UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________
FORM 8-K
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): August 4, 1998
Cordant Technologies Inc.
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(Exact name of registrant as specified in its charter)
Delaware
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(State or other jurisdiction of incorporation)
1-6179 36-2678716
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Commission File Number (IRS Employer Identification No.)
15 W. South Temple, Suite 1600, Salt Lake City, UT 84101-1532
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(Address of principal executive offices) (Zip Code)
(801) 933-4000
-----------------------------
Registrant's Telephone Number
<PAGE>
ITEM 5 OTHER EVENTS
The following news release was issued on August 4, 1998.
CORDANT TECHNOLOGIES POSTS RECORD ANNUAL EARNINGS;
Annual Income Increases 53 Percent
- ----------------------------------
Salt Lake City, Utah, August 4, 1998 -- Cordant Technologies Inc.
reported income of $126 million or $3.34 per share before an extraordinary
item for the fiscal year ended June 30, 1998, compared to $82.4 million or
$2.21 per share last year. Net income for the fiscal year ended June 30,
1998, was $118.9 million, or $3.15 per share. The current year included an
extraordinary charge of $7.1 million or $.19 per share, net of income taxes
and minority interest, related to Howmet debt refinancing to take advantage
of favorable interest rates. Excluding the extraordinary item in 1998, net
income increased 53 percent.
Operating earnings increased substantially in all business segments during
the year. The Company began consolidating Howmet's results within its
financial statements effective December 1997 concurrently with the
Company's increase in ownership to 62 percent. Excluding the increase
attributable to the Howmet consolidation, operating earnings increased 47
percent over the prior year.
James R. Wilson, Chairman and Chief Executive Officer commented, "We had
another outstanding year with record earnings. Operating earnings increased
substantially in all business segments during the year. Highlights during
the year include: increasing our Howmet ownership from 49 to 62 percent in
December 1997; the acquisition of Jacobson Manufacturing in mid-June; and
the selection of Thiokol Propulsion in December as the propulsion team
leader for the Air Force's Minuteman program which is expected to be worth
over $1 billion in sales over the next 12 years."
Propulsion Systems Operating Income Up 43 Percent
- -------------------------------------------------
Thiokol Propulsion sales for the year increased 8 percent compared to last
year. Sales increased on the Missile Defense, Space Shuttle RSRM program,
and commercial launch motor programs. Propulsion systems' operating income
increased 43 percent from the prior year due to higher margins in the
commercial launch motor program and reduced corporate overhead allocations
due to increased ownership in Howmet. Operating margins increased to 12
percent in the current year from 9.1 percent last year.
<PAGE>
Fastening Systems Operating Income up 90 Percent
- ------------------------------------------------
Huck fastening systems sales and operating income for the year were
substantially higher than last year reflecting continued strength in both
commercial aircraft and industrial markets. Sales increased 25 percent
while operating income increased 90 percent over the prior year. Operating
margins were higher in each successive quarter this year with 16.6 percent
margins in the fourth quarter. For the year, margins were 14.5 percent
compared to 9.5 percent in the prior year. Operating margins continue to
benefit from both continuing cost control initiatives and increased
revenues.
Investment Castings Contribution Up 90 Percent
- ----------------------------------------------
Howmet contributed income, after minority interest and taxes, of $48.1
million or $1.27 per share, compared to $28.3 million or $.76 per share for
the prior year, excluding the extraordinary charge for debt refinancing.
Cordant Technologies' 13 percent ownership increase in December contributed
$6.5 million or $.17 per share to the increase over the prior year.
Howmet's twelve month sales increased $130.5 million or 11.5 percent over
last year, adjusting for the sale of Howmet's refurbishment business.
Quarterly Net Income Up 73 Percent
- ----------------------------------
Net income for the quarter ended June 30, 1998, was $41.1 million or $1.09
per share, a 73 percent increase compared to $23.7 million or $.63 per
share last year. The current quarter net income included tax interest
income of $.9 million or $.02 per share and a tax refund of $2.6 million or
$.07 per share. Excluding unusual items in both quarters, net income
increased 63 percent.
Sales for the current quarter were 146 percent higher than last year. The
increase was due primarily to the consolidation of Howmet, and higher
fastener, Space Shuttle RSRM, and commercial launch motor sales. Excluding
the consolidation of Howmet into the results, sales increased 15 percent,
and operating income increased 67 percent from last year. The increase in
operating income was primarily due to higher fastener and commercial launch
motor income.
