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 September 29, 1996
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number 1-4085
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POLAROID CORPORATION
____________________________________________________________________________
(Exact name of registrant as specified in its charter)
DELAWARE 04-1734655
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(State or other jurisdiction (I.R.S. Employer
incorporation or organization) Identification No.)
549 TECHNOLOGY SQUARE, CAMBRIDGE, MASSACHUSETTS 02139
____________________________________________________________________________
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (6l7) 386-2000
________________________________________________________________________________
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, and (2) has been subject to
such filing requirements for the past 90 days.
YES X NO
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Shares of Common Stock, $1 par value,
outstanding as of November 1, 1996: 45,447,183 shares
____________________________________________________________________________
This document contains 29 pages.
Exhibit index appears on page 18
________________________________________________________________________________
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
POLAROID CORPORATION AND SUBSIDIARY COMPANIES
Condensed Consolidated Statement of Earnings (Unaudited)
Periods ended SEPTEMBER 29, 1996 and OCTOBER 1, 1995
(In millions, except per share data)
Third Quarter Nine Months
1996 1995 1996 1995
-------- -------- --------- ---------
Net sales:
United States $270.3 $268.2 $725.6 $690.1
International 298.8 311.8 886.2 872.0
- ------------------------------------------------------------------------------
Total net sales 569.1 580.0 1,611.8 1,562.1
- ------------------------------------------------------------------------------
Cost of sales 294.3 320.0 896.9 899.0
Marketing, research, engineering and
administrative expenses 209.5 209.7 589.0 603.3
Restructuring and other - - 110.0 77.0
- ------------------------------------------------------------------------------
Total costs 503.8 529.7 1,595.9 1,579.3
- ------------------------------------------------------------------------------
Profit/(loss)
from operations 65.3 50.3 15.9 (17.2)
0.0
Other income 4.5 0.4 26.4 9.4
Interest expense 12.3 12.6 35.6 38.7
- ------------------------------------------------------------------------------
Earnings/(loss)
before income taxes 57.5 38.1 6.7 (46.5)
Federal, state and foreign income
tax expense/(benefit) 23.3 14.4 4.7 (17.3)
- ------------------------------------------------------------------------------
Earnings/(loss) before
extraordinary item 34.2 23.7 2.0 (29.2)
Extraordinary Item - - (54.5) -
- ------------------------------------------------------------------------------
Net earnings/(loss) $34.2 $23.7 ($52.5) ($29.2)
==============================================================================
Primary earnings/(loss) per common share:
Earnings/(loss) before
extraordinary item $0.74 $0.51 $0.04 ($0.64)
Extraordinary Item - - (1.20) -
-------- -------- --------- ---------
Net earnings/(loss) $0.74 $0.51 ($1.16) ($0.64)
Fully diluted earnings
per common share $0.71 $0.50 * *
- ------------------------------------------------------------------------------
Cash dividends
per common share $0.15 $0.15 $0.45 $0.45
Weighted average common shares used for primary
earnings/(loss) per share calculation
(in thousands) 46,426 ** 46,326 ** 45,545 45,387
Common shares outstanding at end of period
(in thousands) 45,587 45,399 45,587 45,399
==============================================================================
* Fully diluted earnings per share are not stated because they
are greater than primary earnings per common share.
** The weighted average shares used to calculate primary earnings
per common share include the dilutive effect of
stock options outstanding.
- 2 -
<PAGE>
POLAROID CORPORATION AND SUBSIDIARY COMPANIES
Condensed Consolidated Balance Sheet
(In millions)
(Unaudited) (Unaudited)
September 29, December 31, October 1,
Assets 1996 1995 1995
- -------------------------------------------------------------------------------
Current assets
Cash and cash equivalents $50.4 $73.3 $56.0
Short-term investments 5.4 9.8 10.7
Receivables 504.7 550.4 470.1
Inventories:
Raw materials 124.6 137.2 149.2
Work-in-process 241.8 233.7 262.0
Finished goods 276.3 244.6 290.1
- -------------------------------------------------------------------------------
Total inventories 642.7 615.5 701.3
Prepaid expenses
and other assets 216.7 208.5 181.9
- -------------------------------------------------------------------------------
Total current assets 1,419.9 1,457.5 1,420.0
- -------------------------------------------------------------------------------
Property, plant and equipment
Gross property, plant
and equipment 2,167.3 2,164.4 2,136.4
Less accumulated depreciation 1,501.3 1,473.4 1,366.9
- -------------------------------------------------------------------------------
Net property, plant
and equipment 666.0 691.0 769.5
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Deferred tax assets 113.0 113.3 82.8
- -------------------------------------------------------------------------------
Total assets $2,198.9 $2,261.8 $2,272.3
==============================================================================
Liabilities and stockholders' equity
- -------------------------------------------------------------------------------
Current liabilities
Short-term debt $125.6 $160.4 $155.3
Current portion
of long-term debt 58.1 39.7 37.8
Notes payable
due January 1997 149.9 - -
Payables and accruals 263.8 274.9 240.1
Compensation and benefits 261.7 197.4 153.2
Federal, state and
foreign income taxes 43.8 46.6 28.9
- -------------------------------------------------------------------------------
Total current liabilities 902.9 719.0 615.3
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Long-term debt 339.9 526.7 547.0
- -------------------------------------------------------------------------------
Accrued postretirement benefits 249.9 257.2 254.9
Accrued postemployment benefits 41.7 41.2 42.5
- -------------------------------------------------------------------------------
Common stockholders' equity
Common stock, $1 par value 75.4 75.4 75.4
Additional paid-in capital 408.4 401.9 398.7
Retained earnings 1,453.1 1,525.8 1,643.1
Less: Treasury stock, at cost 1,212.1 1,205.4 1,207.0
Deferred compensation 60.3 80.0 97.6
- -------------------------------------------------------------------------------
Total common stockholders'
equity 664.5 717.7 812.6
- -------------------------------------------------------------------------------
Total liabilities and
stockholders' equity $2,198.9 $2,261.8 $2,272.3
==============================================================================
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<PAGE>
POLAROID CORPORATION AND SUBSIDIARY COMPANIES
