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1995
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
[FEE REQUIRED]
FOR THE FISCAL YEAR ENDED JULY 31, 1995 COMMISSION FILE NUMBER 1-6101
ROHR, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 95-1607455
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
850 LAGOON DRIVE, CHULA VISTA, CALIFORNIA 91910
(Address of principal executive offices)
(619) 691-4111
(Telephone No.)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
-------------------------------- -----------------------------------------
COMMON STOCK, $1 PAR VALUE NEW YORK STOCK EXCHANGE
PACIFIC STOCK EXCHANGE
THE STOCK EXCHANGE, LONDON
7% CONVERTIBLE SUBORDINATED NEW YORK STOCK EXCHANGE
DEBENTURES DUE 2012 PACIFIC STOCK EXCHANGE
THE STOCK EXCHANGE, LONDON
7-3/4% CONVERTIBLE SUBORDINATED NEW YORK STOCK EXCHANGE
NOTES DUE 2004
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE
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 by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (Section 229.405 of this chapter) is not contained herein, and
will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [ X ]
AT SEPTEMBER 8, 1995, THE AGGREGATE MARKET VALUE OF THE VOTING STOCK HELD BY
NONAFFILIATES OF THE REGISTRANT, BASED ON MARKET QUOTATIONS AS OF THAT DATE, WAS
APPROXIMATELY $291,505,154.
AS OF SEPTEMBER 8, 1995, THERE WERE 18,077,839 SHARES OF THE REGISTRANT'S
COMMON STOCK OUTSTANDING.
DOCUMENTS INCORPORATED BY REFERENCE:
------------------------------------
Portions of the following documents are incorporated into this report by
reference:
1. Part II Registrant's Annual Report to Shareholders for fiscal year ended
July 31, 1995.
2. Part III Registrant's definitive Proxy Statement to be filed with the
Securities and Exchange Commission within 120 days after the close
of the fiscal year.
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<PAGE>
TABLE OF CONTENTS
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PART 1
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Page
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<S> <C>
Item 1. Business....................... 1
General...................... 1
Products..................... 2
Contracts.................... 4
Subcontractors............... 6
Program Funding.............. 6
Principal Customers.......... 7
Backlog...................... 7
Competition.................. 7
Raw Materials and Suppliers.. 8
Employees.................... 9
Environmental Matters........ 9
Research and Development..... 9
Patents and Proprietary
Information................ 10
Manufacturing................ 10
Miscellaneous................ 10
Item 2. Properties..................... 11
Item 3. Legal Proceedings.............. 12
Item 4. Submission of Matters to a Vote
of Security Holders.......... 16
Additional Executive Officers of the
Item Registrant................... 16
PART II.
Item 5. Market for Registrant's Common
Equity and Related
Stockholder Matters......... 18
Item 6. Selected Financial Data....... 18
Item 7. Management's Discussion and
Analysis of Financial
Condition and Results of
Operations.................. 18
Item 8. Financial Statements and
Supplementary Data.......... 18
Item 9. Changes in and Disagreements
with Accountants on
Accounting and Financial
Disclosure.................. 18
PART III.
Item 10. Directors and Executive
Officers of the Registrant.. 19
Item 11. Executive Compensation........ 19
Item 12. Security Ownership of Certain
Beneficial Owners and
Management.................. 19
Item 13. Certain Relationships and
Related Transactions........ 19
PART IV.
Item 14. Exhibits, Financial Statement
Schedules, and Reports
on Form 8-K.................. 20
SIGNATURES
Signature Page................ 27
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PART 1
ITEM 1. BUSINESS
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GENERAL
Rohr Inc., (the "Company"), incorporated in Delaware in 1969, is the
successor to a business originally established in 1940 under the name of Rohr
Aircraft Corporation. The Company, a leading aerospace supplier, provides
nacelle and pylon systems integration, design, development, manufacturing, and
support services to the aerospace industry worldwide. The Company focuses its
efforts on the market for commercial aircraft which seat 100 or more passengers.
Its principal products include nacelles, which are the aerodynamic structures or
pods that surround an aircraft's engines; thrust reversers, which are part
of the nacelle system and assist in the deceleration of jet aircraft after
landing; pylons (sometimes referred to as struts) which are the structures that
attach the jet engines or the propulsion system to the aircraft; noise
suppression systems; engine components; and structures for high-temperature
environments. In addition, the Company conducts product research and development
in advanced composites and metals, high-temperature materials, acoustics, and
manufacturing processes for existing and future applications.
The Company sells products and services to the three major commercial
airframe manufacturers (Boeing, Airbus, and McDonnell Douglas) and to the five
major jet engine manufacturers (General Electric, Rolls-Royce, Pratt & Whitney,
CFM International, and International Aero Engines). In addition, the Company has
the right on certain programs to provide customer and product support directly
to airline operators and service centers around the world, including on-site
field services and the sale of spare parts. The Company's commercial and
government (military and space) products represented 88% and 12%, respectively,
of its sales in the fiscal year ended July 31, 1995.
The Company has over 50 years of experience in the aerospace industry.
Originally, the Company operated as a subcontractor to the airframe
manufacturers, building parts to the customer's design. Later, it began to build
to its own designs based on customer specifications. Eventually, the Company
also began operating as a subcontractor to the engine manufacturers who then
provided the engine with nacelle to the airframe manufacturers. Over the last
decade, the Company significantly expanded its role in many newer programs by
becoming a systems integrator for nacelle systems with responsibility for the
integration and management of the design, tooling, manufacture, and delivery of
complete nacelle systems, directing the efforts of international consortia in
some cases. As a result of this range of experience, the Company can provide
many different levels of service to its customers depending upon their needs.
The Company can build to the customer's design, assist in that design, or assume
total responsibility for design, manufacture, integration and product support.
In addition, over the last several years, the Company has expanded its services
to the airlines through the direct sale of spare parts, the provision of
technical support and training, and the operation of repair and overhaul
facilities.
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PRODUCTS
General. The Company designs and manufactures nacelle systems, nacelle
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components, pylons or struts, non-rotating components for jet engines, and other
components for commercial and military aircraft. A nacelle system generally
includes the nose cowl or inlet, fan cowl, nozzle systems and thrust reverser.
The nacelle houses electrical, mechanical, fluid, and pneumatic systems together
with various panels, firewalls, and supporting structures; the aircraft engine
(which is provided by the customer); and purchased or customer-furnished engine
equipment such as electrical generators, starters, fuel pumps and oil coolers.
The Company also performs engine build-ups ("EBU") by assembling nacelle systems
and the related electrical, mechanical, fluid and pneumatic systems onto core
aircraft engines.
Commercial. The Company manufactures and/or is responsible for the design
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of nacelle systems, including thrust reversers, for the McDonnell Douglas MD-80
and MD-90, the Pratt & Whitney PW4000 series engine option for the McDonnell
Douglas MD-11 and the Airbus A310 and A300-600. The Company manufactures the
thrust reverser, nozzle, pylons and fan cowl for Rolls-Royce engine options for
the Boeing 757; the nacelle without thrust reverser for the CF6-80C2, which is
the General Electric engine option for the Airbus A310 and A300-600 and
McDonnell Douglas MD-11; nacelle components, including the nose cowl, fan cowl,
and extension ring, for the Boeing 737; and the aft fan case nozzle and plug for
the General Electric GE 90 engine option for the Boeing 777. Major components
produced by the Company for the General Electric CF6-80C2 nacelle are also used
on the Boeing 747 and 767.
Programs for which the Company has become a systems integrator, with
responsibility for the integration and management of the design, tooling,
manufacture, and delivery of the complete nacelle or pylon system, include the
CFM International CFM56-5 and the International Aero Engines (an international
consortium) V2500 nacelle program, both of which engines are being competitively
marketed for the Airbus A319, A320 and A321; the pylon program for the McDonnell
Douglas MD-11 aircraft; the nacelle with thrust reverser for the CFM
International-powered Airbus A340; and the nacelle with thrust reverser for the
McDonnell Douglas MD-90 aircraft. The Company's enhanced role on these programs
broadens the Company's business base in the commercial aerospace industry, but
terms and conditions of these contracts require a substantial investment in
working capital and subject the Company to increased market risk relative to
the ultimate success of such programs. The Company, in turn, has subcontracted
the design and production of most components for the CFM56-5, nacelle components
on the V2500, and major components of the MD-11 and A340 contracts to foreign
and domestic companies. This enables the Company to improve its competitive
position and to pass on some of the risks associated with such programs to
subcontractors. However, the Company's performance and ultimate profitability on
these programs is dependent on the performance of its subcontractors, including
the timeliness and quality of their work, as well as the ability of the Company
to monitor and manage its subcontractors. See "Subcontractors".
Government (Military and Space). For military aircraft, the Company
-------------------------------
manufactures nacelles for the Lockheed C-130 propjet transport aircraft on which
final deliveries are scheduled for fiscal year 1996 and nacelle components for
re-engining of existing Boeing KC-135 military aerial refueling tankers. For the
U.S. space program, the Company is scheduled
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to complete deliveries in fiscal year 1996 of solid fuel rocket motor nozzles
and insulated casings which are used on the Titan Space Launch Vehicle. The
Company is providing technical support in designing the engine bay doors for the
U.S. Air Force F-22 tactical fighter aircraft. The Company's government business
has declined in recent years and the Company expects the percentage of its
revenues attributable to government sales to decline further in future years.
The extent of future sales under military programs is dependent, among other
things, upon continued government funding.
Spare Parts. The Company sells spare parts for both military and
-----------
commercial aircraft, including those for aircraft in use but no longer in
production. Such sales from continuing operations were approximately $142.5
million in fiscal 1995, $148.9 million in fiscal 1994, and $166.9 million in
fiscal 1993.
Historically, the Company has sold spare parts for commercial programs to
airframe or engine manufacturers which then resold them to the end user.
However, in recent years, under certain programs, the Company has acquired the
right from its customers to sell spare parts directly to airlines (although on
certain programs royalty payments to its customers are required). The contracts
that grant these rights to the Company generally require that the Company
provide technical and product support directly to the airlines. Thus, on certain
programs, the Company has the right to provide customer and product support
directly to approximately 150 airline operators and service centers worldwide.
The Company's direct sales of spare parts to the airlines are expected to
increase in the future as nacelle programs on which the Company sells spare
parts directly to the airlines mature and as the aircraft using those nacelles
age. Generally, the Company earns a higher margin on the direct sale of spare
parts to airlines than it does on the sale of spare parts to prime contractors
(for resale to the airlines). Prices for direct spare part sales are higher than
prices for spare parts sold to prime contractors, in part, because of additional
costs related to the technical and customer support activities provided to the
airlines.
Business Jets. In fiscal 1994, the Company sold and commenced the transfer
-------------
to the buyer of its business jet line of business which is accounted for as a
discontinued operation. The purchase agreement required the Company to
manufacture and deliver certain components and transfer program engineering and
tooling, tasks which were substantially completed in fiscal 1995. See "Notes to
the Consolidated Financial Statements, Note 11," contained in the Company's 1995
Annual Report to Shareholders.
Other Activities. The Company also manufactures other components for
----------------
military and commercial jet aircraft, including the nozzle and plug used on the
Rolls-Royce-powered versions of the Boeing 747 and 767 and the Airbus A330, the
fan exit duct for the Rolls-Royce engine used on the Boeing 757, the pylon or
strut assemblies for the Boeing 757 and the acoustical ducts and/or acoustic
panels for the Pratt & Whitney engine used on the McDonnell Douglas MD-80 and
the Boeing 757.
In June 1995, the Company finalized an agreement with Boeing to design,
tool and manufacture the inlet and fan cowls for the Boeing 737-700 aircraft.
Delivery of hardware is scheduled to start in fiscal 1997.
3
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The Company has been performing nacelle modification and integration
services for Pratt & Whitney, installing Boeing 757 nacelles under a Pratt &
Whitney license, on the PW2000 series engine for use on the former Soviet
Union's IL-96M/T transport aircraft. Pratt & Whitney has entered into a contract
with Boeing for additional nacelles and is negotiating final arrangements with
the Company for additional modification and integration services.
CONTRACTS
Most of the Company's major commercial contracts establish a firm unit
price, subject to cost escalation, over a number of years or, in certain cases,
over the life of the related program. Life-of-program agreements generally
entitle the Company to work as a subcontractor in the program during the entire
period the customer produces its aircraft or engine. While the customer retains
the right to terminate these long-term and life-of-program arrangements, there
are generally significant costs for doing so. The Company has experienced
pressures from customers to reduce prices. In response, the Company has
incorporated or is in the process of incorporating design changes on certain
programs, allowing for a more cost effective manufacture of certain products,
and is exerting pressure on its own suppliers to reduce prices.
The Company's long-term contracts generally contain escalation clauses for
revising prices based on published indices which reflect increases in material
and labor costs. Furthermore, in almost all cases, when a customer orders
production schedule revisions (outside of a range provided in the contract) or
design changes, the contract price is subject to adjustment. These long-term
contracts provide the Company with an opportunity to obtain increased profits if
the Company can improve production efficiencies over time, and the potential for
significant losses if it cannot produce the product for the agreed upon price.
The Company's other commercial contracts generally provide a fixed price
for a specified number of units which, in many cases, are to be delivered over a
specified period of time. Under these contracts, prices are re-negotiated for
each new order. As a result, the Company has the opportunity to negotiate price
increases for subsequent units ordered if production costs are higher than
expected. The Company's customers, however, may seek price reductions from the
Company in connection with any new orders they place.
On its longer-term contracts, the Company bases initial production prices
on estimates of the average cost for a block of the units which it and its
customer believe will be ordered. Generally, production costs on initial units
are substantially higher during the early years of a new contract or program,
when the efficiencies resulting from learning are not yet fully realized, and
decline as the program matures. Learning typically occurs on a program as tasks
and production techniques become more efficient through repetition of the same
manufacturing operation and as management implements actions to simplify product
design and improve tooling and manufacturing techniques. If the customer orders
fewer than the expected number of units within a specified time period, certain
of the Company's contracts have repricing clauses which increase the prices for
units that have already been delivered. However, other contracts do not include
such repricing provisions and force the Company to bear certain market risks.
The Company analyzed the potential market for the products under such contracts
and agreed to prices based on its estimate of the average estimated costs for
the units it expected to deliver under the program.
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Many of the Company's contracts have provided for the recovery of a
specified amount of nonrecurring, pre-production costs, consisting primarily of
design and tooling costs. In some cases, a significant portion of such pre-
production costs have been advanced by the customer. However, in negotiating
some contracts, the Company has agreed to defer recovery of pre-production costs
and instead to recover a certain amount of such costs with the sale of each
production unit over an agreed number of production units plus spares
equivalents. In addition, on some of these contracts, based on its analysis of
the potential market for the products covered by such contracts, the Company
agreed to amortize pre-production costs over a number of units which was larger
than the anticipated initial fabrication orders without the protection of a
repricing clause or guaranteed quantities of orders. On other commercial
contracts, the Company receives advance payments with orders, or other progress
or advance payments, which assist the Company in meeting its working capital
requirements for inventories. To reduce such funding requirements and market
risks, the Company has subcontracted substantial portions of several of its
programs. See "Subcontractors".
In accordance with practices in the aircraft industry, most of the
Company's commercial orders and contracts are subject to termination at the
convenience of the customer and on many programs the tooling and design prepared
by the Company are either owned by the customer or may be purchased by it at a
nominal cost. The contracts generally provide, upon termination of firm orders,
for reimbursement of costs incurred by the Company, plus a reasonable profit on
the work performed. The costs of terminating an entire contract or program can
be significantly greater for the customer than the costs of terminating specific
firm orders. All of the Company's government contracts are subject to
termination at the convenience of the government. In such a situation, the
Company is entitled to recover the costs it incurred prior to termination, plus
a reasonable profit on the work performed.
Under all contracts, the Company may encounter, and on several programs
from time to time has encountered, preproduction and/or production cost overruns
caused by increased material, labor or overhead costs, design or production
difficulties, increased quality requirements, redefined acceptance criteria on
government programs, and various other factors such as technical and
manufacturing complexity. The Company seeks recovery of such cost overruns from
the customer if they are caused by the action or inaction of the customer;
otherwise, such cost overruns will be, and in many cases have been, borne by the
Company.
Incident to the manufacture and sale by the Company of its products, the
Company is subject to possible liability by reason of (i) warranties against
defects in design, material and workmanship; (ii) potential product liability
responsibility arising out of the use of its products; and (iii) strict
liability arising from the disposal of certain wastes covered by environmental
protection laws. The Company also has varying contractual obligations to
maintain the ability to produce and service spare parts as long as there are
specified numbers of aircraft still in operation. Provisions of the Company's
contracts provide remedies ranging from actual damages to specified daily
penalties for late deliveries of products.
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SUBCONTRACTORS
The competitive market has required the Company to make substantial
financial investments in programs on which it participates. Both to reduce the
burden and risk of such financial investments, and also in some cases to
participate in foreign programs, the Company has further subcontracted the
design, development and production of substantial portions of several of its
major contracts to other foreign and domestic corporations. In return, those
companies provided a portion of the investment and assumed a portion of the risk
associated with various of the Company's programs. The Company's performance and
ultimate profitability on these programs is dependent on the performance of its
subcontractors, including the timeliness and quality of their work, as well as
the ability of the Company to monitor and manage its subcontractors.
PROGRAM FUNDING
The highly competitive nature of the aerospace market has required the
Company to commit substantial financial resources, largely for working capital,
to participate with its customers on certain long-term programs. Those working
capital requirements consist primarily of nonrecurring pre-production costs such
as design and tooling, recurring costs for inventories and accounts receivables.
In some cases, a significant portion of the pre-production costs have been
advanced by the customer. However, in negotiating some contracts, the Company
has agreed to defer recovery of pre-production costs and instead to recover a
certain amount of such costs with the sale of each production unit over an
agreed number of production units plus spares equivalents. On some commercial
contracts, the Company receives advance payments with orders, or other progress
or advance payments, which assist the Company in meeting its working capital
requirements for inventories. On government contracts, the Company receives
progress payments for both pre-production and inventory costs. To reduce both
its pre-production funding requirements and the build-up of program inventories,
the Company has entered into agreements with subcontractors to provide a portion
of the program funding needs and has subcontracted to these entities substantial
portions of many of its programs. See "Subcontractors." Advances and progress
payments have varied in the past and are subject to change in the future based
on changes in both commercial and government procurement practices and
governmental regulations. Any future change could affect the Company's need for
program funding.
Accounts receivable balances vary in accordance with various payment terms
and other factors including the periodic receipt of large payments from
customers for reimbursement of non-recurring costs or for amounts which had been
deferred pending aircraft certification.
The Company's primary sources of program funding have been funds
generated from operations and borrowings. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations--Liquidity and Capital
Resources" in the Company's 1995 Annual Report to Shareholders. With respect to
new programs which are developed, the Company anticipates that it may team with
partners, or obtain financial commitments from one or more qualified
subcontractors, prior to entering bids for work.
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PRINCIPAL CUSTOMERS
For a discussion of the Company's sales to its principal customers, see
"Notes to the Consolidated Financial Statements" in the Company's 1995 Annual
Report to Shareholders, Note 3--"Accounts Receivable--Sales."
BACKLOG
The Company's backlog is significant to its business because the production
of most Company products involves a long lead time from order to shipment date.
Firm backlog represents the sales price of all undelivered units covered by
customer orders. Firm backlog includes units ordered by a customer although the
Company and the customer have not yet agreed upon a sales price. In such cases,
the Company records in backlog an amount it believes (based upon all available
information) is a reasonable price estimate. The Company also reports
anticipated backlog, which represents the sales price of units which the Company
expects (based upon all available information) that its customers will order
under existing contracts and the Company will deliver within the next seven
years.
The Company's firm backlog at July 31, 1995, was approximately $1.0
billion, compared to $1.2 billion at July 31, 1994. Of such backlog,
approximately $0.5 billion is scheduled for delivery on or before July 31, 1996,
with the balance to be delivered in subsequent periods. A portion of the
Company's expected sales for fiscal 1996 is not included in firm backlog.
Anticipated backlog approximated $2.8 billion at July 31, 1995, and $2.5 billion
at July 31, 1994.
All of the Company's firm and anticipated backlog is subject to termination
or rescheduling at the customer's convenience. The Company's contracts generally
provide for reimbursement of costs incurred, plus a reasonable profit on such
costs, with respect to any firm orders that are terminated. Historically, it has
been rare for a customer to cancel units in firm backlog because of its
obligations to the Company with respect to such units and its obligations to
suppliers of components other than nacelles and pylons, who frequently are
producing concurrently components for use with the units ordered from the
Company.
COMPETITION
The Company's principal competition is Boeing (which in addition to being a
Company customer also manufactures nacelle systems and pylons for its own
aircraft), other significant aerospace corporations who have development and
production experience with respect to portions of the nacelle system, and the
companies to whom the Company has subcontracted various components and who could
(and have) bid on contracts in competition with the Company. Military aerospace
contractors are also potential competitors, as excess capacity created by
reductions in defense spending could cause some of these contractors to look to
expand in commercial markets.
Because of recent reductions in demand in the aircraft manufacturing
industry, excess production capacity exists in the market for a number of the
Company's principal products, which may result in increasingly intense price
competition for orders. While the Company believes it competes effectively,
there can be no assurance that the Company can maintain its share of the market
for these products.
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The Company believes that its capabilities and technology, which range from
research and development through component design and testing, flight
certification assistance, component production and integration and airframe
production line assistance, contribute significantly to its market position. The
Company also believes that its contractual rights to participate on programs for
long periods of time or, in some cases, over the life of programs also
contribute to the maintenance of its market position.
Even with respect to its shorter term contracts, the Company is likely to
continue working as a subcontractor for the prime contractors well beyond the
end of the existing shorter term contracts. The Company has long standing
relationships with all of its significant customers. The Company's continued
participation on existing programs provides cost advantages to the prime
contractors because it avoids the cost of disassembling, moving, reassembling
and recalibrating the customized tooling used to manufacture aerospace products
which would be necessary if a program were transferred to a new subcontractor at
the end of a short-term contract. In addition, the delays inherent in such a
transfer are likely to disrupt the prime contractor's own production schedule as
the flow of deliveries from the subcontractor is interrupted during the
transfer. It is also generally more expensive for a new subcontractor to begin
producing products in the middle of an existing program than it is for the
Company to continue producing the required products. A new subcontractor's
employees must learn program specific tasks with which the Company's employees
will already be familiar. As a result of all of these factors, it is unusual for
a prime contractor to shift a major aerospace subcontract from one manufacturer
to another at the end of a short-term contract.
Competitive factors include price, quality of product, design and development
capability, ability to consistently achieve scheduled delivery dates,
manufacturing capabilities and capacity, technical expertise of employees, the
desire or lack thereof of airframe and engine manufacturers to produce certain
components in-house, and the willingness, and increasingly the ability, of the
Company and other nacelle manufacturers to accept financial and other risks in
connection with new programs.
RAW MATERIALS AND SUPPLIERS
The principal raw materials used by the Company are sheet, plate, rod, bar,
tubing, and extrusions made of aluminum, steel, Inconel and titanium; electrical
wire; rubber; adhesives; and advanced composite products. The principal
purchased components are aircraft engine equipment, custom machined parts, sheet
metal details, and castings and forgings. All of these items are procured from
commercial sources. Supplies of raw materials and purchased parts historically
have been adequate to meet the requirements of the Company. However, from time
to time, shortages have been encountered, particularly during high industry
production and demand. While the Company endeavors to assure the availability of
multiple sources of supply, there are many instances in which, either because of
a customer requirement or the complexity of the item, the Company may rely on a
single source. The failure of any of these single source suppliers or
subcontractors to meet the Company's needs could seriously delay production on a
program. The Company monitors the delivery performance, product quality and
financial health of its critical suppliers, including all of its single source
suppliers. Over the last ten years, which includes the period from 1987 through
1991 when the Company's sales grew rapidly, there have been occasions of
periodic, short-
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term delays from suppliers, but none of these delays has had a material adverse
effect on the Company or its ability to deliver products to its customers.
EMPLOYEES
At July 31, 1995, the Company had approximately 4,000 full-time employees, of
whom approximately 1250 were represented by the International Association of
Machinists and Aerospace Workers under agreements which expire on February 15,
1996, and approximately 125 were represented by the International Union, United
Automobile, Aerospace and Agricultural Implement Workers of America under an
agreement which expires on October 29, 2000. The Company considers its
relationship with its employees generally to be satisfactory.
ENVIRONMENTAL MATTERS
As an international aerospace manufacturing corporation, the Company is
subject to foreign, federal, state and local laws and regulations that limit the
discharge of pollutants into the air, soil and water and establish standards for
the treatment, storage and disposal of hazardous wastes. If the Company were to
violate or otherwise to have liability pursuant to any of these laws or
regulations, it could be subject to judicial or administrative enforcement
proceedings requiring the Company to investigate the nature and extent of any
pollution it caused, to remediate such pollution, to install control devices in
its manufacturing facilities to reduce the amount of pollutants entering the
environment and to otherwise respond to orders and requests of the courts and
the various regulatory agencies. These proceedings could result in the Company
expending additional funds to satisfy judicial or regulatory decisions. The
Company does not believe that its environmental risks are materially different
from those of comparable manufacturing companies. Nevertheless, the Company
cannot provide assurances that environmental laws will not adversely affect the
Company's operations and financial condition in the future. Environmental risks
are generally excluded from coverage under the Company's current insurance
policies. See "Management's Discussion And Analysis of Financial Condition and
Results of Operations--Environmental Matters" and "Notes to the Consolidated
Financial Statements, Note 8, Commitments and Contingencies," in the Company's
1995 Annual Report to Shareholders. See, also, Item 3, "Legal Proceedings," in
this report.
The Company is involved in several proceedings and investigations related
to waste disposal sites and other environmental matters. See Item 3, "Legal
Proceedings," for a discussion of these matters, and additional suits and
matters that are pending or have been threatened against the Company.
Based upon presently available information, the Company believes that
aggregate costs in relation to all environmental matters of the Company will not
have a material adverse effect on the Company's financial condition, liquidity,
results of operations or capital expenditures.
RESEARCH AND DEVELOPMENT
The Company's research and development activities are designed to improve
its existing products and manufacturing processes, to enhance the
competitiveness of its new products, and to broaden the Company's aerospace
product base.
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Most of its product development is funded through regular production
contracts. The Company developed the world's first all composite nacelle and its
large cascade thrust reverser under such contracts. The Company also performs
self-funded research and development through which it developed proprietary
products which control noise and prevent ice formation on nacelles.
The Company seeks research and development contracts from the U.S.
government and from commercial customers in targeted areas of interest such as
composite materials and advanced low-cost processing and joining of new
materials. From time to time, the Company also enters into joint research and
development programs with its customers.
PATENTS AND PROPRIETARY INFORMATION
The Company has obtained patents and developed proprietary information
which it believes provide it with a competitive advantage. For example, the
Company holds patents on the DynaRohr family of honeycomb sound attenuation
structures, the state-of-the-art RohrSwirl system which prevents ice formation
on the leading edges of nacelles, and bonding processes for titanium and other
metals. In addition, the Company has developed proprietary information covering
such matters as nacelle design, sound attenuation, bonding of metallic and
advanced composite structures, material specifications and manufacturing
processes. The Company protects this information through inventions and
confidentiality agreements with its employees and other third parties. Although
the Company believes that its patents and proprietary information allow it to
produce superior products, it also believes that the loss of any such patent or
disclosure of any item of proprietary information would not have a material
adverse effect on the Company.
