UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1994
Commission File Number 1-5828
CARPENTER TECHNOLOGY CORPORATION
(Exact name of Registrant as specified in its Charter)
Delaware 23-0458500
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
101 West Bern Street, Reading, Pennsylvania 19612-4662
(Address of principal executive offices) (Zip Code)
610-208-2000
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's
classes of common stock as of December 31, 1994.
Common stock, $5 par value 8,104,110
Class Number of shares outstanding
The Exhibit Index appears on page E-1.<PAGE>
CARPENTER TECHNOLOGY CORPORATION
FORM 10-Q
INDEX
Page
----
Part I FINANCIAL INFORMATION
Consolidated Balance Sheet December 31, 1994 (Unaudited)
and June 30, 1994..................................... 3 & 4
Consolidated Statement of Income (Unaudited) for the
Three and Six Months Ended December 31, 1994 and 1993. 5
Consolidated Statement of Cash Flows (Unaudited) for the
Six Months Ended December 31, 1994 and 1993........... 6
Notes to Consolidated Financial Statements.............. 7 - 9
Management's Discussion and Analysis of Results
of Operations......................................... 9 & 10
Part II OTHER INFORMATION................................11 - 13
Exhibit Index............................................. E-1
<PAGE>
PART I
------ CARPENTER TECHNOLOGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET (Page 1 of 2)
December 31, 1994 and June 30, 1994
(in thousands, except share data)
December 31 June 30
1994 1994
----------- ---------
ASSETS (Unaudited)
- ------
Current assets:
Cash and cash equivalents $ 5,491 $ 5,404
Accounts receivable, net 91,603 95,412
Inventories 85,996 65,262
Deferred income taxes 284 463
Other current assets 9,810 4,629
-------- --------
Total current assets 193,184 171,170
-------- --------
Property, plant and equipment,
at cost 747,064 723,720
Less accumulated depreciation
and amortization 345,774 331,880
-------- --------
401,290 391,840
-------- --------
Prepaid pension cost 77,112 73,185
-------- --------
Investment in joint venture 50,611 48,576
-------- --------
Other assets 55,690 45,140
-------- --------
Total assets $777,887 $729,911
======== ========
See accompanying notes to consolidated financial statements.
<PAGE>
CARPENTER TECHNOLOGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET (Page 2 of 2)
December 31, 1994 and June 30, 1994
(in thousands, except share data)
December 31 June 30
LIABILITIES 1994 1994
- ----------- ----------- --------
Current liabilities: (Unaudited)
Short-term debt $ 31,265 $ -
Accounts payable 46,816 35,478
Accrued compensation 12,856 18,654
Accrued income taxes 3,579 616
Other accrued liabilities 31,926 28,153
Current portion of long-term debt 7,207 15,618
-------- --------
Total current liabilities 133,649 98,519
-------- --------
Long-term debt, net of current portion 167,505 158,070
-------- --------
Accrued postretirement benefits 140,670 139,365
-------- --------
Deferred income taxes 75,696 74,739
-------- --------
Other liabilities and deferred income 18,642 20,074
-------- --------
SHAREHOLDERS' EQUITY
- --------------------
Preferred stock, $5 par value -
authorized 2,000,000 shares; issued
458.8 shares at December 31, 1994
and 459.9 shares at June 30, 1994 28,965 29,029
Common stock, $5 par value -
authorized 50,000,000 shares; issued
9,626,989 shares at December 31, 1994
and 9,612,181 shares at June 30, 1994 48,135 48,061
Capital in excess of par value 52,557 50,882
Reinvested earnings 208,874 204,667
Common stock in treasury, at cost -
1,522,879 shares at December 31, 1994
and 1,522,604 shares at June 30, 1994 (66,989) (66,150)
Deferred compensation (25,172) (26,386)
Foreign currency translation
adjustments (4,645) (959)
-------- --------
Total shareholders' equity 241,725 239,144
Total liabilities and -------- --------
shareholders' equity $777,887 $729,911
======== ========
See accompanying notes to consolidated financial statements.
<PAGE>
CARPENTER TECHNOLOGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
for the three and six months ended December 31, 1994 and 1993
(in thousands, except per share data)
Three Months Six Months
------------------ ------------------
1994 1993 1994 1993
---- ---- ---- ----
Net sales $172,400 $147,127 $328,484 $276,556
-------- -------- -------- --------
Costs and expenses:
Cost of sales 127,917 108,264 249,485 205,769
Selling and
administrative
expenses 25,239 22,825 49,193 43,487
Interest expense 3,064 4,178 5,762 9,214
Equity in loss of
joint venture 860 240 1,100 120
Other income, net (274) (517) (785) (922)
-------- -------- -------- --------
156,806 134,990 304,755 257,668
Income before income
taxes 15,594 12,137 23,729 18,888
Income taxes 5,767 4,777 8,970 8,756
-------- -------- -------- --------
Net income $ 9,827 $ 7,360 $ 14,759 $ 10,132
======== ======== ======== ========
Earnings per common share:
Primary $ 1.16 $ .86 $ 1.71 $ 1.16
======== ======== ======== ========
Fully diluted $ 1.11 $ .84 $ 1.66 $ 1.14
======== ======== ======== ========
Weighted average common
shares outstanding 8,161 8,032 8,182 8,019
======== ======== ======== ========
Dividends per common
share $ .60 $ .60 $ 1.20 $ 1.20
======== ======== ======== ========
See accompanying notes to consolidated financial statements.
