NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(in thousands, except share amounts)
Overview of the Business
Ampco-Pittsburgh Corporation (the “Corporation”) manufactures and sells highly engineered, high-performance specialty metal products and customized equipment utilized by industry throughout the world. It operates in two business segments – the Forged and Cast Engineered Products (“FCEP”) segment and the Air and Liquid Processing segment. This segment presentation is consistent with how the Corporation’s chief operating decision maker evaluates financial performance and makes resource allocation and strategic decisions about the business.
The Segments
The FCEP segment produces forged hardened steel rolls, cast rolls and open-die forged products. Forged hardened steel rolls are used primarily in cold rolling mills by producers of steel, aluminum and other metals. Cast rolls, which are produced in a variety of iron and steel qualities, are used mainly in hot and cold strip mills, medium/heavy section mills and plate mills. Forged engineered products (“FEP”) are principally sold to customers in the steel distribution market, oil and gas industry and the aluminum and plastic extrusion industries. The segment has operations in the United States, England, Sweden, Slovenia, and an equity interest in three joint venture companies in China. Collectively, the segment primarily competes with European, Asian and North and South American companies in both domestic and foreign markets and distributes a significant portion of its products through sales offices located throughout the world.
The Air and Liquid Processing segment includes Aerofin, Buffalo Air Handling and Buffalo Pumps, all divisions of Air & Liquid Systems Corporation (“Air & Liquid”), a wholly owned subsidiary of the Corporation. Aerofin produces custom-engineered finned tube heat exchange coils and related heat transfer products for a variety of industries including OEM/commercial, nuclear power generation and industrial manufacturing. Buffalo Air Handling produces large custom-designed air handling systems for institutional (e.g., hospital, university), pharmaceutical and general industrial building markets. Buffalo Pumps manufactures centrifugal pumps for the fossil-fueled power generation, marine defense and industrial refrigeration industries. The segment has operations in Virginia and New York with headquarters in Carnegie, Pennsylvania. The segment distributes a significant portion of its products through a common independent group of sales offices located throughout the United States and Canada.
COVID-19
On January 30, 2020, the World Health Organization (“WHO”) announced a global health emergency caused by a new strain of the coronavirus (“COVID-19”) and advised of the risks to the international community as the virus spread globally. In March 2020, the WHO classified the COVID-19 outbreak as a pandemic based on the rapid increase in exposure globally. In response, many state and local governments required the closure of various businesses. The U.S. Department of Homeland Security, however, provided guidance identifying the Corporation’s domestic businesses as critical infrastructure industries, essential to the economic prosperity, security and continuity of the United States, which provides exceptions to certain closures mandated by state and local governments and permits businesses to continue operations during such an order. Despite the designation, the Corporation has had to periodically and temporarily idle certain operations of its FCEP segment and, consequently, furlough certain of its employees in response to market conditions. It also has experienced, and may continue to experience, customer-requested delays of deliveries or, potentially, cancellation of orders.
It is difficult to isolate the impact of the pandemic on the Corporation’s operating results, particularly in relation to the unabsorbed costs resulting from the periodic and temporary idling of certain of the Corporation’s forged and cast roll operations and furloughing of employees. In addition, the Corporation is uncertain of the full effect the pandemic will have on it for the longer term since the scope and duration of the pandemic is unknown, and evolving factors such as the level and timing of vaccine distribution across the world and the extent of any resurgences of the virus or emergence of new variants will impact the stability of the economic recovery and growth. The extent to which the operations of the Corporation, and the operations of its customers, may be adversely impacted by the COVID-19 pandemic will depend largely on these future developments. The Corporation may experience long-term disruptions to its operations resulting from changes in government policy or guidance; quarantines of employees, customers and suppliers in areas affected by the pandemic; and closures of businesses or manufacturing facilities critical to its business or supply chains. It may also incur higher write-offs of accounts receivables and impairment charges on its asset values, including property, plant and equipment and intangible assets. The Corporation is actively monitoring, and will continue to actively monitor, the pandemic and the potential impact on its operations, financial condition, liquidity, suppliers, industry, and workforce.
8
In response to the pandemic, the United States federal government enacted the “Coronavirus Aid, Relief, and Economic Security (CARES) Act” into law on March 27, 2020. The CARES Act, among other things, includes provisions relating to refundable payroll tax credits, deferral of employer-side social security payments and contributions to employee benefit plans, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property. Subsequently, on March 11, 2021, the “American Rescue Plan (“ARP”) Act of 2021” was enacted into law, providing the next phase of economic relief as a result of the COVID-19 pandemic. The ARP Act, among other things, extends provision relating to refundable payroll tax credits and deferral of contributions to employee benefit plans. Similar programs have been offered in certain of the foreign jurisdictions in which the Corporation operates, including subsidies and reimbursement of certain employee-related costs. While the Corporation has taken, and intends to continue to take, advantage of various provisions of the CARES Act, the ARP Act and other similar programs offered domestically and in foreign jurisdictions in which the Corporation operates, where possible, it is unable to determine what impact those provisions may have on its consolidated financial statements in the future.
