<PAGE>
United States
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended November 30, 1995 OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number 1-9102
AMERON, INC.
(Exact name of registrant as specified in its charter)
Delaware 77-0100596
(State of incorporation) (I.R.S. Employer Identification No.)
245 South Los Robles Avenue
Pasadena, CA 91101
(Address and Zip Code of principal executive offices)
Registrant's telephone number, including area code: (818) 683-4000
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Name of each exchange
Title of each class on which registered
---------------------------- ---------------------
Common Stock $2.50 par value New York Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: None
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
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. x
-----
The Registrant estimates that as of February 9, 1996 the aggregate market
value of the shares of its Common Stock, $2.50 par value, held by non-affiliates
of the Registrant (that is, shares beneficially owned by other than executive
officers and directors) was in excess of $141 million.
On February 9, 1996 there were 3,956,497 shares of Common Stock, $2.50 par
value outstanding. This is the only class of Common Stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
1. PORTIONS OF AMERON'S 1995 ANNUAL REPORT TO STOCKHOLDERS (PARTS I, II AND IV).
2. PORTIONS OF AMERON'S PROXY STATEMENT FOR THE 1996 ANNUAL MEETING OF
STOCKHOLDERS (PART III).
<PAGE>
PART I
AMERON, INC.
AMERON, INC., a Delaware corporation, and its consolidated subsidiaries are
collectively referred to herein as "Ameron", the "Company", the "Registrant" or
the "Corporation" unless the context clearly indicates otherwise. The business
of the Company has been divided into business segments in Item 1(c)(1).
Substantially all activities relate to the manufacture and supply of goods and
services to the industrial, utility, marine and construction markets. All
references to "the year" or "the fiscal year" pertain to the twelve months ended
November 30, 1995. All references to the "Annual Report" pertain to the
Company's 1995 Annual Report to Stockholders.
ITEM 1 - BUSINESS
(a) GENERAL DEVELOPMENT OF BUSINESS.
Although the Company's antecedents date back to 1907, it evolved directly
from the merger of two separate firms in 1929, resulting in the
incorporation of American Concrete Pipe Co. on April 22, 1929. Various name
changes occurred between that time and 1942, at which time the Company's
name became American Pipe and Construction Co. By the late 1960s the
Company was almost exclusively engaged in manufacturing and had expanded its
product lines to include not only concrete and steel pipe but also
high-performance protective coatings, ready-mix concrete, aggregates and
reinforced thermosetting resin pipe and fittings.
At the beginning of 1970, the Company's name was changed to Ameron, Inc. In
the meantime, other manufactured products had been added to its product
lines. These included concrete and steel poles for street and area
lighting, and tapered steel vertical and cantilevered poles for traffic
signals. In 1984, the Company acquired a major domestic fiberglass pipe
business, including a manufacturing plant in Burkburnett, Texas. In 1988,
the Company expanded its ability to serve the water transmission and
distribution market through the acquisition of a major steel pipe
fabricating facility in Fontana, California.
Further details or commentary on the year's operations can be found in the
Annual Report, which is Exhibit 13 to this report on Form 10-K, and which
should be read in conjunction with this report.
(b) FINANCIAL INFORMATION AS TO INDUSTRY SEGMENTS.
The information contained in Notes (1), (4) and (14) of Notes to
Consolidated Financial Statements on pages 44, 45, 50, 52 and 53 of the
Annual Report is incorporated herein by reference.
(c) NARRATIVE DESCRIPTION OF BUSINESS.
(1) For geographical and operational convenience, the Company is organized
into divisions. These divisions are combined into the following groups
serving the following-described industry segments.
a) The Protective Coatings Group develops, manufactures and markets
high-performance coatings and surfacer systems on a world-wide basis.
These products are utilized for the preservation of major structures,
such as metallic and concrete facilities and equipment, to prevent
their degradation by corrosion, abrasion, marine fouling and other
forms of chemical and physical attack. The primary markets served
include marine, offshore, petrochemical, power generation, petroleum,
chemical, steel, pulp and paper, railroad, bridges, mining, metal
processing and original equipment manufacturing. These products are
marketed by direct sales, as well as through manufacturers'
representatives, distributors and licensees. Competition is based
upon quality, price and service. Manufacture of these products is
carried out in the Company's plant in Arkansas, by a wholly-owned
subsidiary in The Netherlands, by jointly-owned operations in
<PAGE>
Mexico and Saudi Arabia and by various third party licensees. The
Company licenses its patents, trademarks, know-how and technical
assistance to various of its subsidiary and affiliated companies and
to various third-party licensees.
b) The Fiberglass Pipe Group develops, manufactures and markets
filament-wound and molded fiberglass pipe and fittings. These
products are used by a wide range of process industries, including
industrial, petroleum, chemical processing and petrochemical
industries, for service station replacement piping systems, aboard
marine vessels and on offshore oil platforms, and are marketed as an
alternative to metallic piping systems which ultimately fail under
corrosive operating conditions. These products are marketed by
direct sales, as well as through manufacturers' representatives,
distributors and licensees. Competition is based upon quality, price
and service. Manufacture of these products is carried out in the
Company's plants in Texas and South Carolina, by wholly-owned
subsidiaries in The Netherlands and Singapore, and by a
jointly-owned affiliate in Saudi Arabia.
c) The Concrete & Steel Pipe Group supplies products and services used
in the construction of pipeline facilities for various utilities.
Eight plants are located in three of the continental western
states. Also included within this group is American Pipe &
Construction International, a wholly-owned subsidiary, with two
plants in Colombia. These plants manufacture concrete cylinder
pipe, prestressed concrete cylinder pipe, steel pipe and reinforced
concrete pipe for water transmission, storm and industrial waste
water and sewage collection. These products are marketed by direct
selling using the Company's own personnel and by competitive bidding.
Customers include local, state and federal agencies, developers and
general contractors. Normally no one customer or group of customers
will account for sales equal to or greater than 10 percent of the
Company's consolidated revenue. However, occasionally, when more than
one unusually large project is in progress, combined sales to all
U.S. government agencies and/or general contractors for those
agencies can reach those proportions. Besides competing with several
other concrete pipe manufacturers located in the market area,
alternative products such as ductile iron, asbestos cement, and clay
pipe compete with the Company's concrete and steel pipe products,
but ordinarily these other materials do not offer the full diameter
range produced by the Company. Principal methods of competition are
price, delivery schedule and service. The Company's technology is
used in the Middle East through affiliated companies whose activities
are not reflected in the amounts reported for this industry segment.
This segment also includes the manufacturing and marketing on a
world-wide basis through direct sales of polyvinyl chloride and
polyethylene sheet lining for the protection of concrete pipe and
cast-in-place concrete structures from the corrosive effects of
sewer gases, acids and industrial chemicals. Competition is based
on quality, price and service. Manufacture of this product is
carried out in the Company's plant in California. This segment also
includes engineered design, fabrication and direct sale of
specialized proprietary equipment which is outside the regular
business of the other segments of the Company's businesses.
Competition for such work is based upon quality, price and service.
Manufacture of such equipment is carried out in the Company's plant
in California.
d) The Construction & Allied Products Group includes the Hawaii
Division, which supplies ready-mix concrete, crushed and sized
basaltic aggregates, dune sand, concrete pipe and box culverts,
primarily to the construction industry in Hawaii. These products are
marketed through direct sales. Ample raw materials are available
locally in Hawaii and, as to rock products, the Company has exclusive
rights to a quarry containing many years' reserves. Within the
market area there are competitors for each of the segment's products.
No single competitor offers the full range of products sold by the
Company in Hawaii. The principal methods of competition
2
<PAGE>
are in price and service, since an appreciable portion of the
segment's business is obtained through competitive bidding.
This segment also includes the operations of the Pole Products
Division, which manufactures and markets concrete and steel poles for
highway, street and outdoor area lighting and for traffic signals.
Sales are nationwide, but with a stronger concentration in the
western states. Marketing is handled by the Company's own sales
force and by outside sales agents. Competition for such products is
mainly based on price, but with some consideration for service and
delivery. Manufacture of these products is carried out in two plants
in California, as well as plants in Washington and Oklahoma.
e) Except as individually shown in the above descriptions of industry
segments, the following comments or situations apply to all segments:
(i) Because of the number of manufacturing locations and the
variety of raw materials essential to the business, no critical
situations exist with respect to supply of materials. The
Company has multiple sources for raw materials. The effects of
increases in costs of energy are being mitigated to the extent
practical through conservation and through addition or
substitution of equipment to manage the use and reduce
consumption of energy.
(ii) The Company owns certain patents and trademarks, both U.S. and
foreign, related to its products. It licenses these
proprietary items to some extent in the U.S., and to a greater
degree abroad. These patents, trademarks, and licenses do not
constitute a material portion of the Company's business. No
franchises or concessions exist.
(iii) Many of the Company's products are used in connection with
capital goods, water and sewage transmission and construction
of capital facilities. Favorable or adverse effects on general
sales volume and earnings can result from weather conditions.
Normally, sales volume and earnings will be lowest in the first
fiscal quarter. Seasonal effects simply accelerate or slow the
business volume and normally do not bring about severe changes
in full-year activity.
(iv) With respect to working capital items, the Company does not
encounter any requirements which are not common to other
companies engaged in the same industries. No unusual amounts
of inventory are required to meet seasonal delivery
requirements. All of the Company's industry segments turn
their inventory between three and ten times annually. Average
days' sales in accounts receivable range between 38 and 94 for
all segments.
(v) The value of backlog orders at November 30, 1995 and 1994 by
industry segment is shown below. A substantial portion of the
November 30, 1995 backlog is expected to be billed and recorded
as sales during the fiscal year 1996.
<TABLE>
<CAPTION>
Industry Segment 1995 1994
---------------- -------- --------
(in thousands)
<S> <C> <C>
Protective Coatings Group $ 6,139 $ 7,558
Fiberglass Pipe Group 20,691 20,666
Concrete & Steel Pipe Group 96,864 103,185
Construction & Allied Products Group 15,581 11,566
------- -------
Total $139,275 $142,975
-------- --------
-------- --------
</TABLE>
3
<PAGE>
(vi) There was no significant change in competitive conditions or
the competitive position of the Company in the industries and
localities in which it operates. There is no knowledge of any
single competitive situation which would be material to an
understanding of the business.
(vii) Sales contracts in all of the Company's business segments
normally consist of purchase orders, which in some cases are
issued pursuant to master purchase agreements. Longer term
contracts seldom involve commitments of more than one year by
the Company, and exceptions are not deemed material by
management. Payment is normally due from 30 to 60 days after
shipment, with progress payments prior to shipment in some
circumstances. It is the Company's practice to require letters
of credit prior to shipment of foreign orders, subject to
limited exceptions. The Company does not typically extend
long-term credit to purchasers of its products.
(2) a) Approximate expense during each of the last three fiscal years for
Research and Development costs is shown under the caption in Note (1)
of Notes to Consolidated Financial Statements on page 44 of the
Annual Report, which information is incorporated herein by reference.
b) The Company's business is not dependent on any single customer or few
customers, the loss of any one or more of whom would have a material
adverse effect on its business.
c) For many years the Company has been consistently installing or
improving devices to control or eliminate the discharge of pollutants
into the environment. Accordingly, compliance with federal, state,
and locally enacted provisions relating to protection of the
environment is not having, and is not expected to have, a material
effect upon the Company's capital expenditures, earnings, or
competitive position.
d) At year-end the Company and its consolidated subsidiaries employed
approximately 2,816 persons. Of those, approximately 1,434 were
covered by labor union contracts, and there are five separate
bargaining agreements subject to renegotiation in 1996. Management
does not presently anticipate a strike or other labor disturbance in
connection with renegotiation of these agreements; however, the
possibility of such an occurrence exists.
(d) FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS AND EXPORT
SALES.
The information contained in Notes (4) and (14) of Notes to Consolidated
Financial Statements on pages 45, 50, 52 and 53 of the Annual Report is
incorporated herein by reference.
Export sales in the aggregate from domestic operations during the last three
fiscal years were:
<TABLE>
<CAPTION>
In thousands
------------
<S> <C>
1995 $15,552
1994 13,648
1993 12,687
</TABLE>
4
<PAGE>
ITEM 2 - DESCRIPTION OF PROPERTY
(a) The location and general character of principal plants and other materially
important physical properties used in the Company's operations is tabulated
below. Property is owned in fee except where otherwise indicated by
footnote. In addition to the property shown, the Company owns vacant land
adjacent to or in the proximity of some of its operating locations and holds
this property available for use when it may be needed to accommodate
expanded or new operations. Property listed does not include any temporary
project sites which are generally leased for the duration of the respective
projects. With the exception of the Kailua, Oahu property, shown under the
Construction & Allied Products industry segment, there are no material
leases with respect to which expiration or inability to renew would have any
material adverse effect on the Company's operations. The lease term on the
Kailua property extends to the year 2012. This is the principal source of
quarried rock and aggregates for the Company's operations on Oahu, Hawaii
and, in management's opinion, reserves are adequate for its requirements
during the term of the lease.
(b) The Company believes that its existing facilities are adequate for current
and presently foreseeable operations. Because of the cyclical nature of
certain of the Company's operations, and the substantial amounts involved in
some individual orders, the level of utilization of particular facilities
may vary significantly from time to time in the normal course of
operations.
INDUSTRY SEGMENT - GROUP
Division - Location Description
------------------- -----------
PROTECTIVE COATINGS GROUP
Protective Coatings division - USA
Brea, CA Office, Laboratory
Little Rock, AR Office, Plant
Ameron B.V.
Geldermalsen, The Netherlands Office, Plant
FIBERGLASS PIPE GROUP
Fiberglass Pipe division - USA
Burkburnett, TX Office, Plant
Spartanburg, SC Plant
Ameron B.V.
Geldermalsen, The Netherlands Office, Plant
Ameron (Pte) Ltd.
Singapore *Office, Plant
5
<PAGE>
CONCRETE AND STEEL PIPE GROUP
Southern division
Rancho Cucamonga, CA *Office
Etiwanda, CA Plant
Lakeside, CA Plant
South Gate, CA Plant
Palmdale, CA Plant
Phoenix, AZ Office, Plant
Northern division
Tracy, CA Office, Plant
Portland, OR Office, Plant
Steel Fabrication division
Fontana, CA *Office, Plant
Protective Linings division
Brea, CA Office, Plant
Fabrication Plant
South Gate, CA Office, Plant
American Pipe & Construction International
Bogota, Colombia Office, Plant
Cali, Colombia Plant
CONSTRUCTION & ALLIED PRODUCTS GROUP
Hawaii division
Honolulu, Oahu, HI *Office, Plant
Kailua, Oahu, HI *Plant, Quarry
Barbers Point, Oahu, HI *Plant
Puunene, Maui, HI *Office, Plant, Quarry
Pole Products division
Fillmore, CA Office, Plant
Oakland, CA *Plant
Everett, WA *Office, Plant
Tulsa, OK *Office, Plant
CORPORATE
Corporate Headquarters
Pasadena, CA *Office
Corporate Research & Engineering
South Gate, CA Office, Laboratory
*Leased
6
<PAGE>
ITEM 3 - LEGAL PROCEEDINGS
An action was filed in 1992 in the U.S. District for the District of Arizona by
the Central Arizona Water Conservation District ("CAWCD") seeking damages
against several parties, including the Company and the Company's customer, Peter
Kiewit Sons' Company ("Kiewit"), in connection with six prestressed concrete
pipe siphons furnished and installed in the 1970's as part of the Central
Arizona Project ("CAP"), a federal project to bring water from the Colorado
River to Arizona. The CAWCD also filed separate actions against the U.S. Bureau
of Reclamation ("USBR") in the U.S. Court of Claims and with the Arizona
Projects Office of the USBR in connection with the CAP siphons. The CAWCD
alleged that the six CAP siphons were defective and that the USBR and the
defendants in the U.S. District Court action were liable for the repair or
replacement of those siphons at a claimed estimated cost of $146.7 million. On
September 14, 1994 the U.S. District granted the Company's motion to dismiss the
CAWCD action and entered judgment against the CAWCD and in favor of the Company
and its co-defendants. CAWCD has filed a notice of appeal with the Ninth
Circuit Court of Appeals.
Separately, on September 28, 1995 the Contracting Officer for the USBR issued a
final decision claiming for the USBR approximately $40 million in damages
against Kiewit, based in part on the Contracting Officer's finding that the
siphons supplied by the Company were defective. That claim amount is considered
by the Company to be duplicative of the damages sought by the CAWCD for the
repair or replacement of the siphons in its aforementioned action in the U.S.
District for the District of Arizona. The Contracting Officer's final decision
has been appealed by Kiewit to the U.S. Department of the Interior Board of
Contract Appeals ("IBCA"). The Company is actively cooperating with, and
assisting, Kiewit in the administrative appeal of that final decision before the
IBCA.
The Company internally, as well as through independent third party consultants,
has conducted engineering analyses regarding the allegations that the CAP
siphons were defective and believes that the siphons were manufactured in
accordance with the project specifications and other contract requirements, and
therefore it is not liable for any claims relating to the siphons, whether by
the CAWCD or by the USBR. The Company has recorded provisions deemed adequate
by the Company to permit it to continue to vigorously defend its position in
this matter. The Company believes that it has meritorious defenses to these
actions and that resultant liability, if any, should not have a material adverse
effect on the financial position of the Company.
In July 1992 the Company was served with a complaint in an action brought by the
City & County of San Francisco in Superior Court of the State of California
against the Company and two co-defendants, in connection with a pipeline
referred to as San Andreas Pipeline No. 3, a water transmission pipeline which
was installed between 1980 and 1982. The Company furnished the pipe used in
that pipeline. Plaintiff alleges that the pipeline is defective. Plaintiff
originally sought damages of $43.95 million to replace the entire pipeline, but
in June 1994 it filed its third amended complaint which alleges damages
according to proof and in excess of the jurisdictional minimum of $25,000. The
Company has recorded provisions deemed adequate by the Company to permit it to
continue to vigorously defend its position in this matter. The Company believes
that it has meritorious defenses to this action and that resultant liability, if
any, should not have a material adverse effect on the financial position of the
Company.
In addition, certain other claims, suits and complaints, which arise in the
ordinary course of business, have been filed or are pending against the Company.
