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, 1995
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 77-0100596
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
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
3,939,725 on March 31, 1995. No other class of Common Stock exists.
PAGE 1
AMERON, INC.
INDEX
Page No.
-------
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
PAGE 2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Ameron, Inc. and Subsidiaries
Consolidated Statements of Operations
(In thousands, except share and per share data)
Three Months Ended
February 28
---------- ----------
1995 1994
---------- ----------
Sales $ 98,031 $ 93,330
Cost of Sales 74,020 70,164
---------- ----------
Gross Profit 24,011 23,166
Selling, General and Administrative Expenses 23,595 22,728
Other Income 1,285 2,398
---------- ----------
Income before Interest Expense and Income Taxes 1,701 2,836
Interest Expense 3,020 2,687
---------- ----------
Income (Loss) before Income Taxes (1,319) 149
Provision (Benefit) for Income Taxes (528) 60
---------- ----------
Income (Loss) of Consolidated Companies (791) 89
Equity in Earnings of Affiliated Companies,
net of taxes 907 -
---------- ----------
Net Income $ 116 $ 89
========== ==========
Net Income per Share $ 0.03 $ 0.02
========== ==========
Cash Dividends per Share $ 0.32 $ 0.32
========== ==========
Average Common and Equivalent Shares Outstanding 3,941,018 3,912,242
========== ==========
See accompanying notes to financial statements.
PAGE 3
Ameron Inc. and Subsidiaries
Consolidated Balance Sheets
(In thousands except share and per share data)
Feb. 28 Nov. 30
1995 1994
--------- ---------
ASSETS
Current Assets
Cash and cash equivalents $ 13,566 $ 9,030
Receivables, net 92,744 97,519
Inventories 80,075 71,644
Deferred income tax benefits 4,707 4,706
Prepaid expenses 5,502 5,192
-------- ---------
Total current assets 196,594 188,091
Investments, Advances and Equity in
Undistributed Earnings Of Affiliated Companies 37,462 37,315
Property, Plant and Equipment, net 116,526 112,953
Other Assets 12,786 12,497
-------- ---------
Total Assets $363,368 $ 350,856
======== =========
LIABILITIES and STOCKHOLDERS' EQUITY
Current Liabilities
Short-term borrowings $ 2,891 $ 2,931
Current portion of long-term debt 9,729 9,674
Trade payables 28,970 25,507
Accrued liabilities 31,753 33,726
Claims and other 3,751 10,435
Income taxes 93 4,813
-------- ---------
Total current liabilities 77,187 87,086
Deferred Income Taxes 6,251 5,759
Long-term Debt, less current portion 106,740 92,847
Other Long-term Liabilities 48,788 40,357
-------- ---------
Total liabilities 238,966 226,049
Stockholders' Equity
Common stock, par value $2.50 a share,
Authorized, 12,000,000 shares
Outstanding, 3,939,725 shares at
February 28, 1995 and 3,935,711 shares at
November 30, 1994, net of treasury shares 12,782 12,772
Additional paid-in capital 14,771 14,658
Retained earnings 138,441 139,586
Cumulative foreign currency translation adjustments 1,187 570
Treasury stock (1,172,900 shares), at cost (42,779) (42,779)
-------- ---------
Total stockholders' equity 124,402 124,807
-------- ---------
Total Liabilities and Stockholders' Equity $363,368 $ 350,856
======== =========
See accompanying notes to financial statements.
PAGE 4
Ameron Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(In thousands)
Three Months Ended
February 28
1995 1994
--------- ---------
Cash Flow from Operating Activities
Net income $ 116 $ 89
Adjustments to reconcile to net cash
provided by operating activities:
Depreciation 3,842 3,943
Equity in earnings of affiliated companies (907) -
Dividends from affiliated companies 2,680 952
Other, net 2,004 1,028
Changes in operating assets & liabilities:
Change in receivables 3,547 (2,674)
Change in inventories (7,664) 1,163
Change in other current assets (265) 934
Change in trade payables and
other current liabilities (4,914) (149)
-------- ---------
Net cash provided by (used in) operating
activities (1,561) 5,286
Cash Flow from Investing Activities
Proceeds from sale of assets 176 140
Additions to property, plant and equipment (6,280) (3,199)
Other (353) (1,133)
-------- ---------
Net cash used in investing activities (6,457) (4,192)
Cash Flow from Financing Activities
Net change in debt with maturities
of three months or less - 471
Issuance of debt 13,550 -
Repayment of debt (217) (92)
Dividends to common stockholders (1,261) (1,246)
Issuance of common stock - 394
-------- ---------
Net cash provided by (used in) financing
activities 12,072 (473)
Effect of Exchange Rate Changes
on Cash and Equivalents 482 (59)
-------- ---------
Net Change in Cash and Equivalents 4,536 562
Beginning Cash and Equivalents Balance 9,030 15,738
-------- ---------
Ending Cash and Equivalents Balance $ 13,566 $ 16,300
======== =========
Other Cash Flow Information:
Interest paid $ 3,427 $ 454
======== =========
Income taxes paid $ 4,182 $ 2,068
======== =========
See accompanying notes to financial statements.
PAGE 5
Notes to Consolidated Financial Statements
February 28, 1995
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, 1995 and the consolidated results of operations for the three month
periods ended February 28, 1995 and 1994, and cash flows for the three
month periods ended February 28, 1995 and 1994. Accounting measurements
at interim dates inherently involve greater reliance on estimates than
at year end, thus the results of operations for the periods 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, 1994.
