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 June 30, 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
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 August 2, 1996: 45,558,018 shares
______________________________________________________________________________
This document contains 28 pages.
Exhibit index appears on page 17
______________________________________________________________________________
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
POLAROID CORPORATION AND SUBSIDIARY COMPANIES
Condensed Consolidated Statement of Earnings (Unaudited)
Periods ended JUNE 30, 1996 and JULY 2, 1995
(In millions, except per share data)
Second Quarter Six Months
1996 1995 1996 1995
---------- ---------- ---------- ----------
Net sales:
United States $277.3 $271.7 $455.3 $421.9
International 304.3 300.8 587.4 560.2
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Total net sales 581.6 572.5 1,042.7 982.1
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Cost of sales 321.7 321.3 602.6 579.0
Marketing, research, engineering
and administrative expenses 203.8 210.1 379.5 393.6
Restructuring and other - - 110.0 77.0
- ------------------------------------------------------------------------------
Total costs 525.5 531.4 1,092.1 1,049.6
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Profit/(loss) from operations 56.1 41.1 (49.4) (67.5)
Other income 4.3 4.4 21.9 9.0
Interest expense 11.7 13.4 23.3 26.1
- ------------------------------------------------------------------------------
Earnings/(loss)
before income taxes 48.7 32.1 (50.8) (84.6)
Federal, state and foreign income
tax expense/(benefit) 20.2 9.2 (18.6) (31.7)
- ------------------------------------------------------------------------------
Earnings/(loss)
before extraordinary item 28.5 22.9 (32.2) (52.9)
Extraordinary Item (54.5) - (54.5) -
- ------------------------------------------------------------------------------
Net earnings/(loss) ($26.0) $22.9 ($86.7) ($52.9)
==============================================================================
Primary earnings/(loss) per common share:
Earnings/(loss)
before extraordinary item $0.63 $0.50 ($0.70) ($1.17)
Extraordinary Item (1.20) - (1.20) -
- ------------------------------------------------------------------------------
Net earnings/(loss) ($0.57) $0.50 ($1.90) ($1.17)
Fully diluted earnings
per common share * $0.49 * *
- ------------------------------------------------------------------------------
Cash dividends per common share $0.15 $0.15 $0.30 $0.30
Weighted average common shares used for primary
earnings/(loss) per share
calculation (in thousands) 45,498 45,878 ** 45,535 45,404
Common shares outstanding at
end of period (in thousands) 45,543 45,183 45,543 45,183
==============================================================================
* 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.
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<PAGE>
POLAROID CORPORATION AND SUBSIDIARY COMPANIES
Condensed Consolidated Balance Sheet
(In millions)
(Unaudited) (Unaudited)
June 30, December 31, July 2,
Assets 1996 1995 1995
- ----------------------------------------------------------------------------
Current assets
Cash and cash equivalents $39.3 $73.3 $45.3
Short-term investments 5.5 9.8 15.2
Receivables 512.9 550.4 494.1
Inventories:
Raw materials 123.8 137.2 130.3
Work-in-process 253.9 233.7 266.5
Finished goods 273.5 244.6 318.0
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Total inventories 651.2 615.5 714.8
Prepaid expenses and other assets 221.5 208.5 176.1
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Total current assets 1,430.4 1,457.5 1,445.5
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Property, plant and equipment
Gross property, plant and equipment 2,165.6 2,164.4 2,094.5
Less accumulated depreciation 1,499.0 1,473.4 1,338.7
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Net property, plant and equipment 666.6 691.0 755.8
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Deferred tax assets 112.9 113.3 82.8
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Total assets $2,209.9 $2,261.8 $2,284.1
============================================================================
Liabilities and stockholders' equity
- ----------------------------------------------------------------------------
Current liabilities
Short-term debt $201.5 $160.4 $190.6
Current portion of long-term debt 58.1 39.7 37.8
Notes payable due January 1997 150.0 0.0 0.0
Payables and accruals 247.2 274.9 247.8
Compensation and benefits 254.5 197.4 144.1
Federal, state and foreign
income taxes 31.1 46.6 30.4
- ----------------------------------------------------------------------------
Total current liabilities 942.4 719.0 650.7
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Long-term debt 339.8 526.7 546.9
- ----------------------------------------------------------------------------
Accrued postretirement benefits 250.8 257.2 256.6
Accrued postemployment benefits 41.5 41.2 40.9
- ----------------------------------------------------------------------------
Common stockholders' equity
Common stock, $1 par value 75.4 75.4 75.4
Additional paid-in capital 407.6 401.9 391.8
Retained earnings 1,425.6 1,525.8 1,625.9
Less: Treasury stock, at cost 1,212.6 1,205.4 1,206.3
