ameron_10q109.htm
United
States
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-Q
(Mark
One)
x QUARTERLY REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE
ACT OF 1934
For
the quarterly period ended March 1, 2009
OR
¨ TRANSITION REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For
the transition period from __________ to __________
Commission
File Number 1-9102
AMERON
INTERNATIONAL CORPORATION
(Exact
name of registrant as specified in its charter)
Delaware
|
77-0100596
|
(State
or other jurisdiction of
incorporation
or organization)
|
(I.R.S.
Employer Identification No.)
|
245
South Los Robles Avenue
Pasadena,
CA 91101-3638
(Address
of principal executive offices)
(626)
683-4000
(Registrant's
telephone number, including area code)
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 whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting company (as
defined in Rule 12b-2 of the Exchange Act).
Large
accelerated filer x
|
Accelerated
filer ¨
|
Non-accelerated
filer ¨
|
Smaller
reporting company ¨
|
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Act). Yes ¨ No
x
The
number of outstanding shares of Common Stock, $2.50 par value, was 9,203,849 on
March 1, 2009. No other class of Common Stock exists.
AMERON
INTERNATIONAL CORPORATION AND SUBSIDIARIES
For
the Quarter Ended March 1, 2009
Table
of Contents
|
3
|
|
3
|
|
20
|
|
28
|
|
28
|
|
29
|
|
29
|
|
30
|
|
31
|
|
31
|
|
31
|
|
32
|
AMERON
INTERNATIONAL CORPORATION AND SUBSIDIARIES
PART I – FINANCIAL
INFORMATION
ITEM 1 – FINANCIAL
STATEMENTS
CONSOLIDATED
STATEMENTS OF INCOME (UNAUDITED)
|
|
Three
Months Ended
|
|
|
|
March
1,
|
|
|
March
2,
|
|
(Dollars
in thousands, except per share data)
|
|
2009
|
|
|
2008
|
|
Sales
|
|
$
|
146,002
|
|
|
$
|
149,769
|
|
Cost
of sales
|
|
|
(111,081
|
)
|
|
|
(116,317
|
)
|
Gross
profit
|
|
|
34,921
|
|
|
|
33,452
|
|
|
|
|
|
|
|
|
|
|
Selling,
general and administrative expenses
|
|
|
(26,408
|
)
|
|
|
(25,802
|
)
|
Other
income, net
|
|
|
470
|
|
|
|
2,975
|
|
Income
before interest, income taxes and equity in earnings of joint
venture
|
|
|
8,983
|
|
|
|
10,625
|
|
Interest
(expense)/income, net
|
|
|
(171
|
)
|
|
|
289
|
|
Income
before income taxes and equity in earnings of joint
venture
|
|
|
8,812
|
|
|
|
10,914
|
|
Provision
for income taxes
|
|
|
(2,644
|
)
|
|
|
(3,929
|
)
|
Income
before equity in earnings of joint venture
|
|
|
6,168
|
|
|
|
6,985
|
|
Equity
(loss)/earnings of joint venture, net of taxes
|
|
|
(2,342
|
)
|
|
|
2,752
|
|
Net
income
|
|
$
|
3,826
|
|
|
$
|
9,737
|
|
|
|
|
|
|
|
|
|
|
Basic
net income per share
|
|
$
|
.42
|
|
|
$
|
1.07
|
|
|
|
|
|
|
|
|
|
|
Diluted
net income per share
|
|
$
|
.42
|
|
|
$
|
1.07
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
shares (basic)
|
|
|
9,146,678
|
|
|
|
9,075,086
|
|
Weighted-average
shares (diluted)
|
|
|
9,159,798
|
|
|
|
9,102,978
|
|
|
|
|
|
|
|
|
|
|
Cash
dividends per share
|
|
$
|
.30
|
|
|
$
|
.25
|
|
The
accompanying notes are an integral part of these consolidated financial
statements.
AMERON
INTERNATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED
BALANCE SHEETS – ASSETS (UNAUDITED)
|
|
March
1,
|
|
|
November
30,
|
|
(Dollars
in thousands)
|
|
2009
|
|
|
2008
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
$
|
148,461
|
|
|
$
|
143,561
|
|
Receivables,
less allowances of $7,143 in 2009 and $7,009 in 2008
|
|
|
157,743
|
|
|
|
181,961
|
|
Inventories
|
|
|
80,832
|
|
|
|
95,645
|
|
Deferred
income taxes
|
|
|
25,767
|
|
|
|
25,582
|
|
Prepaid
expenses and other current assets
|
|
|
9,747
|
|
|
|
10,053
|
|
|
|
|
|
|
|
|
|
|
Total
current assets
|
|
|
422,550
|
|
|
|
456,802
|
|
|
|
|
|
|
|
|
|
|
Investments
in joint ventures
|
|
|
|
|
|
|
|
|
Equity
method
|
|
|
21,836
|
|
|
|
14,428
|
|
Cost
method
|
|
|
3,784
|
|
|
|
3,784
|
|
|
|
|
|
|
|
|
|
|
Property,
plant and equipment
|
|
|
|
|
|
|
|
|
Land
|
|
|
41,336
|
|
|
|
38,679
|
|
Buildings
|
|
|
85,244
|
|
|
|
85,555
|
|
Machinery
and equipment
|
|
|
305,355
|
|
|
|
306,177
|
|
Construction
in progress
|
|
|
41,633
|
|
|
|
37,386
|
|
|
|
|
|
|
|
|
|
|
Total
property, plant and equipment at cost
|
|
|
473,568
|
|
|
|
467,797
|
|
Accumulated
depreciation
|
|
|
(261,607
|
)
|
|
|
(261,635
|
)
|
|
|
|
|
|
|
|
|
|
Total
property, plant and equipment, net
|
|
|
211,961
|
|
|
|
206,162
|
|
Deferred
income taxes
|
|
|
4,763
|
|
|
|
4,763
|
|
Goodwill
and intangible assets, net of accumulated amortization of $1,203 in 2009
and $1,197 in 2008
|
|
|
2,080
|
|
|
|
2,108
|
|
Other
assets
|
|
|
38,059
|
|
|
|
38,275
|
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
$
|
705,033
|
|
|
$
|
726,322
|
|
The
accompanying notes are an integral part of these consolidated financial
statements.
AMERON
INTERNATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED
BALANCE SHEETS – LIABILITIES AND STOCKHOLDERS' EQUITY (UNAUDITED)
|
|
March
1,
|
|
|
November
30,
|
|
(Dollars
in thousands, except per share data)
|
|
2009
|
|
|
2008
|
|
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
|
Current
portion of long-term debt
|
|
$
|
16,594
|
|
|
$
|
16,763
|
|
Trade
payables
|
|
|
42,239
|
|
|
|
52,613
|
|
Accrued
liabilities
|
|
|
71,158
|
|
|
|
79,538
|
|
Income
taxes payable
|
|
|
9,609
|
|
|
|
10,443
|
|
|
|
|
|
|
|
|
|
|
Total
current liabilities
|
|
|
139,600
|
|
|
|
159,357
|
|
|
|
|
|
|
|
|
|
|
Long-term
debt, less current portion
|
|
|
35,483
|
|
|
|
35,989
|
|
Other
long-term liabilities
|
|
|
54,301
|
|
|
|
53,856
|
|
|
|
|
|
|
|
|
|
|
Total
liabilities
|
|
|
229,384
|
|
|
|
249,202
|
|
|
|
|
|
|
|
|
|
|
Commitments
and contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
equity
|
|
|
|
|
|
|
|
|
Common
Stock, par value $2.50 per share, authorized 24,000,000 shares,
outstanding 9,203,849 shares in 2009 and 9,188,692 shares in 2008, net of
treasury shares
|
|
|
29,845
|
|
|
|
29,805
|
|
Additional
paid-in capital
|
|
|
56,241
|
|
|
|
54,447
|
|
Retained
earnings
|
|
|
480,037
|
|
|
|
478,968
|
|
Accumulated
other comprehensive loss
|
|
|
(34,877
|
)
|
|
|
(31,475
|
)
|
Treasury
Stock (2,752,343 shares in 2009 and 2,733,300 shares in
2008)
|
|
|
(55,597
|
)
|
|
|
(54,625
|
)
|
|
|
|
|
|
|
|
|
|
Total
stockholders' equity
|
|
|
475,649
|
|
|
|
477,120
|
|
|
|
|
|
|
|
|
|
|
Total
liabilities and stockholders' equity
|
|
$
|
705,033
|
|
|
$
|
726,322
|
|
The
accompanying notes are an integral part of these consolidated financial
statements.
AMERON
INTERNATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF CASH FLOWS (UNAUDITED)
|
|
Three
Months Ended
|
|
|
|
March
1,
|
|
|
March
2,
|
|
(Dollars
in thousands)
|
|
2009
|
|
|
2008
|
|
OPERATING
ACTIVITIES
|
|
|
|
|
|
|
|
|
Net
income
|
|
$
|
3,826
|
|
|
$
|
9,737
|
|
Adjustments
to reconcile net income to net cash provided by/(used in) operating
activities:
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
5,268
|
|
|
|
4,773
|
|
Amortization
|
|
|
9
|
|
|
|
38
|
|
Loss/(earnings
in excess of distributions) from joint ventures
|
|
|
2,592
|
|
|
|
(2,495
|
)
|
Loss
from sale of property, plant and equipment
|
|
|
19
|
|
|
|
58
|
|
Stock
compensation expense
|
|
|
1,015
|
|
|
|
1,856
|
|
Changes
in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
Receivables,
net
|
|
|
23,299
|
|
|
|
17,738
|
|
Inventories
|
|
|
14,477
|
|
|
|
68
|
|
Prepaid
expenses and other current assets
|
|
|
216
|
|
|
|
(96
|
)
|
Other
assets
|
|
|
27
|
|
|
|
(4,491
|
)
|
Trade
payables
|
|
|
(9,988
|
)
|
|
|
(1,596
|
)
|
Accrued
liabilities and income taxes payable
|
|
|
(8,565
|
)
|
|
|
(20,511
|
)
|
Other
long-term liabilities and deferred income taxes
|
|
|
246
|
|
|
|
13,309
|
|
Net
cash provided by operating activities
|
|
|
32,441
|
|
|
|
18,388
|
|
|
|
|
|
|
|
|
|
|
INVESTING
ACTIVITIES
|
|
|
|
|
|
|
|
|
Proceeds
from sale of property, plant and equipment
|
|
|
134
|
|
|
|
724
|
|
Additions
to property, plant and equipment
|
|
|
(12,366
|
)
|
|
|
(12,006
|
)
|
Investment
in joint venture
|
|
|
(10,000
|
)
|
|
|
-
|
|
Net
cash used in investing activities
|
|
|
(22,232
|
)
|
|
|
(11,282
|
)
|
|
|
|
|
|
|
|
|
|
FINANCING
ACTIVITIES
|
|
|
|
|
|
|
|
|
Repayment
of debt
|
|
|
-
|
|
|
|
(2,610
|
)
|
Dividends
on common stock
|
|
|
(2,757
|
)
|
|
|
(2,285
|
)
|
Issuance
of common stock
|
|
|
-
|
|
|
|
760
|
|
Excess
tax benefits related to stock-based compensation
|
|
|
819
|
|
|
|
1,251
|
|
Purchase
of treasury stock
|
|
|
(972
|
)
|
|
|
(2,754
|
)
|
Net
cash used in financing activities
|
|
|
(2,910
|
)
|
|
|
(5,638
|
)
|
|
|
|
|
|
|
|
|
|
Effect
of exchange rate changes on cash and cash equivalents
|
|
|
(2,399
|
)
|
|
|
2,956
|
|
Net
change in cash and cash equivalents
|
|
|
4,900
|
|
|
|
4,424
|
|
Cash
and cash equivalents at beginning of period
|
|
|
143,561
|
|
|
|
155,433
|
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents at end of period
|
|
$
|
148,461
|
|
|
$
|
159,857
|
|
The accompanying notes
are an integral part of these consolidated financial statements.
AMERON
INTERNATIONAL CORPORATION AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE
1 – BASIS OF PRESENTATION
Consolidated
financial statements for the interim periods included herein are unaudited;
however, they contain all adjustments, including normal recurring accruals,
which, in the opinion of management, are necessary to present fairly the
consolidated financial position of Ameron International Corporation and all
subsidiaries (the "Company" or "Ameron" or the "Registrant") as of March 1,
2009, and consolidated results of operations and cash flows for the three months
ended March 1, 2009. Accounting measurements at interim dates inherently
involve greater reliance on estimates than at year-end. Results of
operations for the periods presented are not necessarily indicative of the
results to be expected for the full year.
