<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
---------
[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended June 28, 1998
OR
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from _______________ to _______________
Commission file number: 0-28942
PRIMEX TECHNOLOGIES, INC.
(Exact name of registrant as specific in its charter)
VIRGINIA 06-1458069
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
10101 NINTH STREET NORTH, ST. PETERSBURG, FLORIDA 33716-3807
(Address of principal executive offices) (Zip Code)
(813) 578-8100
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
------ ------
As of June 28, 1998, there were outstanding 5,138,376 shares of the
registrant's common stock, par value $1.00 per share.
<PAGE>
PRIMEX TECHNOLOGIES, INC.
INDEX
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION
Page No.
--------
<S> <C> <C>
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets -
June 28, 1998 and December 31, 1997 3
Condensed Consolidated Statements of Operations -
Three Months Ending June 28, 1998 and June 30, 1997;
Six Months Ending June 28, 1998 and June 30, 1997 4
Condensed Consolidated Statements of Cash Flow -
Six Months Ending June 28, 1998 and June 30, 1997 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 4. Submission of Matters to a Vote of Security Holders 13
Item 6. Exhibits and Reports on Form 8-K 13
Signatures 14
</TABLE>
2
<PAGE>
PART I. FINANCIAL INFORMATION
- -------------------------------
ITEM 1. FINANCIAL STATEMENTS
- -----------------------------
PRIMEX TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
($ IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
JUNE 28, DECEMBER 31,
1998 1997
---------- -------------
ASSETS (UNAUDITED)
- ------
<S> <C> <C>
Current Assets:
Receivables .............................................................. $ 105,056 $ 94,657
Inventories, Net ......................................................... 50,155 35,157
Other Current Assets ..................................................... 9,613 7,263
--------- ---------
Total Current Assets .................................................. 164,824 137,077
Property, Plant and Equipment .............................................. 255,581 260,189
Less: Accumulated Depreciation ............................................. (161,113) (161,529)
--------- ---------
94,468 98,660
Goodwill, Net .............................................................. 43,517 44,821
Other Assets ............................................................... 16,373 15,733
--------- ---------
Total Assets ............................................................. $ 319,182 $ 296,291
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Current Liabilities:
Short-Term Borrowings .................................................... $ 27,000 $ 24,100
Accounts Payable ......................................................... 22,117 28,894
Contract Advances ........................................................ 48,765 35,070
Accrued Liabilities ...................................................... 32,983 32,522
--------- ---------
Total Current Liabilities ............................................. 130,865 120,586
Other Liabilities .......................................................... 28,433 22,904
--------- ---------
Total Liabilities ........................................................ 159,298 143,490
Shareholders' Equity
Common Stock; $1.00 par value; 60,000,000 shares
authorized; issued and outstanding 5,138,376
shares at June 28, 1998 and 5,137,637 shares at
December 31, 1997 ...................................................... 5,138 5,138
Other Shareholders' Equity ............................................... 154,746 147,663
--------- ---------
Total Shareholders' Equity ............................................ 159,884 152,801
--------- ---------
Total Liabilities and Shareholders' Equity ............................... $ 319,182 $ 296,291
========= =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
<PAGE>
PRIMEX TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
($ IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
------------------ ------------------
JUNE 28, JUNE 30, JUNE 28, JUNE 30,
1998 1997 1998 1997
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Sales ......................................... $111,068 $112,921 $223,319 $227,720
Operating Expenses:
Cost of Goods Sold ........................... 84,152 89,755 172,941 185,468
Selling and Administration ................... 19,069 15,605 35,752 30,170
Research and Development ..................... 2,389 1,482 3,951 2,616
-------- -------- -------- --------
Operating Income .............................. 5,458 6,079 10,675 9,466
Interest Expense .............................. 307 1,336 783 2,888
Other Income, Net ............................. 792 503 1,178 599
Non-Recurring Income .......................... 2,700 - 2,700 -
-------- -------- -------- --------
Income Before Income Taxes .................... 8,643 5,246 13,770 7,177
Income Tax Provision .......................... 3,579 2,382 5,738 3,442