<PAGE>
CARPENTER TECHNOLOGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
for the six months ended December 31, 1994 and 1993
(in thousands)
1994 1993
OPERATIONS ---- ----
Net income $ 14,759 $ 10,132
Adjustments to reconcile net income
to net cash provided from operations:
Depreciation and amortization 15,170 14,374
Deferred income taxes 1,922 2,714
Prepaid pension cost (3,927) (6,147)
Equity in loss of joint venture 1,100 120
Changes in working capital and other:
Receivables 6,163 18,960
Inventories (22,732) 2,040
Other, net 6,331 18,309
-------- --------
Net cash provided from operations 18,786 60,502
INVESTING ACTIVITIES -------- --------
Purchases of plant and equipment (19,948) (15,179)
Disposals of plant and equipment 600 691
Investment in joint venture (2,060) (47,072)
Acquisition of wholly-owned
subsidiaries, net of cash received (13,055) (22,200)
-------- --------
Net cash used for investing activities (34,463) (83,760)
FINANCING ACTIVITIES -------- --------
Proceeds from issuance of short-term debt 31,265 8,794
Proceeds from issuance of long-term debt 50,000 -
Payments on long-term debt (52,140) (4,067)
Dividends paid (10,552) (10,382)
Payments to acquire treasury stock (3,001) -
Proceeds from issuance of common stock 663 1,138
Net cash provided (required) by financing -------- --------
activities 16,235 (4,517)
EFFECT OF EXCHANGE RATE CHANGES ON CASH -------- --------
AND CASH EQUIVALENTS (471) -
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 87 (27,775)
Cash and cash equivalents at
beginning of period 5,404 45,822
-------- --------
Cash and cash equivalents at
end of period $ 5,491 $ 18,047
======== ========
Supplemental Data:
Interest payments, net of amounts capitalized $ 4,562 $ 9,277
Income tax payments, net of refunds $ 3,941 $ 2,768
See accompanying notes to consolidated financial statements.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
1. Basis of Presentation
---------------------
The accompanying unaudited consolidated financial
statements have been prepared in accordance with the
instructions to Form 10-Q and do not include all of the
information and footnotes required by generally accepted
accounting principles for complete financial statements. In
the opinion of management, all adjustments (consisting only
of normal recurring accruals) considered necessary for a
fair presentation have been included. Operating results for
the six months ended December 31, 1994 are not necessarily
indicative of the results that may be expected for the year
ending June 30, 1995. For further information, refer to the
consolidated financial statements and footnotes included in
the Company's 1994 Annual Report on Form 10-K.
The June 30, 1994 condensed balance sheet data was
derived from audited financial statements, but does not
include all disclosures required by generally accepted
accounting principles.
2. Earnings Per Common Share
-------------------------
Primary earnings per common share are computed by
dividing net income (less preferred dividends net of tax
benefits) by the weighted average number of common shares
and common share equivalents outstanding during the period.
On a fully-diluted basis, both net earnings and shares
outstanding are adjusted to assume the conversion of the
convertible preferred stock.
3. Inventories
-----------
December 31 June 30
1994 1994
---- ----
(in thousands)
Finished $ 76,339 $ 76,187
Work in process 103,265 85,247
Raw materials and supplies 32,122 29,558
-------- --------
Total at current cost 211,726 190,992
Excess of current cost
over LIFO values 125,730 125,730
-------- --------
Inventory per Balance Sheet $ 85,996 $ 65,262
======== ========
<PAGE>
3. Inventories, continued
-----------
The current cost of LIFO-valued inventories was $187.8
million at December 31, 1994 and $165.8 million at June 30,
1994. Reductions in LIFO-valued inventories resulted in an
increase in net income of approximately $1.5 million or $.19
per share and $3.6 million or $.45 per share for the three
and six months ended December 31, 1993, respectively.
4. Acquisition of Wholly-Owned Subsidiaries
----------------------------------------
On July 22, 1994, the Company acquired all of the
outstanding shares of Certech, Inc., and an affiliated
company, for $16.7 million, including acquisition costs,
comprised of $13.5 million in cash and 53,124 shares of
treasury common stock. Certech manufactures a broad line of
complex injection molded ceramics parts.
The acquisition has been accounted for using the
purchase method of accounting, and accordingly, the purchase
price has been allocated to the assets purchased and the
liabilities assumed based upon the preliminary estimated
fair values at the date of acquisition. The excess of
purchase price over the preliminary estimated fair values of
the net assets acquired was approximately $10 million and
has been recorded as intangible assets and goodwill, and is
included in other assets on the consolidated balance sheet.
As previously reported, on July 28, 1993, the Company
acquired all of the outstanding shares of Aceros Fortuna,
S.A. de C.V., a Mexican steel distribution company, and two
affiliated companies.
The operating results of these acquired businesses have
been included in the Consolidated Statement of Income from
the dates of acquisition. On the basis of a pro forma
combination of the results of operations as if the
acquisitions had taken place at the beginning of fiscal
1994, combined net sales would have been approximately $330
million for the six months ended December 31, 1994, and $151
million and $286 million for the three and six months ended
December 31, 1993, respectively. Combined pro forma net
income and earnings per share would not have been materially
different from the reported amounts for both periods. Such
pro forma amounts are not necessarily indicative of what the
actual combined results of operations might have been if the
acquisitions had been effective at the beginning of fiscal
1994.
<PAGE>
5. Debt Arrangements
-----------------
During the six months ended December 31, 1994, the
Company issued $50.0 million of medium-term debt securities
with a 7.68% average interest rate under a Form S-3
registration statement ("Shelf Registration") on file with
the Securities and Exchange Commission. The proceeds were
used to retire borrowings under credit arrangements.
6. Foreign Currency Translation Adjustments
----------------------------------------
The functional currency for the majority of the
Company's international operations is the local currency,
and, accordingly, the respective assets and liabilities are
translated at end of period exchange rates, while the income
and expense components are translated at average exchange
rates prevailing during the period. The resulting
translation adjustments are accumulated in a separate
section of shareholders' equity on the consolidated balance
sheet.
During the quarter ended December 31, 1994, the value
of the Mexican peso fell versus that of the U.S. dollar. As
a result of this devaluation, the Company recorded a
reduction to Shareholders' Equity of $4.7 million for the
quarter related to Aceros Fortuna, the Company's Mexican
steel distributor acquired on July 28, 1993.
MANAGEMENT'S DISCUSSION & ANALYSIS OF RESULTS OF OPERATIONS
-----------------------------------------------------------
Second Quarter Results:
- ----------------------
Net income for the quarter ended December 31, 1994 was $9.8
million versus $7.4 million in the same quarter last year.
