UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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): April 20, 2000
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
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Registrant's Telephone Number
<PAGE>
ITEM 5 OTHER EVENTS
The following news release was issued on April 20, 2000.
CORDANT FIRST QUARTER EARNINGS INCREASE EIGHT PERCENT
Salt Lake City, Utah, April 20, 2000 - Cordant Technologies Inc. reported
net income of $37.6 million, or $1.00 per diluted share, for the quarter
ended March 31, 2000. During the quarter Cordant Technologies agreed to be
acquired by Alcoa Inc. for $57 per Cordant share payable in cash. As a
result of the pending Alcoa acquisition, the Company incurred additional
expenses not normally associated with recurring operations. Adjusting for
these unique expenses and other unusual items in the first quarter of 1999
and 2000, the Company's first quarter earnings were $42.1 million, or 1.12
per share, an eight percent increase over the same quarter last year.
Details are discussed below.
As a result of the Alcoa acquisition offer to purchase the Company,
Cordant's stock price increased from $29.56 to $56.56 per share during the
quarter. This 91 percent increase in the Company's stock price resulted in
$3.3 million, or $.09 per share, in stock based incentive compensation
expense at the Company's Howmet subsidiary. In addition, Howmet incurred
$1.2 million, or $.03 per share, in advisory fees associated with the
Company's tender offer to purchase the remaining public shares of Howmet.
The first quarter of 1999 also included certain unusual items. The Company
reported net income of $47.2 million, or $1.26 per share. The prior year's
quarterly net income included a one-time $7.1 million, or $.19 per share,
benefit from reversing taxes on accumulated dividends previously accrued on
the Company's share of Howmet income. This reversal took place once the
Company increased its Howmet ownership to 84.6 percent. The 1999 quarter
also benefited from other stock based incentive plan expense reversals
totaling $1.3 million, or $.03 per share. Adjusting for these unusual
items, 1999's first quarter reported income would have been $38.8 million,
or $1.04 per share.
(more)
<PAGE>
Investment Castings
Excluding unusual items in both 1999 and 2000, Howmet contributed income,
after tax and minority interest of $30 million, or $.80 per share, compared
to $26.3 million or $.70 per share in 1999. The first quarter in 2000
included a $3.3 million after-tax effect of stock based compensation costs
associated with the Cordant share price increase, and $1.2 million
after-tax cost associated with the proposed Cordant purchase of the Howmet
public shares. First quarter 1999 included a benefit of $1.3 million after
tax due to a reversal of stock based compensation previously accrued.
Sales increased two percent over the prior year's quarter primarily as a
result of continued strength in the Industrial Gas Turbine market.
Operating income was flat versus a year ago as improving cost performance
offset continuing production problems at Howmet aluminum and the price
reductions, which took effect on January 1.
Fastening Systems Operating Income Up 17 Percent
Huck Fastening Systems sales for the quarter increased by $12.7 million, or
10 percent, from the prior year reflecting the acquisition of
Continental/Midland in October 1999.
Operating income increased $3.1 million, or 17 percent, over the prior
year. Operating margins increased to 15.9 percent for the quarter compared
to 15.1 percent last year, primarily as a result of cost savings achieved
from plant consolidations last year.
Sales in the industrial market decreased five percent from the prior year's
quarter excluding sales provided by the Continental/Midland acquisition.
Sales in the aerospace market decreased 17 percent from the prior year
primarily from weak domestic aerospace demand. Excluding operating income
provided by the Continental/Midland acquisition, Fastening Systems
operating income increased $1.2 million, or six percent from last year.
(more)
<PAGE>
Propulsion Systems Operating Income Up 17 Percent
Propulsion Systems sales increased $6.9 million, or five percent, for the
quarter ended March 31, 2000, compared to the prior year's quarter,
primarily from higher sales in the Space Shuttle Reusable Solid Rocket
Motor (RSRM), ordnance and commercial launch motor programs. The higher
RSRM sales resulted from increased activity on the RSRM Buy 4 contract.
Operating income increased $3 million, or 17 percent, over the prior year
primarily from higher RSRM and ordnance program sales and margins.
Propulsion systems operating margins were 14.2 percent compared to 12.7
percent in 1999.
General
Interest expense increased $2.7 million over the prior year period, due to
increased debt levels used to finance the Continental/Midland acquisition
in October 1999 and the Howmet common stock purchase in February 1999.
Interest income decreased $2 million from the prior year due to lower cash
levels.
Cordant Technologies Inc. (CDD-NYSE) is a strategically balanced global
business. Cordant Technologies' Howmet International Inc. subsidiary is a
global manufacturer of aircraft and IGT engine components; its Huck
International subsidiary is a leading designer and manufacturer of high
performance proprietary fasteners and installation systems; and its Thiokol
Propulsion division is the leading producer of solid propulsion systems.
