<PAGE> 1
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 31 December 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 1-4534
AIR PRODUCTS AND CHEMICALS, INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware 23-1274455
(State of Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
7201 Hamilton Boulevard, Allentown, Pennsylvania 18195-1501
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code 610-481-4911
Indicate by check /x/ 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 7 February 1997
- -------------------------- ---------------------------------
Common Stock, $1 par value 120,026,911
<PAGE> 2
AIR PRODUCTS AND CHEMICALS, INC. AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
Part I. Financial Information
Consolidated Balance Sheets -
31 December 1996 and 30 September 1996 ..................................................................... 3
Consolidated Income -
Three Months Ended 31 December 1996 and 1995 ............................................................... 4
Consolidated Cash Flows -
Three Months Ended 31 December 1996 and 1995 ............................................................... 5
Notes to Consolidated Financial Statements .................................................................... 6
Management's Discussion and Analysis .......................................................................... 7
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K ..................................................................... 11
Signatures .................................................................................................... 12
</TABLE>
REMARKS:
The consolidated financial statements of Air Products and Chemicals, Inc. and
its subsidiaries (the "Company" or "Registrant") included herein have been
prepared by the Company, without audit, pursuant to the rules and regulations of
the Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations. In the opinion of the Company, the
accompanying statements reflect all adjustments necessary to present fairly the
financial position, results of operations and cash flows for those periods
indicated, and contain adequate disclosure to make the information presented not
misleading. Such adjustments are of a normal, recurring nature unless otherwise
disclosed in the notes to consolidated financial statements. However, the
results for the periods indicated herein reflect certain adjustments, such as
the valuation of inventories on the LIFO cost basis, which can only be finally
determined on an annual basis. It is suggested that these consolidated condensed
financial statements be read in conjunction with the financial statements and
notes thereto included in the Company's latest annual report on Form 10-K.
Results of operations for any three month period are not necessarily indicative
of the results of operations for a full year.
2
<PAGE> 3
AIR PRODUCTS AND CHEMICALS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Millions of dollars, except per share)
<TABLE>
<CAPTION>
31 December 30 September
ASSETS 1996 1996
------ ----------- ------------
<S> <C> <C>
CURRENT ASSETS
Cash and cash items $ 160.7 $ 78.7
Trade receivables, less allowances for doubtful accounts 817.1 670.0
Inventories 405.4 371.1
Contracts in progress, less progress billings 152.0 115.2
Other current assets 185.0 139.7
-------- --------
TOTAL CURRENT ASSETS 1,720.2 1,374.7
-------- --------
INVESTMENTS 624.6 833.6
-------- --------
PLANT AND EQUIPMENT, at cost 8,577.7 8,102.6
Less - Accumulated depreciation 4,186.4 4,144.1
-------- --------
PLANT AND EQUIPMENT, net 4,391.3 3,958.5
-------- --------
GOODWILL 285.8 83.5
-------- --------
OTHER NONCURRENT ASSETS 294.7 272.1
-------- --------
TOTAL ASSETS $7,316.6 $6,522.4
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES
Payables, trade and other $ 637.8 $ 526.4
Accrued liabilities 246.4 241.1
Accrued income taxes 64.5 39.7
Short-term borrowings 566.3 423.2
Current portion of long-term debt 73.7 33.1
-------- --------
TOTAL CURRENT LIABILITIES 1,588.7 1,263.5
-------- --------
LONG-TERM DEBT 2,101.9 1,738.6
-------- --------
DEFERRED INCOME AND OTHER NONCURRENT
