Part I -
Financial Information:
|
Page
No.
|
||
Item 1
–
|
Condensed
Consolidated Financial Statements
|
||
Condensed
Consolidated Balance Sheets –
June 30, 2008
and December 31, 2007
|
3
|
||
Condensed
Consolidated Statements of Operations –Six and Three Months Ended June 30,
2008 and 2007
|
4
|
||
Condensed
Consolidated Statements of Cash Flows –Six Months Ended June 30, 2008 and
2007
|
5
|
||
Notes to
Condensed Consolidated Financial Statements
|
6
|
||
Item 2
-
|
Management's
Discussion and Analysis of Financial Condition and Results of
Operations
|
16
|
|
Item 3
-
|
Quantitative
and Qualitative Disclosures about Market Risk
|
19
|
|
Item 4
–
|
Controls and
Procedures
|
19
|
|
Part II –
Other Information:
|
Item 1
-
|
Legal
Proceedings
|
20
|
||
Item 1A
-
|
Risk
Factors
|
20
|
||
Item
4
|
Submission of
Matters to a Vote of Security Holders
|
20
|
||
Item 6
-
|
Exhibits
|
20
|
||
Signatures
|
22
|
|||
Exhibit
Index
|
23
|
|||
Exhibits
|
||||
Exhibit
31.1
|
||||
Exhibit
31.2
|
||||
Exhibit
32.1
|
||||
Exhibit
32.2
|
||||
June
30,
|
December
31,
|
||||||
2008
|
2007
|
||||||
Assets
|
|||||||
Current
assets:
|
|||||||
Cash and cash
equivalents
|
$ | 19,139,567 | $ | 71,626,379 | |||
Short-term
marketable securities
|
51,080,121 | - | |||||
Receivables,
less allowance for
|
|||||||
doubtful
accounts of $143,858 in
|
|||||||
2008
and $285,223 in 2007
|
75,967,305 | 59,932,808 | |||||
Inventories
|
79,712,673 | 69,228,312 | |||||
Insurance
receivable – asbestos
|
10,000,000 | 10,000,000 | |||||
Other
|
15,703,708 | 17,263,397 | |||||
Total current
assets
|
251,603,374 | 228,050,896 | |||||
Property,
plant and equipment, net
|
81,180,405 | 75,101,225 | |||||
Insurance
receivable - asbestos
|
79,540,557 | 84,547,965 | |||||
Investment in
joint ventures
|
6,842,615 | 4,206,149 | |||||
Deferred tax
assets
|
1,174,014 | 2,195,953 | |||||
Prepaid
pensions
|
2,060,093 | 1,701,839 | |||||
Goodwill
|
2,694,240 | 2,694,240 | |||||
Other
noncurrent assets
|
5,617,036 | 5,893,877 | |||||
$ | 430,712,334 | $ | 404,392,144 | ||||
Liabilities
and Shareholders' Equity
|
|||||||
Current
liabilities:
|
|||||||
Accounts
payable
|
$ | 27,627,634 | $ | 19,418,106 | |||
Accrued
payrolls and employee benefits
|
12,613,590 | 12,968,395 | |||||
Industrial
Revenue Bond debt
|
13,311,000 | 13,311,000 | |||||
Asbestos
liability – current portion
|
20,000,000 | 20,000,000 | |||||
Other
|
32,024,601 | 25,448,981 | |||||
Total current
liabilities
|
105,576,825 | 91,146,482 | |||||
Employee
benefit obligations
|
19,292,043 | 19,721,794 | |||||
Asbestos
liability
|
92,655,399 | 99,722,526 | |||||
Other
noncurrent liabilities
|
7,164,163 | 6,070,852 | |||||
Total
liabilities
|
224,688,430 | 216,661,654 | |||||
Commitments
and contingent liabilities
|
|||||||
(Note
6)
|
|||||||
Shareholders'
equity:
|
|||||||
Preference
stock - no par value;
|
|||||||
authorized
3,000,000 shares; none issued
|
- | - | |||||
Common stock
- par value $1; authorized
|
|||||||
20,000,000
shares; issued and outstanding
|
|||||||
10,177,497
shares in 2008 and 2007
|
10,177,497 | 10,177,497 | |||||
Additional
paid-in capital
|
111,897,093 | 111,897,093 | |||||
Retained
earnings
|
109,321,282 | 91,232,890 | |||||
Accumulated
other comprehensive loss
|
(25,371,968 | ) | (25,576,990 | ) | |||
Total
shareholders' equity
|
206,023,904 | 187,730,490 | |||||
$ | 430,712,334 | $ | 404,392,144 | ||||
Six Months Ended June 30,
|
Three Months Ended June 30,
|
|||||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||
Net
sales
|
$ | 200,519,255 | $ | 176,480,443 | $ | 102,689,468 | $ | 88,740,035 | ||||||||
