Page 1 of 27
For Quarter Ended | September 30, 2004 | Commission File Number | 1-5415 |
A. M. Castle & Co. |
Exact name of registrant as specified in its |
Maryland | 36-0879160 | |
(State or Other Jurisdiction of incorporation of organization) | (I.R.S. Employer Identification No.) | |
|
3400 North Wolf Road, Franklin Park, Illinois | 60131 | |
(Address of Principal Executive Offices) | (Zip Code) |
Registrant’s telephone, including area code | 847/455-7111 |
Registrant's telephone, including area code847/455-7111
None |
(Former name, former address and former fiscal year, if changed since last year) |
Yes |
| NO |
Yes |
| NO |
Class |
| Outstanding at |
Common Stock, $0.01 Par Value |
| 15,796,437 shares |
Page 2 of 27
A. M. CASTLE & CO.
Part I. Finanical Information | Page Number | ||||
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| Financial | ||||
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| 3 | |||
Comparative Statements of Operations |
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Notes to Comparative Financial Statements |
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Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations |
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Item 3 |
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| Quantitative and Qualitative Disclosure About Market Risk | 20 | |||
Item 4 |
| Control and Procedures | 21 | ||
Part II. Other Information | |||||
Item 1. | Legal Proceedings | 22 | |||
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Item 4. | Submission of Matters to a Vote of Security Holders | 22 | |||
Item 6. | Exhibits and Reports on Form 8-K | 22 |
A.M. CASTLE & CO. | ||||||||||
COMPARATIVE BALANCE SHEETS | ||||||||||
(Amounts in thousands) | ||||||||||
Unaudited | Sep. 30 | Dec. 31, | Sep. 30 | |||||||
2004 | 2003 | 2003 | ||||||||
ASSETS | ||||||||||
Current assets | ||||||||||
Cash and equivalents | $ | 5,435 | $ | 2,455 | $ | 831 | ||||
Accounts receivable, net | 99,073 | 54,232 | 51,666 | |||||||
Inventories (principally on last-in first-out basis) | 121,297 | 117,270 | 119,730 | |||||||
Income tax receivable | 310 | 660 | - | |||||||
Assets held for sale | 995 | 1,067 | - | |||||||
Other current assets | 7,926 | 7,184 | 5,546 | |||||||
Total current assets | 235,036 | 182,868 | 177,773 | |||||||
Investment in joint ventures | 7,024 | 5,492 | 5,317 | |||||||
Goodwill | 31,959 | 31,643 | 31,619 | |||||||
Pension assets | 42,216 | 42,075 | 41,823 | |||||||
Advances to joint ventures and other assets | 7,517 | 8,688 | 8,875 | |||||||
Property, plant and equipment, at cost | ||||||||||
Land | 4,767 | 4,767 | 5,020 | |||||||
Building | 47,255 | 45,346 | 48,885 | |||||||
Machinery and equipment | 121,093 | 118,447 | 118,741 | |||||||
173,115 | 168,560 | 172,646 | ||||||||
Less - accumulated depreciation | (107,528 | ) | (100,386 | ) | (101,763 | ) | ||||
65,587 | 68,174 | 70,883 | ||||||||
Total assets | $ | 389,339 | $ | 338,940 | $ | 336,290 | ||||
LIABILITIES AND STOCKHOLDER'S EQUITY | ||||||||||
Current liabilities | ||||||||||
Accounts payable | $ | 102,893 | $ | 67,601 | $ | 60,422 | ||||
Accrued liabilities and deferred gains | 23,990 | 19,145 | 19,259 | |||||||
Current and deferred income taxes | 2,954 | 4,852 | 4,183 | |||||||
Current portion of long-term debt | 11,676 | 8,248 | 7,980 | |||||||
Total current liabilities | 141,513 | 99,846 | 91,844 | |||||||
Long-term debt, less current portion | 89,450 | 100,034 | 98,786 | |||||||
Deferred income taxes | 19,942 | 13,963 | 16,018 | |||||||
Deferred gain on sale of assets | 6,673 | 7,304 | 6,997 | |||||||
Minority interest | 1,268 | 1,456 | 1,441 | |||||||
Post retirement benefits obligations | 2,834 | 2,683 | 2,352 | |||||||
Stockholders' equity | ||||||||||
Preferred stock | 11,239 | 11,239 | 11,239 | |||||||
Common stock | 159 | 159 | 159 | |||||||
Additional paid in capital | 35,025 | 35,009 | 35,017 | |||||||
Earnings reinvested in the business | 80,147 | 66,480 | 72,002 | |||||||
Accumulated other comprehensive income | 1,350 | 1,042 | 727 | |||||||
Other - deferred compensation | (16 | ) | (30 | ) | 62 | ) | ||||
Treasury stock, at cost | (245 | ) | (245 | ) | (230 | ) | ||||
Total stockholders' equity | 127,659 | 113,654 | 118,852 | |||||||
Total liabilities and stockholders' equity | $ | 389,339 | $ | 338,940 | $ | 336,290 | ||||
The accompanying notes are an integral part of these financial statements. |
A.M. CASTLE & CO. | |||||||||||||
COMPARATIVE STATEMENTS OF OPERATIONS | For the Three | For the Nine | |||||||||||
(Amounts in thousands, except per share data) | Months Ended | Months Ended | |||||||||||
(Unaudited) | Sept 30, | Sept 30, | |||||||||||
2004 | 2003 | 2004 | 2003 | ||||||||||
Net sales | $ | 199,341 | $ | 134,917 | $ | 563,195 | $ | 410,510 | |||||
Cost of material sold | (142,033 | ) | (95,948 | ) | (398,378 | ) | (287,931 | ) | |||||
Special charges | - | - | - | (1,524 | ) | ||||||||
Gross material margin | 57,308 | 38,969 | 164,817 | 21,055 | |||||||||
Plant and delivery expense | (23,665 | ) | (21,300 | ) | (70,667 | ) | (65,913 | ) | |||||
Sales, general, and administrative expense | (20,345 | ) | (16,723 | ) | (59,117 | ) | (52,402 | ) | |||||
Depreciation and amortization expense | (2,245 | ) | (2,083 | ) | (6,736 | ) | (6,700 | ) | |||||
Impairment and other operating expenses | - | - | - | (5,924 | ) | ||||||||
Total other operating expense | (46,255 | ) | (40,106 | ) | (136,520 | ) | (130,939 | ) | |||||
Operating income (loss) | 11,053 | (1,137 | ) | 28,297 | (9,884 | ) | |||||||
Equity in earnings (loss) of joint ventures | 1,458 | 2 | 3,197 | (79 | ) | ||||||||
Impairment to joint venture investment and advances | - | - | - | (2,830 | ) | ||||||||
Interest expense, net | (2,175 | ) | (2,452 | ) | (6,706 | ) | (7,347 | ) | |||||
Discount on sale of accounts receivable | (167 | ) | (295 | ) | (684 | ) | (874 | ) | |||||
Income (loss) before income tax | 10,169 | (3,882 | ) | 24,104 | (21,014 | ) | |||||||
Income tax (provision) benefit | |||||||||||||
Federal | (3,250 | ) | 1,284 | (7,720 | ) | 6,808 | |||||||
State | (832 | ) | 261 | (1,994 | ) | 1,431 | |||||||
(4,082 | ) | 1,545 | (9,714 | ) | 8,239 | ||||||||
Net income (loss) | 6,087 | (2,337 | ) | 14,390 | (12,775 | ) | |||||||
Preferred Dividends | (240 | ) | (242 | ) | (720 | ) | (719 | ) | |||||
Net income (loss) applicable to common stock | $ | 5,847 | $ | (2,579 | ) | $ | 13,670 | $ | (13,494 | ) | |||
Basic earnings (loss) per share | $ | 0.37 | $ | (0.16 | ) | $ | 0.87 | $ | (0.86 | ) | |||
Diluted earnings (loss) per share | $ | 0.35 | (0.16 | ) | $ | 0.82 | (0.86 | ) | |||||
The accompanying notes are an integral part of these financial statements. |
COMPARATIVE STATEMENTS OF OPERATIONS | For the Three | For the Six | |||||||||||
(Amounts in thousands, except per share data) | Months Ended | Months Ended | |||||||||||
(Unaudited) | June 30, | June 30, | |||||||||||
| 2004 | 2003 | 2004 | 2003 | |||||||||
