<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended August 31, 1997 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 officers) (Zip Code)
(937) 291-7000
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange
Title of Each Class on Which Registered
------------------- -------------------
Common Shares, without par value New York Stock Exchange
Preferred Share Purchase Rights
Securities registered pursuant to Section 12(g) of the Act:
NONE
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 12 months, and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in the definitive proxy or in information
statements incorporated by reference in Part I, II, and IV of this Form 10K or
any amendment to this Form 10-K. [ X ]
Aggregate market value of common shares, no par value, held by
non-affiliates of the registrant (assuming only for the purposes of this
computation that directors and officers may be affiliates) as of October 24,
1997--$225,505,367.
Number of common shares outstanding, no par value, as of October 24, 1997--
9,185,499 shares.
DOCUMENTS INCORPORATED BY REFERENCE
Parts I, II and IV--Portions of Annual Report to Shareholders for the year
ended August 31, 1997.
Part III--Portions of Proxy Statement for the Annual Meeting of
Shareholders to be held on December 18, 1997 filed November 12, 1997.
Index to exhibits at page 14 of this report.
<PAGE> 2
PART I
------
ITEM 1 - BUSINESS
- -----------------
Amcast Industrial Corporation, an Ohio corporation organized in 1869, and
its subsidiaries (called collectively "Amcast" or the "Company") are engaged in
the business of producing fabricated metal products, valves and controls, and
cast and tubular metal products, in a variety of shapes, sizes, and metals for
sale to end users directly and through sales representatives and distributor
organizations and to original equipment manufacturers. The Company serves four
major sectors of the economy: automotive, construction, industrial, and
aerospace. Manufacturing facilities are located in six states, primarily in the
eastern half of the United States. On August 19, 1997, the Company acquired all
of the outstanding stock of Speedline S.p.A. and its subsidiaries ("Speedline"),
a major European manufacturer located in Italy serving the automotive original
equipment market. See "Engineered Components" below.
The Company operates in two business segments--1) Flow Control Products
and (2) Engineered Components. Information concerning the net sales, operating
profit and identifiable assets of each segment for years 1995 through 1997
appears under "Business Segments" in the Notes to Consolidated Financial
Statements in the Company's Annual Report to Shareholders for the year ended
August 31, 1997. Such information is incorporated herein by reference and is
filed as Exhibit 13.1, page 52 of this report. Consolidated export sales were
$30.9 million, $25.6 million, and $25.4 million in 1997, 1996, and 1995,
respectively. Sales and operating profits by foreign manufacturing operations
were not material.
FLOW CONTROL PRODUCTS
- ---------------------
The Flow Control Products segment (Flow Control) includes the business of
the Superior Valve division (Superior Valve), Elkhart Products Corporation
(Elkhart), Flagg Brass Inc., and Amcast Industrial Ltd. Superior Valve
manufactures valves and accessories used in air conditioning and refrigeration
systems, and compressed gas cylinder valves for the welding, specialty,
carbonic, and medical gas industries. Elkhart produces wrot copper fittings for
use in residential and commercial water systems and markets brass pipe fittings.
Flagg Brass produces brass pipe fittings for the marine and industrial markets.
Amcast Industrial Ltd. is the common Canadian marketing arm for Amcast's Flow
Control segment manufacturing units.
The Company's Flow Control business is a leading supplier of pipe
fittings for the industrial, commercial, and residential construction markets,
valves utilized in air conditioning and refrigeration systems, and industrial
compressed gas applications. These products are sold through distributors and
wholesalers. Shipments are primarily made by truck from Company locations
directly to customers. The competition is comprised of a number of manufacturers
of parts for air conditioning, refrigeration, and plumbing systems, and valves
and controls. The Company believes that competition in this segment is based on
a number of factors including product quality, service, delivery, and value.
The Company is one of three major suppliers of copper and brass fittings
to the North American commercial and residential plumbing markets. Flow Control
sales of copper plumbing fittings amounted to $115.8 million, $113.4 million,
and $112.5 million in 1997, 1996, and 1995, respectively. Products are sold
primarily through plumbing wholesalers, retail hardware stores and home centers
and to original equipment manufacturers and replacement parts distributors in
the air conditioning and commercial refrigeration business. Competition is based
on service levels, pricing and breadth of product offering. The Company's prime
competitors are Mueller Industries, Inc., a publicly owned company listed on the
New York Stock Exchange, and NIBCO Inc., a privately held company headquartered
in Elkhart, Indiana. Both Mueller Industries, Inc. and NIBCO Inc. may have total
financial resources greater than the Company's.
2
<PAGE> 3
FLOW CONTROL PRODUCTS (cont'd)
- ---------------------
Most of the Flow Control business is based on customer purchase orders
for their current product requirements and such orders are filled from Company
inventory. Orders are not considered firm beyond a 90-day period.
See Properties at Item 2 of this report for information on the Company's
facilities which operate in this segment.
ENGINEERED COMPONENTS
- ---------------------
The Engineered Components segment produces cast and fabricated metal
products principally for sale to original equipment manufacturers in the
transportation, construction, air conditioning, refrigeration, and aerospace
industries. The Company's manufacturing processes involve the melting of raw
materials for casting into metal products having the configuration, flexibility,
strength, weight, and finish required for the customer's end use. The Company
also custom fabricates copper and aluminum tubular parts. The Company
manufactures products on a high-volume, medium-volume, and specialized basis and
its metal capabilities include aluminum, steel, magnesium, brass, and copper.
Products manufactured by the North American operations of this segment include
castings for suspension, air conditioning and anti-lock braking systems, master
cylinders, differential carriers, brake calipers and cast aluminum wheels for
use on automobiles and light trucks, and parts for use in heating and air
conditioning systems. The Company also designs and manufactures close-tolerance
aluminum and specialty steel investment castings and related items for sale to
aviation and aerospace companies. Delivery is mostly by truck from Amcast
locations directly to customers.
Principal products manufactured by Speedline include aluminum and
magnesium wheels for passenger cars. Speedline also manufacturers racing wheels,
aftermarket wheels, truck wheels, hubs and caps, industrial vehicle wheels,
modular wheels, and motorcycle wheels. Refer to "Acquisition" in the Notes to
Consolidated Financial Statements of the Company's Annual Report to Shareholders
for the year ended August 31, 1997, Exhibit 13.1, page 40 herein, for additional
information related to the Speedline acquisition.
The Company is not solely dependent on a single customer; however, a
significant portion of the Company's Engineered Components business is directly
or indirectly dependent on the major automobile manufacturers. The Company's net
sales to various divisions of General Motors Corporation were $139.7 million,
$114.5 million, and $120.1 million for 1997, 1996, and 1995, respectively. No
other customer accounted for more than 10% of consolidated sales.
The Company is a leading supplier of aluminum automotive components and
aluminum wheels for automotive original equipment manufacturers in North
America. With the acquisition of Speedline, the Company is also a leading
supplier of aluminum, magnesium, and alloy wheels and hubcaps and other products
for automotive original equipment manufacturers in Europe. Competition in the
automotive components industry is global with numerous competitors. The basis of
competition is generally design and engineering capability, price and quality.
There are approximately 25 competitors in the aluminum automotive
component business serving the North American market. Principal competitors
include Alcoa, CMI International Inc., A-CMI, Stahl Specialty Company, Reliable
Castings Corporation and Kaiser Aluminum Corp., a subsidiary of MAXXAM Inc.,
some of which have significantly greater financial resources than the Company.
3
<PAGE> 4
ENGINEERED COMPONENTS (cont'd)
- ------------------------------
There are approximately 18 producers of aluminum wheels which service the
North American market. The largest of these are Superior Industries
International, Inc. and Hayes Lemmerz International, Inc.. The next tier of
suppliers includes the Company, Reynolds Metals Company, Alcoa and Enkie America
Inc. Some of the Company's competitors in the aluminum wheel business have
significantly greater financial resources than the Company.
There are approximately 15 competitors in the aluminum and magnesium
automotive wheel business serving the European market. Principal competitors
include Hayes Lemmerz International, Inc., Ronal, ATS, and Alloy Wheels
International (AWI), some of which may have significantly greater financial
resources than the Company.
The Company's non-aerospace business of the Engineered Components segment
is on a "blanket" order basis and is generally based on supplying all of the
customer's annual requirements for a particular part. Customers issue firm
releases and shipping schedules each month against their blanket orders
depending on their current needs. As a result, order backlog varies from month
to month and is not considered firm beyond a 30-day period. Amcast believes that
price, product quality, and delivery are the principal bases of competition
within the industry.
The order backlog of the aerospace business was $20.6 million at August
31, 1997, and $11.2 million at August 31, 1996. The backlog at August 31, 1997,
is expected to result in revenue of $13.9 million during 1998.
See Properties at Item 2 of this report for information on the Company's
facilities which operate in this segment.
GENERAL INFORMATION
- -------------------
Raw materials essential to the business are purchased from suppliers
located in the general vicinity of each operating facility. Availability of
these materials is judged to be adequate. The Company does not anticipate any
material shortage that will alter production schedules during the coming year.
Aluminum and copper are basic commodities traded in international
markets. Changes in aluminum and copper costs are generally passed through to
the customer. In North America, changes in the cost of aluminum are currently
passed through to the customer based on various formulas as is the custom in the
segment of the automotive industry the Company serves. In Europe, changes in the
cost of aluminum are currently passed through to approximately one-half of the
customers based upon various formulas and through negotiated contracts with the
remaining customers. Copper cost increases and decreases are generally passed
through to the customer in the form of price changes as permitted by prevailing
market conditions. The Company is unable to project whether these costs will
increase or decrease in the future. The Company's ability to pass through any
increased costs to the customer in the future will be determined by market
conditions at that time.
Amcast owns a number of patents and patent applications relating to the
design of its products. While Amcast considers, in the aggregate, these patents
are important to operations, it believes that the successful manufacture and
sale of its products generally depend more on the Company's technological
know-how and manufacturing skills.
4
<PAGE> 5
GENERAL INFORMATION (cont'd)
- -------------------
Capital expenditures related to compliance with federal, state, and local
environmental protection regulations for 1997 and 1998 are not expected to be
material. Management believes that operating costs related to environmental
protection will not have a materially adverse effect on future earnings or the
Company's competitive position in the industry.
At August 31, Amcast employed approximately 4,040 persons in 1997, 2,600
in 1996, and 2,400 in 1995.
With the acquisition of Speedline, the percentage of the Company's
consolidated net sales derived from the automotive original equipment market
will increase. The automotive industry in general is cyclical and varies based
on the timing of consumer purchases of vehicles and overall economic strength.
Production schedules can vary significantly from quarter to quarter to meet
customer demands. The company normally experiences reduced sales volume in the
fourth and, to a lesser degree, the first quarter due to plant closings by
original equipment manufacturers for vacations and model changeovers.
CAUTIONARY STATEMENTS UNDER THE PRIVATE SECURITIES REFORM ACT OF 1995
Certain statements in this Annual Report, in the Company's press releases
and in oral statements made by or with the approval of an authorized executive
officer of the Company constitute "forward-looking statements" as that term is
defined under the Private Securities Litigation Reform Act of 1995. These may
include statements projecting, forecasting or estimating Company performance
and industry trends. The achievement of the projections, forecasts or
estimates is subject to certain risks and uncertainties. Actual results and
estimates may differ materially from those projected, forecasted or estimated.
Factors which may cause actual results to differ materially from those
contemplated by the forward-looking statement, include, among others: general
economic conditions less favorable than expected, fluctuating demand in the
automotive industry, less favorable than expected growth in sales and profit
margins in the Company's product lines, increased competitive pressures in the
Company's automotive and flow control segments, inherent uncertainties in
connection with international operations and foreign currency fluctuations and
labor relations at the Company and its customers.
ITEM 2 - PROPERTIES
- -------------------
The following table provides certain information relating to the Company's
principal facilities as of October 24, 1997:
<TABLE>
<CAPTION>
SQUARE
FACILITY FOOTAGE USE
- -------------------------------------- ------- ------------------------------------
Flow Control Products Segment
- -----------------------------
<S> <C> <C>
Washington, Pennsylvania 105,600 High and low pressure specialty
valve manufacturing plant, warehouse
sales and general offices
Elkhart, Indiana 222,000 Copper fittings manufacturing
plant, warehouse, and sales
and general offices
Fayetteville, Arkansas 107,800 Copper fittings manufacturing plant
</TABLE>
5
<PAGE> 6
ITEM 2 - PROPERTIES (cont'd)
- -------------------
<TABLE>
<CAPTION>
SQUARE
FACILITY FOOTAGE USE
- -------------------------------------- ------- ------------------------------------
<S> <C> <C>
Burlington, Ontario Canada 20,214 Distribution warehouse and
branch sales office for
Flow Control Products
Stowe, Pennsylvania 250,000 Brass foundry, machining
operations, warehouse, and
sales and general offices
Engineered Components Segment
- -----------------------------
Geneva, Indiana 105,748 Custom fabricated copper
and aluminum tubular
products manufacturing plant
Rancho Cucamonga, California 70,000 Aluminum and specialty steel
investment casting foundry
Cedarburg, Wisconsin 133,000 High-volume, aluminum alloy
permanent-mold foundry
Richmond, Indiana 97,300 High-volume, aluminum alloy
permanent-mold foundry
Fremont, Indiana 139,788 Cast aluminum automotive wheels
Gas City, Indiana 152,000 Cast aluminum automotive wheels
Wapakoneta, Ohio 188,000 Cast, machined and assembled
aluminum suspension components
Southfield, Michigan 8,840 Automotive component
sales, product development
and engineering center offices
Tabina S. Maria di Sala, Italy 215,891 Aluminum passenger car wheels
Tabina S. Maria di Sala, Italy 20,688 Aluminum passenger car wheels
Tabina S. Maria di Sala, Italy 44,024 Aluminum automotive wheels
Tabina S. Maria di Sala, Italy 16,200 Magnesium wheels for OEM,
racing, and aftermarket
Caselle S. Maria di Sala, Italy 56,855 Light alloy wheels
Bolzano, Italy 196,656 Aluminum cast car wheels,
truck cast aluminum wheels
Corporate
- ---------
Dayton, Ohio 16,281 Executive and general offices
</TABLE>
6
<PAGE> 7
ITEM 2 - PROPERTIES (cont'd)
- -------------------
The land and building in Rancho Cucamonga, California are leased under a
5-year lease expiring in 2000, with two successive five year renewals at the
Company's option. The Company has the option to purchase the property at the end
of the lease term at an agreed upon price subject to cost of living adjustment
(COLA). The land and building in Burlington, Ontario, are leased under a 3-year
lease expiring in 1998. The land in Richmond and Gas City, Indiana is leased
under 99 year leases, expiring in 2091. The Corporate offices are being leased
for five years expiring in 1998. The Amcast Automotive offices are being leased
for five years expiring in the year 2000, with an option for a five year
renewal. The Speedline S.p.A. building (20,688 square feet) is leased until
2003. The Speedline S.p.A. building (44,024 square feet) is leased for six years
expiring in the year 2002, with an option for a six year renewal. The Speedline
S.p.A. building (16,200 square feet) is leased until 2003. The Speedline
Competition building is leased until 2001. All other properties are owned by the
Company.