Condensed Consolidated Statement of Cash Flows (Unaudited)
Periods Ended September 29, 1996 and October 1, 1995
(In millions)
Nine Months
Cash flows from operating activities 1996 1995
- -----------------------------------------------------------------------------
Net loss ($52.5) ($29.2)
Depreciation of property, plant
and equipment 92.5 100.1
Decrease in receivables 37.6 83.2
Increase in inventories (27.2) (123.9)
Increase in prepaids and other assets (10.8) (40.2)
Decrease in payables and accruals (5.5) (46.0)
Increase in compensation and benefits 3.3 5.1
Decrease in federal, state
and foreign income taxes payable (0.8) (20.5)
Gain on sale of real estate (23.2) -
Other non cash items 80.3 59.2
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Net cash provided/(used)
by operating activities 93.7 (12.2)
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Cash flows from investing activities
- -----------------------------------------------------------------------------
Decrease in short-term investments 4.4 74.8
Additions to property, plant and equipment (81.1) (127.1)
Proceeds from sale of real estate 35.4 2.1
- -----------------------------------------------------------------------------
Net cash used by investing activities (41.3) (50.2)
- -----------------------------------------------------------------------------
Cash flows from financing activities
- -----------------------------------------------------------------------------
Net increase/(decrease) in short-term
debt (maturities 90 days or less) (30.4) 36.4
Repayments of long-term debt (19.6) (17.5)
Cash dividends paid (20.5) (20.2)
Stock options exercised 8.4 16.3
Purchase of treasury stock (10.4) (37.3)
- -----------------------------------------------------------------------------
Net cash used by financing activities (72.5) (22.3)
- -----------------------------------------------------------------------------
Effect of exchange rate changes on cash (2.8) (2.6)
- -----------------------------------------------------------------------------
Net decrease in cash and cash equivalents (22.9) (87.3)
Cash and equivalents at beginning of period 73.3 143.3
- -----------------------------------------------------------------------------
Cash and cash equivalents at end of period $50.4 $56.0
=============================================================================
- 4 -
<PAGE>
POLAROID CORPORATION AND SUBSIDIARY COMPANIES
Condensed Consolidated Statement of
Changes in Common Stockholders' Equity (Unaudited)
Periods Ended September 29, 1996 and October 1, 1995
(In millions)
Third Quarter Nine Months
1996 1995 1996 1995
-------- -------- -------- --------
Common stock
Balance at the
beginning of the period $75.4 $75.4 $75.4 $75.4
Balance at the
end of the period 75.4 75.4 75.4 75.4
- ------------------------------------------------------------------------------
Additional paid-in capital
Balance at the
beginning of the period 407.6 391.8 401.9 387.2
Stock options exercised
- tax benefit 0.1 2.0 1.2 3.0
Issuance of shares in connection with
stock incentive plan 0.7 4.9 5.3 8.5
Balance at the
end of the period 408.4 398.7 408.4 398.7
- ------------------------------------------------------------------------------
Retained earnings
Balance at the
beginning of the period 1,425.6 1,625.9 1,525.8 1,692.1
Net earnings/(loss) 34.2 23.7 (52.5) (29.2)
Dividends declared
- common stock (6.8) (6.6) (20.5) (20.2)
ESOP dividend tax
benefit received 0.1 0.1 0.3 0.4
Balance at the
end of the period 1,453.1 1,643.1 1,453.1 1,643.1
- ------------------------------------------------------------------------------
Less:
Treasury stock
Balance at the
beginning of the period 1,212.6 1,206.3 1,205.4 1,174.5
Repurchase of common
shares - 4.9 10.4 40.2
Issuance of shares in connection with
stock incentive plan (0.5) (4.2) (3.7) (7.7)
Balance at the
end of the period 1,212.1 1,207.0 1,212.1 1,207.0
- ------------------------------------------------------------------------------
Deferred compensation
Balance at the
beginning of the period 60.6 97.8 80.0 115.8
Stock options - 1993 (0.2) (0.2) (0.7) (0.7)
Restricted stock (0.1) - 0.4 -
Loan repayment from
ESOP Trust - - (19.4) (17.5)
Balance at the
end of the period 60.3 97.6 60.3 97.6
- ------------------------------------------------------------------------------
Total common stockholders'
equity $664.5 $812.6 $664.5 $812.6
=========================================================================
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<PAGE>
Polaroid Corporation and Subsidiary Companies
Notes to Condensed Consolidated Financial Statements (Unaudited)
Basis of Presentation
- ---------------------
The condensed consolidated financial statements include the accounts of the
Company's domestic and foreign subsidiaries, all of which are either wholly
owned or majority owned. Intercompany accounts and transactions are eliminated.
This is an interim unaudited report, subject to year end audit and adjustments.
The information furnished, however, reflects all adjustments (consisting of
normal recurring accruals) which, in the opinion of management, are necessary
for a fair presentation of the results of the interim period.
Restructuring and Other
- -----------------------
In December 1995, the Company announced a plan to make fundamental changes in
its operating structure. The plan features three principal components: program
reductions in certain product, research and manufacturing areas; strategic
refocusing of the Company's digital imaging businesses for the medical
diagnostic and graphic arts markets; and a reduction in corporate overhead
expenses. The total pre-tax special charge related to this plan was $280.0
million. Of that amount, $110.0 million was recorded in the first quarter of
1996 and $170.0 million was recorded in the fourth quarter of 1995. The
December 1995 early retirement and severance programs are expected to result
in the elimination of a total of approximately 1,515 positions worldwide
(approximately 695 from manufacturing and 820 from marketing, research,
engineering and administrative functions). Total cash severance payments
related to the December 1995 program will be approximately $110.4 million.
By the end of the third quarter of 1996, 1,199 of these terminations and
$52.8 million of related cash severance payments were made.
Approximately $19.0 million of additional cash severance payments are
expected to be paid in the fourth quarter of 1996 with the
remaining balance expected to be paid in 1997.
Extraordinary Item
- ------------------
In 1991, the Company issued $140.0 million of 8% Subordinated Convertible
Debentures due 2001 (the Debentures) as partial consideration for the
repurchase of its convertible preferred stock and warrants originally
issued in 1989. Subsequently, the holders of the Debentures created a
trust under which they retained conversion rights to convert the Debentures
into approximately 4.3 million shares of common stock of the Company,
but sold to institutional investors the right to principal and
interest payments on the Debentures.
