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, 1998
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: (973) 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, 1998
----- -----------------------------
Common Stock, $1 par value 819,487,041 *
* Adjusted to reflect a three-for-one stock split of the Registrant's
Common Stock for stockholders of record as of May 8, 1998.
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
WARNER-LAMBERT COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
March 31, December 31,
1998 1997
--------- -----------
(Dollars in millions)
ASSETS:
Cash and cash equivalents $ 559.7 $ 756.5
Receivables 1,246.2 1,370.5
Inventories 793.2 742.9
Prepaid expenses and other current assets 467.8 427.1
--------- ---------
Total current assets 3,066.9 3,297.0
Investments and other assets 609.2 593.8
Property, plant and equipment 2,355.0 2,427.0
Intangible assets 1,683.7 1,712.7
--------- ---------
Total assets $ 7,714.8 $ 8,030.5
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY:
Short-term debt $ 371.8 $ 372.1
Accounts payable, trade 818.3 890.6
Accrued compensation 179.1 186.6
Other current liabilities 861.3 894.0
Federal, state and foreign income taxes 295.6 245.6
--------- ---------
Total current liabilities 2,526.1 2,588.9
Long-term debt 1,408.3 1,831.2
Other noncurrent liabilities 791.3 774.9
Shareholders' equity:
Preferred stock - none issued - -
Common stock issued: 1998 - 961,981,608
shares; 1997 - 320,660,536 shares 962.0 320.7
Capital in excess of par - 225.4
Retained earnings 3,674.0 3,892.6
Treasury stock, at cost: (1998 - 143,378,559
shares; 1997 - 48,436,529 shares) (1,189.0) (1,164.5)
Accumulated other comprehensive income (457.9) (438.7)
--------- ---------
Total shareholders' equity 2,989.1 2,835.5
--------- ---------
Total liabilities and shareholders'
equity $ 7,714.8 $ 8,030.5
========= =========
See accompanying notes to consolidated financial statements.
WARNER-LAMBERT COMPANY
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months
Ended March 31,
-----------------
1998 1997
---- ----
(Dollars in millions, except
per share amounts)
NET SALES $2,218.9 $1,777.4
COSTS AND EXPENSES:
Cost of goods sold 604.6 549.2
Selling, general and administrative 1,011.4 762.2
Research and development 182.9 133.9
Other expense (income), net 26.6 40.5
-------- --------
Total costs and expenses 1,825.5 1,485.8
-------- --------
INCOME BEFORE INCOME TAXES 393.4 291.6
Provision for income taxes 114.1 87.5
-------- --------
NET INCOME $ 279.3 $ 204.1
======== ========
NET INCOME PER COMMON SHARE:
Basic $ .34 * $ .25 *
Diluted $ .33 * $ .24 *
DIVIDENDS PER COMMON SHARE $ .16 * $ .13 *
* Amounts reflect a three-for-one stock split as described in NOTE E.
See accompanying notes to consolidated financial statements.
WARNER-LAMBERT COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months
Ended March 31,
---------------
1998 1997
---- ----
(Dollars in millions)
OPERATING ACTIVITIES:
Net income $ 279.3 $ 204.1
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 71.7 62.7
Deferred income taxes (36.2) 15.0
Changes in assets and liabilities, net of
effects from disposition of business:
Receivables 107.4 (77.8)
Inventories (55.9) (23.5)
Accounts payable and
accrued liabilities (42.1) 25.3
Other, net (30.7) (24.5)
--------- -------
Net cash provided by operating activities 293.5 181.3
--------- -------
INVESTING ACTIVITIES:
Purchases of investments (9.2) (5.9)
Proceeds from maturities/sales of investments 13.8 69.5
Capital expenditures (91.4) (53.6)
Proceeds from disposition of business 125.0 -
Other, net 23.2 (7.2)
--------- -------
Net cash provided by investing activities 61.4 2.8
--------- -------
FINANCING ACTIVITIES:
Proceeds from borrowings 594.0 510.6
Principal payments on borrowings (1,002.0) (509.5)
Purchases of treasury stock (37.6) (70.8)
Cash dividends paid (130.9) (103.1)
Proceeds from stock option exercises 29.7 26.6
--------- -------
Net cash used by financing activities (546.8) (146.2)
--------- -------
Effect of exchange rate changes on cash
and cash equivalents (4.9) (12.4)
--------- -------
Net (decrease) increase in cash
and cash equivalents (196.8) 25.5
Cash and cash equivalents at beginning of year 756.5 390.8
--------- -------
Cash and cash equivalents at end of period $ 559.7 $ 416.3
========= =======
See accompanying notes to consolidated financial statements.
