-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, UQ92BtTrNp+025uasMDJNRbYbiDRGVaoGkUChDx4aClKVtveauxug+g/4FfyT60F O7T/AhZRRlaOBCSZ/twITg== 0000826619-94-000005.txt : 19940509 0000826619-94-000005.hdr.sgml : 19940509 ACCESSION NUMBER: 0000826619-94-000005 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940331 FILED AS OF DATE: 19940506 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GREEN A P INDUSTRIES INC CENTRAL INDEX KEY: 0000826619 STANDARD INDUSTRIAL CLASSIFICATION: 3250 IRS NUMBER: 430899374 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-16452 FILM NUMBER: 94526505 BUSINESS ADDRESS: STREET 1: GREEN BLVD CITY: MEXICO STATE: MO ZIP: 65265 BUSINESS PHONE: 3144733626 FORMER COMPANY: FORMER CONFORMED NAME: A P GREEN INDUSTRIES INC DATE OF NAME CHANGE: 19900619 10-Q 1 1ST QUARTER 1994 TEST FILE 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, 1994 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 6, 1994, 4,027,282 shares of Common Stock, $1 par value, were outstanding. Page 1 of 17 A. P. GREEN INDUSTRIES, INC. PART I. FINANCIAL INFORMATION Item 1. FINANCIAL STATEMENTS CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (UNAUDITED) March 31, December 31, 1994 1993 (Dollars in thousands, except per share data) ASSETS Current Assets Cash and cash equivalents $ 11,713 $ 16,331 Receivables (net of allowances - 1994, $1,011; 1993, $1,198) 22,639 26,873 Reimbursement due on paid asbestos claims 8,174 5,929 Inventories 27,856 25,735 Projected insurance recovery on asbestos claims 36,837 35,779 Deferred income tax benefit 4,072 4,493 Other 1,916 1,811 Total current assets 113,207 116,951 Property, plant and equipment, net 80,505 81,474 Non-current projected insurance recovery on asbestos claims 118,333 130,646 Other assets 10,203 10,243 Total assets $322,248 $339,314 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Accounts payable $ 8,706 $ 12,691 Accrued expenses Payrolls 3,774 4,342 Taxes other than on income 900 1,161 Current portion of projected asbestos claims 37,812 36,754 Other 7,027 7,668 Current maturities of long-term debt 128 123 Income taxes 510 601 Total current liabilities 58,857 63,340 Deferred income taxes 15,009 15,538 Long-term non-pension benefits 14,606 14,123 Long-term debt 12,126 12,160 Projected asbestos claims 120,779 133,223 Total liabilities 221,377 238,384 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: 4,475,629 in 1994 and 4,459,129 in 1993 4,476 4,459 Additional paid-in capital 72,741 72,492 Retained earnings 43,746 43,800 Less: Deferred currency translation (2,583) (2,301) Treasury stock of 448,347 shares, at cost (9,003) (9,003) Note receivable - ESOT (8,491) (8,491) Deferred compensation-restricted stock (15) (26) Total stockholders' equity 100,871 100,930 Total liabilities and stockholders' equity $322,248 $339,314 See accompanying notes to consolidated financial statements. -2- A. P. GREEN INDUSTRIES, INC. CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED) (Dollars in thousands, Three months ended March 31, except per share data) 1994 1993 Net sales $ 37,503 $ 39,505 Cost of sales 31,397 31,666 Gross profit 6,106 7,839 Expenses and other income Selling & administrative expenses 5,969 6,016 Interest expense 263 265 Interest income (318) (288) Other income, net (353) (262) Earnings before taxes and cumulative effect of an accounting change 545 2,108 Income tax expense 109 774 Earnings before cumulative effect of an accounting change 436 1,334 Cumulative effect of an accounting change Postemployment benefits, net of tax (255) - Net earnings $ 181 $ 1,334 Earnings per common share before cumulative effect of an accounting change $ 0.11 $ 0.33 Cumulative effect of an accounting change Postemployment benefits, net of tax (0.06) - Net earnings per common share $ 0.05 $ 0.33 Weighted average number of common shares 4,017,265 4,010,782 Dividends per common share $ 0.06 $ - See accompanying notes to consolidated financial statements. -3- A. P. GREEN INDUSTRIES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Three Months Ended March 31, (Dollars in thousands) 1994 1993 Cash flows from operating activities Net earnings $ 181 $ 1,334 Adjustments for items not requiring cash Cumulative effect of an accounting change- Postemployment benefits, net of tax 255 - Depreciation, depletion, and amortization 1,994 1,906 Deferred compensation 11 23 Stock compensation to directors 28 - Provision for losses on accounts receivable 17 75 Loss (gain) on sale of assets (43) 17 Decrease (increase) in