-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Onkw5wuqUfB4QnxaOsLk81GZhnWkLAbalokWkcryWCZihaQCwhVx4Tp9SQS6AzEl q9TY2TzycakBm664o6pO4A== 0000201493-97-000015.txt : 19971114 0000201493-97-000015.hdr.sgml : 19971114 ACCESSION NUMBER: 0000201493-97-000015 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 19970928 FILED AS OF DATE: 19971112 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: COLTEC INDUSTRIES INC CENTRAL INDEX KEY: 0000201493 STANDARD INDUSTRIAL CLASSIFICATION: MISC INDUSTRIAL & COMMERCIAL MACHINERY & EQUIPMENT [3590] IRS NUMBER: 131846375 STATE OF INCORPORATION: PA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-07568 FILM NUMBER: 97714552 BUSINESS ADDRESS: STREET 1: 3 COLISEUM CENTRE STREET 2: 2550 WEST TYVOLA ROAD CITY: CHARLOTTE STATE: NC ZIP: 28217 BUSINESS PHONE: (704) 423 7000 MAIL ADDRESS: STREET 1: 3 COLISEUM CENTRE STREET 2: 2550 WEST TYVOLA ROAD CITY: CHARLOTTE STATE: NC ZIP: 28217 FORMER COMPANY: FORMER CONFORMED NAME: COLT INDUSTRIES INC DATE OF NAME CHANGE: 19900913 FORMER COMPANY: FORMER CONFORMED NAME: PENN TEXAS CORP DATE OF NAME CHANGE: 19680318 FORMER COMPANY: FORMER CONFORMED NAME: FAIRBANKS WHITNEY CORP DATE OF NAME CHANGE: 19680318 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark one) (X) Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended September 28, 1997 or ( ) Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from __________________ to __________________ Commission file number: 1-7568 COLTEC INDUSTRIES INC (Exact name of registrant as specified in its charter) PENNSYLVANIA 13-1846375 (State or other jurisdiction of incorporation (IRS Employer or organization) Identification No.) 3 Coliseum Centre 2550 West Tyvola Road Charlotte, North Carolina 28217 28217 (Address of principal executive offices) (Zip code) (704)423-7000 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 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 ( ) ________________________________________ On October 31, 1997, there were outstanding 65,485,707 shares of common stock, par value $.01 per share. PART I - FINANCIAL INFORMATION Item 1. Financial Statements COLTEC INDUSTRIES INC AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS Three Months Ended Nine Months Ended Sept. 28, Sept. 29, Sept. 28, Sept. 29, 1997 1996 1997 1996 (in thousands, except per share data) Net sales $324,453 $287,216 $955,852 $861,429 Cost of sales 221,472 201,358 650,284 611,274 Gross profit 102,981 85,858 305,568 250,155 Selling and administrative 53,787 43,718 162,692 141,796 Special charges - - - - Operating income 49,194 42,140 142,876 108,359 Interest expense and other, net 13,859 17,045 38,905 58,503 Earnings from continuing operations before income taxes and extraordinary item 35,335 25,095 103,971 49,856 Income taxes 12,014 8,533 35,350 16,950 Earnings from continuing operations before extraordinary item 23,321 16,562 68,621 32,906 Discontinued operations (net of tax) - 1,509 - 52,665 Extraordinary item (net of tax) - (59) - (1,881) Net earnings $23,321 $18,012 $68,621 $83,690 Earnings per common share Before extraordinary item $.35 $.24 $1.03 $.47 Discontinued operations - .02 - .76 Extraordinary item - - - (.03) Net earnings $.35 $.26 $1.03 $1.20 Weighted average number of common and common equivalent shares 66,596 68,997 67,007 69,835 See notes to consolidated financial statements. COLTEC INDUSTRIES INC AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS Sept. 28, Dec. 31, 1997 1996 (in thousands) ASSETS Current assets: Cash and cash equivalents $11,769 $15,029 Accounts and notes receivable, net of allowance of $2,705 in 1997 and $2,007 in 1996 142,383 190,325 Inventories Finished goods 51,787 48,813 Work in process and finished parts 150,304 122,817 Raw materials and supplies 34,395 32,568 236,486 204,198 Deferred income taxes 8,998 10,524 Other current assets 13,951 12,769 Total current assets 413,587 432,845 Property, plant and equipment, net 246,240 214,790 Costs in excess of net assets acquired, net 140,558 132,872 Other assets 63,827 58,869 $864,212 $839,376 See notes to consolidated financial statements. COLTEC INDUSTRIES INC AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS Sept. 28, Dec. 31, 1997 1996 (In thousand, except share data) LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current portion of long-term debt $565 $2,528 Accounts payable 68,496 55,410 Accrued expenses 151,869 145,104 Current portion of liabilities of discontinued operations 5,345 14,229 Total current liabilities 226,275 217,271 Long-term debt 738,625 717,722 Deferred income taxes 58,864 50,646 Other liabilities 70,912 100,004 Liabilities of discontinued operations 160,428 170,740 Commitments and contingencies - - Shareholders' equity: Preferred stock, $.01 par value, 2,500,000 shares authorized, shares outstanding - none - - Common stock, $.01 par value, 100,000,000 shares authorized, 70,501,948 and 70,398,661 shares issued at September 28, 1997 and December 31, 1996, respectively (excluding 25,000,000 shares held by a wholly owned subsidiary) 705 704 Capital surplus 642,828 643,221 Retained deficit (938,282) (1,006,903) Unearned compensation (3,177) (2,136) Minimum pension liability (3,200) (3,200) Foreign currency translation adjustments (5,213) (1,151) (306,339) (369,465) Less cost of 4,999,741 and 3,182,822 shares of common stock in treasury at September 28, 1997 and December 31, 1996, respectively (84,553) (47,542) (390,892) (417,007) $864,212 $839,376 See notes to consolidated financial statements. COLTEC INDUSTRIES INC AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Nine Months Ended Sept. 28, Sept. 29, 1997 1996 Cash flows from operations activities: Net earnings $68,621 $83,690 Adjustments to reconcile net earnings to cash provided by operating activities: Extraordinary item - 1,881 Depreciation and amortization 28,327 27,720 Deferred income taxes 10,209 15,106 Gain on sale of Automotive Business - (57,487) Payments of liabilities of discontinued operations (19,196) (1,556) Foreign currency translation adjustment (4,062) 978 Other operating items (30,825) (18,402) Changes in assets and liabilities: Accounts and notes receivable (10,604) (67,802) Inventories (28,314) (642) Other current assets (504) (256) Accounts payable 11,934 (10,094) Accrued expenses 4,748 41,411 Cash provided by operating activities 30,334 14,547 Cash flows from investing activities: Capital expenditures (46,004) (29,662) Acquisition of business (23,778) - Proceeds from sale of Automotive Business - 296,522 Cash provided by (used in) investing activities (69,782) 266,860 Cash flows from financing activities: Increase in revolving facility, net 25,000 65,000 Sale of accounts receivable 62,000 - Repayment of long-term debt (8,117) (300,390) Purchase of treasury stock (42,695) (37,545) Cash provided by (used in) financing activities 36,188 (272,935) Increase (decrease) in cash and cash equivalents (3,260) 8,472 Cash and cash equivalents - beginning of period 15,029 3,971 Cash and cash equivalents - end of period $11,769 $12,443 Supplemental cash flow data: Cash paid of interest $35,025 $44,577 Cash paid for income taxes, net 13,827 22,131 See notes to consolidated financial statements. COLTEC INDUSTRIES INC AND SUBSIDIARIES Notes to Consolidated Financial Statements (dollars in thousands) 1. SUMMARY OF ACCOUNTING POLICIES Financial Information: The unaudited consolidated financial statements included herein reflect in the opinion of management of Coltec Industries Inc (the Company) all normal recurring adjustments necessary to present fairly the consolidated financial position and results of operations for the periods indicated. The 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. The Consolidated Balance Sheet as of December 31, 1996 has been extracted from the audited consolidated financial statements as of that date. For further information, refer to the consolidated financial statements and footnotes included in the Company's annual report to shareholders for the year ended December 31, 1996. 2. SALE OF ACCOUNTS RECEIVABLE In September 1997, the Company and certain of its subsidiaries sold $77,500 of their U.S. and Canadian customer trade receivables to CNC Finance LLC (CNC Finance) a bankruptcy remote subsidiary of the Company. CNC Finance entered into a three-year agreement to sell, on a revolving basis, an undivided fractional ownership interest in the receivables, based on the level of eligible receivables, up to a maximum of $85,000. At September 28, 1997, $62,000 of the Company's receivables were sold under this agreement and the sale has been reflected as a reduction of accounts receivable in the Consolidated Balance Sheet. The undivided interests were sold at a discount which was included in Interest expense and other, net in the Consolidated Statement of Earnings. 3. SPECIAL CHARGES In the third quarter of 1995, the Company recorded a special charge of $27,000, primarily to cover the costs of closing the Walbar compressor blade facility in Canada. The facility was closed during 1996. The special charge included costs to cover the cancellation of contractual obligations resulting from the decision to close the Walbar facility, asset write-downs, severance and employee-related costs and other costs necessary to implement the shutdown of the Walbar facility and selected workforce reductions throughout the Company. At September 28, 1997 COLTEC INDUSTRIES INC AND SUBSIDIARIES Notes to Consolidated Financial Statements (dollars in thousands) all related costs had been charged and the remaining accrual was reversed. The activity in the related reserve through September 28, 1997 was as follows: Contractual Asset Obligations Writedowns Severance Other Total 1995 charge $9,065 $7,845 $5,084 $5,006 $27,000 1995 activity (65) (4,549) (1,778) (2,553) (8,945) December 31,1995 9,000 3,296 3,306 2,453 18,055 1996 activity (961) (1,875) (1,876) (1,597) (6,309) December 31, 1996 $8,039 $1,421 $1,430 $856 $11,746 1997 activity year to date (1,200) - (517) (29) (1,746) Reversal (6,839) (1,421) (913) (827) (10,000) September 28, 1997 $ - $ - $ - $ - $ - In the third quarter of 1997, the Company recorded a special charge of $10,000, to cover the restructuring of its Industrial Segment. This special charge included the costs of closing its FMD Electronics operations in Roscoe, Illinois and its Ortman Fluid Power operations in Hammond, Indiana. The special charge also included the costs to restructure the Company's Industrial Segment businesses in Canada and Germany and certain termination costs related to the relocation of the Delavan Commercial divisional headquarters to North Carolina. The third quarter 1997 charge included costs resulting from cancellation of contractual obligations, asset write-downs, severance and employee-related costs and other costs to shut-down these facilities that will not benefit future operations. The related reserve activity for year to date 1997 was as follows: Contractual Asset Obligations Writedowns Severance Other Total 1997 charge $641 $1,049 $5,425 $2,885 $10,000 1997 activity year to date (50) (590) (1,706) (381) (2,727) September 28, 1997 $591 $459 $3,719 $2,504 $7,273 4. DISCONTINUED OPERATIONS In June 1996, the Company sold Holley Automotive, Coltec Automotive and Performance Friction Products to Borg-Warner Automotive, Inc. In December 1996, the Company sold Farnam Sealing Systems Division to Meillor SA. The sale of these businesses represented a disposal of the Company's Automotive Segment. Accordingly, the Consolidated Statements of Earnings for the three months and nine months ended September 29, 1996 have been restated to reflect the operations of the automotive original equipment components businesses as a discontinued operation. COLTEC INDUSTRIES INC AND SUBSIDIARIES Notes to Consolidated Financial Statements (dollars in thousands) Liabilities of discontinued operations at September 28, 1997 of $165,773 relate to contingent contractual obligations, environmental matters, reserves for postretirement benefits and other future estimated costs for various discontinued operations. 