<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 June 2, 1996 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 June 2, 1996 -
8,615,667 shares.
<PAGE> 2
AMCAST INDUSTRIAL CORPORATION
I N D E X
---------
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION PAGE NO.
--------------------- --------
<S> <C>
Item 1 - Financial Statements:
Consolidated Condensed Statements of Financial 3
Condition - June 2, 1996 and August 31, 1995
Consolidated Condensed Statements of Operations - 4
for the Quarter and Nine Months Ended June 2, 1996
and May 28, 1995
Consolidated Condensed Statements of Retained Earnings - 4
for the Quarter and Nine Months Ended June 2, 1996
and May 28, 1995
Consolidated Condensed Statements of Cash Flows - 5
for the Nine Months Ended June 2, 1996 and
May 28, 1995
Notes to Consolidated Condensed Financial Statements 6-8
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations 9-11
PART II - OTHER INFORMATION
-----------------
Item 1 - Legal Proceedings 12
Item 6 - Exhibits and Reports on Form 8-K 12
SIGNATURES 13
</TABLE>
2
<PAGE> 3
PART I - FINANCIAL INFORMATION
AMCAST INDUSTRIAL CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF FINANCIAL CONDITION
(dollars in thousands)
(unaudited)
<TABLE>
<CAPTION>
June 2 August 31
ASSETS 1996 1995
- ------ --------------- --------------
Current Assets
<S> <C> <C>
Cash and cash equivalents $ 1,834 $ 1,286
Accounts receivable 50,023 44,643
Inventories:
Finished products 23,631 25,766
Work-in-process 13,094 13,791
Raw materials and supplies 10,988 9,589
---------- -----------
47,713 49,146
Other current assets 9,461 7,786
----------- -----------
Total current assets 109,031 102,861
Property, Plant and Equipment 238,372 200,324
Less allowances for depreciation (105,561) (94,701)
----------- -----------
132,811 105,623
Other Assets 23,730 20,883
----------- -----------
$ 265,572 $ 229,367
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Current Liabilities
Accounts payable $ 27,642 $ 33,647
Current portion of long-term debt 6,962 4,522
Accrued expenses, compensation and
related items and other current liabilities 19,895 16,847
----------- -----------
Total current liabilities 54,499 55,016
Long-Term Debt--less current portion 58,783 29,687
Deferred Income Taxes 8,766 6,952
Deferred Liabilities 11,265 13,507
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-- 8,615,667 shares
(8,555,875 at August 31, 1995) 8,616 8,556
Capital in excess of stated value 64,916 64,175
Retained earnings 58,727 51,474
----------- ----------
132,259 124,205
----------- -----------
$ 265,572 $ 229,367
=========== ===========
</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 Nine Months Ended
-------------------------------- --------------------------------
June 2 May 28 June 2 May 28
1996 1995 1996 1995
--------------- --------------- --------------- ---------------
CONSOLIDATED CONDENSED STATEMENTS
OF OPERATIONS
<S> <C> <C> <C> <C>
Net sales $ 87,566 $ 86,397 $ 255,827 $ 245,150
Cost of sales 71,311 68,504 205,563 194,545
--------------- --------------- --------------- ---------------
Gross profit 16,255 17,893 50,264 50,605
Selling, general and administrative
expenses 10,832 10,552 31,840 30,388
--------------- --------------- --------------- ---------------
Operating income 5,423 7,341 18,424 20,217
Other income, net 45 134 236 302
Interest expense 925 324 1,738 1,023
--------------- --------------- --------------- ---------------
Income before income taxes 4,543 7,151 16,922 19,496
Income taxes 1,611 2,477 6,018 6,921
--------------- --------------- --------------- ---------------
Net Income $ 2,932 $ 4,674 $ 10,904 $ 12,575
=============== =============== =============== ===============
CONSOLIDATED CONDENSED STATEMENTS
OF RETAINED EARNINGS
Beginning retained earnings $ 56,999 $ 44,461 $ 51,474 $ 38,793
Net income 2,932 4,674 10,904 12,575
Dividends (1,206) (1,110) (3,618) (3,323)
Other 2 19 (33) (1)
--------------- --------------- --------------- ---------------
Ending Retained Earnings $ 58,727 $ 48,044 $ 58,727 $ 48,044
=============== =============== =============== ===============
PER SHARE INFORMATION
Net income per share $ .34 $ .55 $ 1.27 $ 1.48
=============== =============== =============== ===============
Dividends declared per share $ .14 $ .13 $ .42 $ .39
=============== =============== =============== ===============
Dividends paid per share $ .14 $ .13 $ .42 $ .39
=============== =============== =============== ===============
</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>
<CAPTION>
Nine Months Ended
-----------------
June 2 May 28
1996 1995
---------- ----------
<S> <C> <C>
Operating Activities:
Net income $ 10,904 $ 12,575
Depreciation 13,559 10,915
Deferred liabilities (428) 351
Changes in assets and liabilities:
- Receivables (5,380) (3,865)
- Inventories 1,433 (7,259)