Deferred compensation 60.6 80.0 97.8
- ----------------------------------------------------------------------------
Total common stockholders' equity 635.4 717.7 789.0
- ----------------------------------------------------------------------------
Total liabilities and
stockholders' equity $2,209.9 $2,261.8 $2,284.1
============================================================================
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<PAGE>
POLAROID CORPORATION AND SUBSIDIARY COMPANIES
Condensed Consolidated Statement of Cash Flows (Unaudited)
Periods Ended June 30, 1996 and July 2, 1995
(In millions)
Cash flows from operating activities 1996 1995
- ---------------------------------------------------------------------------
Net loss ($86.7) ($52.9)
Depreciation of property, plant and equipment 62.4 67.5
Decrease in receivables 28.9 74.7
Increase in inventories (35.7) (137.3)
Increase in prepaids and other assets (15.8) (31.2)
Decrease in payables and accruals (21.1) (48.1)
Increase/(decrease) in compensation
and benefits 0.7 (1.5)
Decrease in federal, state
and foreign income taxes payable (13.9) (21.7)
Gain on sale of real estate (19.7) 0.0
Other non cash items 76.2 53.7
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Net cash used by operating activities (24.7) (96.8)
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Cash flows from investing activities
- ---------------------------------------------------------------------------
Decrease in short-term investments 4.3 70.3
Additions to property, plant and equipment (48.2) (79.0)
Proceeds from sale of real estate 28.2 1.6
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Net cash used by investing activities (15.7) (7.1)
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Cash flows from financing activities
- ---------------------------------------------------------------------------
Net increase in short-term debt
(maturities 90 days or less) 45.8 64.4
Repayments of long-term debt (19.6) (17.5)
Cash dividends paid (13.7) (13.6)
Stock options exercised 7.1 7.3
Purchase of treasury stock (10.4) (35.3)
- ---------------------------------------------------------------------------
Net cash provided by financing activities 9.2 5.3
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Effect of exchange rate changes on cash (2.8) 0.6
- ---------------------------------------------------------------------------
Net decrease in cash and cash equivalents (34.0) (98.0)
Cash and equivalents at beginning of period 73.3 143.3
- ---------------------------------------------------------------------------
Cash and cash equivalents at end of period $39.3 $45.3
===========================================================================
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<PAGE>
POLAROID CORPORATION AND SUBSIDIARY COMPANIES
Condensed Consolidated Statement of Changes in
Common Stockholders' Equity (Unaudited)
Periods Ended June 30, 1996 and July 2, 1995
(In millions)
Second Quarter Six 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 404.7 387.6 401.9 387.2
Stock options exercised -
tax benefit 0.6 1.0 1.1 1.0
Issuance of shares in connection
with stock incentive plan 2.3 3.2 4.6 3.6
--------- --------- --------- ---------
Balance at the end of the period 407.6 391.8 407.6 391.8
- -----------------------------------------------------------------------------
Retained earnings
Balance at the beginning
of the period 1,458.4 1,609.6 1,525.8 1,692.1
Net loss (26.0) 22.9 (86.7) (52.9)
Dividends declared-common stock (6.9) (6.7) (13.7) (13.6)
ESOP dividend tax
benefit received 0.1 0.1 0.2 0.3
--------- --------- --------- ---------
Balance at the end of the period 1,425.6 1,625.9 1,425.6 1,625.9
- -----------------------------------------------------------------------------
Less:
Treasury stock
Balance at the beginning
of the period 1,209.4 1,197.9 1,205.4 1,174.5
Repurchase of common shares 4.9 11.5 10.4 35.3
Issuance of shares in connection
with stock incentive plan (1.7) (3.1) (3.2) (3.5)
--------- --------- --------- ---------
Balance at the end
of the period 1,212.6 1,206.3 1,212.6 1,206.3
- -----------------------------------------------------------------------------
Deferred compensation
Balance at the beginning
of the period 80.3 115.5 80.0 115.8
Stock options - 1993 (0.2) (0.2) (0.5) (0.5)
Restricted stock (0.1) 0.0 0.5 0.0
Loan repayment
from ESOP Trust (19.4) (17.5) (19.4) (17.5)
--------- --------- --------- ---------
Balance at the end
of the period 60.6 97.8 60.6 97.8
- -----------------------------------------------------------------------------
Total common stockholders' equity $635.4 $789.0 $635.4 $789.0
=============================================================================
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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 second quarter of 1996, 1,146 of these terminations and $32.7
million of related cash severance payments were completed. Approximately $39.0
million of additional cash severance payments are expected to be paid ratably
over the remaining two quarters 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 June 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 retire 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.
