NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(in thousands, except share amounts)
1.
|
Unaudited Condensed Consolidated Financial Statements
|
The condensed consolidated balance sheet as of March 31, 2019, and the condensed consolidated statements of operations, comprehensive income (loss), shareholders’ equity and cash flows for the three months ended March 31, 2019, and 2018, have been prepared by Ampco-Pittsburgh Corporation (the “Corporation”) without audit. In the opinion of management, all adjustments, consisting of only normal and recurring adjustments necessary to present fairly the financial position, results of operations and cash flows for the periods presented, have been made.
The results of operations for the three months ended March 31, 2019, are not necessarily indicative of the operating results expected for the full year.
In October 2018, the Board of Directors of the Corporation approved a plan to sell ASW Steel Inc. (“ASW”). See Note 2. Accordingly, the Corporation has presented the assets and liabilities of ASW as of March 31, 2019, and December 31, 2018, and its operating results and cash flows for the three months ended March 31, 2019, and 2018, as discontinued operations in the accompanying financial statements. All footnotes exclude balances and activity of ASW unless otherwise noted.
Certain information and footnote disclosures normally included in the annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) have been condensed or omitted.
Recently Implemented Accounting Pronouncements
In August 2017, the Financial Accounting Standards Board (“FASB”) issued ASU 2017-12,
Derivatives and Hedging
, which amends and simplifies existing guidance to allow companies to present more accurately the economic effects of risk management activities in the financial statements. The amended guidance became effective for the Corporation on January 1, 2019, and did not affect the Corporation’s financial position, operating results or liquidity.
In February 2016, the FASB issued ASU 2016-02,
Leases (Topic 842)
, which requires lessees to recognize a right-of-use (“ROU”) asset and lease liability for all leases other than those with a term less than one year and to disclose key information about certain leasing arrangements. The guidance became effective for the Corporation on January 1, 2019, and was applied on a modified retrospective basis (cumulative-effect adjustment to January 1, 2019 retained earnings). An operating lease ROU asset and operating lease liability equal to the present value of lease payments of $5,893 was recorded as of January 1, 2019. There was no cumulative-effect adjustment to the Corporation’s retained earnings as of January 1, 2019, since initial direct costs were insignificant. See Note 4 and Note 7, respectively, for the finance lease ROU assets recorded within Property, Plant and Equipment and the finance lease liabilities recorded within Debt as of March 31, 2019. ASU 2016-02 also provides an election for practical expedients which permit an entity not to reassess whether any expired or existing contracts contain leases, to carry forward the existing lease classification, and not to reassess initial direct costs associated with existing leases. The Corporation applied these practical expedients as part of its adoption. The new guidance did not affect the Corporation’s operating results or liquidity.
Recently Issued Accounting Pronouncements
There have been no recently issued accounting pronouncements applicable to the Corporation.
2
.
|
Discontinued Operations and Disposition
|
In 2016, the Corporation purchased the stock of ASW, a specialty steel producer based in Canada. The acquisition supported the Corporation’s diversification efforts in the open-die forging market. Loss of significant U.S. business due to a combination of tariffs imposed by the United States on imports of primary steel and loss of a key customer as a result of a plant closure have resulted in significant losses for the Canadian operation. In October 2018, the Board of Directors of the Corporation approved a plan to sell ASW. While the Corporation will continue to service the open-die forged products market, it will not have a dedicated supply of required specialty steel through a back-end integration of ASW. Additionally, the Corporation will no longer manufacture and supply primary specialty steels to customers in the non-roll opened and closed die forgings and rebar markets and will exit the Canadian market.
Collectively, the sale of ASW represents a strategic shift that will have a major impact on the Corporation’s operations and financial results. As of December 31, 2018, the “asset held for sale” and “discontinued operations” criteria were met. Accordingly, as set forth in ASC 205,
Presentation of Financial Statements
, the assets and liabilities of ASW have been presented separately as assets and liabilities of discontinued operations in the accompanying condensed consolidated balance sheets as of March 31, 2019, and December 31, 2018. The assets and liabilities of ASW are classified as current because the Corporation expects to complete the sale in 2019. Additionally, the operating results and cash flows of ASW have been presented as discontinued operations, for the current and prior year period, in the accompanying condensed consolidated statements of operations and statements of cash flows. Previously, the operating results of ASW were included in the operating results of the Forged and Cast Engineered Products segment.
8
The assets and liabilities of ASW were as follows as of
March
31, 201
9
, and
December 3
1,
201
8
:
|
|
March 31,
2019
|
|
|
December 31,
2018
|
|
Cash and cash equivalents
|
|
$
|
395
|
|
|
$
|
1,124
|
|
Receivables
|
|
|
7,303
|
|
|
|
6,928
|
|
Inventories
|
|
|
11,780
|
|
|
|
13,764
|
|
Other assets
|
|
|
1,463
|
|
|
|
1,708
|
|
Property, plant and equipment, net
|
|
|
11,813
|
|
|
|
11,714
|
|
Estimated charge for impairment
|
|
|
(15,000
|
)
|
|
|
(15,000
|
)
|
Current assets of discontinued operations
|
|
$
|
17,754
|
|
|
$
|
20,238
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
9,123
|
|
|
$
|
8,890
|
|
Accrued payrolls and employee benefits
|
|
|
140
|
|
|
|
178
|
|
Other current liabilities
|
|
|
523
|
|
|
|
390
|
|
Current liabilities of discontinued operations
|
|
$
|
9,786
|
|
|
$
|
9,458
|
|
The following table presents the major classes of ASW’s line items constituting the “loss from discontinued operations, net of tax” in the condensed consolidated statements of operations for the three months ended March 31:
|
|
2019
|
|
|
2018
|
|
Net sales
|
|
$
|
15,045
|
|
|
$
|
22,334
|
|
Costs of products sold (excluding depreciation and amortization)
|
|
|
16,758
|
|
|
|
20,776
|
|
Selling and administrative
|
|
|
549
|
|
|
|
617
|
|
Depreciation and amortization
|
|
|
0
|
|
|
|
305
|
|
Gain on disposal of assets
|
|
|
0
|
|
|
|
(38
|
)
|
(Loss) income from discontinued operations
|
|
|
(2,262
|
)
|
|
|
674
|
|
Other income (expense)
|
|
|
20
|
|
|
|
(721
|
)
|
Loss from discontinued operations before income taxes
|
|
|
(2,242
|
)
|
|
|
(47
|
)
|
Income tax provision
|
|
|
0
|
|
|
|
(22
|
)
|
Loss from discontinued operations, net of tax
|
|
$
|
(2,242
|
)
|
|
$
|
(69
|
)
|
Net sales for the three months ended March 31, 2019, and 2018, include $3,138 and $13,672, respectively, of products sold by ASW to Union Electric Steel Corporation (“UES”), a subsidiary of the Corporation. Costs of products sold (excluding depreciation and amortization) approximated the same. In connection with the sale, the Corporation expects to enter into a long-term supply agreement for the supply of steel ingots.