Primary earnings per share were $1.16 compared with $.86 for the
same period a year ago. The improved results were primarily due
to higher sales volume coupled with increased selling prices.
Sales were $172.4 million, a 17 percent increase over the
$147.1 million last year. The increase in sales was primarily a
result of 10 percent higher Steel Division shipment levels
chiefly of stainless bar and wire products to automotive and
equipment manufacturers. Sales were also higher because of the
inclusion of the sales of Certech, Inc., acquired in July 1994.
In addition, the Company has recently implemented selling price
increases to offset increasing labor and supply costs and has
instituted surcharges to offset sharply rising raw material
costs.
<PAGE>
Cost of sales as a percent of net sales was 74 percent for
the second quarters of both fiscal 1995 and 1994. This year's
second quarter was favorably impacted by higher production
efficiencies due to increased capacity utilization. Last year's
second quarter included the favorable impact of lower inventory
levels and the use of the LIFO inventory valuation method which
reduced costs by $2.5 million before taxes, or $.19 per share.
Six Month Results:
- -----------------
Net income for the six months ended December 31, 1994 was
$14.8 million, compared with $10.1 million for the same period
last year. Primary earnings per share were $1.71 compared with
$1.16 for the same period a year ago. The improved results were
primarily due to higher sales volume and production efficiencies
due to increased capacity utilization. Additionally, earnings
last year were adversely affected by a one-time charge of $1.5
million, or $.19 per share, to increase net deferred tax
liabilities for a change in the U.S. corporate income tax rate.
Sales were $328.5 million, a 19 percent increase from $276.6
million last year. This increase was primarily due to a 12
percent increase in Steel Division unit volume shipments and the
inclusion of the results of Certech, Inc. and Aceros Fortuna S.A.
de C.V., which were acquired on July 22, 1994 and July 28, 1993,
respectively.
Cost of sales increased to 76 percent of net sales in the
current fiscal year versus 74 percent for the same period last
year, primarily due to higher raw material costs. Last year's
cost of sales was favorably impacted by an inventory reduction
program and the use of the LIFO inventory valuation method which
reduced costs by $5.8 million before taxes, or $.45 per share for
the six month period.
Interest costs decreased by $3.5 million for the first six
months of this fiscal year compared to the same period last year.
This decrease was primarily the result of replacing high interest
cost debt with lower interest cost borrowings in the March 1994
quarter, combined with increased capitalized interest costs
during the pre-operating period of Walsin-CarTech Specialty Steel
Corporation, a joint venture with Walsin Lihwa Corporation in the
Republic of China (Taiwan).
<PAGE>
PART II - OTHER INFORMATION
---------------------------
Item 1. Legal Proceedings.
-------------------------
There are no material pending legal proceedings, other than
ordinary routine litigation incidental to the business, to which
the Company or any of its subsidiaries is a party or to which any
of their properties is subject. There are no material
proceedings to which any Director, Officer, or affiliate of the
Company, or any owner of more than five percent of any class of
voting securities of the Company, or any associate of any
Director, Officer, affiliate, or security holder of the Company,
is a party adverse to the Company or has a material interest
adverse to the interest of the Company or its subsidiaries.
There is no administrative or judicial proceeding arising under
any Federal, State or local provisions regulating the discharge
of materials into the environment or primarily for the purpose of
protecting the environment that (1) is material to the business
or financial condition of the Company, (2) involves a claim for
damages, potential sanctions or capital expenditures exceeding
ten percent of the current assets of the Company or (3) includes
a governmental authority as a party and involves potential
monetary sanctions in excess of $100,000.
Item 2. Changes in Securities.
-----------------------------
See Note 5 to the Financial Statements contained in Part I.
Item 4. Submission of Matters to a Vote of Security Holders.
-----------------------------------------------------------
The Annual Meeting of Stockholders of the Company was held
on October 24, 1994. The following directors were elected at the
meeting: Dr. C. McCollister Evarts; William J. Hudson, Jr.;
Mylle Bell Mangum; and Paul R. Roedel. The following directors
continued their terms of office after the meeting: Robert W.
Cardy; Arthur E. Humphrey; Edward W. Kay; Frederick C.
Langenberg; Marcus C. Bennett; Dennis M. Draeger; Carl R. Garr;
Marlin Miller, Jr. Set forth below is a description of the
matters voted upon and the number of votes cast for, against or
withheld, as well as the number of abstentions and broker
nonvotes, as applicable to each such matter.
1. Election Of Directors. The following four directors
were elected to the Board of Directors of the Company. There were
no other nominees for director.
A. Dr. C. McCollister Evarts
Shares voted for: 7,428,204
Shares withheld: 128,659
Abstentions: N/A
Broker nonvotes: N/A
<PAGE>
B. William J. Hudson, Jr.
Shares voted for: 7,431,147
Shares withheld: 125,716
Abstentions: N/A
Broker nonvotes: N/A
C. Mylle Bell Mangum
Shares voted for: 7,425,421
Shares withheld: 131,442
Abstentions: N/A
Broker nonvotes: N/A
D. Paul R. Roedel
Shares voted for: 7,424,538
Shares withheld: 132,325
Abstentions: N/A
Broker nonvotes: N/A
2. The accounting firm of Coopers & Lybrand was elected
independent accountants for the year ending June 30, 1995.
Shares voted for: 7,456,925
Shares voted against: 61,187
Abstentions: N/A
Broker nonvotes: N/A
Item 5. Other Information.
-------------------------
1. On December 8, 1994 the Board of Directors of the
Company elected Kathryn C. Turner as a director to serve until
the Annual Stockholders meeting on October 23, 1995.
2. On December 8, 1994 the Board of Directors of the
Company adopted a new set of By-laws. A complete copy of the
By-laws as amended is attached as an exhibit to this report.
Item 6. Exhibits and Reports on Form 8-K.
----------------------------------------
a. The following documents are filed as exhibits:
3. By-laws as amended on December 8, 1994.
11. Statement regarding computation of per share
earnings.
