UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 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 1-5828
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 October 30, 1998.
Common stock, $5 par value 21,918,272
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 September 30, 1998 (Unaudited)
and June 30, 1998..................................... 3 & 4
Consolidated Statement of Income (Unaudited) for the
Three Months Ended September 30, 1998 and 1997........ 5
Consolidated Statement of Cash Flows (Unaudited) for the
Three Months Ended September 30, 1998 and 1997........ 6
Consolidated Statement of Comprehensive Income
(Unaudited) for the Three Months Ended
September 30, 1998 and 1997........................... 7
Notes to Consolidated Financial Statements.............. 8-12
Management's Discussion and Analysis of Financial
Condition and Results of Operations................... 13-15
Forward-looking Statements.............................. 16
Part II OTHER INFORMATION................................ 17-19
Exhibit Index............................................. E-1
<PAGE>
PART I
CARPENTER TECHNOLOGY CORPORATION
CONSOLIDATED BALANCE SHEET (Page 1 of 2)
September 30, 1998 and June 30, 1998
(in millions, except share data)
September 30 June 30
1998 1998
------------ --------
(Unaudited)
ASSETS
- ------
Current assets:
Cash and cash equivalents $ 12.2 $ 52.4
Accounts receivable, net 147.0 177.0
Inventories 290.4 267.1
Net assets held for sale 110.5 130.2
Other current assets 19.3 18.8
-------- --------
Total current assets 579.4 645.5
Property, plant and equipment,
at cost 1,154.8 1,104.8
Less accumulated depreciation
and amortization 473.4 460.7
-------- --------
681.4 644.1
Prepaid pension cost 146.8 138.0
Goodwill, net 169.6 171.8
Other assets 96.3 99.5
-------- --------
Total assets $1,673.5 $1,698.9
======== ========
See accompanying notes to consolidated financial statements.
<PAGE>
CARPENTER TECHNOLOGY CORPORATION
CONSOLIDATED BALANCE SHEET (Page 2 of 2)
September 30, 1998 and June 30, 1998
(in millions, except share data)
September 30 June 30
LIABILITIES 1998 1998
- ----------- ------------ --------
(Unaudited)
Current liabilities:
Short-term debt $ 132.2 $ 119.8
Accounts payable 80.0 80.5
Accrued compensation 20.4 35.0
Accrued income taxes 8.0 -
Deferred income taxes 19.3 24.8
Other accrued liabilities 44.9 52.7
Current portion of long-term debt 51.0 36.3
-------- --------
Total current liabilities 355.8 349.1
Long-term debt, net of current portion 355.7 370.7
Accrued postretirement benefits 132.6 132.8
Deferred income taxes 144.3 142.9
Other liabilities 43.5 43.9
SHAREHOLDERS' EQUITY
- --------------------
Preferred stock -
$5 par value, authorized 2,000,000
shares; issued 438.6 shares at
September 30, 1998 and 441.1 shares
at June 30, 1998 27.7 27.8
Common stock at $5 par value -
authorized 50,000,000 shares at
September 30, 1998 and June 30, 1998;
issued 23,020,631 shares at
September 30, 1998 and 22,995,036
shares at June 30, 1998 115.2 115.0
Capital in excess of par value -
common stock 190.8 190.0
Reinvested earnings 363.4 359.1
Common stock in treasury, at cost -
794,587 shares at September 30, 1998
and 147,920 shares at June 30, 1998 (27.1) (3.4)
Deferred compensation (17.2) (17.8)
Foreign currency translation
adjustments (11.2) (11.2)
-------- --------
Total shareholders' equity 641.6 659.5
-------- --------
Total liabilities and
shareholders' equity $1,673.5 $1,698.9
========= ========
See accompanying notes to consolidated financial statements.
