<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
- --- ACT OF 1934
For the quarterly period ended March 31, 1996
--------------
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 2-22791
-------
AGWAY INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 15-0277720
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
333 Butternut Drive, DeWitt, New York 13214
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
315-449-6431
- --------------------------------------------------------------------------------
(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 issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at April 26, 1996
- -------------------------------------- ------------------------------
Membership Common Stock, $25 par value 107,749 shares
per share
1
<PAGE>
AGWAY INC. AND CONSOLIDATED SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
PAGE NO.
--------
PART I. FINANCIAL INFORMATION
- ------- ---------------------
<S> <C>
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets as of March 31, 1996 and June 30, 1995........................ 3
Condensed Consolidated Statements of Operations and Retained Margin for the three months
and nine months ended March 31, 1996 and March 31, 1995............................................. 4
Condensed Consolidated Cash Flow Statements for the nine months ended March 31, 1996
and March 31, 1995.................................................................................. 5
Notes to Condensed Consolidated Financial Statements................................................ 6
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations...... 10
<CAPTION>
PART II. OTHER INFORMATION
- -------- -----------------
<S> <C>
Item 1. Legal Proceedings.......................................................................... 16
Item 6. Exhibits and Reports on Form 8-K........................................................... 16
SIGNATURES.......................................................................................... 17
</TABLE>
2
<PAGE>
PART I. FINANCIAL INFORMATION
AGWAY INC. AND CONSOLIDATED SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Thousands of Dollars)
<TABLE>
<CAPTION>
March 31, June 30,
1996 1995
----------- ----------
(Unaudited) (Restated)
<S> <C> <C>
ASSETS
- ------
Current Assets:
Trade accounts receivable (including notes receivable of
$11,906 and $33,491, respectively), less allowance for
doubtful accounts of $10,643 and $9,716, respectively........... $ 155,867 $ 209,949
Leases receivable, less unearned income of $45,284 and
$41,523 respectively............................................ 98,599 96,165
Uncollected insurance premiums.................................... 9,898 10,261
Advances and other receivables.................................... 33,364 21,808
Inventories
Raw materials................................................... 19,326 20,609
Finished goods.................................................. 209,966 129,533
Goods in transit and supplies................................... 7,672 7,516
-------------- -------------
Total inventories............................................... 236,964 157,658
Prepaid expenses.................................................. 46,467 69,292
-------------- -------------
Total current assets.......................................... 581,159 565,133
Marketable securities available for sale............................... 34,051 34,752
Other security investments............................................. 42,787 37,981
Properties and equipment, net.......................................... 236,191 248,753
Long-term leases receivable, less unearned income of
$70,229 and $68,799 respectively..................................... 251,259 236,522
Other assets........................................................... 91,428 85,876
Net assets of discontinued operations.................................. 15,734
-------------- -------------
Total assets.................................................. $ 1,236,875 $ 1,224,751
============== =============
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Current Liabilities:
Notes payable..................................................... $ 81,800 $ 70,300
Current installments of long-term debt and subordinated debt...... 85,118 84,620
Accounts payable.................................................. 112,031 116,777
Unearned insurance premiums....................................... 16,691 17,023
Other current liabilities......................................... 142,251 122,087
-------------- -------------
Total current liabilities..................................... 437,891 410,807
Long-term debt......................................................... 192,512 219,986
Subordinated debt...................................................... 393,666 362,768
Other liabilities...................................................... 57,989 58,825
Commitments and contingencies..........................................
Preferred stock, net................................................... 59,408 65,635
Common stock, net...................................................... 2,699 2,728
Paid-in capital........................................................ 1,470
Retained margin........................................................ 92,710 102,532
-------------- -------------
Total liabilities and shareholders' equity.................... $ 1,236,875 $ 1,224,751
============== =============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
<PAGE>
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION (continued)
AGWAY INC. AND CONSOLIDATED SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED MARGIN
(Unaudited)
(Thousands of Dollars)
Three Months Ended Nine Months Ended
March 31, March 31,
------------------------------- -----------------------------
1996 1995 1996 1995
------------- ------------- ------------- ------------
(Restated) (Restated)
<S> <C> <C> <C> <C>
Net sales and revenues from:
Product sales .......................... $ 406,421 $ 353,693 $ 1,053,539 $ 1,024,423
Leasing operations................. 11,642 10,329 34,688 29,577
Insurance operations............... 6,123 6,571 18,982 19,932
Service revenues................... 2,941 3,958 9,907 12,652
------------- ------------- ------------- ------------
Total net sales and revenues... 427,127 374,551 1,117,116 1,086,584
Cost and expenses from:
Products and plant operations...... 371,042 321,764 983,026 956,858
Leasing operations................. 4,387 4,027 14,803 12,834
Insurance operations............... 4,943 3,967 17,754 12,340
Selling, general and...............
