-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, S1dj04iUIgzAGl2G25yLTSbs5m0MdIE88MkT3pzwdJDdghlVfq2wGLjaV8k3lt/r X0nyC5O6ixjLPd6z/CF3MA== 0000950131-94-001299.txt : 19940817 0000950131-94-001299.hdr.sgml : 19940817 ACCESSION NUMBER: 0000950131-94-001299 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19940630 FILED AS OF DATE: 19940812 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MAXUS ENERGY CORP /DE/ CENTRAL INDEX KEY: 0000724176 STANDARD INDUSTRIAL CLASSIFICATION: 1311 IRS NUMBER: 751891531 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-08567 FILM NUMBER: 94543349 BUSINESS ADDRESS: STREET 1: 717 N HARWOOD ST- RM 3147 CITY: DALLAS STATE: TX ZIP: 75201-6594 BUSINESS PHONE: 2149532000 FORMER COMPANY: FORMER CONFORMED NAME: DIAMOND SHAMROCK CORP /DE/ DATE OF NAME CHANGE: 19870518 FORMER COMPANY: FORMER CONFORMED NAME: NEW DIAMOND CORP DATE OF NAME CHANGE: 19830908 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ___________________ FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ending June 30, 1994 OR [_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 1-8567-2 MAXUS ENERGY CORPORATION (Exact name of registrant as specified in its charter) DELAWARE 75-1891531 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 717 North Harwood Street, Dallas, Texas 75201-6594 (Address of principal executive offices) (Zip Code) (214) 953-2000 (Registrant's telephone number, including area code) 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, and (2) has been subject to the filing requirements for the past 90 days. YES (X) NO ( ) Shares of Common Stock outstanding at June 30, 1994: 134,600,995 PART I. FINANCIAL INFORMATION The accompanying consolidated financial statements have not been examined by independent accountants, but in the opinion of the management of Maxus Energy Corporation (the "Company"), all adjustments (consisting only of normal accruals) necessary for a fair presentation of the consolidated results of operations, consolidated balance sheet and consolidated cash flows at the date and for the periods indicated have been included. 2 MAXUS ENERGY CORPORATION CONSOLIDATED STATEMENT OF OPERATIONS (unaudited) (in millions, except per share)
- - -------------------------------------------------------------------------------------------------- Period Ended June 30, Three Months Six Months 1994 1993 1994 1993 --------------------------------------- REVENUES Sales and operating revenues $167.5 $204.2 $354.5 $396.2 Settlement of litigation 6.8 6.8 Other revenues, net (5.1) 5.1 0.2 10.5 - - -------------------------------------------------------------------------------------------------- 162.4 216.1 354.8 413.5 --------------------------------------- COSTS AND EXPENSES Operating expenses 55.8 61.9 117.9 121.5 Gas purchase costs 32.4 44.9 75.9 75.3 Exploration, including exploratory dry holes 7.7 11.4 17.0 24.1 Depreciation, depletion and amortization 35.2 37.1 73.4 74.3 General and administrative expenses 8.5 9.2 16.7 17.7 Taxes other than income taxes 2.7 4.4 7.0 8.4 Interest and debt expenses 24.9 22.6 47.4 44.5 Restructuring: Gain on sale of assets (201.9) (201.9) Restructuring costs 100.9 100.9 - - -------------------------------------------------------------------------------------------------- 66.2 191.5 254.3 365.8 --------------------------------------- INCOME BEFORE INCOME TAXES AND CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE 96.2 24.6 100.5 47.7 INCOME TAXES 66.1 28.5 81.6 51.4 - - -------------------------------------------------------------------------------------------------- INCOME (LOSS) BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE 30.1 (3.9) 18.9 (3.7) CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE (4.4) - - -------------------------------------------------------------------------------------------------- NET INCOME (LOSS) 30.1 (3.9) 18.9 (8.1) Dividend requirement on preferred stock (12.1) (10.4) (24.4) (20.8) - - -------------------------------------------------------------------------------------------------- INCOME (LOSS) APPLICABLE TO COMMON SHARES $ 18.0 $(14.3) $ (5.5) $(28.9) ================================================================================================== Income (Loss) before cumulative effect of change in accounting principle $ 0.13 $(0.11) $(0.04) $(0.18) Cumulative effect of change in accounting principle (0.03) - - -------------------------------------------------------------------------------------------------- NET INCOME (LOSS) PER COMMON SHARE $ 0.13 $(0.11) $(0.04) $(0.21) ================================================================================================== AVERAGE COMMON SHARES OUTSTANDING (IN MILLIONS) 134.7 133.8 134.6 133.6