<PAGE>
CARPENTER TECHNOLOGY CORPORATION
CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
for the three months ended September 30, 1998 and 1997
(in millions, except per share data)
1998 1997
---- ----
Net sales $250.3 $249.5
------ ------
Costs and expenses:
Cost of sales 183.6 179.4
Selling and
administrative
expenses 40.1 36.2
Interest expense 6.5 5.9
Other expense, net .5 .1
------ ------
230.7 221.6
------ ------
Income before income
taxes 19.6 27.9
Income taxes 7.4 10.8
------ ------
Net income $ 12.2 $ 17.1
====== ======
Earnings per common share:
Basic $ .52 $ .86
====== ======
Diluted $ .51 $ .82
====== ======
Weighted average common
shares outstanding:
Basic 22.7 19.5
====== ======
Diluted 23.7 20.7
====== ======
Dividends per common
share $ .33 $ .33
====== ======
See accompanying notes to consolidated financial statements.
<PAGE>
CARPENTER TECHNOLOGY CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
for the three months ended September 30, 1998 and 1997
(in millions)
1998 1997
---- ----
OPERATIONS
Net income $ 12.2 $ 17.1
Adjustments to reconcile net income
to net cash provided from operations:
Depreciation and amortization 15.7 12.8
Deferred income taxes ( 4.1) 1.4
Prepaid pension costs ( 8.8) (5.5)
Loss on disposal of assets .1 .4
Changes in working capital and other,
net of acquisitions:
Receivables 30.0 17.0
Inventories (23.3) (21.5)
Accounts payable ( .5) ( .5)
Accrued current liabilities (14.4) (10.2)
Other, net 1.9 (7.9)
------ ------
Net cash provided from operations 8.8 3.1
------ ------
INVESTING ACTIVITIES
Purchases of plant and equipment (50.2) (22.3)
Proceeds from disposals of plant
and equipment - .2
Proceeds from net assets held for
sale 19.7 -
Acquisitions of businesses, net
of cash received - (18.1)
------ ------
Net cash used for investing activities (30.5) (40.2)
------ ------
FINANCING ACTIVITIES
Net change in short-term debt 12.4 ( .3)
Proceeds from issuance of long-term debt - 40.0
Payments on long-term debt (.3) ( .1)
Payments to acquire treasury stock (23.7) -
Dividends paid ( 7.9) ( 6.8)
Proceeds from issuance of common stock 1.0 1.3
------ ------
Net cash provided from (used for)
financing activities (18.5) 34.1
------ ------
DECREASE IN CASH AND CASH EQUIVALENTS (40.2) (3.0)
Cash and cash equivalents at
beginning of period 52.4 18.6
------ ------
Cash and cash equivalents at
end of period $ 12.2 $ 15.6
====== ======
See accompanying notes to consolidated financial statements.
<PAGE>
CARPENTER TECHNOLOGY CORPORATION
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(Unaudited)
for the three months ended September 30, 1998 and 1997
(in millions)
1998 1997
---- ----
Net income $ 12.2 $ 17.1
Foreign currency translation, net of tax - (.4)
------ ------
Comprehensive income $ 12.2 $ 16.7
====== ======
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 three months ended September 30, 1998 are not
necessarily indicative of the results that may be expected
for the year ending June 30, 1999. The June 30, 1998
condensed balance sheet data was derived from audited
financial statements, but does not include all disclosures
required by generally accepted accounting principles. For
further information, refer to the consolidated financial
statements and footnotes included in Carpenter's 1998 Annual
Report on Form 10-K.
The preparation of financial statements in conformity
with generally accepted accounting principles requires
management to make estimates and assumptions that affect the
amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results
could differ from those estimates.
Certain reclassifications of prior year's amounts have
been made to conform with the current year's presentation.