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<PAGE>
Polaroid Corporation and Subsidiary Companies
Notes to Condensed Consolidated Financial Statements (Unaudited) (continued)
Reclassifications
- -----------------
The Company's $150 million 7-1/4% Notes due January 15, 1997 has been
reclassified from a long-term liability to a current liability as of June 30,
1996.
Certain prior year information has been reclassified to conform with current
year presentation of data.
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 June 30, 1996 and July 2, 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
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<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 June 30, 1996 and July 2, 1995, and the
related condensed consolidated statements of earnings, cash flows and changes
in common stockholders' equity for the three-month and six-month periods ended
June 30, 1996 and July 2, 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
July 16, 1996
- 8-
<PAGE>
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations
------------------------------------------------
Second Quarter Results
- ----------------------
Worldwide sales of Polaroid Corporation and its subsidiaries increased 2% to
$581.6 million in the second quarter of 1996 compared to sales of $572.5
million in the second quarter of 1995. In the second quarter of 1996,
worldwide shipments of instant film and conventional film increased moderately
compared to the same period last year. Worldwide shipments of instant cameras
were slightly higher and worldwide shipments of videotapes were slightly lower
in the second quarter of 1996 than in the second quarter of 1995.
In the second quarter of 1996, sales in the United States increased 2% to
$277.3 million from $271.7 million in the second quarter of 1995, primarily as
a result of favorable pricing. Instant film shipments in the U.S. in the
second quarter of 1996 were flat against the same period a year ago. U.S.
instant camera shipments were down moderately in the second quarter of 1996
compared to the second quarter of 1995.
International sales increased 1% to $304.3 million in the second quarter of
1996 from $300.8 million in the same period a year ago. In the second quarter
of 1996, international shipments of instant film, instant cameras and
conventional film increased moderately compared to the same period last year.
In the second quarter of 1996, continued growth in developing markets, such as
China, offset a decrease in Russian sales. 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. In mature markets, favorable pricing in Germany and strong
unit sales in Germany and Japan counterbalanced the adverse impact of currency
translation in the second quarter of 1996.
Gross margins as a percent of sales increased to 45% for the second quarter of
1996 from 44% for the second quarter of 1995. The gross margin in the second
quarter of 1995 was affected by lower worldwide shipments of high margin
instant film primarily due to the dealer inventory adjustment program. In the
second quarter of 1996, marketing, research, engineering and administrative
expenses decreased to $203.8 million from $210.1 million in the same period of
1995, primarily reflecting a decrease in research, engineering, and development
expenses. Profit from operations for the second quarter of 1996 was $56.1
million, a 36% increase over $41.1 million in the second quarter of 1995.
These results reflect savings from restructuring and continued reduction of
losses from the digital imaging businesses.
The Helios medical business continued to make significant progress in reducing
its ongoing losses as revenues increased and development costs subsided.
Shipments of Helios film nearly doubled in the second quarter of 1996 compared
to the second quarter of 1995 and hardware shipments were about the same as in
the second quarter of 1995. In Graphics Imaging, sales of Dry Tech
Imagesetting film in the second quarter of 1996 increased compared to the first
quarter of 1996. The Company also started shipping units of Dry Tech ExPRESS
Lithographic Plate in the second quarter of 1996.
