<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
- - --- SECURITIES EXCHANGE ACT OF 1934
For the quarter ended May 29, 1994 Commission File Number 0-947
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A M C A S T I N D U S T R I A L C O R P O R A T I O N
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(Exact name of registrant as specified in its charter)
Ohio 31-0258080
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(State of Incorporation) (I.R.S. Employer
Identification No.)
7887 Washington Village Drive, Dayton, Ohio 45459
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(Address of principal executive offices) (Zip Code)
(Area Code 513) 291-7000
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(Registrant's telephone number, including area code)
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(Former name, former address and former fiscal year, if changed since
last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 and 15(d) of the Securities Exchange Act of
1934 during the preceding twelve months, and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
--- ---
Number of Common Shares outstanding, no par value, as of May 29, 1994 -
8,453,581 shares.
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<TABLE>
AMCAST INDUSTRIAL CORPORATION
I N D E X
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<CAPTION>
PART I - FINANCIAL INFORMATION PAGE NO.
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<S> <C>
Item 1 - Financial Statements:
Consolidated Condensed Statements of Financial 3
Condition - May 29, 1994 and August 31, 1993
Consolidated Condensed Statements of Operations - 4
for the Quarters and Nine Months Ended May 29, 1994
and May 30, 1993
Consolidated Condensed Statements of Retained Earnings - 4
for the Quarters and Nine Months Ended May 29, 1994
and May 30, 1993
Consolidated Condensed Statements of Cash Flows - 5
for the Nine Months Ended May 29, 1994
and May 30, 1993
Notes to Consolidated Condensed Financial Statements 6 - 7
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations 8 - 10
PART II - OTHER INFORMATION
-----------------
Item 1 - Legal Proceedings 11
Item 6 - Exhibits and Reports on Form 8-K 11
SIGNATURES 12
</TABLE>
2
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<TABLE>
PART I - FINANCIAL INFORMATION
AMCAST INDUSTRIAL CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF FINANCIAL CONDITION
(dollars in thousands)
<CAPTION>
May 29 August 31
ASSETS 1994 1993
- - ------ -------------- ------------
(unaudited) (audited)
<S> <C> <C>
Current Assets
Cash $ 16,741 $ 2,251
Accounts receivable 37,514 33,764
Inventories:
Finished products 17,646 18,008
Work-in-process 11,361 10,099
Raw materials and supplies 8,094 6,465
-------- --------
37,101 34,572
Other current assets 5,858 4,326
-------- --------
Total current assets 97,214 74,913
Property, Plant and Equipment 142,239 134,621
Less allowances for depreciation (72,871) (64,412)
-------- --------
69,368 70,209
Net Assets of Discontinued Operation 14,037 19,980
Other Assets 10,705 11,435
-------- --------
$191,324 $176,537
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
- - ------------------------------------
Current Liabilities
Accounts payable $ 21,730 $ 18,050
Current portion of notes payable 4,019 4,356
Accrued expenses, compensation and
related items and other current liabilities 18,384 16,410
-------- --------
Total current liabilities 44,133 38,816
Long-Term Debt--Less Current Portion 16,767 17,929
Deferred Income Taxes 3,720 1,897
Deferred Liabilities 19,662 18,975
Shareholders' Equity
Preferred shares, without par value:
Authorized--1,000,000 shares
Issued--None
Common shares, at stated value:
Authorized--15,000,000 shares
Issued-- 8,453,581 shares
(8,383,342 at August 31, 1993) 8,454 8,383
Capital in excess of stated value 62,693 62,047
Retained earnings 35,895 28,577
Less cost of 3,863 shares at
August 31, 1993 in treasury (87)
-------- --------
107,042 98,920
-------- --------
$191,324 $176,537
======== ========
<FN>
See notes to consolidated condensed financial statements.