Contact:
Lauren Sides Shannon Sebahar
Public Relations Investor Relations
(801) 933-4193 (801) 933-4029
[email protected] [email protected]
(more)
<PAGE>
This release includes or incorporates by reference forward-looking
statements within the meaning of Section 27A of the Securities Act and
Section 21E of the Exchange Act. Forward-looking statements, which are
based on assumptions and describe the Company's future plans, strategies
and expectations, are generally identifiable by the use of the words
"anticipate," "believe," "estimate," "expect," "intend," "project," or
similar expressions. These forward-looking statements are subject to risks,
uncertainties, and assumptions about the Company. Important factors that
could cause actual results to differ materially from the forward-looking
statements made in this document are set forth under the caption "Risk
Factors" and elsewhere in the Company's filings with the Securities and
Exchange Commission. If one or more of these risks or uncertainties
materialize, or if any underlying assumptions prove incorrect, the
Company's actual results, performance or achievements may vary materially
from any future results, performance or achievements expressed or implied
by these forward-looking statements. All forward-looking statements
attributable to the Company, or persons acting on the Company's behalf, are
expressly qualified in their entirety by the cautionary statements in this
paragraph. The Company undertakes no obligation to publicly update or
revise any forward-looking statements to reflect future events or
developments.
(more)
<PAGE>
<TABLE>
<CAPTION>
Summary unaudited financial information for the three-months
ended March 31, follows:
Better
(in millions, except per share data) 2000 1999 (Worse) Percent
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<S> <C> <C> <C> <C>
Sales:
Investment Castings $381.6 $ 372.7 $ 8.9 2
Fastening Systems 133.9 121.2 12.7 10
Propulsion Systems 147.1 140.2 6.9 5
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Total sales $662.6 $ 634.1 28.5 4
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Operating income:
Investment Castings $ 43.0 $ 55.0 $ (12.0) (22)
Fastening Systems 21.4 18.3 3.1 17
Propulsion Systems 20.8 17.8 3.0 17
Unallocated corporate expense (6.2) (7.3) 1.1 15
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Total operating income 79.0 83.8 (4.8) (6)
Interest income .7 2.7 (2.0) (74)
Interest expense (12.2) (9.5) (2.7) (28)
Other, net (1.6) (.2) (1.4) (700)
Income taxes (23.7) (22.5) (1.2) (5)
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Income before minority interest 42.2 54.3 (12.1) (22)
Minority interest (4.6) (7.1) 2.5 35
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Net income $ 37.6 $ 47.2 $(9.6) (20)
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Net income per share:
Basic $ 1.02 $ 1.29 $ (.27) (21)
Diluted $ 1.00 $ 1.26 $ (.26) (21)
=========================================================================================================
</TABLE>
Results for the current quarter include Continental/Midland's operations,
which was purchased in October 1999.
(more)
<PAGE>
The Company's management views continuing operations by excluding special
items that are not expected to have an impact on future operations. The
special items are detailed in the following schedules and do not qualify
for separate treatment under Generally Accepted Accounting Principles
(GAAP) and are not intended to replace the discussion of GAAP financial
statements. Rather, it is management's desire to disclose material events
that have had an impact on reported operations.
<TABLE>
<CAPTION>
Three Months Ended March 31
2000 2000 1999 1999
After-tax Earnings After-tax Earnings
(in millions, except per share data) Income Per Share Income Per Share
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<S> <C> <C> <C> <C>
Reported net income $37.6 $1.00 $47.2 $1.26
Special items
Howmet CDD stock option expense 1 3.3 .09
Howmet tender offer advisory fees2 1.2 .03
Howmet SAR benefit 3 (1.3) (.03)
7 percent tax dividend reversal 4 (7.1) (.19)
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Income without special items $42.1 $1.12 $38.8 $1.04
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</TABLE>
1) Higher expense associated with the increase in Cordant Technologies
Inc.'s common stock price.
2) Expenses incurred by Howmet in the current quarter associated with
Cordant Technologies Inc.'s offer to purchase Howmet's remaining
publicly held shares.
3) The prior year benefit resulted from a decrease in Howmet's common stock
price at March 31, 1999.
4) Taxes on accumulated dividends previously accrued on the Company's share
of Howmet's income were reversed after the Company increased its
ownership percentage in Howmet to 84.6 percent in February 1999.
####
<PAGE>
ITEM 7 FINANCIAL STATEMENTS ON FORM 8-K
Following are Cordant Technologies Inc. consolidated balance sheets,
statements of cash flows, and statements of stockholder's equity. The
complete statements including footnotes will be included in the Company's
first quarter Form 10-Q.