A portion of the land and building at Fayetteville, Arkansas is subject
to a mortgage in favor of Bank One, Dayton, NA, to secure the payment of a
$5,050,000 bond issue dated December 1, 1991, and maturing December 1, 2004.
The Company's operating facilities are in good condition and are suitable
for the Company's purposes. Utilization of capacity is dependent upon customer
demand. During 1997, total company-wide productive capacity utilization ranged
from 76% to 88%, and averaged 83% of the Company's total capacity.
ITEM 3 - LEGAL PROCEEDINGS
- --------------------------
Refer to "Commitments and Contingencies" in the Notes to Consolidated
Financial Statements of the Company's Annual Report to Shareholders for the year
ended August 31, 1997, Exhibit 13.1, page 46 herein.
Allied Signal, Inc. has brought a superfund private cost recovery and
contribution action against the Company in the United States District Court for
the Southern District of Ohio, Western Division, which is captioned
ALLIED-SIGNAL, INC. V. AMCAST INDUSTRIAL CORPORATION (Case No. C-3-92-013). The
action involves the Goldcamp Disposal Site in Ironton, Ohio. Allied-Signal has
taken the lead in remediating the site and has estimated that its total costs
for the remediation may reach $30 million. Allied is seeking a contribution from
the Company in an amount equal to 50 percent of the final remediation costs. A
trial in this proceeding was completed in February 1995, but no judgment is
anticipated until after certain post-trial proceedings are completed. The
Company believes its responsibility with respect to the Goldcamp Site is
limited, primarily due to the nature of the foundry sand waste it disposed of at
the site. The Company believes that if it has any liability at all in regard to
the Goldcamp Site, that liability would not be material to its financial
position or results of operations.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- ------------------------------------------------------------
None
7
<PAGE> 8
ITEM 4A - EXECUTIVE OFFICERS OF REGISTRANT
- ------------------------------------------
John H. Shuey, age 51, has been President and Chief Executive Officer
since March 1995 and a Director since March 1994. Mr. Shuey was President and
Chief Operating Officer from December 1993 to March 1995. Mr. Shuey was
Executive Vice President from February 1991 to December 1993. Mr. Shuey is also
a director of Cooper Tire & Rubber Company.
Thomas K. Walker, age 56, has been President of Amcast Automotive since
August 1995. From 1992 to 1995, Mr. Walker was President of ITT Automotive's
North American operations. Mr. Walker was also President of Allied Signal
Automotive Catalyst Co. in Tulsa, Oklahoma from 1985 to 1992.
Dennis A. Bertram, age 60, has been Senior Vice President, Amcast
Automotive and Division Manager of North American Wheel Division since September
1997. Mr. Bertram was Senior Vice President, Manufacturing Strategy from
February 1997 to August 1997. Mr. Bertram was also Senior Vice President,
Operations of Amcast Automotive from August 1995 to January 1997. From May 1992
until July 1995, he was President and General Manager of the same group.
Giovanni Scarlini, age 46, was appointed General Manager and Managing
Director of Speedline S.p.A. upon Amcast's acquisition of Speedline in August
1997. Mr. Scarlini has been with Speedline since November 1996. From 1986 to
March 1996, Mr. Scarlini occupied several management positions with CESAB, the
most recent being General Manager.
Michael N. Powell, age 50, has been President of the Flow Control
Products Group, since May 1996. From April 1994 until May 1996, he was Vice
President/General Manager of Superior Valve Company. Mr. Powell was President
and Chief Operating Officer of Versa Technologies, Inc. in Racine, Wisconsin
from May 1991 to December 1993. Prior to that, he was a Senior Vice President
for Mark Controls Corporation in Skokie, Illinois.
Douglas D. Watts, age 52, has been Vice President, Finance since August
1994. From 1987 to August 1994 Mr. Watts held various financial management
positions with General Cable Corporation, of which the most recent post was Vice
President and Controller. Prior to that, he was Vice President, Finance and
Chief Financial Officer of LCP Chemicals and Plastics Inc., Edison, New Jersey.
Dean Meridew, age 43, has been Vice President, Amcast Europe since
September 1997. From June 1992 to September 1997, he was Division Manager for
the Company's North American wheel operations. Prior to that, Mr. Meridew was
operations manager and engineering manager within the Company's North American
wheel operations since January 1985.
William L. Bown, age 51, has been Vice President, Finance, Amcast Europe
since November 1997. From June 1992 to November 1997, he was Vice President and
Controller of the Company. Prior to that, Mr. Bown was Controller of Worthington
Industries, Inc. in Columbus, Ohio.
Denis G. Daly, age 55, has been Vice President, General Counsel and
Secretary, since January 1990. From January 1988 to December 1989, he worked in
private practice at the law firm of Thompson, Hine, and Flory. From August 1982
to January 1988, he was Vice President, General Counsel and Secretary at Day
International (Dayco) in Dayton.
8
<PAGE> 9
ITEM 4A - EXECUTIVE OFFICERS OF REGISTRANT (cont'd)
- ---------------------------------------------------
Robert C. Collevechio, age 45, has been Vice President, Human Resources,
since September 1996. From 1992 to 1996, he was Director of Human Resources for
the North American operations of Carrier Corporation.
James R. Van Wert, Jr., age 39, has been Vice President, Technology since
June 1997. Prior to that, Mr. Van Wert was with the Aluminum Company of America
(ALCOA), in numerous capacities. His last position was Director of Technology,
Forging & Casting, focusing primarily on the automotive industry.
Myron E. Frye, age 58, has been Vice President of Purchasing since
November 1992. From March 1983 to November 1992, he was President of
Purchasing/Materials Group, Inc. in Naperville, Illinois.
Michael R. Higgins, age 51, has been Treasurer since January 1987.
Officers of Amcast are elected at the Board of Directors' first meeting
following the annual meeting of shareholders and hold office until the first
meeting of the board following the next Annual Meeting of Shareholders.
PART II
-------
ITEM 5 - MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
- --------------------------------------------------------------------------
MATTERS
-------
Amcast common stock is listed on the New York Stock Exchange, ticker
symbol AIZ. As of August 31, 1997, there were 9,177,455 of the Company's common
shares outstanding, and there were approximately 6,100 shareholders of Amcast's
common stock, including shareholders of record and the Company's estimate of
beneficial holders.
<TABLE>
<CAPTION>
Range of Stock
Prices
------------------------ Dividends
High Low Per Share
---- --- ---------
<S> <C> <C> <C> <C>
1997
- ----
First Quarter $ 25 3/4 $ 17 5/8 $ .14
Second Quarter 25 7/8 22 1/4 .14
Third Quarter 26 1/8 21 1/4 .14
Fourth Quarter 27 1/2 23 15/16 .14
1996
- ----
First Quarter $ 20 1/8 $ 16 7/8 $ .14
Second Quarter 19 3/8 17 1/2 .14
Third Quarter 20 1/4 16 3/8 .14
Fourth Quarter 20 1/4 17 .14
</TABLE>
Refer to "Long-Term Debt and Credit Arrangements" in the Notes to
Consolidated Financial Statements of the Company's Annual Report to Shareholders
for the year ended August 31, 1997, Exhibit 13.1, pages 42-43 herein for other
information required by this item.
9
<PAGE> 10
ITEM 6 - SELECTED FINANCIAL DATA
- --------------------------------
The information required by this item is incorporated by reference to
"Selected Data" of the Company's Annual Report to Shareholders for the year
ended August 31, 1997, Exhibit 13.1, page 28 herein.
ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
- --------------------------------------------------------------------------------
OF OPERATIONS
-------------
The information required by this item is incorporated by reference to
"Management's Discussion of Financial Condition and Results of Operations" of
the Company's Annual Report to Shareholders for the year ended August 31, 1997,
Exhibit 13.1, pages 29 - 32 herein.
ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
- ----------------------------------------------------
The information required by this item is incorporated by reference to
"Consolidated Financial Statements and Notes to Consolidated Financial
Statements", together with the report thereon of Ernst & Young LLP and
"Quarterly Financial Data (Unaudited)" of the Company's Annual Report to
Shareholders for the year ended August 31, 1997, Exhibit 13.1, pages 33 - 53
herein.
ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
- ------------------------------------------------------------------------
FINANCIAL DISCLOSURE
--------------------
None
PART III
--------
ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
- ------------------------------------------------------------
The information required by this item relating to directors of the
Company is incorporated herein by reference to that part of the information
under "Election of Directors" beginning on page 2 of the Company's Proxy
Statement for its Annual Meeting of Shareholders to be held on December 18,
1997. Information concerning executive officers of the Company appears under
"Executive Officers of Registrant" at Part I, pages 8 and 9, of this Report.
ITEM 11 - EXECUTIVE COMPENSATION
- --------------------------------
The information required by this item is incorporated herein by reference
to "Executive Compensation" on pages 6 through 12 of the Company's Proxy
Statement for its Annual Meeting of Shareholders to be held on December 18,
1997.
ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
- ------------------------------------------------------------------------
The information required by this item is incorporated herein by reference
to "Security Ownership of Directors, Nominees and Officers" on page 5 and
"Security Ownership of Certain Beneficial Owners" on page 14 of the Company's
Proxy Statement for its Annual Meeting of Shareholders to be held on December
18, 1997.
ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- --------------------------------------------------------
The information required by this item is contained on pages 9 and 12 in
the Company's Proxy Statement for its Annual Meeting of Shareholders to be held
on December 18, 1997, which is incorporated herein by reference.
10
<PAGE> 11
PART IV
-------
ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
- --------------------------------------------------------------------------
(a) Documents filed as part of this report.
1. Financial statements:
The following financial statements of Amcast Industrial Corporation
and subsidiaries, included in the Annual Report to Shareholders for
the year ended August 31, 1997, are incorporated by reference at
Item 8 of this report.
Consolidated Statements of Income Years Ended August 31, 1997,
1996, and 1995.
Consolidated Statements of Financial Condition August 31, 1997 and
1996.
Consolidated Statements of Shareholders' Equity Years Ended August
31, 1997, 1996 and 1995.
Consolidated Statements of Cash Flows Years Ended August 31, 1997,
1996, and 1995.
Notes to Consolidated Financial Statements
Report of Independent Auditors
2. Consolidated financial statement schedule:
<TABLE>
<CAPTION>
Schedule Page Number
Number Description In This Report
-------- ------------------------------------------------------------ --------------
<S> <C> <C>
II Valuation and Qualifying Accounts and Reserves - August 31,
1997, 1996, and 1995 13
</TABLE>
All other financial statement schedules are omitted because they
are not applicable or because the required information is shown in
the financial statements or in the notes thereto.
3. Exhibits - See Index to Exhibits (page 14 hereof).
4. Reports on Form 8-K - During the fourth quarter ended August 31, 1997,
the Company did not file any reports on Form 8-K.
11
<PAGE> 12
SIGNATURES
Pursuant to the requirements of Section 13 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, on the 24th day of November 1997.
AMCAST INDUSTRIAL CORPORATION
(Registrant)
By /s/John H. Shuey
-------------------------------
John H. Shuey
President and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities indicated.
<TABLE>
<CAPTION>
Signature Title Date
- ------------------------ ----------------------------- -----------------
<S> <C> <C>
/s/John H. Shuey President, Chief Executive November 24, 1997
- ---------------------- Officer, Director
John H. Shuey (Principal Executive Officer)
/s/Douglas D. Watts Vice President, Finance November 24, 1997
- ------------------- (Principal Financial and
Douglas D. Watts Accounting Officer)
*Leo W. Ladehoff Chairman of the Board,
Director November 24, 1997
*James K. Baker Director November 24, 1997
*Walter E. Blankley Director November 24, 1997
*Peter H. Forster Director November 24, 1997
*Ivan W. Gorr Director November 24, 1997
*Earl T. O'Loughlin Director November 24, 1997
*William G. Roth Director November 24, 1997
*R. William Van Sant Director November 24, 1997
</TABLE>
*The undersigned John H. Shuey, by signing his name hereto, does sign and
execute this annual report on Form 10-K on behalf of each of the above-named
directors of the registrant pursuant to powers of attorney executed by each such
director and filed with the Securities and Exchange Commission as an exhibit to
this report.