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<PAGE>
Second Quarter Results (continued)
- ----------------------------------
In the second quarter of 1996, other income was $4.3 million compared to $4.4
million in the second quarter of 1995. Other income in the second quarter of
1996 reflects a $4.2 million gain on the sale of real estate and lower interest
income compared to the same period a year ago. Also, included in other income
was a foreign currency loss of $1.0 million from balance sheet translations in
the second quarter of 1996 compared to a foreign currency gain of $.3 million
in the same period last year. Interest expense decreased to $11.7 million in
the second quarter of 1996 from $13.4 million in the second quarter of 1995
primarily as a result of lower average borrowings.
Income tax expense was $20.2 million in the 1996 second quarter compared to
$9.2 million in the 1995 second quarter. The effective tax rate on earnings
before extraordinary item for the second quarter of 1996 was 41%, compared to
29% for the second quarter of 1995, primarily reflecting the beneficial tax
effect of foreign currency exchange in the second quarter of 1995. The net
after-tax foreign currency loss from balance sheet translation amounted to $1.3
million, or $.03 per common share in the second quarter of 1996 compared to a
gain of $2.0 million, or $.04 per common share in the second quarter of 1995.
Earnings before extraordinary item for the second quarter of 1996 were $28.5
million, a 24% increase compared to $22.9 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 retire 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 second quarter of 1996, the net loss was $26.0 million compared to net
earnings of $22.9 in the same period a year ago
On a primary basis, earnings before extraordinary item were $.63 per common
share in the second quarter of 1996 compared to $.50 per common share in the
second quarter of 1995. In the second quarter of 1996, the extraordinary item
was a $1.20 loss per common share. The net loss in the second quarter of 1996
was $.57 per common share compared to net earnings of $.50 per common share for
the second quarter of 1995.
Fully diluted earnings per common share were $0.49 for the second quarter of
1995, and were not reported for the second quarter of 1996 because they were
greater than primary loss per common share.
Six Month Review
- ----------------
Worldwide sales for the first six months of 1996 increased 6% to $1.04 billion
from $982.1 million for the first six months of 1995. Sales in the first half
of 1995 primarily reflect the effects of the Company's dealer inventory
adjustment program initiated in the first quarter of 1995. In the first half
of 1996, worldwide shipments of instant cameras, instant film and videotapes
increased moderately compared to the same period last year. Worldwide
shipments of conventional film were significantly higher in the first half of
1996 compared to the first half of 1995.
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<PAGE>
Six Month Review (continued)
- ----------------------------
U.S. sales increased 8% to $455.3 million for the first six months of 1996
compared to $421.9 million for the same period in 1995. In the first half of
1996, instant film shipments in the U.S. were moderately higher and instant
camera shipments in the U.S. were moderately lower than in the first half of
1995.
International sales increased 5% to $587.4 million for the first six months of
1996, compared to $560.2 million for the same period in 1995. International
shipments of instant cameras increased significantly and instant film increased
moderately during the first half of 1996 compared to the same period last year.
Gross margin as a percent of sales was 42% for the first six months of 1996 and
41% for the first six months of 1995. In the first half of 1995, the gross
margin was affected by lower worldwide shipments of high margin instant film
primarily due to the dealer inventory adjustment program. Marketing, research,
engineering and administrative expenses for the first six months of 1996
decreased to $379.5 million compared to $393.6 million in the first six 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 six months of 1996 and 1995,
respectively, profit from operation would have been $60.6 million in the first
half of 1996 compared to $9.5 million in the first half of 1995. With the
special charges, the losses from operations were $49.4 million in the first
half of 1996 and $67.5 million in the first half of 1995.
Other income for the first six months of 1996 increased to $21.9 million
compared to $9.0 million for the first six months of 1995. This increase
primarily reflects a $19.7 million gain on the sale of real estate partially
offset by lower interest income. Included in other income was a foreign
currency loss of $1.2 million from balance sheet translation in the first half
of 1996. The Company did not incur any foreign currency gain/loss from balance
sheet translation in the first half of 1995. Interest expense decreased to
$23.3 million in the first six months of 1996 from $26.1 million in the same
period in 1995 primarily as a result of lower average borrowings.
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<PAGE>
Six Month Review (continued)
- ----------------------------
The pre-tax loss before extraordinary item of $50.8 million for the first six
months of 1996 generated a tax benefit of $18.6 million. In the first half of
1995, the tax benefit was $31.7 million, resulting from a pre-tax loss of $84.6
million. The net after-tax foreign currency loss from balance sheet translation
was $2.4 million, or $.05 per common share in the first half of 1996 compared
to a gain of $2.1 million, or $.05 per common share in the first half of 1995.
