UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal year ended December 31, 2001
Commission File Number 1-898
AMPCO-PITTSBURGH CORPORATION I.R.S. Employer Identification
600 Grant Street, Suite 4600, Pittsburgh, PA 15219 No. 25-1117717
412/456-4400 State of Incorporation: Pennsylvania
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
------------------- ---------------------
Common stock, $1 par value New York Stock Exchange
Philadelphia Stock Exchange
Series A Preference Stock New York Stock Exchange
Purchase Rights Philadelphia Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No ___
---
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
As of March 5, 2002, 9,608,897 common shares were outstanding. The
aggregate market value of the voting stock of Ampco-Pittsburgh Corporation held
by non-affiliates (based upon the closing price of these shares on the New York
Stock Exchange) was approximately $103 million.
DOCUMENTS INCORPORATED BY REFERENCE: Parts I, II and IV of this report
incorporate by reference certain information from the Annual Report to
Shareholders for the year ended December 31, 2001.
PART I
ITEM 1 - BUSINESS
(a) GENERAL DEVELOPMENT OF BUSINESS
Ampco-Pittsburgh Corporation (the "Corporation") was incorporated in
Pennsylvania in 1929.
The Corporation classifies it's businesses in three segments - Forged and
Cast Rolls, Air and Liquid Processing, and Plastics Processing Machinery.
In 2001, following a review of its global roll making facilities, the
Corporation permanently closed the forged steel roll finishing plant in Belgium.
However, the European sales and engineering group remains headquartered in that
country.
The Registrant, individually or together with its consolidated
subsidiaries, is also referred to herein as the Corporation.
(b) FINANCIAL INFORMATION ABOUT SEGMENTS
The sales and operating profit of the Corporation's three segments and the
identifiable assets attributable to each segment for the three years ended
December 31, 2001 are set forth in Note 16 (Business Segments) on page 19 of the
Annual Report to Shareholders for the year ended December 31, 2001, which is
incorporated herein by reference.
(c) NARRATIVE DESCRIPTION OF BUSINESS
Forged and Cast Rolls Segment
-----------------------------
Union Electric Steel Corporation produces forged hardened steel rolls for
2
producers of steel, aluminum and other metals throughout the world. It is
headquartered in Carnegie, Pennsylvania with three manufacturing facilities in
Pennsylvania and one in Indiana. Union Electric Steel Corporation is considered
one of the largest producers of forged hardened steel rolls in the world. In
addition to several domestic competitors, several major European and Japanese
manufacturers also compete in both the domestic and foreign markets.
The Davy Roll Company Limited produces cast rolls for hot and cold strip
mills, medium/heavy section mills and plate mills in a variety of iron and steel
qualities. It is located in Gateshead, England and is a major European supplier
of cast rolls to the metal working industry worldwide. It primarily competes
with one British company and several European and American companies in both the
domestic and foreign markets.
Formet Limited custom forges special stock alloys principally used in the
oil and gas, petrochemical, marine and general engineering industries. It is
located in New Castle, England and competes with several other companies.
Air and Liquid Processing Segment
---------------------------------
Aerofin Corporation produces finned tube and plate finned heat exchange
coils for the commercial and industrial construction, process and utility
industries and is headquartered in Lynchburg, Virginia.
Buffalo Air Handling Company produces large standard and custom air
handling systems used in commercial and industrial buildings and is
headquartered in Amherst, Virginia.
Buffalo Pumps, Inc. manufactures a line of centrifugal pumps for the
refrigeration,
3
power generation and marine defense industries and is headquartered in North
Tonawanda, New York.
All three of the companies in this segment compete with several major
competitors.
Plastics Processing Machinery Segment
-------------------------------------
New Castle Industries, Inc. and its subsidiaries primarily produce feed
screws, barrels and chill rolls for use principally in the plastics processing
industry and is headquartered in New Castle, Pennsylvania. The New Castle
Industries group competes with a number of small regional companies.
F. R. Gross Company, located in Stow, Ohio, manufactures heat transfer
rolls and chill rolls for use by original equipment machinery manufacturers and
processors principally serving the plastics industry but also the paper,
packaging, printing and converting industries. Keystone Rolls Company
manufactures heat transfer rolls for the sheet, film, paper coating and textile
industries. Both of these companies compete with a number of small regional
companies.
In all three segments, the products are dependent on engineering,
principally custom designed and are sold to sophisticated commercial and
industrial users in the United States and countries outside of the United
States.
No one customer's purchases in any segment were material to the
Corporation. Contracts that may be subject to renegotiation or termination are
not material to the Corporation. The Corporation's businesses are not seasonal
but are subject to the cyclical nature of the industries and markets served.
For additional information on the products produced and financial
information
4
about each segment, see page 4 and Note 16 (Business Segments) on page 19 of the
Annual Report to Shareholders for the year ended December 31, 2001, which are
incorporated herein by reference.
