Back to GetFilings.com
United States
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended November 30, 1993 OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number 1-9102
AMERON, INC.
(Exact name of registrant as specified in its charter)
Delaware 77-0100596
(State of Incorporation) (I.R.S. Employer Identification No.)
245 South Los Robles Avenue
Pasadena, CA 91101
(Address and Zip Code of principal executive offices)
Registrant's telephone number, including area code: (818) 683-4000
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
Name of each exchange
Title of each class on which registered
---------------------------- ---------------------
Common Stock $2.50 par value New York Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: None
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 by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. x
---
The Registrant estimates that as of February 9, 1994 the aggregate market
value of the shares of its Common Stock, $2.50 par value, held by non-affiliates
of the Registrant (that is, shares beneficially owned by other than executive
officers and directors) was in excess of $137 million.
On February 9, 1994 there were 3,893,748 shares of Common Stock, $2.50 par
value outstanding. This is the only class of Common Stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
1. PORTIONS OF AMERON'S 1993 ANNUAL REPORT TO STOCKHOLDERS (PARTS I, II AND
IV).
2. PORTIONS OF AMERON'S PROXY STATEMENT FOR THE 1994 ANNUAL MEETING OF
STOCKHOLDERS (PART III).
PART 1
AMERON, INC.
AMERON, INC., a Delaware corporation, and its consolidated subsidiaries are
collectively referred to herein as "Ameron", the "Company", the "Registrant" or
the "Corporation" unless the context clearly indicates otherwise. The business
of the Company has been divided into business segments in Item 1(c)(1).
Substantially all activities relate to the manufacture and supply of goods and
services to the industrial, utility, marine and construction markets. All
references to "the year" or "the fiscal year" pertain to the twelve months ended
November 30, 1993. All references to the "Annual Report" pertain to the
Company's 1993 Annual Report to Stockholders.
ITEM 1 - BUSINESS
(A) GENERAL DEVELOPMENT OF BUSINESS.
Although the Company's antecedents date back to 1907, it evolved directly
from the merger of two separate firms in 1929, resulting in the
incorporation of American Concrete Pipe Co. on April 22, 1929. Various
name changes occurred between that time and 1942, at which time the
Company's name became American Pipe and Construction Co. By the late 1960s
the Company was almost exclusively engaged in manufacturing and had
expanded its product lines to include not only concrete and steel pipe but
also high-performance protective coatings, ready-mix concrete, aggregates
and reinforced thermosetting resin pipe and fittings.
At the beginning of 1970, the Company's name was changed to Ameron, Inc.
In the meantime, other manufactured products had been added to its product
lines. These included concrete and steel poles for street and area
lighting, and tapered steel vertical and cantilevered poles for traffic
signals. In 1984, the Company acquired a major domestic fiberglass pipe
business, including a manufacturing plant in Burkburnett, Texas, and
certain trade names and patent rights. In 1988, the Company expanded its
ability to serve the water transmission and distribution market through the
acquisition of a major steel pipe fabricating facility in Fontana,
California.
Further details or commentary on the year's operations can be found in the
Annual Report, which is Exhibit 13 to this report on Form 10-K, and which
should be read in conjunction with this report.
(B) FINANCIAL INFORMATION AS TO INDUSTRY SEGMENTS.
The information contained in Notes (1), (4) and (14) of Notes to
Consolidated Financial Statements on pages 38, 39, 43, 46 and 47 of the
Annual Report is incorporated herein by reference.
(C) NARRATIVE DESCRIPTION OF BUSINESS.
(1) For geographical and operational convenience, the Company is
organized into divisions. These divisions are combined into the
following groups serving the following-described industry segments.
a) The Protective Coatings Systems group develops, manufactures
and markets high-performance coatings and surfacer systems on
a world-wide basis. These products are utilized for the
preservation of major structures, such as metallic and
concrete facilities and equipment, to prevent their
degradation by corrosion, abrasion, marine fouling and other
forms of chemical and physical attack. The primary markets
served include marine, offshore, petrochemical, power
generation, petroleum, chemical, steel, pulp and paper,
railroad, bridges, mining, metal processing and original
equipment manufacturing. These products are marketed by
direct
sales, as well as through manufacturers' representatives,
distributors and licensees. Competition is based upon
quality, price and service. Manufacture of these products is
carried out in the Company's plants in California and
Arkansas, by a wholly-owned subsidiary in The Netherlands, by
jointly-owned operations in Mexico and Saudi Arabia and by
various third party licensees. The Company licenses its
patents, trademarks, know-how and technical assistance to
various of its subsidiary and affiliated companies and to
various third party licensees.
b) The Fiberglass Pipe Systems group develops, manufactures and
markets filament-wound and molded fiberglass pipe and
fittings. These products are used by a wide range of process
industries, including industrial, petroleum, chemical
processing and petrochemical industries, for service station
replacement piping systems, aboard marine vessels and on
offshore oil platforms, and are marketed as an alternative to
metallic piping systems which ultimately fail under corrosive
operating conditions. These products are marketed by direct
sales, as well as through manufacturers' representatives,
distributors and licensees. Competition is based upon
quality, price and service. Manufacture of these products is
carried out in the Company's plants in Texas and South
Carolina, by wholly-owned subsidiaries in The Netherlands and
Singapore, and by a jointly-owned affiliate in Saudi Arabia.
c) The Concrete and Steel Pipe Systems group supplies products
and services used in the construction of pipeline facilities
for various utilities. Eight plants are located in three of
the continental western states. These plants manufacture
concrete cylinder pipe, prestressed concrete cylinder pipe,
steel pipe and reinforced concrete pipe for water
transmission, storm and industrial waste water and sewage
collection. These products are marketed by direct selling
using the Company's own personnel and by competitive bidding.
