Proposed cuts in the nation's defense budget will eventually trickle down to Thiokol Corp., but its chief executive officer says new commercial opportunities should compensate for the losses during the next decade.
"It's certainly my desire to have another leg to the business that's strictly commercial," said U. Edwin Garrison, who is also president of the Utah-based corporation.Ideally, Garrison would like Thiokol to divide its business equally among defense, aerospace and commercial contracts. Presently about half of its business is in the space market, 19 percent in strategic, 17 percent tactical and 16 percent ordnance.
Garrison told stockholders at the corporation's annual meeting at the Ogden Park Hotel that Thiokol had a solid first year as an independent company and he anticipates it should continue to have a relatively stable core sales base for at least the next eight to 10 years.
"When we include the Shuttle Buy III contract, which is in negotiations, we will have a very large $4 billion backlog," he said.
The company experienced a 16 percent increase in net income in fiscal year 1990 compared to fiscal year 1989, rising to $41.4 million from $35.6 million. Earnings per share for the same time period increased to $2.15 from $1.86, also a 16 percent gain.
The corporation's sales increased by 1 percent during the same period to $1.181 billion.
"As a result of our strong earnings growth and the efforts placed on better managing out working capital, we increased our cash balance by $98 million during the year," Garrison said.
In a briefing with reporters, Garrison said diversification is part of Thiokol's long-term plan but he would not specify what course the corporation plans to take.
Thiokol does not want to participate in the "hostile takeover of another company," he said. However, Garrison said Thiokol is interested in companies that meet what he called as a "very rigid criteria," meaning companies under $200 million that offer a growth opportunity, are environmentally conscious and have a strong management team in place.
"We do, I believe, have the finances to help a small company expand if need be," he said.
As for keeping Thiokol's headquarters in Ogden, Harrison said. "We have no plans or desire to move our corporate headquarters in the near future."
In the business portion of the meeting, stockholders re-elected Robert T. Marsh, Thiokol's chairman of the board, Jon M. Huntsman, chairman of Huntsman Chemical Corp., former Apollo astronaut Neil A. Armstrong, chairman of Computing Technologies for Aviation, and Charles S. Locke, Thiokol's former chief executive officer and former chairman of its board of directors to three-year terms on the company's board of directors. The terms expire in 1993.
Stockholders also appointed the international accounting firm of Ernst & Young as the corporation's outside auditors.
Net income increases 29% to $11.5 million
Thiokol Corp. reported a 29 percent increase in net income for the first quarter of the 1991 fiscal year ending Sept. 30.
Net income totaled $11.5 million compared to $8.9 million for the same period last year. Earnings per share were 60 cents compared to 46 cents in the prior year.
Thiokol manufactures and markets high technology solid propulsion systems, ordnance and composite programs for space and defense.