<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A-1
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) August 19, 1997
---------------
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)
<TABLE>
<CAPTION>
<S> <C> <C>
Ohio 1-9967 31-0258080
- - -------------------------------------------------------------------------------------
(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of Incorporation) Identification No.)
</TABLE>
7887 Washington Village Drive, Dayton, Ohio 45459
- - --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (937) 291-7000
- - --------------------------------------------------------------------------------
(Former name or address, if changed since last report)
<PAGE> 2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
- - ------- -------------------------------------
A Share Purchase Agreement (the "Agreement") was entered into on July 21,
1997 among Amcast Industrial Corporation, as purchaser ("Amcast"), and Speedline
International Holding B.V., a Netherlands corporation, Gerance S.A., a Swiss
corporation, San Marco Finanziaria S.p.A., an Italian corporation, Antonio
Zacchello, Giancarlo Zacchello, Gianni Zacchello, Franco Zacchello and Graziella
Zacchello, as sellers (the "Sellers"). Sellers owned all of the outstanding
shares of capital stock of Speedline S.p.A., ("Speedline"). Pursuant to the
Agreement, Amcast, indirectly through its wholly owned subsidiaries, acquired
from Sellers on August 19, 1997 all of the outstanding capital stock of
Speedline (the "Speedline Shares").
Speedline and its subsidiaries (Speedcast B.V., a Netherlands corporation;
Speedline Alumina S.p.A., an Italian corporation; Speedline Engineering S.p.A.,
an Italian corporation; Speedline Competition S.r.l., an Italian corporation,
Autolambro S.r.l., an Italian corporation; Alustampi S.r.l., an Italian
corporation, Speedline UK Limited, an English corporation, Speedline France
S.a.r.l., a French corporation; and SL Wheels, Inc., a Michigan corporation) are
engaged in the business of designing, manufacturing, and marketing aluminum,
magnesium and alloy wheels and hubcaps and other products for the automotive
industry. Speedline and such listed subsidiaries are herein referred to as the
Acquired Companies. Amcast intends to continue the businesses of the Acquired
Companies.
The purchase price paid or payable to Sellers for the Speedline Shares in
U.S. $133.3 million (the "Purchase Price"), subject to adjustment based on the
net worth of the Acquired Companies as of August 19, 1997 (the "Closing Date")
and the amount of indebtedness existing as of the Closing Date, all as shown on
the audited closing statement prepared in accordance with Section 2.4 of the
Agreement. The Purchase Price consists of the following payments (i) U.S. $48.5
million paid on the Closing Date; (ii) delivery into escrow of 478,240 common
shares of Amcast having a value of U.S. $12.5 million (calculated on the basis
of the average closing price per share of the common shares of Amcast on the New
York Stock Exchange for the 20-day trading period ended July 25, 1997); (iii)
U.S. $4.0 million, together with interest from the Closing Date, payable on May
19, 1998; and (iv) an additional U.S. $4.0 million, payable on December 31,
1999, together with interest, provided that the Acquired Companies' financial
performance for the 12-month period ending December 31, 1997 meets certain
criteria specified in the Agreement; (v) U.S. $4.1 million paid for related
transaction costs; and (vi) assumption of U.S. $60.2 million of indebtedness.
In connection with the purchase, Amcast entered into a Credit Agreement,
dated August 14, 1997, with Keybank National Association, (the "Credit
Agreement"). The Credit Agreement provides for up to a maximum of $200 million
in revolving credit loans during the commitment period ending August 14, 2002,
subject to the Bank's right to reduce or terminate the commitment period as
provided in the Credit Agreement. On August 15, 1997, Amcast borrowed
approximately $50.0 million under the Credit Agreement as a source of funds
for the purchase of the Acquired Companies.
2
<PAGE> 3
STATEMENT
---------
Amcast Industrial Corporation (the "Company") filed with the Commission a
Current Report on Form 8-K, dated August 19, 1997. At Item 7 of such Report, the
Company indicated that it would file audited historical statements of the
business acquired and pro forma financial information on or before November 3,
1997. Set forth below is Item 7 of such Report restated in its entirety to
include the financial statements and pro forma financial information being filed
with this Amendment A-1.
<TABLE>
<CAPTION>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS. Page
----
<S> <C> <C>
(A) Financial statements of business acquired. The following audited financial
statements include Speedline S.p.A. and its subsidiaries (hereinafter referred
to as "Speedline"):
(1) Report of Independent Auditors 4
(2) Consolidated Balance Sheets of Speedline as of
December 31, 1996 and 1995. 5
(3) Consolidated Statements of Income of Speedline
for the years ended December 1996, 1995 and 1994. 7
(4) Consolidated Statement of Cash Flows of Speedline
for the years ended December 31, 1996, 1995 and 1994. 8
(5) Consolidated Statements of Shareholders' Equity
(Deficit) of Speedline for the years ended December 31, 1996, 1995
and 1994. 9
(6) Notes to Consolidated Financial Statements 10
(B) Unaudited Pro forma financial information - Amcast Industrial Corporation
(1) Pro Forma Consolidated Balance Sheet at June 1, 1997. 29
(2) Notes to the Pro Forma Consolidated Balance Sheet 30
(3) Pro Forma Consolidated Statement of Income for the year
ended August 31, 1996. 32
(4) Notes to the Pro Forma Consolidated Statement of
Income for the year ended August 31, 1996. 33
(5) Pro Forma Consolidated Statement of Income for the
nine-month period ended June 1, 1997. 34
(6) Notes to the Pro Forma Consolidated Statement of Income
for the nine-month period ended June 1, 1997 35
(C) Index to Exhibits.
23.1 Consent of Independent Auditors 37
</TABLE>
3
<PAGE> 4
REPORT OF INDEPENDENT AUDITORS
To the Shareholders of
Speedline S.p.A.
We have audited the accompanying consolidated balance sheets of Speedline S.p.A.
and subsidiaries as of December 31, 1996 and 1995, and the related consolidated
statements of income, shareholders' equity (deficit) and cash flows for each of
the three years in the period ended December 31, 1996. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Speedline S.p.A. and subsidiaries as of December 31, 1996 and 1995, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1996, in conformity with accounting
principles generally accepted in the United States of America.
RECONTA ERNST & YOUNG S.P.A.