Management believes that these matters, and the matters discussed above, are
either adequately reserved, covered by insurance, or would not have an adverse
material effect on the financial position of the Company and its results of
operations if disposed of unfavorably.
7
<PAGE>
The Company is also subject to federal, state and local laws and regulations
concerning the environment and is currently participating in administrative
proceedings at several sites under these laws. It is difficult to estimate with
any certainty the total cost of remediation, the timing and extent of remedial
actions required by governmental authorities, and the amount of the Company's
liability, if any, in proportion to that of other potentially responsible
parties. While the Company finds it difficult to estimate with any certainty
the total cost of remediation at the several sites which are subject to
environmental regulatory proceedings, on the basis of currently available
information, the Company does not believe it likely that the outcome of such
environmental regulatory proceedings will have a material adverse effect on the
Company's financial position or its results of operations. This conclusion is
based on the location and type of contamination of each site, potential recovery
from insurance carriers and existing reserves. When it has been possible to
reasonably estimate the Company's liability with respect to these matters,
provisions have been made as appropriate.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(Not Applicable)
ITEM 4A - EXECUTIVE OFFICERS OF THE REGISTRANT
The following sets forth information with respect to individuals who served as
executive officers as of November 30, 1995 and who are not directors of the
Company. All executive officers are appointed by the Board of Directors to
serve at the discretion of the Board of Directors.
Name Age Title and Year Elected as Officer
- ------------------- --- --------------------------------------------------
George J. Fischer 61 Senior Vice President, Human Resources 1992
Gordon G. Robertson 56 Senior Vice President, Technology 1992
Javier Solis 49 Senior Vice President of Administration,
Secretary & General Counsel 1984
S. Daniel Stracner 49 Vice President, Communications &
Public Affairs 1993
Gary Wagner 44 Senior Vice President & Chief Financial
Officer, Treasurer 1990
Allen R. Wilkie 45 Vice President 1994
All of the executive officers named above have held high level managerial or
executive positions with the Company for more than the past five years except
Mr. Wilkie, who joined the Company in 1994. Prior to joining the Company, he
was Corporate Director of Information Systems with GenCorp in Akron, Ohio.
8
<PAGE>
PART II
ITEM 5 - MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
The Common Stock, $2.50 Par Value, of the Company, its only outstanding class of
common equity, is traded on the New York Stock Exchange, the only exchange on
which it is presently listed. On February 9, 1996, there were 1,830
stockholders of record of such stock.
Dividends have been paid each quarter during the prior two years and for many
years in the past. Information as to the amount of dividends paid during the
reporting period and the high and low sales prices of the Company's Common Stock
during that period are set out under the caption Per Share Data shown on page 50
of the Annual Report, which information is incorporated herein by reference.
Terms of lending agreements which place restrictions on cash dividends are
discussed in Note (9) of Notes to Consolidated Financial Statements on page 48
of the Annual Report, which is incorporated herein by reference.
ITEM 6 - SELECTED FINANCIAL DATA
The information required by this item is contained in the Selected Consolidated
Financial Information shown on page 34 of the Annual Report, which information
is incorporated herein by reference.
ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The information required by this item with respect to fiscal years 1995 and 1994
is shown under Ameron 1995 Financial Review on pages 35-38 of the Annual Report,
which information is incorporated herein by reference. The information required
for 1993 is as follows:
Results of Operations: 1993 Compared with 1992
GENERAL. Ameron recorded a loss in 1993 of $24.3 million, compared to net
income of $5.9 million in 1992. During the fourth quarter of 1993, the Company
charged to costs and expenses $45.8 million ($31.5 million after tax) for
restructuring and related activities. Of the $45.8 million, $33.8 million
related directly to restructuring and the write-down of related assets. An
additional $9 million provision was recorded for estimated costs related to
certain environmental and legal matters. A $3 million charge was also recorded
against cost of sales in the fourth quarter for the write-down of selected
inventories identified as part of the restructuring efforts. The total effect
of these actions resulted in a net loss of $6.28 per share for the year.
However, excluding the additional fourth quarter charges, net of their
applicable tax benefits, net income per share for the year would have been
$1.87, an improvement over the $1.53 per share earned in the prior year.
SALES. Sales in 1993 increased $6.9 million over the prior year due to higher
shipments of fiberglass pipe and protective coatings to projects in North
Africa. These improvements were partially offset by reduced sales of concrete
and steel pipe and construction products.
9
<PAGE>
Sales of protective coatings declined $2.2 million from 1992. In the United
States, sales of industrial coatings improved over 1992, while revenues from
marine coatings declined due to a reduction in defense spending that impacted
government orders. Sales in Europe were lower because of recessionary trends,
but shipments to North Africa and the Middle East improved from Ameron B.V.
Significant shipments of fiberglass pipe from the Company's European operation
to several large crude oil projects in North Africa were the principal reason
for the $19.2 million increase in sales over 1992 in the Fiberglass Pipe
segment. Additionally, sales in the United States improved throughout all market
areas, with the biggest increase coming from fuel-handling systems used for
service station rehabilitation. Partially offsetting these improvements were
lower sales to industrial customers in Europe.
Concrete & Steel Pipe sales declined $3.2 million from 1992. Improved deliveries
of concrete and steel pipe to projects in Northern California and Nevada were
offset by reduced sales in Southern California. This business segment was
impacted by reduced public spending for large water transmission projects and a
low level of construction activity in the Company's geographic markets. The
decline in construction activity resulted in increased price competition among
producers of non-pressure concrete pipe.
Construction & Allied Products sales fell $7.0 million from 1992 as privately-
funded construction activity continued to decline on the Hawaiian Islands.
However, deliveries of ready-mix concrete, sand and aggregates to
publicly-funded projects remained strong, while deliveries to residential
construction markets improved because of increased housing starts.
GROSS PROFIT. The gross profit margin remained unchanged from 1992. Sales of
fiberglass pipe and protective coatings to North Africa and improved operating
efficiencies favorably impacted the overall gross profit margin. However, price
competition in Europe and in certain concrete pipe markets partially offset
these gains. As part of the restructuring process, a $3 million charge was
recorded in the fourth quarter to write down selected inventories, which had the
effect of decreasing the gross profit margin from 27.1% to 26.4%.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Despite increased insurance
costs, added expenses related to the North African sales and the higher expenses
of the Company's South American operations, overall selling, general and
administrative expenses changed little from 1992. This was principally the
result of salaried staff reductions at the beginning of the fourth quarter.
Environmental and legal claims increased $7.8 million over 1992. As part of
management's restructuring efforts, an additional $9 million was added to
reserves.
RESTRUCTURING CHARGES AND WRITE-DOWN OF ASSETS. During 1993, the Company
charged $33.8 million against pretax earnings for restructuring and the
write-down of assets. The restructuring actions included closing two and
mothballing two concrete pipe plants in the western United States; consolidating
and scaling back Protective Coatings production facilities, distribution
facilities and sales offices in the United States, Canada and Europe; closing a
coatings plant in England; and eliminating several product lines within the
Fiberglass Pipe and Construction & Allied Products groups. Also included in the
restructuring was the company-wide elimination of approximately 330 salaried
staff positions, the planned divestiture of a non-strategic steel fabricator in
South America and the write-down of the Company's investments in selected
affiliated companies, as well as other related assets.
OTHER INCOME. Royalty, fee and other income from affiliated companies and
licensees increased over 1992, due largely to a special dividend received from a
Mexican affiliate.
INTEREST EXPENSE. The $1.7 million increase in interest expense in 1993 is
attributable mainly to accrued interest on income tax obligations related to
prior years.
10
<PAGE>
PROVISION FOR INCOME TAXES. Overall, the effective tax benefit rate in 1993 was
27.2% of the pretax loss. The tax benefit attributable to the restructuring and
related charges of $45.8 million was approximately $14.3 million; thus, taxes
attributable to pretax income, excluding the restructuring and related charges,
were $4.5 million, a 45% effective rate. The significant difference in effective
rate in 1993, compared to 30% in 1992, was due primarily to losses generated by
certain foreign subsidiaries for which no tax benefit was generated.
EQUITY IN EARNINGS OF AFFILIATED COMPANIES. Equity in earnings of jointly-owned
affiliated companies declined slightly from 1992. Sales and earnings of the
Company's Saudi Arabian affiliates were equal to or higher than prior year's
results. Gifford-Hill-American, Inc., the Company's pressure pipe affiliate in
Texas, returned to profitability in 1993, while Tamco, a steel mini-mill,
reported a loss due to increased material costs and price competition.
As part of the Company's restructuring efforts, the Company recorded a
write-down of the investments in certain affiliates to their estimated net
realizable value.
ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Consolidated Financial Statements, the report thereon of Arthur Andersen LLP
dated January 19, 1996 and Notes to Consolidated Financial Statements comprising
pages 39 through 51 of the Annual Report, are incorporated herein by reference.
ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
(Not applicable)
PART III
ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information with respect to the directors is contained under the section
entitled, "Election of Directors" in the Company's Proxy Statement which was
filed on February 20, 1996 in connection with the Annual Meeting of Stockholders
to be held on March 25, 1996. Such information is incorporated herein by
reference.
Information with respect to the executive officers of the Company is located in
Part I, Item 4A of this report.
ITEM 11 - EXECUTIVE COMPENSATION*
ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT*
ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS*
*The information required by Items 11, 12 and 13 is contained in the Company's
Proxy Statement which was filed on February 20, 1996 in connection with the 1996
Annual Meeting of Stockholders to be held on March 25, 1996. Such information
is incorporated herein by reference.
11
<PAGE>
PART IV
ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS
ON FORM 8-K
(a) (1) FINANCIAL STATEMENTS:
The financial statements to be filed hereunder are cross-referenced, in
the index immediately following, to the Annual Report, as to sections
incorporated herein by reference.
INDEX TO FINANCIAL STATEMENTS
Statement Page Reference
--------- to Annual Report
----------------
Consolidated Statements of Operations for the years
ended November 30, 1995, 1994 and 1993 39
Consolidated Balance Sheets at November 30, 1995
and 1994 40-41
Consolidated Statements of Cash Flows for the years
ended November 30, 1995, 1994 and 1993 42
Consolidated Statements of Stockholders' Equity
for the years ended November 30, 1995, 1994 and 1993 43
Notes to Consolidated Financial Statements 44-50
(i) Summarized information as to the financial condition and
results of operations for Gifford-Hill-American, Inc.,
Ameron Saudi Arabia, Ltd., Bondstrand, Ltd,
Oasis-Ameron, Ltd. and Tamco are presented in Note (4) of
Notes to Consolidated Financial Statements on page 45 of
the Annual Report, which information is incorporated
herein by reference.
(a) (2) FINANCIAL STATEMENT SCHEDULES:
The following additional financial data should be read in conjunction
with the consolidated financial statements in the 1995 Annual Report.
Schedules not included with this additional financial data have been
omitted because they are either not applicable, not required, not
significant, or the required information is provided in the consolidated
financial statements or notes thereto.
Pages of
Schedule Schedules of Ameron, Inc. and Subsidiaries This Report
-------- ------------------------------------------ -----------
Report of Independent Public Accountants 13
II Valuation and Qualifying Accounts and Reserves 14-16
12
<PAGE>
(a) (3) EXHIBITS This Report
-----------
3(i) Certificate of Incorporation 18
3(ii) Bylaws 19
4 Instrument Defining the Rights of
Security Holders, Including Indentures 20
10 Material Contracts 21
13 Annual Report 22
21 Subsidiaries of the Registrant 23
23 Consent of Independent Public Accountants 24
(b) REPORTS ON FORM 8-K
A report on Form 8-K was filed by the Corporation on September 26, 1995
reporting under Item 5 the financial results for the Company's third quarter
ended August 31, 1995.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders and the Board of Directors, Ameron, Inc.:
We have audited in accordance with generally accepted auditing standards, the
consolidated financial statements included in Ameron, Inc.'s Annual Report to
Stockholders incorporated by reference in this Form 10-K, and have issued our
report thereon dated January 19, 1996. Our audits were made for the purpose of
forming an opinion on those statements taken as a whole. The schedule listed in
the index above is the responsibility of the Company's management and is
presented for purposes of complying with the Securities and Exchange
Commission's rules and is not part of the basic financial statements. This
schedule has been subjected to the auditing procedures applied in the audits of
the basic financial statements and, in our opinion, fairly states in all
material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.
ARTHUR ANDERSEN LLP
Los Angeles, California
January 19, 1996
13
<PAGE>
AMERON, INC. AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE YEAR ENDED NOVEMBER 30, 1995
(In thousands)
<TABLE>
<CAPTION>
Addi- Deduc-
tions tions,
Balance Charged Pay- Reclas-
at to ments sifica- Balance
Begin- Costs and tions at
ning and Write- and End
Classification of Year Expense offs Others of Year
<S> <C> <C> <C> <C> <C>
Deducted from asset
accounts
Allowance for
doubtful accounts $ 4,135 $ 1,710 $ 1,138 $ 93 $ 4,800
Reserve for investments
in affiliates $ 9,748 $ 0 $ 0 $ (389)(1) $ 9,359
Reserve for write-down
of assets related to
certain foreign
affiliates $ 3,216 $ 3 $ 0 $ 0 $ 3,219
Included in current
liabilities
Reserve for pending
claims and litigation $ 6,218 $ 1,109 $ 1,894 $ (2,347) $ 3,086
Restructuring reserve $ 3,646 $ 0 $ 1,846 $ (1,261) $ 539
Other reserves $ 1,336 $ 62 $ 633 $ (1) $ 764
Reserve for self-insured
programs $ 4,392 $ 5,413 $ 3,931 $ 0 $ 5,874
Included in long-term
liabilities
Reserve for pending
claims and litigation $ 10,429 $ 1,330 $ 387 $ 2,416 $ 13,788
Restructuring reserve $ 0 $ 0 $ 0 $ 1,261 $ 1,261
Reserve for self-insured
programs $ 6,771 $ 0 $ 0 $ 0 $ 6,771
</TABLE>
(1) Included as equity in earnings of affiliated companies in Consolidated
Statement of Operations.
14
<PAGE>
AMERON, INC. AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE YEAR ENDED NOVEMBER 30, 1994
(In thousands)
<TABLE>
<CAPTION>
Addi- Deduc-
tions tions,
Balance Charged Pay- Reclas-
at to ments sifica- Balance
Begin- Costs and tions at
ning and Write- and End
Classification of Year Expense offs Others of Year
<S> <C> <C> <C> <C> <C>
Deducted from asset
accounts
Allowance for
doubtful accounts $ 4,315 $ 1,314 $ 1,793 $ 299 $ 4,135
Reserve for investments
in affiliates $ 7,323 $ 2,425 0 0 $ 9,748
Reserve for write-down
of assets related to
certain foreign
affiliates $ 11,990 $ 236 9,259 $ 249 $ 3,216
Included in current
liabilities
Reserve for pending
claims and litigation $ 7,188 $ 2,232 $ 2,844 $ (358) $ 6,218
Restructuring reserve $ 7,643 0 $ 3,997 $ 0 $ 3,646
Other reserves $ 1,797 $ 732 $ 493 $ (700) $ 1,336
Reserve for self-insured
programs $ 7,541 $ 5,997 $ 8,782 $ (364) $ 4,392
Included in long-term
liabilities
Reserve for pending
claims and litigation $ 9,484 $ 120 $ 963 $ 1,788 $ 10,429
Other reserves $ 1,722 $ 0 771 $ (951) $ 0
Reserve for self-insured
programs $ 4,867 0 0 $ 1,904 $ 6,771
</TABLE>
15
<PAGE>
AMERON, INC. AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE YEAR ENDED NOVEMBER 30, 1993
(In thousands)
<TABLE>
<CAPTION>
Addi- Deduc-
tions tions,
Balance Charged Pay- Reclas-
at to ments sifica- Balance
Begin- Costs and tions at
ning and Write- and End
Classification of Year Expense offs Others of Year
<S> <C> <C> <C> <C> <C>
Deducted from asset
accounts
Allowance for
doubtful accounts $ 5,614 $ 1,458 $ 2,296 $ (461) $ 4,315
Reserve for realization
of investments in
affiliates 0 $ 7,323 0 0 $ 7,323
Reserve for write-down
of assets related to
certain foreign
affiliates $ 8,632 $ 3,392 $ 278 $ 244 $ 11,990
Included in current
liabilities
Reserve for pending
claims and litigation $ 6,060 $ 6,523 $ 5,107 $ (288) $ 7,188
Restructuring reserve 0 $ 9,864 $ 2,221 $ 0 $ 7,643
Other reserves 0 $ 1,221 $ 339 $ 915 $ 1,797
Reserve for self-insured
programs $ 4,653 $ 11,432 $ 8,659 $ 115 $ 7,541
Included in long-term
liabilities
Reserve for pending
claims and litigation $ 2,257 $ 7,790 $ 842 $ 279 $ 9,484
Other reserves 0 $ 951 0 $ 771 $ 1,722
Reserve for self-insured
programs $ 4,867 0 0 0 $ 4,867
</TABLE>
16
<PAGE>
Pursuant to the requirements of Section 13 or 15(d) 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.
By: /s/ JAVIER SOLIS
_______________________________________________
Javier Solis, Senior Vice President & Secretary
Date: February 23, 1996
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
<TABLE>
<S> <C> <C>
Date: 2-13-96 /s/ JAMES S. MARLEN
____________________________________ Director, Chairman of the Board,
James S. Marlen President and Chief Executive
Officer (Principal Executive
Officer)
Date: 2-13-96 /s/ GARY WAGNER
____________________________________ Senior Vice President & Chief
Gary Wagner Financial Officer, Treasurer
(Principal Financial & Accounting
Officer)
Date: 2-16-96 /s/ DONALD H. ALBRECHT
____________________________________ Director
Donald H. Albrecht
Date: 2-15-96 /s/ VICTOR K. ATKINS
____________________________________ Director
Victor K. Atkins
Date: 2-16-96 /s/ STEPHEN W. FOSS
____________________________________ Director
Stephen W. Foss
Date: 2-15-96 /s/ A. FREDERICK GERSTELL
____________________________________ Director
A. Frederick Gerstell
Date: 2-15-96 /s/ J. MICHAEL HAGAN
____________________________________ Director
J. Michael Hagan
Date: 2-22-96 /s/ JOHN F. KING
____________________________________ Director
John F. King
Date: 2-16-96 /s/ ALAN L. OCKENE
____________________________________ Director
Alan L. Ockene
Date: 2-16-96 /s/ RICHARD J. PEARSON
____________________________________ Director
Richard J. Pearson
Date: 2-19-96 /s/ F. H. FENTENER VAN VLISSINGEN
____________________________________ Director
F. H. Fentener van Vlissingen
</TABLE>
17
<PAGE>
CERTIFICATE OF INCORPORATION
Incorporated by reference to Annual Report on Form 10-K filed with the
Commission for Registrant's fiscal year ended November 30, 1988.
