<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[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 1-8247
SCHULLER CORPORATION
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 84-0856796
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
717 17th Street
Denver, Colorado 80202
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(303) 978-2000
--------------
(Registrant's telephone number, including area code)
MANVILLE CORPORATION
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
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 [ ]
At May 9, 1996, there were 162,581,704 shares of the registrant's
common stock outstanding.
<PAGE> 2
*PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
* "Schuller" or the "Company" when used in this report refers to
Schuller Corporation, incorporated in the State of Delaware in 1991, and
includes, where applicable, its consolidated subsidiaries.
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SCHULLER CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
(Thousands of dollars)
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
ASSETS 1996 1995
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Current Assets
Cash and equivalents (Notes 2, 3, 7 and 11) $1,405,968 $ 310,809
Marketable securities, at cost
which approximates market 69,367 116,958
Receivables, net 213,367 195,780
Inventories 107,160 77,121
Prepaid expenses 5,359 5,807
Deferred tax assets 30,109 31,233
--------------------------------------
Total Current Assets 1,831,330 737,708
Property, Plant and Equipment,
net of accumulated depreciation
of $583,964 and $580,022, respectively 751,267 717,410
Deferred Tax Assets 203,743 414,711
Other Assets 245,284 228,629
Net Assets Held for Sale 375,601
--------------------------------------
$3,031,624 $2,474,059
=================================================================================================================
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
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SCHULLER CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET (Continued)
(Thousands of dollars)
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
LIABILITIES 1996 1995
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Current Liabilities
Accounts and notes payable $ 123,117 $ 95,282
Compensation and benefits 103,073 104,550
Income taxes 40,176 28,768
Accrued dividend - common stock 970,425
Cumulative Preference Stock, Series B
Redemption (Note 11) 178,638
Other accrued liabilities 136,799 103,005
--------------------------------------
Total Current Liabilities 1,552,228 331,605
Long-Term Debt, less current portion 433,503 447,007
Postretirement Benefits Other Than
Pensions 207,678 204,445
Deferred Income Taxes and
Other Noncurrent Liabilities 350,321 310,536
--------------------------------------
2,543,730 1,293,593
--------------------------------------
Contingencies and Commitments (Notes 4 and 7)
STOCKHOLDERS' EQUITY
- -----------------------------------------------------------------------------------------------------------------
Cumulative Preference Stock, Series B (Note 11) 178,638
Common Stock 1,554 1,228
Treasury Stock, at cost (4,701) (1,999)
Capital in Excess of Par Value 515,914 1,013,505
Unearned Restricted Stock Compensation (3,427)
Accumulated Deficit (54,312) (39,322)
Pension Liability Adjustment (841) (841)
Cumulative Currency Translation Adjustment 30,280 32,684
--------------------------------------
487,894 1,180,466
--------------------------------------
$3,031,624 $2,474,059
=================================================================================================================
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
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<PAGE> 5
SCHULLER CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF INCOME (LOSS)
(Thousands of dollars, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months
Ended March 31,
-------------------------------------
1996 1995
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net Sales $ 326,109 $ 328,401
Cost of Sales 232,550 228,666
Selling, General and Administrative 36,830 35,857
Research, Development and Engineering 7,053 6,472
Other Income (Expense), net 5,615 (4,558)
-------------------------------------
Income from Operations 55,291 52,848
Interest Income 6,474 3,887
Interest Expense 12,588 12,180
Profit Sharing Expense (Note 8) 6,562 7,487
-------------------------------------
Income from Continuing Operations
before Income Taxes 42,615 37,068
Income Tax Expense (Benefit) (Note 6) (85,763) 16,571
-------------------------------------
Income from Continuing Operations 128,378 20,497
Income from Discontinued Operations,
net of tax and Minority Interest 8,834
Gain on Disposal of Discontinued Operations,
net of tax (Note 7) 177,159
-------------------------------------
Income before Extraordinary Item 305,537 29,331
Extraordinary Loss on Trust Settlements,
net of tax (Note 8) (314,296)
-------------------------------------
Net Income (Loss) (8,759) 29,331
Preference Stock Dividends (6,231) (6,231)
-------------------------------------
Net Income (Loss) Applicable to Common Stock $ (14,990) $ 23,100
=================================================================================================================
EARNINGS (LOSS) PER COMMON SHARE (AFTER
PREFERENCE STOCK DIVIDENDS)
- -----------------------------------------------------------------------------------------------------------------
Primary and Fully Diluted:
Income from Continuing Operations $ .98 $.12
Income from Discontinued Operations,
net of tax and Minority Interest .07
Gain on Disposal of Discontinued Operations,
net of tax 1.42
- -----------------------------------------------------------------------------------------------------------------
Income before Extraordinary Item 2.40 .19
Extraordinary Loss on Trust Settlements,
net of tax (2.52)
- -----------------------------------------------------------------------------------------------------------------
Net Income (Loss) Applicable to Common Stock $ (.12) $.19
=================================================================================================================
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
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SCHULLER CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Thousands of dollars)
(Unaudited)
<TABLE>
<CAPTION>
Three Months
Ended March 31,
-------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES: 1996 1995
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net income (loss)(before Preference Stock Dividends) $ (8,759) $ 29,331
Noncash items included in net income (loss):
Depreciation and amortization 16,461 14,962
Deferred taxes (109,552) 79,918
Product guarantee income 1,517 2,038
Provision for furnace rebuilds 1,798 2,114
Postretirement and pension benefits 3,664 6,102
Interest expense 494 437
Profit sharing expense 6,562 7,487
Income from discontinued operations (8,834)
Gain on disposal of discontinued operations (177,159)
Extraordinary loss on trust settlements 314,296
Other, net 12,355 2,667