- Accounts payable (6,005) (1,739)
- Other 1,373 (1,109)
---------- ----------
Net Cash Provided By Operating Activities 15,456 9,869
Investing Activities:
Additions to property, plant, and equipment (39,220) (24,033)
Contribution to joint venture (1,266) (5,987)
Other (3,108) (786)
---------- ----------
Net Cash Used By Investing Activities (43,594) (30,806)
Financing Activities:
Additions to long-term debt 50,000 6,800
Reduction in long-term debt (20,904) (1,165)
Short-term borrowings and current
portion of long-term debt 2,440 5,203
Dividends (3,618) (3,323)
Other 768 912
---------- ----------
Net Cash Provided By Financing Activities 28,686 8,427
---------- ----------
Net change in cash and cash equivalents 548 (12,510)
Cash and cash equivalents at beginning of period 1,286 15,414
---------- ----------
Cash and Cash Equivalents at End of Period $ 1,834 $ 2,904
========== ==========
</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. Certain amounts
have been reclassified in the prior years' financial statements to conform to
the current year presentation.
NOTE B - ACCOUNTS RECEIVABLE
Accounts receivable are stated net of allowances for doubtful accounts of $379
at June 2, 1996 and $222 at August 31, 1995.
NOTE C - INVENTORIES
Certain inventories are presented net of the appropriate LIFO reserve.
NOTE D - OTHER ASSETS
The major components are:
<TABLE>
<CAPTION>
June 2 August 31
1996 1995
---------- ---------
<S> <C> <C>
Assets held for sale $ 3,437 $ 3,522
Investment in joint venture 8,719 7,278
Other assets 11,574 10,083
---------- ---------
$ 23,730 $ 20,883
========== =========
</TABLE>
NOTE E - LONG-TERM DEBT
The following table summarizes the Company's borrowings:
<TABLE>
<CAPTION>
June 2 August 31
1996 1995
--------- ----------
<S> <C> <C>
Senior notes $ 56,357 $ 7,232
Revolving credit notes 13,000
Lines of credit - notes payable 3,000 7,300
Industrial revenue bonds 6,388 6,677
--------- ----------
Total Obligations 65,745 34,209
Less current portion of notes payable
and lines of credit 6,962 4,522
--------- ----------
$ 58,783 $29,687
========= ==========
</TABLE>
6
<PAGE> 7
AMCAST INDUSTRIAL CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(dollars in thousands except share amounts)
(unaudited)
NOTE F - COMMITMENTS AND CONTINGENCIES
At June 2, 1996, the Company has committed to capital expenditures of $10.8
million, primarily for the Engineered Components segment.
The Company, as is normal for the industry in which it operates, is involved in
certain legal proceedings and subject to certain claims and site investigations
which arise under the environmental laws and which have not been finally
adjudicated.
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 nine U.S. EPA led multi-party
sites and seven state environmental agency-led remediation sites. Each of these
claims involves third-party owned disposal sites for which compensation is
sought from the Company as an alleged waste generator for recovery of past
governmental costs or for future investigation or remedial actions. The
designation as a potentially responsible party and the assertion of such claims
against the Company are made without taking into consideration the extent of the
Company's involvement with the particular site. In each instance, claims have
been asserted against a number of other entities for the same recovery or other
relief as was asserted against the Company. These claims are in various stages
of administrative or judicial proceeding. The Company has no reason to believe
that it will have to pay a significantly disproportionate share of clean-up
costs associated with any site.
To the extent possible, with the information available at the time, the Company
has evaluated its responsibility for costs and related liability with respect to
the above sites. In making such evaluation, the Company did not take into
consideration any possible cost reimbursement claims against its insurance
carriers. The Company is of the opinion that its liability with respect to those
sites should not have a material adverse effect on its financial position or
results of operations. In arriving at this conclusion, the principal factors
considered by the Company were ongoing settlement discussions with respect to
certain of the sites, the volume and relative toxicity of waste alleged to have
been disposed of by the Company at certain sites, which factors are often used
to allocate investigative and remedial costs among potentially responsible
parties, the probable costs to be paid by other potentially responsible parties,
total projected remedial costs for a site, if known, and the Company's existing
reserve to cover costs associated with unresolved environmental proceedings. At
June 2, 1996, the Company's accrued undiscounted reserve for such contingencies
was $2.4 million.
