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 April 30, 1998.
[ ] Transition report pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Commission file number 1-4003
DRESSER INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
Delaware C 75-0813641
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
P. O. Box 718
2001 Ross 75221 (P. O. Box)
Dallas, Texas 75201
(Address of principal executive (Zip Code)
offices)
Registrant's telephone number, including area code -- 214-740-6000
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, 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 May 31, 1998
Common Stock, par value $.25 175,750,663
INDEX
Page
Number
Part I. Financial Information
Management's Representation 3
Condensed Consolidated Statements of Earnings
for the three months and six months ended
April 30, 1998 and 1997 4
Condensed Consolidated Balance Sheets
as of April 30, 1998 and October 31, 1997 5
Condensed Consolidated Statements of Cash Flows
for the six months ended April 30, 1998 and 1997 6
Notes to Condensed Consolidated Financial Statements 7-11
Management's Discussion and Analysis of Financial
Condition and Results of Operations 12-15
Part II. Other Information
Legal Proceedings 16
Changes in Securities 16
Exhibits and Reports on Form 8-K 17
Signature 17
Exhibit Index
Exhibit 10.1 Amendment No. 1 to the Supplemental Executive Retirement
Plan of Dresser Industries, Inc.
Exhibit 27 Financial Data Schedule
MANAGEMENT'S REPRESENTATION
The condensed consolidated financial statements included herein have been
prepared by the Company 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. The Company believes that the
disclosures are adequate to make the information presented not misleading.
These condensed consolidated financial statements should be read in
conjunction with the consolidated financial statements, the notes to
consolidated financial statements and management's discussion and analysis
included in the Company's 1997 Annual Report on Form 10-K.
In the opinion of the Company, all adjustments have been included that were
necessary to present fairly the financial position of Dresser Industries, Inc.
and subsidiaries as of April 30, 1998 and October 31, 1997, the results of
operations for the three months and six months ended April 30, 1998 and 1997,
and cash flows for the six months ended April 30, 1998 and 1997. These
adjustments consisted of normal recurring adjustments. The results of
operations for such interim periods do not necessarily indicate the results
for the full year.
<TABLE>
DRESSER INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(In Millions Except Per Share Data)
<CAPTION>
Three Months Ended Six Months Ended
April 30, April 30,
1998 1997 1998 1997
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Revenues $ 2,007.6 $ 1,771.3 $ 3,743.8 $ 3,475.8
Cost of revenues (1,570.2) (1,364.6) (2,908.3) (2,707.3)
Gross earnings 437.4 406.7 835.5 768.5
Selling, engineering,
administrative and general
expenses (267.8) (267.1) (531.0) (525.1)
Special charges - - (30.2) -
Other income (deductions)
Interest expense, net (15.4) (15.2) (29.1) (30.0)
Other, net (.9) (.5) (4.3) (2.7)
Earnings before items
below 153.3 123.9 240.9 210.7
Income taxes (55.2) (43.4) (86.7) (73.8)
Minority interest (5.1) (5.7) .9 (10.0)
Net earnings $ 93.0 $ 74.8 $ 155.1 $ 126.9
Basic earnings per
common share $ .53 $ .42 $ .88 $ .72
Diluted earnings per
common share $ .53 $ .42 $ .88 $ .72
Cash dividends per
common share $ .19 $ .17 $ .38 $ .34
Basic average common shares
outstanding 175.6 176.2 175.5 176.0
Diluted average common
shares outstanding 176.7 176.7 176.5 176.7
</TABLE>
[FN]
<F1>See accompanying Notes to Condensed Consolidated Financial Statements.
