Amcast Reports Fiscal 2001 Third Quarter Sales, Earnings Decline.

Business Editors

DAYTON, Ohio--(BUSINESS WIRE)--June 26, 2001

Amcast Industrial Corporation, (NYSE:AIZ) today reported sales declined by nearly 17% in its third fiscal quarter ended June 3, 2001 from the prior year.

A net loss of $19.2 million, including unusual items of $13.6 million, was reported for the quarter.

Sales for the quarter were $136.2 million, compared to $163.2 million in the third quarter of fiscal 2000. Weak sales were attributed primarily to low vehicle build in the company's major North American market. The vehicle build in North America was down 9% year over year during the last three months. This compares to vehicle sales that were down 5% during this same period. North American vehicle sales have now been below the prior year for eight consecutive months. In Flow Control, sales volume was up slightly, but the market pricing for its products eroded somewhat.

The net loss for the quarter was $19.2 million or ($2.25) per share versus a prior year net profit of $1.5 million or $ 0.17 per share. Excluding the unusual items, the net loss for the quarter was $5.6 million or ($ 0.66) per share.

For the FY 2001 nine-month period, sales were $397.1 million, down nearly 14% from the prior year's $459.3 million. The net loss for the nine-month period was $25.9 million or ($3.06) per share. Net income for the same period last year was $4.0 million or $0.45 per share. Excluding the unusual items, the net loss for the nine-month period was $10.4 million or ($1.23) per share.

The Company's inventories had increased to a high of $93.8 million in January 2001. This increase in inventory consumed a significant amount of cash. As reported earlier, Amcast's violation of certain financial covenants with its bank group restricted its ability to borrow. The Company remained in this restricted position until June 5, 2001 when a new agreement was reached.

Byron O. Pond, President and Chief Executive Officer, said "The Company has been managed for cash since the new management team was appointed in mid-February." Mr. Pond also said, "It was clear soon after new management joined Amcast that the Company was going to be in violation of certain financial loan covenants. Taking actions to reduce working capital, spending and new investments, therefore, became a very high management priority. At the same time an initiative was launched to develop a new, committed business plan for the last six months of the fiscal year to help the Company get back on track."

Mr. Pond went on to say, "The new management team immediately started a strategic review of the Company in light of its weak markets and relatively poor operating performance. As a result, management has decided to dispose of certain under-utilized machinery, tooling and equipment, to scrap certain slow moving inventories, and to increase the allowance for doubtful and disputed receivables." In addition, the Company established a valuation allowance for foreign net operating loss carryforwards in compliance with Statement of Financial Accounting Standards No. 109. These unusual items also included recent expenses associated with the Company's new financing. Finally, Mr. Pond said, "We expect to conclude our management review during our fiscal fourth quarter. Our present estimate is that we will have additional unusual items in the fourth quarter that are less than half of the charge taken during the third quarter."

Leo W. Ladehoff, Chairman of the Board, said, "We are very pleased to have entered into a new agreement with our lenders, which we completed at the beginning of our fiscal fourth quarter. The members of the bank lending group, as well as the insurance company holders of the Company's senior notes, have waived the financial covenants, which caused the Company to be out of compliance with the existing loan agreements, until April 15, 2002. This will give us additional borrowing capacity, if needed, and it allows us to proceed with addressing the operating needs of the Company. The Company is currently establishing new covenants with its lenders, and, in the process, the Company will propose an agreement that will allow it to be in compliance with its financial covenants through at least September 2002. The Company believes that an agreement will be reached on this matter. The Company, however, will continue with a substantial interest burden, which will affect earnings until lower cost financing can be put in place."

Mr. Pond stated that Amcast is beginning to show signs of improvement. Excluding the unusual items, Amcast's third quarter showed an operating loss of $2.7 million versus an operating loss of $2.9 million in the second quarter. "In addition", Mr. Pond said, "inventories have declined almost $26 million since last quarter. This lost production has cost us about $5 million in overhead absorption. In the second quarter inventory increased by $5.7 million, which increased overhead absorption. Importantly, we have not had to borrow any additional funds since our covenant violation on March 4. In fact, we have increased our cash position by $3.6 million and reduced our accounts payable by over $18 million. We are on the way to rebuilding Amcast's balance sheet."

