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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 March 31, 1998
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 May 13, 1998, 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 -
March 31, 1998 and December 31, 1997 3
Consolidated Statements of Income -
Three Months Ended March 31, 1998
and 1997 4
Consolidated Statements of Cash Flows -
Three Months Ended March 31, 1998
and 1997 5
Notes to Consolidated Financial Statements 6
Item 2 - Management's Discussion and Analysis
of Financial Condition and Results
of Operations 8
Part II - Other Information:
Item 4 - Submission of Matters to a Vote
of Security Holders 10
Item 6 - Exhibits and Reports on Form 8-K 10
Signatures 11
Exhibits
Exhibit 27
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PART I - FINANCIAL INFORMATION
AMPCO-PITTSBURGH CORPORATION
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
March 31, December 31,
1998 1997
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 28,396,371 $ 21,695,512
Receivables, less allowance for
doubtful accounts of $669,036 in
1998 and $629,677 in 1997 33,862,413 35,024,843
Inventories 36,218,144 35,452,494
Other 5,228,776 4,530,430
Total current assets 103,705,704 96,703,279
Property, plant and equipment,
at cost 140,428,823 139,249,677
Accumulated depreciation (68,479,927) (66,714,835)
Net property, plant and equipment 71,948,896 72,534,842
Unexpended industrial revenue bond
proceeds 1,939,897 2,218,317
Prepaid pension 13,679,592 13,679,592
Other noncurrent assets 11,521,704 11,709,131
$202,795,793 $196,845,161
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 9,097,225 $ 8,638,073
Accrued payrolls and employee
benefits 7,483,682 7,747,474
Other 9,642,992 7,373,110
Total current liabilities 26,223,899 23,758,657
Employee benefit obligations 16,384,194 16,755,483
Industrial revenue bond debt 12,586,000 12,586,000
Deferred income taxes 11,672,271 11,329,110
Other noncurrent liabilities 2,973,202 3,000,124
Total liabilities 69,839,566 67,429,374
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 1998
and 1997 9,577,621 9,577,621
Additional paid-in capital 102,555,980 102,555,980
Retained earnings 20,396,199 16,602,063
Accumulated other comprehensive
income 426,427 680,123
Total shareholders' equity 132,956,227 129,415,787
$202,795,793 $196,845,161
See Notes to Consolidated Financial Statements.
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AMPCO-PITTSBURGH CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
Three Months Ended March 31,
1998 1997
<S> <C> <C>
Net sales $ 48,598,350 $ 40,834,154
Operating costs and expenses:
Cost of products sold
(excluding depreciation) 32,797,645 27,861,032
Selling and administrative 6,806,879 5,919,863
Depreciation 1,919,415 1,671,204
41,523,939 35,452,099
Income from operations 7,074,411 5,382,055
Other income (expense):
Gain on sale of investments - 214,665
Other income (expense) net 146,711 278,612
Income before taxes 7,221,122 5,875,332
Provision for taxes on income 2,565,000 2,080,000
Net income $ 4,656,122 $ 3,795,332
Basic earnings per share $ .49 $ .40
Cash dividends declared per share $ .09 $ .06
Weighted average number of
common shares outstanding 9,577,621 9,577,621
See Notes to Consolidated Financial Statements
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<CAPTION>
AMPCO-PITTSBURGH CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Ended March 31,
1998 1997
<S> <C> <C>
Cash flows from operating activities:
Net income $ 4,656,122 $ 3,795,332
Adjustments to reconcile net income to net
cash flows from operating activities:
Depreciation 1,919,415 1,671,204
Gain on sale of investments - (214,665)
Deferred income taxes 373,000 50,000
Other - net 125,255 62,226
(Increase) decrease in assets:
Receivables 1,278,996 1,785,400
Inventories (929,390) (854,573)
Other assets (690,617) 555,496
Increase (decrease) in liabilities
Accounts payable 381,607 (733,343)
Accrued payrolls and employee
benefits (433,925) (111,602)
Other liabilities 2,214,414 1,142,737
Net cash flows from operating
activities 8,894,877 7,148,212
Cash flows from investing activities:
Purchases of property, plant and
equipment (1,957,013) (3,728,367)
Proceeds from sales of property, plant
and equipment 371,657 -
Unexpended industrial revenue bond
proceeds 278,420 1,829,711
Proceeds from sales of investments - 229,467
Net cash flows from investing
activities (1,306,936) (1,669,189)
Cash flows from financing activities:
Dividends paid (861,986) (1,532,419)
Net cash flows from financing activities (861,986) (1,532,419)
Effect of exchange rate changes on cash (25,096) (86,703)
Net increase in cash 6,700,859 3,859,901
Cash at beginning of year 21,695,512 25,510,231
Cash at end of period $ 28,396,371 $ 29,370,132
Supplemental information:
Income tax payments $ 7,226 $ 362,607
Interest payments 179,282 152,113
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 March 31, 1998, the
consolidated statements of income for the three month
periods ended March 31, 1998 and 1997 and the
consolidated statements of cash flows for the three
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, 1997. The
results of operations for the period ended March 31,
1998 are not necessarily indicative of the operating
results for the full year.
2. Inventory
Inventories, principally valued on the LIFO method, are
comprised of the following:
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March 31, December 31,
1998 1997
Raw materials $ 6,289,670 $ 6,213,953
Work-in-process 23,087,612 23,904,940
Finished goods 4,838,765 3,440,584
Supplies 2,002,097 1,893,017
$ 36,218,144 $ 35,452,494
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3. Comprehensive Income
The Corporation adopted Statement of Financial
Accounting Standards No. 130, "Reporting Comprehensive
Income", effective January 1, 1998. This Statement
establishes standards for reporting and display of
comprehensive income and its components in the financial
statements. The Corporation's first quarter 1998
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comprehensive income of $4,402,000 consists of net
income of $4,656,000 and an other comprehensive loss of
$254,000, related to a foreign currency translation
adjustment. The comprehensive income for the comparable
period in 1997 of $2,227,000 consists of net income of
$3,795,000 and other comprehensive losses of $902,000
for foreign currency translation and $666,000 for a net-
of-tax unrealized loss on available-for-sale securities.