For
accounting consistency, the quarter typically ends on the Sunday closest to the
end of the relevant calendar month. The Company’s fiscal year ends on
November 30, regardless of the day of the week. Each quarter consists
of approximately 13 weeks, but the number of days per quarter can change from
period to period. The quarter ended March 1, 2009 consisted of 91
days, compared to 93 days for the quarter ended March 2, 2008.
The
consolidated financial statements do not include certain footnote disclosures
and financial information normally included in consolidated financial statements
prepared in accordance with accounting principles generally accepted in the
United States of America and, therefore, should be read in conjunction with the
consolidated financial statements and notes included in the Company’s Annual
Report on Form 10-K for the year ended November 30, 2008 ("2008 Annual
Report").
NOTE
2 – RECENT ACCOUNTING PRONOUNCEMENTS
In
September 2006, the Financial Accounting Standards Board (“FASB”) issued
Statement of Financial Accounting Standards (“SFAS”) No. 157, “Fair Value
Measurements.” SFAS No. 157 establishes a framework for measuring
fair value in accordance with U.S. generally accepted accounting principles, and
expands disclosure about fair value measurements. SFAS No. 157 is
effective for financial statements issued for fiscal years beginning after
November 15, 2007. Relative to SFAS No. 157, the FASB
issued FASB Staff Position (“FSP”) FASB Statements (“FAS”) 157-1, FAS 157-2 and
FAS 157-3 in 2008. FSP FAS 157-1 amends SFAS No. 157 to exclude
SFAS No. 13, “Accounting for Leases,” and its related interpretive
accounting pronouncements that address leasing transactions. FSP
FAS 157-2 delays the effective date of SFAS No. 157 to fiscal years
beginning after November 15, 2008 for all non-financial assets and non-financial
liabilities, except those that are recognized or disclosed at fair value in the
financial statements on a recurring basis. FSP FAS 157-3 clarifies
how SFAS No. 157 should be applied when valuing securities in markets that are
not active. The Company adopted SFAS No. 157, as amended,
effective December 1, 2007 with the exception of the application of SFAS No. 157
to non-recurring, non-financial assets and non-financial liabilities which was
adopted as of December 1, 2008. The adoption of SFAS No. 157 did
not have a significant impact on the Company’s financial results of operations
or financial position.
In
September 2006, the FASB issued SFAS No. 158, "Employers’ Accounting for Defined
Benefit Pension and Other Postretirement Plans," amending FASB Statement No. 87,
“Employers’ Accounting for Pensions,” FASB Statement No. 88, “Employers’
Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and
for Termination Benefits,” FASB Statement No. 106, “Employers’ Accounting for
Postretirement Benefits Other Than Pensions,” and FASB Statement No. 132,
“Employers’ Disclosures about Pensions and Other Postretirement
Benefits.” SFAS No. 158 requires companies to recognize the
overfunded or underfunded status of a defined benefit postretirement plan (other
than a multiemployer plan) as an asset or liability in its financial statements
and to recognize changes in that status in the year in which the changes
occur. SFAS No. 158 also requires a company to measure the funded
status of a plan as of the date of its year-end financial statements. The
Company adopted the recognition provisions of SFAS No. 158 as of November 30,
2007. The measurement provisions will be effective as of November 30,
2009.
AMERON
INTERNATIONAL CORPORATION AND SUBSIDIARIES
In
September 2006, the FASB issued Emerging Issues Task Force (“EITF”) Issue No.
06-4, “Accounting for Deferred Compensation and Postretirement Benefit Aspects
of Endorsement Split-Dollar Life Insurance Arrangements,” effective for fiscal
years beginning after December 15, 2007. EITF Issue No. 06-4
requires that, for split-dollar life insurance arrangements providing a benefit
to an employee extending to postretirement periods, an employer should recognize
a liability for future benefits in accordance with SFAS No. 106,
“Employers’ Accounting For Postretirement Benefits Other Than
Pensions.” EITF Issue No. 06-4 requires that recognition of the
effects of adoption should be either by (a) a change in accounting
principle through a cumulative-effect adjustment to retained earnings as of the
beginning of the year of adoption or (b) a change in accounting principle
through retrospective application to all prior periods. The Company
adopted EITF Issue No. 06-4 as of December 1, 2008, and adoption did not
have a material effect on the Company’s consolidated financial
statements.
In June
2007, the FASB issued EITF Issue No. 06-11, “Accounting for Income Tax Benefits
of Dividends on Share-Based Payment Awards,” effective for fiscal years
beginning after December 15, 2007. EITF Issue No. 06–11 requires
on a prospective basis that the tax benefit related to dividend equivalents paid
on restricted stock and restricted stock units which are expected to vest, be
recorded as an increase to additional paid-in capital. The Company adopted
EITF Issue No. 06-11 as of December 1, 2008, and adoption did not have a
material effect on the Company’s consolidated financial statements.
In
December 2007, the FASB issued SFAS No. 141(R), “Business
Combinations.” SFAS No. 141(R) amends accounting and reporting
standards associated with business combinations and requires the acquiring
entity to recognize the assets acquired, liabilities assumed and noncontrolling
interests in the acquired entity at the date of acquisition at their fair
values. In addition, SFAS No. 141(R) requires that direct costs
associated with an acquisition be expensed as incurred and sets forth various
other changes in accounting and reporting related to business
combinations. SFAS No. 141(R) applies prospectively to business
combinations for which the acquisition date is on or after the beginning of the
first annual reporting period beginning on or after December 15, 2008. An
entity may not apply SFAS No. 141(R) before that date. The first such
reporting period for the Company will be the fiscal year beginning December 1,
2009.
In
December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests
in Consolidated Financial Statements, an amendment of ARB
No. 51.” SFAS No. 160 amends the accounting and reporting for
noncontrolling interests in a consolidated subsidiary and the deconsolidation of
a subsidiary. Included in this statement is the requirement that
noncontrolling interests be reported in the equity section of the balance
sheet. SFAS No. 160 is effective for fiscal years, and interim
periods within those fiscal years, beginning on or after December 15,
2008. Earlier adoption is prohibited. The first such
reporting period for the Company will be the fiscal year beginning December 1,
2009.
In March
2008, the FASB issued SFAS No. 161, “Disclosures about Derivative
Instruments and Hedging Activities – an amendment of FASB Statement
No. 133,” effective for fiscal years beginning after November 15,
2008, with early application encouraged. SFAS No. 161 amends and
expands the disclosure requirements for derivative instruments and hedging
activities by requiring enhanced disclosures about how and why the Company uses
derivative instruments, how derivative instruments and related hedged items are
accounted for, and how derivative instruments and related hedged items affect
the Company’s financial position, financial performance and cash
flows. The Company adopted SFAS No. 161 as of December 1, 2008, and
adoption did not have a material effect on the Company’s consolidated financial
statements.
In June
2008, the FASB issued FSP EITF 03-6-1, “Determining Whether Instruments
Granted in Share-Based Payment Transactions Are Participating Securities,” which
addresses whether unvested instruments granted in share-based payment
transactions that contain nonforfeitable rights to dividends or dividend
equivalents are participating securities subject to the two-class method of
computing earnings per share under SFAS No. 128, “Earnings Per
Share.” FSP EITF 03-6-1 is effective for financial statements
issued for fiscal years, and interim periods within those fiscal years,
beginning on or after December 15, 2008. Earlier adoption is
prohibited. The adoption of FSP EITF 03-6-1 is not expected to have a
material effect on the Company’s consolidated financial statements.
AMERON
INTERNATIONAL CORPORATION AND SUBSIDIARIES
In
December 2008, the FASB issued EITF Issue No. 08-6, “Equity Method Investment
Accounting Consideration,” effective for fiscal years beginning after
December 15, 2008. EITF Issue No. 08-6 requires an equity method
investor to account for its initial investment at cost and shall not separately
test an investee’s underlying indefinite-lived intangible assets for
impairment. It also requires an equity method investor to account for
share issuance by an investee as if the investor had sold a proportionate share
of its investment. The resulting gain or loss shall be recognized in
earnings. The Company is evaluating whether the adoption of EITF
Issue No. 08-6 will have a material effect on its consolidated financial
statements.
In
December 2008, the FASB issued FSP FAS 132(R)-1, “Employers’ Disclosures about
Postretirement Benefit Plan Assets,” amending FASB Statement No. 132(R),
“Employers’ Disclosures about Pensions and Other Postretirement Benefits,”
effective for fiscal years ending after December 15, 2009. FSP FAS
132(R)-1 requires an employer to disclose investment policies and strategies,
categories, fair value measurements, and significant concentration of risk among
its postretirement benefit plan assets. The adoption of FSP FAS
132(R)-1 is not expected to have a material effect on the Company’s consolidated
financial statements.
NOTE 3 -
RECEIVABLES
The
Company’s receivables consisted of the following:
|
|
March
1,
|
|
|
November
30,
|
|
(In
thousands)
|
|
2009
|
|
|
2008
|
|
Trade
|
|
$
|
132,954
|
|
|
$
|
155,061
|
|
Joint
ventures
|
|
|
1,451
|
|
|
|
1,380
|
|
Other
|
|
|
30,481
|
|
|
|
32,529
|
|
Allowances
|
|
|
(7,143
|
)
|
|
|
(7,009
|
)
|
|
|
$
|
157,743
|
|
|
$
|
181,961
|
|
Trade
receivables included unbilled receivables related to percentage-of-completion
revenue recognition of $27,311,000 and $24,706,000 at March 1, 2009 and November
30, 2008, respectively.
NOTE
4 – INVENTORIES
Inventories
are stated at the lower of cost or market. Inventories consisted of the
following:
|
|
March
1,
|
|
|
November
30,
|
|
(In
thousands)
|
|
2009
|
|
|
2008
|
|
Finished
products
|
|
$
|
38,646
|
|
|
$
|
44,033
|
|
Materials
and supplies
|
|
|
19,257
|
|
|
|
33,485
|
|
Products
in process
|
|
|
22,929
|
|
|
|
18,127
|
|
|
|
$
|
80,832
|
|
|
$
|
95,645
|
|
NOTE
5 – SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Supplemental
cash flow information included the following:
|
|
Three
Months Ended
|
|
|
|
March
1,
|
|
|
March
2,
|
|
(In
thousands)
|
|
2009
|
|
|
2008
|
|
Interest
paid
|
|
$
|
51
|
|
|
$
|
247
|
|
Income
taxes paid
|
|
|
2,102
|
|
|
|
523
|
|
AMERON
INTERNATIONAL CORPORATION AND SUBSIDIARIES
NOTE
6 – JOINT VENTURES
Operating
results of TAMCO, an investment which is accounted for under the equity method,
were as follows:
|
|
Three
Months Ended
|
|
|
|
March
1,
|
|
|
March
2,
|
|
(In
thousands)
|
|
2009
|
|
|
2008
|
|
Net
sales
|
|
$
|
17,797
|
|
|
$
|
82,715
|
|
Gross
profit
|
|
|
(7,633
|
)
|
|
|
13,821
|
|
Net
(loss)/income
|
|
|
(5,184
|
)
|
|
|
6,089
|
|
Investments
in Ameron Saudi Arabia, Ltd. ("ASAL") and Bondstrand, Ltd. ("BL") are accounted
for under the cost method due to management's current assessment of the
Company's influence over these joint ventures. Earnings from ASAL and
BL, if any, are included in other income, net.
Earnings
and dividends from the Company's joint ventures were as
follows:
|
|
Three
Months Ended
|
|
|
|
March
1,
|
|
|
March
2,
|
|
(In
thousands)
|
|
2009
|
|
|
2008
|
|
Earnings
from joint ventures:
|
|
|
|
|
|
|
Equity
(loss)/earnings of TAMCO before income taxes
|
|
$
|
(2,592
|
)
|
|
$
|
3,045
|
|
Less
benefit/(provision) for income taxes
|
|
|
250
|
|
|
|
(293
|
)
|
Equity
(loss)/earnings of TAMCO, net of taxes
|
|
$
|
(2,342
|
)
|
|
$
|
2,752
|
|
Dividends
received from joint ventures:
|
|
|
|
|
|
|
|
|
TAMCO
|
|
$
|
-
|
|
|
$
|
550
|
|
ASAL
|
|
|
-
|
|
|
|
1,496
|
|
BL
|
|
|
-
|
|
|
|
-
|
|
TAMCO’s
shareholders made a $20,000,000 capital contribution to TAMCO in February,
2009. The Company’s share of the funding from shareholders totaled
$10,000,000. The Company continues to have a 50% ownership interest in
TAMCO and accounts for its investment under the equity method of
accounting. The Company may provide additional funding to TAMCO if TAMCO
is unable to generate sufficient cash flow from operations or obtain third-party
financing. TAMCO’s primary source of external financing is currently a
$40,000,000 credit facility (stepping down to $35,000,000 on May 1, 2009).
