-----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, Ti9byK6ErwT3NT4NnxCIIOElKNbfovcQerR1SRJG37vAt+RCCO3v06WTzbttYCCC 67AGcKLJCR8iOZovuIHHIQ== 0000898430-96-002405.txt : 19960604 0000898430-96-002405.hdr.sgml : 19960604 ACCESSION NUMBER: 0000898430-96-002405 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19960428 FILED AS OF DATE: 19960603 SROS: NYSE SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ROHR INC CENTRAL INDEX KEY: 0000084801 STANDARD INDUSTRIAL CLASSIFICATION: AIRCRAFT PART & AUXILIARY EQUIPMENT, NEC [3728] IRS NUMBER: 951607455 STATE OF INCORPORATION: DE FISCAL YEAR END: 0731 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-06101 FILM NUMBER: 96576060 BUSINESS ADDRESS: STREET 1: 850 LAGOON DRIVE CITY: CHULA VISTA STATE: CA ZIP: 91910 BUSINESS PHONE: 6196914111 MAIL ADDRESS: STREET 1: PO BOX 878 CITY: CHULA VISTA STATE: CA ZIP: 91912 FORMER COMPANY: FORMER CONFORMED NAME: ROHR INDUSTRIES INC DATE OF NAME CHANGE: 19911219 FORMER COMPANY: FORMER CONFORMED NAME: ROHR CORP DATE OF NAME CHANGE: 19711220 FORMER COMPANY: FORMER CONFORMED NAME: ROHR AIRCRAFT CORP DATE OF NAME CHANGE: 19710317 10-Q 1 FORM 10-Q FY96: THIRD QUARTER =============================================================================== SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED APRIL 28, 1996 COMMISSION FILE NUMBER 1-6101 ROHR, INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) DELAWARE 95-1607455 (State of other jurisdiction of (I.R.S. Employer Identification Number) incorporation or organization) 850 LAGOON DRIVE, CHULA VISTA, CALIFORNIA 91910-2098 (Address of principal executive offices) (619) 691-4111 (Registrant's Telephone No.) 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 ----- ----- AS OF MAY 24, 1996, THERE WERE 21,823,314 SHARES OF THE REGISTRANT'S COMMON STOCK OUTSTANDING. ================================================================================ ================================================================================ PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS ROHR, INC. AND SUBSIDIARIES --------------------------- CONSOLIDATED BALANCE SHEETS --------------------------- (in thousands except for share data) ------------------------------------
APRIL 28, JULY 31, 1996 1995 ----------- ---------- (UNAUDITED) ASSETS - ------ Cash and cash equivalents $ 38,436 $ 84,584 Accounts receivable 107,396 72,152 Inventories: Work-in-process 456,962 429,578 Raw materials, purchased parts and supplies 23,899 23,367 Less customers' progress payments and advances (59,971) (62,670) -------- -------- Inventories - net 420,890 390,275 Deferred tax asset 6,493 6,493 Prepaid expenses and other current assets 10,691 13,685 -------- -------- TOTAL CURRENT ASSETS 583,906 567,189 Property, plant and equipment - net 205,821 217,051 INVESTMENT IN LEASES 33,473 34,657 DEFERRED TAX ASSETS 105,109 105,020 OTHER ASSETS 52,314 52,623 -------- -------- $980,623 $976,540 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY - ------------------------------------ Accounts payable and other liabilities $158,846 $157,872 Taxes on income 3,418 451 Short-term debt 2,427 - Current portion of long-term debt 22,400 14,119 -------- -------- TOTAL CURRENT LIABILITIES 187,091 172,442 LONG-TERM DEBT 485,967 540,658 PENSION AND POST-RETIREMENT OBLIGATIONS - LONG-TERM 69,753 69,386 OTHER OBLIGATIONS 17,743 18,123 COMMITMENTS AND CONTINGENCIES - - SHAREHOLDERS' EQUITY: Preferred stock, $1 par value per share, 10 million shares authorized, none issued - - Common stock, $1 par value per share, authorized 50,000,000 shares; issued and outstanding 21,819,334 and 18,068,076 shares, respectively 21,819 18,068 Additional paid-in capital 138,456 102,887 Retained earnings 98,212 93,394 Minimum pension liability adjustment (38,418) (38,418) -------- -------- TOTAL SHAREHOLDERS' EQUITY 220,069 175,931 -------- -------- $980,623 $976,540 ======== ========
Page 1 ROHR, INC. AND SUBSIDIARIES --------------------------- CONSOLIDATED STATEMENTS OF EARNINGS - UNAUDITED ----------------------------------------------- (in thousands except for per share data) ----------------------------------------
