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 June 30, 1997
|_| 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 001-04710
WHITMAN CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 36-6076573
- ----------------------------------- ------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
3501 Algonquin Road, Rolling Meadows, Illinois 60008
- ---------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (847) 818-5000
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 July 31, 1997, the Registrant had 101,562,107 outstanding shares
(excluding treasury shares) of common stock, no par value, the Registrant's only
class of common stock.
<PAGE>
WHITMAN CORPORATION AND SUBSIDIARIES
CONTENTS
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Statements of Income
Condensed Consolidated Balance Sheets
Condensed Consolidated Statements of Cash Flows
Notes to Condensed Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
PART II OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
Item 6. Exhibits and Reports on Form 8-K
SIGNATURE
<PAGE>
WHITMAN CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
June 30, June 30,
------------------------- --------------------------
1997 1996 1997 1996
----------- ----------- ----------- -----------
(in millions, except per share data)
<S> <C> <C> <C> <C>
Sales and Revenues $ 803.6 $ 772.2 $ 1,477.7 $ 1,430.1
Cost of Goods Sold 520.0 489.7 957.1 918.3
---------- ---------- ---------- ----------
Gross Profit 283.6 282.5 520.6 511.8
Selling, General and Administrative Expenses 190.2 175.6 369.2 346.9
Amortization Expense 5.2 5.0 10.3 10.0
---------- ---------- ---------- ----------
Operating Income 88.2 101.9 141.1 154.9
Interest Expense (18.3) (18.3) (36.4) (35.7)
Interest Income 1.4 1.4 2.8 3.1
Other Expense, Net (6.0) (4.7) (10.6) (8.7)
---------- ---------- ---------- ----------
Income Before Income Taxes 65.3 80.3 96.9 113.6
Income Tax Provisions 26.9 33.1 40.2 47.1
---------- ---------- ---------- ----------
Income Before Minority Interests 38.4 47.2 56.7 66.5
Minority Interests 4.7 5.5 7.5 8.8
---------- ---------- ---------- ----------
Net Income $ 33.7 $ 41.7 $ 49.2 $ 57.7
========== ========== ========== ==========
Average Number of Common Shares Outstanding 103.1 107.3 103.4 107.2
========== ========== ========== ==========
Net Income per Common Share $ 0.33 $ 0.39 $ 0.48 $ 0.54
========== ========== ========== ==========
Cash Dividends per Common Share $ 0.115 $ 0.105 $ 0.22 $ 0.20
========== ========== ========== ==========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
WHITMJAN CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
------------ ------------
(in millions)
<S> <C> <C>
ASSETS:
Current Assets:
Cash and Cash Equivalents $ 59.7 $ 76.8
Receivables 386.7 396.9
Inventories 345.1 307.3
Other Current Assets 72.5 74.0
------------ ------------
Total Current Assets 864.0 855.0
------------ ------------
Investments 170.5 181.3
Property (at Cost) 1,491.4 1,445.1
Accumulated Depreciation and Amortization (736.8) (710.8)
------------ ------------
Net Property 754.6 734.3
------------ ------------
Intangible Assets, Net 559.8 553.8
Other Assets 98.7 85.0
------------ ------------
Total Assets $ 2,447.6 $ 2,409.4
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current Liabilities:
Short-Term Debt, Including Current Maturities of Long-Term Debt $ 95.0 $ 94.3
Accounts and Dividends Payable 282.3 266.5
Other Current Liabilities 163.8 165.2
------------ ------------
Total Current Liabilities 541.1 526.0
------------ ------------
Long-Term Debt 866.3 837.5
Deferred Income Taxes 54.8 47.1
Other Liabilities 116.6 118.1
Minority Interests 244.6 238.5
Shareholders' Equity:
Common Stock (No par, 250.0 million shares authorized; 111.2 million shares
issued in 1997 and 110.6 million shares
issued in 1996) 466.1 456.3
Retained Income 451.3 426.7
Cumulative Translation Adjustment (95.5) (82.5)
Unrealized Investment Gain 1.4 1.8
Treasury Stock (9.6 million shares in 1997 and 8.0 million
shares in 1996) (199.1) (160.1)
------------ ------------
Total Shareholders' Equity 624.2 642.2
