UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
October 23, 1995 (October 23, 1995)
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Date of Report (Date of earliest event reported)
AMERICAN BRANDS, INC.
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(Exact name of registrant as specified in its charter)
Delaware 1-9076 13-3295276
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
l700 East Putnam Avenue, Old Greenwich, Connecticut 06870-0811
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (203) 698-5000
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<PAGE>
INFORMATION TO BE INCLUDED IN THE REPORT
Item 5. Other Events.
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Registrant's press release dated October 23, 1995 is filed herewith as
Exhibit 20 and is incorporated herein by reference.
Item 7. Financial Statements and Exhibits.
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(c) Exhibits.
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20. Press release of Registrant dated October 23, 1995.
This Current Report shall not be construed as a waiver of the right to
contest the validity or scope of any or all of the provisions of the Securities
Exchange Act of 1934 under the Constitution of the United States, or the
validity of any rule or regulation made or to be made under such Act.
SIGNATURE
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Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this Current Report to be signed on its
behalf by the undersigned thereunto duly authorized.
AMERICAN BRANDS, INC.
---------------------
(Registrant)
By Robert L. Plancher
--------------------------------
Robert L. Plancher
Senior Vice President
and Chief Accounting Officer
Date: October 23, 1995
<PAGE>
EXHIBIT INDEX
Sequentially
Exhibit Numbered Page
- ------- -------------
20. Press release of Registrant dated
October 23, 1995.
EXHIBIT 20
Contact: Roger W. W. Baker
(203) 698-5148
Daniel A. Conforti
(203) 698-5132
AMERICAN BRANDS' E.P.S. FROM ONGOING OPERATIONS
UP 36% IN THIRD QUARTER, 25% YEAR-TO-DATE;
EXPECTS 17%+ INCREASE FOR FULL YEAR
Old Greenwich, CT, October 23, 1995 -- American Brands, Inc.
(NYSE-AMB) today announced that earnings per Common share from
ongoing operations for the quarter ended September 30, 1995 rose
36% to 72 cents per share, compared with 53 cents per share for
the third quarter of 1994. Fully diluted earnings per share rose
37% to 71 cents.
For the nine months, E.P.S. from ongoing operations was
$1.95, up 25% from $1.56 last year. Fully diluted earnings per
share rose 24% to $1.92.
Chairman and Chief Executive Officer Thomas C. Hays noted
that "the excellent performance in both periods reflects the
benefits of our restructuring as well as continued gains by our
brands. Over the past ten months, we have massively restructured
American Brands. We've shed low-growth, low p/e businesses that
accounted for 42% of our operating income just three years ago,
and our ongoing results reflect the powerful benefit of that
restructuring.
"American Brands is firing on all cylinders," Hays said,
noting that nearly all the Company's leading brands were
performing extremely well. "Year-to-date, our U.K.-based
tobacco, golf and office products brands have achieved double-
digit growth in operating company contribution." The Company's
powerful portfolio includes 15 brands that each posted sales of
more than $100 million last year, and many others are market
leaders with great prospects. "We've also invested $1 billion so
far this year reducing fully diluted shares by 12% since year-
end. Subject to market conditions, we intend to repurchase
nearly five million more shares still authorized. In addition,
over the past 12 months, we reduced total debt by $1.3 billion.
"The outlook is also very positive," Hays added. "1995 will
be an excellent year for American Brands, with another favorable
ongoing E.P.S. comparison in the fourth quarter. For the year,
we expect earnings per share to exceed last year's restated $2.39
primary, or $2.37 fully diluted, from ongoing operations by more
than 17%.
"For the 'new' American Brands, we set an aggressive goal to
generate long-term E.P.S. growth in the range of 10%. Obviously,
we're off to a great start in achieving that goal, and we're
bullish on the future. All our key brands have powerful
leadership positions. We have a very strong balance sheet and
enormous cash flow that give us tremendous flexibility. And we
are determined to delight our consumers and our shareholders."