By /s/John H. Shuey
-------------------------
John H. Shuey
Attorney in Fact
12
<PAGE> 13
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
AMCAST INDUSTRIAL CORPORATION AND SUBSIDIARIES
($ In Thousands)
<TABLE>
<CAPTION>
Additions
--------------------------------
Balance Charged to Charged to
Beginning Costs and Other Balance at
Description of Period Expenses Accounts Deductions End of Period
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Deducted From Asset Accounts
Reserves for unrealized
losses on properties and
other assets held for sale:
Year ended August 31, 1997 $ 3,071 $ (253)(1) $ 2,818
Year ended August 31, 1996 $ 3,071 $ 3,071
Year ended August 31, 1995 $ 3,073 $ 1,136(2) $ (1,138)(3) $ 3,071
<FN>
(1) Write off of assets against reserve.
(2) Revised estimate of unrealized loss on sale of assets.
(3) Loss on sale of assets.
</TABLE>
13
<PAGE> 14
INDEX OF EXHIBITS
<TABLE>
<CAPTION>
Exhibit Located at
Number Description Numbered Page
- -------- -------------------------------------------------------------- -------------
<S> <C> <C>
3 ARTICLES OF INCORPORATION AND BY-LAWS:
3.1 Articles of Incorporation of Amcast Industrial
Corporation, incorporated by reference from Form 10-K for
the year ended August 31, 1996.
3.2 Code of Regulations of Amcast Industrial Corporation,
incorporated by reference from Form 10-K for the year
ended August 31, 1996.
4 INSTRUMENTS DEFINING THE RIGHTS OF SECURITY
HOLDERS, INCLUDING INDENTURES:
4.1 $200,000,000 revolving credit agreement between Amcast
Industrial Corporation and KeyBank National Association
dated August 14, 1997, incorporated by reference from
Form 8-K filed September 3, 1997.
4.2 Loan Agreement between the City of Elkhart, Indiana,
and Elkhart Products Corporation, dated as of February
1, 1988, for $2,050,000, Economic Development
Revenue Refunding Bonds, Series 1988, . +
4.3 $10,000,000 Senior Note Agreement between Amcast
Industrial Corporation and Principal Mutual Life
Insurance Company dated September 1, 1989, as amended,
incorporated by reference from Form 10-K for the year
ended August 31, 1996.
4.4 Amendment Agreement, dated July 24, 1995, to the
$10,000,000 Senior Note Agreement between Amcast
Industrial Corporation and Principal Mutual Life
Insurance Company, dated September 1, 1989 -
incorporated by reference from Form 10-K for the year
ended August 31, 1995.
4.5 Loan Agreement by and between the City of Fayetteville,
Arkansas, and Amcast Industrial Corporation, dated as of
December 1, 1991, for $5,050,000 City of Fayetteville,
Arkansas, variable/fixed rate demand Industrial
Development Revenue Refunding Bonds, Series 1992. +
4.6 Lease Agreement between PNC Leasing Corp., lessor, and
Amcast Industrial Corporation, lessee, dated July 15,
1992 incorporated by reference from Form 10-K for the
year ended August 31, 1993.
</TABLE>
14
<PAGE> 15
INDEX TO EXHIBITS (cont'd)
-----------------
<TABLE>
<CAPTION>
Exhibit Located at
Number Description Numbered Page
- -------- -------------------------------------------------------------- -------------
<S> <C> <C>
4.7 Lease Agreement between PNC Leasing Corp., lessor, and
Amcast Industrial Corporation, lessee, dated
August 8, 1996. +
4.8 Amcast guarantee of $15,000,000 of the $25,000,000 Credit
and Intercreditor Agreement between Casting Technology
Company (a joint venture partnership between Amcast
Industrial Corporation and Izumi Industries, Ltd.) and
National Bank of Detroit and The Asahi Bank,
Ltd., and a copy of the Creditor and Intercreditor
Agreement, dated July 28, 1995 - incorporated by
reference from Form 10-K for the year ended August 31,1995.
4.9 Amendment Agreement, dated January 5, 1996, to the
$25,000,000 Credit and Intercreditor Agreement between
Casting Technology Company and National Bank of Detroit
and The Asahi Bank, Ltd., dated July 28, 1995,
incorporated by reference from Form 10-K for the year
ended August 31, 1996.
4.10 Amendment Agreement, dated May 31,1996, to the
$25,000,000 Credit and Intercreditor Agreement between
Casting Technology Company and National Bank of Detroit
and The Asahi Bank, Ltd., dated July 28,1995, and amended
Guarantee Agreement which increased Amcast's guarantee
to $21,000,000 of the revised credit amount of $35,000,000,
incorporated by reference from Form 10-K for the year
ended August 31, 1996.
4.11 Amendment Agreement dated January 28, 1997, to the
credit and intercreditor agreement between Casting
Technology Company and National Bank of Detroit, aka
NBD Bank, and the Asahi Bank, Ltd., dated July 28,
1995, and Amended Guaranty Agreement which increased
Amcast's guarantee to
$23,400,000 of the revised credit amount of $39,000,000. 21
4.12 $50,000,000 Note Agreement between Amcast Industrial
Corporation and Principal Mutual Life Insurance Company
and The Northwestern Mutual Life Insurance Company,
dated November 1, 1995 - incorporated by reference from
Form 10-K for the year ended August 31,1995.
10 MATERIAL CONTRACTS:
10.1 Amcast Industrial Corporation Employee Share- builder
Plan effective August 26, 1987, incorporated by
reference from Form 10-K for the year ended August 31,
1996.
</TABLE>
15
<PAGE> 16
INDEX TO EXHIBITS (cont'd)
<TABLE>
<CAPTION>
Exhibit Located at
Number Description Numbered Page
- -------- -------------------------------------------------------------- -------------
<S> <C> <C>
10.2 Amcast Industrial Corporation Annual Incentive Plan
effective September 1, 1982, incorporated by reference
from Form 10-K for the year ended August 31, 1996.
10.3 Deferred Compensation Agreement for Directors of Amcast
Industrial Corporation, incorporated by reference from
Form 10-K for the year ended August 31, 1996.
10.4 Executive Agreement between Amcast Industrial
Corporation and Leo W. Ladehoff, Chairman of the Board
and former Chief Executive Officer of the Company,
dated March 3, 1995 incorporated by reference from Form
10-Q for the quarter ended May 28, 1995.
10.5 Indemnification Agreement for Directors of Amcast
Industrial Corporation, effective October 30, 1987,
incorporated by reference from Form 10-K for the year
ended August 31, 1996.
10.6 First Master Benefit Trust Agreement between Amcast
Industrial Corporation and Bank One, Dayton, NA,
effective March 11, 1988, incorporated by reference
from Form 10-K for the year ended August 31, 1996.
10.7 Amcast Industrial Corporation 1989 Stock
Incentive Plan, effective October 19, 1988 -
as amended, effective December 9, 1992 and
as amended, effective November 1, 1996 -
incorporated by reference from Form 10-Q
for the quarter ended February 28, 1994.
10.8 Amcast Industrial Corporation 1989 Director Stock
Option Plan, effective October 19, 1988, incorporated
by reference from Form 10-K for the year ended August
31, 1996.
10.9 Amcast Industrial Corporation Change of Control
Agreements effective September 1, 1996, incorporated by
reference from Form 10-K for the year ended August 31,
1996.
</TABLE>
16
<PAGE> 17
INDEX TO EXHIBITS (cont'd)
-----------------
<TABLE>
<CAPTION>
Exhibit Located at
Number Description Numbered Page
- -------- -------------------------------------------------------------- -------------
<S> <C> <C>
10.10 Amcast Industrial Corporation Long-Term Incentive Plan
effective September 1, 1991 incorporated by reference
from Form 10-K for the year ended August 31, 1992.
10.11 Amcast Industrial Corporation Nonqualified
Supplementary Benefit Plan, effective May 29, 1991 -
incorporated by reference from Form 10-K for the year
ended August 31, 1994.
10.12 Change of Control Agreement between Amcast Industrial
Corporation and John H. Shuey, Chief Executive Officer,
effective August 14, 1995 incorporated by reference
from Form 10-K for the year ended August 31,1995.
10.13 Share Purchase Agreement between Amcast
Industrial Corporation and Speedline International
Holding B.V., Gerance S.A., San Marco Finanziaria
S.p.A., Mr. Antonio Zacchello, Mr. Giancarlo
Zacchello, Mr. Gianni Zacchello, Mr. Franco
Zacchello and Ms. Graziella Zacchello,
effective July 18, 1997, incorporated by reference
from Form 8-K filed September 3, 1997.
13 ANNUAL REPORT TO SECURITY HOLDERS:
13.1 Amcast Industrial Corporation Annual Report to
Shareholders for year ended August 31, 1997. Those
portions of the Annual Report as are specifically
referenced under Parts I, II, and IV of
this report are filed herein. 28
21 SUBSIDIARIES OF THE REGISTRANT:
Amcast Industrial Corporation has twenty-four wholly-owned
subsidiaries which are included in the consolidated financial
statements of the Company. Information regarding these
subsidiaries is set forth below:
Amcast Industrial Limited
Jurisdiction of Incorporation: Ontario, Canada
Name Under Which Business Is Done: Amcast Industrial Limited
Elkhart Products Corporation
Jurisdiction of Incorporation: Indiana
Name Under Which Business Is Done: Elkhart Products Corporation
</TABLE>
17
<PAGE> 18
INDEX TO EXHIBITS (cont'd)
- -----------------
<TABLE>
<CAPTION>
Exhibit Located at
Number Description Numbered Page
- -------- -------------------------------------------------------------- -------------
<S> <C>
WheelTek, Inc.
Jurisdiction of Incorporation: Indiana
Name Under Which Business Is Done: WheelTek, Inc. and Amcast
Automotive Wheel Division
Amcast Precision Products, Inc.
Jurisdiction of Incorporation: California
Name Under Which Business Is Done: Amcast Precision Products, Inc.
Amcast Investment Services Corporation
Jurisdiction of Incorporation: Delaware
Name Under Which Business Is Done: Amcast Investment Services
Corporation
Amcast Industrial Financial Services, Inc.
Jurisdiction of Incorporation: Ohio
Name Under Which Business is Done: Amcast Industrial
Financial Services, Inc.
Amcast Industrial Sales Corporation
Jurisdiction of Incorporation: U.S. Virgin Islands
Name Under Which Business is Done: Amcast Industrial Sales Corporation
Amcast Automotive, Inc.
Jurisdiction of Incorporation: Michigan
Name Under Which Business is Done: Amcast Automotive, Inc.
Flagg Brass, Inc.
Jurisdiction of Incorporation: Ohio
Name Under Which Business is Done: Flagg Brass, Inc.
Amcast Casting Technologies, Inc.
Jurisdiction of Incorporation: Indiana
Name Under Which Business is Done: Amcast Casting Technologies, Inc.
AS International, Inc.
Jurisdiction of Incorporation: Delaware
Name Under Which Business is Done: AS International, Inc.
Amcast Italia S.r.l.
Jurisdiction of Incorporation: Italy
Name Under Which Business Is Done: Amcast Italia S.r.l.
ASW International I, B.V.
Jurisdiction of Incorporation: The Netherlands
Name Under Which Business is Done: ASW International I, B.V.
</TABLE>
18
<PAGE> 19
INDEX TO EXHIBITS (cont'd)
-----------------
<TABLE>
<CAPTION>
Exhibit Located at
Number Description Numbered Page
- -------- -------------------------------------------------------------- -------------
<S> <C>
ASW International II, B.V.
Jurisdiction of Incorporation: The Netherlands
Name Under Which Business is Done: ASW International II, B.V.
Speedline S.p.A.
Jurisdiction of Incorporation: Italy
Name Under Which Business is Done: Speedline S.p.A.
Speedcast B.V.
Jurisdiction of Incorporation: The Netherlands
Name Under Which Business Is Done: Speedcast B.V.
Speedline Aluminia S.p.A.
Jurisdiction of Incorporation: Italy
Name Under Which Business Is Done: Speedcast Aluminia S.p.A.
Speedline Engineering S.p.A.
Jurisdiction of Incorporation: Italy
Name Under Which Business Is Done: Speedline Engineering S.p.A.
Speedline Competition S.r.l.
Jurisdiction of Incorporation: Italy
Name Under Which Business Is Done: Speedline Competition S.r.l.
Autolambro S.r.l.
Jurisdiction of Incorporation: Italy
Name Under Which Business Is Done: Autolambro S.r.l.
Alustampi S.r.l.
Jurisdiction of Incorporation: Italy
Name Under Which Business Is Done: Alustampi S.r.l.
Speedline UK Limited
Jurisdiction of Incorporation: England
Name Under Which Business Is Done: Speedline UK Limited
Speedline France S.a.r.l.
Jurisdiction of Incorporation: France
Name Under Which Business Is Done: Speedline France S.a.r.l.
SL Wheels, Inc.
Jurisdiction of Incorporation: Michigan
Name Under Which Business Is Done: SL Wheels, Inc.