-------- -------- -------- --------
Net Income .................................... $ 5,064 $ 2,864 $ 8,032 $ 3,735
======== ======== ======== ========
Net Income Per Share:
Basic ....................................... $ 0.98 $ 0.55 $ 1.56 $ 0.72
======== ======== ======== ========
Diluted .................................... $ 0.94 $ 0.54 $ 1.49 $ 0.71
======== ======== ======== ========
Dividends Per Share ........................... $ 0.15 $ 0.15 $ 0.30 $ 0.30
======== ======== ======== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
<PAGE>
PRIMEX TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
($ IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
------------------------------
JUNE 28, JUNE 30,
1998 1997
--------- ---------
<S> <C> <C>
OPERATING ACTIVITIES
- --------------------
Net Cash Provided (Used) by Operating Activities ............. $(5,028) $68,799
INVESTING ACTIVITIES
- --------------------
Capital Expenditures ......................................... (6,331) (2,577)
Proceeds from Disposition of Business ........................ 10,000 -
------- --------
Net Cash Provided (Used) in Investing Activities ........... 3,669 (2,577)
FINANCING ACTIVITIES
- --------------------
Net Short-Term Borrowing ..................................... 2,900 12,000
Net Long-Term Debt Repayment ................................. - (95,000)
Repurchases of Common Stock ................................. - (1,666)
Dividends Paid ............................................... (1,541) (1,556)
------- --------
Net Cash Provided (Used) in Financing Activities............ 1,359 (86,222)
------- --------
Net Increase (Decrease) in Cash .............................. $ - $(20,000)
========= =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
5
<PAGE>
PRIMEX TECHNOLOGIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
($ IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
The accompanying unaudited condensed consolidated financial statements of
Primex Technologies, Inc. (the "Company") have been prepared in accordance with
generally accepted accounting principles for interim financial information and
with the instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
The condensed consolidated financial statements include the accounts of the
Company and its subsidiaries. All significant inter-company transactions and
accounts have been eliminated. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included.
Operating results for the three and six-month periods ended June 28, 1998
are not necessarily indicative of the results that may be expected for the year
ended December 31, 1998. These condensed consolidated financial statements
should be read in conjunction with the consolidated financial statements, and
notes thereto, for the year ended December 31, 1997, as presented in the
Company's Annual Report on Form 10-K.
In the first quarter of 1998, the Company adopted a 4-4-5 quarterly
accounting cycle having a fiscal year ending on December 31. The adoption of
this accounting cycle will have no significant effect on the comparability of
interim financial information.
NET INCOME PER SHARE
The following sets forth the number of shares of common stock included in
the computation of basic and diluted net income per share for the three and six-
month periods ended June 28, 1998 and June 30, 1997.
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
-------------------- --------------------
JUNE 28, JUNE 30, JUNE 28, JUNE 30,
1998 1997 1998 1997
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Denominator for basic net income per share:
Weighted average shares
outstanding and vested 5,151,212 5,177,586 5,151,058 5,203,101
Effect of dilutive securities:
Employee Stock Options 48,113 - 35,754 -
Restricted Stock Unit Grants 208,985 80,684 203,919 57,084
--------- --------- --------- ---------
Dilutive potential common shares 257,098 80,684 239,673 57,084
--------- --------- --------- ---------
Denominator for diluted
net income per share 5,408,310 5,258,270 5,390,731 5,260,185
========= ========= ========= =========
</TABLE>
6
<PAGE>
PRIMEX TECHNOLOGIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
($ IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
INVENTORIES JUNE 28, 1998 DECEMBER 31, 1997
------------- -----------------
<S> <C> <C>
Inventories consist of the following:
Raw materials and work in progress.................................... $52,330 $34,832
Finished goods........................................................ 5,732 8,232
------- -------
58,062 43,064
Less revaluation to LIFO ............................................. 7,907 7,907
------- -------
$50,155 $35,157
======= =======
</TABLE>
Inventories valued using the last-in, first-out (LIFO) method are based on
an annual determination of quantities and costs as of year end; therefore, June
28, 1998 balances reflect certain estimates relating to inventory quantities and
costs at December 31, 1998. Inventory balances at June 28, 1998 and December
31, 1997 are net of reductions for progress payments in the amount of $11,175
and $9,657 respectively.