administrative activities........ 35,502 39,697 102,198 115,204
------------- ------------- ------------- ------------
Total costs and expenses....... 415,874 369,455 1,117,781 1,097,236
Operating margin (loss)................. 11,253 5,096 (665) (10,652)
Interest expense, net................... (8,454) (8,215) (22,913) (22,153)
Other income, net....................... 11,491 5,510 19,376 8,412
------------- ------------- ------------- ------------
Margin (loss) from continuing operations
before income taxes ............... 14,290 2,391 (4,202) (24,393)
Income tax expense (benefit)............ 8,264 2,131 5,161 (6,925)
------------- ------------- ------------- ------------
Margin (loss) from continuing operations 6,026 260 (9,363) (17,468)
Discontinued operations:
Gain (loss) on disposal of Hood,
net of tax expense (benefit) of
$(850), $1,624 and $(14,111),
respectively....................... (1,605) 2,017 (8,549)
Gain on disposal of Curtice Burns,
net of tax expense of $19,700...... 4,430
------------- ------------- ------------- ------------
Margin (loss) from discontinued
operations................. (1,605) 2,017 (4,119)
------------- ------------- ------------- ------------
Net margin (loss)....................... $ 6,026 $ (1,345) $ (7,346) $ (21,587)
Retained Margin:
Balance at beginning of period..... 87,769 100,807 102,532 123,346
Dividends.......................... (2,172) (2,374)
Adjustment to unrealized gains
(losses) on available-for-sale
securities, net of tax......... (1,085) 135 (304) 212
------------- ------------- ------------- ------------
Balance at end of period................ $ 92,710 $ 99,597 $ 92,710 $ 99,597
============= ============= ============= ============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
<PAGE>
PART I. FINANCIAL INFORMATION (continued)
AGWAY INC. AND CONSOLIDATED SUBSIDIARIES
CONDENSED CONSOLIDATED CASH FLOW STATEMENTS
(Unaudited)
(Thousands of Dollars)
<TABLE>
<CAPTION>
Nine Months Ended
March 31,
---------------------------
1996 1995
------------ ------------
(Restated)
<S> <C> <C>
Net cash flows (used in) provided by operating activities.............. $ (8,346) $ 1,622
Cash flows (used in) provided by investing activities:
Purchases of property, plant and equipment........................ (14,683) (24,312)
Proceeds from disposal of businesses.............................. 26,276
Proceeds from disposal of property, plant and equipment........... 2,594 5,305
Leases originated................................................. (114,399) (119,640)
Leases repaid..................................................... 92,484 77,741
Proceeds from sale of marketable securities....................... 6,505 1,023
Purchases of marketable securities................................ (6,108) (2,218)
Net purchase of investments in related cooperatives............... (4,806) (1,832)
Proceeds from sale of discontinued operations..................... 15,900 55,786
Net changes in net assets of discontinued operations.............. 16,912
------------ ------------
Net cash flows provided by investing activities........................ 3,763 8,765
Cash flows (used in) provided by financing activities:
Net change in short-term borrowings............................... 11,500 11,700
Proceeds from long-term debt...................................... 23,637 44,640
Repayment of long-term debt....................................... (29,364) (51,825)
Proceeds from sale of subordinated debt........................... 72,190 60,933
Maturity and redemption of subordinated debt...................... (61,259) (64,819)
Redemption of stock............................................... (6,256) (4,853)
Cash dividends paid............................................... (4,582) (4,963)
Other............................................................. (1,283) (1,200)
------------ ------------
Net cash flows provided by (used in) financing activities.............. 4,583 (10,387)
------------ ------------
Net decrease in cash and equivalents................................... 0 0
Cash and equivalents at beginning of period............................ 0 0
------------ ------------
Cash and equivalents at end of period.................................. $ 0 $ 0
============ ============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
5
<PAGE>
PART I. FINANCIAL INFORMATION (continued)
AGWAY INC. AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Thousands of Dollars)
1. BASIS OF PRESENTATION
---------------------
The accompanying unaudited condensed consolidated financial statements of
Agway Inc. (the "Company") have been prepared in accordance with generally
accepted accounting principles for interim financial information and with
the instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments (consisting of
normal recurring accruals) considered necessary for a fair presentation
have been included. Operating results for the nine-month period ended March
31, 1996 are not necessarily indicative of the results that may be expected
for the year ending June 30, 1996 due, among other reasons, to the sale of
H. P. Hood Inc. ("Hood") and to the seasonal nature of certain major
segments of the Company's business. For further information, refer to the
consolidated financial statements and notes thereto included in the annual
report on Form 10-K for the year ended June 30, 1995.
The financial statements of Agway Inc. and Agway Financial Corporation have
been restated to reflect Hood, which was previously consolidated in
continuing operations, as a discontinued operation. Certain
reclassifications have been made to conform prior year financial statements
with the current year presentation.
2. AGWAY FINANCIAL CORPORATION
---------------------------
Agway Financial Corporation (AFC) is a wholly owned subsidiary of the
Company whose principal business activity is securing financing through
bank borrowings and issuance of corporate debt instruments to provide funds
for the Company and AFC's sole wholly owned subsidiary, Agway Holdings Inc.
(AHI), and AHI's subsidiaries, for general corporate purposes. The payment
of principal and interest on this debt is absolutely and unconditionally
guaranteed by the Company. In an exemptive relief granted pursuant to a "no
action letter" issued by the staff of the Securities and Exchange
Commission, AFC, as a separate company, is not required to file periodic
reports with respect to these debt securities. However, as required by the
1934 Act, the summarized financial information concerning AFC and
Consolidated Subsidiaries is as follows:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
March 31, March 31,
------------------------------- -------------------------------
1996 1995 1996 1995
------------- ------------- ------------- -------------
(Restated) (Restated)
<S> <C> <C> <C> <C>
Net sales and revenues............. $ 304,684 $ 272,684 $ 791,545 $ 791,078
Operating margin................... 18,711 15,192 20,645 19,319
Margin (loss) from continuing
operations..................... 2,386 719 (9,990) (7,611)
Net margin (loss).................. 2,386 (886) (7,973) (11,729)
</TABLE>
<TABLE>
<CAPTION>
March 31, June 30,
1996 1995
------------- -------------
(Restated)
<S> <C> <C>
Current assets.................................... $ 569,806 $ 544,665
Properties and equipment, net..................... 165,629 169,368
Noncurrent assets................................. 338,425 321,152
Net assets of discontinued operations............. 15,734
------------- -------------
Total assets...................................... $ 1,073,860 $ 1,050,919
============= =============
Current liabilities............................... $ 271,773 $ 240,975
Long-term debt.................................... 187,506 217,425
Subordinated debt................................. 393,666 362,768
Noncurrent liabilities............................ 14,506 8,855
Shareholder's equity.............................. 206,409 220,896
-------------- -------------
Total liabilities and
shareholder's equity.......................... $ 1,073,860 $ 1,050,919
============= =============
</TABLE>
6
<PAGE>
PART I. FINANCIAL INFORMATION (continued)
AGWAY INC. AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
(Thousands of Dollars)
3. BORROWING ARRANGEMENTS
----------------------
As of March 31, 1996, the Company had certain facilities available with
various banking institutions whereby lenders have agreed to provide funds
up to $254,000 to separately financed units of the Company as follows: AFC
- $50,000 and Telmark - $204,000. In addition, AFC may issue up to $50,000
of commercial paper under the terms of a separate agreement, backed by a
letter of credit. AFC reduced its short-term debt facilities $25,000
($15,000 lines of credit and $10,000 commercial paper) since June 30, 1995
because of reduced needs, primarily the result of debt paydowns from cash
generated on lines of business sold. The availability of credit to Telmark
increased $55,000 since June 30, 1995 which will assist in financing new
business and support incremental repayments on debt.
