-----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, LUe9Ro4TMLfIZcMPiVthBPMPHxxTZdPf81LLOpOgdB84NSHbNgfHCmrDvgoCH3JV 67uJ2dfpWho8/0MJ7MZe7Q== 0001017062-97-000313.txt : 19970227 0001017062-97-000313.hdr.sgml : 19970227 ACCESSION NUMBER: 0001017062-97-000313 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19970202 FILED AS OF DATE: 19970226 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: 97544432 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 FOR PERIOD ENDED 02-02-97 FY97: SECOND 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 February 2, 1997 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 February 21, 1997, there were 25,294,672 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) ------------------------------------
FEB. 2, JULY 31, 1997 1996 ----------- ----------- ASSETS (UNAUDITED) - ------ Cash and cash equivalents $ 64,697 $ 88,403 Short-term investments 12,911 - Accounts receivable 134,915 129,523 Inventories: Work-in-process 426,148 423,312 Raw materials, purchased parts and supplies 29,488 26,220 Less customers' progress payments and advances (49,021) (67,165) ---------- ---------- Inventories - net 406,615 382,367 Prepaid expenses and other current assets 9,607 14,587 ---------- ---------- TOTAL CURRENT ASSETS 628,745 614,880 PROPERTY, PLANT, AND EQUIPMENT - NET 190,608 196,052 DEFERRED TAX ASSET 139,095 156,863 PREPAID PENSION COSTS 85,261 - OTHER ASSETS 36,673 64,742 ---------- ---------- $1,080,382 $1,032,537 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY - ------------------------------------ Trade accounts and other payables $ 151,491 $ 125,974 Salaries, wages, and benefits 33,865 44,094 Deferred income tax liability 56,250 56,250 Short-term debt and current portion of long-term debt 22,284 25,962 ---------- ---------- TOTAL CURRENT LIABILITIES 263,890 252,280 LONG-TERM DEBT 460,524 481,481 PENSION AND POST-RETIREMENT OBLIGATIONS - LONG-TERM 18,727 46,096 OTHER OBLIGATIONS 17,284 17,503 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 25,294,694 and 22,329,793 shares, respectively 25,295 22,330 Additional paid-in capital 189,799 142,656 Retained earnings 104,863 96,622 Minimum pension liability adjustment - (26,431) ---------- ---------- TOTAL SHAREHOLDERS' EQUITY 319,957 235,177 ---------- ---------- $ 1,080,382 $1,032,537 =========== ==========
Page 1 ROHR, INC. AND SUBSIDIARIES --------------------------- CONSOLIDATED STATEMENTS OF EARNINGS - UNAUDITED ----------------------------------------------- (in thousands except for per share data) ----------------------------------------
SECOND QUARTER ENDED SIX MONTHS ENDED -------------------- ------------------- FEB. 2, JAN. 28, FEB. 2, JAN. 28, 1997 1996 1997 1996 --------- -------- -------- -------- Sales $213,274 $180,702 $415,179 $331,102 Costs and Expenses 188,700 159,071 367,054 290,604 General & Administrative Expenses 6,352 5,247 13,799 11,975 -------- -------- -------- -------- Operating Income 18,222 16,384 34,326 28,523 Interest Income 1,155 608 2,613 1,660 Interest Expense 11,212 12,574 23,158 24,960 Charge for Exchange of Convertible Notes - 4,075 - 4,075 -------- -------- -------- -------- Income before Taxes on Income 8,165 343 13,781 1,148 Taxes on Income 3,282 138 5,540 461 -------- -------- -------- -------- Net Income $ 4,883 $ 205 $ 8,241 $ 687 ======== ======== ======== ======== Primary Net Income per Share $0.19 $0.01 $0.33 $0.04 ======== ======== ======== ======== Cash Dividends per Share of Common Stock $ - $ - $ - $ - ======== ======== ======== ======== Weighted Average Common Stock and Common Stock Equivalents Used to Compute Net Income Per Share 26,201 19,492 24,788 19,090 ======== ======== ======== ========
Page 2 ROHR, INC. AND SUBSIDIARIES --------------------------- CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED ------------------------------------------------- (in thousands) --------------
SECOND QUARTER ENDED SIX MONTHS ENDED ---------------------- --------------------- FEB. 2, JAN. 28, FEB. 2, JAN. 28, 1997 1996 1997 1996 --------- ---------- --------- --------- OPERATING ACTIVITIES: Net income $ 4,883 $ 205 $ 8,241 $ 687 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 5,284 5,279 10,349 10,605 Charge for exchange of convertible notes - 4,075 - 4,075 Changes due to (increase) decrease in operating assets: Accounts receivable (1,926) 9,746 (25,534) (7,210) Inventories - net 5,638 (3,551) (24,248) (47,526) Prepaid expenses and other assets 2,423 1,508 5,273 3,934 Changes due to increase (decrease) in operating liabilities: Accounts payable and other liabilities 2,861 (6,599) 22,135 9,977 Pension and post-retirement obligations 508 1,797 (1,603) 3,603 Taxes on income and deferred taxes 2,815 24 5,091 38 Other (141) 1,083 (673) 938 -------- -------- -------- -------- Net cash provided by (used in) operating activities 22,345 13,567 (969) (20,879) -------- -------- -------- -------- INVESTING ACTIVITIES: Net purchase of short-term investments 2 - (12,911) - Purchase of property, plant and equipment (4,028) (2,750) (7,371) (5,236) Proceeds from sale of RCC - - 20,142 - Other 1,991 1,105 2,328 285 -------- -------- -------- -------- Net cash provided by (used in) investing activities (2,035) (1,645) 2,188 (4,951) -------- -------- -------- -------- FINANCING ACTIVITIES: Annual principal payment of 9.35% Senior Notes (12,025) - (12,025) - Annual principal payment of 9.33% Senior Notes (8,850) - (8,850) - Increase (decrease) in short-term debt (950) 1,979 (3,615) 1,979 Increase (decrease) in other long-term borrowings 229 (593) (85) (934) Cash collateral for receivable sales program 10,000 (4,499) - (2,499) Other (1,437) 918 (350) 1,292 -------- -------- -------- -------- Net cash used in financing activities (13,033) (2,195) (24,925) (162) -------- -------- -------- -------- INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 7,277 9,727 (23,706) (25,992) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 57,420 48,865 88,403 84,584 -------- -------- -------- -------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 64,697 $ 58,592 $ 64,697 $ 58,592 ======== ======== ======== ======== SUPPLEMENTAL INFORMATION: Cash paid for interest, net of amount capitalized $ 8,509 $ 11,226 $ 22,731 $ 25,111 Cash paid for income taxes 445 93 482 266 Non-cash financing activities: Exchange of 7.75% convertible notes - (28,066) - (28,121) Change in equity due to exchange of 7.75% convertible notes - 32,141 - 32,196 Charge for exchange of convertible notes - (4,075) - (4,075) Rohr common stock contribution to defined benefit plans - - 48,000 -
Page 3 ROHR, INC. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (UNAUDITED) The consolidated balance sheet as of February 2, 1997, and statements of earnings and cash flows for the second quarter and six months ended February 2, 1997, and January 28, 1996, 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, 1996. CONTINGENCIES 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 Page 4 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. From inception to date, the Company has expended approximately $3.8 million on clean-up costs for this site. The Company also estimates that its future clean-up expenditures for this site are likely to range from $5 million to $8 million over and above the sums spent to date, as explained in greater detail in the Company's Annual Report on Form 10-K for fiscal 1996 in "Management's Discussion and Analysis of Financial Condition and Results of Analysis -- Environmental Matters." The Company intends to continue to vigorously defend itself in the Stringfellow matter. Based upon the information currently available to it, including the fact that the Company has reached settlement agreements with its primary comprehensive general liability insurers with respect to this matter and has established reserves in connection with its expected future clean-up liabilities, the Company believes that the ultimate resolution of this matter will not have a material adverse effect on the financial position, liquidity or results of operations of the Company. The Company is involved as plaintiff or defendant in various other legal and regulatory actions and inquiries incident to its business, none of which are believed by management to have a material adverse effect on the financial position, liquidity or results of operations of the Company. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Management's analysis of operating results for the second quarter and six months ended February 2, 1997, and January 28, 1996, is presented below. Material developments in the Company's liquidity and capital resources since July 31, 1996, are also presented. These discussions should be read in conjunction with the financial statements and notes thereto and Management's Discussion and Analysis thereof included in the Company's Annual Report on Form 10-K for the fiscal year ended July 31, 1996. OUTLOOK As a result of the growth in air travel and the need to replace aging aircraft, the demand for new commercial aircraft has been increasing. The increased load factor of commercial aircraft, stable fare structures, and aggressive cost reduction measures have substantially improved airline Page 5 profitability. Airline operators have responded by ordering large quantities of new commercial aircraft. Industry orders for new commercial jet aircraft in calendar year 1996 were 1,115 compared to 679 and 321 in calendar years 1995 and 1994, respectively. Industry analysts continue to predict a potentially large replacement market for commercial aircraft driven by noise legislation and the need to replace aging fleets. In December 1996, The Boeing Company and McDonnell Douglas Corporation announced their intent to merge. Boeing produces aircraft which compete with models produced by McDonnell Douglas. Although Boeing and McDonnell