SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
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SECURITIES EXCHANGE ACT OF 1934
For the quarter ended November 28, 1999 Commission File Number 1-9967
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AMCAST INDUSTRIAL CORPORATION
(Exact name of registrant as specified in its charter)
Ohio 31-0258080
- --------------------------------- -----------------
(State of Incorporation) (I.R.S. Employer
Identification No.)
7887 Washington Village Drive, Dayton, Ohio 45459
- -------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
(937) 291-7000
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(Registrant's telephone number, including area code)
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 and 15(d) of the Securities Exchange Act of 1934
during the preceding twelve months, and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
----- ----
Number of Common Shares outstanding, no par value, as of November 28, 1999 -
8,956,920 shares.
<PAGE>
AMCAST INDUSTRIAL CORPORATION
REPORT ON FORM 10-Q
FOR THE QUARTER ENDED NOVEMBER 28, 1999
I N D E X
PART I - FINANCIAL INFORMATION PAGE
Item 1 - Financial Statements:
Consolidated Condensed Statements of Financial
Condition - November 28, 1999 and August 31, 1999 3
Consolidated Condensed Statements of Income -
for the Three Months Ended November 28, 1999
and November 29, 1998 4
Consolidated Condensed Statements of Retained Earnings -
for the Three Months Ended November 28, 1999
and November 29, 1998 4
Consolidated Condensed Statements of Cash Flows -
for the Three Months Ended November 28, 1999
and November 29, 1998 5
Notes to Consolidated Condensed Financial Statements 6-10
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations 11-15
Item 3 - Quantitative and Qualitative Disclosures
about Market Risk 16
PART II - OTHER INFORMATION
Item 6 - Exhibits and Reports on Form 8-K 16
SIGNATURES 17
<PAGE>
PART I - FINANCIAL INFORMATION
<TABLE>
<CAPTION>
AMCAST INDUSTRIAL CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF FINANCIAL CONDITION
($ in thousands)
(unaudited)
<S> <C> <C>
November 28 August 31
1999 1999
----------- -----------
ASSETS
Current Assets
Cash and cash equivalents $ 12,981 $ 6,928
Accounts receivable 101,987 97,819
Inventories 83,194 77,166
Other current assets 20,731 21,144
----------- -----------
Total Current Assets 218,893 203,057
Property, Plant, and Equipment 404,665 401,012
Less accumulated depreciation (151,042 (144,254)
----------- -----------
253,623 256,758
Goodwill 60,857 61,261
Other Assets 19,644 12,410
----------- -----------
$ 553,017 $ 533,486
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Short-term debt $ 5,224 $ 4,673
Current portion of long-term debt 4,930 6,182
Accounts payable 80,923 82,396
Accrued expenses 39,746 40,851
----------- -----------
Total Current Liabilities 130,823 134,102
Long-Term Debt - less current portion 194,063 174,061
Deferred Income Taxes 32,854 32,775
Deferred Liabilities 21,956 21,782
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 - 9,208,529 shares 9,209 9,209
Capital in excess of stated value 78,998 79,020
Accumulated other comprehensive income (losses) 1,305 (1,018)
Retained earnings 88,023 87,796
Cost of 251,609 and 253,609 common
shares in treasury (4,214) (4,241)
----------- -----------
173,321 170,766
----------- -----------
$ 553,017 $ 533,486
=========== ===========
</TABLE>
See notes to consolidated financial statements
3
<PAGE>
<TABLE>
<CAPTION>
AMCAST INDUSTRIAL CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
AND RETAINED EARNINGS
($ in thousands except per share amounts)
(unaudited)
Three Months Ended
--------------------------
<S> <C> <C>
November 28 November 29
1999 1998
----------- -----------
Consolidated Condensed Statements of Income
Net sales $ 146,079 $ 146,024
Cost of sales 127,453 121,177
----------- -----------
Gross Profit 18,626 24,847
Selling, general and administrative expenses 13,603 13,677
Gain on sale of business - (9,023)
----------- -----------
Operating Income 5,023 20,193
Equity in (income) loss of joint venture and
other (income) and expense (248) 51
Interest expense 2,823 3,585
----------- ----------
Income before Income Taxes 2,448 16,557
Income taxes 962 6,528
----------- -----------
Net Income $ 1,486 $ 10,029
=========== ===========
Consolidated Condensed Statements of Retained Earnings
Beginning retained earnings $ 87,796 $ 73,588
Net income 1,486 10,029
Dividends (1,254) (1,289)
Stock awards (5) -
----------- -----------
Ending Retained Earnings $ 88,023 $ 82,328
=========== ===========
Basic earnings per share $ 0.17 $ 1.09
=========== ===========
Diluted earnings per share $ 0.17 $ 1.09
=========== ===========
Dividends declared per share $ 0.14 $ 0.14
=========== ===========
Dividends paid per share $ 0.14 $ 0.14
=========== ===========
</TABLE>
See notes to consolidated financial statements.
4
<PAGE>
<TABLE>
<CAPTION>
AMCAST INDUSTRIAL CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
($ in thousands)
(unaudited)
Three Months Ended
--------------------------
<S> <C> <C>
November 28 November 29
1999 1998
----------- -----------
Operating Activities
Net income $ 1,486 $ 10,029
Depreciation and amortization 8,040 8,228
Gain on sale of business - (9,023)
Deferred liabilities (148) (2,466)
Changes in assets and liabilities:
Accounts receivable (11,438) 2,853
Inventories (6,073) (3,706)
Other current assets 397 (1,111)
Accounts payable (1,416) 3,849
Accrued liabilities (1,068) 7,588
Other (242) 1,637
------------ -----------
Net Cash (Used) Provided by Operations (10,462) 17,878
Investing Activities
Additions to property, plant, and equipment (5,595) (8,896)
Proceeds from sale of business - 35,604
Other 230 19
----------- -----------
Net Cash (Used) Provided by Investing
Activities (5,365) 26,727
Financing Activities
Additions to long-term debt - 15,000
Reduction in long-term debt (2,461) (42,379)
Short-term borrowings 24,262 1,371
Dividends (1,254) (1,289)
Purchase of treasury shares - (242)
Proceeds from sale leaseback 1,340 -
----------- -----------
Net Cash Provided (Used) by Financing
Activities 21,887 (27,539)
Effect of exchange rate changes on cash (7) 195
----------- -----------
Net change in cash and cash equivalents 6,053 17,261
Cash and cash equivalents at beginning of period 6,928 7,022
----------- -----------
Cash and Cash Equivalents at End of Period $ 12,981 $ 24,283
=========== ===========
</TABLE>
See notes to consolidated financial statements
5
<PAGE>
AMCAST INDUSTRIAL CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
($ in thousands, except per share amounts )
(unaudited)
Preparation of Financial Statements
The accompanying consolidated condensed 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 (CTC), a
joint venture, is included in the accompanying financial statements using the
equity method of accounting. The consolidated condensed financial statements are
unaudited and have been prepared in accordance with generally accepted
accounting principles for interim financial information and with the
instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do
not include all of the information and footnotes required for complete annual
financial statements and should be read in conjunction with the Company's
audited consolidated financial statements and footnotes for the year ended
August 31, 1999 included in the Company's Annual Report on Form 10-K. In the
opinion of management, all adjustments, consisting of only normally recurring
accruals, necessary for a fair presentation have been included.
Comprehensive Income
Comprehensive income includes all changes in shareholders' equity during a
period except those resulting from investments by and distributions to
shareholders. The components of comprehensive income are:
<TABLE>
<CAPTION>
Three Months Ended
---------------------------
<S> <C> <C>
November 28 November 29
1999 1998
----------- -----------
Net income $ 1,486 $ 10,029
Foreign currency translation adjustments 2,323 3,884
----------- -----------
$ 3,809 $ 13,913
=========== ===========
</TABLE>
Divestitures
During the first quarter of fiscal 1999, the Company sold Superior Valve Company
for $35,604 in cash. The transaction resulted in a pre-tax gain of $9,023. The
business, acquired by Amcast in 1986, produces specialty valves and related
products for the compressed gas and commercial refrigeration markets.
