<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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 30, 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 1-13645
HOWMET INTERNATIONAL INC.
INCORPORATED IN THE STATE OF DELAWARE I.R.S. EMPLOYER IDENTIFICATION
NO. 52-1946684
475 STEAMBOAT ROAD, GREENWICH, CT 06830
TELEPHONE NUMBER: (203) 661-4600
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 [ ]
Indicate the number of shares outstanding of each of the registrant's classes
of common stock, as of the latest practicable date.
Common Stock, $0.01 par value, as of August 5, 1998 : 100,005,356 Shares
<PAGE>
Howmet International Inc.
Quarterly Report on Form 10-Q
June 30, 1998
TABLE OF CONTENTS
Part I. FINANCIAL INFORMATION
Item 1 -- Financial Statements
Consolidated Statements of Income - Three months ended and Six
months ended June 30, 1998 and 1997 3
Consolidated Condensed Balance Sheets - June 30,
1998 and December 31, 1997 4
Consolidated Statements of Cash Flows - Six
months ended June 30, 1998 and 1997 5
Consolidated Statements of Common Stockholders'
Equity and Redeemable Preferred Stock - Three months
ended and Six months ended June 30, 1998 and 1997 6
Notes to Consolidated Financial Statements 7
Item 2 -- Management's Discussion and Analysis of
Financial Condition and Results of Operations 11
Part II. OTHER INFORMATION
Item 4 -- Submission of Matters to a Vote of Security Holders 15
Item 5 -- Other Information 15
Item 6 -- Exhibits and Reports on Form 8-K 16
SIGNATURES 17
2
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
--------------------
Howmet International Inc.
Consolidated Statements of Income (Unaudited)
(Dollars in millions, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
----------------------------- ---------------------------
1998 1997 1998 1997
- -------------------------------------------------- ----------------------------- ---------------------------
<S> <C> <C> <C> <C>
Net sales $335.7 $330.4 $664.1 $643.0
Operating expenses:
Cost of sales 235.4 228.0 466.8 449.2
Selling, general and administrative expense 31.4 36.3 64.1 72.8
Depreciation and amortization expense 14.7 14.9 29.1 29.3
Research and development expense 4.4 4.0 9.5 8.7
------------ ----------- ----------- -----------
285.9 283.2 569.5 560.0
------------ ----------- ----------- -----------
Income from operations 49.8 47.2 94.6 83.0
Interest income (expense) from Restricted Trust
and Pechiney Notes, net (Note C)
Interest income .3 .3 .8 .7
Interest expense (3.5) (8.8) (7.3) (16.8)
Other, net (.9) (.7) (1.6) (1.4)
------------ ----------- ----------- -----------
Income before income taxes 45.7 38.0 86.5 65.5
Income taxes 18.3 15.4 34.6 27.4
------------ ----------- ----------- -----------
Net income 27.4 22.6 51.9 38.1
Dividends on redeemable preferred stock (1.4) (1.3) (2.7) (2.5)
------------ ----------- ----------- -----------
Net income applicable to common stock $ 26.0 $ 21.3 49.2 35.6
============ =========== =========== ===========
Net income per common share, basic and diluted $ .26 $ .21 $ .49 $ .36
============ =========== =========== ===========
</TABLE>
See notes to consolidated financial statements.
3
<PAGE>
Howmet International Inc.
Consolidated Condensed Balance Sheets
(Dollars in millions, except share amounts)
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
- -----------------------------------------------------------------------------------------------------------------------------
ASSETS (Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 10.1 $ 45.4
Accounts receivable (less allowance of $5.2 and $4.4) 91.2 78.7
Inventories 161.8 155.5
Retained receivables 42.6 20.2
Deferred income taxes 9.0 16.3
Other current assets 2.7 3.9
Restricted Trust (a) 726.9 --
------------ -----------
Total current assets 1,044.3 320.0
Property, plant and equipment, net 293.9 275.5
Goodwill, net 223.5 226.5
Patents and technology and other intangible assets, net 112.5 118.4
Other noncurrent assets 56.5 53.8
Deferred income taxes 8.1 --
Restricted Trust (a) -- 716.4
------------ -----------
Total assets $1,738.8 $1,710.6
============ ===========
LIABILITIES, REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 61.7 $ 84.2
Accrued liabilities 142.8 145.1
Income taxes payable 45.2 28.2
Short-term debt 18.9 --
Pechiney Notes (a) 726.9 --
------------ -----------
Total current liabilities 995.5 257.5
Accrued retiree benefits other than pensions 95.4 93.1
Other noncurrent liabilities 116.6 106.1
Deferred income taxes -- 3.4
Long-term debt, excluding the Pechiney Notes 154.0 208.4
Pechiney Notes (a) -- 716.4
Commitments and contingencies (Note G).
Redeemable preferred stock, 9% payment-in-kind dividends, $.01 par value,
liquidation value - $10,000 per share, authorized - 15,000 shares,
issued and outstanding: June 30, 1998 - 6,269 shares, December 31, 1997 - 6,001 shares 62.7 60.0
Stockholders' equity:
Preferred stock, authorized - 9,985,000 shares, issued and outstanding - 0 shares -- --
Common stock, $.01 par value, authorized - 400,000,000 shares,
issued and outstanding - 100,000,000 shares 1.0 1.0
Capital surplus 195.0 195.0
Retained earnings 124.5 75.3
Accumulated other comprehensive income (Cumulative translation adjustment) (5.9) (5.6)
------------ -----------
Total stockholders' equity 314.6 265.7
------------ -----------
Total liabilities, redeemable preferred stock and stockholders' equity $1,738.8 $1,710.6
============ ===========
</TABLE>
(a) The Restricted Trust holds a note receivable from Pechiney, S.A. and related
letters of credit that secures Pechiney, S.A.'s agreement to repay the
Pechiney Notes due January 2, 1999. Management believes that it is
extremely remote that the Company will use any assets other than those in
the Restricted Trust to satisfy any payments related to the Pechiney Notes.
See Note C.
See notes to consolidated financial statements.
4
<PAGE>
Howmet International Inc.
Consolidated Statements of Cash Flows (Unaudited)
(Dollars in millions)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
--------------------
1998 1997
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operating activities
- --------------------
Net income $ 51.9 $ 38.1
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 29.3 32.3
Equity in income of unconsolidated affiliates (.3) (.6)
Changes in assets and liabilities:
Receivables (34.6) (18.0)
Inventories (6.0) (3.9)
Accounts payable and accrued liabilities (26.4) (9.2)
Deferred income taxes (4.2) (6.2)
Income taxes payable 18.4 12.5
Long-term SARs accrual .2 15.9
Other--net 7.7 3.6
--------------------
Net cash provided by operating activities 36.0 64.5
Investing activities
- --------------------
Purchases of property, plant and equipment (35.8) (20.3)
--------------------
Net cash used by investing activities (35.8) (20.3)
Financing activities
- --------------------
Net change in short-term debt 18.9 --
Issuance of long-term debt 36.6 89.4
Repayment of long-term debt (91.0) (152.6)
Foreign currency rate changes -- (1.4)
--------------------
Net cash used by financing activities (35.5) (64.6)
--------------------
Decrease in cash and cash equivalents (35.3) (20.4)
Cash and cash equivalents at beginning of period 45.4 23.4
--------------------
Cash and cash equivalents at end of period $ 10.1 $ 3.0
====================
</TABLE>
See notes to consolidated financial statements.
5
<PAGE>
Howmet International Inc.
Consolidated Statements of Common Stockholders' Equity and Redeemable Preferred
Stock
(Dollars in millions, except share amounts)
<TABLE>
<CAPTION>
Accumulated Total Redeemable
Common Stock Other Common Preferred Stock
------------------- Capital Retained Comprehensive Stockholders' ---------------
Shares Amount Surplus Earnings Income (Note D) Equity Shares Amount
----------- ------ ------- --------- --------------- -------------- ------- ------
THREE MONTHS ENDED JUNE 30,
- ---------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, March 31, 1997 100,000,000 $1.0 $195.0 $ 35.0 $(5.3) $225.7 5,614 $56.1
-------------
Comprehensive income (Note D):
Net income 22.6 22.6
Other comprehensive income
(Foreign exchange translation
adjustment) (.8) (.8)
-------------
Total comprehensive income 21.8
-------------
Dividends - redeemable
preferred stock (1.3) (1.3) 125 1.3
- --------------------------------------------------------------------------------------------------------------------------------
Balance, June 30, 1997 100,000,000 $1.0 $195.0 $ 56.3 $(6.1) $246.2 5,739 $57.4
================================================================================================================================
Balance, March 31, 1998 100,000,000 $1.0 $195.0 $ 98.5 $(5.7) $288.8 6,134 $61.3
-------------
Comprehensive income (Note D):
Net income 27.4 27.4
Other comprehensive income
(Foreign exchange translation
adjustment) (.2) (.2)
-------------
Total comprehensive income 27.2
-------------
Dividends - redeemable
preferred stock (1.4) (1.4) 135 1.4
- --------------------------------------------------------------------------------------------------------------------------------
Balance, June 30, 1998 100,000,000 $1.0 $195.0 $124.5 $(5.9) $314.6 6,269 $62.7
================================================================================================================================
SIX MONTHS ENDED JUNE 30,
- -------------------------
Balance, December 31, 1996 100,000,000 $1.0 $195.0 $ 20.7 $ 2.1 $218.8 5,490 $54.9
------------
Comprehensive income (Note D):
Net income 38.1 38.1
Other comprehensive income
(Foreign exchange translation
adjustment) (8.2) (8.2)
------------
Total comprehensive income 29.9
------------
Dividends - redeemable
preferred stock (2.5) (2.5) 249 2.5
- --------------------------------------------------------------------------------------------------------------------------------
Balance, June 30, 1997 100,000,000 $1.0 $195.0 $ 56.3 $(6.1) $246.2 5,739 $57.4
================================================================================================================================
Balance, December 31, 1997 100,000,000 $1.0 $195.0 $ 75.3 $(5.6) $265.7 6,001 $60.0
------------
Comprehensive income (Note D):
Net income 51.9 51.9
Other comprehensive income
(Foreign exchange translation
adjustment) (.3) (.3)
------------
Total comprehensive income 51.6
------------
Dividends - redeemable
preferred stock (2.7) (2.7) 268 2.7
- --------------------------------------------------------------------------------------------------------------------------------
Balance, June 30, 1998 100,000,000 $1.0 $195.0 $124.5 $(5.9) $314.6 6,269 $62.7
================================================================================================================================
</TABLE>
See notes to consolidated financial statements.
6
<PAGE>
Howmet International Inc.
Notes to Consolidated Financial Statements (Unaudited)
A. BASIS OF PRESENTATION
Cordant Technologies Inc. (name changed from Thiokol Corporation on May 5, 1998)
owns 62% of the Company's common shares; Carlyle-Blade Acquisition Partners,
L.P., an affiliate of The Carlyle Group, owns 22.65% and the public owns 15.35%.
Cordant Technologies Inc. ("Cordant") also owns all of the outstanding preferred
stock of the Company.
The accompanying unaudited interim consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10-01
of Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for the complete
financial statements. In the opinion of management, all adjustments necessary
for a fair presentation have been included. The consolidated condensed balance
sheet at December 31, 1997 has been derived from the Company's audited financial
statements at that date. Operating results for the six months ended June 30,
1998 are not necessarily indicative of the results to be expected for the year
ending December 31, 1998. The financial statements should be read in
conjunction with the consolidated financial statements and notes thereto
included in the Company's Annual Report to Stockholders incorporated by
reference in the Annual Report on Form 10-K for the year ended December 31,
1997.
B. INVENTORIES
Inventories are summarized as follows (in millions):
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
------------------ ------------------
<S> <C> <C>
Raw materials and supplies $ 62.5 $ 62.0
Work in progress 73.4 61.5
Finished goods 30.4 35.4
------------------ ------------------
FIFO inventory 166.3 158.9
LIFO valuation adjustment (4.5) (3.4)
------------------ ------------------
$161.8 $155.5
================== ==================
</TABLE>
At June 30, 1998 and December 31, 1997, inventories include $121.9 million and
$122.7 million, respectively, that are valued using LIFO. This valuation
adjustment approximates the difference between the LIFO carrying value and
current replacement cost.