MANUFACTURING
The Company's products are manufactured and assembled at its facilities in
the United States and Europe by an experienced workforce. The Company considers
its facilities and equipment generally to be in good operating condition and
adequate for the purpose for which they are being used. In addition, it has a
substantial number of raw material suppliers and numerous subcontractors to
produce components, and in some cases, major assemblies.
The Company's European final assembly sites, which are located adjacent to
the Company's major European customer, Airbus, allow the Company to respond
quickly to customer needs. The Company believes that these European sites
provide it with advantages in obtaining certain contracts with Airbus because
they allow the Company to perform a portion of the required work in Europe.
MISCELLANEOUS
No material portion of the Company's business is considered to be seasonal.
10
<PAGE>
ITEM 2. PROPERTIES
-------------------
All owned and leased properties of the Company are generally well
maintained, in good operating condition, and are generally adequate and
sufficient for the Company's business. The Company's properties are
substantially utilized; however, due to the downturn in the aerospace industry,
the Company has excess manufacturing capacity. All significant leases (except
for leases associated with industrial revenue bond financings) are renewable at
the Company's option on substantially similar terms, except for increases of
rent which must be negotiated in some cases.
The following table sets forth the location, principal use, approximate
size and acreage of the Company's major production facilities. Those which
are owned by the Company and its subsidiaries are owned free of material
encumbrances, except as noted below:
<TABLE>
<CAPTION>
Owned Leased
---------------------------------- --------------------------
Approximate Approximate
Square Feet Square Feet
Type of of Facility Approximate of Facility Approximate
Location Facility(1) (000) Acreage (000) Acreage
-------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
ALABAMA
Fairhope(2)............. A,B 123 70.6 -- --
Foley(2)................ A,B 343 163.7 -- --
ARKANSAS
Arkadelphia(3).......... A,B 224 65.2 -- --
Heber Springs(2)........ A,B 153 70.5 -- --
Sheridan(2)............. A,B 149 78.0 -- --
CALIFORNIA
Chula Vista............. A,B,C,D 2,770 97.5 12.4 57.5
Moreno Valley(4)........ A,B,C 183 28.3 -- --
Riverside............... A,B,C,D 1,162 75.3 8.5 --
FRANCE
Toulouse/St. Martin..... A,B,C 132 7.0 18 3.2
Toulouse/Gramont(2)..... A,B 170 23.0 -- --
GERMANY
Hamburg................. A,B 28 5.3 -- --
MARYLAND
Hagerstown.............. A,B 423 56.8 -- --
TEXAS
San Marcos.............. A,B 172 55.0 -- --
----- ----- ---- ----
Approximate Totals...... 6,032 796.2 38.9 60.7
</TABLE>
__________________
(1) The letters indicated for each location describe the principal activities
conducted at that location:
A-Office
B-Manufacturing
C-Warehouse
D-Research and Testing
(2) Subject to a capital lease.
(3) The completion of construction of this facility has been deferred.
(4) This facility has been vacated and listed for sale.
11
<PAGE>
ITEM 3. LEGAL PROCEEDINGS
--------------------------
A. Accounts receivable and inventories include estimated recoveries
on constructive change claims that the Company has asserted with respect to
costs it incurred as a result of government imposed redefined acceptance
criteria on several government subcontracts. In connection with the Grumman F-14
subcontract, the Company filed Appeal No. 47139 (filed February 7, 1994) before
the Armed Service Board of Contract Appeals ("ASBCA"). In connection with the
Boeing E3/E6 subcontract, the Company filed Appeal No. 47430, (filed April 11,
1994) before the ASBCA. In the above appeals, the Company's customers are
sponsors of the claims, the U.S. Navy is the defendant, and the Company is
claiming monetary damages. Management believes that the amounts reflected in the
financial statements are a reasonable estimates of the amounts for which these
matters will be resolved. The resolution of these matters may take several
years. See "Notes to the Consolidated Financial Statements, Note 3", contained
in the Company's 1995 Annual Report to Shareholders.
B. In June 1987, the U.S. District Court of Los Angeles, in U.S. et al. vs.
Stringfellow (United States District Court for the Central District of
California, Civil Action No. 83-2501 (JMI)), granted partial summary judgment
against the Company and 14 other defendants on the issue of liability under the
Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA").
This suit, along with related lawsuits, alleges that the defendants are jointly
and severally liable for all damage in connection with the Stringfellow
hazardous waste disposal site in Riverside County, California. In June 1989, a
federal jury and a special master appointed by the federal court found the State
of California also liable for the cleanup costs. On November 30, 1993, the
special master released his "Findings of Fact, Conclusion of Law and Reporting
Recommendations of the Special Master Regarding the State Share Fact Finding
Hearing". In it, he allocated liability between the State of California and
other parties. As this hearing did not involve the valuation of future tasks and
responsibilities, the order did not specify dollar amounts of liability. The
order, phrased in percentages of liability, recommended allocating liability on
the CERCLA claims as follows: 65% to the State of California and 10% to the
Stringfellow entities, leaving 25% to the generator/counterclaimants (including
the Company) and other users of the site (or a maximum of up to 28% depending on
the allocation of any Stringfellow entity orphan share). On the state law
claims, the special master recommended a 95% share for the State of California,
and 5% for the Stringfellow entities, leaving 0% for the generator/counter
claimants. The special master's recommendation is subject to a final decision
and appeal. The Company and other generators of wastes disposed at the
Stringfellow site, which include numerous companies with assets and equity
significantly greater than the Company, are jointly and severally liable for the
share of cleanup costs for which the generators, as a group, ultimately are
found to be responsible. Notwithstanding, CERCLA liability is sometimes
allocated among hazardous waste generators who used a waste disposal site based
on the volume of hazardous waste they disposed of at the site. The Company is
the second largest generator of wastes disposed at the site by volume, although
it and certain other generators have argued the final allocation among
generators of their shares of cleanup costs should not be determined solely by
volume. The largest generator of wastes disposed at the Stringfellow site, by
volume, has indicated it is significantly dependent on insurance to fund its
share of any cleanup costs, and that it is in litigation with certain of its
insurers. The Company intends to continue to defend vigorously these matters and
believes, based on currently available information, that the ultimate
12
<PAGE>
resolutions of these matters will not have a material adverse effect on the
financial position or results of operations of the Company.
The Company filed claims against its comprehensive general liability
insurers for reimbursement of its cleanup costs at the Stringfellow site. These
claims are the subject of separate litigation, United Pacific Insurance Co., et
al. vs. Rohr Industries, Inc., et al., No. C634195 in the Los Angeles Superior
Court. The Company has reached settlements with its primary comprehensive
general liability insurance carriers and has retained the right to file future
claims against its excess carriers.
C. In December 1989, the Maryland Department of the Environment
("MDE") served the Company with a Letter and Consent Order No. CO-90-093. The
Consent Order calls for investigation and remediation of chemicals detected in
soil and ground water at the Company's bonding facility in Hagerstown, Maryland.
The Company and MDE subsequently negotiated a mutually acceptable Consent Order
under which the Company has developed a work plan to determine the nature and
extent of the pollution at the bonding plant. The Company had acquired the
bonding plant from Fairchild Industries, Inc. ("Fairchild"), in September 1987
and Fairchild had agreed to retain responsibility for and to indemnify the
Company against any claims and fees in connection with any hazardous materials
or pollutants released into the environment at or near the bonding plant or any
other property before the closing date of the sale. On March 11, 1993, the
Company and Fairchild executed a settlement agreement pursuant to which
Fairchild substantially reimbursed the Company for past costs relating to
environmental investigations at the bonding plant. The parties also agreed on a
procedure to perform the work required under the MDE Consent Order. Based on
currently available information, the Company believes that the resolution of
this matter will not have a material adverse effect on the financial position or
results of operation of the Company.
D. On March 23, 1992, a Deputy Attorney General for the State of
California advised the Company that it may be subject to suit pursuant to
Proposition 65 on the basis of data contained in a health risk assessment
("HRA") of the Company's Chula Vista facility conducted pursuant to the Air
Toxics Hot Spots Act, also known as California Assembly Bill AB-2588.
Proposition 65 requires manufacturers who expose any person to a chemical
resulting in an increased risk of cancer to issue a clear and reasonable warning
to such person and imposes substantial penalties for non-compliance. AB-2588
requires manufacturers to inventory their air emissions and to submit an HRA to
assess and quantify health risks associated with those emissions. On April 9,
1993, representatives of the Company met with the Deputy Attorney General to
discuss this matter and agreed to supply certain requested data to the
government. The Company is presently working on the procedures required to
produce this data. Based on currently available information, the Company
believes that the resolution of this matter will not have a material adverse
effect on the financial position or results of operation of the Company.
E. On July 22, 1994, the Department of Toxic Substances Control of
the State of California Environmental Protection Agency ("DTSC") filed an action
against the Company and other individuals and companies in the U. S. District
Court for the Eastern District of California, Case No. CV-F-94-5683-GEB DLB,
seeking, among other things, recovery of response costs approximating $1.3
million plus interest and attorney fees. The demand for payment, which is joint
and several, is for expenses allegedly incurred by DTSC personnel in the
oversight of the cleanup of the Rio Bravo deep injection well disposal site in
Shafter,
13
<PAGE>
California. The cleanup is currently being conducted by a group of cooperating
potentially responsible parties ("PRPs"), including the Company ("the
Cooperating PRPs"). In February 1993, the Cooperating PRP group wrote to DTSC
and advised them, among other things, of the Cooperating PRPs' continuing
efforts at the site and suggested that DTSC seek recovery of the oversight funds
from the non-cooperating PRPs. Since the demand of the DTSC was joint and
several, and would arguably cover all generators including the non-cooperating
PRPs, none of the $1.3 million demanded by the DTSC has been allocated to the
Cooperating PRPs. Some PRPs estimate the potential cost of cleanup to be
approximately $7 million. The Company and other PRPs could face joint and
several liability for the entire amount of cleanup costs, regardless of
Cooperating PRP or non-cooperating PRP status. The Company intends to vigorously
argue that such oversight costs should be recovered from the non-cooperating
PRPs. Based on currently available information, the Company believes that the
resolution of this matter will not have a material adverse effect on the
financial position or results of operation of the Company.
F. The Department of Toxic Substances Control of the State of California
Environmental Protection Agency ("DTSC") has informed the Company and
approximately 100 other individuals and companies that DTSC considered the
recipients to be potentially responsible parties liable for cleanup at the
Chatham Brothers Barrel Yard Site located in Escondido, California (the "Chatham
Site"). DTSC further advised the Company that unless a settlement could be
reached with the Company, it intended to name the Company as a defendant in a
cost recovery action it proposed to file in June 1993. The Company has no
knowledge of the filing of any such suit. After a thorough review of the
Company's records and information possessed by DTSC, and interviews of present
and former Company employees, the Company remains convinced that it has no
relationship whatsoever with the Chatham Site and, therefore, is not liable for
the cleanup of that site. In addition, the Company has discussed this matter
with a group of PRPs for the Chatham Site and has indicated its lack of
involvement with the site. If the Company fails to persuade DTSC that it is not
a PRP with regard to the Chatham Site, the Company could face joint and several
liability for the amounts involved. The potential cost of cleanup for the
Chatham Site is estimated by some PRPs to be approximately $30 million. If suit
is filed against the Company, the Company intends to defend vigorously this
matter. Based on currently available information, the Company believes that the
resolution of this matter will not have a material adverse effect on the
financial position or results of operation of the Company.
G. During fiscal 1993, Region IX of the United States Environmental
Protection Agency ("EPA") named the Company as a first-tier generator of
hazardous wastes that were transported to the Casmalia Resources Hazardous Waste
Management Facility (the "Casmalia Site") in Casmalia, California. First-tier
generators are the top 82 generators by volume of waste disposed of at the
Casmalia Site. The size of this group was chosen by the EPA. The EPA has given
the first-tier generators a list of work-related elements needing to be
addressed in a good faith offer to investigate and remediate the site. The
first-tier generators believe a collaborative approach early in the site cleanup
and closure process offers all parties an opportunity to help determine a
technical course of action at this site before the EPA has made final decisions
on the matter. The Company has joined approximately 49 other companies in the
Casmalia Resources Site Steering Committee which recently made a good faith
offer to the EPA. The Company could be found jointly and
14
<PAGE>
severally liable for the total amount of cleanup cost. The Company does not yet
know the ability of all other PRPs at this site, which include companies of
substantial assets and equity, to fund their allocable share. Some PRPs have
made preliminary estimates of cleanup costs at this site of approximately $60 to
$70 million and the Company's share (based on estimated, respective volumes of
discharge into such site by all generators, all of which cannot now be known
with certainty) could approximate $1.8 million. Based on currently available
information, the Company believes that the resolution of this matter will not
have a material adverse effect on the financial position or results of operation
of the Company.
H. By letter dated November 30, 1993, the Environmental Protection
Agency of the State of Ohio advised the Company that it is investigating
potential sources of contamination in the vicinity of property which was
previously owned by a wholly-owned subsidiary of the Company in the Village of
Millersburg, Ohio. This property was sold by the Company in December 1977 under
a purchase and sale agreement that transferred any such liability for
contamination to the purchaser The Company intends to cooperate fully with the
Ohio Environmental Protection Agency. Based on currently available information,
the Company believes that the resolution of this matter will not have a material
adverse effect on the financial position or results of operation of the Company.
I. By letter dated July 14, 1994, the Company was notified by the
State of Washington's Department of Ecology that the Department believes that
the Company to be a "potentially liable person" ("PLP") under the Model Toxics
Control Act of the Revised Code of Washington. The Company is alleged to have
arranged for the disposal or treatment of a hazardous substance or arranged with
a transporter for disposal or treatment of a hazardous substance at a facility
in Washington known as the Yakima Railroad Area. The Department has made a
written determination that the Company is a PLP. Based on currently available
information, the Company believes that the resolution of this matter will not
have a material adverse effect on the financial position or results of operation
of the Company.
J. From time to time, various environmental regulatory agencies
request that the Company conduct certain investigations on the nature and extent
of pollution, if any, at its various facilities. For example, such a request may
follow the spill of a reportable quantity of certain chemicals. At other times,
the request follows the removal, replacement or closure of an underground
storage tank pursuant to applicable regulations. At present, the Company's Chula
Vista facility is conducting certain investigations pursuant to discussions with
the San Diego County Department of Health Services, Hazardous Materials
Management Division and the San Diego Regional Water Quality Control Board. The
Company intends to cooperate fully with the various regulatory agencies.
K. In addition to the litigation discussed above, from time to time
the Company is a defendant in lawsuits involving (i) claims based on the
Company's alleged negligence or strict liability as a manufacturer in the design
or manufacture of various products; (ii) claims based upon environmental
protection laws; and (iii) claims based on the alleged wrongful termination of
its employees due to, among other things, discrimination based on race, age,
sex, national origin, handicap status, sexual preference, etc. The Company
believes that in those types of cases now pending, or in claims known by the
Company to be asserted against it whether or not reduced to a legal proceeding,
it either has no material liability or any such liability is adequately covered
by its reserves or its liability insurance, subject to certain deductible
15
<PAGE>
amounts. The Company is aware that various of its insurers may assert, and in
some such cases have asserted, that their insurance coverage does not provide
protection against punitive damages in any specific lawsuit. While there can be
no assurances that the Company will not ultimately be found liable for material
punitive damages, the Company does not now believe that it has an exposure to
any material liability for punitive damages.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
------------------------------------------------------------
There is no information required to be submitted by the Company under this
Item.
ADDITIONAL ITEM. EXECUTIVE OFFICERS OF THE COMPANY
---------------------------------------------------
As of September 11, 1995, the executive officers of the Company, in
addition to R. H. Rau, President and Chief Executive Officer, referred to at
Item 10, Part III, were as follows:
LAURENCE A. CHAPMAN, Senior Vice President and Chief Financial Officer,
age 46, joined the Company in May 1994. Prior to that and since 1981, he
worked for Westinghouse Electric Company ("Westinghouse"). He had been the
Vice President and Treasurer of Westinghouse since January 1992. He was
previously the Chief Financial Officer of Westinghouse Financial Services,
Inc., a wholly-owned subsidiary of Westinghouse. Prior to that, Mr. Chapman
held positions in Corporate Finance and Corporate Planning with Westinghouse.
JOHN R. JOHNSON, Senior Vice President, Programs, Technical Resources, and
Quality Assurance, age 58, has served in his present position since January
1994. Prior to that and since September 1979, he has served in other senior
management positions, including Senior Vice President, Programs and Support
from March 1993 to January 1994; Vice President, Government Business from
February 1990 to February 1993; Vice President, Planning from May 1989 to
February 1990; and Vice President, Manufacturing, Chula Vista, from April
1986 to May 1989. He joined the Company in September 1979.
RICHARD W. MADSEN, Vice President, General Counsel and Secretary, age 56,
has served in his present position since December 5, 1987. Prior to that and
since August 1979, he served as Secretary and head of the legal function, and
has been an employee of the Company since 1974.
ALVIN L. MAJORS, Vice President and Controller (Chief Accounting Officer),
age 55, has served in his present position since May 1989. Prior to that and
since December 1987 he served as the Company's Controller. Prior to that and
since 1971, he has served in other senior management positions. He has been
an employee of the Company since 1971.
DAVID R. WATSON, Senior Vice President - Customer Support and Business
Development, age 44, has served in his present position since March 1994,
assuming the title of Senior Vice President in June 1994. Prior to that and
since May 1991, he served as Vice President, Commercial Programs. In May
1989, he assumed the position of Vice President and General Manager of the
Company's Riverside facility. He has been an employee since February 1988
when he joined the Company as Vice President, Quality Assurance.
16
<PAGE>
GRAYDON A. WETZLER, Senior Vice President, Operations, age 53, has served
in his present position since January 1994. Prior to that and since July
1993, he served as Vice President, Technical and Quality Assurance. From
November 1990 to July 1993, he served as Vice President Quality/Product
Assurance. From April 1987 to November 1990, he served as Vice President -
Management Information Systems. He has served in other senior management
positions. He has been an employee of the Company since 1979.
The terms of office of Messrs. Chapman and Madsen expire on December 2, 1995.
The initial term of Mr. Rau's Employment Agreement terminates on July 31, 1996.
The other executive officers named above serve at the pleasure of the Chief
Executive Officer.
17
<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
------------------------------------------------------------------------------
Although a cash dividend has not been paid since 1975, a 2-for 1 stock
dividend was paid in December 1985. Currently, under the terms of certain
covenants in several of the Company's principal financing agreements, the
Company may not pay cash dividends until after April 25, 1997. Thereafter, the
Company's ability to pay cash dividends is restricted substantially.
Other information required by this Item is set forth in the section
headed "Rohr Profile" in the Registrant's Annual Report to Shareholders for the
fiscal year ended July 31, 1995, and such information is incorporated herein by
reference.
ITEM 6. SELECTED FINANCIAL DATA
--------------------------------
The information required by this Item is set forth in the section headed
"Selected Financial Data" in the Company's Annual Report to Shareholders for the
fiscal year ended July 31, 1995, and such information is incorporated herein by
reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
------------------------------------------------------------------------
RESULTS OF OPERATIONS
---------------------
The information required by this Item is set forth in the section headed
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" in the Company's Annual Report to Shareholders for the fiscal year
ended July 31, 1995, and such information is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
-----------------------------------------------------
The information required by this Item is set forth in the section headed
"Consolidated Balance Sheets," "Consolidated Statements of Operations,"
"Consolidated Statements of Shareholders' Equity," "Consolidated Statements of
Cash Flows," and "Notes to the Consolidated Financial Statements" in the
Company's Annual Report to Shareholders for the fiscal year ended July 31, 1995,
and such information is incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
------------------------------------------------------------------------
FINANCIAL DISCLOSURE
--------------------
There is no information required to be submitted by the Company under this
Item.
18
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
------------------------------------------------------------
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than 10 percent of a registered
class of the Company's equity securities, to file reports of ownership and
changes in ownership with the Securities and Exchange Commission ("SEC") and the
New York Stock Exchange. Officers, directors and greater than 10-percent
shareholders are required by SEC regulation to furnish the Company with copies
of all Section 16(a) forms they file. Based solely on its review of the copies
of such forms received by it, or written representations from certain reporting
persons that no such forms were required for those persons, the Company believes
that, during fiscal year 1995, all filing requirements applicable to its
officers, directors, and greater than 10-percent beneficial owners were complied
with.
The other information required under this Item is set forth in the section
headed "Election of Directors" in the Company's Proxy Statement for the 1995
Annual Meeting of Shareholders for fiscal year ended July 31, 1995, and such
information is incorporated herein by reference. See also "Additional Item" at
Part I of this report.
ITEM 11. EXECUTIVE COMPENSATION
--------------------------------
The information required by this Item is set forth in the section headed
"Executive Compensation and Other Information" and in the section headed
"Directors' Beneficial Ownership and Compensation" in the Company's Proxy
Statement for the 1995 Annual Meeting of Shareholders for fiscal year ended July
31, 1995, and such information is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
------------------------------------------------------------------------
The information required by this Item is set forth in the table headed
"Beneficial Ownership of Shares" in the Company's Proxy Statement for the 1995
Annual Meeting of Shareholders for fiscal year ended July 31, 1995, and such
information is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
--------------------------------------------------------
There is no information required to be submitted by the Company under this
Item.
19
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
-----------------------------------------------------------------
FORM 8-K
--------
The following consolidated financial statements of the Company and
consolidated subsidiaries, included in the Company's 1995 Annual Report to
Shareholders, are incorporated by reference in Item 8:
(a) 1. Financial Statements
--------------------
Consolidated Balance Sheets at July 31, 1995, and 1994
Consolidated Statements of Operations for Years Ended
July 31, 1995, 1994, and 1993
Consolidated Statements of Shareholders' Equity for
Years Ended July 31, 1995, 1994, and 1993
Consolidated Statements of Cash Flows for Years
Ended July 31, 1995, 1994, and 1993
Notes to the Consolidated Financial Statements
(a) 2. Financial Statement Schedule
-----------------------------
The following consolidated financial statement schedule of the
Company and subsidiaries is included in Part IV of this report.
Schedule II - Valuation and Qualifying Accounts
All other schedules are omitted because they are not applicable,
not required under the instructions or the information is included
in the financial statements or notes thereto.
(a) 3. Index to exhibits
-----------------
3.1 Restated Certificate of Incorporation of Rohr Industries, Inc.,
dated December 7, 1985, incorporated herein by reference to
Exhibit 3.1 filed with Form 10-K for fiscal year ended July 31,
1986.
3.2 Certificate of Designations of Series C Junior Participating
Cumulative Preferred Stock $1.00 Par Value of Rohr Industries,
Inc., dated August 15, 1986, incorporated herein by reference to
Exhibit 3.2 filed with Form 10-K for fiscal year ended July 31,
1986.
20
<PAGE>
3.3 Certificate of Amendment to Restated Certificate of
Incorporation, dated December 9, 1986, incorporated herein by
reference to Exhibit 3.3 filed with Form 10-K for fiscal year
ended July 31, 1987.
3.4 Certificate of Amendment to Restated Certificate of
Incorporation, dated December 10, 1991, incorporated herein by
reference to Exhibit II filed with Form 8-K dated as of
December 7, 1991.
3.5 Bylaws, as amended December 3, 1994, incorporated herein by
reference to Exhibit 3.8 filed with Form 10-Q for period ended
January 29, 1995.
4.1 Indenture, dated as of March 1, 1987, between Rohr Industries,
Inc., and Bankers Trust Company, trustee, relating to 9 1/4%
subordinated debentures, incorporated herein by reference to
Exhibit 4.1 filed with Form 10-Q for period ended May 2, 1993.
4.2 Indenture, dated as of October 15, 1987, between Rohr Industries,
Inc., and Bankers Trust Company, trustee, relating to 7%
convertible subordinated debentures, incorporated herein by
reference to Exhibit 4.2 filed with Form 10-Q for period ended
May 2, 1993.
4.3 Indenture, dated as of May 15, 1994, between Rohr, Inc., and IBJ
Schroder Bank and Trust Company, trustee, relating to 11 5/8%
senior notes, incorporated herein by reference to Exhibit 4.5
filed with Form 10-Q for period ended May 1, 1994.
4.4 Indenture, dated as of May 15, 1994, between Rohr, Inc., and The
Bank of New York, trustee, relating to 7 3/4% convertible
subordinated notes, incorporated herein by reference to Exhibit
4.6 filed with Form 10-Q for period ended May 1, 1994.
4.5 Rohr, Inc. Amended and Restated Note Agreement dated as of May
10, 1994, for 9.35% senior notes due January 29, 2000,
incorporated herein by reference to Exhibit 4.5, filed with Form
10-K for fiscal year ended July 31, 1994.
*4.5.1 First Amendment to Restated Note Agreement, dated as of June 30,
1995, relating to 9.35% senior notes due January 29, 2000.
4.6 Rohr, Inc. Amended and Restated Note Agreement dated as of May
10, 1994, for 9.33% senior notes due December 15, 2002,
incorporated herein by reference to Exhibit 4.6, filed with Form
10-K for fiscal year ended July 31, 1994.
*4.6.1 First Amendment to Restated Note Agreement, dated as of June 30,
1995, relating to 9.33% senior notes due December 15, 2002.
4.7 Amended and Restated Rights Agreement, dated as of April 6, 1990,
incorporated herein by reference to Item 7 of Form 8-K dated as
of April 6, 1990.
21
<PAGE>
10.1 Rohr Industries, Inc., Directors Retirement Plan, as amended
through the Seventh Amendment, incorporated herein by reference
to Exhibits 10.1 through 10.7, as set forth in Form 10-K for
fiscal year ended July 31, 1994.
10.2 Rohr Industries, Inc., Supplemental Retirement Plan (Restated
1983), as amended through the Twenty-Seventh Amendment,
incorporated herein by reference to Exhibits 10.2.1 through
10.2.27, as set forth in Form 10-K for fiscal year ended July 31,
1994.
*10.2.28 Twenty-eighth Amendment to Rohr Industries, Inc., Supplemental
Retirement Plan (Restated 1983), dated April 7, 1995.
*10.2.29 Twenty-ninth Amendment to Rohr Industries, Inc., Supplemental
Retirement Plan (Restated 1983), dated April 7, 1995.
*10.2.30 Thirtieth Amendment to Rohr Industries, Inc., Supplemental
Retirement Plan (Restated 1983), dated July 24, 1995.
10.3 Rohr, Inc. 1991 Stock Compensation for Non-Employee Directors,
incorporated by reference to Exhibit 10.5 filed with Form 10-K
for fiscal year ended July 31, 1992.
10.4 Rohr Industries, Inc., Management Incentive Plan (Restated 1982),
as amended through the Fifteenth Amendment, incorporated herein
by reference to Exhibits 10.4.1 through 10.4.15, as set forth in
Form 10-K for fiscal year ended July 31, 1994.
10.5 Rohr Industries, Inc., 1988 Non-Employee Director Stock Option
Plan, incorporated herein by reference to Exhibit 10.17 filed
with Form 10-K for fiscal year ended July 31, 1989.
10.6 Performance Unit Plan as amended through January 7, 1993,
incorporated herein by reference to Exhibit 10.13, filed with
Form 10-Q for period ended May 2, 1993.
10.7 Employment Agreement with Robert H. Rau, incorporated herein by
reference to Exhibit 10.12, filed with Form 10-Q for period ended
May 2, 1993.
10.8 Employment Agreement with L. A. Chapman, incorporated herein by
reference to Exhibit 10.12, filed with Form 10-K for fiscal year
ended July 31, 1994.
