<TABLE>
<CAPTION>
2000 IN REVIEW
<S>                                               <C>                  <C>
                                                      Year Ended August 31
                                                     2000                1999
FOR THE YEAR
       Net sales                                  $610,655             $588,933
       Operating income                             21,557               46,110
       Operating income percent                       3.5%                 7.8%
       Income before income taxes and cumulative
          effect of accounting change                5,522               31,538
       Income before cumulative
          effect of accounting change                3,364               19,317
       Cumulative effect of accounting change,
          net of tax                                   983                    -
       Net income                                    4,347               19,317
       Income per diluted share before cumulative
          effect of accounting change             $    .38             $   2.11
       Net income per diluted share               $    .49             $   2.11
       Cash dividends declared per share          $    .56             $    .56

YEAR-END POSITION
       Working capital                            $ 54,993             $ 68,955
       Total assets                                480,386              533,486
       Total debt                                  151,901              184,916
       Shareholders' equity                        155,954              170,766
       Book value per share                       $  18.55             $  19.07
</TABLE>
<PAGE>
Management's Discussion of Financial Condition and Results of Operations
($ in thousands except per share amounts)
Cautionary Statements Under the Private Securities Reform Act of 1995

Certain statements in this Report, in the Company's press releases,  and in oral
statements  made by or with the approval of an authorized  executive  officer of
the  Company  constitute  "forward-looking  statements"  as that term is defined
under the Private  Securities  Litigation  Reform Act of 1995. These may include
statements  projecting,  forecasting,  or  estimating  Company  performance  and
industry trends. The achievement of the projections,  forecasts, or estimates is
subject to certain  risks and  uncertainties  and actual  results and events may
differ materially from those projected,  forecasted, or estimated. Factors which
may cause actual results to differ  materially  from those  contemplated  by the
forward-looking  statement,  include,  among others: general economic conditions
less  favorable than expected,  fluctuating  demand in the automotive  industry,
less favorable than expected growth in sales and profit margins in the Company's
product  lines,  increased  competitive  pressures in the  Company's  Engineered
Components  and Flow Control  Products  segments,  effectiveness  of  production
improvement  plans,  inherent  uncertainties  in connection  with  international
operations and foreign currency  fluctuations and labor relations at the Company
and its customers.  The following  discussion and analysis provides  information
which  management  believes  is relevant to an  understanding  of the  Company's
consolidated  results of operations  and financial  condition.  This  discussion
should  be read in  conjunction  with the  accompanying  consolidated  financial
statements and notes thereto.

Business Segments

During 1999, the Company  adopted  Statement of Financial  Accounting  Standards
(SFAS) No.  131,  "Disclosures  about  Segments  of an  Enterprise  and  Related
Information."  This  Statement  requires  the  Company to report  financial  and
descriptive  information about its operating  segments on the same basis that is
used  internally  to assess  operating  performance  and  allocate  resources to
segments.  Operating segments are organized  internally primarily by the type of
products  produced and markets served,  and in accordance with SFAS No. 131, the
Company has aggregated similar operating segments into two reportable  segments:
Flow Control  Products and Engineered  Components.  Adoption of the new standard
did not result in a change in the Company's reportable segments.

The Flow  Control  Products  segment is a supplier of copper and brass  plumbing
fittings for the industrial,  commercial,  and residential construction markets,
and in prior  years,  valves  utilized  in air  conditioning  and  refrigeration
systems and industrial  compressed gas applications.  The Engineered  Components
segment is a supplier of aluminum wheels and aluminum  components for automotive
original equipment manufacturers and cast and fabricated metal products for sale
to original equipment  manufacturers in the  transportation,  construction,  air
conditioning, and refrigeration industries.

<PAGE>

Acquisitions, Divestitures, and Restructuring

During 1998,  1999, and 2000 the Company  completed  several  transactions  that
impact the Company's financial results for those years and affect the comparison
between 2000,  1999,  and 1998.  On October 16, 1998,  the Company sold Superior
Valve Company (Superior Valve) for $35,604 in cash. The transaction  resulted in
a pre-tax gain of $9,023.  Results for 1999 and 1998 included sales for Superior
Valve of approximately $4,600 and $42,000,  respectively,  in the Company's Flow
Control segment.

Effective  March 30,  1998,  the Company sold its Rancho  Cucamonga,  California
investment casting operation, Amcast Precision (Precision), for $25,445 in cash.
The transaction resulted in a pre-tax gain of $12,048. Results for 1998 included
sales  for  Precision  of  approximately  $13,100  in the  Company's  Engineered
Components segment.

On April 9, 1998,  the Company  acquired Lee Brass  Company,  a  privately-owned
company  located  in  Anniston,  Alabama.  Financial  results  for Lee Brass are
included in the Flow Control  Products  segment  since the date of  acquisition.
Following the acquisition of Lee Brass,  the Company  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.  In connection
with the  consolidation  plan, during 1998, the Company recorded a restructuring
charge of $5,800 for  facility  exit costs and a charge of $2,200,  included  in
cost of sales,  primarily  for a non-cash  write-down  of  inventory  to its net
realizable value. Key components of the $5,800  restructuring charge were $4,900
for a non-cash  write-down of assets to their fair value, $500 for severance and
other  termination  benefits,  and $400 for other facility  closure costs. As of
August 31, 2000, all associates had been terminated and all of the severance and
most of the  facility  closure  costs had been  charged  against the  liability.
During  1999,  the Company  wrote off $4,504 of net assets  related to the Flagg
Brass  operation  against the  previously  established  long-term  reserve.  The
Company expects that the disposition of the remaining Flagg Brass assets will be
completed  by the end of fiscal 2002.  Results for 1998 include  sales for Flagg
Brass of approximately $7,800 in the Flow Control segment.

The sale of  Precision  and  Superior  Valve and the  closure of Flagg Brass are
collectively   referred  to  as  "divested   operations"  in  this  Management's
Discussion and Analysis.

During 1998, the Company also  re-evaluated its reserves related to several iron
foundries  previously  closed in the 1980's  and early  1990's.  As a result,  a
restructuring  charge of $4,000  was  recorded  to cover  higher  than  expected
medical benefits and workers  compensation  expenses related to these previously
closed facilities.

  During  2000,   the  Company   re-assessed   its   reserves   related  to  the
aforementioned  foundries  and  recorded a net  restructuring  charge of $721 to
increase the reserve for medical  benefits and workers  compensation  related to
the closed  facilities.  A reduction in certain  other  reserves,  primarily for
product  liability and warranty claims for divested  operations,  is included in
the net charge for 2000.

<PAGE>

Results of Operations

Consolidated net sales in 2000 were $610,655,  which  represented a $21,722,  or
3.7%,  increase over 1999.  Consolidated net sales in 1999 were $588,933,  which
represented a $14,519,  or 2.5%,  increase over 1998. The following  table shows
the components of the growth in the Company's consolidated net sales.

<TABLE>
<S>                                         <C>          <C>
                                               2000          1999
                                            --------     --------
Volume                                          1.9%        11.8%
Price and product mix                           6.5%        (3.6%)
Acquisitions and divestitures                  (0.8%)       (6.0%)
Foreign currency exchange rates                (3.9%)        0.3%
                                            --------     --------
                                                3.7%         2.5%
                                            ========     ========
</TABLE>

In 2000,  consolidated  net sales  increased to $610,655.  Volume growth in 2000
reflects  increased  sales  of  the  Company's   performance-critical   aluminum
components  and European  wheels  partly  offset by a decline in North  American
wheel sales and by lower volumes in the Flow Control Products segment. Favorable
pricing  includes a better  product  mix,  primarily at the  Company's  European
operations, and higher aluminum costs reflected in the sales price of automotive
products.  These  gains  were  partially  offset by a  reduction  in sales  from
divested  operations  and by a  weaker  Italian  lira.  By  segment,  Engineered
Components  sales  increased  6.4%  primarily due to volume gains related to the
increased  aluminum  component sales while Flow Control Products sales decreased
4.0% primarily due to the loss of two significant  customers and decreased sales
from divested operations.

In 1999, consolidated net sales increased to $588,933.  Demand for the Company's
copper  and  brass  plumbing   fittings,   aluminum   automobile   wheels,   and
performance-critical  aluminum  automotive  components  was strong.  Significant
volume  gains and  incremental  growth  from Lee Brass and  Speedline  more than
offset the decrease in sales volume from divested  operations.  The volume gains
in 1999 were  partially  the  result of reduced  volumes in the last  quarter of
fiscal 1998 due to a General Motors work stoppage.  Market pricing  pressures in
the Flow Control  Products  segment and lower  aluminum  costs  reflected in the
Engineered  Components  segment's pricing more than offset favorable product mix
gains,  which when  combined,  decreased  consolidated  net sales.  By  segment,
Engineered  Components  sales  increased  10.5%  primarily  due to volume  gains
related to increased  wheel sales.  Flow  Control  Products net sales  decreased
14.8% primarily due to divested operations.

<PAGE>

Gross  profit  was  $78,694,  $93,025,  and  $93,004  in 2000,  1999,  and 1998,
respectively.  As a percentage of sales, gross profit decreased to 12.9% in 2000
from 15.8% in 1999 and 16.2% in 1998.

A combination of internal and external factors affected gross profit in 2000. In
the Flow Control  Products  segment,  large volume  losses  associated  with two
customers  at Lee Brass  depressed  gross  profit.  In  addition,  this  segment
experienced sporadic,  intense price competition that prevented the Company from
passing  higher  copper costs on to its  customers.  The flow control  units did
respond  positively to the  corporate-wide  cost-  reduction  program  initiated
earlier in the year that partially offset the copper cost and competitive market
pricing issues. In the Engineered Components segment,  reduced sales volumes for
certain aluminum wheel styles, coupled with high associate turnover at one wheel
plant during the first half of the year, had a negative  impact on gross profit.
In North America,  the Company tooled up and reserved capacity to produce wheels
for three vehicles that  experienced less than  anticipated  sales volume.  Also
negatively  impacting  gross profit in 2000 was the  continuation of some of the
operating issues  encountered during 1999 that are discussed below. In Europe, a
negative currency impact,  the inability to pass through certain material costs,
and a factory expansion temporarily depressed gross profit. The cost of aluminum
is a  significant  component of the overall cost of a wheel.  While the aluminum
content  of  selling  prices  is   periodically   adjusted  for  current  market
conditions,  the purchasing  practices and pricing formulas of certain customers
of the Company's European operations prevented the Company from reacting quickly
enough to the sharp rise in aluminum prices early in the year. Additionally, the
Company expanded and rearranged one of its Italian plants to increase output and
better  balance  production  flow.  During  this  time  period,   this  facility
experienced very high labor turnover which,  coupled with the expansion process,
had a negative  effect on  production  and gross profit.  Several  factors had a
positive  impact on gross  profit in 2000.  Effective  September  1,  1999,  the
depreciable  lives of certain assets of foreign  subsidiaries were changed based
upon a study performed by an independent  appraisal company.  The effect of this
change was a reduction of depreciation expense of approximately  $2,400.  During
2000,  the Company also changed its method for accounting for supplies and spare
parts inventories.  The effect of this change,  which is discussed more fully on
the following page, was to increase gross profit in 2000 by approximately $400.

In the last half of 1999, the Company experienced higher than expected costs and
lower product  yields due to high turnover of skilled labor in two Indiana wheel
plants and to the launch of new suspension products at the Company's Wapakoneta,
Ohio plant. The aluminum suspension  components were for popular car models. The
launch proved to be very difficult and was  accompanied by high labor  turnover,
high scrap,  low  productivity,  and  extraordinary  costs to ensure an adequate
customer supply.  These combined factors reduced gross profit in the second half
of 1999.

The  lower  gross  profit  percentage  for 2000 and 1999  compared  with 1998 is
impacted,  to a lessor  degree,  by a change  in the  Company's  sales  mix to a
slightly  higher  percentage  of  Engineered   Component  product  sales,  which
generally have lower gross margins than Flow Control Products.  The gross profit
percentage for 1998 was hurt by a one-time  charge  ($2,200)  related to closing
the Flagg Brass facility.