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Net sales | $ | 188,221 | $ | 133,947 | $ | 363,854 | $ | 275,593 | |||||
Cost of material sold | (131,865 | ) | (93,539 | ) | (256,346 | ) | (191,983 | ) | |||||
Special charges | - | (1,524 | ) | - | (1,524 | ) | |||||||
Gross material margin | 56,356 | 38,884 | 107,508 | 82,086 | |||||||||
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Plant and delivery expense | (23,405 | ) | (22,263 | ) | (47,001 | ) | (44,613 | ) | |||||
Sales, general, and administrative expense | (19,315 | ) | (17,643 | ) | (38,771 | ) | (35,679 | ) | |||||
Depreciation and amortization expense | (2,244 | ) | (2,313 | ) | (4,491 | ) | (4,617 | ) | |||||
Impairment and other operating expenses | - | (5,924 | ) | - | (5,924 | ) | |||||||
Total other operating expense | (44,964 | ) | (48,143 | ) | (90,263 | ) | (90,833 | ) | |||||
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Operating income (loss) | 11,392 | (9,259 | ) | 17,245 | (8,747 | ) | |||||||
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Equity earnings (loss) of joint ventures | 1,104 | (44 | ) | 1,739 | (81 | ) | |||||||
Impairment to joint venture investment and advances | - | (2,830 | ) | - | (2,830 | ) | |||||||
Interest expense, net | (2,218 | ) | (2,452 | ) | (4,532 | ) | (4,895 | ) | |||||
Discount on sale of accounts receivable | (234 | ) | (250 | ) | (517 | ) | (579 | ) | |||||
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Income (loss) from continuing operations before income tax | 10,044 | (14,835 | ) | 13,935 | (17,132 | ) | |||||||
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Income tax (provision) benefit |
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Federal | (3,238 | ) | 4,761 | (4,470 | ) | 5,524 | |||||||
State | (808 | ) | 1,043 | (1,162 | ) | 1,170 | |||||||
| (4,046 | ) | 5,804 | (5,632 | ) | 6,694 | |||||||
Net income (loss) from continuing operations | 5,998 | (9,031 | ) | 8,303 | (10,438 | ) | |||||||
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Preferred dividends | (240 | ) | (240 | ) | (480 | ) | (477 | ) | |||||
Net income (loss) applicable to common stock | $ | 5,758 | $ | (9,271 | ) | $ | 7,823 | $ | (10,915 | ) | |||
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Basic earnings (loss) per share | $ | 0.36 | $ | (0.59 | ) | $ | 0.50 | $ | (0.69 | ) | |||
Diluted earnings (loss) per share | $ | 0.35 | (0.59 | ) | $ | 0.47 | (0.69 | ) | |||||
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EBITDA* | $ | 14,740 | $ | (9,820 | ) | $ | 23,475 | $ | (7,041 | ) | |||
*Earnings before interest, discount on sale of accounts receivable, taxes, depreciation and amortization |
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A.M. CASTLE & CO. | |||||||
CONDENSED STATEMENT OF CASH FLOWS | |||||||
(Dollars in thousands) | For the Nine Months | ||||||
(Unaudited) | Sept. 30, | ||||||
2004 | 2003 | ||||||
Cash flows from operating activities: | |||||||
Net income (loss) | $ | 14,390 | $ | (12,775 | ) | ||
Depreciation | 6,736 | 6,700 | |||||
Amortization of deferred gain | (631 | ) | (150 | ) | |||
Equity in (earnings) loss from joint ventures | (3,197 | ) | 79 | ||||
Deferred taxes and income tax receivable | 6,315 | 4,732 | |||||
Non-cash pension income (loss) and post-retirement benefits | 315 | (1,053 | ) | ||||
Other | 1,267 | (3,257 | ) | ||||
Cash from operating activities before working capital changes | 25,195 | (5,724 | ) | ||||
Asset impairment and special charges | - | 10,278 | |||||
Net change in accounts receivable sold | (8,000 | ) | (5,866 | ) | |||
Other Increase in working capital | (1,076 | ) | (61 | ) | |||
Net cash from operating activities | 16,119 | (1,373 | ) | ||||
Cash flows from investing activities: | |||||||
Investments and acquisitions | (1,744 | ) | - | ||||
Advances to joint ventures | - | (199 | ) | ||||
Capital expenditures | (3,419 | ) | (2,183 | ) | |||
Proceeds from sale of assets | 10,538 | ||||||
Net cash from investing activities | (5,163 | ) | 8,156 | ||||
Cash flows from financing activities | |||||||
Payments on long-term debt | (7,337 | ) | (6,453 | ) | |||
Preferred dividends paid | (720 | ) | (719 | ) | |||
Other | (85 | ) | - | ||||
Net cash from financing activities | (8,142 | ) | (7,172 | ) | |||
Effect of exchange rate changes on cash | 166 | 302 | |||||
Net (decrease) increase in cash | 2,980 | (87 | ) | ||||
Cash - beginning of year | $ | 2,455 | $ | 918 | |||
Cash - end of period | $ | 5,435 | $ | 831 | |||
Supplemental cash disclosure - cash received (paid) during the period: | |||||||
Interest | ($6,815 | ) | ($7,464 | ) | |||
Income taxes | ($4,923 | ) | $ | 12,771 | |||
The accompanying notes are an integral part of these statements. |
COMPARATIVE BALANCE SHEETS |
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(Amounts in thousands except per share data) |
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UNAUDITED | Jun. 30 |
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| 2004 |
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ASSETS |
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Current assets |
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Cash and equivalents | $ | 4,503 | $ | 2,455 | $ | 1,672 | ||||
Accounts receivable, net | 91,714 | 54,232 | 42,219 | |||||||
Inventories (principally on last-in first-out basis) | 105,224 | 117,270 | 127,658 | |||||||
Income tax receivable | 408 | 660 | - | |||||||
Assets held for sale | 1,059 | 1,067 | - | |||||||
Other current assets | 8,658 | 7,184 | 7,800 | |||||||
Total current assets | 211,566 | 182,868 | 179,349 | |||||||
Investment in joint ventures | 5,973 | 5,492 | 7,224 | |||||||
Goodwill | 31,925 | 31,643 | 31,720 | |||||||
Pension assets | 42,169 | 42,075 | 41,109 | |||||||
Advances to joint ventures and other assets | 7,464 | 8,688 | 5,534 | |||||||
Property, plant and equipment, at cost |
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Land | 4,767 | 4,767 | 6,031 | |||||||
Building | 47,130 | 45,346 | 51,826 | |||||||
Machinery and equipment | 119,883 | 118,447 | 119,302 | |||||||
| 171,780 | 168,560 | 177,159 | |||||||
Less - accumulated depreciation | (105,133 | ) | (100,386 | ) | (102,062 | ) | ||||
| 66,647 | 68,174 | 75,097 | |||||||
Total assets | $ | 365,744 | $ | 338,940 | $ | 340,033 | ||||
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LIABILITIES AND STOCKHOLDER'S EQUITY |
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Current liabilities |
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Accounts payable | $ | 87,299 | $ | 67,601 | $ | 61,722 | ||||
Accrued liabilities and deferred gains | 21,652 | 19,145 | 19,810 | |||||||
Current and deferred income taxes | 2,377 | 4,852 | 4,037 | |||||||
Current portion of long-term debt | 13,057 | 8,248 | 11,230 | |||||||
Total current liabilities | 124,385 | 99,846 | 96,799 | |||||||
Long-term debt, less current portion | 89,187 | 100,034 | 100,358 | |||||||
Deferred income taxes | 20,147 | 13,963 | 17,753 | |||||||