10.13 Credit Agreement, dated as April 26, 1989, among Rohr Industries,
Inc., as Borrower, and Citibank, N. A., Bankers Trust Company,
The First National Bank of Chicago and Wells Fargo Bank, N. A.,
and Citibank, N.A., as Agent, as amended through the Seventh
Amendment, incorporated herein by reference to Exhibits 10.13
through 10.13.7, as set forth in Form 10-K for the fiscal year
ended July 31, 1994.
*10.13.8 Eighth Amendment to Credit Agreement, dated as of November 29,
1994.
22
<PAGE>
*10.13.9 Ninth Amendment to Credit Agreement, dated as of June 30, 1995.
10.14 Lease Agreements, dated as of September 14, 1992, by and between
Rohr, Inc., as lessor, and State Street Bank and Trust Company of
California, National Association and W. Jeffrey Kramer, Trustees,
as lessee, incorporated herein by reference to Exhibit 10.22
filed with Form 10-K for fiscal year ended July 31, 1992.
10.15 Sublease Agreements, dated as of September 14, 1992, by and
between State Street Bank and Trust Company of California,
National Association and W. Jeffrey Kramer, Trustees, as
sublessor, and Rohr, Inc., as sublessee, as amended, supplemented
and modified through July 31, 1994, incorporated herein by
reference to Exhibits 10.15 through 10.15.5, as set forth in Form
10-K for the fiscal year ended July 31, 1994.
*10.15.6 Third Amendment Agreement, dated as of November 29, 1994, to
Sublease Agreement, dated as of September 14, 1992.
*10.15.7 Fourth Amendment Agreement, dated as of June 30, 1994, to
Sublease Agreement, dated as of September 14, 1992.
10.16 Pooling and Servicing Agreement, dated as of December 23, 1992,
among Rohr, Inc., RI Receivables, Inc., and Bankers Trust
Company, as Trustee, as amended through the Second Amendment,
incorporated herein by reference to Exhibits 10.16, through
10.16.2, as set forth in Form 10-K for the fiscal year ended
July 31, 1994.
10.17 Receivables Purchase Agreement, dated as of December 23, 1992,
among Rohr, Inc., and RI Receivables, Inc., incorporated herein
by reference to Exhibit 10.11, filed with Form 10-Q for period
ended May 2, 1993.
*11.1 Calculation of Primary Earnings per Share.
*11.2 Calculation of Fully Diluted Earnings per Share.
*13 Annual Report to Shareholders for fiscal year ended July 31,
1995. (The Annual Report, except for the portions thereof which
are expressly incorporated by reference in the Form 10-K, is
being furnished for the information of the Commission and is not
to be deemed "filed" as part of the Form 10-K.)
*23. Consent of Deloitte & Touche.
*27. Financial Data Schedule. (Filed with EDGAR filing only.)
(b) Reports on Form 8-K for Fourth Quarter of Fiscal 1995
-----------------------------------------------------
23
<PAGE>
There were no reports on Form 8-K filed by the Company for the fourth
quarter of fiscal 1995.
(c) Exhibits required by Item 601 of Regulation S-K
-----------------------------------------------
See Subparagraph (a) above.
(d) Financial Statements required by Regulation S-X
-----------------------------------------------
See Subparagraph (a) and (b) above.
__________________
* Exhibits filed with this report.
24
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders of Rohr, Inc.:
We have audited the consolidated financial statements of Rohr, Inc., as of
July 31, 1995 and 1994, and for each of the three years in the period ended July
31, 1995, and have issued our report thereon dated September 11, 1995; such
consolidated financial statements and report are included in your 1995 Annual
Report to Shareholders and are incorporated herein by reference. Our audits also
included the financial statement schedule of Rohr, Inc., listed in Item
14(a)(2). This financial statement schedule is the responsibility of the
Company's management. Our responsibility is to express an opinion based on our
audits. In our opinion, such financial statement schedule, when considered in
relation to the basic consolidated financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.
Deloitte & Touche LLP
San Diego, California
September 11, 1995
25
<PAGE>
ROHR, INC., AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED JULY 31, 1995, 1994, AND 1993
(dollars in thousands)
<TABLE>
<CAPTION>
Balance at Charged to Balance at
beginning of Costs and Accounts end of
period Expenses written-off period
------------ ---------- ----------- ----------
<S> <C> <C> <C> <C>
Reserve for bad debts:
1995 $21,422 $ $(8,500) $12,922
1994 11,122 10,300 -- 21,422
1993 11,122 -- -- 11,122
</TABLE>
26
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
ROHR, INC.
(Registrant)
By: /s/ R. H. Rau
-------------------------------------
R. H. Rau
President and Chief Executive Officer
By: /s/ L. A. Chapman
-------------------------------------
L. A. Chapman
Senior Vice President and Chief
Financial Officer
By: /s/ A. L. Majors
-------------------------------------
A. L. Majors
Vice President and Controller
(Chief Accounting Officer)
Date: September 11, 1995
27
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ W. Barnes Director SEPTEMBER 11, 1995
----------------------------
W. Barnes
/s/ E. E. Covert Director SEPTEMBER 11, 1995
----------------------------
E. E. Covert
/s/ W. M. Hoffman Director SEPTEMBER 11, 1995
----------------------------
W. M. Hoffman
/s/ S. F. Iacobellis Director SEPTEMBER 11, 1995
----------------------------
S. F. Iacobellis
/s/ D. Larry Moore Director SEPTEMBER 11, 1995
----------------------------
D. Larry Moore
Director SEPTEMBER __, 1995
----------------------------
R. M. Price
/s/ R. H. Rau Director SEPTEMBER 11, 1995
----------------------------
R. H. Rau
/s/ W. P. Sommers Director SEPTEMBER 11, 1995
----------------------------
W. P. Sommers
/s/ J. D. Steele Director SEPTEMBER 11, 1995
----------------------------
J. D. Steele
/s/ J. R. Wilson Director SEPTEMBER 11, 1995
----------------------------
J. R. Wilson
</TABLE>
28
<PAGE>
EXHIBIT 4.5.1
FIRST AMENDMENT
TO RESTATED NOTE AGREEMENT
FIRST AMENDMENT TO RESTATED NOTE AGREEMENT (this "Amendment"), dated as of
June 30, 1995, among ROHR, INC. (together with its successors and assigns, the
"Company"), and each of the holders of Notes whose name appears on the signature
pages hereof (individually, a "Holder" and, collectively, the "Holders").
RECITALS:
WHEREAS, the Company entered into those certain separate Note Agreements
(collectively, the "Original Note Agreement"), each dated as of January 15,
1990, between the Company and the purchasers identified on Annex 1 thereto,
pursuant to which the Company issued its 9.35% Senior Notes due January 29, 2000
(the "Notes"); and
WHEREAS, the Original Note Agreement has been amended by that certain
Amendment Agreement, dated June 30, 1993, that certain Second Amendment
Agreement, dated September 24, 1993, and that certain Third Amendment Agreement
(the "Third Amendment"), dated as of May 10, 1994; and
WHEREAS, Exhibit A of the Third Amendment (the "Restated Note Agreement")
amended and restated the Original Note Agreement in its entirety; and
WHEREAS, the Company has requested that the Holders modify certain terms of
the Restated Note Agreement; and
WHEREAS, the Holders are agreeable to such modifications on the terms and
conditions hereinafter set forth;
NOW THEREFORE, in consideration of the premises and other valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:
1. DEFINITIONS.
Capitalized terms used in this Amendment and not otherwise defined herein
shall have the respective meanings ascribed to them in the Restated Note
Agreement.
2. AMENDMENTS.
Subject to the satisfaction of the conditions set forth in paragraph 3
hereof, the Restated Note Agreement shall be amended as set forth below:
1
<PAGE>
2A. Paragraph 6E of the Restated Note Agreement shall be amended and
restated in its entirety to read as follows:
6E. ADJUSTED CONSOLIDATED TANGIBLE NET WORTH MAINTENANCE. The
Company will not permit, as of the last day of each fiscal quarter of the
Company, Adjusted Consolidated Tangible Net Worth to be less than the sum
of:
(i) $125,000,000; plus
(ii) the sum of the Fiscal Quarter Net Worth Increase Amounts
for each fiscal quarter of the Company ended after July 31, 1994; plus
(iii) the aggregate amount of all capital contributions
(which amount shall include, without limitation, all amounts
attributable to the conversion of debt of the Company to equity of the
Company, valued at the amount added to stockholders' equity in
accordance with GAAP) received by the Company or any Consolidated
Subsidiary (in each case, other than contributions originally made by
the Company or any Consolidated Subsidiary) in cash, in Property other
than cash or by conversion of Debt of the Company at any time after
the Third Amendment Date.
2B. Paragraph 6K of the Restated Note Agreement shall be amended and
restated in its entirety to read as follows:
6K. FIXED CHARGE COVERAGE. The Company will not permit, as of the
last day of each fiscal quarter of the Company, the ratio of Consolidated
Net Income Available for Fixed Charges for the period of 365 consecutive
days (or 366 consecutive days for any such period that includes February
29) ending on such day to Consolidated Fixed Charges for such period, to be
less than the ratio set forth in the chart below opposite the period set
forth below in which such day occurs:
Period Ratio
------ -----
Fiscal Year 1994 1.40 to 1.00
Fiscal Years 1995 and 1996 1.55 to 1.00
1st Quarter, Fiscal Year 1997 1.60 to 1.00
2nd Quarter, Fiscal Year 1997 1.65 to 1.00
3rd Quarter, Fiscal Year 1997 1.75 to 1.00
4th Quarter, Fiscal Year 1997 1.80 to 1.00
Fiscal Year 1998 and thereafter 2.00 to 1.00.
2
<PAGE>
2C. Paragraph 6L of the Restated Note Agreement shall be amended and
restated in its entirety to read as follows:
6L. DEBT RATIO. The Company shall not permit the Debt Ratio, as of the
last day of each fiscal quarter of the Company, to be greater than the
ratio set forth opposite the period set forth in the chart below in which
such day occurs:
Fiscal Year Ratio
----------- -----
1994 5.60 to 1.00
1995 5.00 to 1.00
1996 4.10 to 1.00
1997 3.20 to 1.00
1998 2.80 to 1.00
1999 and thereafter 2.50 to 1.00.
2D. Subclause (a) of clause (i) of paragraph 5D of the Restated Note
Agreement shall be amended by replacing the term "sixty (60)" appearing therein
with the term "forty-five (45)".
3. CONDITIONS TO EFFECTIVENESS.
The amendments set forth in Paragraph 2 shall become effective only upon
the satisfaction in all respects of the conditions set forth below (the date on
which such conditions are so satisfied being the "Effective Date"):
3A. The Required Holders and the Company shall have caused this Amendment
to be executed and delivered on their behalf by duly authorized officers thereof
and the Restated Note Agreement, as amended hereby, shall be in full force and
effect.
3B. Paragraphs 6E, 6G and 6R of Exhibit A to the Third Amendment
Agreement, dated as of May 10, 1994, between the Company and the note holders
party thereto and which relates to the Company's 9.33% Senior Notes due December
15, 2002, shall have been amended in substantially the same manner as set forth
in Paragraphs 2A, 2B and 2C hereof, respectively, and each of the Holders shall
have received a copy of such amendment.
3C. Sections 5.01(c), 5.01(d) and 5.02(a) in the Credit Agreement, dated
as of April 26, 1989, between the Company and the other parties thereto, as
amended through the date hereof, shall have been amended in substantially the
same manner as set forth in Paragraphs 2A, 2B and 2C hereof, respectively (such
agreement, as so amended, being the "Credit Agreement"), and each of the Holders
shall have received a copy of such amendments.
3
<PAGE>
3D. The Sublease Agreement, dated as of September 14, 1992, between the
Company and State Street Bank and Trust Company of California, National
Association, and an individual trustee, not in their individual capacities but
solely as owner trustees under a trust for the benefit of General Electric
Capital Corporation, as amended through the date hereof, shall have been amended
to incorporate by reference Sections 5.01(c), 5.01(d) and 5.02(a) of the Credit
Agreement, and each of the Holders shall have received a copy of such
amendments.
3E. The Company shall have paid all amounts which are payable pursuant to
paragraph 6 hereof.
4. REPRESENTATIONS AND WARRANTIES.
The Company represents and warrants to each of the Holders as follows:
4A. The Company:
(a) is a corporation duly organized, validly existing and in good
standing under the laws of its state of incorporation,
(b) has all requisite power and authority to own and operate its
Properties and to carry on its business as now conducted and presently
proposed to be conducted,
(c) has all necessary licenses and permits to own and operate its
Properties and to carry on its business as now conducted and as presently
proposed to be conducted, except where the failure to have any such license
or permit, together with all such other failures, would not be likely to
have a material and adverse effect on the business or financial condition
of the Company and the Subsidiaries, taken as a whole, or the ability of
the Company to perform its obligations set forth in this Amendment, and
(d) is duly qualified and is authorized to do business and is in good
standing as a foreign corporation in each jurisdiction where the character
of its Properties or the nature of its activities makes such qualification
necessary, except where the failure to be so qualified and authorized in
any jurisdiction, together with all such other failures, would not be
likely to have a material and adverse effect on the business or financial
condition of the Company and the Subsidiaries, taken as a whole, or the
ability of the
4
<PAGE>
Company to perform its obligations set forth in the Restated Note
Agreement, as amended by this Amendment.
4B. The Company has the corporate power and authority:
(a) to authorize, execute, deliver and enter into this Amendment; and
(b) to perform its obligations under the Restated Note Agreement, as
amended by this Amendment.
4C. This Amendment has been duly authorized by the Company. This
Amendment constitutes the legal, valid and binding obligation of the Company,
enforceable in accordance with its terms, except as such enforceability may be:
(a) limited by bankruptcy, insolvency or other similar laws affecting
the enforceability of creditors' rights generally; and
(b) subject to the availability of equitable remedies.
The Holders are entitled to the benefits of the Restated Note Agreement, as
amended hereby.
4D. The authorization, execution and delivery by the Company of this
Amendment is not, and the performance by the Company of its obligations under
the Restated Note Agreement as amended by this Amendment will not be,
inconsistent with its certificate of incorporation or by-laws, does not and will
not contravene any law, governmental rule or regulation, violate any judgment,
order or award of any arbitrator applicable to the Company, does not and will
not contravene any provision of, or constitute a default under, any indenture,
mortgage, contract or other instrument to which the Company is a party or by
which any of its Property is bound, and will not result in the imposition of a
Lien upon any Property of the Company.
4E. No consent or approval of, giving of notice to, registration with, or
taking of any other action in respect of or by, any federal, state or local
governmental authority or agency, or other Person (except for actions that will
have occurred by the Effective Date), is required with respect to:
(a) the authorization, execution and delivery by the Company of this
Amendment, or
(b) the performance by the Company of its obligations under the
Restated Note Agreement, as amended by this Amendment.
5
<PAGE>
4F. No event has occurred and no condition exists which would constitute a
Default or an Event of Default under the Restated Note Agreement, as amended
hereby.
4G. There is no agreement between the Company and the Persons named in
paragraphs 3B, 3C and 3D of this Amendment with respect to the matters described
in such paragraphs, including, without limitation, any agreement providing for
any compensation, fees or other consideration, other than as set forth in the
amendments provided to each Holder pursuant to such paragraphs.
4H. Except as disclosed on Annex 1 hereto, it is not reasonably
foreseeable that any action, suit, investigation or proceeding or group of
similar actions, suits, investigations or proceedings (including, as a group,
without limitation, all actions, suits, investigations or proceedings arising
out of federal or state environmental protection laws), pending or, to the
knowledge of the Company, threatened against the Company or any of the
Consolidated Subsidiaries, or any properties or rights of the Company or any of
the Consolidated Subsidiaries, by or before any court, arbitrator or
administrative or governmental body would result in any material adverse change
in the business, condition (financial or otherwise) or operations of the Company
and the Consolidated Subsidiaries taken as a whole.
5. CONSENT TO AMENDMENT OF CREDIT AGREEMENT.
The Holders consent to an amendment of Section 2.05(a) of the Credit
Agreement, for the sole purpose of clarifying that any automatic reduction in
the commitments of the Bank Lenders pursuant to such Section shall be determined
after giving effect to mandatory reductions of commitments pursuant to Section
2.05(c) of the Credit Agreement. Such amendment is set forth in the ninth
amendment to the Credit Agreement, dated as of June 30, 1995, and the Company
hereby represents and warrants that a true and correct copy of such ninth
amendment has been delivered to each Holder pursuant to paragraph 3C of this
Amendment. The aforesaid consent is given pursuant to the requirements of
paragraph 6O of the Restated Note Agreement.
6. COSTS AND EXPENSES.
Whether or not the conditions to effectiveness set forth in paragraph 3 of
this Amendment are satisfied, the Company shall pay all out-of-pocket expenses
of the Holders in connection with the negotiation, preparation, execution and
delivery of this Amendment, including, without limitation, all the fees and
expenses of special counsel
6
<PAGE>
engaged by the Holders in connection therewith. Without limiting the generality
of the foregoing, the Company will pay, on the Effective Date, the reasonable
fees and disbursements of the Holders' special counsel presented on such date,
and shall also pay, upon receipt of any statement thereof, each additional
statement for reasonable fees and disbursements of the Holders' special counsel
rendered after the Effective Date in connection with this Amendment.
7. MISCELLANEOUS.
7A. All provisions of this Amendment by or for the benefit of the parties
hereto shall bind and inure to the benefit of their respective successors and
assigns hereunder.
7B. This Amendment may be executed in one or more counterparts, all of
which taken together shall constitute a single instrument.
7C. THIS AMENDMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND
THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE INTERNAL LAWS OF THE STATE
OF NEW YORK.
7D. Except as expressly provided herein, (i) no other terms and provisions
of the Restated Note Agreement shall be modified or changed by this Amendment
and (ii) the terms and provisions of the Restated Note Agreement shall continue
in full force and effect. The Company hereby acknowledges and reaffirms all of
its obligations and duties under the Restated Note Agreement, as amended by this
Amendment, and under the Notes, as amended to date, issued thereunder.
7E. Any provision of this Amendment which is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
7
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed by their respective authorized officers as of the day and year
fist above written.
ROHR, INC.
By: /s/ L. A. Chapman
-----------------------------------
Name: L.A. Chapman
Title: Senior Vice President
and Chief Financial
Officer
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
By: /s/ Dennis B. Murphy
-----------------------------------
Name: Dennis B. Murphy
Title: Vice President
PRINCIPAL MUTUAL LIFE INSURANCE COMPANY
By: /s/ Fredrick A. Bell
-----------------------------------
Name: Fredrick A. Bell
Title: Director -
Securities Investment
By: /s/ James K. Hovey
-----------------------------------
Name: James K. Hovey
Title: Director -
Securities Investment
SUN LIFE ASSURANCE COMPANY OF CANADA
By: /s/ Richard Gordon
----------------------------------
Name: Richard Gordon
Title: Vice President,
U.S. Public Bonds - For
President
By: /s/ Jeffrey J. Skerry
---------------------------------
Name: Jeffrey J. Skerry
Title: Associate Counsel
for Secretary
8
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
By: /s/ C. James Prieur
----------------------------------
Name: C. James Prieur
Title: Vice President -
Investments
CONNECTICUT GENERAL LIFE INSURANCE COMPANY, ON
BEHALF OF ONE OR MORE ACCOUNTS,
CIGNA PROPERTY AND CASUALTY INSURANCE COMPANY,
INSURANCE COMPANY OF NORTH AMERICA AND
LIFE INSURANCE COMPANY OF NORTH AMERICA
EACH OF THESE ENTITIES, SEVERALLY AND NOT
JOINTLY, IS EITHER THE REGISTERED OWNER OF ONE OR
MORE SECURITIES PERTAINING HERETO OR IS A
BENEFICIAL OWNER OF ONE OR MORE SECURITIES OWNED
BY AND REGISTERED IN THE NAME OF A NOMINEE FOR
THAT ENTITY.
BY: CIGNA INVESTMENTS, INC.
By: /s/ Stephen J. Myott
-------------------------------------
Name: Stephen J. Myott
Title: Vice President
9
<PAGE>
EXHIBIT 4.6.1
FIRST AMENDMENT
TO RESTATED NOTE AGREEMENT
FIRST AMENDMENT TO RESTATED NOTE AGREEMENT (this "Amendment"), dated as of
June 30, 1995, among ROHR, INC. (together with its successors and assigns, the
"Company"), and each of the holders of Notes whose name appears on the signature
pages hereof (individually, a "Holder" and, collectively, the "Holders").
RECITALS:
WHEREAS, the Company entered into that certain Note Agreement (the
"Original Note Agreement"), dated as of December 21, 1992, between the Company
and the purchasers identified on Annex 1 thereto, pursuant to which the Company
issued its 9.33% Senior Notes due December 15, 2002 (the "Notes"); and
WHEREAS, the Original Note Agreement has been amended by that certain
Amendment Agreement, dated June 30, 1993, that certain Second Amendment
Agreement, dated September 24, 1993, and that certain Third Amendment Agreement
(the "Third Amendment"), dated as of May 10, 1994; and
WHEREAS, Exhibit A of the Third Amendment (the "Restated Note Agreement")
amended and restated the Original Note Agreement in its entirety; and
WHEREAS, the Company has requested that the Holders modify certain terms of
the Restated Note Agreement; and
WHEREAS, the Holders are agreeable to such modifications on the terms and
conditions hereinafter set forth;
NOW THEREFORE, in consideration of the premises and other valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:
1. DEFINITIONS.
Capitalized terms used in this Amendment and not otherwise defined herein
shall have the respective meanings ascribed to them in the Restated Note
Agreement.
2. AMENDMENTS.
Subject to the satisfaction of the conditions set forth in paragraph 3
hereof, the Restated Note Agreement shall be amended as set forth below:
1
<PAGE>
2A. Paragraph 6E of the Restated Note Agreement shall be amended and
restated in its entirety to read as follows:
6E. ADJUSTED CONSOLIDATED TANGIBLE NET WORTH MAINTENANCE. The
Company will not permit, as of the last day of each fiscal quarter of the
Company, Adjusted Consolidated Tangible Net Worth to be less than the sum
of:
(i) $125,000,000; plus
(ii) the sum of the Fiscal Quarter Net Worth Increase Amounts
for each fiscal quarter of the Company ended after July 31, 1994; plus
(iii) the aggregate amount of all capital contributions
(which amount shall include, without limitation, all amounts
attributable to the conversion of debt of the Company to equity of the
Company, valued at the amount added to stockholders' equity in
accordance with GAAP) received by the Company or any Consolidated
Subsidiary (in each case, other than contributions originally made by
the Company or any Consolidated Subsidiary) in cash, in Property other
than cash or by conversion of Debt of the Company at any time after
the Third Amendment Date.
2B. Paragraph 6G of the Restated Note Agreement shall be amended and
restated in its entirety to read as follows:
6G. FIXED CHARGE COVERAGE. The Company will not permit, as of the
last day of each fiscal quarter of the Company, the ratio of Consolidated
Net Income Available for Fixed Charges for the period of 365 consecutive
days (or 366 consecutive days for any such period that includes February
29) ending on such day to Consolidated Fixed Charges for such period, to be
less than the ratio set forth in the chart below opposite the period set
forth below in which such day occurs:
Period Ratio
------ -----
Fiscal Year 1994 1.40 to 1.00
Fiscal Years 1995 and 1996 1.55 to 1.00
1st Quarter, Fiscal Year 1997 1.60 to 1.00
2nd Quarter, Fiscal Year 1997 1.65 to 1.00
3rd Quarter, Fiscal Year 1997 1.75 to 1.00
4th Quarter, Fiscal Year 1997 1.80 to 1.00
Fiscal Year 1998 and thereafter 2.00 to 1.00.
2
<PAGE>
2C. Paragraph 6R of the Restated Note Agreement shall be amended and
restated in its entirety to read as follows:
6R. DEBT RATIO. The Company shall not permit the Debt Ratio, as of the
last day of each fiscal quarter of the Company, to be greater than the
ratio set forth opposite the period set forth in the chart below in which
such day occurs:
Fiscal Year Ratio
----------- -----
1994 5.60 to 1.00
1995 5.00 to 1.00
1996 4.10 to 1.00
1997 3.20 to 1.00
1998 2.80 to 1.00
1999 and thereafter 2.50 to 1.00.
2D. Clause (i) of paragraph 5D of the Restated Note Agreement shall be
amended by replacing the term "sixty (60)" appearing therein with the term
"forty-five (45)".
3. CONDITIONS TO EFFECTIVENESS.
The amendments set forth in Paragraph 2 shall become effective only upon
the satisfaction in all respects of the conditions set forth below (the date on
which such conditions are so satisfied being the "Effective Date"):
3A. The Required Holders and the Company shall have caused this Amendment
to be executed and delivered on their behalf by duly authorized officers thereof
and the Restated Note Agreement, as amended hereby, shall be in full force and
effect.
3B. Paragraphs 6E, 6K and 6L of Exhibit A to the Third Amendment
Agreement, dated as of May 10, 1994, between the Company and the note holders
party thereto and which relates to the Company's 9.35% Senior Notes due January
29, 2000, shall have been amended in substantially the same manner as set forth
in Paragraphs 2A, 2B and 2C hereof, respectively, and each of the Holders shall
have received a copy of such amendment.
3C. Sections 5.01(c), 5.01(d) and 5.02(a) in the Credit Agreement, dated
as of April 26, 1989, between the Company and the other parties thereto, as
amended through the date hereof, shall have been amended in substantially the
same manner as set forth in Paragraphs 2A, 2B and 2C hereof, respectively (such
agreement, as so amended, being the "Credit Agreement"), and each of the Holders
shall have received a copy of such amendments.
3
<PAGE>
3D. The Sublease Agreement, dated as of September 14, 1992, between the
Company and State Street Bank and Trust Company of California, National
Association, and an individual trustee, not in their individual capacities but
solely as owner trustees under a trust for the benefit of General Electric
Capital Corporation, as amended through the date hereof, shall have been amended
to incorporate by reference Sections 5.01(c), 5.01(d) and 5.02(a) of the Credit
Agreement, and each of the Holders shall have received a copy of such
amendments.
3E. The Company shall have paid all amounts which are payable pursuant to
paragraph 6 hereof.
4. REPRESENTATIONS AND WARRANTIES.
The Company represents and warrants to each of the Holders as follows:
4A. The Company:
(a) is a corporation duly organized, validly existing and in good
standing under the laws of its state of incorporation,
(b) has all requisite power and authority to own and operate its
Properties and to carry on its business as now conducted and presently
proposed to be conducted,
(c) has all necessary licenses and permits to own and operate its
Properties and to carry on its business as now conducted and as presently
proposed to be conducted, except where the failure to have any such license
or permit, together with all such other failures, would not be likely to
have a material and adverse effect on the business or financial condition
of the Company and the Subsidiaries, taken as a whole, or the ability of
the Company to perform its obligations set forth in this Amendment, and
(d) is duly qualified and is authorized to do business and is in good
standing as a foreign corporation in each jurisdiction where the character
of its Properties or the nature of its activities makes such qualification
necessary, except where the failure to be so qualified and authorized in
any jurisdiction, together with all such other failures, would not be
likely to have a material and adverse effect on the business or financial
condition of the Company and the Subsidiaries, taken as a whole, or the
ability of the Company to perform its obligations set forth in the Restated
Note Agreement, as amended by this Amendment.
4
<PAGE>
4B. The Company has the corporate power and authority:
(a) to authorize, execute, deliver and enter into this Amendment; and
(b) to perform its obligations under the Restated Note Agreement, as
amended by this Amendment.
