FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended March 31, 1997
Commission file number 1-892
THE B.F.GOODRICH COMPANY
NEW YORK 34-0252680
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4020 KINROSS LAKES PARKWAY, RICHFIELD, OHIO 44286-9368
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 216-659-7600
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
-------- --------
As of March 31, 1997, there were 53,948,337 shares of common stock outstanding.
There is only one class of common stock.
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
THE B.F.GOODRICH COMPANY
CONDENSED CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
(Dollars in millions, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-------------- -------------
1997 1996
-------------- -------------
<S> <C> <C>
Sales $ 589.9 $ 531.2
Operating Costs and Expenses:
Cost of sales 405.3 358.7
Selling and administrative expenses 128.1 112.2
Restructuring costs - 4.0
-------------- -------------
533.4 474.9
-------------- -------------
Operating income 56.5 56.3
Interest expense (9.0) (10.6)
Interest income 1.0 0.6
Other expense - net (4.4) (4.3)
-------------- -------------
Income from continuing operations before
income taxes and Trust distributions 44.1 42.0
Income tax expense (16.0) (15.3)
Distributions on Trust preferred securities (2.6) (2.6)
-------------- -------------
Income from continuing operations 25.5 24.1
Income (loss) from discontinued operations (Note B):
Loss from discontinued operations (less income
tax benefit of $2.2) - (4.2)
Gain on sale of discontinued operations,
including provision of $7.9 for operating losses
during the phase-out period (less applicable
income taxes of $22.8) 59.5 -
-------------- -------------
Net Income $ 85.0 $ 19.9
============== =============
Earnings (loss) per share:
Continuing operations $ 0.47 $ 0.45
Discontinued operations 1.09 (0.08)
-------------- --------------
Net income $ 1.56 $ 0.37
============== ==============
Weighted average number of common and common
equivalent shares outstanding - in millions 54.4 53.3
Dividends paid per common share $ 0.275 $ 0.275
</TABLE>
See notes to condensed consolidated financial statements.
Page 2
<PAGE>
THE B.F.GOODRICH COMPANY
CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
(Dollars in millions)
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
---------------- ----------------
<S> <C> <C>
ASSETS
- ------
Current Assets
Cash and cash equivalents $ 113.1 $ 48.7
Accounts and notes receivable, less allowances
for doubtful receivables (March 31, 1997,
$11.7; December 31, 1996, $13.1) 369.1 398.0
Inventories 343.4 367.1
Deferred income taxes 68.0 68.0
Prepaid expenses and other assets 27.5 30.5
---------------- ---------------
Total Current Assets 921.1 912.3
---------------- ---------------
Property
Land, buildings and machinery and equipment 1,550.5 1,663.7
Allowances for depreciation and amortization (669.2) (717.7)
---------------- ----------------
Total Property 881.3 946.0
---------------- ----------------
Deferred Income Taxes 3.1 3.3
Goodwill 522.5 544.3
Identifiable Intangible Assets 44.9 47.6
Other Assets 196.7 209.6
---------------- ----------------
$ 2,569.6 $ 2,663.1
================ ================
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Current Liabilities
Short-term bank debt $ 31.1 $ 130.8
Accounts payable 214.3 243.1
Accrued expenses 223.8 241.5
Income taxes payable 39.2 11.1
Current maturities of long-term debt
and capital lease obligations 20.0 36.0
---------------- ----------------
Total Current Liabilities 528.4 662.5
---------------- ----------------
Long-term Debt and Capital Lease Obligations 394.3 400.0
Postretirement Benefits Other Than Pensions 341.3 348.5
Other Non-current Liabilities 63.5 79.3
Mandatorily Redeemable Preferred Securities of Trust 122.8 122.6
Shareholders' Equity
Common stock - $5 par value
Authorized 100,000,000 shares; issued 55,126,768
shares at March 31, 1997, and 54,899,308
shares at December 31, 1996 275.6 274.5
Additional capital 360.9 357.3
Income retained in the business 523.9 453.7
Cumulative unrealized translation adjustments (0.6) 5.9
Unearned portion of restricted stock awards (6.5) (9.0)
Common stock held in treasury, at cost (1,178,431
shares at March 31, 1997, and 1,135,985 shares
at December 31, 1996) (34.0) (32.2)
---------------- ----------------
Total Shareholders' Equity 1,119.3 1,050.2
---------------- ----------------
$ 2,569.6 $ 2,663.1
================ ================
</TABLE>
See notes to condensed consolidated financial statements.
