<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 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 No. 1-2189
ABBOTT LABORATORIES
An Illinois Corporation I.R.S. Employer Identification
No. 36-0698440
One Abbott Park Road
Abbott Park, Illinois 60064-3500
Telephone: (708) 937-6100
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 reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X . No .
---- ----
As of July 31, 1994, the Corporation had 810,578,733 common shares without par
value outstanding.
<PAGE>
PART 1 FINANCIAL INFORMATION
ABBOTT LABORATORIES AND SUBSIDIARIES
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
<PAGE>
ABBOTT LABORATORIES AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
(UNAUDITED)
(Dollars in Thousands Except Per Share Data)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
------------------------- -------------------------
1994 1993 1994 1993
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net Sales. . . . . . . . . . . . . . . . $2,204,030 $2,073,790 $4,419,278 $4,119,403
---------- ---------- ---------- ----------
Cost of products sold. . . . . . . . . . 946,816 886,988 1,911,088 1,820,163
Research and development . . . . . . . . 244,989 212,342 471,786 414,452
Selling, general and administrative. . . 468,739 555,213 965,923 1,020,036
Provision for product withdrawal . . . . - (70,000) - (70,000)
---------- ---------- ---------- ----------
Total Operating Cost and Expenses. . . 1,660,544 1,584,543 3,348,797 3,184,651
---------- ---------- ---------- ----------
Operating Earnings . . . . . . . . . . . 543,486 489,247 1,070,481 934,752
---------- ---------- ---------- ----------
Interest expense . . . . . . . . . . . . 12,253 13,993 23,749 28,163
Interest and dividend income . . . . . . (8,296) (9,845) (16,726) (19,531)
Other (income) expense, net. . . . . . . 1,593 4,426 2,331 (34,464)
---------- ---------- ---------- ----------
Earnings Before Taxes. . . . . . . . . . 537,936 480,673 1,061,127 960,584
Taxes on earnings. . . . . . . . . . . . 161,381 134,589 318,338 268,964
---------- ---------- ---------- ----------
Net Earnings . . . . . . . . . . . . . . $ 376,555 $ 346,084 $ 742,789 $ 691,620
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Net Earnings Per Common Share. . . . . . $.46 $.42 $.91 $.83
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Cash Dividends Declared
Per Common Share . . . . . . . . . . . $.19 $.17 $.38 $.34
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
The accompanying notes to condensed consolidated financial statements are an
integral part of this statement.
2
<PAGE>
ABBOTT LABORATORIES AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(Dollars in Thousands)
<TABLE>
<CAPTION>
JUNE 30 DECEMBER 31
----------- -----------
1994 1993
----------- -----------
ASSETS (unaudited)
------
<S> <C> <C>
Current Assets:
Cash and cash equivalents. . . . . . . . . . . . . . . . . . . $ 180,596 $ 300,676
Investment securities. . . . . . . . . . . . . . . . . . . . . 68,477 78,149
Trade receivables, less allowances of $117,109 in 1994
and $116,925 in 1993 . . . . . . . . . . . . . . . . . . . . 1,433,592 1,336,222
Inventories:
Finished products. . . . . . . . . . . . . . . . . . . . . . 558,829 476,548
Work in process. . . . . . . . . . . . . . . . . . . . . . . 222,749 216,493
Materials. . . . . . . . . . . . . . . . . . . . . . . . . . 270,871 247,492
----------- -----------
Total Inventories. . . . . . . . . . . . . . . . . . . . . 1,052,449 940,533
Prepaid income taxes . . . . . . . . . . . . . . . . . . . . . 469,005 458,026
Other prepaid expenses and receivables . . . . . . . . . . . . 517,725 471,929
----------- -----------
Total Current Assets . . . . . . . . . . . . . . . . . . . 3,721,844 3,585,535
----------- -----------
Investment Securities Maturing after One Year. . . . . . . . . . 272,380 221,815
----------- -----------
Property and Equipment, at Cost. . . . . . . . . . . . . . . . . 6,623,611 6,221,146
Less: accumulated depreciation and amortization. . . . . . . . 2,938,531 2,710,155
