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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1996
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 No. 1-10270
MORTON INTERNATIONAL, INC.
(Exact Name of Registrant as Specified in its Charter)
Indiana 36-3640053
- ---------------------------------------- ------------------------------------
(State of Incorporation or Organization) (I.R.S. Employer Identification No.)
100 North Riverside Plaza, Chicago, Illinois 60606-1596
- -------------------------------------------- ----------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number (312) 807-2000
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 the latest practical date.
Class Outstanding at December 31, 1996
- ----------------------------- --------------------------------
Common Stock, $1.00 par value 142,289,411 shares
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MORTON INTERNATIONAL, INC.
QUARTERLY REPORT ON FORM 10-Q/A
INDEX
PAGE
-----
PART I. FINANCIAL INFORMATION:
- ------------------------------
Item 1. Financial Statements (Unaudited)
Consolidated Statements of Income and Retained
Earnings - Three months and six months ended
December 31, 1996 and 1995 3
Consolidated Balance Sheets - December 31, 1996
and June 30, 1996 4
Consolidated Statements of Cash Flows -
Six months ended December 31, 1996 and 1995 5
Notes to Consolidated Financial Statements -
December 31, 1996 6 - 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7 - 10
PART II. OTHER INFORMATION
- ---------------------------
Item 4. Submissions of Matters to a Vote of Security-Holders 10 - 11
Item 6. Exhibits and Reports on Form 8-K 11
SIGNATURE 11
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The financial statements in the Morton International, Inc. report of Form 10-Q
filed on February 10, 1997, are hereby amended in their entirety to read as
follows:
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
_________________________________________
MORTON INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS (UNAUDITED)
(IN MILLIONS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
December 31 December 31
-------------------------- -----------------------------
1996 1995 1996 1995
----------- ----------- ------------- -------------
<C> <C> <C> <C>
Net sales $ 943.3 $ 916.1 $ 1,819.2 $ 1,725.7
Interest, royalties, and sundry income 7.3 30.8 17.2 39.1
----------- ----------- ------------- -------------
950.6 946.9 1,836.4 1,764.8
Deductions from income:
Cost of products sold 674.4 645.2 1,296.0 1,225.6
Selling, administrative, and general expense 108.1 111.7 220.2 213.3
Research and development expense 19.6 21.9 38.3 41.5
Interest expense 6.0 6.3 12.0 12.4
Amortization of goodwill 2.6 2.6 5.1 5.1
----------- ----------- ------------- -------------
810.7 787.7 1,571.6 1,497.9
----------- ----------- ------------- -------------
Income before income taxes 139.9 159.2 264.8 266.9
Income taxes 51.8 59.7 98.0 100.1
----------- ----------- ------------- -------------
Net Income 88.1 99.5 166.8 166.8
Retained earnings at beginning of period 1,732.8 1,465.6 1,675.5 1,417.6
Cash dividends: $.15 and $.13 per share for the
three months ended December 31, 1996 and 1995,
respectively; $.30 and $.26 per share for the
six months ended December 31, 1996 and 1995,
respectively. (21.4) (19.3) (42.8) (38.6)
----------- ----------- ------------- -------------
Retained earnings at end of period $ 1,799.5 $ 1,545.8 $ 1,799.5 $ 1,545.8
=========== =========== ============= =============
Net income per share $ .61 $ .66 $ 1.15 $ 1.11
=========== =========== ============= =============
Shares used in computation (in thousands) 145,001 150,452
============= =============
</TABLE>
See notes to consolidated financial statements.
