<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 December 1, 1996 Commission File Number 1-9967
---------------- ------
AMCAST INDUSTRIAL CORPORATION
------------------------------------------------------
(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 937) 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 December 1, 1996 -
8,632,614 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 - December 1, 1996 and August 31, 1996
Consolidated Condensed Statements of Income - 4
for the Quarters Ended December 1, 1996
and December 3, 1995
Consolidated Condensed Statements of Retained Earnings - 4
for the Quarters Ended December 1, 1996
and December 3, 1995
Consolidated Condensed Statements of Cash Flows - 5
for the Quarters Ended December 1, 1996
and December 3, 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 11
Item 6 - Exhibits and Reports on Form 8-K 11
SIGNATURES 12
</TABLE>
-2-
<PAGE> 3
PART I - FINANCIAL INFORMATION
AMCAST INDUSTRIAL CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF FINANCIAL CONDITION
(dollars in thousands)
(unaudited)
<TABLE>
<CAPTION>
December 1 August 31
ASSETS 1996 1996
- ------ ---------- --------
<S> <C> <C>
Current Assets
Cash and cash equivalents $ 2,953 $ 5,413
Accounts receivable 47,514 50,407
Inventories:
Finished products 25,323 21,049
Work-in-process 13,032 13,389
Raw materials and supplies 10,907 10,583
--------- ---------
49,262 45,021
Other current assets 9,697 8,380
--------- ---------
Total current assets 109,426 109,221
Property, Plant and Equipment 253,660 245,001
Less allowances for depreciation (110,790) (106,395)
--------- ---------
142,870 138,606
Other Assets 21,454 21,390
--------- ---------
$ 273,750 $ 269,217
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Current Liabilities
Accounts payable $ 28,957 $ 30,750
Short-term borrowings and current portion
of long-term debt 3,605 1,105
Accrued expenses, compensation and
related items and other current liabilities 20,714 19,592
--------- ---------
Total current liabilities 53,276 51,447
Long-Term Debt--less current portion 57,908 58,783
Deferred Income Taxes 13,541 12,126
Deferred Liabilities 9,637 10,697
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--8,632,614 shares
(8,618,491 at August 31, 1996) 8,633 8,618
Capital in excess of stated value 65,253 65,003
Retained earnings 65,502 62,543
--------- ---------
139,388 136,164
--------- ---------
$ 273,750 $ 269,217
========= =========
</TABLE>
See notes to consolidated condensed financial statements.
-3-
<PAGE> 4
AMCAST INDUSTRIAL CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
AND RETAINED EARNINGS
(dollars in thousands except per share amounts)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended
------------------
December 1 December 3
1996 1995
---------- ---------
<S> <C> <C>
Consolidated Condensed Statements of Income
- -------------------------------------------
Net sales $ 90,789 $ 86,465
Cost of sales 71,684 69,046
-------- --------
Gross profit 19,105 17,419
Selling, general and administrative expenses 10,290 10,703
-------- --------
Operating income 8,815 6,716
Equity in (loss) income of joint venture
and other income, net (1,277) 82
Interest expense 1,123 462
-------- --------
Income before income taxes 6,415 6,336
Income taxes 2,277 2,281
-------- --------
Net Income $ 4,138 $ 4,055
======== ========
Consolidated Condensed Statements of
- ------------------------------------
Retained Earnings
- -----------------
Beginning retained earnings $ 62,543 $ 51,474
Net income 4,138 4,055
Dividends (1,208) (1,205)
Other 29 (21)
-------- --------
Ending Retained Earnings $ 65,502 $ 54,303
======== ========
Per Share Information
- ---------------------
Net income per share $ .48 $ .47
======== ========
Dividends declared per share $ .14 $ .14
======== ========
Dividends paid per share $ .14 $ .14
======== ========
</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>
Three Months Ended
-----------------------
December 1 December 3
1996 1995
----------- ----------
<S> <C> <C>
Operating Activities:
Net income $ 4,138 $ 4,055
Depreciation 5,023 4,484
Deferred liabilities 355 (413)
Changes in assets and liabilities:
- Receivables 2,893 (1,146)
- Inventories (4,241) (3,904)
- Accounts payable (1,793) 2,490
- Other (195) 1,787
-------- --------
Net Cash Provided By Operating Activities 6,180 7,353
Investing Activities:
Additions to property, plant, and equipment (8,876) (14,903)
Contribution to joint venture (2,026)
Other 1,551 (71)
-------- --------
Net Cash Used By Investing Activities (9,351) (14,974)
Financing Activities:
Additions to long-term debt 50,000
Reduction in long-term debt (875) (20,674)
Short-term borrowings and current portion
of long-term debt 2,500 (563)
Dividends (1,208) (1,205)
Other 294 689
-------- --------
Net Cash Provided By Financing Activities 711 28,247
-------- --------
Net change in cash and cash equivalents (2,460) 20,626
Cash and cash equivalents at beginning of period 5,413 1,286
-------- --------
Cash and Cash Equivalents at End of Period $ 2,953 $ 21,912
======== ========
</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 $268
at December 1, 1996 and $233 at August 31, 1996.
