<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): January 21, 1999
COLTEC INDUSTRIES INC
(Exact Name of Registrant as Specified in Charter)
Pennsylvania 1-7568 13-1846375
(State or Other (Commission (IRS Employer
Jurisdiction of File Number) Identification No.)
Incorporation)
3 Coliseum Centre
2550 West Tyvola Road
Charlotte, North Carolina 28217
(Address of Principal Executive Offices)(Zip Code)
Registrant's telephone number, including area code: (704) 423-7000
N/A
(Former Name or Former Address, If Changed Since Last Report)
<PAGE> 2
ITEM 5. OTHER EVENTS
On January 21, 1999, Coltec Industries Inc issued a press release announcing its
earnings for the fourth fiscal quarter of 1998 and the fiscal year ended
December 31, 1998. A copy of such press release is filed as Exhibit 99.1 hereto
and incorporated by reference herein.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL
INFORMATION AND EXHIBITS
(a) Financial Statements
NONE. The financial statements included in this report are not
required to be filed as part of this report.
(b) Pro Forma Financial Information
NONE.
(c) Exhibits
Exhibit 99.1 Press Release dated January 21, 1999,
titled "Coltec Industries' fourth quarter
earnings per share increased 15%; cash flow
for the year reaches $88 million."
2
<PAGE> 3
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 hereunto duly authorized.
COLTEC INDUSTRIES INC
(Registrant)
Date: January 21, 1999 By: /s/ David D. Harrison
-----------------------------------
David D. Harrison
Executive Vice President and
Chief Financial Officer
3
<PAGE> 1
Exhibit 99.1
Coltec Industries' fourth quarter earnings per share increased 15%; cash flow
for the year reaches $88 million
CHARLOTTE, N.C., JANUARY 21, 1999 -- For the fourth quarter, Coltec Industries
Inc (NYSE: COT) reported $.45 in earnings per share, an increase of 15%,
compared to $.39 in the year-ago quarter. Net income in the quarter was $30
million versus $26 million last year, and sales increased 4% to $375 million.
Free cash flow from operations was $36 million, which helped drive total year
free cash flow from operations to $88 million, exceeding Coltec's stated goal of
$70 million. These results marked the tenth consecutive quarter in which Coltec
achieved growth in operating earnings in excess of its 15% target.
For the year, net earnings from operations on a per-share basis increased 18% to
a record $1.68 per share versus $1.42 per share in 1997. Operating income in
1998 was $230 million versus $198 million in the prior-year period. Net earnings
and operating income figures for the current year exclude a one-time gain and
charges in the second quarter. Sales for 1998 increased 14% to approximately
$1.5 billion from $1.3 billion in 1997.
In commenting on the year's results, John W. Guffey, Jr., Coltec's chairman and
chief executive officer, said, "1998 was another year of record performance at
Coltec Industries. We continued to achieve earnings growth in excess of 15%
while maintaining superior operating margins. Our cash flow performance for the
year improved over $100 million compared to 1997. Now that our investments in
growth are behind us and generating the returns we expected, we can look forward
to continued high operating cash flow over the next few years."
Page 1 of 2
<PAGE> 2
Coltec Industries' fourth quarter earnings per share increased 15%; cash flow
for the year reaches $88 million
- -----------------------------------------------------------------------------
In the Aerospace Segment, fourth quarter revenues increased 16% and operating
income rose 22%. Every business contributed to higher profits. These results
reflect increased shipments of fully integrated landing gear systems for
Boeing's Next-Generation 737, 757, and 777 aircraft and higher operating profits
and margins at the landing gear overhaul and maintenance business. The engine
component businesses achieved strong growth and improved margins, reflecting
increased demand for regional jets, higher productivity, and the positive impact
of new programs and mix changes.
In the Industrial Segment, sales and earnings in the quarter, excluding Holley,
increased 5% and 2%, respectively, including the contribution of several
businesses acquired earlier this year. Slower economic growth in key markets,
including pulp and paper, chemicals, refining, and steel, along with the strong
U.S. dollar adversely affected sales and profits. As reported, sales and profits
were down compared to last year's fourth quarter, which included Holley.
This press release contains various forward-looking statements. For a discussion
of various factors that may cause Coltec's actual results to differ materially
from those expressed in such forward-looking statements, see Coltec's 1997
Annual Report on Form 10-K as well as Coltec's 1998 filings with the Securities
and Exchange Commission.
Coltec Industries is a leading producer of landing gear, industrial sealing
systems, and other highly engineered products for aerospace and industrial
applications. The company, which has its headquarters in Charlotte, North
Carolina, expects to complete its merger with The BFGoodrich Company by late
March/early April of this year. The new company will have revenues approaching
$6 billion and leading positions in aerospace systems, performance materials,
and industrial products.