Page 3
<PAGE>
THE B.F.GOODRICH COMPANY
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
(Dollars in millions)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-----------------------------------
1997 1996
---------------- ----------------
<S> <C> <C>
OPERATING ACTIVITIES
Net Income $ 85.0 $ 19.9
Adjustments to reconcile net income to net
cash provided (used) by operating activities:
Depreciation and amortization 30.7 29.1
Deferred income taxes 4.8 8.2
Gain on sale of discontinued operations (net of income
taxes of $22.8) (59.5) -
Change in assets and liabilities, net of effects
of acquisitions and dispositions of businesses:
Receivables (9.0) 8.2
Inventories (6.1) (12.7)
Other current assets 0.4 (5.3)
Accounts payable (8.7) (35.3)
Accrued expenses (11.6) (6.9)
Income taxes payable 6.7 (1.0)
Other non-current assets and liabilities (10.6) (10.6)
---------------- ----------------
Net cash provided (used) by operating activities 22.1 (6.4)
INVESTING ACTIVITIES
Purchases of property (32.6) (39.3)
Proceeds from sale of property 0.7 0.2
Proceeds from sale of business 230.7 -
Payments made in connection with acquisitions,
net of cash acquired (23.0) -
---------------- ----------------
Net cash provided (used) by investing activities 175.8 (39.1)
FINANCING ACTIVITIES
Net (decrease) increase in short-term debt (99.2) 57.3
Repayment of long-term debt and capital lease obligations (18.6) (34.7)
Proceeds from issuance of capital stock 3.1 6.5
Purchases of treasury stock (0.2) -
Dividends (14.8) (14.4)
Distributions on Trust preferred securities (2.6) -
---------------- ---------------
Net cash (used) provided by financing activities (132.3) 14.7
EFFECT OF EXCHANGE RATE CHANGES ON CASH (1.2) (0.4)
---------------- ---------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 64.4 (31.2)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 48.7 60.3
---------------- ---------------
CASH AND CASH EQUIVALENTS AT MARCH 31 $ 113.1 $ 29.1
================ ===============
Supplemental Cash Flow Information:
Income taxes paid $ 1.2 $ 3.0
================ ===============
Interest paid, net of amounts capitalized $ 11.9 $ 12.7
================ ===============
</TABLE>
See notes to condensed consolidated financial statements.
Page 4
<PAGE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note A: BASIS OF INTERIM FINANCIAL STATEMENT PREPARATION - The accompanying
unaudited condensed consolidated financial statements of The BFGoodrich Company
("BFGoodrich" or the "Company") 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
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three months ended March 31, 1997, are
not necessarily indicative of the results that may be achieved for the year
ending December 31, 1997. For further information, refer to the consolidated
financial statements and footnotes included in the Company's Annual Report on
Form 10-K for the year ended December 31, 1996.
Note B: DISCONTINUED OPERATIONS - On February 3, 1997, the Company completed the
sale of Tremco Incorporated to RPM, Inc. for $230.7 million, resulting in an
after-tax gain of $59.5 million or $1.09 per share. The sale of Tremco
Incorporated completed the disposition of the Company's Sealants, Coatings and
Adhesives ("SC&A") Group and represents the disposal of a segment of a business
under APB Opinion No. 30. Sales of the SC&A Group for the first quarter of 1996
were $73.3 million.