In the second quarter of 1996, the Company purchased the conversion rights for
$53.8 million and redeemed $.5 million of principal of the Debentures. A total
principal amount of $139.5 million of the Debentures remains outstanding. As
the holder of the conversion rights, the Company may redeem the Debentures at
any time on or before September 30, 1998. If the Debentures are not redeemed
by the Company by September 30, 1998, the conversion rights revert to the
holders of the Debentures. The transaction has been determined to be a
substantive modification of the terms of the Debentures and has
been accounted for as an extinguishment of debt and the issuance of
new debt. The cost of the conversion rights and the amount of the
fair value of the new debt over the carrying value of the extinguished
debt was recorded as an extraordinary loss of $54.5 million,
net of a tax benefit of $.4 million, on the Company's Consolidated
Statement of Earnings in the second quarter of 1996.
-6-
<PAGE>
Polaroid Corporation and Subsidiary Companies
Notes to Condensed Consolidated Financial Statements (Unaudited) (continued)
Legal Proceedings
- -----------------
Certain legal proceedings to which the Company is a party are discussed in
Part II, Item 1 of this filing on Form 10-Q.
Independent Auditors' Report
- ----------------------------
The September 29, 1996 and October 1, 1995 condensed consolidated financial
statements included in this filing on Form 10-Q have been reviewed by KPMG Peat
Marwick LLP, independent certified public accountants, in accordance with
established professional standards and procedures for such review. The report
by KPMG Peat Marwick LLP commenting upon their review of the condensed
consolidated financial statements appears on page 8
-7-
<PAGE>
Independent Auditors' Report
----------------------------
The Board of Directors
Polaroid Corporation
We have reviewed the condensed consolidated balance sheet of Polaroid
Corporation and subsidiaries as of September 29, 1996 and October 1, 1995, and
the related condensed consolidated statements of earnings, cash flows and
changes in common stockholders' equity for the three-month and nine-month
periods ended September 29, 1996 and October 1, 1995. These condensed
consolidated financial statements are the responsibility of the Company's
management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of
interim financial information consists principally of applying
analytical procedures to financial data and making inquiries of
persons responsible for financial and accounting matters.
It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective
of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the condensed consolidated financial statements referred
to above for them to be in conformity with generally accepted accounting
principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of Polaroid Corporation and
subsidiaries as of December 31, 1995, and the related consolidated statements
of earnings, cash flows and changes in common stockholders' equity for the year
then ended (not presented herein); and in our report dated January 30, 1996, we
expressed an unqualified opinion on those consolidated financial statements. In
our opinion, the information set forth in the accompanying condensed
consolidated balance sheet as of December 31, 1995, is fairly stated, in all
material respects, in relation to the consolidated balance sheet from which it
has been derived.
/s/ KPMG Peat Marwick LLP
Boston, Massachusetts
October 15, 1996
-8-
<PAGE>
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations
------------------------------------------------
Third quarter Results
- ---------------------
Worldwide sales of Polaroid Corporation and its subsidiaries decreased 2% to
$569.1 million in the third quarter of 1996 compared to sales of $580.0 million
in the third quarter of 1995. The decline was due primarily to substantially
lower sales in Russia. In the third quarter of 1996, worldwide shipments of
instant film and videotapes decreased moderately compared to the same period
last year. Worldwide shipments of instant cameras were substantially lower and
worldwide shipments of conventional film were significantly higher in the third
quarter of 1996 than in the third quarter of 1995. Excluding the impact of the
Russian sales decline and licensing income on patents, sales in the third
quarter of 1996 would have been slightly higher than a year ago.
In the third quarter of 1996, United States sales increased 1% to $270.3
million from $268.2 million in the third quarter of 1995.
However, excluding licensing income on patents, U.S. sales in
the third quarter of 1996 would have been down moderately compared
to the third quarter of 1995. The Company is focusing
attention on its substantial portfolio of more than 1,500 active U.S. patents
in order to create value through licensing income and partnerships.
The first result of these efforts generated $10 million to $20 million
in the third quarter of 1996. Although this particular licensing
income will not provide a continued stream of income, the Company
intends to pursue other methods of generating revenues from its patents,
including future licensing agreements. Instant film shipments in
the U.S. in the third quarter of 1996 were down moderately against
the same period a year ago. U.S. instant camera shipments
were down substantially in the third quarter of 1996 compared to the third
quarter of 1995. U.S. retail sales of instant cameras and film were down
moderately from the prior year during the quarter. U.S. dealer
inventories were comparable with year ago levels.
International sales decreased 4% to $298.8 million in the third quarter of 1996
from $311.8 million in the same period a year ago. International shipments of
instant film decreased slightly and instant cameras decreased substantially in
the third quarter of 1996 compared to the same period last year. In the third
quarter of 1996, strong sales in Japan and certain developing markets were
offset by a substantial decline in sales in Russia and the negative impact of
foreign currency translation, particularly the yen. While the Company believes
that developing markets in total present particularly attractive opportunities,
such markets tend to be significantly less stable than more established
markets. There can be no assurance that developing markets will
continue to produce favorable results.
Gross margins as a percent of sales increased to 48.3% for the third quarter of
1996 from 44.8% for the third quarter of 1995, reflecting the impact of savings
from restructuring and licensing income on patents. Marketing, research,
engineering and administrative expenses of $209.5 million in the third quarter
of 1996 were flat compared to $209.7 million in the same period of 1995. In
the third quarter of 1996, lower research, engineering, and
development expenses were offset by higher marketing expenses.
Profit from operations for the third quarter of 1996 was $65.3 million,
a 30% increase over $50.3 million in the third quarter of 1995.
-9-
<PAGE>
Third quarter Results (continued)
- ---------------------------------
In medical diagnostic imaging, shipments of the Helios 1417 Laser Imaging
System continued to ramp up, following the system's introduction a year ago.
As discussed in the section "Other Matters" on page 16, the Company and
Sterling Diagnostic Imaging Inc. entered into a definitive agreement
on October 30, 1996 relating to the Company's medical imaging business.
During the third quarter, Polaroid Graphics Imaging signed agreements with two
additional partners: Creo Products Inc. and Gerber Systems Corporation. These
agreements, among other things, will enable the partners' systems for making
separation films to use Polaroid's Dry Tech Imagesetting Film.