C. RESTRICTED TRUST AND RELATED PECHINEY NOTES PAYABLE
In 1988, Pechiney Corporation, as a wholly-owned subsidiary of Pechiney, S.A.,
issued indebtedness maturing in 1999 (the "Pechiney Notes") to third parties in
connection with the purchase of American National Can Company. As a result of
the acquisition by the Company of Pechiney Corporation (now named Howmet
Holdings Corporation, "Holdings") and the Cercast Group of companies, Holdings
became a wholly-owned subsidiary of the Company. The Pechiney Notes remained at
Holdings, but Pechiney, S.A., which retained American National Can Company,
agreed with the Company to be responsible for all payments due on or in
connection with the Pechiney Notes. Accordingly, Pechiney, S.A. issued its own
note to Holdings in an amount sufficient to satisfy all obligations under the
Pechiney Notes. The Pechiney, S.A. note was deposited in a trust for the
benefit of Holdings (the "Restricted Trust"). If Pechiney, S.A. fails to make
any payments required by its note, the trustee under the Restricted Trust (the
"Trustee")
7
<PAGE>
Howmet International Inc.
Notes to Consolidated Financial Statements (Unaudited)
C. RESTRICTED TRUST AND RELATED PECHINEY NOTES PAYABLE (CONTINUED)
has irrevocable letters of credit in the aggregate amount of $772 million issued
to the Restricted Trust by Banque Nationale de Paris ("BNP"), a French bank,
which has an A+ credit rating from Standard & Poors Ratings Group ("S&P"), to
draw upon to make such payments. In the event that there is an impediment to a
draw under the BNP letters of credit held by the Trustee, the Trustee has
substantially identical "back-up" letters of credit in the aggregate amount of
$772 million issued to the Restricted Trust by Caisse des Depots et
Consignations, a French bank, which has an AAA credit rating from S&P. In
addition, the holders of the Pechiney Notes have a third set of letters of
credit (also issued by BNP), which can be drawn upon by such holders in the
event that principal and/or interest payments on the Pechiney Notes are not
made. Pechiney, S.A. is solely responsible as reimbursement party for draws
under the various letters of credit referenced above, and by agreement with the
banks neither Holdings nor the Company has any responsibility therefor.
However, Holdings remains liable as the original issuer of the Pechiney Notes in
the event that Pechiney, S.A. and both banks fail to meet their obligations
under their respective letters of credit. Management believes that it is
extremely remote that the Company will be required to use any of its assets
other than those in the Restricted Trust to satisfy any payments due on or in
connection with the Pechiney Notes. Upon repayment of the Pechiney Notes, the
Restricted Trust terminates and any assets of the Restricted Trust are to be
returned to Pechiney, S.A..
The Pechiney Notes are due on January 2, 1999 and may not be prepaid prior to
that date. Interest is at three-month LIBOR plus 25 basis points (5.98% for the
quarter ended June 30, 1998). Interest is paid quarterly and was paid shortly
after the end of the 1998 and 1997 quarters. Interest expense on these notes
was $10.5 million and $10.6 million for the quarter ended June 30, 1998 and
1997, respectively. Interest expense on these notes was $21.5 million and $21
million for the six months ended June 30, 1998 and 1997, respectively. Interest
income from the Restricted Trust for the aforementioned periods was equal to the
interest expense and is netted in these financial statements.
D. COMPREHENSIVE INCOME
As of January 1, 1998, the Company adopted Statement of Financial Accounting
Standards No. 130 ("SFAS No. 130"), "Reporting Comprehensive Income". SFAS No.
130 requires the Company to report comprehensive income, which is net income
plus other comprehensive income. For the Company, the only item included in
other comprehensive income is the change in foreign currency translation
adjustments. SFAS No. 130 also requires the Company to report accumulated other
comprehensive income in the stockholders' equity section of the consolidated
condensed balance sheet. The adoption of SFAS No. 130 does not change the
amount reported as net income nor the total amount of stockholders' equity;
however, it does change the presentation of stockholders' equity. The amount
previously presented as "cumulative translation adjustment" in the stockholders'
equity section of the consolidated condensed balance sheets is now captioned
"accumulated other comprehensive income". Prior financial statements have been
recaptioned to conform to the requirement of SFAS No. 130.
Total comprehensive income, as disclosed in the Statements of Common
Stockholders' Equity and Redeemable Preferred Stock, amounted to $27.2 million
and $21.8 million, for the second quarter of 1998 and 1997, respectively and
$51.6 million and $29.9 million, for the six months of 1998 and 1997,
respectively.
E. EARNINGS PER SHARE
Basic earnings per share is calculated by dividing net income applicable to
common stock by the weighted average number of common shares outstanding
(100,000,000). Diluted earnings per share is calculated by dividing net income
applicable to common stock by the weighted average number of common shares
outstanding plus the common stock equivalent shares of employee stock options,
calculated using the treasury stock method (117,415 and 152,713 for the quarter
and six months ended June 30, 1998, respectively).
8
<PAGE>
Howmet International Inc.
Notes to Consolidated Financial Statements (Unaudited)
E. EARNINGS PER SHARE (CONTINUED)
All 1997 share and per share data have been retroactively restated to reflect
the October 1997, 10,000-to-1 stock split.
F. OTHER INFORMATION
For the quarter ended June 30, 1998, selling, general and administrative expense
included $2.6 million of pre-tax expense recorded in connection with the
Company's Stock Appreciation Rights ("SARs") plan and $.2 million of pre-tax
expense recorded in connection with the Cordant Options. The comparable 1997
quarter included $8 million of expense related to the SARs plan and no
expense for the Cordant Options. Partially offsetting the aforementioned 1997
adverse effect on income before income taxes was a $6.3 million benefit from
finalization of a pricing adjustment with a customer that did not occur in 1998
and is not expected to recur in the future.
For the six months ended June 30, 1998, selling, general and administrative
expense included $5.3 million of pre-tax expense recorded in connection with the
Company's Stock Appreciation Rights ("SARs") plan and $1.6 million of pre-tax
expense recorded in connection with the Cordant Options. The comparable 1997
period included $15.9 million of expense related to the SARs plan and no expense
for the Cordant Options. Partially offsetting the aforementioned 1997 adverse
effect on income before income taxes was a $9.7 million benefit from
finalization of a pricing adjustment with a customer that did not occur in 1998
and is not expected to recur in the future.
The Company's research and development expense for the six months ended June 30,
1998 and 1997 was $9.5 million and $8.7 million, respectively. In addition, the
amount spent for customer-sponsored research and development, which is recorded
in cost of sales, was $7.8 million and $6.8 million in the same two respective
periods. Portions of previously reported 1997 research and development amounts
were reclassified to include certain customer-sponsored research and development
costs in cost of sales. This is consistent with the 1998 cost of sales
presentation.
At June 30, 1998, the Company had outstanding short-term borrowings of $15.9
million under unsecured up to thirty day bank borrowing arrangements and $3
million under a $7.5 million credit facility entered into in 1998 by the
Company's Canadian subsidiary. Interest rate on all such borrowings is based on
a bank's daily money market fund rate (approximately 5.9% at June 30, 1998).
The Company paid interest of $6.9 million and $12.1 million, during the
respective 1998 and 1997 six month periods.
The Company paid income taxes, net of refunds, of $20.9 million and $23.3
million, during the respective 1998 and 1997 six month periods.
9
<PAGE>
Howmet International Inc.
Notes to Consolidated Financial Statements (Unaudited)
G. CONTINGENCIES
The Company has received test results indicating levels of polychlorinated
biphenyls ("PCBs") at its Dover, New Jersey plant which will require
remediation. These levels have been reported to the New Jersey Department of
Environmental Protection ("NJDEP"), and the Company is preparing a work plan to
define the risk and to test possible clean-up options. The statement of work
must be approved by the NJDEP pursuant to an Administrative Consent Order
entered into between the Company and NJDEP on May 20, 1991 regarding clean-up of
the site. Various remedies are possible and could involve expenditures ranging
from $2 million to $22 million or more. The Company has recorded a $2 million
long-term liability as of June 30, 1998 for this matter. Given the
uncertainties, it is possible that the estimated range of this cost and the
amount accrued will change within a year. The indemnification discussed below
applies to the costs associated with this matter.
Besides the above-mentioned remediation work required at the Company's Dover,
New Jersey plant, liabilities exist for clean-up costs associated with hazardous
types of materials at eight other on-site and off-site waste disposal
facilities. The Company has been or may be named a potentially responsible
party under the Comprehensive Environmental Response, Compensation and Liability
Act or similar state laws at these locations. At June 30, 1998 $4.1 million of
accrued environmental liabilities are included in the consolidated condensed
balance sheet for these eight sites.
In connection with the acquisition by the Company of Howmet Corporation's parent
holding company, Howmet Holdings Corporation and the Cercast Group of companies
("the Acquisition"), Pechiney, S.A. indemnified the Company for environmental
liabilities relating to Howmet Corporation and stemming from events occurring or
conditions existing on or prior to the Acquisition, to the extent that such
liabilities exceed a cumulative $6 million. This indemnification applies to all
of the aforementioned environmental matters. It is highly probable that changes
in any of the aforementioned accrued liabilities will result in an equal change
in the amount receivable from Pechiney, S.A. pursuant to this indemnification.
In addition to the above environmental matters, and unrelated to Howmet
Corporation, Holdings and Pechiney, S.A. are jointly and severally liable for
environmental contamination and related costs associated with certain
discontinued mining operations owned and/or operated by a predecessor-in-
interest until the early 1960s. These liabilities include approximately $21.3
million in remediation and natural resource damage liabilities at the Blackbird
Mine site in Idaho and a minimum of $10 million in past costs and investigation
and future remediation costs at the Holden Mine site in Washington. Pechiney,
S.A. has agreed to indemnify the Company for such liabilities. In connection
with these environmental matters, the Company recorded a $31.3 million liability
and an equal $31.3 million receivable from Pechiney, S.A. at June 30, 1998.
Pechiney, S.A. is currently funding all amounts related to these liabilities.
Estimated environmental costs are not expected to materially impact the
financial position or the results of the Company's operations in future periods.
However, environmental clean-up periods are protracted in length, and
environmental costs in future periods are subject to changes in environmental
remediation regulations. Any losses which are not covered by the Pechiney, S.A.
indemnifications and which are in excess of amounts currently accrued will be
charged to operations in the periods in which they occur.
The Company, in its ordinary course of business, is involved in other
litigation, administrative proceedings and investigations of various types in
several jurisdictions. The Company believes these are routine in nature and
incidental to its operations, and that the outcome of any proceedings to which
the Company currently is a party will not have a material adverse effect upon
its operations or financial condition.
10
<PAGE>
Item 2. Management's Discussion And Analysis Of Financial Condition
------------------------------------------------------------
And Results Of Operations
-------------------------
RESULTS OF OPERATIONS
- ---------------------
Quarter Ended June 30, 1998 Compared to Quarter Ended June 30, 1997
Summary financial information for the quarters ended June 30 follows (in
millions):
<TABLE>
<CAPTION>
Better/
1998 1997 (Worse) Percent
---------------------------------------------
<S> <C> <C> <C> <C>
Net Sales $335.7 $330.4 $ 5.3 2
- ------------------------------------------------------------------------------------------------------
Gross profit $100.3 $102.4 $(2.1) (2)
Selling, general and administrative expense 31.4 36.3 4.9 14
Depreciation and amortization expense 14.7 14.9 .2 1
Research and development expense 4.4 4.0 (.4) (10)
- ------------------------------------------------------------------------------------------------------
Income from operations 49.8 47.2 2.6 6
Net interest expense (3.2) (8.5) 5.3 62
Other, net (.9) (.7) (.2) (29)
Income taxes 18.3 15.4 (2.9) (19)
- ------------------------------------------------------------------------------------------------------
Net income $ 27.4 $ 22.6 $ 4.8 21
======================================================================================================
Earnings per share (basic and diluted) $ .26 $ .21 $ .05 24
======================================================================================================
</TABLE>
Net sales in the 1998 second quarter were 8% higher than in the 1997 second
quarter, after excluding from the 1997 quarter, the sales of the Company's
refurbishment business, which was sold in September 1997. The 1998 sales
increase is due to volume increases in the aerospace and industrial gas turbine
markets. Also affecting second quarter comparability is $6.3 million of
additional revenue in 1997 from a pricing adjustment with a customer that was
not repeated in 1998 and is not expected to recur in the future.