Raw Materials
-------------
Raw materials used in all segments are generally available from many
sources and the Corporation is not dependent upon any single supplier for any
raw material. Certain of the raw materials used by the Corporation have
historically been subject to variations in price. The Corporation generally
does not purchase or arrange for the purchase of a major portion of raw
materials significantly in advance of the time it requires them.
Patents
-------
While the Corporation holds some patents, trademarks and licenses, in the
opinion of management, they are not material to any segment of the Corporation's
business other than in protecting the goodwill associated with the names under
which products are sold.
Working Capital
---------------
Each of the Corporation's businesses maintains levels of inventory, which
generally reflect normal requirements and are believed to reflect the practices
of its industries. Production in all segments is generally to custom order and
requires inventory levels of raw materials or semi-finished products with only a
limited level of finished products. The Corporation extends credit terms
consistent with practices of the industries served.
Backlog
-------
The backlog of orders at December 31, 2001 was approximately $107,608,000
compared to a backlog of $115,552,000 at year-end 2000. Most of those orders
are
5
expected to be filled in 2002.
Competition
-----------
The Corporation faces considerable competition from a large number of
companies in each segment. The Corporation believes, however, that it is a
significant factor in each of the principal markets which it serves. Competition
in all segments is based on quality, service, price and delivery.
Research and Development
------------------------
As part of an overall strategy to develop new markets and maintain
leadership in each of the industry niches served, each of the Corporation's
businesses in all three segments incur expenditures for research and
development. The activities that are undertaken are designed to develop new
products, improve existing products and processes, enhance product quality,
adapt products to specific customer requirements and reduce costs. In the
aggregate, these expenditures approximate $1,000,000 per year.
Environmental Protection Compliance Costs
-----------------------------------------
Expenditures for environmental control matters were not material to any
segment in 2001 and such expenditures are not expected to be material in 2002.
Employees
---------
In December 2001, the Corporation had 1,618 active employees.
(d) FINANCIAL INFORMATION ABOUT GEOGRAPHIC AREAS
The Corporation had, until mid 2001, manufacturing operations in Belgium
and the United Kingdom. However, the Belgium roll finishing plant was
permanently closed in May, 2001, leaving only a European sales and engineering
support group in that country.
6
For financial information relating to foreign and domestic operations see Note
16 (Business Segments) on page 19 of the Annual Report to Shareholders for the
year ended December 31, 2001, which is incorporated herein by reference.
ITEM 2 - PROPERTIES
The location and general character of the principal locations in each of
the three segments, all of which are owned unless otherwise noted, are as
follows:
Company and Principal Approximate Type of
Location Use Square Footage Construction
----------- --------- -------------- ------------
Forged and Cast Rolls Segment
-------------------------------
Union Electric Steel Corp.
Route 18 Manufacturing 186,000 on Metal and
Burgettstown, PA 15021 facilities 55 acres steel
726 Bell Street Manufacturing 153,000 on Metal and
Carnegie, PA 15106 facilities and 5 acres steel
offices
U.S. Highway 30 Manufacturing 88,000 on Metal and
Valparaiso, IN 46383 facilities 20 acres steel
1712 Greengarden Road Manufacturing 40,000* Metal and
Erie, PA 16501 facilities steel
Industrie Park Manufacturing 66,000 on Concrete,
B-3980 Tessenderlo facilities and 15 acres metal and
Belgium** offices steel
The Davy Roll Company
Gateshead Division Manufacturing 274,000 on Steel framed,
Coulthards Lane facilities and 12 acres metal and
Gateshead, England offices brick
7
Company and Principal Approximate Type of
Location Use Square Footage Construction
----------- -------------- -------------- -------------
Forged and Cast Rolls Segment (con't)
-------------------------------------
Formet Limited
Wincomblee Road Manufacturing 48,000 on Steel framed,
Low Walker facilities and 1.6 acres* metal and
New Castle-upon-Tyne offices brick
England
Air and Liquid Processing Segment
---------------------------------
Aerofin Corporation Manufacturing 146,000 on Brick,
4621 Murray Place facilities and 15.3 acres concrete
Lynchburg, VA 24506 offices and steel
Buffalo Air Handling Manufacturing 89,000 on Metal and
Company facilities and 19.5 acres steel
Zane Snead Drive offices
Amherst, VA 24531
12740 Lynchburg Salem Assembly 16,240* Metal and
Turnpike facility steel
Forest, VA
Buffalo Pumps, Inc. Manufacturing 94,000 on Metal, brick
874 Oliver Street facilities and 7 acres and cement
N. Tonawanda, NY 14120 offices block
Plastics Processing Machinery Segment
-------------------------------------
Atlantic Grinding &
Welding, Inc.
