<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------
FORM 10-Q
-------------
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
FOR THE QUARTER ENDED MARCH 31, 1999
COMMISSION FILE NUMBER 1-4199
BESTFOODS
(Exact name of Registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation or organization)
36-2385545
(I.R.S. Employer Identification Number)
<TABLE>
<S> <C>
700 SYLVAN AVENUE
INTERNATIONAL PLAZA
ENGLEWOOD CLIFFS, N.J. 07632-9976
(Address of principal executive offices) (Zip Code)
</TABLE>
(201) 894-4000
(Registrant's telephone number, including area code)
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
----- -----
Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date.
CLASS OUTSTANDING AT MARCH 31, 1999
Common Stock, $.25 par value 279,437,904 shares
<PAGE> 2
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BESTFOODS AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
($ Millions except per share amounts) Three Months Ended
March 31,
---------------------
1999 1998
------ ------
<S> <C> <C>
Net sales $2,187 $2,121
Cost of sales 1,169 1,160
------ ------
Gross profit 1,018 961
Operating expenses 733 703
------ ------
Operating income 285 258
------ ------
Financing costs 46 41
------ ------
Income before taxes 239 217
Provision for income taxes 83 77
------ ------
156 140
Minority stockholders' interest 12 7
------ ------
Net income $ 144 $ 133
====== ======
AVERAGE COMMON SHARES OUTSTANDING:
Basic 280.9 288.6
Diluted 290.6 300.2
EARNINGS PER COMMON SHARE
Basic $ .50 $ .45
Diluted $ .49 $ .44
CASH DIVIDENDS DECLARED PER COMMON SHARE $ .245 $ .225
</TABLE>
- -----------------
See notes to financial statements.
1
<PAGE> 3
BESTFOODS AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(Unaudited)
($ Millions) Mar. 31, 1999 Dec. 31, 1998
------------- -------------
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 110 $ 142
Notes and accounts receivable, net 1,403 1,281
Inventories 848 827
Prepaid expenses 73 75
Deferred tax asset 78 80
------- -------
Total current assets 2,512 2,405
------- -------
Investments in unconsolidated affiliates 12 12
------- -------
Plant and properties 3,495 3,462
Less accumulated depreciation 1,530 1,497
------- -------
1,965 1,965
------- -------
Excess cost over net assets of businesses acquired and other
intangible assets (net of accumulated amortization of $338 and $329) 1,829 1,854
------- -------
Other assets 204 199
------- -------
$ 6,522 $ 6,435
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Notes and drafts payable $ 776 $ 604
Accounts payable and accrued liabilities 1,492 1,476
Income taxes payable 196 162
Dividends payable 69 70
------- -------
Total current liabilities 2,533 2,312
------- -------
Non-current liabilities 913 928
------- -------
Long-term debt 1,963 2,053
------- -------
Deferred taxes on income 11 5
------- -------
166 156
------- -------
Stockholders' equity
Preferred stock, authorized 25 million shares $1 par value -- --
Designations: Series B ESOP convertible 3 million shares designated
1.7 million shares issued at stated value (1998: 1.8 million shares) 155 157
Series A Junior Participating 2 million shares designated - none issued -- --
Common stock authorized 900 million shares $.25 par value - issued
390.5 million shares 98 98
Capital in excess of par value of stock 176 171
Unearned ESOP compensation (80) (80)
Accumulated other comprehensive income (405) (413)
Common stock in treasury at cost - 111.1 million shares
(1998: 108.6 million shares) (2,031) (1,900)
Retained earnings 3,023 2,948
------- -------
Total stockholders' equity 936 981
------- -------
$ 6,522 $ 6,435
======= =======
</TABLE>
- ----------
See notes to financial statements.
