-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, YKOyMUYPT6rLAW/qkxkHk0cVrfJZpxRPoozJJqaqObjOzfC2Uf0pMmihdnIraz4q vLrfHmXZkJhKo3e3T5ln6Q== 0000017843-94-000037.txt : 19941117 0000017843-94-000037.hdr.sgml : 19941117 ACCESSION NUMBER: 0000017843-94-000037 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19940930 FILED AS OF DATE: 19941110 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CARPENTER TECHNOLOGY CORP CENTRAL INDEX KEY: 0000017843 STANDARD INDUSTRIAL CLASSIFICATION: 3312 IRS NUMBER: 230458500 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-05828 FILM NUMBER: 94558624 BUSINESS ADDRESS: STREET 1: 101 W BERN ST CITY: READING STATE: PA ZIP: 19612 BUSINESS PHONE: 2152082000 MAIL ADDRESS: STREET 1: P O BOX 14662 CITY: READING STATE: PA ZIP: 19612-4662 10-Q 1 SEPTEMBER, 1994 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1994 Commission File Number 1-5828 CARPENTER TECHNOLOGY CORPORATION (Exact name of Registrant as specified in its Charter) Delaware 23-0458500 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 101 West Bern Street, Reading, Pennsylvania 19612-4662 (Address of principal executive offices) (Zip Code) 610-208-2000 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- Indicate the number of shares outstanding of each of the issuer's classes of common stock as of September 30, 1994. Common stock, $5 par value 8,155,164 Class Number of shares outstanding The Exhibit Index appears on page E-1. CARPENTER TECHNOLOGY CORPORATION FORM 10-Q INDEX Page Part I FINANCIAL INFORMATION Consolidated Balance Sheet September 30, 1994 (Unaudited) and June 30, 1994.......................................... 3 & 4 Consolidated Statement of Income (Unaudited) for the Three Months Ended September 30, 1994 and 1993............. 5 Consolidated Statement of Cash Flows (Unaudited) for the Three Months Ended September 30, 1994 and 1993............. 6 Notes to Consolidated Financial Statements................... 7 - 9 Management's Discussion and Analysis of Results of Operations.............................................. 9 Part II OTHER INFORMATION.....................................10 & 11 Exhibit Index.................................................. E-1 PART I CARPENTER TECHNOLOGY CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET (Page 1 of 2) September 30, 1994 and June 30, 1994 (in thousands, except share data) September 30 June 30 1994 1994 ------------ ---------- (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 9,752 $ 5,404 Accounts receivable, net 87,135 95,412 Inventories 71,306 65,262 Deferred income taxes 463 463 Other current assets 10,013 4,629 -------- -------- Total current assets 178,669 171,170 -------- -------- Property, plant and equipment, at cost 741,287 723,720 Less accumulated depreciation and amortization 339,003 331,880 -------- -------- 402,284 391,840 -------- -------- Prepaid pension cost 75,167 73,185 -------- -------- Investment in joint venture 50,526 48,576 -------- -------- Other assets 55,092 45,140 -------- -------- Total assets $761,738 $729,911 ======== ======== See accompanying notes to consolidated financial statements. CARPENTER TECHNOLOGY CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET (Page 2 of 2) September 30, 1994 and June 30, 1994 (in thousands, except share data) September 30 June 30 LIABILITIES 1994 1994 - - - ----------- ------------ ----------- (Unaudited) Current liabilities: Short-term debt $ 19,850 $ - Accounts payable 41,318 35,478 Accrued compensation 9,902 18,654 Accrued income taxes 3,851 616 Other accrued liabilities 28,276 28,153 Current portion of long-term debt 7,299 15,618 -------- -------- Total current liabilities 110,496 98,519 -------- -------- Long-term debt, net of current portion 171,244 158,070 -------- -------- Accrued postretirement benefits 140,019 139,365 -------- -------- Deferred income taxes 75,555 74,739 -------- -------- Other liabilities and deferred income 20,107 20,074 -------- -------- SHAREHOLDERS' EQUITY Preferred stock, $5 par value - authorized 2,000,000 shares; issued 459.3 shares at September 30, 1994 and 459.9 shares at June 30, 1994 29,002 29,029 Common stock, $5 par value - authorized 50,000,000 shares; issued 9,624,919 shares at September 30, 1994 and 9,612,181 