<PAGE>
FORM 1O-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark one)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 1-898.
AMPCO-PITTSBURGH CORPORATION
Incorporated in Pennsylvania.
I.R.S. Employer Identification No. 25-1117717.
600 Grant Street, Pittsburgh, Pennsylvania 15219
Telephone Number 412/456-4400
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15 (d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter periods that the registrant was required
to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
On November 12, 1997, 9,577,621 common shares were outstanding.
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AMPCO-PITTSBURGH CORPORATION
INDEX
Page No.
Part I - Financial Information:
Item 1 - Consolidated Financial Statements
Consolidated Balance Sheets -
September 30, 1997 and December 31, 1996 3
Consolidated Statements of Income -
Nine Months Ended September 30, 1997
and 1996; Three Months Ended September 30,
1997 and 1996 4
Consolidated Statements of Cash Flows -
Nine Months Ended September 30, 1997
and 1996 5
Notes to Consolidated Financial Statements 6
Item 2 - Management's Discussion and Analysis
of Financial Condition and Results
of Operations 9
Part II - Other Information:
Item 6 - Exhibits and Reports on Form 8-K 12
Signatures 13
Exhibits
Exhibit 27
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<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION
AMPCO-PITTSBURGH CORPORATION
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<S> <C> <C>
September 30, December 31,
1997 1996
Assets
Current assets:
Cash and cash equivalents $ 24,647,297 $ 25,510,231
Receivables, less allowance for
doubtful accounts of $712,749 in
1997 and $629,362 in 1996 33,495,213 32,043,626
Inventories 36,219,571 33,223,110
Investments available for sale - 4,409,320
Other 4,728,230 4,056,780
Total current assets 99,090,311 99,243,067
Property, plant and equipment,
at cost 135,986,473 118,463,362
Accumulated depreciation (65,447,269) (61,134,960)
Net property, plant and
equipment 70,539,204 57,328,402
Unexpended industrial revenue
bond proceeds 2,521,508 9,766,938
Prepaid pension 13,729,092 13,989,592
Other noncurrent assets 10,778,403 7,842,345
$196,658,518 $188,170,344
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 10,296,670 $ 8,631,404
Accrued payrolls and employee
benefits 8,058,409 7,819,253
Other 9,587,741 9,718,430
Total current liabilities 27,942,820 26,169,087
Employee benefit obligations 16,621,336 17,122,983
Industrial revenue bond debt 12,586,000 12,586,000
Deferred income taxes 9,922,672 9,944,670
Other noncurrent liabilities 2,918,477 2,680,581
Total liabilities 69,991,305 68,503,321
Shareholders' equity:
Preference stock - no par value;
authorized 3,000,000 shares: none
issued - -
Common stock - par value $1; authorized
20,000,000 shares; issued and
outstanding 9,577,621 in 1997
and 1996 9,577,621 9,577,621
Additional paid-in capital 102,555,980 102,555,980
Retained earnings 13,601,121 2,648,036
125,734,722 114,781,637
Cumulative translation and other
adjustments 932,491 2,364,607
Unrealized holding gains on securities - 2,520,779
Total shareholders' equity 126,667,213 119,667,023
$196,658,518 $188,170,344
See Notes to Consolidated Financial Statements.