For the third quarter, even though results were lower for
the hardware and home improvement brands, ongoing operations
posted a 4% overall increase in contribution.
Hays noted that the U.K.-based tobacco brands led the
charge. Contribution for the Gallaher Tobacco brands was up $12
million, or 8%, in the quarter, driven by a worldwide increase in
cigarette volume and a solid gain in operating margin. In the
face of very challenging market conditions, Gallaher's strategy
to grow its profits while protecting its powerful position is
working well.
Hays commented on the strong, sustained achievements by the
golf and office products brands. "Titleist golf, which is
performing superbly on all fronts, had another record quarter.
Contribution was up 12%, and double-digit volume gains were
achieved in golf balls, golf shoes, golf gloves and golf clubs in
both the quarter and nine month periods. ACCO's office product
brands are also achieving sustained excellent growth, with
contribution up 8% in the quarter, backed by continued strong
increases in volume and in market share, propelled by new
products."
The distilled spirits brands also had a good quarter. While
competition is intense, contribution growth for these brands was
4% for the quarter, and Hays noted that their powerful cash flow
further benefits earnings per share. Notably, Jim Beam Brands'
international operations achieved double-digit growth, and Whyte
& Mackay, where a successful Jim Beam executive took charge at
the end of June, had an encouraging quarter with solid profit and
volume increases.
Hardware and home improvement was the one category posting
lower profit; contribution was down 10% for the quarter. In 1994
and in the first quarter of 1995, these brands achieved double-
digit gains. Orders softened significantly during the second
quarter, particularly for Moen, due to the general slowdown at
home centers and in new construction as well as significant
destocking by the trade. That softness, along with a very weak
housing market in Canada, continued into the summer. In recent
weeks, however, there has been encouraging strengthening in
incoming orders. Hays commented that "if this strengthening
continues, we would anticipate profit growth from these brands
for the fourth quarter and the full year. Encouragingly, the
Master Lock and Waterloo brands achieved record sales in both the
quarter and nine months.
"As to the fourth quarter," Hays said, "we expect another
favorable ongoing E.P.S. comparison. Golf and office products
both have great momentum, driven by strong consumer demand, and
both should achieve solid double-digit growth in the fourth
quarter. Our international tobacco and distilled spirits brands
had unusual benefits last year that will result in unfavorable
comparisons in this year's fourth quarter. Notably for Gallaher,
the U.K. government announced two separate excise tax increases
in the 1994 fourth quarter, leading to distortions in trade
buying that benefited that quarter. For distilled spirits, we
expect modest growth at Jim Beam Brands, but contribution will be
lower at Whyte & Mackay, which benefited last year from
nonrecurring items, principally one-time bulk sales. Despite
these challenges, which are expected to result in lower
consolidated operating company contribution, we expect a modest
increase in E.P.S. in the fourth quarter, reflecting the benefit
of our aggressive share repurchases and substantial debt
reduction.
"Looking to 1996, we believe that our long-term goal to
achieve E.P.S. growth in the range of 10% is realistic and
attainable, assuming economic and exchange rate stability and a
satisfactory pricing environment."
Restructuring
With the disposal of the U.K.-based retailing operations in
July, the entire nonstrategic specialty businesses group has now
been sold. The housewares business was sold in May, and a
smaller U.K. operation was sold in February. The proceeds from
the sale of those nonstrategic businesses were higher than
anticipated. As a result, $20 million that was provided in
connection with the dispositions was reversed in the third
quarter. This $20 million credit does not affect the ongoing
operations comparisons, but it does benefit the reported net
income comparison, which includes results from all the operations
sold.
With the completion of these dispositions, 'ongoing
operations,' which previously excluded The American Tobacco
Company (as well as Franklin Life, which was accounted for as a
discontinued operation) has been restated to also exclude the
specialty operations. Franklin Life was sold in this past
January, and The American Tobacco Company was sold in December
1994.
Total proceeds from these dispositions, which represented
42% of 1992 consolidated operating income, were nearly $2.5
billion.
