-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, S4eERXThhFG2eWBYvnaWa0OmaSCUbBucwKIQBGTmiUZPdGp2UmqyeViieA1LyIUD QY6LiDvNc0fq1Arix69bDw== 0000950124-98-006597.txt : 19981116 0000950124-98-006597.hdr.sgml : 19981116 ACCESSION NUMBER: 0000950124-98-006597 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980930 FILED AS OF DATE: 19981113 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GREAT LAKES CHEMICAL CORP CENTRAL INDEX KEY: 0000043362 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS CHEMICAL PRODUCTS [2890] IRS NUMBER: 951765035 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-06450 FILM NUMBER: 98747762 BUSINESS ADDRESS: STREET 1: ONE GREEAT LAKES BLVD STREET 2: P O BOX 2200 CITY: WEST LAFAYETTE STATE: IN ZIP: 47906 BUSINESS PHONE: 3174976219 FORMER COMPANY: FORMER CONFORMED NAME: MCCLANAHAN OIL CO DATE OF NAME CHANGE: 19700925 FORMER COMPANY: FORMER CONFORMED NAME: GREAT LAKES OIL & CHEMICAL CO DATE OF NAME CHANGE: 19700925 10-Q 1 FORM 10-Q 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarter ended September 30, 1998 Commission file number 1-6450 GREAT LAKES CHEMICAL CORPORATION (Exact name of registrant as specified in its charter) DELAWARE 95-1765035 (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) 500 East 96th Street, Suite 500 Indianapolis, IN 46240 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code 317-715-3000 One Great Lakes Boulevard, P.O. Box 2200, West Lafayette, IN 47906 ------------------------------------------------------------------- (Former address of principal executive office) 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 the number of shares outstanding of each of the issuer's classes of common stock, as of the close of the period covered by this report. One Class - 59,105,583 Shares as of September 30, 1998 2 Part 1 - Financial Statements
GREAT LAKES CHEMICAL CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS September 30 December 31 1998 1997 ------------ ----------- (thousands of dollars) Assets Current Assets Cash and cash equivalents $ 475,046 $ 73,673 Accounts and notes receivable, less allowance of $6,075 (1997 - $5,803) 242,998 256,892 Inventories Finished products 217,802 217,398 Raw materials 46,527 51,984 Supplies 32,451 28,793 ---------- ---------- Total inventories 296,780 298,175 Prepaid expenses 26,551 39,806 ---------- ---------- Total current assets 1,041,375 668,546 Plant and Equipment 1,236,411 1,140,617 Less allowance for depreciation (552,635) (481,982) ---------- ---------- Net plant and equipment 683,776 658,635 Goodwill 118,188 114,902 Investments in and Advances to Unconsolidated Affiliates 77,205 72,716 Other Assets 34,117 29,052 Net Assets of Discontinued Operations 104,743 726,540 ---------- ---------- $2,059,404 $2,270,391 ========== ==========
3 GREAT LAKES CHEMICAL CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (CONTINUED)
September 30 December 31 1998 1997 ------------ ----------- (thousands of dollars) Liabilities and Stockholders' Equity Current Liabilities Accounts payable $ 101,010 $ 140,310 Accrued expenses 152,875 134,547 Income taxes payable 124,073 13,511 Dividends payable 4,728 9,431 Notes payable and current portion of long-term debt 3,302 6,557 ---------- ---------- Total current liabilities 385,988 304,356 Long-term Debt, less Current Portion 472,868 561,455 Other Noncurrent Liabilities 33,147 28,692 Deferred Income Taxes 68,025 68,445 Stockholders' Equity Common stock, $1 par value, authorized 200,000,000 shares, issued 72,732,794 (1997 - 72,572,602 shares) 72,733 72,573 Additional paid-in capital 127,262 123,379 Retained earnings 1,668,779 1,912,468 Minimum pension liability adjustment (2,543) (2,543) Cumulative translation adjustment (21,946) (52,855) Less treasury stock, at cost, 13,627,211 shares (1997 - 13,628,300 shares) (744,909) (745,579) ---------- ---------- Total stockholders' equity 1,099,376 1,307,443 ---------- ---------- $2,059,404 $2,270,391 ========== ==========
4 GREAT LAKES CHEMICAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended Nine Months Ended September 30 September 30 ------------------ ----------------- 1998 1997 1998 1997 ---- ---- ---- ---- (thousands of dollars except per share data) Net Sales $340,450 $309,570 $1,077,130 $ 985,561 Operating Expenses Cost of products sold 249,743 220,508 777,689 705,055 Selling, administrative and research expenses 48,182 42,210 149,175 132,515 Restructuring and Special Charges 48,314 -- 63,814 -- -------- -------- ---------- --------- 346,239 262,718 990,678 837,570 -------- -------- ---------- --------- Operating (Loss) Income (5,789) 46,852 86,452 147,991 Interest and Other Income 12,255 8,368 28,534 