<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 1996.
Commission File Number 1-898
AMPCO-PITTSBURGH CORPORATION I.R.S. Employer Identification
600 Grant Street, Suite 4600, No. 25-1117717
Pittsburgh, PA 15219 State of Incorporation: Pennsylvania
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. [ ]
As of March 14, 1997, 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 $90 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, 1996.
<PAGE>
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 several businesses
which manufacture engineered equipment. Aerofin Corporation produces finned
tube heat exchange coils and is headquartered in Lynchburg, Virginia. Buffalo
Air Handling Company is headquartered in Amherst, Virginia and manufactures
large standard and custom air handling systems. Buffalo Pumps, Inc.
manufactures centrifugal pumps and is headquartered in North Tonawanda, New
York. New Castle Industries, Inc. and Bimex Industries, Inc. primarily produce
feed screws, barrels and chill rolls and are headquartered in New Castle,
Pennsylvania and Wales, Wisconsin, respectively. Union Electric Steel
Corporation produces forged hardened steel rolls and is headquartered in
Carnegie, Pennsylvania.
(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,
1996 are set forth in Note 16 (Segment and Geographic Information) on p. 16 of
the accompanying Annual Report which is incorporated herein by reference.
(c) NARRATIVE DESCRIPTION OF BUSINESS
The Corporation produces finned tube heat exchange coils, air handling systems
and pumps for the construction, power generation, refrigeration, chemical
processing and
2
<PAGE>
marine defense industries; feed screws, barrels and chill rolls for the plastics
processing 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 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 5 and Note 16 on p. 16 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 for the
purchase of a major portion 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.
3
<PAGE>
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, 1996 was approximately $114,100,000
compared to a backlog of $96,800,000 at year end 1995. Most of those orders are
expected to be filled in 1997.
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 serving
refrigeration, power generation and marine defense industries and competes with
many other producers. Aerofin Corporation produces finned tube heat exchange
coils used by the commercial and industrial construction, process and utility
industries. Buffalo Air Handling Company produces standard and custom air
handling systems used in commercial and industrial buildings. Aerofin and
Buffalo Air Handling have several major competitors in each of their markets.
Union Electric Steel Corporation is considered the largest producer of forged
hardened steel rolls in the United States, which are sold to steel and aluminum
companies throughout the world. In addition to several domestic competitors,
several major European
4
<PAGE>
and Japanese manufacturers also compete in both the domestic and foreign
markets. New Castle Industries and Bimex Industries primarily produce feed
screws, barrels and chill rolls for use in the plastics processing industry and
compete with a number of small regional companies. Competition in all of the
Corporation's businesses is based on quality, service, price and delivery.
Research and Development
- ------------------------
As part of an overall strategy to develop new markets and maintain leadership
in each of the industry niches served, each of the Corporation's businesses
incur expenditures for research and development. The activities that are
undertaken are designed to develop new products, improve existing products and
processes, enhance product quality, adapt products to specific customer
requirements and reduce costs. In the aggregate, these expenditures approximate
$1,000,000 per year.
Environmental Protection Compliance Costs
- -----------------------------------------
Expenditures for environmental control matters were not material in 1996 and
such expenditures are not expected to be material in 1997.
Employees
- ---------
In December, 1996, the Corporation had 1204 active employees, of whom 388 were
sales, executive, administrative, engineering and clerical personnel.
Approximately 85% of the production and craft hourly employees are covered by
negotiated labor agreements with various unions.
5
<PAGE>
(d) FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS AND EXPORT
SALES
The Corporation's only foreign operation is a Union Electric Steel Corporation
plant located in Belgium that manufactures forged hardened steel rolls
principally for the European markets. For financial information relating to
foreign and domestic operations see Note 16 (Segment and Geographic Information)
on p. 16 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>
Company and Principal Approximate Type of
Location Use Square Footage Construction
- ----------- --------- -------------- ------------
<S> <C> <C> <C>
Aerofin Corporation Manufacturing 146,000 on Brick,
4621 Murray Place facilities and 15.3 acres concrete
Lynchburg, VA 24506 offices and steel
Bimex Industries, Inc. Manufacturing 33,500 on Metal and
319 Universal Street facilities and 7.8 acres steel
Wales, WI 53183 offices
Buffalo Air Handling Manufacturing 89,000 on Metal and
Company facilities and 19.5 acres steel
Zane Snead Drive offices
Amherst, VA 24531
Buffalo Pumps, Inc. Manufacturing 94,000 on Metal, brick
874 Oliver Street facilities and 7 acres and cement
N. Tonawanda, NY 14120 offices block
New Castle Industries, Inc. Manufacturing 81,600 on Metal and
1399 Countyline Road facilities and 18.5 acres steel
New Castle, PA 16102 offices
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
Company and Principal Approximate Type of
Location Use Square Footage Construction
- ----------- --------- -------------- ------------
<S> <C> <C> <C>
New Castle Industries, Inc. Manufacturing 31,000 Masonry
925 Industrial Street facilities 5.3 acres with steel
New Castle, PA 16102 truss roof
Union Electric Steel Corp. Manufacturing 186,000 on Metal and
Route 18 facilities 55 acres steel
Burgettstown, PA 15021
Union Electric Steel Corp. Manufacturing 153,000 on Metal and
726 Bell Street facilities, 5 acres steel
Carnegie, PA 15106 offices and plant
Union Electric Steel Corp. Manufacturing 88,000 on Metal and
U.S. Highway 30 facilities 20 acres steel
Valparaiso, IN 46383
Union Electric Steel, N.V. Manufacturing 66,000 on Concrete,
Industrie Park facilities and 15 acres metal and
B-3980 Tessenderlo offices steel
Belgium
</TABLE>
- ----------
(1) The Corporation holds properties of discontinued operations for sale in
Coraopolis, PA and Plymouth, MI.
(2) The Corporate office space is leased as are several small domestic sales
offices. Union Electric Steel also leases approximately 40,000 square feet
of manufacturing space. All of the owned facilities are adequate and
suitable for their respective purposes. There were no facilities idled
during 1996.
(3) The Corporation estimates that all of its facilities were operated within
75% to 95% of their normal capacity during 1996. Normal capacity is defined
as capacity under approximately normal conditions with allowances 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 are also taken into consideration.
7
<PAGE>
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.
A lawsuit was commenced in May, 1991 against the Corporation and its
subsidiary, Vulcan, Inc. ("Vulcan"), arising out of the filing of a petition
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 were
also defendants in the lawsuit. 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. In October,
1994, Microdot's Chapter 11 case was converted to a Chapter 7 liquidation.
In the lawsuit, 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 a 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
8
<PAGE>
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. In April,
1994 the Court issued a judgment in favor of the Corporation. Under the Court's
decision, all claims against the Corporation were denied. All claims against
Vulcan were also denied except for its liability as a general partner. Vulcan's
only asset is its interest in the partnership, which has no value, and
accordingly the judgment will not have any adverse effect on the Corporation.
In May, 1994, plaintiff appealed to the United States District Court, Northern
District of Ohio, Eastern Division. The appellate Court has not yet rendered
its decision.
The Corporation is involved in various environmental proceedings which all
involve discontinued operations. In some of those proceedings, the Corporation
has been designated as a Potentially Responsible Party ("PRP"). However, the
Corporation believes that in most instances 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. Based on the current estimate of
cleanup costs and proposed allocation of that cost among the various PRP groups,
for all environmental matters considered in the aggregate, the liability to the
Corporation would not be material.
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.
9
<PAGE>
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. 19 of the Annual
Report to Shareholders for the year ended December 31, 1996 which is
incorporated herein by reference.
ITEM 6 - SELECTED FINANCIAL DATA
The information called for by this item is set forth on p. 19 of the Annual
Report to Shareholders for the year ended December 31, 1996 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. 17 and 18 of the
Annual Report to Shareholders for the year ended December 31, 1996 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. 6 through 16 and
p. 19 of the Annual Report to Shareholders for the year ended December 31, 1996
which are incorporated herein by reference.
ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
There were none.
10
<PAGE>
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 88, Director since 1960; current term expires in 1999). He
has been Chairman of the Board of the Corporation since September 20, 1994. He
is also Chairman of the Executive Committee of the Corporation and has been 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)
Leonard M. Carroll (age 54, Director since 1996; current term expires in 1999).
He has been Managing Director of Seneca Capitol Management, Inc. (a private
investment company) since June, 1996. For more than five years before 1996, he
was President and Chief Operating Officer of Integra Financial Corporation (a
bank holding company). He is also a director of Quaker State Corporation. (3)
William D. Eberle (age 73, Director since 1982; current term expires in 1997).
He is a private investor and consultant and is Chairman of Manchester
Associates, Ltd. He is also a director of Mitchell Energy & Development Co.,
America Service Group, Fibreboard Corporation, Barry's Jewelers, Inc., Mid-
States PLC, Showscan Entertainment, Inc. and Sirrom Capital Corporation. (N)
(3)(4)
Alvin G. Keller (age 87, Director since 1961; current term expires in 1998). He
is a private investor who, prior to his retirement, served as a Vice President
of Mellon Bank, N.A. (2)(3)(4)
Robert A. Paul (age 59, Director since 1970; current term expires in 1997). He
has been President and Chief Executive Officer of the Corporation since
September 20, 1994. For more than five years before 1994, he was President and
Chief Operating Officer of the Corporation. He is also an officer and director
of The Louis Berkman Company and director of National City Corporation. (N)(2)
Carl H. Pforzheimer, III (age 60, Director since 1982; current term expires in
1999). 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)
11
<PAGE>
(a) IDENTIFICATION OF DIRECTORS (cont')
Name, Age, Tenure as a Director, Position with the Corporation (1), Principal
Occupation, Business Experience Past Five Years, and Other Directorships in
Public Companies
- -----------------------------------------------------------------------------
Ernest G. Siddons (age 63, Director since 1981; current term expires in 1998).