Gross profit, as reported, was $2.1 million lower in the 1998 second quarter
than in the 1997 second quarter. However, on a comparable basis, 1998 gross
profit was $9.2 million higher than 1997, after reducing 1997 gross profit to
exclude (i) the gross profit of the sold refurbishment business and (ii) the
aforementioned $6.3 million of additional 1997 revenue (which had no associated
costs). Cost control enabled the Company to capitalize on increased volume.
Selling, general and administrative expense was $4.9 million lower in the 1998
second quarter than in the 1997 second quarter. The decrease was primarily due
to lower expense recorded in connection with the Company's Stock Appreciation
Rights plan ("SARs"). Expense for SARs in 1998 will continue to be less than in
1997.
Net interest expense was $5.3 million lower in the 1998 second quarter than in
the 1997 second quarter. The principal reason for the reduction was
significantly lower debt levels resulting from strong cash generation in the
last three quarters of 1997. Another significant contributor to the lower
interest expense is the interest rate reductions achieved in the Company's 1997
fourth quarter debt refinancing. Also contributing to the reduction was a $1.3
million charge in the second quarter of 1997, which was not repeated in 1998,
for accelerated write-off of debt issuance cost associated with debt that was
repaid ahead of schedule.
Income tax expense increased $2.9 million due to higher pre-tax income.
11
<PAGE>
The impact of the adverse Asian economic condition on the Company is uncertain.
To the extent the Asian economic conditions impact the commercial aerospace and
industrial gas turbine markets, such impact may affect the Company.
Six Months Ended June 30, 1998 Compared to Six Months Ended June 30, 1997
Summary financial information for the six months ended June 30 follows (in
millions):
<TABLE>
<CAPTION>
Better/
1998 1997 (Worse) Percent
--------------------------------------------
<S> <C> <C> <C> <C>
Net Sales $664.1 $643.0 $21.1 3
- -----------------------------------------------------------------------------------------------------
Gross profit $197.3 $193.8 $ 3.5 2
Selling, general and administrative expense 64.1 72.8 8.7 12
Depreciation and amortization expense 29.1 29.3 .2 1
Research and development expense 9.5 8.7 (.8) 9
- -----------------------------------------------------------------------------------------------------
Income from operations 94.6 83.0 11.6 14
Net interest expense (6.5) (16.1) 9.6 60
Other, net (1.6) (1.4) (.2) (14)
Income taxes 34.6 27.4 (7.2) (26)
- -----------------------------------------------------------------------------------------------------
Net income $ 51.9 $ 38.1 $13.8 36
=====================================================================================================
Earnings per share (basic and diluted) $ .49 $ .36 $ .13 36
=====================================================================================================
</TABLE>
Net sales in the 1998 six month period were 10% higher than in the 1997 six
month period, after excluding from the 1997 six month period, the sales of the
Company's refurbishment business, which was sold in September 1997. The 1998
sales increase is due to volume increases in the aerospace and industrial gas
turbine markets. Also affecting six month period comparability is $9.7 million
of additional revenue in 1997 from a pricing adjustment with a customer that was
not repeated in 1998 and is not expected to recur in the future.
Gross profit, as reported, was $3.5 million higher in the 1998 six month period
than in the 1997 six month period. However, on a comparable basis, 1998 gross
profit was $21.5 million higher than 1997, after reducing 1997 gross profit to
exclude (i) the gross profit of the sold refurbishment business and (ii) the
aforementioned $9.7 million of additional 1997 revenue (which had no associated
costs). Cost control enabled the Company to capitalize on increased volume.
Selling, general and administrative expense was $8.7 million lower in the 1998
six month period than in the 1997 six month period. The decrease was primarily
due to lower expense recorded in connection with the Company's Stock
Appreciation Rights plan ("SARs").
Net interest expense was $9.6 million lower in the 1998 six month period. The
principal reason for the reduction was significantly lower debt levels resulting
from strong cash generation in the last three quarters of 1997. Another
significant contributor to the lower interest expense is the interest rate
reductions achieved in the Company's 1997 fourth quarter debt refinancing. Also
contributing to the reduction was a $1.3 million charge in the second quarter of
1997, which was not repeated in 1998, for accelerated write-off of debt
issuance cost associated with debt that was repaid ahead of schedule.
Income tax expense increased $7.2 million primarily due to higher pre-tax
income.
12
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
The Company's principal sources of liquidity are cash flow from operations and
borrowings under its revolving credit facility. Based upon the current level of
operations, management believes that cash from the aforementioned sources will
be adequate to meet the Company's anticipated requirements for working capital,
interest payments, capital expenditures and research and development, although
there can be no assurance in this regard. To date, cash available after
satisfaction of these requirements has been used to voluntarily repay debt prior
to mandatory due dates.
At June 30, 1998, there were $7.6 million of standby letters of credit
outstanding and $145 million of outstanding borrowings under the $300 million
revolving credit facility. At June 30, 1998, the Company also had $18.9 million
of outstanding short-term borrowings.
Capital expenditures in the 1998 six month period were $35.8 million, and are
expected to be approximately $80 million for the current year. The 1998 capital
expenditures are for completion of capacity expansions needed to serve the core
business, as well as additional expenditures to support new products and process
enhancement activities. The Company expects capital expenditures to be at a
high level again in 1999.
Debt, excluding Pechiney Notes, plus redeemable preferred stock as a percentage
of total capitalization (debt, excluding Pechiney Notes, plus redeemable
preferred stock plus common stockholders' equity) is 43% at June 30, 1998
compared to 50% at December 31, 1997. The current ratio (excluding short-term
debt and Pechiney Notes) at June 30, 1998 was 1.3 and was 1.2 at December 31,
1997. Working capital (excluding short-term debt and Pechiney Notes) was $67.7
million and $62.5 million at June 30, 1998 and December 31, 1997, respectively.
At June 30, 1998 the Company's balance sheet includes $726.9 million of Pechiney
Notes and a $726.9 million Restricted Trust asset. See Note C of Notes to
Consolidated Financial Statements.
YEAR 2000 COMPLIANCE
- --------------------
The Company does not anticipate a disruption in operations as a result of
computer software issues associated with the Year 2000. A dedicated team of
both Company and contract programmers are actively addressing the Company's Year
2000 compliance issues. Management believes that all date logic problems on the
Company's central mainframe and distributed server applications have been
identified, and remedial action to correct or replace problematic code is
currently underway. Project work on this phase of the effort started in late
1996 and is scheduled to be completed by June 30, 1999.
The Year 2000 compliance team is concurrently working with the various plant
facilities to identify and implement any needed changes to both local business
applications and shop floor control systems. The inventory and assessment phase
of this effort is well underway and will be completed in the third quarter of
1998. Corrective action projects are expected to be completed by June 30, 1999.
To date no material risk of non-compliance has been identified.
The Company has also initiated formal communications with all of its significant
suppliers, including raw materials, services, and computer hardware/software
suppliers, and large customers to determine the extent to which Howmet's
manufacturing processes and interface systems are vulnerable to those third
parties' failure to resolve their own Year 2000 issues. There can be no
guarantee that the systems of other companies on which Howmet's systems rely
will be timely converted and would not have an adverse effect on the Howmet
systems. However, at this point, no material problems are anticipated.
The Company expects to incur incremental costs for such efforts of $2.5 million,
$2.5 million and $.5 million, respectively, for the full years 1998, 1999 and
2000. The Company has also diverted internal resources with an additional
annual cost of approximately $.6 million for each of the 1998 and 1999 years.
13
<PAGE>
ENVIRONMENTAL AND OTHER LEGAL MATTERS
- -------------------------------------
In view of the indemnification from the Company's previous owners granted in
connection with the acquisition described in Note G of Notes to Consolidated
Financial Statements, the Company does not expect resolution of environmental
matters to have a material effect on its liquidity or results of operations.
See Note G of Notes to Consolidated Financial Statements in this Form 10-Q, and
Exhibit 99.1 to the Company's Annual Report on Form 10-K for the year ended
December 31, 1997, filed with the Securities and Exchange Commission for
discussion of environmental matters.
The Company, in its ordinary course of business, is involved in other
litigation, administrative proceedings and investigations of various types in
several jurisdictions. The Company believes these are routine in nature and
incidental to its operations, and that the outcome of any proceedings to which
the Company currently is a party will not have a material adverse effect upon
its operations or financial condition.
NEW ACCOUNTING STANDARD
- -----------------------
In February 1998, the Financial Accounting Standards Board issued SFAS No. 132,
"Employers' Disclosures about Pensions and Other Postretirement Benefits." This
statement revises employers' disclosures about pensions and other postretirement
benefit plans. It does not change the measurement of assets or recognition of
liabilities under those plans. SFAS No. 132 requirements will be included in
the Company's 1998 annual report.
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities", which is
required to be adopted in years beginning after June 15, 1999. The Company
expects to adopt the new Statement effective January 1, 2000. The statement
will require the Company to recognize all derivatives on the balance sheet at
fair value. Derivatives that are not hedges must be adjusted to fair value
through income. If the derivative is a hedge, depending on the nature of the
hedge, changes in the fair value of derivatives will either be offset against
the change in fair value of the hedged assets, liabilities, or firm commitments
through earnings or recognized in other comprehensive income until the hedged
item is recognized in earnings. The ineffective portion of a derivative's change
in fair value will be immediately recognized in earnings. The Company has not
yet determined what the effect of SFAS No. 133 will be on the earnings and
financial position of the Company.
14
<PAGE>
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
(a) The Annual Meeting of Stockholders of the Company for 1998 was held on
May 12, 1998.
(b) At the meeting the eight individuals nominated for directors by the
management of the Company were elected; the Amended and Restated 1997 Stock
Awards Plan, under which key employees and directors may be awarded stock
options, stock appreciation rights or restricted stock grants, was approved; and
the appointment of Ernst & Young, LLP as the independent auditors of the Company
for 1998 was ratified. The votes for and against and abstentions with respect
to each nominee for election as a director and each of these other two matters
were as set forth below. According to a schedule provided by the Company's
transfer agent, there were no broker non-votes.
<TABLE>
<CAPTION>
For Against Abstain
----------------- ----------------- -----------------
Director Nominees:
<S> <C> <C> <C>
Richard L. Corbin 97,675,350 182,465 -
William E. Conway 97,675,350 182,465 -
Edsel D. Dunford 97,827,950 29,865 -
James R. Mellor 97,827,950 29,865 -
D. Larry Moore 97,827,950 29,865 -
David L. Squier 97,675,050 182,765 -
James R. Wilson 97,657,350 182,465 -
James D. Woods 97,827,950 29,865 -
Amended and Restated 1997
Stock Awards Plan 96,422,119 1,393,207 42,489
Ernst & Young, LLP as
independent auditors 97,824,240 12,939 20,636
</TABLE>
Item 5. Other Events
------------
CAUTIONARY STATEMENT
Certain statements in this quarterly report are "forward-looking statements" as
defined in the "safe harbor" provisions of the Private Securities Litigation
Reform Act of 1995. The matters discussed in these statements are subject to
risks and uncertainties which should be considered in assessing the Company's
conduct of its business. Such risks include changing economic and political
conditions in the United States and in other countries, including those in Asia.
Risks and uncertainties also include but are not limited to changes in
governmental laws and regulations, the outcome of environmental matters, the
availability and cost of raw materials, and the effects of: (i) aerospace and
IGT industry economic conditions, (ii) aerospace industry cyclicality, (iii) a
concentrated customer base, (iv) competition and (v) pricing pressures. These
and other factors are discussed in greater detail in Exhibit 99.1 to the
Company's Annual Report on Form 10-K for the year ended December 31, 1997, filed
with the Securities and Exchange Commission. All forecasts and projections in
this report are "forward-looking statements", and are based on management's
current expectations of the Company's results, based on current information
available pertaining to the Company and its products including the
aforementioned risk factors. Actual future results and trends may differ
materially from any "forward-looking statements" made herein. The Company
undertakes no obligations to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.
15
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) -- Exhibits
--------
10.32 Howmet International Inc. Amended and Restated 1997 Stock Awards
Plan adopted November 20, 1997, amended February 9, 1998, approved
by stockholders May 12, 1998.
10.33 Form of Howmet International Inc. Nonqualified Stock Option
Grant Agreement.
10.34 Form of Howmet International Inc. Director Restricted Stock
Agreement.
27.1 Financial Data Schedule for the quarter ended June 30, 1998.
27.2 Restated Financial Data Schedule including columns for the prior
reporting periods of June 29, 1997 and September 28, 1997 and
prior two fiscal years ended December 31, 1997 and December 31,
1996.