(Increase) decrease in current assets:
Receivables (2,223) 1,340
Inventories (24,254) (23,279)
Prepaid expenses 743 73
Increase (decrease) in current liabilities:
Accounts payable (7,547) (8,130)
Compensation and benefits (7,713) (20,330)
Income taxes 11,352 (2,706)
Other accrued liabilities (550) (1,869)
Decrease in postretirement benefits
other than pensions (426) (1,051)
Increase (decrease) in other noncurrent
liabilities 4,392 (100)
Net cash used in discontinued operations (61,427)
-------------------------------
Net cash provided by operating activities 35,451 18,743
-------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
- ------------------------------------------------------------------------------------------------------------------
Purchases of property, plant and equipment (25,209) (20,891)
Acquisitions (49,818)
Proceeds from sales of assets 1,464 2,057
Proceeds from sale of Riverwood 1,081,341
Purchases of held-to-maturity securities (30,047) (25,351)
Purchases of available-for-sale securities (28,549) (11,077)
Proceeds from maturities of held-to-maturity
securities 59,268 39,356
Proceeds from sales or maturities of
available-for-sale securities 49,106
(Increase) decrease in other assets 10,968 (509)
-------------------------------
Net cash provided by (used in) investing
activities 1,068,524 (16,415)
-------------------------------
</TABLE>
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SCHULLER CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS, continued
(Thousands of dollars)
(Unaudited)
<TABLE>
<CAPTION>
Three Months
Ended March 31,
--------------------
CASH FLOWS FROM FINANCING ACTIVITIES: 1996 1995
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Issuance of debt $ 168
Payments on debt (10) $ (43)
Dividends on Preference Stock (6,231) (6,231)
Other stock transactions 414
Treasury stock (2,702) (449)
-------------------------------
Net cash used in financing activities (8,361) (6,723)
-------------------------------
Effect of Exchange Rate Changes on Cash (455) 469
-------------------------------
Net Increase (Decrease) in Cash and Equivalents 1,095,159 (3,926)
Cash and Equivalents at Beginning of Period 310,809 204,291
-------------------------------
Cash and Equivalents at End of Period $1,405,968 $200,365
==================================================================================================================
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
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<PAGE> 8
SCHULLER CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Schuller Corporation ("Schuller" or the "Company") is a holding company
consisting of Schuller International Group, Inc. ("Schuller International") as
its principal subsidiary. Schuller Corporation owns 100 percent of the common
stock of Schuller International.
On March 27, 1996 the Company disposed of its 81.3 percent interest in
Riverwood International Corporation ("Riverwood"), its paperboard and packaging
systems subsidiary (See Note 7). The assets and liabilities of Riverwood and
related parent Company deferred taxes, goodwill and minority interest were
classified as net assets held for sale at December 31, 1995. Riverwood's
results of operations have been shown as discontinued operations for all
periods presented.
Manville Personal Injury Settlement Trust (the "PI Trust") owns approximately
79 percent of the Company's common stock.
The condensed consolidated financial statements as of March 31, 1996 and
December 31, 1995 and for the three months ended March 31, 1996 and 1995
reflect all normal, recurring adjustments which are, in the opinion of
management, necessary for a fair presentation of the financial condition and
the results of operations for the periods presented. The year-end condensed
consolidated balance sheet was derived from audited financial statements, and
as presented does not include all disclosures required by generally accepted
accounting principles.
The Company has reclassified the presentation of certain prior period
information to conform with the current presentation format.
Additional information regarding the Company's accounting policies, operations,
financial position, reorganization proceedings and relationship with the PI
Trust is contained or incorporated in the Company's Form 10-K for the year
ended December 31, 1995 filed with the Securities and Exchange Commission.
Note 1 - Inventories
The major classes of inventories were as follows:
<TABLE>
<CAPTION>
(Thousands of dollars)
March 31, December 31,
1996 1995
-------------------------------
<S> <C> <C>
Finished goods $ 68,077 $46,432
Raw materials and supplies 28,751 23,344
Work-in-process 10,332 7,345
-------------------------------
$107,160 $77,121
===============================
</TABLE>
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Note 2 - Special Cash Dividend
On March 27, 1996, the Company declared a special cash dividend of $6.00 per
share, payable to all common stockholders on April 12, 1996. Accordingly, the
Company reflected an accrued dividend payable of $970.4 million at March 31,
1996.
Note 3 - Long-Term Debt
During the first quarter of 1996, the Company announced its intention to redeem
the Company's outstanding 9 Percent Sinking Fund Debentures due through 2003.
The prepayment of the debentures at 100 percent of the principal amount plus
accrued interest totaling $29.3 million is expected to result in an
extraordinary loss on the early extinguishment of debt of approximately $2
million, net of taxes of $1 million, during the second quarter of 1996.
Accordingly, the principal balance of $24.7 million is included in current
liabilities at March 31, 1996.
Note 4 - Contingencies and Commitments
Between 1988 and 1992, the Company manufactured phenolic roofing insulation
which may, under certain circumstances, contribute to the corrosion of metal
decks on which it is installed. Subsequently, the Company began a voluntary
program to inspect such metal decks and remediate where appropriate. The
Company has also accrued for costs relating to future inspections, remediation
and anticipated claims. These accruals are based on the Company's historical
experience regarding the incidence of corrosion and the cost of remediation and
include a number of assumptions related to the types of roofs on which phenolic
insulation has been installed as well as the assumption that the Company's past
remediation experience will continue over the remaining lives of roofs
insulated with the Company's phenolic roofing insulation.
During the first quarter of 1995, the Company and its liability insurance
carriers reached a settlement with respect to the extent of coverage to be
provided by such carriers. In addition, during the third quarter of 1995, the
Company and the former owner of the phenolic roofing insulation business
reached an agreement with respect to the costs to be reimbursed by the former
owner. Pursuant to these agreements, the Company has been reimbursed for a
portion of historical costs incurred and is entitled to receive reimbursement
for a substantial portion of future costs to be incurred by the Company for
inspection and remediation.
