-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TPaQsq1D1pOsNoo9WmGdIZKHsaWub1RAglKXrSFO+1npNMLqs+C7KVsMETOgAH0L TIrImjQLwdhfH4peqZ8OeQ== 0000950152-98-009282.txt : 19981126 0000950152-98-009282.hdr.sgml : 19981126 ACCESSION NUMBER: 0000950152-98-009282 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 11 CONFORMED PERIOD OF REPORT: 19980831 FILED AS OF DATE: 19981125 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMCAST INDUSTRIAL CORP CENTRAL INDEX KEY: 0000027425 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS FABRICATED METAL PRODUCTS [3490] IRS NUMBER: 310258080 STATE OF INCORPORATION: OH FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 001-09967 FILM NUMBER: 98759175 BUSINESS ADDRESS: STREET 1: 7887 WASHINGTON VILLAGE DR CITY: DAYTON STATE: OH ZIP: 45459 BUSINESS PHONE: 5132987000 MAIL ADDRESS: STREET 1: 7887 WASHINGTON VILLAGE DRIVE CITY: DAYTON STATE: OH ZIP: 45459 FORMER COMPANY: FORMER CONFORMED NAME: DAYTON MALLEABLE INC DATE OF NAME CHANGE: 19831219 FORMER COMPANY: FORMER CONFORMED NAME: DAYTON MALLEABLE IRON CO DATE OF NAME CHANGE: 19741216 10-K 1 AMCAST INDUSTRIAL CORPORATION 1 SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-K (X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended August 31, 1998 Commission file number 1-9967 AMCAST INDUSTRIAL CORPORATION (Exact name of registrant as specified in its charter) OHIO 31-0258080 -------------------------------- --------------------------- (State of Incorporation) (I.R.S. employer identification no.) 7887 Washington Village Drive, Dayton, Ohio 45459 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (937) 291-7000 - -------------------------------------------------------------------------------- (Registrant's telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: Name of Each Exchange Title of Each Class on Which Registered ------------------- ------------------- Common Shares, without par value New York Stock Exchange Preferred Share Purchase Rights Securities registered pursuant to Section 12(g) of the Act: NONE 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 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes X No ----- ----- Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in the definitive proxy or in information statements incorporated by reference in Part III of this Form 10K or any amendment to this Form 10-K. [ ] Aggregate market value of common shares, no par value, held by non-affiliates of the registrant (assuming only for the purposes of this computation that directors and officers may be affiliates) as of October 22, 1998 -- $151,430,305. Number of common shares outstanding, no par value, as of October 22, 1998 - -- 9,206,529 shares. DOCUMENTS INCORPORATED BY REFERENCE Parts I, II and IV -- Portions of Annual Report to Shareholders for the year ended August 31, 1998. Part III--Portions of Proxy Statement for the Annual Meeting of Shareholders to be held on December 17, 1998 filed November 10, 1998. 2 PART I ------ ITEM 1 - BUSINESS - ----------------- Amcast Industrial Corporation, an Ohio corporation incorporated in 1869, and its subsidiaries (called collectively "Amcast" or the "Company") are engaged in the business of producing fabricated metal products and cast and tubular metal products in a variety of shapes, sizes, and metals for sale to end users directly, through sales representatives and distributor organizations, and to original equipment manufacturers. The Company serves three major sectors of the economy: automotive, construction, and industrial. Manufacturing facilities are located in five states, primarily in the Midwestern United States and in Italy. During fiscal 1998, the Company acquired Lee Brass Company, located in Anniston, Alabama; ceased operations at Flagg Brass, Inc., located in Stowe, Pennsylvania; and in October 1998 completed the sale of Superior Valve Company, located in Washington, Pennsylvania. See further discussion in "Flow Control Products" below. On August 19, 1997, the Company acquired all of the outstanding stock of Speedline S.p.A. and its subsidiaries ("Speedline"), a major European manufacturer located in Italy. During fiscal 1998, Amcast sold Amcast Precision Products Inc. in Rancho Cucamonga, California. See further discussion in "Engineered Components" below. The Company operates in two business segments--(1) Flow Control Products and (2) Engineered Components. Information concerning the net sales, operating profit, and identifiable assets of each segment, including foreign manufacturing operations, for years 1996 through 1998 appears under "Business Segments" in the Notes to Consolidated Financial Statements in the Company's Annual Report to Shareholders for the year ended August 31, 1998. Such information is incorporated herein by reference and is included as Exhibit 13.1 of this report. Domestic export sales were $33.4 million, $30.9 million, and $25.6 million in fiscal 1998, 1997, and 1996, respectively. FLOW CONTROL PRODUCTS - --------------------- The Flow Control Products segment (Flow Control) includes the businesses of Elkhart Products Corporation (Elkhart), Lee Brass Company, and Amcast Industrial Ltd. Elkhart produces a complete line of wrot copper fittings for use in residential, commercial, and industrial construction and markets brass pipe fittings. Lee Brass manufactures cast brass products for residential, commercial, and industrial plumbing systems as well as specific cast brass components unique to the application of original equipment manufacturers. Amcast Industrial Ltd. is the Canadian marketing channel for Amcast's Flow Control segment manufacturing units. The Company's Flow Control business is a leading supplier of copper pipefittings for the industrial, commercial, and residential construction markets. These products are sold through distributors and wholesalers. Shipments are primarily made by truck from Company locations directly to customers. The competition is comprised of a number of manufacturers of parts for air conditioning, refrigeration, and plumbing systems. The Company believes that competition in this segment is based on a number of factors including product quality, service, delivery, and value. The Company's Flow Control business is one of three major suppliers of copper and brass fittings to the North American industrial, commercial and residential plumbing markets. Flow Control Products sales of copper and brass fittings amounted to $142.4 million, $125.9 million, and $123.4 million in fiscal 1998, 1997, and 1996, respectively. Products are sold primarily through plumbing wholesalers, retail hardware stores and home centers, and to original equipment manufacturers and replacement parts distributors in the air conditioning and commercial refrigeration business. Competition is based on service levels, pricing, and breadth 2 3 FLOW CONTROL PRODUCTS (cont'd) - --------------------- of product offering. The Company's prime competitors are Mueller Industries, Inc., a publicly-owned company listed on the New York Stock Exchange, and NIBCO Inc., a privately-held company headquartered in Elkhart, Indiana. Both Mueller Industries, Inc. and NIBCO Inc. may have total financial resources greater than the Company's. On April 9, 1998, the Company acquired Lee Brass Company, a privately-owned company located in Anniston, Alabama. Lee Brass is a major manufacturer of cast brass products for residential, commercial, and industrial plumbing systems. The purchase price was approximately $16.1 million consisting of cash payments of $11.7 million and debt assumption of $4.4 million. Sales of Lee Brass for the twelve months ended December 31, 1997 were approximately $39.0 million. Following the acquisition of Lee Brass, the Company announced plans to consolidate its Flagg Brass operations into Lee Brass and cease operations at Flagg Brass, which is located in Stowe, Pennsylvania. Expected to be completed by December 31, 1998, the consolidation plan includes the transfer of certain product lines to Lee Brass, the sale or closure of the Flagg Brass facility, and the termination of approximately 100 salaried and hourly personnel. The Company's consolidated financial results are not expected to be significantly affected by the closure of Flagg Brass and the transfer of certain product lines to Lee Brass. On October 16, 1998, the Company sold Superior Valve Company (Superior) which is located in Washington, Pennsylvania, to Harsco Corporation. Superior manufactures valves and accessories used in air conditioning and refrigeration systems, and compressed gas cylinder valves for the welding, specialty, carbonic, and medical gas industries. Superior sales in fiscal 1998 were approximately $42.0 million. The majority of the Flow Control business is based on customer purchase orders for their current product requirements. Such orders are filled from inventory positions maintained in the regional warehouse distribution network. In certain situations, longer-term supply arrangements are in place with major customers. Such arrangements are of the type that stipulate a certain percentage of the customer's requirements to be delivered at a specific price over a set period of time. Such arrangements are beneficial to the Company in that they provide firm forecasts of demand that allow for efficient use of equipment and manpower. See Properties at Item 2 of this report for information on the Company's facilities which operate in this segment. ENGINEERED COMPONENTS - --------------------- The Engineered Components segment produces cast and fabricated metal products principally for sale to original equipment manufacturers in the transportation, construction, air conditioning, and refrigeration industries. The Company's manufacturing processes involve the melting of raw materials for casting into metal products having the configuration, flexibility, strength, weight, and finish required for the customer's end use. The Company also custom fabricates copper and aluminum tubular parts. The Company manufactures products on a high-volume, medium-volume, and specialized basis and its metal capabilities include aluminum, magnesium, and copper. Products manufactured by the North American operations of this segment include aluminum castings for suspension, air conditioning and anti-lock braking systems, master cylinders, differential carriers, brake calipers and cast aluminum wheels for use on automobiles and light trucks, and parts for use in heating and air conditioning systems. Delivery is mostly by truck from Amcast locations directly to customers. 3 4 ENGINEERED COMPONENTS (cont'd) - ------------------------------ Principal products manufactured by Speedline include aluminum wheels for passenger cars and trucks. Speedline also manufactures aluminum and magnesium racing wheels, aftermarket wheels, modular wheels and hubcaps. Refer to "Acquisitions, Divestitures, and Restructurings" in the Notes to Consolidated Financial Statements of the Company's Annual Report to Shareholders for the year ended August 31, 1998, Exhibit 13.1 herein, for additional information related to the Speedline acquisition. The Company's Engineered Components segment is not solely dependent on a single customer; however, a significant portion of the Company's Engineered Components business is directly or indirectly dependent on the major automobile manufacturers. The Company's net sales to various divisions of General Motors Corporation were $150.9 million, $139.7 million, and $114.5 million for fiscal 1998, 1997, and 1996, respectively. No other customer accounted for more than 10% of consolidated sales. The Company's Engineered Components segment is a leading supplier of aluminum automotive components and aluminum wheels for automotive original equipment manufacturers in North America. With the acquisition of Speedline, the Company is also a leading supplier of light-alloy wheels for automotive original equipment manufacturers and aftermarket applications in Europe. Competition in the automotive components industry is global with numerous competitors. The basis of competition is generally design and engineering capability, price, product quality, and delivery. There are approximately 25 competitors in the aluminum automotive component business serving the North American market. Principal competitors include Alcoa, CMI International Inc., A-CMI, Stahl Specialty Company, Contech, a subsidiary of SPX Corporation, and Citation Corporation, some of which have significantly greater financial resources than the Company. There are approximately 18 producers of aluminum wheels which service the North American market. The largest of these are Superior Industries International, Inc. and Hayes Lemmerz International, Inc.. The next tier of suppliers includes the Company, Reynolds Metals Company, Alcoa, and Enkei America Inc. Some of the Company's competitors in the aluminum wheel business have significantly greater financial resources than the Company. There are approximately 15 competitors in the aluminum and magnesium automotive wheel business serving the European market. Principal competitors include Hayes Lemmerz International, Inc., Ronal, ATS, and Alloy Wheels International (AWI), some of which may have significantly greater financial resources than the Company. The Company operates on a "blanket" order basis and generally supplies all of the customer's annual requirements for a particular part. Customers issue firm releases and shipping schedules each month against their blanket orders depending on their current needs. As a result, order backlog varies from month to month and is not considered firm beyond a 30-day period. Effective March 30, 1998, the Company sold Amcast Precision Products Inc. (Precision), its Rancho Cucamonga, California investment casting operation, for $25.4 million. Precision produces ferrous and nonferrous castings for the aerospace industry. Precision sales were approximately $19.0 million in fiscal 1997. This was Amcast's only operation in the aerospace industry. See Properties at Item 2 of this report for information on the Company's facilities which operate in this segment. 4 5 GENERAL INFORMATION - ------------------- Aluminum and copper, the essential raw materials to the business, are commodity-based metals purchased from worldwide sources of supply. Supplier selection is based upon quality, delivery, reliability, and price. Availability of these materials is judged to be adequate. The Company does not anticipate any material shortage that will alter production schedules during the coming year. Aluminum and copper are basic commodities traded in international markets. Changes in aluminum and copper costs are generally passed through to the customer. In North America, changes in the cost of aluminum are currently passed through to the customer based on various formulas as is the custom in the segment of the automotive industry the Company serves. In Europe, changes in the cost of aluminum are currently passed through to approximately one-half of the customers based upon various formulas and through negotiated contracts with the remaining customers. Copper cost increases and decreases are generally passed through to the customer in the form of price changes as permitted by prevailing market conditions. The Company is unable to project whether these costs will increase or decrease in the future. The Company's ability to pass through any increased costs to the customer in the future will be determined by market conditions at that time. Amcast owns a number of patents and patent applications relating to the design of its products. While Amcast considers, in the aggregate, these patents are important to operations, it believes that the successful manufacture and sale of its products generally depend more on the Company's technological know-how and manufacturing skills. Capital expenditures related to compliance with federal, state, and local environmental protection regulations for fiscal 1999 and 2000 are not expected to be material. Management believes that operating costs related to environmental protection will not have a materially adverse effect on future earnings or the Company's competitive position in the industry. Amcast employed approximately 4,500, 4,040, and 2,600 associates at August 31, 1998, 1997, and 1996, respectively. With the acquisition of Speedline, the percentage of the Company's consolidated net sales derived from the automotive original equipment market has increased. The automotive industry in general is cyclical and varies based on the timing of consumer purchases of vehicles and overall economic strength. Production schedules can vary significantly from quarter to quarter to meet customer demands. The Company normally experiences reduced sales volume in the fourth and, to a lesser degree, the first quarter due to plant closings by original equipment manufacturers for vacations and model changeovers. 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 facilities. 5 6 ITEM 2 - PROPERTIES - ------------------- The following table provides certain information relating to the Company's principal facilities as of October 22, 1998:
SQUARE FACILITY FOOTAGE USE - ----------------------------- ------- ----------------------------- Flow Control Products Segment - ----------------------------- Elkhart, Indiana 222,000 Copper fittings manufacturing plant, warehouse, and sales and general offices Fayetteville, Arkansas 107,800 Copper fittings manufacturing plant Burlington, Ontario Canada 20,214 Distribution warehouse and branch sales office for Flow Control Products Anniston, Alabama 380,200 Brass foundry, machining, warehouse and distribution Engineered Components Segment - ----------------------------- Geneva, Indiana 105,748 Custom fabricated copper and aluminum tubular products manufacturing plant Cedarburg, Wisconsin 133,000 High-volume, aluminum alloy permanent-mold foundry Richmond, Indiana 97,300 High-volume, aluminum alloy permanent-mold foundry Fremont, Indiana 139,788 Cast aluminum automotive wheels plant Gas City, Indiana 201,600 Cast aluminum automotive wheels plant Wapakoneta, Ohio 188,000 Cast, machined and assembled aluminum suspension components plant Southfield, Michigan 8,840 Automotive component sales, product development and engineering center offices Tabina S. Maria di Sala, Italy 315,586 Aluminum passenger car wheels, aluminum and magnesium wheels for OEM racing and aftermarket plant Caselle S. Maria di Sala, Italy 56,855 Light alloy wheels plant
6 7 ITEM 2 - PROPERTIES (cont'd)
SQUARE FACILITY FOOTAGE USE - ----------------------------- ------- ----------------------------- Bolzano, Italy 196,656 Aluminum cast car wheels, truck cast aluminum wheels plant Riese Pio X (TV), Italy 24,291 Aluminum passenger car wheels plant Corporate - --------- Dayton, Ohio 16,281 Executive and general offices
The land and building in Burlington, Ontario, are leased under a five-year lease expiring in 2003. The land in Richmond and Gas City, Indiana, is leased under 99 year leases, expiring in 2091. The Corporate offices are being leased for five years expiring in 2003. The Amcast Automotive offices in Southfield, Michigan, are being leased for five years expiring in the year 2000, with an option for a five year renewal. Four buildings used by Speedline S.r.l. are leased. Two of the leased buildings are located in Tabina S. Maria di Sala, Italy. One building of 20,688 square feet is leased until 2003 and one of 44,024 square feet is leased until 2002, with an option for a six-year renewal. The Speedline building located in Caselle S. Maria di Sala, Italy is leased until 2001. The land and buildings in Riese Pio X are leased until 2000 and renewable from year to year thereafter. All other properties are owned by the Company. A portion of the land and building at Fayetteville, Arkansas, is subject to a mortgage in favor of Bank One, Dayton, NA, to secure the payment of a $5,050,000 bond issue dated December 1, 1991, and maturing December 1, 2004. The Company's operating facilities are in good condition and are suitable for the Company's purposes. Utilization of capacity is dependent upon customer demand. During 1998, total company-wide productive capacity utilization ranged from 71% to 95%, and averaged 85% of the Company's total capacity. ITEM 3 - LEGAL PROCEEDINGS - -------------------------- Certain legal matters are described at "Commitments and Contingencies" in the Notes to Consolidated Financial Statements of the Company's Annual Report to Shareholders for the year ended August 31, 1998, Exhibit 13.1 herein. Allied Signal, Inc. has brought a superfund private cost recovery and contribution action against the Company in the United States District Court for the Southern District of Ohio, Western Division, which is captioned ALLIED-SIGNAL, INC. V. AMCAST INDUSTRIAL CORPORATION (Case No. C-3-92-013). The action involves the Goldcamp Disposal Site in Ironton, Ohio. Allied-Signal has taken the lead in remediating the site and has estimated that its total costs for the remediation may reach $30 million. Allied is seeking a contribution from the Company in an amount equal to 50% of the final remediation costs. A trial in this proceeding was completed in February 1995, but no judgment has been rendered. The Company believes its responsibility with respect to the Goldcamp Site is limited, primarily due to the nature of the foundry sand waste it disposed of at the site. The Company believes that if it has any liability at all in regard to the Goldcamp Site, that liability would not be material to its financial position or results of operations. 7 8 ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS - ------------------------------------------------------------ None EXECUTIVE OFFICERS OF REGISTRANT - -------------------------------- John H. Shuey, age 52, has been Chairman, President and Chief Executive Officer of the Company since December 1997 and a director since March 1994. Mr. Shuey was President and Chief Executive Officer from March 1995 to December 1997. Mr. Shuey was President and Chief Operating Officer from December 1993 to March 1995. Mr. Shuey was Executive Vice President from February 1991 to December 1993. Mr. Shuey is also a director of Cooper Tire & Rubber Company. Thomas K. Walker, age 57, has been President of Amcast Automotive since August 1995. From 1992 to 1995, Mr. Walker was President of ITT Automotive's North American operations. Mr. Walker was also President of Allied Signal Automotive Catalyst Co. in Tulsa, Oklahoma from 1985 to 1992. Dennis A. Bertram, age 61, has been Senior Vice President, Amcast Automotive and Division Manager of North American Wheel Division since September 1997. Mr. Bertram was Senior Vice President, Manufacturing Strategy from February 1997 to August 1997. Mr. Bertram was also Senior Vice President, Operations of Amcast Automotive from August 1995 to January 1997. From May 1992 until July 1995, he was President and General Manager of the same group. Giovanni Scarlini, age 47, was appointed General Manager and Managing Director of Speedline S.p.A. upon Amcast's acquisition of Speedline in August 1997. Mr. Scarlini has been with Speedline since November 1996. From 1986 to March 1996, Mr. Scarlini occupied several management positions with CESAB, the most recent being General Manager. Michael N. Powell, age 51, has been President of Amcast Flow Control Products Group, since May 1996. From April 1994 until May 1996, he was Vice President/General Manager of Superior Valve Company. Mr. Powell was President and Chief Operating Officer of Versa Technologies, Inc. in Racine, Wisconsin from May 1991 to December 1993. Douglas D. Watts, age 53, has been Vice President, Finance since August 1994. From 1987 to August 1994 Mr. Watts held various financial management positions with General Cable Corporation, of which the most recent post was Vice President and Controller. Dean Meridew, age 44, has been Vice President, Amcast Europe since September 1997. From June 1992 to September 1997, he was Division Manager for the Company's North American wheel operations. Prior to that, Mr. Meridew was Operations Manager and Engineering Manager within the Company's North American wheel operations since January 1985. Denis G. Daly, age 56, has been Vice President, General Counsel and Secretary since January 1990. From January 1988 to December 1989, he worked in private practice at the law firm of Thompson, Hine, and Flory. Robert C. Collevechio, age 46, has been Vice President, Human Resources since September 1996. From 1992 to 1996, he was Director of Human Resources for the North American operations of Carrier Corporation. 8 9 EXECUTIVE OFFICERS OF REGISTRANT (cont'd) - ----------------------------------------- James R. Van Wert, Jr., age 40, has been Vice President, Technology since June 1997. Prior to that, Mr. Van Wert was with the Aluminum Company of America (ALCOA), in numerous capacities. His last position was Director of Technology, Forging & Casting, focusing primarily on the automotive industry. Michael R. Higgins, age 52, has been Treasurer since January 1987. Mark D. Mishler, age 40, has been Controller since April, 1998. From April 1995 to April 1998, he was International Controller for Witco Corporation. From April 1991 to April 1995, he was a Divisional Controller for Siemens. PART II ------- ITEM 5 - MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED - -------------------------------------------------------------- STOCKHOLDER MATTERS ------------------- Amcast common stock is listed on the New York Stock Exchange, ticker symbol AIZ. As of August 31, 1998, there were 9,206,529 of the Company's common shares outstanding, and there were approximately 6,819 shareholders of Amcast's common stock, including shareholders of record and the Company's estimate of beneficial holders.
Range of Stock Prices ----------------------------- Dividends High Low Per Share ---- --- --------- Fiscal - ------ 1998 - ---- First Quarter $ 25 7/8 $ 22 1/2 $ .14 Second Quarter 24 7/8 20 15/16 .14 Third Quarter 22 9/16 19 5/8 .14 Fourth Quarter 21 11/16 15 1/4 .14 Fiscal - ------ 1997 - ---- First Quarter $ 25 3/4 $ 17 5/8 $ .14 Second Quarter 25 7/8 22 1/4 .14 Third Quarter 26 1/8 21 1/4 .14 Fourth Quarter 27 1/2 23 15/16 .14
At "Long-Term Debt and Credit Arrangements" in the Notes to Consolidated Financial Statements of the Company's Annual Report to Shareholders for the year ended August 31, 1998, Exhibit 13.1 herein, is certain information concerning provisions affecting the payment of dividends. ITEM 6 - SELECTED FINANCIAL DATA - -------------------------------- The information required by this item is incorporated herein by reference to "Selected Data" of the Company's Annual Report to Shareholders for the year ended August 31, 1998, Exhibit 13.1 herein. 9 10 ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL - ---------------------------------------------------------- CONDITION AND RESULTS OF OPERATIONS ----------------------------------- The information required by this item is incorporated herein by reference to "Management's Discussion of Financial Condition and Results of Operations" of the Company's Annual Report to Shareholders for the year ended August 31, 1998, Exhibit 13.1 herein. ITEM 7a - QUALITATIVE AND QUANTITATIVE 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. To manage the volatility relating to these exposures on a consolidated basis, the Company takes advantage of natural offsets. The Company has estimated its market risk exposures using sensitivity analyses assuming a 10% change in market rates. FOREIGN CURRENCY EXCHANGE RATE RISK Due to its Foreign operations, the Company has assets, liabilities, and cash flows in currencies other than the U.S. dollar. The Company minimizes the impact of foreign currency exchange rate fluctuations on its Italian net investment with debt borrowings denominated in Italian lira. Fluctuations in foreign currency exchange rates also impact the dollar value of non-U.S. cash flows. To illustrate the potential impact of changes in foreign currency exchange rates on the dollar value of non-U.S. cash flows, a hypothetical 10% change in the average exchange rate for fiscal 1998 would have changed income before taxes by approximately $1.0 million. The Company's Italian operations also attempt to keep asset and liability positions that are denominated in non-functional currencies, primarily the U.S. dollar, German marks, and French francs, in balance. During fiscal 1998, the net exposure averaged approximately $6.0 million; a hypothetical 10% change in the average exchange rates would change the exposure by $.6 million. The analysis assumes a parallel shift in currency exchange rates, relative to the Italian lira. Exchange rates rarely move in the same direction, and the assumption that the exchange rates change in parallel may overstate the impact of the foreign currency exchange rate fluctuations. INTEREST RATE RISK To manage its exposure to changes in interest rates, the Company uses both fixed and variable rate debt. At August 31, 1998, the Company had approximately $172.8 million of debt obligations outstanding with variable interest rates with a weighted-average effective interest rate of 5.73%. A hypothetical 10% change in the effective interest rate for these borrowings, assuming debt levels as of August 31, 1998, would change interest expense by approximately $1.0 million. FORWARD-LOOKING STATEMENTS The above discussion and the estimated amounts generated from the sensitivity analyses referred to above include forward-looking statements of market risk which assume that certain adverse market conditions may occur. Actual future market conditions may differ materially from such assumptions; accordingly, the forward-looking statements should not be considered projections by the Company of future events or losses. ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA - ---------------------------------------------------- The information required by this item is incorporated by reference to "Consolidated Financial Statements and Notes to Consolidated Financial Statements", together with the report thereon of Ernst & Young LLP and "Quarterly Financial Data (Unaudited)" of the Company's Annual Report to Shareholders for the year ended August 31, 1998, Exhibit 13.1 herein. ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON - --------------------------------------------------------- ACCOUNTING AND FINANCIAL DISCLOSURE ----------------------------------- None 10 11 PART III -------- ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT - ------------------------------------------------------------ The information required by this item relating to directors and executive officers of the Company is incorporated herein by reference to that part of the information under "Election of Directors" on pages 2 and 3, and "Section 16(a) Beneficial Ownership Reporting Compliance" on page 4 of the Company's Proxy Statement for its Annual Meeting of Shareholders to be held on December 17, 1998. Certain information concerning executive officers of the Company appears under "Executive Officers of Registrant" at Part I, pages 8 and 9, of this Report. ITEM 11 - EXECUTIVE COMPENSATION - -------------------------------- The information required by this item is incorporated herein by reference to "Executive Compensation" on pages 6 through 12 of the Company's Proxy Statement for its Annual Meeting of Shareholders to be held on December 17, 1998. ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND - ------------------------------------------------------------- MANAGEMENT ---------- The information required by this item is incorporated herein by reference to "Security Ownership of Directors, Nominees and Officers" on page 5 and "Security Ownership of Certain Beneficial Owners" on page 14 of the Company's Proxy Statement for its Annual Meeting of Shareholders to be held on December 17, 1998. ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS - -------------------------------------------------------- The information required by this item is contained on pages 9 and 12 in the Company's Proxy Statement for its Annual Meeting of Shareholders to be held on December 17, 1998, which is incorporated herein by reference. 11 12 PART IV ------- ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS - -------------------------------------------------------------- ON FORM 8-K ----------- (a) Documents filed as part of this report. 1. Financial statements: The following financial statements of Amcast Industrial Corporation and subsidiaries, included in the Annual Report to Shareholders for the year ended August 31, 1998, are incorporated by reference at Item 8 of this report. Consolidated Statements of Income - Years Ended August 31, 1998, 1997, and 1996. Consolidated Statements of Financial Condition - August 31, 1998 and 1997. Consolidated Statements of Shareholders' Equity - Years Ended August 31, 1998, 1997, and 1996. Consolidated Statements of Cash Flows - Years Ended August 31, 1998, 1997, and 1996. Notes to Consolidated Financial Statements Report of Independent Auditors 2. Consolidated financial statement schedule:
Schedule Page Number Number Description In This Report -------- -------------------------------------------------- -------------- II Valuation and Qualifying Accounts and Reserves - August 31, 1998, 1997, and 1996 14 All other financial statement schedules are omitted because they are not applicable or because the required information is shown in the financial statements or in the notes thereto.
