SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(MARK ONE)
/x/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 1996
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from: NOT APPLICABLE
Commission File No. 1-971
HONEYWELL INC.
(Exact name of registrant as specified in its charter)
DELAWARE 41-0415010
(State or other jurisdiction (I.R.S. Employer
of incorporation) Identification No.)
Honeywell Plaza, Minneapolis, Minnesota 55408
(Address of principal executive offices) (Zip Code)
(612) 951-1000
(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
----- -----
As of March 31, 1996, the number of shares outstanding of the registrant's
common stock, $1.50 par value, was 126,667,504.
PART I. FINANCIAL INFORMATION
--------------------------------
Item 1. Financial Statements
<TABLE>
<CAPTION>
INCOME STATEMENT
Honeywell Inc. and Subsidiaries
(Unaudited)
First Quarter Ended
-----------------------------
(Dollars in Millions Except Per Share Amounts) March 31, 1996 April 2, 1995
.............................................................................
<S> <C> <C>
SALES $1,619.5 $1,478.7
------- -------
COSTS AND EXPENSES
Cost of sales 1,109.0 1,013.2
Research and development 85.1 78.8
Selling, general and administrative 309.3 287.9
Interest - net 17.1 17.3
Equity (income) loss 0.3 (1.4)
------- -------
1,520.8 1,395.8
------- -------
INCOME BEFORE INCOME TAXES 98.7 82.9
PROVISION FOR INCOME TAXES 33.6 28.2
------- -------
NET INCOME $ 65.1 $ 54.7
======= =======
EARNINGS PER COMMON SHARE $ 0.51 $ 0.43
======== ========
AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 126,851,136 127,156,836
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF CASH FLOWS
Honeywell Inc. and Subsidiaries
(Unaudited)
Three Months Ended
-----------------------------
(Dollars in Millions) March 31, 1996 April 2, 1995
.....................................................................................
<S> <C> <C>
Cash Flows from Operating Activities
Net income $ 65.1 $54.7
Adjustments to reconcile net income to net cash flows
from operating activities:
Depreciation 54.2 57.8
Amortization of intangibles 11.0 13.5
Deferred income taxes 0.2 13.2
Equity (income) loss, net of dividends received 0.6 (1.4)
Loss on sale of assets 0.1 0.4
Contributions to employee stock plans 11.5 8.7
Decrease in receivables 65.2 19.0
Increase in inventories (36.2) (50.0)
Decrease in accounts payable (71.2) (56.6)
Increase in accrued income taxes and interest 3.7 14.0
Other changes in working capital, excluding short-term
investments and short-term debt (32.6) (20.0)
Other noncurrent items - net 3.5 (16.9)
---- ----
Net cash flows from operating activities 75.1 36.4
---- ----
Cash Flows from Investing Activities
Proceeds from sale of assets 29.9 2.5
Capital expenditures (65.0) (53.0)
Investment in acquisitions, net of cash acquired (298.3) (25.4)
(Increase) decrease in short-term investments 0.1 (7.1)
Other - net 0.9 3.4
----- ----
Net cash flows from investing activities (332.4) (79.6)
----- ----
Cash Flows from Financing Activities
Net increase in short-term debt 167.9 38.9
Repayment of long-term debt (0.3) (10.2)
Purchase of treasury stock (64.3) (25.0)
Proceeds from exercise of stock options 24.5 15.5
Dividends paid (33.1) (31.4)
----- -----
Net cash flows from financing activities 94.7 (12.2)
----- -----
Effect of Exchange Rate Changes on Cash (4.8) 10.8
----- -----
Decrease in Cash and Cash Equivalents (167.4) (44.6)
Cash and Cash Equivalents at Beginning of Year 291.6 267.4
----- -----
Cash and Cash Equivalents at End of Three Months $124.2 $222.8
===== =====
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF FINANCIAL POSITION
Honeywell Inc. and Subsidiaries
(Unaudited)
(Dollars in Millions) March 31, 1996 December 31, 1995
.........................................................................................