Padua, Italy
October 20, 1997
4
<PAGE> 5
SPEEDLINE S.P.A. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31
(In millions of Italian lire ("Lit."), unless otherwise stated)
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1996 1995
------------ -------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents 9,261 13,925
Accounts receivable, trade, net of allowances
for doubtful accounts and discounts of
Lit. 1,557 (1995 - Lit. 1,015) 66,769 63,753
Accounts receivable, related parties 21,693 37,054
Inventories (Note 3) 42,100 45,818
Prepaid expenses and other current assets 10,357 7,257
------------ -------------
Total current assets 150,180 167,807
Property, plant and equipment (Notes 8 and 11):
Land and buildings 28,746 25,299
Plant, machinery and equipment 153,748 134,157
Office furniture and equipment 5,487 4,757
Vehicles 2,678 2,402
Construction in progress 2,261 2,405
------------ -------------
192,920 169,020
Less accumulated depreciation (105,141) (91,101)
------------ -------------
Property, plant and equipment, net 87,779 77,919
Intangible assets, net of accumulated amortization
of Lit. 1,579 (1995 - Lit. 1,219) 310 292
Investments 132 1,145
Other non-current assets 1,160 334
------------ -------------
TOTAL ASSETS 239,561 247,497
============ =============
</TABLE>
See accompanying notes
5
<PAGE> 6
SPEEDLINE S.P.A. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31
(In millions of Italian lire ("Lit."), unless otherwise stated)
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS'
EQUITY (DEFICIT)
Current liabilities:
Bank borrowings (Note 4) 95,631 88,219
Factor borrowings (Note 5) 5,740 3,790
Current portion of long-term debt (Note 8) 6,199 6,607
Current maturities of capitalized lease
obligations (Note11) 3,589 2,897
Accounts payable, trade 56,943 47,392
Due to related parties 12,435 35,394
Accrued expenses (Note 6) 18,613 31,189
------------ ------------
Total current liabilities 199,150 215,488
Termination indemnities (Note 7) 14,335 12,525
Long-term debt, less current portion (Note 8) 14,947 21,146
Capital lease obligations (Note 11) 11,652 6,717
Deferred income taxes (Note 9) 1,134 853
Shareholders' equity (deficit) (Note 10):
Capital stock, at December 31, 1996 and 1995
30,000,000 ordinary shares
authorized, issued and outstanding,
par value 1,000 lire per share 30,000 30,000
Additional paid-in capital 8,820 8,820
Deficit (40,477) (48,052)
------------ ------------
Total shareholders' equity (deficit) (1,657) (9,232)
------------ ------------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY (DEFICIT) 239,561 247,497
============ ============
</TABLE>
See accompanying notes
6
<PAGE> 7
SPEEDLINE S.P.A. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
For the years ended December 31
(In millions of Italian lire ("Lit."), unless otherwise stated)
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1996 1995 1994
------------ ------------ ------------
<S> <C> <C> <C>
NET SALES 296,643 266,713 212,235
COST OF SALES 257,755 224,522 174,230
------------ ------------ ------------
GROSS PROFIT 38,888 42,191 38,005
OPERATING EXPENSES
General and administrative expenses 11,788 10,998 8,982
Selling expenses 12,627 9,708 10,312
------------ ------------ ------------
24,415 20,706 19,294
------------ ------------ ------------
INCOME FROM OPERATIONS 14,473 21,485 18,711
OTHER (INCOME) EXPENSES
Interest expense 12,251 12,498 10,704
Interest income (1,380) (2,024) (1,687)
Other (income) expenses, net (5,254) (1,354) 7,357
------------ ------------ ------------
5,617 9,120 16,374
------------ ------------ ------------
INCOME BEFORE INCOME TAXES 8,856 12,365 2,337
INCOME TAXES (Note 9) 1,281 1,315 847
------------ ------------ ------------
NET INCOME 7,575 11,050 1,490
============ ============ ============
</TABLE>
See accompanying notes
7
<PAGE> 8
SPEEDLINE S.P.A. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended December 31
(In millions of Italian lire ("Lit."), unless otherwise stated)
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1996 1995 1994
---------------- --------------- ----------------
<S> <C> <C> <C>
Cash flows from operating activities
Net income 7,575 11,050 1,490
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 17,392 14,856 12,248
Amortization 360 211 212
Provision for doubtful accounts 753 415 374
Deferred income taxes 281 363 199
Other, non-cash items 39 (2,850) (1,687)
Provision for termination indemnities 2,694 2,842 2,228
Changes in operating assets and liabilities:
Accounts receivable (3,959) (3,343) (11,969)
Accounts receivable/due to-related parties (7,597) (532) (16,472)
Inventories 3,718 (13,877) 6,256
Accounts payable 9,551 3,603 14,636
Other, net (16,929) 10,940 (3,234)
Payment of termination indemnities (884) (942) (680)
---------------- --------------- ----------------
Net cash provided by operating activities 12,994 22,736 3,601
---------------- --------------- ----------------
Cash flows from investing activities
Additions to property, plant and equipment (42,777) (27,504) (19,162)
Proceeds from disposal of property, plant and
equipment 17,115 7,392 3,642
Additions to intangible assets (378) (135) (100)
---------------- --------------- ----------------
Net cash used in investing activities (26,040) (20,247) (15,620)
---------------- --------------- ----------------
Cash flows from financing activities
Net change in short-term borrowings and factor debt 9,362 (2,056) 6,409
Proceeds from long-term debt and capital lease
obligations 9,504 10,334 5,455
Repayment of long-term debt and capital lease
obligations (10,484) (10,298) (5,869)
Additional paid-in capital -- -- 8,820
---------------- --------------- ----------------
Net cash provided by (used in) financing 8,382 (2,020) 14,815
activities
---------------- --------------- ----------------
Increase (decrease) in cash and cash equivalents (4,664) 469 2,796
Cash and cash equivalents at beginning of the year 13,925 13,456 10,660
---------------- --------------- ----------------
Cash and cash equivalents at end of the year 9,261 13,925 13,456
================ =============== ================
Supplemental Information:
Interest paid 12,251 12,498 10,704
Income taxes paid 1,225 883 152
</TABLE>
See accompanying notes
8
<PAGE> 9
SPEEDLINE S.P.A. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)
For the years ended December 31
(In millions of Italian lire ("Lit."), unless otherwise stated)
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ADDITIONAL
SHARE PAID-IN
CAPITAL CAPITAL DEFICIT TOTAL
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Balance at December 31, 1993 30,000 -- (60,592) (30,592)
Additional paid-in capital -- 8,820 -- 8,820
Net income for 1994 -- -- 1,490 1,490
------------ ------------ ------------ ------------
Balance at December 31, 1994 30,000 8,820 (59,102) (20,282)
Net income for 1995 -- -- 11,050 11,050
------------ ------------ ------------ ------------
Balance at December 31, 1995 30,000 8,820 (48,052) (9,232)
Net income for 1996 -- -- 7,575 7,575
------------ ------------ ------------ ------------
Balance at December 31, 1996 30,000 8,820 (40,477) (1,657)
============ ============ ============ ============
</TABLE>
See accompanying notes
9
<PAGE> 10
1. SPEEDLINE S.P.A. AND OTHER COMPANIES OF THE WHEELS SEGMENT ("SPEEDLINE
GROUP")
BUSINESS ACTIVITY
The Speedline Group designs, manufactures and markets high-quality aluminum and
magnesium alloy wheels principally for sale to original equipment manufacturers
in the transportation industry and also for sale to the after-market and racing
markets.
