<PAGE>
1
SECURITIES AND EXCHANGE COMMISSION
OF THE SECURITIES EXCHANGE ACT OF 1934
FORM 10 - Q
[ X ] Quarterly report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended June 30, 1994 or
[ ] Transition report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934
Commission File Number 0-4625
OLD REPUBLIC INTERNATIONAL CORPORATION
--------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware No. 36-2678171
- ------------------------------- ---------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
307 North Michigan Avenue, Chicago, Illinois 60601
- -------------------------------------------------------------------------------
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: 312-346-8100
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--------- ---------
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the close of the period covered by this report.
Shares Outstanding
Class June 30, 1994
--------------------------- ------------------
Common Stock / $1 par value 51,880,529*
* Excludes 4,439,267 common shares issued, outstanding and held by an affiliate,
which are classified as treasury stock for financial accounting purposes only.
There are 11 pages contained in this report.
<PAGE>
2
OLD REPUBLIC INTERNATIONAL CORPORATION
Report on Form 10-Q / June 30, 1994
INDEX
- -------------------------------------------------------------------------------
PAGE NO.
------------
PART I FINANCIAL INFORMATION:
CONSOLIDATED SUMMARY BALANCE SHEETS 3
CONSOLIDATED SUMMARY STATEMENTS OF INCOME 4
CONSOLIDATED SUMMARY STATEMENTS OF CASH FLOWS 5
NOTES TO CONSOLIDATED SUMMARY FINANCIAL STATEMENTS 6
MANAGEMENT ANALYSIS OF FINANCIAL POSITION AND
RESULTS OF OPERATIONS 7 & 8
PART II OTHER INFORMATION 9 - 11
<PAGE>
3
<TABLE>
OLD REPUBLIC INTERNATIONAL CORPORATION
CONSOLIDATED SUMMARY BALANCE SHEETS (Unaudited)
($ in Millions)
- -------------------------------------------------------------------------------
<CAPTION>
June 30, December 31,
1994 1993
------------ ------------
<S> <C> <C>
Assets
Investments: Held to maturity:
Fixed maturity securities (at amortized cost)
(Fair value:$2,532.6 and $2,599.3) $2,607.5 $2,509.8
Other long-term investments 18.1 19.8
------------ ------------
Total 2,625.7 2,529.6
------------ ------------
Available for sale:
Fixed maturity securities (at fair value)
(Cost: $587.9 and $616.5) 575.8 642.4
Equity securities (at fair value)
(Cost: $219.6 and $180.5) 218.4 191.9
Short-term investments 245.0 254.3
------------ ------------
Total 1,039.4 1,088.7
------------ ------------
Total investments 3,665.1 3,618.4
------------ ------------
Other Assets:Cash 36.4 43.9
Accrued investment income 61.6 60.6
Accounts and notes receivable 298.7 288.3
Federal income tax recoverable - deferred 91.1 83.2
Reinsurance balances and funds held 165.6 165.8
Reinsurance recoverable:
Paid losses 28.3 20.2
Policy and claim reserves 1,541.3 1,524.2
Deferred policy acquisition costs 97.4 95.5
Sundry assets 195.4 197.7
------------ ------------
2,516.2 2,479.8
------------ ------------
Total assets $6,181.4 $6,098.3
============ ============
- -------------------------------------------------------------------------------------------
Liabilities, Preferred Stock and
Common Shareholders' Equity
Liabilities: Future policy benefits $183.9 $190.1
Losses, claims and settlement expenses 3,507.2 3,405.6
Unearned premiums 388.6 419.2
Other policyholders' benefits and funds 78.0 82.9
------------ ------------
Insurance reserves 4,157.9 4,097.9
Commissions, expenses, fees and taxes 97.5 105.8
Reinsurance balances and funds 183.0 169.5
Federal income tax payable - current --- 14.8
Debt and debt equivalents 292.3 282.7
Sundry liabilities 95.7 92.4
------------ ------------
Total liabilities 4,826.5 4,763.3
------------ ------------
Preferred Redeemable convertible preferred stock 17.3 16.6
Stock: Convertible preferred stock 3.7 3.9
Cumulative preferred stock 57.4 57.5
------------ ------------
Total preferred stock 78.6 78.0
------------ ------------
Common Common stock 57.6 57.5
Shareholders'Additional paid-in capital 456.2 455.2
Equity: Net unrealized appreciation of securities (7.8) 25.2
Retained earnings 802.4 750.2
Treasury stock (32.1) (31.3)
------------ ------------
Total common shareholders' equity 1,276.2 1,256.9
------------ ------------
Total liabilities, preferred stock
and common shareholders' equity $6,181.4 $6,098.3
============ ============
</TABLE>
See accompanying notes.
