<PAGE>
Quarterly Information--Unaudited
<TABLE>
<CAPTION>
First Second Third Fourth
Quarter Quarter Quarter Quarter Year
------- ------- ------- ------- ----
<S> <C> <C> <C> <C> <C>
1993
- - ----
Net sales.................................... $ 28,836,338 $ 29,385,361 $ 23,699,768 $26,924,949 $108,846,416
Gross profit (1)............................. 7,206,774 7,787,799 6,488,391 7,952,807 29,435,771
Income from operations....................... 761,884 1,807,980 1,104,346 2,024,404 5,698,614
Income from continuing
operations (2)............................. 37,833 7,660,062 903,553 3,369,892 11,971,340
Discontinued operations (3).................. 184,027 (16,271,323) -- (400,000) (16,487,296)
Net income (loss)............................ 221,860 (8,611,261) 903,553 2,969,892 (4,515,956)
Per common share:
Continuing operations...................... -- .80 .09 .35 1.25
Discontinued operations.................... .02 (1.70) -- (.04) (1.72)
Net income (loss).......................... .02 (.90) .09 .31 (.47)
1992
- - ----
Net sales.................................... $ 26,052,292 $ 26,385,548 $ 25,574,188 $26,296,276 $104,308,304
Gross profit (1)............................. 8,583,261 8,218,274 7,606,040 6,514,191 30,921,766
Income from operations....................... 2,361,890 1,691,890 1,351,889 571,101 5,976,770
Income from continuing
operations before cumulative
effect of accounting changes............... 1,198,197 941,778 445,010 281,049 2,866,034
Discontinued operations (4).................. (660,687) 159,019 (57,974) (4,232,001) (4,791,643)
Cumulative effect of accounting
changes.................................... (12,838,000) -- -- -- (12,838,000)
Net income (loss) (5)........................ (12,300,490) 1,100,797 387,036 (3,950,952) (14,763,609)
Per common share:
Continuing operations...................... .12 .10 .04 .03 .30
Discontinued operations.................... (.07) .01 -- (.44) (.50)
Cumulative effect of accounting
changes................................. (1.34) -- -- -- (1.34)
Net income (loss).......................... (1.29) .11 .04 (.41) (1.54)
</TABLE>
Notes
1. Gross profit as used herein does not include a charge for depreciation.
2. Continuing operations in 1993 include a gain from the sale of an investment
of $6,490,000 in the second quarter and a tax benefit of $1,720,000 in the
fourth quarter.
3. Discontinued operations in 1993 include a loss on disposal of the
Corporation's air handling operations of $15,491,000 in the second quarter.
The fourth quarter of 1993 included an increase in reserves for previous
disposals of $5,000,000, offset by $4,600,000 of tax benefits associated with
1993 losses from discontinued operations.
4. The third quarter of 1992 includes a gain from discontinued operations
comprising a gain from the sale of certain shares in Northwestern Steel and
Wire Company of $2,791,000, partially offset by loss provisions relating to
previously discontinued operations of $2,500,000. The fourth quarter of 1992
includes losses incurred by the air handling operations which were sold in
1993.
5. Net income (loss) in 1992 includes charges totaling $12,838,000 in the first
quarter due to the cumulative effect of accounting changes for retirees'
health and life insurance benefits and deferred income taxes.