assets Trade receivables 4,216 804 Asbestos claim and fee reimbursements received 11,255 7,283 Inventories (2,120) (721) Receivable and prepaid taxes 96 - Other current assets (201) (78) Increase (decrease) in liabilities Accounts payable and accrued expenses (5,455) (237) Asbestos claims paid (13,631) (9,083) Income taxes (91) 349 Deferred income taxes 39 203 Long-term non-pension benefits 81 56 Net cash from (used in) operating activities (3,368) 1,931 Cash flows from investing activities Capital expenditures (1,050) (482) Decrease in other long-term assets 145 120 Increase in pension assets (104) (276) Proceeds from sales of assets 46 5 Net cash used in investing activities (963) (633) Cash flows from financing activities Payment of debt (29) (38) Dividends paid (242) - Exercised stock options 238 - Tax benefit on dividends paid to ESOP 7 - Tax effect on stock plan - (59) Net cash used in financing activities (26) (97) Effect of exchange rate changes (261) (36) Net increase (decrease) in cash and cash equivalents (4,618) 1,165 Cash and cash equivalents at beginning of year 16,331 7,118 Cash and cash equivalents at end of period $11,713 $ 8,283 See accompanying notes to consolidated financial statements. -4- 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, 1993. The results for the quarter ended March 31, 1994 are not necessarily indicative of the results which may occur for the full year. 2. INVENTORIES March 31, 1994 December 31, 1993 Finished goods & work-in-process Valued at LIFO: FIFO cost $ 26,171 $25,150 Less LIFO reserve (13,859) (14,003) LIFO cost 12,312 11,147 Valued at FIFO 4,634 3,935 TOTAL 16,946 15,082 Raw materials and supplies Valued at LIFO: FIFO cost 10,763 11,017 Less LIFO reserve (5,330) (5,431) LIFO cost 5,433 5,586 Valued at FIFO 5,477 5,067 TOTAL 10,910 10,653 $27,856 $25,735 -5- 3. CHANGES IN METHOD OF ACCOUNTING Postemployment Benefits The Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 112, "Employers' Accounting for Postemployment Benefits," in November 1992. The standard requires application of the accrual method of accounting to all benefits provided to former or inactive employees, their beneficiaries and covered dependents, subsequent to their employment by the Company and prior to retirement, rather than recognizing these expenses as they are paid. Effective January 1, 1994, the Company adopted this standard and recognized the projected benefit obligation relating to short-term and long-term disability benefits as a cumulative effect of an accounting change, reducing net income by $255,000, or $.06 per share. The annual incremental expense is not expected to be material. Projected Asbestos Claims and Insurance Reimbursements In prior years, the Company reported its projected asbestos claims and projected insurance reimbursements relating to such claims net within accrued liabilities. With the issuance of FASB Interpretation No. 39, "Offsetting of Amounts Related to Certain Contracts," the Company has determined that the amounts should be reported gross rather than net. As such, the consolidated statements of financial position and cash flows as of March 31, 1994 reflect both the gross projected liability for asbestos claims and gross projected insurance reimbursements related to those claims on a current and non-current basis. The consolidated statements of financial position and cash flows as of December 31, 1993 have been restated to be consistent with the 1994 presentation. There was no impact on operating results of either period as a result of this "grossed-up" presentation. 4. LITIGATION Asbestos-related claims - Personal Injury A. P. Green is among numerous defendants in lawsuits pending as of March 31, 1994 that seek to recover compensatory, and in many cases, punitive damages for personal injury allegedly resulting from exposure to asbestos-containing products manufactured, sold or installed by A. P. Green. 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 -6- brought against it. Claims activity for each of the years ended December 31, 1993 and 1992 was as follows: _________________________________________________________________ 1993 1992 _________________________________________________________________ Claims pending at January 1 50,007 38,681 Claims filed 26,100 19,767 Cases settled, dismissed or otherwise resolved (23,985) (8,441) Claims pending at December 31 52,122 50,007 Average settlement amount per claim(1) $1,728 $1,875 _________________________________________________________________ (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 pursuant to Federal Rule of Civil Procedure 23(b)(3) in the Federal District Court for the Eastern District of Pennsylvania brought on behalf of all persons who have been occupationally exposed to asbestos-containing products of the Members and who have not filed suite against any Member for such exposure (the Class). 