SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarter Ended September 30, 1995
Commission file number 1-7823
ANHEUSER-BUSCH COMPANIES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 43-1162835
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Busch Place, St. Louis, Missouri 63118
(Address of principal executive offices) (Zip Code)
314-577-2000
(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.
$1 Par Value Common Stock - 254,326,534 shares as of October 31, 1995
<PAGE>2
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT OF INCOME
AND RETAINED EARNINGS
Anheuser-Busch Companies, Inc., and Subsidiaries (Unaudited)
(In millions, except per share data)
3RD QUARTER ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Sales........................................ $3,897.5 $3,759.3 $10,780.2 $10,383.3
Less federal and state excise taxes........ 461.3 461.4 1,295.4 1,288.7
-------- -------- -------- ---------
Net sales.................................... 3,436.2 3,297.9 9,484.8 9,094.6
Cost of products and services.............. 2,180.1 2,062.0 6,091.5 5,808.4
-------- -------- -------- ---------
Gross profit................................. 1,256.1 1,235.9 3,393.3 3,286.2
Marketing, distribution and administrative
expenses................................. 653.7 635.7 1,792.8 1,724.4
-------- -------- -------- ---------
Operating income............................. 602.4 600.2 1,600.5 1,561.8
Other income and expenses:
Interest expense........................... (54.7) (54.3) (169.2) (165.1)
Interest capitalized....................... 6.0 5.6 16.8 15.2
Interest income............................ 2.3 1.3 6.6 2.7
Other income/(expense), net................ 3.9 (3.5) 3.0 3.2
-------- -------- -------- --------
Income before income taxes................... 559.9 549.3 1,457.7 1,417.8
Provision for income taxes:.................. (220.2) (219.9) (572.8) (561.4)
-------- ------- -------- --------
Net income................................... 339.7 329.4 884.9 856.4
Retained earnings, beginning of period....... 6,996.6 6,359.4 6,656.7 6,023.4
Common stock dividends (per share: 3rd
quarter, 1995--$.44; 1994--$.40; nine
months, 1995--$1.24; 1994--$1.12).......... (112.2) (104.2) (317.5) (295.2)
-------- -------- -------- --------
Retained earnings, September 30.............. $7,224.1 $6,584.6 $7,224.1 $6,584.6
======== ======== ======== ========
Primary earnings per share................... $ 1.32 $ 1.26 $ 3.43 $ 3.23
======== ======== ======== ========
Fully diluted earnings per share............. $ 1.31 $ 1.24 $ 3.40 $ 3.20
======== ======== ======== ========
<FN>
See accompanying Notes to Consolidated Financial Statements on Page 3.
</TABLE>
2
<PAGE>3
Notes to Consolidated Financial Statements
1. Unaudited Financial Statements: The accompanying unaudited financial
statements have been prepared in accordance with generally accepted
accounting principles and applicable SEC guidelines pertaining to
interim financial information. These statements should be read in
conjunction with the financial statements and notes thereto included
in the company's Annual Report to Shareholders for the year ended
December 31, 1994. In the opinion of the company's management, all
adjustments, consisting of normal recurring adjustments, necessary for
a fair presentation of the financial statements have been included
therein.
2. Earnings Per Share: Primary earnings per share of common stock are based
on the weighted average number of shares of common stock outstanding
during the period. Fully diluted earnings per share of common stock
assume the conversion of the company's 8% Convertible Debentures due
1996 and the elimination of related after-tax interest expense.
