FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
-------------------------------------
QUARTERLY REPORT UNDER SECTION 13
OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
-------------------------------------
For Quarter Ended March 31, 1997
Commission File Number: 0-2085
BETZDEARBORN INC.
(Exact name of registrant as specified in its charter)
Pennsylvania 23-1503731
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4636 Somerton Road, Trevose, PA 19053
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (215) 355-3300
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months [or for such shorter period that the
registrant was required to file such report(s)], 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.
28,765,286 Common Shares outstanding as of May 8, 1997.
<PAGE>
BETZDEARBORN INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per share amounts)
Three Months Ended
March 31,
1997 1996
---- ----
Net Sales $306.4 $199.5
Operating Costs and Expenses:
Cost of products sold 122.2 76.9
Selling, research and administrative 137.0 90.9
Integration/restructuring 6.6 0.0
------ ------
265.8 167.8
OPERATING EARNINGS 40.6 31.7
Other Income (Expense):
Investment and other income (0.4) 0.3
Interest (11.4) (0.5)
------ ------
(11.8) (0.2)
------ ------
EARNINGS BEFORE INCOME TAXES 28.8 31.5
Income Taxes 10.2 11.8
------ ------
NET EARNINGS $ 18.6 $ 19.7
====== ======
Net earnings per Common Share:
Primary $ .59 $ .66
====== ======
Fully diluted $ .56 $ .62
====== ======
Cash dividends declared per Common Share $ .375 $ .37
====== ======
Average number of Common Shares:
Primary 29.1 27.8
====== ======
Fully diluted 31.8 30.7
====== ======
See notes to consolidated financial statements.
<PAGE>
BETZDEARBORN INC.
Consolidated Balance Sheets (In millions except share amounts)
<TABLE>
<CAPTION>
ASSETS March 31, 1997 December 31, 1996
-------------- -----------------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 36.8 $ 38.2
Trade accounts receivable,
less allowances:
1997--$7.8; 1996--$7.6 258.9 243.2
Inventories:
Finished products and goods
purchased for resale 51.6 54.5
Raw materials 45.3 42.2
-------- --------
96.9 96.7
Income taxes 21.1 31.1
Prepaid expenses and other 30.6 29.5
-------- --------
TOTAL CURRENT ASSETS 444.3 438.7
PROPERTY, PLANT AND EQUIPMENT--at cost
Land 36.1 38.9
Buildings 214.7 221.9
Machinery and equipment 528.0 531.0
Construction in progress 16.2 11.9
-------- --------
795.0 803.7
Allowance for depreciation (deduction) (385.3) (374.7)
-------- --------
409.7 429.0
OTHER ASSETS
Investments and other 15.7 16.6
Goodwill - net of accumulated amortization:
1997 -- $9.7; 1996 -- $7.1 432.6 449.9
Other Intangibles - net of accumulated
amortization:
1997 -- $5.4; 1996 -- $4.3 83.0 84.1
-------- --------
531.3 550.6
-------- --------
$1,385.3 $1,418.3
======== ========
</TABLE>
See notes to consolidated financial statements.