The $50,000 line of credit available to AFC and its ability to issue
$50,000 of commercial paper require collateralization using certain of the
Company's accounts receivable and non-petroleum inventories ("collateral").
Amounts which can be drawn under the AFC short-term agreements are limited
to a specific calculation based upon the collateral available. Adequate
collateral has existed throughout the fiscal year to permit AFC to borrow
amounts to meet the ongoing needs of the Company and is expected to
continue to do so. In addition, the agreements include certain covenants,
the most restrictive of which requires the Company to maintain specific
quarterly levels of interest coverage and monthly levels of tangible
retained margins. During the third quarter, the Company extended the AFC
short-term facilities through December 1996. The amounts outstanding as of
March 31, 1996 under AFC's $50,000 line of credit and $50,000 commercial
paper were $25,800 and $50,000, respectively. The Company has ongoing
discussions with its lenders and expects to continue to have appropriate
and adequate financing to meet its ongoing needs.
Telmark borrows under its short-term line of credit agreement and its
revolving term agreement from time to time to fund its operations.
Short-term debt serves as interim financing between the issuances of
long-term debt. The current uncommitted short-term line of credit agreement
permits Telmark to borrow up to $4,000 on an unsecured basis with interest
paid upon maturity. The line bears interest at money market variable rates.
A committed $200,000 unsecured revolving term loan facility permits Telmark
to draw short-term funds bearing interest at money market rates or draw
long-term debt at rates appropriate for the term of the note drawn. The
total amount outstanding as of March 31, 1996 under the short-term line of
credit and the revolving term loan facility was $0 and $112,000,
respectively.
Telmark renews its lines of credit annually. The $4,000 line of credit has
been renewed through December 1996. The $200,000 revolving term loan
facility is available through February 1, 1997. The Company believes
Telmark has sufficient lines of credit in place to meet interim funding
needs.
Annually, the Company offers subordinated debentures and subordinated money
market certificates to the public with maturities and interest rates that
vary.
Long-term and subordinated debt outstanding amounted to:
<TABLE>
<CAPTION>
Agway & AFC Telmark Total
---------------------------- --------------------------- --------------------------
3/96 6/95 3/96 6/95 3/96 6/95
------------- ------------ ------------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Long-term debt.......... $ 15,458 $ 22,843 $ 245,844 $ 245,467 $ 261,302 $ 268,310
Currently payable....... 5,168 13,702 63,622 34,622 68,790 48,324
------------- ------------ ------------- ----------- ------------ ------------
Net long-term debt...... $ 10,290 $ 9,141 $ 182,222 $ 210,845 $ 192,512 $ 219,986
============= ============ ============= =========== ============ ============
Subordinated debt....... $ 390,327 $ 390,890 $ 19,667 $ 8,174 $ 409,994 $ 399,064
Currently payable....... 16,328 36,296 16,328 36,296
------------- ------------ ------------- ----------- ------------ ------------
Net subordinated debt... $ 373,999 $ 354,594 $ 19,667 $ 8,174 $ 393,666 $ 362,768
============= ============ ============= =========== ============ ============
</TABLE>
7
<PAGE>
PART I. FINANCIAL INFORMATION (continued)
AGWAY INC. AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
(Thousands of Dollars)
4. COMMITMENTS AND CONTINGENCIES
-----------------------------
Environmental
The Company is subject to a number of governmental regulations concerning
environmental matters, either directly, or as a result of the operations of
its subsidiaries. The Company expects that it will be required to expend
funds to remediate certain sites, including certain Superfund sites and
sites with underground fuel storage tanks. In addition, the Company expects
that it will incur other expenses associated with environmental compliance.
The Company continually monitors its operations with respect to potential
environmental issues, including changes in legally mandated standards and
remediation technologies. The Company's recorded liability reflects those
specific issues where remediation activities are currently deemed to be
probable and where the cost of remediation is estimable. Estimates of the
extent of the Company's degree of responsibility of a particular site and
the method and ultimate cost of remediation require a number of assumptions
for which the ultimate outcome may differ from current estimates; however,
the Company believes that its past experience provides a reasonable basis
for estimating its liability. As additional information becomes available,
estimates are adjusted as necessary. While the Company does not anticipate
that any such adjustment would be material to its financial statements, it
is reasonably possible that the result of ongoing and/or future
environmental studies, changes in legal requirements or other factors could
alter this expectation and require the recording of additional liabilities.
The extent or amount of such events, if any, cannot be estimated at this
time.
As part of its long-term environmental protection program, the Company
spent approximately $4,000 in fiscal 1995 on capital projects. The Company
estimates that during fiscal 1996 and 1997 approximately $4,000 per year
will be spent on additional capital projects for environmental protection.