</TABLE>
3
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<TABLE>
AMCAST INDUSTRIAL CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
AND RETAINED EARNINGS
(dollars in thousands except per share amounts)
(unaudited)
<CAPTION>
Three Months Ended Nine Months Ended
----------------------- ---------------------
May 29 May 30 May 29 May 30
1994 1993 1994 1993
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<S> <C> <C> <C> <C>
Consolidated Condensed Statements
- - ---------------------------------
of Operations
- - -------------
Net sales $ 70,902 $55,770 $ 198,927 $165,248
Cost of sales 55,080 42,891 155,777 127,691
---------- ------- ----------- --------
Gross profit 15,822 12,879 43,150 37,557
Selling, general and
administrative expenses 9,320 7,304 26,162 22,906
Interest expense 421 263 1,244 979
Other income (173) (12) (271) (97)
---------- ------- ----------- --------
9,568 7,555 27,135 23,788
---------- ------- ----------- --------
Income before income taxes 6,254 5,324 16,015 13,769
Income taxes 1,963 1,917 5,525 4,957
---------- ------- ----------- --------
Income before cumulative effect of a
change in accounting principle 4,291 3,407 10,490 8,812
Cumulative effect of change in
accounting for postretirement
benefits other than pensions
net of taxes (3,942)
---------- ------- ----------- --------
Net Income $ 4,291 $ 3,407 $ 10,490 $ 4,870
========== ======= =========== ========
Consolidated Condensed Statements
- - ---------------------------------
of Retained Earnings
- - --------------------
Beginning retained earnings $ 32,684 $24,079 $ 28,577 $ 24,695
Net income 4,291 3,407 10,490 4,870
Less dividends (1,014) (1,007) (3,034) (3,007)
Other (66) (37) (138) (116)
---------- ------- ----------- --------
Ending Retained Earnings $ 35,895 $26,442 $ 35,895 $ 26,442
========== ======= =========== ========
Per Share Information
- - ---------------------
Income per share:
Before change in accounting $ .51 $ .41 $ 1.25 $ 1.06
Cumulative effect of change in
accounting (.47)
---------- ------- ----------- --------
Net income per share $ .51 $ .41 $ 1.25 $ .59
========== ======= =========== ========
Dividends declared per share $ .12 $ .12 $ .36 $ .36
========== ======= =========== ========
Dividends paid per share $ .12 $ .12 $ .36 $ .36
========== ======= =========== ========
<FN>
See notes to consolidated condensed financial statements.
</TABLE>
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<TABLE>
AMCAST INDUSTRIAL CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(dollars in thousands)
(unaudited)
<CAPTION>
Nine Months Ended
-----------------
May 29 May 30
1994 1993
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<S> <C> <C>
Operating Activities:
Net income $ 10,490 $ 4,870
Depreciation and amortization 9,727 9,075
Cumulative effect of change in
accounting principle 6,159
Deferred liabilities 2,510 (2,615)
Other 10 46
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22,737 17,535
Changes in assets and liabilities:
- Receivables (3,750) 3,688
- Inventories (2,529) (5,543)
- Other current assets (1,532) (1,637)
- Prepaid pension costs 331 365
- Other assets (246) (1,893)
- Accounts payable 3,680 (5,622)
- Accrued liabilities 1,974 3,263
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Net Cash Provided
By Operating Activities 20,665 10,156
Investing Activities:
Discontinued operation 5,943 1,165
Additions to plant and equipment, net (8,251) (9,599)
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Net Cash Provided (Used) By
Investing Activities (2,308) (8,434)
Financing Activities:
Proceeds from exercise of stock options 804 637
Reduction in long-term debt (1,162) (1,243)
Short-term borrowings and current
portion of notes payable (337) 2
Dividends (3,034) (3,007)
Other (138) (126)
---------- -----------
Net Cash Provided (Used) By
Financing Activities (3,867) (3,737)
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Net Change In Cash 14,490 (2,015)
Cash at Beginning of Period 2,251 3,140
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Cash at End of Period $ 16,741 $ 1,125
========== ============
<FN>
See notes to consolidated condensed financial statements.
</TABLE>
5
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AMCAST INDUSTRIAL CORPORATION
NOTES TO CONSOLIDATED CONDENSED
FINANCIAL STATEMENTS
(dollars in thousands except share amounts)
(unaudited)
Note A - Preparation of Financial Statements
- - --------------------------------------------
The consolidated condensed financial statements include the accounts of the
Amcast Industrial Corporation and subsidiaries (the "Company"). Intercompany
transactions have been eliminated. All adjustments, consisting of only
normally recurring accruals, necessary for a fair presentation have been
included. Prior year amounts have been restated due to the adoption of the
Statement of Financial Accounting Standards (SFAS) No. 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions".