During the quarter, Howmet contributed after tax income of $16.3 million or
$.43 per share compared to $10.9 million or $.29 per share for the prior
year period, excluding the extraordinary item. Cordant Technologies' 13
percent increase in Howmet ownership contributed $3.1 million or $.08 per
share. Howmet's increased income is due to continued revenue growth in both
the aerospace and industrial gas turbine (IGT) markets.
<PAGE>
All of the per share discussions above reflect diluted earnings per share
as required by Financial Accounting Standards Board statement 128 "Earnings
per Share," and the two-for-one stock split on March 13, 1998.
Cordant Technologies Inc. (CDD-NYSE) is a strategically balanced global
business. Cordant Technologies' Thiokol Propulsion business is the leading
producer of solid propulsion systems and its Huck International subsidiary
is a leading designer and manufacturer of high performance proprietary
fasteners and installation systems. Cordant Technologies also holds a
majority interest in Howmet International Inc., a global manufacturer of
aircraft and IGT engine components.
This release includes forward-looking statements that are made pursuant to
the safe harbor provisions of the Securities Litigation Reform Act of 1995.
Such forward-looking statements are subject to certain risks and
uncertainties that could cause actual results to differ materially from
those projected in them. These risks and uncertainties include, but are not
limited to, unanticipated slowdowns in the Company's major markets, the
impact of competition, the effectiveness of operational changes expected to
increase efficiency and productivity, worldwide economic and political
conditions and the effect of foreign currency fluctuations.
###
Contact:
Lauren Sides Shannon Polk
Public Relations Investor Relations
(801) 933-4193 (801) 933-4030
[email protected] [email protected]
Release 98.008
<PAGE>
Summary unaudited financial information for the twelve months ended June
30, follows:
(in millions, except per share data)
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<TABLE>
<CAPTION>
Dollar
1998 1997 Change Percent
------------- ------------- ----------- ------------
<S> <C> <C> <C> <C>
Sales
- -------------------------------------------------
Propulsion systems $ 655.9 $ 606.1 $ 49.8 8
Fastening systems 354.1 284.0 70.1 25
Investment castings 769.3 - 769.3 -
--------- ------- ------- -----
Total sales $ 1,779.3 $ 890.1 $ 889.2 100
========= ======= ======= =====
Operating income
- -------------------------------------------------
Propulsion systems $ 78.8 $ 55.1 $ 23.7 43
Fastening systems 51.4 27.0 24.4 90
Investment castings 104.4 - 104.4 -
Unallocated corporate expense (18.7) (6.5) (12.2) (188)
--------- ------- ------- -----
Total operating income 215.9 75.6 140.3 186
Equity income of affiliates 15.6 30.5 (14.9) (49)
Interest income 10.0 10.9 (.9) (8)
Interest expense (16.2) (1.7) (14.5) (853)
Other, net (2.7) - (2.7) -
Income taxes (76.1) (32.9) (43.2) (131)
--------- ------- ------- -----
Income before minority interest and
extraordinary item 146.5 82.4 64.1 78
Minority interest (20.5) - (20.5) -
--------- ------- ------- -----
Income before extraordinary item 126.0 82.4 43.6 53
Extraordinary item - loss on early
retirement of debt (7.1) - (7.1) -
--------- ------- ------- -----
Net income $ 118.9 $ 82.4 $ 36.5 44
Per share:
Income before extraordinary item:
Basic $ 3.45 $ 2.26 $ 1.19 53
Diluted $ 3.34 $ 2.21 $ 1.13 51
Net income:
Basic $ 3.26 $ 2.26 $ 1.00 44
Diluted $ 3.15 $ 2.21 $ .94 43
</TABLE>
<PAGE>
Summary unaudited financial information for the three months ended June 30,
follows:
(in millions, except per share data):
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<TABLE>
<CAPTION>
Dollar
1998 1997 Change Percent
------------- ------------- ---------- -----------
<S> <C> <C> <C> <C>
Sales
- --------------------------------------------
Propulsion systems $ 192.2 $ 173.8 $ 18.4 11
Fastening systems 100.7 81.8 18.9 23
Investment castings 335.7 - 335.7 -
------- ------- ------- -------
Total sales $ 628.6 $ 255.6 $ 373.0 146
======= ======= ======= =======
Operating income
- --------------------------------------------
Propulsion systems $ 22.9 $ 10.8 $ 12.1 112
Fastening systems 16.7 10.6 6.1 58
Investment castings 48.8 - 48.8 -
Unallocated corporate expense (6.6) (1.6) (5.0) (313)
------- ------- ------ -------
Total operating income 81.8 19.8 62.0 313
Equity income of affiliates - 11.7 (11.7) (100)
Interest income 3.8 1.7 2.1 124
