UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended December 31, 2004
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 1-5828
CARPENTER TECHNOLOGY CORPORATION
(Exact name of Registrant as specified in its Charter)
| Delaware | 23-0458500 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) | |
| P.O. Box 14662, Reading, Pennsylvania | 19610 | |
| (Address of principal executive offices) | (Zip Code) | |
610-208-2000
(Registrant’s telephone number, including area code)
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 ¨
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes x No ¨
Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of January 31, 2005.
| Common stock, $5 par value | 24,304,422 | |
| Class | Number of shares outstanding |
The Exhibit Index appears on page 31.
CARPENTER TECHNOLOGY CORPORATION
FORM 10-Q
INDEX
2
CARPENTER TECHNOLOGY CORPORATION
CONSOLIDATED BALANCE SHEET
(Unaudited)
December 31, 2004 and June 30, 2004
(in millions)
| December 31 2004 |
June 30 2004 |
|||||||
| ASSETS |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 113.3 | $ | 76.6 | ||||
| Marketable securities |
65.4 | 28.8 | ||||||
| Accounts receivable, net |
172.9 | 165.2 | ||||||
| Inventories |
214.9 | 185.0 | ||||||
| Other current assets |
33.8 | 36.2 | ||||||
| Total current assets |
600.3 | 491.8 | ||||||
| Property, plant and equipment, net |
590.9 | 608.7 | ||||||
| Prepaid pension cost |
248.9 | 247.0 | ||||||
| Goodwill |
46.4 | 46.4 | ||||||
| Trademarks and trade names, net |
21.6 | 24.3 | ||||||
| Other assets |
33.4 | 38.0 | ||||||
| Total assets |
$ | 1,541.5 | $ | 1,456.2 | ||||
| LIABILITIES |
||||||||
| Current liabilities: |
||||||||
| Short-term debt |
$ | 1.7 | $ | 2.2 | ||||
| Current portion of long-term debt |
20.2 | 20.2 | ||||||
| Accounts payable |
95.1 | 109.0 | ||||||
| Accrued liabilities |
103.7 | 87.8 | ||||||
| Deferred income taxes |
7.4 | 10.9 | ||||||
| Total current liabilities |
228.1 | 230.1 | ||||||
| Long-term debt, net of current portion |
333.6 | 332.7 | ||||||
| Accrued postretirement benefits |
137.9 | 143.5 | ||||||
| Deferred income taxes |
184.3 | 175.6 | ||||||
| Other liabilities |
37.3 | 36.3 | ||||||
| Total liabilities |
921.2 | 918.2 | ||||||
| STOCKHOLDERS’ EQUITY |
||||||||
| Convertible preferred stock – authorized 2,000,000 shares; issued 325.8 and 333.7 shares at December 31, 2004 and June 30, 2004, respectively |
20.3 | 20.8 | ||||||
| Common stock – authorized 100,000,000 shares; issued 25,345,547 and 24,141,150 shares at December 31, 2004 and June 30, 2004, respectively |
126.7 | 120.7 | ||||||
| Capital in excess of par value |
244.3 | 215.1 | ||||||
| Reinvested earnings |
277.6 | 230.4 | ||||||
| Common stock in treasury (1,099,764 shares and 1,106,772 shares at December 31, 2004 and June 30, 2004, respectively), at cost |
(37.8 | ) | (38.0 | ) | ||||
| Deferred compensation |
(7.7 | ) | (9.5 | ) | ||||
| Accumulated other comprehensive loss |
(3.1 | ) | (1.5 | ) | ||||
| Total stockholders’ equity |
620.3 | 538.0 | ||||||
| Total liabilities and stockholders’ equity |
$ | 1,541.5 | $ | 1,456.2 | ||||
See accompanying notes to consolidated financial statements.