------------ ------------
Total Liabilities and Shareholders' Equity $ 2,447.6 $ 2,409.4
============ ============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
WHITMAN CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
-----------------------------
1997 1996
-------- --------
(in millions)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 49.2 $ 57.7
Adjustments to Reconcile to Net Cash Provided by Operating Activities:
Depreciation and Amortization 58.9 59.0
Other 9.5 6.6
Changes in Assets and Liabilities, Exclusive of Acquisitions:
Decrease in Receivables 14.9 1.6
Increase in Inventories (32.9) (36.2)
Increase in Payables 9.9 22.6
Net Change in Other Assets and Liabilities (0.5) 5.2
-------- --------
Net Cash Provided by Continuing Operations 109.0 116.5
Net Cash Used in Discontinued Operations (5.8) (9.1)
-------- --------
Net Cash Provided by Operating Activities 103.2 107.4
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital Investments, Net (59.1) (61.1)
Acquisitions and Investments in Joint Ventures (44.1) (21.6)
Purchases of Investments (28.8) (65.1)
Proceeds from Sales of Investments 40.7 74.1
-------- --------
Net Cash Used in Investing Activities (91.3) (73.7)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Issuance of Long-Term Debt 78.2 --
Repayment of Long-Term Debt (67.7) (0.9)
Net Borrowings from Bank Lines of Credit and
Commercial Paper 19.0 1.8
Net Change in Notes Payable (0.1) 9.6
Common Dividends (22.4) (21.1)
Treasury Stock Purchases (37.0) (23.1)
Issuance of Common Stock 2.4 12.5
-------- --------
Net Cash Used in Financing Activities (27.6) (21.2)
-------- --------
Effects of Exchange Rate Changes on Cash and Cash Equivalents (1.4) 0.1
-------- --------
Change in Cash and Cash Equivalents (17.1) 12.6
Cash and Cash Equivalents at January 1 76.8 53.3
-------- --------
Cash and Cash Equivalents at June 30 $ 59.7 $ 65.9
======== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
WHITMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. The condensed consolidated financial statements included herein have been
prepared by the Registrant, without audit. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to the rules and regulations of the Securities and Exchange
Commission ("SEC"), although the Registrant believes that the disclosures
made are adequate to make the information presented not misleading. It is
suggested that these condensed consolidated financial statements be read in
conjunction with the financial statements and notes thereto included in the
Registrant's Annual Report on Form 10-K for the year ended December 31,
1996. In the opinion of management, the information furnished herein
reflects all adjustments (consisting only of normal, recurring adjustments)
necessary for a fair statement of results for the interim periods presented.
2. In June, 1997, the Registrant announced that its Board of Directors had
approved a plan to spin off Hussmann Corporation (Hussmann) and Midas
International Corporation (Midas) to Whitman shareholders. This plan is
subject to receipt of a ruling (the "Ruling") by the Internal Revenue
Service that the transaction would be non-taxable to the Registrant and its
shareholders, as well as market conditions at the time of the spin-off. The
Registrant has elected to continue to report Hussmann and Midas as part of
continuing operations for the period ending June 30, 1997.
The Registrant also announced that it is likely to incur some special
charges to income as part of these transactions. The nature, size or timing
of such charges has not yet been determined.
3. Net cash provided by operating activities reflected cash payments and
receipts for interest and income taxes as follows:
Six Months Ended
June 30,
------------------
1997 1996
------ ------
(in millions)
Interest Paid $ 36.4 $ 35.6
Interest Received 3.0 2.3
Income Taxes Paid, net 26.8 29.4
4. As of June 30, 1997, the components of inventory were approximately: raw
materials and supplies -- 33.4 percent; work in process -- 18.2 percent; and
finished goods -- 48.4 percent.
