SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
--------
SECURITIES EXCHANGE ACT OF 1934
For the quarter ended December 3, 2000 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
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(Address of principal executive offices) (Zip Code)
(937) 291-7000
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(Registrant's telephone number, including area code)
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(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 and 15(d) of the Securities Exchange Act of 1934
during the preceding twelve months, and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
----- ----
Number of Common Shares outstanding, no par value, as of December 3, 2000 -
8,405,604 shares.
<PAGE>
AMCAST INDUSTRIAL CORPORATION
REPORT ON FORM 10-Q
FOR THE QUARTER ENDED DECEMBER 3, 2000
I N D E X
PART I - FINANCIAL INFORMATION PAGE
Item 1 - Financial Statements:
Consolidated Condensed Statements of Financial
Condition - December 3, 2000 and August 31, 2000 3
Consolidated Condensed Statements of Income -
for the Three Months Ended December 3, 2000
and November 28, 1999 4
Consolidated Condensed Statements of Retained Earnings -
for the Three Months Ended December 3, 2000
and November 28, 1999 4
Consolidated Condensed Statements of Cash Flows -
for the Three Months Ended December 3, 2000
and November 28, 1999 5
Notes to Consolidated Condensed Financial Statements 6-12
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations 13-17
Item 3 - Quantitative and Qualitative Disclosures
about Market Risk 18
PART II - OTHER INFORMATION
Item 5 - Submission of Matters to a Vote of Security Holders 18
Item 6 - Exhibits and Reports on Form 8-K 18
SIGNATURES 19
<PAGE>
PART I - FINANCIAL INFORMATION
<TABLE>
<CAPTION>
AMCAST INDUSTRIAL CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF FINANCIAL CONDITION
($ in thousands)
(unaudited)
<S> <C> <C>
December 3 August 31
2000 2000
------------ ------------
ASSETS
Current Assets
Cash and cash equivalents $ 5,399 $ 3,062
Accounts receivable 72,592 85,041
Inventories 84,891 77,512
Other current assets 20,569 16,304
------------ -----------
Total Current Assets 183,451 181,919
Property, Plant, and Equipment 395,509 396,040
Less accumulated depreciation (173,809) (169,183)
------------ -----------
221,700 226,857
Goodwill 49,370 49,707
Other Assets 22,321 21,903
------------ -----------
$ 476,842 $ 480,386
============ ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Short-term debt $ 6,794 $ 1,584
Current portion of long-term debt 2,689 3,044
Accounts payable 76,557 84,285
Accrued expenses 38,370 38,013
------------ -----------
Total Current Liabilities 124,410 126,926
Long-Term Debt - less current portion 152,062 147,273
Deferred Income Taxes 31,284 31,275
Deferred Liabilities 17,402 18,958
Shareholders' Equity
Common shares, at stated value
Authorized - 15,000,000 shares
Issued - 9,208,529 shares 9,228 9,228
Capital in excess of stated value 70,981 70,981
Accumulated other comprehensive losses (5,075) (1,900)
Retained earnings 86,192 87,287
Cost of 821,966 common shares in treasury (9,642) (9,642)
------------ -----------
151,684 155,954
------------ -----------
$ 476,842 $ 480,386
============ ===========
</TABLE>
See notes to consolidated financial statements
<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>
December 3 November 28
2000 1999
------------ ------------
Consolidated Condensed Statements of Income
Net sales $ 137,944 $ 146,079
Cost of sales 121,656 127,768
------------ -----------
Gross Profit 16,288 18,311
Selling, general and administrative expenses 12,197 13,603
------------ ------------
Operating Income 4,091 4,708
Equity in (income) loss of joint venture and
other (income) and expense 755 (248)
Interest expense 3,199 2,823
------------ ------------
Income before Income Taxes and
Cumulative Effect of
Accounting Change 137 2,133
Income taxes 55 838
------------ ------------
Income before Cumulative Effect
of Accounting Change 82 1,295
Cumulative effect of accounting change, net of tax - 983
------------ ------------
Net Income $ 82 $ 2,278
============ ============
Consolidated Condensed Statements of Retained Earnings
Beginning retained earnings $ 87,287 $ 87,796
Net income 82 2,278
Dividends (1,177) (1,254)
Stock awards - (5)
------------ ------------
Ending Retained Earnings $ 86,192 $ 88,815
============ ============
Basic earnings per share
Income before cumulative effect
of accounting adjustment $ 0.01 $ 0.14
Cumulative effect of accounting adjustment - 0.11
------------ ------------
Net Income $ 0.01 $ 0.25
============ ============
Diluted earnings per share
Income before cumulative effect
of accounting adjustment $ 0.01 $ 0.14
Cumulative effect of accounting adjustment - 0.11
------------ ------------
Net Income $ 0.01 $ 0.25
============ ============
Dividends declared per share $ 0.14 $ 0.14
============ ============
Dividends paid per share $ 0.14 $ 0.14
============ ============
</TABLE>
See notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
