-----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, EEUMR94Plk13D7WUI3uVvXXSmb5oSJcXoLLxtqPO2ZHy7XCGhqMzeqtYuLsAIn9i Ja1N084Mh51Pk+8gVHjm1A== 0000007383-98-000010.txt : 19980409 0000007383-98-000010.hdr.sgml : 19980409 ACCESSION NUMBER: 0000007383-98-000010 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19980408 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19980408 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ARMCO INC CENTRAL INDEX KEY: 0000007383 STANDARD INDUSTRIAL CLASSIFICATION: STEEL WORKS, BLAST FURNACES ROLLING MILLS (COKE OVENS) [3312] IRS NUMBER: 310200500 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-00873 FILM NUMBER: 98589608 BUSINESS ADDRESS: STREET 1: 301 GRANT ST - 15TH FLR STREET 2: ONE OXFORD CENTRE CITY: PITTSBURGH STATE: PA ZIP: 15219-1415 BUSINESS PHONE: 4122559859 MAIL ADDRESS: STREET 1: 301 GRANT ST - 15TH FLR CITY: PITTSBURGH STATE: PA ZIP: 15219-1415 FORMER COMPANY: FORMER CONFORMED NAME: ARMCO STEEL CORP DATE OF NAME CHANGE: 19790506 8-K 1 NONE SECURITIES AND EXCHANGE COMMISSION ---------------------------------- FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (date of earliest event reported): April 8, 1998 Armco Inc. - ------------------------------------------------------------------------ (Exact name of registrant as specified in charter) Ohio - ------------------------------------------------------------------------ (State or other jurisdiction of incorporation or organization) 1-873-2 31-0200500 - ------------------------ -------------------------------- (Commission File Number) (I.R.S. Employer Identification No.) One Oxford Centre, 301 Grant Street, Pittsburgh, Pennsylvania 15219-1415 - ------------------------------------------------------------- ---------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: 412/255-9800 ------------ Item 5. Other Events. ------------ On April 8, 1998, Armco Inc. announced that it will record a gain of $237.5 million, or $2.21 per share of common stock, for the cumulative effect of an accounting change. Armco stated that effective January 1, 1998, it changed the method used to amortize unrecognized net gains and losses associated with accounting for pension and other postretirement benefit plans. Item 7. Exhibits. -------- 99.2 Press release dated April 8, 1998. 2 SIGNATURE 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 hereunto duly authorized. ARMCO INC. Date: April 8, 1998 By: /s/ Gary R. Hildreth ------------------------------------ Name: Gary R. Hildreth Title: Vice President 3 EX-99.1 2 EX-99.1 EXHIBIT INDEX EXHIBIT LIST 99.2 Press release dated April 8, 1998. EX-99.2 3 EX-99.2 Exhibit 99.2 [ARMCO LOGO] ARMCO INC. SPECIALTY FLAT-ROLLED STEELS Pittsburgh, Pennsylvania N E W S F R O M A R M C O CONTACT: ---------------------------- Jim Herzog 412-255-9825 ARMCO TO RECORD ONE-TIME GAIN OF $237.5 MILLION IN FIRST QUARTER PITTSBURGH, PA, April 8, 1998 --- Armco Inc. (NYSE:AS) announced that it will record a gain of $237.5 million, or $2.21 per share of common stock, related to previously unrecognized net gains in its retiree benefit programs. Armco has continued to aggressively manage the significant liabilities associated with these programs through expanded cost containment actions in both pension and retiree medical benefits, including use of managed care and contributions to the pension plans that exceeded minimum funding requirements. These actions, coupled with investment returns on pension plan assets that substantially exceeded assumed returns and lower than expected increases in retiree medical benefit costs, have contributed to an improved financial position of the plans and an increase in unrecognized net gains over the last several years. Armco stated that effective January 1, 1998, it changed the method used to amortize unrecognized net gains and losses associated with accounting for pension and other postretirement benefit plans. The cumulative effect of this accounting change will increase Armco's first quarter 1998 net income by $237.5 million, or $2.21 per share of common stock. Armco believes that the change provides an improved assessment of its financial condition since recorded liabilities will now more closely reflect current estimated economic obligations. - more - - Page 2 - Background on change in accounting method At December 31, 1997, Armco reported pension and other postretirement liabilities of $1,227.1 million. However, the actuarially determined estimate of the net present value of Armco's future payments for these obligations was $747.8 million. Therefore, total recorded pension and postretirement benefit liabilities exceeded estimated future obligations by $479.3 million. Of this amount, $419.3 million was unrecognized net gains, which are generated when actual experience differs from assumptions used to calculate pension and other postretirement benefit obligations. These assumptions include discount rates, assumed returns on plan assets, mortality and health care cost trend rates. In 1987, when Armco adopted Statement of Financial Accounting Standards, No. 87, Employers' Accounting for Pensions (SFAS 87), and in ---------------------------------- 1993, when it adopted SFAS No. 106, Employers' Accounting for ------------------------- Postretirement Benefits Other Than Pensions (SFAS 106), Armco chose to - ------------------------------------------- use the minimum amortization method allowable. This method, combined with the favorable trends previously mentioned, resulted in the accumulation of substantial unrecognized net gains, causing reported long-term employee benefit liabilities on Armco's balance sheet to be higher than the actuarially determined economic obligations. The newly adopted method accelerates the amortization process by immediately recognizing all net gains or losses that exceed a 10-percent corridor as defined in SFAS 87 and 106. Also under the new method, Armco will amortize net gains or losses within the 10-percent corridor over the average remaining service life of covered employees, or about 15 years. - more - - Page 3 - Armco said that, while the new amortization method could lead to future earnings that are more sensitive to changes in interest rates and other assumptions used to establish the benefit obligations, it believes that maintaining an amortization period of about 15 years within the 10- percent corridor provides a reasonable buffer against volatility. In analyzing the long-term effect on its financial statements, Armco concluded that the overall benefits of recorded liabilities more closely reflecting economic obligations outweighed the potential for increased volatility to the income statement. Effect on Shareholders' Equity The change will also result in Armco reporting positive total shareholders' equity for the first time since 1992. At December 31, 1997, Armco reported negative shareholders' equity of $152.5 million. Adjusting for the cumulative effect of adopting the accounting change increases shareholders' equity by $237.5 million. On a pro forma basis at December 31, 1997, shareholders' equity would have been a positive $85 million. Armco Inc. is a leading domestic producer of specialty flat-rolled stainless, electrical and galvanized steels with plants in Butler, Pennsylvania and Coshocton, Dover, Mansfield and Zanesville, Ohio. Armco also produces snowplows and other ice control products, and standard pipe and tubular products. ### -----END PRIVACY-ENHANCED MESSAGE-----