4C. This Amendment has been duly authorized by the Company. This
Amendment constitutes the legal, valid and binding obligation of the Company,
enforceable in accordance with its terms, except as such enforceability may be:
(a) limited by bankruptcy, insolvency or other similar laws affecting
the enforceability of creditors' rights generally; and
(b) subject to the availability of equitable remedies.
The Holders are entitled to the benefits of the Restated Note Agreement, as
amended hereby.
4D. The authorization, execution and delivery by the Company of this
Amendment is not, and the performance by the Company of its obligations under
the Restated Note Agreement as amended by this Amendment will not be,
inconsistent with its certificate of incorporation or by-laws, does not and will
not contravene any law, governmental rule or regulation, violate any judgment,
order or award of any arbitrator applicable to the Company, does not and will
not contravene any provision of, or constitute a default under, any indenture,
mortgage, contract or other instrument to which the Company is a party or by
which any of its Property is bound, and will not result in the imposition of a
Lien upon any Property of the Company.
4E. No consent or approval of, giving of notice to, registration with, or
taking of any other action in respect of or by, any federal, state or local
governmental authority or agency, or other Person (except for actions that will
have occurred by the Effective Date), is required with respect to:
(a) the authorization, execution and delivery by the Company of this
Amendment, or
(b) the performance by the Company of its obligations under the
Restated Note Agreement, as amended by this Amendment.
4F. No event has occurred and no condition exists which would constitute a
Default or an Event of Default under the Restated Note Agreement, as amended
hereby.
5
<PAGE>
4G. There is no agreement between the Company and the Persons named in
paragraphs 3B, 3C and 3D of this Amendment with respect to the matters described
in such paragraphs, including, without limitation, any agreement providing for
any compensation, fees or other consideration, other than as set forth in the
amendments provided to each Holder pursuant to such paragraphs.
4H. Except as disclosed on Annex 1 hereto, it is not reasonably
foreseeable that any action, suit, investigation or proceeding or group of
similar actions, suits, investigations or proceedings (including, as a group,
without limitation, all actions, suits, investigations or proceedings arising
out of federal or state environmental protection laws), pending or, to the
knowledge of the Company, threatened against the Company or any of the
Consolidated Subsidiaries, or any properties or rights of the Company or any of
the Consolidated Subsidiaries, by or before any court, arbitrator or
administrative or governmental body would result in any material adverse change
in the business, condition (financial or otherwise) or operations of the Company
and the Consolidated Subsidiaries taken as a whole.
5. CONSENT TO AMENDMENT OF CREDIT AGREEMENT.
The Holders consent to an amendment of Section 2.05(a) of the Credit
Agreement, for the sole purpose of clarifying that any automatic reduction in
the commitments of the Bank Lenders pursuant to such Section shall be determined
after giving effect to mandatory reductions of commitments pursuant to Section
2.05(c) of the Credit Agreement. Such amendment is set forth in the ninth
amendment to the Credit Agreement, dated as of June 30, 1995, and the Company
hereby represents and warrants that a true and correct copy of such ninth
amendment has been delivered to each Holder pursuant to paragraph 3C of this
Amendment. The aforesaid consent is given pursuant to the requirements of
paragraph 6O of the Restated Note Agreement.
6. COSTS AND EXPENSES.
Whether or not the conditions to effectiveness set forth in paragraph 3 of
this Amendment are satisfied, the Company shall pay all out-of-pocket expenses
of the Holders in connection with the negotiation, preparation, execution and
delivery of this Amendment, including, without limitation, all the fees and
expenses of special counsel engaged by the Holders in connection therewith.
Without limiting the generality of the foregoing, the Company will pay, on the
Effective Date, the reasonable fees and disbursements of the Holders' special
counsel presented on such date, and shall also pay, upon receipt of any
statement
6
<PAGE>
thereof, each additional statement for reasonable fees and disbursements of the
Holders' special counsel rendered after the Effective Date in connection with
this Amendment.
7. MISCELLANEOUS.
7A. All provisions of this Amendment by or for the benefit of the parties
hereto shall bind and inure to the benefit of their respective successors and
assigns hereunder.
7B. This Amendment may be executed in one or more counterparts, all of
which taken together shall constitute a single instrument.
7C. THIS AMENDMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND
THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE INTERNAL LAWS OF THE STATE
OF NEW YORK.
7D. Except as expressly provided herein, (i) no other terms and provisions
of the Restated Note Agreement shall be modified or changed by this Amendment
and (ii) the terms and provisions of the Restated Note Agreement shall continue
in full force and effect. The Company hereby acknowledges and reaffirms all of
its obligations and duties under the Restated Note Agreement, as amended by this
Amendment, and under the Notes, as amended to date, issued thereunder.
7E. Any provision of this Amendment which is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed by their respective authorized officers as of the day and year
first above written.
ROHR, INC.
By: /s/ L. A. Chapman
------------------------------------
Name: L.A. Chapman
Title: Senior Vice President
and Chief Financial
Officer
7
<PAGE>
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
By: /s/ Dennis B. Murphy
-----------------------------------
Name: Dennis B. Murphy
Title: Vice President
PRINCIPAL MUTUAL LIFE INSURANCE COMPANY
By: Fredrick A. Bell
-----------------------------------
Name: Fredrick A. Bell
Title: Director -
Securities Investment
By: /s/ James K. Hovey
-----------------------------------
Name: James K. Hovey
Title: Director -
Securities Investment
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
By: /s/ Richard C. Morrison
-----------------------------------
Name: Richard C. Morrison
Title: Vice President
8
<PAGE>
EXHIBIT 10.2.28
ROHR, INC.
SUPPLEMENTAL RETIREMENT PLAN
TWENTY-EIGHTH AMENDMENT
Pursuant to Article 6, this amendment to the Supplemental Retirement Plan is
hereby adopted.
1. A new Section 8.15 is hereby added, to read in full as follows:
8.15 Laurence A. Chapman
-------------------
(a) The normal retirement benefit for which Mr. Chapman is entitled
under the Plan shall be established as provided at Paragraph 3.01
of the Plan; provided, however, that Mr. Chapman will be credited
with two years of Credited Service for each year, up to a maximum
of thirteen years, that he remains an Employee, with one year of
Credited Service for each year he remains as an Employee
thereafter.
(b) All other Benefits provided in the Plan, including Early
Retirement, Disability Retirement and Survivor Benefits, shall be
as set forth in the Plan, also based upon the above-described
normal retirement benefit.
2. In all other respects, the Plan is hereby ratified and confirmed.
IN WITNESS WHEREOF, Rohr, Inc., has caused its duly authorized officers to
execute this Amendment on the 7th day of April 1995.
ROHR, INC.
By: /s/ R. W. MADSEN
------------------------------------
R. W. Madsen
Vice President, General Counsel
and Secretary
<PAGE>
EXHIBIT 10.2.29
ROHR, INC.
SUPPLEMENTAL RETIREMENT PLAN
TWENTY-NINTH AMENDMENT
Pursuant to Article 6, this amendment to the Supplemental Retirement Plan is
hereby adopted.
1. A new Section 1.01(a) is hereby added, to read in full as follows:
"1.01(a) "Cash Balance Plan" means the Rohr, Inc., Cash Balance
Retirement Plan, effective January 1, 1995, as it may be
amended from time to time."
2. Subparagraph (a) of Section 1.04 is hereby amended to read as follows:
"(a) the base cash salary (including any lump sum payment paid under
the Company "Pay for Performance" system) paid during such year,
deferred and paid as a pretax savings contribution under the
Pretax Savings Plan for the Salaried Employees of Rohr, Inc., or
reduced and paid as a Company contribution pursuant to a
cafeteria plan described in Internal Revenue Code Section 125
plus the amounts in subparagraph (b) and (c), below.
Compensation shall not include any payment or reimbursement for
vacation earned but not taken or the value of fringe benefits,
such as group insurance, medical or dental benefits, stock
options or restriction stock (except for that paid in lieu of
merit increases, which will be valued for these purposes as at
fair market value on the date of the grant of stock), per diem or
out-of-plant field allowances".
3. Subparagraph (b) of Section 1.04 is hereby amended to read as follows:
"(b) The award, if any, paid or credited to the Participant with
respect to such calendar year under the Rohr Management Incentive
Plan, whether paid in cash or in the form of stock (in which
case, the stock shall be valued for these purposes as the fair
market value on the date of the grant of stock) or other
consideration or deferred under the provisions of that Plan."
3. Section 3.01(b) is hereby modified as follows:
(a) After subparagraph (iii), add a semi-colon and the word "and."
(b) Add a new subparagraph (iv), to read in full as follows:
"(iv) An amount equal to the monthly life annuity which the
Participant is then eligible to receive, whether or not he
is then receiving it and regardless of whether the
Participant has elected to receive his benefit as a monthly
benefit (single life or with a joint and survivor benefit)
or as a lump sum, under the Cash Balance Plan."
<PAGE>
4. In all other respects, the Plan is hereby ratified and confirmed.
IN WITNESS WHEREOF, Rohr, Inc., has caused its duly authorized
officers to execute this Amendment on the 7th day of April 1995.
ROHR, INC.
By: /s/ R. W. Madsen
-----------------------------------
R. W. Madsen
Vice President, General Counsel
and Secretary
<PAGE>
EXHIBIT 10.2.30
ROHR, INC.
SUPPLEMENTAL RETIREMENT PLAN
THIRTIETH AMENDMENT
Pursuant to Article 6, this amendment to the Supplemental Retirement Plan is
hereby adopted:
1. Pursuant to the provisions of Section 1.02, Ron Miller is declared to
remain eligible as a Participant under the Plan until July 1, 1999, and
will also be deemed eligible to take normal retirement on such date.
2. In all other respects, the Plan is hereby ratified and confirmed.
IN WITNESS WHEREOF, Rohr, Inc., has caused its duly authorized officers to
execute this Amendment on the 26th day of July 1995.
ROHR, INC.
BY: /s/ R. W. Madsen
------------------------------
R. W. Madsen
Vice President, General Counsel
and Secretary
<PAGE>
EXHIBIT 10.13.8
EIGHTH AMENDMENT
This EIGHTH AMENDMENT, dated as of November 29, 1994 among ROHR, INC.
(formerly known as Rohr Industries, Inc.) (the "Borrower"), the Lenders parties
to the Credit Agreement as defined and referred to below, and CITICORP USA,
INC., as Agent (the "Agent") for such Lenders.
PRELIMINARY STATEMENT. The Borrower has entered into a Credit
Agreement dated as of April 26, 1989, as amended by the First Amendment dated as
of July 21, 1989, the Second Amendment dated as of January 25, 1990, the Third
Amendment dated as of April 30, 1990, the Letter Amendment dated as of October
31, 1992, the Fifth Amendment dated as of July 9, 1993, the Sixth Amendment
dated as of September 24, 1993, and the Seventh Amendment, dated as of May 10,
1994 (said Credit Agreement, as so amended, being the "Credit Agreement", the
terms defined therein being used herein as therein defined unless otherwise
defined herein), with the Lenders parties thereto and the Agent. The Borrower
and the Lenders have agreed to amend the Credit Agreement as hereinafter set
forth.
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. Amendment to Credit Agreement. The Credit Agreement is,
-----------------------------
effective as of the date hereof and subject to the satisfaction of the
conditions set forth in Section 2 below, hereby amended as follows:
(a) Section 5.01(c) is hereby amended in its entirety to read as
follows:
"(c) Maintenance of Consolidated Tangible Net Worth. Maintain
----------------------------------------------
for the last day of each Fiscal Quarter, a Consolidated Tangible Net
Worth of not less than the sum of (i) $125,000,000 plus (ii) 50% of
----
the sum of the positive Consolidated Net Income, if any, during the
period from August 1, 1994 to the last day of such Fiscal Quarter,
plus (iii) the aggregate amount of all capital contributions
----
(including, without limitation, all amounts attributable to the
conversion of Debt of the Borrower to equity of the Borrower) received
by the Borrower or any Subsidiary (other than such contributions
originally made by the Borrower or any of its Subsidiaries) in cash,
in other property, or by conversion of Debt of the Borrower at any
time after the date of the Seventh Amendment."
(b) Section 5.01(d) is hereby amended in its entirety to read as
follows:
"(d) Maintenance of Ratio of Net Income Available for Fixed
------------------------------------------------------
Charges to Fixed Charges. Maintain for the last day of each Fiscal
------------------------
Quarter, a
1
<PAGE>
ratio of Consolidated Net Income Available for Fixed Charges for the
period of 365 consecutive days (or 366 consecutive days for any such
period that includes February 29) ending on the last day of such
Fiscal Quarter, to Consolidated Fixed Charges for such period of not
less than the ratio set forth opposite the period set forth below in
which such day occurs:
Period Ratio
------ -----
From the date of the 1.40 to 1
Seventh Amendment to
July 31, 1994
From August 1, 1994 to 1.55 to 1
July 31, 1995
From August 1, 1995 to 1.90 to 1
July 31, 1996
From August 1, 1996 to 2.00 to 1"
the Termination Date
(c) Section 5.02(a) is hereby amended in its entirety to read as
follows:
"(a) Debt Ratio. Permit the Debt Ratio for the last day of any
----------
Fiscal Quarter to be greater than the ratio set forth opposite the
period set forth below in which such day occurs:
Period Ratio
------ -----
From the date of the 5.60 to 1
Seventh Amendment to
July 31, 1994
From August 1, 1994 to 5.00 to 1
July 31, 1995
From August 1, 1995 to 4.10 to 1
July 31, 1996
From August 1, 1996 to 3.20 to 1"
the Termination Date
(d) Section 5.03 is hereby amended by:
(i) deleting the existing subsection (b) in its entirety;
2
<PAGE>
(ii) amending the existing Section 5.03(c) in full to read as
follows (with such subsection being relettered as indicated):
"(b) as soon as available and in any event within 45 days
after the end of each Fiscal Quarter (other than the last Fiscal
Quarter in each Fiscal Year), (i) a report covering such Fiscal
Quarter as well as the Fiscal Year to date, containing
Consolidated and consolidating balance sheets of the Borrower and
the Subsidiaries as of the end of such Fiscal Quarter and related
Consolidated and consolidating statements of earnings and
Consolidated statement of cash flows of the Borrower and the
Subsidiaries for the Fiscal Year to date and for the period
commencing at the end of the Fiscal Quarter immediately preceding
such Fiscal Quarter and ending with the end of such Fiscal
Quarter, and Consolidated statement of shareholders' equity for
the Fiscal Year to date, setting forth in each case (except in
the case of the statement of shareholders' equity) in comparative
form the corresponding figures for the corresponding period of
the prior year, all in reasonable detail and duly certified
(subject to year-end audit adjustments) by the chief financial
officer of the Borrower as having been prepared in accordance
with generally accepted accounting principles consistent with
those applied in the preparation of the financial statements
referred to in Section 4.01(e); and (ii) a Business Status Report
as of the last day of such quarter;";
(iii) amending the existing Section 5.03(d) in full to read as
follows (with such subsection being relettered as indicated):
"(c) as soon as available and in any event within 90 days
after the end of each Fiscal Year of the Borrower, a copy of the
annual audited report for such year for the Borrower and the
Subsidiaries, including therein a Consolidated balance sheet of
the Borrower and the Subsidiaries as of the end of such Fiscal
Year and related Consolidated statements of earnings,
shareholders' equity and cash flows of the Borrower and the
Subsidiaries for such Fiscal Year, setting forth in each case in
comparative form the
3
<PAGE>
corresponding figures for the corresponding period for the prior
year, in each case with the related opinion of Deloitte & Touche
LLP (or other independent public accountants of recognized
standing), together with (i) a Business Status Report as of the
last day of such Fiscal Year and (ii) a report covering the last
Fiscal Quarter in such Fiscal Year as well as such Fiscal Year,
containing Consolidated and consolidating balance sheets of the
Borrower and the Subsidiaries as of the end of such Fiscal Year
and related Consolidated and consolidating statements of earnings
and Consolidated statement of cash flows of the Borrower and the
Subsidiaries for such Fiscal Year and for the period commencing
at the end of the Fiscal Quarter immediately preceding such
Fiscal Quarter and ending with the end of such Fiscal Year, and
Consolidated statement of shareholders' equity for such Fiscal
Year, setting forth in each case (except in the case of the
statement of shareholders' equity) in comparative form the
corresponding figures for the corresponding period for the prior
year, all in reasonable detail and certified by the chief
financial officer of the Borrower as having been prepared in
accordance with generally accepted accounting principles
consistent with those applied in the preparation of the financial
statements referred to in Section 4.01(e);"; and
(iv) relettering the existing subsections (e) through (l) as
(d) through (k), respectively, and relettering the existing subsection
(n) as (l).
SECTION 2. Conditions of Effectiveness. This Eighth Amendment shall
---------------------------
become effective as of the date hereof when:
(a) the Agent shall have received counterparts of this Eighth
Amendment executed by the Borrower and the Majority Lenders or, as to any
such Lender, advice satisfactory to the Agent that such Lender has executed
counterparts of this Eighth Amendment,
(b) Paragraphs 6E, 6G and 6R in the Amended and Restated Note
Agreement, dated as of May 10, 1994, between the Borrower and the note
holders parties thereto and relating to the Company's 9.33% Senior Notes,
shall have been amended in substantially the same manner as set forth in
Sections 1(a), (b) and (c), respectively, hereof,
4
<PAGE>
(c) Paragraphs 6E, 6K and 6L in the Amended and Restated Note
Agreements, dated as of May 10, 1994, between the Borrower and the note
holders parties thereto and relating to the Company's 9.35% Senior Notes,
shall have been amended in substantially the same manner as set forth in
Sections 1(a), (b) and (c), respectively, hereof, and
(d) the Sublease Agreement, dated as of September 14, 1992, between
the Borrower and State Street Bank and Trust Company of California,
National Association, and an individual trustee, not in their individual
capacities but solely as owner trustees under a trust for the benefit of
General Electric Capital Corporation, as amended through October 31, 1994,
shall have been amended to incorporate by reference Sections 5.01(c),
5.01(d) and 5.02(a) of the Credit Agreement, as amended by this Eighth
Amendment.
SECTION 3. Reference to and Effect on the Credit Agreement. (a) Upon the
-----------------------------------------------
effectiveness of this Eighth Amendment, on and after the date hereof each
reference in the Credit Agreement to "this Agreement", "hereunder", "hereof",
"herein" or words of like import referring to the Credit Agreement, and each
reference in the Notes to the "Credit Agreement", "thereunder", "thereof",
"therein" or words of like import referring to the Credit Agreement, shall mean
and be a reference to the Credit Agreement as amended or otherwise modified
hereby.
(b) Except as specifically amended above, the Credit Agreement and the
A Notes, and each B Note outstanding on the date hereof, shall remain in full
force and effect and are hereby ratified and confirmed.
(c) Except as the Credit Agreement may expressly be modified hereby,
the execution, delivery and effectiveness of this Eighth Amendment shall not
operate as a waiver of any right, power or remedy of any Lender or the Agent
under the Credit Agreement or any of the Notes nor constitute a waiver of any of
the provisions contained therein.
SECTION 4. Costs and Expenses. The Borrower agrees to pay on demand
------------------
all costs and expenses of the Agent in connection with the preparation,
execution and delivery of this Eighth Amendment, including, without limitation,
the reasonable fees and out-of-pocket expenses of counsel for the Agent with
respect hereto and with respect to advising the Agent as to its rights and
responsibilities hereunder.
SECTION 5. Execution in Counterparts. This Eighth Amendment may be
-------------------------
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed and delivered shall be
deemed to be an
5
<PAGE>
original and all of which taken together shall constitute but one and the same
instrument. Delivery of an executed counterpart of a signature page to this
Eighth Amendment by telecopier shall be effective as delivery of a manually
executed counterpart of this Eighth Amendment.
SECTION 6. Governing Law. This Eighth Amendment shall be governed
--------------
by, and construed in accordance with, the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this Eighth
Amendment to be executed by their respective officers thereunto duly authorized,
as of the date first above written.
ROHR, INC.
By: /s/ L. A. Chapman
------------------------------
Title: Senior Vice President
and Chief Financial
Officer
CITICORP USA, INC., as Agent
By: /s/ Barbara A. Cohen
-----------------------------
Title: Vice President
BANKS
-----
CITIBANK, N.A.
By: /s/ Gerald R. Gallucci
-----------------------------
Title: Vice President
CITICORP USA, INC.
By: /s/ Barbara A. Cohen
-----------------------------
Title: Vice President
6
<PAGE>
WELLS FARGO BANK, N.A.
By /s/ S. R. Jeppsen
-----------------------------
Title: Vice President
THE FIRST NATIONAL BANK OF CHICAGO
By: /s/ Linda M. Thompson
-----------------------------
Title: Vice President
MANUFACTURERS BANK
By:
-----------------------------
Title:
ROYAL BANK OF CANADA
By: /s/ Brian W. Dixon
-----------------------------
Title: Senior Manager
THE LONG-TERM CREDIT BANK OF
JAPAN, LTD., Los Angeles Agency
By: /s/ M. Uematsu
-----------------------------
Title: Deputy General Manager
BANQUE FRANCAISE DU COMMERCE EXTERIEUR
By: /s/ Daniel Toffu
----------------------------
Title: First Vice President &
Regional Manager
By: /s/ Henry Lee
----------------------------
Title: Assistant Vice
President
7
<PAGE>
BANCA COMMERCIALE ITALIANA,
Los Angeles Foreign Branch
By: /s/ Richard E. Iwanicki
----------------------------
Title: Vice President
By: /s/ Jack Wityak
----------------------------
Title: Vice President
BANCO CENTRAL HISPANOAMERICANO, S.A.
By: /s/ John Estruch
----------------------------
Title: Vice President
THE MITSUBISHI TRUST AND BANKING CORPORATION,
LOS ANGELES AGENCY
By:
----------------------------
Title:
8
<PAGE>
EXHIBIT 10.13.9
NINTH AMENDMENT
This NINTH AMENDMENT, dated as of June 30, 1995, is entered into by
and among ROHR, INC. (formerly known as Rohr Industries, Inc.) (the "Borrower"),
the financial institutions listed on the signature pages hereof under the
heading "Lenders" (collectively the "Lenders"), and CITICORP USA, INC., a
Delaware corporation, as Agent (the "Agent") for such Lenders.
PRELIMINARY STATEMENT. The Borrower has entered into a Credit
Agreement dated as of April 26, 1989, as amended by the First Amendment dated as
of July 21, 1989, the Second Amendment dated as of January 25, 1990, the Third
Amendment dated as of April 30, 1990, the Letter Amendment dated as of October
31, 1992, the Fifth Amendment dated as of July 9, 1993, the Sixth Amendment
dated as of September 24, 1993, the Seventh Amendment dated as of May 10, 1994,
and the Eighth Amendment dated as of November 29, 1994 (said Credit Agreement,
as so amended, being the "Credit Agreement", the terms defined therein being
used herein as therein defined unless otherwise defined herein), with the
Lenders party thereto and the Agent. The Borrower and the Lenders have agreed
to amend and modify the Credit Agreement as hereinafter set forth.
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. Amendment to Credit Agreement. The Credit Agreement is,
-----------------------------
effective as of the date hereof and subject to the satisfaction of the
conditions set forth in Section 2 below, hereby amended as follows:
(a) Section 2.05(a) of the Credit Agreement is hereby amended by
replacing the parenthetical "(determined after giving effect to any
subsequent Assignment and Acceptance but without giving effect to any B
Reduction on such day)" with the parenthetical "(determined after giving
effect to any subsequent Assignment and Acceptance and any reduction of
such Lender's Commitment pursuant to Section 2.05(c), but without giving
effect to any B Reduction on such day)".
(b) Section 5.01(d) of the Credit Agreement is hereby amended in its
entirety to read as follows:
"(d) Maintenance of Ratio of Net Income Available for Fixed
------------------------------------------------------
Charges to Fixed Charges. Maintain for the last day of each Fiscal
------------------------
Quarter, a ratio of Consolidated Net Income Available for Fixed
Charges for the period of 365 consecutive days (or 366 consecutive
days for any such period that includes February 29) ending on the last
day of such Fiscal Quarter, to Consolidated Fixed Charges for such
period of not less than the ratio set forth opposite the period set
forth
<PAGE>
2
below in which such day occurs:
Period Ratio
------ -----
From August 1, 1994 to
July 31, 1996 1.55 to 1
From August 1, 1996 to
November 3, 1996 1.60 to 1.00
November 4, 1996 to
February 2, 1997 1.65 to 1.00
February 3, 1997 to the
Termination Date 1.75 to 1.00"
SECTION 2. Conditions of Effectiveness. This Ninth Amendment shall
---------------------------
become effective as of the date hereof when:
(a) the Agent shall have received counterparts of this Ninth Amendment
executed by the Borrower and the Majority Lenders, or, as to any of the
Lenders, advice satisfactory to the Agent that such Lenders have executed
counterparts of this Ninth Amendment;
(b) Paragraph 6G of the Amended and Restated Note Agreement, dated as
of May 10, 1994, between the Borrower and the note holders parties thereto
and relating to the Company's 9.33% Senior Notes, shall have been amended
in substantially the same manner as set forth in Section 1 hereof;
(c) Paragraph 6K of the Amended and Restated Note Agreements, dated as
of May 10, 1994, between the Borrower and the note holders parties thereto
and relating to the Company's 9.35% Senior Notes, shall have been amended
in substantially the same manner as set forth in Section 1 hereof;
(d) the Sublease Agreement, dated as of September 14, 1992, between
the Borrower and State Street Bank and Trust Company of California,
National Association, and an individual trustee, not in their individual
capacities but solely as owner trustees under a trust for the benefit of
General Electric Capital Corporation, as amended through November 29, 1994,
shall have been amended to incorporate by reference Sections 5.01(c),
5.01(d), and 5.02(a) of the Credit Agreement, as amended by this Ninth
Amendment; and
(e) The Commitment of each Lender shall have been reduced pursuant to
Section 2.05(c) of the Credit Agreement
<PAGE>
3
by at least 16.8% as a result of the Company's prepayment of at least
$21,000,000 in aggregate principal amount on the Company's 9.35% and 9.33%
senior notes due 2000 and 2002, respectively.
SECTION 3. Reference to and Effect on the Credit Agreement. (a)
-----------------------------------------------
Upon the effectiveness of this Ninth Amendment, on and after the date hereof
each reference in the Credit Agreement to "this Agreement", "hereunder",
"hereof", "herein" or words of like import referring to the Credit Agreement,
and each reference in the Notes to the "Credit Agreement", "thereunder",
"thereof", "therein" or words of like import referring to the Credit Agreement,
shall mean and be a reference to the Credit Agreement as amended or otherwise
modified by this Ninth Amendment.
(b) Except as specifically amended above, the Credit Agreement and the
A Notes, and each B Note outstanding on the date hereof, shall remain in full
force and effect and are hereby ratified and confirmed.
(c) Except as the Credit Agreement may expressly be modified hereby,
the execution, delivery and effectiveness of this Ninth Amendment shall not
operate as a waiver of any right, power or remedy of any Lender or the Agent
under the Credit Agreement or any of the Notes nor constitute a waiver of any of
the provisions contained therein.
SECTION 4. Costs and Expenses. The Borrower agrees to pay on demand
------------------
all costs and expenses of the Agent in connection with the preparation,
execution and delivery of this Ninth Amendment, including, without limitation,
the reasonable fees and out-of-pocket expenses of counsel for the Agent with
respect hereto and with respect to advising the Agent as to its rights and
responsibilities hereunder.
SECTION 5. Execution in Counterparts. This Ninth Amendment may be
-------------------------
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed and delivered shall be
deemed to be an original and all of which taken together shall constitute but
one and the same instrument. Delivery of an executed counterpart of a signature
page to this Ninth Amendment, or of any document required to be delivered
hereunder, by telecopier shall be effective as delivery of a manually executed
counterpart of this Ninth Amendment or such document.
