UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark one)
(X) Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended March 29, 1998
or
( ) Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from __________________ to __________________
Commission file number: 1-7568
COLTEC INDUSTRIES INC
(Exact name of registrant as specified in its charter)
PENNSYLVANIA 13-1846375
(State or other jurisdiction of incorporation (IRS Employer
or organization) Identification No.)
3 Coliseum Centre
2550 West Tyvola Road
Charlotte, North Carolina 28217
(Address of principal executive offices) (Zip code)
(704)423-7000
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Sections 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes (X) No ( )
________________________________________
On May 1, 1998, there were outstanding 65,965,154 shares of common stock,
par value $.01 per share.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
COLTEC INDUSTRIES INC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(in thousands, except per share data)
Three Months Ended
March 29, March 30,
1998 1997
Net sales $ 374,441 $ 309,172
Cost of sales 260,148 211,675
Gross profit 114,293 97,497
Selling and administrative 60,999 52,569
Operating income 53,294 44,928
Interest expense and other, net 15,080 12,364
Earnings before income taxes 38,214 32,564
Income taxes 12,993 11,072
Net earnings $ 25,221 $ 21,492
Basic earnings per common share $ .38 $ .32
Basic weighted-average common shares 65,881 66,786
Diluted earnings per common share $ .38 $ .32
Diluted weighted-average common
and common equivalent shares 67,137 67,731
See notes to consolidated financial statements.
COLTEC INDUSTRIES INC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands)
March 29, Dec. 31,
1998 1997
ASSETS
Current assets:
Cash and cash equivalents $ 21,075 $ 14,693
Accounts and notes receivable, net of
allowance of $4,319 in 1998 and $2,894 in 1997 151,935 120,311
Inventories
Finished goods 49,506 53,748
Work in process and finished parts 179,678 158,937
Raw materials and supplies 43,978 44,051
273,162 256,736
Deferred income taxes 17,171 15,195
Other current assets 17,412 20,508
Total current assets 480,755 427,443
Property, plant and equipment, net 304,271 287,619
Costs in excess of net assets acquired, net 210,528 157,751
Other assets 80,527 60,221
$1,076,081 $933,034
See notes to consolidated financial statements.
COLTEC INDUSTRIES INC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
March 29, Dec. 31,
1998 1997
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 4,184 $ 1,811
Accounts payable 99,124 93,799
Accrued expenses 144,012 138,969
Current portion of liabilities of
discontinued operations 4,999 4,999
Total current liabilities 252,317 239,578
Long-term debt 855,854 757,578
Deferred income taxes 87,221 79,229
Other liabilities 64,260 60,892
Liabilities of discontinued operations 151,657 154,918
Commitments and contingencies - -
Shareholders' equity:
Preferred stock, $.01 par value,
2,500,000 shares authorized,
shares outstanding - none - -
Common stock, $.01 par value,
100,000,000 shares authorized, 70,517,363 and
70,501,948 shares issued at March 29, 1998
and December 31, 1997, respectively (excluding
25,000,000 shares held by a wholly owned
subsidiary) 705 705
Capital surplus 641,815 642,828
Retained deficit (886,808) (912,029)
Unearned compensation (2,699) (2,721)
Minimum pension liability (1,646) (1,646)
Foreign currency translation adjustments (9,150) (6,745)
(257,783) (279,608)
Less cost of 4,542,709 and 4,666,406 shares
of common stock in treasury at
March 29, 1998 and December 31, 1997,
respectively (77,445) (79,553)
(335,228) (359,161)
$1,076,081 $933,034
See notes to consolidated financial statements.
