<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 March 3, 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 March 3, 1996 -
8,615,670 shares.
<PAGE> 2
AMCAST INDUSTRIAL CORPORATION
I N D E X
---------
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION PAGE NO.
--------------------- --------
<S> <C> <C>
Item 1 - Financial Statements:
Consolidated Condensed Statements of Financial 3
Condition - March 3, 1996 and August 31, 1995
Consolidated Condensed Statements of Operations - 4
for the Quarter and Six Months Ended March 3, 1996
and February 26, 1995
Consolidated Condensed Statements of Retained Earnings - 4
for the Quarter and Six Months Ended March 3, 1996
and February 26, 1995
Consolidated Condensed Statements of Cash Flows - 5
for the Six Months Ended March 3, 1996 and
February 26, 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 4 - Submission of Matters to a Vote of Security Holders 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>
March 3 August 31
ASSETS 1996 1995
----------- -----------
<S> <C> <C>
Current Assets
Cash and cash equivalents $ 7,855 $ 1,286
Accounts receivable 47,032 44,643
Inventories:
Finished products 27,057 25,766
Work-in-process 14,629 13,791
Raw materials and supplies 10,758 9,589
----------- -----------
52,444 49,146
Other current assets 9,049 7,786
----------- -----------
Total current assets 116,380 102,861
Property, Plant and Equipment 227,180 200,324
Less allowances for depreciation (102,059) (94,701)
----------- -----------
125,121 105,623
Other Assets 21,985 20,883
----------- -----------
$ 263,486 $229,367
----------- -----------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 32,243 $ 33,647
Current portion of long-term debt 3,962 4,522
Accrued expenses, compensation and
related items and other current liabilities 18,423 16,847
----------- -----------
Total current liabilities 54,628 55,016
Long-Term Debt - less current portion 58,783 29,687
Deferred Income Taxes 8,229 6,952
Deferred Liabilities 11,308 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 - 8,615,670 shares
(8,555,875 at August 31, 1995) 8,616 8,556
Capital in excess of stated value 64,923 64,175
Retained earnings 56,999 51,474
----------- -----------
130,538 124,205
----------- -----------
$ 263,486 $ 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 Six Months Ended
------------------------------- -------------------------------
March 3 February 26 March 3 February 26
1996 1995 1996 1995
-------------- -------------- -------------- --------------
Consolidated Condensed Statements
- ---------------------------------
of Operations
- -------------
<S> <C> <C> <C> <C>
Net sales $ 81,796 $ 81,755 $ 168,261 $ 158,753
Cost of sales 65,206 64,700 134,252 126,041
-------------- -------------- -------------- --------------
Gross profit 16,590 17,055 34,009 32,712
Selling, general and administrative
expenses 10,305 10,083 21,008 19,836
-------------- -------------- -------------- --------------
Operating income 6,285 6,972 13,001 12,876
Other income, net 109 65 191 168
Interest expense 351 353 813 699
-------------- -------------- -------------- --------------
Income before income taxes 6,043 6,684 12,379 12,345
Income taxes 2,126 2,406 4,407 4,444
-------------- -------------- -------------- --------------
Net Income $ 3,917 $ 4,278 $ 7,972 $ 7,901
============== ============== ============== ==============
Consolidated Condensed Statements
- ---------------------------------
of Retained Earnings
- --------------------
Beginning retained earnings $ 54,303 $ 41,302 $ 51,474 $ 38,793
Net income 3,917 4,278 7,972 7,901
Dividends (1,207) (1,107) (2,412) (2,213)
Other (14) (12) (35) (20)
-------------- -------------- -------------- --------------
Ending Retained Earnings $ 56,999 $ 44,461 $ 56,999 $ 44,461
============== ============== ============== ==============
Per Share Information
- ---------------------
Net income per share $ .46 $ .50 $ .93 $ .93
============== ============== ============== ==============
Dividends declared per share $ .14 $ .13 $ .28 $ .26
============== ============== ============== ==============
Dividends paid per share $ .14 $ .13 $ .28 $ .26
============== ============== ============== ==============
</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>
Six Months Ended
----------------
March 3 February 26
1996 1995
---------- ----------
<S> <C> <C>
Operating Activities:
Net income $ 7,972 $ 7,901