Additionally, in March 2019, the Board of Directors of the Corporation approved a plan to sell certain assets of the Corporation’s Avonmore, Pennsylvania, cast roll manufacturing facility owned by Akers National Roll Company. In connection with the anticipated disposal, the Corporation recognized an impairment loss of $10,082 to record the assets to their estimated net realizable value. See Note 18.
At March 31, 2019, and December 31, 2018, approximately 33% and 36%, respectively, of the inventories were valued on the LIFO method with the remaining inventories valued on the FIFO method. Inventories were comprised of the following:
|
|
March 31,
2019
|
|
|
December 31,
2018
|
|
Raw materials
|
|
$
|
20,813
|
|
|
$
|
19,615
|
|
Work-in-process
|
|
|
42,311
|
|
|
|
42,339
|
|
Finished goods
|
|
|
18,757
|
|
|
|
20,650
|
|
Supplies
|
|
|
11,552
|
|
|
|
11,592
|
|
Inventories
|
|
$
|
93,433
|
|
|
$
|
94,196
|
|
9
4
.
|
Property, Plant and Equipment
|
Property, plant and equipment were comprised of the following:
|
|
March 31,
2019
|
|
|
December 31,
2018
|
|
Land and land improvements
|
|
$
|
9,934
|
|
|
$
|
10,207
|
|
Buildings
|
|
|
62,113
|
|
|
|
65,425
|
|
Machinery and equipment
|
|
|
321,146
|
|
|
|
332,378
|
|
Construction-in-process
|
|
|
4,289
|
|
|
|
3,499
|
|
Other
|
|
|
6,811
|
|
|
|
6,813
|
|
|
|
|
404,293
|
|
|
|
418,322
|
|
Accumulated depreciation and amortization
|
|
|
(230,801
|
)
|
|
|
(232,661
|
)
|
Property, plant and equipment, net
|
|
$
|
173,492
|
|
|
$
|
185,661
|
|
The majority of the assets of the Corporation, except real property, is pledged as collateral for the Corporation’s Revolving Credit and Security Agreement (Note 7). Land and buildings of Union Electric Steel UK Limited (“UES-UK”), equal to approximately $2,733 (£2,098) at March 31, 2019, are held as collateral by the trustees of the UES-UK defined benefit pension plan (Note 8). The gross value of finance lease ROU assets and the related accumulated amortization as of March 31, 2019, approximated $3,687 and $967, respectively, and at December 31, 2018, approximated $3,716 and $1,340, respectively.
Intangible assets were comprised of the following:
|
|
March 31,
2019
|
|
|
December 31,
2018
|
|
Customer relationships
|
|
$
|
6,019
|
|
|
$
|
6,234
|
|
Developed technology
|
|
|
4,105
|
|
|
|
4,322
|
|
Trade name
|
|
|
2,371
|
|
|
|
2,497
|
|
|
|
|
12,495
|
|
|
|
13,053
|
|
Accumulated amortization
|
|
|
(3,968
|
)
|
|
|
(3,828
|
)
|
Intangible assets, net
|
|
$
|
8,527
|
|
|
$
|
9,225
|
|
The following summarizes changes in intangible assets:
|
Three Months Ended March 31,
|
|
|
2019
|
|
|
2018
|
|
Balance at beginning of period
|
$
|
9,225
|
|
|
$
|
11,021
|
|
Changes in intangible assets (Akers National Roll)
|
|
(292
|
)
|
|
|
0
|
|
Amortization of intangible assets
|
|
(298
|
)
|
|
|
(314
|
)
|
Other, primarily impact from changes in foreign currency exchange rates
|
|
(108
|
)
|
|
|
35
|
|
Balance at end of period
|
$
|
8,527
|
|
|
$
|
10,742
|
|
Changes during the three months ended March 31, 2019, represent an impairment charge on intangible assets of Akers National Roll Company.
6
.
|
Other Current Liabilities
|
Other current liabilities were comprised of the following:
|
|
March 31,
2019
|
|
|
December 31,
2018
|
|
Customer-related liabilities
|
|
$
|
15,462
|
|
|
$
|
16,439
|
|
Accrued interest payable
|
|
|
2,519
|
|
|
|
2,333
|
|
Accrued sales commissions
|
|
|
1,683
|
|
|
|
1,637
|
|
Other
|
|
|
10,254
|
|
|
|
8,578
|
|
Other current liabilities
|
|
$
|
29,918
|
|
|
$
|
28,987
|
|
10
Included in customer-related liabilities are costs expected to be incurred with respect to product warranties and customer deposits. The Corporation provides a limited warranty on its products, known as assurance type warranties, and may issue credit notes or replace products free of charge for valid claims. A warranty is considered an assurance type warranty if it provides the customer with assurance that the product will function as intended. Historically, warranty claims have been insignificant. The Corporation records a provision for product warranties at the time the underlying sale is recorded. The provision is based on historical experience as a percent of sales adjusted for potential claims when a liability is probable and for known claims.
Changes in the liability for product warranty claims consisted of the following:
|
|
Three Months Ended March 31,
|
|
|
|
2019
|
|
|
2018
|
|
Balance at beginning of the period
|
|
$
|
9,447
|
|
|
$
|
11,379
|
|
Satisfaction of warranty claims
|
|
|
(1,469
|
)
|
|
|
(1,792
|
)
|
Provision for warranty claims
|
|
|
1,450
|
|
|
|
893
|
|
Other, primarily impact from changes in foreign currency
exchange rates
|
|
|
(64
|
)
|
|
|
38
|
|
Balance at end of the period
|
|
$
|
9,364
|
|
|
$
|
10,518
|
|
Customer deposits represent amounts collected from, or invoiced to, a customer in advance of revenue recognition, and are recorded as an other current liability on the balance sheet. The liability for customer deposits is reversed when the Corporation satisfies its performance obligations and control of the inventory transfers to the customer, typically when title transfers. Performance obligations related to customer deposits are expected to be satisfied in less than one year.