EXHIBIT 3(i)
<PAGE>
AMERON, INC.
(a Delaware corporation)
BYLAWS
(Restated with amendments
through January 30, 1996)
ARTICLE I
Offices
SECTION 1.01. Registered Office. The registered office
of AMERON, INC. (hereinafter called the Corporation) in the State
of Delaware shall be at 1209 Orange Street, City of Wilmington,
County of New Castle, and the name of the registered agent in
charge thereof shall be The Corporation Trust Company.
SECTION 1.02. Other Offices. The Corporation may also
have an office or offices at such other place or places, either
within or without the State of Delaware, as the Board of
Directors (hereinafter called the Board) may from time to time
determine or as the business of the Corporation may require.
ARTICLE II
Meetings of Stockholders
SECTION 2.01. Annual Meetings. Annual Meetings of the
stockholders of the Corporation for the purpose of electing
directors and for the transaction of such other proper business
as may come before such meetings may be held at such time, date
and place as the Board shall determine by resolution.
SECTION 2.02. Special Meetings. Special meetings of the
stockholders of the Corporation for any purpose may only be
called in accordance with the provisions of the Certificate of
Incorporation.
SECTION 2.03. Place of Meetings. All meetings of the
stockholders shall be held at such places, within or without the
State of Delaware, as may be designated by the Board.
<PAGE>
SECTION 2.04. Notice of Meetings. Except as otherwise
required by law, notice of each meeting of the stockholders,
whether annual or special, shall be given not less than ten (10)
nor more than sixty (60) days before the date of the meeting to
each stockholder of record entitled to vote at such meeting by
delivering a typewritten or printed notice thereof to him
personally, or by depositing such notice in the United States
mail, in a postage prepaid envelope, directed to him at his post
office address furnished by him to the Secretary of the
Corporation for such purpose or, if he shall not have furnished
to the Secretary his address for such purpose, then at his post
office address last known to the Secretary, or by transmitting a
notice thereof to him at such address by telegraph, cable, or
wireless. Except as otherwise expressly required by law, no
publication of any notice of a meeting of the stockholders shall
be required. Every notice of a meeting of the stockholders shall
state the place, date and hour of the meeting, and, in the case
of a special meeting, shall also state the purpose or purposes
for which the meeting is called. Notice of any meeting of
stockholders shall not be required to be given to any stockholder
to whom notice may be omitted pursuant to applicable Delaware law
or who shall have waived such notice and such notice shall be
deemed waived by any stockholder who shall attend such meeting in
person or by proxy, except as a stockholder who shall attend such
meeting for the express purpose of objecting, at the beginning of
the meeting, to the transaction of any business because the
meeting is not lawfully called or convened. Except as otherwise
expressly required by law, notice of any adjourned meeting of the
stockholders need not be given if the time and place thereof are
announced at the meeting at which the adjournment is taken.
SECTION 2.05. Quorum. Except as otherwise required by
law, the holders of record of a majority in voting interest of
the shares of stock of the Corporation entitled to be voted
thereat, present in person or by proxy, shall constitute a quorum
for the transaction of business at any meeting of the
stockholders of the Corporation or any adjournment thereof. In
the absence of a quorum at any meeting or any adjournment
thereof, a majority in voting interest of the stockholders
present in person or by proxy and entitled to vote thereat or, in
the absence therefrom of all the stockholders, any officer
entitled to preside at, or to act as secretary of, such meeting
may adjourn such meeting from time to time. At any such
adjourned meeting at which a quorum is present any business may
be transacted which might have been transacted at the meeting as
originally called.
<PAGE>
SECTION 2.06. Voting.
(a) Each stockholder shall, at each meeting of the
stockholders, be entitled to vote in person or by proxy each
share or fractional share of the stock of the Corporation having
voting rights on the matter in question and which shall have been
held by him and registered in his name on the books of the
Corporation:
(i) on the date fixed pursuant to Section 6.05 of
these Bylaws as the record date for the determination of
stockholders entitled to notice of and to vote at such
meeting, or
(ii) if no such record date shall have been so
fixed, then (a) at the close of business on the day next
preceding the day on which notice of the meeting shall be
given or (b) if notice of the meeting shall be waived, at
the close of business on the day next preceding the day on
which the meeting shall be held.
(b) Shares of its own stock belonging to the Corporation
or to another corporation, if a majority of the shares entitled
to vote in the election of directors in such other corporation is
held, directly or indirectly, by the Corporation, shall neither
be entitled to vote nor be counted for quorum purposes. Persons
holding stock of the Corporation in a fiduciary capacity shall be
entitled to vote such stock. Persons whose stock is pledged
shall be entitled to vote, unless in the transfer by the pledgor
on the books of the Corporation he shall have expressly empowered
the pledges to vote thereon, in which case only the pledges, or
his proxy, may represent such stock and vote thereon. Stock
having voting power standing of record in the names of two or
more persons, whether fiduciaries, members of a partnership,
joint tenants in common, tenants by entirety or otherwise, or
with respect to which two or more persons have the same fiduciary
relationship, shall be voted in accordance with the provisions of
the General Corporation Law of the State of Delaware.
(c) Any such voting rights may be exercised by the
stockholder entitled thereto in person or by his proxy appointed
by an instrument in writing, subscribed by such stockholder or by
his attorney thereunto authorized and delivered to the secretary
of the meeting; provided, however, that no proxy shall be voted
or acted upon after three years from its date unless said proxy
shall provide for a longer period. The attendance at any meeting
of a stockholder who may theretofore have given a proxy shall not
have the effect of revoking the same unless he shall in writing
so notify the secretary of the meeting prior to the voting of the
proxy. At any meeting of the stockholders all matters, except as
<PAGE>
otherwise provided in the Certificate of Incorporation, in these
Bylaws or by law, shall be decided by the vote of a majority in
voting interest of the stockholders present in person or by proxy
and entitled to vote thereat and thereon, a quorum being present.
The vote at any meeting of the stockholders on any question need
not be by ballot, unless so directed by the chairman of the
meeting. On a vote by ballot each ballot shall be signed by the
stockholder voting, or by his proxy, if there be such proxy, and
it shall state the number of shares voted.
SECTION 2.07. List of Stockholders. The Secretary of the
Corporation shall prepare and make, at least ten (10) days before
every meeting of stockholders, a complete list of the
stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder
and the number of shares registered in the name of each
stockholder. Such list shall be open to the examination of any
stockholder, for any purpose germane to the meeting, during
ordinary business hours, for a period of at least ten (10) days
prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the
notice of the meeting, or, if not so specified, at the place
where the meeting is to be held. The list shall also be produced
and kept at the time and place of the meeting during the whole
time thereof, and may be inspected by any stockholder who is
present.
SECTION 2.08. Judges. If at any meeting of the
stockholders a vote by written ballot shall be taken on any
question, the chairman of such meeting may appoint a judge or
judges to act with respect to such vote. Each judge so appointed
shall first subscribe an oath faithfully to execute the duties of
a judge at such meeting with strict impartiality and according to
the best of his ability. Such judges shall decide upon the
qualifications of the voters and shall report the number of
shares represented at the meeting and entitled to vote on such
question, shall conduct and accept the votes, and, when the
voting is completed, shall ascertain and report the number of
shares voted respectively for and against the question. Reports
of judges shall be in writing and subscribed and delivered by
them to the Secretary of the Corporation. The judges need not be
stockholders of the Corporation, and any officer of the
Corporation may be a judge on any question other than a vote for
or against a proposal in which he shall have a material interest.
SECTION 2.09. Action Without Meeting. No action shall be
taken by the stockholders except at an annual or special meeting
of stockholders. No action shall be taken by stockholders by
written consent.
<PAGE>
SECTION 2.10 Notice of Stockholder Business. At any
annual stockholders' meeting, only such business shall
be conducted as shall have been properly brought before the
meeting. To be properly brought before an annual stockholders'
meeting, business must be (i) specified in the notice of meeting
(or any supplement thereto) given by or at the direction of the
Board of Directors; (ii) otherwise properly brought before the
meeting by or at the direction of the Board of Directors; or
(iii) otherwise properly brought before the meeting by a
stockholder. For business to be properly brought before an
annual meeting by a stockholder, the stockholder must have given
timely notice thereof in writing to the Secretary of the
Corporation. To be timely, a stockholder's notice must be
received at the principal office of the Corporation not less than
sixty (60) days nor more than one hundred and twenty (120) days
prior to the meeting; provided, however, that in the event that
the first public disclosure (whether by mailing of a notice to
shareholders, press release or otherwise) of the date of the
meeting is made less than sixty-five (65) days prior to the date
of the meeting, notice by the stockholder will be timely if
received not later than the close of business on the tenth day
following the day on which such first public disclosure was made.
A stockholder's notice to the Secretary shall set forth, as to
each matter the stockholder proposes to bring before the annual
meeting, (i) the reasons for conducting such business at the
annual meeting; (ii) the name and address as they appear on the
Corporation's stock register, of the stockholder proposing such
business; (iii) the number of shares of capital stock of the
Corporation which are beneficially owned by the stockholder; and
(iv) any material interest of the stockholder in such business.
Notwithstanding any other provision of these Bylaws, no business
shall be conducted at an annual stockholders' meeting except in
accordance with the procedures set forth in this Section 2.10.
If the presiding officer of an annual stockholders' meeting
determines and declares that business was not properly brought
before the meeting in accordance with this Section 2.10, any such
business shall not be transacted.
ARTICLE III
Board of Directors
SECTION 3.01. General Powers. The property, business and
affairs of the Corporation shall be managed by the Board.
SECTION 3.02. Number and Term of Office. The number of
directors shall not be less than six (6) nor more than ten (11),
the exact number of which shall be fixed by Bylaw duly adopted by
the Board. The number of directors of the Corporation shall be
<PAGE>
ten (10). The Board shall be divided into three classes, Class
I, Class II and Class III. Such classes shall be as nearly equal
in number of directors as possible. Each director shall serve
for a term ending on the third annual meeting following the
annual meeting at which such director was elected; provided,
however, that the directors first elected to Class I shall serve
for a term ending at the annual meeting to be held in 1987, the
directors first elected to Class II shall serve for a term ending
at the annual meeting to be held in 1988 and the directors first
elected to Class III shall serve for a term ending at the annual
meeting to be held in 1989. Directors need not be stockholders.
Each of the directors of the Corporation shall hold office until
his successor shall have been duly elected and shall qualify or
until he shall resign or shall have been removed in the manner
hereinafter provided.
SECTION 3.03. Election of Directors. In any election of
directors of the Corporation, a holder of any class or series of
stock then entitled to vote in such election shall be entitled to
as many votes as shall equal (i) the number of votes which
(except for this Section as to cumulative voting) he would be
entitled to cast for the election of directors with respect to
his shares of stock multiplied by (ii) the number of directors to
be elected in the election in which his class or series of shares
is entitled to vote, and each stockholder may cast all of such
votes for a single director or for any two or more of them as he
may see fit.
SECTION 3.04. Resignations. Any director of the
Corporation may resign at any time by giving written notice to
the Board or to the Secretary of the Corporation. Any such
resignation shall take effect at the time specified therein, or,
if the time be not specified, it shall take effect immediately
upon its receipt; and unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it
effective.
SECTION 3.05. Vacancies. Except as otherwise provided in
the Certificate of Incorporation, any vacancy in the Board,
whether because of death, resignation, disqualification, an
increase in the number of directors, or any other cause, may be
filled by vote of the majority of the remaining directors,
although less than a quorum. Each director so chosen to fill a
vacancy shall hold office for the unexpired term of his
predecessor or until his successor shall have been elected and
shall qualify or until he shall resign or shall have been removed
in the manner hereinafter provided.
<PAGE>
SECTION 3.06. Place of Meeting, Etc. The Board may hold
any of its meetings at such place or places within or without the
State of Delaware as the Board may from time to time by
resolution designate or as shall be designated by the person or
persons calling the meeting or in the notice or a waiver of
notice of any such meeting. Directors may participate in any
regular or special meeting of the Board by means of conference
telephone or similar communications equipment pursuant to which
all persons participating in the meeting of the Board can hear
each other, and such participation shall constitute presence in
person at such meeting.
SECTION 3.07. First Meeting. The Board shall meet as
soon as practicable after each annual election of directors and
notice of such first meeting shall not be required.
SECTION 3.08. Regular Meetings. Regular meetings of the
Board may be held at such times as the Board shall from time to
time by resolution determine. If any day fixed for a regular
meeting shall be a legal holiday at the place where the meeting
is to be held, then the meeting shall be held at the same hour
and place on the next succeeding business day not a legal
holiday. Except as provided by law, notice of regular meetings
need not be given.
SECTION 3.09. Special Meetings. Special meetings of the
Board shall be held whenever called by the Chairman of the Board,
the President or a majority of the authorized number of
directors. Except as otherwise provided by law or by these
Bylaws, notice of the time and place of each such special meeting
shall be mailed to each director, addressed to him at his
residence or usual place of business, at least five (5) days
before the day on which the meeting is to be held, or shall be
sent to him at such place by telegraph or cable or be delivered
personally not less than twenty-four (24) hours before the time
at which the meeting is to be held. Except where otherwise
required by law or by these Bylaws, notice of the purpose of a
special meeting need not be given. Notice of any meeting of the
Board shall not be required to be given to any director who is
present at such meeting, except a director who shall attend such
meeting for the express purpose of objecting, at the beginning of
the meeting, to the transaction of any business because the
meeting is not lawfully called or convened.
SECTION 3.10. Quorum and Manner of Acting. Except as
otherwise provided in these Bylaws or by law, the presence of a
majority of the number of directors then currently specified as
the size of the Board pursuant to
Section 3.02 of these Bylaws shall be required to constitute a
quorum for the transaction of business at any meeting of the
<PAGE>
Board, and all matters shall be decided at any such meeting, a
quorum being present, by the affirmative votes of a majority of
the directors present. In the absence of a quorum, a majority of
directors present at any meeting may adjourn the same from time
to time until a quorum shall be present. Notice of any adjourned
meeting need not be given. The directors shall act only as a
Board, and the individual directors shall have no power as such.
SECTION 3.11. Action by Consent. Any action required or
permitted to be taken at any meeting of the Board or of any
committee thereof may be taken without a meeting if a written
consent thereto is signed by all members of the Board or of such
committee, as the case may be, and such written consent is filed
with the minutes of proceedings of the Board or committee.
SECTION 3.12. Removal of Directors. Subject to the
provisions of the Certificate of Incorporation, a director may be
removed at any time, for cause only.
SECTION 3.13. Compensation. The directors shall receive
only such compensation for their services as directors as may be
allowed by resolution of the Board. The Board may also provide
that the Corporation shall reimburse each such director for any
expense incurred by him on account of his attendance at any
meetings of the Board or Committees of the Board. Neither the
payment of such compensation nor the reimbursement of such
expenses shall be construed to preclude any director from serving
the Corporation or its subsidiaries in any other capacity and
receiving compensation therefor.
SECTION 3.14. Committees. The Board may, by resolution
passed by a majority of the whole Board, designate one or more
committees, each committee to consist of one or more of the
directors of the Corporation. Any such committee, to the extent
provided in the resolution of the Board and except as otherwise
limited by law, shall have and may exercise all the powers and
authority of the Board in the management of the business and
affairs of the Corporation, and may authorize the seal of the
Corporation to be affixed to all papers which may require it.
Any such committee shall keep written minutes of its meetings and
report the same to the Board at the next regular meeting of the
Board. In the absence or disqualification of a member of a
committee, the member or members thereof present at any meeting
and not disqualified from voting, whether or not he or they
constitute a quorum, may unanimously appoint another member of
such absent or disqualified member.
SECTION 3.15. Notice of Director Nominations. Only
persons who are nominated in accordance with the procedures set
forth in this Section 3.15 shall be eligible for election as
<PAGE>
Director at annual meeting of the stockholders. Nominations of
candidates for election to the Board of Directors of the
Corporation at any annual meeting may be made only by or at the
direction of the Board of Directors or by a stockholder entitled
to vote at such annual meeting. All such nominations, except
those made by or at the direction of the Board of Directors,
shall be made pursuant to timely notice in writing to the
Secretary of the Corporation of the stockholder's intention to
make such nomination. To be timely, any such notice must be
received at the principal office of the Corporation not less than
sixty (60) no more than one hundred twenty (120) days prior to
the date of such annual meeting; provided, however, that in the
event that the first public disclosure (whether by mailing of a
notice to stockholders, press release or otherwise) of the date
of such annual meeting is made less than sixty-five (65) days
prior to the date of such annual meeting, notice by the
stockholder will be timely if received not later than the close
of business on the tenth day following the day on which such
first public disclosure was made. Such stockholder's notice with
respect to a proposed nomination shall set forth (i) the name,
age, business and residence address and principal occupation or
employment of each nominee proposed in such notice; (ii) the name
and address of the stockholder giving the notice as the same
appears in the Corporation's stock register; (iii) the number of
shares of capital stock of the Corporation which are beneficially
owned by each such nominee and by such stockholder; and (iv) such
other information concerning each such nominee as would be
required, under the rules of the Securities and Exchange
Commission, in a proxy statement soliciting proxies for the
election of such nominee. Such notice must also include a signed
consent of each such nominee to serve as a director of the
Corporation, if elected.
