SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
-----------------
For the quarter ended March 31, 1996 Commission File No. 0-16452
-------------- -------
A. P. GREEN INDUSTRIES, INC.
----------------------------
(Exact name of registrant as specified in its charter)
Delaware 43-0899374
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Green Boulevard, Mexico, Missouri 65265
--------------------------------- -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (314) 473-3626
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 the number of shares outstanding of each of the registrant's classes
of common stock as of the latest practicable date: As of May 13, 1996,
4,010,754 shares of Common Stock, $1 par value, were outstanding.
Page 1 of 18
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A. P. GREEN INDUSTRIES, INC.
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
March 31, December 31,
1996 1995
(Dollars in thousands, except per share data) ----------- ----------
ASSETS
Current Assets
Cash and cash equivalents $ 4,477 $ 9,284
Receivables (net of allowances -
1996, $1,954; 1995, $1,930) 44,534 44,183
Reimbursement due on paid asbestos claims 3,145 3,696
Inventories 57,975 55,557
Projected insurance recovery on asbestos claims 22,857 21,990
Deferred income tax asset 3,107 4,115
Other 6,657 6,411
----------- ------------
Total current assets 142,752 145,236
Property, plant and equipment, net 97,545 96,785
Non-current projected insurance recovery 107,422 113,168
on asbestos claims
Pension assets 8,973 9,071
Intangible assets, net 4,227 3,941
Other assets 5,383 5,367
----------- -----------
Total assets $ 366,302 $ 373,568
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 17,078 $ 18,254
Accrued expenses
Payrolls 5,717 6,281
Taxes other than on income 1,803 1,889
Insurance reserves 4,019 4,657
Current portion of projected asbestos claims 23,069 22,198
Other 7,692 8,534
Current maturities of long-term debt 2,742 2,705
Income taxes 1,418 1,103
----------- -----------
Total current liabilities 63,538 65,621
Deferred income taxes 11,810 12,671
Long-term non-pension benefits 15,939 15,597
Long-term pensions 14,351 14,233
Long-term debt 34,360 34,384
Non-current projected asbestos claims 109,288 115,048
----------- -----------
Total liabilities 249,286 257,554
----------- -----------
Minority Interests 1,842 2,015
Stockholders' Equity
Preferred stock - $1 par value;
authorized: 2,000,000 shares;
issued and outstanding: none - -
Common stock - $1 par value;
authorized: 10,000,000 shares;
issued: 4,487,721 in 1996
and 4,486,221 in 1995 4,488 4,486
Additional paid-in capital 72,797 72,770
Retained earnings 58,436 56,981
Less: Deferred foreign currency translation (3,240) (2,931)
Treasury stock of 448,967 shares in 1996, (9,018) (9,018)
448,962 in 1995, at cost
Note receivable-ESOT (7,505) (7,505)
Minimum pension liability adjustment,
net of tax (784) (784)
----------- -----------
Total stockholders' equity 115,174 113,999
----------- -----------
Total liabilities and stockholders' equity $ 366,302 $ 373,568
=========== ===========
See accompanying notes to consolidated financial statements.
2
<PAGE>
A. P. GREEN INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
Three months ended March 31,
1996 1995
(Dollars in thousands, except per share data) ----------- -----------
Net sales $ 64,234 $ 61,889
Cost of sales 52,879 51,451
----------- -----------
Gross profit 11,355 10,438
Expenses and other income
Selling & administrative expenses 8,869 7,967
Interest expense 786 793
Interest income (322) (323)
Minority interest in loss of partnership (33) -
Other income, net (142) (204)
----------- -----------
Earnings before income taxes 2,197 2,205
Income tax expense 786 757
Equity in net income of affiliates (180) (240)
Minority interest in loss of consolidated subsidiaries (140) -
----------- -----------
Net earnings $ 1,731 $ 1,688
=========== ===========
Net earnings per common share $ 0.43 $ 0.42
=========== ===========
Weighted average number of common shares 4,038,721 4,028,129
=========== ===========
Dividends per common share $ 0.07 $ 0.07
=========== ===========
See accompanying notes to consolidated financial statements.