COMPREHENSIVE INCOME
The Company adopted Statement of Financial Accounting Standards 130,
"Reporting Comprehensive Income," in the first quarter of 1998. Comprehensive
income includes net income and all other changes in equity during a period
except those resulting from investments by and distributions to the Company's
shareholders. On this basis, the Company's comprehensive income which includes
currency translation and minimum pension liability adjustments, totaled $4,863
and $2,869 for the three-month periods and $7,830 and $3,721 for the six-month
periods ended June 28, 1998 and June 30, 1997, respectively.
STOCK OPTION PLAN
A total of 250,000 and 25,000 stock options were granted to certain key
employees on January 2, 1998 and May 5, 1998, respectively, under the 1996 Long
Term Incentive Plan of Primex Technologies, Inc., as amended. The exercise price
of the January and May options is $33.88 and $47.44 per share respectively,
which was the fair market value of the Company's common stock on the date of
the grant. These options become vested in one-third installments over a three-
year period beginning one year from the date of grant and have a ten-year term
from the date of grant. All options granted were outstanding on June 28, 1998.
The Company accounts for stock-based employee compensation using the intrinsic
value method; accordingly, no compensation cost has been recognized for the
stock options granted.
DISPOSITIONS
On April 15, 1998, the Company sold substantially all of the assets related
to its high-power pulsed energy device product line for $10,000 in cash, $9,500
of which was payable at the closing. A gain on this sale of approximately $800
was included in other income for the three and six month periods ended June 28,
1998. Sales of products and services in this product line were $16,833 for the
year ending December 31, 1997 and $3,698 for the first three months of 1998.
Net income for this product line was not material to the Company's consolidated
net income.
7
<PAGE>
PRIMEX TECHNOLOGIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
($ IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
ARBITRATION AWARD
The Company has been awarded approximately $4,000 in a binding arbitration
concerning a breach of contract, of which approximately $1,300 represents
payments due under the contract which are included in operating income, and
approximately $2,700 represents future payments which have been recognized as
non-recurring income for the three and six month periods ending June 28, 1998.
CONTINGENCIES
The Company has agreed to a settlement in principle regarding costs
associated with environmental remediation at a location where the Company
formerly had manufacturing operations. The Company has recorded a net
settlement expense of $800 for the three and six month periods ending June 28,
1998.
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
------------------------------------------------------------------------
RESULTS OF OPERATIONS
----------------------
The following table sets forth certain data, expressed as a percentage of
sales, from the Company's Condensed Consolidated Statements of Operations for
the three and six months ended June 28, 1998 and June 30, 1997.
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
-------------------- --------------------
JUNE 28, JUNE 30, JUNE 28, JUNE 30,
1998 1997 1998 1997
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Sales:
Large caliber tank ammunition ................................. 32.9% 32.9% 32.5% 31.2%
Medium caliber ammunition ..................................... 9.3% 18.4% 9.5% 21.1%
BALL POWDER(R) propellant ..................................... 9.9% 11.0% 9.8% 11.3%
Electronic products ........................................... 15.5% 9.6% 14.4% 9.0%
Space products ................................................ 8.8% 7.8% 8.3% 8.5%
Other products and services ................................... 23.6% 20.3% 25.5% 18.9%
----- ----- ----- -----
100.0% 100.0% 100.0% 100.0%
Cost of goods sold .............................................. 75.8% 79.5% 77.4% 81.4%
----- ----- ----- -----
Gross profit .................................................... 24.2% 20.5% 22.6% 18.6%
Selling and administration expense .............................. 17.2% 13.8% 16.0% 13.2%
Research and development expense ................................ 2.1% 1.3% 1.8% 1.2%
----- ----- ----- -----
Operating income ................................................ 4.9% 5.4% 4.8% 4.2%
Interest expense ................................................ 0.3% 1.2% 0.3% 1.3%
Other income, net ............................................... 0.7% 0.4% 0.5% 0.3%
Non-Recurring Income ........................................... 2.5% - 1.2% -
----- ----- ----- -----
Income before income taxes ...................................... 7.8% 4.6% 6.2% 3.2%
Income tax provision ........................................... 3.2% 2.1% 2.6% 1.5%
----- ----- ----- -----
Net income ...................................................... 4.6% 2.5% 3.6% 1.7%
===== ===== ===== =====
</TABLE>
RESULTS OF OPERATIONS
The Company's sales of $111.1 million during the second quarter of 1998
decreased by $1.9 million, or 1.6%, compared to the second quarter of 1997.