6
<PAGE>
AMCAST INDUSTRIAL CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
($ in thousands, except per share amounts)
(unaudited)
Inventories
The major components of inventories are:
<TABLE>
<S> <C> <C>
November 28 August 31
1999 1999
------------ -----------
Finished products $42,566 $36,979
Work in process 22,739 21,833
Raw materials and supplies 20,336 20,801
------------ -----------
85,641 79,613
Less amount to reduce certain
inventories to LIFO value 2,447 2,447
------------ -----------
$83,194 $77,166
============ ===========
</TABLE>
Long-Term Debt
The following table summarizes the Company's long-term borrowings:
<TABLE>
<S> <C> <C>
November 28 August 31
1999 1999
------------- -----------
Senior notes $ 50,000 $ 50,875
Revolving credit notes 110,316 112,793
Lines of credit 23,700 -
Industrial revenue bonds 5,750 5,750
Other debt 3,238 4,014
Capital leases 5,989 6,811
------------- -----------
198,993 180,243
Less current portion 4,930 6,182
------------- -----------
$ 194,063 $ 174,061
============= ===========
</TABLE>
During the first quarter of fiscal 2000, the Company amended its credit
agreement. The amendments included changes to certain restrictive covenants
including the interest coverage and debt-to-earnings ratios. The amendments also
included increases to the applicable LIBOR margin.
7
<PAGE>
AMCAST INDUSTRIAL CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
($ in thousands, except per share amounts)
(unaudited)
Earnings Per Share
The following table reflects the calculations for basic and diluted earnings per
share for the three-month periods ended November 28, 1999 and November 29, 1998,
respectively.
<TABLE>
<CAPTION>
Three Months Ended
---------------------------
<S> <C> <C>
November 28 November 29
1999 1998
----------- -----------
Net income $ 1,486 $ 10,029
=========== ===========
Basic Earnings per Share:
Basic shares 8,956 9,192
=========== ===========
Net income $ 0.17 $ 1.09
=========== ===========
Diluted Earnings per Share:
Basic shares 8,956 9,192
Stock options 6 10
----------- -----------
Diluted shares 8,962 9,202
=========== ===========
Net income $ 0.17 $ 1.09
=========== ===========
</TABLE>
For each of the periods presented, there were outstanding stock options excluded
from the computation of diluted earnings per share because the options were
antidilutive.
8
<PAGE>
BUSINESS SEGMENTS
Operating segments are organized internally primarily by the type of products
produced and markets served. The Company has aggregated similar operating
segments into two reportable segments: Flow Control Products and Engineered
Components. The Company evaluates segment performance and allocates resources
based on several factors, of which net sales and operating income are the
primary financial measures. At November 28, 1999, there were no significant
changes in identifiable assets of reportable segments from the amounts disclosed
at August 31, 1999, nor were there any changes in the reportable segments, or in
the measurement of segment operating results.
Operating information related to the Company's reportable segments is as
follows:
<TABLE>
<CAPTION>
Net Sales Operating Income
-------------------------- --------------------------
For the Three Months Ended For the Three Months Ended
-------------------------- --------------------------
<S> <C> <C> <C> <C>
November 28 November 29 November 28 November 29
1999 1998 1999 1998
----------- ----------- ----------- -----------
Flow Control Products $ 35,369 $ 39,216 $ 6,014 $ 5,737
Engineered Components 110,710 106,808 949 8,077
Corporate - - (1,940) (2,644)
----------- ----------- ----------- -----------
146,079 146,024 5,023 11,170
Disposition of businesses - - - (9,023)
Equity in (income) loss
of joint venture and
other (income) expense - - (248) 51
Interest expense - - 2,823 3,585
----------- ----------- ----------- -----------
Total net sales and
income before taxes $ 146,079 $ 146,024 $ 2,448 $ 16,557
=========== =========== =========== ===========
</TABLE>
9
<PAGE>
AMCAST INDUSTRIAL CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
($ in thousands, except per share amounts)
(unaudited)
Commitments and Contingencies
At November 28, 1999, the Company has committed to capital expenditures of
$3,326, 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. 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
November 28, 1999, the Company's accrued undiscounted reserve for such
contingencies was $1,580.
Allied-Signal Inc. brought an action against the Company seeking a
contribution from the Company equal to 50% of Allied-Signal's estimated $30,000
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. The court has
rendered its decision on this case, however, the exact amount of the verdict has
not yet been determined by the court. The amount will be significantly less than
the amount sought by the plaintiff and the Company estimates its liability
associated with the action to be between $500 and $1,500. The Company believes
its liability is at the low end of this range.
10
<PAGE>
AMCAST INDUSTRIAL CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Cautionary Statements Under the Private Securities Reform Act of 1995
Certain statements in this 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 events 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 Engineered
Components and Flow Control Products segments, effectiveness of production
improvement plans, inherent uncertainties in connection with international
operations and foreign currency fluctuations and labor relations at the Company
and its customers. The following discussion and analysis provides information
which management believes is relevant to an understanding of the Company's
consolidated results of operations and financial condition. This discussion
should be read in conjunction with the accompanying consolidated condensed
financial statements and notes thereto.
Acquisitions and Divestitures
During the first quarter of fiscal 1999, the Company sold Superior Valve Company
("Superior Valve") for $35.6 million in cash. The transaction resulted in a
pre-tax gain of $9.0 million. The facility, acquired by Amcast in 1986, produces
specialty valves and related products for the compressed gas and commercial
refrigeration markets.
Results of Operations
Demand for the Company's products was strong in the first quarter of fiscal 2000
as consolidated net sales were $146.1 million compared with $146.0 million for
the first quarter of fiscal 1999. Higher volume and favorable pricing increased
sales by 4.0% and 1.5%, respectively, offset by a reduction in sales from
divested operations and a stronger Italian lira. During the first quarter of
fiscal 1999, the Company sold Superior Valve which had contributed $4.6 million
to net sales of the Flow Control Products segment prior to its sale. By segment,
Engineered Components sales increased by 3.7% compared with the first quarter of
fiscal 1999, while Flow Control Products sales decreased by 9.8%.
Gross profit for the first quarter of fiscal 2000 decreased 25.0% to $18.6
million. As a percentage of sales, gross profit was 12.8% for the first quarter
compared with 17.0% for the same period of 1999. The decrease in gross profit is
primarily due to the continuation of operating issues encountered in several
manufacturing locations in the third and fourth quarters of fiscal 1999,
discussed more fully under Business Segments below.
11
<PAGE>
AMCAST INDUSTRIAL CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Selling, general and administrative (SG&A) expenses remained constant, both in
dollar amount and as a percentage of sales. As a percentage of sales, SG&A
expense was 9.3% and 9.4% in the first quarters of fiscal 2000 and fiscal 1999,
respectively.
The Company's pre-tax share of income from Casting Technology Company (CTC), the
Company's joint venture with Izumi Industries, was $0.1 million in the first
quarter of fiscal 2000 compared with a $0.8 million loss in the first quarter of
fiscal 1999. CTC's results for the first quarter of fiscal 1999 were negatively
impacted by foreign exchange losses resulting from the strengthening of the
Japanese yen, operating inefficiencies resulting from efforts to meet
extremely-high customer demand early in the year, and difficulties hiring and
retaining skilled labor which led to manufacturing inefficiencies and higher
scrap.
Interest expense was $2.8 million for the first quarter of fiscal 2000 compared
with $3.6 million for the first quarter of fiscal 1999. The decrease in interest
expense is primarily due to significant debt reductions late in fiscal 1999 and,
to a lesser degree, lower interest rates.