SECTION 6. Governing Law. This Ninth Amendment shall be governed by,
-------------
and construed in accordance with, the laws of the State of New York.
<PAGE>
4
IN WITNESS WHEREOF, the parties hereto have caused this Ninth Amendment
to be executed by their respective officers thereunto duly authorized, as of the
date first above written.
ROHR, INC.
By: /s/ L. A. Chapman
-------------------------------------
Title: Senior Vice President
and Chief Financial Officer
CITICORP USA, INC., as Agent
By: /s/ Marjorie F. Futornick
-------------------------------------
Title: Vice President
Lenders
-------
CITIBANK, N.A.
By: /s/ Aerzoo Jafari
-------------------------------------
Title: Assistant Vice President
CITICORP USA, INC.
By: /s/ Marjorie F. Futornick
-------------------------------------
Title: Vice President
WELLS FARGO BANK, N.A.
By: /s/ Craig T. Ingram
-------------------------------------
Title: Vice President
THE FIRST NATIONAL BANK OF CHICAGO
By: /s/ Linda M. Thompson
-------------------------------------
Title: Vice President
MANUFACTURERS BANK
By:
-------------------------------------
Title:
<PAGE>
5
ROYAL BANK OF CANADA
By:
------------------------------------
Title:
THE LONG-TERM CREDIT BANK OF JAPAN, LTD.,
Los Angeles Agency
By: /s/ M. Uematsu
-----------------------------------
Title: Deputy General Manager
BANQUE FRANCAISE DU COMMERCE EXTERIEUR
By: /s/ Daniel Touffu
-----------------------------------
Title: First Vice President
and Regional Manager
By: /s/ Henry Lee
-----------------------------------
Title: Assistant Vice
President
BANCA COMMERCIALE ITALIANA,
Los Angeles Foreign Branch
By: /s/ Iacopo Navone
-----------------------------------
Title: Vice President &
Manager
By: /s/ Moufid Hanna
-----------------------------------
Title: Assistant Vice
President
BANCO CENTRAL HISPANOAMERICANO, S.A.
By:
------------------------------------
Title:
THE MITSUBISHI TRUST AND BANKING CORPORATION,
LOS ANGELES AGENCY
By:
------------------------------------
Title:
<PAGE>
EXHIBIT 10.15.6
THIRD AMENDMENT AGREEMENT
This Third Amendment Agreement (this "Amendment"), dated as of
November 29, 1994, is entered into by Rohr, Inc., a Delaware corporation
("Rohr"), State Street Bank and Trust Company of California, National
Association, a national banking association, not in an individual capacity but
solely as owner trustee ("Trustee"), and General Electric Capital Corporation
("GE Capital").
WITNESSETH:
WHEREAS, Rohr is a party to a Sublease Agreement, dated as of
September 14, 1992, with the Trustee and an individual trustee, as owner
trustees under that certain Trust Agreement for the benefit of GE Capital (such
Sublease Agreement as amended to date, being hereinafter referred to as the "GE
Capital Sublease"); and
WHEREAS, Rohr has requested that a covenant in the GE Capital Sublease
be modified;
NOW, THEREFORE, for and in consideration of the premises and other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. Amendment to GE Capital Sublease. Section XVII(j) of the GE Capital
---------------------------------
Sublease is amended in its entirety to read as follows:
(j) The provisions of Sections 5.01(c), 5.01(d) and 5.02(a) of the
Credit Agreement, dated as of April 26, 1989, among Sublessee, the
Lenders parties thereto and Citicorp USA, Inc., as agent (after giving
effect to the Eighth Amendment thereto dated as of November 29, 1994),
together with all relevant definitions pertaining to such Sections,
are incorporated herein by reference.
2. Jury Trial Waiver. EACH OF THE PARTIES HERETO HEREBY UNCONDITIONALLY
-----------------
WAIVES THEIR RESPECTIVE RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF, DIRECTLY OR INDIRECTLY, THIS
AMENDMENT, ANY DEALINGS AMONG ANY OF THEM RELATING TO THE SUBJECT
MATTER HEREOF, AND/OR THE RELATIONSHIP THAT IS BEING ESTABLISHED AMONG
THEM. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF
ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT (INCLUDING,
WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY
CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS).
1
<PAGE>
THIS WAIVER IS IRREVOCABLE MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AMENDMENT.
IN THE EVENT OF LITIGATION, THIS AMENDMENT MAY BE FILED AS A WRITTEN
CONSENT TO A TRIAL BY THE COURT.
3. Direction to Trustee. GE Capital hereby joins in this Amendment to
--------------------
acknowledge its consent to the terms and provisions hereof and to
direct the Trustee to enter into this Amendment and any other
agreements, instruments and documents to be executed in connection
herewith in its capacity as owner trustee.
4. Expenses. Rohr agrees to pay all reasonable costs and expenses of the
--------
Trustee and GE Capital in connection with the preparation, execution,
delivery and enforcement of this Amendment and any other agreements,
instruments and documents executed in connection herewith.
5. Further Assurances. Each of the parties hereto agrees that at any
------------------
time it shall execute and deliver all further instruments and
documents, and take all further action, in order to effectuate or
otherwise document the transactions contemplated hereby or otherwise
implement the intention of the parties under this Amendment, as any of
the parties hereto and their successors and assigns reasonably may
request.
6. Further Modifications. NO VARIATION OR MODIFICATION OF THIS AMENDMENT
---------------------
OR ANY WAIVER OF ANY OF ITS PROVISIONS OR CONDITIONS, SHALL BE VALID
UNLESS IN WRITING AND SIGNED BY AN AUTHORIZED REPRESENTATIVE OF EACH
OF THE PARTIES HERETO.
7. Multiple Counterparts. This Amendment may be executed in two or more
---------------------
counterparts, each of which shall be deemed to be an original as
against any party whose signature appears thereon, and all of which
shall constitute one and the same instrument.
8. Eighth Amendment. A copy of the Eighth Amendment to the Credit
----------------
Agreement, referred to in Section 1 of this Amendment, is attached
hereto as Exhibit A.
2
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed
by their duly authorized representatives as of the date first above written.
Rohr, Inc. State Street Bank and Trust Company of
California, National Association, not in its
individual capacity but solely as Corporate
Trustee
By: /s/ L. A. Chapman
-------------------------
Name: L. A. Chapman
Title: Senior Vice President and
Chief Financial Officer
By: /s/ Scott C. Emmons
------------------------------
Name: Scott C. Emmons
------------------------------
Title: Trust Officer
------------------------------
General Electric Capital Corporation
By: /s/ James R. Newman
------------------------------
Name: James R. Newman
------------------------------
Title: Credit Manager
------------------------------
3
<PAGE>
EXHIBIT 10.15.7
FOURTH AMENDMENT AGREEMENT
This Fourth Amendment Agreement (this "Amendment"), dated as of June
30, 1995, is entered into by Rohr, Inc., a Delaware corporation ("Rohr"), State
Street Bank and Trust Company of California, National Association, a national
banking association, not in an individual capacity but solely as owner trustee
("Trustee"), and General Electric Capital Corporation ("GE Capital").
WITNESSETH:
WHEREAS, Rohr is a party to a Sublease Agreement, dated as of
September 14, 1992, with the Trustee and an individual trustee, as owner
trustees under that certain Trust Agreement for the benefit of GE Capital (such
Sublease Agreement as amended to date, being hereinafter referred to as the "GE
Capital Sublease"); and
WHEREAS, Rohr has requested that a covenant in the GE Capital Sublease
be modified;
NOW, THEREFORE, for and in consideration of the premises and other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. Amendment to GE Capital Sublease. Section XVII(j) of the GE Capital
--------------------------------
Sublease is amended in its entirety to read as follows:
(j) The provisions of Sections 5.01(c), 5.01(d) and 5.02(a) of the
Credit Agreement, dated as of April 26, 1989, among Sublessee, the
Lenders parties thereto and Citicorp USA, Inc., as agent (after giving
effect to the Ninth Amendment thereto dated as of June 30, 1995),
together with all relevant definitions pertaining to such Sections,
are incorporated herein by reference.
2. Jury Trial Waiver. EACH OF THE PARTIES HERETO HEREBY UNCONDITIONALLY
-----------------
WAIVES THEIR RESPECTIVE RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF, DIRECTLY OR INDIRECTLY, THIS
AMENDMENT, ANY DEALINGS AMONG ANY OF THEM RELATING TO THE SUBJECT
MATTER HEREOF, AND/OR THE RELATIONSHIP THAT IS BEING ESTABLISHED AMONG
THEM. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF
ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT (INCLUDING,
WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY
CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS). THIS WAIVER
IS IRREVOCABLE MEANING THAT IT
1
<PAGE>
MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THE WAIVER SHALL
APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS AMENDMENT. IN THE EVENT OF LITIGATION, THIS
AMENDMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
3. Direction to Trustee. GE Capital hereby joins in this Amendment to
--------------------
acknowledge its consent to the terms and provisions hereof and to
direct the Trustee to enter into this Amendment and any other
agreements, instruments and documents to be executed in connection
herewith in its capacity as owner trustee.
4. Expenses. Rohr agrees to pay all reasonable costs and expenses of the
--------
Trustee and GE Capital in connection with the preparation, execution,
delivery and enforcement of this Amendment and any other agreements,
instruments and documents executed in connection herewith.
5. Further Assurances. Each of the parties hereto agrees that at any
------------------
time it shall execute and deliver all further instruments and
documents, and take all further action, in order to effectuate or
otherwise document the transactions contemplated hereby or otherwise
implement the intention of the parties under this Amendment, as any of
the parties hereto and their successors and assigns reasonably may
request.
6. Further Modifications. NO VARIATION OR MODIFICATION OF THIS AMENDMENT
---------------------
OR ANY WAIVER OF ANY OF ITS PROVISIONS OR CONDITIONS, SHALL BE VALID
UNLESS IN WRITING AND SIGNED BY AN AUTHORIZED REPRESENTATIVE OF EACH
OF THE PARTIES HERETO.
7. Multiple Counterparts. This Amendment may be executed in two or more
---------------------
counterparts, each of which shall be deemed to be an original as
against any party whose signature appears thereon, and all of which
shall constitute one and the same instrument.
8. Ninth Amendment. A copy of the Ninth Amendment to the Credit
---------------
Agreement, referred to in Section 1 of this Amendment, is attached
hereto as Exhibit A.
2
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed by their duly authorized representatives as of the date first above
written.
Rohr, Inc. State Street Bank and Trust Company of
California, National Association, not in its
individual capacity but solely as Corporate
Trustee
By: /s/ L. A. Chapman
--------------------------
Name: L. A. Chapman
Title: Senior Vice President and
Chief Financial Officer
By: /s/ Scott C. Emmons
--------------------------------
Name: Scott C. Emmons
--------------------------------
Title: Trust Officer
--------------------------------
General Electric Capital Corporation
By: /s/ James R. Newman
--------------------------------
Name: James R. Newman
--------------------------------
Title: Credit Manager
--------------------------------
3
<PAGE>
EXHIBIT 11.1
ROHR, INC. AND SUBSIDIARIES
---------------------------
CALCULATION OF PRIMARY NET INCOME PER SHARE OF COMMON STOCK
-----------------------------------------------------------
(in thousands except per share data)
<TABLE>
<CAPTION>
Year Ended July 31,
---------------------------------------------------------------
1995 1994 1993 1992 1991
------- ------- --------- ------- -------
<S> <C> <C> <C> <C> <C>
Net income (loss) from continuing operations before
extraordinary item and cumulative effect of accounting
changes $ 8,493 $ 4,669 $ (24,257) $ 996 $28,566
Income (loss) from discontinued operations, net of taxes 3,879 2,258 (6,324) 459 1,951
Loss from extraordinary item, net of taxes (1,146) - - - -
Cumulative effect of accounting changes, net of taxes - - (223,950) - -
------- ------- --------- ------- -------
Net income (loss) applicable to primary earnings per
common share $11,226 6,927 $(254,531) $ 1,455 $30,517
======= ======= ========= ======= =======
Common stock and common stock equivalents:
Average shares of common stock outstanding during the year 18,055 18,017 17,908 17,647 17,502
Net effect of common stock equivalents (principally stock
options and rights) 158 45 1 63 23
------- ------- --------- ------- -------
Total common stock and common stock equivalents 18,213 18,062 17,909 17,710 17,525
======= ======= ========= ======= =======
Net income (loss) per average share of common stock:
Net income (loss) from continuing operations before
extraordinary item and cumulative effect of accounting
changes $ 0.47 $ 0.26 $ (1.35) $ 0.05 $ 1.63
Income (loss) from discontinued operations, net of taxes 0.21 0.12 (0.36) 0.03 0.11
Extraordinary item, net of taxes (0.06)
Cumulative effect of accounting changes - net of taxes (12.50)
------- ------- --------- ------- -------
Primary net income (loss) per share $ 0.62 $ 0.38 $ (14.21) $ 0.08 $ 1.74
======= ======= ========= ======= =======
</TABLE>
<PAGE>
EXHIBIT 11.2
ROHR, INC. AND SUBSIDIARIES
CALCULATION OF FULLY DILUTED NET INCOME PER SHARE OF COMMON STOCK
(in thousands except per share data)
<TABLE>
<CAPTION>
Year ended July 31,
-------------------------------------------------------
1995 1994 1993 1992 1991
-------- ------- --------- ------- -------
<S> <C> <C> <C> <C> <C>
Net income (loss) from continuing operations before
extraordinary item and cumulative effect of accounting
changes applicable to primary earnings per common share $ 8,493 $ 4,669 $ (24,257) $ 996 $28,566
Add back interest and issue expense on convertible
debentures, net of tax adjustment 2,720 5,477 4,941 4,941 4,930
-------- ------- --------- ------- -------
Adjusted income (loss) from continuing operations before
extraordinary item and cumulative effect of accounting
changes applicable to common stock on a fully diluted basis 11,213 10,146 (19,316) 5,937 33,496
Income (loss) from discontinued operations, net of taxes 3,879 2,258 (6,324) 459 1,951
Loss from extraordinary item, net of taxes (1,146)
Cumulative effect of accounting changes, net of taxes (223,950)
-------- ------- --------- ------- -------
Net income (loss) applicable to fully diluted earnings
per share $ 13,946 $12,404 $(249,590) $ 6,396 $35,447
======== ======= ========= ======= =======
Average number of shares outstanding on a fully diluted basis:
Shares used in calculating primary earnings per share 18,213 18,062 17,909 17,710 17,525
Unexercised options 375 4 2
Shares on conversion of 7% debentures 2,674 2,674 2,674 2,674
Shares on conversion of 7.75% debentures 5,556 1,157
-------- ------- --------- ------- -------
Average number of shares outstanding on a fully diluted basis 24,144 21,893 20,583 20,388 20,201
======== ======= ========= ======= =======
Fully diluted net income (loss) per common share before
extraordinary item and cumulative effect of accounting changes $ 0.47 $ 0.47 $ (0.94) $ 0.29 $ 1.66
Income (loss) from discontinued operations, net of taxes 0.16 0.10 (0.31) 0.02 0.09
Extraordinary item, net of taxes (0.05)
Loss from cumulative effect of accounting changes, net
of taxes (10.88)
-------- ------- --------- ------- -------
Fully diluted net income (loss) per average common share $ 0.58 $ 0.57 $ (12.13) $ 0.31 $ 1.75
======== ======= ========= ======= =======
</TABLE>
Note:
The fully diluted net income (loss) per average share for the twelve months
ended July 31, 1995, excludes the assumed conversion of those securities that
results in improvement of earnings per share. The assumed conversion of the
Company's convertible debentures for prior years were antidilutive, hence
primary earnings per share are presented for these periods in the Company's
Consolidated Statement of Earnings.
<PAGE>
________________________________________________________________________________
SELECTED FINANCIAL DATA
--------------------------------------------------------------------------------
(IN THOUSANDS EXCEPT FOR PER-SHARE DATA, NUMBER OF EMPLOYEES, PERCENTAGES AND
RATIOS)
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
-----------------------------------------------------------------------------------------------------
1995 1994 1993 1992 1991
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Results of Operations:
Sales $ 805,000 $ 918,141 $1,149,503 $ 1,251,502 $1,361,766
Operating income (1) 64,629 51,389 8,562 44,801 97,353
Operating profit margin 8.0% 5.6% 0.7% 3.6% 7.1%
Net income (loss) from continuing
operations $ 8,493 $ 4,669 $ (24,257) $ 996 $ 28,566
Income (loss) from discontinued
operations, net of taxes 3,879 2,258 (6,324) 459 1,951
Extraordinary item, net of taxes (1,146) - - - -
Cumulative effect through
July 31, 1992 of accounting
changes, net of taxes (2) - - (223,950) - -
Net income (loss) $ 11,226 $ 6,927 $ (254,531) $ 1,455 $ 30,517
Primary earnings (loss)
per average share
of common stock from:
Continuing operations $ 0.47 $ 0.26 $ (1.35) $ 0.05 $ 1.63
Discontinued operations 0.21 0.12 (0.36) 0.03 0.11
Extraordinary item, net of taxes (0.06) - - - -
Cumulative effect through July
31, 1992, of accounting
changes, net of taxes (2) - - (12.50) - -
Primary earnings (loss) $ 0.62 $ 0.38 $ (14.21) $ 0.08 $ 1.74
Proforma amounts from
continuing operations (3):
Income (loss) $ 8,493 $ 4,669 $ (24,257) $ (35,314) $ (20,944)
Income (loss) per average
share of common stock $ 0.47 $ 0.26 $ (1.35) $ (1.99) $ (1.20)
Cash dividends per share of
common stock - - - - -
=====================================================================================================
Financial Position at July 31:
Total assets $ 976,540 $1,056,847 $1,017,786 $1,363,958 $1,411,498
Indebtedness 554,777 588,990 531,608 572,594 636,070
Net financings (4) 520,970 537,567 601,669 656,472 730,512
Shareholders' equity 175,931 146,909 182,243 448,866 441,401
Debt-to-equity ratio 3.15:1 4.01:1 2.92:1 1.28:1 1.44:1
Return on average equity 7.0% 4.2% - 0.3% 7.1%
Book value per common share 9.74 8.14 10.13 25.17 25.23
Number of full-time employees
at year end 4,000 4,900 6,500 9,200 11,200
Backlog - firm 1,000,000 1,200,000 1,400,000 1,900,000 2,200,000
Backlog - anticipated 2,800,000 2,500,000 2,600,000 2,300,000 2,800,000
=====================================================================================================
</TABLE>
(1) Fiscal years 1993 and 1992 include special provisions of $25.0 million and
$50.0 million, respectively.
(2) In the third quarter of fiscal 1993, the Company changed certain elements
of its application of accounting principles relating to long-term programs
and contracts, and adopted the provisions of SFAS Nos. 106 and 109.
(3) Assumes the changes in the application of accounting principles for long-
term programs and contracts, adopted effective August 1, 1992, are applied
retroactively.
(4) Net financings include indebtedness plus the receivables sales program
(which is reflected as a reduction to accounts receivable), and two sale-
leaseback transactions (accounted for as operating leases), reduced by
cash, cash equivalents, and short-term investments. See Notes 3 and 7 of
the Notes to the Consolidated Financial Statements.
<PAGE>
________________________________________________________________________________
MANAGEMENT'S DISCUSSION AND ANALYSIS
--------------------------------------------------------------------------------
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
The following discussion and analysis presents management's assessment of
material developments affecting the Company's results of operations, liquidity
and capital resources for each of the three years in the period ended July 31,
1995. These discussions should be read in conjunction with the Company's
Consolidated Financial Statements and the Notes thereto.
On certain long-term programs under which spares are sold directly to the
airlines, the Company accounts for profit and loss under the program method of
accounting. Under the program method of accounting, the quantity of units in
the profit center includes existing and anticipated orders and is predicated
upon contractual arrangements with customers and market forecasts. Included
within the program quantity are spares anticipated to be sold concurrent with
production units which historically have increased as a percentage of total
deliveries as a program matures. Generally, spares have been sold at higher
prices than production units. This inclusion of anticipated orders for
production units and spares in the program quantity generally increases
margins in the early program years and decreases margins in the later program
years compared to the margins that would be reported under other methods of
accounting. Programs for which the Company uses the program method of
accounting and for which spares are significant are as follows: V2500, CF6-
80C, CFM56-5, A340, and MD-90. See "Notes to Consolidated Financial Statement
-- Note 1b."
INDUSTRY OUTLOOK
Demand for new commercial jet aircraft is highly dependent upon consumer
demand for air travel, stability of fuel and ticket prices, the availability
of surplus or "parked" aircraft, and the financial capabilities of the
airlines and leasing companies to order and accept deliveries of new aircraft.
In addition, demand is dependent on the replacement of older aircraft which is
influenced by the time required for, and the economics of, compliance with
noise and maintenance regulations. Historically, such demands and financial
capabilities have been related to the stability and health of the United
States and world economies. Since the production of aircraft can take up to
18 months, production in the aircraft manufacturing industry typically lags
behind changes in the general economy.
United States and world airlines' (excluding the former U.S.S.R.)
passenger capacity increased rapidly from calendar 1990 through 1992 as the
commercial aircraft industry produced record numbers of aircraft. During this
same period, the United States and world economies experienced recession and
slow growth. United States' scheduled airlines reported operating losses
averaging approximately $2 billion per year, while non-United States scheduled
airlines reported significantly reduced profits. Aircraft deliveries by the
commercial aircraft manufacturing industry have been declining steadily since
calendar 1991. The industry delivered 830 new commercial transport aircraft
in calendar 1991, 784 in 1992, 629 in 1993, and 495 in 1994.
Recent indicators point to the beginning of improved market conditions for
new commercial jet aircraft. World airlines reported operating profit of $8.0
billion in 1994, as compared to $2.5 billion in 1993, and United States
airlines reported greatly improved operating profits for the first half of
calendar 1995. Other encouraging signs for improved market conditions are:
record load factors, a reduction in the number of "parked" aircraft, from
1,100 at the end of calendar 1993 to 741 at July 31, 1995 (a significant
number of these parked aircraft are not expected to return to service because
of age and noise restrictions), and an increased rate of orders for new
aircraft in the first half of 1995.
<PAGE>
________________________________________________________________________________
________________________________________________________________________________
Industry analysts have predicted that worldwide airline passenger traffic
will grow in excess of 5 percent per year over the long term. Factors
favoring long-term passenger traffic growth include a favorable economic
environment, pricing pressures from low-cost carriers, and the potential
expansion of air travel in emerging markets. Industry analysts also predict a
potentially large replacement market for commercial jet aircraft fueled by
noise legislation and aging fleets. While it is difficult to predict exactly
when commercial jet aircraft deliveries will increase, industry analysts agree
that favorable long-term traffic growth and the need to replace older aircraft
will result in increased demand for new commercial jet aircraft.
COMPANY OUTLOOK
As a result of the slow-down in the commercial aerospace industry and
reductions in the Company's military and space programs, the Company's
revenues from continuing operations have decreased approximately 41 percent
from a high in fiscal 1991 to fiscal 1995. In response to these conditions,
management has taken aggressive actions to reduce costs, increase
competitiveness, improve margins, and maximize cash flow.
Although the commercial airline industry is experiencing financial
improvement, the Company expects revenues in fiscal 1996 to be lower than in
fiscal 1995. This is due in part to the long lead time between orders and
deliveries of commercial aircraft. The Company's level of commercial spare
sales increased in fiscal 1995 over fiscal 1994 and the Company is expecting
continued increases in spare sales as conditions in the commercial airline
industry continue to improve.
The Company has experienced pressures from customers to reduce prices. In
response, the Company has incorporated or is in the process of incorporating
design changes on certain programs, allowing for a more cost effective
manufacture of certain products, and is exerting pressure on its own suppliers
to reduce prices.
RESULTS OF OPERATIONS
FISCAL 1995 COMPARED TO FISCAL 1994
Sales from continuing operations declined 12 percent from $918.1 million
in fiscal 1994 to $805.0 million in fiscal 1995. Commercial sales declined
primarily as a result of reduced deliveries of commercial aircraft.
Government sales declined due to the near completion of certain military and
space programs. Both the C-130 and the Titan Space programs are scheduled to
make final deliveries in fiscal 1996.
The Company reported operating income of $64.6 million, a margin of 8
percent, for fiscal 1995 compared to $59.3 million, a margin of 6.5 percent
(excluding the impact from unusual items), for fiscal 1994. Including the
effect of the unusual items of $7.9 million, operating income for fiscal 1994
was $51.4 million, a margin of 5.6 percent. Operating results in fiscal 1995
benefited from initial deliveries on the MD-90 program, improved results on
several other programs, and a reduction in general and administrative expense.
Net interest expense was $50.0 million for the year ended July 31, 1995,
compared to $46.8 million for fiscal 1994. Net interest expense increased due
to the $157.5 million of public debt offerings completed in the fourth quarter
of fiscal 1994.
Income from continuing operations for fiscal 1995 was $8.5 million or 47
cents per share compared to income from continuing operations for fiscal 1994
of $4.7 million or 26 cents per share. In fiscal 1994, the net impact of
unusual items was to reduce income from continuing operations by $4.8 million
or 27 cents per share.
<PAGE>
________________________________________________________________________________
________________________________________________________________________________
Discontinued Operations
In the fourth quarter of fiscal 1994, the Company sold and commenced the
transfer of its business jet line of business which is accounted for as a
discontinued operation in accordance with Accounting Principles Board Opinion
No. 30. The purchase agreement required the Company to manufacture and
deliver certain components and transfer program engineering and tooling, tasks
which were substantially completed in fiscal 1995. The business jet line of
business sales were approximately $22.3 million, $40.3 million, and $25.6
million in fiscal 1995, 1994, and 1993, respectively. Income from
discontinued operations, net of income tax benefit, was $3.8 million or 21
cents per share for fiscal 1995 compared to $2.2 million or 12 cents per
share for fiscal 1994. See "Notes to the Consolidated Financial Statements --
Note 11."
Extraordinary Item
In line with the objective of reducing its debt and interest expense, the
Company prepaid a portion of its 9.33% and 9.35% Senior Notes during the
fourth quarter of fiscal 1995. The cost associated with the early
extinguishment of this debt has been reported as an extraordinary item. Loss
from the extraordinary item, net of income tax benefit, was $1.1 million or 6
cents per share for fiscal 1995. See "Notes to the Consolidated Financial
Statements -- Note 7."
Net Income
Total net income for fiscal 1995 was $11.2 million or 62 cents per share
compared to $6.9 million or 38 cents per share in fiscal 1994.
FISCAL 1994 COMPARED TO FISCAL 1993
Sales from continuing operations declined 20 percent from $1,149.5 million
in fiscal 1993 to $918.1 million for fiscal 1994, due primarily to reduced
deliveries. Commercial sales aggregated 86 percent and government sales 14
percent in both fiscal 1994 and fiscal 1993.
The Company reported operating income of $59.3 million, an operating
margin of 6.5 percent, for fiscal 1994, excluding the impact from unusual
items. Including the effect of the unusual items of $7.9 million, operating
income was $51.4 million, a margin of 5.6 percent. The unusual items were the
write-off of unamortized pension past service costs related to the reduction
of employment levels, net of a gain on the sale of the Company's Auburn,
Washington, facility. Operating results in fiscal 1994 benefited from the
Company's downsizing, related reductions in overhead expenses, and improved
program results. During fiscal 1993, the Company reported operating income of
$8.6 million after the effect of a $25.0 million net provision for asset and
liability valuations and other costs related to the planned consolidation
activity. In addition, fiscal 1993 results were adversely impacted by losses
on tooling and design efforts and cost problems related to certain programs.