<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY March 31, 1997 December 31, 1996
-------------- -----------------
<S> <C> <C>
CURRENT LIABILITIES
Trade accounts payable $ 73.8 $ 68.9
Payroll and related taxes 34.1 47.8
Notes payable 0.8 0.8
Accrued restructuring costs 20.9 30.9
Other accrued liabilities 56.2 67.5
Income taxes 5.9 0.0
Dividends payable 0.0 10.6
Current portion of long-term debt 1.0 1.0
-------- --------
TOTAL CURRENT LIABILITIES 192.7 227.5
LONG-TERM DEBT--less portion classified as current 727.2 744.5
LONG-TERM LIABILITIES
Income taxes 10.5 12.4
Employee benefit plans 42.9 44.3
Other 4.6 4.1
-------- --------
58.0 60.8
SHAREHOLDERS' EQUITY
Preferred Shares -- Authorized - 1,000,000
shares, $.10 par value, voting
Series A ESOP Convertible, 8% Cumulative, stated
at aggregate liquidation preference; Issued:
1997 -- 480,077 shares;
1996 -- 481,780 shares 96.0 96.4
Guarantee of related ESOP debt (89.7) (90.0)
-------- --------
6.3 6.4
Common Shareholders' Equity
Common Shares -- Authorized - 90,000,000
shares, $.10 par value;
Issued (including treasury shares):
1997 -- 33,636,141 shares;
1996 -- 33,637,359 shares 3.4 3.4
Capital in excess of par value of shares 107.1 93.8
Retained earnings 484.2 463.9
Cost of Common Shares in treasury:
1997 -- 4,916,821 shares;
1996 -- 5,509,124 shares (175.2) (188.0)
Unearned compensation (4.0) (4.2)
Foreign currency translation adjustments (14.4) 10.2
-------- --------
COMMON SHAREHOLDERS' EQUITY 401.1 379.1
-------- --------
TOTAL SHAREHOLDERS' EQUITY 407.4 385.5
-------- --------
$1,385.3 $1,418.3
======== ========
</TABLE>
See notes to consolidated financial statements.
<PAGE>
BETZDEARBORN INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1997 1996
---- ----
<S> <C> <C>
OPERATING ACTIVITIES
Net earnings $18.6 $19.7
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation 16.4 13.7
Amortization 3.8 0.3
Compensation and employee benefit plans 2.5 2.2
Other, net (0.1) 0.1
Changes in operating assets and liabilities, net of business
acquisitions:
Accounts receivable (15.6) (3.5)
Inventories (3.0) (1.1)
Prepaid expenses and other (1.2) (0.5)
Accounts payable and accrued expenses (7.5) (2.2)
----- -----
NET CASH PROVIDED BY OPERATING ACTIVITIES 13.9 28.7
INVESTING ACTIVITIES
Expenditures for property, plant and equipment (13.0) (15.0)
Proceeds from sales of long-term assets 6.0 0.2
Purchases of businesses and long-term investments (0.6) (4.6)
Other, net 1.4 1.0
----- -----
NET CASH USED IN INVESTING ACTIVITIES (6.2) (18.4)
FINANCING ACTIVITIES
Repayments under credit facilities (135.0) -
Borrowings under credit facilities 117.7 -
Net short-term borrowings - 3.8
Dividends paid (12.5) (12.2)
Proceeds from issuance of common shares,
including treasury shares 22.4 0.3
----- -----
NET CASH USED IN FINANCING ACTIVITIES (7.4) (8.1)
Effect of exchange rate changes on cash (1.7) (0.7)
------ -----
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (1.4) 1.5
Cash and Cash Equivalents at Beginning of Year 38.2 13.9
------ -----
CASH AND CASH EQUIVALENTS AT END OF PERIOD $36.8 $15.4
===== =====
</TABLE>
See notes to consolidated financial statements.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Basis of Presentation
The accompanying unaudited consolidated financial statements have been
prepared in accordance with the instructions to Form 10-Q and, therefore, do not
include all information and footnotes necessary for a fair presentation of
consolidated financial position, consolidated results of operations and
consolidated cash flows in conformity with generally accepted accounting
principles. The foregoing consolidated financial statements do include all
adjustments, consisting only of normal recurring accruals, except for
Restructuring/Integration discussed in Note 4, which, in the opinion of
management, are necessary for a fair statement of the results of the interim
periods. Certain amounts in the financial statements for the year ended December
31, 1996 and for the quarter ended March 31, 1996 have been reclassified to
conform with 1997 classifications.