Approximately $30,000,000 was outstanding under the credit facility as of March
1, 2009. The terms of TAMCO’s credit facility prohibit TAMCO from
paying dividends to its shareholders until the expiration of the facility on
February 28, 2010.
AMERON
INTERNATIONAL CORPORATION AND SUBSIDIARIES
NOTE
7 – NET INCOME PER SHARE
Basic net
income per share is computed on the basis of the weighted-average number of
common shares outstanding during the periods presented. Diluted net income per
share is computed on the basis of the weighted-average number of common shares
outstanding plus the effect of outstanding stock options and restricted stock,
using the treasury stock method. Outstanding common stock
equivalents, consisting of 16,200 and 25,570 restricted shares and options
to purchase 32,500 and 43,500 common shares, were dilutive for the three months
ended March 1, 2009 and March 2, 2008, respectively. Following
is a reconciliation of the weighted-average number of shares used in the
computation of basic and diluted net income per share:
|
|
Three
Months Ended
|
|
|
|
March
1,
|
|
|
March
2,
|
|
(In
thousands, except per share data)
|
|
2009
|
|
|
2008
|
|
Numerator:
|
|
|
|
|
|
|
Net
income
|
|
$
|
3,826
|
|
|
$
|
9,737
|
|
|
|
|
|
|
|
|
|
|
Denominator
for basic net income per share:
|
|
|
|
|
|
|
|
|
Weighted-average
shares outstanding, basic
|
|
|
9,146,678
|
|
|
|
9,075,086
|
|
|
|
|
|
|
|
|
|
|
Denominator
for diluted net income per share:
|
|
|
|
|
|
|
|
|
Weighted-average
shares outstanding, basic
|
|
|
9,146,678
|
|
|
|
9,075,086
|
|
Dilutive
effect of stock options and restricted stock
|
|
|
13,120
|
|
|
|
27,892
|
|
Weighted-average
shares outstanding, diluted
|
|
|
9,159,798
|
|
|
|
9,102,978
|
|
|
|
|
|
|
|
|
|
|
Basic
net income per share
|
|
$
|
.42
|
|
|
$
|
1.07
|
|
|
|
|
|
|
|
|
|
|
Diluted
net income per share
|
|
$
|
.42
|
|
|
$
|
1.07
|
|
NOTE
8 – COMPREHENSIVE INCOME
Comprehensive
income was as follows:
|
|
Three
Months Ended
|
|
|
|
March
1,
|
|
|
March
2,
|
|
(In
thousands)
|
|
2009
|
|
|
2008
|
|
Net
income
|
|
$
|
3,826
|
|
|
$
|
9,737
|
|
Foreign
currency translation adjustment
|
|
|
(3,402
|
)
|
|
|
4,802
|
|
Comprehensive
income
|
|
$
|
424
|
|
|
$
|
14,539
|
|
AMERON
INTERNATIONAL CORPORATION AND SUBSIDIARIES
NOTE
9 – DEBT
The
Company's long-term debt consisted of the following:
|
|
March
1,
|
|
|
November
30,
|
|
(In
thousands)
|
|
2009
|
|
|
2008
|
|
Fixed-rate
notes:
|
|
|
|
|
|
|
|
|
5.36%,
payable in annual principal installments of $10,000
|
|
$
|
10,000
|
|
|
$
|
10,000
|
|
4.25%,
payable in Singapore dollars, in annual principal installments of $6,594,
beginning November 25, 2008
|
|
|
26,377
|
|
|
|
27,052
|
|
Variable-rate
industrial development bonds:
|
|
|
|
|
|
|
|
|
payable
in 2016 (.85% at March 1, 2009)
|
|
|
7,200
|
|
|
|
7,200
|
|
payable
in 2021 (.85% at March 1, 2009)
|
|
|
8,500
|
|
|
|
8,500
|
|
Total
long-term debt
|
|
|
52,077
|
|
|
|
52,752
|
|
Less
current portion
|
|
|
(16,594
|
)
|
|
|
(16,763
|
)
|
Long-term
debt, less current portion
|
|
$
|
35,483
|
|
|
$
|
35,989
|
|
The
Company maintains a $100,000,000 revolving credit facility with six banks (the
"Revolver"). At March 1, 2009, $18,167,000 of the Revolver was utilized
for standby letters of credit; therefore, $81,833,000 was available under the
Revolver. Under the Revolver, the Company may, at its option, borrow
up to the available amount at floating interest rates (LIBOR plus a spread
ranging from .75% to 1.625%, based on the Company's financial condition and
performance), at any time until September 2010, when all borrowings under the
Revolver must be repaid.
The
lending agreements contain various restrictive covenants, including the
requirement to maintain specified amounts of net worth and restrictions on cash
dividends, borrowings, liens, capital expenditures, investments, guarantees, and
financial covenants. The Company was in compliance with all covenants as
of March 1, 2009. The Revolver, the 4.25% term notes and the 5.36%
term notes are collateralized by substantially all of the Company's
assets. The industrial development bonds are supported by standby letters
of credit that are issued under the Revolver. The interest rate on
the industrial development bonds is based on the Securities Industry and
Financial Markets Association (“SIFMA”) Index plus a spread of .20%.
Certain note agreements contain provisions regarding the Company's ability
to grant security interests or liens in association with other debt
instruments. If the Company grants such a security interest or lien, then
such notes will be collateralized equally and ratably as long as such other debt
shall be collateralized.
NOTE
10 – SEGMENT INFORMATION
The
Company provides certain information about operating segments in accordance with
SFAS No. 131, “Disclosure about Segments of an Enterprise and Related
Information.” In accordance with SFAS No. 131, the Company has
determined that it has four operating and three reportable segments:
Fiberglass-Composite Pipe, Water Transmission and Infrastructure Products.
Infrastructure Products consists of two operating segments, the Pole
Products and Hawaii Divisions, which are aggregated. Each of the segments
has a dedicated management team and is managed separately, primarily because of
differences in products. The Company's Chief Operating Decision Maker
is the Chief Executive Officer who primarily reviews sales and income before
interest, income taxes and equity in earnings of joint venture for each
operating segment in making decisions about allocating resources and assessing
performance. The Company allocates certain selling, general and
administrative expenses to operating segments utilizing assumptions believed to
be appropriate in the circumstances. Costs of shared services (e.g., costs
of Company-wide insurance programs or benefit plans) are allocated to the
operating segments based on revenue, wages or net assets employed. Other
items not related to current operations or of an unusual nature are not
allocated to the reportable segments, such as adjustments to reflect inventory
balances of certain steel inventories under the last-in, first-out ("LIFO")
method, certain unusual legal costs and expenses, interest expense and income
taxes.
AMERON
INTERNATIONAL CORPORATION AND SUBSIDIARIES
Following
is information related to each reportable segment included in, and in a manner
consistent with, internal management reports:
|
|
Three
Months Ended
|
|
|
|
March
1,
|
|
|
March
2,
|
|
(In
thousands)
|
|
2009
|
|
|
2008
|
|
Sales
|
|
|
|
|
|
|
|
|
Fiberglass-Composite
Pipe
|
|
$
|
56,741
|
|
|
$
|
65,843
|
|
Water
Transmission
|
|
|
51,543
|
|
|
|
40,984
|
|
Infrastructure
Products
|
|
|
37,719
|
|
|
|
43,328
|
|
Eliminations
|
|
|
(1
|
)
|
|
|
(386
|
)
|
Total
sales
|
|
$
|
146,002
|
|
|
$
|
149,769
|
|
|
|
|
|
|
|
|
|
|
Income
Before Interest, Income Taxes and Equity in Earnings of Joint
Venture
|
|
|
|
|
|
|
|
|
Fiberglass-Composite
Pipe
|
|
$
|
14,647
|
|
|
$
|
16,635
|
|
Water
Transmission
|
|
|
513
|
|
|
|
(3,939
|
)
|
Infrastructure
Products
|
|
|
3,785
|
|
|
|
6,294
|
|
Corporate
and unallocated
|
|
|
(9,962
|
)
|
|
|
(8,365
|
)
|
Total
Income Before Interest, Income Taxes and Equity in Earnings of Joint
Venture
|
|
$
|
8,983
|
|
|
$
|
10,625
|
|
|
|
March
1,
|
|
|
November
30,
|
|
(In
thousands)
|
|
2009
|
|
|
2008
|
|
Assets
|
|
|
|
|
|
|
|
|
Fiberglass-Composite
Pipe
|
|
$
|
257,488
|
|
|
$
|
303,672
|
|
Water
Transmission
|
|
|
210,729
|
|
|
|
235,664
|
|
Infrastructure
Products
|
|
|
104,795
|
|
|
|
107,792
|
|
Corporate
and unallocated
|
|
|
282,443
|
|
|
|
227,543
|
|
Eliminations
|
|
|
(150,422
|
)
|
|
|
(148,349
|
)
|
Total
Assets
|
|
$
|
705,033
|
|
|
$
|
726,322
|
|
NOTE
11 – COMMITMENTS AND CONTINGENCIES
In April
2004, Sable Offshore Energy Inc. ("Sable"), as agent for certain owners of the
Sable Offshore Energy Project, brought an action against various coatings
suppliers and application contractors, including the Company and its subsidiary,
Ameron B.V., in the Supreme Court of Nova Scotia, Canada. Sable seeks
damages allegedly sustained by it resulting from performance problems with
several coating systems used on the Sable Offshore Energy Project, including
coatings products furnished by the Company and Ameron B.V. Sable's
originating notice and statement of claim alleged a claim for damages in an
unspecified amount; however, Sable has since alleged that its claim for damages
against all defendants is approximately 440,000,000 Canadian dollars, a figure
which the Company and Ameron B.V. contest. This matter is in
discovery, and no trial date has yet been established. The Company is
vigorously defending itself in this action. Based upon the information
available to it at this time, the Company is not able to estimate the possible
range of loss with respect to this case.
AMERON
INTERNATIONAL CORPORATION AND SUBSIDIARIES
In May
2003, Dominion Exploration and Production, Inc. and Pioneer Natural Resources
USA, Inc. (collectively "Dominion") brought an action against the Company in
Civil District Court for the Parish of Orleans, Louisiana as owners of an
offshore production facility known as a SPAR. Dominion seeks damages
allegedly sustained by it resulting from delays in delivery of the SPAR caused
by the removal and replacement of certain coatings containing lead and/or lead
chromate for which the manufacturer of the SPAR alleged the Company was
responsible. Dominion contends that the Company made certain
misrepresentations and warranties to Dominion concerning the lead-free nature of
those coatings. Dominion's petition as filed alleged a claim for damages
in an unspecified amount; however, Dominion's economic expert has since
estimated Dominion's damages at approximately $128,000,000, a figure which the
Company contests. This matter is in discovery, and no trial date has yet
been established. The Company is vigorously defending itself in this
action. Based upon the information available to it at this time, the
Company is not able to estimate the possible range of loss with respect to this
case.
In July
2004, BP America Production Company (“BP America”) brought an action against the
Company in the 24th
Judicial District Court, Parish of Jefferson, Louisiana in connection with
fiberglass pipe sold by the Company for installation in four offshore platforms
constructed for BP America. The plaintiff seeks damages allegedly
sustained by it resulting from claimed defects in such pipe. BP
America’s petition as filed alleged a claim against the Company for rescission,
products liability, negligence, breach of contract and warranty and for damages
in an amount of not less than $20,000,000, a figure which the Company
contests. This matter is in discovery, and no trial date has yet been
established. The Company is vigorously defending itself in this
action. Based upon the information available to it at this time, the
Company is not able to estimate the possible range of loss with respect to this
case.
In June
2006, the Cawelo, California Water District (“Cawelo”) brought an action against
the Company in Kern County Superior Court, California in connection
with concrete pipe sold by the Company in 1995 for a wastewater
recovery pipeline in such county. Cawelo seeks damages allegedly
sustained by it resulting from the failure of such pipe in
2004. Cawelo’s petition as filed alleged a claim against the Company
for products liability, negligence, breach of express warranty and breach of
written contract and for damages in an amount of not less than $8,000,000, a
figure which the Company contests. This matter is in discovery, and
no trial date has yet been established. The Company is vigorously
defending itself in this action. Based upon the information available
to it at this time, the Company is not able to estimate the possible range of
loss with respect to this case.