Net interest expense was $46.8 million for the year ended July 31, 1994,
compared to $47.9 million for fiscal 1993.
Income from continuing operations for fiscal 1994 was $4.7 million or 26
cents per share compared to a loss from continuing operations of $24.3 million
or $1.35 per share in fiscal 1993. The net impact of the unusual items
described above was to reduce net income for fiscal 1994 by $4.8 million or 27
cents per share. The increase in federal income tax rates resulting from the
Omnibus Budget Reconciliation Act, implemented in August 1993, increased net
income in fiscal 1994 by $2.8 million or 16 cents per share and increased the
deferred tax asset.
<PAGE>
________________________________________________________________________________
________________________________________________________________________________
LIQUIDITY AND CAPITAL RESOURCES
At July 31, 1995, the Company had $84.6 million of cash and cash
equivalents and $74.2 million available under its revolving credit agreement.
Over the next several years, the Company expects to increase its investments
in program inventory in connection with increased deliveries and anticipated
new business opportunities. The Company believes that its financial resources
are adequate to meet its requirements during this time period.
Cash provided by operating activities during fiscal 1995 totaled $27.5
million compared with $80.5 million for the prior fiscal year. Contributing
to the positive cash flow in fiscal 1995 and 1994 were cost reduction efforts,
increased productivity, and improved collection efforts on receivables.
Fiscal 1995 cash provided by operating activities was reduced by a $36 million
contribution to the Company's pension plans compared with $17 million in
fiscal 1994. Cash provided by operating activities for fiscal 1994 included
significant settlements associated with the restructuring of certain
contracts, several one-time payments for non-recurring tasks, and proceeds
from the sale of the business jet line of business. Cash provided by
operations is subject to significant variations from period to period.
The Company's total financings (balance sheet debt plus off-balance sheet
financings) aggregated $605.6 million at July 31, 1995, compared to $671.1
million at July 31, 1994. Balance sheet debt decreased $34.2 million from
$589.0 million on July 31, 1994, to $554.8 million on July 31, 1995. In
January 1995, the Company made the annual $12.5 million principal payment on
its 9.35% Senior Notes and in July 1995, the Company made voluntary
prepayments of $10.7 million on its 9.35% Senior Notes and $10.7 million on
its 9.33% Senior Notes. As a result of such prepayments, the commitment under
the Company's revolving credit agreement was reduced from $110 million to
$91.1 million. The availability of this commitment is also reduced by an
outstanding $16.9 million stand-by letter of credit. The revised commitment
will be reduced by an additional $8.3 million every six months beginning in
October 1995 until it reaches $66.2 million. The Company anticipates that it
will replace the existing revolving credit agreement with a new facility
during fiscal 1996.
The Company has a $40 million accounts receivable sales program, down from
$60 million at July 31, 1994. Under this off-balance sheet financing program,
the Company sells receivables from specified customers on an on-going basis.
Due to the slowdown in the aerospace industry and the resulting reduction in
the Company's sales, the amount of outstanding receivables from these
customers falls, from time to time, below levels required to support the
facility. As a result, the Company has elected to deposit cash collateral
when necessary to support the facility and has withdrawn cash when it is no
longer required to be deposited. At July 31, 1995, $13.5 million of cash
collateral was on deposit thereby reducing the effective utilization of this
program to $26.5 million.
The Company is also a party to certain equipment leases, treated as an
off-balance sheet financing, totaling $24.3 million at July 31, 1995. During
the second quarter of fiscal 1995, the Company restructured a major sales
leaseback agreement reducing the size of this financing by approximately $22
million. In connection with this restructuring, the equipment lessors
released their interest in certain Company equipment and receivables and
released the Company from its potential obligation to prepay up to $10 million
of equipment lease rentals.
At July 31, 1995, the underfunded status (excess of accrued benefit
obligations over plan assets) of the Company's defined benefit plans was $64.0
million, a reduction of $60.0 million from $124.0 million at July 31, 1994.
The improved funded status resulted primarily from an increase in the discount
rate used to calculate the present value of future pension plan liabilities,
the substantial contribution made by the Company in fiscal 1995, and market
gains. Reflecting a rise in market interest rates, the Company increased its
discount rate to 8.25 percent for its fiscal 1995 valuation from the 7.5
percent used for its fiscal 1994 valuation. This decrease in the underfunded
status of the plans resulted in a $17.5 million reduction in the charge to
shareholders' equity in fiscal 1995 and a $11.7 million decrease to the
Company's deferred tax asset account.
<PAGE>
________________________________________________________________________________
________________________________________________________________________________
The Company's required annual contribution to its defined benefit plans is
determined in accordance with IRS regulations. Due to the underfunded status
of the pension plans, these regulations required the Company to make
significant annual cash contributions to the pension plans. During fiscal
1995, the Company's contributions to its pension plans aggregated $36.0
million. A significant level of contributions is expected to continue until
the plans approach a fully funded status. The Company expects to have
sufficient liquidity to make these increased contributions. See "Notes to the
Consolidated Financial Statements -- Note 9."
The Company's net inventory increased to $390.3 million at July 31, 1995
from $363.2 million at July 31, 1994. Production inventory declined
reflecting the reduced sales volume and the efforts of management to control
inventory levels through shorter lead times and just-in-time contracts. In
addition, pre-production inventory declined as prior investments were
recovered from customers, but grew on the 737-700 program as the program
progressed through the design and tooling stages. Progress payments and
advances declined as the Company delivered units and certain government
programs neared completion. Excess-over-average inventory also increased on
certain programs due to implementation of design changes, higher than
anticipated costs, schedule slides, and initial production costs on the MD-90
program.
Capital expenditures for property, plant, and equipment totaled $8.1
million for fiscal 1995, up from $5.8 million for fiscal 1994. The Company
substantially curtailed capital expenditures for fiscal 1995 and 1994 in line
with other cost cutting efforts. This level of spending is expected to
increase over the next several years.
The Company's firm backlog, which includes the sales price of all
undelivered units covered by customers' orders, was approximately $1.0 billion
at July 31, 1995, compared to $1.2 billion at July 31, 1994. Approximately
$0.5 billion of the $1.0 billion backlog is scheduled to be delivered in
fiscal 1996. (Sales during any period include sales which were not part of
backlog at the end of the prior period.) Customer orders in firm backlog are
subject to rescheduling and/or termination for customer convenience; however,
in certain cases, the Company is entitled to an adjustment in contract
amounts. The Company has an additional $2.8 billion in anticipated backlog,
which represents the sales price of units which the Company expects that its
customers will order under existing contracts and the Company will deliver
within seven years.
ADDITIONAL ITEMS
During November 1994 through January 1995, inspection of commercial
aircraft revealed a cracked spar cap on two wing pylons. The company has
warranted these applications to its customer. Investigation indicates that
the wing pylon spar caps, which were sourced, assembled and supplied by a
major subcontractor to the Company, did not receive a required process step.
Analysis and testing show that there are no airworthiness or safety of flight
concerns with continued aircraft operations. Subsequent fleetwide inspections
have revealed no other cracks; however, a replacement program is being
implemented. The Company expects that replacement will occur during regularly
scheduled maintenance. The spar caps will require replacement on
approximately 120 aircraft over a period of several years. The wing pylon is
warranted to Rohr by its subcontractor and the Company believes that the cost
of removing and replacing the spar cap components for the wing pylon, which is
expected to approximate $315,000 per aircraft, will be primarily the
responsibility of the subcontractor. To date the subcontractor has not agreed
to pay all of these costs, but has already borne some of the costs incurred
for the replacement program to date. Further, the Company believes that, under
the terms of its subcontractors contractual warranty, it will recover the
substantial portion of its own cost, and that the resolution of this matter
will not have a material adverse effect on the Company's financial condition.
In addition, the Company acquired materials directly from the spar cap
materials supplier, a small company with limited financial resources. Some of
these materials were not processed to specifications before use in various
aircraft applications. The Company has warranted these applications. With
respect to these other applications, no failures have been noted to date and
the Company and its customers are investigating whether any replacement or
repair will be required.
<PAGE>
________________________________________________________________________________
________________________________________________________________________________
ENVIRONMENTAL MATTERS
The Company has been identified as a potentially responsible party ("PRP")
under the Comprehensive Environmental Response, Compensation and Liability Act
of 1980, as amended ("CERCLA" or "Superfund"), and under certain analogous
state laws for the cleanup of contamination resulting from past disposal of
hazardous substances at several sites to which the Company, among others, sent
such substances in the past. CERCLA requires the cleanup of sites from which
there has been a release or threatened release of hazardous substances, and
authorizes the Environmental Protection Agency ("EPA") to take any necessary
response actions at such sites, including ordering PRPs to clean up or
contribute to the cleanup of a Superfund site. Courts have interpreted CERCLA
to impose strict, joint, and several liability upon all persons liable for
response cost.
In June 1987, the U.S. District Court of Los Angeles, in U.S. et al., vs.
Stringfellow, granted partial summary judgment against the Company and 14
other defendants on the issue of liability under CERCLA. Subsequently, the
State of California was found liable and an allocation of its responsibility
was made. The most recent estimate the Company has made of its liability,
assuming the court order allocating substantial liability to the State of
California is upheld, assuming the 1989 EPA estimate of total cleanup costs is
not exceeded (although the EPA cautioned the actual costs could have a
variation of 30 percent less or 50 percent higher than its estimate), and
assuming tentative allocations among the Company and all other users of the
site will approximate the final allocation of aggregate user liability, shows
a Company expenditure ranging from $5 million to $8 million over and above
sums spent to date. However, the Company estimates further assume that the
EPA selects a final remedial action of moderate technology and cost, rather
than one of several more radical ones previously suggested, but apparently
discarded at this point, by the EPA. Expenditures by the Company for cleanup
of this site during fiscal 1995 were approximately $0.4 million and are
expected to be approximately $0.3 million during fiscal 1996. From inception
to July 31, 1995, the Company has expended approximately $3.7 million on
cleanup costs for this site. Applicable law provides for continuing liability
for future remedial work beyond existing agreements and consent decrees. The
Company has reached settlement agreements with its primary comprehensive
general liability insurers and has retained the right to file future claims
against its excess carriers. The Company recorded the proceeds from such
settlements received from its carriers as reserves. The Company has not
recorded any other amounts with respect to its rights against its insurers.
The Company is also involved in several other proceedings and
investigations related to waste disposal sites and other environmental
matters. It is difficult to estimate the ultimate level of environmental
expenditures for these various other environmental matters due to a number of
uncertainties at this early stage, including the complexity of the related
laws and their interpretation, alternative cleanup technologies and methods,
insurance and other recoveries, and in some cases the extent or uncertainty of
the Company's involvement. However, preliminary estimates of cleanup costs for
the Rio Bravo, Chatham Brothers, and Casmalia waste disposal sites were
approximately $7 million, $30 million, and $70 million respectively, and the
Company's share (based on estimated, respective volumes of discharges into
such sites by all generators, all of which cannot now be known with certainty)
could approximate $0.5 million for the Rio Bravo site, $0 for the Chatham
Brothers site (based on the Company's belief that it never used that site),
and $1.8 million for the Casmalia site. The Company does not yet know about
the ability of all of the other waste generators using the Casmalia and Rio
Bravo sites to fund their allocable share, and the Company could be found
jointly and severally liable with all waste generators using such sites. The
Company has made claims against its insurance carriers for certain of these
items, and has received claims acknowledgment letters reserving the rights of
such carriers. The insurers have alleged or may allege various defenses to
coverage, although no litigation has been commenced.
<PAGE>
________________________________________________________________________________
________________________________________________________________________________
During the year ended July 31, 1995, the Company expended, for the
environmental items described above and also for other environmental matters
(including environmental protection activities in the normal operation of its
plants), a total of approximately $6.3 million. These expenditures covered
various environmental elements, including hazardous waste treatment and
disposal costs, environmental permits, environmental consultants, fines or
donations (which were not material, either individually or in the aggregate),
and environmental remediation (including Stringfellow), no significant part of
which was capitalized. Assuming the usage of all of these various
environmental elements remains substantially the same for fiscal 1996 as in
fiscal 1995, which the Company anticipates, costs for these elements in fiscal
1996 should be comparable to the current rate of expenditure for fiscal 1995.
Based upon presently available information, the Company believes it has
sufficient reserves and that aggregate costs in relation to all environmental
matters of the Company will not have a material adverse effect on the
Company's financial condition, liquidity, results of operations or capital
expenditures.
INCOME TAXES
At July 31, 1995, the Company's deferred tax asset was $111.5 million,
consisting of $96.7 million for federal tax purposes and $14.8 million for
state tax purposes. The ultimate realization of the Company's deferred tax
asset is dependent upon the generation of sufficient future taxable income
during the available federal and state NOL carryforward periods. Management
expects that a sufficient level of taxable income will result in years
subsequent to fiscal 1995 and prior to the expiration of the NOLs to realize
the deferred tax asset recorded at July 31, 1995.
Based on tax rates in effect on July 31, 1995, the Company must generate
approximately $290 million of future taxable income (net of $210 million of
taxable income that the Company will report as a result of the automatic
reversal of existing taxable temporary differences between asset and liability
values for financial reporting and income tax purposes) prior to the
expiration of the Company's NOLs in 2003 through 2010 for full realization of
the net deferred tax asset.
The Company's long-term contracts and programs provide the Company
opportunities to generate future taxable income necessary to realize the
deferred tax asset recorded. During the rapid growth cycle in the late 1980's
and early 1990's, the Company made significant investments in new facilities
and in new programs. As programs mature, the Company expects to utilize its
investments, resources, and experience to reduce the cost of production. For
example, the Company has been able to reduce its work force through
consolidation and downsizing. In addition, direct sales of spare parts to the
airlines are expected to increase as a program matures. Generally, the Company
earns a higher margin on the direct sales of spare parts to the airlines. The
Company believes it will be able to generate, on average, at least $36 million
in pretax income for each of the next eight years, in order to fully utilize
the deferred tax asset (assuming all temporary differences between asset and
liability values for financial reporting and income tax purposes reverse
during that period). This level of annual pretax income would be $21.4 million
in excess of reported fiscal 1995 pretax income of $14.6 million from
continuing operations.
The availability of the Company's NOLs may be limited under the Tax Reform
Act of 1986 as a result of changes that may occur in the ownership of the
Company's stock in the future, principally relating to a change in control.
Management has considered this factor in reaching its conclusion that it is
"more likely than not" that future taxable income will be sufficient to
realize fully the deferred tax asset reflected on the balance sheet.
<PAGE>
________________________________________________________________________________
CONSOLIDATED BALANCE SHEETS
--------------------------------------------------------------------------------
(IN THOUSANDS)
<TABLE>
<CAPTION>
JULY 31,
----------------------------------------------------------------------
1995 1994
----------------------------------------------------------------------
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 84,584 $ 115,996
Short-term investments - 17,568
Accounts receivable 72,152 93,143
Inventories:
Work-in-process 429,578 444,076
Raw materials, purchased parts and supplies 23,367 23,441
Less customers' progress payments and advances (62,670) (104,321)
-----------------------------------------------------------------------
Inventories - net 390,275 363,196
Deferred tax asset 6,493 36,353
Prepaid expenses and other current assets 13,685 18,493
-----------------------------------------------------------------------
TOTAL CURRENT ASSETS 567,189 644,749
PROPERTY, PLANT AND EQUIPMENT - NET 217,051 222,063
INVESTMENT IN LEASES 34,657 37,145
DEFERRED TAX ASSET 105,020 97,135
OTHER ASSETS 52,623 55,755
------------------------------------------------------------------------
$976,540 $1,056,847
========================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Trade accounts and other payables $125,861 $ 129,674
Salaries, wages and benefits 32,011 37,100
Taxes on income 451 2,343
Current portion of long-term debt 14,119 14,952
-----------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 172,442 184,069
LONG-TERM DEBT 540,658 574,038
PENSION AND POST-RETIREMENT
OBLIGATIONS - LONG-TERM 69,386 125,004
OTHER OBLIGATIONS 18,123 26,827
COMMITMENTS AND CONTINGENCIES (NOTE 8) - -
SHAREHOLDERS' EQUITY:
Preferred stock, $1 par value per share,
10 million shares authorized, none issued - -
Common stock, $1 par value per share,
authorized 50,000,000 shares; issued and
outstanding 18,068,076 and 18,041,680
shares, respectively 18,068 18,042
Additional paid-in capital 102,887 102,598
Retained earnings 93,394 82,168
Minimum pension liability adjustment (38,418) (55,899)
-----------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY 175,931 146,909
-----------------------------------------------------------------------
$976,540 $1,056,847
=======================================================================
</TABLE>
The accompanying Notes to the Consolidated Financial Statements are an
integral part of these statements.
<PAGE>
________________________________________________________________________________
CONSOLIDATED STATEMENTS OF OPERATIONS
--------------------------------------------------------------------------------
(IN THOUSANDS EXCEPT FOR PER-SHARE DATA)
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
------------------------------------------------------------------------------
1995 1994 1993
<S> <C> <C> <C>
------------------------------------------------------------------------------
SALES $ 805,000 $ 918,141 $1,149,503
COSTS AND EXPENSES 714,173 830,474 1,097,141
GENERAL AND ADMINISTRATIVE
EXPENSES 26,198 28,352 43,800
UNUSUAL ITEMS (NOTE 9) - 7,926 -
------------------------------------------------------------------------------
OPERATING INCOME 64,629 51,389 8,562
INTEREST - NET 49,986 46,836 47,883
------------------------------------------------------------------------------
INCOME (LOSS) FROM CONTINUING
OPERATIONS
BEFORE TAXES ON INCOME 14,643 4,553 (39,321)
TAXES (BENEFIT) ON INCOME 6,150 (116) (15,064)
----------------------------------------------------------------------------
INCOME (LOSS) FROM
CONTINUING OPERATIONS 8,493 4,669 (24,257)
INCOME (LOSS) FROM
DISCONTINUED OPERATIONS
- NET OF TAXES (NOTE 11) 3,879 2,258 (6,324)
------------------------------------------------------------------------------
INCOME (LOSS) BEFORE EXTRAORDINARY
ITEM AND CUMULATIVE EFFECT OF
ACCOUNTING CHANGE 12,372 6,927 (30,581)
LOSS FROM EXTRAORDINARY
ITEM - NET OF TAXES (NOTE 7) (1,146) - -
CUMULATIVE EFFECT THROUGH JULY 31,
1992, OF ACCOUNTING CHANGES
- NET OF TAXES (NOTE 2) - - (223,950)
------------------------------------------------------------------------------
NET INCOME (LOSS) $ 11,226 $ 6,927 $ (254,531)
==============================================================================
PRIMARY EARNINGS (LOSS) PER AVERAGE
SHARE OF COMMON STOCK FROM:
Continuing Operations $ 0.47 $ 0.26 $ (1.35)
Discontinued Operations 0.21 0.12 (0.36)
Extraordinary Item (0.06) - -
Cumulative Effect Through July 31,
1992, of Accounting Changes - - (12.50)
------------------------------------------------------------------------------
NET PRIMARY EARNINGS (LOSS) PER
AVERAGE SHARE $ 0.62 $ 0.38 $ (14.21)
==============================================================================
FULLY DILUTED EARNINGS (LOSS) PER
AVERAGE SHARE OF COMMON STOCK FROM:
Continuing Operations $ 0.47 $ 0.26 $ (1.35)
Discontinued Operations 0.16 0.12 (0.36)
Extraordinary Item (0.05) - -
Cumulative Effect Through July 31,
1992, of Accounting Changes - - (12.50)
------------------------------------------------------------------------------
NET FULLY DILUTED EARNINGS
(LOSS) PER AVERAGE SHARE $ 0.58 $ 0.38 $ (14.21)
==============================================================================
</TABLE>
The accompanying Notes to the Consolidated Financial Statements are an integral
part of these statements.
<PAGE>
________________________________________________________________________________
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
--------------------------------------------------------------------------------
(IN THOUSANDS)
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------
COMMON STOCK ADDITIONAL MINIMUM PENSION
PAR VALUE PAID-IN RETAINED LIABILITY
$1 A SHARE CAPITAL EARNINGS ADJUSTMENT
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
BALANCE AT JULY 31, 1992 $ 17,833 $ 101,261 $ 329,772 $ -
Common stock issued to
employee benefit plans 67 673
Stock plans activity 96 378
Net loss (254,531)
Minimum pension
liability adjustment (Note 9) (13,306)
--------------------------------------------------------------------------------------------
BALANCE AT JULY 31, 1993 17,996 102,312 75,241 (13,306)
Stock plans activity 46 286
Net Income 6,927
Minimum pension
liability adjustment (Note 9) (42,593)
--------------------------------------------------------------------------------------------
BALANCE AT JULY 31, 1994 18,042 102,598 82,168 (55,899)
Stock plans activity 26 289
Net Income 11,226
Minimum pension liability
adjustment (Note 9) 17,481
--------------------------------------------------------------------------------------------
BALANCE AT JULY 31, 1995 $ 18,068 $ 102,887 $ 93,394 $ (38,418)
============================================================================================
</TABLE>
The accompanying Notes to the Consolidated Financial Statements are an
integral part of these statements.
<PAGE>
________________________________________________________________________________
CONSOLIDATED STATEMENTS OF CASH FLOWS
--------------------------------------------------------------------------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
--------------------------------------------------------------------------------------------------
1995 1994 1993
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income (loss) $ 11,226 $ 6,927 $(254,531)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization 22,148 22,538 25,578
Cumulative effect of accounting changes -
net of taxes - - 223,950
Changes due to (increase) decrease in
operating assets:
Accounts receivable 29,059 27,500 84,013
Inventories - net (22,034) 71,497 34,447
Prepaid expenses and other assets 5,291 (1,459) 4,514
Changes due to increase (decrease) in operating
liabilities:
Trade accounts and other payables (10,206) (56,000) (6,464)
Pension and post-retirement obligations (26,642) 5,517 (5,269)
Taxes on income and deferred tax asset 8,332 1,176 (29,432)
Other 10,373 2,837 4,251
--------------------------------------------------------------------------------------------------
Net cash provided by operating activities 27,547 80,533 81,057
--------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES:
Sale (purchase) of short-term investments 17,568 (17,568) -
Proceeds (repurchase) from sale-leaseback
transactions (21,782) - 52,247
Purchase of property, plant and equipment (8,135) (5,784) (27,536)
Net advances on discontinued operations (5,045) 5,045 -
Other 1,280 (907) (1,180)
--------------------------------------------------------------------------------------------------
Net cash provided by (used in) investing
activities (16,114) (19,214) 23,531
--------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES:
Proceeds from 9.33% senior notes - - 62,000
Net proceeds from 11.625% senior notes - 95,690 -
Net proceeds from 7.75% convertible subordinated
notes - 55,515 -
Annual principal payment of 9.35% senior notes (12,500) (12,500) (12,500)
Net prepayment of 9.33% senior notes (11,195) - -
Net prepayment of 9.35% senior notes (11,286) - -
Repayment of medium-term notes - (35,000) (10,000)
Net short-term borrowings (repayments) - - (20,000)
Long-term borrowings under revolving credit
agreement - 115,000 90,000
Repayment of borrowings under revolving credit
agreement - (165,000) (120,000)
Repayment of other long-term borrowings (2,323) (2,618) (36,387)
Proceeds (repayment) from cash values in
insurance policies - (9,907) 9,907
Reduction in sales of receivable sales program (20,000) - (45,000)
Cash collateral for receivable sales program 13,003 (26,503) -
Stock contributions to employee benefit plans - - 741
Other 1,456 (2,186) (2,285)
--------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing
activities (42,845) 12,491 (83,524)
--------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (31,412) 73,810 21,064
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 115,996 42,186 21,122
--------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, END OF YEAR $ 84,584 $ 115,996 $ 42,186
==================================================================================================
SUPPLEMENTAL CASH FLOW INFORMATION:
CASH PAID (RECEIVED) DURING THE YEAR FOR:
Interest, net of amount capitalized $ 52,010 $ 41,622 $ 47,758
Income taxes (1,958) 174 9,802
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Sale of receivables - - 60,000
Repurchase of receivable or inventory equivalents - - (105,000)
==================================================================================================
The accompanying Notes to the Consolidated Financial Statements are an integral part of these statements.
</TABLE>
<PAGE>
________________________________________________________________________________
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. PRINCIPLES OF CONSOLIDATION
The consolidated statements include the accounts of Rohr, Inc. and all
subsidiaries ("Company"). Total assets and sales of foreign subsidiaries are
not significant.
Certain reclassifications have been made to prior years to conform to
current year presentation.
B. SALES AND EARNINGS
The Company follows the guidelines of Statement of Position 81-1,
"Accounting for Performance of Construction-Type and Certain Production-Type
Contracts" (the contract method of accounting) for certain commercial and all
governmental contracts, except that the Company's contract accounting policies
differ from the recommendations of SOP 81-1 in that revisions of estimated
profits on contracts are included in earnings by the Company under the
reallocation method rather than the cumulative catch-up method. Contract
accounting generally places limitations on the combining of contracts and
prohibits the anticipation of future contracts in determining the contract
profit center. Approximately one-half of the Company's sales during fiscal
years 1995, 1994, and 1993 were accounted for using the contract method of
accounting.
Several major commercial programs, under which spares and technical
product support are sold directly to airlines, are accounted for under the
program method of accounting, a method which existed in practice for many
years prior to the issuance of SOP 81-1. Guidelines for use of program
accounting have been developed in practice and are not codified by
authoritative accounting literature. This method of accounting is followed by
relatively few public companies in a limited number of industries. It applies
in situations where the economics of producing and marketing the program
product extend beyond the initial production order. The most significant
differences from contract accounting are that (1) the quantity of units
included in the profit center under program accounting includes existing and
anticipated contracts, and (2) program units may be sold to more than one
customer. The Company uses program accounting in those circumstances where it
is able to make reasonably dependable estimates of (1) the value of
anticipated production units and spares sales in future contracts, (2) the
length of time to produce and sell those additional production units and
spares, and (3) the production costs and selling prices associated with such
units and spares. Typically, the Company applies program accounting on
programs for which the Company is responsible for total systems integration
and continuing product support.
Profit is estimated based on the difference between total estimated
revenue and total estimated cost of a contract or program and is recognized
evenly as a uniform percentage of sales value on all remaining units to be
delivered. Current revenue does not anticipate higher or lower future prices,
but includes units delivered at actual sales prices. A constant contract or
program margin is achieved by deferring or accelerating a portion of the
average unit cost on each unit delivered. Cost includes the estimated cost of
the pre-production effort (primarily tooling and design), plus the cost of
manufacturing both a specified number of production units and, under the
program method of accounting, those spares which are expected to be delivered
concurrently with such production units. The specified number of production
units used to establish the profit margin is predicated upon market forecasts
and does not exceed the lesser of those quantities assumed in original program
pricing or those quantities which the Company now expects to deliver in the
periods assumed in original program pricing. The number of units used to
estimate profit margin is increased when firm orders exceed the number of
units used for pricing purposes. Generally, spares, as a percentage of total
deliveries, increase as a program matures and are sold at higher prices than
production units. This higher price reflects, in part, additional costs
related to technical and customer support activities.