1.
|
Unaudited Condensed Consolidated Financial Statements
|
The condensed consolidated balance sheet as of March 31, 2021, the condensed consolidated statements of operations, comprehensive income (loss), shareholders’ equity, and cash flows for the three months ended March 31, 2021, and 2020, have been prepared by 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, 2021, are not necessarily indicative of the operating results expected for the full year.
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 (“GAAP”) have been condensed or omitted.
Recently Implemented Accounting Pronouncements
In December 2019, the Financial Accounting Standards Board (“FASB”) issued ASU 2019-12, Income Taxes (Topic 740). ASU 2019-12 is intended to simplify the accounting for income taxes including removing the exception to the incremental approach for intraperiod tax allocation when there is a loss from continuing operations and income or a gain from other items such as other comprehensive income, accounting for franchise or similar tax, and requiring an entity reflect the effect of an enacted change in tax laws or rates in the interim period that includes the enactment date. The guidance became effective for the Corporation on January 1, 2021, and did not impact the Corporation’s financial position, operating results or liquidity.
Recently Issued Accounting Pronouncements
In August 2020, the FASB issued ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. ASU 2020-06 simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts in an entity’s own equity. ASU 2020-06 requires entities to provide expanded disclosures about the terms and features of convertible instruments and amends certain guidance in ASC 260, Earnings per Share, relating to the computation of earnings per share for convertible instruments and contracts in an entity’s own equity. The guidance becomes effective for the Corporation on January 1, 2024, with early adoption of all amendments in the same period permitted. The Corporation is currently evaluating the impact the guidance will have on its consolidated financial statements.
In March 2020, the FASB issued ASU 2020-04, Facilitation of the Effects of Reference Rate Reform on Financial Reporting. ASU 2020-04 provides optional guidance for a limited period of time for applying generally accepted accounting principles to modifications of contracts, hedging relationships, and other transactions that reference LIBOR or another rate that will be discontinued by reference rate reform if certain criteria are met. The optional guidance is available as of March 12, 2020, through December 31, 2022. To date, no contracts have been required to be modified as a result of reference rate reform. The Corporation is currently evaluating the impact the guidance will have on its financial position, operating results and liquidity if such an event occurs in the future and the Corporation chooses to avail itself of the optional guidance.
In September 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses, which adds a new impairment model, known as the current expected credit loss (“CECL”) model, that is based on expected losses rather than incurred losses. Under the new guidance, an entity recognizes an allowance for its estimate of expected credit losses and applies it to most debt instruments, trade receivables, lease receivables, financial guarantee contracts, and other loan commitments. The CECL model does not have a minimum threshold for recognition of impairment losses and entities will need to measure expected credit losses on assets that have a low risk of loss. The guidance originally became effective for the Corporation on January 1, 2020, however, since the Corporation met the definition of a Smaller Reporting Company, as defined by the Securities Exchange Commission, the effective date was subsequently revised to fiscal years beginning after December 15, 2022. The Corporation is currently evaluating the impact the guidance will have on its financial position and operating results. It will not, however, affect the Corporation’s liquidity.
9
At March 31, 2021, and December 31, 2020, 35% 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,
2021
|
|
|
December 31,
2020
|
|
Raw materials
|
|
$
|
15,824
|
|
|
$
|
17,893
|
|
Work-in-process
|
|
|
34,139
|
|
|
|
31,568
|
|
Finished goods
|
|
|
14,791
|
|
|
|
12,466
|
|
Supplies
|
|
|
11,039
|
|
|
|
11,316
|
|
Inventories
|
|
$
|
75,793
|
|
|
$
|
73,243
|
|
3.
|
Property, Plant and Equipment
|
Property, plant and equipment were comprised of the following:
|
|
March 31,
2021
|
|
|
December 31,
2020
|
|
Land and land improvements
|
|
$
|
10,375
|
|
|
$
|
10,473
|
|
Buildings
|
|
|
63,547
|
|
|
|
63,765
|
|
Machinery and equipment
|
|
|
340,650
|
|
|
|
339,203
|
|
Construction-in-process
|
|
|
4,005
|
|
|
|
4,896
|
|
Other
|
|
|
6,870
|
|
|
|
6,870
|
|
|
|
|
425,447
|
|
|
|
425,207
|
|
Accumulated depreciation and amortization
|
|
|
(267,546
|
)
|
|
|
(263,109
|
)
|
Property, plant and equipment, net
|
|
$
|
157,901
|
|
|
$
|
162,098
|
|
The majority of the assets of the Corporation, except real property including the land and building of Union Electric Steel UK Limited, an indirect subsidiary of the Corporation (“UES-UK”), is pledged as collateral for the Corporation’s revolving credit facility (Note 6). Land and buildings of UES-UK equal to $2,921 (£2,122) at March 31, 2021, are held as collateral by the trustees of the UES-UK defined benefit pension plan (Note 7). The gross value of finance lease right-of-use assets and the related accumulated amortization equaled $2,897 and $1,023, respectively, as of March 31, 2021, and $3,430 and $1,222, respectively, at December 31, 2020. Amortization on assets under finance leases approximated $118 and $70 for the three months ended March 31, 2021, and 2020, respectively.