In 1996, the Company and a third party were named as defendants in two class
action cases filed in U.S. District Court in Boston, Massachusetts. The
plaintiffs purport to represent all building owners in the United States with
phenolic insulation installed on their roof decks and seek damages and
injunctive relief, including an order requiring the removal and replacement of
the phenolic insulation and remediation of any deck corrosion. The Company
intends to defend these allegations vigorously.
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<PAGE> 10
The Company has reviewed its historical inspection and remediation experience
and the terms and collectibility of amounts payable under the reimbursement
agreements in light of the commitments and contingencies described above.
Based on the information available to date and subject to the assumptions
described above, if additional costs are incurred in excess of the accrued
amounts, such costs are not expected to have a material adverse effect on the
Company's financial condition, liquidity or results of operations.
Note 5 - Other Income (Expense), net
Other income, net, was $5.6 million for the first quarter of 1996 compared with
other expense, net, of $4.6 million for the same period of 1995. Other income
for 1996 includes a $7.2 million gain relating to the receipt of surplus
pension assets in connection with the settlement of defined benefit pension
plans in which the Company's Canadian employees previously participated. Other
expense for 1995 included a $2.9 million charge for legal costs in connection
with litigation brought by the Company against the former owner of the phenolic
roofing business.
Note 6 - Income Taxes
For the quarter ended March 31, 1996, the net income tax benefit of $85.8
million includes a $104.5 million tax benefit on the portion of the special
cash dividend that was paid to the PI Trust.
For income tax purposes, the Company is entitled to a tax benefit on the amount
of the common dividends paid to the PI Trust in the years in which those
dividends are transferred to a specific settlement fund within the PI Trust or
paid to the claimants. The Company expects the PI Trust to transfer its entire
dividend proceeds from the special dividend to the settlement fund which will
result in a current tax deduction for the Company. This current tax deduction
will be utilized to shelter the tax gain on the disposition of Riverwood (Note
7) which will result in cash tax payments to be made in conjunction with the
sale at tax rates significantly lower than normal statutory tax rates.
For financial reporting purposes, the tax benefit on the portion of the
dividend paid to the PI Trust was realized at less than statutory rates. Due
to the size of the dividend in relation to the Company's equity, the Company
recorded a corresponding pro rata reduction in the carrying value of its
deferred tax asset related to common stock held by the PI Trust. The pro rata
reduction in the deferred tax asset partially offset the statutory tax benefit
on the dividend, resulting in an effective tax rate on the portion of the
dividend paid to the PI Trust of approximately 14 percent.
Exclusive of the tax benefit on the special cash dividend, the Company's first
quarter 1996 and 1995 tax rates were 44 percent and 44.7 percent, respectively.
These are higher than the U.S. federal statutory rate primarily due to higher
foreign effective tax rates and U.S. state and local taxes.
I-9
<PAGE> 11
The decline in the Company's deferred tax assets of $212.1 million during the
first quarter of 1996 is primarily due to net operating loss carryforwards and
PI Trust related deductions that are expected to be utilized to shelter the
gain on the disposition of Riverwood.
Note 7 - Disposition of Riverwood
On March 27, 1996, the Company consummated the disposition of its 81.3 percent
interest in Riverwood and received gross cash proceeds of $1.08 billion and
recorded a gain of $177.2 million, net of taxes of $177.8 million.
The estimated effective tax rate on the sale is higher than statutory tax rates
due to federal income taxes resulting from the election under Section
338(h)(10) of the U.S. Internal Revenue Code to treat the disposition of
Riverwood as an asset sale for tax purposes and other book and tax basis
differences.
The Company has agreed to indemnify the purchaser of Riverwood and certain
affiliated parties against losses resulting from a breach of representations or
warranties with respect to (i) certain Riverwood filings with the Securities
and Exchange Commission, (ii) the absence of undisclosed Riverwood liabilities
and (iii) certain Riverwood environmental matters. The Company will not be
required to indemnify the purchaser for losses until the aggregate amount of
all losses exceeds $20 million. In addition, the Company's obligation to
indemnify is limited to 80 percent of the amount of losses in excess of $20
million. The aggregate liability of the Company is limited to $100 million.
The Company's obligation to indemnify is limited to claims made on or prior to
May 31, 1997.
In this regard, the Louisiana Department of Environmental Quality notified
Riverwood, by letter dated December 19, 1995, that Riverwood may be liable for
the remediation of the release or threat of release of hazardous substances at
two sites that Riverwood or its predecessor previously operated in Shreveport,
Louisiana and Caddo Parish, Louisiana. The Company has consented to be
responsible, subject to the provisions of the preceding paragraph, for losses
incurred in connection with these matters to the extent such losses exceed $1
million. The Company is currently evaluating these claims.
In addition, the Company may be responsible for certain Riverwood U.S. federal,
state and local income tax liabilities to the extent, if any, they are
attributable to audit adjustments for tax periods ending prior to the
disposition of Riverwood.
Note 8 - Extraordinary Loss on Trust Settlements
On April 5, 1996, the Company completed the Profit Sharing Exchange Agreement
(the "Agreement") with the PI Trust which had been approved by the Company's
stockholders in March 1996. The Agreement provided for the exchange (the
"Exchange") of the PI Trust's profit sharing right to 20 percent of the
Company's net earnings (as adjusted) for approximately 32.5 million shares of
the common stock of the Company, which represent 20 percent of the Company's
common stock on
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<PAGE> 12
a fully diluted basis after giving effect to the Exchange. In accordance with
Statement of Financial Accounting Standards No. 5, "Accounting for
Contingencies", the Company recorded an extraordinary loss of $314.3 million,
net of taxes of $169.2, million during the first quarter of 1996. The
extraordinary loss was based on the New York Stock Exchange closing price of
the Company's common stock on April 4, 1996 of $14.50 per share, plus related
expenses of the transaction and other trust related settlements. The Company
will receive a tax deduction when the PI Trust sells some or all of its shares
of common stock and distributes the proceeds to its beneficiaries or transfers
the proceeds to a specific settlement fund. If the PI Trust were to sell the
stock at a price greater than the average carrying value, the Company may
receive a tax benefit in excess of the deferred tax asset reflected for
financial reporting purposes. Likewise, if the PI Trust were to sell the stock
at a price lower than the average carrying value, the Company would receive a
tax benefit less than the deferred tax asset reflected for financial reporting
purposes. The Company will recognize profit sharing expense payable to the PI
Trust through April 5, 1996.