The loss before extraordinary item for the first half of 1996 was $32.2 million
compared to a loss $52.9 million in the same period of 1995. As discussed in
the section above "Second Quarter Results", the Company recorded an
extraordinary loss of $54.5 million. In the first half of 1996, the net loss
was $86.7 million compared to a net loss of $52.9 million in the same period a
year ago.
On a primary basis, the loss before extraordinary item was $.70 per common
share in the first six months of 1996 compared to a $1.17 loss per common share
in the same period a year ago. In the first half of 1996, the extraordinary
item was a $1.20 loss per common share. The net loss in the first half of 1996
was $1.90 per common share compared to a net loss of $1.17 per common share for
the first half of 1995. Fully diluted earnings per common share were not
reported in the first half of 1996 and 1995 because they were greater than
primary loss per common share.
Financial Liquidity and Capital Resources
- -----------------------------------------
As of June 30, 1996, the Company's cash and cash equivalents and short-term
investments amounted to $44.8 million, compared to $83.1 million at December
31, 1995. In addition, working capital decreased to $488.0 million at June 30,
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
half of 1996 was net cash provided by a net increase in short-term debt and
proceeds from the sale of real estate. Capital spending during the first half
of 1996 of $48.2 million was less than depreciation expense of $62.4 million.
Total capital expenditures in 1996 are expected to be approximately $120.0
million.
During the first half 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
$32.7 million under the December 1995 severance program, to repay $19.6 million
of long-term debt, to purchase $10.4 million of the Company's common stock and
to pay $13.7 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 $39.0 million is expected to be paid
ratably over the remaining two quarters of 1996. The remaining balance of cash
severance payments of $38.7 million is expected to be paid in 1997.
As of July 2, 1995, cash and cash equivalents and short-term investments were
$60.5 million and working capital was $794.8 million. During the period from
July 2, 1995 to June 30, 1996, net cash provided by operating activities was
more than offset by cash used by investing and financing activities. Capital
spending during the period from July 2, 1995 to June 30, 1996 was $137.1
million, which exceeded depreciation expense of $127.6 million. The Company
expended cash during the twelve month period from July 2, 1995 to June 30, 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.
- 12 -
<PAGE>
Financial Liquidity and Capital Resources (continued)
- -----------------------------------------------------
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 second
quarter of 1996 and 1995, there were no borrowings under this facility. As of
June 30, 1996, gross borrowings from the Company's U.S. and international
uncommitted lines of credit were $55.0 million and $146.5 million,
respectively. Additional available, uncommitted lines of credit for U.S. and
international operations were $105.0 million and $145.9 million, respectively,
at June 30, 1996. As of July 2, 1995, gross borrowings from U.S. and
international uncommitted lines of credit were $5.0 million and $185.6 million,
respectively. Additional available, uncommitted lines of credit for U.S. and
international operations were $95.0 and $128.0 million, respectively at July 2,
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 second quarter of 1996, the Company repurchased 109,765 shares of
its common stock for $4.9 million. As of June 30, 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.
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 June 30, 1996 and July 2, 1995, the amount of the Company's outstanding
short-term foreign currency-denominated borrowings were $126.9 million and
$159.5 million, respectively.
- 13 -
<PAGE>
Foreign Currency Exchange (continued)
- -------------------------------------
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 $6.6 million and $17.0
million at June 30, 1996 and July 2, 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 June 30, 1996. At July 2, 1995, option contracts with a notional value of
$91.4 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.
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.
- 14 -
<PAGE>
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 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, 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 continue to produce favorable results for the Company.
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. 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. 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.
- 15 -
<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 June 30, 1996 and July 2, 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 June 30, 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.
In December 1994, the Company entered into a consent agreement with the EPA to
resolve alleged violations of the Toxic Substances Control Act ("TSCA"). Under
this agreement, the Company paid a civil penalty of $80,000 and agreed to
conduct an internal audit of certain TSCA practices. This audit was completed
in December 1995 and revealed an additional civil penalty of $87,786, which has
been paid.
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.