Douglas have said that they will continue to produce McDonnell Douglas aircraft in response to customer demand, aerospace analysts differ as to the anticipated effect of the proposed merger on the future production of these McDonnell Douglas aircraft. Approximately 25 percent of the Company's products, by revenue, are manufactured for installation on the McDonnell Douglas MD-80, MD-90, MD-95 (in development) and MD-11 aircraft programs. For the MD-90 program, the Company's investment recovery is over program deliveries. The Company's unrecovered investment on this program, at February 2, 1997, was $80.4 million in inventoried preproduction and excess-over-average costs, and $16.8 million in production inventory. Through February 2, 1997, 40 MD-90 aircraft were delivered. Industry sources indicate that firm orders exist for 105 aircraft, and options and/or letters of intent exist for an additional 104 aircraft. In light of recent order activity for the MD-90 aircraft as compared to that of competitive aircraft and the anticipated merger of McDonnell Douglas and Boeing, several aerospace analysts are less than optimistic relative to the future of this aircraft. At present, the Company has delivered or has firm orders for components to be installed on 91 MD-90 aircraft. Assuming these orders were delivered but no further orders were obtained, the Company estimates that it could incur a pre- tax loss approximating $80 million, which includes investments then remaining in preproduction and excess-over-average inventory and other potential obligations related to the program. If the Company's ultimate deliveries support all the firm orders, options and letters of intent that McDonnell Douglas has received (249 aircraft in total), the Company anticipates that it would recover all of its program costs and not incur a loss. In view of the uncertainty as to the number of aircraft which may be delivered, the Company decided, during the second quarter of fiscal 1997, to discontinue the recognition of profits on the Page 6 MD-90 program. As a result, the Company anticipates that its operating margin for fiscal 1997 may be less than the 9 percent operating margin, before unusual items, it reported for fiscal 1996 and had anticipated it would achieve in the current fiscal year. The McDonnell Douglas MD-95 program is a new 100 passenger aircraft currently under development. The Company invested $26 million for design and development costs on the MD-95 program through February 2, 1997. The Company anticipates spending an additional $50 million for preproduction costs through mid 1999, the aircraft's scheduled FAA certification date. If the program is canceled prior to FAA certification, the Company expects substantial recovery of these costs. If the aircraft is certified, the amount of these costs and initial production start-up costs recovered by the Company will depend upon the number of aircraft delivered. To date, there are 50 firm orders and 50 options from the launch customer, ValuJet. The McDonnell Douglas MD-11 program, on which the Company provides pylons and nacelles, and the MD-80 program, on which the Company provides nacelles, have been in production for several years. The Company has previously recovered its initial investment on these programs. As a result of the maturity of these programs and existing contractual provisions, the Company does not expect to incur any losses in the event of a reduction in program quantity. The Company produces nacelles and/or components for many aircraft that compete with the MD-90 and MD-95, which could lessen the impact in the long term from reduced sales on these programs. FOWARD-LOOKING INFORMATION IS SUBJECT TO RISK AND UNCERTAINTY This document contains forward looking statements, as defined in the Private Securities Litigation Reform Act of 1995, that involve risk and uncertainty. The aggregate operating results that the Company will experience on the MD-90 program may differ from those projected in the forward looking statements if the timing of the Company's sales on that program occur at a substantially different rate than currently estimated by the Company, if the Company's manufacturing performance on that program fails to improve in accordance with the learning curves currently projected by the Company, if the Company fails to resolve contractual items with its customer and suppliers as currently anticipated, if spare sales on this program are substantially different than currently projected by the Company, or if one or more suppliers to the Company on that program fail to meet their contractual obligations. The additional preproduction investment that the Company will make on the MD-95 program may differ from that projected in the forward looking statements if the cost of MD-95 product and tooling design, tooling manufacturing and production planning exceeds the Company's estimates. RESULTS OF OPERATIONS Second Quarter Fiscal