<S> <C> <C>
Assets
Current Assets
Cash and cash equivalents $ 124.2 $ 291.6
Short-term investments 8.8 9.0
Receivables (less allowance for doubtful accounts:
1996, $33.8; 1995, $34.5) 1,472.3 1,477.3
Inventories (less progress billing on uncompleted
contracts: 1996, $59.3; 1995, $56.4) 872.1 794.4
Deferred income taxes 197.3 194.6
------- -------
2,674.7 2,766.9
Investments and Advances 239.1 244.8
Property, Plant and Equipment
Property, plant and equipment 2,953.8 2,857.1
Less accumulated depreciation 1,832.5 1,758.2
------- -------
1,121.3 1,098.9
Other Assets
Long-term receivables (less allowance for doubtful
accounts: 1996, $0.7; 1995, $0.7) 20.5 46.8
Intangible assets 827.5 624.2
Deferred income taxes 71.5 71.8
Other 212.5 206.8
Total Assets $5,167.1 $5,060.2
======= =======
Liabilities and Stockholders' Equity
Current Liabilities
Short-term debt $ 587.3 $ 312.4
Accounts payable 450.2 491.5
Customer advances 181.3 158.2
Accrued income taxes 272.7 274.8
Deferred income taxes 19.5 20.4
Other accrued liabilities 744.0 765.2
------- -------
2,255.0 2,022.5
Long-Term Debt 377.0 481.0
Deferred Income Taxes 49.1 39.2
Other Liabilities 475.5 477.4
Stockholders' Equity
Common stock - $1.50 par value
Authorized - 250,000,000 shares
Issued - 1996 - 188,035,247 shares 282.0
- 1995 - 188,126,704 shares 282.2
Additional paid-in capital 489.8 481.3
Retained earnings 2,838.0 2,805.8
Treasury stock - 1996 - 61,367,743 shares (1,699.8)
- 1995 - 61,306,251 shares (1,650.2)
Accumulated foreign currency translation 120.0 140.9
Pension liability adjustment (19.5) (19.9)
------- -------
2,010.5 2,040.1
------- -------
Total Liabilities and Stockholders' Equity $5,167.1 $5,060.2
======= =======
</TABLE>
NOTES TO FINANCIAL STATEMENTS
(Dollars in Millions Except Per Share Amounts)
(Unaudited)
(1) The financial information and statements of companies owned 20 percent to
50 percent, accounted for using the equity method, are omitted pursuant to
Rule 10-01 of Regulation S-X.
(2) Interest consists of the following:
<TABLE>
First Quarter
-------------
1996 1995
---- ----
<S> <C> <C>
Interest expense $20.9 $20.8
Interest income (3.8) (3.5)
---- ----
Total $17.1 $17.3
==== ====
</TABLE>
Interest paid amounted to $12.2 and $13.5 for the first quarters of 1996
and 1995, respectively.
(3) Income tax provisions for interim periods are based on estimated effective
annual income tax rates. Income tax expense varies from the normal U.S.
statutory tax rate primarily because of state taxes and variations in the
tax rates on foreign source income. While a portion of the annual tax
provisions will be deferred income taxes, it is not practicable to
determine the amount or composition of deferred income taxes for interim
periods. Income taxes paid, net of refunds received, amounted to $19.1 and
$(3.5) for the first quarters of 1996 and 1995 respectively.
(4) Dividends per share of common stock were $.26 and $.25 for the first
quarters of 1996 and 1995 respectively.
(5) Inventories consist of the following:
<TABLE>
March 31, December 31,
1996 1995
------ ------
<S> <C> <C>
Finished goods $376.5 $356.6
Inventories related to long-term contracts 84.1 73.6
Work in process 178.2 159.5
Raw materials and supplies 233.3 204.7
------ ------
Total $872.1 $794.4
====== ======
</TABLE>
(6) Litton Litigation.
On March 13, 1990, Litton Systems, Inc. (`Litton') filed suit against
Honeywell in U.S. District Court, Central District of California, alleging
patent infringement relating to the process used by Honeywell to coat
mirrors incorporated in its ring laser gyroscopes; attempted monopolization
and predatory pricing by Honeywell of certain alleged markets for products
containing ring laser gyroscopes; and intentional interference by Honeywell
with Litton's prospective advantage in European markets and with its
contractual relationships with Ojai Research, Inc., a California
corporation. Honeywell generally denied Litton's allegations, contested
both the validity and infringement of the patent, and alleged that the
patent had been obtained by Litton's inequitable conduct before the United
States Patent and Trademark Office. Honeywell also filed counterclaims
against Litton alleging, among other things, that Litton's business and
litigation conduct violated federal and state laws, causing Honeywell
considerable damage and expense.