5. EXTRAORDINARY ITEM The Company incurred an extraordinary charge of $1,821, net of income taxes of $937, in the first quarter of 1996 in connection with early retirement of debt. 6. COMMITMENTS AND CONTINGENCIES The Company and certain of its subsidiaries are defendants in various lawsuits, including actions involving asbestos-containing products and certain environmental proceedings. With respect to asbestos product liability and related litigation costs, as of September 28, 1997, two subsidiaries of the Company were among a number of defendants (typically 15 to 40) in approximately 110,300 actions (including approximately 3,600 actions in advanced stages of processing) filed in various states by plaintiffs alleging injury or death as a result of exposure to asbestos fibers. During the first nine months of 1997, two subsidiaries of the Company received approximately 31,400 new actions compared to approximately 32,400 new actions received during the first nine months of 1996. Through September 28, 1997, approximately 193,700 of the approximately 304,000 total actions brought have been settled or otherwise disposed. The damages claimed for personal injury or death vary from case to case, and in many cases plaintiffs seek $1,000 or more in compensatory damages and $2,000 or more in punitive damages. Although the law in each state differs to some extent, it appears, based on advice of counsel, that liability for compensatory damages would be shared among all responsible defendants, thus limiting the potential monetary impact of such judgments on any individual defendant. Following a decision of the Pennsylvania Supreme Court, in a case in which neither the Company or any or its subsidiaries were parties, that held insurance carriers are obligated to cover asbestos-related bodily injury actions if any injury or disease process, from first exposure through manifestation, occurred during a covered policy period (the "continuous trigger theory of coverage"), the Company settled litigation with its primary and most of its first-level excess insurance carriers, substantially on the basis of the Court's ruling. The Company has negotiated a final agreement with most of its excess carriers that are in the layers of coverage immediately above its first layer. The Company is currently receiving payments pursuant to this agreement. The Company believes that, with respect to the remaining carriers, a final agreement can be achieved without litigation and on substantially the same basis that it has resolved the issues with its other carriers. Settlements are generally made on a group basis with payments made to individual claimants over periods of one to four years. COLTEC INDUSTRIES INC AND SUBSIDIARIES Notes to Consolidated Financial Statements (dollars in thousands) Payments were made with respect to asbestos liability and related costs aggregating $47,572 and $53,642 for the first nine months of 1997 and 1996, respectively, substantially all of which were covered by insurance. Related to payments not covered by insurance, the Company recorded charges to operations amounting to $6,000 and $6,125 for the first nine months of 1997 and 1996, respectively. In accordance with the Company's internal procedures for the processing of asbestos product liability actions and due to the proximity to trial or settlement, certain outstanding actions have progressed to a stage where the Company can reasonably estimate the cost to dispose of these actions. As of September 28, 1997, the Company estimates that the aggregate remaining cost of the disposition of the settled actions for which payments remain to be made and actions in advanced stages of processing, including associated legal costs, is approximately $56,300 and the Company expects that this cost will be substantially covered by insurance. With respect to the 106,700 outstanding actions as of September 28, 1997, which are in preliminary procedural stages, the Company lacks sufficient information upon which judgments can be made as to the validity or ultimate disposition of such actions, thereby making it difficult to estimate with reasonable certainty the potential liability or costs to the Company. When asbestos actions are received, they are typically forwarded to local counsel to ensure that the appropriate preliminary procedural response is taken. The complaints typically do not contain sufficient information to permit a reasonable evaluation as to their merits at the time or receipt, and in jurisdictions encompassing a majority of the outstanding actions, the practice has been that little or no discovery or other action is taken until several months prior to the date set for trial. Accordingly, the Company generally does not have the information necessary to analyze the actions in sufficient detail to estimate the ultimate liability or costs to the Company, if any, until the actions appear on a trial calendar. A determination to seek dismissal, to attempt to settle or proceed to trial is typically not made prior to the receipt of such information. It is also difficult to predict the number of asbestos lawsuits that the Company's subsidiaries will receive in the future. The Company has noted that, with respect to recently settled actions or actions in advanced stages of processing, the mix of the injuries alleged and the mix of the occupations of the plaintiffs have been changing from those traditionally associated with the Company's asbestos- related actions. The Company is not able to determine with reasonable certainty whether this trend will continue. Based upon the foregoing, and due to the unique factors inherent in each of the actions, including the nature of the disease, the occupation of the plaintiff, the presence or absence of other possible causes of a plaintiff's illness, the availability of legal defenses, such as the statute of limitations or state of the art, and whether the lawsuit is an individual one or part of a group, management is unable to estimate with reasonable certainty the cost of disposing of outstanding actions in preliminary procedural stages or of actions that may be filed in the future. However, the Company believes that its subsidiaries are in a favorable position compared to many other defendants because, among other things, the asbestos fibers in its asbestos-containing products were encapsulated. Considering the COLTEC INDUSTRIES INC AND SUBSIDIARIES Notes to Consolidated Financial Statements (dollars in thousands) foregoing, as well as the experience of the Company's subsidiaries and other defendants in asbestos litigation, the likely sharing of judgements among multiple responsible defendants, and the substantial amount of insurance coverage that the Company expects to be available from its solvent carriers, the Company believes that pending and reasonably anticipated future actions are not likely to have a material effect on the Company's consolidated results of operations and financial condition. Although the insurance coverage which the Company has is substantial, it should be noted that insurance coverage for asbestos claims is not available to cover exposures initially occurring on and after July 1, 1984. The Company's subsidiaries continue to be named as defendants in new cases, some of which allege initial exposure after July 1, 1984. In addition to claims for personal injury, the Company's subsidiaries have been involved in an insignificant number of property damage claims based upon asbestos-containing materials found in schools, public facilities and private commercial buildings. Based upon proceedings to date, the overwhelming majority of these claims have been resolved without a material adverse impact on the Company. Likewise, the insignificant number of claims remaining to be resolved are not expected to have a material effect on the Company's consolidated results of operations and financial condition. The Company has recorded an accrual for its liabilities for asbestos- related matters that are deemed probable and can be reasonably estimated (settled actions and actions in advanced stages of processing), and has separately recorded an asset equal to the amount of such liabilities that is expected to be recovered by insurance. In addition, the Company has recorded a receivable for that portion of payments previously made for asbestos product liability actions and related litigation costs that is recoverable from its insurance carriers. Liabilities for asbestos-related matters and the receivable from insurance carriers included in the Consolidated Balance Sheets are as follows: Sept. 28, Dec. 31, 1997 1996 Accounts and notes receivable $68,439 $67,012 Other assets 16,553 18,728 Accrued expenses 49,942 60,659 Other liabilities 6,396 10,879 With respect to environmental proceedings, the Company has been notified that it is among the Potentially Responsible Parties under federal environmental laws, or similar state laws, relative to the costs of investigating and in some cases remediating contamination by hazardous materials at several sites. Such laws impose joint and several liability for the costs of investigating and remediating properties contaminated by hazardous materials. Liability for these costs can be imposed on present and former owners or operators of the properties or on parties who generated the wastes that contributed to the contamination. The Company's COLTEC INDUSTRIES INC AND SUBSIDIARIES Notes to Consolidated Financial Statements (dollars in thousands) policy is to accrue environmental remediation costs when it is both probable that a liability has been incurred and the amount can be reasonably estimated. While it is often difficult to reasonably quantify future environmental-related expenditures, the Company currently estimates its future non-capital expenditures related to environmental matters to range between $28,000 and $52,000. In connection with these expenditures, the Company has accrued $33,000 at September 28, 1997, representing management's best estimate of probable non-capital environmental expenditures. These non-capital expenditures are estimated to be incurred over the next 10 to 20 years. In addition, capital expenditures aggregating $5,000 may be required during the next two years related to environmental matters. Although the Company is pursuing insurance recovery in connection with certain of these matters, no receivable has been recorded with respect to any potential recovery of costs in connection with any environmental matters. 