Note C: INVENTORY - Inventories included in the accompanying condensed
consolidated balance sheet consist of:
<TABLE>
<CAPTION>
(Dollars in millions)
------------------------
March 31, December 31,
1997 1996
--------- ------------
<S> <C> <C>
FIFO or average cost
(which approximates
current costs):
Finished products $ 123.1 $ 157.7
In process 134.0 122.0
Raw materials & supplies 144.2 152.1
---------- ----------
401.3 431.8
Reserve to reduce certain
inventories to LIFO (57.9) (64.7)
---------- ----------
Total $ 343.4 $ 367.1
========== ==========
</TABLE>
- 5 -
<PAGE>
Note D: ACQUISITIONS - During the latter part of the first quarter of 1997, the
Company's Aerospace segment acquired a manufacturer of data acquisition systems
for satellites and other aerospace applications. The preliminary purchase price
of $23 million is subject to post-closing adjustments and includes approximately
$16 million of goodwill. The purchase price allocations have been based on
preliminary estimates, which may be revised at a later date. Goodwill is being
amortized using the straight-line method over 20 years. The results of
operations since the acquisition date have been included in the consolidated
financial statements.
Note E: CAPITAL STOCK - During the first three months of 1997, 227,460 shares of
authorized but previously unissued shares of common stock were issued under an
employee compensation plan. Also under this plan, 29,246 shares of treasury
stock were purchased and 13,200 unearned shares were forfeited and returned to
treasury stock.
Note F: INCOME TAXES - The effective tax rate for the first quarter of 1997 and
1996 was higher than the federal statutory rate principally due to state and
local income taxes.
Note G: CONTINGENCIES - There are pending or threatened against BFGoodrich or
its subsidiaries various claims, lawsuits and administrative proceedings, all
arising from the ordinary course of business with respect to commercial, product
liability and environmental matters, which seek remedies or damages. BFGoodrich
believes that any liability that may finally be determined with respect to
commercial and product liability claims, should not have a material effect on
the Company's consolidated financial position or results of operations. The
Company is also involved from time to time in legal proceedings as a plaintiff
involving contract, patent protection, environmental and other matters. Gain
contingencies, if any, are recognized when they are realized.
The Company and its subsidiaries are generators of both hazardous wastes and
non-hazardous wastes, the treatment, storage, transportation and disposal of
which are subject to various laws and governmental regulations. Although past
operations were in substantial compliance with the then-applicable regulations,
the Company has been designated as a potentially responsible party by the U.S.
Environmental Protection Agency in connection with 32 sites, most of which
related to previously discontinued businesses. The Company believes it may have
continuing liability with respect to not more than 15 sites.
A significant portion of accrued environmental liabilities is in connection with
five sites which relate to businesses previously discontinued. Two of the most
significant variables in determining the Company's ultimate liability are the
remediation method finally adopted for the site and the Company's share of the
total site remediation cost. With respect to the five previously discontinued
sites, the Company's maximum percentage share of the ultimate remediation costs
is
- 6 -
<PAGE>
fixed. Of the five sites, two sites are in the operation and maintenance phase
for which costs are reasonably fixed; a third site is in the construction phase,
which is expected to be completed soon, which the Company will "buy out" of for
a percentage of the total cost without any further liability exposure; a fourth
site will be constructed in 1997 for which reasonable estimates of the ultimate
completion cost can be made; however, the final cost at completion can vary
significantly as a result of changes made during the construction phase and
changed regulatory agency requirements, all of which are difficult to predict.
With respect to the fifth site, uncertainty exists as to the total cost of
remediation and the amount of past EPA costs to be reimbursed.
Management believes that it is reasonably possible that additional environmental
costs may be incurred beyond the amounts accrued as a result of new information.
However, the amounts, if any, cannot be estimated and management believes that
they would not be material to the Company's financial condition, but could be
material to the Company's results of operations in a given period.
Note H: RECENTLY ISSUED ACCOUNTING STANDARD - In February 1997, the Financial
Accounting Standards Board issued Statement No. 128, "Earnings per Share", which
is required to be adopted on December 31, 1997. At that time, the Company will
be required to change the method currently used to compute earnings per share
and to restate all prior periods. Under the new requirements for calculating
primary earnings per share, the dilutive effect of stock options will be
excluded. The impact of Statement 128 on the calculation of primary and fully
diluted earnings per share for the first quarter ended March 31, 1997 and March
31, 1996 is not material.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
POSITION AND RESULTS OF OPERATIONS
----------------------------------
COMPARISON OF THE FIRST QUARTER OF 1997
TO THE FIRST QUARTER OF 1996
----------------------------
TOTAL COMPANY
-------------
Sales in the first quarter of 1997 increased to $589.9 million, or 11 percent
over the same period last year. Excluding acquisitions, sales increased 7
percent, largely reflecting higher volumes in each segment.