3
<PAGE>
A. P. GREEN INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Three months ended March 31,
----------------------------
(Dollars in thousands) 1996 1995
---- ----
Cash flows from operating activities
Net earnings $ 1,731 $ 1,688
Adjustments for items not requiring (providing) cash
Depreciation, depletion and amortization 2,592 2,443
Deferred compensation earned - 3
Stock compensation to directors 28 23
Provision for losses on accounts receivable 148 88
Loss (gain) on sale of assets 36 (11)
Equity in undistributed earnings of affiliates (180) (240)
Minority interest in losses of consolidated
subsidiaries and partnership (173) -
Decrease (increase) in assets
Trade receivables (500) 3,712
Asbestos claim and fee reimbursements received 4,913 1,697
Inventories (2,418) 1,572
Receivable and prepaid taxes 355 -
Other current assets (601) (140)
Increase (decrease) in liabilities
Accounts payable and accrued expenses (3,306) (9,211)
Asbestos claims paid (4,371) (7,280)
Pensions 118 169
Income taxes 316 (629)
Deferred income taxes 146 163
Long-term non-pension benefits 342 112
----------- -----------
Net cash used in operating activities (824) (5,841)
----------- -----------
Cash flows from investing activities
Capital expenditures (3,264) (1,003)
Decrease (increase) in other long-term assets (272) 57
Decrease (increase) in pension assets 99 (16)
Proceeds from sales of assets 26 132
----------- -----------
Net cash used in investing activities (3,411) (830)
----------- -----------
Cash flows from financing activities
Repayments of debt (63) (31)
Capital contributions from minority partner - 110
Proceeds from borrowings 75 -
Dividends paid (283) (282)
Tax benefit on dividends paid to ESOT 7 3
----------- -----------
Net cash used in financing activities (264) (200)
----------- -----------
Effect of exchange rate changes (308) (96)
----------- -----------
Net decrease in cash and cash equivalents (4,807) (6,967)
Cash and cash equivalents at beginning of year 9,284 9,637
----------- -----------
Cash and cash equivalents at end of period $ 4,477 $ 2,670
=========== ===========
See accompanying notes to consolidated financial statements.
4
<PAGE>
A. P. GREEN INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. MANAGEMENT'S COMMENTS REGARDING ADJUSTMENTS AND RESULTS OF OPERATIONS
---------------------------------------------------------------------
In the opinion of management, the accompanying consolidated financial
statements include all adjustments of a normal and recurring nature necessary
for a fair presentation of the financial position and results of operations
for the periods presented. These financial statements should be read in
conjunction with the Company's Annual Report on Form 10-K for the year ended
December 31, 1995. The results for the quarter ended March 31, 1996 are not
necessarily indicative of the results which may occur for the full year.
2. RESERVES FOR PLANT CLOSINGS
---------------------------
The Company has reserves for estimated exit costs and termination benefits in
connection with the shutdown of certain facilities in the U.S. and Canada.
Three of the plants acquired in the acquisition of the refractories business
of General Refractories Company and its affiliated companies ("General") were
closed during 1994, a $3.6 million reserve for which was established at the
time of acquisition and included on the opening balance sheet. During the
second quarter of 1995 this reserve was increased by approximately $330,000,
primarily to revise estimates of employee termination benefits resulting from
the sale of these facilities taking longer than anticipated. A $380,000
reserve was also established during the second quarter of 1995 for the closing
of the Weston, Ontario plant, which was sold in December 1995. Substantially
all employees at these facilities (approximately 210 in total) have been
terminated and approximately $3.5 million of termination benefits and plant
closing costs have been charged against the reserves to date. The U.S.
facilities are held for sale at their estimated net realizable value.
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3. INVENTORIES
-----------
March 31, 1996 December 31, 1995
-------------- -----------------
Finished goods & work-in-process
Valued at LIFO:
FIFO cost $40,655 $36,429
Less LIFO reserve (15,983) (14,186)
------- -------
LIFO cost 24,672 22,243
Valued at FIFO 10,369 10,404
------- -------
TOTAL 35,041 32,647
------- -------
Raw materials and supplies
Valued at LIFO:
FIFO cost 18,484 18,187
Less LIFO reserve (5,464) (5,234)
------- -------
LIFO cost 13,020 12,953
Valued at FIFO 9,914 9,957
------- -------
TOTAL 22,934 22,910
------- -------
$57,975 $55,557
======= =======
4. LITIGATION
----------
Asbestos-related claims - Personal Injury
- -----------------------------------------
A. P. Green is among numerous defendants in lawsuits pending as of March 31,
1996 that seek to recover compensatory, and in many cases, punitive damages
for personal injury allegedly resulting from exposure to asbestos-containing
products.