5. In January, 1997, the SEC released amended Rule 4-08 of Regulation S-X
(General Notes to the Financial Statements), as part of Release No. 33-7386,
requiring additional disclosure with respect to accounting policies followed
in connection with the accounting for derivative financial instruments and
derivative commodity instruments. This disclosure is required for all
periods ending after June 15, 1997, unless a registrant's most recent Form
10-K is in compliance. The Release also added Item 305 to Regulation S-K to
require quantitative and qualitative disclosures outside the financial
statements about market risk inherent in derivative and other financial
instruments. The requirements of Item 305 become effective for non-bank
registrants with market capitalization in excess of $2.5 billion at January
28, 1997, for filings that include annual financial statements for periods
ending after June 15, 1997. For registrants with market capitalization under
$2.5 billion, the requirements of Item 305 become effective for filings that
include annual financial statements for periods ending after June 15, 1998.
The Registrant believes it is currently in compliance with amended Rule 4-08
of Regulation S-X in its most recent Form 10-K. Based on the Registrant's
market capitalization being under $2.5 billion on January 28, 1997, the
requirements of Item 305 will commence with its Form 10-K for the period
ended December 31, 1998, at which time the additional requirements of Item
305 will be addressed.
6. In February, 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") no. 128, "Earnings per
Share" (Statement So. 128). Statement No. 128 specifies the computation,
presentation and disclosure requirements for earnings per share and will be
effective for interim and annual periods ending after December 15, 1997.
Commencing with its annual financial statements for the year ended December
31, 1997, the Registrant will adopt this statement as required and its
adoption is not expected to have a material effect on the Registrant's
reported earnings per share.
7. In June, 1997, FASB issued SFAS No. 130, "Reporting Comprehensive Income"
(Statement No. 130). Statement No. 130 establishes standards for disclosing
comprehensive income and its components in a full set of general financial
statements. Statement No. 130 is effective for both interim and annual
periods beginning after December 15, 1997. The Registrant will adopt
Statement No. 130 beginning in 1998.
8. In June, 1997, FASB issued SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information" (Statement No. 131). Statement No. 131
establishes standards for disclosing information related to operating
segments by superseding SFAS No. 14, "Financial Reporting for Segments of a
Business Enterprise", and amending SFAS No. 94, "Consolidation of All
Majority-Owned Subsidiaries", to remove the special disclosure requirements
for previously unconsolidated subsidiaries. Statement No. 131 replaces the
industry segment concept of Statement No. 14 with a management concept as
the basis for identifying reportable segments. It also retains the
requirement to report information about major customers. Statement No. 131
is effective for all periods beginning after December 15, 1997 and the
Registrant believes the disclosures in the financial statements included in
its most recent Form 10-K meet the requirements of Statement No. 131
relating to reportable segments.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 1997, the Registrant had cash and cash equivalents of $59.7
million, compared with $76.8 million at December 31, 1996.
The Company's cash flow provided by continuing operations amounted to
$109.0 million for the first six months of 1997, down from $116.5 million in the
first six months of 1996. The decrease of $7.5 million primarily resulted from
lower net income during the first six months of 1997. Cash used in discontinued
operations principally represented disbursements related to environmental
liabilities related to previously sold subsidiaries. Cash provided by
operations, together with the cash received from the net borrowings of long-term
debt, commercial paper and bank lines, was used primarily for capital
expenditures, acquisitions and investments in joint ventures, dividends, and
treasury stock purchases.
Cash used in investing activities totaled $91.3 million in the first six
months of 1997, compared with $73.7 million for the same period of 1996. Net
capital spending of $59.1 million during the first six months of 1997 was at
essentially the same level as during the comparable period of 1996. Cash used
for acquisitions and investments in joint ventures of $44.1 million in the first
six months of 1997 included Pepsi General's acquisition of the St. Petersburg,
Russia bottling operations, Hussmann's acquisition of a seventy percent interest
in Fast Frio do Brazil, and Midas' acquisition of eleven franchise shops in
Utah. In 1996, $21.6 million was spent for additional investments in the
Pepsi-Cola bottling facilities of the manufacturing joint venture in Poland.