3. Exhibits - See Index to Exhibits (page 15 hereof). 4. Reports on Form 8-K - During the fourth quarter ended August 31, 1998, the Company did not file any reports on Form 8-K. 12 13 SIGNATURES Pursuant to the requirements of Section 13 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, on the 25th day of November 1998. AMCAST INDUSTRIAL CORPORATION (Registrant) By /s/John H. Shuey -------------------------------- John H. Shuey Chairman, President and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated.
Signature Title Date - ------------------------ -------------------------------- ----------------- /s/John H. Shuey Chairman, President and - ------------------------ Chief Executive Officer November 25, 1998 John H. Shuey Director (Principal Executive Officer) /s/Douglas D. Watts Vice President, Finance November 25, 1998 - ------------------------ (Principal Financial and Douglas D. Watts Accounting Officer) /s/Mark D. Mishler Controller November 25, 1998 - ------------------------ (Principal Accounting Officer) Mark D. Mishler *Leo W. Ladehoff Director November 25, 1998 *Walter E. Blankley Director November 25, 1998 *Peter H. Forster Director November 25, 1998 *Ivan W. Gorr Director November 25, 1998 *Earl T. O'Loughlin Director November 25, 1998 *William G. Roth Director November 25, 1998 *R. William Van Sant Director November 25, 1998
*The undersigned John H. Shuey, by signing his name hereto, does sign and execute this annual report on Form 10-K on behalf of each of the above-named directors of the registrant pursuant to powers of attorney executed by each such director and filed with the Securities and Exchange Commission as an exhibit to this report. By /s/John H. Shuey ------------------------- John H. Shuey Attorney in Fact 13 14 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES AMCAST INDUSTRIAL CORPORATION AND SUBSIDIARIES ($ In Thousands)
Additions ----------------------------- Balance Charged to Charged to Beginning Costs and Other Balance at Description of Period Expenses Accounts Deductions End of Period - ---------------------------------------------------------------------------------------------------------------------------------- Deducted From Asset Accounts Reserves for unrealized losses on properties and other assets held for sale: Year ended August 31, 1998 $ 2,818 $ 2,818 Year ended August 31, 1997 $ 3,071 $ (253)(1) $ 2,818 Year ended August 31, 1996 $ 3,071 $ 3,071 (1) Write off of assets against reserve.
14 15 INDEX OF EXHIBITS
Exhibit See Key Number Description Below ------ -------------------------------------- ----- 3 ARTICLES OF INCORPORATION AND BY-LAWS: 3.1 Articles of Incorporation of Amcast Industrial Corporation, incorporated by reference from Form 10-K for the year ended August 31, 1996. I 3.2 Code of Regulations of Amcast Industrial Corporation, incorporated by reference from Form 10-K for the year ended August 31, 1996. I 4 INSTRUMENTS DEFINING THE RIGHTS OF SECURITY HOLDERS, INCLUDING INDENTURES: 4.1 $200,000,000 revolving credit agreement between Amcast Industrial Corporation and KeyBank National Association dated August 14, 1997, incorporated by reference from Form 8-K filed September 3, 1997. I 4.2 First Amendment Agreement dated October 7, 1997, to the $200,000,000 revolving credit agreement between Amcast Industrial Corporation and KeyBank National Association dated August 14, 1997. F 4.3 Second Amendment Agreement dated August 30, 1998, to the $200,000,000 revolving credit agreement between Amcast Industrial Corporation and KeyBank National Association dated August 14, 1997. F 4.4 Loan Agreement between the City of Elkhart, Indiana, and Elkhart Products Corporation, dated as of February 1, 1988, for $2,050,000, Economic Development Revenue Refunding Bonds, Series 1988. + 4.5 $10,000,000 Senior Note Agreement between Amcast Industrial Corporation and Principal Mutual Life Insurance Company dated September 1, 1989, as amended, incorporated by reference from Form 10-K for the year ended August 31, 1996. I 4.6 Amendment Agreement, dated July 24, 1995, to the $10,000,000 Senior Note Agreement between Amcast Industrial Corporation and Principal Mutual Life Insurance Company, dated September 1, 1989 - incorporated by reference from Form 10-K for the year ended August 31, 1995. I
15 16 INDEX TO EXHIBITS (cont'd) -----------------
Exhibit See Key Number Description Below ------ -------------------------------------- ----- 4.7 Amendment Agreement dated as of December 31, 1997, to the $10,000,000 Senior Note Agreement between Amcast Industrial Corporation and Principal Mutual Life Insurance Company, dated September 1, 1989. F 4.8 Loan Agreement by and between the City of Fayetteville, Arkansas, and Amcast Industrial Corporation, dated as of December 1, 1991, for $5,050,000 City of Fayetteville, Arkansas, variable/fixed rate demand Industrial Development Revenue Refunding Bonds, Series 1992. + 4.9 Amcast guarantee of $15,000,000 of the $25,000,000 Credit and Intercreditor Agreement between Casting Technology Company (a joint venture partnership between Amcast Industrial Corporation and Izumi Industries, Ltd.) and National Bank of Detroit and The Asahi Bank, Ltd., and a copy of the Credit and Intercreditor Agreement, dated July 28, 1995, incorporated by reference from Form 10-K for the year ended August 31, 1995. I 4.10 Amendment Agreement, dated January 5, 1996, to the $25,000,000 Credit and Intercreditor Agreement between Casting Technology Company and National Bank of Detroit and The Asahi Bank, Ltd., dated July 28, 1995, incorporated by reference from Form 10-K for the year ended August 31, 1996. I 4.11 Amendment Agreement, dated May 31,1996, to the $25,000,000 Credit and Intercreditor Agreement between Casting Technology Company and National Bank of Detroit and The Asahi Bank, Ltd., dated July 28,1995, and amended Guarantee Agreement which increased Amcast's guarantee to $21,000,000 of the revised credit amount of $35,000,000, incorporated by reference from Form 10-K for the year ended August 31, 1996. I 4.12 Amendment Agreement dated January 28, 1997, to the credit and intercreditor agreement between Casting Technology Company and National Bank of Detroit, aka NBD Bank, and the Asahi Bank, Ltd., dated July 28, 1995, and Amended Guaranty Agreement which increased Amcast's guarantee to $23,400,000 of the revised credit amount of $39,000,000, incorporated by reference from Form 10-K for the year ended August 31, 1997. I
16 17 INDEX TO EXHIBITS (cont'd) -----------------
Exhibit See Key Number Description Below ------ -------------------------------------- ----- 4.13 Amendment Agreement dated August 3, 1998, to the credit and intercreditor agreement between Casting Technology Company and National Bank of Detroit, aka NBD Bank, and the Asahi Bank, Ltd., dated July 28, 1995. F 4.14 $50,000,000 Note Agreement between Amcast Industrial Corporation and Principal Mutual Life Insurance Company and The Northwestern Mutual Life Insurance Company, dated November 1, 1995, incorporated by reference from Form 10-K for the year ended August 31,1995. I 4.15 Amendment Agreement dated December 31, 1997, to $50,000,000 Note Agreement between Amcast Industrial Corporation and Principal Mutual Life Insurance Company, dated November 1, 1995. F 10 MATERIAL CONTRACTS: 10.1 Amcast Industrial Corporation Employee Share- builder Plan effective August 26, 1987, incorporated by reference from Form 10-K for the year ended August 31, 1996. I 10.2 Amcast Industrial Corporation Annual Incentive Plan effective September 1, 1982, incorporated by reference from Form 10-K for the year ended August 31, 1996. I 10.3 Deferred Compensation Agreement for Directors of Amcast Industrial Corporation, incorporated by reference from Form 10-K for the year ended August 31, 1996. I 10.4 Executive Agreement between Amcast Industrial Corporation and Leo W. Ladehoff, former Chairman of the Board and Chief Executive Officer of the Company, dated March 3, 1995, incorporated by reference from Form 10-Q for the quarter ended May 28, 1995. I 10.5 Indemnification Agreement for Directors of Amcast Industrial Corporation, effective October 30, 1987, incorporated by reference from Form 10-K for the year ended August 31, 1996. I
17 18 INDEX TO EXHIBITS (cont'd) -----------------
Exhibit See Key Number Description Below ------ -------------------------------------- ----- 10.6 First Master Benefit Trust Agreement between Amcast Industrial Corporation and Bank One, Dayton, NA, effective March 11, 1988, incorporated by reference from Form 10-K for the year ended August 31, 1996. I 10.7 Amcast Industrial Corporation 1989 Stock Incentive Plan, effective October 19, 1988, as amended, effective December 9, 1992 and as amended, effective November 1, 1996, incorporated by reference from Form 10-Q for the quarter ended February 28, 1994. I 10.8 Amcast Industrial Corporation 1989 Director Stock Option Plan, effective October 19, 1988, incorporated by reference from Form 10-K for the year ended August 31, 1996. I 10.9 Amcast Industrial Corporation Change of Control Agreements effective September 1, 1996, incorporated by reference from Form 10-K for the year ended August 31, 1996. I 10.10 Amcast Industrial Corporation Long-Term Incentive Plan effective September 1, 1991, incorporated by reference from Form 10-K for the year ended August 31, 1992, as amended effective May 27, 1998. I 10.11 Amcast Industrial Corporation Nonqualified Supplementary Benefit Plan, effective May 29, 1991, incorporated by reference from Form 10-K for the year ended August 31, 1994. I 10.12 Change of Control Agreement between Amcast Industrial Corporation and John H. Shuey, Chairman, President and Chief Executive Officer, effective December 31, 1997. F 10.13 Share Purchase Agreement between Amcast Industrial Corporation and Speedline International Holding B.V., Gerance S.A., San Marco Finanziaria S.p.A., Mr. Antonio Zacchello, Mr. Giancarlo Zacchello, Mr. Gianni Zacchello, Mr. Franco Zacchello and Ms. Graziella Zacchello, effective July 18, 1997, incorporated by reference from Form 8-K filed September 3, 1997. I
18 19 INDEX TO EXHIBITS (cont'd) -----------------
Exhibit See Key Number Description Below ------ -------------------------------------- ----- 13 ANNUAL REPORT TO SECURITY HOLDERS: 13.1 Amcast Industrial Corporation Annual Report to Shareholders for year ended August 31, 1998. Those portions of the Annual Report as are specifically referenced under Parts I, II, and IV of this report are filed herein. F 21 SUBSIDIARIES OF THE REGISTRANT: Amcast Industrial Corporation has twenty-six wholly-owned subsidiaries, with the exception of Lee Brass Company, which is 96% owned by an Amcast wholly owned subsidiary, which are included in the consolidated financial statements of the Company. Information regarding these subsidiaries is set forth below: Amcast Industrial Limited Jurisdiction of Incorporation: Ontario, Canada Name Under Which Business Is Done: Amcast Industrial Limited Elkhart Products Corporation Jurisdiction of Incorporation: Indiana Name Under Which Business Is Done: Elkhart Products Corporation WheelTek, Inc. Jurisdiction of Incorporation: Indiana Name Under Which Business Is Done: Amcast Automotive Wheel Division Amcast Investment Services Corporation Jurisdiction of Incorporation: Delaware Name Under Which Business Is Done: Amcast Investment Services Corporation Amcast Industrial Financial Services, Inc. Jurisdiction of Incorporation: Ohio Name Under Which Business Is Done: Amcast Industrial Financial Services, Inc. Amcast Industrial Sales Corporation Jurisdiction of Incorporation: U.S. Virgin Islands Name Under Which Business Is Done: Amcast Industrial Sales Corporation Amcast Automotive, Inc. Jurisdiction of Incorporation: Michigan Name Under Which Business Is Done: Amcast Automotive, Inc.
19 20 INDEX TO EXHIBITS (cont'd) -----------------
Exhibit See Key Number Description Below ------ -------------------------------------- ----- Amcast Casting Technologies, Inc. Jurisdiction of Incorporation: Indiana Name Under Which Business Is Done: Amcast Casting Technologies, Inc. Lee Brass Company Jurisdiction of Incorporation: Delaware Name Under Which Business is Done: Lee Brass Company Speedline S.r.l. Jurisdiction of Incorporation: Italy Name Under Which Business Is Done: Speedline S.r.l. Speedcast B.V. Jurisdiction of Incorporation: The Netherlands Name Under Which Business Is Done: Speedcast B.V. Speedline Engineering S.p.A. Jurisdiction of Incorporation: Italy Name Under Which Business Is Done: Speedline Engineering S.p.A. Speedline Components S.r.l. Jurisdiction of Incorporation: Italy Name Under Which Business Is Done: Speedline Components S.r.l. Speedline Competition S.r.l. Jurisdiction of Incorporation: Italy Name Under Which Business Is Done: Speedline Competition S.r.l. Alustampi S.r.l. Jurisdiction of Incorporation: Italy Name Under Which Business Is Done: Alustampi S.r.l. Speedline UK Limited Jurisdiction of Incorporation: England Name Under Which Business Is Done: Speedline UK Limited Speedline France S.a.r.l. Jurisdiction of Incorporation: France Name Under Which Business Is Done: Speedline France S.a.r.l. Fusione e Lavorazioni Technologiche S.r.l. Jurisdiction of Incorporation: Italy Name Under Which Business Is Done: Fusione e Lavorazioni Technologiche S.r.l. LA. MEC. S.r.l. Jurisdiction of Incorporation: Italy Name Under Which Business Is Done: LA. MEC. S.r.l.
20 21 23 CONSENTS OF EXPERTS AND COUNSEL: 23.1 Consent of Ernst & Young LLP dated November 20, 1998, with respect to the incorporation by reference of their report dated October 13, 1998, into this Annual Report (Form 10-K), the inclusion of the financial statement schedule listed in Item 14(a)(2) to the financial statements covered by their report dated October 13, 1998, and material incorporated by reference into Amcast Industrial Corporation's Post-Effective Amendment No. 1 to Registration Statement No. 33-2876 on Form S-8, on Registration Statements on Form S-8 (Registration Nos. 33-18690, 33-28080, 33-28084, 33-38176, 33-61290 and 333-00133), and on Registration Statement No. 33-28075 on Form S-3 F 24 POWER OF ATTORNEY: 24.1 Powers of attorney of persons who are indicated as having executed this Annual Report Form 10-K on behalf of another. F 27 FINANCIAL DATA SCHEDULE: 27.1 Article 5 of Regulation S-X Financial Data Schedule Form 10-K for the year ended August 31, 1998. F
Key: "F" Indicates document filed herewith. "I" Indicates document incorporated from another filing. + Indicates that the document relates to a class of indebtedness that does not exceed 10% of the total consolidated assets of the Company and that the Company will furnish a copy of the document to the Commission upon its request. NOTE: Exhibits have been omitted from the reproduction of this Form 10-K. A copy of the exhibits can be obtained at a reasonable copying charge by writing to Investor Relations, Amcast Industrial Corporation, P.O. Box 98, Dayton, Ohio 45401. 21 EX-4.2 2 EXHIBIT 4.2 1 EXHIBIT 4.2 FIRST AMENDMENT AGREEMENT This First Amendment Agreement is made as of the 7th day of October, 1997, by and among AMCAST INDUSTRIAL CORPORATION, an Ohio corporation ("Borrower"), KEYBANK NATIONAL ASSOCIATION, as Agent ("Agent") and the banking institutions named in Schedule 1 attached thereto ("Banks"): WHEREAS, Borrower, Agent and the Banks are parties to a certain Credit Agreement dated as of August 14, 1997, as it may from time to time be amended, restated or otherwise modifed, which provides, among other things, for loans and letters of credit aggregating Two Hundred Million Dollars ($200,000,000), all upon certain terms and conditions ("Credit Agreement"); WHEREAS, Borrower, Agent and the Banks desire to amend the Credit Agreement to modify certain provisions thereof; WHEREAS, each term used herein shall be defined in accordance with the Credit Agreement; NOW, THEREFORE, in consideration of the premises and of the mutual covenants herein and for other valuable considerations, Borrower, Agent and the Banks agree as follows: 1. Article I of the Credit Agreement is hereby amended to delete the definitions of "Business Day", "Dollar Equivalent", "LIBOR", "Prime Rate Loan" and "Proviso" in their entirety and to insert in place thereof the following: "Business Day" shall mean a day of the year an which banks are not required or authorized to close in Cleveland, Ohio, and, if the applicable Business Day relates to any LIBOR Loan, on which dealings are carried on in the London interbank eurodollar market, and, if the applicable Business Day relates to any Eurocurrency Loan (other than a Eurodollar Loan), on which dealings are carried on in the relevant Eurocurrency are carried on in the applicable offshore foreign exchange interbank market in which disbursement of or payment in such Eurocurrency will be made or received hereunder. "Dollar Equivalent" of a Eurocurrency Loan shall mean the Dollar equivalent of the amount of such Eurocurrency Loan, determined by Agent on the basis of its spot rate at approximately 11:00 A.M. London time on the date two (2) Business Days before the date of such Eurocurrency Loan for the purchase of the relevant Eurocurrency with Dollars for delivery on the date of such Eurocurrency Loan; provided, however, that, in calculating the Dollar Equivalent for purposes of determining (a) Borrower's obligation to prepay Loans pursuant to Section 2.7 hereof or (b) Borrower's ability to request additional Loans or Letters of Credit pursuant to the Commitment, Agent may, in its discretion, calculate the Dollar Equivalent of each such Loan on any Business Day selected by Agent. Agent shall notify Borrower of the Dollar Equivalent of each Eurocurrency Loan at the time that Dollar Equivalent is determined. 2 "LIBOR" shall mean the average (rounded upward to the nearest 1/16th of 1%) of the per annum rates at which deposits in immediately available funds in the relevant Eurocurrency for the relevant Interest Period or Competitive Bid Interest Period, as applicable, and in the amount of the LIBOR Loan to be disbursed or to remain outstanding, as the case may be, during such Interest Period or Competitive Bid Interest Period, as applicable, are offered to the Reference Bank by prime banks in any Eurocurrency market reasonably selected by the Reference Bank, determined as of 11:00 A.M. London time (or as soon thereafter as practicable), two (2) Business Days prior to the beginning of the relevant Interest Period or Competitive Bid Interest Period, as applicable, pertaining to a LIBOR Loan hereunder. "Prime Rate Loan" shall mean a Loan on which Borrower shall pay interest at a rate based on the Adjusted Prime Rate. "Proviso" shall mean that for Borrower's fiscal quarters ending prior to the fiscal year ending on or about August 31, 1998, Consolidated EBITDA, as referred to in the Leverage Ratio, shall be calculated as follows: (a) for the fiscal year ending on or about August 31, 1997, Consolidated EBITDA shall be calculated as disclosed in the pro forma statement provided by Borrower to Agent on or about July 30, 1997, (b) for the fiscal quarter ending on or about November 30, 1997, Consolidated EBITDA shall be annualized by multiplying the Consolidated EBITDA for that fiscal quarter by four (4), (c) for the fiscal quarter ending on or about February 28, 1998, Consolidated EBITDA shall be annualized by multiplying the Consolidated EBITDA for that fiscal quarter and the previous fiscal quarter by two (2), and (d) for the fiscal quarter ending on or about May 31, 1998, Consolidated EBITDA shall be annualized by multiplying the Consolidated EBITDA for that fiscal quarter and the two (2) previous fiscal quarters by one and one-third (1.333). 2. Section 2.1A of the Credit Agreement is hereby amended to add the words "(subject to changes in the Applicable LIBOR Margin)" between the words "Period" and "on" in the third line of the third paragraph thereof. 3. Section 2.1B of the Credit Agreement is hereby amended to delete the fourth paragraph in its entirety with the following being inserted in place thereof: Whenever a Letter of Credit is drawn, unless the amount drawn is immediately reimbursed by Borrower, the amount outstanding thereunder shall be deemed to be a Revolving Loan to Borrower subject to the provisions and requirements of Section 2.1A and 2.2 hereof (other than any requirement pertaining to a minimum draw amount or the requirement set forth in Section 2.2(c) if such requirement shall be waived by Agent) and shall be evidenced by the Revolving Credit Notes. Each such Revolving Loan shall be deemed to be a Prime Rate Loan unless otherwise requested by (in accordance with the notice provisions of Section 2.2(b) hereof) and available to Borrower hereunder. Each Bank is hereby authorized to record on its records relating to its Revolving Credit Note such Bank's pro rata share of the amounts paid and not reimbursed on the Letters of Credit. 2 3 4. Subpart (a) of Section 2.1C of the Credit Agreement is hereby deleted in its entirety with the following being inserted in place thereof: (a) THE COMPETITIVE BID OPTION. Subject to the terms and conditions of this Agreement, during the Commitment Period, Borrower may request the Banks to make offers to make Competitive Bid Loans to Borrower from time to time in amounts such that (i) the aggregate amount of all Revolving Loans, Competitive Bid Loans and all issued and outstanding Letters of Credit by all Banks at any one time outstanding shall not exceed the Total Commitment Amount and (ii) the aggregate amount of all Competitive Bid Loans at any one time outstanding shall not exceed Fifty Million Dollars ($50,000,000). The Banks may, but shall have no obligation to, make such offers and Borrower may, but shall have no obligation to, accept any such offers in the manner set forth in this Section 2.1C. 5. Subpart (b) of Section 2.5 of the Credit Agreement is hereby amended to delete the word "Bank" from the second line thereof and to insert in place thereof the word "Agent". 6. Subpart (ii) of Section 10.11.A of the Credit Agreement is hereby deleted in its entirety with the following being inserted in place thereof: (ii) Minimum Amount. Each such assignment shall be in a minimum amount of the lesser of Ten Million Dollars ($10,000,000) of the transferor's Commitment or the entire amount of the transferor's Commitment. 7. The Credit Agreement is hereby amended by deleting Exhibit B in its entirety and by substituting in place thereof a new Exhibit B in the form of Exhibit B attached hereto. 8. Concurrently with the execution of this First Amendment Agreement, Borrower shall execute and deliver to each Bank a new Competitive Bid Rate Note dated as of August 14, 1997, and such new Competitive Bid Rate Note shall be in the form and substance of Exhibit B attached hereto. After a Bank receives a new Competitive Bid Rate Note, such Bank will mark its Competitive Bid Rate Note being replaced thereby "Replaced" and return the same to Borrower; 9. The Credit Agreement is hereby amended to delete Exhibit C-3 in its entirety and to substitute in place thereof a new Exhibit C-3 in the form of C-3 attached hereto. 10. Borrower hereby represents and warrants to Agent and the Banks that (a) Borrower has the legal power and authority to execute and deliver this First Amendment Agreement; (b) the officials executing this First Amendment Agreement have been duly authorized to execute and deliver the same and bind Borrower with respect to the provisions hereof; (c) the execution and delivery hereof by Borrower and the performance and observance by Borrower of the provisions hereof do not violate or conflict with the organizational agreements of Borrower or any law applicable to Borrower or result in a breach of any provision of or constitute a default under any other agreement, instrument or document binding upon or enforceable against Borrower; (d) no 3 4 Unmatured Event of Default or Event of Default exists under the Credit Agreement, nor will any occur immediately after the execution and delivery of this First Amendment Agreement or by the performance or observance of any provision hereof; (e) neither Borrower nor any Subsidiary has any claim or offset against, or defense or counterclaim to, any of Borrower's or any Subsidiary's obligations or liabilities under the Credit Agreement or any Related Writing, and Borrower and each Subsidiary hereby waives and releases Agent and each of the Banks from any and all such claims, offsets, defenses and counterclaims of which Borrower and any Subsidiary is aware, such waiver and release being with full knowledge and understanding of the circumstances and effect thereof and after having consulted legal counsel with respect thereto; and (f) this First Amendment Agreement constitutes a valid and binding obligation of Borrower in every respect, enforceable in accordance with its terms. 11. Each reference that is made in the Credit Agreement or any other writing to the Credit Agreement shall hereafter be construed as a reference to the Credit Agreement as amended hereby. Except as herein otherwise specifically provided, all provisions of the Credit Agreement shall remain in full force and effect and be unaffected hereby. 12. This First Amendment Agreement may be executed in any number of counterparts, by different parties hereto in separate counterparts and by facsimile signature, each of which when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute but one and the same agreement. 13. The rights and obligations of all parties hereto shall be governed by the laws of the State of Ohio, without regard for principles of conflicts of laws. Address: 7887 Washington Village Drive AMCAST INDUSTRIAL CORPORATION Dayton, Ohio 45459 By: /s/ John H. Shuey --------------------------------- John H. Shuey, President and Chief Executive Officer Address: Key Center KEYBANK NATIONAL ASSOCIATION, 127 Public Square as Agent and as a Bank Cleveland, OH 44114-1206 Attn. Large Corporate By: /s/ Michael J. Landini Banking Division --------------------------------- Michael J. Landini, Assistant Vice President 4 5 The undersigned consent to the terms hereof. ELKHART PRODUCTS CORPORATION WHEELTEK, INC. AMCAST INVESTMENT SERVICES CORPORATION AS INTERNATIONAL, INC. By: /s/ John H. Shuey --------------------------------- John H. Shuey, President of each of the Companies listed above 5 EX-4.3 3 EXHIBIT 4.3 1 EXHIBIT 4.3 SECOND AMENDMENT AGREEMENT This Second Amendment Agreement is made as of the 30th day of August, 1998, by and among AMCAST INDUSTRIAL CORPORATION, an Ohio corporation ("Borrower"), the banking institutions named in Schedule I to the Credit Agreement, as hereinafter defined ("Banks"), and KEYBANK NATIONAL ASSOCIATION, as agent for the Banks ("Agent"): WHEREAS, Borrower, Agent and the Banks are parties to a certain Credit Agreement dated as of August 14, 1997, as amended and as it may from time to time be further amended, restated or otherwise modified, which provides, among other things, for loans and letters of credit aggregating Two Hundred Million Dollars ($200,000,000), all upon certain terms and conditions ("Credit Agreement"); WHEREAS, Borrower, Agent and the Banks desire to amend the Credit Agreement to modify certain provisions thereof; WHEREAS, each term used herein shall be defined in accordance with the Credit Agreement; NOW, THEREFORE, in consideration of the premises and of the mutual covenants herein and for other valuable considerations, Borrower, Agent and the Banks agree as follows: 1. Article I of the Credit Agreement is hereby amended to add the following definition thereto: "SVC Sale" shall mean the proposed sale by Borrower of all of the assets of the Superior Valve Company, a division of Borrower, to Harsco Corporation. 2. Article I of the Credit Agreement is hereby amended to delete the definition of "Eurocurrency" in its entirety and to insert in place thereof the following: "Eurocurrency" shall mean Eurodollars, Deutsche Marks, Pounds Sterling, French Francs, Italian Lira, Swiss Francs, Belgian Francs, the lawful currency of the European Economic and Monetary Union or any other non-U. S. currency agreed to by Agent and the Banks. 3. The Credit Agreement is hereby amended to delete Section 5.7(b) therefrom in its entirety and to insert in place thereof the following: (b) LEVERAGE. Borrower shall not suffer or permit at any time the Leverage Ratio of the Companies to exceed: (i) 3.65 to 1.00 on the Closing Date through November 29, 1998; (ii) (A) if the SVC Sale has occurred, (1) 3.40 to 1.00 on November 30, 1998 through February 27, 1999, and (2) 3.25 to 1.00 on February 28, 1999 through August 30, 2 1999, or (B) if the SVC Sale has not occurred, (1) 3.65 to 1.00 on November 30, 1998 through February 27, 1999, (2) 3.50 to 1.00 on February 28, 1999 through May 30, 1999, and (3) 3.35 to 1.00 on May 31, 1999 through August 30, 1999; and (iii) 3.00 to 1.00 on August 31, 1999 and thereafter, based upon Borrower's financial statements for the most recent fiscal quarter and the three (3) previous fiscal quarters (on a rolling four (4) quarter basis), subject to the Proviso. 4. The Credit Agreement is hereby amended to delete the second to the last paragraph of Section 2.2 therefrom in its entirety and to insert in place thereof the following: Each request for a Loan or the issuance of a Letter of Credit by Borrower hereunder shall be deemed to be a representation and warranty by Borrower as of the date of such request as to the facts specified in (c) and (d) above. At no time shall Borrower request that LIBOR Loans and Competitive Bid Loans be outstanding for more than ten (10) different Interest Periods and Competitive Bid Interest Periods at any time, and, if Prime Rate Loans are outstanding, then LIBOR Loans and Competitive Bid Loans shall be limited to nine (9) different Interest Periods and Competitive Bid Interest Periods at any time. 5. Concurrently with the execution of this Second Amendment Agreement, Borrower shall: (a) pay to Agent, for the pro rata benefit of the Banks, an amendment fee in an amount equal to twelve and one-half (12.5) basis points times the Total Commitment Amount; and (b) pay all legal fees and expenses of Agent in connection with this Second Amendment Agreement. 