</FN>
<TABLE>
DRESSER INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Millions)
<CAPTION>
April 30, October 31,
ASSETS 1998 1997
(Unaudited)
Current Assets
<S> <C> <C>
Cash and cash equivalents $ 123.0 $ 162.8
Notes and accounts receivable, net 1,154.8 1,181.8
Inventories, net 1,027.6 972.3
Deferred income taxes 96.3 96.0
Other current assets 54.1 58.7
Total Current Assets 2,455.8 2,471.6
Investments in and receivables from
unconsolidated affiliates 321.5 320.3
Goodwill, net 822.1 803.7
Deferred income taxes 182.2 181.7
Other assets 216.2 217.8
Property, plant and equipment - at cost 2,736.3 2,658.0
Accumulated depreciation and amortization 1,619.3 1,554.3
Net Property 1,117.0 1,103.7
Total Assets $5,114.8 $5,098.8
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Short-term debt $ 161.0 $ 48.1
Accounts payable 540.6 566.0
Contract advances 278.7 334.6
Accrued compensation and benefits 247.5 253.8
Income taxes 88.9 122.1
Other current liabilities 379.6 362.8
Total Current Liabilities 1,696.3 1,687.4
Long-term debt 758.0 758.0
Employee retirement and postemployment
benefit obligations 608.2 622.3
Deferred compensation, insurance
reserves and other liabilities 152.6 155.2
Minority interest 120.9 143.7
Shareholders' Equity
Common shares 46.2 46.2
Capital in excess of par value 449.8 452.8
Retained earnings 1,704.2 1,615.8
Cumulative translation adjustments (134.4) (112.2)
Pension liability adjustment (3.9) (3.9)
2,061.9 1,988.7
Less treasury shares, at cost 283.1 266.5
Total Shareholders' Equity 1,778.8 1,732.2
Total Liabilities and
Shareholders' Equity $5,114.8 $5,098.8
Actual common shares outstanding 175.7 175.6
</TABLE>
[FN]
<F1>See accompanying Notes to Condensed Consolidated Financial Statements.
</FN>
<TABLE>
DRESSER INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Millions)
<CAPTION>
Six Months Ended
April 30,
1998 1997
(Unaudited)
Cash flows from operating activities:
<S> <C> <C>
Net earnings $ 155.1 $ 126.9
Adjustments to reconcile net earnings
to cash flow:
Depreciation and amortization 123.0 126.1
Equity earnings from
unconsolidated affiliates (50.1) (19.1)
Minority interest (.9) 10.0
Contract advances (44.6) (1.5)
Changes in working capital (120.8) (189.4)
Other - net 20.0 (4.6)
Net cash provided by
operating activities 81.7 48.4
Cash flows from investing activities:
Capital expenditures (129.1) (114.6)
Business acquisitions (25.8) (3.6)
Proceeds from sale of assets 1.2 24.1
Net cash used by investing
activities (153.7) (94.1)
Cash flows from financing activities:
Dividends paid (66.7) (59.8)
Purchases of common shares for
Treasury (39.8) (19.0)
Issuance of common shares 22.7 9.2
Increase in short-term debt 112.9 26.5
Decrease in long-term debt - (1.5)
Net cash provided (used) by
financing activities 29.1 (44.6)
Effect of translation adjustments on
cash 3.1 1.9
Net decrease in cash and cash
equivalents (39.8) (88.4)
Cash and cash equivalents,
beginning of period 162.8 232.4
Cash and cash equivalents,
end of period $ 123.0 $ 144.0
</TABLE>
[FN]
<F1>See accompanying Notes to Condensed Consolidated Financial Statements.