WARNER-LAMBERT COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollars in millions, except per share amounts)
NOTE A: The interim financial statements presented herein should be read
in conjunction with Warner-Lambert Company's 1997 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: Certain prior year amounts have been reclassified to conform
with the current year presentation.
NOTE E: On April 28, 1998 the stockholders approved an increase in the
number of authorized shares of common stock from 500 million to
1.2 billion in order to effectuate a three-for-one stock split
effective May 8, 1998. Par value remained at $1.00 per share.
The stock split was reflected in the March 31, 1998 balance sheet
by increasing common stock issued by $641.3 and reducing Capital
in excess of par value by $274.2 and Retained earnings by $367.1.
In addition, the average number of common shares outstanding and
all per share information has been restated to reflect the stock
split.
NOTE F: In the first quarter of 1998, the company sold its Rochester,
Michigan pharmaceutical manufacturing plant as well as certain
minor prescription products for approximately $125.0. The
resulting pretax gain of $66.6 was offset by costs related to
the company's plans to restructure two of its foreign
manufacturing facilities. The results of these transactions are
recorded in Other expense (income), net for the three months
ended March 31, 1998.
NOTE G: In June 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 130,
"Comprehensive Income," which requires reporting the components
of comprehensive income in a financial statement, on an annual
basis, as part of a full set of general purpose financial
statements. Total comprehensive income includes net income and
other comprehensive income which consists primarily of foreign
currency translation adjustments. Total comprehensive income for
the three-month periods ended March 31, 1998 and 1997 was $260.1
and $112.2, respectively.
In 1998, Cumulative translation adjustments, and certain other
equity adjustments which were previously reported in Capital in
excess of par, have been combined in one line item, Accumulated
other comprehensive income, in the accompanying Condensed
Consolidated Balance Sheet. These reclassifications have also
been made to the 1997 Condensed Consolidated Balance Sheet.
NOTE H: The Net income per common share computations were as follows:
(Shares in thousands)
Three Months Ended
March 31,
------------------
1998 1997
---- ----
Basic:
Net income $279.3 $204.1
Average common shares outstanding 818,056 813,929
-------- --------
$.34 * $.25 *
======== ========
Diluted:
Net income $279.3 $204.1
Average common shares outstanding 818,056 813,929
Impact of potential future stock
option exercises, net of shares
repurchased 26,470 19,376
-------- --------
Average common shares outstanding -
assuming dilution 844,526 833,305
-------- --------
$.33 * $.24 *
======== ========
* Amounts reflect a three-for-one stock split as described in
NOTE E.