The
Company is a defendant in a number of asbestos-related personal injury
lawsuits. These cases generally seek unspecified damages for
asbestos-related diseases based on alleged exposure to products previously
manufactured by the Company and others. As of March 1, 2009, the
Company was a defendant in 23 asbestos-related cases, compared to 24 cases as of
November 30, 2008. During the quarter ended March 1, 2009, there were
two new asbestos-related cases, two cases dismissed, one case settled, no
judgments and aggregate net costs and expenses of $169,000. Based
upon the information available to it at this time, the Company is not able to
estimate the possible range of loss with respect to these cases.
The
Company is 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. While the Company finds it difficult to estimate
with any certainty the total cost of remediation at the several sites, on the
basis of currently available information and reserves provided, the Company
believes that the outcome of such environmental regulatory proceedings will not
have a material effect on the Company's financial position, cash flows, or
results of operations.
In
December, 2008, the Company received from the U.S. Treasury Department’s Office
of Foreign Assets Control (“OFAC”) a Requirement To Furnish Information
regarding transactions involving Iran. The Company intends to
cooperate fully with OFAC on this matter. Based upon the information
available to it at this time, the Company is not able to predict the outcome of
this matter.
AMERON
INTERNATIONAL CORPORATION AND SUBSIDIARIES
In
addition, certain other claims, suits and complaints that arise in the ordinary
course of business, have been filed or are pending against the
Company. Management believes that these matters are either adequately
reserved, covered by insurance, or would not have a material effect on the
Company's financial position, cash flows or results of operations if disposed of
unfavorably.
NOTE
12 – PRODUCT WARRANTIES AND GUARANTEES
The
Company's product warranty accrual reflects management's estimate of probable
liability associated with product warranties. The Company generally
provides a standard product warranty covering defects for a period not exceeding
one year from date of purchase. Management establishes product warranty
accruals based on historical experience and other currently-available
information. Changes in the product warranty accrual were as
follows:
|
|
Three
Months Ended
|
|
|
|
March
1,
|
|
|
March
2,
|
|
(In
thousands)
|
|
2009
|
|
|
2008
|
|
Balance,
beginning of period
|
|
$
|
3,238
|
|
|
$
|
3,590
|
|
Payments
|
|
|
(1,068
|
)
|
|
|
(20
|
)
|
Warranties
issued during the period
|
|
|
762
|
|
|
|
(211
|
)
|
Balance,
end of period
|
|
$
|
2,932
|
|
|
$
|
3,359
|
|
NOTE
13 – GOODWILL AND OTHER INTANGIBLE ASSETS
Changes
in the Company’s carrying amount of goodwill by business segment were as
follows:
|
|
|
|
|
Foreign
|
|
|
|
|
|
|
|
|
|
Currency
|
|
|
|
|
|
|
November
30,
|
|
|
Translation
|
|
|
March
1,
|
|
(In
thousands)
|
|
2008
|
|
|
Adjustments
|
|
|
2009
|
|
Fiberglass-Composite
Pipe
|
|
$
|
1,440
|
|
|
$
|
-
|
|
|
$
|
1,440
|
|
Water
Transmission
|
|
|
360
|
|
|
|
(15
|
)
|
|
|
345
|
|
Infrastructure
Products
|
|
|
201
|
|
|
|
-
|
|
|
|
201
|
|
|
|
$
|
2,001
|
|
|
$
|
(15
|
)
|
|
$
|
1,986
|
|
AMERON
INTERNATIONAL CORPORATION AND SUBSIDIARIES
NOTE
14 – INCENTIVE STOCK COMPENSATION PLANS
As of
March 1, 2009, the Company had outstanding grants under the following
share-based compensation plans:
· 1994
Non-Employee Director Stock Option Plan ("1994 Plan") - The 1994 Plan was
terminated in 2001, except as to the outstanding options. A total of
240,000 new shares of Common Stock were made available for awards to
non-employee directors. Non-employee directors were granted options to
purchase the Company's Common Stock at prices not less than 100% of market value
on the date of grant. Such options vested in equal annual installments
over four years and terminate ten years from the date of grant.
· 2001
Stock Incentive Plan ("2001 Plan") - The 2001 Plan was terminated in 2004,
except as to the outstanding stock options and restricted stock grants. A
total of 380,000 new shares of Common Stock were made available for awards to
key employees and non-employee directors. The 2001 Plan served as the
successor to the 1994 Plan and superseded that plan. Non-employee
directors were granted options under the 2001 Plan to purchase the Company's
Common Stock at prices not less than 100% of market value on the date of
grant. Such options vested in equal annual installments over four
years. Such options terminate ten years from the date of grant. Key
employees were granted restricted stock under the 2001 Plan. Such
restricted stock grants vested in equal annual installments over four
years.
· 2004
Stock Incentive Plan ("2004 Plan") - The 2004 Plan serves as the successor to
the 2001 Plan and supersedes that plan. A total of 525,000 new shares of
Common Stock were made available for awards to key employees and non-employee
directors and may include, but are not limited to, stock options and restricted
stock grants. Non-employee directors were granted options under the 2004
Plan to purchase the Company's Common Stock at prices not less than 100% of
market value on the date of grant. Such options vest in equal annual
installments over four years and terminate ten years from the date of
grant. Key employees and non-employee directors were granted restricted
stock under the 2004 Plan. Such restricted stock grants typically vest in
equal annual installments over three years. During the three months ended
March 1, 2009, the Company granted 16,200 restricted shares to key
employees with a fair value on the grant date of $806,000. During the
three months ended March 2, 2008, the Company granted 3,802 stock options to
non-employee directors with a fair value on the grant date of $101,000 and
16,000 restricted shares to key employees with fair value on the grant date of
$1,639,000.
In
addition to the above, in 2001, non-employee directors were granted options to
purchase the Company's Common Stock at prices not less than 100% of market value
on the date of grant. Such options vested in equal annual installments
over four years and terminate ten years from the date of grant. At March
1, 2009, there were 7,000 shares subject to such stock options.
The
Company's income before income taxes and equity in earnings of joint venture for
the three months ended March 1, 2009 and March 2, 2008 included compensation
expenses of $1,015,000 and $1,856,000, respectively, related to stock-based
compensation arrangements. Tax benefits related to these expenses
were $397,000 and $724,000, respectively. There were no capitalized
share-based compensation costs for the three months ended March 1, 2009 and
March 2, 2008.
AMERON
INTERNATIONAL CORPORATION AND SUBSIDIARIES
The
following table summarizes the stock option activity for the three months ended
March 1, 2009:
|
|
|
|
|
|
|
|
Weighted-
|
|
|
|
|
|
|
|
|
|
Weighted-
|
|
|
Average
|
|
|
|
|
|
|
|
|
|
Average
|
|
|
Remaining
|
|
|
Aggregate
|
|
|
|
Number
of
|
|
|
Exercise
Price
|
|
|
Contractual
|
|
|
Intrinsic
Value
|
|
Options
|
|
Options
|
|
|
per
Share
|
|
|
Term
(Years)
|
|
|
(in
thousands)
|
|
Outstanding
at November 30, 2008
|
|
|
36,302
|
|
|
$
|
37.61
|
|
|
|
|
|
|
|
Granted
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
Exercised
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
Outstanding
at March 1, 2009
|
|
|
36,302
|
|
|
|
37.61
|
|
|
|
4.36
|
|
|
$
|
608
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options
exercisable at March 1, 2009
|
|
|
33,451
|
|
|
|
32.18
|
|
|
|
3.97
|
|
|
$
|
550
|
|
For the
three months ended March 1, 2009, no options were granted, forfeited, exercised
or expired. For the three months ended March 2, 2008, 3,802 options were
granted and no options were forfeited or expired. The aggregate
intrinsic value in the table above represents the total pretax intrinsic value,
which is the difference between the closing price of the Company’s Common Stock
on the last trading day of the first quarter of 2009 and the exercise price
times the number of shares that would have been received by the option holders
if the options were exercised on such trading day. This amount will
change based on the fair market value of the Company's Common Stock. The
aggregate intrinsic value of stock options exercised during the three months
ended March 2, 2008 was $1,702,000. As of March 1, 2009, unrecognized
compensation cost related to stock-based compensation arrangements totaled
$4,610,000, which is expected to be recognized over a weighted-average period of
2.25 years.
For the
three months ended March 1, 2009 and March 2, 2008, 16,200 and 16,000
shares of restricted stock were granted, respectively. The
weighted-average grant-date, fair value of such restricted stock was $49.78 and
$102.44 per share, respectively. The fair value of restricted stock,
which vested during the three months ended March 1, 2009 and March 1, 2008, was
$2,353,000 and $5,488,000, respectively.
Net cash
proceeds from the exercise of stock options during the three months ended March
1, 2008 was $760,000. The Company's policy is to issue shares from
its authorized shares upon the exercise of stock options.
NOTE
15 – EMPLOYEE BENEFIT PLANS
For the
three months ended March 1, 2009 and March 2, 2008, net pension and
postretirement costs were comprised of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
Postretirement
|
|
|
|
Pension
Benefits
|
|
|
Benefits
|
|
|
|
U.S.
Plans
|
|
|
Non-U.S.
Plans
|
|
|
|
|
|
|
|
(In
thousands)
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
Service
cost
|
|
$
|
690
|
|
|
$
|
744
|
|
|
$
|
67
|
|
|
$
|
110
|
|
|
$
|
81
|
|
|
$
|
96
|
|
Interest
cost
|
|
|
3,089
|
|
|
|
2,888
|
|
|
|
561
|
|
|
|
636
|
|
|
|
222
|
|
|
|
209
|
|
Expected
return on plan assets
|
|
|
(2,860
|
)
|
|
|
(3,928
|
)
|
|
|
(404
|
)
|
|
|
(423
|
)
|
|
|
(29
|
)
|
|
|
(32
|
)
|
Amortization
of unrecognized
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
prior
service cost
|
|
|
18
|
|
|
|
29
|
|
|
|
66
|
|
|
|
77
|
|
|
|
19
|
|
|
|
19
|
|
Amortization
of unrecognized
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
net
transition obligation
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
46
|
|
|
|
46
|
|
Amortization
of accumulated loss
|
|
|
1,451
|
|
|
|
284
|
|
|
|
(167
|
)
|
|
|
-
|
|
|
|
5
|
|
|
|
11
|
|
Net
periodic cost
|
|
$
|
2,388
|
|
|
$
|
17
|
|
|
$
|
123
|
|
|
$
|
400
|
|
|
$
|
344
|
|
|
$
|
349
|
|
AMERON
INTERNATIONAL CORPORATION AND SUBSIDIARIES
The
Company contributed $1,700,000 to the non-U.S. pension plans and did not make
any material contributions to the U.S. pension plan in the first three months of
2009. The Company expects to contribute approximately $8,500,000 to
its U.S pension plan and an additional $100,000 to its non-US pension plans
during the remainder of 2009.
NOTE
16 – PROVISION FOR INCOME TAXES
Income
taxes decreased to $2,644,000 in the first quarter of 2009, from $3,929,000 in
the same period of 2008. The effective tax rate on income from
continuing operations decreased to 30.0% in 2009, from 36.0% in
2008. The effective tax rates for the first quarters of 2009 and 2008
were based on forecasted full-year earnings and the anticipated mix of domestic
and foreign earnings. Income from certain foreign operations and
joint ventures is taxed at rates that are lower than the U.S. statutory tax
rates. The effective tax rate for the first quarter of 2009 is not
necessarily indicative of the tax rate for the full fiscal year.
At March
1, 2009, the total amount of gross unrecognized tax benefits, excluding
interest, was $9,226,000. This amount is not reduced for offsetting
benefits in other tax jurisdictions and for the benefit of future tax deductions
that would arise as a result of settling such liabilities as
recorded. Of this amount, $5,665,000 would reduce the Company’s
income tax expense and effective tax rate, after giving effect to offsetting
benefits from other tax jurisdictions and resulting future
deductions. At November 30, 2008, the total amount of gross
unrecognized tax benefits, excluding interest, was $7,416,000.
The
Company anticipates that it is reasonably possible that the total amount of
unrecognized tax benefits may significantly change within the succeeding 12
months as a result of the expiration of certain state statutes of limitations
for examination and the settlement of certain state audits. The
Company estimates that these events could reasonably result in a possible
decrease in unrecognized tax benefits of $1,501,000.
The
Company accrues interest and penalties related to unrecognized tax benefits as
income tax expense. Accruals totaling $1,187,000 were recorded
as a liability in the Company’s consolidated balance sheet at March 1, 2009,
compared to $1,098,000 as of November 30, 2008.