The effective tax rate was 39.3% and 39.4% for the first quarters of fiscal 2000
and 1999, respectively.
<TABLE>
<CAPTION>
Results by Business Segment (unaudited)
($ in thousands)
Net Sales Operating Income
-------------------------- --------------------------
For the Three Months Ended For the Three Months Ended
-------------------------- --------------------------
<S> <C> <C> <C> <C>
November 28 November 29 November 28 November 29
1999 1998 1999 1998
----------- ----------- ----------- -----------
Flow Control Products $ 35,369 $ 39,216 $ 6,014 $ 5,737
Engineered Components 110,710 106,808 949 8,077
Corporate - - (1,940) (2,644)
----------- ----------- ----------- -----------
146,079 146,024 5,023 11,170
Disposition of businesses - - - (9,023)
Equity in (income) loss
of joint venture and
other (income) expense - - (248) 51
Interest expense - - 2,823 3,585
----------- ----------- ----------- -----------
Total net sales and
income before taxes $ 146,079 $ 146,024 $ 2,448 $ 16,557
=========== =========== =========== ===========
</TABLE>
12
<PAGE>
AMCAST INDUSTRIAL CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Net sales for the Flow Control Products segment were $35.4 million for the first
quarter of fiscal 2000 compared with $39.2 million for the same period of fiscal
1999. The decrease reflects a $4.6 million reduction of sales due to the sale of
Superior Valve early in the first quarter of fiscal 1999. Better pricing for the
Company's copper and brass plumbing fittings increased sales by 4.6% and helped
to offset the reduction in net sales. Operating income increased 4.8% due to the
effect of higher pricing and slightly lower material costs, partially offset by
modestly higher operating costs.
Net sales for the Engineered Components segment were $110.7 million for the
first quarter of fiscal 2000 compared with $106.8 million for the same period of
fiscal 1999. Sales increased by 6.1% due to volume and 1.2% due to higher
material costs which are reflected in the selling price of the Company's
products. Sales of aluminum components were up significantly; however, aluminum
wheel sales in the first quarter were not as strong as the heavy demand
experienced in the comparable period last year stemming from the ending of the
extended General Motors work stoppage. A stronger Italian lira in the first
quarter of fiscal 2000 compared with the same period in fiscal 1999 reduced
sales by 3.6%. Operating income was $0.9 million for the first quarter compared
with $8.1 million for the comparable prior-year period as operating challenges
continued. Operating income was lower than the prior year due to high operating
costs at the Company's Gas City, Indiana, wheel plant and the Wapakoneta, Ohio,
suspension components plant as well as the lower wheel demand. Low yields and
labor inefficiencies continue to drive the higher production costs. Product
design and process improvements have been implemented at the Midwest plants and
management has initiated hiring practice changes to attract and retain skilled
labor. The Company has made progress, but some negative impact on the second
quarter of fiscal 2000 results is anticipated.
Liquidity and Capital Resources
For the first quarter of fiscal 2000, net cash used by operations was $10.5
million compared with net cash provided of $17.9 million for the first quarter
of fiscal 1999. Cash provided by net income plus the non-cash benefits of
depreciation totaled $9.5 million for fiscal 2000; however, a $20.0 million
increase in working capital requirements produced the negative cash flow. The
first quarter's working capital increase primarily reflects higher accounts
receivable due to the timing of cash receipts from the Company's largest
customers and increased inventory levels to meet customer requirements.
Investing activities used net cash of $5.4 in the first quarter of fiscal 2000
compared with net cash provided of $26.7 million in the first quarter of fiscal
1999. Proceeds from the sale of Superior Valve provided $35.6 million in the
first quarter of fiscal 1999 which were primarily used for the reduction of
long-term debt. Capital spending totaled $5.6 million in the first quarter of
fiscal 2000, compared with $8.9 million in the first quarter of fiscal 1999. At
November 28, 1999, the Company had $3.3 million of commitments for additional
capital expenditures, primarily for the Engineered Components segment.
13
<PAGE>
AMCAST INDUSTRIAL CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Financing activities provided $21.9 million in net cash in the first quarter of
fiscal 2000 versus net cash used of $27.5 million in fiscal 1999. Additional
financing included $24.3 million of net short-term borrowings and $1.4 million
from the sale-leaseback of equipment. Financing activities also included
long-term debt repayments of $2.5 million and dividend payments of $1.3 million.
Long-term debt was 52.8% of total capital at November 28, 1999 compared with
50.5% at August 31, 1999. The Company may borrow up to $200 million under a
credit agreement that expires August 14, 2002. During the first quarter of 2000,
the Company amended its credit agreement. These amendments included changes to
certain restrictive covenants including the interest coverage and
debt-to-earnings ratios. The amendments also included increases to the
applicable LIBOR margin. In addition, the Company maintains bank lines of credit
under which it may borrow up to $27 million. At November 28, 1999, $110.3
million was outstanding under the credit agreement and $23.7 million was
outstanding under available bank lines of credit. In addition, Speedline has
short-term lines of credit totaling $29.9 million, of which $26.8 million was
available at October 31, 1999. At November 28, 1999, the Company had unused
borrowing capacity of $21.4 million, under its most restrictive debt covenant.
The Company considers these external sources of funds, together with funds
generated from operations, to be adequate to meet operating needs.
Year 2000
During 1999, the Company designated a year 2000 Steering Committee and a task
force in each of its operations to ensure compliance of its computer systems
including computers utilized in production, production support equipment, and
plant infrastructure systems. During 1999, the Company also worked with its
vendors to assess their readiness. The Company engaged an independent third
party to evaluate its year 2000 remediation and preparedness at selected
locations in the fourth quarter of fiscal 1999. The Company's year 2000
preparedness team continued to audit all locations in the first quarter of 2000
to ensure the recommendations had been followed.
The Company's remediation program was executed primarily by internal
resources.The Company estimates that it spent between $1.3 million and $1.5
million for its year 2000 remediation program. For the most part, the Company
uses third-party supplied computer programs and packages for its information
technology systems. Certain of those systems were already year 2000 compliant as
supplied by the vendor. In the Flow Control Products segment, certain software
packages had been modified by the Company. As of January 1, 2000 all Flow
Control systems were year 2000 compliant. In the Engineered Components segment,
some facilities were utilizing compliant releases of software. The North
American automotive group is also in the process of installing an enterprise
resource planning (ERP) system as an upgrade in functionality that will also
improve business processes. The ERP system also remediated year 2000 issues with
the systems formerly used in certain plants. The entire project is expected to
take approximately three years to complete. Cost of the project is estimated to
be between $5.0 million and $6.0 million for hardware and software including
training and installation. The costs have been funded through internal cash
flow. At the Company's Speedline unit, internal resources evaluated the
compliant status of the computer systems and made any necessary upgrades and/or
replacements to ensure year 2000 preparedness. As of January 1, 2000 all
Engineered Components systems were year 2000 ready.
14
<PAGE>
AMCAST INDUSTRIAL CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The Company has not experienced any significant year 2000 related complications
regarding any of its critical vendors or major customers. Overall, any issues
experienced to date as a result of year 2000 issues have been insignificant and
have had no material impact on the Company's consolidated results of operations,
financial position or cash flows.
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 condensed
financial statements. At November 28, 1999, the Company had reserves of $1.6
million for environmental liabilities. The Company is of the opinion that, in
light of its existing reserves, its liability in connection with environmental
proceedings should not have a material adverse effect on its financial condition
or results of operation. The Company is presently unaware of the existence of
any potential material environmental costs that are likely to occur in
connection with the disposition of any of its property.