In early 1994, the Company received a letter from Jerome H. Lemelson alleging
that a broad range of the Company's manufacturing equipment and products
infringe a number of patents. The letter proposes that the Company enter into
licensing negotiations to pay substantial past and future royalties under those
patents. The Company has responded to the allegations.
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.
- 16 -
<PAGE>
Item 4. Submission of Matters to Vote of Security Holders
On May 14, 1996 the Company held its annual meeting of stockholders. The
owners of 88% of the shares of common stock outstanding were present either in
person or by proxy. The following are the voting results for the meeting:
* the stockholders ratified the Board's appointment of KPMG Peat Marwick
LLP, Independent Public Accountants, as the Company's auditors for 1996
with 38,419,958 votes in favor, 689,535 votes against, 1,256,424
abstentions and broker nonvotes.
* the stockholders approved an amendment to the Board of Directors Stock
Option Plan with 30,772,121 votes in favor, 7,931,738 votes against,
1,662,058 abstentions and broker nonvotes.
* the stockholders elected the nominated slate of directors to hold office
until the next annual meeting with the following votes:
For Withheld
---------- ---------
Gary T. DiCamillo 39,207,003 1,158,914
Ralph E. Gomory 39,244,188 1,121,729
Frank S. Jones 39,231,723 1,134,194
John W. Loose 39,252,527 1,113,390
Albin F. Moschner 36,841,475 3,524,442
Henry Necarsulmer 39,081,884 1,284,033
Kenneth H. Olsen 39,191,644 1,174,273
Lester Pollack 39,212,389 1,153,528
Charles P. Slichter 39,161,867 1,204,050
Ralph Z. Sorenson 39,202,424 1,163,493
Delbert C. Staley 39,179,380 1,186,537
Bernee D.L. Strom 39,211,314 1,154,603
Alfred M. Zeien 39,240,137 1,125,780
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:
There were no reports on Form 8-K during the quarter ended June 30, 1996.
- 17 -
<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)
August 8, 1996 /s/ William J. O'Neill, Jr.
--------------- ------------------------------
William J. O'Neill, Jr.
Executive Vice President and
Chief Financial Officer
- 18 -
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)
SECOND QUARTER, 1996
PRIMARY COMPUTATION
- -------------------
Earnings before extraordinary item per statement of earnings $ 28.5
Extraordinary item (54.5)
-------
Net loss $(26.0)
=======
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 $ .63
Extraordinary item (1.20)
-------
Net loss $ (.57)
=======
- 19 -
<PAGE>
POLAROID CORPORATION
COMPUTATION OF EARNINGS PER COMMON SHARE (Continued)
(IN MILLIONS, EXCEPT FOR PER SHARE DATA)
SECOND QUARTER, 1996
FULLY DILUTED COMPUTATION
- -------------------------
Earnings before extraordinary item per statement of earnings $ 28.5
Add: effect of elimination of after-tax interest expense
on $139.5 million 8% convertible debentures 1.7
-------
Earnings before extraordinary item, as adjusted 30.2
Extraordinary item (54.5)
--------
Net loss, as adjusted $ (24.3)
========
Weighted average number of common
shares outstanding used for primary computation 45.5
Weighted average number of common
stock equivalents 1.1
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 50.9
========
Fully diluted earnings/(loss) per common share:
Earnings before extraordinary item $ .59
Extraordinary item (1.07)
-------
Net loss $ (.48) (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.
- 20 -
<PAGE>
POLAROID CORPORATION
COMPUTATION OF EARNINGS PER COMMON SHARE (Continued)
(IN MILLIONS, EXCEPT FOR PER SHARE DATA)
SIX MONTHS ENDED JUNE 30, 1996
PRIMARY COMPUTATION
- -------------------
Loss before extraordinary item per statement of earnings $ (32.2)
Extraordinary item (54.5)
--------
Net loss $(86.7)
========
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 loss per common share:
Loss before extraordinary item $ (.70)
Extraordinary item (1.20)
-------
Net loss $(1.90)
=======
- 21 -
<PAGE>
POLAROID CORPORATION
COMPUTATION OF EARNINGS PER COMMON SHARE (Continued)
(IN MILLIONS, EXCEPT FOR PER SHARE DATA)
SIX MONTHS ENDED JUNE 30, 1996
FULLY DILUTED COMPUTATION
- -------------------------
Loss before extraordinary item per statement of earnings $(32.2)
Add: effect of elimination of after-tax interest expense
on $139.5 million 8% convertible debentures 3.4
--------
Loss before extraordinary item, as adjusted (28.8)
Extraordinary item (54.5)
--------
Net loss, as adjusted $ (83.3)
========
Weighted average number of common
shares outstanding used for primary computation 45.5
Weighted average number of common
stock equivalents 1.1
Add: effect of converting $140 million
8% convertible debentures into common stock 4.3 (A)
--------
Weighted average number of common shares
outstanding, as adjusted 50.9
========
Fully diluted loss per common share:
Loss before extraordinary item $ (.57)
Extraordinary item (1.07)
--------
Net loss $(1.64) (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.
