third quarter filing 2003

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) __November 4, 2003_________________________________

_______________________A. M. Castle & Co._____________________________________________
(Exact name of registrant as specified in its chapter)

____Maryland_____________________
(State or other jurisdiction
of incorporation)		 _____1-5415_______
(Commission
File Number)		 ____36-0879160_______
(IRS Employer
Identification No.)
_3400 N. Wolf Road, Franklin Park, IL
(Address of principal executive offices)		 ___________60131_________
(Zip Code)

Registrant's telephone number, including area code ____847/455-7111______________________

__________________________________________________________
(Former name or former address, if changed since last report)

 
     
 

Item 12. Results of Operations and Financial Condition

On Tuesday, November 4, 2003 the Company disseminated a press release, a copy attached as Exhibit A, announcing the Company’s operational results for the Third Quarter and the Nine-Month Period ending September 30, 2003.

As part of the press release there is a discussion of a non-GAAP financial term, EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization). None of the financial figures contained in the press release is non-GAAP information. The Company believes, however, that EBITDA is an important term and concept because of it use by the professional investment community, including the Company’s primary lenders. The Company believes that the use of this term is necessary to a proper understanding of the changes in the Company’s earnings.

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

                                    A. M. Castle & Co.


               /s/ Lawrence A. Boik
                                      Lawrence A. Boik
                                Vice President, Controller/Treasurer

Date____ 11-3-03 _______
 
 
     
 
 
                                                                                                           3400 N. Wolf Road
                                       Franklin Park, Illinois 60131
                A. M. CASTLE & CO.                      (847) 455-7111
                                               (847) 455-6930 (Fax)
                                         
 
For Further Information:

----------AT THE COMPANY-----------
-------------------AT FRB/WEBER SHANDWICK--------------------
Edward Culliton
General Information:
Analyst Contacts:
VP, Finance & Chief Financial Officer
George Zagoudis
John McNamara (212) 455-8435

349-2508

(312) 640-6663

     
Traded: AMEX, MSE, CSE (CAS)
 
 
Member: S&P SmallCap 600 Index
 
 
 
 
 

 
FOR IMMEDIATE RELEASE
TUESDAY, NOVEMBER 4, 2003


A. M. CASTLE & CO. ANNOUNCES THIRD QUARTER
AND YEAR-TO-DATE OPERATING RESULTS


FRANKLIN PARK, ILLINOIS, NOVEMBER 4, 2003 — A. M. CASTLE & CO. (AMEX: CAS) , A North American distributor of highly engineered metals and plastics, today announced its operating results for the three and nine month periods ended September 30, 2003. For the quarter ended September 30, 2003, Castle reported sales of $134.9 million, down 1.2% from $136.6 million in the same period a year ago, and an after tax operating loss of $2.3 million, an improvement of 13.1% from a loss of $2.7 million in the prior year. Including preferred stock dividends, the Company reported a net loss applicable to common stock of $2.6 million, or $0.16 per share, slightly lower than last year's loss of $2.7 million, or $0.18 per share. For the first nine months of 2003, sales totalled $410.5 million, down 0.8% from $413.9 million in the same period last year. After tax losses, including impairment and special charges of $6.2 million recognized in the second quarter, totalled $13.5 million, or $0.86 per share. In the same period of 2002, after tax losses, including $0.8 million of losses from discontinued operations, totalled $4.9 million, or $0.33 per share.
Commenting on Castle's current year operating results, Mr. G. Thomas McKane, President and CEO, noted that, exclusive of impairment and other special charges, the Company has generated positive operating income before interest, taxes, depreciation and amortization (EBITDA) in each quarter of 2003. "One of our primary objectives this year," he said, "was to significantly reduce our total debt. The combination of positive EBITDA, improved working capital utilization, the sale of underutilized distribution capacity and the liquidation or sale of under-performing business units has enabled us to make significant progress in this area. A year ago, at September 30, 2002, our total interest bearing debt, including
 
     
 