9 Ricker Avenue Manufacturing 19,000 on Metal and
Londonderry, NH 03053 facilities and 2.6 acres Steel
offices
1950 Old Dunbar Road Manufacturing 20,000* Metal and
West Columbia, SC 29172 facilities steel
Bimex Industries, Inc. Manufacturing 33,500 on Metal and
319 Universal Street facilities and 7.8 acres steel
Wales, WI 53183 offices
8
Company and Principal Approximate Type of
Location Use Square Footage Construction
----------- --------- -------------- ------------
Plastics Processing Machinery Segment (cont')
---------------------------------------------
F. R. Gross Co., Inc. Manufacturing 25,300 on Masonry,
1397 Commerce Drive facilities and 4.2 acres metal and
Stow, OH 44224 offices steel
Keystone Rolls Company, Inc.
40 Council Avenue Manufacturing 25,000 on Metal and
Wheatland, PA 16161 facilities and 4.5 acres steel
offices
New Castle Industries, Inc.
1399 Countyline Road Manufacturing 81,600 on Metal and
New Castle, PA 16102 facilities and 18.5 acres steel
offices
925 Industrial Street Manufacturing 31,000 on Masonry
New Castle, PA 16102 facilities 5.3 acres with steel
truss roof
________________
* Facility is leased.
** Available for sale
The Corporate office space is leased as are several small sales offices.
All of the owned facilities are adequate and suitable for their respective
purposes.
The Corporation estimates that all of its facilities were operated within
65% to 95% of their normal capacity during 2001. Normal capacity is defined as
capacity under approximately normal conditions with allowances made for
unavoidable interruptions, such as lost time for repairs, maintenance,
breakdowns, set-up, failure, supply delays, labor shortages and absences,
Sundays, holidays, vacation, inventory taking, etc. The number of work shifts is
also taken into consideration.
ITEM 3 - LEGAL PROCEEDINGS
The Corporation has been involved in various claims and lawsuits
incidental to its
9
business, including alleged exposure to asbestos containing components in
certain products. In the opinion of management, the Corporation has appropriate
insurance coverage and/or meritorious defenses in those cases and believes that,
in the aggregate, any liability will not have a material effect on the financial
position of the Corporation.
The Corporation is currently performing remedial activities in connection
with real estate previously owned or operated by certain discontinued
operations. In addition, the Corporation has been designated as a Potentially
Responsible Party ("PRP") at a third party landfill site used by a former
operation. However, the Corporation believes that based on information known to
date for all environmental matters considered in the aggregate, the liability to
the Corporation would not be material.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of security holders during the fourth
quarter.
10
PART II
ITEM 5 - MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The information called for by this item is set forth on pages 21 and 22 of
the Annual Report to Shareholders for the year ended December 31, 2001 which is
incorporated herein by reference.
ITEM 6 - SELECTED FINANCIAL DATA
The information called for by this item is set forth on page 22 of the
Annual Report to Shareholders for the year ended December 31, 2001, which is
incorporated herein by reference.
ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION
The information called for by this item is set forth on pages 5 through 8
of the Annual Report to Shareholders for the year ended December 31, 2001, which
are incorporated herein by reference.
ITEM 7A - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information called for by this item is set forth in Note 10 (Financial
Instruments) on pages 17 and 18 and Results of Operations on pages 5 through 8
of the Annual Report to Shareholders for the year ended December 31, 2001, which
is incorporated herein by reference.
11
ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information called for by this item is set forth on pages 9 through 20
of the Annual Report to Shareholders for the year ended December 31, 2001, which
are incorporated herein by reference.
ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
There were none.
12
PART III
ITEM 10 - DIRECTORS and EXECUTIVE OFFICERS
(a) IDENTIFICATION OF DIRECTORS
Name, Age, Tenure as a Director, Position with the Corporation (1), Principal
Occupation, Business Experience Past Five Years, and Other Directorships in
Public Companies
--------------------------------------------------------------------------------
Louis Berkman (age 93, Director since 1960; current term expires in 2002). He
has been Chairman of the Board of the Corporation and Chairman of the Executive
Committee of the Corporation for more than five years. He is also President and
a director of The Louis Berkman Company (steel products, fabricated metal
products, building and industrial supplies). (N)(2)
Leonard M. Carroll (age 59, Director since 1996; current term expires in 2004).
He has been Managing Director of Seneca Capital Management, Inc. (a private
investment company) for more than five years. (2)(3)
William D. Eberle (age 78, Director since 1982; current term expires in 2003).
