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): February 9, 1999
Cordant Technologies Inc.
- ---------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware
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(State or other jurisdiction of incorporation)
1-6179 36-2678716
- ---------------------- ---------------------------------
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
1
<PAGE>
ITEM 2 ACQUISITION OR DISPOSITION OF ASSETS
Cordant Technologies Inc. announced that effective February 8, 1999, it has
acquired the 22,650,000 shares of Howmet International Inc. owned by the
Carlyle Group for $17.00 per share or $385 million. The acquisition of
these shares increases Cordant Technologies' ownership in Howmet
International to 84.7 percent of outstanding common stock. The remaining
Howmet International common stock is publicly owned and traded on the NYSE.
James R. Wilson, Chairman and Chief Executive Officer of Cordant
Technologies, commented, "This purchase is consistent with Cordant
Technologies' stated objective of acquiring the balance of the Carlyle
Group's holdings in Howmet International."
The transaction is expected to be accretive to Cordant Technologies'
earnings per share by 5 to 7 percent in 1999 and from 10 to 12 percent in
2000.
Cordant Technologies held an option to acquire the Carlyle Group's shares
of Howmet International that was exercisable beginning in December 1999 at
a market-based price. Mr. Wilson stated that the purchase of the Carlyle
Group's shares at this time eliminated the uncertainty regarding the price
and timing of the option exercise and that Cordant Technologies has no
present plans to acquire additional Howmet International shares.
The purchase of the Howmet International shares owned by the Carlyle Group
was financed with borrowings under bank lines of credit.
ITEM 5 OTHER EVENTS
The following news release was issued on February 9, 1999.
CORDANT TECHNOLOGIES REPORTS ANNUAL EARNINGS;
Income and Earnings Per Share Increase 47 Percent
Salt Lake City, Utah, February 9, 1999 - Cordant Technologies Inc. reported
net income of $142 million or $3.79 per share for the year ended December
2
<PAGE>
31, 1998. The prior year's net income included an extraordinary charge of
$7.1 million or $.19 per share, net of income taxes and minority interest,
related to Howmet's debt refinancing. Excluding the extraordinary item,
income and earnings per share increased 47 percent over the $96.6 million
or $2.57 per share reported in 1997.
James R. Wilson, Chairman and Chief Executive Officer, commented,
"Substantial increases in operating earnings in all business segments
resulted in record earnings per share in calendar 1998. Equally important,
each business strategically strengthened its competitive position with
aggressive improvements in quality, on-time delivery and cost reductions.
Significant new customer alliances and product introductions during the
year along with these operational improvements provide the basis for a
strong 1999."
"We remain comfortable with the 1999 and 2000 consensus earnings per share
estimates," Mr. Wilson continued. "The strength of our industrial markets,
combined with improving operating margins in all business segments, should
offset the commercial aerospace downturn as well as a slight increase in
our effective tax rate."
"This expected performance is prior to the accretion in earnings per share
resulting from the increased ownership in Howmet International," said Mr.
Wilson. On February 8, 1999, Cordant announced that its ownership in Howmet
was raised from 62 percent to 84.7 percent through the cash purchase of
Howmet shares held by the Carlyle Group.
Propulsion Systems Operating Income Up 27 Percent
- -------------------------------------------------
Thiokol Propulsion's sales for the year were flat compared to last year.
Higher Space Shuttle Reusable Solid Rocket Motor (RSRM), Missile Defense
and Trident program sales were offset by lower sales in the
demilitarization and Japanese Technology Transfer programs. Propulsion
systems operating income increased 27 percent from the prior year,
primarily from significantly higher commercial launch motor and RSRM
margins. Operating margins increased from 10 percent in 1997 to 12.8
percent in 1998.
Fastening Systems Operating Income Up 61 Percent
- ------------------------------------------------
Huck's fastening systems sales and operating income for the year were
higher than last year reflecting the Jacobson Manufacturing acquisition
during the year and continued strength in both commercial aircraft and
industrial markets. Operating income increased 61 percent over the prior
year while operating margins for the year were 15.1 percent, compared to
12.6 percent in the prior year. Operating margins continue to benefit from
3
<PAGE>
continuing cost control initiatives and increased revenues. Excluding
Jacobson's results, sales and income increased 11 and 36 percent,
respectively, over the prior year.