Customers include local, state and federal agencies,
developers and general contractors. Normally no one customer
or group of customers will account for sales equal to or
greater than 10 percent of the Company's consolidated revenue.
However, occasionally, when more than one unusually large
project is in progress, combined sales to all U.S. government
agencies and/or general contractors for those agencies can
reach those proportions. Besides competing with several other
concrete pipe manufacturers located in the market area,
alternative products such as ductile iron, asbestos cement,
and clay pipe compete with the Company's concrete and steel
pipe products, but ordinarily these other materials do not
offer the full diameter range produced by the Company.
Principal methods of competition are price, delivery schedule
and service. The Company's technology is used in the Middle
East through affiliated companies whose activities are not
reflected in the amounts reported for this industry segment.
This segment also includes the manufacturing and marketing on
a world-wide basis through direct sales of polyvinyl chloride
sheet lining for the protection of concrete pipe and cast-in-
place concrete structures from the corrosive effects of sewer
gases, acids and industrial chemicals. Competition is based
on quality, price and service. Manufacture of this product is
carried out in the Company's plant in California. This
segment also includes engineered design, fabrication and
direct sale of specialized proprietary equipment which is
outside the regular business of the other segments of the
Company's businesses. Competition for such work is based upon
quality, price and service. Manufacture of such equipment is
carried out in the Company's plant in California.
d) The Construction & Allied Products group includes the HC&D
division, which suppllies ready-mix concrete, crushed and
sized basaltic aggregates, dune sand, concrete pipe and box
culverts, primarily to the construction industry in Hawaii.
These products are marketed through direct sales. Ample raw
materials are available locally in Hawaii and, as to rock
products, the
2
Company has exclusive rights to a quarry containing many
years' reserves. Within the market area there are competitors
for each of the segment's products. No single competitor
offers the full range of products sold by the Company in
Hawaii. The principal methods of competition are in price and
service, since an appreciable portion of the segment's
business is obtained through competitive bidding.
This segment also includes the operations of the Pole Products
& Systems division, which manufactures and markets concrete
and steel poles for highway, street and outdoor area lighting
and for traffic signals. Sales are nationwide, but with a
stronger concentration in the western states. Marketing is
handled by the Company's own sales force and by outside sales
agents. Competition for such products is mainly based on
price, but with some consideration for service and delivery.
Manufacture of these products is carried out in in two plants
in California, as well as plants in Washington and Oklahoma.
e) Except as individually shown in the above descriptions of
industry segments, the following comments or situations apply
to all segments:
(i) Because of the number of manufacturing locations and the
variety of raw materials essential to the business, no
critical situations exist with respect to supply of
materials. The Company has multiple sources for raw
materials. A program continues in operation to minimize
any potential effect which may be anticipated to result
from any foreseeable inadequacy of energy supplies. The
effects of increases in costs of energy are being
mitigated to the extent practical through conservation and
through addition or substitution of equipment to manage
the use and reduce consumption of energy.
(ii) The Company owns certain patents and trademarks, both U.S.
and foreign, related to its products. It licenses these
proprietary items to some extent in the U.S., and to a
greater degree abroad. These patents, trademarks, and
licenses do not constitute a material portion of the
Company's business. No franchises or concessions exist.
(iii) Many of the Company's products are used in connection with
capital goods, water and sewage transmission and
construction of capital facilities. Favorable or adverse
effects on general sales volume and earnings can result
from weather conditions. Normally, sales volume and
earnings will be lowest in the first fiscal quarter,
seasonal effects typically accelerate or slow the
business volume and normally do not bring about severe
changes in full-year activity.
(iv) With respect to working capital items, the Company does
not encounter any requirements which are not common to
other companies engaged in the same industries. No
unusual amounts of inventory are required to meet seasonal
delivery requirements. All of the Company's industry
segments turn their inventory between four and eleven
times annually. Average days' sales in accounts
receivable range between 39 and 81 for all segments.
3
(v) The value of backlog orders at November 30, 1993 and 1992
by industry segment is shown below. Substantially all of
the November 30, 1993 backlog is expected to be billed and
recorded as sales during the year 1994.
Industry Segment 1993 1992
---------------- --------- ---------
(In thousands)
Protective Coatings Systems $13,754 $ 9,059
Fiberglass Pipe Systems 14,507 40,243
Concrete and Steel Pipe Systems 40,658 62,685
Construction & Allied Products 11,903 17,896
------- -------
Total $80,822 $129,883
------- -------
------- -------
Backlog at November 30, 1993 declined 37.8% from the prior
year's level. The $25.7 million decrease in the Fiberglass
Pipe Systems segment reflects the completion of several
large crude oil projects overseas. The lower backlog of the
Concrete and Steel Pipe Systems segment resulted from a
decline in public spending for large water transmission
systems and reduced construction activity in the Company's
geographic markets. Backlog declined in the Construction
and Allied Products segment because of reduced construction
activity in Hawaii. The increase in backlog for the
Protective Coatings Systems segment reflects an increase in
overseas project orders.