Purchases and sales of investments principally related to the Registrant's
insurance subsidiary, which provides certain levels of insurance for Whitman's
various operating companies. Funds provided by the operating companies are
invested by the insurance subsidiary and proceeds from sales are often used by
the insurance company to pay claims. A substantial portion of the purchases and
sales of such investments are reinvested as the investments mature. During the
first six months of 1997, the Registrant's insurance subsidiary liquidated $10
million of its investment portfolio and loaned the proceeds to the Registrant.
Proceeds from this loan were used for general corporate purposes.
In the first six months of 1997, the Registrant had net borrowings of
long-term debt, bank lines and commercial paper of $29.5 million, bringing the
Registrant's total debt level to $961.3 million at June 30, 1997. Proceeds of
$2.4 million were received from the issuance of common stock for stock options
exercised during the first six months of 1997.
At June 30, 1997, the Registrant had contractual bank lines of credit of
$300.0 million and also maintained a $200.0 million commercial paper program,
unchanged from December 31, 1996. Borrowings under these facilities totaled
$19.0 at June 30, 1997, while no borrowings were made from either facility at
December 31, 1996.
<PAGE>
RESULTS OF OPERATIONS
1997 SECOND QUARTER COMPARED WITH 1996 SECOND QUARTER
Sales and revenues increased 4.1 percent to $803.6 million in the second
quarter of 1997 compared with the same period of 1996. Revenue increases were
reported by Pepsi General and Hussmann, while Midas reported a slight decline in
sales and revenues during the quarter, as summarized below:
Quarter Ended
June 30,
--------------------- %
1997 1996 Change
------ ------ ------
(in millions)
Pepsi General $ 392.5 $ 384.5 2.1
Midas 160.3 161.7 (0.9)
Hussmann 250.8 226.0 11.0
------- -------
Total Sales and Revenues $ 803.6 $ 772.2 4.1
======= =======
Pepsi General's revenues increased $8.0 million, principally resulting
from a $10.2 million increase in international sales during the quarter. The
international sales growth was attributable to Pepsi General's expansion into
the newly acquired territories of the St. Petersburg area of Russia and the
Baltics. Domestic case sales increased just over five percent in the quarter,
but were essentially offset by a decrease in the average net selling price on
such volume, reflecting very competitive market conditions. Midas' revenues
decreased by $1.4 million during the quarter resulting from weak demand in the
domestic retail and wholesale automotive replacement markets. Hussmann's
revenues increased $24.8 million during the quarter, primarily the result of
strong demand in North America (U.S. and Canada), partially offset by lower
revenues in the U.K., where the demand remained extremely sluggish, and in
Mexico, reflecting an unfavorable shift in product mix to lower priced beverage
coolers.
Gross profit improved 0.4 percent to $283.6 million, primarily reflecting
the increase in sales. Gross profit margins, however, declined to 35.3 percent
in 1997 from 36.6 percent in 1996. The decline primarily resulted from the
competitive pricing conditions in Pepsi General's markets during the current
quarter, as well as a decline in margins at Hussmann's North American
operations, where price increases have not been sufficient to offset higher
material and labor costs, due in part to the customer mix moving towards higher
volume supermarket chains.
Selling, general & administrative (S,G&A) expenses increased $14.6
million, or 8.3 percent, resulting from the increase in sales volumes, including
higher distribution costs at Pepsi General, higher operating expenses at Midas,
as well as other cost increases. Additionally, S,G&A expenses at Pepsi General
included a charge for $2.7 million related to a reduction in staff. S,G&A
expenses represented 23.7 percent of sales in second quarter of 1997, up one
percentage point from the same period of 1996.
