UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------
FORM 8-K
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): April 20, 2000
HOWMET INTERNATIONAL INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware
- --------------------------------------------------------------------------------
(State or other jurisdiction of incorporation)
1-13645 52-1946684
---------------------- -------------------------------
Commission File Number IRS Employer Identification No.
475 Steamboat Road, Greenwich, CT 06830
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(203) 661-4600
-----------------------------
Registrant's Telephone Number
Item 5 OTHER EVENTS
- --------------------------------------------------------------------------------
(a) The following news release was issued on April 20, 2000.
HOWMET REPORTS FIRST QUARTER RESULTS
RECORD SALES; BOTTOM LINE BEFORE UNUSUAL ITEMS UP 10 PERCENT
GREENWICH, CONNECTICUT, APRIL 20, 2000 - Howmet International Inc. (HWM-NYSE)
reported net income applicable to common stock of $30.1 million, or $.30 per
share, for the first quarter of 2000 compared to $34 million, or $.34 per share,
for 1999. After excluding the unusual 2000 and 1999 items discussed in the
attached first quarter earnings table, net income applicable to common stock for
the 2000 quarter increased 10 percent over 1999, and earnings per share
increased 13 percent.
Sales for the first quarter of 2000 increased two percent over 1999. Reported
income from operations was 20 percent lower than in 1999; however, after
adjusting for the aforementioned unusual items, operating income was
approximately equal. Lower interest expense and the elimination of preferred
stock dividends, as well as a lower effective tax rate contributed to the
earnings improvement.
President and Chief Executive Officer David Squier commented, "We are pleased to
report another quarter of strong earnings growth. Sales were at a record level.
And before unusual items, net income for our common stockholders was up 10
percent."
Mr. Squier added, "The outlook for the industrial gas turbine market continues
to be very positive, as sales were 18 percent higher than 1999. Aero sales,
while down seven percent from the 1999 first quarter, rebounded from the 1999
fourth quarter and are expected to finish the year ahead of 1999. Our 2000
versus 1999 first quarter operating margin improved more than one percentage
point, excluding the unusual items and the adverse effect of our aluminum
operations. Progress in resolving the aluminum operations problems continues,
and we are confident that the resolution will add to future earnings
improvement. As always, Howmet's leadership position and continuous focus on
customer satisfaction and manufacturing excellence have and will continue to be
the means to substantial near and long-term earnings growth."
(more)
HOWMET REPORTS ANNUAL EARNINGS, PG. 2
Headquartered in Greenwich, CT, Howmet International Inc. is the world's largest
manufacturer of precision investment castings, primarily for jet aircraft and
industrial gas turbine engines. Howmet and its subsidiaries operate 29
production facilities in the United States, Canada, France, the United Kingdom
and Japan.
This press release includes forward-looking statements. Such statements include
those relating to future sales and earnings growth, industrial gas turbine
market growth, and issues concerning aluminum casting operations, among others.
Pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995, the Company cautions readers that such forward-looking
statements are subject to certain risks and uncertainties, which could cause
actual results to differ materially from those projected in those statements.
These risks and uncertainties include, but are not limited to, worldwide
economic and political conditions, the effects of aerospace industry economic
conditions and cyclicality, the nature of the Company's customer base,
competition, pricing pressures, availability and cost of raw materials,
continued or unexpected operational issues at the Company's aluminum casting
facilities and others detailed in the Company's Annual Report on Form 10-K for
the year 1999 and other reports filed with the Securities and Exchange
Commission. The Company undertakes no obligation to update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise.
Contact:
Doreen L. Deary Shannon P. Sebahar
Corporate Communications Investor Relations
(203) 625-8735 (801) 933-4030
ddeary@howmet.com shannon.sebahar@cordant.com
(more)
HOWMET REPORTS ANNUAL EARNINGS, PG. 3
Summary unaudited financial information for the three months ended March 31
follows:
(in millions, except per share Better
amounts) 2000 1999 (Worse) Percent
- --------------------------------------------------------------------------------
Net sales $381.6 $372.7 $ 8.9 2
================================================================================
Income from operations 45.9 57.2 (11.3) (20)
Interest income .4 .2 .2 100
Interest expense (.7) (1.9) 1.2 63
Other, net (.7) (.3) (.4) (133)
- --------------------------------------------------------------------------------
Income before income taxes 44.9 55.2 (10.3) (19)
Income taxes (14.8) (20.4) 5.6 27
- --------------------------------------------------------------------------------
Net income 30.1 34.8 (4.7) (14)
Dividends on redeemable
preferred stock - (.8) .8 -
- --------------------------------------------------------------------------------
Net income applicable to
common stock $ 30.1 $ 34.0 $ (3.9) (11)
================================================================================
Net income per common share,
basic and diluted $ .30 $ .34 $ (.04) (12)
First quarter 2000 results were adversely affected by $2.3 million of pretax
expense ($.02 per share) related to the Cordant Technologies Inc. (Howmet's 85
percent owner) proposed buyout of Howmet's 15 percent publicly held shares. The
2000 quarter was also adversely affected by a $6.2 million pretax charge ($.04
per share) triggered by the proposed acquisition of Cordant by Alcoa Inc. The
$6.2 million charge is related to a variable compensation plan which is tied to
the market price of Cordant common stock. Following the announcement of the
Alcoa Inc. proposed acquisition of Cordant, the market price of Cordant
increased from $29.56 to $56.56 per common share, resulting in the $6.2 million
charge. (If the March 31, 2000 Cordant stock price were at the average for the
30 days prior to the March 14, 2000 Alcoa Inc. acquisition announcement, Howmet
would have recorded no expense in the 2000 first quarter related to this
variable compensation plan.) At the current Cordant stock price level,
additional significant charges are expected, as vesting in this variable
compensation plan continues.