6. Borrower hereby represents and warrants to Agent and the Banks that (a) Borrower has the legal power and authority to execute and deliver this Second Amendment Agreement; (b) the officials executing this Second Amendment Agreement have been duly authorized to execute and deliver the same and bind Borrower with respect to the provisions hereof, (c) the execution and delivery hereof by Borrower and the performance and observance by Borrower of the provisions hereof do not violate or conflict with the organizational agreements of Borrower or any law applicable to Borrower or result in a breach of any provision of or constitute a default under any other agreement, instrument or document binding upon or enforceable against Borrower; (d) no Unmatured Event of Default or Event of Default exists under the Credit Agreement, nor will any occur immediately after the execution and delivery of this Second Amendment Agreement or by the performance or observance of any provision hereof; (e) neither Borrower nor any Subsidiary has any claim or offset against, or defense or counterclaim to, any of Borrower's or any Subsidiary's obligations or liabilities under the Credit Agreement or any Related Writing; and (f) this Second 2 3 Amendment Agreement constitutes a valid and binding obligation of Borrower in every respect, enforceable in accordance with its terms. 7. Each reference that is made in the Credit Agreement or any other writing to the Credit Agreement shall hereafter be construed as a reference to the Credit Agreement as amended hereby. Except as herein otherwise specifically provided, all provisions of the Credit Agreement shall remain in full force and effect and be unaffected hereby. 8. Borrower and each Subsidiary, by signing below, hereby waives and releases Agent and each of the Banks and their respective directors, officers, employees, attorneys, affiliates and subsidiaries from any and all such claims, offsets, defenses and counterclaims of which Borrower and any Subsidiary is aware, such waiver and release being with full knowledge and understanding of the circumstances and effect thereof and after having consulted legal counsel with respect thereto. 9. This Second Amendment Agreement may be executed in any number of counterparts, by different parties hereto in separate counterparts and by facsimile signature, each of which when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute but one and the same agreement. 10. The rights and obligations of all parties hereto shall be governed by the laws of the State of Ohio, without regard for principles of conflicts of laws. [Remainder of page intentionally left blank] 3 4 11. JURY TRIAL WAIVER. BORROWER, AGENT AND EACH OF THE BANKS HEREBY WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, AMONG BORROWER, AGENT AND THE BANKS, OR ANY THEREOF, ARISING OUT OF, IN CONNECTION WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH THIS AGREEMENT OR ANY NOTE OR OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS RELATED THERETO. AMCAST INDUSTRIAL CORPORATION By: /s/ John H. Shuey -------------------------------------- John H. Shuey, President and Chief Executive Officer KEYBANK NATIONAL ASSOCIATION as Agent and as a Bank By: /s/ Lawrence A. Mack -------------------------------------- Lawrence A. Mack, Senior Vice President BANCA COMMERCIALE ITALIANA By: /s/ D.R. Lamb -------------------------------------- D.R. Lamb, Vice President and /s/ Mathew V. Trujillo -------------------------------------- Mathew V. Trujillo, Vice President THE BANK OF NEW YORK By: /s/ Edward J. Dougherty III -------------------------------------- Edward J. Dougherty III, Vice President US Commercial Banking BANK ONE, NA By: /s/ Susan M. Lipowicz -------------------------------------- Susan M. Lipowicz, Vice President & Portfolio Manager 4 5 CREDIT AGRICOLE INDOSUEZ (successor in interest to Caisse Nationale de Credit Agricole) By: /s/ David Bouhl -------------------------------------- David Bouhl, F.V.P. Head of Corporate Banking Chicago and /s/ Katherine L. Abbott -------------------------------------- Katherine L. Abbott First Vice President COMERICA BANK By: /s/ Nicholas G. Mester -------------------------------------- Nicholas G. Mester Account Officer CREDITO ITALIANO SPA By: /s/ H.P. Butler -------------------------------------- H.P. Butler First Vice President and /s/ Gainfranco Bisagni -------------------------------------- Gainfranco Bisagni First Vice President INSTITUTO BANCARIO SAN PAOLO DI TORINO, SPA By: /s/ William J. DeAngelo -------------------------------------- William J. DeAngelo First Vice President and /s/ Carlo Persico -------------------------------------- Carlo Persico DJM NATIONAL CITY BANK F/k/a NATIONAL CITY BANK OF DAYTON By: /s/ Neal Hinkel -------------------------------------- Neal Hinkel Vice President NBD BANK, N.A. By: /s/ Tim Oliver -------------------------------------- Tim Oliver Vice President 5 6 THE SANWA BANK, LIMITED, CHICAGO BRANCH By: -------------------------------------- Title: ----------------------------------- STAR BANK, N.A. By: /s/ Thomas D. Gibbons -------------------------------------- Thomas D. Gibbons Vice President Each of the undersigned consents and agrees to and acknowledges the terms of the foregoing Second Amendment Agreement. Each of the undersigned further agrees that the obligations of each of the undersigned pursuant to the Guaranty of Payment executed by each of the undersigned shall remain in full force and effect and be unaffected hereby. ELKHART PRODUCTS CORPORATION WHEELTEK, INC. AS INTERNATIONAL, INC. By: /s/ Douglas D. Watts -------------------------------------- Douglas D. Watts, Vice President of each of the Companies listed above AMCAST INVESTMENT SERVICES CORPORATION By: /s/ John H. Shuey -------------------------------------- John H. Shuey, President 6 EX-4.7 4 EXHIBIT 4.7 1 ================================================================================ EXHIBIT 4.7 AMCAST INDUSTRIAL CORPORATION ----------------------------------------------------------- FOURTH AMENDMENT AND LIMITED WAIVER Dated as of December 31, 1997 to NOTE AGREEMENT Dated as of September 1, 1989 ----------------------------------------------------------- Re: $10,000,000 9.0% Senior Notes, Due September 15, 1999 ================================================================================ 2 FOURTH AMENDMENT AND LIMITED WAIVER AGREEMENT THIS FOURTH AMENDMENT AND LIMITED WAIVER AGREEMENT dated as of December 31, 1997 (the or this "Agreement"), to the Note Agreement dated as of September 1, 1989, is between AMCAST INDUSTRIAL CORPORATION, an Ohio corporation (the "Company"), and Principal Mutual Life Insurance Company (the "Noteholder"). Capitalized terms used in this Agreement and not defined herein shall have the meanings ascribed to such terms in the Note Agreement referred to below. RECITALS: A. The Company and the Noteholder have heretofore entered into a Note Agreement dated as of September 1, 1989, as amended pursuant to certain agreements dated as of January 26, 1990, October 1, 1990 and July 24, 1995 (as so amended, the "Note Agreement"), pursuant to which the Company has heretofore issued its 9.0% Senior Notes, due September 15, 1999, in the aggregate principal amount of $10,000,000 (the "Notes"). The Noteholder is the holder of 100% of the outstanding principal amount of the Notes. B. The Company has entered into that certain Credit Agreement dated as of August 14, 1997 (the "Credit Agreement"), with the banking institutions named therein (the "Banks") and Keybank National Association, as Agent (the "Agent"), pursuant to which the Banks have made available to the Company up to $200,000,000 aggregate principal amount in revolving credit facilities, which facilities have been guaranteed by certain Subsidiaries of the Company. C. Concurrently with the execution and delivery of the Credit Agreement and the guaranties of Subsidiaries given in connection therewith, and as a condition to the necessary consent of the Noteholder to the execution and delivery by the Company and its Subsidiaries of the same, the Company has heretofore caused to be executed and delivered certain guaranties of Subsidiaries in favor of the Noteholder (the "Subsidiary Guaranties") substantially in the form delivered in favor of the Banks in connection with the Credit Agreement. D. The Company and the Noteholder now desire to amend the Note Agreement in the respects, but only in the respects, hereinafter set forth in order to reflect certain agreements between the Company and the Noteholder arising in connection with the consummation of the Credit Agreement and the execution and delivery of the Subsidiary Guaranties. E. All requirements of law have been fully complied with and all other acts and things necessary to make this Agreement a valid, legal and binding instrument according to its terms for the purposes herein expressed have been done or performed. NOW, THEREFORE, upon the full and complete satisfaction of the conditions precedent to the effectiveness of this Agreement set forth in Section 4.1 hereof, and in consideration of good 3 and valuable consideration the receipt and sufficiency of which is hereby acknowledged, the Company and the Noteholder do hereby agree as follows: SECTION 1. AMENDMENTS. Section 1.1 Sections 6.6 through 6.13 of the Note Agreement shall be and are hereby deleted in their entirety and replaced with the following: "Section 6.6. Consolidated Net Worth. The Company will at all times keep and maintain Consolidated Net Worth at an amount not less than (a) $90,000,000 plus (b) 25% of Consolidated Net Earnings computed on a cumulative basis for each of the elapsed fiscal years ending August 31, 1995 through August 31, 1997 plus (c) 50% of Consolidated Net Earnings computed on a cumulative basis for each of the elapsed fiscal years ending after August 31, 1997; provided that notwithstanding that Consolidated Net Earnings for any such elapsed fiscal year may be a deficit figure, no reductions as a result thereof shall be made in the sum to be maintained pursuant hereto. Section 6.7. Maintenance of Consolidated Indebtedness The Company will not at any time permit Consolidated Indebtedness to exceed the percentage of Consolidated Total Capitalization set forth below during each of the periods indicated: PERCENTAGE OF CONSOLIDATED PERIOD TOTAL CAPITALIZATION September 1, 1997 through August 31, 1998 65% September 1, 1998 through August 31, 1999 63% September 1, 1999 and thereafter 60%" Section 6.8. Limitations on Consolidated Priority Indebtedness (a) The Company will not, and will not permit any Subsidiary to, create, assume or incur or in any manner be or become liable in respect of any Consolidated Priority Indebtedness, except: (1) Consolidated Priority Indebtedness of the Company and its Subsidiaries outstanding as of the Closing Date and reflected on Schedule II hereto, or any extension, renewal or refunding of any such Consolidated Priority Indebtedness; provided that (i) such extension, renewal or refunding of such Consolidated Priority Indebtedness shall be without increase in the -2- 4 principal amount thereof at the time of such extension, renewal or refunding, (ii) in the case of secured Consolidated Priority Indebtedness, the related Lien shall attach solely to the same such property, and (iii) at the time of such extension, renewal or refunding and after giving effect thereto and to the application of the proceeds thereof, no Default or Event of Default would exist; and (2) additional Consolidated Priority Indebtedness of the Company and its Subsidiaries incurred after the Closing Date; provided that at the time of creation, issuance, assumption, guarantee or incurrence thereof and after giving effect thereto and to the application of the proceeds thereof: (i) no Default or Event of Default would exist; and (ii) Consolidated Priority Indebtedness would not exceed an amount equal to: (A) 30% of Consolidated Net Worth in the case of any determination made on or prior to August 31, 1999; and (B) 25% of Consolidated Net Worth in the case of any determination made after August 31, 1999." (b) Any corporation which becomes a Subsidiary after the date hereof shall for all purposes of this Section 6.8 be deemed to have created, assumed or incurred at the time it becomes a Subsidiary all Indebtedness of such corporation existing immediately after it becomes a Subsidiary. Section 6.9. Limitation on Liens. (a) The Company will not, and will not permit any Subsidiary to, create or incur, or suffer to be incurred or to exist, any Lien on its or their property or assets, whether now owned or hereafter acquired, or upon any income or profits therefrom, or transfer any property for the purpose of subjecting the same to the payment of obligations in priority to the payment of its or their general creditors, or acquire or agree to acquire, or permit any Subsidiary to acquire, any property or assets upon conditional sales agreements or other title retention devices, except: (1) Liens for property taxes and assessments or governmental charges or levies and Liens securing claims or demands of mechanics and materialmen, provided that payment thereof is not at the time required by Section 6.3; (2) Liens of or resulting from any judgment or award, the time for the appeal or petition for rehearing of which shall not have expired, or in respect of which the Company or a Subsidiary shall at any time in good faith be prosecuting an appeal or proceeding for a review and in respect of which a stay -3- 5 of execution pending such appeal or proceeding for review shall have been secured; (3) Liens incidental to the conduct of business or the ownership of properties and assets (including Liens in connection with worker's compensation, unemployment insurance and other like laws, warehousemen's and attorneys' liens and statutory landlords' liens) and Liens to secure the performance of bids, tenders or trade contracts, or to secure statutory obligations, surety or appeal bonds or other Liens of like general nature, in any such case incurred in the ordinary course of business and not in connection with the borrowing of money, provided in each case, the obligation secured is not overdue or, if overdue, is being contested in good faith by appropriate actions or proceedings; (4) minor survey exceptions or minor encumbrances, easements or reservations, or rights of others for rights-of-way, utilities and other similar purposes, or zoning or other restrictions as to the use of real properties, which are necessary for the conduct of the activities of the Company and its Subsidiaries or which customarily exist on properties of corporations engaged in similar activities and similarly situated and which do not in any event materially impair their use in the operation of the business of the Company, and the Company and its Subsidiaries, taken as a whole, or the value of such properties for the purpose of such business; (5) Liens securing Indebtedness of a Subsidiary to the Company or to another Wholly-owned Subsidiary; (6) Liens existing as of November 8, 1995 and described on Annex IV hereto and any extensions, renewals or replacements, in whole or in part, of any such Lien, provided that (i) such extension, renewal or replacement of Indebtedness shall be without increase in the principal amount remaining unpaid as of the date of such extension, renewal or replacement, (ii) such Lien shall attach solely to the same property theretofore subject to such Lien and (iii) after giving effect to any such extension, renewal or refunding and to the application of the proceeds thereof, no Default or Event of Default would exist; (7) Liens created or incurred after November 8, 1995 given to secure the payment of the purchase price or cost of construction of property or assets useful and intended to be used in carrying on the business of the Company or a Subsidiary, including Liens existing on such property or assets at the time of acquisition thereof, whether or not such existing Liens were given to secure the payment of the purchase price of the property or assets to which they attach, provided that (i) except in connection with industrial development bond financings where applicable law shall otherwise require, the Lien shall attach solely to the property or assets acquired, purchased or constructed, (ii) such Lien shall have been created or incurred within 180 days of the date of -4- 6 acquisition or purchase or of completion of construction, as the case may be, (iii) at the time of acquisition or purchase or the date of completion of construction, as the case may be, the aggregate amount remaining unpaid on all Indebtedness secured by Liens on such property or assets, whether or not assumed by the Company or a Subsidiary, shall not exceed fair market value at the time of acquisition or purchase or the date of completion of the construction of such property or assets (as determined in good faith by the Board of Directors of the Company) and (iv) at the time of creation, issuance, assumption, guarantee or incurrence of the Indebtedness relating to such Lien and after giving effect thereto and to the application of the proceeds thereof, no Default or Event of Default would exist; (8) Liens affixed on real or personal property existing (i) at the time of acquisition thereof, whether or not the Indebtedness secured thereby is assumed by the Company or any of its Subsidiaries, or (ii) on the property or outstanding shares of a corporation at the time such corporation is merged into or consolidated with the Company or a Subsidiary or at the time of a sale, lease or other disposition of the properties or outstanding shares or Indebtedness of a corporation or firm as an entirety to the Company or a Subsidiary; provided that (A) the amount of Indebtedness secured by such Liens shall not exceed an amount equal to the fair market value of such real or personal property (as determined in good faith by the Board of Directors of the Company) and (B) at the time of the creation, issuance, assumption, guarantee or incurrence of the Indebtedness relating to any such Lien and after giving effect thereto and to the application of the proceeds thereof, no Default or Event of Default would exist; and (9) Liens created or incurred after November 8, 1995 given to secure Indebtedness of the Company or any Subsidiary in addition to the Liens permitted by the preceding clauses (1) through (8) hereof, provided that all Indebtedness secured by such Liens shall have been incurred within the limitations provided in Section 6.8(a)(2). (b) If at any time the Company is requested by any holder of Indebtedness of the Company or any Subsidiary to grant a Lien (other than a Lien expressly permitted by Section 6.9(a)) on any of the property or assets of the Company or any of its Subsidiaries as security for the payment of such Indebtedness, then and in such event the Company shall at least ten Business Days prior to the granting of any such Lien so notify the holders of the Notes and, concurrently with the granting of such Lien, the Company shall, in a manner satisfactory to the Requisite Holders, equally and ratably secure the Notes with the such Indebtedness under and pursuant to a mortgage, security agreement or other agreement securing such Indebtedness and pursuant to an intercreditor agreement to be entered into by the holder or holders of such Indebtedness with the holders of the Notes confirming such equal and ratable security of the such Indebtedness and the Notes, and the Company shall furnish to the holders of the Notes on the date of the creation or incurrence of such Lien an opinion of -5- 7 independent counsel (which independent counsel shall be satisfactory to the Requisite Holders) to such effect and otherwise in form and substance satisfactory to the Requisite Holders. Section 6.10. Mergers, Consolidations and Sales of Assets: (a) The Company will not, and will not permit any Subsidiary to, consolidate with or be a party to a merger with any other Person, or sell, lease or otherwise dispose of all or substantially all of its assets; provided that: (1) any Subsidiary may merge or consolidate with or into the Company or any Wholly-owned Subsidiary so long as in any merger or consolidation involving the Company, the Company shall be the surviving or continuing corporation; (2) the Company may consolidate or merge with or into any other corporation if (i) the corporation which results from such consolidation or merger (the "surviving corporation") is organized under the laws of any state of the United States or the District of Columbia, (ii) the due and punctual payment of the principal of and premium, if any, and interest on all of the Notes, according to their tenor, and the due and punctual performance and observation of all of the covenants in the Notes and this Agreement to be performed or observed by the Company are expressly assumed in writing by the surviving corporation and the surviving corporation shall furnish to the holders of the Notes an opinion of counsel satisfactory to such holders to the effect that the instrument of assumption has been duly authorized, executed and delivered and constitutes the legal, valid and binding contract and agreement of the surviving corporation enforceable in accordance with its terms, except as enforcement of such terms may be limited by bankruptcy, insolvency, reorganization, moratorium and similar laws affecting the enforcement of creditors' rights generally and by general equitable principles, and (iii) at the time of such consolidation or merger and immediately after giving effect thereto, no Default or Event of Default would exist; (3) the Company may sell or otherwise dispose of all or substantially all of its assets (other than stock and Indebtedness of a Subsidiary, which may only be sold or otherwise disposed of pursuant to Section 6.10(c)) to any Person for consideration which represents the fair market value of such assets (as determined in good faith by the Board of Directors of the Company, a copy of which determination, certified by the Secretary or an Assistant Secretary of the Company, shall have been furnished to the holders of the Notes) at the time of such sale or other disposition if (i) the acquiring Person is a corporation organized under the laws of any state of the United States or the District of Columbia, (ii) the due and punctual payment of the principal of and premium, if any, and interest on all the Notes, according to their tenor, and the due and punctual performance and observance of all of the covenants in the Notes and in this Agreement to be performed or observed by the Company are expressly -6- 8 assumed in writing by the acquiring corporation and the acquiring corporation shall furnish to the holders of the Notes an opinion of counsel satisfactory to such holders to the effect that the instrument of assumption has been duly authorized, executed and delivered and constitutes the legal, valid and binding contract and agreement of such acquiring corporation enforceable in accordance with its terms, except as enforcement of such terms may be limited by bankruptcy, insolvency, reorganization, moratorium and similar laws affecting the enforcement of creditors' rights generally and by general equitable principles, and (iii) at the time of such sale or disposition and immediately after giving effect thereto, no Default or Event of Default would exist. (b) The Company will not, and will not permit any Subsidiary to, sell, lease, transfer, abandon or otherwise dispose of assets (except assets sold in the ordinary course of business for fair market value and except as provided in Section 6.10(a)(3)); provided that the foregoing restrictions do not apply to: (1) the sale, lease, transfer or other disposition of assets of a Subsidiary to the Company or a Wholly-owned Subsidiary; or (2) the sale of the Flagg Brass Division Assets; or (3) the sale of assets for cash or other property to a Person or Persons other than an Affiliate if all of the following conditions are met: (i) such assets (valued at net book value) do not, together with all other assets of the Company and its Subsidiaries previously disposed of during the period from November 1, 1995 to and including the date of the sale of such assets (other than in the ordinary course of business), exceed 25% of Consolidated Total Assets determined as of the end of the immediately preceding fiscal year; (ii) in the opinion of the Company's Board of Directors, the sale is for fair value and is in the best interests of the Company; and (iii) immediately after the consummation of the transaction and after giving effect thereto, no Default or Event of Default would exist; provided, however, that for purposes of the foregoing calculation, there shall not be included any assets the proceeds of which were or are applied within twelve months of the date of sale of such assets to either (A) the acquisition of, or Binding Commitment to acquire, fixed assets useful and intended to be used in the operation of the business of the Company and its Subsidiaries as described in Section 6.5 and having a fair market value (as determined in good faith by the Board of Directors of the Company) at least equal to that of the assets so disposed of or (B) the prepayment at any applicable prepayment premium, on a pro rata basis, of Senior Indebtedness of the Company. It is understood and -7- 9 agreed by the Company that any such proceeds paid and applied to the prepayment of the Notes as hereinabove provided shall be prepaid as and to the extent provided in Section 2.2. Computations pursuant to this Section 6.10(b) shall include dispositions made pursuant to Section 6.10(c) and computations pursuant to Section 6.10(c) shall include dispositions made pursuant to this Section 6.10(b). (c) The Company will not, and will not permit any Subsidiary to, sell, pledge or otherwise dispose of any shares of the stock (including as "stock" for the purposes of this Section 6.10(c) any options or warrants to purchase stock or other Securities exchangeable for or convertible into stock) of a Subsidiary (said stock, options, warrants and other Securities herein called "Subsidiary Stock") or any Indebtedness of any Subsidiary, nor will any Subsidiary issue, sell, pledge or otherwise dispose of any shares of its own Subsidiary Stock, provided that the foregoing restrictions do not apply to: (1) the issue of directors' qualifying shares; or (2) the issue of Subsidiary Stock to the Company; or (3) the sale or other disposition at any one time to a Person (other than directly or indirectly to an Affiliate) of the entire investment of the Company and its other Subsidiaries in any Subsidiary if all of the following conditions are met: (i) such assets (valued at net book value) of such Subsidiary do not, together with all other assets of the Company and its Subsidiaries previously disposed of during the period from November 1, 1995 to and including the date of the sale of such assets (other than in the ordinary course of business), exceed 25% of Consolidated Total Assets determined as of the end of the immediately preceding fiscal year; (ii) in the opinion of the Company's Board of Directors, the sale is for fair value and is in the best interests of the Company; (iii) immediately after the consummation of the transaction and after giving effect thereto, such Subsidiary shall have no Indebtedness of or continuing investment in the capital stock of the Company or of any Subsidiary and any such Indebtedness or investment shall have been discharged or acquired, as the case may be, by the Company or a Subsidiary; and (iv) immediately after the consummation of the transaction and after giving effect thereto, no Default or Event of Default would exist; -8- 10 provided, however, that for purposes of the foregoing calculation, there shall not be included any assets the proceeds of which were or are applied, within twelve months of the date of sale of such assets to either (A) the acquisition of, or Binding Commitment to acquire, fixed assets useful and intended to be used in the operation of the business of the Company and its Subsidiaries as described in Section 6.5 and having a fair market value (as determined in good faith by the Board of Directors of the Company) at least equal to that of the assets so disposed of or (B) the prepayment at any applicable prepayment premium, on a pro rata basis, of Senior Indebtedness of the Company. It is understood and agreed by the Company that any such proceeds paid and applied to the prepayment of the Notes as hereinabove provided shall be prepaid as and to the extent provided Section 2.2. Computations pursuant to this Section 6.10(C) shall include dispositions made pursuant to Section 6.10(B) and computations pursuant to Section 6.10(B) shall include dispositions made pursuant to this Section 6.10(C). Section 6.11. Additional Security, Collateral and Guaranties. (a) If at any time, pursuant to the terms and conditions of the Credit Agreement, the Company or any existing or newly acquired or formed Subsidiary shall pledge, grant, assign or convey to the Bank Lenders, or any one or more of them, any security or collateral of any kind, then the Company or such Subsidiary shall grant to the holders of the Notes the same security or collateral so that the holders of the Notes shall at all times be secured on an equal and pro rata basis with the Bank Lenders, and the Company shall deliver, or shall cause to be delivered, to the holders of the Notes (i) all such certificates, resolutions, legal opinions and other related items in substantially the same forms as those delivered to and accepted by the Bank Lenders and (ii) all such amendments to this Agreement as may reasonably be deemed necessary by the holders of the Notes in order to reflect the existence of such additional security or collateral. (b) If at any time, pursuant to the terms and conditions of the Credit Agreement, any existing or newly acquired or formed Subsidiary grants to any one or more of the Bank Lenders a guarantee of obligations owing to such Bank Lender (whether pursuant to the Credit Agreement or otherwise), the Company shall cause such Subsidiary to execute and deliver to the holders of the Notes a Guaranty in substantially the same form as the Guaranty delivered to the Bank Lenders, or any one or more of them, and the