shares at June 30, 1994 48,125 48,061 Capital in excess of par value 52,471 50,882 Reinvested earnings 204,325 204,667 Common stock in treasury, at cost - 1,469,755 shares at September 30, 1994 and 1,522,604 shares at June 30, 1994 (63,988) (66,150) Deferred compensation (25,771) (26,386) Foreign currency translation adjustments 153 (959) -------- -------- Total shareholders' equity 244,317 239,144 -------- -------- Total liabilities and shareholders' equity $761,738 $729,911 ======== ======== See accompanying notes to consolidated financial statements. CARPENTER TECHNOLOGY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF INCOME (Unaudited) for the three months ended September 30, 1994 and 1993 (in thousands, except per share data) 1994 1993 ---- ---- Net sales $156,084 $129,429 -------- -------- Costs and expenses: Cost of sales 121,568 97,505 Selling & administrative expenses 23,954 20,662 Interest expense 2,698 5,036 Equity in loss (profit) of joint venture 240 (120) Other income, net (511) (405) -------- -------- 147,949 122,678 -------- -------- Income before income taxes 8,135 6,751 Income taxes 3,203 3,979 -------- -------- Net income $ 4,932 $ 2,772 ======== ======== Earnings per common share $ .55 $ .30 ======== ======== Weighted average common shares outstanding 8,201 7,981 ======== ======== Dividends per common share $ .60 $ .60 ======== ======== See accompanying notes to consolidated financial statements. CARPENTER TECHNOLOGY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) for the three months ended September 30, 1994 and 1993 (in thousands) 1994 1993 ---- ---- OPERATIONS Net income $ 4,932 $ 2,772 Adjustments to reconcile net income to net cash provided from operations: Depreciation and amortization 7,373 7,150 Deferred income taxes 302 2,348 Prepaid pension cost (1,982) (2,898) Equity in loss (profit) of joint venture 240 (120) Changes in working capital and other: Receivables 11,694 16,588 Inventories (4,818) 106 Other, net (5,270) (4,189) -------- ------- Net cash provided from operations 12,471 21,757 -------- ------- INVESTING ACTIVITIES Purchases of plant and equipment (11,012) (10,015) Disposals of plant and equipment 47 378 Investment in joint venture (1,020) (45,892) Acquisition of wholly-owned subsidiaries, net of cash received (13,005) (22,200) -------- -------- Net cash used for investing activities (24,990) (77,729) -------- -------- FINANCING ACTIVITIES Proceeds from issuance of short-term debt 19,850 24,776 Proceeds from issuance of long-term debt 40,000 - Payments on long-term debt (38,309) (491) Dividends paid (5,274) (5,196) Proceeds from issuance of common stock 604 163 -------- -------- Net cash provided by financing activities 16,871 19,252 -------- -------- EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS (4) - -------- -------- INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 4,348 (36,720) Cash and cash equivalents at beginning of period 5,404 45,822 -------- -------- Cash and cash equivalents at end of period $ 9,752 $ 9,102 ======== ======== Supplemental Data: Interest payments, net of amounts capitalized $ 4,411 $ 8,545 Income tax payments, net of refunds $ (411) $ 223 See accompanying notes to consolidated financial statements. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. Basis of Presentation --------------------- The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting only of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months ended September 30, 1994 are not necessarily indicative of the results that may be expected for the year ending June 30, 1995. For further information, refer to the consolidated financial statements and footnotes included in the Company's 1994 Annual Report on Form 10-K. The June 30, 1994 condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by generally accepted accounting principles. 2. Earnings Per Common Share ------------------------- Earnings per common share are computed by dividing net income (less preferred dividends net of tax benefits) by the weighted average number of common shares and common share equivalents outstanding during the period. 