Changes in customer deposits consisted of the following:
|
|
Three Months Ended March 31,
|
|
|
|
2019
|
|
|
2018
|
|
Balance at beginning of the period
|
|
$
|
4,304
|
|
|
$
|
4,574
|
|
Satisfaction of performance obligations
|
|
|
(3,934
|
)
|
|
|
(2,512
|
)
|
Receipt of additional deposits
|
|
|
2,738
|
|
|
|
2,637
|
|
Other, primarily changes in foreign currency
exchange rates
|
|
|
(77
|
)
|
|
|
3
|
|
Balance at end of the period
|
|
$
|
3,031
|
|
|
$
|
4,702
|
|
7.
|
Borrowing Arrangements
|
|
Borrowings consisted of the following:
|
|
|
March 31,
2019
|
|
|
December 31,
2018
|
|
Revolving Credit and Security Agreement
|
|
$
|
40,037
|
|
|
$
|
14,320
|
|
Sale and leaseback financing obligation
|
|
|
18,626
|
|
|
|
18,518
|
|
Promissory notes (and interest)
|
|
|
0
|
|
|
|
26,205
|
|
Industrial Revenue Bonds ("IRB")
|
|
|
13,311
|
|
|
|
13,311
|
|
Minority shareholder loan
|
|
|
3,858
|
|
|
|
4,056
|
|
Finance lease liabilities
|
|
|
1,485
|
|
|
|
1,199
|
|
Outstanding borrowings
|
|
|
77,317
|
|
|
|
77,609
|
|
Debt – current portion
|
|
|
(19,256
|
)
|
|
|
(45,728
|
)
|
Long-term debt
|
|
$
|
58,061
|
|
|
$
|
31,881
|
|
11
Revolving Credit and Security Agreement
The Corporation is party to a five-year Revolving Credit and Security Agreement (the “Credit Agreement”) with a syndicate of banks, which expires in May 2021. The Credit Agreement provides for initial borrowings not to exceed $100,000, with an option to increase the credit facility by an additional $50,000 at the request of the Corporation and with the approval of the banks. The Credit Agreement includes sublimits for letters of credit not to exceed $40,000, European borrowings not to exceed $15,000, and Canadian borrowings not to exceed $15,000.
Availability under the Credit Agreement is based on eligible accounts receivable, inventory and fixed assets. Amounts outstanding under the credit facility bear interest, at the Corporation’s option, at either (i) LIBOR plus an applicable margin ranging between 1.75% to 2.25% based on the quarterly average excess availability or (ii) the base rate plus an applicable margin ranging between 0.75% to 1.25% based on the quarterly average excess availability. Additionally, the Corporation is required to pay a commitment fee ranging between 0.25% and 0.375% based on the daily unused portion of the credit facility. As of March 31, 2019, the Corporation had outstanding borrowings under the Credit Agreement of $40,037 (including £3,000 of European borrowings for its U.K. subsidiary). Outstanding borrowings increased from December 31, 2018, to March 31, 2019, due to additional borrowings used to repay promissory notes in March 2019. The average interest rate for the three months ended March 31, 2019, was approximately 2.22%. Additionally, the Corporation had utilized a portion of the credit facility for letters of credit (Note 9). As of March 31, 2019, remaining availability under the Credit Agreement approximated $39,000, net of standard availability reserves.
Borrowings outstanding under the Credit Agreement are collateralized by a first priority perfected security interest in substantially all of the assets of the Corporation and its subsidiaries (other than real property). Additionally, the Credit Agreement contains customary affirmative and negative covenants and limitations, including, but not limited to, investments in certain of its subsidiaries, payment of dividends, incurrence of additional indebtedness, upstream distributions from subsidiaries, and acquisitions and divestures. The Corporation must also maintain a certain level of excess availability. If excess availability falls below the established threshold, or in an event of default, the Corporation will be required to maintain a minimum fixed charge coverage ratio of not less than 1.00 to 1.00. The Corporation was in compliance with the applicable bank covenants as of March 31, 2019.
Sale and Leaseback Financing Obligation
In September 2018, UES completed a sale and leaseback financing transaction for certain of its real property, including its manufacturing facilities in Valparaiso, Indiana and Burgettstown, Pennsylvania, and its manufacturing facility and corporate headquarters located in Carnegie, Pennsylvania (the “Properties”). Simultaneously with the sale, UES entered into a lease agreement pursuant to which UES leased the Properties from the buyer. The lease provides for an initial term of 20 years; however, UES may extend the lease for four successive periods of approximately five years each. If fully extended, the lease would expire in September 2058. UES also has the option to repurchase the Properties, which it may exercise in 2025, for a price equal to the greater of (i) their Fair Market Value, or (ii) 115% of Lessor’s Total Investment for the Facilities, with such terms defined in the lease agreement. The effective interest rate approximated 6% for the three months ended March 31, 2019.
Promissory Notes
In connection with a March 2016 acquisition, the Corporation issued two three-year promissory notes. Principal and accrued interest of $26,474, in the aggregate, were paid on March 4, 2019, using additional borrowings under the Credit Agreement.
8.
Pension and Other Postretirement Benefits
In 2019, the Corporation amended retiree health benefits for one of its other postretirement benefit plans to a stipend and reimbursement plan, with the amendment becoming effective in 2020. Additionally, future hires will be no longer eligible for retiree medical or life insurance. Changes to retiree health benefits resulted in a remeasurement of the liability, reducing the liability by $4,632, and a curtailment gain of $15.
