-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Fp+KWUshm777LtrwG/VbH6qHT8HubPpgQCSmoSEmXRenILZzpIvSvy/HzzRNYrDj /Q3vswtsFtC/0S2HocjJRg== 0000826619-98-000015.txt : 19980203 0000826619-98-000015.hdr.sgml : 19980203 ACCESSION NUMBER: 0000826619-98-000015 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19980202 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: GREEN A P INDUSTRIES INC CENTRAL INDEX KEY: 0000826619 STANDARD INDUSTRIAL CLASSIFICATION: STRUCTURAL CLAY PRODUCTS [3250] IRS NUMBER: 430899374 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: SEC FILE NUMBER: 001-13359 FILM NUMBER: 98519557 BUSINESS ADDRESS: STREET 1: GREEN BLVD CITY: MEXICO STATE: MO ZIP: 65265 BUSINESS PHONE: 5734733626 MAIL ADDRESS: STREET 1: GREEN BLVD CITY: MEXICO STATE: MO ZIP: 65265 FORMER COMPANY: FORMER CONFORMED NAME: A P GREEN INDUSTRIES INC DATE OF NAME CHANGE: 19900619 10-Q/A 1 AMENDED QUARTERLY REPORT FOR QUARTER ENDED 3/31/97 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 --------------- FORM 10-Q/A QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 --------------- For the quarter ended March 31, 1997 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: (573) 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 14, 1997, 8,026,158 shares of Common Stock, $1 par value, were outstanding. Page 1 of 14 A. P. GREEN INDUSTRIES, INC. PART I. FINANCIAL INFORMATION Item 1. FINANCIAL STATEMENTS ADJUSTED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (UNAUDITED) March 31, December 31, 1997 1996 --------- ------------ (Dollars in thousands, except per share data) ASSETS Current Assets Cash and cash equivalents $ 3,323 $ 9,477 Receivables (net of allowances - 1997, $1,782; 1996, $1,701) 42,947 42,084 Reimbursement due on paid asbestos claims 678 3,898 Inventories 56,312 53,674 Deferred income tax asset 2,850 3,374 Other 6,941 7,030 ------- ------- Total current assets 113,051 119,537 Property, plant and equipment, net 106,844 107,394 Projected insurance recovery on asbestos claims 118,343 110,374 Pension assets 9,061 9,044 Intangible assets, net 4,078 4,132 Other assets 4,589 4,648 ------- ------- Total assets $355,966 $355,129 ======= ======= LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Accounts payable $ 21,158 $ 20,408 Accrued expenses Payrolls 5,599 6,267 Taxes other than on income 1,591 1,860 Insurance reserves 3,472 3,574 Other 6,369 6,528 Current maturities of long-term debt 4,145 4,168 Income taxes 1,126 1,191 ------- ------- Total current liabilities 43,460 43,996 Deferred income taxes 9,459 10,228 Long-term non-pension benefits 16,832 16,583 Long-term pensions 12,726 12,449 Long-term debt 34,736 40,109 Projected asbestos claims 118,343 111,966 ------- ------- Total liabilities 235,556 235,331 ------- ------- Minority Interests 2,652 2,088 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: 8,978,792 in 1997 and 8,975,442 in 1996 8,979 8,975 Additional paid-in capital 68,335 68,309 Retained earnings 60,806 60,477 Less: Deferred foreign currency translation (3,186) (2,875) Treasury stock of 953,934 shares in 1997 and 1996, at cost (9,498) (9,498) Note receivable-ESOT (6,941) (6,941) Minimum pension liability adjustment, net of tax (737) (737) ------- ------- Total stockholders' equity 117,758 117,710 ------- ------- Total liabilities and stockholders' equity $355,966 $355,129 ======= ======= See accompanying notes to adjusted consolidated financial statements. 2 A. P. GREEN INDUSTRIES, INC. ADJUSTED CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED) Three months ended March 31, ------------------------- (Dollars in thousands, except per share data) 1997 1996 ---------- ---------- Net sales $ 64,816 $ 64,234 Cost of sales 54,014 52,742 --------- --------- Gross profit 10,802 11,492 Expenses and other income Selling & administrative expenses 9,222 9,006 Interest expense 834 786 Interest income (247) (322) Minority interest in income (loss) of partnership 4 (33) Other income, net (66) (142) --------- --------- Earnings before income taxes 1,055 2,197 Income tax expense 358 786 Equity in net income of affiliates (15) (180) Minority interest in income (loss) of consolidated subsidiaries 69 (13) --------- --------- Net earnings $ 643 $ 1,604 ========= ========= Net earnings per common share $ 0.08 $ 0.20 ========= ========= Weighted average number of common shares 8,023,220 8,077,442 ========= ========= Dividends per common share $ 0.04 $ 0.035 ========= ========= See accompanying notes to adjusted consolidated financial statements. 