A. P. Green is a member of the Center for Claims Resolution (the Center), an
organization of twenty companies (Members) who were formerly distributors or
manufacturers of asbestos-containing products. The Center administers,
evaluates, settles, pays and defends all of the asbestos-related personal
injury lawsuits involving its Members. Under the terms of the Center
Agreement, each Member's portion of the liability payments and defense costs
are based upon, among other things, the number and type of claims brought
against it.
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<PAGE>
Claims activity for each of the years ended December 31, 1995, 1994 and 1993,
based upon information provided by the Center, was as follows:
- -----------------------------------------------------------------------------
1995 1994 1993
- -----------------------------------------------------------------------------
Claims pending at January 1 50,920 52,122 50,007
Claims filed 12,560 14,836 26,100
Cases settled, dismissed or
otherwise resolved (15,113) (16,038) (23,985)
------- ------- -------
Claims pending at December 31 48,367 50,920 52,122
======= ======= =======
Average settlement amount per claim (1) $ 1,778 $ 1,816 $ 1,728
===========================================================================
(1) Substantially all settlements are covered by the Company's insurance
program.
On January 15, 1993, the Members were named as defendants in a class action
lawsuit brought on behalf of all persons who have been occupationally exposed
to asbestos-containing products of the Members and who have unasserted claims
for such exposure (the Class) pursuant to Federal Rule of Civil Procedure
23(b)(3) in the Federal District Court for the Eastern District of
Pennsylvania. At about the same time, the Center negotiated and filed with
the Court a settlement (the Settlement) between the Members and the Class.
Under the terms of the Settlement, the Members have agreed to pay compensation
to any member of the Class who has, according to objective medical criteria,
physical impairment as a result of such exposure. Different levels of
compensation will be paid depending on the type and degree of physical
impairment. No punitive damages will be paid. The Settlement provides, among
other things, for a cap on the number of claims to be processed each year
during the next ten years and a range of settlement values for each disease
category. Settlement values are based on historical average payments by the
Center for similar cases. Each Member is responsible for its percentage share
of each claim payment (no joint and several liability), such shares having
been previously established. Hearings were held to determine the fairness of
the Settlement and the court ruled that the Settlement was fair and enjoined
Class members from filing lawsuits in the tort system against the Members.
The Center is processing and settling claims filed by Class members pursuant
to the Settlement. This ruling has been appealed by certain objectors. On
May 10, 1996, the United States Court of Appeals for the Third Circuit ordered
the District Court to decertify the Class and vacate the injunction
prohibiting Class Members from filing suit in the tort system against the
Members of the Center. It is expected that a petition for rehearing will be
filed and appeals pursued.
-7-
<PAGE>
In a third party action filed simultaneously with the class action (and in
parallel Alternate Dispute Resolution proceedings), the Members have asked for
a declaratory judgment against their respective insurers that such insurers
cannot use the Settlement as a defense to their payment under applicable
policies of insurance. The Settlement is expressly contingent upon such
declaratory relief. In addition, some Members, including A. P. Green, have
asked for a declaratory judgment against their insurers with whom they have
not reached coverage resolutions. No decision has been rendered at this date
with respect to these issues.
Under the assumption that it receives these court approvals, the Settlement
has provided the Company with a basis for estimating its potential liability
and related insurance recovery associated with asbestos cases. The Company
has reviewed its insurance policies, historical settlement amounts, the number
of pending cases and the projected number of claims to be filed pursuant to
the Settlement and the Company's share of amounts to be paid thereunder. The
Company has also reviewed its contractual liability for the payment of
deductibles under certain insurance policies insuring the E. J. Bartells
Company (Bartells), a former subsidiary, against asbestos-related personal
injury claims, such policies having been issued when Bartells was owned by
A. P. Green. Additionally, the Company has reviewed the claims asserted by
Bartells against the issuers of such policies and any exposure of the Company
to such claims. Based upon such reviews, the Company has estimated its
liability for such asbestos cases and claims to be approximately $132.4
million and $137.2 million at March 31, 1996 and December 31, 1995,
respectively, with partially offsetting projected insurance reimbursements of
approximately $130.3 million and $135.1 million, respectively. While
management understands the inherent uncertainty in litigation of this type and
the possibility that past costs may not be indicative of future costs,
management does not believe that these claims and cases will have any
additional material adverse effect on the Company's consolidated financial
position or results of operations. Management anticipates the Company's
payments for these claims will occur over at least ten years and can be made
from normal operating cash sources.