Note B - Accounts Receivable
- - ----------------------------
Accounts receivable are stated net of allowances for doubtful accounts of $184
at May 29, 1994 and $172 at August 31, 1993.
Note C - Inventories
- - --------------------
Certain inventories are presented net of the appropriate LIFO reserve.
Note D - Other Assets
- - ---------------------
<TABLE>
The major components are:
<CAPTION>
May 29 August 31
1994 1993
--------- ---------
<S> <C> <C>
Properties held for sale $ 553 $ 579
Technical and product programs 1,625 2,200
Goodwill 2,795 2,860
Prepaid pension costs 268 599
Other assets and deferred charges 5,464 5,197
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$10,705 $11,435
======= =======
</TABLE>
Note E - Deferred Liabilities
- - -----------------------------
Deferred liabilities include the noncurrent portion of retirement,
compensation, medical benefits, and estimated future payouts under the
Company's self-insured workers' compensation program. These liabilities
primarily relate to the Company's provisions for restructuring operations, a
discontinued operation and postretirement benefits. Significant related
noncurrent liabilities at May 29, 1994 and August 31, 1993 respectively, were:
medical - $2,800 and $3,100; workers' compensation - $400 and $1,000;
disposition of operations - $5,100 and $5,600; postretirement benefits other
than pensions were $5,800 and $6,200. These accruals are not deductible for
income tax purposes until paid and are accounted for as temporary differences
in the Company's tax provision.
6
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AMCAST INDUSTRIAL CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(dollars in thousands except share amounts)
(unaudited)
Note F - Long-Term Debt
- - -----------------------
<TABLE>
The following table summarizes the Company's borrowings:
<CAPTION>
May 29 August 31
1994 1993
--------------- ----------
<S> <C> <C>
Senior notes $13,821 $14,696
Industrial revenue bonds 6,965 7,589
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Total Obligations 20,786 22,285
Less current portion of notes payable 4,019 4,356
------- -------
$16,767 $17,929
======= =======
</TABLE>
Note G - Income Taxes
- - ---------------------
In the third quarter, the annual effective income tax rate was reduced from
36.5% to 34.5% to reflect the tax benefit derived from the conversion of
Casting Technology Corporation, a 60% owned joint venture, to a partnership.
The impact of this change reduced the third quarter tax expense by $320,000.
The effective tax rates are 31.4% and 36.0% for the third quarters of
1994 and 1993, respectively.
Note H - Net Income Per Share
- - -----------------------------
For the third quarters of 1994 and 1993, the weighted average number of common
shares used to calculate income per share was 8,444,491 and 8,359,923, and for
the first nine months of 1994 and 1993 was 8,414,629 and 8,335,307,
respectively.
7
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AMCAST INDUSTRIAL CORPORATION
PART I - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Net sales of $70.9 million in the current quarter ended May 29, 1994
increased 27.1% from the prior year third quarter. Flow Control Products'
sales increased 32.9% to $33.6 million primarily due to the improvement in
housing starts which provided a strong market for copper fittings. Engineered
Components' sales rose 22.3% to $37.3 million primarily due to the continued
strong automotive market.
Net sales of $198.9 million in the nine-month period of fiscal 1994 increased
20.4% from the comparable prior year period. Flow Control Products' sales rose
12.9% to $89.3 million, and Engineered Components' sales increased 27.3% to
$109.6 million. The increase in Engineered Component sales is due to the
strong demand for aluminum wheels.
Gross profit for the third quarter of fiscal 1994 and 1993 was $15.8 million
and $12.9 million, respectively. The increase in gross profit was primarily
attributable to the increase in sales. Gross profit as a percent of sales for
the third quarter of 1994 was 22.3% compared to 23.1% in 1993. This decrease
is due to the increase in the cost of copper during the current quarter. For
the nine-month periods of 1994 and 1993, the gross profit was $43.2 million and
$37.6 million, respectively. The gross profit percent for the nine-month
period decreased to 21.7% from 22.7% primarily due to the underutilization of
two recently completed automotive parts plants.