<PAGE>
________________________________________________________________________________
________________________________________________________________________________
Under both the contract and program methods of accounting, the Company's
sales are primarily under fixed-price contracts, many of which contain
escalation clauses and require delivery of products over several years. Sales
and profits on each contract or program are recognized primarily in accordance
with the percentage-of-completion method of accounting, using the units-of-
delivery method. Revisions of estimated profits on contracts or programs are
included in earnings by the reallocation method, which spreads the change in
estimate over current and future deliveries. Any anticipated losses on
contracts or programs and overruns of program pre-production costs are charged
to earnings when identified. Both the contract and program methods of
accounting involve the use of various estimating techniques to project
estimated costs at completion and may include estimates of recoveries on
claims asserted against the customer for changes in specifications. These
estimates involve various assumptions and projections relative to the outcome
of future events. Paramount are assumptions relative to labor performance and
anticipated future labor rates, and projections relative to material and
overhead costs. These assumptions involve various levels of expected
performance improvements. Program accounting also requires estimates of the
market for a program and the spares expected to be ordered. The Company
reevaluates its estimates quarterly for all significant contracts and
programs. Changes in estimates are reflected in the current and future
periods.
Included in sales are amounts arising from contract terms that provide for
invoicing a portion of the contract price at a date after delivery. Also
included are: negotiated values for units delivered; and anticipated price
adjustments for contract changes, claims, escalation, and estimated earnings
in excess of billing provisions resulting from the percentage-of-completion
method of accounting. Certain contract costs are estimated based on the
learning curve concept discussed in Note 1c.
C. INVENTORIES
Inventories of raw materials, purchased parts and supplies are stated at
the lower of average cost or estimated realizable value. Inventoried costs on
long-term contracts and programs include certain pre-production costs,
consisting primarily of tooling and design costs, and production costs,
including applicable overhead. As the production costs for early units are
charged to work-in-process inventory at an actual unit cost in excess of the
estimated average cost for all units projected to be delivered over the entire
contract or program, a segment of inventory described as the excess of
production costs over estimated average unit cost (and referred to as excess-
over-average inventory) is created. Generally, excess-over-average inventory,
which may include production (but not pre-production) cost over-runs, builds
during the early years of the contract or program when the efficiencies
resulting from learning are not yet fully realized and declines as the program
matures. Under the learning curve concept, an estimated decrease in unit labor
hours is assumed as tasks and production techniques become more efficient
through repetition of the same manufacturing operation and through management
action such as simplifying product design, improving tooling, purchasing new
capital equipment, improving manufacturing techniques, etc. For programs under
the program method of accounting, excess-over-average inventory also builds
until sales of spares, as a percentage of total sales, equal or exceed the
percentage used for the overall profit margin calculation.
Inventoried costs are reduced by the estimated average cost of deliveries
computed as a uniform percentage of sales value.
In the event that work-in-process inventory plus estimated costs to
complete a specific contract or program exceeds the anticipated remaining
sales value of such contract or program, such excess is charged to current
earnings, thus reducing inventory to estimated realizable value.
In accordance with industry practice, costs in inventory include amounts
relating to programs and contracts with long production cycles, much of which
is not expected to be realized within one year.
<PAGE>
________________________________________________________________________________
________________________________________________________________________________
D. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is recorded at cost or, in the case of
assets under capital leases, the lower of the present value of minimum lease
payments or fair market value. Depreciation and amortization is computed by
the straight-line method over the estimated useful lives of the various
classes of assets or, in the case of capitalized leased assets, over the lease
term if shorter.
The Company assesses on an annual basis its ability to recover the
carrying value of its long-lived assets. If management concludes that the
carrying value will not be recovered from future activities, an impairment
write-down is recorded to reduce the asset to its estimated fair value.
E. PENSION
Pension costs include current costs plus the amortization of transition
assets over periods up to 14 years. The Company funds pension costs in
accordance with plan and legal requirements.
F. RESEARCH AND DEVELOPMENT
Research and development costs incurred for the development of proprietary
products are expensed as incurred as part of general and administrative
expense. These costs have not been material to operations during the periods
presented. Design efforts performed under contract generally consist of the
adaptation of an existing capability to a particular customer need and are
accounted for as an element of contract costs.
G. INCOME TAXES
Deferred tax assets and liabilities are recognized based upon temporary
differences between financial statement and tax bases of assets and
liabilities using presently enacted tax rates. See Note 6.
H. NET INCOME PER AVERAGE SHARE OF COMMON STOCK
Primary earnings per share was determined by dividing net income by the
weighted average number of common shares and common share equivalents (stock
options and warrants) outstanding during the year. Fully diluted earnings per
share reflect the maximum dilution of per share earnings, if applicable, which
would have occurred if the dilutive convertible notes and debentures of the
Company had been converted as of the beginning of the period.
I. CASH EQUIVALENTS
For purpose of the statement of cash flows, the Company considers all
investments and highly liquid debt instruments with a maturity of three months
or less to be cash equivalents. Cash equivalents are stated at cost which
approximates market.
J. SHORT-TERM INVESTMENTS
Short-term investments are highly liquid investments with a maturity of 91
days to one-year and generally issued by the U.S. Treasury, federal agencies,
municipalities, banks and major corporations. Short-term investments are
stated at cost which approximates market.
K. INDUSTRY SEGMENTS
The Company considers itself to operate in one industry segment.
<PAGE>
________________________________________________________________________________
________________________________________________________________________________
NOTE 2 - ACCOUNTING CHANGES
In fiscal 1993, the Company changed certain elements in the application of
accounting principles relating to long-term programs and contracts. In
addition, the Company also adopted the provisions of SFAS No. 106, "Employers'
Accounting for Post-Retirement Benefits Other than Pensions", and SFAS No.
109, "Accounting for Income Taxes". Each change requires that the Company
calculate the effect of the change in accounting principles on retained
earnings as of the first day in the fiscal year of change. These changes did
not affect the Company's cash flow. The cumulative effect of these changes for
the periods through July 31, 1992, was a charge of $224.0 million, net of
income tax benefits of $139.0 million, substantially all of which related to
the change in application of accounting principles related to long-term
programs and contracts.
NOTE 3 - ACCOUNTS RECEIVABLE
Accounts receivable, which relate primarily to long-term programs and
contracts, consist of the following (in thousands):
<TABLE>
<CAPTION>
JULY 31,
------------------------------------------------------------------------------------------------------------------------------------
1995 1994
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Amount billed $ 41,884 $ 67,487
Recoverable costs and accrued profit on
units delivered but not billed 12,422 10,351
Recoverable costs and accrued profit on
progress completed but not billed 4,533 871
Unrecovered costs and estimated profit
subject to future negotiations 13,313 14,434
------------------------------------------------------------------------------------------------------------------------------------
$ 72,152 $ 93,143
====================================================================================================================================
</TABLE>
"Recoverable costs and accrued profit on units delivered but not billed"
represent revenue recognized on contracts for amounts not billable to
customers at the balance sheet date. This amount principally represents
delayed payment terms along with escalation and repricing predicated upon
deliveries and final payment after acceptance. Some of these recoverable costs
are expected to be billed and collected in the normal course of business
beyond one year.
"Recoverable costs and accrued profit on progress completed but not
billed" represent revenue recognized on contracts based on the percentage-of-
completion method of accounting and is anticipated to be billed and collected
in accordance with contract terms, which may be longer than one year.
"Unrecovered costs and estimated profit subject to future negotiations"
consist of contract tasks completed for which a final price has not been
negotiated with the customer. Amounts in excess of agreed upon contract prices
are recognized when it is probable that the claim will result in additional
contract revenue and the amounts can be reliably estimated. Included in this
amount at July 31, 1995, are estimated recoveries on constructive change
claims related to government imposed redefined acceptance criteria on the
Grumman F-14 and the Boeing E3/E6 programs. Management believes that amounts
reflected in the financial statements are reasonable estimates of the ultimate
settlements. The resolution of these items may take several years.
<PAGE>
________________________________________________________________________________
________________________________________________________________________________
The Company has a $40 million accounts receivable sales program under
which it sells receivables through a subsidiary to a trust on an ongoing
basis. The investors' interests in the trust, net of the cash collateral
discussed below, are reported as a reduction to accounts receivable. The
Company's subsidiary holds the remaining interest in the trust which
fluctuates in value depending upon the amount of receivables owned by the
trust from time to time. Due to the slowdown in the aerospace industry and the
resulting reduction in the Company's sales, the amount of outstanding
receivables owned by the trust has fallen below levels which existed at the
start of the facility. As a result, the Company has elected to deposit cash
collateral from time to time as required to support the facility. The Company
had cash collateral on deposit totaling $13.5 million and $26.5 million at
July 31, 1995 and 1994, respectively. The cost associated with the sale of
receivables under the current facility is 7.57% per year. These costs, and
those of a predecessor facility, all of which have been reflected as a
reduction in sales values, were $3.6 million, $4.5 million, and $5.3 million
in fiscal 1995, 1994, and 1993, respectively.
SALES
The Company's sales to major customers including related program spares,
expressed as a percentage of total sales, during the following periods are
summarized as follows:
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
-------------------------------------------------------------------
1995 1994 1993
-------------------------------------------------------------------
<S> <C> <C> <C>
Boeing 17% 15% 18%
International Aero Engines 14 16 9
Rolls-Royce 13 10 8
CFM International 11 9 8
Pratt & Whitney 10 14 17
McDonnell Douglas 8 7 11
General Electric 7 9 7
Airbus Industrie 6 3 6
Lockheed 5 6 3
United Technology 4 4 6
Other 5 7 7
==================================================================
</TABLE>
Total sales to the U.S. Government (including direct sales and indirect
sales through some of the prime contractors shown above) accounted for 12
percent, 14 percent, and 14 percent of sales from continuing operations in the
years ended July 31, 1995, 1994, and 1993, respectively.
Commercial products sold by the Company to jet engine manufacturers are
ultimately installed on aircraft produced by the major commercial airframe
manufacturers, Airbus Industrie, Boeing and McDonnell Douglas. Sales to
foreign customers accounted for 38%, 24%, and 26% of total sales for fiscal
1995, 1994, and 1993, respectively. Of the total sales, 33%, 22%, and 23%
were to Europe for fiscal 1995, 1994, and 1993, respectively.
<PAGE>
________________________________________________________________________________
________________________________________________________________________________
NOTE 4 - INVENTORIES
Work-in-process inventories, which relate primarily to long-term contracts
and programs, are summarized as follows (in thousands, except quantities):
<TABLE>
<CAPTION>
AIRCRAFT ORDER STATUS (1) COMPANY ORDER STATUS WORK-IN-PROCESS INVENTORY
-------------------------- --------------------------------------- ----------------------------------------
AS OF 6/30/95 AS OF 7/31/95 AS OF 7/31/95
(2) Firm (3)
Delivered Unfilled Unfilled Program Unfilled Fiscal Year Pre- Excess
Program to Airlines Orders Options Quantity Delivered Orders Complete(6) Production Production Over Average Total
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
A340 nacelle (4) (5) 62 82 87 118 73 14 1997 $ 11,210 49,805 $19,280 $ 80,295
PW4000 nacelle for the
A300/A310 and
MD-11 (4) 268 17 48 395 272 16 2003 19,230 16,463 32,107 67,800
MD-90 (4) (5) 5 98 129 401 13 30 2006 8,405 83,405 22,832 114,642
V2500 nacelle for the
A319/A320/A321 (4) (5) 192 131 157 298 200 37 1998 16,193 7,441 0 23,634
CF6-80C nacelle for the
747/767, MD-11 and
A300/A310 (5) 644 197 255 829 680 132 1998 22,158 188 14,953 37,299
CFM56-5 nacelle for the
A319/A320/A321 (5) 339 189 131 554 351 172 2000 19,406 1,740 24,517 45,663
MD-11 pylon (4) (5) 140 22 71 200 150 20 1999 13,168 0 0 13,168
737-700 (5) (7) 0 146 108 TBD 0 0 TBD 16 14,068 0 14,084
Others 18,576 14,417 0 32,993
------------------------------------------------------------------------------------------------------------------------------------
BALANCE AT JULY 31, 1995 $128,362 $187,527 $113,689 $429,578
===================================================================================================================================
Balance at July 31, 1994 $172,799 $202,299 $ 68,978 $444,076
====================================================================================================================================
</TABLE>
(1) Represents the aircraft order status as announced by the aircraft
manufacturers for the related aircraft and engine option. The Company's
orders frequently are less than the announced orders shown above.
(2) Represents the number of aircraft used to obtain average unit cost. Spares
(which are not included in this quantity) anticipated to be delivered
concurrently with the production units for the above aircraft are also used
in calculating average unit cost. Total spares sales values used in
calculating average unit cost at July 31, 1995, were $92,292 on the A340,
$330,744 on the PW4000, $278,173 on the MD90, $131,881 on the V2500,
$189,306 on the CF6-80C, $232,490 on the CFM56-5, and $18,663 on the MD-11.
Total spares values sold as of July 31, 1995, were $45,822 on the A340,
$212,034 on the PW4000, $6,647 on the MD90, $86,574 on the V2500, $138,130
on the CF6-80C, $132,607 on the CFM56-5, and $15,806 on the MD-11. The
Company does not have orders for all of these units at this time.
(3) Represents the number of aircraft for which the Company has firm unfilled
orders.
(4) Program quantity represents the lesser of those quantities assumed in
original program pricing or those quantities which the Company now expects
to deliver in the periods assumed in original program pricing.
(5) Programs accounted for in accordance with the program method of
accounting.
(6) The year presented for each program or contract represents the fiscal year
in which the final production and spares units included in the program
quantity will be delivered. The expected life of a program is often
significantly longer and as additional orders are received, program
quantity is increased and this date is extended.
(7) Program quantity to be determined. New program; quantity not to exceed
that used by the prime manufacturer.
<PAGE>
________________________________________________________________________________
________________________________________________________________________________
On certain long-term programs, the Company has agreed to recover pre-
production costs (primarily tooling and design) over an expected number of
deliveries, including spare parts. The number of deliveries over which
production costs are to be amortized is predicated upon initial pricing
agreements and does not exceed the Company's overall assessment of the market
for that program.
Excess-over-average inventory represents the cost of in-process and
delivered units less, for each such unit, the current estimated average cost
of the units in the program. Recovery of these inventoried costs assumes (i)
certain production efficiencies, (ii) the sale of the program quantity used in
estimating the profit margin, (iii) a specified allocation of sales among
production units and spare units, and (iv) the attainment of an estimated
spares margin that is substantially higher than the margin of production
units. Spares prices are higher than production unit prices, in part, due to
additional costs related to technical and customer support activities. If
these program assumptions are not attained, then substantial amounts of
unrecoverable costs may be charged to expense in subsequent periods.
To the extent that a forward loss is encountered on a program, the amount
of such loss is offset against the inventory of such program, (until such
inventory has been depleted). The loss is offset first against excess-over-
average, followed by pre-production, then production.
Contractual terms on certain programs provide varying levels of recovery
commitments for specified amounts of pre-production costs. Certain programs
also provide for the repricing of units in the event that less than a
specified quantity is sold, which allows for recovery of additional excess-
over-average inventory in such circumstances. The Company, in turn, has
provided certain subcontractors with similar recovery commitments and
repricing provisions on these programs.
The excess of deferred program costs over the total costs allocated to
units in process and delivered (less recoveries from customers due to
repricing provisions) that would not be recovered based on existing firm
orders as of July 31, 1995, is $16.5 million on the A340 and $106.2 million on
the MD-90.
The Company has used forward contracts to manage its exchange risk on a
portion of its purchase commitments from vendors of aircraft components
denominated in foreign currencies and to manage its exchange risk for sums
paid to its French subsidiary for services. The extent to which the Company
utilizes forward contracts varies and depends upon management's evaluation of
current and projected foreign currency exchange rates, but the Company does
not acquire forward contracts in excess of its current hedging requirements.
At July 31, 1995, the Company had no foreign exchange contracts outstanding to
purchase foreign currencies.
<PAGE>
________________________________________________________________________________
________________________________________________________________________________
NOTE 5 - PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consist of the following (in thousands):
<TABLE>
<CAPTION>
JULY 31,
---------------------------------------------------------------
1995 1994
---------------------------------------------------------------
<S> <C> <C>
Land $ 25,132 $ 25,234
Buildings 205,637 208,635
Machinery and equipment 282,427 253,480
Construction in progress 10,400 12,688
---------------------------------------------------------------
523,596 500,037
Less accumulated depreciation and
amortization (306,545) (277,974)
---------------------------------------------------------------
Property, plant and equipment - net $ 217,051 $ 222,063
===============================================================
</TABLE>
Included in the above categories are assets recorded under capitalized
leases with original cost totaling $50.6 million at July 31, 1995 and 1994.
NOTE 6 - TAXES ON INCOME
The provision (benefit) for taxes on income is comprised of the following
(in thousands):
<TABLE>
<CAPTION>
JULY 31,
---------------------------------------------------------------------------
1995 1994 1993
---------------------------------------------------------------------------
<S> <C> <C> <C>
CURRENTLY PAYABLE:
Federal income taxes $ 900 $ 1,320 $ 400
Foreign income taxes (90) 400 1,000
State income taxes 240 1,200 -
DEFERRED:
Federal income taxes 2,310 (3,660) (12,935)
State income taxes 2,790 624 (3,529)
---------------------------------------------------------------------------
$6,150 $ (116) $(15,064)
===========================================================================
</TABLE>
<PAGE>
________________________________________________________________________________
________________________________________________________________________________
The difference between the income tax provision (benefit) computed at the
federal statutory rate and the actual tax provision (benefit) is accounted for
as follows (in thousands):
<TABLE>
<CAPTION>
JULY 31,
------------------------------------------------------------------------------------------------
1995 1994 1993
------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Taxes (benefit) computed at the federal
statutory tax rate $ 5,125 $ 1,594 $ (13,369)
Increase (reduction) resulting from:
State income taxes, net of federal tax benefit 761 237 (2,176)
Effect of statutory rate increase (2,870)
Tax-exempt income from Foreign Sales Corporation (395) (680)
Non-deductible items 659 2,270
Utilization of reserves previously provided
for tax assessments (860)
Other 193 481
-----------------------------------------------------------------------------------------------
$ 6,150 $ (116) $ (15,064)
===============================================================================================
</TABLE>
Deferred income taxes reflect the net tax effects of (a) temporary
differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax purposes and
(b) operating loss and tax credit carryforwards.
The components of the Company's deferred tax asset which reflect the tax
effects of the Company's temporary differences, tax credit carryforwards and
net operating loss carryforwards (NOLs) are listed below (in thousands):
<TABLE>
<CAPTION>
JULY 31,
-------------------------------------------------------------------
1995 1994
-------------------------------------------------------------------
<S> <C> <C>
CURRENT:
Inventories $ 5,546 $ 36,512
Employee benefits 5,235 5,443
State taxes (4,288) (5,602)
-------------------------------------------------------------------
Net deferred tax asset - current $ 6,493 $ 36,353
===================================================================
LONG-TERM:
Depreciation $ 16,500 $ 25,308
Deferred gain on sale/leaseback 8,249 8,707
Minimum pension liability adjustment 25,826 37,578
Net operating loss carryforward 83,135 53,440
Tax credit carryforward 8,883 10,107
Investment in leases (35,973) (39,393)
Other - net (1,600) 1,388
-------------------------------------------------------------------
Net deferred tax asset - long-term $105,020 $ 97,135
===================================================================
</TABLE>
<PAGE>
________________________________________________________________________________
________________________________________________________________________________
The Company has federal NOLs totaling approximately $216 million at July
31, 1995, which expire in the years 2003 through 2010, and tax credit
carryforwards totaling $8.9 million which expire in the years 2003 through
2011.
When tax effected at the rates in effect July 31, 1995, the net deductible
temporary differences, tax credit carryforwards, and NOLs result in a deferred
tax asset of $111.5 million, consisting of $96.7 million for federal tax
purposes and $14.8 million for state tax purposes. Based on rates in effect
July 31, 1995, approximately $290 million of future taxable income is required
prior to expiration of the Company's NOLs and credits for full realization of
the deferred tax asset. The Company believes that its future taxable income
will be sufficient for full realization of the deferred tax asset.
During the fiscal year, the Company resolved the remaining audit issues
with the IRS regarding fiscal years 1984 and 1985. The resolution did not
have a material adverse effect on the Company and its financial position.
NOTE 7 - INDEBTEDNESS
The maturity schedule of the Company's debt is summarized as follows (in
thousands):
<TABLE>
<CAPTION>
TOTAL AT
FISCAL YEAR ENDED JULY 31, JULY 31,
------------------------------------------------------------------------------------------------------------
1996 1997 1998 1999 2000 Thereafter 1995 1994
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
11.625% Senior Notes 100,000 100,000 100,000
9.35% Senior Notes 12,500 12,500 12,500 12,500 1,757 51,757 75,000
9.33% Senior Notes 8,850 8,850 8,850 8,850 15,943 51,343 62,000
Other Debt 398 346 303 62 62 16,500 17,671 18,982
------------------------------------------------------------------------------------------------------------
12,898 21,696 21,653 21,412 10,669 132,443 220,771 255,982
CAPITAL LEASES 2,116 1,975 1,870 1,766 1,662 6,800 16,189 15,290
LESS IMPUTED INTEREST (895) (797) (700) (605) (510) (1,176) (4,683) (4,782)
------------------------------------------------------------------------------------------------------------
1,221 1,178 1,170 1,161 1,152 5,624 11,506 10,508
SUBORDINATED DEBT:
7.75% Convertible Notes 57,500 57,500 57,500
9.25% Debentures 7,500 7,500 7,500 127,500 150,000 150,000
7.00% Convertible Debentures 5,750 5,750 103,500 115,000 115,000
------------------------------------------------------------------------------------------------------------
7,500 13,250 13,250 288,500 322,500 322,500
------------------------------------------------------------------------------------------------------------
TOTAL LONG-TERM DEBT 14,119 22,874 30,323 35,823 25,071 426,567 554,777 588,990
------------------------------------------------------------------------------------------------------------
Less Current Portion of Long-Term Debt (14,119) (14,952)
------------------------------------------------------------------------------------------------------------
LONG-TERM DEBT $540,658 $574,038
============================================================================================================
</TABLE>
The fair value of the Company's total long-term debt as of July 31, 1995
is estimated to be $544.9 million compared to the carrying value of $554.8
million reflected in the table above. This fair value was derived using
quoted market prices on publicly traded debt and estimated market value of the
privately held debt.
<PAGE>
________________________________________________________________________________
________________________________________________________________________________
The Company's total financings at July 31, 1995 included: indebtedness,
shown in the table above; the accounts receivable sales program in the net
amount (after the deposit of cash collateral) of $26.5 million, which is
reported as a reduction to accounts receivable (see Note 3); and two sale-
leaseback transactions, accounted for as operating leases, totaling $24.3
million. The Company's total financings were $605.6 million and $671.1
million at July 31, 1995 and 1994, respectively.
The Company has an unsecured revolving credit agreement with a group of
banks, maturing in April 1997. In the fourth quarter of fiscal 1995,
concurrent with a prepayment to its privately placed senior note holders, the
total commitment under this agreement was reduced to $91.1 million. The
revised commitment is reduced by an additional $8.3 million every six months
beginning in October 1995 until it reaches $66.2 million. The Company
anticipates that it will replace the existing revolving credit agreement with
a new facility in fiscal 1996. Up to $30 million of the commitment is
available to support the issuance of letters of credit. At July 31, 1995,
$16.9 million of the commitment was used to support an industrial development
bond financing. No borrowings were outstanding on July 31, 1995.
Borrowings under this credit agreement generally incur interest at an
annual rate equal to the London Interbank Offered Rate plus 0.75% to 3.25%.
In addition, the agreement provides for a facility fee, payable on a monthly
basis at the rate of 0.35 to 0.75 of 1% on each lender's total commitment.
The specific interest rate and facility fee payable at any time are based upon
the Company's credit rating.
The Company's privately placed 9.35% Senior Notes due January 2000 require
principal payments of $12.5 million in January of each year until repaid. The
Company's privately placed 9.33% Senior Notes due December 2002 require
principal payments of approximately $8.9 million in December of each year,
beginning in 1996, until repaid. In the fourth quarter of fiscal 1995, the
Company voluntarily prepaid $10.7 million of its 9.33% Senior Notes and $10.7
million of its 9.35% Senior Notes. The Company used existing funds to
extinguish this debt. A premium and certain other expenses associated with
this early extinguishment of debt were recorded as an extraordinary item. The
net loss associated with this early extinguishment totaled $1.1 million or 6
cents per share, net of income tax benefit of $.7 million. The note holders
can require the Company to purchase the remaining principal amount of the
notes plus accrued interest and premium for yield adjustment in the event of
certain changes in control or ownership of the Company.
During the fourth quarter of fiscal 1994, the Company completed its
public offering of $100 million of 11.625% Senior Notes due May 2003 and the
concurrent offering of $57.5 million of 7.75% Convertible Subordinated Notes
due May 2004. Both series of notes are general unsecured obligations of the
Company and do not have sinking fund requirements. The Convertible
Subordinated Notes are convertible at the option of the holder into shares of
the Company's common stock at a conversion price of $10.35 per share, subject
to adjustment under certain conditions. At the Company's option, the
Convertible Subordinated Notes are redeemable after May 14, 1998, at a premium
price of 104.7 percent, and the Senior Notes are redeemable after May 14,
1999, at a premium price of 105.8 percent, both declining annually to par at
maturity. The note holders can require the Company to purchase the remaining
principal, plus accrued interest and premium in the event of certain changes
in control or ownership of the Company.
The Company's 9.25% Subordinated Debentures due March 2017 are subject to
mandatory annual sinking fund payments of $7.5 million beginning March 1998.
The Company's 7.00% Convertible Subordinated Debentures due October 2012 are
subject to mandatory annual sinking fund payments of $5.8 million beginning
October 1998. These debentures are convertible at the option of the holder
into shares of the Company's common stock at a conversion price of $43.00 per
share, subject to adjustment under certain conditions. The 7.00% debentures
are redeemable at the Company's option at a premium price of 102.1 percent and
the 9.25% debentures are redeemable at a premium price of 105.6 percent, both
declining to par over specified time periods.
The Company's principal financing agreements contain covenants and ratios,
the most significant of
<PAGE>
________________________________________________________________________________
________________________________________________________________________________
which relate to tangible net worth, debt to equity, and income available for
fixed charges. The Company was in compliance with these covenants at July 31,
1995. These financing agreements also contain other restrictions, including
restrictions on new indebtedness, prepayments and redemptions of indebtedness,
amendments to debt agreements, liens, dividends, lease obligations, mergers,
sales of assets, investments and capital expenditures. If the Company were to
breach a covenant in any of its principal financing agreements, the lenders
under such agreement could, at their option, accelerate the maturity of the
debt evidenced by such agreement. In addition, any such default (or, in some
cases, an acceleration after the occurrence of such a default) would cause
defaults under cross-default provisions (or cross-acceleration provisions) in
other Company financing agreements.
NOTE 8 - COMMITMENTS AND CONTINGENCIES
Minimum rental commitments under operating leases with non-cancelable
terms of more than one year as of July 31, 1995 are as follows (in thousands):
<TABLE>
----------------------------------
<S> <C>
1996 $ 5,500
1997 4,600
1998 4,100
1999 2,800
2000 2,500
Thereafter 6,400
----------------------------------
$25,900
==================================
</TABLE>
Generally, leases have provisions for rent escalation based on inflation.
Certain leases provide for options to renew with substantially similar terms
(except negotiable rent increases). The total expense under all operating
leases was approximately $8.5 million, $13.1 million and $15.9 million for
fiscal 1995, 1994 and 1993, respectively.
In June 1987, the U.S. District Court of Los Angeles, in U.S. et al, vs.