Note 9 - Earnings (Loss) Per Common Share
Primary and fully diluted earnings per common share amounts were determined
using the following common equivalent shares:
<TABLE>
<CAPTION>
First Quarter
1996 1995
--------------------------------------
<S> <C> <C>
Primary 124,866,000 122,863,000
Fully Diluted 125,258,000 122,873,000
</TABLE>
During April 1996, an additional 32.5 million common shares were issued
pursuant to the Agreement, in addition to the exercise of outstanding warrants
to purchase 6.7 million shares of common stock. These additional shares are
not reflected in the above first quarter common equivalent shares.
Earnings (loss) per share amounts were calculated after the deduction for
preference stock dividends.
Note 10 - Acquisitions
On January 31, 1996, the Company acquired the commercial and industrial roofing
businesses of Nord Bitumi SpA, headquartered in Italy, and Nord Bitumi U.S.,
Inc. (collectively "Nord") to expand the Company's existing commercial and
industrial roofing product lines. On March 25, 1996, the Company acquired Web
Dynamics, a U.S. manufacturer of synthetic filtration products. Also during
the first quarter of 1996, a joint venture, in which the Company has a 60
percent interest, to operate and expand an existing fiber glass mat facility in
China became effective.
The combined purchase price for the acquisitions and the Company's contribution
to the joint venture totaled $56.5 million during the first quarter of 1996.
The acquisitions were accounted for under the purchase method, and accordingly,
the
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<PAGE> 13
purchase prices were allocated on the basis of the estimated fair value of
assets acquired and liabilities assumed. Total purchase price in excess of net
assets acquired of $41 million is being amortized on a straight-line basis over
20 years. The pro forma effect of the acquisitions is not material to the
results of operations for the quarters ended March 31, 1996 and 1995.
Note 11 - Subsequent Event
On April 30, 1996, the Company redeemed its 9.2 million shares of Cumulative
Preference Stock, Series B, for $25 per share, or a total of $230.8 million,
plus accrued dividends of $4.1 million. The excess of the total redemption
price over the carrying value of the preference stock was $52.1 million and
will be charged directly to capital in excess of par and deducted from net
income, along with the applicable dividends, during the second quarter of 1996
to compute earnings per share applicable to common stock.
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<PAGE> 14
Note 12 - Business Segment Information
The Company reports separately the results of the Building Products and
Engineered Products segments. The Building Products segment consists of the
Company's building insulation, commercial and industrial roofing systems and
mechanical insulations businesses. The Engineered Products segment consists of
the Company's specialty insulations, filtration and mats and fibers businesses.
<TABLE>
<CAPTION>
(Thousands of dollars)
Three Months
Ended March 31,
- --------------------------------------------------------------------------------------------------------------
Building Products 1996 1995
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net Sales $180,500 $179,132
Costs and Expenses 156,006 146,582
Other Income (Expense), net (161) (2,702)
- --------------------------------------------------------------------------------------------------------------
Income from Operations $ 24,333 $ 29,848
==============================================================================================================
Engineered Products
- --------------------------------------------------------------------------------------------------------------
Net Sales $153,495 $156,199
Costs and Expenses 121,668 124,451
Other Income (Expense), net 270 453
- --------------------------------------------------------------------------------------------------------------
Income from Operations $ 32,097 $ 32,201
==============================================================================================================
Corporate and Eliminations
- ---------------------------------------------------------------------------------------------------------------
Net Sales $ (7,886) $ (6,930)
Costs and Expenses (1,241) (38)
Other Income (Expense), net 5,506 (2,309)
- --------------------------------------------------------------------------------------------------------------
Income (Loss) from Operations $ (1,139) $ (9,201)
==============================================================================================================
Consolidated Total Company
- --------------------------------------------------------------------------------------------------------------
Net Sales $326,109 $328,401
Costs and Expenses 276,433 270,995
Other Income (Expense), net 5,615 (4,558)
- --------------------------------------------------------------------------------------------------------------
Income from Operations $ 55,291 $ 52,848
==============================================================================================================
</TABLE>
Net sales included in Corporate and Eliminations relate principally to the
elimination of intersegment sales from the Engineered Products segment to the
Building Products segment (at prices approximating market).
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<PAGE> 15
Report of Independent Accountants
To the Stockholders and Directors
of Schuller Corporation:
We have reviewed the accompanying condensed consolidated balance sheet of
Schuller Corporation as of March 31, 1996 and the related condensed
consolidated statement of income (loss) and cash flows for the three month
periods ended March 31, 1996 and 1995. These financial statements are the
responsibility of the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted
in accordance with generally accepted auditing standards, the objective of
which is the expression of an opinion regarding the financial statements taken
as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the condensed consolidated financial statements for them to be in
conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet as of December 31, 1995, and the
related consolidated statements of income, stockholders' equity and cash flows
for the year then ended (not presented herein); and in our report dated April
5, 1996, we expressed an unqualified opinion on those consolidated financial
statements. In our opinion, the information set forth in the accompanying
condensed consolidated balance sheet as of December 31, 1995, is fairly stated
in all material respects in relation to the consolidated balance sheet from
which it has been derived.