See Notes to Consolidated Financial Statements (Unaudited). 3
MAXUS ENERGY CORPORATION CONSOLIDATED BALANCE SHEET (in millions, except shares) - - ------------------------------------------------------------------------------ June 30, December 31, 1994 1993 ------------------------------- (Unaudited) ASSETS Current Assets Cash and cash equivalents $ 114.3 $ 128.7 Short-term investments 84.9 33.6 Receivables, less doubtful receivables 134.7 156.8 Inventories 29.1 24.1 Restricted cash 45.9 38.4 Deferred income taxes 2.1 2.1 Prepaids and other current assets 18.0 21.0 - - ------------------------------------------------------------------------------ Total Current Assets 429.0 404.7 Properties and equipment, less accumulated depreciation and depletion of $1,677.2; $2,063.2 in 1993 1,103.2 1,305.6 Investments and long-term receivables 111.6 94.2 Restricted cash 101.1 121.8 Intangible assets, less accumulated amortization of $13.5; $12.9 in 1993 36.5 37.1 Deferred charges 21.9 24.0 - - ------------------------------------------------------------------------------ TOTAL ASSETS $1,803.3 $1,987.4 ============================================================================== LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Long-term debt $23.9 $39.7 Securities sold under repurchase agreements Accounts payable 50.4 99.9 Accrued liabilities 111.2 107.7 Taxes payable 34.2 16.1 - - ------------------------------------------------------------------------------ Total Current Liabilities 219.7 263.4 Long-term debt 981.3 1,015.4 Deferred income taxes 225.0 198.3 Other liabilities and deferred credits 106.9 112.4 Redeemable Preferred Stock, $1.00 par value Authorized and issued shares--1,250,000 and 2,500,000 125.0 250.0 Stockholders' Equity $2.50 Preferred Stock, $1.00 par value Authorized shares--5,000,000 Issues shares--3,500,000 3.5 3.5 $4.00 Preferred Stock, $1.00 par value Issued shares--4,358,658 4.4 4.4 Common Stock, $1.00 par value Authorized shares--300,000,000 Issued shares--134,840,644 and 134,373,523 134.8 134.4 Paid-in capital 1,005.0 1,026.2 Accumulated deficit (974.8) (993.7) Minimum pension liability (24.4) (24.4) Common Treasury Stock, at cost--239,649 and 173,963 shares (3.1) (2.5) - - ------------------------------------------------------------------------------ Total Stockholders' Equity 145.4 147.9 - - ------------------------------------------------------------------------------ TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,803.3 $1,987.4 ==============================================================================
See Notes to Consolidated Financial Statements (Unaudited). The Company uses the successful efforts method to account for its oil and gas producing activities. 4 MAXUS ENERGY CORPORATION CONSOLIDATED STATEMENT OF CASH FLOWS (unaudited) (in millions)
- - ---------------------------------------------------------------------------------------------- Period Ended June 30, 1994 1993 -------------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ 18.9 $ (8.1) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Cumulative effect of change in accounting principle 4.4 Depreciation, depletion and amortization 73.4 74.3 Dry hole costs 0.3 0.1 Income taxes 26.8 11.3 Gain or loss on sale of assets (179.3) 4.5 Restructuring costs 91.0 Other 21.6 1.7 Changes in components of working capital: Receivables 10.7 (22.6) Inventories, prepaids and other current assets (2.8) (4.8) Accounts and taxes payable (18.9) (10.8) Accrued liabilities (6.3) (4.8) -------------------- NET CASH PROVIDED BY OPERATING ACTIVITIES 35.4 45.2 - - ---------------------------------------------------------------------------------------------- CASH FLOWS FROM INVESTING ACTIVITIES: Expenditures for properties and equipment--including dry hole costs (98.3) (158.3) Expenditures for investments (20.1) (10.1) Proceeds from sale of assets 312.8 4.7 Proceeds from sale/maturity of short-term investments 4.2 122.2 Purchases of short-term investments (55.5) (51.7) Restricted cash 13.2 0.3 Other (6.7) -------------------- NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES 149.6 (92.9) - - ---------------------------------------------------------------------------------------------- CASH FLOWS FROM FINANCING ACTIVITIES: Net borrowings from joint venture partners (4.4) Proceeds from issuance of short-term debt 27.5 Repayment of short-term debt (67.1) (0.1) Proceeds from issuance of long-term debt 61.3 101.2 Repayment of long-term debt (67.3) (30.2) Proceeds from issuance of common stock Redemption of preferred stock (125.0) Dividends paid (24.4) (20.8) -------------------- NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (199.4) 50.1 - - ---------------------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (14.4) 2.4 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 128.7 6.8 - - ---------------------------------------------------------------------------------------------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 114.3 $ 9.2 ==============================================================================================