- 22 -
<PAGE>
POLAROID CORPORATION
COMPUTATION OF EARNINGS PER COMMON SHARE
(IN MILLIONS, EXCEPT FOR PER SHARE DATA)
SECOND QUARTER, 1995
PRIMARY COMPUTATION
- -------------------
Net earnings per statement of earnings $ 22.9
========
Weighted average number of common
shares outstanding 45.2
Weighted average number of common
stock equivalents .7
--------
Weighted average number of common
shares, as adjusted 45.9
========
Primary earnings per common share $ .50
========
- 23 -
<PAGE>
POLAROID CORPORATION
COMPUTATION OF EARNINGS PER COMMON SHARE (Continued)
(IN MILLIONS, EXCEPT FOR PER SHARE DATA)
SECOND QUARTER, 1995
FULLY DILUTED COMPUTATION
- -------------------------
Net earnings per statement of earnings $ 22.9
Add: effect of elimination of after-tax interest expense
on $140 million 8% convertible debentures 1.7
--------
Net earnings, as adjusted $ 24.6
========
Weighted average number of common
shares outstanding used for primary computation 45.2
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 50.4
========
Fully diluted earnings per common share $ .49
========
(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.
- 24 -
<PAGE>
POLAROID CORPORATION
COMPUTATION OF EARNINGS PER COMMON SHARE (Continued)
(IN MILLIONS, EXCEPT FOR PER SHARE DATA)
SIX MONTHS ENDED July 2, 1995
PRIMARY COMPUTATION
Net loss per statement of earnings $ (52.9)
========
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 $ (1.17)
========
- 25 -
<PAGE>
POLAROID CORPORATION
COMPUTATION OF EARNINGS PER COMMON SHARE (Continued)
(IN MILLIONS, EXCEPT FOR PER SHARE DATA)
SIX MONTHS ENDED JULY 2, 1995
FULLY DILUTED COMPUTATION
Net loss per statement of earnings $ (52.9)
Add: effect of elimination of after-tax interest expense
on $140 million 8% convertible debentures 3.4
--------
Net loss, as adjusted $ (49.5)
========
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
outstanding, as adjusted 50.6
========
Fully diluted loss per common share $ (.98) (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.
- 26 -
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 July 16, 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
August 8, 1996
<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
June 30, 1996 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 39,300
<SECURITIES> 5,500
<RECEIVABLES> 539,100
<ALLOWANCES> (26,200)
<INVENTORY> 651,200
<CURRENT-ASSETS> 1,430,400
<PP&E> 2,165,600
<DEPRECIATION> (1,499,000)
<TOTAL-ASSETS> 2,209,900
<CURRENT-LIABILITIES> 942,400
<BONDS> 339,800
0
0
<COMMON> 75,400
<OTHER-SE> 560,000
<TOTAL-LIABILITY-AND-EQUITY> 2,209,900
<SALES> 1,042,700
<TOTAL-REVENUES> 1,042,700
<CGS> 602,600
<TOTAL-COSTS> 1,092,100
<OTHER-EXPENSES> 0
<LOSS-PROVISION> (2,500)
<INTEREST-EXPENSE> 23,300
<INCOME-PRETAX> (50,800)
<INCOME-TAX> (18,600)
<INCOME-CONTINUING> (32,200)
<DISCONTINUED> 0
<EXTRAORDINARY> (54,500)
<CHANGES> 0
<NET-INCOME> (86,700)
<EPS-PRIMARY> (1.90)
<EPS-DILUTED> 0
</TABLE>
