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
January 22, 1996 (January 22, 1996)
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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 January 22, 1996 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 January 22, 1996.
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: January 22, 1996
<PAGE>
EXHIBIT INDEX
Sequentially
Exhibit Numbered Page
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20. Press release of Registrant dated January 22, 1996.
FOR IMMEDIATE RELEASE
Media Relations: Investor Relations:
Roger W. W. Baker Daniel A.Conforti
(203) 698-5148 (203) 698-5132
AMERICAN BRANDS' 1995 E.P.S. FROM ONGOING OPERATIONS
UP 20% TO $2.87 EXCLUDING A 6 CENT ONE-TIME CHARGE;
EXPECTS STRONG 1996 E.P.S. GROWTH
Old Greenwich, CT, January 22, 1996 -- American Brands, Inc.
(NYSE-AMB) today announced that earnings per Common share from
ongoing operations for 1995 rose 20% to $2.87, compared with
$2.39 in 1994. Fully diluted earnings per share rose 19% to
$2.81. The 1995 figures exclude a pre-tax provision of $17.8
million, or 6 cents per share, in connection with the
reorganization of distilled spirits operations under a new,
worldwide management structure.
For the quarter ended December 31, 1995, E.P.S. from ongoing
operations (excluding the one-time charge) was up 11% to 92 cents
per share, compared with 83 cents per share for the fourth
quarter of 1994, and fully diluted earnings per share rose 9% to
89 cents.
Chairman and Chief Executive Officer Thomas C. Hays noted
that "we made strong progress in 1995. We achieved E.P.S. growth
substantially greater than our
long-range target. We accomplished a massive restructuring. And
we moved aggressively to build our powerful array of consumer
brands.
"We have tremendous confidence in the future. We are
pushing for growth from all our operations, and we are determined
to achieve it. We expect the fastest growth from the golf,
office products and hardware and home improvement brands. But we
are also pushing for and expecting growth from tobacco and
distilled spirits, both of which generate phenomenal cash flow.
"Our powerful cash flow and balance sheet give us great
flexibility to achieve our objectives, and we have been decisive
in capitalizing on that financial strength. We reduced fully
diluted shares substantially in 1995 and have already moved to
further reduce shares in 1996. We have an offer underway to
acquire Cobra Golf, and we have the capability to make further
add-on acquisitions to strengthen the competitiveness and growth
prospects of our operations.
"Most fundamentally, our confidence is based on our great
brands. Our companies have seventeen brands that each generated
sales over $100 million last year, many more brands that are
number 1 or number 2 in their categories and hundreds of new
products and line extensions introduced just during 1995.
"With these great strengths, we anticipate another good year
in 1996. Our expectation for 1996 as well as our long-term goal
- -- assuming exchange rate stability and a satisfactory economic
and pricing environment -- is to generate E.P.S. growth in the
range of 10%.
Restructuring and Share Repurchases
"Since the closing weeks of 1994," Mr. Hays noted, "we sold
operations with sales of nearly $4 billion, including The
American Tobacco Company, Franklin Life and U.K. retailing
operations. Together, these businesses would rank number 292 on
the Fortune 500, but they were low growth operations with no
prospect of brand leadership.
"To enhance value for our shareholders, we have been
aggressively investing the proceeds. To add muscle to our
fastest growing category, we have announced an offer to acquire
Cobra Golf for approximately $700 million through a tender that
is scheduled to conclude at midnight tomorrow, unless extended.
The alliance of Cobra with the Titleist and Foot-Joy brands
rounds out our leadership position in golf, complementing our
number 1 positions in golf balls, shoes and gloves with a
significantly enhanced presence in golf clubs, which account for
55% of overall golf equipment sales. Cobra is the number 1 brand
in irons and the number 2 brand, overall, in clubs. On a
combined basis, the Cobra and Titleist brands will be even more
effective competitors.
"As an expression of our confidence in American Brands, we
invested $1.2 billion during 1995 to reduce our fully diluted
shares by 30 million shares, or more than 14%. Last week, we
announced that we will redeem in March our $150 million 7-5/8%
Eurodollar Convertible Debentures and our $150 million 9-1/8%
Debentures. The redemption of the 7-5/8% Convertible issue,
along with anticipated ongoing share repurchases, could reduce
fully diluted shares by more than 5 million shares, or another
3%, during 1996. In addition, beyond that 5 million shares, we
would consider further share repurchases, depending on market
conditions and investment needs and opportunities.