He is a private investor and consultant and is Chairman of Manchester
Associates, Ltd. He is also a director of Mitchell Energy & Development Co.,
America Service Group and Konover Property Trust. (3)
Robert A. Paul (age 64, Director since 1970; current term expires in 2003). He
has been President and Chief Executive Officer of the Corporation for more than
five years. He is also an officer and director of The Louis Berkman Company and
director of National City Corporation. (2)
Laurence E. Paul (age 37, Director since 1998; current term expires in 2004). He
is a Vice President of The Louis Berkman Company. From 1995 to February 2001 he
served in various capacities, including as a Managing Director, of Donaldson,
Lufkin & Jenrette (Investment Banker). The firm was bought by Credit Suisse
First Boston in 2000.
Carl H. Pforzheimer, III (age 65, Director since 1982; current term expires in
2002). For more than five years he has been Managing Partner of Carl H.
Pforzheimer & Co. (member of the New York and American Stock Exchanges). (N)(3)
13
(a) IDENTIFICATION OF DIRECTORS (cont')
Name, Age, Tenure as a Director, Position with the Corporation (1), Principal
Occupation, Business Experience Past Five Years, and Other Directorships in
Public Companies
--------------------------------------------------------------------------------
Ernest G. Siddons (age 68, Director since 1981; current term expires in 2004).
He has been Executive Vice President and Chief Operating Officer of the
Corporation for more than five years. From September 1996 to December 1997 he
was also President of Union Electric Steel Corporation, a subsidiary of the
Corporation. (2)
__________
(N) Nominee for election at the April 23, 2002 Annual Meeting of Shareholders.
(1) Officers serve at the discretion of the Board of Directors.
(2) Member of Executive Committee.
(3) Member of Audit, Salary, Stock Option and Nominating Committees.
(b) IDENTIFICATION OF EXECUTIVE OFFICERS
In addition to Louis Berkman, Robert A. Paul and Ernest G. Siddons (see
"Identification of Directors" above) the following are also Executive Officers
of the Corporation:
Name, Age, Position with the Corporation (1), Business Experience Past Five
Years
--------------------------------------------------------------------------------
Rose Hoover (age 46). She has been a Vice President of the Corporation since
June 1999 and has been Secretary for more than five years. For more than five
years before June 1999, she was Manager of Real Property and Environmental
Control.
Marliss D. Johnson (age 37). She has been Vice President, Controller and
Treasurer of the Corporation since July 1999. For five years before July 1999,
she was a Senior Manager with PricewaterhouseCoopers LLP (a public accounting
firm).
Terrence W. Kenny (age 42). He has been Group Vice President of the Corporation
since February 1999 and was Vice President Corporate Development & Planning from
April 1998 to February 1999. For five years prior to 1998, he was Vice President
and Treasurer of Buffalo Pumps, Inc., a subsidiary of the Corporation.
Robert F. Schultz (age 54). He has been Vice President Industrial Relations and
Senior Counsel of the Corporation for more than five years.
__________
(1) Officers serve at the discretion of the Board of Directors and none of the
listed individuals serve as a director of a public company.
14
(c) IDENTIFICATION OF CERTAIN SIGNIFICANT EMPLOYEES
None.
(d) FAMILY RELATIONSHIPS
Louis Berkman is the father-in-law of Robert A. Paul, and grandfather of
Laurence E. Paul (son of Robert A. Paul). There are no other family
relationships among the Directors and Executive Officers.
15
ITEM 11 - EXECUTIVE COMPENSATION
The following table sets forth certain information as to the total
remuneration received for the past three years by the five most highly
compensated executive officers of the Corporation, including the Chief Executive
Officer (the "Named Executive Officers"):
SUMMARY COMPENSATION TABLE
Annual Compensation
----------------------------------------------------------------------------------------
(a) (b) (c) (d) (g) (i)
Name and Securities All Other
Principal Salary Bonus Underlying Compensation
Position Year ($) ($) Options(#) ($)
--------- ---- ------ ----- ---------- ------------
Robert A. Paul 2001 400,000 0
President and Chief 2000 375,000 63,750 60,000(1)
Executive Officer 1999 353,250 112,500 60,000(2)
Louis Berkman 2001 400,000 0
Chairman of the Board 2000 375,000 63,750 60,000(1)
and Executive Committee 1999 353,250 112,500 60,000(2)
Ernest G. Siddons 2001 360,000 0
Executive Vice President 2000 336,000 57,120 50,000(1)
and Chief Operating 1999 316,500 100,800 50,000(2)
Officer
Terrence W. Kenny 2001 140,000 0 38,500(3)
Group Vice President 2000 120,000 30,000 12,500(1)
1999 110,550 25,000 12,500(2)
Robert F. Schultz 2001 153,000 0
Vice President 2000 147,000 18,000 10,000(1)
Industrial Relations 1999 142,000 20,000 20,000(2)
and Senior Counsel
______________
(1) Options granted in April 2000 and exercisable in June 2000.
(2) Options granted in December 1998 and exercisable in May 1999.