Deferred gain on sale of assets | 6,902 | 7,304 | - | |||||||
Minority interest | 1,262 | 1,456 | 1,404 | |||||||
Post retirement benefits obligations | 2,758 | 2,683 | 2,292 | |||||||
Stockholders' equity |
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Preferred stock | 11,239 | 11,239 | 11,239 | |||||||
Common stock | 159 | 159 | 159 | |||||||
Additional paid in capital | 35,009 | 35,009 | 35,017 | |||||||
Earnings reinvested in the business | 74,300 | 66,480 | 74,581 | |||||||
Accumulated other comprehensive income (loss) | 663 | 1,042 | 732 | |||||||
Other - deferred compensation | (22 | ) | (30 | ) | (71 | ) | ||||
Treasury stock, at cost | (245 | ) | (245 | ) | (230 | ) | ||||
Total stockholders' equity | 121,103 | 113,654 | 121,427 | |||||||
Total liabilities and stockholders' equity | $ | 365,744 | $ | 338,940 | $ | 340,033 | ||||
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The accompanying notes are an integral part of these financial statements. |
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CONDENSED STATEMENT OF CASH FLOWS |
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(Dollars in thousands) | For the Six Months | ||||||
(Unaudited) | June 30, | ||||||
| 2004 | 2003 | |||||
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Cash flows from operating activities: |
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Net income/(loss) | $ | 8,303 | $ | (10,438 | ) | ||
Depreciation and amortization | 4,491 | 4,617 | |||||
Amortization of deferred gain on sale of assets | (402 | ) | - | ||||
Equity loss (earnings) from joint ventures | (1,739 | ) | 81 | ||||
Deferred taxes and income tax receivable | 6,454 | 6,466 | |||||
Non-cash pension income and post-retirement benefits | 105 | (480 | ) | ||||
Other | 1,010 | (1,694 | ) | ||||
Cash from operating activities before working capital changes | 18,222 | (1,448 | ) | ||||
Asset impairment and special charges | - | 10,278 | |||||
Net change in accounts receivable sold | (5,000 | ) | 1,800 | ||||
Other; Increase in working capital | (688 | ) | (5,822 | ) | |||
Net cash from operating activities | 12,534 | 4,808 | |||||
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Cash flows from investing activities: |
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Investments and acquisitions | (1,744 | ) | - | ||||
Advances to joint ventures | - | (233 | ) | ||||
Capital expenditures | (2,372 | ) | (1,727 | ) | |||
Net cash from investing activities | (4,116 | ) | (1,960 | ) | |||
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Cash flows from financing activities |
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Long-term debt reductions | (5,826 | ) | (1,737 | ) | |||
Preferred dividends paid | (480 | ) | (477 | ) | |||
Other | (94 | ) | - | ||||
Net cash from financing activities | (6,400 | ) | (2,214 | ) | |||
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Effect of exchange rate changes on cash | 30 | 120 | |||||
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Net increase in cash | 2,048 | 754 | |||||
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Cash - beginning of year | $ | 2,455 | $ | 918 | |||
Cash - end of period | $ | 4,503 | $ | 1,672 | |||
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Supplemental cash disclosure - cash (paid) received during the period: |
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Interest | $ | (4,569 | ) | $ | (4,634 | ) | |
Income taxes | $ | (1,448 | ) | $ | 12,813 | ||
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The accompanying notes are an integral part of these statements. |
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Pag 6 of 27
1. | Comparative Financial Statements |
2. | New Accounting Standards |
3. | Earnings Per Share |
For The Three Months Ended Sept 30, | For The Nine Months Ended Sept 30, | ||||||||||||
2004 | 2003 | 2004 | 2003 | ||||||||||
(in thousands) | |||||||||||||
Net income (loss) | $ | 6,087 | $ | (2,337 | ) | $ | 14,390 | $ | (12,775 | ) | |||
Preferred dividends | (240 | ) | (242 | ) | (720 | ) | (719 | ) | |||||
Net income (loss) applicable to common stock | $ | 5,847 | $ | (2,579 | ) | $ | 13,670 | $ | (13,494 | ) | |||
Weighted average common shares outstanding | 15,797 | 15,788 | 15,794 | 15,777 | |||||||||
Dilutive effect of outstanding employee and | |||||||||||||
Directors’ common stock options and preferred stock | 953 | — | 802 | — | |||||||||
Diluted common shares outstanding | 16,750 | 15,788 | 16,596 | 15,777 | |||||||||
Basic income (loss) per common share | $ | 0.37 | $ | (0.16 | ) | $ | 0.87 | $ | (0.86 | ) | |||
Diluted income (loss) per common share | $ | 0.36 | $ | (0.16 | ) | $ | 0.87 | $ | (0.86 | ) | |||
Outstanding employee and directors' common stock options and restricted and preferred stock shares having no dilutive effect | 845 | 3,575 | 850 | 3,575 | |||||||||
4. | Accounts Receivable Securitization |
For The Three Months Ended June 30, For The Six Months Ended June 30, 2004 2003 2004 2003 (in thousands) Net income (loss) $ 5,998 $ (9,031 ) $ 8,303 $ (10,438 ) Preferred dividends (240 ) (240 ) (480 ) (477 ) Net income (loss) applicable to common stock $ 5,758 $ (9,271 ) $ 7,823 $ (10,915 ) Weighted average common shares outstanding 15,793 15,780 15,792 15,771 Dilutive effect of outstanding employee and Directors’ common stock options and preferred stock 871 — 716 — Diluted common shares outstanding 16,664 15,780 16,508 15,771 Basic income (loss) per common share $ 0.36 $ (0.59 ) $ 0.50 $ (0.69 ) Diluted income (loss) per common share $ 0.35 $ (0.59 ) $ 0.47 $ (0.69 ) Outstanding employee and directors' common stock options and restricted and preferred stock shares having no dilutive effect 977 3,662 977 3,662
305 thousand shares of Preferred Stock Common Stock equivalents are anti-dilutive to "Net income (loss)" before preferred dividends.
4. Accounts Receivable Securitization
The Company is utilizing a special purpose, fully consolidated, bankruptcy remote company (Castle SPFD, LLC) for the sole purpose of buying receivables from the parent Company and selected subsidiaries and selling an undivided interest in a base of receivables to a finance company. Castle SPFD, LLC retains an undivided interest in the pool of accounts receivable and bad debt losses are allocated first to this retained interest. The facility, which expires in December 2005, requires early amortization if the special purpose company does not maintain a required minimum equity balance or if certain ratios related to the collectibility of the receivables are not maintained. Funding under the facility is limited to the lesser of a calculated funding base or $60 million. As of JuneSeptember 30, 2004, $8.0$5.0 million of accounts receivablerec eivable were sold to the finance company and an additional $41.5$ 43.1 million could have been sold under the agreement. The amount sold to the financing company at December 31, 2003 a nd Juneand September 30, 2003 was $13.0 million and $27.7$20.0 million, respectively.
