-----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, ABI/IYZ/UC4GoPtYjza2yueMDHrs4VDmcR5FvlZ01nSP5VVSKVsXogWL/Hwc6Zgi 1O3X9FlLoTORVl9CMYr+JQ== 0000201493-96-000003.txt : 19960514 0000201493-96-000003.hdr.sgml : 19960514 ACCESSION NUMBER: 0000201493-96-000003 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960513 SROS: NYSE SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: COLTEC INDUSTRIES INC CENTRAL INDEX KEY: 0000201493 STANDARD INDUSTRIAL CLASSIFICATION: AIRCRAFT PART & AUXILIARY EQUIPMENT, NEC [3728] IRS NUMBER: 131846375 STATE OF INCORPORATION: PA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-07568 FILM NUMBER: 96561143 BUSINESS ADDRESS: STREET 1: 430 PARK AVE CITY: NEW YORK STATE: NY ZIP: 10022 BUSINESS PHONE: 2129400400 MAIL ADDRESS: STREET 1: 430 PARK AVE CITY: NEW YORK STATE: NY ZIP: 10022 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 COLTEC IND INC 1ST QTR 1996 10-Q. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (X) Quarterly Report Pursuant To Section 13 Or 15(d) Of The Securities Exchange Act of 1934 For the quarterly period ended March 31, 1996 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.) 430 PARK AVENUE, NEW YORK, N.Y. 10022 (Address of principal executive offices) (Zip code) (212) 940-0400 (Registrant's telephone number, including area code) ________________________________________________________________________________ (Former name, former address and former fiscal year, if changed since last report) 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 ( ) ____________________________________ On April 28, 1996, there were outstanding 70,164,632 shares of common stock, par value $.01 per share. Page 1 of 16 PART I FINANCIAL INFORMATION Item 1 Financial Statements COLTEC INDUSTRIES INC AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET March 31, December 31, 1996 1995 _________ ____________ (Unaudited) (In thousands) A S S E T S Current assets - Cash and cash equivalents $ 6,613 $ 3,971 Accounts and notes receivable - net 212,397 192,011 Inventories - Finished goods 52,015 55,533 Work in process and finished parts 148,620 146,916 Raw materials and supplies 30,717 26,987 ________ ________ 231,352 229,436 Deferred income taxes 14,885 13,902 Other current assets 10,469 10,174 ________ ________ Total current assets 475,716 449,494 Property, plant and equipment 677,199 666,285 Less accumulated depreciation and amortization 444,199 435,812 ________ ________ 233,000 230,473 Costs in excess of net assets acquired, net of amortization 139,669 140,811 Other assets 81,381 73,724 ________ ________ $929,766 $894,502 ======== ======== 2. COLTEC INDUSTRIES INC AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET March 31, December 31, 1996 1995 ___________ ____________ (Unaudited) (In thousands, except share data) LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities - Notes payable and current maturities of long-term debt $ 2,230 $ 226 Accounts payable 75,728 72,735 Accrued expenses 199,703 164,617 Current portion of liabilities of discontinued operations 3,000 3,000 ___________ ___________ Total current liabilities 280,661 240,578 Long-term debt 924,779 945,606 Deferred income taxes 16,747 14,878 Other liabilities 125,806 120,670 Liabilities of discontinued operations 26,286 26,532 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, 70,269,309 and 70,077,350 shares issued at March 31, 1996 and December 31, 1995, respectively (excluding 25,000,000 shares held by a wholly owned subsidiary) 703 701 Capital in excess of par value 641,409 639,419 Retained earnings (deficit) (1,082,088) (1,088,042) Unearned compensation - restricted stock awards (2,135) (2,408) Foreign currency translation adjustments (733) (1,816) ___________ ___________ (442,844) (452,146) Less: Cost of 104,677 and 100,346 shares of common stock in treasury at March 31, 1996 and December 31, 1995, respectively (1,669) (1,616) ___________ ___________ (444,513) (453,762) ___________ ___________ $ 929,766 $ 894,502 =========== =========== The accompanying notes to financial statements are an integral part of this statement. 3. COLTEC INDUSTRIES INC AND SUBSIDIARIES CONSOLIDATED STATEMENT OF EARNINGS (Unaudited) Three Months Ended ____________________ March 31, April 2, 1996 1995 ________ ________ (In thousands, except per share data) Net sales $359,424 $356,344 ________ ________ Costs and expenses - Cost of sales 271,231 246,489 Selling and administrative 55,286 51,722 ________ ________ Total costs and expenses 326,517 298,211 ________ ________ Operating income 32,907 58,133 Interest and debt expense, net 21,126 22,001 ________ ________ Earnings before income taxes and extraordinary item 11,781 36,132 Provision for income taxes 4,006 12,646 ________ ________ Earnings before extraordinary item 7,775 23,486 Extraordinary item (1,821) (82) ________ ________ Net earnings $ 5,954 $ 23,404 ======== ======== Earnings per common share - Before extraordinary item $ .11 $ .34 Extraordinary item (.03) - ________ ________ Net earnings $ .08 $ .34 ======== ======== Weighted average number of common and common equivalent shares 70,187 69,822 ======== ======== The accompanying notes to financial statements are an integral part of this statement. 