15
<PAGE>
AMCAST INDUSTRIAL CORPORATION
Item 3 - Quantitative and Qualitative Disclosures About Market Risk
The Company is exposed to market risk from changes in foreign currency exchange
rates and interest rates as part of its normal operations. There have been no
material changes in the Company's exposure to these items since the Company's
disclosure in Item 7A, Part II of Form 10-K for the year ended August 31, 1999.
PART II - OTHER INFORMATION
Item 6 - Exhibits and Reports on Form 8-K
a) Exhibits
Exhibit 4.1 - Third Amendment Agreement dated November 5, 1999, to the
$200,000,000 Credit Agreement between Amcast Industrial
Corporation and KeyBank National Association dated August 14,
1997.
Exhibit 4.2 - Fourth Amendment Agreement dated November 28, 1999, to
the $200,000,000 Credit Agreement between Amcast Industrial
Corporation and KeyBank National Association dated August 14,
1997.
Exhibit 10.1 - Amcast Industrial Corporation Nonqualified Supplementary
Benefit Plan effective as of June 1, 1999, as restated
through January 12, 2000
Exhibit 27.1 - Financial Data Schedule for the three-month period ended
November 29, 1999.*
* Schedule submitted in electronic format only
b) Reports on Form 8-K:
No reports on Form 8-K were filed by the Company during the quarter ended
November 29, 1999.
16
<PAGE>
AMCAST INDUSTRIAL CORPORATION
S I G N A T U R E S
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AMCAST INDUSTRIAL CORPORATION
(Registrant Company)
Date: January 12, 2000 By: /s/J. H. Shuey
----------------- --------------------------
John H. Shuey
Chairman, President and
Chief Executive Officer
(Principal Executive Officer)
Date: January 12, 2000 By: /s/D. D. Watts
---------------- --------------------------
Douglas D. Watts
Vice President, Finance
(Principal Financial Officer)
Date: January 12, 2000 By: /s/M.D. Mishler
---------------- --------------------------
Mark D. Mishler
Corporate Controller
(Principal Accounting Officer)
17
EXHIBIT 4.1
THIRD AMENDMENT AGREEMENT
This Third Amendment Agreement is made as of the 5th day of November, 1999,
by and among AMCAST INDUSTRIAL CORPORATION, an Ohio corporation ("Borrower"),
the banking institutions named in Schedule 1 to the Credit Agreement, as
hereinafter defined ("Banks"), and KEYBANK NATIONAL ASSOCIATION, as agent for
the Banks ("Agent"):
WHEREAS, Borrower, Agent and the Banks are parties to a
certain Credit Agreement dated as of August 14, 1997, as amended and as it may
from time to time be further amended, restated or otherwise modified, which
provides, among other things, for loans and letters of credit aggregating Two
Hundred Million Dollars ($200,000,000), all upon certain terms and conditions
("Credit Agreement");
WHEREAS, Borrower, Agent and the Banks desire to amend the Credit Agreement
to modify certain provisions thereof;
WHEREAS, each term used herein shall be defined in accordance with the
Credit Agreement;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein and for other valuable considerations, Borrower, Agent and the
Banks agree as follows:
1. Article I of the Credit Agreement is hereby amended to delete the
definition of "Proviso" therefrom in its entirety and to insert in place
thereof the following:
"Proviso" shall mean that:
(a) for Borrower's fiscal quarters ending prior to the fiscal year
ending on or about August 31, 1998, Consolidated EBITDA, as referred to in
the Leverage Ratio, shall be calculated as follows: (i) for the fiscal year
ending on or about August 31, 1997, Consolidated EBITDA shall be calculated
as disclosed in the pro forma statement provided by Borrower to Agent on or
about July 30, 1997, (ii) for the fiscal quarter ending on or about
November 30, 1997, Consolidated EBITDA shall be annualized by multiplying
the Consolidated EBITDA for that fiscal quarter by four (4), (iii) for the
fiscal quarter ending on or about February 28, 1998, Consolidated EBITDA
shall be annualized by multiplying the Consolidated EBITDA for that fiscal
quarter and the previous fiscal quarter by two (2), and (iv) for the fiscal
quarter ending on or about May 31, 1998, Consolidated EBITDA shall be
annualized by multiplying the Consolidated EBITDA for that fiscal quarter
and the two (2) previous fiscal quarters by one and one-third (1.333); and
(b) for Borrower's fiscal quarter ending November 28, 1999, and for
each fiscal quarter of Borrower thereafter, any payment received by
Borrower from General Motors Corporation with respect to outstanding
accounts receivable (each a "GM Payment") on any Last Weekend, as
hereinafter defined, shall be deemed to have been received and applied as a
reduction to Funded Indebtedness (for purposes of calculation of the
Leverage Ratio) on the last day of the fiscal quarter that ends during such
Last Weekend, so long as Borrower actually applies the amount of such GM
Payment as a payment of Funded Indebtedness on the next Business Day of the
Last Weekend after the Business Day on which the payment is received by
Borrower. As used herein, "Last Weekend" shall mean the Friday, Saturday
Sunday, Monday and Tuesday (and Wednesday, if Monday is a national holiday
in the United States) that contains the last day of a fiscal quarter of
Borrower.
2. After the date of this Third Amendment Agreement, Borrower shall
include in each Compliance Certificate a description (with respect to amount
and timing) of any recalculation of Funded Indebtedness that occurs pursuant to
subpart (b) of the Proviso definition.
3. Concurrently with the execution of this Third Amendment Agreement,
Borrower shall:
(a) cause each Guarantor of Payment to consent and agree to and
acknowledge the terms of this Third Amendment Agreement; and
(b) pay all legal fees and expenses of Agent in connection with this Third
Amendment Agreement.
4. Borrower hereby represents and warrants to Agent and the Banks that(a)
Borrower has the legal power and authority to execute and deliver this
Third Amendment Agreement; (b) the officials executing this Third Amendment
Agreement have been duly authorized to execute and deliver the same and bind
Borrower with respect to the provisions hereof; (c) the execution and delivery
hereof by Borrower and the performance and observance by Borrower of the
provisions hereof do not violate or conflict with the organizational agreements
of Borrower or any law applicable to Borrower or result in a breach of any
provision of or constitute a default under any other agreement, instrument or
document binding upon or enforceable against Borrower; (d) no Unmatured Event of
Default or Event of Default exists under the Credit Agreement, nor will any
occur immediately after the execution and delivery of this Third Amendment
Agreement or by the performance or observance of any provision hereof; (e)
neither Borrower nor any Subsidiary has any claim or offset against, or defense
or counterclaim to, any of Borrower's or any Subsidiary's obligations or
liabilities under the Credit Agreement or any Related Writing; and (f) this
Third Amendment Agreement constitutes a valid and binding obligation of Borrower
in every respect, enforceable in accordance with its terms.
5. Each reference that is made in the Credit Agreement or any other
writing to the Credit Agreement shall hereafter be construed as a reference
to the Credit Agreement as amended hereby. Except as herein otherwise
specifically provided, all provisions of the Credit Agreement shall remain in
full force and effect and be unaffected hereby.
6. Borrower and each Subsidiary, by signin g below, hereby waives and
releases Agent and each of the Banks and their respective directors, officers,
employees, attorneys, affiliates and subsidiaries from any and all claims,
offsets, defenses and counterclaims of which Borrower and any Subsidiary is
aware, such waiver and release being with full knowledge and understanding
of the circumstances and effect thereof and after having consulted legal counsel
with respect thereto.
7. This Third Amendment Agreement may be executed in any number of
counterparts, by different parties hereto in separate counterparts and by
facsimile signature, each of which when so executed and delivered shall be
deemed to be an original and all of which taken together shall constitute but
one and the same agreement.
8. The rights and obligations of all parties hereto shall be governed
by the laws of the State of Ohio, without regard to principles of conflicts
of laws.