99. Additional Exhibits.
A. Press release dated December 9, 1994.
b. The Company filed no Reports on Form 8-K for
events occurring during the quarter of the fiscal
year covered by this report.
<PAGE>
Item 3 is omitted as the answer is negative or the items are
not applicable.
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.
CARPENTER TECHNOLOGY CORPORATION
--------------------------------
(Registrant)
Date: February 9, 1995 s/G. Walton Cottrell
------------------- --------------------------------
G. Walton Cottrell
Sr. Vice President - Finance
and Chief Financial Officer
<PAGE>
EXHIBIT INDEX
-------------
Exhibit No. Title Page
- ----------- ----- ----
3. By-laws as amended on December 8, E-1 - E-19
1994
11. Statement regarding computation of
per share earnings. E-20 & E-21
27. Financial data schedule E-22
99. Press release dated December 9, 1994 E-23 & E-24
By-Laws
of
CARPENTER TECHNOLOGY CORPORATION
As Last Amended Effective October 24, 1994
l. MEETINGS OF STOCKHOLDERS.
------------------------
l.l Annual Meeting. The annual meeting of stockholders
--------------
shall be held during the last two weeks of October in each year,
and shall be held at a place and time determined by the Board of
Directors (the "Board").
At an annual meeting of stockholders, only such business
shall be conducted as shall have been properly brought before the
meeting. To be properly brought before an annual meeting,
business must be (a) specified in the notice of meeting (or any
supplement thereto) given by or at the direction of the Board, or
(b) otherwise brought before the meeting by or at the direction
of the Board or by a stockholder in accordance with the following
provisions. In addition to any other applicable requirements,
for business to be brought before an annual meeting by a
stockholder, the stockholder must have given notice thereof in
writing to the Secretary of the Corporation, which must be
delivered to or mailed and received at the principal executive
offices of the Corporation not less than 60 days nor more than 90
days prior to the anniversary date of the immediately preceding
annual meeting of the stockholders; provided, however, that in
the event that the annual meeting is called for a date that is
not within 30 days before or after such anniversary date, notice
by the stockholder must be so received not later than the close
of business on the 10th day following the day on which notice of
the date of the annual meeting was mailed or public disclosure of
the date of the annual meeting was made, whichever first occurs.
A stockholder's notice to the Secretary shall set forth as to
each matter the stockholder proposes to bring before the annual
meeting (i) a brief description of the business desired to be
brought before the annual meeting and the reasons for conducting
such business at the annual meeting, (ii) the name and record
address of the stockholder proposing such business, (iii) the
class and number of shares of the Corporation which are
beneficially owned by the stockholder, and (iv) any material
interest of the stockholder in such business.
Notwithstanding anything in these By-Laws to the contrary,
no business shall be conducted at the annual meeting except in
accordance with the procedures set forth in this Section 1.1.
The chairperson of an annual meeting shall, if the facts
warrant, determine and declare to the meeting that business was
not properly brought before the meeting in accordance with the
provisions of this Section 1.1 and, if the chairperson should so
determine, any such business not properly brought before the
meeting shall not be transacted.
l.2 Special Meetings. Except as otherwise required by law
----------------
and subject to the rights of the holders of any class or series
of stock having preference over the Common Stock as to dividends
or upon liquidation, special meetings of the stockholders may be
called only by the Board pursuant to a resolution approved by a
majority of the entire Board. At a special meeting of the
stockholders, only such business shall be conducted as shall be
specified in the notice of meeting (or any supplement thereto)
given by or at the direction of the Board.
l.3 Place of Meetings. Meetings of the stockholders may be
-----------------
held in or outside Delaware at the place specified in the notice
by the person or persons calling the meeting.
1.4 Notice of Meetings. Written notice of each meeting of
------------------
stockholders shall be mailed to each stockholder entitled to vote
at the meeting, not less than 20 nor more than 40 days before the
meeting, and shall state the time and place of the meeting and
the purposes for which it is called.
1.5 Quorum. The presence in person or by proxy of the
------
holders of a majority of the shares entitled to vote shall
constitute a quorum for the transaction of any business, except
as otherwise provided by law. In the absence of a quorum any
officer entitled to preside at or act as secretary of such
meeting shall have the power to adjourn the meeting from time to
time until a quorum is present, without further notice other than
announcement at the meeting of the adjourned time and place
(provided that if a meeting is adjourned for more than 30 days,
or if a new record date is set, a new notice must be given). At
any adjourned meeting at which a quorum is present, any action
may be taken which might have been taken at the meeting as
originally called.
l.6 Voting; Proxies. Stockholders may attend meetings and
---------------
vote either in person or by proxy. Without limiting the manner
in which a stockholder may authorize another person or persons to
act for the stockholder as proxy, either of the following shall
constitute a valid means by which a stockholder may grant such
authority:
(i) A stockholder may execute a writing authorizing
another person or persons to act for the stockholder as proxy.
Execution may be accomplished by the stockholder or an authorized
officer, director, employee or agent signing such writing or
causing their signature to be affixed to such writing by any
reasonable means including, but not limited to, by facsimile
signature.
(ii) A stockholder may authorize another person or
persons to act for the stockholder as proxy by transmitting or
authorizing the transmission of a telegram or other means of
electronic transmission to the person who will be the holder of
the proxy or to a proxy solicitation firm, proxy support service
organization or like agent duly authorized by the person who will
be the holder of the proxy to receive such transmission, provided
that any such telegram or other means of electronic transmission
must either set forth or be submitted with information from which
it can be determined that the telegram or other electronic
transmission was authorized by the stockholder.