Earlier in 1994, the U.K.-based optical business and the
Acushnet Rubber division were sold.
Share Repurchases
We have invested $1 billion during 1995 to reduce fully
diluted shares. Through September, we had repurchased 20 million
shares of our Common stock. We also retired a $200 million
convertible issue this past April. This had the effect of
reducing fully diluted shares by another five million shares.
Subject to market conditions, we intend to complete the purchase
by year-end of nearly 5 million shares still authorized. So, by
year-end, we may well have reduced fully diluted shares by as
many as 30 million shares, or 14%.
Brand Highlights
:::International Tobacco:::
Gallaher is powerfully positioned as the U.K. market leader
with the two top selling brands. Worldwide cigarette units were
up 2% in the third quarter, with a 20% increase in exports
offsetting a 3.4% unit decline in the U.K. Shipments to the
Former Soviet Union (F.S.U.) were up sharply; the F.S.U. trade is
somewhat opportunistic, but we believe there are further
interesting opportunities. For the nine months, F.S.U. shipments
approximated last year's level, and exports to continental Europe
were up 5%; U.K. shipments declined 2.3%, approximating the 2%
estimated decline in U.K. industry consumer sales. For the nine
months, Gallaher's share of U.K. consumer sales was estimated at
39.3%. Gallaher has introduced a number of new cigarette
products this year to respond to ongoing downtrading by consumers
as well as growing preference for lower "tar" products. The
downtrading from premium to lower price cigarettes has been
driven by significant excise tax increases in the U.K.
The 8% contribution increase in the quarter reflected the
benefit of an April cigarette price increase averaging about 5%
(excluding excise taxes) as well as a higher average exchange
rate for the British pound. In sterling, contribution was up 6%.
Gallaher is also benefiting from facility rationalization,
notably the ongoing consolidation of six older distribution
centers into a modern, new center.
:::Distilled Spirits:::
Third quarter sales and contribution were records, and
worldwide volume was up 2%.
Jim Beam Brands, the #2 distilled spirits business in the
U.S., had excellent growth in international markets, with sales
and contribution up 18% and 19%, respectively. Jim Beam bourbon
has just become the largest selling whisky of any type in
Germany, Austria and Latvia.
In the U.S., After Shock, which was introduced in March, is
already the most successful new product Beam has ever introduced,
and sales are now projected to reach 170,000 cases this year.
Although industrywide pricing remains difficult, Beam is,
nevertheless, benefiting from selective price increases in
regional markets.
Beam's worldwide case sales declined 3% in the quarter,
reflecting a 7% decline in domestic shipments. The comparison is
with a particularly strong quarter last year. For the nine
months, worldwide shipments were up 1%, even though domestic
shipments declined 1%. On a year-to-date basis, Beam's U.S.
depletion trend on major brands is approximately equal to the
industry's. Estimated U.S. depletions for Jim Beam bourbon,
which is celebrating its 200th anniversary, were up in both the
quarter and nine months.
At Whyte & Mackay, contribution was up 25% in the quarter on
a 26% volume increase. Exports rose sharply, reflecting
substantial bulk shipments. In the U.K., where the pricing
environment continues to be intensely competitive, shipments were
flat, but the company's two leading scotch brands, Whyte & Mackay
Special Reserve and The Claymore, achieved strong worldwide
volume increases in both the quarter and nine months. Year-to-
date, Whyte & Mackay's 1.9% decline in U.K. scotch shipments was
significantly better than the industry trend, and their worldwide
scotch shipments were up 7.8%.
Late in June, Kenneth Hitchcock, who had led Jim Beam's very
successful Australian operation, was named chairman and chief
executive of Whyte & Mackay. Under his direction, Whyte & Mackay
is reevaluating all aspects of its operations, is developing
plans to grow its brands and is investigating significant
measures to reduce costs and maximize manufacturing efficiencies.
