FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For The Quarterly Period Ended March 31, 1994
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 1-3608
WARNER-LAMBERT COMPANY
(Exact name of registrant as specified in its charter)
Delaware 22-1598912
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
201 Tabor Road, Morris Plains, New Jersey
(Address of principal executive offices)
07950
(Zip Code)
Registrant's telephone number, including area code: (201) 540-2000
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.
CLASS Outstanding at April 30, 1994
----- -------------------------------
Common Stock, $1 par value 133,685,984
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
WARNER-LAMBERT COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
March 31, 1994 December 31, 1993
-------------- -----------------
(Millions of dollars)
ASSETS:
Cash and cash equivalents $ 379.4 $ 440.5
Receivables 926.7 890.8
Inventories 544.3 476.5
Prepaid expenses and other current assets 413.2 410.9
-------- --------
Total current assets 2,263.6 2,218.7
Investments and other assets 527.5 487.4
Equity investments in affiliated companies 213.9 208.6
Property, plant and equipment 1,599.4 1,599.3
Intangible assets 318.6 314.1
-------- --------
Total assets $4,923.0 $4,828.1
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY:
Commercial paper $ 540.4 $ 507.5
Notes payable - banks and other 209.3 145.3
Accounts payable, trade 392.3 427.1
Accrued compensation 105.1 116.9
Other current liabilities 656.1 638.8
Federal, state and foreign income taxes 171.1 180.3
-------- --------
Total current liabilities 2,074.3 2,015.9
Long-term debt 550.4 546.2
Other noncurrent liabilities 804.9 867.8
-------- --------
Total liabilities 3,429.6 3,429.9
-------- --------
Minority interests 28.2 8.6
Shareholders' equity:
Preferred stock - none issued - -
Common stock - 160,330,268 shares issued 160.3 160.3
Capital in excess of par value 122.0 120.1
Retained earnings 2,396.3 2,287.7
Cumulative translation adjustments (222.1) (224.8)
Treasury stock, at cost (1994 - 26,698,713
shares; 1993 - 26,190,513 shares) (991.3) (953.7)
-------- --------
Total shareholders' equity 1,465.2 1,389.6
-------- --------
Total liabilities and shareholders'
equity $4,923.0 $4,828.1
======== ========
See accompanying notes to consolidated financial statements.
<PAGE>
WARNER-LAMBERT COMPANY
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended March 31,
----------------------------
1994 1993
-------- --------
(Millions of dollars, except per share amounts)
NET SALES $1,472.9 $1,331.7
COSTS AND EXPENSES:
Cost of goods sold 479.0 410.9
Marketing 523.8 494.3
Administrative and general 103.4 93.4
Research and development 97.9 110.7
Other(income)expense, net (4.8) (22.5)
Restructuring - 70.0
-------- --------
Total costs and expenses 1,199.3 1,156.8
-------- --------
INCOME BEFORE INCOME TAXES, MINORITY
INTERESTS AND ACCOUNTING CHANGES 273.6 174.9
Provision for income taxes 63.4 38.7
Minority interests 19.8 .1
-------- --------
INCOME BEFORE ACCOUNTING CHANGES 190.4 136.1
Accounting changes (net of tax) - 46.0
-------- --------
NET INCOME $ 190.4 $ 182.1
======== ========
PER COMMON SHARE:
Income before accounting changes $ 1.42 $ 1.01
Accounting changes - .34
-------- --------
Net income $ 1.42 $ 1.35
======== ========
Cash dividends paid $ .61 $ .57
======== ========
See accompanying notes to consolidated financial statements.<PAGE>
WARNER-LAMBERT COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months
Ended March 31,
------------------
1994 1993
------------------
(Millions of dollars)
OPERATING ACTIVITIES:
Net income $ 190.4 $ 182.1
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 43.5 40.5
Accounting changes (net of tax) - (46.0)
Restructuring - 70.0
Increase in receivables (39.7) (52.0)
Increase in inventories (66.1) (56.4)
Decrease in accounts payable,
trade and other current liabilities (95.8) (83.6)
Other 24.1 (33.5)
------- -------