"We have also been moving decisively to strengthen the
competitive position of our brands. During 1995, we invested
nearly $200 million in capital projects and $1.1 billion in
marketing and customer service."
Brand Highlights
:::International Tobacco:::
Gallaher, the U.K. market leader, achieved strong profit
growth in 1995. Operating company contribution was up $36
million, or 7%, for the year, benefiting from an April price
increase averaging about 5% (excluding excise taxes), continuing
productivity improvements and a favorable exchange rate for the
British pound. In sterling, contribution rose 4%.
For the fourth quarter, contribution declined 3% in dollars
and 1% in sterling. In 1994's fourth quarter, the U.K.
government increased excise taxes twice, leading to distortions
in trade buying that bolstered that quarter.
For the year, Gallaher's U.K. cigarette shipments declined
6%, principally reflecting those trade buying distortions.
Industry sales to consumers in the U.K. declined an estimated 2%,
and Gallaher's share of consumer sales declined marginally from
39.7% to an estimated 39.2%. Benson and Hedges maintained its
position as the number 1 cigarette brand in the U.K., with a
stable share throughout 1995 following the introduction of the
Gratis gift program in late 1994. The franchise was further
strengthened in 1995 by the introduction in June of two new
styles, Benson and Hedges Lights and Benson and Hedges Ultra
Lights. These initiatives, coupled with the continuing share
growth of Silk Cut, the number 2 brand in the U.K., improved to
54% Gallaher's share of the premium price sector, which accounted
for over 50% of all U.K. cigarette sales in 1995.
Although Gallaher's worldwide shipments declined 5%, a 4%
volume gain was achieved in continental Europe. In the former
Soviet Union, where Gallaher's brands sold 2.9 billion units in
1995, Gallaher is actively exploring plans to establish one or
more manufacturing facilities.
In spite of continued intense competition and excise tax
increases that have caused some U.K. consumers to seek lower
priced cigarettes, we expect modest contribution growth in
sterling and continued very strong cash flow from Gallaher's
brands in 1996.
:::Distilled Spirits:::
In a difficult year globally for distilled spirits, our
operations performed well, and achieved significant marketing
successes. Contribution was up 3% on a comparable basis for the
year, excluding the one-time $17.8 million charge in 1995 as well
as $19.7 million in 1994 nonrecurring benefits at Whyte & Mackay.
Including all these nonrecurring items, contribution declined 12%
for the year, though sales were a record, backed by an increase
in worldwide case sales.
To capitalize on our global strengths in distilled spirits,
we have reorganized these brands under a new management
structure, JBB Worldwide, Inc. In connection with that
reorganization, we took the one-time $17.8 million charge in the
fourth quarter. JBB Worldwide's resources will include the
operations of Jim Beam Brands and Whyte & Mackay. Jim Beam
Brands is the second largest distilled spirits company in the
U.S. Whyte & Mackay ranks a strong number 2 in the U.K. Scotch
whisky market. Both have a fast growing international presence,
which should be enhanced by the new organization.
Beam achieved increases in contribution for the quarter and
full year of 1% and 2%, respectively, even though domestic price
competition remained intense. Internationally, Beam continued to
show strong, profitable growth, with contribution in
international markets up 11% in both periods. For the year, 22%
of Beam's contribution was derived from international operations,
and international contribution has increased 68% over the past
three years. Beam's brands posted a slight increase in worldwide
case sales in 1995, overcoming a 2% decline in domestic volume
with superb growth in international markets. Case sales in
Australia and Germany, Beam's two largest international markets,
were up 16% and 11%, respectively, and excellent growth was
achieved in emerging markets. Overall, international case sales
were up 11%.
Jim Beam, the world's top selling bourbon, celebrated its
200th anniversary by selling a record 5.4 million cases
worldwide, up 6%. After Shock, a premium cordial with a unique
cinnamon taste, introduced in March, shipped over 170,000 cases,
ranking it among the most successful new product launches in the
history of the industry.
Whyte & Mackay worldwide case sales were up 3% for the year.
The U.K. Scotch market had a difficult year in 1995, with an
estimated 7% decline in industry consumer sales and continued
intense pressure on pricing. Against this background, Whyte &
Mackay performed comparatively well, with Scotch case sales down
just 3% in the U.K. but up 13% internationally. To further
reduce costs, Whyte & Mackay has announced that, as part of the
worldwide reorganization, it is consolidating three bottling
facilities into two.