AMCAST INDUSTRIAL CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
($ in thousands)
(unaudited)
Three Months Ended
---------------------------
<S> <C> <C>
December 3 November 28
2000 1999
------------ ------------
Operating Activities
Net income $ 82 $ 2,278
Depreciation and amortization 7,914 8,040
Cumulative effect of accounting change - (983)
Deferred liabilities (1,659) (148)
Changes in assets and liabilities:
Accounts receivable 9,437 (11,438)
Inventories (9,186) (5,758)
Other current assets (4,857) 397
Accounts payable (5,428) (1,416)
Accrued liabilities 1,416 (1,192)
Other 1,128 (242)
------------ ------------
Net Cash Used for Operations (1,153) (10,462)
Investing Activities
Additions to property, plant, and equipment (6,050) (5,595)
Other 58 230
------------ ------------
Net Cash Used for Investing Activities (5,992) (5,365)
Financing Activities
Additions to long-term debt 31,000 -
Reduction in long-term debt (31,820) (2,461)
Short-term borrowings 11,763 24,262
Dividends (1,177) (1,254)
Proceeds from sale leaseback - 1,340
------------ ------------
Net Cash Provided by Financing Activities 9,766 21,887
Effect of exchange rate changes on cash (284) (7)
------------ ------------
Net change in cash and cash equivalents 2,337 6,053
Cash and cash equivalents at beginning of period 3,062 6,928
------------ ------------
Cash and Cash Equivalents at End of Period $ 5,399 $ 12,981
============ ============
</TABLE>
See notes to consolidated financial statements
<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, 2000 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.
Accounting Change
During 2000, as a result of a new enterprise resource planning (ERP) system
implementation, the Company began capitalizing the cost of supplies and spare
parts inventories, whereas previously the cost of these manufacturing supplies
was expensed when purchased. Management believes this change is preferable in
that it provides for a more appropriate matching of revenues and expenses. The
total amount of inventory capitalized and reported as a cumulative effect of a
change in accounting principle, retroactive to September 1, 1999, was $983 net
of taxes of $602.
Accounting Standards Adopted
Effective September 1, 2000, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 133, "Accounting for Derivative Instruments and
Hedging Activities," as amended by SFAS Nos. 137 and 138, which establishes a
comprehensive standard for the recognition and measurement of derivatives and
hedging activities. The new standard requires that all derivatives be recognized
as assets or liabilities in the statement of financial position and measured at
fair value. Gains or losses resulting from changes in fair value are required to
be recognized in current earnings unless specific hedge criteria are met.
Special accounting allows for gains or losses on qualifying derivatives to
offset gains or losses on the hedged item in the statement of income and
requires formal documentation of the effectiveness of transactions that receive
hedge accounting. The adoption of this standard did not have a material effect
on the Company's consolidated results of operations, financial position, or cash
flows.
<PAGE>
AMCAST INDUSTRIAL CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
($ in thousands, except per share amounts)
(unaudited)
Comprehensive Income
Comprehensive income (losses) include all changes in shareholders' equity during
a period except those resulting from investments by and distributions to
shareholders. The components of comprehensive income (losses) are:
<TABLE>
<CAPTION>
Three Months Ended
------------------------------
<S> <C> <C>
December 3 November 28
2000 1999
----------- -----------
Net income $ 82 $ 2,278
Foreign currency translation adjustments (3,175) 2,323
----------- -----------
$ (3,093) $ 4,601
=========== ===========
</TABLE>
Inventories
The major components of inventories are:
<TABLE>
<S> <C> <C>
December 3 November 28
2000 1999
----------- -----------
Finished Goods $ 44,497 $ 40,013
Work in process 25,741 23,932
Raw materials and supplies 19,747 18,661
----------- -----------
89,985 82,606
Less amount to reduce certain
inventories to LIFO value 5,094 5,094
----------- -----------
$ 84,891 $ 77,512
=========== ===========
</TABLE>
<PAGE>
AMCAST INDUSTRIAL CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
($ in thousands, except per share amounts)
(unaudited)
Long-Term Debt
The following table summarizes the Company's long-term borrowings:
<TABLE>
<S> <C> <C>
December 3 August 31
2000 2000
----------- -----------
Senior notes $ 50,000 $ 50,000
Revolving credit notes 76,751 77,510
Lines of credit 22,600 16,200
Other debt 2,911 3,388
Capital leases 2,489 3,219
----------- -----------
154,751 150,317
Less current portion 2,689 3,044
----------- -----------
$152,062 $147,273
=========== ===========
</TABLE>
<PAGE>
AMCAST INDUSTRIAL CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
($ 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 December 3, 2000 and November 28, 1999,
respectively.