REORGANIZATION
At December 31, 1996, the companies forming the Speedline Group (see Note 2 for
the list of companies) were controlled or participated in directly or indirectly
by members of the Zacchello family of Venice, Italy. In April 1997, the
ownership interests of the Zacchello family in the individual Speedline Group
companies were reorganized in order to consolidate the Speedline Group under the
direct and 100% legal ownership of Speedline S.p.A. for its subsequent sale.
After the reorganization, Speedline S.p.A. remains directly or indirectly
controlled by members of the Zacchello family.
The corporate reorganization gave rise to a new holding company, Speedcast B.V,
incorporated in Amsterdam, The Netherlands, having nominal share capital and
being directly owned by Speedline S.p.A. after the reorganization. Speedcast
B.V. was constituted for the purpose of holding the investments in the other
companies of the Speedline Group.
The corporate reorganization involved Speedcast B.V. acquiring the 100% interest
in the other group companies. Subsequently, Speedcast B.V. was acquired by
Speedline S.p.A. from a Zacchello family holding company.
These consolidations of interests have been accounted for as a reorganization
under common control under which it is assumed that the companies have been
combined for all periods presented. Consequently, the carrying amounts of the
assets and liabilities of the entities combined were not adjusted at their
transfer dates in accounting for the reorganization.
The Speedcast B.V. acquisition of the other Speedline Group companies in April
1997 was at a price in excess of the related companies' net assets at December
31, 1996. The excess of the purchase price over the net assets has been treated
as a deemed dividend in the years presented.
10
<PAGE> 11
BASIS OF PRESENTATION
The consolidated balance sheets of Speedline S.p.A. and subsidiaries as of
December 31, 1996 and 1995, and the related consolidated statements of income,
shareholders' equity (deficit) and cash flows for each of the three years in the
period ended December 31, 1996 have been prepared on a consolidated basis
assuming the retroactive application of the reorganization in April 1997 of the
Speedline Group to the years presented.
2. SIGNIFICANT ACCOUNTING POLICIES
The accounting policies and valuation methods of the Speedline Group have been
consistently applied for the years presented.
PRINCIPLES OF CONSOLIDATION
The entities included in the accompanying consolidated financial statements and
the related equity ownership interest after the reorganization in April 1997,
retroactively applied to the years presented, are as follows:
<TABLE>
<CAPTION>
NAME CITY, COUNTRY OWNERSHIP %
- - ------------------------------------------ ----------------------------------------- ----------------
<S> <C> <C>
Speedline S.p.A. Santa Maria di Sala, Venice, Parent Company
Italy
Speedcast B.V. Amsterdam, The Netherlands 100%
Speedline Aluminia S.p.A. Bolzano, Italy 100%
Speedline Engineering S.p.A. Santa Maria di Sala, Venice, 100%
Italy
Speedline Competition S.r.l. Tabina di Santa Maria di Sala, 100%
Venice, Italy
Autolambro S.r.l. Venice, Italy 100%
Alustampi S.r.l. Santa Maria di Sala, Venice 100%
Italy
Speedline UK Limited Birmingham, England 100%
Speedline France S.a.r.l. Evry, France 100%
</TABLE>
11
<PAGE> 12
The financial statements used for the consolidation are those approved by the
shareholders of the respective companies forming part of the Speedline Group.
Such financial statements are adjusted, where necessary, to conform with the
Company's accounting policies that are in conformity with accounting principles
generally accepted in the United States of America ("US GAAP").
All significant intercompany transactions and balances are eliminated.
Unrealized intercompany profits and the gains and losses arising from
transactions between Speedline Group companies are also eliminated.
USE OF ESTIMATES
The preparation of the consolidated financial statements in conformity with
generally accepted accounting principles require management to make estimates
and assumptions that affect the amounts reported in the consolidated financial
statements and accompanying notes. Actual results could differ from those
estimates.
FOREIGN CURRENCY TRANSLATION
The financial statements of foreign subsidiaries expressed in foreign currencies
are translated into Italian lire using the year-end exchange rate for balance
sheet items and the average exchange rate for the year for statement of income
items.
FOREIGN CURRENCY TRANSACTIONS
Monetary assets and monetary liabilities denominated in foreign currencies are
recorded at the exchange rates in effect on the relevant transaction dates. Such
assets and liabilities are adjusted to current exchange rates as of the balance
sheet date. Gains and losses are included in income. Long-term monetary assets
and monetary liabilities in foreign currency are adjusted to the current rates
at the balance sheet date.
12
<PAGE> 13
INVENTORIES
Raw materials, manufacturing supplies and goods purchased are valued at the
lower of cost, determined on a weighted average basis for the year, or market.
Finished goods and work-in-process are valued at the lower of manufacturing cost
(comprising direct material, direct labor and applicable manufacturing overhead
including depreciation), determined on a weighted average basis for the year or
net realizable value. Obsolescence provisions are made to the extent that
inventory risks are determinable.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are recorded at historical cost.
Depreciation of plant and equipment is computed on the historical cost of the
relevant asset, using the straight-line method over the estimated useful lives
of the related assets, as follows:
<TABLE>
<S> <C>
Buildings 27 - 33 years
Light construction 13 years
Plant, machinery and equipment 3 - 14 years
Office furniture and equipment 7 - 11 years
Vehicles 4 years
</TABLE>
The amortization of assets under capital lease is included in depreciation
expense.
INTANGIBLE ASSETS
Intangible assets are recorded at historical cost and are amortized, using the
straight-line method, over 5 years.
FACTOR BORROWINGS
Factor borrowing debt is recorded on accounts receivable factored on a
with-recourse basis. The factor borrowing debt is reduced when payment is
received on the related accounts receivable.
INCOME TAXES
Income taxes are provided by each entity included in the consolidation in
accordance with applicable local laws. Deferred income taxes are accounted for
under the liability method and reflect the tax effect of all significant
temporary differences between the tax basis of assets and liabilities and their
reported amounts in the consolidated financial statements.
13
<PAGE> 14
REVENUE RECOGNITION
Revenue from product sales is recognized at the moment of ownership transfer
which is normally at the time of shipment of the product.
DERIVATIVE PRODUCTS
The Company uses derivative products and enters into aluminum forward contracts
and foreign currency forward contracts. These contracts have been
marked-to-market. The effects of movements in aluminum prices and currency
exchange rates on these instruments are recognized on the accrual basis and
unrealized gains and losses are included in earnings.
CONSOLIDATED STATEMENT OF CASH FLOWS
Short-term borrowings arise primarily under the Speedline Group's short-term
lines of credit with its banks. These short-term obligations are payable on
demand. The cash flows from these items are included under the caption "Net
change in short-term borrowings" in the Consolidated Statements of Cash Flows.