<PAGE>

Selling,  general, and administrative (SG&A) expenses were $56,416, $55,938, and
$57,294 in 2000, 1999, and 1998,  respectively.  As a percentage of sales,  SG&A
expenses  decreased  to 9.2% in 2000 from  9.5% in 1999 and 10.0% in 1998.  SG&A
expense in 2000 includes a net pension expense benefit of $2,546  primarily as a
result of improvement  in the defined  benefit  pension plan's funded status,  a
one-half  percentage  point increase in the expected return on plan assets,  and
the change to a defined  benefit cash balance  pension  plan.  Current year SG&A
expense  also  includes  the  benefit  of the  reversal  of a  $2,226  liability
resulting from the favorable settlement of a legal claim against the Company. In
prior years,  the Company had recorded a liability for a legal claim asserted by
former employees at its Flagg Brass operations. Due to the terms of a settlement
reached  during 2000 relative to this  obligation,  this  liability was reversed
through a reduction in SG&A expense. SG&A expense was also favorably impacted by
the results of the Company's  cost-reduction program initiated at the end of its
second quarter. In early March, the Company implemented an 8% salaried workforce
reduction  across all its North American  operations.  At the same time,  global
restrictions  were placed on other  controllable  operating  and  administrative
costs. These reductions in SG&A expense were offset by higher commissions, legal
costs, and information system  expenditures.  The dollar amount of SG&A expenses
decreased in 1999 from 1998 primarily due to divested operations, a reduction in
pension cost, and lower incentive plan expense.

The Company's pre-tax share of losses from Casting  Technology  Company (CTC), a
joint venture with Izumi  Industries,  was $3,528,  $1,452,  and $1,000 in 2000,
1999, and 1998, respectively. CTC's results for 2000 were severely impacted by a
customer's  extraordinarily  high, temporary demand. In the second half of 2000,
particularly  the fourth  quarter,  CTC was pushed beyond  capacity and incurred
higher  costs  associated  with  operating  in  excess of  capacity  to meet the
customer's  demand.  In 1999,  CTC's  results were  reduced by foreign  exchange
losses  resulting  from  the  strengthening  of  the  Japanese  yen,   operating
inefficiencies  resulting from efforts to meet  extremely  high customer  demand
early in the year, and difficulties hiring and retaining skilled labor which led
to manufacturing inefficiencies and higher scrap.

Interest  expense  was  $12,929 in 2000,  $13,182 in 1999,  and $15,045 in 1998.
Lower  interest  expense in 2000 and 1999 compared with 1998 is primarily due to
the  significant  debt  reductions in 2000 and 1999. To a lesser degree,  higher
interest  rates in 2000 versus 1999 and lower interest rates in 1999 versus 1998
effected  interest expense for those years.  Interest expense also was higher in
1998 as the result of the impact of the  General  Motors  work  stoppage  on the
Company's operating income and working capital.

<PAGE>

The effective tax rate for 2000,  1999,  and 1998 was 38.0%,  38.8%,  and 27.0%,
respectively.  Changes in the effective tax rates primarily reflect the level of
federal and state tax credits applicable to U.S. taxes. The higher effective tax
rate in 1999 relates  primarily to a permanent tax basis  difference  associated
with  the sale of  Superior  Valve.  A  one-time  adjustment  of  $2,562  from a
reduction of Italian tax rates  lowered the  effective  rate in 1998.  Excluding
this  adjustment,  the effective  tax rate for 1998 was 38.2%.  As of August 31,
2000,  the Company has booked a valuation  allowance of $3,198 against a portion
of their foreign net operating  losses and other tax attributes.  For additional
information  regarding the provision for income taxes as well as the  difference
between  effective  and  statutory  tax  rates,  see the  Notes to  Consolidated
Financial Statements.

During 2000, the Company implemented portions of an enterprise resource planning
(ERP)  system  in its  automotive  businesses  in  North  America.  Among  other
features, this system facilitates the tracking and control of supplies and spare
parts  inventories.  To take  advantage  of the  enhanced  tracking  and control
features of the ERP system, the Company capitalized the supplies and spare parts
inventories  at  three   locations,   whereas   previously  the  cost  of  these
manufacturing  supplies was expensed when  purchased.  Management  believes this
change is  preferable  in that it provides  for a more  appropriate  matching of
revenues and expenses. The total amount of inventory capitalized and reported as
a  cumulative  effect  of a  change  in  accounting  principle,  retroactive  to
September  1,  1999,  is $983,  net of income  taxes of $602.  The effect of the
change in 2000 was to increase  income  before  cumulative  effect of accounting
change by $248 ($.03 per share).

Effective  September 1, 1997, the Company adopted the provisions of the American
Institute of Certified  Public  Accountants'  Statement of Position  (SOP) 98-5,
"Reporting on the Costs of Start-Up  Activities." SOP 98-5 provides  guidance on
the  financial  reporting of start-up and  organization  costs and requires such
costs to be expensed as incurred.  The total amount of deferred  start-up  costs
reported as a cumulative effect of a change in accounting  principle in 1998 was
$8,588,  net of tax benefits of $5,044.  The Company's share of CTC's cumulative
effect of a change in accounting principle was $3,529, net of tax.

Flow  Control  Products  Net sales of the Flow  Control  Products  segment  were
$147,697  in 2000,  compared  with  $153,903 in 1999 and  $180,596 in 1998.  The
decrease  in 2000 is  primarily  due to lower  sales  volume of copper and brass
products  associated  with the loss of two  customers at the Company's Lee Brass
unit and decreased sales from divested  operations.  Annual sales volume for the
two customers was  approximately  $7,900,  and the Company was able to replace a
portion  of those  sales in 2000.  The  lower  volumes  decreased  sales by 6.2%
compared with 1999. While this segment did face sporadic price competition,  the
reduced volume was partially offset by overall  favorable pricing that increased
sales by 2.2%.  Operating  income was $22,214 in 2000  compared  with $26,919 in
1999. Lower volumes and higher material costs decreased operating income by 5.6%
and 11.1%,  respectively.  While price  competition  prevented  the Company from
passing  higher  copper costs on to  customers,  current  pricing and  favorable
product mix combined to increase  operating  income by 17.8%. The cost reduction
program implemented in March, combined with continuous improvement activities in
the plants, helped to offset the material cost and pricing issues.

<PAGE>

Decreased sales from divested operations more than offset volume gains resulting
in a 9.3% net  reduction  in sales  volume  in 1999.  Pricing  pressures  in the
Company's  copper and brass  fittings  business,  net of favorable mix benefits,
decreased  segment sales by an additional 5.5%.  Operating income was $26,919 in
1999 compared with $27,931 for 1998.  Cost reduction  efforts and lower material
costs partially  offset the impact of pricing  pressures in the Company's copper
and brass fittings business.

Engineered  Components  Net  sales of the  Engineered  Components  segment  were
$462,958  in 2000,  compared  with  $435,030 in 1999 and  $393,818 in 1998.  The
Company's Engineered  Components product sales continued to grow in 2000, as the
global wheel  business  continues  to expand,  win new  customers,  and launch a
variety of new wheel styles. The aluminum  components  business also experienced
significant sales growth as their customers fully incorporated new products into
additional  vehicle  platforms.  Sales volume increased 3.7% as sales of control
arms and European wheels were offset by a decline in North American wheels sales
as one customer  experienced lower sales on three vehicles.  Higher pricing,  in
the form of aluminum  cost  pass-throughs  reflected in the selling price of the
Company's  products,  and a favorable  product mix  increased  sales by 2.8% and
5.2%, respectively.  However, a weaker Italian lira in fiscal 2000 compared with
fiscal 1999 reduced sales by 5.3%.  Operating income was $6,692 in 2000 compared
with $19,708 in 1999. The two accounting changes previously  discussed increased
operating income; however,  several factors negatively impacted operating income
during 2000.  Increased costs  associated with the  over-capacity  volume issues
previously  discussed  and  higher   manufacturing-related   spending  decreased
operating  income by over 20%.  Material costs that could not be passed along to
customers under existing price formulas,  primarily at our European  operations,
further reduced  operating income by 23.4%.  Pricing and an unfavorable  product
mix reduced  operating  income by 19.8%.  Also  contributing  to the decrease in
operating  income in 2000 were costs  associated  with high  levels of  employee
turnover   and   the   difficulty   of   obtaining    qualified   labor   in   a
near-full-employment economy.

Strong  aluminum wheel sales in North America and Europe  contributed to a 16.1%
increase  in  segment  sales  in  1999  due to  volume,  12.8%  net of  divested
operations.  However,  sales  decreased by 2.3 % in 1999 from a combination of a
favorable  product mix and a stronger Italian lire in 1999 versus 1998,  largely
offset by lower  aluminum  costs which are also reflected in most of the selling
price of the Company's  products.  Operating income was $19,708 in 1999 compared
with $19,609 in 1998.  Operating income reflects the unfavorable impact of labor
turnover and new-product launch issues previously discussed.

<PAGE>

Liquidity and Capital Resources

Cash provided by operations in fiscal 2000 was $40,341, compared with $64,770 in
1999  and  $9,580  in  1998.  Net  income  plus  non-cash   items   (principally
depreciation and amortization,  changes in deferred  liabilities,  restructuring
charges,  and the cumulative effect of an accounting  change) totaled $30,357 in
2000.  Changes in the components of working  capital,  excluding  short-term and
current debt and divested  operations,  provided  additional  operating  cash of
$9,984 in 2000. Cash provided by operations in 1998 was unusually low due to the
increase in working  capital from the Lee Brass  acquisition  and the  Precision
divestiture,  coupled with the increased sales volume and inventory build during
the General Motors work stoppage.

Investing  activities used net cash of $25,802 in 2000, compared with $12,656 in
1999  and  $33,018  in  1998.  Capital  expenditures  totaled  $21,535  in 2000,
considerably  less than the $47,360  and  $46,763,  expended in 1999,  and 1998,
respectively.  To support  business  expansion  activities,  in  previous  years
investments  were made in property,  plant,  and equipment  and in CTC.  Capital
expenditures  decreased  significantly in 2000 from prior levels, as the Company
turned its focus from  expansion  to cost  reduction  and  improving  production
efficiencies.  At August 31, 2000,  the Company had $10,027 of  commitments  for
capital expenditures to be made in 2001, primarily for the Engineered Components
segment.  During  2000,  the Company  increased  its  investment  in CTC with an
additional  noncash  capital  contribution of $8,400,  accomplished  through the
conversion of a $3,000 note receivable and $5,400 of accounts  receivable.  Also
during 2000,  the Company  resolved  several  matters with the former  owners of
Speedline  which,  among other  items,  resulted in a purchase by the Company of
478,240 shares of the Company's  common stock held by Speedline's  former owners
and a net cash payment to the former owners of $2,500. Proceeds from the sale of
businesses  provided $35,604 and $25,445, in 1999 and 1998,  respectively.  Cash
outlays  for  business  acquisitions  used  $1,200 and $12,247 in 1999 and 1998,
primarily for the Lee Brass acquisition.

Financing  activities  used  $18,148  and  $51,466  in cash in  2000  and  1999,
respectively,  versus $21,033 of cash provided in 1998. During 1999, the Company
reduced total debt by $51,904 and further reduced total debt by $18,728 in 2000.
The debt  reductions  were  financed in part with the proceeds from the Superior
Valve sale in 1999, the proceeds from  sale-leaseback  transactions in both 1999
and 2000, and participation in one of our customer's accelerated payment program
in 2000.  Additional  financing  in 2000  includes  $74,560  borrowed  under the
Company's  revolving  credit  agreement,  which  was  partly  used  to pay  down
short-term borrowings made in the first quarter of the fiscal year. During 2000,
the Company had $13,569 of net short-term  borrowings  and received  $6,488 from
the  sale-leaseback of equipment.  Financing  activities also included long-term
debt  repayments  of  $106,857,  dividend  payments  of $4,851  and  $1,255  for
repurchases of the Company's common stock.