20,784 Interest and Other Expenses 4,736 10,170 28,167 30,762 -------- -------- ---------- --------- Income from Continuing Operations before Income Taxes 1,730 45,050 86,819 138,013 Income Taxes 500 16,000 30,400 49,500 -------- -------- ---------- --------- Net Income from Continuing Operations 1,230 29,050 56,419 88,513 Net Income from Discontinued Operations -- 29,768 32,571 85,564 -------- -------- ---------- --------- Net Income $ 1,230 $ 58,818 $ 88,990 $ 174,077 ======== ======== ========== ========= Earnings per Share: Basic Continuing Operations $ 0.02 $ 0.48 $ 0.96 $ 1.47 Discontinued Operations -- 0.50 0.55 1.42 -------- -------- ---------- --------- $ 0.02 $ 0.98 $ 1.51 $ 2.89 ======== ======== ========== ========= Diluted Continuing Operations $ 0.02 $ 0.48 $ 0.95 $ 1.46 Discontinued Operations -- 0.50 0.55 1.42 -------- -------- ---------- --------- $ 0.02 $ 0.98 $ 1.50 $ 2.88 ======== ======== ========== ========= Cash Dividends Declared per Share $ 0.08 $ 0.16 $ 0.32 $ 0.47
5 GREAT LAKES CHEMICAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended September 30 ---------------------- 1998 1997 ---------------------- (thousands of dollars) OPERATING ACTIVITIES Net income from continuing operations $ 56,419 $ 88,513 Adjustments to reconcile income from continuing operations to net cash provided by operating activities: Depreciation and amortization 61,882 55,072 Changes in deferred items and other 46,697 (541) -------- -------- Cash provided by continuing operations excluding changes in working capital 164,998 143,044 Changes in working capital other than debt, net of effect from business combinations 534 32,744 Other noncurrent liabilities (2,786) 677 -------- -------- Net Cash Provided by Operating Activities from Continuing Operations 162,746 176,465 Discontinued Operations: Net income 32,571 85,564 Change in net assets 431,812 55,867 -------- -------- Net Cash Provided by Operating Activities 627,129 317,896 INVESTING ACTIVITIES Plant and equipment additions (114,339) (100,415) Business combinations, net of cash acquired 3,258 (999) Other (8,739) (2,872) -------- -------- Net Cash Used in Investing Activities (119,820) (104,286) FINANCING ACTIVITIES Net (repayments) borrowings under short-term credit lines (3,447) 394 Net (decrease) increase in commercial paper and other long-term obligations (88,672) 3,544 Proceeds from stock options exercised 4,043 1,941 Cash dividends (18,981) (22,927) Repurchase of common stock (1,407) (86,405) Other 707 --- -------- -------- Net Cash Used in Financing Activities (107,757) (103,453) Effect of Exchange Rate Changes on Cash and Cash Equivalents 1,821 (4,438) -------- -------- Increase in Cash and Cash Equivalents 401,373 105,719 Cash and Cash Equivalents at Beginning of Year 73,673 141,439 -------- -------- Cash and Cash Equivalents at End of Period $475,046 $247,158 ======== ========
6 MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 CONTINUING OPERATIONS Sales for the third quarter increased 10 percent to $340 million primarily on the strength of 6 percent volume growth. Excluding the effect of restructuring and special charges of $48 million pretax, earnings from continuing operations were $33 million or $.56 per share compared to $29 million or $.48 per share in the third quarter of 1997. Including restructuring and special charges net income was $1 million or $.02 per share. The following table sets forth the percentage relationship to net sales of certain income statement items for the Company's continuing operations:
Third Quarter Year to Date ---------------- ---------------- 1998 1997 1998 1997 ------- ------- ------- ------- Net Sales 100.0% 100.0% 100.0% 100.0% Gross Profit 26.6 28.8 27.8 28.5 Selling, Administrative and Research 14.1 13.6 13.8 13.5 Restructuring and Special Charge 14.2 -- 5.9 -- ------- ------- ------- ------- Operating Income (Loss) (1.7) 15.2 8.1 15.0 Interest and Other Income 3.6 2.7 2.6 2.1 Interest and Other Expense 1.4 3.3 2.6 3.1 ------- ------- ------- ------- Income before Taxes .5 14.6 8.1 14.0 Income Taxes .1 5.2 2.9 5.0 ------- ------- ------- ------- Net Income .4% 9.4% 5.2% 9.0% ======= ======= ======= =======
Sales for the quarter were $340 million, an increase of $30 million over the prior-year quarter. Net sales by business unit are set forth in the following table:
Third Quarter Year to Date -------------------------------------------- 1998 1997 Change 1998 1997 Change ---- ---- ------ ---- ---- ------ Polymer Additives $139 $126 10.3% $438 $398 10.1% Performance Chemicals 84 68 23.5% 233 205 13.7% Water Treatment 94 87 8.0% 319 293 8.9% Energy Services & Products 24 26 (7.7)% 91 83 9.6% Elimination & Other (1) 3 n/a (4) 7 n/a ---- ----- ------ ------ ---- ------ $340 $310 10.0% $1,077 $986 9.1% ==== ===== ====== ====== ==== ======
