10-Q 1 0001.txt SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q [X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended September 30, 2000. or [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from [ ] to [ ] Commission file number 1-5224 The Stanley Works (Exact name of registrant as specified in its charter) CONNECTICUT 06-0548860 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 1000 Stanley Drive New Britain, Connecticut 06053 (Address of principal executive offices) (Zip Code) (860) 225-5111 (Registrant's telephone number) 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 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 latest practicable date: shares of the company's Common Stock ($2.50 par value) were outstanding 85,961,360 as of November 10, 2000. PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS THE STANLEY WORKS AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited, Millions of Dollars Except Per Share Amounts) Third Quarter Nine Months 2000 1999 2000 1999 ------- ------- --------- --------- Net Sales $ 684.4 $ 692.0 $ 2,082.6 $ 2,061.2 Costs and Expenses Cost of sales 439.4 446.9 1,324.5 1,353.4 Selling, general and administrative 162.2 166.9 502.2 522.2 Interest - net 7.2 7.0 20.9 21.9 Other - net 1.8 (6.2) 11.5 0.8 ------- ------- --------- --------- 610.6 614.6 1,859.1 1,898.3 ------- ------- --------- --------- Earnings before income taxes 73.8 77.4 223.5 162.9 Income Taxes 25.1 27.1 76.0 57.0 ------- ------- --------- --------- Net Earnings $ 48.7 $ 50.3 $ 147.5 $ 105.9 ======= ======= ========= ========= Net Earnings Per Share of Common Stock Basic $ 0.56 $ 0.56 $ 1.68 $ 1.18 ======= ======= ========= ========= Diluted $ 0.56 $ 0.56 $ 1.68 $ 1.18 ======= ======= ========= ========= Dividends per share $ 0.23 $ 0.22 $ 0.67 $ 0.65 ======= ======= ========= ========= Average shares outstanding (in thousands) Basic 86,532 89,687 87,721 89,532 ======= ======= ========= ========= Diluted 86,677 89,949 87,927 89,805 ======= ======= ========= ========= See notes to consolidated financial statements. -1- THE STANLEY WORKS AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited, Millions of Dollars)
September 30 January 1 2000 2000 -------- -------- ASSETS Current Assets Cash and cash equivalents $ 93.3 $ 88.0 Accounts and notes receivable 576.7 546.1 Inventories 388.6 381.2 Other current assets 72.9 75.7 -------- -------- Total Current Assets 1,131.5 1,091.0 Property, plant and equipment 1,226.4 1,208.0 Less: accumulated depreciation (721.1) (687.4) -------- -------- 505.3 520.6 Goodwill and other intangibles 174.9 185.2 Other assets 111.8 93.8 -------- -------- $ 1,923.5 $ 1,890.6 ======== ======== LIABILITIES AND SHAREOWNERS' EQUITY Current Liabilities Short-term borrowings $ 287.6 $ 145.3 Current maturities of long-term debt 5.9 11.7 Accounts payable 222.4 225.0 Accrued expenses 288.4 311.0 -------- -------- Total Current Liabilities 804.3 693.0 Long-Term Debt 243.3 290.0 Other Liabilities 175.1 172.2 Shareowners' Equity Common stock 230.9 230.9 Retained earnings 984.8 926.9 Accumulated other comprehensive loss (123.2) (99.2) ESOP debt (198.9) (202.2) -------- -------- 893.6 856.4 Less: cost of common stock in treasury 192.8 121.0 -------- -------- Total Shareowners' Equity 700.8 735.4 -------- -------- $ 1,923.5 $ 1,890.6 ======== ========
See notes to consolidated financial statements. -2- THE STANLEY WORKS AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited, Millions of Dollars) Third Quarter Nine Months 2000 1999 2000 1999 ------------- ------------ Operating Activities Net earnings $ 48.7 $ 50.3 $147.5 $105.9 Depreciation and amortization 20.3 20.9 64.4 66.2 Other non-cash items 2.8 (4.0) 9.9 9.8 Changes in working capital (16.7) (13.2) (80.1) (47.2) Changes in other operating assets and liabilities 17.5 38.4 (21.2) 17.9 ------ ------ ------ ------ Net cash provided by operating activities 72.6 92.4 120.5 152.6 Investing Activities Capital expenditures (17.8) (17.9) (45.2) (58.4) Capitalized software (1.5) (13.2) (2.9) (23.4) Proceeds from sales of assets 6.5 22.1 10.0 37.0 Other (3.9) 2.5 (15.3) (1.6) ------ ------ ------ ------ Net cash used by investing activities (16.7) (6.5) (53.4) (46.4) Financing Activities Payments on long-term borrowings - - (32.6) (156.0) Proceeds from long-term borrowings - 0.4 - 121.3 Net