4. COLTEC INDUSTRIES INC AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) Three Months Ended _____________________ March 31, April 2, 1996 1995 ________ _________ (In thousands) Cash flows from operating activities Net earnings $ 5,954 $ 23,404 Adjustments to reconcile net earnings to cash provided by (used in) operating activities Extraordinary item 1,821 82 Depreciation and amortization 11,167 10,711 Deferred income taxes 1,869 (2,076) Receivable from insurance carriers (560) (14,146) Payment of liabilities of discontinued operations (246) (160) Other operating items (1,667) (4,273) ________ __________ 18,338 13,542 ________ __________ Changes in assets and liabilities Accounts and notes receivable (11,851) (18,153) Inventories (1,916) (10,683) Deferred income taxes (983) 621 Other current assets (295) 3,338 Accounts payable 2,993 (9,238) Accrued expenses 21,367 13,278 ________ __________ Changes in assets and liabilities 9,315 (20,837) ________ __________ Cash provided by (used in) operating activities 27,653 (7,295) ________ __________ Cash flows from investing activities Capital expenditures (11,188) (7,564) Other - net 7,610 369 ________ __________ Cash used in investing activities (3,578) (7,195) ________ __________ Cash flows from financing activities Issuance of long-term debt 32,000 23,142 Payment of long-term debt (53,433) (10,088) ________ __________ Cash provided by (used in) financing activities (21,433) 13,054 ________ __________ Cash and cash equivalents - Increase (decrease) 2,642 (1,436) At beginning of period 3,971 4,188 ________ _________ At end of period $ 6,613 $ 2,752 ========= ========= The accompanying notes to financial statements are an integral part of this statement. 5. COLTEC INDUSTRIES INC AND SUBSIDIARIES Notes to Financial Statements March 31, 1996 (Unaudited) 1. SUMMARY OF ACCOUNTING POLICIES Financial Information: The unaudited financial statements, included herein, reflect in the opinion of Coltec Industries Inc ("Coltec") all normal recurring adjustments necessary to present fairly the financial position and results of operations for the periods indicated. The unaudited 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, 1995 has been derived from the audited financial statements as of that date. For further information, refer to the financial statements and footnotes included in Coltec's annual report to shareholders for the year ended December 31, 1995. Consolidated Statement of Cash Flows: Interest paid and federal and state income taxes paid and refunded were as follows: Three Months Ended __________________ March 31, April 2, 1996 1995 _______ ________ (In thousands) Interest paid $ 6,825 $6,852 Income taxes: Paid 2,934 14,179 Refunded 245 521 2. EXTRAORDINARY ITEM Coltec incurred extraordinary charges of $1,821,000, net of a tax benefit of $981,000; and $82,000, net of a tax benefit of $44,000; in the first quarter of 1996 and 1995, respectively, in connection with the early retirement of debt. 3. COMMITMENTS AND CONTINGENCIES Coltec 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 March 31, 1996, two subsidiaries of Coltec were among a number of defendants (typically 15 to 40) in approximately 106,300 actions (including approximately 21,300 actions, in advanced stages of processing) filed in various states by plaintiffs alleging injury or death as a result of exposure to asbestos fibers. Through March 31, 1996, approximately 139,200 of the approximately 245,500 total actions brought have been settled or otherwise disposed of. 6. COLTEC INDUSTRIES INC AND SUBSIDIARIES Notes to Financial Statements March 31, 1996 (Unaudited) The damages claimed for personal injury or death vary from case to case and in many cases plaintiffs seek $1,000,000 or more in compensatory damages and $2,000,000 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 Coltec nor any of 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"), Coltec settled litigation with its primary and most of its first-level excess insurance carriers, substantially on the basis of the Court's ruling. Coltec has negotiated a final agreement with most of its excess carriers that are in the layers of coverage immediately above its first layer. Coltec is currently receiving payments pursuant to this agreement. Coltec 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. During the first three months of 1996, two subsidiaries of Coltec received approximately 10,500 new actions, compared with approximately 9,600 actions received during the first three months of 1995. Payments were made with respect to asbestos liability and related costs aggregating $15,187,000 and $20,785,000 in the first three months of 1996 and 1995, respectively, substantially all of which were covered by insurance. In accordance with Coltec'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 Coltec can reasonably estimate the cost to dispose of these actions. As of March 31, 1996, Coltec 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 $89,565,000 and Coltec expects that this cost will be substantially covered by insurance. With respect to the 85,000 outstanding actions as of March 31, 1996, which are in preliminary procedural stages, Coltec 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 Coltec. 