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 May 28, 2000 Commission File Number 1-9967
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A M C A S T I N D U S T R I A L C O R P O R A T I O N
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(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 May 28, 2000 -
8,405,604 shares.
1
AMCAST INDUSTRIAL CORPORATION
REPORT ON FORM 10-Q
FOR THE QUARTER ENDED MAY 28, 2000
I N D E X
PART I - FINANCIAL INFORMATION PAGE
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Item 1 - Financial Statements:
Consolidated Condensed Statements of Financial 3
Condition - May 28, 2000 and August 31, 1999
Consolidated Condensed Statements of Income - 4
for the Quarter and Nine Months Ended May 28, 2000
and May 30, 1999
Consolidated Condensed Statements of Retained Earnings - 4
for the Quarter and Nine Months Ended May 28, 2000
and May 30, 1999
Consolidated Condensed Statements of Cash Flows - 5
for the Nine Months Ended May 28, 2000
and May 30, 1999
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 16
Market Risk
PART II - OTHER INFORMATION
Item 5 - Submission of Matters to a Vote of Security Holders 16
Item 6 - Exhibits and Reports on Form 8-K 16
SIGNATURES 17
2
PART I - FINANCIAL INFORMATION
AMCAST INDUSTRIAL CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF FINANCIAL CONDITION
($ in thousands)
(unaudited)
May 28 August 31
2000 1999
--------- ---------
ASSETS
Current Assets
Cash and cash equivalents $ 2,336 $ 6,928
Accounts receivable 88,257 97,819
Inventories 73,281 77,166
Other current assets 19,694 21,144
--------- ---------
Total Current Assets 183,568 203,057
Property, Plant, and Equipment 388,131 401,012
Less accumulated depreciation (162,926) (144,254)
--------- ---------
225,205 256,758
Goodwill 50,048 61,261
Other Assets 18,177 12,410
--------- ---------
$ 476,998 $ 533,486
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Short-term debt $ 248 $ 4,673
Current portion of long-term debt 3,861 6,182
Accounts payable 68,277 82,396
Accrued expenses 40,495 40,851
--------- ---------
Total Current Liabilities 112,881 134,102
Long-Term Debt - less current portion 161,930 174,061
Deferred Income Taxes 32,129 32,775
Deferred Liabilities 18,497 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 - 9,227,600 and 9,208,529 shares,
respectively 9,228 9,209
Capital in excess of stated value 70,981 79,020
Accumulated other comprehensive income (losses) (7,169) (1,018)
Retained earnings 88,163 87,796
Cost of 821,996 and 253,609 common shares in treasury (9,642) (4,241)
--------- ---------
151,561 170,766
--------- ---------
$ 476,998 $ 533,486
========= =========
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 Nine Months Ended
---------------------- ----------------------
May 28 May 30 May 28 May 30
2000 1999 2000 1999
---------- --------- ---------- ---------
Consolidated Condensed Statements of Income
Net sales $ 163,162 $ 157,790 $ 459,250 $ 445,548
Cost of sales 141,224 133,939 399,336 371,735
---------- --------- ---------- ---------
Gross Profit 21,938 23,851 59,914 73,813
Selling, general and administrative expenses 14,349 14,362 42,958 42,135
Gain on sale of business - - - (9,023)
---------- --------- ---------- ---------
Operating Income 7,589 9,489 16,956 40,701
Equity in (income) loss of joint venture
and other (income) and expense 1,521 382 884 708
Interest expense 3,287 3,076 9,657 10,144
---------- --------- ---------- ---------
Income before Income Taxes 2,781 6,031 6,415 29,849
Income taxes 940 2,292 2,368 11,579
---------- --------- ---------- ---------
Net Income $ 1,841 $ 3,739 $ 4,047 $ 18,270
========== ========= ========== =========
Consolidated Condensed Statements of Retained Earnings
Beginning retained earnings $ 87,499 $ 85,541 $ 87,796 $ 73,588
Net income 1,841 3,739 4,047 18,270
Dividends (1,177) (1,277) (3,675) (3,855)
Stock awards - - (5) -
---------- --------- ---------- ---------
Ending Retained Earnings $ 88,163 $ 88,003 $ 88,163 $ 88,003
========== ========= ========== =========
Basic earnings per share $ 0.21 $ 0.41 $ 0.45 $ 1.99
========== ========= ========== =========
Diluted earnings per share $ 0.21 $ 0.41 $ 0.45 $ 1.98
========== ========= ========== =========
Dividends declared per share $ 0.14 $ 0.14 $ 0.42 $ 0.42
========== ========= ========== =========
Dividends paid per share $ 0.14 $ 0.14 $ 0.42 $ 0.42
========== ========= ========== =========
See notes to consolidated financial statements.