<TABLE>
<CAPTION>
Three Months Ended
--------------------------------------
<S> <C> <C>
December 3 November 28
2000 1999
----------- -----------
Income before cumulative effect
of accounting change $ 82 $ 1,295
=========== ===========
Net income $ 82 $ 2,278
=========== ===========
Basic Earnings per Share:
Basic shares 8,406 8,956
=========== ===========
Income before cumulative effect
of accounting change $ 0.01 $ 0.14
=========== ===========
Net income $ 0.01 $ 0.25
=========== ===========
Diluted Earnings per Share:
Basic shares 8,406 8,956
Stock options 6 6
----------- -----------
Diluted shares 8,412 8,962
=========== ===========
Income before cumulative effect
of accounting change $ 0.01 $ 0.14
=========== ===========
Net income $ 0.01 $ 0.25
=========== ===========
</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.
<PAGE>
AMCAST INDUSTRIAL CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
($ in thousands, except per share amounts)
(unaudited)
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 December 03, 2000 there were no significant
changes in identifiable assets of reportable segments from the amounts disclosed
at August 31, 2000, 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>
December 3 November 28 December 3 November 28
2000 1999 2000 1999 *
----------- ----------- ----------- -----------
Flow Control Products $ 32,959 $ 35,369 $ 4,485 $ 6,014
Engineered Components 104,985 110,710 1,264 634
Corporate - - (1,658) (1,940)
----------- ----------- ----------- -----------
137,944 146,079 4,091 4,708
Equity in joint venture
and other (income) expense - - 755 (248)
Interest expense - - 3,199 2,823
----------- ----------- ----------- -----------
Total net sales and income
before taxes $ 137,944 $ 146,079 $ 137 $ 2,133
=========== =========== =========== ===========
* Income before cumulative effect of a change in accounting principle in fiscal
2000
</TABLE>
<PAGE>
AMCAST INDUSTRIAL CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
($ in thousands, except per share amounts)
(unaudited)
Commitments and Contingencies
At December 3, 2000, the Company has committed to capital expenditures of
$13,168, 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
December 3, 2000, the Company's accrued undiscounted reserve for such
contingencies was $900.
<PAGE>
AMCAST INDUSTRIAL CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
($ in thousands, except per share amounts)
(unaudited)
Allied-Signal Inc. (now Honeywell) brought an action against the Company seeking
a contribution from the Company equal to 50% of Honeywell'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.
Increasingly, major automotive industry companies are withholding partial
payment for goods received. Often, this is a negotiating tactic for costs
incurred by the customer in which the customer believes that the supplier should
participate. Generally, payment is received, however, only after several months
have passed. At December 3, 2000, the Company has $2,037 and CTC has $1,926 of
accounts receivable being withheld pending final resolution of various issues.
It is anticipated that these amounts will ultimately be collected.
<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, cost of raw materials, 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.
Results of Operations
Consolidated net sales decreased by 5.6% to $137.9 million in the first quarter
of fiscal 2001 compared with $146.1 million in the first quarter of fiscal 2000.
The following table shows the components of the decrease in consolidated net
sales:
<TABLE>
<S> <C>
Volume (4.2%)
Price and product mix 3.9%
Foreign currency exchange rates (5.3%)
------------
(5.6%)
============
</TABLE>
While demand for the Company's copper plumbing fittings and North American
automotive products remained near prior-year levels, anticipated replacement of
commercial brass product business lost in the second quarter of fiscal 2000 was
not achieved and demand for aluminum wheels in Europe softened. Favorable
pricing reflects a better product mix, primarily at the Company's European
operations, and higher aluminum costs reflected in the sales price of automotive
products, which helped to offset competitive market pricing issues encountered
by the Flow Control business. A weaker Italian lira also caused a decrease in
sales. By segment, Engineered Components sales decreased by 5.2% compared with
the first quarter of fiscal 2000, while Flow Control Products sales decreased by
6.8%.
