UNITED STATES 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 39 weeks ended September 26, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____ to _____
Commission file number 1-9256
__________________
PREMARK INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
Delaware 36-3461320
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1717 Deerfield Road, Deerfield, Illinois 60015
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (847)
405-6000
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes___X___ No_______
As of November 2, 1998, 61,703,125 shares of the Common Stock,
$1.00 par value, of the Registrant were outstanding.
<PAGE>
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements
a) Financial Statements of Registrant
Page
Index Number
Condensed Consolidated Statement of Income
(Unaudited) for the 13 week periods ended
September 26, 1998 and September 27, 1997........ 2
Condensed Consolidated Statement of Income
(Unaudited) for the 39 week periods ended
September 26, 1998 and September 27, 1997........ 3
Condensed Consolidated Balance Sheet
as of September 26, 1998 (Unaudited) and
December 27, 1997................................ 4
Condensed Consolidated Statement of Cash Flows
(Unaudited) for the 39 week periods ended
September 26, 1998 and September 27, 1997........ 6
Notes to Condensed Consolidated
Financial Statements (Unaudited)................. 7
The condensed consolidated financial statements of the
Registrant included herein have been prepared, without audit,
pursuant to the rules and regulations of the Securities and
Exchange Commission. Although certain information normally
included in financial statements prepared in accordance with
generally accepted accounting principles has been condensed or
omitted, the Registrant believes that the disclosures are
adequate to make the information presented not misleading. It
is suggested that these condensed consolidated financial
statements be read in conjunction with the financial statements
and the notes thereto included in the Annual Report on Form 10-K
of the Registrant for its fiscal year ended December 27, 1997.
The condensed consolidated financial statements included herein
reflect all adjustments, consisting only of normal recurring
items, which, in the opinion of management, are necessary to
present a fair statement of the results for the interim periods
presented.
The results for interim periods are not necessarily indicative
of trends or of results to be expected for a full year.
<PAGE>
PREMARK INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
13 Weeks Ended
--------------------
Sept. 26, Sept. 27,
1998 1997
(In millions, except per share data) --------- ---------
Net sales.................................. $ 698.5 $ 601.4
--------- ---------
Costs and expenses:
Cost of products sold.................... 447.4 376.4
Delivery, sales, and
administrative expense................. 188.3 169.6
Interest expense......................... 3.2 2.9
Interest income.......................... (0.8) (1.1)
Other income, net........................ (1.3) (0.4)
--------- ---------
Total costs and expenses.............. 636.8 547.4
--------- ---------
Income before income taxes................. 61.7 54.0
Provision for income taxes................. 23.0 20.1
--------- ---------
Net income................................. 38.7 33.9
Retained earnings, beginning of period..... 783.9 718.8
Cash dividends declared.................... (6.2) (5.6)
Cost of treasury stock issued
in excess of option exercise prices...... (5.8) (8.3)
--------- ---------
Retained earnings, end of period........... $ 810.6 $ 738.8
========= =========
Net income per common share................ $ 0.63 $ 0.54
========= =========
Net income per common share--
assuming dilution........................ $ 0.60 $ 0.52
========= =========
Average number of common shares
outstanding.............................. 61.8 62.4
========= =========
Average number of common shares
and assumed conversions.................. 64.5 65.5
========= =========
Dividends declared per common share........ $ 0.10 $ 0.09
========= =========
See accompanying Notes to Condensed Consolidated Financial
Statements (Unaudited).
- 2 -
<PAGE>
PREMARK INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
39 Weeks Ended
--------------------
Sept. 26, Sept. 27,
1998 1997
(In millions, except per share data) --------- ---------
Net sales.................................. $1,990.2 $1,741.4
--------- ---------
Costs and expenses:
Cost of products sold.................... 1,264.7 1,089.8
Delivery, sales, and
administrative expense................. 566.8 514.1
Interest expense......................... 9.9 8.9
Interest income.......................... (2.8) (6.3)
Other (income) expense, net.............. (1.5) 0.1
--------- ---------
Total costs and expenses.............. 1,837.1 1,606.6
--------- ---------
Income before income taxes................. 153.1 134.8
Provision for income taxes................. 58.2 51.8
--------- ---------
Net income................................. 94.9 83.0
Retained earnings, beginning of period..... 749.7 688.2
Cash dividends declared.................... (18.0) (16.2)
Cost of treasury stock issued
in excess of option exercise prices...... (16.0) (16.2)
--------- ---------
Retained earnings, end of period........... $ 810.6 $ 738.8
========= =========
Net income per common share................ $ 1.53 $ 1.33
========= =========
Net income per common share--
assuming dilution........................ $ 1.47 $ 1.27
========= =========
Average number of common shares
outstanding.............................. 61.9 62.5
========= =========
Average number of common shares
and assumed conversions.................. 64.7 65.5
========= =========
Dividends declared per common share........ $ 0.29 $ 0.26
========= =========
See accompanying Notes to Condensed Consolidated Financial
Statements (Unaudited).