Cash used by financing  activities in 1999 also included  $4,594 for repurchases
of the Company's common stock and $5,109 for the payment of dividends.  Net cash
provided  by  financing  activities  in 1998 was used to  finance  the Lee Brass
acquisition,  business expansion,  a working capital increase due to the General
Motors work stoppage, and to pay dividends.

<PAGE>

In August 1997, the Company replaced its prior credit facility with a new Credit
Agreement (the Agreement) that provided for up to $200,000 in borrowings through
2002.  During 2000,  the Company  amended the  Agreement and among other things,
these amendments  changed certain  financial  covenants  (including the interest
coverage and debt-to-earnings  ratios) and added certain affirmative  covenants.
Both  amendments  also  included  increases  to  the  applicable  LIBOR  margin.
Effective  June  2000,  the  Company  reduced  the  amount of the  Agreement  to
$150,000.  At August 31,  2000,  the  Company had unused  borrowing  capacity of
$45,300 under the most restrictive  debt covenant of the Agreement.  The Company
also has lines of credit totaling $27,000; at August 31, 2000, there was $16,200
outstanding under these lines of credit.  In addition,  Speedline has short-term
lines of credit  totaling  $26,300,  of which  $24,716 was available at July 31,
2000.

The ratio of long-term debt as a percent of capital decreased to 48.6% at August
31, 2000 from 50.5% at August 31, 1999, reflecting a net reduction in debt. Book
value per common share at August 31, 2000 was $18.55, down from $19.07 at August
31, 1999.  One million  preferred  shares and  approximately  5.8 million common
shares are authorized and available for future  issuance.  On December 17, 1998,
the Company  announced  a plan to  repurchase  up to 750,000 of its  outstanding
common shares. As of August 31, 2000, 350,000 shares have been repurchased under
this plan at an average  cost of $15.53 per share.  The  Company  currently  has
8,405,604  common  shares  outstanding.  Management  believes  the  Company  has
adequate financial resources to meet its future needs.

Contingencies  The Company,  as is normal for the industry in which it operates,
is involved in certain legal  proceedings and subject to certain claims and site
investigations  that arise under the environmental  laws and which have not been
finally adjudicated. To the extent possible, with the information available, the
Company  regularly  evaluates its  responsibility  with respect to environmental
proceedings.  The factors considered in this evaluation are more fully described
in  the  Commitments  and  Contingencies  note  to  the  consolidated  financial
statements.  At August 31, 2000,  the Company had reserves of $1,575 accrued for
environmental liabilities.  Allied-Signal Inc. (now Honeywell) brought an action
against  the Company  seeking a  contribution  from the Company  equal to 50% of
Honeywell's  estimated  $30,000  remediation  cost in connection  with a site in
southern Ohio. The Company believes its responsibility with respect to this site
is very  limited due to the nature of the  foundry  sand waste it disposed of at
the site. The court has rendered its decision on this case;  however,  the exact
amount of the verdict has not yet been determined by the court.  The amount will
be  significantly  less than the amount  sought by the plaintiff and the Company
estimates  its  liability  associated  with the  action to be  between  $500 and
$1,500.  The Company believes its liability is at the low end of this range. The
Company is of the opinion that, in light of its existing reserves, its liability
in connection with environmental  proceedings should not have a material adverse
effect on its financial  condition,  results of operations,  or cash flows.  The
Company  is  presently  unaware  of  the  existence  of any  potential  material
environmental  costs that are likely to occur in connection with  disposition of
any of its property.

<PAGE>

Increasingly,  major  automotive  industry  companies  are  withholding  partial
payment  for goods  received.  Often,  this is a  negotiating  tactic  for costs
incurred by the customer in which the customer believes that the supplier should
participate.  Generally, payment is received, however, only after several months
have passed.  At August 31, 2000, the Company has $2,037 of accounts  receivable
being withheld  pending final  resolution of various  issues.  It is anticipated
that this amount will ultimately be collected.

Impact of Recently Issued Accounting Standards
During  2000,  the  Company  adopted  Emerging  Issues Task Force  (EITF)  99-5,
"Accounting for Pre-Production Costs Related to Long-Term Supply  Arrangements."
EITF 99-5 provides guidance for the capitalization, under certain circumstances,
of costs incurred to design and develop  molds,  dies, and other tools that will
be  used to  produce  products  that  will be  sold  under  a  long-term  supply
arrangement.  EITF 99-5 is effective for design and  development  costs incurred
after  December  31,  1999.  The  adoption  of EITF 99-5 did not have a material
effect on the Company's consolidated results of operations,  financial position,
or cash flows.

During 1999, the Company adopted SOP 98-1, "Accounting for the Costs of Computer
Software  Developed or Obtained for Internal  Use," which  requires that certain
costs  related to  developing  or  obtaining  internal  use  software  should be
capitalized. The adoption of this standard did not have a material effect on the
Company's consolidated results of operations, financial position, or cash flows.

New accounting standards issued include SFAS No. 133, "Accounting for Derivative
Instruments  and Hedging  Activities," as amended by SFAS Nos.137 and 138, which
establishes a  comprehensive  standard for the  recognition  and  measurement of
derivatives  and  hedging  activities.   The  new  standard  requires  that  all
derivatives be recognized as assets or liabilities in the statement of financial
position and measured at fair value.  Gains or losses  resulting from changes in
fair value are required to be recognized  in current  earnings  unless  specific
hedge  criteria  are met.  SFAS No. 133 will  become  effective  for the Company
beginning  in the first  quarter  of  fiscal  year  2001.  The  Company  has not
determined  the  effect  of this new  standard;  however,  due to the  Company's
limited use of derivatives, the impact is not expected to be material.


Market Risks
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.

<PAGE>


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 rates for 2000 and 1999
would change income before taxes by approximately $700 and $1,200, respectively.

       The  Company's  Italian  operations  also  attempt to  balance  asset and
liability positions that are denominated in non-functional currencies, primarily
the U.S.  dollar,  Japanese yen, and British pound sterling in 2000 and the U.S.
dollar,  German marks, and French francs in 1999.  During 2000 and 1999, the net
exposure averaged approximately $1,700 and $2,200,  respectively. A hypothetical
10% change in the average  exchange  rates would change the exposure by $200 for
2000 and 1999,  and that change would be reflected in the  operating  results of
the Company.  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.  The decrease in net
exposure  between  years is primarily  due to the  introduction  of the Euro and
favorable lire exchange rates.

Interest  Rate Risk To manage its  exposure  to changes in interest  rates,  the
Company uses both fixed and variable rate debt. At August 31, 2000 and 1999, the
Company had approximately  $98,600 and $127,200 of debt obligations  outstanding
with variable interest rates with a weighted-average  effective interest rate of
6.6% and 4.5%, respectively. A hypothetical 10% change in the effective interest
rate for these borrowings,  using the outstanding debt levels at August 31, 2000
and  1999,  would  change  interest  expense  by  approximately  $700  and  $600
respectively.  The decrease in interest  rate exposure is primarily due to lower
effective interest rates.


Year 2000

The Company has not experienced any significant year 2000 related  complications
regarding any of its critical  vendors or major customers.  Overall,  any issues
experienced to date as a result of year 2000 issues have been  insignificant and
have had no material impact on the Company's consolidated results of operations,
financial position or cash flows.

<PAGE>

Euro Conversion

On January 1, 1999,  certain members of the European Union irrevocably fixed the
conversion rates between their national  currencies and a common  currency,  the
"Euro",  which  became  the  legal  currency  on that  date.  The  participating
countries' former national  currencies continue to exist as denominations of the
Euro until January 1, 2002. The Company is in various stages of assessments  and
implementation and, although difficult to predict, any competitive  implications
and any  impact  on  existing  financial  instruments  resulting  from  the Euro
implementation  are not  expected  to be  material  to the  Company's  financial
condition, liquidity, or results of operations.

<PAGE>
<TABLE>
<CAPTION>
SELECTED DATA
($ in thousands except per share amounts)
<S>                                                            <C>          <C>           <C>           <C>           <C>
Financial Data                                                    2000          1999          1998          1997          1996
     Net sales                                                 $610,655     $ 588,933     $ 574,414     $ 387,051     $ 343,934
     Operating income                                            21,557        46,110        37,958        27,242        27,328
     Operating income percent                                      3.5%          7.8%          6.6%          7.0%          7.9%
     Income before income taxes and
        cumulative effect of accounting change                    5,422        31,538        22,975        20,005        24,731
     Income before cumulative effect
        of accounting change                                      3,364        19,317        16,765        12,983        15,926
     Net income                                                   4,347        19,317         8,177        12,983        15,926
     Working capital                                             54,993        68,955        86,929        26,260        57,774
     Total assets                                               480,386       533,486       563,450       508,918       269,217
     Long-term debt                                             147,273       174,061       217,199       145,304        58,783

Per Common Share Data
     Income before cumulative effect
        of accounting change - basic                           $    .38     $    2.11     $    1.82     $    1.50     $    1.85
     Net income - basic                                        $    .49     $    2.11     $    0.89     $    1.50     $    1.85
     Weighted average number of common
        shares outstanding - basic (in thousands)                 8,788         9,144         9,200         8,674         8,606

     Income before cumulative effect
        of accounting change - diluted                         $    .38     $    2.11     $    1.81     $    1.48     $    1.84
     Net income - diluted                                      $    .49     $    2.11     $    0.88     $    1.48     $    1.84
     Weighted average number of common
        shares outstanding - diluted (in thousands)               8,792         9,162         9,250         8,754         8,628

     Dividends declared                                        $    .56     $     .56     $     .56     $     .56     $     .56
     Book value                                                $  18.55     $   19.07     $   17.47     $   17.24     $   15.80

Statistical Data
     Current ratio                                                  1.4           1.5           1.6           1.1           2.1
     Long-term debt as a percent of capital                       48.6%         50.5%         57.5%         47.9%         30.2%
     Number of associates                                         4,530         4,960         4,500         4,040         2,600

</TABLE>
<PAGE>
Report of Ernst & Young LLP
Independent Auditors

Shareholders and Board of Directors
Amcast Industrial Corporation
Dayton, Ohio

We have audited the accompanying  consolidated statements of financial condition
of Amcast  Industrial  Corporation  and  subsidiaries  as of August 31, 2000 and
1999, and the related  consolidated  statements of income,  shareholders' equity
and cash flows for each of the three years in the period  ended August 31, 2000.
These financial  statements are the responsibility of the Company's  management.
Our responsibility is to express an opinion on these financial  statements based
on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable  assurance about whether the financial  statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting  the amounts and  disclosures in the financial  statements.  An audit
also includes assessing the accounting principles used and significant estimates
made by  management,  as well as  evaluating  the  overall  financial  statement
presentation.  We believe  that our audits  provide a  reasonable  basis for our
opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects,  the consolidated financial position of Amcast Industrial
Corporation and  subsidiaries at August 31, 2000 and 1999, and the  consolidated
results of their  operations and their cash flows for each of the three years in
the period ended August 31,  2000,  in  conformity  with  accounting  principles
generally  accepted  in the  United  States.  As  discussed  in the  summary  of
accounting policies, in fiscal 2000 the Company changed its method of accounting
for supplies and spare parts inventory.


/S/ ERNST & YOUNG LLP

                                                                    Dayton, Ohio
                                                                October 19, 2000
<PAGE>

Amcast Industrial Corporation
Statement of Internal Control

The  management of Amcast  Industrial  Corporation  has the  responsibility  for
preparing the  accompanying  financial  statements  and for their  integrity and
objectivity. In fulfilling this responsibility,  management maintains accounting
systems and related controls.  These controls provide reasonable  assurance,  at
appropriate costs, that assets are safeguarded against losses and that financial
records are reliable for use in preparing financial statements.  The systems are
enhanced by written policies, an organizational  structure providing division of
responsibilities,  careful  selection  and training of qualified  people,  and a
program  of  financial,  operational,  and  systems  review  coordinated  by the
internal auditors and by management.

