<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended APRIL 30, 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: 1-5190
VARITY CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 22-3091314
------------------------- ------------------
(State or other jurisdiction (IRS Employer
of Incorporation) Identification No.)
672 DELAWARE AVENUE, BUFFALO, NEW YORK 14209
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(Address of principal executive offices) (Zip Code)
Telephone number including area code: (716) 888-8000
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(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
--- ---
THE NUMBER OF SHARES OF COMMON STOCK OUTSTANDING AS OF MAY 15, 1996 WAS
39,331,526 SHARES.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Exhibit index appears on page 13.
<PAGE>
VARITY CORPORATION
QUARTERLY REPORT ON FORM 10-Q
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION: PAGE
Item 1. Financial Statements
Consolidated Condensed Statements of Operations. . . . . . . . . 3
Consolidated Condensed Balance Sheets. . . . . . . . . . . . . . 4
Consolidated Condensed Statements of Cash Flows. . . . . . . . . 5
Notes to Consolidated Condensed Financial Statements. . . . . . . 6
Item 2. Management's Discussion and Analysis . . . . . . . . . . . 7
PART II. OTHER INFORMATION:
Item 1. - Legal Proceedings . . . . . . . . . . . . . . . . . . . . 11
Item 2. - Changes in Registered Securities. . . . . . . . . . . . . 11
Item 3. - Defaults upon Senior Securities . . . . . . . . . . . . . 11
Item 4. - Submission of Matters to a Vote of Security Holders . . . 11
Item 5. - Other Information . . . . . . . . . . . . . . . . . . . . 11
Item 6.(a) - Exhibits . . . . . . . . . . . . . . . . . . . . . . . 11
Item 6.(b) - Reports on Form 8-K. . . . . . . . . . . . . . . . . . 11
SIGNATURES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
UNLESS OTHERWISE INDICATED REFERENCES TO "COMPANY" MEAN VARITY CORPORATION AND
ITS SUBSIDIARIES AND REFERENCES TO "FISCAL" MEAN THE COMPANY'S YEAR ENDED
JANUARY 31 (E.G. FISCAL 1996 REPRESENTS THE PERIOD FEBRUARY 1, 1996 TO JANUARY
31, 1997).
Page 2
<PAGE>
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
VARITY CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED APRIL 30,
(Unaudited)
(Dollars in millions except per share amounts)
<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
Sales $ 585.1 $ 595.3
---------- ----------
Expenses:
Cost of goods sold 478.4 486.0
Marketing, general and administration 43.3 42.4
Engineering and product development 27.0 23.4
Interest, net 5.2 5.0
Other (income) expense, net 0.6 (0.3)
Restructuring charge (Note 2) 5.0 --
---------- ----------
559.5 556.5
---------- ----------
Income before income taxes, earnings of associated
companies and discontinued operation 25.6 38.8
Income tax provision (6.4) (8.9)
---------- ----------
Income before earnings of associated companies and
discontinued operation 19.2 29.9
Equity in earnings of associated companies 2.8 3.8
---------- ----------
Income before discontinued operation 22.0 33.7
Earnings from discontinued operation -- 0.5
---------- ----------
Net income $ 22.0 $ 34.2
---------- ----------
---------- ----------
Income attributable to common stockholders $ 21.4 $ 33.6
Earnings per common share:
Before discontinued operation $ 0.54 $ 0.80
Discontinued operation -- 0.01
---------- ----------
Net income $ 0.54 $ 0.81
---------- ----------
---------- ----------
Weighted average shares of common stock
and equivalents (in thousands) 39,710 41,382
</TABLE>
See accompanying Notes to Consolidated Condensed Financial Statements
Page 3
<PAGE>
VARITY CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
(Unaudited)
(Dollars in millions)
April 30, January 31,
1996 1996
--------- -----------
Assets
Current assets:
Cash and cash equivalents $ 37.7 $ 78.4
Marketable securities 33.2 33.7