The
Company’s federal income tax returns remain subject to examination for the 2007
and forward tax years. The Company files multiple state income tax
returns, including California, Hawaii, Arizona and Texas, with open statutes
ranging from 2000 through 2008. The Company also files multiple
foreign income tax returns and remains subject to examination in major foreign
jurisdictions, including the Netherlands, Singapore and Malaysia, for years
ranging from 1996 through 2008.
NOTE
17 – FAIR VALUE MEASURMENTS
As
defined in SFAS No. 157, fair value is the price that would be received to sell
an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date (exit price). The Company
utilizes market data or assumptions that the Company believes market
participants would use in pricing the asset or liability, including assumptions
about risk and the risks inherent in the inputs to the valuation
technique. These inputs can be readily observable, market
corroborated or generally unobservable.
The
Company primarily applies the market approach for recurring fair value
measurements and endeavors to utilize the best available
information. Accordingly, the Company utilizes valuation techniques
that maximize the use of observable inputs and minimize the use of unobservable
inputs. The Company is able to classify fair value balances based on
the observability of those inputs.
AMERON
INTERNATIONAL CORPORATION AND SUBSIDIARIES
SFAS No.
157 establishes a fair value hierarchy that prioritizes the inputs used to
measure fair value. The hierarchy gives the highest priority to unadjusted
quoted prices in active markets for identical assets or liabilities (Level 1
measurement) and the lowest priority to unobservable inputs (Level 3
measurement). The three levels of the fair value hierarchy defined by
SFAS No. 157 are as follows:
Level 1
|
Quoted
prices are available in active markets for identical assets or liabilities
as of the reporting date. Active markets are those in which
transactions for the asset or liability occur in sufficient frequency and
volume to provide pricing information on an ongoing
basis. Level 1 primarily consists of financial instruments such
as exchange-traded derivatives, listed equities and U.S. government
treasury securities.
|
Level 2
|
Pricing
inputs are other than quoted prices in active markets included in Level 1,
which are either directly or indirectly observable as of the reporting
date. Level 2 includes those financial instruments that are
valued using models or other valuation methodologies. These
models are primarily industry-standard models that consider various
assumptions, including quoted forward prices for commodities, time value,
volatility factors, and current market and contractual prices for the
underlying instruments, as well as other relevant economic
measures. Substantially all of these assumptions are observable
in the marketplace throughout the full term of the instrument, can be
derived from observable data or are supported by observable levels at
which transactions are executed in the marketplace. Instruments
in this category include non-exchange-traded derivatives such as over the
counter forwards, options and repurchase
agreements.
|
Level 3
|
Pricing
inputs include significant inputs that are generally less observable from
objective sources. These inputs may be used with internally
developed methodologies that result in management’s best estimate of fair
value from the perspective of a market participant. Level 3
instruments include those that may be more structured or otherwise
tailored to customers’ needs. At each balance sheet date, the
Company performs an analysis of all instruments subject to SFAS No. 157
and includes in Level 3 all of those whose fair value is based on
significant unobservable inputs.
|
Assets
and liabilities measured at fair value on a recurring basis included the
following as of March 1, 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair
Value Measurements Using
|
|
|
Liabilities
|
|
(In
thousands)
|
|
Level
1
|
|
|
Level
2
|
|
|
Level
3
|
|
|
At
Fair Value
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative
liabilities
|
|
$
|
-
|
|
|
$
|
10
|
|
|
$
|
-
|
|
|
$
|
10
|
|
Total
liabilities
|
|
$
|
-
|
|
|
$
|
10
|
|
|
$
|
-
|
|
|
$
|
10
|
|
Assets
and liabilities measured at fair value on a recurring basis included the
following as of March 2, 2008:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair
Value Measurements Using
|
|
|
Assets
|
|
(In
thousands)
|
|
Level
1
|
|
|
Level
2
|
|
|
Level
3
|
|
|
At
Fair Value
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative
assets
|
|
$
|
-
|
|
|
$
|
107
|
|
|
$
|
-
|
|
|
$
|
107
|
|
Total
assets
|
|
$
|
-
|
|
|
$
|
107
|
|
|
$
|
-
|
|
|
$
|
107
|
|
AMERON
INTERNATIONAL CORPORATION AND SUBSIDIARIES
Derivatives
The
Company operates internationally, giving rise to exposure to market risks from
changes in foreign exchange rates. From time to time, derivative financial
instruments, primarily foreign exchange contracts, are used by the Company to
reduce those risks. The Company does not hold or issue financial or
derivative financial instruments for trading or speculative purposes. The
Company and its subsidiaries complete transactions in currencies other than
their functional currencies. The Company’s primary objective with
respect to currency risk is to reduce net income volatility that would otherwise
occur due to exchange-rate fluctuations.
In order
to minimize the risk of gain or loss due to exchange rates, the Company uses
foreign currency derivatives. As of March 1, 2009, the Company held
one foreign currency forward contract aggregating $6,000,000 U.S. dollars,
hedging Singapore dollars, and no other contracts. Such contract had
a fair value loss of $10,000 as of March 1, 2009 based on quotations from
financial institutions. As of March 2, 2008, the Company held 14
foreign currency forward contracts in the amount of $7,000,000 U.S. dollars,
hedging Singapore dollars. As of March 2, 2008, such instruments had
a fair value gain of $107,000 based on quotations from financial
institutions. Derivatives are reported as receivables on the balance
sheet and recognized as other income, net, on the income statement.
ITEM 2 – MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
INTRODUCTION
Ameron
International Corporation ("Ameron", the "Company", the “Registrant” or the
“Corporation”) is a multinational manufacturer of highly-engineered products and
materials for the chemical, industrial, energy, transportation and
infrastructure markets. Ameron is a leading producer of water transmission
lines; fiberglass-composite pipe for transporting oil, chemicals and corrosive
fluids and specialized materials; and products used in infrastructure
projects. The Company operates businesses in North America, South America,
Europe and Asia. The Company has three reportable segments. The
Fiberglass-Composite Pipe Group manufactures and markets filament-wound and
molded composite fiberglass pipe, tubing, fittings and well screens. The
Water Transmission Group manufactures and supplies concrete and steel pressure
pipe, concrete non-pressure pipe, protective linings for pipe and fabricated
steel products, such as large-diameter wind towers. The Infrastructure
Products Group consists of two operating segments, which are
aggregated: the Hawaii Division which manufactures and sells ready-mix
concrete, sand and aggregates, concrete pipe and culverts and the Pole Products
Division which manufactures and sells concrete and steel lighting and traffic
poles. The markets served by the Fiberglass-Composite Pipe Group are
worldwide in scope. The Water Transmission Group serves primarily the
western U.S. for pipe and sells wind towers primarily west of the Mississippi
river. The Infrastructure Products Group's quarry and ready-mix business
operates exclusively in Hawaii, and poles are sold throughout the U.S.
Ameron also participates in several joint-venture companies, directly in the
U.S. and Saudi Arabia, and indirectly in Egypt.
CRITICAL
ACCOUNTING POLICIES AND ESTIMATES
Management's
Discussion and Analysis of Liquidity and Capital Resources and Results of
Operations are based upon the Company's consolidated financial statements, which
are prepared in accordance with accounting principles generally accepted in the
United States of America. The preparation of these financial statements
requires management to make certain estimates and assumptions that affect the
reported amounts of assets, liabilities, revenues and expenses, and related
disclosure of contingent assets and liabilities during the reporting
periods. Management bases its estimates on historical experience and on
various other assumptions that are believed to be reasonable under the
circumstances, the results of which form the basis for making judgments about
the carrying values of assets and liabilities that are not readily apparent from
other sources. Actual results could differ from those
estimates.
AMERON
INTERNATIONAL CORPORATION AND SUBSIDIARIES
A summary
of the Company's significant accounting policies is provided in Note (1) of the
Notes to Consolidated Financial Statements, under Part II, Item 8, in the
Company’s Annual Report on Form 10-K for the fiscal year ended November 30, 2008
(“2008 Annual Report”). In addition, management believes the following
accounting policies affect the more significant estimates used in preparing the
consolidated financial statements.
The
consolidated financial statements include the accounts of Ameron and all
wholly-owned subsidiaries. All material intercompany accounts and
transactions are eliminated. The functional currencies for the Company's
foreign operations are the applicable local currencies. The translation
from the applicable foreign currencies to U.S. dollars is performed for balance
sheet accounts using current exchange rates in effect at the balance sheet date
and for revenue and expense accounts using a weighted-average exchange rate
during the period. The resulting translation adjustments are recorded in
accumulated other comprehensive income/(loss). The Company advances funds
to certain foreign subsidiaries that are not expected to be repaid in the
foreseeable future. Translation adjustments arising from these advances
are also included in accumulated other comprehensive income/(loss). The
timing of repayments of intercompany advances could materially impact the
Company's consolidated financial statements. Additionally, earnings of
foreign subsidiaries are often permanently reinvested outside the U.S.
Unforeseen repatriation of such earnings could result in significant
unrecognized U.S. tax liability. Gains or losses resulting from foreign
currency transactions are included in other income, net.
Revenue
for the Fiberglass-Composite Pipe and Infrastructure Products segments is
recognized when risk of ownership and title pass, primarily at the time goods
are shipped, provided that an agreement exists between the customer and the
Company, the price is fixed or determinable and collection is reasonably
assured. Revenue is recognized for the Water Transmission Group primarily
under the percentage-of-completion method, typically based on completed units of
production, since products are manufactured under enforceable and binding
construction contracts, typically are designed for specific applications, are
not interchangeable between projects, and are not manufactured for stock.
Revenue for the period is determined by multiplying total estimated contract
revenue by the percentage-of-completion of the contract and then subtracting the
amount of previously recognized revenue. Cost of earned revenue is
computed by multiplying estimated contract completion cost by the
percentage-of-completion of the contract and then subtracting the amount of
previously recognized cost. In some cases, if products are manufactured
for stock or are not related to specific construction contracts, revenue is
recognized under the same criteria used by the other two
segments. Revenue under the percentage-of-completion method is
subject to a greater level of estimation, which affects the timing of revenue
recognition, costs and profits. Estimates are reviewed on a consistent
basis and are adjusted periodically to reflect current expectations. Costs
attributable to unpriced change orders are treated as costs of contract
performance in the period, and contract revenue is recognized if recovery is
probable. Disputed or unapproved change orders are treated as
claims. Recognition of amounts of additional contract revenue relating to
claims occurs when amounts have been received or awarded with recognition based
on the percentage-of-completion methodology.
The
Company expenses environmental clean-up costs related to existing conditions
resulting from past or current operations on a site-by-site basis.
Liabilities and costs associated with these matters, as well as other pending
litigation and asserted claims arising in the ordinary course of business,
require estimates of future costs and judgments based on the knowledge and
experience of management and its legal counsel. When the Company's
exposures can be reasonably estimated and are probable, liabilities and expenses
are recorded. The ultimate resolution of any such exposure to the Company
may differ due to subsequent developments.
Inventories
are stated at the lower of cost or market with cost determined principally on
the first-in, first-out ("FIFO") method. Certain steel inventories used by
the Water Transmission Group are valued using the last-in, first-out ("LIFO")
method. Significant changes in steel levels or costs could materially
impact the Company's financial statements. Reserves are established for
excess, obsolete and rework inventories based on estimates of salability and
forecasted future demand. Management records an allowance for doubtful
accounts receivable based on historical experience and expected
trends. A significant reduction in demand or a significant worsening
of customer credit quality could materially impact the Company’s consolidated
financial statements.
AMERON
INTERNATIONAL CORPORATION AND SUBSIDIARIES
Investments
in unconsolidated joint ventures or affiliates ("joint ventures") over which the
Company has significant influence are accounted for under the equity method of
accounting, whereby the investment is carried at the cost of acquisition, plus
the Company's equity in undistributed earnings or losses since
acquisition. Investments in joint ventures over which the Company does not
have the ability to exert significant influence over the investees' operating
and financing activities are accounted for under the cost method of
accounting. The Company's investment in TAMCO, a steel mini-mill in
California, is accounted for under the equity method. Investments in
Ameron Saudi Arabia, Ltd. and Bondstrand, Ltd. are accounted for under the cost
method due to Management's current assessment of the Company's influence
over these joint ventures.