(vi) There was no significant change in competitive conditions or
the competitive position of the Company in the industries
and localities in which it operates. There is no knowledge
of any single competitive situation which would be material
to an understanding of the business.
(vii) Sales contracts in all of the Company's business segments
normally consists of purchase orders, which in some cases
are issued pursuant to master purchase agreements. Longer
term contracts seldom involve commitments of more than one
year by the Company, and exceptions are not deemed material
by management. Payment is normally due from 30 to 60 days
after shipment, with progress payments prior to shipment in
some circumstances. It is the Company's practice to require
letters of credit prior to shipment of foreign orders,
subject to limited exceptions. The Company does not
voluntarily extend long-term credit to purchasers of its
products.
(2) a) Approximate expense during each of the last three fiscal years
for Research and Development costs is shown under the caption
in Note (1) of Notes to Consolidated Financial Statements on
page 38 of the Annual Report, which information is incoporated
herein by reference.
b) The Corporation's business is not dependent on any single
customer or few customers, the loss of any one or more of whom
would have a material adverse effect on its business.
c) For many years the Corporation has been consistently
installing or improving devices to control or eliminate the
discharge of pollutants into the environment. Accordingly,
compliance with federal, state, and locally enacted provisions
relating to protection of the environment is not having, and
is not expected to have, a material effect upon the
Corporation's capital expenditures, earnings, or competitive
position.
4
d) At year-end the Corporation and its consolidated subsidiaries
employed approximately 2,868 persons. Of those, approximately
1,340 were covered by labor union contracts, and there are six
separate bargaining agreements subject to renegotiation in
1994. Management does not presently anticipate a strike or
other labor disturbance in connection with renegotiation of
these agreements; however, the possibility of such an
occurrence exists.
(D) FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS AND EXPORT
SALES.
The information contained in Notes (4) and (14) of Notes to Consolidated
Financial Statements on pages 39, 43, 46 and 47 of the Annual Report is
incorporated herein by reference.
Export sales in the aggregate from domestic operations during the last
three fiscal years were:
In thousands
------------
1993 $12,687
1992 9,663
1991 12,523
ITEM 2 - DESCRIPTION OF PROPERTY
(A) The location and general character of principal plants and other materially
important physical properties used in the Company's operations is tabulated
below. Property is owned in fee except where otherwise indicated by
footnote. In addition to the property shown, the Company owns vacant land
adjacent to or in the proximity of some of its operating locations and
holds this property available for use when it may be needed to accommodate
expanded or new operations. Property listed does not include any temporary
project sites which are generally leased for the duration of the respective
projects. With the exception of the Kailua, Oahu property, shown under the
Construction & Allied Products industry segment, there are no material
leases with respect to which expiration or inability to renew would have
any material adverse effect on the Company's operations. The lease term on
the Kailua property extends to the year 2012. This is the principal source
of quarried rock and aggregates for the Company's operations on Oahu,
Hawaii and, in management's opinion, reserves are adequate for its
requirements during the term of the lease.
(B) The Company believes that its existing facilities are adequate for current
and presently foreseeable operations. Because of the cyclical nature of
certain of the Company's operations, and the substantial amounts involved
in some individual orders, the level of utilization of particular
facilities may vary significantly from time to time in the normal course of
operations.
INDUSTRY SEGMENT - GROUP
Division - Location Description
------------------- -----------
PROTECTIVE COATINGS SYSTEMS
Protective Coatings Systems division - USA
Brea, CA Office, Plant, Laboratory
Little Rock, AR Office, Plant
Ameron B.V.
Geldermalsen, The Netherlands Office, Plant
5
FIBERGLASS PIPE SYSTEMS
Fiberglass Pipe Systems division - USA
Burkburnett, TX Office, Plant
Spartanburg, SC Plant
Ameron B.V.
Geldermalsen, The Netherlands Office, Plant
Ameron (Pte) Ltd.
Singapore *Office, Plant
CONCRETE AND STEEL PIPE SYSTEMS
Southern Division
Rancho Cucamonga, CA *Office
Etiwanda, CA Plant
Lakeside, CA Plant
South Gate, CA Plant
Palmdale, CA Plant
Phoenix, AZ Office, Plant
Northern Division
Tracy, CA Office, Plant
Portland, OR Office, Plant
Steel Fabrication division
Fontana, CA *Office, Plant
Protective Linings division
Brea, CA Office, Plant
Fabrication Plant
South Gate, CA Office, Plant
CONSTRUCTION & ALLIED PRODUCTS
HC&D division
Honolulu, Oahu, HI *Office, Plant
Kailua, Oahu, HI *Plant, Quarry
Barbers Point, Oahu, HI *Plant
Puunene, Maui, HI *Office, Plant, Quarry
Pole Products & Systems division
Fillmore, CA Office, Plant
Oakland, CA *Plant
Everett, WA *Office, Plant
Tulsa, OK *Office, Plant
6
CORPORATE
Corporate Headquarters
Pasadena, CA *Office
Corporate Research & Engineering
South Gate, CA Office, Laboratory
*Leased
ITEM 3 - LEGAL PROCEEDINGS
On August 22, 1988, Fontana Pipe and Fabrication, Inc. filed a civil lawsuit
against the Company in the United States District Court, District of Oregon.
