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, 2000
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 12, 2000, 9,602,621 common shares were outstanding.
- 1 -
AMPCO-PITTSBURGH CORPORATION
INDEX
Page No.
Part I - Financial Information:
Item 1 - Consolidated Financial Statements
Consolidated Balance Sheets -
March 31, 2000 and December 31, 1999 3
Consolidated Statements of Income -
Three Months Ended March 31, 2000
and 1999 4
Condensed Consolidated Statements of Cash Flows -
Three Months Ended March 31, 2000
and 1999 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:
Exhibits and Reports on Form 8-K 12
Signatures 14
Exhibits
- Exhibit 27
- 2 -
PART I -FINANCIAL INFORMATION
AMPCO-PITTSBURGH CORPORATION
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C>
March 31, December 31,
2000 1999
Assets
Current assets:
Cash and cash equivalents $ 20,396,811 $ 16,322,834
Receivables, less allowance for
doubtful accounts of $429,292 in
2000 and $364,138 in 1999 48,888,080 51,114,519
Inventories 47,963,203 47,281,320
Other 4,323,831 3,864,604
Total current assets 121,571,925 118,583,277
Property, plant and equipment, at cost:
Land and land improvements 5,157,341 5,269,931
Buildings 28,621,369 28,981,171
Machinery and equipment 135,372,075 134,402,869
169,150,785 168,653,971
Accumulated depreciation (81,506,708) (79,933,027)
Net property, plant and equipment 87,644,077 88,720,944
Prepaid pension 15,059,325 14,679,325
Other noncurrent assets 12,659,609 13,824,778
$236,934,936 $235,808,324
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 13,258,694 $ 14,197,817
Accrued payrolls and employee benefits 9,181,312 9,395,336
Other 15,986,095 16,699,277
Total current liabilities 38,426,101 40,292,430
Employee benefit obligations 15,674,438 15,716,358
Industrial revenue bond debt 14,661,000 14,661,000
Deferred income taxes 11,996,269 11,440,862
Other noncurrent liabilities 1,126,323 1,077,948
Total liabilities 81,884,131 83,188,598
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 9,602,621 in 2000
and 9,590,121 in 1999 9,602,621 9,590,121
Additional paid-in capital 102,780,980 102,668,480
Retained earnings 43,238,704 40,034,339
Accumulated other comprehensive (loss)
income (571,500) 326,786
Total shareholders' equity 155,050,805 152,619,726
$236,934,936 $235,808,324
See Notes to Consolidated Financial Statements.
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</TABLE>
AMPCO-PITTSBURGH CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C>
Three Months Ended March 31,
2000 1999
Net sales $ 59,469,353 $ 49,417,506
Operating costs and expenses:
Cost of products sold
(excluding depreciation) 42,911,588 35,088,097
Selling and administrative 8,035,682 7,181,088
Depreciation 2,030,711 1,908,626
52,977,981 44,177,811
Income from operations 6,491,372 5,239,695
Other income (expense) - net (156,744) (98,079)
Income before income taxes 6,334,628 5,141,616
Income taxes 2,170,000 1,740,000
Net income $ 4,164,628 $ 3,401,616
Basic and diluted earnings
per share $ 0.43 $ 0.36
Cash dividends declared per share $ 0.10 $ 0.10
Weighted average number of
common shares outstanding 9,595,341 9,577,621
</TABLE>
See Notes to Consolidated Financial Statements
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AMPCO-PITTSBURGH CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C>
Three Months Ended March 31,
2000 1999
Net cash flows provided by operating
activities $ 5,883,726 $ 5,146,800
Cash flows from investing activities:
Purchases of property, plant and
equipment (3,383,134) (2,961,511)
Proceeds from sale of business
(Note 2) 1,272,882 -
Proceeds from sale of investments 1,297,248 -
Use of unexpended industrial revenue
bond proceeds - 150,013
Net cash flows (used in) investing
activities (813,004) (2,811,498)
Cash flows from financing activities:
Proceeds from industrial revenue bonds - 2,075,000
Proceeds from the issuance of stock 125,000 -
Dividends paid (959,012) (957,762)
Net cash flows (used in) provided by
financing activities (834,012) 1,117,238
Effect of exchange rate changes on cash
and cash equivalents (162,733) (121,258)
Net increase in cash and cash
equivalents 4,073,977 3,331,282
Cash and cash equivalents at
beginning of period 16,322,834 33,107,815
Cash and cash equivalents at
end of period $20,396,811 $ 36,439,097
Supplemental information:
Income tax payments $ 116,950 $ 734,010
Interest payments 215,514 177,241
Noncash investing and financing activities: Note 2
</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 March 31, 2000, and
the consolidated statements of income and of cash flows
for the three months ended March 31, 2000 and 1999 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. These consolidated financial
statements should 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, 1999. The
results of operations for the period ended March 31,
2000 are not necessarily indicative of the operating
results for the full year.