Contributions were as follows:
|
|
Three Months Ended March 31,
|
|
|
|
2019
|
|
|
2018
|
|
U.S. defined benefit pension plans
|
|
$
|
253
|
|
|
$
|
0
|
|
Foreign defined benefit pension plans
|
|
|
93
|
|
|
|
540
|
|
Other postretirement benefits (e.g., net payments)
|
|
|
266
|
|
|
|
307
|
|
U.K. defined contribution pension plan
|
|
|
85
|
|
|
|
91
|
|
U.S. defined contribution plan
|
|
|
625
|
|
|
|
705
|
|
12
Net periodic pension and other postretirement
benefit
costs include the following components:
|
|
Three Months Ended March 31,
|
|
U.S. Defined Benefit Pension Plans
|
|
2019
|
|
|
2018
|
|
Service cost
|
|
$
|
194
|
|
|
$
|
335
|
|
Interest cost
|
|
|
2,220
|
|
|
|
2,040
|
|
Expected return on plan assets
|
|
|
(3,173
|
)
|
|
|
(3,284
|
)
|
Amortization of prior service cost
|
|
|
9
|
|
|
|
13
|
|
Amortization of actuarial loss
|
|
|
308
|
|
|
|
475
|
|
Net benefit income
|
|
$
|
(442
|
)
|
|
$
|
(421
|
)
|
|
|
Three Months Ended March 31,
|
|
Foreign Defined Benefit Pension Plans
|
|
2019
|
|
|
2018
|
|
Service cost
|
|
$
|
102
|
|
|
$
|
111
|
|
Interest cost
|
|
|
357
|
|
|
|
364
|
|
Expected return on plan assets
|
|
|
(591
|
)
|
|
|
(672
|
)
|
Amortization of prior service credit
|
|
|
(72
|
)
|
|
|
(88
|
)
|
Amortization of actuarial loss
|
|
|
166
|
|
|
|
194
|
|
Net benefit income
|
|
$
|
(38
|
)
|
|
$
|
(91
|
)
|
|
|
Three Months Ended March 31,
|
|
Other Postretirement Benefit Plans
|
|
2019
|
|
|
2018
|
|
Service cost
|
|
$
|
88
|
|
|
$
|
102
|
|
Interest cost
|
|
|
105
|
|
|
|
125
|
|
Amortization of prior service credit
|
|
|
(489
|
)
|
|
|
(402
|
)
|
Amortization of actuarial gain
|
|
|
(83
|
)
|
|
|
(62
|
)
|
Curtailment gain
|
|
|
(15
|
)
|
|
|
0
|
|
Net benefit income
|
|
$
|
(394
|
)
|
|
$
|
(237
|
)
|
9
.
|
Commitments and Contingent Liabilities
|
Outstanding standby and commercial letters of credit as of March 31, 2019, approximated $18,850, the majority of which serves as collateral for the IRB debt. In addition, the Corporation issued two surety bonds approximating $4,000 (SEK 33,900) to guarantee certain obligations under a credit insurance arrangement for certain of its foreign pension commitments.
See Note 11 for derivative instruments, Note 15 for litigation and Note 16 for environmental matters.
10.
|
Accumulated Other Comprehensive Loss
|
Net change and ending balances for the various components of accumulated other comprehensive loss as of and for the three months ended March 31, 2019, and 2018, is summarized below. All amounts are net of tax, where applicable.
|
|
Foreign
Currency
Translation
Adjustments
|
|
|
Unrecognized
Employee
Benefit Costs
|
|
|
Cash Flow
Hedges
|
|
|
Accumulated
Other
Comprehensive
Loss
|
|
Balance at January 1, 2019
|
|
$
|
(18,642
|
)
|
|
$
|
(30,902
|
)
|
|
$
|
(64
|
)
|
|
$
|
(49,608
|
)
|
Net Change
|
|
|
449
|
|
|
|
4,310
|
|
|
|
387
|
|
|
|
5,146
|
|
Balance at March 31, 2019
|
|
$
|
(18,193
|
)
|
|
$
|
(26,592
|
)
|
|
$
|
323
|
|
|
$
|
(44,462
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at January 1, 2018
|
|
$
|
(11,932
|
)
|
|
$
|
(34,196
|
)
|
|
$
|
739
|
|
|
$
|
(45,389
|
)
|
Net Change
|
|
|
2,498
|
|
|
|
(283
|
)
|
|
|
(524
|
)
|
|
|
1,691
|
|
Balance at March 31, 2018
|
|
$
|
(9,434
|
)
|
|
$
|
(34,479
|
)
|
|
$
|
215
|
|
|
$
|
(43,698
|
)
|
13
The following summarizes the line items affected on the condensed consolidated statements of operations for components reclassified from accumulated other comprehe
nsive loss. Amounts in parentheses represent credits to net income (loss). There was no income tax benefit or expense associated with the various components of other comprehensive income (loss) for
either
of the periods, due to the Corporation having a val
uation allowance recorded against its deferred income tax assets for the jurisdiction where the expense is recognized. Foreign currency translation adjustments exclude the effect of income taxes since earnings of non-U.S. subsidiaries are deemed to be rein
vested for an indefinite period of time.
|
|
Three Months Ended March 31,
|
|
|
|
2019
|
|
|
2018
|
|
Amortization of unrecognized employee benefit costs:
|
|
|
|
|
|
|
|
|
Other income
|
|
$
|
161
|
|
|
$
|
130
|
|
Income tax provision
|
|
|
0
|
|
|
|
0
|
|
Net of tax
|
|
$
|
161
|
|
|
$
|
130
|
|
Realized gains/losses from settlement of cash flow hedges:
|
|
|
|
|
|
|
|
|
Depreciation and amortization (foreign currency
purchase contracts)
|
|
$
|
(7
|
)
|
|
$
|
(7
|
)
|
Costs of products sold (excluding depreciation and amortization) (futures contracts – copper and aluminum)
|
|
|
126
|
|
|
|
(202
|
)
|
Total before income tax
|
|
|
119
|
|
|
|
(209
|
)
|
Income tax provision
|
|
|
0
|
|
|
|
0
|
|
Net of tax
|
|
$
|
119
|
|
|
$
|
(209
|
)
|
11
.
|
Derivative Instruments
|
Certain of the Corporation’s operations are subject to risk from exchange rate fluctuations in connection with sales in foreign currencies. To minimize this risk, foreign currency sales contracts are entered into which are designated as cash flow or fair value hedges. As of March 31, 2019, approximately $20,917 of anticipated foreign-denominated sales has been hedged which are covered by fair value contracts settling at various dates through January 2020.
