<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 February 26, 1995 Commission File Number 1-9967
----------------- ------
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
---------------------------------------------------------
(Exact name of registrant as specified in its charter)
Ohio 31-0258080
------------------------ ---------------------------------
(State of Incorporation) (I.R.S. Employer Identification No.)
7887 Washington Village Drive, Dayton, Ohio 45459
-------------------------------------------- ------------
(Address of principal executive offices) (Zip Code)
(Area Code 513) 291-7000
---------------------------------------------------------
(Registrant's telephone number, including area code)
------------------------------------------------------------------------------
(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 February 26, 1995 -
8,517,891 shares.
<PAGE> 2
AMCAST INDUSTRIAL CORPORATION
I N D E X
---------
PART I - FINANCIAL INFORMATION PAGE NO.
--------------------- --------
Item 1 - Financial Statements:
Consolidated Condensed Statements of Financial 3
Condition - February 26, 1995 and August 31, 1994
Consolidated Condensed Statements of Operations - 4
for the Quarters and Six Months Ended February 26, 1995
and February 27, 1994
Consolidated Condensed Statements of Retained Earnings - 4
for the Quarters and Six Months Ended February 26, 1995
and February 27, 1994
Consolidated Condensed Statements of Cash Flows - 5
for the Six Months Ended February 26, 1995
and February 27, 1994
Notes to Consolidated Condensed Financial Statements 6 - 7
Item 2 - Management's Discussion and Analysis of Financial 8 - 10
Condition and Results of Operations
PART II - OTHER INFORMATION
-----------------
Item 1 - Legal Proceedings 11
Item 4 - Submission of Matters to a Vote of Security Holders 12
Item 6 - Exhibits and Reports on Form 8-K 12
SIGNATURES 13
-2-
<PAGE> 3
PART I - FINANCIAL INFORMATION
AMCAST INDUSTRIAL CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF FINANCIAL CONDITION
(dollars in thousands)
(unaudited)
<TABLE>
ASSETS
- ------ February 26 August 31
1995 1994
---------- ----------
<S> <C> <C>
Current Assets
Cash and cash equivalents $ 1,152 $ 15,414
Accounts receivable 53,241 38,400
Inventories:
Finished products 20,690 17,833
Work-in-process 12,661 11,878
Raw materials and supplies 9,801 8,758
---------- ----------
43,152 38,469
Other current assets 5,655 5,143
---------- ----------
Total current assets 103,200 97,426
Property, Plant and Equipment 159,254 149,185
Less allowances for depreciation (81,937) (75,531)
---------- ----------
77,317 73,654
Net Assets of Discontinued Operation 12,540 12,389
Other Assets 13,600 10,692
---------- ----------
$206,657 $194,161
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Current Liabilities
Accounts payable $ 29,127 $ 27,169
Current portion of notes payable
and lines of credit 10,122 4,019
Accrued expenses, compensation and
related items and other current liabilities 17,108 17,648
---------- ----------
Total current liabilities 56,357 48,836
Long-Term Debt--less current portion 12,745 13,910
Deferred Income Taxes 5,513 4,024
Deferred Liabilities 15,471 17,228
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-- 8,517,891 shares
(8,457,896 at August 31, 1994) 8,518 8,458
Capital in excess of stated value 63,592 62,912
Retained earnings 44,461 38,793
---------- ----------
116,571 110,163
---------- ----------
$206,657 $194,161
========== ==========
</TABLE>
See notes to consolidated condensed financial statements.