Cost of sales as a percent of sales in the first quarter of 1997 compared to the
same period of 1996 increased by 1.2 percentage points. This increase is
principally due to higher original-equipment strategic sales incentives in the
Aerospace segment and start-up costs and increased operating expenses in the
Specialty Chemicals segment related to several capital projects in
- 7 -
<PAGE>
Europe and the United States. Total cost of sales increased to $405.3 million in
the first quarter of 1997 from $358.7 million in the first quarter of 1996,
reflecting acquisitions and internal volume growth.
Selling and administrative expenses as a percent of sales for the first quarter
of 1997 remained virtually unchanged compared to the corresponding period of
1996. Selling and administrative expenses were $128.1 million for the first
quarter of 1997 compared to $112.2 million in the same period of 1996,
reflecting acquisitions and support costs associated with capital expansions.
In February 1997, the Financial Accounting Standards Board issued Statement No.
128, "Earnings per Share", which is required to be adopted on December 31, 1997.
At that time, the Company will be required to change the method currently used
to compute earnings per share and to restate all prior periods. Under the new
requirements for calculating primary earnings per share, the dilutive effect of
stock options will be excluded. The impact of Statement 128 on the calculation
of primary and fully diluted earnings per share for the first quarter ended
March 31, 1997 and March 31, 1996 is not material.
SEGMENT ANALYSIS
----------------
<TABLE>
<CAPTION>
Three Months Ended March 31 1997 1996
- --------------------------------------------------------------------------------
(Dollars in millions)
<S> <C> <C>
Sales:
Aerospace $ 326.7 $ 307.0
Specialty Chemicals 222.7 191.0
------- -------
Total Reportable Segments 549.4 498.0
Other Operations 40.5 33.2
------- -------
Total $ 589.9 $ 531.2
- --------------------------------------------------------------------------------
Operating Income:
Aerospace $ 33.0 $ 39.2
Specialty Chemicals 31.1 25.0
------- -------
Total Reportable Segments 64.1 64.2
Other Operations 7.2 4.7
Corporate (14.8) (12.6)
------- -------
Total $ 56.5 $ 56.3
- --------------------------------------------------------------------------------
</TABLE>
- 8 -
<PAGE>
The Company's operations are classified into two reportable business segments:
BFGoodrich Aerospace ("Aerospace") and BFGoodrich Specialty Chemicals
("Specialty Chemicals"). Aerospace consists of three business groups: Landing
Systems; Sensors and Integrated Systems; and Maintenance, Repair and Overhaul
("MRO"). They serve commercial, military, regional, business and general
aviation markets. Specialty Chemicals consists of two business groups: Specialty
Additives and Specialty Plastics. They serve various markets, such as personal
care, industrial piping, plumbing, pharmaceuticals, printing, textiles and
automotive.
Other Operations represents the manufacture of chlor-alkali and olefins.
Corporate includes general corporate administrative costs and Advanced
Technology Group research expenses. Segment operating income is total segment
revenue reduced by operating expenses directly identifiable with that business
segment. Intersegment eliminations are included in Corporate and are not
significant in any period.
An expanded analysis of sales and operating income by business segment follows.
Aerospace
- ---------
<TABLE>
<CAPTION>
Sales by Group (in millions)
Three Months Ended March 31 1997 1996
- --------------------------------------------------------------------------------
<S> <C> <C>
Landing Systems $ 115.8 $ 100.3
Sensors and Integrated Systems 126.0 117.8
MRO 84.9 88.9
- --------------------------------------------------------------------------------
TOTAL $ 326.7 $ 307.0
- --------------------------------------------------------------------------------
</TABLE>
The Aerospace segment achieved a 6 percent increase in sales over the first
quarter of 1996, excluding an acquisition late in the first quarter of 1997.
