ITEM 1. BUSINESS
(a) Kellwood Company and its subsidiaries (the "Company") manufacture and market apparel and related soft goods. Kellwood Company was founded in 1961 as the successor by merger of fifteen independent suppliers to Sears.
During the second half of the 1980's and the first half of the 1990's, the Company implemented a business strategy to expand its branded label products, broaden its customer base, increase its channels of distribution and further develop its global product sourcing capability. Since 1985, Kellwood has acquired the following 14 domestic companies.
These companies are principally marketers of branded apparel except for American Recreation Products, Inc. and Slumberjack which are manufacturers and marketers of branded camping soft goods and Crowntuft Manufacturing Corp. which is a vertically integrated manufacturer of chenille robes.
In addition to its domestic acquisitions, in the early 1980's, the Company acquired Smart Shirts Limited of Hong Kong, a leading shirt and blouse manufacturer in the Far East. Smart Shirts, since its acquisition, continued to diversify its manufacturing capabilities from its principal base of Hong Kong to the People's Republic of China, Sri Lanka, Saipan and Costa Rica. During fiscal year 1996, the Company shut down the facilities in Saipan and Costa Rica.
Kellwood has invested $291 million acquiring companies since the inception of the acquisition program that began in 1985. These investments were primarily financed by cash provided from operations and short-term borrowings. Except for recent acquisitions, Kellwood's short-term borrowings related to these acquisitions were subsequently replaced with long-term notes due insurance companies or repaid with cash repatriated from Kellwood's Far East operations, other cash provided by operations, or cash provided by the public sale of common stock. The total investment in subsidiaries during 1996, 1995 and 1994 was approximately $4,935,000, $55,218,000, and $28,324,000, respectively.
As a result of the above business strategy, the Company has redirected its focus from primarily the manufacturing of private label apparel and home fashions for Sears to a marketing- driven emphasis on branded apparel and related soft goods. The Company's acquisition strategy has further diversified its customer base and has broadened its channels of distribution. As a result of these efforts, sales to Sears declined to 7% of total sales in fiscal year 1996, compared to 50% in fiscal year 1985.
(b) All of the Company's operations are in the apparel and related soft goods industry.
(c) The Company manufactures and markets apparel and other soft goods products made from cloth or fabric or knitted from yarn. These products are manufactured primarily domestically and in the Far East.
(i) The Company's products include diversified lines of men's, women's and children's clothing, sleeping bags, and other soft goods. Products are mainly sold to retailers under either the Company's or customer's brands and labels.
(ii) The Company anticipates no significant change in products or new industry segments which would require a material investment. However, business acquisitions within the apparel and related soft goods industry are continually being considered, and it is anticipated that external and internal demands will generate increasing requirements for capital. The Company has negotiated a new credit facility agreement in the amount of $300 million, of which up to $200 million can be utilized for short-term loans and up to $200 million can be utilized for letters of credit. The new credit facility was effective May 31, 1996. The combined operating, cash and equity position of the Company should continue to provide the capital flexibility necessary to fund future opportunities as well as to meet existing obligations.
(iii) The Company purchases the majority of its raw materials directly from numerous textile mills and yarn producers and converters. The Company has not experienced difficulty in obtaining raw materials essential to its business.
(iv) The Company holds patents covering various aspects of its products, the machinery used to manufacture its products, and various manufacturing processes. The Company is a licensee of certain trade names and patented machines and processes. The expiration, or invalidation, of any of the patents or licenses would not, in the opinion of management, have a material effect upon the continuation of business.
(v) Although specific styles are seasonal, the Company's various product lines are manufactured and sold on a year-round basis. Products are primarily manufactured and sold prior to each of the principal retail selling seasons including spring, summer, fall and holiday.
(vi) Consistent with the seasonality of specific product offerings, the Company carries necessary levels of inventory to meet the anticipated delivery requirements of its customers.
(vii) Approximately $142,857,000 (10%) of the Company's sales in the fiscal year ended April 30, 1996, were to J. C. Penney Company, Inc. ("J. C. Penney"). No customer accounts for more than 10% of the Company's revenues. Other information relating to J. C. Penney is set forth in the Company's 1996 Annual Report to Shareowners, under the caption "Significant Customers" in the Notes to Consolidated Financial Statements, which information is incorporated herein by reference. The Company's management believes that the relationship with J. C. Penney will continue into the foreseeable future.
(viii) Approximately 20% of the Company's domestic sales are produced under contracts for distribution on a seasonal basis. It is normal for the merchandise manufactured under these contracts to be sold within 12 months after
production. Because of this, the Company does not believe backlog is important for this merchandise. In addition to these contracts, the backlog for domestic operations totalled approximately $390 million as of April 30, 1996 ($376 million - 1995). The backlog for Far East operations totalled approximately $75 million ($77 million - 1995). All of the Company's backlog is expected to be filled within 12 months.
(ix) Government contracts or subcontracts with the Company are not material.
(x) The Company has substantial competition from numerous manufacturers and marketers, but accurate statistics relative to the competitive position of the Company are not available.
(xi) The Company has a continuing program for the purpose of improving its products and production machinery. The Company is not engaged in any material customer-sponsored research and development programs. Approximately $612,000 and $525,000 were spent on research and development activities during fiscal years 1996 and 1995 respectively. The dollar amount spent in the research and development activities during fiscal 1994 was not material.
(xii) In the opinion of management, there will be no material effect on the Company resulting from compliance with any federal, state or local provisions which have been enacted or adopted regulating the discharge of materials into the environment or otherwise relating to the protection of the environment.
(xiii) At the end of fiscal 1996, there were approximately 16,500 people employed by the Company. Substantially all of the work force is non-union, and the Company considers its relations with its employees to be satisfactory.
(d) Except for its Far East operations, the Company's foreign activities including foreign manufacturing operations and customers have not been material. The Company owns all of the outstanding shares of Smart Shirts Limited, a Hong Kong corporation engaged in apparel manufacturing, and other Far East companies under Smart Shirts' management. The sales, operating profit, and identifiable assets attributable to each geographic area are set forth in the Company's 1996 Annual Report to Shareowners, under the caption "Industry Segment and Geographic Area Information" in the Notes to Consolidated Financial Statements, which note is incorporated herein by reference. The risk attendant to the Company's Far East operations is slightly greater than that of domestic operations primarily due to quota allocations and political instability. Utilization of existing quota rights and diversification of Far East manufacturing capacity to various countries help to mitigate these risks.
ITEM 2.