Net cash provided by operating activities 56.4 21.1
------- -------
INVESTING ACTIVITIES:
Purchase of investments (110.5) (65.0)
Proceeds from sale of investments 63.7 19.0
Purchase of property, plant and equipment (46.5) (55.1)
Acquisitions of businesses - (224.3)
Other 1.4 1.5
------- -------
Net cash used by investing activities (91.9) (323.9)
------- -------
FINANCING ACTIVITIES:
Proceeds from borrowings 128.0 155.9
Principal payments on borrowings (32.0) (12.1)
Purchase of treasury stock (40.1) (3.6)
Cash dividends paid (81.7) (77.2)
Proceeds from exercise of stock options 3.4 2.5
------- -------
Net cash (used) provided
by financing activities (22.4) 65.5
------- -------
Effect of exchange rate changes on cash
and cash equivalents (3.2) (3.3)
------- -------
Decrease in cash and cash equivalents (61.1) (240.6)
Cash and cash equivalents at beginning of year 440.5 718.4
------- -------
Cash and cash equivalents at end of period $ 379.4 $ 477.8
======= =======
See accompanying notes to consolidated financial statements.
<PAGE>
WARNER-LAMBERT COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE A: The interim financial statements presented herein should be
read in conjunction with Warner-Lambert Company's 1993 Annual
Report.
NOTE B: The results of operations for the interim periods are not
necessarily indicative of the results for the full year.
NOTE C: In the opinion of management, all adjustments considered
necessary for a fair presentation of the results for the
interim periods have been included in the consolidated
financial statements.
NOTE D: Net income per share for the three months ended March 31, 1994
and March 31, 1993 has been computed based on the average
number of shares of common stock outstanding during each
period. The effect on net income per share from the assumed
conversion of common stock equivalents was not material. The
average number of shares of common stock outstanding during
the three months ended March 31, 1994 and March 31, 1993 was
133,850,000 and 135,363,000, respectively.
NOTE E: Interest payments for the three months ended March 31, 1994
and March 31, 1993 were $20.0 million and $15.6 million,
respectively. Income tax payments for the same periods were
$57.8 million and $9.0 million, respectively.
NOTE F: Major classes of inventories were as follows:
March 31, 1994 December 31, 1993
-------------- -----------------
(In millions)
Raw materials $ 98.8 $ 88.6
Finishing supplies 41.3 38.6
Goods in process 90.8 79.3
Finished goods 313.4 270.0
------ ------
$544.3 $476.5
====== ======
NOTE G: Property, plant and equipment balances were as follows:
March 31, 1994 December 31, 1993
-------------- -----------------
(In millions)
Property, plant and equipment $ 2,834.8 $ 2,834.2
Less accumulated depreciation (1,235.4) (1,234.9)
---------- ---------
Net $ 1,599.4 $ 1,599.3
========== =========
<PAGE>
NOTE H: Intangible asset balances were as follows:
March 31, 1994 December 31, 1993
-------------- -----------------
(In millions)
Patents, trademarks,
goodwill and other
intangibles $ 368.8 $ 361.4
Less accumulated amortization (50.2) (47.3)
------- -------
Net $ 318.6 $ 314.1
======= =======
NOTE I: Warner Wellcome Consumer Health Products:
Warner-Lambert and Wellcome plc formed an alliance to develop
and market non-prescription consumer health care products.
The U.S. and Canadian joint ventures became operational in the
first quarter of 1994. Joint ventures in Europe and Australia
are expected to be formed later in 1994. Warner-Lambert has
voting control of the joint ventures and has consolidated the
financial results since their dates of formation. Wellcome's
share of the operating results of the joint ventures has been
reflected as minority interest. Warner-Lambert's consolidated
net sales for the first quarter of 1994 included approximately
$59 million for products contributed by Wellcome. The joint
venture did not have a significant impact on the results of
operations.
