1
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, 1995 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)
(Area Code 513) 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 December 3, 1995 -
8,609,398 shares.
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AMCAST INDUSTRIAL CORPORATION
I N D E X
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PART I - FINANCIAL INFORMATION PAGE NO.
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Item 1 - Financial Statements:
Consolidated Condensed Statements of Financial 3
Condition - December 3, 1995 and August 31, 1995
Consolidated Condensed Statements of Operations - 4
for the Quarters Ended December 3, 1995
and November 27, 1994
Consolidated Condensed Statements of Retained Earnings - 4
for the Quarters Ended December 3, 1995
and November 27, 1994
Consolidated Condensed Statements of Cash Flows - 5
for the Quarters Ended December 3, 1995
and November 27, 1994
Notes to Consolidated Condensed Financial Statements 6-8
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations 9-10
PART II - OTHER INFORMATION
-----------------
Item 1 - Legal Proceedings 11
Item 6 - Exhibits and Reports on Form 8-K 11
SIGNATURES 12
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PART I - FINANCIAL INFORMATION
AMCAST INDUSTRIAL CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF FINANCIAL CONDITION
(dollars in thousands)
(unaudited)
December 3 August 31
ASSETS 1995 1995
- ------ ---- ----
Current Assets
Cash and cash equivalents $ 21,912 $ 1,286
Accounts receivable 45,789 44,643
Inventories:
Finished products 26,394 25,766
Work-in-process 14,966 13,791
Raw materials and supplies 11,690 9,589
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53,050 49,146
Other current assets 7,455 7,786
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Total current assets 128,206 102,861
Property, Plant and Equipment 215,136 200,324
Less allowances for depreciation (98,631) (94,701)
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116,505 105,623
Other Assets 20,491 20,883
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$ 265,202 $ 229,367
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Current Liabilities
Accounts payable $ 36,137 $ 33,647
Current portion of long-term debt 3,959 4,522
Accrued expenses, compensation and
related items and other current liabilities 18,303 16,847
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Total current liabilities 58,399 55,016
Long-Term Debt--less current portion 59,013 29,687
Deferred Income Taxes 7,536 6,952
Deferred Liabilities 12,510 13,507
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--8,609,398 shares
(8,555,875 at August 31, 1995) 8,609 8,556
Capital in excess of stated value 64,832 64,175
Retained earnings 54,303 51,474
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127,744 124,205
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$ 265,202 $ 229,367
=========== ===========
See notes to consolidated condensed financial statements.
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AMCAST INDUSTRIAL CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
AND RETAINED EARNINGS
(dollars in thousands except per share amounts)
(unaudited)
Three Months Ended
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December 3 November 27
1995 1994
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Consolidated Condensed Statements
- ---------------------------------
of Income
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Net sales $ 86,465 $ 76,998
Cost of sales 69,046 61,341
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Gross profit 17,419 15,657
Selling, general and administrative expenses 10,703 9,754
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Operating income 6,716 5,903
Other income, net 82 104
Interest expense 462 346
--- ---
Income before income taxes 6,336 5,661
Income taxes 2,281 2,038
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Net Income $ 4,055 $ 3,623
========= =========
Consolidated Condensed Statements of
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Retained Earnings
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Beginning retained earnings $ 51,474 $ 38,793
Net income 4,055 3,623
Dividends (1,205) (1,106)
Other (21) (8)
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Ending Retained Earnings $ 54,303 $ 41,302
========= =========
Per Share Information
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Net income per share $ .47 $ .43
========= =========
Dividends declared per share $ .14 $ .13
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Dividends paid per share $ .14 $ .13
======== =========
See notes to consolidated condensed financial statements.