In the third quarter of 1996, other income increased to $4.5 million compared
to $.4 million in the third quarter of 1995, primarily reflecting a
$3.5 million gain on the sale of real estate. Included in other income was
a foreign currency loss of $.4 million from balance sheet translations in the
third quarter of 1996 compared to a foreign currency loss of $.8 million in
the same period last year. Interest expense was $12.3 million in the
third quarter of 1996 compared to $12.6 million in the third quarter of 1995.
Income tax expense was $23.3 million in the 1996 third quarter compared to
$14.4 million in the 1995 third quarter. The effective tax rate for
the third quarter of 1996 was 41%, compared to 38% for the third
quarter of 1995. The net after-tax foreign currency loss from
balance sheet translation amounted to $.5 million, or $.01 per common
share in the third quarter of 1996 compared to a loss of $1.6 million,
or $.03 per common share in the third quarter of 1995.
Net earnings for the third quarter of 1996 were $34.2 million, a 44% increase
compared to $23.7 million in the same period of 1995. Primary earnings per
common share were $.74 per common share in the third quarter of 1996
compared to $.51 per common share in the third quarter of 1995.
Fully diluted earnings per common share were $.71 and $.50 for the
third quarter of 1996 and 1995,respectively.
Nine Month Review
- -----------------
Worldwide sales for the first nine months of 1996 increased 3% to $1.61 billion
from $1.56 billion for the first nine months of 1995. In the first nine months
of 1996, worldwide shipments of instant film increased slightly and worldwide
shipments of instant cameras decreased moderately compared to the same period
last year. Worldwide shipments of conventional film were significantly higher
and worldwide shipments of videotapes were moderately higher in the first nine
months of 1996 compared to the first nine months of 1995.
U.S. sales increased 5% to $725.6 million for the first nine months of 1996
compared to $690.1 million for the same period in 1995. In the first nine
months of 1996, instant film shipments in the U.S. were slightly higher and
instant camera shipments in the U.S. were moderately lower than in the first
nine months of 1995. Sales in the U.S. in the first nine months of 1996 also
includes licensing income on patents.
-10-
<PAGE>
Nine month Review (continued)
- -----------------------------
International sales increased 2% to $886.2 million for the first nine months of
1996, compared to $872.0 million for the same period in 1995. International
shipments of instant film increased slightly and instant cameras decreased
slightly during the first nine months of 1996 compared to the same period last
year. In the first nine months of 1996, strong sales in Europe, Asia Pacific
and Latin America more than offset the decline in sales in Russia, which
decreased more than 40% compared to the first nine months of 1995, and the
negative impact of foreign currency translation. To address the decline in
Russian sales, the Company is seeking to double the number of distributors,
hire new sales representatives and broaden its marketing.
Gross margin as a percent of sales was 44.4% for the first nine months of 1996
and 42.4% for the first nine months of 1995, reflecting the impact of savings
from restructuring and favorable pricing. Marketing, research, engineering and
administrative expenses for the first nine months of 1996 decreased to $589.0
million compared to $603.3 million in the first nine months of 1995. Lower
research, engineering and development expenses more than offset increased
marketing expenses.
In December 1995, the Company announced a plan to make fundamental changes in
its operating structure. This plan features three principal components: program
reductions in certain product, research and manufacturing areas; strategic
refocusing of the Company's digital imaging businesses for the medical
diagnostic and graphic arts markets; and a reduction in corporate overhead
expenses. The total pre-tax special charge for restructuring and other expenses
is $280.0 million. Of that amount, $110.0 million was recorded in the first
quarter of 1996 and $170.0 million was recorded in the fourth quarter of 1995.
The December 1995 early retirement and severance programs are expected to
result in the elimination of a total of approximately 1,515 positions
worldwide (695 from manufacturing and 820 from marketing, research,
engineering and administrative functions).
The 1996 first quarter pre-tax special charge of $110.0 million represents the
balance of severance and pension enhancement costs and inventory write downs
related to the December 1995 program. In the first quarter of 1996,
the pre-tax costs related to the severance program were approximately
$55.4 million. Additionally, approximately $44.6 million represents
enhanced retirement benefits provided under the early retirement
program that will be funded from the Company's pension plans,
and therefore has been reflected as a non-cash item on the
Company's consolidated statement of cash flows.
Excluding the special charges for restructuring and other expenses of $110.0
million and $77.0 million in the first nine months of 1996 and 1995,
respectively, profit from operation would have been $125.9 million in the first
nine months of 1996 compared to $59.8 million in the first nine months of 1995.
With the special charges, profit from operations were $15.9 million in the
first nine months of 1996 compared to a loss from operations of
$17.2 million in the first nine months of 1995.
Although the Company does not as a matter of course disclose projected
financial information, the Company has stated that it expects that 1996
full year operating profit, excluding special charges, will be
approximately $200 million. The ability of the Company to achieve this
result is subject to numerous factors and uncertainties, many of
which are beyond the control of the Company. Some of
these factors are summarized below under "Factors That May Affect Future
Results". The Company currently does not intend to update or revise the
foregoing information.
-11-
<PAGE>
Nine month Review (continued)
- -----------------------------
Other income for the first nine months of 1996 increased to $26.4 million
compared to $9.4 million for the first nine months of 1995. This increase
primarily reflects a $23.2 million gain on the sale of real estate partially
offset by lower interest income. Included in other income was a foreign
currency loss of $1.6 million from balance sheet translation in the first nine
months of 1996 compared to a foreign currency loss of $.8 million in the same
period last year. Interest expense decreased to $35.6 million in the first
nine months of 1996 from $38.7 million in the same period in
1995 primarily as a result of lower average borrowings and lower
average interest rates.
In the first nine months of 1996, income tax expenses was $4.7 million on pre-
tax earnings of $6.7 million before extraordinary item. In the first nine
months of 1995, the pre-tax loss of $46.5 million before extraordinary item
generated a tax benefit of $17.3 million. The net after-tax foreign currency
loss from balance sheet translation was $3.0 million, or $.06 per common share
in the first nine months of 1996 compared to a gain of $.5 million, or $.01 per
common share in the first nine months of 1995.
Earnings before extraordinary item for the first nine months of 1996 was $2.0
million compared to a loss of $29.2 million in the same period of 1995.