</FN>
DRESSER INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
April 30, 1998
(Unaudited)
NOTE A - INFORMATION BY INDUSTRY SEGMENT (IN MILLIONS)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
April 30, April 30,
1998 1997 1998 1997
REVENUES
Petroleum Products and
<S> <C> <C> <C> <C>
Services $ 709.6 $ 644.6 $1,354.9 $1,247.3
Engineering Services 600.9 444.5 1,101.0 901.7
Energy Equipment 702.0 688.1 1,297.2 1,336.5
Eliminations (4.9) (5.9) (9.3) (9.7)
Total revenues $2,007.6 $1,771.3 $3,743.8 $3,475.8
OPERATING PROFIT
Petroleum Products and
Services $ 104.1 $ 72.8 $ 195.6 $ 142.2
Engineering Services 29.9 21.7 59.1 45.5
Energy Equipment 54.1 63.8 59.2 93.1
Total segment operating
profit 188.1 158.3 313.9 280.8
General corporate expenses (19.4) (19.2) (43.9) (40.1)
Interest expense, net (15.4) (15.2) (29.1) (30.0)
Earnings before taxes and
minority interest $ 153.3 $ 123.9 $ 240.9 $ 210.7
</TABLE>
Beginning this quarter, goodwill amortization has been included as a component
of operating profit by segment. Included in the above operating profit is
goodwill amortization as follows:
<TABLE>
Petroleum Products and
<S> <C> <C> <C> <C>
Services $ 2.3 $ 2.6 $ 4.4 $ 5.2
Engineering Services 2.6 2.7 5.3 5.3
Energy Equipment 2.5 2.5 5.0 4.9
$ 7.4 $ 7.8 $14.7 $15.4
</TABLE>
Also included in the Energy Equipment operating profit for the six months ended
April 30, 1998 are nonrecurring items of $30.2 million.
NOTE B - UNCONSOLIDATED AFFILIATED COMPANIES
The Company has several investments in less than majority owned affiliates.
A summary of the impact of these investments on the condensed consolidated
financial statements follows (in millions):
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
April 30, April 30,
1998 1997 1998 1997
Share of earnings of
unconsolidated affiliates
Ingersoll-Dresser Pump
<S> <C> <C> <C> <C>
(49% owned) $ 6.7 $ 5.9 $ 16.0 $ 15.1
Bredero-Shaw (50% owned) 16.8 - 29.4 -
Other affiliates 2.7 2.2 4.7 4.0
$ 26.2 $ 8.1 $ 50.1 $ 19.1
</TABLE>
<TABLE>
<CAPTION>
April 30, October 31,
1998 1997
Investments in and receivables
from unconsolidated affiliates
<S> <C> <C>
Ingersoll-Dresser Pump (49% owned) $ 135.8 $ 133.2
Bredero-Shaw (50% owned) 137.3 139.0
Other affiliates 48.4 48.1
$ 321.5 $ 320.3
</TABLE>
NOTE C - INVENTORIES
The determination of inventory values and cost of sales under the LIFO method
for interim financial results is based on management's estimates of expected
year-end inventories.
Inventories include the following (in millions):
<TABLE>
<CAPTION>
April 30, October 31,
1998 1997
Finished products and work
<S> <C> <C>
in process $ 797.4 $ 783.2
Raw materials and supplies 230.2 189.1
$1,027.6 $ 972.3
</TABLE>
NOTE D - DIVIDENDS
On May 6, 1998 the Company declared a quarterly dividend of $.19 per share of
common stock payable on June 22, 1998 to shareholders of record on June 1,
1998.
NOTE E - LITIGATION AND CONTINGENCIES
The Company is involved in certain legal actions and claims arising in the
ordinary course of business. See Note J - Commitments and Contingencies - in
the Company's 1997 Annual Report on Form 10-K for a complete discussion of
these matters. A discussion of significant changes subsequent to October 31,
1997 follows.
ASBESTOSIS LITIGATION
The Company has approximately 71,300 pending claims at April 30, 1998 with
approximately 9,000 new claims filed and approximately 7,900 claims resolved
during the second quarter of the fiscal year. Certain settlements previously
reported, covering approximately 19,300 claims, are carried as pending until
releases are signed.
Management recognizes the uncertainties of litigation and the possibility that
one or more adverse rulings could materially impact operating results. However,
based upon the nature of and management's understanding of the facts and
circumstances which gave rise to such actions and claims, management believes
that such litigation and claims will be resolved without material effect on the
Company's financial position or results of operations.