COLTEC INDUSTRIES INC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Three Months Ended
March 29, March 30,
1998 1997
Cash flows from operating activities:
Net earnings $ 25,221 $ 21,492
Adjustments to reconcile net earnings to cash
provided by operating activities:
Depreciation and amortization 12,416 8,511
Deferred income taxes 6,016 5,536
Payments of liabilities of discontinued
operations (3,261) (10,750)
Other operating items (1,525) (10,321)
Changes in assets and liabilities:
Accounts and notes receivable (18,969) (5,040)
Inventories (9,184) (6,339)
Other current assets 3,748 (3,700)
Accounts payable 178 12,995
Accrued expenses (176) 56
Accrued pension liability (4,359) 288
Cash provided by operating activities 10,105 12,728
Cash flows from investing activities:
Capital expenditures (15,005) (13,554)
Acquisition of businesses (81,312) -
Cash used in investing activities (96,317) (13,554)
Cash flows from financing activities:
Increase in revolving facility, net 110,500 14,000
Purchase of treasury stock - (17,419)
Repayment of long-term debt (14,035) (2,971)
Payments for unclaimed stock (3,871) -
Cash provided by (used in) financing activities 92,594 (6,390)
Increase (decrease) in cash and cash equivalents 6,382 (7,216)
Cash and cash equivalents - beginning of period 14,693 15,029
Cash and cash equivalents - end of period $ 21,075 $ 7,813
Supplemental cash flow data:
Cash paid for interest $ 12,409 $ 11,024
Cash paid (refunded) for income taxes 4,990 (11,140)
See notes to consolidated financial statements.
COLTEC INDUSTRIES INC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)
Three Months Ended
March 29, March 30,
1998 1997
Net earnings $ 25,221 $ 21,492
Other comprehensive income/(loss), net of tax:
Foreign currency translation adjustments (2,405) (1,100)
Unearned compensation 22 (692)
Other comprehensive income/(loss), net of tax (2,383) (1,792)
Comprehensive income $22,838 $19,700
See notes to consolidated financial statements.
COLTEC INDUSTRIES INC AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(dollars in thousands)
1. SUMMARY OF ACCOUNTING POLICIES
Financial Information: The unaudited consolidated financial statements included
herein reflect in the opinion of management of Coltec Industries Inc (the
Company) all normal recurring adjustments necessary to present fairly the
consolidated financial position and results of operations for the periods
indicated. The unaudited consolidated financial statements have been prepared
in accordance with the instructions to Form 10-Q and do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. The Consolidated Balance Sheet as of
December 31, 1997 has been extracted from the audited consolidated financial
statements as of that date. For further information, refer to the consolidated
financial statements and footnotes included in the Company's annual report to
shareholders for the year ended December 31, 1997.
2. ACQUISITIONS
On January 30, 1998, the Company acquired certain Marine and Petroleum Mfg.
Inc.'s manufacturing facilities based in Texas for approximately $17,000. The
plants acquired produce flexible graphite and polytetrafluoroethylene (PTFE)
fluid sealing products used in the petrochemical industry. Combined annual
sales for these facilities are expected to approximate $18,000. The Company
also acquired Tex-o-Lon and Repro-Lon for approximately $25,000. These two
Texas businesses have combined annual sales of $15,000. Tex-o-Lon
manufactures, machines and distributes PTFE products, primarily for the
semiconductor industry. Repro-Lon reprocesses PTFE compounds for the chemical
and semiconductor industries. The acquisitions were accounted for as
purchases; accordingly, the purchase price, which was financed through
available cash resources, was allocated to the acquired assets based upon
their fair market values.
On February 2, 1998, the Company purchased the Sealing Division of Groupe
Carbone Lorraine for $45,600. This division, with facilities in France and
South Carolina, produces high-technology metallic gaskets used in the nuclear,
petroleum and chemical industries. Sales are expected to approximate $38,000.
This acquisition was accounted for as a purchase and the purchase price, also
financed through available cash resources, was allocated to the acquired
assets based upon their fair market values.
3. EARNINGS PER SHARE
In 1997, the Company adopted Statement of Financial Accounting Standards (SFAS)
No. 128, Earnings per Share, effective December 15, 1997. The Company's
reported earnings per common share for the three months ended March 30, 1997
equaled diluted earnings per share as set forth in SFAS No. 128. As a result,
the Company's reported earnings per share for three months ended March 30, 1997
were not restated.
Basic earnings per common share is computed by dividing net income by the
weighted-average number of shares of common stock outstanding during the year.
COLTEC INDUSTRIES INC AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(dollars in thousands)
Diluted earnings per common share is computed by using the treasury stock
method to determine shares related to stock options and restricted stock.
(In thousands) Three Months Ended
March 29, March 30,
1998 1997
Weighted-average
common shares 65,881 66,786
Stock options and restricted
stock issued 1,256 945
Diluted weighted-average
common and common equivalent
shares 67,137 67,731
4. COMMITMENTS AND CONTINGENCIES
The Company and certain of its subsidiaries are defendants in various lawsuits,
including actions involving asbestos-containing products and certain
environmental proceedings.