3. Inventories ----------- September 30 June 30 1994 1994 -------- -------- (in thousands) Finished $ 73,899 $ 76,187 Work in process 91,820 85,247 Raw materials and supplies 31,317 29,558 -------- -------- Total at current cost 197,036 190,992 Excess of current cost over LIFO values 125,730 125,730 -------- -------- Inventory per Balance Sheet $ 71,306 $ 65,262 ======== ======== 3. Inventories, continued ----------- The current cost of LIFO-valued inventories was $169.9 million at September 30, 1994 and $165.8 million at June 30, 1994. Reduction in LIFO-valued inventories resulted in an increase in net income of approximately $2.1 million or $.26 per share for the three months ended September 30, 1993. 4. Acquisition of Wholly-Owned Subsidiaries ---------------------------------------- On July 22, 1994, the Company acquired all of the outstanding shares of Certech, Inc., and an affiliated company, for $16.6 million, including acquisition costs, comprised of $13.4 million in cash and 53,124 shares of treasury common stock. Certech manufactures a broad line of complex injection molded ceramics parts. The acquisition has been accounted for using the purchase method of accounting, and accordingly, the purchase price has been allocated to the assets purchased and the liabilities assumed based upon the preliminary estimated fair values at the date of acquisition. The excess of purchase price over the preliminary estimated fair values of the net assets acquired was approximately $10 million and has been recorded as intangible assets and goodwill. As previously reported, on July 28, 1993, the Company acquired all of the outstanding shares of Aceros Fortuna, S.A. de C.V., a Mexican steel distribution company, and two affiliated companies. The operating results of these acquired businesses have been included in the Consolidated Statement of Income from the dates of acquisition. On the basis of a pro forma combination of the results of operations as if the acquisitions had taken place at the beginning of fiscal 1994, combined net sales would have been approximately $158 million and $135 million for the quarters ended September 30, 1994 and 1993, respectively. Combined pro forma net income and earnings per share would not have been materially different from the reported amounts for both periods. Such pro forma amounts are not necessarily indicative of what the actual combined results of operations might have been if the acquisitions had been effective at the beginning of fiscal 1994. 5. Debt Arrangements ----------------- During the quarter ended September 30, 1994, the Company issued $40.0 million of medium-term debt securities with a 7.66% average interest rate under a Form S-3 registration statement ("Shelf Registration") on file with the Securities and Exchange Commission. On October 5, 1994, the Company issued an additional $10.0 million of medium- term debt securities with a 7.75% interest rate. The proceeds were used to retire borrowings under credit arrangements. MANAGEMENT'S DISCUSSION & ANALYSIS OF RESULTS OF OPERATIONS ----------------------------------------------------------- Net income for the quarter was $4.9 million or $.55 per share versus $2.8 million or $.30 per share in the same quarter last year. The improved results were primarily due to higher sales volume. In addition, earnings last year were adversely affected by a one-time charge of $1.5 million, or $.19 per share, to increase net deferred tax liabilities for a change in the U.S. corporate income tax rate. Sales were $156.1 million, a 21 percent increase over the $129.4 million last year. The increase in sales was primarily a result of the higher shipment levels, particularly of stainless bar and wire products to the automotive and equipment manufacturers. Steel Division unit volume shipments were up 15 percent compared with the year-ago period. Sales and profits were also improved by the inclusion of the results of Certech, Inc. and Aceros Fortuna S.A., which were acquired on July 22, 1994 and July 28, 1993, respectively. Cost of sales as a percent of net sales increased from 75 percent in last year's first fiscal quarter to 78 percent in the current year's first quarter. Last year's cost of sales was favorably impacted because of an inventory reduction program and the use of the LIFO inventory valuation method which reduced costs by $3.3 million before taxes