(b) -- Reports on Form 8-K
-------------------
During the quarter ended June 30, 1998, the Company did not file any
Current Reports on Form 8-K.
16
<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.
Dated: August 10, 1998
HOWMET INTERNATIONAL INC.
/s/ John C. Ritter
------------------
John C. Ritter
Senior Vice President &
Chief Financial Officer
(Principal Financial Officer)
/s/ George T. Milano
---------------------
George T. Milano
Corporate Controller
(Principal Accounting Officer)
17
<PAGE>
EXHIBIT 10.32
HOWMET INTERNATIONAL INC.
AMENDED AND RESTATED 1997 STOCK AWARDS PLAN
1. PURPOSE. The purpose of the Howmet International Inc. Amended and Restated
1997 Stock Awards Plan (the "Plan") is to promote the long term financial
interests and growth of Howmet International Inc. (the "Company") by (a)
attracting and retaining executive personnel, (b) motivating executive personnel
by means of growth-related incentives, (c) providing incentive compensation
opportunities that are competitive with those of other major corporations; and
(d) furthering the identity of interests of Participants with those of the
stockholders of the Company.
2. DEFINITIONS. The following definitions are applicable to the Plan:
"Affiliate" means any entity in which the Company has a direct or indirect
equity interest which is so designated by the Committee.
"Amended SAR Program" means the stock appreciation rights plan of the Company
adopted in May 1996 as amended thereafter in connection with the initial
public offering of Common Stock.
"Award Limit" means 400,000 shares of Common Stock.
"Code" means the Internal Revenue Code of 1986, as amended, and any successor
statute.
"Committee" means, as to a Participant who is not a Director, a committee of
two or more Directors of the Company who are "outside Directors" as such term
is used in Section 162(m) of the Code and Non-Employee Directors for purposes
of Rule 16b-3. With respect to a Director who is a Participant, the Committee
shall be the Board of Directors of the Company.
"Common Stock" means the common stock, $.01 per share par value, of the
Company or such other securities as may be substituted therefor pursuant to
paragraph 6(e).
"Director" means any person who is a member of the Board of Directors of the
Company and is not also an Employee.
"Employee" means any officer or other employee (as defined in accordance with
Section 3401(c) of the Code) of the Company, or of any Affiliate.
The "Fair Market Value" of a share of Common Stock means the average between
the highest and lowest quoted selling prices of the Common Stock on the New
York Stock Exchange on the pertinent option grant date or exercise date.
The "IPO Closing Date" means the date on which the initial offering of Common
Stock, whether by the Company or by any stockholder of the Company, to the
public pursuant to an
<PAGE>
effective registration statement on Form S-1 under the Securities Act of 1933,
as amended, is completed.
"Participant" means any Director or key Employee of the Company or an
Affiliate selected by the Committee.
"QDRO" means a qualified domestic relations order as defined by the Code or
Title I of the Employee Retirement Income Security Act of 1974, as amended, or
the rules thereunder.
"Rule 16b-3" means such rule adopted under the Securities Exchange Act of 1934
(the "Exchange Act"), as such rule is amended from time to time, or any
successor rule.
3. LIMITATION ON AGGREGATE SHARES. The number of shares of Common Stock with
respect to which awards may be granted under the Plan shall not exceed 5,000,000
shares. Such 5,000,000 shares of Common Stock may be either previously
authorized but unissued shares, treasury shares, or a combination thereof, as
the Committee shall determine. Other than in connection with the Amended SAR
Program, the maximum number of shares of Common Stock with respect to which
awards may be granted under the Plan during any calendar year to a single
Participant may not exceed the Award Limit. To the extent required by Section
162(m) of the Code, shares subject to Options (as defined in Section 5 below)
which are canceled continue to be counted against the Award Limit and if, after
grant of an Option, the price of shares subject to such Option is reduced, the
transaction is treated as a cancellation of the Option and a grant of a new
Option and both the Option deemed to be canceled and the Option deemed to be
granted are counted against the Award Limit. Furthermore, to the extent required
by Section 162(m) of the Code, if, after grant of a Stock Appreciation Right
("SAR"), the base amount on which stock appreciation is calculated is reduced to
reflect a reduction in the Fair Market Value of the Company's Common Stock, the
transaction is treated as a cancellation of the SAR and a grant of a new SAR and
both the SAR deemed to be canceled and the SAR deemed to be granted are counted
against the Award Limit.
4. ADD-BACK OF OPTIONS AND OTHER RIGHTS. If any Option, other right to acquire
shares of Common Stock under this Plan, or any other award, expires or is
canceled without having been fully exercised, the number of shares subject to
such Option or other right but as to which such Option or other right was not
exercised prior to its expiration, cancellation or exercise may again be
optioned, granted or awarded hereunder, subject to the limitations of Section 3.
Furthermore, any shares subject to Options or other awards which are adjusted
pursuant to Section 6(e) and become exercisable with respect to shares of stock
of another corporation shall be considered canceled and may again be optioned,
granted or awarded hereunder, subject to the limitations of Section 3. Shares of
Common Stock which are delivered by the Participant or withheld by the Company
upon the exercise of any Option or other award under this Plan, in payment of
the exercise price thereof, may again be optioned, granted or awarded hereunder,
subject to the limitations of Section 3. If any share of Restricted Stock is
forfeited by the Participant or repurchased by the Company pursuant to Section
5(c)(iii) hereof, such share may again be optioned, granted or awarded
hereunder, subject to the limitations of Section 3. Notwithstanding the
provisions of this Section 4, no shares of Common
2
<PAGE>
Stock may again be optioned, granted or awarded if such action would cause an
incentive stock option to fail to qualify as an incentive stock option under
Section 422 of the Code.
5. AWARDS. The Committee may grant stock options ("Options"), to Participants,
in accordance with this paragraph 5 and the other provisions of the Plan.
(a) Options.
(i) Option Grants. Options granted under the Plan may be incentive stock
options ("ISOs") within the meaning of Section 422 of the Code or any
successor provision, or in such other form, consistent with the Plan, as
the Committee may determine.
(ii) Option Exercise Price. The exercise price of an Option shall be fixed
by the committee at not less than 100% of the Fair Market Value of a share
of Common Stock on the date of grant.
(iii) Option Term. The term of an Option shall be set by the Committee in
its discretion; provided, however, that in the case of ISOs, the term shall
not be more than ten (10) years from the date the ISO is granted.
(iv) Exercisability. Options shall be exercisable at such time or times as
the Committee shall determine at or subsequent to grant.
(v) Exercise of Options. An exercisable Option may be exercised in whole or
in part. However, an Option shall not be exercisable with respect to
fractional shares and the Committee may require that, by the terms of the
Option, a partial exercise be with respect to a minimum number of shares.
Options shall be exercised in whole or in part by providing (A) written
notice to the Company (to the attention of the Secretary) complying with
the applicable rules established by the Committee; (B) such representations
and documents as the Committee deems necessary or advisable to effect
compliance with all applicable laws or regulations; (C) in the event that
the Option shall be exercised pursuant to Section 6(d) by any person or
persons other than the optionee, appropriate proof of the right of such
person or persons to exercise the Option; and (D) payment in full of the
option price. Payment of the option price may be made, at the discretion of
the optionee, and to the extent permitted by the Committee, (1) in cash
(including check, bank draft, or money order), (2) in Common Stock with a
Fair Market Value on the date of delivery equal to the aggregate exercise
price of the Option or exercised portion thereof, (3) by a combination of
cash and Common Stock, or (4) with any other good and valuable
consideration.
(vi) Rights as Stockholders. The holders of Options shall not be, nor have
any of the rights or privileges of, stockholders of the Company in respect
of any shares purchasable upon the exercise of any part of an Option unless
and until such shares have been issued by the Company to such holders.
3
<PAGE>
(vii) Ownership and Transfer Restrictions. The Committee may impose such
restrictions on the ownership and transferability of the shares
purchasable upon the exercise of an Option as it deems appropriate. Any
such restriction shall be set forth in the respective Stock Option
Agreement and may be referred to on the certificates evidencing such
shares. The Committee may require the Participant to give the Company
prompt notice of any disposition of shares of Common Stock acquired by
exercise of an ISO within (i) two years from the date of granting such
Option to such Participant or (ii) one year after the transfer of such
shares to such Participant. The Committee may direct that the certificates
evidencing shares acquired by exercise of an Option refer to such
requirement to give prompt notice of disposition.
(b) Stock Appreciation Rights.
(i) Grant and Price of SAR. Subject to such terms and conditions not
inconsistent with this Plan as the Committee shall impose and shall be
evidenced by a written Stock Appreciation Right Agreement, an SAR shall
entitle its holder to receive from the Company, at the time of exercise of
such right, an amount equal to the excess of the Fair Market Value (at the
date of exercise) of a share of Common Stock over the SAR price multiplied
by the number of shares as to which the holder is exercising the SAR. The
SAR price shall be fixed by the Committee at not less than 100% of the
Fair Market Value of a share of Common Stock on the date of grant. SARs
may be in tandem with any previously or contemporaneously granted Option
or independent of any Option.
(ii) Tandem SARs. An SAR in tandem with an Option shall be related to a
particular Option and shall be exercisable only when and to the extent the
related Option is exercisable. An SAR in tandem with an Option may be
granted to the Participant for no more than the number of shares subject
to the simultaneously or previously granted Option to which it is coupled.
(iii) Amount Payable by Company. The amount payable may be paid by the
Company in Common Stock (valued at its Fair Market Value on the date of
exercise), cash or a combination thereof, as the Committee may determine,
which determination shall be made after considering any preference
expressed by the holder.
(c) Restricted Stock.
(i) Restricted Stock Award. The Committee may award to any Participant
shares of Common Stock, including shares earned under any of the Company's
compensation plans, subject to this paragraph 5(c) and such other terms
and conditions as the Committee may prescribe (such shares being called
"Restricted Stock"), which restrictions may include, without limitation,
restrictions concerning voting rights and transferability and restrictions
based on duration of employment with the Company, Company performance and
individual performance. Each certificate for Restricted Stock shall be
registered in the name of the
4
<PAGE>
Participant and deposited, together with a stock power endorsed in blank,
with the Company.
(ii) Restrictions. There shall be established for each Restricted Stock
award a restriction period (the "Restriction Period") of such length as
shall be determined by the Committee. Shares of Restricted Stock may not be
sold, assigned, transferred, pledged or otherwise encumbered, except as
hereinafter provided, during the Restriction Period. Unless otherwise
provided by the Committee, except for such restrictions on transfer and
such other restrictions as the Committee may impose, the Participant shall
have all the rights of a holder of Common Stock as to such Restricted
Stock. The Committee, in its sole discretion, may permit or require the
payment of cash dividends to be deferred and, if the Committee so
determines, reinvested in additional Restricted Stock or otherwise
invested. At the expiration of the Restriction Period, the Corporation
shall redeliver to the Participant (or the Participant's designated
beneficiary under Section 6(h), or, if none, the Participant's legal
representative) the certificates deposited pursuant to this paragraph.
(iii) Forfeiture/Repurchase of Restricted Stock. Except as provided by the
Committee at the time of grant or otherwise, upon a termination of
employment for any reason during the Restriction Period all shares still
subject to restriction shall be forfeited by the Participant or at the
discretion of the Committee may be repurchased by the Company at a price to
be determined by the Committee.
6. MISCELLANEOUS PROVISIONS.
(a) Administration. The Plan shall be administered by the Committee. Subject
to the limitations of the Plan, the Committee shall have the sole and complete
authority to: (i) select Participants in the plan; (ii) subject to Section 3, to
make awards in such forms and amounts as it shall determine, including the
determination whether any such awards which are in the form of Options are to be
ISOs; (iii) to impose such limitations, restrictions and conditions upon such
awards as it shall deem appropriate, (iv) to interpret the Plan and the
agreements pursuant to which Options, Restricted Stock or SARs are granted or
awarded, and to adopt, amend and rescind administrative guidelines and other
rules and regulations relating to the Plan, (v) to correct any defect or
omission or to reconcile any inconsistency in the Plan or in any award granted
hereunder and (vi) to make all other determinations and to take all other
actions necessary or advisable for the implementation and administration of the
Plan. Any such interpretations and rules with respect to ISOs shall be
consistent with the provisions of Section 422 of the Code. The actions and
determinations of the Committee or its delegates on matters within its authority
shall be conclusive and binding upon the Company, all the Participants and all
other interested persons, subject to such allocation to the Company's Affiliates
and operating units as it deems appropriate. The Committee may, to the extent
that any such action will not prevent the Plan from complying with Rule 16b-3 or
Section 162(m) of the Code, delegate any of its authority hereunder to such
persons as it deems appropriate.