With respect to asbestos product liability and related litigation costs, as of
March 29, 1998 two subsidiaries of the Company were among a number of
defendants (typically 15 to 40) in approximately 106,000 actions (including
approximately 2,400 actions in advanced stages of processing) filed in various
states by plaintiffs alleging injury or death as a result of exposure to
asbestos fibers. During the first three months of 1998, two subsidiaries of
the Company received approximately 11,000 new actions compared to approximately
7,300 new actions received during the first three months of 1997. Through
March 29, 1998, approximately 214,000 of the approximately 320,000 total
actions brought have been settled or otherwise disposed of.
The damages claimed for personal injury or death vary from case to case, and
in many cases plaintiffs seek $1,000 or more in compensatory damages and
$2,000 or more in punitive damages. Although the law in each state differs to
some extent, it appears, based on advice of counsel, that liability for
compensatory damages would be shared among all responsible defendants, thus
limiting the potential monetary impact of such judgments on any individual
defendant.
Following a decision of the Pennsylvania Supreme Court, in a case in which
neither the Company or any or its subsidiaries were parties, that held
insurance carriers are obligated to cover asbestos-related bodily injury
actions if any injury or disease process, from first exposure through
manifestation, occurred during a covered policy period (the continuous
trigger theory of coverage), the Company settled litigation with its primary
and most of its first-level excess insurance carriers, substantially on the
basis of the Court's ruling. The Company has negotiated a final agreement
with most of its excess carriers that are in the layers of coverage
immediately above its first layer. The Company is currently receiving payments
COLTEC INDUSTRIES INC AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(dollars in thousands)
pursuant to this agreement. The Company believes that, with respect to the
remaining carriers, a final agreement can be achieved without litigation and
on substantially the same basis that it has resolved the issues with its other
carriers. Settlements are generally made on a group basis with payments made
to individual claimants over periods of one to four years. Payments were made
with respect to asbestos liability and related costs aggregating $14,901 and
$20,191 for the first three months of 1998 and 1997, respectively,
substantially all of which were covered by insurance. Related to payments not
covered by insurance, the Company recorded charges to operations amounting to
$2,000 for the first three months of 1998 and 1997.
In accordance with the Company's internal procedures for the processing of
asbestos product liability actions and due to the proximity to trial or
settlement, certain outstanding actions have progressed to a stage where the
Company can reasonably estimate the cost to dispose of these actions. As of
March 29, 1998, the Company estimates that the aggregate remaining cost of the
disposition of the settled actions for which payments remain to be made and
actions in advanced stages of processing, including associated legal costs, is
approximately $70,636 and the Company expects that this cost will be
substantially covered by insurance.
With respect to the 103,600 outstanding actions as of March 29, 1998, which
are in preliminary procedural stages, the Company lacks sufficient information
upon which judgments can be made as to the validity or ultimate disposition of
such actions, thereby making it difficult to estimate with reasonable
certainty the potential liability or costs to the Company. When asbestos
actions are received, they are typically forwarded to local counsel to ensure
that the appropriate preliminary procedural response is taken. The complaints
typically do not contain sufficient information to permit a reasonable
evaluation as to their merits at the time or receipt, and in jurisdictions
encompassing a majority of the outstanding actions, the practice has been that
little or no discovery or other action is taken until several months prior to
the date set for trial. Accordingly, the Company generally does not have the
information necessary to analyze the actions in sufficient detail to estimate
the ultimate liability or costs to the Company, if any, until the actions
appear on a trial calendar. A determination to seek dismissal, to attempt to
settle or proceed to trial is typically not made prior to the receipt of such
information.