NOTE F - BAROID FINANCIAL INFORMATION
Dresser Industries, Inc. (Dresser) merged with Baroid Corporation (Baroid) on
January 21, 1994. Baroid has ceased filing periodic reports with the
Securities and Exchange Commission. Baroid's 8% Senior Notes (the Notes)
remain outstanding and are fully guaranteed by the Company. As long as the
Notes remain outstanding, summarized financial information of Baroid is
required to be presented as follows (in millions):
<TABLE>
<CAPTION>
April 30, October 31,
1998 1997
Baroid Corporation
<S> <C> <C>
Current assets $1,022.8 $ 919.9
Noncurrent assets 466.4 447.4
Total $1,489.2 $1,367.3
Current liabilities $ 516.6 $ 441.8
Noncurrent liabilities 264.8 300.9
Shareholders' equity 707.8 624.6
Total $1,489.2 $1,367.3
</TABLE>
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
April 30, April 30,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Revenues $ 561.9 $ 474.4 $1,087.3 $ 904.3
Gross earnings $ 154.0 $ 131.5 $ 303.8 $ 254.3
Earnings from operations $ 77.8 $ 59.9 $ 150.5 $ 112.6
Other income (deductions) (2.0) (2.7) (2.6) (7.7)
Earnings before taxes
and minority interests 75.8 57.2 147.9 104.9
Income taxes (27.2) (20.0) (53.2) (36.7)
Minority interest (2.4) (.4) (2.7) (.3)
Net earnings $ 46.2 $ 36.8 $ 92.0 $ 67.9
</TABLE>
NOTE G - PROPOSED MERGER
On February 26, 1998 the Company and Halliburton Company ("Halliburton")
announced that they had entered into a definitive merger agreement in which
Halliburton N.C., Inc., a wholly-owned subsidiary of Halliburton, will be
merged into the Company with the shareholders of the Company receiving one
newly issued share of Halliburton common stock for each common share of the
Company. The transaction will be accounted for as a pooling of interests and
is expected to be treated as tax-free to shareholders of the Company's stock.
The approval process for the proposed merger is proceeding. The two companies
announced on May 8, 1998 that special shareholder meetings to consider and
vote on issues related to the proposed merger will be held in Dallas on
June 25, 1998. Dresser shareholders will consider and vote on the merger at
their meeting.
Dresser and Halliburton are continuing to provide requested information to the
Antitrust Division of the U.S. Department of Justice and to cooperate with
regulatory bodies of certain other countries. The two companies expect to
complete the merger by the fall of 1998.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
CONSOLIDATED RESULTS OF OPERATIONS - THREE MONTHS AND SIX MONTHS ENDED
APRIL 30, 1998 COMPARED TO 1997
Diluted earnings per share for the second quarter of 1998 increased 26 percent
to $.53 per share compared to $.42 per share in 1997. Revenues for the quarter
increased 13 percent to $2.0 billion and operating profit improved 19 percent to
$188.1 million versus the 1997 quarter. Beginning this quarter, goodwill
amortization has been reflected as a component of operating profit. Prior
period operating profit has been restated to reflect goodwill amortization.
The Company began reporting its interest in the Bredero-Shaw joint venture
under the equity method as of the beginning of this fiscal year. The joint
venture results were fully consolidated in 1997. Adjusting for the effect of
deconsolidating Bredero-Shaw, the Company's revenues increased 19 percent, and
operating profit increased 21 percent for the quarter.
For the six months ended April 30, 1998, diluted earnings per share were $.88, a
22 percent increase from $.72 in 1997. The 1998 six-month results include
nonrecurring charges of $12.0 million, or $.07 per share incurred in the first
quarter (after tax and minority interest). These charges relate to capacity
reductions and other efficiency measures at the Dresser-Rand and Ingersoll-
Dresser Pump joint ventures.