Intangible assets were comprised of the following:
|
|
March 31,
2021
|
|
|
December 31,
2020
|
|
Customer relationships
|
|
$
|
6,017
|
|
|
$
|
6,191
|
|
Developed technology
|
|
|
4,283
|
|
|
|
4,457
|
|
Trade name
|
|
|
2,509
|
|
|
|
2,646
|
|
|
|
|
12,809
|
|
|
|
13,294
|
|
Accumulated amortization
|
|
|
(6,107
|
)
|
|
|
(6,077
|
)
|
Intangible assets, net
|
|
$
|
6,702
|
|
|
$
|
7,217
|
|
The following summarizes changes in intangible assets:
|
|
|
Three Months Ended March 31,
|
|
|
|
|
|
|
2021
|
|
|
2020
|
|
Balance at beginning of the period
|
|
|
|
|
$
|
7,217
|
|
|
$
|
7,625
|
|
Amortization of intangible assets
|
|
|
|
|
|
(249
|
)
|
|
|
(277
|
)
|
Other, primarily impact from changes in foreign currency exchange rates
|
|
|
|
|
|
(266
|
)
|
|
|
(362
|
)
|
Balance at end of the period
|
|
|
|
|
$
|
6,702
|
|
|
$
|
6,986
|
|
10
5.
|
Other Current Liabilities
|
Other current liabilities were comprised of the following:
|
|
March 31,
2021
|
|
|
December 31,
2020
|
|
Customer-related liabilities
|
|
$
|
15,910
|
|
|
$
|
16,144
|
|
Accrued interest payable
|
|
|
2,114
|
|
|
|
2,131
|
|
Accrued sales commissions
|
|
|
1,680
|
|
|
|
1,419
|
|
Other
|
|
|
7,224
|
|
|
|
4,546
|
|
Other current liabilities
|
|
$
|
26,928
|
|
|
$
|
24,240
|
|
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,
|
|
|
|
|
|
|
2021
|
|
|
2020
|
|
Balance at beginning of the period
|
|
|
|
|
$
|
8,105
|
|
|
$
|
9,065
|
|
Satisfaction of warranty claims
|
|
|
|
|
|
(650
|
)
|
|
|
(1,187
|
)
|
Provision for warranty claims
|
|
|
|
|
|
786
|
|
|
|
1,114
|
|
Other, primarily impact from changes in foreign currency exchange rates
|
|
|
|
|
|
(84
|
)
|
|
|
(329
|
)
|
Balance at end of the period
|
|
|
|
|
$
|
8,157
|
|
|
$
|
8,663
|
|
Customer deposits represent amounts collected from, or invoiced to, a customer in advance of revenue recognition, and are recorded as other current liabilities on the condensed consolidated 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,
|
|
|
|
|
|
|
2021
|
|
|
2020
|
|
Balance at beginning of the period
|
|
|
|
|
$
|
6,507
|
|
|
$
|
4,895
|
|
Satisfaction of performance obligations
|
|
|
|
|
|
(4,035
|
)
|
|
|
(4,025
|
)
|
Receipt of additional deposits
|
|
|
|
|
|
4,072
|
|
|
|
5,586
|
|
Other, primarily impact from changes in foreign currency exchange rates
|
|
|
|
|
|
(33
|
)
|
|
|
(74
|
)
|
Balance at end of the period
|
|
|
|
|
$
|
6,511
|
|
|
$
|
6,382
|
|
Borrowings consisted of the following:
|
|
March 31,
2021
|
|
|
December 31,
2020
|
|
Revolving Credit and Security Agreement
|
|
$
|
5,571
|
|
|
$
|
6,000
|
|
Sale and leaseback financing obligation
|
|
|
20,088
|
|
|
|
19,931
|
|
Industrial Revenue Bonds
|
|
|
9,191
|
|
|
|
9,191
|
|
Minority shareholder loan
|
|
|
747
|
|
|
|
1,056
|
|
Finance lease liabilities
|
|
|
896
|
|
|
|
1,065
|
|
Outstanding borrowings
|
|
|
36,493
|
|
|
|
37,243
|
|
Debt – current portion
|
|
|
(14,584
|
)
|
|
|
(12,436
|
)
|
Long-term debt
|
|
$
|
21,909
|
|
|
$
|
24,807
|
|
11
Revolving Credit and Security Agreement
On May 20, 2016, the Corporation became a party to a Revolving Credit and Security Agreement, which has been amended periodically (collectively, with the original and amended agreements, the “Amended Credit Agreement”). The Amended Credit Agreement is with a syndicate of banks and provides for borrowings not to exceed $92,500. The Amended Credit Agreement includes sublimits for letters of credit not to exceed $40,000 and European borrowings not to exceed $15,000. The maturity date for the Amended Credit Agreement is May 20, 2022, and, subject to other terms and conditions of the Amended Credit Agreement, would become due on that date.