Sales of $223.3 million for the first six months of 1998 were 1.9%, or $4.4
million, lower than the corresponding period in 1997. The second quarter sales
decrease reflects lower Ordnance Division sales which were $76.8 million in 1998
compared to $83.6 million in the corresponding period of 1997, offset by higher
second quarter Aerospace Division sales which were $34.3 million in 1998 as
compared to $29.3 million in the corresponding period of 1997. Ordnance
Division sales for the first six months declined from $169.1 million in 1997 to
$156.4 million in 1998 while Aerospace Division sales increased from $58.6
million in 1997 to $66.9 million in 1998. Ordnance Division sales in the
second quarter and first six months of 1997 benefited from a higher level of
medium caliber shipments as the result of a production recovery from 1996.
Additionally, shipments of BALL POWDER(R) Propellant during the second quarter
of 1998 were 11.6% below the second quarter of 1997. The increase in Aerospace
Division sales between the second quarter of 1997 and 1998 reflects a 95.2%
increase in electronic product sales attributable to shipments of EmPower(TM)
airline passenger seat power supply systems. The electronic product sales
increase more than offset the decline in sales associated with the high-power
pulsed energy device product line that was disposed of in April 1998. Sales of
other products and services reflect increases for the
9
<PAGE>
second quarter and first six months of 1998 as a result of higher shipments
associated with artillery propelling charges and commercial pipe joint
components, compared to the corresponding periods of 1997.
Gross margin, as a percentage of sales, increased to 24.2% in the second
quarter of 1998, compared to 20.5% in the second quarter of 1997. For the first
six months of 1998, gross margins as a percentage of sales increased to 22.6%
from 18.6% during the first six months of 1997. The gross margin improvement in
the second quarter and first six months of 1998, compared to 1997, reflects a
favorable sales product mix and the absence of unfavorable performance that was
experienced on ammunition demilitarization and medium caliber ammunition
programs during the first six months of 1997. Gross margins as a percentage of
sales during the third and fourth quarters of 1998 are not anticipated to reach
the levels achieved during the first six months of 1998 due to an anticipated
less favorable sales product mix.
Selling and administration expenses increased by $3.5 million, or 22.2%, in
the second quarter of 1998 and increased by $5.6 million, or 18.5%, in the first
six months of 1998, compared to corresponding periods in 1997. These 1998
increases reflect higher levels of bid and proposal expenditures associated with
large caliber and space products. Bid and proposal costs for the second quarter
and first six months of 1998 increased 111.0% and 91.5%, respectively, from the
corresponding periods in 1997. Additionally, management incentive costs
associated with improvements in the Company's operating performance increased
20.4% and 41.3% in the second quarter and first six months of 1998,
respectively, over the corresponding periods in 1997.
Research and development expenses increased by $0.9 million, or 61.2%, during
the second quarter of 1998 and by $1.3 million, or 51.0%, during the first six
months of 1998, compared to corresponding periods in 1997. These higher
expenditures reflect increased research and development activity in the
Company's space products business unit.
Interest expense declined to $0.3 million and $0.8 million in the second
quarter and first six months of 1998, respectively, compared to $1.3 million and
$2.9 million for corresponding periods in 1997, respectively. This decrease
reflects the lower level of debt outstanding during 1998 compared to 1997.
Non-operating income and expense for the second quarter and first six months
of 1998 include a pre-tax gain of approximately $0.8 million recognized on the
sale of the Company's high-power pulsed energy device product line and a pre-tax
charge of $0.8 million associated with a settlement regarding costs for
environmental remediation at a former manufacturing site.
Primex Aerospace Company, a wholly owned subsidiary of the Company, was
awarded, during the second quarter of 1998, approximately $4 million in a
binding arbitration concerning a breach of contract. The award was based on
the defendant's ceasing and failing to complete payments on the production of
certain components used in automobile airbags. Approximately $1.3 million of
the award represents payments due under the contract which are included in
operating income, and approximately $2.7 million represents future payments
which have been recognized as non-recurring income for the three and six month
periods ending June 28, 1998.