Receivables 388.2 377.4
Inventories (Note 3) 159.4 151.2
Prepaid expenses and other 27.8 29.4
------- -------
Total current assets 646.3 670.1
Investments in associated and other companies 120.9 117.2
Fixed assets, net 685.1 674.5
Other assets and intangibles 383.2 373.3
------- -------
$ 1,835.5 $ 1,835.1
------- -------
------- -------
Liabilities
Current liabilities:
Current portion of long-term debt and notes
payable $ 20.5 $ 6.7
Accounts payable 271.4 283.2
Accrued liabilities 236.6 228.6
------- -------
Total current liabilities 528.5 518.5
------- -------
Non-current liabilities:
Long-term debt 150.5 151.0
Other long-term liabilities 327.0 351.1
------- -------
Total non-current liabilities 477.5 502.1
------- -------
Stockholders' equity (Note 4):
Preferred stock 6.8 6.8
Common stock 643.6 643.3
Contributed surplus 656.3 656.3
Deficit (274.5) (295.9)
Other (24.8) (24.0)
Treasury stock at cost (177.9) (172.0)
------- -------
Total stockholders' equity 829.5 814.5
------- -------
$ 1,835.5 $ 1,835.1
------- -------
------- -------
See accompanying Notes to Consolidated Condensed Financial Statements
Page 4
<PAGE>
VARITY CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED APRIL 30,
(Unaudited)
(Dollars in millions)
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 22.0 $ 34.2
Adjustments to reconcile net income to cash
provided by operating activities:
Depreciation and amortization 24.7 23.1
Other (49.9) (11.5)
----------- -----------
Cash provided (used) by operating activities (3.2) 45.8
----------- -----------
Cash flows from investing activities:
Purchases of marketable securities (3.5) (9.5)
Proceeds from sales of marketable securities 3.0 10.7
Additions to fixed assets (32.5) (33.7)
Other (11.5) 1.9
----------- -----------
Cash used by investing activities (44.5) (30.6)
----------- -----------
Cash flows from financing activities:
Proceeds from bank borrowings 17.2 14.2
Repayments of bank borrowings (0.4) (10.7)
Proceeds from long-term debt 0.2 0.1
Repayments of long-term debt (3.6) (1.6)
Repurchases of common stock (5.9) (30.1)
Other (0.3) (0.5)
----------- -----------
Cash provided (used) by financing activities 7.2 (28.6)
----------- -----------
Effect of foreign currency translation on
cash and cash equivalents (0.2) 2.9
----------- -----------
Decrease in cash and cash equivalents
during the period (40.7) (10.5)
Cash and cash equivalents at beginning of period 78.4 147.0
----------- -----------
Cash and cash equivalents at end of period $ 37.7 $ 136.5
----------- -----------
----------- -----------
Cash paid for:
Interest $ 0.4 $ 0.8
Income taxes $ 4.0 $ 1.8
</TABLE>
See accompanying Notes to Consolidated Condensed Financial Statements.
Page 5
<PAGE>
VARITY CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
Three Months Ended April 30, 1996 and 1995
(Unaudited)
(Dollars in millions unless otherwise stated)
1. BASIS OF PRESENTATION
The accompanying unaudited consolidated condensed financial statements have been
prepared by management and in the opinion of management contain all adjustments,
consisting of normal recurring adjustments, necessary to present fairly the
financial position of the Company as of April 30, 1996 and January 31, 1996 and
the results of its operations and cash flows for the three months ended April
30, 1996 and 1995. The consolidated condensed financial statements should be
read in conjunction with the consolidated financial statements and notes thereto
included in the Company's Form 10-K for the fiscal year ended January 31, 1996.
Results for interim periods are not necessarily indicative of those to be
expected for the year.
2. RESTRUCTURING CHARGE
During the quarter ended April 30, 1996, the Company's engines business recorded
a $5.0 million charge ($4.2 million net of tax) in connection with contractual
termination benefits related to a voluntary early retirement program.