Depreciation 9,053 7,556
Deferred liabilities (922) (268)
Changes in assets and liabilities:
- Receivables (2,389) (14,841)
- Inventories (3,297) (4,683)
- Accounts payable (1,404) 1,958
Other 313 (1,052)
---------- ----------
Net Cash Provided (Used) By
Operating Activities 9,326 (3,429)
Investing Activities:
Additions to property, plant, and equipment (27,518) (10,475)
Contribution to joint venture (180) (3,527)
Other (1,956) (276)
---------- ----------
Net Cash Used By Investing Activities (29,654) (14,278)
Financing Activities:
Additions to long-term debt 50,000
Reduction in long-term debt (20,904) (1,165)
Short-term borrowings and current
portion of long-term debt (560) 6,103
Dividends (2,412) (2,213)
Other 773 720
---------- ----------
Net Cash Provided By Financing Activities 26,897 3,445
---------- ----------
Net change in cash and cash equivalents 6,569 (14,262)
Cash and cash equivalents at beginning of period 1,286 15,414
---------- ----------
Cash and Cash Equivalents at End of Period $ 7,855 $ 1,152
---------- ----------
</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 $216
at March 3, 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>
March 3 August 31
1996 1995
--------- --------
<S> <C> <C>
Assets held for sale $ 3,437 $ 3,522
Investment in joint venture 7,576 7,278
Other assets 10,972 10,083
--------- --------
$ 21,985 $ 20,883
--------- --------
</TABLE>
Note E - Long-Term Debt
The following table summarizes the Company's borrowings:
<TABLE>
<CAPTION>
March 3 August 31
1996 1995
--------- --------
<S> <C> <C>
Senior notes $ 56,357 $ 7,232
Revolving credit notes 13,000
Lines of credit - notes payable 7,300
Industrial revenue bonds 6,388 6,677
--------- ---------
Total Obligations 62,745 34,209
Less current portion of notes payable
and lines of credit 3,962 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 March 3, 1996, the Company has committed to capital expenditures of $20.1
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 six 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
March 3, 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 35.2% and 36.0% for the second quarter of
fiscal 1996 and 1995, and 35.6% and 36.0% for the six months of 1996 and 1995,
respectively.
Note H - Net Income Per Share
- -----------------------------
For the second quarter of 1996 and 1995, the weighted average number of common
shares used to calculate income per share was 8,614,011 and 8,513,256, and for
the first six months of 1996 and 1995 was 8,595,113 and 8,494,280, 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 $81.8 million for the second quarter ended March 3, 1996 were equal
to the prior year second quarter. Flow Control Products' sales increased 3.1% to
$38.1 million primarily due to the retention of Flagg Brass, which was reported
as a discontinued operation in 1995. Engineered Components' sales declined 2.5%
to $43.7 million primarily due to sales price adjustments resulting from lower
aluminum costs. For the first six months of fiscal 1996, net sales were $168.3
million, up 6.0% from the comparable prior year period. Flow Control Products'
sales rose 5.2% to $76.4 million as higher volumes and improved pricing
contributed equally to the increase. The volume increase reflects sales of $4
million by Flagg Brass, a retained operation in 1996. Engineered Components'
sales increased 6.6% to $91.8 million primarily due to higher volumes of wheels.
Gross profit for the second quarter of fiscal 1996 and 1995 was $16.6 million
and $17.1 million, respectively. Gross profit as a percent of sales for the
second quarter of 1996 was 20.3% compared to 20.9% in 1995. These decreases are
primarily attributable to a change in the sales mix to lower margin products in
the Flow Control segment and production inefficiencies due to lower volumes of
automotive components, other than wheels, in the Engineered Components segment.
Gross profit for the first six months of fiscal 1996 increased to $34.0 million
from $32.7 million due to higher sales. As a percent of sales, the year-to-date
gross profit was 20.2% compared to 20.6% for the prior year.
Selling, general and administrative expenses for the second quarter of $10.3
million, rose $.2 million from the second quarter of 1995 to support business
expansion activities. Year-to-date selling, general and administrative expenses,
as a percent of sales, were 12.5% in both 1996 and 1995.