short-term borrowings 4.3 (30.7) 140.5 4.0 Proceeds from issuance of common stock 1.4 2.3 4.6 7.3 Proceeds from swap termination - 13.9 - 13.9 Purchase of common stock for treasury (32.3) (4.8) (111.7) (13.7) Cash dividends on common stock (19.8) (19.6) (58.5) (57.9) ------ ------ ------ ------ Net cash used by financing activities (46.4) (38.5) (57.7) (81.1) Effect of Exchange Rate Changes on Cash 0.8 (0.7) (4.1) (3.7) ------ ------ ------ ------ Increase in Cash and Cash Equivalents 10.3 46.7 5.3 21.4 Cash and Cash Equivalents, Beginning of Period 83.0 84.8 88.0 110.1 ------ ------ ------ ------ Cash and Cash Equivalents, End of Third Quarter $ 93.3 $131.5 $ 93.3 $131.5 ====== ====== ====== ======
See notes to consolidated financial statements. -3- THE STANLEY WORKS AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN SHAREOWNERS' EQUITY (Unaudited, Millions of Dollars) Accumulated Other Compre- hensive Total Common Retained Income ESOP Treasury Shareowners' Stock Earnings (Loss) Debt Stock Equity --------------------------------------------------------- Balance Jan 1, 2000 $230.9 $926.9 $(99.2) $(202.2) $(121.0) $735.4 Comprehensive income: Net earnings 147.5 Foreign currency translation (24.0) Total comprehensive income 123.5 Cash dividends declared (58.5) (58.5) Net common stock activity (33.4) (71.8) (105.2) Tax benefit related to stock options 0.3 0.3 ESOP debt 3.3 3.3 ESOP tax benefit 2.0 2.0 --------------------------------------------------------- Balance Sep 30, 2000 $230.9 $984.8 $(123.2) $(198.9) $(192.8) $700.8 ========================================================= Accumulated Other Compre- hensive Total Common Retained Income ESOP Treasury Shareowners' Stock Earnings (Loss) Debt Stock Equity --------------------------------------------------------- Balance Jan 2, 1999 $230.9 $867.2 $(84.6) $(213.2) $(130.9) $669.4 Comprehensive income: Net earnings 105.9 Foreign currency translation (13.0) Total comprehensive income 92.9 Cash dividends declared (57.8) (57.8) Net common stock activity (25.5) 23.8 (1.7) Tax benefit related to stock options 0.6 0.6 ESOP debt 8.2 8.2 ESOP tax benefit 2.0 2.0 --------------------------------------------------------- Balance Oct 2, 1999 $230.9 $892.4 $(97.6) $(205.0) $(107.1) $713.6 =========================================================
See notes to consolidated financial statements. -4- THE STANLEY WORKS AND SUBSIDIARIES BUSINESS SEGMENT INFORMATION (Unaudited, Millions of Dollars) Third Quarter Nine Months 2000 1999 2000 1999 ------- ------- --------- --------- INDUSTRY SEGMENTS Net Sales Tools $ 530.6 $ 525.5 $ 1,621.8 $ 1,584.1 Doors 153.8 166.5 460.8 477.1 ------- ------- --------- --------- Consolidated $ 684.4 $ 692.0 $ 2,082.6 $ 2,061.2 ======= ======= ========= ========= Operating Profit Tools $ 68.7 $ 67.3 $ 219.2 $ 207.9 Doors 14.1 10.9 36.7 32.6 ------- ------- --------- --------- 82.8 78.2 255.9 240.5 Restructuring-related transition and other non-recurring costs - - - (54.9) Interest-net (7.2) (7.0) (20.9) (21.9) Other-net (1.8) 6.2 (11.5) (0.8) ------- ------- --------- ---------- Earnings Before Income Taxes $ 73.8 $ 77.4 $ 223.5 $ 162.9 ======= ======= ========= ========== GEOGRAPHIC NET SALES United States $ 497.6 $ 496.4 $ 1,505.8 $ 1,466.5 Other Americas 51.7 51.3 154.8 150.5 Europe 108.1 119.0 345.1 372.7 Asia 27.0 25.3 76.9 71.5 ------- ------- --------- ---------- Consolidated $ 684.4 $ 692.0 $ 2,082.6 $ 2,061.2 ======= ======= ========= ==========
See notes to consolidated financial statements. -5- THE STANLEY WORKS AND SUBSIDIARIES NOTES TO (Unaudited) CONDENSED CONSOLIDATED FINANCIAL STATEMENTS September 30, 2000 NOTE A - Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial statements and with the instructions to Form 10-Q and Article 10 of Regulation S-X and do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations for the interim periods have been included. 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 January 1, 2000. NOTE B - Earnings Per Share Computation The following table reconciles the weighted average shares outstanding used to calculate basic and diluted earnings per share. Third Quarter Nine Months 2000 1999 2000 1999 ---------- ---------- ---------- ---------- Net earnings - basic and diluted $ 48.7 $ 50.3 $147.5 $105.9 ========== ========== ========== ========== Basic earnings per share - weighted average shares 86,531,911 89,686,916 87,721,165 89,531,833 Dilutive effect of employee stock options 145,386 262,205 205,838 273,108 ---------- ---------- ----------- ---------- Diluted earnings per share - weighted average shares 86,677,297 89,949,121 87,927,003 89,804,941 ========== ========== =========== ========== NOTE C - Inventories The components of inventories at the end of the third quarter of 2000 and at year-end 1999, in millions of dollars, are as follows:
September 30 January 1 2000 2000 ------ ------ Finished products $ 278.8 $ 269.0 Work in process 51.4 48.3 Raw materials 58.4 63.9 ------ ------ $ 388.6 $ 381.2 ====== ======
-6- NOTE D - Cash Flow Information Interest paid during the third quarters of 2000 and 1999 amounted to $7.9 million and $7.1 million, respectively. Interest paid for the nine months of 2000 and 1999 amounted to $29.3 million and $24.5 million, respectively. Income taxes paid during the third quarter of 2000 were $5.7 million. Income taxes refunded net of payments made for the third quarter of 1999 were $4.7 million. Income taxes paid (net of refund received in 1999) for the nine months of 2000 and 1999 were $50.3 million and $16.3 million, respectively. NOTE E - Royalty Revenues The company enters into arrangements licensing its brand name on specifically approved products. The licensee pays the company royalties as products are sold, subject to annual minimum guaranteed amounts. For those arrangements where the company has continuing involvement with the licensee, royalty revenues are recognized over the term of the agreement. For certain agreements, where the company has no further continuing involvement with the licensee, the company recognizes the guaranteed minimum royalties at the time the arrangement becomes effective and all applicable products have been approved. NOTE F - Other-net Other income in the third quarter of 1999 included non-recurring currency related gains of $9.2 million, $0.6 per share, comprised of a gain of $11.4 million realized upon the termination of a cross-currency financial instrument partially offset by other currency related items of $2.2 million. NOTE G - Recent Accounting Pronouncements Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative Instruments and Hedging Activities", as amended by SFAS Nos. 137 and 138 establishes standards for recognition and measurement of derivatives and hedging activities. The adoption of the statement is required for the company in the first quarter of fiscal year 2001. The company does not believe the SFAS will have a material financial statement impact. -7- ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Net sales were $684 million, a decrease of 1% from $692 million in the same quarter last year. The decrease was driven by a 2% reduction from the effect of foreign currency translation and a 1% reduction in sales from unfavorable pricing pressures. The reduction in sales from foreign currency translation was primarily due to weaker European currencies during the quarter. Net sales were $2,083 million for the first nine months of 2000, a 1% increase over the same period last year. The increase was caused by an overall unit volume increase of 3% which was offset partially by a 1% reduction in sales from the effect of foreign currency translation and a 1% reduction in sales from unfavorable pricing pressures. Financial results for the first six months of 1999 included transition expenses related to the company's restructuring initiatives. These costs were classified as period operating expenses within cost of sales or selling, general and administrative expense. They included the costs of moving production equipment, operating duplicate facilities while transferring production or distribution, consulting costs incurred in planning and implementing changes, and other types of costs that have been incurred to facilitate restructuring. Management judgment was used to determine which costs should be classified as transition costs based on whether the costs were unusual in nature, were incurred only because of restructuring initiatives and were expected to cease when the transition activities ended. In addition, the company incurred costs to remediate its computer and related systems so that these systems would function properly with regard to date issues