2. Earnings Per Common Share
-------------------------
In December 1997, Carpenter adopted SFAS No. 128,
"Earnings per Share," which replaced the calculation of
primary and fully diluted earnings per share with basic and
diluted earnings per share.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
------------------------------------------
2. Earnings Per Common Share, continued
-------------------------
The calculations of earnings per share are as follows:
(in millions, except Three Months
per share data) 1998
-------------------
Basic Diluted
------- -------
Net income $ 12.2 $ 12.2
Dividends accrued on
convertible preferred
stock, net of tax
benefits (.4) -
Assumed shortfall
between common and
preferred dividend - (.2)
------ ------
Earnings available for
common shareholders $ 11.8 $ 12.0
====== ======
Weighted average
number of common
shares outstanding 22.7 22.7
Assumed conversion
of preferred shares - .9
Effect of shares
issuable under
stock option plans - .1
------ ------
Adjusted weighted average
common shares 22.7 23.7
====== ======
Earnings per share $ 0.52 $ 0.51
====== ======
Three Months
1997
-------------------
Basic Diluted
------- -------
Net income $ 17.1 $ 17.1
Dividends accrued on
convertible preferred
stock, net of tax
benefits (.4) -
Assumed shortfall
between common and
preferred dividend - (.2)
------ ------
Earnings available for
common shareholders $ 16.7 $ 16.9
====== ======
Weighted average
number of common
shares outstanding 19.5 19.5
Assumed conversion
of preferred shares - .9
Effect of shares
issuable under
stock option plans - .3
------ ------
Adjusted weighted average
common shares 19.5 20.7
====== ======
Earnings per share $ 0.86 $ 0.82
====== ======
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
------------------------------------------
3. Inventories
-----------
September 30 June 30
1998 1998
------------ -------
(in millions)
Finished and purchased products $179.6 $169.1
Work in process 185.2 183.3
Raw materials and supplies 56.5 46.2
------ ------
Total at current cost 421.3 398.6
Excess of current cost
over LIFO values 130.9 131.5
------ ------
Inventory per Balance Sheet $290.4 $267.1
====== ======
The current cost of LIFO-valued inventories was $373.5
million at September 30, 1998 and $352.2 million at June 30,
1998.
4. Common Stock Repurchase Program
-------------------------------
On August 6, 1998, Carpenter rescinded the 1989 stock
repurchase program and approved a new stock repurchase
program for up to 1.2 million, or 5 percent, of the
outstanding shares of Carpenter's common stock. The shares
may be purchased over time and held as treasury shares. As
of September 30, 1998, Carpenter had repurchased .6 million
shares under this program at a total cost of $23.3 million.
In addition, treasury shares purchased increased by $.4
million as a result of employee benefit plans.
5. Authorized Shares of Common Stock
---------------------------------
On October 26, 1998, the stockholders of Carpenter
voted to approve an amendment to Carpenter's Restated
Certificate of Incorporation to increase the number of
authorized shares of common stock from 50 million to 100
million shares.
6. Net Assets Held for Sale
------------------------
Carpenter intends to sell the businesses in the
government products and services and industrial products
segments of Talley Industries, Inc. ("Talley"). The sales
are expected to be completed by December 1998. The expected
net proceeds of these sales and the cash flows of these
businesses until they are sold less an allocation of
interest expense for the holding period were allocated to
net assets held for sale in the allocation of the Talley
purchase price. Any difference between the actual and
expected amounts will result in an adjustment of goodwill
unless there is a difference caused by a post-acquisition
event.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
------------------------------------------
6. Net Assets Held for Sale, continued
------------------------
Activity from June 30, 1998 to September 30, 1998 in the net
assets held for sale follows:
(in millions)
Balance June 30, 1998 $130.2
Net cash funded by Carpenter 5.1
Interest allocated 2.3
Proceeds from sales of businesses (27.1)
------
Balance September 30, 1998 $110.5
======
7. Commitments and Contingencies - Environmental
---------------------------------------------
Carpenter accrues amounts for environmental remediation
costs which represent management's best estimate of the
probable and reasonably estimable costs relating to
environmental remediation. For the three months ended
September 30, 1998, no amounts were charged to operations
for environmental remediation costs. The liability recorded
for environmental remediation costs remaining at September
30, 1998 was $10 million. The estimated range of the
reasonably possible future costs of remediation at
Carpenter-owned operating facilities and superfund sites is
between $10 million and $14 million.
During the first quarter of fiscal 1999, approximately
$1.5 million of cash was received under settlements of
litigation relating to insurance coverages for certain
superfund sites, leaving the remaining discounted receivable
for recoveries from these settlements at September 30, 1998
at approximately $.7 million.