Any copy, facsimile telecommunication or other reliable
reproduction of the writing or transmission authorizing another
person or persons to act as proxy for a stockholder may be
substituted or used in lieu of the original writing or
transmission for any and all purposes for which the original
writing or transmission could be used, provided that such copy,
facsimile telecommunication or other reproduction shall be a
complete reproduction of the entire original writing or
transmission. Corporate action to be taken by stockholder vote,
other than the election of directors, shall be authorized by a
majority of the votes cast at a meeting of stockholders at which
a quorum is present, except as otherwise provided by law, by the
Certificate of Incorporation, as amended from time to time, or by
these By-Laws. Directors shall be elected in the manner provided
in Section 2.l of these By-Laws.
l.7 Inspectors of Election. In advance of every meeting of
----------------------
the stockholders, the Board by resolution or the Chairperson or
President shall appoint one or more persons to act as inspectors
of election at the meeting. One or more other persons may be
designated as alternate inspectors to replace any inspector who
is unable or unwilling to act at such meeting. If no inspector
or alternate inspector has been appointed or is present, ready
and willing to act at any meeting, the chairperson of the meeting
shall appoint one or more persons to act as inspectors at the
meeting. Each inspector, before discharging the duties of
office, shall faithfully take and sign an oath to execute the
duties of inspector with strict impartiality and according to the
best of the inspector's ability. The inspectors shall have the
duties prescribed by law. Any person, including persons who
serve the Corporation in other capacities, including without
limitation, as officers, employees, agents or representatives of
the Corporation, may act as an inspector, except that no
candidate for the office of director shall act as an inspector of
any election for directors.
1.8 Opening and Closing of the Polls. At every meeting of
--------------------------------
the stockholders, the chairperson of the meeting shall fix and
announce at the meeting the date and time of the opening and the
closing of the polls for each matter upon which the stockholders
will vote at the meeting.
2. BOARD OF DIRECTORS.
------------------
2.l Number, Election and Term of Directors. The business
--------------------------------------
of the Corporation shall be managed under the direction of the
Board, which shall consist of not less than three nor more than
fifteen directors, the exact number of directors to be determined
from time to time by resolution adopted by affirmative vote of a
majority of the entire Board. A majority of the Board must be
persons who are neither current nor former officers or employees
of the Corporation or its subsidiaries. The Board of Directors
shall be divided into three classes. Each class shall consist,
as nearly as may be possible, of one-third of the total number of
directors constituting the entire Board. The term of office of
the first class will expire at the first annual meeting of the
stockholders after the initial classification of the Board, that
of the second class will expire at the second meeting after the
initial classification of the Board, and that of the third class
will expire at the third annual meeting after the initial
classification of the Board. At each annual meeting of the
stockholders after such initial classification of the Board,
directors shall be chosen for a term of three years to succeed
those whose terms expire, and shall hold office until the third
following annual meeting of stockholders and until the election
of their respective successors, subject to the provisions of
Section 2.6 hereof. If the number of directors is changed, any
increase or decrease shall be apportioned among the classes so as
to maintain the number of directors in each class as nearly equal
as possible, and any additional director of any class elected to
fill a vacancy resulting from an increase in such class shall
hold office for a term that shall coincide with the remaining
term of that class, but in no case may a decrease in the number
of directors shorten the term of any incumbent director.
Directors shall be elected at each annual meeting of stockholders
by a plurality of the votes cast by written ballot. As used in
these By-Laws, "entire Board" means the total number of directors
which the Corporation would have if there were no vacancies.
2.2 Quorum and Manner of Acting. A majority of the
---------------------------
directors in office (but not less than one-third of the entire
Board) shall constitute a quorum for the transaction of business
at any meeting, except as provided in Section 2.7 of these
By-Laws. Action of the Board shall be authorized by the vote of
a majority of the directors present at the time of the vote, if a
quorum is present, unless otherwise provided by law or these
By-Laws. In the absence of a quorum, a majority of the directors
present may adjourn any meeting from time to time until a quorum
is present, on notice given as provided in Section 2.5 hereof.
2.3 Annual and Regular Meetings. Annual meetings of the
---------------------------
Board, for the election of officers and consideration of other
matters, shall be held either (a) without notice immediately
after the annual meeting of stockholders and at the same place,
or (b) as soon as practicable after the annual meeting of
stockholders on notice as provided in Section 2.5 of these
By-Laws. Regular meetings of the Board may be held at such times
and places as the Board determines.
2.4 Special Meetings. Special meetings of the Board may be
----------------
called by the Chairperson of the Board or the Chief Executive
Officer of the Corporation or by three directors, one from each
class of directors then in office.
2.5 Notice of Meetings; Waiver of Notice. Notice of the
------------------------------------
time and place of each regular and special meeting of the Board,
and of each annual meeting not held immediately after the annual
meeting of stockholders and at the same place, shall be given to
each director by mailing it to the Director at the Director's
residence or usual place of business at least five days before
the meeting, or by delivering or telephoning or telegraphing it
to the Director at least one day before the meeting. Notice of a
special meeting shall also state the general purpose or purposes
for which the meeting is called. Notice need not be given to any
director who submits a signed waiver of notice before or after
the meeting, or who attends the meeting without protesting the
lack of notice to him or herself, either before the meeting or
when it begins. Notice of any adjourned meeting need not be
given, other than by announcement at the meeting at which the
adjournment is taken.
2.6 Resignation and Retirement of Directors. Any director
---------------------------------------
may resign at any time by giving written notice to the Chief
Executive Officer or Secretary of the Corporation, to take effect
at the time specified therein. The acceptance of such
resignation, unless required by the terms thereof, shall not be
necessary to make it effective. Unless otherwise provided by
resolution of the Board, any director who is also an officer of
the Corporation shall retire from the Board upon the earlier of
(a) attaining age 65 or (b) retirement as an officer of the
Corporation. Any director who is not an officer of the
Corporation shall retire from the Board at the next annual
meeting of stockholders after the Director attains age 70.
2.7 Vacancies. Any vacancy in the Board, including one
---------
created by an increase in the number of directors, may be filled
for the unexpired term by a majority vote of the remaining
directors, though not a quorum.
2.8 Action by Directors Without a Meeting. Any action by
-------------------------------------
the Board or any committee of the Board may be taken without a
meeting, if a written consent to the action is signed by all of
the members of the Board or committee.
