10-Q
1
AMCAST 10-Q
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 November 27, 1994 Commission File Number 0-947
----------------- -----
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
---------------------------------------------------------
(Exact name of registrant as specified in its charter)
Ohio 31-0258080
------------------------ ---------------------
(State of Incorporation) (I.R.S. Employer
Identification No.)
7887 Washington Village Drive, Dayton, Ohio 45459
----------------------------------------------- ---------
(Address of principal executive offices) (Zip Code)
(Area Code 513) 291-7000
------------------------------------------------------
(Registrant's telephone number, including area code)
-------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 and 15(d) of the Securities Exchange Act of
1934 during the preceding twelve months, and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
--- ---
Number of Common Shares outstanding, no par value, as of November 27, 1994 -
8,505,332 shares.
2
AMCAST INDUSTRIAL CORPORATION
I N D E X
- - - - -
PART I - FINANCIAL INFORMATION PAGE NO.
--------------------- --------
Item 1 - Financial Statements:
Consolidated Condensed Statements of Financial 3
Condition - November 27, 1994 and August 31, 1994
Consolidated Condensed Statements of Operations - 4
for the Quarters Ended November 27, 1994
and November 28, 1993
Consolidated Condensed Statements of Retained Earnings - 4
for the Quarters Ended November 27, 1994
and November 28, 1993
Consolidated Condensed Statements of Cash Flows - 5
for the Quarters Ended November 27, 1994
and November 28, 1993
Notes to Consolidated Condensed Financial Statements 6 - 7
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations 8 - 10
PART II - OTHER INFORMATION
-----------------
Item 1 - Legal Proceedings 10
Item 6 - Exhibits and Reports on Form 8-K 10
SIGNATURES 11
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3
PART I - FINANCIAL INFORMATION
AMCAST INDUSTRIAL CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF FINANCIAL CONDITION
(dollars in thousands)
November 27 August 31
ASSETS 1994 1994
------ -------------- ------------
(unaudited) (audited)
Current Assets
Cash and cash equivalents $ 8,232 $ 15,414
Accounts receivable 44,063 38,400
Inventories:
Finished products 17,421 17,833
Work-in-process 13,576 11,878
Raw materials and supplies 7,595 8,758
----------- -----------
38,592 38,469
Other current assets 5,049 5,143
----------- -----------
Total current assets 95,936 97,426
Property, Plant and Equipment 153,477 149,185
Less allowances for depreciation (78,718) (75,531)
------------ -----------
74,759 73,654
Net Assets of Discontinued Operation 12,137 12,389
Other Assets 11,263 10,692
----------- -----------
$194,095 $194,161
=========== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Current Liabilities
Accounts payable $ 24,596 $ 27,169
Current portion of long-term debt 4,019 4,019
Accrued expenses, compensation and
related items and other current liabilities 18,514 17,648
----------- -----------
Total current liabilities 47,129 48,836
Long-Term Debt--less current portion 12,972 13,910
Deferred Income Taxes 4,712 4,024
Deferred Liabilities 16,057 17,228
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--8,505,332 shares
(8,457,896 at August 31, 1994) 8,505 8,458
Capital in excess of stated value 63,418 62,912
Retained earnings 41,302 38,793
---------- ----------
113,225 110,163
----------- -----------
$ 194,095 $194,161
=========== ========
See notes to consolidated condensed financial statements.
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4
AMCAST INDUSTRIAL CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
AND RETAINED EARNINGS
(dollars in thousands except per share amounts)
(unaudited)
Three Months Ended
--------------------
November 27 November 28
1994 1993
-------------- ---------------
Consolidated Condensed Statements
---------------------------------
of Operations
-------------
Net sales $76,998 $ 60,328
Cost of sales 61,341 47,693
-------- ---------
Gross profit 15,657 12,635
Selling, general and
administrative expenses 9,762 7,973
Interest expense 346 436
Other income (112) (2)
--------- ----------
9,996 8,407
-------- ---------
Income before income taxes 5,661 4,228
Income taxes 2,038 1,543
-------- ---------
Net Income $ 3,623 $ 2,685
======== =========
Consolidated Condensed Statements of
------------------------------------
Retained Earnings
-----------------
Beginning retained earnings $38,793 $28,577
Net income 3,623 2,685
Less dividends (1,106) (1,008)
Other (8) (29)
--------- ---------
Ending Retained Earnings $41,302 $30,225
======= =======
Per Share Information
---------------------
Net income per share $ .43 $ .32
======== =========
Dividends declared per share $ .13 $ .12
======== =========
Dividends paid per share $ .13 $ .12
======== =========
See notes to consolidated condensed financial statements.