For the second quarter of fiscal years 1996 and 1995, interest expense was $.4
million. Current year-to-date interest expense is $.8 million compared to $.7
million in fiscal 1995. This increase is 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
Results by Business Segment (unaudited)
- ---------------------------------------
(dollars in thousands)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------------------- -------------------------------
March 3 February 26 March 3 February 26
1996 1995 1996 1995
-------------- -------------- -------------- --------------
Net Sales
- ---------
<S> <C> <C> <C> <C>
Flow Control Products $ 38,116 $ 36,964 $ 76,435 $ 72,647
Engineered Components 43,680 44,791 91,826 86,106
-------------- -------------- -------------- --------------
$ 81,796 $ 81,755 $ 168,261 $ 158,753
============== ============== ============== ==============
Income Before Income Taxes
- --------------------------
Flow Control Products $ 6,121 $ 6,722 $ 12,067 $ 12,458
Engineered Components 1,709 1,963 4,327 3,819
Corporate Expense (1,436) (1,648) (3,202) (3,233)
Interest Expense (351) (353) (813) (699)
-------------- -------------- -------------- --------------
$ 6,043 $ 6,684 $ 12,379 $ 12,345
============== ============== ============== ==============
</TABLE>
Flow Control Products' operating income in the second quarter of $6.1 million
was down 8.9% primarily due to lower margins resulting from the change in
product mix. Engineered Components' operating income of $1.7 million decreased
$.3 million as gains from higher wheel volumes were offset by reduced demand for
other automotive components. Year-to-date Flow Control Products' operating
income declined by 3.1% from fiscal 1995 primarily due to unfavorable product
mix. Engineered Components' six-month operating income increased $.5 million or
13.3% from the prior year primarily due to higher wheel sales and prices offset
by lower volume for other automotive components and spending.
Capital Resources and Liquidity
- -------------------------------
For the first half of fiscal 1996, net cash provided by operations was $9.3
million compared to cash used by operations of $3.4 million for the first six
months of fiscal 1995. In the current year, cash provided by net income and
depreciation was partially offset by a $6.8 million increase in working capital.
In the prior year, cash provided by net income and depreciation was offset by an
increase in working capital of $18.6 million.
Capital expenditures were $27.5 million and $10.5 million for the six-month
period of fiscal 1996 and 1995, respectively. At March 3, 1996, the Company had
$20.1 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 31.0% of total capital at March 3, 1996, and 19.3% at August
31, 1995. The increase during the period is due to higher debt levels to fund
business expansion. A private placement of $50 million in senior notes with two
insurance companies was completed on November 7, 1995.
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 March 3, 1996, there were no borrowings under the
Revolving Credit Agreement or 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 March 3, 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 4 - Submission of Matters to a Vote of Security Holders
- ------------------------------------------------------------
a) The annual meeting of shareholders of Amcast Industrial Corporation was held
on December 13, 1995.
b) At the annual meeting, shareholders voted on and approved two proposals.
Those proposals are stated below, together with information concerning the
votes cast.
1. Election of three directors to serve for a term of three years.
Directors elected were Walter E. Blankley, William G. Roth, and
John H. Shuey.
<TABLE>
<CAPTION>
Walter E. William G. Roth John H. Shuey
Blankley
------------------------ ---------------------------- ----------------------------
<S> <C> <C> <C>
Shares For 6,441,905 6,444,138 6,443,385
Shares Withheld 353,411 351,178 351,931
Total 6,795,316 6,795,316 6,795,316
</TABLE>
2. Ratification of the appointment of Ernst & Young LLP as independent
auditors of the Company for the fiscal year ending August 31, 1996.
Shares For 6,756,186
Shares Against 19,944
Shares Abstain 19,186
Total 6,795,316
3. Adoption of Amendment to the Company's 1989 Stock Incentive Plan
increasing the maximum number of shares for which awards may be
granted from 800,000 to 1,200,000.
Shares For 6,143,294
Shares Against 590,865
Shares Abstain 61,157
Total 6,795,316
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 March 3, 1996.
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 16, 1996 By: /s/ J. H. Shuey
------------------- ------------------------------------
John H. Shuey
President and Chief Executive Officer,
Director
(Principle Executive Officer)
Date: April 16, 1996 By: /s/ D. D. Watts
------------------- ------------------------------------
Douglas D. Watts
Vice President, Finance
(Principle Financial Officer)
Date: April 16, 1996 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-31-1996
<PERIOD-START> SEP-01-1995
<PERIOD-END> MAR-03-1996
<CASH> 7,855
<SECURITIES> 0
<RECEIVABLES> 47,248
<ALLOWANCES> 216
<INVENTORY> 52,444
<CURRENT-ASSETS> 116,380
<PP&E> 227,180
<DEPRECIATION> 102,059
<TOTAL-ASSETS> 263,486
<CURRENT-LIABILITIES> 54,628
<BONDS> 62,745
<COMMON> 8,616
0
0
<OTHER-SE> 121,922
<TOTAL-LIABILITY-AND-EQUITY> 263,486
<SALES> 168,261
<TOTAL-REVENUES> 168,261
<CGS> 134,252
<TOTAL-COSTS> 155,260
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 813
<INCOME-PRETAX> 12,379
<INCOME-TAX> 4,407
<INCOME-CONTINUING> 7,972
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,972
<EPS-PRIMARY> .93
<EPS-DILUTED> .93
</TABLE>