THIRD QUARTER ENDED NINE MONTHS ENDED --------------------- --------------------- APRIL 28, APRIL 30, APRIL 28, APRIL 30, 1996 1995 1996 1995 --------- --------- --------- --------- Sales $203,711 $210,759 $534,813 $622,689 Costs and Expenses 177,810 187,922 468,414 553,664 General & Administrative Expenses 7,336 6,053 19,311 18,902 -------- -------- -------- -------- Operating Income 18,565 16,784 47,088 50,123 Interest Income 661 969 2,321 2,945 Interest Expense 11,491 13,077 36,451 40,664 Charge for Exchange of Convertible Notes 827 - 4,902 - -------- -------- -------- -------- Income from Continuing Operations - Before Taxes on Income 6,908 4,676 8,056 12,404 Taxes on Income 2,778 2,103 3,239 5,210 -------- -------- -------- -------- Income from Continuing Operations 4,130 2,573 4,817 7,194 Income from Discontinued Operations - Net of Taxes - 87 - 922 -------- -------- -------- -------- Net Income $ 4,130 $ 2,660 $ 4,817 $ 8,116 ======== ======== ======== ======== NET INCOME PER SHARE: PRIMARY: Income from Continuing Operations $ 0.19 $ 0.14 $ 0.24 $ 0.40 Income from Discontinued Operations - 0.01 - 0.05 -------- -------- -------- -------- Net Income $ 0.19 $ 0.15 $ 0.24 $ 0.45 ======== ======== ======== ======== ASSUMING FULL DILUTION: Income from Continuing Operations $ 0.18 $ 0.14 $ 0.24 $ 0.39 Income from Discontinued Operation - - - 0.04 -------- -------- -------- -------- Net Income $ 0.18 $ 0.14 $ 0.24 $ 0.43 ======== ======== ======== ======== Cash Dividends per Share of Common Stock $ - $ - $ - $ - ======== ======== ======== ========
Page 2 ROHR, INC. AND SUBSIDIARIES --------------------------- CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED ------------------------------------------------- (in thousands) --------------
THIRD QUARTER ENDED NINE MONTHS ENDED ---------------------- ---------------------- APRIL 28, APRIL 30, APRIL 28, APRIL 30, 1996 1995 1996 1995 ---------- ---------- ---------- ---------- OPERATING ACTIVITIES: Net income $ 4,130 $ 2,660 $ 4,817 $ 8,116 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 5,252 5,724 15,857 16,499 Charge for exchange of convertible notes 827 - 4,902 - Changes due to (increase) decrease in operating assets: Accounts receivable (34,385) (7,509) (41,595) (11,549) Inventories - net 16,911 11,331 (30,615) (10,455) Prepaid expenses and other assets (1,030) 605 2,904 6,071 Changes due to increase (decrease) in operating liabilities: Accounts payable and other liabilities (8,631) (4,800) 1,346 (7,306) Pension and post-retirement obligations (3,235) 3,295 368 (26,601) Taxes on income and deferred taxes 2,841 1,985 2,879 3,245 Other (645) 2,861 293 7,267 -------- -------- -------- -------- Net cash provided by (used in) operating activities (17,965) 16,152 (38,844) (14,713) -------- -------- -------- -------- INVESTING ACTIVITIES: Proceeds from sale of assets 2,921 1,030 3,060 2,103 Sale of short-term investments - - - 17,568 Repurchase of sale/leaseback assets - - - (21,782) Purchase of property, plant and equipment (2,676) (1,193) (7,912) (4,133) Net advances on discontinued operations - - - (5,045) Other (216) (3,734) (70) (2,854) -------- -------- -------- -------- Net cash provided by (used in) investing activities 29 (3,897) (4,922) (14,143) -------- -------- -------- -------- FINANCING ACTIVITIES: Annual principal payment on 9.35% senior notes (12,025) (12,500) (12,025) (12,500) Long-term borrowings 1,106 - 1,106 - Short-term borrowings 448 - 2,427 - Repayment of other long-term borrowings (445) (435) (1,379) (2,052) Cash collateral for receivable sales program 8,850 8,500 6,351 23,003 Reduction in sales of receivable sales program - - - (20,000) Other (154) 1,055 1,138 1,710 -------- -------- -------- -------- Net cash used in financing activities (2,220) (3,380) (2,382) (9,839) -------- -------- -------- -------- INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (20,156) 8,875 (46,148) (38,695) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 58,592 68,426 84,584 115,996 -------- -------- -------- -------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 38,436 $ 77,301 $ 38,436 $ 77,301 ======== ======== ======== ======== SUPPLEMENTAL INFORMATION: Cash paid during the year for: Interest, net of amount capitalized $ 13,863 $ 14,491 $ 38,974 $ 40,586 Income taxes 94 (111) 360 1,038 Non-cash financing activities: Exchange of 7.75% convertible notes $ (5,614) - $(33,735) - Change in equity due to exchange of 7.75% convertible notes 6,441 - 38,637 - Charge for exchange of convertible notes (827) - (4,902) -