- 3 -
<PAGE>
PREMARK INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
ASSETS
Sept. 26,
1998 December 27,
(Unaudited) 1997
(In millions) --------- ---------
Cash and cash equivalents................. $ 74.7 $ 151.3
Accounts and notes receivable............. 473.4 446.2
Less allowances for
doubtful accounts..................... (21.0) (18.1)
--------- ---------
452.4 428.1
Inventories............................... 449.3 394.0
Deferred income tax benefits.............. 80.8 68.8
Prepaid expenses.......................... 38.2 35.2
--------- ---------
Total current assets.................. 1,095.4 1,077.4
--------- ---------
Property, plant, and equipment............ 1,111.3 986.0
Less accumulated depreciation........... (598.4) (550.9)
--------- ---------
512.9 435.1
Intangibles, net of accumulated
amortization............................ 198.4 172.2
Other assets.............................. 97.3 81.1
--------- ---------
Total assets.......................... $1,904.0 $1,765.8
========= =========
See accompanying Notes to Condensed Consolidated Financial
Statements (Unaudited).
- 4 -
<PAGE>
PREMARK INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
LIABILITIES AND SHAREHOLDERS' EQUITY
Sept. 26,
1998 December 27,
(Unaudited) 1997
(In millions) --------- ---------
Accounts payable.......................... $ 137.0 $ 135.2
Short-term borrowings and current
portion of long-term debt............... 27.0 14.7
Accrued liabilities....................... 419.7 395.4
--------- ---------
Total current liabilities............. 583.7 545.3
--------- ---------
Long-term debt............................ 112.1 112.3
Accrued postretirement benefit cost....... 128.6 124.2
Other liabilities......................... 109.7 76.1
Shareholders' equity:
Preferred stock, $1.00 par value,
authorized 50,000,000 shares;
issued -- none........................ - -
Series A Junior Participating
Preferred stock, $1.00 par value,
authorized 1,000,000 shares;
issued - none......................... - -
Common stock, $1.00 par value,
authorized 200,000,000 shares;
issued -- 69,003,840 shares........... 69.0 69.0
Capital surplus........................... 355.4 348.9
Retained earnings......................... 810.6 749.7
Treasury stock, 7,406,720 shares at
September 26, 1998 and 7,201,201 shares
at December 27, 1997, at cost........... (243.2) (236.1)
Unearned portion of restricted
stock issued for future service......... (1.5) (1.5)
Accumulated other comprehensive income.... (20.4) (22.1)
--------- ---------
Total shareholders' equity............ 969.9 907.9
--------- ---------
Total liabilities and
shareholders' equity................ $1,904.0 $1,765.8
========= =========
See accompanying Notes to Condensed Consolidated Financial
Statements (Unaudited).
- 5 -
<PAGE>
PREMARK INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
39 Weeks Ended
--------------------
Sept. 26, Sept. 27,
1998 1997
(In millions) --------- ---------
Cash flows from operating activities:
Net income............................ $ 94.9 $ 83.0
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation and amortization..... 59.2 49.1
Changes in assets and liabilities:
Accounts and notes receivable..... (6.5) (5.1)
Inventory......................... (29.2) (63.2)
Accounts payable
and accrued liabilities......... (10.2) 18.6
Current income taxes.............. (6.9) 22.5
Deferred income taxes............. - (1.0)
Prepaid expenses.................. (1.5) (0.7)
Other............................. 7.3 10.8
-------- --------
Net cash provided by
operating activities............ 107.1 114.0
-------- --------
Cash flows from investing activities:
Capital expenditures.................. (78.5) (57.6)
Net sales of short-term investments... - 84.3
Business acquisitions................. (67.2) (24.2)
Other................................. 3.9 1.1
-------- --------
Net cash (used in) provided by
investing activities ........... (141.8) 3.6
-------- --------
Cash flows from financing activities:
Net increase (decrease) in
short-term borrowings............... 3.1 (13.0)
Repayment of long-term debt........... (2.7) (0.5)
Proceeds from exercise of
stock options....................... 5.4 5.4
Purchase of treasury stock............ (29.4) (31.7)
Payment of dividends.................. (17.4) (15.7)
-------- --------
Net cash used in financing
activities........................ (41.0) (55.5)
-------- --------
Effect of exchange rate changes on
cash and cash equivalents............. (0.9) (2.6)
-------- --------
Net (decrease) increase in cash
and cash equivalents.................. $ (76.6) $ 59.5
======== ========
See accompanying Notes to Condensed Consolidated Financial
Statements (Unaudited).