Availability under the Amended 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 2.75% to 3.25% based on the quarterly average excess availability with LIBOR set at a minimum of 0.75% or (ii) the base rate plus an applicable margin ranging between 1.75% to 2.25% 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, 2021, the Corporation had outstanding borrowings under the Amended Credit Agreement of $5,571. The average interest rate was approximately 4% for the three months ended March 31, 2021, and 2020. Additionally, the Corporation utilizes a portion of the credit facility for letters of credit (Note 8). As of March 31, 2021, remaining availability under the Amended Credit Agreement approximated $46,800, net of standard availability reserves.
Borrowings outstanding under the Amended Credit Agreement are collateralized by a first priority perfected security interest in substantially all assets of the Corporation and its subsidiaries (other than real property). Additionally, the Amended 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, and acquisitions and divestures. The Corporation must also maintain a certain level of excess availability. The Corporation was in compliance with the applicable bank covenants as of March 31, 2021.
Sale and Leaseback Financing Obligation
In September 2018, Union Electric Steel Corporation (“UES”), an indirect subsidiary of the Corporation, 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 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 8% for the three months ended March 31, 2021, and 2020.
Industrial Revenue Bonds (“IRBs”)
The Corporation has two IRBs outstanding: (i) $7,116 taxable IRB maturing in 2027 and (ii) $2,075 tax-exempt IRB maturing in 2029. The IRBs are remarketed periodically. If the IRBs are not able to be remarketed, although considered remote by the Corporation and its bankers, the bondholders can seek reimbursement immediately from the letters of credit which serve as collateral for the bonds. Accordingly, the IRBs are recorded as current debt.
7.
|
Pension and Other Postretirement Benefits
|
Contributions to the Corporation’s employee benefit plans are as follows:
|
|
Three Months Ended March 31,
|
|
|
|
2021
|
|
|
2020
|
|
U.S. defined benefit pension plans
|
|
$
|
0
|
|
|
$
|
281
|
|
Foreign defined benefit pension plans
|
|
|
171
|
|
|
|
105
|
|
Other postretirement benefits (e.g., net payments)
|
|
|
182
|
|
|
|
432
|
|
U.K. defined contribution pension plan
|
|
|
82
|
|
|
|
80
|
|
U.S. defined contribution plan
|
|
|
1,402
|
|
|
|
1,377
|
|
12
Net periodic pension and other postretirement benefit costs include the following components:
|
|
|
|
Three Months Ended March 31,
|
|
U.S. Defined Benefit Pension Plans
|
|
|
|
|
|
2021
|
|
|
2020
|
|
Service cost
|
|
|
|
|
|
$
|
57
|
|
|
$
|
58
|
|
Interest cost
|
|
|
|
|
|
|
1,471
|
|
|
|
1,836
|
|
Expected return on plan assets
|
|
|
|
|
|
|
(3,348
|
)
|
|
|
(3,199
|
)
|
Amortization of prior service cost (credit)
|
|
|
|
|
|
|
6
|
|
|
|
(3
|
)
|
Amortization of actuarial loss
|
|
|
|
|
|
|
574
|
|
|
|
583
|
|
Net benefit income
|
|
|
|
|
|
$
|
(1,240
|
)
|
|
$
|
(725
|
)
|
|
|
|
|
Three Months Ended March 31,
|
|
Foreign Defined Benefit Pension Plans
|
|
|
|
|
|
2021
|
|
|
2020
|
|
Service cost
|
|
|
|
|
|
$
|
87
|
|
|
$
|
105
|
|
Interest cost
|
|
|
|
|
|
|
208
|
|
|
|
263
|
|
Expected return on plan assets
|
|
|
|
|
|
|
(485
|
)
|
|
|
(494
|
)
|
Amortization of prior service credit
|
|
|
|
|
|
|
(77
|
)
|
|
|
(72
|
)
|
Amortization of actuarial loss
|
|
|
|
|
|
|
162
|
|
|
|
176
|
|
Net benefit income
|
|
|
|
|
|
$
|
(105
|
)
|
|
$
|
(22
|
)
|
|
|
|
|
Three Months Ended March 31,
|
|
Other Postretirement Benefit Plans
|
|
|
|
|
|
2021
|
|
|
2020
|
|
Service cost
|
|
|
|
|
|
$
|
56
|
|
|
$
|
59
|
|
Interest cost
|
|
|
|
|
|
|
70
|
|
|
|
84
|
|
Amortization of prior service credit
|
|
|
|
|
|
|
(254
|
)
|
|
|
(254
|
)
|
Amortization of actuarial gain
|
|
|
|
|
|
|
(35
|
)
|
|
|
(45
|
)
|
Net benefit income
|
|
|
|
|
|
$
|
(163
|
)
|
|
$
|
(156
|
)
|
8.