<PAGE>
4
<TABLE>
OLD REPUBLIC INTERNATIONAL CORPORATION
CONSOLIDATED SUMMARY STATEMENTS OF INCOME (Unaudited)
($ in Millions, Except Common Share Data)
- -------------------------------------------------------------------------------
<CAPTION>
Quarters Ended Six Months Ended
June 30, June 30,
--------------------- -----------------------
1994 1993 1994 1993
----------- --------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues: Net premiums earned $326.3 $286.9 $657.8 $586.4
Title, escrow and other fees 37.3 53.3 81.1 88.5
Net investment income 55.1 55.5 110.3 109.8
Realized investment gains 2.6 8.4 5.9 18.0
Other income 5.3 6.4 9.7 11.0
----------- --------- ---------- ----------
Net revenues 426.9 410.8 864.9 813.9
----------- --------- ---------- ----------
Expenses: Benefits, claims and settlement expenses 193.7 183.5 396.9 387.4
Underwriting, acquisition and insurance expenses 173.7 157.4 352.5 306.0
Interest and other expenses 5.7 6.2 11.3 12.3
----------- --------- ---------- ----------
Total expenses 373.1 347.2 760.8 705.8
----------- --------- ---------- ----------
Income before income taxes and items below 53.7 63.5 104.0 108.1
----------- --------- ---------- ----------
Income Taxes: Currently payable 8.2 16.7 23.0 28.9
Deferred 9.4 3.8 10.8 4.9
----------- --------- ---------- ----------
Total income taxes 17.6 20.5 33.9 33.8
----------- --------- ---------- ----------
36.1 42.9 70.1 74.2
Other items - net --- 0.1 --- 0.3
----------- --------- ---------- ----------
Income before cumulative effect
of accounting changes 36.0 43.0 70.1 74.5
Cumulative effect of accounting changes --- --- --- 8.6
----------- --------- ---------- ----------
Net Income: $36.0 $43.0 $70.1 $83.2
=========== ========= ========== ==========
Earnings and Primary Earnings:
Dividends Per Before cumulative effect of accounting changes $0.61 $0.73 $1.18 $1.26
Common Share: Cumulative effect of accounting changes --- --- --- 0.15
----------- --------- ---------- ----------
Net income $0.61 $0.73 $1.18 $1.41
=========== ========= ========== ==========
Fully Diluted Earnings:
Before cumulative effect of accounting changes $0.58 $0.70 $1.13 $1.20
Cumulative effect of accounting changes --- --- --- 0.14
----------- --------- ---------- ----------
Net income $0.58 $0.70 $1.13 $1.34
=========== ========= ========== ==========
Cash dividends $0.12 $0.11 $0.23 $0.21
=========== ========= ========== ==========
Average number of common and common
equivalent shares outstanding:
Primary 57,264,182 57,148,698 57,268,222 57,127,146
========== ========== ========== ==========
Fully Diluted 61,692,856 61,582,297 61,696,988 61,581,059
========== ========== ========== ==========
</TABLE>
See accompanying notes.