In addition to asbestos-related personal injury claims asserted against
A. P. Green, a number of claims have been asserted against Bigelow-Liptak
Corporation (now known as A. P. Green Services, Inc.), a subsidiary of the
Company. These claims have been and are currently being handled by such
subsidiary's insurance carriers. Except for deductible amounts or retentions
provided under insurance policies, no claim for reimbursement of defense or
indemnity payments has been made against the Company or such subsidiary by any
such carriers.
Asbestos-related claims-Property Damage
- ---------------------------------------
A. P. Green is also among numerous defendants in a property damage class
action suit pending in South Carolina. A. P. Green previously has been
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<PAGE>
dismissed from a number of property damage cases and believes that it should
be dismissed from the South Carolina case based on the end uses of its
products. A similar suit pending in the State of Oregon involves a former
wholly owned subsidiary of the Company and is being defended by the Company's
insurance carrier. Based upon the Company's history in these asbestos-related
property damage claims, management does not believe that the ultimate
resolution of these matters will have a material adverse effect on the
Company's consolidated financial position or results of operations.
There was no assumption of asbestos-related liability, either personal injury
or property damage, in connection with the August 1994 acquisition of General.
Environmental
- -------------
The EPA or other private parties have named the Company or one of its
subsidiaries as a potentially responsible party in connection with two
superfund sites in the United States. The Company is a de minimis party with
respect to one of the sites and expects to arrive at a settlement agreement
and consent decree with respect to it for an amount of not more than $10,000.
With respect to the second, involving a wholly owned subsidiary of the
Company, there does not appear to be any evidence of delivery to the site of
hazardous material by the subsidiary. An estimate has been made of the costs
to be incurred in these matters and the Company has recorded a reserve
respecting those costs.
Other
- -----
A. P. Green is subject to claims and other lawsuits that arise in the ordinary
course of business, some of which may seek damages in substantial amounts,
including punitive or extraordinary damages. Reserves for these claims and
lawsuits are recorded to the extent that losses are deemed probable and are
estimable. In the opinion of management, the disposition of all current
claims and lawsuits will not have a material adverse effect on the
consolidated financial position or results of operations of A. P. Green.
-9-
<PAGE>
A. P. GREEN INDUSTRIES, INC.
PART I. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
RESULTS OF OPERATIONS
- ---------------------
Total sales increased 3.8% to $64.2 million for the three months ended March
31, 1996 from $61.9 million for the comparable 1995 three-month period. Gross
profit increased 8.8% to $11.4 million from $10.4 million for the comparable
periods. The impact from the July 1995 acquisition of A. P. Green de Mexico
was to increase sales by $1.6 million and gross profit by $487,000, while the
impact of the December 1995 acquisition of Lanxide ThermoComposites, Inc. and
subsidiary, Chiam Technologies, Inc. (collectively referred to as LTI) was to
increase sales by $400,000 and reduce gross profit by $42,000 due to the
relatively high percentage of fixed costs at the initial low volume level. The
impact from the INTOGREEN partnership formed in January 1995 was not material.
Refractory Products and Services
- --------------------------------
Refractory products and services sales increased 2.7% to $54.4 million for the
three-month period ended March 31, 1996, including $2.0 million due to the
1995 acquisitions of A. P. Green de Mexico and LTI, from $53.0 million for the
three-month period ended March 31, 1995. United States refractory sales were
unchanged at $47.6 million for both three-month periods. Specialties volumes
were unchanged, while brick, pre-cast shape and ceramic fiber volumes all
declined, partially offset by an increase in clays and grogs, for a net volume
decline of 7.0%. Prices on all U.S. refractory product lines improved an
average of 6.9% for the comparable quarters. The Company's international
business continued to expand, with U.S. export sales improving 48.7% to $6.2
million from $4.2 million.