LIABILITIES 404.2 363.5
-------- --------
DEFERRED INCOME TAXES 643.0 582.2
-------- --------
TOTAL LIABILITIES 4,737.8 3,947.8
-------- --------
SHAREHOLDERS' EQUITY
Common stock, par value $1 per share 124.7 124.7
Capital in excess of par value 457.5 461.2
Retained earnings 2,756.9 2,687.2
Unrealized gain on investments 29.8 40.4
Cumulative translation adjustments (69.8) (70.2)
Treasury stock, at cost (262.8) (211.2)
Shares in trust (457.5) (457.5)
-------- --------
TOTAL SHAREHOLDERS' EQUITY 2,578.8 2,574.6
-------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $7,316.6 $6,522.4
======== ========
</TABLE>
3
<PAGE> 4
AIR PRODUCTS AND CHEMICALS, INC. AND SUBSIDIARIES
CONSOLIDATED INCOME
(Millions of dollars, except per share)
<TABLE>
<CAPTION>
Three Months Ended
31 December
-----------------------
1996 1995
---- ----
<S> <C> <C>
SALES AND OTHER INCOME
Sales $ 1,120.9 $ 947.5
Other income, net 9.4 3.8
--------- ---------
1,130.3 951.3
--------- ---------
COSTS AND EXPENSES
Cost of sales 692.7 559.4
Selling, distribution and administrative 241.5 220.1
Research and development 26.7 27.6
--------- ---------
OPERATING INCOME 169.4 144.2
Income from equity affiliates, net of
related expenses 18.7 15.8
Interest expense 39.9 28.7
--------- ---------
INCOME BEFORE TAXES 148.2 131.3
Income taxes 48.3 42.3
--------- ---------
NET INCOME $ 99.9 $ 89.0
========= =========
MONTHLY AVERAGE OF COMMON
SHARES OUTSTANDING (in millions) 110.3 111.8
--------- ---------
EARNINGS PER COMMON SHARE $ .91 $ .80
========= =========
DIVIDENDS DECLARED PER COMMON
SHARE - Cash $ .28 $ .26
========= =========
</TABLE>
4
<PAGE> 5
AIR PRODUCTS AND CHEMICALS, INC. AND SUBSIDIARIES
CONSOLIDATED CASH FLOWS
(Millions of dollars)
<TABLE>
<CAPTION>
Three Months Ended
31 December
---------------------------
1996 1995
------ ------
<S> <C> <C>
OPERATING ACTIVITIES
Net Income $ 99.9 $ 89.0
Adjustments to reconcile income to cash provided by
operating activities:
Depreciation 108.1 99.4
Deferred income taxes 15.1 22.0
Impairment loss 9.3 --
Other 4.6 .9
Working capital changes that provided (used) cash, net of effects
of acquisitions:
Trade receivables (50.8) (6.5)
Other receivables 50.9 (.5)
Inventories and contracts in progress (54.0) (25.3)
Payables, trade and other 82.1 (32.4)
Accrued liabilities (53.1) (24.8)
Other 17.0 3.9
------ ------
CASH PROVIDED BY OPERATING ACTIVITIES 229.1 125.7
------ ------
INVESTING ACTIVITIES
Additions to plant and equipment* (303.0) (184.1)
Acquisitions, less cash acquired** (292.2) --
Investment in and advances to unconsolidated affiliates (20.1) (126.4)
Proceeds from sale of assets and investments 36.4 24.2
Other 4.6 (.2)
------ ------
CASH USED FOR INVESTING ACTIVITIES (574.3) (286.5)
------ ------
FINANCING ACTIVITIES
Long-term debt proceeds* 325.5 125.2
Payments on long-term debt (2.9) (8.3)
Net increase in commercial paper 193.0 64.4
Net increase in other short-term borrowings 6.1 8.8
Dividends paid to shareholders (30.2) (29.1)
Purchase of Treasury Stock (75.0) --
Other 9.6 7.6
------ ------
CASH PROVIDED BY FINANCING ACTIVITIES 426.1 168.6
------ ------
Effect of Exchange Rate Changes on Cash 1.1 (.3)
------ ------
Increase in Cash and Cash Items 82.0 7.5
Cash and Cash Items - Beginning of Year 78.7 87.5
------ ------
Cash and Cash Items - End of Period $160.7 $ 95.0
====== ======
</TABLE>
*Excludes capital leases of $1.0 million and $.8 million for the three months
ended 31 December 1996 and 1995.
**Excludes debt of $1.1 million to former shareholders of company acquired in
fiscal 1997.
5
<PAGE> 6
AIR PRODUCTS AND CHEMICALS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Company completed the sale of the landfill gas recovery business, GSF Energy
Inc., during the three months ended 31 December 1996. A gain of $9.5 million
($5.9 million after tax, or $.05 per share) was recorded. Sales of the landfill
gas business were $20.3 million in fiscal year 1996 with an operating loss of
$3.0 million and net income of $4.0 million, including the net income benefit
from nonconventional fuel tax credits. The gain on sale is included in the other
income line of the income statement.