The action stemmed from the purchase by the Company in 1988 of the assets of a
steel fabrication plant located in Fontana, California which had been owned by
Kaiser Steel Corporation. The amounts claimed by the plaintiff were
substantial. The case went to trial in October, 1989 and resulted in a judgment
in favor of the Company. Following two appeals to the Ninth Circuit Court of
Appeals by plaintiff, this lawsuit was settled in September 1993 on terms deemed
to be favorable to the Company.
On January 24, 1992, the Central Arizona Water Conservation District ("CAWCD")
filed an action for damages against several parties, including the Company, in
United States District Court, District of Arizona, in connection with six
prestressed concrete pipe siphons furnished and installed in the 1970's as part
of the Central Arizona Project ("CAP"), a federal project to bring water from
the Colorado River to Arizona. The CAWCD also filed separate actions against
the U.S. Bureau of Reclamation ("USBR") in the United States Claims Court and
with the Arizona Projects Office of the USBR in connection with the CAP siphons.
The CAWCD alleges that the six CAP siphons are defective and that the USBR and
the defendants in the U.S. District Court action are liable for the repair or
replacement of those siphons at a claimed estimated cost of $146.7 million. The
Company has internally, as well as through independent third party consultants,
conducted engineering analyses regarding this issue and believes that the
siphons were manufactured in accordance with the project specifications and
other contract requirements, and therefore it is not liable for any claims
relating to the siphons. The Company has recorded reserves that it believes are
adequate to cover costs associated with the Company's vigorous defense of its
position in this matter. The Company and its legal counsel believe that it has
meritorious defenses to this action and that resultant liability, if any, should
not have a material adverse effect on the financial position of the Company and
its results of operations.
On July 22, 1992, the Company was served with a complaint in an action brought
by the City and County of San Francisco ("CCSF") in Superior Court, County of
San Francisco, State of California against the Company and two co-defendants, in
connection with a pipeline referred to as San Andreas Pipeline No. 3, a water
transmission pipeline that was installed between 1980 and 1982. The Company
furnished the pipe used in that pipeline. In its complaint, plaintiff alleges
that the pipeline is defective and seeks damages of approximately $44 million to
replace the entire pipeline. The Company has recorded reserves that it believes
are adequate to cover costs associated with the Company's vigorous defense of
its position in this matter. The Company believes that it has meritorious
defenses to this action and that resultant liability, if any, should not have a
material adverse effect on the financial position of the Company and its results
of operations.
In addition, certain other claims, suits and complaints, which arise in the
ordinary course of business, have been filed or are pending against the Company.
Management believes that these matters, and the matters discussed above, are
either adequately reserved, covered by insurance, or would not have an adverse
7
material effect on the financial position of the Company and its results of
operations if disposed of unfavorably.
The Company is also subject to federal, state and local laws and regulations
concerning the environment and is currently participating in administrative
proceedings at several sites under these laws. It is difficult to estimate with
any certainty the total cost of remediation, the timing and extent of remedial
actions required by governmental authorities, and the amount of the Company's
liability, if any, in proportion to that of other potentially responsible
parties. While the Company finds it difficult to estimate with any certainty
the total cost of remediation at the several sites which are subject to
environmental regulatory proceedings, on the basis of currently available
information, the Company does not believe it likely that the outcome of such
environmental regulatory proceedings will have a material adverse effect on the
Company's financial position or its results of operations. This conclusion is
based on the location and type of contamination of each site, potential recovery
from insurance carriers and existing reserves. When it has been possible to
reasonably estimate the Company's liability with respect to these matters,
provisions have been made as appropriate.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(Not Applicable)
ITEM 4A - EXECUTIVE OFFICERS OF THE REGISTRANT
The following sets forth information with respect to individuals who served as
executive officers as of November 30, 1993 and who are not directors of the
Company. All executive officers are appointed by the Board of Directors to
serve at the discretion of the Board of Directors.
Name Age Title and Year Elected as Officer
- ------------------- --- --------------------------------------------
George J. Fischer 59 Senior Vice President, Human Resources 1992
Gordon G. Robertson 54 Senior Vice President, Technology 1992
James F. Slatic 62 Group Vice President 1989
Javier Solis 47 Senior Vice President of Administration,
Secretary & General Counsel 1984
Robert P. Steinkamp 47 Vice President, Manufacturing &
Environmental Affairs 1992
S. Daniel Stracner 47 Vice President, Communications &
Public Affairs 1993
Gary Wagner 42 Senior Vice President & Chief Financial
Officer, Treasurer 1990
8
All of the executive officers named above have held high level managerial or
executive positions with the Company for more than the past five years except
Mr. Steinkamp, who joined the Company in 1990 as Corporate Director of
Manufacturing and in 1992 was named Vice President, Manufacturing. He was
previously with Dayton Superior Corporation since 1982 where he was Vice
President, Northern Division and in 1987 Vice President, Operations.