Company shall deliver, or shall cause to be delivered, to the holders of the Notes (i) all such certificates, resolutions, legal opinions and other related items in substantially the same forms as those delivered to and accepted by the Bank Lenders and (ii) all such amendments to this Agreement as may reasonably be deemed necessary by the holders of the Notes in order to reflect the existence of such Guaranty of the Notes. Section 6.12. Repurchase of Notes. Except as provided in Section 2.2 or 2.3, neither the Company nor any Subsidiary or Affiliate, directly or indirectly, may repurchase or make any offer to repurchase any Notes. -9- 11 Section 6.13. Intentionally omitted." Section 1.2. The reference to "Sections 6.11 or 6.12" contained in Section 6.1 of the Note Agreement shall be and is hereby amended to read "Section 6.10." Section 1.3. The references to "Sections 6.6, 6.7, 6.8, 6.9 and 6.10" and "Sections 6.6, 6.7, 6.8, 6.10 and 6.11" appearing in Section 6.15(c) of the Note Agreement shall, in each case, be and are hereby amended to read "Sections 6.6 through 6.11". Section 1.4 The reference to "Section 6.9(a)" set forth in Section 6.19 shall be and is hereby amended to read "Section 6.9(a)(i)." Section 1.5. Subparagraph (j) of Section 7.1 of the Note Agreement shall be and is hereby amended by deleting the period at the end thereof and replacing it with a semicolon and by adding the word "or" thereafter. Section 1.6. The following shall be added as a new subparagraph (k) to Section 7.1 of the Note Agreement: "(k) Any Subsidiary Guaranty shall cease to be in full force and effect for any reason whatsoever, including, without limitation, a determination by any governmental body or court that such Subsidiary Guaranty is invalid, void or unenforceable or such Subsidiary shall contest or deny in writing the validity or enforceability of any of its obligations under the Subsidiary Guaranty." Section 1.7. The following shall be added as new definitions in alphabetical order to Section 5.1 of the Note Agreement: "'ACT' shall mean Amcast Casting Technologies, Inc., an Indiana corporation and Subsidiary of the Company." "'Bank Lenders' shall mean Keybank National Association and each other bank or financial institution which is now, or hereafter becomes, a lender under the Credit Agreement." "'Binding Commitment' shall mean, with respect to the acquisition of assets to be used in the operation of the business of the Company and its Subsidiaries as described in Section 6.5, a binding agreement, in writing, between the Company and the seller of such assets pursuant to which the Company agrees to purchase such assets for a specified price and on a specified date, which date shall not be more than 60 days following the date such agreement is entered into." "'Business Day' shall mean any day other than a Saturday, Sunday or other day on which banks in Dayton, Ohio or Chicago, Illinois are required by law to close or are customarily closed." -10- 12 "'Capitalized Lease' shall mean any lease the obligation for Rentals with respect to which is required to be capitalized on a consolidated balance sheet of the lessee and its subsidiaries in accordance with GAAP." "'Capitalized Rentals' of any Person shall mean as of the date of any determination thereof the amount at which the aggregate Rentals due and to become due under all Capitalized Leases under which such Person is a lessee would be reflected as a liability on a consolidated balance sheet (or the statements of financial condition) of such Person." "'Consolidated Indebtedness' shall mean all Indebtedness of the Company and its Subsidiaries, determined on a consolidated basis eliminating intercompany items." "'Consolidated Net Worth' shall mean, as of the date of any determination thereof the amount of the capital stock accounts (net of treasury stock, at cost) plus (or minus in the case of a deficit) the surplus in retained earnings of the Company and its Subsidiaries as determined in accordance with GAAP." "'Consolidated Priority Indebtedness' shall mean the sum of (a) Indebtedness of the Company secured by any Lien other than Liens permitted by Sections 6.9(a)(1) through (8), plus (b) all Indebtedness of the Company's Subsidiaries, provided that, for so long as the cumulative investment of the Company and any of its Subsidiaries in ACT and CTC, measured from the date of acquisition of ACT to the date of any determination hereunder, does not exceed the sum of (i) $25,000,000 plus (ii) an amount equal to investments made by the Company in ACT and CTC after February 1, 1998 which increase the Company's or ACT's ownership interest in CTC above 60%, the Company shall be permitted to exclude from Consolidated Priority Indebtedness an amount equal to the lesser of (y) $15,000,000 or (z) 60% of the Indebtedness outstanding under the CTC Revolving Credit Agreement." "'Consolidated Total Assets' shall mean as of the date of any determination thereof, total assets of the Company and its Subsidiaries determined on a consolidated basis in accordance with GAAP." "'Credit Agreement' shall mean that certain Credit Agreement dated as of August 14, 1997, by and among the Company, the banking institutions named therein and Keybank National Association, as Agent." "'CTC' shall mean Casting Technologies Company, an Indiana general partnership, the general partners of which are ACT and Izumi Industries, Inc., a Delaware corporation." "'CTC Revolving Credit Agreement' shall mean that certain Revolving Credit Agreement dated July, 1995, by and between CTC, as borrower, and NBD Bank and Asahi Bank, as lenders, as amended, modified or supplemented from time to time." -11- 13 "'ERISA' shall mean the Employee Retirement Income Security Act of 1974, as amended, and any successor statute of similar import, together with the regulations thereunder, in each case as in effect from time to time. References to sections of ERISA shall be construed to also refer to any successor sections." "'ERISA Affiliate' shall mean any corporation, trade or business that is, along with the Company, a member of a controlled group of corporations or a controlled group of trades or businesses, as described in section 414(b) and 414(c), respectively, of the Code or Section 4001 of ERISA." "'Flagg Brass Division Assets' shall mean the assets of the Company used to manufacture brass pipe fittings in the operation of the Stanley G. Flagg Division of the Company located in Stowe, Pennsylvania, which Division is identified in Item 2 of the Company's August 31, 1994 Form 10-K as a discontinued operation." "'GAAP' shall mean generally accepted accounting principles at the time." "'Guaranties' by any Person shall mean all obligations (other than endorsements in the ordinary course of business of negotiable instruments for deposit or collection) of such Person guaranteeing, or in effect guaranteeing, any Indebtedness, dividend or other obligation of any other Person (the "primary obligor") in any manner, whether directly or indirectly, including, without limitation, all obligations incurred through an agreement, contingent or otherwise, by such Person: (a) to purchase such Indebtedness or obligation or any property or assets constituting security therefor, (b) to advance or supply funds (1) for the purchase or payment of such Indebtedness or obligation, or (2) to maintain working capital or any balance sheet or income statement condition or otherwise to advance or make available funds for the purchase or payment of such Indebtedness or obligation, (c) to lease property or to purchase Securities or other property or services primarily for the purpose of assuring the owner of such Indebtedness or obligation of the ability of the primary obligor to make payment of the Indebtedness or obligation, or (d) otherwise to assure the owner of the Indebtedness or obligation of the primary obligor against loss in respect thereof. For the purposes of all computations made under this Agreement, a Guaranty in respect of any Indebtedness for borrowed money shall be deemed to be Indebtedness equal to the principal amount of such Indebtedness for borrowed money which has been guaranteed, and a Guaranty in respect of any other obligation or liability or any dividend shall be deemed to be Indebtedness equal to the maximum aggregate amount of such obligation, liability or dividend." "'Indebtedness' of any Person shall mean and include all (a) obligations of such Person for borrowed money or which have been incurred in connection with the acquisition of property or assets, (b) obligations secured by any Lien upon property or assets owned by such Person, even though such Person has not assumed or become liable for the payment of such obligations, (c) obligations created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person, notwithstanding the fact that the rights and remedies of the seller, lender -12- 14 or lessor under such agreement in the event of default are limited to repossession or sale of property, (d) Capitalized Rentals, (e) Guaranties of obligations of others of the character referred to in this definition and (f) obligations of such Person in respect of mandatorily redeemable Preferred Stock. Indebtedness of the Company and its Subsidiaries shall be determined on a consolidated basis after eliminating intercompany items. In no event shall Indebtedness include (i) Unfunded Pension Liability of the Plans of the Company and its Subsidiaries which amount, as of August 31, 1995, is reflected on Schedule II hereto and (ii) letters of credit given to secure statutory worker's compensation bonds." "'Lien' shall mean any interest in property securing an obligation owed to, or a claim by, a Person other than the owner of the property, whether such interest is based on the common law, statute or contract, and including but not limited to the security interest lien arising from a mortgage, encumbrance, pledge, conditional sale or trust receipt or a lease, consignment or bailment for security purposes. The term "Lien" shall include reservations, exceptions, encroachments, easements, rights-of-way, covenants, conditions, restrictions, leases and other title exceptions and encumbrances (including, with respect to stock, stockholder agreements, voting trust agreements, buy-back agreements and all similar arrangements) affecting property. For the purposes of this Agreement, the Company or a Subsidiary shall be deemed to be the owner of any property which it has acquired or holds subject to a conditional sale agreement, Capitalized Lease or other arrangement pursuant to which title to the property has been retained by or vested in some other Person for security purposes and such retention or vesting shall constitute a Lien." "'Plan' shall mean a "pension plan," as such term is defined in ERISA, established or maintained by the Company or any ERISA Affiliate or as to which the Company or any ERISA Affiliate contributed or is a member or otherwise may have any liability." "'Preferred Stock' shall mean, in respect of any corporation, shares of the capital stock of such corporation that are entitled to preference or priority over any other shares of the capital stock of such corporation in respect of payment of dividends or distribution of assets upon liquidation." "'Rentals' shall mean and include as of the date of any determination thereof all fixed payments (including as such all payments which the lessee is obligated to make to the lessor on termination of the lease or surrender of the property) payable by the Company or a Subsidiary, as lessee or sublessee under a lease of real or personal property, but shall be exclusive of any amounts required to be paid by the Company or a Subsidiary (whether or not designated as rents or additional rents) on account of maintenance, repairs, insurance, taxes and similar charges. Fixed rents under any so-called "percentage leases" shall be computed solely on the basis of the minimum rents, if any, required to be paid by the lessee regardless of sales volume or gross revenues." -13- 15 "'Requisite Holders' shall mean the holders of at least 66-2/3% in aggregate principal amount of outstanding Notes." "'Senior Indebtedness' shall mean and include the Notes and all other outstanding Indebtedness of the Company which is not expressed to be junior or subordinate to any other Indebtedness of the Company." "'Subsidiary Guaranty' shall mean those certain Guaranties of Payment of Debt, each dated as of August 15, 1997, executed and delivered by AS International, Inc., Elkhart Products Corporation, Wheeltek Inc. and Amcast Investment Services Corporation in favor of the holders of the Notes and each additional Guaranty of any Subsidiary executed and delivered pursuant to the requirements of Section 6.11(b) or otherwise." "'Unfunded Pension Liability' of any Plan means the amount, if any, by which the actuarial present value of the accumulated plan benefits under the Plan as of the close of its most recent plan year, determined in accordance with statement of Financial Accounting Standards No. 35, based upon the actuarial assumptions used by the Plan's actuary in the most recent annual valuation of the Plan, exceeds the fair market value of the assets allocable thereto, determined in accordance with Section 412 of the Code." Section 1.8. The definitions of the terms Capitalized Lease, Capitalized Rentals, Consolidated Adjusted Assets, Consolidated Adjusted Net Worth, Consolidated Current Assets, Consolidated Current Liabilities, Consolidated Net Earnings, Guaranties, Joint Venture and Maintenance Agreement, as such definitions appear in the Note Agreement immediately prior to the effectiveness of this Agreement, shall be deleted in their entirety. Section 1.9. The Note Agreement shall be and is hereby amended by adding a new Annex IV in the form attached to this Agreements as Exhibit A. SECTION 2. LIMITED WAIVER. Section 2.1. By execution of this Agreement, the Noteholder hereby waives any Default or Event of Default under Section 6.8 of the Note Agreement (after giving effect to the amendments provided for in Section 1 of this Agreement) caused solely by the existence of Consolidated Priority Indebtedness consisting of Indebtedness of Speedline S.p.A. existing at the time Speedline S.p.A. was acquired by the Company. The waiver provided for in this Section 2 shall be effective from the date hereof through and including December 31, 1997, at which time such waiver shall terminate. -14- 16 SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. Section 3.1. To induce the Noteholder to execute and deliver this Agreement, the Company represents and warrants (which representations shall survive the execution and delivery of this Agreement) to the Noteholder that: (a) this Agreement has been duly authorized, executed and delivered by it and this Agreement constitutes the legal, valid and binding obligation, contract and agreement of the Company enforceable against it in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles relating to or limiting creditors' rights generally; (b) the Note Agreement, as amended by this Agreement, constitutes the legal, valid and binding obligation, contract and agreement of the Company enforceable against it in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles relating to or limiting creditors' rights generally; (c) the execution, delivery and performance by the Company of this Agreement (i) has been duly authorized by all requisite corporate action and, if required, shareholder action, (ii) does not require the consent or approval of any governmental or regulatory body or agency, and (iii) will not (A) violate (1) any provision of law, statute, rule or regulation or its certificate of incorporation or bylaws, (2) any order of any court or any rule, regulation or order of any other agency or government binding upon it, or (3) any provision of any material indenture, agreement or other instrument to which it is a party or by which its properties or assets are or may be bound, including, without limitation, the Credit Agreement, or (B) result in a breach or constitute (alone or with due notice or lapse of time or both) a default under any indenture, agreement or other instrument referred to in clause (iii)(A)(3) of this Section 3.1(C), other than any violation, breach or default which individually or in the aggregate could not reasonably be expected to have a material adverse effect; and (d) as of the date hereof and after giving effect to this Agreement, no Default or Event of Default has occurred which is continuing. SECTION 4. CONDITIONS TO EFFECTIVENESS OF THIS AGREEMENT. Section 4.1. This Agreement shall not become effective until, and shall become effective when, each and every one of the following conditions shall have been satisfied: (a) executed counterparts of this Agreement, duly executed by the Company and the Noteholder, shall have been delivered to the Noteholder; -15- 17 (b) copies of the final executed form of the Credit Agreement among the Company, the Banks and the Agent, shall have been delivered to the Noteholder together with copies of each of the Guaranties delivered by the Subsidiaries in connection therewith, which Credit Agreement and Guaranties shall be in form and substance satisfactory to the Noteholder; and (c) the representations and warranties of the Company set forth in Section 3 hereof are true and correct on and with respect to the date hereof and a certificate of a Responsible Officer certifying the same shall have been delivered to the Noteholder. Upon receipt of all of the foregoing, this Agreement shall become effective. Delivery of this Agreement to the Company, duly executed by the Noteholder, shall acknowledge satisfaction of the foregoing conditions. SECTION 5. PAYMENT OF NOTEHOLDER'S COUNSEL FEES AND EXPENSES. Section 5.1. The Company agrees to pay upon demand, the reasonable fees and expenses of Chapman and Cutler, counsel to the Noteholder, in connection with the negotiation, preparation, approval, execution and delivery of this Agreement. SECTION 6. MISCELLANEOUS. Section 6.1. This Agreement shall be construed in connection with and as part of the Note Agreement, and except as modified and expressly amended by this Agreement, all terms, conditions and covenants contained in the Note Agreement and the Notes are hereby ratified and shall be and remain in full force and effect. Section 6.2. Any and all notices, requests, certificates and other instruments executed and delivered after the execution and delivery of this Agreement may refer to the Note Agreement without making specific reference to this Agreement but nevertheless all such references shall include this Agreement unless the context otherwise requires. Section 6.3. The descriptive headings of the various Sections or parts of this Agreement are for convenience only and shall not affect the meaning or construction of any of the provisions hereof. Section 6.4. This Agreement shall be governed by and construed in accordance with Ohio law. -16- 18 Section 6.5. The execution hereof by you shall constitute a contract between us for the uses and purposes hereinabove set forth, and this Agreement may be executed in any number of counterparts, each executed counterpart constituting an original, but all together only one agreement. AMCAST INDUSTRIAL CORPORATION By: /s/ John H. Shuey ---------------------------------- Its Chairman, President and Chief Executive Officer FOURTH AMENDMENT AND LIMITED WAIVER (1989 NOTE AGREEMENT) 19 Accepted and agreed to as of the date first written above: PRINCIPAL MUTUAL LIFE INSURANCE COMPANY By: /s/ Sarah J. Pitts ---------------------------------- Sarah J. Pitts Its Counsel By: /s/ Daniel J. Garrett ---------------------------------- Daniel J. Garrett Its Assistant Director Securities Investment Fourth Amendment EX-4.13 5 EXHIBIT 4.13 1 EXHIBIT 4.13 FOURTH AMENDMENT TO CREDIT AND INTERCREDITOR AGREEMENT ---------------------------------- THIS FOURTH AMENDMENT TO CREDIT AND INTERCREDITOR AGREEMENT, dated as of August 3, 1998 (this "Amendment"), among CASTING TECHNOLOGY COMPANY, an Indiana general partnership (the "Company"), NBD BANK, N.A., a national banking association (successor by assignment to NBD Bank, a Michigan banking corporation) ("NBD"), and THE ASAHI BANK, LTD., a Japanese banking corporation acting through its Chicago Branch ("Asahi") (NBD and Asahi, collectively, the "Banks" and individually, a "Bank"), and NBD BANK, N.A., a national banking association, as agent for the Banks (in such capacity, the "Agent"). RECITALS -------- A. The parties hereto have entered into a Credit and Intercreditor Agreement dated July 28, 1995 (as amended, the "Credit Agreement"), which is in full force and effect. B. The Company desires to amend the Credit Agreement as herein provided, and the Banks and the Agent are willing to so amend the Credit Agreement on the terms set forth herein. AGREEMENT --------- Based upon these recitals, the parties agree as follows: 1. AMENDMENT. Upon the effective date of this Amendment, the Credit Agreement shall be amended as follows: Section 5.2(a) of the Credit Agreement is amended by adding the following paragraph to the end of such subsection: Notwithstanding anything else contained in this Agreement, the Company may incur Indebtedness to the Partners or the Guarantors, or any of them, in aggregate principal amount not to exceed Six Million Dollars ($6,000,000) at any one time outstanding, and make payments of principal and interest thereon (irrespective of the limitations contained in Section 5.2(h)), PROVIDED that, upon the occurrence and during the continuance of any Default or Event of Default, all such Indebtedness to the Partners or the Guarantors shall be subordinated to all Indebtedness now or hereafter owing by the Company to the Banks until all Indebtedness owing by the Company to the Banks has been irrevocably paid in full. 2. REFERENCES TO CREDIT AGREEMENT. From and after the effective date of this Amendment, references to the Credit Agreement in the Credit Agreement and all other documents issued under or with respect thereto (as each of the foregoing is amended hereby or pursuant hereto) shall be deemed to be references to the Credit Agreement as amended hereby. 3. REPRESENTATIONS AND WARRANTIES. The Company represents and Warrants to the Banks and the Agent that: (a) (i) The execution and delivery by the Partners on behalf of the Company and 2 the performance by the Company of this Amendment and all agreements, instruments, and documents delivered pursuant hereto by the Company have been duly authorized by all necessary action and do not and will not violate any provision of any law, rule, regulation, order, judgment, injunction, or award presently in effect applying to the Company, or of the Company's charter, or result in a breach of or constitute a default under any material agreement, lease or instrument to which the Company is a party or by which it or its properties may be bound or affected; (ii) no authorization, consent, approval, license, exemption or filing of a registration with any court or governmental department, agency or instrumentality is or will be necessary to the valid execution, delivery or performance by the Company of this Amendment and all agreements and documents delivered pursuant hereto; and (iii) this Amendment and all agreements and documents delivered pursuant hereto by the Company are the legal, valid and binding obligations of the Company, enforceable against it in accordance with the terms thereof. (b) After giving effect to the amendments contained herein, the representations and warranties contained in Article IV (other than Section 4.6) of the Credit Agreement are true and correct on and as of the effective date hereof with the same force and effect as if made on and as of such effective date. (c) No Default or Event of Default has occurred and is continuing or will exist under the Credit Agreement as of the effective date hereof. 4. MISCELLANEOUS. The terms used but not defined herein shall have the respective meanings ascribed thereto in the Credit Agreement. Except as expressly amended hereby, the Credit Agreement and all other documents issued under or with respect thereto are hereby ratified and confirmed by the Banks, the Agent, and the Company and shall remain in fall force and effect, and the Company acknowledges that it has no defense, offset or counterclaim with respect thereto. 5. COUNTERPARTS. This Amendment may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument and any of the parties hereto may execute this Amendment by signing any such counterpart. 6. EXPENSES. The Company agrees to pay and save the Agent and the Banks harmless from liability for all costs and expenses of the Agent and the Banks arising in respect of this Amendment, including the reasonable fees and expenses of the respective counsel to the Agent and the Banks in connection with preparing and reviewing this Amendment and any related agreements and documents. 7. GOVERNING LAW. This Amendment is a contract made under, and shall be governed by and construed in accordance with, the laws of the State of Michigan applicable to contracts made and to be performed entirely within such state and without giving effect to the choice law principles of such state. -2- 3 IN WITNESS WHEREOF the parties hereto have caused this Amendment to be duly executed and delivered as of the date first written above. CASTING TECHNOLOGY COMPANY By: AMCAST CASTING TECHNOLOGIES, INC., Its General Partner By: /s/ John H. Shuey -------------------------------------- John H. Shuey Its: President And By: IZUMI, INC., its General Partner By: /s/ Tomoaki Izumi -------------------------------------- Tomoaki Izumi Its: Vice President & CEO AMCAST CASTING TECHNOLOGIES, INC., individually By: /s/ John H. Shuey -------------------------------------- John H. Shuey Its: President IZUMI, INC., individually By: -------------------------------------- Its: ---------------------- NBD BANK, N.A., individually and as Agent By: /s/ Edward C. Hathaway -------------------------------------- Edward C. Hathaway Its: First Vice President -3- EX-4.15 6 EXHIBIT 4.15 1 ================================================================================ EXHIBIT 4.15 AMCAST INDUSTRIAL CORPORATION --------------------------------------- FIRST AMENDMENT AND LIMITED WAIVER Dated as of December 31, 1997 to NOTE AGREEMENTS Dated as of November 1, 1995 --------------------------------------- Re: $50,000,000 7.09% Senior Notes, Due November 7, 2005 ================================================================================ 2 FIRST AMENDMENT AND LIMITED WAIVER AGREEMENT THIS FIRST AMENDMENT AND LIMITED WAIVER AGREEMENT dated as of December 31, 1997 (the or this "Agreement"), to the Note Agreements, each dated as of November 1, 1995, is between AMCAST INDUSTRIAL CORPORATION, an Ohio corporation (the "Company"), and each of the institutions which is a signatory to this Agreement (collectively, the "Noteholders"). Capitalized terms used in this Agreement and not defined herein shall have the meanings ascribed to such terms in the Note Agreements referred to below. RECITALS: A. The Company and each of the Noteholders have heretofore entered into separate and several Note Agreements, each dated as of November 1, 1995 (collectively, the "Note Agreements"), pursuant to which the Company has heretofore issued its 7.09% Senior Notes, due November 7, 2005, in the aggregate principal amount of $50,000,000 (the "Notes"). The Noteholders are the holders of 100% of the outstanding principal amount of the Notes. B. The Company has entered into that certain Credit Agreement dated as of August 14, 1997 (the "Credit Agreement"), with the banking institutions named therein (the "Banks") and Keybank National Association, as Agent (the "Agent"), pursuant to which the Banks have made available to the Company up to $200,000,000 aggregate principal amount in revolving credit facilities, which facilities have been guaranteed by certain Subsidiaries of the Company. C. Concurrently with the execution and delivery of the Credit Agreement and the guaranties of Subsidiaries given in connection therewith, and as a condition to the necessary consent of the Noteholders to the execution and delivery by the Company and its Subsidiaries of the same, the Company has heretofore caused to be executed and delivered certain guaranties of Subsidiaries in favor of the Noteholders (the "Subsidiary Guaranties") substantially in the form delivered in favor of the Banks in connection with the Credit Agreement. D. The Company and the Noteholders now desire to amend the Note Agreements in the respects, but only in the respects, hereinafter set forth in order to reflect certain agreements between the Company and the Noteholders arising in connection with the consummation of the Credit Agreement and the execution and delivery of the Subsidiary Guaranties. E. All requirements of law have been fully complied with and all other acts and things necessary to make this Agreement a valid, legal and binding instrument according to its terms for the purposes herein expressed have been done or performed. NOW, THEREFORE, upon the full and complete satisfaction of the conditions precedent to the effectiveness of this Agreement set forth in Section 4.1 hereof, and in consideration of good 3 and valuable consideration the receipt and sufficiency of which is hereby acknowledged, the Company and the Noteholders do hereby agree as follows: SECTION 1. AMENDMENTS. Section 1.1. Section 5.6 of the Note Agreements shall be and is hereby amended in its entirety to read as follows: "Section 5.6. Consolidated Net Worth. The Company will at all times keep and maintain Consolidated Net Worth at an amount not less than (a) $90,000,000 plus (b) 25% of Consolidated Net Earnings computed on a cumulative basis for each of the elapsed fiscal years ending August 31, 1995 through August 31, 1997 plus (c) 50% of Consolidated Net Earnings computed on a cumulative basis for each of the elapsed fiscal years ending after August 31, 1997; provided that notwithstanding that Consolidated Net Earnings for any such elapsed fiscal year may be a deficit figure, no reductions as a result thereof shall be made in the sum to be maintained pursuant hereto." Section 1.2. Section 5.7 of the Note