For the six months, revenues of $3.7 billion increased 8 percent and operating
profit of $313.9 million was up 12 percent versus last year. Adjusting for the
effect of deconsolidating Bredero-Shaw as noted above, revenues increased 13
percent and operating profits increased 16 percent versus the six months in
1997.
Total backlog of $6.3 billion at April 30, 1998 was an all-time high and was
up 18 percent from a year ago. The backlog included $4.1 billion for
Engineering Services, $1.7 billion for Energy Equipment and $.5 billion for
Petroleum Products and Services.
INDUSTRY SEGMENT ANALYSIS - THREE MONTHS AND SIX MONTHS ENDED APRIL 30, 1998
COMPARED TO 1997
See Note A to Condensed Consolidated Financial Statements for details of
financial information by Industry Segment.
PETROLEUM PRODUCTS AND SERVICES SEGMENT
Revenues of $709.6 million for the quarter and $1.35 billion for the six
months rose 10 percent and 9 percent, respectively, from the same 1997
periods. Operating profit of $104.1 million for the quarter and $195.6 million
for the six months improved 43 percent and 38 percent, respectively. Adjusting
for the effect of deconsolidating Bredero-Shaw (see discussion in Consolidated
Operations above), segment revenues increased 26 percent for the quarter and
27 percent for the six months, while segment operating profit increased
48 percent for the quarter and 47 percent for the six months.
Baroid Drilling Fluids and Sperry-Sun recorded substantial performance gains.
Baroid experienced significant business growth in the Gulf of Mexico and Latin
America. Sperry-Sun benefitted from additional activity in formation evaluation
and directional drilling product lines. Both Baroid and Sperry-Sun had better
product and service mix.
Wellstream and SubSea, the deepwater offshore businesses, also saw significant
growth in revenues and operating profit. The new Wellstream facility in the
U.K. not only generated business in the North Sea but also enabled more of the
capacity at the Panama City, Florida facility to be used to meet additional
product demand in South America.
The Bredero-Shaw joint venture continues its strong performance with higher
activity levels seen in virtually all markets.
ENGINEERING SERVICES SEGMENT (THE M.W. KELLOGG OPERATIONS)
M. W. Kellogg's operating profit increased 38 percent in the quarter to $29.9
million from $21.7 million in the prior year. Revenues in the quarter rose to
$600.9 million from $444.5 million in the prior year, a 35 percent increase.
For the six months, operating profit increased 30 percent to $59.1 million from
$45.5 million last year, and revenues increased 22 percent to $1.1 billion from
$.9 billion last year. The improved performance reflected strong levels of
activity in global LNG, gas processing, oil and gas production and fertilizer
markets. Despite higher bid and proposal costs, operating margins were strong.
Backlog of $4.1 billion at April 30, 1998 was 32 percent higher than a year ago.
The increase in backlog reflected numerous awards, particularly a major multi-
year petrochemical complex for a customer in Singapore. Backlog is comprised of
34 percent LNG, 39 percent oil and gas, 5 percent fertilizers, 20 percent
petrochemicals and 2 percent refining and all other projects.
ENERGY EQUIPMENT SEGMENT
Revenues for the quarter were $702.0 million, up slightly from the prior year.
The quarter's operating profit of $54.1 million was down 15 percent from the
prior year primarily as a result of lower earnings at Dresser-Rand and
Waukesha.
For the six months, revenues of $1.3 billion were down slightly from 1997.
Six-month operating profit, including nonrecurring charges, was $59.2 million,
down 36 percent from 1997. As noted in the discussion of consolidated
operations, Dresser-Rand and Ingersoll-Dresser Pump incurred nonrecurring
charges of $30.2 million ($12.0 million after tax and minority interest) in
the first quarter of 1998. Excluding nonrecurring charges, six-month
operating profit was down 4 percent from 1997. Dresser-Rand is proceeding
under its restructuring plan and has incurred approximately $6.1 million in
charges against the restructuring provision. Costs incurred relate primarily
to employee costs and property costs at its U.K. facility.