On January 9, 1995, Judge Mariana Pfaelzer of the U.S. District Court set
aside an August 1993 jury verdict and damage award of $1.2 billion against
Honeywell in the patent and interference with contract case. She ruled,
among other things, that the Litton patent was unenforceable because it was
obtained by inequitable conduct and invalid because it was an invention that
would have been obvious from combining existing processes. She further
ruled that if her judgment were ever subsequently vacated or reversed on
appeal, Honeywell would be granted a new trial on the issue of damages
because the jury's 1993 award was inconsistent with the clear weight of the
evidence and permitting it to stand would constitute a miscarriage of
justice. Litton has appealed all of Judge Pfaelzer's rulings to the Court
of Appeals for the Federal Circuit, Washington, D.C. Briefs for the appeal
have been submitted by the parties and oral arguments were presented
December 8, 1995. Honeywell believes that Judge Pfaelzer's rulings will be
upheld on appeal. As a result, no provision has been made in the financial
statements with respect to this contingent liability.
The trial for the antitrust case began on November 20, 1995, before Judge
Pfaelzer and a different jury. Prior to the jury's deliberations in the
antitrust trial, the court dismissed, for failure of proof, Litton's
contentions that Honeywell engaged in below-cost predatory pricing, illegal
tying, bundling and illegally acquiring Sperry Avionics in 1986. The case
was submitted to the jury on two claims, monopolization and attempt to
monopolize, both based on Litton's allegations that Honeywell entered into
certain exclusive dealings and penalty arrangements with aircraft
manufacturers and airlines to exclude Litton from the commercial aircraft
market. On February 29, 1996, the jury returned a $234 million verdict
against Honeywell for the monopolization claim. On March 1, 1996, the jury
indicated that it was unable to reach a verdict on damages for the attempted
monopolization claim, and a mistrial was declared on that claim.
Honeywell continues to maintain that it competed vigorously and lawfully in
the inertial navigation business and will continue to defend itself against
Litton's allegations. Honeywell believes that the jury's partial verdict
should be overturned because Litton (i) failed to prove essential elements
of liability and (ii) failed to submit competent evidence to support its
claim for damages by offering only a speculative, all-or-nothing $298.5
million damage study. Honeywell filed post-verdict motions with the trial
court asking that judgment be granted in favor of Honeywell as a matter of
law or, in the alternative, for a new trial, and will argue important
procedural and other matters that could dispose of this case. If the $234
million jury verdict withstands post-verdict motions, in whole or in part,
any dollar judgment will be trebled under federal antitrust laws and will be
appealed by Honeywell. The case will conclude only when the trial and
appellate courts resolve all of the legal issues that could reduce or
eliminate the jury verdict. As a result, no provision has been made in the
financial statements with respect to this contingent liability.
(7) As of March 31, 1996, Honeywell had reserved 9,845,275 shares of common
stock for the issuance of shares in connection with stock option and stock
bonus plans.
(8) In 1996, Honeywell adopted Statement of Financial Accounting Standards No.
121 (SFAS 121), `Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of'. SFAS 121 requires that (i) assets to
be held and used be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable; (ii) an impairment loss be recognized when the estimated
future cash flows from the asset are less than the carrying value of the
asset; and (iii) assets to be disposed of be reported at the lower of their
carrying amount or their fair value, less cost to sell. Adoption of SFAS
121 did not have any effect on results of operations or financial position
in the first quarter of 1996.
In 1996, Honeywell adopted Statement of Financial Accounting Standards No.