Agreements shall be and is hereby amended in its entirety to read as follows: "Section 5.7. Maintenance of Consolidated Indebtedness. The Company will not at any time permit Consolidated Indebtedness to exceed the percentage of Consolidated Total Capitalization set forth below during each of the periods indicated: PERCENTAGE OF CONSOLIDATED PERIOD TOTAL CAPITALIZATION September 1, 1997 through August 31, 1998 65% September 1, 1998 through August 31, 1999 63% September 1, 1999 and thereafter 60%" Section 1.3. Section 5.8(a)(2) of the Note Agreements shall be and is hereby amended in its entirety to read as follows: "(2) additional Consolidated Priority Indebtedness of the Company and its Subsidiaries incurred after the Closing Date; provided that at the time of creation, issuance, assumption, guarantee or incurrence thereof and after giving effect thereto and to the application of the proceeds thereof: (i) no Default or Event of Default would exist; and -2- 4 (ii) Consolidated Priority Indebtedness would not exceed an amount equal to: (A) 30% of Consolidated Net Worth in the case of any determination made on or prior to August 31, 1999; and (B) 25% of Consolidated Net Worth in the case of any determination made after August 31, 1999." Section 1.4. The following shall be added as a new Section 5.16 of the Note Agreements: "Section 5.16. Additional Security, Collateral and Guaranties. (a) If at any time, pursuant to the terms and conditions of the Credit Agreement, the Company or any existing or newly acquired or formed Subsidiary shall pledge, grant, assign or convey to the Bank Lenders, or any one or more of them, any security or collateral of any kind, then the Company or such Subsidiary shall grant to the holders of the Notes the same security or collateral so that the holders of the Notes shall at all times be secured on an equal and pro rata basis with the Bank Lenders, and the Company shall deliver, or shall cause to be delivered, to the holders of the Notes (i) all such certificates, resolutions, legal opinions and other related items in substantially the same forms as those delivered to and accepted by the Bank Lenders and (ii) all such amendments to this Agreement as may reasonably be deemed necessary by the holders of the Notes in order to reflect the existence of such additional security or collateral. (b) If at any time, pursuant to the terms and conditions of the Credit Agreement, any existing or newly acquired or formed Subsidiary grants to any one or more of the Bank Lenders a guarantee of obligations owing to such Bank Lender (whether pursuant to the Credit Agreement or otherwise), the Company shall cause such Subsidiary to execute and deliver to the holders of the Notes a Guaranty in substantially the same form as the Guaranty delivered to the Bank Lenders, or any one or more of them, and the Company shall deliver, or shall cause to be delivered, to the holders of the Notes (i) all such certificates, resolutions, legal opinions and other related items in substantially the same forms as those delivered to and accepted by the Bank Lenders and (ii) all such amendments to this Agreement as may reasonably be deemed necessary by the holders of the Notes in order to reflect the existence of such Guaranty of the Notes." Section 1.5 Subparagraph (1) of Section 6.1 of the Note Agreements shall be and is hereby amended by deleting the period at the end thereof and replacing it with a semicolon and by adding the word "or" thereafter. Section 1.6. The following shall be added as a new subparagraph (m) to Section 6.1 of the Note Agreements: -3- 5 "(m) Any Subsidiary Guaranty shall cease to be in full force and effect for any reason whatsoever, including, without limitation, a determination by any governmental body or court that such Subsidiary Guaranty is invalid, void or unenforceable or such Subsidiary shall contest or deny in writing the validity or enforceability of any of its obligations under the Subsidiary Guaranty." Section 1.7. The following shall be added as new definitions in alphabetical order to Section 8.1 of the Note Agreements: "'ACT' shall mean Amcast Casting Technologies, Inc., an Indiana corporation and Subsidiary of the Company." "'Bank Lenders' shall mean Keybank National Association and each other bank or financial institution which is now, or hereafter becomes, a lender under the Credit Agreement." "'Credit Agreement' shall mean that certain Credit Agreement dated as of August 14, 1997, by and among the Company, the banking institutions named therein and Keybank National Association, as Agent, as in effect from time to time, including any extension, renewal, refunding or replacement thereof." "'CTC' shall mean Casting Technologies Company, an Indiana general partnership, the general partners of which are ACT and Izumi Industries, Inc., a Delaware corporation." "'CTC Revolving Credit Agreement' shall mean that certain Revolving Credit Agreement dated July, 1995, by and between CTC, as borrower, and NBD Bank and Asahi Bank, as lenders, as amended, modified or supplemented from time to time." "'Preferred Stock' shall mean, in respect of any corporation, shares of the capital stock of such corporation that are entitled to preference or priority over any other shares of the capital stock of such corporation in respect of payment of dividends or distribution of assets upon liquidation." "'Subsidiary Guaranty' shall mean those certain Guaranties of Payment of Debt, each dated as of August 15, 1997, executed and delivered by AS International, Inc., Elkhart Products Corporation, Wheeltek Inc. and Amcast Investment Services Corporation in favor of the holders of the Notes and each additional Guaranty of any Subsidiary executed and delivered pursuant to the requirements of Section 5.16(b) or otherwise." Section 1.8. The definition of "Consolidated Priority Indebtedness" is hereby deleted in its entirety and replaced with the following: "'Consolidated Priority Indebtedness' shall mean the sum of (a) Indebtedness of the Company secured by any Lien other than Liens permitted by Sections 5.9(a)(1) -4- 6 through (8), plus (b) all Indebtedness of the Company's Subsidiaries, provided that, for so long as the cumulative investment of the Company and any of its Subsidiaries in ACT and CTC, measured from the date of acquisition of ACT to the date of any determination hereunder, does not exceed the sum of (i) $25,000,000 plus (ii) an amount equal to investments made by the Company in ACT and CTC after February 1, 1998 which increase the Company's or ACT's ownership interest in CTC above 60%, the Company shall be permitted to exclude from Consolidated Priority Indebtedness an amount equal to the lesser of (y) $15,000,000 or (z) 60% of the Indebtedness outstanding under the CTC Revolving Credit Agreement." SECTION 2. LIMITED WAIVER. Section 2.1. By execution of this Agreement, the Noteholders hereby waive any Default or Event of Default under Section 5.8 of the Note Agreements caused solely by the existence of Consolidated Priority Indebtedness consisting of Indebtedness of Speedline S.p.A. which existed at the time Speedline S.p.A. was acquired by the Company. The waiver provided for in this Section 2 shall be effective from the date hereof through and including December 31, 1997, at which time such waiver shall terminate. SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY Section 3.1. To induce the Noteholders to execute and deliver this Agreement, the Company represents and warrants (which representations shall survive the execution and delivery of this Agreement) to the Noteholders that: (a) this Agreement has been duly authorized, executed and delivered by it and this Agreement constitutes the legal, valid and binding obligation, contract and agreement of the Company enforceable against it in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles relating to or limiting creditors' rights generally; (b) the Note Agreements, as amended by this Agreement, constitute the legal, valid and binding obligations, contracts and agreements of the Company enforceable against it in accordance with their respective terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles relating to or limiting creditors' rights generally; (c) the execution, delivery and performance by the Company of this Agreement (i) has been duly authorized by all requisite corporate action and, if required, shareholder action, (ii) does not require the consent or approval of any governmental or regulatory body or agency, and (iii) will not (A) violate (1) any provision of law, statute, rule or regulation or its certificate of incorporation or bylaws, (2) any order of any court or any rule, regulation or order of any other agency or government binding upon it, or (3) any provision of any material -5- 7 indenture, agreement or other instrument to which it is a party or by which its properties or assets are or may be bound, including, without limitation, the Credit Agreement, or (B) result in a breach or constitute (alone or with due notice or lapse of time or both) a default under any indenture, agreement or other instrument referred to in clause (iii)(A)(3) of this Section 3.1(c), other than any violation, breach or default which individually or in the aggregate could not reasonably be expected to have a material adverse effect; and (d) as of the date hereof and after giving effect to this Agreement, no Default or Event of Default has occurred which is continuing. SECTION 4. CONDITIONS TO EFFECTIVENESS OF THIS AGREEMENT. Section 4.1. This Agreement shall not become effective until, and shall become effective when, each and every one of the following conditions shall have been satisfied: (a) executed counterparts of this Agreement, duly executed by the Company and the holders of at least 66-2/3% of the outstanding principal of the Notes, shall have been delivered to the Noteholders; (b) copies of the final executed form of the Credit Agreement among the Company, the Banks and the Agent, shall have been delivered to the Noteholders together with copies of each of the Guaranties delivered by the Subsidiaries in connection therewith, which Credit Agreement and Guaranties shall be in form and substance satisfactory to the Noteholders; and (c) the representations and warranties of the Company set forth in Section 3 hereof are true and correct on and with respect to the date hereof and a certificate of a Responsible Officer certifying the same shall have been delivered to the Noteholders. Upon receipt of all of the foregoing, this Agreement shall become effective. Delivery of this Agreement to the Company, duly executed by the holders of at least 66-2/3% of the outstanding principal amount of the Notes, shall acknowledge satisfaction of the foregoing conditions. SECTION 5. PAYMENT OF NOTEHOLDERS' COUNSEL FEES AND EXPENSES. Section 5.1. The Company agrees to pay upon demand, the reasonable fees and expenses of Chapman and Cutler, counsel to the Noteholders, in connection with the negotiation, preparation, approval, execution and delivery of this Agreement. SECTION 6. MISCELLANEOUS. Section 6.1. This Agreement shall be construed in connection with and as part of each of the Note Agreements, and except as modified and expressly amended by this -6- 8 Agreement, all terms, conditions and covenants contained in the Note Agreements and the Notes are hereby ratified and shall be and remain in full force and effect. Section 6.2. Any and all notices, requests, certificates and other instruments executed and delivered after the execution and delivery of this Agreement may refer to the Note Agreements without making specific reference to this Agreement but nevertheless all such references shall include this Agreement unless the context otherwise requires. Section 6.3. The descriptive headings of the various Sections or parts of this Agreement are for convenience only and shall not affect the meaning or construction of any of the provisions hereof. Section 6.4. This Agreement shall be governed by and construed in accordance with Ohio law. -7- 9 Section 6.5. The execution hereof by you shall constitute a contract between us for the uses and purposes hereinabove set forth, and this Agreement may be executed in any number of counterparts, each executed counterpart constituting an original, but all together only one agreement. AMCAST INDUSTRIAL CORPORATION By: /s/ John H. Shuey -------------------------------------- Its Chairman, President and Chief Executive Officer FIRST AMENDMENT AND LIMITED WAIVER (1995 NOTE AGREEMENTS) 10 Accepted and agreed to as of the date first written above: THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY By: /s/ Jerome R. Baier -------------------------------------- Jerome R. Baier Its Vice President PRINCIPAL MUTUAL LIFE INSURANCE COMPANY By: /s/ Sarah J. Pitts -------------------------------------- Sarah J. Pitts Its Counsel By: /s/ Daniel J. Garrett -------------------------------------- Daniel J. Garrett Its Assistant Director Securities Investment First Amendment EX-10.12 7 EXHIBIT 10.12 1 EXHIBIT 10.12 CHANGE OF CONTROL AGREEMENT This Agreement entered into this 31st day December, 1997, by and between Amcast Industrial Corporation (the "Company") and John H. Shuey (the "Executive"). WHEREAS, Executive has performed valuable services to Company in senior executive positions in the past and; WHEREAS, it is the desire of the Company to continue to retain the services of Executive in the future as the Company's chief executive officer and; WHEREAS, the Company recognizes that as is the case with most publicly held corporations, the possibility of a change in control may raise distracting and disrupting uncertainties especially for the chief executive officer, may create a conflict and make it difficult for Executive to give his whole-hearted attention and devotion to the performance of his duties, and may even lead to his departure, all to the detriment of the best interests of the Company and its shareholders. WHEREAS, the Board of Directors of the Company (the "Board") has determined that the best interests of the Company and its shareholders will be served by assuring Executive, the protection provided by an agreement which defines the respective rights and obligations of the Company and the Executive in the event of termination of employment subsequent to a change in control of the Company and to induce Executive to remain in the employ of the Company. NOW, THEREFORE, the parties agree that this agreement sets forth the severance benefits which the Company agrees will be provided to Executive in the event Executive's employment with the Company [or, in the case of a transaction described in clause (iv) of paragraph 2, with the successor to the Company (a "Successor")] is terminated subsequent to a "change in control of the Company" under the circumstances described below. Except where the context otherwise indicates, the term "Company" hereinafter includes the Company and any Successor. 1. OPERATION AND TERM OF AGREEMENT. This agreement, although effective immediately, shall not become operative unless and until there has been a change in control of the Company. None of the provisions of this agreement shall be applicable to any termination of Executive's employment, however occurring, which is effective prior to a change in control of the Company. This agreement shall continue until the later of December 31, 2000 or two years after the occurrence of a change in control of the Company, provided such change in control occurs on or before December 31, 2000, subject to extension beyond that date by mutual written consent. This agreement will be reviewed with Executive between January 1, 2000 and July 31, 2000, for the purpose of determining whether or not an extension beyond December 31, 2000 is mutually agreeable and, if so, on what basis and for how long. 2 CHANGE OF CONTROL AGREEMENT 2. CHANGE IN CONTROL. No benefits shall be payable hereunder unless there shall have been a change in control of the Company, as set forth below. For purposes of this agreement, a "change in control of the Company" shall mean and be deemed to have occurred on (i) the date upon which the Company is provided a copy of a Schedule 13D, filed pursuant to Section 13(d) of the Securities Exchange Act of 1934 (the "1934 Act"), indicating that a group or person, as defined in Rule 13d-3 under the 1934 Act, has become the beneficial owner of 20% or more of the outstanding Voting Shares of the Company or the date upon which the Company first learns that a person or group has become the beneficial owner of 20% or more of the outstanding Voting Shares of the Company if a Schedule 13D is not filed; (ii) the date of a change in the composition of the Board of Directors of the Company such that individuals who were members of the Board of Directors on the date two years prior to such change (or who were subsequently elected to fill a vacancy in the Board, or were subsequently nominated for election by the Company's shareholders, by the affirmative vote of at least two-thirds of the directors then still in office who were directors at the beginning of such two year period) no longer constitute a majority of the Board of Directors of the Company; (iii) the date the shareholders of the Company approve a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the holders of the Voting Shares of the Company outstanding immediately prior to the merger or consolidation continuing to own immediately after the merger or consolidation 80% or more of the Voting Shares of the Company or the surviving entity, if the Company is not the surviving entity in the merger or consolidation; or (iv) the date shareholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all the Company's assets. "Voting Shares" means any securities of the Company which vote generally in the election of directors. 3. TERMINATION FOLLOWING CHANGE IN CONTROL. (A) If any of the events described in paragraph 2 constituting a change in control of the Company shall have occurred, then upon any subsequent termination of Executive's employment at any time within two years following the occurrence of such event, Executive shall be entitled to the benefits provided by this agreement, as set forth in paragraph 5, unless such termination is for Cause. (B) As used in this agreement, the term "Cause" shall have the meaning set forth below: (i) Cause. "Cause" shall mean (a) the willful and continued failure by Executive to substantially perform Executive's duties with the Company (other than any such failure resulting from Executive's physical or mental illness or other physical or mental incapacity), after a demand for substantial -2- 3 CHANGE OF CONTROL AGREEMENT performance is delivered to Executive by the Board which specifically identifies the manner in which the Board believes that Executive has not substantially performed Executive's duties, or (b) the willful engaging by Executive in gross misconduct which is materially and demonstrably injurious to the Company resulting or intended to result, directly or indirectly, in substantial personal gain or substantial personal enrichment at the expense of the Company. For purposes of this subparagraph, no act, or failure to act, on Executive's part shall be considered "willful" unless done, or omitted to be done, by Executive not in good faith and without reasonable belief that Executive's action or omission was in the best interests of the Company. Notwithstanding the foregoing, Cause shall not be deemed to exist unless and until there shall have been delivered to Executive a copy of a resolution duly adopted by the affirmative vote of not less than three-fourths of the number of directors then in office at a meeting of the Board called and held for that purpose (after reasonable notice to Executive and an opportunity for Executive, together with Executive's counsel, to be heard before the Board), finding that in the good faith opinion of the Board Executive is guilty of conduct set forth above in clauses (a) or (b) of the first sentence of this subparagraph and specifying the particulars thereof in detail. (C) If subsequent to a change in control of the Company Executive's employment is terminated by the Company for Cause, the Company shall pay Executive's full salary through the Date of Termination at Executive's annual base salary rate in effect at the time Notice of Termination is given, and Executive shall also receive all accrued or vested benefits of any kind to which Executive is, or would otherwise have been, entitled through the Date of Termination (as defined in paragraph 4), and the Company shall thereupon have no further obligation to Executive under this agreement. 4. NOTICE AND DATE OF TERMINATION. (A) Any termination of Executive's employment subsequent to a change in control of the Company shall be consummated by written Notice of Termination given to the other party. For purposes of this agreement, "Notice of Termination" shall mean a notice which indicates the specific termination provision or provisions in this agreement relied upon, if any, and sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Executive's employment. (B) "Date of Termination" shall mean (i) if Executive's employment is terminated by the Company for Cause, the date specified in the Notice of Termination or the date on which the meeting of the Board referred to in subparagraph 3(B)(i) is concluded, whichever date is the later; or (ii) if Executive's employment is -3- 4 CHANGE OF CONTROL AGREEMENT terminated for any other reason, the date on which Notice of Termination is given or the effective date specified in the Notice, whichever is later. For purposes of this agreement, termination of Executive's employment shall be deemed to have occurred within two years following the occurrence of a change in control of the Company if the Date of Termination is within such two year period. 5. COMPENSATION AND BENEFITS UPON TERMINATION. (A) "Incentive Compensation" shall mean the annual cash payment awarded under the Annual Incentive Program (AIP) or other plan which replaces the AIP but not including any awards under any stock option, stock grant, stock rights, or similar plan or any award under any company sponsored profit sharing, pension, 401k, or similar savings plan. (B) "Long Term Incentive Compensation" shall mean compensation payable under the terms of the Amcast (LTIP) or any other plan which replaced the LTIP. (C) The compensation and benefits to be provided to Executive pursuant to paragraph 3 of this agreement upon termination of Executive's employment with the Company for any reason other than Cause within two years following a change in control of the Company include the following: (i) Subject to the provisions of paragraph 8 hereof, the Company shall pay to Executive as severance pay in a lump sum in cash on the first day following the Date of Termination, the following amounts: (a) Executive's full salary through the Date of Termination at Executive's annual base salary rate in effect at the time Notice of Termination is given; and also the amount of Incentive Compensation and Long Term Incentive Compensation to any completed period or periods which has been earned by or awarded to Executive but which has not yet been paid to Executive. (b) In lieu of any further salary payments to Executive for periods subsequent to the Date of Termination, an amount (the "Additional Compensation Payment") equal to three hundred percent (300%) of the sum of Executive's annual base salary at the rate in effect as of the Date of Termination (or, if higher, at the rate in effect at the time of the change in control) plus an amount equal to three times the average annual amount awarded to Executive as Incentive Compensation for the two years immediately preceding the year during which the Date of Termination occurs (whether or not fully paid). -4- 5 CHANGE OF CONTROL AGREEMENT (c) All amounts due Executive under the terms of the LTIP as a result of a change of control. (d) An amount in cash equal to the aggregate spread between the exercise prices of all options granted to Executive under the Company's existing stock option plans or any stock option plan adopted by the Company subsequent to the date hereof ("Options") which are then outstanding, whether or not then fully exercisable, and the higher of (a) the Fair Market Value of Common Share of the Company ("Company Shares") on the Date of Termination or (b) the average price per Company Share actually paid by the acquiring party in connection with any change in control of the Company. As used in this subparagraph, "Fair Market Value" shall mean (1) in the event the Company Shares are listed on any exchange or in the NASD National Market System, the last sale price on such exchange or System on the Date of Termination (or last trading date prior thereto) or, if there are no sales on such date, the mean between the representative bid and asked prices for Company Shares on such exchange or System at the close of business on such date or (2) in the event that there is then no public market for the Company Shares or that trading in the Company Shares is sporadic and the mean between any bid and asked prices is not representative of fair market value, the fair market value of the Company Shares determined in accordance with Section 2031-2(f) of the Treasury Regulations or any successor provision thereto. Any Option for which payment is made as prescribed in this subparagraph (c) shall be canceled effective upon the making of such payment. (e) All legal fees and expenses reasonably incurred by Executive in good faith as a result of such termination (including all such fees and expenses, if any, incurred in contesting or disputing any such termination or in seeking to obtain or enforce any right or benefit provided by this agreement). (f) Interest at a rate equal to three percent (3%) per annum plus the per annum rate announced from time to time by the First National Bank of Chicago as its "prime rate", compounded daily from the due date of any payment required to be made by the company under any provision of the agreement through the date such payment is actually made. (ii) The Company shall, at its expense, continue to provide to Executive financial planning and tax preparation services the same or similar to those provided to Executive prior to the change of control and to continue to -5- 6 CHANGE OF CONTROL AGREEMENT maintain in full force and effect for Executive's continued benefit all life insurance, medical, health, and accident plans, programs and arrangements in which Executive was entitled to participate at the time of the change in control, provided that Executive's continued participation is possible under the terms of such plans, programs and arrangements. In the event that the terms of any such plan, program, or arrangement do not permit Executive's continued participation or that any such plan, program or arrangement has been or is discontinued or the benefits thereunder have been or are materially reduced, the Company shall arrange to provide, at its expense, benefits to Executive which are substantially similar to those which Executive was entitled to receive under such plan, program or arrangement at the time of the change in control. The Company's obligation under this subparagraph (ii) shall terminate on the earliest of the following dates: (a) the third anniversary date of the Date of Termination, (b) the date an essentially equivalent and no less favorable benefit is made available to Executive by a subsequent employer or (c) the date that would have been Executive's normal retirement date under the Company's defined benefit pension plan for salaried employees had Executives remained employed by the Company. (iii) In the event that because of their relationship to Executive, members of Executive's family or other individuals are covered by any plan, program, or arrangement described in subparagraph (ii) above immediately prior to the Date of Termination, the provisions set forth in subparagraph (ii) shall apply equally to require the continued coverage of such persons; provided, however, that if under the terms of any such plan, program or arrangement any such person would have ceased to be eligible for coverage during the period in which the Company is obligated to continue coverage for Executive, nothing set forth herein shall obligate the Company to continue to provide coverage for such person beyond the date such coverage would have ceased even if Executive had remained an employee of the Company. (iv) The Company shall enable Executive to purchase the automobile, if any, which the Company was providing for Executive's use at the time Notice of Termination was given at the wholesale value as set out in the latest Black Book published by National Auto Research Division of Hearst Business Media Corporation, of such automobile at such time. (E) In the event that any payment to the Executive (whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the Company, any person whose actions result in a change of control or any person affiliated with the Company or such persons) shall be subject to the tax (the "Excise Tax") imposed by Section 4999 of the Internal revenue Code of 1954, as amended (the -6- 7 CHANGE OF CONTROL AGREEMENT "Code") or any successor provision, the Company shall pay to the Executive, prior to the date upon which the Executive is required to pay the Excise Tax, an additional amount (the "Gross-Up Payment"), appropriately calculated by the Company's independent auditor, equal to the Excise Tax on such payment and any additional federal, state, local tax and additional Excise Tax incurred by the Executive in respect of such Gross-Up Payment. For purposes of determining whether any payment to the Executive is subject to the Excise Tax (i) all payments received or to be received by the Executive in connection with a change of control of the Company or the termination of employment of the Executive (whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the Company, any person whose action results in a change of control or any person affiliated with the Company or such persons) shall be treated as "parachute payments" within the meaning of Section 280(G)(b)(2) of the Code, and all "excess parachute payments" within the meaning of Section 280 (G)(b)(i) shall be treated as subject to the Excise Tax and (ii) the value of any noncash benefits on any deferred payment or benefit shall be determined by the Company's independent auditors in accordance with the principles of Sections 280 (G)(d)(3) and (7) of the Code. For purposes of determining the amount of the Gross-Up Payment, unless the Executive notifies the Company's independent auditor to the contrary the Executive shall be deemed to pay federal income taxation at the maximum applicable individual rate in the calendar year in which the Gross-Up Payment is to be made and taxes at the maximum applicable rate in the state and locality of the Executive's residence on the Date of Termination, net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes. In the event that the Excise Tax is subsequently finally determined to be less than the amount taken into account hereunder at the time of termination of the Executive's employment, the Executive shall repay to the Company at the time that the amount of such reduction in Excise Tax is finally determined the portion of the Gross-Up Payment attributable to such reduction plus interest on the amount of such repayment at the then current prime rate. (F) Executive shall not be required to mitigate the amount of any payment provided for in this agreement by seeking other employment or otherwise; provided, however, that in the event that Executive shall obtain other employment at any time within three years immediately following Executive's Date of Termination, 20% of all earnings obtained by reason of such other employment during the three year period immediately following Executive's Date of Termination shall be payable to the Company in full satisfaction of any obligation Executive has to mitigate payment made to Executive by the Company. Upon obtaining any such other employment, Executive, within thirty (30) days thereof, shall notify the Company in writing of such other employment and the aggregate compensation (including Incentive Compensation, bonuses and all other forms -7- 8 CHANGE OF CONTROL AGREEMENT of cash and contingent remuneration) to which Executive will be entitled. During each of the three years immediately following Executive's Date of Termination, Executive shall provide the Company, on or before April 15 of each year following such year, a photostatic copy of Executive's federal income tax return (including all schedules and exhibits thereto), as filed with the Internal Revenue Service for the preceding calendar year. 6. RIGHTS AS FORMER EMPLOYEE. Nothing contained in this agreement shall be construed as preventing Executive, and shall not prevent Executive, following any termination of Executive's employment whether pursuant to this agreement or otherwise, from thereafter participating in any benefit or insurance plans, programs or arrangements (including without limitation, any retirement plans or programs) in the same manner and to the same extent that Executive would have been entitled to participate as a former employee of the Company had this agreement not have been executed, except, however, Executive shall not be entitled to any severance payments under any severance pay programs of the Company (other than this agreement) if Executive is paid the benefits provided for under this agreement. 