NOTE I: Major classes of inventories were as follows:
March 31, 1998 December 31, 1997
-------------- -----------------
Raw materials $184.0 $167.7
Finishing supplies 47.1 53.1
Work in process 115.8 95.6
Finished goods 446.3 426.5
------ ------
$793.2 $742.9
====== ======
NOTE J: Property, plant and equipment balances were as follows:
March 31, 1998 December 31, 1997
-------------- -----------------
Property, plant and equipment $ 3,926.4 $ 3,968.9
Less accumulated depreciation (1,571.4) (1,541.9)
--------- ---------
Net $ 2,355.0 $ 2,427.0
========= =========
NOTE K: Intangible asset balances were as follows:
March 31, 1998 December 31, 1997
-------------- -----------------
Goodwill $1,256.7 $1,267.5
Trademarks and other
intangibles 596.7 602.3
Less accumulated amortization (169.7) (157.1)
-------- --------
Net $1,683.7 $1,712.7
======== ========
NOTE L: Included in Other expense (income), net was interest expense of
$35.8 and $39.2 for the first quarters of 1998 and 1997,
respectively.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
FIRST QUARTER ENDED MARCH 31, 1998
- -----------------------------------
COMPARED WITH CORRESPONDING PERIOD IN 1997
- ------------------------------------------
NET SALES
- ---------
Sales for the first quarter of 1998 of $2,219 million were 25
percent above 1997 first quarter sales. Sales increased 29 percent,
adjusting for the unfavorable impact of foreign exchange rate
changes of 4 percent. The sales increase was attributable to unit
volume growth of 31 percent which was partially offset by overall
price decreases of 2 percent.
U.S. sales increased $392 million or 47 percent to $1,220 million.
International sales increased $49 million or 5 percent to $999
million. At constant exchange rates, international sales were 14
percent above the same period last year.
SEGMENT SALES Three Months Ended March 31,
- ------------- ------------------------------
Percent
Increase/
(Dollars in Millions) 1998 1997 (Decrease)
------ ------ --------
Pharmaceutical $ 1,125 $ 686 64 %
Consumer Health Care 650 662 (2)
Confectionery 444 429 4
------ ------
Consolidated Net Sales $2,219 $1,777 25 %
====== ======
Worldwide pharmaceutical sales increased 64 percent to $1,125
million in the first quarter of 1998. The sales increase was
primarily attributable to the continued growth of the cholesterol-
lowering agent LIPITOR, the type 2 diabetes drug REZULIN and the
add-on epilepsy therapy NEURONTIN which achieved worldwide sales of
$378 million, $138 million and $96 million, respectively.
Pharmaceutical sales in the U.S. increased 93 percent to $715
million in the first quarter of 1998. International pharmaceutical
sales increased 30 percent to $410 million or 40 percent at constant
exchange rates.
By the end of 1998 the company expects that LIPITOR will be
available in 45 markets worldwide. Large market launches in 1998
will include Australia, France, Italy and Brazil.
In the fourth quarter of 1997 the company initiated changes in the
prescribing information for REZULIN in response to reports of rare
cases of severe hepatic dysfunction during marked use. The changes
include a recommendation that healthcare providers monitor patients
for signs of liver dysfunction. The company continues to find that
the benefits of REZULIN outweigh the potential risks that may be
associated with the product. There are currently more than 800,000
patients on REZULIN therapy in the U.S. and an additional 200,000 in
Japan.
To sustain growth in currently marketed drugs including LIPITOR,
REZULIN and NEURONTIN, the company has initiated aggressive life-
cycle management programs exploring new indications and patient
populations.
Consumer health care product sales in the U.S. increased 8 percent
to $355 million in the first quarter of 1998. Sales of the Glaxo
Wellcome Warner-Lambert joint venture, including the heartburn
medication ZANTAC 75, are not reflected in reported sales results
since the joint venture is accounted for on an equity basis. If
sales of ZANTAC 75 were included, the sales comparison would have
been positively impacted by 3 percent. U.S. shaving products sales
increased 40 percent to $51 million due to the launch of the
PROTECTOR shaving system and the newly designed SLIM TWIN disposable
razor.
International consumer health care sales fell 12 percent to $295
million, or 4 percent at constant exchange rates. If international
sales of the Glaxo Wellcome Warner-Lambert joint venture were
consolidated, the decline in international sales would have been
positively impacted by 1 percent. International sales of the
company's TETRA pet care products business fell 16 percent to $28
million, or 10 percent at constant exchange rates. This decline is
primarily attributable to Japan, where sales fell due to the
continued broad economic downturn in that country. International
sales of the shaving products business fell 11 percent to $116
million or 5 percent at constant exchange rates. This decline is
also attributable to the weakness in the Japanese economy.