In June 1996, the Company purchased the conversion rights for
$53.8 million and redeemed $.5 million of principal of the 8%
Subordinated Convertible Debentures due 2001 (the Debentures.)
A total principal amount of $139.5 million of the Debentures remains
outstanding. As the holder of the conversion rights, the Company may
redeem the Debentures at any time on or before September 30, 1998. If the
Debentures are not redeemed by the Company by September 30, 1998, the
conversion rights revert to the holders of the Debentures.
The transaction has been determined to be a substantive modification
of the terms of the Debentures and has been accounted for as an
extinguishment of debt and the issuance of new debt. The cost of the
conversion rights and the amount of the fair value of the new debt
over the carrying value of the extinguished debt was recorded
as an extraordinary loss of $54.5 million, net of a tax benefit of
$.4 million. In the first nine months of 1996, the net loss was $52.5
million compared to a net loss of $29.2 million in the same
period a year ago.
On a primary basis, earnings before extraordinary item was $.04 per common
share in the first nine months of 1996 compared to a $.64 loss per common
share in the same period a year ago. In the first nine months of 1996, the
extraordinary item was a $1.20 loss per common share. The net loss
in the first nine months of 1996 was $1.16 per common share compared
to a net loss of $.64 per common share for the first nine
months of 1995. Fully diluted earnings per common
share were not reported in the first nine months of 1996 and 1995
because they were greater than primary loss per common share.
Financial Liquidity and Capital Resources
- -----------------------------------------
As of September 29, 1996, the Company's cash and cash equivalents and
short-term investments amounted to $55.8 million, compared to
$83.1 million at December 31, 1995. In addition, working
capital decreased to $517.0 million at September 29,
1996 from $738.5 at December 31, 1995. This decrease reflects the
reclassification of the Company's $150.0 million of Notes due January 15, 1997
from a long-term liability to a current liability and an increase in the
compensation and benefits liability as a result of the December 1995 early
retirement and severance programs. The primary source for cash in the first
nine months of 1996 was net cash provided by a decrease in receivables and
proceeds from the sale of real estate. Capital spending during the first nine
months of 1996 of $81.1 million was less than depreciation expense of $92.5
million. Total capital expenditures in 1996 are expected to be approximately
$110.0 million.
-12-
<PAGE>
Financial Liquidity and Capital Resources (continued)
- -----------------------------------------------------
During the first nine months of 1996, the Company also expended cash to
purchase the conversion rights of the Debentures for $53.8
million, to make severance payments of $9.0 million under the
1995 first quarter severance program and $52.8 million under
the December 1995 severance program, to reduce short and long-term
debt, to purchase $10.4 million of the Company's common stock and to
pay $20.5 million of dividends to common stockholders. Total cash severance
payments related to the December 1995 program are expected to be approximately
$110.4 million of which approximately $19.0 million is expected to be paid in
the fourth quarter of 1996. The remaining balance of cash severance payments
of $38.6 million is expected to be paid in 1997.
As of October 1, 1995, cash and cash equivalents and short-term investments
were $66.7 million and working capital was $804.7 million.
During the period from October 1, 1995 to September 29, 1996,
net cash provided by operating activities was offset by cash
used by investing and financing activities. Capital spending
during the period from October 1, 1995 to September 29, 1996 was
$121.9 million, which was less than depreciation expense of
$125.1 million. The Company expended cash during the twelve month
period from October 1, 1995 to September 29, 1996 to purchase the
conversion rights of the Debentures, to make cash
severance payments under the 1995 first quarter severance program and the
December 1995 severance program, to reduce borrowings, to purchase treasury
stock, and to pay dividends to common stockholders.
The Company maintains a five year $150 million working capital line of credit
for general corporate purposes which expires in 1999. At the end of the third
quarter of 1996 and 1995, there were no borrowings under this facility. As of
September 29, 1996, gross borrowings from the Company's international
uncommitted lines of credit were $125.6 million. There were no borrowing from
the Company's U.S. uncommitted lines of credit as of September 29, 1996.
Additional available, uncommitted lines of credit for U.S. and international
operations were $160.0 million and $195.5 million, respectively, at September
29, 1996. As of October 1, 1995, gross borrowings from U.S. and international
uncommitted lines of credit were $15.0 million and $140.3 million,
respectively. Additional available, uncommitted lines of credit
for U.S. and international operations were $145.0 and $137.1 million,
respectively at October 1, 1995. The Company is reviewing its
plan for payment of $150 million of 7-1/4% Notes due
January 15, 1997, which may not be redeemed prior to maturity. The Company's
available borrowing capacity is limited by certain debt covenants.
During the first six months of 1996, the Company repurchased 244,765 shares of
its common stock for $4.9 million. No shares were repurchased during the third
quarter of 1996. As of September 29, 1996, the unexpended balance under the
Company's $100 million common stock repurchase program, which was approved by
the Board of Directors in January 1995, was $74.8 million. The Company may
repurchase its common stock on the open market, in privately negotiated
transactions or otherwise (which may include transactions with Polaroid stock
option holders and with Polaroid retirement plans, including the employee stock
ownership plan). The timing and amounts of any future purchases under this
program depend upon many factors, including market conditions as well as the
Company's business and financial condition.
The Company believes that its borrowing capacity and other existing corporate
resources are adequate for at least the next twelve months to meet working
capital needs, to fund planned capital expenditures, to pursue future growth
opportunities, and to fund other corporate requirements, including cash
severance payments for the December 1995 restructuring program.
-13-
<PAGE>
Foreign Currency Exchange
- -------------------------
The Company generates a substantial portion of its revenues in international
markets, which subjects its operations to the exposure of foreign currency
fluctuations. The impact of currency fluctuations can be positive or negative
in any given period. The Company's ability to counteract foreign currency
exchange movement is primarily dependent on pricing.
To minimize the adverse impact of foreign currency fluctuations on its foreign
currency-denominated net assets, the Company may engage in foreign currency-
denominated borrowings. The Company determines the aggregate amount of such
borrowings based on its forecast of the Company's net asset position and the
relative strength of the U.S. dollar as compared to foreign currencies. These
borrowings create foreign currency-denominated liabilities that hedge the
Company's foreign currency-denominated net assets. Upon receipt of the
borrowed foreign currency-denominated funds, the Company converts those funds
to U.S. dollars at the spot exchange rate. Exchange gains and losses on the
foreign currency-denominated borrowings are recognized in earnings as incurred.