Operating
costs and expenses:
|
||||||||||||||||
Costs
of products sold
|
||||||||||||||||
(excluding
depreciation)
|
142,432,065 | 123,947,961 | 72,531,491 | 61,673,688 | ||||||||||||
Selling
and administrative
|
20,931,495 | 19,779,481 | 10,676,878 | 9,864,783 | ||||||||||||
Depreciation
|
3,668,403 | 3,517,084 | 1,809,904 | 1,759,928 | ||||||||||||
Gain on
disposition of assets
|
(84,268 | ) | (32,994 | ) | (79,828 | ) | (42,187 | ) | ||||||||
Total
operating expenses
|
166,947,695 | 147,211,532 | 84,938,445 | 73,256,212 | ||||||||||||
Income from
operations
|
33,571,560 | 29,268,911 | 17,751,023 | 15,483,823 | ||||||||||||
Other income
(expense):
|
||||||||||||||||
Investment-related
income
|
1,195,052 | 958,245 | 965,515 | 741,013 | ||||||||||||
Interest
expense
|
(247,859 | ) | (361,438 | ) | (113,925 | ) | (182,158 | ) | ||||||||
Other
|
(1,195,462 | ) | (645,432 | ) | (686,605 | ) | (582,995 | ) | ||||||||
(248,269 | ) | (48,625 | ) | 164,985 | (24,140 | ) | ||||||||||
Income before
income taxes
|
33,323,291 | 29,220,286 | 17,916,008 | 15,459,683 | ||||||||||||
Income tax
provision
|
11,571,000 | 9,578,000 | 6,307,000 | 5,282,000 | ||||||||||||
Net
income
|
$ | 21,752,291 | $ | 19,642,286 | $ | 11,609,008 | $ | 10,177,683 | ||||||||
Earnings per
common share:
|
||||||||||||||||
Basic
|
$ | 2.14 | $ | 1.98 | $ | 1.14 | $ | 1.02 | ||||||||
Diluted
|
$ | 2.14 | $ | 1.96 | $ | 1.14 | $ | 1.01 | ||||||||
Cash
dividends declared
|
||||||||||||||||
per
share
|
$ | 0.36 | $ | 0.30 | $ | 0.18 | $ | 0.15 | ||||||||
Weighted
average number of
|
||||||||||||||||
common
shares outstanding:
|
||||||||||||||||
Basic
shares
|
10,177,497 | 9,913,237 | 10,177,497 | 9,988,145 | ||||||||||||
Diluted
shares
|
10,179,800 | 10,031,854 | 10,179,860 | 10,076,936 | ||||||||||||
Six Months
Ended June 30,
|
||||||||
2008
|
2007
|
|||||||
Net cash
flows provided by operating activities
|
$ | 14,186,374 | $ | 14,155,404 | ||||
Cash flows
from investing activities:
|
||||||||
Purchases of
property, plant and equipment
|
(9,755,367 | ) | (3,723,251 | ) | ||||
Purchases of
short-term marketable securities
|
(61,628,567 | ) | (50,490,947 | ) | ||||
Sales of
short-term marketable securities
|
11,000,000 | - | ||||||
Investment in
Chinese joint venture
|
(2,940,000 | ) | - | |||||
Purchases of
long-term marketable securities
|
(562,558 | ) | (770,583 | ) | ||||
Sales of
long-term marketable securities
|
463,058 | 711,523 | ||||||
Other
|
92,572 | (180,640 | ) | |||||
Net cash
flows used in investing activities
|
(63,330,862 | ) | (54,453,898 | ) | ||||
Cash flows
from financing activities:
|
||||||||
Proceeds from
the issuance of common stock
|
- | 3,625,809 | ||||||
Excess tax
benefits from the exercise of stock
|
||||||||
options
|
- | 1,089,060 | ||||||
Dividends
paid
|
(3,358,575 | ) | (2,460,499 | ) | ||||
Net cash
flows (used in) provided by
|
||||||||
financing
activities
|
(3,358,575 | ) | 2,254,370 | |||||
Effect of
exchange rate changes on cash
|
||||||||
and cash
equivalents
|
16,251 | 128,358 | ||||||
Net decrease
in cash and cash equivalents
|
(52,486,812 | ) | (37,915,766 | ) | ||||
Cash and cash
equivalents at beginning of period
|
71,626,379 | 56,083,870 | ||||||
Cash and cash
equivalents at end of period
|
$ | 19,139,567 | $ | 18,168,104 | ||||
Supplemental
information:
|
||||||||
Income
tax payments
|
$ | 5,512,649 | $ | 6,051,842 | ||||
Interest
payments
|
$ | 266,236 | $ | 362,357 | ||||
Non-cash
investing activities:
|
||||||||
Appreciation
of short-term marketable
|
||||||||
securities
|
$ | 451,554 | $ | 971,453 | ||||
1.
