DSHW-1996-002309 - 0901a0688013a26b

DSHW TN
1996.10843
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE AGT
OF 1934 (FEE REQUIRED^
For the fiscal year ended June 30,1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 (NO FEE REQUIRED^
Commission file number 1-6179
THIOKOL CORPORATION
incorporated in the State of Delaware IRS Employer identification
No. 36-2678716
Principal Executive Offices
2475 Washington Boulevard, Ogden, Utah 84401
Telephone Number [phone]
Secunties registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange
Common Stock, par value on Which Registered
$1.00 per share New York Stock Exchange
Common Stock Purchase Rights Chicago Stock Exchange
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not
contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or
infonnation statements incorporated by reference in Part III of this Fomri 10-K or any amendment to this Form
10-K. .Z_
Securities registered pursuant to Section 12(g) of the Act: NONE
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section
13 or 15(d) ofthe Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period
than the Registrant was required to file such reports), and (2) has been subject to such filing requirements fbr
the past 90 days. Yes JL No_
Aggregate mari(et value of Registrant's voting stock held by non-affiliates, based upon the closing
price of said stock on the New Yori< Stock Exchange-Composite Transaction Listing on August 30, 1996,
($44,875 per share): $818,267,039.
Number of shares of Common Stock outstanding as of August 30,1996:18,234,363.
DOCUMENTS INCORPORATED BY REFERENCE
\ 1. Portionsof Annual Report to Stockholders for the fiscal year ended June 30,1996: Parts I, II, and IV.
2. Portions of definitive Proxy Statement dated September 20,1996: Parts lil and IV. ..t
PARTI
ITEM1. BUSINESS
Thiokol Corporation (the "Company") manufactures solid rocket propulsion systems
and related products, ordnance, flares, gas generators, and actuators, and provides
services for the aerospace and defense markets and specialty fastening systems for
aerospace and industrial applications. Founded in 1930, Thiokol Corporation and its
successor, Thiokol Chemical Corporation (old Thiokol), operated in various corporate forms
until merged in 1982 with Morton-NonA/ich Products, Inc., and operated thereafter as a
division of Morton Thiokol, Inc. After the 1989 spin-off of the specialty chemicals, salt, and
automotive-restraint businesses to a newly-fomned publicly-traded company, Morton
International, Inc., the Company's aerospace and defense business operated
independently as Thiokol Corporation. In 1991, the Company acquired the aerospace and
industrial fastener business of Huck Manufacturing Company. The Company operates this
fastening systems segment of the business as a wholly-owned subsidiary, Huck
Intemational, Inc. ("Huck"). Huck acquired the threaded lock bolts, locknuts, and related
product line assets of the Deutsch Manufacturing Company in 1994 and acquired the
assets of Automatic Fastener Company, manufacturer of blind fasteners for automotive
and industrial applications, in January 1995. The Company established the Defense and
Launch Vehicles Division in 1995 reflecting the consolidation of certain of its defense and
solid propulsion product lines.
During fiscal year 1996, the Company and The Cariyle Group, a private merchant
investment firm CCariyle"^, formed a jointly-owned company, Blade Acquisition Corp.
("Blade"). The Company owns 49 percent and Cariyle owns 51 percent of the outstanding
Blade voting common stock. In December 1995, Blade completed the acquisition of
Howmet Corporation ("Howmet"), the worid's largest manufacturer of investment casting
components consisting primarily of turbine airfoils (both moving blades and stationary
vanes) used in aircraft and industrial gas turbine engines and the Cercast Group, a major
producer of high-quality aluminum investment castings used in the defense electronics and
commercial aerospace industry. The Shareholders' Agreement between the Company and
Cariyle provides the Company with a call option, exercisable during a three-year period
commencing the third year from the Closing Date, December 13,1998, to purchase all of
the voting common stock of Blade owned by Cariyle. Upon the Company's exercise ofthe
call option, an event the Company reasonably anticipates will occur, but does not
guarantee, at a purchase price valuation process set forth in the Shareholders' Agreement,
the Company will own all of the issued and outstanding common stock of Blade and
indirectly owns Howmet, and the Cercast Group which will become the investment casting
business segment ofthe Company. The Shareholders' Agreement contains a change in
control provision which provides the Company the right to accelerate the exercise of the
call option in the event of a change of control of Cariyle. In the event of a change of control
of the Company as defined by the terms of the Shareholders' Agreement, the Company
1
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will effectively lose its option for the purchase of the Cariyle equity investment in Blade.
Business Segments
The Company operates in three business segments: (i) Space; (ii) Defense; and
Fastening Systems. This business segmentation reflects the Company's reorganization
of its defense and launch business unit during fiscal years 1995 and 1996.
Space Systems. The space systems segment consists of solid rocket propulsion
systems and related products, research and development and launch support services for
the National Aeronautics and Space Administration (NASA) and commercial space
applications. Such systems include the Reusable Solid Rocket Motor (RSRM) used for
NASA's Space Shuttle. The current Buy III Space Shuttle contract awarded to the
Company in 1991 to build 142 solid rocket motor boosters for the NASA Space Shuttle
program has approximately $1.0 billion remaining through its projected completion date
in fiscal year 2000. The Buy III contract is a "cost plus award fee" contract with an award
fee based on the degree of the Company's success, as rated by NASA, of meeting
contract standards relating to program safety, management, reliability, quality assurance
management, delivery, and hardware flight performance on the contract. The Company
also receives a cost-incentive fee for meeting certain predetermined cost-reduction targets.
The delivery rate and the Company's contract accrual rate for financial statement purposes
is subject to continuing NASA's funding, NASA's Shuttle flight scheduling (cun-ently seven
flights per year), and program performance. The NASA contract is subject to termination
for convenience by the federal govemment with the Company retaining such rights of
recovery for costs and expenses provided by the govemment procurement laws and
regulations, and contract temns and conditions. NASA has announced plans to restructure
and reorganize the Shuttle program to include a single prime contractor or prime contractor
group to manage many program functions now managed by NASA. Such restmcturing will
occur over a transition period bf several years. The Company's position as a contractor
to NASA is expected over time, most probably with completion of the Buy lil contract, to
shift to the role of a subcontractor to the prime contractor, although there can be no
assurance that such shift will occur. Since the Company is the only qualified manufacturer
of the RSRM and the time and cost to requalify a second source of supply would be
prohibitively expensive in light of declining govemment expenditures for the Space
program, the Company anticipates continuing participation in the Shuttle program after
completion ofthe Buy III contract. The Company's service contract at the Kennedy Space
Center in Florida temriinated in October 1995. The Company retains certain shuttle RSRM
solid rocket motor launch oversight activities at the Kennedy Space Center. During fiscal
year 1996, the Company substantially recovered its costs, expenses and investments
made in connection with the termination in fiscal year 1995 of the peri'ormance of the
NASA Yellow Creek, Mississippi nozzle facility contract.
The Company's family of CASTOR solid rocket motors is used in the first and
second stages of a number of expendable launch vehicles and as strap-on boosters for
medium and heavy lift vehicles for space, defense, and commercial applications.