:::Hardware and Home Improvement Products:::
In this period of market softness, Moen has strengthened its
share position in the U.S. and is the best-selling faucet brand
in North America. Moen's entire product line of kitchen,
bathroom and bar faucets just became the first brand to be
certified as meeting the exacting requirements of the new NSF
(National Sanitation Foundation) standard; this standard is a
means of measuring the impact of certain plumbing fixtures on the
quality of drinking water. Moen's powerful 1995 television
advertising has significantly increased consumer awareness, and
Moen now ranks number 1 in several key measures. Master Lock is
shooting with both barrels: both padlocks and the fast-growing
door lock operations achieved record sales in the quarter.
:::Office Products:::
ACCO has continued to build on its position as the world
leader in office supplies. Sales were up 15% to a record,
reflecting solid gains in units and market share. Sales gains
were particularly strong in North America and Australia, though
solid increases were achieved in all regions. Notable gains have
been posted by the ACCO, Wilson Jones, Day-Timers, Swingline and
Rexel brands, all of which are leaders in their categories.
Margins eroded somewhat in the quarter, reflecting rapid
escalation in raw material costs and costs associated with major
growth initiatives. Raw material costs now appear to be
stabilizing, and ACCO has announced further price increases
effective during the fourth quarter and early 1996. The growth
initiatives should yield significant profits in future periods.
These initiatives include the successful launch of Day-Timers
products in retail superstores and the office products trade, the
introduction of Day-Timers software products, and key customer
conversions to Wilson Jones vinyl binder products.
:::Golf:::
The Titleist and Foot-Joy brands are the world leaders in
quality golf balls, golf shoes and golf gloves. The Titleist
ball is continuing to dominate the worldwide tours, with 97 wins
this year versus 20 for its nearest competitor. Titleist is the
most played ball in professional golf, the worldwide tournament
wins leader and the number 1 money-winning ball. Titleist is
also achieving particularly notable success in the club category;
year-to-date club sales are up 42%, and its on-course market
share has increased nearly 3 percentage points in the past year
to over 10%.
Titleist is achieving excellent growth in international
markets, notably including strong gains in Japan. To further
strengthen Titleist's low cost position, a joint venture to
manufacture Foot-Joy golf shoes in China commenced operations
during the quarter.
Other Data
Fluctuations in exchange rates for foreign currencies,
primarily the British pound, favorably affected ongoing sales,
income from ongoing operations and ongoing E.P.S. by $33 million,
$2 million and 1 cent, respectively, in the quarter, and by $228
million, $13 million and 7 cents for the nine months. Lower
average Common shares outstanding benefited ongoing fully diluted
E.P.S. by 7 cents in the quarter and 14
cents for the nine months. "Interest and related expenses" and "Other
(income) expenses, net" benefited substantially from the disposition
proceeds. The comparison was favorably affected by a decrease in the
effective income tax rate for ongoing operations for the quarter to a more
normal 40.4% from 43.3% a year ago; for the nine months, the effective rate
was 39.4% versus 37.6% last year.
Net income, compared with 1994 results including discontinued
operations, The American Tobacco Company and specialty operations, increased
1% in the quarter and declined 17% for the nine months.
Headquartered in Old Greenwich, Connecticut, American Brands is a
focused international consumer products company with powerhouse brands and
leading market positions in distilled spirits, hardware and home improvement
products, office products, golf and leisure products, and international
tobacco. Major brands include Jim Beam and Old Grand-Dad bourbons, DeKuyper
cordials, Moen faucets, Master locks, Aristokraft cabinets, ACCO office
products including Day-Timer and Swingline, Titleist, Pinnacle and Foot-Joy
golf products, and, in Europe, Benson and Hedges and Silk Cut cigarettes.
# # #
AMERICAN BRANDS, INC.