These estimates recognize the additional capital required to comply with
Environmental Protection Agency (EPA) Underground Storage Tank (UST)
regulations which become effective in December 1998. Presently, the total
cost to comply with the EPA UST regulations is estimated to be
approximately $5,000. The total capital requirements may change due to,
amongst other things, the actual number of USTs actively in use on the
effective date.
Contingent Tax Adjustment
In April 1996, the Internal Revenue Service (IRS) indicated to the Company
that for the years 1991-1994 the IRS contends that the Energy Group's use
of independently owned and operated contract haulers does not qualify for
independent contractor reporting status. There is a reasonable possibility
that the IRS will propose a tax adjustment. The Company disagrees with the
examiner's interpretation and will challenge any proposed adjustment. It is
the Company's opinion that the contract haulers are properly reported as
independent contractors. In the event that the IRS does propose a tax
adjustment and the Company is unsuccessful in its challenge, the resulting
amount and effect of such adjustment on the financial statements could be
material but cannot be estimated at this time.
Other
The Company is also subject to various investigations, claims and legal
proceedings covering a wide range of matters that arise in the ordinary
course of its business activities. Each of these matters is subject to
various uncertainties, and it is possible that some of these other matters
may be resolved unfavorably to the Company. The Company has established
accruals for other matters for which payment is probable and amounts
reasonably estimable. Management believes any liability that may ultimately
result from the resolution of these other matters in excess of amounts
provided will not have a material adverse effect on the financial position
or results of operations of the Company.
8
<PAGE>
PART I. FINANCIAL INFORMATION (continued)
AGWAY INC. AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
(Thousands of Dollars)
5. RESTRUCTURING RESERVES
----------------------
In June 1992, the Company established a $75,000 reserve for the estimated
net cost to complete a significant restructuring of the Company.
Periodically, management has reviewed its original estimates and has made
revisions due to changes in circumstances. At June 30, 1995, $6,200 of the
original reserve remained for incremental environmental costs ($3,600),
which are remediation costs identified during the process of asset sales
that primarily relate to real estate assets retained on energy business
sold, and other net costs ($2,600), which include shutdown costs in
connection with the closing and sale of remaining locations. During the
nine months ended March 31, 1996, the Company incurred an additional $1,500
of net costs against this reserve and had no changes in the remaining
estimated reserve levels. The $4,700 reserve remaining at March 31, 1996
includes $3,500 for environmental costs and $1,200 for other net costs. The
Company anticipates that the environmental costs will be incurred over the
next three years, while the efforts associated with the other net costs
will be completed by the end of fiscal 1996.
6. INCOME TAXES
------------
The income tax expense from continuing operations and the resulting
effective tax rate for the three- and nine-month periods ended March 31,
1996 vary significantly from the anticipated statutory rates. The
difference between the expected tax expense (benefit) on current period
margins (losses) and the actual amount recorded in the current year is
primarily the result of certain patronage losses not being given current
tax benefit.
9
<PAGE>
PART I. FINANCIAL INFORMATION (continued)
AGWAY INC. AND CONSOLIDATED SUBSIDIARIES
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(Unaudited)
(Thousands of Dollars)
RESULTS OF OPERATIONS
- ---------------------
The Company's net sales and revenues and operating results are significantly
impacted by seasonal fluctuations due to the nature of its operations and the
geographic location of its service area, which is primarily the Northeastern
United States. Agriculture & Consumer net sales and revenues are traditionally
higher in the spring as customers acquire products to initiate the growing
season. Energy realizes significantly higher net sales and revenues in the
winter months due to cold winter conditions. Financial Services and Corporate
are not materially impacted by seasonal fluctuations.
<TABLE>
<CAPTION>
Results by Operating Segment
----------------------------
Three Months Ended Nine Months Ended
------------------------------------- ---------------------------------------
$ Increase $ Increase
3/31/96 3/31/95 (Decrease) 3/31/96 3/31/95 (Decrease)
---------- ---------- ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Net Sales and Revenues
- ----------------------
Agriculture & Consumer....... $ 216,630 $ 197,817 $ 18,813 $ 630,493 $ 629,038 $ 1,455
Energy....................... 191,603 157,876 33,727 429,282 403,110 26,172
Financial Services........... 18,527 18,278 249 55,809 52,958 2,851
Corporate.................... 367 580 (213) 1,532 1,478 54
---------- ---------- ----------- ----------- ----------- -------------
$ 427,127 $ 374,551 $ 52,576 $ 1,117,116 $ 1,086,584 $ 30,532
========== ========== =========== =========== =========== =============
Margin (Loss) from Continuing
- -----------------------------
Operations before Income Taxes
------------------------------
Agriculture & Consumer....... $ (1,130) $ (12,421) $ 11,291 $ (12,750) $ (33,856) $ 21,106
Energy....................... 19,322 17,649 1,673 19,012 17,827 1,185
Financial Services........... 2,078 3,469 (1,391) 3,784 8,339 (4,555)
Corporate.................... 2,474 1,909 565 8,665 5,450 3,215
---------- ---------- ----------- ----------- ---------- -------------
Operating margin (loss) and
other income (expense), net 22,744 10,606 12,138 18,711 (2,240) 20,951
Interest (expense), net...... (8,454) (8,215) (239) (22,913) (22,153) (760)
---------- ---------- ----------- ----------- ---------- -------------
$ 14,290 $ 2,391 $ 11,899 $ (4,202) $ (24,393) $ 20,191
========== ========== =========== =========== ========== =============
</TABLE>
Numbers in the following narrative have been rounded to the nearest hundred
thousand.