|
Unaudited Condensed
Consolidated Financial
Statements
|
2.
|
Inventories
|
(in
thousands)
|
|||||||
June
30,
|
December
31,
|
||||||
2008
|
2007
|
||||||
Raw
materials
|
$ | 17,432 | $ | 14,197 | |||
Work-in-process
|
41,591 | 35,924 | |||||
Finished
goods
|
11,053 | 10,486 | |||||
Supplies
|
9,637 | 8,621 | |||||
$ | 79,713 | $ | 69,228 |
|
Property,
plant and equipment were comprised of the
following:
|
(in
thousands)
|
|||||||
June
30,
|
December
31,
|
||||||
2008
|
2007
|
||||||
Land and land
improvements
|
$ | 4,507 | $ | 4,507 | |||
Buildings
|
27,440 | 27,371 | |||||
Machinery and
equipment
|
144,461 | 142,258 | |||||
Construction-in-progress
|
13,855 | 6,459 | |||||
Other
|
7,127 | 7,074 | |||||
197,390 | 187,669 | ||||||
Accumulated
depreciation
|
(116,210 | ) | (112,568 | ) | |||
$ | 81,180 | $ | 75,101 |
4.
|
Other Current
Liabilities
|
(in
thousands)
|
|||||||
June
30,
|
December
31,
|
||||||
2008
|
2007
|
||||||
Customer-related
liabilities
|
$ | 9,033 | $ | 9,248 | |||
Accrued
income taxes
|
5,195 | 819 | |||||
Foreign
exchange contracts
|
5,054 | 4,832 | |||||
Accrued sales
commissions
|
3,474 | 3,161 | |||||
Other
|
9,269 | 7,389 | |||||
$ | 32,025 | $ | 25,449 |
(in
thousands)
|
||||||||||||||||
Six
Months
|
Three
Months
|
|||||||||||||||
Ended June
30,
|
Ended June
30,
|
|||||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||
Balance at
beginning of the period
|
$ | 6,156 | $ | 5,567 | $ | 6,543 | $ | 5,926 | ||||||||
Satisfaction
of warranty claims
|
(1,955 | ) | (1,245 | ) | (1,372 | ) | (576 | ) | ||||||||
Provision for
warranty claims
|
1,571 | 2,365 | 596 | 1,355 | ||||||||||||
Other,
primarily impact from
|
||||||||||||||||
changes
in foreign currency
|
||||||||||||||||
exchange
rates
|
(4 | ) | 92 | 1 | 74 | |||||||||||
Balance at
end of the period
|
$ | 5,768 | $ | 6,779 | $ | 5,768 | $ | 6,779 |
(in
thousands)
|
||
2008
|
2007
|
|
U.S. pension
benefits plans
|
$ -
|
$ -
|
U.K. pension
benefits plan
|
$ 923
|
$ 743
|
Other
postretirement benefits
(e.g. net
payments)
|
$ 200
|
$ 385
|
U.K. defined
contribution plan
|
$ 256
|
$ 246
|
(in
thousands)
|
||||||||||||||||
Six
Months
|
Three
Months
|
|||||||||||||||
Ended June
30,
|
Ended June
30,
|
|||||||||||||||
U.S. Pension Benefits
|
2008
|
2007
|
2008
|
2007
|
||||||||||||
Service
cost
|
$ | 1,344 | $ | 1,339 | $ | 672 | $ | 670 | ||||||||
Interest
cost
|
3,960 | 3,784 | 1,980 | 1,892 | ||||||||||||
Expected
return on plan assets
|
(5,605 | ) | (5,822 | ) | (2,802 | ) | (2,911 | ) | ||||||||
Amortization
of:
|
||||||||||||||||
Prior
service cost
|
324 | 320 | 162 | 160 | ||||||||||||
Actuarial
gain
|
(65 | ) | (68 | ) | (33 | ) | (34 | ) | ||||||||
Net benefit
income
|
$ | (42 | ) | $ | (447 | ) | $ | (21 | ) | $ | (223 | ) |
(in
thousands)
|
||||||||||||||||
Six
Months
|
Three
Months
|
|||||||||||||||
Ended June
30,
|
Ended June
30,
|
|||||||||||||||
Foreign Pension Benefits
|
2008
|
2007
|
2008
|
2007
|
||||||||||||
Interest
cost
|
$ | 1,320 | $ | 1,338 | $ | 660 | $ | 674 | ||||||||