3. INVENTORIES
Inventories consist of the following:
<TABLE>
<CAPTION>
1996 1995
---------------- -----------------
<S> <C> <C>
Raw materials and supplies 16,671 15,608
Work-in-process 14,395 11,986
Finished goods 11,034 18,224
---------------- -----------------
Total 42,100 45,818
================ =================
</TABLE>
14
<PAGE> 15
4. SHORT-TERM BANK BORROWINGS
At December 31, 1996 and 1995, the Speedline Group had short-term bank lines of
credit in Italian Lire and foreign currencies and short-term bank loans
aggregating to approximately Lit. 138,500 and Lit. 123,500, respectively. At
December 31, 1996 and 1995, approximately Lit. 36,700 and Lit. 24,100,
respectively, were available for further borrowing. At December 31, 1996 and
1995, the annual weighted average interest rates for the short-term lines of
credit were 6.2% and 8.3%, respectively. Amounts outstanding under these lines
of credits are payable upon demand.
At December 31, 1996, security for the short-term bank borrowings has been
provided in the form of guarantees by certain members of the Zacchello family
and/or companies owned by them in the amount of Lit. 118,500 and the pledge of
cash equivalents in the amount of Lit. 878.
5. FACTOR BORROWINGS
At December 31, 1996 and 1995, the Speedline Group had revolving lines of credit
with various factoring companies aggregating to approximately Lit. 7,300 and
Lit. 5,500, respectively, for the factoring of accounts receivable on a
with-recourse basis. At December 31, 1996 and 1995, approximately Lit. 1,560 and
Lit. 1,710, respectively, were available for further borrowing.
6. ACCRUED EXPENSES
Accrued expenses consist of the following:
<TABLE>
<CAPTION>
1996 1995
---------------- -----------------
<S> <C> <C>
Salaries payable and related social
security contributions 8,086 6,086
Employee taxes withheld 1,105 1,126
Other 9,422 23,977
---------------- -----------------
18,613 31,189
================ =================
</TABLE>
15
<PAGE> 16
7. EMPLOYEE BENEFITS
The liability for termination indemnities relates to the Speedline Group's
employees of its Italian operations. In accordance with the Italian severance
pay statutes, an employee benefit is accrued for service to date and is payable
immediately upon separation. The termination indemnity liability is calculated
in accordance with local civil and labor laws based on each employee's length of
service, employment category and remuneration. The termination liability is
adjusted annually by a cost of living index provided by the Italian Government.
There is no vesting period or funding requirement associated with the liability.
The liability recorded in the balance sheet is the amount that the employees
would be entitled to if the employees separate immediately. The charge to
earnings for 1996, 1995 and 1994 were respectively, Lit. 2,694, Lit. 2,842 and
Lit.2,228.
8. LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
1996 1995
--------------- ----------------
<S> <C> <C>
Mortgage loan payable to bank pool, bearing variable interest at 6
month Lire Libor rate plus 1.5% (8.125% per annum at December 31,
1996); payable in semi-annual installments of Lit. 1,553 through
the year 1999 7,763 10,868
Mortgage loans payable to a bank, bearing interest at annual rates
of 9.2% to 11.175%; payable in installments through the year 2002
3,996 5,759
Loans payable to Italian Ministry of Industry, Commerce and
Artisans, bearing interest at annual rates of 8.82% and 8.88%;
payable in annual installments of principal and interest of Lit.160
and Lit. 405 through the year 2006 3,582 3,651
Loans subsidized by regional government:
- - ---------------------------------------
Mortgage loans payable to the Province of Bolzano, bearing interest
at an annual rate of 3%; payable in installments through the year
2003 5,805 7,475
--------------- ----------------
Total long-term debt 21,146 27,753
Less current portion (6,199) (6,607)
--------------- ----------------
14,947 21,146
=============== ================
</TABLE>
16
<PAGE> 17
The mortgage loans are secured by liens and preference rights on property, plant
and equipment that have a carrying value of approximately Lit. 56,600 at
December 31, 1996.
At December 31, 1996 the maturities of long-term debt over the next five years
are as follows:
<TABLE>
<S> <C>
1997 6,199
1998 5,484
1999 4,010
2000 1,538
2001 1,089
Thereafter 2,826
-----------------
21,146
=================
</TABLE>
9. INCOME TAXES
Income before income taxes and the provision for income taxes consist of the
following for the years ended December 31:
<TABLE>
<CAPTION>
1996 1995 1994
--------------- ---------------- ---------------
<S> <C> <C> <C>
Income before income taxes (principally Italy) 8,856 12,365 2,337
=============== ================ ===============
Provision for income taxes:
Current 1,000 952 648
Deferred 281 363 199
--------------- ---------------- ---------------
1,281 1,315 847
=============== ================ ===============
</TABLE>
17
<PAGE> 18
A reconciliation between the Italian statutory tax rate and the effective
consolidated tax rate is as follows:
<TABLE>
<CAPTION>
1996 1995 1994
--------------- ---------------- ---------------
<S> <C> <C> <C>
Income before income taxes 8,856 12,365 2,337
=============== ================ ===============
Tax at Italian statutory rate of 53.2% 4,711 6,578 1,243
Investment tax credit (371) -- --
Other permanent differences 1,944 1,008 817
Utilization of tax loss carry-forward 56 433 529
Other differences 17 -- --
Change in valuation allowance (5,076) (6,704) (1,742)
--------------- ---------------- ---------------
Provision for income taxes 1,281 1,315 847
=============== ================ ===============
Effective consolidated tax rate 14.5% 10.6% 36.2%
=============== ================ ===============
</TABLE>
To encourage capital investments in Italy, legislation was enacted in 1994 to
enable companies to reduce their taxable income by 50% of the excess of the net
investments made in the years 1994 and 1995 in property, plant and equipment
over the average net investments made in such assets during the prior five
years. The legislation does not require any reduction in the bases of the assets
to compute future tax deductions for depreciation relating to investment credits
granted. As a result of this legislation, the Speedline Group recognized
benefits from the investment credit amounting to Lit. 371 in 1996. This
legislation expired in early 1996.
The Speedline Group has net operating losses of approximately Lit. 6,800
available for carry-forward against future taxable income. These losses expire
from 1997 to 2001.
Tax years for the constituent companies in the Speedline Group are open from
1989 and are subject to review by the pertinent tax authorities. Management and
its legal advisors do not believe that any significant liabilities will arise
from any future tax reviews.