Estimates of the amount and timing of future costs of
environmental remediation requirements are necessarily
imprecise because of the continuing evolution of
environmental laws and regulatory requirements, the
availability and application of technology and the
identification of presently unknown remediation sites and
the allocation of costs among the potentially responsible
parties. Based upon information presently available, such
future costs are not expected to have a material effect on
Carpenter's competitive or financial position. However,
such costs could be material to results of operations in a
particular future quarter or year.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
------------------------------------------
8. Accounting Pronouncements
-------------------------
The FASB has issued SFAS No. 131, "Disclosures about
Segments of an Enterprise and Related Information" which
will be effective beginning in the fourth quarter of
Carpenter's fiscal year 1999. SFAS No. 131 establishes
standards for methods by which public business enterprises
report information about operating segments in annual
financial statements and requires them to report selected
information about operating segments in interim financial
reports issued to shareholders. It also establishes
standards for related disclosures about products and
services, geographic areas, and major customers. Carpenter
has not determined the full impact of this standard on its
future financial disclosures.
The FASB issued SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities" which will be
effective for Carpenter's fiscal year 2000. This standard
requires that all derivative instruments be recorded on the
balance sheet at their fair value. Changes in fair value of
derivatives will be recorded each period in current earnings
or comprehensive income. Carpenter anticipates that, due to
its limited use of derivative instruments, the adoption of
SFAS No. 133 will not have a significant effect on
Carpenter's future results of operations or financial
position.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
-----------------------------------------------------------
AND RESULTS OF OPERATIONS
-------------------------
Net income for the quarter ended September 30, 1998 was
$12.2 million, a 29% decrease compared to $17.1 million for the
same quarter last year. Diluted earnings per share were $.51 for
the quarter compared to $.82 per share for the prior year
quarter. The decrease was primarily attributable to lower unit
sales volume and reduced operating levels for the core Specialty
Alloys and Dynamet operations. The diluted earnings per share
decrease was also attributable to the increase in common shares
outstanding as a result of the December 1997 acquisition of
Talley Industries, Inc.
Net sales were $250.3 million, a slight increase from $249.5
million in the same period last year. Excluding the sales of
businesses acquired since last year's first quarter, sales
decreased 31%, primarily as a result of a 14% decrease in core
Specialty Alloys unit volume and a 17% decrease in Dynamet sales.
The lower sales were a result of the strike against General
Motors, excess inventory in the aerospace industry supply chain,
softness in some industrial markets, and reduced drilling
activity in the oil exploration markets.
Sales outside of the United States increased by 9% to $39.9
million, of which $11.3 million was exported by domestic
operations.
Cost of sales as a percent of net sales increased to 73%
from 72% during last year's first quarter primarily because of
lower production levels in the core Specialty Alloys and Dynamet
operations. The favorable effects of lower raw material and
environmental remediation costs and increased pension credits
partially offset these negative items.
Selling and administrative costs were higher by $3.9 million
primarily due to the inclusion of costs of newly-acquired companies.
Interest expense was higher by $.7 million chiefly due to
the increased debt level required to finance the business
acquisitions made during the prior fiscal year.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
-----------------------------------------------------------
AND RESULTS OF OPERATIONS, continued
-------------------------
Cash Flow and Financial Condition:
- ---------------------------------
During the three months ended September 30, 1998,
Carpenter's cash and cash equivalents decreased by $40.2 million,
as shown in the Consolidated Statement of Cash Flows.
Net cash provided from operating activities for the
September 30, 1998 quarter was $8.8 million. Accounts receivable
and current liabilities decreased due to normal seasonal trends.
Inventories increased by $23.3 million primarily due to lower
than expected sales.