During the three months ended 31 December 1996, an impairment loss of $9.3
million ($6.0 million after tax, or $.05 per share) was recorded in the
chemicals segment. The write-down was related to production assets and the
related goodwill in the polyurethane release agents product line. The impairment
loss is calculated based on an offer to purchase these assets and is included in
the other income line of the income statement.
On 22 October 1996, the Company obtained control of Carburos Metalicos S.A.
(Carburos). The company now owns 96.7% of the outstanding shares in Carburos.
The acquisition of the additional 70.8% ownership was completed through a series
of planned tender offers over a three year period at a total cost of $408.4
million. The acquisition was funded through the issuance of U.S. dollar debt
effectively converted to Spanish Peseta liabilities through the use of interest
rate and currency swap contracts and foreign exchange contracts.
Carburos is a leading supplier of industrial gases in Spain. This transaction
was accounted for as a step acquisition purchase and the results for the three
months ended 31 December 1996 contained approximately six weeks of consolidated
operating results for Carburos. Previously, the Company accounted for its
investment using the equity method. The Company has recorded a total of $212.2
million as cumulative goodwill, which will be amortized on a straight-line basis
over forty years.
The following table shows unaudited pro forma consolidated financial information
for the three months ended 31 December 1996 and 1995 and the fiscal year ended
30 September 1996. This information reflects the acquisition as if it had
occurred on 1 October 1995 and includes adjustments for asset valuation
depreciation expense, goodwill amortization, and interest expense from
acquisition debt. This information is not necessarily indicative of future
consolidated results or what actual results would have been had the acquisition
occurred during the periods presented.
PRO FORMA INFORMATION (Unaudited)
<TABLE>
<CAPTION>
(Millions of dollars, except per share)
- --------------------------------------------------------------------------------
Three Months Ended Twelve Months Ended
31 December 30 September
1996 1995 1996
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Sales $ 1,165.8 $ 1,025.0 $ 4,309.7
Net Income $ 100.9 $ 92.9 $ 423.1
Earnings Per Share $ .91 $ .83 $ 3.79
- --------------------------------------------------------------------------------
</TABLE>
6
<PAGE> 7
AIR PRODUCTS AND CHEMICALS, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
FIRST QUARTER FISCAL 1997 VS. FIRST QUARTER FISCAL 1996
- --------------------------------------------------------------------------------
RESULTS OF OPERATIONS
CONSOLIDATED
Sales in the first quarter of fiscal 1997 of $1,120.9 million were 18% higher
than in the same quarter of last year while operating income was up $25.2
million, or 17%, to $169.4 million. Profits of equity affiliates increased $2.9
million to $18.7 million for the three months ended 31 December 1996. Net income
was $99.9 million, or $.91 per share, compared to net income of $89.0 million,
or $.80 per share, in the year-ago quarter.
The earnings for the quarter included two special items. During the three months
ended 31 December 1996, the Company recorded a gain of $9.5 million ($5.9
million after tax, or $.05 per share) on the sale of the landfill gas recovery
business. The results of the first quarter also included an impairment loss of
$9.3 million ($6.0 million after tax or $.05 per share).
Sales and operating income increased due primarily to volume gains in both
domestic tonnage gases and the chemicals segment coupled with the Carburos
acquisition. Equipment and services contributed to the sales growth through the
initial booking of several large projects. Operating income also increased from
margin improvement in domestic merchant gases and favorable foreign exchange
impacts in the corporate segment. Income from equity affiliates increased due
mainly to favorable foreign exchange impacts and tax adjustments.
SEGMENT ANALYSIS
The segment results for the three months ended 31 December 1995 have been
restated. The business to be divested (American Ref-Fuel) and the landfill gas
recovery business sold in November 1996 are included in the corporate and other
segment, while the continuing businesses from the environmental and energy
segment (power generation and Pure Air(TM)), are now included in the equipment
and services segment.
INDUSTRIAL GASES - Sales of $614.5 million in the first quarter of fiscal 1997
were up 12% while operating income increased 14% to $118.3 million. On 22
October 1996, the Company obtained control of Carburos. The results for the
three months ended 31 December 1996 contained approximately six weeks of
consolidated operating results for Carburos. Previously, the Company accounted
for its investment using the equity method. This completed acquisition provided
sales growth of $35.3 million and approximately half of the operating profit
improvement. Additional factors driving the growth were strong volume gains in
domestic tonnage gases and lower production and distribution costs in domestic
merchant gases. Excluding Carburos, European results were lower due to
competitive pressures in Northern Europe and planned maintenance outages at two
major tonnage facilities. Unfavorable European currency effects decreased both
sales and operating income by 1%.