ITEM 2. PROPERTIES
At April 30, 1996, the Company operated 30 production plants and various distribution facilities. Domestic business operated 18 plants in 8 states, two plants in the Dominican Republic, one plant in Honduras, one plant in El Salvador and one plant in Canada. These domestically managed plants aggregated to approximately 3,100,000 square feet and were operating at an estimated 91% of capacity at April 30, 1996. Sixteen of these domestically managed plants were primarily producing private label goods and seven were primarily producing branded goods. The Company's Far East subsidiaries operated seven plants which aggregated to approximately 650,000 square feet and were operating at an estimated 90% of capacity. Far East subsidiaries manage operations in Hong Kong, Sri Lanka and China.
In management's opinion, current facilities generally are well maintained and provide adequate production capacity for future operations. However, management continues to evaluate the need to reposition the Company's portfolio of businesses and facilities to meet the needs of the changing markets it serves and reflect the international business environment.
The Company's operating facilities are primarily leased under long-term capital leases with renewal options at decreasing rentals. Certain facilities are leased under operating leases that generally contain renewal options. The Company also leases its corporate space in St. Louis County, Missouri and major showrooms in New York City, New York; Dallas, Texas; and Los Angeles, California.
ITEM 3.

ITEM 3. LEGAL PROCEEDINGS
The Company is involved in several routine lawsuits incidental to the Company's business. Management and general counsel are of the opinion that the ultimate disposition of such litigation should have no material adverse effect on the Company's financial position or results of operations.
ITEM 4.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART II
ITEM 5.

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SECURITY HOLDER MATTERS
The information required by this Item is set forth in the Company's 1996 Annual Report to Shareowners, at page 1 under the caption "Common Stock Data," which information is incorporated herein by reference.
ITEM 6.

ITEM 6. SELECTED FINANCIAL DATA
The information required by this Item is set forth in the Company's 1996 Annual Report to Shareowners, at page 28 under the caption "Supplemental Selected Financial Data," which information is incorporated herein by reference.
ITEM 7.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The information required by this Item is set forth in the Company's 1996 Annual Report to Shareowners, at pages 29 and 30 under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations," which information is incorporated herein by reference.
ITEM 8.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements, together with the report thereon of Price Waterhouse LLP dated May 30, 1996, appearing at pages 18 to 30 of the Company's 1996 Annual Report to Shareowners, are incorporated herein by reference.
ITEM 9.

ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10.

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
(a) The information required by this Item regarding directors is set forth in the Company's Proxy Statement for the 1996 Annual Meeting of Shareowners, at pages 3 and 4 under the captions "Nominees for Election to Serve Until 1998" and "Directors Continuing to Serve Until 1997," which information is incorporated herein by reference.
(b) Reference is made to "Executive Officers of the Registrant as of June 24, 1996" in Part I after Item 4.
(c) The information called for with respect to the identification of certain significant employees is not applicable to the registrant.
(d) There are no family relationships between the directors and executive officers listed above. There are no arrangements nor understandings between any named officer and any other person pursuant to which such person was selected as an officer.
(e) Each of the officers named in Part I was elected to serve in the office indicated until the first meeting of the Board of Directors following the Annual Meeting of Shareowners in August 1996 and until his successor is elected and qualified.
(f) There are no legal proceedings involving directors, nominees for directors, or officers.
The information required by this Item regarding compliance with Section 16(a) of the Exchange Act is set forth in the Company's Proxy Statement for the
1996 Annual Meeting of Shareowners at page 14 under the caption "Compliance with Section 16(a) of the Exchange Act," which information is incorporated herein by reference.
ITEM 11.

ITEM 11. EXECUTIVE COMPENSATION
The information required by this Item is set forth in the Company's Proxy Statement for the 1996 Annual Meeting of Shareowners, at pages 7 through 14 under the captions "Compensation of Executive Officers," "Retirement Program," and "Other Officer Agreements," which information is incorporated herein by reference.
ITEM 12.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this Item is set forth in the Company's Proxy Statement for the 1996 Annual Meeting of Shareowners, at pages 2 and 6 under the captions "Security Ownership of Certain Beneficial Owners" and "Management Ownership of the Company's Stock," which information is incorporated herein by reference.
ITEM 13.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this Item is set forth in the Company's Proxy Statement for the 1996 Annual Meeting of Shareowners, at page 12 under the caption "Compensation Committee Interlocks and Insider Participation," which information is incorporated herein by reference.
PART IV
ITEM 14.