Confectionery sales in the U.S. increased 17 percent to $150 million
in the first quarter of 1998 primarily due to the successful 1997
launches of DENTYNE ICE chewing gum and CERTS POWERFUL Mints breath
freshener and strong sales of TRIDENT sugarless gum.
International confectionery sales were $294 million, a decrease of 2
percent, or an increase of 5 percent at constant exchange rates.
The international sales decline is primarily attributable to Brazil,
where sales fell due to economic softness and a lack of price
increases.
COSTS AND EXPENSES
- ------------------
As a percentage of net sales, cost of goods sold improved to 27.2%
from 30.9% in 1997. The improvement in the ratio was partly
attributable to an increase in pharmaceutical segment product sales,
with generally higher margins than consumer health care or
confectionery products, as a percentage of total company sales.
Also contributing to the improvement were productivity improvements
and a favorable product mix in the pharmaceutical segment throughout
the world and in the confectionery segment in the U.S.
Selling, general and administrative expense in the first quarter of
1998 increased 33 percent compared with a net sales increase of 25
percent. As a percentage of net sales, selling, general and
administrative expense for the quarter increased to 45.6% compared
with 42.9% for the same quarter last year. Pharmaceutical segment
expenses significantly increased to support new products. Quarterly
settlements of co-promotion agreements related to LIPITOR and
REZULIN are recorded in selling expense. Management expects that
selling, general and administrative expenses will remain at or
slightly above this level as a percent of sales for the full year.
Research and development expense increased 37 percent in the first
quarter of 1998. As a percentage of net sales, research and
development expense was 8.2% in the first quarter of 1998 compared
with 7.5% in the first quarter of 1997. For 1998 the company plans
to invest in excess of $800 million in research and development, a
projected increase of almost 20 percent compared with 1997.
Other expense (income), net in the first quarter of 1998 compared
favorably to the first quarter of 1997 by $14 million. The
improvement was partly attributable to recorded income from the
Glaxo Wellcome Warner-Lambert joint venture in 1998 as compared to a
loss in 1997. Other expense (income), net in 1998 includes a gain
on the sale of the company's Rochester, Michigan manufacturing plant
and certain minor prescription products of $67 million which was
offset by costs related to the company's plans to restructure two of
its foreign manufacturing facilities.
INCOME TAXES
- ------------
The effective tax rate for the first quarter of 1998 decreased to
29.0% from 30.0% in 1997. The decrease of 1.0 percentage point is
primarily due to increased income generated in foreign jurisdictions
with lower tax rates.
NET INCOME
- ----------
Net income for the first quarter of 1998 increased 37 percent to
$279 million.
On April 28, 1998 the stockholders approved an increase in the
number of authorized shares of common stock from 500 million to 1.2
billion in order to effectuate a three-for-one stock split for all
shares of record held on May 8, 1998.
Diluted earnings per share for the first quarter of 1998 increased
from $0.24 to $0.33 on a post-split basis. Based on current
planning assumptions, the company expects to increase earnings per
share by a minimum of 35 percent this year.
LIQUIDITY AND FINANCIAL CONDITION
- ---------------------------------
Selected data:
March 31, December 31,
1998 1997
------ ------
Net debt (in millions) $1,132 $1,347
Net debt to net capital(equity
and net debt) 27% 32%
Net debt (total debt less cash and cash equivalents and other
nonequity securities) decreased $215 million from December 31, 1997.
Cash and cash equivalents were $560 million at March 31, 1998, a
decrease of $197 million from December 31, 1997. The company also
held $88 million in nonequity securities, included in other current
assets and investments and other assets, that management views as
cash equivalents, representing a decrease of $11 million from
December 31, 1997. The total decrease in cash and cash equivalents
of $208 million is offset by a decrease in total debt of $423
million.