123 (SFAS 123), `Accounting for Stock-Based Compensation'. SFAS 123
requires expanded disclosures of stock-based compensation arrangements with
employees and nonemployees and encourages a new method of accounting for
employee stock compensation awards based on their estimated fair value at
the date of grant and the recognition of associated compensation expense
over the service period in the income statement. Companies are permitted
to continue following Accounting Principles Board Opinion No. 25 (APB 25),
`Accounting for Stock Issued to Employees', but must disclose pro forma net
income and pro forma earnings per share, as if the fair value method of
SFAS 123 had been applied, in a footnote to the financial statements. The
fair value measurement and recognition provisions of SFAS 123 must be
applied to all stock-based arrangements with nonemployees. As permitted by
SFAS 123, Honeywell has elected to continue following the guidance of APB
25 for measurement and recognition of stock-based transactions with
employees. SFAS 123 disclosures are not required on an interim reporting
basis unless a complete set of financial statements is presented.
(9) On April 24, 1996, Honeywell issued $300 million of long-term debt through
an underwritten offering with maturities of 5 and 12 years. Honeywell
subsequently entered into interest rate swap agreements effectively
converting this debt from fixed-rate debt to floating-note debt.
(10)The amounts set forth in this quarterly report are unaudited but, in the
opinion of the registrant, include all adjustments necessary for a fair
presentation of the results of operations for the three-month periods ended
March 31, 1996 and April 2, 1995, respectively. Honeywell's accounting
policies are described in the notes to financial statements in its 1995
Annual Report on Form 10-K. Certain amounts in prior year's statement of
financial position have been reclassified to conform to the current year
presentation.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations
- ---------------------
Net income in the first quarter of 1996 was $65.1 million ($0.51 per share)
compared with $54.7 million ($0.43 per share) in the first quarter of 1995.
Worldwide sales increased 10 percent to $1.620 billion in the first quarter of
1996, compared with $1.479 billion in 1995. Operating profit margins improved
50 basis points to 8.9 percent in 1996 from 8.4 percent in 1995 as a result of
higher productivity and lower costs. Orders increased 4 percent and backlog
increased 6 percent in the first quarter of 1996 compared with the first quarter
of 1995. Translation of the U.S. dollar had approximately a 1 percent positive
effect on sales and orders and minimal effect on profits.
Both Home and Building Control sales and operating profit increased 8 percent
for the first quarter of 1996. Orders increased 9 percent from year-earlier
levels. Home Control sales and operating profit benefited from a strengthening
in domestic markets. Order growth was strong with domestic order strength
coming primarily from increased wholesale distribution business, as well as
significant order increases from new products such as the Perfect Climate
Comfort Center-TM-. In March, Honeywell completed the $283 million acquisition
of Duracraft Corp., a manufacturer of home comfort products that expand
Honeywell's worldwide consumer and products portfolio. Building Control sales
and orders were up moderately for the quarter fueled by continuing strength
overall in Europe. Building Control has announced closure of the Arlington
Heights factory and will consolidate manufacturing of low volume, high
complexity building automation systems in Albuquerque, New Mexico. The
consolidation will result in net reductions of up to 300,000 square feet of
manufacturing space and headcount reductions of approximately 300.
Industrial Control sales and operating profit increased 10 percent and 4
percent, respectively, for the first quarter of 1996. Orders increased 6
percent for the quarter compared with 1995 with strong Industrial Automation and
Control orders more than offsetting industry-wide pressure experienced by
Sensing and Control. In the first quarter of 1996, Industrial Control completed
the acquisition of the measurement and control and sensor businesses of Leeds &
Northrup that will enhance Honeywell's position as a leading supplier of
products and services for the process and discrete manufacturing industries.
The acquisition also expands Honeywell's sensor portfolio. In the first
quarter, the Micro Switch division introduced an open and modular integrated PC
control system to control factory automation. Industrial Automation and Control
had strong increases for both sales and operating profits in the quarter
compared with 1995 primarily as a result of strength in international markets.
The process control business continues to be driven by productivity and
regulatory requirements with sales in the hydrocarbon processing and chemical
industries picking up in Europe. Increased demand for systems to improve safety
and productivity in developing countries, such as China, India and Kuwait is
evidenced by three contracts totaling $21 million to supply automation controls.
Sensing and Control sales increased slightly and operating profit declined
sharply compared with the first quarter of 1995. Earnings were adversely
affected by lower demand in the industrial distributor business which includes
high margin repair and replacement products of small OEM's and small factories
as target customers as well as on-board automotive products, which were affected
by the GM strike.