PART II
ITEM 5 - MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
The Common Stock, $2.50 Par Value, of the Corporation, its only outstanding
class of common equity, is traded on the New York Stock Exchange, the only
exchange on which it is presently listed. On February 9, 1994, there were 1,925
stockholders of record of such stock.
Dividends have been paid each quarter during the prior two years and for many
years in the past. Information as to the amount of dividends paid during the
reporting period and the high and low sales prices of the Corporation's Common
Stock during that period are set out under the caption Per Share Data shown on
page 44 of the Annual Report, which information is incorporated herein by
reference.
Terms of lending agreements which place restrictions on cash dividends are
discussed in Note (9) of Notes to Consolidated Financial Statements on page 42
of the Annual Report, which is incorporated herein by reference.
ITEM 6 - SELECTED FINANCIAL DATA
The information required by this item is contained in the Selected Consolidated
Financial Information shown on page 29 of the Annual Report, which information
is incorporated herein by reference.
ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The information required by this item with respect to fiscal years 1993 and 1992
is shown under Ameron 1993 Financial Review on pages 30-32 of the Annual Report,
which information is incorporated herein by reference. The information required
for 1991 is as follows:
9
RESULTS OF OPERATIONS-1991 COMPARED WITH 1990
SALES. During 1991, sales rose 4.3 percent to $465 million. The higher
revenues were attributable primarily to sales of steel pipe, protective coatings
and linings, and fiberglass pipe products.
Protective coatings and linings sales were higher than in 1990, due principally
to the addition of operations in the United Kingdom and Spain, and increased
marine coatings sales to a United States government agency. However, domestic
and Canadian sales of industrial protective coatings were flat, reflecting
continued recessionary conditions in several markets. The European protective
coatings operation was impacted by the delay in the start-up of the next phase
of a large North African project, which resumed in 1992.
Sales of fiberglass pipe products increased because of continued strong domestic
demand for service station rehabilitation piping systems, and increased
deliveries to North Africa and the Middle East resulting from petroleum-related
and infrastructure development in those regions.
Concrete and steel pipe sales were higher than last year, due mainly to welded
steel pipe sold to two major water projects in Southern California, and sales of
prestressed concrete pipe for a large tunnel liner project. However, the
Company's concrete pipe operations were impacted by the economic downturn and
competitive pricing pressures, as well as limitations imposed by certain water
agencies on the utilization of prestressed concrete cylinder pipe as a result of
problems encountered with several pipelines in the United States. In addition,
at the beginning of 1992, the Central Arizona Water Conservation District filed
an action for damages in connection with six prestressed concrete pipe siphons
furnished and installed in the 1970s as part of the Central Arizona Project.
The Company's technical staff is working with water agencies and other concrete
pipe manufacturers to determine solutions to the pipeline problems. Although
near term revenues from this product are expected to be reduced, demand
increased in 1991 for welded steel pipe throughout California, thus offsetting
much of the effect of the drop-off in sales of prestressed concrete cylinder
pipe.
Construction product sales declined from 1990, due primarily to a decrease in
activity for both concrete and steel pole products as a result of delays in
public spending and the sharp drop-off in housing starts and construction.
Partially offsetting the reduced pole products sales were moderate gains by the
construction products operations in Hawaii, which continued to experience high
demand for ready-mix concrete and aggregates in both commercial and public
sector markets.
GROSS PROFIT. The gross profit margin decreased by .7 percent to 25.5 percent
in 1991. Profit margins on sales of protective coatings and linings increased
because of improved product pricing achieved by the domestic industrial and
marine coatings operations. Higher margins on fiberglass pipe product sales
were attributable to manufacturing efficiencies stemming from higher production
volumes and better pricing on fiberglass pipe products sold abroad. The decline
in construction activity during 1991 furthered price competition and lowered
production volumes at several of the concrete pipe operations, causing overall
margins on concrete pipe products to decrease. Construction products profit
margins declined as a result of significant price competition in steel traffic
and lighting pole markets and increased manufacturing costs resulting from lower
production volumes, as well as price competition for ready-mix concrete in
Hawaii.
10
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses were higher than in 1990, due mainly to the addition of
the British and Spanish protective coatings operations, which were not included
in the 1990 consolidated results. Other factors affecting selling, general and
administrative expenses include increased costs associated with the expansion of
marine and protective coatings marketing activities, legal expenses, and
additional provisions for insurance, doubtful accounts, and other contingencies.
INTEREST EXPENSE. Interest expense increased marginally in 1991, due
principally to slightly higher borrowing levels maintained throughout the year.
WRITE DOWN OF ASSETS AND RESTRUCTURING COSTS. The Company recorded
repositioning costs of approximately $5.6 million and wrote down related fixed
assets of approximately $8.9 million after an in-depth evaluation by management
of the long-term profitability and rate of return on investment potential for
each of the Company's major product lines. Based on this evaluation, management
determined that the Company's overall long-term rate of return could be
increased if certain facilities were consolidated and if capital and management
were redeployed among certain product lines to those with the greatest long-term
potential. As a result, management decided to de-emphasize certain product
lines and promote and emphasize alternative products that it considered to be
more viable and technologically appropriate on a long-term basis. The Company's
restructuring activities were also a further response to the lingering effects
of the domestic recession and shifting of the Company's productive capabilities
to lower cost, more competitive products.