A. M. Castle & Co.
Add One

advances under our Accounts Receivable Securitization Facility, stood at $157.2. Today, that debt has been reduced by $30.5 million to $126.7 million, our current ratio stands at 1.9 to 1.0, our debt-to-total capital ratio is 47.3%, and we are well within all of our loan covenant requirements. Looking ahead," he added, "proceeds from asset sales and liquidations not yet completed are expected to generate an additional $6.0 million for future debt reduction in the next several quarters."
A key element to improving the Company's current and future EBITDA is to continue to decrease operating expenses and, by so doing, reduce our breakeven point. In the third quarter of 2003, other operating expenses totalled $40.1 million, down 5.4%, or $2.3 million from $42.4 million in the prior year period. Exclusive of the plastics business, which saw a 12.6% year-over-year quarterly sales increase, operating expenses of the Company's metals segment fell $2.8 million, or 7.4% on a 3.0% decline in metals sales, reflecting the structural expense reductions we have made along with continued productivity gains. "These improvements in operating efficiencies," McKane said, "are part of a continuing effort to reduce the Company's breakeven point. We started 2001 with a breakeven point of $700 million which was reduced to $600 million by the beginning of 2003. Through the third quarter of this year, we have further reduced the breakeven point to $575 million on our way to our target of $545 million, about equal to our current annual sales run rate."
In discussing the Company's near-term expectations, Mr. McKane noted that, "as the third quarter developed, there were some indications of improved demand in the general manufacturing sector of the economy while demand in aerospace continued to be very soft and readings in the oil and gas markets were mixed." He also stated that "the Company had a number of aggressive sales programs underway which are expected to result in new business in 2004 in our traditional core metals product areas." In addition, McKane stated, "we are seeing solid business growth in our Mexico joint venture which is expected to grow sales by over 20%."
McKane cautioned that the fourth quarter of 2003 was expected to be impacted by extended customer plant shutdowns during Thanksgiving week and again during the holiday season the last two weeks of December. "We won't have a good reading on 2004," McKane said, "until January or February, which will tell the tale of whether a real recovery is underway as opposed to the bounce we saw early in 2003. If this is the beginning of a sustained recovery, we expect it to be a slow and gradual one building strength over an extended period of time. "
A recording of the Company's quarterly investor's conference call is available to interested parties through November 14, 2003 at www.amcastle.com
 
     
 
A. M. Castle & Co.
Add Two


    Founded in 1890, A. M. Castle & Co. provides highly engineered materials and value added services to a wide range of companies within the producer durable equipment sector of the economy. Its customer base includes many Fortune 500 companies as well as thousands of medium and smaller-sized firms spread across a wide spectrum of industries. Within its core metals business, it specializes in the distribution of carbon, alloy and stainless steels; nickel alloy; aluminum; titanium; copper and brass. Through its subsidiary, Total Plastics, Inc., the Company also distributes a broad range of value-added industrial plastics. Together, Castle and its affiliated companies operate over 50 locations throughout North America. Its common stock is traded on the American and Chicago Stock Exchange under the ticker symbol "CAS".
This release may contain forward-looking statements relating to future financial results. Actual results may differ materially as a result of factors over which the company has no control. These risk factors and additional information are included in the company’s reports on file with the Securities and Exchange Commission.
Financial tables to follow.
 
     
 


A.M. CASTLE & CO.
 
 
 
 
 
CONSOLIDATED STATEMENTS OF OPERATIONS
 
For the Three
For the Nine
(Amounts in thousands, except per share data)
   
Months Ended   
    
Months Ended   
  
(Unaudited)
   
September 30,   
    
September 30,   
  
 
    
2003
   
2002
   
2003
   
2002
 
 
    
 
    
 
    
 
    
 
  
Net sales
 
$
134,917
 
$
136,604
 
$
410,510
 
$
413,854
 
Cost of material sold
   
(95,948
)
 
(96,592
)
 
(287,931
)
 
(290,470
)
Special charges
   
-
   
-
   
(1,524
)
 
-
 
   
 
 
 
 
Gross material margin
   
38,969
   
40,012
   
121,055
   
123,384
 
 
    
 
    
 
    
 
    
 
  
Plant and delivery expense
   
(21,300
)
 
(22,112
)
 
(65,913
)
 
(66,854
)
Sales, general, and administrative expense
   
(16,723
)
 
(18,040
)
 
(52,402
)
 
(50,720
)
Depreciation and amortization expense
   
(2,083
)
 
(2,249
)
 
(6,700
)
 
(6,438
)
Impairment and other operating expenses
   
-
   
-
   
(5,924
)
 
-
 
   
 
 
 
 
Total other operating expense
   
(40,106
)
 
(42,401
)
 
(130,939
)
 
(124,012
)
 
    
 
    
 
    
 
    
 
  
Operating loss
   
(1,137
)
 
(2,389
)
 
(9,884
)
 
(628
)
 
    
 
    
 
    
 
    
 