Investing activities consumed $30.5 million in cash during
the first three months of fiscal 1999. Capital expenditures
remained at planned levels as Carpenter continues its capital
expenditure program to invest for future business requirements,
including manufacturing capacity. As of September 30, 1998, the
total approved capital improvement projects in excess of
$1 million was approximately $259 million of which approximately
$96 million has been spent. These projects are to upgrade and
increase production capabilities, reduce costs of production,
increase the throughput and quality of existing facilities, and
make environmental improvements. The major projects include
modernization of the strip finishing facility ($87 million), a
new 4500 ton forging press ($42 million), four new vacuum arc
remelt furnaces ($22 million), and bar finishing equipment ($22
million). On October 26, 1998, the Board approved $114 million
of additional capital projects. These projects are to modernize
the melting facilities ($70 million), and expand manufacturing
capacity at the Talley Metals plant in Hartsville, SC ($44
million). Total capital expenditures anticipated for fiscal 1999
are approximately $170 million of which $50.2 million was spent
as of September 30, 1998. For fiscal years 2000, 2001 and 2002,
Carpenter anticipates capital expenditures of approximately $190
million, $115 million, and $90 million, respectively.
The sales of businesses formerly owned by Talley (net assets
held for sale) provided $19.7 million of cash before taxes. As
of September 30, 1998, the remaining net cash expected to be
received on the disposition of these businesses was $110.5
million before income taxes and is shown as net assets held for
sale in the consolidated balance sheet. These cash proceeds are
expected to be received by December 1998 and will be used to
repay short-term debt. Details are included in the notes to the
consolidated financial statements.
Financing activities included cash payments of $23.7 million
for the purchase of Carpenter common stock under the stock
repurchase program, which is discussed in the notes to the
consolidated financial statements.
Total debt increased by $12.1 million since June 30, 1998 to
a level of $538.9 million or 40.1% of total capital employed,
including deferred taxes. Current year borrowings were in the
form of short-term debt.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
-----------------------------------------------------------
AND RESULTS OF OPERATIONS, continued
-------------------------
Cash Flow and Financial Condition: continued
- ---------------------------------
At September 30, 1998, Carpenter was in a sound liquidity
position, with current assets exceeding current liabilities by
$223.6 million (a ratio of 1.6 to 1). This favorable ratio is
conservatively stated because certain inventories are valued
$130.9 million less than the current cost as a result of using
the LIFO method.
Carpenter believes that its present financial resources,
both from internal and external resources, including the
anticipated proceeds from the sales of the remaining Talley
segments, will be adequate to meet its foreseeable short-term and
long-term liquidity needs.
Year 2000 Issues:
- ----------------
Carpenter, its suppliers and customers are heavily reliant
upon computer systems for many aspects of their businesses. The
calendar year 2000 will make many current computerized systems
ineffective and will require corrections or replacements before
January 1, 2000. This situation ("Year 2000 Issues") could have
a material adverse effect upon Carpenter if not adequately
remedied by Carpenter, its suppliers and customers on a timely
basis.
Reference Carpenter's June 30, 1998 Form 10-K for details on
its status regarding Year 2000 Issues. The costs charged to
income and estimated future costs to remediate Carpenter's Year
2000 Issues have not changed significantly since June 30, 1998.
Carpenter believes that its internal systems will be Year 2000
compliant in all material respects by December 1999.
<PAGE>
Forward-looking Statements
--------------------------
This Form 10-Q contains various "Forward-looking Statements"
within the meaning of the Private Securities Litigation Reform
Act of 1995. These statements are based on current expectations
regarding future events that involve a number of risks and
uncertainties which could cause actual results to differ from
those of such forward-looking statements. Such risks and
uncertainties include those set forth in other filings made by
Carpenter under the Securities Act of 1933, as amended, and the
Securities Exchange Act of 1934, as amended, and also include the
following factors: 1) the cyclical nature of the specialty
materials business and certain end-use markets, including, but
not limited to, aerospace, automotive and consumer durables, all
of which are subject to changes in general economic conditions;
2) the impact of inventory adjustments in Carpenter's aerospace
customer base; 3) the criticality of certain raw materials
acquired from foreign sources, some of which are located in
countries that may be subject to unstable political and economic
conditions, potentially affecting the prices of these materials;
4) the level of export sales impacted by political and economic
instability, export controls, changes in legal and regulatory
requirements, policy changes affecting the markets, changes in
tax laws and tariffs, exchange rate fluctuations and accounts
receivable collection; 5) the general economic and financial
market conditions and other uncertainties which affect Carpenter
generally and may specifically affect the sales of the remaining
companies which comprise the industrial products and government
products and services business segments of Talley Industries,
Inc.; 6) the effects on operations of changes in U.S. and foreign
governmental laws and public policy, including environmental
regulations; and 7) the ability of Carpenter's suppliers and
customers to correct or replace their computer systems for Year
2000 Issues. Any of these factors could have an adverse and/or
fluctuating effect on Carpenter's results of operations. The
forward-looking statements in this document are intended to be
subject to the safe harbor protection provided by Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended.
