For Quarter Ended | or, |
For the transition period from | to |
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 | (I.R.S. Employer Identification No.) | |
incorporation of organization) |
3400 North Wolf Road, Franklin Park, Illinois | 60131 | ||
(Address of Principal Executive Offices) | (Zip Code) |
847/455-7111 |
None |
(Former name, former address and former fiscal year, if changed since last year) |
Class | Outstanding at | |
Common Stock, $0.01 Par Value |
Preferred Stock, No Par Value | ||
12,000 shares |
The accompanying notes are an integral part of these statements
The accompanying notes are an integral part of these statements
The accompanying notes are an integral part of these statements A. M. Castle & Co. Notes to (Unaudited)
The
New Accounting Standards—In In May 2003, the FASB issued SFAS No. 150 - "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity". This Statement provides guidance as to the appropriate classification of certain financial statement instruments that have characteristics of both liabilities and equity. This Statement was effective at the beginning of the first interim period after June 15, 2003. Adoption of this Statement has not had an impact on the Company's financial position or results of operations. In March 2003, the FASB issued Interpretation No. 46. This Interpretation of Accounting Research Bulletin No. 51, "Consolidated Financial Statements",
Earnings per common share are computed by dividing net income by the weighted average number of shares of common stock (basic) plus common stock equivalents (diluted) outstanding during the year. Common stock equivalents consist of stock options, restricted stock awards and preferred stock shares and have been included in the calculation of weighted average shares outstanding using the treasury stock method. In accordance with SFAS No. 128 "Earnings per Share", the following table is a reconciliation of the basic and fully diluted earnings per share calculations for the periods reported.
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 The sale of accounts receivable is reflected as a reduction of "accounts receivable, net" in the
During the first quarter of 2004 the The Company performs an annual impairment test on The changes in carrying amounts of goodwill were as follows(in thousands):
Effective January 1, 2004 the Company purchased the remaining joint venture partner's interest in Castle de Mexico, S.A. de C.V. for $1.6 million. Castle de Mexico is a distribution company, which targets a wide range of businesses within the durable goods sector throughout Mexico. The results of this entity, now a wholly owned subsidiary, have been consolidated in the Company's financial statements as of the effective date of the acquisition. On March 31, 2004, the Company’s wholly-owned subsidiary, Total Plastics Inc. (TPI), purchased the remaining 40% interest in its Paramont Machine Company subsidiary for $0.4 million. Paramont is a manufacturer of plastic parts and components which sells to a variety of businesses basically in the Midwest. Beginning on
Inventory determination under the Current replacement cost of inventories
Valuation Assumptions - As required, the Company has adopted the disclosure provisions of SFAS No. 148, "Accounting for Stock-Based Compensation - Transition and Disclosure", for the periods ended 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 Pro-Forma Income
The Company distributes and performs first stage processing on both The accounting policies of all segments are as described in the summary of The following is the segment information for the quarters ended
"Other" — Operating loss includes costs of executive and legal departments and other corporate activities which support both operating segments of the Company. The segment information for total assets at