Sales of the Canadian subsidiary were unchanged at $5.5 million for the
comparable three-month periods. Increases in ceramic fiber and crucible
volumes were offset by declines in all other product lines, resulting in an
overall volume decline of 3.5%. Price increases for brick, pre-cast shapes,
crucibles and clays and grogs were partially offset by a decline in ceramic
fiber prices, with specialties pricing essentially unchanged, resulting in an
overall price increase of 1.4%. The Canadian operation generated pre-tax
losses of $76,000 and $19,000 during the first quarters of 1996 and 1995,
respectively.
Sales in the United Kingdom (U.K.) increased 15.5% to $2.1 million for the
three months ended March 31, 1996 from $1.8 million for the comparable 1995
quarter, as the U.K. market continued to improve. A decline in gross profit
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<PAGE>
due primarily to unfavorable 1996 production variances more than offset the
sales increase, resulting in pre-tax earnings of $74,000 in the first quarter
of 1996 compared to $107,000 in the comparable 1995 period.
Sales at A. P. Green de Mexico for the first quarter of 1996 were $1.6
million, with pre-tax earnings of $230,000.
Consolidated cost of sales as a percentage of sales declined to 83.1% from
84.1% for the three months ended March 31, 1996 and 1995, respectively. This
improvement was primarily due to reduced workers' compensation insurance, raw
materials and freight expense and improved brick breakage variances, partially
offset by increased pension, group health insurance and casualty insurance
costs. Refractory operating profits increased 4.6% to $3.1 million from $3.0
million in 1996 and 1995, respectively.
Industrial Lime
- ---------------
Industrial lime sales increased 10.4% to $9.9 million from $9.0 million for
the respective first quarters of 1996 and 1995. Volumes at the New Braunfels,
Texas plant increased an average of 8.5% across all product lines. At the
Kimballton, Virginia plant, a decline in quicklime volume was partially offset
by improvements in all other product lines for an overall decline of 2.1%,
resulting in a net volume increase of 5.4% for APG Lime. Average selling
prices increased 4.8% for the comparable periods, with increases coming from
all product lines with the exception of Cal-Dol at the Kimballton plant.
As a result of the sales increase, industrial lime gross profit increased 6.1%
to $2.2 million, or 21.8% of sales, from $2.0 million, or 22.7% of sales. The
decline in gross profit percentage was due to increased equipment maintenance
and group health insurance expense at both plants, partially offset by reduced
power, processing fuel and outside processing costs at the Kimballton plant
and net favorable production variances at both plants. Operating profit
increased 4.9% to $1.8 million for the first quarter of 1996 compared to $1.7
million for the comparable 1995 period.
Expenses and Other Income
- -------------------------
Selling and administrative expenses increased 11.3% to $8.9 million for the
three-month period ended March 31, 1996 from $8.0 million for the comparable
1995 period. The increase was primarily due to the addition of A. P. Green de
Mexico, LTI and INTOGREEN.
Interest expense decreased slightly to $786,000 in 1996 from $793,000 in 1995.
There were no bank line borrowings during the first quarter of either period.
Interest income for the first quarter of 1996 was $321,000 compared to
$323,000 for the first quarter of 1995. Other income decreased 30.1% to
$142,000 for the three months ended March 31, 1996 from $204,000 for the
comparable 1995 period primarily due to a reduction in currency conversion
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<PAGE>
gains on U.S. dollar denominated accounts at the Canadian subsidiary,
partially offset by increased royalty income.
The Company and its Canadian and U.K. subsidiaries typically transact
business in their own currencies and accordingly are not subject to
significant transaction gains and losses. A. P. Green de Mexico transacts a
significant portion of its business in U.S. dollars and, as such, uses the
dollar as its functional currency. This results in currency conversion
gains and losses on Mexican peso transactions, A. P. Green's portion of
which were not significant to the consolidated results.
Equity in Net Income of Affiliates
- ----------------------------------
The Company's share of income from its two Colombian affiliates was
$180,000 in the first quarter of 1996 compared to $240,000 for the first
quarter of 1995, with the higher 1995 income being primarily due to
adjustments related to 1994.