5
<PAGE>
(b) Professional Assistance; Good Faith Actions. All expenses and liabilities
which members of the Committee incur in connection with the administration of
this Plan shall be borne by the Company. The Committee may employ attorneys,
consultants, accountants, appraisers, brokers, or other persons. The Committee,
the Company and the Company's officers and Directors shall be entitled to rely
upon the advice, opinions or valuations of any such persons. No members of the
Committee or Board shall be personally liable for any action, determination or
interpretation made in good faith with respect to this Plan, Options, awards of
Restricted Stock or SARs; and all members of the Committee and the Board shall
be fully protected by the Company in respect of any such action, determination
or interpretation.
(c) Written Agreement. Each award shall be evidenced by a written agreement,
which shall be executed by the Participant and an authorized officer of the
Company and which shall contain such terms and conditions as the Committee shall
determine, consistent with this Plan. Stock Option Agreements evidencing Options
intended to qualify as performance-based compensation as described in Section
162(m)(4)(C) of the Code shall contain such terms and conditions as may be
necessary to meet the applicable provisions of Section 162(m) of the Code. Stock
Option Agreements evidencing ISOs shall contain such terms and conditions as may
be necessary to meet the applicable provisions of Section 422 of the Code.
(d) Non-Transferability. Subject to the provisions of paragraph 6(h), no award
under the Plan and no interest therein, shall be transferable by the Participant
otherwise than (i) by will or the laws of descent and distribution, (ii)
pursuant to a QDRO or (iii) as expressly permitted under the applicable option
agreement including, if so permitted, pursuant to a gift to such optionee's
family, whether directly or indirectly or by means of a trust or partnership or
otherwise, unless and until such rights or awards have been exercised, or the
shares underlying such rights or awards have been issued, and all restrictions
applicable to such shares have lapsed. All awards shall be exercisable or
received during the Participant's lifetime only by the Participant or the
Participant's legal representative. Any purported transfer contrary to this
provision will nullify the award. During the lifetime of the Participant, only
he may exercise an Option or other right or award (or any portion thereof)
granted to him under the Plan, unless it has been disposed of pursuant to a
QDRO. After the death of the Participant, any exercisable portion of an Option
or other right or award may, prior to the time when such portion becomes
unexercisable under the Plan or the applicable Stock Option Agreement or other
agreement, be exercised by his beneficiary designated under 6(h) or, if none,
his personal representative or by any person empowered to do so under the
deceased Participant's will or under the then applicable laws of descent and
distribution.
(e) Adjustments Upon Certain Changes. In the event of a reorganization,
recapitalization, stock dividend, stock split, combination, reclassification,
reverse stock split, merger, consolidation, split-up, spin-off, repurchase,
liquidation, dissolution, or sale, transfer, exchange or other disposition of
all or substantially all of the assets of the Company, or exchange of Common
Stock or other securities of the Company, issuance of warrants or other rights
to purchase Common Stock or other securities of the Company, or other similar
corporate transaction or event or other increase or reduction in the number of
issued shares of Common Stock, the Committee may, in order to prevent the
dilution or enlargement of rights under awards, make such adjustments in the
6
<PAGE>
number and type of shares authorized by the Plan, or the number and type of
shares covered by, or with respect to which payments are measured under,
outstanding awards and the exercise prices specified therein as may be
determined to be appropriate and equitable. In the event of any of the events or
transactions described in the preceding sentence, a change in control, or
similar transaction by the Company or any unusual or nonrecurring transactions
or events affecting the Company, any Affiliate of the Company, or the financial
statements of the Company or any Affiliate, or changes in applicable laws,
regulations, or accounting principles, if the Committee determines that such
action is appropriate in order to prevent dilution or enlargement of the
benefits or potential benefits intended to be made available under the Plan or
with respect to any option, right or other award under this Plan, to facilitate
such transactions or events or to give effect to such changes in laws,
regulations or principles, the Committee in its discretion is hereby authorized
to provide in the agreement evidencing any award or otherwise: (i) for
adjustments to such award in order to prevent the dilution or enlargement of
rights thereunder or to provide for acceleration of benefits thereunder; (ii)
for either the purchase of any such Option, SAR, or any Restricted Stock for the
payment of an amount of cash equal to the amount that could have been attained
upon the exercise of such option, right or award or realization of the
Participant's rights had such option, right or award been currently exercisable
or payable or fully vested or the replacement of such option, right or award
with other rights or property selected by the Committee in its sole discretion;
(iii) that it cannot be exercised after such event; (iv) that upon such event,
such option, right or award be assumed by the successor or survivor corporation,
or a parent or subsidiary thereof, or shall be substituted for by similar
options, rights or awards covering the stock of the successor survivor
corporation, or a parent or subsidiary thereof, with appropriate adjustments as
to the number and kind of shares and prices; and (v) that the restrictions
imposed under a restricted stock agreement upon some or all shares of Restricted
Stock may be terminated, and some or all shares of such Restricted Stock may
cease to be subject to repurchase or forfeiture under Section 5(c)(iii) after
such event. With respect to Options and SARs intended to qualify as incentive
stock options under Section 422(b) of the Code or as performance-based
compensation under Section 162(m), no adjustment or action described in this
Section 6(e) or in any other provision of the Plan shall be authorized to the
extent that such adjustment or action would cause the Plan to violate Section
422(b)(1) of the Code or would cause such Option or SAR to fail to so qualify
under Section 162(m), as the case may be, or any successor provisions thereto.
Furthermore, no such adjustment or action shall be authorized to the extent such
adjustment or action would result in short-swing profits liability under Section
16 or violate the exemptive conditions of Rule 16b-3 unless the Committee
determines that the option or other award is not to comply with such exemptive
conditions.
(f) Tax Withholding. The Committee shall have the power to withhold, or
require a Participant to remit to the Company, an amount to satisfy any
withholding or other tax due with respect to any amount payable and/or shares
issuable under the Plan, and the Committee may defer such payment or issuance
unless indemnified to its satisfaction. Subject to the consent of the Committee,
a Participant may make an irrevocable election to have shares of Common Stock
otherwise issuable under an award withheld, tender back to the Company shares of
Common Stock received pursuant to an award or deliver to the Company previously-
acquired shares of Common Stock having a fair market value sufficient to satisfy
all or part of the Participant's estimated tax obligations associated with the
transaction. Such election must be made by a Participant prior to the date on
which the
7
<PAGE>
relevant tax obligation arises. The Committee may disapprove of any election and
may limit, suspend or terminate the right to make such elections.
(g) Listing and Legal Compliance. The Committee may suspend the exercise or
payment of any award so long as it determines that securities exchange listing
or registration or qualification under any securities laws is required in
connection therewith and has not been completed on terms acceptable to the
Committee. The Company shall not be required to issue or deliver any certificate
or certificates for shares of stock purchased upon the exercise of any Option or
portion thereof prior to fulfillment of all of the following conditions:
(i) The admission of such shares to listing on all stock exchanges on which
such class of stock is then listed;
(ii) The completion of any registration or other qualification of such shares
under any state or federal law, or under the rulings or regulations of the
Securities and Exchange Commission or any other governmental regulatory body
which the Committee or Board shall, in its absolute discretion, deem necessary
or advisable;
(iii) The obtaining of any approval or other clearance from any state or
federal governmental agency which the Committee shall, in its absolute
discretion, determine to be necessary or advisable;
(iv) The lapse of such reasonable period of time following the exercise of the
Option as the Committee may establish from time to time for reasons of
administrative convenience; and
(v) The receipt by the Company of full payment for such shares, including
payment of any applicable withholding tax.
The Committee may, in its absolute discretion, also take whatever additional
actions it deems appropriate to effect such compliance including, without
limitation, placing legends on share certificates and issuing stop-transfer
notices to agents and registrars.
(h) Beneficiary Designation. Subject to paragraph 6(d), Participants may name,
from time to time, beneficiaries (who may be named contingently or successively)
to whom benefits under the Plan are to be paid in the event of their death
before they receive any or all of such benefit. Each designation will revoke all
prior designations by the same Participant, shall be in a form prescribed by the
Committee, and will be effective only when filed by the Participant in writing
with the Committee during the Participant's lifetime. In the absence of any such
designation, benefits remaining unpaid at the Participant's death shall be paid
to the Participant's estate.
(i) Rights of Participants. Nothing in the Plan shall interfere with or limit
in any way the right of the Company to terminate any Participant's employment at
any time, nor confer upon any Participant any right to continue in the employ of
the Company for any period of time or to continue
8
<PAGE>
his or her present or any other rate of compensation. No employee or director
shall have the right to be selected as a Participant, or, having been so
selected, to be selected again as a Participant.
(j) Amendment, Suspension and Termination of Plan. This Plan will terminate
on, and no Options, SARs or Restricted Stock may be granted after, the tenth
anniversary of the IPO Closing Date, December 2, 1997. The Board of Directors or
the Committee may amend the Plan from time to time in such respects as the Board
of Directors or the Committee may deem advisable; provided, however, that no
such amendment shall be made without stockholder approval to the extent such
approval is required by law, agreement or the rules of any exchange upon which
the Common Stock is listed. No such amendment, suspension or termination shall
impair the rights of Participants under outstanding awards without the consent
of the Participants affected thereby or make any change that would disqualify
the Plan, or any other plan of the Company intended to be so qualified, from the
exemption provided by Rule 16b-3. No such amendment shall be made that would
prevent the Options and the SARs from qualifying as performance based
compensation as that term is used in Section 162(m) of the Code.
The Committee may amend or modify any award in any manner to the extent that
the Committee would have had the authority under the Plan to initially grant
such award. No such amendment or modification shall impair the rights of any
Participant under any award without the consent of such Participant.
(k) Effective Date of Plan. The Plan shall become effective on November 20,
1997.
(l) Governing Law. This Plan and any agreements hereunder shall be
administered, interpreted and enforced under the internal laws of the State of
Delaware without regard to conflicts of laws principles.
(m) Limitations Applicable to Section 16 Persons and Performance-Based
Compensation. Notwithstanding any other provision of this Plan, any Option, SAR,
or Restricted Stock granted to any individual who is then subject to Section 16
of the Exchange Act shall be subject to any additional limitations set forth in
any applicable exemptive rule under Section 16 of the Exchange Act (including
any amendment to Rule 16b-3 under the Exchange Act) that are requirements for
the application of such exemptive rule. To the extent permitted by applicable
law, the Plan, Options, SARs and Restricted Stock granted hereunder shall be
deemed amended to the extent necessary to conform to such applicable exemptive
rule. Furthermore, notwithstanding any other provision of this Plan, any Option
or SAR intended to qualify as performance-based compensation as described in
Section 162(m)(4)(C) of the Code shall be subject to any additional limitations
set forth in Section 162(m) of the Code (including any amendment to Section
162(m) of the Code) or any regulations or rulings issued thereunder that are
requirements for qualification as performance-based compensation as described in
Section 162(m)(4)(C) of the Code, and this Plan shall be deemed amended to the
extent necessary to conform to such requirements.
9
<PAGE>
(n) Consideration. In all cases, legal consideration shall be required for
each issuance of Options, Restricted Stock and SARs.
adopted November 20, 1997
amended February 9, 1998
approved by public stockholders
May 12, 1998
10
<PAGE>
EXHIBIT 10.33
HOWMET INTERNATIONAL INC.
G R A N T A G R E E M E N T
NONQUALIFIED STOCK OPTION
AGREEMENT, made as of the 15th day of June, 1998 between Howmet
International Inc., a Delaware corporation ("Company") and the Employee, whose
name appears on the Notice of Grant attached hereto ("Employee").
WHEREAS, the Committee (as defined in Section 1.5), has determined that it
would be to the advantage and best interest of the Company and its stockholders
to grant the stock option provided for herein to the Employee in consideration
of Employee's services to the Company or Affiliate and as an incentive for
increased efforts during the Employee's service to the Company or Affiliate
WHEREAS, the stock option subject to this agreement is now governed by the
terms of the Howmet International Inc. Amended and Restated 1997 Stock Awards
Plan.