Management  recognizes its  responsibility  for conducting the Company's affairs
according  to the highest  standards  of personal and  corporate  conduct.  This
responsibility  is  characterized  by and  included  in key  policy  statements.
Management  maintains  a  systematic  program  to assess  compliance  with these
policies.

The  Company's  financial  statements  have been  audited  by Ernst & Young LLP,
independent auditors elected by the shareholders.  Management has made available
to Ernst & Young LLP all the  Company's  financial  records and related data, as
well as the  minutes of  shareholders'  and  directors'  meetings.  Furthermore,
management  believes that all  representations  made to Ernst & Young LLP during
their audit were valid and appropriate.

The  Audit  Committee  of the Board of  Directors,  composed  solely of  outside
directors,  meets  with  the  independent  auditors,  management,  and  internal
auditors  periodically  to review  their work and ensure that they are  properly
discharging their  responsibilities.  The independent auditors and the Company's
internal  auditors  have  free  access  to this  committee,  without  management
present,  to discuss the  results of their  audit work and their  opinion on the
adequacy of internal financial controls and the quality of financial reporting.



/S/ JOHN H. SHUEY
-----------------
John H. Shuey
Chairman, President and Chief Executive Officer


/S/ DOUGLAS D. WATTS
--------------------
Douglas D. Watts
Vice President, Finance (Chief Financial Officer)

/S/ MARK D. MISHLER
-------------------
Mark D. Mishler
Controller

<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF INCOME
($ in thousands except per share amounts)
<S>                                              <C>        <C>        <C>
                                                      Year Ended August 31
                                                    2000       1999       1998

Net sales                                        $610,655   $588,933   $574,414
Cost of sales                                     531,961    495,908    481,410
                                                 --------   --------   --------
         Gross Profit                              78,694     93,025     93,004

Selling, general and administrative expenses       56,416     55,938     57,294
Restructuring charges                                 721          -      9,800
Gain on sale of businesses                              -     (9,023)   (12,048)
                                                 --------    -------   --------
         Operating Income                          21,557     46,110     37,958

Equity in loss of joint venture
   and other (income) and expense                   3,206      1,390        (62)
Interest expense                                   12,929     13,182     15,045
                                                 --------   --------   --------
         Income before Income Taxes and
           Cumulative Effect of Accounting
           Change                                   5,422     31,538     22,975

Income taxes                                        2,058     12,221      6,210
                                                 --------   --------   --------
         Income before Cumulative Effect
           of Accounting Change                     3,364     19,317     16,765

Cumulative effect of accounting change,
  net of tax                                          983          -     (8,588)
                                                 --------   --------   --------
         Net Income                              $  4,347   $ 19,317   $  8,177
                                                 ========   ========   ========

Basic Earnings per Share
Income before cumulative effect of
   accounting change                             $   0.38   $   2.11   $   1.82

Cumulative effect of accounting change               0.11          -      (0.93)
                                                 --------   --------   --------
Net income                                       $   0.49   $   2.11   $   0.89
                                                 ========   ========   ========

Diluted Earnings per Share
Income before cumulative effect of
   accounting change                             $   0.38   $   2.11   $   1.81

Cumulative effect of accounting change               0.11          -      (0.93)
                                                 --------   --------   --------
Net income                                       $   0.49   $   2.11   $   0.88
                                                 ========   ========   ========
</TABLE>

See notes to consolidated financial statements
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
($ in thousands)
<S>                                                      <C>          <C>
                                                                 August 31
                                                             2000         1999
ASSETS
Current Assets
    Cash and cash equivalents                            $   3,062    $   6,928
    Accounts receivable                                     85,041       97,819
    Inventories                                             77,512       77,166
    Other current assets                                    16,304       21,144
                                                         ---------    ---------
       Total Current Assets                                181,919      203,057

Property, Plant, and Equipment
    Land                                                     8,383        8,948
    Buildings                                               60,140       59,143
    Machinery and equipment                                315,387      306,228
    Construction in progress                                12,130       26,693
                                                         ---------    ---------
                                                           396,040      401,012
    Less accumulated depreciation                          169,183      144,254
                                                         ---------    ---------
                                                           226,857      256,758

Goodwill                                                    49,707       61,261
Other Assets                                                21,903       12,410
                                                         ---------    ---------
                                                         $ 480,386    $ 533,486
                                                         =========    =========

LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
    Short-term debt                                      $   1,584    $   4,673
    Current portion of long-term debt                        3,044        6,182
    Accounts payable                                        84,285       82,396
    Compensation and related items                          20,403       21,875
    Accrued expenses                                        17,610       18,976
                                                         ---------    ---------
       Total Current Liabilities                           126,926      134,102

Long-Term Debt - less current portion                      147,273      174,061
Deferred Income Taxes                                       31,275       32,775
Deferred Liabilities                                        18,958       21,782

Shareholders' Equity Preferred shares, without par value:
       Authorized - 1,000,000 shares; Issued - None              -            -
    Common shares, at stated value
       Authorized - 15,000,000 shares
       Issued - 9,227,600 and 9,208,529 shares,
          respectively                                       9,228        9,209
    Capital in excess of stated value                       70,981       79,020
    Accumulated other comprehensive losses                  (1,900)      (1,018)
    Retained earnings                                       87,287       87,796
    Cost of 821,996 and 253,609 common shares
       in treasury, respectively                            (9,642)      (4,241)
                                                         ---------    ---------
                                                           155,954      170,766
                                                         ---------    ---------
                                                         $ 480,386    $ 533,486
                                                         =========    =========
</TABLE>
See notes to consolidated financial statements
 <PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
($ in thousands, except per share amounts)
<S>                                       <C>         <C>        <C>              <C>          <C>           <C>
                                                        Capital    Accumulated
                                                      in Excess     Other
                                           Common     of Stated  Comprehensive    Retained     Treasury
                                           Shares       Value       Losses        Earnings       Stock        Total

Balance at August 31, 1997                $ 9,177     $ 78,484      $      -      $ 70,565     $      -      $158,226

     Net income                                 -            -             -         8,177            -         8,177
     Foreign currency translation               -            -          (945)            -            -          (945)
                                                                                                             --------
     Total comprehensive income                                                                                 7,232

     Cash dividends declared,
        $.56 per share                          -            -             -        (5,154)           -        (5,154)
     Stock options exercised                   30          480             -             -            -           510
                                          -------     --------      --------      --------     --------      --------
Balance at August 31, 1998                  9,207       78,964          (945)       73,588            -       160,814

     Net income                                 -            -             -        19,317            -        19,317
     Foreign currency translation               -            -           169             -            -           169
     Minimum pension liability,
        net of tax benefit of $148              -            -          (242)            -            -          (242)
                                                                                                             --------
     Total comprehensive income                                                                                19,244

     Cash dividends declared,
        $.56 per share                          -            -             -        (5,109)           -        (5,109)
     Purchase treasury stock                    -            -             -             -       (4,594)       (4,594)
     Stock options exercised                    2           34             -             -            -            36
     Stock awards                               -           22             -             -          353           375
                                          -------     --------      --------      --------     --------      --------
Balance at August 31, 1999                  9,209       79,020        (1,018)       87,796       (4,241)      170,766

     Net income                                 -            -             -         4,347            -         4,347
     Foreign currency translation               -            -        (1,124)            -            -        (1,124)
     Minimum pension liability,
     net of tax benefit of $148                 -            -           242             -            -           242
                                                                                                             --------
     Total comprehensive income                                                                                 3,465

     Cash dividends declared,
        $.56 per share                          -            -             -        (4,851)           -        (4,851)
     Price adjustment for stock
     issued for acquisition                     -       (8,196)            -             -            -        (8,196)
     Purchase treasury stock                    -            -             -             -       (5,559)       (5,559)
     Stock options exercised                   19          179             -             -            -           198
     Issue treasury stock - Directors           -            -             -             -          131           131
     Restricted stock awards                    -          (22)            -            (5)          27             -
                                          -------     --------      --------      --------     --------      --------
     Balance at August 31, 2000           $ 9,228     $ 70,981      $ (1,900)     $ 87,287     $ (9,642)     $155,954
                                          =======     ========      ========      ========     ========      ========
</TABLE>
See notes to consolidated financial statements
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS
($ in thousands)
<S>                                                                 <C>           <C>            <C>

                                                                             Year Ended August 31
                                                                       2000          1999           1998
Operating Activities
      Net income                                                    $  4,347      $  19,317      $  8,177
      Depreciation and amortization                                   32,999         31,346        32,113
      Non-cash restructuring and inventory write-down                    721              -        12,000
      Cumulative effect of accounting change                            (983)             -         8,588
      Gain on sale of businesses                                           -         (9,023)      (12,048)
      Deferred liabilities                                            (6,727)         4,634        (1,497)

      Changes in assets and liabilities,
         net of acquisitions
           Accounts receivable                                        (1,470)         7,581        (9,667)
           Inventories                                                (3,137)        (5,686)       (9,122)
           Other current assets                                        3,742         (1,421)        1,141
           Accounts payable                                            7,381         14,445       (11,833)
           Accrued liabilities                                          (700)         2,156        (9,204)
           Other                                                       4,168          1,421           932
                                                                    --------      ---------      --------
              Net Cash Provided by Operations                         40,341         64,770         9,580

Investing Activities
      Additions to property, plant, and equipment                    (21,535)       (47,360)      (46,763)
      Settlement related to business acquisition                      (2,500)             -             -
      Acquisitions, net of cash acquired                                   -         (1,200)      (12,247)
      Proceeds from sale of businesses                                     -         35,604        25,445
      Other                                                           (1,767)           300           547
                                                                    --------      ---------      --------
              Net Cash Used by Investing Activities                  (25,802)       (12,656)      (33,018)

Financing Activities
      Additions to long-term debt                                     74,560         36,154        85,871
      Reduction in long-term debt                                   (106,857)       (66,993)      (30,216)
      Short-term borrowings                                           13,569        (21,065)      (29,978)
      Purchase of treasury stock                                      (1,255)        (4,594)            -
      Proceeds from sale leaseback                                     6,488         10,105             -
      Dividends                                                       (4,851)        (5,109)       (5,154)
      Other                                                              198             36           510
                                                                    --------      ---------      --------
              Net Cash (Used) Provided by Financing Activities       (18,148)       (51,466)       21,033
                                                                    --------      ---------      --------
Effect of exchange rate changes on cash                                 (257)          (742)         (181)
                                                                    --------      ---------      --------
Net change in cash and cash equivalents                               (3,866)           (94)       (2,586)
Cash and cash equivalents at beginning of year                         6,928          7,022         9,608
                                                                    --------      ---------      --------
              Cash and Cash Equivalents at End of Year              $  3,062      $   6,928      $  7,022
                                                                    ========      =========      ========

Supplemental disclosure of non-cash investing and financing activities:

Purchase price settlement related to business acquisition:
      Disposition of common stock price protection liability        $ (8,196)
      Acquisition of treasury shares                                  (4,304)
      Less reduction in original purchase price                       10,000
                                                                    --------
                                                                    $ (2,500)
                                                                    ========
</TABLE>
See notes to  consolidated  financial  statements
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($ in thousands except per share amounts)

ACCOUNTING POLICIES
The consolidated  financial statements include the accounts of Amcast Industrial
Corporation   and  its  domestic  and  foreign   subsidiaries   (the   Company).
Intercompany  accounts and  transactions  have been  eliminated.  The  Company's
investment in Casting Technology Company (CTC), a joint venture,  is included in
the accompanying  consolidated  financial  statements using the equity method of
accounting.  The Company's investment in CTC was $7,266 and $2,394 at August 31,
2000 and 1999, respectively,  and is included in Other Assets. Operations of the
Company's  European  subsidiaries  are  included in the  consolidated  financial
statements for periods  ending one month prior to the Company's  fiscal year end
in order to ensure timely preparation of the consolidated financial statements.