Consolidated Results
- --------------------
The sales increase of $30,500 for the nine months ended March 31, 1996 (a 3%
increase over the prior nine-month period) was the result of (1) higher sales
prices charged by AAP for feed and fertilizer products and by Energy for heating
oil and propane products due to an increase in the cost of these products; (2)
volume increases in CPG, particularly in human edible sunflower seeds, bird food
and flour; in Energy heating oil and propane due to colder weather than in the
prior year; and in ARS, particularly in winter consumable products and bird
food.
These sales increases were offset by planned decreases resulting from (1) the
sale of the Dairy Route and Installation & Service businesses by AAP in the
fourth quarter of fiscal 1995; (2) the change in product mix from high dollar
volume, low gross margin power equipment to lower unit value, higher gross
margin consumer products which affected both AAP and ARS; (3) the sale of
Pro-Lawn Products (professional turf business), Sacramento Valley Milling (a
bean seed company) and Agway's laboratory animal diet business (selling the
PROLAB and ISOPRO labels) by CPG in the third quarter of fiscal 1996; (4) the
reduction of power fuel facilities in the Energy segment for locations
determined not to be cost beneficial to upgrade; and (5) a reduction of Energy
sales to high volume, low margin commercial accounts. Sales were also adversely
affected in the first quarter by the summer drought conditions which reduced
sales of fertilizer, lime, and yard and garden equipment and supplies, as well
as crop and farm store supplies.
10
<PAGE>
PART I. FINANCIAL INFORMATION (continued)
AGWAY INC. AND CONSOLIDATED SUBSIDIARIES
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(Unaudited)
(Thousands of Dollars)
Consolidated Results (continued)
- --------------------------------
The $20,200 (83%) improvement in pre-tax loss from continuing operations for the
nine-month period ended March 31, 1996, as compared to the same period in the
prior year, was primarily the result of reductions in selling and administration
expenses in AAP and ARS; increased patronage refund on fertilizer purchases and
commodity trading gains in feed contracts in AAP; an increase in gross margin
percent on ARS sales; an increase in gross margin dollars on increased CPG sales
volume; increased margin from Telmark due to the increase of its net investment
in leases; a $1,400 second quarter gain on the sale of an investment; a $4,000
third quarter gain on the sale of the Pro-Lawn Products, Sacramento Valley
Milling and laboratory animal diet lines of business of CPG; and the
non-reoccurrence of severance and reengineering costs incurred in the prior
year. These improvements were partially offset by significant adverse claim
experience for Insurance operations in the second and third quarters.
Agriculture & Consumer
- ----------------------
Agriculture & Consumer consists of Agway Agricultural Products (AAP),
Agriculture & Related Services (ARS) and Country Products Group (CPG). The
change from the prior year of net sales and revenues and pre-tax margin (loss)
from continuing operations for the three-month and nine-month periods ended
March 31, 1996 within the segment was as follows:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
-------------------------------------- ----------------------------------------
$ Increase $ Increase
3/31/96 3/31/95 (Decrease) 3/31/96 3/31/95 (Decrease)
------------ ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net sales and revenues:
AAP........................ $ 112,329 $ 88,928 $ 23,401 $ 313,964 $ 293,627 $ 20,337
ARS........................ 44,003 46,481 (2,478) 149,403 174,551 (25,148)
CPG........................ 60,298 62,408 (2,110) 167,126 160,860 6,266
------------ ----------- ------------ ----------- ----------- -----------
Total................... $ 216,630 $ 197,817 $ 18,813 $ 630,493 $ 629,038 $ 1,455
============= =========== ============ =========== =========== ===========
Pre-tax margin (loss) from
continuing operations:
AAP........................ $ (3,357) $ (8,709) $ 5,352 $ (15,205) $ (27,415) $ 12,210
ARS........................ (4,624) (7,022) 2,398 (8,687) (13,389) 4,702
CPG........................ 6,785 1,966 4,819 7,553 843 6,710
Eliminations............... 66 1,344 (1,278) 3,589 6,105 (2,516)
------------ ----------- ----------- ----------- ----------- -----------
Total................... $ (1,130) $ (12,421) $ 11,291 $ (12,750) $ (33,856) $ 21,106
============ =========== =========== =========== =========== ===========
</TABLE>
AAP sales during 1996 increased $20,300 (7%) and $23,400 (26%) over the prior
year nine-month and three-month periods ending March 31, respectively. The
increases reflect the impact of increased feed and fertilizer product costs, and
improved wholesale crop sales, particularly in dry fertilizers. This sales
increase has been mitigated by the decision to exit the Dairy Route and
Installation & Service (I&S) businesses and reduced sales caused by the summer
drought conditions during the first quarter, followed by early and prolonged
winter conditions in the Northeast during the second quarter. These mitigating
items lowered demand for fertilizer, lime, yard and garden equipment and
supplies and crop and farm store supplies.
ARS experienced an aggregate decline of $25,100 (14%) in net sales and revenues
during the first nine months of fiscal 1996 as compared to the same period
during the prior fiscal year. To improve overall margins, the unit has made
product mix changes and has created marketing programs designed to de-emphasize
high dollar value/lower margin power equipment sales in favor of more consumer
products of smaller per unit value, but with higher turnover rates and margins.
Exiting of the Dairy Route and I&S businesses in the fourth quarter of fiscal
1995 has also reduced sales compared to the prior year. In addition, the summer
drought and early winter conditions have adversely impacted sales in yard and
garden product lines, particularly fertilizers and turf seeds.
11
<PAGE>
PART I. FINANCIAL INFORMATION (continued)
AGWAY INC. AND CONSOLIDATED SUBSIDIARIES
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(Unaudited)
(Thousands of Dollars)
Agriculture & Consumer (continued)
- ----------------------------------
The $6,300 (4%) increase in net sales and revenues of CPG over the first nine
months of fiscal 1996 is mainly the result of increased sales of sunflower
seeds, both in use for human consumption and in the production of bird foods,
and growth in the flour operations. Third quarter sales were $2,100 (3%) lower
than the same period in the prior year due, in part, to the impact on volume of
the sale of the Pro-Lawn Products line of business sold.