Property,
plant and equipment is stated on the basis of cost and depreciated principally
using a straight-line method based on the estimated useful lives of the related
assets, generally three to 40 years. The Company reviews long-lived assets
for impairment whenever events or changes in circumstances indicate that the
carrying value of such assets may not be recoverable. If the estimated
future, undiscounted cash flows from the use of an asset are less than its
carrying value, a write-down is recorded to reduce the related asset to
estimated fair value. Actual cash flows may differ significantly from
estimated cash flows. Additionally, current estimates of future cash flows
may differ from subsequent estimates of future cash flows. Changes in
estimated or actual cash flows could materially impact the Company's
consolidated financial statements.
The
Company is self-insured for a portion of the losses and liabilities primarily
associated with workers' compensation claims and general, product and vehicle
liability. Losses are accrued based upon the Company's estimates of the
aggregate liability for claims incurred using historical experience and certain
actuarial assumptions followed in the insurance industry. The estimate of
self-insurance liability includes an estimate of incurred but not reported
claims, based on data compiled from historical experience. Actual
experience could differ significantly from these estimates and could materially
impact the Company's consolidated financial statements. The Company
purchases varying levels of insurance to cover losses in excess of the
self-insured limits. Currently, the Company's primary self-insurance
limits or deductibles are $1.0 million per workers' compensation claim, $.1
million per general, property or product liability claim, and $.25 million per
vehicle liability claim.
The
Company follows the guidance of Statement of Financial Accounting Standards
("SFAS") No. 158, “Employers’ Accounting for Defined Benefit Pension and Other
Postretirement Plans,” SFAS No. 87, “Employers' Accounting for Pensions,” and
SFAS No. 106, “Employers’ Accounting for Postretirement Benefits Other Than
Pensions,” when accounting for pension and other postretirement benefits.
Under these accounting standards, assumptions are made regarding the valuation
of benefit obligations and the performance of plan assets that are controlled
and invested by third-party fiduciaries. Delayed recognition of
differences between actual results and expected or estimated results is a
guiding principle of these standards. Such delayed recognition provides a
gradual recognition of benefit obligations and investment performance over the
working lives of the employees who benefit under the plans, based on various
assumptions. Assumed discount rates are used to calculate the present
values of benefit payments which are projected to be made in the future,
including projections of increases in employees' annual compensation and health
care costs. Management also projects the future returns on invested assets
based principally on prior performance. These projected returns reduce the
net benefit costs the Company records in the current period. Actual
results could vary significantly from projected results, and such deviations
could materially impact the Company's consolidated financial statements.
Management consults with the Company’s actuaries when determining these
assumptions. Program changes, including termination, freezing of benefits
or acceleration of benefits, could result in an immediate recognition of
unrecognized benefit obligations; and such recognition could materially impact
the Company's consolidated financial statements.
AMERON
INTERNATIONAL CORPORATION AND SUBSIDIARIES
The
Company adopted SFAS No. 157, “Fair Value Measurements,” which provides a
framework for measuring fair value. As defined in SFAS No. 157, fair
value is the price that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants at the
measurement date (exit price). The Company utilizes market data or
assumptions that the Company believes market participants would use in pricing
assets or liabilities, including assumptions about risk and the risks inherent
in the inputs to valuation techniques. These inputs can be readily
observable, market corroborated or generally unobservable. The
Company primarily applies the market and income approaches for recurring fair
value measurements and endeavors to utilize the best available
information. Accordingly, the Company utilizes valuation techniques
that maximize the use of observable inputs and minimize the use of unobservable
inputs. The Company classifies fair value balances based on the
observability of those inputs. The ultimate exit price could be
significantly different than currently estimated by the Company.
Management
incentive compensation is accrued based on current estimates of the Company's
ability to achieve short-term and long-term performance targets. The
Company’s actual performance could be significantly different than currently
estimated by the Company.
Deferred
income tax assets and liabilities are computed for differences between the
financial statement and income tax bases of assets and liabilities. Such
deferred income tax asset and liability computations are based on enacted tax
laws and rates applicable to periods in which the differences are expected to
reverse. Valuation allowances are established, when necessary, to reduce
deferred income tax assets to the amounts expected to be realized.
Quarterly income taxes are estimated based on the mix of income by jurisdiction
forecasted for the full fiscal year. The Company believes that it has
adequately provided for tax-related matters. Actual income, the mix
of income by jurisdiction and income taxes could be significantly different than
currently estimated.
The
amount of income taxes the Company pays is subject to ongoing audits by federal,
state and foreign tax authorities. The Company’s estimate of the
potential outcome of any uncertain tax issue is subject to Management’s
assessment of relevant risks, facts, and circumstances existing at that time,
pursuant to the Financial Accounting Standards Board (“FASB”) Interpretation
(“FIN”) No. 48, “Accounting for Uncertainty in Income Taxes - an
interpretation of FASB Statement No. 109.” FIN No. 48 requires a
more-likely-than-not threshold for financial statement recognition and
measurement of tax positions taken or expected to be taken in a tax
return. A liability is recorded for the difference between the
benefit recognized and measured pursuant to FIN No. 48 and the tax position
taken or expected to be taken on the tax return. To the extent that
the Company’s assessment of such tax positions changes, the change in estimate
is recorded in the period in which the determination is made. The
Company reports tax-related interest and penalties as a component of income tax
expense.
LIQUIDITY
AND CAPITAL RESOURCES
As of
March 1, 2009, the Company's working capital, including cash and cash
equivalents and current portion of long-term debt, totaled $282.9 million, a
decrease of $14.5 million from working capital of $297.4 million as of November
30, 2008. The decrease resulted primarily from a decrease in
receivables and inventories, partially offset by an increase in cash and
decreases in trade payables, income taxes payable and accrued liabilities.
The reductions in receivables and inventories were primarily due to more
efficient working capital management and a slowdown in business
activity. Cash and cash equivalents totaled $148.5 million as of
March 1, 2009, compared to $143.6 million as of November 30, 2008.
AMERON
INTERNATIONAL CORPORATION AND SUBSIDIARIES
For the
three months ended March 1, 2009, net cash of $32.4 million was generated from
operating activities, compared to $18.4 million generated in the similar period
in 2008. The higher operating cash flow in 2009 was primarily due to a
sharper decline in operating assets, offset by lower liabilities and
earnings. In the three months ended March 1, 2009, the Company's cash
provided by operating activities included net income of $3.8 million, plus
non-cash adjustments (depreciation, amortization, loss from joint venture and
stock compensation expense) of $8.9 million, plus changes in operating assets
and liabilities of $19.7 million. In the three months ended March 2,
2008, the Company’s cash from operating activities included net income of $9.7
million, less similar non-cash adjustments (depreciation, amortization, equity
income from joint ventures in excess of dividends and stock compensation
expense) of $4.2 million, plus changes in operating assets and liabilities of
$4.4 million. The non-cash adjustments in 2009 were higher due
primarily to the Company’s equity in loss of TAMCO. The positive
change in operating assets and liabilities in 2009 was primarily due to
decreases in receivables and inventories.
Net cash
used in investing activities totaled $22.2 million in three months ended March
1, 2009, compared to $11.3 million used in the three months ended March 2,
2008. Net cash used in investing activities during the first quarter of
2009 consisted of capital expenditures of $12.4 million, compared to $12.0
million in the same period of 2008. In addition to normal replacement
and upgrades of machinery and equipment in both 2009 and 2008, the Company
expanded a wind tower manufacturing facility in 2008 and fiberglass pipe plants
in Texas and Brazil in 2009. Normal replacement expenditures are
typically equal to depreciation. During the first quarter of 2009,
the Company contributed capital of $10.0 million to TAMCO, the Company’s
50%-owned steel mini-mill in California. During the year ending
November 30, 2009, the Company anticipates spending between $30 and $40 million
on capital expenditures. Capital expenditures are expected to be funded by
existing cash balances, cash generated from operations or additional
borrowings.
Net cash
used in financing activities totaled $2.9 million during the three months ended
March 1, 2009, compared to $5.6 million used in the three months ended March 2,
2008. Net cash used in 2009 consisted of payment of Common Stock
dividends of $2.8 million and treasury stock purchases of $1.0 million, related
to the payment of taxes associated with the vesting of restricted
shares. Also in 2009, the Company recognized tax benefits related to
stock-based compensation of $.8 million. Net cash used in 2008
consisted of net repayment of debt of $2.6 million, payment of Common Stock
dividends of $2.3 million and similar treasury stock purchases of $2.8
million. In 2008, the Company received $.8 million from the
issuance of Common Stock related to exercised stock options and recognized tax
benefits related to stock-based compensation of $1.3 million.
The
Company utilizes a $100.0 million revolving credit facility with six banks (the
"Revolver"). Under the Revolver, the Company may, at its option, borrow up
to the available amount at floating interest rates (LIBOR plus a spread ranging
from .75% to 1.625%, determined based on the Company’s financial condition and
performance), at any time until September 2010, when all borrowings under the
Revolver must be repaid. At March 1, 2009, $81.8 million was
available to be borrowed under the Revolver.
The
Company's lending agreements contain various restrictive covenants, including
the requirement to maintain specified amounts of net worth and restrictions on
cash dividends, borrowings, liens, investments, capital expenditures,
guarantees, and financial covenants. The Company is required to maintain
consolidated net worth of $181.4 million plus 50% of net income and 75% of
proceeds from any equity issued after January 24, 2003. The Company's
consolidated net worth exceeded the covenant amount by $164.6 million as of
March 1, 2009. The Company is required to maintain a consolidated leverage ratio
of consolidated funded indebtedness to earnings before interest, taxes,
depreciation and amortization ("EBITDA") of no more than 2.5 times. At March 1,
2009, the Company maintained a consolidated leverage ratio of .55 times
EBITDA. Lending agreements require that the Company maintain qualified
consolidated tangible assets at least equal to the outstanding secured funded
indebtedness. At March 1, 2009, qualifying tangible assets equaled 3.76 times
funded indebtedness. Under the most restrictive fixed charge coverage ratio, the
sum of EBITDA and rental expense less cash taxes must be at least 1.50 times the
sum of interest expense, rental expense, dividends and scheduled funded debt
payments. At March 1, 2009, the Company maintained such a fixed charge coverage
ratio of 2.53 times. Under the most restrictive provisions of the
Company's lending agreements, approximately $23.4 million of retained earnings
was not restricted at March 1, 2009, as to the declaration of cash dividends or
the repurchase of Company stock. At March 1, 2009, the Company was in
compliance with all covenants.
AMERON
INTERNATIONAL CORPORATION AND SUBSIDIARIES
Cash and
cash equivalents at March 1, 2009 totaled $148.5 million, an increase of $4.9
million from November 30, 2008. At March 1, 2009, the Company had total
debt outstanding of $52.1 million, compared to $52.8 million at November 30,
2008, and approximately $107.3 million in unused committed and uncommitted
credit lines available from foreign and domestic banks. The Company's
highest borrowing and the average borrowing levels during 2009 were $53.9
million and $52.9 million, respectively.
Cash
balances are held throughout the world, including substantial amounts held
outside of the U.S. Most of the amounts held outside of the U.S.
could be repatriated to the U.S. but, under current law, would be subject to
U.S. federal income taxes, less applicable foreign tax credits.
The
Company contributed $1.7 million to the non-U.S. pension plans and did not
contribute to the U.S. defined benefit pension plan during the first three
months of 2009. The Company expects to contribute approximately $8.5
million to its U.S. defined benefit pension plan and an additional $.1 million
to the non-U.S. pension plans during the remainder of 2009.
TAMCO’s
shareholders made a $20.0 million capital contribution to TAMCO in February,
2009. The Company’s share of the funding from shareholders totaled $10.0
million. The Company continues to have a 50% ownership interest in TAMCO
and accounts for its investment under the equity method of accounting. The
Company may provide additional funding to TAMCO if TAMCO is unable to generate
sufficient cash flow from operations or obtain third-party
financing. TAMCO’s primary source of external financing is currently a
$40.0 million credit facility (stepping down to $35.0 million on May 1,
2009). Approximately $30.0 million was outstanding under the credit
facility as of March 1, 2009. The terms of TAMCO’s credit facility
prohibit TAMCO from paying dividends to its shareholders until the expiration of
the facility on February 28, 2010.
Management
believes that cash flow from operations and current cash balances, together with
currently available lines of credit, will be sufficient to meet operating
requirements in 2009. Cash available from operations could be affected by
any general economic downturn or any decline or adverse changes in the Company's
business, such as a loss of customers, competitive pricing pressures or
significant raw material price increases.