7
<PAGE> 8
Equity affiliates' income for the first quarter of fiscal 1997 was $12.0 million
compared to $9.2 million in the prior year. The increase of $2.8 million was due
primarily to favorable foreign exchange effects and tax adjustments.
CHEMICALS- Sales in the first quarter of 1997 of $346.2 million increased $36.5
million while operating income decreased $3.6 million to $44.5 million. The 12%
sales increase resulted from strong volume growth in most product lines,
especially polyurethane intermediates. The prior year period was impacted by an
extended customer outage. The results for the first quarter of 1997 included an
impairment loss of $9.3 million related to production assets and the related
goodwill in the polyurethane release agents product line. Excluding this
writedown, operating income increased 12% or $5.7 million. Operating income
increased mainly on the volume gains in polyurethane intermediates.
EQUIPMENT AND SERVICES - Sales of $159.0 million increased $77.1 million from
the year-ago quarter while operating income was up $1.0 million to $5.6 million.
This year's results included the initial sales booking for several large
projects being sold to unconsolidated affiliates. Sales backlog for the
equipment product line continues to grow at $431.3 million at 31 December 1996.
This high quality backlog compares to $305.7 million at 30 September 1996 and
$266.4 million at 31 December 1995.
Equity affiliates' income for the first quarter of fiscal 1997 increased $1.5
million to $3.5 million. The improved results reflect improved operating
performance at the power generation facilities.
CORPORATE AND OTHER - Sales in the first quarter of 1997 of $1.2 million
decreased from $5.0 million due to the sale of the landfill gas recovery
business. Operating income was up $13.2 million to income of $1.0 million. The
results for the first quarter included a gain of $9.5 million related to the
sale of the landfill gas recovery business, GSF Energy Inc. Excluding this gain,
operating income was up $3.7 million due to favorable foreign exchange impacts.
Equity affiliates' income for the first quarter of fiscal 1997 decreased $1.7
million to $3.1 million.
INTEREST
Interest expense was $39.9 million compared to $28.7 million in the first
quarter of fiscal 1996. The increase in expense was due primarily to a higher
level of debt outstanding due to the share repurchase program and the capital
investment program which included the Carburos acquisition.
INCOME TAXES
The effective tax rate on income was 32.6% for the quarter ended 31 December
1996 compared with 32.2% for the same quarter in fiscal 1996. The slight
increase in the effective tax rate was due to the Company no longer receiving
nonconventional fuel tax credits due to the sale of the landfill gas recovery
business.
8
<PAGE> 9
LIQUIDITY AND CAPITAL RESOURCES
Capital expenditures during the first three months of fiscal 1997 totaled $617.4
million compared to $311.3 million in the corresponding period of the prior
year. Additions to plant and equipment increased from $184.1 million during the
first three months of fiscal 1996 to $303.0 million during the current period
primarily in support of growth in the worldwide industrial gas business.
Investments in unconsolidated affiliates were $20.1 million during the first
three months of fiscal 1997 versus $126.4 million last year. Prior year numbers
included the acquisition of an additional 21.5% of the outstanding shares of
Carburos at a cost of $120.0 million. On 22 October 1996, the company obtained
control of Carburos through the acquisition of an additional 49.1% shares at a
cost of $288.4 million. Including this acquisition, capital expenditures are
expected to be approximately $1.3 billion in fiscal 1997. It is anticipated that
these expenditures will be funded with cash from operations supplemented with
proceeds from financing activities.
Cash provided by operating activities during the first three months of fiscal
1997 ($229.1 million) combined with cash provided by debt financing ($524.6
million), and proceeds from the sale of assets and investments ($36.4 million)
were used largely for capital expenditures ($617.4 million), purchase of the
Company's common stock for treasury ($75.0 million), and cash dividends ($30.2
million). Cash and cash items increased $82.0 million from $78.7 million at the
beginning of the fiscal year to $160.7 million at 31 December 1996. The net
increase in commercial paper outstanding was $193.0 million.