18
<PAGE> 19
Principal items comprising net deferred income tax assets are as follows:
<TABLE>
<CAPTION>
1996 1995
--------------- ----------------
<S> <C> <C>
Inventories 683 2,833
Other current assets 70 70
Property, plant and equipment 4,085 4,209
Intangible assets 6,095 6,616
Accrued liabilities 2,520 4,673
Net operating loss carry-forward 2,516 2,644
--------------- ----------------
Deferred tax assets 15,969 21,045
Less valuation allowance (15,969) (21,045)
--------------- ----------------
Net deferred tax assets -- --
=============== ================
</TABLE>
Deferred tax assets and liabilities for the Italian entities have been
calculated by using the enacted Italian statutory rate of 53.2% (37% for
national income tax, IRPEG, and 16.2% for regional tax, ILOR). In December 1996,
the 1997 Budget Law presented by the Italian State Authorities gave a mandate to
the Government to issue a decree providing for replacing equity tax, certain
other minor taxes and the ILOR tax on pre-tax income at 16.2% rate with a new
regional tax (IRAP). It is contemplated that the IRAP tax will not be calculated
on the basis of a pre-tax income but on the basis of adjusted gross margin (at a
rate to be fixed between a minimum of 3.5% and a maximum of 5.5%). This new IRAP
tax is currently expected to be enacted before the end of 1997 and will apply as
from fiscal year 1998. Since the new tax law has not been enacted at October 20,
1997, it is not possible to make a reasonable estimate as to whether the new tax
law will have a negative or positive effect on the amount of taxation to be paid
by the Company nor the estimate for deferred taxes as of December 31, 1996.
10. SHAREHOLDERS' EQUITY
Italian law requires that 5% of a company's net income be retained as a legal
reserve until such reserve equals 20% of share capital. Included in retained
earnings are legal reserves of Lit. 498 and Lit. 426 at December 31, 1996, and
1995, respectively, pertaining to the Speedline Group's Italian companies. This
reserve is not available for distribution.
Retained earnings which could be available for distribution to shareholders are
those recorded by the Speedline Group's constituent companies in their
individual financial statements. Such retained earnings amount in aggregate to
Lit. 211 at December 31, 1996.
No provision has been made for income taxes on the undistributed earnings of
Speedline Group Italian companies amounting to Lit. 1,241 which would be subject
to equalization taxes of approximately Lit. 660 when dividends are distributed.
Undistributed earnings of foreign subsidiaries are immaterial.
19
<PAGE> 20
Due to operating losses incurred in 1994, pursuant to Italian legal requirements
Speedline S.p.A. has eliminated losses reported for Italian statutory purposes
amounting to Lit. 6,282 against additional capital paid-in by the shareholders.
For U.S. GAAP financial reporting purposes, such operating losses are reflected
as an increase in deficit and the amount of capital used to eliminate such
losses is reflected as additional paid-in capital.
11. COMMITMENTS AND CONTINGENCIES
LEASES
Plant, machinery and equipment includes the following amounts that have been
capitalized under capital leases:
<TABLE>
<CAPTION>
1996 1995
--------------- ----------------
<S> <C> <C>
Plant, machinery and equipment 23,368 15,009
Less allowance for accumulated depreciation (5,073) (3,229)
--------------- ----------------
18,295 11,780
=============== ================
</TABLE>
20
<PAGE> 21
At December 31, 1996, future minimum payments, by year and in the aggregate,
under capital leases and operating leases for facilities with initial or
remaining terms of one year or more consisted of the following:
<TABLE>
<CAPTION>
Capital Operating
Leases Leases
---------------- -----------------
<S> <C> <C>
1997 5,184 910
1998 4,956 905
1999 4,497 905
2000 3,059 900
2001 1,246 765
Thereafter -- 890
--------------- ----------------
Total minimum lease payments 18,942 5,275
=================
Less amount representing interest (3,701)
----------------
Present value of net minimum lease payments 15,241
Less current maturities (3,589)
----------------
Long-term maturities 11,652
================
</TABLE>
The payments on certain capital lease contracts amounting to Lit 1,860 have been
secured by guarantees provided by certain members of the Zacchello family.
LITIGATION
The Speedline Group is involved in legal proceedings arising in the normal
course of business. Management believes that, based on advice of legal counsel,
the outcome of these proceedings will not have any material adverse effect on
the Speedline Group's consolidated financial statements.
DEBTS OF RELATED PARTIES
At December 31, 1996, the Speedline Group has guaranteed the bank debts of
certain Zacchello family companies in the amount of Lit. 11,787 of which cash
equivalents amounting to Lit. 330 have been pledged.
PURCHASE COMMITMENTS
At December 31, 1996, the Speedline Group had committed to the purchase of
approximately 85% of its estimated aluminum needs for 1997.
21
<PAGE> 22
FINANCIAL INSTRUMENTS
Off-balance sheet risk
The Speedline Group enters into forward aluminum contracts and forward foreign
exchange contracts. At December 31, 1996, the Speedline Group had forward
aluminum contracts and forward foreign exchange contracts, all with a maturity
of less than 12 months, amounting to Lit 51,699 (Lit. 49,402 for purchase
commitments and Lit. 2,297 for sales commitments). The table below summarizes
the forward aluminum contracts and the forward foreign exchange contracts by
currency at December 31, 1996:
<TABLE>
<CAPTION>
Contract value
-----------------
<S> <C>
Aluminum (contracts denominated in U.S. Dollars) 39,574
Japanese Yen 1,992
German Marks 990
Swiss Francs 6,846
-----------------
49,402
Swiss Francs 2,297
-----------------
Equivalent in Italian Lire at December 31, 1996 51,699
=================
</TABLE>
At December 31, 1996, an unrealized loss of Lit. 1,204 on forward aluminum
contracts and an unrealized gain of Lit. 781 on forward foreign exchange
contracts have been recognized in the consolidated financial statements.
22
<PAGE> 23
CONCENTRATION OF CREDIT RISKS
Financial investments that potentially subject the Speedline Group to
concentration of credit risks consist principally of trade accounts receivable
and cash equivalents.
The Speedline Group sells products to original equipment automotive
manufacturers primarily in Europe and to the automotive after-market. The
Speedline Group generally does not require collateral with respect to sale
orders and, in addition, it does not insure its receivables against credit loss.
Allowances are maintained for potential credit losses. Sales to the Speedline
Group's four largest customers for the years ended December 31, were as follows:
<TABLE>
<CAPTION>
1996 1995 1994
--------------- ---------------- ---------------
<S> <C> <C> <C>
FIAT 60,900 63,900 33,500
Volkswagen 51,400 39,400 39,500
Mercedes 51,000 22,400 16,400
PSA 22,700 26,900 24,300
--------------- ---------------- ---------------
186,000 152,600 113,700
=============== ================ ===============
</TABLE>
No other individual customer represented 10% or more of sales in each of the
three years in the period ended December 31, 1996.
Trade accounts receivable from these four customers were, respectively, at
December 31, 1996 and 1995:
<TABLE>
<CAPTION>
1996 1995
--------------- ----------------
<S> <C> <C>
FIAT 20,460 23,810
Volkswagen 10,190 6,720
Mercedes 5,310 3,460
PSA 6,230 5,110
--------------- ----------------
42,190 39,100
=============== ================
</TABLE>
23
<PAGE> 24
FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used by the Speedline Group in
estimating its fair value disclosure for financial instruments.