For foreign subsidiaries, the local foreign currency is the functional currency.
Assets and liabilities are translated into U.S.  dollars at the rate of exchange
existing at year-end.  Translation  gains and losses are included as a component
of shareholders' equity and comprehensive  income.  Income statement amounts are
translated at the average monthly exchange rates.  Transaction  gains and losses
are included in the statement of income and were not material.

Revenue is recognized at the time products are shipped to customers.

Cash and cash equivalents include amounts on deposit with financial institutions
and investments with original maturities of 90 days or less.

Accounts  receivable are stated net of allowances for doubtful  accounts of $191
and $217 at August 31, 2000 and 1999,  respectively.  The Company held  accounts
receivable  of  $2,938  and  $6,498  from  CTC at  August  31,  2000  and  1999,
respectively  and a note  receivable of $3,000 at August 31, 1999.  During 2000,
the  Company  increased  its  investment  in  CTC  with  an  additional  capital
contribution  of $8,400  accomplished  through  conversion  of the  $3,000  note
receivable and $5,400 of the accounts receivable.

Inventories  are  valued  at the  lower of cost or  market  using  the  last-in,
first-out (LIFO) and the first-in,  first-out (FIFO) methods.  During 2000, as a
result of a new enterprise  resource planning (ERP) system  implementation,  the
Company  began  capitalizing  the cost of supplies and spare parts  inventories,
whereas  previously the cost of these  manufacturing  supplies was expensed when
purchased. Management believes this change is preferable in that it provides for
a more  appropriate  matching  of revenues  and  expenses.  The total  amount of
inventory  capitalized  and  reported  as a  cumulative  effect  of a change  in
accounting principle, retroactive to September 1, 1999, was $983 net of taxes of
$602. The effect of the change in 2000 was to increase income before  cumulative
effect of  accounting  change by $248  ($0.03  per  diluted  share).  Additional
disclosures pursuant to Accounting  Principles Board Opinion No. 20, "Accounting
Changes"  are not  provided  since  supplies  inventory  was not  monitored  for
financial  reporting purposes prior to the implementation of the ERP system and,
consequently, the information is not available.

Property,  plant, and equipment are stated at cost. Expenditures for significant
renewals and improvements  are capitalized.  Repairs and maintenance are charged
to expense as incurred.  Depreciation is computed using the straight-line method
based upon the estimated  useful lives of the assets as follows:  buildings - 20
to 40 years;  machinery  and equipment - 3 to 20 years.  Effective  September 1,
1999,  the  depreciable  lives of certain  assets of foreign  subsidiaries  were
changed based upon a study performed by an independent  appraisal  company.  The
effect  of  this  change  was  a  reduction  of   depreciation   expense  and  a
corresponding increase in income before income taxes of approximately $2,400. As

<PAGE>

a result, net income increased by $1,488 ($0.17 per share). Tooling expenditures
reimbursable  by the customer are capitalized and classified as a current asset.
Tooling  expenditures  not  reimbursable  by the  customer are  capitalized  and
classified with property,  plant, and equipment then charged to expense over the
estimated useful life.

Goodwill  represents the excess of the cost of businesses acquired over the fair
market value of identifiable net assets at the dates of acquisition. Goodwill is
amortized on a straight-line  basis over 40 years.  Accumulated  amortization of
goodwill  was $5,048 and $3,494 at August 31, 2000 and 1999,  respectively.  The
carrying  value  of  goodwill  is  evaluated  periodically  in  relation  to the
operating  performance  and future  undiscounted  cash  flows of the  underlying
businesses.

Deferred income taxes are provided for temporary  differences  between financial
and tax reporting in accordance  with the liability  method under the provisions
of Statement of Financial  Accounting  Standards (SFAS) No. 109, "Accounting for
Income Taxes."

Use of estimates and  assumptions  are made by management in the  preparation of
the financial  statements  in  conformity  with  generally  accepted  accounting
principles  that affect the amounts  reported in the  financial  statements  and
accompanying notes. Actual results could differ from those estimates.

Earnings per common share are  calculated  under the provisions of SFAS No. 128,
"Earnings per Share." The  calculation  of basic  earnings per share is based on
the  weighted-average  number of common shares  outstanding.  The calculation of
diluted  earnings  per share is based on the  weighted-average  number of common
shares outstanding plus all potential dilutive common shares outstanding.

Start-up and  organization  costs are accounted for under the  provisions of the
American Institute of Certified Public Accountants'  Statement of Position (SOP)
98-5,  "Reporting on the Costs of Start-Up  Activities."  Adopted by the Company
effective  September  1,  1997,  SOP 98-5  provides  guidance  on the  financial
reporting  of start-up  and  organization  costs and  requires  such costs to be
expensed as incurred.  The total amount of deferred start-up costs reported as a
cumulative  effect of a change in accounting  principle  was $8,588,  net of tax
benefits of $5,044.  The Company's share of CTC's cumulative  effect of a change
in accounting principle was $3,529, net of tax.

Accounting  standard  adopted  during 2000 includes  Emerging  Issues Task Force
(EITF) 99-5,  "Accounting for  Pre-Production  Costs Related to Long-Term Supply
Arrangements." EITF 99-5 provides guidance for the capitalization, under certain
circumstances,  of costs incurred to design and develop  molds,  dies, and other
tools that will be used to produce  products that will be sold under a long-term
supply  arrangement.  EITF 99-5 is effective  for design and  development  costs
incurred  after  December  31,  1999.  The  adoption of EITF 99-5 did not have a
material effect on the Company's  consolidated results of operations,  financial
position, or cash flows.

During 1999, the Company adopted SOP 98-1, "Accounting for the Costs of Computer
Software  Developed or Obtained for Internal  Use," which  requires that certain
costs  related to  developing  or  obtaining  internal  use  software  should be
capitalized. The adoption of this standard did not have a material effect on the
Company's consolidated results of operations, financial position, or cash flows.

New accounting standards issued include SFAS No. 133, "Accounting for Derivative
Instruments and Hedging  Activities," as amended by SFAS Nos. 137 and 138, which
establishes a  comprehensive  standard for the  recognition  and  measurement of
derivatives  and  hedging  activities.   The  new  standard  requires  that  all
derivatives be recognized as assets or liabilities in the statement of financial
position and measured at fair value.  Gains or losses  resulting from changes in

<PAGE>

fair value are required to be recognized  in current  earnings  unless  specific
hedge  criteria  are met.  SFAS No. 133 will  become  effective  for the Company
beginning  in the first  quarter  of  fiscal  year  2001.  The  Company  has not
determined  the  effect  of this new  standard;  however,  due to the  Company's
limited use of derivatives, the impact is not expected to be material.

ACQUISITIONS, DIVESTITURES, AND RESTRUCTURING

On October 16, 1998,  the Company  sold  Superior  Valve  Company for $35,604 in
cash.  The  transaction  resulted  in a pre-tax  gain of $9,023.  The  business,
acquired by Amcast in 1986,  produces  specialty valves and related products for
the compressed gas and commercial refrigeration markets. Results for fiscal 1999
and 1998  included  sales  of approximately $4,600 and $42,000, respectively, in
the Company's Flow Control segment.

Effective  March 30,  1998,  the Company sold its Rancho  Cucamonga,  California
investment  casting  operation,  Amcast  Precision,  for  $25,445  in cash.  The
transaction  resulted in a pre-tax gain of $12,048.  The  facility,  acquired by
Amcast in 1987,  produces  ferrous and  nonferrous  castings  for the  aerospace
industry. Results for fiscal 1998 included sales of approximately $13,100 in the
Engineered  Components  segment.  This was the only Amcast operation involved in
the aerospace industry.

On April 9, 1998,  the Company  acquired Lee Brass  Company,  a  privately-owned
company located in Anniston,  Alabama. Lee Brass is a major manufacturer of cast
brass products for residential,  commercial,  and industrial  plumbing  systems.
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.  In connection
with the  consolidation  plan, during 1998, the Company recorded a restructuring
charge of $5,800 for  facility  exit costs and a charge of $2,200,  included  in
cost of sales,  primarily  for a non-cash  write-down  of  inventory  to its net
realizable value. Key components of the $5,800  restructuring charge were $4,900
for a non-cash  write-down of assets to their fair value, $500 for severance and
other  termination  benefits,  and $400 for other facility  closure costs. As of
August 31, 2000, all associates had been terminated and all of the severance and
most of the  facility  closure  costs had been  charged  against the  liability.
During  1999,  the Company  wrote off $4,504 of net assets  related to the Flagg
Brass  operation  against the  previously  established  long-term  reserve.  The
Company expects that the disposition of the remaining Flagg Brass assets will be
completed by the end of fiscal 2002.  Results for 1998 included  sales for Flagg
Brass of approximately $7,800 in the Flow Control segment.

     During 1998, the Company also  re-evaluated its reserves related to several
iron factories  previously closed in the 1980's and early 1990's. As a result, a
restructuring  charge of $4,000  was  recorded  to cover  higher  than  expected
medical benefits and workers  compensation  related to these  previously  closed
facilities.

      During  2000,  The  Company   re-assessed  its  reserves  related  to  the
aforementioned  foundaries  and recorded a net  restructuring  charge of $721 to
cover higher than expected  medical benefits and workers  compensation  expenses
related to the closed  facilities.  A reduction in certain  other  restructuring
reserves,  primarily  for product  liability  and  warranty  claims for divested
operations, is included in the net charge for 2000.

     At the end of 1997, the Company  acquired all of the  outstanding  stock of
Speedline  S.p.A.  and its  subsidiaries  (Speedline).  The  purchase  agreement
contained  a provision  to protect  the seller  from stock  price  fluctuations.
During 2000, the Company resolved  several matters with the seller which,  among
other items,  resulted in the  purchase by the Company of 478,240  shares of the
Company's  common stock held by the seller,  a reduction  in the purchase  price
(goodwill) of $10,000 and a net cash payment to the seller of $2,500.

<PAGE>

INVENTORIES
The major components of inventories as of August 31 are:
<TABLE>
<CAPTION>
<S>                                                       <C>          <C>
                                                            2000          1999
Finished products                                         $ 40,013     $ 36,979
Work in process                                             23,932       21,833
Raw materials and supplies                                  18,661       20,801
                                                          --------     --------
                                                            82,606       79,613
Less amount to reduce certain inventories to LIFO value      5,094        2,447
                                                          --------     --------
                                                          $ 77,512     $ 77,166
                                                          ========     ========
</TABLE>
Inventories  reported on the FIFO method,  primarily in foreign locations,  were
$30,343  and $30,802 at August 31, 2000 and 1999,  respectively.  The  estimated
replacement cost of inventories is the amount reported before the LIFO reserve.

<PAGE>

LONG-TERM DEBT AND CREDIT ARRANGEMENTS
<TABLE>
<CAPTION>
The following table summarizes the Company's long-term borrowings at August 31:
<S>                                                       <C>          <C>

                                                             2000         1999
Senior notes                                              $ 50,000     $ 50,875
Revolving credit notes                                      77,510      112,793
Lines of credit                                             16,200            -
Industrial revenue bonds                                         -        5,750
Other debt                                                   3,388        4,014
Capital leases                                               3,219        6,811
                                                          --------     --------
                                                           150,317      180,243
Less current portion                                         3,044        6,182
                                                          --------     --------
Long-Term Debt                                            $147,273     $174,061
                                                          ========     ========
</TABLE>
     The senior  notes bear  interest  at 7.09% and require  periodic  principal
payments beginning in November 2002 through November 2005.

     In August 1997, the Company  replaced its prior credit  facility with a new
Credit  Agreement (the Agreement) that provided for up to $200,000 in borrowings
through August 2002.  During 2000,  the Company  amended the Agreement and among
other things,  these amendments changed certain financial  covenants  (including
the interest coverage and debt-to-earnings ratios) and added certain affirmative
covenants.  The  amendments  also  included  increases to the  applicable  LIBOR
margin.  Effective June 2000, the Company reduced the amount of the Agreement to
$150,000.  At August 31, 2000,  $77,510 was outstanding under the Agreement with
an average  interest rate of 6.37%. In addition,  a commitment fee is payable on
the unused  portion of the credit  line (0.5% at August 31,  2000).  The Company
also has lines of credit  totaling  $27,000 of which $16,200 was  outstanding at
August 31, 2000 with an average interest rate of 8.32%.