The Landing Systems Group sales growth reflects higher demand from
original-equipment manufacturers for landing gear and evacuation products,
primarily for the B747-400 and B767 programs. Demand also improved for wheels
and brakes products for regional, business and military aircraft, as well as for
the B777, B737 and A330/340 commercial programs.
Excluding an acquisition, sales in the Sensors and Integrated Systems Group
increased 5 percent over the 1996 first quarter due to stronger demand for
aftermarket spares sales, particularly for aircraft sensors and aircraft
integrated systems. In addition, higher commercial original-equipment demand for
sensors products on the B777 and B747 programs and the aftermarket B747 Classic
retrofit program contributed to the quarterly improvement.
- 9 -
<PAGE>
The MRO Group sales declined from the prior year quarter reflecting lower sales
from the component services businesses, despite strong growth in the group's
airframe business. Sales for the group's airframe business increased 21 percent
over the first quarter of 1996 as demand continues to grow. The sales decline in
the component services businesses was attributable to two factors. First, the
1996 quarter included approximately $7 million of product sales that are not
normally made by the service businesses and that are not expected to recur.
Second, component service demand declined as a result of the bankruptcy of two
customers and reduced demand from another major customer with whom a new
maintenance contract is currently being negotiated.
Operating Income by Group (in millions)
<TABLE>
<CAPTION>
Three Months Ended March 31 1997 1996
- --------------------------------------------------------------------------------
<S> <C> <C>
Landing Systems $ 13.3 $ 14.7
Sensors and Integrated Systems 15.5 13.1
MRO 4.2 11.4
- --------------------------------------------------------------------------------
TOTAL $ 33.0 $ 39.2
- --------------------------------------------------------------------------------
</TABLE>
Total Aerospace segment operating income declined by 16 percent from the high
operating income level in the first quarter of 1996. Excluding an acquisition,
operating income decreased 17 percent.
Despite the solid sales growth over the first quarter of 1996, a significant
increase in original-equipment strategic sales incentives, primarily for the
B747-400 and B777-200 programs, resulted in lower operating income for the
Landing Systems Group for the first quarter of 1997.
The Sensors and Integrated Systems Group operating income increased 18 percent
over the 1996 first quarter due to higher sales volumes, especially for higher
margin aftermarket spares sales. Excluding an acquisition late in the first
quarter of 1997, operating income for the group increased 15 percent.
Operating income in the MRO Group was considerably lower in the first quarter of
1997, principally due to the lower component services sales levels previously
mentioned. In addition, the group's airframe business is still being adversely
affected by inefficiencies from training new technicians as a result of the
higher than normal turnover that began in the second quarter of 1996 due to
increased employment by Boeing. The Company, however, expects the labor
inefficiencies to diminish during the year.
- 10 -
<PAGE>
Specialty Chemicals
- -------------------
Sales by Group (in millions)
<TABLE>
<CAPTION>
Three Months Ended March 31 1997 1996
- --------------------------------------------------------------------------------
<S> <C> <C>
Specialty Plastics $ 76.7 $ 71.6
Specialty Additives 146.0 119.4
- --------------------------------------------------------------------------------
TOTAL $ 222.7 $ 191.0
- --------------------------------------------------------------------------------
</TABLE>
The Specialty Chemicals segment continues to build on the sales record set last
year by achieving a 17 percent increase in sales for the first quarter of 1997
over the first quarter last year. Excluding five acquisitions made in the second
quarter of 1996, sales increased 5 percent due to higher sales volume.
The Specialty Plastics Group achieved a 7 percent increase in sales over the
first quarter of 1996. Excluding an acquisition, sales increased 5 percent,
reflecting higher volumes across all product lines. This growth was achieved
despite unfavorable foreign exchange effects due to the stronger U.S. dollar in
1997.
Sales in the Specialty Additives Group increased 5 percent, excluding
acquisitions. The group experienced solid demand for most product lines,
especially in the personal-care, adhesives and industrial coatings markets. The
group's sales were also adversely affected by unfavorable foreign currency
translation effects.