He has been Executive Vice President and Chief Operating Officer of the
Corporation since September 20, 1994. For more than five years before 1994, he
was Senior Vice President Finance and Treasurer of the Corporation. Since
September, 1996 he has been President of Union Electric Steel Corporation, a
subsidiary of the Corporation. (2)
____________
(N) Nominee for election at the April 24, 1997 Annual Meeting of Shareholders.
(1) Officers serve at the discretion of the Board of Directors.
(2) Member of Executive Committee.
(3) Member of Audit Committee.
(4) Member of Salary Committee.
(b) IDENTIFICATION OF EXECUTIVE OFFICERS
In addition to 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 41). She has been Secretary of the Corporation for more than
five years and Manager of Real Property and Environmental Control since January,
1995.
Robert J. Reilly (age 40). Vice President Finance and Treasurer of the
Corporation since January, 1997. He was Treasurer of the Corporation since
September, 1994 and Controller of the Corporation since January, 1994. For five
years before September, 1994 he was Assistant Treasurer.
Robert F. Schultz (age 49). He has been Vice President Industrial Relations and
Senior Counsel of the Corporation for more than five years.
- ---------------
(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.
12
<PAGE>
(c) IDENTIFICATION OF CERTAIN SIGNIFICANT EMPLOYEES
None.
(d) FAMILY RELATIONSHIPS
Louis Berkman is the father-in-law of Robert A. Paul. There are no other
family relationships among the Directors and Officers.
(e) SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Leonard M. Carroll was elected as a Director by the Board of Directors in
July, 1996. His initial filing on Form 3 under Section 16 of the Securities
Exchange Act, which was filed in August, 1996, was not filed on a timely basis.
At that time, Mr. Carroll owned no shares of the Corporation's Common Stock. He
subsequently acquired 1,000 shares and filed a timely Form 4.
13
<PAGE>
ITEM 11 - EXECUTIVE COMPENSATION
The following table sets forth certain information as to the total
remuneration received for the past three years by the four most highly
compensated executive officers of the Corporation, including the Chief Executive
Officer (the "Named Executive Officers"):
SUMMARY COMPENSATION TABLE
Annual Compensation
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
(a) (b) (c) (d) (i)
Name and All Other
Principal Salary Bonus Compensation
Position Year ($) ($) ($)
- --------- ----- ------- ------- ------------
<S> <C> <C> <C> <C>
Louis Berkman 1996 290,000 67,000
Chairman of the Board 1995 250,000 42,500
and Executive Committee 1994 118,750 15,000
Robert A. Paul 1996 290,000 67,000
President and Chief 1995 250,000 42,500
Executive Officer 1994 236,500 15,000
Ernest G. Siddons 1996 260,000 60,000 5,520(1)
Executive Vice President 1995 225,000 38,250 5,064(1)
and Chief Operating 1994 216,750 13,500 4,359(1)
Officer
Robert F. Schultz 1996 130,875 16,500
Vice President 1995 127,500 12,500
Industrial Relations 1994 122,500 7,500
and Senior Counsel
</TABLE>
- ---------------
(1) Value of the term portion of a split dollar life insurance policy. The
Corporation remains entitled to the cash surrender value of such policy.
(b) COMPENSATION PURSUANT TO PLANS
The Corporation has a tax qualified retirement plan (the "Plan") applicable to
the Executive Officers, to which the Corporation makes annual contributions, as
required, in amounts determined by the Plan's actuaries. The Plan does not have
an offset for Social
14
<PAGE>
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. Federal law requires that any active employee start receiving a
pension no later than April 1 following the calendar year in which the age 70-
1/2 is reached. Louis Berkman is currently receiving $3,754 a month pursuant to
the Plan. As an active employee, Mr. Berkman continues to receive credit for
additional service rendered after age 70-1/2.
The Corporation adopted a Supplemental Executive Retirement Plan (SERP) in
1988 (amended and restated in 1996) for all officers listed in the compensation
table, except Louis Berkman, and a certain key employee, 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.
15
<PAGE>
The following shows the estimated annual pension that would be payable,
without offset, under the Plan and the SERP to the individuals named in the
compensation table assuming continued employment to retirement at age 65, but no
change in the level of compensation shown in such table:
<TABLE>
<S> <C>
Louis Berkman (1)
Robert A. Paul $178,500
Ernest G. Siddons $154,325
Robert F. Schultz $ 73,688
- -----------
</TABLE>
(1) Mr. Berkman is currently receiving a pension pursuant to the Plan as
described above.
(c) COMPENSATION OF DIRECTORS
In 1996, each Director who was not employed by the Corporation received $2,000
for each Board meeting attended and $500 for each Committee meeting attended.
Directors received one-half of those amounts if not in attendance or if
participation was by telephonic connection.
(d) TERMINATION OF EMPLOYMENT AND CHANGE OF CONTROL ARRANGEMENTS
The Chairman, President, and Executive Vice President 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 remaining officer named in the compensation table and
a certain key employee have two year contracts providing for three times their
annual
16
<PAGE>
compensation in the event their employment is 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 1996 was comprised
of three Directors: William D. Eberle, who is Chairman of the Committee, Louis
Berkman and Alvin G. Keller.
Louis Berkman is Chairman of the Board of Directors and the Executive
Committee. He is also the President and a Director of The Louis Berkman Company.
The Corporation's President and Chief Executive Officer is also an officer and
director 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 Item 13 "Certain
Relationships and Related Transactions."
17
<PAGE>
(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 of
Directors after a recommendation by the Salary Committee. Salaries for
executive officers below the level of $150,000 are set by the Chairman,
President and Executive Vice President of the Corporation.
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. 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 benefiting the
long-term interest of shareholders.
In December, 1995, the Salary Committee reviewed and approved salary increases
and an incentive program for 1996 covering Louis Berkman, Robert A. Paul and
Ernest G. Siddons ("participants"). Incentive payments were to be determined,
based exclusively on the Corporation's 1996 income from operations performance
as compared to the Corporation's business plan.
18
<PAGE>
These payments were to be limited to 30% of base salary of participants. In
1996, the Corporation exceeded the business plan and as a result the
participants earned incentives of $67,000, $67,000 and $60,000 respectively.
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
19
<PAGE>
(g) STOCK PERFORMANCE GRAPH
Comparative Five-Year Total Returns*
Ampco-Pittsburgh ("AP"), S&P 500, Peer Group
(Performance results through 12/31/96)
[GRAPH APPEARS HERE]
COMPARISON OF FIVE YEAR CUMULATIVE RETURN
AMONG AP, S&P 500 INDEX AND PEER GROUP INDEX
<TABLE>
<CAPTION>
Measurement period S&P 500 Peer Group
(Fiscal Year Covered) AP Index Index
---- ------ ----------
<S> <C> <C> <C>
Measurement PT-
12/31/91 $100.00 $100.00 $100.00
FYE 12/31/92 121.12 107.79 116.84
FYE 12/31/93 98.10 118.66 159.64
FYE 12/31/94 137.69 120.56 142.72
FYE 12/31/95 151.51 165.78 115.70
FYE 12/31/96 171.40 204.32 102.55
</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.
20
<PAGE>
ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
(a) SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
As of March 6, 1997, Louis Berkman owned directly 213,888 shares (2.23%) 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
2,126,089 shares (22.2%) of the Common Stock of the Corporation. Louis Berkman,
an officer and director of The Louis Berkman Company, owns directly 62.90% of
its common stock. Robert A. Paul, an officer and director of The Louis Berkman
Company, disclaims beneficial ownership of the 18.93% of its common stock owned
by his wife. Louis Berkman and Robert A. Paul are trustees of The Louis and
Sandra Berkman Foundation and disclaim beneficial ownership of the 1,266 shares
of the Corporation's Common Stock held by such Foundation.
The Corporation has received three Schedules 13G filed with the Securities
and Exchange Commission disclosing that as of December 31, 1996 Dimensional Fund
Advisors Inc., 1299 Ocean Avenue, 11th Floor, Santa Monica, CA 90401 owned
603,700 shares or 6.3% (all of which shares are held in portfolios of various
investment vehicles for qualified employee benefit plans of which Dimensional
Fund Advisors serves as investment manager); that Long Term Investment Trust
(F.K.A. AT&T Master Pension Trust), through The Northern Trust Company, as
Trustee of the Long Term Investment Trust, 50 S. LaSalle Street, Chicago, IL
60675, owned 667,400 shares or 6.97%; and that Norwest Corporation, Sixth &
Marquette, Minneapolis, MN 55479 (in various fiduciary and agency capacities and
including the Long Term Investment Trust shares described
21
<PAGE>
above) owned 1,083,716 shares or 11.3%. On November 11, 1996, Gabelli Funds,
Inc. and affiliates, Corporate Center, Rye, NY 10580, filed an amendment to its
Schedule 13D showing they owned 1,799,700 shares or 18.79%.
(b) SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth as of March 6, 1997 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:
<TABLE>
<CAPTION>
Name of Amount and nature of Percent
beneficial owner beneficial ownership of class
---------------- -------------------- --------
<S> <C> <C>
Louis Berkman 2,341,243(1)(2) 24.4
Robert A. Paul 57,922(2)(3) .6
Alvin G. Keller 9,753(4) .1
Carl H. Pforzheimer, III 2,733(5) *
Ernest G. Siddons 1,833(6) *
Leonard M. Carroll 1,000 *
William D. Eberle 200 *
Robert F. Schultz 200(6) *
Directors and Executive
Officers as a group
(10 persons) 2,413,618(7) 25.2
</TABLE>
- ---------------
*less than .1%
(1) Includes 213,888 shares owned directly, 2,126,089 shares owned by The
Louis Berkman Company and 1,266 shares held by The Louis and Sandra Berkman
Foundation of which Louis Berkman and Robert A. Paul are trustees, in which
shares Mr. Berkman disclaims beneficial ownership.