7. ACQUISITION OF BUSINESS On June 30 1997, the Company acquired the assets of AMI Industries Inc. (AMI), a Colorado-based manufacturer of flight attendant and cockpit seats for commercial aircraft for approximately $24,000. The purchase agreement also includes contingent payments based on earning levels for the years ended December 31, 1997 - 2000. These contingent payments will be recorded as additional purchase price and amortized over the remaining life of goodwill. For financial statement purposes, the acquisition was accounted for as a purchase and, accordingly, AMI's results are included in the Company's consolidated financial statements since the date of acquisition. The purchase price, which was financed through available cash resources, has been allocated to the assets of AMI, based upon their fair market values. The excess of the purchase price over net assets acquired approximate $10,700 and is being amortized over twenty-five years. If AMI's results of operations had been combined with the Company for year to date 1997 and 1996, the Company's consolidated pro forma net sales, net earnings and net earnings per common share would not have been materially different from reported amounts. AMI's 1997 sales are expected to approach $28,000, $15,000 of such sales subsequent to June 30, 1997. In July 1997, the Company signed a letter of intent to acquire the sheet rubber and conveyor belt business of Dana Corporation's Boston Weatherhead division based in Paragould, Arkansas. The transaction is scheduled to close in the fourth quarter of 1997. Annual sales are expected to approximate $35 million. In September 1997, the Company reached an agreement in principle to acquire Marine and Petroleum Mfg. Inc's (M&P) manufacturing facilities based in Houston, Burnet and Freeport, Texas. The plants being acquired produce flexible graphite and Teflon sealing products used in the petrochemical industry. Combined annual sales for these facilities are expected to approximate $18 million. The Company also reached an agreement in principle to acquire Tex-o-Lon and Repro-Lon. These two Texas businesses have combined annual sales of $15 million. Tex-o-Lon, with COLTEC INDUSTRIES INC AND SUBSIDIARIES Notes to Consolidated Financial Statements (dollars in thousands) operations in Houston and Burnet, Texas manufactures, machines and distributes Teflon products, primarily for the semiconductor industry. Repro-Lon, based in Burnet, reprocesses Teflon compounds for the chemical and semiconductor industries. On October 1, 1997, the Company acquired Danti Tool and Die, Inc. which designs, engineers and manufactures tooling. Danti, which has approximately $5,000 in annual sales, operates plants in Saginaw and Standish, Michigan. COLTEC INDUSTRIES INC AND SUBSIDIARIES Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations The following table shows financial information by industry segment for the three months and nine months ended Sept. 28, 1997 and Sept. 29, 1996. Three Months Ended Nine Months Ended Sept. 28, Sept. 29, Sept. 28, Sept. 29, 1997 1996 1997 1996 (in thousands) Sales: Aerospace $142,775 $111,590 $390,532 $308,781 Industrial 181,923 176,045 565,940 553,862 Intersegment elimination (245) (419) (620) (1214) Total $324,453 $287,216 $955,852 $861,429 Operating income: Aerospace $22,077 $19,226 $60,974 $28,452 Industrial 36,619 33,125 112,054 110,636 Total segments 58,696 52,351 173,028 139,088 Corporate unallocated (9,502) (10,211) (30,152) (30,729) Operating income $49,194 $42,140 $142,876 $108,359 Operating income for the nine months ended September 29, 1996 included a charge of $14.2 million relating to the bankruptcy of a major aerospace customer (Fokker). Excluding this charge, operating income for the nine months ended September 29, 1996 for the Aerospace Segment and the Company would have been $42.7 million and $122.6 million, respectively. COLTEC INDUSTRIES INC AND SUBSIDIARIES Results of Operations Company Review Net sales for the third quarter of 1997 increased 13.0% to $324.5 million from $287.2 million for the third quarter of 1996 primarily driven by increases in the Aerospace Segment. Gross profit increased to $103.0 million for the third quarter 1997 from $85.9 million in third quarter 1996. The increase in gross profit margin to 31.7% in the third quarter 1997 from 29.9% in the third quarter 1996 resulted from higher margins in the Aerospace Segment. Selling and administrative expenses totaled $53.8 million, or 16.6% of sales, in third quarter 1997 compared to 43 million, or 15.2% sales, in third quarter 1996. Net sales for the nine months ended September 28, 1997 increased 11.0% to $955.9 million from $861.4 million for the nine months ended September 29, 1996 as a result of continued sales increases in the Aerospace Segment. Gross profit increased to $305.6 million for the first nine months of 1997 from $250.2 million for the first nine months of 1996. The increase in gross profit margin to 32.0% for year to date 1997 from 29.0% for year to date 1996 resulted from higher margins in the Aerospace Segment and the first quarter 1996 bankruptcy of Fokker. Although selling and administrative expenses totaled $162.7 million for year to date 1997 compared to $141.8 million for year to date 1996, selling and administrative expenses as a percentage of sales increased slightly to 17.0% for year to date 1997 as compared to 16.5% for year to date 1996. Operating income increased to $49.2 million in third quarter 1997 from $42.1 million in the third quarter of 1996. Operating margin increased slightly to 15.2% for third quarter 1997 from 14.7% for the second quarter 1996. Operating income increased to $142.9 million for the first nine months of 1997 from $108.4 million for the first nine months of 1996. The 1996 amount includes the effect of the $14.2 million charge relating to the Fokker bankruptcy. Operating margin for year to date 1997 was 14.9% compared to 12.6% for year to date 1996 (14.0% excluding the effect of Fokker). Interest expense decreased 18.2% to $13.9 million in third quarter 1997 from $17.0 million for third quarter 1996 and decreased 33.5% to $38.9 million for year to date 1997 as compared to $58.5 million for year to date 1996. These decreases were a direct result of significant debt reduction in June 1996 and the December 1996 refinancing of substantially all of the Company's high-cost, fixed-rate debt with lower-cost, variable-rate bank debt. The results of discontinued operations for the three months and nine months ended September 29, 1996 reflect the net earnings for those periods for the automotive original equipment components operations which were sold in 1996. As a result of the foregoing, earnings from continuing operations for the three months and nine months ended September 28, 1997 were $23.3 million and $68.6 million, respectively, as compared to $16.6 million and $32.9 million for the three months and nine months ended September 29, 1996, respectively. Net earnings were $23.3 million in third quarter 1997, or $0.35 per share, compared to net earnings of $18.0 million, or $0.26 per share, in third quarter 1996. 1997 year to date net earnings were $68.6 COLTEC INDUSTRIES INC AND SUBSIDIARIES million, or $1.03 per share, as compared to $83.7 million, or $1.20 per share for 1996. The decrease in interest expense increased 1997 third quarter earnings by $0.03 per share and 1997 year to date earnings by $0.17 per share. Segment Review - Aerospace Sales in third quarter 1997 for the Aerospace Segment totaled $142.8 million increasing 28.0% from $111.6 million in the third quarter 1996. For the nine months ended September 28, 1997 Aerospace sales increased 26.5% to $390.5 million from $308.8 million for the comparable 1996 period. At Menasco, sales increased significantly due to rising commercial aircraft production as well as improved military sales. Menasco deliveries of main landing gear systems for the Boeing 737 increased from 27 and 44 shipsets in the three months and nine months ended September 29, 1996, respectively, to 42 and 114 shipsets in the three months and nine months ended September 28, 1997, respectively, while military sales benefited primarily from higher shipset deliveries for the F-15 and F-16 programs. At Chandler Evans, significantly higher sales were primarily due to higher sales of spare parts while original equipment sales also improved. Operating income for the Aerospace Segment increased 15.1% to $22.1 million in third quarter 1997 from $19.2 million in third quarter of 1996. Operating margin for the third quarter 1997 decreased to 15.5% from 17.2% for third quarter 1996. Operating income for year to date 1997 was $61.0 million, increasing from $28.5 million for year to date 1996. The year to date 1996 amount includes the effect of the $14.2 million charge relating to the Fokker bankruptcy. Excluding such charge, operating margin for year to date 1996 would have been 13.8% compared to 15.6% for year to date 1997. At Menasco's Aerospace Division, operating margin for the nine months ended September 28, 1997 was impacted by a favorable mix of landing gear systems for certain commercial