Note 2 - Common Shares Reserved for Stock Plans
At March 31, 1997, 3,505,215 and 506,964 Common Shares were reserved
for possible issuance pursuant to the exercise of stock options and grants under
the Company's Stock Option and Incentive Plans, respectively. At the Company's
Annual Meeting on April 10, 1997, the shareholders approved an amendment to the
Employee Stock Option Plan of 1987 which provides for an additional 2,000,000
shares of the Company's common stock to be used for granting stock options to
employees and members of the Board of Directors until April 10, 2007. Also at
the Company's Annual Meeting, the shareholders approved adoption of the Employee
Stock Purchase Plan of 1997 which provides for 400,000 shares of the Company's
common stock to be purchased by U.S. employees of the Company through payroll
deductions. Further, 2,666,000 Common Shares were reserved and kept available
for possible conversion of the Series A ESOP Convertible preferred stock.
Note 3 - Dearborn Business Acquisition
On June 28, 1996, the Company acquired (the "Acquisition") the Dearborn
business unit ("Dearborn") of W.R. Grace & Co. - Conn. ("Grace"). The
Acquisition is accounted for using the purchase method of accounting. Had the
Acquisition occurred as of January 1, 1996, unaudited pro forma results would
have been (in millions, except per share amounts):
Three Months Ended March 31
---------------------------
1997 1996
---- ----
Net Sales $306.4 $296.9
Net Earnings 18.6 7.3
Net Earnings per Common Share:
Primary .59 .21
Fully Diluted .56 --
<PAGE>
The pro forma results reflect adjustments for the three months ended
March 31, 1996, primarily for the increased amortization and interest expense
attributable to the Acquisition and the related tax effects. Potential cost
savings, however, from combining Dearborn with the Company's operations are not
reflected. Therefore, the pro forma results are not indicative of the results
that would have occurred had the Acquisition actually been consummated on
January 1, 1996, and are not intended to be a projection of future results or
trends. The historical financial results of operations of Dearborn reflect the
"carve out" of Dearborn from Grace. Certain selling, research and administrative
expenses of Grace have been allocated to Dearborn on various bases, which, in
the opinion of Grace's management, are reasonable. However, such expenses are
not necessarily indicative of, and it is not practicable for management to
estimate, the nature and level of expenses which might have been incurred if
Dearborn had been operating as a separate independent company.
Note 4 - Restructuring/Integration
To continue to achieve the planned reductions in operating costs and to
integrate the operations of the former Betz Laboratories, Inc. (Betz) and the
former Dearborn business (Dearborn), the Company has incurred incremental and
non-recurring expenses that are reported as Integration operating expenses.
Integration expenses are incremental and non-recurring costs necessary
to integrate Dearborn and Betz. Integration expenses for the three months ending
March 31, 1997 amounted to $6.6 million and are associated with the activities
of integration teams responsible for merging the two companies for the benefit
of future operations and include items such as consulting and legal fees,
transition administrative services fees, integration bonuses, training, travel
and Betz employee relocation expenses.
In connection with the Acquisition and associated restructuring
decisions, a provision for restructuring was accrued in 1996. These costs are
accrued when such decisions are announced and exit costs can be reasonably
estimated. Cash payments of $9.1 million for these costs were made during the
first quarter. The remaining reserve at March 31, 1997 is expected to be
sufficient to complete these actions. Although most major integration and
restructuring decisions have been made, there may be additional actions later in
1997. The Company anticipates the restructuring plans will be completed during
1997. Cash flows from operations and available financing sources will be
sufficient to implement the intended actions.
Note 5 - Long-Term Debt
On June 28, 1996, the Company entered into a Revolving Credit Agreement
(the "Revolver") with a syndicate of banks to fund the Acquisition. In addition
to cash borrowings made to finance the Acquistion, $103 million of commitments
under the Revolver were used to obtain a Letter of Credit which secured a $100
million promissory note payable to W.R. Grace & Co. - Conn. The note matured on
January 2, 1997 and was refinanced using proceeds from additional borrowings
under the Revolver.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE RESULTS OF OPERATIONS
Results of Operations -- First Quarter
The acquisition of the Dearborn Business ("Dearborn") from W.R. Grace &
Co. - Conn. ("Grace") on June 28, 1996 significantly impacts the comparability
of results for the first quarter of 1997 to the 1996 first quarter. The
subsequent integration of this business makes it impracticable to segregate the
first quarter 1997 Dearborn results from the remainder of the Company's
operations. Consequently, only pro forma sales comparisons, adding the 1996
first quarter Dearborn sales (as provided by Grace) to the sales reported in the
first quarter of 1996, can be discussed. The remainder of the discussion will
primarily focus on results of operations as a percentage of sales.