The Company's CASTOR 120® motor has been designed as a low-cost 120,000
pound class motor for the small launch vehicle mari^et. This motor is designed for first and
second stage propulsion and for strap-on booster applications. The CASTOR 120 motor
has been selected as the propulsion system for the Lockheed Launch Vehicle and the
Orbital Science Taurus® launch vehicle. The application of the CASTOR 120 motor
includes launch vehicles for placement of communications, mapping, and scientific
satellites into earth orbit. The Company is currently under contract to provide eight
CASTOR 120 motors to Lockheed/Martin Aeronautics for its LLV family of launch vehicles
and three motors to Orbital Science. Although the first demonstration launch vehicle
utilizing the CASTOR 120 motor failed to properiy place the satellite payload in orbit, the
Company believes, but cannot be assured until after completion of successful
demonstration flights and testings, the technical problems associated with the launch
vehicle have been resolved. The motor loss was covered by insurance. During fiscal year
1997, three CASTOR 120 motor launches are planned.
The CASTOR IVA motor is designed with 110,000 pounds of thrust for use as strap-
on boosters. The Company currently has orders forthe production of twenty-four CASTOR
IVA motors to Lockheed/Martin Aeronautics for the Atlas MAS program. The Company's
CASTOR IVB motors equipped with thmst vector control deliver 100,000 pounds of thrust
and have been selected to support the United States Department of Defense's Target
Critical Measurement Program.
Production of CASTOR IVA and CASTOR IVB motors has been transfered to the
Company's Promontory, Utah, facility from the Huntsville, Alabama, facility which has been
closed.
During fiscal year 1996, there were four successful CASTOR IV motor flights,
including flights on the Atias HAS program. During fiscal year 1997, four flights are planned
by the Air Force.
The Company's family of STAR™ motors manufactured at its Elkton, Maryland,
facilities provide upper stage propulsion systems for a number of launch vehicle systems.
The STAR motors also provide satellite positioning for space, defense, and commercial
applications. The Company has successfully tested and qualifled movable nozzle
technology for STAR motor applications. During fiscal year 1996, the Company's STAR
motors successfully completed fifteen missions utilizing thirty-five motors, including the
Global Positioning Satellites, Korea Sat, and INMARSAT.
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Defense Systems. The Defense Systems segment of the Company's business
consists of design, manufacturing, and related services and sale of propulsion systems,
gas generators, and ordnance to the federal government and for qualifying foreign military
sales.
For strategic and tactical markets, the Company produces or is otherwise a qualified
producer on a number of propulsion-related programs and products. Major strategic
programs include a joint venture arrangement with Alliant Technologies, Inc., which was
restructured and consolidated by the Navy during 1995 to produce the first, second and
third stages of United States Navy submarine launched Trident II missile systems.
Consistent with industry practice, the joint venture is operated as a teaming arrangement
which is used as a billing mechanism and serves to keep overhead expense at a minimum.
The Company utilizes the percentage of completion method to recognize sales and profits
on this incentive-type contract. Profit recognition under the contract includes the
Company's and its partner's estimate of their respective performances on such contract.
The Company has an Air Force contract to monitor the sen/ice life ofthe Minuteman
III Stage I motors and a development contract for the Minuteman propulsion replacement
program including the development and qualification of new materials, propellants, and
refurbishment of components for the Minuteman Stage I.
During fiscal year 1996, the Company substantially completed the consolidation of
certain of its tactical motor manu^cturing operations from the Huntsville, Alabama, Udlity
to the Company's facilities in northem Utah and Elkton, Maryland. Production at the
Huntsville facility was completed during fiscal year 1996. After completion ofthe program
re-qualifications required as the result of such program relocations, the Company expects
to remain a qualified manufacturer of tactical propulsion systems and related products for
the Harm, Patriot, Maverick, and VT-1 Sidewinder programs at the Company's northem
Utah and Elkton, Maryland faciiities. The Company maintains a sole source position on
the vertical launch ASROC and Harpoon programs. The Company's Omneco Operations
in Carson City, Nevada, manufacturer of metal parts for tactical propulsion systems, was
closed and operations discontinued during fiscal year 1996.
The Company's gas generator and ordnance operations consist of research,
development, production, and sale of solid propellant gas generators. This family of
products is designed for a variety of functions for space, defense, and commercial
applications including thrust vector control actuation, missile launch eject and flight
termination systems and aftitude control, and propulsion for dispensing ordnance and
automotive airbag application.
The Company's flare operations consist of research, development, and production
of visible and infrared illuminating and decoy flares for primarily military applications as well
as search and rescue missions.
The Company has developed technology used for demilitarization of both solid and
liquid propulsion systems. The Company has entered into a contract funded by the federal
government's Defense Nuclear Agency for the conversion of liquid propellant from missile
systems located in the fonner Soviet Union into commercial materials.
Loading operations managed by the Company under contract for the Anmy-owned
ammunition facilities near Marshall, Texas and Shreveport, Louisiana have been
discontinued. The Company provides maintenance services to the Amny for these facilities
which will be discontinued during fiscal year 1997. Under agreements with the Army, the
Company is permitted to use the facilities for limited third-party production contracts.
The Company continues wori< on a number of product developments including
support work on a heavy-lift launch vehicle system, hybrid propulsion, booster
technologies, propellant, and nozzle technology for Theater Missile Defense applications.
Development work continues in both solid and liquid explosives technologies for both
commercial and military applications. Present technology used in conjunction with the
Company's propulsion motor case is being developed and tested for commercial
applications. During fiscal year 1995, the Company organized the TCR Composites
Division for the commercial development of a lower cost carbon fiber resin technology.
During fiscal year 1996, the Company entered into a joint technology development
agreement with Morton Intemational, Inc. for development of non-sodium azide gas
generant airbag and initiator technology. The Company's Science and Engineering group
maintains ongoing research projects funded under various Company, commercial, and
government programs and provides support to the Company's space and defense
propulsion system programs. Federal export laws, controls, and regulations impact or
othenvise restrict the export of the Company's propulsion products and technical
knowledge.
Fastening Systems. The fastening systems segment consists of the development,
production, and sale of threaded and non-threaded fasteners consisting of lock bolts, blind
bolts, locknuts, blind rivets, cap screws, and product installation tooling. Fasteners and
fastening systems are sold to customers directly by the Company and through a
distribution network, domestic and foreign. The fasteners are manufactured from high
stirength metal and metal alloys and are sold under various trade names and trademarks
to aerospace and industrial markets for original equipment and other mari<et use. Product
installation tooling is also manufactured and marketed to provide customers complete
fastener installation systems. The aerospace mari<et consists of both commercial and
military aerospace manufacturing companies, domestic and foreign. Customer product
qualification required by domestic and foreign regulatory agencies such as the Federal
Aviation Administration as to plant and product quality and lot traceability is important for
the aerospace maricet acceptance of the Company's fasteners. The Company's fasteners
have been qualified by major domestic and foreign aerospace companies in order for such
customers to use such fasteners in original equipment and aftennari<et aircraft products.