<PAGE>
Operating income decreased $13.7 million, or 13.4 percent, to $88.2
million in the second quarter of 1997, with reductions being reported by each of
the Registrant's three major subsidiaries. Operating income for the Registrant's
three major subsidiaries and corporate administrative expenses are summarized
below:
Quarter Ended
June 30,
--------------------- %
1997 1996 Change
------ ------ ------
(in millions)
Pepsi General $ 49.1 $ 57.2 (14.2)
Midas 22.0 27.2 (19.1)
Hussmann 21.3 21.8 (2.3)
------ ------
Subsidiary Operating Income 92.4 106.2 (13.0)
Corporate Administrative Expenses (4.2) (4.3) 2.3
------ -------
Total Operating Income $ 88.2 $101.9 (13.4)
====== ======
Pepsi General's operating earnings decreased by $8.1 million, with
domestic earnings down $5.8 million, or 9.6%, primarily due to the adverse
effects of lower pricing. Included in the second quarter results were operating
losses of $5.7 million in its international operations compared with losses of
$3.4 million in the second quarter of 1996, with the increased losses coming
from the newly acquired territories in Russia and the Baltics. Midas' operating
earnings declined $5.2 million due to the soft demand domestically in both the
retail and wholesale markets, a continuing shift to a less profitable sales mix
and higher operating expenses. Hussmann's operating earnings were down $0.5
million, or 2.3 percent, from last year. The lower earnings reflected the
effects of lower sales in the U.K. and a less favorable product mix in Mexico,
which more than offset record performances in North America, where operating
income rose 11 percent in the quarter.
Net interest expense of $16.9 million in the second quarter of 1997 was
unchanged from the same period last year. The effects of higher debt levels were
essentially offset by lower weighted average interest rates during the quarter.
Other expense, net, increased $1.3 million to $6.0 million in the second
quarter of 1997. There were no individually significant items in the increase in
net expense during the quarter.
<PAGE>
RESULTS OF OPERATIONS
1997 FIRST SIX MONTHS COMPARED WITH 1996 FIRST SIX MONTHS
Sales and revenues increased 3.3 percent to $1,477.7 million in the first
six months of 1997 compared with the same period of 1996. Revenue increases were
reported by all three major subsidiaries of the Registrant, as summarized below:
Six Months Ended
June 30,
-------------------------- %
1997 1996 Change
-------- -------- ------
(in millions)
Pepsi General $ 726.0 $ 717.2 1.2
Midas 302.3 292.3 3.4
Hussmann 449.4 420.6 6.8
-------- --------
Total Sales and Revenues $1,477.7 $1,430.1 3.3
======== ========
Pepsi General's revenues increased $8.8 million, including a $9.7 million
increase in international sales. The international sales growth was attributable
to Pepsi General's expansion into the newly acquired territories in Russia and
the Baltics. Domestically, case volume increased 4.4 percent during the first
half of the year, but was essentially offset by a 4.3 percent reduction in the
average net selling price on such volume. Midas' revenues increased $10.0
million during the first six months of 1997, with the increase occurring
entirely during the first quarter of 1997. The increased revenues principally
resulted from an additional selling week during the first quarter, a brake
program promotion in the U.S. and higher revenues in Canada and Europe.
Hussmann's sales increased $28.8 million during the first half of 1997,
reflecting strong demand for supermarket equipment in North America and
additional revenues from the Brazilian operation acquired during the first
quarter of 1997. These increases were offset by lower sales in the U.K., down
nearly 17 percent, and slightly lower sales in Mexico due to an unfavorable
shift in product mix.
Gross profit improved 1.7 percent to $520.6 million, primarily reflecting
the benefits of higher revenues. Gross profit margins declined to 35.2 percent
in 1997 from 35.8 percent in the comparable period of 1996. The decline
primarily resulted from the competitive pricing conditions encountered by Pepsi
General during the first six months, as well as increases in product costs in
Hussmann's North American operations, which Hussmann was unable to offset with
sufficient price increases, due in part to the shift in customer mix to high
volume supermarket chains.