Note C - Inventories
- --------------------
Certain inventories are presented net of the appropriate LIFO reserve.
Note D - Other Assets
- ---------------------
The major components are:
<TABLE>
<CAPTION>
December 1 August 31
1996 1996
---------- ---------
<S> <C> <C>
Assets held for sale $ 3,264 $ 3,425
Investment in joint venture 10,322 9,639
Other assets 7,868 8,326
---------- ---------
$ 21,454 $ 21,390
========== =========
</TABLE>
<TABLE>
<CAPTION>
Note E - Long-Term Debt
- -----------------------
The following table summarizes the Company's borrowings:
December 1 August 31
1996 1996
---------- ---------
<S> <C> <C>
Senior notes $52,625 $53,500
Lines of credit - notes payable 2,500
Industrial revenue bonds 6,388 6,388
------- -------
Total Obligations 61,513 59,888
Less short-term borrowings and current portion
of long-term debt 3,605 1,105
------- -------
$57,908 $58,783
======= =======
</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 December 1, 1996, the Company has committed to capital expenditures of $12.1
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
December 1, 1996, the Company's accrued undiscounted reserve for such
contingencies was $2.1 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.
-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 36.0% for the first quarter of
fiscal 1997 and 1996, respectively.
Note H - Net Income Per Share
- -----------------------------
For the first quarter of 1997 and 1996, the weighted average number of common
shares used to calculate income per share was 8,624,864 and 8,576,817,
respectively.
-8-
<PAGE> 9
AMCAST INDUSTRIAL CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Operating Results
- -----------------
Net sales increased 5% to $90.8 million in the first quarter ended December 1,
1996 as sales of Flow Control Products were up slightly and Engineered
Components' sales rose 7.9% compared to the first quarter ended December 3,
1995.
Gross profit for the first quarter of fiscal 1997 rose 9.7 percent to $19.1
million from $17.4 million in fiscal 1996. The gross profit percentage for the
first quarter of 1997 increased to 21.0% from 20.1% in the prior year's first
quarter due to cost reductions coupled with higher sales volumes and increased
capacity utilization.
The selling, general and administrative expenses for the first quarter were
$10.3 million, down $.4 million due to reduced technical program and development
expenses. The selling, general and administrative expenses were 11.3% of sales
in the current quarter, down from 12.4% due to the reduced spending levels and
higher sales volumes.
Operating income increased 31.3% to $8.8 million in the current quarter due to
higher sales volumes and lower selling, general and administrative expenses as
discussed above.
Casting Technology Company, the Company's joint venture with Izumi Industries,
launched several new products and experienced an unusually steep production
ramp-up. Higher launch costs in the form of low productivity and high scrap
rates experienced earlier in the quarter had a negative impact on income. The
Company's equity in the joint venture's loss was $1.3 million in the first
quarter.
In the current quarter, interest expense increased to $1.1 million, compared to
$.5 million in the first quarter of fiscal 1996 due to higher debt levels. The
private placement of a $50 million senior note was executed in November 1995.
The debt proceeds were used to retire bank debt and fund business expansion.