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AMCAST INDUSTRIAL CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(dollars in thousands)
(unaudited)
Three Months Ended
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December 3 November 27
1995 1994
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Operating Activities:
Net income $ 4,055 $ 3,623
Depreciation 4,484 3,527
Deferred liabilities (413) (483)
Changes in assets and liabilities:
- Receivables (1,146) (5,663)
- Inventories (3,904) (123)
- Accounts payable 2,490 (2,573)
- Other 1,787 960
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Net Cash Provided (Used) By
Operating Activities 7,353 (732)
Investing Activities:
Additions to property, plant, and equipment (14,903) (4,424)
Contribution to joint venture (810)
Other (71) 283
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Net Cash Used By Investing Activities (14,974) (4,951)
Financing Activities:
Additions to long-term debt 50,000
Reduction in long-term debt (21,237) (938)
Dividends (1,205) (1,106)
Other 689 545
--- ---
Net Cash Provided (Used) By
Financing Activities 28,247 (1,499)
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Net change in cash and cash equivalents 20,626 (7,182)
Cash and cash equivalents at beginning of period 1,286 15,414
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Cash and Cash Equivalents at End of Period $ 21,912 $ 8,232
========= ========
See notes to consolidated condensed financial statements.
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AMCAST INDUSTRIAL CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(dollars in thousands except share amounts)
(unaudited)
Note A - Preparation of Financial Statements
- --------------------------------------------
The consolidated condensed financial statements include the accounts of Amcast
Industrial Corporation and subsidiaries (the Company). Intercompany
transactions have been eliminated. All adjustments, consisting of only
normally recurring accruals, necessary for a fair presentation have been
included.
Note B - Accounts Receivable
- ----------------------------
Accounts receivable are stated net of allowances for doubtful accounts of $206
at December 3, 1995 and $222 at August 31, 1995.
Note C - Inventories
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Certain inventories are presented net of the appropriate LIFO reserve.
Note D - Other Assets
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The major components are:
December 3 August 31
1995 1995
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Assets held for sale $ 3,439 $ 3,522
Investment in joint venture 7,324 7,278
Other assets 9,728 10,083
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$ 20,491 $ 20,883
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Note E - Long-Term Debt
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The following table summarizes the Company's borrowings:
December 3 August 31
1995 1995
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Senior notes $ 56,357 $ 7,232
Revolving credit notes 13,000
Lines of credit - notes payable 7,300
Industrial revenue bonds 6,615 6,677
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Total Obligations 62,972 34,209
Less current portion of notes payable
and lines of credit 3,959 4,522
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$ 59,013 $ 29,687
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AMCAST INDUSTRIAL CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(dollars in thousands except share amounts)
(unaudited)
Note F - Commitments and Contingencies
- --------------------------------------
At December 3, 1995, the Company has committed to capital expenditures of $21.5
million, 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 nine U.S. EPA led
multi-party sites and six state environmental agency-led remediation sites.
Each of these claims involves 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. 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, 1995, the Company's accrued
undiscounted reserve for such contingencies was $2.5 million.
Allied-Signal Inc. has brought an action against the Company seeking a
contribution from the Company equal to 50% of Allied-Signal's estimated $30
million remediation cost in connection with a site in southern Ohio. The
Company believes its responsibility with respect to this site is very limited
due to the nature of the foundry sand waste it disposed of at the site. A
trial in this case was completed in February of 1995, but no judgment has been
rendered. The Company believes that if it has any liability at all in regard
to this matter, that liability would not be material to its financial position
or results of operations.
The Company is a defendant in a lawsuit brought by the Public Interest Research
Group Inc. seeking substantial penalties for alleged waste water discharges by
the Company's Stanley G. Flagg & Co. division during a 48-month period ended in
October of 1988. The Company's discharges have been in compliance since at
least 1990. The Company therefore believes that penalties, if any, will not be
material to its financial position or results of operations.
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AMCAST INDUSTRIAL CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(dollars in thousands except share amounts)
(unaudited)
Note G - Income Taxes
- ---------------------
The estimated effective tax rate was 36.0% for the first quarter of fiscal 1996
and 1995.
Note H - Net Income Per Share
- -----------------------------
For the first quarter of 1996 and 1995, the weighted average number of common
shares used to calculate income per share was 8,576,817 and 8,474,657,
respectively.
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AMCAST INDUSTRIAL CORPORATION
PART I - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Operating Results
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Net sales of $86.5 million in the current quarter ended December 3, 1995
increased 12.3% from the prior year first quarter. Flow Control Products'
sales increased 7.4% to $38.3 million, due to higher demand for valves and the
retention of the Flagg Brass business. Engineered Components' sales rose 16.5%
to $48.1 million, primarily due to higher wheel sales and strong demand for a
number of the Company's other automotive and aerospace products..