Principal domestic and foreign industrial markets include automotive, truck, trailer, railcar,
and mining applications. The construction industry utilizes the Company's fastening
systems for certain structural applications such as bridges and building columns.
Competition
Space Systems. The Company is the sole source supplier of RSRM solid rocket
motors, the only domestically human-rated solid rocket propulsion, for NASA's Space
Shuttle program. The Shuttle Buy III contract was placed directly with NASA. The
Company, as the only qualified source of supplier for the RSRM, does not compete with
other manufacturers. The Company, Alliant Technologies, Inc., and the CSD Division of
United Technologies, Inc. are the major suppliers of heavy-lift solid propulsion launch
vehicles for space and strategic applications and are competitive with each other with
regard to medium, light, and strap-on launch vehicles for commercial space applications.
Both foreign governments and foreign private enterprises have solid rocket propulsion
systems competitive with propulsion systems manufactured by the Company. For Space
Systems' products, other than the RSRM solid rocket motors sold to the federal
govemment or federal govemment prime contractors, the primary method of competition
is through the Company responding to a request for proposal or complying with other
govemment procurement procedures under federal acquisition regulations in competition
with others responding to the terms and conditions requested for proposal and negotiated
contracts with others. Commercial launch vehicle products are sold primarily through
responding to the temns and conditions of a request for proposal or negotiated contracts
in competition with others. Principal competitive factors are cost, technical perfonmance,
quality, reliability, depth and capability of personnel and adequacy of facilities. Except for
the sole-sourced RSRM solid rocket motor, the Company's Space system products are
sold primarily on price. The Company's competitive strength is also enhanced by the
technical perfonnance, quality, and reliability of its solid propulsion products for space
launch applications.
Defense Systems. The Company's defense-related solid rocket propulsion systems,
services and related products are competitive with Alliant Technologies, Inc. and CSD's
strategic programs. The Company is also competitive with the Aerojet Division of Gen
Corp. and the ARC Division of Sequa Corporation on a number of tactical motor programs.
Reductions in Department of Defense expenditures and in quantities being procured
for strategic and tactical solid rocket motor programs have substantially increased the
competitive pressure for these products. The primary method of competition for defense-
related products and services is by responding to a request for proposal from the federal
government or federal government prime contractor or complying with procurement
procedures under the federal acquisition regulations in competition with others. Price,
quality, reliability, perfonnance, depth and capability of personnel, and adequacy of
faciiities are the principal competitive factors in the defense mari<et for strategic and tactical
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solid propulsion products. The Company's defense related products are subject to
competitive pricing and the cost structures of its competitors. The Company's defense
related products are sold primarily on price.
Fastening Systems. Fastening systems are manufactured by a number of
competitors with no one manufacturer having a major position in the aerospace or
industrial fastening mari<ets. Competitive with the Company's threaded and non-threaded
fastening systems are altemative fastening methods. Competition for orders from
aerospace original equipment manufacturers is often dependent on customer qualification
required by govemment regulations ofthe Company's fasteners. The Company's fastening
system products compete not only on price, but also product quality and the Company's
ability to provide customer service and delivery. Fastening systems applications and
tooling help differentiate the Company's fastening systems products. Aerospace fastener
competition is primarily through responding to request for proposals made by major
aerospace contractors and distributors and purchase orders. Industrial fastener
competition is primarily through requests for proposals, purchase order quotations and
negotiated contracts in competition with others. The Company's fastening systems
compete on quality, delivery, price, and ability to provide customer fastening installation
solutions through specific-purpose tooling and fasteners. The Company maintains a
proprietary patented position for certain of its fastener designs for which certain limited
licenses have been granted to competitors. The Company also manufactures certain
fasteners under licenses from competitors.
Research and Development
Company-sponsored research and development activities relate to new products
and services and improvement of existing products and services. The Company's R&D
cost was $13.3 million, $15.0 million, and $15.4 million and represented 1.5 percent,
1.6 percent and 1.5 percent of revenues for fiscal years 1996, 1995, and 1994,
respectively; the amount spent during the same periods for customer-sponsored R&D
(primarily U.S. government-funded) was approximately $56.6 million, $25.1 million, and
$25.5 million, respectively.
Environmental Matters
Compliance with federal, state, and local environmental requirements with respect
to the Company's facilities, including formerly owned and operated facilities, while having
the potential to be a significant cost and liability, are not at this time expected to have a
material adverse effect on the Company's financial condition or upon the competitive
position of the Company or its subsidiaries. Capital expenditures and amounts expensed
related to environmental matters respectively were $2.6 million and $9.3 million for fiscal
year 1996 and are estimated to be $3.0 million and $9.4 million for fiscal year 1997. The
Company maintains ongoing programs for environmental site evaluations, continues its
cooperation with federal and state agencies in site investigations, and engages in
environmental remediation activities of its sites and sites of third parties where appropriate.
The Company is involved with two Environmental Protection Agency (EPA)
superfund sites designated under the Comprehensive Environmental Response,
Compensation and Liability Act (CERCLA) in Monis County, New Jersey, operated about
thirty years ago by the Company for government contract work. The Company has
negotiated a consent decree with the EPA concerning the Rockaway Borough Well Field
Site ("Klockner"). At this site, the Company's estimated cost for response costs, site
remediation, and future operation and maintenance costs is approximately $5.5 million of
which approximately $.6 million will be spent during fiscal year 1997. In 1996, the
Company negotiated a consent decree with the state of New Jersey for the Rockaway
Township Well Field Site ("Denville"). At this site, the Company's estimated cost for
response costs, site remediation, and future operations and maintenance costs is
approximately $4.6 million of which approximately $0.55 million will be spent in fiscal year
1997.
The Company has settled a third party claim covering environmental issues at the
Woodbine, Georgia, site operated by the Company from 1963 to 1976. Under the terms
ofthe agreement, the Company paid $.425 million for past costs incurred by the third party
relating to ownership of the site. The Company is also investigating and remediating
certain solid waste management units (SWMU's) related to past operations conducted by
the Company. The third party retains all other environmental liability for the site. The total
estimated investigation and remediation costs for the site is approximately $0.6 million of
which approximately $0.2 million will be spent in fiscal year 1997.
The Company believes that the eventual cost for site remediation matters known at
this time, before any recoveries from insurance and third party contributions by other
responsible parties including the federal government, is estimated to be $19 million. The
Company has established a receivable in the amount of $2.3 million for expected
reimbursement or recovery for environmental claims, costs and expenses from third
parties, including the federal government. During fiscal year 1996, the Company settied
outstanding environmental liability claims with insurance carriers receiving payments of
$8.7 million from such carriers of which $5.3 million was used to settle reimbursement
claims with the federal govemment for fiscal years 1990 through 1996. The Company's
policy and accounting for environmental matters is set forth in Note 1 and Note 13 ofthe
Company's consolidated financial statements. The Company believes that after recoveries
from third parties and the federal govemment, any net liability for which it may ultimately
be responsible in excess amounts currently accrued, would not be material to the
Company's financial condition and results of operations.
The Company has negotiated an agreement with the federal govemment to recover
certain environmental costs and expenses incun^ed in connection with the performance of
8
government contracts in the fonward pricing on certain of the Company's government
contracts.