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 7. COLTEC INDUSTRIES INC AND SUBSIDIARIES Notes to Financial Statements March 31, 1996 (Unaudited) reasonable evaluation as to their merits at the time of 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, Coltec generally does not have the information necessary to analyze the actions in sufficient detail to estimate the ultimate liability or costs to Coltec, if any, until the actions appear on a trial calendar. A determination to seek dismissal, to attempt to settle or to 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 Coltec's subsidiaries will receive in the future. Coltec 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 Coltec's asbestos-related actions. Coltec 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, Coltec 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 foregoing, as well as the experience of Coltec's subsidiaries and other defendants in asbestos litigation, the likely sharing of judgments among multiple responsible defendants, and the significant amount of insurance coverage that Coltec expects to be available from its solvent carriers, Coltec believes that pending and reasonably anticipated future actions are not likely to have a material effect on Coltec's results of operations and financial condition. Although the insurance coverage which Coltec 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. Coltec'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, Coltec'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 Coltec. Likewise, the insignificant number of claims 8. COLTEC INDUSTRIES INC AND SUBSIDIARIES Notes to Financial Statements March 31, 1996 (Unaudited) remaining to be resolved are not expected to have a material effect on Coltec's results of operations and financial condition. Coltec 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, Coltec 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 Sheet are as follows: March 31, Dec. 31, (In thousands) 1996 1995 _________________________________________________________________ Accounts and notes receivable - other $62,212 $53,677 Other assets 29,648 16,243 Accrued expenses - other 62,491 47,791 Other liabilities 27,074 11,450 With respect to environmental proceedings, Coltec has been notified that it is among the Potentially Responsible Parties ("PRPs") under the federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended ("CERCLA"), or similar state laws, for the costs of investigating and in some cases remediating contamination by hazardous materials at several sites. CERCLA imposes 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 process of investigating and remediating contaminated properties can be lengthy and expensive. The process is also subject to the uncertainties occasioned by changing legal requirements, developing technological applications and liability allocations among PRPs. Based on the progress to date in the investigation, cleanup and allocation of responsibility for these sites, Coltec has estimated that its costs in connection with these sites approximate $20,000,000 at March 31, 1996, and has accrued for this amount in the Consolidated Balance Sheet as of March 31, 1996. Although Coltec is pursuing insurance recovery in connection with certain of these matters, Coltec has not recorded a receivable with respect to any potential recovery of costs in connection with any environmental matter. 4. SUBSEQUENT EVENT On April 26, 1996, Coltec announced an agreement for the purchase by Borg- Warner Automotive, Inc of the operations and substantially all of the operating assets of Coltec's Holley Automotive, Coltec Automotive and 9. COLTEC INDUSTRIES INC AND SUBSIDIARIES Notes to Financial Statements March 31, 1996 (Unaudited) Performance Friction Products automotive OEM businesses. The sale is expected to close in the second quarter of 1996, subject to regulatory approval and other conditions. Under terms of the agreement, Borg-Warner Automotive will pay $283 million in cash for the businesses. These operations reported sales of $255 million in 1995. 