/s/ COOPERS & LYBRAND L.L.P.
- ----------------------------
COOPERS & LYBRAND L.L.P.
Denver, Colorado
May 13, 1996
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<PAGE> 16
ITEM 2.
SCHULLER CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Schuller Corporation ("Schuller" or the "Company") manufactures and markets
insulation for buildings and equipment, commercial roofing systems,
high-efficiency air filtration media and fibers and nonwoven mats used as
reinforcements in building and industrial applications. The Company operates
43 manufacturing facilities in North America, Europe and China, and is
comprised of two principal business segments: Building Products and Engineered
Products.
The Building Products segment consists of the Company's building insulation
business, which manufactures fiber glass wool insulation for walls and attics
in residential and commercial buildings; commercial and industrial roofing
systems business, which supplies roofing membranes, insulations, accessories
and related guarantees; and mechanical insulations business, which manufactures
pipe and duct insulation for use in commercial buildings, factories, refineries
and other industrial applications.
The Engineered Products segment consists of the Company's specialty insulations
and filtration business, which manufactures thermal and acoustic insulation for
aircraft, automobiles and heating, ventilating
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<PAGE> 17
and air conditioning ("HVAC") and other equipment; air filtration media for
commercial and industrial buildings; and ultra-fine fibers for clean room air
filters and battery separators. The Engineered Products segment also includes
the Company's mats and fibers business, which manufactures continuous filament
fiber glass-based products used for reinforcing roofing, flooring, wall
covering and plastic products. The mats and fibers business includes the
Company's German subsidiary, Schuller GmbH.
On March 27, 1996, the Company disposed of its 81.3 percent interest in
Riverwood International Corporation ("Riverwood"), its former paperboard and
packaging systems subsidiary. The assets and liabilities of Riverwood and
related parent Company deferred taxes, goodwill and minority interest were
classified as net assets held for sale at December 31, 1995. Riverwood's
results of operations have been shown as discontinued operations for all
periods presented. See Note 7 of the Notes to the Condensed Consolidated
Financial Statements.
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<PAGE> 18
RESULTS OF OPERATIONS
The following table sets forth, for the three months ended March 31, 1996 and
1995, certain income and expense items and the percentage that such items
increased (decreased):
<TABLE>
<CAPTION>
Three Months Percentage
Ended March 31, Increase
1996 1995 (Decrease)
-------- -------- ----------
(thousands of dollars)
<S> <C> <C> <C>
Net Sales:
Building Products $180,500 $179,132 0.8
Engineered Products 153,495 156,199 (1.7)
Corporate and Eliminations (7,886) (6,930)
-------- --------
326,109 328,401 (0.7)
Cost of Sales 232,550 228,666 1.7
-------- --------
Gross Profit 93,559 99,735 (6.2)
Other Operating Expenses 43,883 42,329 3.7
Other Income (Expense), net 5,615 (4,558)
-------- --------
Income from Operations:
Building Products 24,333 29,848 (18.5)
Engineered Products 32,097 32,201 (0.3)
Corporate and Eliminations (1,139) (9,201)
-------- --------
$ 55,291 $ 52,848 4.6
======== ========
</TABLE>
The Company's net sales in the first quarter of 1996 decreased slightly
compared with the same period of 1995. Gross profit decreased $6.2 million, or
6.2 percent, with gross profit margins declining to 28.7 percent for the first
quarter of 1996 from 30.4 percent for the first quarter of 1995, primarily due
to decreased selling prices in building insulation. Income from operations for
the first quarter of 1996 increased $2.5 million to $55.3 million from $52.8
million as the gross profit decline was more than offset by the recognition of
a gain on the settlement of pension plans (see discussion in other income
(expense), net, below) during the first quarter of 1996.
I-17
<PAGE> 19
The Building Products segment reported a decrease in income from operations of
$5.5 million, or 18.5 percent, compared with the first quarter of 1995. Income
from operations declined principally as a result of the lower building
insulation selling prices and an unfavorable product mix in roofing systems.
During the first quarter of 1996, the Company acquired the commercial and
industrial roofing businesses of Nord Bitumi SpA and Nord Bitumi U.S., Inc.
(collectively "Nord") to complement and expand existing product lines - see
Liquidity and Capital Resources. Although the Nord acquisition resulted in
higher sales volumes during the first quarter of 1996, the additional sales
were offset by the impacts of lower selling prices for building insulation,
reflecting excess capacity in the industry. Net sales were essentially flat
for mechanical insulations for the first quarter of 1996, compared with the
same period of 1995.
The Engineered Products segment's first quarter 1996 income from operations was
flat as net sales decreased slightly when compared with the first quarter of
1995. Selling prices for mats and fibers in the U.S. increased compared with
1995, while sales volumes were essentially flat as the Company's U.S.
production remained capacity constrained. However, in total, operating results
of the Company's mats and fibers business declined as net sales decreased
slightly during the first
I-18
<PAGE> 20
quarter of 1996 due primarily to softness in European construction markets.
Operating results of the filtration and specialty insulations businesses were
slightly improved for the first quarter of 1996 as the Company benefited from
continuing strong demand for its ultra-fine fibers used for filtration,
realizing higher sales volumes and selling prices, partially offset by lower
sales of automotive products.
Other operating expenses include selling, general, administrative and research,
development and engineering expenses. These expenses increased $1.6 million,
or 3.7 percent, for the first quarter of 1996 compared with the same period of
1995. The increase is principally due to additional selling, general and
administrative expenses as a result of recent acquisitions and acquisition
activities.
Other income, net, was $5.6 million for the first quarter of 1996 compared with
other expense, net, of $4.6 million for the same period of 1995. Other income
for 1996 includes a $7.2 million gain relating to the receipt of surplus
pension assets in connection with the settlement of defined benefit pension
plans in which the Company's Canadian employees previously participated. Other
expense for 1995 included a $2.9 million charge for legal costs in connection
with litigation brought by the Company against the former owner of the phenolic
roofing business.