In the event that a person is validly designated as a
nominee in accordance with the procedures specified above and
shall thereafter become unable or unwilling to stand for election
to the Board of Directors, the Board of Directors or the
stockholder who proposed such nominee, as the case may be, may
designate a substitute nominee; provided, however, that in the
case of persons not nominated by the Board of Directors, such a
substitution may only be made if notice as provided above in this
Section 3.15 is received at the principal office of the
Corporation not later than the later of (i) thirty (30) days
prior to the date of the annual meeting or (ii) five (5) days
after the stockholder proposing the original nominee first
learned that such original nominee has become unable or unwilling
to stand for election.
<PAGE>
ARTICLE IV
Officers
SECTION 4.01. Officers, Election and Removal. The
officers of the Corporation shall be a President, a Vice
President, a Secretary, and a Treasurer. The Corporation may
also have at the discretion of the Board of Directors an
Executive Vice President, one or more additional Vice Presidents,
one or more Assistant Secretaries, one or more Assistant
Treasurers, and such other officers as may be elected by the
Board of Directors. Any two or more offices may be held by the
same person except that the office of President and the office of
Secretary may not be held by the same person.
The officers of the Corporation shall be elected annually
by the Board of Directors at their first meeting after the annual
meeting of the stockholders and, unless they shall sooner resign,
be removed or become disqualified, shall hold office until their
respective successors shall be elected and qualify.
The Chairman of the Board and the President shall be
elected from among the Directors but the other officers need not
be Directors.
Any officer may be removed either with or without cause by
a majority of the Directors at the time in office at any regular
or special meeting of the Board of Directors.
SECTION 4.02. Chairman of the Board. The Chairman of the
Board, if there shall be one, shall preside at all meetings of
the stockholders and of the Board of Directors. He shall, ex
officio, be a member of all committees appointed or constituted
by the Board of Directors, including the Executive Committee.
SECTION 4.03. President, Executive Vice President and
Vice President. The President shall be responsible to the Board
of Directors for all actions and activities of the Corporation.
The Executive Vice President, if there shall be one, shall
act for the President in the President's absence. He shall have
such other powers and be required to perform such other duties as
the President and the Board of Directors shall prescribe.
The Vice President, or if there shall be more than one
such officer elected, shall have such powers and perform such
duties as may be delegated to him or them by the President or the
Board of Directors.
SECTION 4.04. Secretary. The Secretary shall issue
notices for all meetings, shall keep their minutes, shall have
charge of the seal and the Corporate books, and shall make such
reports and perform such other duties as are incident to his
office, or are properly required of him by the Board of
Directors. He shall also keep at the principal office of the
corporation or cause to be kept at the office of the
Corporation's transfer agent, a stock transfer book, and he shall
keep or cause to be kept by the Corporation's registrar, a share
registry book. The Secretary may be required to perform such
duties of the Treasurer as may be assigned to him from time to
time.
SECTION 4.05. Treasurer. The Treasurer shall have the
custody of all moneys and securities of the Corporation and shall
keep regular books of account. He shall disburse the funds of
the Corporation in payment of the just demands against the
Corporation or as may be ordered by the Board of Directors,
taking proper vouchers for such disbursements, and shall render
to the President and to the Board of Directors from time to time
<PAGE>
as may be required of him, an account of all his transactions as
Treasurer and of the financial condition of the Corporation. He
shall perform all other duties incident to his office or that are
properly required of him by the Board. He shall give the
Corporation a bond, if required by the Board of Directors, in a
sum, and with one or more sureties, satisfactory to the Board of
Directors, for the faithful performance of the duties of his
office, and for the restoration to the Corporation, in case of
his death, resignation, retirement, or removal from office, of
all books, papers, vouchers, money and other property of whatever
kind in his possession or under his control belonging to the
Corporation.
SECTION 4.06. Incapacity. In case of the absence or
inability of any officer of the Corporation to act and of any
person herein authorized to act in his place, the Board of
Directors may from time to time delegate the powers or duties of
such officer to any other officer or any Director or other person
whom they may select.
SECTION 4.07. Vacancies. Vacancies in any office arising
from any cause may be filled by the Directors at any regular or
special meeting.
SECTION 4.08. Other officers. The Board of Directors may
appoint such other officers and agents as it shall deem necessary
or expedient, who shall hold their offices for such terms and
shall exercise such powers and perform such duties as shall be
determined from time to time by the Board of Directors.
<PAGE>
SECTION 4.09. Salaries. The salaries of all officers and
agents of the Corporation shall be fixed by the Board of
Directors. Nothing contained herein shall preclude any officer
from serving the Corporation, or any subsidiary corporation, in
any other capacity and receiving proper compensation therefor.
ARTICLE V
Contracts, Checks, Drafts, Bank Accounts, Etc.
SECTION 5.01. Execution of Contracts. The Board, except
as in these Bylaws otherwise provided, may authorize any officer
or officers, agent or agents, to enter into any contract or
execute any instrument in the name of and on behalf of the
Corporation, and such authority may be general or confined to
specific instances; and unless so authorized by the Board or by
these Bylaws, no officer, agent or employee shall have any power
or authority to bind the Corporation by any contract or
engagement or to pledge its credit or to render it liable for any
purpose or in any amount.
SECTION 5.02. Checks, Drafts, Etc. All checks, drafts or
other orders for payment of money, notes or other evidence of
indebtedness, issued in the name of or payable to the
Corporation, shall be signed or endorsed by such person or
persons and in such manner as, from time to time, shall be
determined by resolution of the Board. Each such officer,
assistant, agent or attorney shall give such bond, if any, as the
Board may require.
SECTION 5.03. Deposits. All funds of the Corporation not
otherwise employed shall be deposited from time to time to the
credit of the Corporation in such banks, trust companies or other
depositories as the Board may select, or as may be selected by
any officer or officers, assistant or assistants, agent or
agents, or attorney or attorneys of the Corporation to whom such
power shall have been delegated by the Board and shall be drawn
out only by check signed by persons designated, from time to
time, by resolution of the Board of Directors.
SECTION 5.04. General and Special Bank Accounts. The
Board may from time to time authorize the opening and keeping of
general and special bank accounts with such banks, trust
companies or other depositories as the Board may select or as may
be selected by any officer or officers, assistant or assistants,
agent or agents, or attorney or attorneys of the Corporation to
whom such power shall have been delegated by the Board. The
Board may make such special rules and regulations with respect to
such bank accounts, not inconsistent with the provisions of these
Bylaws, as it may deem expedient.
ARTICLE VI
Shares and Their Transfer
SECTION 6.01. Certificates for Stock. Every owner of
stock of the Corporation shall be entitled to have a certificate
or certificates, to be in such form as the Board shall prescribe,
certifying the number and class of shares of the stock of the
Corporation owned by him. The certificates representing shares
of such stock shall be numbered in the order in which they shall
be issued and shall be signed in the name of the Corporation by
the President or a Vice President, and by the Secretary or an
Assistant Secretary or by the Treasurer or an Assistant
Treasurer. Any of or all of the signatures on the certificates
may be a facsimile. In case any officer, transfer agent or
registrar who has signed, or whose facsimile signature has been
placed upon, any such certificate, shall have ceased to be such
officer, transfer agent or registrar before such certificate is
issued, such certificate may nevertheless be issued by the
Corporation with the same effect as though the person who signed
<PAGE>
such certificate, or whose facsimile signature shall have been
placed thereupon, were such officer, transfer agent or registrar
at the date of issue. A record shall be kept of the respective
names of the persons, firms or corporations owning the stock
represented by such certificates, the number and class of shares
represented by such certificates, respectively, and the
respective dates thereof, and in case of cancellation, the
respective dates of cancellation. Every certificate surrendered
to the Corporation for exchange or transfer shall be cancelled,
and no new certificate or certificates shall be issued in
exchange for any existing certificate until such existing
certificate shall have been so cancelled, except in cases
provided for in Section 6.04.
SECTION 6.02. Transfers of Stock. Transfers of shares of
stock of the Corporation shall be made only on the books of the
Corporation by the registered holder thereof, or by his attorney
thereunto authorized by power of attorney duly executed and filed
with the Secretary, or with a transfer clerk or a transfer agent
appointed as provided in Section 6.03, and upon surrender of the
certificate or certificates for such shares properly endorsed and
the payment of all taxes thereon. The person in whose name
shares of stock stand on the books of the Corporation shall be
deemed the owner thereof for all purposes as regards the
Corporation. Whenever any transfer of shares shall be made for
collateral security, and not absolutely, such fact shall be so
expressed in the entry of transfer if, when the certificate or
certificates shall be presented to the Corporation for transfer,
both the transferor and the transferee request the Corporation to
do so.
SECTION 6.03. Regulations. The Board may make such rules
and regulations as it may deem expedient, not inconsistent with
these Bylaws, concerning the issue, transfer and registration of
certificates for shares of the stock of the Corporation. It may
appoint, or authorize any officer or officers to appoint, one or
more transfer clerks or one or more transfer agents and one or
more registrars, and may require all certificates for stock to
bear the signature or signatures of any of them.
SECTION 6.04. Lost, Stolen, Destroyed, and Mutilated
Certificates. In any case of loss, theft, destruction, or
mutilation of any certificate of stock, another may be issued in
its place upon proof of such loss, theft, destruction, or
mutilation and upon the giving of a bond of indemnity to the
Corporation in such form and in such sum as the Board may direct;
provided, however, that a new certificate may be issued without
requiring any bond when, in the judgment of the Board, it is
proper so to do.
SECTION 6.05. Fixing Date for Determination of
Stockholders of Record. In order that the Corporation may
determine the stockholders entitled to notice of or to vote at
any meeting of stockholders or any adjournment thereof, or
entitled to receive payment of any dividend or other distribution
or allotment of any rights, or entitled to exercise any rights in
respect of any other change, conversion or exchange of stock or
for the purpose of any other lawful action, the Board may fix, in
advance, a record date, which shall not be more than sixty (60)
nor less than ten (10) days before the date of such meeting, nor
more than sixty (60) days prior to any other action. If in any
case involving the determination of stockholders for any purpose
other than notice of or voting at a meeting of stockholders, the
Board shall not fix such a record date, the record date for
determining stockholders for such purpose shall be the close of
business on the day on which the Board shall adopt the resolution
relating thereto. A determination of stockholders entitled to
notice of or to vote at a meeting of stockholders shall apply to
any adjournment of such meeting; provided, however, that the
Board may fix a new record date for the adjourned meeting.
<PAGE>
ARTICLE VII
Indemnification
SECTION 7.01. (DELETED MARCH 30, 1987)
ARTICLE VIII
Executive Committee
SECTION 8.01. Members and Powers. The Board, by
resolution adopted by majority of its total number, may annually
elect three or more of its number to constitute an Executive
Committee of the Board to have authority to exercise to the
extent permitted by law, in the intervals between meetings of the
Board, all powers of the Board, except to amend or repeal these
Bylaws, or to fill vacancies in its own membership or in the
Board, or to declare dividends. The actions of the Executive
Committee shall be ratified at the next succeeding meeting of the
Board.
SECTION 8.02. Meetings. The Executive Committee may
adopt rules governing the method of the notice of the time and
place of its meetings and the conduct of the proceedings thereat;
but, in the absence of such rules, meetings of the Executive
Committee may be called by any
member of the Committee. Notice to each member, regarding the
time and place of holding the proposed meeting, shall be given to
each member verbally or by mail at least twenty-four (24) hours
before the time of the meeting. No notice of a meeting will be
required if all members of the Committee are in attendance, or if
notice is waived. The Executive Committee shall keep a record of
its acts and proceedings.
SECTION 8.03. Quorum. To constitute a quorum of the
Executive Committee for the transaction of business at any
meeting, a majority shall be present and the act of a majority of
the whole Committee shall be necessary to constitute the act of
the Committee.
SECTION 8.04. Removal of Members. Any member of the
Executive Committee may be removed with or without cause by
resolution of the Board, adopted by a majority of its total
number then in office.
SECTION 8.05. Vacancies. Vacancies in the Executive
Committee shall be filled in the same manner as for the original
appointment to membership.
ARTICLE IX
Miscellaneous
SECTION 9.01. Seal. The Corporate seal of the
Corporation shall consist of two concentric circles, between
which is the name of the Corporation, and in the center shall be
inscribed the year of its incorporation and the words, "Corporate
Seal, Delaware."
SECTION 9.02. Waiver of Notices. Whenever notice is
required to be given by these Bylaws or the Certificate of
Incorporation or by law, the person entitled to said notice may
waive such notice in writing, either before or after the time
stated therein, and such waiver shall be deemed equivalent to
notice.
SECTION 9.03. Amendments. Except as otherwise provided
herein or in the Certificate of Incorporation, these Bylaws or
any of them, may be altered, amended, repealed or rescinded and
<PAGE>
new Bylaws may be adopted, (i) by the Board, or (ii) by the
stockholders, at any annual meeting of stockholders, or at any
special meeting of stockholders, provided that notice of such
proposed alteration, amendment, repeal, rescission or adoption is
given in the notice of meeting.
EXHIBIT 3(ii)
<PAGE>
INSTRUMENTS DEFINING THE RIGHTS OF SECURITY HOLDERS, INCLUDING INDENTURES
1. Note Agreement dated September 1, 1990 re: Senior Notes due
September 15, 2000, which document is incorporated by reference to
Annual Report on Form 10-K filed with the Commission for Registrant's
fiscal year ended November 30, 1990.
2. Note Agreement dated November 15, 1991 re: Senior Notes due
November 15, 1998, which document is incorporated by reference to
Annual Report on Form 10-K filed with the Commission for Registrant's
fiscal year ended November 30, 1991.
EXHIBIT 4
<PAGE>
MATERIAL CONTRACTS
Exhibit 10 is an Employment Agreement between James S. Marlen and the Company
which document is incorporated by reference to Annual Report on Form 10-K filed
with the Commission for Registrant's fiscal year ended November 30, 1993.
EXHIBIT 10
<PAGE>
ANNUAL REPORT
Exhibit 13 is the Corporation's 1995 Annual Report to Stockholders.
This 10-K Report should be read only in conjunction with that Annual Report.
In the event you do not already have a copy of the Annual Report, one may be
obtained by contacting the Corporate Secretary, Post Office Box 7007, Pasadena,
California 91109-7007. The telephone number is (818) 683-4000.
EXHIBIT 13
<PAGE>
SELECTED CONSOLIDATED FINANCIAL INFORMATION
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30
(DOLLARS IN THOUSANDS
EXCEPT PER SHARE DATA) 1995 1994 1993 1992 1991
- ------------------------------------ ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
PER COMMON SHARE DATA
Net income (loss) $ 3.15 $ 2.75(1) $ (6.28)(2) $ 1.53 $ 2.01(3)
Net income excluding restructuring
and related charges and unusual
items 3.15 2.29 1.87 1.53 1.91
Dividends 1.28 1.28 1.28 1.28 1.28
Average shares(4) 3,954,544 3,924,456 3,861,872 3,827,540 3,805,781
Stock price - high 37 7/8 43 1/8 38 3/4 36 1/2 47 1/8
Stock price - low 29 31 7/8 31 29 31 3/4
Price/earnings ratio (range) 12-9 16-12 NA 24-19 23-16
- ------------------------------------ ------------- ------------- ------------- ------------- -------------
OPERATING RESULTS
Sales $ 481,405 $ 417,682 $ 453,357 $ 446,477 $ 465,136
Gross profit 116,731 103,975 119,869 118,528 118,399
Interest expense 11,715 11,191 12,689 10,990 14,105
Provision (benefit) for income taxes 4,940 6,971 (9,732) 1,649 5,052
Equity in earnings (losses) of
affiliated companies, net of taxes 3,594 1,359 1,821 2,011 (976)
Net income (loss) 12,452 10,790(1) (24,255)(2) 5,859 7,635(3)
Net income/sales 2.6% 2.6% -5.4% 1.3% 1.6%
Return on equity 9.6% 9.0% -18.6% 4.1% 5.4%
- ------------------------------------ ------------- ------------- ------------- ------------- -------------
FINANCIAL CONDITION AT YEAR END
Working capital $ 114,458 $ 103,104 $ 85,990 $ 107,086 $ 104,228
Property, plant and equipment, net 114,116 112,953 113,199 128,130 122,201
Investments, advances and equity in
affiliated companies 36,197 37,315 39,984 47,882 45,901
Total assets 371,381 350,856 337,842 379,480 384,472
Long-term debt, less current portion 91,565 92,847 89,590 105,874 99,304
- ------------------------------------ ------------- ------------- ------------- ------------- -------------
PROPERTY, PLANT AND EQUIPMENT
Expenditures $ 6,154 $ 14,934 $ 14,697 $ 21,027 $ 26,527
Depreciation 16,065 15,855 16,444 15,649 16,704
</TABLE>
- ------------------------
(1) INCLUDES $1.8 MILLION GAIN, NET OF INCOME TAXES, OR $.46 PER SHARE, ON
THE SALE OF A COLOMBIAN SUBSIDIARY.
(2) INCLUDES $31.5 MILLION, NET OF INCOME TAXES, IN FOURTH QUARTER CHARGES,
OR $8.15 PER SHARE, FOR RESTRUCTURING AND OTHER RELATED ITEMS.
(3) INCLUDES $360,000, NET OF INCOME TAXES, OR $.10 PER SHARE, RELATED TO
THE SALE OF THE COMPANY'S CORPORATE HEADQUARTERS FACILITY, REDUCED BY
RESTRUCTURING CHARGES AND ASSET WRITE-DOWNS.
(4) INCLUDES COMMON STOCK EQUIVALENTS IN PERIODS IN WHICH THEY HAVE A DILUTIVE
EFFECT.
34
<PAGE>
AMERON 1995 FINANCIAL REVIEW
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
- -------------------------------------------------------------------------------
LIQUIDITY AND CAPITAL RESOURCES
During 1995, the Company generated $20.2 million of cash from operations.
These funds, along with additional net borrowings of $5.0 million, were used
for investment in new property, plant and equipment of $16.2 million and
payment of common dividends of $5.1 million. Cash and cash equivalents at
November 30, 1995 totaled $12.9 million, an increase of $3.9 million from the
prior year.
Cash provided by operating activities increased due to improved earnings
after adjusting for depreciation and higher affiliate dividends in excess of
equity income. This was partially offset by increased working capital
requirements. The increase in working capital included higher receivable
balances due to greatly improved sales by the Concrete & Steel Pipe business
segment. Inventories rose as a result of future delivery commitments to water
transmission pipelines in California.