Dresser-Rand revenues for the quarter were up, but earnings were down as a
result of lower aftermarket sales. Excluding the nonrecurring charges,
Dresser-Rand six-month earnings were down from 1997 on lower revenues,
primarily due to lower complete machine sales and lower aftermarket sales.
The earnings impact of the lower volume was partially offset by lower costs
due to the restructuring begun in late 1997. Excluding its nonrecurring
charges, Ingersoll-Dresser Pump earnings were up slightly from 1997 for the
quarter and the six months.
Wayne and Energy Valve saw revenues and earnings increase over last year for
both the quarter and the six months. Successful product introductions at the
Wayne fuel dispenser business resulted in substantial increases in earnings over
last year, with growth in the U.S., Europe and South America. Energy Valve
revenues and earnings were up from last year, with favorable variances coming
from cost improvements, better product mix and increased volume. Waukesha
earnings were down significantly from last year due to an unfavorable product
mix, cost increases and aggressive discounting by competitors.
LIQUIDITY, CAPITAL RESOURCES AND FINANCIAL CONDITION
Operating activities generated positive cash flow of $81.7 million during the
six months ended April 30, 1998 compared with $48.4 million generated a year
ago. The improvement between years was essentially due to favorable working
capital changes, partially offset by a decrease in contract advances at
Dresser-Rand and M.W. Kellogg. Short-term debt increased $112.9 million
during the six months. Significant expenditures during the six months
included $129.1 million for capital expenditures, $39.8 million for common
share purchases and $66.7 million for dividends.
Total debt was $919.0 million as of April 30, 1998 compared with $806.1 million
at October 31, 1997. Total debt was 34 percent of total book capitalization as
of April 30, 1998 compared with 32 percent as of October 31, 1997. Net debt to
net book capitalization was 31 percent at April 30, 1998 compared with 27
percent at October 31, 1997.
LEGAL AND ENVIRONMENTAL MATTERS
The Company is currently involved in a number of lawsuits and also has been
identified as a potentially responsible party in a number of Superfund sites.
Note E to Condensed Consolidated Financial Statements includes significant
changes since October 31, 1997.
FORWARD-LOOKING INFORMATION
In accordance with the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995, the Company notes that the statements in this
Form 10-Q and elsewhere, which are forward-looking and which provide other
than historical information, involve risks and uncertainties that may impact
the Company's results of operations. These forward-looking statements
include, among others, statements concerning the Company's general business
strategies, financing decisions, corporate structure, backlog, operating
trends, industry trends, cost reduction strategies and their results,
expectations for funding capital expenditures and operations in future
periods. The Company also continues to face many risks and uncertainties
including: litigation, environmental laws, operations in high risk countries,
technological and structural changes in the industries served by the Company,
changes in the price of oil and natural gas, changes in capital spending by
customers in the hydrocarbon industry for exploration, development,
production, processing and refining and pipeline delivery networks. The
risks and uncertainties inherent in these forward-looking statements could
cause actual results to differ materially from those expressed in or implied
by these statements.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In connection with the previously announced proposed merger between
the Company and Halliburton Company, the following three lawsuits
have been filed: GRILL V. DRESSER INDUSTRIES, INC. (Del. Ct.
Chancery, C.A. No. 16208), WRIGG V. BRADFORD (Del. Ct. Chancery, C.A.
No. 16209) and GREEN V. DRESSER INDUSTRIES, INC. (Del. Ct.
Chancery, C.A. No. 16222). The Company and its directors have been
named as defendants in these lawsuits filed in late February and
early March in the Delaware Court of Chancery.