The
Company's contractual obligations and commercial commitments at March 1, 2009
are summarized as follows (in thousands):
|
|
Payments
Due by Period
|
|
|
|
|
|
|
Less
than
|
|
|
|
|
|
|
|
|
After
5
|
|
Contractual
Obligations
|
|
Total
|
|
|
1
year
|
|
|
1-3
years
|
|
|
3-5
years
|
|
|
years
|
|
Long-term
debt
|
|
$
|
52,077
|
|
|
$
|
16,594
|
|
|
$
|
13,188
|
|
|
$
|
6,595
|
|
|
$
|
15,700
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
payments on debt (a)
|
|
|
4,647
|
|
|
|
1,756
|
|
|
|
1,666
|
|
|
|
546
|
|
|
|
679
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
leases
|
|
|
35,235
|
|
|
|
4,390
|
|
|
|
7,004
|
|
|
|
3,231
|
|
|
|
20,610
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension
funding
|
|
|
8,600
|
|
|
|
8,600
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Uncertain
tax positions
|
|
|
1,166
|
|
|
|
1,166
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
contractual obligations (b)
|
|
$
|
101,725
|
|
|
$
|
32,506
|
|
|
$
|
21,858
|
|
|
$
|
10,372
|
|
|
$
|
36,989
|
|
AMERON
INTERNATIONAL CORPORATION AND SUBSIDIARIES
|
|
Commitments
Expiring Per Period
|
|
|
|
|
|
|
Less
than
|
|
|
|
|
|
|
|
|
After
|
|
Contractual
Commitments
|
|
Total
|
|
|
1
year
|
|
|
1-3
years
|
|
|
3-5
years
|
|
|
5
years
|
|
Standby
letters of credit (c)
|
|
$
|
2,100
|
|
|
$
|
2,100
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
commercial commitments (b)
|
|
$
|
2,100
|
|
|
$
|
2,100
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
(a)
Future interest payments related to debt obligations, excluding the
Revolver.
(b) The
Company has no capitalized lease obligations, unconditional purchase obligations
or standby repurchases obligations.
(c) Not
included are standby letters of credit totaling $16,067 supporting industrial
development bonds with principal of $15,700. The principal amount of the
industrial development bonds is included in long-term debt. The standby
letters of credit are issued under the Revolver.
RESULTS
OF OPERATIONS: 2009 COMPARED WITH 2008
General
Net
income totaled $3.8 million, or $.42 per diluted share, on sales of $146.0
million in the quarter ended March 1, 2009, compared to $9.7 million, or $1.07
per diluted share, on sales of $150.0 million in the same period in 2008.
The Fiberglass-Composite Pipe Group had lower sales and profits due to a
slowdown in foreign markets. The Infrastructure Products Group had
lower sales and profits due to declines by both the Hawaiian division and the
Pole Products division due to declining construction markets. The
Water Transmission Group had higher sales and profits due primarily to an
improvement in the wind tower operation. Net income was lower due
primarily to a $5.1 million reduction in equity in earnings of TAMCO, Ameron's
50%-owned steel mini-mill in California, in the first quarter of 2009, compared
to the same period in 2008, caused by the lack of activity in the steel
market.
Sales
Sales
decreased $3.8 million in the first quarter of 2009, compared to the similar
period in 2008. The Water Transmission Group had higher sales, while the
Fiberglass-Composite Pipe and Infrastructure Products Groups had lower
sales. The aggregate sales decrease was due in large part to weaker
foreign currencies.
Fiberglass-Composite
Pipe's sales decreased $9.1 million, or 13.8%, in the first quarter of 2009,
compared to the similar period in 2008. Sales from operations in the U.S.
increased $1.4 million in the first quarter of 2009 primarily due to increased
demand for onshore oilfield and marine and offshore piping. Sales from
Asian subsidiaries decreased $4.9 million in the first quarter of 2009 due to a
general downturn in marine and offshore segments and the impact of foreign
exchange. Sales from European operations decreased $2.3 million in the
first quarter of 2009 due to slowdown in marine and offshore markets and the
impact of foreign exchange. Sales from Brazilian operations decreased $3.4
million due to project delays in municipal markets and a halt in activity in the
pulp and paper market. The Group’s customers in the industrial,
marine, offshore and onshore oilfield markets are being impacted by the decline
in oil prices, financing issues, lower transportation demand and shipping
rates. The Fiberglass-Composite Pipe Group is expected to moderate
during 2009 due to the overall economic climate, the effect of oil prices and
energy demand on oil production and the impact of tight credit
markets.
Water
Transmission’s sales increased $10.6 million, or 25.8%, in the first quarter of
2009, compared to the similar period in 2008. The sales improvement was
driven by increased production of large-diameter wind towers. Sales
of water pipe in the U.S. increased due to several pipe liner projects in
Arizona and Southern California, offset by lower volume in Colombia, South
America. The demand for large-diameter water pipe in the western U.S.
remains soft due to a cyclical lull in the water infrastructure
market. The timing of bid activity is being influenced by municipal
budgets, availability of financing in tight credit markets and the slowdown in
housing construction. Longer term, new and upgraded water
infrastructure will be required to support population growth, to provide
adequate water supply and to develop redundant water supplies. Near
term, the water pipe business will continue to experience soft market
demand. The level of wind-tower sales in the first quarter of 2009 is
not sustainable given the current lack of project financing available to wind
farm developers. During the first quarter, the wind tower business
had order postponements totaling approximately 30% of the order
backlog. Until financing and incentives are provided to the wind
energy industry, wind tower activity will remain
depressed.
AMERON
INTERNATIONAL CORPORATION AND SUBSIDIARIES
Infrastructure
Products' sales decreased $5.6 million, or 12.9%, in the first quarter of 2009,
compared to the similar period in 2008. The Company’s Hawaiian division
had lower sales as construction markets in Hawaii continued to
weaken. Pole Products continued to be impacted by the decline in U.S.
housing markets and reduced demand for concrete lighting poles. The
Infrastructure Products Group is expected to continue to be impacted by the
slowdown in construction spending in Hawaii and the low residential construction
spending level in the western and the southeastern U.S. An
improvement for the Infrastructure Products Group is not anticipated in
2009.
Gross
Profit
Gross
profit in the first quarter of 2009 was $34.9 million, or 23.9% of sales,
compared to $33.5 million, or 22.3% of sales, in the first quarter of
2008. Gross profit increased $2.3 million due to higher profit margins,
offset by $.8 million due to lower sales. Margins increased primarily
due to improved efficiency from wind-tower operation.
Fiberglass-Composite
Pipe Group's gross profit decreased $2.0 million in the first quarter of 2009,
compared to the similar period in 2008. Profit margins improved to
38.8% in 2009, compared to 36.4% in 2008. Higher margins resulted
from improvements in product and market mix and prices. Decreased sales volume
negatively impacted gross profit by $3.3 million, while favorable product mix
and operating efficiencies generated additional gross profit of $1.3 million in
2009.
Water
Transmission Group's gross profit increased $6.1 million in the first quarter of
2009, compared to the similar period in 2008. The profit margin was 10.4%
in 2009, compared to a negative profit margin of 1.9% in 2008. Higher
margins resulted from improved efficiency and better plant utilization of the
wind-tower operation.
Gross
profit in the Infrastructure Products Group decreased $2.1 million in the first
quarter of 2009, compared to the similar period in 2008. Profit margins
declined to 20.3% in the first quarter of 2009, compared to 22.5% in 2008.
The decrease in sales volume reduced gross profit by $1.3
million. Lower margins reduced gross profit by $.8 million in 2009
due to underutilization of plant capacity and pricing
pressures.
Selling,
General and Administrative Expenses
Selling,
general and administrative ("SG&A") expenses totaled $26.4 million, or 18.1%
of sales, in the first quarter of 2009, compared to $25.8 million, or 17.2% of
sales, in the similar period of 2008. The $.6 million increase included
higher pension expense of $1.7 million and higher legal expenses of $.5 million,
offset by lower stock compensation expense of $.8 million and lower management
incentive and other expenses of $.8 million.
Other
Income, Net
Other
income was $.5 million in the first quarter of 2009, compared to $3.0 million in
the similar period of 2008. The decrease in other income in 2009 was
due primarily to dividend income received from the Company’s concrete pipe joint
venture, Ameron Saudi Arabia, Ltd., of $1.5 million in 2008. Other
income also included royalties and fees from licensees, foreign currency
transaction losses and other miscellaneous income.
Interest
Net
interest expense totaled $.2 million in the first quarter of 2009, compared to
net interest income of $.3 million in the same period of 2008. Higher net
interest expense was due to lower returns from short-term
investments.
AMERON
INTERNATIONAL CORPORATION AND SUBSIDIARIES
Provision
for Income Taxes
Income
taxes decreased to $2.6 million in the first quarter of 2009, from $3.9 million
in the same period of 2008. The effective tax rate decreased to 30.0%
in 2009, from 36.0% in 2008. The effective tax rates for the first
quarters of 2009 and 2008 were based on forecasted full-year earnings and the
anticipated mix of domestic and foreign earnings. Income from certain
foreign operations and joint ventures is taxed at rates that are lower than the
U.S. statutory tax rates. The effective tax rate for the first
quarter of 2009 is not necessarily indicative of the tax rate for the full
year.
Equity
in Earnings of Joint Venture, Net of Taxes
Equity in
earnings of joint venture, which consists of the Company’s share of the net
income or loss of TAMCO, decreased to a loss of $2.3 million in the first
quarter of 2009, compared to income of $2.8 million in the similar period of
2008. Equity income is shown net of income taxes. Losses and
earnings from TAMCO were taxed at an effective rate of 9.6%, for the first
quarter of 2009 and 2008, reflecting the dividend exclusion provided to the
Company under current tax laws. The reduction in TAMCO’s earnings was
due to a significant downturn in the steel industry. TAMCO’s
production operations are currently shut down and are not expected to restart
until market conditions improve. TAMCO plans to start up production
operations on a limited basis during the second quarter of
2009. Demand for steel rebar in TAMCO’s key markets in the western
U.S. is not expected to recover in the short term.
ITEM 3 – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
No
material changes have occurred in the quantitative and qualitative market risk
disclosure as presented in the Company’s 2008 Annual Report.
ITEM 4 – CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and
Procedures. Management established disclosure controls and
procedures to ensure that material information relating to the Company,
including its consolidated subsidiaries, is made known to the officers who
certify the Company's financial reports and to other members of senior
management and the Board of Directors.
The
Company carried out an evaluation, under the supervision and with the
participation of the Company's management, including the Company's Chief
Executive Officer and Chief Financial Officer, of the effectiveness of the
design and operation of the Company's disclosure controls and procedures as of
March 1, 2009 pursuant to Exchange Act Rule 13a-14. Based upon that
evaluation, the Chief Executive Officer and Chief Financial Officer concluded
that the Company's disclosure controls and procedures (as defined in
Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934)
are effective. “Disclosure controls and procedures” are the controls and
other procedures of an issuer that are designed to ensure that information
required to be disclosed by the issuer in the reports filed or submitted by it
under the Securities Exchange Act of 1934, as amended (Exchange Act) is
recorded, processed, summarized and reported, within the time periods specified
in the Securities and Exchange Commission’s rules and forms. “Disclosure
controls and procedures” include, without limitation, controls and procedures
designed to ensure that information required to be disclosed by an issuer in its
Exchange Act reports is accumulated and communicated to the issuer’s management,
including its principal executive and financial officers, as appropriate to
allow timely decisions regarding required disclosure.
There was
no change in the Company's internal control over financial reporting that
occurred during the fiscal quarter covered by this report that has materially
affected, or is reasonably likely to materially affect, the Company's internal
control over financial reporting.
AMERON
INTERNATIONAL CORPORATION AND SUBSIDIARIES
FORWARD-LOOKING
AND CAUTIONARY STATEMENTS
All
statements and assumptions contained in this Quarterly Report on Form 10-Q and
in any documents attached or incorporated by reference that do not directly and
exclusively relate to historical facts constitute “forward-looking statements”
within the meaning of the Safe Harbor provisions of the Private Securities
Litigation Reform Act of 1995. These statements represent current expectations
and beliefs of the Company, and no assurance can be given that the results
described in such statements will be achieved.
Forward-looking
information contained in these statements include, among other things,
statements with respect to the Company’s financial condition, results of
operations, cash flows, business strategies, operating efficiencies or
synergies, competitive positions, growth opportunities, plans and objectives of
management, and other matters. Such statements are subject to numerous
assumptions, risks, uncertainties and other factors, many of which are outside
of the Company’s control, which could cause actual results to differ materially
from the results described in such statements. These factors include without
limitation those listed below under Item 1A, Risk Factors, in the Company’s 2008
Annual Report on Form 10-K.