3
<PAGE>4
CONSOLIDATED BALANCE SHEET
Anheuser-Busch Companies, Inc., and Subsidiaries (Unaudited)
(In millions)
SEPTEMBER 30,
-----------------
1995 1994
---- ----
ASSETS
CURRENT ASSETS:
Cash and marketable securities....... $ 91.6 $ 81.4
Receivables, less allowance for
doubtful accounts.................. 929.9 898.1
Inventories--
Raw materials and supplies......... 419.6 338.2
Work in progress................... 90.8 113.7
Finished goods..................... 156.5 132.6
Total inventories................. 666.9 584.5
Other current assets................. 349.2 324.9
--------- ---------
Total current assets............... 2,037.6 1,888.9
INVESTMENTS AND OTHER ASSETS.......... 1,805.3 1,724.8
PLANT AND EQUIPMENT, NET.............. 7,691.7 7,358.5
--------- ---------
TOTAL ASSETS....................... $11,534.6 $10,972.2
========= =========
4
<PAGE>5
LIABILITIES AND SHAREHOLDER'S EQUITY
(in millions)
SEPTEMBER 30,
------------------
1995 1994
---- ----
CURRENT LIABILITIES:
Accounts payable......................... $ 753.7 $ 717.2
Accrued salaries, wages and benefits..... 334.4 289.9
Accrued taxes, other than income taxes... 122.1 159.6
Restructuring accrual.................... 13.5 84.9
Other current liabilities................ 376.3 426.8
--------- ---------
Total current liabilities.............. 1,600.0 1,678.4
--------- ---------
POSTRETIREMENT BENEFITS.................... 638.4 632.2
--------- ---------
LONG-TERM DEBT............................. 3,156.5 2,949.9
--------- ---------
DEFERRED INCOME TAXES...................... 1,358.8 1,265.8
--------- ---------
SHAREHOLDERS EQUITY:
Common stock............................. 345.9 343.7
Capital in excess of par value........... 937.9 845.7
Retained earnings........................ 7,224.1 6,584.6
Foreign currency translation adjustment.. (9.1) (31.5)
--------- --------
8,498.8 7,742.5
Treasury stock, at cost.................. (3,370.8) (2,919.2)
ESOP debt guarantee offset............... (347.1) (377.4)
--------- --------
4,780.9 4,445.9
--------- ---------
COMMITMENTS AND CONTINGENCIES............. -- --
TOTAL LIABILITIES AND EQUITY.......... $11,534.6 $10,972.2
========= =========
5
<PAGE>6
CONSOLIDATED STATEMENT OF CASH FLOWS
Anheuser-Busch Companies, Inc., and Subsidiaries (Unaudited)
(In millions, except per share data)
Nine months ended September 30,
1995 1994
---- ----
CASH FLOW FROM OPERATING ACTIVITIES:
Net income...................................... $ 884.9 $ 856.4
Adjustments to net income to arrive at net cash
provided by operations:
Depreciation and amortization............... 482.6 465.7
Increase in deferred income taxes........... 100.5 95.3
Decrease in noncash working capital......... (309.8) (276.8)
Other, net.................................. 42.9 122.0
------- -------
Cash provided by operating activities........... 1,201.1 1,262.6
------- -------
CASH FLOW FROM INVESTING ACTIVITIES:
Capital expenditures............................ (752.6) (542.2)
New business acquisitions....................... (59.2) (17.2)
------- -------
Cash used for investing activities.............. (811.8) (559.4)
------- -------
CASH FLOW FROM FINANCING ACTIVITIES:
Issuance of long-term debt...................... 375.1 49.6
Decrease in long-term debt...................... (266.7) (102.2)
Acquisition of treasury stock................... (328.2) (439.6)
Dividends paid to stockholders.................. (317.5) (295.2)
Shares issued under stock plans................. 83.2 38.2
------- -------
Cash used for financing activities.............. (454.1) (749.2)
------- -------
Net decrease in cash and marketable securities
during the period............................. (64.8) (46.0)
Cash and marketable securities at beginning of
period........................................ 156.4 127.4
------- -------
Cash and marketable securities at end of period. $ 91.6 $ 81.4
======= =======
A more adequate understanding of the company's financial position and
business can be gained by reference to the Anheuser-Busch Companies, Inc.
Annual Report on Form 10-K for the fiscal year ended December 31, 1994.
6
<PAGE>7
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
INTRODUCTION
- ------------
This discussion summarizes the significant factors affecting the
consolidated operating results, financial condition and liquidity (cash
flow) of Anheuser-Busch Companies, Inc. for the third quarter and nine
months ended September 30, 1995 compared to the third quarter and nine
months ended September 30, 1994 and the year ended December 31, 1994. This
discussion should be read in conjunction with the consolidated financial
statements and notes thereto included in the company's Annual Report to
Shareholders for the year ended December 31, 1994. Additional information
concerning the company's consolidated financial and operating results is
contained in the Letter to Shareholders section of the Third Quarter 1995
Shareholders Report.
On October 25, 1995, Anheuser-Busch announced a series of moves to
enhance shareholder value:
1. Selling the snack food business.
2. Consolidating brewing capacity for greater efficiency,
resulting in the closing of the company's Tampa brewery.
3. Selling the St. Louis National Baseball Club (Cardinals).
4. Lowering beer wholesaler inventories in order to achieve
greater system-wide efficiencies and reduce costs.