4. Basic Earnings Per Share
Basic earnings per 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. Currently there are no potentially dilutive
securities; accordingly, basic earnings per share and
dilutive earnings per share are equivalent.
5. Recently Issued Accounting Standard
In September 1997, the Financial Accounting Standards
Board (FASB) issued Statement of Financial Accounting
Standards (SFAS) No. 131, "Disclosures about Segments of
an Enterprise and Related Information". 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. Generally, financial
information is required to be reported on the basis that
it is used internally for evaluating segment performance
and deciding how to allocate resources to segments. The
Corporation must adopt the provisions of SFAS No. 131
for its consolidated financial statements for the year
ending December 31, 1998.
The adoption of SFAS No. 131 will not effect 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 Three Month Periods Ended
March 31, 1998 and 1997
Operations
Net sales of $48,598,000 for the first quarter of 1998 were
19.0% higher when compared to 1997 sales of $40,834,000.
Excluding the impact of the previous year acquisitions of
F. R. Gross and Atlantic Grinding and Welding, which were
not included in the first quarter of 1997, sales increased
approximately 12.0% compared to the prior year. Most of
the Corporation's operations experienced higher shipment
levels due primarily to improved economic activity in
domestic markets. Strong shipments in the first quarter
and a slowing of forged steel roll orders from customers in
Asia resulted in a decrease in the order backlog to
$103,800,000 at March 31, 1998 compared to $115,200,000 at
December 31, 1997.
The cost of products sold as a percentage of sales was
67.5% in 1998 and 68.2% in 1997.
Selling and administrative expenses were $6,807,000 in 1998
compared to $5,920,000 in 1997. The increase is
principally due to the inclusion of the acquired companies
in 1998.
Depreciation expense increased to $1,919,000 in 1998
compared to $1,671,000 in 1997 due to a combination of
higher capital expenditures and the inclusion of the
acquired businesses.
Due to higher sales, a product mix providing better than
average profit margins and the contribution from
acquisitions, income from operations of $7,074,000
increased by 31% compared to $5,382,000 in 1997.
Other income (expense) in 1997 included gains from the sale
of investments of $215,000.
As a result of all of the above, the Corporation had net
income of $4,656,000 in 1998 compared to $3,795,000 in
1997.
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Liquidity and Capital Resources
Net cash flow from operating activities was positive in
1998 and 1997 at $8,895,000 and $7,148,000, respectively.
Operating cash flow in 1998 benefitted from a $1,692,000
increase in income from operations.
Capital expenditures for 1998 totaled $1,957,000 compared
to $3,728,000 in 1997. Capital appropriations carried
forward from March 31, 1998 total $7,200,000 and unexpended
industrial revenue bond proceeds of $1,940,000 are
available to fund a portion of this capital spending.
Funds generated internally are expected to be sufficient to
finance the balance of the capital expenditures.
Cash outflows with respect to financing activities in 1998
reflect an increase in the quarterly dividend rate to $.09
per share compared to $.06 per share in 1997. Included in
1997's first quarter dividend is an additional prior year-
end dividend of $960,000 or $.10 per share.
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 March 31, 1998 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.
Impact of Year 2000
The Corporation and its subsidiaries are taking actions to
provide that their computer systems are capable of
processing for the periods the year 2000 and beyond. The
year 2000 issue and related costs are not expected to have
a material impact on the operations of the Corporation.
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PART II - OTHER INFORMATION
AMPCO-PITTSBURGH CORPORATION
Items 1-3. None
Item 4. Submission of Matters to a Vote of Security Holders
On April 28, 1998, at the annual meeting of
shareholders, Ernest G. Siddons and Leonard M.
Carroll were elected directors of the Registrant:
For Withheld
Ernest G. Siddons 8,678,077 252,407
Leonard M. Carroll 8,755,301 175,174
Item 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.
[S] [C]
AMPCO-PITTSBURGH CORPORATION
DATE: May 13, 1998 BY: s/Robert A. Paul
Robert A. Paul
President and
Chief Executive Officer
DATE: May 13, 1998 BY: s/Robert J. Reilly
Robert J. Reilly
Vice President - Finance
and Treasurer
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<CAPTION>
EXHIBIT 27
EXHIBIT 27
<S> <C>
<ARTICLE> 5
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 28,396,371
<SECURITIES> 0
<RECEIVABLES> 34,531,449
<ALLOWANCES> 669,036
<INVENTORY> 36,218,144
<CURRENT-ASSETS> 103,705,704
<PP&E> 140,428,823
<DEPRECIATION> 68,479,927
<TOTAL-ASSETS> 202,795,793
<CURRENT-LIABILITIES> 26,223,899
<BONDS> 12,586,000
0
0
<COMMON> 9,577,621
<OTHER-SE> 123,378,606
<TOTAL-LIABILITY-AND-EQUITY> 202,795,793
<SALES> 48,598,350
<TOTAL-REVENUES> 48,917,690
<CGS> 32,797,645
<TOTAL-COSTS> 41,523,939
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 172,629
<INCOME-PRETAX> 7,221,122
<INCOME-TAX> 2,565,000
<INCOME-CONTINUING> 4,656,122
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,656,122
<EPS-PRIMARY> .49
<EPS-DILUTED> .49
</TABLE>