<TABLE>
<CAPTION>
CORDANT TECHNOLOGIES INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(IN MILLIONS, EXCEPT PER SHARE DATA)
Three Months Ended
March 31
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2000 1999
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<S> <C> <C>
Net sales $ 662.6 $ 634.1
Operating expenses:
Cost of sales 513.7 490.7
Selling, general and administrative 61.9 51.4
Research and development 8.0 8.2
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Total operating expenses 583.6 550.3
Income from operations 79.0 83.8
Interest income .7 2.7
Interest expense (12.2) (9.5)
Other, net (1.6) (.2)
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Income before income taxes and minority interest 65.9 76.8
Income taxes (23.7) (22.5)
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Income before minority interest 42.2 54.3
Minority interest (4.6) (7.1)
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Net income $ 37.6 $ 47.2
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Net income per share:
Basic $ 1.02 $ 1.29
Diluted $ 1.00 $ 1.26
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Dividends per share $ .10 $ .10
======================================================================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CORDANT TECHNOLOGIES INC.
CONSOLIDATED BALANCE SHEETS
(IN MILLIONS)
March 31
2000 December 31
(Unaudited) 1999
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<S> <C> <C>
Assets
Current assets
Cash and cash equivalents $ 21.1 $ 37.1
Receivables 293.0 238.0
Inventories 268.3 261.7
Deferred income taxes and prepaid expenses 63.6 67.2
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Total current assets 646.0 604.0
Property, plant and equipment at cost
Less allowances for depreciation 751.8 755.0
Other assets
Costs in excess of net assets of businesses
acquired, net 908.4 903.8
Patents and other intangible assets, net 101.1 104.7
Other noncurrent assets 118.1 114.5
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Total other assets 1,127.6 1,123.0
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Total assets $2,525.4 $2,482.0
========================================================================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CORDANT TECHNOLOGIES INC.
CONSOLIDATED BALANCE SHEETS
(IN MILLIONS)
March 31
2000 December 31
(Unaudited) 1999
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<S> <C> <C>
Liabilities and stockholders' equity
Current liabilities
Short-term debt $ 100.4 $ 83.6
Accounts payable 128.1 137.6
Accrued compensation 91.0 102.3
Other accrued expenses 212.8 216.9
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Total current liabilities 532.3 540.4
Noncurrent liabilities
Accrued retiree benefits 176.2 174.1
Deferred income taxes 57.3 61.5
Accrued interest and other noncurrent liabilities 215.5 211.6
Long-term debt 616.1 601.3
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Total noncurrent liabilities 1,065.1 1,048.5
Commitments and contingent liabilities
Minority interest 81.2 77.0
Stockholders' equity
Common stock (par value $1.00 per share) Authorized - 200 shares Issued -
41.1 shares at March 31, 2000 and
December 31, 1999 (includes treasury shares) 41.1 41.1
Additional paid-in capital 48.1 48.0
Retained earnings 842.4 808.5
Accumulated other comprehensive income (loss) (13.4) (10.0)
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918.2 887.6
Less common stock in treasury, at cost
(4.4 shares at March 31, 2000
and December 31, 1999, respectively) (71.4) (71.5)
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Total stockholders' equity 846.8 816.1
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Total liabilities and stockholders' equity $ 2,525.4 $2,482.0
========================================================================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CORDANT TECHNOLOGIES INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(IN MILLIONS)
Three Months Ended
March 31
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2000 1999
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<S> <C> <C>
Operating Activities
Net income $ 37.6 $ 47.2
Adjustments to reconcile net income to net cash
provided by operating activities:
Minority interest 4.6 7.1
Depreciation 21.7 19.5
Amortization 9.8 8.6
Changes in operating assets and liabilities:
Receivables (58.1) (45.8)
Inventories (8.0) (11.2)
Accounts payable and accrued expenses (32.1) (27.2)
Income taxes 6.6 21.0
Other 5.1 4.8
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Net cash (used for) provided by operating activities (12.8) 24.0
Investing Activities
Acquisitions (10.9) (385.0)
Purchases of property, plant and equipment (20.4) (31.1)
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Net cash used for investing activities (31.3) (416.1)
Financing Activities
Net change in short-term debt 17.5 50.7
Issuance of long-term debt 500.0 450.0
Repayment of long-term debt (485.3) (130.1)
Dividends paid (3.7) (3.7)
Stock option transactions .2 1.3
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Net cash provided by financing activities 28.7 368.2
Foreign currency rate changes (.6) (2.6)
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Decrease in cash and cash equivalents (16.0) (26.5)