At September 29, 1996 and October 1, 1995, the amount of the Company's
outstanding short-term foreign currency-denominated borrowings were $115.5
million and $117.8 million, respectively.
From time to time, the Company may use over-the-counter foreign exchange swaps
to reduce the interest expense incurred on its overseas borrowings. When a
foreign exchange swap is used, the currency received by the Company in the spot
market component of the foreign exchange swap is used to close out borrowings
in a similar currency and, simultaneously, the original borrowing position is
reinstituted through a forward contract (not exceeding six months). The net
interest value of the foreign exchange swap contract is amortized to earnings
over the life of the contract. Exchange gains or losses on the foreign
currency component of the forward contract are recognized in earnings as
incurred in each accounting period. The Company does not enter
into foreign exchange swaps for trading purposes. The
aggregate notional value of the Company's short-term foreign
exchange swap contracts was $10.1 million and $3.4 million at September
29, 1996 and October 1, 1995, respectively.
When the Company may not have sufficient flexibility to increase prices in
local currency to reflect any appreciation of the U.S. dollar, the
Company may, from time to time, also purchase U.S. dollar call options.
The term of these call options typically does not exceed one year.
The Company's purchase of call options allows it to protect a portion
of its expected foreign currency-denominated revenues from adverse
foreign currency exchange movement. The Company does not buy call
options which can be exercised prior to the expiration
date, nor does it write options or purchase call options for trading purposes.
The Company defers premiums and any gains for its call options activity until
the option exercise date. No option contracts were outstanding at September
29, 1996. At October 1, 1995, option contracts with a notional value of
$59.4 million were outstanding.
The Company maintains a Monetary Control Center (the MCC), which operates under
written policies and procedures defining day-to-day operating guidelines,
including exposure limits, to contract for the foreign currency-denominated
borrowings, foreign exchange swaps and call options described above. The MCC
is subject to random independent audits and reports to a supervisory committee
comprised of members of the Company's management. The MCC publishes monthly
reports to the Company's management detailing the foreign currency
activities it has engaged in for the prior month.
-14-
<PAGE>
Impact of Inflation
- -------------------
Inflation continues to be a factor in many countries in which the Company does
business. The Company's pricing strategy has offset to a considerable degree
inflation and normal cost increases. The overall inflationary impact on
earnings has been immaterial.
Factors That May Affect Future Results
- --------------------------------------
From time to time, information and statements provided by the Company may
contain "forward-looking statements" as defined by the Private Securities
Litigation Reform Act of 1995 (the "Act"). The Company desires to take
advantage of the "safe harbor" provisions of the Act. The Company therefore
cautions shareholders and investors that actual results may differ materially
from those projected or suggested in any forward-looking statement as the
result of a wide variety of factors, which include but are not
limited to the factors and conditions set forth below. Many of
the important factors below have been discussed in prior
Securities and Exchange Commission filings by the Company.
The Company sells and markets its products worldwide. The worldwide market for
imaging products, particularly products in electronic and medical imaging, is
highly competitive in price, quality, service and product performance. The
Company has competitors worldwide, ranging from large corporations to smaller
and more specialized companies. The most significant competitors, Eastman
Kodak Company and Fuji Photo Film Co., Ltd., are considerably larger than
the Company and thus have more resources. The impact of these
factors can cause varied results.
The Company is affected by retail demand for its products, particularly in the
United States and Europe. Additional factors including fluctuation of foreign
exchange rates, economic factors, political activity, changes in laws and
regulations, particularly in the environmental arena, could affect the
Company's results from operations. The Company believes
that developing markets, such as Russia and China, in total present
particularly attractive opportunities. However, such markets
tend to be considerably less stable than more established markets and
there can be no assurance that developing markets will produce
favorable results for the Company. For the first nine months of 1996,
sales in Russia have declined and cannot be predicted with any certainty.
The Company anticipates that price competition from conventional film and other
imaging technologies will place continued pressure on instant products.
Furthermore the profit of the Company's instant photography business have been
generally derived from the sale of instant film, not from the sale of instant
cameras.
The Company is continuing to develop digital imaging products for medical,
graphic arts and other applications. The profits of the Company's basic
instant photography business have been higher than the Company's total
profit from operations due to the operating losses of these digital
imaging businesses. Markets for digital imaging products are
increasing rapidly and over time may erode either the growth or the
absolute size of the Company's instant photography business.
The markets for digital imaging products are highly competitive and
there is no assurance that the Company will attain the level of
success in these markets that it has achieved with respect to instant
photography. Included in the digital imaging losses are costs
associated with the Company's new coating facility which was
brought on-line in 1994 and is operating at low levels of
production capacity. The Company is consolidating its coating
facilities, shifting capacity from some of its oldest to its newer,
more efficient facilities. The timing and impact of this consolidation are
uncertain.
-15-
<PAGE>
Factors That May Affect Future Results (continued)
- --------------------------------------------------
The future prospects of the Company's digital imaging businesses are uncertain
and they are likely to continue to affect the Company's financial results
adversely for the next few years. The Company's ability to reduce its digital
imaging losses is also dependent on its ability to develop new products in a
timely manner and to market them effectively. The Company continues to study
the different areas of its businesses, including their cost structures, and is
exploring prospects for aligning itself in various business relationships to
improve financial results.
Other Matters
- -------------
On October 30, 1996, the Company and Sterling Diagnostic Imaging Inc.
(Sterling) entered into a definitive agreement relating to the sales,
marketing, and development of dry diagnostic imaging technology and products.
The far-reaching agreement contains the following key elements:
* The Company is entering into a long-term exclusive arrangement with Sterling
to develop new technologies and products for the medical diagnostic imaging
marketplace. The first of these products is expected to enter the market in
1997.
* Sterling is acquiring the assets relating to hardware manufacturing,
worldwide marketing, sales and servicing of Helios Laser Imaging systems
from the Company.
* The Company is supplying Sterling with Helios media, a dry, digital film
manufactured at its New Bedford, Mass. facility under a long-term supply
agreement.
* The Company is acquiring a minority equity interest in Sterling's parent
corporation.