These initiatives are detailed in the "Other Information" section
of this discussion.
7
<PAGE>8
OPERATIONS
- ----------
Sales and Beer Volume
- ---------------------
Gross sales for the third quarter of 1995 were $3.9 billion, an increase
of $139 million, or 3.7%, over gross sales of $3.8 billion for the third
quarter of 1994. Gross sales for the first nine months of 1995 were $10.8
billion compared to $10.4 billion for the first nine months of 1994, an
increase of $397 million, or 4.3%.
Net sales for the third quarter of 1995 were $3.4 billion, an increase
of $138 million, or 4.2%, over net sales of $3.3 billion for the third
quarter of 1994. Net sales for the first nine months of 1995 were $9.5
billion, an increase of $390 million or 4.3% over net sales of $9.1 billion
for the first nine months of 1994. The difference between gross sales and
net sales represents federal and state excise taxes paid by the company on
beer sales.
The increase in gross and net sales during the period was driven
primarily by higher beer sales and reflects beer volume growth for
established premium brands and new brand introductions. Sales-to-retailers
were up over 1% in the third quarter with August being a record month for
sales-to-retailers. During the third quarter, Anheuser-Busch's core
premium brands (the Budweiser and Michelob families) gained momentum, with
Bud Light and Michelob Light both growing at double-digit rates. Bud Ice
sales have grown since its February introduction, and several new specialty
brands were introduced during the third quarter. This is occurring in
conjunction with an improved pricing outlook.
Anheuser-Busch, Inc., the company's brewing subsidiary and largest
contributor to consolidated sales, reported record third quarter
sales-to-wholesalers of 24.2 million barrels, up slightly compared to the
third quarter of 1994. Sales-to-wholesalers for the first nine months of
1995 were a record 68.1 million barrels compared to 67.8 million barrels
during the first nine months of 1994, an increase of 0.4%. The previously
announced Fall price increases have been implemented in seven states, and
8
<PAGE>9
the environment appears favorable for the company's planned February 1996
price increase in the remainder of the country.
International beer performance increased during the first nine months
of 1995, led by continuing sales expansion in the United Kingdom and
Ireland. International brewing's contribution to company profitability for
the first nine months was up at a double-digit pace versus the same period
in 1994.
The company has introduced or announced seven new beer brands this year.
Busch Ice and Natural Ice were introduced in selected regional markets.
Michelob Amber Bock has been introduced to the national market and a special
Christmas Brew will be added for the important holiday season. Three
"American Original" specialty beers (Faust, Muenchener and Black & Tan)
based on recipes of beers originally brewed by Adolphus Busch in the late
1800's, were introduced for test marketing in Seattle and Denver.
For the first nine months of 1995 Anheuser-Busch's beer volume
sales-to-wholesalers accounted for 44.3% of total United States brewing
industry sales (including import and export brews), as estimated from
information provided by The Beer Institute. This compares to a share of
44.0 % for the same period last year, an increase of .3 share point.
Campbell Taggart, Inc. and Eagle Snacks
- ---------------------------------------
Campbell Taggart, Inc., the company's baking subsidiary, experienced
lower profits for both the third quarter and first nine months of 1995
compared to the same periods of the previous year. However, this was
primarily because of higher raw material costs, costs associated with the
restructuring of unprofitable bakery locations and increased expenses
related to implementing productivity improvements. Underlying profit
margins for Campbell Taggart's core businesses and international operations
are up for both the third quarter and first nine months of 1995.
9
<PAGE>10
As announced in the second quarter, Campbell Taggart is preparing for
its spin-off from Anheuser-Busch. In anticipation of the spin-off, Campbell
Taggart is continuing to restructure its bakery operations and focus on its
core businesses. The spin-off is on schedule for completion in the first
half of 1996.
Eagle Snacks, the company's snack food subsidiary, reported operating
losses for the third quarter and first nine months of 1995 as compared to
last year.
Cost of Products and Services
- -----------------------------
Cost of products and services for the third quarter of 1995 was $2.2
billion, an increase of 5.7% compared to the third quarter of 1994. Cost
of products and services increased $283.1 million, or 4.9%, for the first
nine months of 1995 compared to the prior year. The increase in cost of
products and services is primarily attributable to the increase in beer
sales volume and higher packaging costs.
Gross profit as a percentage of net sales was 36.6% for the third
quarter of 1995 compared to 37.5% for the same period of 1994. Gross
profit as a percentage of net sales was 35.8% for the first nine months of
1995 compared to 36.1% for the corresponding 1994 period.