Note 2. Inventories
Inventories are stated at the lower of cost (principally first-in,
first-out) or market. Inventories at February 28, 1995 and November 30,
1994 were comprised of the following (in thousands):
Feb. 28 Nov. 30
1995 1994
-------- --------
Finished products $ 38,447 $ 34,664
Products in process 22,950 20,175
Materials and supplies 18,678 16,805
-------- --------
Total Inventories $ 80,075 $ 71,644
======== ========
PAGE 6
Note 3. Affiliated Companies
Equity in earnings of affiliated companies are recognized in the Company's
net income partly on a lag basis, net of taxes, only to the extent
that cash dividends are anticipated.
Summarized operating results of affiliated companies in the Concrete and
Steel Pipe Group segment follow, U.S. dollars in thousands:
Three Months Ended
February 28
-------- --------
1995 1994
-------- --------
Net Sales $ 11,317 $ 22,012
Gross Profit $ 2,430 $ 6,998
Net Income (Loss) $ (285) $ 1,593
Amounts shown above represent operating results for Gifford-
Hill-American, Inc. for the three-month periods ended January
31, 1995 and 1994 and operating results for Ameron Saudi Arabia, Ltd.
for the three-month periods ended December 31, 1994 and 1993.
Summarized results of operations of Tamco, Bondstrand, Ltd., and Oasis
Ameron, Ltd. follow, U.S. dollars in thousands:
Three Months Ended
February 28
-------- --------
1995 1994
-------- --------
Net Sales $ 30,094 $ 30,867
Gross Profit $ 4,971 $ 497
Net Income (Loss) $ 1,655 $ (992)
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, 1994
and 1993.
PAGE 7
Note 4. Income Taxes
The deferred tax assets and deferred tax liabilities recorded on the
balance sheet as of February 28, 1995 are as follows, U.S. Dollars
in thousands:
Non-
Current Current
-------- ---------
Deferred Tax Assets
Self-insurance & contingency reserves $ - $ (8,315)
Employee benefits (1,297) (6,729)
Accounts receivable (1,925) -
Inventory (2,064) -
Alternative minimum tax credits - (3,612)
Miscellaneous - (170)
-------- ---------
Total Deferred Tax Asset $ (5,286) $ (18,826)
======== =========
Deferred Tax Liabilities
Investments $ - $ 4,763
Fixed Assets - 20,127
Miscellaneous 579 187
-------- ---------
Total Deferred Tax Liability $ 579 $ 25,077
======== =========
PAGE 8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Ameron Inc. and Subsidiaries
February 28, 1995
INTRODUCTION
Management's Discussion and Analysis should be read in conjunction with
the same discussion included in the Company's 1994 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
Cash and cash equivalents totaled $13.6 million, an increase of $4.5
million from the balance at November 30, 1994.
Operating activities used approximately $1.6 million of cash during the
first quarter as higher working capital requirements offset earnings
and cash dividends received from affiliated companies. The increase
in working capital reflects the seasonal demands of the business,
especially in the Concrete and Steel Pipe and the Protective
Coatings businesses. The cash used in operating activities also
includes payments for interest and income taxes.
Cash used in investment activities consisted principally of capital
expenditures associated with start-up of the Las Vaqueros Water Project
in Northern California that is being supplied by the Concrete and Steel
Pipe Segment. Other capital expenditures during the quarter were for
normal replacement and upgrades of machinery and equipment, and
construction of a protective coatings warehouse in The Netherlands.
During the fiscal year ending November 30, 1995, the Company expects
that capital expenditures will be consistent with the level of spending
in 1994 and 1993 and approximately equal to depreciation. Capital
expenditures are expected to be funded from existing cash balances and
cash generated from operations.
At February 28, 1995, the Company had approximately $61.1 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 the future operating requirements.
PAGE 9
RESULTS OF OPERATIONS - FIRST QUARTER
Ameron earned $116,000, or 3 cents per share, on sales of $98.0 million
for the first quarter of 1995. This compares with net income of $89,000,
or 2 cents per share, earned during the same period last year on sales of
$93.3 million. The first quarter results reflect the Company's
traditional seasonal pattern and additionally 1995 includes the impact of
severe weather conditions in the western U.S. and The Netherlands.
The earnings improvement compared to the first quarter of last year is
attributable to higher equity income recorded as a result of cash
dividends received from two affiliated companies, Gifford-Hill-American,
Inc. and TAMCO. Excluding equity income, earnings of Ameron's business
segments were down compared to last year due to an unfavorable change
in product mix and bad weather.
The Protective Coatings Group had lower sales and income compared with
last year primarily as a result of lower volume in Europe. Also during
the quarter, the threat of flooding in The Netherlands forced the shut-
down and evacuation of the Company's protective coatings plant. The
plant was not damaged, and the facility returned to full operation prior
to the end of the quarter. Domestic sales volume continued strong and
exceeded last year's level.
Fiberglass Pipe sales and earnings were about equal to last year as
improved results in Asia and Europe offset lower domestic activity.
The Company's fiberglass pipe plant in The Netherlands was also closed
and evacuated because of the threat of flooding. The plant returned
to full operation prior to the end of the quarter with no damage.
The Concrete and Steel Pipe Segment achieved higher sales and earnings
compared to last year despite rain storms that delayed pipe installations
throughout California. The order backlog continued at record levels as
two major orders were received for pipelines in California. Given the
size of the order backlog, the business is well positioned to achieve
continuing strong performance for the balance of 1995.
Sales and earnings for the Construction Products business in Hawaii were
equal to last year, while the domestic Pole Products business continued
to have steady growth in sales and earnings.
PAGE 10
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, approximately
$6.8 million of consolidated retained earnings were not restricted
at February 28, 1995.
Item 6. Exhibits and Reports on Form 8-K
No reports on Form 8-K were filed during the three months ended
February 28, 1995.
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, 1995
/s/ Gary Wagner
___________________________________
Gary Wagner
Senior Vice President and
Chief Financial Officer,
Treasurer
PAGE 11
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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