Cash used in investing activities consisted principally of capital
expenditures to support major water transmission contracts being supplied by
the Concrete & Steel Pipe business segment. Capital expenditures also
included normal replacement and upgrades of machinery and equipment and the
completion of a protective coatings warehouse in The Netherlands. Management
estimates that capital spending by the Company during the year ending
November 30, 1996 will be between $15.0 million and $25.0 million. Capital
expenditures will be funded from existing cash balances, cash generated from
operations and existing lines of credit.
During the third quarter, the Company replaced its $35.0 million revolving
credit facility with a new $75.0 million revolving credit facility. The new
agreement expires in June 1998. The Company had $81.8 million in unused
credit available to fund operating and investing activities worldwide at
November 30, 1995. Management believes that cash flows from operations and
current cash balances, together with currently available lines of credit,
will be sufficient to meet future operating requirements.
- -------------------------------------------------------------------------------
RESULTS OF OPERATIONS: 1995 COMPARED WITH 1994
GENERAL
Net income in 1995 was $12.5 million or $3.15 per share on sales of $481.4
million, compared to net income of $10.8 million or $2.75 per share on sales
of $417.7 million in 1994. Results in 1994 included a gain on the sale of a
non-strategic steel fabrication subsidiary in Colombia, which resulted in a
net after-tax gain of $1.8 million or $.46 per share. After adjusting for the
gain on the sale of this subsidiary, earnings per share for 1994 were $2.29.
The increase in 1995 earnings over equivalent 1994 earnings was 38%.
The sales and earnings improvement over the prior year reflects a significant
increase in concrete and steel pipe deliveries in California, as well as
improved performance by the Fiberglass Pipe business segment. Net income in
1995 also benefitted from improved performance at certain affiliated
companies.
SALES
Compared to 1994, sales increased $63.7 million or 15% in 1995, primarily
because of significantly improved deliveries of concrete and steel pipe in
California and increased shipments of fiberglass pipe to Central Africa, the
Middle East, Europe and the Pacific Rim. These sales increases were partially
offset by lower Protective Coatings shipments to North Africa from the
Company's subsidiary in The Netherlands.
Protective Coatings sales were $130.5 million in 1995 compared to $134.2
million in 1994. Sales of protective coatings and product finishes in the
U.S. increased over 1994 record sales. Ameron's product line based on
proprietary PSX-Registered Trademark- technology continues to grow as an
important component of its high-performance product sales. The primary
product in that series, PSX 700, tripled sales in 1995 compared to 1994 and
is among the segment's top five products in sales volume. Modest gains were
made in key U.S. market segments, notably rail, marine and offshore. Sales in
Europe, while adversely affected by the reduction in shipments to North
Africa, showed improvements in core industrial segments in Western and
Eastern Europe and in the Middle East. The Company anticipates continued
sales growth worldwide.
Fiberglass Pipe sales improved to $82.8 million in 1995, versus $66.2 million
in the prior year. The increase in sales can be attributed to strong
oilfield, industrial, offshore and marine markets in Europe, Central Africa,
the Middle East and the Pacific Rim. Sales in the U.S. declined during the
year. The outlook for Europe and the Pacific Rim continues favorable in all
market segments. The U.S. market is expected to remain weak, but exports from
the U.S. should increase.
Concrete and Steel Pipe sales totaled $153.2 million in 1995, compared to
$101.6 million in 1994. The primary reason for the $51.6 million increase was
the commencement of several major water transmission pipelines in California,
including the Coastal Aqueduct, the Eastside pipeline and the Los Vaqueros
pipeline -- the largest concrete pipe contract in Ameron's history. The
outlook for Concrete & Steel Pipe is positive since the business entered
fiscal 1996 with a backlog of approximately $97 million compared to $103
million at the beginning of fiscal 1995.
35
<PAGE>
Construction & Allied Products sales totaled $115.0 million in 1995 compared
to $115.6 million in 1994. The Pole Products business enjoyed significant
growth in traffic signal, highway lighting and street lighting applications
due to broader geographic coverage. The Company's Hawaiian operation, which
is the largest supplier of ready-mix concrete on the Islands continued to
experience a downturn in sales due to reduced construction spending in
Hawaii. Growth should continue in the Pole Products business, but economic
conditions in Hawaii are expected to remain weak in the near term.
GROSS PROFIT
Gross profit of $116.7 million in 1995 was higher than the $104.0 million
reported in 1994. The improvement in gross profit in 1995 was due mainly to
the increase in sales volume in 1995, as discussed above. Gross profit as a
percent of sales declined from 24.9% in 1994 to 24.2% in 1995. The decrease
in margin resulted principally from a change in the product mix caused by
higher sales of lower margin concrete and steel pipe, coupled with decreased
margins due to higher raw material costs and competitive pricing in the
Protective Coatings segment. This decline was partially offset by improved
gross profit margins in the Company's other business segments as a result of
improved pricing and increased capacity utilization.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses totaled $95.8 million in 1995 or
19.9% of sales, compared to $86.8 million or 20.8% of sales in 1994. The $9.0
million increase was attributable primarily to the substantial increase in
business activity over the prior year.
Selling, general and administrative expenses include charges for
environmental and legal claims. For a discussion on pending environmental and
legal claims, refer to Note 11: "Contingencies and Commitments." Given
recorded reserves, the Company does not expect these matters to have a
material adverse effect on the Company's present and future financial
position or its results of operations.
In the early 1970s, the Company disposed of certain quantities of waste at
the Stringfellow Hazardous Waste Site in Riverside County, California, which
is one of several priority sites on the Superfund list established by the
U.S. Environmental Protection Agency. Ameron waste accounted for less than
one percent of the total waste deposited at the site. In 1993, the State of
California was found to be 75% to 85% liable for the remediation costs of
this Superfund site. However, the State of California has appealed this
finding. Ameron maintains reserves that it believes to be adequate to cover
expected future costs associated with this matter.
The Company is subject to federal, state and local laws and regulations
concerning the environment and, in addition to the Stringfellow site, is
currently participating in administrative proceedings at several sites under
these laws. While the Company finds it difficult to estimate with any
certainty the total cost of remediation at the several sites, on the basis of
currently available information and reserves provided, the Company believes
it unlikely that the outcome of such environmental regulatory proceedings
will have a material adverse effect on the Company's financial position or
its results of operations.
GAIN ON THE SALE OF ASSETS
The gain from the sale of assets in 1994 was realized principally from the
divestiture of a wholly-owned non-strategic steel fabrication subsidiary in
Colombia.
OTHER INCOME
Royalty and fee income from affiliated companies and licensees declined from
the prior year as a result of decreased sales reported by affiliated
companies. Foreign currency losses were incurred by the Company's Colombian
and European operations. Miscellaneous income includes sublease rental income
and other income from various sources.
INTEREST
Interest expense totaled $11.7 million in 1995, an increase of $.5 million
from 1994 due to higher borrowing levels maintained throughout the year.
PROVISION FOR INCOME TAXES
The Company's effective tax rate declined from 42.5% in 1994 to 35.8% in
1995. The lower effective rate was attributable to a reduction of deemed
dividends from foreign subsidiaries and improved availability of foreign tax
credits on the Federal tax return. The Company adopted Financial Accounting
Standards Board Statement No. 109, "Accounting for Income Taxes," in 1994.
The requirements and impact of this statement are discussed in Note 8 of the
financial statements.
EQUITY IN EARNINGS OF AFFILIATED COMPANIES
Equity in earnings of affiliated companies recorded in 1995 totaled $3.6
million, an increase of $2.2 million from 1994. During 1994, the Company
refined its method for recognizing equity in earnings from affiliated
companies to a more conservative approach under which income is recognized
only to the extent that cash dividends are anticipated. During 1995,
dividends were received from all the Company's principal investments. Two
affiliates, Tamco, which operates a steel mini-mill in Southern California,
and Bondstrand, Ltd., a fiberglass pipe manufacturer in Saudi Arabia,
reported higher sales and earnings in 1995. Sales and earnings of the
Company's concrete pipe producing affiliates, Gifford-Hill-American, Inc. in
Texas and Ameron Saudi Arabia, Ltd. were lower in 1995 than in the previous
year.
36
<PAGE>
- -------------------------------------------------------------------------------
RESULTS OF OPERATIONS: 1994 COMPARED WITH 1993
GENERAL
Ameron earned $2.75 per share ($10.8 million after taxes) on sales of $417.7
million for 1994, compared to a net loss of $6.28 per share (loss of $24.3
million after taxes) in 1993 on sales of $453.4 million. During 1993, Ameron
recognized costs totaling $45.8 million ($31.5 million after taxes)
associated with a comprehensive restructuring of the Company. Excluding the
after-tax effect of restructuring charges, earnings per share for 1993 would
have been $1.87. During 1994, a non-strategic steel fabrication subsidiary in
Colombia was sold as part of the restructuring program; the sale resulted in
a net after-tax gain of $1.8 million or $.46 per share. Adjusting for the
gain on the sale of this subsidiary, earnings per share for 1994 were $2.29,
a 22% increase over equivalent 1993 earnings of $1.87 per share.
The earnings improvement was due principally to the positive impact of the
restructuring on Ameron's business segments, as well as continued growth of
the Protective Coatings business and the Construction & Allied Products
segment. The Concrete & Steel Pipe business had lower earnings as a result of
project delays, and the Fiberglass Pipe business declined because of
completion of major fiberglass pipe projects in North Africa during 1993.
SALES
Compared to 1993, sales declined $35.7 million or 8% in 1994, primarily
because of completion of major fiberglass pipe projects in North Africa;
lower shipments of protective coatings from Ameron B.V., the Company's
subsidiary in The Netherlands; and project delays in California that reduced
shipments of concrete and steel pipe. The sales decline was offset partially
by stronger Protective Coatings sales in the United States and improved
market penetration by the Pole Products business within the Construction &
Allied Products Group.
Total Protective Coatings sales were $134.2 million in 1994, compared to
$137.8 million in 1993. The modest decline of $3.6 million reflects
relatively flat market conditions in Europe and lower shipments to North
Africa. Sales of industrial coatings and product finishes in the United
States reached record high levels in 1994. The favorable sales performance
resulted in part from the successful introduction of PSX, Ameron's
proprietary new polysiloxane technology. Also contributing were market share
gains in product finishes for the original equipment manufacturer market and
several large protective coatings projects.
Total Fiberglass Pipe segment sales were $66.2 million in 1994, compared with
$92.9 million in 1993. The sales decrease ($26.7 million) was attributable to
completion of several major crude oil projects in North Africa in 1993. Sales
in the United States were down in 1994, mostly due to the general softness in
oilfield markets and reduced demand for fuel-handling systems used for
service station rehabilitation.
Concrete & Steel Pipe segment sales totaled $101.6 million in 1994, compared
to $110.3 million in 1993. The sales decline ($8.7 million) occurred
primarily because of delivery delays on several major projects in California.
Construction & Allied Products sales totaled $115.6 million in 1994, compared
with $112.4 million in 1993. The main reason for the $3.2 million increase
was sales growth achieved by the Pole Products business, which more than
offset a slight sales decline at the Company's Hawaiian operations. The
growth in the Pole Products business was due to market share gains in the
steel pole product line for traffic and street lighting applications,
generally stronger market demand and successful market expansion programs.
Continued softness in the private construction sector accounted for the
modest sales decline in Hawaii.
GROSS PROFIT
Gross profit margin of $104.0 million or 24.9% of sales in 1994 was lower
than the $119.9 million or 26.4% of sales reported in 1993. The decline in
gross profit ($15.9 million) in 1994 was due principally to the lower sales
volume in 1994, particularly in the European Fiberglass Pipe operations. The
lower gross profit margin rate resulted mainly from the completion of
Fiberglass Pipe projects in North Africa that had favorably affected 1993
operations. The gross profit of the Concrete & Steel Pipe segment was
unfavorably impacted by price competition, product mix and project delivery
delays in California. Protective Coatings had a slightly lower gross profit
margin due to product mix, while Construction & Allied Products had a higher
gross profit margin because of productivity gains and favorable pricing.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses totaled $86.8 million in 1994,
compared with $115.4 million in 1993. The $28.6 million decrease was
attributable to the significant reduction in the Company's overhead structure
resulting from the comprehensive restructuring in 1993. In addition, charges
to income for environmental and legal claims decreased $12.2 million in 1994
compared to 1993. In 1993 an additional $9.0 million was reserved for
environmental and legal matters as part of the restructuring. The decrease in
selling, general and administrative expenses also reflects reduced selling
expenses as a result of lower sales volume.
RESTRUCTURING
During 1994, the Company disbursed approximately $3.5 million for plant
consolidation and employee severance costs in connection with its 1993
restructuring plan. At November 30, 1994, $1.9 million of accrued liabilities
related to the 1993 restructuring remained in the Company's balance sheet.
37
<PAGE>
GAIN ON THE SALE OF ASSETS
The gains from the sale of assets in 1994 were realized principally from the
divestiture of a wholly-owned non-strategic steel fabrication subsidiary in
Colombia.
OTHER INCOME
Other income consisted of royalties and fees received from affiliated
companies and licensees, as well as miscellaneous income earned from various
sources.
INTEREST
Interest expense totaled $11.2 million in 1994, a decrease of $1.5 million
from 1993. Interest in 1993 was higher because of the recording of accrued
interest on income tax obligations related to prior years.
PROVISION FOR INCOME TAXES
Income tax expense aggregated $7.0 million in 1994, which represents an
overall effective tax rate of 42.5% of pretax income. This compares to the
effective tax rate of 45.0% in 1993 after adjusting for restructuring and
related charges.
EQUITY IN EARNINGS OF AFFILIATED COMPANIES
Equity in earnings of affiliated companies recorded in 1994 totaled $1.4
million, a slight decline from the $1.8 million recorded in 1993. During
1994, the Company refined its method for equity income recognition to a more
conservative approach under which equity income is recognized only to the
extent that cash dividends are anticipated. Two affiliates, Gifford-Hill-
American, Inc., a pressure pipe operation in Texas, and Tamco, a steel
mini-mill in Southern California, reported sizable improvements in sales
and earnings in 1994. Sales and earnings of the Company's Saudi Arabian
affiliates, Oasis-Ameron, Ltd., Bondstrand, Ltd. and Ameron Saudi Arabia,
Ltd., were lower than in 1993.
38
<PAGE>
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA) 1995 1994 1993
- ------------------------------------------------------------------------ ----------- ----------- -----------
<S> <C> <C> <C>
Sales $ 481,405 $ 417,682 $ 453,357
Cost of sales 364,674 313,707 333,488
----------- ----------- -----------
Gross profit 116,731 103,975 119,869
Selling, general and administrative expenses 95,786 86,767 115,420
Restructuring charges and write-down of assets -- -- 33,797
Gain from sale of assets 730 4,188 547
Other income 3,494 5,513 4,846
----------- ----------- -----------
Income (loss) before interest and income taxes 25,169 26,909 (23,955)
Interest income 344 684 836
Interest expense 11,715 11,191 12,689
----------- ----------- -----------
Income (loss) before income taxes 13,798 16,402 (35,808)
Provision (benefit) for income taxes 4,940 6,971 (9,732)
----------- ----------- -----------
Income (loss) of consolidated companies 8,858 9,431 (26,076)
Equity in earnings of affiliated companies, net of taxes 3,594 1,359 1,821
----------- ----------- -----------
Net income (loss) $ 12,452 $ 10,790 $ (24,255)
=========== =========== ===========
Net income (loss) per share $ 3.15 $ 2.75 $ (6.28)
=========== =========== ===========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF
THESE CONSOLIDATED FINANCIAL STATEMENTS.
39
<PAGE>
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
AS OF NOVEMBER 30
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA) 1995 1994
- ---------------------------------------------------------------------------------------- ----------- -----------
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 12,923 $ 9,030
Receivables, less allowance of $4,800 in 1995 and $4,135 in 1994 105,019 97,519
Inventories 76,426 71,644
Deferred income tax benefits 7,315 4,706
Prepaid expenses and other 5,155 5,192
----------- -----------
Total current assets 206,838 188,091
Investments, advances and equity in undistributed earnings of affiliated companies 36,197 37,315
Property, plant and equipment
Land 22,068 21,589
Buildings 50,256 43,991
Machinery and equipment 203,282 192,483
Construction in progress 8,980 10,028
----------- -----------
Total property, plant and equipment at cost 284,586 268,091
Less -- accumulated depreciation (170,470) (155,138)
Total property, plant and equipment, net 114,116 112,953
Other assets 14,230 12,497
----------- -----------
Total assets $ 371,381 $ 350,856
=========== ===========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF
THESE CONSOLIDATED BALANCE SHEETS.