Additionally, certain of the divisions of the Air and Liquid Processing segment are subject to risk from increases in the price of commodities (copper and aluminum) used in the production of inventory. To minimize this risk, futures contracts are entered into which are designated as cash flow hedges. At March 31, 2019, approximately 49% or $2,389 of anticipated copper purchases over the next 10 months and 56% or $496 of anticipated aluminum purchases over the next six months are hedged.
The Corporation previously entered into foreign currency purchase contracts to manage the volatility associated with Euro-denominated progress payments to be made for certain machinery and equipment. As of December 31, 2010, all contracts had been settled and the underlying fixed assets were placed in service.
No portion of the existing cash flow or fair value hedges is considered to be ineffective, including any ineffectiveness arising from the unlikelihood of an anticipated transaction to occur. Additionally, no amounts have been excluded from assessing the effectiveness of a hedge.
The Corporation does not enter into derivative transactions for speculative purposes and, therefore, holds no derivative instruments for trading purposes.
Losses on foreign exchange transactions included in other income (expense) approximated $348 and $67 for the three months ended March 31, 2019, and 2018, respectively.
The location and fair value of the foreign currency sales contracts recorded on the condensed consolidated balance sheets were as follows:
|
|
Location
|
|
March 31,
2019
|
|
|
December 31,
2018
|
|
Fair value hedge contracts
|
|
Other current assets
|
|
$
|
190
|
|
|
$
|
44
|
|
|
|
Other current liabilities
|
|
|
361
|
|
|
|
950
|
|
|
|
Other noncurrent liabilities
|
|
|
0
|
|
|
|
70
|
|
Fair value hedged items
|
|
Receivables
|
|
|
686
|
|
|
|
232
|
|
|
|
Other current assets
|
|
|
362
|
|
|
|
967
|
|
|
|
Other noncurrent assets
|
|
|
0
|
|
|
|
105
|
|
|
|
Other current liabilities
|
|
|
660
|
|
|
|
12
|
|
14
The change in the fair value of the cash flow contracts is recorded as a component of accumulated other comprehensive loss. The balances as of
March 31
, 201
9
, and 201
8
, and the amount recognized as and reclassified from accumulated other comprehensive loss
for each of the periods is summarized below. Amounts recognized as comprehensive income (loss) and reclassified from accumulated other comprehensive loss have no tax effect due to deferred income tax assets being fully valued in the related jurisdictions.
Three Months Ended March 31, 2019
|
|
Beginning of
the Period
|
|
|
Recognized
|
|
|
Reclassified
|
|
|
End of
the Period
|
|
Foreign currency purchase contracts
|
|
$
|
216
|
|
|
$
|
0
|
|
|
$
|
7
|
|
|
$
|
209
|
|
Futures contracts – copper and aluminum
|
|
|
(280
|
)
|
|
|
268
|
|
|
|
(126
|
)
|
|
|
114
|
|
|
|
$
|
(64
|
)
|
|
$
|
268
|
|
|
$
|
(119
|
)
|
|
$
|
323
|
|
Three Months Ended March 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency purchase contracts
|
|
$
|
239
|
|
|
$
|
0
|
|
|
$
|
7
|
|
|
$
|
232
|
|
Futures contracts – copper and aluminum
|
|
|
500
|
|
|
|
(315
|
)
|
|
|
202
|
|
|
|
(17
|
)
|
|
|
$
|
739
|
|
|
$
|
(315
|
)
|
|
$
|
209
|
|
|
$
|
215
|
|
The change in fair value reclassified or expected to be reclassified from accumulated other comprehensive loss to earnings is summarized below. All amounts are pre-tax.
|
|
Location of
Gain (Loss)
in Statements
|
|
Estimated to
be Reclassified
in the Next
|
|
|
Three Months Ended March 31,
|
|
|
|
of Operations
|
|
12 Months
|
|
|
2019
|
|
|
2018
|
|
Foreign currency purchase contracts
|
|
Depreciation and
amortization
|
|
$
|
27
|
|
|
$
|
7
|
|
|
$
|
7
|
|
Futures contracts – copper and aluminum
|
|
Costs of products
sold (excluding
depreciation and
amortization)
|
|
|
114
|
|
|
|
(126
|
)
|
|
|
202
|
|
The Corporation’s financial assets and liabilities that are reported at fair value in the condensed consolidated balance sheets as of March 31, 2019, and December 31, 2018, were as follows:
|
|
Quoted Prices
in Active
Markets for
Identical Inputs
(Level 1)
|
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
|
Total
|
|
As of March 31, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other noncurrent assets
|
|
$
|
3,973
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
3,973
|
|
Foreign currency exchange contracts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other current assets
|
|
|
0
|
|
|
|
552
|
|
|
|
0
|
|
|
|
552
|
|
Other noncurrent assets
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Other current liabilities
|
|
|
0
|
|
|
|
1,021
|
|
|
|
0
|
|
|
|
1,021
|
|
Other noncurrent liabilities
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
As of December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other noncurrent assets
|
|
$
|
3,659
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
3,659
|
|
Foreign currency exchange contracts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other current assets
|
|
|
0
|
|
|
|
1,011
|
|
|
|
0
|
|
|
|
1,011
|
|
Other noncurrent assets
|
|
|
0
|
|
|
|
105
|
|
|
|
0
|
|
|
|
105
|
|
Other current liabilities
|
|
|
0
|
|
|
|
962
|
|
|
|
0
|
|
|
|
962
|
|
Other noncurrent liabilities
|
|
|
0
|
|
|
|
70
|
|
|
|
0
|
|
|
|
70
|
|
15
The investments held as other noncurrent assets represent assets held in a “Rabbi” trust for the purpose of providing benefits under a non-qualified defined benefit pension plan. The fair value of the investments is based on quoted prices of the investments in active markets. The fair value of foreign currency exchange contracts is determined based on the fair value of similar contracts with similar terms and remaining maturities. The fair value of futures contracts is based on market quotations. The fair value of the variable-rate IRB debt and borrowings under the Credit Agreement approximate their carrying value. Additionally, the fair value of trade receivables and trade payables approximates their carrying value.