NOTE J: The company adopted the provisions of SFAS No. 115,
"Accounting for Certain Investments in Debt and Equity
Securities," effective January 1, 1994. The adoption of the
statement had no impact on the company's earnings.
At January 1, 1994, the company's portfolio of Held-to-
Maturity securities had an aggregate fair value of $569.8
million including unrealized holding gains of $4.3 million.
There were no unrealized holding losses. The portfolio was
comprised primarily of certificates of deposit and time
deposits which generally mature within one year. The balance
of the portfolio consisted mainly of certain Puerto Rico fixed
income investments with various maturity dates up to 23 years.
Securities categorized as Available-For-Sale are immaterial.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FIRST QUARTER ENDED MARCH 31, 1994
- - ----------------------------------
COMPARED WITH CORRESPONDING PERIOD IN 1993
- - ------------------------------------------
REVENUES
- - --------
Worldwide sales for the first quarter of 1994 were $1,473 million, 11
percent higher than 1993 first quarter sales of $1,332 million. Sales
growth of approximately 8 percent was from businesses that
Warner-Lambert acquired in 1993 and Wellcome plc products contributed
to the Warner Wellcome joint ventures (discussed below), partly offset
by the absence of the chocolate/caramel business (which was sold in
October 1993). Unit volume gains were 9 percent, price increases added
3 percent, and foreign exchange rate changes had an unfavorable impact
of 1 percent. U.S. sales increased $8 million or 1 percent to $659
million. International sales increased $133 million or 20 percent to
$814 million. At constant exchange rates, international sales
increased 22 percent from the same period last year.
SEGMENT SALES THREE MONTHS ENDED MARCH 31,
- - ------------- -----------------------------------------
(Dollars in Millions) Percent
1994 1993 Increase/(Decrease)
-------- -------- -------------------
Pharmaceutical $ 506.9 $ 514.8 (1.5)%
Consumer Health Care 653.8 528.4 23.7
Confectionery 312.2 288.5 8.2
-------- --------
Consolidated Net Sales $1,472.9 $1,331.7 10.6 %
======== ========
Pharmaceutical sales decreased 8 percent in the U.S. to $243 million
for the first quarter primarily due to sales erosion of the lipid-
regulator Lopid to generic competition. The company was also hampered
by the inability to ship certain pharmaceutical products undergoing
certification to comply with the terms of the consent decree the
company entered into with the U.S. Food and Drug Administration (FDA)
in 1993. In addition, Medicaid rebates, state programs and other
related rebate programs reduced net sales by $13 million in the first
quarter of 1994 compared to a $10 million reduction in the
corresponding 1993 period.
The consent decree with the FDA is a court-approved agreement that
primarily requires the company to certify that laboratory and/or
manufacturing procedures at its pharmaceutical manufacturing facilities
in the U.S. and Puerto Rico meet current Good Manufacturing Practices
established by the FDA.
<PAGE>
Warner-Lambert continues to make progress in resolving many of the
issues related to this matter. Most of the company's pharmaceutical
products have returned to full manufacture and distribution, and
laboratories in all U.S. pharmaceutical plants received certification.
Plans are underway to complete facility certification for the Vega Baja
and Fajardo plants in Puerto Rico during 1994.
Pharmaceutical products with U.S. sales growth during the first quarter
included the cardiovascular drug Accupril (benefiting from expanded
labeling as a treatment for congestive heart failure), Cognex for the
treatment of mild-to-moderate Alzheimer's disease (introduced in the
third quarter of 1993), and the add-on epilepsy therapy Neurontin
(launched during the first quarter of 1994). International
pharmaceutical sales increased 5 percent to $264 million. At constant
exchange rates, sales increased 10 percent from 1993. International
sales growth was led by Accupril and Capsugel empty hard-gelatin
capsules. In April 1994, the company obtained marketing approval in
France for dispensing Cognex in a hospital setting and anticipates a
marketing launch in the second quarter of 1994.