On an overall basis the increases in sales reflect the following:
Third Quarter Year to Date ---------------- ---------------- Selling Price Decreases $(3) $(10) Volume Increases 20 76 Foreign Exchange -- (16) Acquisitions 13 42 --- ---- $30 $ 92 === ====
7 The sales of the Polymer Additives business unit, which consists of flame retardants and polymer stabilizers, increased $13 million for the quarter and $40 million for the nine months compared to the prior year periods. Sales volume improved in both periods on the strength of polymer stabilizer products. These gains were offset in the third quarter by unfavorable selling price comparisons and for the nine month by the combined effects of unfavorable selling prices and foreign exchange. Selling prices in the business unit remain under pressure due to competitive activity and the weak economic situation in Asia. The November 1997 addition of Anzon, a producer of antimony-based product provided the overall increase in sales. The Performance Chemicals business unit, which includes agricultural chemicals, bromine intermediates, fine chemicals, fluorine products and WIL Labs, recorded a sales increase of $16 million for the quarter and $28 million year to date compared to the prior year periods. Volume gains account for the majority of the improvement in both periods. Average selling prices were flat to slightly positive while currency effects were negligible. Volume improvement reflects solid customer demand for pharmaceutical and other fine chemicals intermediates; increasing market acceptance of Hypersolve(TM), a replacement for some chlorinated solvents; and an increase in demand for FM200, a fire suppressant product. Water Treatment business unit sales improved $7 million and $26 million for the quarter and year to date periods, respectively. Volume gains in the US recreational water treatment market account for the majority of the increase. The higher volume reflects share gains in the mass merchandise segment of the market, successful introduction of new products and better than normal weather conditions during the pool season. Average selling prices were unchanged while currency had a slightly negative impact. Energy Services and Products business unit (OSCA) sales were down $2 million for the third quarter. Sales for the nine months improved $8 million. Sales in the quarter were adversely affected by reduced drilling activity caused by low oil prices and weather conditions in the Gulf of Mexico that halted well service activities for approximately 20 days. The year to date sales increase reflects volume gains due to the introduction of expanded service capabilities. Gross Profits for the quarter amounted to $91 million, and increase of $2 million from the prior year period. Gross profits as a percentage of sales for the third quarter were 26.6%, a decrease of 2.2% points from the prior year quarter. Gross profit margin compression results from the negative price trends in polymer stabilizers and the reduced level of OSCA activities including demand for clean fluids which, in addition to the loss of volume leverage on OSCA's cost base, negatively impacts bromine costs. Raw materials price reductions, primarily chlorine, were offset in part by lower bromine production. 8 Gross profits for the nine months were $300 million compared to $281 million in the prior year. In absolute terms the increase in gross profits results from: volume gains, particularly in Water Treatment and Polymer Additives; improved manufacturing cost performance across all units; and the contribution of the Anzon acquisition. Partially offsetting these improvements were price decreases in polymer stabilizer and negative currency effects, primarily the Japanese Yen and the German Mark. As a percentage of sales gross profit were 27.8% in 1998 compared to 28.5% in 1997. The decrease was primarily due to lower prices in polymer stabilizers. Selling, administrative and research costs were $48 million for the quarter and $149 year to date representing an increase of $6 million and $17 million for the quarter and year to date periods, respectively. As a percentage of sales selling, administrative and research costs were up about 0.5 percentage points for both periods compared to a year ago. Increased costs resulted from expanded infrastructure to support revenue growth and the implementation of a new information systems. Interest and other income increased $4 million for the quarter and $8 million for the nine months compared to the prior year periods