3. INVENTORIES
The major classes of inventory are as follows:
April 30, January 31,
1996 1996
--------- -----------
Raw material $ 67.3 $ 61.1
Work in process 28.6 31.9
Finished goods 63.5 58.2
------- -------
$ 159.4 $ 151.2
------- -------
------- -------
4. STOCKHOLDERS' EQUITY
The following table summarizes changes in stockholders' equity that occurred
during the three months ended April 30, 1996:
<TABLE>
<CAPTION>
Thousands of
shares
outstanding Equity (Dollars in millions)
------------------ ---------------------------------------------------------------------
Total
Class II Class II Contrib- stock-
preferred Common preferred Common uted Treasury holders'
stock stock stock stock surplus Deficit Other stock equity
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, January 31, 1996 2,001 39,478 $6.8 $643.3 $656.3 $(295.9) $(24.0) $ (172.0) $814.5
Exercise of stock options 10 .3 .3
Repurchases of common stock (158) (5.9) (5.9)
Foreign currency translation
adjustment .2 .2
Dividends on Class II
preferred stock (.6) (.6)
Unrealized losses on marketable
securities (1.0) (1.0)
Net income 22.0 22.0
- ----------------------------------------------------------------------------------------------------------------------
Balance, April 30, 1996 2,001 39,330 $6.8 $643.6 $656.3 $(274.5) $(24.8) $(177.9) $ 829.5
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
As of April 30, 1996 options to purchase 3.3 million shares of common stock were
outstanding.
Page 6
<PAGE>
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
OVERVIEW
In October 1995, the Company sold substantially all the net operating
assets of Pacoma at book value, resulting in no gain or loss. Such operations
have historically been referred to as the Company's "other" segment. As a
result of the sale, the "other" segment has been presented as a discontinued
operation in the accompanying financial statements.
For the three months ended April 30, 1996, the Company earned $22.0 million
($.54 per share) on sales of $585.1 million, compared with income before
discontinued operations of $33.7 million ($.80 per share) on sales of $595.3
million for the comparable period in the prior year. Excluding the effect, net
of tax, of the Company's restructuring charge in the current quarter, income
from continuing operations amounted to $26.2 million ($.65 per share). Net
income in the prior year first quarter of $34.2 million ($.81 per share)
included earnings from discontinued operation of $0.5 million.
SEGMENT OPERATING REVIEW
(Dollars in millions) Three Months Ended
April 30,
____________________________
%
1996 1995 Change
---- ---- ------
Sales:
Automotive products:
Brake Systems $ 336 $ 321 5
Heavy Duty Brakes 30 34 (12)
Eliminations - (1) -
------- ------
366 354 3
Engines 219 241 (9)
------- ------
Total $ 585 $ 595 (2)
------- ------
------- ------
Operating income:
Automotive products:
Brake Systems $ 29 $ 32 (9)
Heavy Duty Brakes (1) - -
------- ------
28 32 (13)
------- ------
Engines:
Before restructuring charge 19 20 (5)
Restructuring charge (5) - -
------- ------
14 20 (30)
------- ------
Total $ 42 $ 52 (19)
------- ------
------- ------
Page 7
<PAGE>
AUTOMOTIVE PRODUCTS
United States light vehicle demand during the first quarter of fiscal 1996
improved as measured by a 10% increase in vehicle sales over the comparable
fiscal 1995 period, with sales of pick-ups, vans and sport utility vehicles
(light trucks) increasing 17%. North American industry production of light
vehicles, which incorporates Kelsey-Hayes' products and influences the Company's
automotive products segment, decreased 4% during the same period, in part due to
the 17-day strike at General Motors. Light truck production, however, increased
5%. Within Varity's automotive products segment, VarityKelsey-Hayes brake
systems recorded sales of $336 million in the quarter ended April 30, 1996, an
increase of 5% from the first quarter of fiscal 1995, principally on the
strength of higher anti-lock braking systems (ABS) sales in Europe.
VarityKelsey-Hayes brake systems segment operating income in the first
quarter decreased to $29 million from $32 million in the first quarter of the
prior year, principally due to one-time operating disruptions related to lost
production from the strike at General Motors and to a lesser extent, costs
associated with higher engineering and product development and expenditures
related to new business activities in Asia.