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5
AMCAST INDUSTRIAL CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(dollars in thousands)
(unaudited)
Three Months Ended
------------------
November 27 November 28
1994 1993
-------------- ---------------
Operating Activities:
Net income $ 3,623 $ 2,685
Depreciation and amortization 3,527 3,290
Deferred liabilities (483) 2,271
------- -----
6,667 8,246
Changes in assets and liabilities:
- Accounts receivable (5,663) (6,237)
- Inventories (123) (1,358)
- Other current assets 94 (166)
- Prepaid pension costs 152 167
- Other assets (931) (69)
- Accounts payable (2,573) 24
- Accrued liabilities 866 371
---------- -----------
Net Cash Provided (Used)
By Operating Activities (1,511) 978
Investing Activities:
Decrease (increase) in net assets of
discontinued operation 252 (1,020)
Additions to plant and equipment, net (4,424) (1,716)
----------- -----------
Net Cash Provided (Used) By
Investing Activities (4,172) (2,736)
Financing Activities:
Additions to long-term debt 2,000
Proceeds from exercise of stock options 553 182
Reduction in long-term debt (938) (2,938)
Short-term borrowings and current
portion of long-term debt 1,661
Dividends (1,106) (1,008)
Other (8) (29)
----------- -----------
Net Cash Provided (Used) By
Financing Activities (1,499) (132)
----------- -----------
Net change in cash and cash equivalents (7,182) (1,890)
Cash and cash equivalents
at beginning of period 15,414 2,251
---------- -----------
Cash and Cash Equivalents
at End of Period $ 8,232 $ 361
========== ===========
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 $146
at November 27, 1994 and $147 at August 31, 1994.
Note C - Inventories
--------------------
Certain inventories are presented net of the appropriate LIFO reserve.
Note D - Other Assets
---------------------
The major components are:
November 27 August 31
1994 1994
--------------- ------------
Properties held for sale $ 553 $ 553
Technical and product programs 1,236 1,419
Goodwill 2,753 2,774
Other assets and deferred charges 6,721 5,946
---------- ---------
$ 11,263 $ 10,692
======== ==========
Note E - Deferred Liabilities
-----------------------------
Deferred liabilities include the noncurrent portion of retirement,
compensation, medical benefits, and estimated future payouts under the
company's self-insured workers' compensation program. These liabilities
primarily relate to the company's provisions for restructuring operations, the
discontinued operation, and postretirement benefits other than pensions.
Significant noncurrent restructuring liabilities for medical and workers'
compensation costs were $2,800 at both November 27, 1994 and August 31, 1994;
consolidation and disposition of operations were $1,800 and $2,100,
respectively at November 27, 1994 and August 31, 1994. Postretirement benefits
other than pensions were $5,400 and $5,600 at November 27, 1994 and August 31,
1994, respectively. These accruals are not deductible for income tax purposes
until paid and are therefore, accounted for as temporary differences in the
company's tax provision.
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AMCAST INDUSTRIAL CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(dollars in thousands except share amounts)
(unaudited)
Note F - Long-Term Debt
-----------------------
The following table summarizes the company's borrowings:
November 27 August 31
1994 1994
--------------- ----------
Senior notes $ 10,089 $10,964
Industrial revenue bonds 6,902 6,965
--------- --------
Total Obligations 16,991 17,929
Less current portion of long-term debt 4,019 4,019
--------- ---------
$12,972 $13,910
======== =======
Note G - Income Taxes
---------------------
The estimated effective tax rates were 36.0% and 36.5% for the first quarters
of 1995 and 1994, respectively.
Note H - Net Income Per Share
-----------------------------
For the first quarter of 1995 and 1994, the weighted average number of common
shares used to calculate income per share was 8,474,657 and 8,389,570,
respectively.
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8
AMCAST INDUSTRIAL CORPORATION
PART I - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Net sales of $77.0 million in the current quarter ended November 27, 1994
increased 27.6% from the prior year first quarter. Flow Control Products'
sales increased 38.0% to $35.7 million primarily due to increased volume
resulting from the continued strong demand for copper fittings. Also, prices
were increased to offset the impact of rising copper costs. Engineered
Components' sales rose 19.9% to $41.3 million due to the continued strong
automotive market.
Gross profit for the first quarter of fiscal 1995 and 1994 was $15.7 million
and $12.6 million, respectively. The increase in gross profit was primarily
attributable to the increase in sales. Gross profit as a percent of sales for
the first quarter of 1995 was 20.3% compared to 20.9% in 1994. This decrease
is primarily due to the impact of higher copper prices reflected in the
company's sales and cost of sales during the current quarter, coupled with the
cost of launching several new products in the Engineered Components' business.
Selling, general and administrative expenses for the first quarter of $9.8
million, were 22.4% higher than the first quarter 1994. The increase was
primarily due to higher commission expense relating to the increased Flow
Control Products' sales.