Cash provided by operating activities for the first quarter of 1998
of $294 million was more than sufficient to fund capital
expenditures of $91 million and pay dividends of $131 million.
Cash flow in the first quarter of 1998 includes proceeds of $125
million from the sale the Rochester, Michigan pharmaceutical
manufacturing plant.
Planned capital expenditures for 1998 are estimated to be $800
million in support of additional manufacturing operations and
expanded research facilities. Over the next four years the company
plans to invest nearly $1 billion in pharmaceutical research and
manufacturing infrastructure alone. The company intends to fund
capital expenditures with cash provided by operations.
Statements made in this report that state "we believe," "we expect"
or otherwise state the company's predictions for the future are
forward-looking statements. Actual results might differ materially
from those projected in the forward-looking statements. Additional
information concerning factors that could cause actual results to
materially differ from those in the forward-looking statements is
contained in Exhibit 99 of the company's December 31, 1997 Form 10-K
filed with the Securities and Exchange Commission. Exhibit 99 to
the Form 10-K is incorporated by reference herein.
All product names appearing in capital letters are registered
trademarks of Warner-Lambert Company, its affiliates, related
companies or its licensors. ZANTAC 75 is a registered trademark of
Glaxo Wellcome, its affiliates, related companies or licensors.
PART II - OTHER INFORMATION
---------------------------
Item 1. Legal Proceedings
-----------------
In September 1993, the U.S. Environmental Protection Agency, Region
V, filed a civil administrative enforcement action against Warner-
Lambert, Parke-Davis division, Holland, Michigan, seeking penalties
of $268,000 for alleged violations of the Resource Conservation and
Recovery Act, Boilers and Industrial Furnace regulations. Parke-
Davis and Region V have agreed to settle the matter for $40,000,
with no admission of liability by the Company. The agreement was
filed on April 6, 1998, effectively resolving the matter.
In late 1993, Warner-Lambert, along with numerous other
pharmaceutical manufacturers and wholesalers, was sued in a number
of state and federal antitrust lawsuits seeking damages (including
trebled and statutory damages, where applicable) and injunctive
relief. These actions arose from allegations that the defendant
drug companies, acting alone or in concert, engaged in differential
pricing whereby they favored institutions, managed care entities,
mail order pharmacies and other buyers with lower prices for brand
name prescription drugs than those afforded to retailer pharmacies.
The federal cases, which were brought by retailers, have been
consolidated by the Judicial Panel on Multidistrict Litigation and
transferred to the U.S. District Court for the Northern District of
Illinois for pre-trial proceedings. In June 1996, the Court
approved Warner-Lambert's agreement to settle part of the
consolidated federal cases, specifically, the class action
conspiracy lawsuit, for a total of $15.1 million. This settlement
also contains certain commitments regarding Warner-Lambert's pricing
of brand name prescription drugs. Appeals of the District Court's
approval of this settlement were unsuccessful, and the commitments
have become effective. Certain other rulings of the judge presiding
in this case were also appealed, and the judge was reversed on all
rulings. The cases have been remanded to the District Court, and
trial of the class action conspiracy action against the non-settling
defendant pharmaceutical manufacturers and wholesalers has been
scheduled for September, 1998.
In April, 1997, after execution of the federal class settlement
referred to above but prior to the formal effectiveness of its
pricing commitments, the same plaintiff-class members brought a new
purported class action relating to the time period subsequent to the
execution of the settlement. This new class suit sought only
injunctive relief. At present, Warner-Lambert cannot predict the
outcome of this and the other remaining federal lawsuits in which it
is a defendant.
The state cases pending in California, brought by classes of
pharmacies and consumers, have been coordinated in the Superior
Court of California, County of San Francisco. Warner-Lambert has
also been named as a defendant in actions in state courts filed in
Alabama, Minnesota, Mississippi and Wisconsin brought by classes of
pharmacies, each arising from the same allegations of differential
pricing. With its co-defendants, the Company has settled the
Minnesota and Wisconsin actions. The Company's share of these
settlements, which have been approved, are not material. In
addition, the Company is named in class action complaints filed in
Alabama, Arizona, Florida, Kansas, Maine, Michigan, Minnesota, New
York, North Carolina, Tennessee, Wisconsin and the District of
Columbia, brought by classes of consumers who purchased brand name
prescription drugs at retail pharmacies. With its co-defendants,
the Company has agreed to settle these state consumer class actions.