</TABLE>
19
<PAGE> 20
INDEX TO EXHIBITS (cont'd)
-----------------
<TABLE>
<CAPTION>
Exhibit Located at
Number Description Numbered Page
- -------- -------------------------------------------------------------- -------------
<S> <C> <C>
23 CONSENTS OF EXPERTS AND COUNSEL:
23.1 Consent of Ernst & Young LLP dated
November 21, 1997, with respect to the
incorporation by reference of
their report dated October 16, 1997 into this
Annual Report (Form 10-K), the inclusion of the
financial statement schedule listed in Item 14(a)(2)
to the financial statements covered by their report
dated October 16, 1997, and material incorporated by
reference into Amcast Industrial Corporation's
Post-Effective Amendment No. 1 to Registration
Statement No. 33-2876 on Form S-8, on Registration
Statements on Form S-8 (Registration Nos. 33-18690,
33-28080, 33-28084, 33-38176, 33-61290 and 333-00133),
and on Registration Statement No. 33-28075 on
Form S-3 54
24 POWER OF ATTORNEY:
24.1 Powers of attorney of persons who are indicated as
having executed this Annual Report Form 10-K
on behalf of another. 55
27 FINANCIAL DATA SCHEDULE:
27.1 Article 5 of Regulation S-X Financial Data Schedule
Form 10-K for the year ended August 31, 1997. 63
</TABLE>
+ Indicates that the document relates to a class of indebtedness that does not
exceed 10% of the total consolidated assets of the Company and that the
Company will furnish a copy of the document to the Commission upon its
request.
20
<PAGE> 1
Exhibit 4.11
THIRD AMENDMENT TO
------------------
CREDIT AND INTERCREDITOR AGREEMENT
----------------------------------
THIS THIRD AMENDMENT TO CREDIT AND INTERCREDITOR AGREEMENT, dated as of
January 28, 1997 (this "Amendment"), among CASTING TECHNOLOGY COMPANY, an
Indiana general partnership (the "Company"), NBD BANK, a Michigan banking
corporation ("NBD"), and THE ASAHI BANK, LTD., a Japanese banking corporation
acting through its Chicago Branch ("Asahi") (NBD and Asahi, collectively, the
"Banks" and individually, a "Bank"), and NBD BANK, a Michigan banking
corporation, as agent for the Banks (in such capacity, the "Agent").
RECITALS
--------
A. The parties hereto have entered into a Credit and Intercreditor
Agreement dated July 28, 1995 (as amended, the "Credit Agreement"), which is in
full force and effect.
B. The Company desires to amend the Credit Agreement as herein
provided, and the Banks and the Agent are willing to so amend the Credit
Agreement on the terms set forth herein.
AGREEMENT
---------
Based upon these recitals, the parties agree as follows:
1. AMENDMENT. Upon the Company satisfying the conditions set forth in
Section 4 hereof, the Credit Agreement shall be amended as follows:
(a) Section 2.1(b) of the Credit Agreement is amended in its
entirety, to read as follows:
TERM LOAN. Each Bank further agrees, for itself only,
subject to the terms of this Agreement, to make a
single Term Loan to the Company on the Termination
Date in an amount not to exceed the lesser of (i) its
pro rata share of Thirty-Five Million Dollars
($35,000,000) and (ii) its respective Commitment then
effective as of the Termination Date.
(b) The Commitment Amount set forth next to the name of NBD
Bank on the signature page of the Credit Agreement is increased by Two Million,
Four Hundred Thousand Dollars ($2,400,000) to Twenty-Three Million, Four Hundred
Thousand Dollars ($23,400,000).
(c) The Commitment Amount set forth next to the name of The
Asahi Bank, Ltd. on the signature page of the Credit Agreement is increased by
One Million, Six Hundred
21
<PAGE> 2
Thousand Dollars ($1,600,000) to Fifteen Million, Six Hundred Thousand Dollars
($15,600,000).
(d) Section 5.1(i) of the Credit Agreement is deleted, and
Section 5.2(a)(iv) of the Credit Agreement is amended to read as follows:
"(iv) This subsection is deleted;"
(e) Exhibit A-1 to the Credit Agreement, the form of Revolving
Credit Note, is amended and restated in its entirety, to read as set forth on
Exhibit A-1 attached to this Amendment.
2. REFERENCES TO CREDIT AGREEMENT. From and after the effective date of
this Amendment, references to the Credit Agreement in the Credit Agreement and
all other documents issued under or with respect thereto (as each of the
foregoing is amended hereby or pursuant hereto) shall be deemed to be references
to the Credit Agreement as amended hereby.
3. REPRESENTATIONS AND WARRANTIES. The Company represents and warrants
to the Banks and the Agent that:
(a) (i) The execution and delivery by the Partners on behalf
of the Company and the performance by the Company of this Amendment and all
agreements, instruments, and documents delivered pursuant hereto by the Company
have been duly authorized by all necessary action and do not and will not
violate any provision of any law, rule, regulation, order, judgment, injunction,
or award presently in effect applying to the Company, or of the Company's
charter, or result in a breach of or constitute a default under any material
agreement, lease or instrument to which the Company is a party or by which it or
its properties may be bound or affected; (ii) no authorization, consent,
approval, license, exemption or filing of a registration with any court or
governmental department, agency or instrumentality is or will be necessary to
the valid execution, delivery or performance by the Company of this Amendment
and all agreements and documents delivered pursuant hereto; and (iii) this
Amendment and all agreements and documents delivered pursuant hereto by the
Company are the legal, valid and binding obligations of the Company, enforceable
against it in accordance with the terms thereof.
(b) After giving effect to the amendments contained herein,
the representations and warranties contained in Article IV (other than Section
4.6) of the Credit Agreement are true and correct on and as of the effective
date hereof with the same force and effect as if made on and as of such
effective date.
(c) No Default or Event of Default has occurred and is
continuing or will exist under the Credit Agreement as of the effective date
hereof.
22
<PAGE> 3
4. CONDITIONS TO EFFECTIVENESS. This Amendment shall not become
effective until the Agent and each Bank has received the following documents and
the following conditions have been satisfied, each in form and substance
satisfactory to the Agent and each Bank:
(a) Updated Closing Certificates and copies of such
organizational documents of the Company, each of the Partners and each of the
Guarantors, including partnership agreements, articles of incorporation, bylaws
(or certifying as to the continued accuracy of the partnership agreements,
articles of incorporation and bylaws previously delivered to the Banks), good
standing certificates and incumbency certificates, and such documents evidencing
necessary corporate action by each of the Partners and each of the Guarantors
with respect to this Amendment and all other agreements or documents delivered
pursuant hereto;
(b) Second Restated Revolving Credit Notes, duly executed on
behalf of the Company in favor of each Bank, substantially in the form attached
as Exhibit A-1;
(c) A Second Confirmation of Security Agreement acceptable to
the Agent, duly executed on behalf of the Company in favor of the Agent;
(d) A Second Amendment and Confirmation of Guaranty - NBD
acceptable to NBD, duly executed on behalf of Amcast in favor of NBD;
(e) A Second Acknowledgment and Confirmation of Guaranty
Agreement - Asahi acceptable to Izumi, duly executed on behalf of Izumi in favor
of Asahi;
(f) Payment by the Company to the Banks of a Closing Fee in
the amount of Five Thousand Dollars ($5,000) to be shared pro rata between the
Banks based on their respective Commitments; and
(g) Such additional agreements and documents as may be
reasonably requested by the Agent.
5. CONSENT TO ASSIGNMENT. The Company, the Banks, the Agent, and the
Partners in their individual capacities each consent to (a) the assignment at
any time by NBD of all its rights and obligations, individually and as Agent,
under the Credit Agreement, the Revolving Credit Notes, the Security Documents,
and all other related documents, to NBD Bank, N.A., a national banking
association, of Indianapolis, Indiana ("NBD-Indiana"), (b) NBD-Indiana's
assumption of all such rights and obligations, and (c) NBD's release from all
such obligations. The parties further agree to execute and deliver such
documents as NBD or NBD-Indiana may consider necessary or desirable in order to
accomplish or reflect the assignment and assumption. This consent is deemed to
satisfy the requirements of Section 8.6(a) of the Credit Agreement.
6. MISCELLANEOUS. The terms used but not defined herein shall have the
respective meanings ascribed thereto in the Credit Agreement. Except as
expressly amended hereby, the Credit Agreement and all other documents issued
under or with respect thereto are hereby
23
<PAGE> 4
ratified and confirmed by the Banks, the Agent, and the Company and shall remain
in full force and effect, and the Company acknowledges that it has no defense,
offset or counterclaim with respect thereto.
7. COUNTERPARTS. This Amendment may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument and any of the parties hereto may execute this Amendment by signing
any such counterpart.
8. EXPENSES. The Company agrees to pay and save the Agent and the Banks
harmless from liability for all costs and expenses of the Agent and the Banks
arising in respect of this Amendment, including the reasonable fees and expenses
of the respective counsel to the Agent and the Banks in connection with
preparing and reviewing this Amendment and any related agreements and documents.
9. GOVERNING LAW. This Amendment is a contract made under, and shall be
governed by and construed in accordance with, the laws of the State of Michigan
applicable to contracts made and to be performed entirely within such state and
without giving effect to the choice law principles of such state.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed and delivered as of the date first written above.
CASTING TECHNOLOGY COMPANY
By: AMCAST CASTING TECHNOLOGIES, INC.,
Its General Partner
By: /s/ Douglas D. Watts
-----------------------------------------
Its: Vice President
--------------------------------
And By: IZUMI, INC.,
its General Partner
By: /s/ Sadao Taura
-----------------------------------------
Its: President
--------------------------------
AMCAST CASTING TECHNOLOGIES, INC.,
individually
By: /s/ Douglas D. Watts
-----------------------------------------
Its: Vice President
--------------------------------
24
<PAGE> 5
IZUMI, INC.,
individually
By: /s/ Sadao Taura
-----------------------------------------
Its: President
--------------------------------
NBD BANK, individually and as Agent
By: /s/ Edward C. Hathaway
-----------------------------------------
Its: First Vice President
THE ASAHI BANK, LTD., acting
through its Chicago branch
By: /s/ Masahiro Katagiri
-----------------------------------------
Its: Senior Manager
Executed as of the date first set forth above for the purpose of consenting to
the assignment described in Section 5 above:
AMCAST INDUSTRIAL CORPORATION,
as Guarantor
By: /s/ Douglas D. Watts
------------------------------
Its: Vice President
--------------
IZUMI INDUSTRIES, LTD.,
as Guarantor
By: /s/ Hajimi Izumi
------------------------------
Its: Chairman & Ceo
--------------
25
<PAGE> 6
SECOND AMENDMENT AND CONFIRMATION
---------------------------------
OF GUARANTY AGREEMENT - NBD
---------------------------
THIS SECOND AMENDMENT AND CONFIRMATION OF GUARANTY AGREEMENT - NBD,
dated as of January 28, 1997 (this "Confirmation"), made by Amcast Industrial
Corporation, an Ohio corporation (the "Guarantor"), in favor of NBD Bank, a
Michigan banking corporation ("NBD").
RECITALS
--------
A. Casting Technology Company, an Indiana general partnership (the
"Company"), has entered into a Credit and Intercreditor Agreement dated July 28,
1995 (as amended, the "Credit Agreement") with NBD and The Asahi Bank, Ltd., a
Japanese banking corporation acting through its Chicago Branch ("Asahi")
(collectively, the "Banks" and individually, a "Bank"), and NBD, as agent for
the Banks (in such capacity, the "Agent").
B. The Guarantor has entered into a Guaranty Agreement - NBD, dated as
of July 28, 1995 (as amended, the "Guaranty"), in favor of NBD pursuant to which
the Guarantor guaranteed, among other things, the payment of the Company's
obligations to NBD under the Credit Agreement.
C. The Company, the Banks and the Agent have entered into a Third
Amendment to Credit and Intercreditor Agreement of even date herewith (the
"Amendment"), pursuant to which, among other things, the Banks have agreed to
increase the credit facilities of the Company to an aggregate principal amount
not to exceed Thirty-Nine Million Dollars ($39,000,000), of which NBD has
committed to provide an aggregate principal amount not to exceed Twenty-Three
Million, Four Hundred Thousand Dollars ($23,400,000).
D. The Guarantor wishes to confirm to NBD its obligations under the
Guaranty and desires to amend the Guaranty to further guaranty the obligations
of the Company to NBD under the Credit Agreement as amended by the Amendment.
AGREEMENT
---------
Based upon these recitals, the parties agree as follows:
1. CONFIRMATION. The Guarantor confirms to NBD the continuing effect of
the Guaranty as a guaranty of the Guaranteed Obligations (as defined in the
Guaranty).
26
<PAGE> 7
2. AMENDMENT. Section (1)(a) of the Guaranty shall be amended by
replacing the number "$21,000,000" with the number "$23,400,000".
3. REFERENCES TO THE GUARANTY. From and after the date of this
Confirmation, references to the Guaranty in the Credit Agreement, the Guaranty
and all other documents executed pursuant to the Credit Agreement shall be
deemed to be references to the Guaranty as amended hereby.
4. REPRESENTATIONS AND WARRANTIES. The Guarantor represents and
warrants that the representations and warranties set forth in Section 5 of the
Guaranty are true and correct as of the date hereof with the same effect as if
made on that date. Except as expressly amended, the Guaranty shall remain in
full force and effect.
5. COUNTERPARTS. This Confirmation may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument and any of the parties hereto may execute this Confirmation by
signing any such counterpart.
6. GOVERNING LAW. This Confirmation is made under, and the rights and
obligations of the parties hereunder, shall be governed by and construed in
accordance with, the laws of the State of Michigan applicable to contracts to be
made and to be performed entirely within such State.
IN WITNESS WHEREOF, the parties hereto have caused this Confirmation to
be duly executed and delivered as of the date first written above.