5. | Goodwill |
5. Goodwill
During the first quarter of 2004 the Company’s MetalsMetal Segment purchased the remaining 50% interest in its Mexican joint venture and the PlasticsPlastic Segment purchased the remaining 40% interest in its Paramont Machine Company subsidiary (both of these entities are now wholly owned). Based on the purchase price of these entities and the valuations required by SFAS 141 "Business Combinations"åBusiness Combinationsæ, additional net goodwill of $0.3 million was reported.
MetalsSegment |
| PlasticsSegment | Total | |||||||
Balance As of December 31, 2003 | $ | 18,670 | $ | 12,973 | $ | 31,643 | ||||
Purchases | 510 | (210 | ) | 300 | ||||||
Currency Valuation | (18 | ) | ¾ | (18 | ) | |||||
Balance As of June 30, 2004 | $ | 19,162 | $ | 12,763 | $ | 31,925 | ||||
6. Acquisitions
Metal Segment Plastic Segment Total Balance As of December 31, 2003 $ 18,670 $ 12,973 $ 31,643 Purchases 510 (210 ) 300 Currency Valuation 16 — 16 Balance As of September 30, 2004 $ 19,196 $ 12,763 $ 31,959
6. | Acquisitions |
7. LIFO
7. | LIFO |
8. Stock Options
8. | Stock Options |
following assumptions: risk free interest rate of 3.1% to 4.5%, expected dividend yield of zero, option life of 10 years, and expected volatility from 30.0% to 50.0%. There were no employee options granted in the first halfthree quarters of 2004.
For The Three Months Ended September 30 | For The Nine Months Ended September 30, | ||||||||||||
2004 | 2003 | 2004 | 2003 | ||||||||||
Net income (loss) applicable to common stock, as reported | $ | 5,847 | $ | (2,579 | ) | $ | 13,670 | $ | (13,494 | ) | |||
Pro-forma effect of stock option compensation | |||||||||||||
under fair value based method for all awards | (474 | ) | (236 | ) | (940 | ) | (709 | ) | |||||
Pro-forma net income (loss) applicable to common stock | $ | 5,373 | $ | (2,815 | ) | $ | 12,730 | $ | (14,203 | ) | |||
Basic income (loss) per share, as reported | $ | 0.37 | $ | (0.16 | ) | $ | 0.87 | $ | (0.86 | ) | |||
Diluted income (loss) per share, as reported | $ | 0.36 | $ | (0.16 | ) | $ | 0.87 | $ | (0.86 | ) | |||
Pro-forma income (loss) per share: | |||||||||||||
Basic | $ | 0.34 | $ | (0.18 | ) | $ | 0.81 | $ | (0.90 | ) | |||
Diluted | $ | 0.33 | $ | (0.18 | ) | $ | 0.81 | $ | (0.90 | ) | |||
For The Three Months Ended June 30, | For The Six Months Ended June 30, | ||||||||||||
2004 |
|
| 2003 |
|
| 2004 |
|
| 2003 | ||||
Net income (loss) applicable to common stock, as reported | $ | 5,758 | $ | (9,271 | ) | $ | 7,823 | $ | 10,915 | ) | |||
Pro-forma effect of stock option compensation under fair value based method for all awards | (233 | ) | (237 | ) | (466 | ) | (473 | ) | |||||
Pro-forma net income (loss) applicable to common stock | $ | 5,525 | $ | 9,508 | $ | 7,357 | $ | (11,388 | ) | ||||
Total basic diluted income (loss) per share, as reported | $ | 0.36 | $ | (0.59 | ) | $ | 0.50 | $ | (0.69 | ) | |||
Total diluted income (loss) per share, as reported | $ | 0.35 | $ | (0.59 | ) | $ | 0.47 | $ | (0.69 | ) | |||
Pro-forma income (loss) per share: | |||||||||||||
Basic | $ | 0.35 | $ | (0.60 | ) | $ | 0.47 | $ | (0.72 | ) | |||
Diluted | $ | 0.34 | $ | (0.60 | ) | $ | 0.44 | $ | (0.72 | ) | |||
|
|
|
9. Segment Reporting
9. | Segment Reporting |
(in millions) |
Net Sales | Gross Mat’lMargin | OtherOper Exp | Operating Income(Loss) |
| ||||||||
2004 |
|
|
|
| |||||||||
Metals Segment | $ | 166.1 | $ | 49.0 | $ | (38.0 | ) | $ | 11.0 | ||||
Plastics Segment | 22.1 | 7.3 | (5.7 | ) | 1.6 | ||||||||
Other | — | — | (1.2 | ) | (1.2 | ) | |||||||
Consolidated | $ | 188.2 | $ | 56.3 | $ | (44.9 | ) | $ | 11.4 | ||||
2003 | |||||||||||||
Metals Segment | $ | 117.6 | $ | 33.1 | $ | (42.5 | ) | $ | (9.4 | ) | |||
Plastics Segment | 16.3 | 5.8 | (5.0 | ) | 0.8 | ||||||||
Other | — | — | (0.6 | ) | (0.6 | ) | |||||||
Consolidated | $ | 133.9 | $ | 38.9 | $ | (48.1 | ) | $ | (9.2 | ) | |||
|
|
|
|
|
Net Sales Gross Mat’l Margin Other Oper Exp Operating Income (Loss) 2004 Metal Segment $ 174.5 $ 49.1 $ (38.9 ) $ 10.2 Plastic Segment 24.8 8.2 (6.0 ) 2.2 Other — — (1.3 ) (1.3 ) Consolidated $ 199.3 $ 57.3 $ (46.2 ) $ 11.1 2003 Metal Segment $ 117.3 $ 32.9 $ (33.5 ) $ (0.6 ) Plastic Segment 17.6 6.1 (5.3 ) 0.8 Other — — (1.3 ) (1.3 ) Consolidated $ 134.9 $ 39.0 $ (40.1 ) $ (1.1 )
The following is the segment information for the six-monthsnine-months ended JuneSeptember 30, 2004 and 2003:
(in millions) | Net Sales | Gross Mat’lMargin | OtherOper Exp | Operating Income(Loss) |
| ||||||||
2004 | |||||||||||||
Metals Segment | $ | 320.8 | $ | 93.3 | $ | (76.6 | ) | $ | 16.7 | ||||
Plastics Segment | 43.0 | 14.2 | (11.5 | ) | 2.7 | ||||||||
Other | — | — | (2.2 | ) | (2.2 | ) | |||||||
Consolidated | $ | 363.8 | $ | 107.5 | $ | (90.3 | ) | $ | 17.2 | ||||
2003 | |||||||||||||
Metals Segment | $ | 243.2 | $ | 70.7 | $ | (79.4 | ) | $ | (8.7 | ) | |||
Plastics Segment | 32.4 | 11.4 | (10.1 | ) | 1.3 | ||||||||
Other | — | — | (1.4 | ) | (7.4 | ) | |||||||
Consolidated | $ | 275.6 | $ | 82.1 | $ | (90.8 | ) | $ | (8.8 | ) | |||
|
|
|
|
|
Net Sales Gross Mat’l Margin Other Oper Exp Operating Income (Loss) 2004 Metal Segment $ 495.4 $ 142.4 $ (115.5 ) $ 26.9 Plastic Segment 67.8 22.4 (17.4 ) 4.9 Other — — (3.5 ) (3.5 ) Consolidated $ 563.2 $ 164.8 $ (136.4 ) $ 28.3 2003 Metal Segment $ 360.5 $ 103.6 $ (112.8 ) $ (9.2 ) Plastic Segment 50.0 17.5 (15.4 ) 2.1 Other — — (2.7 ) (2.7 ) Consolidated $ 410.5 $ 121.1 $ (130.9 ) $ (9.8 )
(in thousands) | June 30, 2004 | December 31, 2003 | |||||
Metals Segment | $ | 332,900 | $ | 306,892 | |||
Plastics Segment | 32,436 | 31,388 | |||||
Other | 408 | 660 | |||||
Consolidated | $ | 365,744 | $ | 338,940 | |||
(in thousands) | September 30, 2004 | December 31, 2003 | ||||
Metal Segment | $ | 342,736 | $ | 306,892 | ||
Plastic Segment | 46,293 | 31,388 | ||||
Other | 310 | 660 | ||||
Consolidated | $ | 389,339 | $ | 338,940 | ||
10. Asset Impairment and Special Charges
10. | Asset Impairment and Special Charges |
The impairment and special charges consisted of $1.5 million of inventories anticipated to be sold or liquidated in connection with the disposition of these businesses; the impairment of long-lived assets of $4.9 million based on their anticipated sale price or appraisal value; the accrual of $1.0 million of contract termination costs under operating leases associated with the sale of the businesses’ non inventory assets, which are included in "impairmentåimpairment and other operating expenses"expensesæ; and a $2.8 million impairment on the investment in the two joint ventures; which are included in "impairmentåimpairment to joint venture investment and advances."