Sales of consumer health care products of $654 million for first
quarter 1994 were 24 percent higher than first quarter 1993. Warner-
Lambert acquired several businesses in this reporting segment in 1993,
including the principal operations of the Wilkinson Sword wet shave
business and Willinger Bros., Inc., a privately owned manufacturer and
distributor of aquarium products. Sales from these businesses and
approximately $59 million in sales of Wellcome products contributed by
Wellcome plc to the Warner Wellcome joint ventures increased sales by
approximately 22 percent.
The Warner Wellcome alliance calls for both Warner-Lambert and Wellcome
plc to contribute to the joint venture current and future over-the-
counter (OTC) products. Joint ventures became operational in the U.S.
and Canada in January, 1994 and are expected to be formed in Europe and
Australia later in 1994. After a two-year phase-in period, Warner-
Lambert will receive approximately 70 percent and Wellcome 30 percent
of the profits generated in the U.S. An NDA for the conversion to OTC
use of Wellcome's anti-viral drug Zovirax as a genital herpes
medication was filed with the FDA in August 1993. Subject to such
conversion, profits on OTC Zovirax sales in the U.S. will be shared in
favor of Wellcome. Profits on current products will be shared equally
in Canada, Australia and Europe. Profits on Zovirax cream (which is to
be used for the OTC treatment of cold sores) outside the U.S. will also
be shared equally, subject to a royalty to Wellcome if sales exceed a
threshold amount. Other future OTC switch products will be subject to
a profit split in favor of the innovator.
Warner-Lambert and Glaxo Holdings plc formed a joint venture in the
U.S. that commenced operation in December 1993. The joint venture will
develop, seek approval of and market OTC versions of Glaxo prescription
drugs in the U.S., including Zantac, its leading pharmaceutical
product. Additional joint ventures are expected to be formed with
Glaxo in other major markets outside the U.S., excluding Japan.
Warner-Lambert and Glaxo will share development costs and profits
equally, with Glaxo receiving a royalty on OTC sales by the joint
venture. During the first quarter of 1994, Warner-Lambert began
marketing Glaxo's nasal spray Beconase for OTC sale in the U.K.
<PAGE>
Consumer health care sales rose 13 percent in the U.S. to $307 million
for the first quarter. Excluding sales from businesses that Warner-
Lambert acquired in 1993 and the inclusion of Wellcome products, sales
decreased 12 percent. Major Wellcome products included in first
quarter sales were Sudafed and Actifed cold medications and Neosporin
topical anti-infective. International sales advanced 36 percent to
$347 million compared with the same period last year reflecting the
inclusion of the Wilkinson products, the continued success of Halls
cough tablets, Tetra pet care products and Schick wet-shaving products.
Sales growth of approximately 18 percent was from businesses that
Warner-Lambert acquired in 1993 and the inclusion of Wellcome products
in Canada.
Confectionery sales decreased 5 percent in the U.S. to $109 million in
the first quarter primarily due to the sale of the chocolate/caramel
business in the fourth quarter of 1993. Excluding chocolate/caramel
sales, sales grew 4 percent for first quarter 1994. Confectionery
products with U.S. sales gains included Mint*A*Burst stick gum
(introduced in December 1993) and Bubblicious chewing gum.
International confectionery sales increased 17 percent to $203 million.
At constant exchange rates, international sales increased 18 percent.
Major contributors to the international sales growth were Trident
sugarless gum, Clorets gums and mints (due to the introduction of a new
sugarless version) and Chiclets candy-coated gum.