2.9 Compensation. Directors shall receive such
------------
compensation as the Board determines, together with reimbursement
of their reasonable expenses in connection with the performance
of their duties. A director may also be paid for serving the
Corporation, its affiliates or subsidiaries in other capacities.
2.10 Nominations of Director Candidates. Only persons who
----------------------------------
are nominated in accordance with the following procedures shall
be eligible for election as directors at meetings of
stockholders. Nominations of persons for election to the Board
of the Corporation may be made at a meeting of stockholders by
(a) the Board, (b) any committee whose responsibilities include
director nominations or person appointed by the Board, or (c) any
stockholder of the Corporation entitled to vote for the election
of directors at the meeting who complies with the notice
procedures set forth in this Section 2.10. Such nominations,
other than those made by or at the direction of the Board, shall
be made pursuant to timely notice in writing to the Secretary of
the Corporation. To be timely, a stockholder's notice shall be
delivered to or mailed and received at the principal executive
offices of the Corporation not less than 60 days nor more than 90
days prior to the anniversary date of the immediately preceding
annual meeting of the stockholders; provided, however, that in
the event that the annual meeting is called for a date that is
not within 30 days before or after such anniversary date, notice
by the stockholder in order to be timely must be so received not
later than the close of business on the 10th day following the
date on which notice of the date of the annual meeting was mailed
or public disclosure of the date of the annual meeting was made,
whichever first occurs. Such stockholder's notice to the
Secretary shall set forth (a) as to each person whom the
stockholder proposes to nominate for election or reelection as a
director, (i) the name, age, business address and
residence address of the person, (ii) the principal occupation or
employment of the person, (iii) the class and number of shares of
capital stock of the Corporation which are beneficially owned by
the person, and (iv) any other information relating to the person
that is required to be disclosed in solicitations for proxies for
election of directors pursuant to Schedule 14A under the
Securities Exchange Act of 1934, as amended; and (b) as to the
stockholder giving the notice (i) the name and record address of
the stockholder and (ii) the class and number of shares of
capital stock of the Corporation which are beneficially owned by
the stockholder. The Corporation may require any proposed
nominee to furnish such other information as may reasonably be
required by the Corporation to determine the eligibility of such
proposed nominee to serve as a director of the Corporation.
The chairperson of the meeting shall, if the facts warrant,
determine and declare to the meeting that a nomination was not
made in accordance with the foregoing procedure and, if the
chairperson should so determine, the chairperson shall so declare
to the meeting and the defective nomination shall be disregarded.
3. COMMITTEES.
----------
3.l Standing Committees. The Board shall by resolution
-------------------
designate an Audit Committee, a Corporate Governance Committee, a
Finance Committee and a Human Resources Committee, each
consisting of two or more members of the Board, but, except for
the Finance Committee, excluding any current or former officer or
employee of the Corporation or its subsidiaries. The members of
each such Committee shall serve at the pleasure of the Board, and
the Board shall designate from the membership a Committee
chairperson and shall fill any membership vacancies. Each such
Committee shall determine from time to time the scope of its
responsibilities, which shall be set forth in a written statement
to be submitted to the Board for approval. Each such Committee
shall perform such other functions and exercise such other powers
as may be delegated to it from time to time by the Board.
3.2 Executive Committee. The Board may by resolution
-------------------
designate an Executive Committee of four or more members of the
Board, which Committee shall have all the authority of the Board
except as otherwise provided in the resolution or by law. The
members of such Committee shall serve at the pleasure of the
Board, and the Board shall designate from among the membership a
Committee chairperson and shall fill any membership vacancies.
3.3 Other Committees. The Board may by resolution provide
----------------
for such other standing or special committees, composed of two or
more members of the Board, and discontinue the same at its
pleasure. Each such committee shall have such powers and perform
such duties, not inconsistent with law, as may be assigned to it
by the Board.
3.4 Meetings of Committees. Each committee of the Board
----------------------
shall fix its own rules of procedure consistent with the
provisions of the Board governing such committee, and shall meet
as provided by such rules or by resolution of the Board, and it
shall also meet at the call of its chairperson or any two members
of such committee. Unless otherwise provided by such rules or by
such resolution, the provisions of Article 2 of these By-Laws
relating to the place of holding and notice required of meetings
of the Board shall govern committees of the Board. A majority of
each committee shall constitute a quorum thereof; provided,
however, that in the absence of any member of such committee, the
members thereof present at any meeting, whether or not they
constitute a quorum, may appoint a member of the Board otherwise
qualified for membership of such committee to act in the place of
such absent member. The vote of a majority of such quorum at a
duly constituted meeting shall be sufficient to authorize any
action within the scope of responsibilities of each committee,
unless otherwise provided by the rules of such committee or by
resolution of the Board. Each committee shall keep minutes of
its meetings and all action taken by such committee shall be
reported to the Board at its next meeting.
4. OFFICERS.
--------
4.l Executive and Other Officers. The officers of the
----------------------------
Corporation shall be a Chairperson of the Board (who shall be
elected from among the Directors); a President, if the Board
chooses to elect one; one or more Vice Presidents, a Treasurer; a
Secretary and a Controller (any of whom may be designated as
executive officers). The offices of Chairperson and President
may be held by the same person, and the offices of Treasurer,
Controller or Secretary may be filled by the same person who may
also be a Vice President. The Board shall designate the
Chairperson or the President as Chief Executive Officer of the
Corporation. The Officers specifically listed above, or
otherwise designated as executive officers, shall be elected
annually by the Board, and each such officer shall hold office
until the next annual meeting of the Board and until the election
of his successor, or until his earlier resignation or removal.
The Board may elect other officers including Vice Presidents
(not otherwise designated by the Board as executive officers),
Assistant Vice Presidents, Assistant Secretaries and Assistant
Treasurers, each of whom shall hold office for such period and
have such powers and duties as the Board determines.
4.2 Vacancies. A vacancy in any office may be filled for
---------
the unexpired term in the manner prescribed in Section 4.l of
these By-Laws for election or appointment to the office.