|
Commitments and Contingent Liabilities
|
Outstanding standby and commercial letters of credit as of March 31, 2021, equaled $14,352, the majority of which serves as collateral for the IRB debt. Outstanding surety bonds as of March 31, 2021, approximated $4,000 (SEK 33,900), which guarantee certain obligations under a credit insurance arrangement for certain of the Corporation’s foreign pension commitments.
At March 31, 2021, the Corporation had purchase commitments for expected future capital expenditures of approximately $3,700, which are anticipated to be spent over the next 12-18 months.
See Note 11 for derivative instruments, Note 15 for litigation and Note 16 for environmental matters.
9.
|
Equity Rights Offering
|
In September 2020, the Corporation completed an equity rights offering, issuing 5,507,889 shares of its common stock and 12,339,256 Series A warrants to existing shareholders for total gross proceeds of $19,279. The shares of common stock and warrants are classified as equity instruments in the condensed consolidated statement of shareholders’ equity. Each Series A warrant provides the holder with the right to purchase 0.4464 shares of common stock at an exercise price of $2.5668, or $5.75 per whole share of common stock, and expires on August 1, 2025. Stock issuance costs equaled $1,140 and were recorded against the proceeds in additional paid in capital. In 2021, the Corporation received proceeds of $3,101 from shareholders who exercised 1,208,192 Series A warrants, equating to the issuance of 539,336 common shares.
13
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, 2021, and 2020, are summarized below. All amounts are net of tax, where applicable.
|
|
Foreign
Currency
Translation
|
|
|
Unrecognized
Employee
Benefit Costs
|
|
|
Cash Flow
Hedges
|
|
|
Total
Accumulated Other
Comprehensive Loss
|
|
|
Less:
Noncontrolling
Interest
|
|
|
Accumulated Other
Comprehensive Loss
Attributable to Ampco-Pittsburgh
|
|
Balance at January 1, 2021
|
|
$
|
(11,371
|
)
|
|
$
|
(57,652
|
)
|
|
$
|
589
|
|
|
$
|
(68,434
|
)
|
|
$
|
261
|
|
|
$
|
(68,695
|
)
|
Net change
|
|
|
(856
|
)
|
|
|
419
|
|
|
|
(21
|
)
|
|
|
(458
|
)
|
|
|
34
|
|
|
|
(492
|
)
|
Balance at March 31, 2021
|
|
$
|
(12,227
|
)
|
|
$
|
(57,233
|
)
|
|
$
|
568
|
|
|
$
|
(68,892
|
)
|
|
$
|
295
|
|
|
$
|
(69,187
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at January 1, 2020
|
|
$
|
(18,352
|
)
|
|
$
|
(50,859
|
)
|
|
$
|
291
|
|
|
$
|
(68,920
|
)
|
|
$
|
(258
|
)
|
|
$
|
(68,662
|
)
|
Net change
|
|
|
(4,882
|
)
|
|
|
1,078
|
|
|
|
(593
|
)
|
|
|
(4,397
|
)
|
|
|
(122
|
)
|
|
|
(4,275
|
)
|
Balance at March 31, 2020
|
|
$
|
(23,234
|
)
|
|
$
|
(49,781
|
)
|
|
$
|
(302
|
)
|
|
$
|
(73,317
|
)
|
|
$
|
(380
|
)
|
|
$
|
(72,937
|
)
|
The following summarizes the line items affected on the condensed consolidated statements of operations for components reclassified from accumulated other comprehensive loss. Amounts in parentheses represent credits to net income. Amounts are after tax, where applicable. Certain amounts have no tax effect due to the Corporation having a valuation allowance recorded against the deferred income tax assets for the jurisdiction where the income or expense is recognized. Foreign currency translation adjustments exclude the effect of income taxes since earnings of non-U.S. subsidiaries are deemed to be reinvested for an indefinite period of time.