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AMPCO-PITTSBURGH CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<S> <C> <C> <C> <C>
Nine Months Ended Sept 30, Three Months Ended Sept 30,
1997 1996 1997 1996
Net sales $125,553,711 $120,362,625 $ 41,628,394 $ 38,497,160
Operating costs and expenses:
Cost of products sold
(excluding depreciation) 86,383,180 85,428,707 28,834,143 27,523,055
Selling and administrative 18,176,998 17,730,565 6,327,401 5,643,073
Depreciation 5,033,007 4,710,696 1,696,880 1,560,215
109,593,185 107,869,968 36,858,424 34,726,343
Income from operations 15,960,526 12,492,657 4,769,970 3,770,817
Other income (expense):
Gain on sale of investments 3,489,228 - 2,552,653 -
Other income (expense)-net 503,309 205,229 93,662 18,331
Income before taxes 19,953,063 12,697,886 7,416,285 3,789,148
Provision for taxes on income 7,276,000 4,770,000 2,866,000 1,420,000
Net income $ 12,677,063 $ 7,927,886 $ 4,550,285 $ 2,369,148
Net income per common share $ 1.32 $ .83 $ .48 $ .25
Cash dividends declared
per share $ .18 $ .075 $ .06 $ .025
Weighted average number of
common shares outstanding 9,577,621 9,577,621 9,577,621 9,577,621
</TABLE>
See Notes to Consolidated Financial Statements
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<TABLE>
<CAPTION>
AMPCO-PITTSBURGH CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<S> <C> <C>
Nine Months Ended September 30,
1997 1996
Cash flows from operating activities:
Net income $ 12,677,063 $ 7,927,886
Adjustments to reconcile net income to net
cash flows from operating activities:
Depreciation 5,033,007 4,710,696
Gain on sale of investments (3,489,228) -
Deferred income taxes 327,000 4,017,000
Other - net 201,908 206,082
Changes in assets/liabilities, net of
effects from business acquisitions:
Receivables (116,117) (2,155,837)
Inventories (2,914,896) 698,994
Other assets 688,888 93,023
Accounts payable 693,989 (802,984)
Accrued payrolls and employee
benefits (92,063) (161,359)
Other liabilities 997,809 (2,111,497)
Net cash flows from
operating activities 14,007,360 12,422,004
Cash flows from investing activities:
Purchases of property, plant
and equipment (12,258,391) (6,264,442)
Unexpended industrial revenue
bond proceeds 7,245,430 (10,217,815)
Business acquisitions (11,966,579) -
Proceeds from sales of investments 4,907,484 582,122
Net cash flows from
investing activities (12,072,056) (15,900,115)
Cash flows from financing activities:
Increase in industrial revenue bond debt - 11,236,000
Dividends paid (2,681,733) (1,197,203)
Net cash flows from financing activities (2,681,733) 10,038,797
Effect of exchange rate changes on cash (116,505) (105,748)
Net increase (decrease) in cash (862,934) 6,454,938
Cash at beginning of year 25,510,231 15,553,263
Cash at end of period $ 24,647,297 $ 22,008,201
Supplemental information:
Income tax payments $ 5,482,524 $ 1,656,931
Interest payments 406,353 150,759
</TABLE>
See Notes to Consolidated Financial Statements.
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AMPCO-PITTSBURGH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Unaudited Consolidated Financial Statements
The consolidated balance sheet as of September 30, 1997,
the consolidated statements of income for the nine and
three month periods ended September 30, 1997 and 1996
and the consolidated statements of cash flows for the
nine month periods then ended have been prepared by the
Corporation without audit. In the opinion of
management, all adjustments, consisting of only normal
recurring adjustments, necessary to present fairly the
financial position, results of operations and cash flows
for the periods presented have been made.
Certain information and footnote disclosures normally
included in financial statements prepared in accordance
with generally accepted accounting principles have been
condensed or omitted. It is suggested that these
consolidated financial statements be read in conjunction
with the consolidated financial statements and notes
thereto included in the Corporation's annual report to
shareholders for the year ended December 31, 1996. The
results of operations for the periods ended September
30, 1997 are not necessarily indicative of the operating
results for the full year.
2. Acquisitions
Effective July 1, 1997, the Corporation acquired F. R.
Gross Co., a small Ohio manufacturer of heat transfer
rolls for the plastics, packaging, printing and other
industries for approximately $9,400,000 cash, including
debt assumed and retired. The acquisition was accounted
for as a purchase transaction. The excess of the
purchase price over the estimated fair value of the net
assets acquired (goodwill) amounted to approximately
$4,500,000.
Effective August 1, 1997, the Corporation acquired
Atlantic Grinding & Welding Inc. for approximately
$2,600,000 cash, including debt assumed and retired.
This small manufacturer of feed screws, with operations
in New Hampshire and South Carolina, will expand New
Castle Industries' market coverage to the plastics
processing industry. The acquisition was accounted for
as a purchase transaction.
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<CAPTION>
The consolidated financial statements include the
results of operations of F. R. Gross and Atlantic
Grinding & Welding from their acquisition date of July 1
and August 1, 1997, respectively. The consolidated
results of operations on a pro forma basis as though
those businesses had been acquired as of January 1,
1996 are as follows (in thousands except for per share
information):
<S> <C> <C> <C> <C>
Nine Months Three Months
Ended Sept. 30, Ended Sept. 30,
1997 1996 1997 1996
Net sales $132,393 $130,263 $42,018 $42,225
Net income $ 13,060 $ 8,034 $ 4,550 $ 2,561
Net income
per share $ 1.36 $ .84 $ .48 $ .27
The pro forma financial information is not necessarily
indicative either of results of operations that would
have occurred had the purchases been made at the
beginning of the period, or of future results of
operations of the combined companies. The 1997 periods
include gains from investments (see Note 4).