æ
(in millions) | December 31, 2003 Balance |
|
| First Half 2004 Spending |
|
| June 30, 2004 Balance | |||
Lease and other contract transition costs | $ | 0.3 | $ | (0.3 | ) | $ | — | |||
Environmental clean-up costs | 0.8 | (0.8 | ) | — | ||||||
Legal fees on asset sales/divestiture | 0.1 | (0.1 | ) | — | ||||||
Total | $ | 1.2 | $ | (1.2 | ) | $ | — | |||
11.Pension and Post Retirement Benefits Lease and other contract transaction costs $ 0.3 $ (0.3 ) $ -- Environmental clean-up costs 0.8 (0.8 ) — Legal fees on asset sales/divestiture 0.1 (0.1 ) — Total $ 1.2 $ (1.2 ) $ —
The following are the components of the net pension and post-retirement benefit activities for the quarters ended September 30, 2004 and 2003 (in thousands): |
Other Benefits | Total Benefits | ||||||||||||||||||
2004 | 2003 | 2004 | 2003 | 2004 | 2003 | ||||||||||||||
Service cost | $ | (594.2 | ) | $ | (785.8 | ) | $ | (29.0 | ) | $ | (22.6 | ) | $ | (623.2 | ) | $ | (808.4 | ) | |
Interest cost | (1,448.1 | ) | (2,239.2 | ) | (38.1 | ) | (34.9 | ) | (1,486.2 | ) | (2,274.1 | ) | |||||||
Expected return on plan assets | 2,396.7 | 3,763.1 | — | — | 2,396.7 | 3,763.1 | |||||||||||||
Amortization of prior service cost | (16.9 | ) | (26.1 | ) | (11.9 | ) | (9.5 | ) | (28.8 | ) | (35.6 | ) | |||||||
Amortization of net (loss) gain | (366.3 | ) | (78.6 | ) | 2.4 | 7.0 | (363.9 | ) | (71.6 | ) | |||||||||
Net periodic (cost) benefit | $ | (28.8 | ) | $ | 633.5 | $ | (76.6 | ) | $ | (60.0 | ) | $ | (105.4 | ) | $ | 573.5 |
Pension Benefits | Other Benefits | Total Benefits | |||||||||||||||||
| 2004 | 2003 | 2004 | 2003 | 2004 | 2003 | |||||||||||||
Service cost | $ | (594.2 | ) | $ | (372.1 | ) | $ | (29.0 | ) | $ | (22.6 | ) | $ | (623.2 | ) | $ | (394.7 | ) | |
Interest cost | (1,448.1 | ) | (1,060.4 | ) | (38.1 | ) | (34.9 | ) | (1,486.2 | ) | (1,095.3 | ) | |||||||
Expected return on plan | 2,396.7 | 1,782.1 | — | — | 2,396.7 | 1,782.1 | |||||||||||||
Amortization of prior service cost | (16.9 | ) | (12.4 | ) | (11.9 | ) | (9.5 | ) | (28.8 | ) | (21.9 | ) | |||||||
Amortization of net (loss) gain | (366.3 | ) | (37.2 | ) | 2.4 | 7.0 | (363.9 | ) | (30.2 | ) | |||||||||
Net periodic (cost) benefit | $ | (28.8 | ) | $ | 300.0 | $ | (76.6 | ) | $ | (60.0 | ) | $ | (105.4 | ) | $ | 240.0 |
The following are the components of the net pension and post-retirement benefit activities for the six months ended June 30, 2004 and 2003 (in thousands):
| Pension Benefits | Other Benefits | Total Benefits | Pension Benefits | Other Benefits | Total Benefits | ||||||||||||||||||||||||||||||||
| 2004 | 2003 | 2004 | 2003 | 2004 | 2003 | 2004 | 2003 | 2004 | 2003 | 2004 | 2003 | ||||||||||||||||||||||||||
Service cost | $ | (1,188.4 | ) | $ | (744.2 | ) | $ | (58.0 | ) | $ | (45.2 | ) | $ | (1246.4 | ) | $ | (789.4 | ) | $ | (1,782.6 | ) | $ | (1,530.0 | ) | $ | (87.0 | ) | $ | (67.8 | ) | $ | (1,869.6 | ) | $ | (1,597.8 | ) | ||
Interest cost | (2,896.2 | ) | (2,120.8 | ) | (76.2 | ) | (69.8 | ) | (2,972.4 | ) | (2,190.6 | ) | (4,344.3 | ) | (4,360.0 | ) | (114.3 | ) | (104.7 | ) | (4,458.6 | ) | (4,464.7 | ) | ||||||||||||||
Expected return on plan | 4,793.4 | 3,564.2 | — | — | 4,793.4 | 3,564.2 | ||||||||||||||||||||||||||||||||
Expected return on plan assets | 7,190.1 | 7,327.3 | — | — | 7,190.1 | 7,327.3 | ||||||||||||||||||||||||||||||||
Amortization of prior service cost | (33.8 | ) | (24.8 | ) | (23.8 | ) | (19.0 | ) | (57.6 | ) | (43.8 | ) | (50.7 | ) | (50.9 | ) | (35.7 | ) | (28.5 | ) | (86.4 | ) | (79.4 | ) | ||||||||||||||
Amortization of net (loss) gain | (732.6 | ) | (74.4 | ) | 4.8 | 14.0 | (727.8 | ) | (60.4 | ) | (1.098.9 | ) | (153.0 | ) | 7.2 | 21.0 | (1,091.7 | ) | (132.0 | ) | ||||||||||||||||||
Net periodic (cost) benefit | $ | (57.6 | ) | $ | 600.0 | $ | (153.2 | ) | $ | (120.0 | ) | $ | (210.8 | ) | $ | 480.0 | $ | (86.4 | ) | $ | 1,233.4 | $ | (229.8 | ) | $ | (180.0 | ) | $ | (316.2 | ) | $ | 1,053.4 | ||||||
|
|
|
|
|
|
12. | Commitments and Contingent Liabilities |
12.Commitments and Contingent Liabilities
At JuneSeptember 30, 2004 the Company had no outstanding guarantees of $2.0 million for bank loans made to one of its unconsolidated affiliates. Also outstanding wereaffiliate. The Company had $1.8 million of irrevocable letters of credit and $0.7 million of cash deposits outstanding at quarter end to comply with the insurance reserve requirements of its workers’ compensation insurance carrier. The letter of credit is secured with a Certificate of Deposit, which is included in "AdvancesåAdvances to joint ventures and other current assets"assetsæ on the Comparative Balance Sheets.