AMCAST INDUSTRIAL CORPORATION
By: /s/ Douglas D. Watts
-------------------------------
Its: VICE PRESIDENT
NBD BANK
By: /s/ Edward C. Hathaway
-------------------------------
Its: FIRST VICE PRESIDENT
27
<PAGE> 1
EXHIBIT 13.1
------------
SELECTED DATA
($ in thousands except per common share and statistical data)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL DATA 1997 1996 1995 1994 1993
Net sales $387,051 $343,934 $328,231 $271,856 $222,643
Gross profit 69,040 70,696 68,111 59,258 50,425
Gross profit percent 17.8% 20.6% 20.8% 21.8% 22.6%
Income before income taxes 20,005 24,731 26,098 22,067 18,831
Net income 12,983 15,926 17,171 14,454 12,052
Working capital 26,260 57,774 47,845 48,590 36,097
Total assets 508,918 269,217 229,367 194,161 176,537
Long-term debt 145,304 58,783 29,687 13,910 17,929
PER COMMON SHARE DATA
Net income $ 1.50 $ 1.85 $ 2.02 $ 1.72 $ 1.44
Weighted average number of common
shares outstanding (in thousands) 8,674 8,606 8,517 8,425 8,347
Dividends declared $ .56 $ .56 $ .53 $ .49 $ .48
Book value 17.24 15.80 14.52 13.02 11.81
STATISTICAL DATA
Current ratio 1.1 2.1 1.9 2.0 1.9
Long-term debt as a percent of capital 47.9% 30.2% 19.3% 11.2% 15.3%
Number of associates 4,040 2,600 2,400 2,300 1,900
</TABLE>
Net income for 1993 is Income before Cumulative Effect of a Change in
Accounting Principle.
28
<PAGE> 2
MANAGEMENT'S DISCUSSION OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
($ in thousands except per share amounts)
RESULTS OF OPERATIONS In 1997, the Company experienced double-digit sales growth
as net sales increased 12.5% to $387,051. By segment, Flow Control Products
sales increased slightly while Engineered Components sales increased 21.8%.
Volume increases in both segments increased total net sales by 15%; however,
reduced prices slightly offset the favorable impact of the increased volume. Net
sales in 1996 were $343,934, up 4.8% from net sales of $328,231 in 1995. By
segment, Flow Control Products sales increased 8.6%, primarily due to higher
unit volumes, and Engineered Components sales were slightly ahead of the prior
year.
Gross profit was $69,040, $70,696, and $68,111 in 1997, 1996, and 1995,
respectively. As a percentage of sales, gross profit decreased to 17.8% in 1997
from 20.6% in 1996 and 20.8% in 1995. Higher volume provided increased gross
profit in 1997; however, this improvement was partly offset by new facility
start-up costs and a cumulative $3,500 charge for overstated inventory. In 1997
and 1996, the gross profit percentage was impacted by an unfavorable sales mix.
Selling, general and administrative (SG&A) expenses were $41,798,
$43,368, and $41,139 in 1997, 1996, and 1995, respectively. SG&A expense
increased in 1996 to support higher sales volume and future business expansion
in the automotive market. As a percentage of sales, SG&A decreased to 10.8% in
1997 from 12.6% in 1996 and 12.5% in 1995. Higher sales volume and reduced
spending levels contributed to the decrease in 1997.
In the fourth quarter of fiscal year 1996, Casting Technology Company
(CTC), the Company's joint venture with Izumi Industries, launched several new
products that resulted in an unusually steep production ramp-up in 1997. The
ramp-up caused inefficiencies at CTC during this period, including unusually
high handling and freight costs in addition to the typically high launch-related
costs. The Company's pre-tax share of CTC's loss for 1997 was $2,416.
Interest expense of $5,135 increased from $2,348 in 1996 and $1,387 in
1995. Interest expense increased in 1997 primarily due to lower interest
capitalization and, to a lesser degree, higher debt levels. Capitalized interest
was $145, $2,038, and $390 in 1997, 1996, and 1995, respectively. Interest
expense increased in 1996 as the Company borrowed $50,000 of senior debt. A
large portion of the proceeds financed plant construction and expansion and,
accordingly, the interest related to such long-term projects was capitalized.
Interest expense is expected to increase significantly in 1998 due to higher
debt levels related to the acquisition of Speedline S.p.A. (Speedline) discussed
below.
The effective tax rate for 1997, 1996, and 1995 was 35.1%, 35.6%, and
34.2%, respectively. Changes in the effective tax rates primarily reflect the
level of federal and state tax credits.
29
<PAGE> 3
FLOW CONTROL PRODUCTS Net sales of the Flow Control Products segment were
$162,150 in 1997 compared with $159,323 in 1996 and $146,692 in 1995. Increased
volumes of copper and brass plumbing fittings in 1997 provided a 5.5% increase
in net sales. Lower selling prices partially offset this increase, as the
Company experienced competitive pricing pressures in copper plumbing fittings in
much of the fiscal year's second half. Pricing pressures, together with a
product mix that included low margin products, reduced net sales by
approximately 3.5% and narrowed margins. As a result, operating income of
$24,358 in 1997 decreased slightly from 1996. In 1996, net sales increased 8.6%
while operating income of $25,236 remained equal to the prior year. Although all
businesses in this segment experienced higher volumes in 1996, the primary
increase in sales came from shipments of brass fittings which sell at lower
margins.
ENGINEERED COMPONENTS Net sales of the Engineered Components segment were
$224,901 in 1997, compared with $184,611 in 1996 and $181,539 in 1995. The sales
increase for 1997 resulted primarily from higher demand for the Company's
aluminum wheels, the full year effect of the Company's new automotive plant in
Ohio, and the introduction of several new products for automotive suspension
systems. This increased volume resulted in a 23.5% increase in net sales, which
was partially offset by lower-than-expected demand for other products due to
strikes at several of the Company's automotive customers. Operating income of
$9,531 in 1997 was slightly higher than the prior year, as new facility start-up
costs partially offset the impact of the increased sales volumes. In addition,
the Company recorded a one-time, cumulative, non-cash charge of $3,500 to reduce
overstated inventory values at the Company's Amcast Precision unit. Excluding
the one-time charge, operating income increased 39.8% from the prior year. In
1996, net sales were up slightly from the prior year as sales of aluminum wheels
were higher. This increase was diminished by lower demand for other automotive
components and volumes lost during a third quarter labor strike at GM. Operating
income increased 5.2% primarily due to improved operating efficiencies.
SPEEDLINE ACQUISITION On August 19, 1997, the Company acquired all of the
outstanding stock of Speedline. The purchase price was approximately $133,300,
consisting of cash payments of $60,600, the assumption of approximately $60,200
in debt and the issuance of 478,240 shares of the Company's common stock with a
fair market value of $12,500. Of the cash payments, $4,000 is deferred until May
1998, and $4,000 is due December 31, 1998, contingent upon future operating
income of Speedline. The acquisition resulted in goodwill of approximately
$34,300.
Located near Padova, Italy, Speedline is a major European manufacturer of
light-alloy wheels. Speedline's products are sold principally to original
equipment manufacturers in the automotive industry. For the twelve months ended
August 31, 1997, Speedline had net sales of approximately $209,000.
30
<PAGE> 4
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operations was $30,675 and $33,638 in 1997 and 1996,
considerably higher than the $15,464 provided in 1995. In each of the three
years, cash was primarily provided by net income and depreciation. Accounts
payable increased in 1997 due to acquisition related expenses, purchases for
expansion activities, and increased sales activity. In 1996, accounts receivable
increased as a result of increased sales while inventories decreased primarily
due to the more efficient management of inventories. In 1995, inventories and
accounts receivables increased to support the increased sales volume.
Net cash used by investing activities during 1997 was $91,954, as
compared with $51,223 in 1996 and $42,743 in 1995. Investing activities for 1997
include $48,486 expended for the Speedline acquisition discussed above. Capital
expenditures totaled $40,377, $48,640, and $41,724 in 1997, 1996, and 1995,
respectively. To support business expansion activities, investments were made in
property, plant, and equipment and in the Company's joint venture, Casting
Technology Company. During this time period, the Company constructed two new
facilities and completed expansions at four facilities. At August 31, 1997, the
Company had $5,277 of commitments for capital expenditures to be made in 1998,
primarily for the Engineered Components segment.
Net cash provided by financing activities was $65,474 in 1997, as
compared with $21,712 and $13,151 for 1996 and 1995, respectively. Financing
activities in 1997 include $70,000 in borrowings under the Company's new credit
agreement, discussed below, in part to finance the Speedline acquisition. In
1996 and 1995, increased borrowings were used to fund business expansion. In
1996 the Company completed a private placement of $50,000 in senior notes that
mature in November 2005 and reduced outstanding debt by $24,321. Borrowings in
1995 were under the existing revolving credit agreement and lines of credit.
On August 14, 1997, the Company replaced its prior credit facility with a
new Credit Agreement (the Agreement) that provides for up to $200,000 in
borrowings through 2002. At August 31, 1997, the Company had unused borrowing
capacity of $38,432, under the most restrictive debt covenant of the Agreement,
The Company also has lines of credit totaling $20,000 that were unused at August
31, 1997. In addition, Speedline has short-term lines of credit totaling
$81,283, of which $27,245 was available at August 31, 1997.
The ratio of long-term debt as a percent of capital increased to 47.9% at
August 31, 1997, from 30.2% at August 31, 1996. The increase reflects the higher
level of borrowings as a result of the recent Speedline acquisition. Book value
per common share at August 31, 1997, was $17.24, up from $15.80 for the prior
year. One million preferred shares and 5.8 million common shares are authorized
and available for future issuance. Management believes the Company has adequate
financial resources to meet its future needs.
31
<PAGE> 5
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 more fully described
in the Commitments and Contingencies note to the consolidated financial
statements. At August 31, 1997, the Company had reserves of $1,900 accrued 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, results of
operations, or cash flows. The Company is presently unaware of the existence of
any potential material environmental costs that are likely to occur in
connection with disposition of any of its property.
IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS. During 1997, the Company adopted
Statement of Financial Accounting Standards (SFAS) No. 121 "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of."
The adoption of SFAS No. 121 did not have a material effect on the Company's
consolidated financial statements. The Company also adopted SFAS No. 123
"Accounting for Stock-Based Compensation", which encourages, but does not
require, companies to record compensation cost for stock-based employee
compensation plans at fair value. The adoption of SFAS No. 123 had no effect on
the Company's consolidated financial statements as the Company elected to
continue to account for such transactions, as permitted, under Accounting
Principles Board Opinion No. 25. In June 1997, the Financial Accounting
Standards Board issued SFAS No. 130, "Reporting Comprehensive Income," and SFAS
No. 131, "Disclosure about Segments of an Enterprise and Related Information",
both of which will become effective for the Company during fiscal year 1999. The
Company has not determined the effect of these new standards.
32
<PAGE> 6
REPORT OF ERNST & YOUNG LLP
INDEPENDENT AUDITORS
Shareholders and Board of Directors
Amcast Industrial Corporation
Dayton, Ohio
We have audited the accompanying consolidated statements of financial condition
of Amcast Industrial Corporation and subsidiaries as of August 31, 1997 and
1996, and the related consolidated statements of income, shareholders' equity,
and cash flows for each of the three years in the period ended August 31, 1997.
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 generally accepted auditing
standards. 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 financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Amcast
Industrial Corporation and subsidiaries at August 31, 1997 and 1996, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended August 31, 1997, in conformity with generally
accepted accounting principles.