<PAGE>
AMCAST INDUSTRIAL CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Gross profit for the first quarter of fiscal 2001 decreased by 11.0% to $16.3
million. As a percentage of sales, gross profit was 11.8% for the first quarter
compared with 12.5% for the same period of 2000. In the Flow Control Products
segment, pricing issues and lower volume decreased gross profit. In the
Engineered Components segment, lower sales volume plus manufacturing
inefficiencies experienced by the Company's European operations offset the gross
profit improvement from a more profitable mix of wheels in Europe and North
America and lower manufacturing costs, primarily at the Company's Wapakoneta,
Ohio plant.
Selling, general and administrative (SG&A) expenses decreased, both in total and
as a percentage of sales. As a percentage of sales, SG&A expense was 8.8% and
9.3% in the first quarters of fiscal 2001 and fiscal 2000, respectively. A net
pension expense benefit, lower recruiting costs, and reduced legal expenditures
contributed to the decrease. The salaried workforce reduction implemented in the
second half of fiscal 2000 also contributed to lower SG&A expenses in the first
quarter of fiscal 2001, through reduced salary and benefit costs.
The Company's pre-tax share of losses from Casting Technology Company (CTC), the
Company's joint venture with Izumi Industries, was $0.8 million in the first
quarter of fiscal 2001, compared with income of $0.1 million in the first
quarter of fiscal 2000. CTC's results had been severely impacted by a customer's
extraordinarily high, temporary demand in the second half of fiscal 2000. CTC
was pushed beyond capacity and incurred higher costs associated with operating
in excess of capacity to meet the customer's demand. While the demand and
capacity issues have subsided, there were some carryover effects in the form of
higher costs and manufacturing inefficiencies in the first quarter of fiscal
2001.
Interest expense was $3.2 million for the first quarter of fiscal 2001, compared
with $2.8 million for the first quarter of fiscal 2000. The increase in interest
expense is primarily due to higher interest rates.
The effective tax rate was 40.1% and 39.3% for the first quarters of fiscal 2001
and 2000, respectively. The increase in the effective tax rate is primarily due
to the Company's mix of business.
During 2000, as a result of a new enterprise resource planning (ERP) system
implementation, the Company began capitalizing the cost of supplies and spare
parts inventories, whereas previously the cost of these manufacturing supplies
was expensed when purchased. Management believes this change is preferable in
that it provides for a more appropriate matching of revenues and expenses. The
total amount of inventory capitalized and reported as a cumulative effect of a
change in accounting principle, retroactive to September 1, 1999, was $983 net
of taxes of $602.
<PAGE>
AMCAST INDUSTRIAL CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Flow Control Products Net sales for the Flow Control Products segment were $32.9
million for the first quarter of fiscal 2001, compared with $35.4 for the same
period of fiscal 2000. Unfavorable pricing, primarily due to price competition,
reduced sales by 9.1%. This decrease was offset slightly by a 2.0% increase in
sales from higher volume, as demand for copper plumbing fittings more than
offset lost commercial brass products business. Operating income in the first
quarter of fiscal 2001 was $4.5 million, compared with $6.0 million for the same
period of fiscal 2000. The impact of the competitive market pricing issues
previously discussed reduced operating profit; however, the effect was partly
offset by lower manufacturing and administrative spending and improved plant
efficiencies.
Engineered Components Net sales for the Engineered Components segment were
$105.0 million for the first quarter of fiscal 2001 compared with $110.7 million
for the same period of fiscal 2000. Sales decreased by 6.1% due to a drop in
volume, particularly at the Company's European operations where demand has
softened. A weaker Italian lira in the first quarter of fiscal 2001 compared
with the same period in fiscal 2000 further reduced sales by 7.1%. However,
aluminum cost pass-throughs reflected in the selling price of the Company's
products, and a favorable product mix increased sales by 8.1%. Despite a
decrease in sales, operating income in the first quarter of fiscal 2001 improved
to $1.3 million, up from $0.6 million in the first quarter of 2000. The increase
was the result of a more profitable mix of wheels in Europe and improvement in
North America operations that helped to offset manufacturing inefficiencies and
higher costs in the Company's European operations.