Cash and cash equivalents at beginning of year 37.1 45.3
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Cash and cash equivalents at end of period $ 21.1 $ 18.8
======================================================================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CORDANT TECHNOLOGIES INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED)
(IN MILLIONS)
Accumulated
Additional Other Total
Common Paid-In Retained Treasury Comprehensive Stockholders'
Stock Capital Earnings Stock Income Equity
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Three months ended March 31, 1999
Balance, December 31, 1998 $41.1 $47.4 $658.8 $(75.5) $ (3.9) $667.9
Comprehensive income
Net income 47.2 47.2
Other comprehensive income
Minimum pension liability .9 .9
Cumulative translation adjustment (7.1) (7.1)
-----------
Comprehensive income 41.0
===========
Dividends paid (3.7) (3.7)
Stock options exercised and related
income tax benefits (.1 shares) (.5) 1.8 1.3
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Balance, March 31, 1999 $41.1 $46.9 $702.3 $(73.7) $ (10.1) $706.5
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Three months ended March 31, 2000
Balance, December 31, 1999 $41.1 $48.0 $808.5 $(71.5) $(10.0) $816.1
Comprehensive income
Net income 37.6 37.6
Other comprehensive income
Cumulative translation adjustment (3.4) (3.4)
-----------
Comprehensive income 34.2
===========
Dividends paid (3.7) (3.7)
Stock options exercised and related
income tax benefits .1 .1 .2
- --------------------------------------------------------------------------------------------------------------------
Balance, March 31, 2000 $41.1 $48.1 $842.4 $(71.4) $ (13.4) $846.8
====================================================================================================================
</TABLE>
<PAGE>
Following is additional unaudited supplemental information:
Cash Flow Data
The following tables provide cash flow data for both Cordant Technologies
and Howmet as neither company has access to the other's cash balances.
Selected Financial Data
For the three months ended March 31
<TABLE>
<CAPTION>
2000 1999
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(in millions) Cordant(a) Howmet Consolidated Cordant(a) Howmet Consolidated
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<S> <C> <C> <C> <C> <C> <C>
Net cash provided by
operating activities $ (4.8) $ (8.0) $ (12.8) $ 14.2 $ 9.8 $ 24.0
Capital expenditures (8.1) (12.3) (20.4) (7.8) (23.3) (31.1)
Dividends (3.7) - (3.7) (3.7) - (3.7)
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$ (16.6) $ (20.3) $ (36.9) $ 2.7 $ (13.5) $ (10.8)
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Total debt $ 666.1 $ 50.4 $716.5 $620.6 $154.0 $774.6
Less cash & cash
Equivalents (2.1) 23.2 21.1 .7 18.1 18.8
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$ 668.2 $ 27.2 $695.4 $619.9 $135.9 $755.8
==========================================================================================================================
<FN>
(a) Cordant, exclusive of Howmet.
</FN>
</TABLE>
<PAGE>
Book to Bill Ratios
Fastening Systems book-to-bill ratios, defined as period orders divided by
period shipments, for the quarter ended March 31, were as follows:
<TABLE>
<CAPTION>
2000 1999
-------------------------------------------------------------------------------------------------
<S> <C> <C>
Aerospace .75 .59
Industrial .94 1.06
Total .88 .90
</TABLE>
Book to bill ratios are used as an indicator of future sales, but as with
all indicators, has inherent limitations and actual results may be
different. This is not a GAAP disclosure, and other companies may calculate
this ratio differently and utilize the ratio for different purposes.
This Form 8-K includes or incorporates by reference forward-looking
statements within the meaning of Section 27A of the Securities Act and
Section 21E of the Exchange Act. Forward-looking statements, which are
based on assumptions and describe the Company's future plans, strategies
and expectations, are generally identifiable by the use of the words
"anticipate," "believe," "estimate," "expect," "intend," "project," or
similar expressions. These forward-looking statements are subject to risks,
uncertainties, and assumptions about the Company. Important factors that
could cause actual results to differ materially from the forward-looking
statements made in this document are set forth under the caption "Risk
Factors" and elsewhere in the Company's filings with the Securities and
Exchange Commission. If one or more of these risks or uncertainties
materialize, or if any underlying assumptions prove incorrect, the
Company's actual results, performance or achievements may vary materially
from any future results, performance or achievements expressed or implied
by these forward-looking statements. All forward-looking statements
attributable to the Company, or persons acting on the Company's behalf, are
expressly qualified in their entirety by the cautionary statements in this
paragraph. The Company undertakes no obligation to publicly update or
revise any forward-looking statements to reflect future events or
developments.
<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: April 20, 2000