Page 3 ROHR, INC. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (UNAUDITED) The consolidated balance sheet as of April 28, 1996, and statements of earnings and cash flows for the third quarter and nine months ended April 28, 1996, and April 30, 1995, reflect all adjustments (consisting only of normal recurring adjustments) which are, in the opinion of management, necessary for a fair presentation of the results of operations for the interim periods. Financial results for interim periods are not necessarily indicative of results to be expected for the full year. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. These consolidated financial statements should be read in conjunction with the financial statements included in the Form 10-K for the year ended July 31, 1995. Certain reclassifications have been made to prior years to conform to current year presentation. CONTINGENCIES During November 1994 through January 1995, inspection of certain commercial aircraft revealed a cracked spar cap on two wing pylons. The Company has warranted these applications to its customer. Investigation indicates that the wing pylon spar caps, which were sourced, assembled, and supplied by a major subcontractor to the Company, did not receive a required process step. Analysis and testing show that there are no airworthiness or safety of flight concerns with continued aircraft operations. Subsequent fleetwide inspections have revealed no other cracks; however, a replacement program has been implemented. The spar caps will require replacement on approximately 120 aircraft over a period of several years. The wing pylon is warranted to Rohr by its subcontractor and the Company believes that the cost of removing and replacing the spar cap components for the wing pylon, which is expected to approximate $315,000 per aircraft, will be primarily the responsibility of the subcontractor. To date, the subcontractor has borne their costs to furnish materials but has paid only a portion of the costs incurred by the Company. The Company is in negotiations with its subcontractor and believes that it will recover a substantial portion of its own costs under the terms of its subcontractor's contractual warranty and that the resolution of this matter will not have a material adverse effect on the Company's financial condition. In addition, the Company acquired other materials directly from the spar cap materials supplier, a small company with limited financial resources. Some of these materials were not processed to specifications before use in various aircraft applications. The Company has warranted these applications. With respect to these other applications, no failures have been noted to date and the Company and its customers are investigating whether any replacement or repair will be required. Page 4 In June 1987, the U.S. District Court of Los Angeles, in U.S. et al, vs. Stringfellow, granted partial summary judgment against the Company and 14 other defendants on the issue of liability under the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"). This suit alleges that the defendants are jointly and severally liable for all damage in connection with the Stringfellow hazardous waste disposal site in Riverside County, California. In June 1989, a federal jury and a special master appointed by the federal court found the State of California also liable for the cleanup costs. On November 30, 1993, the special master released his "Findings of Fact, Conclusions of Law and Reporting Recommendations of the Special Master Regarding the State Share Fact Finding Hearing." In it, he allocated liability between the State of California and other parties. As this hearing did not involve the valuation of future tasks and responsibilities, the order did not specify dollar amounts of liability. The order, phrased in percentages of liability, recommended allocating liability on the CERCLA claims as follows: 65 percent to the State of California and 10 percent to the Stringfellow entities, leaving 25 percent to the generator/counterclaimants (including the Company) and other users of the site (or a maximum of up to 28 percent depending on the