airline programs as well as improved manufacturing efficiencies due to higher production. Chandler Evans realized higher margins due to a higher profit sales mix and selling price increases for certain products. The increases were also driven by generally higher sales volumes and improved margins for the Segment's other businesses. Third quarter 1996 was favorably impacted by gains recognized on foreign exchange contracts. Segment Review - Industrial Industrial sales increased to $181.9 million and $565.9 million in the three months and nine months ended September 28, 1997, respectively, from $176.0 and $553.9 million in the three months and nine months ended September 29, 1996, respectively. The Garlock Bearings, Stemco, Delavan Commercial, and Quincy Compressor Divisions all experienced solid sales volume increases. Sales for Garlock Sealing Technologies increased primarily due to selling price increases and new product sales. Holley Performance Products sales decreased due to curtailed orders by one major customer and the bankruptcy of one major customer. Operating income for the Industrial Segment increased to $36.6 million and $112.1 million in the three months and nine months ended September 28, 1997, respectively, from $33.1 million and 110.6 million in the three and nine months ended September 29, 1996, respectively. Operating income increased for the Stemco, Delavan Commercial and Quincy Compressor Divisions due to higher sales volumes. Operating results at Holley Performance Products were lower due to decreased sales volumes while Garlock Sealing Technologies was negatively impacted by increased costs related to various international initiatives. COLTEC INDUSTRIES INC AND SUBSIDIARIES Liquidity and Capital Resources The Company generated $30.3 million of operating cash flows for the nine months ended September 28, 1997 compared with $14.5 million for the nine months ended September 29, 1996. The higher operating cash flows in 1997 were primarily due to increased cash flow from earnings from continuing operations and decreased accounts receivable, partially offset by increased payments related to liabilities of discontinued operations and payments related to asbestos claims. The current ratio of current assets to current liabilities at September 28, 1997 was 1.83, decreasing from 1.99 at December 31, 1996. Cash and cash equivalents decreased to $11.8 million at September 28, 1997 from $15.0 million at December 31, 1996. In the first nine months of 1997 the Company invested $46.0 million in capital expenditures compared to $29.7 million during the same prior year period. Debt increased by $18.9 million at September 28, 1997 compared to December 31, 1996 through additional borrowings and additional cash provided by operations under the Company's revolving credit facility. The increased borrowings were used to repurchase 2,160,900 shares of the Company's common stock at a cost of $42.7 million and to acquire AMI Industries Inc.(see note 7 to consolidated financial statements). COLTEC INDUSTRIES INC AND SUBSIDIARIES PART II - OTHER INFORMATION Item 1. Legal Proceedings. The Company and certain of its subsidiaries are defendants in various lawsuits involving asbestos-containing products. In addition, the Company has been notified that it is among Potentially Responsible Parties under federal environmental laws, or similar state laws, relative to the costs of investigating and in some cases remediating contamination by hazardous materials at several sites. See note 4 to consolidated financial statements. Item 6.Exhibits and Reports on Form 8-K. (a) 4.1 First Amendment to Credit Agreement dated August 22, 1997. 4.2 Second Amendment to Credit Agreement dated as of October 14, 1997. 10.1 Form of Amendment No. 1 to Employment Agreement between the Company and John W. Guffey, Jr., adopted by the Board of Directors of the Company on July 10, 1997 and effective as of September 12, 1997. 10.2 Form of Amendment No. 1 to Employment Agreements between the Company and Laurence H. Polsky, David D. Harrison, Robert J. Tubbs and John M. Cybulski, adopted by the Board of Directors on July 10, 1997 and effective as of September 12, 1997. 10.3 Amendment No. 2 to the Company's 1992 Stock Option and Incentive Plan. 10.4 Amendment No. 1 to the 1994 Stock Option Plan for Outside Directors. 10.5 1997 Restricted Stock Plan for Outside Directors of the Company filed on March 26, 1997 as Exhibit A to the Company's proxy statement for the 1997 Annual Meeting of Shareholders and incorporated herein by reference. 27.1 Consolidated Financial Data Schedule. (b) No reports on Form 8-K were filed by the Company during the quarter ended September 28, 1997. S I G N A T U R E 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. COLTEC INDUSTRIES INC (Registrant) by David D. Harrison Executive Vice President and Chief Financial Officer Date: November 12, 1997 EX-4.1 2 EXHIBIT 4.1 FIRST AMENDMENT TO CREDIT AGREEMENT FIRST AMENDMENT (this "First Amendment"), dated as of August 22, 1997, among COLTEC INDUSTRIES INC, a corporation organized and existing under the laws of the State of Pennsylvania (the "Company"), the various Banks from time to time party to the Credit Agreement referred to below, BANK OF AMERICA ILLINOIS, as Documentation Agent, THE CHASE MANHATTAN BANK, as Syndication Agent, and BANKERS TRUST COMPANY, as Administrative Agent, and acknowledged and agreed to by each of the Subsidiary Guarantors. All capitalized terms used herein and nor otherwise defined herein shall have the respective meanings provided such terms in the Credit Agreement. W I T N E S S E T H : WHEREAS, the Company, the Banks, the Documentation Agent, the Syndication Agent and the Administrative Agent are parties to a Credit Agreement, dated as of March 24, 1992, amended and restated as of January 11, 1994 and further amended and restated as of December 18, 1996, (as amended, modified or supplemented to the date hereof, the "Credit Agreement"); WHEREAS, the Company desires to consummate a transaction (the "Proposed Receivables Transaction") to effect the sale of accounts receivable of the Company and certain of its Subsidiaries to Atlantic Asser Securitization Corp., an asset-backed commercial paper issuer administered by Credit Lyonnais: WHEREAS, subject to the terms and conditions set forth herein, the Banks desire to permit the Company and its Subsidiaries to consummate the Proposed Receivables Transaction and to amend the Credit Agreement in connection therewith; and WHEREAS, subject to the terms and conditions set forth below, the parties hereto agree as follows. NOW, THEREFORE, it is agreed: 1. Section 9.02 of the Credit Agreement is hereby amended by (1) deleting the word "and" at the end of clause (xviii), (2) deleting the period at the end of clause (xix) and inserting a semicolon in lieu thereof and (3) inserting the following new clauses (xx) and (xxi): "(xx) so long as the Intangibles Subsidiary shall have executed and delivered the documentation required by the penultimate sentence of Section 9.15, and so long as no Event of Default exists at such time or would result therefrom, the Company and/or any of its Subsidiaries shall be permitted to contribute or otherwise transfer accounts receivable to the Intangibles Subsidiary, and the Intangibles Subsidiary shall be permitted to contribute or otherwise transfer such accounts receivable to the Receivables SPC, in each case pursuant to a Permitted Receivables Transaction; and (xxi) so long as the Intangibles Subsidiary shall have executed and delivered the documentation required by the penultimate sentence of Section 9.15, the Company and/or any of its Subsidiaries shall be permitted to contribute or otherwise transfer patents, trademarks, copyrights and know-how to the Intangibles Subsidiary." 2. Section 9.02 (xii) of the Credit Agreement is hereby further amended by inserting the text "the Receivables SPC, CNC Member," immediately before the word "Garlock" appearing in clause (t) of the proviso appearing therein. 3. Section 9.05 of the Credit Agreement is hereby amended by (1) deleting the word "and" at the end of clause (xviii), (2) deleting the period at the end of clause (xix) and inserting the text"; and" in lieu thereof and (3) inserting the following new clause (xx); "(xx) so long as no Default or Event of Default exists at such time or would result therefrom, the Company and/or any of its Subsidiaries shall be permitted to contribute accounts receivable to the Intangibles Subsidiary and the Intangibles Subsidiary shall be permitted to contribute such accounts receivable to the Receivables SPC, in each case pursuant to a Permitted Receivables Transaction." 4. Section 9.06 of the Credit Agreement is hereby amended by (1) deleting the word "and" at the end of clause (ii) of the first sentence and inserting a comma in lieu thereof and (2) inserting the following new text at the end of such sentence: "(iv) transaction between the Company, the Intangibles Subsidiary and any other Subsidiary of the Company shall be permitted to the extent expressly permitted by Sections 9.02 (xx) and (xxi) and 9.05 (xx)." 5. Section 11 of the Credit Agreement is hereby amended by inserting the following new definitions in the appropriate alphabetical order: "`CNC Member' shall mean CNC Member Inc, a North Carolina corporation, special purpose Wholly-Owned Subsidiary of the Company, which was created for the sole purpose of holding a 1% interest in the Receivables SPC and which shall engaged in no other business or activities except as reasonably related thereto, it being understood that CNC Member shall not be required to be a party to any Guaranty or Security Document as otherwise provided in this Agreement. `Intangibles Subsidiary' shall mean Coltec North Carolina Inc. a North Carolina corporation, which is a Wholly-Owned Subsidiary of the Company created, in accordance with Section 9.15, for the purpose of receiving (i) accounts receivable pursuant to a Permitted Receivables Transaction and (ii) patents, trademarks, copyrights and know-how, in each case from the Company and any of its other Subsidiaries. `Receivables SPC' shall mean CNC Finance LLC, a North Carolina limited liability company, which is a special purpose Wholly-Owned Subsidiary of the Company, directly owned by the Intangibles Subsidiary and CNC Member Inc, which was created for the sole purpose of acquiring accounts receivable from the Intangibles Subsidiary and selling such accounts receivable or interest therein to one or more third parties pursuant to a Permitted Receivables Transaction and which shall engage in no other business or activities except as reasonable related thereto, it being understood that the Receivables SPC shall not be required to be a party to any Guaranty or Security Document as otherwise provided in this Agreement." 