(2) The Louis Berkman Company owns beneficially and of record 2,126,089 shares
of the Corporation's Common Stock (22.2%). Louis Berkman is an officer and
director of The Louis Berkman Company and owns directly 62.90% of its
common shares. Robert A. Paul, an officer and director of The Louis
Berkman Company, disclaims beneficial ownership of the 18.93% of its common
stock owned by his
22
<PAGE>
wife. The number of shares shown in the table for Robert A. Paul does not
include any shares held by The Louis Berkman Company.
(3) Includes 42,889 shares owned directly and the following shares in which he
disclaims beneficial ownership: 13,767 shares owned by his wife and 1,266
shares held by The Louis and Sandra Berkman Foundation of which Robert A.
Paul and Louis Berkman are Trustees.
(4) 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.
(5) Includes 1,000 shares owned directly, 1,600 shares held by a trust of which
he is a trustee and principal beneficiary, and 133 shares held by his
daughter, in which shares he disclaims beneficial ownership.
(6) The shares are owned jointly with his wife.
(7) 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 1996 the Corporation bought industrial supplies from The Louis Berkman
Company in transactions in the ordinary course of business amounting to
approximately $1,440,915. Additionally, The Louis Berkman Company paid the
Corporation $155,000 for certain administrative services. Louis Berkman and
Robert A. Paul are officers and
23
<PAGE>
directors, and Louis Berkman is a shareholder, in that company. These
transactions and services were at prices generally available from outside
sources. Transactions between the parties will take place in 1997.
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 the Corporation's interest in two of
the 50/50 partnerships. At December 31, 1996, there were promissory notes
outstanding from certain of the partnerships to subsidiaries of the Corporation
totaling $635,000. These notes are due in 1998.
24
<PAGE>
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 thereon of
Price Waterhouse LLP, appearing on pp. 6 through 16 of the accompanying Annual
Report are incorporated by reference in this Form 10-K Annual Report.
2. Financial Statement Schedules - None
3. Exhibits
Exhibit No.
(3) Articles of Incorporation and By-laws
a. Articles of Incorporation
Incorporated by reference to the Quarterly Report on Form 10-Q for the
quarter ended March 31, 1983; 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. By-laws
Incorporated by reference to the Quarterly Report on Form 10-Q for the
quarter ended September 30, 1994 and the Quarterly Report on Form 10-Q
for the quarter ended March 31, 1996.
(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.
25
<PAGE>
3. Exhibits (cont')
- --------------------
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 and the Quarterly Report on
Form 10-Q for quarter ended September 30, 1995.
(10) Material Contracts
a. 1988 Supplemental Executive Retirement Plan
Incorporated by reference to the Quarterly Report on Form 10-Q
for the quarter ended March 31, 1996.
b. 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; the Quarterly Report on
Form 10-Q for the quarter ended September 30, 1994 and the
Annual Report on Form 10-K for fiscal year ended December 31,
1994.
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.
e. 1997 Stock Option Plan
Incorporated by reference to the Proxy Statement dated March 14,
1997.
(13) Annual Report to Shareholders for the fiscal year ended December 31, 1996
(21) Significant Subsidiaries
(27) Financial Data Schedule
26
<PAGE>
(b) Reports on Form 8-K
-------------------
No reports on Form 8-K were filed in the fourth quarter of 1996.
Note: With the exception of the Corporation's 1996 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.
27
<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 17, 1997
By s/Louis Berkman
----------------------------------------
Director, Chairman of the Board -
Louis Berkman
By s/Robert A. Paul
----------------------------------------
Director, President and Chief Executive
Officer - Robert A. Paul
By s/Ernest G. Siddons
----------------------------------------
Director, Executive Vice President
and Chief Operating Officer -
Ernest G. Siddons
By s/Robert J. Reilly
----------------------------------------
Vice President Finance and Treasurer
(Principal Financial Officer) - Robert J.
Reilly
28
<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
registrant, in their capacities as Directors, as of the date indicated.
March 17, 1997
By s/Leonard M. Carroll
------------------------------------
Leonard M. Carroll
By s/William D. Eberle
----------------------------------------
William D. Eberle
By s/Alvin G. Keller
----------------------------------------
Alvin G. Keller
By s/Carl H. Pforzheimer, III
----------------------------------------
Carl H. Pforzheimer, III
29
<PAGE>
Exhibit 13
ampco pittsburgh
- --------------------------------------------------------------------------------
1996 ANNUAL REPORT
<PAGE>
To Our Shareholders------------------------------------------------------------
The results achieved in 1996 were very gratifying. The highlights for the year
include:
. A twenty-seven percent improvement in operating income to $18,068,000
and net income of $12,390,000 -- the best operating performance in
more than a decade.
. The expansion of facilities at Union Electric Steel has commenced.
. Our financial strength has increased as cash holdings at year end stood
at $25,510,000.
OPERATIONS
A healthy domestic economy and continued growth in export business resulted in
improved sales and earnings at most operations. For Union Electric Steel, 1996
marked the second consecutive year in which records were achieved for sales and
year-end backlog. Their continued success in capturing foreign business has
resulted in over fifty percent of roll sales being to customers outside of the
U.S. A capital program to more efficiently meet the current high level of
demand was embarked on during the year and will be completed by the end of
1997.
The Corporation's Aerofin coil operation achieved record sales and earnings in
1996. Strong demand from the general industrial market and power generation
industries, together with improved margins, were key contributors.
Buffalo Pumps also enjoyed an outstanding year as its commercial business,
particularly the refrigeration and lube oil markets, continued to be strong.
Although defense spending is slowing, orders from the U.S. Navy were higher
than in recent years.
Sales and earnings at New Castle Industries, which supplies machinery
components to the plastics processing industry, were disappointing and
reflective of a slowdown in that market. Shipments to original equipment
manufacturers were particularly depressed; however, demand from plastic
processors is expected to improve.
Buffalo Air Handling performed reasonably in 1996. Although price competition
continues to be severe, the operation expanded its sales organization in order
to target additional sales volume.
FINANCIAL
Sales in 1996 were $162,403,000 compared to sales in 1995 of $143,785,000. The
full year inclusion of the 1995 acquisitions added approximately $10,500,000
to total sales while other operations increased their sales overall by 6%.
Operating income improved by 27% in 1996, due both to sales volume growth and
better margins, to $18,068,000 compared to $14,176,000 in the prior year. The
Corporation had net income of $12,390,000 in 1996, or $1.29 per share,
compared to net income of $9,050,000 in 1995, or $.94 per share. Net income
for 1996 includes investment gains of $.05 per share.
The Corporation further improved its already strong financial position as cash
holdings increased by $9,957,000 to end the year at $25,510,000. Long-term,
low interest rate industrial revenue bonds totalling $11,236,000 were issued
to finance a portion of the Union Electric Steel expansion. At year end,
$9,767,000 of these funds were unexpended and reflected as a noncurrent asset
on the balance sheet.
In recognition of the improved operating income trend and 1996 earnings in
particular, an additional year-end dividend of $.10 per share and an increase
in the regular quarterly dividend from $.025 to $.06 per share, were declared
in January. There will not be an additional year-end dividend for 1997.
OUTLOOK
The performance of the last several years has been encouraging. As 1997
begins, we are focusing on investment in plant and equipment for each of our
businesses to maintain their position as market and technological leaders. It
is our objective to continue our global market penetration providing that our
competitiveness is not significantly impacted by the strength of the dollar.
In 1997, the Corporation will continue to pursue potential acquisition
candidates both in related industries and other manufacturing niche businesses.
We thank our employees, customers, shareholders and suppliers for their
support. Together we are building a stronger Ampco-Pittsburgh for the future.
/s/ Louis Berkman
Louis Berkman
Chairman of the Board
/s/ Robert A. Paul
Robert A. Paul
President and
Chief Executive Officer
/s/ Ernest G. Siddons
Ernest G. Siddons
Executive Vice President and
Chief Operating Officer
1
<PAGE>
Investing In The Future
Ampco-Pittsburgh Corporation is committed to the highest standards of product
quality, service and leadership in each of the industry niches that it serves.
In order to meet quality standards, improve efficiency, develop new products
and combat domestic and international competition, the corporation embarked
on a capital expenditure program during the past year which, by the end of
1997, will approach a total of twenty-five million dollars. The following
pages contain thumbnail sketches of each company and their products, together
with some of the steps being taken to meet the Corporate commitment.
[Photo of Structural steel being erected for a building addition to Union
Electric Steel's melting and forging facility in Burgettstown, Pennsylvania]
2
<PAGE>
- --------------------------------------------------------- Union Electric Steel
Union Electric Steel is the Corporation's largest business and produces forged
hardened steel rolls for the ferrous and non-ferrous material finishing
industries. Its rolls are sold principally to steel and aluminum producers,
which supply strip and sheet products to the automotive, appliance, aircraft,
packaging and construction markets worldwide.
[Photo of a steel ingot being transferred from a forging furnace to the
forge press.]
The company has its headquarters in Carnegie, Pennsylvania, also the site of
the largest of three finishing plants. Other finishing plants are in
Valparaiso, Indiana and Tessenderlo, Belgium. Melting, forging and some
machining operations are located in Burgettstown, Pennsylvania and an
electroslag remelt facility is in Erie, Pennsylvania. In addition to being the
market leader in North America and a significant producer of forged hardened
steel rolls in Western Europe, Union Electric Steel has continued to increase
its participation in global markets. In 1996, substantial shipments were
made to South Korea, India, Japan, Taiwan, Indonesia and the Philippines.