Allied-Signal Inc. has brought an action against the Company seeking a
contribution from the Company equal to 50% of Allied-Signal's estimated $30
million remediation cost in connection with a site in southern Ohio. The Company
believes its responsibility with respect to this site is very limited due to the
nature of the foundry sand waste it disposed of at the site. A trial in this
case was completed in February of 1995, but no judgment has been rendered. The
Company believes that if it has any liability at all in regard to this matter,
that liability would not be material to its financial position or results of
operations.
The Company is a defendant in a lawsuit brought by the Public Interest Research
Group Inc. seeking substantial penalties for alleged waste water discharges by
the Company's Stanley G. Flagg & Co. division during a 48-month period ended in
October of 1988. The Company's discharges have been in compliance since at least
1990. The Company therefore believes that penalties, if any, will not be
material to its financial position or results of operations.
7
<PAGE> 8
AMCAST INDUSTRIAL CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(dollars in thousands except share amounts)
(unaudited)
NOTE G - INCOME TAXES
The estimated effective tax rate was 35.5% and 34.6% for the third quarter of
fiscal 1996 and 1995, and 35.6% and 35.5% for the nine months of 1996 and 1995,
respectively.
NOTE H - NET INCOME PER SHARE
For the third quarter of 1996 and 1995, the weighted average number of common
shares used to calculate income per share was 8,615,662 and 8,524,002, and for
the first nine months of 1996 and 1995 was 8,601,888 and 8,504,298,
respectively.
8
<PAGE> 9
AMCAST INDUSTRIAL CORPORATION
PART I - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
OPERATING RESULTS
Net sales of $87.6 million for the third quarter ended June 2, 1996 increased
slightly from the prior year third quarter. Flow Control Products' sales
increased 14% to $41.4 million primarily due to higher sales levels of copper
and brass fittings, resulting from the inclusion of Flagg Brass, which was
reported as a discontinued operation in 1995. Engineered Components' sales
declined 8% to $46.2 million primarily due to an eighteen day work stoppage by
the Company's largest customer, General Motors. For the first nine months of
fiscal 1996, net sales were $255.8 million, up 4% from the comparable prior year
period. Flow Control Products' sales rose 8% to $117.8 million, primarily due to
the addition of $6 million of sales by Flagg Brass, a retained operation in
1996. Year-to-date, Engineered Components' sales increased 1% to $138.0 million.
Gross profit for the third quarter of fiscal 1996 and 1995 was $16.3 million and
$17.9 million, respectively. Gross profit as a percent of sales for the third
quarter of 1996 was 18.6% compared to 20.7% in 1995. These decreases are
primarily attributable to a change in the sales mix to lower margin products in
the Flow Control segment and, in the Engineered Components segment, the loss of
sales, combined with production cutbacks as a result of the General Motors' work
stoppage. Gross profit for the first nine months of fiscal 1996 decreased
slightly to $50.3 million from $50.6 million. As a percent of sales, the
year-to-date gross profit was 19.6% compared to 20.6% for the prior year.
Selling, general and administrative expenses for the third quarter of $10.8
million, rose $.3 million from the third quarter of 1995 to support business
expansion activities. Year-to-date selling, general and administrative expenses,
as a percent of sales, were 12.4% in both 1996 and 1995.
For the third quarter of fiscal years 1996 and 1995, interest expense was $.9
million and $.3 million, respectively. Current year-to-date interest expense is
$1.7 million compared to $1.0 million in fiscal 1995. These increases are a
result of higher borrowings to support business expansion in fiscal 1996.