  
Equity earnings (loss) of joint ventures
   
2
   
326
   
(79
)
 
420
 
Impairment to joint venture investment and advances
   
-
   
-
   
(2,830
)
 
-
 
Interest expense, net
   
(2,452
)
 
(1,820
)
 
(7,347
)
 
(5,337
)
Discount on sale of accounts receivable
   
(295
)
 
(360
)
 
(874
)
 
(939
)
 
    
 
    
 
    
 
    
 
  
   
 
 
 
 
Loss from continuing operations before income taxes
   
(3,882
)
 
(4,243
)
 
(21,014
)
 
(6,484
)
   
 
 
 
 
 
    
 
    
 
    
 
    
 
  
Income taxes
   
 
    
 
    
 
    
 
  
Federal
   
1,284
   
1,372
   
6,808
   
2,047
 
State
   
261
   
181
   
1,431
   
306
 
   
 
 
 
 
 
    
1,545
   
1,553
   
8,239
   
2,353
 
   
 
 
 
 
Net loss from continuing operations
   
(2,337
)
 
(2,690
)
 
(12,775
)
 
(4,131
)
 
    
 
    
 
    
 
    
 
  
Discontinued operations:
   
 
    
 
    
 
    
 
  
Loss from discontinued operations; net of
   
 
    
 
    
 
    
 
  
income tax
   
 
    
 
    
 
    
(26
)
Loss on disposal of subsidiary, net of tax
   
 
    
 
    
 
    
(729
)
 
    
 
    
 
    
 
    
 
  
   
 
 
 
 
Net loss
   
(2,337
)
 
(2,690
)
 
(12,775
)
 
(4,886
)
Preferred Dividends
   
(242
)
 
-
   
(719
)
 
-
 
   
 
 
 
 
Net loss applicable to common stock
 
$
(2,579
)
$
(2,690
)
$
(13,494
)
$
(4,886
)
Basic & diluted earnings per share from:
   
 
    
 
    
 
    
 
  
Continuing operations
 
$
(0.16
)
$
(0.18
)
$
(0.86
)
$
(0.28
)
Discontinued operations
   
-
   
-
   
-
   
(0.05
)
   
 
 
 
 
Total
 
$
(0.16
)
$
(0.18
)
$
(0.86
)
$
(0.33
)
   
 
 
 
 

A.M. CASTLE & CO.
 
 
 
 
CONSOLIDATED BALANCE SHEETS
   
 
    
 
    
 
  
(Amounts in thousands except per share data)
   
 
    
 
    
 
  
(Unaudited)
   
Sept. 30,

 

 
Dec. 31,

 

 
Sept. 30,

 

 

 

 
2003

 

 
2002

 

 
2002
 
   
 
 
 
ASSETS
   
 
    
 
    
 
  
Current assets
   
 
    
 
    
 
  
Cash and equivalents
 
$
831
 
$
918
 
$
2,621
 
Accounts receivable, net
   
51,666
   
34,273
   
29,229
 
Inventories (principally on last-in first-out basis)
   
119,730
   
131,704
   
130,525
 
Income tax receivable
   
-
   
9,897
   
7,109
 
Advances to joint ventures and other current assets
   
5,546
   
7,930
   
7,352
 
   
 
 
 
Total current assets
   
177,773
   
184,722
   
176,836
 
   
 
 
 
Investment in joint ventures
   
5,317
   
7,278
   
6,909
 
Goodwill
   
31,619
   
31,947
   
31,942
 
Pension assets
   
41,823
   
40,359
   
34,373
 
Advances to joint ventures and other assets
   
8,875
   
6,754
   
5,812
 
Property, plant and equipment, at cost
   
 
    
 
    
 
  
Land
   
5,020
   
6,025
   
6,174
 
Building
   
48,885
   
53,322
   
53,307
 
Machinery and equipment
   
118,741
   
125,376
   
127,109
 
   
 
 
 
 
    
172,646
   
184,723
   
186,590
 
Less - accumulated depreciation
   
(101,763
)
 
(103,188
)
 
(101,104
)
   
 
 
 
 
    
70,883
   
81,535
   
85,486
 
   
 
 
 
Total assets
 
$
336,290
 
$
352,595
 
$
341,358
 
   
 
 
 
 
    
 
    
 
    
 
  
LIABILITIES AND STOCKHOLDER'S EQUITY
   
 
    
 
    
 
  
Current liabilities
   
 
    
 
    
 
  