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) FINANCIAL STATEMENTS AND SCHEDULES
The consolidated financial statements, together with the report thereon of Price Waterhouse LLP dated May 30, 1996, appearing at pages 18 to 30 of the 1996 Annual Report to Shareowners are incorporated by reference in this Form 10-K. With the exception of the aforementioned information and information incorporated in Items 1, 5, 6, 7 and 8, the 1996 Annual Report to Shareowners is not to be deemed filed as part of this Form 10-K. The following financial statement schedule should also be read in conjunction with the financial statements in such 1996 Annual Report to Shareowners. Financial statement schedules not included in this Form 10-K have been omitted because they are not applicable or the required information is shown in the financial statements or notes thereto. Separate financial statements of 50% or less owned persons accounted for by the equity method which are not shown herein have been omitted because, if considered in the aggregate, they would not constitute a significant subsidiary.
(i) Financial Statements:
Report of Independent Accountants
Consolidated Statement of Earnings, Years Ended April 30, 1996, 1995 and 1994
Consolidated Balance Sheet, April 30, 1996 and 1995
Consolidated Statement of Cash Flows, Years Ended April 30, 1996, 1995 and 1994
Consolidated Statement of Shareowners' Equity, Years Ended April 30, 1996, 1995 and 1994
Notes to Consolidated Financial Statements
(ii) Report of Independent Accountants on Financial Statement Schedule:
Financial Statement Schedule for the Years Ended April 30, 1996, 1995 and 1994: Valuation and Qualifying Accounts (Schedule VIII)
Consent of Independent Accountants
(iii) Exhibits:
Exhibits filed as part of this report are listed below. Certain exhibits have been previously filed with the Commission and are incorporated herein by reference.
(b) REPORTS ON FORM 8-K:
No reports were filed on Form 8-K during the three months ended April 30, 1996.
SIGNATURES
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.
KELLWOOD COMPANY
Dated: June 25, 1996 /s/ Thomas H. Pollihan -------------------------------- Thomas H. Pollihan Vice President, Secretary and General Counsel
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following on behalf of Kellwood Company and in the capacities and on the dates indicated.
REPORT OF INDEPENDENT ACCOUNTANTS ON FINANCIAL STATEMENT SCHEDULE
To the Board of Directors of Kellwood Company
Our audits of the consolidated financial statements referred to in our report dated May 30, 1996 appearing at page 18 of the 1996 Annual Report to Shareowners of Kellwood Company (which report and consolidated financial statements are incorporated by reference in this Annual Report on Form 10-K) also included an audit of the Financial Statement Schedule listed in Item 14(a) of this Form 10- K. In our opinion, this Financial Statement Schedule presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements.
/s/ PRICE WATERHOUSE LLP
St. Louis, Missouri May 30, 1996
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration Statement on Form S-8 (No. 033-64847) of Kellwood Company of our report dated May 30, 1996 appearing at page 18 of the 1996 Annual Report to Shareowners which is incorporated in this Annual Report on Form 10-K. We also consent to the incorporation by reference of our report on the Financial Statement Schedule, which appears at page 12 on this Form 10-K.
/s/ PRICE WATERHOUSE LLP
St. Louis, Missouri June 25, 1996