----------- -----------
Net Property and Equipment . . . . . . . . . . . . . . . . 3,685,080 3,510,991
Deferred Charges and Other Assets. . . . . . . . . . . . . . . . 403,632 370,228
----------- -----------
$ 8,082,936 $ 7,688,569
----------- -----------
----------- -----------
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Current Liabilities:
Short-term borrowings and current portion of long-term debt. . $ 745,798 $ 843,594
Trade accounts payable . . . . . . . . . . . . . . . . . . . . 724,472 638,509
Salaries, dividends payable, and other accruals. . . . . . . . 1,798,725 1,612,830
----------- -----------
Total Current Liabilities. . . . . . . . . . . . . . . . . 3,268,995 3,094,933
----------- -----------
Long-Term Debt . . . . . . . . . . . . . . . . . . . . . . . . . 307,275 306,840
----------- -----------
Other Liabilities and Deferrals. . . . . . . . . . . . . . . . . 650,486 611,867
----------- -----------
Shareholders' Investment:
Preferred shares, $1 par value
Authorized - 1,000,000 shares, none issued - -
Common shares, without par value
Authorized - 1,200,000,000 shares
Issued at stated capital amount -
1994: 821,973,566 shares; 1993: 830,941,614 shares . . . . 492,165 469,828
Earnings employed in the business. . . . . . . . . . . . . . . . 3,491,873 3,364,952
Cumulative translation adjustments . . . . . . . . . . . . . . . (70,612) (100,716)
----------- -----------
3,913,426 3,734,064
Less:
Common shares held in treasury, at cost -
1994: 9,804,252 shares; 1993: 9,811,930 shares . . . . . . . . 51,743 51,783
Unearned compensation - restricted stock awards. . . . . . . . . 5,503 7,352
----------- -----------
Total Shareholders' Investment . . . . . . . . . . . . . . 3,856,180 3,674,929
----------- -----------
$ 8,082,936 $ 7,688,569
----------- -----------
----------- -----------
</TABLE>
The accompanying notes to condensed consolidated financial statements are an
integral part of this statement.
3
<PAGE>
ABBOTT LABORATORIES AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
(Dollars in Thousands)
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30
------------------------
1994 1993
--------- ---------
<S> <C> <C>
Cash Flow From (Used in) Operating Activities:
Net earnings . . . . . . . . . . . . . . . . . . $ 742,789 $ 691,620
Adjustments to reconcile net earnings to
net cash from operating activities -
Depreciation and amortization. . . . . . . . . . 260,450 251,601
Trade receivables. . . . . . . . . . . . . . . . (92,565) (105,411)
Inventories. . . . . . . . . . . . . . . . . . . (99,720) (62,590)
Provision for product withdrawal . . . . . . . . - (70,000)
Other, net . . . . . . . . . . . . . . . . . . . 209,034 96,857
--------- ---------
Net Cash From Operating Activities . . . . . 1,019,988 802,077
--------- ---------
Cash Flow From (Used in) Investing Activities:
Acquisitions of property and equipment . . . . . (436,959) (452,894)
Investment securities transactions . . . . . . . (41,123) (73,327)
Other. . . . . . . . . . . . . . . . . . . . . . 16,553 34,025
--------- ---------
Net Cash (Used in) Investing Activities. . . (461,529) (492,196)
--------- ---------
Cash Flow From (Used in) Financing Activities:
Borrowing transactions . . . . . . . . . . . . . (100,106) 76,952
Common share transactions. . . . . . . . . . . . (284,281) (204,430)
Dividends paid . . . . . . . . . . . . . . . . . (294,663) (266,929)
--------- ---------
Net Cash (Used in) Financing Activities. . . (679,050) (394,407)
--------- ---------
Effect of exchange rate changes on cash and
cash equivalents . . . . . . . . . . . . . . . . 511 (2,528)
--------- ----------
Net (Decrease) in Cash and Cash Equivalents. . . . (120,080) (87,054)
Cash and Cash Equivalents, Beginning of Year . . . 300,676 116,576
--------- ----------
Cash and Cash Equivalents, End of Period . . . . . $ 180,596 $ 29,522
--------- ---------
--------- ---------
</TABLE>
The accompanying notes to condensed consolidated financial statements are an
integral part of this statement.