6. The definition of Permitted Receivables Transaction appearing in Section 11 of the Credit Agreement is hereby amended by inserting the text "and/or the Intangibles Subsidiary and/or the Receivables SPC" immediately after the word "Company" the first place it appears therein. 7. Notwithstanding anything to the contrary contained in the definition of Permitted Receivables Transaction contained in the Credit Agreement, the Banks hereby consent to the Company and its relevant Subsidiaries consummation the Proposed Receivables Transaction and agree that the Proposed Receivables Transaction shall constitute a Permitted Receivables Transaction under the Credit Agreement so long as (i) the aggregate amount outstanding under the Proposed Receivables Transaction facility shall in no event exceed $85,000.000 at any time and (ii) the receivables purchase agreement and related documentation evidencing the Proposed Receivables Transaction shall be consistent with the term sheet therefor attached hereto as Annex I and otherwise be in form and substance satisfactory to the Administrative Agent: provided, however, that in connection with the Proposed Receivables Transaction, the Company shall not be required to (x) provide the Administrative Agent and the Banks with at least 30 days' prior notice of the Proposed Receivables Transaction or (y) apply the proceeds received pursuant to the Proposed Receivables Transaction as a mandatory commitment reduction otherwise in accordance with Section 3.03 (f) of the Credit Agreement. 8. Notwithstanding anything to the contrary contained in the Credit Agreement or the Security Agreements, the Banks hereby consent to the release of the receivables sold to Receivables SPC at any time pursuant to the Proposed Receivables Transaction from any and all security interests created by the Security Agreements, and, on and after the First Amendment Effective Date, such receivables are hereby released. In connection therewith. the Collateral Agent is hereby authorized to (1) amend any Security Agreement to exclude such receivables from the security interests granted thereby and (2) execute and deliver such documentation (including UCC amendment/termination statements and the like) deemed necessary or desirable by it in connection therewith. 9. Notwithstanding anything to the contrary contained in Section 9.15 of the Credit Agreement, in respect of the Company's new Subsidiaries Coltec North Carolina Inc, CNC Member Inc, CNC Finance LLC and AMI Industries Inc., (x) the Banks hereby waive (A) the requirement of ten Business Days prior written notice of the creation thereof and (B) the requirement that CNC Member Inc and CNC Finance LLC become parties to the Additional Security Documents otherwise required by Section 9.15 of the Credit Agreement and (y) the parties hereto agree (and the Banks hereby consent) that each of Coltec North Carolina Inc and AMI Industries Inc. shall become a party to the Subsidiaries Guaranty, the Subsidiaries Pledge Agreement and the Subsidiaries Security Agreement within thirty days after the First Amendment Effective Date. 10. Notwithstanding anything to the contrary contained in Section 13.16 of the Credit Agreement, the Company shall, within 30 days after the First Amendment Effective Date (as defined below), deliver to the Collateral Agent, as Pledgee, the capital stock constituting Pledged Securities of Coltec Industries Pacific Pte Ltd together with executed and undated stock powers related thereto, and the Banks hereby waive any Default or Event of Default, if any, that may have arisen solely from the Company's failure to deliver such capital stock and stock powers as of the date hereof. The Company hereby represents and warrants that the capital stock of Coltec do Brasil Products Industrias LTDA is uncertificated and, accordingly, is not required to be delivered pursuant to Section 13.16 of the Credit Agreement. 11. In order to induce the Banks to enter into this First Amendment, the Company hereby represents and warrants that (i) all representations and warranties contained in the Section 7 of the Credit Agreement are true and correct in all material respects on and as of the First Amendment Effective Date and after giving effect to the First Amendment (unless such representations and warranties relate to a specific earlier date, in which case such representations and warranties shall be true and correct as of such as of such earlier date) and (ii) there exists no Default or Event of Default on the First Amendment Effective Date after giving effect to this Consent. 12. This First Amendment is limited as specified and shall not constitute a modification, acceptance or waiver of any other provision of the Credit Agreement or any other Credit Document. 13. This First Amendment may be executed in any number of counterparts and by the different parties hereto on separate counterparts, each of which counterparts when executed and delivered shall be an original, but all of which shall together constitute one and the same instrument. A complete set of counterparts shall be lodged with the Company and the Administrative Agent. 14. THIS FIRST AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW YORK. 15. This First Amendment shall become effective on the date (the "First Amendment Effective Date") when each Credit Party and the Required Banks shall have signed a counterpart hereof (whether the same or different counterparts) and shall have delivered (including by way of facsimile transmission) the same to the Administrative Agent at its Notice Office. 16. From and after the First Amendment Effective Date, all references in the Credit Agreement and each of the Credit Documents to the Credit Agreement shall be deemed to be references to the Credit Agreement as amended hereby. * * * IN WITNESS WHEREOF, the parties hereto have caused a counter part of this First Amendment to be duly executed and delivered as of the date first above written. COLTEC INDUSTRIES INC By_____________________ Title: BANKERS TRUST COMPANY, Individually and as Administrative Agent By_____________________ Title: BANK OF AMERICA NATIONAL TRUST & SAVING ASSOCIATION Individually and as Documentation Agent By____________________ Title: THE CHASE MANHATTAN BANK Individually and as Syndication Agent By____________________ Title: ABN AMRO BANK N.V. NEW YORK BRANCH By___________________ Title: ALLIED IRISH BANK, PLC, CAYMAN ISLANDS BRANCH By___________________ Title: BANK OF IRELAND By___________________ Title: BANK COMMERCIALE ITALIANA NEW YORK BRANCH By____________________ Title: BANK LEUMI TRUST COMPANY OF NEW YORK By___________________ Title: THE BANK OF NEW YORK By___________________ Title: THE BANK OF MONTREAL By__________________ Title: BANK OF SCOTLAND By__________________ Title: BANK OF TOKYO-MITSUBISHI TRUST COMPANY By__________________ Title: BANQUE FRANCAISE DU COMMERCE EXTERIEUR By_________________ Title: CIBC INC. By_________________ Title: COMMERCIAL LOAN FUNDING TRUST By________________ Title: CORESTATES BANK By________________ Title: CREDIT LYONNAIS ATLANTA AGENCY By________________ Title: CREDIT LYONNAIS NEW YORK BRANCH By________________ Title: THE DAI-ICHI KANGYO BANK, LTD. By________________ Title: FIRST UNION NATIONAL BANK (f/k/a First Union National Bank of North Carolina) By________________ Title: THE FUJI BANK, LIMITED, ATLANTA AGENCY By________________ Title: GIROCREDIT BANK AG DER SPARKASSEN, GRAND CAYMAN ISLAND BRANCH By________________ Title: THE INDUSTRIAL BANK OF JAPAN, LIMITED By________________ Title: LEHMAN COMMERCIAL PAPER INC. By________________ Title: LLOYDS BANK PLC By_________________ Title: MELLON BANK, N.A. By_________________ Title: NATIONSBANK, N.A. By_________________ Title: THE SAKURA BANK, LTD By________________ Title: THE SANWA BANK, LIMITED By_________________ Title: SOCIETE GENERALE By________________ Title: THE SUMITOMO BANK, LIMITED By_________________ Title: WACHOVIA BANK, N.A. By_________________ Title: THE YASUDA TRUST & BANKING COMPANY, LTD. By_________________ Title: Acknowledged and agreed: CII HOLDINGS INC COLTEC CANADA INC COLTEC INDUSTRIAL PRODUCTS INC COLTEC TECHNICAL SERVICES INC DELAVAN-DELTA INC. DELAVAN INC GARLOCK INC GARLOCK INTERNATIONAL INC GARLOCK OVERSEAS CORPORATION HOLLEY PERFORMANCE PRODUCTS INC MENASCO AEROSYSTEMS INC COLTEC INTERNATIONAL SERVICES CO. STEMCO INC WALBAR INC By_____________________ Title: On behalf of each of the above Subsidiary Guarantors ANNEX I Proposed Receivables Transaction Term Sheet. EX-4.2 3 EXHIBIT 4.2 SECOND AMENDMENT TO CREDIT AGREEMENT SECOND AMENDMENT (this "Amendment"), dated as of October 14, 1997, among Coltec Industries Inc. a corporation organized and existing under the laws of the State of Pennsylvania (the "Company"), the various Banks from time to time party to the Credit Agreement referred to below, BANK OF AMERICA ILLINOIS, as Documentation Agent. THE CHASE MANHATTAN BANK, as Syndication Agent, and BANKERS TRUST COMPANY, as Administrative Agent, and acknowledged and agreed to by each of the Subsidiary Guarantors. All capitalized terms used herein and not otherwise defined herein shall have the respective meanings provided such terms in the Credit Agreement. W I T N E S S E T H : WHEREAS, the Company, the Banks, the Documentation Agent, the Syndication Agent and the Administrative Agent are parties to the Credit Agreement, dated as of March 24, 1992, amended and restated as of January 11, 1994 and further amended and restated as of December 18, 1996, (as amended, modified or supplemented to the date hereof, the "Credit Agreement"); WHEREAS, the Company desires to consummate a transaction in which the Company and Jamco Products, LLC ("Jamco"), a limited liability company indirectly wholly-owned by the Company, would purchase substantially all of the assets of Marine & Petroleum Manufacturing, Inc., Tex-o-lon, Inc. and Repro-lon, Inc. (collectively, the "M&P Acquisition") for a purchase price of up to $42,000,000: WHEREAS, the Company desires to sell or otherwise dispose (the "Alco Asset Sale") of certain inventory, intellectual property (it being understood that the Company may also license certain intellectual property in accordance with Section 9.02 (xv) of the Credit Agreement) and certain other assets previously identified (including, patterns, dyes, tooling, drawings