Year 1997 Compared to Second Quarter Fiscal Year 1996 Sales for the second quarter of fiscal 1997 were $213.3 million, up 18 percent from the $180.7 million reported for the second quarter of fiscal 1996. The increased sales resulted primarily from increased deliveries on a number of commercial programs, reflecting increased customer delivery schedules. The Company's operating income for the second quarter of fiscal 1997 was $18.2 million, an operating margin of 8.5 percent. Operating income for the same period of the prior fiscal year was $16.4 million, an operating margin of 9.1 percent. Operating income has improved due to the increase in sales. However, operating margins declined compared to the second quarter of Page 7 the prior fiscal year primarily as a result of discontinuing the recognition of program profit on the MD-90 program due to market uncertainties as discussed in the "Outlook" section. Historically, operating results for any period have included the resolution of various program issues, the amount of which can vary from period to period. The second quarter of fiscal 1997 benefited from the recognition of favorable warranty experience on one program and the resolution of open contractual issues on the Titan program. Deliveries were completed on the Titan program during the prior fiscal year. General and administrative expenses increased as a result of higher expenditures for research and development, bid and proposal and salaries and wages. Net interest expense was $10.1 million for the second quarter of fiscal 1997 compared to $12.0 million for the same period of the prior fiscal year. Interest income increased reflecting higher levels of invested funds, while interest expense declined primarily as a result of reduced debt levels. During the second quarter of the prior fiscal year, the Company negotiated the exchange of 3.0 million shares of the Company's common stock for $28.1 million of its 7.75% Convertible Subordinated Notes due 2004. The shares of common stock issued in the exchange in excess of the shares required for conversion were valued at $4.1 million, which was expensed during the second quarter of the prior year. Net income for the second quarter of fiscal 1997 was $4.9 million or 19 cents per share. This compares to net income of $0.2 million or 1 cent per share for the second quarter of the prior fiscal year. The charge due to the exchange of the convertible notes, as discussed above, reduced net income by $2.4 million or 13 cents per share in the second quarter of the prior fiscal year. FIRST SIX-MONTHS OF FISCAL 1997 COMPARED TO FIRST SIX-MONTHS OF FISCAL 1996 In the first six-months of fiscal 1997 sales increased to $415.2 million, up 25 percent from the $331.1 million reported for the first six-months of fiscal 1996. The increase in sales resulted from increased deliveries on a number of commercial programs, particularly the Airbus Industrie A340 and the McDonnell Douglas MD-90 programs. Operating income for the first six-months of fiscal 1997 was $34.3 million, an operating margin of 8.3 percent. Operating income for the same period of the prior year was $28.5 million, an operating margin of 8.6 percent. Although operating income increased due to an increase in deliveries, operating margin declined primarily as a result of discontinuing the recognition of program profit on the MD-90 program due to market uncertainties as discussed in the "Outlook" section. Historically, operating results for any period have included the resolution of various Page 8 program issues, the amount of which can vary from period to period. The first six-months of fiscal 1997 benefited from the recognition of favorable warranty experience on one program and the resolution of open contractual issues on the Titan program. General and administrative expenses increased as a result of higher expenditures for internal research and development, bid and proposal and salaries and wages. Net Interest expense declined from $23.3 million in the first six-months of fiscal 1996 to $20.5 million in the first six-months of this fiscal year. Interest income increased due to higher levels of invested funds, while interest expense declined primarily as a result of reduced debt levels. As discussed above, during the second quarter of the prior fiscal year, the Company incurred a charge of $4.1 million resulting from the exchange of 3.0 million shares of the Company's stock for $28.1 million of its 7.75% convertible subordinated notes due 2004. Net income for the first six-months of fiscal 1997 was $8.2 million or 33 cents per share. During the same period of the prior year, the Company reported net income of $0.7 million or 4 cents per share. The charge due to the exchange of the convertible notes reduced net income by $2.4 million or 13 cents per share in the first six months of the prior fiscal year. LIQUIDITY AND CAPITAL RESOURCES On February 2, 1997, the Company had $77.6 million of cash, cash equivalents, and short term investments. In addition, the Company had a $66.2 million revolving credit agreement with no amounts outstanding. The Company is continuing its discussions with banks to replace the existing revolving credit agreement, which may not be completed prior to the maturity of the existing agreement in April 1997. The Company expects to obtain a satisfactory credit agreement in advance of any need for funds from such an agreement. Over the next several years, the Company expects to increase its investment in production inventory in connection with increased deliveries on existing programs. The Company continues to seek business opportunities which would require future investments. The Company believes that its financial resources will be adequate to meet such requirements during this period. Net cash provided by operating activities for the second quarter of fiscal year 1997 was $22.3 million compared to $13.6 million for the second quarter of the prior fiscal year. Net cash used in operating activities for the first six- months of fiscal 1997 was $1.0 million compared to $20.9 million for the same period of the prior fiscal year. Contributing to the use of cash in the first six-months of fiscal 1997 was an increase in inventory and receivables, offset by an increase in accounts payable. Net cash provided by operations is subject to significant variations from period to period. Page 9 Contributing to cash flow from investing activities in the first six-months of fiscal 1997 was the collection of a note receivable of $20.1 million from the sale of Rohr Credit Corporation, which was completed in the fourth quarter of fiscal 1996. Cash of $12.9 million was used in investing activities for the purchase of short-term investments. The Company's total financings were $543.3 million on February 2, 1997, compared to $569.2 million on July 31, 1996. Total financings decreased due to the principle payments made during the second quarter of 1997 of $12.0 million on the 9.35% Senior Notes and $8.9 million on the 9.33% Senior Notes. Total financings include balance sheet debt, a $40.0 million ongoing accounts receivable sales program and $20.5 million of equipment leases. Accounts receivable increased from $129.5 million on July 31, 1996, to $134.9 million on February 2, 1997. This increase is due primarily to a change in customer mix and the timing of payments from customers. The Company's net inventory increased from $382.4 million on July 31, 1996, to $406.6 million on February 2, 1997. The inventory increase is primarily due to a build-up of production inventory in anticipation of higher deliveries, an increase in preproduction investment on the MD-95 program, and the reduction of advances from customers. On October 31, 1996, the Company completed the previously announced contribution of Company common stock valued at $48.0 million to its primary pension plans. This contribution resulted in the Company's primary pension plans achieving a fully funded status predicated upon the May 1, 1996, valuation of its pension obligations. This contribution, which is reflected as a prepaid asset, allowed the Company to reverse the liability and deferred asset related to the underfunded position, and to eliminate the $26.4 million charge to shareholders' equity, net of the tax benefit of $17.8 million. In addition to the stock contribution, the Company also made a cash contribution of $3.9 million during the first quarter of fiscal 1997. The pension plans' funded status is primarily impacted by discount rates (adjusted annually to reflect then prevailing market interest rates), market performance of plan assets, the granting of additional benefits, changes in actuarial assumptions, including mortality assumptions, and funding made by the Company during the year. The Company's contribution of stock to its pension plans increased shareholders' equity by $73.9 million, net of the anticipated registration cost. This resulted in an improvement to the Company's debt-to-equity ratio to 1.5 to 1 on February 2, 1997, down from 2.2 to 1 on July 31, 1996. This improved ratio enhances the Company's ability to negotiate a new bank credit agreement (currently in process) under more favorable terms. In addition, the stock contribution Page 10 will improve the Company's future liquidity by reducing future cash funding requirements and also by reducing the benefit plans' annual expense due to the expected return on the increased assets and reduced future Pension Benefit Guarantee Corporation insurance premiums. Capital expenditures for property, plant and equipment is projected to approximate $15 million for fiscal 1997 and will be financed by internally generated cash flow. 