Cash and cash equivalents -- The carrying amount of cash and cash equivalents
reported by the Speedline Group approximates their fair value.
Short- and long-term debt and capital lease obligations -- The carrying amount
of the Speedline Group's borrowings under its short-term credit arrangements
approximates their fair value. The fair values of the Speedline Group's
long-term debt and capital lease obligations are estimated using cash flow
analyses, based on the Speedline Group's incremental borrowing rates for similar
types of borrowing arrangements.
Certain of the Speedline Group's long-term loans are subsidized by government
entities in Italy. The government entities pay a part of these entities'
interest charges thereby reducing the Speedline Group's interest rate to below
market. The fair value of these loans have been determined as being equal to the
carrying amount of the loans, as all companies with investments in the same
region where the Speedline Group has its investments are entitled to such
benefits.
The carrying amounts and fair values of the Speedline Group's financial
instruments at December 31, 1996 and 1995, are as follows:
<TABLE>
<CAPTION>
1996 1995
------------------------------------------------------------
Carrying Fair Carrying Fair
amount value amount value
<S> <C> <C> <C> <C>
Cash and cash equivalents 9,261 9,261 13,925 13,925
Accounts receivable, trade 66,769 66,769 63,753 63,753
Accounts receivable, related parties 21,693 21,693 37,054 37,054
Bank borrowings 95,631 95,631 88,219 88,219
Long-term debt 21,146 21,146 27,753 27,753
Capital lease obligations 15,241 15,241 9,614 9,614
Aluminum forward contracts -- 39,574 -- --
Foreign currency forward contracts -- 12,125 -- --
</TABLE>
24
<PAGE> 25
VALUATION AND QUALIFYING ACCOUNTS
The following table summarizes the changes in accounts receivable and inventory
allowances for the years ended December 31:
<TABLE>
<CAPTION>
Balance at Charged Charged to Balance at
beginning to cost of costs and end of
Description of year sales expenses Deduction year
-------------- -------------- -------------- --------------- --------------
<S> <C> <C> <C> <C> <C>
Year ended December 31,
1994
Deducted from asset accounts:
Allowance for doubtful
accounts 512 -- 374 (173) 713
Reserve for inventory
obsolescence -- -- -- -- --
-------------- -------------- -------------- --------------- --------------
512 -- 374 (173) 713
============== ============== ============== =============== ==============
Year ended December 31,
1995
Deducted from asset accounts:
Allowance for doubtful
accounts 713 -- 415 (113) 1,015
Reserve for inventory
obsolescence -- 150 -- -- 150
-------------- -------------- -------------- --------------- --------------
713 150 415 (113) 1,165
============== ============== ============== =============== ==============
Year ended December 31,
1996
Deducted from asset accounts:
Allowance for doubtful
accounts 1,015 -- 753 (211) 1,557
Reserve for inventory
obsolescence 150 -- -- -- 150
-------------- -------------- -------------- --------------- --------------
1,165 -- 753 (211) 1,707
============== ============== ============== =============== ==============
</TABLE>
25
<PAGE> 26
12. RESEARCH AND DEVELOPMENT AND TRADING ACTIVITIES
The Speedline Group's charge to earnings for research and development in 1996,
1995 and 1994 amounted to approximately Lit. 3,100, Lit. 2,800 and Lit. 3,100,
respectively.
The Speedline Group made a net loss of Lit. 3,754 in 1996, a net gain of Lit.
1,682 in 1995 and no gain or loss in 1994 on trading in forward aluminum
contracts.
13. RELATED PARTY TRANSACTIONS
The Speedline Group, in the normal course of business, sells and purchases
materials, services and assets from companies owned by related parties. The
following summarizes the related party transactions which occurred during each
of the following years ended December 31:
<TABLE>
<CAPTION>
1996 1995 1994
--------------- ---------------- ---------------
<S> <C> <C> <C>
Materials, services and assets sold:
- - ------------------------------------
Net sales 37,015 48,110 32,522
Expenses - costs recovered 497 324 550
Other income 2,569 765 600
Plant and equipment 2,598 -- --
Spin-off of non-wheel sector business 5,482 -- --
--------------- ---------------- ---------------
48,161 49,199 33,672
=============== ================ ===============
Materials, services and assets purchased:
- - -----------------------------------------
Cost of sales 24,574 43,391 11,001
General and administrative expenses 453 371 284
Selling expenses 30 59 124
Other expenses 751 590 374
Plant and equipment 28 -- --
--------------- ---------------- ---------------
25,836 44,411 11,783
=============== ================ ===============
</TABLE>
26
<PAGE> 27
14. INFORMATION BY GEOGRAPHIC AREA
The Speedline Group operates in one business segment, comprising aluminum and
magnesium alloy wheels. All manufacturing facilities and substantially all
distribution of the Speedline Group's products are located and performed in
Italy. The Speedline Group does not have any significant identifiable assets
outside Italy.
Export sales by the Speedline Group from Italy to customers outside Italy were
as follows for the years ended December 31:
<TABLE>
<CAPTION>
1996 1995 1994
---------------- ---------------- ---------------
<S> <C> <C> <C>
Rest of Europe 176,200 151,200 136,800
Rest of the world 11,000 5,500 2,300
---------------- ---------------- ---------------
187,200 156,700 139,100
================ ================ ===============
</TABLE>
15. SUBSEQUENT EVENTS
In February 1997, a new company, SL Wheels, Inc. was incorporated in Michigan,
USA, and is wholly-owned by Speedcast B.V..
On August 19, 1997, 100% of the share capital of Speedline S.p.A. and, thereby,
the Speedline Group, was acquired by Amcast Industrial Corporation, of Dayton,
Ohio, USA.
Subsequent to the acquisition of Speedline S.p.A. by Amcast Industrial
Corporation, certain members of the Zacchello family and/or companies owned by
them, have undertaken to retract the guarantees they provided as security on
short-term bank borrowings.
At October 20, 1997 the Speedline Group had no open forward currency contracts
and had open forward aluminum contracts totaling approximately Lit. 7,300 and an
unrealized loss thereon of approximately Lit. 96.
27
<PAGE> 28
AMCAST INDUSTRIAL CORPORATION
Pro Forma Consolidated Financial Information
(In thousands, except per share data)
(Unaudited)
On August 19, 1997 (the "Closing Date"), Amcast Industrial Corporation (the
"Company") acquired all of the outstanding capital stock of Speedline S.p.A.
("Speedline"). The total purchase price paid or payable, including assumed
indebtedness, was $133,300 (the "Purchase Price"), subject to adjustment based
on the net worth of Speedline as of the Closing Date and the amount of
indebtedness existing as of the Closing Date, all as shown on the audited
closing statement prepared in accordance with Section 2.4 of the purchase
agreement. The Purchase Price consists of the following payments (i) U.S.