ITEM 1 - BUSINESS
(A) GENERAL DEVELOPMENT OF BUSINESS.
Although the Company's antecedents date back to 1907, it evolved directly from the merger of two separate firms in 1929, resulting in the incorporation of American Concrete Pipe Co. on April 22, 1929. Various name changes occurred between that time and 1942, at which time the Company's name became American Pipe and Construction Co. By the late 1960s the Company was almost exclusively engaged in manufacturing and had expanded its product lines to include not only concrete and steel pipe but also high-performance protective coatings, ready-mix concrete, aggregates and reinforced thermosetting resin pipe and fittings.
At the beginning of 1970, the Company's name was changed to Ameron, Inc. In the meantime, other manufactured products had been added to its product lines. These included concrete and steel poles for street and area lighting, and tapered steel vertical and cantilevered poles for traffic signals.
In 1996, the Company's name was changed to Ameron International Corporation in order to better reflect its expanded, global focus. Also in 1996, the Company acquired assets of Centron, a leading manufacturer of fiberglass pipe for the worldwide oil field market. In late 1996, the Company acquired the worldwide Devoe marine coatings business of Imperial Chemical Industries PLC.
Further details or commentary on the year's operations can be found in the Annual Report, which is Exhibit 13 to this report on Form 10-K, and which should be read in conjunction with this report.
(B) FINANCIAL INFORMATION AS TO INDUSTRY SEGMENTS.
The information contained in Notes (1), (6) and (18) of Notes to Consolidated Financial Statements on pages 44, 45, 50, 52 and 53 of the Annual Report is incorporated herein by reference.
(C) NARRATIVE DESCRIPTION OF BUSINESS.
(1) For geographical and operational convenience, the Company is organized into divisions. These divisions are combined into the following groups serving the following-described industry segments.
a) The Protective Coatings Group develops, manufactures and markets high-performance coatings and surfacer systems on a world-wide basis. These products are utilized for the preservation of major structures, such as metallic and concrete facilities and equipment, to prevent their degradation by corrosion, abrasion, marine fouling and other forms of chemical and physical attack. The primary markets served include marine, offshore, petrochemical, power generation, petroleum, chemical, steel, pulp and paper, railroad, bridges, mining, metal processing and original equipment manufacturing. These products are marketed by direct sales, as well as through manufacturers' representatives, distributors and licensees. Competition is based upon quality, price and service. Manufacture of these products is carried out in the Company's plant in Arkansas, by a wholly-owned subsidiary in The Netherlands, by jointly-owned operations in Mexico and Saudi Arabia and by various third party licensees. The Company licenses its patents, trademarks, know-how and technical assistance to various of its subsidiary and affiliated companies and to various third- party licensees.
b) The Fiberglass Pipe Group develops, manufactures and markets filament-wound and molded fiberglass pipe and fittings. These products are used by a wide range of process industries, including industrial, petroleum, chemical processing and petrochemical industries, for service station replacement piping systems, aboard marine vessels and on offshore oil platforms, and are marketed as an alternative to metallic piping systems which ultimately fail under corrosive operating conditions. These products are marketed by direct sales, as well as through manufacturers' representatives, distributors and licensees. Competition is based upon quality, price and service. Manufacture of these products is carried out in the Company's plants in Texas and South Carolina, by its wholly- owned domestic subsidiary, Centron International Inc., at its plant in Texas, by wholly-owned subsidiaries in The Netherlands and Singapore, and by a jointly-owned affiliate in Saudi Arabia.
c) The Concrete & Steel Pipe Group supplies products and services used in the construction of pipeline facilities for various utilities. Six plants are located in three of the continental western states. Also included within this group is American Pipe & Construction International, a wholly-owned subsidiary, with two plants in Colombia. These plants manufacture concrete cylinder pipe, prestressed concrete cylinder pipe, steel pipe and reinforced concrete pipe for water transmission, storm and industrial waste water and sewage collection. These products are marketed by direct selling using the Company's own personnel and by competitive bidding. Customers include local, state and federal agencies, developers and general contractors. Normally no one customer or group of customers will account for sales equal to or greater than 10 percent of the Company's consolidated revenue. However, occasionally, when more than one unusually large project is in progress, combined sales to all U.S. government agencies and/or general contractors for those agencies can reach those proportions. Besides competing with several other concrete pipe manufacturers located in the market area, alternative products such as ductile iron, asbestos cement, and clay pipe compete with the Company's concrete and steel pipe products, but ordinarily these other materials do not offer the full diameter range produced by the Company. Principal methods of competition are price, delivery schedule and service. The Company's technology is used in the Middle East through affiliated companies whose activities are not reflected in the amounts reported for this industry segment. This segment also includes the manufacturing and marketing on a world-wide basis through direct sales of polyvinyl chloride and polyethylene sheet lining for the protection of concrete pipe and cast-in-place concrete structures from the corrosive effects of sewer gases, acids and industrial chemicals. Competition is based on quality, price and service. Manufacture of this product is carried out in the Company's plant in California. This segment also includes engineered design, fabrication and direct sale of specialized proprietary equipment which is outside the regular business of the other segments of the Company's businesses. Competition for such work is based upon quality, price and service. Manufacture of such equipment is carried out in the Company's plant in California.
d) The Construction & Allied Products Group includes the Hawaii Division, which supplies ready-mix concrete, crushed and sized basaltic aggregates, dune sand, concrete pipe and box culverts, primarily to the construction industry in Hawaii. These products are marketed through direct sales. Ample raw materials are available locally in Hawaii and, as to rock products, the Company has exclusive rights to a quarry containing many years' reserves. Within the market area there are competitors for each of the segment's products. No single competitor offers the full range of products sold by the Company in Hawaii. The principal methods of competition are in price and service, since an appreciable portion of the segment's business is obtained through competitive bidding.
This segment also includes the operations of the Pole Products Division, which manufactures and markets concrete and steel poles for highway, street and outdoor area lighting and for traffic signals. Sales are nationwide, but with a stronger concentration in the western states. Marketing is handled by the Company's own sales force and by outside sales agents. Competition for such products is mainly based on price, but with some consideration for service and delivery. Manufacture of these products is carried out in two plants in California, as well as plants in Washington and Oklahoma.
e) Except as individually shown in the above descriptions of industry segments, the following comments or situations apply to all segments:
(i) Because of the number of manufacturing locations and the variety of raw materials essential to the business, no critical situations exist with respect to supply of materials. The Company has multiple sources for raw materials. The effects of increases in costs of energy are being mitigated to the extent practical through conservation and through addition or substitution of equipment to manage the use and reduce consumption of energy.
(ii) The Company owns certain patents and trademarks, both U.S. and foreign, related to its products. It licenses these proprietary items to some extent in the U.S., and to a greater degree abroad. These patents, trademarks, and licenses do not constitute a material portion of the Company's business. No franchises or concessions exist.
(iii) Many of the Company's products are used in connection with capital goods, water and sewage transmission and construction of capital facilities. Favorable or adverse effects on general sales volume and earnings can result from weather conditions. Normally, sales volume and earnings will be lowest in the first fiscal quarter. Seasonal effects simply accelerate or slow the business volume and normally do not bring about severe changes in full-year activity.
(iv) With respect to working capital items, the Company does not encounter any requirements which are not common to other companies engaged in the same industries. No unusual amounts of inventory are required to meet seasonal delivery requirements. All of the Company's industry segments turn their inventory between three and nine times annually. Average days' sales in accounts receivable range between 36 and 97 for all segments.
(v) The value of backlog orders at November 30, 1996 and 1995 by industry segment is shown below. A substantial portion of the November 30, 1996 backlog is expected to be billed and recorded as sales during the fiscal year 1997.
Industry Segment 1996 1995 ---------------- -------- -------- (in thousands)
Protective Coatings Group $ 10,291 $ 6,139 Fiberglass Pipe Group 19,819 20,691 Concrete & Steel Pipe Group 59,718 96,864 Construction & Allied Products Group 14,978 15,581 -------- -------- Total $104,806 $139,275 ======== ========
(vi) There was no significant change in competitive conditions or the competitive position of the Company in the industries and localities in which it operates. There is no knowledge of any single competitive situation which would be material to an understanding of the business.
(vii) Sales contracts in all of the Company's business segments normally consist of purchase orders, which in some cases are issued pursuant to master purchase agreements. Longer term contracts seldom involve commitments of more than one year by the Company, and exceptions are not deemed material by management. Payment is normally due from 30 to 60 days after shipment, with progress payments prior to shipment in some circumstances. It is the Company's practice to require letters of credit prior to shipment of foreign orders, subject to limited exceptions. The Company does not typically extend long-term credit to purchasers of its products.
(2) a) Approximate expense during each of the last three fiscal years for Research and Development costs is shown under the caption in Note (1) of Notes to Consolidated Financial Statements on page 44 of the Annual Report, which information is incorporated herein by reference.
b) The Company's business is not dependent on any single customer or few customers, the loss of any one or more of whom would have a material adverse effect on its business.
c) For many years the Company has been consistently installing or improving devices to control or eliminate the discharge of pollutants into the environment. Accordingly, compliance with federal, state, and locally enacted provisions relating to protection of the environment is not having, and is not expected to have, a material effect upon the Company's capital expenditures, earnings, or competitive position.
d) At year-end the Company and its consolidated subsidiaries employed approximately 2,611 persons. Of those, approximately 1,080 were covered by labor union contracts, and there are six separate bargaining agreements subject to renegotiation in 1997. Management does not presently anticipate a strike or other labor disturbance in connection with renegotiation of these agreements; however, the possibility of such an occurrence exists.
(D) FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS AND EXPORT SALES.
The information contained in Notes (6) and (18) of Notes to Consolidated Financial Statements on pages 45, 50, 52 and 53 of the Annual Report is incorporated herein by reference.
Export sales in the aggregate from domestic operations during the last three fiscal years were:
In thousands ------------ 1996 $30,980 1995 15,552 1994 13,648
ITEM 2