primarily due to interest earned in the cash distribution from Octel. Interest and other expense decreased $5 million for the quarter and $3 million year to date compare to prior years periods due to the elimination of provisions no longer required. RESTRUCTURING AND SPECIAL CHARGES On October 21, 1998, the company announced actions intended to improve the operating income of its businesses, primarily polymer additives, by approximately $40 million per year before taxes. The major components of the charge include: - Consolidating manufacturing operations - Elimination of approximately 600 jobs - Writing down or disposing of underperforming assets and product lines. - Consolidating sales offices and research and development facilities To implement these actions, the company will take a pre-tax charge of $100 to $120 million. For actions finalized in the third quarter the company recognized a pre-tax charge of $48 million. The company is in the process of finalizing the remaining actions which will be 9 reflected as a charge in the 1998 fourth quarter. In addition to the above the company incurred a charge in the first quarter of 1998 of approximately $16 million in connection with a change in the chief executive officer; which is reflected as part of the restructuring and special charges in the nine months ended September 30, 1998. FINANCIAL CONDITION Net cash provided by the operating activities of the continuing operations amounted to $163 million for the nine months ended September 30, 1998 compared to $176 million for the same period in 1997. The decline reflects an increased use of working capital in the operations of approximately $33 million. Excluding the change in working capital, net cash provided increased $22 million as lower net income resulting from the restructuring and special charges was more than offset by the fact that very little of the charge consumed cash in the period and depreciation and amortization increased by approximately $7 million. The change in working capital reflects a reduction in accounts payable and accrued liabilities primarily due to timing compared to the prior year. Accounts receivable of $243 million at September 30, 1998 increased about $14 million from September last year in line with increased sales. Days sales outstanding at 63 days represents an improvement of 3 days compared to September 1997. Inventories of $297 million at September 30, 1998 increased about $15 million from the prior September. Inventory turnover remains essentially unchanged at 3.4 times. Capital sending amounted to $114 million for the period and is expected to total approximately $160 million for the full year. Discontinued Operations generated $464 million in the current year, all but $4 million of which is the cash received from the company's petroleum additives business (Octel) prior to the May 22, 1998 spin-off of Octel to Great Lakes shareholders. Approximately $50 million of the $462 million in cash received from Octel was used to reduce debt. The balance was added to cash and cash equivalents. As part of the transaction, approximately $108 million in tax liabilities were assumed by Great Lakes. Approximately $54 million in taxes related to Octel's 1997 earnings will be paid in October 1998. An additional $38 million will become payable when the dividend from Octel is repatriated. Shareholders equity (retained earnings and cumulative translation adjustment) was reduced by approximately $282 million representing the remaining net book value of the Octel Corp asset distribution to the Great Lakes shareholders. Approximately 37,000 shares of common stock have been repurchased during 1998 at an average cost of $38.16. YEAR 2000 READINESS 10 The Year 2000 Issue (Y2K) is the result of computer programs being written using two digits rather than four to define the applicable year. Any computer programs or any hardware that have date sensitive software or embedded chips may recognize a date using "00" as the year 1900 rather than the year 2000. This could result in a temporary inability to process transactions or engage in normal manufacturing or other business activities. Failure by the Company or any of its significant suppliers or customers to complete year 2000 readiness activities in manner could have a material adverse effect on the Company's business and results of operations. Great Lakes is actively engaged in a company-wide effort to achieve year 2000 readiness for both information technology (IT) and non-information technology (Non-IT) systems and to determine the readiness of significant suppliers and customers. The Company's approach to addressing its Y2K issues consists of the