In distilled spirits, margins have been pressured by very
competitive product pricing. We believe that the most effective
strategy in this situation is to continue to build the equity in
our strong portfolio of brands, so we expect to invest
aggressively in marketing as well as operational enhancements
during 1996. Even so, we are hopeful that we can achieve an
increase in distilled spirits contribution in 1996, even after
adding back the one-time $17.8 million charge in 1995.
:::Hardware and Home Improvement Products:::
In spite of the significant economic slowdown that adversely
affected this category, contribution from hardware and home
improvement brands was up 1% for the year and 9% in the fourth
quarter. Record sales were achieved for the year by all four key
brands: Moen -- the leading faucet brand in North America,
Master Lock -- the world's leading padlock, Aristokraft -- which
is number 2 in kitchen and bath cabinets, and Waterloo -- the
world leader in tool storage. Master Lock, Aristokraft and
Waterloo all posted contribution increases.
Master Lock padlocks continued to register strong gains in
home centers and mass merchants, and Master door lock sales were
up 11%. Aristokraft and the companion Decora brand of cabinets
continued to broaden distribution; these brands are benefiting
from continuous flow manufacturing (CFM), which has cut
production lead time by about 35% and reduced inventories by 20%
over the past year. Waterloo benefited from continued growth at
Sears, its largest customer, and a significant expansion in
international business. Moen outperformed the market,
strengthening its number 1 position. Contribution for Moen
declined, reflecting the downturn in its U.S. market and raw
material cost pressures as well as very difficult economic
conditions in Taiwan and Canada, which are key international
markets. Despite the downturn in the U.S. market that began in
the second quarter of 1995, Moen achieved a 4% increase in U.S.
sales for the year.
In recent months, the housing market has shown some
vitality. Assuming that this vitality continues in 1996, we
expect solid contribution growth from the hardware and home
improvement brands, though the first quarter comparison with last
year's very strong results will be difficult.
:::Office Products:::
ACCO, the world leader in office supplies, had an excellent
year, outperforming its competitors. Contribution was up 10% in
the quarter and 11% for the year, backed by record sales in both
periods.
In North America, strong market share gains were achieved,
spanning many product categories and key distribution channels.
The ACCO, Wilson Jones and Swingline brands all had notable
success. Geographically, solid gains were achieved in the U.S.,
Canada and Mexico. Strong growth was also achieved for the Day-
Timer brand, which was very successfully expanded from its
traditional mail order base into the retail, contract and
wholesale channels. In Europe, double-digit sales growth was
achieved on the Continent, paced by the successful rollout of
ACCOdata and Rexel brand pan-European products and substantially
higher sales to pan-European and global customers.
For 1996, these brands have strong advantages that lead us
to expect continued solid growth, in spite of uncertain economies
and higher raw material costs. These advantages include an
excellent position across all channels, an array of successful
new products introduced in 1995, the international scope to meet
the needs of customers who are growing beyond traditional
national boundaries, a streamlined operating structure, higher
selling prices in many categories, and superior customer service.
:::Golf:::
The Titleist and Foot-Joy brands capped another great year
with a superb fourth quarter. Contribution was up 50% for the
quarter and 13% for the year. Sales were records in both
periods, backed by double-digit volume gains for the year in golf
balls, golf shoes, golf gloves and golf clubs. Titleist enhanced
its position in 1995 as the number 1 ball in golf with more than
100 professional tour wins worldwide, more than all other balls
combined. Foot-Joy solidified its position as the number 1 golf
shoe, with a gain of three share points to about 35% worldwide,
three times its nearest competitor. In golf clubs, the Titleist
DCI iron continued to achieve strong volume gains. Titleist DCI
has secured its position as a high performance iron; it is now
the leading iron used by club professionals and leading amateurs,
and it is the leader in the fast-growing custom-fitted segment of
the market.
As noted, the tender offer for Cobra Golf is scheduled to
conclude tomorrow. Cobra's powerful brand, innovative marketing
and superior manufacturing and development will add an exciting
new dimension to our worldwide leadership in golf. The addition
of Cobra, assuming the acquisition is completed as planned,
should result in sharp gains for this category and no dilution to
overall earnings. But even were Titleist to continue on a stand-
alone basis, we would expect continued excellent growth.
Other Data
Fluctuations in exchange rates for foreign currencies,
primarily the British pound, affected ongoing sales, income from
ongoing operations and ongoing E.P.S. adversely by $30 million,
$2 million and 1 cent, respectively, in the quarter, but
favorably by $197 million, $11 million and 6 cents for the year.