or $.26 per share after taxes. In addition, raw material costs were 23 percent higher in this year's first fiscal quarter versus last year's first fiscal quarter. Interest costs decreased by $2.3 million versus the same period last year. This was primarily due to increased capitalized interest costs during the pre-operating period of Walsin-CarTech Specialty Steel Corporation, a joint venture with Walsin Lihwa Corporation. Additionally, the Company replaced high interest cost debt with lower interest cost borrowings in the March 1994 quarter. PART II - OTHER INFORMATION - - - --------------------------- Item 1. Legal Proceedings. ------------------------- There are no material pending legal proceedings, other than routine litigation incidental to the business, to which the Company or any of its subsidiaries is a party or to which any of their properties is subject. There are no material proceedings to which any Director, Officer, or affiliate of the Company, or any owner of more than five percent of any class of voting securities of the Company, or any associate of any Director, Officer, affiliate, or security holder of the Company, is a party adverse to the Company or has a material interest adverse to the interest of the Company or its subsidiaries. There is no administrative or judicial proceeding arising under any Federal, State or local provisions regulating the discharge of materials into the environment or primarily for the purpose of protecting the environment that (1) is material to the business or financial condition of the Company, (2) involves a claim for damages, potential sanctions or capital expenditures exceeding ten percent of the current assets of the Company or (3) includes a governmental authority as a party and involves potential monetary sanctions in excess of $100,000. Item 2. Changes in Securities. ----------------------------- (a) See Note 5 to Financial Statements contained in Part I. Item 6. Exhibits and Reports on Form 8-K. ---------------------------------------- a. The following documents are filed as exhibits: 11. Statement regarding computation of per share earnings. b. The Company filed no Reports on Form 8-K for events occurring during the quarter of the fiscal year covered by this report. Items 3, 4 and 5 are omitted as the answer is negative or the items are not applicable. SIGNATURES ---------- Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. CARPENTER TECHNOLOGY CORPORATION -------------------------------- (Registrant) Date: November 10, 1994 /s/G. Walton Cottrell ------------------- -------------------------------- G. Walton Cottrell Sr. Vice President - Finance and Chief Financial Officer EX-99 2 EXHIBIT INDEX EXHIBIT INDEX ------------- Exhibit No. Title Page - - - ----------- ----- ---- 11. Statement regarding computation of per share earnings. E-2 27. Financial data schedule E-3 EX-11 3 EARNINGS PER SHARE EXHIBIT Exhibit 11 CARPENTER TECHNOLOGY CORPORATION AND SUBSIDIARIES EARNINGS PER COMMON SHARE COMPUTATIONS For the Three Months Ended September 30, 1994 and 1993 (in thousands, except per share data) 1994 1993 ---- ---- Net Income for Primary Earnings - - - ------------------------------- Per Common Share ---------------- Net income $ 4,932 $ 2,772 Dividends accrued on convertible preferred stock, net of tax benefits (400) (406) -------- -------- Net income for primary earnings per common share $ 4,532 $ 2,366 ======== ======== Weighted Average Common Shares - - - ------------------------------ Weighted average number of common shares outstanding 8,137 7,974 Effect of shares issuable under the stock option plans 64 7 -------- -------- Weighted average common shares 8,201 7,981 ======== ======== Primary Earnings Per Common Share $ .55 $ .30 - - - --------------------------------- ======== ======== Earnings per common share on a fully diluted basis were substantially the same as primary earnings per common share. EX-27 4 FINANCIAL DATA SCHEDULE
5 1,000 3-MOS JUN-30-1995 SEP-30-1994 $9,752 $0 $87,135 $0 $71,306 $178,669 $741,287 $339,003 $761,738 $110,196 $171,244 $48,125 $0 $29,002 $167,190 $761,738 $156,084 $156,084 $121,568 $121,568 $(271) $0 $2,698 $8,135 $3,203 $4,932 $0 $0 $0 $4,932 $.55 $.55
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