COSTS AND EXPENSES
- - ------------------
Cost of goods sold of $479 million was 17 percent higher than $411
million in the first quarter of 1993. Cost of goods sold as a
percentage of sales was 32.5 percent in the first quarter of 1994
compared with 30.9 percent in the first quarter of 1993, primarily due
to an increase in the pharmaceutical segment's ratio, resulting from an
unfavorable product mix, (more lower-margin generics being sold in
place of higher-margin branded products) and increased costs related to
regulatory compliance issues.
Marketing expense in the first quarter rose 6 percent to $524 million
compared with $494 million for the same period last year, primarily due
to the inclusion of the acquired companies and the Wellcome alliance.
As a percentage of sales, expenses in the first quarter of 1994 were
35.6 percent compared with 37.1 percent in the first quarter of 1993,
as sales growth outpaced the company's investment in marketing expense.
Administrative and general expense increased 11 percent to $103 million
in the first quarter from $93 million in the corresponding 1993 period
primarily due to the inclusion of the acquired companies' results and
the Wellcome alliance, and increased quality assurance expenses related
to regulatory compliance issues.
Research and development expense totaled $98 million, decreasing 12
percent from the first quarter of 1993, representing 6.6 percent of
sales versus 8.3 percent in the same period a year ago. The decrease
reflects reduced spending on selected pharmaceutical programs and the
absence of spending on the Novon specialty polymer business, which was
discontinued in 1993.
<PAGE>
Other (income) expense, net of $(5) million in the first quarter of
1994 decreased $18 million compared with the first quarter of 1993
primarily due to higher interest expense and currency exchange losses
and lower income on investments.
Minority interests increased $20 million in the first quarter as a
result of the Warner Wellcome joint venture.
First quarter 1993 results included a restructuring charge of $70
million pretax ($45 million after tax or $.33 per share) relating to
the disposition of the Novon business.
ACCOUNTING CHANGES
- - ------------------
The company adopted, effective January 1, 1993, Statement of Financial
Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes,"
which increased net income by $63 million or $.47 per share; and SFAS
No. 112, "Employers' Accounting for Postemployment Benefits," which
decreased net income by $17 million or $.13 per share.
INCOME TAXES
- - ------------
An effective tax rate of 23.2 percent in the first quarter of 1994
compares with an effective tax rate of 26.0 percent in the first
quarter of 1993. The 1993 rate excludes the impact of the accounting
changes and the restructuring charge. The 1994 rate reduction reflects
the impact of reporting minority interests (which reduced the effective
tax rate by 1.8 percent), the extension of the U.S. research tax credit
enacted as part of the Omnibus Budget Reconciliation Act of 1993 in
August 1993, and effective tax rate improvements from international
operations, partly offset by reduced tax benefits from tax-advantaged
jurisdictions.
NET INCOME
- - ----------
Net income was $190 million or $1.42 per share in the first quarter, an
increase of 5 percent from the comparable prior year period. Excluding
restructuring and accounting changes in 1993, earnings per share
increased 6 percent from $1.34 in the first quarter of 1993.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
- - -------------------------------
Total cash and cash equivalents amounted to $379 million, a decrease of
$61 million since December 31, 1993. Cash provided by operating
activities of $56 million and a net increase in borrowings of $96
million was used to pay dividends of $82 million, to purchase property,
plant and equipment of $46 million and to repurchase approximately 620
thousand shares of company stock in the amount of $40 million. The
company also holds $209 million in securities and time deposits that do
not qualify as cash equivalents. Warner-Lambert's net debt (total debt
less total cash and cash equivalents, a portion of investments and
other assets) of $712 million at March 31, 1994 increased $114 million
from $598 million at December 31, 1993.
Expenditures for property, plant and equipment for the year 1994 are
planned to be approximately $360 million. This includes approximately
$95 million to be spent for the consolidation and upgrading of
manufacturing, distribution and research facilities, and for
organizational restructuring in connection with the company's
restructuring plans announced in 1993 and 1991.