(3) Pursuant to an Incentive Bonus Plan based on income from operations of the
Air and Liquid Handling Group.
16
(b) COMPENSATION PURSUANT TO PLANS
Stock Option Plan
The Corporation's 1997 Stock Option Plan, as amended, permits the grant of
options exercisable for shares of Common Stock to corporate officers and other
key employees of the Corporation and its subsidiaries upon such terms, including
exercise price and conditions and timing of exercise, as may be determined by
the Stock Option Committee. The Stock Option Plan authorizes the grants of
awards up to a maximum of 600,000 shares of the Corporation's Common Stock,
however, the maximum number of Shares with respect to which stock options may be
granted to any one Participant in any fiscal year may not exceed 150,000. No
options were granted in 2001.
Pension Benefits
The Corporation has a tax qualified retirement plan (the "Plan") applicable
to the Executive Officers and other employees, to which the Corporation makes
annual contributions, as required, in amounts determined by the Plan's
actuaries. The Plan does not have an offset for Social Security and is fully
paid for by the Corporation. Under the Plan, employees become fully vested after
five years of participation and normal retirement age under the Plan is age 65
but actuarially reduced benefits may be available for early retirement at age
55. The primary benefit formula is 1.1% of the highest consecutive five year
average earnings in the final ten years, times years of service. Federal law
requires that 5% owners start receiving a pension no later than April 1
following the calendar year in which the age 70-1/2 is reached. Louis Berkman is
currently receiving $6,164 a month pursuant to the Plan. As an active employee,
Mr. Berkman continues to receive credit for
17
additional service rendered after age 70-1/2.
The Corporation adopted a Supplemental Executive Retirement Plan (SERP) in
1988 (amended and restated in 1996) for certain officers and key employees
covering retirement after completion of ten years of service and attainment of
age 55. All officers listed in the compensation table are Participants in the
SERP, except Louis Berkman. The combined retirement benefit at age 65 or older
provided by the Plan and the SERP is 50% of the highest consecutive five year
average earnings in the final ten years of service. The participants are
eligible for reduced benefits for early retirement at age 55. A benefit equal to
50% of the benefit otherwise payable at age 65 is paid to the surviving spouse
of any participant, who has had at least five years of service, commencing on
the later of the month following the participant's death or the month the
participant would have reached age 55. In addition, there is an offset for
pensions from other companies. Certain provisions, applicable if there is a
change of control, are discussed below under Termination of Employment and
Change of Control Arrangement.
The following shows the estimated annual pension that would be payable,
without offset, under the Plan and the SERP, if applicable, to the individuals
named in the compensation table assuming continued employment to retirement at
age 65 or older, and assuming the compensation stated in the table is the final
five year average:
Louis Berkman (1)
Robert A. Paul $200,000
Ernest G. Siddons $180,000
Terrence W. Kenny $ 89,250
Robert F. Schultz $ 76,500
________
18
(1) Mr. Berkman is currently receiving a pension pursuant to the Plan as
described above.
(c) COMPENSATION OF DIRECTORS
In 2001, each Director who was not employed by the Corporation received an
annual retainer of $6,000 (payable quarterly), $1,000 for each Board meeting
attended and $500 for each Committee meeting attended. Attendance can be either
in person or by telephonic connection. Directors do not receive a fee for either
Board or Committee meetings if they do not attend.
(d) TERMINATION OF EMPLOYMENT AND CHANGE OF CONTROL ARRANGEMENTS
Mr. Berkman, Mr. Paul and Mr. Siddons have two year contracts (which
automatically renew for one year periods unless the Corporation chooses not to
extend) providing for compensation equal to five times their annual compensation
(with a provision to gross up to cover the cost of any federal excise tax on the
benefits) in the event their employment is terminated following a change of
control (including a voluntary departure for good cause) and the right to
equivalent office space and secretarial help for a period of one year after a
change in control. Mr. Schultz, Mr. Kenny, the two remaining Vice Presidents and
one other employee have two year contracts providing for three times their
annual compensation in the event their employment is terminated following a
change in control (including a voluntary departure for good cause). All of the
contracts provide for the continuation of employee benefits, for three years for
the three senior executives and two years for the others, and the right to
purchase the leased car used by the covered individual at the Corporation's then
book value. The same provisions concerning change
19
in control that apply to the contracts apply to the SERP and vest the right to
that pension arrangement. A change of control triggers the right to a lump sum
payment equal to the present value of the vested benefit under the SERP if
applicable.
(e) SALARY COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN COMPENSATION
DECISIONS
A Salary Committee is appointed each year by the Board of Directors. The
Salary Committee for the year 2001 was comprised of three Directors: William D.
Eberle (Chairman), Leonard M. Carroll and Carl H. Pforzheimer, III. None of the
Committee members is now, or ever has been, an officer or employee of the
Corporation.