10. COLTEC INDUSTRIES INC AND SUBSIDIARIES March 31, 1996 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 ended March 31, 1996 and April 2, 1995. Three Months Ended __________________ March 31, April 2, 1996 1995 _______ _______ (In millions) Sales: Aerospace/Government $122.6 $ 114.9 Automotive 124.0 132.3 Industrial 113.3 109.5 Intersegment elimination (.5) (.4) ______ ______ Total $359.4 $356.3 ====== ====== Operating income: Aerospace/Government $ (.1) $ 15.0 Automotive 20.7 27.9 Industrial 24.3 24.7 ______ ______ Total segments 44.9 67.6 Corporate unallocated (12.0) (9.5) ______ ______ Operating income $ 32.9 $ 58.1 ====== ====== Results of Operations Three Months Ended March 31, 1996 Compared With Three Months Ended April 2, 1995. Earnings before extraordinary item for the first quarter of 1996 was $7.8 million, equal to 11 cents per common share, and included a charge of $14.2 million ($9.4 million after tax) resulting from the cessation of shipments of landing gears and flight control systems for the Fokker 70 and 100 aircraft. Fokker has filed for bankruptcy and has stopped producing these aircraft. For the first quarter of 1995, earnings before extraordinary item were $23.5 million, or 34 cents per common share. Sales for the quarter ended March 31, 1996, were $359.4 million compared with $356.3 million in the like quarter last year. Operating income for the first quarter of 1996 was $32.9 million and the operating margin was 9.2%. Excluding the $14.2 million charge, 11. COLTEC INDUSTRIES INC AND SUBSIDIARIES March 31, 1996 operating income was $47.2 million with an operating margin of 13.1%. This compared with operating income of $58.1 million and an operating margin of 16.3% in the 1995 first quarter. The Aerospace/Government segment reported an operating loss of $.1 million for the first quarter of 1996; however, excluding the $14.2 million charge, operating income was down 6% with sales up 7%. Operating income in the Automotive segment declined 26% on a 6% sales reduction; and in the Industrial segment, operating income was down slightly on a sales increase of 3%. Operating results for the Aerospace/Government segment were affected by lower shipments at Menasco and Chandler Evans Control Systems and by recognition in the 1995 first quarter of a nonrecurring government grant by Menasco. Higher first quarter sales and earnings were reported by Walbar, Delavan Gas Turbine Products and Fairbanks Morse Engine. Walbar's results benefited from the phaseout of its unprofitable compressor blade facility in Canada, which is scheduled to be closed by the end of 1996. Walbar's remaining operations posted strong gains. The decline in operating results for the Automotive segment from a strong first quarter of 1995 was due to the General Motors strike, lower vehicle production rates and the continued adverse industry pricing environment. The slightly lower earnings in the Industrial segment reflected lower margins on the acquired Furon Company's metallic gasket business and changes in product mix. The increase in Corporate unallocated costs was attributable to a provision for that portion of asbestos product liability claims and related litigation costs not covered by insurance. Following is a discussion of the results of operations for the three months ended March 31, 1996 compared with the three months ended April 2, 1995. Sales. In the Aerospace/Government segment, sales were $122.6 million compared with $114.9 million a year ago. At Walbar, sales were up on increased shipments of turbine blades and vanes for commercial aircraft engines, and components and assemblies for the locomotive turbocharger market. Sales were higher at Delavan Gas Turbine Products on strong demand for fuel injectors and components from regional airlines, as this segment of the airline industry continues to replace larger aircraft on short run trips. Fairbanks Morse Engine reported an increase in repair part sales to the nuclear energy market and higher shipments of Alco engines. Sales were down at Menasco due to lower shipments to Fokker and to Boeing, as Boeing worked off inventory it received during its recent strike. The decline in sales at Chandler Evans Control Systems was due to completion of shipments in the first quarter of 1995 for the Taiwanese fighter program. 12. COLTEC INDUSTRIES INC AND SUBSIDIARIES March 31, 1996 Sales for the Automotive segment were $124.0 million for the three months ended March 31, 1996 compared with $132.3 million last year. The sale decline was due to the General Motors strike, lower vehicle production rates and the continued adverse industry pricing environment. Contributing to the sales decline at Holley Automotive was the continuing phaseout of the mechanical emission-control air pump. In the Industrial segment, sales were $113.3 million compared with $109.5 million last year. The higher sales primarily reflected the acquisition in December 1995 by Garlock Mechanical Packing of Furon Company's metallic gasket business. Sales were higher in the first quarter of 1996 at France Compressor Products, Plastomer Products and Haber Tool, while Delavan Commercial Products and Sterling Die reported lower sales. Cost of Sales. Cost of sales increased 10% in the first quarter of 1996. This increase was attributable to a $12.8 million charge resulting from the filing for bankruptcy by Fokker. Also contributing to the increase were a provision for that portion of asbestos product liability claims and related litigation costs not covered by insurance, costs related to the acquired metallic gasket business, and recognition in the first quarter of 1995 of a