Total debt at 31 December 1996 and 30 September 1996, expressed as a percentage
of the sum of total debt and shareholders' equity, was 52% and 46%,
respectively. Total debt increased from $2,194.9 million at 30 September 1996 to
$2,741.9 million at 31 December 1996. During the first quarter of fiscal 1997,
the Company issued $231 million in debt securities with maturities ranging from
three to seven years and fixed coupon rates of 6.01% to 6.86% or variable rates
tied to LIBOR. Additionally, $53.0 million of 7.03%, nine year U.S. dollar debt
was issued by a foreign subsidiary. The Carburos acquisition was financed
primarily through the issuance of U.S. dollar debt effectively converted to
Spanish Peseta liabilities through the use of interest rate and currency swap
contracts and foreign exchange contracts.
There was $563.0 million of commercial paper outstanding at 31 December 1996.
The Company's revolving credit commitments amounted to $600.0 million at 31
December 1996 with funding available in 13 currencies. No borrowings were
outstanding under these commitments. Additional commitments totaling $15.8
million are maintained by the Company's foreign subsidiaries, of which $2.4
million was utilized at 31 December 1996.
At 31 December 1996, the Company had an unutilized shelf registration for $408.0
million of debt securities. Subsequent to 31 December 1996, the Company issued
$100.0 million in notes due in 2009, with a one-time put option exercisable by
the investor after two years. The coupon rate on this note is indexed to LIBOR
for the first two years.
The Company enters into interest rate swap agreements to change the
fixed/variable interest rate mix of the debt portfolio in order to maintain the
percentage of fixed and variable debt within certain parameters set by
management. In accordance with these parameters, the agreements are used to
reduce interest rate risks and costs inherent in the Company's debt portfolio.
Accordingly, the Company enters into agreements to both effectively convert
variable-rate debt to fixed-rate debt and to effectively convert fixed-rate debt
to variable-rate debt which is indexed principally to LIBOR rates. The Company
has also entered into interest rate swap contracts to effectively convert the
stated variable rates to interest rates based on LIBOR. The fair value gain
(loss) on the variable to variable swaps is equally offset by a fair value loss
(gain) on the related debt agreement.
9
<PAGE> 10
The notional principal and fair value of interest rate swap agreements at 31
December 1996 and 30 September 1996 were as follows:
(Millions of dollars)
<TABLE>
<CAPTION>
31 December 1996 30 September 1996
----------------------------- ------------------------------------
Notional Fair Value Notional Fair Value
Amount Gain (Loss) Amount Gain (Loss)
----------------------------- ------------------------------------
<S> <C> <C> <C> <C>
Fixed to Variable $279.1 $ 6.6 $243.5 $ 1.3
Variable to Fixed 57.5 (.2) 54.0 (.5)
Variable to Variable 60.0 50.2 60.0 27.9
----------------------------- ------------------------------------
Total $396.6 $56.6 $357.5 $ 28.7
============================= ====================================
</TABLE>
The Company is also party to interest rate and currency swap contracts. These
contracts effectively convert the currency denomination of a debt instrument
into another currency in which the Company has a net equity position while
changing the interest rate characteristics of the instrument. The notional
principal of interest rate and currency swap agreements outstanding at 31
December 1996 was $273.6 million. The fair value of the agreements was a loss of
$17.5 million, of which a $12.5 million gain related to the currency component
was recognized in the financial statements. The remaining $30.0 million loss was
related to the interest component (reflecting that current interest rates are
generally lower than the interest rates paid under the interest rate and
currency swap agreements) and has not been recognized in the financial
statements. As of 30 September 1996 interest rate and currency swap agreements
were outstanding with a notional principal amount and fair value of $273.6
million and a loss of $15.5 million, respectively.
The estimated fair value of the Company's long-term debt, including current
portion, as of 31 December 1996 is $2,330.7 million compared to a book value of
$2,175.6 million.
During the first quarter of fiscal 1997, 1.1 million shares of the Company's
outstanding common stock were repurchased at a cost of $75.0 million. The
remainder of the program will be paced by the disposition of American Ref-Fuel
and ongoing capital investment requirements.
10
<PAGE> 11
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a)(12) Computation of Ratios of Earnings to Fixed Charges.
(a)(27) Financial Data Schedule, which is submitted electronically
to the Securities and Exchange Commission for information
only, and not filed.