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<PAGE>
INDUSTRY SEGMENTS
(In thousands)
Three Months Ended March 31,
----------------------------
1996 1995
Net Sales ---- ----
Refractory products and services $ 54,380 $ 52,979
Industrial lime 9,892 8,957
Intersegment eliminations (38) (47)
-------- --------
$ 64,234 $ 61,889
======== ========
Gross Profit
Refractory products and services $ 9,203 $ 8,409
Industrial lime 2,152 2,029
-------- --------
$ 11,355 $ 10,438
======== ========
Gross Profit Percentage
Refractory products and services 16.9% 15.9%
Industrial lime 21.8% 22.7%
17.7% 16.9%
======== ========
Operating Profit
Refractory products and services $ 3,090 $ 2,955
Industrial lime 1,835 1,749
-------- --------
4,925 4,704
-------- --------
Other Charges to Income
General corporate expenses, net 2,264 2,029
Interest expense 786 793
Interest income (322) (323)
-------- --------
Total other charges 2,728 2,499
-------- --------
Earnings Before Income Taxes $ 2,197 $ 2,205
======== ========
Identifiable Assets (at period end)
Refractory products and services $311,004 $309,683
Industrial lime 47,523 46,754
Corporate 7,775 6,519
-------- --------
$366,302 $362,956
======== ========
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<PAGE>
Three Months Ended March 31,
----------------------------
1996 1995
---- ----
Depreciation, Depletion and Amortization
Refractory products and services $ 1,637 $ 1,534
Industrial lime 692 655
Corporate 263 254
-------- --------
$ 2,592 $ 2,443
======== ========
Capital Expenditures
Refractory products and services $ 2,637 $ 871
Industrial lime 481 118
Corporate 146 14
-------- --------
$ 3,264 $ 1,003
======== ========
GEOGRAPHIC SEGMENTS
(In thousands)
Three months ended March 31,
----------------------------
1996 1995
---- ----
Net Sales
United States $ 57,489 $ 56,604
Canada 5,487 5,489
United Kingdom 2,094 1,813
Mexico 1,571 -
Intersegment transfers (primarily U.S.) (2,407) (2,017)
-------- --------
$ 64,234 $ 61,889
======== ========
Earnings (Loss) Before Income Taxes
United States $ 1,975 $ 2,117
Canada (76) (19)
United Kingdom 74 107
Mexico 230 -
Far East (6) -
-------- --------
$ 2,197 $ 2,205
======== ========
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<PAGE>
Three Month Ended March 31,
---------------------------
1996 1995
---- ----
Identifiable Assets (at period end)
United States $328,946 $335,316
Canada 17,283 17,444
United Kingdom 4,278 3,677
Mexico 5,043 -
Far East 2,976 -
Corporate 7,776 6,519
-------- --------
$366,302 $362,956
======== ========
PRICE/VOLUME SUMMARY
1996 AS COMPARED TO 1995
PERCENT INCREASE (DECREASE)
Three
Months
Ended
-----
U.S. Refractory Products Sales
Volume (7.0)%
Price 6.9
Industrial Lime Sales
Volume 5.4
Price 4.8
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<PAGE>
FINANCIAL CONDITION
- -------------------
The Company continues to maintain a strong balance sheet.
Summary Information
(Dollars in thousands)
March 31,
----------------------- December 31,
1996 1995 1995
------ ------ ------
Working capital $ 79,214 $ 81,274 $ 79,615
Current ratio 2.2:1 2.1:1 2.2:1
Total assets $366,302 $362,956 $373,568
Current maturities
of long-term debt 2,742 147 2,705
Long-term debt 34,360 36,984 34,384
Stockholders' equity $115,174 $108,377 $113,999
Debt to total
capitalization (1) 24.4% 25.5% 24.5%
(1) Calculated as total Debt (long-term debt including current
maturities) divided by total stockholders' equity plus total Debt.
The 51% ownership interests acquired during 1995 in A. P. Green de Mexico and
LTI resulted in an increase in working capital of approximately $1.1 million
(net of 1996 adjustments to original acquisition valuations, primarily LTI
inventories and Mexican deferred tax assets, which resulted in a net reduction
in working capital of approximately $425,000). This working capital increase
was composed primarily of $1.9 million in accounts receivable, $400,000 in
inventories and $200,000 in cash, partially offset by $1.8 million in accounts
payable and accrued expenses. In addition, property, plant and equipment
increased $1.6 million, intangible assets increased $1.9 million and deferred
tax liabilities increased $300,000 as a result of these acquisitions.
Working capital declined 2.5%, or $2.1 million, to $79.2 million at March 31,
1996 from $81.3 million at March 31, 1995, net of the $1.1 million obtained
through acquisitions, while the ratio of current assets to current liabilities
increased to 2.2:1 from 2.1:1.
