[TEXT]
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
/ X / QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended February 28, 1994
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 No. 1 - 9102
AMERON, INC.
(Exact name of registrant as specified in its charter)
DELAWARE
77-01005
(State or other jurisdiction of
(I.R.S.
incorporation or organization)
Identifi
245 South Los Robles Avenue
Pasadena, California 91101-2894
(Address of principal executive offices)
Telephone Number (818) 683-4000
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
The number of shares outstanding of Common Stock, $2.50 par value,
was 3,915,698 on March 31, 1994. No other class of Common Stock
exists.
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AMERON, INC.
INDEX
<TABLE>
<CAPTION>
Page No.
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<S>
<C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statements of Operations 3
Consolidated Balance Sheets 4
Consolidated Statements of Cash Flows 5
Notes to Consolidated Financial Statements 6-8
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations 9-10
PART II. OTHER INFORMATION
Item 2. Changes in Securities 11
Item 6. Exhibits and Reports on Form 8-K 11
</TABLE>
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
Ameron, Inc. and Subsidiaries
Consolidated Statements of Operations
(In thousands, except share and per share data)
<CAPTION>
Three Months Ended
February 28
--------------------
1994 1993
--------- ---------
<S> <C> <C>
Sales $ 93,330 $ 96,454
Cost of Goods Sold 70,164 69,452
--------- ---------
Gross Profit 23,166 27,002
Selling, General and Administrative Expenses 22,728 26,527
Other Income 2,398 1,801
--------- ---------
Operating Profit 2,836 2,276
Interest Expense 2,687 2,765
--------- ---------
Income (Loss) before Income Taxes 149 (489)
Provision (Benefit) for Income Taxes 60 (181)
--------- --------
Income (Loss) of Consolidated Companies 89 (308)
Equity in Earnings of Affiliated Companies, net
of tax - 1,091
--------- --------
Net Income $ 89 $ 783
========= ========
Net Income per Share $ 0.02 $ 0.20
========= =========
Cash Dividends per Share $ 0.32 $ 0.32
========= =========
Average Common and Equivalent Shares
Outstanding 3,912,242 3,857,949
========= =========
</TABLE>
See accompanying notes to financial statements.
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<TABLE>
Ameron Inc. and Subsidiaries
Consolidated Balance Sheets
(In thousands except share and per share data)
<CAPTION>
Feb. 28 Nov. 30
1994 1993
--------- ---------
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 16,300 $ 15,738
Receivables, net 79,591 77,572
Inventories 59,977 61,661
Deferred income tax benefits 13,996 13,586
Prepaid expenses 7,607 8,590
--------- ---------
Total current assets 177,471 177,147
Investments, Advances and Equity in
Undistributed Earnings Of Affiliated Companies 38,304 39,984
Property, Plant and Equipment, net 111,792 113,199
Other Assets 8,077 7,512
--------- ---------
Total Assets $335,644 $337,842
========= =========
LIABILITIES and STOCKHOLDERS' EQUITY
Current Liabilities
Short-term borrowings $ 1,614 $ 2,021
Current portion of long-term debt 5,884 5,978
Trade payables 24,228 25,309
Accrued liabilities 39,667 38,919
Reserve for contingencies 14,873 13,083
Income taxes 3,734 5,847
--------- ---------
Total current liabilities 90,000 91,157
Deferred Income Taxes 6,374 15,605
Long-term Debt, less current porti 90,168 89,590
Other Long-term Liabilities 33,932 25,976
--------- ---------
Total liabilities 220,474 222,328
Stockholders' Equity
Common stock, par value $2.50 a share,
Authorized, 12,000,000 shares,
Outstanding, 3,915,573 shares at
February 28, 1994 and 3,886,465 shares
at November 30, 1993, net of treasury shares 12,721 12,648
Additional paid-in capital 13,958 13,414
Retained earnings 132,655 133,812
Cumulative foreign currency translation
adjustments (665) (861)
Minimum pension liability adjustment (720) (720)
Treasury stock (1,172,900 shares), at cos (42,779) (42,779)
--------- ---------
Total stockholders' equity 115,170 115,514
--------- ---------
Total Liabilities and Stockholders' Equity $335,644 $337,842
========= =========
</TABLE>
See accompanying notes to financial statements
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<TABLE>
Ameron Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(In thousands)
<CAPTION>
Three Months Ended
February 28
1994 1993
--------- ---------
<S> <C> <C>
Cash Flow from Operating Activities
Net income $ 89 $ 783
Adjustments to reconcile to net cash
provided by operating activities:
Depreciation 3,943 4,101
Equity in earnings of affiliated companies - (1,091)
Dividends from affiliated companies 952 452
Other, net 1,028 753
Changes in operating assets & liabilities:
Change in receivables (2,674) 15,364
Change in inventories 1,163 (8,347)
Change in other current assets 934 6
Change in trade payables and
other current liabilities (149) (2,702)
--------- ---------
Net cash provided by operating
activities 5,286 9,319
Cash Flow from Investing Activities
Proceeds from sale of assets 140 995
Additions to property, plant and equipment (3,199) (2,565)
Other (1,133) (497)
---------- ---------
Net cash used in investing activities (4,192) (2,067)
Cash Flow from Financing Activities
Net change in debt with maturities
of three months or less 471 2,070