Pre-tax loss for AAP and ARS has significantly decreased in the nine-month
period {$12,210 (34%) and $4,700 (61%), respectively} and in the three-month
period {$5,400 (35%) and $2,400 (45%), respectively} ending March 31, 1996 as
compared to the prior year. Substantial improvement has come from management's
successful efforts to reduce selling and administrative expenses in the current
year. The AAP improvement is additionally due to an increased patronage refund
for fertilizer purchases and commodity trading gains in feed contracts. The ARS
improvements are after considering declines in gross margin dollars of
approximately $4,900 (10%) over the first three quarters that are the result of
the increased product cost or volume reductions noted previously.
Pre-tax margin improvement of $6,700 (796%) for the nine months ended March 31,
1996 compared to the corresponding period in the prior year for CPG is due
primarily to gross margin gains realized from increased sales volume in
sunflower seeds and growth in the flour operations and from the $4,000 gain on
the sale of Pro-Lawn Products, laboratory animal diet and Sacramento Valley
Milling lines of business. Margin gains from Turf operations realized in the
first six months of fiscal 1996 declined in the third quarter with the sale of
the Pro-Lawn Products business noted previously.
Energy
- ------
For the nine-month period ended March 31, 1996, net sales and revenues increased
$26,200 (6%) over the same period in the prior year. Overall, nine-month unit
volume increased 2% over the prior year. Third quarter weather-related sales
volume increases and price increases (in response to a rise in cost of product)
were partially offset by the impact of (1) ongoing efforts to close down certain
company-owned retail keytrol/cardtrol sites and bulk customer sites determined
not to be cost beneficial for upgrade to comply with storage tank regulation
requirements; (2) a regional oversupply of fuel oil from the prior year's warm
winter in Energy's marketplace which was sold in the summer and fall seasons by
competitors as commercial and retail diesel fuel at bargain prices which reduced
Energy's volume of diesel fuel sold; and (3) a decision to redirect commercial
diesel fuel sales away from high volume/low margin transport deliveries toward
higher margin/low volume tankwagon sales.
Third quarter net sales and revenues increased $33,700 (21%) over the prior year
three-month period due to (1) colder temperatures than in the prior year which
elevated residential heating oil and propane sales; and (2) an increase in
average selling prices in response to the increase in cost of product. The third
quarter was 6% colder than the third quarter of the prior year and 1% colder
than the five-year average for the three-month period. This increase resulted in
a unit volume increase of 12% over the third quarter of the prior year.
Pre-tax margin for Energy improved $1,200 (7%) and $1,700 (9%) for the
nine-month period and during the third quarter ended March 31, 1996,
respectively, as compared to the prior year periods, primarily due to the
increased unit volume. Margin improvements realized, particularly in the retail
propane and fuel oil products and as the result of reduced selling and
distribution expenses, were partially offset by higher product costs during the
third quarter as the result of a volatile market price of fuel oil which could
not be fully recovered through increased selling price to customers, and lower
gross margins in power fuels due to volatile product costs as well as product
mix, competitive pricing and higher administrative costs.
12
<PAGE>
PART I. FINANCIAL INFORMATION (continued)
AGWAY INC. AND CONSOLIDATED SUBSIDIARIES
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(Unaudited)
(Thousands of Dollars)
Financial Services
- ------------------
For segment reporting purposes, Financial Services consists of Telmark Inc.
("Telmark"), Agway Insurance Company ("Insurance") and Agway General Agency,
Inc. ("General Agency"). The change from the prior year of net sales and
revenues and pre-tax margin (loss) from continuing operations for the
three-month and nine-month periods ended March 31, 1996 within the segment was
as follows:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
------------------------------------- -------------------------------------------
$ Increase $ Increase
3/31/96 3/31/95 (Decrease) 3/31/96 3/31/95 (Decrease)
----------- ----------- ---------- ------------ ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Net sales and revenues:
Telmark.................... $ 12,052 $ 10,729 $ 1,323 $ 35,746 $ 30,577 $ 5,169
Insurance.................. 6,123 6,571 (448) 18,982 19,932 (950)
General Agency............. 352 978 (626) 1,081 2,449 (1,368)
----------- ----------- ---------- ------------ ------------ -------------
Total................. $ 18,527 $ 18,278 $ 249 $ 55,809 $ 52,958 $ 2,851
=========== =========== ========== ============ ============ =============
Pre-tax margin (loss) from
continuing operations:
Telmark.................... $ 3,235 $ 2,950 $ 285 $ 8,588 $ 6,797 $ 1,791
Insurance................. (1,176) 359 (1,535) (4,961) 1,011 (5,972)
General Agency and
Eliminations............ 19 160 (141) 157 531 (374)
----------- ----------- ---------- ------------ ------------ -------------
Total................. $ 2,078 $ 3,469 $ (1,391) $ 3,784 $ 8,339 $ (4,555)
=========== =========== ========== ============ ============ =============
</TABLE>
Telmark continued to experience growth as its net investment in leases increased
$21,100 (6%) and $8,500 (2%) during the nine-month period and for the third
quarter, respectively, to $369,600 as of March 31, 1996 as compared to the
comparable periods during the prior fiscal year. The increase in Telmark's
nine-month and third quarter revenues of $5,200 (17%) and $1,300 (12%), as
compared to the same periods last year, is primarily due to the higher level of
net investment as well as having higher interest rates charged on new leases.
The Insurance Company has experienced a decline in direct written premiums due
to competitive price conditions for personal lines business.