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 will be responsible for its percentage share of each claim payment (no joint and several liability), such shares having been previously negotiated among the Members. The Settlement does not become operative until it has received appropriate court approval. In accordance with Rule 23, the Court ordered that appropriate notice be given to the Class. Hearings have been held to determine the fairness of the Settlement. Rulings from these hearings have not yet been made. -7- In a third party action filed simultaneously with the class action, 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. 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 policies of insurance, 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 insurance policies defending asbestos cases brought against a former subsidiary. Based upon such reviews, the Company has estimated and recorded its liability for such cases and claims as well as its projected insurance reimbursements related to such claims. 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 that 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. No claim for reimbursement of defense or indemnity payments has been made against the Company or such subsidiary by any such carriers. The Company is also contractually liable to The E. J. Bartells Company (Bartells), a former subsidiary, for deductible amounts on certain insurance policies insuring Bartells against asbestos- related personal injury claims issued when it was owned by A. P. Green. The Company has estimated the amounts of such deductibles and provision for such estimate was made in the Company's 1992 financial statements. 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 dismissed from a number of property damage cases and believes that it should be dismissed from the South -8- 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. Environmental In the third quarter of 1993, the United States Environmental Protection Agency (EPA) filed a lawsuit against the Company in the Federal District Court for the Northern District of Oklahoma alleging violations of the Clean Water Act at the Company's Pryor, Oklahoma facility. The alleged violations involved discharges without a permit. After discussions, an agreement in principle to settle the matter has been reached between the Company and the EPA and Department of Justice. Under the terms of the agreement in principle, the Company paid a civil penalty in the amount of $450,000, expense for which was recognized in prior periods. The EPA or other private parties have named the Company or one of its subsidiaries as a potentially responsible party in connection with three superfund sites in the United States. The Company is a de minimis party with respect to two of the sites and expects to arrive at settlement agreements with respect to them for amounts of not more than $10,000 per site. With respect to the third, 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 numerous claims and lawsuits that arise in the ordinary course of business, some of which seek damages in substantial amounts, including punitive or extraordinary damages. Reserves for these claims and lawsuits have been recorded to the extent that losses are deemed probable and are estimable. Although the ultimate outcome of these claims and lawsuits cannot be accurately predicted and liabilities in indeterminate amounts may be imposed on A. P. Green, it is the opinion of management that the disposition of such claims and lawsuits will not have a material adverse effect on the consolidated financial position or results of operations of A. P. Green. -9- 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 decreased 5.1% from $39.5 million for the three months ended March 31, 1993 to $37.5 million for the comparable 1994 three-month period. Gross profit declined 22.1% from $7.8 million to $6.1 million for the comparable periods. Refractory Products and Services Refractory products and services sales were $30.8 million and $29.1 million for the three-month periods ended March 31, 1993 and 1994, respectively, reflecting a decrease of 