Selling, general and administrative expenses for the third quarter were $9.3
million, up from $7.3 million in fiscal 1993, as a result of increased volume
related selling expenses, and higher expenditures in support of new product and
sales development. As a percent of sales, these expenses were 13.1% for both
the third quarter 1994 and 1993. For the nine-month periods, selling, general
and administrative expenses were 13.2% and 13.9% in 1994 and 1993,
respectively, as a percent of sales. The lower percent of sales in the current
year is due to increased sales volume.
Interest expense was $.4 million for the current quarter and $.3 million for
the third quarter of fiscal 1993. No interest was capitalized in the current
quarter. In the third quarter of 1993, interest totaling $.3 million was
capitalized. Current year-to-date interest expense is $1.2 million compared to
$1.0 million in fiscal 1993. No interest has been capitalized in the current
year, while $.7 million was capitalized in 1993.
8
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<TABLE>
AMCAST INDUSTRIAL CORPORATION
PART I - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS - CONTINUED
Results by Business Segment (unaudited)
- - --------------------------------------
(dollars in thousands)
<CAPTION>
Three Months Ended Nine Months Ended
--------------------------- ----------------------------
May 29 May 30 May 29 May 30
1994 1993 1994 1993
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Net Sales
- - ---------
Flow Control Products $33,602 $25,283 $ 89,313 $ 79,132
Engineered Components 37,300 30,487 109,614 86,116
------- ------- -------- --------
$70,902 $55,770 $198,927 $165,248
======= ======= ======== ========
Income Before Taxes
- - -------------------
Flow Control Products $ 4,998 $ 3,476 $ 14,374 $ 10,885
Engineered Components 3,108 2,992 7,415 7,312
Corporate Expense (1,431) (882) (4,529) (3,449)
Interest Expense (421) (262) (1,245) (979)
------- ------- -------- --------
$ 6,254 $ 5,324 $ 16,015 $ 13,769
======= ======= ======== ========
</TABLE>
Flow Control Products' operating income in the third quarter of $5.0 million
was higher by 43.8% from the prior year comparable period as a result of both
improved margins resulting from cost reductions and increased sales volume.
Engineered Components' operating income of $3.1 million increased 3.9% when
compared to the third quarter of 1993 due to the increased volume of aluminum
wheel sales. Year-to-date Flow Control Products' operating income rose by
32.1% from fiscal year 1993. Engineered Components' nine-month operating
income showed a slight increase over the prior period.
Capital Resources and Liquidity
- - -------------------------------
Net cash provided by operations was $20.7 million for the first nine months of
fiscal 1994 compared to cash provided by operations of $10.2 million for the
comparable period of fiscal 1993. In 1994, cash provided by net income,
depreciation and amortization was partially offset by an increase in working
capital of $2.2 million. In the prior year, cash provided by net income,
depreciation and amortization was offset by a $5.9 million increase in working
capital.
Capital expenditures were $8.3 million and $9.6 million for the nine-month
period of fiscal 1994 and 1993, respectively. At May 29, 1994, the Company had
$5.4 million of commitments for additional capital expenditures, primarily for
the Engineered Components segment.
Long-term debt was 13.5% of total capital at May 29, 1994, down from 15.3% at
August 31, 1993. The decrease during the period is due to lower debt levels
and increased retained earnings.
9
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AMCAST INDUSTRIAL CORPORATION
PART I - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS - CONTINUED
The Company may borrow up to $40 million under a Revolving Credit Agreement
which expires September 1, 1997. In addition, the Company maintains bank lines
of credit under which it may borrow up to $25 million. At May 29, 1994, there
were no borrowings under the Revolving Credit Agreement and none outstanding
under the bank lines of credit. The Company considers these external sources
of funds, together with funds generated from operations, to be adequate to meet
operating needs.