4
AMCAST INDUSTRIAL CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
($ in thousands)
(unaudited)
Nine Months Ended
----------------------
May 28 May 30
2000 1999
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Operating Activities
Net income $ 4,047 $ 18,270
Depreciation and amortization 24,772 24,105
Gain on sale of business - (9,023)
Deferred liabilities (2,220) (2,853)
Changes in assets and liabilities:
Accounts receivable (3,757) 2,664
Inventories (363) (4,226)
Other current assets (82) 1,779
Accounts payable (8,796) 2,671
Accrued liabilities 2,904 8,206
Other 1,407 907
--------- ---------
Net Cash Provided by Operations 17,912 42,500
Investing Activities
Additions to property, plant, and equipment (12,909) (34,122)
Settlement related to business acquisition (2,500) -
Proceeds from sale of business - 35,604
Acquisitions, net of cash acquired - (1,200)
Other 142 231
--------- ---------
Net Cash (Used) Provided by Investing Activities (15,267) 513
Financing Activities
Additions to long-term debt 59,466 36,154
Reduction in long-term debt (84,847) (65,522)
Short-term borrowings 16,950 (10,419)
Proceeds from sale leaseback 6,488 -
Dividends (3,675) (3,855)
Purchase of treasury shares (1,255) (1,831)
Other 198 36
--------- ---------
Net Cash Used by Financing Activities (6,675) (45,437)
Effect of exchange rate changes on cash (562) (465)
--------- ---------
Net change in cash and cash equivalents (4,592) (2,889)
Cash and cash equivalents at beginning of period 6,928 7,022
--------- ---------
Cash and Cash Equivalents at End of Period $ 2,336 $ 4,133
========= =========
Supplemental disclosure of non-cash investing and financing activities:
Purchase price settlement related to business acquisition:
Disposition of common stock price protection
liability $ (8,196)
Acquisition of treasury shares (4,304)
Less reduction in original purchase price 10,000
---------
$ (2,500)
=========
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 Nine Months Ended
-------------------- ---------------------
May 28 May 30 May 28 May 30
2000 1999 2000 1999
-------- -------- -------- --------
Net income $ 1,841 $ 3,739 $ 4,047 $ 18,270
Foreign currency
translation adjustments (4,206) (2,497) (6,151) 92
-------- -------- -------- --------
$(2,365) $ 1,242 $(2,104) $ 18,362
======== ======== ======== ========
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
Inventories
The major components of inventories are:
May 28 August 31
2000 1999
-------- ---------
Finished products $ 38,092 $36,979
Work in process 19,975 21,833
Raw materials and supplies 17,661 20,801
-------- ---------
75,728 79,613
Less amount to reduce certain
inventories to LIFO value 2,447 2,447
-------- ---------
$ 73,281 $77,166
======== =========
Long-Term Debt
The following table summarizes the Company's long-term borrowings:
May 28 August 31
2000 1999
-------- ---------
Senior notes $ 50,000 $ 50,875
Revolving credit notes 81,307 112,793
Lines of credit 21,100 -
Industrial revenue bonds 5,575 5,750
Other debt 4,031 4,014
Capital leases 3,778 6,811
-------- ---------
165,791 180,243
Less current portion 3,861 6,182
-------- ---------
$161,930 $ 174,061
======== =========
During the first and third quarters of fiscal 2000, the Company amended its
credit agreement. Among other things, these amendments changed certain financial
covenants (including the interest coverage and debt-to-earnings ratios) and
added certain affirmative covenants. Both amendments also included increases to
the applicable LIBOR margin. Subsequent to the third quarter amendment, the
Company decreased its credit agreement from $200,000 to $150,000.