     Debt  covenants  require the Company to  maintain  certain  debt-to-equity,
debt-to-earnings,   and  interest   coverage  ratios.   Other  provisions  limit
subsidiary  indebtedness.  At August 31, 2000,  $27,609 of retained earnings was
available for the payment of dividends.

     Other debt consists of various mortgage loans with variable interest rates,
ranging from 3.0% to 12.58% that require  periodic  principal  payments  through
2006. These obligations are secured by property, plant, and equipment with a net
book value of $11,760 at August 31, 2000.

     Capitalized lease  obligations  provide for aggregate  payments,  including
interest, of approximately $3,400 annually,  payable through 2002. At August 31,
2000,  future  minimum  payments  for the leases  were  $3,629,  including  $410
representing interest.

     The Company also has guaranteed  debt totaling  $14,508 at August 31, 2000,
for Casting Technology Company.

<PAGE>

     The carrying  amounts of the Company's debt  instruments  approximate  fair
value as defined under SFAS No. 107. Fair value is estimated based on discounted
cash flows, as well as other valuation techniques. Long-term debt maturities for
each of the next five  years are  $3,044 in 2001,  $95,440  in 2002,  $13,236 in
2003, $12,999 in 2004, and $12,742 in 2005.

     The Company's  foreign  operations have short-term lines of credit totaling
approximately  $26,300 which are subject to annual review by the lending  banks.
At August 31, 2000, the average interest rate for the short-term lines of credit
was 5.26%. Amounts outstanding under these lines of credit are payable on demand
and total $1,584 as of August 31, 2000.

     Interest paid was $12,945,  $13,044,  and $14,823 in 2000,  1999, and 1998,
respectively.

LEASES

     The Company has a number of operating lease agreements  primarily involving
machinery,  physical  distribution,  and  computer  equipment.  Certain of these
leases contain renewal or purchase options that vary by lease.  These leases are
noncancelable and expire on dates through 2009.

     During 1999 and 2000, the Company entered into sale-leaseback  transactions
whereby the Company sold new and existing manufacturing  equipment and leased it
back for 7 years.  The leasebacks are being  accounted for as operating  leases.
The gains of $2,044 have been  deferred  and are being  amortized to income over
the lease term.

     Rent expense was $5,277,  $3,215, and $3,891 for the years ended August 31,
2000, 1999, and 1998, respectively.

     The  following  is a schedule  by year of future  minimum  rental  payments
required under the operating leases that have initial or remaining noncancelable
lease terms in excess of one year as of August 31, 2000:
<TABLE>
<S>                                                       <C>

2001                                                      $  4,205
2002                                                         3,909
2003                                                         3,495
2004                                                         2,924
2005                                                           984
2006 and thereafter                                            897
                                                          --------
Total Minimum Lease Payments                              $ 16,414
                                                          ========
</TABLE>
<PAGE>
PENSION PLANS AND POSTRETIREMENT HEALTH CARE AND LIFE INSURANCE BENEFITS
         Pension  Plans:  The  Company  has a  noncontributory  defined  benefit
pension plan covering certain employees.  The plan covers salaried employees and
provides pension benefits that are based on years of credited service,  employee
compensation during years preceding retirement,  and the primary social security
benefit.  The plan also covers hourly employees and provides pension benefits of
stated  amounts for each year of credited  service.  The Company's  policy is to
fund the annual amount required by the Employee  Retirement  Income Security Act
of 1974. Plan assets consist of U.S. Treasury bonds and notes, U.S. governmental
agency issues,  corporate bonds, and common stocks. The plan held 350,000 common
shares of the Company at August 31, 2000 (3.0% of plan assets) and 1999 (4.6% of
plan assets).

         On July 1, 1999, the Company  amended its defined  benefit pension plan
with respect to certain  salaried and hourly employees by establishing a defined
benefit cash balance pension plan (the Plan). The Plan provides pension benefits
that are based on years of credited  service and  employee  compensation  during
years  preceding   retirement.   Employees  who  met  certain  age  and  service
requirements  remained in the defined  benefit pension plan. In August 2000, the
Company  amended  the Plan to provide  additional  benefits  to  certain  former
employees.  This amendment increased the Company's obligations under the Plan by
$3,945, which will be amortized against income over approximately 17 years.

         The Company  also has an unfunded  nonqualified  supplementary  benefit
plan through which the Company provides  supplemental pension payments in excess
of qualified  plan payments  including  payments in excess of limits  imposed by
federal tax law and other  benefits.  The plan covers  certain  officers and key
employees.

         In addition,  the Company  participates  in a  multiemployer  plan that
provides  defined benefits to certain  bargaining unit employees.  The Company's
contributions to the  multiemployer  plan totaled $344, $293, and $241 for 2000,
1999 and 1998, respectively.

         Postretirement  Health and Life: The Company  provides  health care and
life  insurance  benefits  to  designated  salaried  and  hourly  employees  who
participate in a defined  benefit  pension plan and who retired prior to January
1, 1992. The plan coordinates with Medicare and requires employee contributions.
The Company also provides similar benefits to certain employees,  represented by
bargaining  units,  who retire before  attaining age 65 and meet certain minimum
service requirements.  Benefits for the bargaining unit employees terminate when
the retiree attains age 65. The Company funds the  postretirement  benefits on a
cash basis. On July 1, 1999, the Company  discontinued the  postretirement  life
insurance  benefits  for all  non-organized  salaried and hourly  employees  who
became participants in the defined benefit cash balance pension plan.

         In prior  years,  health care and life  insurance  benefits for retired
employees  of  closed  facilities  were  provided  for at the time  the  related
facility was closed.  The accrued  postretirement  benefit  obligation for these
retirees was $877 and $1,100 at August 31, 2000 and 1999, respectively.

         Effective  September  1,  1998,  the  Company  adopted  SFAS  No.  132,
"Employers'  Disclosures about Pensions and Other  Postretirement  Benefits." In
accordance with SFAS No. 132, the following tables provide a  reconciliation  of
the change in the benefit obligation, the change in plan assets, and a statement
of the funded status of the plans.
<PAGE>
<TABLE>
<CAPTION>
                                                              Pension Benefits       Postretirement Benefits
                                                          ----------------------     -----------------------
<S>                                                       <C>          <C>             <C>        <C>

                                                              2000         1999          2000        1999
                                                          ---------    ---------       -------    --------
Change in Benefit Obligation
Benefit obligation at beginning of year                   $  98,582    $ 106,334       $ 3,260    $  3,900
Service cost                                                  1,555        2,117            22          50
Interest cost                                                 6,925        7,104           226         262
Plan amendments                                               5,047       (1,367)            -           -
Actuarial (gain) loss                                        (7,591)      (6,244)         (118)        (98)
Plan curtailment                                                  -       (1,804)            -        (559)
Benefits paid                                                (7,799)      (7,558)         (532)       (295)
                                                          ---------    ---------       -------    --------
Benefit obligation at end of year                         $  96,719    $  98,582       $ 2,858    $  3,260
                                                          ---------    ---------       -------    --------

Change in Plan Assets
Fair value of plan assets at beginning of year            $ 120,192    $ 114,681             -           -
Actual return on plan assets                                 20,682       12,981             -           -
Employer contribution                                            92           88           532         295
Benefits paid                                                (7,799)      (7,558)         (532)       (295)
                                                          ---------    ---------       -------    --------
Fair value of plan assets at end of year                  $ 133,167    $ 120,192       $     -    $      -
                                                          ---------    ---------       -------    --------

Funded Status
Funded status                                             $  36,448     $ 21,610       $(2,858)   $ (3,260)
Unrecognized net actuarial (gains) loss                     (38,483)     (20,757)        1,266       1,443
Unrecognized prior service cost                               6,038        1,070             -           -
Unrecognized transition asset                                  (837)      (1,394)            -           -
                                                          ---------    ---------       -------    --------
Net asset (liability)                                     $   3,166    $     529       $(1,592)   $ (1,817)
                                                          ---------    ---------       -------    --------

Amounts recognized in Statements of Financial Condition
Prepaid (accrued) benefit cost                            $   3,166    $     529       $(1,592)   $ (1,817)
Additional minimum liability                                   (723)        (401)            -           -
Intangible asset                                                723           11             -           -
Accumulated other comprehensive losses                            -          390             -           -
                                                          ---------    ---------       -------    --------
Net amount recognized                                     $   3,166    $     529       $(1,592)   $ (1,817)
                                                          =========    =========       =======    ========
</TABLE>
<PAGE>
         The  assumptions  used  in the  measurement  of the  Company's  benefit
obligation and net periodic benefit cost were as follows:
<TABLE>
<CAPTION>
                                    Pension Benefits     Postretirement Benefits
                                   -------------------   -----------------------
<S>                                <C>           <C>     <C>          <C>
                                    2000          1999     2000         1999
                                   -----         -----   ------       -------
Weighted-average assumptions
Discount rate                       8.3%          7.3%     8.3%         7.3%
Expected return on plan assets     10.5%         10.0%        -            -
Rate of compensation increase       4.7%          4.7%        -            -
</TABLE>
         The assumed rates of future increases in per capita cost of health care
benefits  (health care trend rates) are 5.5% in 2000 and thereafter.  Increasing
the  health  care  trend  rate  by  one  percentage  point  would  increase  the
accumulated  postretirement  benefit  obligation by $184 and would  increase the
2000  postretirement  benefit cost by $17. Decreasing the health care trend rate
by one percentage  point would decrease the accumulated  postretirement  benefit
obligation $162 and would decrease the 2000 postretirement benefit cost by $15.

         The  components  of net periodic  benefit  cost  included in results of
operations are as follows:
<TABLE>
<CAPTION>
                                                Pension Benefits            Postretirement Benefits
                                        -------------------------------    ------------------------
<S>                                     <C>          <C>        <C>        <C>      <C>      <C>

                                           2000        1999       1998       2000    1999     1998
                                        --------     -------    -------    -------  ------    -----
Net Periodic Benefit Cost
Service cost                            $  1,555     $ 2,117    $ 1,680    $    22  $   50   $   41
Interest cost                              6,925       7,104      7,083        226     262      285
Expected return on plan assets           (10,594)     (9,088)    (8,369)         -       -        -
Amortization of prior service cost            79         334        235          -       -        -
Recognized net actuarial loss                 47          39         59         60      65       53
Amortization of transition asset            (558)       (558)      (558)         -       -        -
Adjustment for settlement                      -           -          -          -       -        -
Dispositions                                   -        (305)         -          -     (47)       -
Curtailment gain                               -      (1,089)         -          -    (511)       -
                                        --------    --------    -------    -------  ------    -----
Net periodic benefit cost( benefit)     $ (2,546)   $ (1,446)   $   130    $   308  $ (181)  $  379
                                        ========    ========    =======    =======  ======    =====
</TABLE>


<PAGE>
 The Company also sponsors a deferred  compensation  profit sharing plan
for the benefit of substantially  all domestic salaried  employees.  The Company
provides a 25% match on employee contributions up to 6% of eligible compensation
and a supplemental savings match from 1% to 35% based on the Company achieving a
minimum return on shareholders' equity and subject to IRS limitations.  Matching
contributions  made by the Company totaled $734,  $369, and $333 for 2000, 1999,
and 1998, respectively.

     Included in deferred liabilities at August 31, 2000 and 1999, is an accrual
totaling  $10,439  and  $11,063,  respectively,  for  termination  benefits  for
Speedline employees. The liability is based on the employee's length of service,
position, and remuneration,  and is payable upon separation. There is no vesting
period or funding requirement associated with the liability.