Net earnings, excluding the 1997 integration expenses, increased to
$22.8 million from $19.7 million in 1996 and fully diluted earnings per share,
also excluding integration, increased 13% to $0.70 from $0.62. Net earnings for
the quarter, as reported, decreased $1.1 million to $18.6 million and fully
diluted earnings per share declined 10% to $0.56.
First quarter net sales, as reported, increased 54% from $199.5 million
in 1996 to $306.4 million in 1997. On a pro forma basis quarterly sales
increased 3% in U.S. dollars and 5% in local currencies. U.S. sales declined 1%
from the prior year's pro forma level, while sales outside the U.S. increased 8%
in U.S. dollars and 12% in local currencies. Local currency pro forma Canadian
sales were up strongly at almost 20%, Latin American sales were up in the mid
teen range and Asia Pacific sales increased approximately 30%. The double-digit
increases in these regions are partially offset by a European local currency pro
forma sales percent increase in the mid single-digit range. The European and
U.S. regions were especially impacted by non-recurring computer system
integration problems and integration activities involving the field sales force
which impinged on sales time.
Worldwide first quarter sales recorded by the Water Management Group
global business unit, on a pro forma basis, are essentially flat in U.S. dollars
and up in the low single-digit percentage range in local currencies. In the
U.S., pro forma sales are lower than last year, while local currency pro forma
percentage increases outside the U.S. are in the upper single-digit range.
The combined process chemical global business units increased pro forma
net sales by approximately 8%, with the U.S. reporting a percentage increase in
the mid single-digit range, while units outside the U.S. reported local currency
increases in the mid teen range. All global process chemical units reported
increased sales on a pro forma basis. The Paper Process Group, the largest of
the three process chemical groups, reported a solid double-digit sales growth in
local currencies. The Metals Process Group also continued to achieve impressive
sales growth recording a sales increase of approximately 20%. The Hydrocarbon
Process Group reported a local currency sales percentage increase in the mid
single-digit range.
The Company's gross profit margin decreased from 61.5% of net sales in
1996 to 60.1% in 1997. This deterioration in the gross profit margin is
primarily due to sales included in the 1997 Statement of Operations that are
attributable to the Dearborn acquisition which historically generated gross
profit margins at a rate lower than the Company's pre-acquisition margins. It is
impractical to quantify this impact on the first quarter margins since Dearborn
<PAGE>
customer accounts are integrated with the remainder of the Company's accounts
and "cross-selling" of product offerings has occurred. The first quarter gross
margin percentage slightly improved from the 59.4% recorded in the fourth
quarter of 1996.
Selling, research and administrative expenses, as a percent of net
sales, decreased from 45.6% in 1996 to the current quarter's level of 44.7%. The
1997 expenses also include $3.8 million of intangible amortization, primarily
attributable to the Dearborn acquisition, which is a $3.5 million increase over
the 1996 level. Selling, research and administrative expenses, as a percent of
net sales, excluding intangible amortization are 43.5%. The decline is
primarily due to savings achieved from the Company's 1995 and 1996 restructuring
actions targeted at reducing operating expenses as a percent of sales and
integrating the Dearborn operations.
Integration expenses for the three months ending March 31, 1997
amounted to $6.6 million and are associated with the activities of integration
teams responsible for merging the two companies for the benefit of future
operations and include items such as consulting and legal fees, transition
administrative service fees, integration bonuses, training, travel and Betz
employee relocation expenses.