In conclusion, Mr. Pond said, "While we are pleased with the progress we have made during the past four months, it is clear that much remains to be done. Our markets are not expected to show any significant recovery until the fourth quarter of this calendar year. However, we have won new contracts in the wheel and suspension segments of our business, and we are continuing to quote new business opportunities. In the meantime, we are committed to focusing on better management of Amcast's balance sheet, improving profitability and creating a stronger competitive edge."

A conference call will be held on June 27th at 2 p.m. EDT. The Webcast to discuss the quarter'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 INCOME

($ in thousands except per share amounts)

                            Three Months Ended     Nine Months Ended
                           --------------------- ---------------------
                            June 03     May 28    June 03     May 28
                              2001       2000       2001       2000
                           ---------- ---------- ---------- ----------
Net sales                  $ 136,158  $ 163,162  $ 397,068  $ 459,250
Cost of sales                130,074    141,775    364,728    400,921
                           ---------- ---------- ---------- ----------
   Gross Profit                6,084     21,387     32,340     58,329

Selling, general and
 administrative expenses      24,374     14,349     52,419     42,958
                           ---------- ---------- ---------- ----------
   Operating Income (Loss)   (18,290)     7,038    (20,079)    15,371

Equity in (income) loss of
 joint venture and other
 (income) and expense            972      1,521      2,582        884
Interest expense               4,601      3,287     11,121      9,657
                           ---------- ---------- ---------- ----------
   Income (Loss) before
    Income Taxes and
    Cumulative Effect
    of Accounting Change     (23,863)     2,230    (33,782)     4,830

Income taxes                  (4,620)       745     (7,884)     1,766
                           ---------- ---------- ---------- ----------

   Income (Loss) before
    Cumulative Effect of
    Accounting Change        (19,243)     1,485    (25,898)     3,064

Cumulative effect of
 accounting change                                                983
                           ---------- ---------- ---------- ----------

   Net Income (Loss)       $ (19,243) $   1,485  $ (25,898) $   4,047
                           ========== ========== ========== ==========

Basic earnings per share
 before cumulative effect
 of accounting change      $   (2.25) $    0.17  $   (3.06) $    0.34
                           ========== ========== ========== ==========

Basic earnings per share   $   (2.25) $    0.17  $   (3.06) $    0.45
                           ========== ========== ========== ==========

Diluted earnings per share
 before cumulative effect
 of accounting change      $   (2.25) $    0.17  $   (3.06) $    0.34
                           ========== ========== ========== ==========

Diluted earnings per share $   (2.25) $    0.17  $   (3.06) $    0.45
                           ========== ========== ========== ==========

Average number of shares
 outstanding- Basic            8,536      8,863      8,451      8,922

Average number of
 shares outstanding- Diluted   8,537      8,863      8,455      8,927


                       CONDENSED BALANCE SHEETS

($ in thousands)
                                                 June 03    August 31
                                                   2001        2000
                                                ----------  ----------
Current Assets
Cash and cash equivalents                       $  11,598   $   3,062
Accounts receivable                                80,750      85,041
Inventories                                        64,737      77,512
Other current assets                               17,391      16,304
                                                ----------  ----------

                                                  174,476     181,919

Property, Plant and Equipment                     217,998     226,857
Goodwill                                           48,694      49,707
Other Assets                                       22,678      21,903
                                                ----------  ----------

                                                $ 463,846   $ 480,386
                                                ==========  ==========

Current Liabilities
Current debt                                    $ 185,357   $   4,628
Accounts payable                                   58,189      84,285
Other current liabilities                          39,951      38,013
                                                ----------  ----------

                                                  283,497     126,926

Long-Term Debt                                      1,985     147,273
Deferred Liabilities                               47,299      50,233
Shareholders' Equity                              131,065     155,954
                                                ----------  ----------

                                                $ 463,846   $ 480,386
                                                ==========  ==========