<TABLE>
<CAPTION>
Results by Business Segment (unaudited)
- ---------------------------------------
(dollars in thousands) Three Months Ended
------------------------
December 1 December 3
1996 1995
---- ----
<S> <C> <C>
Net Sales
- ---------
Flow Control Products $ 38,832 $ 38,319
Engineered Components 51,957 48,146
-------- --------
$ 90,789 $ 86,465
======== ========
Income Before Income Taxes
- --------------------------
Flow Control Products $ 6,932 $ 5,946
Engineered Components 3,755 2,618
Corporate Expense (1,872) (1,848)
Equity in (loss) income of joint venture
and other income, net (1,277) 82
Interest Expense (1,123) (462)
-------- --------
$ 6,415 $ 6,336
======== ========
</TABLE>
-9-
<PAGE> 10
AMCAST INDUSTRIAL CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS - CONTINUED
In the Flow Control Products segment, sales and operating income ($38.8 million
and $6.9 million, respectively) reflect continued cost reductions coupled with
high operating rates and strong demand for the Company's copper and brass
fittings. Operating margins in this segment increased to 17.9% from 15.5% in the
comparable period of fiscal 1996.
Sales in the Engineered Components segment rose from $48.1 million in the first
quarter of 1996 to $52.0 million, primarily due to higher volumes of suspension
components, aluminum wheels, and aerospace products. Operating income rose to
$3.8 million from $2.6 million. Both sales and earnings were affected by demand
curtailments for some automotive products resulting from work stoppages at the
Company's largest automotive customer, General Motors. Despite the volume
shortfall, planned cost reductions coupled with higher capacity utilization at
several components plants resulted in margin improvements of this segment.
Operating margins increased to 7.2% from 5.4% in the same period last year.
Capital Resources and Liquidity
- -------------------------------
In the current quarter, net cash provided by operations was $6.2 million
compared to $7.4 million for the first three months of fiscal 1996. In both 1997
and 1996, cash provided by net income and depreciation was partially offset by
an increase in working capital of $3.3 million and $.8 million, respectively.
Capital expenditures were $8.9 million and $14.9 million for the three-month
period of fiscal 1997 and 1996, respectively. At December 1, 1996, the Company
had $12.1 million of commitments for additional capital expenditures, primarily
for the Engineered Components segment.
Long-term debt was 29.4% of total capital at December 1, 1996, and 30.2% at
August 31, 1996. The current portion of debt increased $2.5 million at December
1, 1996 due to borrowings against short-term credit lines to partially finance
the increase in working capital.
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 under which it may borrow up to $25 million. At December 1, 1996, there
were no borrowings under the Revolving Credit Agreement and $2.5 million
outstanding under available 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.
-10-
<PAGE> 11
AMCAST INDUSTRIAL CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS - CONTINUED
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 December 1, 1996, the Company had accrued reserves of
$2.1 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.
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, 1996.
Item 6 - Exhibits and Reports on Form 8-K
- -----------------------------------------
a) Exhibits
--------
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
December 1, 1996.
-11-
<PAGE> 12
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: January 15, 1997 By: /s/J. H. Shuey
---------------- --------------------------
John H. Shuey
President and Chief Executive
Officer, Director
(Principal Executive Officer)
Date: January 15, 1997 By: /s/D. D. Watts
---------------- --------------------------
Douglas D. Watts
Vice President, Finance
(Principal Financial Officer)
Date: January 15, 1997 By /s/W. L. Bown
---------------- ---------------------------
William L. Bown
Vice President and Controller
(Principal Accounting Officer)
-12-
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> AUG-31-1997
<PERIOD-START> SEP-01-1996
<PERIOD-END> DEC-01-1996
<CASH> 2,953
<SECURITIES> 0
<RECEIVABLES> 47,782
<ALLOWANCES> 268
<INVENTORY> 49,262
<CURRENT-ASSETS> 109,426
<PP&E> 253,660
<DEPRECIATION> 110,790
<TOTAL-ASSETS> 273,750
<CURRENT-LIABILITIES> 53,276
<BONDS> 61,513
<COMMON> 8,633
0
0
<OTHER-SE> 130,755
<TOTAL-LIABILITY-AND-EQUITY> 273,750
<SALES> 90,789
<TOTAL-REVENUES> 90,789
<CGS> 71,684
<TOTAL-COSTS> 81,974
<OTHER-EXPENSES> 1,277
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,123
<INCOME-PRETAX> 6,415
<INCOME-TAX> 2,277
<INCOME-CONTINUING> 4,138
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,138
<EPS-PRIMARY> .48
<EPS-DILUTED> .48
</TABLE>