S,G&A expenses increased $22.3 million, or 6.4 percent, with the increase
reflecting higher distribution costs associated with the increase in sales
volume at Pepsi General, higher operating expenses at Midas, including costs
associated with the brake promotion program, as well as other cost increases. As
previously noted, the S,G&A expenses at Pepsi General also included a charge for
$2.7 million related to a reduction in staff. S,G&A expenses represented 25.0
percent of sales in the first half of 1997, up 0.7 percentage points from the
same period of last year.
<PAGE>
Operating income decreased $13.8 million, or 8.9 percent, to $141.1
million in the first six months of 1997, with only Hussmann having an improved
earnings performance. Operating income for the Registrant's three major
subsidiaries and corporate administrative expenses are summarized below:
Six Months Ended
June 30,
---------------------- %
1997 1996 Change
-------- --------
(in millions)
Pepsi General $ 84.3 $ 95.3 (11.5)
Midas 34.0 38.7 (12.1)
Hussmann 30.9 29.8 3.7
-------- --------
Subsidiary Operating Income 149.2 163.8 (8.9)
Corporate Administrative Expenses (8.1) (8.9) 9.0
-------- --------
Total Operating Income $ 141.1 $ 154.9 (8.9)
======== ========
Pepsi General's operating earnings decreased by $11.0 million, principally
resulting from the competitive pricing conditions in both its domestic and
international markets, as well as losses from the recently acquired territories
in Russia and the Baltic countries. Domestic earnings were down $7.1 million, or
6.9%, primarily due to the sharp decline in pricing. Included in the results for
the first half were operating losses of $11.6 million related to its
international operations, compared with losses of $7.7 million in the first six
months of 1996, with the increase in operating losses primarily resulting from
the newly acquired territories. Midas' operating earnings declined $4.7 million,
due to soft demand domestically in both the retail and wholesale markets, a less
favorable product mix and higher operating expenses. Hussmann's earnings
improvement reflected strong product demand in its North American operations,
where operating income was up nearly 18 percent, and improved results from the
joint venture in China. These improved earnings were offset by lower earnings in
the U.K., where market demand remained slow, and in Mexico, due to an
unfavorable product mix compared with the previous year.
Net interest expense was $33.6 million in the first half of 1997, up $1.0
million from the same period of last year, principally due to an increased level
of debt.
Other expense, net, increased $1.9 million to $10.6 million for the first
six months of 1997 compared with the same period of 1996. The increase in other
expense, net, was not related to any individually significant item.
<PAGE>
WHITMAN CORPORATION AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.
(a) May 1, 1997 Annual Meeting of Shareholders.
(b) Election of Directors
The following persons were elected at the Annual Meeting of
Shareholders held May 1, 1997, to serve as Directors for the ensuing
year:
Herbert M. Baum Charles W. Gaillard
Bruce S. Chelberg Jarobin Gilbert, Jr.
Richard G. Cline Victoria B. Jackson
Pierre S. duPont Donald P. Jacobs
Archie R. Dykes Charles S. Locke
(c) Matters Voted Upon
Proposal Number 1 (Election of Directors)
To consider and vote upon election of the Registrant's directors.
The following votes were recorded with respect thereto:
Nominees Votes For Votes Withheld
Herbert M. Baum 90,785,632 509,115
Bruce S. Chelberg 90,788,297 506,450
Richard G. Cline 90,791,652 503,095
Pierre S. duPont 90,775,023 519,724
Archie R. Dykes 90,743,079 551,668
Charles W. Gaillard 90,767,463 527,284
Jarobin Gilbert, Jr. 90,744,081 550,666
Victoria B. Jackson 90,791,739 503,088
Donald P. Jacobs 90,755,114 539,633
Charles S. Locke 90,775,171 519,576
Proposal Number 2 (Independent Public Accountants)
To consider and vote upon the proposal to ratify the selection of KPMG
Peat Marwick LLP as the Registrant's independent public accountants.
Votes For and Against and Abstentions on this matter were as follows:
For Against Abstain
90,933,736 119,537 241,474
<PAGE>
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
12. Statement of Calculation of Ratio of Earnings to Fixed Charges.
(b) Reports on Form 8-K.