Lower average Common shares outstanding benefited ongoing fully
diluted E.P.S. by 10 cents in the quarter and 24 cents for the
year. "Interest and related expenses" and "Other (income)
expenses, net" benefited substantially from the disposition
proceeds. The effective income tax rate for ongoing operations
for the quarter was 39.9%, compared with 40.7% a year ago; for
the year, the effective rate was 39.6% versus 38.7% in 1994.
Net income, compared with 1994 results including
discontinued operations, The American Tobacco Company, specialty
businesses, and the net gain on disposal of businesses, decreased
43% in the quarter and 26% for the year.
* * * *
Headquartered in Old Greenwich, Connecticut, American Brands
is an international consumer products holding company. Its
operating companies have powerhouse brands and leading market
positions. Major distilled spirits brands sold by Jim Beam
Brands Co. include Jim Beam and Old Grand-Dad bourbons and
DeKuyper cordials. MasterBrand Industries, Inc.'s leading
hardware and home improvement brands include Moen faucets, Master
locks and Aristokraft cabinets. ACCO World Corporation's major
office product brands include Day-Timer and Swingline. Acushnet
Company's golf brands include Titleist, Pinnacle and Foot-Joy.
Gallaher Limited sells tobacco products, principally in Europe,
where its major brands include Benson and Hedges and Silk Cut.
# # #
AMERICAN BRANDS, INC.
(In millions, except per share
amounts)
(Unaudited)
Three Months Ended December 31,
1995 1994 % Change
Net Sales
International Tobacco (3) $1,867.5 $2,015.1 (7.3)
Distilled Spirits (3) 410.8 428.8 (4.2)
Hardware & Home Improve. Prods. 344.4 338.3 1.8
Office Products 361.5 324.0 11.6
Golf & Leisure Products 100.5 89.6 12.2
--------- --------- -------
Ongoing Operations 3,084.7 3,195.8 (3.5)
Businesses Disposed (2)(3) (0.1) 554.3 -
--------- --------- -------
Continuing Operations 3,084.6 3,750.1 (17.7)
========= ========= =======
Operating Company Contribution
International Tobacco 154.8 160.3 (3.4)
Distilled Spirits (4) 71.9 106.1 (32.2)
Hardware & Home Improve. Prods. 58.2 53.2 9.4
Office Products 47.4 43.0 10.2
Golf & Leisure Products 5.1 3.4 50.0
--------- --------- -------
Ongoing Operations 337.4 366.0 (7.8)
Businesses Disposed (2) - 72.6 -
--------- --------- -------
Continuing Operations 337.4 438.6 (23.1)
========= ========= =======
Amortization of Intangibles 23.3 24.4 (4.5)
--------- --------- -------
Operating Income 314.1 414.2 (24.2)
--------- --------- -------
Interest and Related Expenses 37.6 46.6 (19.3)
Corporate Admin. Expenses 11.3 17.2 (34.3)
Gain on Disposal of
Businesses, Net (2) - 332.9 -
Other (Income) Expenses, Net 4.6 5.7 -
--------- --------- -------
Income Before Income Taxes 260.6 677.6 (61.5)
Income Taxes (5) 106.5 205.7 (48.2)
--------- --------- -------
Income From Continuing Opers.(2) 154.1 471.9 (67.3)
Discontinued Operations (6) - (202.8) -
Extraordinary Item (7) - - -
--------- --------- -------
Net Income 154.1 269.1 (42.7)
========= ========= =======
Earnings per Common Share
Primary
Income From Continuing Opers.(2) $0.85 $2.34 (63.7)
Discontinued Operations (6) - (1.01) -
Extraordinary Item (7) - - -
--------- --------- -------
Net Income $0.85 $1.33 (36.1)
Fully diluted
Income From Continuing Opers.(2) $0.83 $2.23 (62.8)
Discontinued Operations (6) - (0.95) -
Extraordinary Item (7) - - -
--------- --------- -------
Net Income $0.83 $1.28 (35.2)
Avg. Common Shares Outstanding
Primary 180.3 201.4 (10.5)
Fully Diluted 187.3 213.4 (12.2)
(NOTES FOLLOW)
AMERICAN BRANDS, INC.