3 A. P. GREEN INDUSTRIES, INC. ADJUSTED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Three months ended March 31, ------------------------ (Dollars in thousands) 1997 1996 ---------- ---------- Cash flows from operating activities Net earnings $ 643 $ 1,604 Adjustments for items not requiring (providing) cash Depreciation, depletion and amortization 2,999 2,592 Stock compensation to directors 29 28 Provision for losses on accounts receivable 195 148 Loss (gain) on sale of assets (58) 36 Equity in earnings of affiliates, net of dividends received (15) (180) Minority interest in income (losses) of consolidated subsidiaries and partnerships 73 (46) Decrease (increase) in assets Trade receivables (1,058) (500) Asbestos claim and fee reimbursements received 5,236 4,913 Inventories (2,639) (2,418) Receivable and prepaid taxes 45 355 Other current assets (6) (601) Increase (decrease) in liabilities Accounts payable and accrued expenses (447) (3,306) Asbestos claims paid (3,607) (4,371) Pensions 277 118 Income taxes (65) 316 Deferred income taxes (246) 146 Long-term non-pension benefits 249 342 ------ ------ Net cash provided by (used in) operating activities 1,605 (824) ------ ------ Cash flows from investing activities Capital expenditures (1,589) (3,264) Increase in other long-term assets (24) (272) Decrease (increase) in pension assets (17) 99 Proceeds from sales of assets 106 26 ------ ------ Net cash used in investing activities (1,524) (3,411) ------ ------ Cash flows from financing activities Repayments of debt (6,100) (63) Proceeds from borrowings -- 75 Dividends paid (321) (283) Capital contributions from minority partner 490 -- Tax benefit on dividends paid to ESOT 7 7 ------ ------ Net cash used in financing activities (5,924) (264) ------ ------ Effect of exchange rate changes (311) (308) ------ ------ Net decrease in cash and cash equivalents (6,154) (4,807) Cash and cash equivalents at beginning of year 9,477 9,284 ------ ------ Cash and cash equivalents at end of period $ 3,323 $ 4,477 ====== ====== See accompanying notes to adjusted consolidated financial statements. 4 A. P. GREEN INDUSTRIES, INC. NOTES TO ADJUSTED 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, 1996. The results for the quarter ended March 31, 1997 are not necessarily indicative of the results which may occur for the full year. All per share amounts have been restated to reflect the two-for-one stock split effective September 20, 1996. Certain prior year amounts have been reclassified to conform to the 1997 presentation. 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 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 1995 for the closing of the Weston, Ontario plant. Substantially all employees at these facilities (approximately 210 in total) have been terminated and approximately $3.2 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. -5- 3. INVENTORIES ----------- March 31, 1997 December 31, 1996 -------------- ----------------- Finished goods & work-in-process Valued at LIFO: FIFO cost $33,979 $31,278 Less LIFO reserve (14,472) (14,907) ------- ------- LIFO cost 19,507 16,371 Valued at FIFO 13,223 13,225 ------- ------- TOTAL 32,730 29,596 ------- ------- Raw materials and supplies Valued at LIFO: FIFO cost 17,116 17,702 Less LIFO reserve (6,275) (6,129) ------- ------- LIFO cost 10,841 11,573 Valued at FIFO 12,741 12,505 ------- ------- TOTAL 23,582 24,078 ------- ------- $56,312 $53,674 ======= ======= 4. LITIGATION ---------- Asbestos-related claims - Personal Injury ----------------------------------------- A. P. Green is among numerous defendants in lawsuits pending as of March 31, 1997 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 numbers and types of claims brought against it. -6- Claims activity for the Company for each of the years ended December 31, 1996, 1995 and 1994, based upon information provided by the Center, was as follows: ----------------------------------------------------------------------- 1996 1995 1994 ----------------------------------------------------------------------- Claims pending at January 1 48,367 50,920 52,122 Claims filed 29,702 12,560 14,836 Cases settled, dismissed or otherwise resolved (19,184) (15,113) (16,038) ------- ------- ------- Claims pending at December 31 58,885 48,367 50,920 ======= ======= ======= Average settlement amount per claim(1) $ 1,582 $ 1,778 $ 1,816 ======================================================================= (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 had not yet asserted 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 the same time, a settlement (the Settlement) between the Members and the Class was filed with the court. 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 through 2004 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 established. A five-week hearing was held to determine the fairness of the Settlement. At the end of the hearing, the court ruled that the Settlement was fair and enjoined Class members from filing lawsuits in the tort system against the Members. The Center has been processing and settling claims filed by Class members pursuant to the Settlement since 1994. The ruling by the Eastern District Court of Pennsylvania was appealed by certain objectors. The Third Circuit Court of Appeals reversed the lower court, ruling that the Class should be decertified. The Class members and settling plaintiffs applied for a writ of certiorari to the U. S. Supreme Court which was granted. Oral arguments were heard in February 1997, but no decision has been rendered to date. -7- 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. However, in December 1996 A. P. Green and the E. J. Bartells Company (Bartells), a former subsidiary, reached a comprehensive settlement with all but one of their insurance carriers. Under the terms of that settlement agreement, the carriers have agreed to pay (subject to applicable policy limits), on behalf of the insureds, their liabilities arising out of asbestos personal injury claims. A. P. Green will maintain its coverage litigation against the non-settling carrier in the event that agreement cannot be reached with it. Under the assumption that it receives the necessary 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 Bartells against asbestos-related personal injury claims, such policies having been issued when Bartells was owned by A. P. Green. The Company has also reviewed the terms of the settlement agreement with its insurance carriers. Based upon such reviews, the Company has projected its liability for such cases and claims through 2004 to be approximately $118.3 million and $112.0 million at March 31, 1997 and December 31, 1996, respectively, with offsetting projected insurance reimbursements of approximately $118.3 million and $110.4 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 seven 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 similar 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 -8- 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 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 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 by the Company of asbestos-related liability, either personal injury or property damage, in connection with the August 1994 General acquisition. Environmental ------------- The EPA or 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 ----- From time to time, 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. 5. SUBSEQUENT EVENT ---------------- The Company acquired a 51% ownership interest in Lanxide ThermoComposites, Inc. and -9- Subsidiary (LTI) on December 31, 1995, at which date total stockholders' equity of LTI was $196,078. LTI has incurred quarterly net losses since the acquisition. Accounting Research Bulletin No. 51, "Consolidated Financial Statements" (ARB51), requires that "...In the unusual case in which losses applicable to the minority interest in a subsidiary exceed the minority interest in the equity capital of the subsidiary, such excess and any further losses applicable to the minority interest shall be charged against the majority interest..." The Company did not become aware of this requirement until recently and, as such, as been charging 49% of all LTI losses against the minority