2. Business Acquisition
On August 2, 1999, the Corporation acquired the stock of
The Davy Roll Company and two smaller companies. The
consolidated financial statements include the results of
operations of Davy from its acquisition date of August
2, 1999. The pro forma financial information is based
on the unaudited financial statements for each of these
companies. The consolidated results of operations for
the first quarter 1999, on a pro forma basis, as though
the business had been acquired as of January 1, 1999,
are as follows (in thousands except for per share
information):
Net sales $ 61,557
Net income $ 3,418
Basic and diluted
earnings per share $ 0.36
The unaudited pro forma financial information is
included for comparative purposes only and is not
intended to be indicative of the results that would have
occurred if the acquisition had been consummated on
January 1, 1999 or that may be obtained in the future.
In March 2000, the Corporation sold the net assets,
excluding accounts receivables, of the small roll
division of The Davy Roll Company for approximately net
book value. A portion of the proceeds included a
$400,000 note, secured by a first priority mortgage, on
the property. The note is payable in two equal annual
installments beginning in January 2001. Interest
accrues on the outstanding balance at base rate plus 1%.
- 6 -
3. Inventory
At March 31, 2000 and December 31, 1999, approximately
65% and 63%, respectively, of the inventories are valued
on the LIFO method, with the remaining inventories being
valued on the FIFO method. Inventories are comprised of
the following:
(in thousands)
March 31, December 31,
2000 1999
Raw materials $ 13,660 $ 11,714
Work-in-process 26,305 26,212
Finished goods 3,981 4,084
Supplies 4,017 5,271
$ 47,963 $ 47,281
4. Comprehensive Income
The Corporation's comprehensive income for the three
months ended March 31, 2000 and 1999 consisted of:
(in thousands)
Three Months Ended
March 31,
2000 1999
Net income $ 4,165 $ 3,402
Foreign currency translation (769) (1,067)
Unrealized holding (losses)
gains on securities (129) 29
Comprehensive income $ 3,267 $ 2,364
5. Earnings Per Share
Basic earnings per share is computed by dividing net
income by the weighted average number of common shares
outstanding. In February 2000, 12,500 options were
exercised resulting in a weighted average number of
common shares outstanding for the three months ended
March 31, 2000 of 9,595,341 shares. The weighted
average number of common shares outstanding for the
three months ended March 31, 1999 equaled 9,577,621
shares.
The computation of diluted earnings per share is similar
to basic earnings per share except that the denominator
is increased to include the net additional common shares
that would have been outstanding assuming exercise of
outstanding stock options, calculated using the treasury
stock method. The weighted average number of common
shares outstanding assuming exercise of the stock
options was 9,611,127 shares and 9,580,984 shares for
the three months ended March 31, 2000 and 1999,
respectively.
- 7 -
6. Business Segments
Presented below are the net sales and income before
taxes for the Corporation's three business segments.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
(in thousands)
Three Months Ended March 31
Net Sales Income Before Taxes
2000 1999 2000 1999
Forged and Cast Rolls $ 32,357 $ 22,440 $ 3,694 $ 2,709
Air and Liquid
Processing 18,387 17,126 2,151 1,648
Plastics Processing
Machinery 8,725 9,852 646 883
Total Reportable
Segments 59,469 49,418 6,491 5,240
Other income
(expense) - net - - (156) (98)
Total $ 59,469 $ 49,418 $ 6,335 $ 5,142
</TABLE>
7. Subsequent Event
Effective April 2000, the number of shares of common
stock that may be granted under the 1997 Stock Option
Plan was increased from 300,000 shares to 600,000
shares.
8. Recently Issued Accounting Standards
In June 1998, the Financial Accounting Standards Board
issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities". This pronouncement
requires all derivative instruments to be reported at
fair value on the balance sheet; depending on the nature
of the derivative instrument, changes in fair value will
be recognized either in net income or as an element of
other comprehensive income. As amended, SFAS No. 133 is
first effective for the Corporation for the year ending
December 31, 2001. The Corporation does not engage in
significant activity with respect to derivative
instruments or hedging activities. Management is
evaluating the impact but does not anticipate adoption
of SFAS No. 133 will have a material effect on the
financial condition, results of operations or liquidity
of the Corporation.