Marketing, Distribution and Administrative Expenses
- ---------------------------------------------------
Marketing, distribution and administrative expenses for the third
quarter of 1995 were $653.7 million compared with $635.7 million for the
third quarter of 1994, an increase of $18.0 million or 2.8%. Marketing,
distribution and administrative expenses during the first nine months of
1995 were $1.79 billion, compared to $1.72 billion during the first nine
months of 1994, an increase of $68.3 million or 4.0%. These expenses
increased primarily due to higher marketing expenses associated
with new product introductions and the company's expanding international
business.
10
<PAGE>11
Financial Summaries for Third Quarter and Nine Months
- -----------------------------------------------------
- -------------------------------------------------------------------------
| Third Quarter 1995 vs. 1994
|($ in millions, except per share)
- ---------------------------------------|---------------------------------
| 1995 1994 Increase
|=================================
Operating Income | $602.4 $600.2 $ 2.1
Pre-tax Income/(Loss) | 559.8 549.3 10.6
Net Income/(Loss) | 339.7 329.4 10.2
- ---------------------------------------|---------------------------------
Fully-diluted Earnings/(Loss) Per Share| $ 1.31 $ 1.24 $ .07
- -------------------------------------------------------------------------
- -------------------------------------------------------------------------
| Nine Months 1995 vs. 1994
|($ in millions, except per share)
- ---------------------------------------|---------------------------------
| 1995 1994 Increase
|=================================
Operating Income | $1,600.5 $1,561.8 $38.8
Pre-tax Income | 1,457.7 1,417.8 39.9
Net Income | 884.9 856.4 28.5
- ---------------------------------------|---------------------------------
Fully-diluted Earnings Per Share | $ 3.40 $ 3.20 $ .20
- -------------------------------------------------------------------------
Operating Income
- ----------------
Operating income was $602.4 million for the third quarter of 1995, a
0.4% increase when compared to the third quarter of 1994. Operating income
was $1.60 billion for the first nine months of 1995, a 2.5% increase
compared to the first nine months of 1994.
Higher beer packaging material costs, losses at Eagle Snacks and
one-time charges by Campbell Taggart were offset by earnings growth in the
company's other businesses.
Interest Capitalized
- --------------------
Interest capitalized increased $0.3 million for the quarter and
increased $1.6 million for the first nine months of 1995, as compared to
the corresponding periods of 1994. The increase in interest capitalized
for the first nine months of 1995 is due to increased construction activity
related to brewery modernizations.
11
<PAGE>12
Income Taxes
- ------------
The effective income tax rate was 39.3% of pre-tax earnings for both the
third quarter and first nine months of 1995, as compared to 40.0% for the
third quarter and 39.6% for the first nine months of 1994. The decline in
the effective income tax rate in 1995 as compared to 1994 is primarily
related to lower non-deductible expenses.
Net Income
- ----------
Net income for the third quarter of 1995 was $339.7 million, an
increase of $10.2 million, or 3.1%, compared to the third quarter of 1994.
For the first nine months of 1995, net income was $884.9 million, or an
increase of 3.3% compared to the prior year.
Earnings Per Share
- ------------------
Fully diluted earnings per share for the third quarter of 1995 were $1.31,
an increase of 5.6% as compared to the third quarter of 1994. Fully diluted
earnings per share for the first nine months of 1995 were $3.40, an increase
of 6.3% over the prior year.
Fully diluted earnings per share assume the conversion of the company's
8% Convertible Debentures due 1996 and the elimination of related after-tax
interest expense. The difference between the percentage change in net income
and the percentage change in earnings per share was due to fewer shares
outstanding as a result of the company's continuing share repurchase program.
FINANCIAL CONDITION
- -------------------
Cash and marketable securities at September 30, 1995 were $92 million, an
increase of $10 million from the September 30, 1994 level and a decrease of $65
million from the December 31, 1994 level. The increase in cash and marketable
securities from the September 1994 level is due primarily to cash used to
12
<PAGE>13
support the company's capital expenditure and share repurchase programs,
offset by cash generated by operations.