Liquidity and Capital Resources
Cash used for operations was $1.2 million in the first quarter of fiscal 2001
compared with $10.5 million used in the first quarter of fiscal 2000. A $7.5
million increase in working capital requirements in the first quarter offset the
$8.0 million positive cash flow generated by net income plus the non-cash
benefits of depreciation and amortization. The working capital increase
primarily reflects the combination of a decrease in accounts receivable, an
increase in inventory levels and other current assets, and a reduction from the
high level of open accounts payable at August 31, 2000. The $1.7 million
decrease in deferred liabilities primarily represents cash payments plus
non-cash changes in deferred taxes.
Investing activities, primarily capital spending, used net cash of $6.0 million
in the first quarter of fiscal 2001 compared with $5.4 million in the first
quarter of fiscal 2000. At December 3, 2000, the Company had $13.2 million of
commitments for additional capital expenditures, primarily for the Engineered
Components segment.
<PAGE>
AMCAST INDUSTRIAL CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Financing activities provided $9.8 million in cash in the first quarter of
fiscal 2001, compared with $21.9 million in the first quarter of fiscal 2000.
Additional financing included $11.8 million of net short-term borrowings and
$31.0 million of long-term debt borrowings under the Company's revolving credit
agreement. Financing activities also included long-term debt payments of $31.8
million and dividend payments of $1.2 million. Long-term debt was 51.6% of total
capital at December 3, 2000, compared with 49.3% at August 31, 2000. The Company
may borrow up to $150 million under a credit agreement that expires August 14,
2002 and has additional lines of credit of $27.0 million. At December 3, 2000,
$76.8 million was outstanding under the credit agreement, and $22.6 million was
outstanding under available lines of credit. At December 3, 2000, the Company
had unused borrowing capacity of $29.0 million under its most restrictive debt
covenant. Speedline also has short-term lines of credit totaling $24.3 million,
of which $21.4 was available at October 31, 2000. The Company considers these
external sources of funds, together with funds expected to be generated from
operations, to be adequate to meet operating needs.
Contingencies
The Company, as is normal for the industry in which it operates, is involved in
certain legal proceedings and subject to certain claims and site investigations
that arise under the environmental laws and which have not been finally
adjudicated. To the extent possible, with the information available, the Company
regularly evaluates its responsibility with respect to environmental
proceedings. The factors considered in this evaluation are more fully described
in the Commitments and Contingencies note to the consolidated condensed
financial statements. At December 3, 2000, the Company had reserves of $900 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.
Increasingly, major automotive industry companies are withholding partial
payment for goods received. Often, this is a negotiating tactic for costs
incurred by the customer in which the customer believes that the supplier should
participate. Generally, payment is received, however, only after several months
have passed. At December 3, 2000, the Company has $2,037 and CTC has $1,926 of
accounts receivable being withheld pending final resolution of various issues.
It is anticipated that these amounts will ultimately be collected.
<PAGE>
AMCAST INDUSTRIAL CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Impact of Recently Issued Accounting Standards
Effective September 1, 2000, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 133, "Accounting for Derivative Instruments and
Hedging Activities," as amended by SFAS Nos. 137 and 138, which establishes a
comprehensive standard for the recognition and measurement of derivatives and
hedging activities. The new standard requires that all derivatives be recognized
as assets or liabilities in the statement of financial position and measured at
fair value. Gains or losses resulting from changes in fair value are required to
be recognized in current earnings unless specific hedge criteria are met.
Special accounting allows for gains or losses on qualifying derivatives to
offset gains or losses on the hedged item in the statement of income and
requires formal documentation of the effectiveness of transactions that receive
hedge accounting. The adoption of this standard did not have a material effect
on the Company's consolidated results of operations, financial position, or cash
flows.
<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, 2000.
PART II - OTHER INFORMATION
Item 4 - Submission of Matters to a Vote of Security Holders
None
Item 6 - Exhibits and Reports on Form 8-K
a) Exhibits
None
b) Reports on Form 8-K:
No reports on Form 8-K were filed by the Company during
the quarter ended December 3, 2000
<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 17, 2001 By: /s/J. H. Shuey
----------------------------------
John H. Shuey
Chairman, President and
Chief Executive Officer
(Principal Executive Officer)
Date: January 17, 2001 By: /s/D. D. Watts
----------------------------------
Douglas D. Watts
Vice President, Finance
(Principal Financial Officer)
Date: January 17, 2001 By: /s/M.D. Mishler
----------------------------------
Mark D. Mishler
Corporate Controller
(Principal Accounting Officer)