(In millions, except per share
amounts)
(Unaudited)
Twelve Months Ended December 31,
1995 (1) 1994 % Change
Net Sales
International Tobacco (3) $6,436.1 $6,168.9 4.3
Distilled Spirits (3) 1,288.6 1,268.2 1.6
Hardware & Home Improve. Prods. 1,306.8 1,270.6 2.8
Office Products 1,206.1 1,049.7 14.9
Golf & Leisure Products 579.3 507.1 14.2
--------- --------- -------
Ongoing Operations 10,816.9 10,264.5 5.4
Businesses Disposed (2)(3) 550.2 2,882.0 (80.9)
--------- --------- -------
Continuing Operations 11,367.1 13,146.5 (13.5)
========= ========= =======
Operating Company Contribution
International Tobacco 558.4 522.3 6.9
Distilled Spirits (4) 224.1 255.1 (12.2)
Hardware & Home Improve. Prods. 208.4 206.6 0.9
Office Products 105.5 95.0 11.1
Golf & Leisure Products 84.2 74.4 13.2
--------- --------- -------
Ongoing Operations 1,180.6 1,153.4 2.4
Businesses Disposed (2) 7.5 255.3 (97.1)
--------- --------- -------
Continuing Operations 1,188.1 1,408.7 (15.7)
========= ========= =======
Amortization of Intangibles 95.1 96.3 (1.2)
--------- --------- -------
Operating Income 1,093.0 1,312.4 (16.7)
--------- --------- -------
Interest and Related Expenses 159.8 212.1 (24.7)
Corporate Admin. Expenses 76.2 69.9 9.0
Gain on Disposal of
Businesses, Net (2) 20.0 332.9 (94.0)
Other (Income) Expenses, Net (16.8) 12.1 -
--------- --------- -------
Income Before Income Taxes 893.8 1,351.2 (33.9)
Income Taxes (5) 350.7 466.1 (24.8)
--------- --------- -------
Income From Continuing Opers.(2) 543.1 885.1 (38.6)
Discontinued Operations (6) - (151.0) -
Extraordinary Item (7) (2.7) - -
--------- --------- -------
Net Income 540.4 734.1 (26.4)
========= ========= =======
Earnings per Common Share
Primary
Income From Continuing Opers.(2) $2.90 $4.38 (33.8)
Discontinued Operations (6) - (0.75) -
Extraordinary Item (7) (0.01) - -
--------- --------- -------
Net Income $2.89 $3.63 (20.4)
Fully diluted
Income From Continuing Opers.(2) $2.84 $4.24 (33.0)
Discontinued Operations (6) - (0.71) -
Extraordinary Item (7) (0.01) - -
--------- --------- -------
Net Income $2.83 $3.53 (19.8)
Avg. Common Shares Outstanding
Primary 186.9 201.6 (7.3)
Fully Diluted 195.7 213.7 (8.4)
(NOTES FOLLOW)
AMERICAN BRANDS, INC.
NOTES:
(1) All figures are subject to completion of audit.
(2) Ongoing operations comparisons are as follows (in millions,
except EPS):
Income from Continuing Operations Before Extraordinary Item:
------------------------------------------------------------
Three Months Twelve Months
------------ -------------
1995 1994 %Change 1995 1994 %Change
---- ---- ------- ---- ---- -------
Income:
-------
Ongoing Operations $156.7 $167.7 (6.6) $526.0 $484.1 8.7
Businesses Disposed
Domestic Tobacco - 42.1 - - 139.6 -
Other Businesses (2.6) (4.9) 46.9 (2.9) (5.6) 48.2
Gain on Disposal
of Businesses, Net - 267.0 - 20.0 267.0 (92.5)
------ ------ ------ ------ ------ ------
As Reported $154.1 $471.9 (67.3) $543.1 $885.1 (38.6)
====== ====== ====== ====== ====== ======
Earnings per Common share:
--------------------------
Primary
Ongoing Operations $0.86 $0.83 3.6 $2.81 $2.39 17.6
Businesses Disposed
Domestic Tobacco - 0.21 - - 0.69 -
Other Businesses (0.01) (0.02) 50.0 (0.01) (0.02) 50.0
Gain on Disposal
of Businesses, Net - 1.32 - 0.10 1.32 (92.4)
------ ------ ------ ------ ------ ------
As Reported $0.85 $2.34 (63.7) $2.90 $4.38 (33.8)
====== ====== ====== ====== ====== ======
Fully Diluted
Ongoing Operations $0.83 $0.82 1.2 $2.75 $2.37 16.0
Businesses Disposed
Domestic Tobacco - 0.18 - - 0.64 -
Other Businesses - (0.02) - - (0.02) -
Gain on Disposal
of Businesses, Net - 1.25 - 0.09 1.25 (92.8)
------ ------ ------ ------ ------ ------
As Reported $0.83 $2.23 (62.8) $2.84 $4.24 (33.0)
====== ====== ====== ====== ====== ======
Other Businesses include results of nonstrategic businesses disposed of
including Retail Distribution, Optical, Acushnet Rubber Division and
Housewares.