19
<PAGE>
Five-Year Summary of Selected Financial Data
<TABLE>
<CAPTION>
Year ended December 31,
1993 1992 1991 1990 1989
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net sales*.............................. $ 108,846,416 $ 104,308,304 $ 113,298,563 $ 113,524,833 $ 111,522,107
Income from operations*................. 5,698,614 5,976,770 9,798,965 11,010,137 12,297,460
Income (loss) from continuing
operations*........................... 11,971,340 2,866,034 903,664 (9,210,678) 2,608,137
Discontinued operations................. (16,487,296) (4,791,643) (14,571,452) 6,125,830 6,723,357
Cumulative effect of accounting
changes............................... -- (12,838,000) -- -- --
Extraordinary tax credit................ -- -- -- 3,590,000 3,900,000
Net income (loss)....................... (4,515,956) (14,763,609) (13,667,788) 505,152 13,231,494
Total assets............................ 138,494,114 193,291,690 209,978,401 229,039,942 261,225,443
Long-term debt.......................... 1,350,000 27,272,869 27,756,203 28,434,644 57,006,406
Shareholders' equity.................... 91,150,230 94,308,590 113,539,315 129,709,308 126,462,576
Per common share:
Income (loss) from continuing
operations......................... 1.25 .30 .09 (.96) .27
Discontinued operations............... (1.72) (.50) (1.52) .64 .70
Cumulative effect of
accounting changes................. -- (1.34) -- -- --
Extraordinary tax credit.............. -- -- -- .37 .41
Net income (loss)..................... (.47) (1.54) (1.43) .05 1.38
Cash dividends declared............... .15 .275 .30 .30 .30
Shareholders' equity.................. 9.52 9.85 11.85 13.54 13.20
Market price at year end.............. $ 7.125 $ 9.00 $ 7.75 $ 6.50 $ 11.50
Weighted average shares
outstanding and at year end........... 9,577,621 9,577,621 9,577,621 9,577,621 9,577,621
Number of shareholders.................. 1,738 1,873 1,976 2,056 2,104
Number of employees..................... 949 1,950 2,068 2,131 2,314
</TABLE>
*Reclassified to reflect continuing operations
Common Stock Information
The shares of common stock of Ampco Pittsburgh Corporation are traded on the New
York Stock Exchange and on the Philadelphia Stock Exchange (symbol AP). Cash
dividends have been paid on common shares in every year since 1965.
<TABLE>
<CAPTION>
1993 1992
--------------------------------- -----------------------------------
Dividends Dividends
Quarter High Low Declared High Low Declared
- - ------- ---- --- --------- ---- --- ---------
<S> <C> <C> <C> <C> <C> <C>
First $10 1/4 $6 3/4 $.050 $ 9 $ 6 $.075
Second 8 1/4 6 1/4 .050 9 1/4 7 .075
Third 7 3/4 6 1/2 .025 7 3/4 5 7/8 .075
Fourth 7 3/8 6 1/2 .025 8 1/8 6 7/8 .050
Year 10 1/4 6 1/4 .150 9 1/4 5 7/8 .275
</TABLE>
20
<PAGE>
Graphics Appendix List
Page Where
Graphic Appears Description of Graphic or Cross-Reference
- - --------------- -------------------------------------------------------------
Page 2 Photos appear on page 2 and are described in the
accompanying paragraph.
Page 3 Photos appear on page 3 and are described in the
accompanying paragraph.
Page 4 Photos appear on page 4 and are described in the
accompanying paragraph.
<PAGE>
<TABLE>
<CAPTION>
SUBSIDIARIES
Jurisdiction of
Name Ownership _Incorporation_
<S> <C> <C>
AP Venture Corp. III 100% owned by
Ampco-Pittsburgh Corporation Delaware
Aerofin Corporation 100% owned by
Ampco BFC Sub, Inc. New York
Ampco NCII Sub, Inc. 100% owned by Delaware
New Castle Industries, Inc.
Ampco-Pittsburgh Securities 100% owned by
III Corporation Ampco-Pittsburgh Corporation Delaware
Ampco-Pittsburgh Securities 100% owned by
V Corporation Ampco-Pittsburgh Corporation Delaware
Ampco UES Sub, Inc. 100% owned by
Union Electric Steel Corporation Delaware
Buffalo Pumps, Inc. 100% owned by
Ampco-Pittsburgh Corporation Delaware
New Castle Industries, Inc. 100% owned by
Ampco UES Sub, Inc. Pennsylvania
Union Electric Steel 100% owned by
Corporation Ampco-Pittsburgh Securities
V Corporation Pennsylvania
Union Electric Steel N.V. 100% owned by Canadian Blower/
Canada Pumps Limited Belgium
</TABLE>
The financial statements of all subsidiaries have been consolidated with
those of the Corporation. Names of other subsidiaries have been omitted
because, considered in the aggregate as a single subsidiary, they would not
constitute a significant subsidiary.
Exhibit 21