The Company has sold the iron foundry and pole line hardware portion of the
Stanley G. Flagg division. The net assets of this discontinued operation were
$14.0 million and $20.0 million at May 29, 1994 and August 31, 1993 consisting
of current assets, current liabilities, and fixed assets, net of allowance for
estimated loss on disposal.
The Company is involved in a number of environmental clean-ups and has been
named by the United States Environmental Protection Agency and various state
agencies as one of several parties potentially liable for clean-ups at various
sites. The Company cannot predict the outcome of any action or proceeding, and
future environmental related expenditures cannot be reasonably quantified due
to the speculative nature of remediation and clean-up cost estimates and
methods, the imprecise and conflicting data regarding the characteristics of
various types of waste, the unknown number of other potentially responsible
parties (PRP's) involved, the level of responsibility of any PRP, the extent to
which such costs may be recoverable from insurance, and changing environmental
laws and interpretations. While the Company could be found to be jointly and
severally liable at a number of these sites, the Company believes that the
liability, if any, resulting from all such matters in the aggregate will not
have a material adverse effect on the Company's consolidated financial
condition. Refer to Item 1, Part II of this report.
10
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AMCAST INDUSTRIAL CORPORATION
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings
- - --------------------------
The Company is subject to a range of federal, state and local laws and
regulations governing the discharge of material into the environment or
otherwise relating to the protection of the environment. The Company
periodically makes capital expenditures to meet the requirements of these laws
and regulations; however, the Company believes that the anticipated
expenditures for such purposes in the foreseeable future will not be material
to its financial position or its competitive position.
The Company, as is normal for the industry in which it operates, is subject to
periodic environmental site investigations and inquiries. The Company has been
identified as a "potentially responsible party" by various state agencies and
by the United States Environmental Protection Agency under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, for
costs associated with seven multi-party "superfund" sites and four state
environmental remediation sites. While the Company could be found jointly and
severally liable at a number of these sites, the Company, in each case, is
contesting any responsibility or believes that its liability will not be
material because of the nature of the waste involved or the limited amount of
waste generated by the Company which was allegedly disposed of at the site.
With respect to one such site (located in Ironton, Ohio), another potentially
responsible party has brought an action seeking contribution from the Company
for a portion of the total response and remediation costs, which the plaintiff
has claimed may exceed $20 million. The Company believes that its ultimate
equitable share, if any, of any liability for clean-up costs at the site will
not be material.
The Company also is a defendant in a lawsuit brought by Public Research Group,
Inc. which alleges that the zinc content of the waste water discharged at the
Company's Stowe, Pennsylvania facility exceeded the levels allowed under the
applicable permit during the period from October 1984 through October 1988.
The suit seeks injunctive relief and the assessment of penalties; however, the
Company believes that injunctive relief is inappropriate because the discharge
currently is in compliance with the permit. The Company has provided in its
financial statements a reserve based on its estimate of possible penalties and
believes that such reserve is adequate. In a related case, the plaintiffs
objected to certain provisions of a waste water discharge permit issued with
response to the Stowe facility in 1991. The permit has been remanded for
modification and reissuance. While the modified permit has not yet been
issued, the Company believes that it will be able to meet any additional
requirements of the permit without incurring material additional expenditures.
Item 6 - Exhibits and Reports on Form 8-K
- - -----------------------------------------
a) Exhibits -- None.
b) Reports on Form 8-K--No reports on Form 8-K were filed by the Company
during the quarter ended May 29, 1994.
11
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AMCAST INDUSTRIAL CORPORATION
S I G N A T U R E S
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AMCAST INDUSTRIAL CORPORATION
-----------------------------
(Registrant Company)
<TABLE>
<S> <C>
Date: July 13, 1994 By: /s/L. W. Ladehoff
------------- ---------------------------------------------
Leo W. Ladehoff, Chairman and
Chief Executive Officer
Date: July 13, 1994 By: /s/J. H. Shuey
------------- ---------------------------------------------
John H. Shuey, President and
Chief Operating Officer
(principal financial and accounting officer)
Date: July 13, 1994 By: /s/W. L. Bown
------------- ---------------------------------------------
William L. Bown, Vice President and Controller
</TABLE>
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