I-19
<PAGE> 21
Compared with the first quarter of 1995, the Company's interest income
increased $2.6 million to $6.5 million in 1996 from $3.9 million in 1995,
primarily due to higher average cash and marketable securities balances.
Profit sharing expense for the first quarter of 1996 totaled $6.6 million, a
decrease of $0.9 million from the $7.5 million recorded in the first quarter of
1995, primarily due to lower operating income associated with Riverwood in 1996
compared with 1995.
For the quarter ended March 31, 1996, the Company reported a net income tax
benefit of $85.8 million, which included a $104.5 million tax benefit on the
portion of the special cash dividend that was paid to Manville Personal Injury
Settlement Trust (the "PI Trust") in April 1996. See Note 6 to the Condensed
Consolidated Financial Statements. Exclusive of the tax benefit on the special
cash dividend, the Company's first quarter 1996 and 1995 tax rates were 44
percent and 44.7 percent, respectively. These are higher than the U.S. federal
statutory rate primarily due to higher foreign effective tax rates and U.S.
state and local taxes.
On March 27, 1996, the Company consummated the disposition of Riverwood,
received gross cash proceeds of $1.08 billion and recorded a gain of $177.2
million, net of taxes of $177.8 million, on the disposition of the Company's
81.3 percent interest. The estimated effective tax rate on the sale is higher
than the statutory tax rates due to federal income taxes resulting from the
election under Section 338(h)(10) of the U.S. Internal Revenue Code to treat
the disposition of
I-20
<PAGE> 22
Riverwood as an asset sale for tax purposes and other book and tax basis
differences.
On April 5, 1996, the Company completed the Profit Sharing Exchange Agreement
with the PI Trust, which provided for the exchange of the PI Trust's profit
sharing right to 20 percent of the Company's net earnings (as adjusted) for
approximately 32.5 million shares of the common stock of the Company. In
accordance with Statement of Financial Accounting Standards No. 5, "Accounting
for Contingencies", the Company recorded an extraordinary loss of $314.3
million, net of taxes of $169.2 million during the first quarter of 1996. The
extraordinary loss was based on the New York Stock Exchange closing price of
the Company's common stock on April 4, 1996 of $14.50 per share, plus related
expenses of the transaction and other trust related settlements. The Company
will pay its final profit sharing obligation for the period of January 1, 1996
through April 5, 1996, during 1996.
Due to the factors discussed above, net loss applicable to common stock for the
first quarter of 1996 was $15 million, compared with net income of $23.1
million for the same period of 1995.
I-21
<PAGE> 23
The primary and fully diluted net loss per common share for the first quarter
of 1996 was $0.12 each, as compared with primary and fully diluted earnings per
common share of $0.19 each for the same period in 1995. Earnings (loss) per
common share amounts were calculated after deducting preference stock
dividends.
Excluding the extraordinary loss on trust settlements, discontinued operations
and the tax benefit on the special dividend, the Company would have reported
net income applicable to common stock for the first quarter of 1996 of
approximately $18.2 million, or $0.15 per share, compared with $15.5 million,
or $0.13 per share, for the first quarter of 1995.
LIQUIDITY AND CAPITAL RESOURCES
The Company broadly defines liquidity as the ability to generate sufficient cash
flow to satisfy operating requirements, fund capital expenditures and meet
existing obligations and commitments. In addition, liquidity also includes the
ability to obtain appropriate financing and to convert into cash those assets
that are no longer required to meet the Company's strategic objectives.
Therefore, liquidity should not be considered separately from capital resources,
which consist of currently or potentially available funds for use in achieving
long-range business objectives and meeting debt service commitments.
Additionally, the Company's relationship with the PI Trust should be considered
in evaluating liquidity.
I-22
<PAGE> 24
The Company's agreements with its lenders and other agreements with the PI
Trust and Manville Property Damage Settlement Trust, contain a number of
financial and general covenants. These include, among other things,
restrictions on borrowings, investments, stock issuances and repurchases,
dividends and other distributions by Schuller International (the Company's
wholly owned subsidiary), and restrictions on intercompany transactions,
including transfers of cash. As of March 31, 1996, the maximum amount
available for dividends to be paid by Schuller International under their most
restrictive debt covenants was approximately $181 million. Noncompliance with
these or other covenants, or the occurrence of any other event of default,
could result in the termination of existing credit agreements and the
acceleration of debt owed by the Company and its subsidiaries. At March 31,
1996, the Company was in compliance with these covenants.
A tax sharing agreement between the Company and Schuller International provide
that Schuller International's U.S. federal and state income taxes be
calculated as if it was an independent entity and that such tax amounts be
remitted to the Company. The Company is able to apply tax benefits to reduce
the consolidated domestic tax obligations, allowing Schuller Corporation to
retain a large portion of the cash remitted by Schuller International. In
connection with the disposition of
I-23
<PAGE> 25
Riverwood, the tax sharing agreement between the Company and Riverwood
terminated on March 27, 1996.
The Company paid a cash dividend of $6.2 million, or $0.675 per share, in the
first quarter of both 1996 and 1995 to Cumulative Preference Stock, Series B,
stockholders.
At March 31, 1996, the Company had cash and marketable securities totaling
$1.48 billion, of which $1.08 billion relates to proceeds received for the
disposition of the Company's 81.3 percent interest in Riverwood. Total cash
and marketable securities located outside the U.S. and Canada were
approximately $31.1 million. At December 31, 1995, the Company's cash and
marketable securities totaled $427.8 million.