Investment Castings Contribution Up 83 Percent
- ----------------------------------------------
Howmet contributed income, after minority interest and taxes, of $65.6
million or $1.75 per share, an 83 percent increase compared to $35.8
million or $.95 per share for the prior year. Cordant Technologies' 13
percent ownership increase in December 1997 contributed $12.1 million or
$.32 per share of the increase. Howmet's sales increased $145.8 million or
12 percent over last year, adjusting for the sale of Howmet's refurbishment
business. Howmet's increase in income resulted from the higher revenues and
increased operating margins. Also contributing to the income increase were
reduced debt levels and lower interest rates which reduced interest expense
by $18.3 million or 59 percent.
Quarterly Income Per Share Up 29 Percent
- ----------------------------------------
Net income for the quarter ended December 31, 1998, was $29.6 million or
$.80 per share. The prior year's net income included an extraordinary
charge of $7.1 million, or $.19 per share, net of income taxes and minority
interest, related to Howmet's debt refinancing. Excluding the extraordinary
item, income increased 26 percent over the $23.5 million reported in 1997.
Earnings per share before extraordinary item increased 29 percent over the
$.62 reported in 1997.
Net income for the current quarter includes Howmet Stock Appreciation
Rights (SAR) expense of $2.9 million, or $.08 per share. This expense
reversed SAR income for the same amount that was recognized in the third
quarter. This reversal was due to the rise in Howmet's stock price to the
$15 per share SAR ceiling. Excluding the extraordinary item and SAR
expense, income increased 38 percent over the prior year period and
earnings per share increased 42 percent.
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.
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.
4
<PAGE>
Summary unaudited financial information for the twelve-months ended
December 31, follows:
<TABLE>
<CAPTION>
Better
(in millions, except per share data) 1998 1997 (Worse) Percent
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sales:
Propulsion systems $ 643.0 $ 645.5 $ (2.5)
Fastening systems 433.3 319.4 113.9 36
Investment castings 1,350.6 105.2 1,245.4 1,184
- ----------------------------------------------------------------------------------------------------------
Total sales $2,426.9 $1,070.1 $1,356.8 127
==========================================================================================================
Operating income:
Propulsion systems $ 82.1 $ 64.4 $ 17.7 27
Fastening systems 65.2 40.4 24.8 61
Investment castings 185.8 11.7 174.1 1,488
Unallocated corporate expense (24.4) (12.8) (11.6) (91)
- -----------------------------------------------------------------------------------------------------------
Total operating income 308.7 103.7 205.0 198
Equity income of affiliates .4 35.3 (34.9) (99)
Interest income 12.8 7.0 5.8 83
Interest expense (28.3) (4.0) (24.3) (608)
Other, net (4.2) (2.2) (2.0) (91)
Income taxes (107.6) (41.4) (66.2) (160)
- -----------------------------------------------------------------------------------------------------------
Income before minority interest and
extraordinary item 181.8 98.4 83.4 85
Minority interest (39.8) (1.8) (38.0) 2,111
- ----------------------------------------------------------------------------------------------------------
Income before extraordinary item 142.0 96.6 45.4 47
Extraordinary item - loss on early
retirement of debt (7.1) 7.1 100
- ----------------------------------------------------------------------------------------------------------
Net income $ 142.0 $ 89.5 $ 52.5 59
==========================================================================================================
Income per share before extraordinary item:
Basic $ 3.89 $ 2.64 $ 1.25 47
Diluted $ 3.79 $ 2.57 $ 1.22 47
Net income per share:
Basic $ 3.89 $ 2.45 $ 1.44 59
Diluted $ 3.79 $ 2.38 $ 1.41 59
</TABLE>
Calendar year 1998 includes Howmet's results on a consolidated basis.
Howmet results for 1997 were accounted for under the equity method for
eleven months and consolidated for one month (December). Results for 1998
include Jacobson's operations since June 1998.