As part of its capital program the company expanded its Valparaiso plant and
installed heat treating equipment and finishing lathes. Union Electric also
embarked on a major building expansion of its melting and forging facility in
Burgettstown. Equipment additions there will include an enlarged electric arc
furnace and additional forge and annealing furnaces to allow for more efficient
handling of larger backup rolls. Finally, the Carnegie plant's capacity will
be increased by the end of 1997 with the installation of additional finishing
lathes.
[Photo of a work roll being finish machined on a
newly-installed lathe at the Carnegie plant.]
3
<PAGE>
New Castle Industries . Buffalo ---------------------------------------------
From its Feed Screws Division in New Castle, Pennsylvania and Bimex operation
in Wales, Wisconsin, New Castle Industries offers an integrated product line of
extrusion and injection feed screws and bimetallic barrels for the plastics
processing industry.
New Castle also engineers, builds and retrofits extrusion processing machinery
and manufactures hard chrome chill rolls for the paper, glass, film and
plastics industries. It recently secured a patent for its
ContraBend(R) chill roll, permitting plastic sheets to be processed
perfectly flat.
Following the acquisition of Bimex in late 1995, that unit's sales force has
been fully integrated into the organization, giving customers expert technical
assistance for both screws and barrels. To improve efficiency, New Castle is
installing a new vertical machining center, which will significantly reduce
milling time.
Buffalo Pumps has been producing centrifugal pumps from the same location in
North Tonawanda, New York, for more than a century. The company has a
reputation for quality with customers in the power generation, refrigeration,
lube oil and marine defense markets.
During 1996, Buffalo Pumps developed an updated line of pumps for the
refrigeration market and added a second horizontal boring mill to provide
larger pump capability and reduce the need for outsourcing. Buffalo Pumps is
also currently in the process of a major upgrade to its test and research
facility to support continued new product development.
[Photo of three mirror finished ContraBend(R) chill rolls installed on
a customer's plastic sheet roll stand.]
[Photo of a large feed screw at the final polish stage prior to shipment.]
[Photo of the new horizontal boring mill machining the housing for a large
double suction industrial pump.]
[Photo of a CNC lathe machining the casing of a leak proof Can-O-Matic(R)
pump for use in refrigeration applications.]
4
<PAGE>
- ----------------------------------------------Buffalo Air Handling . Aerofin
Buffalo Air Handling produces large standard and custom air handling systems
at its facility in Amherst, Virginia. These systems control indoor air quality
for such buildings as hospitals, manufacturing plants, universities and
high-rise office structures.
During 1996, the company successfully installed a new computer system which
will improve production planning and order entry. The computer-aided design
system was also upgraded. Delivery of a new press brake will soon be taken,
which will add to product quality.
Aerofin, located in Lynchburg, Virginia, manufactures the industry's most
extensive line of heat exchange coils for such installations as nuclear and
conventional power plants, pulp and paper mills and municipal waste treatment
centers. The company also provides coils for use in heating, ventilating and
air conditioning systems.
Aerofin continued its commitment to product quality and productivity in 1996
by making a major investment in machinery. The company took delivery of a
second vertical machining center and ordered a new press brake. Aerofin also
has on order a new and uniquely-designed finning machine, which will be
delivered by the end of 1997.
[Photo of a large air handling unit divided into sections to facilitate a
roof mounted installation at a pharmaceutical plant.]
[Photo of one of 45 air handling units designed to maintain critical
temperatures and air flow in a photographic film manufacturing facility.]
[Photo of a finished heating coil for use in the boiler house of a pulp and
paper mill.]
[Photo of the recently installed CNC vertical machining center drilling a
stainless steel header for cooling coils to be used in a nuclear power plant.]
5
<PAGE>
FINANCIAL REPORT
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Consolidated Balance Sheets........................ 7
Consolidated Statements of Income.................. 8
Consolidated Statements of Retained
Earnings (Deficit)................................ 8
Consolidated Statements of Cash Flows.............. 9
Notes to Consolidated Financial Statements......... 10
Quarterly Information.............................. 16
Management's Discussion and Analysis
of Financial Condition
and Results of Operations......................... 17
Five-Year Summary of Selected Financial Data....... 19
</TABLE>
REPORT OF INDEPENDENT ACCOUNTANTS
PRICE WATERHOUSE LLP
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, of
retained earnings and of cash flows present fairly, in all
material respects, the financial position of Ampco-Pittsburgh
Corporation and its subsidiaries at December 31, 1996 and
1995, and the results of their operations and their cash
flows for each of the three years in the period ended
December 31, 1996, 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.
/s/ Price Waterhouse LLP
600 Grant Street
Pittsburgh, Pennsylvania 15219
January 30, 1997
6
<PAGE>
CONSOLIDATED BALANCE SHEETS
<TABLE>
DECEMBER 31,
1996 1995
---- ----
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents...................... $ 25,510,231 $ 15,553,263
Receivables, less allowance for doubtful
accounts of
$629,362 in 1996 and $633,036 in 1995......... 32,043,626 28,734,492
Inventories.................................... 33,223,110 33,509,644
Investments available for sale................. 4,409,320 6,969,878
Deferred income taxes.......................... 1,901,383 5,530,994
Other.......................................... 2,155,397 1,663,337
------------ ------------
Total current assets......................... 99,243,067 91,961,608
Property, plant and equipment, at cost:
Land and land improvements..................... 4,381,980 4,383,787
Buildings...................................... 20,480,294 18,803,086
Machinery and equipment........................ 93,601,088 88,952,660
------------ ------------
118,463,362 112,139,533
Accumulated depreciation....................... (61,134,960) (56,987,783)
------------ ------------
Net property, plant and equipment............ 57,328,402 55,151,750
Unexpended industrial revenue bond proceeds...... 9,766,938 --
Prepaid pension.................................. 13,989,592 14,296,588
Other noncurrent assets.......................... 7,842,345 10,013,744
------------ ------------
$188,170,344 $171,423,690
============ ============
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable............................... $ 8,631,404 $ 8,279,435
Accrued payrolls and employee benefits......... 7,819,253 7,878,148
Other.......................................... 9,718,430 8,861,133
------------ ------------
Total current liabilities.................... 26,169,087 25,018,716
Employee benefit obligations..................... 17,122,983 18,621,697
Industrial revenue bond debt..................... 12,586,000 1,350,000
Deferred income taxes............................ 9,944,670 10,929,725
Other noncurrent liabilities..................... 2,680,581 3,368,503
------------ ------------
Total liabilities............................ 68,503,321 59,288,641
Shareholders' Equity:
Preference stock--no par value; authorized
3,000,000 shares;
none issued................................... -- --
Common stock--par value $1; authorized
20,000,000 shares;
issued and outstanding 9,577,621 shares....... 9,577,621 9,577,621
Additional paid-in capital..................... 102,555,980 102,555,980
Retained earnings (deficit).................... 2,648,036 (7,491,711)
------------ ------------
114,781,637 104,641,890
Cumulative translation and other adjustments... 2,364,607 3,234,345
Unrealized holding gains on securities......... 2,520,779 4,258,814
------------ ------------
Total shareholders' equity................... 119,667,023 112,135,049
------------ ------------
$188,170,344 $171,423,690
============ ============
</TABLE>
See Notes to Consolidated Financial Statements.
7
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Net sales........................... $162,402,805 $143,785,139 $113,836,181
------------ ------------ ------------
Operating costs and expenses:
Cost of products sold (excluding
depreciation).................... 113,933,520 103,103,255 82,956,858
Selling and administrative........ 24,248,794 20,822,760 17,268,354
Depreciation...................... 6,152,433 5,683,123 5,251,264
------------ ------------ ------------
144,334,747 129,609,138 105,476,476
------------ ------------ ------------
Income from operations.............. 18,068,058 14,176,001 8,359,705
Other income (expense):
Gain on sale of investments....... 518,589 -- 2,554,294
Other income (expense)--net....... 183,841 (200,715) (721,522)
------------ ------------ ------------
Income from continuing operations
before taxes on income............. 18,770,488 13,975,286 10,192,477
Provision for taxes on income....... 6,380,000 4,925,000 3,870,000
------------ ------------ ------------
Income from continuing operations... 12,390,488 9,050,286 6,322,477
Discontinued operations:
Gain on disposal, net of an income
tax provision of $931,000........ -- -- 1,728,251
------------ ------------ ------------
Net income.......................... $ 12,390,488 $ 9,050,286 $ 8,050,728
============ ============ ============
Net income per common share:
Continuing operations............. $ 1.29 $ .94 $ .66
Discontinued operations........... -- -- .18
------------ ------------ ------------
Net income.......................... $ 1.29 $ .94 $ .84
============ ============ ============
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,
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Retained earnings (deficit) at
beginning of year.................. $(7,491,711) $(15,104,987) $(22,197,466)
Net income.......................... 12,390,488 9,050,286 8,050,728
----------- ------------ ------------
4,898,777 (6,054,701) (14,146,738)
Cash dividends declared, $.235 per
share in 1996,
$.15 per share in 1995 and $.10 per
share in 1994...................... (2,250,741) (1,437,010) (958,249)
----------- ------------ ------------
Retained earnings (deficit) at end
of year............................ $ 2,648,036 $ (7,491,711) $(15,104,987)
=========== ============ ============
</TABLE>
See Notes to Consolidated Financial Statements.