Expected
return on plan assets
|
(1,400 | ) | (1,316 | ) | (700 | ) | (662 | ) | ||||||||
Amortization
of actuarial loss
|
157 | 232 | 79 | 117 | ||||||||||||
Net benefit
cost
|
$ | 77 | $ | 254 | $ | 39 | $ | 129 |
(in
thousands)
|
||||||||||||||||
Six
Months
|
Three
Months
|
|||||||||||||||
Ended June
30,
|
Ended June
30,
|
|||||||||||||||
Other Postretirement
Benefits
|
2008
|
2007
|
2008
|
2007
|
||||||||||||
Service
cost
|
$ | 203 | $ | 197 | $ | 106 | $ | 125 | ||||||||
Interest
cost
|
393 | 417 | 196 | 263 | ||||||||||||
Amortization
of:
|
||||||||||||||||
Prior
service cost
|
34 | 18 | 17 | 9 | ||||||||||||
Actuarial
loss
|
28 | 77 | 24 | 38 | ||||||||||||
Net benefit
cost
|
$ | 658 | $ | 709 | $ | 343 | $ | 435 |
6.
|
Commitments and
Contingent Liabilities
|
(in
thousands)
|
||||||||||||||||
Six
Months
|
Three
Months
|
|||||||||||||||
Ended June
30,
|
Ended June
30,
|
|||||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||
Net
income
|
$ | 21,752 | $ | 19,642 | $ | 11,609 | $ | 10,178 | ||||||||
Foreign
currency translation
|
||||||||||||||||
adjustments
|
255 | 1,180 | 51 | 550 | ||||||||||||
Unrecognized
components of
|
||||||||||||||||
employee
benefit plans
|
312 | 378 | 162 | 306 | ||||||||||||
Unrealized
holding gains on
|
||||||||||||||||
marketable
securities
|
272 | 662 | 192 | 383 | ||||||||||||
Change in the
fair value
|
||||||||||||||||
of
derivatives (cash flow hedges)
|
(634 | ) | (317 | ) | 407 | (188 | ) | |||||||||
Comprehensive
income
|
$ | 21,957 | $ | 21,545 | $ | 12,421 | $ | 11,229 |
(in
thousands)
|
||||||||||||||||
Level 1
|
Level 2
|
Level 3
|
Total
|
|||||||||||||
Investments
|
||||||||||||||||
Short-term
marketable
securities
|
$ | - | $ | 51,080 | $ | - | $ | 51,080 | ||||||||
Other
noncurrent assets
|
2,907 | - | - | 2,907 | ||||||||||||
Foreign
currency contracts
|
||||||||||||||||
Other current
assets
|
- | 1,568 | - | 1,568 | ||||||||||||
Other
noncurrent assets
|
- | 621 | - | 621 | ||||||||||||
Other current
liabilities
|
- | 5,054 | - | 5,054 | ||||||||||||
Other
noncurrent liabilities
|
- | 3,958 | - | 3,958 |
(in
thousands)
|
||||||||||||||||
Six
Months
|
Three
Months
|
|||||||||||||||
Ended June
30,
|
Ended June
30,
|
|||||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||
Net
Sales:
|
||||||||||||||||
Forged
and Cast Rolls
|
$ | 142,994 | $ | 123,759 | $ | 73,509 | $ | 63,014 | ||||||||
Air and
Liquid Processing
|
57,525 | 52,721 | 29,180 | 25,726 | ||||||||||||
Total
Reportable Segments
|
$ | 200,519 | $ | 176,480 | $ | 102,689 | $ | 88,740 | ||||||||
Income before
Income Taxes:
|
||||||||||||||||
Forged
and Cast Rolls
|
$ | 31,592 | $ | 28,123 | $ | 16,705 | $ | 14,875 | ||||||||
Air and
Liquid Processing
|
5,376 | 4,296 | 2,790 | 2,137 | ||||||||||||
Total
Reportable Segments
|
36,968 | 32,419 | 19,495 | 17,012 | ||||||||||||
Other
expense, including
|
||||||||||||||||
corporate
costs – net
|
(3,645 | ) | (3,199 | ) | (1,579 | ) | (1,552 | ) | ||||||||
Total
|
$ | 33,323 | $ | 29,220 | $ | 17,916 | $ | 15,460 | ||||||||