(In millions, except per share amounts)
(Unaudited)
Three Months Ended September 30,
1995 1994 % Change
Net Sales
International Tobacco (2) $1,711.5 $1,608.1 6.4
Distilled Spirits (2) 307.3 305.9 0.5
Hardware & Home Improve. Prods. 327.9 334.0 (1.8)
Office Products 300.1 260.1 15.4
Golf & Leisure Products 136.5 116.1 17.6
--------- --------- -------
Ongoing Operations 2,783.3 2,624.2 6.1
Businesses Disposed (1)(2) 112.0 730.4 (84.7)
--------- --------- -------
Continuing Operations 2,895.3 3,354.6 (13.7)
========= ========= =======
Operating Company Contribution
International Tobacco 153.2 141.7 8.1
Distilled Spirits 59.9 57.4 4.4
Hardware & Home Improve. Prods. 47.1 52.1 (9.6)
Office Products 21.8 20.1 8.5
Golf & Leisure Products 18.4 16.4 12.2
--------- --------- -------
Ongoing Operations 300.4 287.7 4.4
Businesses Disposed (1) 1.6 47.1 (96.6)
--------- --------- -------
Continuing Operations 302.0 334.8 (9.8)
========= ========= =======
Amortization of Intangibles 23.6 24.1 (2.1)
--------- --------- -------
Operating Income 278.4 310.7 (10.4)
--------- --------- -------
Interest and Related Expenses 36.1 52.7 (31.5)
Corporate Admin. Expenses 22.7 24.0 (5.4)
Gain on Disposal of
Businesses, Net (1) 20.0 - -
Other (Income) Expenses, Net (5.4) 1.5 -
--------- --------- -------
Income Before Income Taxes 245.0 232.5 5.4
Income Taxes 91.7 100.7 (8.9)
--------- --------- -------
Income From Continuing Opers.(1) 153.3 131.8 16.3
Discontinued Operations (3) - 20.1 -
Extraordinary Item (4) - - -
--------- --------- -------
Net Income 153.3 151.9 0.9
========= ========= =======
Earnings per Common Share
Primary
Income From Continuing Opers.(1) $0.82 $0.65 26.2
Discontinued Operations (3) - 0.10 -
Extraordinary Item (4) - - -
--------- --------- -------
Net Income $0.82 $0.75 9.3
Fully diluted
Income From Continuing Opers.(1) $0.80 $0.64 25.0
Discontinued Operations (3) - 0.09 -
Extraordinary Item (4) - - -
--------- --------- -------
Net Income $0.80 $0.73 9.6
Avg. Common Shares Outstanding
Primary 184.7 201.3 (8.2)
Fully Diluted 191.7 213.3 (10.1)
(NOTES FOLLOW)
AMERICAN BRANDS, INC.
(In millions, except per share amounts)
(Unaudited)
Nine Months Ended September 30,
1995 1994 % Change
Net Sales
International Tobacco (2) $4,568.6 $4,153.8 10.0
Distilled Spirits (2) 877.8 839.4 4.6
Hardware & Home Improve. Prods. 962.4 932.3 3.2
Office Products 844.6 725.7 16.4
Golf & Leisure Products 478.8 417.5 14.7
--------- --------- -------
Ongoing Operations 7,732.2 7,068.7 9.4
Businesses Disposed (1)(2) 550.3 2,327.7 (76.4)
--------- --------- -------
Continuing Operations 8,282.5 9,396.4 (11.9)
========= ========= =======
Operating Company Contribution
International Tobacco 403.6 362.0 11.5
Distilled Spirits 152.2 149.0 2.1
Hardware & Home Improve. Prods. 150.2 153.4 (2.1)
Office Products 58.1 52.0 11.7
Golf & Leisure Products 79.1 71.0 11.4
--------- --------- -------
Ongoing Operations 843.2 787.4 7.1
Businesses Disposed (1) 7.5 182.7 (95.9)
--------- --------- -------
Continuing Operations 850.7 970.1 (12.3)
========= ========= =======