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<PAGE>
Excluding the impact of acquisitions, working capital decreased $3.1 million,
primarily due to decreases in reimbursement due on paid asbestos claims of $13.9
million, partially offset by decreases in insurance reserves of $3.0 million and
increases in cash of $1.8 million, accounts receivable of $2.7 million and
inventories of $5.6 million. Also contributing to the working capital decrease
was a $2.6 million increase in current portion of long-term debt. A reduction
in projected insurance recovery on asbestos claims of $12.6 million was offset
by a reduction in current portion of projected asbestos claims of $12.7 million,
both resulting from reallocation between current and long-term based upon data
provided by the Center for Claims Resolution.
The decrease in reimbursement due on paid asbestos claims since March 31, 1995
was due primarily to payments being made directly to the Center for Claims
Resolution by one insurance carrier starting in May 1995. The increase in
inventories, both since March 31, 1995 and the $2.4 million increase since
December 31, 1995, as well as the increase in accounts receivable since March
31, 1995 were primarily due to increasing sales levels. The decrease in
insurance reserves since March 31, 1995 was due to favorable workers'
compensation claims experience in comparison to the historical experience used
to establish the reserves. The increase in current portion of long-term debt
since March 31, 1995 was due to a payment due July 1996 against the debt
incurred in connection with the General acquisition and thus was offset by a
decrease in long-term debt.
Non-current projected insurance recovery on asbestos claims and non-current
projected asbestos claims decreased by $5.8 million and $5.7 million,
respectively, since December 31, 1995 due to claim payments recovered from
insurance carriers during the first quarter of 1996, partially offset by the
reallocation between current and long-term discussed above. Deferred income
tax assets decreased $1.0 million since December 31, 1995 due primarily
to reductions in alternative minimum tax carryforwards and adjustments to
the original deferred tax assets related to the acquisition of A. P. Green de
Mexico. Deferred income tax liabilities declined approximately $900,000 due
to reductions in prepaid pension costs and depreciation method differences.
Capital expenditures for the first quarter of 1996 totaled $3.3 million
compared to $1.0 million during the first quarter of 1995, with capital
expenditures for the refractories business increasing $1.8 million. Of this
refractories increase, $700,000 was for construction of the new specialties
plant in Indonesia and $300,000 was for expansion of the Smithville, Ontario
plant to accommodate the production from the closed plant in Weston, Ontario.
The balance of the increase was for replacement, modernization and expansion
of operations.
Subsequent Event
- ----------------
On May 2, 1996, the Company's $30.0 million U. S. long-term line of credit was
extended to May 2, 1998.
-17-
<PAGE>
A. P. GREEN INDUSTRIES, INC.
PART II. OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
(a) Exhibits:
--------
Exhibit No.
-----------
27 Financial Data Schedule as of and for the Three Months Ended
March 31, 1996
(b) Reports on Form 8-K: No reports on Form 8-K were filed during the
------------------- quarter ended March 31, 1996.
SIGNATURE
---------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
A. P. Green Industries, Inc.
(Registrant)
By: /s/ Gary L. Roberts
------------------------------
Gary L. Roberts
Vice President, Chief Financial
Officer and Treasurer
Date: May 13, 1996
------------
-18-
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
QUARTERLY FINANCIAL REPORT ON FORM 10-Q OF A. P. GREEN INDUSTRIES, INC. AS
OF AND FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 1996 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH REPORT.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 4,477
<SECURITIES> 0
<RECEIVABLES> 46,488
<ALLOWANCES> 1,954
<INVENTORY> 57,975
<CURRENT-ASSETS> 142,752
<PP&E> 97,545
<DEPRECIATION> 0
<TOTAL-ASSETS> 366,302
<CURRENT-LIABILITIES> 63,538
<BONDS> 37,102
0
0
<COMMON> 4,488
<OTHER-SE> 110,686
<TOTAL-LIABILITY-AND-EQUITY> 366,302
<SALES> 64,234
<TOTAL-REVENUES> 64,234
<CGS> 52,879
<TOTAL-COSTS> 52,879
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 148
<INTEREST-EXPENSE> 786
<INCOME-PRETAX> 2,197
<INCOME-TAX> 786
<INCOME-CONTINUING> 1,731
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,731
<EPS-PRIMARY> 0.43
<EPS-DILUTED> 0
</TABLE>