Space and Aviation Control sales increased 13 percent and operating profit
increased over 40 percent. Despite double digit order growth for Commercial
Aviation, total orders declined 5 percent during the quarter due to a decline in
military and space orders, when compared against the first quarter of 1995.
Commercial Aviation Systems sales and operating profit increased sharply in the
first quarter of 1996 as a result of an increase in business jet production and
profit improvement resulting from a volume increase in business and commuter
aviation coupled with continued efficiency improvements and lower R&D spending
in Air Transport. Military Avionics Systems sales increased while operating
profit declined compared with the first quarter of 1995. The decline in profit
is the result of varied timing and profitability of production contracts and
increased development expenses related to new programs. Space Systems sales and
operating profit increased sharply due to growth in sales and profits related to
increased International Space Station project work.
Sales from other operations which do not correspond with Honeywell's primary
business segments, including the activities of various units such as the Solid
State Electronics and the Honeywell Technology and research and development
centers, were unchanged from the first quarter of 1995. These units had
operating profits of $0.9 million and $0.2 for the first quarter of 1996 and
1995, respectively.
Financial Condition
- -------------------
Stockholders' equity decreased to $2.010 billion from $2.040 billion at the end
of 1995. Stockholders' equity includes an increase of $32 million to retained
earnings resulting from current year earnings less dividends offset by a $21
million decrease in the accumulated foreign currency translation balance and $41
million of net treasury stock transactions.
Common shares outstanding decreased from 126.8 million at the end of 1995 to
126.7 million. Shares repurchased during the first three months of 1996 totaled
1.4 million at a cost of $73 million. Shares issued through stock option and
stock bonus plans totaled 1.2 million shares and yielded $25 million in
proceeds.
Debt as a percentage of total capital at the end of the first quarter was 32.4
percent compared with 28.0 percent at the end of 1995. Total debt increased
$171 million from 1995 year end. The proceeds from the debt increase along with
the reduction of cash balances was used to finance general corporate
requirements, including capital expenditures and working capital, and $298
million of acquisitions (net of cash acquired).
Cash flows used by investing activities exceeded cash flows from operating
activities by $257 million in the first three months of 1996, primarily due to
acquisition activities and capital expenditures offset by proceeds from asset
sales.
On March 31, 1996, Honeywell had $751 million of revolving committed credit
lines with twenty-two banks. There was $5 million outstanding under these
lines. In addition, certain foreign units had $351 million in credit lines
available at the end of the first quarter. Honeywell believes its available
cash, committed credit lines and access to the public debt markets through
commercial paper and medium-term note programs provide adequate short-term and
long-term liquidity.
Subsequent to the end of the first quarter, Honeywell issued $300 million of
long-term debt through an underwritten offering with maturities of 5 and 12
years. Honeywell has entered into interest rate swap agreements effectively
converting this debt from fixed-rate debt to floating-rate debt. The proceeds
were used to repay outstanding commercial paper.
Honeywell's credit rating for long-term and short-term debt are, respectively,
A/A-1 by Standard and Poor's Corporation, A/Duff1 by Duff and Phelps Corporation
and A3/P-2 by Moody's Investors Service, Inc.
Honeywell has entered into various foreign currency exchange contracts and
interest rate swaps to manage its net exposure to changes in currency and
interest rate fluctuation. At March 31, 1996, the notional amount of
outstanding foreign exchange contracts was approximately $1.127 billion. The
amount of hedging gains and losses deferred was not material at March 31, 1996.
The notional amount of outstanding interest rate swaps was $215 million at March
31, 1996.
PART II. OTHER INFORMATION
-----------------------------
Item 1. Legal Proceedings
As previously reported in Item 3. `Legal Proceedings' of Part I of Honeywell's
Annual Report on Form 10-K for the fiscal year ended December 31, 1995,
Honeywell is a defendant in a lawsuit filed by Litton Systems, Inc. alleging
patent infringement relating to the process used by Honeywell to coat mirrors
incorporated in its ring laser gyroscopes; attempted monopolization by Honeywell
of certain alleged markets for products containing ring laser gyroscopes; and
intentional interference by Honeywell with Litton's prospective advantage in
European markets and with its contractual relationships with Ojai Research,
Inc., a California corporation.