Accounts payable
 
$
60,422
 
$
64,192
 
$
58,113
 
Accrued liabilities and deferred gains
   
19,259
   
16,092
   
16,136
 
Current and deferred income taxes
   
4,183
   
4,351
   
4,598
 
Current portion of long-term debt
   
7,980
   
3,546
   
2,442
 
   
 
 
 
Total current liabilities
   
91,844
   
88,181
   
81,289
 
   
 
 
 
Long-term debt, less current portion
   
98,786
   
108,801
   
113,785
 
Deferred income taxes
   
16,018
   
21,101
   
21,367
 
Deferred gain on sale of assets
   
6,997
   
-
   
-
 
Minority interest
   
1,441
   
1,352
   
1,345
 
Post retirement benefits obligations
   
2,352
   
2,236
   
2,283
 
Stockholders' equity
   
 
    
 
    
 
  
Preferred stock
   
11,239
   
11,239
   
-
 
Common stock
   
159
   
158
   
151
 
Additional paid in capital
   
35,017
   
35,017
   
31,782
 
Earnings reinvested in the business
   
72,002
   
85,490
   
90,763
 
Accumulated other comprehensive income (loss)
   
727
   
(555
)
 
(895
)
Other - deferred compensation
   
(62
)
 
(195
)
 
(282
)
Treasury stock, at cost
   
(230
)
 
(230
)
 
(230
)
   
 
 
 
Total stockholders' equity
   
118,852
   
130,924
   
121,289
 
   
 
 
 
Total liabilities and stockholders' equity
 
$
336,290
 
$
352,595
 
$
341,358
 
   
 
 
 

A.M. CASTLE & CO.
 
 
 
CONSOLIDATED STATEMENT OF CASH FLOWS
 
 
 
(Dollars in thousands)
 
For the nine months
(Unaudited)
 
September 30,
 
    
2003
   
2002
 
 
    
 
    
 
  
Cash flows from operating activities:
   
 
    
 
  
Net loss
 
$
(13,494
)
$
(4,886
)
Net loss from discontinued operations
   
 
    
755
 
Depreciation
   
6,700
   
6,438
 
Amortization of deferred gain
   
(150
)
 
-
 
Equity loss (earnings) from joint ventures
   
79
   
(420
)
Decrease in deferred taxes and income tax receivable
   
4,732
   
463
 
Non-cash pension income
   
(1,053
)
 
(1,887
)
Other
   
(3,257
)
 
(5,567
)
   
 
 
Cash used by operating activities before working capital changes
   
(6,443
)
 
(5,104
)
Asset impairment and special charges
   
10,278
   
-
 
Net change in accounts receivable sold
   
(5,866
)
 
1,000
 
Other Increase in working capital
   
(61
)
 
10,113
 
   
 
 
Net cash (used by) provided from operating activities - continuing operations
   
(2,092
)
 
6,009
 
Net cash used by operating activities - discontinued operations
   
-
   
(1,194
)
   
 
 
Net cash (used by) provided from operating activities
   
(2,092
)
 
4,815
 
   
 
 
 
    
 
    
 
  
Cash flows from investing activities:
   
 
    
 
  
Investments and acquisitions
   
-
   
(842
)
Proceeds from disposition of subsidiary
   
-
   
2,486
 
Advances to joint ventures
   
(199
)
 
(2,044
)
Capital expenditures
   
(2,183
)
 
(758
)
Proceeds from sale of assets
   
10,538
   
 
  
   
 
 
Net cash provided from (used by) investing activities - continuing operations
   
8,156
   
(1,158
)
Net cash provided from investing activities - discontinued operations
   
-
   
98
 
   
 
 
Net cash provided from (used by) investing activities
   
8,156
   
(1,060
)
 
    
 
    
 
  
Cash flows from financing activities
   
 
    
 
  
Long-term borrowings, net
   
(6,453
)
 
(4,204
)
Effect of exchange rate changes on cash
   
302
   
7
 
Other
   
-
   
325
 
   
 
 
Net cash used by financing activities - continuing operations
   
(6,151
)
 
(3,872
)
Net cash provided from financing activities - discontinued operations
   
-
   
937
 
   
 
 
Net cash used by financing activities
   
(6,151
)
 
(2,935
)
 
    
 
    
 
  
Net (decrease) increase in cash
   
(87
)
 
820
 
 
    
 
    
 
  
   
 
 
Cash - beginning of year
 
$
918
 
$
1,801
 
   
 
 
Cash - end of period
 
$
831
 
$
2,621