The agreement is expected to close by the end of November. The Company expects
to record a special charge of an estimated $15 million to $20 million in the
fourth quarter of 1996 to cover an adjustment of inventory values, fixed
assets, employee severance programs, and other costs associated
with this agreement.
-16-
<PAGE>
PART II. OTHER INFORMATION
Item 1. - Legal Proceedings
The Company, together with other parties, is currently designated a Potentially
Responsible Party (PRP) by the United States Environmental Protection Agency
and certain state agencies with respect to the response costs for
environmental remediation at several sites. The Company believes
that its potential liability with respect to any site and with
respect to all sites in the aggregate will not have a materially
adverse effect on the financial condition or operating results
of the Company.
Due to a wide range of estimates with regard to response costs at these sites
and various other uncertainties, the Company cannot firmly establish its
ultimate liability concerning these sites. In each case in which the Company
is able to determine its likely exposure, such amount has been included in the
Company's reserve for environmental liabilities. Where a range of comparably
likely exposures exists, the Company has included in its reserve the minimum
amount of the range. The Company's aggregate reserve for these liabilities as
of September 29, 1996 and October 1, 1995 was $5.1 million and $5.2 million,
respectively. The Company currently estimates that the majority of the $5.1
million amount reserved for environmental liabilities on September 29, 1996
will be payable over the next two to three years. The Company's analysis
of data which underlies its establishment of this reserve is undertaken on
a quarterly basis. The reserve for such liability does not provide
for associated litigation costs, which, if any, are expected to be
inconsequential in comparison with the amount of the reserve.
The Company will continue to accrue in its reserve such amounts as
management believes appropriate from time to time as circumstances
warrant. This reserve does not take into account potential recoveries
from third parties.
Federal law provides that PRPs may be held jointly and severally liable for
response costs. Based on current estimates of those costs and after
consideration of the potential estimated liabilities of other PRPs with
respect to those sites and their respective estimated levels of financial
responsibility, the Company does not believe its potential liability will be
materially enlarged by the fact that the liability is joint and several.
The Company reviews its recurring internal expenditures on environmental
matters, as well as capital expenditures related to environmental compliance,
on a monthly basis, and reviews its third-party expenditures on environmental
matters on a quarterly basis. The Company believes that these expenditures have
not had and will not have a materially adverse effect on the financial
condition or operating results of the Company.
The Company is involved in various other legal proceedings and claims arising
in the ordinary course of business. Management believes that the disposition of
these matters will not have a materially adverse effect on the financial
condition or results of operations of the Company.
-17-
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
-----------------------------------------
(a) Exhibits:
(11) Computation of earnings per share.
(15) Letter from KPMG Peat Marwick LLP re unaudited interim financial
information.
(27) Financial Data Schedule
(b) Reports on Form 8-K:
During the third quarter of 1996, the Company filed a Current Report on
Form 8-K, dated July 19, 1996.
-18-
<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.
POLAROID CORPORATION
--------------------
(Registrant)
November 12, 1996 /s/ William J. O'Neill, Jr.
-----------------------
William J. O'Neill, Jr.
Executive Vice President and
Chief Financial Officer
-19-
EXHIBIT 11
STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
-----------------------------------------------
POLAROID CORPORATION
COMPUTATION OF EARNINGS PER COMMON SHARE (Continued)
(IN MILLIONS, EXCEPT FOR PER SHARE DATA)
THIRD QUARTER, 1996
PRIMARY COMPUTATION
- -------------------
Earnings before extraordinary item per statement of earnings $ 34.2
Extraordinary item --
------
Net earnings $ 34.2
======
Weighted average number of common
shares outstanding 45.6
Weighted average number of common
stock equivalents .8
------
Weighted average number of common
shares, as adjusted 46.4
======
Primary earnings per common share:
Earnings before extraordinary item $ .74
Extraordinary item --
------
Net earnings $ .74
======
-20-
<PAGE>
POLAROID CORPORATION
COMPUTATION OF EARNINGS PER COMMON SHARE (Continued)
(IN MILLIONS, EXCEPT FOR PER SHARE DATA)
THIRD QUARTER, 1996
FULLY DILUTED COMPUTATION
- -------------------------
Earnings before extraordinary item per statement of earnings $ 34.2
Add: effect of elimination of after-tax interest expense
on $139.5 million 8% convertible debentures 1.7
------
Earnings before extraordinary item, as adjusted 35.9
Extraordinary item --
------
Net earnings, as adjusted $ 35.9
=======
Weighted average number of common
shares outstanding used for primary computation 45.6
Weighted average number of common
stock equivalents .9
Add: effect of converting $139.5 million
8% convertible debentures into common stock 4.3 (A)
------
Weighted average number of common shares
outstanding, as adjusted 50.8
======
Fully diluted earnings/(loss) per common share:
Earnings before extraordinary item $ .71
Extraordinary item --
------
Net earnings $ .71
======
(A) Assumes conversion of $139.5 million 8% convertible debentures at a price
of approximately $32.50 per common share in accordance with the terms of the
convertible debentures.
-21-
<PAGE>
POLAROID CORPORATION
COMPUTATION OF EARNINGS PER COMMON SHARE (Continued)
(IN MILLIONS, EXCEPT FOR PER SHARE DATA)
NINE MONTHS ENDED SEPTEMBER 29, 1996
PRIMARY COMPUTATION
- -------------------
Earnings before extraordinary item per statement of earnings $ 2.0
Extraordinary item (54.5)
-------
Net loss $(52.5)
=======
Weighted average number of common
shares outstanding 45.5
Weighted average number of common
stock equivalents --
------
Weighted average number of common
shares, as adjusted 45.5
======
Primary earnings/(loss) per common share:
Earnings before extraordinary item $ .04
Extraordinary item (1.20)
-------
Net loss $(1.16)
=======
-22-
<PAGE>
POLAROID CORPORATION
COMPUTATION OF EARNINGS PER COMMON SHARE (Continued)
(IN MILLIONS, EXCEPT FOR PER SHARE DATA)
NINE MONTHS ENDED SEPTEMBER 29, 1996
FULLY DILUTED COMPUTATION
- -------------------------
Earnings before extraordinary item per statement of earnings $ 2.0
Add: effect of elimination of after-tax interest expense
on $139.5 million 8% convertible debentures 5.1
------
Earnings before extraordinary item, as adjusted 7.1
Extraordinary item (54.5)
-------
Net loss, as adjusted $(47.4)
=======
Weighted average number of common
shares outstanding used for primary computation 45.5
Weighted average number of common
stock equivalents .9
Add: effect of converting $140 million
8% convertible debentures into common stock 4.3 (A)
------
Weighted average number of common shares
outstanding, as adjusted 50.7
======
Fully diluted earnings/(loss) per common share:
Earnings before extraordinary item $ .14
Extraordinary item (1.07)
-------
Net loss $ (.93) (B)
=======
(A) Assumes conversion of $139.5 million 8% convertible debentures at a price
of approximately $32.50 per common share in accordance with the terms of the
convertible debentures.