Employees
The approximate number of employees ofthe Company on June 30, 1996, was
5,900 compared to 7,200 on June 30, 1995. Space Systems and Defense and Launch
Vehicles Division employees totaled approximately 3,600 on June 30,1996, compared to
4,800 on June 30, 1995. Fastening systems employees totaled approximately 1,600 on
June 30,1996, compared to 1,700 on June 30,1995. Reduced employment levels reflect
lower levels of business activity in non-Shuttle related propulsion and defense-related
programs. Reductions in Shuttle-related employment refiect continuing improvements in
production efficiencies. Ordnance-related employment levels are down due to
discontinuance of Army loading operations at the Louisiana and Marshall, Texas, Army
ammunition plants. Fastening systems' employment levels are moderately lower refiecting
lower volumes for industrial fasteners.
Raw Materials
Although most of the raw materials used by the Company are readily available,
certain key raw material suppliers (such as suppliers of propellent raw materials and nozzle
and case component materials) must be approved by the federal govemment. With a
limited numberof such approved suppliers, delivery of these materials could be disrupted
at the supplier level at any time and have a material adverse impact on production and
delivery schedules until govemment approval of altemative suppliers is obtained.
Seasonality
The business of the Company is not subject to seasonal fluctuations.
Patents and Trademarks
The Company has approximately 373 patents and patent applications, of which 289
relate to the Space and Defense Systems business segments, and 84 relate to the
fastening systems segment. As a govemment contractor, the Company conducts
independent research and development (IR&D) to enable it to maintain its competitive
position. Research and development wori( is also perfomned under contracts with the
Department of Defense, NASA, and other govemment agencies (Contract R&D).
Approximately eighty-six percent of the Company's patents in the Space and
Defense Systems business segment were developed under Company funded IR&D related
budgets. The Company has full ownership interest in its patents developed under these
budgets and lesser rights in the patents it developed under Contract R&D programs.
The Space and Defense Systems business segment patents have the following
remaining duration: approximately seventy-four percent ofthe patents have a duration of
more than 10 years; sixteen percent, 5-10 years; and ten percent, less than 5 years.
Patent coverage includes propulsion system design, case, nozzle, and propellants.
Patents also cover gas generators, ordnance, flare-related products, and the Company's
fiber resin technology. Patents cover non-sodium azide gas generant technology used by
Morton International, Inc. pursuant to agreements with the Company. Under contracts with
the federal govemment, licenses have been granted to the government for limited use of
certain patented technology.
Fastening Systems segment patents have the following remaining duration:
approximately flfly-one percent of the patents have a duration of more than 10 years;
twenty-five percent, 5-10 years; and twenty-four percent less than 5 years. Major
aerospace fastening systems covered by patents include a lightweight grooved
proportional lock bolt and the "Unimatic" blind bolt rivet. Major industrial fastening systems
covered by patents include "Huck-Fit" lock bolts, "Magna-Lok" blind rivets, "Ultra-Twist"
blindbolt for box beam construction applications and "Magna-Grip" lock bolts with patent
lives remaining of more than 10 years. Certain ofthe Company's fastener products are
manufactured under licenses from competitors.
Although the Compiany believes that its present competitive position is enhanced
by its patent and its technical expertise, know-how and proprietary infonnation, no
individual patent or group of patents is material to the conduct of the business of the
Company.
Trademarks are important for product identification in the fastening systems
segment of the business but are not significant to the Company's propulsion business.
Customers
The customers ofthe Space and Defense Systems business segment are primarily
the federal govemment and its prime contractors and subcontractors. Commercial
propulsion customers, primarily in the light and medium launch vehicle market, are being
developed but are not yet material to the Company's customer base. Federal govemment
contracts and subcontracts entered into by the Company, are by their terms, subject to
termination by the govemment or the prime contractor either for convenience or default.
Such contracts are also subject to funding appropriations by Congress. Since the federal
govemment provided, directly and indirectly, approximately 70 percent of the Company's
business in fiscal year 1996, the tennination or discontinuance of funding of a substantial
portion of such business would have a material adverse effect on its operations. No single
non-govemment customer is material to the overall business conducted by the Company.
Fastening systems customers consist of industrial and aerospace original equipment
manufacturers and distributors, domestic and foreign. Foreign customers and a foreign
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sales base are still developing but are not yet material to the Company's customer and
sales base.
Backlog Orders
The Company's backlog of propulsion systems orders on June 30, 1996, and
June 30, 1995, was $1.4 billion and $2.3 billion, respectively. The NASA Space Shuttie
solid rocket motor booster and related contracts comprise approximately 72 percent ofthe
backlog. It Is expected that approximately 41 percent ofthe orders in backlog on June 30,
1996, will be completed by June 30,1997; and the remainder thereafter through fiscal year
2000. The backlog represents the value of contracts for which goods and services are to
be provided and includes approximately $.5 billion in govemment contracts for which funds
have been approved. The backlog is believed to consist of fimn contracts and although
such contracts can be changed or canceled with the exception of the RSRM contract, no
single change or cancellation is expected to be materially significant to the Company's
business. The contract backlog consists of a combination of cost plus award fee, cost plus
fixed fee, cost plus incentive fee, fixed price incentive fee, and firm fixed price contracts.
The Company's fastening systems backlog was approximately $64 million on June 30,
1996.
ITEM 2. PROPERTIES
The Company operates manufacturing, research, and development facilities at 15
locations, and administrative and sales offices, warehouses, and service centers at
approximately teri locations woridwide. The Company considers its manufacturing
facilities, warehouses, and other properties to be generally in good operating condition and
suitable for their intended purposes. All Company-owned property is held in fee with no
encumbrances. Company leased property obligations are set forth in Note 14 of the
Company's consolidated financial statements.
The Company's consolidation of the Space and Defense Systems business
segment faciiities was substantially completed during fiscal year 1996 and is considered
adequate and sufficient to meet operating needs. As a result of such restructuring, the
Company's operations have been discontinued and facilities closed at Huntsville, Alabama
and Carson City, Nevada.
Loading operations at the government-owned Amny Ammunition plants near
Marshall, Texas, and Shreveport, Louisiana, have been completed. Under maintenance
contracts with the United States Amny which will expire in fiscal 1997, the Company
maintains these plants in an inactive status. Under agreement with the Amny, the
Company is permitted limited production at these plants of defense and commercially
related products under third party contracts.
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The Fastening Systems facilities are sufflcient and adequate to meet anticipated
demand in the aerospace and industrial fastening markets. Fastening systems business
segment corporate headquarters and research and development facilities located in Irvine,
California, were closed during fiscal year 1996. The administrative functions were
transferred to the Tucson, Arizona, facilities and the research and development activities
were relocated to other manufacturing faciiities. During fiscal year 1997, the Company will
relocate its installation systems division from a leased facility to a new Company-owned
facility in Kingston, New Yori<.
During fiscal year 1996, additions to property, plant, and equipment totaled $29.1
million.
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The following table sets forth the Company's manufacturing locations and the
approximate square footage.