allocation of any Stringfellow entity orphan share). On the state law claims, the special master recommended a 95 percent share for the State of California, and 5 percent for the Stringfellow entities, leaving 0 percent for the generator/counterclaimants. This special master's finding is subject to a final decision and appeal. The Company and the other generators of wastes disposed at the Stringfellow site, which include numerous companies with assets and equity significantly greater than the Company, are jointly and severally liable for the share of cleanup costs for which the generators, as a group, may ultimately be found to be responsible. Notwithstanding, CERCLA liability is sometimes allocated among hazardous waste generators who used a waste disposal site based on the volume of hazardous waste they disposed at the site. The Company is the second largest generator of waste by volume disposed at the site, although it and certain other generators have argued the final allocation of cleanup costs among generators should not be determined solely by volume. The largest volume generator of wastes disposed at the Stringfellow site has indicated it is significantly dependent on insurance to fund its share of any cleanup costs, and that it is in litigation with certain of its insurers. The Company intends to continue to vigorously defend itself in the Stringfellow matter and believes, based upon currently available information, that the ultimate resolution will not have a material adverse effect on the financial position, liquidity, or results of operations of the Company. In January 1996, McDonnell Douglas Corporation announced a change in the method of accounting, which was treated as a change in estimate, for its MD-11 program. Its announcement indicated that such action was taken "in recognition of production rates, existing order base, and length of time required to achieve program deliveries". In light of these changing conditions, the Company is reassessing the market requirements for its products on the MD-11 related programs. This preliminary reassessment indicated that the PW4000 program, which also provides nacelles Page 5 with reversers for the Airbus A300 and A310 aircraft, may not achieve contractual quantities within the specified time period. The PW4000 contract provides that under such circumstances the parties are to negotiate an equitable price adjustment. The Company has asserted a price adjustment and commenced negotiations with its customer. Subsequent to the end of the third quarter, the Company received a Revenue Agent's Report ("RAR") from the Internal Revenue Service in connection with its audit of the Company's federal tax returns for fiscal years 1986 through 1989. The Company is in the process of reviewing the numerous adjustments proposed in the RAR and has not yet determined what the financial impact of the adjustments would be if they were upheld. However, based on its review to date, the Company expects to contest all or substantially all of the proposed adjustments. CONVERTIBLE SUBORDINATED NOTES During the third quarter of fiscal 1996, the Company privately negotiated the exchange of approximately 600,000 shares of the Company's common stock for $5.6 million of its 7.75% Convertible Subordinated Notes due 2004. Through the first nine months of fiscal 1996, the Company exchanged a total of 3.6 million shares of the Company's common stock for $33.7 million of its 7.75% Convertible Subordinated Notes due 2004. The Convertible Subordinated Notes, of which $23.7 million remained outstanding at April 28, 1996, are convertible into shares of common stock at a conversion price of $10.35 per share and are redeemable at the Company's option, beginning in May 1998, at a price of 104.7%, declining to par at maturity. The shares of common stock issued in the exchanges in excess of the shares required for conversion were valued at $0.8 million and $4.9 million for the third quarter and nine months, respectively, which have been expensed. The Company may enter into additional exchange transactions from time to time. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Management's analysis of operating results for the third quarter and nine months ended April 28, 1996 and April 30, 1995 is presented below. Material developments in the Company's liquidity and capital resources since July 31, 1995, are also presented. These discussions should be read in conjunction with the financial statements and Management's Discussion and Analysis thereof included in the Company's Form 10-K for the fiscal year ended July 31, 1995. Page 6 RESULTS OF OPERATIONS Third Quarter Fiscal Year 1996 Compared to Third Quarter Fiscal Year 1995 Sales for the third quarter of fiscal 1996 were $203.7 million, slightly down from $210.8 million in the third quarter of the prior fiscal year. Sales in the third quarter of fiscal 1996, declined due primarily to the near completion of the Company's space program. Operating income for the third quarter of fiscal 1996 was $18.6 million, an operating margin of 9.1 percent, compared to $16.8 million, an operating margin of 8.0 percent, for the same period of the prior fiscal year. Operating income in the third quarter of fiscal 1996 increased compared to the third quarter of fiscal 1995 primarily due to a favorable program mix and improved contract terms on certain programs. Net interest expense was $10.8 million for the third quarter of fiscal 1996 compared to $12.1 million for the third quarter of fiscal 1995. Interest expense declined primarily due to principal payments made in the fourth quarter fiscal year 1995 on the Company's 9.33% and 9.35% Senior Notes and the conversion of the Convertible Subordinated Notes as discussed below. In the third quarter of fiscal 1996, the Company privately negotiated the exchange of approximately 600,000 shares of the Company's common stock for $5.6 million of its 7.75% Convertible Subordinated Notes due 2004. The Convertible Subordinated Notes, of which $23.7 million remained outstanding at April 28, 1996, are convertible into shares of common stock at a conversion price of $10.35 per share and are redeemable at the Company's option, beginning in May 1998 at a price of 104.7%, declining to par at maturity. The shares of common stock issued in the exchange in excess of the shares required for conversion were valued at $0.8 million, which was expensed during the quarter. The value of additional shares of common stock issued represents only a portion of the interest expense the Company would have incurred on the exchanged notes through May 1998, the first date on which the Company could force conversion by calling the notes for redemption. Net income for the third quarter of fiscal 1996 was $4.1 million or 19 cents per share. The charge due to the exchange of the convertible notes reduced net income by $0.5 million or 2 cents per share. During the same period of the prior year, the Company reported net income from continuing operations of $2.6 million or 14 cents per share. Total net income for the third quarter of the prior year, which included $0.1 million of income or 1 cent per share from the discontinuance of the business jet line of business, was $2.7 million or 15 cents per share. Page 7 First Nine-Months Fiscal Year 1996 Compared to First Nine-Months Fiscal Year 1995 Sales declined 14.1 percent to $534.8 million in the first nine months of fiscal 1996, from $622.7 million for the same period of fiscal 1995. Sales for the first nine months of the current year benefited from production deliveries on the MD-90 program. However, in the aggregate, sales declined from the prior year due to changes in engine options selected on certain aircraft and delivery rate reductions on some commercial programs, reflecting reduced deliveries of commercial aircraft throughout the industry. In addition, government sales declined due to the near completion of the Company's space program. For the first nine months of fiscal 1996, operating income was $47.1 million, an operating margin of 8.8 percent, as compared to $50.1 million, an operating margin of 8.0 percent, for the same period of the prior year. Operating income for the first nine months of the current year benefited from improved margins, which increased in part because of improved contract terms on certain programs. However, in the aggregate, operating income declined from the prior year primarily due to the reduction in sales, change in mix of deliveries, and revised market outlook for the PW4000 program. Operating results in the first