2
<PAGE> 4
BESTFOODS AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
($ Millions) March 31,
-----------------------------
1999 1998
----- -----
<S> <C> <C>
Cash flows from (used for) operating activities
Net income $ 144 $ 133
Non-cash charges (credits) to net income
Depreciation and amortization 65 63
Deferred taxes 6 8
Changes in trade working capital:
Notes and accounts receivable and prepaid expenses (124) (132)
Inventories (23) (6)
Accounts payable and accrued liabilities 52 93
----- -----
Net cash flows from operating activities 120 159
----- -----
Cash flows used for investing activities
Capital expenditures paid (59) (57)
Proceeds from disposal of plants and properties 5 30
----- -----
Net cash flows used for investing activities (54) (27)
----- -----
Net cash flows after investments 66 132
----- -----
Cash flows from (used for) financing activities
Purchase of treasury stock (136) (33)
Repayment of long-term debt (5) (6)
New long-term debt 5 354
Net change in short-term debt 101 (243)
Dividends paid on common stock (70) (65)
Common stock issued 5 21
Other liabilities (assets) 1 (5)
----- -----
Net cash flows from (used for) financing activities (99) 23
----- -----
Effects of exchange rates on cash 1 (2)
----- -----
Increase (decrease) in cash and cash equivalents (32) 153
----- -----
Cash and cash equivalents, beginning of year 142 39
----- -----
Cash and cash equivalents, end of period $ 110 $ 192
===== =====
</TABLE>
- ---------------
See notes to financial statements.
3
<PAGE> 5
BESTFOODS AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(UNAUDITED)
<TABLE>
<CAPTION>
($ Millions)
Capital in Unearned
Comprehensive Preferred Common Excess of ESOP
Income Stock Stock Par Value Compensation
------ ----- ----- --------- ------------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1998 $157 $98 $171 $(80)
Comprehensive income
Net income for the period $144
Foreign currency translation
adjustment ($12 pre-tax) 8
----
Comprehensive income $152
====
ESOP shares redeemed (2) (3)
Dividends:
Common stock
Shares issued for:
Stock options and deferred
Compensation 8
Treasury stock acquired
---- --- ---- ----
Balance, March 31, 1999 $155 $98 $176 $(80)
==== === ==== ====
<CAPTION>
($ Millions) Accumulated
Other
Comprehensive Treasury Retained
Income Stock Earnings
------ ----- --------
<S> <C> <C> <C>
Balance, December 31, 1998 $(413) $(1,900) $2,948
Comprehensive income
Net income for the period 144
Foreign currency translation
adjustment ($12 pre-tax) 8
Comprehensive income
ESOP shares redeemed
Dividends:
Common stock (69)
Shares issued for:
Stock options and deferred
Compensation 5
Treasury stock acquired (136)
----- ------- ------
Balance, March 31, 1999 $(405) $(2,031) $3,023
===== ======= ======
</TABLE>
- ----------------
See notes to financial statements.
4
<PAGE> 6
BESTFOODS AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. INTERIM FINANCIAL STATEMENTS
The unaudited consolidated interim financial statements included herein
were prepared by management and reflect all adjustments (consisting solely of
normal recurring items) which are, in the opinion of management, necessary to
present a fair statement of results of operations for the interim periods ended
March 31, 1999 and 1998 and the financial position as of March 31, 1999.
References to "the Company" are to Bestfoods and it's consolidated
subsidiaries. These statements should be read in conjunction with the
consolidated financial statements and the related footnotes to these statements
contained in the Company's Annual Report to Stockholders which were incorporated
by reference in Form 10-K for the fiscal year ended December 31, 1998.
2. ACCOUNTING PRONOUNCEMENTS
In June 1998 the Financial Accounting Standards Board issued Statement No.
133 (FAS 133), "Accounting for Derivative Instruments and Hedging Activities,"
which requires companies to recognize all derivatives as assets or liabilities
in the statement of financial position and measure those instruments at fair
value. Changes in fair value of derivatives are recorded in earnings or other
comprehensive income depending upon the intended use of the derivative and the
resulting designation. This statement is effective for fiscal periods beginning
after June 15, 1999. The Company is in the process of assessing the impact of
adoption of this statement on its financial position and results of operations,
which is not expected to be significant.
3. ACQUISITIONS
During the first quarter of 1999, the Company purchased Thomas Morel Foods
Ltd. in the United Kingdom for approximately $7 million and included the
operating results since the date of acquisition. The Thomas Morel business has
approximately $9 million in annual sales and produces chilled and frozen foods
mainly for the foodservice (catering) market. This acquisition was acquired on a
deferred payment basis and resulted in the Company issuing interest-bearing
notes in the full amount of the purchase price.