In the current quarter, interest expense was $.3 million, compared to $.4
million in the first quarter of fiscal 1994. This decrease is a result of
reduced borrowings in fiscal 1995.
Results by Business Segment (unaudited)
---------------------------------------
(dollars in thousands)
Three Months Ended
-------------------------------
November 27 November 28
1994 1993
-------------- --------------
Net Sales
---------
Flow Control Products $ 35,683 $ 25,861
Engineered Components 41,315 34,467
--------- ---------
$ 76,998 $60,328
========= =======
Income Before Taxes
-------------------
Flow Control Products $ 5,736 $ 4,106
Engineered Components 1,856 2,045
Corporate Expense (1,585) (1,487)
Interest Expense (346) (436)
---------- ----------
$ 5,661 $ 4,228
========= =========
Flow Control Products' operating income in the first quarter of $5.7 million
was up 39.7% as a result of the increased sales volume. Engineered Components'
operating income of $1.9 million decreased 9.2% as gains from higher wheel
production were offset by inefficiencies relating to the start-up of several
new products.
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9
AMCAST INDUSTRIAL CORPORATION
PART I - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS - CONTINUED
Capital Resources and Liquidity
-------------------------------
In the current quarter, net cash used by operations was $1.5 million compared
to cash provided by operations of $1.0 million for the first three months of
fiscal 1994. In the current year, cash provided by net income, and
depreciation and amortization was offset by a $7.4 million increase in working
capital. In the prior year, cash provided by net income, and depreciation and
amortization was partially offset by an increase in working capital of $7.4
million.
Capital expenditures were $4.4 million and $1.7 million for the three-month
period of fiscal 1995 and 1994, respectively. At November 27, 1994, the
company had $7.3 million of commitments for additional capital expenditures
primarily for the Engineered Components segment.
Long-term debt was 10.3% of total capital at November 27, 1994 and 11.2% at
August 31, 1994. The decrease during the period is due to lower debt levels
and increased retained earnings.
The company may borrow up to $40 million under a Revolving Credit Agreement
which expires September 1, 1997. In addition, the company maintains bank lines
of credit under which it may borrow up to $25 million. At November 27, 1994,
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.
The company has sold the iron foundry and pole line hardware portion of the
Stanley G. Flagg division. The remaining brass business is not material to the
company's operations or financial position. The net assets of this
discontinued operation were $12.1 million and $12.4 million at November 27,
1994 and August 31, 1994 consisting of current assets, current liabilities, and
fixed assets, net of allowance for estimated loss on disposal.
The company is subject to a range of federal, state, and local laws and
regulations governing the discharge of material into the environment or
otherwise relating to the protection of the environment. The company
periodically makes capital expenditures to meet the requirements of these laws
and regulations; however, the company believes that the anticipated
expenditures for such purposes in the foreseeable future will not be material
to its financial position or its competitive position.
The company, as is normal for the industry in which it operates, is subject to
periodic environmental site investigation and inquiries. 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 eight U.S. EPA led multi-party
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AMCAST INDUSTRIAL CORPORATION
PART I - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS - CONTINUED
"superfund" sites and three state environmental agency led remediation sites.
While the company could be found jointly and severally liable at a number of
these sites, the company, in each case, is contesting any responsibility or
believes that its liability will not be material because of the nature of the
waste involved or the limited amount of waste generated by the company which
was allegedly disposed of at these sites. With respect to one such site
located in Ironton, Ohio, another potentially responsible party has brought an
action seeking contribution from the company for a portion of the total
response and remediation costs, which the plaintiff has claimed may exceed $20
million. The company believes that its ultimate equitable share, if any, of
any liability for cleanup costs at this site will not be material.
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, 1994.
Item 6 - Exhibits and Reports on Form 8-K
-----------------------------------------
a) 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 November 27, 1994.
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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
-----------------------------
(Registrant Company)
Date: January 11, 1995 By: /s/L. W. Ladehoff
---------------- ----------------------------
Leo W. Ladehoff
Chairman of the Board and Chief
Executive Officer, Director
Date: January 11, 1995 By: /s/J. H. Shuey
---------------- ----------------------------
John H. Shuey
President and Chief Operating
Officer, Director
Date: January 11, 1995 By: /s/D. D. Watts
---------------- ----------------------------
Douglas D. Watts
Vice President, Finance
Date: January 11, 1995 By /s/W. L. Bown
---------------- ----------------------------
William L. Bown
Vice President and Controller
-11-
EX-27
2
AMCAST EX-27
5
3-MOS
AUG-31-1995
SEP-1-1994
NOV-27-1994
8,232
0
38,738
146
38,592
95,936
153,477
78,718
194,095
47,129
16,991
8,505
0
0
104,720
194,095
76,998
76,998
61,341
71,103
0
0
346
5,661
2,038
3,623
0
0
0
3,623
.43
.43