nine months of fiscal 1995 were negatively impacted by cost problems on the CF6-80E1 program. Net interest expense was $34.1 million for the first nine months of fiscal 1996, compared to $37.7 million for the first nine months of fiscal 1995. The decrease of $3.6 million was due primarily to principal payments made in fiscal year 1995 on the Company's 9.33% and 9.35% Senior Notes and the conversion of the Convertible Subordinated Notes. As discussed above, during the first nine months of fiscal 1996, the Company incurred a charge of $4.9 million resulting from the exchange of 3.6 million shares of the Company's common stock for $33.7 million of its 7.75% convertible subordinated notes due 2004. This exchange improves the Company's debt-to-equity ratio and will reduce future interest payments by approximately $2.6 million annually. Net income for the first nine months of fiscal 1996 was $4.8 million or 24 cents per share. The charge due to the exchange of the convertible notes reduced net income by $2.9 million or 15 cents per share. During the same period of the prior year, the Company reported net income from continuing operations of $7.2 million or 40 cents per share. Total net income for the first nine months of the prior year was $8.1 million or 45 cents per share. This included $0.9 million or 5 cents per share from the discontinuance of its business jet line of business which was completed in fiscal 1995. Page 8 Market conditions have continued to improve for new commercial jet aircraft. The world's airlines have reported solid growth in traffic combined with record-high load factors and strong operating profits. The supply of "parked aircraft" has declined and airframe manufacturers continue to obtain aircraft orders at increased rates. Due to the long lead-time between placement of orders and subsequent aircraft deliveries, the Company expects fiscal 1996 to be the bottom of the commercial jet aircraft production cycle. Predicated upon firm orders, scheduled deliveries and current market projections, the Company expects fiscal 1997 sales to increase more than 15 percent from sales anticipated in fiscal 1996. LIQUIDITY AND CAPITAL RESOURCES At April 28, 1996, the Company had $38.4 million of cash and cash equivalents. In addition, the Company had a $74.5 million revolving credit agreement with no amounts outstanding. The total amount available under the credit agreement is reduced by a $16.9 million letter of credit. The credit agreement will be reduced by $8.3 million in October 1996, and matures in April 1997. The Company has entered into preliminary discussions to replace the existing revolving credit agreement. Over the next several years, the Company expects to increase its investment in program inventory in connection with increased deliveries, pre-production cost on the BR715 program for application on the McDonnell Douglas MD-95 aircraft and other anticipated new business opportunities. The Company believes that its financial resources will be adequate to meet its requirements during this period. Cash used in operating activities for the third quarter of fiscal 1996 was $18.0 million, resulting primarily from an increased level of accounts receivables reflecting a change in program mix and an increased level of sales activities. Net cash used in operating activities for the first nine months of fiscal year 1996 was $38.8 million compared to $14.7 million for the first nine months of the prior fiscal year. Contributing to the use of cash in the first nine months of fiscal 1996 was an increase in production inventory, reflecting the Company's preparation for a scheduled increase in deliveries in future periods, and increased receivables, resulting from a change in program mix and increased sales now being experienced. Contributing to the use of cash in the first nine months of the prior fiscal year was a $36.0 million contribution to the Company's pension plans. Cash flow from operating activities is subject to significant variations from period to period. The Company's total financings (balance sheet debt plus off-balance sheet financings) aggregated $566.1 million at April 28, 1996, compared to $605.6 million at July 31, 1995. This reduction in debt is due primarily to the $33.7 million exchange of the 7.75% Convertible