<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 or which is known by the Company
to be contemplated by governmental authorities. 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 4. Submission of Matters to a Vote of Security Holders
------------------------------------------------------------
a.,
b. On October 26, 1998, at the 1998 Annual Meeting,
stockholders of Carpenter elected the following
Directors to a three-year term which will expire at the
2001 Annual Meeting of Stockholders: Robert W. Cardy,
Robert J. Lawless, Robert N. Pokelwaldt and
Kathryn C. Turner. Voting for these Directors was as
follows:
For Against/ Abstention/Broker
Withheld Non-Vote
Robert W. Cardy 20,988,291 176,549 N/A
Robert J. Lawless 20,991,016 173,824 N/A
Robert N. Pokelwaldt 20,904,316 260,524 N/A
Kathryn C. Turner 20,991,635 173,205 N/A
The following are the other Directors whose term
continued following the 1998 Annual Meeting:
Marcus C. Bennett, William S. Dietrich II,
J. Michael Fitzpatrick, Dr. C. McCollister Evarts,
William J. Hudson, Marlin Miller, Jr., Peter C. Rossin
and Kenneth L. Wolfe.
<PAGE>
c. Stockholders also approved the appointment of
PricewaterhouseCoopers as independent public
accountants for Carpenter for fiscal 1999 and adopted
an amendment to the Company's Restated Certificate of
Incorporation which increased the number of authorized
shares of Common Stock from 50,000,000 to 100,000,000.
The voting on these matters was as follows:
For Against/ Abstention/Broker
Withheld Non-Vote
Appointment of
PricewaterhouseCoopers 21,013,299 80,877 N/A
Amendment to Restated
Certificate of
Incorporation 19,313,567 1,736,512 Abstentions - 114,761
Non-Votes - 0
Item 6. Exhibits and Reports on Form 8-K.
-----------------------------------------
a. The following documents are filed as exhibits:
3. Restated Certificate of Incorporation, as amended by
vote of stockholders on October 26, 1998.
27. Financial Data Schedule
b. The Company filed the following Reports on Form 8-K for
events occurring during the quarter of the fiscal year
covered by this Report:
Reports on Form 8-K:
A Current Report on Form 8-K, dated August 6, 1998, was
filed on behalf of Carpenter on August 21, 1998. The Form
8-K was filed to report the common stock repurchase program,
and covered Item 5, Other Events. No financial statements
were filed with this Report.
Items 2, 3, and 5 are omitted as the answer is negative or the
items are not applicable.
<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.
CARPENTER TECHNOLOGY CORPORATION
(Registrant)
Date: November 13, 1998 s/G. Walton Cottrell
------------------- --------------------------------
G. Walton Cottrell
Sr. Vice President - Finance
and Chief Financial Officer
<PAGE>
EXHIBIT INDEX
-------------
Exhibit No. Title Page
- ----------- ----- ----
3. Restated Certificate of Incorporation, as
amended by vote of stockholders on
October 26, 1998 E-2 to E-5
27. Financial Data Schedule. E-6
E-1
<PAGE>
<PAGE>
EXHIBIT 3
RESTATED CERTIFICATE OF INCORPORATION
OF
CARPENTER TECHNOLOGY CORPORATION, a corporation organized and existing
under the General Corporation Law of the State of Delaware ("General Corporation
Law"), Hereby certifies as follows:
1. The name of the corporation is Carpenter Technology Corporation.
The date of filing its original Certificate of Incorporation with the Secretary
of State was October 3, 1968 and on August 13, 1987, the Certificate of
Incorporation was restated.