It is also difficult to predict the number of asbestos lawsuits that the
Company's subsidiaries will receive in the future. The Company has noted
that, with respect to recently settled actions in advanced stages of
processing, the mix of the injuries alleged and the mix of the occupations of
the plaintiffs have been changing from those traditionally associated with the
Company's asbestos-related actions. The Company is not able to determine with
reasonable certainty whether this trend will continue. Based upon the
foregoing, and due to the unique factors inherent in each of the actions,
including the nature of the disease, the occupation of the plaintiff, the
presence or absence of other possible causes of a plaintiff's illness, the
availability of legal defenses, such as the statute of limitations or state of
the art, and whether the lawsuit is an individual one or part of a group,
management is unable to estimate with reasonable certainty the cost of
disposing of outstanding actions in preliminary procedural stages or of
COLTEC INDUSTRIES INC AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(dollars in thousands)
actions that may be filed in the future. However, the Company believes that
its subsidiaries are in a favorable position compared to many other defendants
because, among other things, the asbestos fibers in its asbestos-containing
products were encapsulated.
Insurance coverage of a small non-operating subsidiary formerly distributing
asbestos-bearing products in nearly depleted. Considering the foregoing, as
well as the experience of the Company's subsidiaries and other defendants in
asbestos litigation, the likely sharing of judgments among multiple
responsible defendants, and the substantial amount of insurance coverage that
the Company expects to be available from its solvent carriers, the Company
believes that pending and reasonably anticipated future actions are not likely
to have a material effect on the Company's consolidated results of operations
and financial condition. Although the insurance coverage which the Company has
is substantial, it should be noted that insurance coverage for asbestos claims
is not available to cover exposures initially occurring on and after July 1,
1984. The Company's subsidiaries continue to be named as defendants in new
cases, some of which allege initial exposure after July 1, 1984.
In addition to claims for personal injury, the Company's subsidiaries have
been involved in an insignificant number of property damage claims based upon
asbestos-containing materials found in schools, public facilities and private
commercial buildings. Based upon proceedings to date, the overwhelming
majority of these claims have been resolved without a material adverse impact
on the Company. Likewise, the insignificant number of claims remaining to be
resolved are not expected to have a material effect on the Company's
consolidated results of operations and financial condition.
The Company has recorded an accrual for its liabilities for asbestos-related
matters that are deemed probable and can be reasonably estimated (settled
actions and actions in advanced stages of processing), and has separately
recorded an asset equal to the amount of such liabilities that is expected to
be recovered by insurance. In addition, the Company has recorded a receivable
for that portion of payments previously made for asbestos product liability
actions and related litigation costs that is recoverable from its insurance
carriers. Liabilities for asbestos-related matters and the receivable from
insurance carriers included in the Consolidated Balance Sheets are as follows:
March 29, Dec. 31,
1998 1997
Accounts and notes receivable $ 62,403 $ 56,039
Other assets 25,812 16,249
Accrued expenses 59,173 50,688
Other liabilities 11,463 2,682
With respect to environmental proceedings, the Company has been notified that
it is among the Potentially Responsible Parties under federal environmental
laws, or similar state laws, relative to the costs of investigating and in
some cases remediating contamination by hazardous materials at several sites.
Such laws impose joint and several liability for the costs of investigating
and remediating properties contaminated by hazardous materials. Liability for
COLTEC INDUSTRIES INC AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(dollars in thousands)
these costs can be imposed on present and former owners or operators of the
properties or on parties who generated the wastes that contributed to the
contamination. The Company's policy is to accrue environmental remediation
costs when it is both probable that a liability has been incurred and the
amount can be reasonably estimated. While it is often difficult to reasonably
quantify future environmental-related expenditures, the Company currently
estimates its future non-capital expenditures related to environmental matters
to range between $26,000 and $48,000. In connection with these expenditures,
the Company has accrued $31,400 at March 29, 1998, representing management's
best estimate of probable non-capital environmental expenditures. These non-
capital expenditures are estimated to be incurred over the next 10 to 20
years. In addition, capital expenditures aggregating $5,000 may be required
during the next two years related to environmental matters. Although the
Company is pursuing insurance recovery in connection with certain of these
matters, no receivable has been recorded with respect to any potential
recovery of costs in connection with any environmental matters.
As in the case with most other companies, the Company recognizes the need to
ensure its operations will not be adversely impacted by the Year 2000 date
transition and is faced with the task of addressing related issues. The
Company is evaluating whether the effect of the Year 2000 transition issues
resulting from relationships with customers, suppliers and other constituents
will have an impact on the Company's results of operations or financial
condition. At March 29, 1998, the Company estimates that expenditures over
the next two years for the cost of modifying its existing software for the
Year 2000 date transition will have an immaterial impact on consolidated
operating results.