5
<PAGE>
Summary unaudited financial information for the three-months ended December
31, follows:
<TABLE>
<CAPTION>
Better
(in millions, except per share data) 1998 1997 (Worse) Percent
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sales:
Propulsion systems $159.6 $160.2 $ (.6)
Fastening systems 126.0 84.9 41.1 48
Investment castings 354.9 105.2 249.7 237
- -----------------------------------------------------------------------------------------------------
Total sales $640.5 $350.3 $290.2 83
=====================================================================================================
Operating income:
Propulsion systems $21.4 $19.2 $ 2.2 11
Fastening systems 20.4 12.4 8.0 65
Investment castings 31.5 11.7 19.8 169
Unallocated corporate expense (8.8) (6.4) (2.4) (38)
- -----------------------------------------------------------------------------------------------------
Total operating income 64.5 36.9 27.6 75
Equity income of affiliates 4.3 (4.3) (100)
Interest income 2.0 1.8 .2 11
Interest expense (7.3) (3.2) (4.1) (128)
Other, net (1.0) (1.1) .1 9
Income taxes (21.4) (13.4) (8.0) (60)
- -----------------------------------------------------------------------------------------------------
Income before minority interest
and extraordinary item 36.8 25.3 11.5 45
Minority interest (7.2) (1.8) (5.4) 300
- -----------------------------------------------------------------------------------------------------
Income before extraordinary item 29.6 23.5 6.1 26
Extraordinary item - loss on early
retirement of debt (7.1) 7.1 (100)
- -----------------------------------------------------------------------------------------------------
Net income $29.6 $16.4 $ 13.2 80
=====================================================================================================
Income per share before extraordinary item:
Basic $ .81 $ .64 $ .17 27
Diluted $ .80 $ .62 $ .18 29
Net income per share:
Basic $ .81 $ .45 $ .36 80
Diluted $ .80 $ .43 $ .37 86
</TABLE>
Results for the quarter ending December 31, 1998 include Howmet's results
on a consolidated basis. Howmet results for the prior year's quarter were
accounted for under the equity method for two months and consolidated for
one month (December). Results for the current year quarter include
Jacobson's operations purchased in June 1998.
6
<PAGE>
Following are Cordant Technologies Inc. consolidated balance sheets,
statements of cash flows, and statements of stockholders' equity.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
<TABLE>
<CAPTION>
December 31
-------------------------
(in millions) 1998 1997
- ---------------------------------------------------------------------------------------------
ASSETS
- ------
<S> <C> <C>
Current Assets
Cash and cash equivalents $ 45.3 $ 45.6
Receivables 240.0 235.7
Inventories 252.3 240.2
Deferred income taxes and prepaid expenses 60.8 50.5
Restricted trust (a) 716.4
- ---------------------------------------------------------------------------------------------
Total Current Assets 1,314.8 572.0
Property, Plant and Equipment
Land 36.9 30.0
Buildings and improvements 311.2 295.3
Machinery and equipment 768.6 602.0
- ---------------------------------------------------------------------------------------------
Total Property, Plant and Equipment 1,116.7 927.3
Less allowances for depreciation (444.4) (376.9)
- ---------------------------------------------------------------------------------------------
Net Property, Plant and Equipment 672.3 550.4
Other Assets
Costs in excess of net assets of businesses acquired, net 561.7 400.3
Restricted trust (a) 716.4
Patents and other intangible assets, net 119.8 131.6
Other noncurrent assets 141.3 129.1
- ---------------------------------------------------------------------------------------------
Total Other Assets 822.8 1,377.4
- ---------------------------------------------------------------------------------------------
Total Assets $2,809.9 $2,499.8
=============================================================================================
<FN>
(a) The Restricted Trust held a note receivable from Pechiney S.A. and related letters of
credit that secured Pechiney S.A.'s agreement to repay the Pechiney Notes. Subsequent to
December 31, 1998, Pechiney S.A. (Howmet's previous owner) paid the Pechiney Notes in
full on January 4, 1999. No Howmet or Cordant funds were used in the payment of the
Notes. As a result, the Restricted Trust has been terminated and like the Pechiney Notes,
subsequent to December 31, 1998, will not be included on the Company's balance sheet.