7
Earnings Per Share
The following table reflects the calculations for basic and diluted earnings per
share for the three-and nine-month periods ended May 28, 2000 and May 30, 1999,
respectively.
Three Months Ended Nine Months Ended
-------------------- ------------------------
May 28 May 30 May 28 May 30
2000 1999 2000 1999
--------- --------- --------- ---------
Net income $ 1,841 $ 3,739 $ 4,047 $ 18,270
========= ========= ========= =========
Basic Earnings per Share:
Basic shares 8,863 9,169 8,930 9,187
========= ========= ========= =========
Net income $ 0.21 $ 0.41 $ 0.45 $ 1.99
========= ========= ========= =========
Diluted Earnings per Share:
Basic shares 8,863 9,169 8,930 9,187
Stock options 0 19 5 19
--------- --------- --------- ---------
Diluted shares 8,863 9,188 8,935 9,206
========= ========= ========= =========
Net income $ 0.21 $ 0.41 $ 0.45 $ 1.98
========= ========= ========= =========
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 May 28, 2000 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
-------------------------- --------------------------
May 28 May 30 May 28 May 30
2000 1999 2000 1999
---------- ---------- ---------- ----------
Flow Control Products $ 38,094 $ 41,208 $ 6,396 $ 7,035
Engineered Components 125,068 116,582 2,925 5,132
Corporate - - (1,732) (2,678)
---------- ---------- ---------- ----------
163,162 157,790 7,589 9,489
Equity in joint venture
and other (income)
expense - - 1,521 382
Interest expense - - 3,287 3,076
---------- ---------- ---------- ----------
Total net sales and
income before taxes $ 163,162 $ 157,790 $ 2,781 $ 6,031
========== ========== ========== ==========
Net Sales Operating Income
-------------------------- --------------------------
For the Nine Months Ended For the Nine Months Ended
-------------------------- --------------------------
May 28 May 30 May 28 May 30
2000 1999 2000 1999
---------- ---------- ---------- ----------
Flow Control Products $ 109,578 $ 115,914 $ 17,176 $ 18,549
Engineered Components 349,672 329,634 6,141 21,036
Corporate - - (6,361) (7,907)
---------- ---------- ---------- ----------
459,250 445,548 16,956 31,678
Disposition of businesses - - - (9,023)
Equity in joint venture
and other (income)
expense - - 884 708
Interest expense - - 9,657 10,144
---------- ---------- ---------- ----------
Total net sales and
income before taxes $ 459,250 $ 445,548 $ 6,415 $ 29,849
========== ========== ========== ==========
9
Commitments and Contingencies
At May 28, 2000, the Company has committed to capital expenditures of $2,877,
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
May 28, 2000, the Company's accrued undiscounted reserve for such contingencies
was $1,512.
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, 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.
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 business, acquired by Amcast in 1986, produces
specialty valves and related products for the compressed gas and commercial
refrigeration markets.
Results of Operations
Consolidated net sales increased by 3.4% to $163.2 million compared with $157.8
million in the third quarter of fiscal 1999. Increased sales of the Company's
performance-critical aluminum components and European wheels were partly offset
by a decline in North American wheel sales and by lower volumes in the Flow
Control Products segment. Favorable pricing, including product mix, and higher
volumes increased consolidated sales by 3.6%, and 0.2%, respectively. Higher
aluminum costs reflected in the selling price of automotive products increased
sales by 3.8%. These gains were partially offset by a 4.2% reduction in sales
due to a weaker Italian lira. By segment, Engineered Components sales increased
by 7.3% compared with the third quarter of fiscal 1999, while Flow Control
Products sales decreased by 7.5%.
11
For the first nine months of fiscal 2000, consolidated net sales increased by
3.1% to $459.3 million compared with $445.5 million in the prior year. Increased
sales of the Company's performance-critical aluminum components and European
wheels were partly offset by a decline in North American wheel sales and by
lower volumes in the Flow Control Products segment. Favorable pricing (primarily
as a result of higher aluminum costs reflected in the sales of automotive
products) and a better product mix plus higher volumes increased consolidated
sales by 6.4% and 1.6%, respectively. These gains were partially offset by a
1.0% reduction in sales from divested operations and a 3.9% reduction due to the
weaker 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 6.1% compared with the prior year, while Flow Control
Products sales decreased by 5.4%.