The majority of the Company's cash and marketable securities balance at March
31, 1996 were used to pay a special cash dividend of $6 per common share on
April 12, 1996, totaling $970.4 million, and to redeem its Cumulative
Preference Stock, Series B, on April 30, 1996, at $25 per share plus accrued
dividends, totaling $234.9 million. In addition, the Company announced its
intention to redeem its 9 Percent Sinking Fund Debentures on July 1, 1996, at
100 percent of the principal amount plus accrued interest totaling $29.3
million.
The Company's cash flows from operating activities are primarily
I-24
<PAGE> 26
influenced by sales volume and selling prices. During the first quarter of
1996, sales volumes were adversely affected by softness in European
construction markets and capacity constraints in U.S. markets served by its
mats and fibers and ultra-fine fibers businesses. The Company's building
insulation business continued to experience price declines which began in the
second half of 1995 due to new capacity added by competitors.
The recent acquisition discussed in results of operations is expected to
provide additional sales volumes for commercial and industrial roofing systems
as it becomes fully integrated into existing product lines. While stronger
housing starts reported during the first quarter of 1996, compared with the
same period of 1995, should benefit the building insulation business in terms
of volumes and pricing this year, selling price pressures from new industry
capacity are expected to negatively impact mechanical insulations during 1996.
The Company anticipates continuing softness in European markets for its mats
and fibers business, along with capacity constraints in the U.S., until the
completion of expansion projects. Meanwhile, the filtration business expects
to benefit from growing worldwide markets through capacity expansions this
year, along with the March 25, 1996 acquisition of Web Dynamics, a U.S.
manufacturer of synthetic filtration products.
Demand for the Company's products has historically been cyclical due to
I-25
<PAGE> 27
macroeconomic factors affecting residential and commercial construction
markets. The Company estimates that approximately half of its annual sales are
made to commercial and industrial markets, while approximately one-third are
made to residential markets and the remainder are made to original equipment
manufacturers.
In addition to the proceeds from the disposition of Riverwood, the Company's
investing activities for the quarter ended March 31, 1996 include the combined
purchase prices for acquisitions of $49.8 million. The Company's investing
activities also include capital expenditures for the three months ended March
31, 1996 totaling $25.2 million, of which approximately $12.7 million were
attributable to capacity expansion projects.
The Company's capacity expansion programs are periodically revised to reflect
changes in demand, industry capacity and the results of productivity and
technology innovations. In order to meet strong worldwide demand for its mats
and fibers products, the Company announced plans during 1995 to increase its
U.S. production capacity of continuous filament fiber glass by mid 1997. In
addition, the Company entered into a joint venture in China and began expansion
of an existing fiber glass mat facility, with completion expected in 1997. The
Company also plans to continue the expansion of its filtration business'
ultra-fine fiber production capacity during 1996 through capital spending
programs. The
I-26
<PAGE> 28
Company currently estimates capital spending in 1996 of approximately $100
million to $110 million, excluding acquisitions, of which approximately $40
million to $50 million will be used in the capacity expansion programs
described above. As of March 31, 1996, outstanding purchase commitments
relating to these and other projects totaled $20.6 million. The Company plans
to fund future capital spending from existing cash balances and cash flows
generated by operations.
At March 31, 1996, the Company had $87 million available under a receivables
sale facility (the "Receivables Facility") for its domestic short-term working
capital requirements. Amounts available for borrowing under the Receivables
Facility, up to a maximum of $100 million, are based on the daily balance of
certain outstanding trade accounts receivable adjusted for various factors as
defined under the terms of the Receivables Facility. There have been no
borrowings under the Receivables Facility through March 31, 1996. The
Company's foreign subsidiaries also had working capital facilities totaling $68
million available for borrowing at March 31, 1996.
The Company believes that its current cash position, funds available under the
Receivables Facility and foreign working capital facilities, and cash generated
from operations will enable it to satisfy its debt service requirements, its
ongoing capital expansion program and its other ongoing operating costs.
However, the Company may need to access
I-27
<PAGE> 29
capital markets to pay the principal of the $400 million Senior Notes due in
2004, or in connection with possible future acquisitions.
RELATIONSHIP OF SCHULLER TO THE PI TRUST
The PI Trust owns approximately 79 percent of Schuller's common stock, after
the Profit Sharing Exchange and the exercise of all outstanding warrants. The
PI Trust is an irrevocable trust formed under the laws of the State of New
York, pursuant to a trust agreement dated as of November 28, 1988, as amended
(the "Trust Agreement"), to implement certain portions of the Company's Second
Amended and Restated Plan of Reorganization (the "Plan"), in particular, those
relating to the settlement of asbestos health claims against Schuller
Corporation and certain of its affiliates. As the majority owner of the
Company's common stock, the PI Trust has effective voting control, including
the power to nominate and elect directors as the trustees of the PI Trust
determine. Three trustees of the PI Trust currently serve as members of
Schuller's Board of Directors.
In furtherance of its purposes under the Trust Agreement of enhancing and
preserving its trust estate and providing compensation to bona fide asbestos
health claimants, the PI Trust has an interest in maximizing the value of, and
at times increasing the liquidity of, its investment in the Company. The PI
Trust may from time to time consider and discuss with management various means
by which the Company might seek to
I-28
<PAGE> 30
maximize stockholder value and enhance stockholder liquidity. The Company
conducts all negotiations with the PI Trust on an arm's-length basis, with both
parties being represented by their own legal and financial advisors.
Significant transactions with the PI Trust are reviewed by the Board of
Directors, after consultation with appropriate external advisors and experts,
to determine that the transactions are fair. In addition, the Audit Committee
of the Board of Directors reviews the accounting treatment for such
transactions.
Additional information regarding the Company's accounting policies, operations,
financial position, reorganization proceedings, relationship with the PI Trust,
disposition of Riverwood and the Profit Sharing Exchange Agreement is contained
or incorporated in the Company's Form 10-K for the year ended December 31, 1995
and Form 8-K, dated March 27, 1996, filed with the Securities and Exchange
Commission.