</FN>
</TABLE>
7
<PAGE>
Following are Cordant Technologies Inc. consolidated balance sheets,
statements of cash flows, and statements of stockholders' equity.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
<TABLE>
<CAPTION>
December 31
-------------------------
(in millions) 1998 1997
- ---------------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
<S> <C> <C>
Current Liabilities
Short-term debt $ 71.5 $ 8.2
Accounts payable 139.8 121.8
Accrued compensation 81.6 79.5
Other accrued expenses 210.7 174.5
Pechiney notes (a) 716.4
- ---------------------------------------------------------------------------------------------
Total Current Liabilities 1,220.0 384.0
Noncurrent Liabilities
Accrued retiree benefits 169.0 163.9
Deferred income taxes 52.3 44.8
Accrued interest and other noncurrent liabilities 234.2 213.3
Long-term debt 324.5 325.9
Pechiney notes (a) 716.4
- ---------------------------------------------------------------------------------------------
Total Noncurrent Liabilities 780.0 1,464.3
Commitments and Contingent Liabilities
Minority interest 142.0 101.0
Stockholders' Equity
Common stock (par value $1.00 per share)
Authorized - 200 shares
Issued - 41.1 and 20.5 shares at December 31, 1998 and 1997
respectively, (includes treasury shares) 41.1 20.5
Additional paid-in capital 47.4 46.0
Retained earnings 658.8 552.0
Accumulated other comprehensive income (3.9) (3.5)
- ---------------------------------------------------------------------------------------------
743.4 615.0
Less common stock in treasury, at cost
(4.6 and 2.2 shares at December 31, 1998 and 1997 respectively) (75.5) (64.5)
- ---------------------------------------------------------------------------------------------
Total Stockholders' Equity 667.9 550.5
- ---------------------------------------------------------------------------------------------
Total Liabilities and Stockholders' Equity $2,809.9 $2,499.8
=============================================================================================
<FN>
(a) The Restricted Trust held a note receivable from Pechiney S.A. and related letters of
credit that secured Pechiney S.A.'s agreement to repay the Pechiney Notes. Subsequent to
December 31, 1998, Pechiney S.A. (Howmet's previous owner) paid the Pechiney Notes in
full on January 4, 1999. No Howmet or Cordant funds were used in the payment of the
Notes. As a result, the Restricted Trust has been terminated and like the Pechiney Notes,
subsequent to December 31, 1998, will not be included on the Company's balance sheet.
</FN>
</TABLE>
8
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
Year Ended December 31
----------------------------------------------
(in millions) 1998 1997 1996
- ------------------------------------------------------------------------------------------------------------------------
OPERATING ACTIVITIES
- --------------------
<S> <C> <C> <C>
Net income $142.0 $89.5 $60.7
Adjustments to reconcile net income to net cash
provided by operating activities:
Restructuring and impairment (2.2)
Extraordinary item 7.1
Minority interest 39.8 1.8
Depreciation 71.9 33.8 32.8
Amortization 30.1 12.5 11.2
Equity income (.4) (35.3) (15.1)
Deferred income taxes .2 (3.4) (5.7)
Changes in operating assets and liabilities:
Receivables 28.1 25.2 53.1
Inventories 14.6 (1.5) 20.8
Accounts payable and accrued expenses .3 5.1 5.9
Income taxes 19.6 (12.1) 4.5
Other -- net 7.0 (12.1) (3.0)
- ------------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 353.2 110.6 163.0
INVESTING ACTIVITIES
- --------------------
Acquisitions, net of acquired cash (277.0) (156.6)
Purchases of property, plant and equipment (114.7) (36.3) (33.0)
Proceeds from disposal of assets 4.7 1.7 1.0
- ------------------------------------------------------------------------------------------------------------------------
Net cash used for investing activities (387.0) (191.2) (32.0)
FINANCING ACTIVITIES
- --------------------
Net change in short-term debt 57.9 1.4 (98.1)
Issuance of long-term debt 336.4 336.2
Repayment of long-term debt (337.9) (213.5) (.3)
Premiums paid on early retirement of debt (13.7)
Purchase of common stock for treasury (14.4) (7.9) (.3)
Stock option transactions 4.8 6.1 2.3
Dividends paid (14.6) (14.1) (12.5)
- ------------------------------------------------------------------------------------------------------------------------
Net cash provided by (used for) financing activities 32.2 94.5 (108.9)
- ------------------------------------------------------------------------------------------------------------------------
Foreign currency rate changes 1.3 (1.0)
(Decrease) increase in cash and cash equivalents (.3) 12.9 22.1
Cash and cash equivalents at beginning of year 45.6 32.7 10.6