Stringfellow, granted partial summary judgment against the Company and 14
other defendants on the issue of liability under the Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA"). This suit
alleges that the defendants are jointly and severally liable for all damage in
connection with the Stringfellow hazardous waste disposal site in Riverside
County, California. In June 1989, a federal jury and a special master
appointed by the federal court found the State of California also liable for
the cleanup costs. On November 30, 1993, the special master released his
"Findings of Fact, Conclusions of Law and Reporting Recommendations of the
Special Master Regarding the State Share Fact Finding Hearing." In it, he
allocated liability between the State of California and other parties. As
this hearing did not involve the valuation of future tasks and
responsibilities, the order did not specify dollar amounts of liability. The
order, phrased in percentages of liability, recommended allocating liability
on the CERCLA claims as follows: 65 percent to the State of California and 10
percent to the Stringfellow entities, leaving 25 percent to the
generator/counterclaimants (including the Company) and other users of the site
(or a maximum of up to 28 percent depending on the allocation of any
Stringfellow entity orphan share). On the state law claims, the special
master recommended a 95 percent share for the State of California, and 5
percent for the Stringfellow entities, leaving 0 percent for the
generator/counterclaimants. This special master's finding is subject to a
final decision and appeal. The Company and the other generators of wastes
disposed at the Stringfellow site, which include numerous companies with
assets and equity significantly greater than the Company, are jointly and
severally liable for the share of cleanup costs for which the
<PAGE>
________________________________________________________________________________
________________________________________________________________________________
generators, as a group, may ultimately be found to be responsible.
Notwithstanding, CERCLA liability is sometimes allocated among hazardous waste
generators who used a waste disposal site based on the volume of hazardous
waste they disposed at the site. The Company is the second largest generator
of waste by volume disposed at the site, although it and certain other
generators have argued the final allocation of cleanup costs among generators
should not be determined solely by volume. The largest volume generator of
wastes disposed at the Stringfellow site has indicated it is significantly
dependent on insurance to fund its share of any cleanup costs, and that it is
in litigation with certain of its insurers.
The Company has reached settlement agreements with its primary
comprehensive general liability insurers for reimbursement of its cleanup
costs at the site and has retained the right to file future claims against its
excess carriers.
The Company intends to continue to vigorously defend itself in the
Stringfellow matter and believes, based upon currently available information,
that the ultimate resolution will not have a material adverse effect on the
financial position, liquidity, or results of operations of the Company.
The Company is involved as plaintiff or defendant in various other legal
and regulatory actions and inquiries incident to its business, none of which
are believed by management to have a material adverse effect on the financial
position or results of operations of the Company.
NOTE 9 - EMPLOYEE BENEFIT PLANS
A. PENSION PLAN
The Company has non-contributory pension plans covering substantially all
of its employees. Effective January 1, 1995, the Company froze at current
levels the benefits earned under the retirement plan covering approximately
two-thirds of its employees. Concurrently, for the same group of employees,
the Company adopted a cash balance plan and enhanced the benefits under its
primary defined contribution plan. The cash balance plan provides benefits
based on age and years of service plus interest at specified levels. Benefits
under the retirement plan covering certain union employees are based on a
negotiated amount per year of service. The Company has made contributions to
independent trusts for the minimum funding requirements of these plans under
IRS regulations. The Company also has supplemental retirement plans which are
generally unfunded.
Defined benefit plans expense consists of the following components (in
thousands):
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
-------------------------------------------------------------------------------
1995 1994 1993
-------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost $ 9,574 $ 7,017 $ 12,250
Interest cost on projected benefit obligation 36,462 36,686 34,601
Actual gain on plan assets (43,245) (9,168) (29,379)
Net amortization and deferral 12,118 (20,093) 1,605
-------------------------------------------------------------------------------
Total $ 14,909 $ 14,442 $ 19,077
===============================================================================
</TABLE>
The adoption of the cash balance plan, net of the elimination of future
benefits under the retirement
<PAGE>
________________________________________________________________________________
________________________________________________________________________________
plan, increased fiscal 1995 costs by $1.1 million. Fiscal 1994 expense
declined from the prior year primarily as a result of reduced employment
levels.
The following table summarizes the funded status of these plans and the
amounts recognized in the Consolidated Balance Sheets (in thousands):
<TABLE>
<CAPTION>
JULY 31,
---------------------------------------------------------------------------------
1995 1994
----------------------------------------------------------------------------------
<S> <C> <C>
Actuarial present value of benefit obligations:
Vested $ 459,036 $ 471,678
Non-vested 20,252 22,702
----------------------------------------------------------------------------------
Accumulated benefit obligation 479,288 494,380
Effect of projected future salary increases 3,441 6,023
----------------------------------------------------------------------------------
Projected benefit obligation for service rendered to date 482,729 500,403
Plan assets at fair value, primarily stocks, bonds,
other fixed income obligations and real estate 415,284 370,331
----------------------------------------------------------------------------------
Plan assets less than projected benefit obligation (67,445) (130,072)
Unrecognized net loss 73,255 111,288
Unrecognized net asset from initial application
of SFAS No. 87 being recognized over
plans' average remaining service life (12,819) (15,822)
Unrecognized prior service cost 26,915 28,472
Additional minimum liability (87,480) (119,132)
----------------------------------------------------------------------------------
Pension liability recognized in the
Consolidated Balance Sheets $ (67,574) $ (125,266)
==================================================================================
</TABLE>
At July 31, 1995, the Company's additional minimum liability for its
defined benefit plans was in excess of the unrecognized prior service costs
and net transition obligation and was recorded as a reduction of $38.4 million
to shareholders' equity, net of tax benefits of $25.8 million, in accordance
with SFAS No. 87, "Employers' Accounting for Pensions". At July 31,1994, the
reduction to shareholders' equity totalled $55.9 million.
The weighted average discount rate used in determining the present value
of the projected benefit obligation was 8.25 percent, 7.5 percent, and 8.5
percent respectively, for the years ended July 31, 1995, 1994, and 1993. For
compensation based plans, the rate of increase in future compensation levels
used in determining the actuarial present value of the projected benefit
obligation and service cost was based upon an experience-related table and
approximated 4.0 percent on current salaries through January 1, 1995, in
accordance with plan terms. The expected long-term rate of return on plan
assets was 9 percent for the periods presented. Plan assets are invested
primarily in stocks, bonds and real estate.
During fiscal 1994, the Company recognized a curtailment loss of $10.6
million for the write-off of unamortized pension past service costs relating
to the downsizing of employment levels. This loss is reflected as an unusual
item for the 1994 statement of operations net of a gain recognized on the sale
of a facility.
The Company also has certain defined contribution plans covering most
employees. Expenses for
<PAGE>
________________________________________________________________________________
________________________________________________________________________________
these plans amounted to $2.8 million, $1.7 million and $3.4 million in fiscal
1995, 1994 and 1993, respectively.
B. POST-RETIREMENT BENEFIT OBLIGATIONS OTHER THAN PENSIONS
The Company has a retirement health care program that pays a specified
fixed amount to supplement the medical insurance payments made by retirees who
are under age 65 and their spouses and covered dependents. Eligibility for
and the amount of the supplement provided by the Company is based on age and
years of service. The program requires employee contributions.
SFAS No. 106 requires disclosure of the effect on the Company's
accumulated post-retirement benefit obligation, and net periodic post-
retirement benefit cost, using the assumption that the health care cost trend
will increase by 1 percent each year. This disclosure is not applicable
because the Company is not affected by future health care cost trends since
its obligation is to pay a fixed amount as a health care supplement for
retirees entitled to this benefit.
Post-retirement benefit costs, net of expected retiree contributions,
included the following components (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
--------------------------------------------------------------------------------------------------
1995 1994 1993
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost - benefits attributed to service during the period $ 146 $ 168 $ 196
Interest cost on accumulated post-retirement benefit obligation 408 465 549
Net amortization and deferral 32 - -
--------------------------------------------------------------------------------------------------
Net periodic post-retirement benefit cost $ 586 $ 633 $ 745
==================================================================================================
</TABLE>
The liability for post-retirement health care benefits included the
following components (in thousands):
<TABLE>
<CAPTION>
JULY 31,
--------------------------------------------------------------------------------------------------
1995 1994
--------------------------------------------------------------------------------------------------
<S> <C> <C>
Accumulated post-retirement benefit obligation:
Retirees $ 2,722 $ 2,671
Fully eligible active plan participants 180 214
Other active plan participants 2,425 2,749
Unrecognized net loss (690) (634)
--------------------------------------------------------------------------------------------------
Liability for post-retirement health care benefits $ 4,637 $ 5,000
==================================================================================================
</TABLE>
The accumulated post-retirement benefit obligation was determined using
weighted average discount rates of 8.25 percent and 7.5 percent, respectively,
for the years ended July 31, 1995 and 1994. The plan is unfunded. Each year
the Company funds the benefits paid.
<PAGE>
________________________________________________________________________________
________________________________________________________________________________
NOTE 10 - SHAREHOLDERS' EQUITY
Under the terms of certain covenants in several of the Company's principal
financing agreements, the Company may not pay cash dividends until after April
25, 1997. (See Note 7) Thereafter, the Company's ability to pay cash
dividends is substantially restricted.
The Company's 1989 Stock Incentive Plan provides that qualified employees
are eligible to receive stock options and various other stock-based awards.
Subject to certain adjustments, the plan provides that up to 2,500,000 shares
of common stock may be sold or issued under the plan. As a result of previous
option grants under this plan, 258,374 and 248,431 stock options and other
stock-based awards remained available for grant at July 31, 1995 and 1994,
respectively. The plan has no specific termination date except that Incentive
Stock Options may not be granted after July 31, 1999. The terms and
conditions of the stock-based awards are determined by a Committee of the
Board of Directors on each grant date and may include provisions for the
exercise price, expiration, vesting, restriction on sale and forfeiture, as
applicable. Restricted shares purchased under this plan are subject to
restrictions on sale or disposal, which lapse in varying installments from one
to 10 years. During fiscal 1995, 14,000 restricted shares were purchased by
grantees at a price of $1.00 per share.
The Company's 1982 Stock Option Plan, under which no future options will
be granted, provided for the issuance of non-qualified stock options at the
market price of the Company's common stock at the date of grant. The options
become exercisable in installments from one to two years after date of grant
and expire 10 years from date of grant.
The Company has a director stock plan under which non-employee directors
are automatically
granted, on the first business day following the annual meeting of
shareholders, an option to purchase 1,000 shares of common stock. The option
exercise price is equal to the fair market value of the stock on the date the
option is granted. Options granted under the plan generally becomes
exercisable six months after the date of grant and expire 10 years from the
date of grant. Subject to certain adjustments, the plan provides that up to
100,000 shares of common stock may be sold or issued under the plan. As a
result of previous option grants under the plan, 41,000 and 50,000 shares
remained available for grant at July 31, 1995 and 1994, respectively.
The Company also has a stock compensation plan for non-employee directors
pursuant to which the Company will issue or deliver to each such director, in
partial consideration for the services rendered by such director during the
Company's prior fiscal year, 250 shares of the Company's common stock, subject
to certain adjustments. The shares will be issued or delivered on the date of
the first meeting of the Board that occurs after the end of each fiscal year.
<PAGE>
________________________________________________________________________________
________________________________________________________________________________
Under the various stock option plans, outstanding options for 2,267,359
and 2,037,769 shares of common stock were exercisable as of July 31, 1995 and
1994, respectively. Activity in these stock option plans for the three years
ended July 31, 1995, is summarized as follows:
<TABLE>
<CAPTION>
OPTIONS OPTION PRICE
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance at August 1, 1992 2,795,863 $10.625 - $31.625
Granted 155,000 8.875 11.375
Relinquished (30,880) 16.500 - 31.625
Forfeited (254,134) 10.625 22.125
-----------------------------------------------------------------------------------
Balance Outstanding at July 31, 1993 2,665,849 8.875 - 31.625
Granted 109,000 8.375 10.250
Relinquished (18,655) 16.500 - 31.625
Forfeited (33,150) 10.625 22.125
-----------------------------------------------------------------------------------
Balance Outstanding at July 31, 1994 2,723,044 8.375 - 31.625
Granted 19,000 9.125 10.250
Relinquished (7,180) 16.500 - 31.625
Forfeited (44,300) 10.625 23.875
Exercised (26,000) 10.625 12.000
-----------------------------------------------------------------------------------
BALANCE OUTSTANDING AT JULY 31, 1995 2,664,564 $ 8.375 - $31.625
===================================================================================
</TABLE>
The Company's stockholder rights plan generally entitles the holder of
each right to purchase one one-hundredths of a share of Series C preferred
stock, $1 par value, from the Company for $100, subject to adjustment. A right
is included with, and attaches to, each share of common stock issued and
expires on August 25, 1996 and is redeemable by the Company. The rights become
exercisable and separate from the common stock under certain circumstances
generally when a person or group of affiliated or associated persons has
acquired or obtained the right to acquire 15 percent or more of the Company's
outstanding voting stock or has made a tender offer to acquire 15 percent or
more of such voting stock. Under certain circumstances, each right would
entitle the holder to purchase a certain number of the Company's common stock
at one-half of fair market value.
In May 1993, in connection with certain amendments to the financial
covenants of its principal financing agreements, the Company issued warrants
to certain lenders. The warrants are exercisable for 600,000 shares of common
stock at $9.00 per share and expire in August 2000.
<PAGE>
________________________________________________________________________________
________________________________________________________________________________
Authorized, unissued shares of common stock were reserved for the following:
<TABLE>
<CAPTION>
JULY 31,
----------------------------------------------------------------------------
1995 1994
----------------------------------------------------------------------------
<S> <C> <C>
Various stock plans 2,963,938 3,021,475
Conversion of subordinated debentures and notes 8,229,973 8,229,973
Warrants 600,000 600,000
----------------------------------------------------------------------------
11,793,911 11,851,448
============================================================================
</TABLE>
NOTE 11 - DISCONTINUED OPERATIONS
In the fourth quarter of fiscal 1994, the Company sold and commenced the
transfer of its business jet line of business. The purchase agreement
requires the Company, to manufacture and deliver certain components and
transfer program engineering and tooling which was substantially completed in
fiscal 1995. The operating results of the business jet line of business are
included in earnings from discontinued operations summarized as follows (in
thousands):
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
------------------------------------------------------------------------------------------
1995 1994 1993
------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales $ 22,287 $ 40,286 $ 25,649
Income (loss) before taxes $ 6,486 $ 3,777 $(10,250)
Taxes on income (benefit) 2,607 1,519 (3,926)
------------------------------------------------------------------------------------------
Net income (loss) $ 3,879 $ 2,258 $ (6,324)
==========================================================================================
Net income (loss) per average share
of common stock $ 0.21 $ 0.12 $ (0.36)
==========================================================================================
</TABLE>
<PAGE>
________________________________________________________________________________
QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
--------------------------------------------------------------------------------
(in thousands except for pre-share data)
<TABLE>
<CAPTION>
YEAR ENDED JULY 31, 1995
-----------------------------------------------------------------------------------------------
1ST 2ND 3RD 4TH
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SALES $192,156 $219,774 $210,759 $182,311
OPERATING INCOME 15,353 17,986 16,784 14,506
INCOME FROM CONTINUING OPERATIONS
BEFORE TAXES 2,291 5,438 4,676 2,238
INCOME FROM CONTINUING OPERATIONS 1,370 3,252 2,573 1,298
INCOME FROM DISCONTINUED OPERATIONS, NET OF TAXES 497 337 87 2,958
INCOME BEFORE EXTRAORDINARY ITEM $ 1,867 $ 3,589 $ 2,660 $ 4,256
LOSS FROM EXTRAORDINARY ITEM, NET OF TAXES - - - (1,146)
NET INCOME $ 1,867 $ 3,589 $ 2,660 $ 3,110
PRIMARY EARNINGS (LOSS) PER AVERAGE SHARE
OF COMMON STOCK FROM:
CONTINUING OPERATIONS $ 0.08 $ 0.18 $ 0.14 $ 0.07
DISCONTINUED OPERATIONS 0.02 0.02 0.01 0.16
EXTRAORDINARY ITEM - - - (0.06)
NET PRIMARY EARNINGS $ 0.10 $ 0.20 $ 0.15 $ 0.17
-----------------------------------------------------------------------------------------------
FULLY DILUTED EARNINGS (LOSS) PER AVERAGE SHARE
OF COMMON STOCK FROM:
CONTINUING OPERATIONS $ 0.08 $ 0.17 $ 0.14 $ 0.08
DISCONTINUED OPERATIONS 0.02 0.01 - 0.13
EXTRAORDINARY ITEM - - - (.05)
NET FULLY DILUTED EARNINGS $ 0.10 $ 0.18 $ 0.14 $ 0.16
===============================================================================================
</TABLE>
<TABLE>
<CAPTION>
Year ended July 31, 1994
-----------------------------------------------------------------------------------------------
1st 2nd 3rd 4th
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sales $237,091 $234,800 $221,696 $224,554
Operating income before unusual items 16,567 14,048 14,099 14,601
Operating income after unusual items 16,567 14,048 6,173 14,601
Income (loss) from continuing operations
before taxes 4,728 2,206 (4,868) 2,487
Income (loss) from continuing operations 5,761 1,341 (2,953) 520
Income from discontinued operations, net of taxes 302 331 266 1,359
Net Income (loss) $ 6,063 $ 1,672 $ (2,687) $ 1,879
Primary earnings (loss) per average share
of common stock:
From continuing operations $ 0.32 $ 0.07 $ (0.16) $ 0.03
From discontinued operations 0.02 0.02 0.01 0.07
Net primary earnings (loss) $ 0.34 $ 0.09 $ (0.15) $ 0.10
===============================================================================================
</TABLE>
The third quarter includes unusual items aggregating $7.9 million,
representing the write-off of unamortized pension past service costs related
to the downsizing of employment levels, net of a gain on the sale of the
Auburn, Washington facility, which was closed during the prior fiscal year.
<PAGE>
________________________________________________________________________________
REPORT BY MANAGEMENT
--------------------------------------------------------------------------------
TO THE SHAREHOLDERS AND BOARD OF DIRECTORS OF ROHR, INC.
The consolidated financial statements have been prepared by the Company in
accordance with generally accepted accounting principles. These statements
necessarily include amounts based on judgments and estimates by the accounting
process.
The Company's operating and financial managers apply systems of internal
accounting controls that are designed to provide reasonable, but not absolute,
assurance that assets are safeguarded, that transactions are executed and
recorded in accordance with management's established policies and procedures,
and that accounting records are adequate for preparation of financial
statements and other financial information. Management's judgment with
respect to the relative cost and expected benefits of specific measures
determines the design, monitoring and revision of internal accounting control
systems.
The Company has a staff of internal auditors to review accounting records,
controls and practices on a planned, rotational basis and to determine
compliance with corporate policies.
The consolidated financial statements have been audited by Deloitte &
Touche LLP, independent certified public accountants, appointed annually by
the Board of Directors and ratified by the shareholders. Their responsibility
is to audit the Company's financial statements in accordance with generally
accepted auditing standards and to render an opinion that the statements
presented are in conformity with generally accepted accounting principles.
The voting members of the Audit Committee of the Board of Directors, none
of whom are employees of the Company, review the activities of the internal
auditors and independent certified public accountants to ascertain that each
is properly discharging its responsibility. These groups have free access to
the Audit Committee, and certain meetings with the independent certified
public accountants are held without the presence of management. The Audit
Committee held six meetings during fiscal 1995.
<TABLE>
<S> <C> <C>
/s/ Bob Rau /s/ L.A. Chapman /s/ A. L. Majors
R. H. Rau L. A. Chapman A. L. Majors
President and Senior Vice President Vice President and and Controller
Chief Executive Officer Chief Financial Office (Chief Accounting Officer)
</TABLE>
______________________________________________________________________________
INDEPENDENT AUDITORS' REPORT
TO THE SHAREHOLDERS AND BOARD OF DIRECTORS OF ROHR, INC.
We have audited the accompanying consolidated balance sheets of Rohr, Inc.
and its subsidiaries as of July 31, 1995 and 1994, and the related
consolidated statements of operations, shareholders' equity, and cash flows
for each of the three years in the period ended July 31, 1995. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of Rohr, Inc. and its
subsidiaries as of July 31, 1995 and 1994, and the results of its operations
and its cash flows for each of the three years in the period ended July 31,
1995, in conformity with generally accepted accounting principles.
As discussed in Note 2 to the consolidated financial statements, in fiscal
year 1993 the Company changed certain elements in the application of
accounting principles relating to long-term programs and contracts and changed
its method of accounting for income taxes and for post-retirement benefits
other than pensions.
/s/ DELOITTE & TOUCHE LLP
San Diego, California
September 11, 1995
<PAGE>
________________________________________________________________________________
MANAGEMENT
--------------------------------------------------------------------------------
BOARD OF DIRECTORS
WALLACE BARNES Chairman of the Board of Rohr, Inc., and former Chairman,
Barnes Group Inc. Bristol, Conn. Director since 1989
PROF. EUGENE E. COVERT Professor, Department of Aeronautics and Astronautics,
Massachusetts Institute of Technology Cambridge, Mass. Director since 1986
WAYNE M. HOFFMAN Former Chairman of the Board, Tiger International, Inc. Los
Angeles, Calif. Director since 1982
SAM F. IACOBELLIS Executive Vice President and Deputy Chairman for Major
Programs, Rockwell International Corporation Seal Beach, Calif. Director since
1994
DR. D. LARRY MOORE President and Chief Operating Officer, Honeywell, Inc.
Minneapolis, Minn. Director since 1991
ROBERT M. PRICE Former Chairman and Chief Executive Officer, Control Data
Corporation Bloomington, Minn. Director since 1991
ROBERT H. RAU President and Chief Executive Officer, Rohr, Inc. Chula Vista,
Calif. Director since 1993
DR. WILLIAM P. SOMMERS President and Chief Executive Officer, SRI
International Menlo Park, Calif. Director since 1992
DR. JACK D. STEELE Former Dean, School of Business Administration, University
of Southern California Los Angeles, Calif. Director since 1976
JAMES R. WILSON President and Chief Executive Officer, Thiokol Corporation
Ogden, Utah Director since 1994
______________________________________________________________________________
OFFICERS
DANIEL ABEHSERA President and Director General, Rohr Europe
WALLACE BARNES Chairman of the Board
WILLIAM BILLINGSLEA, JR. Corporate Counsel and Assistant Secretary
F. PATRICK BURKE Vice President, Airline Support
LAURENCE A. CHAPMAN Senior Vice Presidentand Chief Financial Officer
KEITH D. GENTRY Vice President, Materiel
JAMES A. GOINGS Vice President, Manufacturing, Chula Vista
JOHN R. JOHNSON Senior Vice President, Programs, Technical Resources and
Quality Assurance
RICHARD W. MADSEN Vice President, General Counsel and Secretary
ALVIN L. MAJORS Vice President and Controller
ELAINE K. MILLS Manager, Corporate Stock Records and Assistant Secretary
DAVID A. RAMSAY Vice President, Human Resources
ROBERT H. RAU President and Chief Executive Officer
KENNETH W. SCHOLZ Treasurer
DAVID W. SHAW Vice President, Financial Planning and Control
RICHARD J. WARTERS Vice President, Technical Resources and Chief Engineer
DAVID R. WATSON Senior Vice President, Customer Support and Business
Development
GRAYDON A. WETZLER Senior Vice President, Operations
<PAGE>
________________________________________________________________________________
ROHR PROFILE
--------------------------------------------------------------------------------
Incorporated in Delaware in 1969, Rohr, Inc. is the successor to an aerospace
manufacturing company founded in San Diego in 1940 and is now headquartered in
Chula Vista, California.
The Company had approximately 4,000 full-time employees at the end of
fiscal 1995 and is an Equal Opportunity Employer.
SHAREHOLDER INFORMATION
Rohr's common stock is traded principally on the following markets:
-- New York Stock Exchange (RHR)
-- Pacific Stock Exchange (RHR)
-- The Stock Exchange, London
The number of common shareholders of record on July 31, 1995 was 4,635.
The Company's fiscal year is from August 1 to July 31.
10-K REPORT REQUESTS
The Company will provide a copy of its most recent report to the
Securities and Exchange Commission on Form 10-K (excluding the exhibits
thereto) upon the written request of any beneficial owner of the Company's
securities as of the record date for the Annual Meeting (October 6, 1995)
without charge. Copies of the exhibits to Form 10-K are also available upon
request and after payment of the cost of reproducing such exhibits. Such
request should be addressed to Rohr, Inc., Attention: Shareholder Services,
850 Lagoon Drive, Chula Vista, CA 91910-2098.
TRANSFER AGENT AND REGISTRAR
Rohr's common stock transfer agent and registrar is the First Chicago
Trust Co. of New York at:
P.O. Box 2500, Jersey City, NJ 07303-2500 (Correspondence and address
changes)
P.O. Box 2506, Jersey City, NJ 07303-2506 (Certificate transfers)
Telephone: (800) 446-2617.
COMMUNICATING WITH ROHR
Mailing Address and Parcel Deliveries: 850 Lagoon Drive Chula Vista,
CA 91910-2098
Main Telephone: (619) 691-4111
Employment: (619) 691-4062
Investor Relations: (619) 691-3002 Fax: (619) 691-2222
Purchasing: (619) 691-2331 Fax: (619) 691-2584
Shareholder Records and Services: (619) 691-2214 Fax: (619) 691-2801
Telex: 69-5038
STOCK PRICE BY FISCAL QUARTER
<TABLE>
<CAPTION>
1995 1994
--------------------------------------------------------
HIGH LOW High Low
--------------------------------------------------------
<S> <C> <C> <C> <C>
First Quarter $ 12-1/8 $ 8-5/8 $ 8-3/4 $ 6-3/4
Second Quarter 12-1/4 8-1/4 11-1/2 7-1/8
Third Quarter 12-3/4 10 11-1/8 8
Fourth Quarter 15-3/8 10-3/8 11-5/8 8-1/4
========================================================
</TABLE>
<PAGE>
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statements on
Form S-3 (Nos. 33 - 53113, 33-12340, 33-13373 and 33-17536); Form S-8 (Nos. 2-
75423, 2-83877, 33-14382, 33-29351, 33-32839 and 33-56529); and Form S-16
(Nos. 2-76538 and 2-76656) of Rohr, Inc., of our reports dated September 11,
1995, appearing and incorporated by reference in this Annual Report on Form 10-K
of Rohr, Inc., for the year ended July 31, 1995.
Deloitte & Touche LLP
San Diego, California
September 11, 1995
EXHIBIT 23
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE BALANCE SHEET AND INCOME STATEMENT AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUL-31-1995
<PERIOD-END> JUL-31-1995
<CASH> 84,584
<SECURITIES> 0
<RECEIVABLES> 72,152
<ALLOWANCES> 0
<INVENTORY> 390,275
<CURRENT-ASSETS> 567,189
<PP&E> 523,596
<DEPRECIATION> (306,545)
<TOTAL-ASSETS> 976,540
<CURRENT-LIABILITIES> 172,442
<BONDS> 540,658
<COMMON> 18,068
0
0
<OTHER-SE> 157,863
<TOTAL-LIABILITY-AND-EQUITY> 976,540
<SALES> 0
<TOTAL-REVENUES> 805,000
<CGS> 0
<TOTAL-COSTS> 714,173
<OTHER-EXPENSES> 26,198
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 49,986
<INCOME-PRETAX> 14,643
<INCOME-TAX> 6,150
<INCOME-CONTINUING> 8,493
<DISCONTINUED> 3,879
<EXTRAORDINARY> (1,146)
<CHANGES> 0
<NET-INCOME> 11,226
<EPS-PRIMARY> 0.62
<EPS-DILUTED> 0.58
</TABLE>