5. Subsequent Events
In April 1998, the Company privately placed $300 million principal amount
7 1/2% Senior Notes due 2008(Senior Notes) and $130 million liquidation value
of 5 1/4% Trust Convertible Preferred Securities (Convertible Preferred
Securities). The initial purchasers of the Convertible Preferred Securities
have also exercised their option to purchase an additional $20 million
liquidation value of Convertible Preferred Securities to cover over
allotments. Net proceeds of approximately $436,000 from both offerings were
used to reduce indebtedness under Coltec's credit agreement.
In April 1998, Coltec reached an agreement to sell the capital stock of its
Holley Performance Products subsidiary to Kohlberg & Co., L.L.C., a private
merchant banking firm located in Mount Kisco, New York, for $100 million in
cash. The agreement is subject to obtaining requisite governmental approvals.
The transaction is excepted to close in May 1998. In 1997, Holley
Performance's revenues were approximately $99,000.
COLTEC INDUSTRIES INC AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The following table shows financial information by industry segment for the
three months ended March 29, 1998 and March 30, 1997.
Three Months Ended
March 29, March 30,
1998 1997
(in thousands)
Sales:
Aerospace $166,158 $119,140
Industrial 209,084 190,099
Intersegment elimination (801) (67)
Total $374,441 $309,172
Operating income:
Aerospace $ 26,102 $ 18,303
Industrial 37,281 36,270
Total segments 63,383 54,573
Corporate unallocated (10,089) (9,645)
Operating income $ 53,294 $ 44,928
Results of Operations - First Quarter 1998 Compared to First Quarter 1997
Company Review
Net sales for the first quarter of 1998 increased 21.1% to $374.4 million from
$309.2 million for the first quarter of 1997 primarily driven by increases in
the Aerospace Segment. Gross profit increased to $114.3 million for the first
quarter 1998 from $97.5 million in first quarter 1997. The gross profit
margin decreased slightly to 30.5% in first quarter 1998 from 31.5% in the
first quarter 1997 as a result of slightly lower gross profit margins in the
Industrial Segment. Selling and administrative expenses totaled $61.0
million, or 16.3% of sales, in first quarter 1998 compared to $52.6 million,
or 17.0% of sales in first quarter 1997.
Operating income increased to $53.3 million in first quarter 1998 from $44.9
million in the first quarter of 1997. Operating margin for first quarter 1998
was 14.2% compared to 14.5% for the first quarter 1997. The margin decrease
related to a slight decrease in operating margin in the Industrial Segment.
Interest expense increased to $15.1 million in the first quarter 1998 from
$12.4 million for the first quarter 1997. This increase was a result of
increased outstanding amounts under the credit facility due to acquisitions
discussed under Liquidity and Capital Resources.
The effective tax rate was 34% in the first quarter of 1998 and 1997.
COLTEC INDUSTRIES INC AND SUBSIDIARIES
As a result of the foregoing, net earnings were $25.2 million in first
quarter 1998, or $0.38 per share, compared to net earnings of $21.5 million,
or $0.32 per share, in first quarter 1997.
Segment Review - Aerospace
Sales in first quarter 1998 for the Aerospace Segment totaled $166.2 million
increasing 39.5% from $119.1 million in the first quarter 1997. At Menasco,
sales increased significantly due to rising commercial aircraft production
as well as improved military sales. Menasco deliveries of main landing gear
systems for the Boeing 737 increased from 33 shipsets in first quarter 1997
to 69 shipsets in first quarter 1998, while military sales benefited
primarily from higher shipset deliveries for the F-15 and F-16 programs. At
Walbar, significantly higher sales were primarily due to increased customer
demand and expanding product lines. Aerospace Segment sales were also
favorably impacted by the acquisition of AMI Seating Systems in July
1997.
Operating income for the Aerospace Segment increased to $26.1 million in first
quarter 1998 from $18.3 million in first quarter of 1997. Operating margin
for the first quarter 1998 was 15.7% compared to 15.4% for the first quarter
1997. At Menasco's Aerospace Division, operating margin was impacted by a
favorable mix oflanding gear systems for certain commercial airline programs
as well as improved manufacturing efficiencies due to higher production.
Walbar also yielded improved manufacturing efficiencies as a result of its
higher production levels. The increased margin was also driven by higher
sales volumes and improved margins for the Segment's other businesses.