and plans), in each case which was previously acquired by the Company pursuant to the purchase, dated as of September 27, 1997, of the Alco locomotive business from General Electric Co.; WHEREAS, subject to the terms and conditions set forth herein, the Banks desire to (i) permit the Company to consummate the M&P Acquisition, the Alco Asset Sale and (ii) further amend the Credit Agreement as provided herein; and WHEREAS, subject to the terms and conditions set forth below, the parties hereto agree as follows. NOW, THEREFORE, it is agreed: 1. Notwithstanding anything to the contrary contained in Section 8.14 of the Credit Agreement, the Banks hereby (i) consent to the Company consummating the M&P Acquisition, (ii) waive (solely in connection with the M&P Acquisition) the limitation on transaction consideration set forth in Section 8.14 (a) (A) of the Credit Agreement and (iii) agree that (A) the M&P Acquisition shall constitute a Permitted Acquisition under the Credit Agreement, (B) the aggregate principal amount of all Permitted Acquired Debt incurred, and the aggregate amount of cash expended, in each case pursuant to the M&P Acquisition, shall not be included for purposes of calculating the Company's compliance (whether in connection with the M&P Acquisition or Permitted Acquisitions consummated thereafter) with the aggregate amount of transaction consideration permitted by Section 8.14 (a) (B) of the Credit Agreement and (C) the notice regarding the M&P Acquisition previously made by the Company to the Administrative Agent shall constitute sufficient notice for purposes of Section 8.14 (a) (E) of the Credit Agreement, so long as (i) any Liens or Indebtedness issued or assumed in connection with the M&P Acquisition are otherwise permitted under the Credit Agreement, (ii) promptly after (but in no event later than 30 days after) the consummation of the M&P Acquisition, 100% (or, in the case of a Foreign Subsidiary, 65%) of the capital stock of, or membership interests in, as the case may be, Jamco and any Subsidiary acquired pursuant to the M&P Acquisition is pledged and delivered to the Collateral Agent for the benefit of the Secured Creditors under the Pledge Agreement, (iii) within 10 days after the M&P Acquisition, each such new Domestic Subsidiary (including, without limitation, Jamco) (x) executes and delivers a counterpart of the Subsidiaries Guaranty and (y) secures the Company's obligations pursuant to the Credit Agreement and the other Credit Documents (or such Subsidiary's obligations pursuant to a Subsidiaries Guaranty) by executing a counterpart of the Subsidiaries Security Agreement and the Subsidiaries Pledge Agreement and (iv) no Default or Event of Default then exists or would result therefrom. 2. Notwithstanding anything to the contrary contained in Section 9.02 of the Credit Agreement, the Banks hereby consent to the Company consummating the Alco Asset Sale so long as the Net Sale proceeds therefrom do not exceed $3,700,000. provided that, the Company shall not be required to apply the proceeds of the Alco Asset Sale as a mandatory commitment reduction as otherwise required by Section 3.03 (c). 3. Notwithstanding anything to the contrary contained in Section 9.04 of the Credit Agreement, the Banks hereby consent to Jamco incurring Indebtedness, in aggregate principal amount not to exceed $2.6 million outstanding at any time, consisting of seller note issued in connection with the M&P Acquisition, which note shall be unsecured and otherwise on terms and conditions satisfactory to Administrative Agent. 4. Section 11 of the Credit Agreement is hereby amended by inserting at the end of the definition of "Consolidated ERITDA" appearing therein the following new sentence: "Notwithstanding anything to the contrary contained above. Consolidated EBITDA shall be determined on a pro forma basis to give effect to the consummation of all Permitted Acquisitions effected during the respective such period as if such Permitted Acquisitions had accrued on the first date of such period." 5. Section 11 of the Credit Agreement is hereby further amended by inserting at the end of the definition of "Consolidated Interest Expense" appearing therein the following new sentence: "Notwithstanding anything to the contrary contained above, Consolidated Interest Expense shall be determined on a pro forma basis to give effect to the consummation of all Permitted Acquisitions effected during the respective such period as if such Permitted Acquisitions had occurred on the first day of such period." 6. The Banks hereby waive any Default or Event of Default arising solely from the Company's failure to deliver the officer's certificates, otherwise required to be delivered pursuant to Sections 8.14 (a) (B) and 8.14 (c), in connection with the Permitted Acquisitions effected prior to the date hereof, so long as, within 10 days after the Second Amendment Effective Date (as defined below), the Company shall deliver to the Administrative Agent a certificate of the Company's chief financial officer showing (in reasonable detail) that after giving effect to all Permitted Acquisitions effected prior to the date hereof, the Company is in compliance with the requirements of Section 8.14 (a) (B) and 8.14 (c). 7. In order to induce the Banks to enter into this Amendment, the Company hereby represents and warrants that (i) all representations and warranties contained in the Section 7 of the Credit Agreement are true and correct in all material respects on as of the Second Amendment Effective Date and after giving effect to the Amendment (unless such representations and warranties relate to a specific earlier date, in which case such representations and warranties shall be true and correct as of such earlier date) and (ii) there exists no Default or Event or Default on the Second Amendment Effective Date after giving effect to this Amendment. 8. This Amendment is limited as specified and shall not constitute a modification, acceptance or waiver of any other provision of the Credit Agreement or any other Credit Document. 9. This Amendment may be executed in any number of counterparts and by the different parties hereto on separate counterparts, each of which counterparts when executed and delivered shall be an original, but all of which shall together constitute one and the same instrument. A complete set of counterparts shall be lodged with the Company and the Administrative Agent. 10. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW YORK. 11. This Amendment shall become effective on the date (the "Second Amendment Effective Date") when each Credit Party and the Required Banks shall have signed a counterpart hereof (whether the same or different counterparts) and shall have delivered (including by way of facsimile transmission) the same to the Administrative Agent at its Notice Office. 12. From and after the Second Amendment Effective Date, all references in the Credit Agreement and each of the Credit Documents to the Credit Agreement shall be deemed to be references to the Credit Agreement as amended hereby. * * * IN WITNESS WHEREOF, the parties hereto have caused a counter part of this Amendment to be duly executed and delivered as of the date first above written. COLTEC INDUSTRIES INC By_____________________ Title: BANKERS TRUST COMPANY, Individually and as Administrative Agent By_____________________ Title: BANK OF AMERICA NATIONAL TRUST & SAVING ASSOCIATION Individually and as Documentation Agent By____________________ Title: THE CHASE MANHATTAN BANK Individually and as Syndication Agent By____________________ Title: ABN AMRO BANK N.V. NEW YORK BRANCH By___________________ Title: ALLIED IRISH BANK, PLC, CAYMAN ISLANDS BRANCH By___________________ Title: BANK OF IRELAND By___________________ Title: BANK COMMERCIALE ITALIANA NEW YORK BRANCH By____________________ Title: BANK LEUMI TRUST COMPANY OF NEW YORK By___________________ Title: THE BANK OF NEW YORK By___________________ Title: THE BANK OF MONTREAL By__________________ Title: BANK OF SCOTLAND By__________________ Title: BANK OF TOKYO-MITSUBISHI TRUST COMPANY By__________________ Title: BANQUE FRANCAISE DU COMMERCE EXTERIEUR By_________________ Title: CIBC INC. By_________________ Title: COMMERCIAL LOAN FUNDING TRUST By________________ Title: CORESTATES BANK By________________ Title: CREDIT LYONNAIS ATLANTA AGENCY By________________ Title: CREDIT LYONNAIS NEW YORK BRANCH By________________ Title: THE DAI-ICHI KANGYO BANK, LTD. By________________ Title: FIRST UNION NATIONAL BANK (f/k/a First Union National Bank of North Carolina) By________________ Title: THE FUJI BANK, LIMITED, ATLANTA AGENCY By________________ Title: GIROCREDIT BANK AG DER SPARKASSEN, GRAND CAYMAN ISLAND BRANCH By________________ Title: THE INDUSTRIAL BANK OF JAPAN, LIMITED By________________ Title: LEHMAN COMMERCIAL PAPER INC. By________________ Title: LLOYDS BANK PLC By_________________ Title: MELLON BANK, N.A. By_________________ Title: NATIONSBANK, N.A. By_________________ Title: THE SAKURA BANK, LTD By________________ Title: THE SANWA BANK, LIMITED By_________________ Title: SOCIETE GENERALE By________________ Title: THE SUMITOMO BANK, LIMITED By_________________ Title: WACHOVIA BANK, N.A. By_________________ Title: THE YASUDA TRUST & BANKING COMPANY, LTD. By_________________ Title: Acknowledged and agreed: CII HOLDINGS INC COLTEC CANADA INC COLTEC INDUSTRIAL PRODUCTS INC COLTEC TECHNICAL SERVICES INC DELAVAN-DELTA INC. DELAVAN INC GARLOCK INC GARLOCK INTERNATIONAL INC GARLOCK OVERSEAS CORPORATION HOLLEY PERFORMANCE PRODUCTS INC MENASCO AEROSYSTEMS INC COLTEC INTERNATIONAL SERVICES CO. STEMCO INC WALBAR INC By_____________________ Title: On behalf of each of the above Subsidiary Guarantors ANNEX I Proposed Receivables Transaction Term Sheet. EX-10.1 4 EXHIBIT 10.1 FIRST AMENDMENT TO THE JUNE 1, 1995 EMPLOYMENT AGREEMENT This First Amendment dated as of this ______________ of ______________, 1997 between John W. Guffey, Jr. (the "Executive") and Coltec Industries Inc, a Pennsylvania Corporation (the "Corporation"). WHEREAS, the Executive and the Corporation desire to continue the relationship established by the employment agreement dated June 1, 1995 between the Executive and the Corporation (the "Agreement") but to amend the terms and conditions thereof to reflect modifications and clarifications to the Agreement. NOW, THEREFORE, in consideration of the foregoing and the mutual promises herein contained, the parties agree to amend the Agreement as follows: 1.The address, 430 Park Avenue, New York, New York 10022, appearing in section 2.3 shall be replaced with 3 Coliseum Center, 2550 West Tyvola Road, Charlotte, North Carolina 28217. 