Investment and other income declined $0.7 million from 1996 primarily
due to foreign exchange losses. In addition, the cost of financing the Dearborn
acquisition caused the significant increase in interest expense during the first
quarter of 1997 compared to the first quarter of last year.
The effective income tax rate decreased to 35.5% in 1997 from 37.5% in
1996, reflecting the benefits from tax planning initiatives.
Capital Resources and Liquidity
The $40.4 million increase in working capital since 1996 year end is
mainly due to a $15.6 million increase in accounts receivable. These receivables
are higher principally due to delays in customer invoicing from non-recurring
computer system processing delays as a result of the integration of systems.
This increase in receivables and cash payments to meet restructuring and payroll
liabilities are the principal reasons for the $14.8 million decline in cash
provided from operations in the current year first quarter compared to the same
quarter last year.
During the first three months of 1997, expenditures for property, plant
and equipment were $13.0 million, a $2.0 million decrease from 1996. The Company
anticipates that capital expenditures for 1997 will be approximately $100 - 110
million. Major projects include the installation of SAP financial systems and
capacity expansions at the Company's production facility in Beaumont, Texas and
at other plants outside the U.S. Proceeds from sales of long-term assets are
$5.8 million higher than the first quarter of 1996 mainly due to proceeds from
the sale of the Company's former Canadian headquarters.
Approximately one-half of the Company's assets are outside the U.S. The
stronger U.S. dollar relative to most currencies is the primary cause for
declines in non-U.S. assets such as property, plant and equipment and goodwill,
with the offsetting impact included in the foreign currency translation
adjustments section of shareholders' equity.
The Company reduced its long-term debt by $17.3 million in the first
quarter with proceeds from the issuance of common shares under its employee
stock option plans.
<PAGE>
At March 31, 1997, borrowings available under the Revolving Credit
Agreement are $137 million. The Company expects that available lines of credit
plus cash balances and cash generated from operations will be sufficient to fund
operating, dividend and capital requirements.
Impact of Accounting Pronouncements
In February 1997, the Financial Accounting Standards Board issued
Statement No. 128, Earnings per Share, which is required to be adopted on
December 31, 1997. At that time, the Company will be required to change the
method currently used to compute earnings per share and to restate all prior
periods. Under the new requirements for calculating primary earnings per share,
the dilutive effect of stock options will be excluded. The impact of Statement
128 on the calculation of earnings per share for these quarters is not expected
to be material.
Forward-Looking Information
Pursuant to the "Safe Harbor" provisions under the Private Securities
Litigation Act of 1995, certain forward-looking statements made in this
communication concerning such issues as sales, income, profitability, foreign
currency fluctuations, cost savings and restructuring and integration progress
are subject to a number of risks that could cause actual results to differ
materially from those anticipated. For example, timeliness could be longer than
expected, there may be unforeseen execution difficulties, or market, economic,
or competitive conditions could alter expected results. In addition to the
forward looking statements, the reader is cautioned that pro forma sales
comparisons are the Company's best estimates based on 1996 pre-acquisition
Dearborn sales that we believe to be reasonable.
PART II OTHER INFORMATION
Item 1 - Legal Proceedings
There have been no material developments in the cases of Katherine
Adams, et al. v. Pacific Gas and Electric, et al. and Danny Aguayo, et al. v.
Betz Laboratories, Inc., et al., nor in the pending proceedings to which the
Company is a "Potentially Responsible Party" under the Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA") during the
quarter for which this report is filed. The Company is a "Potentially
Responsible Party" under CERCLA at ten (10) sites. See the discussion under Item
3, "Pending Legal Proceedings," of the Company's Annual Report on Form 10-K for
fiscal year ended December 31, 1996.
Item 4 - Submission of Matters to a Vote of Security Holders
The Company's Annual Meeting of Shareholders was held on April 10,
1997. Proxies were solicited by the Board of Directors of the Company ("Board")
pursuant to Regulation 14 of the Securities Exchange Act of 1934. There was no
solicitation of proxies in opposition to the Board's nominees for Director. All
<PAGE>
such nominees were elected. The firm of Ernst & Young LLP was elected as the
Company's independent auditors for the year 1997.