3
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MORTON INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(IN MILLIONS)
<TABLE>
<CAPTION>
December 31 June 30
1996 1996
----------- ----------
(Note)
<C> <C>
ASSETS
- ------
Current assets
Cash and cash equivalents $ 71.3 $ 71.1
Receivables 660.1 624.6
Deferred income tax benefits 15.5 23.6
Inventories 392.0 364.5
Prepaid expenses 131.5 112.4
----------- ----------
Total current assets 1,270.4 1,196.2
Other assets
Cost in excess of net assets of businesses acquired,
less amortization 291.2 296.3
Investments in affiliates 137.3 70.7
Miscellaneous 60.0 62.5
----------- ----------
488.5 429.5
Property, plant and equipment, at cost 2,251.4 2,151.3
Less allowances for depreciation 1,072.9 1,005.5
----------- ----------
1,178.5 1,145.8
----------- ----------
$ 2,937.4 $ 2,771.5
=========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Current liabilities
Notes payable and current portion of long-term debt $ 108.2 $ 37.2
Accounts payable 279.1 296.6
Accrued salaries, wages and other compensation 59.3 67.6
Other accrued expenses 125.1 122.3
Income taxes 31.9 33.6
----------- ----------
Total current liabilities 603.6 557.3
Long-term debt, less current portion 218.5 218.5
Deferred income taxes 54.4 53.4
Accrued postretirement benefits other than pensions 156.7 155.2
Other noncurrent liabilities 115.3 114.3
Shareholders' equity
Preferred stock (par value $1.00 per share)
Authorized - 25.0 shares, none issued
Common stock (par value $1.00 per share)
Authorized - 300.0 shares
Issued, including shares in treasury - 148.4 shares
and 148.4 shares at December 31 and June 30, 1996 148.4 148.4
Additional paid-in capital 50.8 55.9
Retained earnings 1,799.5 1,675.5
Foreign currency translation adjustment and other 15.8 11.0
----------- ----------
2,014.5 1,890.8
Less cost of common stock in treasury - 6.1 shares
at December 31, 1996 and 6.0 shares at June 30, 1996 225.6 218.0
----------- ----------
Total shareholders' equity 1,788.9 1,672.8
----------- ----------
$ 2,937.4 $ 2,771.5
=========== ==========
</TABLE>
Note: The balance sheet at June 30, 1996 has been derived from the
audited consolidated financial statements at that date.
See notes to consolidated financial statements.
4
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MORTON INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(IN MILLIONS)
<TABLE>
<CAPTION>
Cash Provided (Used)
Six Months Ended
December 31
------------------------
1996 1995
----------- ----------
Operating Activities <C> <C>
- --------------------
Net income $ 166.8 $ 166.8
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 94.2 90.8
Deferred income taxes 0.2 0.2
Undistributed earnings of affiliates (1.5) (2.6)
Changes in operating assets and liabilities
net of effects of businesses acquired:
Receivables (34.6) (96.5)
Inventories and prepaid expense (46.0) (42.5)
Accounts payable and accrued expenses (24.1) (5.0)
Accrued income taxes 9.6 22.3
Other - net 3.2 3.7
----------- ----------
Net cash provided by operating activities 167.8 137.2
----------- ----------
Investing Activities
- --------------------
Purchase of property, plant and equipment (122.5) (100.0)
Proceeds from property and other asset disposals 5.3 1.5
Cash invested in businesses acquired (65.0) (0.6)
----------- ----------
Net cash used for investing activities (182.2) (99.1)
----------- ----------
Financing Activities
- --------------------
Purchase of common stock for treasury (21.6) (52.8)
Increase in notes payable 71.6 21.7
Repayment of long-term debt (0.1) (0.1)
Stock option transactions 5.3 4.6
Dividends paid (42.8) (38.6)
----------- ----------
Net cash provided by (used for) financing activities 12.4 (65.2)
Effect of foreign exchange rate changes on cash
and cash equivalents 2.2 1.0
Increase/(decrease) in cash and cash equivalents 0.2 (26.1)
Cash and cash equivalents at beginning of year 71.1 88.3
----------- ----------
Cash and cash equivalents at end of period $ 71.3 $ 62.2
=========== ==========
</TABLE>
See notes to consolidated financial statements.
5
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MORTON INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Basis of Presentation
- ---------------------
The interim financial statements have been prepared in accordance with the
instructions to Form 10-Q and Rule 10-01 of Regulation SX and therefore, do
not include all 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 December 31, 1996 are not necessarily indicative of the
results to be expected for the fiscal year ending June 30, 1997. It is
suggested that the financial statements be read in conjunction with the
consolidated financial statements and notes thereto included in the Company's
Annual Report to Shareholders and Annual Report on Form 10-K for the fiscal
year ended June 30, 1996.