(f) SALARY COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Salary Committee approves salaries for executive officers within a
range from $150,000 up to $200,000 and increases in the salary of any executive
officer, which would result in such officer earning a salary within such range.
Salaries of $200,000 per year and above must be approved by the Board of
Directors, after a recommendation by the Salary Committee. Salaries for
executive officers below the level of $150,000 are set by the Chairman,
President and Executive Vice President of the Corporation.
The compensation reported for the last completed fiscal year for the Chief
Executive Officer of the Corporation, as well as the other applicable executive
officers, was based on an analysis conducted by the Salary Committee. The
Committee does not specifically link remuneration solely to quantitative
measures of performance because of the cyclical nature of the industries and
markets served by the Corporation. In setting compensation, the
20
Committee also considers various qualitative factors, including competitive
compensation arrangements of other companies within relevant industries,
individual contributions, leadership ability and an executive officer's overall
performance. In this way, it is believed that the Corporation will attract and
retain quality management, thereby benefiting the long-term interest of
shareholders.
The Salary Committee had previously approved an incentive program for 2001
covering Louis Berkman, Robert A. Paul and Ernest G. Siddons. Incentive
payments were to be determined, based exclusively on the Corporation's 2001
income from operations performance as compared to the Corporation's business
plan. These payments were to be limited to 30% of base salary of participants.
In 2001, no incentive payments were earned by the participants.
This report of the Salary Committee shall not be deemed incorporated by
reference by any general statement incorporating by reference this 10-K report
into any filing under the Securities Act of 1933 or under the Securities
Exchange Act of 1934, except to the extent that the Corporation specifically
incorporates this report and the information contained herein by reference, and
shall not otherwise be deemed filed under such Acts.
Leonard M. Carroll
William D. Eberle
Carl H. Pforzheimer, III
21
(g) STOCK PERFORMANCE GRAPH
Comparative Five-Year Total Returns*
Ampco-Pittsburgh Corporation, Standard & Poors 500 and Value Line Steel
(Integrated) Index
(Performance results through 12/31/01)
[GRAPH]
Assumes $100 invested at the close of trading on the last trading day
preceding January 1, 1997 in Ampco-Pittsburgh Corporation common stock,
Standard & Poors 500 and Steel (integrated).
*Cumulative total return assumes reinvestment of dividends.
In the above graph, the Corporation has used Value Line's Steel
(Integrated) Index for its peer comparison. The diversity of products produced
by subsidiaries of the Corporation made it difficult to match to any one
product-based peer group. The Steel Industry was chosen because it is impacted
by some of the same end markets that the Corporation ultimately serves, such as
the automotive, appliance and construction industries. Historical stock price
performance shown on the above graph is not necessarily indicative of future
price performance.
22
ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(a) SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
As of March 5, 2002, Louis Berkman owned directly 215,000 shares of the
Common Stock of the Corporation and had the right to acquire 120,000 shares
pursuant to stock options. As of the same date, The Louis Berkman Company, P.
O. Box 576, Steubenville, OH 43952 owned beneficially and of record 2,363,842
shares of the Common Stock of the Corporation. Louis Berkman, an officer and
director of The Louis Berkman Company, owns directly 61.51% of its common stock.
Robert A. Paul, an officer and director of The Louis Berkman Company, disclaims
beneficial ownership of the 38.49% of its common stock owned by his wife. Louis
Berkman and Robert A. Paul are trustees of The Louis and Sandra Berkman
Foundation and disclaim beneficial ownership of the 1,266 shares of the
Corporation's Common Stock held by such Foundation.
In March 1998, Gabelli Funds, Inc. and affiliates, Corporate Center, Rye,
NY 10580, filed an amendment to its Schedule 13D reporting they owned 1,893,500
shares or 19.77%. In January 2002, Dimensional Fund Advisors Inc., 1299 Ocean
Avenue, Santa Monica, CA 90401 filed a 13G disclosing that as of December 31,
2001 it had sole voting and dispositive power of 802,800 shares or 8.35% (all of
which shares are held in portfolios of various investment vehicles).
(b) SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth as of March 5, 2002 information concerning
the beneficial ownership of the Corporation's Common Stock by the Directors and
Named
23
Executive Officers and all Directors and Executive Officers of the Corporation
as a group:
Name of Amount and nature of Percent
beneficial owner beneficial ownership of class
---------------- -------------------- --------
Louis Berkman 2,701,108(1)(2) 28.11
Robert A. Paul 177,922(2)(3) 1.85
Ernest G. Siddons 101,833(4) 1.06
Robert F. Schultz 30,200(5) .31
Terrence W. Kenny 25,000(6) .26
Carl H. Pforzheimer, III 2,733(7) *
Leonard M. Carroll 1,500 *
Laurence E. Paul 1,000 *
William D. Eberle 200 *
Directors and Executive
Officers as a group
(11 persons) 3,060,230(8) 31.85
________________
*less than .1%
(1) Includes 215,000 shares owned directly, 120,000 shares which he has the
right to acquire within sixty days pursuant to stock options, 2,363,842
shares owned by The Louis Berkman Company, and the following shares in
which he disclaims beneficial ownership: 1,266 shares held by The Louis and
Sandra Berkman Foundation of which Louis Berkman and Robert A. Paul are
trustees, and 1,000 shares owned by his wife.