The Company's effective tax rates differ from statutory tax rates due
principally to expenses associated with goodwill which are not deductible for
federal and state income tax purposes.
10
<PAGE>
Net income of $5.1 million for the second quarter of 1998, and $8.0 million
for the first six months of 1998 compares favorably to the $2.9 million and $3.7
million net income during corresponding periods in 1997.
LIQUIDITY AND SOURCES OF CAPITAL
Cash flow used by operations was $5.0 million during the first six months of
1998 compared to cash provided by operations of $68.8 million during the first
six months of 1997. The decrease primarily resulted from timing in the receipt
of contract advances in the form of performance based payments. During the
first six months of 1997, the Company received $61.0 million of these payments
which accelerated cash flow on a one-time basis in that period.
Investing activities during the first six months of 1998 reflect an increase
in planned capital expenditures to $6.3 million from $2.6 million during the
first six months of 1997. Additionally, the Company received $10.0 million from
the sale of assets related to its high-powered pulsed energy device product
line. Funds from operations were sufficient to pay dividends of $.15 per share
in each of the first and second quarters of 1998 and 1997.
The Company has a revolving credit agreement ("RCA") under the terms of which
participating banks have committed a maximum of $160.0 million for cash
borrowing and letters of credit. The RCA expires on December 31, 2001. The RCA
contains covenants requiring the Company to maintain ratios of (i) minimum
earnings before interest and taxes to interest expense, and (ii) maximum total
debt to earnings before interest, taxes, depreciation and amortization and also
contains certain minimum tangible net worth requirements. The Company also
borrows from RCA participating banks on an uncommitted and unsecured short term
basis at rates similar to the RCA. Aggregate borrowings are limited to the
committed RCA maximum. Management believes that the Company is currently in
compliance with all covenants and requirements under this credit facility. At
June 28, 1998, the Company had unused availability under the RCA facility and
short term credit lines of $133.0 million.
The Company believes, based on its working capital, fixed capital, and
dividend policy, that future cash flow from operations and amounts available
under the RCA are adequate to meet the Company's anticipated cash requirements
in the foreseeable future.
IMPACT OF YEAR 2000
The Company continues to address the Year 2000 software issues described in
its "Annual Report on Form 10-K for the year ended December 31, 1997." The
processes for evaluating and managing the risks and costs associated with this
potential problem are being managed by a team of internal staff and outside
consultants. The Company's financial and operational systems are being
identified and assessed for Year 2000 compliance and efforts to modify existing
software or convert to new software are currently being taken. The Company
believes that it can complete such modifications and conversions in a timely
manner. The Company has initiated communications with vendors, customers and
other third party service providers to evaluate whether they are making adequate
efforts to achieve Year 2000 compliance. The Company cannot presently conclude
whether Year 2000 non-compliance by such third parties is likely to have a
material adverse effect on the Company's operations. The Company believes it
has no exposure to contingencies related to the Year 2000 issue for products it
has sold. The total cost of the Year 2000 project is presently estimated to be
less than $1.0 million, which includes the purchase of new software and
equipment which will be capitalized.
11
<PAGE>
FORWARD-LOOKING STATEMENTS
All statements other than statements of historical fact in this report are
"forward-looking statements" as defined in the Private Securities Litigation
Reform Act of 1995, and are based on management's current expectations of the
Company's near term results, based on current information available and
pertaining to the Company. The Company assumes no obligation to update
publicly any forward-looking statement. Actual results may differ materially
from those projected in the forward-looking statements. These forward-looking
statements involve risks and uncertainties, including, but not limited to, the
following: demand for commercial powder; international business opportunities;
ammunition lot acceptance; timing of contract funding and continued receipt of
performance-based payments under the multi-year tank ammunition contract;
changing economic and political conditions in the United States and in other
countries; changes in governmental laws and regulations surrounding various
matters, such as environmental remediation, contract pricing, and international
trading restrictions; changes in governmental spending and budgetary policies,
such as reductions in the level of defense spending and redirection of
Department of Defense program funding; production and pricing levels of
important raw materials; lower than anticipated levels of plant utilization
resulting in production inefficiencies and higher costs, whether related to the
delay of new product introductions, improved production processes or equipment,
or labor relation issues; difficulties or delays in the development, production,
testing and marketing of products; product margins and customer product
acceptance; and costs and effects of legal and administrative cases,
proceedings, settlements and investigations involving the Company.