- 8 -
AMPCO-PITTSBURGH CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Operations for the Three-Month Periods Ended March 31, 2000
and 1999
On August 2, 1999, the Corporation acquired the stock of The
Davy Roll Company and two smaller companies (Davy).
Subsequently, in March 2000, the small roll division was
sold for approximately net book value.
Operations
Net Sales. Net sales for the three-month period ended March
31, 2000 were $59,469,000, compared to $49,418,000 for the
same period of the prior year. A discussion of the first
quarter sales and results for the Corporation's three
segments is included below. The order backlog at March 31,
2000 approximated $116,672,000 in comparison to $118,098,000
at December 31, 1999. The sale of the small roll division
reduced the backlog by approximately $3,000,000 which was
offset primarily by a larger backlog for the Plastics
Processing Machinery segment.
Cost of Products Sold. The cost of products sold, excluding
depreciation, equaled 72.2% and 71.0% of net sales for the
three months ended March 31, 2000 and 1999, respectively.
The increase is due primarily to Davy which has a higher
cost of production. Without Davy, cost of products sold,
excluding depreciation, approximated 70% of net sales.
Income from Operations. Income from operations increased
$1,251,000 for the three-month period ended March 31, 2000
to $6,491,000 compared to $5,240,000 for the same period of
the prior year. This is a result of increased earnings from
the Forged and Cast Rolls and the Air and Liquid Processing
segments.
Forged and Cast Rolls. Sales for the Forged and Cast Rolls
segment increased for the three months ended March 31, 2000
by $9,917,000 to $32,357,000. This compares with sales of
$22,440,000 for the same period of the prior year. The
increase is attributable to the acquisition of Davy, and
increased shipments by the U.S. operations offset by lower
sales of the Belgium operation. Earnings for this segment
increased for the three months ended March 31, 2000 by
$985,000 to $3,694,000 compared with earnings of $2,709,000
for the comparable prior year period. The increase is
attributable to the addition of Davy, favorable product mix
and operating efficiencies. Earnings of the Belgium
operation continue to be negatively impacted by the strength
of the dollar thereby increasing the cost of imported
forgings and causing margin erosion.
- 9 -
Air and Liquid Processing. Sales for the Air and Liquid
Processing segment improved for the three months ended March
31, 2000 by 7.4% to $18,387,000. This compares with sales
of $17,126,000 for the comparable 1999 period. Sales were
higher for each of the operations, particularly at the pumps
operation. Earnings for this segment increased for the
three-month period ended March 31, 2000 to $2,151,000
compared to $1,648,000 for the same period in 1999. Higher
sales volumes and improved margins earned principally by the
pumps operation account for this increase.
Plastics Processing Machinery. Sales for the Plastics
Processing Machinery segment for the three months ended
March 31, 2000 decreased by $1,127,000 to $8,725,000 from
$9,852,000 for the 1999 period. Earnings decreased for the
three months ended March 31, 2000 by $237,000 to $646,000
compared to earnings of $883,000 for the prior year period.
Lower opening backlogs for 2000 and unusually high shipments
of the machine product line in first quarter 1999 account
for this decline.
Other Income (Expense). Other income (expense) for the
three months ended March 31, 2000 of $(156,000) compares to
$(98,000) for the three months ended March 31, 1999. The
increase in expense was due to lower interest earnings
attributable to lower cash and cash equivalent balances
resulting from the third quarter 1999 acquisition of Davy.
In addition, interest expense was higher due to higher
interest rates on existing debt.
Net Income. As a result of all of the above, the
Corporation had net income of $4,165,000 for the three
months ended March 31, 2000 in comparison to $3,402,000 for
the comparable 1999 period.
Liquidity and Capital Resources
Net cash flows from operating activities were positive for
first quarter 2000 at $5,884,000 in comparison to positive
cash flows of $5,147,000 for first quarter 1999. The
difference in cash flows between the two periods results
primarily from changes in working capital requirements
(principally accounts receivable and accounts payable which
decreased in 2000 but increased in 1999).
Net cash flows used in investing activities were $813,000 in
2000 compared to $2,811,000 in 1999. In March 2000, the
Corporation sold the net assets, excluding accounts
receivables, of the small roll division of The Davy Roll
Company for approximately $1,673,000. A portion of the
proceeds includes a $400,000 note which is payable in two
equal annual installments beginning January 2001. Interest
accrues on the outstanding balance at base rate plus 1%.