Gross profit for the third quarter of fiscal 2000 decreased by 8.0% to $21.9
million, while year-to-date gross profit fell by 18.8% to $59.9 million. As a
percentage of sales, gross profit was 13.4% for the third quarter and 13.0% for
the first nine months of fiscal 2000 compared with 15.1% and 16.6% for the same
periods of 1999. A combination of temporary internal and external factors
depressed both gross profit and operating profit, including the inability to
pass through certain material costs, the loss of two large brass products
customers, reduced volumes for certain aluminum wheel styles, and higher than
expected operating costs in the second quarter in the Flow Control Products
segment. These factors are discussed more fully under business segments below.
These difficulties offset operating cost improvements which took place during
the third quarter of fiscal 2000 at the Company's Ohio suspension components
plant and its wheel manufacturing operations in Indiana.
Selling, general and administrative (SG&A) expenses decreased slightly, both in
total and as a percentage of sales, in the third quarter of fiscal 2000 compared
with prior year. As a percentage of sales, SG&A expense was 8.8% in the third
quarter and 9.4% for the first nine months of fiscal 2000 compared with 9.1% and
9.5% for the same periods of fiscal 1999. This favorable decrease resulted from
lower pension expense and the Company's cost-reduction program initiated at the
end of its second fiscal quarter.
In early March, the Company implemented an 8% salaried workforce reduction
across all its North American operations. At the same time, global restrictions
were placed on other controllable operating and administrative costs. The
Company expects the combination of the workforce and overhead spending
reductions to have a significantly favorable impact on the fourth quarter
results.
The Company's pre-tax share of losses from Casting Technology Company (CTC), the
Company's joint venture with Izumi Industries, was $1.7 million in the third
quarter of fiscal 2000 compared with income of $0.2 million in the third quarter
of fiscal 1999. The Company's year-to-date pre-tax share of losses from CTC was
$1.2 million in fiscal 2000 compared with a $0.9 million loss for the same
period in fiscal 1999. During the third quarter of fiscal 2000, CTC incurred
excessive costs to meet a customer's extraordinarily high demand. CTC's results
for fiscal 1999 were negatively impacted by foreign exchange losses resulting
from the strengthening of the yen versus the US dollar, operating inefficiencies
resulting from efforts to
12
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 $3.3 million and $3.1 million in the third quarters of
fiscal 2000 and 1999 and $9.7 million and $10.1 million in the first nine months
of fiscal 2000 and 1999, respectively.
The effective tax rate was 33.8% and 38.0% for the third quarters of fiscal 2000
and 1999 and 36.9% and 38.8% for the first nine months of fiscal 2000 and 1999,
respectively. The decrease in the effective tax rate is due to lower effective
state tax rates.
Flow Control Products Net sales for the Flow Control Products segment were $38.1
million for the third quarter of fiscal 2000 compared with $41.2 million for the
same period of fiscal 1999. Favorable pricing increased sales by 1.5%, offset by
a 9.0% decrease in sales caused by lower volume of copper and brass products.
Operating income in the third quarter of fiscal 2000 was $6.4 million compared
with $7.0 million for the same period of fiscal 1999. Operating income benefited
from the favorable pricing, but was adversely affected by lower volume and
higher material costs.
Engineered Components Net sales for the Engineered Components segment were
$125.1 million for the third quarter of fiscal 2000 compared with $116.6 million
for the same period of fiscal 1999. Sales increased by 3.3% due to volume as
sales of control arms and European wheels more than offset a decline in North
American wheel sales. Higher pricing, in the form of aluminum cost pass-throughs
reflected in the selling price of the Company's products, and a favorable
product mix increased sales by 5.1% and 4.6%, respectively. However, a weaker
Italian lira in the third quarter of fiscal 2000 compared with the same period
in fiscal 1999 reduced sales by 5.7%. Operating income in the third quarter of
fiscal 2000 was $2.9 million, down from $5.1 million in the third quarter of
1999. The volume and mix of products sold had an unfavorable impact of $1.1
million. Material costs that could not be passed along to customers in the third
quarter under existing pricing formulas, primarily at the Company's Speedline
unit, also reduced operating income by approximately $1.5 million.