The information reported in Note (6) to the Financial Statements set forth in
Item 1 of Part I of this report with respect to recent developments in this
litigation is incorporated by reference into this Item 1.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
(11) Computation of Earnings Per Share.
(12) Computation of Ratio of Earnings to Fixed Charges.
(27) Financial Data Schedule.
(b) (i) On January 31, 1996, the registrant filed a report on Form
8-K with respect to the adoption of a new stockholder rights plan by
the registrant's Board of Directors on January 16, 1996.
(ii) On March 11, the registrant filed a report on Form 8-K
reporting on February 29 and March 1 jury decisions in an antitrust
trial involving Litton Systems Inc., in which the registrant is a
defendant.
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.
HONEYWELL INC.
Date: May 14, 1996 By: /s/ E. D. Grayson
------------------------------------
E. D. Grayson
Vice President and General Counsel
Date: May 14, 1996 By: /s/ P. M. Palazzari
------------------------------------
P. M. Palazzari
Vice President and Controller
(Chief Accounting Officer)
INDEX TO EXHIBITS
Exhibit No. Page No.
- ---------- -------
11 Computation of Earnings Per Share i
12 Computation of Ratio of Earnings to Fixed Charges ii
27 Financial Data Schedule iii
<TABLE>
<CAPTION>
EXHIBIT (11)
HONEYWELL INC. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
(Dollars in Millions Except Per Share Amounts)
(Unaudited)
Three Months Ended
March 31, April 2,
1996 1995
----------------------------
<S> <C> <C>
PRIMARY:
Income:
Net income $ 65.1 $ 54.7
=========== ===========
Shares:
Weighted average of shares outstanding during the year 126,851,136 127,156,836
=========== ===========
Earnings per share:
Net income $ 0.51 $ 0.43
=========== ===========
ASSUMING FULL DILUTION:
Income:
Net income $ 65.1 $ 54.7
=========== ===========
Shares:
Weighted average of shares outstanding during the year 126,851,136 127,156,836
Shares issuable in connection with stock plans
less shares purchasable from proceeds 2,562,133 1,210,652
----------- -----------
Total shares 129,413,269 128,367,488
=========== ===========
Earnings per share:
Net income $ 0.50 $ 0.43
=========== ===========
i
</TABLE>
<TABLE>
<CAPTION>
EXHIBIT (12)
HONEYWELL INC. AND SUBSIDIARIES
COMBINED WITH PROPORTIONAL SHARES OF 50% OWNED COMPANIES
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
(Unaudited)
Three Months Ended
March 31, 1996
------------------
<S> <C>
Income before Income Taxes $ 98.70
Deduct:
Equity income (loss) (0.30)
------
Subtotal 99.00
Add (deduct):
Dividends from less than 50% owned companies -
Proportional share of income (loss) before
income taxes of 50% owned companies (0.08)
------
Adjusted income 98.92
------
Fixed charges
Interest on Indebtedness 19.68
Amortization of Debt Expense 1.19
Interest Portion of Rent Expense 12.45
------
Total Fixed Charges 33.32
------
Total Available Income $132.24
======
Ratio of Earnings to Fixed Charges 3.97
======
ii
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 124
<SECURITIES> 9
<RECEIVABLES> 1506
<ALLOWANCES> 34
<INVENTORY> 872
<CURRENT-ASSETS> 2675
<PP&E> 2954
<DEPRECIATION> 1833
<TOTAL-ASSETS> 5167
<CURRENT-LIABILITIES> 2255
<BONDS> 377
<COMMON> 282
0
0
<OTHER-SE> 1729
<TOTAL-LIABILITY-AND-EQUITY> 5167
<SALES> 1620
<TOTAL-REVENUES> 1620
<CGS> 1109
<TOTAL-COSTS> 1109
<OTHER-EXPENSES> 85
<LOSS-PROVISION> (1)
<INTEREST-EXPENSE> 21
<INCOME-PRETAX> 99
<INCOME-TAX> 34
<INCOME-CONTINUING> 65
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 65
<EPS-PRIMARY> 0.51
<EPS-DILUTED> 0.50
</TABLE>