interest. In order to correct its prior accounting treatment, the Company has adjusted its consolidated statements of earnings for the year ended December 31, 1996 and the first three quarters of 1997. The impact on the quarters ended March 31, 1997 and 1996 was as follows: Three months ended March 31, ------------------ (Dollars in thousands, except per share data) 1997 1996 ------------------ Net earnings As reported $811 $1,731 As adjusted 643 1,604 Net earnings per common share As reported .10 .22 As adjusted .08 .20 In accordance with ARB 51, for future periods in which LTI has earnings the Company, as majority stockholder, will be credited with 100% of those earnings until such time as total stockholders' equity of LTI is positive. -10- A. P. GREEN INDUSTRIES, INC. PART I. FINANCIAL INFORMATION ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION The Company acquired a 51% ownership interest in Lanxide ThermoComposites, Inc. and Subsidiary (LTI) on December 31, 1995, at which date total stockholders' equity of LTI was $196,078. LTI has incurred quarterly net losses since the acquisition. ARB 51 requires that "...In the unusual case in which losses applicable to the minority interest in a subsidiary exceed the minority interest in the equity capital of the subsidiary, such excess and any further losses applicable to the minority interest shall be charged against the majority interest..." The Company did not become aware of this requirement until recently and, as such, has been charging 49% of all LTI losses against the minority interest. In order to correct its prior accounting treatment, the Company has adjusted its consolidated statements of earnings for the year ended December 31, 1996 and the first three quarters of 1997. The impact on the quarter ended March 31, 1997 was to increase minority interest in income of consolidated subsidiaries by approximately $168,000 through the elimination of the minority interest in all LTI losses for the quarter, which reduced net income by the same amount, or $.02 per share. The impact on the quarter ended March 31, 1996 was to increase minority interest in income of consolidated subsidiaries and reduce net income by approximately $127,000, or $.02 per share. In addition, on the adjusted consolidated statements of financial position minority interests was increased and retained earnings reduced by approximately $842,000 as of March 31, 1997 and approximately $127,000 and $674,000 as of March 31, 1996 and December 31, 1996, respectively. These adjustments are reflected in the adjusted consolidated financial statements included herein under Item 1., as well as wherever these items appear in or impact the supplementary data. In accordance with ARB 51, for future periods in which LTI has earnings the Company, as majority stockholder, will be credited with 100% of those earnings until such time as total stockholders' equity of LTI is positive. -11- FINANCIAL CONDITION - ------------------- Summary Information (Dollars in thousands) March 31, --------------------- December 31, 1997 1996 1996 ------- ------- ------- Working capital $ 69,591 $ 79,426 $ 75,541 Current ratio 2.6:1 3.0:1 2.7:1 Total assets $355,966 $366,302 $355,129 Current maturities of long-term debt 4,145 2,742 4,168 Long-term debt 34,736 34,360 40,109 Stockholders' equity (adjusted) $117,758 $115,047 $117,710 Debt to total capitalization(1) (adjusted) 24.8% 24.4% 27.3% (1) Calculated as total Debt (long-term debt including current maturities) divided by total stockholders' equity plus total Debt. -12- 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, 1997, as adjusted -13- 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: February 2, 1998 ---------------- -14- EX-27 2 FDS FOR THREE MONTHS ENDED 3/31/97
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE A.P. GREEN INDUSTRIES, INC. ADJUSTED QUARTERLY REPORT ON FORM 10-Q/A AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND IS QUALIFIED IN ITS ENTIRELY BY REFERENCE TO SUCH ADJUSTED REPORT. 1,000 3-MOS DEC-31-1997 MAR-31-1997 3,323 0 44,729 1,782 56,312 113,051 106,844 0 355,966 43,460 38,881 0 0 8,979 108,779 355,966 64,816 64,816 54,014 54,014 0 0 834 1,055 358 643 0 0 0 643 .08 0
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