NOW, THEREFORE, in consideration of the mutual covenants herein contained
and other good and valuable consideration, receipt of which is hereby
acknowledged, the parties hereto do hereby agree as follows:
ARTICLE I
DEFINITIONS
-----------
Whenever the following terms are used in this Agreement, they shall
have the meaning specified below unless the context clearly indicates to the
contrary. Capitalized terms which are not defined below shall have the meaning
specified in the Plan.
Section 1.1 - Affiliate
- ----------- ---------
"Affiliate" shall mean any entity in which the Company has a
direct or indirect equity interest which is so designated by the Committee.
Section 1.2 - Beneficiary
- ----------- -----------
"Beneficiary" shall mean the person or persons properly designated
by the Employee, including his spouse or heirs at law, to exercise such
Employee's rights under the Plan in the event of the Employee's death, or if the
Employee has not
<PAGE>
designated such person or persons, or such person or persons shall all have pre-
deceased the Employee, the executor or administrator of the Employee's estate.
Designation, revocation and redesignation of Beneficiaries must be made in
writing in accordance with rules established by the Committee and shall be
effective upon delivery to the Committee.
Section 1.3 - Board
- ----------- -----
"Board" shall mean the Board of Directors of the Company.
Section 1.4 - Code
- ----------- ----
"Code" shall mean the Internal Revenue Code of 1986, as heretofore
or hereafter amended.
Section 1.5 - Committee
- ----------- ---------
"Committee" shall mean the Committee or Subcommittee of the Board
appointed as provided in the Plan.
Section 1.6 - Company
- ----------- -------
"Company" shall mean Howmet International Inc., a Delaware
corporation.
Section 1.7 - Date of Grant
- ----------- -------------
"Date of Grant" shall mean December 2, 1997.
Section 1.8 - Exchange Act
- ----------- ------------
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
heretofore or hereafter amended.
Section 1.9 - Expiration Date
- ----------- ---------------
"Expiration Date" shall mean the first to occur of the events
specified in Section 3.3(a)(i) or (ii) of this Agreement.
Section 1.10 - Option
- ------------ ------
"Option" shall mean the nonqualified stock option to purchase
Common Stock of the Company granted under this Agreement.
2
<PAGE>
Section 1.11 - Plan
- ------------ ----
"Plan" shall mean the Howmet International Inc. Amended and
Restated 1997 Stock Awards Plan.
Section 1.12 - Rule 16b-3
- ------------ ----------
"Rule 16b-3" shall mean Rule 16b-3, as heretofore or hereafter
amended, under the Exchange Act.
Section 1.13 - Securities Act
- ------------ --------------
"Securities Act" shall mean the Securities Act of 1933, as
heretofore or hereafter amended.
ARTICLE II
GRANT OF OPTION
---------------
Section 2.1 - Grant of Option. In consideration of Employee's services to the
- ----------- ---------------
Company, Howmet International Inc. has granted to Employee the option to
purchase the number of shares of its Common Stock (par value $.01 per share) and
at the purchase price set forth on the Notice of Grant of Stock attached hereto
(the fair market value of such shares on the Date of Grant), subject to the
conditions of this Agreement.
Section 2.2 - Adjustments in Option. Subject to Section 5.3, in the event of
- ----------- ---------------------
a reorganization, recapitalization, spin-off, stock dividend or other dividend
or other distribution (whether in the form of cash, Common Stock, other
securities, or other property) stock split, combination, reclassification,
reverse stock split, merger, consolidation, split-up, spin-off, repurchase,
liquidation, dissolution, or sale, transfer, exchange or other disposition of
all or substantially all of the assets of the Company, or exchange of Common
Stock or other securities of the Company, issuance of warrants or other rights
to purchase Common Stock or other securities of the Company, or other similar
corporate transaction or event or other increase or reduction in the number of
issued shares of Common Stock, the Committee may, in order to prevent the
dilution or enlargement of rights under awards, make such adjustments in the
number and type of shares covered by the Option and the exercise price specified
herein as may be determined to be appropriate and equitable. Any such
adjustment made by the Committee shall be final and binding upon the Employee,
the Company and all other interested persons.
3
<PAGE>
ARTICLE III
PERIOD OF EXERCISABILITY
------------------------
Section 3.1 - Commencement of Exercisability
- ----------- ------------------------------
(a) Subject to subsection (b), the Option shall become vested and
exercisable in 25% increments on January 1 of each year beginning in 1999 until
fully vested as follows:
January 1, 1999 25% vested
January 1, 2000 50% vested
January 1, 2001 75% vested
January 1, 2002 100% vested
No fractional share of a vested option is exercisable until such
anniversary date from the date of grant as the remainder of such fractional
share becomes exercisable.
(b) Subject to the exception for retirement set forth in Section
3.3(b), no portion of the Option which is unvested at termination of employment
shall thereafter become exercisable.
Section 3.2 - Duration of Exercisability. After any portion of the Option
- ----------- --------------------------
becomes exercisable pursuant to Section 3.1(a), the Option shall remain
exercisable until it has been exercised or until it becomes unexercisable under
Section 3.3.
Section 3.3 - Expiration of Option.
- ----------- --------------------
(a) Subject to paragraph (b) below, no portion of the Option
whether vested or unvested at the time may be exercised to any extent by anyone
after the first to occur of the following events:
(i) The expiration of eight (8) years from the date of grant;
(ii) The expiration of three (3) months from the date of the
employee's termination of employment unless such termination of
employment results from such employee's death or retirement
pursuant to the terms of a tax qualified retirement plan of the
Company
(iii) If Employee should die prior to the Expiration Date (i.e., the
earlier
4
<PAGE>
to occur of the events in (i) or (ii) above), the expiration of
three (3) months from the date of death but only to the extent
the Option is vested on the date of death;
(iv) The effective date of the Committee's action under Section
5.3(ii), (iii) or (iv) (except in the case of an action
providing for assumption of the Option).
(b) If Employee's employment with the Company terminates prior to the
Expiration Date because of Employee's retirement pursuant to the terms of a tax
qualified retirement plan of the Company, the Employee's Option will remain
exercisable until the Expiration Date provided in clause 3.3(a)(i) above, so
long as Employee is living until the Expiration Date. The employee's retirement
date shall be the last date the employee actively works for the Company,
notwithstanding the employee's election to defer the receipt of the payment of
retirement benefits pursuant to the terms of the retirement plan. Any portion
of the Option not yet vested at the Employee's date of retirement will
automatically vest with the passage of time (as if the retired Employee had
remained actively employed) pursuant to the Option vesting schedule set forth in
Section 3.1(a) so long as the Employee is living. In the event of a retired
Employee's death, the Option shall remain exercisable to the extent such option
is vested at the time of his death, for a period of three (3) months after the
date of the retired Employee's death.
ARTICLE IV
EXERCISE OF OPTION
------------------
Section 4.1 - Person Eligible to Exercise. During Employee's lifetime,
- ----------- ---------------------------
Employee's option is exercisable only by Employee unless it has been disposed of
pursuant to a Qualified Domestic Relations Order ("QDRO"). After the death of
the Employee, any exercisable portion of the Option may, prior to the time when
the Option becomes unexercisable under Section 3.3, be exercised by his
Beneficiary.
Section 4.2 - Partial Exercise. Any exercisable portion of the Option or the
- ----------- ----------------
entire Option, if then wholly exercisable, may be exercised in whole or in part
prior to the time when the Option or portion thereof becomes unexercisable under
Section 3.3.
Section 4.3 - Procedure for Exercise. The Option may be exercised with respect
- ----------- ----------------------
to shares of the Company's Common Stock covered by the Option in the amount
specified ("Option Shares") at any time from the date that any portion of the
Option described in 3.1(a) becomes exercisable until the Option expires pursuant
to Section 3.3 by: (i) delivery of written notification of exercise and payment
in full either in cash or in Common Stock of the Company, or a combination
thereof, delivered to the Secretary
5
<PAGE>
of the Company, or his designee, for all Option Shares being purchased plus the
amount of any federal and state income taxes required to be withheld by reason
of the exercise of the Option; and (ii) if requested, within the specified time
set forth in any such request, delivery to the Company of such written
representations and undertakings as may, in the opinion of the Company's legal
counsel, be necessary or desirable to comply with federal and state tax and
securities laws and (iii) a bona fide written representation and agreement, in a
form satisfactory to the Committee, signed by the Employee or other person then
entitled to exercise such Option or portion, stating that the shares of stock
are being acquired for his own account, for investment and without any present
intention of distributing or reselling said shares or any of them except as may
be permitted under the Securities Act and then applicable rules and regulations
thereunder, and that the Employee or other person then entitled to exercise such
Option or portion will indemnify the Company against and hold it free and
harmless from any loss, damage, expense or liability resulting to the Company if
any sale or distribution of the shares by such person is contrary to the
representation and agreement referred to above. In the event the Option or
portion shall be exercised pursuant to Section 4.1 by any person or persons
other than the Employee, appropriate proof of the right of such person or
persons to exercise the Option shall also be provided.
The Committee may, in its absolute discretion, take whatever additional
action it deems appropriate to insure the observance and performance of such
representations, undertakings and agreements and to effect compliance with the
Securities Act and any other federal or state securities laws or regulations.
Without limiting the generality of the foregoing, the Committee may require an
opinion of counsel acceptable to it to the effect that any subsequent transfer
of shares acquired on an Option exercise does not violate the Securities Act,
and may issue stop-transfer orders covering such shares. Share certificates
evidencing stock issued on exercise of this Option may, in the Company's
discretion, bear an appropriate legend referring to the provisions of this
subsection and the representations, undertakings and agreements referenced
herein.
Section 4.4 - Securities Law Restrictions. The Employee acknowledges that the
- ----------- ---------------------------
Plan is intended to conform to the extent necessary with all applicable
securities laws, including the Securities Act and the Exchange Act and
regulations and rules promulgated by the Securities and Exchange Commission (the
"SEC") thereunder, including without limitation Rule 16b-3. Notwithstanding
anything herein to the contrary, the Plan shall be administered, and the Option
is granted and may be exercised, only in such a manner as to conform to such
laws, rules and regulations. To the extent permitted by applicable law, the
Plan and this Agreement shall be deemed amended to the extent necessary to
conform to such laws, rules and regulations.
Employee further acknowledges that applicable securities laws govern and
may restrict Employee's right to offer, sell, or otherwise dispose of any Option
Shares. Employee may not offer, sell or otherwise dispose of any Option Shares
unless
6
<PAGE>
Employee's offer, sale or other disposition thereof is registered under the
Securities Act or an exemption from the registration requirements of the
Securities Act, such as the exemption afforded by Rule 144 thereunder is
available. Employee further understands and acknowledges that one of the
requirements of Rule 144 is that there shall be available adequate current
public information with respect to the Company at the time of the proposed
disposition of the Option Shares, and that the Company is not obligated
hereunder to file reports with the SEC or otherwise make current public
information available for such purpose or to take any other action to make
available an exemption from the registration requirements of the Securities Act.
Employee agrees that Employee will not offer, sell or otherwise dispose of any
Option Shares in any manner which would (i) require the Company to file any
registration statement with the SEC; (ii) require the Company to amend or
supplement any registration statement which the Company at any time may have on
file with the SEC; or (iii) violate the Securities Act, the rules and
regulations promulgated thereunder or any other state or federal law.
Section 4.5 - Conditions to Issuance of Stock Certificates. The shares of stock
- ----------- --------------------------------------------
deliverable upon the exercise of the Option, or any portion thereof, may be
either previously authorized but unissued shares or issued shares which have
then been reacquired by the Company. Such shares shall be fully paid and
nonassessable. The Company shall not be required to issue or deliver any
certificate or certificates for shares of stock purchased upon the exercise of
the Option or portion thereof prior to fulfillment of all of the following
conditions:
(a) The admission of such shares to listing on all stock exchanges on
which such class of stock is then listed; and
(b) The completion of any registration or other qualification of such
shares under any state or federal law or under rulings or regulations of the
Securities and Exchange Commission or of any other governmental regulatory body,
which the Committee shall, in its sole and absolute discretion, deem necessary
or advisable; and
(c) The obtaining of any approval or other clearance from any state
or federal governmental agency which the Committee shall, in its sole and
absolute discretion, determine to be necessary or advisable; and
(d) The payment to the Company (or other employer corporation) of all
amounts which, under federal, state or local tax law, it is required to withhold
upon exercise of the Option; and
(e) The lapse of such reasonable period of time following the
exercise of the Option as the Committee may from time to time establish for
reasons of administrative convenience.