GAIN FROM SALE OF ASSETS. During the fourth quarter of 1991, the Company sold,
under the threat of condemnation, its headquarters facility for $21 million,
resulting in a pre-tax gain of $15 million.
OTHER INCOME. Royalties and fees from affiliated companies were higher than
last year because of the increased level of sales activity at licensees and
foreign affiliated companies. Gains from foreign currency transactions compared
favorably to the prior year's losses, reflecting the strength of the U.S. dollar
against the Dutch guilder and the Canadian dollar. Other income includes a
legal settlement of $770,000 received from resolution of a prior class action
lawsuit.
EQUITY IN LOSSES OF AFFILIATED COMPANIES. Equity in losses of jointly-owned
affiliated companies was primarily the result of economic downturns experienced
by several of the affiliates. The losses of Gifford-Hill-American, Inc., a 50-
percent-owned concrete pressure pipe manufacturer, reflect ongoing weak demand
in the Texas concrete pipe market, coupled with the bankruptcy loss of Gifford-
Hill-American's wholly-owned "Lock-Joint" subsidiary. Tamco, a 50-percent-
owned steel mini-mill, also reported lower operating results due to the downturn
in construction activity in California, while Ameron Saudi Arabia, Ltd., endured
the effects of the Gulf War. Partially offsetting these declines were the
improved performance of both Oasis-Ameron, Ltd. and Bondstrand, Ltd., which
benefitted from increased demand for protective coatings and fiberglass pipe,
respectively, in Saudi Arabia.
ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA
The Consolidated Financial Statements, the report thereon of Arthur Andersen &
Co. dated January 13, 1994, Notes to Consolidated Financial Statements and
Quarterly Financial Data, comprising pages 33 through 47 of the Annual Report,
are incorporated herein by reference.
11
ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
(Not applicable)
PART III
ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS
Information with respect to the directors is contained under the section
entitled, "Election of Directors" in the Corporation's Proxy Statement which was
filed on February 25, 1994 in connection with the Annual Meeting of Stockholders
to be held on March 28, 1994. Such information is incorporated herein by
reference.
Information with respect to the executive officers of the Corporation is located
in Part I, Item 4A of this report.
ITEM 11 - EXECUTIVE COMPENSATION*
ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT*
ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS*
*The information required by Items 11, 12 and 13 is contained in the
Corporation's Proxy Statement which was filed on February 25, 1994 in connection
with the 1994 Annual Meeting of Stockholders to be held on March 28, 1994. Such
information is incorporated herein by reference.
12
PART IV
ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS
ON FORM 8-K
(A) (1) FINANCIAL STATEMENTS:
The financial statements to be filed hereunder are
cross-referenced, in the index immediately following, to the Annual
Report, as to sections incorporated herein by reference.
INDEX TO FINANCIAL STATEMENTS
Page Reference
Statement to Annual Report
--------- ----------------
Consolidated Balance Sheets at November 30, 1993
and 1992 34-35
Consolidated Statements of Operations for the years
ended November 30, 1993, 1992 and 1991 33
Consolidated Statements of Cash Flows for the years
ended November 30, 1993, 1992 and 1991 36
Consolidated Statements of Stockholders' Equity
for the years ended November 30, 1993, 1992 and 1991 37
Notes to Consolidated Financial Statements 38-43
(i) Summarized information as to the financial condition and
results of operations for Gifford-Hill-American, Inc., Ameron
Saudi Arabia, Ltd., Bondstrand, Ltd, Oasis-Ameron, Ltd. and
Tamco are presented in Note (4) of Notes to Consolidated
Financial Statements on page 39 of the Annual Report, which
information is incorporated herein by reference.
(A) (2) FINANCIAL STATEMENT SCHEDULES:
The following additional financial data should be read in
conjunction with the consolidated financial statements in the 1993
Annual Report. Schedules not included with this additional
financial data have been omitted because they are either not
applicable, not required, not significant, or the required
information is provided in the consolidated financial statements or
notes thereto.
13
Pages of
Schedule Schedules of Ameron, Inc. and Subsidiaries This Report
-------- ------------------------------------------ -----------
Report of Independent Public Accountants 15
V Property, Plant and Equipment 16
VI Accumulated Depreciation of Property, Plant and Equipment 17
VIII Valuation and Qualifying Accounts and Reserves 18-20
IX Short Term Borrowings 21
X Supplementary Income Statement Information 22
Pages of
(A) (3) EXHIBITS This Report
-----------
3(i) Certificate of Incorporation 24
3(ii) Bylaws 25-35
4 Instrument Defining the Rights of Security Holders,
Including Indentures 36
10 Material Contracts 37-41
13 Annual Report 42
21 Subsidiaries of the Registrant 43
23 Consent of Independent Public Accountants 44
(B) REPORTS ON FORM 8-K
No report on Form 8-K was filed by the Corporation during the last quarter
of the fiscal year ended November 30, 1993.