Pre-tax operating margin (loss) for Financial Services deteriorated $4,600 (55%)
for the first nine months and $1,400 (40%) in the third quarter of 1996 as
compared to the prior year. Telmark's pre-tax operating margin increase reflects
the positive impact of net investment growth in leases with relatively higher
interest rates. This increase was offset somewhat by an increase in interest
expense of approximately $2,000 and $400 for the first nine months and in the
third quarter of 1996, respectively, as compared to the corresponding period in
the prior year, due to higher average levels of interest bearing debt and from
higher interest rates on new and replacement debt. The pre-tax operating margin
of Insurance for the nine months ended March 31, 1996 declined $6,000 as
compared to the prior year, which reflected the negative impact by unusually
large farmowner and auto liability casualty losses and loss development
experienced in the second quarter of fiscal 1996 from severe weather conditions.
During the third quarter, Insurance experienced a $1,535 decrease in pre-tax
margin as compared to the corresponding period in the prior year, which was
primarily due to increased property and casualty loss claim activity over the
prior year as a result of blizzard conditions in the Northeast.
Corporate
- ---------
Net sales and revenues in the nine-month period and for the third quarter ended
March 31, 1996 remained relatively constant as compared to comparable periods
last year and represent miscellaneous external revenues and the elimination of
sales and revenues between operating segments.
Pre-tax operating margins in the nine-month and three-month periods ended March
31, 1996 showed improvement of $3,200 and $600, respectively, as compared to the
same periods in the prior year. Prior year operating margin included
reengineering costs totaling $4,065 and $2,420 in the nine-month and three-month
periods. These costs were not incurred in the current year. Additionally, in the
second quarter of fiscal 1996, Corporate recorded a $1,400 gain on the sale of
an investment.
13
<PAGE>
PART I. FINANCIAL INFORMATION (continued)
AGWAY INC. AND CONSOLIDATED SUBSIDIARIES
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(Unaudited)
(Thousands of Dollars)
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
Cash flows from operating activities for the nine months ended March 31, 1996
decreased approximately $10,000 as compared to the first nine months of the
prior year primarily due to less cash provided from working capital. The
Company's inventory levels at March 31, 1996 are below that of the prior year.
However, low levels of inventory at June 30, 1995 and higher cost of product in
fiscal 1996 resulted in a $30,000 greater build-up of dollars invested in
inventories in the first nine months of fiscal 1996 than in the prior year.
Additionally, receivable balances at the beginning of the current fiscal year
were also substantially lower than the prior year due to improved collection and
follow-up efforts last year. This resulted in a smaller decline of receivable
balances through the first nine months, approximately $60,000 less, than for the
same period last year. The use of cash from inventory and receivable changes was
offset by cash provided from an approximately $50,000 change over the prior year
nine-month period of payables. The change in payables is the result of both the
higher cost of products acquired and agreed upon terms with vendors. Net cash
provided by investing activities for the nine months was approximately $3,800 as
compared to approximately $8,800 for the same period last year. This decline was
primarily due to the cash proceeds from the sale of Curtice Burns in the prior
year exceeding the proceeds in the current year on the sale of H. P. Hood plus
proceeds on the Country Product Group businesses sold. The net cash flows
provided by financing activities for the nine months were approximately $4,600
as compared to net cash used of approximately $10,400 for the same period in the
prior year. The majority of the change from financing activities was the result
of lower repayments of long-term debt offset by an increase in subordinated debt
for the first nine months as compared to the same period in the prior year. Net
repayments of long-term debt declined approximately $22,500 while the change in
subordinated debt, net of redemptions, increased $14,800 as compared to the nine
months ended March 31, 1995.
The Company finances its operations and the operations of all its continuing
businesses and subsidiaries, except Telmark and Agway Insurance Company, through
Agway Financial Corporation (AFC). External sources of short-term financing for
the Company and all its other continuing operations include revolving credit
lines, letters of credit, and commercial paper programs. Telmark and Agway
Insurance Company finance themselves through operations or direct borrowing
arrangements. Each is financed with a combination of short- and long-term credit
facilities. In addition, Telmark has occasionally sold blocks of its lease
portfolio. Sources of longer-term financing include the following as of March
31, 1996:
<TABLE>
<CAPTION>
Source of debt Agway & AFC Telmark Total
-------------- ----------- ------------- ----------
<S> <C> <C> <C>
Banks - due 5/96 - 8/99 with interest
from 6.0% - 8.5% $ 106,000 $ 106,000
Insurance companies - due 5/96 - 11/00
with interest from 5.7% - 9.2% 139,844 139,844
Capital leases & other - due 1996-2007
with interest from 6% - 12% 15,458 15,458
----------- ------------- ----------
Long-term debt 15,458 245,844 261,302
Subordinated debt - due 10/96 - 10/08
with interest from 4.5% - 9.5% 390,327 19,667 409,994
----------- ------------- ----------
Total debt $ 405,785 $ 265,511 $ 671,296
=========== ============= ==========
</TABLE>
As of March 31, 1996, the Company had certain facilities available with various
banking institutions whereby lenders have agreed to provide funds up to $254,000
to separately financed units of the Company as follows: AFC - $50,000 and
Telmark - $204,000. In addition, AFC may issue up to $50,000 of commercial paper
under the terms of a separate agreement, backed by a letter of credit. AFC
reduced its short-term debt facilities $25,000 ($15,000 lines of credit and
$10,000 commercial paper) since June 30, 1995 because of reduced needs,
primarily the result of debt paydowns from cash generated on lines of business
sold. The availability of credit to Telmark increased $55,000 since June 30,
1995 which will assist in financing new business and support incremental
repayments on debt.