5.4%. This decrease occurred primarily in the United States, where refractory sales were down $1.7 million, or 6.2%, from 1993 levels. Sales volumes and prices increased 2.9% and 3.8%, respectively, on U.S. specialties. Volumes declined on all other U.S. product lines due to severe weather conditions in the northeastern states and reduced operating rates of the Company's aluminum customers, resulting in an 8.3% overall volume decrease. Ceramic fiber prices improved 6.2%, while brick pricing was unchanged. Sales of the Canadian subsidiary improved from $2.6 million for the three-month period ended March 31, 1993 to $2.9 million for the comparable 1994 period, a 12.9% increase. This increase was due to volume improvements across all product lines, while prices were unchanged from first quarter 1993 levels. A pre-tax reserve of approximately $315,000 was established for the cost of Canadian personnel reductions made during the first quarter, resulting in a pre-tax loss of $63,000 compared to earnings of $131,000 during the first quarter of 1993. Sales of the United Kingdom (U.K.) subsidiary declined 7.4% from $1.5 million to $1.4 million due to continuing weakness in the U.K. market. This sales decline resulted in a pre-tax loss of $52,000 in the first quarter of 1994 compared to a $36,000 loss in the comparable 1993 period. Cost of sales as a percentage of sales increased from 80.4% to 83.2% for the three months ended March 31, 1993 and 1994, respectively. This increase was primarily due to the $315,000 reserve for personnel reductions in Canada and unfavorable brick breakage variances in the U.S. during 1994 compared to favorable variances in 1993. Also contributing to the cost increase were higher U.S. pension costs due to plan benefit changes, increased group insurance costs and a lower favorable LIFO inventory cost -10- adjustment in 1994 compared to 1993, partially offset by reduced casualty insurance costs and reversal of a portion of the U.S. reorganization reserve established in prior periods. Refractory operating profits declined 51.1% from $2.4 million to $1.2 million in 1993 and 1994, respectively. Results from both U.S. and Canadian refractory operations improved significantly in March over the first two months of the quarter and the March results are expected to be more reflective of trends for the immediate future. Industrial Lime Industrial lime sales declined 4.2% from $8.8 million to $8.5 million for the respective first quarters of 1993 and 1994, due primarily to the curtailment of production at the Kimballton, Virginia plant for several days as a result of severe weather conditions. Volumes decreased across all product lines at both plants with the exception of the steel and aluminum markets at the New Braunfels, Texas facility. Average selling prices increased 2.3% for the comparable periods, with increases coming from all product lines with the exception of hydrate at the Kimballton plant. The gross margins of the Company's industrial lime operations are sensitive to volume changes due to the capital intensive nature of the operations and semi-fixed nature of other costs. As a result of the sales decline, gross profit and operating profit decreased 32.2% and 36.0%, respectively. Also contributing to this decline were increased depreciation expense and unfavorable production variances at both plants due to the previously mentioned production curtailment at the Kimballton plant and downtime at the New Braunfels plant related to the installation of a new kiln preheater and dust collection system, partially offset by lower processing fuel costs at both facilities. As with the U.S. and Canadian refractory operations, March results for industrial lime showed significant improvement and are expected to be more indicative of trends for the immediate future. Expenses and Other Income Selling and administrative expenses were level at $6.0 million for both three-month periods. A decrease in salary costs and investment plan expenses and reduced provisions for doubtful accounts were offset by increased sales promotion expenses. Interest expense decreased slightly from 1993 to 1994, with no bank line borrowings during the first quarter of either period. Interest income for the first quarter of 1994 increased 10.3% from the comparable 1993 period due to increased funds available for investing. Other income increased 34.5% for the comparable three- month periods primarily due to a gain on the sale of land during the first quarter of 1994 and transaction gains on U.S. dollar denominated accounts at the Canadian subsidiary compared to losses during the first quarter of 1993. 