[Remainder of page intentionally left blank]
<PAGE>
9. JURY TRIAL WAIVER. BORROWER, AGENT AND EACH OF THE BANK S HEREBY WAIVE ANY
RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN
CONTRACT, TORT OR OTHERWISE, AMONG BORROWER, AGENT AND THE BANKS, OR ANY
THEREOF, ARISING OUT OF, IN CONNECTION WITH, RELATED TO, OR INCIDENTAL TO THE
RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH THIS AGREEMENT OR ANY
NOTE OR OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN
CONNECTION HEREWITH OR THE TRANSACTIONS RELATED THERETO.RESOLVING ANY DISPUTE,
WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, AMONG BORROWER, AGENT AND THE
BANKS, OR ANY THEREOF, ARISING OUT OF, IN CONNECTION WITH, RELATED TO, OR
INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH THIS
AGREEMENT OR ANY NOTE OR OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR
DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS RELATED THERETO.
AMCAST INDUSTRIAL CORPORATION
By: /s/ JOHN H. SHUEY
-------------------------------------
John H. Shuey, President and
Chief Executive Officer
KEYBANK NATIONAL ASSOCIATION,
as Agent and as a Bank
By: /s/ FRANCIS W. LUTZ
-------------------------------------
Francis W. Lutz, Portfolio Manager
BANCA COMMERCIALE ITALIANA
By: /s/ CHARLES DOUGHERTY
-------------------------------------
Title: Vice President
-------------------------------------
and /s/ TIZIANO GALLONETTO
-------------------------------------
Title: Assistant Vice President
-------------------------------------
THE BANK OF NEW YORK
By: /s/ EDWARD J. DOUGHERTY III
-------------------------------------
Title: Vice President, U.S. Commercial
Banking
-------------------------------------
BANK ONE, NA
By: /s/ RANDALL WITH
-------------------------------------
Title: Senior Vice President
-------------------------------------
CREDIT AGRICOLE INDOSUEZ
(successor in interest to Caisse Nationale
de Credit Agricole)
By:
-------------------------------------
Title:
-------------------------------------
and
-------------------------------------
Title:
-------------------------------------
COMERICA BANK
By: /s/ NICHOLAS G. MESTER
-------------------------------------
Title: Account Officer
-------------------------------------
CREDITO ITALIANO SPA
By: /s/ CHRISTOPHER J. ELDIN
-------------------------------------
Title: First Vice President & Deputy
Manager
-------------------------------------
and /s/ SAIYED A. ABBAS
-------------------------------------
Title: Vice President
-------------------------------------
SANPAOLO IMI, SPA
By: /s/ LUCA SACCHI
-------------------------------------
Title: Vice President
-------------------------------------
and /s/ CARLO PERSICO
-------------------------------------
Title: Designated Group Manager
-------------------------------------
NATIONAL CITY BANK OF DAYTON
By: /s/ NEAL J. HINKEL
-------------------------------------
Title: Vice President
-------------------------------------
BANK ONE, MICHIGAN (successor by merger
to NBD Bank)
By: /s/ RANDALL WITH
-------------------------------------
Title: Senior Vice President
-------------------------------------
THE SANWA BANK, LIMITED,
CHICAGO BRANCH
By:
-------------------------------------
Title:
-------------------------------------
FIRSTAR BANK, NATIONAL
ASSOCIATION (fka STAR BANK, N.A.)
By: /s/ THOMAS D. GIBBONS
-------------------------------------
Title: Vice President
-------------------------------------
<PAGE>
GUARANTOR ACKNOWLEDGMENT
Each of the undersigned consents and agrees to and acknowledges the terms
of the foregoing Third Amendment Agreement. Each of the undersigned further
agrees that the obligations of each of the undersigned pursuant to the Guaranty
of Payment executed by each of the undersigned shall remain in full force and
effect and be unaffected hereby.
ELKHART PRODUCTS CORPORATION
WHEELTEK, INC.
AS INTERNATIONAL, INC.
By: /s/ DOUGLAS D. WATTS
-------------------------------------
Douglas D. Watts, Vice President
of each of the Companies listed
above
AMCAST INVESTMENT SERVICES
CORPORATION
By: /s/ JOHN H. SHUEY
-------------------------------------
John H. Shuey, President
EXHIBIT 4.2
FOURTH AMENDMENT AGREEMENT
This Fourth Amendment Agreement is made as of the 28th day of November,
1999, by and among AMCAST INDUSTRIAL CORPORATION, an Ohio corporation
("Borrower"), the banking institutions named in Schedule 1 to the Credit
Agreement, as hereinafter defined ("Banks"), and KEYBANK NATIONAL ASSOCIATION,
as agent for the Banks ("Agent"):
WHEREAS, Borrower, Agent and the Banks are parties to a certain Credit
Agreement dated as of August 14, 1997, as amended and as it may from time to
time be further amended, restated or otherwise modified, which provides, among
other things, for loans and letters of credit aggregating Two Hundred Million
Dollars ($200,000,000), all upon certain terms and conditions ("Credit
Agreement");
WHEREAS, Borrower, Agent and the Banks desire to amend the Credit Agreement
to modify certain provisions thereof;
WHEREAS, each term used herein shall be defined in accordance with the
Credit Agreement;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein and for other valuable considerations, Borrower, Agent and the
Banks agree as follows:
1. Article I of the Credit Agreement is hereby amended to delete the
definitions of "Applicable Commitment Fee Rate", "Applicable LIBOR Margin" and
"Leverage Ratio" therefrom in their entirety and to insert in place thereof the
following:
"Applicable Commitment Fee Rate" shall mean:
(a) for the period from November 28, 1999, through the fiscal quarter
ending on February 27, 2000, fifty (50) basis points; and
(b) commencing with the financial statements for the fiscal quarter
ending on November 28, 1999, the number of basis points set forth in the
following matrix based on the result of the computation of the Leverage
Ratio shall be used to establish the number of basis points that will go
into effect on February 28, 2000 and thereafter:
<TABLE>
<S> <C>
----------------------------------------------------- -------------------------
Applicable
Leverage Ratio Commitment Fee Rate
----------------------------------------------------- -------------------------
Greater than or equal to 3.25 to 1.00 50.00 basis points
----------------------------------------------------- -------------------------
Greater than or equal to 3.00 to 1.00
but less than 3.25 to 1.00 37.50 basis points
----------------------------------------------------- -------------------------
Greater than or equal to 2.50 to 1.00
but less than 3.00 to 1.00 32.50 basis points
----------------------------------------------------- -------------------------
Less than 2.50 to 1.00 25.00 basis points
----------------------------------------------------- -------------------------
</TABLE>
Changes to the Applicable Commitment Fee Rate shall be effective on the
first day of each month following the date upon which Agent received, or,
if earlier, Agent should have received, pursuant to Section 5.3 hereof, the
financial statements of the Companies. The above matrix does not modify or
waive, in any respect, the requirements of Section 5.7 hereof, the rights
of the Banks to charge the Default Rate, or the rights and remedies of
Agent and the Banks pursuant to Articles VII and VIII hereof.