4. INVENTORIES
Inventories are summarized as follow:
<TABLE>
<CAPTION>
($ Millions) Mar. 31, 1999 Dec. 31, 1998
------------- -------------
<S> <C> <C>
Finished and goods in process $552 $533
Raw materials 185 186
Supplies 111 108
---- ----
$848 $827
==== ====
</TABLE>
5
<PAGE> 7
5. LONG-TERM DEBT
Long-term debt is summarized as follows:
<TABLE>
<CAPTION>
($ Millions) Mar. 31, 1999 Dec. 31, 1998
- ------------ ------------- -------------
<S> <C> <C>
7.71% ESOP guaranteed notes due December 2004 $ 113 $ 113
5.625% -- 6.75% pollution control revenue bonds due
2007-2016 15 15
5.6% notes due 2097 (effective rate 7.3%) 100 100
7.0% notes due 2017 150 150
6.15% notes due 2006 300 300
7.25% notes due 2026 300 300
6.625% notes due 2028 250 250
Medium term notes at various rates due 2000-2005 175 175
5% Swiss franc debentures 144 144
6.75% German mark debentures 119 120
2.3% Japanese yen term loan 20 21
Other secured and unsecured notes and loans at various
rates and due dates 405 428
------ ------
2,091 2,116
------ ------
Less current maturities 128 63
------ ------
$1,963 $2,053
====== ======
</TABLE>
6. CONSOLIDATED STATEMENTS OF CASH FLOWS
Supplementary information for the consolidated statements of cash flows is set
forth below:
<TABLE>
<CAPTION>
($ Millions) Three Months Ended March 31,
1999 1998
---- ----
<S> <C> <C>
Cash paid during the period for:
Interest $38 $33
Income taxes 32 38
</TABLE>
7. FINANCIAL INSTRUMENTS
The Company's policies regarding hedging foreign currency cash flows and
commodities are set forth in the Annual Report to Stockholders which was filed
with the Commission as Exhibit 13 to Form 10-K for the year ended December 31,
1998.
FOREIGN EXCHANGE CONTRACTS
At March 31, 1999, the Company had forward exchange contracts to deliver
$74 million of foreign currencies comprising $33 million in British pounds, $23
million in Dutch guilders, and $18 million in various other currencies. The
Company also had, at March 31, 1999, contracts to purchase $1 million worth of
foreign currencies comprising mostly French francs.
6
<PAGE> 8
At December 31, 1998, the Company had forward exchange contracts to deliver $150
million in foreign currencies comprising $58 million in French francs, $28
million in German marks, $20 million in Italian lira, $12 million in Irish
punts, and $32 million in various other currencies. The Company also had
contracts to purchase $134 million in foreign currencies consisting of $49
million in French francs, $29 million in Dutch guilders, $24 million in Italian
lira, $13 million in Spanish pesetas, and $19 million in various other
currencies.
COMMODITIES
At March 31, 1999 and December 31, 1998 the outstanding commodity contracts
were not material to the Company's financial position or results of operations.
INTEREST RATE SWAPS
At March 31, 1999 and December 31, 1998 the Company had interest rate swap
agreements outstanding with notional amounts of $200 million. A portion of the
Company's fixed-rate debt position was hedged with these agreements with a
floating weighted-average pay rate of 5.2% and a fixed weighted-average receive
rate of 5.3%. These swap agreements terminate on various dates through 2003.
7
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
Worldwide sales for the three months ended March 31, 1999 were $2.19
billion, up 3.1% from the $2.12 billion for the same period last year.
Contributing to the increase in sales were a 2.4% improvement in worldwide
volumes as well as improved prices in all divisions. Partially offsetting these
increases was the negative impact of currency values, particularly in Latin
America.
Operating income for the three months ended March 31, 1999 increased 10.3%
compared to last year. This gain was chiefly the result of the higher volumes in
the ongoing businesses and improved margins in all five divisions, as the
company continued to benefit from the cost-improvement efforts of the last
several years. Volume additions from two businesses acquired since the first
quarter of last year were fully offset by disposals of several non-core
businesses in the same period. Negative currency comparisons to last year
slightly offset the gains mentioned above.