ITEM 2 - DESCRIPTION OF PROPERTY
(a) The location and general character of principal plants and other materially important physical properties used in the Company's operations is tabulated below. Property is owned in fee except where otherwise indicated by footnote. In addition to the property shown, the Company owns vacant land adjacent to or in the proximity of some of its operating locations and holds this property available for use when it may be needed to accommodate expanded or new operations. Property listed does not include any temporary project sites which are generally leased for the duration of the respective projects. With the exception of the Kailua, Oahu property, shown under the Construction & Allied Products industry segment, there are no material leases with respect to which expiration or inability to renew would have any material adverse effect on the Company's operations. The lease term on the Kailua property extends to the year 2012. This is the principal source of quarried rock and aggregates for the Company's operations on Oahu, Hawaii and, in management's opinion, reserves are adequate for its requirements during the term of the lease.
(b) The Company believes that its existing facilities are adequate for current and presently foreseeable operations. Because of the cyclical nature of certain of the Company's operations, and the substantial amounts involved in some individual orders, the level of utilization of particular facilities may vary significantly from time to time in the normal course of operations.
INDUSTRY SEGMENT - GROUP - ------------------------
Division - Location Description ------------------- -----------
PROTECTIVE COATINGS GROUP
Protective Coatings division - USA Brea, CA Office, Laboratory Little Rock, AR Office, Plant
Ameron B.V. Geldermalsen, The Netherlands Office, Plant
FIBERGLASS PIPE GROUP
Fiberglass Pipe division - USA Houston, TX * Office Burkburnett, TX Office, Plant Spartanburg, SC Plant
Centron International, Inc. Office, Plant Mineral Wells, TX
Ameron B.V. Geldermalsen, The Netherlands Office, Plant
Ameron (Pte) Ltd. Singapore *Office, Plant
CONCRETE AND STEEL PIPE GROUP
Southern division Rancho Cucamonga, CA *Office Etiwanda, CA Plant Fontana *Office, Plant Lakeside, CA Plant Phoenix, AZ Office, Plant
Northern division Tracy, CA Office, Plant Portland, OR Office, Plant
Protective Linings division Brea, CA Office, Plant
Fabrication Plant South Gate, CA Office, Plant
American Pipe & Construction International Bogota, Colombia Office, Plant Cali, Colombia Plant
CONSTRUCTION & ALLIED PRODUCTS GROUP
Hawaii division Honolulu, Oahu, HI *Office, Plant Kailua, Oahu, HI *Plant, Quarry Barbers Point, Oahu, HI Plant Puunene, Maui, HI *Office, Plant, Quarry
Pole Products division Fillmore, CA Office, Plant Oakland, CA *Plant Everett, WA *Office, Plant Tulsa, OK *Office, Plant
CORPORATE Corporate Headquarters Pasadena, CA *Office
Corporate Research & Engineering South Gate, CA Office, Laboratory
*Leased
ITEM 3