/s/Ernst & Young LLP
- --------------------
Dayton, Ohio
October 16, 1997
33
<PAGE> 7
CONSOLIDATED STATEMENTS OF INCOME
($ in thousands except per share amounts)
<TABLE>
<CAPTION>
Year Ended August 31
1997 1996 1995
<S> <C> <C> <C>
Net sales $ 387,051 $ 343,934 $ 328,231
Cost of sales 318,011 273,238 260,120
--------- --------- ---------
GROSS PROFIT 69,040 70,696 68,111
Selling, general and administrative expenses 41,798 43,368 41,139
--------- --------- ---------
OPERATING INCOME 27,242 27,328 26,972
Equity in (loss) income of joint venture
and other income and expense (2,102) (249) 513
Interest expense 5,135 2,348 1,387
--------- --------- ---------
INCOME BEFORE INCOME TAXES 20,005 24,731 26,098
Income taxes 7,022 8,805 8,927
--------- --------- ---------
NET INCOME $ 12,983 $ 15,926 $ 17,171
========= ========= =========
Net income per share $ 1.50 $ 1.85 $ 2.02
========= ========= =========
</TABLE>
See notes to consolidated financial statements
34
<PAGE> 8
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
($ in thousands)
<TABLE>
<CAPTION>
August 31
1997 1996
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 9,608 $ 5,413
Accounts receivable 100,589 50,407
Inventories 71,960 45,021
Other current assets 21,068 8,380
-------- --------
TOTAL CURRENT ASSETS 203,225 109,221
PROPERTY, PLANT, AND EQUIPMENT
Land 5,067 2,385
Buildings 47,320 33,382
Machinery and equipment 285,115 166,286
Construction in progress 19,560 42,948
------ ------
357,062 245,001
Less accumulated depreciation 121,818 106,395
------- -------
235,244 138,606
GOODWILL 36,784 2,602
OTHER ASSETS 33,665 18,788
------ ------
$508,918 $269,217
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Short-term debt $ 54,038
Current portion of long-term debt 7,087 $ 1,105
Accounts payable 79,732 30,750
Compensation and related items 16,717 10,174
Accrued expenses 19,391 9,418
-------- --------
TOTAL CURRENT LIABILITIES 176,965 51,447
LONG-TERM DEBT - LESS CURRENT PORTION 145,304 58,783
DEFERRED INCOME TAXES 8,400 12,126
DEFERRED LIABILITIES 20,023 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 - 9,177,455 and 8,618,491 shares, respectively 9,177 8,618
Capital in excess of stated value 78,484 65,003
Retained earnings 70,565 62,543
-------- --------
158,226 136,164
-------- --------
$508,918 $269,217
======== ========
</TABLE>
See notes to consolidated financial statements
35
<PAGE> 9
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
($ in thousands)
<TABLE>
<CAPTION>
Capital in
Common Excess of Retained
Shares Stated Value Earnings Total
<S> <C> <C> <C> <C>
BALANCE AT SEPTEMBER 1, 1994 $ 8,458 $ 62,912 $ 38,793 $ 110,163
Net income 17,171 17,171
Cash dividends declared, $.53 per share (4,523) (4,523)
Stock options exercised 98 1,029 1,127
Other 234 33 267
-------------- ---------------- -------------- ----------------
BALANCE AT AUGUST 31, 1995 8,556 64,175 51,474 124,205
Net income 15,926 15,926
Cash dividends declared, $.56 per share (4,824) (4,824)
Stock options exercised 62 780 842
Other 48 (33) 15
-------------- ---------------- -------------- ----------------
BALANCE AT AUGUST 31, 1996 8,618 65,003 62,543 136,164
Net income 12,983 12,983
Stock issued for acquisition 478 12,022 12,500
Cash dividends declared, $.56 per share (4,922) (4,922)
Stock options exercised 78 1,356 1,434
Other 3 103 (39) 67
-------------- ---------------- -------------- ----------------
BALANCE AT AUGUST 31, 1997 $ 9,177 $ 78,484 $ 70,565 $ 158,226
============== ================ ============== ================
</TABLE>
See notes to consolidated financial statements
36
<PAGE> 10
CONSOLIDATED STATEMENTS OF CASH FLOWS
($ in thousands)
<TABLE>
<CAPTION>
Year Ended August 31
1997 1996 1995
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income $ 12,983 $ 15,926 $ 17,171
Depreciation and amortization 20,463 17,428 14,392
Deferred liabilities (801) 2,364 (793)
Changes in assets and liabilities, net of acquisition:
Accounts receivable (5,203) (5,764) (6,243)
Inventories (4,323) 4,125 (10,677)
Other current assets (2,920) (594) (2,643)
Accounts payable 8,077 (2,897) 6,478
Accrued liabilities (669) 2,745 (801)
Other 3,068 305 (1,420)
-------- -------- --------
NET CASH PROVIDED BY OPERATIONS 30,675 33,638 15,464
INVESTING ACTIVITIES:
Additions to property, plant, and equipment (40,377) (48,640) (41,724)
Acquisition, net of cash received (48,486)
Contributions to joint venture (3,226) (2,774) (6,660)
Other assets 135 191 5,641
-------- -------- --------
NET CASH USED BY INVESTING ACTIVITIES (91,954) (51,223) (42,743)
FINANCING ACTIVITIES:
Additions to long-term debt 70,000 50,000 20,300
Reduction in long-term debt (1,105) (20,904) (4,523)
Short-term borrowings (3,417) 503
Dividends (4,922) (4,824) (4,523)
Other 1,501 857 1,394
-------- -------- --------
NET CASH PROVIDED BY FINANCING ACTIVITIES 65,474 21,712 13,151
-------- -------- --------
Net change in cash and cash equivalents 4,195 4,127 (14,128)
Cash and cash equivalents at beginning of year 5,413 1,286 15,414
-------- -------- --------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 9,608 $ 5,413 $ 1,286
======== ======== ========
</TABLE>
See notes to consolidated financial statements
37
<PAGE> 11
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($ in thousands except per share data)
ACCOUNTING POLICIES
THE CONSOLIDATED FINANCIAL STATEMENTS include the accounts of Amcast Industrial
Corporation and its domestic and foreign subsidiaries (the Company).
Intercompany accounts and transactions have been eliminated. The Company's
investment in Casting Technology Company, a joint venture, is included in the
accompanying consolidated financial statements using the equity method of
accounting. Certain prior year amounts have been reclassified to conform to the
current year presentation.
FOR FOREIGN SUBSIDIARIES, the local foreign currency is the functional currency.
Assets and liabilities are translated into U.S. dollars at the rate of exchange
existing at year-end. Translation gains and losses are included as a component
of shareholders' equity. Income statement amounts are translated at the average
monthly exchange rates. Transaction gains and losses are included in the
statement of income and were not material.
REVENUE is recognized at the time products are shipped.
CASH AND CASH EQUIVALENTS include amounts on deposit with financial institutions
and investments with original maturities of 90 days or less.
ACCOUNTS RECEIVABLE are stated net of allowances for doubtful accounts of $346
and $233 at August 31, 1997 and 1996, respectively.
INVENTORIES are valued at the lower of cost or market using the last-in,
first-out (LIFO) and the first-in, first-out (FIFO) methods.
PROPERTY, PLANT, AND EQUIPMENT are stated at cost. Expenditures for significant
renewals and improvements are capitalized. Repairs and maintenance are charged
to expense as incurred. Depreciation is computed using the straight-line method
based upon the estimated useful lives of the assets as follows: buildings - 20
to 40 years; machinery and equipment - 3 to 20 years.
GOODWILL represents the excess of the cost of businesses acquired over the fair
market value of identifiable net assets at the dates of acquisition. Goodwill is
amortized on a straight-line basis over 40 years. Accumulated amortization of
goodwill was $916 and $830 at August 31, 1997 and 1996, respectively. The
carrying value of goodwill is evaluated periodically in relation to the
operating performance and future undiscounted cash flows of the underlying
businesses.
DEFERRED INCOME TAXES are provided for temporary differences between financial
and tax reporting in accordance with the liability method under the provisions
of Statement of Financial Accounting Standards (SFAS) No. 109, "Accounting for
Income Taxes."
NET INCOME PER SHARE is computed using the weighted average number of common
shares outstanding during each year. Outstanding stock options, which are common
stock equivalents, are not included, as they do not have a material dilutive
effect. In February 1997, the Financial Accounting Standards Board issued SFAS
No. 128, "Earnings per Share," which will become effective for the Company
during fiscal year 1998. The Company does not believe the adoption of the new
standard, which requires the exclusion of common stock equivalents from primary
earnings per share, will have a material effect on earnings per share.
38
<PAGE> 12
USE OF ESTIMATES and assumptions are made by management in the preparation of
the financial statements in conformity with generally accepted accounting
principles that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
NEW ACCOUNTING STANDARDS issued in June 1997 include SFAS No. 130, "Reporting
Comprehensive Income," and SFAS No. 131, "Disclosure about Segments of an
Enterprise and Related Information," both of which will become effective for the
Company during fiscal year 1999. The Company has not determined the effect of
these new standards.
39
<PAGE> 13
ACQUISITION
On August 19, 1997, the Company acquired all of the outstanding stock
of Speedline S.p.A. and its subsidiaries (Speedline), a major European
manufacturer of light alloy wheels serving the automotive original equipment
market. The purchase price was approximately $133,300, consisting of cash
payments of $60,600, the assumption of $60,200 in debt, and the issuance of
478,240 shares of the Company's common stock with a fair market value of
$12,500. Of the cash payments, $4,000 is deferred until May 1998, and $4,000 is
due December 31, 1998, contingent upon the future operating income of Speedline
The acquisition of Speedline has been accounted for by the purchase method.
Accordingly, the cost of the acquisition was allocated on the basis of the
estimated fair market value of the assets acquired and liabilities assumed,
resulting in goodwill of $34,300. A summary of the purchase price allocation is
as follows:
<TABLE>
<CAPTION>
<S> <C>
Current assets $ 81,500
Property, plant, and equipment 75,700
Other assets 15,700
Goodwill 34,300
Current liabilities (59,600)
Capital leases (11,900)
Deferred liabilities (2,400)
----------
$ 133,300
==========
</TABLE>
Speedline's results of operations since the date of acquisition have
not been included in the Company's consolidated statements of income as they
were not material. The following summarized, unaudited pro forma results of
operations for the fiscal years ended August 31, 1997 and 1996, assume the
acquisition occurred as of the beginning of the respective periods:
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Net sales $595,703 $526,644
Gross profit 98,189 99,096
Net income 12,532 17,733
Net income per share $ 1.37 $ 1.95
- ------------------------------------------------------------------
</TABLE>
The pro forma financial information is presented for informational
purposes only and is not necessarily indicative of the operating results that
would have occurred had the acquisition been consummated as of the above dates,
nor are they indicative of future operating results.
40
<PAGE> 14
INVENTORIES
The major components of inventories as of August 31 are:
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Finished products $35,375 $24,121
Work in process 22,968 14,519
Raw materials and supplies 20,506 12,115
------- -------
78,849 50,755
Less amount to reduce certain inventories to LIFO value 6,889 5,734
------- -------
$71,960 $45,021
======= =======
</TABLE>
Inventories reported on the FIFO method were $35,788 and $13,811 at August 31,
1997 and 1996, respectively. The estimated replacement cost of inventories is
the amount reported before the LIFO reserve.
OTHER ASSETS
The major components of other assets as of August 31 are:
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Joint venture investment $10,449 $ 9,639
Assets held for sale 3,313 3,425
Other 19,903 5,724
------- -------
$33,665 $18,788
======= =======
</TABLE>
The joint venture investment represents the Company's share of Casting
Technology Company's net equity. Assets held for sale reflect the estimated
realizable values of the fixed assets of closed facilities.
41
<PAGE> 15
LONG-TERM DEBT AND CREDIT ARRANGEMENTS
The following table summarizes the Company's long-term borrowings at August 31:
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Senior notes $ 52,625 $ 53,500
Revolving credit notes 70,000
Industrial revenue bonds 6,158 6,388
Other debt 11,710
Capital leases 11,898
- ----------------------------------------------------
152,391 59,888
Less current portion 7,087 1,105
- ----------------------------------------------------
LONG-TERM DEBT $145,304 $ 58,783
====================================================
</TABLE>
Senior notes consist of two agreements with interest rates of 7.09% and
9.0%. The notes call for periodic principal payments and mature November 7,
2005, and September 15, 1999, respectively.
On August 14, 1997, the Company replaced its prior credit facility with
a new Credit Agreement (the Agreement) that provides for up to $200,000 in
borrowings through August 14, 2002. At August 31, 1997, $70,000 was outstanding
under the Agreement with an interest rate of 6.26 %. In addition, a commitment
fee is payable on the unused portion of the credit line. The Company also has
lines of credit totaling $20,000. These lines were unused at August 31, 1997,
and require no compensating balances or commitment fees.
Debt covenants require the Company to maintain certain debt-to-equity,
debt-to-earnings, and interest coverage ratios. Other provisions limit tangible
net worth and subsidiary indebtedness. At August 31, 1997, all retained earnings
were available for the payment of dividends.
Industrial revenue bonds consist of various issues at fixed and
variable interest rates, ranging from 3.1% to 5%. These bonds call for periodic
principal payments through 2004. These obligations are collateralized by
property, plant, and equipment with a net book value of $1,193 at August 31,
1997.
The Company has guaranteed debt totaling $22,380 at August 31, 1997,
for Casting Technology Company.
Other debt consists of various mortgage loans and other loans at fixed
and variable interest rates, ranging from 3% to 12.58%, and requires periodic
principal payments through 2011. These obligations are secured by property,
plant, and equipment with a net book value of $32,835 at August 31, 1997.
Capitalized lease obligations provide for aggregate payments, including
interest, of approximately $3,000 annually, payable through 2002. At August 31,
1997, future minimum payments for the leases were $14,795, including $2,897
representing interest.
The carrying amounts of the Company's debt instruments approximate fair
value as defined under SFAS No. 107. Fair value is estimated based on discounted
cash flows, as well as other valuation techniques.
Long-term debt maturities for each of the next five years are $7,087 in
1998, $7,632 in 1999, $5,353 in 2000, $3,217 in 2001, and $71,777 in 2002.
42
<PAGE> 16
The Company's foreign operations have short-term lines of credit
totaling approximately $75,000, which are subject to annual review by the
lending banks. At August 31, 1997, the average interest rate for the short-term
lines of credit was 7.4%. Amounts outstanding under these lines of credit are
payable on demand and total $48,493 as of August 31, 1997. Additionally, foreign
operations have revolving lines of credit with various factoring companies
totaling $6,283 for the factoring of accounts receivable on a with-recourse
basis, of which $5,545 was outstanding at August 31, 1997.
Capitalized interest was $145, $2,038, and $390 in 1997, 1996, and
1995, respectively. Interest paid was $5,057, $4,272, and $1,830 in 1997, 1996,
and 1995, respectively.
43
<PAGE> 17
STOCK OPTIONS
The Company has two plans under which stock options for the purchase of
common shares may be granted. The 1989 Stock Incentive Plan provides for the
granting of options for the purchase of a maximum of 1,200,000 shares, stock
appreciation rights, performance awards, and restricted stock awards to key
employees of the Company. Options awarded under the plan may not be granted at
an option price less than the fair market value of a share on the date the
option is granted, and the maximum term of an option may not exceed ten years.
All options currently granted under the plan are exercisable one year after the
date of grant.
The 1989 Director Stock Option Plan provides for the granting of
options for the purchase of a maximum of 120,000 shares. Under the plan, each
person serving as a director of the Company on the first business day of January
of each year, who is not employed by the Company, is automatically granted
options for the purchase of 1,500 shares. All options were granted at an option
price equal to the fair market value of a share on the date of grant. Each
option is exercisable one year after the date of grant and expires at the end of
five years.