<PAGE>
5
<TABLE>
OLD REPUBLIC INTERNATIONAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
($ in Millions)
- --------------------------------------------------------------------------------
<CAPTION>
Six Months Ended
June 30,
---------------------------
1994 1993
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net income $70.1 $83.2
Change in non-cash items:
Deferred policy acquisition costs (1.7) (4.0)
Premiums and other receivables (7.4) 0.2
Unpaid claims and related items 77.9 34.4
Future policy benefits and policyholders' funds (29.8) (6.3)
Income taxes (6.3) 2.2
Reinsurance balances and funds 6.0 8.9
Accounts payable, accrued expenses and other 1.7 10.7
------------ ------------
Total 110.3 129.5
------------ ------------
Cash flows from investing activities:
Sales of fixed maturity securities 160.6 370.2
Sales of equity securities 11.3 21.9
Sales of other investments 2.3 1.6
Sales of fixed assets for company use 0.6 0.4
Purchases of fixed maturity securities (238.2) (418.2)
Purchases of equity securities (50.5) (57.2)
Purchases of other investments (0.6) (3.3)
Purchases of fixed assets for company use (7.0) (4.0)
Other-net --- 6.8
------------ ------------
Total (121.4) (81.9)
------------ ------------
Cash flows from financing activities:
Increase in term loans 11.0 ---
Issuance of preferred and common stocks 0.8 1.2
Issuance of debentures and notes --- ---
Repayments of term loans --- ---
Dividends on common shares (11.9) (10.3)
Dividends on preferred shares (4.0) (4.2)
Purchase of treasury stock (0.8) ---
Other-net (0.6) ---
------------ ------------
Total (5.7) (13.4)
------------ ------------
Increase (decrease) in cash and short-term investments (16.8) 34.1
Cash and short-term investments, beginning of year 298.3 280.7
------------ ------------
Cash and short-term investments, end of period $281.5 $314.9
============ ============
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest $9.8 $9.6
============ ============
Income taxes $38.6 $24.3
============ ============
</TABLE>
See accompanying notes.
<PAGE>
6
OLD REPUBLIC INTERNATIONAL CORPORATION
NOTES TO CONSOLIDATED SUMMARY FINANCIAL STATEMENTS (Unaudited)
($ in Millions, Except Share Data)
- -------------------------------------------------------------------------------
1.Accounting Policies and Basis of Presentation:
The accompanying consolidated summary financial statements have been prepared
in conformity with generally accepted accounting principles as described in
the Corporation's latest annual report to shareholders or as disclosed herein.
The financial accounting and reporting process relies on estimates and on the
exercise of judgement, but in the opinion of management all adjustments,
consisting of normal recurring accruals, necessary to a fair presentation of
the accompanying statements have been reflected therein. Realized gains or
losses on dispositions of investment securities have been reflected in the
operating results for each period presented.
2.Common Share Data:
Earnings per share have been calculated on the basis of average common and
common equivalent shares outstanding for the quarters and six months ended
June 30, 1994 and 1993. Retroactive adjustment has been made for all stock
dividends and splits declared through June 30, 1994. Primary earnings per
share calculations give effect to the deduction of dividend requirements
applicable to preferred stock of $1.2 and $2.5 for the quarter and six months
ended June 30, 1994, respectively and $1.2 and $2.7 for the quarter and six
months ended June 30, 1993, respectively. Fully diluted earnings per share are
similarly calculated, after taking into account substantially all convertible
securities and options includable for each period.
Common shares outstanding were 51,880,529 at June 30, 1994 after elimination
of 4,439,267 shares issued and outstanding, which are held by a consolidated
affiliate. These shares are classified as treasury stock for financial
accounting purposes only.
3.Unrealized Appreciation of Investments:
Cumulative net unrealized losses on investments (fixed maturity securities
available for sale and equity securities) debited to a separate account in
common shareholders' equity amounted to $7.8 at June 30, 1994. Unrealized
depreciation of investments, before applicable income tax credits of $4.3, at
June 30, 1994 included gross unrealized gains and (losses) of $10.4 and
$(22.5), respectively.
For the six months ended June 30, 1994 and 1993, net unrealized appreciation
(depreciation) of investments, net of deferred income taxes, amounted to
$(33.1) and $21.9, respectively.
<PAGE>
7
OLD REPUBLIC INTERNATIONAL CORPORATION
MANAGEMENT ANALYSIS OF FINANCIAL POSITION AND RESULTS OF OPERATIONS
Six Months Ended June 30, 1994 and 1993
- -------------------------------------------------------------------------------
OVERVIEW
This analysis pertains to the consolidated accounts of Old Republic
International Corporation. The Company conducts its business through four major
segments, namely its General (property and liability coverages), Title, Mortgage
Guaranty, and Life insurance groups.