-3-
<PAGE> 4
AMCAST INDUSTRIAL CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
AND RETAINED EARNINGS
(dollars in thousands except per share amounts)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
---------------------------- ----------------------------
February 26 February 27 February 26 February 27
1995 1994 1995 1994
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Consolidated Condensed Statements
---------------------------------
of Operations
-------------
Net sales $81,755 $67,697 $158,753 $128,025
Cost of sales 64,700 53,003 126,041 100,696
------- ------- -------- --------
Gross profit 17,055 14,694 32,712 27,329
Selling, general and
administrative expenses 10,090 8,869 19,851 16,842
Interest expense 353 388 699 824
Other income (72) (96) (183) (98)
------- ------- -------- --------
10,371 9,161 20,367 17,568
------- ------- -------- --------
Income before income taxes 6,684 5,533 12,345 9,761
Income taxes 2,406 2,020 4,444 3,563
------- ------- -------- --------
Net Income $ 4,278 $ 3,513 $ 7,901 $ 6,198
======= ======= ======= =======
Consolidated Condensed Statements
---------------------------------
of Retained Earnings
--------------------
Beginning retained earnings $41,302 $30,225 $ 38,793 $ 28,577
Net income 4,278 3,513 7,901 6,198
Less dividends (1,107) (1,012) (2,213) (2,020)
Other (12) (42) (20) (71)
------- ------- -------- --------
Ending Retained Earnings $44,461 $32,684 $44,461 $32,684
======= ======= ======= =======
Per Share Information
---------------------
Net income per share $.50 $.42 $.93 $.74
======= ======= ======= =======
Dividends declared per share $.13 $.12 $.26 $.24
======= ======= ======= =======
Dividends paid per share $.13 $.12 $.26 $.24
======= ======= ======= =======
</TABLE>
See notes to consolidated condensed financial statements.
-4-
<PAGE> 5
AMCAST INDUSTRIAL CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(dollars in thousands)
(unaudited)
<TABLE>
Six Months Ended
<CAPTION> --------------------------------
February 26 February 27
1995 1994
---------- -----------
<S> <C> <C>
Operating Activities:
Net income $ 7,901 $ 6,198
Depreciation and amortization 7,141 6,464
Deferred liabilities (268) 1,920
Changes in assets and liabilities:
- Accounts receivable (14,841) (7,508)
- Inventories (4,683) 1,123
- Other current assets (512) (542)
- Other assets 182 668
- Accounts payable 1,958 242
- Accrued liabilities (540) 334
------- -------
Net Cash (Used) Provided
By Operating Activities (3,662) 8,899
Investing Activities:
(Increase) decrease in net assets of
discontinued operation (151) 5,557
Investment in joint venture (3,511) (269)
Additions to plant and equipment, net (10,383) (4,580)
------- -------
Net Cash (Used) Provided By
Investing Activities (14,045) 708
Financing Activities:
Proceeds from exercise of stock options 739 591
Reduction in long-term debt (1,165) (1,162)
Short-term borrowings and current
portion of long-term debt 6,103 (337)
Dividends (2,213) (2,020)
Other (19) (71)
------- -------
Net Cash Provided (Used) by
Financing Activities 3,445 (2,999)
------- -------
Net change in cash and cash equivalents (14,262) 6,608
Cash and cash equivalents
at beginning of period 15,414 2,251
------- -------
Cash and Cash Equivalents
at End of Period $ 1,152 $ 8,859
======= =======
</TABLE>
See notes to consolidated condensed financial statements.
-5-
<PAGE> 6
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 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.
Note B - Accounts Receivable
- ----------------------------
Accounts receivable are stated net of allowances for doubtful accounts of $169
at February 26, 1995 and $147 at August 31, 1994.
Note C - Inventories
- --------------------
Certain inventories are presented net of the appropriate LIFO reserve.
Note D - Other Assets
- ---------------------
The major components are:
<TABLE>
<CAPTION>
February 26 August 31
1995 1994
----------- ---------
<S> <C> <C>
Technical and product programs $ 1,046 $ 1,419
Goodwill 2,731 2,774
Investment in joint venture 4,159 648
Other assets and deferred charges 5,664 5,851
------- -------
$13,600 $10,692
======= =======
</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, the
discontinued operation, and postretirement benefits other than pensions.
Significant noncurrent restructuring liabilities for medical and workers'
compensation costs were $2,600 and $2,800 at February 26, 1995 and August 31,
1994, respectively; consolidation and disposition of operations were $1,600 and
$2,100, respectively at February 26, 1995 and August 31, 1994. Postretirement
benefits other than pensions were $5,400 and $5,600 at February 26, 1995 and
August 31, 1994, respectively. These accruals are not deductible for income
tax purposes until paid and are therefore, accounted for as temporary
differences in the Company's tax provision.