40
<PAGE>
<TABLE>
<CAPTION>
AS OF NOVEMBER 30
------------------------
1995 1994
----------- -----------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Short-term borrowings $ 1,718 $ 2,931
Current portion of long-term debt 17,803 9,674
Trade payables 32,219 25,507
Accrued liabilities
Taxes, interest and other 14,303 17,952
Compensation and benefits 12,998 11,382
Insurance and claims 10,126 11,928
Income taxes 3,213 4,813
----------- -----------
Total current liabilities 92,380 84,187
Deferred income taxes 4,040 5,759
Long-term debt, less current portion 91,565 92,847
Other long-term liabilities 48,824 43,256
----------- -----------
Total liabilities 236,809 226,049
Commitments and contingencies
Stockholders' equity
Common stock, par value $2.50 a share
Authorized 12,000,000 shares
Outstanding 3,956,497 shares in 1995 and 3,935,711 shares in 1994, net of treasury
shares 12,823 12,772
Additional paid-in capital 15,322 14,658
Retained earnings 146,987 139,586
Cumulative foreign currency translation adjustments 2,219 570
Less treasury stock (1,172,900 shares in 1995 and 1994), at cost (42,779) (42,779)
----------- -----------
Total stockholders' equity 134,572 124,807
----------- -----------
Total liabilities and stockholders' equity $ 371,381 350,856
=========== ===========
</TABLE>
41
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30
-------------------------------
(DOLLARS IN THOUSANDS) 1995 1994 1993
- ------------------------------------------------------------------------------- --------- --------- ---------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income (loss) $ 12,452 $ 10,790 $ (24,255)
Adjustments to reconcile net income (loss) to net cash provided by operating
activities:
Depreciation 16,065 15,855 16,444
Provision (benefit) for deferred income taxes (1,072) 9,414 (17,759)
Equity in earnings of affiliated companies (3,594) (1,359) (1,821)
Dividends from affiliated companies 6,186 1,755 3,670
Gain from sale of assets (730) (4,188) (547)
Stock contributed to employee benefit plan 681 967 958
Non-cash restructuring and asset write-downs -- -- 28,668
Other, net (537) (479) (189)
Other changes in operating assets and liabilities:
(Increase) decrease in receivables (8,483) (17,109) 3,744
Increase in inventories (4,182) (9,383) (2,489)
(Increase) decrease in other current assets (3,274) 3,374 357
(Increase) decrease in long-term assets (279) (2,390) 332
Increase (decrease) in trade payables, accrued liabilities and income taxes (2,511) (9,899) 7,468
Increase in long-term liabilities 9,445 6,184 10,466
--------- --------- ---------
Net cash provided by operating activities 20,167 3,532 25,047
--------- --------- ---------
INVESTING ACTIVITIES
Proceeds from sale of assets 1,126 4,688 1,850
Additions to property, plant and equipment (16,154) (14,934) (14,697)
Investment in life insurance policies (1,452) (2,872) (1,613)
Other -- (420) (30)
--------- --------- ---------
Net cash used in investing activities (16,480) (13,538) (14,490)
--------- --------- ---------
FINANCING ACTIVITIES
Net change in debt with maturities of three months or less (1,061) 395 (221)
Issuance of debt 15,897 13,041 --
Repayment of debt (9,849) (5,953) (15,728)
Dividends on common stock (5,051) (5,016) (4,950)
Issuance of common stock 34 401 70
--------- --------- ---------
Net cash provided by (used in) financing activities (30) 2,868 (20,829)
--------- --------- ---------
Effect of exchange rate changes on cash and cash equivalents 236 430 (437)
--------- --------- ---------
Net change in cash and cash equivalents 3,893 (6,708) (10,709)
Cash and cash equivalents at beginning of year 9,030 15,738 26,447
--------- --------- ---------
Cash and cash equivalents at end of year $ 12,923 $ 9,030 $ 15,738
========= ========= =========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF
THESE CONSOLIDATED FINANCIAL STATEMENTS.
42
<PAGE>
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
COMMON STOCK
---------------------- ADDITIONAL
SHARES PAID-IN RETAINED
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA) OUTSTANDING AMOUNT CAPITAL EARNINGS OTHER
- ----------------------------------------------------- ----------- --------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C>
BALANCE, NOVEMBER 30, 1992 3,841,630 $ 12,536 $ 12,007 $ 163,017 $ 105
Net loss -- 1993 (24,255)
Exercise of stock options and issuance of stock to
employee savings plan 44,835 112 1,407
Dividends on common stock of $1.28 a share (4,950)
Foreign currency translation adjustments (net of
deferred income tax benefit of $644) (966)
Minimum pension liability adjustment (720)
----------- --------- ---------- ----------- ---------
BALANCE, NOVEMBER 30, 1993 3,886,465 12,648 13,414 133,812 (1,581)
Net income -- 1994 10,790
Exercise of stock options and issuance of stock to
employee savings plan 49,246 124 1,244
Dividends on common stock of $1.28 a share (5,016)
Foreign currency translation adjustments (net of
deferred income tax of $954) 1,431
Minimum pension liability adjustment 720
----------- --------- ---------- ----------- ---------
BALANCE, NOVEMBER 30, 1994 3,935,711 12,772 14,658 139,586 570
Net income -- 1995 12,452
Exercise of stock options and issuance of stock to
employee savings plan 20,786 51 664
Dividends on common stock of $1.28 a share (5,051)
Foreign currency translation adjustments (net of
deferred income tax of $1,100) 1,649
----------- --------- ---------- ----------- ---------
BALANCE, NOVEMBER 30, 1995 3,956,497 $ 12,823 $ 15,322 $ 146,987 $ 2,219
=========== ========= ========= =========== =========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF
THESE CONSOLIDATED FINANCIAL STATEMENTS.
43
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of Ameron, Inc.
and all wholly-owned subsidiaries (the Company). All material intercompany
accounts and transactions have been eliminated. Investments in significant
30- to 50-percent-owned affiliates are accounted for by the equity method,
whereby the investment is carried at cost of acquisition, plus the Company's
equity in undistributed earnings or losses since acquisition, less reserves.
The Company provides technical services and receives fees, royalties and
other income from several of its affiliates and licensees, which are included
in other income.
Certain prior year balances have been reclassified to conform with the
current year presentation.
CASH AND CASH EQUIVALENTS
Cash equivalents include time deposits with maturities of three months or
less when purchased. The Company had no cash equivalents at November 30,
1995. At November 30, 1994, the Company had approximately $22,000 invested in
such securities. The carrying value of cash and cash equivalents approximates
their fair value.
INVENTORIES
Inventories are valued at the lower of cost or market. Cost is principally
determined by either the first-in, first-out or average cost methods. Such
cost includes raw materials, direct labor and manufacturing overhead. Certain
steel inventories are valued using the last-in, first-out cost method.
PROPERTY, PLANT AND EQUIPMENT
Items capitalized as property, plant and equipment, including improvements to
existing facilities, are recorded at cost. Upon sale or retirement, the cost
and related accumulated depreciation are removed from the respective
accounts, and any gain or loss is included in income. Maintenance and repair
costs are expensed as incurred. Interest costs applicable to the construction
of major plant and expansion projects were immaterial for the periods
presented.
Depreciation is computed principally using the straight-line method based on
estimated useful lives of the assets. Annual rates of depreciation are as
follows:
PERCENTAGE OF COST
------------------
Buildings 2-1/2 - 10
Machinery and equipment
Autos, trucks and trailers 6-2/3 - 50
Cranes and tractors 10 - 15
Manufacturing equipment 6-2/3 - 33-1/3
Other 5 - 66-2/3
In March 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 121 "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of." The Statement
requires that long-lived assets and certain identifiable intangibles to be
held and used by an entity be reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset may
not be recoverable. The Statement must be adopted by the Company no later
than the fiscal year ending November 30, 1997. The Company does not expect
implementation of this statement to have a material effect on its financial
position or its results of operations.
FOREIGN CURRENCY TRANSLATION
The functional currency for the majority of the Company's foreign operations
is the applicable local currency. The translation from the applicable foreign
currencies to U.S. dollars is performed for balance sheet accounts using
current exchange rates in effect at the balance sheet date and for revenue
and expense accounts using a weighted average exchange rate during the
period. The gains or losses, net of applicable deferred income taxes,
resulting from such translation are included in stockholders' equity. Gains
or losses resulting from foreign currency transactions are included in other
income.
REVENUE RECOGNITION
Revenue from sales of protective coatings, fiberglass pipe, construction
products and certain other products is recorded at the time the goods are
shipped or when title passes. Revenue from sales of concrete and steel pipe
is recorded at the time the pipe is inspected and accepted by the customer.
RESEARCH AND DEVELOPMENT COSTS
Research and development costs are expensed as incurred. Such costs were
approximately $4,300,000 in 1995, $4,700,000 in 1994 and $4,100,000 in 1993.
INCOME TAXES
In December 1993, the Company adopted Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes." The adoption of this
Statement changes the Company's method of accounting for income taxes from
the deferred method (APB 11) to an asset and liability approach. Previously
the Company deferred the past tax effects of timing differences between
financial reportings and taxable income. The asset and liability approach
requires the recognition of deferred tax liabilities and assets for the
expected future tax consequences of temporary differences between the
carrying amounts and the tax bases of assets and liabilities.
NET INCOME PER SHARE
Net income per share is computed on the basis of the weighted average number
of common shares outstanding each year, plus common stock equivalents related
to dilutive stock options. The number of shares used in the computation of
per share data was 3,954,544 in 1995, 3,924,456 in 1994 and 3,861,872 in 1993.
CASH FLOW INFORMATION
(IN THOUSANDS) 1995 1994 1993
- -------------- ------ ------- -------
Interest paid $9,849 $10,365 $11,903
Income taxes paid, net $2,448 $ 1,581 $ 3,535
NOTE 2 OTHER INCOME
Other income for the years ended November 30 included the following:
(IN THOUSANDS) 1995 1994 1993
- -------------- ------ ------ ------
Royalties and fees from affiliated
companies and licensees $3,297 $4,018 $3,967
Foreign currency loss (928) (205) (147)
Miscellaneous 1,125 1,700 1,026
------ ------ ------
$3,494 $5,513 $4,846
====== ====== ======
44
<PAGE>
- -------------------------------------------------------------------------------
NOTE 3 INVENTORIES
Inventories at November 30, were as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS) 1995 1994
- ------------------------- ------- --------
<S> <C> <C>
Finished products $32,210 $34,664
Products in process 26,128 20,175
Materials and supplies 18,088 16,805
-------- -------
$76,426 $71,644
======== =======
</TABLE>
Certain steel inventories are valued using the last-in, first-out cost
method. These items comprised 8.7% and 9.2% of consolidated inventories at
November 30, 1995 and 1994, respectively. If such inventories had been valued
using the first-in, first-out cost method, total inventories would have
increased by $2,469,000 and $2,265,000 at November 30, 1995 and 1994,
respectively.
- -------------------------------------------------------------------------------
NOTE 4 AFFILIATED COMPANIES
The Company's principal investments, which have been accounted for by the
equity method, are summarized as follows:
<TABLE>
<CAPTION>
OWNERSHIP
PRODUCTS AFFILIATE INTEREST
- ----------------------- --------------------------- --------
<S> <C> <C>
Concrete pipe products Gifford-Hill-American, Inc. 50%
Ameron Saudi Arabia, Ltd. 30%
Steel products Tamco 50%
Other Bondstrand, Ltd. 40%
Oasis-Ameron, Ltd. 40%
</TABLE>
<TABLE>
<CAPTION>
CONCRETE STEEL
(IN THOUSANDS) PIPE PRODUCTS PRODUCTS OTHER TOTAL
- ----------------------------- ------------- -------- ------- --------
<S> <C> <C> <C> <C>
Investment, November 30, 1995
Cost $ 6,194 $ 8,482 $3,706 $18,382
Accumulated equity in
undistributed earnings 15,258 9,335 2,581 27,174
Reserves (8,116) (1,042) (201) (9,359)
--------- ------- ------ -------
$13,336 $16,775 $6,086 $36,197
========= ======= ====== =======
Investment, November 30, 1994
Cost $6,194 $8,482 $3,706 $18,382
Accumulated equity in
undistributed earnings 17,112 8,760 2,809 28,681
Reserves (9,281) (467) -- (9,748)
--------- ------- ------ -------
$14,025 $16,775 $6,515 $37,315
========= ======= ====== =======
</TABLE>
The Company provides income taxes on its equity in earnings of affiliated
companies to the extent that such earnings are expected to be distributed or
repatriated.
Summarized financial information for affiliates in the concrete pipe products
business follows:
<TABLE>
<CAPTION>
FINANCIAL CONDITION (IN THOUSANDS) 1995 1994
- -------------------------------------- --------- --------
<S> <C> <C>
Current assets $ 63,360 $ 70,100
Noncurrent assets 39,604 39,802
--------- --------
$102,964 $109,902
========= ========
Current liabilities $ 35,554 $ 39,125
Noncurrent liabilities 7,303 3,371
Stockholders' equity 60,107 67,406
--------- --------
$102,964 $109,902
========= ========
</TABLE>
<TABLE>
<CAPTION>
RESULTS OF OPERATIONS (IN THOUSANDS) 1995 1994 1993
- ------------------------------------ -------- ------- --------
<S> <C> <C> <C>
Net sales $41,861 $80,230 $81,144
======== ======= =======
Gross profit $ 8,087 $23,715 $21,305
======== ======= =======
Net income (loss) $(1,924) $ 5,688 $ 5,367
======== ======= =======
</TABLE>
The Company's investment in Gifford-Hill-American, Inc., which manufactures
concrete pressure pipe, was recorded based on audited financial statements as
of June 30, 1995 and unaudited financial statements as of October 31, 1995.
The Company's investments in Ameron Saudi Arabia, Ltd., Bondstrand, Ltd. and
Oasis-Ameron, Ltd. were recorded based on audited financial statements as of
December 31, 1994 and unaudited financial statements as of September 30,
1995. The investment in Tamco was based on audited financial statements as of
November 30, 1995.
Summarized financial information for Tamco, Bondstrand, Ltd. and
Oasis-Ameron, Ltd. follows:
<TABLE>
<CAPTION>
FINANCIAL CONDITION (IN THOUSANDS) 1995 1994
- ----------------------------------- -------- -------
<S> <C> <C>
Current assets $65,392 $48,074
Noncurrent assets 27,787 28,131
-------- -------
$93,179 $76,205
======== =======
Current liabilities $36,718 $18,768
Noncurrent liabilities 3,588 4,312
Stockholders' equity 52,873 53,125
-------- -------
$93,179 $76,205
======== =======
</TABLE>
<TABLE>
<CAPTION>
RESULTS OF OPERATIONS (IN THOUSANDS) 1995 1994 1993
- ----------------------------------- --------- -------- --------
<S> <C> <C> <C>
Net sales $140,568 $136,790 $118,845
========= ======== ========
Gross profit $ 26,387 $ 17,637 $ 10,953
========= ======== ========
Net income $ 7,870 $ 3,886 $ 2,805
========= ======== ========
</TABLE>
The amount of investments and accumulated equity in the undistributed
earnings in the Middle Eastern affiliates was approximately $18,000,000 and
$19,000,000 at November 30, 1995 and 1994, respectively.
Sales and technical services provided by the Company to affiliates in the
Middle East totaled approximately $1,700,000 in 1995, $3,500,000 in 1994 and
$4,100,000 in 1993, and related receivables aggregated approximately
$1,300,000 at November 30, 1995 and $2,400,000 at November 30, 1994.
Receivables from all affiliated companies approximated $1,500,000 at November
30, 1995 and $2,800,000 at November 30, 1994.
- -------------------------------------------------------------------------------
NOTE 5 SALES OF ASSETS
During the third quarter of 1994, the Company completed the sale of a
non-strategic steel fabrication subsidiary in Colombia. This sale resulted in
an after tax gain of $1.8 million or $.46 per share, for the year.
- -------------------------------------------------------------------------------
NOTE 6 RESTRUCTURING CHARGES AND WRITE-DOWN OF ASSETS
In the fourth quarter of fiscal 1993, the Company recorded a pretax
restructuring charge of $31.9 million and wrote down related fixed assets of
$1.9 million. The restructuring charges included facility and product line
consolidation, severance of approximately 330 salaried employees, revaluation
of underperforming assets to their expected
45
<PAGE>
realizable value and provision for elimination of several non-strategic
and unprofitable operations. These costs reflect management's efforts to
redeploy the Company's capital to those core businesses that are
expected to yield returns consistent with management's expectations and
objectives.
The following is a summary of restructuring charges and asset write-downs
recorded by the Company:
<TABLE>
<CAPTION>
(IN THOUSANDS) 1993
- ------------------------------------------------------------------------------- ---------
<S> <C>
Facility and product line consolidation $ 11,367
Revalue investments and related assets 9,403
Elimination of non-strategic operations 7,494
Employee severance costs 3,430
Fixed asset write downs 1,937
Other 166
---------
Total $ 33,797
=========
</TABLE>
The following is a summary of restructuring charges and asset write-downs by
business segment:
<TABLE>
<CAPTION>
(IN THOUSANDS) 1993
- ----------------------------------------------------------------------------- -----------
<S> <C>
Protective Coatings $ 5,128
Fiberglass Pipe 1,909
Concrete & Steel Pipe 10,604
Construction & Allied Products 3,723
Corporate 12,433
-----------
Total $ 33,797
===========
</TABLE>
During the fiscal years ended November 30, 1993, 1994 and 1995, the Company
utilized $2,019,000, $4,758,000 and $1,846,000, respectively, of reserves
for restructuring activities. At November 30, 1995, $1,800,000 of
restructuring reserves remained on the Company's balance sheet.
NOTE 7 EMPLOYEE BENEFIT PLANS
The Company has a qualified, defined benefit, noncontributory pension plan
for employees not covered by union pension plans, which is accounted
for in accordance with Financial Accounting Standards Board Statement No.
87. Benefits paid to retirees are based upon age at retirement, years of
credited service and average compensation or negotiated benefit rates. The
Company's funding policy is to make contributions to the plan sufficient
to meet the minimum funding requirements of applicable laws and
regulations, plus such additional amounts, if any, as the Company's
actuarial consultants recommend.
Assets of the defined benefit plan are invested in a directed trust. Assets
in the trust are invested in equity securities of corporations
(including $3,604,000 of the Company's common stock at November 30, 1995),
U.S. government obligations, derivative securities, corporate bonds and money
market funds.
During 1994, the overfunded and underfunded pension plans were combined so
that the assets of each predecessor pension plan are available to satisfy
the previously existing obligations of the other.
The Company has a supplemental non-qualified, non-funded retirement plan,
for which the Company has purchased cost recovery life insurance on the lives
of the participants. The Company is the sole owner and beneficiary
of such policies. The amount of the coverage is designed to provide
sufficient revenues to cover all costs of the plan if assumptions made as
to mortality experience, policy earnings and other factors are realized. On
November 30, 1995 and 1994, the cash surrender value of these policies
was $3,775,000 and $3,314,000, respectively.