The lawsuits each purport to be a class action filed on behalf of
the Company's stockholders and allege that the consideration to be
paid to stockholders in the proposed merger between the Company and
Halliburton Co. is inadequate and does not reflect the true value of
the Company. The complaints also each allege that the directors of
the Company have breached their fiduciary duties in approving the
merger. The GRILL and GREEN actions further allege self-dealing on
the part of the individual defendants and assert that the directors
are obliged to conduct an auction to assure that stockholders
receive the maximum realizable value for their shares. All three
actions seek preliminary and permanent injunctive relief as well
as damages.
The parties to the three lawsuits have agreed to the terms of a
proposed Order of Consolidation which, if entered by the Court, will
require the filing of a consolidated and amended complaint. The
various defendants' time to respond to the original complaints in
the three actions has been extended by agreement of the parties in
anticipation of the filing of an amended complaint.
The Company believes that the lawsuits are without merit and intends
to defend the lawsuits vigorously.
ITEM 2. CHANGES IN SECURITIES
(c) In May 1998, the Company issued 83 shares of Common Stock
($.25 par value) to one officer of the Company in connection
with exercises of stock options. Under the terms of the
Company's 1989 Restricted Incentive Stock Plan (Plan), one
restricted share will be issued for every five shares of the
related stock option exercised. Stock issued pursuant to the
Plan is not registered.
No consideration for the unregistered shares was exchanged.
In issuing the above securities, the Company relied on the
exemption from the registration and prospectus delivery
requirements of the Securities Act of 1933 (the Securities Act)
provided by Section 4(2) of the Securities Act.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
Exhibit 10.1 Amendment No. 1 to the Supplemental Executive
Retirement Plan of Dresser Industries, Inc.
Exhibit 27 Financial Data Schedule.
(b) No reports on Form 8-K were filed during the quarter ended
April 30, 1998.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DRESSER INDUSTRIES, INC.
By: /s/ Kenneth J. Kotara
Kenneth J. Kotara
Controller
Dated: June 12,1998
EXHIBIT INDEX
EXHIBIT DESCRIPTION
10.1 Amendment No. 1 to the Supplemental Executive Retirement Plan of
Dresser Industries, Inc.
27 Financial Data Schedule. (Pursuant to Item 601(c)(iv) of Regulation
S-K, the Financial Data Schedule is not deemed to be "filed" for
purposes of Section 11 of the Securities Act of 1933, as amended, or
Section 18 of the Securities Exchange Act of 1934, as amended.)
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-END> APR-30-1998
<CASH> 123,000
<SECURITIES> 0
<RECEIVABLES> 1,154,800
<ALLOWANCES> 0
<INVENTORY> 1,027,600
<CURRENT-ASSETS> 2,455,800
<PP&E> 2,736,300
<DEPRECIATION> 1,619,300
<TOTAL-ASSETS> 5,114,800
<CURRENT-LIABILITIES> 1,696,300
<BONDS> 758,000
0
0
<COMMON> 46,200
<OTHER-SE> 1,732,545
<TOTAL-LIABILITY-AND-EQUITY> 5,114,800
<SALES> 3,693,700
<TOTAL-REVENUES> 3,743,800
<CGS> 2,908,300
<TOTAL-COSTS> 3,439,300
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 36,100
<INCOME-PRETAX> 240,900
<INCOME-TAX> 86,700
<INCOME-CONTINUING> 155,100
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 155,100
<EPS-PRIMARY> .88
<EPS-DILUTED> .88
</TABLE>
AMENDMENT NO. 1
TO THE SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
OF DRESSER INDUSTRIES, INC.
The Supplemental Executive Retirement Plan of Dresser
Industries, Inc., as heretofore amended by restatement effective
January 1, 1998, is further amended effective May 6, 1998, as set
forth below:
1. Section 1.5 in its entirety shall be deleted.
2. Section 4.2 in its entirety shall be deleted.
3. The last sentence of Section 4.4 shall be deleted.