Liquidity and Capital Resources
For the first nine months of fiscal 2000, operations provided net cash of $17.9
million compared with $42.5 million provided in the first nine months of fiscal
1999. An $8.7 million increase in working capital requirements in the first nine
months of fiscal 2000 offset the positive cash flow generated by net income plus
the non-cash benefits of depreciation of $28.8 million. The working capital
increase primarily reflects a reduction from the high level of accounts payable
at August 31, 1999 related to capital expenditures.
Investing activities used net cash of $15.3 million in the first nine months of
fiscal 2000 compared with $0.5 million provided in fiscal 1999. Proceeds from
the sale of Superior Valve in
13
the first quarter of fiscal 1999 provided $35.6 million, which primarily was
used to reduce long-term debt. Capital spending totaled $12.9 million in the
first nine months of fiscal 2000, significantly less than the $34.1 million in
the comparable period of fiscal 1999. During the third quarter of fiscal 2000,
the Company resolved several matters with the former owners of Speedline which,
among other items, resulted in a purchase by the Company of 478,240 shares of
the Company's common stock held by Speedline's former owners and a net cash
payment to the former owners of $2.5 million. At May 28, 2000, the Company had
$2.9 million of commitments for additional capital expenditures, primarily for
the Engineered Components segment.
Financing activities used $6.7 million in cash in the first nine months of
fiscal 2000 compared with net cash used of $45.4 million in fiscal 1999.
Additional financing included $59.5 million under the Company's revolving credit
agreement which was partly used to pay down short-term borrowings made in the
first quarter of fiscal 2000. For the first nine months of fiscal 2000, the
Company had $17.0 of net short-term borrowings and received $6.5 million from
the sale-leaseback of equipment. Financing activities also included long-term
debt repayments of $84.8 million, dividend payments of $3.7 million, and $1.3
million for repurchases of the Company's common stock. Long-term debt was 51.7%
of total capital at May 28, 2000 and 50.5% at August 31, 1999. The Company may
borrow up to $150 million under a credit agreement that expires August 14, 2002.
During the first and third quarters of fiscal 2000, the Company amended its
credit agreement. Among other things, these amendments changed certain financial
covenants (including the interest coverage and debt-to-earnings ratios) and
added certain affirmative covenants. Both amendments also included increases to
the applicable LIBOR margin. Subsequent to the third quarter amendment, the
Company reduced the amount of the credit agreement from $200 million to $150
million. At May 28, 2000, $81.3 million was outstanding under the credit
agreement, and $21.1 million was outstanding under available lines of credit. At
May 28, 2000, the Company had unused borrowing capacity of $35.1 million under
its most restrictive debt covenant. Speedline also has short-term lines of
credit totaling $25.8 million, of which $22.1 million was available at April 30,
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.
Year 2000
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
14
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 May 28, 2000, the Company
had reserves of $1.5 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 4 - Submission of Matters to a Vote of Security Holders
None
Item 6 - Exhibits and Reports on Form 8-K
a) Exhibits
Exhibit 4.1 - Creditor and Intercreditor agreement dated August 14, 1997
as subsequently amended through May 28, 2000
Exhibit 10.1 - Amended and Restated Executive agreement between the
Company and Leo W. Ladehoff dated July 10, 2000 as amended and
restated through July 10, 2000
Exhibit 27.1 - Financial Data Schedule for the nine-month period ended
May 28, 2000. *
Exhibit 99.1 - Amended and restated Amcast Nonqualified Supplemental
Benefit Plan dated July 10, 2000 as amended and restated through
July 10, 2000
* 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
May 28, 2000
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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: July 12, 2000 By: /s/ J. H. Shuey
--------------- ---------------
John H. Shuey
Chairman, President and
Chief Executive Officer
(Principal Executive Officer)
Date: July 12, 2000 By: /s/ D. D. Watts
-------------- ----------------
Douglas D. Watts
Vice President, Finance
(Principal Financial Officer)
Date: July 12, 2000 By: /s/ M.D. Mishler
-------------- -----------------
Mark D. Mishler
Corporate Controller
(Principal Accounting Officer)
17