Total short-term and long-term debt increased $207 million during the
twelve month period ended September 30, 1995. The net increase in debt
during this period is primarily due to the following:
Debt Issuance ...... $540 million
-------------
- $200 million of 10 year 6.75% coupon fixed rate debt
- $150 million of 20 year 7.25% coupon fixed rate debt
- $100 million of 10 year 7% coupon fixed rate debt
- $38 million of medium-term notes
- $28 million of commercial paper
- $24 million of foreign currency denominated floating rate debt
Debt Reduction ......$333 million
--------------
- $155 million of medium-term notes
- $100 million of 8.75% notes
- $30 million ESOP debt repayment (guarantee)
- $48 million other debt
At September 30, 1995, $645 million of commercial paper borrowings
outstanding were classified as long-term debt. This debt is expected to be
maintained on a long-term basis with ongoing credit provided by the company's
revolving credit agreements.
Capital expenditures during the third quarter and first nine months of
1995 were $280 million and $753 million, respectively, as compared to $105
million and $542 million for the comparable periods of 1994. The company
anticipates that capital expenditures for 1995 will approximate $1 billion.
13
<PAGE>14
ENVIRONMENTAL MATTERS
- ---------------------
The company is subject to federal, state and local environmental
protection laws and regulations and is operating within such laws or is
taking action aimed at assuring compliance with such laws and regulations.
Compliance with these laws and regulations is not expected to materially
affect the company's competitive position. None of the Environmental
Protection Agency (EPA) designated clean-up sites for which Anheuser-Busch
has been identified as a Potentially Responsible Party (PRP) would have a
material impact on the company's consolidated financial statements.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
As described in the Company's Form 10-Q for the quarter ended March 31,
1995, a federal grand jury had been investigating the sale of bread and bread
products, principally in the State of Texas. The federal grand jury has
expired, taking no action against Campbell Taggart, Inc. or Campbell Taggart
Baking Companies, Inc.
Item 5. Other Information
Initiatives to Enhance Shareholder Value
- ----------------------------------------
In order to enhance future profitability and devote maximum attention to
the company's core domestic and international beer business, the following
initiatives were approved by the Board of Directors on October 25:
1. Selling the Snack Food Business
-------------------------------
Anheuser-Busch has decided to sell the snack food business. The company
has received serious expressions of interest to purchase Eagle Snacks from
qualified parties.
14
<PAGE>15
It is anticipated that the sale of Eagle Snacks will result in a
substantial write-off which will be recognized in the fourth quarter of 1995.
The book value of Eagle Snacks is $240 million and it will lose at least $25
million in 1995. The sale of Eagle Snacks, along with the spin-off of
Campbell Taggart, will effectively eliminate Anheuser-Busch's food products
segment, thereby allowing the company to devote maximum attention to its
core businesses.
2. Consolidation of Brewing Capacity
---------------------------------
Through full production at the Cartersville brewery and its ongoing
efficiency program, Anheuser-Busch has been able to add a significant amount
of efficient, lower cost capacity. The Tampa brewery is the company's
highest cost per barrel brewery.
Accordingly, the Tampa brewery will be closed and cease production by
the end of the year resulting in an estimated pretax write-off in the fourth
quarter of 1995 of $150 million ($.36 per share), but will result in $33
million a year in operational cost savings.
Earlier this year, the Cartersville brewery, the most efficient
facility of its kind in the world, brought 3 million barrels of expansion
capacity on stream. As previously announced, Anheuser-Busch will spend $2
billion on a benchmarking program to bring all production facilities as near
as possible to the efficiency levels achieved at the Cartersville brewery.
3. Sale of St. Louis National Baseball Club (Cardinals)
----------------------------------------------------
Anheuser-Busch has decided to sell the St. Louis National Baseball Club
(Cardinals) in order to better focus management's attention on its core
businesses. Sale of the club will include Busch Memorial Stadium and several
nearby parking garages owned by the company's Civic Center Corp. subsidiary
in downtown St. Louis.
15
<PAGE>16
In 1995, because of a strike shortened season and the team's performance,
the Cardinals will incur an operating loss of $12 million.
Anheuser-Busch determined that its corporate objectives, which are highly
focused on producing value for the company's shareholders, are not consistent
with the needs of the baseball team. The company concluded that continued
ownership of the club would divert significant management efforts away from
the needs of the company's core businesses.
It is anticipated that the sale of the Cardinals will result in a
substantial gain which will be recognized when the sale is completed.
4. Beer Wholesaler Inventory Reduction Program
-------------------------------------------
In a move that will minimize inventory system costs, Anheuser-Busch will
reduce wholesaler inventories during the final two months of the year.