4
<PAGE>
ABBOTT LABORATORIES AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1994
(UNAUDITED)
NOTE 1 - BASIS OF PREPARATION:
The accompanying unaudited, condensed consolidated financial statements have
been prepared pursuant to rules and regulations of the Securities and Exchange
Commission and, therefore, do not include all information and footnote
disclosures normally included in audited financial statements. However, in the
opinion of management, all adjustments (which include only normal adjustments)
necessary to present fairly the financial position, cash flows, and results of
operations have been made. It is suggested that these statements be read in
conjunction with the financial statements included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1993.
NOTE 2 - EARNINGS PER COMMON SHARE:
Earnings per common share amounts are computed by using the weighted average
number of common shares outstanding. These shares averaged 816,763,000 for the
six months ended June 30, 1994 and 832,840,000 for the same period in 1993.
NOTE 3 - TAXES ON EARNINGS:
Taxes on earnings reflect estimated annual effective tax rates. The effective
tax rates are less than the statutory U.S. Federal income tax rate principally
due to tax incentive grants related to subsidiaries operating in Puerto Rico and
Ireland. The increase in the effective tax rate from 28 percent in 1993 to 30
percent in 1994 is due primarily to the increase in the statutory U.S. Federal
income tax rate and the reduction in the tax incentive grants for operations in
Puerto Rico.
5
<PAGE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1994
(Unaudited), Continued
NOTE 4 - LITIGATION AND ENVIRONMENTAL MATTERS:
The Company is involved in various claims and legal proceedings including
numerous antitrust suits and investigations in connection with the sale and
marketing of infant formula and pharmaceutical products.
The Company is also involved in numerous product liability cases, many of which
allege injuries to the offspring of women who ingested a synthetic estrogen
(DES) during pregnancy. In addition, the Company has been identified as a
potentially responsible party for investigation and cleanup costs at a number of
locations in the United States and Puerto Rico under federal remediation laws
and is voluntarily investigating potential contamination at a number of Company-
owned locations.
The matters above are discussed more fully in Item 1, Business - Environmental
Matters, and Item 3, Legal Proceedings, in the Annual Report on Form 10-K, which
is available upon request, and in Part II, Item 1, Legal Proceedings, in this
Form.
While it is not feasible to predict the outcome of such pending claims,
proceedings, investigations and remediation activities with certainty,
management is of the opinion that their ultimate disposition should not have a
material adverse effect on the Company's financial position.
NOTE 5 - OTHER SIGNIFICANT EVENTS:
In June 1992, the Company voluntarily withdrew from the worldwide market its
quinolone anti-infective, temafloxacin, and recorded a charge for costs
associated with this withdrawal. In the second quarter 1993, the Company
resolved various contingencies relative to the temafloxacin withdrawal and
recorded a credit for these items.
6
<PAGE>
FINANCIAL REVIEW
RESULTS OF OPERATIONS - SECOND QUARTER AND FIRST SIX MONTHS 1994 COMPARED WITH
SAME PERIODS IN 1993
Worldwide sales for the second quarter and first six months increased 6.3
percent and 7.3 percent, respectively, over the comparable 1993 periods. Net
earnings increased 8.8 percent and 7.4 percent, respectively, for the second
quarter and first six months 1994. Earnings per share increased 9.5 percent and
9.6 percent, respectively, for the second quarter and first six months 1994.