ITEM 3 - LEGAL PROCEEDINGS
An action was filed in 1992 in the U.S. District for the District of Arizona by the Central Arizona Water Conservation District ("CAWCD") seeking damages against several parties, including the Company and the Company's customer, Peter Kiewit Sons' Company ("Kiewit"), in connection with six prestressed concrete pipe siphons furnished and installed in the 1970's as part of the Central Arizona Project ("CAP"), a federal project to bring water from the Colorado River to Arizona. The CAWCD also filed separate actions against the U.S. Bureau of Reclamation ("USBR") in the U.S. Court of Claims and with the Arizona Projects Office of the USBR in connection with the CAP siphons. The CAWCD alleged that the six CAP siphons were defective and that the USBR and the defendants in the U.S. District Court action were liable for the repair or replacement of those siphons at a claimed estimated cost of $146.7 million. On September 14, 1994 the U.S. District granted the Company's motion to dismiss the CAWCD action and entered judgment against the CAWCD and in favor of the Company and its co-defendants. CAWCD has filed a notice of appeal with the Ninth Circuit Court of Appeals.
Separately, on September 28, 1995 the Contracting Officer for the USBR issued a final decision claiming for the USBR approximately $40 million in damages against Kiewit, based in part on the Contracting Officer's finding that the siphons supplied by the Company were defective. That claim amount is considered by the Company to be duplicative of the damages sought by the CAWCD for the repair or replacement of the siphons in its aforementioned action in the U.S. District for the District of Arizona. The Contracting Officer's final decision has been appealed by Kiewit to the U.S. Department of the Interior Board of Contract Appeals ("IBCA"). The Company is actively cooperating with, and assisting, Kiewit in the administrative appeal of that final decision before the IBCA.
The Company internally, as well as through independent third party consultants, has conducted engineering analyses regarding the allegations that the CAP siphons were defective and believes that the siphons were manufactured in accordance with the project specifications and other contract requirements, and therefore it is not liable for any claims relating to the siphons, whether by the CAWCD or by the USBR. The Company has recorded provisions deemed adequate by the Company to permit it to continue to vigorously defend its position in this matter. The Company believes that it has meritorious defenses to these actions and that resultant liability, if any, should not have a material adverse effect on the financial position of the Company.
In July 1992 the Company was served with a complaint in an action brought by the City & County of San Francisco in Superior Court of the State of California against the Company and two co-defendants, in connection with a pipeline referred to as San Andreas Pipeline No. 3, a water transmission pipeline which was installed between 1980 and 1982. The Company furnished the pipe used in that pipeline. Plaintiff alleged that the pipeline was defective. The amounts claimed by plaintiff were substantial. In June of 1996 a settlement of this litigation was reached by the Company. The terms of that settlement were considered by management to be favorable to the Company, and did not have a material effect on the Company's financial position or its results of operations.
In addition, certain other claims, suits and complaints, which arise in the ordinary course of business, have been filed or are pending against the Company. Management believes that these matters, and the matters discussed above, are either adequately reserved, covered by insurance, or would not have an adverse material effect on the financial position of the Company and its results of operations if disposed of unfavorably.
The Company is also subject to federal, state and local laws and regulations concerning the environment and is currently participating in administrative proceedings at several sites under these laws. It is difficult to estimate with any certainty the total cost of remediation, the timing and extent of remedial actions required by governmental authorities, and the amount of the Company's liability, if any, in proportion to that of other potentially responsible parties. While the Company finds it difficult to estimate with any certainty the total cost of remediation at the several sites which are subject to environmental regulatory proceedings, on the basis of currently available information, the Company does not believe it likely that the outcome of such environmental regulatory proceedings will have a material adverse effect on the Company's financial position or its results of operations. This conclusion is based on the location and type of contamination of each site, potential recovery from insurance carriers and existing reserves. When it has been possible to reasonably estimate the Company's liability with respect to these matters, provisions have been made as appropriate.
ITEM 4

ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(Not Applicable)
ITEM 4A - EXECUTIVE OFFICERS OF THE REGISTRANT
The following sets forth information with respect to individuals who served as executive officers as of November 30, 1996 and who are not directors of the Company. All executive officers are appointed by the Board of Directors to serve at the discretion of the Board of Directors.
NAME AGE TITLE AND YEAR ELECTED AS OFFICER - ---------------------- --- ------------------------------------------------
George J. Fischer 62 Senior Vice President, Human Resources 1992
Raymond E. Foscante 54 Senior Vice President, Technology and Business Development 1996
Javier Solis 50 Senior Vice President of Administration, Secretary & General Counsel 1984
S. Daniel Stracner 50 Vice President, Communications & Public Affairs 1993
Gary Wagner 45 Senior Vice President & Chief Financial Officer, Treasurer 1990
All of the executive officers named above have held high level managerial or executive positions with the Company for more than the past five years.
PART II
ITEM 5

ITEM 5 - MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Common Stock, $2.50 Par Value, of the Company, its only outstanding class of common equity, is traded on the New York Stock Exchange, the only exchange on which it is presently listed. On February 11, 1997, there were 1,723 stockholders of record of such stock.
Dividends have been paid each quarter during the prior two years and for many years in the past. Information as to the amount of dividends paid during the reporting period and the high and low sales prices of the Company's Common Stock during that period are set out under the caption Per Share Data shown on page 50 of the Annual Report, which information is incorporated herein by reference.
Terms of lending agreements which place restrictions on cash dividends are discussed in Note (12) of Notes to Consolidated Financial Statements on page 48 of the Annual Report, which is incorporated herein by reference.
ITEM 6

ITEM 6 - SELECTED FINANCIAL DATA
The information required by this item is contained in the Selected Consolidated Financial Information shown on page 34 of the Annual Report, which information is incorporated herein by reference.
ITEM 7

ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The information required by this item with respect to fiscal years 1996 and 1995 is shown under Ameron 1996 Financial Review on pages 35-38 of the Annual Report, which information is incorporated herein by reference. The information required for 1994 is as follows:
Results of Operations: 1994 Compared with 1993
GENERAL. Ameron earned $2.75 per share ($10.8 million after taxes) on sales of $417.7 million for 1994, compared to a net loss of $6.28 per share (loss of $24.3 million after taxes) in 1993 on sales of $453.4 million. During 1993, Ameron recognized costs totaling $45.8 million ($31.5 million after taxes) associated with a comprehensive restructuring of the Company. Excluding the after-tax effect of restructuring charges, earnings per share for 1993 would have been $1.87. During 1994, a non-strategic steel fabrication subsidiary in Colombia was sold as part of the restructuring program; the sale resulted in a net after-tax gain of $1.8 million or $.46 per share. Adjusting for the gain on the sale of this subsidiary, earnings per share for 1994 were $2.29, a 22% increase over equivalent 1993 earnings of $1.87 per share.
The earnings improvement was due principally to the positive impact of the restructuring on Ameron's business segments, as well as continued growth of the Protective Coatings business and the Construction & Allied Products segment. The Concrete & Steel Pipe business had lower earnings as a result of project delays, and the Fiberglass Pipe business declined because of completion of major fiberglass pipe projects in North Africa during 1993.
SALES. Compared to 1993, sales declined $35.7 million or 8% in 1994, primarily because of completion of major fiberglass pipe projects in North Africa; lower shipments of protective coatings from Ameron B.V., the Company's subsidiary in The Netherlands; and project delays in California that reduced shipments of concrete and steel pipe. The sales decline was offset partially by stronger Protective Coatings sales in the United States and improved market penetration by the Pole Products business within the Construction & Allied Products Group.
Total Protective Coatings sales were $134.2 million in 1994, compared to $137.8 million in 1993. The modest decline of $3.6 million reflects relatively flat market conditions in Europe at the time and lower shipments to North Africa. Sales of industrial coatings and product finishes in the United States reached record high levels in 1994. The favorable sales performance resulted in part from the successful introduction of PSX, Ameron's proprietary new polysiloxane technology. Also contributing were market share gains in product finishes for the original equipment manufacturer market and several large protective coatings projects.
Total Fiberglass Pipe segment sales were $66.2 million in 1994, compared with $92.9 million in 1993. The sales decrease ($26.7 million) was attributable to the completion of several major crude oil projects in North Africa in 1993. Sales in the United States were down in 1994, mostly due to the general softness in oilfield markets and reduced demand for fuel-handling systems used for service station rehabilitation.
Concrete & Steel Pipe segment sales totaled $101.6 million in 1994, compared to $110.3 million in 1993. The sales decline ($8.7 million) occurred primarily because of delivery delays on several major projects in California
Construction & Allied Products sales totaled $115.6 million in 1994, compared with $112.4 million in 1993. The main reason for the $3.2 million increase was sales growth achieved by the Pole Products business, which more than offset a slight sales decline at the Company's Hawaiian operations. The growth in the Pole Products business was due to market share gains in the steel pole product line for traffic and street lighting applications, generally stronger market demand and successful market expansion programs. Continued softness in the private construction sector accounted for the modest sales decline in Hawaii.
GROSS PROFIT. Gross profit margin of $104.0 million or 24.9% of sales in 1994 was lower than the $119.9 million or 26.4% of sales reported in 1993. The decline in gross profit ($15.9 million) in 1994 was due principally to the lower sales volume in 1994, particularly in the European Fiberglass Pipe operations. The lower gross profit margin rate resulted mainly from the completion of Fiberglass Pipe projects in North Africa that had favorably affected 1993 operations. The gross profit of the Concrete & Steel Pipe segment was unfavorably impacted by price competition, product mix and project delivery delays in California. Protective Coatings had a slightly lower gross profit margin due to product mix, while Construction & Allied Products had a higher gross profit margin because of productivity gains and favorable pricing.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and administrative expenses totaled $86.8 million in 1994, compared with $115.4 million in 1993. The $28.6 million decrease was attributable to the significant reduction in the Company's overhead structure resulting from the comprehensive restructuring in 1993. In addition, charges to income for environmental and legal claims decreased $12.2 million in 1994 compared to 1993. In 1993 an additional $9.0 million was reserved for environmental and legal matters as part of the restructuring. The decrease in selling, general and administrative expenses also reflects reduced selling expenses as a result of lower sales volume.
RESTRUCTURING. During 1994, the Company disbursed approximately $3.5 million for plant consolidation and employee severance costs in connection with its 1993 restructuring plan.
GAIN ON THE SALE OF ASSETS. The gains from the sale of assets in 1994 were realized principally from the divestiture of a wholly-owned non-strategic steel fabrication subsidiary in Colombia.
OTHER INCOME. Equity in earnings of affiliated companies recorded in 1994 totaled $1.7 million, a slight decline from the amount recorded in 1993. Two affiliates, Gifford-Hill-American, Inc., a pressure pipe operation in
Texas, and Tamco, a steel mini-mill in Southern California, reported sizable improvements in sales and earnings in 1994. Sales and earnings of the Company's Saudi Arabian affiliates, Oasis-Ameron, Ltd., Bondstrand, Ltd. and Ameron Saudi Arabia, Ltd., were lower than in 1993.
Other income also includes royalties and fees received from affiliated companies and licensees, as well as miscellaneous income earned from various sources.
INTEREST EXPENSE. Interest expense totaled $11.2 million in 1994, a decrease of $1.5 million from 1993. Interest in 1993 was higher because of the recording of accrued interest on income tax obligations related to prior years.
PROVISION FOR INCOME TAXES. Income tax expense aggregated $7.0 million in 1994, which represents an overall effective tax rate of 42.5% of pretax income. This compares to the effective tax rate of 45.0% in 1993 after adjusting for restructuring and related charges.
EQUITY IN EARNINGS OF AFFILIATED COMPANIES. Equity in earnings of affiliated companies recorded in 1994 totaled $1.4 million, a slight decline from the $1.8 million recorded in 1993. Two affiliates, Gifford-Hill-American, Inc., a pressure pipe operation in Texas, and Tamco, a steel mini-mill in Southern California, reported sizable improvements in sales and earnings in 1994. Sales and earnings of the Company's Saudi Arabian affiliates, Oasis-Ameron, Ltd., Bondstrand, Ltd. and Ameron Saudi Arabia, Ltd., were lower than in 1993.
ITEM 8

ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Consolidated Financial Statements, the report thereon of Arthur Andersen LLP dated January 13, 1997 and Notes to Consolidated Financial Statements comprising pages 39 through 51 of the Annual Report, are incorporated herein by reference.
ITEM 9

ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
(Not applicable) PART III
ITEM 10

ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information with respect to the directors is contained under the section entitled, "Election of Directors" in the Company's Proxy Statement which was filed on February 24, 1997 in connection with the Annual Meeting of Stockholders to be held on March 26, 1997. Such information is incorporated herein by reference.
Information with respect to the executive officers of the Company is located in Part I, Item 4A of this report.
ITEM 11

ITEM 11 - EXECUTIVE COMPENSATION*
ITEM 12

ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT*
ITEM 13

ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS*
*The information required by Items 11, 12 and 13 is contained in the Company's Proxy Statement which was filed on February 25, 1997 in connection with the 1997 Annual Meeting of Stockholders to be held on March 26, 1997. Such information is incorporated herein by reference.
PART IV
ITEM 14

ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(A) (1) FINANCIAL STATEMENTS:
The financial statements to be filed hereunder are cross-referenced, in the index immediately following, to the Annual Report, as to sections incorporated herein by reference.
PAGE REFERENCE STATEMENT TO ANNUAL REPORT --------- -----------------
Consolidated Statements of Operations for the years ended November 30, 1996, 1995 and 1994 39
Consolidated Balance Sheets at November 30, 1996 and 1995 40-41
Consolidated Statements of Cash Flows for the years ended November 30, 1996, 1995 and 1994 42
Consolidated Statements of Stockholders' Equity for the years ended November 30, 1996, 1995 and 1994 43
Notes to Consolidated Financial Statements 44-50
(i) Summarized information as to the financial condition and results of operations for Gifford-Hill-American, Inc., Ameron Saudi Arabia, Ltd., Bondstrand, Ltd, Oasis-Ameron, Ltd. and Tamco are presented in Note (6) of Notes to Consolidated Financial Statements on page 46 of the Annual Report, which information is incorporated herein by reference.
(A) (2) FINANCIAL STATEMENT SCHEDULES:
The following additional financial data should be read in conjunction with the consolidated financial statements in the 1996 Annual Report. Schedules not included with this additional financial data have been omitted because they are either not applicable, not required, not significant, or the required information is provided in the consolidated financial statements or notes thereto.
PAGES OF SCHEDULE SCHEDULES OF AMERON INTERNATIONAL AND SUBSIDIARIES THIS REPORT -------- -------------------------------------------------- -----------
Report of Independent Public Accountants 13
II Valuation and Qualifying Accounts and Reserves 14-16
(A) (3) EXHIBITS THIS REPORT ----------- 3(i) Certificate of Incorporation 18
3(ii) Bylaws 19
4 Instrument Defining the Rights of Security Holders, Including Indentures 20
10 Material Contracts 21
13 Annual Report 22
21 Subsidiaries of the Registrant 23
23 Consent of Independent Public Accountants 24
(B) REPORTS ON FORM 8-K
A report on Form 8-K was filed by the Corporation on September 26, 1996 reporting under Item 5 the financial results for the Company's third quarter ended August 31, 1996.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ----------------------------------------
To the Stockholders and the Board of Directors, Ameron International Corporation:
We have audited in accordance with generally accepted auditing standards, the consolidated financial statements included in Ameron's Annual Report to Stockholders incorporated by reference in this Form 10-K, and have issued our report thereon dated January 13, 1997. Our audits were made for the purpose of forming an opinion on those statements taken as a whole. The schedule listed in the index above is the responsibility of the Company's management and is presented for purposes of complying with the Securities and Exchange Commission's rules and is not part of the basic financial statements. This schedule has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, fairly states in all material respects the financial data required to be set forth therein in relation to the basic financial statements taken as a whole.
ARTHUR ANDERSEN LLP
Los Angeles, California January 13, 1997
AMERON INTERNATIONAL AND SUBSIDIARIES SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES FOR THE YEAR ENDED NOVEMBER 30, 1996 (In thousands)
AMERON INTERNATIONAL AND SUBSIDIARIES SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES FOR THE YEAR ENDED NOVEMBER 30, 1995 (In thousands)
(1) Included as equity in earnings of affiliated companies in Consolidated Statement of Operations
AMERON INTERNATIONAL AND SUBSIDIARIES SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES FOR THE YEAR ENDED NOVEMBER 30, 1994 (In thousands)
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
AMERON INTERNATIONAL CORPORATION
By: ----------------------------------------------- Javier Solis, Senior Vice President & Secretary
Date: February 21, 1997
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 and in the capacities and on the dates indicated.
Date: 2-27-97 Director, Chairman of the Board, ----------------------------- President and Chief Executive Officer James S. Marlen (Principal Executive Officer)
Date: 2-27-97 Senior Vice President & Chief Financial ----------------------------- Officer, Treasurer (Principal Financial Gary Wagner & Accounting Officer)
Date: 2-24-97 Director ----------------------------- Stephen W. Foss
Date: 2-21-97 Director ----------------------------- A. Frederick Gerstell
Date: 2-24-97 Director ----------------------------- J. Michael Hagan
Date: 2-21-97 Director ----------------------------- Terry L. Haines
Date: 2-22-97 Director ----------------------------- John F. King
Date: 2-21-97 Director ----------------------------- Alan L. Ockene
Date: Director ----------------------------- Richard J. Pearson
Date: 2-24-97 Director ----------------------------- David L. Sliney Date: 2-24-97 Director ----------------------------- F. H. Fentener van Vlissingen