FINANCIAL POSITION
Old Republic's financial position at June 30, 1994 reflected increases in assets
of 1.4%, liabilities of 1.3%, and common shareholders' equity of 1.5% when
compared to the immediately preceding year-end. Cash and invested assets
represented 60.8% and 61.0% of consolidated assets as of June 30, 1994 and
December 31, 1993, respectively. Relatively high short-term maturity investment
positions continued to be maintained as of June 30, 1994 to provide necessary
liquidity for specific operating needs and to enhance flexibility in investment
strategy. Changes in short-term investments reflect a large variety of seasonal
and intermediate-term factors including seasonal operating cash needs,
investment strategy, and expectations as to trends in interest yields.
Accordingly, the future level of short-term investments will vary and respond to
the dynamics of these factors and may, as a result, increase or decrease from
current levels. During the first six months of 1994, the Corporation committed
substantially all investable funds in short to intermediate-term fixed maturity
securities. Old Republic continues to adhere to its long-term policy of
investing primarily in investment grade, marketable securities; the Corporation
has not directed its investable funds to so-called "junk bonds." During the
first six months of 1994, Old Republic increased its commitment to common stock
investments which reflected growth of 13.8% vis-a-vis the related invested
balance at year-end 1993. As of June 30, 1994, the carrying value of fixed
maturity securities in default as to principal or interest was immaterial in
relation to consolidated assets or shareholders' equity.
Consolidated operations produced positive cash flows in the first half of 1994.
The parent holding company has met its liquidity and capital needs principally
through dividends paid by its subsidiaries. The insurance subsidiaries' ability
to pay cash dividends to the parent company is generally restricted by law or
subject to approval of the insurance regulatory authorities of the states in
which they are domiciled. Additionally, the terms of guarantees by the Company
of bank loans to the trustee of the Company's Employees Savings and Stock
Ownership Plan require the Company to maintain a minimum consolidated tangible
net worth and restrict the amount of debt the Company may incur, both of which
covenants are being met.
Old Republic's capitalization of $1.6 billion at June 30, 1994 consisted of debt
and debt equivalents of $292.3 million, redeemable convertible preferred stock
of $17.3 million (excluding $13.8 million of such stock classified as a debt
equivalent), convertible preferred stock of $3.7 million, cumulative preferred
stock of $57.4 million, and common shareholders' equity of $1.27 billion. The
rise in the common shareholders' equity account during the six months ended June
30, 1994 reflects primarily the retention of earnings in excess of dividends
declared on outstanding preferred and common shares and the net unrealized
depreciation of securities. During the second quarter of 1994, the Corporation
acquired $.8 million of common stock and $13 thousand of cumulative preferred
stock.
RESULTS OF OPERATIONS
Revenues:
Net premiums and fees earned in the first half of 1994 amounted to $738.9
million and were 9.5% above the amount reported for the first half of 1993. For
the second quarter of 1994, net premiums and fees earned amounted to $363.6
million and were 6.9% above the amount reported for the second quarter of 1993.
For the second quarter of 1994, the Company's General Insurance Group posted an
increase in premium revenues due to varying levels of growth in certain parts of
the Company's business, but principally among liability coverages. Title Group
premium and fee revenues declined in the second quarter of 1994 when compared to
the immediately preceding quarter and second quarter of 1993; a rise in mortgage
rates, along with a much lower level of refinancing activity, contributed to a
decline in housing sales and resales. Growth in the Mortgage Guaranty Group's
premium production was affected adversely by the factors cited for title
insurance, but offset positively by continued geographic expansion and
increasing renewal premiums.
The General Insurance Group's net premiums earned increased 6.6% to $441.1
million in the first half of 1994. The Title Insurance Group reported premiums
and fees in the first half of $214.8 million, up from $203.1 million in the
year-ago period. The Mortgage Guaranty Group continued to experience double-
digit growth in production and reported net premiums earned of $63.4 million, an
<PAGE>
8
increase of 47.4%. For the year's second quarter, premium and fees grew
(declined) by 11.9% for general insurance, (11.1%) for title insurance and 44.2%
for mortgage guaranty. Life and health premiums also rose during these 1994
periods but remained below 3% of consolidated premiums and fees.