related to Y2K. Because the presence of restructuring charges, restructuring-related transition costs and non-recurring Y2K remediation costs obscured the underlying trends within the company's business, the company also provided information on its results for the first nine months of 1999 excluding these identifiable costs. These pro forma or "core" results were the basis of business segment information. The narrative regarding results of operations has also been expanded to provide information as to the effects of these items on each financial statement category. Effective in the third quarter 1999, these costs were no longer disclosed separately as they were significantly lower than amounts previously incurred. The company reported gross profit of $245 million, or 35.8% of net sales in the third quarter compared to 35.4% of net sales 1999. This increase was attributed to productivity improvements from a variety of programs which were partially offset by continued commodity cost increases and pricing pressures. The company reported gross profit of $758 million, or 36.4% of net sales for the first nine months of 2000 compared to 34.3% of net sales in 1999. Included in the cost of sales in 1999 for the nine month period were $20 million of restructuring-related transition costs, primarily for plant rationalization activities. Core gross profits were 35.3% of net sales during that nine month period. This improvement in gross profits is attributable to a combination of improved cost controls in operations, the benefits of the company's 1997 restructuring, higher unit volumes and continued progress on purchased material costs despite inflationary pressures. -8- Selling, general and administrative expenses were $162 million, or 23.7% of net sales, in the third quarter of 2000, as compared with $167 million, or 24.1% of net sales in the third quarter of 1999. The decrease of $5 million in 2000 from the 1999 selling, general and administrative expenses is primarily the result of decreased information management infrastructure costs and reducing distribution and administration costs. These decreases were partially offset by higher compensation costs for the MacDirect program and increased sales and marketing expenses in certain channels. Selling, general and administrative expenses were $502 million, or 24.1% of net sales, in the nine month period of 2000, as compared with $522 million, or 25.3% of net sales for the same period in 1999. Restructuring-related transition and other non-recurring costs were $35 million in 1999. These expenses resulted from spending on system conversions for the Y2K remediation project and certain consulting costs incurred for structural reorganization and administrative efficiency solutions. On a core basis, selling, general and administrative expenses were $487 million in 1999. The $15 million increase in 2000 compared with core selling, general and administrative expenses in 1999 is primarily the result of higher compensation costs for the MacDirect program and increased sales and marketing expenses in certain channels. Net interest expense for the third quarter and first nine months of 2000 were relatively flat to the comparable periods in 1999. Other-net of $2 million expense in the third quarter of 2000 and $12 million expense for the nine month period of 2000 compared to income of $6 million and expense of $1 million, respectively, for the same periods in 1999. The reduction in the 1999 expense is primarily attributed to a gain realized during the third quarter of 1999 upon the termination of a cross-currency financial instrument. The company's income tax rate was 34% in the third quarter and for the first nine months of 2000. In the comparable 1999 periods, the company's income tax rate was 35%. This income tax rate decrease reflects the continued effect of changes implemented which benefit the company's tax structure. Net earnings for the third quarter were $49 million, or $.56 per diluted share, compared with the prior year's net income of $50 million, or $.56 per diluted share. Net earnings for the first nine months of 2000 were $148 million, or $1.68 per diluted share, compared with net income of $106 million, or $1.18 per diluted share in the prior year. Net earnings on a core basis, would have been $142 million, or $1.58 per diluted share in the