- ------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period $45.3 $45.6 $32.7
========================================================================================================================
</TABLE>
9
<PAGE>
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED)
<TABLE>
<CAPTION>
Accumulated
Additional Other Total
Common Paid-In Retained Treasury Comprehensive Stockholders'
(in millions) Stock Capital Earnings Stock Income Equity
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1995 $20.5 $44.3 $428.4 $(63.0) $430.2
=============================================================================================================================
Comprehensive income
Net income 60.7 60.7
--------------
Total comprehensive income 60.7
==============
Dividends paid (12.5) (12.5)
Treasury stock purchases (.3) (.3)
Stock options exercised and related
income tax benefits 2.3 2.3
- -----------------------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1996 20.5 44.3 476.6 (61.0) 480.4
=============================================================================================================================
Comprehensive income
Net income 89.5 89.5
Other comprehensive income
Cumulative translation adjustment $(3.5) (3.5)
--------------
Total comprehensive income 86.0
==============
Dividends paid (14.1) (14.1)
Treasury stock purchases (7.9) (7.9)
Stock options exercised and related
income tax benefits 1.7 4.4 6.1
- -----------------------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1997 20.5 46.0 552.0 (64.5) (3.5) 550.5
=============================================================================================================================
Comprehensive income
Net income 142.0 142.0
Other comprehensive income
Minimum pension liability (3.1) (3.1)
Cumulative translation adjustment 2.7 2.7
--------------
Total comprehensive income 141.6
==============
Dividends paid (14.6) (14.6)
Stock dividend 20.6 (20.6)
Treasury stock purchases (14.4) (14.4)
Stock options exercised and related
income tax benefits 1.4 3.4 4.8
- -----------------------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1998 $41.1 $47.4 $658.8 $(75.5) $(3.9) $667.9
=============================================================================================================================
</TABLE>
10
<PAGE>
Following is additional unaudited supplemental information:
Cash Flow Data
- --------------
The following tables provide cash flow data for both Cordant and Howmet as
neither company has access to the other's cash balances.
Selected Financial Data
For the Three Months Ended December 31
<TABLE>
<CAPTION>
1998 1997 (a)
---------------------------------------------- -------------------------------------------------
(in millions) Cordant Howmet Consolidated Cordant Howmet Consolidated
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net cash provided by
operating activities $49.3 $97.3 $146.6 $ 42.8 $25.6 $68.4
Capital expenditures (8.5) (28.3) (36.8) (4.4) (15.1) (19.5)
Dividends (3.6) (3.6) (3.6) (3.6)
- ---------------------------------------------------------------------------------------------------------------------------
$37.2 $69.0 $106.2 $34.8 $10.5 $45.3
===========================================================================================================================
<FN>
(a) Howmet results were consolidated starting in December 1997.
</FN>
</TABLE>
Selected Financial Data
For the Twelve Months Ended December 31
<TABLE>
<CAPTION>
1998 1997(a)
---------------------------------------------- -------------------------------------------------
(in millions) Cordant Howmet Consolidated Cordant Howmet Consolidated
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net cash provided by
operating activities $145.8 $207.4 $353.2 $85.0 $25.6 $110.6
Capital expenditures (31.7) (83.0) (114.7) (21.2) (15.1) (36.3)
Dividends (14.6) (14.6) (14.1) (14.1)
- ----------------------------------------------------------------------------------------------------------------------------
$99.5 $124.4 $223.9 $49.7 $10.5 $ 60.2
- ----------------------------------------------------------------------------------------------------------------------------
Total Debt (b) $313.6 $91.0 $404.6 $125.9 $208.4 $334.3
Less cash & cash
equivalents 7.7 37.6 45.3 .2 45.4 45.6
- ----------------------------------------------------------------------------------------------------------------------------
$305.9 $53.4 $359.3 $125.7 $163.0 $288.7
- ----------------------------------------------------------------------------------------------------------------------------
<FN>
(a) Howmet results were consolidated starting in December 1997.