Executive Overview
Strong market and pricing trends continued throughout
As the table shows, the growth that began in the third quarter of 2003 has continued through each subsequent quarter in 2004.
YEAR | Qtr 1 | Qtr 2 | Qtr 3 | Qtr 4 |
2003 | 49.7 | 48.9 | 54.1 | 60.6 |
2004 | 62.5 | 62.1 | 59.8 |
YEAR | Qtr 1 | Qtr 2 | Qtr 3 | Qtr 4 |
2003 | 49.7 | 48.9 | 54.1 | 60.6 |
2004 | 62.5 | 62.1 |
As of this filing, there
Oct - Dec 2004 | 2005 | 2006 | 2007 | 2008 and Beyond | |
Required Principal Payments on Debt | $0.3 | $11.4 | $16.2 | $16.2 | $56.3 |
July – Dec 2004 |
|
|
2005 |
|
|
2006 |
|
|
2007 |
|
| 2008 andBeyond | ||||
Required Principal Payments on Debt | $ | 1.8 | $ | 11.4 | $ | 16.2 | $ | 16.2 | $ | 56.3 |
Results of Operations: Year-to-Year Comparisons and Commentary
Second
Quarter Ended Sept 30 | |||||||||||||
2004 | 2003 | Fav/ (Unfav) | Fav/(Unfav)% Change | ||||||||||
Net Sales | |||||||||||||
Metal | $ | 174.5 | $ | 117.3 | $ | 57.3 | 48.8 | % | |||||
Plastic | 24.8 | 17.6 | 7.2 | 40.9 | |||||||||
Total Net Sales | $ | 199.3 | $ | 134.9 | $ | 64.5 | 47.8 | % | |||||
Gross Material Margin | |||||||||||||
Metal | $ | 49.1 | $ | 32.9 | $ | 16.2 | 49.2 | % | |||||
% of Metal Sales | 28.1 | % | 28.1 | % | 0.0 | % | |||||||
Plastic | 8.2 | 6.1 | 2.1 | 34.4 | |||||||||
% of Plastic Sales | 33.1 | % | 34.7 | % | (1.3 | )% | |||||||
Total Gross Material Margin | $ | 57.3 | $ | 39.0 | $ | 18.3 | 46.9 | % | |||||
% of Total Sales | 28.7 | % | 28.9 | % | (0.2 | )% | |||||||
Operating Expense | |||||||||||||
Metal | $ | (38.9 | ) | $ | (33.5 | ) | $ | (5.4 | ) | (16.1 | )% | ||
Plastic | (6.0 | ) | (5.3 | ) | (0.7 | ) | (13.2 | ) | |||||
Other | (1.3 | ) | (1.3 | ) | — | — | |||||||
Total Operating Expense | $ | (46.2 | ) | $ | (40.1 | ) | $ | (6.1 | ) | (15.2 | )% | ||
% of Total Sales | (23.2 | )% | (29.7 | )% | 6.5 | % | |||||||
Operating Income | |||||||||||||
Metal | $ | 10.2 | $ | (0.6 | ) | $ | 10.8 | 1800.0 | % | ||||
% of Metal Sales | 5.8 | % | (0.5 | )% | 6.3 | % | |||||||
Plastic | 2.2 | 0.8 | 1.4 | 175.0 | |||||||||
% of Plastic Sales | 8.9 | % | 4.5 | % | 4.4 | % | |||||||
Other | (1.3 | ) | (1.3 | ) | — | — | |||||||
Total Operating Income | $ | 11.1 | $ | (1.1 | ) | $ | 12.2 | 1109.1 | % | ||||
% of Total Sales | 5.6 | % | (0.8 | )% | 6.4 | % | |||||||
"Other" includes costs of the executive and legal departments, and other corporate activities which support both operating segments of the Company. |
| Quarter Ended June 30, | Fav/(Unfav) | ||||||||||||||
| 2004 | 2003 | Fav/ | % Change | ||||||||||||
Net Sales | ||||||||||||||||
Metals | $ | 166.1 | $ | 117.6 | $48.5 | 41.2 | % | |||||||||
Plastics | 22.1 | 16.3 | 5.8 | 35.6 | ||||||||||||
Total Net Sales | $ | 188.2 | $ | 133.9 | $54.3 | 40.6 | % | |||||||||
Gross Material Margin | ||||||||||||||||
Metals | $ | 49.0 | $ | 33.1 | $15.9 | 48.0 | % | |||||||||
% of Metals | 29.5 | % | 28.1 | % | 1.4% | |||||||||||
Plastics | 7.3 | 5.8 | 1.5 | 25.9 | ||||||||||||
% of Plastics | 33.1 | % | 35.4 | % | (2.3)% | |||||||||||
Total Gross Material Margin | $ | 56.3 | $ | 38.9 | $17.4 | 44.7 | % | |||||||||
% of Total | 29.9 | % | 29.1 | % | 0.8% | |||||||||||
Operating Expense | ||||||||||||||||
Metals | $ | (38.0 | ) | $ | (42.5 | ) | $4.5 | 10.6 | % | |||||||
Plastics | (5.7 | ) | (5.0 | ) | (0.7) | (14.0 | ) | |||||||||
Other | (1.2 | ) | (0.6 | ) | (0.6) | (100.0 | ) | |||||||||
Total Operating Expense | $ | (44.9 | ) | $ | (48.1 | ) | $3.2 | 6.7 | % | |||||||
% of Total | (23.9) | % | (35.9) | % | 12.0% | |||||||||||
Operating Income | ||||||||||||||||
Metals | $ | 11.0 | $ | (9.4 | ) | $20.4 | 217.0 | % | ||||||||
% of Metals Sales | 6.7 | % | (8.0) | % | 14.7% | |||||||||||
Plastics | 1.6 | 0.8 | 0.8 | 100.0 | ||||||||||||
% of Plastics Sales | 7.2 | % | 4.9 | % | 2.3% | |||||||||||
Other | (1.2 | ) | (0.6 | ) | (0.6) | (100.0 | ) | |||||||||
Total Operating Income | $ | 11.4 | $ | (9.2 | ) | $20.6 | 223.9 | % | ||||||||
% of Total Sales | 6.1 | % | (6.9) | % | 13.0% | |||||||||||
"Other" includes costs of the executive and legal departments, and other corporate activities which support both operating segments of the Company. |
Net Sales and Gross Material Margin:
Net Sales and Gross Material Margin Bridge | |||||||||||||||||||
Quarter Ending September 30, 2004 Vs. 2003 | |||||||||||||||||||
(dollars in millions) | |||||||||||||||||||
Gross Material Margin | |||||||||||||||||||
Dollars | Percent | Dollars | Percent | ||||||||||||||||
Quarter Ended 9/30/03 | |||||||||||||||||||
Metal | $ | 117.3 | 58.8 | % | $ | 32.9 | 57.4% | ||||||||||||
Plastic | 17.6 | 8.8 | % | 6.1 | 10.7% | ||||||||||||||
Total Company | $ | 134.9 | 67.6 | % | $ | 39.0 | 68.1% | ||||||||||||
Change 3Q04 Vs. 3Q03 | |||||||||||||||||||
Metal | |||||||||||||||||||
Volume | $ | 17.6 | 13.1 | % | $ | 6.0 | 15.4% | ||||||||||||
Price | 34.6 | 25.7 | % | 7.0 | 17.9% | ||||||||||||||
Mix/Other | (0.1 | ) | 0.0 | % | 2.3 | 5.9% | |||||||||||||
Mexico | 5.1 | 3.8 | % | 0.9 | 2.3% | ||||||||||||||
Total Metals | $ | 57.2 | 42.4 | % | $ | 16.2 | 41.5% | ||||||||||||
Plastic | 7.2 | 5.3 | % | 2.1 | 5.4% | ||||||||||||||
Total Company | $ | 64.4 | 47.8 | % | $ | 18.3 | 47.1% | ||||||||||||
Quarter Ended 9/30/04 | |||||||||||||||||||
Metal | $ | 174.5 | 87.6 | % | $ | 49.1 | 85.7% | ||||||||||||
Plastic | 24.8 | 12.4 | % | 8.2 | 14.3% | ||||||||||||||
Total Company | $ | 199.3 | 100.0 | % | $ | 57.3 | 100.0% |
Net Sales and Gross Material Margin Bridge | |||||||||||||
Quarter Ending June 30, 2004 Vs. 2003 | |||||||||||||
(dollars in millions) | |||||||||||||
Net Sales | Gross Material Margin | ||||||||||||
Dollars |
|
| Percent |
|
| Dollars |
|
| Percent | ||||
Quarter Ended 6/30/03 | |||||||||||||