"Other" — The segment's total assets consist solely of the Company's income tax receivable (the segments file a consolidated tax
|
The following are the components of the net pension and post-retirement benefit activities |
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 | ||||||||||||||||||||||||||||||||||||
Pension Benefits | Other Benefits | Total Benefits | March 31, | March 31, | March 31, | |||||||||||||||||||||||||||||||||
2004 | 2003 | 2004 | 2003 | 2004 | 2003 | 2005 | 2004 | 2005 | 2004 | 2005 | 2004 | |||||||||||||||||||||||||||
Service cost | $ | (1,782.6 | ) | $ | (1,530.0 | ) | $ | (87.0 | ) | $ | (67.8 | ) | $ | (1,869.6 | ) | $ | (1,597.8 | ) | $ | (685.9 | ) | $ | (594.2 | ) | $ | (34.6 | ) | $ | (29.0 | ) | $ | (720.5 | ) | $ | (623.2 | ) | ||
Interest cost | (4,344.3 | ) | (4,360.0 | ) | (114.3 | ) | (104.7 | ) | (4,458.6 | ) | (4,464.7 | ) | (1,548.3 | ) | (1,448.1 | ) | (44.7 | ) | (38.1 | ) | (1,593.0 | ) | (1,486.2 | ) | ||||||||||||||
Expected return on plan assets | 7,190.1 | 7,327.3 | — | — | 7,190.1 | 7,327.3 | ||||||||||||||||||||||||||||||||
Expected return on plan | 2,394.2 | 2,396.7 | — | — | 2,394.2 | 2,396.7 | ||||||||||||||||||||||||||||||||
Amortization of prior service cost | (50.7 | ) | (50.9 | ) | (35.7 | ) | (28.5 | ) | (86.4 | ) | (79.4 | ) | (15.8 | ) | (16.9 | ) | (11.9 | ) | (11.9 | ) | (27.7 | ) | (28.8 | ) | ||||||||||||||
Amortization of net (loss) gain | (1.098.9 | ) | (153.0 | ) | 7.2 | 21.0 | (1,091.7 | ) | (132.0 | ) | (614.7 | ) | (366.3 | ) | 0.1 | 2.4 | (614.6 | ) | (363.9 | ) | ||||||||||||||||||
Net periodic (cost) benefit | $ | (86.4 | ) | $ | 1,233.4 | $ | (229.8 | ) | $ | (180.0 | ) | $ | (316.2 | ) | $ | 1,053.4 | ||||||||||||||||||||||
Net periodic cost | $ | (470.5 | ) | $ | (28.8 | ) | $ | (91.1 | ) | $ | (76.6 | ) | $ | (561.6 | ) | $ | (105.4 | ) | ||||||||||||||||||||
11. | ||
Commitments and Contingent Liabilities |
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 |
2004 | 62.4 | 62.0 | 60.1 | 57.5 |
2005 | 55.6 |
Oct - Dec 2004 | 2005 | 2006 | 2007 | 2008 and Beyond | |
Required Principal Payments on Debt | $0.3 | $11.4 | $16.2 | $16.2 | $56.3 |
2005 | 2006 | 2007 | 2008 | 2009 and Beyond | ||||||||||||
Required Principal Payments on Debt | $ | 9.4 | $ | 16.4 | $ | 16.4 | $ | 19.3 | $ | 37.6 |
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 March 31, | Fav/(Unfav) | ||||||||||||
2005 | 2004 | Fav/ (Unfav | ) | % Change | |||||||||
Net Sales | |||||||||||||
Metals | $ | 220.0 | $ | 154.7 | $ | 65.3 | 42.2 | % | |||||
Plastics | 26.2 | 20.9 | 5.3 | 25.4 | |||||||||
Total Net Sales | $ | 246.2 | $ | 175.6 | $ | 70.6 | 40.2 | % | |||||
Gross Material Margin | |||||||||||||
Metals | $ | 64.3 | $ | 44.3 | $ | 20.0 | 45.1 | % | |||||
% of Metals | 29.2 | % | 28.6 | % | 0.6 | % | |||||||
Plastics | 8.6 | 6.9 | 1.7 | 24.6 | % | ||||||||
% of Plastics | 32.8 | % | 33.0 | % | (0.2 | )% | |||||||
Total Gross Material Margin | $ | 72.9 | $ | 51.2 | $ | 21.7 | 42.4 | % | |||||
% of Total Net Sales | 29.6 | % | 29.2 | % | 0.5 | % | |||||||
Operating Expense | |||||||||||||
Metals | $ | (43.4 | ) | $ | (38.3 | ) | $ | (5.1 | ) | 13.3 | % | ||
Plastics | (7.1 | ) | (5.9 | ) | (1.2 | ) | 20.3 | % | |||||
Other | (1.1 | ) | (1.1 | ) | — | — | |||||||
Total Operating Expense | $ | (51.6 | ) | $ | (45.3 | ) | $ | (6.3 | ) | 13.9 | % | ||
% of Total Net Sales | (21.0 | )% | (25.8 | )% | 4.8 | % | |||||||
Operating Income | |||||||||||||
Metals | $ | 21.0 | $ | 6.0 | $ | 15.0 | 250.0 | % | |||||
% of Metals Sales | 9.5 | % | 3.9 | % | 5.7 | % | |||||||
Plastics | 1.5 | 1.0 | 0.5 | 50.0 | % | ||||||||
% of Plastics Sales | 5.7 | % | 4.8 | % | 0.9 | % | |||||||