14
<PAGE>
PART I. FINANCIAL INFORMATION (continued)
AGWAY INC. AND CONSOLIDATED SUBSIDIARIES
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(Unaudited)
(Thousands of Dollars)
LIQUIDITY AND CAPITAL RESOURCES (continued)
- -------------------------------------------
The $50,000 line of credit available to AFC and its ability to issue $50,000 of
commercial paper require collateralization using certain of the Company's
accounts receivable and non-petroleum inventories ("collateral"). Amounts which
can be drawn under the AFC short-term agreements are limited to a specific
calculation based upon the collateral available. Adequate collateral has existed
throughout the fiscal year to permit AFC to borrow amounts to meet the ongoing
needs of the Company and is expected to continue to do so. In addition, the
agreements include certain covenants, the most restrictive of which requires the
Company to maintain specific quarterly levels of interest coverage and monthly
levels of tangible retained margins. During the third quarter, the Company
extended the AFC short-term facilities through December 1996. The amounts
outstanding as of March 31, 1996 under AFC's $50,000 line of credit and $50,000
commercial paper were $25,800 and $50,000, respectively. The Company has ongoing
discussions with its lenders and expects to continue to have appropriate and
adequate financing to meet its ongoing needs.
Telmark borrows under its short-term line of credit agreement and its revolving
term agreement from time to time to fund its operations. Short-term debt serves
as interim financing between the issuances of long-term debt. The current
uncommitted short-term line of credit agreement permits Telmark to borrow up to
$4,000 on an unsecured basis with interest paid upon maturity. The line bears
interest at money market variable rates. A committed $200,000 unsecured
revolving term loan facility permits Telmark to draw short-term funds bearing
interest at money market rates or draw long-term debt at rates appropriate for
the term of the note drawn. The total amount outstanding as of March 31, 1996
under the short-term line of credit and the revolving term loan facility was $0
and $112,000, respectively.
Telmark renews its lines of credit annually. The $4,000 line of credit has been
renewed through December 1996. The $200,000 revolving term loan facility is
available through February 1, 1997. The Company believes Telmark has sufficient
lines of credit in place to meet interim funding needs.
Annually, the Company offers subordinated debentures and subordinated money
market certificates to the public with maturities and interest rates that vary.
15
<PAGE>
PART II. OTHER INFORMATION
AGWAY INC. AND CONSOLIDATED SUBSIDIARIES
(Thousands of Dollars)
Item 1. Legal Proceedings
- --------------------------
In December 1985, it was asserted by the Massachusetts Department of
Environmental Protection (MDEP) that certain real property located in West
Concord, Massachusetts previously owned by Agway is contaminated and that Agway
and the current owner of the property are responsible for the cost of
investigating and cleaning up environmental contamination at the property. In
September 1993, Agway entered into an Administrative Consent Order with the MDEP
pursuant to which Agway performed a phase II comprehensive site assessment. In
March 1995, Agway and the current owner entered into a settlement agreement
whereby Agway agreed, at Agway's expense, to complete any additional assessment,
containment, removal or remediation actions at the property. The current owner
agreed to cooperate with Agway in achieving a permanent solution satisfactory to
the MDEP and in compliance with the MDEP's requirements. Agway prepared a risk
assessment scope of work which has been approved by the MDEP. The MDEP also
recently approved reclassification of the site. Agway plans to complete its risk
assessment for the site during the spring and summer of 1996. The Company
currently has accrued its best estimate relative to the cost of any additional
assessment, containment, removal or remediation actions regarding the property.
However, it is reasonably possible that the results of ongoing and/or future
environmental studies or other factors could alter this estimate and require the
recording of additional liabilities. The extent or amount of such events cannot
be estimated at this time. However, Agway believes that its past experience
provides a reasonable basis for its estimates recorded for this matter.
In August 1995, the Environmental Protection Agency (EPA) notified Agway that
the EPA has reason to believe that Agway is a potentially responsible party
(PRP) under the Comprehensive Environmental Response, Compensation and Liability
Act (CERCLA) at the Tri-Cities Barrel Site, Port Crane, New York. The EPA
requested that Agway and other PRPs participate in the ongoing Remedial
Investigation/Feasibility Study (RI/FS) for the Tri-Cities Barrel Site. Agway
believes that its involvement at the Tri-Cities Barrel Site is minimal. Agway
has had further discussions with other PRPs who have been participating in the
ongoing RI/FS and decided to participate at this time.
Item 6. Exhibits and Reports on Form 8-K
- -----------------------------------------
There were no reports on Form 8-K required to be filed during the third quarter
ended March 31, 1996.
16
<PAGE>
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.
AGWAY INC.
-------------------------------------
(Registrant)
Date May 6, 1996 /s/ PETER J. O'NEILL
------------------------ ----------------------------------------
Peter J. O'Neill
Senior Vice President,
Finance & Control,
Treasurer and Controller
(Principal Financial Officer and
Chief Accounting Officer)
17
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<ARTICLE> 5
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-END> MAR-31-1995
<CASH> 0
<SECURITIES> 35350
<RECEIVABLES> 151088
<ALLOWANCES> 11623
<INVENTORY> 238725
<CURRENT-ASSETS> 566240
<PP&E> 530651
<DEPRECIATION> 285338
<TOTAL-ASSETS> 1217473
<CURRENT-LIABILITIES> 422603
<BONDS> 558159
0
66523
<COMMON> 2734
<OTHER-SE> 101067
<TOTAL-LIABILITY-AND-EQUITY> 1217473
<SALES> 1037075
<TOTAL-REVENUES> 1086584
<CGS> 956858
<TOTAL-COSTS> 982032
<OTHER-EXPENSES> 115204
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 22153
<INCOME-PRETAX> (24393)
<INCOME-TAX> (6925)
<INCOME-CONTINUING> (17468)
<DISCONTINUED> (4119)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (21587)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
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<MULTIPLIER> 1,000
<S> <C>
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<RECEIVABLES> 166510
<ALLOWANCES> 10643
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<CURRENT-ASSETS> 581159
<PP&E> 531239
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