Carpenter Technology Announces Retirement Plan Changes
September 14 2016 - 8:00AM
Will freeze General Retirement Plan
effective December 31, 2016
Carpenter Technology Corporation (NYSE:CRS) (the “Company”) today
announced changes to retirement plans it offers to certain
employees. The Company will freeze benefits accrued to eligible
participants of the General Retirement Plan (“GRP”) effective
December 31, 2016. The GRP is a defined benefit pension plan that
currently includes approximately 1,900 domestic current salaried
and hourly employees. The affected employees will be transitioned
to the Company’s 401(k) plan that has been in effect for eligible
employees since 2012, when the GRP was closed to new entrants.
The Company also announced plans to voluntarily contribute $100
million to the GRP within the next 60 days, which will further
bolster the funded position of the plan.
As a result of these changes, the Company expects an
approximately $40-45 million reduction in its annual net pension
expense inclusive of estimated incremental defined contribution
plan costs. The savings estimates are based on assumptions used in
the Company’s June 30, 2016 valuation and are subject to change as
the Company completes a re-measurement of the plan’s assets and
liabilities as of September 30, 2016. The Company also expects to
record certain non-cash charges related to the change of an amount
less than $1 million.
“During the past year, we launched numerous initiatives to
aggressively manage our business and promote sustainability in the
face of ongoing marketplace volatility across select end-use
markets. To further strengthen our long-term financial
condition and remain competitive in today’s marketplace, we are
modifying our approach to how we partner with employees to help
them prepare for retirement,” said Tony Thene, Carpenter's
President and CEO. “Our decision to transition from a
traditional defined benefit pension plan to a more typical defined
contribution plan reflects our goal to provide our employees a
competitive retirement plan option while aligning the majority of
our workforce under a common retirement plan. At the same
time, our $100 million voluntary contribution to the GRP underlines
our commitment to supporting our many loyal employees who have
contributed to Carpenter’s success and leadership position.”
In connection with these actions, the Company has updated its
forward looking guidance for fiscal year 2017 related to net
pension expense and pension contributions. The Company now expects
net pension expense for fiscal year 2017 to be approximately $39
million to $44 million and expects to make a discretionary pension
contribution of $100 million during fiscal year 2017. The reduction
in net pension expense excludes the expected incremental defined
contribution plan costs of approximately $5 million in the second
half of fiscal year 2017.
About Carpenter Technology
Carpenter Technology Corporation is a leading producer and
distributor of premium specialty alloys, including titanium alloys,
powder metals, stainless steels, alloy steels and tool
steels. Carpenter’s high-performance materials and advanced
process solutions are an integral part of critical applications
used within the aerospace, transportation, medical and energy
markets, among other markets. Building on its history of
innovation, Carpenter’s superalloy powder technologies support a
range of next-generation products and manufacturing techniques,
including additive manufacturing or 3D Printing. Information
about Carpenter can be found at www.cartech.com.
Forward-Looking Statements
This presentation contains forward-looking statements within the
meaning of the Private Securities Litigation Act of 1995. These
forward-looking statements are subject to risks and uncertainties
that could cause actual results to differ from those projected,
anticipated or implied. The most significant of these uncertainties
are described in Carpenter’s filings with the Securities and
Exchange Commission, including its annual report on Form 10-K for
the year ended June 30, 2016 and the exhibits attached to that
filing. They include but are not limited to: (1) the cyclical
nature of the specialty materials business and certain end-use
markets, including aerospace, defense, industrial, transportation,
consumer, medical and energy, or other influences on Carpenter’s
business such as new competitors, the consolidation of competitors,
customers and suppliers, or the transfer of manufacturing capacity
from the United States to foreign countries; (2) the ability of
Carpenter to achieve cash generation, growth, earnings,
profitability, cost savings and reductions, productivity
improvements or process changes; (3) the ability to recoup
increases in the cost of energy, raw materials, freight or other
factors; (4) domestic and foreign excess manufacturing capacity for
certain metals; (5) fluctuations in currency exchange rates; (6)
the degree of success of government trade actions; (7) the
valuation of the assets and liabilities in Carpenter’s pension
trusts and the accounting for pension plans; (8) possible labor
disputes or work stoppages; (9) the potential that our customers
may substitute alternate materials or adopt different manufacturing
practices that replace or limit the suitability of our products;
(10) the ability to successfully acquire and integrate
acquisitions; (11) the availability of credit facilities to
Carpenter, its customers or other members of the supply chain; (12)
the ability to obtain energy or raw materials, especially from
suppliers located in countries that may be subject to unstable
political or economic conditions; (13) Carpenter’s manufacturing
processes are dependent upon highly specialized equipment located
primarily in facilities in Reading and Latrobe, Pennsylvania and
Athens, Alabama for which there may be limited alternatives if
there are significant equipment failures or a catastrophic event;
(14) the ability to hire and retain key personnel, including
members of the executive management team, management, metallurgists
and other skilled personnel; (15) fluctuations in oil and gas
prices and production; and (16) the success of actions taken to
reduce costs associated with retirement and pension plans. Any of
these factors could have an adverse and/or fluctuating effect on
Carpenter’s results of operations. The forward-looking statements
in this document are intended to be subject to the safe harbor
protection provided by Section 27A of the Securities Act of 1933,
as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended. Carpenter undertakes no obligation to update or revise
any forward-looking statements.
Media Inquiries:
William J. Rudolph, Jr.
+1 610-208-3892
wrudolph@cartech.com
Investor Inquiries:
Brad Edwards
Brainerd Communicators
+1 212-986-6667
edwards@braincomm.com
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