See Notes to Consolidated Financial Statements (Unaudited). 5 MAXUS ENERGY CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SECOND QUARTER 1994 (UNAUDITED) RESTRUCTURING - - -------------- A) ASSET SALES On April 25, 1994, Diamond Shamrock Offshore Partners Limited Partnership ("DSP") sold its interests in Main Pass Blocks 72, 73 and 74 to Pogo Producing Company. On April 26, 1994, Maxus and its subsidiaries sold all of their partnership interests in DSP to affiliates of Burlington Resources Inc. On June 22, 1994, Maxus also sold the McFarlan Field and Grand Isle Block 25, both producing oil and gas properties, to affiliates of Burlington Resources Inc. In total, the Company received $324.6 million of proceeds and recorded a net gain of $201.9 million from these transactions. B) RESTRUCTURING COSTS In the second quarter of 1994, the Company recorded a $100.9 million restructuring charge. The charge included a $69.8 million write-off associated with undeveloped Alaska coal leases, the development of which does not fit within the Company's revised strategy to commit funds only to oil and gas exploration and production in core and emerging areas. The charge also included costs associated with staff reductions and the write-off of non- producing assets outside the Company's core areas. ENVIRONMENTAL - - ------------- During the second quarter of 1994, the Company increased by $11.5 million its reserve for future environmental costs. The charge was recorded in other revenues, net. LONG-TERM DEBT - - -------------- On January 10, 1994, the Company issued $60.0 million of 9 3/8% notes due 2003 pursuant to a shelf registration statement which became effective in May 1993. The proceeds from these debt securities were used to redeem $29.0 million of long-term debt maturing in 1994, and for general corporate purposes. During the second quarter of 1994, the Company repaid $36.6 million of outstanding medium-term notes maturing in 1994 and $37.7 million of outstanding medium-term notes maturing in 1995 and 1996 from the proceeds of asset sales. SHORT-TERM DEBT - - --------------- In the second quarter of 1994, the Company repaid $25.0 million outstanding at the end of the first quarter of 1994 under the terms of a purchase and sale agreement for crude oil. PREFERRED STOCK - - --------------- On February 1, 1994, the Company redeemed the 625,000 shares of its $9.75 Cumulative Convertible Preferred Stock which were subject to mandatory redemption provisions for $62.5 million. On June 15, 1994, the Company redeemed an additional 625,000 shares of its $9.75 Cumulative Convertible Preferred Stock for $63.5 million, which fulfilled an obligation otherwise due in February 1995. 6 MAXUS ENERGY CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION SECOND QUARTER 1994 RESULTS OF OPERATIONS Maxus reported second quarter 1994 net income of $30 million or, after preferred dividends, income of 13 cents per common share, compared to a net loss of $4 million or, after preferred dividends, a loss of 11 cents per common share, reported in the second quarter of 1993. For year-to-date 1994, Maxus reported net income of $19 million or, after payment of preferred dividends, a loss of four cents per common share, compared to a net loss of $8 million or, after payment of preferred dividends, a loss of 21 cents per common share in 1993. The second quarter 1994 results reflect a $101 million pre-tax net benefit from the Company's restructuring activities, which included the sale of Maxus' interest in Diamond Shamrock Offshore Partners Limited Partnership ("DSP") and certain domestic oil and gas properties, resulting in a pre-tax gain of $202 million. This gain was partially offset by restructuring costs, including a $70 million write-off associated with the Company's undeveloped Alaska coal leases, the development of which does not fit within the Company's revised strategy to commit funds only to oil and gas exploration and production in core and emerging areas. The restructuring also included costs associated with staff reductions and the write-off of