2.Section 7.1(c) shall be modified by renumbering subsection (v) to become (vi) and changing the words New York City to be Charlotte, NC. 3. Section 7.1(c) shall be modified by the insertion of a new Subsection (v) reading as follows: "The Corporation during the two year period following a Change-in- Control delivers to the Executive a Notice of Termination Other than for Cause or takes any other action which purports to terminate the Executive's Employment Other than for Cause." 4. Section 7.6 of the Agreement shall be modified by the insertion of Subsections (e) and (f) reading as follows: e)For purposes of Section 7.6(d) Executive's participation in respect to the Corporation's 1994 Long Term Incentive Plan (the "LTIP") shall be as follows (the defined terms within this section and not otherwise defined within this agreement being the same as defined in the LTIP): i) all of the Executive's Restricted Shares previously issued under the LTIP and not yet vested by the Date of Termination shall become 100% vested, nonforfeitable and fully transferable as of such date, and ii) the Corporation will pay the Executive as soon as practicable following the Date of Termination an amount in cash equal to three times the product of (x) the number of Performance Units previously granted under the LTIP to the Executive and still outstanding times (y) the Award Value at the Threshold Target level. f)For purposes of Section 7.6(d) Executive's benefits with respect to the Corporation's Retirement Plan for Salaried Employees and the BE Plan or any equivalent or superior plans or arrangements in which the Executive participated prior to the Date of Termination (any such Plan or arrangement, the "Pension Plans") and the Corporation's welfare benefit plans in which the Executive participates on the date hereof or any equivalent or superior successor plans or arrangements in which the Executive participates prior to the Date of Termination ("Welfare Benefit Plans") the contemplated continued participation shall require the Corporation to pay or provide the executive with the benefits which the Executive would have received under the Pension Plans and Welfare Benefit Plans if (x) the Executive's employment and his coverage under the Pension Plans and the Welfare Benefit Plans had continued during the relevant damage period, and (y) the compensation described in Section 7.6(b) which would have been credited under the Pension Plans and/or the Welfare Plans were paid to the Executive ratably over the relevant damage period. 5. Section 7.7 of the Agreement shall be notified by the insertion of Subsections (f) and (g) reading as follows: f)For purposes of Section 7.7(e) Executive's participation in respect to the LTIP shall be as follows (the defined terms within this section and not otherwise defined within this agreement being the same as defined in the LTIP): i) all of the Executive's Restricted Shares previously issued under the LTIP and not yet vested by the Date of Termination shall become 100% vested, nonforfeitable and fully transferable as of such date; and ii) the Corporation will pay the Executive as soon as practicable following the Date of Termination an amount in cash equal to three times the product of (x) the number of Performance Units previously granted under the LTIP to the Executive and still outstanding, times (y) the Award Value at the Threshold Target level. g)For purposes of Section 7.7(e) Executive's benefits with respect to the Pension Plans and the Welfare Benefit Plans, the contemplated continued participation shall require the Corporation to pay or provide the Executive with the benefits, earnings credits for benefits and service credits for benefits which the Executive would have received under the Pension Plans and Welfare Benefit Plans if (x) the Executive's employment and his coverage under the Pension Plans and the Welfare Benefit Plans had continued during the relevant damage period, and (y) the compensation described in Section 7.7(b) which would have been credited under the Pension Plans and/or the Welfare Plans were paid to the Executive ratably over the relevant damage period. 6. Section 7.9 of the Agreement shall be modified by rewording the second sentence of such section to read in its entirety as follows: "Upon receipt of written notice from Executive that Executive has been reemployed by another company or entity on a full-time basis (or would have been reemployed but for the non-competition provisions of Section 1 of the Agreement) benefits otherwise receivable by Executive pursuant to Sections 7.6(d) or 7.7(e) related solely to life, health disability and accident insurance plans and programs and other similar benefits (but not Incentive Compensation, LTIP, Pension Plans or other similar plans and programs) shall be reduced to the extent comparable benefits are made available to Executive at his new employment and any such benefits actually received by Executive shall be reported to the Corporation. 7. Section 9 of the Agreement shall be modified by inserting the words, "the last home address of the Executive provided to the Corporation by the Executive", in place of the Executive's address now appearing in Section 9. Section 9 shall be further modified by replacing the address, 430 Park Avenue, New York, New York 10022, with the address, 3 Coliseum Center, 2550 West Tyvola Road, Charlotte, North Carolina 28217. 8.In all other respects, the Agreement shall remain in full force and effect and unmodified except as set forth herein. IN WITNESS WHEREOF, the parties hereto have executed this amendment as of the date and year first above written. COLTEC INDUSTRIES INC By: ______________________________ Name ______________________________ Title EXECUTIVE By: ________________________________ Name ________________________________ Title EX-10.2 5 EXHIBIT 10.2 FIRST AMENDMENT TO THE ___________________ EMPLOYMENT AGREEMENT This First Amendment dated as of this ______________ of ______________, 1997 between ___________________ (the "Executive") and Coltec Industries Inc, a Pennsylvania Corporation (the "Corporation"). WHEREAS, the Executive and the Corporation desire to continue the relationship established by the employment agreement dated ___________________ between the Executive and the Corporation (the "Agreement") but to amend the terms and conditions thereof to reflect modifications and clarifications to the Agreement. NOW, THEREFORE, in consideration of the foregoing and the mutual promises herein contained, the parties agree to amend the Agreement as follows: 1. The address, 430 Park Avenue, New York, New York 10022, appearing in section 2.3 shall be replaced with 3 Coliseum Center, 2550 West Tyvola Road, Charlotte, North Carolina 28217. 2. Section 6.1(c) shall be modified by the renumbering of Subsection (v) to become (vi) and the insertion of a new Subsection (v) reading as follows: "The Corporation during the two year period following a Change-in- Control delivers to the Executive a Notice of Termination Other than for Cause or takes any other action which purports to terminate the Executive's Employment Other than for Cause." 3. Section 6.6 of the Agreement shall be modified by the insertion of Subsections (e) and (f) reading as follows: e)For purposes of Section 6.6(d) Executive's participation in respect to the Corporation's 1994 Long Term Incentive Plan (the "LTIP") shall be as follows (the defined terms within this section and not otherwise defined within this agreement being the same as defined in the LTIP): i) all of the Executive's Restricted Shares previously issued under the LTIP and not yet vested by the Date of Termination shall become 100% vested, nonforfeitable and fully transferable as of such date, and ii) the Corporation will pay the Executive as soon as practicable following the Date of Termination an amount in cash equal to three times the product of (x) the number of Performance Units previously granted under the LTIP to the Executive and still outstanding times (y) the Award Value at the Threshold Target level. f)For purposes of Section 6.6(d) Executive's benefits with respect to the Corporation's Retirement Plan for Salaried Employees and the BE Plan or any equivalent or superior plans or arrangements in which the Executive participated prior to the Date of Termination (any such Plan or arrangement, the "Pension Plans") and the Corporation's welfare benefit plans in which the Executive participates on the date hereof or any equivalent or superior successor plans or arrangements in which the Executive participates prior to the Date of Termination ("Welfare Benefit Plans") the contemplated continued participation shall require the Corporation to pay or provide the executive with the benefits which the Executive would have received under the Pension Plans and Welfare Benefit Plans if (x) the Executive's employment and his coverage under the Pension Plans and the Welfare Benefit Plans had continued during the relevant damage period, and (y) the compensation described in Section 6.6(b) which would have been credited under the Pension Plans and/or the Welfare Plans were paid to the Executive ratably over the relevant damage period. 4. Section 6.7 of the Agreement shall be notified by the insertion of Subsections (f) and (g) reading as follows: f)For purposes of Section 6.7(e) Executive's participation in respect to the LTIP shall be as follows (the defined terms within this section and not otherwise defined within this agreement being the same as defined in the LTIP): i) all of the Executive's Restricted Shares previously issued under the LTIP and not yet vested by the Date of Termination shall become 100% vested, nonforfeitable and fully transferable as of such date; and ii) the Corporation will pay the Executive as soon as practicable following the Date of Termination an amount in cash equal to three times the product of (x) the number of Performance Units previously granted under the LTIP to the Executive and still outstanding, times (y) the Award Value at the Threshold Target level. g)For purposes of Section 6.7(e) Executive's benefits with respect to the Pension Plans and the Welfare Benefit Plans, the contemplated continued participation shall require the Corporation to pay or provide the Executive with the benefits, earnings credits for benefits and service credits for benefits which the Executive would have received under the Pension Plans and Welfare Benefit Plans if (x) the Executive's employment and his coverage under the Pension Plans and the Welfare Benefit Plans had continued during the relevant damage period, and (y) the compensation described in Section 6.7(b) which would have been credited under the Pension Plans and/or the Welfare Plans were paid to the Executive ratably over the relevant damage period. 