Operating Income by Group (in millions)
<TABLE>
<CAPTION>
Three Months Ended March 31 1997 1996
- --------------------------------------------------------------------------------
<S> <C> <C>
Specialty Plastics $ 9.8 $ 11.2
Specialty Additives 21.3 13.8
- --------------------------------------------------------------------------------
TOTAL $ 31.1 $ 25.0
- --------------------------------------------------------------------------------
</TABLE>
Operating income for the Specialty Chemicals segment increased 25 percent over
the first quarter of 1996. Excluding the effects of acquisitions, operating
income increased 14 percent.
The Specialty Plastics Group operating income declined 14 percent from the prior
year quarter, excluding an acquisition, despite higher sales in 1997. Operating
margins were down primarily due to start-up costs and higher operating expenses
associated with capacity expansions in Europe and the U.S. Operating income was
also adversely affected by unfavorable foreign exchange rate changes. The 1996
first quarter included a $1.1 million
- 11 -
<PAGE>
pretax charge relating to a voluntary early retirement program.
Operating income in the Specialty Additives Group increased 37 percent,
excluding acquisitions, largely due to higher volumes, complemented by lower raw
material costs and higher selling prices. In addition, the 1996 first quarter
included a $2.9 million pretax charge relating to the early retirement program
in that quarter.
OTHER OPERATIONS
----------------
Chlor-Alkali & Olefins
- ----------------------
First quarter 1997 sales increased 22 percent to $40.5 million, compared to the
same period last year. Operating income increased from $4.7 million in the first
quarter of 1996 to $7.2 million in 1997. The increases in sales and operating
income resulted from higher ethylene prices and higher volumes and prices for
chlorine.
CORPORATE
---------
First quarter 1997 Corporate expenses increased to $14.8 million, compared to
$12.6 million in the same period last year. This increase is largely
attributable to higher costs associated with the Company's long-term incentive
plan.
INTEREST EXPENSE
----------------
Interest expense in the first quarter of 1997 decreased 15 percent to $9.0
million, compared to the same period in 1996 due to lower short-term debt levels
resulting from the use of the proceeds from the sale of Tremco Incorporated.
INCOME TAXES
------------
For the first quarter of 1997, an income tax provision of $16.0 million was
recorded on pretax income from continuing operations of $44.1 million, an
effective tax rate of 36.3 percent. For the same period last year, an income tax
provision of $15.3 million was recorded on pretax income from continuing
operations of $42.0 million, an effective tax rate of 36.4 percent. For each
year, the effective tax rate was higher than the federal statutory rate
principally due to state and local income taxes.
- 12 -
<PAGE>
DISCONTINUED OPERATIONS
-----------------------
On February 3, 1997, the Company completed the sale of Tremco Incorporated to
RPM, Inc. for $230.7 million, resulting in an after-tax gain of $59.5 million or
$1.09 per share. The sale of Tremco Incorporated completed the disposition of
the Company's SC&A Group and represents the disposal of a segment of a business
under APB Opinion No. 30. Sales of the SC&A Group for the first quarter of 1996
were $73.3 million.
CAPITAL RESOURCES AND LIQUIDITY
-------------------------------
Current assets less current liabilities increased by $142.9 million from
December 31, 1996 to March 31, 1997. This result reflects the proceeds from the
sale of Tremco Incorporated and lower working capital usage by the Company's
businesses during the first quarter of the year. The Company's current ratio
increased from 1.4X at December 31, 1996 to 1.7X at March 31, 1997. The quick
ratio also increased from .67X at December 31, 1996 to .91X at March 31, 1997.
The Company expects to have adequate cash flow from operations and has the
credit facilities (described in the Company's Annual Report on Form 10-K for the
year ended December 31, 1996) to satisfy its operating requirements and capital
spending programs and to finance growth opportunities as they arise.
The Company's debt-to-capitalization ratio was 26.4 percent at March 31, 1997,
compared with 32.6 percent at December 31, 1996. For purposes of this ratio, the
Trust preferred securities are treated as capital.