Metals | $ | 117.6 | 62.5 | % | $ | 33.1 | 58.8 | % | |||||
Plastics | 16.3 | 8.7 | % | 5.8 | 10.3 | % | |||||||
Total Company | $ | 133.9 | 71.2 | % | $ | 38.9 | 69.1 | % | |||||
Change 2Q04 Vs. 2Q03 | |||||||||||||
Metals | |||||||||||||
Volume | $ | 19.2 | 14.3 | % | $ | 5.7 | 14.7 | % | |||||
Price | 24.6 | 18.4 | % | 5.0 | 12.9 | % | |||||||
Mix/Other | 0.1 | 0.1 | % | 2.8 | 7.2 | % | |||||||
Mexico | 4.6 | 3.4 | % | 0.9 | 2.3 | % | |||||||
Impairment(2003 charge) | — | — | 1.5 | 3.9 | % | ||||||||
Total Metals | $ | 48.5 | 36.2 | % | $ | 15.9 | 40.9 | % | |||||
Plastics | 5.8 | 4.3 | % | 1.5 | 3.9 | % | |||||||
Total Company | $ | 54.3 | 40.6 | % | $ | 17.4 | 44.7 | % | |||||
Quarter Ended 6/30/04 | |||||||||||||
Metals | $ | 166.1 | 88.3 | % | $ | 49.0 | 87.0 | % | |||||
Plastics | 22.1 | 11.7 | % | 7.3 | 13.0 | % | |||||||
Total Company | $ | 188.2 | 100.0 | % | $ | 56.3 | 100.0 | % |
quarter.
Page 16 of 27
Excluding a $5.9
(dollars in millions) | Nine-Months Ended September 30 | ||||||||||||
2004 | 2003 | Fav/ (Unfav) | Fav/(Unfav) % Change | ||||||||||
Net Sales | |||||||||||||
Metal | $ | 495.4 | $ | 360.5 | $ | 134.9 | 37.4 | % | |||||
Plastic | 67.8 | 50.0 | 17.8 | 35.6 | |||||||||
Total Net Sales | $ | 563.2 | $ | 410.5 | $ | 152.7 | 37.2 | % | |||||
Gross Material Margin | |||||||||||||
Metal | $ | 142.4 | $ | 103.6 | $ | 38.8 | 37.5 | % | |||||
% of Metal Sales | 28.7 | % | 28.7 | % | 0.0 | % | |||||||
Plastic | 22.4 | 17.5 | 4.9 | 28.0 | % | ||||||||
% of Plastic Sales | 33.0 | % | 35.0 | % | (2.0 | )% | |||||||
Total Gross Material Margin | $ | 164.8 | $ | 121.1 | $ | 43.7 | 36.1 | % | |||||
% of Total Sales | 29.3 | % | 29.5 | % | (0.2 | )% | |||||||
Operating Expense | |||||||||||||
Metal | $ | (115.5 | ) | $ | (112.8 | ) | $ | (2.7 | ) | (2.4 | )% | ||
Plastic | (17.5 | ) | (15.4 | ) | (2.1 | ) | (13.6 | ) | |||||
Other | (3.5 | ) | (2.7 | ) | (0.8 | ) | (29.6 | ) | |||||
Total Operating Expense | $ | (136.5 | ) | $ | (130.9 | ) | $ | (5.6 | ) | (4.3 | )% | ||
% of Total Sales | (24.2 | )% | (31.9 | )% | 7.7 | % | |||||||
Operating Income | |||||||||||||
Metal | $ | 26.9 | $ | (9.2 | ) | $ | 36.2 | 389.3 | % | ||||
% of Metal Sale | 5.4 | % | (2 .6 | )% | 8.0 | % | |||||||
Plastic | 4.9 | 2.1 | 2.8 | 133.3 | |||||||||
% of Plastic Sales | 7.3 | % | 4.2 | % | 3.1 | % | |||||||
Other | (3.5 | ) | (2.7 | ) | (0.8 | ) | (29.6 | ) | |||||
Total Operating Income | $ | 28.3 | $ | (9.8 | ) | $ | 38.2 | 385.9 | % | ||||
% of Total Sales | 5.0 | % | (2.4 | )% | 7.4 | % | |||||||
"Other" includes costs of the executive and legal departments, and other corporate activities which support both operating segments of the Company. |
Page 17 of 27
Table 5
Operating Results by Segment
(dollars in millions) | Six-Months Ended June 30, | Fav/(Unfav) | ||||||||||||||
| 2004 | 2003 | Fav/ (Unfav) | %Change | ||||||||||||
Net Sales | ||||||||||||||||
Metals | $ | 320.8 | $ | 243.2 | $77.6 | 31.9 | % | |||||||||
Plastics | 43.0 | 32.4 | 10.6 | 32.7 | ||||||||||||
Total Net Sales | $ | 363.8 | $ | 275.6 | $88.2 | 32.0 | % | |||||||||
Gross Material Margin | ||||||||||||||||
Metals | $ | 93.3 | $ | 70.7 | $22.6 | 31.9 | % | |||||||||
% of Metals | 29.1 | % | 29.1 | % | 0.0% | |||||||||||
Plastics | 14.2 | 11.4 | 2.8 | 24.6 | ||||||||||||
% of Plastics | 33.0 | % | 35.2 | % | (2.2)% | |||||||||||
Total Gross Material Margin | $ | 107.5 | $ | 82.1 | $25.4 | 30.9 | % | |||||||||
% of Total | 29.5 | % | 29.8 | % | (0.3)% | |||||||||||
Operating Expense | ||||||||||||||||
Metals | $ | (76.6 | ) | $ | (79.4 | ) | $2.8 | 3.5 | % | |||||||
Plastics | (11.5 | ) | (10.1 | ) | (1.4) | (13.9 | ) | |||||||||
Other | (2.2 | ) | (1.4 | ) | (0.8) | (57.1 | ) | |||||||||
Total Operating Expense | $ | (90.3 | ) | $ | (90.9 | ) | $0.6 | 0.7 | % | |||||||
% of Total | (24.8) | % | (32.9) | % | 8.1% | |||||||||||
Operating Income | ||||||||||||||||
Metals | $ | 16.7 | $ | (8.7 | ) | $25.4 | 291.9 | % | ||||||||
% of Metals Sales | 5.2 | % | (3.6) | % | 8.8% | |||||||||||
Plastics | 2.7 | 1.3 | 1.4 | 107.7 | ||||||||||||
% of Plastics Sales | 6.3 | % | 4.0 | % | 2.3% | |||||||||||
Other | (2.2 | ) | (1.4 | ) | (0.8) | (57.1 | ) | |||||||||
Total Operating Income | $ | 17.2 | $ | (8.8 | ) | $26.0 | 295.5 | % | ||||||||
% of Total Sales | 4.7 | % | (3.2) | % | 7.9% | |||||||||||
"Other" includes costs of the executive and legal departments, and other corporate activities which support both operating segments of the Company. |
Page 18 of 27
Net Sales and Gross Material Margin: Net Sales and Gross Material Margin Bridge Six Months Ending June 30, 2004 Vs. 2003 (dollars in millions) Net Sales Gross Material Margin Dollars Percent Dollars Percent Six Months Ended 6/30/03 Metals $ 243.2 66.8 % $ 70.7 65.8 % Plastics 32.4 8.9 % 11.4 10.6 Total Company $ 275.6 75.7 % $ 82.1 76.4 % Change YTD ‘04 Vs. ‘03 Metals Volume $ 41.2 14.9 % $ 12.0 14.6 % Price 35.4 12.8 % 7.2 8.8 % Mix/Other (5.7 ) -2.1 % 0.4 0.5 % Mexico 6.8 2.5 % 1.5 1.8 % Impairment(2003 charge) — — 1.5 1.8 % Total Metals $ 77.7 28.2 % $ 22.6 27.5 % Plastics 10.6 3.8 % 2.8 3.4 % Total Company $ 88.3 32.0 % $ 25.4 30.9 % Six Months Ended 6/30/04 Metals $ 320.8 88.2 % $ 93.3 86.8 % Plastics 43.0 11.8 % 14.2 13.2 % Total Company $ 363.8 100.0 % $ 107.5 100.0 %six-monthnine-month period of 2003 and the same period of 2004.Net Sales and Gross Material Margin Bridge Nine Months Ending September 30, 2004 Vs. 2003 Net Sales Gross Material Margin Dollars Percent Dollars Percent Nine Months Ended 9/30/03 $ 360.5 64.0 % $ 103.6 62.9 % 50.0 8.9 % 17.5 10.6 % $ 410.5 72.9 % $ 121.1 73.5 % Change YTD '04 Vs. '03 $ 58.7 14.3 % $ 17.9 14.8 % 70.0 17.1 % 14.2 11.6 % (5.8 ) -1.4 % 2.7 2.2 % 11.9 2.9 % 2.5 2.1 % — — 1.5 1.2 % $ 134.9 32.9 % $ 38.8 32.0 % 17.8 4.3 % 4.9 4.1 % $ 152.7 37.2 % $ 43.7 36.1 % Nine Months Ended 9/30/04 $ 495.4 88.0 % $ 142.4 86.4 % 67.8 12.0 % 22.4 13.6 % $ 563.2 100.0 % $ 164.8 100.0 %