Attachments:
Summary Consolidated Statements of Earnings
Industry Segment Information
Summary Consolidated Balance Sheets
Cash Flow Statements
Page 2 of 2
<PAGE> 3
COLTEC INDUSTRIES AND SUBSIDIARIES
Summary Consolidated Statements of Earnings
(in thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended Twelve Months Ended
------------------------- -----------------------------
December 31 December 31 December 31 December 31
1998 1997 1998 1997
------------------------- -----------------------------
<S> <C> <C> <C> <C>
Net sales $ 374,461 $ 359,017 $ 1,504,054 $ 1,314,869
Costs and expenses (314,505) (304,101) (1,273,881) (1,117,077)
Non-recurring charges (1) -- -- (42,054) --
--------- --------- ----------- -----------
Operating income (1) 59,956 54,916 188,119 197,792
Gain on sale of business -- -- 56,194 --
Interest expense and other, net (12,508) (15,138) (53,438) (54,043)
--------- --------- ----------- -----------
Earnings before income taxes, minority interest
and extraordinary item 47,448 39,778 190,875 143,749
Income taxes (16,132) (13,525) (64,898) (48,875)
Minority interest in net loss of subsidiaries (1,300) -- (3,684) --
--------- --------- ----------- -----------
Earnings before extraordinary item (2) 30,016 26,253 122,293 94,874
Extraordinary item (4) -- -- (4,326) --
--------- --------- ----------- -----------
Net earnings $ 30,016 $ 26,253 $ 117,967 $ 94,874
========= ========= =========== ===========
Earnings from operations (2) $ 30,016 $ 26,253 $ 112,961 $ 94,874
========= ========= =========== ===========
Diluted earnings per share
Earnings from operations (3) $ 0.45 $ 0.39 $ 1.68 $ 1.42
Non-recurring charges -- -- (0.39) --
Gain on sale of business -- -- 0.52 --
--------- --------- ----------- -----------
Earnings before extraordinary item (3) 0.45 0.39 1.81 1.42
Extraordinary item (4) -- -- (0.06) --
--------- --------- ----------- -----------
Net earnings $ 0.45 $ 0.39 $ 1.75 $ 1.42
========= ========= =========== ===========
Diluted weighted average
common and common
stock equivalents 68,910 66,622 69,443 66,911
========= ========= =========== ===========
</TABLE>
(1) Operating income for the twelve months ended December 31, 1998 included
non-recurring charges as follows:
a) $25.0 million non-cash charge to recognize program costs during
the ramp-up of the Boeing 777 program which will reduce future
shipset costs,
b) $12.0 million non-cash charge to record additional warranty and
legal reserves, and
c) $5.0 million expense related to Year 2000 compliance costs for
new computer systems.
Excluding these charges totaling $42.0 million, operating income for
the twelve months ended December 31, 1998 was $230.1 million.
(2) Earnings before extraordinary item excluding the non-recurring charges
of $42.0 million and the gain on the sale of Holley Performance
Products (Holley) of $56.2 million was $113.0 million for the twelve
months ended December 31, 1998.
(3) Represents diluted earnings per share before extraordinary item
excluding the non-recurring charges and the gain on the sale of Holley.
Such one-time items net to $14.1 million of pretax income ($9.3 million
after-tax) or $0.13 per share for the twelve months ended December 31,
1998.
(4) The Company incurred extraordinary charges of $4.3 million (net of
income taxes of $2.2 million) in connection with early repayment of
debt in the twelve months ended December 31, 1998.
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COLTEC INDUSTRIES INC AND SUBSIDIARIES
Industry Segment Information
(in millions)
<TABLE>
<CAPTION>
Three Months Ended Twelve Months Ended
-------------------------- -------------------------
December 31 December 31 December 31 December 31
1998 1997 1998 1997
-------------------------- -------------------------
<S> <C> <C> <C> <C>
Sales:
Aerospace $ 195.1 $ 167.8 $ 724.8 $ 558.3
Industrial 179.5 191.7 780.5 757.6
Intersegment elimination (0.1) (0.5) (1.2) (1.0)
-------- -------- ---------- ----------
Total $ 374.5 $ 359.0 $ 1,504.1 $ 1,314.9
======== ======== ========== ==========
Operating income:
Aerospace (1) $ 32.8 $ 26.8 $ 90.1 $ 87.7
Industrial (2) 35.9 37.8 135.5 149.8
-------- -------- ---------- ----------
Total segments 68.7 $ 64.6 225.6 237.5
Corporate unallocated (8.7) (9.6) (37.5) (39.7)
-------- -------- ---------- ----------
Operating income $ 60.0 $ 55.0 $ 188.1 $ 197.8
======== ======== ========== ==========
</TABLE>
(1) Operating income in the Aerospace Segment for the twelve months ended
December 31, 1998 included a non-recurring charge of $25.0 million to
recognize program costs during the ramp-up of the Boeing 777 program and
a $2.0 million expense for training costs and year 2000 compliance for
new computer systems. Excluding these one-time charges, Aerospace Segment
operating income was $117.1 million for the twelve months ended December
31, 1998.