ENVIRONMENT
- - -----------
The company maintains control systems designed to assure compliance in
all material respects with applicable environmental laws and
regulations. Warner-Lambert is involved in various environmental
matters, including actions initiated by the Environmental Protection
Agency or by state authorities under similar state legislation or other
parties. It is not possible to predict with certainty the outcome of
such matters or the total cost of remediation. In the opinion of
management, such proceedings will not result in a material adverse
effect on the company's financial position, liquidity, cash flow or
results of operations for any year.
OTHER
- - -----
The Clinton Administration has identified the containment of health
care costs as a major priority. The Administration's proposed health
care plan, along with a number of alternative proposals, if enacted,
will likely have an adverse impact on the pharmaceutical industry.
SHAREHOLDER INFORMATION
- - -----------------------
In January 1994, the Board of Directors approved a 7 percent increase
in the quarterly dividend to $.61 cents per share, which was paid in
the first quarter of 1994.
<PAGE>
PART II - OTHER INFORMATION
---------------------------
Item 1. Legal Proceedings
-----------------
Warner-Lambert and certain present and former employees
have been served with subpoenas by the U.S. Attorney's office in
Maryland, which is conducting an inquiry relating to compliance with
FDA regulations, to produce records and/or appear before a federal
grand jury in Baltimore. Warner-Lambert is cooperating with the
inquiry and cannot predict what the outcome of the investigation
will be.
In September 1993, Warner-Lambert received a Complaint
and Compliance Order from the EPA seeking penalties of $268,000 for
alleged violations of the Resource Conservation and Recovery Act,
Boilers and Industrial Furnace regulations. Warner-Lambert
responded to the complaint in October 1993. The Company is
contesting the allegations and has entered into negotiations with
the EPA.
Warner-Lambert, along with numerous other pharmaceutical
manufacturers and wholesalers, has been sued in a number of state
and federal antitrust lawsuits by retail pharmacies seeking treble
damages and injunctive relief. These actions arise from alleged
price discrimination by which the defendant drug companies, acting
alone or in concert, are alleged to have favored institutions,
managed care entities, mail order pharmacies and other buyers with
lower prices for brand name prescription drugs than those afforded
to plaintiff retailers. The federal cases have been consolidated by
the Judicial Panel on Multidistrict Litigation and transferred to
the United States District Court for the Northern District of
Illinois for pre-trial proceedings. The state cases pending in
California have been coordinated in the Superior Court of
California, County of San Francisco. Warner-Lambert has also
recently been named as a defendant in two actions in Alabama state
court, brought by a class of consumers and a class of pharmacies,
arising from the same allegations of price discrimination. Warner-
Lambert believes that these actions are without merit and will
defend itself vigorously. Although it is too early to predict the
outcome of these actions, Warner-Lambert does not at present expect
this litigation to have a material adverse effect on its financial
position, liquidity, cash flow or results of operations.
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
(a) The Annual Meeting of Shareholders of Warner-
Lambert was held on April 26, 1994.
(b) Proxies for such meeting were solicited pursuant to
the definitive Proxy Statement of Warner-Lambert relating to the
Annual Meeting of Shareholders held on April 26, 1994, which was
filed with the Securities and Exchange Commission via EDGARLINK
software on March 7, 1994.
<PAGE>
(c) The following describes the matters voted upon at
such meeting and sets forth the number of votes cast for, against or
withheld and the number of abstentions as to each such matter.
Broker non-votes were not counted for voting purposes.