Consolidated net investment income was $110.3 million in the first half of 1994
and $55.1 million in the second quarter of 1994, reflecting flat to slightly
lower levels when compared to corresponding 1993 periods. While invested assets
have grown as a results of positive operating cash flow, the benefits of the
greater investment base have been offset in part by a greater commitment to tax-
exempt fixed maturity securities and common stock investments that typically
produce lower current yields. Equities made up about 5.9% of the investment
portfolio at the end of the first half of 1994 compared to 4.7% one year ago.
The average annual yield on investments was 6.1% and 6.6% for the six months
ended June 30, 1994 and 1993, respectively.
While the Company's investment policies have not been designed to maximize
capital gains, in the first six months of 1994 such gains were lower than those
for the comparable period in 1993. Dispositions of securities have, as in recent
periods, been caused principally by: (1) calls prior to maturity by issuers, (2)
a desire to extend moderately the average life of the portfolio, and (3) the
Company's ongoing process of monitoring its investments with a view toward
maximizing the quality of its portfolio. For the first six months of 1994,
approximately 73% of total dispositions represented maturities and early calls
of existing holdings; for the year 1993 these transactions amounted to
approximately 58%.
Expenses:
Consolidated benefit, claim and settlement costs, as a percentage of net
premiums and fees earned, were approximately 54% and 57% in the first six months
of 1994 and 1993, respectively. For the second quarter of each year these ratios
were 53% in 1994 and 54% in 1993. Claims for property and liability coverages
were slightly lower in 1994 due to a decline in claim frequency and reduced
losses from involuntary pool assessments. Mortgage Guaranty claim costs
increased, mainly in California, while the Title and Life segments benefited
from generally lower claim provisions.
The ratio of consolidated underwriting, acquisition and insurance expenses to
net premiums and fees earned was 48% and 45% in the first six months of 1994 and
1993, respectively. These ratios were 48% and 46% for the second quarters of
1994 and 1993, respectively. Variations in these percentages between comparative
periods typically reflect changing patterns in the mix of business and the
varying production costs pertaining thereto. While Title segment operating
expenses were being reduced during this year's second quarter, most of the
benefits from these cost reductions are expected in succeeding quarters.
Income from Operations:
Income before taxes, other items, and the cumulative effect of accounting
changes decreased by 3.8% in the first half of 1994 when compared to the same
period one year ago; for the second quarter of 1994, pre-tax income decreased by
15.4% when compared to the same period in 1993. In the 1994 second quarter, the
Corporation's General and Mortgage Guaranty segments reflected higher pre-tax
operating earnings, the Life segment reported basically level to slightly lower
pre-tax earnings from operations, and the Title segment posted lower pre-tax
earnings for the aforementioned reasons. For the first half of the year the same
patterns prevailed.
The effective consolidated income tax rate was 32% and 31% in the first six
months of 1994 and 1993, respectively and 32% in the second quarter of both 1994
and 1993. The rates for each period reflect primarily the varying proportions
of pre-tax operating income derived from tax-sheltered investment income
(principally tax-exempt interest) on the one hand, and fully taxable investment
and underwriting/service income on the other hand. In August 1993, the corporate
federal income tax rate was increased from 34% to 35% retroactive to January 1,
1993. The 1993 income tax rate increase was recorded by the Company in its
third quarter 1993 financial statements on a cumulative basis as required in the
circumstances. Accordingly, the effective income tax expenses for the first half
of 1993 and 1994 are not comparable. The effective income tax rate for all of
1993 was 32%.
OTHER INFORMATION
Historical data pertaining to the operating results, liquidity, and other
financial matters applicable to an insurance enterprise such as the Company are
not necessarily indicative of expectations for future periods. The long-term
nature of the insurance business, seasonal and annual patterns in premium
production and incidence of claims, the random nature of the latter costs,
changes in market yields obtained on invested assets, and changes in government
policies affecting inflation rates and general economic conditions are some of
the factors which bear upon comparisons of quarter-to-quarter and year-to-year
operating results.