Segment Review - Industrial
Industrial sales increased to $209.1 million in first quarter 1998 from $190.1
million in first quarter 1997. The Stemco and Quincy Compressor Divisions
experienced solid sales volume increases. Sales for Garlock Sealing
Technologies increased primarily due to the acquisition of the sheet rubber
and conveyor belt business of Dana Corporation's Boston Weatherhead division.
Holley Performance Products sales decreased due to curtailed orders by two
major customers. Sales increased as a result of first quarter 1998 Industrial
Segment acquisitions, Texo-Lon, and Repro-Lon and the Sealing Division of
Group Carbone Lorraine, as described in note 5 to consolidated financial
statements.
Operating income for the Industrial Segment was increased slightly at $37.3
million in first quarter 1998 compared to $36.3 million in first quarter
1997. Operating income increased for Garlock Sealing Technologies and Quincy
Compressor Divisions due to higher sales volumes. Operating results at
Holley Performance Products were lower due to decreased sales volumes.
Excluding Holley Performance, which is expected to be sold in May 1998,
operating income in the Industrial Segment increased 6% on a 14% sales
increase.
Liquidity and Capital Resources
The Company generated $10.1 million of operating cash flows in first quarter
1998 compared with $12.7 million for the first quarter 1997. The lower
operating cash flows in 1998 were due to negative cash flow generated by
working capital requirements primarily from the increase in accounts
COLTEC INDUSTRIES INC AND SUBSIDIARIES
receivable. The change in assets and liabilities generated negative cash flow
of $28.8 million in first quarter 1998 compared to negative cash flow of
$1.7 million in first quarter 1997. This negative cash flow impact was offset
by increased net earnings and decreased payments related to liabilities of
discontinued operations and asbestos claims.
The current ratio of current assets to current liabilities at March 29, 1998
was 1.91, increasing from 1.78 at December 31, 1997. Cash and cash equivalents
increased to $21.1 million at March 29, 1998 from $14.7 million at December 31,
1997.
In the first quarter of 1998 the Company invested $15.0 million in capital
expenditures compared to $13.6 million during the same prior year period. Debt
increased by $100.6 million at March 29, 1998 compared to December 31, 1997
through additional borrowings under the Company's revolving credit facility
primarily for first quarter 1998 acquisitions.
On January 30, 1998, the Company acquired Marine and Petroleum Mfg. Inc.'s
manufacturing facilities based in Texas for approximately $17,000. The plants
acquired produce flexible graphite and PTFE fluid sealing products used in the
petrochemical industry. Combined annual sales for these facilities are
expected to approximate $18,000. The Company also acquired Tex-o-Lon and
Repro-Lon for approximately $25,000. These two Texas businesses have
combined annual sales of $15,000. Tex-o-Lon manufactures, machines and
distributes PTFE products, primarily for the semiconductor industry.
Repro-Lon reprocesses PTFE compounds for the chemical and semiconductor
industries. The acquisitions were accounted for as purchases; accordingly,
the purchase prices, which were financed through available cash resources,
were allocated to the acquired assets based upon their fair market
values.
On February 2, 1998, the Company purchased the Sealing Division of Groupe
Carbone Lorraine for $45,600. This division, with facilities in France and
South Carolina, produces high-technology metallic gaskets used in the
nuclear, petroleum and chemical industries. Sales for 1998 are expected to
approximate $38,000. This acquisition was accounted for as a purchase and
the purchase price, also financed through available cash resources, was
allocated to the acquired assets based upon their fair market values.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
The Company and certain of its subsidiaries are defendants in various lawsuits
involving asbestos-containing products. In addition, the Company has been
notified that it is among Potentially Responsible Parties under federal
environmental laws, or similar state laws, relative to the costs of
investigating and in some cases remediating contamination by hazardous
materials at several sites. See note 4 to consolidated financial statements.
Item 6. Exhibits and Reports on Form 8-K.
(a) 27.1 Consolidated Financial Data Schedule.
(b) No reports on Form 8-K were filed by the Company
during the quarter ended March 29, 1998.
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 /s/David D. Harrison
_____________________________
David D. Harrison
Executive Vice President
and Chief Financial Officer
Date: May 11, 1998