"Applicable LIBOR Margin" shall mean:
(a) for the period from November 28, 1999, through the fiscal quarter
ending on February 27, 2000, two hundred (200) basis points; and
(b) commencing with the financial statements for the fiscal quarter
ending on November 28, 1999, the number of basis points set forth in
the following matrix based on the result of the computation of the Leverage
Ratio shall be used to establish the number of basis points that will go
into effect on February 28, 2000 and thereafter:
<TABLE>
<S> <C>
- ------------------------------------------------------ -------------------------
Applicable Margin for
Leverage Ratio LIBOR Loans
----------------------------------------------------- -------------------------
Greater than or equal to 3.50 to 1.00 225 basis points
- ------------------------------------------------------ -------------------------
Greater than or equal to 3.25 to 1.00
but less than 3.50 to 1.00 200 basis points
- ------------------------------------------------------ -------------------------
Greater than or equal to 3.00 to 1.00
but less than 3.25 to 1.00 175 basis points
- ------------------------------------------------------ -------------------------
Greater than or equal to 2.50 to 1.00
but less than 3.00 to 1.00 150 basis points
- ------------------------------------------------------ -------------------------
Less than 2.50 to 1.00 125 basis points
- ------------------------------------------------------ -------------------------
</TABLE>
Changes to the Applicable LIBOR Margin shall be effective on the first day
of each month following the date upon which Agent received, or, if earlier,
Agent should have received, pursuant to Section 5.3 hereof, the financial
statements of the Companies. The above matrix does not modify or waive, in
any respect, the requirements of Section 5.7 hereof, the rights of the
Banks to charge the Default Rate, or the rights and remedies of Agent and
the Banks pursuant to Articles VII and VIII hereof.
"Leverage Ratio" shall mean, at any time, on a Consolidated basis
and in accordance with GAAP, the ratio of (a) Funded Indebtedness (based
upon the financial statements of the Companies for the most recently com-
pleted fiscal quarter) to (b) Consolidated EBITDA (based upon the financial
statements of the Companies for the most recently completed four (4) fiscal
quarters); subject to the Proviso.
2. The Credit Agreement is hereby amended to delete Section 5.7(a)
therefrom in its entirety and to insert in place thereof the following:
(a) INTEREST COVERAGE. Borrower shall not suffer or permit at
any time the ratio of Consolidated EBIT to Consolidated Interest Expense to
be less than (i)2.00 to 1.00 on the Closing Date through November 27, 1999,
(ii) 1.75 to 1.00 on November 28, 1999 through August 31, 2000, and (iii)
2.00 to 1.00 on September 1, 2000 and thereafter, based upon the financial
statements for the Companies for most recently completed four (4) fiscal
quarters.
3. The Credit Agreement is hereby amended to delete Section 5.7(b) there-
from in its entirety and to insert in place thereof the following:
(b) LEVERAGE. Borrower shall not suffer or permit at any time
the Leverage Ratio to exceed (i)3.65 to 1.00 on the Closing Date through
November 29, 1998, (ii) 3.40 to 1.00 on November 30, 1998 through February
27, 1999, (iii) 3.25 to 1.00 on February 28, 1999 through August 30, 1999,
(iv) 3.00 to 1.00 on August 31, 1999 through November 27, 1999, (v) 3.75 to
1.00 on November 28, 1999 through February 27, 2000, (vi) 3.50 to 1.00 on
February 28, 2000 through August 31, 2000, (vii) 3.25 to 1.00 on September
1, 2000 through December 2, 2001, and (viii) 3.00 to 1.00 on December 3,
2001 and thereafter.
4. Concurrently with the execution of this Fourth Amendment Agreement,
Borrower shall:
(a) cause each Guarantor of Payment to consent and agree to and
acknowledge the terms of this Fourth Amendment Agreement;
(b) pay an amendment fee to each Bank that executes this Amendment
prior to 12:01 P.M.(Cleveland, Ohio time) on November 30, 1999 (each such Bank,
an "Executing Bank") in an amount equal to (i) fifteen (15) basis points, times
(ii) the Total Commitment Amount, times (iii) the Commitment Percentage of such
Executing Bank. Such amendment fee shall be paid to Agent for the pro rata
benefit of the Executing Banks; and
(c) pay all legal fees and expenses of Agent in connection with this
Fourth Amendment Agreement.
5. Borrower hereby represents and warrants to Agent and the Banks
that(a) Borrower has the legal power and authority to execute and deliver this
Fourth Amendment Agreement; (b) the officials executing this Fourth Amendment
Agreement have been duly authorized to execute and deliver the same and bind
Borrower with respect to the provisions hereof; (c) the execution and delivery
hereof by Borrower and the performance and observance by Borrower of the
provisions hereof do not violate or conflict with the organizational agreements
of Borrower or any law applicable to Borrower or result in a breach of any
provision of or constitute a default under any other agreement, instrument or
document binding upon or enforceable against Borrower; (d) no Unmatured Event of
Default or Event of Default exists under the Credit Agreement, nor will any
occur immediately after the execution and delivery of this Fourth Amendment
Agreement or by the performance or observance of any provision hereof; (e)
neither Borrower nor any Subsidiary has any claim or offset against, or defense
or counterclaim to, any of Borrower's or any Subsidiary's obligations or
liabilities under the Credit Agreement or any Related Writing; and (f) this
Fourth Amendment Agreement constitutes a valid and binding obligation of
Borrower in every respect, enforceable in accordance with its terms.
6. Each reference that is made in the Credit Agreement or any
other writing to the Credit Agreement shall hereafter be construed as a
reference to the Credit Agreement as amended hereby. Except as herein otherwise
specifically provided, all provisions of the Credit Agreement shall remain in
full force and effect and be unaffected hereby.
7. Borrower and each Subsidiary, by signing below, hereby waives
and releases Agent and each of the Banks and their respective directors,
officers, employees, attorneys, affiliates and subsidiaries from any and all
claims, offsets, defenses and counterclaims of which Borrower and any Subsidiary
is aware, such waiver and release being with full knowledge and understanding of
the circumstances and effect thereof and after having consulted legal counsel
with respect thereto.
8. This Fourth Amendment Agreement may be executed in any number
of counterparts, by different parties hereto in separate counterparts and by
facsimile signature, each of which when so executed and delivered shall be
deemed to be an original and all of which taken together shall constitute but
one and the same agreement.
9. The rights and obligations of all parties hereto shall b
governed by the laws of the State of Ohio, without regard to principles of
conflicts of laws.
[Remainder of Page Intentionally Left Blank.]
<PAGE>
10. JURY TRIAL WAIVER. BORROWER, AGENT AND EACH OF THE BANKS HEREBY
WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER
SOUNDING IN CONTRACT, TORT OR OTHERWISE, AMONG BORROWER, AGENT AND THE BANKS, OR
ANY THEREOF, ARISING OUT OF, IN CONNECTION WITH, RELATED TO, OR INCIDENTAL TO
THE RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH THIS AGREEMENT OR ANY
NOTE OR OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN
CONNECTION HEREWITH OR THE TRANSACTIONS RELATED THERETO.
AMCAST INDUSTRIAL CORPORATION
By: /s/ JOHN H. SHUEY
-------------------------------------
John H. Shuey, President and
Chief Executive Officer
KEYBANK NATIONAL ASSOCIATION,
as Agent and as a Bank
By: /s/ FRANCIS W. LUTZ
-------------------------------------
Francis W. Lutz, Portfolio Manager
BANCA COMMERCIALE ITALIANA
By: /s/ CHARLES DOUGHERTY
-------------------------------------
Title: Vice President
-------------------------------------
and /s/ EDWARD BERMANT
-------------------------------------
Title: First Vice President, Deputy Manager
-------------------------------------
THE BANK OF NEW YORK
By: /s/ EDWARD J. DOUGHERTY III
-------------------------------------
Title: Vice President, U.S. Commercial
Banking
-------------------------------------
BANK ONE, NA
By: /s/ RANDALL WITH
-------------------------------------
Title: Senior Vice President
-------------------------------------
CREDIT AGRICOLE INDOSUEZ
(successor in interest to Caisse Nationale
de Credit Agricole)
By: /s/ RAYMOND A. FALKENBERG
-------------------------------------
Title: Vice President, Senior Relationship
Manager
-------------------------------------
and /s/ SUSAN KNIGHT
-------------------------------------
Title: Vice President
-------------------------------------
COMERICA BANK
By: /s/ NICHOLAS G. MESTER
-------------------------------------
Title: Account Officer
-------------------------------------
UNI CREDITO ITALIANO SPA
By: /s/ CHRISTOPHER J. ELDIN
-------------------------------------
Title: First Vice President & Deputy
Manager
-------------------------------------
and /s/ GIANFRANCO BISAGNI
-------------------------------------
Title: First Vice President
-------------------------------------
SANPAOLO IMI, SPA
By: /s/ LUCA SACCHI
-------------------------------------
Title: Vice President
-------------------------------------
and /s/ CARLO PERSICO
-------------------------------------
Title: Designated Group Manager
-------------------------------------
NATIONAL CITY BANK
By: /s/ NEAL J. HINKEL
-------------------------------------
Title: Vice President
-------------------------------------
BANK ONE, INDIANA, NA. (successor by
merger to NBD Bank, N.A.)