nonrecurring government grant by Menasco. The $12.8 million charge for the Fokker bankruptcy covers nonrecurring development costs, vendor claims, losses on foreign exchange contracts and write-off of inventories related to the Fokker 70 and 100 aircraft programs. As a percentage of sales, cost of sales increased to 75.5% from 69.2% last year. Selling and Administrative Expense. Selling and administrative expense, including other income and expense, increased 7% in the first quarter due mainly to a $1.4 million charge for the Fokker bankruptcy covering the write-off of receivables related to the Fokker 70 and 100 aircraft programs, and to costs related to the acquired metallic gasket business. As a percent of sales, selling and administrative expense increased to 15.4% from 14.5% in the first three months of 1995. Interest and Debt Expense, Net. Interest and debt expense, net declined 4% due to lower interest rates and the substitution of bank debt at a lower interest rate for 11-1/4% debentures. Provision for Income Taxes. The provision for income taxes for the first three months of 1996 resulted in an effective income tax rate of 34% compared with 35% for last year. Extraordinary Item. The extraordinary charges for both the first quarters of 1996 and 1995 resulted from early extinguishment of debt. 13. COLTEC INDUSTRIES INC AND SUBSIDIARIES March 31, 1996 Liquidity and Financial Position At March 31, 1996, total debt was $927.0 million compared with $945.8 million at year-end 1995. The negative balance in shareholders' equity of $444.5 million compares with a negative balance of $453.8 million at December 31, 1995. Cash and cash equivalents were $6.6 million compared with $4.0 million at year-end 1995. Working capital was $195.1 million and the current ratio was 1.69. This compares with working capital of $208.9 million and a current ratio of 1.87 at December 31, 1995. In the first three months of 1996, Coltec generated $27.7 million of cash from operating activities compared with $7.3 million of cash that was used last year. The cash generated from operations in 1996 was due to lower working capital requirements, an increase in deferred income taxes and the net payment of $.6 million to insurance carriers for asbestos-related matters compared with a $14.1 million net payment last year. Included in receivables at March 31, 1996 and December 31, 1995 were $62.2 million and $53.7 million, respectively, of receivables due from insurance carriers for asbestos product liability claims and related litigation costs. Excluding these amounts, receivables increased 9% to $150.2 million and receivables days outstanding were 37 days at March 31, 1996, compared with 38 days at year-end 1995. Inventories were up slightly to $231.4 million. During the 1996 first quarter, total debt was reduced by $18.8 million. In January 1996, Coltec used borrowings under its credit agreement to redeem $46.4 million principal amount of the 11-1/4% debentures at a redemption price of 105.625% plus accrued interest. On April 26, 1996, Coltec announced an agreement for the purchase by Borg-Warner Automotive, Inc of the operations and substantially all of the operating assets of Coltec's Holley Automotive, Coltec Automotive and Performance Friction Products automotive OEM businesses. The sale is expected to close in the second quarter of 1996, subject to regulatory approval and other conditions. Under terms of agreement, Borg-Warner Automotive will pay $283 million in cash for the businesses. These operations reported sales of $255 million in 1995. 14. COLTEC INDUSTRIES INC AND SUBSIDIARIES March 31, 1996 PART II OTHER INFORMATION Item 1. Legal Proceedings. Coltec and certain of its subsidiaries are defendants in various lawsuits involving asbestos-containing products. In addition, Coltec has been notified that it is among the Potentially Responsible Parties under the federal Comprehensive Environmental Response Compensation and Liability Act of 1980, as amended, or similar state laws, for the costs of investigating and in some cases remediating contamination by hazardous materials at several sites. See Note 3 of the Notes to Financial Statements. Item 6. Exhibits and Reports on Form 8-K. (a)(27) Financial Data Schedule. (b) No reports on Form 8-K were filed during the quarter ended March 31, 1996 by Coltec Industries Inc. 15. 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 Paul G. Schoen ___________________________ Paul G. Schoen Executive Vice President, Finance Treasurer and Chief Financial Officer Date: May 13, 1996 16. EX-27 2 ART. 5 FDS FOR COLTEC IND INC 1ST QTR 1996 10-Q
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE MARCH 31, 1996 CONSOLIDATED BALANCE SHEET AND STATEMENT OF EARNINGS FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS DEC-31-1996 MAR-31-1996 6,613 0 217,954 5,557 231,352 475,716 677,199 444,199 929,766 280,661 924,779 0 0 703 (445,216) 929,766 359,424 359,424 271,231 326,517 0 0 21,126 11,781 4,006 7,775 0 (1,821) 0 5,954 .11 .11
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