COMMITMENTS AND CONTINGENCIES
         At August 31, 2000,  the Company has committed to capital  expenditures
of $10,027 in 2001, primarily for the Engineered Components segment.

         The Company,  as is normal for the  industry in which it  operates,  is
involved in certain  legal  proceedings  and subject to certain  claims and site
investigations  which arise under the environmental laws and which have not been
finally adjudicated.

The Company has been  identified as a potentially  responsible  party by various
state agencies and by the United States  Environmental  Protection  Agency (U.S.
EPA) under the Comprehensive  Environmental  Response Compensation and Liability
Act of 1980, as amended,  for costs  associated  with U.S.  EPA-led  multi-party
sites and state  environmental  agency-led  remediation  sites.  The majority of
these claims involve  third-party owned disposal sites for which compensation is
sought  from the  Company as an alleged  waste  generator  for  recovery of past
governmental  costs or for  future  investigation  or  remedial  actions  at the
multi-party sites. There are two Company-owned properties where state-supervised
cleanups are expected.  The designation as a potentially  responsible  party and
the  assertion of such claims  against the Company are made without  taking into
consideration the extent of the Company's  involvement with the particular site.
In each instance,  claims have been asserted  against a number of other entities
for the same recovery or other relief as was asserted against the Company. These
claims are in various  stages of  administrative  or  judicial  proceeding.  The
Company  has no  reason  to  believe  that it will  have to pay a  significantly
disproportionate share of clean-up costs associated with any site. To the extent
possible,  with the information available at the time, the Company has evaluated
its  responsibility  for costs and related  liability  with respect to the above
sites. In making such  evaluation,  the Company did not take into  consideration
any possible  cost  reimbursement  claims  against its insurance  carriers.  The
Company is of the opinion that its liability  with respect to those sites should
not have a  material  adverse  effect on its  financial  position  or results of
operations. In arriving at this conclusion,  the principal factors considered by
the Company were ongoing  settlement  discussions with respect to certain of the
sites,  the volume and relative  toxicity of waste alleged to have been disposed
of by the  Company at certain  sites,  which  factors are often used to allocate
investigative  and remedial costs among  potentially  responsible  parties,  the
probable  costs  to be paid by  other  potentially  responsible  parties,  total
projected  remedial  costs for a site,  if  known,  and the  Company's  existing
reserve to cover costs associated with unresolved environmental proceedings.  At
August  31,  2000,  the  Company's   accrued   undiscounted   reserve  for  such
contingencies was $1,575.

<PAGE>

     Allied-Signal  Inc. (now  Honeywell)  brought an action against the Company
seeking a contribution  from the Company equal to 50% of  Honeywell's  estimated
$30,000 remediation cost in connection with a site in southern Ohio. The Company
believes its responsibility with respect to this site is very limited due to the
nature of the  foundry  sand  waste it  disposed  of at the site.  The court has
rendered its decision on this case, however, the exact amount of the verdict has
not yet been determined by the court. The amount will be significantly less than
the amount  sought by the  plaintiff  and the Company  estimates  its  liability
associated with the action to be between $500 and $1,500.  The Company  believes
its liability is at the low end of this range.

     In prior  years,  the  Company had  recorded a liability  for a legal claim
asserted by former employees at its Flagg Brass operations.  Due to the terms of
a settlement reached during 2000 relative to this obligation, a liability in the
amount of $2,226 was reversed through a reduction in SG&A expense.

     Increasingly,  major automotive  industry companies are withholding partial
payment  for goods  received.  Often,  this is a  negotiating  tactic  for costs
incurred by the customer in which the customer believes that the supplier should
participate.  Generally, payment is received, however, only after several months
have passed.  At August 31, 2000, the Company has $2,037 of accounts  receivable
being withheld  pending final  resolution of various  issues.  It is anticipated
that this amount will ultimately be collected.

MAJOR CUSTOMERS AND CREDIT CONCENTRATION
     The Company sells products to customers  primarily in the United States and
Europe.  The Company  performs  ongoing  credit  evaluations  of customers,  and
generally does not require  collateral.  Allowances are maintained for potential
credit  losses and such losses have been within  management's  expectations.  On
August  31,  2000,  total  trade  receivables  from  the  domestic  and  foreign
automotive  industry  were $57,928,  and $ 19,945 was due from the  construction
industry.

     Sales to Engineered  Components'  largest  customer,  General Motors,  were
$157,099,  $136,469, and $105,720 for the years ended August 31, 2000, 1999, and
1998, respectively. Trade receivables from General Motors on August 31, 2000 and
1999, were $7,845 and $14,570,  respectively,  and were current. No other single
customer accounted for a material portion of trade receivables.
<PAGE>
INCOME TAXES
<TABLE>
<CAPTION>
For  financial  reporting  purposes,  income  before  income taxes  includes the
following components:
<S>                                              <C>      <C>         <C>
                                                  2000       1999        1998
United States                                    $  135   $ 23,005    $ 17,736
Foreign                                           5,287      8,533       5,239
                                                 ------   --------    --------
                                                 $5,422   $ 31,538    $ 22,975
                                                 ======   ========    ========
</TABLE>
<TABLE>
<CAPTION>
The provisions for income taxes on continuing operations are as follows:
<S>                                              <C>      <C>         <C>
Currently payable
      State and local                            $   62   $  1,002    $    222
      Foreign                                     3,142      3,450       2,232
      Federal                                        61      5,499       5,360
                                                 ------   --------    --------
                                                  3,265      9,951       7,814
Deferred
      State and local                                78        133          (4)
      Foreign                                    (1,053)      (803)     (2,091)
      Federal                                      (232)     2,940         491
                                                -------   --------    --------
                                                 (1,207)     2,270      (1,604)
                                                -------   --------    --------
                                                 $2,058   $ 12,221    $  6,210
                                                 ======   ========    ========
</TABLE>
<TABLE>
<CAPTION>
Reconciliation of income taxes computed by applying the statutory federal income
tax rate to the provisions for Income taxes are as follows:
<S>                                              <C>      <C>         <C>

Federal income tax at statutory rate             $1,898   $ 11,038    $  8,041
Federal tax credits                                (200)      (108)       (140)
State income taxes                                  117        784         144
Goodwill amortization                               507        852         424
Higher effective income taxes of other countries    454        954         268
Foreign tax basis step-up                             -     (1,590)          -
Change in Italian tax rates                           -          -      (2,562)
Other                                              (718)       291          35
                                                 ------   --------    --------
                                                 $2,058   $ 12,221    $  6,210
                                                 ======   ========    ========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Significant components of deferred tax assets and liabilities are as follows:
<S>                                                       <C>         <C>
                                                             2000        1999
                                                          --------    --------
Deferred tax assets related to
Accrued compensation and related items                    $  3,090    $  2,272
Tax credit carryforwards                                     1,747       4,272
Net operating losses                                         9,179       7,115
Other                                                        2,096       5,516
                                                          --------    --------
                                                            16,112      19,175
Valuation allowance                                         (3,198)     (4,667)
                                                          --------    --------
                                                            12,914      14,508
Deferred tax liabilities related to
Depreciation                                                31,954      32,874
Other                                                        5,584       8,995
                                                          --------    --------
                                                            37,538      41,869
                                                          --------    --------
Net deferred tax liabilities                              $ 24,624    $ 27,361
                                                          ========    ========
</TABLE>
The Company has foreign net operating loss  carryforwards  totaling $20,117,  of
this total,  $8,643 will expire in years 2001  through  2005 and $11,475 have an
unlimited  carryforward.  The  Company  also has a  current  year  domestic  net
operating loss of $1,736 that will expire in 2020. In addition,  the Company has
income tax  credits of $200  expiring  in 2020 and an  alternative  minimum  tax
credit of $1,547  which has an  unlimited  carryforward  period.  For  financial
reporting  purposes,  a valuation  allowance  of $3,198 has been  recognized  to
offset the deferred tax assets related to those carryforwards.

     Income  taxes paid by the Company  totaled  $4,342,  $7,000,  and $5,701 in
2000, 1999, and 1998, respectively.

     Undistributed earnings of the Company's foreign subsidiaries are considered
to be permanently  reinvested  and,  accordingly,  no provisions for U.S. income
taxes have been provided thereon.  It is not practical to determine the deferred
tax liability for temporary differences related to these undistributed earnings.
<PAGE>
STOCK OPTIONS
     The Company has two plans  under  which stock  options for the  purchase of
common  shares can be granted.  The 1999 Stock  Incentive  Plan provides for the
granting  of options  for the  purchase  of a maximum of 425,000  shares,  stock
appreciation  rights,  performance  awards,  and restricted  stock awards to key
employees of the Company.  Options  awarded under the plan may not be granted at
an  option  price  less  than the fair  market  value of a share on the date the
option is granted,  and the maximum  term of an option may not exceed ten years.
All options  currently granted under the plan are exercisable one year after the
date of grant.
     The 1999  Director  Stock Option Plan  provides for the granting of options
for the  purchase of a maximum of 150,000  shares.  Under the plan,  each person
serving as a director  of the  Company on the first  business  day of January of
each year, who is not employed by the Company, is automatically  granted options
for the  purchase of 1,500  shares.  All options were granted at an option price
equal to the fair market  value of a share on the date of grant.  Each option is
exercisable  one year after the date of grant and the maximum  term of an option
may not exceed ten years.
     Certain options also remain  outstanding  and exercisable  from prior stock
option plans.  Information  regarding  the Company's  stock option plans for the
years ended August 31, 2000, 1999, and 1998 is as follows: Information regarding
options outstanding at August 31, 2000, is as follows:
<TABLE>
<CAPTION>
                                                       2000                  1999                       1998
                                            -----------------------  -----------------------  -----------------------
<S>                                         <C>          <C>         <C>         <C>          <C>         <C>

                                                          Weighted-                Weighted-                Weighted-
                                                          Average                  Average                  Average
                                                          Exercise                 Exercise                 Exercise
                                              Shares       Price       Shares       Price       Shares       Price
                                            -----------  ----------  ----------  -----------  ----------  ----------

Outstanding at beginning of year              668,494       $19.21     571,337       $19.94      472,525      $18.96
Granted                                       161,346       $14.18     132,657       $16.46      149,601      $22.78
Exercised                                     (19,071)      $10.38      (2,000)      $18.03      (30,539)     $18.25
Cancelled                                    (162,977)      $18.63     (33,500)      $20.86      (20,250)     $20.78
                                            ---------                ---------                ----------
Outstanding at end of year                    647,792       $18.36     668,494       $19.21      571,337      $19.94
                                            =========                =========                ==========
Options exercisable at end of year            510,607       $19.51     535,837       $19.89      421,736      $18.93
                                            =========                =========                ==========
Weighted-average fair value of
   options granted during the year            $4.81                    $3.36                     $4.95
                                              =====                    =====                     =====
</TABLE>
<TABLE>
<CAPTION>
Information regarding options outstanding at August 31, 2000, is as follows:

                                      Options Outstanding                   Options Exercisable
                             --------------------------------------        ----------------------
<S>                          <C>         <C>              <C>              <C>          <C>
                                          Weighted        Weighted-                     Weighted-
                                          Remaining        Average                       Average
                                         Contractual      Exercise                      Exercise
Range of Exercise Prices      Number        Life            Price           Number        Price
------------------------      ------     -----------      ---------        --------     ---------

$8.50 -  $14.50               86,968      6.8 years        $11.63            29,468        $11.47
$15.53 - $19.81              360,784      6.9 years        $17.13           281,099        $17.51
$20.44 - $25.91              200,040      5.5 years        $23.50           200,040        $23.50
</TABLE>

<PAGE>

     The Company has elected to adopt the disclosure-only provisions of SFAS No.
123, "Accounting for Stock-Based Compensation," and continue to apply Accounting
Principles  Board Opinion No. 25 and related  interpretations  in accounting for
its stock option plans.  Accordingly,  no compensation  cost has been recognized
related to the Company's  stock option plans.  Consistent with the provisions of
SFAS 123, had  compensation  cost been determined based on the fair value at the
grant date for awards in fiscal 2000,  1999,  and 1998 the  Company's net income
and net income per share would be reduced for such years as follows.
<TABLE>
<S>                                         <C>       <C>       <C>
                                             2000      1999      1998
                                            ------    ------    ------