(2) The Louis Berkman Company owns beneficially and of record 2,363,842 shares
of the Corporation's Common Stock. Louis Berkman is an officer and
director of The Louis Berkman Company and owns directly 61.51% of its
common shares. Robert A. Paul, an officer and director of The Louis
Berkman Company, disclaims beneficial ownership of the 38.49% of its common
stock owned by his wife. The number of shares shown in the table for
Robert A. Paul does not include any shares held by The Louis Berkman
Company.
(3) Includes 42,889 shares owned directly, 120,000 shares which he has the
right to acquire within sixty days pursuant to stock options, and the
following shares in which he disclaims beneficial ownership: 13,767 shares
owned by his wife and 1,266 shares held by The Louis and Sandra Berkman
Foundation of which Robert A. Paul and Louis Berkman are Trustees.
24
(4) Includes 1,833 shares owned jointly with his wife and 100,000 shares which
he has the right to acquire within sixty days pursuant to stock options.
(5) Includes 200 shares owned jointly with his wife and 30,000 shares which he
has the right to acquire within sixty days pursuant to stock options.
(6) Includes 25,000 shares which he has the right to acquire within sixty days
pursuant to stock options.
(7) Includes 1,000 shares owned directly, 800 shares held by a trust of which
he is a trustee and principal beneficiary, and the following shares in
which he disclaims beneficial ownership: 133 shares held by his daughter
and 800 shares held by a trust of which he is a trustee.
(8) Includes 415,000 shares which certain officers have the right to acquire
within sixty days pursuant to stock options and excludes double counting of
shares deemed to be beneficially owned by more than one Director.
Unless otherwise indicated the individuals named have sole investment and
voting power.
(c) CHANGES IN CONTROL
The Corporation knows of no arrangements which may at a subsequent date
result in a change in control of the Corporation.
ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In 2001 the Corporation bought industrial supplies from The Louis Berkman
Company in transactions in the ordinary course of business amounting to
approximately $1,625,000. Additionally, The Louis Berkman Company paid the
Corporation $188,333 for certain administrative services. Louis Berkman is an
officer, director and shareholder, Robert A. Paul is an officer and director,
and Laurence E. Paul is an officer, of that
25
company. These transactions and services were at prices generally available from
outside sources. Transactions between the parties will take place in 2002.
PART IV
ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) 1. Financial Statements
The consolidated financial statements, together with the report thereon of
Deloitte & Touche LLP appearing on pages 9 through 20 and page 22 of the Annual
Report to Shareholders for the year ended December 31, 2001 are incorporated by
reference in this Form 10-K Annual Report.
2. Financial Statement Schedules
The following additional financial data should be read in conjunction with the
consolidated financial statements in the accompanying Annual Report. Schedules
not included with this additional financial data have been omitted because they
are not applicable or the required information is shown in the financial
statements or notes thereto.
Schedule Page
Number Number
-------- ------
Index to Ampco-Pittsburgh
Corporation Financial Data F-1
Report of Independent
Accountants F-2
Valuation and Qualifying
Accounts and Reserves II F-3
26
3. Exhibits
Exhibit No.
(3) Articles of Incorporation and By-laws
a. Articles of Incorporation
Incorporated by reference to the Quarterly Report on Form 10-Q for
the quarter ended March 31, 1983; the Quarterly Report on Form 10-Q
for the quarter ended March 31, 1984; the Quarterly Report on Form
10-Q for the quarter ended March 31, 1985; the Quarterly Report on
Form 10-Q for the quarter ended March 31, 1987; and the Quarterly
Report on Form 10-Q for the quarter ended September 30, 1998.
b. By-laws
Incorporated by reference to the Quarterly Report on Form 10-Q for
the quarter ended September 30, 1994 and the Quarterly Report on
Form 10-Q for the quarter ended March 31, 1996 and 10-Q for the
Quarter ended June 30, 2001.
(4) Instruments defining the rights of securities holders
a. Rights Agreement between Ampco-Pittsburgh Corporation and Chase
Mellon Shareholder Services dated as of September 28, 1998.
Incorporated by reference to the Form 8-K Current Report dated
September 28, 1998.