The Assets Purchase Agreements for F. R. Gross and
Atlantic Grinding & Welding provide for additional
payments to the former owners contingent on future
earnings. Any additional payments made, when the
contingencies are resolved, will be accounted for as
goodwill and amortized over the remaining life of the
original goodwill.
3. Inventory
Inventories, principally valued on the LIFO method, are
comprised of the following:
<S> <C> <C>
September 30, December 31,
1997 1996
Raw materials $ 6,174,988 $ 6,384,104
Work-in-process 24,560,720 20,945,337
Finished goods 3,616,868 3,885,851
Supplies 1,866,995 2,007,818
$ 36,219,571 $ 33,223,110
4. Investments
In connection with the sale of its remaining
investments, including the stock holdings of
Northwestern Steel and Wire Company previously
</TABLE>
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classified as available for sale, the Corporation
recognized pre-tax gains of $3,489,228 and $2,552,653
during the nine and three month periods ended September
30, 1997, respectively.
5. Net Income Per Common Share
Net income per common share is computed on the basis of
the weighted number of shares of Ampco-Pittsburgh
Corporation's common stock outstanding, which has
remained unchanged at 9,577,621 shares for the periods
presented.
6. Recently Issued Accounting Standards
In February 1997, the Financial Accounting Standards
Board (FASB) issued Statement of Financial Accounting
Standards (SFAS) No. 128, "Earnings per Share". SFAS
No. 128 establishes new standards for computing and
presenting earnings per share and is effective for the
year ending December 31, 1997. The adoption of SFAS No.
128 is not expected to have an effect on the
Corporation's calculation of earnings per share as there
are currently no potential additional shares of common
stock issuable.
In September 1997, the FASB issued SFAS No. 130,
"Reporting Comprehensive Income", and SFAS No. 131,
"Disclosures about Segments of an Enterprise and Related
Information". SFAS No. 130 establishes standards for
reporting and display of comprehensive income and its
components. The Corporation is required to adopt the
provisions of SFAS No. 130 beginning with its
consolidated financial statements for the three months
ending March 31, 1998. SFAS No. 131 requires certain
disclosures about segment information in interim and
annual financial statements and related information
about products and services, geographic areas and major
customers. The Corporation must adopt the provisions of
SFAS No. 131 for its consolidated financial statements
for the year ending December 31, 1998.
The adoptions of SFAS No. 130 and SFAS No. 131 are not
expected to have a material effect on the measurement of
the Corporation's financial position, results of
operations or cash flows; the Corporation is reviewing
possible changes in disclosures that may be necessary.
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AMPCO-PITTSBURGH CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Operations for the Nine and Three Month Periods Ended
September 30, 1997 and 1996
Net sales for the nine and three month periods of 1997 were
$125,554,000 and $41,628,000 compared to $120,363,000 and
$38,497,000 for the same periods of the prior year.
Excluding the additional sales from the acquisitions of
F. R. Gross and Atlantic Grinding & Welding during the
third quarter of 1997, overall sales increased by 2% and 1%
for the first nine months and third quarter of 1997,
respectively, compared to the prior year. While several of
the Corporation's operations experienced higher shipment
levels due to continued growth in export business and
improved economic activity, other operations experienced
modest declines in sales. The order backlog stood at
$118,200,000 at September 30, 1997 compared to $114,100,000
at December 31, 1996. The increase in the backlog is due
primarily to the businesses acquired in 1997.
The cost of products sold relationships for the nine and
three months ended September 30, 1997 were 68.8% and 69.3%,
respectively. This compares with the prior comparable
periods at 71.0% and 71.5%, respectively. A more
profitable sales mix together with increased margins
resulted in improved ratios of cost of products sold to
sales in 1997.
Selling and administrative expenses in 1997 increased by
$446,000 for the year-to-date period and $684,000 for the
third quarter, both compared to the prior year, principally
due to the impact of the businesses acquired during the
third quarter 1997. The relationships of selling and
administrative expenses to net sales for the nine and three
months ended September 30, 1997 were 14.5% and 15.2%,
respectively. This compares with the prior comparable
periods, both at 14.7%.