PART II. OTHER INFORMATION
- ---------------------------
ITEM 1. LEGAL PROCEEDINGS
- --------------------------
The Company is engaged primarily in providing products and services under
contracts with the U.S. Government and, to a lesser degree, under foreign
government contracts, some of which are funded by the U.S. Government. All such
contracts are subject to extensive legal and regulatory requirements and, from
time to time, agencies of the U.S. Government review, audit or investigate
whether the Company's operations are being conducted in accordance with these
requirements. If such reviews, audits or investigations were to find
inappropriate activity by the Company, such finding could result in contract
repayments or administrative, civil or criminal liabilities including fines or
penalties being imposed upon the Company, or could lead to suspension or
debarment from future U.S. Government contracting by the Company.
The Company has strict policies requiring its employees to comply with all
applicable legal standards relating to contract procurement and administration.
In addition, the Company requires adherence to high ethical standards by its
employees. The Company has an Ethics and Compliance Program in which each major
facility has an ethics officer who acts as a resource for encouraging and
monitoring compliance with these standards. It is the policy of the Company and
its subsidiaries to cooperate fully with all Governmental reviews, audits and
investigations of their affairs.
The Company is a party to a number of pending or threatened investigations,
claims and proceedings. Management believes that all such investigations,
claims and proceedings are routine and incidental to the Company's business and
will not materially adversely affect the Company's results of operations or
financial position.
12
<PAGE>
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- ------------------------------------------------------------
On May 5, 1998, the Company held its Annual Meeting of Shareholders (the
"Annual Meeting"). The matters submitted to a vote by the shareholders were the
election of three directors, approval of an amendment to the 1996 Long Term
Incentive Plan of Primex Technologies, Inc. and the appointment of independent
accountants for the Company.
Votes cast for or withheld regarding the election of three directors for a
term expiring in 2001 were as follows:
<TABLE>
<CAPTION>
For Withheld
--------- --------
<S> <C> <C>
Angelo A. Catani ................................... 4,863,335 41,962
Bob Martinez ....................................... 4,860,289 45,008
Anthony W. Ruggiero ................................ 4,858,063 47,234
</TABLE>
There were no broker non-votes.
The foregoing represents three of the Company's nine Directors. The other
six directors, whose terms of office as directors continued after the Annual
Meeting, are as follows:
Term Expiring in 1999 Term Expiring in 2000
--------------------- ---------------------
James G. Hascall Edwin M. Glasscock
David Lasky Robert H. Rau
William B. Mitchell Leon E. Salomon
At the Annual Meeting, the shareholders also approved an amendment to the
1996 Long Term Incentive Plan of Primex Technologies, Inc. which, among other
things, made an additional 500,000 shares of common stock of the Company
available for issuance under the plan pursuant to stock options. The holders of
3,410,184 shares of common stock voted in favor; 572,408 voted against; 59,497
abstained from voting. There were 863,208 broker non-votes.
At the Annual Meeting, the shareholders also approved the appointment of Ernst
& Young LLP as independent public accountants for the Company. The holders of
4,861,473 shares of common stock voted in favor; 21,479 voted against; 22,345
abstained from voting. There were no broker non-votes.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- -----------------------------------------
(a) Exhibits
27. Financial Data Schedule
(b) Reports filed on Form 8-K during this quarter
During the quarterly period ended June 28, 1998, no reports on Form
8-K were filed by the Company.
13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
PRIMEX TECHNOLOGIES, INC.