7. SUCCESSORS. The Company shall require any Successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company, by agreement in form and substance satisfactory to Executive, to expressly assume and agree to perform this agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. Failure of the Company to obtain such agreement prior to the effectiveness of such succession shall be a breach of this agreement and shall entitle Executive to compensation from the Company in the same amount and on the same terms as Executive would be entitled hereunder if Executive terminated Executive's employment other than for cause, except that for purposes of implementing the foregoing, the date on which any such succession becomes effective shall be deemed the Date of Termination. This agreement shall inure to the benefit of and be enforceable by Executive's personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If Executive should die while any amounts would still be payable to Executive hereunder if Executive had continued to live, all such amounts, unless otherwise provided herein, shall be paid to such beneficiary or beneficiaries as Executive shall have designated by written notice delivered to the Company prior to Executive's death or, failing such written notice, to Executive's estate. -8- 9 CHANGE OF CONTROL AGREEMENT 8. UNAUTHORIZED DISCLOSURE; INVENTIONS. (A) During the period of Executive's employment hereunder, and for a period of five (5) years following the termination of such employment, Executive hereby agrees that Executive will not, without the written consent of the Board or a person authorized thereby, disclose to any person, other than an employee of the Company, a person to whom disclosure is reasonably necessary or appropriate in connection with the performance by Executive of Executive's duties as an executive of the Company or pursuant to any order or process of any court or regulatory agency, any material confidential information obtained by Executive while in the employ of the Company with respect to any of the Company's products, improvements, formulae, designs or styles, processes, customers, methods of distribution or methods of manufacture; provided, however, that confidential information shall not include any information known generally to the public (other than as a result of unauthorized disclosure by Executive) or any information of a type not otherwise considered confidential by persons engaged in the same business or a business similar to that conducted by the Company. (B) INVENTIONS. Any and all inventions made, developed or created by Executive (whether at the request or suggestion of the Company or otherwise, whether alone or in conjunction with others, and whether during regular hours of work or otherwise) during the period of Executive's employment by the Company, which may be directly or indirectly useful in, or relate to, the business of or tests being carried out by the Company or any of its subsidiaries or affiliates, will be promptly and fully disclosed by Executive to an appropriate executive officer of the Company and shall be the Company's exclusive property as against Executive, and Executive will promptly deliver to an appropriate executive officer of the Company all papers, drawings, models, data and other material relating to any invention made, developed or created by Executive as aforesaid. Executive will, upon the Company's request and without any payment therefor, execute any documents necessary or advisable in the opinion of the Company's counsel to direct issuance of patents to the Company with respect to such inventions as are to be the Company's exclusive property as against Executive under this subsection (b) or to vest in the Company title to such inventions as against the Executive, the expense of securing any patent, however, to be borne by the Company. (C) The foregoing provision of this Section 8 shall be binding upon the Executive's heirs, successors and legal representatives. -9- 10 CHANGE OF CONTROL AGREEMENT 9. NOTICES. All notices required or permitted to be given under this agreement shall be in writing and shall be mailed (postage prepaid by either registered or certified mail) or delivered, if to the Company, addressed to: Amcast Industrial Corporation 7887 Washington Village Drive Dayton, Ohio 45459 Attention: Secretary and if to Executive, addressed to: John H. Shuey 696 Uplands Camp Road Dayton, Ohio 45419 Either party may change the address to which notices to such party are to be directed by giving written notice of such change to the other party in the manner specified in this paragraph. All notices, including without limitation, any Notice of Termination, shall be deemed to have been given upon the date of actual receipt of the recipient party. 10. ARBITRATION. Any dispute or controversy arising out of or relating to this agreement shall be settled by arbitration in Dayton, Ohio, in accordance with the rules then obtaining of the American Arbitration Association, and judgment may be entered on the arbitrator's award in any court having jurisdiction. The decision of such arbitrator shall be final, binding, and not appealable. 11. MISCELLANEOUS. No provision of this agreement may be modified, waived, or discharged unless such waiver, modification or discharge is agreed to in writing, signed by Executive and such officer of the Company as may be specifically designated by the Board. No waiver by either party hereto at any time of any breach by the other party hereto of, or of compliance by such other party with, any condition or provision of this agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not set forth expressly in this agreement. 12. GOVERNING LAW. The validity, interpretation, construction and performance of this agreement shall be governed by the laws of the State of Ohio, without giving effect to the principles of conflicts of law thereof. -10- 11 CHANGE OF CONTROL AGREEMENT 13. VALIDITY. The invalidity or unenforceability of any provision of this agreement shall not affect the validity or enforceability of any other provision, which shall remain in full force and effect. EXECUTIVE AMCAST INDUSTRIAL CORPORATION /s/ John H. Shuey By: /s/ William G. Roth - ------------------------------ ----------------------------------- John H. Shuey William G. Roth 12/31/97 Title: Chairman, Compensation Committee - ------------------------------ ---------------------------------- Date 12/31/97 --------------------------------- Date
-11- EX-13.1 8 EXHIBIT 13.1 1 EXHIBIT 13.1 MANAGEMENT'S DISCUSSION OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ($ in thousands except per share amounts) 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 financial statements and notes thereto. ACQUISITIONS, DIVESTITURES, AND RESTRUCTURING At the end of 1997, the Company completed a significant acquisition that impacts the comparison of financial results between 1998 and 1997. On August 19, 1997, the Company acquired all of the outstanding stock of Speedline S.p.A. (Speedline), a major European manufacturer of light-alloy wheels serving the automotive original equipment market located near Padova, Italy. Accordingly, the acquisition was reflected in the August 31, 1997 year-end balance sheet, but had no material effect on 1997 operating results. Operations of Speedline are included for periods ending one month prior to the Company's fiscal period to ensure timely preparation of the consolidated financial statements. Thus, the consolidated financial statements for 1998 include financial results for Speedline for the eleven-month period of September 1997 through July 1998. Primarily as a result of the acquisition of Speedline, the percentage of the Company's sales derived from the Engineered Components segment increased to 68.6% in 1998. During the third quarter of 1998, the Company completed two transactions that had an impact on the Company's financial results as well as on the comparison between 1998 and 1997. Effective March 30, 1998, the Company sold its Rancho Cucamonga, California investment casting operation, Amcast Precision, for $25,445 in cash. The transaction resulted in a pre-tax gain of $12,048. The facility, acquired by Amcast in 1987, produces ferrous and nonferrous castings for the aerospace industry. Sales of approximately $19,000 in 1997 were included in the Engineered Components segment. This was the only Amcast operation involved in the aerospace industry. On April 9, 1998, the Company acquired Lee Brass Company, a privately-owned company located in Anniston, Alabama. Lee Brass is a major manufacturer of cast brass products for residential, commercial, and industrial plumbing systems. The purchase price was approximately $16,100 consisting of cash payments of $11,700 and debt assumption of $4,400. The acquisition resulted in goodwill of $6,300. Sales of Lee Brass for the twelve months ended December 31, 1997, were approximately $39,000. Financial results for Lee Brass are included in the Flow Control Products segment since the date of acquisition. Following the acquisition of Lee Brass, the Company announced a plan to consolidate its two brass operations and subse- 2 quently ceased production at its Flagg Brass operation located in Stowe, Pennsylvania. Expected to be completed by December 31, 1998, the consolidation plan includes the transfer of certain product lines to Lee Brass, the sale or closure of the Flagg Brass facility, and the termination of approximately 100 salaried and hourly personnel. In connection with the consolidation plan, during the third quarter the Company recorded a restructuring charge of $5,800 for facility exit costs and a charge of $2,200, included in cost of sales, primarily for a non-cash write-down of inventory to its net realizable value. Key components of the $5,800 restructuring charge are $4,900 for a non-cash write-down of assets to their net realizable value, $500 for severance and other termination benefits, and $400 for other facility closure costs. As of August 31, 1998, approximately 97 associates had been terminated and substantially all of the severance and facility closure costs had been charged against the liability, with the majority of the remaining costs expected to be spent by December 31, 1998. Sales of Flagg Brass in 1997 were approximately $9,000 and were included in the Flow Control Products segment. The Company's consolidated financial results are not expected to be significantly affected by the closure of Flagg Brass and the transfer of certain product lines to Lee Brass. During the third quarter, the Company also re-evaluated its reserves related to several iron foundries previously closed in the 1980's and early 1990's. As a result, a $4,000 restructuring charge was recorded to cover higher than expected medical benefits, workers compensation expenses, and legal costs for environmental and other matters related to these previously closed facilities. RESULTS OF OPERATIONS In 1998, total Company sales increased 48% to $574,414 due primarily to the acquisitions of Speedline and Lee Brass and by growth of its aluminum components business. By segment, Engineered Components sales increased 75% primarily due to the inclusion of Speedline sales and the increased aluminum component sales. Flow Control Products sales increased 11.4% due to the inclusion of Lee Brass and increased sales of the Company's copper and brass plumbing fitting products. In 1997, the Company experienced growth in net sales of 12.5% from $343,934 in 1996 to $387,051. By segment, 1997 Flow Control Products sales increased slightly while Engineered Components sales increased 21.8%. Volume increases in both segments increased total net sales by 15%; however, reduced prices partially offset the favorable impact of the increased volume. Gross profit was $93,004, $69,040, and $70,696 in 1998, 1997, and 1996, respectively. As a percentage of sales, gross profit decreased to 16.2% in 1998 from 17.8% in 1997 and 20.6% in 1996. The decrease in gross profit percentage in 1998 reflects a change in the Company's sales mix to a higher percentage of Engineered Component product sales, which generally have lower gross margins than Flow Control Products and, to a lesser degree, operating inefficiencies encountered at one of the Company's automotive component plants in the first half of the year. The gross profit percentage for 1998 was also impacted by a one-time charge ($2,200) related to closing the Flagg Brass facility. Higher volume provided increased gross profit in 1997 as compared to 1996; however, this improvement was offset by new facility start-up costs, a cumulative $3,500 charge for overstated inventory, and an unfavorable sales mix. Selling, general, and administrative (SG&A) expenses were $57,294, $41,798, and $43,368 in 1998, 1997, and 1996, respectively. SG&A expense increased in 1998 as a result of the inclusion of Speedline and Lee Brass. SG&A expense decreased in 1997 compared to 1996 due to reduced commissions in the Flow Control segment and lower administrative expenses in the Flow Control segment and at the corporate office. As a percentage of sales, SG&A decreased to 10.0% in 1998 from 10.8% in 1997 and 12.6% in 1996. The decrease in 1998 is primarily due to higher sales volumes in the Engineered Components segment, which generally has lower SG&A expenses. Higher sales volume and reduced spending levels contributed to the decrease in 1997. For 1998, the Company's pre-tax share of losses from Casting Technology Company (CTC), the Company's joint venture with Izumi Industries, was $1,000 compared with $2,416 in 1997. The 1998 results of CTC were significantly impacted by lost sales resulting from a major General Motors work stoppage. The launch of several new automotive products at CTC in 1997 resulted in significant inefficiencies and high launch-related costs associated with meeting required volumes. Interest expense of $15,045 in 1998 increased from $5,135 in 1997 and $2,348 in 1996. Interest expense increased in 1998 primarily due to the cost of financing the Speedline operation, and as a result of the impact of the General Motors work stoppage on the Company's operating income and working capital. Interest increased in 1997 primarily due to lower interest capitalization and, to a lesser degree, higher debt levels. There was no interest capitalized during 1998. Capitalized interest was $145, and $2,038 in 1997 and 1996, respectively. A portion of the amounts borrowed by the Company was used to finance plant construction and expansion and, accordingly, the interest related to such long-term projects was capitalized. The effective tax rate for 1998, 1997 and 1996 was 27.0%, 35.1%, and 35.6%, respectively. Changes in the effective tax rates primarily reflect the level of federal and state tax credits applicable to U.S. taxes, and a one-time adjustment of $2,562 resulting from a reduction of Italian tax rates from 53.2% to 41.3%. 3 FLOW CONTROL PRODUCTS Net sales of the Flow Control Products segment were $180,596 in 1998, compared with $162,150 in 1997 and $159,323 in 1996. Increased volumes of copper and brass plumbing fittings in 1998 resulting from the Lee Brass acquisition and higher product sales of the Company's copper and brass fittings provided a 15.4% increase over 1997. Pricing pressures which were largely offset by lower material costs reduced sales by 4.1%. As a result of the higher volume, operating income increased to $27,931 in 1998, an increase of 14.7% over the $24,358 operating income achieved in 1997. Increased volumes of copper and brass plumbing fittings in 1997 provided a 5.5% increase in net sales. However, lower selling prices partially offset this increase as the Company experienced competitive pricing pressures in much of the second half of 1997. As a result, the operating income of $24,358 in 1997 decreased slightly from 1996. ENGINEERED COMPONENTS Net sales of the Engineered Components segment were $393,818 in 1998 compared with $224,901 in 1997 and $184,611 in 1996. The increase in sales was due primarily to the addition of Speedline in 1998. The sales of aluminum brake, suspension, and chassis components and North American aluminum wheels were running at a rate nearly 14% higher than in 1997 before the impact of the General Motors work stoppage, which more than offset those gains in the last quarter of 1998. Operating income increased over 100% to $19,609 in 1998 compared to the $9,531 achieved in 1997. The increase was due primarily to Speedline and reduced start-up amortization expense. The improvement in volume at the Company's North American automotive operations in the first nine months of 1998 added significantly to operating income but was more than offset by the impact of the General Motors work stoppage in the fourth quarter and a less favorable product mix. The sales increase for 1997 resulted primarily from higher demand for the Company's aluminum wheels, the full-year effect of the Company's new automotive plant in Ohio, and the introduction of several new products for automotive suspensions. Operating income of $9,531 in 1997 was slightly higher than 1996 as new facility start-up costs partially offset the impact of increased volume. In addition, the Company recorded a one-time cumulative non-cash charge of $3,500 to reduce overstated inventory values at the Company's Amcast Precision unit. LIQUIDITY AND CAPITAL RESOURCES Net cash provided by operations was $9,580, $30,675, and $33,638 in 1998, 1997, and 1996, respectively. In each of the three years, cash was primarily provided by net income and depreciation. During 1998, working capital, excluding short-term and current debt, increased 26% as a result of the Lee Brass acquisition and the Precision divestiture, coupled with the increased sales volume and inventory build during the General Motors work stoppage. Accounts payable increased in 1997 due to acquisition-related expenses, purchases for expansion activities, and increased sales activity. Net cash used by investing activities during 1998 was $33,018, compared with $91,954 in 1997 and $51,223 in 1996. Investing activities for 1998 include $12,247 primarily for the Lee Brass acquisition and for 1997 include $48,486 for the Speedline acquisition discussed above. Capital expenditures totaled $46,763, $40,377, and $48,640, in 1998, 1997, and 1996, respectively. To support business expansion activities, investments were made in property, plant, and equipment and in the Company's joint venture, Casting Technology Company. At August 31, 1998, the Company had $10,938 of commitments for capital expenditures to be made in 1999, primarily for the Engineered Components segment. Net cash provided by financing activities was $21,033 in 1998, as compared with $65,474 in 1997 and $21,712 for 1996, respectively. Net cash provided by financing activities in 1997 include $70,000 in borrowings under the Company's new credit agreement, discussed below, primarily to finance the Speedline acquisition. In 1996, increased borrowings were used to fund business expansion. In 1996, the Company completed a private placement of $50,000 in senior notes that mature in November 2005 and replaced outstanding debt by $24,321. During 1998, the Company replaced $46,807 of its Speedline debt with borrowings under its $200 million revolver. On August 14, 1997, the Company replaced its prior credit facility with a new Credit Agreement (the Agreement) that provides for up to $200,000 in borrowings through 2002. At August 31, 1998, the Company had unused borrowing capacity of $11,100 under the most restrictive debt covenant of the Agreement. The Company also has lines of credit totaling $27,000, of which $8,900 was used at August 31, 1998. In addition, Speedline has short-term lines of credit totaling $55,900, of which $40,100 was available at July 31, 1998. The ratio of long-term debt as a percent of capital increased to 57.5% at August 31, 1998 from 47.9% at August 31, 1997. The increase reflects the replacement of short-term debt with long-term debt at Speedline as well as additional borrowings to support business expansion and working capital needs. Book value per common share at August 31, 1998, was $17.47, up from $17.24 for the prior year. One million preferred shares and 5.8 million common shares are authorized and available for future issuance. Management believes the Company has adequate financial resources to meet its future needs. CONTINGENCIES The Company, as is normal for the industry in which it operates, is involved in certain legal proceedings and subject to certain claims and site investigations that arise under the environmental laws and which have not been finally adjudicated. 4 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 financial statements. At August 31, 1998, the Company had reserves of $1,700 accrued 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, results of operations, or cash flows. The Company is presently unaware of the existence of any potential material environmental costs that are likely to occur in connection with disposition of any of its property. IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS During 1998, the Company adopted Statement of Financial Accounting Standards (SFAS) No. 128, "Earnings per Share," which establishes new standards for computing and presenting earnings per share. SFAS No. 128 requires the Company to report both basic earnings per share, which is based on the weighted-average number of common shares outstanding, and diluted earnings per share, which is based on the weighted-average number of common shares outstanding plus all potential dilutive common shares outstanding. Adoption of the statement had no effect on the Company's results of operations, financial position, or cash flows. However, as required, the Company restated earnings per share for all prior periods to present diluted earnings per share. Basic earnings per share are unchanged from previously reported earnings per share amounts. In April 1998, the American Institute of Certified Public Accountants issued Statement of Position (SOP) No. 98-5, "Reporting on the Costs of Start-Up Activities." SOP No. 98-5 provides guidance on the financial reporting of start-up and organization costs and requires such costs to be expensed as incurred, with the effect of initial adoption reported as a cumulative effect of a change in accounting principle. The Company has adopted SOP No. 98-5 retroactively to the first quarter of 1998 as required under the SOP. The total amount of deferred start-up reported as a cumulative effect of a change in accounting principle is $8,588. This includes the effect of the adoption of SOP No. 98-5 by Casting Technology Company, the Company's 60% owned joint venture with Izumi Industries. The Company's share of CTC's cumulative effect of a change in accounting principle is $3,529. The impact of adoption of the SOP on previously reported operating income will be to change the first quarter 1998 results from $9,705 to $10,329, the second quarter 1998 from $8,380 to $8,760, and the third quarter 1998 from $12,608 to $12,894. Reported earnings per diluted share will change in the first quarter of 1998 from $.44 to a loss of $.44, in the second quarter 1998 from $.58 to $.61, and in the third quarter of 1998 from $.58 to $.62. The impact in 1998 of adopting the SOP on previously-reported financial results will be to increase operating income by $1,290 and to decrease earnings per diluted share by $.81. New accounting standards issued that relate to financial statement disclosure include SFAS No. 130, "Reporting Comprehensive Income," SFAS No. 131, "Disclosure about Segments of an Enterprise and Related Information," and SFAS No. 132, "Employers' Disclosures about Pensions and Other Postretirement Benefits." SFAS No. 130 establishes guidelines for the display of comprehensive income, which includes those items now reported directly in equity, for financial statement purposes. SFAS No. 131 establishes guidelines for determining operating segments and extensive disclosure requirements of those segments. SFAS No. 132 revises the disclosures of pension and other postretirement benefit plans. SFAS Nos. 130 and 131 will be effective for the Company during fiscal year 1999 and SFAS No. 132 will be effective during fiscal year 2000. The Company has not determined the effect these new standards will have on its financial statement disclosures. New accounting standards issued also include SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities." This statement establishes a comprehensive standard for the recognition and measurement of derivatives and hedging activities. SFAS No. 133 will become effective for the Company during fiscal year 2000. The Company has not determined the effect of this new standard. YEAR 2000 The Company has 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. The Company has been working with its vendors to assess their readiness. For the most part, the Company uses third-party supplied computer programs and packages for its information technology systems. Certain of those systems are already year 2000 compliant as supplied by the vendor. In the Flow Control Products segment, certain software packages had been modified by the Company. These packages have been remediated and tested by internal information technology professionals. The total cost of these modifications is estimated to have cost the Company $400. In the Engineered Components segment, some facilities are utilizing compliant releases of software. The Automotive group is in the process of installing an enterprise resource planning (ERP) system as an upgrade in functionality that will improve business processes. At the same time and without incremental cost, the new system will address the year 2000 issue. Should the ERP system 5 not be installed and operational in sufficient time, the Company believes that it can install compliant versions of its current software promptly to resolve the issue at a cost that will not materially impact its results of operations, liquidity, or financial condition. At the Company's Speedline unit, internal resources are presently evaluating the compliant status of the computer systems. The Company's vendors are in various stages of compliance with year 2000. The Company expects that critical vendors will be in compliance or have adequate alternative solutions in place. The Company believes its risk is low in the event of year 2000 issues. Its Flow Control systems and many of its Engineered Components systems are compliant. The Company's primary raw materials are basic commodities available from multiple sources such as copper cathode, aluminum sows and ingots, and brass from scrap radiators. As a result, the Company does not expect and cannot at this time reasonably estimate a material impact due to the uncertainty of year 2000 issues on its results of operations, liquidity, and financial condition. Contingency plans if deemed necessary will be developed to address the Company's specific risks during 1999.