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. -11- Income Taxes The 20.0% effective income tax rate in 1994 as compared to 36.7% in 1993 is primarily due to depletion expense at APG Lime which, at the lower earnings level, has a more pronounced effect on the effective income tax rate. Accounting Changes The cumulative effect of adopting the Financial Accounting Standards Board Statement No. 112, "Employers' Accounting for Postemployment Benefits," further reduced 1994 net income by $255,000, or $.06 per share. -12- INDUSTRY SEGMENTS (In thousands) Three Months Ended March 31, 1994 1993 Net Sales Refractory products and services $ 29,084 $ 30,761 Industrial lime 8,469 8,840 Intersegment eliminations (50) (96) $ 37,503 $ 39,505 Gross Profit Refractory products and services $ 4,887 $ 6,040 Industrial lime 1,219 1,799 $ 6,106 $ 7,839 Gross Profit Percentage Refractory products and services 16.8% 19.6% Industrial lime 14.4% 20.4% 16.3% 19.8% Operating Profit Refractory products and services $ 1,193 $ 2,439 Industrial lime 928 1,450 2,121 3,889 Other Charges to Income General corporate expenses, net 1,631 1,804 Interest expense 263 265 Interest income (318) (288) Total other charges 1,576 1,781 Earnings Before Income Taxes and Cumulative Effect of an Accounting Change $ 545 $ 2,108 Identifiable Assets (at period end) Refractory products and services $260,484 $279,800 Industrial lime 45,848 44,486 Corporate 15,916 12,779 $322,248 $337,065 -13- Three Months Ended March 31, 1994 1993 Depreciation and Depletion Refractory products and services $ 1,050 $ 1,075 Industrial lime 707 602 Corporate 237 229 $ 1,994 $ 1,906 Capital Expenditures Refractory products and services $ 217 $ 248 Industrial lime 506 44 Corporate 327 190 $ 1,050 $ 482 GEOGRAPHIC SEGMENTS (In thousands) Three Months Ended March 31, 1994 1993 Net Sales United States $ 34,437 $ 36,513 Canada 2,942 2,607 United Kingdom 1,382 1,493 Intersegment transfers (primarily U.S.) (1,258) (1,108) $ 37,503 $ 39,505 Earnings (Loss) Before Income Taxes and Cumulative Effect of an Accounting Change United States $ 660 $ 2,013 Canada (63) 131 United Kingdom (52) (36) $ 545 $ 2,108 Identifiable Assets (at period end) United States $295,551 $313,220 Canada 7,861 7,925 United Kingdom 2,920 3,141 Corporate 15,916 12,779 $322,248 $337,065 -14- PRICE/VOLUME SUMMARY 1994 AS COMPARED TO 1993 PERCENT INCREASE (DECREASE) Three Months Ended U.S. Refractory Products Sales Volume (8.3)% Price 1.7 Industrial Lime Sales Volume (6.4) Price 2.3 -15- FINANCIAL CONDITION The Company's balance sheet and cash flow remain strong. Summary Information (Dollars in thousands) March 31, December 31, 1994 1993 1993 Working capital $ 54,350 $ 48,007 $ 53,611 Current ratio 1.9:1 1.8:1 1.8:1 Total assets $322,248 $337,065 $339,314 Current maturities of long-term debt 128 111 123 Long-term debt 12,126 12,256 12,160 Stockholders' equity $100,871 $ 95,996 $100,930 Debt to total capitalization(1) 10.8% 11.4% 10.8% (1) Calculated as total Debt (long-term debt including current maturities) divided by total stockholders' equity plus total Debt. The working capital increase of $6.3 million from March 31, 1993 to March 31, 1994 was due to a decrease in the worker's compensation, general liability and group health insurance reserves and increases in cash and reimbursement due on paid asbestos claims, partially offset by a reduction in trade receivables due to improved collections and lower sales in the first quarter of 1994 compared to 1993. SUBSEQUENT EVENTS On April 18, 1994, the Company entered into a letter of intent to acquire all of the refractory assets of General Refractories Company. These operations include nine plants in the U.S., one plant in Canada and a 49% interest in a profitable Colombian refractory operation. The transaction is subject to the negotiation and execution of a definitive agreement between the parties and appropriate governmental and regulatory approvals and due diligence by the Company. Closing of the transaction is planned for early in the third quarter of 1994. -16- A. P. GREEN INDUSTRIES, INC. PART II. OTHER INFORMATION Item 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits: None. (b) Reports on Form 8-K: No reports on Form 8-K were filed during the quarter ended March 31, 1994. 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 6, 1994 -17- -----END PRIVACY-ENHANCED MESSAGE-----