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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.
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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
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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.
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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.
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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
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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
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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.
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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.
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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
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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.
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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
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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.
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PART IV
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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