Buildings (OOP's Square Feet)
Manufacturing Location
by Segment
Space and Defense Systems
Sfigments:^
Northem Utah^
Elkton, Maryland
Huntsville, Alabama^
Shreveport, Louisiana'*
Marshall, Texas^
Carson City, Nevada^
Fagtgpinq Systgm? Sgqment:
Domestic:
Branford, Connecticut
Carson, Califomia
Kingston, New York*
Lakewood, Califomia
Tucson, Arizona
Waco, Texas
International:
Us, France
Osterode, Gemnany®
Shropshire, United Kingdom
Company
Owned
2,794
381
32
164
76
371
61
50
Leased
640
74
153
105
115
10
25
Government
Owned Total
6
967
2,731
1,408
3,440
381
999
2,731
1,408
164
74
153
105
115
86
371
61
25
50
^The Company's Space and Defense Systems business segments share facilities in Northem
Utah and Elkton, l\1aryland.
^During fiscal year 1996, the Company completed the purchase of Air Force Plant 78 at
Promontory, Utah.
^Facilities closed during fiscal year 1996.
^Army ammunition tcility maintenance contracts expected to expire during fiscal year 1997.
^During fiscal year 1997, the Company will relocate to a new Company-owned facility of
approximately 142,000 sq. ft in Kingston, New Yorit.
^Closure of this manufacturing facility is expected to be completed during fiscal year 1997.
13
ITEM 3. LEGAL PROCEEDINGS
Litigation and Regulation
McDonnell Douglas v. Thiokol Corporation, United States District Court, Central
District of California, was filed in July 1992 by plaintiff McDonnell Douglas claiming
damages of $17 million for breach of warranty and prejudgment interest of $19 million. The
action was based upon the failure in 1984 of two STAR 48 satellite placement motors,
manufactured by the Company in accordance with plaintiffs acceptance requirements, to
lift telecommunication satellites into geosynchronous orisit. Plaintiff sought recovery of its
costs incurred to conduct its failure analysis and motor redesign. After trial on the merits
during fiscal year 1996, the Court mled in the Company's favor on all counts. Plaintiff has
appealed the Court's decision to the Ninth Circuit Court of Appeals. The Company
believes that its defense verdict will be upheld by the Court of Appeals. The Company
defended this suit and is defending the appeal, under an agreement with its insurance
carrier pursuant to which the Company's past and future costs of defense are being
reimbursed subject to a reservation of rights.
Thiokol Corporation v. The United States of America. On July 17, 1996, the
Company filed an action in the United States Court of Federal Claims seeking payment of
costs that arose under its cost-reimbursement contracts with the Govemment for operation
and management of Government-owned, contractor-operated Army ammunition plants in
Texas and Louisiana. The Company seeks to recover its costs incun-ed for Govemment-
approved benefits that woricers eamed during their years of service at these plants. These
benefits include: (i) post-retirement health benefits; (ii) long-temn disability benefits; (iii)
Workers' Compensation benefits; and (iv) severance benefits. The Company seeks
recovery of $39.9 million for these costs, with interest. Approximately $6 million of this
amount reflects benefit claims which have been paid to employees by the Company but
not reimbursed by the Army, as required by contract. The Company's litigation costs are
unallowable expenses for govemment contract purposes and are not expected to be
material. The Company expects to prevail in this litigation, but if it does not, the Company
would recognize in that period material non-cash and cash charges. See note 12 to the
Company's consolidated financial statements.
Miscellaneous
The Company is involved in a number of other pending legal and administrative
proceedings which are not expected individually or in the aggregate to have a material
adverse effect upon the Company's financial condition.
Depending on the amount and the timing of an unfavorable resolution of these
14
•
matters, it is possible that the Company's future results of operations or cash flows could
be materially affected in a particular period.
ITEM 4. SUBMISSION OF MA TTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote ofthe Company's stockholders during the fourth
quarter of fiscal year 1996.
EXECUTIVE OFFICERS OF THE REGISTRANT (as required by Instruction 3. to item
401(b) of Registration S-K)
Generally, Executive Officers are elected by the Board of Directors at its first
meeting following the Annual Meeting of Stockholders. The officers generally serve until
the next such meeting, or until their successors are elected and qualified. The next Annual
Meeting of Stockholders will be held on October 24,1996.
The Executive Officers of the Company on June 30, 1996, were:
Positions Held During Past Five
Name and Aae Years and Temns of Office
James R. Wilson (55) President and Chief Executive Officer since
October 1993; Executive Vice President,
Chief Financial Officer and Treasurer
(1992-October 1993); Vice President and
Chief Financial Officer (1989-92).
Richard L. Corbin (50) Senior Vice President and Chief Financial
Officer since May 1994; Chief Financial
Officer and Vice President, Administration
Space Systems Division of General
Dynamics Corporation (1976-94).
James E. McNulty (52) Executive Vice President Human Resources
and Administration since 1991; Vice Presi-
dent Human Resources (1989-91).
Joseph A. Lombardo (63) Vice President Space Operations since
April 1992; (1989-April 1992) Assistant
General Manager Space Operations; prior
to 1989, NASA Marshall Space Flight
Center.
15
Winston N. Brundige (51) Vice President and General Manager,
Defense and Launch Vehicles Division
since July 1994; Vice President and Divi-
sion Manager Elkton Division (1991-June
1994); Director of Production (1990-91).
R. Robert Harris (62) Vice President and General Counsel since
1989.
Robert K. Lund (58) Vice President, Science and Engineering
and Technical Director since 1991; Tech-
nical Director Advanced Technology
(1989-91).
Michael R. Ayers (45) Vice President and Controller since January
1996; Vice President Strategic Develop-
ment (1994-1996); Director Finance &
Administration (1986-1994).
Nicholas J. luanow (36) Treasurer since 1994; Assistant Treasurer
ofthe Company (1989-93).
Edwin M. North (51) Secretary since 1990.
PART II
ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
Information conceming the market for the Company's common equity and related
security holder matters is included in the section "Dividends and Recent Market Prices" and
"Quarterly Financial Highlights" on page 52 of the Company's Annual Report to
Stockholders for fiscal year 1996, and is incorporated herein by reference in Exhibit
Number 13. As of August 30,1996, there were 6,004 stockholders of record.
ITEM 6. SELECTED FINANCIAL DATA
Selected financial data for the five fiscal years ended June 30,1996, is included on
page 62 of the Company's Annual Report to Stockholders for fiscal year 1996 and is
incorporated herein by reference in Exhibit Number 13.
16
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Management's Discussion and Analysis of Financial Condition and Results of
Operations for the three fiscal years ended June 30, 1996, is included on pages 53
through 61 of the Company's Annual Report to Stockholders for fiscal year 1996 and is
incorporated herein by reference in Exhibit Number 13.