8
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities:
Net income............................ $12,390,488 $ 9,050,286 $ 8,050,728
Adjustments to reconcile net income to
net cash flows from operating
activities:
Depreciation and amortization....... 6,152,433 5,683,123 5,251,264
Gain on sale of investments......... (518,589) -- (2,554,294)
Gain on disposal of discontinued
operations......................... -- -- (2,659,251)
Deferred income taxes............... 3,787,000 3,328,000 3,983,000
Other--net.......................... 649,415 324,772 256,081
(Increase) decrease in assets:
Accounts receivable............... (4,096,165) 6,147 (2,977,948)
Inventories....................... (13,434) (808,997) (1,699,607)
Other assets...................... 1,258,330 1,621,250 2,162,319
Increase (decrease) in liabilities:
Accounts payable.................. 607,939 137,821 533,954
Accrued payrolls and employee
benefits......................... 159,337 (161,635) 199,996
Other liabilities................. (2,533,659) (1,537,846) (2,764,713)
----------- ----------- -----------
Net cash flows from operating
activities........................... 17,843,095 17,642,921 7,781,529
----------- ----------- -----------
Cash flows from investing activities:
Purchases of property, plant and
equipment............................ (8,901,966) (4,636,779) (4,001,704)
Unexpended industrial revenue bond
proceeds............................. (9,766,938) -- --
Business acquisitions................. -- (16,000,000) --
Proceeds from sales of investments.... 1,101,939 -- 4,309,579
Proceeds from disposals of
discontinued operations.............. -- -- 3,278,070
----------- ----------- -----------
Net cash flows from investing
activities........................... (17,566,965) (20,636,779) 3,585,945
----------- ----------- -----------
Cash flows from financing activities:
Increase (decrease) in industrial
revenue bond debt.................... 11,236,000 -- (783,333)
Dividends paid........................ (1,436,643) (958,250) (958,250)
----------- ----------- -----------
Net cash flows from financing
activities........................... 9,799,357 (958,250) (1,741,583)
----------- ----------- -----------
Effect of exchange rate changes on cash. (118,519) 176,450 152,610
----------- ----------- -----------
Net increase (decrease) in cash and cash
equivalents............................ 9,956,968 (3,775,658) 9,778,501
Cash and cash equivalents at beginning
of year................................ 15,553,263 19,328,921 9,550,420
----------- ----------- -----------
Cash and cash equivalents at end of
year................................... $25,510,231 $15,553,263 $19,328,921
=========== =========== ===========
Supplemental information:
Interest payments..................... $ 287,887 $ 197,897 $ 190,362
Income tax payments................... 3,298,598 538,734 1,088,145
</TABLE>
See Notes to Consolidated Financial Statements.
9
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DESCRIPTION OF BUSINESS
Ampco-Pittsburgh Corporation is in one business segment that manufactures and
sells principally custom engineered equipment. The Corporation's operating
businesses, major products and principal markets are: Union Electric Steel--
forged hardened steel rolls for steel and aluminum producers; New Castle
Industries-- feed screws, barrels and chill rolls for the plastics processing
industry; Aerofin--finned tube heat exchange coils; Buffalo Air Handling--air
handling systems; and Buffalo Pumps--centrifugal pumps, all of which sell to a
variety of commercial and industrial users. Based on sales, Union Electric
Steel is the largest company with the other operating units approximately equal
to each other in size.
NOTE 1--ACCOUNTING POLICIES:
Ampco-Pittsburgh Corporation's accounting policies conform to generally
accepted accounting principles. The preparation of financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
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 1996 presentation.
CONSOLIDATION
All subsidiaries are wholly owned and are included in the consolidated
financial statements. Intercompany accounts and transactions are eliminated.
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.
INVESTMENTS AVAILABLE FOR SALE
Investments classified as available for sale are reported at market value, with
the unrealized gains and losses, net of tax, reported as a separate component
of shareholders' equity. Realized gains and losses on sales of investments and
declines in value judged to be other than temporary are included in operating
results.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are recorded at cost with depreciation computed
on the straight-line method over the following estimated useful lives: land
improvements--15 to 20 years, buildings--25 to 45 years and machinery and
equipment 5 to 20 years. Expenditures that extend economic useful lives are
capitalized. Gains or losses are recognized on retirements or disposals.
Routine maintenance is charged to operating results.
FOREIGN CURRENCY TRANSLATION
Assets and liabilities of the Corporation's 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.
TAXES ON INCOME
Income taxes are recognized during the year in which transactions enter into
the determination of financial statement income. Deferred tax assets and
liabilities are recognized for the future tax consequences of temporary
differences between the book carrying amounts and the tax basis of assets and
liabilities.
EARNINGS PER SHARE
Net income per common share is computed on the basis of the weighted average
number of shares of stock outstanding during each period.
NOTE 2--ACQUISITIONS:
In May, 1995 the Corporation acquired Buffalo Air Handling Company located in
Amherst, VA ("Buffalo") for $12,200,000 in cash. Buffalo is a manufacturer of
large custom air handling systems for industrial and commercial customers. The
acquisition was accounted for as a purchase transaction. Accordingly, the
purchase price was allocated to the net assets acquired based upon their
estimated fair market values. The excess of the purchase price over the
estimated fair value of the tangible net assets acquired amounted to
approximately $3,500,000, which has been accounted for as goodwill and is being
amortized over thirty years
10
<PAGE>
NOTE 2--ACQUISITIONS (CONTINUED):
using the straight-line method. The results of operations of Buffalo from May
1, 1995 have been included in the consolidated financial statements.
The 1994 consolidated results of operations, on a pro forma basis as though
Buffalo had been acquired as of January 1, 1994, are as follows (unaudited):
net sales--$133,658,000; net income--$8,639,000 and net income per share--$.90.
The proforma 1995 results are not materially different from the reported
amounts. The pro forma financial information is not necessarily indicative
either of results of operations that would have occurred had the purchase been
made at the beginning of the period, or of future results of operations of the
combined companies. Net income for 1994 includes gains from investments.
In October, 1995 the Corporation acquired the business of Bimex Corporation, a
manufacturer of bimetallic liners and barrels for the plastics processing
industry, located in Wales, WI. The acquisition, for approximately $3,800,000
cash, was accounted for as a purchase transaction. Accordingly, the purchase
price was allocated to the net assets acquired based upon their estimated fair
market values. The results of operations of Bimex from October 1, 1995 have
been included in the consolidated financial statements. The results of
operations on a pro forma basis are not presented as the effects are not
material.
NOTE 3--INVESTMENTS:
The Corporation's stock interest in Northwestern Steel and Wire Company
(Northwestern), a NASDAQ-traded producer of structural steel components and rod
and wire products, is included in Investments Available for Sale. These
securities are available for sale, however, management believes that the market
currently undervalues the stock. A partial sale of Northwestern stock in 1994
resulted in a gain of $1,728,000 (net of deferred taxes of $931,000).
In connection with the sale of other investments, the Corporation recognized
gains of $519,000 in 1996 and $2,554,000 in 1994.
NOTE 4--INVENTORIES:
<TABLE>
<CAPTION>
(in thousands)
1996 1995
---- ----
<S> <C> <C>
Raw materials................................................... $ 6,384 $ 5,603
Work-in-process................................................. 20,945 21,327
Finished goods.................................................. 3,886 4,804
Supplies........................................................ 2,008 1,776
------- -------
$33,223 $33,510
======= =======
</TABLE>
The carrying amount of inventories valued on the LIFO method approximates
current cost at December 31, 1996 and 1995. Approximately 85% of the inventory
was valued using the LIFO method in 1996 and 86% in 1995.
NOTE 5--DISCONTINUED OPERATIONS:
Included on the Corporation's balance sheet are liabilities associated with
businesses sold or discontinued in previous years. These reserves are primarily
for retiree health benefits and workers' compensation claims. Payment in
respect of retiree benefits and workers' compensation is expected to be made
over an extended number of years.
NOTE 6--BORROWING ARRANGEMENTS:
The Corporation maintains a revolving credit agreement (RCA) which provides for
a bank commitment of up to $7,500,000 expiring in September 1998. In addition,
the Corporation maintains short-term lines of credit of approximately
$7,000,000. There were no bank borrowings outstanding at either December 31,
1996 or 1995, with only minimal line of credit borrowings during 1996.
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, 1996.
During the third quarter of 1996, the Corporation completed the sale of two
series of tax-exempt, long-term Industrial Revenue Bonds totalling $11,236,000.
The presently unexpended proceeds of this debt, incurred for the purpose of
financing expansion and equipment at Union Electric Steel's Pennsylvania
facilities, are presented as a non-current asset on the balance sheet. As
required by the Trust Indenture Agreement, these funds have been invested in
liquid, highly-rated securities, and are carried at cost which approximates
market. The terms of the bond issues are twenty-four and thirty years, with
principal payable at maturity. Interest on these bonds, and a previous tax-
exempt issue for $1,350,000 which is due in 2002, are at floating rates which
averaged 3.75% during the year.
11
<PAGE>
NOTE 7--OPERATING LEASES:
The Corporation leases office space, manufacturing space and certain production
machinery and computer equipment. Operating lease payments were $1,745,000 in
1996, $1,885,000 in 1995 and $1,818,000 in 1994. Operating lease payments for
subsequent years are as follows:
<TABLE>
<S> <C> <C> <C>
1997 $1,725,000 2000 $ 851,000
1998 1,617,000 2001 698,000
1999 956,000 Thereafter 1,888,000
</TABLE>
NOTE 8--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.
For its pension plans covered by the Employee Retirement Income Security Act of
1974 (ERISA), the Corporation's policy is to fund at least the minimum
actuarially computed annual contribution required under ERISA.