(B) This computation is submitted as an exhibit to the Company's Form 10-Q in
accordance with Regulation S-K item 601(b)(11), although presenting the
computation is not in accord with paragraph 40 of APB Opinion 15 because the
computation produces an antidilutive result.
-23-
<PAGE>
POLAROID CORPORATION
COMPUTATION OF EARNINGS PER COMMON SHARE (Continued)
(IN MILLIONS, EXCEPT FOR PER SHARE DATA)
THIRD QUARTER, 1995
PRIMARY COMPUTATION
- -------------------
Net earnings per statement of earnings $ 23.7
========
Weighted average number of common
shares outstanding 45.4
Weighted average number of common
stock equivalents .9
--------
Weighted average number of common
shares, as adjusted 46.3
========
Primary earnings per common share $ .51
========
-24-
<PAGE>
POLAROID CORPORATION
COMPUTATION OF EARNINGS PER COMMON SHARE (Continued)
(IN MILLIONS, EXCEPT FOR PER SHARE DATA)
THIRD QUARTER, 1995
FULLY DILUTED COMPUTATION
- -------------------------
Net earnings per statement of earnings $ 23.7
Add: effect of elimination of after-tax interest expense
on $140 million 8% convertible debentures 1.7
-------
Net earnings, as adjusted $ 25.4
=======
Weighted average number of common
shares outstanding used for primary computation 45.4
Weighted average number of common
stock equivalents .9
Add: effect of converting $140 million
8% convertible debentures into common stock 4.3 (A)
------
Weighted average number of common
shares, as adjusted 50.6
======
Fully diluted earnings per common share $ .50
======
(A) Assumes conversion of $140 million 8% convertible debentures at a price of
approximately $32.50 per common share in accordance with the terms of the
convertible debentures.
-25-
<PAGE>
POLAROID CORPORATION
COMPUTATION OF EARNINGS PER COMMON SHARE (Continued)
(IN MILLIONS, EXCEPT FOR PER SHARE DATA)
NINE MONTHS ENDED October 1, 1995
PRIMARY COMPUTATION
- -------------------
Net loss per statement of earnings $ (29.2)
--------
Weighted average number of common
shares outstanding 45.4
Weighted average number of common
stock equivalents --
------
Weighted average number of common
shares, as adjusted 45.4
======
Primary loss per common share $ (.64)
========
-26-
<PAGE>
POLAROID CORPORATION
COMPUTATION OF EARNINGS PER COMMON SHARE (Continued)
(IN MILLIONS, EXCEPT FOR PER SHARE DATA)
NINE MONTHS ENDED OCTOBER 1, 1995
FULLY DILUTED COMPUTATION
- -------------------------
Net loss per statement of earnings $ (29.2)
Add: effect of elimination of after-tax interest expense
on $140 million 8% convertible debentures 5.1
-------
Net loss, as adjusted $ (24.1)
========
Weighted average number of common
shares outstanding used for primary computation 45.4
Weighted average number of common
stock equivalents .7
Add: effect of converting $140 million
8% convertible debentures into common stock 4.3 (A)
-------
Weighted average number of common shares
outstanding, as adjusted 50.4
=======
Fully diluted loss per common share $ (.48) (B)
========
(A) Assumes conversion of $140 million 8% convertible debentures at a price of
approximately $32.50 per common share in accordance with the terms of the
convertible debentures.
(B) This computation is submitted as an exhibit to the Company's Form 10-Q in
accordance with Regulation S-K item 601(b)(11), although presenting the
computation is not in accord with paragraph 40 of APB Opinion 15 because the
computation produces an antidilutive result.
-27-
Exhibit 15
----------
The Board of Directors
Polaroid Corporation
Ladies and Gentlemen:
Re: Registration Statements No. 33-36384, No. 33-44661, No. 33-51173 and
No. 333-0791
With respect to the subject registration statements, we acknowledge our
awareness of the use therein of our report dated October 15, 1996, related
to our review of interim financial information.
Pursuant to Rule 436(c) under the Securities Act of 1933, such report is not
considered part of a registration statement prepared or certified by an
accountant or a report prepared or certified by an accountant within the
meaning of Sections 7 and 11 of the Act.
Very truly yours,
/s/ KPMG Peat Marwick LLP
Boston, Massachusetts
November 12, 1996
-28-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
Securities and Exchange Commission Form 10-Q for the quarter ended
September 29, 1996 and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-29-1996
<CASH> 50,400
<SECURITIES> 5,400
<RECEIVABLES> 533,300
<ALLOWANCES> (28,600)
<INVENTORY> 642,700
<CURRENT-ASSETS> 1,419,900
<PP&E> 2,167,300
<DEPRECIATION> (1,501,300)
<TOTAL-ASSETS> 2,198,900
<CURRENT-LIABILITIES> 902,900
<BONDS> 339,900
0
0
<COMMON> 75,400
<OTHER-SE> 589,100
<TOTAL-LIABILITY-AND-EQUITY> 2,198,900
<SALES> 1,611,800
<TOTAL-REVENUES> 1,611,800
<CGS> 896,900
<TOTAL-COSTS> 1,595,900
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 6,300
<INTEREST-EXPENSE> 35,600
<INCOME-PRETAX> 6,700
<INCOME-TAX> 4,700
<INCOME-CONTINUING> 2,000
<DISCONTINUED> 0
<EXTRAORDINARY> (54,500)
<CHANGES> 0
<NET-INCOME> (52,500)
<EPS-PRIMARY> (1.16)
<EPS-DILUTED> 0
</TABLE>