First quarter 1999 results were positively impacted by $2.6 million of pretax
benefit ($.02 per share) related to Howmet's Stock Appreciation Rights plan.
This benefit was the result of Howmet's common stock market price dropping below
$15 per share on March 31, 1999. In the second quarter of 1999 when Howmet's
stock price rose above $15 per share, this unusual benefit was reversed.
Excluding the effects of the three items discussed above, net income applicable
to common stock in 2000 is $35.8 million compared to $32.4 million in 1999, a 10
percent increase, and earnings per share is $.36 in 2000 compared to $.32 in
1999, a 13 percent increase.
####
(End of Press Release)
Item 7 Financial Statements on Form 8-K
- --------------------------------------------------------------------------------
Following are Howmet International Inc.'s consolidated statements of income,
balance sheets, statements of cash flows and statements of stockholders' equity
and redeemable preferred stock. The complete consolidated statements including
footnotes will be included in the Company's Form 10-Q for the quarter ended
March 31, 2000.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(in millions, except per share data)
Three Months Ended
March 31,
-------------------------
2000 1999
- ----------------------------------------------------------------------------
Net sales $381.6 $372.7
Operating expenses:
Cost of sales 296.8 284.6
Selling, general and administrative 34.4 26.0
Research and development 4.5 4.9
- ----------------------------------------------------------------------------
Total operating expenses 335.7 315.5
Income from operations 45.9 57.2
Interest income .4 .2
Interest expense (.7) (1.9)
Other, net (.7) (.3)
- ----------------------------------------------------------------------------
Income before income taxes 44.9 55.2
Income taxes (14.8) (20.4)
- ----------------------------------------------------------------------------
Net income 30.1 34.8
Dividends on redeemable preferred stock - (.8)
- ----------------------------------------------------------------------------
Net income applicable to common stock $ 30.1 $ 34.0
============================================================================
Net income per common share, basic and diluted $ .30 $ .34
============================================================================
CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions, except share data)
MARCH 31, December 31,
2000 1999
- -------------------------------------------------------------------------------------
(UNAUDITED)
ASSETS
Current assets:
Cash and cash equivalents $ 23.2 $ 39.4
Accounts receivable (less allowance of $3.8 and $3.7) 96.1 80.7
Inventories 169.5 165.3
Retained receivables 49.3 35.6
Deferred income taxes 13.8 14.3
Other current assets 3.7 3.7
- -------------------------------------------------------------------------------------
Total current assets 355.6 339.0
Property, plant and equipment, net 394.1 396.5
Goodwill, net 207.9 209.5
Patents and technology and other intangible assets, net 91.9 94.9
Deferred income taxes 16.8 11.9
Other noncurrent assets 65.6 68.3
- -------------------------------------------------------------------------------------
Total assets $1,131.9 $1,120.1
=====================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 78.1 $ 81.3
Accrued compensation 38.7 59.8
Other accrued liabilities 94.5 98.0
Advance on accounts receivable 40.0 40.0
Income taxes payable 49.7 47.8
Short-term debt 50.4 45.7
- -------------------------------------------------------------------------------------
Total current liabilities 351.4 372.6
Noncurrent liabilities:
Accrued retiree benefits other than pensions 103.0 101.2
Accrued pension liability 36.1 35.9
Other noncurrent liabilities 62.9 59.9
SARs 50.6 49.8
- -------------------------------------------------------------------------------------
Total noncurrent liabilities 252.6 246.8
Commitments and contingencies
Stockholders' equity:
Preferred stock, authorized - 10,000,000 shares, no
shares issued and outstanding - -
Common stock, $.01 par value, authorized - 400,000,000
shares, issued and outstanding: 2000 - 100,033,307 shares;
1999 - 100,028,883 shares 1.0 1.0
Capital surplus 195.5 195.4
Retained earnings 346.1 316.0
Accumulated other comprehensive income (14.7) (11.7)
- -------------------------------------------------------------------------------------
Total stockholders' equity 527.9 500.7
- -------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $1,131.9 $1,120.1
=====================================================================================
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in millions)
Three Months Ended
March 31,