4.3 Chairperson of the Board. The Chairperson of the
------------------------
Board, if one is elected, shall preside at all meetings of the
Board and of the stockholders. The Chairperson shall perform all
duties incident to the office of Chairperson of the Board and
shall have such other powers and duties as the Board assigns to
that individual. In the absence of the Chairperson, the Board
shall designate a member of the Board as temporary Chairperson.
4.4 The President. The President shall perform all duties
-------------
incident to the office of President and such other duties as the
Board assigns to that individual.
4.5 Chief Executive Officer. The Chief Executive Officer
-----------------------
shall, subject to the control of the Board, have the general
management and control of the business and affairs of the
Corporation and, in general, shall have all powers and perform
all duties incident to the office of Chief Executive Officer.
4.6 Vice Presidents. Each Vice President shall have such
---------------
designation as the Board may determine and such powers and duties
as the Board or the Chief Executive Officer, subject to the
control of the Board, assigns to that individual. One of the
Vice Presidents, who is an executive officer, may be designated
by the Board to act, in the absence of the Chief Executive
Officer, in the Chief Executive Officer's place.
4.7 The Treasurer. The Treasurer shall, subject to the
-------------
direction of the Chief Executive Officer, have charge of all
funds, securities, notes, receipts and disbursements of the
Corporation. The Treasurer shall be responsible for the deposit
of Corporation funds in or withdrawal from such banks or other
depositories as shall be selected by the Chief Executive Officer
with the approval of the Board, and shall provide all necessary
cash and other records to the Controller. The Treasurer shall
perform such other duties as treasurers of corporations usually
have or as the Chief Executive Officer or the Vice President to
whom the Treasurer reports assigns to that individual.
4.8 The Secretary. The Secretary shall be the secretary
-------------
of, and keep the minutes of, all meetings of the Board and of the
stockholders, shall be responsible for giving notice of all
meetings of the Board and of the stockholders and shall keep the
seal and shall apply it to any instrument requiring it. The
Secretary shall be custodian of the corporate records (except
accounting records), contracts and documents, and shall have
such other powers and duties as the Chief Executive Officer or
the Vice President to whom the Secretary reports assigns to that
individual. In the absence of the Secretary from meetings, the
minutes shall be kept by the person appointed for that purpose by
the presiding officer.
4.9 The Controller. The Controller shall be the officer in
--------------
charge of accounts of the Corporation and shall be responsible
for the maintenance of adequate accounting and internal control
procedures, and adequate records of the Corporation, for the
preparation of financial statements and reports on the operation
of the business. The Controller shall be responsible for the
administration of the office and shall have such other powers and
duties as the Board, the Chief Executive Officer or the Vice
President to whom the Controller reports assigns to that
individual.
4.10 Division Officers. For administrative and management
-----------------
purposes, the Chief Executive Officer, with the approval of the
Board, may appoint such division officers with such titles, as
deemed necessary or advisable for the transaction of the business
of the Corporation. Any division officer may be removed from
office as a division officer, either with or without cause, at
any time, by the Board, the Chief Executive Officer or by any
other executive officer of the Corporation or officer of a
division to whom such division officer may at the time be
responsible. A division officer shall not be an officer of the
Corporation by virtue of his or her position as such division
officer. Division officers shall perform such duties as shall be
assigned to them from time to time by the Chief Executive Officer
but no division officer shall execute any deed, lease or other
conveyance or transfer of real property of the Corporation, any
note or other evidence of indebtedness or any mortgage or other
security for indebtedness.
5. SHARES.
------
5.l Certificates. The shares of the Corporation shall be
------------
represented by certificates in the form approved by the Board,
unless the Board by resolution provides that some or all classes
or series of stock shall be uncertificated shares (provided that
no such resolution shall apply to shares theretofore represented
by a certificate unless and until such certificate is surrendered
to the Corporation). Notwithstanding the adoption of such
resolution by the Board, every holder of shares represented by
certificates and upon request every holder of uncertificated
shares shall be entitled to have a certificate representing such
shares registered in his or her name on the Corporation's books.
Each certificate shall be signed by the Chairperson, the
President or a Vice President and by the Secretary or the
Treasurer. Any or all the signatures on the certificate may be a
facsimile.
5.2 Transfers. Shares shall be transferable only on the
---------
Corporation's books, (and, in the case of shares represented by
certificates,) upon surrender of the certificate for the shares,
properly endorsed. The Board may require satisfactory surety
before issuing a new certificate to replace a certificate claimed
to have been lost or destroyed.
5.3 Transfer Agents and Registrars. The Corporation shall
------------------------------
have one or more transfer agents and one or more registrars of
its shares, whose respective duties shall be defined by the
Board. Unless the Board specifically directs otherwise with
respect to a particular certificate, no certificates for shares
shall be valid unless countersigned by a transfer agent and
unless registered by a registrar.
6. MISCELLANEOUS.
-------------
6.l Seal. The Board shall adopt a corporate seal, which
shall be in the form of a circle and shall bear the Corporation's
name and the year and state in which it was incorporated.
6.2 Fiscal Year. The Board may determine the Corporation's
-----------
fiscal year. Until changed by the Board, the Corporation's
fiscal year shall end on June 30.
6.3 Voting of Shares in Other Corporations. Shares in
--------------------------------------
other corporations which are held by the Corporation may be
represented and voted by the Chairperson, the President or a Vice
President of this Corporation or by proxy or proxies appointed by
one of them. The Board may, however, appoint some other person
to vote the shares.
6.4 Indemnification of Officers, Directors, Employees and Agents.
------------------------------------------------------------
The Corporation shall, to the fullest extent permitted by Section l45
of the Delaware General Corporation Law as amended from time to time,
indemnify all persons whom it may indemnify under that Section.
For these purposes an employee or agent shall be deemed to
have acted in good faith only if his or her action were within
the scope of employment as defined by an agreement with the
Corporation or in accordance with the rules of the Corporation or
an authorized officer thereof.