|
|
|
Three Months Ended March 31,
|
|
|
|
|
2021
|
|
|
2020
|
|
Amortization of unrecognized employee benefit costs:
|
|
|
|
|
|
|
|
|
|
Other income
|
|
|
$
|
376
|
|
|
$
|
385
|
|
Income tax provision
|
|
|
|
(14
|
)
|
|
|
0
|
|
Net of tax
|
|
|
$
|
362
|
|
|
$
|
385
|
|
Realized gains 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)
|
|
|
|
(324
|
)
|
|
|
(8
|
)
|
Total before income tax
|
|
|
|
(331
|
)
|
|
|
(15
|
)
|
Income tax provision
|
|
|
|
0
|
|
|
|
0
|
|
Net of tax
|
|
|
$
|
(331
|
)
|
|
$
|
(15
|
)
|
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, 2021, approximately $4,694 of anticipated foreign-denominated sales has been hedged, which is covered by fair value contracts settling at various dates through January 2022.
Additionally, certain 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, 2021, approximately 34%, or $2,200, of anticipated copper purchases over the next seven months and 56%, or $512, 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.
14
The Corporation previously entered into purchase commitments to cover a portion of its anticipated natural gas usage for one of its subsidiaries. The commitments qualified as normal purchases and, accordingly, were not reflected on the condensed consolidated balance sheet. As of March 31, 2021, no purchase commitments for anticipated natural gas usage are outstanding. Purchases of natural gas under previously existing commitments equaled $388 for the three months ended March 31, 2020. There were no such purchases of natural gas under previously existing commitments for the three months ended March 31, 2021.
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) equaled $(1,221) and $(1,731) for the three months ended March 31, 2021, and 2020, 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,
2021
|
|
|
December 31,
2020
|
|
Fair value hedge contracts
|
|
Other current assets
|
|
$
|
1,135
|
|
|
$
|
1,123
|
|
|
|
Other noncurrent assets
|
|
|
0
|
|
|
|
332
|
|
|
|
Other current liabilities
|
|
|
0
|
|
|
|
12
|
|
Fair value hedged items
|
|
Receivables
|
|
|
(435
|
)
|
|
|
(960
|
)
|
|
|
Other current liabilities
|
|
|
695
|
|
|
|
201
|
|
|
|
Other noncurrent liabilities
|
|
|
0
|
|
|
|
327
|
|
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, 2021, and 2020, and the amount recognized as and reclassified from accumulated other comprehensive loss for each of the periods is summarized below. Amounts are after tax, where applicable. Certain amounts recognized as comprehensive income (loss) or reclassified from accumulated other comprehensive loss have no tax effect due to the Corporation having a valuation allowance recorded against the deferred income tax assets for the jurisdiction where the income or expense is recognized.
Three Months Ended March 31, 2021
|
|
Beginning of
the Period
|
|
|
Recognized
|
|
|
Reclassified
|
|
|
End of
the Period
|
|
Foreign currency purchase contracts
|
|
$
|
162
|
|
|
$
|
0
|
|
|
$
|
7
|
|
|
$
|
155
|
|
Futures contracts – copper and aluminum
|
|
|
427
|
|
|
|
310
|
|
|
|
324
|
|
|
|
413
|
|
|
|
$
|
589
|
|
|
$
|
310
|
|
|
$
|
331
|
|
|
$
|
568
|
|
Three Months Ended March 31, 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency purchase contracts
|
|
$
|
189
|
|
|
$
|
0
|
|
|
$
|
7
|
|
|
$
|
182
|
|
Futures contracts – copper and aluminum
|
|
|
102
|
|
|
|
(578
|
)
|
|
|
8
|
|
|
|
(484
|
)
|
|
|
$
|
291
|
|
|
$
|
(578
|
)
|
|
$
|
15
|
|
|
$
|
(302
|
)
|
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
|
|
|
2021
|
|
|
2020
|
|
Foreign currency purchase contracts
|
|
Depreciation and
amortization
|
|
$
|
28
|
|
|
$
|
7
|
|
|
$
|
7
|
|
Futures contracts – copper and aluminum
|
|
Costs of products sold
(excluding depreciation and amortization)
|
|
$
|
413
|
|
|
$
|
324
|
|
|
$
|
8
|
|
15
The Corporation’s financial assets and liabilities that are reported at fair value in the condensed consolidated balance sheets as of March 31, 2021, and December 31, 2020, 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, 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other noncurrent assets
|
|
$
|
4,508
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
4,508
|
|
Foreign currency exchange contracts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
0
|
|
|
|
(435
|
)
|
|
|
0
|
|
|
|
(435
|
)
|
Other current assets
|
|
|
0
|
|
|
|
1,135
|
|
|
|
0
|
|
|
|
1,135
|
|
Other current liabilities
|
|
|
0
|
|
|
|
695
|
|
|
|
0
|
|
|
|
695
|
|
As of December 31, 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other noncurrent assets
|
|
$
|
4,402
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
4,402
|
|
Foreign currency exchange contracts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
0
|
|
|
|
(960
|
)
|
|
|
0
|
|
|
|
(960
|
)
|
Other current assets
|
|
|
0
|
|
|
|
1,123
|
|
|
|
0
|
|
|
|
1,123
|
|
Other noncurrent assets
|
|
|
0
|
|
|
|
332
|
|
|
|
0
|
|
|
|
332
|
|
Other current liabilities
|
|
|
0
|
|
|
|
213
|
|
|
|
0
|
|
|
|
213
|
|
Other noncurrent liabilities
|
|
|
0
|
|
|
|
327
|
|
|
|
0
|
|
|
|
327
|
|
The investments held as other noncurrent assets represent assets held in the “Rabbi” trust for the purpose of providing benefits under the 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 values of the variable-rate IRB debt and borrowings under the Amended Credit Agreement approximate their carrying values. Additionally, the fair values of trade receivables and trade payables approximate their carrying values.