--------------------------
2000 1999
- --------------------------------------------------------------------------------
OPERATING ACTIVITIES
Net income $ 30.1 $ 34.8
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 17.8 16.2
Changes in assets and liabilities:
Receivables (30.6) (28.3)
Inventories (5.9) (8.3)
Accounts payable and accrued liabilities (26.1) (25.9)
Deferred income taxes (4.4) (.7)
Income taxes payable 2.1 20.0
Long-term SARs and Cordant options accruals 7.0 (.3)
Other, net 2.0 2.3
- --------------------------------------------------------------------------------
Net cash (used) provided by operating activities (8.0) 9.8
INVESTING ACTIVITIES
Purchases of property, plant and equipment (12.3) (23.3)
- --------------------------------------------------------------------------------
Net cash used by investing activities (12.3) (23.3)
FINANCING ACTIVITIES
Net change in short-term debt 4.7 32.7
Issuance of long-term debt - 65.0
Repayment of long-term debt - (35.0)
Redemption of preferred stock - (66.4)
- --------------------------------------------------------------------------------
Net cash provided (used) by financing activities 4.7 (3.7)
Foreign currency rate changes (.6) (2.3)
- --------------------------------------------------------------------------------
Decrease in cash and cash equivalents (16.2) (19.5)
Cash and cash equivalents at beginning of period 39.4 37.6
- --------------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 23.2 $ 18.1
================================================================================
CONSOLIDATED STATEMENTS OF COMMON STOCKHOLDERS' EQUITY
AND REDEEMABLE PREFERRED STOCK (UNAUDITED)
(in millions, except share data)
Accumulated Total
Other Common Redeemable
Common Stock Capital Retained Comprehensive Stockholders' Preferred Stock
------------------- -----------------
Shares Amount Surplus Earnings Income Equity Shares Amount
- --------------------------------------------------------------------------------------------------------------------
THREE MONTHS ENDED
MARCH 31, 1999
Balance, December 31, 1998 100,005,356 $1.0 $195.1 $180.1 $(4.9) $371.3 6,560 $ 65.6
Comprehensive income
Net income 34.8 34.8
Other comprehensive income
Foreign exchange translation
adjustment (7.0) (7.0)
----------
Total comprehensive income 27.8
----------
Dividends - redeemable
preferred stock (.8) (.8) 78 .8
Redeemable preferred
stock redemption (6,638) (66.4)
Shares issued 8,902 .1 .1
- --------------------------------------------------------------------------------------------------------------------
Balance, March 31, 1999 100,014,258 $1.0 $195.2 $214.1 $(11.9) $398.4 - $ -
====================================================================================================================
THREE MONTHS ENDED
MARCH 31, 2000
Balance, December 31, 1999 100,028,883 $1.0 $195.4 $316.0 $(11.7) $500.7
Comprehensive income
Net income 30.1 30.1
Other comprehensive income
Foreign exchange translation
adjustment (3.3) (3.3)
Unrealized gain on
securities .3 .3
----------
Total comprehensive income 27.1
----------
Shares issued 4,424 .1 .1
- --------------------------------------------------------------------------------------------------------------------
Balance, March 31, 2000 100,033,307 $1.0 $195.5 $346.1 $(14.7) $527.9
====================================================================================================================
This Form 8-K includes forward-looking statements. Such statements include those
relating to future sales and earnings growth, industrial gas turbine market
growth and issues concerning aluminum casting operations, among others. Pursuant
to the safe harbor provisions of the Private Securities Litigation Reform Act of
1995, the Company cautions readers that such forward-looking statements are
subject to certain risks and uncertainties, which could cause actual results to
differ materially from those projected in those statements. These risks and
uncertainties include, but are not limited to, worldwide economic and political
conditions, the effects of aerospace industry economic conditions and
cyclicality, the nature of the Company's customer base, competition, pricing
pressures, availability and cost of raw materials and others detailed in the
Company's Annual Report on Form 10-K for the year 1999 and other reports filed
with the Securities and Exchange Commission. The Company undertakes no
obligation to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise.
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereto duly authorized.
Date: April 20, 2000
HOWMET INTERNATIONAL INC.
(Registrant)
By: /s/ Roland A. Paul
------------------
Roland A. Paul
Vice President &
General Counsel