Gross profit margin (sales less cost of products sold, including freight and
distribution expenses) of 57.0 percent for the second quarter was slightly down
from 57.2 percent in the second quarter of 1993 due to product mix. First half
gross margin of 56.8 percent was up from 55.8 percent one year ago. The year-
to-date increase is primarily due to favorable product mix and productivity
improvements.
Research and development expenses were $245.0 million and $471.8 million for the
second quarter and first six months 1994, respectively. This represented 11.1
percent and 10.7 percent of net sales, compared to 10.2 percent and 10.1 percent
in 1993. The majority of research and development expenditures continues to be
concentrated on pharmaceutical and diagnostic products.
Selling, general and administrative expenses for the second quarter and first
six months 1994 decreased (15.6) percent and (5.3) percent, respectively, over
the comparable 1993 periods. The decreases reflect the settlement in May 1993
of certain claims and legal proceedings in connection with the sale and
marketing of infant formula products. The Company recorded a pre-tax charge to
earnings of approximately $104 million in the second quarter of 1993 in
connection with these settlements.
During the second quarter of 1993, the Company resolved various contingencies
relative to the temafloxacin withdrawal. The Company recorded a pre-tax credit
to earnings of $70 million for these items.
Other (income) expense, net, includes net foreign exchange losses of $15.3
million and $27.5 million, respectively, for the second quarter and first six
months 1994 compared with net foreign exchange losses of $14.9 million and $19.2
million, respectively, for the corresponding prior year periods. Also included
in the first six months of 1993 is the gain on the sale of the Company's
peritoneal dialysis product line.
The effective income tax rate increased from 28 percent in 1993 to 30 percent in
1994 due primarily to the increase in the statutory U.S. Federal income tax rate
and the reduction in tax incentive grants for Puerto Rico operations.
7
<PAGE>
FINANCIAL REVIEW
(Continued)
INDUSTRY SEGMENTS
Industry segment sales for the second quarter and first six months 1994 and the
related change from the comparable 1993 periods are shown in the table below.
The Pharmaceutical and Nutritional Products segment includes a broad line of
adult and pediatric pharmaceuticals and nutritionals, which are sold primarily
on the prescription or recommendation of physicians or other health care
professionals; consumer products; agricultural and chemical products; and bulk
pharmaceuticals. The Hospital and Laboratory Products segment includes
diagnostic systems for blood banks, hospitals, commercial laboratories and
alternate-care testing sites; intravenous and irrigation fluids and related
administration equipment; drugs and drug delivery systems; anesthetics; critical
care products; and other medical specialty products for hospitals and alternate-
care sites.
Domestic and international sales for the second quarter and first six months
1994 reflect unit growth, and international sales were adversely affected 2.7
percent and 3.5 percent, respectively, due to the relatively stronger U.S.
dollar.
<TABLE>
<CAPTION>
Second Quarter Six Months
- - --------------------------------------------------------------------------------------------
SEGMENT SALES 1994 Percent 1994 Percent
(in millions of dollars) Sales Increase Sales Increase
- - --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Pharmaceutical and Nutritional Products:
Domestic $ 786.0 6.5 $1,631.1 11.1
- - --------------------------------------------------------------------------------------------
International 382.8 15.5 762.0 11.4
- - --------------------------------------------------------------------------------------------
1,168.8 9.3 2,393.1 11.2
Hospital and Laboratory Products:
Domestic 574.7 3.5 1,138.1 3.1
- - --------------------------------------------------------------------------------------------
International 460.5 2.7 888.1 2.9
- - --------------------------------------------------------------------------------------------
1,035.2 3.1 2,026.2 3.0
Total All Segments:
Domestic 1,360.7 5.2 2,769.2 7.7
- - --------------------------------------------------------------------------------------------
International 843.3 8.1 1,650.1 6.7
- - --------------------------------------------------------------------------------------------
$2,204.0 6.3 $4,419.3 7.3
- - --------------------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------------------
</TABLE>
8
<PAGE>
FINANCIAL REVIEW
(Continued)
LIQUIDITY AND CAPITAL RESOURCES AT JUNE 30, 1994
COMPARED WITH DECEMBER 31, 1993
- - ------------------------------------------------
Net cash from operating activities for the first six months 1994 totaled $1.020
billion. The Company expects annual cash flow from operating activities to
continue to approximate or exceed the Company's capital expenditures and cash
dividends.