-6-
<PAGE> 7
AMCAST INDUSTRIAL CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(dollars in thousands except share amounts)
(unaudited)
Note F - Long-Term Debt
- -----------------------
The following table summarizes the Company's borrowings:
<TABLE>
February 26 August 31
1995 1994
------- -------
<S> <C> <C>
Senior notes $10,089 $10,964
Industrial revenue bonds 6,678 6,965
Lines of credit - notes payable 6,100
------- -------
Total Obligations 22,867 17,929
Less current portion of notes payable
and lines of credit 10,122 4,019
------- -------
$12,745 $13,910
======= =======
</TABLE>
Note G - Income Taxes
- ---------------------
The estimated effective tax rates were 36.0% and 36.5% for the second quarters
and 36.0% and 36.5% for the six months of 1995 and 1994, respectively.
Note H - Net Income Per Share
- -----------------------------
For the second quarter of 1995 and 1994, the weighted average number of common
shares used to calculate income per share was 8,513,256 and 8,409,276, and for
the first six months of 1995 and 1994 was 8,494,280 and 8,399,532,
respectively.
-7-
<PAGE> 8
AMCAST INDUSTRIAL CORPORATION
PART I - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Operating Results
- -----------------
Net sales of $81.8 million in the current quarter ended February 26, 1995
increased 20.8% from the prior year second quarter. Flow Control Products'
sales increased 23.8% to $37.0 million primarily due to higher selling prices
that were instituted to offset the nearly 60% cost increase in copper used in
manufacturing plumbing fittings from the second quarter of 1994 to the second
quarter of 1995. Engineered Components' sales rose 18.3% to $44.8 million
primarily due to sales price adjustments that offset increases in aluminum
costs and higher volumes resulting from the continued strong automotive market.
For the first six months of fiscal 1995, net sales were $158.8 million, up
24.0% from the comparable prior year period. Flow Control Products' sales rose
30.4% to $72.6 million, due to increased volumes and pricing actions which
passed on escalating copper costs to the customer. Engineered Components'
sales increased 19.1% to $86.1 million due to contractual price adjustments for
increased aluminum cost and higher volumes of wheels and other aluminum
automotive components.
Gross profit for the second quarter of fiscal 1995 and 1994 was $17.1 million
and $14.7 million, respectively. The increase in gross profit was primarily
attributable to the increase in sales. Gross profit as a percent of sales for
the second quarter of 1995 was 20.9% compared to 21.7% in 1994. This decrease
resulted from improvements in margin due to price increases being offset by the
cost of launching several new products in the Engineered Components' business.
Gross profit for the first six months of fiscal 1995 increased to $32.7 million
from $27.3 million. As a percent of sales, the year-to-date gross profit was
20.6% compared to 21.3% for the prior year. Product launch costs in the first
six months of 1995 offset the gains from pricing actions when compared to the
first six months of 1994.
Selling, general and administrative expenses for the second quarter of $10.1
million, rose $1.2 million from the second quarter of 1994, primarily due to
higher commission expense relating to the increased Flow Control Products'
sales. For the six-month periods, selling, general and administrative expenses
as a percent of sales, were 12.5% and 13.2% in 1995 and 1994, respectively.
For the second quarter of fiscal years 1995 and 1994, interest expense was $.4
million. Current year-to-date interest expense is $.7 million compared to $.8
million in fiscal 1994. This decrease is a result of lower average borrowings
in fiscal 1995.
-8-
<PAGE> 9
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)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
---------------------------- ----------------------------
February 26 February 27 February 26 February 27
1995 1994 1995 1994
------- ------- -------- --------
<S> <C> <C> <C> <C>
Net Sales
---------
Flow Control Products $36,964 $29,850 $ 72,647 $ 55,711
Engineered Components 44,791 37,847 86,106 72,314
------- ------- -------- --------
$81,755 $67,697 $158,753 $128,025
======= ======= ======== ========
Income Before Taxes
-------------------
Flow Control Products $ 6,722 $ 5,269 $ 12,458 $ 9,376
Engineered Components 1,963 2,262 3,819 4,307
Corporate Expense (1,648) (1,610) (3,233) (3,098)
Interest Expense (353) (388) (699) (824)
------- ------- -------- --------
$ 6,684 $ 5,533 $ 12,345 $ 9,761
======= ======= ======== ========
</TABLE>
Flow Control Products' operating income in the second quarter of $6.7 million
was up 27.6% primarily due to improved margins resulting from higher pricing
and the increased volume of products sold. Engineered Components' operating
income of $2.0 million decreased $.3 million as gains from higher sales volumes
were offset by cost relating to the launch of several new products.