Subordinated Notes and the annual $12.0 million principal payment on the Company's 9.35% Senior Notes made during the third quarter. Page 9 The Company has a $40.0 million receivables sales program. Under this off- balance sheet financing program, the Company sells receivables from specified customers on an on-going basis. Due to the slowdown in the aerospace industry, the amount of outstanding receivables from these customers has fallen below levels required to support the total program. As a result, the Company has elected to deposit cash collateral as necessary to support the program and withdraws such cash when it is no longer required to be deposited. At April 28, 1996, $7.1 million of cash collateral was on deposit. The Company is also a party to certain equipment leases, treated as off-balance sheet financings, totaling $22.4 million at April 28, 1996. The Company's net inventory increased from $390.3 million at July 31, 1995, to $420.9 million at April 28, 1996. This increase is due primarily to an increase in production inventory, reflecting the Company's preparation for a scheduled increase in deliveries during future periods. The Company is in negotiations to sell Rohr Credit Corporation, a wholly owned subsidiary of Rohr, Inc., whose principal assets include beneficial interests in two aircraft, an A300 and a DC10, currently on lease through 2003 and 2004, respectively. These assets are included on Rohr's consolidated balance sheet as "Investment in Leases" in the amount of $33.5 million. Preliminary negotiations indicate that the Company will receive approximately $21 million of cash and a note receivable in excess of $6 million and will retain an interest in the residual value of the aircraft. The sale is expected to result in a pretax book loss of approximately $6 million which may ultimately be recovered at the end of the lease periods through the Company's interest in the residual value of the aircraft. As a result of the slow-down, over the last several years, in the commercial aerospace industry and reductions in the Company's military and space programs, many of the Company's facilities are operating below capacity. The Company is in the process of reviewing its long-range site strategy and assessing the facilities and equipment necessary to meet its future needs. If management concludes that any facilities (such as the incomplete facility in Arkadelphia, Arkansas) or equipment are in excess of the Company's projected needs and that their book value will not be recovered from future activities, then an impairment write-down will be recorded to reduce the assets to their estimated fair value. The Company's firm backlog, which includes the sales price of all undelivered units covered by customers' orders for which the Company has production authorization, was approximately $1.1 billion at April 28, 1996, and $1.0 billion at July 31, 1995. Approximately $0.2 billion of the $1.1 billion backlog is expected to be delivered in the remainder of fiscal 1996. (Sales during any period include sales which were not part of backlog at the end of the prior period.) Customer Page 10 orders in firm backlog are subject to rescheduling and/or termination for customer convenience; however, in certain cases the Company is entitled to an equitable adjustment in contract amounts. The Company has an additional $2.7 billion in anticipated backlog, which represents the sales price of units which the Company expects that its customers will order under existing contracts and the Company will deliver within seven years. Page 11 PART II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) Index to Exhibits: *11.1 Calculation of Primary Net Income Per Share of Common Stock. *11.2 Calculation of Fully Diluted Net Income Per Share of Common Stock. *27. Financial Data Schedule (Filed with EDGAR filing only.) (b) Reports on Form 8-K: There were no reports on Form 8-K during this period. (c) Exhibits required by Item 601 of Regulation S-K: See subparagraph (a) above. (d) Financial Statements required by Regulation S-X: See subparagraphs (a) and (b) above. ___________________________ *Exhibits filed with this report. Page 12 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. ROHR, INC. May 31, 1996 By: /s/ L. A. CHAPMAN --------------------------- L. A. Chapman Senior Vice President and Chief Financial Officer May 31, 1996 By: /s/ A. L. MAJORS --------------------------- A. L. Majors Vice President and Controller (Chief Accounting Officer) Page 13 EX-11.1 2 CALCULATION OF NET INCOME PER SHARE/COMMON STOCK EXHIBIT 11.1 ROHR, INC. AND SUBSIDIARIES --------------------------- CALCULATION OF PRIMARY NET INCOME PER SHARE ------------------------------------------- OF COMMON STOCK --------------- (in thousands except for earnings per share data) -------------------------------------------------