(b) Current Reports on Form 8-K dated 23 October 1996 and 25
October 1996 were filed by the registrant during the
quarter ended 31 December 1996 in which Item 5 of such
form was reported.
11
<PAGE> 12
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.
Air Products and Chemicals, Inc.
(Registrant)
Date: February 12, 1997 By: /s/ A. H. Kaplan
---------------------------------
A. H. Kaplan
Vice President - Finance
(Chief Financial Officer)
12
<PAGE> 13
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------------
EXHIBITS
To
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended 31 December 1996
Commission File No. 1-4534
-------------------
AIR PRODUCTS AND CHEMICALS, INC.
(Exact name of registrant as specified in its charter)
<PAGE> 14
INDEX TO EXHIBITS
(a)(12) Computation of Ratios of Earnings to Fixed Charges.
(a)(27) Financial Data Schedule, which is submitted electronically to
the Securities and Exchange Commission for information only, and not filed.
<PAGE> 1
Exhibit (a)(12)
AIR PRODUCTS AND CHEMICALS, INC., AND SUBSIDIARIES
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
(Unaudited)
<TABLE>
<CAPTION>
Three
Months
Ended
Year Ended 30 September 31
December
-------------------------------------------------------- -----------
1992 1993 1994 1995 1996 1996
---- ---- ---- ---- ---- ----
EARNINGS: (Millions of dollars)
<S> <C> <C> <C> <C> <C> <C>
Income before extraordinary item and
the cumulative effect of accounting
changes: $277.0 $200.9 $233.5 $368.2 $416.4 $ 99.9
Add (deduct):
Provision for income taxes 130.8 103.0 95.2 186.2 195.5 48.8
Fixed charges, excluding capitalized
interest 133.4 127.3 127.1 148.8 184.0 57.8
Capitalized interest amortized during
the period 7.5 7.7 8.0 9.1 9.4 2.0
Undistributed earnings of less-than-
fifty-percent-owned affiliates (12.5) (8.1) (2.8) (25.4) (40.6) (9.8)
------ ------ ------ ------ ------ ------
Earnings, as adjusted $536.2 $430.8 $461.0 $686.9 $764.7 $198.7
====== ====== ====== ====== ====== ======
FIXED CHARGES:
Interest on indebtedness, including
capital lease obligations $125.1 $118.6 $118.2 $139.4 $171.7 $ 54.1
Capitalized interest 4.1 6.3 9.7 18.5 20.0 5.5
Amortization of debt discount premium
and expense .8 .7 .8 .2 1.5 .4
Portion of rents under operating leases
representative of the interest factor 7.5 8.0 8.1 9.2 10.8 3.3
------ ------ ------ ------ ------ ------
Fixed charges $137.5 $133.6 $136.8 $167.3 $204.0 $ 63.3
====== ====== ====== ====== ====== ======
RATIO OF EARNINGS TO FIXED CHARGES: 3.9 3.2 3.4 4.1 3.7 3.1
====== ====== ====== ====== ====== ======
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AND THE CONSOLIDATED STATEMENT OF INCOME FILED AS
PART OF FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FORM
10-Q.
</LEGEND>
<MULTIPLIER> 1,000,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> OCT-01-1996
<PERIOD-END> DEC-31-1996
<EXCHANGE-RATE> 1
<CASH> 161
<SECURITIES> 0
<RECEIVABLES> 833
<ALLOWANCES> 16
<INVENTORY> 405
<CURRENT-ASSETS> 1,720
<PP&E> 8,578
<DEPRECIATION> 4,186
<TOTAL-ASSETS> 7,317
<CURRENT-LIABILITIES> 1,589
<BONDS> 2,102
0
0
<COMMON> 125
<OTHER-SE> 2,454
<TOTAL-LIABILITY-AND-EQUITY> 7,317
<SALES> 1,121
<TOTAL-REVENUES> 1,121
<CGS> 693
<TOTAL-COSTS> 693
<OTHER-EXPENSES> 27
<LOSS-PROVISION> 1
<INTEREST-EXPENSE> 40
<INCOME-PRETAX> 148
<INCOME-TAX> 48
<INCOME-CONTINUING> 100
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 100
<EPS-PRIMARY> .91
<EPS-DILUTED> .91
</TABLE>