non-producing assets outside the Company's core areas. As a result of the restructuring, Maxus expects annualized cost savings of approximately $35 million due to lower administrative costs and exploration expenditures. During the second quarter, revised cost estimates for engineering studies and remediation of certain sites resulted in Maxus increasing its reserve for future environmental costs by $12 million. The second quarter 1993 results included a $7 million gain as a result of partial payment of an agreed judgment against Ivan Boesky in a lawsuit arising out of transactions related to the Natomas Company acquisition in 1983. This gain was recorded in "Settlement of litigation." Sales and operating revenues for the second quarter of 1994 were $168 million, compared to $204 million for the same period a year ago. A decrease of $17 million was attributable to a loss of production from properties sold. In addition, lower oil prices (down $4.03 per barrel) negatively impacted second quarter 1994 sales by $23 million. Year-to-date 1994 sales and operating revenues were $355 million, compared to $396 million for the same period a year ago. The decrease of $41 million was also primarily attributable to the loss of production from properties sold and lower oil prices. Net worldwide crude production remained flat at 63 thousand barrels per day ("mbpd") in second quarter 1994 and 1993. U.S. natural gas sales for the second quarter of 1994 were 297 million cubic feet per day ("mmcfpd"), a decrease of 72 mmcfpd over the second quarter 1993. The decline was largely due to the loss of production from properties sold as well as lower quantities of gas purchased for processing and resale. ($12 million decrease in revenues). The average gas price received in the United States was $2.01 per thousand cubic feet ("mcf") in the second quarter 1994 as compared to $2.22 per mcf a year ago. Natural gas liquids sales in the United States were 17 mbpd for second quarter 1994 and 1993. The average sales price for natural gas liquids in the second quarter of 1994 was $9.78 per barrel, a decrease of $1.91 per barrel from 1993. Operating expenses for both the quarter and six-month period ending June 30 were lower than the same periods a year ago partially due to the elimination of operating costs for the properties sold. Additionally, higher U.S. gathering and processing costs were incurred in the first five months of 1993 during the transition period from the old processing facility to the new Sunray gas plant. 7 Gas purchase costs were $13 million lower in the second quarter of 1994 as compared to second quarter 1993 due to the reduction in gas purchased for processing and resale. Overall, exploration costs were lower in 1994 due to the Company's revised strategy. Income tax expense for both the quarter and six-month period ending June 30 was higher than the same periods a year ago. The higher tax expense was recorded to reflect the U.S. tax impact from the sale of DSP and oil and gas producing properties in 1994. The 1993 year-to-date results included a $4 million loss due to the adoption of Statement of Financial Accounting Standards No. 112, "Employers' Accounting for Post employment Benefits," which requires an accrual method of recognizing post employment benefits. This expense, which was recorded as a cumulative effect of a change in accounting principle, primarily represents accrued medical benefits for long-term disability recipients. FINANCIAL CONDITION The Company's net cash provided by operating activities was $35 million in the first half of 1994 compared to $45 million in the first half of 1993. Net cash from operating activities before working capital changes declined $36 million during 1994. Cash flow from operations was negatively impacted by lower crude oil prices, loss of production from U.S. properties sold and costs associated with staff reductions, but was partially offset by additional gas volumes from Northwest Java ($15 million). The 1993 cash flow from operations included the $7 million litigation settlement from Ivan Boesky. Net working capital requirements were $26 million lower in 1994 primarily because of the settlement of Indonesian underlift receivables in the first quarter of this year. The Company began 1994 with $129 million of cash and cash equivalents. For the first six months of 1994, additional cash was provided by operations ($35 million), proceeds from the sale of assets ($313 million) and the release of $13 million in restricted cash. In 1994, the Company redeemed $125 million of its $9.75 Cumulative Convertible Preferred Stock, which was subject to mandatory