The automotive products segment also includes sales of products for the
heavy and medium duty truck and trailer market by VarityDaytonWalther. Sales of
this unit decreased $4 million to $30 million in the first quarter of 1996, due
to the aforementioned strike at General Motors and a softening in the primary
markets that it serves. Lower volumes resulted in a $1 million operating loss
for the three months ended April 30, 1996 as compared with the prior year's
first quarter breakeven results.
ENGINES
Demand for diesel engines in the major market sectors in which the
Company's VarityPerkins engines segment participates, particularly the power
generation sector, remained soft during the first quarter of fiscal 1996.
Additionally, the strengthening of the U.S. dollar versus the pound sterling
lowered the translated values of the unit's foreign sales. As a result, total
engines segment sales declined 9% to $219 million in the quarter ended April 30,
1996, as compared with the same period in the prior year. Excluding the impact
of fluctuations in foreign exchange rates, sales in the current quarter would
have only declined by $9 million or 4% as compared to the same period in the
prior year.
Operating income for the engines segment (excluding the restructuring
charge) decreased 5% to $19 million in the first quarter of fiscal 1996,
reflecting lower sales partially offset by on-going success with margin
improvement and cost control programs in the current quarter. Operating income
as a percentage of sales increased in the current quarter to 8.7% (before the
restructuring charge) from 8.3% in the same period last year. During the
current quarter the engines segment recorded a $5.0 million restructuring charge
in connection with contractual termination benefits related to a voluntary early
retirement program. As a result, operating income for the quarter amounted to
$14 million.
NON-SEGMENT OPERATING REVIEW
Income tax expense amounted to $6.4 million in the quarter ended April 30,
1996, which is representative of the Company's anticipated effective tax rate of
25% for fiscal 1996.
Equity in earnings of associated companies of $2.8 million for the current
quarter declined $1.0 million from the prior year's first quarter principally
due to volume declines at the Company's affiliate, Hayes Wheels International,
Inc. (Hayes Wheels), associated with lost production arising from the General
Motors strike.
Page 8
<PAGE>
As previously announced, on May 31, 1996, the Boards of Directors of the
Company and Lucas Industries plc, a United Kingdom-based international supplier
of advanced technology systems, products and services to the automotive and
aerospace markets, unanimously approved a definitive agreement to merge the two
companies. The transaction is subject to approval by shareholders of both
companies and various regulatory approvals in both the U.S. and Europe. It is
anticipated that the merger will be completed in early Fall.
In March 1996, subsequent to the Company's announcement that it had
withdrawn its proposal to acquire the remaining 9.4 million outstanding shares
of Hayes Wheels it did not already own, the Company agreed to vote its shares of
Hayes Wheels in favor of the proposed merger with Motor Wheel Corporation (Motor
Wheel) and to sell its 46.3% interest to Motor Wheel upon the occurrence of
certain events. The Company will receive total consideration of approximately
$261 million - $235 million in cash and $26 million in stock of the merged
company. The Company anticipates recording an after-tax gain of approximately
$100 million upon completion of the sale which is expected to occur during the
second quarter of fiscal 1996.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
Cash used by operations during the first three months of fiscal 1996 of
$3.2 million was unfavorable as compared to the same period last year primarily
due to lower net income in the current quarter and working capital uses
resulting from moderate increases in receivables and inventories as well as
decreases in accounts payable. Such working capital uses were funded with cash
as well as notes payable, which together with the current portion of long-term
debt, increased $13.8 million to $20.5 million at April 30, 1996.
Unused long-term and short-term lines of credit at April 30, 1996 were
$159.8 million and $128.0 million, respectively. Management believes that
Varity's strong financial condition and operating results will continue to
improve its access to credit markets and that its credit facilities and cash
flow from operations will continue to be sufficient to meet its operating needs.
Certain of the Company's loan agreements provide for financial covenants
relating to such matters as the maintenance of specified financial ratios and
minimum net worth. Certain loan agreements also contain cross-default
provisions. At April 30, 1996, the Company and each of its subsidiaries were in
compliance with their financial covenants. Management expects that the Company
and each of its subsidiaries will remain in compliance during the period ending
April 30, 1997.