Amortization of Intangibles 71.8 71.9 (0.1)
--------- --------- -------
Operating Income 778.9 898.2 (13.3)
--------- --------- -------
Interest and Related Expenses 122.2 165.5 (26.2)
Corporate Admin. Expenses 64.9 52.7 23.1
Gain on Disposal of
Businesses, Net (1) 20.0 - -
Other (Income) Expenses, Net (21.4) 6.4 -
--------- --------- -------
Income Before Income Taxes 633.2 673.6 (6.0)
Income Taxes 244.2 260.4 (6.2)
--------- --------- -------
Income From Continuing Opers.(1) 389.0 413.2 (5.9)
Discontinued Operations (3) - 51.8 -
Extraordinary Item (4) (2.7) - -
--------- --------- -------
Net Income 386.3 465.0 (16.9)
========= ========= =======
Earnings per Common Share
Primary
Income From Continuing Opers.(1) $2.05 $2.04 0.5
Discontinued Operations (3) - 0.26 -
Extraordinary Item (4) (0.01) - -
--------- --------- -------
Net Income $2.04 $2.30 (11.3)
Fully diluted
Income From Continuing Opers.(1) $2.01 $2.01 -
Discontinued Operations (3) - 0.24 -
Extraordinary Item (4) (0.01) - -
--------- --------- -------
Net Income $2.00 $2.25 (11.1)
Avg. Common Shares Outstanding
Primary 189.1 201.6 (6.2)
Fully Diluted 198.3 213.6 (7.2)
(NOTES FOLLOW)
AMERICAN BRANDS, INC.
NOTES:
(1) Ongoing operations comparisons are as follows (in millions, except
EPS):
Income from Continuing Operations Before Extraordinary
Item:
Three Months Nine Months
1995 1994 %Change 1995 1994 %Change
Income:
Ongoing Operations $133.5 $108.0 23.6 $369.3 $316.4 16.7
Businesses Disposed
Domestic Tobacco - 27.8 - - 97.5 -
Other Businesses (0.2) (4.0) 92.5 (0.3) (0.7) 57.1
Gain on Disposal
of Businesses, Net 20.0 - - 20.0 - -
------ ------ ---- ------ ------ -----
As Reported $153.3 $131.8 16.3 $389.0 $413.2 (5.9)
====== ====== ==== ====== ====== =====
Earnings per Common share:
Primary
Ongoing Operations $0.72 $0.53 35.8 $1.95 $1.56 25.0
Businesses Disposed
Domestic Tobacco - 0.13 - - 0.48 -
Other Businesses - (0.01) - - - -
Gain on Disposal
of Businesses, Net 0.10 - - 0.10 - -
----- ----- ---- ----- ----- ----
As Reported $0.82 $0.65 26.2 $2.05 $2.04 0.5
===== ===== ==== ===== ===== ====
Fully Diluted
Ongoing Operations $0.71 $0.52 36.5 $1.92 $1.55 23.9
Businesses Disposed
Domestic Tobacco - 0.13 - - 0.46 -
Other Businesses - (0.01) - - - -
Gain on Disposal
of Businesses, Net 0.09 - - 0.09 - -
----- ----- ---- ----- ----- ----
As Reported $0.80 $0.64 25.0 $2.01 $2.01 -
===== ===== ==== ===== ===== ====
Other Businesses include results of nonstrategic businesses disposed of
including Retail Distribution, Optical, Acushnet Rubber Division and
Housewares.
On July 12, 1994, Dollond & Aitchison Group PLC (Optical), a subsidiary of
Gallaher Limited, was sold for total consideration of $146 million, which
approximated the carrying value of the company.
On December 22, 1994, the Company sold The American Tobacco Company, its
domestic tobacco business, for $1 billion in cash, before related expenses.
An after-tax gain of $508.3 million, or $2.52 per Common share, was
recognized on the transaction in the fourth quarter of 1994.
AMERICAN BRANDS, INC.