2. On October 26, 1998, an amendment to Article 4 of the Corporation's
Restated Certificate of Incorporation which increased the number of authorized
shares of Common Stock, par value $5 per share, to 100,000,000 was duly adopted
in accordance with the provisions of Section 242 of the General Corporation Law
at the 1998 Annual Meeting of Stockholders of the Corporation, held upon notice
in accordance with Section 222 of the General Corporation Law.
3. This Restated Certificate of Incorporation restates and integrates and
in accordance with the approval of the stockholders on October 26, 1998, further
amends the Restated Certificate of Incorporation such that the initial paragraph
of Article 4 reads as follows:
The Corporation shall have authority to issue 102,000,000 shares of stock,
consisting of 2,000,000 shares of Series Preferred Stock, par value $5 per
share, and 100,000,000 shares of Common Stock, par value $5 per share.
4. The text of the Restated Certificate of Incorporation as amended or
supplemented heretofore is hereby restated without further amendments or changes
to read as herein set forth in full:
1. The name of the Corporation is Carpenter Technology
Corporation.
2. The address of the Corporation's registered office in Delaware is
<PAGE>
1209 Orange Street, City of Wilmington, County of New Castle. The
Corporation Trust Company is the Corporation's registered agent at that
address.
3. The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the Delaware General
Corporation Law.
4. The Corporation shall have authority to issue 102,000,000 shares
of stock, consisting of 2,000,000 shares of Series Preferred Stock, par
value $5 per share, and 100,000,000 shares of Common Stock, par value $5
per share.
The Board of Directors may authorize the issuance from time to time of
the Series Preferred Stock in one or more series and with such
designations, preferences, relative, participating, optional and other
special rights, and qualifications, limitations or restrictions (which may
differ with respect to each series) as the Board may fix by resolution.
Without limiting the foregoing, the Board of Directors is expressly
authorized to fix, with respect to each such series, the dividend rate and
whether or not dividends shall be cumulative, the voting powers, if any,
and the conversion rights, if any.
Except as otherwise provided by law, or in this Restated Certificate
of Incorporation as amended from time to time, or in the resolutions of the
Board of Directors relating to any series of the Series Preferred Stock,
the holders of the Common Stock shall possess full voting power for the
election of directors and for all other purposes, and each holder of record
of shares of the Common Stock shall be entitled to one vote for each share
so held.
5. The Board of Directors shall have the power to make, alter or
repeal the By-Laws of the Corporation, subject to any voting requirements
contained in the By-Laws.
6. The Board of Directors shall be divided into three classes, each
class to be as nearly equal in number as possible and to have the number
provided in the By-Laws. The term of office of the first class shall
expire at the first annual meeting of stockholders after the incorporation
of the Corporation, that of the second class at the second annual meeting
after said incorporation, and that of the third class at the third annual
meeting after said incorporation. At each annual meeting the number of
directors equal to the number of the class whose term expires at the time
of such meeting shall be elected to hold office until the third succeeding
annual meeting.
7. (a) The liability of the Corporation's Directors to the
Corporation or its stockholders shall be eliminated to the fullest extent
permitted by Section 102 (b) (7) of the General Corporation Law of the
State of Delaware, as amended from time to time.
(b) The Corporation shall indemnify, to the fullest extent
permitted by Section 145 of the General Corporation Law of the State of
Delaware, as amended from time to time, all persons that such section
grants the Corporation the power to indemnify.