The Company sets forth below "Cautionary Statements" forthe purpose ofthe "safe
harbor" provisions ofthe Private Securities Litigation Refomn Act of 1995. Many ofthe
factors described below are discussed in both cunrent and prior Company SEC filings and
to the extent not othenvise discussed in fonA^ard-looking statements should be considered
in assessing the various risks associated with the Company's conduct of its business and
financial condition. In addition to the inherent general business risk, including but not
necessarily limited to changes in the level of economic activity in the markets where the
Company does business; govemmental and regulatory changes; the adverse outcome of
litigation or claims (including environmental) asserted against the Company; weather;
availability and price of raw materials (such as ammonium perchlorate and rayon yam, an
oxidizer for rocket propellant fuels and an essential material for nozzle wrapping
respectively), components, fuel, utilities, and qualified suppliers; work and transportation
stoppage; foreign currency fiuctuations; events of casualty and calamity; and changes in
tax laws and accounting rules; major risks at this time which may impact the Company's
fon/vard-looking statements include but are not necessarily limited to the following risk
factors:
(i) The Company's National Aeronautical and Space Administiration (NASA) Reusable
Solid Rocket Motor (RSRM) contract for the Space Shuttle program is subject to
substantial performance and financial risks. Without cause, the contract may be
temninated for the convenience of the U.S. Govemment (govemment). Deliveries
under the contract may be delayed or extended at the election of the govemment.
Congress may change the funding available to the contract. Actions by the
government or the Company may make the amount of the contract fee already
booked inappropriate, thus causing a retroactive award fee adjustment including
possible reimbursement to the govemment of fees the govemment has paid to the
Company. There is no assurance the Company will be awarded additional RSRM
contracts as a follow-on upon completion ofthe current "Buy III" contract expected
to continue until fiscal year 2000. If the Company is awarded such a follow-on
contract, the profitability and cash fiow from such contract may not be at current
levels. NASA's proposed privatization of the Space Shuttle Program could
adversely impact the Company's RSRM contract in the out-years.
(ii) The Company's maintenance of non-RSRM space and defense contracts and
programs (collectively "programs") and the availability and award of future programs
17
with the govemment and prime contractors are subject to the risk of termination or
renegotiation by the government or failure of such programs to be funded. The
Company's ability to successfully compete and win new programs or retain current
programs is also dependent on the availability of program funding; competition by
others with the Company for such programs on price, quality, technology, facilities,
delivery, and product performance; changes in Congressional funding objectives;
and federal agency demand and program management including but not limited to
program termination, consolidation, or privatization. Risk factors also include the
degree the Company successfully manages current programs, obtaining or retaining
new and existing programs, and the profitability of such programs with satisfactory
retum on investment on lower prices, costs, and unit volumes of a contracting and
competitive govemment procurement environment.
(iii) The products and services, primarily through the Company's fastening systems
business segment and the Company's minority equity investment in Howmet
Corporation, sold by the Company to domestic and international commercial
aerospace martlets are subject to the risks of the cyclical nature of the aircraft
market and the phase of such cycle at any point in time. Delay or changes in
aircraft and component orders and build schedules may impact the future demand
for Company products, delivery, and profitability. The Company's major aerospace
customers are large and may exercise their mari<et power among a number of
vendors, including the Company, competing for their business by exerting pricing
pressure, delivery, inventory, and unit volume requirements. Risks to the Company
include management's ability to maintain both product and manufacturing
qualifications to meet the needs of its major customers and regulatory agencies and
rnaintain or improve margins and retum on investinent in light of competitive pricing
pressures, unit demand and product qualification, and product substitutions by
major customers. The Company's potential inability to maintain product pricing, as
well as availability, delivery, and service are important risk factors.
(iv) The products and services sold by the Company for domestic and intemational, and
industrial commercial maricets, primarily through the fastening systems business
segment and the Company's minority equity investment in Howmet Corporation, are
subject to the risks of the level of general economic activity and industry capacity
in mature industrial markets, product applications, and technology associated
primarily with aircraft, automotive, transportation, power generation, construction,
and other industrial applications. The risks forthe Company include managements
ability to successfully expand new and existing product lines, to improve margins
and retums on investment by successfully implementing asset management, pricing
and cost reduction strategies. The Company's ability to maintain competitive
products, pricing, availability, delivery, and service are important customer and
competitor risk factors.
18
(v) Many of the Company's products and manufacturing processes utilize highly
energetic and hazardous materials. Major liability, employee safety, production
disruptions, and asset destruction or impairment risks exist. Unknown
environmental hazards including the designation ofthe Company as a responsible
party in a Superfund or similar state enforcement action by the Environmental
Protection Agency and environmental claims by third parties pose a significant risk
to the Company especially with respect to new acquisitions the Company may make
with the implementation of its diversification and growth strategies to the extent such
risks are not identified or othenvise indemnified by third parties.
(vi) Management's ability to successfully implement and complete its long-term
diversification strategy making the Company less dependent on govemment space
and defense procurement is a strategic risk factor. The exercise of the Company's
option to purchase the remaining 51 percent ofthe Howmet acquisition will In part
be dependent on the favorable operational and financial pertonnance, favorable
economic conditions, and the availability of financing at reasonable costs and on
reasonable terms from the capital martlets at the time the Company exercises its
option to acquire the balance of the equity ownership of Howmet from the Cariyle
Group. Implementation of a successful expansion and diversification stirategy
including acquisitions of new product lines and additions to existing product lines is
a challenging risk to the Company and its long-temn success. There is strategic risk
associated with the integration and management of new business, such as Howmet,
into the existing organization structure.
(vii) Supplier and customer product qualifications are important to the Company as a
supplier and as a purchaser. As a supplier, loss or failure to maintain product or
manufacturing qualifications from major customers including the govemment and
major commercial aerospace and aircraft manufacturers may result in loss of
markets and business for the Company. Vendor, component parts, and raw
materials qualifications are important to the Company in the manufacture of its
products including major propulsion systems such as the RSRM. Vendor,
component parts and raw material qualifications may be limited and the loss of a
major vendor as a supplier has the potential to cause a major and material delay in
production or program management.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated balance sheets ofthe Company as of June 30,1996 and 1995,
and the consolidated statements of income, cash fiows, and stockholders' equity for each
of the three years for the periods ended June 30, 1996, 1995, and 1994, and notes to
consolidated financial statements are included on pages 34 through 52 of the Company's
Annual Report to Stockholders for fiscal year 1996 and are incorporated herein by
reference in Exhibit Number 13.
19
Quarteriy financial highlights are included on page 52 of the Company's Annual
Stockholders' Report to Stockholders for the fiscal year ended June 30, 1996, and are
incorporated herein by reference in Exhibit Number 13.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information concerning the Company's directors and nominees for director is
included on pages 4 through 6 of the Company's definitive Proxy Statement dated
September 20, 1996, and is incorporated herein by reference. Information conceming
disclosure of delinquent files pursuant to Item 405 of Regulation S-K is set forth on page 8
of the Company's definitive Proxy Statement dated September 20, 1996, and is
incorporated herein by reference.
Information conceming the Company's Executive Officers is included on pages 15
through 16 of Part 1 hereof.