redemption provisions in 1994 and 1995. The Company also purchased an additional $56 million in short-term investments with a portion of the proceeds from asset sales. After funding expenditures for properties and equipment of $98 million, paying the preferred dividends of $24 million and repaying debt ($50 million net activity), a balance of $114 million in cash and cash equivalents remained at June 30, 1994. In the first six months of 1993, cash balances on hand of $7 million, cash provided by operations of $45 million, net borrowings of $71 million and net proceeds from the sale/purchase of short term investments ($71 million) were used to fund expenditures for properties and equipment and preferred dividends. Expenditures for properties and equipment, including dry hole costs, were $98 million for the first half of 1994 as compared to $158 million for the same period last year. Approximately half of the 1994 spending was associated with the Ecuador development project. Overall, spending declined as a result of Maxus' reduced capital program for 1994, following the completion in 1993 of the Sunray gas plant and the first phase of the Northwest Java gas project. On April 25, 1994, DSP sold its interests in Main Pass Blocks 72, 73 and 74 to Pogo Producing Company. On April 26, 1994, Maxus and its subsidiaries sold all of their partnership interests in DSP to affiliates of Burlington Resources Inc. As a result of the sale, Meridian Offshore Company, a Burlington Resources Inc. affiliate, became the managing general partner of DSP. In second quarter 1994, Maxus also sold the McFarlan Field and Grand Isle Block 25, both producing oil and gas properties, to affiliates of Burlington Resources Inc. In total, the Company received $325 million of proceeds and recorded a net gain of $202 million ($155 million net of tax) from these transactions. The proceeds from these sales were used to reduce debt by $100 million and to redeem $63 million of Prudential preferred stock due in February 1995. The remaining cash and investment balances, which increased $76 million during the quarter, will supplement cash flow from operations to fund program spending and repay maturing debt obligations over the next two years. During the second quarter of 1994 Maxus Bolivia, Inc., a subsidiary of Maxus, signed an agreement to take BHP Petroleum as a partner in its Bolivian oil development project. The Company received $10 million from BHP in exchange for a 50% interest in the project. 8 In January 1994, the Company issued $60 million of 9 3/8% notes due in 2003. The proceeds from these debt securities were used to redeem $29 million of long- term debt maturing in 1994 and for general corporate purposes. During the second quarter of 1994, the Company also repaid $74 million of outstanding medium-term notes maturing in 1994, 1995 and 1996 from the proceeds from asset sales. Working capital (current assets less current liabilities) increased $68 million from December 31, 1993, primarily from the sale of assets during the second quarter of 1994. A portion of the sales proceeds was used to invest in short- term investments and repay current maturities of long-term debt. OTHER EVENTS Oil production is averaging nearly 21 mbpd from 12 wells in Maxus Ecuador's Tivacuno, Bogi and Capiron fields. Seven wells in Tivacuno, four in Bogi and one in Capiron are currently on-stream. Total production for the year will be less than previously anticipated because of delays in commencement of production and because initial rates are below original expectations. Northwest Java gas volumes during 1994 have been below planned volumes. While deliverability is available at or above contract quantities, the purchaser is taking approximately one-half the contract volume during the transition from traditional sources of fuel to natural gas for electric power generation. 9 PART II. OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders. The Company's annual meeting of its stockholders was held on May 11, 1994. The holders of common stock and $4.00 Cumulative Convertible Preferred Stock voted as follows: Election of Directors ---------------------
Votes For Votes Withheld ----------- -------------- George L. Jackson 115,541,227 4,180,540 John T. Kimbell 115,391,828 4,329,939 Richard W. Murphy 112,462,986 7,258,781 Jose Maria Perez Arteta 115,733,913 3,987,854