14
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders and the Board of Directors, Ameron, Inc.:
We have audited in accordance with generally accepted auditing standards, the
consolidated financial statements included in Ameron, Inc.'s Annual Report to
Stockholders incorporated by reference in this Form 10-K, and have issued our
report thereon dated January 13, 1994. Our audits were made for the purpose of
forming an opinion on those statements taken as a whole. The schedules listed
in the index above are the responsibility of the Company's management and are
presented for purposes of complying with the Securities and Exchange
Commission's rules and are not part of the basic financial statements. These
schedules have been subjected to the auditing procedures applied in the audits
of the basic financial statements and, in our opinion, fairly state in all
material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.
ARTHUR ANDERSEN & CO.
Los Angeles, California
January 13, 1994
15
AMERON, INC. AND SUBSIDIARIES
SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT
(In thousands)
Retire-
ments,
Balance Write-
at Addi- Downs Balance
Begin- tions and at
ning at Cost Sales Other End
Classification of Year (a) (b) (c) of Year
================================ =========== =========== =========== =========== ===========
Year ended November 30, 1993
Land $ 21,457 $ 125 $ 37 $ (85) $ 21,460
Buildings 44,475 1,484 3,386 (362) 42,211
Machinery and equipment 201,604 14,230 29,531 4,769 191,072
Construction in progress 10,092 (1,142) 994 (592) 7,364
----------- ----------- ----------- ----------- -----------
$ 277,628 $ 14,697 $ 33,948 $ 3,730 $ 262,107
=========== =========== =========== =========== ===========
Year ended November 30, 1992
Land $ 20,177 $ 841 $ 95 $ 534 $ 21,457
Buildings 40,964 3,282 513 742 44,475
Machinery and equipment 184,630 17,933 1,224 265 201,604
Construction in progress 10,567 (1,029) 4 558 10,092
----------- ----------- ----------- ----------- -----------
$ 256,338 $ 21,027 $ 1,836 $ 2,099 $ 277,628
=========== =========== =========== =========== ===========
Year ended November 30, 1991
Land $ 16,736 $ 5,378 $ 1,631 $ (306) $ 20,177
Buildings 47,376 2,405 8,574 (243) 40,964
Machinery and equipment 181,853 15,726 13,852 903 184,630
Construction in progress 8,060 3,018 469 (42) 10,567
----------- ----------- ----------- ----------- -----------
$ 254,025 $ 26,527 $ 24,526 $ 312 $ 256,338
=========== =========== =========== =========== ===========
(a) Additions at cost are net of transfers from construction in progress.
(b) Property, plant and equipment write-offs and write-downs of original costs
associated with restructuring activities totaled $27,400 in 1993 and
$8,891 in 1991.
(c) Primarily the effect of the translation from foreign currencies to
U.S. dollars and reclassifications.
16
AMERON, INC. AND SUBSIDIARIES
SCHEDULE VI - ACCUMULATED DEPRECIATION OF PROPERTY, PLANT AND EQUIPMENT
(In thousands)
Addi-
Balance tions Retire-
at Charged ments Balance
Begin- to Costs and at
ning and Sales Other End
Classification of Year Expense (a) (b) of Year
================================ =========== =========== =========== =========== ===========
Year ended November 30, 1993
Buildings $ 23,052 $ 2,402 $ 2,249 $ (105) $ 23,100
Machinery and equipment 126,446 14,042 19,062 4,382 125,808
----------- ----------- ----------- ----------- -----------
$ 149,498 $ 16,444 $ 21,311 $ 4,277 $ 148,908
=========== =========== =========== =========== ===========
Year ended November 30, 1992
Buildings $ 21,900 $ 2,275 $ 224 $ (899) $ 23,052
Machinery and equipment 112,237 13,374 815 1,650 126,446
----------- ----------- ----------- ----------- -----------
$ 134,137 $ 15,649 $ 1,039 $ 751 $ 149,498
=========== =========== =========== =========== ===========
Year ended November 30, 1991
Buildings $ 23,899 $ 2,193 $ 4,089 $ (103) $ 21,900
Machinery and equipment 102,348 14,511 4,368 (254) 112,237
----------- ----------- ----------- ----------- -----------
$ 126,247 $ 16,704 $ 8,457 $ (357) $ 134,137
=========== =========== =========== =========== ===========
(a) Property, plant and equipment write-offs of accumulated depreciation
associated with restructuring activities totaled $16,285 in 1993.
(b) Primarily the effect of the translation from foreign currencies to
U.S. dollars and reclassifications.