Year-to-date Flow Control Products' operating income rose by 32.9% from fiscal
1994 due to increased volume and improved pricing. Engineered Components'
six-month operating income decreased $.5 million from the prior period
primarily due to cost related to new product launches which more than offset an
increase in sales volume of wheels and other aluminum automotive components.
Capital Resources and Liquidity
- -------------------------------
For the first half of fiscal 1995, net cash used by operations was $3.7 million
compared to cash provided by operations of $8.9 million for the first six
months of fiscal 1994. In the current year cash provided by net income and
depreciation and amortization was offset by an $18.6 million increase in
working capital. In the prior year, cash provided by net income and
depreciation and amortization was partially offset by a increase in working
capital of $6.4 million.
Capital expenditures were $10.4 million and $4.6 million for the six-month
period of fiscal 1995 and 1994, respectively. At February 26, 1995, the
Company had $18.1 million of commitments for additional capital expenditures
primarily for the Engineered Components segment.
-9-
<PAGE> 10
AMCAST INDUSTRIAL CORPORATION
PART I - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS - CONTINUED
Total long-term debt at February 26, 1995 was $12,745 or 9.9% of capital
compared to $13,910 or 11.2% of capital as of August 31, 1994. The current
portion of notes payable and lines of credit increased $6,100 at February 26,
1995 due to borrowing against short-term credit lines to partially finance the
increase in accounts receivable.
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 February 26, 1995,
there were no borrowings under the Revolving Credit Agreement and $6.1 million
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.
Net assets of the discontinued operation were $12.5 million and $12.4 million
at February 26, 1995 and August 31, 1994, respectively, consisting of current
assets, current liabilities, and fixed assets of the Stanley G. Flagg Division,
net of an allowance for estimated loss on disposal.
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 investigation and inquiries. The Company has been
identified as a potentially responsible party by various state agencies and by
the United States Environmental Protection Agency (U.S. EPA) under the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
as amended, for costs associated with eight U.S. EPA led multi-party
"superfund" sites and four state environmental agency led remediation sites.
While the Company could be found jointly and severally liable at a number of
these sites, the Company 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 these sites.
-10-
<PAGE> 11
AMCAST INDUSTRIAL CORPORATION
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings
- --------------------------
Refer to Item 3, Part I of Form 10-K for the fiscal year ended August 31, 1994.
The Company is a defendant in a class action suit filed in the Southern
District of Ohio by the United Steelworkers of America and certain retired
bargaining unit employees, from the Company's Flagg Brass division, captioned
EDWARD ADAMS, ET AL., VERSUS AMCAST INDUSTRIAL CORPORATION (Case No.
C-3-94-456). Plaintiffs are seeking retroactive reinstatement of medical and
life insurance benefits for certain early retirees, all of which were
discontinued when the collective bargaining agreement between the Company and
the Union expired in July of 1994, and unspecified compensatory and punitive
damages. The Company believes that it has substantial defenses to the claims.
Allied-Signal, Inc. has brought a superfund private cost recovery and
contribution action against the Company in the United States District Court for
the Southern District of Ohio, Western Division, which is captioned
ALLIED-SIGNAL, INC. V. AMCAST INDUSTRIAL CORPORATION (Case No. C- 3-92-013).
The action involves the Goldcamp Disposal Site in Ironton, Ohio. Allied-Signal
has taken the lead in remediating the site and has estimated that its total
costs for the remediation may reach $30 million. Allied is seeking a
contribution from the Company in an amount equal to 50% of the final
remediation costs. A trial in this proceeding was completed in February 1995,
but no judgment is anticipated until after certain post-trial proceedings are
completed. The Company believes its responsibility with respect to the
Goldcamp Site, if any, is limited, primarily due to the nature of the foundry
sand waste it disposed of at the site. The Company believes that, if it has
any liability at all in regard to the site, that liability would not be
material to the results of operations.