The net pension cost for the Corporate-sponsored pension plans consists of the
following components:
<TABLE>
<CAPTION>
(in thousands)
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Service cost........................................ $ 1,143 $ 889 $ 890
Interest cost on projected benefit obligation....... 5,214 5,125 4,579
Return on plan assets............................... (12,111) (5,337) (2,141)
Net amortization and deferral....................... 6,385 274 (2,834)
-------- ------- -------
Net pension cost.................................... $ 631 $ 951 $ 494
======== ======= =======
</TABLE>
The reconciliation of the funded status for the pension plan in which assets
exceed the projected benefit obligation is as follows:
<TABLE>
<CAPTION>
(in thousands)
1996 1995
---- ----
<S> <C> <C>
Actuarial present value of:
Vested benefit obligation................................... $64,981 $62,479
======= =======
Accumulated benefit obligation.............................. $68,319 $65,531
======= =======
Projected benefit obligation................................ $72,337 $68,821
Plan assets at fair value..................................... 91,850 83,312
------- -------
Plan assets in excess of projected benefit obligation......... 19,513 14,491
Unrecognized gain............................................. (5,523) (194)
------- -------
Prepaid pension............................................... $13,990 $14,297
======= =======
</TABLE>
Assumptions used for the Corporation's defined benefit plans for the three
years ended December 31, 1996 include:
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Discount rate at year end for projected benefit obligation.... 7.75% 7.25% 8.5%
Expected long-term rate
of return on assets.......................................... 8.5% 8.5% 9.0%
Rate of increases in compensation............................. 3.0% 3.0% 4.0%
</TABLE>
The pension plans' assets principally comprise:
<TABLE>
<CAPTION>
(Percent)
1996 1995
---- ----
<S> <C> <C>
Preferred and common stocks......................................... 72.1 66.3
Industrial and financial obligations................................ 23.4 26.1
United States government obligations................................ 2.9 5.2
Miscellaneous and temporary investments............................. 1.6 2.4
----- -----
100.0 100.0
===== =====
</TABLE>
The reconciliation of the funded status for a supplemental executive retirement
pension plan, in which the projected benefit obligation exceeds assets, is as
follows:
<TABLE>
<CAPTION>
(in thousands)
1996 1995
---- ----
<S> <C> <C>
Actuarial present value of:
Vested benefit obligation.................................. $2,367 $2,382
======= =======
Accumulated benefit obligation............................. $2,488 $2,474
======= =======
Projected benefit obligation............................... $2,754 $2,694
Plan assets.................................................. 0 0
------- -------
Projected benefit obligation in
excess of plan assets....................................... 2,754 2,694
Unrecognized future compensation increases................... (266) (220)
------- -------
Accrued pension cost included in employee benefit
obligations................................................. $2,488 $2,474
======= =======
</TABLE>
NOTE 9--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 benefits are provided to retirees under plans no longer being
offered by the Corporation.
12
<PAGE>
NOTE 9--POSTRETIREMENT BENEFITS OTHER THAN PENSIONS (CONTINUED):
Retiree life insurance is provided to substantially all retirees.
Postretirement benefits with respect to health care are subject to certain
Medicare offsets.
During 1994 the Corporation amended its primary postretirement health benefit
plans to provide for a cost-sharing method for current and future retirees. The
amendments, along with changes in inflation, discount rate and mortality
assumptions used in calculating the accumulated postretirement benefit
obligation (APBO), resulted in an unrecognized gain of $4,976,000 which is
being amortized on a straight-line basis over the average remaining employee
service period as a reduction in postretirement benefit expense beginning in
1995.
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.
The Corporation's postretirement health care and life insurance plans are
unfunded.
The Corporation's APBO for continuing and discontinued businesses consists of
the following:
<TABLE>
<CAPTION>
(in thousands)
1996 1995
---- ----
<S> <C> <C>
APBO attributable to:
Current retirees.............................................. $ 7,162 $ 8,164
Fully eligible active plan participants....................... 162 256
Other plan participants....................................... 1,796 2,090
------- -------
Total APBO...................................................... 9,120 10,510
Unrecognized gain............................................... 5,699 5,109
------- -------
Accrued retiree benefits........................................ $14,819 $15,619
======= =======
</TABLE>
The net postretirement benefit cost consists of the following components:
<TABLE>
<CAPTION>
(in thousands)
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Service cost.............................................. $ 85 $ 130 $ 293
Interest on APBO.......................................... 651 922 1,164
Amortization of unrecognized gain......................... (594) (408) --
----- ----- ------
Net postretirement benefit cost........................... $ 142 $ 644 $1,457
===== ===== ======
</TABLE>
The following assumptions were utilized for measurement purposes of the APBO:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Medical inflation rate............................................. 7.5% 8.5%
Gradual reduction to the year 2001 and to remain level
thereafter...................................................... 5.5% 5.0%
Discount rate...................................................... 7.75% 7.25%
</TABLE>
A 1% change in the medical inflation rate would impact the APBO and the annual
benefit expense by approximately $700,000 and $70,000.
NOTE 10--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 a potential 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, 1996, 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 11--FINANCIAL INSTRUMENTS:
FORWARD FOREIGN EXCHANGE CONTRACTS
The Corporation's Belgian operation is subject to risk from exchange rate
fluctuations in connection with its regular purchases in U.S. dollars of in-
process materials from its U.S. parent. In order to minimize this risk, forward
foreign exchange contracts are purchased as hedges of these anticipated
purchase transactions. At December 31, 1996, the Belgian operation had monthly
forward exchange contracts through 1998 to purchase an aggregate of $9,300,000
of U.S. dollars, representing approximately sixty percent of anticipated
requirements. Gains and losses on forward exchange contracts which hedge
exposures on anticipated foreign currency commitments are deferred and
recognized as
13
<PAGE>
NOTE 11--FINANCIAL INSTRUMENTS (CONTINUED):
adjustments to the bases of the inventory acquired. The deferred unrealized
gain on forward exchange contracts at December 31, 1996 was $700,000.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The estimated fair value of forward foreign exchange contracts, based on quoted
market prices of comparable contracts, approximates their notional principal
amount plus the unrealized deferred gain.
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. The fair value of the floating rate industrial
revenue bond debt approximates its carrying value.
NOTE 12--TAXES ON INCOME:
The (benefit) or provision for taxes on income from continuing operations
consists of the following:
<TABLE>
<CAPTION>
(in thousands)
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Current:
Federal................................................. $2,014 $1,030 $ 354
State................................................... 600 540 380
Foreign................................................. (21) 27 84
------ ------ ------
2,593 1,597 818
Deferred.................................................. 3,787 3,328 3,052
------ ------ ------
$6,380 $4,925 $3,870
====== ====== ======
</TABLE>
The total (benefit) or provision for taxes on income consists of the following:
<TABLE>
<CAPTION>
(in thousands)
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Current:
Federal................................................ $2,014 $1,030 $ 354
State.................................................. 600 540 380
Foreign................................................ (21) 27 84
------ ------ ------
2,593 1,597 818
------ ------ ------
Deferred:
Federal................................................ 3,854 3,444 3,756
State.................................................. 72 (242) --
Foreign................................................ (139) 126 227
------ ------ ------
3,787 3,328 3,983
------ ------ ------
$6,380 $4,925 $4,801
====== ====== ======
</TABLE>
Deferred tax assets and liabilities comprise the following:
<TABLE>
<CAPTION>
(in thousands)
ASSETS 1996 1995
- ------ ---- ----
<S> <C> <C>
Employment-related liabilities............................. $ 5,984 $ 8,855
Capital loss carryforward.................................. 13,139 15,448
Tax credit carryforwards................................... -- 3,425
Other...................................................... 4,928 2,765
-------- --------
Gross deferred tax assets.................................. 24,051 30,493
Valuation allowance........................................ (12,173) (14,556)
-------- --------
11,878 15,937
-------- --------
LIABILITIES
- -----------
Depreciation............................................... (11,610) (11,924)
Prepaid pension............................................ (5,596) (5,719)
Foreign deferred tax....................................... (1,260) (1,399)
-------- --------
Gross deferred tax liabilities............................. (18,466) (19,042)
-------- --------
Net deferred tax liability................................. $ (6,588) $ (3,105)
======== ========
</TABLE>
For federal income tax purposes the Corporation has an unused capital loss
carryforward at December 31, 1996 of $37,541,000 which expires in 1998. The
Corporation has recorded a valuation allowance with respect to the future tax
benefit of the capital loss carryforward reflected as a deferred tax asset due
to the uncertainty of its ultimate realization. The reduction in the valuation
allowance in 1996 is due to the elimination of certain capital loss
carryforwards which expired unutilized at December 31, 1996.
The deferred income taxes reflected as a current asset on the balance sheet
exclude the tax effect (included in shareholders' equity) of $1,455,000 in 1996
and $2,294,000 in 1995 related to the unrealized holding gains of the
Corporation's investments available for sale.
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)
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Computed at statutory rate................................... 35.0 35.0 35.0
Foreign income taxes......................................... (0.1) 0.2 0.8
Benefit from operating loss carryforward..................... -- -- (16.3)
Adjustment to prior year tax accruals........................ -- 2.1 --
State income taxes........................................... 2.1 0.8 2.4
Valuation reserve............................................ (1.0) (4.7) 13.7
Other--net................................................... (2.0) 1.8 2.4
---- ---- -----
34.0 35.2 38.0
==== ==== =====
</TABLE>
14
<PAGE>
NOTE 12--TAXES ON INCOME (CONTINUED):
The 1995 effective tax rate was decreased due to a revision of the valuation
reserve, as the Corporation expected to realize a future benefit for investment
tax credit carryforwards, that had previously been expected to expire
unutilized. Such benefits were realized in 1996.
The 1994 effective tax rate was reduced to reflect a change in net operating
loss carryforwards as a result of the final tax return treatment of the 1993
sale of Buffalo Forge Company. Further, the effective tax rate was increased
due to a revision of the valuation reserve concerning the Corporation's
expected ability to realize certain capital gains in the future.