By: /s/ EDWARD HATHAWAY
-------------------------------------
Title: First Vice President
-------------------------------------
THE SANWA BANK, LIMITED,
CHICAGO BRANCH
By: /s/ KENNETH C. EICHWALD
-------------------------------------
Title: First Vice President and Assistant
General Manager
-------------------------------------
FIRSTAR BANK, NATIONAL
ASSOCIATION (fka STAR BANK, N.A.)
By: /s/ THOMAS D. GIBBONS
-------------------------------------
Title: Vice President
-------------------------------------
<PAGE>
GUARANTOR ACKNOWLEDGMENT
Each of the undersigned consents and agrees to and acknowledges the terms
of the foregoing Fourth Amendment Agreement. Each of the undersigned further
agrees that the obligations of each of the undersigned pursuant to the Guaranty
of Payment executed by each of the undersigned shall remain in full force and
effect and be unaffected hereby.
ELKHART PRODUCTS CORPORATION
WHEELTEK, INC.
AS INTERNATIONAL, INC.
By: /s/ DOUGLAS D. WATTS
-------------------------------------
Douglas D. Watts, Vice President
of each of the Companies listed
above
AMCAST INVESTMENT SERVICES
CORPORATION
By: /s/ JOHN H. SHUEY
-------------------------------------
John H. Shuey, President
AMCAST INDUSTRIAL CORPORATION
NONQUALIFIED SUPPLEMENTARY BENEFIT PLAN
Effective as of June 1, 1999, as restated through January 12, 2000
Article I. Purpose and Definitions
1.1 Purpose - In order to permit a select group of management and
highly compensated employees of the Company to earn equal and full credit for
all years of service to the Company, to cause these employee's pensions to be
calculated based upon compensation above, certain limits applicable to the
Qualified Plan and to provide certain other supplemental retirement benefits,
the Company has adopted the following supplemental retirement plan (the "Plan").
1.2 Actuarial Equivalent - A benefit equal in value to the benefit
for which it is substituted as determined actuarially on the basis of such rates
of interest and rates of mortality herein set forth. Actuarial Equivalent under
this Plan will be calculated assuming an investment return based on the PBGC
interest rate in effect on the first day of the year in which the retirement
occurs and the UP-1984 Mortality Table.
1.3 Code - The Internal Revenue Code of 1986, as amended.
1.4 Company - Amcast Industrial Corporation, an Ohio corporation,
and its divisions and subsidiaries.
1.5 Executive Participant - An employee of the Company who is, as
of June 1, 1999, the Chairman of the Board of Directors of the Company or a
corporate officer of the Company who reports directly to the Chairman or is the
President of Elkhart Products Corporation.
1.6 Income - The total compensation paid during employment to a
Participant by the Company while he or she is a Participant, including regular
pay, overtime pay, annual incentive payments, bonuses, commissions, and a
Participant's salary deferral contributions to the Company's 401(k) Salary
Deferral Plan and Employees Flexible Compensation Plan, but excluding any other
Employer contributions made to any "employee benefit plan" for the Participant,
such as reimbursed expenses, special awards, gifts or allowances, severance
payments, payments under the Company's Long-Term Incentive Plan and
extraordinary compensation.
1.7 Participant - All employees of the Company (a) who are members
of the Qualified Plan, and (b) whose income exceeds the amount specified in
401(a)(17) of the Federal Code.
1.8 Participant's Beneficiary - The person or persons entitled to
receive benefits under the Qualified Plan because of a relationship with or
designation by a Participant. The Participant's Beneficiary is entitled to
receive a portion of the Participant's benefits under the Plan equal to the
portion of Participant's benefits that the Participant's Beneficiary is entitled
to receive under the Qualified Plan.
1.9 Qualified Plan - The Amcast Merged Pension Plan, Part "A",
f/k/a the Amcast Pension Plan for Salaried Employees.
Article II. Administration
2.1 Administrator - The Plan shall be administered by the pension
and benefits department of the Company.
Article III. Benefits
3.1 Qualified Plan Pension - At the time of retirement, all
Participants shall have their pensions calculated under the provisions of the
Qualified Plan, taking into account the Participant's age and years of service
at retirement, the retirement option selected by Participant, and such other
factors set forth in the Qualified Plan or any provision of federal, state, or
local law, as would affect the calculation of Participant's benefit under the
Qualified Plan. This is the amount of the pension payments payable to
Participant or Participant's Beneficiary under the Qualified Plan.
3.2 Benefits Under the Plan
a. At the time of a Participant's retirement, the following
calculation shall be made:
i. Any Participant who is not an Executive Participant shall
have a calculation made as to the amount their benefits
would be under the Qualified Plan using the same formula
as described in Section 3.1 hereof, but not taking into
account any reduction in benefits or any reduction in the
amount of income or time of service used in calculating
benefits resulting from any provision of federal, state or
local law.
ii. Any Participant who is an Executive Participant shall have
a calculation made as to the amount their benefits would
be under the Qualified Plan using the formula as described
in Section 3.1 hereof, not taking into account any
reduction in benefits or any reduction in the amount of
income or time of service used in calculating benefits
resulting from any provision of federal, state or local
law (including, but not limited to, Section 401 (a)(4) of
the Code and regulations thereunder), and further modified
as follows:
A. In calculating such benefits, 2.5% shall be
substituted for the percentage used in making the
calculation described in Section 1.1 (a)(ii)(A) of
the Qualified Plan.
B. In calculating such benefits, any such
Participant's Credited Service (as defined in the
Qualified Plan) shall be increased by 3 full years,
with the total of such Credited Service not to
exceed 30 years; and
C. In calculating any reduction for early commencement
of such benefits, any such Participant's age shall
be deemed to be 3 years more than his actual age,
with his deemed age not to exceed age 65.
b. In any instance where the benefit payable to a Participant
or the Participant's Beneficiary under the Qualified Plan
is less than the benefit calculated for such Participant
in accordance with the applicable provisions of paragraph
3.2(a) above, the Participant or Participant's Beneficiary
shall be entitled to receive a pension under the Plan in
an amount which when added to the amount the Participant
or Participant's Beneficiary is entitled to receive under
the Qualified Plan, results in a total amount of pension
payments payable to the Participant or Participant's
Beneficiary from the Plan plus the Qualified Plan equal to
the amount calculated with respect to the Participant or
Participant's Beneficiary in accordance with the
applicable provisions of paragraph 3.2(a) above.
3.3 Payment of Plan Benefits - Benefits shall be payable to
Participants under the terms of any of the following options.
a. Benefits under the Plan shall be payable at the
same times and intervals as benefits payable under
the Qualified Plan.
b. Notwithstanding Section 3.3(a) hereof, at any
time after the end of Participant's employment
with the Company and at the election of the Parti-
cipant or Participant's Beneficiary, the Comp-
any shall pay to the Participant or Participant's
Beneficiary an amount equal to the Net Present
Value Amount, as defined in Section 3.5 hereof,
less 10 percent of such amount. After the payment
described in this Section 3.3(b) is made, the
Company shall have no further obligation to the
Participant or the Participant's Beneficiary under
this Plan. In calculating such Net Present Value
Amount, the Determination Date shall be the date
on which the Participant exercised his or her
option under this Section. Such Net Present Value
Amount shall be paid to the Participant as soon as
practical, but not more than 30 days after the
Determination Date.
c. Notwithstanding Section 3.3 (a) hereof, the
Participant shall be entitled, no later than three
months prior to termination of Participant's
employment with the Company, to elect to receive
the Net Present Value Amount at the time payments
begin under the Qualified Plan. The Participant
shall have the option to change such election from
time to time provided that such change is made no
later than three months prior to the termination
of the Participant's employment with the Company.