This lower inventory level will result in a $12 million system-wide
cost savings by both Anheuser-Busch and wholesalers through improved
scheduling, lower transportation costs, and reduced working capital
requirements. The move is also expected to improve production scheduling at
the breweries and ensure that the company continues to have the freshest
beer in the market.
Lowering wholesaler inventories will require a one-time reduction in
production levels at the company's breweries. As a result, total shipments
will be down approximately 1.1 million barrels, or 5% in the fourth quarter
of 1995. This will reduce operating profits by approximately $71 million.
For all of 1995, shipments will be reduced about 1 percent. However, sales-
to-retailers --- a more accurate measure of consumer demand --- will not be
affected and will reflect record levels for the year.
16
<PAGE>17
These actions, along with the spin-off of Campbell Taggart, will make
Anheuser-Busch a more focused and competitive company.
The company plans to achieve three major objectives in coming years.
First, the company will continue to gain an increased share of the brewing
industry margin pool in the United States. Second, Anheuser-Busch will
continue to globalize its beer operations. Finally, we will support the
growth of our packaging and entertainment subsidiaries. Focusing on these
objectives will permit the company to capitalize on its market leadership
and competitive advantages in its core brewing business, gain efficiencies
through the manufacture of beverage containers, and enhance profitability
through the entertainment of more than 20 million guests annually.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
--------
4 - No instruments defining the rights of holders of long-term
debt are filed since the total amount of securities
authorized under any such instruments does not exceed 10%
of the total assets of the Company on a consolidated basis.
The Company agrees to furnish a copy of such instruments to
the Securities and Exchange Commission upon request.
12 - Ratio of Earnings to Fixed Charges
27 - Financial Data Schedule
(b) Reports on Form 8-K
-------------------
Items Reported Date of Report
-------------- --------------
Item 5 (Other Events) and July 26, 1995
Item 7 (Pro Forma Financial Statements)
17
<PAGE>18
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.
ANHEUSER-BUSCH COMPANIES, INC.
(Registrant)
/s/ Jerry E. Ritter
----------------------------------------
Jerry E. Ritter
Executive Vice President -
Chief Financial and Administrative Officer
(Chief Financial Officer)
November 13, 1995
/s/ Gerald C. Thayer
----------------------------------------
Gerald C. Thayer
Vice President and Controller
(Chief Accounting Officer)
November 13, 1995
<PAGE>19
INDEX TO EXHIBITS
Exhibit No. Exhibit
----------- -------
12 Ratio of Earnings to Fixed Charges
27 Financial Data Schedule
EXHIBIT 12
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of the Company's earnings
to fixed charges, on a consolidated basis, for the periods
indicated:
Nine Months
Ended
Sept. 30 Year Ended December 31
------------- ------------------------------------------
1995 1994 1994 1993 1992 1991 1990
---- ---- ---- ---- ---- ---- ----
8.3X 8.4X 7.6X 5.2X 1/ 7.8X 6.4X 5.1X
For purposes of this ratio, earnings have been calculated by adding
to income before income taxes the amount of fixed charges. Fixed
charges consist of interest on all indebtedness, amortization of
debt discount and that portion of rental expense deemed to
represent interest.
1/ Includes the impact of the one-time, pretax restructuring charge
of $565 million as a result of the Company's Profitability
Enhancement Program. Excluding the non-recurring special charge,
the ratio would have been 7.6X for 1993.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from
the Form 10-Q for the quarter ended September 30, 1995 and is qualified
in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 75,936
<SECURITIES> 15,617
<RECEIVABLES> 939,838
<ALLOWANCES> 9,917
<INVENTORY> 666,916
<CURRENT-ASSETS> 349,168
<PP&E> 12,842,526
<DEPRECIATION> 5,150,856
<TOTAL-ASSETS> 11,534,567
<CURRENT-LIABILITIES> 1,599,988
<BONDS> 3,156,474
<COMMON> 345,891
0
0
<OTHER-SE> 4,435,022
<TOTAL-LIABILITY-AND-EQUITY> 11,534,567
<SALES> 9,484,814
<TOTAL-REVENUES> 10,780,244
<CGS> 6,091,490
<TOTAL-COSTS> 7,884,287
<OTHER-EXPENSES> (2,975)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 169,223
<INCOME-PRETAX> 1,457,695
<INCOME-TAX> 572,787
<INCOME-CONTINUING> 884,908
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 884,908
<EPS-PRIMARY> 3.43
<EPS-DILUTED> 3.40
</TABLE>
