Action Comes With Report of 81% Income Gain : Fluorocarbon Moves to Foil a Takeover

By JOHN CHARLES TIGHE

March 23, 1989 12 AM PT

Times Staff Writer

Directors of Fluorocarbon adopted a plan Wednesday that will allow stockholders to buy shares at a bargain in the event of a hostile takeover.

Shareholders of record on May 23 will be entitled to buy either Fluorocarbon’s stock or stock in a merged company at half the market value if an investor acquires more than 20% of Fluorocarbon’s stock without its board’s approval.

Income Climbed 81%

The Laguna Niguel-based maker of specialized rubber and plastics said the shareholder rights plan was adopted as a precautionary measure and was not in response to a takeover bid.

Fluorocarbon Chairman Peter Churm said in a prepared statement that he is unaware of any effort to acquire control.

Also on Wednesday, Fluorocarbon reported that net income for fiscal 1989 climbed 81% to $9.9 million, compared to $5.4 million for the prior year. Revenue for the year, which ended Feb. 4, rose 43% to $249.8 million from $174.5 million.

For the fiscal fourth quarter, net income was up 32% to $1.8 million, compared to $1.3 million. Revenue rose 29% to $65.6 million, from $51 million.

Churm said that all of Fluorocarbon’s operating groups contributed to the performance. Net income for the company’s Samuel Moore group, which was acquired in May, 1987, was up 54%.

Fluorocarbon ended its fiscal year with a record amount of backlog, Churm said. But he also said that expenses related to acquisitions will slow earnings growth for the next 12 months.

In February, Fluorocarbon purchased Dixon Industries, CHR Industries and Bunnell Plastics for $86 million. Sales of the three companies totaled $60 million last year.

“I’m concerned about how CHR and Bunnell will be integrated into Fluorocarbon’s businesses,” said Patricia Trent, an analyst at Seidler Amdec Securities in Los Angeles. Trent said she expects the company’s fiscal 1990 revenue to grow by $90 million, including $60 million from the newly acquired firms.

Fluorocarbon stock closed Wednesday at $13 per share, down 12.5 cents, on the over-the-counter market.