<PAGE>
9
OLD REPUBLIC INTERNATIONAL CORPORATION
FORM 10 - Q
PART II - OTHER INFORMATION
- -------------------------------------------------------------------------------
Item 4 - Submission of Matters to a Vote of Security Holders
- ------------------------------------------------------------
(a) The annual meeting of registrant's shareholders was held on May 13, 1994.
(b) Proxies for the meeting were solicited by management pursuant to Regulation
14A under the Security Exchange Act of 1934. There was no solicitation in
opposition to management's nominees for directors as listed in the proxy
statement and all such nominees were elected.
(c) At the meeting, the shareholders voted on the following matters:
1. The election of five Class I directors. There were at least 68,579,679
affirmative votes for each director and no more than 430,139 votes
withheld.
2. The approval of an amendment to the Company's Restated Certificate of
Incorporation to change the par value of the Company's Preferred Stock
to one cent per share. There were 67,818,312 votes for the amendement,
399,291 votes against the amendment and 718,984 votes that abstained
from voting.
Item 6 - Exhibits and reports on Form 8-K
- -----------------------------------------
(a) Exhibits
1. Earnings per share.
(b) Reports on Form 8-K
1. The registrant has not filed any reports on Form 8-K during the
quarter for which this report was filed.
Items other than those listed are omitted because they are not required.
<PAGE>
10
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.
Old Republic International Corporation
--------------------------------------
(Registrant)
Date: August 12, 1994
----------------
/s/ Paul D. Adams
-----------------------------------
P. D. Adams
Senior Vice President &
Chief Financial Officer
<PAGE>
<TABLE>
OLD REPUBLIC INTERNATIONAL CORPORATION
EARNINGS PER SHARE EXHIBIT
(Amounts in millions, except per share data)
- --------------------------------------------------------------------------------------------------
<CAPTION>
Computation of Primary Earnings Per Share
-----------------------------------------
Quarters Ended Six Months Ended
June 30, June 30,
------------------ ------------------
1994 1993 1994 1993
------ ------ ------ ------
<S> <C> <C> <C> <C>
Weighted average number of common shares outstanding 51.9 51.5 51.8 51.4
Add: Weighted average number of assumed common shares
to be issued upon conversion or exercise of:
Redeemable and/or Convertible Preferred Stock 4.9 5.0 4.9 5.0
Stock Options 0.3 0.5 0.3 0.5
------ ------ ------ ------
Weighted average number of common and common
equivalent shares 57.2 57.1 57.2 57.1
====== ======= ====== ======
Net income for the period $36.0 $43.0 $70.1 $83.2
Less dividends applicable to appropriate Series of
Redeemable and Convertible Preferred Stock 1.2 1.2 2.5 2.7
------ ------ ------ ------
Adjusted net income $34.7 $41.8 $67.5 $80.5
====== ====== ====== ======
Primary earnings per share $0.61 $0.73 $1.18 $1.41
====== ======= ====== ======
- ----------------------------------------------------------------------------------------------------------------
<CAPTION>
Computation of Primary Earnings Per Share
-----------------------------------------
Quarters Ended Six Months Ended
June 30, June 30,
------------------ ------------------
1994 1993 1994 1993
------ ------ ------ ------
<S> <C> <C> <C> <C>
Weighted average number of common shares outstanding 51.9 51.5 51.8 51.4
Add: Weighted average number of assumed common shares
to be issued upon conversion or exercise of:
Redeemable and/or Convertible Preferred Stock 5.1 5.1 5.1 5.2
Convertible Subordinated Debentures 4.2 4.2 4.2 4.2
Stock Options 0.3 0.5 0.3 0.6
------ ------ ------ ------
Weighted average number of common and common
equivalent shares 61.6 61.5 61.6 61.5
====== ====== ====== ======
Net income for the period $36.0 $43.0 $70.1 $83.2
Less dividends applicable to appropriate Series of
Cumulative Preferred Stock 1.2 1.2 2.5 2.6
Plus interest applicable to Convertible Debentures 1.0 1.0 2.0 2.0
------ ------ ------ ------
Adjusted net income $35.8 $42.8 $69.7 $82.6
======= ======= ======= =======
Fully diluted earnings per share $0.58 $0.70 $1.13 $1.34
======= ======= ======= =======
</TABLE>