first nine months of 1999. Business Segment Results The Tools segment includes carpenters, mechanics, pneumatic and hydraulic tools as well as tool sets. The Doors segment includes commercial and residential doors, both automatic and manual, as well as closet doors and systems, home decor and door and consumer hardware. The company assesses the performance of its business segments using core operating profit, which excludes restructuring charges, restructuring-related transition and other non-recurring costs for the first six months of 1999. Segment eliminations are also excluded. -9- As reflected in the table, "Business Segment Information", Tools sales in the third quarter of 2000 increased to $531 million, or 1% over the third quarter of 1999. Tools sales for the nine month period of 2000 increased 2% compared to the same period of 1999. The Tools segment core operating profit was 12.9% of net sales for the third quarter and 13.5% for the first nine months of 2000, compared with 12.8% and 13.1% of net sales, respectively, in the same periods last year. These improvements are attributable to improved cost controls in operations, the benefits of the company's restructuring initiatives, and higher unit volumes. Doors segment sales decreased to $154 million, 8% below 1999's third quarter, due to unit volume decreases in the U.S. hardware, residential entry doors and home decor products. These decreases are primarily the result of lower market demand from the Company's large retail and OEM customers. The Doors segment core operating profit increased to 9.2% of net sales in the third quarter and 8.0% for the first six months of 2000, compared with 6.5% and 6.8% of net sales, respectively, in the same periods last year. The improvements in operating margins are due to productivity gains. Restructuring Restructuring reserves as of the beginning of 2000 were $58 million. These reserves consisted of $42 million related to severance, $10 million related to asset write-downs, and $6 million related to other exit costs. In the first nine months of 2000, severance of $20 million, asset write-downs of $7 million, and payments for other exit costs of $1 million reduced these reserves to $30 million. FINANCIAL CONDITION Liquidity and Sources of Capital In the third quarter of 2000, the company generated operating cash flow of $73 million. Accounts receivable increased $26 million during the third quarter of 2000, which is comparable to the prior year increase, as a result of normal seasonal monthly sales patterns. Inventories decreased $5 million during the third quarter of 2000, as production rates were successfully rebalanced in consideration of lower demand. In the third quarter of 2000, the company repurchased approximately 1 million of its common shares. Cash flow from operations was utilized to fund these repurchases. For the first nine months of 2000, the company has repurchased approximately 4.3 million of it common shares. Short-term borrowings were utilized to fund the repurchases prior to the third quarter along with working capital needs driven by the accounts receivable and inventory increases since the beginning of the year. On October 18, 2000, the Company entered into an unsecured extendible commercial notes facility with a maximum authorized amount of $50 million at any time outstanding. Under this facility, notes will be issued by the Company from time to time in a series of transactions exempt from registration under the Securities Act of 1933, as amended, pursuant to Section 4(2) thereof. The legal final maturity date for any such note issued by the Company is the 390th day following the date of issuance; however, the Company may, in its sole discretion, optionally redeem any such note on any day established by the Company at issuance that is not more than 90 days following the date of issuance of such note. This facility was entered into by the Company to provide an additional source of liquidity for general corporate purposes. -10- PART II OTHER INFORMATION Item 2. - Changes in Securities and Use of Proceeds (c) Recent Sales of Unregistered Securities (1) During the third fiscal quarter of 2000, 3,412 shares of the Company's common stock shares were issued to certain participants under the Company's German Savings Related Share Plan (the "Savings Plan"). Under the Savings Plan, shares are issued to employees who elect at the end of the five year savings period or upon termination of employment to receive the accumulated savings in the form of shares of the Company's stock rather than cash. (a)Participation in the Savings Plan is offered to all employees of the Company's subsidiaries in Germany. (b)The total dollar value of the shares issued during the quarter was $54,194.16. Under the Savings Plan: 3,412 shares were issued at $15.8834 per share with an aggregate value of $54,194.16.