6.5 Amendments. These By-Laws may be amended, repealed or
----------
adopted by the affirmative vote of a majority of the entire Board
or of the holders of two-thirds of the issued and outstanding
stock of the Corporation entitled to vote.
Exhibit 11
CARPENTER TECHNOLOGY CORPORATION AND SUBSIDIARIES
PRIMARY EARNINGS PER COMMON SHARE COMPUTATIONS
for the three and six months ended December 31, 1994 and 1993
(in thousands, except per share data)
Three Months Six Months
------------------ ------------------
1994 1993 1994 1993
---- ---- ---- ----
Net Income for Primary
- ----------------------
Earnings Per Common
-------------------
Share
-----
Net income $ 9,827 $ 7,360 $ 14,759 $ 10,132
Dividends accrued on
convertible preferred
stock, net of tax
benefits (400) (413) (800) (819)
-------- -------- -------- --------
Net income for primary
earnings per common
share $ 9,427 $ 6,947 $ 13,959 $ 9,313
======== ======== ======== ========
Weighted Average Common
- -----------------------
Shares
------
Weighted average number
of common shares
outstanding 8,126 7,999 8,132 7,994
Effect of shares
issuable under the
stock option plans 35 33 50 25
-------- -------- -------- --------
Weighted average
common shares 8,161 8,032 8,182 8,019
======== ======== ======== ========
Primary Earnings Per
- --------------------
Common Share $ 1.16 $ .86 $ 1.71 $ 1.16
------------ ======== ======== ======== ========
<PAGE>
Exhibit 11
CARPENTER TECHNOLOGY CORPORATION AND SUBSIDIARIES
FULLY DILUTED EARNINGS PER COMMON SHARE COMPUTATIONS
for the three and six months ended December 31, 1994 and 1993
(in thousands, except per share data)
Three Months Six Months
------------------- ------------------
1994 1993 1994 1993
---- ---- ---- ----
Net Income for Fully
- --------------------
Diluted Earnings Per
--------------------
Common Share
------------
Net income $ 9,827 $ 7,360 $ 14,759 $ 10,132
Shortfall between common
and preferred dividend (199) (199) (397) (397)
-------- -------- -------- --------
Net income for fully
diluted earnings per
common share $ 9,628 $ 7,161 $ 14,362 $ 9,735
======== ======== ======== ========
Weighted Average
- ----------------
Common Shares
-------------
Weighted average number
of common shares
outstanding 8,126 7,999 8,132 7,994
Conversion of
preferred shares 459 461 459 461
Effect of shares
issuable under the
stock option plans 32 52 51 52
-------- -------- -------- --------
Weighted average
common shares 8,617 8,512 8,642 8,507
======== ======== ======== ========
Fully Diluted Earnings
Per Common Share $ 1.11 $ .84 $ 1.66 $ 1.14
======== ======== ======== ========
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-END> DEC-31-1994
<CASH> 5,491
<SECURITIES> 0
<RECEIVABLES> 91,603
<ALLOWANCES> 0
<INVENTORY> 85,996
<CURRENT-ASSETS> 193,184
<PP&E> 747,064
<DEPRECIATION> 345,774
<TOTAL-ASSETS> 777,887
<CURRENT-LIABILITIES> 133,649
<BONDS> 167,505
<COMMON> 48,135
0
28,965
<OTHER-SE> 164,625
<TOTAL-LIABILITY-AND-EQUITY> 777,887
<SALES> 328,484
<TOTAL-REVENUES> 328,484
<CGS> 249,485
<TOTAL-COSTS> 249,485
<OTHER-EXPENSES> 315
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,762
<INCOME-PRETAX> 23,729
<INCOME-TAX> 8,970
<INCOME-CONTINUING> 14,759
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 14,759
<EPS-PRIMARY> 1.71
<EPS-DILUTED> 1.66
</TABLE>
Cathy Souders
(610) 208-2639
IMMEDIATE RELEASE
CARPENTER TECHNOLOGY ELECTS NEW DIRECTOR
Reading, PA (December 9, 1994) -- Carpenter Technology
Corporation (NYSE:CRS) has elected Kathryn C. Turner, chairperson
and chief executive officer of Standard Technology, Inc. (STI),
to its Board of Directors.
Turner, 47, founded STI, a high-technology, engineering,
systems integration and manufacturing firm, in 1985. STI is
headquartered in Rockville, Md., with offices in northern
Virginia; Dallas, Tex. and Jacksonville, Fla.
The company was ranked 63rd in Inc. Magazine's 1991 list of
America's 500 fastest growing private companies. Also, it was the
only small business to receive the National Aeronautics and Space
Administration Agency Honor Award in 1992. In 1994, STI had $17
million in contracts with the Department of Defense and other
federal agencies and their prime contractors.
In November 1993, Turner was appointed to the Commission on
The Future of Worker-Management Relations, a joint commission of
the Departments of Labor and Commerce, established by President
Clinton. She has participated in CEO meetings with Commerce
Secretary Ronald H. Brown and Kenneth Brody (Export-Import Bank
of the United States) regarding the Trade Promotion Coordinating
<PAGE>
Committee, and now serves a one-year term as a member of the
EXIMBANK Advisory Committee. Turner was the first woman appointed
to the Defense Policy Advisory Committee on Trade, an advisory
committee to the Secretary of Defense and the U.S. Trade
Representative on major policy areas such as trade negotiations,
defense trade policy, financial competitiveness and government
relations.
Turner holds a bachelor's degree in chemistry from Howard
University. After graduating, she began her career as a chemist
for the Naval Ordinance Station in Maryland. In 1969, she became
involved with software development for Control Data Corporation,
then advanced through various technical and management positions
in several firms in the Washington, D.C. area. In the late '70s,
while with General Electric's Information Services Company, she
moved to sales, where she became one of the company's top revenue
producers.
Turner becomes the thirteenth board member of Carpenter
Technology Corporation, a major producer of specialty steel long
products and high-performance alloys for aerospace, automotive,
electronics and other industries worldwide. In fiscal year 1994
(ended June 30, 1994), the company had sales of $628.8 million.
# # #