The Company's share of these settlements, which are subject to court
approval in their respective jurisdictions, is not material.
The Federal Trade Commission (the "FTC") is conducting an
investigation to determine whether Warner-Lambert and twenty-one
other pharmaceutical manufacturers have engaged in concerted
activities to raise the prices of pharmaceutical products in the
United States. Warner-Lambert was served with and responded to two
subpoenas from the FTC in 1996 and 1997, respectively, and is
continuing to cooperate with this investigation. Warner-Lambert
cannot at present predict the outcome of this investigation.
Warner-Lambert is also involved in various administrative or
judicial proceedings related to environmental actions initiated by
the EPA under the Comprehensive Environmental Response, Compensation
and Liability Act (also known as Superfund) or by state authorities
under similar state legislation, or by third parties. While it is
not possible to predict with certainty the outcome of such matters
or the total cost of remediation, Warner-Lambert believes it is
unlikely that their ultimate disposition will have a material
adverse effect on Warner-Lambert's financial position, liquidity,
cash flow or results of operations for any year.
Warner-Lambert Inc., a wholly-owned subsidiary of Warner-Lambert,
has been named as a defendant in class actions filed in Puerto Rico
Superior Court by current and former employees from the Vega Baja,
Carolina and Fajardo plants, as well as Kelly Services temporary
employees assigned to those plants. The lawsuits seek monetary
relief for alleged violations of local statutes and decrees relating
to meal period payments, minimum wage, overtime and vacation pay.
Warner-Lambert believes that these actions are without merit and
will defend these actions vigorously. Although it is too early to
predict the outcome of these actions, Warner-Lambert does not at
present expect these lawsuits to have a material adverse effect on
the Company's 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 28, 1998.
(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 28, 1998, which was
filed with the Securities and Exchange Commission via EDGARLINK
software on March 6, 1998.
(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. There
were broker non-votes only with respect to item (4).
(1) Election of Directors:
Number of Shares
Number of Shares Withheld From
Nominee Voted For Voting For
- ---------------------- ---------------- ----------------
Robert N. Burt 244,076,919 1,232,057
Donald C. Clark 243,934,468 1,374,508
Lodewijk J. R. de Vink 243,984,242 1,324,734
John A. Georges 244,043,317 1,265,659
Melvin R. Goodes 243,996,655 1,312,321
William H. Gray III 243,846,902 1,462,074
William R. Howell 244,007,178 1,301,798
LaSalle D. Leffall, Jr. 244,057,108 1,251,868
Patricia Shontz Longe 244,048,625 1,260,351
George A. Lorch 244,040,719 1,268,257
Alex J. Mandl 244,081,548 1,227,428
Lawrence G. Rawl 243,935,024 1,373,952
Michael I. Sovern 244,051,294 1,257,682
(2) Appointment of Independent Accountants for 1998:
Number of Shares
Number of Shares Number of Shares Abstaining From
Voted For Voted Against Voting
---------------- ---------------- ----------------
244,272,065 372,594 664,317
(3) Amendment of Certificate of Incorporation to Increase
Authorized Common Stock:
Number of Shares
Number of Shares Number of Shares Abstaining From
Voted For Voted Against Voting
---------------- ---------------- ----------------
233,092,730 9,547,142 2,669,104
(4) Stockholder Proposal Relating to the Company's Oral
Contraceptive Business:
Number of Shares
Number of Shares Number of Shares Abstaining From Broker
Voted For Voted Against Voting Non-Votes
---------------- ---------------- ---------------- ----------
5,325,657 210,468,826 5,666,321 23,848,172
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits
--------
(12) Computation of Ratio of Earnings to Fixed
Charges.