Inventories
- -----------
Inventories are stated at lower of cost (principally last-in, first-out
method) or market. Components of inventories are as follows:
Dec. 31 June 30
1996 1996
------- -------
Finished products and work-in-process $263.8 $261.3
Materials and supplies 128.2 103.2
------- -------
$392.0 $364.5
======= =======
Recent Developments
- -------------------
On November 25, 1996, Morton International, Inc. (the "Company"), Autoliv,
Inc., Autoliv AB and ASP Merger Sub Inc. entered into a Combination Agreement
pursuant to which the Company's Automotive Safety Products Group (ASP) will
become a wholly owned subsidiary of Autoliv, Inc. and Autoliv, Inc. will
acquire at least 90 percent of the outstanding capital of Autoliv AB (the
Combination). The Combination, which will be tax free, is intended to be a
merger of equals in which, if the Exchange Offer which is a part of the
transaction is fully accepted, the Company's shareholders will exchange their
interest in ASP for 46.5 percent of Autoliv, Inc. and Autoliv AB's
shareholders will exchange their Autoliv AB shares for 53.5 percent of the
equity of Autoliv, Inc.
Immediately prior to the business combination, the Company will contribute all
of its businesses other than ASP to a new company, New Morton, and will spin
off New Morton to the Company's shareholders in a tax free distribution (the
Distribution). Each shareholder of the Company's common stock will receive
one share of new Morton common stock for each share of the Company's stock
owned prior to the combination. In addition, in conjunction with the
spin-off, the Company will contribute $750 million in cash to New Morton to be
funded by debt to be retained by ASP. The Company will also distribute to New
Morton a portion of the cash generated by the ASP business since July 1, 1996,
in an amount equal to $50.0 million plus $7.2 million per month after March 31,
1997, until the consummation of the Distribution.
In substance, the Company is combining its ASP business with the businesses of
Autoliv AB, which will together be conducted by Autoliv, Inc.
For the purposes of governing certain relationships among the Company, New
Morton and Autoliv, Inc., as well as to help in the orderly separation and
transition of the ASP business, the Company, New Morton, Autoliv, Inc. and
Autoliv AB have entered or will enter into numerous agreements, including the
Combination Agreement, Tax Sharing Agreement, Employee Benefits Allocation
Agreement and other agreements. These agreements deal with many operational
issues, including (a) the separation of the ASP business from the remaining
businesses; (b) transitional services to be provided by New Morton to the ASP
business after the Combination; (c) the sharing of certain facilities for a
limited time by the ASP business and New Morton; and (d) the allocation of
certain tax, employee benefits and other liabilities among New Morton,
Autoliv, Inc. and the Company.
The transactions described above are subject to, among other things, approval
by the Company's shareholders, acceptance by holders of at least 90 percent of
Autoliv AB's outstanding shares of an exchange offer for Autoliv, Inc. shares,
receipt by the Company of a ruling from the U.S. Internal Revenue Service
regarding certain tax aspects of the transactions, and certain regulatory
approvals.
In December 1996, Morton signed a definitive agreement to acquire two-thirds
of the stock of Salins du Midi, for $195 million. Morton expects to make a
public cash tender offer in France for the remaining shares. The proposed
acquisition has a total value of approximately $290 million. Salins du Midi
is the leading independent salt producer in Europe, with estimated 1996 sales
of almost $270 million. Salins du Midi, based in Paris, supplies salt for
food and agricultural products, water treatment and ice/snow and industrial
applications, and markets its products under the "La Baleine" label. Salins
du Midi produces solar, rock and vacuum-processed salt at nine sites in France
and at four sites in Spain.
In December 1996, Morton also announced plans to purchase Pulverlac, an
Italian powder coatings maker, for an undisclosed sum. Pulverlac is a leader
in the European coatings industry with estimated 1996 sales of $75 million.
7
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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.
MORTON INTERNATIONAL, INC.
--------------------------
(Registrant)
Date: February 13, 1997 BY: /s/ L. F. Zumbach
--------------------------
L. F. Zumbach
Controller
(Principal Accounting Officer)
11
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