13.
|
Revenue and Income (Loss) Before Income Taxes
|
Net sales and income (loss) before income taxes by geographic area for the three months ended March 31, 2021, and 2020, are 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. Substantially all foreign net sales for each of the periods is attributable to the FCEP segment.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
Net Sales
|
|
|
2021
|
|
|
2020
|
|
United States
|
|
|
|
|
$
|
44,482
|
|
|
$
|
40,050
|
|
Foreign
|
|
|
|
|
|
42,318
|
|
|
|
51,013
|
|
|
|
|
|
|
$
|
86,800
|
|
|
$
|
91,063
|
|
16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
Income (Loss) Before Income Taxes
|
|
2021
|
|
|
2020
|
|
United States (1)
|
|
|
|
|
|
$
|
(61
|
)
|
|
$
|
(1,340
|
)
|
Foreign
|
|
|
|
|
|
|
756
|
|
|
|
3,159
|
|
|
|
|
|
|
|
$
|
695
|
|
|
$
|
1,819
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Includes Corporate costs of $3,251 and $2,789 which represent operating costs of the corporate office not allocated to the segments.
|
Net sales by product line for the three months ended March 31, 2021, and 2020, were as follows:
|
|
|
Three Months Ended March 31,
|
|
|
|
|
|
|
2021
|
|
|
2020
|
|
Forged and cast mill rolls
|
|
|
|
|
$
|
58,166
|
|
|
$
|
65,652
|
|
Forged engineered products
|
|
|
|
|
|
5,185
|
|
|
|
3,112
|
|
Heat exchange coils
|
|
|
|
|
|
6,057
|
|
|
|
6,548
|
|
Centrifugal pumps
|
|
|
|
|
|
10,042
|
|
|
|
8,244
|
|
Air handling systems
|
|
|
|
|
|
7,350
|
|
|
|
7,507
|
|
|
|
|
|
|
$
|
86,800
|
|
|
$
|
91,063
|
|
14.
|
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 stock options and 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 the shares, or if the 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, including expense associated with equity-based awards granted to non-employee members of the Board of Directors, for the three months ended March 31, 2021, and 2020, equaled $546 and $364, respectively. The income tax benefit recognized in the condensed consolidated statements of operations was not significant due to the Corporation having a valuation allowance recorded against its deferred income tax assets for the jurisdiction where the expense was recognized.
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.
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 (the “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.
17
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, 2021, and 2020 (claims not in thousands):
|
|
Three Months Ended March 31,
|
|
|
|
2021
|
|
|
2020
|
|
Total claims pending at the beginning of the period
|
|
|
5,891
|
|
|
|
6,102
|
|
New claims served
|
|
|
318
|
|
|
|
273
|
|
Claims dismissed
|
|
|
(141
|
)
|
|
|
(86
|
)
|
Claims settled
|
|
|
(104
|
)
|
|
|
(108
|
)
|
Total claims pending at the end of period (1)
|
|
|
5,964
|
|
|
|
6,181
|
|
Administrative closures (2)
|
|
|
(2,887
|
)
|
|
|
|
|
Total active claims at the end of the period (2)
|
|
|
3,077
|
|
|
|
|
|
Gross settlement and defense costs paid in period (in 000’s)
|
|
$
|
3,340
|
|
|
$
|
6,206
|
|
Avg. gross settlement and defense costs per claim resolved (in 000’s) (3)
|
|
$
|
13.63
|
|
|
$
|
31.99
|
|
|
(1)
|
Included as “total claims pending” are approximately 687 and 749 claims in 2021 and 2020, respectively, classified in various jurisdictions as “inactive” or transferred to a state or federal judicial panel on multi-district litigation.