Also in March 2000, the Corporation sold the remaining
discontinued operation property, which it carried as an
investment, for its carrying value of approximately
$1,300,000. Capital expenditures for 2000 totaled
$3,383,000 compared to $2,811,000 in 1999, after
consideration of reimbursement from unexpended bond proceeds
from previously issued bonds. Capital expenditures carried
forward from March 31, 2000 approximate $9,800,000. Funds
on-hand, funds generated by future operations and available
lines of credit are expected to be sufficient to finance
capital expenditure requirements.
- 10 -
Cash used in financing activities for 2000 and 1999 includes
payment of quarterly dividends at a rate of $.10 per share.
In first quarter 2000, proceeds were received from the
issuance of stock under the Corporation's stock option plan
resulting in net cash used in financing activities of
$834,000. In first quarter 1999, proceeds were received
from the issuance of tax-exempt industrial revenue bonds
resulting in net cash provided by financing activities of
$1,117,000.
The Corporation maintains short-term lines of credit in
excess of the cash needs of its businesses. The total
available at March 31, 2000 was approximately $10,000,000.
With respect to environmental concerns, the Corporation has
been named a potentially responsible party at a third party
site. 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
Each subsidiary had reviewed its information and operational
systems and manufacturing processes to identify those
products, services or systems that were not Year 2000
compliant. As a result of these reviews, certain information
and operational systems were modified or replaced so they
would be Year 2000 compliant. These modifications and
replacements were made in conjunction with the Corporation's
overall systems initiatives. The Corporation did not
experience and does not anticipate any business interruption
as a result of Year 2000 compliance issues.
Conversion to the Euro
The Corporation has identified issues that may result from
conversion to the Euro which include primarily changes to
information systems at its Belgian operation. The
Corporation does not expect the conversion to the Euro will
have a material impact on its financial condition, results
of operations or liquidity.
- 11 -
PART II - OTHER INFORMATION
AMPCO-PITTSBURGH CORPORATION
Items 1-5. None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
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; the Quarterly
Report on Form 10-Q for the quarter ended
March 31, 1987; and the Quarterly Report on
Form 10-Q for the quarter ended September
30, 1998.
(b) 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 Chase Mellon
Shareholder Services dated as of
September 28, 1998.
Incorporated by reference to the Form 8-
K Current Report dated September 28,
1998.
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) Severance Agreements between Ampco-
Pittsburgh Corporation and certain
officers and employees of Ampco-
Pittsburgh Corporation.
- 12 -
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; the
Annual Report on Form 10-K for fiscal
year ended December 31, 1994; the
Quarterly Report on Form 10-Q for the
quarter ended June 30, 1997; the Annual
Report on Form 10-K for the fiscal year
ended December 31, 1998; and the
Quarterly Report on Form 10-Q for the
quarter ended June 30, 1999.
(c) 1997 Stock Option Plan, as amended.
Incorporated by reference to the Proxy
Statements dated March 14, 1997 and
March 15, 2000.
27. Financial Data Schedule
(b) Reports on Form 8-K
None
- 13 -
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: May 12, 2000 BY: s/Robert A. Paul
Robert A. Paul
President and
Chief Executive Officer
DATE: May 12, 2000 BY: s/Marliss D. Johnson
Marliss D. Johnson
Vice President
Controller and Treasurer
- 14 -
<TABLE> <S> <C>
<CAPTION>
EXHIBIT 27
EXHIBIT 27
<S> <C>
<ARTICLE> 5
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 20,396,811
<SECURITIES> 0
<RECEIVABLES> 49,317,372
<ALLOWANCES> 429,292
<INVENTORY> 47,963,203
<CURRENT-ASSETS> 121,571,925
<PP&E> 169,150,785
<DEPRECIATION> 81,506,708
<TOTAL-ASSETS> 236,934,936
<CURRENT-LIABILITIES> 38,426,101
<BONDS> 14,661,000
0
0
<COMMON> 9,602,621
<OTHER-SE> 145,448,184
<TOTAL-LIABILITY-AND-EQUITY> 236,934,936
<SALES> 59,469,353
<TOTAL-REVENUES> 59,579,404
<CGS> 42,911,588
<TOTAL-COSTS> 52,977,981
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 266,795
<INCOME-PRETAX> 6,334,628
<INCOME-TAX> 2,170,000
<INCOME-CONTINUING> 4,164,628
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,164,628
<EPS-BASIC> 0.43
<EPS-DILUTED> 0.43
</TABLE>