Other | (1.2 | ) | (1.1 | ) | (0.1 | ) | (9.1 | )% | |||||
Total Operating Income | $ | 21.3 | $ | 5.9 | $ | 15.4 | 261.0 | % | |||||
% of Total Net Sales | 8.7 | % | 3.4 | % | 5.3 | % |
*Otheræ 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 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% |
(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. |
Net Sales and Gross Material Margin Bridge | |||||||||||||
Nine Months Ending September 30, 2004 Vs. 2003 | |||||||||||||
(dollars in millions) | |||||||||||||
Net Sales | Gross Material Margin | ||||||||||||
Dollars | Percent | Dollars | Percent | ||||||||||
Nine Months Ended 9/30/03 | |||||||||||||
Metal | $ | 360.5 | 64.0 | % | $ | 103.6 | 62.9 | % | |||||
Plastic | 50.0 | 8.9 | % | 17.5 | 10.6 | % | |||||||
Total Company | $ | 410.5 | 72.9 | % | $ | 121.1 | 73.5 | % | |||||
Change YTD '04 Vs. '03 | |||||||||||||
Metal | |||||||||||||
Volume | $ | 58.7 | 14.3 | % | $ | 17.9 | 14.8 | % | |||||
Price | 70.0 | 17.1 | % | 14.2 | 11.6 | % | |||||||
Mix/Other | (5.8 | ) | -1.4 | % | 2.7 | 2.2 | % | ||||||
Mexico | 11.9 | 2.9 | % | 2.5 | 2.1 | % | |||||||
Impairment(2003 charge) | — | — | 1.5 | 1.2 | % | ||||||||
Total Metal | $ | 134.9 | 32.9 | % | $ | 38.8 | 32.0 | % | |||||
Plastic | 17.8 | 4.3 | % | 4.9 | 4.1 | % | |||||||
Total Company | $ | 152.7 | 37.2 | % | $ | 43.7 | 36.1 | % | |||||
Nine Months Ended 9/30/04 | |||||||||||||
Metal | $ | 495.4 | 88.0 | % | $ | 142.4 | 86.4 | % | |||||
Plastic | 67.8 | 12.0 | % | 22.4 | 13.6 | % | |||||||
Total Company | $ | 563.2 | 100.0 | % | $ | 164.8 | 100.0 | % |
Required | Actual | |
Debt-to-Capital Ratio | <0.55 | |
Working Capital-to-Debt Ratio | >1.00 | |
Minimum Equity Value | $ | $ |
(a) |
(b) | Changes in Internal Controls |
Item 1. | Legal Proceedings |
There are no material legal proceedings other than ordinary routine litigation incidental to the business of the Registrant except for the litigation. |
Item 6. | Exhibits and Reports on Form 8-K |
Exhibit 31.1 Certification Pursuant to Section 302 by CEO |
Exhibit 31.2 Certification Pursuant to Section 302 by CFO | ||
Exhibit 32.1 Certification Pursuant to Section 906 by CEO & CFO | ||
A. M. Castle & | ||
Date:May 5, 2005 | /s/ Henry J. Veith | ||||
Henry J. Veith Controller | |||||
(Mr. |
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 |
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 |
4. | The |
a) | Designed such disclosure controls and procedures, or |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the |
Disclosed in this report any changes in the |
5. | The |
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 |
b) | Any fraud, whether or not material, that involves management or other employees who have a |
Date: | May 5, 2005 | By: | /s/ G. Thomas McKane | |||
G. Thomas McKane | ||||||
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 |
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 |
4. | The |
a) | Designed such disclosure controls and procedures, or |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the |
Disclosed in this report any changes in the |
5. | The |
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 |
b) | Any fraud, whether or not material, that involves management or other employees who have a |
Date: | May 5, 2005 | By: | /s/ Lawrence A. Boik | |||
Lawrence A. Boik | ||||||
Vice President and Chief Financial Officer |
(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 |
/s/ G. Thomas McKane | ||||
G. Thomas McKane | ||||
Chairman and Chief Executive Officer | ||||
(Principal Executive Officer) | ||||
May 5, 2005 | ||||
/s/ Lawrence A. Boik | ||||
Lawrence A. Boik | ||||
Vice President and Chief Financial Officer | ||||
(Principal Financial Officer) | ||||