Net sales and (loss) income from continuing operations before income taxes by geographic area for the three months ended March 31, 2019, and 2018, are as outlined below. When disaggregating revenue, consideration is given to information regularly reviewed by the chief operating decision maker to evaluate the financial performance of the operating segments and make resource allocation decisions. (Loss) income from continuing operations before income taxes for the three months ended March 31, 2019, includes an impairment charge of $10,082 for the write-down of certain assets of the Corporation’s cast roll manufacturing facility in Avonmore, Pennsylvania to their net realizable value. See Note 18.
|
|
|
|
|
|
|
|
|
Net Sales
|
|
|
(Loss) Income from Continuing Operations Before Income Taxes
|
|
|
|
Three Months Ended March 31,
|
|
|
Three Months Ended March 31,
|
|
|
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
|
United States
|
|
$
|
51,481
|
|
|
$
|
53,436
|
|
|
$
|
(13,309
|
)
|
|
$
|
(2,175
|
)
|
Foreign
|
|
|
56,013
|
|
|
|
52,979
|
|
|
|
1,401
|
|
|
|
3,170
|
|
|
|
$
|
107,494
|
|
|
$
|
106,415
|
|
|
$
|
(11,908
|
)
|
|
$
|
995
|
|
Substantially all of the foreign net sales for each of the periods are attributable to the Forged and Cast Engineered Products segment. Net sales by product line for the three months ended March 31, 2019, and 2018, were as follows:
|
|
Three Months Ended March 31,
|
|
|
|
2019
|
|
|
2018
|
|
Forged and cast mill rolls
|
|
$
|
77,286
|
|
|
$
|
67,488
|
|
Forged engineered products
|
|
|
8,004
|
|
|
|
17,758
|
|
Heat exchange coils
|
|
|
6,299
|
|
|
|
6,401
|
|
Centrifugal pumps
|
|
|
8,633
|
|
|
|
8,375
|
|
Air handling systems
|
|
|
7,272
|
|
|
|
6,393
|
|
|
|
$
|
107,494
|
|
|
$
|
106,415
|
|
1
4
.
|
Stock-Based Compensation
|
The Ampco-Pittsburgh Corporation 2016 Omnibus Incentive Plan (the “Incentive Plan”) authorizes the issuance of up to 1,100,000 shares of the Corporation’s common stock for awards under the Incentive Plan. Awards under the Incentive Plan may include incentive non-qualified stock options, stock appreciation rights, restricted shares and restricted stock units, performance awards, other stock-based awards or short-term cash incentive awards. If any award is canceled, terminates, expires or lapses for any reason prior to the issuance of shares, or if shares are issued under the Incentive Plan and thereafter are forfeited to the Corporation, the shares subject to such awards and the forfeited shares will not count against the aggregate number of shares available under the Incentive Plan. Shares tendered or withheld to pay the option exercise price or tax withholding will continue to count against the aggregate number of shares of common stock available for grant under the Incentive Plan. Any shares repurchased by the Corporation with cash proceeds from the exercise of options will not be added back to the pool of shares available for grant under the Incentive Plan.
The Incentive Plan may be administered by the Board of Directors or the Compensation Committee of the Board of Directors. The Compensation Committee has the authority to determine, within the limits of the express provisions of the Incentive Plan, the individuals to whom the awards will be granted and the nature, amount and terms of such awards.
The Incentive Plan also provides for equity-based awards during any one year to non-employee members of the Board of Directors, based on the grant date fair value, not to exceed $200. The limit does not apply to shares received by a non-employee director at his or her election in lieu of all or a portion of the director’s retainer for board service.
Stock-based compensation expense for the three months ended March 31, 2019, and 2018, equaled $305 and $666, respectively. There was no income tax benefit for either of the periods due to the Corporation having a valuation allowance recorded against its deferred income tax assets for the jurisdiction where the expense is recognized.
16
The Corporation and its subsidiaries are involved in various claims and lawsuits incidental to their businesses and are also subject to asbestos litigation as described below. In February 2017, the Corporation, its indirect subsidiary Akers National Roll Company, as well as the Akers National Roll Company Health & Welfare Benefits Plan were named as defendants in a class action complaint filed in the United States District Court for the Western District of Pennsylvania, where the plaintiffs (currently retired former employees of Akers National Roll Company and the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial, and Service Workers International Union, AFL-CIO) alleged that the defendants breached collective bargaining agreements and violated the benefit plan by modifying medical benefits of the plaintiffs and similarly situated retirees. The defendants moved to dismiss the case, and plaintiffs petitioned the court to compel arbitration. On June 13, 2017, the District Court compelled arbitration and denied the defendants’ motion to dismiss as moot. Defendants appealed this decision to the Third Circuit Court of Appeals on June 21, 2017. The Third Circuit Court of Appeals reversed the District Court’s decision to compel arbitration on August 29, 2018. The plaintiffs filed a petition for rehearing, which was denied. Rather than litigating the merits of the case at the United States District Court for the Western District of Pennsylvania, the Corporation reached a settlement agreement in principle with the plaintiffs, which has been preliminarily approved by the court but remains subject to the court’s final approval subsequent to a hearing to be held on July 22, 2019. As expected, the final resolution of this settlement agreement will not have a material adverse effect on our results of operations, financial position, liquidity or capital resources.
Asbestos Litigation
Claims have been asserted alleging personal injury from exposure to asbestos-containing components historically used in some products manufactured by predecessors of Air & Liquid (“Asbestos Liability”). Air & Liquid, and in some cases the Corporation, are defendants (among a number of defendants, often in excess of 50) in cases filed in various state and federal courts.
Asbestos Claims
The following table reflects approximate information about the claims for Asbestos Liability against Air & Liquid and the Corporation for the three months ended March 31, 2019, and 2018 (claims not in thousands):
|
|
Three Months Ended March 31,
|
|
|
|
2019
|
|
|
2018
|
|
Total claims pending at the beginning of the period
|
|
|
6,772
|
|
|
|
6,907
|
|
New claims served
|
|
|
333
|
|
|
|
287
|
|
Claims dismissed
|
|
|
(90
|
)
|
|
|
(112
|
)
|
Claims settled
|
|
|
(56
|
)
|
|
|
(78
|
)
|
Total claims pending at the end of the period
(1)
|
|
|
6,959
|
|
|
|
7,004
|
|
Gross settlement and defense costs (in 000’s)
|
|
$
|
2,789
|
|
|
$
|
6,881
|
|
Avg. gross settlement and defense costs per claim
resolved (in 000’s)
|
|
$
|
19.10
|
|
|
$
|
36.22
|
|
|
(1)
|
Included as “open claims” are approximately 666 and 479 claims in 2019 and 2018, respectively, classified in various jurisdictions as “inactive” or transferred to a state or federal judicial panel on multi-district litigation, commonly referred to as the MDL.
|
A substantial majority of the settlement and defense costs reflected in the above table was reported and paid by insurers. Because claims are often filed and can be settled or dismissed in large groups, the amount and timing of settlements, as well as the number of open claims, can fluctuate significantly from period to period.