Receivables increased $10.8 million to $388.2 million at April 30, 1996
from $377.4 million at January 31, 1996, primarily due to marginally higher
sales in the later portion of the current quarter.
Inventories of raw materials, work-in-process and finished products
increased $8.2 million to $159.4 million at April 30, 1996 from $151.2 million
at January 31, 1996, primarily due to routine adjustments in manufacturing
schedules.
Accounts payable and accrued liabilities decreased $3.8 million during the
first three months of fiscal 1996 to $508.0 million at April 30, 1996, primarily
due to general disbursement activity, partially offset by normal
reclassifications to current liabilities from long-term.
Net fixed assets increased $10.6 million to $685.1 million at April 30,
1996 due to capital additions exceeding depreciation and disposals. Capital
expenditures for the first three months of fiscal 1996 were $32.5 million
compared to $33.7 million last year, and depreciation and amortization were
$24.7 million and $23.1 million, respectively, for the same periods. Capital
expenditures for fiscal 1996 should approximate $190 million. These
expenditures will be mainly for normal equipment replacements and operating
improvements related to reducing costs and increasing output.
Page 9
<PAGE>
Other assets and intangibles increased $9.9 million to $383.2 million at
April 30, 1996, primarily due to contributions to certain overfunded pension
plans in the United Kingdom.
Other long-term liabilities decreased $24.1 million to $327.0 million at
April 30, 1996, primarily due to normal reclassifications to current
liabilities.
Stockholders' equity increased by $15.0 million to $829.5 million at April
30, 1996. The increase resulted primarily from net income of $22.0 million
partially offset by repurchases of 158,000 shares of common stock for $5.9
million and preferred dividends paid of $.6 million.
The Company enters into forward exchange contracts to hedge certain firm
sales commitments, net of offsetting purchases, denominated in foreign
currencies. In addition, forward exchange contracts are entered into for a
portion of anticipated sales commitments, net of anticipated purchases, expected
to be denominated in foreign currencies. The purpose of such foreign currency
hedging activities is to protect the Company from the risk that the eventual
cash flows resulting from the sale of products to foreign customers (net of
purchases from foreign suppliers) will be adversely affected by fluctuations in
exchange rates. The Company has also entered into interest rate swaps to manage
its exposure to increases in interest rates on a floating-rate revolving credit
facility in the United Kingdom. The Company does not hold or issue financial
instruments for trading purposes.
The Company has ongoing short-term cash requirements for working capital,
capital expenditures, dividends, interest and debt payments. The Company
believes that its cash requirements will be met through internally and
externally generated sources, existing cash balances and utilization of
available borrowing facilities.
As a result of the Company's concerted actions over recent years to reduce
debt and increase operating efficiencies, the Company's financial position and
liquidity have improved markedly. The Company believes these actions have
improved its access to capital markets and will better posture the Company to
finance investment in and expansion of the growth areas of its businesses. In
order to maintain financial flexibility the Company has filed with the
Securities and Exchange Commission a registration statement covering $100
million of debt securities of the Company and Kelsey-Hayes Company which has not
yet become effective; the Company has no immediate plans to make an offering
under such registration statement.
During the next five years the Company believes that its cash requirements for
working capital, capital expenditures, dividends, interest and debt repayments
will continue to be met through internally and externally generated sources and
utilization of available borrowing sources.
The Company, primarily through its automotive products segment, is involved
in a limited number of remedial actions under various federal and state laws and
regulations relating to the environment which impose liability on parties to
clean up, or contribute to the cost of cleaning up, sites on which their
hazardous wastes or materials were disposed or released. The Company believes
that it has made adequate provision for costs associated with known remediation
efforts in accordance with generally accepted accounting principles and does not
anticipate the future cash requirements of such efforts to be significant. The
Company has made no provision for any unasserted claims as it is not possible to
estimate the potential size of such future claims, if any.
OUTLOOK
The Company believes that the balance of fiscal 1996 will be characterized by
difficult economic conditions in light of anticipated full year North American
light vehicle production declines and generally soft economies in Europe.
