Amcast Reports Fiscal 2001 Fourth Quarter and Total Year Results
DAYTON, Ohio--Oct. 17, 2001--Amcast Industrial Corporation, today reported sales declined nearly 13% in its fourth fiscal quarter ended August 31, 2001 versus the prior year. A net loss of $11.2 million, including unusual items of $5.3 million after tax, was reported for the quarter.Fourth quarter sales were $132.3 million, compared to $151.4 million in the fourth quarter of fiscal 2000. Weaker sales were attributed primarily to low vehicle build in the company's major North American market. U.S. light vehicle production dropped more than 9% year-over-year during the three months ending in August, while vehicle sales were down 4% in the same period. Sales at Speedline, the Company's European operation, were down 5 % during the quarter as compared to the prior year. Flow Control segment sales declined 14% for the fourth quarter versus last year, mostly due to some softness in housing starts and competitive market pricing pressures.
The net loss for the quarter was $11.2 million or ($1.31) per share versus a prior year net profit of $0.3 million or $ 0.04 per share. Excluding unusual items, the net loss for the quarter would have been $5.9 million or ($ 0.69) per share.
For fiscal year 2001, sales were $529.4 million, down 13.3% from the prior year's $610.7 million. The net loss for the year was $37.1 million or ($4.38) per share. Excluding unusual items, the net loss for the year would have been $16.3 million or ($1.92) per share. Net income for fiscal year 2000 was $3.4 million or $0.38 per share.
Byron O. Pond, President and Chief Executive Officer said, "The Company has been primarily managed for cash since the new management team was appointed in mid-February. The Company experienced sales weaknesses early in the fiscal year, but continued producing at planned levels causing inventories to rise. By February inventories, including those at Casting Technology Company, reached a high of $98.2 million, consuming valuable cash resources. Management began taking actions to reduce working capital, general spending and capital projects, making cash generation the new management's highest priority. We ended the year with inventories of $58.2 million, a $40 million decrease. Obviously, a reduction of this magnitude had a negative impact on operating income due to lost overhead absorption. Most important, we have been able to operate the Company without any additional borrowings since March 9 after we had a non-monetary default on our credit facility."
Mr. Pond continued, "As we announced at the end of the third quarter, the new management team immediately started a strategic review of the Company because of its weak markets and relatively poor operating performance. This resulted in management deciding to dispose of certain under-utilized machinery, tooling and equipment and certain slow moving inventories, and to increase the Company's allowance for doubtful and disputed receivables. We also established a valuation allowance for foreign net operating loss carryforwards in compliance with Statement of Financial Accounting Standards No.109. These unusual items included recent costs associated with the Company's financial covenant default and new financing arrangements." Mr. Pond added, "We substantially concluded our strategic review during Amcast's fiscal fourth quarter. This resulted in an after tax write off of $5.3 million in the period. Unusual items for the year totaled $20.9 million after tax. We do not anticipate that there will be any significant additional charges of this nature in the near future.
Leo W. Ladehoff, Chairman of the Board, in reviewing the status of Amcast's loan agreements said, "Renegotiating our loan agreements has been a slow process, but we have made considerable progress with our lending group of banks and senior note holders. The lending group has waived the financial covenants until April 15, 2002. We entered into a LIFO lending arrangement on June 5, 2001 that allows us to borrow an additional $35 million, if required. As of today, we have not borrowed against this line. In addition, the banks have extended the maturity date of our loan agreement to September 15, 2002, pending finalization of new financial covenants, and there is a provision to extend this to September 2003, under certain conditions. Right now, we are in the process of finalizing our new financial covenants and anticipate completing this by the time we file our Form 10-K with the SEC."
Mr. Pond stated, "Amcast is showing signs of improvement. Our August run rate was positive for Flow Control and U.S. Automotive on the operating income line, although Speedline's performance has been below expectations. We are taking actions to continue to improve output, lower scrap and rework and improve our support operations at Speedline. It may be late in the fiscal year before Speedline will begin to experience satisfactory operating income."
In conclusion, Mr. Pond said, "While we have made important progress during the past seven months, it is clear that much remains to be done. The September 11 terrorist attack and the U.S. response will most likely further depress our markets. However, we do believe that an economic recovery should benefit our market sectors in six to nine months. Despite lower levels of economic activity, we have won six new wheel programs with General Motors in North America, won our first Chrysler wheel order in North America, started up new business that will equal 10% of revenue in Europe and added several important pieces of business in automotive aluminum suspension components. In addition, we began production of front and rear steering knuckles for Saab and Opel in Europe from our Franklin and Richmond, Indiana plants. In the new fiscal year, we will be focusing heavily on reducing SG&A spending overall and lowering our total labor costs. This, coupled with our emphasis on lowering our internal cost of quality, should help Amcast create a stronger competitive edge."