The Company has maintained its favorable bond ratings (AAA by Standard & Poor's
Corporation and Aa1 by Moody's Investors Service) and continues to have readily
available financial resources, including unused domestic lines of credit of $300
million at June 30, 1994.
During the first six months 1994, the Company continued its program to purchase
its common shares. The Company purchased and retired 10,625,000 shares during
this period at a cost of $306 million. As of June 30, 1994, an additional
3,476,000 shares may be purchased in future periods under authorization granted
by the Board of Directors in September 1993.
LEGISLATIVE ISSUES
The Company's primary markets are highly competitive and subject to substantial
government regulation. In the U.S., comprehensive legislation may be enacted
that could make significant changes to the availability, delivery and payment
for health care products and services. International operations are also
subject to a significant degree of government regulation. It is not possible to
predict the extent to which the Company or the health care industry in general
might be adversely affected by these factors in the future. A more complete
discussion of these factors is contained in Item 1, Business, in the Annual
Report on Form 10-K, which is available upon request.
9
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company's 10-Q for the quarter ended March 31, 1994 described 13
antitrust suits and 6 investigations (as of March 31, 1994) regarding the
Company's marketing and sale of infant formula products. On May 27, 1994, after
a 5-week trial, the federal court in the District of Columbia District found the
Company innocent of anticompetitive conduct as charged by the Federal Trade
Commission (the "Commission") and dismissed the case that had been brought by
the Commission. Seven new antitrust suits regarding the Company's marketing and
sale of infant formula products have commenced since March 31,1994: on April
1,1994, a case was filed in state court in Boulder County, Colorado; on April 6,
1994, a case was filed in state court in Blount County, Tennessee (this case has
been removed by the defendants to federal court in the Eastern District of
Tennessee); on April 26, 1994, a case was filed in state court in St. Clair
County, Illinois; on April 26, 1994, a case was filed in state court in Kanwaha
County, West Virginia; on April 27, 1994, a case was filed in federal court in
the District of Nevada; on May 4, 1994, a case was filed in state court in
Hennepin County, Minnesota; and, on May 6, 1994, a case was filed in state court
in Holmes County, South Dakota. Each purports to be a state consumer class
action; alleges violation of either state antitrust laws, trade practices laws,
or both; asks for unspecified actual and/or punitive damages, injunctive relief,
and declaratory judgment; and names the Company and certain other infant formula
manufacturers as defendants. In June 1994 the Canadian Bureau of Competition
Policy broadened its previously reported civil investigation to include a
criminal inquiry of the infant formula industry's marketing practices. The
Company intends to defend itself in these suits and investigations and to deny
all substantive allegations. As of June 30, 1994, there are 19 antitrust suits
and 6 investigations pending in connection with the Company's sale and marketing
of infant formula products.
The Company's 10-Q for the quarter ended March 31, 1994 described 16
antitrust suits (as of March 31, 1994) regarding the pricing of prescription
pharmaceuticals. Three additional lawsuits were filed after March 31, 1994: on
April 29, 1994, a case was filed in state court in Bullock County, Alabama (this
case has been removed by the defendants to federal court in the Middle District
of Alabama); on May 2, 1994, a case was filed in state court in Greene County,
Alabama; and on May 31, 1994, a case was filed in federal court in the Southern
District of Alabama. The first two of these cases purport to be statewide class
actions on behalf of Alabama retail pharmacies. The third is brought by an
individual pharmacy. The plaintiffs seek unspecified treble damages, attorneys'
fees, and declaratory and injunctive relief and have named the Company and
numerous other pharmaceutical manufacturers and wholesalers as defendants. As
of June 30, 1994, the Company has been named as a defendant in 19 pending
antitrust suits regarding the pricing of prescription pharmaceuticals. The
Company intends to defend itself in these suits and to deny all substantive
allegations.