Information regarding the Company's stock option plans for the years
ended August 31, 1997, 1996, and 1995 is as follows:
<TABLE>
<CAPTION>
1997 1996 1995
----------------------- ----------------------- -----------------------
EXERCISE EXERCISE EXERCISE
SHARES PRICE SHARES PRICE SHARES PRICE
--------- -------- ---------- -------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Outstanding at beginning of year 455,822 $18.15 414,820 $17.46 383,327 $15.14
Granted 135,527 $21.49 124,202 $18.14 139,637 $19.63
Exercised (77,606) $18.48 (60,775) $13.29 (97,144) $11.44
Cancelled (41,218) $19.18 (22,425) $18.54 (11,000) $17.83
--------- ---------- ----------
Outstanding at end of year 472,525 $18.96 455,822 $18.15 414,820 $17.45
========= ========== ==========
Options exercisable at end of year 340,153 $17.94 338,055 $18.16 280,183 $16.36
========= ========== ==========
Weighted-average fair value of
options granted during the year $4.63 $3.84
===== =====
</TABLE>
Information regarding options outstanding at August 31, 1997, is as follows :
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
-------------------------------- -------------------
WEIGHTED WEIGHTED WEIGHTED
REMAINING AVERAGE AVERAGE
CONTRACTUAL EXERCISE EXERCISE
RANGE OF EXERCISE PRICES NUMBER LIFE PRICE NUMBER PRICE
- ------------------------ ------ ---- ----- ------ -----
<S> <C> <C> <C> <C> <C>
$8.50 - $14.50 48,539 3.5 years $11.04 48,539 $11.04
$15.81 - $19.81 251,369 3.1 years $18.07 195,497 $18.11
$20.44 - $24.72 172,617 3.6 years $22.50 96,117 $21.09
</TABLE>
The Company has elected to adopt the disclosure-only provisions of SFAS
No. 123, "Accounting for Stock-Based Compensation," and continue to apply
Accounting Principles Board Opinion No. 25 and related interpretations in
accounting for its stock option plans. Accordingly, no compensation cost has
been recognized related to the Company's stock option plans. Consistent with the
provisions of SFAS 123, had compensation cost been determined based on the fair
value at the grant date for awards in fiscal 1997 and 1996, the effect on the
Company's net income and net income per share for such years would not be
material. The fair value of
44
<PAGE> 18
each option grant was estimated as of the grant date using the Black-Scholes
option-pricing model with the following assumptions for both years: expected
volatility 23%; dividend yield of 2.26%; expected life of 3.5 years; and a
risk-free interest rate of 6.3%.
LEASES
The Company has a number of operating lease agreements primarily
involving machinery, physical distribution, and computer equipment. Certain of
these leases contain renewal or purchase options that vary by lease. These
leases are noncancelable and expire on dates through 2003.
Rent expense was $4,978, $4,960, and $5,206 for the years ended August
31, 1997, 1996, and 1995, respectively.
The following is a schedule by year of future minimum rental payments
required under the operating leases that have initial or remaining noncancelable
lease terms in excess of one year as of August 31, 1997:
<TABLE>
<CAPTION>
<S> <C>
1998 $ 3,374
1999 5,113
2000 1,060
2001 923
2002 901
--------
TOTAL MINIMUM LEASE PAYMENTS $11,371
========
</TABLE>
PREFERRED SHARE PURCHASE RIGHTS
The Company has a Shareholder Rights Plan pursuant to which holders of
the Company's common shares receive a dividend of one preferred share purchase
right (collectively, the Rights) for each common share held. The Rights contain
features which, under defined circumstances, allow holders to buy shares at a
bargain price. Unless renewed, the Rights will expire on February 28, 1998. The
Rights are not presently exercisable and trade in tandem with the common shares.
The Rights become exercisable following the close of business on the tenth day
after a public announcement that a person or group has acquired 20% or more of
the common shares of the Company or a public announcement or commencement of a
tender or exchange offer which would result in ownership of 30% or more of the
common shares of Amcast. It is expected that the Rights will begin to trade
independently of the Company's common shares at that time.
The Company may redeem the Rights for one cent per Right any time prior
to the close of business on the tenth day following the day that a 20% position
is acquired and under certain circumstances thereafter, including certain
transactions not involving a 20% shareholder of the Company.
45
<PAGE> 19
COMMITMENTS AND CONTINGENCIES
At August 31, 1997, the Company has committed to capital expenditures
of $5,277 in 1998, 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 U.S. EPA led
multi-party sites and state environmental agency-led remediation sites. The
majority of these claims involve 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 at the multi-party sites. There are three Company owned properties where
state supervised cleanups are expected. None of these is expected to involve
material future expense. The Company believes that none of these will have a
material adverse effect on its financial position or results of operations. 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
August 31, 1997, the Company's accrued undiscounted reserve for such
contingencies was $1,900.
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
46
<PAGE> 20
MAJOR CUSTOMERS AND CREDIT CONCENTRATION
The Company sells products to customers primarily in the United States and,
with the acquisition of Speedline, will also sell products to original equipment
automotive manufacturers in Europe. The Company performs ongoing credit
evaluations of customers, and generally does not require collateral. Allowances
are maintained for potential credit losses and such losses have been within
management's expectations. On August 31, 1997, total trade receivables from the
domestic and foreign automotive industry were $66,635, and $22,388 was due from
the construction industry.
Sales to Engineered Components' largest customer, General Motors
Corporation, were $139,721, $114,473, and $120,100 for the years ended August
31, 1997, 1996, and 1995, respectively. Trade receivables from General Motors
Corporation on August 31, 1997 and 1996, were $16,511 and $14,551, respectively,
and were current. No other single customer accounted for a material portion of
trade receivables.
PENSION PLANS
The Company has a noncontributory defined benefit pension plan covering
certain employees. The plan covers salaried employees and provides pension
benefits that are based on years of credited service, employee compensation
during years preceding retirement, and the primary social security benefit. The
plan also covers hourly employees and provides pension benefits of stated
amounts for each year of credited service. The Company's policy is to fund the
annual amount required by the Employee Retirement Income Security Act of 1974.
Plan assets consist of U.S. Treasury bonds and notes, U.S. governmental agency
issues, corporate bonds, and common stocks. The plan held 350,000 common shares
of the Company at August 31, 1997 (8.6% of plan assets) and 1996 (6.8% of plan
assets).
The Company also sponsors a deferred compensation profit sharing plan
for the benefit of substantially all domestic salaried employees. The Company
provides a 15% match on employee contributions up to 6% of eligible compensation
and a supplemental savings match from 1% to 35% based on the Company achieving a
minimum return on shareholders' equity and subject to IRS limitations.
The Company participates in a multiemployer plan that provides defined
benefits to certain bargaining unit employees.
The following table sets forth the funded status and the amounts
recognized in the consolidated statements of financial condition for the
Company's defined benefit plan at August 31:
47
<PAGE> 21
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Actuarial present value of benefit obligation:
Vested benefit obligation $(86,337) $(82,720)
======== ========
Accumulated benefit obligation $(89,410) $(85,626)
======== ========
Projected benefit obligation $(94,404) $(90,299)
Plan assets at fair value 98,692 90,834
-------- --------
Overfunded projected benefit obligation 4,288 535
Unrecognized net gain (5,406) (360)
Unrecognized prior service cost 1,952 1,653
Unrecognized transition asset being recognized
over a minimum of 15 years (2,510) (3,067)
-------- --------
Net pension liability recognized in the consolidated statement
of financial condition $ (1,676) $ (1,239)
======== ========
</TABLE>
A summary of the components of net periodic pension cost for the
defined plan in 1997, 1996, and 1995, and the total amounts charged to expense
for the defined contribution and multiemployer plans follows:
<TABLE>
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Defined benefit plan:
Service cost of current period $ 1,588 $ 1,603 $ 1,133
Interest cost on projected benefit obligation 6,487 6,268 6,412
Actual return on plan assets (15,358) (12,630) (10,021)
Net amortization and deferral 7,806 5,410 2,868
-------- -------- --------
Net pension cost 523 651 392
Defined contribution plan 306 416 510
Multiemployer pension plan 241 232 214
-------- -------- --------
TOTAL COST $ 1,070 $ 1,299 $ 1,116
======== ======== ========
Assumed rates of return:
Weighted average discount rate 7.8% 7.5% 7.5%
Rate of future compensation increase 4.7% 4.7% 4.7%
Long-term return on assets:
Dedicated 7.3% 7.0% 8.0%
Nondedicated 10.5% 10.5% 10.5%
</TABLE>
Included in deferred liabilities at August 31, 1997 is an accrual
totaling $8,625 for termination benefits for Speedline employees. The liability
is based on the employee's length of service, position, and remuneration, and is
payable upon separation. There is no vesting period or funding requirement
associated with the liability.
48
<PAGE> 22
POSTRETIREMENT HEALTH CARE AND LIFE INSURANCE BENEFITS
The Company provides health care and life insurance benefits to
designated salaried and hourly employees who participate in a defined benefit
pension plan and who retired prior to January 1, 1992. The plan coordinates with
Medicare and requires employee contributions. The Company also provides similar
benefits to certain employees, represented by bargaining units, who retire
before attaining age 65 and meet certain minimum service requirements. Benefits
for the bargaining unit employees terminate when the retiree attains age 65. The
Company funds the postretirement benefits on a cash basis.
Accumulated postretirement benefit obligation recognized in 1997 and
1996:
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Retirees $4,267 $4,264
Fully eligible active plan participants 88 101
Other active employees 415 447
------ ------
4,770 4,812
Deferred loss 245 472
------ ------
$4,525 $4,340
====== ======
</TABLE>
In prior years, health care and life insurance benefits for retired
employees of closed facilities were provided for at the time the related
facility was closed. The accrued postretirement benefit obligation for these
retirees at August 31, 1997 and 1996 was $1,200 and $1,800, respectively.
Net periodic postretirement benefit expense for 1997, 1996 and 1995 is as
follows:
1997 1996 1995
Service cost $ 29 $ 28 $ 25
Interest cost 336 340 415
------------ -------------- -------------
$ 365 $ 368 $ 440
============ ============== =============
The actuarial assumptions used to determine costs and benefit obligation
includes a discount rate of 7.8% for 1997 and 7.5% for 1996. The assumed rates
of future increases in per capita cost of health care benefits (health care
trend rates) are 7% in 1997, 6% in 1998, and 5.5 % in 1999 and thereafter .
Increasing the health care trend rate by one percentage point would increase the
accumulated postretirement benefit obligation $323 and would increase the 1997
postretirement benefit cost $21.
49
<PAGE> 23
INCOME TAXES
The provisions for income taxes are as follows:
<TABLE>
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Currently payable
State and local $ 31 $ 171 $ 561
Foreign 384 507 542
Federal 4,016 2,702 4,896
------ ------ ------
4,431 3,380 5,999
Deferred
State and local 367 364 88
Federal 2,224 5,061 2,840
------ ------ ------
2,591 5,425 2,928
------ ------ ------
$7,022 $8,805 $8,927
====== ====== ======
</TABLE>
Reconciliations of income taxes computed by applying the statutory federal
income tax rate to the provisions for income taxes are as follows:
<TABLE>
<S> <C> <C> <C>
Federal income tax at statutory rate $7,002 $8,657 $9,134
Federal tax credits (150) (400)
State income taxes 259 348 422
Other (89) (200) (229)
------ ------ ------
$7.022 $8,805 $8,927
====== ====== ======
</TABLE>
Deferred taxes resulting from temporary differences between financial and tax
reporting are as follows:
<TABLE>
<S> <C> <C> <C>
Depreciation $3,354 $2,406 $ 846
Restructuring 316 785 847
Discontinued operations 645
Start-up costs (110) 1,979 1,359
Alternative minimum tax credit (1,538) 542 (51)
Other 569 (287) (718)
------ ------ ------
$2,591 $5,425 $2,928
====== ====== ======
</TABLE>
The Company has income tax credits of $152, $35, and $150 expiring in
2010, 2011, and 2012, respectively, and an alternative minimum tax credit of
$2,519 available to offset future tax payments. Income taxes paid totaled
$4,407, $1,905, and $6,603 in 1997, 1996, and 1995, respectively.
50
<PAGE> 24
Significant components of deferred tax assets and liabilities are as follows:
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Deferred tax assets related to:
Accrued compensation and related items $ 3,693 $ 5,163
Tax credit carryforwards 3,025 713
Intangible assets 2,998
Other 8,536 3,187
--------- ----------
18,252 9,063
Deferred tax liabilities related to:
Depreciation 13,514 11,770
Other 9,440 8,240
--------- ----------
22,954 20,010
--------- ----------
Net deferred tax liabilities $ 4,702 $ 10,947
========= ==========
</TABLE>
51
<PAGE> 25
BUSINESS SEGMENTS
The Company has two business segments, Flow Control Products and
Engineered Components, through which the Company serves the construction,
automotive, industrial, and aerospace sectors of the economy. See the inside
front cover and pages 4 through 13 for a review of the major products produced.
Flow Control Products sales of copper plumbing fittings amounted to
$115,763, $113,409, and $112,492 in 1997, 1996, and 1995, respectively. Sales of
aluminum products to the automotive industry by Engineered Components amounted
to $189,987, $151,237, and $150,215 in 1997, 1996, and 1995, respectively.
Consolidated export sales were $30,907, $25,615, and $25,383 for 1997, 1996, and
1995, respectively.