Asbestos Insurance
The Corporation and Air & Liquid are parties to a series of settlement agreements (“Settlement Agreements”) with insurers that have coverage obligations for Asbestos Liability (the “Settling Insurers”). Under the Settlement Agreements, the Settling Insurers accept financial responsibility, subject to the terms and conditions of the respective agreements, including overall coverage limits, for pending and future claims for Asbestos Liability. The Settlement Agreements encompass the substantial majority of insurance policies that provide coverage for claims for Asbestos Liability.
The Settlement Agreements include acknowledgements that Howden North America, Inc. (“Howden”) is entitled to coverage under policies covering Asbestos Liability for claims arising out of the historical products manufactured or distributed by Buffalo Forge, a former subsidiary of the Corporation (the “Products”), which was acquired by Howden. The Settlement Agreements do not provide for any prioritization on access to the applicable policies or any sublimits of liability as to Howden or the Corporation and Air & Liquid, and, accordingly, Howden may access the coverage afforded by the Settling Insurers for any covered claim arising out of a Product. In general, access by Howden to the coverage afforded by the Settling Insurers for the
17
Products will erode coverage under the Settlement Agreements available to the Corporation and Air & Liquid for Asbestos Liability.
Asbestos Valuations
In 2006, the Corporation retained Hamilton, Rabinovitz & Associates, Inc. (“HR&A”), a nationally recognized expert in the valuation of asbestos liabilities, to assist the Corporation in estimating the potential liability for pending and unasserted future claims for Asbestos Liability. Based on this analysis, the Corporation recorded a reserve for Asbestos Liability claims pending or projected to be asserted through 2013 as of December 31, 2006. HR&A’s analysis has been periodically updated since that time. In 2018, the Corporation engaged Nathan Associates Inc. (“Nathan”) to update the liability valuation, and additional reserves were established by the Corporation as of December 31, 2018, for Asbestos Liability claims pending or projected to be asserted through 2052. The methodology used by Nathan in its projection in 2018 of the operating subsidiaries’ liability for pending and unasserted potential future claims for Asbestos Liability, which is substantially the same as the methodology employed by HR&A in prior estimates, relied upon and included the following factors:
|
•
|
interpretation of a widely accepted forecast of the population likely to have been exposed to asbestos;
|
|
•
|
epidemiological studies estimating the number of people likely to develop asbestos-related diseases;
|
|
•
|
analysis of the number of people likely to file an asbestos-related injury claim against the subsidiaries and the Corporation based on such epidemiological data and relevant claims history from January 1, 2016, to August 19, 2018;
|
|
•
|
an analysis of pending cases, by type of injury claimed and jurisdiction where the claim is filed;
|
|
•
|
an analysis of claims resolution history from January 1, 2016, to August 19, 2018, to determine the average settlement value of claims, by type of injury claimed and jurisdiction of filing; and
|
|
•
|
an adjustment for inflation in the future average settlement value of claims, at an annual inflation rate based on the Congressional Budget Office’s ten year forecast of inflation.
|
Using this information, Nathan estimated in 2018 the number of future claims for Asbestos Liability that would be filed through the year 2052, as well as the settlement or indemnity costs that would be incurred to resolve both pending and future unasserted claims through 2052. This methodology has been accepted by numerous courts.
In conjunction with developing the aggregate liability estimate referenced above, the Corporation also developed an estimate of probable insurance recoveries for its Asbestos Liability. In developing the estimate, the Corporation considered Nathan’s projection for settlement or indemnity costs for Asbestos Liability and management’s projection of associated defense costs (based on the current defense to indemnity cost ratio), as well as a number of additional factors. These additional factors included the Settlement Agreements in effect, policy exclusions, policy limits, policy provisions regarding coverage for defense costs, attachment points, prior impairment of policies and gaps in the coverage, policy exhaustions, insolvencies among certain of the insurance carriers, and the nature of the underlying claims for Asbestos Liability asserted against the subsidiaries and the Corporation as reflected in the Corporation’s asbestos claims database, as well as estimated erosion of insurance limits on account of claims against Howden arising out of the Products. In addition to consulting with the Corporation’s outside legal counsel on these insurance matters, the Corporation consulted with a nationally recognized insurance consulting firm it retained to assist the Corporation with certain policy allocation matters that also are among the several factors considered by the Corporation when analyzing potential recoveries from relevant historical insurance for Asbestos Liability. Based upon all of the factors considered by the Corporation, and taking into account the Corporation’s analysis of publicly available information regarding the credit-worthiness of various insurers, the Corporation estimated the probable insurance recoveries for Asbestos Liability and defense costs through 2052.
With the assistance of Nathan, the Corporation extended its estimate of the Asbestos Liability, including the costs of settlement and defense costs relating to currently pending claims and future claims projected to be filed against the Corporation through the estimated final date by which the Corporation expects to have settled all asbestos-related claims in 2052. The Corporation’s previous estimate was for asbestos claims filed or projected to be filed against the Corporation through 2026. Our ability to reasonably estimate this liability through the expected final date of settlement for all asbestos-related claims of this litigation instead of a ten-year period was based on several factors:
|
•
|
There have been generally favorable trends developments in the trend of case law which has been a contributing factor in stabilizing the asbestos claims activity and related settlement and defense costs;
|
|
•
|
There have been significant actions taken by certain state legislatures and courts that have reduced the number and type of claims that can proceed to trial;
|
|
•
|
The Corporation has coverage-in-place agreements with almost all of its excess insurers which enables the Corporation to project a stable relationship between settlement and defense costs paid by the Corporation and reimbursements from its insurers; and
|
18
|
•
|
Annual settlements with respect to groups of cases with certain plaintiff firms have helped to stabilize indemnity payments and defense costs.
|
Taking these factors into consideration, the Corporation believes there is greater predictability of outcomes from settlements, a reduction in the volatility of defense costs, and it has gained substantial experience as an asbestos defendant. As a result, the Corporation believes the uncertainty in estimating the Asbestos Liability beyond 10 years has been reduced and it now has sufficient information to estimate the Asbestos Liability through 2052, the estimated final date by which the Corporation expects to have settled all asbestos-related claims.