Interest expense (6.9) (.2) (6.7) (3,350)
Other, net (.3) - (.3) -
Income taxes (27.4) (9.3) (18.1) (195)
------- ------- ------ -------
Income before minority interest 51.0 23.7 27.3 115
Minority interest (9.9) - (9.9) -
------- ------- ------ -------
Net income $ 41.1 $ 23.7 $ 17.4 73
======= ======= ====== =======
Net income per share:
Basic $ 1.13 $ .65 $ .48 74
Diluted $ 1.09 $ .63 $ .46 73
</TABLE>
<PAGE>
Following are Cordant Technologies Inc. consolidated balance sheets,
statements of cash flows, statements of stockholder's equity, and changes
in common stock shares.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30
--------------------------
(in millions) 1998(a) 1997
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<S> <C> <C>
ASSETS (Unaudited)
Current Assets
Cash and cash equivalents $ 17.4 $ 51.4
Receivables 275.5 146.4
Inventories 261.4 84.6
Prepaid expenses and other current assets 52.8 29.3
Restricted trust (b) 726.9
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Total Current Assets 1,334.0 311.7
Property, Plant and Equipment
Land 32.3 17.2
Buildings and improvements 315.2 231.2
Machinery and equipment 673.1 332.7
Construction in progress 16.5 14.0
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1,037.1 595.1
Less allowances for depreciation (400.5) (311.9)
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636.6 283.2
Other Assets
Equity investment in Howmet 178.0
Costs in excess of net assets of businesses acquired, net 569.0 26.7
Patents and other intangible assets, net 125.6 14.1
Other noncurrent assets 113.1 40.7
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807.7 259.5
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$ 2,778.3 $ 854.4
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<FN>
(a) Since December 2, 1997, Cordant Technologies Inc. has consolidated the financial
statements of its 62 percent ownership interest in Howmet International Inc. Prior to
December 2, 1997, Cordant Technologies Inc.'s then 49 percent interest in Howmet
International Inc. was accounted for under the equity method.
(b) The Restricted Trust holds a note receivable from Pechiney S.A. and related letters of
credit that secures Pechiney S.A.'s agreement to repay the Pechiney Notes due January
2, 1999. Management believes that it is extremely remote that the Company will use any
assets other than those in the Restricted Trust to satisfy any payments related to the
Pechiney Notes.
</FN>
</TABLE>
<PAGE>
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30
--------------------------
(in millions) 1998 (a) 1997
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LIABILITIES AND STOCKHOLDERS' EQUITY (Unaudited)
- ------------------------------------
<S> <C> <C>
Current Liabilities
Short-term debt $ 43.1 $ 22.7
Accounts payable 106.1 36.3
Accrued compensation 87.0 43.1
Other accrued expenses 211.6 37.4
Pechiney notes (b) 726.9
- -------------------------------------------------------------------------------------------------------
Total Current Liabilities 1,174.7 139.5
Noncurrent Liabilities
Accrued retiree benefits 166.9 70.4
Deferred income taxes 42.3 41.3
Accrued interest and other noncurrent liabilities 202.4 80.3
Long-term debt 462.9 1.8
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Total Noncurrent Liabilities 874.5 193.8
Commitments and Contingent Liabilities
Minority interest 119.6
Stockholders' Equity
Common stock (par value $1.00 per share)
Authorized - 200 shares
Issued - 41.1 shares at June 30, 1998, and 20.5 shares 41.1 20.5
at June 30, 1997, (includes treasury shares)
Additional paid-in capital 46.8 44.7
Retained earnings 598.0 514.3
Cumulative translation adjustment (3.9)
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682.0 579.5
Less common stock in treasury, at cost
(4.6 shares at June 30, 1998 and 2.1 shares at June 30, 1997) (72.5) (58.4)
- -------------------------------------------------------------------------------------------------------
Total Stockholders' Equity 609.5 521.1
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$2,778.3 $ 854.4
=======================================================================================================
<FN>
(a) Since December 2, 1997, Cordant Technologies Inc. has consolidated the financial statements of its
62 percent ownership interest in Howmet International Inc. Prior to December 2, 1997, Cordant
Technologies Inc.'s then 49 percent interest in Howmet International Inc. was accounted for under
the equity method.