Repayment of debt (92) (5,200)
Dividends to common stockholders (1,246) (1,231)
Issuance of common stock 394 -
---------- ---------
Net cash used in financing activities (473) (4,361)
Effect of Exchange Rate Changes
on Cash and Equivalents (59) 211
---------- ---------
Net Change in Cash and Equivalents 562 3,102
Beginning Cash and Equivalents Balance 15,738 26,447
---------- ---------
Ending Cash & Equivalents Balance $ 16,300 $ 29,549
========== =========
Other Cash Flow Information:
Interest paid $ 454 $ 596
========= =========
Income taxes paid $ 2,068 $ 418
========= =========
</TABLE>
See accompanying notes to financial statements
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Ameron Inc. and Subsidiaries
Notes to Consolidated Financial Statements
February 28, 1994
Note 1. Basis Of Presentation
The consolidated financial statements for the interim periods
included herein are unaudited, however, they contain all normal
recurring accruals which, in the opinion of management, are
necessary to present fairly the consolidated financial position of
the Company at February 28, 1994 and the consolidated results of
operations for the three month periods ended February 28, 1994 and
1993, and cash flows for the three month periods ended February 28,
1994 and 1993. Accounting measurements at interim dates inherently
involve greater reliance on estimates than at year end, thus the
results of operations for the period presented, are not necessarily
indicative of the results to be expected for the full year.
The accompanying consolidated financial statements do not include
footnotes and certain financial presentations normally required
under generally accepted accounting principles and, therefore,
should be read in conjunction with the Annual Report on Form 10-K
for the year ended November 30,1993.
Note 2. Inventories
Inventories are stated at the lower of cost (principally first-in,
first-out) or market. Inventories at February 28, 1994 and
November 30, 1993 were comprised of the following (in thousands):
<PAGE>
<TABLE>
<CAPTION>
Feb. 28 Nov. 30
1994 1994
--------- ---------
<S> <C> <C>
Finished products $ 33,980 $ 34,124
Products in process 11,513 11,689
Materials and supplies 14,484 15,848
--------- ---------
Total Inventories $ 59,977 $ 61,661
========= =========
</TABLE>
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Note 3. Affiliated Companies
Summarized operating results of affiliated companies in the
Concrete and Steel Pipe Products segment follow, U.S. dollars in
thousands:
<TABLE>
<CAPTION>
Three Months Ended
February 28
--------------------
1994 1993
--------- ---------
<S> <C> <C>
Net Sales $ 22,012 $ 17,326
Gross Profit $ 6,998 $ 4,672
Net Income $ 1,593 $ 1,844
</TABLE>
Equity in earnings of affiliated companies are recorded in the
Company's net income partly on a lag basis, net of taxes and net of
reserves for amounts that management anticipates will not be
distributed to the company. Amounts shown above represent
operating results for Gifford-Hill-American, Inc. for the
three-month periods ended January 31, 1994 and 1993 and operating
results for Ameron Saudi Arabia, Ltd. for the three-month periods
ended December 31, 1993 and 1992.
Summarized results of operations of Tamco, Bondstrand, Ltd., and
Oasis Ameron, Ltd. follow, U.S. dollars in thousands:
<PAGE>
<TABLE>
<CAPTION>
Three Months Ended
February 28
--------------------
1994 1993
--------- ---------
<S> <C> <C>
Net Sales $ 30,867 $ 22,081
Gross Profit $ 497 $ 4,164
Net Income (Loss) $ (992) $ 2,222
</TABLE>
Amounts shown above include operating results for Tamco for the
three-month periods stated, and operating results for Bondstrand,
Ltd. and Oasis Ameron, Ltd. for the three-month periods ended
December 31, 1993 and 1992.
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Note 4. Income Taxes
Effective December 1, 1993, the company adopted FAS 109 "Accounting
for Income Taxes." This standard requires the use of the asset and
liability approach for financial accounting and reporting of income
taxes. The effect of this accounting change did not have a material
effect on the accompanying financial statements. The deferred tax
assets and deferred tax liabilities recorded on the balance sheet
as of February 28, 1994 are as follows, U.S. dollars in thousands:
<TABLE>
<CAPTION>
Non-
Current Current
--------- ---------
<S> <C> <C>
Deferred Tax Assets
Self-insurance & contingency
reserves $ 2,039 $ 7,068
Employee benefits 4,683 3,689
Accounts receivable 3,066 -
Investments 831 -
Inventory 2,971 -
Miscellaneous 406 655
Alternative minimum tax credits - 2,206
Valuation allowance - (633)
--------- ---------
Total Deferred Tax Asset $ 13,996 $ 12,985
========= =========
Deferred Tax Liabilities
Investments $ - $ 1,210
Fixed Assets - 18,149
--------- ---------
Total Deferred Tax Liability $ - $ 19,359
========= =========
</TABLE>
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Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Ameron Inc. and Subsidiaries
February 28, 1994
INTRODUCTION
Management's Discussion and Analysis should be read in conjunction
with the same discussion included in the Company's 1993 Annual
Report on Form 10-K. Reference should also be made to the
financial statements included in this Form 10-Q for comparative
consolidated balance sheets and statements of operations and cash
flows.