<TABLE>
<CAPTION>
($ in thousands)
NET SALES INCOME BEFORE INCOME TAXES
1997 1996 1995 1997 1996 1995
<S> <C> <C> <C> <C> <C> <C>
Flow Control Products $ 162,150 $ 159,323 $ 146,692 $ 24,358 $ 25,236 $ 25,387
Engineered Components 224,901 184,611 181,539 9,531 9,323 8,862
Corporate (6,647) (7,231) (7,277)
Equity in (loss) income
of joint venture and
other income and expense (2,102) (249) 513
Interest Expense (5,135) (2,348) (1,387)
------------ ------------ ------------- ----------- ----------- --------------
$ 387,051 $ 343,934 $ 328,231 $ 20,005 $ 24,731 $ 26,098
============ ============ ============= =========== =========== ==============
<CAPTION>
CAPITAL EXPENDITURES DEPRECIATION AND AMORTIZATION
1997 1996 1995 1997 1996 1995
<S> <C> <C> <C> <C> <C> <C>
Flow Control Products $ 6,318 $ 9,809 $ 12,236 $ 5,638 $ 5,370 $ 4,294
Engineered Components 34,042 38,767 29,371 14,665 11,892 9,954
Corporate 17 64 117 160 166 144
------------ ------------ ------------- ----------- ----------- --------------
$ 40,377 $ 48,640 $ 41,724 $ 20,463 $ 17,428 $ 14,392
============ ============ ============= =========== =========== ==============
<CAPTION>
IDENTIFIABLE ASSETS
1997 1996 1995
<S> <C> <C> <C>
Flow Control Products $ 100,632 $ 94,604 $ 92,373
Engineered Components:
U.S. 180,908 156,744 126,159
Foreign 155,356
Corporate 72,022 17,869 10,835
------------ ------------ ------------
$ 508,918 $ 269,217 $ 229,367
============ ============ ============
</TABLE>
52
<PAGE> 26
QUARTERLY FINANCIAL DATA (UNAUDITED)
($ in thousands except per share data)
<TABLE>
<CAPTION>
FISCAL QUARTER FOR THE YEAR
--------------------------------------------------------------------------------
1997 1st 2nd 3rd 4th
<S> <C> <C> <C> <C> <C>
NET SALES $ 90,789 $ 91,334 $ 106,223 $ 98,705 $ 387,051
GROSS PROFIT 19,105 15,524 * 18,114 16,297 69,040
NET INCOME 4,138 2,081 4,294 2,470 12,983
NET INCOME PER SHARE $ .48 $ .24 * $ .50 $ .28 $ 1.50
AVERAGE NUMBER OF SHARES OUTSTANDING 8,625 8,650 8,666 8,756 8,674
<CAPTION>
Fiscal Quarter For the Year
--------------------------------------------------------------------------------
1996 1st 2nd 3rd 4th
<S> <C> <C> <C> <C> <C>
Net sales $ 86,465 $ 81,796 $ 87,566 $ 88,107 $ 343,934
Gross profit 17,419 16,590 16,255 20,432 70,696
Net income 4,055 3,917 2,932 5,022 15,926
Net income per share $ .47 $ .46 $ .34 $ .58 $ 1.85
Average number of shares outstanding 8,577 8,614 8,616 8,617 8,606
<FN>
* After a one-time, cumulative, non-cash charge of $3,500 ($.26 per share) to
costs of goods sold as a consequence of overstated inventory values at the
Company's aerospace casting operation.
</TABLE>
53
<PAGE> 1
EXHIBIT 23.1
------------
Consent of Independent Auditors
We consent to the incorporation by reference in this Annual Report (Form 10-K)
of Amcast Industrial Corporation and subsidiaries of our report dated October
16, 1997, included in the 1997 Annual Report to Shareholders of Amcast
Industrial Corporation.
Our audits also included the financial statement schedule of Amcast Industrial
Corporation listed in item 14(a). This schedule is the responsibility of the
Company's management. Our responsibility is to express an opinion based on our
audits. In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly, in all material respects, the information set forth therein.
We also consent to the incorporation by reference in 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 on Form S-8 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 dated January
10, 1996, of our report dated October 16, 1997, with respect to the consolidated
financial statements incorporated herein by reference, and our report included
in the preceding paragraph with respect to the financial statement schedule
included in this Annual Report (Form 10-K) of Amcast Industrial Corporation and
subsidiaries.
/s/ Ernst & Young LLP
- ---------------------
November 21, 1997
Dayton, Ohio
54
<PAGE> 1
EXHIBIT 24.1
POWER OF ATTORNEY
-----------------
WHEREAS, Amcast Industrial Corporation (the "Company") intends to file
with the Securities and Exchange Commission its Annual Report on Form 10-K for
the year ended August 31, 1997;
NOW, THEREFORE, the undersigned in his capacity as a director of the
Company hereby appoints John H. Shuey and Douglas D. Watts, and each of them,
his true and lawful attorneys-in-fact and agent, with full power of substitution
and resubstitution, to execute in his name, place, and stead, the Company's
Annual Report on Form 10-K for the year ended August 31, 1997, (including an
amendment to such report) and any and all other instruments necessary or
incidental in connection therewith, and to file the same with the Securities and
Exchange Commission. Said attorneys shall have full power and authority to do
and perform in the name and on behalf of the undersigned, in the aforesaid
capacity, every act whatsoever necessary or desirable to be done, as fully to
all intents and purposes as the undersigned might or could do in person. The
undersigned hereby ratifies and approves the acts of said attorneys.
IN WITNESS WHEREOF, the undersigned has executed this instrument this
17th day of October, 1997.
/s/ James K. Baker
------------------
James K. Baker
55
<PAGE> 2
POWER OF ATTORNEY
-----------------
WHEREAS, Amcast Industrial Corporation (the "Company") intends to file
with the Securities and Exchange Commission its Annual Report on Form 10-K for
the year ended August 31, 1997;
NOW, THEREFORE, the undersigned in his capacity as a director of the
Company hereby appoints John H. Shuey and Douglas D. Watts, and each of them,
his true and lawful attorneys-in-fact and agent, with full power of substitution
and resubstitution, to execute in his name, place, and stead, the Company's
Annual Report on Form 10-K for the year ended August 31, 1997, (including an
amendment to such report) and any and all other instruments necessary or
incidental in connection therewith, and to file the same with the Securities and
Exchange Commission. Said attorneys shall have full power and authority to do
and perform in the name and on behalf of the undersigned, in the aforesaid
capacity, every act whatsoever necessary or desirable to be done, as fully to
all intents and purposes as the undersigned might or could do in person. The
undersigned hereby ratifies and approves the acts of said attorneys.
IN WITNESS WHEREOF, the undersigned has executed this instrument this
17th day of October, 1997.
/s/ Walter E. Blankley
----------------------
Walter E. Blankley
56
<PAGE> 3
POWER OF ATTORNEY
-----------------
WHEREAS, Amcast Industrial Corporation (the "Company") intends to file
with the Securities and Exchange Commission its Annual Report on Form 10-K for
the year ended August 31, 1997;
NOW, THEREFORE, the undersigned in his capacity as a director of the
Company hereby appoints John H. Shuey and Douglas D. Watts, and each of them,
his true and lawful attorneys-in-fact and agent, with full power of substitution
and resubstitution, to execute in his name, place, and stead, the Company's
Annual Report on Form 10-K for the year ended August 31, 1997, (including an
amendment to such report) and any and all other instruments necessary or
incidental in connection therewith, and to file the same with the Securities and
Exchange Commission. Said attorneys shall have full power and authority to do
and perform in the name and on behalf of the undersigned, in the aforesaid
capacity, every act whatsoever necessary or desirable to be done, as fully to
all intents and purposes as the undersigned might or could do in person. The
undersigned hereby ratifies and approves the acts of said attorneys.
IN WITNESS WHEREOF, the undersigned has executed this instrument this
17th day of October, 1997.
/s/ Peter H. Forster
--------------------
Peter H. Forster
57
<PAGE> 4
POWER OF ATTORNEY
-----------------
WHEREAS, Amcast Industrial Corporation (the "Company") intends to file
with the Securities and Exchange Commission its Annual Report on Form 10-K for
the year ended August 31, 1997;
NOW, THEREFORE, the undersigned in his capacity as a director of the
Company hereby appoints John H. Shuey and Douglas D. Watts, and each of them,
his true and lawful attorneys-in-fact and agent, with full power of substitution
and resubstitution, to execute in his name, place, and stead, the Company's
Annual Report on Form 10-K for the year ended August 31, 1997, (including an
amendment to such report) and any and all other instruments necessary or
incidental in connection therewith, and to file the same with the Securities and
Exchange Commission. Said attorneys shall have full power and authority to do
and perform in the name and on behalf of the undersigned, in the aforesaid
capacity, every act whatsoever necessary or desirable to be done, as fully to
all intents and purposes as the undersigned might or could do in person. The
undersigned hereby ratifies and approves the acts of said attorneys.
IN WITNESS WHEREOF, the undersigned has executed this instrument this
17th day of October, 1997.
/s/ Ivan W. Gorr
----------------
Ivan W. Gorr
58
<PAGE> 5
POWER OF ATTORNEY
-----------------
WHEREAS, Amcast Industrial Corporation (the "Company") intends to file
with the Securities and Exchange Commission its Annual Report on Form 10-K for
the year ended August 31, 1997;
NOW, THEREFORE, the undersigned in his capacity as a director of the
Company hereby appoints John H. Shuey and Douglas D. Watts, and each of them,
his true and lawful attorneys-in-fact and agent, with full power of substitution
and resubstitution, to execute in his name, place, and stead, the Company's
Annual Report on Form 10-K for the year ended August 31, 1997, (including an
amendment to such report) and any and all other instruments necessary or
incidental in connection therewith, and to file the same with the Securities and
Exchange Commission. Said attorneys shall have full power and authority to do
and perform in the name and on behalf of the undersigned, in the aforesaid
capacity, every act whatsoever necessary or desirable to be done, as fully to
all intents and purposes as the undersigned might or could do in person. The
undersigned hereby ratifies and approves the acts of said attorneys.
IN WITNESS WHEREOF, the undersigned has executed this instrument this
17th day of October, 1997.
/s/ R. William Van Sant
-----------------------
R. William Van Sant
59
<PAGE> 6
POWER OF ATTORNEY
-----------------
WHEREAS, Amcast Industrial Corporation (the "Company") intends to file
with the Securities and Exchange Commission its Annual Report on Form 10-K for
the year ended August 31, 1997;
NOW, THEREFORE, the undersigned in his capacity as a director of the
Company hereby appoints John H. Shuey and Douglas D. Watts, and each of them,
his true and lawful attorneys-in-fact and agent, with full power of substitution
and resubstitution, to execute in his name, place, and stead, the Company's
Annual Report on Form 10-K for the year ended August 31, 1997, (including an
amendment to such report) and any and all other instruments necessary or
incidental in connection therewith, and to file the same with the Securities and
Exchange Commission. Said attorneys shall have full power and authority to do
and perform in the name and on behalf of the undersigned, in the aforesaid
capacity, every act whatsoever necessary or desirable to be done, as fully to
all intents and purposes as the undersigned might or could do in person. The
undersigned hereby ratifies and approves the acts of said attorneys.
IN WITNESS WHEREOF, the undersigned has executed this instrument this
17th day of October, 1997.
/s/ Earl T. O'Loughlin
----------------------
Earl T. O'Loughlin
60
<PAGE> 7
POWER OF ATTORNEY
-----------------
WHEREAS, Amcast Industrial Corporation (the "Company") intends to file
with the Securities and Exchange Commission its Annual Report on Form 10-K for
the year ended August 31, 1997;
NOW, THEREFORE, the undersigned in his capacity as a director of the
Company hereby appoints John H. Shuey and Douglas D. Watts, and each of them,
his true and lawful attorneys-in-fact and agent, with full power of substitution
and resubstitution, to execute in his name, place, and stead, the Company's
Annual Report on Form 10-K for the year ended August 31, 1997, (including an
amendment to such report) and any and all other instruments necessary or
incidental in connection therewith, and to file the same with the Securities and
Exchange Commission. Said attorneys shall have full power and authority to do
and perform in the name and on behalf of the undersigned, in the aforesaid
capacity, every act whatsoever necessary or desirable to be done, as fully to
all intents and purposes as the undersigned might or could do in person. The
undersigned hereby ratifies and approves the acts of said attorneys.
IN WITNESS WHEREOF, the undersigned has executed this instrument this
17th day of October, 1997.
/s/ William G. Roth
-------------------
William G. Roth
61
<PAGE> 8
POWER OF ATTORNEY
-----------------
WHEREAS, Amcast Industrial Corporation (the "Company") intends to file
with the Securities and Exchange Commission its Annual Report on Form 10-K for
the year ended August 31, 1997;
NOW, THEREFORE, the undersigned in his capacity as a director of the
Company hereby appoints John H. Shuey and Douglas D. Watts, and each of them,
his true and lawful attorneys-in-fact and agent, with full power of substitution
and resubstitution, to execute in his name, place, and stead, the Company's
Annual Report on Form 10-K for the year ended August 31, 1997, (including an
amendment to such report) and any and all other instruments necessary or
incidental in connection therewith, and to file the same with the Securities and
Exchange Commission. Said attorneys shall have full power and authority to do
and perform in the name and on behalf of the undersigned, in the aforesaid
capacity, every act whatsoever necessary or desirable to be done, as fully to
all intents and purposes as the undersigned might or could do in person. The
undersigned hereby ratifies and approves the acts of said attorneys.
IN WITNESS WHEREOF, the undersigned has executed this instrument this
17th day of October, 1997.
/s/ Leo W. Ladehoff
--------------------
Leo W. Ladehoff
62
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