ITEM 11. EXECUTIVE COMPENSATION
Information conceming executive compensation for fiscal year 1996 is included on
pages 9 through 13 of the Company's definitive Proxy Statement dated September 20,
1996, and is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
Information concerning beneficial ownership of the Company's common stock is
included on page 8 of the Company's definitive Proxy Statement dated September 20,
1996, and is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
20
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K
(a) DOCUMENTS FILED AS PART OF THIS REPORT
1. Financial Statements
The following consolidated financial statements are included on pages 34 through
52 of the Company's Annual Report to Stockholders for the fiscal year ended
June 30, 1996, and are incorporated herein by reference in Exhibit Number 13:
Consolidated Statements of Income - Years ended June 30,1996,1995, and 1994.
Consolidated Balance Sheets - June 30, 1996, and June 30, 1995.
Consolidated Statements of Cash Flows -Years ended June 30, 1996, 1995, and
1994.
Consolidated Statements of Stockholders' Equity - Years ended June 30, 1996,
1995, and 1994.
Notes to Consolidated Financial Statements.
Management's Report on Financial Statements.
Report of Ernst & Young LLP, Independent Auditors.
2. Financial Statement Schedules
All schedules for which provision is made under the appiicabte accounting regulation
of the Securities and Exchange Commission are omitted as they are either not required
under the related instructions or are othen/vise inapplicable.
21
3. Index to Exhibits
Exhibit
Number Description
(3) Certificate of Incorporation and By-Laws.
3.01 Restated Certificate of Incorporation of the Company, effective
July 3,1989: Incorporated by reference as Exhibit 3 to Form 10-K
for fiscal year ended June 30, 1989.
3.02 Amended By-Laws of the Company: Incorporated by reference to
Annex IV to Proxy Statement/Prospectus dated May 22,1989, for
Special Stockholders meeting held June 23, 1989.
3.03 Amended By-Laws ofthe Company June 19, 1993, increasing
Board of Directors: Incorporated by reference as Exhibit 3 to Fomn
10-K for fiscal year ended June 30,1993.
(4) Instruments defining the rights of security holders including indentures.
4.01 Rights Agreement dated January 26,1989, between the Company
and The First National Bank of Chicago: Incorporated by reference
to Exhibit 1 to Fomn 8-A dated Febmary 8, 1989.
4.02 Amendment dated June 22, 1989, to Rights Agreement between
the Company and The First National Bank of Chicago:
Incorporated by reference to Exhibit 2 to Fomn 8-K dated July 3,
1989.
4.03 Amendment No. 2 to Rights Agreement dated January 18, 1990,
between the Company and The First National Bank of Chicago:
Incorporated by reference to Exhibit 3 to Form 8-K dated January
18,1990.
4.04 See Exhibits 3.01, 3.02, and 3.03 above.
(10) Material contracts.
10.01 ^Key Executive Long-Term Incentive Plan effective for fiscal year
1990: Incorporated by reference as Exhibit 10 to Fomn 10-K for
fiscal year ended June 30,1989.
22
Exhibit
Number Description
10.02 ^Key Executive Long-Term Bonus Plans effective fiscal year 1991:
Incorporated by reference as Exhibit 10 to Fonn 10-K for fiscal
year ended June 30, 1991.
10.03 ^Key Executive Annual Bonus Plan (Plan 1) effective for fiscal year
1990: Incorporated by reference as Exhibit 10 to Form 10-K for
fiscal year ended June 30, 1989.
10.04 ^Staff Annual Bonus Plan effective for fiscal year 1991:
Incorporated by reference as Exhibit 10 to Fomn 10-K for fiscal
year ended June 30, 1990.
10.05 ^Staff Executive Annual Bonus Plan (Plan 2) effective for fiscal
year 1990: Incorporated by reference as Exhibit 10 to Form 10-K
for fiscal year ended June 30,1989.
10.06 ^ 1989 Stock Awards Plan: Incorporated by reference to Annex VI
to Proxy Statement/Prospectus dated May 22, 1989, for Special
Stockholders Meeting held June 23,1989.
10.07 ^1989 Stock Awards Plan as amended by stockholder approval
October 15, 1993: Incorporated by reference to the definitive
Proxy Statement dated September 11, 1992.
10.08 ^Survivor Income Benefits Plan, amended through March 24,
1983: Incorporated by reference as Exhibit 10 to Form 10-K for
fiscal year ended June 30,1989.
10.09 ^Arrangements whereby the Company compensates its
independent auditors for tax services to certain key executives for
which there is no written document: Incorporated by reference as
Exhibit 10 to Form 10-K for fiscal year ended June 30, 1989.
10.10 ^Form of Employment Agreement between the Company and
certain of its executive officers including the Chief Executive
Officer and the other four highest paid executive officers:
Incorporated by reference as Exhibit 10 to Form 10-K for fiscal
year ended June 30,1989.
23
Exhibit
Number Description
10.11 ^Amended Fomn of Employment Agreement between certain of its
executive officers including the five most highly compensated:
Incorporated by reference as Exhibit 10 to Form 10-K for fiscal
year ended June 30, 1990.
10.12 ^Consulting Agreement effective July 1, 1993, as amended,
between the Company and U. Edwin Gamson, the temns of which
are described: Incorporated by reference from the 1994 Proxy
Statement dated September 23, 1994.
10.13 Note Agreement $120,000,000 dated June 19, 1990:
Incorporated by reference as Exhibit 10 to Fomn 10-K for fiscal
year ended June 30, 1990.
10.14 Credit Agreement dated 09/30/93 among Thiokol Coqaoration and
The First National Bank of Chicago, Bank of America National
Trust and Savings Association, NBD Bank, N.A., and The
Northem Trust Company: Incorporated by reference as Exhibit 10
to Form 10-K for fiscal year ended June 30, 1994.
10.15 ^^iokol Corporation Pension Plan (Second Restatement
Effective January 1,1989): Incorporated by reference as Exhibit
10 to Fomn 10-K for fiscal year ended June 30, 1994.
10.16 ^^iokol Corporation Supplemental Executive Retirement Plan
(Effective July 1, 1992): Incorporated by reference as Exhibit 10
to Fonn 10-K for fiscal year ended June 30, 1992.
10.17 Huck International, Inc. Personal Retirement Account Plan
(Second Restatement Effective as of January 1, 1992):
Incorporated by reference as Exhibit 10 to Fonn 10-K for fiscal
year ended June 30, 1995.
10.18 Huck International, Inc. Supplemental Executive Retirement Plan
(Effective January 1,1992): Incorporated by reference as Exhibit
10 to Form 10-K for fiscal year ended June 30, 1995.
10.19 Stock Purchase Agreement by and among Thiokol Holding
Company, Cariyle-Blade Acquisition Partners L.P., and Blade
Acquisition Corp. dated as of December 31, 1995: Incorporated
24
Exhibit
Number Description
by reference as Exhibit 10 to Form 10-Q forthe quarterly period
ended December 31, 1995.
10.20 Shareholders' Agreement by and among Thiokol Holding
Company, Carlyle-Blade Acquisition Partners, L.P., and Blade
Acquisition Corp. dated as of December 13, 1995: Incorporated
by reference as Exhibit 10 to Form 10-Q for the quarterly period
ended December 31, 1995.