17
AMERON, INC. AND SUBSIDIARIES
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE YEAR ENDED NOVEMBER 30, 1993
(In thousands)
Addi- Deduc-
tions tions,
Balance Charged Pay- Reclas-
at to ments sifica- Balance
Begin- Costs and tions at
ning and Write- and End
Classification of Year Expense offs Others of Year
===================== =========== =========== =========== =========== ===========
Deducted from asset accounts
Allowance for
doubtful accounts $ 5,614 $ 1,458 $ 2,296 $ (461) $ 4,315
Reserve for realization
of investments in
affiliates - $ 7,323 - - $ 7,323
Reserve for write-down
of assets related to
certain foreign
affiliates $ 8,632 $ 3,392 278 $ 244 $ 11,990
Included in current liabilities
Reserve for pending
claims and litigation $ 6,060 $ 6,523 $ 5,107 $ (288) $ 7,188
Restructuring reserve - $ 2,572 $ 246 $ 1,772 $ 4,098
Other reserves - $ 1,221 $ 339 $ 915 $ 1,797
Reserve for self-insured
programs $ 4,653 $ 11,432 $ 8,659 $ 115 $ 7,541
Included in long term liabilities
Reserve for pending
claims and litigation $ 2,257 $ 7,790 $ 842 $ 279 $ 9,484
Other reserves - $ 951 - $ 771 $ 1,722
Reserve for self-insured
programs $ 4,867 - - - $ 4,867
18
AMERON, INC. AND SUBSIDIARIES
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE YEAR ENDED NOVEMBER 30, 1992
(In thousands)
Addi- Deduc-
tions tions,
Balance Charged Pay- Reclas-
at to ments sifica- Balance
Begin- Costs and tions at
ning and Write- and End
Classification of Year Expense offs Others of Year
===================== =========== =========== =========== =========== ===========
Deducted from asset accounts
Allowance for
doubtful accounts $ 4,838 $ 1,705 $ 851 $ (78) $ 5,614
Reserve for write-down
of assets related to
certain foreign
affiliates $ 7,003 $ 1,629 - - $ 8,632
Included in current liabilities
Reserve for pending
claims and litigation $ 3,296 $ 4,149 $ 1,440 $ 55 $ 6,060
Reserve for self-insured
programs $ 3,769 $ 11,762 $ 10,278 $ (600) $ 4,653
Included in long term liabilities
Reserve for pending
claims and litigation $ 2,045 $ 511 $ 239 $ (60) $ 2,257
Reserve for self-insured
programs $ 3,962 - - $ 905 $ 4,867
19
AMERON, INC. AND SUBSIDIARIES
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE YEAR ENDED NOVEMBER 30, 1991
(In thousands)
Addi- Deduc-
tions tions,
Balance Charged Pay- Reclas-
at to ments sifica- Balance
Begin- Costs and tions at
ning and Write- and End
Classification of Year Expense offs Others of Year
===================== =========== =========== =========== =========== ===========
Deducted from asset accounts:
Allowance for
doubtful accounts $ 3,923 $ 1,404 $ 753 $ 264 $ 4,838
Reserve for write-down
of assets related to
certain foreign
affiliates $ 6,200 $ 712 - $ 91 $ 7,003
Included in current liabilities:
Reserve for pending
claims and litigation $ 2,200 $ 2,859 $ 3,163 $ 1,400 $ 3,296
Reserve for self-insured
programs $ 3,263 $ 12,698 $ 12,693 $ 501 $ 3,769
Included in long term liabilities:
Reserve for pending
claims and litigation $ 1,131 $ 620 $ 23 $ 317 $ 2,045
Reserve for self-insured
programs $ 4,266 - - $ (304) $ 3,962
20
AMERON, INC. AND SUBSIDIARIES
SCHEDULE IX - SHORT TERM BORROWINGS
(In thousands)
Maximum Average
Amount Amount Weighted
Out- Out- Average
stand- stand- Interest
Balance Weighted ing ing Rate
at Average During During During
Category of Aggregate End Interest the the the
Short Term Borrowings of Year Rate Year Year Year
=============================================== ========== ======= ========== ========== =========
Year ended November 30, 1993
Foreign $ 2,021 24.0% $ 3,179 $ 2,071 22.3%
Year ended November 30, 1992
Foreign $ 1,027 11.6% $ 15,884 $ 7,886 11.3%
Year ended November 30, 1991
Foreign $ 11,452 10.8% $ 17,157 $ 12,937 11.1%
The increased interest rates in 1993 reflect a higher
percentage of short-term borrowings owed by the
Company's Colombian subsidiary.
21
AMERON, INC. AND SUBSIDIARIES
SCHEDULE X
SUPPLEMENTARY INCOME STATEMENT INFORMATION
(In thousands)
FOR THE YEARS ENDED
NOVEMBER 30,
========================================
Item 1993 1992 1991
==================================== ============ ============ ============
Maintenance and repairs $ 18,632 $ 19,527 $ 21,912
22
Pursuant to the requirements of Section 13 or 15(d) 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.
AMERON, INC.
By: /s/Javier Solis
_______________________________________________
Javier Solis, Senior Vice President & Secretary
Date: February 25, 1994
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
Date: /s/James S. Marlen Chief Executive Officer, President
--------------------- and Director (Principal Executive
James S. Marlen Officer)
Date: /s/Gary Wagner Senior Vice President and Chief
--------------------- Financial Officer, Treasurer
Gary Wagner (Principal Financial and
Accounting Officer)
Date: /s/Donald H. Albrecht Director
---------------------
Donald H. Albrecht
Date: /s/Victor K. Atkins Director
---------------------
Victor K. Atkins
Date: /s/John F. King Director
---------------------
John F. King
Date: /s/William I. McKay Director
---------------------
William I. McKay
Date: /s/Richard J. Pearson Director
---------------------
Richard J. Pearson
Date: /s/Lawrence R. Tollenaere Director, Chairman of the Board
-------------------------
Lawrence R. Tollenaere
Date: ________________________________ Director
Robert Toxe
Date: ________________________________ Director
F. H. Fentener van Vlissingen
23