After the payment described in this Section is
made, the Company shall have no further obligation
to the Participant under this Plan. In calculating
the Net Present Value Amount in regard to this
Section 3.3(d),the Determination Date shall be the
first day of the month preceding the Participant's
termination of employment.
d. Notwithstanding Section 3.3(a) hereof,in the event
the Trust has been funded as a result of a Change
of Control and the Participant's employment with
the Company is terminated by the Company for any
reason other than cause (as defined in the Change
of Control Agreements), the Participant shall have
the option to elect to receive the Net Present
Value Amount, provided such election is made no
later than one week after the Participant's term-
ination by the Company. Payment shall be made on
the date on which the first payment is due under
the Qualified Plan. After the payment described
in this Section is made, the Company shall have no
further obligation to the Participant under this
Plan. In calculating the Net Present Value Amount
in regard to this Section 3.3(e),the Determination
Date shall be the date on which the Participant
exercised his or her option under this Section.
3.4 Trust - The Company agrees it will establish a "Guarantor"
trust (the "Trust"), and a copy of which will be attached hereto as Annex A.
a. In the event of a Change of Control of the Company
(as defined in the form of contract approved for
certain executives of the Company by the Board of
Directors of the Company on 12/19/89 ("Change of
Control Agreements")) ("Change of Control"), the
Company shall fund the Trust, as hereinafter
defined, in an amount equal to the Net Present
Value Amount (as defined at Section 3.5). In calc-
ulating such Net Present Value Amount, the Determ-
ination Date shall be the date on which the Change
of Control occurred. Funding of the Trust, either
under this Section or voluntarily by the Company,
will not relieve the Company of any of its payment
obligations under this Plan, and such obligations
will be fulfilled only upon actual payment in ac-
cordance with this Plan.
b. If the Trust is funded at the time a payment is
required under this Agreement, the payment will be
made on behalf of the Company by the Trustee out
of Trust funds to the extent permitted by the
Trust; provided that the making of such payment
shall not reduce the balance in the Trust below
the Net Present Value Amount (as defined in
Section 3.5) of the then remaining payments to all
Participants. The Determination Date for each such
calculation of Net Present Value Amount will be
the related payment date.
At any time when it is determined that the
remaining assets of the Trust are reduced to an
amount below the Net Present Value Amount of all
remaining payments to all Participants the Company
shall, within six months of such determination,
deposit an amount in the Trust so that the assets
of the trust are at least equal to the Net Present
Value Amount of all remaining payments to all
Participants.
c. In the event all required payments are made to all
Participants or their Beneficiaries, all funds
remaining in the Trust shall be immediately
delivered to the Company.
3.5 Net Present Value Amount - For the purpose of determining the
amount needed to fund the Trust as described in Section 3.4 or the amount of
payments to be made as described in Section 3.3, the Company's independent
actuaries will calculate the net present value of all payments remaining to be
made to Participant or Participant's Beneficiary under this Plan (herein the
"Net Present Value Amount"). The Net Present Value Amount shall be determined as
of the Determination Date (herein the "Determination Date") in accordance with
the provisions of Annex B attached.
Article IV. General
4.1 Amendment and Termination - The Plan may be altered or
terminated only by action of three-fourths (3/4) of the entire Board of
Directors of the Company at a valid meeting. Such termination shall in no way
effect, alter, or reduce any vested right of any Participant existing at the
time of the termination.
4.2 Vesting - Participant's rights under the Plan shall vest at
the time when the Participant's Income and time of service are such that
Participant would be entitled to receive a pension under the Plan if Participant
were of retirement age under the terms of the Qualified Plan and retired under
the Qualified Plan or, in the case of an Executive Participant, when he has
completed five years of Credited Service as calculated under the Plan.
4.3 Effect on Qualified Plans - The adoption, administration,
amendment, or termination of the Plan shall have no effect upon the Qualified
Plan or any other of the Company's qualified plans.
4.4 Non-Assignability of Right to Receive Benefits - The right to
receive benefits under the Plan may not be anticipated, alienated, sold,
transferred, assigned, pledged, encumbered, or subjected to any charge or
legal process; and if any attempt is made to do so, or a person eligible for
any benefit becomes bankrupt, the interest under the Plan of the person
affected may be terminated by the Company, and the Committee may cause the
same to be held or applied for the benefit of such person or one or more of
his or her dependents in such manner as it deems proper.
4.5 This Plan not an Employment Contract - This Plan does not
give to any Participant the right to be continued in employment or otherwise
enlarge or affect employment status or rights.
4.6 Applicable Law - All questions pertaining to the
construction, validity, and effect of the provisions hereof are to be
determined in accordance with the laws of the State of Ohio.
4.7 Non-Funded Plan - Except as provided herein, the entire cost
of the Plan will be paid from the general assets of the Company. It is the
intent of the Company to pay benefits under the Plan as they become due under
the provisions of Section 3.3 hereof. No liability for the payment of benefits
under the Plan shall be imposed upon any officer, director, employee, or
stockholder of the Company.
4.8 Plan not a Qualified Plan - The Plan is not intended to be a
qualified pension plan.
4.9 Effect on Contractual Rights - The Plan shall not reduce or
otherwise adversely affect any contractual right with respect to retirement of
any person who is a Participant or a Participant's Beneficiary, or relieve the
Company of any contractual obligation with respect to retirement of any person
who is a Participant or Participant's Beneficiary, except to the extent of
payments made under this Plan.
4.10 Severability - If any provisions of the Plan shall be held
illegal or invalid for any reason, said illegality or invalidity shall not
affect the remaining parts of the Plan, but this Plan shall be construed and
enforced as if said illegal or invalid provision had never been included herein.
<PAGE>
4.11 Effective Date - The Plan is effective as of June 1, 1999.
/s/ JOHN H. SHUEY
----------------------------------
John H. Shuey, Chairman, President
and Chief Executive Officer
ATTEST:
/s/ DENIS G. DALY
- ------------------------
Denis G. Daly, Secretary
<PAGE>
ANNEX B
In calculating the Net Present Value Amount, the following provisions shall
apply; (i) all remaining payments under the SERP shall be provided for; (ii) the
actuarial principles used in connection with the Qualified Plan shall be used to
establish the life expectancy of Participant, Participant's spouse, or their
combined life expectancy, as the case may be, as of the Determination Date for
purposes of establishing the period over which the payments under Article 3
shall be assumed to be made; and (iii) an annual discount rate equal to the PBGC
Discount Rate shall be used to discount future payments to the Determination
Date, or if applicable to calculate a lump sum amount pursuant to Section 3.3
for any Participant with an agreement that limits certain benefits to avoid the
20% tax pursuant to Section 4999 of the Internal Revenue Code of 1986, as
amended, such other discount rate as is necessary to avoid any payments from
being subject to such additional 20% tax. As used in this Annex B, the PBGC
Discount Rate shall mean the average of the PBGC discount rates used pursuant to
Section 417(e) (3) (B) of the Internal Revenue Code of 1986 as amended, for the
three months immediately preceding the Determination Date.
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<PERIOD-START> SEP-01-1999
<PERIOD-END> NOV-28-1999
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<COMMON> 9209
<OTHER-SE> 164112
<TOTAL-LIABILITY-AND-EQUITY> 553017
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