Net periodic pension cost for the years ended November 30, consists of the
following:
<TABLE>
<CAPTION>
(IN THOUSANDS) 1995 1994 1993
- ------------------------------------------------------ ---------- --------- ----------
<S> <C> <C> <C>
Service cost:
Defined benefit plans $ 1,822 $ 2,111 $ 2,452
Supplemental plan 26 25 26
Interest cost:
Defined benefit plans 8,333 7,663 7,744
Supplemental plan 213 186 146
Return on plan assets (17,466) 508 (20,847)
Net(amortization) deferral:
Defined benefit plans 7,860 (9,701) 11,962
Supplemental plan 273 268 202
---------- --------- ----------
Net periodic pension cost $ 1,061 $ 1,060 $ 1,685
========== ========= ==========
</TABLE>
The following table sets forth the funding status of the qualified, defined
benefit plan and the amount recognized in the Company's balance sheet at
November 30:
<TABLE>
<CAPTION>
(IN THOUSANDS) 1995 1994
- ---------------------------------------------------------------- ----------- -----------
<S> <C> <C>
Actuarial present value of:
Vested benefit obligation $ 104,666 $ 88,108
Non-vested benefits 738 621
----------- -----------
Accumulated benefit obligation 105,404 88,729
Effect of salary increases 8,669 8,349
----------- -----------
Actuarial present value of projected benefit obligation 114,073 97,078
Less plan assets at market value 115,204 104,381
----------- -----------
Plan assets in excess of projected benefit obligation (1,131) (7,303)
Unrecognized asset 6,196 11,820
----------- -----------
Accrued pension cost in consolidated balance sheets $ 5,065 $ 4,517
=========== ===========
</TABLE>
The following table sets forth the status of the supplemental plan as of
November 30:
<TABLE>
<CAPTION>
(IN THOUSANDS) 1995 1994
- --------------------------------------------------------------------- --------- ---------
<S> <C> <C>
Actuarial present value of:
Vested benefit obligation $ 2,618 $ 2,172
Non-vested benefits 3 5
--------- ---------
Accumulated benefit obligation 2,621 2,177
Effect of salary increases 259 124
Actuarial present value of projected benefit obligation 2,880 2,301
Unrecognized obligation (729) (965)
Unrecognized net gain (loss) (135) 353
--------- ---------
Accrued pension cost in consolidated balance sheets $ 2,016 $ 1,689
========= =========
</TABLE>
The 1995 actuarial computations for both the qualified, defined benefit plan
and the supplemental plan assumed a discount rate of 7.5% and annual
salary increases of 5.0%. The qualified, defined benefit plan assumed
an expected long-term rate of return of 9.75%.
Approximately 18% of the Company's employees are covered by union sponsored,
collectively bargained, multi-employer pension plans. The Company
contributed and charged to expense $2,700,000 in 1995 and $2,400,000 and
$1,900,000 in 1994 and 1993, respectively. These contributions are
determined in accordance with the provisions of negotiated labor
contracts and generally are based on the number of
46
<PAGE>
hours worked. Information from the plans' administrators is not available to
permit the Company to determine its share of unfunded vested benefits, if
any. The Company has no intention of withdrawing from any of these plans, nor
is there any intention to terminate such plans.
Effective December 1, 1993, the Company adopted Statement of Financial
Accounting Standards No. 106, "Employers' Accounting for Postretirement
Benefits Other Than Pensions." The Statement requires the Company to accrue
the estimated cost of retiree benefit payments during the years the employees
provide services. The Statement allows recognition of the cumulative effect
of the liability in the year of the adoption or the amortization of the
obligation over a period of up to 20 years. The Company has elected to
recognize the initial postretirement benefit obligation of $1,330,000 over a
period of 20 years.
The accumulated postretirement benefit obligation in the Company's balance
sheet at November 30, follows:
(IN THOUSANDS) 1995 1994
- -------------------------------------------------- ------- -------
Retirees $ 356 $ 297
Actives eligible 563 462
All others 632 571
------- -------
Postretirement benefit obligation 1,551 1,330
Unrecognized net transition obligation (1,282) (1,353)
Unrecognized gains (losses) (20) 154
------- -------
Accrued postretirement cost in the balance sheet $ 249 $ 131
======= =======
Net periodic postretirement benefit cost for the year ended November 30,
consisted of the following components:
(IN THOUSANDS) 1995 1994
- ------------------------------------------------- ---- ----
Service cost $ 52 $ 55
Interest cost 113 111
Net amortization 69 71
---- ----
Net periodic postretirement benefit expense $234 $237
==== ====
The assumed health care cost trend rate used in measuring the accumulated
postretirement benefit obligation was 9.5% in 1995; it is assumed that the
rate will decline gradually to 6% by the year 2001. The assumed discount rate
used in determining the accumulated postretirement benefit obligation was
7.5% at November 30, 1995. The salary increase rate used was 5.0%.
The Company has a deferred compensation plan providing key executives with
the opportunity to participate in an unfunded, deferred compensation program.
Under the program, participants may defer base compensation and bonuses and
earn interest on their deferred amounts. The program is not qualified under
Section 401 of the Internal Revenue Code. The total of net participant
deferrals, which is reflected in accrued liabilities was $3,911,000 at
November 30, 1995 and $3,208,000 at November 30, 1994. The expense for this
plan was $346,000 in 1995, $136,000 in 1994 and $362,000 in 1993.
The Company has a life insurance plan wherein eligible executives are
provided with life insurance protection based upon three times base salary.
Upon retirement, the executive is provided with life insurance protection
based upon final base salary. Benefits may be paid as a lump sum or as an
annual income to the identified survivor over ten years. The expense for this
plan was $46,000 in 1995, $60,000 in 1994 and $50,000 in 1993.
In connection with the above two plans, whole life insurance contracts were
purchased on the related participants. At November 30, 1995 and 1994, the
cash surrender value of these policies was $5,682,000 and $4,690,000, net of
loans of $2,043,000.
The Company provides to certain employees a savings plan under Section 401(k)
of the Internal Revenue Code. The savings plan allows for deferral of income
up to a certain percentage through contributions to the plan and, within
certain restrictions, Company matching contributions in the form of the
Company's common stock. In 1995, 1994 and 1993, the Company recorded expenses
for matching contributions of $681,000, $967,000 and $958,000, respectively,
while 19,761 and 25,996 and 27,635 shares of common stock were issued by the
Company to the savings plan.
In December 1994, the Company adopted Statement of Financial Accounting
Standards No. 112 "Employers' Accounting for Postemployment Benefits--An
Amendment of FASB Statements No. 5 and 43." This statement requires employers
to recognize obligations to provide postemployment benefits if certain
criteria are met. Implementation of this statement did not have a material
effect on the Company's financial position or its results of operations.
NOTE 8 INCOME TAXES
The provision (benefit) for income taxes for the years ended
November 30, included the following:
(IN THOUSANDS) 1995 1994 1993
- ----------------------------- ------- ------- --------
Current
Federal $ 2,833 $(3,730) $ 1,340
Foreign 2,516 1,287 6,542
State 663 -- 145
------- ------- --------
6,012 (2,443) 8,027
Deferred
Federal (1,243) 8,566 (15,918)
Foreign 396 (157) (25)
State (225) 1,005 (1,816)
------- ------- --------
(1,072) 9,414 (17,759)
------- ------- --------
$ 4,940 $ 6,971 $ (9,732)
======= ======= ========
The principal types of timing differences and the tax effect of each, which
give rise to the deferred tax provision (benefit), for the years ended
November 30, follow:
(IN THOUSANDS) 1995 1994 1993
- --------------------------------- ------- ------ --------
Accelerated depreciation $ (377) $ (150) $ 33
Change in nondeductible reserves (2,310) 8,799 (12,163)
Investment tax credits, net -- -- (42)
Write down of fixed assets -- -- (3,472)
Federal alternative minimum tax
and State loss carryforwards 1,379 (314) (1,099)
Other, net 236 1,079 (1,016)
------- ------ --------
$(1,072) $9,414 $(17,759)
======= ====== ========
47
<PAGE>
Deferred tax liabilities (assets) are comprised of the following as of
November 30:
<TABLE>
<CAPTION>
(IN THOUSANDS) 1995 1994
- -------------------------------------------------------------------- --------- ---------
<S> <C> <C>
Non-current deferred taxes
Self insurance/claims reserves $ (8,242) $ (8,738)
Investments 2,675 4,795
Employee benefits (8,399) (6,741)
Fixed assets 20,577 20,225
Federal and State tax credit and loss carryforwards (2,347) (3,612)
Other (224) (170)
--------- ---------
Net non-current deferred liability 4,040 5,759
Current deferred taxes
Self-insurance/claims reserves (1,309) --
Employee benefits (1,685) (1,420)
Accounts receivable (1,481) (1,926)
Inventory (2,728) (2,064)
Other (112) 704
--------- ---------
Net current deferred asset (7,315) (4,706)
--------- ---------
Net deferred taxes $ (3,275) $ 1,053
========= =========
</TABLE>
The tax provision represents effective tax rates of 35.8%, 42.5% and 27.2%
of pretax income for the years ended November 30, 1995, 1994 and
1993, respectively. A reconciliation of income taxes provided at the
effective income tax rate and the amount computed at the federal statutory
income tax rate of 35% for the years ended November 30, 1995 and November 30,
1994 and 34% for the year ended November 30, 1993 follows:
<TABLE>
<CAPTION>
(IN THOUSANDS) 1995 1994 1993
- ------------------------------------------------------ --------- --------- ----------
<S> <C> <C> <C>
Domestic pretax income (loss) $ 9,571 $ 14,438 $ (45,011)
Foreign pretax income 4,227 1,964 9,203
--------- --------- ----------
$ 13,798 $ 16,402 $ (35,808)
========= ========= ==========
Taxes at federal statutory rate $ 4,829 $ 5,741 $ (12,175)
State taxes (net of federal tax benefit) 285 653 (1,103)
Foreign losses with no federal benefit 630 199 2,591
Percentage depletion (512) (457) (486)
Investment tax credit amortization -- -- (42)
Write down affiliate investment -- -- 1,130
Foreign branch/withholding taxes 226 481 807
Other, net (518) 354 (454)
--------- --------- ----------
$ 4,940 $ 6,971 $ (9,732)
========= ========= ==========
</TABLE>
The Company has filed an appeal with respect to a portion of the Internal
Revenue Service audit assessment relating to the Company's 1987 through 1989
Federal income tax returns. The appeal is currently being reviewed by the
Internal Revenue Service. The resolution of this matter is not expected to
have a material effect on the Company's results of operations.
NOTE 9 DEBT
Short-term borrowings consist of loans payable to banks by foreign
subsidiaries totaling $1,718,000 and $2,931,000 as of November 30, 1995 and
1994 respectively. The average interest rate on these loans was approximately
16.9% in 1995 and 19.5% in 1994. The high interest rates relate to borrowings
by the Company's Colombian subsidiary.
Domestically, the Company has uncommitted, short-term, bank credit lines
totaling $12,000,000 with interest at various money market rates.
Long-term debt as of November 30, consisted of the following:
<TABLE>
<CAPTION>
(IN THOUSANDS) 1995 1994
- ---------------------------------------------------------------- ----------- -----------
<S> <C> <C>
Unsecured notes payable to insurance companies:
8.63%, payable in annual installments of $5,000, plus accrued
interest $ 15,000 $ 20,000
9.79%, payable in annual installments of $12,000 commencing in
1996, plus accrued interest 60,000 60,000
Variable-rate unsecured bank revolving credit facilities (6.4%
at November 30, 1995) 29,148 13,041
10% mortgage loan, secured by land with a book value of $3,478 -- 3,888
Variable-rate unsecured bank loan, payable by a consolidated
subsidiary in Dutch guilders, with annual installments of
approximately $803 plus accrued interest through 2002 (4.48% at
November 30, 1995) 5,220 5,545
Other indebtedness with various interest rates and maturities -- 47
----------- -----------
109,368 102,521
Less -- Current portion 17,803 9,674
----------- -----------
$ 91,565 $ 92,847
=========== ===========
</TABLE>
The Company maintains a $75,000,000 revolving credit facility with five
banks. The Company may at its option borrow at interest rates based on
specified margins over money market rates, at any time until June 1998, when
all borrowings under the facility must be repaid.
Additionally, a consolidated subsidiary maintains revolving credit facilities
with three banks. The subsidiary may at its option borrow in various
currencies, at interest rates based on specified margins over money market
rates. The subsidiary is able to borrow up to the equivalent of $8,000,000 at
any time through September 1996 under one facility, and $4,000,000 through
August 1998 under a second facility. A third arrangement permits borrowings
up to $3,000,000; this availability declines by $741,000 semi-annually. At
November 30, 1995, $3,649,000 was borrowed under these bank facilities.
Future payments due on long-term debt total $17,803,000 in 1996, $17,803,000
in 1997, $46,951,000 in 1998, $12,803,000 in 1999, and $12,803,000 in 2000.
The lending agreements contain various restrictive covenants including the
requirement to maintain specified amounts of working capital and net worth
and restrictions on cash dividends, borrowings, liens, investments and
guarantees. Under the most restrictive provisions of the Company's lending
agreements, approximately $12,000,000 of retained earnings was not restricted
at November 30, 1995.
Certain note agreements contain provisions regarding the Company's ability to
grant security interests or liens in association with other debt instruments.
If the Company grants such a security interest or lien, then such notes will
be secured equally and ratably as long as such other debt shall be secured.
The following disclosure of the estimated fair value of the Company's debt is
made in accordance with the requirements of Financial Accounting Standards
Board Statement No. 107 "Disclosures about Fair Value of Financial
Instruments." The estimated fair value amounts have been determined by the
Company using available market information and appropriate valuation
methodologies. Considerable judgment is required to develop the estimates of
fair value, thus the estimates provided herein are not necessarily indicative
of the amounts that could be realized in a current market exchange.
48
<PAGE>
<TABLE>
<CAPTION>
(IN THOUSANDS) NOVEMBER 30, 1995
- ------------------------------ ---------------------------
CARRYING FAIR
AMOUNT VALUE
--------- -------
<S> <C> <C>
Short-term borrowings $ 1,718 $ 1,718
Fixed-rate long-term debt 75,000 80,000
Variable-rate long-term debt 34,368 34,368
</TABLE>
The carrying values of short-term and variable-rate long-term debt are a
reasonable estimate of their fair value. The estimated fair value of the
Company's fixed-rate long-term debt is based on U.S. government notes plus an
estimated spread at November 30, 1995 for similar securities with similar
remaining maturities.
The Company has guaranteed obligations of various unconsolidated foreign
affiliated and nonaffiliated companies of $1,412,000 as of November 30, 1995.
- -------------------------------------------------------------------------------
NOTE 10 LEASE COMMITMENTS
Rental expense under long-term operating leases of property, vehicles and
other equipment was $7,225,000 in 1995, $6,532,000 in 1994 and $6,068,000 in
1993. At November 30, 1995, future rental commitments under these leases
totaled $67,350,000. Future rental commitments are payable as follows:
<TABLE>
<CAPTION>
YEAR ENDING
(IN THOUSANDS) NOVEMBER 30 AMOUNT
- ---------------------- ----------- --------
<S> <C> <C>
1996 $ 6,738
1997 5,758
1998 5,112
1999 5,117
2000 4,432
2001-Beyond 40,193
--------
$67,350
========
</TABLE>
Minimum payments for leases have not been reduced by minimum noncancelable
sublease rentals aggregating $4,776,000 for operating leases.
- -------------------------------------------------------------------------------
NOTE 11 CONTINGENCIES AND COMMITMENTS
An action was filed in 1992 in the U.S. District for the District of Arizona
by the Central Arizona Water Conservation District ("CAWCD") seeking damages
against several parties, including the Company and the Company's customer,
Peter Kiewit Sons' Company ("Kiewit"), in connection with six prestressed
concrete pipe siphons furnished and installed in the 1970's as part of the
Central Arizona Project ("CAP"), a federal project to bring water from the
Colorado River to Arizona. The CAWCD also filed separate actions against the
U.S. Bureau of Reclamation ("USBR") in the U.S. Court of Claims and with the
Arizona Projects Office of the USBR in connection with the CAP siphons. The
CAWCD alleged that the six CAP siphons were defective and that the USBR and
the defendants in the U.S. District Court action were liable for the repair
or replacement of those siphons at a claimed estimated cost of $146.7
million. On September 14, 1994 the U.S. District granted the Company's motion
to dismiss the CAWCD action and entered judgment against the CAWCD and in
favor of the Company and its co-defendants. CAWCD has filed a notice of
appeal with the Ninth Circuit Court of Appeals.
Separately, on September 28, 1995 the Contracting Officer for the USBR issued
a final decision claiming for the USBR approximately $40 million in damages
against Kiewit, based in part on the Contracting Officer's finding that the
siphons supplied by the Company were defective. That claim amount is
considered by the Company to be duplicative of the damages sought by the
CAWCD for the repair or replacement of the siphons in its aforementioned
action in the U.S. District for the District of Arizona. The Contracting
Officer's final decision has been appealed by Kiewit to the U.S. Department
of the Interior Board of Contract Appeals ("IBCA"). The Company is actively
cooperating with, and assisting Kiewit in the administrative appeal of that
final decision before the IBCA.
The Company internally, as well as through independent third party
consultants, has conducted engineering analyses regarding the allegations
that the CAP siphons were defective and believes that the siphons were
manufactured in accordance with the project specifications and other contract
requirements, and therefore it is not liable for any claims relating to the
siphons, whether by the CAWCD or by the USBR. The Company has recorded
provisions deemed adequate by the Company to permit it to continue to
vigorously defend its position in this matter. The Company believes that it
has meritorious defenses to these actions and that resultant liability, if
any, should not have a material adverse effect on the financial position of
the Company or its results of operations.
In July 1992 the Company was served with a complaint in an action brought by
the City & County of San Francisco in Superior Court of the State of
California against the Company and two co-defendants, in connection with a
pipeline referred to as San Andreas Pipeline No. 3, a water transmission
pipeline, which was installed between 1980 and 1982. The Company furnished
the pipe used in that pipeline. Plaintiff alleges that the pipeline is
defective. Plaintiff originally sought damages of $43.95 million to replace
the entire pipeline, but in June 1994 it filed its third amended complaint,
which alleges damages according to proof and in excess of the jurisdictional
minimum of $25,000. The Company has recorded provisions deemed adequate by
the Company to permit it to continue to vigorously defend its position in
this matter. The Company believes that it has meritorious defenses to this
action and that resultant liability, if any, should not have a material
adverse effect on the financial position of the Company.
In addition, certain other claims, suits and complaints that arise in the
ordinary course of business, have been filed or are pending against the
Company. Management believes that these matters, and the matters discussed
above, are either adequately reserved, covered by insurance, or would not
have a material adverse effect on the financial position of the Company or
its results of operations if disposed of unfavorably. The Company is also
subject to federal, state and local laws and regulations concerning the
environment and is currently participating in administrative proceedings at
several sites under these laws. While the Company finds it difficult to
estimate with any certainty the total cost of remediation at the several
sites, on the basis of currently available information and reserves provided,
the Company believes that the outcome of such environmental regulatory
proceedings will not have a material adverse effect on the Company's
financial position or its results of operations.