The Corporation’s reserve at December 31, 2018, for the total costs, including defense costs, for Asbestos Liability claims pending or projected to be asserted through 2052, was $227,922. The reserve at March 31, 2019, was $225,133. Defense costs are estimated at 80% of settlement costs. The Corporation’s receivable at December 31, 2018, for insurance recoveries attributable to the claims for which the Corporation’s Asbestos Liability reserve has been established, including the portion of incurred defense costs covered by the Settlement Agreements in effect through December 31, 2018, and the probable payments and reimbursements relating to the estimated indemnity and defense costs for pending and unasserted future Asbestos Liability claims, was $152,508 ($150,093 at March 31, 2019).
The following table summarizes activity relating to insurance recoveries for each of the three months ended March 31, 2019, and 2018.
|
|
Three Months Ended March 31,
|
|
|
|
2019
|
|
|
2018
|
|
Insurance receivable – asbestos, beginning of the year
|
|
$
|
152,508
|
|
|
$
|
100,342
|
|
Settlement and defense costs paid by insurance carriers
|
|
|
(2,415
|
)
|
|
|
(4,954
|
)
|
Insurance receivable – asbestos, end of the period
|
|
$
|
150,093
|
|
|
$
|
95,388
|
|
The insurance receivable recorded by the Corporation does not assume any recovery from insolvent carriers and a substantial majority of the insurance recoveries deemed probable is from insurance companies rated A – (excellent) or better by A.M. Best Corporation. There can be no assurance, however, that there will not be further insolvencies among the relevant insurance carriers, or that the assumed percentage recoveries for certain carriers will prove correct. The difference between insurance recoveries and projected costs is not due to exhaustion of all insurance coverage for Asbestos Liability.
The amounts recorded by the Corporation for Asbestos Liability and insurance receivable rely on assumptions that are based on currently known facts and strategy. The Corporation’s actual expenses or insurance recoveries could be significantly higher or lower than those recorded if assumptions used in the Corporation’s or Nathan’s calculations vary significantly from actual results. Key variables in these assumptions are identified above and include the number and type of new claims to be filed each year, the average cost of disposing of each such new claim, average annual defense costs, compliance by relevant parties with the terms of the Settlement Agreements, and the solvency risk with respect to the relevant insurance carriers. Other factors that may affect the Corporation’s Asbestos Liability and ability to recover under its insurance policies include uncertainties surrounding the litigation process from jurisdiction to jurisdiction and from case to case, reforms that may be made by state and federal courts, and the passage of state or federal tort reform legislation.
The Corporation intends to evaluate its estimated Asbestos Liability and related insurance receivable as well as the underlying assumptions on a regular basis to determine whether any adjustments to the estimates are required. Due to the uncertainties surrounding asbestos litigation and insurance, these regular reviews may result in the Corporation incurring future charges; however, the Corporation is currently unable to estimate such future charges. Adjustments, if any, to the Corporation’s estimate of its recorded Asbestos Liability and/or insurance receivable could be material to operating results for the periods in which the adjustments to the liability or receivable are recorded, and to the Corporation’s liquidity and consolidated financial position.
1
6
.
|
Environmental Matters
|
The Corporation is currently performing certain remedial actions in connection with the sale of real estate previously owned and periodically incurs costs to maintain compliance with environmental laws and regulations. Environmental exposures are difficult to assess and estimate for numerous reasons, including lack of reliable data, the multiplicity of possible solutions, the years of remedial and monitoring activity required, and identification of new sites. In the opinion of management, the potential liability for environmental compliance measures of approximately $328 at March 31, 2019, is considered adequate based on information known to date.
19
1
7
.
Business Segments
Presented below are the net sales and (loss) income from continuing operations before income taxes for the Corporation’s two business segments. For the three months ended March 31, 2019, the operating loss of the Forged and Cast Engineered Products segment includes an impairment charge of $10,082 associated with the anticipated sale of certain assets of Akers National Roll Company. For the three months ended March 31,
2018, other expense, including corporate costs, includes the impact of a favorable contractual settlement with a third party of approximately $2,425.
|
|
Three Months Ended March 31,
|
|
|
|
2019
|
|
|
2018
|
|
Net sales:
|
|
|
|
|
|
|
|
|
Forged and Cast Engineered Products
|
|
$
|
85,290
|
|
|
$
|
85,246
|
|
Air and Liquid Processing
|
|
|
22,204
|
|
|
|
21,169
|
|
Total Reportable Segments
|
|
$
|
107,494
|
|
|
$
|
106,415
|
|
(Loss) income from continuing operations before income taxes:
|
|
|
|
|
|
|
|
|
Forged and Cast Engineered Products
|
|
$
|
(10,033
|
)
|
|
$
|
202
|
|
Air and Liquid Processing
|
|
|
2,143
|
|
|
|
2,259
|
|
Total Reportable Segments
|
|
|
(7,890
|
)
|
|
|
2,461
|
|
Other expense, including corporate costs
|
|
|
(4,018
|
)
|
|
|
(1,466
|
)
|
Total
|
|
$
|
(11,908
|
)
|
|
$
|
995
|
|
18.
Subsequent Events
On May 6, 2019, Akers National Roll Company, a subsidiary of the Corporation, entered into a definitive agreement to sell certain assets, including real estate and personal property, of its Avonmore, Pennsylvania, cast roll manufacturing facility to an affiliate of WHEMCO, Inc. It is expected the transaction will close in the second half of 2019, following cessation of roll finishing operations once remaining customer commitments are fulfilled.
On May 9, 2019, the shareholders of the Corporation approved an amendment to the Corporation’s Amended and Restated Articles of Incorporation to increase the number of authorized shares of the Corporation’s common stock from 20,000,000 shares to 40,000,000 shares.
20