following: - Inventory - identification of items to be assessed for Y2K readiness. - Assessment - prioritizing the inventoried items, assessing their Y2K readiness, defining corrective actions and developing contingency plans. - Deployment - implementing corrective actions, verifying implementation and finalizing contingency plans. The Company's IT systems are comprised of business computer systems, end user systems and technical infrastructure. In 1996, the company determined that the IT systems supporting its Polymer Additives and Performance Chemical business units were inadequate to meet the business requirements and embarked on a project to replace all critical systems for these businesses. In the Water Treatment and Energy Services and Products business units IT systems inventories and assessments were completed in the first part of 1998 and replacement of non-conforming systems will begin during the 1998 fourth quarter. Deployment of all critical systems is expected to be completed by the end of the third quarter of 1999. The company has begun to develop contingency plans and expects them to be completed by the end of the first quarter of 1999. Non-IT systems are comprised of manufacturing and warehousing systems and facility support systems. The Company has made a preliminary inventory and assessment of these systems and anticipates finalizing these activities by the end of the first quarter of 1999. In 1998 Great Lakes began contacting its suppliers regarding their Y2K readiness. The suppliers readiness program focuses on those suppliers considered essential for the prevention of material disruption of Great Lakes business operation. The program is expected 11 to be completed by the end of the second quarter of 1999. It is anticipated contingency plans will be in place by September 30, 1999. The Company is using both internal and external resources to complete it's Y2K readiness plan. The Company currently estimates that the cost of resolving the year 2000 issues at approximately $15 to $20 million, of this amount, the Company estimates an expenditure of approximately $4 million in 1998. Approximately 50 percent of the total year 2000 costs will be for equipment or software replacement and the remainder on assessment and remediation. The Company expects all costs will be funded out of operating cash flow. Year 2000 costs are expensed except for new systems and equipment. Such costs are capitalized and charged to expense over the estimated useful life of the asset in accordance with existing company policy. The estimated costs are base on currently available information and may be subject to change. While the Company believes its efforts to address Y2K issues will be completed in a timely manner, the Company recognizes that failing to resolve Y2K issues on a timely basis would, in a reasonably likely worst case scenario, significantly limit the Company's ability to manufacture and distribute its products and process business transactions. Also, the Company could be adversely affected by the failure of suppliers or customers to conduct their operations due to Y2K-related issues. Adverse effects on the Company could include among other things disruption of manufacturing operations, increased costs and loss of business which can not be reasonably quantified. ACCOUNTING STANDARDS In March 1998, the American Institute of Certified Public Accountants (AICPA) issued Statement of Positive (SOP) 98-1, Accounting for the Costs of Computer Software Developed or Obtained for Internal Use. This accounting standard, which is effective for fiscal years beginning after December 15, 1998, defines the criteria for capitalizing or expensing costs incurred in connection with internal-use computer software projects and establishes when amortization of capitalized costs is to begin. The adoption of SOP 98-1 will result in a small increase in operating expense in 1999. In June 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards (SFAS) No. 133, Accounting for Derivative Instruments and Hedging Activities. This accounting standard, which is effective for all fiscal quarters of fiscal years beginning after June 15, 1999, requires that all derivatives be recognized as either assets or liabilities at fair value. The Company is evaluating the new statements provisions and has not yet determined the date on which it will adopt SFAS No. 133. 12 FORWARD LOOKING STATEMENT This report contains forward looking statements involving risks and uncertainties that affect the Company's operations as discussed in the 1997 Annual Report on Form 10-K filed with the Securities and Exchange Commission. Accordingly, there is no assurance that the Company's expectations will be realized. 