At November 30, 1995, the Company had reserves of approximately $8,100,000
for potential environmental liabilities and approximately $8,800,000
associated with product liability and other legal claims.
The Company insures for property loss, workers' compensation, general
liability and automotive liability, subject to specific retention levels.
Consulting actuaries assist the Company in determining its liability for
retained claims.
- -------------------------------------------------------------------------------
NOTE 12 CAPITAL STOCK
The certificate of incorporation in Delaware authorizes 12,000,000 shares of
$2.50 par value common stock, 1,000,000 shares of $1.00 par value preferred
stock and 100,000 shares of $1.00 par value series A junior participating
cumulative preferred stock. The preferred stock may be issued in series, with
the rights and preferences of each series to
49
<PAGE>
be established by the Board of Directors. As of November 30, 1995, the
Company had no shares of preferred stock or series A junior participating
cumulative preferred stock outstanding.
The Company has a Stockholders' Rights Agreement, which entitles stockholders
to purchase common stock if a party acquires 15% or more of the Company's
common shares or announces a tender offer for at least 15% of its common
shares outstanding.
NOTE 13 INCENTIVE STOCK COMPENSATION PLAN
On January 27, 1992, the Board of Directors of the Company adopted the
Incentive Stock Compensation Plan (the "1992 Incentive Plan"). Under the
terms of the 1992 Incentive Plan, 1.5% of the total number of shares of
Common Stock outstanding on the preceding December 31 are available for grant
of awards in the following calendar year to key employees.
The Company has reserved 176,634 shares of common stock for sale to employees
under the 1992 Incentive Plan at November 30, 1995. The plan provides for the
issuance of options to purchase not more than 250,000 shares of common stock
in the form of incentive options under the provisions of Section 422 of the
Internal Revenue Code. Options can be incentive stock options or nonqualified
options and may be granted for up to ten years. Awards under the 1992
Incentive Plan may include but are not limited to stock bonuses, stock
options, convertible securities and restricted stock grants. Restrictions may
limit the sale, transfer, voting rights and dividends on these shares. At
November 30, 1995, 7,500 restricted shares were outstanding, and 40,054
shares were available for future grants.
On June 27, 1994 the Board of Directors of the Company adopted the 1994
Nonemployee Director Stock Option Plan (Nonemployee Director Plan). On March
27, 1995, the Nonemployee Director Plan was approved by the stockholders at
the Annual Stockholders' Meeting. Under the terms of the Nonemployee Director
Plan, each Nonemployee Director shall automatically be granted 1,000 options
on the first business day following the date of the annual meeting of
stockholders of the Company at which the directors of the Company are
elected. The aggregate number of common shares issued and issuable shall not
exceed 120,000. As of November 30, 1995, the Company had reserved 8,000
shares of common stock for sale under the Nonemployee Director Plan.
The Company accounts for the above plans under APB Opinion No. 25, under
which no compensation cost has been recognized.
A summary of all stock option transactions for 1995, 1994 and 1993 is as
follows:
NUMBER OF SHARES OPTION PRICE PER SHARE
---------------- ----------------------
Outstanding at November 30, 1992 136,725 $14.63 to $43.75
Granted 40,700 31.00 to 32.75
Exercised (2,200) 32.00
Expired (28,375) 32.00 to 43.75
-------
Outstanding at November 30, 1993 146,850 14.63 to 43.75
Granted 121,184 37.00 to 42.00
Exercised (23,250) 14.63 t0 34.75
Expired (34,450) 31.00 to 43.75
-------
Outstanding at November 30, 1994 210,334 31.00 to 43.75
Granted 36,575 31.63 to 33.75
Exercised (1,025) 31.00 to 34.75
Expired (17,550) 31.00 to 43.75
-------
Outstanding at November 30, 1995 228,334 31.00 to 42.00
=======
Options for 66,950 shares were exercisable at November 30, 1995. The
remaining outstanding options become exercisable in varying amounts through
2005.
In November 1995, the Financial Accounting Standards Board issued statement
of Financial Accounting Standards No. 123 "Accounting for Stock-Based
Compensation." The Statement recommends changes in accounting for employee
stock-based compensation plans, and requires certain disclosures with respect
to these plans. The Statement's disclosure requirements must be adopted by
the company no later than the fiscal year ending November 30, 1997.
NOTE 14 BUSINESS SEGMENTS AND GEOGRAPHIC AREAS
Financial information for 1995, 1994 and 1993, with respect to the various
business segments of the Company, appears on pages 52 and 53.
NOTE 15 SUBSEQUENT EVENT
On January 8, 1996 the Company acquired substantially all the assets of
Centron Corporation (Centron) of Mineral Wells, Texas. Centron is a
manufacturer of fiberglass pipe for the worldwide oil field market. Any
amount of the purchase price greater than the fair market value of the
tangible assets will be allocated to intangible assets and amortized over
their economic life, not to exceed 40 years. The acquisition will be
accounted for as a purchase and the results of operations of the acquired
business will be included in the Company's consolidated financial statements
commencing January 1996.
NOTE 16 QUARTERLY FINANCIAL DATA
Summarized quarterly financial data for the years ended November 30, 1995 and
1994 follow:
1995
----------------------------------------------
(IN THOUSANDS EXCEPT FIRST SECOND THIRD FOURTH
PER SHARE DATA) QUARTER QUARTER QUARTER QUARTER
- -------------------- ------- ------- ------- -------
Sales $98,031 $118,526 $137,421 $127,427
Gross Profit 24,011 29,563 33,431 29,726
Net Income 116 4,002 4,577 3,757
Net Income per Share .03 1.01 1.16 .95
1994
-----------------------------------------------
(IN THOUSANDS EXCEPT FIRST SECOND THIRD FOURTH
PER SHARE DATA) QUARTER QUARTER QUARTER QUARTER
- -------------------- ------- ------- ------- -------
Sales $93,330 $100,612 $108,376 $115,364
Gross Profit 23,166 27,003 26,364 27,442
Net Income(1) 89 3,134 4,072 3,495
Net Income per Share(1) .02 .80 1.04 .89
The Company traditionally experiences seasonal patterns associated with
weather and contractor schedules, which result in lower sales during the
first quarter.
(1) Includes $1.8 million gain, net of income taxes, or $.46 per share on the
sale of a Colombian subsidiary.
PER SHARE DATA
STOCK PRICE DIVIDENDS
---------------- ----------------
QUARTERS ENDED 1995 1994 1995 1994
- -------------- ---- ---- ---- ----
February 28 --High $34 $43-1/8 $.32 $.32
--Low 29 35-5/8
May 31 --High 37-7/8 42-3/4 .32 .32
--Low 33-5/8 35-5/8
August 31 --High 36-5/8 38 .32 .32
--Low 33-3/4 34-5/8
November 30 --High 36-7/8 37-7/8 .32 .32
--Low 33-7/8 31-7/8
50
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders and the Board of Directors, Ameron, Inc.:
We have audited the accompanying consolidated balance sheets of Ameron, Inc.
(a Delaware corporation) and subsidiaries as of November 30, 1995 and 1994,
and the related consolidated statements of operations, cash flows and
stockholders' equity for each of the three years in the period ended
November 30, 1995. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits. We did not
audit the financial statements of Gifford-Hill-American, Inc. as of November
30, 1995, the investment in which is reflected in the accompanying
financial statements using the equity method of accounting (see Note 4).
The investment in this company is insignificant to consolidated assets. The
equity in its net income represents 8 percent of consolidated net income for
1995. Those statements were audited by other auditors whose report has
been furnished to us and our opinion, insofar as it relates to the amounts
included for Gifford-Hill-American, Inc., is based solely on the report
of the other auditors.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits and the report of other auditors provide a reasonable
basis for our opinion.
In our opinion, based on our audits and the report of other auditors, the
consolidated financial statements referred to above present fairly, in all
material respects, the financial position of Ameron, Inc. and subsidiaries as of
November 30, 1995 and 1994, and the results of their operations and their cash
flows for each of the three years in the period ended November 30, 1995, in
conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
LOS ANGELES, CALIFORNIA
JANUARY 19, 1996
REPORT OF MANAGEMENT
We have prepared the accompanying consolidated financial statements and
related financial information of Ameron, Inc. and subsidiaries in
conformity with generally accepted accounting principles appropriate in the
circumstances. Management is primarily responsible for the integrity
of the financial information included in this Annual Report. In
preparing the financial statements, management makes estimates as
necessary based upon currently available information and judgments of
current conditions and circumstances.
Ameron maintains a system of internal accounting controls supported by
documentation to provide reasonable assurance that assets are safeguarded
and the accounting records reflect the authorized transactions of the
Company. We believe the Company's system provides this appropriate balance
in accordance with established policies and procedures as implemented by
qualified personnel.
The independent auditors, Arthur Andersen LLP, appointed by the Board of
Directors, are responsible for expressing their opinion as to whether
the consolidated financial statements present fairly in all material
respects the financial position, operating results and cash flows of the
Company. In this process, they evaluate the system of internal accounting
controls to establish the audit procedures. Their opinion appears on this
page.
The Audit Committee of the Board of Directors is composed of
four directors who are not officers or employees of the Company. They
meet periodically with management, Arthur Andersen LLP and the internal
auditors to review the audit scope and results, discuss internal control
and financial reporting subjects, and review management actions on these
matters. Arthur Andersen LLP and the internal auditors have full and
free access to the members of the Audit Committee.
/s/ JAMES S. MARLEN
CHAIRMAN OF THE BOARD, PRESIDENT &
CHIEF EXECUTIVE OFFICER
/s/ GARY WAGNER
SENIOR VICE PRESIDENT & CHIEF
FINANCIAL OFFICER, TREASURER
51
<PAGE>
BUSINESS SEGMENTS
Ameron classifies its business operations into four segments: PROTECTIVE
COATINGS GROUP - high-performance coatings and product finishes; FIBERGLASS
PIPE GROUP - filament-wound fiberglass pipe, tubing and fittings; CONCRETE &
STEEL PIPE GROUP - concrete and steel pressure pipe, concrete non-pressure
pipe, protective linings for pipe, and fabricated products; CONSTRUCTION &
ALLIED PRODUCTS GROUP - ready-mix concrete, sand and aggregates, concrete
pipe, and concrete and steel lighting and traffic poles.
Intersegment sales were not significant. Income (loss) for reportable
segments is exclusive of certain unallocated corporate income and expense.
Identifiable assets by segment are those assets that are used exclusively by
such segment. Corporate assets are principally cash, receivables, property
and equipment, and investments. Capital expenditures do not include plant and
equipment from business acquisitions. A summary of sales, income (loss),
assets, depreciation and capital expenditures by segment follows.
<TABLE>
<CAPTION>
BUSINESS SEGMENTS
---------------------------------------------------------------------------------------------
PROTECTIVE FIBERGLASS CONCRETE & CONSTRUCTION & CORPORATE &
(DOLLARS IN THOUSANDS) COATINGS PIPE STEEL PIPE ALLIED PRODUCTS ADJUSTMENTS CONSOLIDATED
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1995
SALES $130,543 $82,752 $153,155 $114,955 $ -- $481,405
INCOME (LOSS) BEFORE INTEREST
AND INCOME TAXES 3,248 8,777 10,496 15,178 (12,530) 25,169
IDENTIFIABLE ASSETS 71,432 63,892 107,092 54,228 74,737 371,381
CAPITAL EXPENDITURES 3,894 2,534 5,375 2,856 1,495 16,154
DEPRECIATION 2,359 4,027 4,091 4,928 660 16,065
- --------------------------------------------------------------------------------------------------------------------------------
1994
Sales $134,201 $66,228 $101,644 $115,609 $ -- $417,682
Income (loss) before interest
and income taxes 13,338 2,987 3,271(1) 16,687 (9,374) 26,909(1)
Identifiable assets 64,493 60,731 94,393 56,062 75,177 350,856
Capital expenditures 3,605 2,127 5,161 2,701 1,340 14,934
Depreciation 2,208 3,943 4,159 4,913 632 15,855
- --------------------------------------------------------------------------------------------------------------------------------
1993
Sales $137,776 $92,947 $110,261 $112,373 $ -- $453,357
Income (loss) before interest
and income taxes(2) 1,494 14,207 (15,067) 6,607 (31,196) (23,955)
Identifiable assets 66,958 58,481 72,838 58,973 80,592 337,842
Capital expenditures 3,202 4,302 2,581 3,864 748 14,697
Depreciation 2,350 3,774 4,871 4,852 597 16,444
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) INCLUDES $3.2 MILLION GAIN, BEFORE INCOME TAXES, ON THE SALE OF A COLOMBIAN
SUBSIDIARY.
(2) INCLUDES $45.8 MILLION, BEFORE INCOME TAXES, IN FOURTH QUARTER CHARGES FOR
RESTRUCTURING AND OTHER RELATED CHARGES.
52
<PAGE>
GEOGRAPHIC AREAS
The PROTECTIVE COATINGS GROUP and the FIBERGLASS PIPE GROUP are worldwide in
scope. The CONCRETE & STEEL PIPE GROUP operates primarily in the western
United States; AMERON HAWAII operates exclusively in the State of Hawaii; and
the POLE PRODUCTS DIVISION operates in the continental United States. AMERON
HAWAII and the POLE PRODUCTS DIVISION together comprise the CONSTRUCTION &
ALLIED PRODUCTS GROUP.
Sales for export or to any individual customer did not exceed 10% of
consolidated sales. Information with respect to the Company's geographic
segments is as follows:
<TABLE>
<CAPTION>
Geographic Areas
----------------------------------------------------------------------------
United Investments &
(Dollars in thousands) States Europe Other Eliminations Consolidated
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1995
SALES TO UNAFFILIATED CUSTOMERS $372,589 $73,528 $35,288 $ -- $481,405
INTERCOMPANY SALES BETWEEN GEOGRAPHIC AREAS 4,180 1,411 6,448 (12,039) --
--------------------------------------------------------------------------
TOTAL SALES $376,769 $74,939 $41,736 $(12,039) $481,405
==========================================================================
INCOME BEFORE INTEREST
AND INCOME TAXES $ 15,915 $ 1,006 $ 8,248 $ -- $ 25,169
IDENTIFIABLE ASSETS 253,734 56,315 25,135 36,197 371,381
- -------------------------------------------------------------------------------------------------------------------------------
1994
Sales to unaffiliated customers $334,688 $55,286 $27,708 $ -- $417,682
Intercompany sales between geographic areas 2,519 1,716 5,507 (9,742) --
--------------------------------------------------------------------------
Total sales $337,207 $57,002 $33,215 $ (9,742) $417,682
==========================================================================
Income before interest
and income taxes $ 19,112(1) $ 1,489 $ 6,308 $ -- $ 26,909(1)
Identifiable assets 239,652 49,053 24,836 37,315 350,856
- -------------------------------------------------------------------------------------------------------------------------------
1993
Sales to unaffiliated customers $339,993 $90,634 $22,730 $ -- $453,357
Intercompany sales between geographic areas 3,416 1,075 6,284 (10,775) --
--------------------------------------------------------------------------
Total sales $343,409 $91,709 $29,014 $(10,775) $453,357
==========================================================================
Income (loss) before interest
and income taxes(2) $(33,234) $11,247 $(1,968) $ -- $(23,955)
Identifiable assets 225,168 53,479 19,211 39,984 337,842
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) INCLUDES $3.2 MILLION GAIN, BEFORE INCOME TAXES, ON THE SALE OF A
COLOMBIAN SUBSIDIARY.
(2) INCLUDES $45.8 MILLION, BEFORE INCOME TAXES, IN FOURTH QUARTER CHARGES
FOR RESTRUCTURING AND OTHER RELATED CHARGES.
53
<PAGE>
SUBSIDIARIES OF THE REGISTRANT
PARENTS
None
JURISDICTION OF PERCENT OF
SUBSIDIARIES CONSOLIDATED INCORPORATION STOCK OWNED
American Pipe & Construction International California 100
Ameron B.V. The Netherlands 100
Ameron FSC Guam 100
Ameron (Hong Kong) Ltd. Hong Kong 100
Ameron (Pte) Ltd. Singapore 100
SUBSIDIARIES NOT CONSOLIDATED AND
FIFTY-PERCENT OR LESS OWNED COMPANIES
Gifford-Hill-American, Inc. Texas 50
Tamco California 50
Bondstrand, Ltd. Saudi Arabia 40
Oasis-Ameron, Ltd. Saudi Arabia 40
Ameron Saudi Arabia, Ltd. Saudi Arabia 30
Names of other subsidiaries not consolidated and fifty-percent or less owned
companies are omitted because when considered in the aggregate as a single
subsidiary they do not constitute a significant subsidiary.
EXHIBIT 21
<PAGE>
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent of the incorporation of our
reports included and incorporated by reference in this Form 10-K, into Ameron,
Inc.'s previously filed Registration Statements File No. 33-3400 and 33-57308.
ARTHUR ANDERSEN LLP
Los Angeles, California
February 23, 1996
EXHIBIT 23
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1995
<PERIOD-END> NOV-30-1995
<CASH> 12,923
<SECURITIES> 0
<RECEIVABLES> 109,819
<ALLOWANCES> (4,800)
<INVENTORY> 76,426
<CURRENT-ASSETS> 206,838
<PP&E> 284,586
<DEPRECIATION> (170,470)
<TOTAL-ASSETS> 371,381
<CURRENT-LIABILITIES> 92,380
<BONDS> 91,565
0
0
<COMMON> 12,823
<OTHER-SE> 121,749
<TOTAL-LIABILITY-AND-EQUITY> 371,381
<SALES> 481,405
<TOTAL-REVENUES> 481,405
<CGS> 364,674
<TOTAL-COSTS> 364,674
<OTHER-EXPENSES> 95,786
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 11,715
<INCOME-PRETAX> 13,798
<INCOME-TAX> 4,940
<INCOME-CONTINUING> 12,452
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,452
<EPS-PRIMARY> 3.15
<EPS-DILUTED> 3.15
</TABLE>