The number of votes cast for, against or withheld, as well as the
number of abstentions and broker non-votes, were as follows:
<TABLE>
<CAPTION>
Election of Directors
---------------------
Nominee For Against Abstained Not Voted
------- --- ------- --------- ---------
<S> <C> <C> <C> <C>
John F. McCaughan 25,061,402 176,362 -- 3,005,658
John Quarles 24,532,340 705,424 -- 3,005,658
Robert L. Yohe 25,060,506 177,258 -- 3,005,658
Approval of Amendment to Company's Stock Option Plan of 1987
------------------------------------------------------------
For Against Abstained Not Voted
--- ------- --------- ---------
19,146,110 4,642,362 110,704 4,344,246
Approval of Proposed Employee Stock Purchase Plan of 1997
---------------------------------------------------------
For Against Abstained Not Voted
--- ------- --------- ---------
23,586,996 222,949 89,232 4,344,245
Election of Independent Auditors
--------------------------------
For Against Abstained Not Voted
--- ------- --------- ---------
Ernst & Young LLP 25,194,003 24,990 18,771 3,005,658
</TABLE>
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibit 11: Statement Re: Computation of Per Share Earnings.
(b) No reports on Form 8-K have been filed during the quarter for which
this Form 10-Q is filed.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BETZDEARBORN INC.
-----------------
(Registrant)
Date: May 15, 1997 By: s/George L. James
-----------------------------
George L. James
Vice President - Finance
Date: May 15, 1997 By: s/William C. Brafford
-----------------------------
William C. Brafford
Vice President,
Secretary and General Counsel
EXHIBIT 11 - STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
(In millions, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
Primary Earnings per Common Share 1997 1996
- ------------------------------------- ---- ----
<S> <C> <C>
Net earnings $18.6 $19.7
Effect of preferred stock dividends, net of taxes (1.4) (1.3)
----- -----
Net earnings available to common shareholders $17.2 $18.4
===== =====
Average Common Shares outstanding 28.4 27.7
Common stock equivalents 0.7 0.1
----- -----
Average number of Common Shares - primary 29.1 27.8
===== =====
Primary earnings per Common Share $ .59 $ .66
===== =====
Fully Diluted Earnings per Common Share
- --------------------------------------------
Net earnings $18.6 $19.7
Effect of ESOP charge to operations assuming
conversion of Series A ESOP Convertible
Preferred Shares, net of taxes (0.7) (0.7)
----- -----
Net earnings available to common shareholders $17.9 $19.0
===== =====
Average Common Shares outstanding 28.4 27.7
Common stock equivalents 0.7 0.2
Assumed conversion of Series A ESOP Convertible
Preferred Shares 2.7 2.8
----- -----
Average number of Common Shares - fully diluted 31.8 30.7
===== =====
Fully diluted earnings per Common Share $ .56 $ .62
===== =====
</TABLE>
Common stock equivalents reflect the assumed exercise of dilutive employees'
stock options using the treasury stock method.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED STATEMENTS OF OPERATIONS 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-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 37
<SECURITIES> 0
<RECEIVABLES> 267
<ALLOWANCES> 8
<INVENTORY> 97
<CURRENT-ASSETS> 444
<PP&E> 795
<DEPRECIATION> 385
<TOTAL-ASSETS> 1,385
<CURRENT-LIABILITIES> 193
<BONDS> 727
6
0
<COMMON> 3
<OTHER-SE> 398
<TOTAL-LIABILITY-AND-EQUITY> 1,385
<SALES> 306
<TOTAL-REVENUES> 306
<CGS> 122
<TOTAL-COSTS> 122
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 11
<INCOME-PRETAX> 29
<INCOME-TAX> 10
<INCOME-CONTINUING> 19
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 19
<EPS-PRIMARY> 0.59
<EPS-DILUTED> 0.56
</TABLE>
