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 during fiscal 1999, sold Superior Valve Company, located in Washington, Pennsylvania. See further discussion in "Flow Control Products" below. During fiscal 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 and during fiscal 1998, 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 and sales by product catagory for years 1997 through 1999 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, 1999. Such information is incorporated herein by reference and is included as Exhibit 13.1 of this report. Domestic export sales were $18.0 million, $33.4 million, and $30.9 million in fiscal 1999, 1998, and 1997, respectively.
FLOW CONTROL PRODUCTS
The Flow Control Products segment (Flow Control) includes the businesses of Elkhart Products Corporation (Elkhart), Lee Brass Company (Lee Brass), 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 the Company's Flow Control segment manufacturing units.
The Flow Control Products segment is a leading supplier of copper pipe fittings 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 Flow Control Products segment is one of three major suppliers of copper and brass fittings to the North American industrial, commercial, and residential plumbing markets. 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
FLOW CONTROL PRODUCTS (cont'd)
conditioning and commercial refrigeration business. Competition is based on service levels, pricing, and breadth 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 greater financial resources than the Company.
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.
Following the acquisition of Lee Brass, the Company consolidated its two brass foundry operations and ceased production at its Flagg Brass plant located in Stowe, Pennsylvania. The consolidation plan included the transfer of certain product lines to Lee Brass, the closure of the Flagg Brass facility, and the termination of approximately 100 salaried and hourly personnel.
On October 16, 1998, the Company sold Superior Valve Company for $35.6 million in cash. The transaction resulted in a pre-tax gain of $9.0 million. This business, acquired by Amcast in 1986, produces specialty valves and related products for the compressed gas and commercial refrigeration markets. Fiscal 1998 sales of approximately $42.0 million were included in the Company's Flow Control Segment.
The majority of the Flow Control Products segment's 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
ITEM 2 - PROPERTIES
The following table provides certain information relating to the Company's principal facilities as of October 18, 1999:
ITEM 2 - PROPERTIES (cont'd)
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 2004, with an option for a five year renewal. Five buildings used by Speedline S.r.l. are leased. Three of the leased buildings are located in Tabina S. Maria di Sala, Italy. One building of 13,002 square feet and one building of 37,221 square feet are both leased until 2003 and the third building of 21,670 square feet is leased until 2002, with an option for a six-year renewal. There are two additional leases for Speedline associates parking lots renewable from year to year thereafter. The Speedline building located in Caselle S. Maria di Sala, Italy, is leased in two portions--one is leased until 2001 and the other is leased until 2006. The land and buildings in Riese Pio X are leased until 2000, with an option for a six year renewal. The Bolzano land is leased under a 20 year lease, expiring in 2019. 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 1999, total company-wide productive capacity utilization ranged from 85% to 95%, and averaged 91% of the Company's total capacity.
ITEM 3
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, 1999, which is included in Exhibit 13.1 to this Report and incorporated herein by reference.
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
ITEM 3 - LEGAL PROCEEDINGS (cont'd)
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. The trial court recently entered a "short form" opinion on the merits. The Court stated that the Company is responsible for 2% of Allied's past and future clean-up costs, and that the Company is responsible for 28% of the costs that Allied incurred to place a "cap" on the Goldcamp Disposal site. The Court also ordered the Company to pay pre-judgment interest. Based on the Court's action, the Company estimates that its maximum liability associated with the action is between $0.5 million and $1.5 million. The Court has not entered a "final" order and any final order could be subject to appeal. The Company believes its liability is at the low end of this range.
ITEM 4
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
EXECUTIVE OFFICERS OF REGISTRANT
John H. Shuey, age 53, 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.
Giovanni Scarlini, age 48, 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 52, has been President of Amcast Flow Control, 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.
Ronald C. DiLiddo, age 54, has been President of Amcast Automotive since October 1999. From 1998 to 1999, he was General Manager of the North American Wiper Systems and Electric Motor group of Valeo S.A. From 1996 to 1998, Mr. DiLiddo was Vice President of Operations for ITT's automotive electrical systems group and from 1994 to 1996, he was President and Chief Executive Officer of Hansford Manufacturing.
Douglas D. Watts, age 54, 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 45, has been Vice President of Amcast Automotive since September 1999. From September 1997 to September 1999, he was Vice President, Amcast Europe. 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 57, 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.
EXECUTIVE OFFICERS OF REGISTRANT (cont'd)
Robert C. Collevechio, age 47, 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.
James R. Van Wert, Jr., age 41, 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 53, has been Treasurer since January 1987.
Mark D. Mishler, age 41, has been Corporate 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
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, 1999, there were 8,954,920 of the Company's common shares outstanding, and there were approximately 8,100 shareholders of Amcast's common stock, including shareholders of record and the Company's estimate of beneficial holders.
Certain information concerning provisions affecting the payment of dividends is located 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, 1999, Exhibit 13.1 herein.
ITEM 6
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, 1999, Exhibit 13.1 herein.
ITEM 7
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, 1999, Exhibit 13.1 herein.
ITEM 7a
ITEM 7a - QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK
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, 1999, Exhibit 13.1 herein.
ITEM 8
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, 1999, Exhibit 13.1 herein.
ITEM 9
ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None
PART III
ITEM 10
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 15, 1999. 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
ITEM 11 - EXECUTIVE COMPENSATION
The information required by this item is incorporated herein by reference to "Executive Compensation" on pages 6 through 13 of the Company's Proxy Statement for its Annual Meeting of Shareholders to be held on December 15, 1999.
ITEM 12
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 15 of the Company's Proxy Statement for its Annual Meeting of Shareholders to be held on December 15, 1999.
ITEM 13
ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this item is contained on pages 9 and 13 in the Company's Proxy Statement for its Annual Meeting of Shareholders to be held on December 15, 1999, which is incorporated herein by reference.
PART IV
ITEM 14
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, 1999, are incorporated by reference at Item 8 of this report.
Consolidated Statements of Income - Years Ended August 31, 1999, 1998, and 1997.
Consolidated Statements of Financial Condition - August 31, 1999 and 1998.
Consolidated Statements of Shareholders' Equity - Years Ended August 31, 1999, 1998, and 1997.
Consolidated Statements of Cash Flows - Years Ended August 31, 1999, 1998, and 1997.
Notes to Consolidated Financial Statements
Report of Independent Auditors
2. Consolidated financial statement schedule:
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 14 hereof).
4. Reports on Form 8-K - During the fourth quarter ended August 31, 1999, the Company did not file any reports on Form 8-K.
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 23rd day of November 1999.
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.
*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
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
AMCAST INDUSTRIAL CORPORATION AND SUBSIDIARIES
($ In Thousands)
(1) Write off of assets against reserve.
INDEX TO EXHIBITS
INDEX TO EXHIBITS (cont'd)
INDEX TO EXHIBITS (cont'd)
INDEX TO EXHIBITS (cont'd)
INDEX TO EXHIBITS (cont'd)
INDEX TO EXHIBITS (cont'd)
INDEX TO EXHIBITS (cont'd)
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