|
|
(2)
|
In 2021, the Corporation adopted the same methodology used by Nathan Associates, Inc. (“Nathan”), the liability expert who values the Corporation’s asbestos claims, in order to better align the Corporation’s data with Nathan’s liability valuation. Nathan’s methodology treats all claims filed six or more years ago as “administratively closed.” Therefore, the Corporation changed its prior practice of reporting “Total claims pending at the end of the period” into two categories – “Administrative closures” and “Total active claims at the end of the period.” Administrative closures now include (i) those claims that were filed six or more years ago; (ii) claims that were previously classified in various jurisdictions as “inactive;” and (iii) claims that were transferred to a state or federal judicial panel on multi-district litigation. Collectively, these claims are unlikely to result in any liability to the Corporation. Accordingly, the Corporation believes that presentation of “Total active claims at the end of the period” is a better indicator of total claims which may result in future payment.
|
|
(3)
|
Claims resolved do not include claims that were administratively closed.
|
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 the 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 the Asbestos Liability. The Settlement Agreements encompass the substantial majority of insurance policies that provide coverage for claims for the Asbestos Liability.
The Settlement Agreements include acknowledgements that Howden North America, Inc. (“Howden”) is entitled to coverage under policies covering the 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 the Products. In general, access by Howden to the coverage afforded by the Settling Insurers for the Products will erode coverage under the Settlement Agreements available to the Corporation and Air & Liquid for the Asbestos Liability.
Asbestos Valuations
At December 31, 2006, with the assistance of a nationally recognized expert in the valuation of asbestos liabilities, the Corporation recorded its initial reserve for the Asbestos Liability. With the assistance of the nationally recognized expert, the reserve for the Asbestos Liability had 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 for the Asbestos Liability claims pending or projected to be asserted through 2052, the estimated final date by which the Corporation expects to have settled all asbestos-related claims. The methodology used by Nathan in its projection was substantially the same methodology employed by the previous expert 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;
|
18
|
•
|
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 forecast of inflation.
|
Using this information, Nathan estimated the number of future claims for the 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 Asbestos Liability through 2052, the Corporation also developed an estimate of probable insurance recoveries for the Asbestos Liability. In developing the estimate, the Corporation considered Nathan’s projection for settlement or indemnity costs for the 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 the 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 the Asbestos Liability. Based upon all of the factors considered by the Corporation, and considering the Corporation’s analysis of publicly available information regarding the credit-worthiness of various insurers, the Corporation estimated the probable insurance recoveries for the Asbestos Liability and defense costs through 2052.
Based on the analysis described above, 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, 2021, was $176,856. 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 ($115,862 at March 31, 2021).
The following table summarizes activity relating to insurance recoveries for the three months ended March 31, 2021, and 2020.
|
|
Three Months Ended March 31,
|
|
|
|
2021
|
|
|
2020
|
|
Insurance receivable – asbestos, beginning of the year
|
|
$
|
117,937
|
|
|
$
|
136,932
|
|
Settlement and defense costs paid by insurance carriers
|
|
|
(2,075
|
)
|
|
|
(4,062
|
)
|
Insurance receivable – asbestos, end of the period
|
|
$
|
115,862
|
|
|
$
|
132,870
|
|
The insurance receivable recorded by the Corporation does not assume any recovery from insolvent carriers. In addition, 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 the Asbestos Liability.
The amounts recorded for the 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 Asbestos Liability and ability to recover under the Corporation’s 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.
19
The Corporation intends to evaluate the 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 adjusting its current reserve; however, the Corporation is currently unable to estimate such future adjustments. Adjustments, if any, to the Corporation’s estimate of the 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.
16.
|
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 remedial actions and environmental compliance measures of approximately $100 at March 31, 2021, is considered adequate based on information known to date.
Presented below are the net sales and income before income taxes for the Corporation’s two business segments.
|
|
|
Three Months Ended March 31,
|
|
|
|
|
|
|
2021
|
|
|
2020
|
|
Net sales:
|
|
|
|
|
|
|
|
|
|
|
|
Forged and Cast Engineered Products
|
|
|
|
|
$
|
63,351
|
|
|
$
|
68,764
|
|
Air and Liquid Processing
|
|
|
|
|
|
23,449
|
|
|
|
22,299
|
|
Total Reportable Segments
|
|
|
|
|
$
|
86,800
|
|
|
$
|
91,063
|
|
Income before income taxes:
|
|
|
|
|
|
|
|
|
|
|
|
Forged and Cast Engineered Products
|
|
|
|
|
$
|
1,846
|
|
|
$
|
4,556
|
|
Air and Liquid Processing
|
|
|
|
|
|
2,312
|
|
|
|
2,584
|
|
Total Reportable Segments
|
|
|
|
|
|
4,158
|
|
|
|
7,140
|
|
Other expense, including corporate costs
|
|
|
|
|
|
(3,463
|
)
|
|
|
(5,321
|
)
|
Total
|
|
|
|
|
$
|
695
|
|
|
$
|
1,819
|
|
20