Proforma effect on net income               $  430    $  290    $  523

Proforma effect on net income per share:

Basic                                       $ 0.05    $ 0.03    $ 0.06

Diluted                                     $ 0.05    $ 0.03    $ 0.06
</TABLE>

       The fair value of each option  grant was  estimated  as of the grant date
using the Black-Scholes option-pricing model with the following assumptions:
<TABLE>
<S>                                <C>             <C>             <C>
                                          2000            1999            1998
                                   ------------    ------------    ------------

Expected volatility                      46.0%           23.0%           23.0%

Dividend yield                           4.42%           3.31%           2.26%

Expected life of option in years           5.0             5.0             3.5

Risk-free interest rates           5.7% - 6.8%     4.4% - 5.6%     5.8% - 6.6%
</TABLE>
<PAGE>
EARNINGS PER SHARE
<TABLE>
<CAPTION>
The following table reflects the calculations for basic and diluted earnings per
share for the three years ended August 31:
<S>                                     <C>          <C>         <C>
                                          2000         1999        1998
                                        --------     -------     -------
Income before cumulative effect
   of accounting change                 $  3,364     $19,317     $16,765
                                        ========     ========    =======
Net income                              $  4,347     $19,317     $ 8,177
                                        ========     ========    =======
Basic Earnings per Share:
Basic shares                               8,788       9,144       9,200
                                        ========     ========    =======
Income before cumulative
    effect of accounting change         $   0.38     $ 2.11      $  1.82
                                        ========     ========    =======
Net income                              $   0.49     $ 2.11      $  0.89
                                        ========     ========    =======

Diluted Earnings per Share
Basic shares                               8,788       9,144       9,200
Stock options                                  4          18          50
                                        --------     -------     -------
Diluted shares                             8,792       9,162       9,250
                                        ========     ========    =======
Income before cumulative
    effect of accounting change         $   0.38     $  2.11     $  1.81
                                        ========     ========    =======
Net income                              $   0.49     $  2.11     $  0.88
                                        ========     ========    =======
</TABLE>

For each of the three years,  there were outstanding stock options excluded from
the  computation  of  diluted  earnings  per  share  because  the  options  were
antidilutive.
<PAGE>
PREFERRED SHARE PURCHASE RIGHTS
     Under the  Company's  Shareholder  Rights Plan,  as amended on February 24,
1998,  holders  of  common  shares  have  one  preferred  share  purchase  right
(collectively,  the  Rights)  for each common  share  held.  The Rights  contain
features which, under defined circumstances,  allow holders to buy common shares
at a bargain price. The Rights are not presently exercisable and trade in tandem
with the common  shares.  The Rights become  exercisable  following the close of
business on the earlier of (i) the 20th day after a public  announcement  that a
person or group has acquired 15% or more of the common  shares of the Company or
(ii) the date  designated  by the Company's  board of directors.  It is expected
that the Rights will begin to trade independently of the Company's common shares
at that time. Unless renewed, the Rights expire on February 23, 2008.

BUSINESS SEGMENTS

During 1999, the Company adopted SFAS No. 131, "Disclosures about Segments of an
Enterprise  and Related  Information."  This  Statement  requires the Company to
report financial and descriptive information about its operating segments on the
same basis that is used internally to assess operating  performance and allocate
resources to segments.  Operating segments are organized internally primarily by
the type of products  produced and markets  served,  and in accordance with SFAS
No.  131,  the  Company  has  aggregated  similar  operating  segments  into two
reportable segments:  Flow Control Products and Engineered Components.  Adoption
of the new  standard  did not  result  in a change in the  Company's  reportable
segments.

         The Flow  Control  Products  segment is a supplier  of copper and brass
plumbing  fittings for the industrial,  commercial and residential  construction
markets,   and  in  prior  years,   valves  utilized  in  air  conditioning  and
refrigeration systems and industrial compressed gas applications. The Engineered
Components  segment is a supplier of  aluminum  wheels and  aluminum  automotive
components  for  automotive  original  equipment   manufacturers  and  cast  and
fabricated  metal products for sale to original  equipment  manufacturers in the
transportation, construction, air conditioning and refrigeration industries.

         The Company evaluates segment performance and allocates resources based
on several  factors,  of which net sales and  operating  income are the  primary
financial  measures.  The accounting policies of the reportable segments are the
same as those described in the footnote  entitled  "Accounting  Policies" of the
Notes to the Consolidated Financial Statements. There are no intersegment sales.
<PAGE>
<TABLE>
<CAPTION>
                                          Net Sales                   Operating Income
<S>                             <C>       <C>       <C>          <C>        <C>      <C>
                                   2000      1999      1998        2000 *    1999     1998 *
Flow Control Products           $147,697  $153,903  $180,596     $22,214   $26,919  $27,931
Engineered Components            462,958   435,030   393,818       6,692    19,708   19,609
Corporate                              -         -         -      (6,628)   (9,540)  (9,630)
                                --------  --------  --------     -------   -------  -------
                                 610,655   588,933   574,414      22,278    37,087   37,910
Restructuring and
Integration charges                    -         -         -        (721)        -  (12,000)
Disposition of businesses              -         -         -           -     9,023   12,048
Equity in loss of joint
venture and other
income (expense)                       -         -         -      (3,206)   (1,390)      62
Interest expense                       -         -         -     (12,929)  (13,182) (15,045)
                                --------  --------  --------     -------   -------  -------
Total net sales and
income before taxes             $610,655  $588,933  $574,414     $ 5,422   $31,538  $22,975
                                ========  ========  ========     =======   =======  =======
</TABLE>
<TABLE>
<CAPTION>
                                    Capital Expenditures       Depreciation and Amortization
<S>                             <C>       <C>       <C>         <C>        <C>      <C>
                                   2000      1999      1998        2000      1999     1998
Flow Control Products           $  4,435  $  6,266  $  9,085    $  5,497   $ 5,322  $ 6,114
Engineered Components             17,018    40,799    37,535      26,445    25,018   24,545
Corporate                             82       295       143       1,057     1,006    1,454
                                --------  --------  --------    --------   -------  -------
                                $ 21,535  $ 47,360  $ 46,763    $ 32,999   $31,346  $32,113
                                ========  ========  ========    ========   =======  =======
</TABLE>
<TABLE>
<CAPTION>
                                        Total Assets
<S>                             <C>       <C>       <C>
                                    2000     1999      1998
Flow Control Products           $ 82,070  $ 81,673  $112,874
Engineered Components:           317,526   361,753   362,742
Corporate                         80,790    90,060    87,834
                               ---------- --------  --------
                                $480,386  $533,486  $563,450
                                ========= ========  ========
</TABLE>

* Income before  cumulative  effect of a change in accounting  principle in 2000
and 1998.
<PAGE>
The Company's  manufacturing  operations  are conducted in the United States and
Europe. Information about the Company's operations in different geographic areas
for the years ended August 31, 2000,  1999,  and 1998 is shown below.  Net sales
are based on the location of the customer.
<TABLE>
<S>                                <C>          <C>          <C>
                                     2000         1999         1998
                                   --------     --------     --------
Net Sales
United States                      $422,403     $392,960     $377,770
Other Europe                         92,319      107,602      101,125
Germany                              76,780       70,143       65,229
Other                                19,153       18,228       30,290
                                   --------     --------     --------
                                   $610,655     $588,933     $574,414
                                   ========     ========     ========

Long-Lived Assets
United States                      $146,908     $158,997     $175,229
Europe                               79,949       97,761       84,888
                                   --------     --------     --------
                                   $226,857     $256,758     $260,117
                                   ========     ========     ========
</TABLE>
<TABLE>
<CAPTION>
The Company's sales by product category are as follows:
<S>                                <C>          <C>          <C>    <C>    <C>    <C>
                                     2000         1999         1998
                                   --------     --------     --------

Aluminum wheels                    $289,210     $301,490     $266,395
Brass and copper fittings           166,203      167,931      159,603
Aluminum automotive components      155,242      115,297       97,110
Valves                                    -        4,215       38,172
Other                                     -            -       13,134
                                   --------     --------     --------
                                   $610,655     $588,933     $574,414
                                   ========     ========     ========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
QUARTERLY FINANCIAL DATA (UNAUDITED)
($ in thousands except per share data)
                                                                                                      For the
                                                                    Fiscal Quarter                      Year
                                             --------------------------------------------------------------------------------
<S>                                             <C>          <C>          <C>          <C>          <C>
2000                                                1st          2nd          3rd          4th
Net sales                                       $ 146,079    $ 150,009    $ 163,162    $ 151,405    $ 610,655
Gross profit                                       18,311       18,631       21,387       20,365       78,694
Income before cumulative effect
  of accounting change                              1,295          284        1,485          300        3,364

Income per share before cumulative
  effect of accounting change - basic              $ 0.14       $ 0.03       $ 0.17       $ 0.04       $ 0.38
Income per share before cumulative
  effect of accounting change - diluted            $ 0.14       $ 0.03       $ 0.17       $ 0.04       $ 0.38

Net income                                          2,278          284        1,485          300        4,347

Net income per share - basic                       $ 0.25       $ 0.03       $ 0.17       $ 0.04       $ 0.49
Net income per share - diluted                     $ 0.25       $ 0.03       $ 0.17       $ 0.04       $ 0.49

Average number of shares
outstanding - basic                                 8,956        8,949        8,863        8,406        8,788
Average number of shares
outstanding - diluted                               8,962        8,956        8,863        8,407        8,792

</TABLE>
<TABLE>
<CAPTION>
                                                                                                      For the
                                                                    Fiscal Quarter                      Year
                                             -----------------------------------------------------------------
<S>                                             <C>          <C>          <C>          <C>          <C>
1999                                                1st          2nd          3rd          4th
Net sales                                       $ 146,024    $ 141,734    $ 157,790    $ 143,385    $ 588,933
Gross profit                                       24,847       25,115       23,851       19,212       93,025

Net income                                         10,029        4,502        3,739        1,047       19,317

Net income per share - basic                       $ 1.09       $ 0.49       $ 0.41       $ 0.12       $ 2.11
Net income per share - diluted                     $ 1.09       $ 0.49       $ 0.41       $ 0.12       $ 2.11

Average number of shares
outstanding - basic                                 9,192        9,200        9,169        9,019        9,144
Average number of shares
outstanding - diluted                               9,202        9,227        9,188        9,034        9,162
</TABLE>
Gross  profit and net income for the first  three  quarters  of fiscal 2000 have
been restated from the amounts previously reported in the Company's Form 10-Q's.
The restated amounts reflect the accounting  change for supplies and spare parts
inventories  that was made  retroactive  to September 1, 1999. The effect of the
restatements was to recognize the cumulative  effect of this change in the first
quarter,  which  decreased  gross  profit by $315 and  increased  net  income by
$792.  Gross   profit and net income  decreased  in  the second  quarter by $719
and $436, respectively, and in the third quarter by $551 and $356, respectively.
<PAGE>

COMMON STOCK PRICE AND DIVIDENDS DECLARED

<TABLE>
<CAPTION>
                              Fiscal 2000                                Fiscal 1999
                ------------------------------------       ------------------------------------
<S>              <C>          <C>          <C>             <C>           <C>         <C>

                     Common Stock                              Common Stock
                      Price Range          Dividends            Price Range           Dividends
Quarter           High          Low        Declared          High           Low       Declared
-------          --------     --------     ---------       --------      --------    ---------
First            $16          $12  3/8      14 cents       $18 15/16     $13 7/8       14 cents
Second           $17          $11  3/4      14 cents       $22           $15 5/16      14 cents
Third            $12  1/8     $8            14 cents       $19           $15 1/4       14 cents
Fourth           $12  1/8     $8  3/16      14 cents       $18 7/16      $14 1/2       14 cents
</TABLE>