Metals
Page 19
Operating Expense:
2003. Excluding a $5.9 million impairment charge incurred in the first half of 2003, consolidated operating expenses increased 6.3%$11.5 million, or $5.4 million in 2004.9.2%. This incremental increase represents 6%7.5% of the $88.2$152.7 million sales increase versus prior year. Actions taken in 2003 and earlier, to reduce the Company’s operating costs and enhance productivity are the primary drivers of this favorable operating leverage.
facility.
nine months of 2003.
Capital expenditures in the first halfnine months of 2004 were $2.4$3.4 million versus $1.7$2.2 million last year. Current year expenditures are consistent with the Company’s historical maintenance capital requirements. We expect second halftotal 2004 capital expenditures to be similar to the first six-month level.approximately $4.5 million. The Company purchased it’sits former partner’s equity interest in a Mexico joint venture for $1.6 million effective January 1, 2004.
Required |
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Debt-to-Capital Ratio | <0.55 |
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| 0.39 | |||
Working Capital-to-Debt Ratio | >1.00 |
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| 1.55 | |||
Minimum Equity Value | $105.8 Million | $ |
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All current
Commitments and Contingencies
Item 4. Controls and Procedures:
A review and evaluation was performedinformation required to be disclosed by the Company’s management, includingCompany in reports that it files or submits under the Company’s Chief Executive Officer (the "CEO")Securities Exchange Act of 1934 is recorded, processed, summarized and Chief Financial Officer (the "CFO"),reported within the time periods specified in SEC rules and forms.
There have beenControl over Financial Reporting.
Part II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of the Security Holders
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Director | For | Withheld | Abstaining |
Edward F. Culliton | 14,061,821 | 37,530 | ¾ |
William K. Hall | 14,067,255 | 37,098 | ¾ |
Robert S. Hamada | 13,742,282 | 357,070 | ¾ |
Patrick J. Herbert | 13,742,319 | 357,033 | ¾ |
John W. McCarter, Jr. | 13,742,281 | 357,070 | ¾ |
John McCartney | 14,062,255 | 46,616 | ¾ |
G. Thomas McKane | 14,052,736 | 46,616 | ¾ |
John W. Puth | 13,740,450 | 358,901 | ¾ |
Michael Simpson | 12,986,479 | 1,112,873 | ¾ |
(c) At the Annual Meeting the Stockholders ratified and adopted:
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Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 31.1 Certification Pursuant to Section 302 by CEO
Item 6. | Exhibits and Reports on Form 8-K |
(a) | Exhibit 31.1 Certification Pursuant to Section 302 by CEO |
(b) The Company filed a Form 8-K, dated April 5, 2004, on April 5, 2004 in connection with the Company
dissemination of the Company's press release of first quarter results.
(b) | ||
The Company filed a Form 8-K, dated August 3, 2004, on August 3, 2004 under Item 12 the Company dissemination of the Company’s press release of second quarter results. |
The Company filed a Form 8K, dated September 15, 2004 on September 15, 2004 reporting under Item 7.01 the Company’s dissemination of a press release relating to the outlook for the second half of year sales. |
The Company filed a Form 8K, dated September 24, 2004 on September 24, 2004 reporting under Item 5.02 the retirement of the CFO and the election of the new CFO of the Company. |
SIGNATURES
A. M. Castle & |
(Registrant) |
Date: | November 5, 2004 | By: | /s/ Lawrence A. Boik | |
| Lawrence A. Boik | |||
Vice President and Chief Financial Officer | ||||
(Mr. Boik is the Chief Accounting Officer and has been authorized to sign on behalf of the Registrant.) |
Exhibit 31.1
1. | I have reviewed this quarterly report on Form 10-Q of A. M. Castle & Co.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report: |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or cause such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
c) | Disclosed in this report any changes in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
| Any fraud, whether or not material, that involves management or other employees who have a sisignificant role in the registrant's internal control over financial reporting. |
Date: | November 5, 2004 | By: | /s/ G. Thomas McKane | |
G. Thomas McKane | ||||
President and Chief Executive Officer |
Exhibit 31.2
CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Edward F. Culliton,Lawrence A. Boik, certify that:
| I have reviewed this quarterly report on Form 10-Q of A. M. Castle & Co.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report: |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or cause such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
c) | Disclosed in this report any changes in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a sisignificant role in the registrant's internal control over financial reporting. |
Date: | November 5, 2004 | By: | /s/ | |
| Lawrence A. Boik | |||
Vice President and Chief Financial Officer |
Exhibit 32.1
(1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. |
By: | /s/ G. Thomas McKane | |||
G. Thomas McKane | ||||
President and Chief Executive Officer | ||||
| November 5, 2004 |
Exhibit 32.2
(1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. |
By: | /s/ | |||
| Lawrence A. Boik | |||
Vice President and Chief Financial Officer | ||||
| November 5, 2004 |