(i) Election of Directors:
Number of Shares
Number of Shares Withheld From
Nominee Voted For Voting for
- - -------------------- ---------------- ----------------
B. Charles Ames 112,269,175 969,340
Donald C. Clark 112,305,089 933,426
Lodewijk J. R. de Vink 112,273,779 964,736
John A. Georges 112,292,922 945,593
Melvin R. Goodes 112,245,113 993,402
William H. Gray III 112,241,309 997,206
William R. Howell 112,290,529 947,986
LaSalle D. Leffall, Jr. 112,302,946 935,569
Patricia Shontz Longe 112,289,302 949,213
Lawrence G. Rawl 112,264,621 973,894
Paul S. Russell 112,296,157 942,358
Michael I. Sovern 112,252,256 986,259
Joseph D. Williams 112,207,296 1,031,219
(ii) Appointment of Independent Accountants for 1994:
Number of Shares
Number of Shares Number of Shares Abstaining From
Voted For Voted Against Voting
----------- ------------- ----------
112,159,626 737,365 341,524
(iii) Shareholder resolution seeking to eliminate the
Directors' Retirement Plan and certain other Directors' benefits:
Number of Shares
Number of Shares Number of Shares Abstaining From
Voted For Voted Against Voting
----------- ------------- ----------
27,486,741 72,533,758 2,782,652
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits
--------
(12) Computation of Ratio of Earnings to Fixed
Charges.
(b) Warner-Lambert has not filed any reports on Form
8-K for the quarter ended March 31, 1994.
<PAGE>
S I G N A T U R E S
-------------------
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.
WARNER-LAMBERT COMPANY
(Registrant)
Date: May 12, 1994 By: Ernest J. Larini
----------------
Ernest J. Larini
Vice President and
Chief Financial Officer
(Principal Financial Officer)
Date: May 12, 1994 By: William F. Gilroy
-----------------
William F. Gilroy
Vice President and Controller
(Principal Accounting Officer)
<PAGE>
EXHIBIT INDEX
-------------
Exhibit No. Exhibit Page No.
- - ----------- ------- --------
(12) Computation of Ratio of Earnings
to Fixed Charges.
<TABLE>
EXHIBIT 12
WARNER-LAMBERT COMPANY AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(Dollars in millions)
Years Ended December 31,
Three Months Ended --------------------------------------------
March 31, 1994 1993 1992 1991 1990 1989
------------------ ---- ---- ---- ---- ----
Earnings before income taxes and
<S> <C> <C> <C> <C> <C> <C>
accounting changes $ 253.8 $ 318.5 $ 858.2 $ 221.5 $ 680.7 $ 591.6
Add:
Interest on indebtedness-
excluding amount capitalized 18.4 64.2 80.8 58.2 68.7 55.6
Amortization of debt expense .1 .5 .6 .4 .3 1.0
Interest factor in rent
<S> <C> <C> <C> <C> <C> <C>
expense (a) 6.4 25.4 23.4 22.3 20.6 17.9
------- ------- ------- ------- ------- -------
Adjusted Earnings $ 278.7 $ 408.6 $ 963.0 $ 302.4 $ 770.3 $ 666.1
======= ======= ======= ======= ======= =======
Fixed Charges:
<S> <C> <C> <C> <C> <C> <C>
Interest on indebtedness $ 18.4 $ 64.2 $ 80.8 $ 58.2 $ 68.7 $ 55.6
Capitalized interest 1.9 8.6 8.1 9.4 5.2 6.3
Amortization of debt expense .1 .5 .6 .4 .3 1.0
Interest factor in rent
expense (a) 6.4 25.4 23.4 22.3 20.6 17.9
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Total Fixed Charges $ 26.8 $ 98.7 $ 112.9 $ 90.3 $ 94.8 $ 80.8
======= ======= ======= ======= ======= =======
Ratio of earnings to fixed charges 10.4 4.1(b) 8.5 3.3(c) 8.1 8.2
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(a) One third of rental expense (which the company believes to be a reasonable approximation of the
interest factor of such rental expense).
(b) The company's ratio of earnings to fixed charges for 1993 would have been 9.5 excluding the
restructuring charge of $525.2 million.
(c) The company's ratio of earnings to fixed charges for 1991 would have been 9.4 excluding the
restructuring charge of $544.0 million.
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