13 GREAT LAKES CHEMICAL CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE A - BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and footnotes necessary for a comprehensive presentation of financial position and results of operations. It is management's opinion, however, that all material adjustments (consisting of normal recurring accruals) have been made which are necessary for a fair financial statement presentation. The results for the interim period are not necessarily indicative of the results to be expected for the year. For further information, refer to the consolidated financial statements and footnotes included in the Company's Annual Report on form 10-K for the year ended December 31, 1997. NOTE B - INCOME TAXES The provision for income taxes at the effective tax rates reconciles with the statutory U.S. Federal tax rate as follows:
Nine Months Ended September 30 -------------------- 1998 1997 -------------------- Statutory U.S. Federal tax rate 35.0% 35.0% State income taxes 2.1 2.4 Restructuring and special charges rate differential 1.5 -- Change in taxes relating to various minor items (3.6) (1.5) --------- --------- 35.0% 35.9% ========= =========
NOTE C - COMPREHENSIVE INCOME As of January 1, 1998, the Company adopted the Financial Accounting Standards Board's Statement 130, Reporting Comprehensive Income. Statement 130 establishes new rules for reporting and display of comprehensive income and its components. However, the adoption of 14 this Statement had no impact on the Company's net income or stockholders' equity. Statement 130 requires foreign currency translation adjustments and minimum pension liability adjustments, which are reported separately in stockholders' equity, to be included in other comprehensive income. Prior year financial statements have been reclassified to conform to the requirements of Statement 130. Comprehensive income was as follows:
(in thousands) 1998 1997 ------- -------- Third Quarter $14,594 $ 46,633 Year to Date $90,904 $104,714
NOTE D - EARNINGS PER SHARE The computation of basic and diluted earnings per share is determined by dividing net income as reported as the numerator, by the number of shares included in the denominator as follows:
(in thousands) Three Months Ended Nine Months Ended September 30 September 30 ------------------ ------------------- 1998 1997 1998 1997 ---- ---- ---- ---- Weighted average shares used for calculating basic earnings per share 59,093 59,849 59,050 60,181 Effect of potentially dilutive stock options and restricted stock used for calculating diluted earnings per share 137 265 202 258 ------ ------ ------ ------ Denominator for diluted earnings per share 59,230 60,114 59,252 60,439 ====== ====== ====== ======
NOTE E - RESTRUCTURING AND SPECIAL CHARGES On October 21, 1998, the Company announced actions intended to reduce costs and improve operating efficiencies. The Company estimates the cost of implementing the plan will be between $100 and $120 million. For those actions finalized in the third quarter a charge of $48 million was recorded, the remaining costs will be recognized in the 1998 fourth quarter when the action plans are finalized. The components of the charge are as follows (in millions): 15 Restructuring Charge:
Write down of property plant and equipment (Non-Cash) $19 Severance and related cost 7 Other 12 --- 38 --- Special Charge: Write down of property plant and equipment (non-cash) 10 --- Restructuring and Special Charges $48 ===
The restructuring is expected to be completed by the first quarter of 2000. Part II. Other Financial Information Item 6. Exhibits and Reports on Form 8-K (a) Exhibits filed as part of the report are listed below: Exhibit Number -------------- 27 Financial Data Schedule (b) The Company filed a form 8K on October 27, 1998 in connection with Restructuring and Special Charges. SIGNATURES Pursuant to the requirements 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. Date: November 13, 1998 By /s/ Robert J. Smith ----------------------- -------------------------------- Robert J. Smith Vice President, Controller EX-27 2 FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from the consolidated balance sheet, statement of income, and statment of cash flow and is qualified in its entirety by reference to such financial statements. 9-MOS DEC-31-1998 JAN-01-1998 SEP-30-1998 475,046 0 249,073 6,075 296,780 1,041,375 1,236,411 552,635 2,059,404 385,988 472,868 0 0 72,733 1,026,643 2,059,404 1,077,130 1,105,664 777,689 990,067 9,125 611 19,042 86,819 30,400 56,419 32,571 0 0 88,990 1.51 1.50
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