Subject to the severity of the foregoing, as well as the effects of any
additional labor disruptions at the Big Three, the Company anticipates that it
will increase sales and net income for the full year through higher sales of
four-wheel ABS at VarityKelsey-Hayes and the launch of new engines and expanded
market share at VarityPerkins.
Page 10
<PAGE>
CAUTIONARY STATEMENT
This report contains forward-looking statements within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act
of 1934. Forward-looking statements contained herein involve a number of risks
and uncertainties including, but not limited to, demand for the Company's
products, pricing pressure from purchasers which could affect the Company's
gross margins and sales levels, competition with respect to each of the
Company's product areas, general economic conditions which could materially
affect demand for the Company's products, the need for the Company to keep pace
with technological developments and labor relations of the Company and its
customers. In addition, factors relating to economic conditions may vary and be
more or less favorable to the Company with respect to different products or
different geographical areas. Actual results may also be subject to the impact
of fluctuations in exchange rates for foreign currencies in which sales are made
or expenses are incurred.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN REGISTERED SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
Exhibit 11 - Earnings per share computations
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K:
On June 4, 1996 the Company filed a report on Form 8-K reporting
on Items 5 and 7.
Page 11
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
VARITY CORPORATION
/s/ N.D. Arnold /s/ Mark J. MacGuidwin
- ---------------------------- ---------------------------
N.D. Arnold Mark J. MacGuidwin
Executive Vice President, Corporate Development Vice President, Controller
and Acting Chief Financial Officer (Principal Accounting Officer)
(Principal Financial Officer)
June 5, 1996
Page 12
<PAGE>
VARITY CORPORATION
INDEX TO EXHIBITS
Exhibit
Number
- -------
11.0 PRIMARY EARNINGS PER SHARE COMPUTATIONS
27.0 FINANCIAL DATA SCHEDULE
Page 13
<PAGE>
EXHIBIT 11
VARITY CORPORATION
PRIMARY EARNINGS PER SHARE COMPUTATIONS
(Dollars in millions except per share amounts)
Three months ended April 30,
----------------------------
1996 1995
------ ------
Income before discontinued operation . . . . . . . . . . $22.0 $33.7
Preferred stock dividend entitlements. . . . . . . . . . (.6) (.6)
------ ------
Income attributable to common stockholders before
discontinued operation (A) . . . . . . . . . . . . . . 21.4 33.1
Earnings (loss) from discontinued operation (B). . . . . -- .5
------ ------
Net income attributable to common stockholders (C) . . . $21.4 $33.6
------ ------
------ ------
Weighted average shares of common stock outstanding
during the period (in thousands) . . . . . . . . . . . 39,377 40,977
Common stock options . . . . . . . . . . . . . . . . . 333 405
------ ------
Primary weighted average shares of common stock
outstanding during the period (D). . . . . . . . . . . 39,710 41,382
------ ------
------ ------
Primary income per share of common stock:
Before discontinued operation (A DIVIDED BY D) . . . . $.54 $.80
Discontinued operation (B DIVIDED BY D). . . . . . . . -- .01
------ ------
Net income (C DIVIDED BY D). . . . . . . . . . . . . . $.54 $.81
------ ------
------ ------
Note: Fully diluted earnings per share computations are not presented as no
significant dilution exists.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-31-1997
<PERIOD-START> FEB-01-1996
<PERIOD-END> APR-30-1996
<CASH> 38
<SECURITIES> 33
<RECEIVABLES> 388
<ALLOWANCES> 0
<INVENTORY> 159
<CURRENT-ASSETS> 646
<PP&E> 685
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,836
<CURRENT-LIABILITIES> 529
<BONDS> 151
0
7
<COMMON> 644
<OTHER-SE> 179
<TOTAL-LIABILITY-AND-EQUITY> 1,836
<SALES> 585
<TOTAL-REVENUES> 585
<CGS> 478
<TOTAL-COSTS> 478
<OTHER-EXPENSES> 32
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5
<INCOME-PRETAX> 26
<INCOME-TAX> 6
<INCOME-CONTINUING> 22
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 22
<EPS-PRIMARY> .54
<EPS-DILUTED> 0
</TABLE>