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 $1.4 billion and $1.2 billion on February 2, 1997, and July 31, 1996, respectively. Approximately $440 million of the $1.2 billion backlog is expected to be delivered in the remainder of fiscal 1997. (Sales during any period include sales which were not part of backlog at the end of the prior period.) Customer 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. Page 11 PART II. OTHER INFORMATION ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The Company held its Annual Meeting of Shareholders on Saturday, December 7, 1996, at the offices of the Company in Chula Vista, California. Of the 22,411,124 shares eligible to vote at the meeting, 19,057,390 shares were represented. Messrs. Iacobellis, Rau, Sommers, and Wilson were elected as Directors for three-year terms expiring at the Annual Meeting in 1999. For Mr. Iacobellis, 18,979,747 shares were voted in favor and 77,643 were withheld; for Mr. Rau, 18,980,918 shares were voted in favor and 76,472 shares were withheld; for Dr. Sommers, 18,980,019 shares were voted in favor and 77,371 shares were withheld; and for Mr. Wilson, 18,979,959 shares were voted in favor and 77,431 shares were withheld. Directors whose terms of office as Directors continued after the meeting included Messrs. Price, Marafino, Barnes, Covert, and Moore. Dr. Steele, having reached the mandatory retirement age for Directors, retired at the conclusion of the Annual Meeting. At a meeting of the Board of Directors held immediately following the Annual Meeting, the Directors by resolution reduced the number of Directors from 10 to 9. The Shareholders also approved the selection of Deloitte & Touche LLP as the Company's auditors for fiscal 1997. The selection of Deloitte & Touche LLP received 19,017,656 affirmative votes, 23,392 negative votes, and 16,342 abstentions. Page 12 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. ___________________________ *Exhibits filed with this report. Page 13 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. February 26, 1997 By: /S/ L. A. CHAPMAN ----------------------------- L. A. Chapman Senior Vice President and Chief Financial Officer February 26, 1997 By: /S/ A. L. MAJORS ----------------------------- A. L. Majors Vice President and Controller (Chief Accounting Officer) Page 14 EX-11.1 2 CALCULATION OF PRIMARY NET INCOME PER SHARE 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) -------------------------------------------------
SECOND QUARTER ENDED SIX MONTHS ENDED -------------------- ------------------ FEB. 2, JAN. 28, FEB. 2, JAN. 28, 1997 1996 1997 1996 -------- --------- ------- -------- Net income applicable to primary earnings per common share $ 4,883 $ 205 $ 8,241 $ 687 ======= ======= ======= ======= Common stock and common stock equivalents: Average shares of common stock outstanding during the period 25,285 18,934 23,863 18,516 Net effect of common stock equivalents (principally stock options and rights) 916 558 925 574 ------- ------- ------- ------- Total common stock and common stock equivalents 26,201 19,492 24,788 19,090 ======= ======= ======= ======= Primary net income per average common share $ 0.19 $ 0.01 $ 0.33 $ 0.04 ======= ======= ======= =======
EX-11.2 3 CALCULATION OF FULLY DILUTED NET INCOME PER SHARE 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) -------------------------------------------------
SECOND QUARTER ENDED SIX MONTHS ENDED -------------------- ------------------ FEB. 2, JAN. 28, FEB. 2, JAN. 28, 1997 1996 1997 1996 -------- --------- ------- -------- Net income applicable to primary earnings per common share $ 4,883 $ 205 $ 8,241 $ 687 Add back interest and issue expense on convertible notes - net of tax adjustment 238 588 489 1,278 ------- ------- ------- ------- Net income applicable to fully diluted earnings per share $ 5,121 $ 793 $ 8,730 $ 1,965 ======= ======= ======= ======= Average number of shares outstanding on a fully diluted basis: Shares used in calculating primary earnings per share 26,201 19,492 24,788 19,090 Unexercised options 116 145 107 129 Shares issuable on conversion of notes 1,905 2,838 1,905 2,838 ------- ------- ------- ------- Average number of shares outstanding on a fully diluted basis 28,222 22,475 26,800 22,057 ======= ======= ======= ======= Fully diluted net income per average common share $0.18 $0.04 $0.33 $0.09 ======= ======= ======= =======
Note: Fully diluted net income per average common share is not presented in the Company's Consolidated Statements of Operations for the three-months and six- months periods ending February 2, 1997 and January 28, 1996, as the effect of the assumed conversion of the Company's convertible notes was less than 3 percent dilutive or anti-dilutive. EX-27 4 FINANCIAL DATA SCHEDULE
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 6-MOS JUL-31-1997 FEB-02-1997 64,697 12,911 134,915 0 406,615 628,745 520,188 (329,580) 1,080,382 263,890 460,524 25,295 0 0 294,662 1,080,382 0 415,179 0 367,054 13,799 0 20,545 13,781 5,540 8,241 0 0 0 8,241 0.33 0.33
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