LIQUIDITY AND CAPITAL RESOURCES
At February 28, 1994, cash and cash equivalents were $16.3 million;
$562,000 lower than the balance at November 30, 1993.
Cash provided by operating activities during 1994 was derived
mainly from earnings and dividends from affiliated companies,
offset by changes in working capital. Receivables rose as a result
of unseasonally higher domestic sales, while inventories declined
company-wide.
Investing activities included capital expenditures for a large
diameter welded steel pipe facility. Remaining expenditures were
primarily for replacement of machinery and equipment and
refurbishment of existing facilities. During the fiscal year
ending November 30, 1994, the company anticipates spending $10
million to $14 million for capital expenditures, which will be
funded from existing cash balances and cash generated from
operations.
At February 28, 1994, the company had approximately $65 million in
unused credit lines available from foreign and domestic banks.
The company believes that cash and cash equivalents on hand,
anticipated cash flows from operations and funds available from
existing lines of credit will be sufficient to meet its future
operating requirements.
RESULTS OF OPERATIONS - FIRST QUARTER
Ameron earned $89,000, or 2 cents per share, on sales of $93.3
million for the first quarter of 1993. For the same period last
year, the company earned 20 cents per share on sales of $96.5
million. However, 1993 results included substantial equity in
earnings of affiliated companies, as well as significant income
from large fiberglass pipe projects in North Africa that did not
continue into the current year.
In 1994, management is taking a more conservative approach to
recording equity in earnings from affiliated companies, recognizing
income only to the extent that management anticipates receiving
cash dividends. Excluding equity in earnings from affiliated
companies, consolidated earnings from Ameron's four core businesses
were actually higher in the first quarter of 1994 than during the
same period in 1993. The company lost $308,000 in the first
quarter of 1993 from consolidated companies.
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The improvement in first-quarter results is particularly noteworthy
given the company's history of weather-related first-quarter losses
and the fact that the winter of 1993-94 was the most severe of the
century in many of Ameron's markets. The main reason for the
change was the positive impact of the restructuring actions taken
by management in the fourth quarter of 1993. These actions were
the primary reason that selling, general and administrative
expenses declined to $22.7 million in the first quarter of fiscal
1994 from $26.5 million during the same period last year.
Sales from Ameron's worldwide protective coatings operations were
moderately better than last year in spite of unusually inclement
weather. Overall earnings improved substantially, primarily due to
the restructuring. Domestic operations benefitted from stronger
sales to commercial and government customers. However, European
sales lagged somewhat compared to last year because of sluggish
economic conditions. The Company anticipates improved industrial
sales in the United States during fiscal 1994 as the domestic
economy continues to improve.
Excluding sales and profits from two large projects in North Africa
in the first quarter of 1993, Ameron's worldwide fiberglass pipe
business reported improved sales and earnings compared to last
year. Export shipments from the U.S., including fuel-handling
systems, rose appreciably, and growth continued in the worldwide
market for pipe used on offshore platforms. European results not
related to the North African projects were down slightly compared
to last year due to the harsh winter and soft economy.
Concrete and steel pipe operations in the western states posted
lower results for the quarter because of project delays and weak
pricing. Earnings are expected to improve in the second half of
the year. This business started 1994 with a low order backlog.
However, subsequent orders for the first two phases of the Coastal
Aqueduct in Southern California have increased backlog
significantly compared to the end of last year.
Sales and earnings were generally flat in Hawaii. Although
private-sector work continues to decline, as predicted, sales to
public-sector projects remain strong. Ameron is a major supplier of
ready-mix concrete to the H-3 Interstate Highway project and the
new Honolulu Airport.
The domestic pole products business reported improved results for
the quarter due chiefly to increased shipments of concrete poles to
West Coast markets. Higher earnings were also attributable, in
part, to the restructuring.
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Part II. OTHER INFORMATION
Item 2. Changes in Securities
Terms of lending agreements place restrictions on cash dividends,
borrowings, investments and guarantees and require maintenance of
specified minimum working capital and certain current ratios.
Under the most restrictive provisions of these agreements, almost
all of consolidated retained earnings were restricted at February
28, 1994.
Item 6. Exhibits and Reports on Form 8-K
No reports on Form 8-K were filed during the three months ended
February 28, 1994.
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.
AMERON, INC.
Date: April 14, 1994
________________________
Gary Wagner
Senior Vice President and
Chief Financial Officer,
Treasurer
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