NOTE 13--FOREIGN CURRENCY TRANSLATION ADJUSTMENTS:
Cumulative translation adjustments included as a component of shareholders'
equity are as follows:
<TABLE>
<CAPTION>
(in thousands)
INCREASE
(DECREASE)
----------
<S> <C>
December 31, 1993................................................ $1,430
1994 translation adjustment.................................... 1,280
------
December 31, 1994................................................ 2,710
1995 translation adjustment.................................... 787
------
December 31, 1995................................................ 3,497
1996 translation adjustment.................................... (938)
------
DECEMBER 31, 1996................................................ $2,559
======
</TABLE>
NOTE 14--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, had 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. In 1991, the unsecured creditors committee brought an
adversary proceeding against the Corporation and its subsidiary, as well as
others, seeking 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. In April 1994, the Bankruptcy Court
issued a favorable judgment denying all claims against the Corporation. In
addition, the Court permitted the Corporation to recover $2,200,000 from the
estate of Valley in connection with the Corporation's lien for the industrial
revenue bond guarantee. No reserve had been established for the outcome of this
litigation based on the Corporation's belief that it had meritorious defenses.
The plaintiff in the case, the unsecured creditors committee of Valley, has
filed a notice of appeal from the Court's decision. The Corporation has posted
a bank letter of credit for $2,200,000 pending the outcome of the appeal.
In addition to the litigation noted above, the Corporation is from time to time
subject to routine litigation incidental to its business. The Corporation
believes that the results of the above noted litigation and other pending legal
proceedings will not have a material adverse effect on its financial condition,
results of operations or liquidity.
NOTE 15--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. The reserves for discontinued operations
include an accrual for costs of likely remedial actions.
Environmental exposures are difficult to assess and estimate for numerous
reasons including the lack of reliable data, the number of potentially
responsible parties and their financial capabilities, the multiplicity of
possible solutions, the years of remedial and monitoring activity required, and
the identification of new sites. While it is not possible to quantify with
certainty the environmental exposure, in the opinion of management, the
potential liability for all environmental proceedings, based on information
known to date and the estimated quantities of waste at these sites, will not
have a material adverse effect on the financial condition, results of
operations or liquidity of the Corporation.
15
<PAGE>
NOTE 16--SEGMENT AND GEOGRAPHIC INFORMATION:
The Corporation is in one business segment that manufactures and sells
engineered products. The table below sets forth information on U.S. operations
and one non-U.S. operation which is a wholly-owned subsidiary in Belgium.
<TABLE>
<CAPTION>
(in thousands)
U.S. Non U.S.
Total operations operations
----- ---------- ----------
<S> <C> <C> <C>
1996
- ----
Net sales*....................................... $162,403 $153,064 $19,439
Identifiable assets.............................. 188,170 173,061 15,109
Capital expenditures............................. 8,902 8,620 282
Depreciation..................................... 6,152 5,679 473
Contributions to operating income................ 18,068 17,411 657
1995
- ----
Net sales*....................................... $143,785 $133,210 $18,658
Identifiable assets.............................. 171,424 155,259 16,165
Capital expenditures............................. 4,637 4,184 453
Depreciation..................................... 5,683 5,208 475
Contributions to operating income................ 14,176 13,775 401
</TABLE>
<TABLE>
<CAPTION>
(in thousands)
U.S. Non U.S.
Total operations operations
----- ---------- ----------
<S> <C> <C> <C>
1994
- ----
Net sales*....................................... $113,836 $104,109 $15,647
Identifiable assets.............................. 151,912 137,797 14,115
Capital expenditures............................. 4,002 3,539 463
Depreciation..................................... 5,251 4,836 415
Contributions to operating income................ 8,360 7,794 566
</TABLE>
*Total net sales exclude intercompany sales of: $10,100 in 1996, $8,083 in 1995
and $5,920 in 1994.
Net sales from U.S. operations, excluding those to a subsidiary company,
include export sales of $35,512,000 in 1996, $27,609,000 in 1995 and
$17,687,000 in 1994. Included in identifiable assets of U.S. operations are
amounts attributable to either investments or discontinued operations of
$7,792,000 in 1996, $11,551,000 in 1995 and $10,591,000 in 1994.
QUARTERLY INFORMATION--UNAUDITED
<TABLE>
<CAPTION>
(in thousands, except per share data)
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER YEAR
------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C>
1996
- ----
Net sales.............................. $41,099 $40,767 $38,497 $42,040 $162,403
Gross profit(1)........................ 11,717 12,243 10,974 13,535 48,469
Income from operations................. 4,170 4,552 3,771 5,575 18,068
Net income(2).......................... 2,648 2,910 2,369 4,463 12,390
Net income per common share............ .28 .30 .25 .47 1.29
1995
- ----
Net sales.............................. $33,603 $36,548 $34,956 $38,678 $143,785
Gross profit(1)........................ 9,469 10,035 9,783 11,395 40,682
Income from operations................. 3,335 3,522 3,008 4,311 14,176
Net income............................. 2,112 2,006 1,743 3,189 9,050
Net income per common share............ .22 .21 .18 .33 .94
</TABLE>
NOTES
1. Gross profit as used herein does not include a charge for depreciation.
2. Included in net income in the fourth quarter of 1996 is a gain
on sale of an investment of $485.
16
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
1996 COMPARED TO 1995 OPERATIONS
Net sales were increased in 1996 to $162,403,000 compared with sales of
$143,785,000 in 1995. Approximately $10,500,000 of this increase is attributed
to the impact of including the sales of the previous year acquisitions of
Buffalo Air Handling and Bimex Industries for the full year 1996. Excluding the
impact of the 1995 acquisitions, sales increased by $8,100,000, or 6%, as most
of the Corporation's operations experienced higher shipment levels due to
continued growth in export business and improved economic activity in the
markets served. Sales at New Castle Industries, a machinery component supplier
to the plastics processing industry, were slightly lower in 1996 reflecting a
slowdown in that market. During 1996, the order backlog increased by
$17,300,000, or 18%, to $114,100,000 at December 31, 1996. The growth in the
backlog is due to an increase in forged steel roll orders.
The cost of products sold, excluding depreciation, in relationship to net sales
was 70.2% in 1996 compared to 71.7% in 1995. The margin improvement in 1996
principally resulted from improved pricing and more favorable product mix.
Selling and administrative expenses increased by $3,426,000 in 1996. Excluding
the impact of the acquisitions, these costs increased by $1,700,000, or 9% for
the year. This increase is principally due to increased commission costs on
higher sales and a mix change towards sales on which commission is payable. The
relationship of selling and administrative expenses to net sales was 14.9% in
1996 and 14.5% in 1995.
Depreciation expense of $6,152,000 in 1996 compares with $5,683,000 in 1995.
The increase is attributable to the higher capital expenditure levels in 1996
and the full period impact of the acquisitions.
As a result of the improved levels of sales, margin improvement and ongoing
overhead cost control, income from operations increased 27% for 1996 to
$18,068,000 compared to $14,176,000 in 1995.
Gains of $519,000 were recognized in 1996 from the sale of investments.
Other income (expense)--net was $184,000 in 1996 as compared to $(201,000) in
1995. The improvement principally reflects a reduced charge in 1996 for the
accretion, from present values, on long-term reserves.
As a result of all of the above, the Corporation had net income of $12,390,000
in 1996 compared to $9,050,000 in 1995.
LIQUIDITY AND CAPITAL RESOURCES
Net cash flows from operating activities were positive for 1996 at $17,843,000
and compare with positive cash flows of $17,643,000 for 1995. While income from
operations increased by $3,892,000 in 1996, an increase in working capital
requirements, principally an accounts receivable increase of $4,096,000,
limited the improvement in operating cash flows.
Net cash outflows from investing activities were $17,567,000 in 1996 and
compare with cash outflows of $20,637,000 in 1995. Capital expenditures for
1996 totaled $8,902,000 compared to $4,637,000 in 1995. Capital appropriations
carried forward from 1996 total $10,600,000 with the major expenditure being
for plant and equipment at Union Electric Steel, to be completed by the end of
1997. During 1996, the Corporation completed the sale of two series of tax-
exempt, long-term Industrial Revenue Bonds totalling $11,236,000. At December
31, 1996, $9,767,000 of these funds are unspent, and have been temporarily
invested to be drawn down as expenditures are made at Union Electric Steel's
Pennsylvania facilities (also see Notes to Consolidated Financial Statements--
Note 6). Funds generated internally will be sufficient to finance the balance
of the expansion program.
During 1996, the Corporation sold shares of two investments, realizing proceeds
of $1,102,000 and gains of $519,000. Net cash outflows from investing
activities in 1995 included $16,000,000 for the acquisitions of Buffalo Air
Handling and Bimex.
Cash flows from financing activities include the Industrial Revenue Bonds
issued in 1996, dividend payments of $958,000 in both 1996 and 1995, and in
1996, payment of an additional prior year-end dividend of $479,000, or $.05 per
share.
As a result of all of the above, cash and cash equivalents increased by
$9,957,000 in 1996 and ended the year at $25,510,000.
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, 1996, exclusive of the Industrial Revenue Bond financing noted
above, was $14,500,000.
17
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (CONTINUED)
At December 31, 1996, the Corporation's shares of Northwestern Steel and Wire
had a market value of approximately $4,200,000. These securities are available
for sale, however, management believes that the market currently undervalues
the stock.
With respect to environmental concerns, the Corporation has been named a
potentially responsible party at certain third party sites. The Corporation has
accrued its share of the estimated cost of remedial actions it would likely be
required to contribute. In addition, the Corporation has provided for
environmental clean-up costs related to preparing its discontinued business
facilities for sale. While it is not possible to quantify with certainty the
potential cost of actions regarding environmental matters, particularly any
future remediation and other compliance efforts, in the opinion of management,
compliance with the present environmental protection laws and the potential
liability for all environmental proceedings will not have a material adverse
effect on the financial condition, results of operations or liquidity of the
Corporation (also see Notes to Consolidated Financial Statements-- Note 15).