(27) Financial Data Schedule (EDGAR filing only).
(b) Reports on Form 8-K
-------------------
Warner-Lambert has not filed any reports on
Form 8-K for the quarter ended March 31,
1998.
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, 1998 By: Ernest J. Larini
----------------
Vice President and
Chief Financial Officer
(Principal Financial Officer)
Date: May 12, 1998 By: Joseph E. Lynch
---------------
Vice President and Controller
(Principal Accounting Officer)
EXHIBIT INDEX
-------------
Exhibit No. Exhibit
- ----------- -------
(12) Computation of Ratio of Earnings to Fixed
Charges.
(27) Financial Data Schedule (filed electronically).
<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, 1998 1997 1996 1995 1994 1993
------------------ ---- ---- ---- ---- ----
Earnings before income taxes and
accounting changes (less
<S> <C> <C> <C> <C> <C> <C>
minority interests) $279.3 $1,233.4 $1,107.7 $1,018.6 $ 913.1 $318.5
Add:
Interest on indebtedness-
excluding amount capitalized 35.8 167.0 145.9 122.7 93.7 64.2
Amortization of debt expense .3 .4 .5 .4 .4 .5
Interest factor in rent
expense (a) 7.7 30.7 27.5 26.9 26.2 25.4
------ -------- -------- -------- ------- ------
<S> <C> <C> <C> <C> <C> <C>
Adjusted earnings $323.1 $1,431.5 $1,281.6 $1,168.6 $1,033.4 $408.6
====== ======== ======== ======== ======== ======
Fixed Charges:
Interest on indebtedness $ 35.8 $ 167.0 $ 145.9 $ 122.7 $ 93.7 $ 64.2
Capitalized interest 1.2 8.3 9.6 10.1 9.4 8.6
Amortization of debt expense .3 .4 .5 .4 .4 .5
Interest factor in rent
expense (a) 7.7 30.7 27.5 26.9 26.2 25.4
------ -------- -------- -------- -------- ------
<S> <C> <C> <C> <C> <C> <C>
Total fixed charges $ 45.0 $ 206.4 $ 183.5 $ 160.1 $ 129.7 $ 98.7
====== ======== ======== ======== ======== ======
Ratio of earnings to fixed charges 7.2 6.9 7.0 7.3 8.0 4.1(b)
====== ======== ======== ======== ======== ======
(a) Represents one third of rental expense, which the Company believes is a reasonable
approximation.
(b) The Company's ratio of earnings to fixed charges for 1993 would have been 9.5 excluding the
restructuring charges of $525.2.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AT MARCH 31, 1998 AND FROM THE RELATED CONSOLIDATED
STATEMENT OF INCOME FOR THE 3 MONTH PERIOD ENDED MARCH 31, 1998 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 560
<SECURITIES> 0
<RECEIVABLES> 1,246
<ALLOWANCES> 0
<INVENTORY> 793
<CURRENT-ASSETS> 3,067
<PP&E> 3,926
<DEPRECIATION> 1,571
<TOTAL-ASSETS> 7,715
<CURRENT-LIABILITIES> 2,526
<BONDS> 1,408
0
0
<COMMON> 962
<OTHER-SE> 2,027
<TOTAL-LIABILITY-AND-EQUITY> 7,715
<SALES> 2,219
<TOTAL-REVENUES> 2,219
<CGS> 605
<TOTAL-COSTS> 605
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 36
<INCOME-PRETAX> 393
<INCOME-TAX> 114
<INCOME-CONTINUING> 279
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 279
<EPS-PRIMARY> .34<F1><F2>
<EPS-DILUTED> .33<F2>
<FN>
<F1>Amount represents basic earnings per share.
<F2>Reflects three-for-one stock split effective May 8, 1998.
Prior period financial data schedules have not been restated for this
recapitalization.
</FN>
</TABLE>