SELECTED DATA ($ in thousands except per share amounts) FINANCIAL DATA 1998 1997 1996 1995 1994 Net sales........................................ $ 574,414 $ 387,051 $ 343,934 $ 328,231 $ 271,856 Operating income................................. 37,958 27,242 27,328 26,972 23,220 Operating income percent......................... 6.6% 7.0% 7.9% 8.2% 8.5% Income before income taxes and cumulative effect of accounting change.................... 22,975 20,005 24,731 26,098 22,067 Income before cumulative effect of accounting change........................... 16,765 12,983 15,926 17,171 14,454 Net income....................................... 8,177 12,983 15,926 17,171 14,454 Working capital.................................. 86,929 26,260 57,774 47,845 48,590 Total assets..................................... 563,450 508,918 269,217 229,367 194,161 Long-term debt................................... 217,199 145,304 58,783 29,687 13,910 - -------------------------------------------------------------------------------------------------------------------------------- PER COMMON SHARE DATA Income before cumulative effect of accounting change - basic................... $ 1.82 $ 1.50 $ 1.85 $ 2.02 $ 1.72 Net income - basic............................... $ .89 $ 1.50 $ 1.85 $ 2.02 $ 1.72 Weighted-average number of common shares outstanding - basic (in thousands)...... 9,200 8,674 8,606 8,517 8,425 Income before cumulative effect of accounting change - diluted................. $ 1.81 $ 1.48 $ 1.84 $ 2.00 $ 1.69 Net income - diluted............................. $ .88 $ 1.48 $ 1.84 $ 2.00 $ 1.69 Weighted-average number of common shares outstanding - diluted (in thousands).... 9,250 8,754 8,628 8,598 8,565 Dividends declared............................... $ .56 $ .56 $ .56 $ .53 $ .49 Book value....................................... $ 17.47 $ 17.24 $ 15.80 $ 14.52 $ 13.02 - --------------------------------------------------------------------------------------------------------------------------------- STATISTICAL DATA Current ratio.................................... 1.6 1.1 2.1 1.9 2.0 Long-term debt as a percent of capital........... 57.5% 47.9% 30.2% 19.3% 11.2% Number of associates ............................ 4,500 4,040 2,600 2,400 2,300 - ---------------------------------------------------------------------------------------------------------------------------------
6 AMCAST INDUSTRIAL CORPORATION STATEMENT OF INTERNAL CONTROL The management of Amcast Industrial Corporation has the responsibility for preparing the accompanying financial statements and for their integrity and objectivity. In fulfilling this responsibility, management maintains accounting systems and related controls. These controls provide reasonable assurance, at appropriate costs, that assets are safeguarded against losses and that financial records are reliable for use in preparing financial statements. These systems are enhanced by written policies, an organizational structure providing division of responsibilities, careful selection and training of qualified people, and a program of financial, operational, and systems review coordinated by the internal auditors and by management. Management recognizes its responsibility for conducting the Company's affairs according to the highest standards of personal and corporate conduct. This responsibility is characterized by and included in key policy statements. Management maintains a systematic program to assess compliance with these policies. The Company's financial statements have been audited by Ernst & Young LLP, independent auditors elected by the shareholders. Management has made available to Ernst & Young LLP all the Company's financial records and related data, as well as the minutes of shareholders' and directors' meetings. Furthermore, management believes that all representations made to Ernst & Young LLP during their audit were valid and appropriate. The Audit Committee of the Board of Directors, composed solely of outside directors, meets with the independent auditors, management, and internal auditors periodically to review their work and ensure that they are properly discharging their responsibilities. The independent auditors and the Company's internal auditors have free access to this committee, without management present, to discuss the results of their audit work and their opinion on the adequacy of internal financial controls and the quality of financial reporting. /s/ John H. Shuey John H. Shuey Chairman, President and Chief Executive Officer /s/ Douglas D. Watts Douglas D. Watts Vice President, Finance (Chief Financial Officer) REPORT OF ERNST & YOUNG LLP INDEPENDENT AUDITORS Shareholders and Board of Directors Amcast Industrial Corporation Dayton, Ohio We have audited the accompanying consolidated statements of financial condition of Amcast Industrial Corporation and subsidiaries as of August 31, 1998 and 1997, and the related consolidated statements of income, shareholders' equity, and cash flows for each of the three years in the period ended August 31, 1998. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Amcast Industrial Corporation and subsidiaries at August 31, 1998 and 1997, and the consolidated results of their operations and their cash flows for each of the three years in the period ended August 31, 1998, in conformity with generally accepted accounting principles. /s/ Ernst & Young LLP Dayton, Ohio October 13, 1998 7
CONSOLIDATED STATEMENTS OF INCOME ($ in thousands except per share amounts) Year Ended August 31 1998 1997 1996 - --------------------------------------------------------------------------------------------------------------------------------- Net sales...................................................................... $ 574,414 $ 387,051 $ 343,934 Cost of sales.................................................................. 481,410 318,011 273,238 - --------------------------------------------------------------------------------------------------------------------------------- GROSS PROFIT 93,004 69,040 70,696 Selling, general and administrative expenses................................... 57,294 41,798 43,368 Restructuring charges.......................................................... 9,800 - - Gain on sale of aerospace business............................................. (12,048) - - - --------------------------------------------------------------------------------------------------------------------------------- OPERATING INCOME 37,958 27,242 27,328 Equity in loss of joint venture and other (income) and expense............................................ (62) 2,102 249 Interest expense............................................................... 15,045 5,135 2,348 - ---------------------------------------------------------------------------------------------------------------------------------- INCOME BEFORE INCOME TAXES AND CUMULATIVE EFFECT OF ACCOUNTING CHANGE 22,975 20,005 24,731 Income taxes................................................................... 6,210 7,022 8,805 - ---------------------------------------------------------------------------------------------------------------------------------- INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE 16,765 12,983 15,926 Cumulative effect of accounting change, net of tax............................. (8,588) - - - ---------------------------------------------------------------------------------------------------------------------------------- NET INCOME $ 8,177 $ 12,983 $ 15,926 ================================================================================================================================== BASIC EARNINGS PER SHARE Income before cumulative effect of accounting change......................................................... $ 1.82 $ 1.50 $ 1.85 Cumulative effect of accounting change......................................... (.93) - - - ----------------------------------------------------------------------------------------------------------------------------------- Net income..................................................................... $ .89 $ 1.50 $ 1.85 =================================================================================================================================== Diluted Earnings per Share Income before cumulative effect of accounting change......................................................... $ 1.81 $ 1.48 $ 1.84 Cumulative effect of accounting change......................................... (.93) - - - ----------------------------------------------------------------------------------------------------------------------------------- Net income .................................................................... $ .88 $ 1.48 $ 1.84 =================================================================================================================================== See notes to consolidated financial statements
8
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION ($ in thousands) August 31 1998 1997 - -------------------------------------------------------------------------------------------------------------------------------- ASSETS CURRENT ASSETS Cash and cash equivalents............................................................... $ 7,022 $ 9,608 Accounts receivable..................................................................... 111,066 100,589 Inventories............................................................................. 84,255 71,960 Other current assets.................................................................... 20,308 21,068 - -------------------------------------------------------------------------------------------------------------------------------- TOTAL CURRENT ASSETS 222,651 203,225 PROPERTY, PLANT, AND EQUIPMENT Land.................................................................................... 8,858 5,067 Buildings............................................................................... 62,902 47,320 Machinery and equipment................................................................. 307,849 285,115 Construction in progress................................................................ 19,269 19,560 - -------------------------------------------------------------------------------------------------------------------------------- 398,878 357,062 Less accumulated depreciation........................................................... 138,761 121,818 - -------------------------------------------------------------------------------------------------------------------------------- 260,117 235,244 GOODWILL .................................................................................... 62,555 36,784 OTHER ASSETS ................................................................................ 18,127 33,665 - -------------------------------------------------------------------------------------------------------------------------------- $ 563,450 $ 508,918 ================================================================================================================================ LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Short-term debt......................................................................... $ 16,878 $ 54,038 Current portion of long-term debt....................................................... 6,370 7,087 Accounts payable........................................................................ 72,887 79,732 Compensation and related items.......................................................... 19,336 16,717 Accrued expenses........................................................................ 20,251 19,391 - -------------------------------------------------------------------------------------------------------------------------------- TOTAL CURRENT LIABILITIES 135,722 176,965 LONG-TERM DEBT - LESS CURRENT PORTION ....................................................... 217,199 145,304 DEFERRED INCOME TAXES ....................................................................... 25,164 8,400 DEFERRED LIABILITIES ........................................................................ 24,551 20,023 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 - 9,206,529 and 9,177,455 shares, respectively............................... 9,207 9,177 Capital in excess of stated value....................................................... 78,964 78,484 Foreign currency translation adjustment................................................. (945) - Retained earnings....................................................................... 73,588 70,565 - -------------------------------------------------------------------------------------------------------------------------------- 160,814 158,226 - -------------------------------------------------------------------------------------------------------------------------------- $ 563,450 $ 508,918 ================================================================================================================================= See notes to consolidated financial statements
9
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY ($ in thousands except per share amounts) Foreign Capital in Currency Common Excess of Translation Retained Shares Stated Value Adjustment Earnings Total - -------------------------------------------------------------------------------------------------------------------------------- BALANCE AT SEPTEMBER 1, 1995 .................... $ 8,556 $ 64,175 $ - $ 51,474 $ 124,205 Net income.................................. - - - 15,926 15,926 Cash dividends declared, $.56 per share..... - - - (4,824) (4,824) Stock options exercised..................... 62 780 - - 842 Other....................................... - 48 - (33) 15 - -------------------------------------------------------------------------------------------------------------------------------- BALANCE AT AUGUST 31, 1996 ..................... 8,618 65,003 - 62,543 136,164 Net income.................................. - - - 12,983 12,983 Stock issued for acquisition................ 478 12,022 - - 12,500 Cash dividends declared, $.56 per share..... - - - (4,922) (4,922) Stock options exercised..................... 78 1,356 - - 1,434 Other....................................... 3 103 - (39) 67 - -------------------------------------------------------------------------------------------------------------------------------- BALANCE AT AUGUST 31, 1997 ...................... 9,177 78,484 - 70,565 158,226 Net income ................................. - - - 8,177 8,177 Cash dividends declared, $.56 per share .... - - - (5,154) (5,154) Foreign currency translation ............... - - (945) - (945) Stock options exercised .................... 30 480 - - 510 - --------------------------------------------------------------------------------------------------------------------------------- BALANCE AT AUGUST 31, 1998 ..................... $ 9,207 $ 78,964 $ (945) $ 73,588 $ 160,814 ================================================================================================================================= See notes to consolidated financial statements
10
CONSOLIDATED STATEMENTS OF CASH FLOWS ($ in thousands) Year Ended August 31 1998 1997 1996 OPERATING ACTIVITIES Net income.................................................................. $ 8,177 $ 12,983 $ 15,926 Depreciation and amortization............................................... 32,113 20,463 17,428 Non-cash restructuring and inventory write-down............................. 12,000 - - Cumulative effect of accounting change...................................... 8,588 - - Gain on sale of aerospace business.......................................... (12,048) - - Deferred liabilities........................................................ (1,497) (801) 2,364 Changes in assets and liabilities, net of acquisitions Accounts receivable..................................................... (9,667) (5,203) (5,764) Inventories............................................................. (9,122) (4,323) 4,125 Other current assets.................................................... 1,141 (2,920) (594) Accounts payable........................................................ (11,833) 8,077 (2,897) Accrued liabilities..................................................... (9,204) (669) 2,745 Other .................................................................. 932 3,068 305 - -------------------------------------------------------------------------------------------------------------------------------- NET CASH PROVIDED BY OPERATIONS 9,580 30,675 33,638 INVESTING ACTIVITIES Additions to property, plant, and equipment................................. (46,763) (40,377) (48,640) Acquisitions, net of cash received.......................................... (12,247) (48,486) - Contributions to joint venture............................................. - (3,226) (2,774) Proceeds from sale of aerospace business.................................... 25,445 - - Other assets................................................................ 547 135 191 - -------------------------------------------------------------------------------------------------------------------------------- NET CASH USED BY INVESTING ACTIVITIES (33,018) (91,954) (51,223) FINANCING ACTIVITIES Additions to long-term debt................................................. 85,871 70,000 50,000 Reduction in long-term debt................................................. (30,216) (1,105) (20,904) Short-term borrowings....................................................... (29,978) - (3,417) Dividends................................................................... (5,154) (4,922) (4,824) Other....................................................................... 510 1,501 857 - -------------------------------------------------------------------------------------------------------------------------------- NET CASH PROVIDED BY FINANCING ACTIVITIES 21,033 65,474 21,712 Effect of exchange rate changes on cash.......................................... (181) - - - -------------------------------------------------------------------------------------------------------------------------------- Net change in cash and cash equivalents.......................................... (2,586) 4,195 4,127 Cash and cash equivalents at beginning of year................................... 9,608 5,413 1,286 - ----------------------------------------------------------------------------------------------------------------------------------- CASH AND CASH EQUIVALENTS AT END OF YEAR $ 7,022 $ 9,608 $ 5,413 =================================================================================================================================== See notes to consolidated financial statements
11 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ($ in thousands except per share amounts) ACCOUNTING POLICIES THE CONSOLIDATED 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 consolidated financial statements using the equity method of accounting. Operations of the Company's European subsidiaries are included in the consolidated financial statements for periods ending one month prior to the Company's fiscal year-end in order to ensure timely preparation of the consolidated financial statements. Certain prior year amounts have been reclassified to conform to the current year presentation. FOR FOREIGN SUBSIDIARIES, the local foreign currency is the functional currency. Assets and liabilities are translated into U.S. dollars at the rate of exchange existing at year-end. Translation gains and losses are included as a component of shareholders' equity. Income statement amounts are translated at the average monthly exchange rates. Transaction gains and losses are included in the statement of income and were not material. REVENUE is recognized at the time products are shipped. CASH AND CASH EQUIVALENTS include amounts on deposit with financial institutions and investments with original maturities of 90 days or less. ACCOUNTS RECEIVABLE are stated net of allowances for doubtful accounts of $264 and $346 at August 31, 1998 and 1997, respectively. The Company held notes receivables of $3,000 and accounts receivable of $3,962 at August 31, 1998, and accounts receivable of $1,825 at August 31, 1997, from CTC. INVENTORIES are valued at the lower of cost or market using the last-in, first-out (LIFO) and the first-in, first-out (FIFO) methods. PROPERTY, PLANT, AND EQUIPMENT are stated at cost. Expenditures for significant renewals and improvements are capitalized. Repairs and maintenance are charged to expense as incurred. Depreciation is computed using the straight-line method based upon the estimated useful lives of the assets as follows: buildings - 20 to 40 years; machinery and equipment - 3 to 20 years. GOODWILL represents the excess of the cost of businesses acquired over the fair market value of identifiable net assets at the dates of acquisition. Goodwill is amortized on a straight-line basis over 40 years. Accumulated amortization of goodwill was $2,259 and $916 at August 31, 1998 and 1997, respectively. The carrying value of goodwill is evaluated periodically in relation to the operating performance and future undiscounted cash flows of the underlying businesses. DEFERRED INCOME TAXES are provided for temporary differences between financial and tax reporting in accordance with the liability method under the provisions of Statement of Financial Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes." USE OF ESTIMATES and assumptions are made by management in the preparation of the financial statements in conformity with generally accepted accounting principles that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. ACCOUNTING STANDARDS ADOPTED during 1998 include SFAS No. 128, "Earnings per Share," which establishes new standards for computing and presenting earnings per share. SFAS No. 128 requires the Company to report both basic earnings per share, which is based on the weighted-average number of common shares outstanding, and diluted earnings per share, which is based on the weighted-average number of common shares outstanding plus all potential dilutive common shares outstanding. Earnings per share amounts for all periods are presented, and where necessary, restated to give effect to the adoption of SFAS No. 128. Effective September 1, 1997, the Company also adopted the provisions of the American Institute of Certified Public Accountants' Statement of Position (SOP) 98-5, "Reporting on the Costs of Start-Up Activities." SOP 98-5 provides guidance on the financial reporting of start-up and organization costs and requires such costs to be expensed as incurred. The total amount of deferred start-up costs reported as a cumulative effect of a change in accounting principle is $8,588, net of tax benefits of $5,044. The Company's share of CTC's cumulative effect of a change in accounting principle is $3,529, net of tax. Pro forma earnings per share amounts, assuming the new accounting principle is applied retroactively, are as follows:
1997 1996 BASIC EARNINGS PER SHARE: Income before cumulative effect of accounting change - as reported.... $1.50 $1.85 Income before cumulative effect of accounting change - pro forma...... $1.52 $1.36 Net income - as reported................ $1.50 $1.85 Net income - pro forma.................. $1.52 $1.36 DILUTED EARNINGS PER SHARE: Income before cumulative effect of accounting change - as reported. $1.48 $1.84 Income before cumulative effect of accounting change - pro forma... $1.51 $1.36 Net income - as reported................ $1.48 $1.84 Net income - pro forma.................. $1.51 $1.36
12 NEW ACCOUNTING STANDARDS issued that relate to financial statement disclosure include SFAS No. 130, "Reporting Comprehensive Income," SFAS No. 131, "Disclosure about Segments of an Enterprise and Related Information," and SFAS No. 132, "Employers' Disclosures about Pensions and Other Postretirement Benefits." SFAS No. 130 establishes guidelines for the display of comprehensive income, which includes those items now reported directly in equity, for financial statement purposes. SFAS No. 131 establishes guidelines for determining operating segments and extensive disclosure requirements of those segments. SFAS No. 132 revises the disclosures of pension and other postretirement benefit plans. SFAS Nos. 130 and 131 will be effective for the Company during fiscal year 1999 and SFAS No. 132 will be effective during fiscal year 2000. The Company has not determined the effect these new standards will have on its financial statement disclosures. New accounting standards issued also include SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities." This statement establishes a comprehensive standard for the recognition and measurement of derivatives and hedging activities. SFAS No. 133 will become effective for the Company during fiscal year 2000. The Company has not determined the effect of this new standard. ACQUISITIONS, DIVESTITURES, AND RESTRUCTURING At the end of fiscal 1997 and during fiscal 1998, the Company completed transactions that impacted the comparison between 1998 and 1997. Effective March 30, 1998, the Company sold its Rancho Cucamonga, California investment casting operation, Amcast Precision, for $25,445 in cash. The transaction resulted in a pre-tax gain of $12,048. The facility, acquired by Amcast in 1987, produces ferrous and nonferrous castings for the aerospace industry. Fiscal 1997 sales were approximately $19,000. This was the only Amcast operation involved in the aerospace industry. On April 9, 1998, the Company acquired Lee Brass Company, a privately-owned company located in Anniston, Alabama. Lee Brass is a major manufacturer of cast brass products for residential, commercial, and industrial plumbing systems. The purchase price was approximately $16,100 consisting of cash payments of $11,700 and debt assumption of $4,400. The acquisition of Lee Brass has been accounted for by the purchase method. Accordingly, the cost of the acquisition was allocated on the basis of the estimated fair market value of the assets acquired, principally inventory and property, plant, and equipment, and liabilities assumed, resulting in goodwill of $6,300. The pro forma effect of the acquisition on the results of operations is not presented, as it is not material. Following the acquisition of Lee Brass, the Company announced a plan to consolidate its two brass operations and subsequently ceased production at its Flagg Brass operation located in Stowe, Pennsylvania. Expected to be completed by December 31, 1998, the consolidation plan includes the transfer of certain product lines to Lee Brass, the sale or closure of the Flagg Brass facility, and the termination of approximately 100 salaried and hourly personnel. In connection with the consolidation plan, during the third quarter the Company recorded a restructuring charge of $5,800 for facility exit costs and a charge of $2,200, included in cost of sales, primarily for a non-cash write-down of inventory to its net realizable value. Key components of the $5,800 restructuring charge are $4,900 for a non-cash write-down of assets to their net realizable value, $500 for severance and other termination benefits, and $400 for other facility closure costs. As of August 31, 1998, approximately 97 associates had been terminated and substantially all of the severance and facility closure costs had been charged against the liability, with the majority of the remaining costs expected to be spent by December 31, 1998. During the third quarter, the Company also re-evaluated its reserves related to several iron factories previously closed in the 1980's and early 1990's. As a result, a $4,000 restructuring charge was recorded to cover higher than expected medical benefits, workers compensation expenses, and legal costs for environmental and other matters related to these previously closed facilities. At the end of fiscal 1997, the Company acquired all of the outstanding stock of Speedline S.p.A. and its subsidiaries (Speedline), a major European manufacturer of light-alloy wheels serving the automotive original equipment market. The acquisition was reflected in the 1997 year-end balance sheet, but had no material effect on 1997 operating results. Operating results for Speedline are included for periods ending one month prior to the Company's fiscal period to ensure timely preparation of the consolidated financial statements. Thus, the financial statements for 1998 include eleven months of results of operations for Speedline from September, 1997 through July, 1998, and these results are shown in the Engineered Components segment. The purchase price was approximately $130,700, consisting of cash payments of $58,000, the assumption of $60,200 in debt, and the issuance of 478,240 shares of the Company's common stock with a fair market value of $12,500. The purchase agreement contains a provision to protect the seller for stock price fluctuations. The price protection provides for the Company to pay the difference between the $26.13 per share value of the stock issued to the seller of Speedline at closing and the market value of any such shares sold during a 180-day period following the second anniversary of the acquisition. The liability, if any, on the part of the Company can only be determined during the relevant 180-day period following the second anniversary of the closing, August 19, 1999. Had the price protection been calculated based on the relevant period during 1998 for all shares, the price protection liability would have been $4,000. The acquisition of 13 Speedline has been accounted for by the purchase method. Accordingly, the cost of the acquisition was allocated on the basis of the estimated fair market value of the assets acquired and liabilities assumed, resulting in goodwill of $54,100. A summary of the purchase price allocation follows: Current assets................................... $ 81,300 Property, plant, and equipment................... 82,200 Other assets..................................... 15,200 Goodwill......................................... 54,100 Current liabilities.............................. (65,800) Capital leases................................... (11,900) Deferred liabilities............................. (24,400) - ---------------------------------------------------------------- $ 130,700 ================================================================
INVENTORIES The major components of inventories as of August 31 are: 1998 1997 Finished products....................... $ 37,561 $ 35,375 Work in process......................... 28,760 22,968 Raw materials and supplies.............. 20,610 20,506 - -------------------------------------------------------------- 86,931 78,849 Less amount to reduce certain inventories to LIFO value............... 2,676 6,889 - --------------------------------------------------------------- $ 84,255 $ 71,960 ===============================================================
Inventories reported on the FIFO method, primarily in foreign locations, were $32,412 and $35,788 at August 31, 1998 and 1997, respectively. The estimated replacement cost of inventories is the amount reported before the LIFO reserve. OTHER ASSETS The major components of other assets as of August 31 are: 1998 1997 Joint venture investment................ $ 3,846 $ 10,449 Assets held for sale.................... 3,189 3,313 Other................................... 11,092 19,903 - --------------------------------------------------------------- $ 18,127 $ 33,665 ===============================================================
The joint venture investment represents the Company's share of Casting Technology Company's net equity. The decrease is primarily related to the cumulative effect adjustment resulting from the adoption of SOP 98-5 during 1998. Assets held for sale reflect the estimated realizable values of the fixed assets of closed facilities. LONG-TERM DEBT AND CREDIT ARRANGEMENTS The following table summarizes the Company's long-term borrowings at August 31:
1998 1997 Senior notes............................ $ 51,750 $ 52,625 Revolving credit notes.................. 141,092 70,000 Lines of credit......................... 8,900 - Industrial revenue bonds................ 5,925 6,158 Other debt.............................. 5,372 11,710 Capital leases.......................... 10,530 11,898 - --------------------------------------------------------------- 223,569 152,391 Less current portion.................... 6,370 7,087 - --------------------------------------------------------------- Long-Term Debt ......................... $ 217,199 $145,304 ===============================================================
Senior notes consist of two agreements with interest rates of 7.09% and 9.0%. The notes call for periodic principal payments and mature November 7, 2005, and September 15, 1999, respectively. On August 14, 1997, the Company replaced its prior credit facility with a new Credit Agreement (the Agreement) that provides for up to $200,000 in borrowings through August 14, 2002. At August 31, 1998, $141,092 was outstanding under the Agreement with an interest rate of 5.86%. In addition, a commitment fee is payable on the unused portion of the credit line. The Company also has lines of credit totaling $27,000; at August 31, 1998, $8,900 was used. Debt covenants require the Company to maintain certain debt-to-equity, debt-to-earnings, and interest coverage ratios. Other provisions limit tangible net worth and subsidiary indebtedness. At August 31, 1998, $44,300 of retained earnings were available for the payment of dividends. Industrial revenue bonds consist of various issues at fixed and variable interest rates, ranging from 3.34% to 4.15%. These bonds call for periodic principal payments through 2004. These obligations are collateralized by property, plant, and equipment with a net book value of $793 at August 31, 1998. The Company has guaranteed debt totaling $21,000 at August 31, 1998, for Casting Technology Company. Other debt consists of various mortgage loans and other loans at fixed and variable interest rates, ranging from 3.0% to 12.58%, and requires periodic principal payments through 2011. These obligations are secured by property, plant, and equipment with a net book value of $10,700 at August 31, 1998. Capitalized lease obligations provide for aggregate payments, including interest, of approximately $3,000 annually, payable through 2002. At August 31, 1998, future minimum payments for the leases were $12,600, including $2,070 representing interest. The carrying amounts of the Company's debt instruments approximate fair value as defined under SFAS No. 107. Fair value is estimated based on discounted cash flows, as well as other valuation techniques. Long-term debt maturities for each of the next five years are $6,370 in 1999, $5,600 in 2000, $3,505 in 2001, $151,955 in 2002, and $13,277 in 2003. The Company's foreign operations have short-term lines of credit totaling approximately $55,900 which are subject to annual review by the lending banks. At August 31, 1998, the average interest rate for the short-term lines of credit was 5.12%. Amounts 14 outstanding under these lines of credit are payable on demand and total $15,800 as of August 31, 1998. There was no interest capitalized during 1998. Capitalized interest was $145 and $2,038 in 1997 and 1996, respectively. Interest paid was $14,823, $5,057, and $4,272 in 1998, 1997, and 1996, respectively. LEASES The Company has a number of operating lease agreements primarily involving machinery, physical distribution, and computer equipment. Certain of these leases contain renewal or purchase options that vary by lease. These leases are noncancelable and expire on dates through 2003. Rent expense was $3,891, $4,978, and $4,960 for the years ended August 31, 1998, 1997, and 1996, respectively. The following is a schedule by year of future minimum rental payments required under the operating leases that have initial or remaining noncancelable lease terms in excess of one year as of August 31, 1998: 1999 ....................................... $1,744 2000 ....................................... 1,215 2001 ....................................... 741 2002 ....................................... 655 2003 ....................................... 389 - -------------------------------------------------------- TOTAL MINIMUM LEASE PAYMENTS ............... $ 4,744 ========================================================
COMMITMENTS AND CONTINGENCIES At August 31, 1998, the Company has committed to capital expenditures of $10,938 in 1999, 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 two 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 August 31, 1998, the Company's accrued undiscounted reserve for such contingencies was $1,700. Allied-Signal Inc. has brought an action against the Company seeking a contribution from the Company equal to 50% of Allied-Signal's estimated $30,000 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. 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. MAJOR CUSTOMERS AND CREDIT CONCENTRATION The Company sells products to customers primarily in the United States and, with the acquisition of Speedline, also sells products to original equipment automotive manufacturers in Europe. The Company performs ongoing credit evaluations of customers, and generally does not require collateral. Allowances are maintained for potential credit losses and such losses have been within management's expectations. On August 31, 1998, total trade receivables from the domestic and foreign automotive industry were $77,148, and $20,381 was due from the construction industry. Sales to Engineered Components' largest customer, General Motors, were $150,897, $139,721, and $114,473 for the years ended August 31, 1998, 1997, and 1996, respectively. Trade receivables from General Motors on August 31, 1998 and 1997, were $19,538 and $16,511, respectively, and were current. No other single customer accounted for a material portion of trade receivables. 15 PENSION PLANS The Company has a noncontributory defined benefit pension plan covering certain employees. The plan covers salaried employees and provides pension benefits that are based on years of credited service, employee compensation during years preceding retirement, and the primary social security benefit. The plan also covers hourly employees and provides pension benefits of stated amounts for each year of credited service. The Company's policy is to fund the annual amount required by the Employee Retirement Income Security Act of 1974. Plan assets consist of U.S. Treasury bonds and notes, U.S. governmental agency issues, corporate bonds, and common stocks. The plan held 350,000 common shares of the Company at August 31, 1998 (4.7% of plan assets) and 1997 (8.6% of plan assets). The Company also sponsors a deferred compensation profit sharing plan for the benefit of substantially all domestic salaried employees. The Company provides a 15% match on employee contributions up to 6% of eligible compensation and a supplemental savings match from 1% to 35% based on the Company achieving a minimum return on shareholders' equity and subject to IRS limitations. The Company participates in a multiemployer plan that provides defined benefits to certain bargaining unit employees. The following table sets forth the funded status and the amounts recognized in the consolidated statements of financial condition for the Company's defined benefit plan at August 31:
1998 1997 Actuarial present value of benefit obligation: Vested benefit obligation.................................................. $ (95,554) $ (86,337) ================================================================================================================================ Accumulated benefit obligation............................................. $ (99,248) $ (89,410) ================================================================================================================================ Projected benefit obligation.................................................... $ (106,334) $ (94,404) Plan assets at fair value....................................................... 114,681 98,692 - -------------------------------------------------------------------------------------------------------------------------------- Overfunded projected benefit obligation......................................... 8,347 4,288 Unrecognized net gain........................................................... (10,580) (5,406) Unrecognized prior service cost................................................. 3,181 1,952 Unrecognized transition asset being recognized over a minimum of 15 years....... (1,952) (2,510) - -------------------------------------------------------------------------------------------------------------------------------- Net pension liability recognized in the consolidated statement of .............. financial condition $ (1,004) $ (1,676) ================================================================================================================================ A summary of the components of net periodic pension cost for the defined benefit plan and the total amounts charged to expense for the defined contribution and multiemployer plans follows: 1998 1997 1996 Defined benefit plan: Service cost of current period............................................. $ 1,680 $ 1,588 $ 1,603 Interest cost on projected benefit obligation.............................. 7,083 6,487 6,268 Actual return on plan assets............................................... (21,971) (15,358) (12,630) Net amortization and deferral.............................................. 13,338 7,806 5,410 - ------------------------------------------------------------------------------------------------------------------------------- Net pension cost........................................................... 130 523 651 Defined contribution plan....................................................... 333 306 416 Multiemployer pension plan...................................................... 241 241 232 - ------------------------------------------------------------------------------------------------------------------------------- TOTAL COST ................................................... $ 704 $ 1,070 $ 1,299 =============================================================================================================================== Assumed rates of return: Weighted average discount rate.................................................. 7.0% 7.8% 7.5% Rate of future compensation increase............................................ 4.7% 4.7% 4.7% Long-term return on assets: Dedicated..................................................... N/A 7.3% 7.0% Nondedicated.................................................. 10.0% 10.5% 10.5%
Included in deferred liabilities at August 31, 1998 and 1997 is an accrual totaling $10,202 and $8,625, respectively, for termination benefits for Speedline employees. The liability is based on the employee's length of service, position, and remuneration, and is payable upon separation. There is no vesting period or funding requirement associated with the liability. 16
INCOME TAXES For financial reporting purposes, income before income taxes includes the following components: 1998 1997 1996 United States..................................................................... $ 17,736 $ 20,005 $ 24,731 Foreign........................................................................... 5,239 - - - ------------------------------------------------------------------------------------------------------------------------------- $ 22,975 $ 20,005 $ 24,731 =============================================================================================================================== The provisions for income taxes are as follows: Currently payable State and local.............................................................. $ 222 $ 31 $ 171 Foreign...................................................................... 2,232 384 507 Federal...................................................................... 5,360 4,016 2,702 - ------------------------------------------------------------------------------------------------------------------------------- 7,814 4,431 3,380 Deferred State and local.............................................................. (4) 367 364 Foreign...................................................................... (2,091) - - Federal...................................................................... 491 2,224 5,061 - ------------------------------------------------------------------------------------------------------------------------------- (1,604) 2,591 5,425 - ------------------------------------------------------------------------------------------------------------------------------- $ 6,210 $ 7,022 $ 8,805 =============================================================================================================================== Reconciliations of income taxes computed by applying the statutory federal income tax rate to the provisions for income taxes are as follows: Federal income tax at statutory rate.............................................. $ 8,041 $ 7,002 $ 8,657 Federal tax credits............................................................... (140) (150) - State income taxes................................................................ 144 259 348 Goodwill amortization............................................................. 424 - - Higher effective income taxes of other countries.................................. 268 - - Change in Italian tax rates....................................................... (2,562) - - Other............................................................................. 35 (89) (200) - ------------------------------------------------------------------------------------------------------------------------------- $ 6,210 $ 7,022 $ 8,805 =============================================================================================================================== Significant components of deferred tax assets and liabilities are as follows: 1998 1997 Deferred tax assets related to: Accrued compensation and related items............................................ $ 3,659 $ 3,693 Tax credit carryforwards.......................................................... 3,901 3,025 Net operating losses.............................................................. 3,394 2,291 Other............................................................................. 8,552 6,651 - ------------------------------------------------------------------------------------------------------------------------------- 19,506 15,660 Valuation allowance............................................................... (3,824) (406) - ------------------------------------------------------------------------------------------------------------------------------- 15,682 15,254 Deferred tax liabilities related to: Depreciation...................................................................... 33,138 13,514 Other............................................................................. 4,793 6,442 - ------------------------------------------------------------------------------------------------------------------------------- 37,931 19,956 - ------------------------------------------------------------------------------------------------------------------------------- Net deferred tax liabilities...................................................... $ 22,249 $ 4,702 ===============================================================================================================================
The Company has foreign net operating loss carryforwards totaling $9,173 that expire in years 1999 through 2003. The Company also has U.S. income tax credits of $1,259 that expire in years 2003 through 2013. In addition, the Company has alternative minimum tax credits of $2,642 which have an indefinite carryforward period. For financial reporting purposes, a valuation allowance of $3,824 has been recognized to offset the deferred tax assets related to those carryforwards. Income taxes paid by the Company totaled $5,701, $4,407, and $1,905 in 1998, 1997, and 1996, respectively. Undistributed earnings of the Company's foreign subsidiaries are considered to be permanently reinvested and, accordingly, no provisions for U.S. income taxes have been provided thereon. It is not practicable to determine the deferred tax liability for temporary differences related to these undistributed earnings. 17 STOCK OPTIONS The Company has two plans under which stock options for the purchase of common shares may be granted. The 1989 Stock Incentive Plan provides for the granting of options for the purchase of a maximum of 1,200,000 shares, stock appreciation rights, performance awards, and restricted stock awards to key employees of the Company. Options awarded under the plan may not be granted at an option price less than the fair market value of a share on the date the option is granted, and the maximum term of an option may not exceed ten years. All options currently granted under the plan are exercisable one year after the date of grant. The 1989 Director Stock Option Plan provides for the granting of options for the purchase of a maximum of 120,000 shares. Under the plan, each person serving as a director of the Company on the first business day of January of each year, who is not employed by the Company, is automatically granted options for the purchase of 1,500 shares. All options were granted at an option price equal to the fair market value of a share on the date of grant. Each option is exercisable one year after the date of grant and expires at the end of five years. Information regarding the Company's stock option plans for the years ended August 31, 1998, 1997, and 1996 is as follows:
1998 1997 1996 - ------------------------------------------------------------------------------------------------------------------------------ WEIGHTED Weighted Weighted AVERAGE Average Average EXERCISE Exercise Exercise SHARES PRICE Shares Price Shares Price - ----------------------------------------------------------------------------------------------------------------------------- Outstanding at beginning of year........ 472,525 $18.96 455,822 $18.15 414,820 $17.46 Granted................................. 149,601 $27.08 135,527 $21.49 124,202 $18.14 Exercised............................... (30,539) $18.25 (77,606) $18.48 (60,775) $13.29 Cancelled............................... (20,250) $20.78 (41,218) $19.18 (22,425) $18.54 - ----------------------------------------------------------------------------------------------------------------------------- Outstanding at end of year.............. 571,337 $21.06 472,525 $18.96 455,822 $18.15 ============================================================================================================================== Options exercisable at end of year...... 421,736 $18.93 340,153 $17.94 338,055 $18.16 ============================================================================================================================== Weighted-average fair value of options granted during the year.... $4.95 $4.63 $3.84 ============================================================================================================================== Information regarding options outstanding at August 31, 1998, is as follows: OPTIONS OUTSTANDING OPTIONS EXERCISABLE - ------------------------------------------------------------------------------------------------------------------------------ WEIGHTED WEIGHTED WEIGHTED REMAINING AVERAGE AVERAGE CONTRACTUAL EXERCISE EXERCISE RANGE OF EXERCISE PRICES NUMBER LIFE PRICE NUMBER PRICE - ------------------------------------------------------------------------------------------------------------------------------- $ 8.50-$14.50.......................... 48,539 2.5 years $11.04 48,539 $11.04 $ 15.81-$19.81.......................... 253,719 7.3 years $18.04 221,219 $18.18 $ 20.44-$25.91.......................... 269,079 7.2 years $23.33 151,978 $22.54 - -------------------------------------------------------------------------------------------------------------------------------
The Company has elected to adopt the disclosure-only provisions of SFAS No. 123, "Accounting for Stock-Based Compensation," and continue to apply Accounting Principles Board Opinion No. 25 and related interpretations in accounting for its stock option plans. Accordingly, no compensation cost has been recognized related to the Company's stock option plans. Consistent with the provisions of SFAS 123, had compensation cost been determined based on the fair value at the grant date for awards in fiscal 1998, 1997, and 1996, the effect on the Company's net income and net income per share for such years would not be material. The fair value of each option grant was estimated as of the grant date using the Black-Scholes option-pricing model with the following assumptions for all three years: expected volatility 23%; dividend yield of 2.26%; expected life of 3.5 years; and risk-free interest rates ranging from 5.8% to 6.6%. 18 EARNINGS PER SHARE During 1998, the Company adopted the provisions of SFAS No. 128, "Earnings per Share," which replaced the calculation of primary and fully diluted earnings per share with basic and diluted earnings per share. The following table reflects the calculations for basic and diluted earnings per share for the three years ended August 31:
1998 1997 1996 Income before cumulative effect of accounting change....... $ 16,765 $12,983 $15,926 - -------------------------------------------------------------- Net Income...................... $ 8,177 $12,983 $15,926 - -------------------------------------------------------------- BASIC EARNINGS PER SHARE: Basic shares.................... 9,200 8,674 8,606 - -------------------------------------------------------------- Income before cumulative effect of accounting change....... $ 1.82 $1.50 $1.85 - -------------------------------------------------------------- Net income...................... $ .89 $1.50 $1.85 - -------------------------------------------------------------- DILUTED EARNINGS PER SHARE: Basic shares.................... 9,200 8,674 8,606 Stock options................... 50 80 22 - -------------------------------------------------------------- Diluted shares.................. 9,250 8,754 8,628 - -------------------------------------------------------------- Income before cumulative effect of accounting change....... $ 1.81 $1.48 $1.84 - -------------------------------------------------------------- Net income...................... $ .88 $1.48 $1.84 - --------------------------------------------------------------
For each of the three years, there were outstanding stock options excluded from the computation of diluted earnings per share because the options were antidilutive. PREFERRED SHARE PURCHASE RIGHTS Under the Company's Shareholder Rights Plan, as amended on February 24, 1998, holders of common shares have one preferred share purchase right (collectively, the Rights) for each common share held. The Rights contain features which, under defined circumstances, allow holders to buy common shares at a bargain price. The Rights are not presently exercisable and trade in tandem with the common shares. The Rights become exercisable following the close of business on the earlier of (i) the 20th day after a public announcement that a person or group has acquired 15% or more of the common shares of the Company or (ii) the date designated by the Company's board of directors. It is expected that the Rights will begin to trade independently of the Company's common shares at that time. Unless renewed, the Rights expire on February 23, 2008. POSTRETIREMENT HEALTH CARE AND LIFE INSURANCE BENEFITS The Company provides health care and life insurance benefits to designated salaried and hourly employees who participate in a defined benefit pension plan and who retired prior to January 1, 1992. The plan coordinates with Medicare and requires employee contributions. The Company also provides similar benefits to certain employees, represented by bargaining units, who retire before attaining age 65 and meet certain minimum service requirements. Benefits for the bargaining unit employees terminate when the retiree attains age 65. The Company funds the postretirement benefits on a cash basis. Accumulated postretirement benefit obligation recognized in 1998 and 1997:
1998 1997 Retirees.............................. $ 3,380 $ 4,267 Fully eligible active plan participants 98 88 Other active employees................ 582 415 - -------------------------------------------------------------- ................................. 4,060 4,770 Deferred (gain) loss ................. (456) 245 - -------------------------------------------------------------- $ 4,516 $ 4,525 ==============================================================
In prior years, health care and life insurance benefits for retired employees of closed facilities were provided for at the time the related facility was closed. The accrued postretirement benefit obligation for these retirees at August 31, 1998 and 1997 was $1,100 and $1,200, respectively. Net periodic postretirement benefit expense for 1998, 1997, and 1996 is as follows:
1998 1997 1996 Service cost.................... $ 41 $ 29 $ 28 Interest cost................... 285 336 340 Amortization of loss............ 53 - - - -------------------------------------------------------------- $ 379 $ 365 $ 368 ==============================================================
The actuarial assumptions used to determine costs and benefit obligation include a discount rate of 7% for 1998 and 7.8% for 1997. The assumed rates of future increases in per capita cost of health care benefits (health care trend rates) are 8% in 1998, 7% in 1999, and 6% in 2000 and thereafter. Increasing the health care trend rate by one percentage point would increase the accumulated postretirement benefit obligation $277 and would increase the 1998 postretirement benefit cost $21. 19 BUSINESS SEGMENTS The Company has two business segments, Flow Control Products and Engineered Components, through which the Company serves the construction, automotive, and industrial sectors of the economy. The Company's Flow Control Products segment is a supplier of fittings for the industrial, commercial, and residential construction markets, valves utilized in air conditioning and refrigeration systems, and industrial compressed gas applications. Flow Control Products sales of copper and brass fittings amounted to $142,424, $125,863, and $123,351 in 1998, 1997, and 1996, respectively. The Company's Engineered Components segment is a supplier of aluminum automotive components and aluminum wheels for automotive original equipment manufacturers and the automotive aftermarket, cast and fabricated metal products for sale to original equipment manufacturers in the transportation, construction, air conditioning, and refrigeration industries. Sales of aluminum products to the automotive industry by the Engineered Components segment amounted to $363,903, $189,987, and $151,237 in 1998, 1997, and 1996, respectively. Domestic consolidated export sales were $33,372, $30,907, and $25,615 for 1998, 1997, and 1996, respectively.
NET SALES INCOME BEFORE INCOME TAXES* 1998 1997 1996 1998 1997 1996 Flow Control Products.................... $180,596 $ 162,150 $159,323 $ 27,931 $ 24,358 $ 25,236 Engineered Components United States....................... 226,049 224,901 184,611 9,708 9,531 9,323 Foreign............................. 167,769 - - 9,901 - - - ------------------------------------------------------------------------------------------------------------------------------ 393,818 224,901 184,611 19,609 9,531 9,323 Restructuring and integration charges (a) - - - (12,000) - - Disposition of aerospace business (b) ... - - - 12,048 - - Corporate................................ - - - (9,630) (6,647) (7,231) Equity in loss of joint venture and other income and expense............ - - - 62 (2,102) (249) Interest Expense......................... - - - (15,045) (5,135) (2,348) - ------------------------------------------------------------------------------------------------------------------------------ $574,414 $ 387,051 $ 343,934 $ 22,975 $ 20,005 $ 24,731 =============================================================================================================================== CAPITAL EXPENDITURES DEPRECIATION AND AMORTIZATION 1998 1997 1996 1998 1997 1996 Flow Control Products.................... $ 9,085 $ 6,318 $ 9,809 $ 6,114 $ 5,638 $ 5,370 Engineered Components United States....................... 24,018 34,042 38,767 14,551 14,665 11,892 Foreign............................. 13,517 - - 9,994 - - - ------------------------------------------------------------------------------------------------------------------------------ 37,535 34,042 38,767 24,545 14,665 11,892 Corporate................................ 143 17 64 1,454 160 166 - ------------------------------------------------------------------------------------------------------------------------------ $ 46,763 $ 40,377 $ 48,640 $ 32,113 $ 20,463 $ 17,428 ============================================================================================================================== IDENTIFIABLE ASSETS 1998 1997 1996 Flow Control Products.................... $112,874 $ 100,632 $ 94,604 Engineered Components United States....................... 173,130 180,908 156,744 Foreign............................. 189,612 155,356 - - ------------------------------------------------------------------------------------------------------------------- 362,742 336,264 156,744 Corporate................................ 87,834 72,022 17,869 - ------------------------------------------------------------------------------------------------------------------- $563,450 $ 508,918 $ 269,217 =================================================================================================================== * Income before cumulative effect of a change in accounting principle in 1998. a) $10,000 of restructuring and integration charges relates to the Flow Control Products segment (of which $2,200 is recorded in cost of sales) and $2,000 relates to prior shutdown locations. b) Disposition of aerospace business relates to the Engineered Components segment.
20 QUARTERLY FINANCIAL DATA (Unaudited) ($ in thousands except per share amounts)
FISCAL QUARTER FOR THE YEAR - --------------------------------------------------------------------------------------------------------------------------------- 1998 1ST 2ND 3RD 4TH - --------------------------------------------------------------------------------------------------------------------------------- NET SALES ................................. $ 140,979 $ 136,975 $ 159,267 $ 137,193 $ 574,414 GROSS PROFIT .............................. 23,596 22,178 26,072 21,158 93,004 INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE .......... 4,560 5,609 5,684 912 16,765 INCOME PER SHARE BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE - BASIC . $ .49 $ .61 $ .62 $ .10 $ 1.82 INCOME PER SHARE BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE - DILUTED $ .49 $ .61 $ .61 $ .10 $ 1.81 NET INCOME (LOSS) ......................... (4,028) 5,609 5,684 912 8,177 NET INCOME (LOSS) PER SHARE - BASIC ....... $ (.44) $ .61 $ .62 $ .10 $ .89 NET INCOME (LOSS) PER SHARE - DILUTED ..... $ (.44) $ .61 $ .61 $ .10 $ .88 AVERAGE NUMBER OF SHARES OUTSTANDING - BASIC .................. 9,184 9,202 9,206 9,207 9,200 AVERAGE NUMBER OF SHARES OUTSTANDING - DILUTED ................ 9,266 9,262 9,248 9,223 9,250 Fiscal Quarter For the Year - --------------------------------------------------------------------------------------------------------------------------------- 1997 1st 2nd 3rd 4th - --------------------------------------------------------------------------------------------------------------------------------- Net sales.................................. $ 90,789 $ 91,334 $ 106,223 $ 98,705 $ 387,051 Gross profit............................... 19,105 15,524 18,114 16,297 69,040 Net income................................. 4,138 2,081 4,294 2,470 12,983 Net income per share - basic............... $ .48 $ .24 $ .50 $ .28 $ 1.50 Net income per share - diluted............. $ .48 $ .24 $ .49 $ .28 $ 1.48 Average number of shares outstanding - basic................... 8,625 8,650 8,666 8,756 8,674 Average number of shares outstanding - diluted................. 8,669 8,743 8,749 8,854 8,754 - ---------------------------------------------------------------------------------------------------------------------------------
Net income for the first three quarters of fiscal 1998 have been restated from the amounts previously reported in the Company's Form 10-Q's. The restated amounts reflect the adoption of SOP 98-5 "Reporting on the Costs of Start-up Activities" retroactive to September 1, 1997. The effect of the restatements was to recognize the cumulative effect of this change in accounting principle in the first quarter, which reduced net income by $8,588 ($.93 per share) and to increase net income by $488, $330, and $320 for the first three quarters of fiscal 1998, respectively. Results for the third quarter of fiscal 1998 includes restructuring and integration charges of $12,000, of which $2,200 was recorded in cost of sales. Results for the second quarter of fiscal 1997 include a one-time, cumulative, non-cash charge of $3,500 ($.26 per share) to cost of sales as a consequence of overstated inventory values at the Company's aerospace casting operation. EX-23.1 9 EXHIBIT 23.1 1 EXHIBIT 23.1 Consent of Independent Auditors We consent to the incorporation by reference in this Annual Report (Form 10-K) of Amcast Industrial Corporation and subsidiaries of our report dated October 13, 1998, included in the 1998 Annual Report to Shareholders of Amcast Industrial Corporation. Our audits also included the financial statement schedule of Amcast Industrial Corporation listed in item 14(a). This schedule is the responsibility of the Company's management. Our responsibility is to express an opinion based on our audits. In our opinion, the financial statement schedule referred to above, when considered in relation to the basic financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein. We also consent to the incorporation by reference in Post-Effective Amendment No. 1 to Registration Statement Number 33-2876 on Form S-8 dated November 27, 1987, in Registration Statement Number 33-18690 on Form S-8 dated December 21, 1987, in Registration Statement Number 33-28080 on Form S-8 dated April 11, 1989, in Registration Statement Number 33-28084 on Form S-8 dated April 11, 1989, in Registration Statement Number 33-38176 on Form S-8 dated December 20, 1990, in Registration Statement Number 33-28075 on Form S-3 dated April 11, 1989, in Registration Statement Number 33-61290 on Form S-8 dated April 19, 1993,and in Registration Statement Number 333-00133 on Form S-8 dated January 10, 1996, of our report dated October 13, 1998, with respect to the consolidated financial statements incorporated herein by reference, and our report included in the preceding paragraph with respect to the financial statement schedule included in this Annual Report (Form 10-K) of Amcast Industrial Corporation and subsidiaries. /s/ Ernst & Young LLP - --------------------- November 20, 1998 Dayton, Ohio EX-24.1 10 EXHIBIT 24.1 1 EXHIBIT 24.1 POWER OF ATTORNEY ----------------- WHEREAS, Amcast Industrial Corporation (the "Company") intends to file with the Securities and Exchange Commission its Annual Report on Form 10-K for the year ended August 31, 1998; NOW, THEREFORE, the undersigned in his capacity as a director of the Company hereby appoints John H. Shuey and Douglas D. Watts, and each of them, his true and lawful attorneys-in-fact and agent, with full power of substitution and resubstitution, to execute in his name, place, and stead, the Company's Annual Report on Form 10-K for the year ended August 31, 1998, (including an amendment to such report) and any and all other instruments necessary or incidental in connection therewith, and to file the same with the Securities and Exchange Commission. Said attorneys shall have full power and authority to do and perform in the name and on behalf of the undersigned, in the aforesaid capacity, every act whatsoever necessary or desirable to be done, as fully to all intents and purposes as the undersigned might or could do in person. The undersigned hereby ratifies and approves the acts of said attorneys. IN WITNESS WHEREOF, the undersigned has executed this instrument this 21st day of October, 1998. /s/ Walter E. Blankley ---------------------- Walter E. Blankley 2 POWER OF ATTORNEY ----------------- WHEREAS, Amcast Industrial Corporation (the "Company") intends to file with the Securities and Exchange Commission its Annual Report on Form 10-K for the year ended August 31, 1998; NOW, THEREFORE, the undersigned in his capacity as a director of the Company hereby appoints John H. Shuey and Douglas D. Watts, and each of them, his true and lawful attorneys-in-fact and agent, with full power of substitution and resubstitution, to execute in his name, place, and stead, the Company's Annual Report on Form 10-K for the year ended August 31, 1998, (including an amendment to such report) and any and all other instruments necessary or incidental in connection therewith, and to file the same with the Securities and Exchange Commission. Said attorneys shall have full power and authority to do and perform in the name and on behalf of the undersigned, in the aforesaid capacity, every act whatsoever necessary or desirable to be done, as fully to all intents and purposes as the undersigned might or could do in person. The undersigned hereby ratifies and approves the acts of said attorneys. IN WITNESS WHEREOF, the undersigned has executed this instrument this 21st day of October, 1998. /s/ Peter H. Forster -------------------- Peter H. Forster 3 POWER OF ATTORNEY ----------------- WHEREAS, Amcast Industrial Corporation (the "Company") intends to file with the Securities and Exchange Commission its Annual Report on Form 10-K for the year ended August 31, 1998; NOW, THEREFORE, the undersigned in his capacity as a director of the Company hereby appoints John H. Shuey and Douglas D. Watts, and each of them, his true and lawful attorneys-in-fact and agent, with full power of substitution and resubstitution, to execute in his name, place, and stead, the Company's Annual Report on Form 10-K for the year ended August 31, 1998, (including an amendment to such report) and any and all other instruments necessary or incidental in connection therewith, and to file the same with the Securities and Exchange Commission. Said attorneys shall have full power and authority to do and perform in the name and on behalf of the undersigned, in the aforesaid capacity, every act whatsoever necessary or desirable to be done, as fully to all intents and purposes as the undersigned might or could do in person. The undersigned hereby ratifies and approves the acts of said attorneys. IN WITNESS WHEREOF, the undersigned has executed this instrument this 21st day of October, 1998. /s/ Ivan W. Gorr ---------------- Ivan W. Gorr 4 POWER OF ATTORNEY ----------------- WHEREAS, Amcast Industrial Corporation (the "Company") intends to file with the Securities and Exchange Commission its Annual Report on Form 10-K for the year ended August 31, 1998; NOW, THEREFORE, the undersigned in his capacity as a director of the Company hereby appoints John H. Shuey and Douglas D. Watts, and each of them, his true and lawful attorneys-in-fact and agent, with full power of substitution and resubstitution, to execute in his name, place, and stead, the Company's Annual Report on Form 10-K for the year ended August 31, 1998, (including an amendment to such report) and any and all other instruments necessary or incidental in connection therewith, and to file the same with the Securities and Exchange Commission. Said attorneys shall have full power and authority to do and perform in the name and on behalf of the undersigned, in the aforesaid capacity, every act whatsoever necessary or desirable to be done, as fully to all intents and purposes as the undersigned might or could do in person. The undersigned hereby ratifies and approves the acts of said attorneys. IN WITNESS WHEREOF, the undersigned has executed this instrument this 21st day of October, 1998. /s/ R. William Van Sant ----------------------- R. William Van Sant 5 POWER OF ATTORNEY ----------------- WHEREAS, Amcast Industrial Corporation (the "Company") intends to file with the Securities and Exchange Commission its Annual Report on Form 10-K for the year ended August 31, 1998; NOW, THEREFORE, the undersigned in his capacity as a director of the Company hereby appoints John H. Shuey and Douglas D. Watts, and each of them, his true and lawful attorneys-in-fact and agent, with full power of substitution and resubstitution, to execute in his name, place, and stead, the Company's Annual Report on Form 10-K for the year ended August 31, 1998, (including an amendment to such report) and any and all other instruments necessary or incidental in connection therewith, and to file the same with the Securities and Exchange Commission. Said attorneys shall have full power and authority to do and perform in the name and on behalf of the undersigned, in the aforesaid capacity, every act whatsoever necessary or desirable to be done, as fully to all intents and purposes as the undersigned might or could do in person. The undersigned hereby ratifies and approves the acts of said attorneys. IN WITNESS WHEREOF, the undersigned has executed this instrument this 21st day of October, 1998. /s/ Earl T. O'Loughlin ---------------------- Earl T. O'Loughlin 6 POWER OF ATTORNEY ----------------- WHEREAS, Amcast Industrial Corporation (the "Company") intends to file with the Securities and Exchange Commission its Annual Report on Form 10-K for the year ended August 31, 1998; NOW, THEREFORE, the undersigned in his capacity as a director of the Company hereby appoints John H. Shuey and Douglas D. Watts, and each of them, his true and lawful attorneys-in-fact and agent, with full power of substitution and resubstitution, to execute in his name, place, and stead, the Company's Annual Report on Form 10-K for the year ended August 31, 1998, (including an amendment to such report) and any and all other instruments necessary or incidental in connection therewith, and to file the same with the Securities and Exchange Commission. Said attorneys shall have full power and authority to do and perform in the name and on behalf of the undersigned, in the aforesaid capacity, every act whatsoever necessary or desirable to be done, as fully to all intents and purposes as the undersigned might or could do in person. The undersigned hereby ratifies and approves the acts of said attorneys. IN WITNESS WHEREOF, the undersigned has executed this instrument this 21st day of October, 1998. /s/ William G. Roth ------------------- William G. Roth 7 POWER OF ATTORNEY ----------------- WHEREAS, Amcast Industrial Corporation (the "Company") intends to file with the Securities and Exchange Commission its Annual Report on Form 10-K for the year ended August 31, 1998; NOW, THEREFORE, the undersigned in his capacity as a director of the Company hereby appoints John H. Shuey and Douglas D. Watts, and each of them, his true and lawful attorneys-in-fact and agent, with full power of substitution and resubstitution, to execute in his name, place, and stead, the Company's Annual Report on Form 10-K for the year ended August 31, 1998, (including an amendment to such report) and any and all other instruments necessary or incidental in connection therewith, and to file the same with the Securities and Exchange Commission. Said attorneys shall have full power and authority to do and perform in the name and on behalf of the undersigned, in the aforesaid capacity, every act whatsoever necessary or desirable to be done, as fully to all intents and purposes as the undersigned might or could do in person. The undersigned hereby ratifies and approves the acts of said attorneys. IN WITNESS WHEREOF, the undersigned has executed this instrument this 21st day of October, 1998. /s/ Leo W. Ladehoff ------------------- Leo W. Ladehoff 8 POWER OF ATTORNEY ----------------- WHEREAS, Amcast Industrial Corporation (the "Company") intends to file with the Securities and Exchange Commission its Annual Report on Form 10-K for the year ended August 31, 1998; NOW, THEREFORE, the undersigned in his capacity as a director of the Company hereby appoints John H. Shuey and Douglas D. Watts, and each of them, his true and lawful attorneys-in-fact and agent, with full power of substitution and resubstitution, to execute in his name, place and stead, the Company's Annual Report on Form 10-K for the year ended August 31, 1998, (including an amendment to such report) and any and all other instruments necessary or incidental in connection therewith, and to file the same with the Securities and Exchange Commission. Said attorneys shall have full power and authority to do and perform in the name and on behalf of the undersigned, in the aforesaid capacity, every act whatsoever necessary or desirable to be done, as fully to all intents and purposes as the undersigned might or could do in person. The undersigned hereby ratifies and approves the acts of said attorneys. IN WITNESS WHEREOF, the undersigned has executed this instrument this 21st day of October, 1998. /s/ James K. Baker ------------------ James K. Baker EX-27 11 EXHIBIT 27
5 1,000 YEAR AUG-31-1998 SEP-01-1997 AUG-31-1998 7022 0 111066 0 84255 222651 398878 138761 563450 135722 240447 0 0 9207 151607 563450 574414 574414 481410 481410 0 0 15045 22975 6210 16765 0 0 (8588) 8177 .89 .88
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