Net income and earnings per diluted common share increased 7.9% and 11.4%,
respectively to $144 million or $.49 per share compared to $133 million or $.44
per share last year. Contributing to the improved results were an improvement in
operating income, a slightly lower effective tax rate and fewer shares
outstanding which were partially offset by higher financing costs and minority
stockholders' interest.
In North America, sales were slightly lower mainly due to a 2.1% decline in
volumes. The lower volumes reflected a decline in the peanut butter category and
intense competition in pourable dressings and oils. The division also
experienced some temporary problems with distribution in February, as a massive
supply chain project was implemented for the U.S. grocery portion of the
division. Shipments in March, however, strongly improved from the previous
month. In addition, volumes for North American foodservice, which accounts for
25% of the division's sales, increased 4%. Despite the lower sales, operating
income improved 2.4% compared to the same period last year due to improved
margins.
In Europe, sales were 7.7% higher than first quarter of last year due to
improved volumes, slightly higher prices and positive currency impact. Operating
income was up 22% also as a result of vigorous volume growth, positive
currencies and improved margins. In the region volumes grew 5.6% including a .9%
improvement from acquired businesses.
In Latin America, net sales and operating income were 4.3% and 2.4% lower,
respectively. These results reflect the tough economic environment in the region
during the first quarter of 1999. Negative currency comparisons significantly
affected the results as both sales and operating income improved in local
currencies.
In Asia, sales improved 2.8% while operating income decreased 5.3%. Volumes
in the region improved 5.4% and prices were higher but results were impacted by
the effect of negative currency values compared to last year.
In the Baking business, net sales and operating income increased 1.5% and
17%, respectively compared to the first quarter of last year. Volumes increased
2.3%, excluding the impact of the sale of the business in the United Kingdom,
which was sold at the end of 1998, and prices were higher. The improvement in
operating income was also positively impacted by the improved volumes but most
of the gain was from cost efficiencies compared to last year.
8
<PAGE> 10
RISKS AND UNCERTAINTIES
The Company operates in more than sixty countries, and in each country, the
business is subject to varying degrees of risk and uncertainty. It insures its
business and assets in each country against insurable risks in a manner it deems
appropriate. Because of its diversity, the Company believes that the risk of
loss from non-insurable events in any one business or country would not have a
material adverse affect on the Company's operations as a whole. Additionally,
the Company believes there is no concentration of risk with any single customer
or supplier, or small group of suppliers or customers, whose failure or
non-performance would materially affect the Company's results.
Also because of the Company's broad operational reach, it is subject to
risks due to changes in foreign currencies that could affect earnings. As a
practical matter, it is not feasible to cover these fluctuations with currency
hedges. Additionally, the Company believes that over time most currencies of
major countries in which it operates will equalize against the U.S. dollar.
However, the Company does maintain a policy of hedging its exposure to foreign
currency cash flows to cover planned dividends, fees and royalties,
inter-company loans, and other similar transactions. In addition, the Company
hedges certain net investments with borrowings denominated in the particular
currency. As a matter of policy, the Company does not speculate in foreign
currencies.
For certain of its North American raw material purchases, the Company
hedges its exposure to commodity price fluctuations with commodity futures
contracts. The Company's products are manufactured from a number of raw
materials, including soybean and other edible oils, peanuts and wheat, all of
which are, and are expected to be, in adequate supply. Such raw materials may or
may not be hedged at any given time based on management's decisions as to the
need to fix the cost of raw materials to protect the Company's profitability.
The value of raw materials subject to commodity hedging represents a small
percentage of the total worldwide cost of sales. The historical price volatility
of raw materials, combined with the relatively low percentage of raw materials
to cost of sales, have never yielded a material adverse effect on gross margins
and are not expected to in the future. In addition, any significant change in
commodity prices can generally be recovered in higher selling prices, thereby
further minimizing the impact on the Company's margins.
LIQUIDITY AND CAPITAL RESOURCES
The Company's indebtedness at March 31, 1999 and December 31, 1998 is
summarized herein under the caption "Long-term debt" on page 6. Material terms
of all loans, lines of credit and covenants are discussed in the "Long-term
debt" note found on pages 33 and 34 of the Company's 1998 Annual Report and
filed as Exhibit 13 to the 1998 Form 10-K. At March 31, 1999, the debt to total
capitalization ratio was 71.1% and the ratio of EBITDA to interest was 7.4.