5. Section 6.9 of the Agreement shall be modified by rewording the second sentence of such section to read in its entirety as follows: "Upon receipt of written notice from Executive that Executive has been reemployed by another company or entity on a full-time basis (or would have been reemployed but for the non-competition provisions of Section 10 of the Agreement) benefits otherwise receivable by Executive pursuant to Sections 6.6(d) or 6.7(e) related solely to life, health disability and accident insurance plans and programs and other similar benefits (but not Incentive Compensation, LTIP, Pension Plans or other similar plans and programs) shall be reduced to the extent comparable benefits are made available to Executive at his new employment and any such benefits actually received by Executive shall be reported to the Corporation. 6. Section 8 of the Agreement shall be modified by inserting the words, "the last home address of the Executive provided to the Corporation by the Executive", in place of the Executive's address now appearing in Section 8. Section 8 shall be further modified by replacing the address, 430 Park Avenue, New York, New York 10022, with the address, 3 Coliseum Center, 2550 West Tyvola Road, Charlotte, North Carolina 28217. 7. In all other respects, the Agreement shall remain in full force and effect and unmodified except as set forth herein. IN WITNESS WHEREOF, the parties hereto have executed this amendment as of the date and year first above written. COLTEC INDUSTRIES INC By: ______________________________ Name ______________________________ Title EXECUTIVE By: ________________________________ Name ________________________________ Title EX-10.3 6 EXHIBIT 10.3 AMENDMENT NO. 2 TO THE COLTEC INDUSTRIES INC 1992 STOCK OPTION AND INCENTIVE PLAN The Corporation hereby amends the Coltec Industries Inc 1992 Stock Option and Incentive Plan in the manner hereinafter set forth. 1. Section 17 of the Plan entitled Non-Assignability of Awards shall be amended in its entirety to read as follows: "17. Non-Assignability of Awards. No Award shall be assignable or transferable by the recipient except by will or by the laws of descent and distribution. An Award shall be exercisable only by the recipient or his or her personal representatives, heirs or legatees. Notwithstanding the foregoing, the Committee in its discretion, after making suitable provision with the employee to provide for the payment of any required withholding upon the option's exercise, may authorize a recipient who is an employee of the Corporation or one of its Subsidiaries to transfer a Nonqualified Stock Option to any member of the employee's immediate family, to a trust established solely for the benefit of one or more members of the employee's immediate family or to a partnership of which the only individuals or entities who are or could be partners are members of the employee's immediate family and/or a trust established solely for the benefit of one or more members of the employee's immediate family (collectively, `Permitted Transferee'). For this purpose, `immediate family' shall mean the employee's spouse, children, present or former stepchildren, grandchildren, present or former stepgrandchildren, parents, present or former stepparents, grandparents, siblings (including half- brothers and sisters), in-laws and relationships arising due to legal adoption. The Committee's authorization to allow such a transfer must be evidenced by the written Stock Option Agreement pursuant to which the Nonqualified Stock Option is awarded, or by a written amendment thereto. In the event of a transfer, the Permitted Transferee may exercise the Nonqualified Stock Option generally in accordance with the terms of this Plan and the Stock Option Agreement, but may not subsequently assign or transfer the Nonqualified Stock Option except by will or by the laws of descent and distribution. The foregoing sentence shall not be interpreted to prohibit a Permitted Transferee that is either a trust or partnership from modifying or expanding its beneficiaries or partners, respectively, provided that such beneficiaries or partners also independently would be considered Permitted Transferees." "No Option shall be exercisable and no transfer of the shares of Common Stock underlying such Option (the "Underlying Shares") may be made to any Permitted Transferee; and any attempt to exercise any Option or to transfer any Underlying Shares to any Permitted Transferee shall be void and of no effect, unless and until (i) a registration statement under the Securities Act of 1933, as amended (the "Securities Act"), has been duly filed and declared effective pertaining to the Underlying Shares and the Underlying Shares have been duly qualified under applicable state securities or blue sky laws or (ii) the Board, in its sole discretion after securing the advice of counsel, determines, or the Permitted Transferee provides an opinion of counsel satisfactory to the Board, that such registration or qualification is not required as a result of the availability of an exemption from registration or qualification under such laws." 2. Section 18 of the Plan entitled Withholding Taxes shall be amended in its entirety to read as follows: "18. Withholding Taxes. Whenever under the Plan shares are to be issued in satisfaction of Awards, the Corporation shall have the right to require the employee (or if the employee is not then living, the employee's estate) to remit to the Corporation an amount sufficient to satisfy Federal, state and local withholding tax requirements prior to the delivery of any certificate or certificates for such shares. Whenever under the Plan payments are to be made in cash, such payments shall not be net of an amount sufficient to satisfy Federal, state and local withholding tax requirements." 3. The foregoing Amendments shall be effective for all Nonqualified Stock Options granted under the Plan; provided, however, that the amendment to Section 17 shall not be effective for any Nonqualified Stock Option granted under the Plan prior to July 10, 1997, until the employee granted the Nonqualified Stock Option consents to the Amendment. EX-10.4 7 EXHIBIT 10.4 AMENDMENT NO. 1 TO THE 1994 STOCK OPTION PLAN FOR OUTSIDE DIRECTORS OF COLTEC INDUSTRIES INC The Corporation hereby amends the 1994 Stock Option Plan for Outside Directors of Coltec Industries Inc in the manner hereinafter set forth. 1. Article VI, Section 6.07 of the Plan entitled Nontransferable shall be amended in its entirety to read as follows: "6.07 Non-Assignability of Options. No Option shall be assignable or transferable by the recipient except by will or by the laws of descent and distribution. An Option shall be exercisable only by the recipient or his or her personal representatives, heirs or legatees. Notwithstanding the foregoing, the Company in its discretion, after making suitable provision with the Outside Director to provide for the payment of any required withholding upon the Option's exercise, may authorize the Outside Director to transfer a Nonqualified Stock Option to any member of the Outside Director's immediate family, to a trust established solely for the benefit of one or more members of the Outside Director's immediate family or to a partnership of which the only individuals or entities who are or could be partners are members of the Outside Director's immediate family and/or a trust established solely for the benefit of one or more members of the Outside Director's immediate family (collectively, `Permitted Transferee'). For this purpose, `immediate family' shall mean the Outside Director's spouse, children, present or former stepchildren, grandchildren, present or former stepgrandchildren, parents, present or former stepparents, grandparents, siblings (including half- brothers and sisters), in-laws and relationships arising due to legal adoption. The Company's authorization to allow such a transfer must be evidenced by the written Stock Option Agreement pursuant to which the Nonqualified Stock Option is awarded, or by a written amendment thereto. In the event of a transfer, the Permitted Transferee may exercise the Nonqualified Stock Option generally in accordance with the terms of this Plan and the Stock Option Agreement, but may not subsequently assign or transfer the Nonqualified Stock Option except by will or by the laws of descent and distribution. The foregoing sentence shall not be interpreted to prohibit a Permitted Transferee that is either a trust or partnership from modifying or expanding its beneficiaries or partners, respectively, provided that such beneficiaries or partners also independently would be considered Permitted Transferees." A new Section of the Plan entitled Withholding Taxes shall be added to read as follows: "6.08 Withholding Taxes. Whenever under the Plan shares are to be issued in satisfaction of Options, the Corporation shall have the right to require the Outside Director (or if the Outside Director is not then living, the Outside Director's estate) to remit to the Corporation an amount sufficient to satisfy Federal, state and local withholding tax requirements prior to the delivery of any certificate or certificates for such shares. Whenever under the Plan payments are to be made in cash, such payments shall not be net of an amount sufficient to satisfy Federal, state and local withholding tax requirements." 2. The foregoing Amendment shall be effective for all Stock Options granted under the Plan; provided, however, that the amendment to Article VI, shall not be effective for any Stock Option granted under the Plan prior to July 10, 1997, until the Outside Director granted the Stock Option consents to the Amendment. EX-27 8
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE SEPTEMBER 28, 1997 CONSOLIDATED BALANCE SHEET AND STATEMENT OF EARNINGS FOR THE NINE MONTHS ENDED SEPTEMBER 28, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH CONSOLIDATED FINANCIAL STATEMENTS. 1,000 9-MOS DEC-31-1997 SEP-28-1997 11,769 0 145,088 2,705 236,486 413,587 644,020 (397,780) 864,212 226,275 27,567 0 0 705 (391,597) 864,212 955,852 955,852 650,284 812,976 0 0 38,905 103,971 35,350 68,621 0 0 0 68,621 1.03 1.03
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