(a)(a) (c) Neither the options nor the underlying shares have been registered in reliance on an exemption from registration found in several no-action letters issued by the Division of Corporation Finance of the Securities and Exchange Commission. Registration is not required because the Company is a reporting company under the Securities Exchange Act of 1934, its shares are actively traded, the number of shares issuable under the Savings Plans is small relative to the number of shares outstanding, all eligible employees are entitled to participate, the shares are being issued in connection with the employees' compensation, not in lieu of it and there is no negotiation between the Company and the employee regarding the grant. (d) Under the Savings Plans, employees are given the right to buy a specified number of shares with the proceeds of a "Save-as-You-Earn" savings contract. Under the savings contract, the employee authorizes 60 monthly deductions from his or her paycheck At the end of the five year period, the employee may elect to (i) use all or a part of the accumulated savings to buy all or some of the shares under the employee's options, (ii) leave the accumulated savings with the financial institution that has custody of the funds for an additional two years or (iii) take a cash distribution of the accumulated savings. The option to purchase shares will lapse at the end of the five year period if not exercised at that time. -11- Item 6. - Exhibits and Reports on Form 8-K (a) Exhibits (1) See Exhibit Index on page 14. (b) Reports on Form 8-K. (1) Company filed a Current Report on Form 8-K, dated July 11, 2000, which announced the election of John G. Breen and John D. Opie to the Company's Board of Directors. (2) Company filed a Current Report on Form 8-K, dated July 13, 2000, announcing the resignation of William Y. O'Connor from the Company's Board of Directors. (3) Company filed a Current Report on Form 8-K, dated July 19, 2000, in respect of the Company's press release announcing second quarter results. (4) Company filed a Current Report on Form 8-K, dated September 29, 2000, announcing the resignation of Stef G.H. Kranendijk, President, Stanley Europe; the election of Bruce H. Beatt by the Company's Board of Directors as VP, General Counsel and Secretary as of October 9, 2000; and the Company's executive officers, as defined under Section 16 of the Act, as of October 9, 2000. -12- 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. THE STANLEY WORKS Date: November 14, 2000 By: /s/ James M. Loree ------------------ James M. Loree Vice President, Finance and Chief Financial Officer -13- EXHIBIT INDEX EXHIBIT LIST (3) By-Laws (10) Amended and Restated Credit Agreement, dated October 21, 1998, as amended and restated as of October 18, 2000, among The Stanley Works, each lender that is a signatory thereto and Citibank, N.A. (12) Computation of Ratio of Earnings to Fixed Charges (27) Financial Data Schedule -14- Exhibit 12 THE STANLEY WORKS AND SUBSIDIARIES COMPUTATION OF EARNINGS TO FIXED CHARGES (In Millions of Dollars) THIRD QUARTER NINE MONTHS 2000 1999 2000 1999 ------ ------ ------ ------ Earnings before income taxes $73.8 $77.4 $223.5 $162.9 Add: Interest expense 9.5 8.2 26.3 25.5 Portion of rents representative of interest factor 3.5 3.8 10.7 11.3 Amortization of expense on long- term debt 0.1 0.1 0.2 0.2 ------ ------ ------ ------ Income as adjusted $86.9 $89.5 $260.7 $199.9 ====== ====== ====== ====== Fixed charges: Interest expense $9.5 $8.2 $26.3 $25.5 Portion of rents representative of interest factor 3.5 3.8 10.7 11.3 Amortization of expense on long- term debt - 0.1 0.2 0.2 ------ ------ ------ ------ Fixed charges $13.1 $12.1 $37.2 $37.0 ====== ====== ====== ====== Ratio of earnings to fixed charges 6.63 7.40 7.01 5.40 ====== ====== ====== ======
-15-