(b) The Restricted Trust holds a note receivable from Pechiney S.A. and related letters of credit that
secures Pechiney S.A.'s agreement to repay the Pechiney Notes due January 2, 1999. Management
believes that it is extremely remote that the Company will use any assets other than those in the
Restricted Trust to satisfy any payments related to the Pechiney Notes.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended June 30
--------------------------------------
(in millions) 1998 (a) 1997 1996
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OPERATING ACTIVITIES (Unaudited)
- --------------------
<S> <C> <C> <C>
Net income $ 118.9 $ 82.4 $ 58.3
Adjustments to reconcile net income to net cash
provided by operating activities:
Restructuring and impairment (2.2) 5.9
Extraordinary item 7.1
Minority interest 20.5
Depreciation 53.9 30.0 33.0
Amortization 21.7 10.2 9.0
Equity income (15.6) (30.5) (4.5)
Deferred income taxes 2.5 (7.8) (11.7)
Changes in operating assets and liabilities:
Receivables 21.5 16.1 103.9
Inventories (12.1) 6.1 41.5
Accounts payable and accrued expenses (11.4) 1.8 (17.3)
Income taxes 9.7 9.5 (9.5)
Other -- net (8.6) (1.5) (25.8)
- ------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 208.1 114.1 182.8
INVESTING ACTIVITIES
- --------------------
Acquisitions, net of acquired cash (430.2) (146.0)
Purchases of property, plant and equipment (72.8) (33.1) (29.1)
Proceeds from disposal of assets 4.8 2.6 6.1
- -------------------------------------------------------------------------------------------------------
Net cash used for investing activities (498.2) (30.5) (169.0)
FINANCING ACTIVITIES
- --------------------
Net change in short-term debt 37.2 (38.0) 2.5
Issuance of long-term debt 642.6
Repayment of long-term debt (382.4) (.1) (.2)
Premiums paid on early retirement of debt (13.7)
Foreign currency rate changes (1.0)
Purchase of common stock for treasury (18.7) (4.3)
Stock option transactions 6.7 4.0 2.5
Dividends paid (14.6) (13.2) (12.4)
- -------------------------------------------------------------------------------------------------------
Net cash provided by (used for) financing activities 256.1 (47.3) (11.9)
- -------------------------------------------------------------------------------------------------------
(Decrease) increase in cash and cash equivalents (34.0) 36.3 1.9
Cash and cash equivalents at beginning of year 51.4 15.1 13.2
- -------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 17.4 $ 51.4 $ 15.1
=======================================================================================================
<FN>
(a) Since December 2, 1997, Cordant Technologies Inc. has consolidated the financial statements of its
62 percent ownership interest in Howmet International Inc. Prior to December 2, 1997, Cordant
Technologies Inc.'s then 49 percent interest in Howmet International Inc. was accounted for under
the equity method.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Current year activity is unaudited)
Additional Cumulative Total
Common Paid-In Retained Treasury Translation Stockholders'
(in millions) Stock Capital Earnings Stock Adjustment Equity
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, JUNE 30, 1995 $20.5 $44.5 $399.2 $(60.4) $403.8
- ------------------------------------------------------------------------------------------------------------------------
Net income 58.3 58.3
Dividends paid (12.4) (12.4)
Treasury stock purchases (4.3) (4.3)
Stock options exercised and related
income tax benefits (.3) 2.8 2.5
- ------------------------------------------------------------------------------------------------------------------------
BALANCE, JUNE 30, 1996 20.5 44.2 445.1 (61.9) 447.9
- ------------------------------------------------------------------------------------------------------------------------
Net income 82.4 82.4
Dividends paid (13.2) (13.2)
Stock options exercised and related
income tax benefits .5 3.5 4.0
- ------------------------------------------------------------------------------------------------------------------------
BALANCE, JUNE 30, 1997 20.5 44.7 514.3 (58.4) 521.1
- ------------------------------------------------------------------------------------------------------------------------
Net income 118.9 118.9