READINESS FOR THE YEAR 2000
As discussed on pages 23 and 24 of the Company's 1998 Annual Report which
was filed as Exhibit 13 to the 1998 Form 10-K, the Bestfoods Year 2000 Program
continued on track during the first quarter. The Inventory and Impact Assessment
phases of the program were completed before December 31, 1998 while the
Remediation, Testing, and Implementation phases have already been completed for
a substantial number of systems. The Company expects these phases of the program
to be complete for all systems by July 31, 1999.
Contingency plans for all critical business processes are currently being
established to ensure business continuation in the event of internal or external
Y2K related failures.
9
<PAGE> 11
EURO CONVERSION
On January 1, 1999, 11 of the 15 member states of the European Union
("Participating Countries") established fixed conversion rates from their
existing currencies ("Legacy Currencies") to the Euro and agreed to adopt the
Euro as their common legal currency. During a transition period, from January 1,
1999, until January 1, 2002 the Legacy Currencies will remain legal tender and
parties will have the option to pay in Euros or Legacy Currencies of
Participating Countries. On January 1, 2002 Participating Countries are expected
to issue Euro currency and withdraw all bills and coinage of Legacy Currencies
by July 1, 2002.
Conversion to the Euro has necessitated some modification to the Company's
information systems to produce dual currency invoices and accounts during the
transition period. Also modifications have been required to enable use of the
Euro as a base currency for the year 2002 and thereafter.
Although the conversion to the Euro will, in general, make the prices of
products more transparent across participating countries' boundaries, the
Company doesn't expect any significant impact due to its great variety of
products.
The Company has also realized some cost savings because it ceased hedging
activity among the participating currencies as of May 1998. The conversion to
the Euro is also not expected to impact material contracts of the Company. The
Company's Euro task force continues to monitor the impact of Euro conversion.
The Company's overall costs of conversion to the Euro are not expected to exceed
$5 million.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Quantitative Disclosure - There have been no material changes in the
Company's market risk during the first quarter ended March 31, 1999.
Qualitative Disclosure - This information is set forth on page 31, under
the caption "Financial Instruments," of the Company's 1998 Annual Report which
was filed as Exhibit 13 to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1998 and is incorporated herein by reference.
10
<PAGE> 12
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There have been no material developments in the legal proceedings as
previously reported in Form 10-K for the year ended December 31, 1998.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the annual meeting of stockholders held on April 22, 1999, the following
matters were submitted to a vote of security holders along with the number of
votes cast for, against or withheld, as to each such matter:
1. ELECTION OF DIRECTORS:
The following directors were elected each for a term of three years
expiring in 2002:
<TABLE>
<CAPTION>
Director Name Votes For Votes
Withheld
------------- --------- --------
<S> <C> <C>
Clateo Castellini 229,242,029 8,297,431
Richard G. Holder 229,166,219 8,373,241
Eileen S. Kraus 229,128,978 8,410,482
Alain Labergere 229,228,459 8,311,001
</TABLE>
2. APPOINTMENT OF INDEPENDENT AUDITORS - The stockholders were asked to
ratify the appointment of KPMG LLP as independent auditors for the
Company for 1999. This matter was approved by the stockholders with
235,458,415 votes cast for, 1,237,583 votes cast against and 843,462
votes withheld.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits pursuant to Item 601 of Regulation S-K.
Exhibit 11 - Statements regarding the computation of earnings per
common share.
Exhibit 12 - Statement regarding the computation of ratios of earnings
to fixed charges.
Exhibit 27 - Financial data schedule.
b) Reports on Form 8-K.
There were no reports filed on Form 8-K during the first quarter of
1999.
11
<PAGE> 13
BESTFOODS AND SUBSIDIARIES
SIGNATURES
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.