THIRD QUARTER ENDED NINE MONTHS ENDED --------------------- --------------------- APRIL 28, APRIL 30, APRIL 28, APRIL 30, 1996 1995 1996 1995 --------- --------- --------- --------- Net income from continuing operations $ 4,130 $ 2,573 $ 4,817 $ 7,194 Income from discontinued operations - net of taxes - 87 - 922 ------- ------- ------- ------- Net income applicable to primary earnings per common share $ 4,130 $ 2,660 $ 4,817 $ 8,116 ======= ======= ======= ======= Common stock and common stock equivalents: Average shares of common stock outstanding during the period 21,635 18,057 19,560 18,054 Net effect of common stock equivalents (principally stock options and rights) 677 141 608 87 ------- ------- ------- ------- Total common stock and common stock equivalents 22,312 18,198 20,168 18,141 ======= ====== ====== ======= Net income per average share of common stock: Net income from continuing operations $ 0.19 $ 0.14 $ 0.24 $ 0.40 Income from discontinued operations - net of taxes - 0.01 - 0.05 ------- ------- ------- ------- Primary net income per share $ 0.19 $ 0.15 $ 0.24 $ 0.45 ======= ======= ======= =======
Page 14 EX-11.2 3 CALCULATION DILUTED NET INCOME/SHARE COMMON STOCK EXHIBIT 11.2 ROHR, INC. AND SUBSIDIARIES --------------------------- CALCULATION OF FULLY DILUTED NET INCOME PER SHARE ------------------------------------------------- OF COMMON STOCK - UNAUDITED --------------------------- (in thousands except for earnings per share data) -------------------------------------------------
THIRD QUARTER ENDED NINE MONTHS ENDED --------------------- --------------------- APRIL 28, APRIL 30, APRIL 28, APRIL 30, 1996 1995 1996 1995 --------- --------- --------- --------- Net income from continuing operations applicable to primary earnings per common share $ 4,130 $ 2,573 $ 4,817 $ 7,194 Add back interest and issue expense on convertible debentures and notes - net of tax adjustment 283 677 1,561 2,035 ------- ------- ------- ------- Adjusted income from continuing operations applicable to common stock on a fully diluted basis 4,413 3,250 6,378 9,229 Income from discontinued operations - net of taxes - 87 - 922 ------- ------- ------- ------- Net income applicable to fully diluted earnings per share $ 4,413 $ 3,337 $ 6,378 $10,151 ======= ======= ======= ======= Average number of shares outstanding on a fully diluted basis: Shares used in calculating primary earnings per share 22,312 18,198 20,168 18,141 Unexercised options 24 64 92 118 Shares issuable on conversion of debentures and notes 2,291 5,555 2,291 5,555 ------- ------- ------- ------- Average number of shares outstanding on a fully diluted basis 24,627 23,817 22,551 23,814 ======= ======= ======= ======= Fully diluted net income per share from continuing operations $ 0.18 $ 0.14 $ 0.28 $ 0.39 Income from discontinued operations - net of taxes - - - 0.04 ------- ------- ------- ------- Fully diluted net income per average common share $ 0.18 $ 0.14 $ 0.28 $ 0.43 ======= ======= ======= =======
Note: Fully diluted net income per average common share is not presented in the Company's Consolidated Statements of Operations for the nine months period ending April 28, 1996, as the effect of the assumed conversion of the Company's convertible debentures and notes was anti-dilutive. Page 15 EX-27 4 FINANCIAL DATA SCHEDULE - ARTICLE 5
5 THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE SHEET AND INCOME STATEMENT AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 9-MOS JUL-31-1996 APR-28-1996 38,436 0 107,396 0 420,890 583,906 524,348 (318,527) 980,623 187,091 485,967 21,819 0 0 198,250 980,623 0 534,813 0 468,414 24,213 0 34,130 8,056 3,239 4,817 0 0 0 4,817 0.24 0.24
-----END PRIVACY-ENHANCED MESSAGE-----