$48,500 paid on the Closing Date; (ii) delivery into escrow of 478,240 common
shares of the Company having a value of U.S. $12,500 (calculated on the basis
of the average closing price per share of the common shares of the Company on
the New York Stock Exchange for the 20-day trading period ended July 25, 1997;
(iii) U.S. $4,000, together with interest from the Closing Date, payable on May
19, 1998; (iv) an additional U.S. $4,000, payable on December 31, 1999,
together with interest, provided that Speedline's financial performance for the
twelve months ended December 31, 1997 meets certain criteria specified in the
purchase agreement; (v) U.S. $4,100 paid for related transaction costs; and
(vi) assumption of U.S. $60,200 of indebtedness.
The following Unaudited Pro Forma Consolidated Balance Sheet as of June 1, 1997
(the "Pro Forma Balance Sheet"), and the Unaudited Pro Forma Consolidated
Statement of Income for the year ended August 31, 1996 and the nine-month period
ended June 1, 1997 (the "Pro Forma Statements of Income" and, together with the
Pro Forma Balance Sheet, the "Pro Forma Financial Statements"), are based on the
historical financial statements of the Company and Speedline adjusted to give
effect to the acquisition. The Pro Forma Balance Sheet assumes that the
acquisition of Speedline occurred on June 1, 1997. The Pro Forma Statements of
Income assume that the acquisition of Speedline occurred on September 1, 1995.
The Pro Forma Financial Statements do not purport to present what the Company's
financial position and results of operations would actually have been had the
acquisition occurred on June 1, 1997 or September 1, 1995, as specified above,
or which may be obtained in the future. The pro forma adjustments are described
in the accompanying notes and are based upon available information and certain
assumptions that the Company believes are reasonable. The Pro Forma Financial
Statements should be read in conjunction with the Company's Audited Consolidated
Financial Statements which are included in the Company's Annual Report for the
year ended August 31, 1996, the Company's Consolidated Financial Statements
which are included in Form 10-Q for the nine-month period ended June 1, 1997,
and the Audited Financial Statements of Speedline that are filed herewith as
Item 7(a).
The Speedline acquisition will be accounted for by the purchase method of
accounting. The Pro Forma Financial Statements reflect estimated purchase
accounting adjustments that are subject to revision once appraisals and other
studies of the fair value of Speedline's assets and liabilities are completed.
Final purchase accounting adjustments may differ significantly from the pro
forma adjustments presented herein and described in the accompanying notes.
28
<PAGE> 29
AMCAST INDUSTRIAL CORPORATION
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
JUNE 1, 1997
($ in thousands)
<TABLE>
<CAPTION>
HISTORICAL HISTORICAL ACQUISITION AMCAST AND
AMCAST SPEEDLINE PRO FORMA SPEEDLINE
JUNE 1, 1997 AUGUST 19, 1997 ADJUSTMENTS CONSOLIDATED
------------ --------------- ----------- ------------
<S> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 778 $ 4,114 $ -- $ 4,892
Accounts receivable 57,949 45,329 (350)(c) 102,928
Inventories 52,541 22,991 (375)(c) 75,157
Other current assets 11,694 7,155 2,613 (c) 21,462
---------------------------------------- ----------
TOTAL CURRENT ASSETS 122,962 79,589 1,888 204,439
PROPERTY, PLANT AND EQUIPMENT, NET 151,812 55,762 20,000 (c) 227,574
GOODWILL 2,537 -- 34,268 (c) 36,805
OTHER ASSETS 18,092 730 15,000 (c) 33,822
---------------------------------------- ----------
$ 295,403 $ 136,081 $ 71,156 $ 502,640
======================================== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Short-term borrowings $ 8,700 $ 54,038 $ -- $ 62,738
Current portion of long-term debt 1,108 5,979 -- 7,087
Accounts payable 38,872 40,905 -- 79,777
Accrued expenses 18,334 12,185 8,100 (b) 39,619
1,000 (c)
---------------------------------------- ----------
TOTAL CURRENT LIABILITIES 67,014 113,107 9,100 189,221
LONG-TERM DEBT 62,675 17,629 48,500 (b) 128,804
DEFERRED INCOME TAXES 13,280 1,163 (7,387)(c) 7,056
DEFERRED LIABILITIES 8,152 8,625 4,000 (b) 20,777
SHAREHOLDERS' EQUITY
Common shares 8,682 -- 478 (b) 9,160
Net assets purchased (4,443) 4,443 --
Capital in excess of stated value 66,202 -- 12,022 (b) 78,224
Retained earnings 69,398 -- 69,398
---------------------------------------- ----------
144,282 (4,443) 16,943 156,782
---------------------------------------- ----------
$ 295,403 $ 136,081 $ 71,156 $ 502,640
======================================== ==========
</TABLE>
See notes to unaudited pro forma consolidated balance sheet.
29
<PAGE> 30
AMCAST INDUSTRIAL CORPORATION
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
June 1, 1997
($ in thousands)
(a) The balance sheet of Speedline presented herein reflects all material
adjustments necessary to present Speedline's financial position in
conformity with accounting principles generally accepted in the United
States.
(b) The following table depicts the calculation of the purchase price for
Speedline and the preliminary allocation to Speedline's assets and
liabilities using estimated purchase accounting adjustments which are
subject to revision once appraisals and other studies of the fair value of
the assets and liabilities of Speedline are completed. Final purchase
accounting adjustments may differ significantly from the amounts shown
below.