The nature and scope of the Corporation's business brings it into regular
contact with a variety of persons, businesses and government agencies in the
ordinary course of business. Consequently, the Corporation and its subsidiaries
from time to time are named in various legal actions. The Corporation does not
anticipate that its financial condition, results of operations or liquidity
will be materially affected by the costs of known, pending or threatened
litigation (also see Notes to Consolidated Financial Statements--Note 14).
1995 COMPARED TO 1994 OPERATIONS
Net sales were increased in 1995 to $143,785,000 compared with sales of
$113,836,000 in 1994. Approximately $15,600,000 of this increase is attributed
to the acquisitions of Buffalo Air Handling and Bimex in May and October of
1995, respectively. Excluding the impact of the acquisitions, sales increased
by $14,400,000, or 13%, as each of the Corporation's operations experienced
higher shipment levels due to increased export business and improved economic
activity in all of the markets served.
The cost of products sold, excluding depreciation, in relationship to net sales
was 71.7% in 1995 compared to 72.9% in 1994. The margin improvement in 1995 is
due to a combination of higher production levels and a return to historical
margins at Aerofin, which was impacted by a strike in 1994.
Selling and administrative expenses increased by $3,554,000 in 1995.
Approximately one-half of the increase in costs is attributable to the
acquisitions. While sales volume increased 13% at other operations, selling and
administrative costs only increased by 9%.
Depreciation expense of $5,683,000 in 1995 compares with $5,251,000 in 1994.
Approximately one-half of the increase relates to the two business acquisitions
during 1995.
As a result of the improved levels of sales, margin improvements and ongoing
overhead cost control, income from operations increased 70% for 1995 to
$14,176,000 compared to $8,360,000 in 1994.
In connection with the sale of an investment in United States Biochemical
Corporation, a gain of $2,554,000 was recognized in 1994.
Other income (expense)--net was $(201,000) in 1995 as compared to $(722,000) in
1994. The improvement reflects higher interest earnings on invested cash
balances and a reduced charge in 1995 for the accretion, from present values,
on long-term reserves.
Discontinued operations in 1994 includes an after tax gain of $1,728,000 on the
partial sale of Northwestern Steel and Wire shares.
As a result of all of the above, the Corporation had net income of $9,050,000
in 1995 compared to $8,051,000 in 1994. The 1994 results included investment
gains, net of deferred taxes, of $3,388,000.
STATEMENT OF CASH FLOW
Net cash flows from operating activities were positive for 1995 at $17,643,000
and compare with positive cash flows of $7,782,000 for 1994. The increased cash
flow in 1995 resulted primarily from a $5,816,000 increase in income from
operations and a reduction in cash outflow for working capital changes.
The net cash outflow from investing activities in 1995 of $20,637,000 includes
$16,000,000 for the acquisitions of Buffalo Air Handling and Bimex, with the
balance attributable to purchases of equipment. The positive cash flow from
investing activities in 1994 of $3,586,000 included proceeds from investments
of $7,588,000, partially offset by purchases of equipment.
Cash outflows with respect to financing activities include dividend payments of
$958,000 in both 1995 and 1994, and in 1994, an Industrial Revenue Bond debt
payment of $783,000.
As a result of all of the above, cash and cash equivalents decreased by
$3,776,000 in 1995 and ended the year at $15,553,000.
18
<PAGE>
FIVE-YEAR SUMMARY OF SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net sales............... $162,402,805 $143,785,139 $113,836,181 $108,846,416 $104,308,304
Income from operations.. 18,068,058 14,176,001 8,359,705 5,698,614 5,976,770
Income from continuing
operations............. 12,390,488 9,050,286 6,322,477 11,971,340 2,866,034
Discontinued operations. -- -- 1,728,251 (16,487,296) (4,791,643)
Cumulative effect of
accounting changes..... -- -- -- -- (12,838,000)
Net income (loss)....... 12,390,488 9,050,286 8,050,728 (4,515,956) (14,763,609)
Total assets............ 188,170,344 171,423,690 151,912,087 138,494,114 193,291,690
Shareholders' equity.... 119,667,023 112,135,049 102,970,884 91,150,230 94,308,590
Per common share:
Income from continuing
operations............ 1.29 .94 .66 1.25 .30
Discontinued
operations............ -- -- .18 (1.72) (.50)
Cumulative effect of
accounting changes... -- -- -- -- (1.34)
Net income (loss)...... 1.29 .94 .84 (.47) (1.54)
Cash dividends
declared.............. .235 .15 .10 .15 .275
Shareholders' equity... 12.49 11.71 10.75 9.52 9.85
Market price at year
end................... $12.00 $10.75 $9.875 $7.125 $9.00
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.. 1,418 1,532 1,654 1,738 1,873
Number of employees..... 1,225 1,204 955 949 979
</TABLE>
Total assets for 1992 include operations subsequently sold.
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>
1996 1995
------------------------ -----------------------
DIVIDENDS Dividends
QUARTER HIGH LOW DECLARED High Low Declared
- ------- ---- --- -------- ---- --- --------
<S> <C> <C> <C> <C> <C> <C>
First $13 1/4 $10 $.025 $9 3/4 $7 3/4 $.025
Second 13 5/8 11 3/8 .025 9 1/8 8 .025
Third 12 3/8 10 1/4 .025 10 5/8 8 7/8 .025
Fourth 14 11 1/2 .160* 11 3/8 9 1/4 .075*
Year 14 10 .235* 11 3/8 7 3/4 .150*
</TABLE>
* Includes an additional year-end dividend of $.10 per share in 1996 and $.05
per share in 1995.
19
<PAGE>
DIRECTORS & OFFICERS
Louis Berkman (1) (3)
Director
Chairman of the Board
President, The Louis Berkman Company
Robert A. Paul (1)
Director
President and Chief Executive Officer
Ernest G. Siddons (1)
Director
Executive Vice President and
Chief Operating Officer
Leonard M. Carroll (2)
Director
Managing Director, Seneca Capital
Management, Inc.
William D. Eberle (2) (3)
Director
Private Investor
Alvin G. Keller (1) (2) (3)
Director
Private Investor
Carl H. Pforzheimer, III (2)
Director
Managing Partner, Carl H. Pforzheimer & Co.
Robert J. Reilly
Vice President Finance and
Treasurer
Robert F. Schultz
Vice President Industrial Relations and
Senior Counsel
Rose Hoover
Corporate Secretary
(1) Member of the Executive Committee
(2) Member of the Audit Committee
(3) Member of the Salary Committee
OPERATING COMPANIES
Union Electric Steel Corporation
Carnegie, Pennsylvania
Ernest G. Siddons, President
Buffalo Pumps, Inc.
North Tonawanda, New York
Charles R. Kistner, President
Buffalo Air Handling Company
Amherst, Virginia
William R. Phelps, President
New Castle Industries, Inc.
New Castle, Pennsylvania
James D. Frankland, President
Aerofin Corporation
Lynchburg, Virginia
David L. Corell, President
ANNUAL MEETING
The Annual Meeting of the Shareholders will be held at:
The USX Tower
33rd Floor Conference Room
Pittsburgh, Pennsylvania
Thursday, April 24, 1997
at 10:00 a.m.
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
Pittsburgh, Pennsylvania
EMPLOYMENT POLICY
The Corporation is an equal opportunity employer.
10K REPORT
A copy of Ampco-Pittsburgh Corporation's Annual Report on Form 10-K as filed
with the Securities and Exchange Commission is available without charge to
shareholders upon written request to:
Corporate Secretary
Ampco-Pittsburgh Corporation
600 Grant Street
Pittsburgh, Pennsylvania
15219-2700
20
<PAGE>
AMPCO-PITTSBURGH CORPORATION
Pittsburgh, PA 15219
<PAGE>
Exhibit 21
SUBSIDIARIES
------------
<TABLE>
<CAPTION>
Jurisdiction of
Name Ownership Incorporation
- ---- --------- ---------------
<S> <C> <C>
1027226 Ontario Ltd. 100% owned by
Aerofin Corporation Canada
AP Venture Corp. III 100% owned by
Ampco-Pittsburgh Corporation Delaware
Aerofin Corporation 100% owned by
Ampco-Pittsburgh Securities V
Corporation New York
Ampco NCII Sub, Inc. 100% owned by
New Castle Industries, Inc. Delaware
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
Bimex Industries, Inc. 100% owned by
Ampco NCII Sub, Inc. Delaware
Buffalo Air Handling Company 100% owned by
Ampco-Pittsburgh 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 Corporation 100% owned by
Ampco-Pittsburgh Securities
V Corporation Pennsylvania
Union Electric Steel N.V. 100% owned by 1027226
Ontario 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.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 25,510,231
<SECURITIES> 4,409,320
<RECEIVABLES> 32,672,988
<ALLOWANCES> 629,362
<INVENTORY> 33,223,110
<CURRENT-ASSETS> 99,243,067
<PP&E> 118,463,362
<DEPRECIATION> 61,134,960
<TOTAL-ASSETS> 188,170,344
<CURRENT-LIABILITIES> 26,169,087
<BONDS> 12,586,000
0
0
<COMMON> 9,577,621
<OTHER-SE> 110,089,402
<TOTAL-LIABILITY-AND-EQUITY> 188,170,344
<SALES> 162,402,805
<TOTAL-REVENUES> 163,455,616
<CGS> 113,933,520
<TOTAL-COSTS> 144,334,747
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 350,381
<INCOME-PRETAX> 18,770,488
<INCOME-TAX> 6,380,000
<INCOME-CONTINUING> 12,390,488
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,390,488
<EPS-PRIMARY> 1.29
<EPS-DILUTED> 1.29
</TABLE>