9
<PAGE> 10
AMCAST INDUSTRIAL CORPORATION
PART I - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS -CONTINUED
<TABLE>
<CAPTION>
RESULTS BY BUSINESS SEGMENT (UNAUDITED)
(dollars in thousands)
Three Months Ended Nine Months Ended
-------------------------------- --------------------------------
June 2 May 28 June 2 May 28
1996 1995 1996 1995
--------------- --------------- --------------- ---------------
NET SALES
<S> <C> <C> <C> <C>
Flow Control Products $ 41,371 $ 36,291 $ 117,806 $ 108,938
Engineered Components 46,195 50,106 138,021 136,212
--------------- --------------- --------------- ---------------
$ 87,566 $ 86,397 $ 255,827 $ 245,150
=============== =============== =============== ===============
INCOME BEFORE INCOME TAXES
Flow Control Products $ 6,031 $ 6,636 $ 18,098 $ 19,094
Engineered Components 1,439 2,669 5,766 6,488
Corporate Expense (2,002) (1,830) (5,204) (5,063)
Interest Expense (925) (324) (1,738) (1,023)
--------------- --------------- --------------- ---------------
$ 4,543 $ 7,151 $ 16,922 $ 19,496
=============== =============== =============== ===============
</TABLE>
Flow Control Products' operating income in the third quarter of $6.0 million
declined 9% primarily due to the mix of products sold in 1996 having lower
margins than in 1995. The product mix in 1996 includes additional high volume,
lower priced copper and brass fittings. Engineered Components' operating income
of $1.4 million decreased $1.2 million primarily due to the aforementioned
General Motors work stoppage. Year-to-date, Flow Control Products' operating
income declined 5% from fiscal 1995 primarily due to unfavorable product mix.
Engineered Components' nine-month operating income decreased $.7 million from
the prior year primarily due to the General Motors work stoppage.
CAPITAL RESOURCES AND LIQUIDITY
For the first nine months of fiscal 1996, net cash provided by operations was
$15.5 million compared to $10.7 million in fiscal 1995. In the current year,
cash provided by net income and depreciation was partially offset by a $8.6
million increase in working capital. In the prior year, cash provided by net
income and depreciation was reduced by an increase in working capital of $13.9
million.
Capital expenditures were $39.2 million and $24.0 million for the nine-month
period of fiscal 1996 and 1995, respectively. At June 2, 1996, the Company had
$10.8 million of commitments for additional capital expenditures primarily for
the Engineered Components segment.
10
<PAGE> 11
AMCAST INDUSTRIAL CORPORATION
PART I - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS -CONTINUED
CAPITAL RESOURCES AND LIQUIDITY (CONTINUED)
Long-term debt was 30.8% of total capital at June 2, 1996, and 19.3% at August
31, 1995. The increase during the period is due to a private placement of $50
million in senior notes with two insurance companies, used to fund business
expansion.
The Company may borrow up to $60 million under a Revolving Credit Agreement
which expires April 1, 2000. In addition, the Company maintains bank lines of
credit of $25 million. At June 2, 1996, there were no borrowings under the
Revolving Credit Agreement and $3 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.
CONTINGENCIES
The Company, as is normal for the industry in which it operates, is involved in
certain legal proceedings and subject to certain claims and site investigations
that arise under the environmental laws and which have not been finally
adjudicated. To the extent possible, with the information available, the Company
regularly evaluates its responsibility with respect to environmental
proceedings. The factors considered in this evaluation are described in detail
in the Commitments and Contingencies note to the consolidated condensed
financial statements. At June 2, 1996, the Company had accrued reserves of $2.4
million for environmental liabilities. The Company is of the opinion that, in
light of its existing reserves, its liability in connection with environmental
proceedings should not have a material adverse effect on its financial condition
or results of operation. The Company is presently unaware of the existence of
any potential material environmental costs that are likely to occur in
connection with the disposition of any of its property.
11
<PAGE> 12
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, 1995.
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibit 27 - Financial Data Schedule
b) Reports on Form 8-K:
No reports on Form 8-K were filed by the Company during the quarter ended
June 2, 1996.
12
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> AUG-31-1996
<PERIOD-START> SEP-01-1995
<PERIOD-END> JUN-02-1996
<CASH> 1,834
<SECURITIES> 0
<RECEIVABLES> 50,402
<ALLOWANCES> 379
<INVENTORY> 47,713
<CURRENT-ASSETS> 109,031
<PP&E> 238,372
<DEPRECIATION> 105,561
<TOTAL-ASSETS> 265,572
<CURRENT-LIABILITIES> 54,499
<BONDS> 65,745
<COMMON> 8,616
0
0
<OTHER-SE> 123,643
<TOTAL-LIABILITY-AND-EQUITY> 265,572
<SALES> 255,827
<TOTAL-REVENUES> 255,827
<CGS> 205,563
<TOTAL-COSTS> 237,403
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,738
<INCOME-PRETAX> 16,922
<INCOME-TAX> 6,018
<INCOME-CONTINUING> 10,904
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,904
<EPS-PRIMARY> 1.27
<EPS-DILUTED> 1.27
</TABLE>