<PAGE>
8. The affirmative vote of the holders of four-fifths of the
outstanding shares of the capital stock of the Corporation entitled to vote
shall be required (a) for the adoption of any agreement for the merger or
consolidation of the Corporation with or into any other corporation, and
(b) to authorize any sale, lease or exchange of all or substantially all of
the assets of the Corporation to or with, or any sale, lease or exchange to
or with the Corporation (in exchange for its securities in a transaction
for which stockholder approval is required by law or any agreement between
the Corporation and any national securities exchange) of any assets of, any
other corporation, person or other entity, if (as of the record date for
the determination of stockholders entitled to notice thereof and to vote
thereon) such other corporation, person or entity referred to in clause
(a) or clause (b), above, is the beneficial owner, directly or indirectly,
of more than 10% of any class of capital stock of the Corporation. For the
purposes hereof any corporation, person or other entity shall be deemed to
be the beneficial owner of any shares of capital stock of the Corporation,
(i) which it has the right to acquire pursuant to any agreement, or upon
exercise of conversion rights, warrants or options, or otherwise, or
(ii) which are beneficially owned, directly or indirectly (including shares
deemed owned through application of clause (i), above), by any other
corporation, person or entity with which it has any agreement, arrangement
or understanding with respect to the acquisition, holding, voting or
disposition of stock of the Corporation, or which is its "affiliate" or
"associate" as those terms are defined in Rule 12b-2 of the General Rules
and Regulations under the Securities Exchange Act of 1934.
9. Any action required or permitted to be taken by the stockholders
of the Corporation must be effected at a duly called annual or special
meeting of stockholders of the Corporation and may not be effected by any
consent in writing by such stockholders. Except as otherwise required by
law and subject to the rights of the holders of any class or series of
stock having a preference over the Common Stock as to dividends or upon
liquidation, special meetings of stockholders of the Corporation may be
called only by the Board of Directors pursuant to a resolution approved by
a majority of the entire Board of Directors.
10. Notwithstanding any other provisions of the Certificate of
Incorporation or the By-Laws of the Corporation (and notwithstanding the
fact that a lesser percentage may be specified by law, this Restated
Certificate of Incorporation or the By-Laws of the Corporation), the
affirmative vote of the holders of four-fifths or more of the outstanding
shares of the capital stock of the Corporation entitled to vote shall be
required to amend or repeal, or adopt any provisions inconsistent with,
Articles 6, 8 and 9, and this Article 10, of this Restated Certificate of
Incorporation.
11. The Carpenter Steel Company is the incorporator and its mailing
address is 101 West Bern Street, Reading, Pennsylvania 19603.
<PAGE>
<PAGE>
5. This Restated Certificate of Incorporation was duly adopted by the
Board of Directors on October 26, 1998, in accordance with Section 245 of the
General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, said CARPENTER TECHNOLOGY CORPORATION has caused this
certificate to be signed by Robert W. Cardy, its Chairman of the Board,
President and Chief Executive Officer, and attested by John R. Welty, its Vice
President, General Counsel and Secretary, this 26th day of October, 1998.
CARPENTER TECHNOLOGY CORPORATION
By /s/Robert W. Cardy
----------------------------
Robert W. Cardy
Chairman of the Board,
President and Chief Executive Officer
ATTEST:
By /s/John R. Welty
-------------------------
John R. Welty
Vice President,
General Counsel and Secretary
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> JUL-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 12
<SECURITIES> 0
<RECEIVABLES> 147
<ALLOWANCES> 0
<INVENTORY> 290
<CURRENT-ASSETS> 579
<PP&E> 1155
<DEPRECIATION> 473
<TOTAL-ASSETS> 1674
<CURRENT-LIABILITIES> 340
<BONDS> 371<F1>
0
28
<COMMON> 115
<OTHER-SE> 499
<TOTAL-LIABILITY-AND-EQUITY> 1674
<SALES> 250
<TOTAL-REVENUES> 250
<CGS> 184
<TOTAL-COSTS> 184
<OTHER-EXPENSES> 1
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7
<INCOME-PRETAX> 20
<INCOME-TAX> 7
<INCOME-CONTINUING> 12
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12
<EPS-PRIMARY> .52<F2>
<EPS-DILUTED> .51
<FN>
<F1>Represents long-term debt, net of current portion
<F2>Represents Basic Earnings per Share as required under SFAS No. 128
</FN>
</TABLE>