Approximate
open claims at end of period
|
9,373
|
(1)
|
Gross
settlement and defense costs (in 000’s)
|
8,450
|
|
Approximate
claims settled or dismissed
|
439
|
|
(1)
|
Included as
“open claims” are approximately 3,194 claims classified in various
jurisdictions as “inactive” or transferred to a state or federal judicial
panel on multi-district litigation, commonly referred to as the
MDL.
|
·
|
HR&A’s
interpretation of a widely accepted forecast of the population likely to
have been exposed to asbestos;
|
·
|
epidemiological
studies estimating the number of people likely to develop asbestos-related
diseases;
|
·
|
HR&A’s
analysis of the number of people likely to file an asbestos-related injury
claim against the subsidiaries and the Corporation based on such
epidemiological data and relevant claims history from January 1, 2004
through August 31, 2006;
|
·
|
an analysis
of pending cases, by type of injury claimed and jurisdiction where the
claim is filed;
|
·
|
an analysis
of claims resolution history from January 1, 2004 through August 31, 2006
to determine the average settlement value of claims, by type of injury
claimed and jurisdiction of filing;
and
|
·
|
an adjustment
for inflation in the future average settlement value of claims, at an
annual inflation rate based on the Congressional Budget Office’s ten year
forecast of inflation.
|
ITEM 2 - MANAGEMENT'S
DISCUSSION AND ANALYSIS OF
|
FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
|
ITEM 3 – QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
|
ITEM 4 – CONTROLS AND
PROCEDURES
|
- 19
-
|
|
PART II - OTHER
INFORMATION
|
|
(a)
|
Articles of
Incorporation
|
|
(b)
|
By-laws
|
|
(a)
|
Rights
Agreement between Ampco-Pittsburgh Corporation and Chase Mellon
Shareholder Services dated as of September 28,
1998.
|
|
(a)
|
2008 Omnibus
Incentive Plan
|
(31.1)
|
Certification
of the principal executive officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
|
(31.2)
|
Certification
of the principal financial officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
|
(32.1)
|
Certification
of principal executive officer pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
|
(32.2)
|
Certification
of principal financial officer pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
|
AMPCO-PITTSBURGH
CORPORATION
|
|
DATE: August 4,
2008
|
BY: s/Robert A.
Paul
|
Robert A.
Paul
|
|
Chairman
and
|
|
Chief
Executive Officer
|
|
DATE: August 4,
2008
|
BY: s/Marliss D.
Johnson
|
Marliss D.
Johnson
|
|
Vice
President
|
|
Controller
and Treasurer
|
|
Exhibit
|
(31.1)
|
Certification
of principal executive officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
|
(31.2)
|
Certification
of principal financial officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
|
|
Exhibit
|
(32.1)
|
Certification
of principal executive officer pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
|
(32.2)
|
Certification
of principal financial officer pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
|
|