<PAGE>
The Company's 1993 10-K disclosed that the Company is participating as
one of many potentially responsible parties in investigation and/or remediation
at eight locations in the United States and Puerto Rico under the Comprehensive
Environmental Response, Compensation, and Liability Act commonly known as
Superfund. The Company is now also participating in an investigation and clean-
up at a ninth location.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
a) EXHIBITS
11 Statement re: computation of per share earnings.
12 Statement re: computation of ratio of earnings to fixed
charges.
b) REPORTS ON FORM 8-K
No reports on Form 8-K were filed during the quarter ended
June 30, 1994.
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.
ABBOTT LABORATORIES
Date: August 12, 1994 /s/ Theodore A. Olson
------------------------------------
Theodore A. Olson, Vice President
and Controller (Principal
Accounting Officer)
<PAGE>
EXHIBIT 11
ABBOTT LABORATORIES AND SUBSIDIARIES
CALCULATION OF FULLY DILUTED EARNINGS PER SHARE
(Dollars and Shares in Millions Except Per Share Amounts)
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30
----------------------------
1994 1993
-------- --------
<S> <C> <C>
1. Net earnings $ 742.8 $ 691.6
-------- --------
2. Average number of shares outstanding 816.8 832.8
-------- --------
3. Earnings per share based upon average
outstanding shares (1 DIVIDED BY 2) $ .91 $ .83
-------- --------
-------- --------
4. Fully diluted earnings per share:
a. Stock options granted and outstanding for which the
market price at quarter-end exceeds the option price 18.4 19.4
-------- --------
-------- --------
b. Aggregate proceeds to the Company from the exercise
of options in 4.a. $ 321.9 $ 297.8
-------- --------
-------- --------
c. Market price of the Company's common stock at
quarter-end $ 29.00 $ 25.625
-------- --------
-------- --------
d. Shares which could be repurchased under the
treasury stock method (4.b. DIVIDED BY 4.c.) 11.1 11.6
-------- --------
-------- --------
e. Addition to average outstanding shares (4.a. - 4.d.) 7.3 7.8
-------- --------
-------- --------
f. Shares for fully diluted earnings per share
calculation (2. + 4.e.) 824.1 840.6
-------- --------
-------- --------
g. Fully diluted earnings per share (1. DIVIDED BY 4.f.) $ .90 $ .82
-------- --------
-------- --------
</TABLE>
<PAGE>
EXHIBIT 12
ABBOTT LABORATORIES AND SUBSIDIARIES
CALCULATION OF RATIO OF EARNINGS TO FIXED CHARGES
(Unaudited)
(Millions of Dollars)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED JUNE 30
1994
--------------
<S> <C>
Net Earnings $ 743
Add (deduct):
Income taxes 318
Capitalized interest cost, net
of amortization (4)
Minority interest 5
-------
Net earnings as adjusted $ 1,062
-------
Fixed Charges:
Interest on long-term
and short-term debt 24
Capitalized interest cost 9
Rental expense representative
of an interest factor 12
-------
Total Fixed Charges 45
-------
Total adjusted earnings available
for payment of fixed charges $ 1,107
-------
-------
Ratio of earnings to fixed charges 24.6
-------
-------
</TABLE>
NOTE: For the purpose of calculating this ratio, (i) earnings have
been calculated by adjusting net earnings for taxes on earnings;
interest expense; capitalized interest cost, net of
amortization; minority interest; and the portion of rentals
representative of the interest factor, (ii) the Company
considers one-third of rental expense to be the amount
representing return on capital, and (iii) fixed charges comprise
total interest expense, including capitalized interest and such
portion of rentals.