(2) Operating income in the Industrial Segment for the twelve months ended
December 31, 1998 included non-recurring charges of $12.0 million to
record additional warranty and legal reserves and $3.0 million expense
for training costs and year 2000 compliance for new computer systems.
Excluding these one-time charges, Industrial Segment operating income was
$150.5 million for the twelve months ended December 31, 1998.
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COLTEC INDUSTRIES INC AND SUBSIDIARIES
Summary Consolidated Balance Sheets
(in thousands)
<TABLE>
<CAPTION>
December 31
Assets 1998 1997
------ ---- ----
<S> <C> <C>
Current assets
Cash and cash equivalents $ 21,785 $ 14,693
Accounts and notes receivable, net of allowance 148,185 120,311
Inventories 236,003 256,736
Deferred income taxes 20,464 15,195
Other current assets 15,612 20,508
----------- ---------
Total current assets 442,049 427,443
Property, plant and equipment, net 306,642 287,619
Costs in excess of net assets, net 214,647 157,751
Other assets 92,310 60,221
----------- ---------
$ 1,055,648 $ 933,034
=========== =========
Liabilities and Shareholders' Equity
------------------------------------
Current liabilities
Current portion of long-term debt $ 2,513 $ 1,811
Accounts payable 91,595 93,799
Accrued expenses 171,084 138,969
Liabilities of discontinued operations 4,999 4,999
----------- ---------
Total current liabilities 270,191 239,578
----------- ---------
Long-term debt 580,092 757,578
Deferred income taxes 139,909 79,229
Other liabilities 85,490 72,592
Liabilities of discontinued operations 134,995 143,218
Company-obligated, mandatorily redeemable
convertible preferred securities of
subsidiary Coltec Capital Trust holding
solely convertible junior subordinated
debentures of the company 145,293 --
Shareholders' equity:
Common stock 706 705
Capital surplus 643,615 642,828
Retained deficit (795,356) (912,029)
Other equity (21,359) (11,112)
----------- ---------
(172,394) (279,608)
Less treasury shares (127,928) (79,553)
----------- ---------
(300,322) (359,161)
----------- ---------
$ 1,055,648 $ 933,034
=========== =========
</TABLE>
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COLTEC INDUSTRIES INC AND SUBSIDIARIES
Summary Consolidated Statements of Cash Flows
(in thousands)
<TABLE>
<CAPTION>
Twelve Months Ended
December 31 December 31
1998 1997
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 117,967 $ 94,874
Adjustments to reconcile net earnings to cash
provided by operating activities
Gain on divestiture (56,194) --
Extraordinary item 6,554 --
Depreciation and amortization 47,947 38,415
Deferred income taxes 56,616 24,791
Payment of liabilities of discontinued operations (8,223) (25,052)
Special charge payments -- (11,746)
Foreign currency translation adjustment (8,364) (5,594)
Other operating items (3,837) (6,951)
Changes in assets and liabilities, net of effect
from acquisitions and divestitures:
Accounts and notes receivable (40,254) (4,263)
Inventories 17,776 (42,508)
Other current assets 2,131 3,455
Accounts payable (2,982) 35,963
Accrued expenses and other 26,379 (18,972)
Accrued pension liability (14,076) (20,993)
--------- ---------
Cash provided by operating activities 141,440 61,419
--------- ---------
Cash flows from investing activities:
Proceeds from divestitures 100,000 --
Capital expenditures (53,545) (81,218)
Acquisition of businesses (94,242) (60,711)
--------- ---------
Cash used in investing activities (47,787) (141,929)
--------- ---------
Cash flows from financing activities:
Issuance of long-term debt 291,451 813
Issuance of convertible preferred securities 143,999 --
Repayment of long-term debt (24,265) (8,113)
Increase (decrease) in revolving facility, net (458,000) 39,500
Proceeds from sale of accounts receivable 12,500 82,500
Payments for unclaimed stock (3,871) --
Proceeds from exercise of stock options 2,996 8,169
Purchase of treasury stock (51,371) (42,695)
--------- ---------
Cash provided by (used in) financing activities (86,561) 80,174
--------- ---------
Increase (decrease) in cash and cash equivalents 7,092 (336)
Cash and cash equivalents - beginning of period 14,693 15,029
--------- ---------
Cash and cash equivalents - end of period $ 21,785 $ 14,693
========= =========
</TABLE>