A conference call will be held Thursday, October 18th at 2 p.m. EDT. The Webcast to discuss the year's performance and unusual items can be accessed through www.amcast.com.
Amcast Industrial Corporation is a leading manufacturer of technology-intensive metal products. Its two business segments are brand name Flow Control Products marketed through national distribution channels, and Engineered Components for original equipment manufacturers. The company serves the automotive, construction, and industrial sectors of the economy.
This release includes "forward-looking statements" which are subject to change based on various factors and uncertainties that may cause actual results to differ significantly from expectations. These factors include, among others; general economic conditions less favorable than expected, the ability of the Company to negotiate an extension of its waivers with its bank group, fluctuating demand in the automotive and housing industries, price pressures in the company's automotive and flow control businesses, effectiveness of production improvements plans, inherent uncertainties in connection with international operations and foreign currency fluctuations, and labor availability and relations at the company and its customers.
STATEMENTS OF OPERATIONS
($ in thousands except per share amounts)
Three Months Ended Year Ended
-------------------- -------------------
August 31 August 31 August 31 August 31
2001 2000 2001 2000
-------- -------- -------- --------
Net sales $132,305 $151,405 $529,373 $610,655
Cost of sales 123,852 131,040 488,580 531,961
-------- -------- -------- --------
Gross Profit 8,453 20,365 40,793 78,694
Selling, general and
administrative expenses 18,764 14,179 71,183 57,137
-------- -------- -------- --------
Operating (Loss)
Income (10,311) 6,186 (30,390) 21,557
Equity in loss of joint
venture and other
(income) and expense (938) 2,322 1,644 3,206
Interest expense 6,411 3,272 17,532 12,929
-------- -------- -------- --------
(Loss) Income before
Income Taxes and
Cumulative Effect
of Accounting Change (15,784) 592 (49,566) 5,422
Income taxes (4,551) 292 (12,435) 2,058
-------- -------- -------- --------
(Loss) Income before
Cumulative Effect
of Accounting Change (11,233) 300 (37,131) 3,364
Cumulative Effect of
Accounting Change,
net of tax - - 983
-------- -------- -------- --------
Net (Loss) Income $(11,233) $ 300 $(37,131) $ 4,347
======== ======== ======== ========
Basic Earnings per Share
(Loss) income before
cumulative effect of
accounting change $ (1.31) $ 0.04 $ (4.38) $ 0.38
Cumulative effect
of accounting change - - - 0.11
-------- -------- -------- --------
Net (loss) income $ (1.31) $ 0.04 $ (4.38) $ 0.49
======== ======== ======== ========
Diluted Earnings per
Share
(Loss) income before
cumulative effect of
accounting change $ (1.31) $ 0.04 $ (4.38) $ 0.38
Cumulative effect
of accounting change - - - 0.11
-------- -------- -------- --------
Net (loss) income $ (1.31) $ 0.04 $ (4.38) $ 0.49
======== ======== ======== ========
Average number of
shares outstanding
- Basic 8,577 8,406 8,482 8,788
Average number of
shares outstanding
- Diluted 8,577 8,407 8,482 8,792
CONDENSED BALANCE SHEETS
($ in thousands)
August 31 August 31
2001 2000
-------------- ---------------
Current Assets
Cash and cash equivalents $ 14,981 $ 3,062
Accounts receivable 64,408 85,041
Inventories 58,193 77,512
Other current assets 13,846 16,304
-------------- ---------------
151,428 181,919
Property, Plant and Equipment 242,292 226,857
Goodwill 48,353 49,707
Other Assets 16,617 21,903
-------------- ---------------
$ 458,690 $ 480,386
============== ===============
Current Liabilities
Accounts payable $ 66,032 $ 84,285
Current debt 28,694 4,628
Other current liabilities 38,014 38,013
-------------- ---------------
132,740 126,926
Long-Term Debt 170,296 147,273
Deferred Liabilities 40,142 50,233
Shareholders' Equity 115,512 155,954
-------------- ---------------
$ 458,690 $ 480,386
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