(Registrant)
Date: August 10, 1998 /s/ George H. Pain
------------------
Vice President, General Counsel and
Secretary
Date: August 10, 1998 /s/John E. Fischer
------------------
Vice President, Chief Financial and
Accounting Officer
14
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED BALANCE SHEET AT JUNE 28, 1998 AND THE CONDENSED
CONSOLIDATED STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDING JUNE 28,
1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-28-1997
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 105,056
<ALLOWANCES> 0
<INVENTORY> 50,155
<CURRENT-ASSETS> 164,824
<PP&E> 255,581
<DEPRECIATION> 161,113
<TOTAL-ASSETS> 319,182
<CURRENT-LIABILITIES> 130,865
<BONDS> 0
0
0
<COMMON> 5,138
<OTHER-SE> 154,746
<TOTAL-LIABILITY-AND-EQUITY> 319,182
<SALES> 223,319
<TOTAL-REVENUES> 223,319
<CGS> 172,941
<TOTAL-COSTS> 172,941
<OTHER-EXPENSES> 3,951
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 783
<INCOME-PRETAX> 13,770
<INCOME-TAX> 5,738
<INCOME-CONTINUING> 8,032
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,032
<EPS-PRIMARY> 1.56
<EPS-DILUTED> 1.49
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED BALANCE SHEET AT MARCH 31, 1997 AND THE CONDENSED
CONSOLIDATED STATEMENT OF OPERATIONS FOR THE THREE MONTHS ENDING MARCH 31, 1997
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 119,155
<ALLOWANCES> 0
<INVENTORY> 49,217
<CURRENT-ASSETS> 177,224
<PP&E> 254,592
<DEPRECIATION> 153,150
<TOTAL-ASSETS> 340,274
<CURRENT-LIABILITIES> 94,032
<BONDS> 0
0
0
<COMMON> 5,223
<OTHER-SE> 140,281
<TOTAL-LIABILITY-AND-EQUITY> 340,274
<SALES> 114,799
<TOTAL-REVENUES> 114,799
<CGS> 95,713
<TOTAL-COSTS> 95,713
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,552
<INCOME-PRETAX> 1,931
<INCOME-TAX> 1,060
<INCOME-CONTINUING> 871
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 871
<EPS-PRIMARY> 0.17<F1>
<EPS-DILUTED> 0.17<F1>
<FN>
<F1>RESTATED TO CONFORM TO FASB STATEMENT 128 REQUIREMENTS
</FN>
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED BALANCE SHEET AT JUNE 30, 1997 AND THE CONDENSED
CONSOLIDATED STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDING JUNE 30, 1997 AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 97,230
<ALLOWANCES> 0
<INVENTORY> 50,906
<CURRENT-ASSETS> 154,949
<PP&E> 256,101
<DEPRECIATION> 156,817
<TOTAL-ASSETS> 317,035
<CURRENT-LIABILITIES> 94,921
<BONDS> 0
0
0
<COMMON> 5,137
<OTHER-SE> 141,080
<TOTAL-LIABILITY-AND-EQUITY> 317,035
<SALES> 227,720
<TOTAL-REVENUES> 227,720
<CGS> 185,468
<TOTAL-COSTS> 185,468
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,888
<INCOME-PRETAX> 7,177
<INCOME-TAX> 3,442
<INCOME-CONTINUING> 3,735
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,735
<EPS-PRIMARY> 0.55<F1>
<EPS-DILUTED> 0.54<F1>
<FN>
<F1>RESTATED TO CONFORM TO FASB STATEMENT 128 REQUIREMENTS
</FN>
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED BALANCE SHEET AT SEPTEMBER 30, 1997 AND THE CONDENSED
CONSOLIDATED STATEMENT OF OPERATIONS FOR THE NINE MONTHS ENDING SEPTEMBER 30,
1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 842
<SECURITIES> 0
<RECEIVABLES> 77,562
<ALLOWANCES> 0
<INVENTORY> 45,416
<CURRENT-ASSETS> 131,791
<PP&E> 257,166
<DEPRECIATION> 159,666
<TOTAL-ASSETS> 290,014
<CURRENT-LIABILITIES> 117,645
<BONDS> 0
0
0
<COMMON> 5,137
<OTHER-SE> 143,994
<TOTAL-LIABILITY-AND-EQUITY> 290,014
<SALES> 346,581
<TOTAL-REVENUES> 346,581
<CGS> 282,156
<TOTAL-COSTS> 282,156
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,405
<INCOME-PRETAX> 12,561
<INCOME-TAX> 5,799
<INCOME-CONTINUING> 6,762
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,762
<EPS-PRIMARY> 1.30<F1>
<EPS-DILUTED> 1.28<F1>
<FN>
<F1>RESTATED TO CONFORM TO STATEMENT 128 REQUIREMENTS
</FN>
</TABLE>