(10) Material Contracts
a. 1988 Supplemental Executive Retirement Plan
Incorporated by reference to the Quarterly Report on Form 10-Q for
the quarter ended March 31, 1996.
b. Severance Agreements between Ampco-Pittsburgh Corporation and
certain officers and employees of Ampco-Pittsburgh Corporation.
Incorporated by reference to the Quarterly Report on Form 10-Q for
the quarter ended September 30, 1988; the Quarterly Report on Form
10-Q for
27
the quarter ended September 30, 1994, the Annual Report on Form 10-
K for fiscal year ended December 31, 1994; the Quarterly Report on
Form 10-Q for the quarter ended June 30, 1997; the Annual Report on
Form 10-K for fiscal year ended December 31, 1998; and the
Quarterly Report on Form 10-Q for the quarter ended June 30, 1999.
c. 1997 Stock Option Plan
Incorporated by reference to the Proxy Statement dated March 14,
1997 and the Proxy Statement dated March 15, 2000.
(13) Annual Report to Shareholders for the fiscal year ended December
31, 2001
(21) Significant Subsidiaries
(23) Consent of Expert
(b) Reports on Form 8-K
-------------------
None.
28
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
AMPCO-PITTSBURGH CORPORATION
(Registrant)
March 14, 2002
By /s/Louis Berkman
--------------------------------------------
Director, Chairman of the Board -
Louis Berkman
By /s/Robert A. Paul
--------------------------------------------
Director, President and Chief Executive
Officer -
Robert A. Paul
By /s/Ernest G. Siddons
--------------------------------------------
Director, Executive Vice President
and Chief Operating Officer -
Ernest G. Siddons
By /s/Marliss D. Johnson
--------------------------------------------
Vice President, Controller and Treasurer
(Principal Financial Officer) -
Marliss D. Johnson
29
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant, in their capacities as Directors, as of the date indicated.
March 14, 2002
By /s/Leonard M. Carroll
-----------------------------------
Leonard M. Carroll
By /s/William D. Eberle
-----------------------------------
William D. Eberle
By /s/Laurence E. Paul
-----------------------------------
Laurence E. Paul
By /s/Carl H. Pforzheimer, III
-----------------------------------
Carl H. Pforzheimer, III
Index to Ampco-Pittsburgh Corporation Financial Data
----------------------------------------------------
Schedule Page
Number Number
------ ------
Index to Ampco-Pittsburgh Corporation
Financial Data F-1
Report of Independent Accountants F-2
Valuation and Qualifying Accounts and
Reserves II F-3
F-1
Deloitte & Topuche LLP
2500 One PPG Place
Pittsburgh, Pennsylvania 15222-5401
Tel: (412) 338-7200
Fax: (412) 338-7380
www.us.deloitte.com Deloitte
-------------------
& Touche
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
Ampco-Pittsburgh Corporation
We have audited the consolidated balance sheets of Ampco-Pittsburgh Corporation
and subsidiaries as of December 31, 2001 and 2000, and the related consolidated
statements of operations, shareholders equity, and cash flows for each of the
three years in the period ended December 31, 2001, and have issued our report
thereon dated February 7, 2002; such consolidated financial statements and
report are included in your 2001 Annual Report to Shareholders and are
incorporated herein by reference. Our audits also included the financial
statement schedule II, Valuation of Qualifying Accounts, of Ampco-Pittsburgh
Corporation and subsidiaries for the years ended December 31, 2001, 2000 and
1999. The financial statement schedule is the responsibility of the
Corporation's management. Our responsibility is to express an opinion based on
our audits. In our opinion, such financial statement schedule, when considered
in relation to the basic financial statements taken as a whole, presents fairly
in all material respects the information set forth therein.
/s/ DELOITTE & TOUCHE LLP
Pittsburgh, Pennsylvania
February 7, 2002
F-2
Schedule II
-----------
Ampco-Pittsburgh Corporation
Valuation and Qualifying Accounts
For the Years Ended December 31, 2001, 2000 and 1999
Column A Column B Column C Column D Column E
Description Balance at -----------------Additions --------------- Balance at
beginning of Charged to costs Charged to other Deductions- end of
period and expenses accounts - describe describe period
Year ended December 31, 2001
Allowance for doubt- $626,727 $1,099,889 ($275,748)(1) $1,450,868
ful accounts
Year ended December 31, 2000
Allowance for doubt- $364,138 $ 384,251 ($121,662)(1) $ 626,727
ful accounts
Year ended December 31, 1999
Allowance for doubt- $691,090 $ 296,455 $112,106 (2) ($735,513)(1) $ 364,138
ful accounts
(1) Represents primarily writeoff of accounts receivable customer balances.
(2) Represents allowance established in connection with the acquisition of The
Davy Roll Group on August 2, 1999, for potentially uncollectible accounts.
F-3