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
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(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
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Number of Common Shares outstanding, no par value, as of November 28, 1999 -
8,956,920 shares.
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
PART I - FINANCIAL INFORMATION
AMCAST INDUSTRIAL CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF FINANCIAL CONDITION
($ in thousands)
(unaudited)
November 28 August 31
1999 1999
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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
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$ 553,017 $ 533,486
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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
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$ 553,017 $ 533,486
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See notes to consolidated financial statements
3
AMCAST INDUSTRIAL CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
AND RETAINED EARNINGS
($ in thousands except per share amounts)
(unaudited)
Three Months Ended
--------------------------
November 28 November 29
1999 1998
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Consolidated Condensed Statements of Income
Net sales $ 146,079 $ 146,024
Cost of sales 127,453 121,177
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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
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Income before Income Taxes 2,448 16,557
Income taxes 962 6,528
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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
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Basic earnings per share $ 0.17 $ 1.09
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Diluted earnings per share $ 0.17 $ 1.09
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Dividends declared per share $ 0.14 $ 0.14
=========== ===========
Dividends paid per share $ 0.14 $ 0.14
=========== ===========
See notes to consolidated financial statements.
4
AMCAST INDUSTRIAL CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
($ in thousands)
(unaudited)
Three Months Ended
--------------------------
November 28 November 29
1999 1998
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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
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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
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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 -
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Net Cash Provided (Used) by Financing
Activities 21,887 (27,539)
Effect of exchange rate changes on cash (7) 195
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Net change in cash and cash equivalents 6,053 17,261
Cash and cash equivalents at beginning of period 6,928 7,022
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Cash and Cash Equivalents at End of Period $ 12,981 $ 24,283
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See notes to consolidated financial statements
5
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:
Three Months Ended
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November 28 November 29
1999 1998
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Net income $ 1,486 $ 10,029
Foreign currency translation adjustments 2,323 3,884
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$ 3,809 $ 13,913
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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 $9,023. The
business, acquired by Amcast in 1986, produces specialty valves and related
products for the compressed gas and commercial refrigeration markets.
6
AMCAST INDUSTRIAL CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
($ in thousands, except per share amounts)
(unaudited)
Inventories
The major components of inventories are:
November 28 August 31
1999 1999
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Finished products $42,566 $36,979
Work in process 22,739 21,833
Raw materials and supplies 20,336 20,801
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85,641 79,613
Less amount to reduce certain
inventories to LIFO value 2,447 2,447
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$83,194 $77,166
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Long-Term Debt
The following table summarizes the Company's long-term borrowings:
November 28 August 31
1999 1999
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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
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198,993 180,243
Less current portion 4,930 6,182
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$ 194,063 $ 174,061
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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
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.
Three Months Ended
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November 28 November 29
1999 1998
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Net income $ 1,486 $ 10,029
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Basic Earnings per Share:
Basic shares 8,956 9,192
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Net income $ 0.17 $ 1.09
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Diluted Earnings per Share:
Basic shares 8,956 9,192
Stock options 6 10
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Diluted shares 8,962 9,202
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Net income $ 0.17 $ 1.09
=========== ===========
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
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:
Net Sales Operating Income
-------------------------- --------------------------
For the Three Months Ended For the Three Months Ended
-------------------------- --------------------------
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
=========== =========== =========== ===========
9
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
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
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 $3.6 million for the first quarter of fiscal 1999. The decrease in interest
expense is primarily due to significant debt reductions late in fiscal 1999 and,
to a lesser degree, lower interest rates.
The effective tax rate was 39.3% and 39.4% for the first quarters of fiscal 2000
and 1999, respectively.
Results by Business Segment (unaudited)
($ in thousands)
Net Sales Operating Income
-------------------------- --------------------------
For the Three Months Ended For the Three Months Ended
-------------------------- --------------------------
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
=========== =========== =========== ===========
12
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
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
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
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
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
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John H. Shuey
Chairman, President and
Chief Executive Officer
(Principal Executive Officer)
Date: January 12, 2000 By: /s/D. D. Watts
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Douglas D. Watts
Vice President, Finance
(Principal Financial Officer)
Date: January 12, 2000 By: /s/M.D. Mishler
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Mark D. Mishler
Corporate Controller
(Principal Accounting Officer)
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