Section 4.6 - Rights as Stockholder. The holder of the Option shall not be, nor
- ----------- ---------------------
have
7
<PAGE>
any of the rights or privileges of, a stockholder of the Company in respect of
any shares purchasable upon the exercise of any part of the Option unless and
until such shares shall have been issued by the transfer agent on behalf of the
Company.
ARTICLE V
OTHER PROVISIONS
----------------
Section 5.1 - Administration. The Committee shall have the power to interpret
- ----------- --------------
the Plan and this Agreement and to adopt such rules for the administration,
interpretation and application of the Plan as are consistent therewith and to
interpret or revoke any such rules. All actions taken and all interpretations
and determinations made by the Committee in good faith shall be final and
binding upon the Employee, the Company and all other interested persons. No
member of the Committee shall be personally liable for any action, determination
or interpretation made in good faith with respect to the Plan or the Option. In
its sole and absolute discretion, the Board may at any time and from time to
time exercise any and all rights and duties of the Committee under the Plan and
this Agreement except with respect to matters which under Rule 16b-3 or Section
162(m) of the Code are required to be determined in the sole discretion of the
Committee.
Section 5.2 - Non-Transferability. Employee's option is personal to Employee and
- ----------- -------------------
shall not be transferable by Employee otherwise than by will or the laws of
descent and distribution or pursuant to a QDRO. Neither the Option nor any
interest or right therein or portion thereof shall be liable for the debts,
contracts or engagements of the Employee or his successors in interest or shall
be subject to disposition by transfer, alienation, anticipation, pledge,
encumbrance, assignment or any other means whether such disposition be voluntary
or involuntary or by operation of law by judgment, levy, attachment, garnishment
or any other legal or equitable proceedings (including bankruptcy), and any
attempted disposition thereof shall be null and void and of no effect; provided,
--------
however, that this Section 5.2 shall not prevent transfers by will or by the
- -------
applicable laws of descent and distribution or pursuant to QDRO.
Section 5.3 - Changes in Common Stock or Assets of the Company,
- ----------- ------------------------------------------------
Acquisition or Liquidation of the Company and Other Corporate Events. Subject
- ----------------------------------------------------------------------
to the provisions of this Section 5.3, in the event of any transaction or event
described in Section 2.2, a change of control or similar transaction by the
Company or any unusual or nonrecurring transactions or events affecting the
Company, any Affiliate of the Company, or the financial statements of the
Company or any Affiliate, or changes in applicable laws, regulations, or
accounting principles, if the Committee determines that such action is
appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan or with respect
to the Option, to facilitate such transactions or events or to give effect to
such changes in laws,
8
<PAGE>
regulations or principles, the Committee in its discretion is hereby authorized
to provide for such terms and conditions as it deems appropriate; (i) for
adjustments to the Option in order to prevent the dilution or enlargement of
rights thereunder or to provide for acceleration of benefits thereunder; (ii)
for either the purchase of the Option for an amount of cash equal to the amount
that could have been attained upon the exercise of the Option or realization of
the Participant's rights had the Option been currently exercisable or fully
vested or the replacement of the Option with other rights or property selected
by the Committee in its sole discretion; (iii) that the Option cannot be
exercised after such event; or (iv) that upon such event, the Option be assumed
by the successor or survivor corporation, or a parent or subsidiary thereof, or
shall be substituted for by similar options, rights or awards covering the stock
of the successor or survivor corporation, or a parent or subsidiary thereof,
with appropriate adjustments as to the number and kind of shares and prices. No
adjustment or action described in this Section 5.3 or in any other provision of
this Agreement shall be authorized to the extent that such adjustment or action
would cause the Option to fail to qualify under Section 162(m), or any successor
provisions thereto. Furthermore, no such adjustment or action shall be
authorized to the extent such adjustment or action would result in short-swing
profits liability under Section 16 or violate the exemptive conditions of Rule
16b-3 unless the Committee determines that the Option is not to comply with such
exemptive conditions.
Section 5.4 - Shares to Be Reserved. The Company shall at all times during the
- ----------- ---------------------
term of the Option keep available from authorized but unissued shares or shares
in its treasury such number of shares of stock as will be sufficient to satisfy
the requirements of this Agreement.
Section 5.5 - Notices. Any notice to be given under the terms of this Agreement
- ----------- -------
to the Company shall be addressed to the Company at its corporate office in care
of its Secretary, or his designee, and any notice to be given to the Employee
shall be addressed to him at the address maintained by the Corporation in its
business records. By a notice given pursuant to this Section 5.5, either party
may hereafter designate a different address for notices to be given to him. Any
notice which is required to be given to the Employee shall, if the Employee is
then deceased, be given to the Employee's personal representative if such
representative has previously informed the Company of his status and address by
written notice under this Section 5.5. Any notice shall be deemed duly given
when enclosed in a properly sealed envelope or wrapper addressed as aforesaid,
deposited (with postage prepaid) in a post office or branch post office
regularly maintained by the United States Postal Service or sent by telecopier,
electronic mail or overnight courier, if an address for such transmission or
delivery is available.
Section 5.6 - Titles. Titles are provided herein for convenience only and are
- ----------- ------
not to serve as a basis for interpretation or construction of this Agreement.
9
<PAGE>
Section 5.7 - Notification of Disposition. The Employee shall give prompt
- ----------- ---------------------------
notice to the Company of any disposition or other transfer of any shares of
stock acquired under this Agreement if such disposition or transfer is made (a)
within two (2) years from the date of granting the Option with respect to such
shares or (b) within one (1) year after the transfer of such shares to him.
Such notice shall specify the date of such disposition or other transfer and the
amount realized, in cash, other property, assumption of indebtedness or other
consideration, by the Employee in such disposition or other transfer.
Section 5.8 - Governing Law. This Grant Agreement and the Plan shall be
- ----------- -------------
construed in accordance with and governed by the laws of the State of Delaware.
Section 5.9 - Amendments. Besides amendments provided for elsewhere in this
- ----------- ----------
Agreement, it and the Plan may otherwise be amended without the consent of the
Optionee; provided that none of these other amendments may impair any material
rights of the Optionee under this Agreement.
Section 5.10 - Conformity With Plan. Employee's option is intended to conform
- ------------ --------------------
in all respects with the Plan, a copy of which has been provided to the
Employee. Inconsistencies between this Grant Agreement and the Plan shall be
resolved in accordance with the terms of the Plan. All definitions stated in
the Plan shall be fully applicable to this Grant Agreement.
Section 5.11 - Employment and Successors. Nothing herein or in the Plan confers
- ------------ -------------------------
any right or obligation on Employee to continue in the employ of the Company or
any Affiliate or shall affect in any way Employee's right or the right of the
Company or any Affiliate, as the case may be, which are hereby expressly
reserved, to terminate Employee's employment at any time, subject to the terms
of any separate employment agreement that may exist. Nothing herein or in the
Plan is to be interpreted as an express or implied contract of employment. This
Grant Agreement and the Plan shall be binding upon any successor or successors
of the Company.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of this 15th day of June, 1998.
HOWMET INTERNATIONAL INC. EMPLOYEE:
By:
--------------------------- -----------------------------
Vice President Print Name:
10
<PAGE>
EXHIBIT 10.34
HOWMET INTERNATIONAL INC.
DIRECTOR
RESTRICTED STOCK AGREEMENT
THIS RESTRICTED STOCK AGREEMENT, dated July 1, 1998 is made by and
between Howmet International, Inc., a Delaware corporation (the "Company"), and
_________________________, a Director of the Company (the "Grantee").
WHEREAS, it is determined to be in the best interests of the Company
and its Stockholders to offer grants of Restricted Stock as compensation to
recruit and retain qualified individuals to serve as Directors of the Company;
WHEREAS, it is in the best interests of the Company and its
Stockholders to provide the Grantee, who is not an officer or employee of the
Company, an opportunity to acquire shares of Common Stock of the Company as part
of the annual retainer compensation paid to Directors for serving on the Board
of Directors; and
WHEREAS, the terms and conditions of the Company's Amended and
Restated 1997 Stock Awards Plan (the terms and conditions of which are hereby
incorporated by reference and made a part of this Agreement) permit the grant of
Restricted Stock;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, receipt of which is hereby
acknowledged, the parties hereto do hereby agree as follows:
ARTICLE I
DEFINITIONS
-----------
Whenever the following terms are used below in this Agreement, they
shall have the meaning specified below unless the context clearly indicates to
the contrary. All capitalized terms used herein without definition shall have
the meanings ascribed to such terms in the Plan.
1.1. Board. "Board" means the Board of Directors of the Company.
-----
1.2. Common Stock. "Common Stock" means the common stock, $.01 par
------------
value, of the Company or such other securities as may be substituted therefor
pursuant to the Plan.
1.3. Exchange Act. "Exchange Act" means the Securities Exchange Act
------------
of 1934, as amended.
<PAGE>
1.4. Fair Market Value. "Fair Market Value" shall have the meaning
-----------------
set forth in the Plan.
1.5. Plan. "Plan" means the Amended and Restated 1997 Stock Awards
----
Plan of Howmet International Inc.
1.6. Restrictions. "Restrictions" means the reacquisition and
------------
transferability restrictions imposed upon Restricted Stock under this Agreement.
1.7. Restricted Stock. "Restricted Stock" means Common Stock issued
----------------
under this Agreement and subject to the Restrictions imposed hereunder.
1.8. Rule 16b-3. "Rule 16b-3" means such rule adopted under the
----------
Exchange Act, as such Rule may be amended from time to time, or any successor
rule.
1.9. Securities Act. "Securities Act" means the Securities Act of
--------------
1933, as amended.
ARTICLE II
ISSUANCE OF RESTRICTED STOCK
----------------------------
In consideration for the services rendered to the Company as a
Director and for other good and valuable consideration, on the date hereof the
Company issues to the Grantee one thousand three hundred thirty-nine (1,339)
shares of Restricted Stock upon the terms and conditions set forth in this
Agreement.
ARTICLE Ill
RESTRICTIONS, VESTING AND REMOVAL OF RESTRICTIONS
-------------------------------------------------
3.1. Restrictions. No shares of Restricted Stock granted pursuant to
------------
this Agreement may be sold, traded, assigned, transferred or otherwise
encumbered until such shares shall become vested and non-forfeitable and the
restrictions thereon are removed.
3.2. Vesting And Removal Of Restrictions. No shares of Restricted
-----------------------------------
Stock granted pursuant to this Agreement shall vest and become non-forfeitable
and
2
<PAGE>
the restrictions thereon removed ('Vested Stock") until such date as the
director's services as a member of the Company's Board of Directors terminates,
which shall be the date at which the earliest of the following events occurs:
(a) the director's death or permanent disability,
(b) mandatory retirement, pursuant to Company directors' retirement
policy, effective at the end of the term of service during which
the director has attained retirement age pursuant to the terms of
such directors' retirement policy,
(c) resignation or failure to stand for re-election prior to such
mandatory retirement, provided that such action must have the
consent of at least 80% of all directors then on the Board, with
the affected director abstaining, or
(d) the occurrence of a merger, consolidation, acquisition,
liquidation or dissolution as described in Section 3.5 of this
Agreement.
In the event the Grantee terminates his or her services other than by an event
set forth in (a) through (d) above, such Restricted stock shall be forfeited.
3.3. Legend. Certificates representing shares of Restricted Stock
------
issued pursuant to this Agreement shall, until all restrictions !apse and new
certificates are issued pursuant to Section 3.4, bear the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
VESTING REQUIREMENTS AND MAY BE SUBJECT TO FORFEITURE OR REACQUISITION BY
HOWMET INTERNATIONAL INC. (THE "COMPANY") UNDER THE TERMS OF A RESTRICTED
STOCK AGREEMENT BY AND BETWEEN THE COMPANY AND THE HOLDER OF THE
SECURITIES. PRIOR TO VESTING OF OWNERSHIP IN THE SECURITIES, THEY MAY NOT
BE, DIRECTLY OR INDIRECTLY, OFFERED, TRANSFERRED, SOLD, ASSIGNED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF UNDER ANY CIRCUMSTANCES. COPIES OF
THE ABOVE REFERENCED AGREEMENT ARE ON FILE AT THE OFFICES OF THE COMPANY."
The Company shall retain custody of all shares of Restricted Stock or may hold
such shares by book entry registration until such restrictions are removed.