(b) Excludes Pechiney note payable, which was paid by Pechiney S.A. on January 4, 1999.
</FN>
</TABLE>
11
<PAGE>
Book to Bill Ratios
- -------------------
Fastening Systems book-to-bill ratios, defined as period orders divided by
period shipments, for the quarter ended December 31, were as follows:
<TABLE>
<CAPTION>
1998 1997
---------------------------------------------------------------------
<S> <C> <C>
Aerospace .72 1.20
Industrial 1.05 1.10
Total .92 1.15
</TABLE>
Fastening Systems book-to-bill ratios, for the twelve months ended December
31, were as follows:
<TABLE>
<CAPTION>
1998 1997
--------------------------------------------------------------------
<S> <C> <C>
Aerospace .84 1.28
Industrial 1.00 1.06
Total .93 1.17
</TABLE>
Book to bill ratios are used as an indicator of future sales, but as with
all indicators, have inherent limitations and actual results may be
different. This is not a Generally Accepted Accounting Principles
disclosure, and other companies may calculate this ratio differently and
utilize the ratio for different purposes
Howmet-Pechiney Notes
- ---------------------
Subsequent to December 31, 1998, Pechiney S.A. (Howmet's previous owner)
paid the $716.4 million Pechiney Notes in full on January 4, 1999. No
Howmet or Cordant funds were used in the payment of the Notes. As a result,
the $716.4 million Restricted Trust has been terminated and like the
Pechiney Notes, subsequent to December 31, 1998, will not be included on
the Company's balance sheet.
Comparability between Years
- ---------------------------
Calendar year 1998 results include Howmet's results on a consolidated basis
as a result of the Company's ownership increase from 49 percent to 62
12
<PAGE>
percent in December 1997. Howmet results for 1997 were accounted for under
the equity method for eleven months and consolidated for one month. Results
for 1998 include Jacobson earnings since June 1998. Excluding Howmet
results from 1998 and 1997 and Jacobson results from 1998, sales and
operating earnings increased 3 and 22 percent, respectively, over 1997.
Sales for the current quarter were 83 percent higher than last year. The
increase was due primarily to the Howmet consolidation and the Jacobson
acquisition. Excluding the sales and income provided by the Howmet
consolidation and the Jacobson acquisition, sales and income increased 1
and 15 percent, respectively, from last year.
Howmet Operations
- -----------------
Howmet has discovered certain testing and specification non-compliance
issues at its aluminum casting operations. No formal claims have been
asserted, and the Company knows of no in-service problems associated with
these issues. Howmet and its customers must complete data collection and
analysis before a definitive estimate of the cost to resolve this matter
can be completed. Based on a preliminary evaluation, however, Howmet has
recorded an estimated cost of $4 million in its statement of income for the
year ended December 31, 1998. Based on currently known facts, the Company
currently believes that additional costs beyond $4 million, if any, would
not have a material effect on the Company's financial position, cash flow,
or annual operating results.
RSRM Buy 4
- -----------
In December 1998 an agreement was reached with NASA outlining all
significant contractual issues for the RSRM Buy 4 contract. The final
contract signing is expected during the first half of 1999. The Buy 4
contract will include 35 flight sets, or 70 motors, and three flight
support motors. Contract completion is expected during 2004. The Company
anticipates follow-on contracts for RSRM motors through the life of the
Space Shuttle Program. The Buy 4 contract type will be
cost-plus-incentive/award-fee. NASA has provided the Company with long lead
material procurement authorization to support Buy 4 production start in
October 1998. The contract is subject to annual Congressional funding.
This 8-K 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.
13
<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
Executive Vice President and
Chief Financial Officer
Date: February 9, 1999
14