3
CARPENTER TECHNOLOGY CORPORATION
CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
for the three and six months ended December 31, 2004 and 2003
(in millions, except per share data)
| Three Months Ended December 31, |
Six Months Ended December 31, |
|||||||||||||||
| 2004 |
2003 |
2004 |
2003 |
|||||||||||||
| NET SALES |
$ | 312.1 | $ | 226.3 | $ | 609.7 | $ | 439.6 | ||||||||
| Cost of sales |
237.6 | 186.8 | 471.7 | 366.1 | ||||||||||||
| Gross profit |
74.5 | 39.5 | 138.0 | 73.5 | ||||||||||||
| Selling and administrative expenses |
29.6 | 27.7 | 57.3 | 56.4 | ||||||||||||
| Operating income |
44.9 | 11.8 | 80.7 | 17.1 | ||||||||||||
| Interest expense |
5.9 | 6.2 | 11.7 | 12.5 | ||||||||||||
| Loss on early retirement of debt |
— | 2.3 | — | 2.3 | ||||||||||||
| Other income, net |
(4.8 | ) | (4.9 | ) | (5.3 | ) | (6.6 | ) | ||||||||
| Income before income taxes |
43.8 | 8.2 | 74.3 | 8.9 | ||||||||||||
| Income tax expense |
11.3 | 0.7 | 21.9 | 0.9 | ||||||||||||
| NET INCOME |
$ | 32.5 | $ | 7.5 | $ | 52.4 | $ | 8.0 | ||||||||
| EARNINGS PER COMMON SHARE: |
||||||||||||||||
| Basic |
$ | 1.33 | $ | 0.32 | $ | 2.17 | $ | 0.32 | ||||||||
| Diluted |
$ | 1.28 | $ | 0.31 | $ | 2.09 | $ | 0.32 | ||||||||
| WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: |
||||||||||||||||
| Basic |
24.1 | 22.4 | 23.8 | 22.4 | ||||||||||||
| Diluted |
25.1 | 23.3 | 24.8 | 23.2 | ||||||||||||
| Cash dividends per common share |
$ | 0.1000 | $ | 0.0825 | $ | 0.1825 | $ | 0.1650 | ||||||||
See accompanying notes to consolidated financial statements.
4
CARPENTER TECHNOLOGY CORPORATION
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(Unaudited)
for the three and six months ended December 31, 2004 and 2003
(in millions)
| Three Months Ended December 31, |
Six Months Ended December 31, |
|||||||||||||||
| 2004 |
2003 |
2004 |
2003 |
|||||||||||||
| Net income |
$ | 32.5 | $ | 7.5 | $ | 52.4 | $ | 8.0 | ||||||||
| Unrealized loss on securities classified as available-for-sale |
(0.2 | ) | — | (0.1 | ) | — | ||||||||||
| Net (losses) gains on derivative instruments |
(14.1 | ) | 23.9 | (10.2 | ) | 26.8 | ||||||||||
| Foreign currency translation |
3.4 | 2.0 | 4.3 | 0.1 | ||||||||||||
| Income tax benefit (expense) related to items of other comprehensive income |
5.3 | (8.5 | ) | 4.4 | (10.7 | ) | ||||||||||
| Comprehensive income |
$ | 26.9 | $ | 24.9 | $ | 50.8 | $ | 24.2 | ||||||||
See accompanying notes to consolidated financial statements.
5
CARPENTER TECHNOLOGY CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
for the six months ended December 31, 2004 and 2003
(in millions)
| December 31, 2004 |
December 31, 2003 |
|||||||
| OPERATING ACTIVITIES: |
||||||||
| Net income |
$ | 52.4 | $ | 8.0 | ||||
| Adjustments to reconcile net income to net cash provided from operating activities: |
||||||||
| Depreciation |
23.4 | 24.8 | ||||||
| Amortization |
2.0 | 4.8 | ||||||
| Deferred income taxes |
9.4 | (2.6 | ) | |||||
| Net pension expense |
1.2 | 8.8 | ||||||
| Net loss on asset disposals |
0.1 | 0.2 | ||||||
| Changes in working capital and other: |
||||||||
| Receivables |
(4.4 | ) | (5.9 | ) | ||||
| Inventories |
(28.5 | ) | (10.7 | ) | ||||
| Other current assets |
(3.5 | ) | (1.4 | ) | ||||
| Accounts payable |
(14.5 | ) | 3.1 | |||||
| Accrued current liabilities |
10.5 | 3.1 | ||||||
| Income tax refund |
1.9 | 0.3 | ||||||
| Other, net |
2.4 | 6.2 | ||||||
| Net cash provided from operating activities |
52.4 | 38.7 | ||||||