Ratification of Appointment of Independent Accountants ------------------------------ Votes For Votes Against Abstentions ----------- ------------- ----------- 117,975,127 1,046,565 700,074 Stockholder proposal requesting that the Company prepare a report regarding the CERES Principles ------------------------------------------------ Votes For Votes Against Abstentions Broker Non-Votes ---------- ------------- ----------- ---------------- 20,661,901 54,415,040 5,186,073 39,458,753 In addition, the holders of the $9.75 Cumulative Convertible Preferred Stock unanimously elected Mr. R. A. Walker to the board of directors. Item 5. Other Information. The ratio of earnings to fixed charges and the ratio of earnings to combined fixed charges and preferred stock dividends for the six-month period ended June 30, 1994 have been computed on a consolidated basis to be 2.67 and 1.63, respectively. Before non-recurring transactions, earnings would have been inadequate to cover fixed charges and combined fixed charges and preferred stock dividends for such period by $2.9 million and $40.4 million, respectively. 10 For the purposes of these computations, earnings consist of income before income taxes and fixed charges (excluding interest capitalized, net of amortization). Fixed charges represent interest incurred, amortization of debt expense and that portion of rental expense deemed to be the equivalent of interest. Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits. 12.1 --Statement re Computation of Ratios. (b) Reports on Form 8-K. None. SIGNATURE 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. MAXUS ENERGY CORPORATION By: G. R. Brown G. R. Brown, Vice President and Controller, on behalf of the registrant and as its chief accounting officer August 11, 1994 11 Exhibit Index Exhibit Title Exhibit No. Statement re Computation of Ratios 12.1 EX-12.1 2 EXHIBIT 12.1 Exhibit 12.1 MAXUS ENERGY CORPORATION STATEMENT RE COMPUTATION OF RATIOS (in millions, except ratios)
Six Months Ended June 30, 1994 ---------- Earnings Net income ............................................................ $ 18.9 Add: Provision for income taxes ...................................... 81.6 Interest and debt expenses ...................................... 47.4 Other fixed charges (a) ......................................... 1 Rentals (b) ..................................................... 8.1 ---------- Total earnings ............................................... $157.0 ========== Fixed Charges: Interest and debt expenses ......................................... $ 47.4 Rentals ............................................................ 8.1 Capitalized interest ............................................... 3.1 Proportionate share of fixed charges of unconsolidated associated companies 50% owned ................... 0.3 ---------- Total fixed charges .......................................... $ 58.9 ---------- Preferred stock dividend requirement (c) ........................... 37.5 ---------- Combined fixed charges and preferred stock dividends ......... $ 96.4 ========== Ratio of earnings to fixed charges (d) ................................ 2.67 Ratio of earnings to combined fixed charges and preferred stock dividends (e) ................................................ 1.63
(a) Other fixed charges include amortization of capitalized interest and the proportionate share of fixed charges of unconsolidated associated companies 50% owned. (b) The amount shown above for rentals represents that portion of rental expense representative of the interest factor (which approximates 45%). (c) The preferred stock dividend requirement was increased by the amount representing pre-tax earnings which would be required to cover such dividend requirement. Due to the mix of foreign and domestic income and losses, use of the Company's effective tax rate per the consolidated financial statements yielded meaningless results. Accordingly, the Company chose the U.S. statutory federal income tax rate to better reflect the pre-tax earnings necessary to cover the preferred stock dividend requirement. (d) Without income in the amount of $101.0 million from restructuring activities ($201.9 million from gain on sale of assets, net of restructuring costs of $100.9 million), the ratio of earnings to fixed charges would have been 0.95 for the six months ended June 30, 1994. Before non-recurring transactions, earnings were inadequate to cover fixed charges for the six months ended June 30, 1994 by $2.9 million. (e) Before the non-recurring transactions referenced in (d), the ratio of earnings to combined fixed charges and preferred dividends would have been 0.58 for the six months ended June 30, 1994 and earnings were inadequate to cover combined fixed charges and preferred stock dividends for the six months ended June 30, 1994 by $40.4 million. -----END PRIVACY-ENHANCED MESSAGE-----