Depreciation expense of $5,033,000 and $1,697,000 for the
nine and three months ended September 30, 1997 increased
approximately 7% and 9%, respectively, compared to the
prior year due principally to an increase in capital
expenditures.
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Income from operations increased 28% for the nine month
period and 26% for the three month period, both ended
September 30, 1997 compared to the corresponding 1996
periods. These increases are principally a result of
improved margins, a more profitable sales mix and slightly
higher volumes.
Gains of $3,489,000 and $2,553,000 were recognized in the
nine and three month periods ended September 30, 1997,
respectively, from the sale of investments.
The Corporation had net income for the nine and three
months ended September 30, 1997 of $12,677,000 and
$4,550,000, respectively. This compares with net income
for the prior year comparable periods of $7,928,000 and
$2,369,000, respectively.
Liquidity and Capital Resources
Net cash flow from operating activities was positive in
1997 and 1996 at $14,007,000 and $12,422,000, respectively.
Operating cash flow in 1997 benefitted from a $3,468,000
increase in income from operations.
Capital expenditures for 1997 totaled $12,258,000 compared
to $6,264,000 in 1996. The Corporation anticipates capital
expenditures for 1997 to approximate $16,000,000 with the
major expenditure being for plant and equipment at Union
Electric Steel's plants to be completed by the end of the
year. Unexpended industrial revenue bond proceeds of
$9,767,000 were available to fund a portion of this capital
program and $7,245,000 of these proceeds were drawn down
during the first nine months of 1997. Funds generated
internally are expected to be sufficient to finance the
balance of the capital expenditures.
The net cash outflow from investing activities in 1997
includes $11,967,000 for the purchases of F. R. Gross and
Atlantic Grinding & Welding during the third quarter. The
Corporation disposed of all of its stock and other
investment interests, including its stock holdings in
Northwestern Steel and Wire Company, receiving proceeds of
$4,907,000 in 1997.
Cash outflows with respect to financing activities in 1997
reflect an increase in the quarterly dividend rate to $.06
per share compared to $.025 per share in 1996, and an
additional prior year-end dividend of $960,000 in 1997 or
$.10 per share, as compared to $.05 per share paid in 1996.
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The Corporation maintains short-term lines of credit and a
revolving credit agreement in excess of the cash needs of
its businesses. The total available at September 30, 1997
was $14,500,000.
With respect to environmental concerns, the Corporation has
been named a potentially responsible party at certain third
party sites. The Corporation has accrued its share of the
estimated cost of remedial actions it would likely be
required to contribute. 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.
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.
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PART II - OTHER INFORMATION
AMPCO-PITTSBURGH CORPORATION
Items 1-5. None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27. Financial Data Schedule
(b) Reports on Form 8-K
None
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
AMPCO-PITTSBURGH CORPORATION
DATE: November 12, 1997 BY: s/Robert A. Paul
Robert A. Paul
President and
Chief Executive Officer
DATE: November 12, 1997 BY: s/Robert J. Reilly
Robert J. Reilly
Vice President - Finance
and Treasurer
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<TABLE> <S> <C>
<PAGE>
<CAPTION>
EXHIBIT 27
EXHIBIT 27
<S> <C>
<ARTICLE> 5
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 24,647,297
<SECURITIES> 0
<RECEIVABLES> 34,207,962
<ALLOWANCES> 712,749
<INVENTORY> 36,219,571
<CURRENT-ASSETS> 99,090,311
<PP&E> 135,986,473
<DEPRECIATION> 65,447,269
<TOTAL-ASSETS> 196,658,518
<CURRENT-LIABILITIES> 27,942,820
<BONDS> 12,586,000
0
0
<COMMON> 9,577,621
<OTHER-SE> 117,089,592
<TOTAL-LIABILITY-AND-EQUITY> 196,658,518
<SALES> 125,553,711
<TOTAL-REVENUES> 126,560,782
<CGS> 86,383,180
<TOTAL-COSTS> 109,593,185
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 503,762
<INCOME-PRETAX> 19,953,063
<INCOME-TAX> 7,276,000
<INCOME-CONTINUING> 12,677,063
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,677,063
<EPS-PRIMARY> 1.32
<EPS-DILUTED> 1.32
</TABLE>