Grantee will execute stock powers to permit the transfer of such shares by the
Company free of such Restrictions, including in an event of forfeiture as the
case may be.
3
<PAGE>
3.4. Lapse of Restrictions, Upon the vesting of the Restricted Stock
---------------------
as provided in Section 3.2 and subject to Section 4.3, the Company shall cause
new certificates to be issued with respect to such Vested Stock and delivered to
the Grantee or, in the case of death, the Grantee's designated beneficiary, or
if none, the Grantee's legal representative, free from the legend provided for
in Section 3.3 and any of the other Restrictions. Such Vested Stock shall cease
to be considered Restricted Stock subject to the terms and conditions of this
Agreement. Notwithstanding the foregoing, no such new certificate shall be
delivered to the Grantee or his or her beneficiary or legal representative until
the Company has received in cash or by check the full amount of any federal,
state and local withholding or other employment taxes applicable to the taxable
income of the Grantee resulting from the lapse of the Restrictions as required
by Section 4.8.
3.5. Merger, Consolidation, Acquisition, Liquidation, or Dissolution.
----------------------------------------------------------------
Upon the (w) dissolution or liquidation of the Company, (x) merger or
consolidation in which the Company or a subsidiary of the Company is not the
surviving corporation, (y) sale of more than 60% of the Company's capital stock
or (z) sale of all or substantially all of the Company's assets, the Board may
then provide by resolution adopted prior to such event that, at some time prior
to the effective date of such event, all Restricted Stock shall fully vest and
all Restrictions with respect to such Restricted Stock shall immediately expire.
3.6. Restrictions On New Stock. In the event that the Company's
-------------------------
outstanding Common Stock is changed into or exchanged for a different number or
kind of stock, shares or other securities of the Company or of another entity
pursuant to a merger or consolidation of the Company, the sale of more than 50%
of the Company's capital stock, the sale of all or substantially all of the
Company's assets or other similar transaction, or a stock split, stock dividend,
reorganization, recapitalization or other similar event, such new, additional or
different stock, shares or other securities which are held or received by the
Grantee in his or her capacity as a holder of Restricted Stock shall be
considered to be Restricted Stock and shall be subject to all of the
Restrictions, unless the Board provides, pursuant to Section 3.5, for the
accelerated vesting and expiration of the Restrictions on the Restricted Stock
underlying the distribution of the new, additional or different securities.
ARTICLE IV
MISCELLANEOUS
-------------
4.1. Administration. The Board shall have the power to interpret
--------------
this Agreement and all other documents relating to the shares of Restricted
Stock and to adopt such rules for the administration, interpretation and
application of the Plan with respect to this Agreement as are consistent
therewith and to interpret, amend or revoke any such rules. All actions taken
and all interpretations and determinations made by
4
<PAGE>
the Board in good faith shall be final and binding upon the Grantee, the Company
and all other interested persons. No member of the Board shall be personally
liable for any action, determination or interpretation made in good faith with
respect to the Plan or Restricted Stock and all members of the Board shall be
fully protected by the Company in respect to any such action, determination or
interpretation.
4.2. Restricted Stock Not Transferable. No shares of Restricted Stock
---------------------------------
or any interest or right therein or part thereof shall be liable for the debts,
contracts or engagements of the Grantee or his or her successors in interest or
shall be subject to disposition by transfer, alienation, anticipation, pledge,
encumbrance, assignment or any other means whether such disposition be voluntary
or involuntary or by operation of law by judgment, levy, attachment, garnishment
or any other legal or equitable proceedings (including bankruptcy), and any
attempted disposition thereof shall be null and void and of no effect; provided,
however, that this Section 4.2 shall not prevent transfers by will or by
applicable laws of descent and distribution or pursuant to a qualified domestic
relations order.
4.3. Conditions to Issuance of Stock Certificates. The Company shall
--------------------------------------------
not be required to issue or deliver any certificate or certificates for shares
of Restricted Stock pursuant to this Agreement prior to fulfillment of all of
the following conditions:
(a) The admission of such shares to listing on all stock exchanges on
which the Common Stock is then listed;
(b) The completion of any registration or other qualification of such
shares under any state or federal law, or under the rulings or regulations of
the Securities and Exchange Commission or any other governmental regulatory body
which the Board shall, in its absolute discretion, deem necessary or advisable;
(c) The obtaining of any approval or other clearance from any state
or federal governmental agency which the Board shall, in its absolute
discretion, determine to be necessary or advisable;
(d) The lapse of such reasonable period of time as the Board may
establish from time to time for reasons of administrative convenience; and
(e) Subject to the provisions of Section 4.8, the receipt by the
Company of full payment of any applicable withholding or other taxes and/or the
lapse or removal of any of the Restrictions.
4.4. Notices. Any notice to be given under the terms of this
-------
Agreement to the Company shall be addressed to the Company in care of its
Secretary, and any notice to be given to the Grantee shall be addressed to him
or her at the address given beneath his or her signature hereto. By a notice
given pursuant to this Section 4.4,
5
<PAGE>
either party may hereafter designate a different address for notices to be given
to it, him or her. Any notice which is required to be given to the Grantee
shall, if the Grantee is then deceased, be given to the Grantee's personal
representative if such representative has previously informed the Secretary of
the Company of his or her status and address by written notice under this
Section 4.4. Any notice shall have been deemed duly given when enclosed in a
properly sealed envelope or wrapper addressed as aforesaid, deposited (with
postage prepaid) in a post office or branch post office regularly maintained by
the United States Postal Service.
4.5. Rights as Stockholder. The Grantee shall have all the rights of
---------------------
a stockholder with respect to the Restricted Stock granted hereby (subject to
the restrictions provided for herein and in the Plan), including the right to
vote the shares of Restricted Stock.
4.6. Conformity to Securities Laws. This Agreement is intended to
-----------------------------
conform to the extent necessary with all provisions of the Securities Act and
the Exchange Act and any and all regulations and rules promulgated by the
Securities and Exchange Commission thereunder, including without limitation,
Rule 16b-3. Notwithstanding anything herein to the contrary, this Agreement
shall be administered, and the Restricted Stock shall be issued, only in such a
manner as to conform to such laws, rules and regulations. To the extent
permitted by applicable law, this Agreement and the Restricted Stock issued
hereunder shall be deemed amended to the extent necessary to conform to such
laws, rules and regulations.
4.7. Amendment. This Agreement may be amended only by a writing
---------
executed by the parties hereto which specifically states that it is amending
this Agreement.
4.8. Tax Withholding. The Company's obligation (i) to issue or
---------------
deliver to the Grantee any certificate or certificates for unrestricted Common
Stock or (ii) to pay to the Grantee any distributions with respect to the
Restricted Stock, is expressly conditioned upon receipt from the Grantee, on or
prior to the date the same is required to be withheld, of:
(a) Full payment (in cash or by check) of any amount that must be
withheld by the Company for federal, state and/or local tax purposes; or
(b) Subject to the Board's consent, full payment by delivery to the
Company of unrestricted and unencumbered Common Stock previously owned by the
Grantee, duly endorsed for transfer to the Company by the Grantee, with an
aggregate Fair Market Value (determined, as applicable, as of the date of the
lapse of the restrictions or vesting, or as of the date of the distribution)
equal to the amount that must be withheld by the Company for federal, state
and/or local tax purposes; or
6
<PAGE>
(c) With respect to the withholding obligation for Restricted Stock
that becomes unrestricted as of a certain date (the "Vesting Date"), subject to
the Board's consent, full payment by retention by the Company of a portion of
such Restricted Stock which becomes unrestricted or vested with an aggregate
Fair Market Value (determined as of the Vesting Date) equal to the amount that
must be withheld by the Company for federal, state and/or local tax purposes; or
(d) Subject to the Board's consent, any combination of payments
provided for in the foregoing subsections (a), (b) or (c).
4.9. Governing Law. The laws of the State of Delaware shall govern
-------------
the interpretation, validity, administration, enforcement and performance of the
terms of this Agreement regardless of the law that might be applied under
principles of conflicts of laws.
IN WITNESS WHEREOF, this Agreement has been executed and delivered by the
parties hereto.
HOWMET INTERNATIONAL INC.
By:
---------------------------
Name: David L. Squier
Title: President
-----------------------------
Grantee
Name:
Date:
------------------------------------
Social Security No.
---------------------
Address:
7
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONSOLIDATED
BALANCE SHEETS AND STATEMENTS OF INCOME OF HOWMET INTERNATIONAL INC. INCLUDED IN
FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 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-30-1998
<CASH> 10,123
<SECURITIES> 0
<RECEIVABLES> 139,040
<ALLOWANCES> 5,235
<INVENTORY> 161,820
<CURRENT-ASSETS> 1,044,382
<PP&E> 378,262
<DEPRECIATION> 84,375
<TOTAL-ASSETS> 1,738,854
<CURRENT-LIABILITIES> 995,477
<BONDS> 154,000<F1>
62,741
0
<COMMON> 1,000
<OTHER-SE> 313,627
<TOTAL-LIABILITY-AND-EQUITY> 1,738,854
<SALES> 664,061
<TOTAL-REVENUES> 664,061
<CGS> 466,815
<TOTAL-COSTS> 466,815
<OTHER-EXPENSES> 38,607
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,266
<INCOME-PRETAX> 86,473
<INCOME-TAX> 34,590
<INCOME-CONTINUING> 51,883
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 51,883
<EPS-PRIMARY> .49
<EPS-DILUTED> .49
<FN>
<F1>Long-term debt, excluding the Pechiney Notes.
</FN>
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<RESTATED>
<MULTIPLIER> 1,000
<S> <C> <C> <C> <C>
<PERIOD-TYPE> 12-MOS 6-MOS 9-MOS 12-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1997 DEC-31-1997 DEC-31-1997
<PERIOD-START> JAN-01-1996 JAN-01-1997 JAN-01-1997 JAN-01-1997
<PERIOD-END> DEC-31-1996 JUN-29-1997 SEP-28-1997 DEC-31-1997
<CASH> 23,398 3,020 9,080 45,439
<SECURITIES> 0 0 0 0
<RECEIVABLES> 128,625 141,395 119,707 103,302
<ALLOWANCES> 5,623 5,531 4,351 4,409
<INVENTORY> 149,419 151,405 142,370 155,534
<CURRENT-ASSETS> 319,758 316,649 278,884 320,020
<PP&E> 332,047 347,987 336,244 340,695
<DEPRECIATION> 40,961 61,113 72,026 65,205
<TOTAL-ASSETS> 1,768,845 1,760,292 1,696,103 1,710,556
<CURRENT-LIABILITIES> 308,590 302,025 288,796 257,533
<BONDS> 1,010,962 965,175 883,387 924,805
54,900 57,398 58,690 60,010
0 0 0 0
<COMMON> 1,000 1,000 1,000 1,000
<OTHER-SE> 217,815 245,253 265,368 264,660
<TOTAL-LIABILITY-AND-EQUITY> 1,768,845 1,760,292 1,696,103 1,710,556
<SALES> 1,106,812 642,985 951,990 1,258,189
<TOTAL-REVENUES> 1,106,812 642,985 951,990 1,258,189
<CGS> 807,524 449,242 665,059 881,214
<TOTAL-COSTS> 807,524 449,242 665,059 881,214
<OTHER-EXPENSES> 79,993 37,946 47,357 77,122
<LOSS-PROVISION> 0 0 0 0
<INTEREST-EXPENSE> 41,877 16,838 25,874 30,988
<INCOME-PRETAX> 55,885 65,515 95,776 118,220
<INCOME-TAX> 30,259 27,414 36,474 46,267
<INCOME-CONTINUING> 25,626 38,101 59,302 71,953
<DISCONTINUED> 0 0 0 0
<EXTRAORDINARY> 0 0 0 12,255
<CHANGES> 0 0 0 0
<NET-INCOME> 25,626 38,101 59,302 59,698
<EPS-PRIMARY> .21 .36 .56 .55
<EPS-DILUTED> .21 .36 .56 .55
<FN>
<F1>FINANCIAL DATA SCHEDULES PREVIOUSLY FILED FOR PERIODS ENDED JUN-29-1997 AND
SEP-28-1997 AND FOR PRIOR TWO FISCAL YEARS ENDED DEC-31-1997 AND DEC-31-1996 ARE
BEING AMENDED FOR RECLASSIFICATION OF CUSTOMER FUNDED R&D FROM OTHER-EXPENSES TO
CGS.
</FN>
</TABLE>