None filed during the second quarter ended June 30, 1997.
<PAGE>
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.
WHITMAN CORPORATION
Date: August 14, 1997 By: /s/ FRANK T. WESTOVER
---------------- --------------------------------
Frank T. Westover
Senior Vice President and Controller
(As Chief Accounting Officer and Duly
Authorized Officer of Whitman Corporation)
EXHIBIT 12
WHITMAN CORPORATION
STATEMENT OF CALCULATION
OF RATIO OF EARNINGS TO FIXED CHARGES
(in Millions, Except Ratios)
<TABLE>
<CAPTION>
Six Months
Ended June 30, Years Ended December 31,
---------------------- ------------------------------------------
1997 1996 1996 1995 1994 1993 1992
--------- --------- -------- -------- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings:
Income from Continuing
Operations before Taxes $ 96.9 $ 113.6 $ 275.7 $ 259.7 $ 212.7 $ 212.2 $ 170.6
Fixed Charges Excluding
Capitalized Interest 42.9 42.2 84.7 86.7 82.2 105.9 106.9
--------- --------- -------- -------- -------- --------- ---------
Earnings as Adjusted $ 139.8 $ 155.8 $ 360.4 $ 346.4 $ 294.9 $ 318.1 $ 277.5
========= ========= ======== ======== ======== ========= =========
Fixed Charges:
Interest Expense $ 36.4 $ 35.7 $ 72.2 $ 74.6 $ 71.1 $ 96.2 $ 97.7
Portion of Rents Representative
of Interest Factor 6.5 6.5 12.5 12.1 11.1 9.7 9.2
--------- --------- -------- -------- -------- --------- ---------
Fixed Charges Excluding
Capitalized Interest 42.9 42.2 84.7 86.7 82.2 105.9 106.9
Capitalized Interest 0.0 0.0 0.0 0.2 0.2 0.2 0.2
--------- --------- -------- -------- -------- --------- ---------
Total Fixed Charges $ 42.9 $ 42.2 $ 84.7 $ 86.9 $ 82.4 $ 106.1 $ 107.1
========= ========= ======== ======== ======== ========= =========
Ratio of Earnings to
Fixed Charges 3.3x 3.7x 4.3x 4.0x 3.6x 3.0x 2.6x
========= ========= ======== ======== ======== ========= =========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000049573
<NAME> WHITMAN CORPORATION
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 59,700
<SECURITIES> 0
<RECEIVABLES> 386,700<F1>
<ALLOWANCES> 0
<INVENTORY> 345,100
<CURRENT-ASSETS> 864,000
<PP&E> 1,491,400
<DEPRECIATION> 736,800
<TOTAL-ASSETS> 2,447,600
<CURRENT-LIABILITIES> 541,100
<BONDS> 866,300
0
0
<COMMON> 466,100
<OTHER-SE> 158,100
<TOTAL-LIABILITY-AND-EQUITY> 2,447,600
<SALES> 1,477,700
<TOTAL-REVENUES> 1,477,700
<CGS> 957,100
<TOTAL-COSTS> 1,336,600<F2>
<OTHER-EXPENSES> 10,600
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 33,600<F3>
<INCOME-PRETAX> 96,900
<INCOME-TAX> 40,200
<INCOME-CONTINUING> 49,200<F4>
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 49,200
<EPS-PRIMARY> $0.48
<EPS-DILUTED> $0.48
<FN>
<F1>NET OF ALLOWANCE OF DOUBTFUL ACCOUNTS OF $8,000.
<F2>INCLUDES SELLING, GENERAL AND ADMINISTRATIVE EXPENSES, AMORTIZATION EXPENSE
AND COST OF GOODS SOLD.
<F3>INTEREST EXPENSE IS OFFSET BY $2,800 OF INTEREST INCOME. THEREFORE, GROSS
INTEREST EXPENSE IS $36,400.
<F4>INCOME FROM CONTINUING OPERATIONS IS REPORTED AFTER MINORITY INTEREST OF
$7,500.
</FN>
</TABLE>