Gross profit for the first quarter of fiscal 1996 and 1995 was $17.4 million
and $15.7 million, respectively. The increase in gross profit was primarily
attributable to higher prices for plumbing fittings and wheels, coupled with
improved demand for valves. Gross profit as a percent of sales for the first
quarter of 1996 was 20.1%, compared to 20.3% in 1995. The slight decrease in
the gross profit percentage was due to higher material costs. As increased
aluminum and copper costs were passed through to customers, materials costs as
a percentage of sales increased, resulting in a lower gross profit percent.
Selling, general and administrative expenses for the first quarter of $10.7
million were 9.7% higher than the first quarter 1995. The higher expenses were
related to activity in support of new businesses. For the three-month period,
selling, general and administrative expenses were 12.4% and 12.7% of fiscal
1996 and 1995 sales, respectively.
In the current quarter, interest expense was $.5 million, compared to $.3
million in the first quarter of fiscal 1995. This increase is a result of
higher borrowings in fiscal 1996.
Results by Business Segment (unaudited)
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(dollars in thousands)
Three Months Ended
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December 3 November 27
1995 1994
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Net Sales
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Flow Control Products $ 38,319 $ 35,683
Engineered Components 48,146 41,315
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$ 86,465 $ 76,998
========= ========
Income Before Taxes
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Flow Control Products $ 5,946 $ 5,736
Engineered Components 2,618 1,856
Corporate Expense (1,766) (1,585)
Interest Expense (462) (346)
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$ 6,336 $ 5,661
========= ========
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AMCAST INDUSTRIAL CORPORATION
PART I - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS -CONTINUED
Flow Control Products' operating income in the first quarter of $5.9 million
was up 3.7% due to higher margins resulting from higher prices for plumbing
fittings and increased demand for valves. Engineered Components' operating
income of $2.6 million increased 41.1% primarily due to improved volume and mix
of wheels and other automotive and aerospace components.
Capital Resources and Liquidity
- -------------------------------
In the current quarter, net cash provided by operations was $7.4 million
compared to cash used by operations of $.7 million for the first three months
of fiscal 1995. In the current year, cash provided by net income and
depreciation was offset by a $.8 million increase in working capital. In the
prior year, cash provided by net income and depreciation was partially offset
by an increase in working capital of $7.4 million.
Capital expenditures were $14.9 million and $4.4 million for the three-month
period of fiscal 1996 and 1995, respectively. At December 3, 1995, the Company
had $21.5 million of commitments for additional capital expenditures, primarily
for the Engineered Components segment.
Long-term debt was 31.6% of total capital at December 3, 1995, and 19.3% at
August 31, 1995. The increase during the period is due to higher debt levels
relating to the November 7, 1995 private placement of $50 million in senior
notes with two insurance companies.
The Company may borrow up to $60 million under a Revolving Credit Agreement
which expires April 1, 2000. In addition, the Company maintains bank lines of
credit under which it may borrow up to $25 million. At December 3, 1995, there
were no borrowings under the Revolving Credit Agreement and none outstanding
under the bank lines of credit. The Company considers these external sources
of funds, together with funds generated from operations, to be adequate to meet
operating needs.
Contingencies
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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 described in detail
in the Commitments and Contingencies note to the consolidated condensed
financial statements. At December 3, 1995, the Company had accrued reserves of
$2.5 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.
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AMCAST INDUSTRIAL CORPORATION
PART I - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS -CONTINUED
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings
- --------------------------
Refer to Item 3, Part I of Form 10-K for the fiscal year ended August 31, 1995.
Item 6 - Exhibits and Reports on Form 8-K
- -----------------------------------------
a) Exhibits
--------
Exhibit 27 - Financial Data Schedule
b) Reports on Form 8-K:
No reports on Form 8-K were filed by the Company during
the quarter ended December 3, 1995.
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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
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(Registrant Company)
Date: January 15, 1996 By: /s/J. H. Shuey
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John H. Shuey
President and Chief Executive Officer,
Director
(Principle Executive Officer)
Date: January 15, 1996 By: /s/D. D. Watts
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Douglas D. Watts
Vice President, Finance
(Principle Financial Officer)
Date: January 15, 1996 By /s/W. L. Bown
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William L. Bown
Vice President and Controller
(Principle Accounting Officer)
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