BESTFOODS
DATE: May 12, 1999
/S/ Robert J. Gillespie
--------------------------------------------
(Robert J. Gillespie)
Executive Vice President, Strategic Business
Development and Finance
DATE: May 12, 1999
/S/ Philip V. Terenzio
---------------------------------------------
(Philip V. Terenzio)
Vice President and Controller
12
<PAGE> 1
PAGE>
EXHIBIT 11
BESTFOODS AND SUBSIDIARIES
SCHEDULE OF COMPUTATION OF EARNINGS PER SHARE
(In millions, except per share amounts)
<TABLE>
<CAPTION>
FOR THE PERIODS ENDED MARCH 31,
BASIC 1999 1998
----- ---- ----
<S> <C> <C>
Net income $ 143.9 $ 133.4
Preferred stock dividends, net of taxes (2.5) (2.8)
-------- --------
Net income available to common stockholders $ 141.4 $ 130.6
======== ========
Weighted average shares outstanding 280.9 288.6
-------- --------
BASIC EARNINGS PER SHARE:
-------- --------
Net income $ 0.50 $ 0.45
======== ========
DILUTED
-------
Net income $ 143.9 $ 133.4
Adjustments to net income:
Assumed additional cost if ESOP shares are fully converted net of
certain tax benefits (.7) (.6)
-------- --------
Diluted net income $ 143.2 $ 132.8
======== ========
Weighted average shares outstanding 280.9 288.6
Add incremental shares representing:
Shares issuable upon exercise of stock options 2.4 3.2
Performance incentive shares issuable .3 .3
Shares issuable upon conversion of ESOP shares 7.0 8.1
-------- --------
Weighted average number of shares as adjusted 290.6 300.2
======== ========
DILUTED EARNINGS PER SHARE:
-------- --------
Net income $ 0.49 $ 0.44
======== ========
</TABLE>
13
<PAGE> 1
EXHIBIT 12
BESTFOODS AND SUBSIDIARIES
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
($ Millions) FOR THE THREE
MONTHS ENDED FOR THE YEARS ENDED DECEMBER 31,
MAR. 31, 1999 1998 1997 1996 1995 1994
------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
INCOME FROM CONTINUING
OPERATIONS BEFORE INCOME TAXES: $ 238.7 $1,021.1 $ 704.2 $ 880.2 $ 654.9 $ 446.6
-------- -------- -------- -------- -------- --------
Add (subtract):
Portion of rents representative
of interest 8.5 33.3 32.2 33.4 25.6 24.6
Interest on bonds, mortgages
& similar debt 34.7 125.5 100.9 68.4 52.6 50.1
Other interest 15.1 60.7 72.8 100.0 55.7 33.9
Interest expense included in
cost of plant construction (.5) (3.5) (3.4) (4.8) (3.7) (4.2)
Income of unconsolidated
venture -- -- -- -- -- 3.9
-------- -------- -------- -------- -------- --------
Income as adjusted $ 296.5 $1,237.1 $ 906.7 $1,077.2 $ 785.1 $ 554.9
======== ======== ======== ======== ======== ========
FIXED CHARGES:
Portion of rents representative
of interest $ 8.5 $ 33.3 $ 32.2 $ 33.4 $ 25.6 $ 24.6
Interest on bonds, mortgages
& similar debt 34.7 125.5 100.9 68.4 52.6 50.1
Other interest 15.1 60.7 72.8 100.0 55.7 33.9
-------- -------- -------- -------- -------- --------
$ 58.3 $ 219.5 $ 205.9 $ 201.8 $ 133.9 $ 108.6
======== ======== ======== ======== ======== ========
RATIO OF EARNINGS TO FIXED CHARGES 5.1 5.6 4.4 5.3 5.9 5.1
======== ======== ======== ======== ======== ========
</TABLE>
14
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 110
<SECURITIES> 0
<RECEIVABLES> 1,403
<ALLOWANCES> 0
<INVENTORY> 848
<CURRENT-ASSETS> 2,512
<PP&E> 3,495
<DEPRECIATION> 1,530
<TOTAL-ASSETS> 6,522
<CURRENT-LIABILITIES> 2,533
<BONDS> 1,963
0
155
<COMMON> 98
<OTHER-SE> 683
<TOTAL-LIABILITY-AND-EQUITY> 6,522
<SALES> 2,187
<TOTAL-REVENUES> 2,187
<CGS> 1,169
<TOTAL-COSTS> 1,902
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 46
<INCOME-PRETAX> 239
<INCOME-TAX> 83
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 144
<EPS-PRIMARY> .50
<EPS-DILUTED> .49
</TABLE>