Cash Flows
Cash flow from operating activities in the first quarter of 1997 was $28.5
million more than the same period last year, largely due to lower levels of
operating working capital. Average operating working capital (defined as
accounts receivable plus pre-LIFO inventory less accounts payable) as a percent
of sales was 23.3 percent for the first quarter of 1997, compared to 25.5
percent for the same period last year (percentages exclude the SC&A Group). The
Company is realizing the benefits of its initiatives to reduce the
investment in operating working capital. The Company expects to generate
positive cash flow in 1997 after satisfying capital expenditures and payment
of dividends, but excluding the effects of acquisitions and divestitures.
- 13 -
<PAGE>
PART II - OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit 11 - Statement re Computation of Per Share Earnings is filed
as part of this report.
Exhibit 27 - Financial data schedule.
(b) Reports on Form 8-K - None.
- 14 -
<PAGE>
SIGNATURE
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.
April 23, 1997 The B.F.Goodrich Company
------------------------
/S/D. LEE TOBLER
-------------------------------
D. Lee Tobler
Executive Vice President and
Chief Financial Officer
/S/STEVEN G. ROLLS
--------------------------------
Steven G. Rolls
Vice President and Controller
(Chief Accounting Officer)
- 15 -
THE B.F.GOODRICH COMPANY
EXHIBIT 11 - STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
(Dollars in millions, except per share amounts)
<TABLE>
<CAPTION>
Three months ended March 31,
--------------------------------------------
1997 1996
------------------- -------------------
PRIMARY EARNINGS PER SHARE:
<S> <C> <C>
Number of Shares:
Average number of common shares outstanding 53,842,581 52,715,733
Effect of dilutive stock options 549,763 595,397
------------------- -------------------
Total average number of common and common
equivalent shares outstanding 54,392,344 53,311,130
=================== ===================
Income:
Income from continuing operations $ 25.5 $ 24.1
Income (loss) from discontinued operations 59.5 (4.2)
------------------- -------------------
Net income applicable to common stock $ 85.0 $ 19.9
=================== ===================
Per share amounts:
Continuing operations $ 0.47 $ 0.45
Discontinued operations 1.09 (0.08)
------------------- -------------------
Net income $ 1.56 $ 0.37
=================== ===================
FULLY DILUTED EARNINGS PER SHARE:
Number of Shares:
Average number of common shares
outstanding from above 53,842,581 52,715,733
Effect of dilutive stock options -
based on the treasury method using
last day's market price, if higher
than average market price 550,707 683,107
------------------- -------------------
Total average number of common and common
equivalent shares outstanding 54,393,288 53,398,840
=================== ===================
Income:
Income from continuing operations $ 25.5 $ 24.1
Income (loss) from discontinued operations 59.5 (4.2)
------------------- -------------------
Net income applicable to common stock $ 85.0 $ 19.9
=================== ===================
Per share amounts:
Continuing operations $ 0.47 $ 0.45
Discontinued operations 1.09 (0.08)
------------------- -------------------
Net income $ 1.56 $ 0.37
=================== ===================
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Condensed Consolidated Balance Sheet and the Condensed Consolidated Statement of
Income of this Form 10-Q and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 113,100
<SECURITIES> 0
<RECEIVABLES> 380,800
<ALLOWANCES> 11,700
<INVENTORY> 343,400
<CURRENT-ASSETS> 921,100
<PP&E> 1,550,500
<DEPRECIATION> 669,200
<TOTAL-ASSETS> 2,569,600
<CURRENT-LIABILITIES> 528,400
<BONDS> 394,300
122,800
0
<COMMON> 275,600
<OTHER-SE> 843,700
<TOTAL-LIABILITY-AND-EQUITY> 2,569,600
<SALES> 589,900
<TOTAL-REVENUES> 589,900
<CGS> 405,300
<TOTAL-COSTS> 405,300
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 9,000
<INCOME-PRETAX> 44,100
<INCOME-TAX> 16,000
<INCOME-CONTINUING> 25,500
<DISCONTINUED> 59,500
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 85,000
<EPS-PRIMARY> 1.56
<EPS-DILUTED> 1.56
</TABLE>