Forward-looking
statements in this Quarterly Report on Form 10-Q speak only as of the date of
this Quarterly Report, and forward-looking statements in documents attached or
incorporated by reference speak only as to the date of those
documents. The Company does not undertake any obligation to update or
release any revisions to any forward-looking statement or to report any events
or circumstances after the date of this Quarterly Report or to reflect the
occurrence of unanticipated events, except as required by law.
PART II – OTHER INFORMATION
ITEM 1 – LEGAL PROCEEDINGS
In April
2004, Sable Offshore Energy Inc. ("Sable"), as agent for certain owners of the
Sable Offshore Energy Project, brought an action against various coatings
suppliers and application contractors, including the Company and its subsidiary,
Ameron B.V., in the Supreme Court of Nova Scotia, Canada. Sable seeks
damages allegedly sustained by it resulting from performance problems with
several coating systems used on the Sable Offshore Energy Project, including
coatings products furnished by the Company and Ameron B.V. Sable's
originating notice and statement of claim alleged a claim for damages in an
unspecified amount; however, Sable has since alleged that its claim for damages
against all defendants is approximately 440 million Canadian dollars, a figure
which the Company and Ameron B.V. contest. This matter is in
discovery, and no trial date has yet been established. The Company is
vigorously defending itself in this action. Based upon the information
available to it at this time, the Company is not able to estimate the possible
range of loss with respect to this case.
In May
2003, Dominion Exploration and Production, Inc. and Pioneer Natural Resources
USA, Inc. (collectively "Dominion") brought an action against the Company in
Civil District Court for the Parish of Orleans, Louisiana as owners of an
offshore production facility known as a SPAR. Dominion seeks damages
allegedly sustained by it resulting from delays in delivery of the SPAR caused
by the removal and replacement of certain coatings containing lead and/or lead
chromate for which the manufacturer of the SPAR alleged the Company was
responsible. Dominion contends that the Company made certain
misrepresentations and warranties to Dominion concerning the lead-free nature of
those coatings. Dominion's petition as filed alleged a claim for damages
in an unspecified amount; however, Dominion's economic expert has since
estimated Dominion's damages at approximately $128 million, a figure which the
Company contests. This matter is in discovery, and no trial date has yet
been established. The Company is vigorously defending itself in this
action. Based upon the information available to it at this time, the
Company is not able to estimate the possible range of loss with respect to this
case.
In July
2004, BP America Production Company (“BP America”) brought an action against the
Company in the 24th
Judicial District Court, Parish of Jefferson, Louisiana in connection with
fiberglass pipe sold by the Company for installation in four offshore platforms
constructed for BP America. The plaintiff seeks damages allegedly
sustained by it resulting from claimed defects in such pipe. BP
America’s petition as filed alleged a claim against the Company for rescission,
products liability, negligence, breach of contract and warranty and for damages
in an amount of not less than $20 million, a figure which the Company
contests. This matter is in discovery, and no trial date has yet been
established. The Company is vigorously defending itself in this
action. Based upon the information available to it at this time, the
Company is not able to estimate the possible range of loss with respect to this
case.
AMERON
INTERNATIONAL CORPORATION AND SUBSIDIARIES
In June
2006, the Cawelo, California Water District (“Cawelo”) brought an action against
the Company in Kern County Superior Court, California in connection
with concrete pipe sold by the Company in 1995 for a wastewater
recovery pipeline in such county. Cawelo seeks damages allegedly
sustained by it resulting from the failure of such pipe in
2004. Cawelo’s petition as filed alleged a claim against the Company
for products liability, negligence, breach of express warranty and breach of
written contract and for damages in an amount of not less than $8 million, a
figure which the Company contests. This matter is in discovery, and
no trial date has yet been established. The Company is vigorously
defending itself in this action. Based upon the information available
to it at this time, the Company is not able to estimate the possible range of
loss with respect to this case.
The
Company is a defendant in a number of asbestos-related personal injury
lawsuits. These cases generally seek unspecified damages for
asbestos-related diseases based on alleged exposure to products previously
manufactured by the Company and others. As of March 1, 2009, the
Company was a defendant in 23 asbestos-related cases, compared to 24 cases as of
November 30, 2008. During the quarter ended March 1, 2009, there were
two new asbestos-related cases, two cases dismissed, one case settled, no
judgments and aggregate net costs and expenses of $.2 million. Based
upon the information available to it at this time, the Company is not able to
estimate the possible range of loss with respect to these cases.
The
Company is 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. While the Company finds it difficult to estimate
with any certainty the total cost of remediation at the several sites, on the
basis of currently available information and reserves provided, the Company
believes that the outcome of such environmental regulatory proceedings will not
have a material effect on the Company's financial position, cash flows, or
results of operations.
In
December 2008, the Company received from the U.S. Treasury Department’s Office
of Foreign Assets Control (“OFAC”) a Requirement To Furnish Information
regarding transactions involving Iran. The Company intends to
cooperate fully with OFAC on this matter. Based upon the information
available to it at this time, the Company is not able to predict the outcome of
this matter.
In
addition, certain other claims, suits and complaints that arise in the ordinary
course of business, have been filed or are pending against the
Company. Management believes that these matters are either adequately
reserved, covered by insurance, or would not have a material effect on the
Company's financial position, cash flows or results of operations if disposed of
unfavorably.
No
material changes have occurred in risk factors as presented in the Company’s
2008 Annual Report.
AMERON
INTERNATIONAL CORPORATION AND SUBSIDIARIES
ITEM 2 – UNREGISTERED SALES OF EQUITY SECURITIES AND USE
OF PROCEEDS
Terms of
lending agreements which place restrictions on cash dividends are discussed in
Management's Discussion and Analysis of Financial Condition and Results of
Operations under Item 2, herein, and Note (9) of the Notes to Consolidated
Financial Statements, under Part I, Item 1, herein.
ISSUER
PURCHASES OF EQUITY SECURITIES
|
|
|
|
|
|
|
|
(c)
|
|
|
(d)
|
|
|
|
|
|
|
|
|
|
Number
of Shares
|
|
|
Maximum
Number (or
|
|
|
|
(a)
|
|
|
(b)
|
|
|
(or
Units) Purchased
|
|
|
Approximate
Dollar Value)
|
|
|
|
Total
Number of
|
|
|
Average
Price
|
|
|
As
Part of Publicly
|
|
|
of
Shares (or Units) that May
|
|
|
|
Shares
(or Units)
|
|
|
Paid
per
|
|
|
Announced
Plans or
|
|
|
Yet
Be Purchased Under
|
|
Period
|
|
Purchased
|
|
|
Share
(or Unit)
|
|
|
Programs
|
|
|
the
Plans or Programs**
|
|
12/1/08
thru 12/28/08
|
|
|
-
|
|
|
$
|
-
|
|
|
|
-
|
|
|
|
39,742
|
|
12/29/08
thru 2/1/09
|
|
|
5,062
|
|
|
|
49.80
|
|
|
|
-
|
|
|
|
33,641
|
|
2/2/09
thru 3/1/09
|
|
|
13,981
|
|
|
|
51.57
|
|
|
|
-
|
|
|
|
25,937
|
|
**Shares
may be repurchased by the Company to pay taxes applicable to the vesting of
restricted stock. The number of shares does not include shares which may
be repurchased to pay social security taxes applicable to the vesting of such
restricted stock.
No
matters were submitted to a vote of security holders during the first quarter of
2009.
ITEM 5 – OTHER INFORMATION
No
material changes have occurred in the other information disclosure as presented
in the Company’s 2008 Annual Report.
AMERON
INTERNATIONAL CORPORATION AND SUBSIDIARIES
The
following exhibits are filed with this Quarterly Report on Form
10-Q:
EXHIBIT
NO.
|
DESCRIPTION
OF EXHIBIT
|
3.1
|
Certificate
of Incorporation, effective March 29,2004
|
3.2
|
Bylaws
(incorporated by reference to Exhibit 3.2 to the Company’s Current Report
on Form 8-K dated September 26, 2008)
|
4.1
|
Credit
Agreement dated as of January 24, 2003 (incorporated by reference to
Exhibit 4.1 to the Company’s Annual Report on Form 10-K for the year ended
November 30, 2008)
|
4.2
|
Amended
and Restated Note Purchase Agreement dated January 24, 2003, re:
$50,000,000 5.36% Senior Secured Notes due November 30, 2009
(incorporated by reference to Exhibit 4.2 to the Company’s Annual Report
on Form 10-K for the year ended November 30, 2008)
|
4.3
|
Note
Purchase Agreement dated November 25, 2005, re: SGD 51,000,000 4.25%
Senior Secured Notes due November 25, 2012 (incorporated by reference to
Exhibit 4.3 to the Company’s Annual Report on Form 10-K for the year ended
November 30, 2008)
|
4.4
|
Agreement
to furnish to the Securities and Exchange Commission upon request a copy
of instruments defining the rights of holders of certain long-term debt of
the Company and consolidated subsidiaries (incorporated by reference to
Exhibit 4.4 to the Company’s Annual Report on Form 10-K for the year ended
November 30, 2008)
|
10.1
|
Amended
and Restated Employment Agreement between James S. Marlen and the Company
(incorporated by reference to Exhibit 10(1) to the Company’s Annual Report
on Form 10-K for the year ended November 30, 2003)**
|
10.2
|
First
Amendment to Amended and Restated Employment Agreement between James S.
Marlen and the Company (incorporated by reference to Exhibit 99.1 to the
Company’s Current Report on Form 8-K dated September 21,
2007)**
|
10.3
|
Performance
Stock Unit Agreement between James S. Marlen and the Company (incorporated
by reference to Exhibit 99.2 to the Company’s Current Report on Form 8-K
dated September 21, 2007)**
|
10.4
|
Change
of Control Agreement between Javier Solis and the Company (incorporated by
reference to Exhibit 10(2) to the Company’s Annual Report on Form 10-K for
the year ended November 30, 1998)**
|
10.5
|
Amendment
to Change of Control Agreement between Javier Solis and the Company
(incorporated by reference to Exhibit 10.3 to the Company’s Current Report
on Form 8-K dated December 17, 2008)**
|
10.6
|
Change
of Control Agreement between Gary Wagner and the Company (incorporated by
reference to Exhibit 10(3) to the Company’s Annual Report on Form 10-K for
the year ended November 30, 1998)**
|
10.7
|
Amendment
to Change of Control Agreement between Gary Wagner and the Company
(incorporated by reference to Exhibit 10.1 to the Company’s Current Report
on Form 8-K dated December 17, 2008)**
|
10.8
|
Change
of Control Agreement between James R. McLaughlin and the Company
(incorporated by reference to Exhibit 10(5) to the Company’s Annual Report
on Form 10-K for the year ended November 30, 2000)**
|
10.9
|
Amendment
to Change of Control Agreement between James R. McLaughlin and the Company
(incorporated by reference to Exhibit 10.2 to the Company’s Current Report
on Form 8-K dated December 17, 2008)**
|
10.10
|
Change
of Control Agreement between Stephen E. Johnson and the Company
(incorporated by reference to Exhibit 10.4 to the Company’s Current Report
on Form 8-K dated December 17, 2008)**
|
10.11
|
2001
Stock Incentive Plan (incorporated by reference to Exhibit 2 to the
Company’s Proxy Statement for the Annual Meeting of Stockholders held on
March 21, 2001)**
|
10.12
|
2004
Stock Incentive Plan (incorporated by reference to Exhibit E to the
Company’s Proxy Statement for the Annual Meeting of Stockholders held on
March 24, 2004)**
|
10.13
|
Key
Executive Long-Term Cash Incentive Plan (incorporated by reference to
Exhibit C to the Company’s Proxy Statement for the Annual Meeting of
Stockholders held on March 26, 2008)**
|
10.14
|
Form
of Restricted Stock Agreement for Employees (incorporated by reference to
Exhibit 99.1 to the Company’s Current Report on Form 8-K dated January 27,
2006)**
|
10.15
|
Form
of Restricted Stock Agreement for Non-Employee Directors (incorporated by
reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K
dated March 23, 2006)**
|
31.1
|
Section 302
Certification of Chief Executive Officer
|
31.2
|
Section 302
Certification of Chief Financial Officer
|
32
|
Section 906
Certification of Chief Executive Officer and Chief Financial
Officer
|
** Compensatory
plan or arrangement
AMERON
INTERNATIONAL CORPORATION AND SUBSIDIARIES
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
INTERNATIONAL CORPORATION
By:
|
/s/
James R. McLaughlin
|
|
|
James
R. McLaughlin, Senior Vice President, Chief Financial Officer &
Treasurer
|
Date:
March 26, 2009