The Company is also a defendant in a lawsuit captioned PUBLIC INTEREST RESEARCH
GROUP, INC., ET AL. V. STANLEY G. FLAGG & CO., ET AL, filed in the United
States District Court for the Eastern District of Pennsylvania (Case No.
89-2137). In this proceeding, it is alleged that the content of zinc and other
minerals in the waste water discharged at the Company's Stowe, Pennsylvania
facility exceeded the level allowed under the applicable permit during the
period from October 1984 through October 1988. The suit seeks the assessment
of penalties. The Company had believed that penalties, if any, would not be
material because the discharge has been in compliance with the permit since at
least early 1990 and the proceedings had been inactive for more than four years
prior to March 16, 1995. On March 16, 1995, the Court moved the case to the
current docket from the civil suspense file. While the possibilities of
penalties is again at issue, the Company believes that such penalties would not
be material to the results of operations.
-11-
<PAGE> 12
AMCAST INDUSTRIAL CORPORATION
PART II - OTHER INFORMATION - CONTINUED
Item 4 - Submission of Matters to a Vote of Security Holders
- ------------------------------------------------------------
a) The annual meeting of shareholders of Amcast Industrial Corporation was held
on December 14, 1994.
b) At the annual meeting, shareholders voted on and approved two proposals.
Those proposals are stated below, together with information concerning the
votes cast.
<TABLE>
1. Election of three directors to serve for a term of three years.
Directors elected were Ivan W. Gorr, Peter H. Forster, and Leo W. Ladehoff.
Ivan W. Gorr Peter H. Forster Leo W. Ladehoff
------------ ---------------- ---------------
<S> <C> <C> <C>
Shares For 6,844,771 6,839,599 6,842,302
Shares Withheld 28,387 33,559 30,856
Total 6,873,158 6,873,158 6,873,158
2. Ratification of the appointment of Ernst & Young as independent auditors of the Company for the fiscal year ending
August 31, 1995.
<S> <C>
Shares For 6,832,751
Shares Against 22,118
Shares Abstain 18,289
Total 6,873,158
</TABLE>
Item 6 - Exhibits and Reports on Form 8-K
- -----------------------------------------
a) Exhibit 27 -- Financial Data Schedule
b) Reports on Form 8-K:
A Form 8-K filed March 27, 1995 is incorporated herein by reference. The
content of the report dated March 23, 1995 in the format of a press release
announced the appointment of John H. Shuey as Chief Executive Officer of the
Company.
-12-
<PAGE> 13
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)
Date: April 12, 1995 By: /s/J. H. Shuey
-------------- ------------------------------------
John H. Shuey
President and Chief Executive Officer,
Director
(Principle Executive Officer)
Date: April 12, 1995 By: /s/D. D. Watts
-------------- ------------------------------------
Douglas D. Watts
Vice President, Finance
(Principle Financial Officer)
Date: April 12, 1995 By /s/W. L. Bown
-------------- -------------------------------------
William L. Bown
Vice President and Controller
(Principle Accounting Officer)
-13-
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> AUG-31-1995
<PERIOD-START> SEP-01-1994
<PERIOD-END> FEB-26-1995
<CASH> 1,152
<SECURITIES> 0
<RECEIVABLES> 53,410
<ALLOWANCES> 169
<INVENTORY> 43,152
<CURRENT-ASSETS> 103,200
<PP&E> 159,254
<DEPRECIATION> 81,937
<TOTAL-ASSETS> 206,657
<CURRENT-LIABILITIES> 56,357
<BONDS> 22,867
<COMMON> 8,518
0
0
<OTHER-SE> 108,053
<TOTAL-LIABILITY-AND-EQUITY> 206,657
<SALES> 158,753
<TOTAL-REVENUES> 158,753
<CGS> 126,041
<TOTAL-COSTS> 145,892
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 699
<INCOME-PRETAX> 12,345
<INCOME-TAX> 4,444
<INCOME-CONTINUING> 7,901
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,901
<EPS-PRIMARY> .93
<EPS-DILUTED> .93
</TABLE>