10.21 Registration Rights Agreement by and between Blade Acquisition
Corp., Thiokol Holding Company and Carlyle-BIade Acquisition
Partners, L.P. dated as of December 13, 1995: Incorporated by
reference as Exhibit 10 to Fomn 10-Q for the quarterly period
ended December 31, 1995.
10.22 Holding Management Agreement by and between Howmet
Corporation and Thiokol Holding Company dated as of December
13, 1995: Incorporated by reference as Exhibit 10 to Form 10-Q
forthe quarterly period ended December 31,1995.
10.23 Thiokol Transaction Fee Agreement by and between Howmet
Holdings Acquisition Corp. and Thiokol Corporation dated as of
December 13, 1995: Incorporated by reference as Exhibit 10 to
Form 10-Q forthe quarteriy period ended December 31, 1995.
10.24 Amended Certificate of Designations, Preferences and Relative,
Participating, Optional, and Other Special Rights of Preferred
Stock and Qualifications, Limitations, and Restrictions thereof of
9.0% Series A Senior Cumulative Prefen-ed Stock of Blade
Acquisition Corp.: Incorporated by reference as Exhibit 10 to Form
10-Q for the quarteriy period ended December 31,1995.
10.25 Standstill Agreement by and among Thiokol Holding Company,
Thiokol Corporation, Cariyle-Blade Acquisition Partners, L.P. et al.
dated as of December 13, 1995: Incorporated by reference as
Exhibit 10 to Fomn 10-Q forthe quarteriy period ended December
31, 1995.
10.26 Collateral Custodial Agreement by and among Carlyle-Blade
Acquisition partners L.P., Thiokol Holding Company, and the First
25
Exhibit
Number Description
National Bank of Chicago: Incorporated by reference as Exhibit
10 to Form 10-Q for the quarterly period ended December 31,
1995.
10.27 Credit Agreement dated as of May 23, 1996, among Thiokol
Corporation and The First National Bank of Chicago.
10.28 Thiokol Corporation 1996 Stock Awards Plan.
10.29 Key Executive Bonus Plan, 1996 Amendments.
(11) Statement re computation of per share earnings.
Statement re computation of per share earnings of the Company and
subsidiaries forthe three years ended June 30, 1996, 1995, and 1994.
(13) Annual Report to security holders.
Applicable sections of the Annual Report to Stockholders of the Company
for fiscal year 1996 incorporated by reference.
(21) Subsidiaries ofthe registrant.
Subsidiaries of the Company.
(24) Consents.
Consent of Ernst & Young LLP, independent auditors.
(27) Financial Data Schedule.
(99) Additional exhibits.
"Cautionary Statements" for the pun30se of the "Safe Harbor" provisions of
the Private Securities Litigation Reform Act of 1995, filed in the Company's
report on Fomn 8-K dated May 14,1996, and are incorporated by reference.
26
(b) REPORTS ON FORM 8-K
Fomn 8-K filed May 14,1996, sets forth the Company's "cautionary statements" for
the purpose of the "safe harbor" provisions of the Private Securities Litigation
Refomn Act of 1995.
^Participation by the Company's Chief Executive Officer and four most highly
compensated Executive Officers as a group in the compensation plans identified in such
exhibits are described on page 9 in the Company's definitive Proxy Statement dated
September 20, 1996, which description is incorporated herein by reference. Each
management contract or compensatory plan or arrangement has been filed as an Exhibit
to this Fomn 10-K pursuant to Item 14c.
^A description of these contracts is set forth in the Company's definitive Proxy
Statement dated September 20, 1996, and such contracts are filed as Exhibits pursuant
to Fomn 10-K, Part IV, Item 14(a)3.
27
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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, as of the 26 day of September
1996.
THIOKOL CORPORATION
(Registrant)
By. Isi Richard L. Corbin
Richard L. Corbin
Senior Vice President and
Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the registrant
in the capacities indicated, as of the 26 day of September 1996.
SIGNATURE TITLE
Isl James R. Wilson
James R. Wilson
Chairman of the Board, President,
Chief Executive Officer and Director
(Principal Executive Officer)
Isl Richard L. Corbin
Richard L. Corbin
Senior Vice President and Chief
Financial Officer (Principal Financial
Officer)
Isl Michael R. Ayers
Michael R. Ayers
Vice President and Controller
(Principal Accounting Officer)
/s/ NeWA Am^stronq
Neil A. Armstrong
Director
lsi U. Edwin Garrison
U. Edwin Garrison
Director
/R/Mir.haelPC.Carns
Michael P.C. Cams
Director
Is/ Edsel D. Dupford
Edsel D. Dunford
Director
/S/ L. Dgnnis Koglowski
L. Dennis Kozlowski
Director
Isl Charies S. Locke
Charles S. Locke
Director
isl James M. Rinoler
James M. Ringler
Director
/g/WiJIiamO, Studeman
William O. Studeman
Director
Isl Donald C Trauscht
Donald C. Trauscht
Director
EXHIBIT 11
STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
THIOKOL CORPORATION
(in thousands, except per share data)
Year Ended June 30
Primary
Average shares outstanding:
Additional shares assuming exercise of
dilutive stock options-based on
treasury stock method using average
mari(et prices:
Total shares:
Net income (loss):
Eamings per share (loss):
1996
18,228
33S.
18.556
$ 58,298
$ 3.14
1995
18,538
25S.
1994
19,658
.^15
19.973
$(3,515)
$ (.^8)
Fully Diluted
Average shares outstanding:
Additional shares assuming exercise of
dilutive stock options-based on
treasury stock method using the year-end
market price, if higher than average
martlet price:
Total shares:
Net income (loss):
Eamings per share (loss):
18,228 18,538 19,658
36?
18.596
$ 58,298
$ 3.13
326
18.864
$47,463
$ 2.52
315
19.973
$(3,515)
$ (18)
EXHIBIT (21)
SUBSiDiARiES OF THIOKOL CORPORATION
The following is a list of operating subsidiary corporations of the Company as of
June 30,1996. Certain subsidiaries not considered significant have been omitted.
State or Other
Jurisdiction
Subsidiary of Incorporation
Huck International, Inc Delaware
Huck S.A France
Huck Intemational GmbH & Co Gemnany
Huck Intemational Ltd United Kingdom
Thiokol Holding Co Delaware
EXHIBIT (24)
Consent of Independent Auditors
We consent to the incorporation by reference in this Annual Report (Form 10-K) of
Thiokol Corporation of our report dated August 1, 1996, included in the 1996 Annual
Report to Shareholders of Thiokol Corporation.
We also consent to the incorporation by reference in the Registration Statements
(Fomn S-8, Nos. 33-18630, 33-2921, 33-10316, 2-76672, 2-90885, and 33-38322)
pertaining to certain Retirement Savings and Investinent Plans and Stock Option Plans of
Thiokol Corporation of our report dated July 31, 1996, with respect to the consolidated
financial statements of Thiokol Corporation incorporated by reference in the Annual Report
(Form 10-K) of Thiokol Corporation for the year ended June 30, 1996.
ERNST & YOUNG LLP
Salt Lake City, Utah
September 26,1996