<TABLE>
<S> <C>
Calculation of acquisition cost:
Cash paid at closing $ 48,500
Common shares issued to sellers (478,240 shares) 12,500
Deferred cash payments 8,000
Accrual for transaction costs 4,100
Debt assumed 60,200
---------
Total acquisition cost $ 133,300
=========
Allocation of acquisition cost:
Cash and cash equivalents $ 4,114
Accounts receivable 44,979
Inventories 22,616
Other current assets 9,768
Fixed assets, net 75,762
Other assets 15,730
Goodwill 34,268
Accounts payable (40,905)
Accrued expenses (13,185)
Capital leases and factored debt (short-term and long-
term debt less debt assumed) (17,446)
Deferred taxes and liabilities (2,401)
--------
Total acquisition cost $ 133,300
========
</TABLE>
30
<PAGE> 31
AMCAST INDUSTRIAL CORPORATION
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
June 1, 1997
($ in thousands)
(c) Purchase accounting adjustments to Speedline's historical asset values are
as follows:
Adjustment of accounts receivable to fair value. ($350)
Adjustment of inventory values to reflect fair value. ($375)
Adjustment of property, plant, and equipment to fair value. ($20,000)
Recording of current deferred tax asset. ($2,613)
Adjustment to deferred income taxes. ($7,387)
Recording of goodwill resulting from the purchase of Speedline ($34,268)
Recording of other assets related to purchase. ($15,000)
Adjustment to accrued expenses. ($1,000)
31
<PAGE> 32
AMCAST INDUSTRIAL CORPORATION
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
($ in thousands except per share amounts)
<TABLE>
<CAPTION>
ACQUISITION AMCAST AND
YEAR ENDED AUGUST 31, 1996 PRO FORMA SPEEDLINE
AMCAST SPEEDLINE ADJUSTMENTS CONSOLIDATED
------ ------------- ----------- ------------
<S> <C> <C> <C> <C>
Net sales $ 343,934 $ 182,710 $ 526,644
Cost of sales 273,238 157,222 $ 1,167 (b) 427,548
(4,079)(c)
------------ ------------ ------------ ------------
Gross profit 70,696 25,488 2,912 99,096
Selling, general, and
administrative expenses 43,368 14,773 857 (d) 59,365
100 (e)
267 (f)
------------ ------------ ------------ ------------
Operating income 27,328 10,715 1,688 39,731
Equity in loss of joint venture and
other income and expense (249) 3,536 3,287
Interest expense 2,348 7,861 3,285 (g) 13,494
------------ ------------ ------------ ------------
Income before income taxes 24,731 6,390 (1,597) 29,524
Income taxes 8,805 824 2,162 (h) 11,791
------------ ------------ ------------ ------------
Net income $ 15,926 $ 5,566 $ (3,759) $ 17,733
============ ============ ============ ============
Net income per share $ 1.85 $ 1.95
============ ============
Weighted average number of
common shares outstanding 8,606 9,084
============ ============
</TABLE>
See notes to Unaudited Pro Forma Consolidated Statement of Income
32
<PAGE> 33
AMCAST INDUSTRIAL CORPORATION
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED
STATEMENT OF INCOME
For the Year Ended August 31, 1996
($ in thousands)
(a) The income statement of Speedline presented herein reflects all material
adjustments necessary to present Speedline's financial position in
conformity with accounting principles generally accepted in the United
States.
(b) Additional depreciation expense for the adjustment to fair value of
Speedline's property, plant, and equipment. ($1,167)
(c) Adjustment to depreciation expense to depreciate Speedline's property,
plant, and equipment balance over remaining useful lives that are
consistent with the Company's depreciation policy. ($4,079)
(d) Amortization of goodwill on a straight line basis over 40 years. ($857)
(e) Amortization of trade name over 40 years. ($100)
(f) Amortization of purchased technology over 15 years. ($267)
(g) Adjustment for additional interest expense calculated on $52,500 of
borrowings under the Company's revolving credit facility to finance the
acquisition and related transaction costs. ($3,285)
(h) Income tax effects of pro forma consolidation assuming a combined
effective income tax rate of 39.9%. ($2,162)
33
<PAGE> 34
AMCAST INDUSTRIAL CORPORATION
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
($ in thousands except per share amounts)
<TABLE>
<CAPTION>
ACQUISITION AMCAST AND
NINE MONTHS ENDED JUNE 1, 1997 PRO FORMA SPEEDLINE
AMCAST SPEEDLINE ADJUSTMENTS CONSOLIDATED
------ ------------- ----------- ------------
<S> <C> <C> <C> <C>
Net sales $ 288,346 $ 156,712 $ $ 445,058
Cost of sales 235,603 136,816 875 (b) 370,241
(3,053)(c)
------------ ------------ ------------ ------------
Gross profit 52,743 19,896 2,178 74,817
Selling, general, and
administrative expenses 30,628 13,794 643 (d) 45,340
75 (e)
200 (f)
------------ ------------ ------------ ------------
Operating income 22,115 6,102 1,260 29,477
Equity in loss of joint venture and
other income and expense (2,356) 1,252 (1,104)
Interest expense 3,561 5,452 2,464 (g) 11,477
------------ ------------ ------------ ------------
Income before income taxes 16,198 1,902 (1,204) 16,896
Income taxes 5,685 885 (168)(h) 6,402
------------ ------------ ------------ ------------
Net income $ 10,513 $ 1,017 $ (1,036) $ 10,494
============ ============ ============ ============
Net income per share $ 1.22 $ 1.15
============ ============
Weighted average number of
common shares outstanding 8,647 9,125
============ ============
</TABLE>
See notes to Unaudited Pro Forma Consolidated Statement of Income
34
<PAGE> 35
AMCAST INDUSTRIAL CORPORATION
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED
STATEMENT OF INCOME
For the Nine Months Ended June 1, 1997
($ in thousands)
(a) The income statement of Speedline presented herein reflects all material
adjustments necessary to present Speedline's financial position in
conformity with accounting principles generally accepted in the United
States.
(b) Additional depreciation expense for the adjustment to fair value of
Speedline's property, plant, and equipment. ($875)
(c) Adjustment to depreciation expense to depreciate Speedline's property,
plant, and equipment balance over remaining useful lives that are
consistent with the Company's depreciation policy. ($3,053)
(d) Amortization of goodwill on a straight line basis over 40 years. ($643)
(e) Amortization of trade name over 40 years. ($75)
(f) Amortization of purchased technology over 15 years. ($200)
(g) Adjustment for additional interest expense calculated on $52,500 of
borrowings under the Company's revolving credit facility to finance the
acquisition and related transaction costs. ($2,464)
(h) Income tax effects of pro forma consolidation assuming a combined
effective income tax rate of 37.9%. ($168)
35
<PAGE> 36
SIGNATURES
----------
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 hereunto duly authorized.
Amcast Industrial Corporation
By /s/ Douglas D. Watts
--------------------
Douglas D. Watts
Vice President, Finance
(Principal Financial Officer)
Dated: October 31, 1997
36
<PAGE> 1
Exhibit 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation in this Form 8-K of Amcast Industrial
Corporation and in the Post-Effective Amendment No. 1 to Registration Statement
Number 33-2876 on Form S-8 dated November 27, 1987, in Registration Statement
Number 33-18690 dated December 21, 1987, in Registration Statement Number
33-28080 on Form S-8 dated April 11, 1989, in Registration Statement Number
33-28084 on Form S-8 dated April 11, 1989, in Registration Statement Number
33-38176 on Form S-8 dated December 20, 1990, in Registration Statement Number
33-28075 on Form S-3 dated April 11, 1989, in Registration Statement Number
33-61290 on Form S-8 dated April 19, 1993 and in Registration Statement Number
333-00133 on Form S-8 January 10, 1996 of Amcast Industrial Corporation, of our
report darted October 20, 1997 with respect to the consolidated financial
statements of Speedline S.p.A. included in this Form 8-K.
RECONTA ERNST & YOUNG S.P.A.
Padua, Italy
October 20, 1997
37