NOTES (CONTINUED):
The Company announced plans to dispose of a number of nonstrategic
businesses and product lines, including U.K.-based Forbuoys (Retail
Distribution) and Prestige (Housewares), both subsidiaries of Gallaher
Limited, and in the fourth quarter of 1994 recorded an after-tax loss of
$241.3 million, or $1.20 per Common share, substantially non-cash, based on
the anticipated sale of these businesses for proceeds in the range of
$150-$175 million. The sale of Prestige was completed on May 2, 1995. With
the sale of retail distribution operations on July 24, 1995, the Company has
substantially completed the disposition of non- strategic businesses and
product lines and as a result, $20 million that was provided in connection
with the dispositions was reversed in the third quarter of 1995.
(2) Federal and foreign excise taxes included in net sales for the three months
and nine months ended September 30 are as follows (in millions):
Three Months Nine Months
1995 1994 1995 1994
International Tobacco $1,330.4 $1,235.2 $3,528.0 $3,185.0
Distilled Spirits 112.1 120.2 331.5 326.3
Domestic Tobacco - 101.1 - 313.8
-------- -------- -------- --------
$1,442.5 $1,456.5 $3,859.5 $3,825.1
======== ======== ======== ========
(3) On November 30, 1994, the Company entered into an agreement to sell its
Franklin life insurance business for $1.17 billion in cash, before related
expenses. A net loss of $206.8 million was recognized on the transaction in
the fourth quarter of 1994 in discontinued operations.
The sale was completed on January 31, 1995.
(4) On April 11, 1995, holders of $199.5 million of the $200 million 5 3/4%
Eurodollar Convertible Debentures, Due 2005, exercised their right to "put"
their debentures at a price of 114.74%, plus accrued interest. This resulted
in a total payment by the Company of $240.4 million, including premium and
accrued interest, and will reduce fully diluted shares by 5.1 million. The
extinguishment of debt resulted in a charge of $4.1 million ($2.7 million
net of taxes).
(5) The Company and its subsidiaries are defendants in various lawsuits
associated with their business and operations, including actions based upon
allegations that human ailments have resulted from tobacco use. It is not
possible to predict the outcome of the pending litigation, but management
believes that there are
AMERICAN BRANDS, INC.
NOTES (CONTINUED):
meritorious defenses to the pending actions and that the pending
actions will not have a material adverse effect upon the results of
operations, cash flow or financial condition of the Company. These
actions are being vigorously contested.
On December 22, 1994, the Company sold The American Tobacco Company
subsidiary to Brown & Williamson Tobacco Corporation, a wholly-owned
subsidiary of B.A.T Industries p.l.c. In connection with the sale, Brown &
Williamson Tobacco Corporation and The American Tobacco Company agreed to
indemnify the Company against claims arising from smoking and health and
fire safe cigarette matters relating to the tobacco business of The American
Tobacco Company.
AMERICAN BRANDS, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(In millions)
September 30, December 31,
1995 1994
Assets (Unaudited)
Current Assets
Cash and Cash Equivalents $392.7 $110.1
Accounts Receivable, Net 1,391.8 1,067.9
Inventories 1,304.2 2,015.7
Net Assets of Discontinued Operations 0.0 1,170.0
Other Current Assets 227.6 307.2
-------- --------
Total Current Assets 3,316.3 4,670.9
Property, Plant and Equipment, Net 1,118.1 1,212.7
Intangibles Resulting From
Business Acquisitions 3,355.2 3,549.1
Other Assets 401.5 361.7
-------- --------
Total Assets $8,191.1 $9,794.4
========= =========
Liabilities and Stockholders' Equity
Current Liabilities
Short-Term Debt $65.4 $180.6
Current Portion - Long-Term Debt 128.0 525.2
Other Current Liabilities 2,154.4 2,409.7
-------- --------
Total Current Liabilities 2,347.8 3,115.5
Long-Term Debt 1,382.9 1,512.1
Other Long-Term Liabilities 539.7 529.3
-------- --------
Total Liabilities 4,270.4 5,156.9
Stockholders' Equity 3,920.7 4,637.5
-------- --------
Total Liabilities and Stockholders' Equity $8,191.1 $9,794.4
========= =========