I-29
<PAGE> 31
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
Not applicable.
ITEM 2. CHANGES IN SECURITIES.
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
On March 27, 1996, a Special Meeting of the Company's Stockholders was held for
the purposes of approving (i) the Profit Sharing Exchange Agreement, dated
October 25, 1995 (the "Exchange Agreement"), between the Company and the
Manville Personal Injury Settlement Trust (the "Trust") and the transactions
contemplated thereby, including the issuance of approximately 32.5 million
shares of the Company's Common Stock to the Trust in exchange for the Trust's
right to receive annually 20 percent of the Company's adjusted net earnings and
a portion of the proceeds from certain asset sales; (ii) the Company's
disposition of all of the shares of common stock of Riverwood International
Corporation ("Riverwood") held by the Company pursuant to an Agreement and Plan
of Merger, dated as of October 25, 1995, among Riverwood, the Company and RIC
Holding, Inc.; and (iii) an amendment to the Company's Restated Certificate of
Incorporation changing the Company's name to "Schuller Corporation." The
results of the vote are as follows:
<TABLE>
<S> <C> <C> <C> <C>
1. Approval of Exchange Agreement.
Votes For: 114,254,021 Abstentions: 132,209
Votes Against: 1,639,113 Broker Non-Votes: 27,001
2. Approval of Riverwood Disposition.
Votes For: 114,313,627 Abstentions: 113,435
Votes Against: 1,598,281 Broker Non-Votes: 27,001
3. Approval of Amendment to Certificate of Incorporation.
Votes For: 113,694,571 Abstentions: 110,565
Votes Against: 2,247,208 Broker Non-Votes: -0-
</TABLE>
II-1
<PAGE> 32
ITEM 5. OTHER INFORMATION.
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits.
Exhibit 15, Letter of Coopers and Lybrand L.L.P.
Exhibit 27.1, Financial Statement Schedule.
Exhibit 27.2, Financial Statement Schedule.
(b) Form 8-K.
None.
II-2
<PAGE> 33
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.
<TABLE>
<S> <C>
SCHULLER CORPORATION
(Registrant)
Date: May 15, 1996 By: /s/ R. B. Von Wald
--------------------------------------------
R. B. Von Wald
Executive Vice President,
General Counsel and Secretary
Date: May 15, 1996 By: /s/ K. L. Jensen
--------------------------------------------
K. L. Jensen
Senior Vice President, Finance
Schuller International Group, Inc.
</TABLE>
II-3
<PAGE> 34
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION PAGE
- ------ ------------------- ----
<S> <C> <C>
15 Letter of Coopers & Lybrand L.L.P.
27.1 Financial Data Schedule
27.2 Financial Data Schedule
</TABLE>
<PAGE> 1
[COOPERS & LYBRAND LETTERHEAD]
May 13, 1996
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Schuller Corporation
Registrations: on Form S-8 (File No. 33-29389)
and Form S-3 (File No. 33-43912)
Gentlemen:
We are aware that our report dated May 13, 1996 on our review of interim
financial information of Schuller Corporation for the three-month period ended
March 31, 1996 and included in the Company's quarterly report on Form 10-Q for
the quarter then ended is incorporated by reference in the above referenced
registration statements. Pursuant to Rule 436(c) under the Securities Act of
1933, this report should not be considered a part of the registration
statements prepared or certified by us within the meaning of Sections 7 and 11
of that Act.
Very truly yours
/s/ COOPERS & LYBRAND L.L.P.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE MARCH
31, 1996 FORM 10-Q OF SCHULLER CORPORATION AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<CASH> 200,365
<SECURITIES> 17,479
<RECEIVABLES> 202,986
<ALLOWANCES> 7,310
<INVENTORY> 81,391
<CURRENT-ASSETS> 535,175
<PP&E> 1,264,671
<DEPRECIATION> 575,997
<TOTAL-ASSETS> 2,349,012
<CURRENT-LIABILITIES> 284,821
<BONDS> 442,222
0
178,638
<COMMON> 1,228
<OTHER-SE> 935,273
<TOTAL-LIABILITY-AND-EQUITY> 2,349,012
<SALES> 328,401
<TOTAL-REVENUES> 328,401
<CGS> 228,666
<TOTAL-COSTS> 228,666
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 776
<INTEREST-EXPENSE> 12,180
<INCOME-PRETAX> 37,068
<INCOME-TAX> 16,571
<INCOME-CONTINUING> 20,497
<DISCONTINUED> 8,834
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 29,331
<EPS-PRIMARY> .19
<EPS-DILUTED> .19
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE MARCH
31, 1996 FORM 10Q OF SCHULLER CORPORATION AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 1,405,968
<SECURITIES> 69,367
<RECEIVABLES> 209,095
<ALLOWANCES> 6,894
<INVENTORY> 107,160
<CURRENT-ASSETS> 1,831,330
<PP&E> 1,335,231
<DEPRECIATION> 583,964
<TOTAL-ASSETS> 3,031,624
<CURRENT-LIABILITIES> 1,552,228
<BONDS> 433,503
<COMMON> 1,554
0
0
<OTHER-SE> 486,340
<TOTAL-LIABILITY-AND-EQUITY> 3,031,624
<SALES> 326,109
<TOTAL-REVENUES> 326,109
<CGS> 232,550
<TOTAL-COSTS> 232,550
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 355
<INTEREST-EXPENSE> 12,588
<INCOME-PRETAX> 42,615
<INCOME-TAX> (85,763)
<INCOME-CONTINUING> 128,378
<DISCONTINUED> 177,159
<EXTRAORDINARY> (314,296)
<CHANGES> 0
<NET-INCOME> (8,759)
<EPS-PRIMARY> (.12)
<EPS-DILUTED> (.12)
</TABLE>