AMERICAN BRANDS, INC.
NOTES (CONTINUED):
On December 22, 1994, the Company sold The American Tobacco Company, its
domestic tobacco business, for $1 billion in cash, before related expenses.
In the fourth quarter of 1994, the Company recorded a $245 million charge to
income in connection with 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. The sale of Prestige was completed on May 2, 1995. With the sale of
the retail distribution operations on July 24, 1995, the Company
substantially completed the disposition of nonstrategic businesses and
product lines. As a result, $20 million of the $245 million provision that
was recorded in 1994 in connection with the dispositions was reversed in the
third quarter of 1995.
The components of the gain on the disposal of businesses, net are as
follows:
1995 1994
---------- -------------------------
In millions, except per Other Domestic Other
share amounts Businesses Tobacco Businesses Total
---------- ------- ---------- -----
Pretax gain (loss) $20.0 $577.9 $(245.0) $332.9
Income taxes - 69.6 (3.7) 65.9
Net Income $20.0 $508.3 $(241.3) $267.0
Earnings per Common share
Primary $0.10 $2.52 $(1.20) $1.32
Fully Diluted $0.09 $2.38 $(1.13) $1.25
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.
(3) Federal and foreign excise taxes included in net sales for the three months
and twelve months ended December 31 are as follows (in millions):
Three Months Twelve Months
------------------ ------------------
1995 1994 1995 1994
---- ---- ---- ----
International Tobacco $1,448.5 $1,557.6 $4,976.5 $4,742.6
Distilled Spirits 154.2 162.6 485.7 488.9
Domestic Tobacco - 111.5 - 425.3
-------- -------- -------- --------
$1,602.7 $1,831.7 $5,462.2 $5,656.8
======== ======== ======== ========
(4) For the three-month and twelve-month periods ended December 31, 1995,
Distilled Spirits recorded a $17.8 million one-time charge principally in
connection with a bottling plant closing and related employee termination
costs and the worldwide reorganization of this segment.
AMERICAN BRANDS, INC.
NOTES (CONCLUDED):
(5) The effective income tax rate for the three months ended December 31, 1995
was 40.9% compared with 30.4% a year ago. Last year's quarter was affected
by a low effective tax rate on the gain on disposal of businesses. For the
full year 1995, the effective tax rate was 39.2% as compared with 34.5% in
1994 and reflected the above item as well as lower reversals of tax
provisions no longer required.
(6) 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.
(7) On April 11, 1995, the 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 reduced the number of fully diluted shares outstanding
by 5.1 million. The extinguishment of debt resulted in a charge of $4.1
million ($2.7 million net of taxes), or one cent per share.
(8) 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 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)
December 31, December 31,
1995 1994
Assets (Unaudited)
Current Assets
Cash and Cash Equivalents $139.9 $110.1
Accounts Receivable, Net 984.4 1,067.9
Inventories 1,840.2 2,015.7
Net Assets of Discontinued Operations - 1,170.0
Other Current Assets 199.5 307.2
-------- --------
Total Current Assets 3,164.0 4,670.9
Property, Plant and Equipment, Net 1,137.3 1,212.7
Intangibles Resulting From
Business Acquisitions 3,305.2 3,549.1
Other Assets 414.7 361.7
-------- --------
Total Assets $8,021.2 $9,794.4
========= =========
Liabilities and Stockholders' Equity
Current Liabilities
Short-Term Debt $297.4 $180.6
Current Portion - Long-term Debt 413.4 525.2
Other Current Liabilities 1,700.5 2,409.7
-------- --------
Total Current Liabilities 2,411.3 3,115.5
Long-Term Debt 1,154.6 1,512.1
Other Long-Term Liabilities 578.1 529.3
-------- --------
Total Liabilities 4,144.0 5,156.9
Stockholders' Equity 3,877.2 4,637.5
-------- --------
Total Liabilities and Stockholders' Equity $8,021.2 $9,794.4
========= =========