Currency translation adjustment (3.9) (3.9)
Dividends paid (14.6) (14.6)
Stock split 20.6 (20.6)
Treasury stock purchases (18.7) (18.7)
Stock options exercised and related
income tax benefits 2.1 4.6 6.7
- ------------------------------------------------------------------------------------------------------------------------
BALANCE, JUNE 30, 1998 (Unaudited) $41.1 $46.8 $598.0 $(72.5) $(3.9) $609.5
========================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
CHANGES IN COMMON STOCK SHARES
(Current year activity is unaudited)
Common Treasury
(in millions) Stock Stock
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
BALANCE, JUNE 30, 1995 20.5 (2.3)
Common stock purchase (.1)
Stock options exercised and related tax benefits .1
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BALANCE, JUNE 30, 1996 20.5 (2.3)
- ----------------------------------------------------------------------------------------------------
Stock options exercised and related tax benefits .2
- ----------------------------------------------------------------------------------------------------
BALANCE, JUNE 30, 1997 20.5 (2.1)
- ----------------------------------------------------------------------------------------------------
Stock options exercised and related tax benefits .2
Stock split 20.6 (2.2)
Purchase of common stock for treasury (.5)
- ----------------------------------------------------------------------------------------------------
BALANCE, JUNE 30, 1998 (Unaudited) 41.1 (4.6)
====================================================================================================
</TABLE>
<PAGE>
Following is additional unaudited supplemental information:
<TABLE>
<CAPTION>
For the Quarter Ended 6/30/98
1998 1997 (a)
-------------------------------------------- -----------
(in millions) Cordant Howmet Consolidated Cordant
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net cash provided by operating activities $64.7 $41.4 $106.1 $33.8
Capital expenditures (7.6) (19.2) (26.8) (6.2)
Dividends (3.7) - (3.7) (3.8)
- ------------------------------------------------------------------------------------------------------------
Free Cash flow $53.4 $22.2 $ 75.6 $23.8
- ------------------------------------------------------------------------------------------------------------
<FN>
(a) Howmet was not consolidated until December 1997.
</FN>
</TABLE>
<TABLE>
<CAPTION>
For the Twelve Months Ended 6/30/98
1998 1997
-------------------------------------------- -----------
(in millions) Cordant Howmet (b) Consolidated Cordant
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net cash provided by operating activities $146.5 $ 61.6 $208.1 $114.1
Capital expenditures (21.9) (50.9) (72.8) (33.1)
Dividends (14.6) - (14.6) (13.2)
- ------------------------------------------------------------------------------------------------------------
Free Cash flow $110.0 $ 10.7 $120.7 $ 67.8
- ------------------------------------------------------------------------------------------------------------
Total Debt (a) $333.3 $172.9 $506.2 $ 24.6
Less cash & cash equivalents 7.3 10.1 17.4 51.4
- ------------------------------------------------------------------------------------------------------------
Net Debt (Cash) Position $326.0 $162.8 $488.8 ($ 26.8)
- ------------------------------------------------------------------------------------------------------------
<FN>
(a) Excludes Pechiney note payable.
(b) Howmet's results since December 2, 1997.
</FN>
</TABLE>
Fastening Systems book-to-bill ratios, which are orders divided by
shipments, for the quarter ended June 30, were as follows:
<TABLE>
<CAPTION>
1998 1997
------------------------------------------------------------
<S> <C> <C>
Aerospace .89 1.36
Industrial .98 1.04
Total .93 1.21
</TABLE>
Fastening Systems book-to-bill ratios, for the twelve months ended June 30,
were as follows:
<TABLE>
<CAPTION>
1998 1997
-----------------------------------------------------------
<S> <C> <C>
Aerospace 1.09 1.32
Industrial 1.03 1.05
Total 1.07 1.18
</TABLE>
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
CORDANT TECHNOLOGIES INC.
(Registrant)
By: /S/ Richard L. Corbin
--------------------------
Richard L. Corbin
Senior Vice President and
Chief Financial Officer
Date: August 4, 1998