- 6 -
<PAGE>
PREMARK INTERNATIONAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1: Basis of Presentation
The accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with the instructions
to Form 10-Q and therefore do not include all information and
footnotes necessary for a fair presentation of financial
position, results of operations, and changes in financial
position in conformity with generally accepted accounting
principles. In the opinion of management, the unaudited
condensed consolidated financial statements include all
adjustments, consisting only of normal recurring items, necessary
for a fair presentation of financial position and results of
operations. The results of operations of any interim period are
not necessarily indicative of the results that may be expected
for a full fiscal year.
Note 2: Inventories
Inventories, by component, are summarized as follows (in
millions):
September 26, December 27,
1998 1997
-------- --------
Finished goods.................. $ 228.0 $ 207.4
Work in process................. 20.1 14.8
Raw materials and supplies...... 201.2 171.8
-------- --------
Total inventories $ 449.3 $ 394.0
======== ========
Note 3: Comprehensive Income
The components of comprehensive income, net of related tax, are as
follows (in millions):
13 Weeks Ended 39 Weeks Ended
------------------ ------------------
Sept. 26, Sept. 27, Sept. 26, Sept. 27,
1998 1997 1998 1997
-------- -------- -------- --------
Net income................. $ 38.7 $ 33.9 $ 94.9 $ 83.0
Foreign currency
translation adjustment... 5.1 (4.3) 1.6 (11.4)
-------- -------- -------- --------
Comprehensive income....... $ 43.8 $ 29.6 $ 96.5 $ 71.6
======== ======== ======== ========
Accumulated other comprehensive income, net of related tax benefits,
at September 26, 1998 and December 27, 1997, is comprised solely of
foreign currency translation adjustments.
Note 4: Net Income per Share
In 1997, the company adopted Statement of Financial Accounting
Standards No. 128, "Earnings per Share" ("SFAS No. 128"). Under the
statement, the calculation of primary and fully diluted earnings per
share has been replaced with basic and diluted earnings per share.
Unlike primary earnings per share, basic earnings per share excludes
any dilutive effect of options. Diluted earnings per share is very
similar to the previously reported fully diluted earnings per share.
All earnings per share amounts for all periods have been presented,
and, where appropriate, restated to conform to the SFAS No. 128
requirements.
The following table sets forth the computation of basic and diluted
earnings per share.
13 Weeks Ended 39 Weeks Ended
------------------ ------------------
Sept. 26, Sept. 27, Sept. 26, Sept. 27,
1998 1997 1998 1997
-------- -------- -------- --------
(In millions, except earnings per share)
Numerator for both basic
and diluted earnings
per share--net income.... $ 38.7 $ 33.9 $ 94.9 $ 83.0
======== ======== ======== ========
Denominator for basic
earnings per share--
weighted average shares.. 61.8 62.4 61.9 62.5
Plus: Effect of dilutive
securities--employee
stock options............ 2.7 3.1 2.8 3.0
-------- -------- -------- --------
Denominator for diluted
earnings per share--
weighted average shares
and assumed conversions.. 64.5 65.5 64.7 65.5
======== ======== ======== ========
Basic earnings per share... $ 0.63 $ 0.54 $ 1.53 $ 1.33
======== ======== ======== ========
Diluted earnings per share. $ 0.60 $ 0.52 $ 1.47 $ 1.27
======== ======== ======== ========
Options to purchase 775,300 shares of common stock at $32.25 per
share were outstanding during 1998 but were not included in the
computation of diluted earnings per share because the options'
exercise price was greater than the average market price of the
common shares and, therefore, the effect would be antidilutive.
Note 5: Acquisitions
In the first quarter of 1998, Wilsonart completed the acquisition
of the Resopal (German) and Arborite (Canadian) decorative laminate
businesses from Forbo Holdings AG for approximately $16 million,
including the assumption of $6 million of debt. In addition, the
company's Food Equipment Group completed the acquisition of Somat
Corporation, a manufacturer of commercial waste systems, for
approximately $4 million and Wittco Foodservice Equipment, Inc., a
manufacturer of cooking equipment, primarily warming, holding and
display cabinets, for approximately $6 million.
In the second quarter of 1998, the Food Equipment Group completed
the acquisition of Traulsen & Co., Inc., a manufacturer of
commercial refrigeration equipment, for approximately $42 million,
which includes the assumption of $4 million in debt. In addition,
Wilsonart acquired a majority position in a joint venture in
Thailand for approximately $10 million. This joint venture will
provide Wilsonart manufacturing capacity for laminate in the Far
East.
In early fourth quarter 1998, the Food Equipment Group acquired
M.B.M. S.p.A., an Italian manufacturer of high quality, low cost
cooking equipment, for approximately $30 million, including the
assumption of $4 million of debt. In addition, Wilsonart purchased
certain operating assets of Direct Worktops Limited for
approximately $60 million. Direct Worktops is the largest
manufacturer and distributor of high-pressure laminate countertops
in the United Kingdom. Also, Precor acquired Pacific Fitness
Corporation of Cypress, California for approximately $7 million.
Pacific Fitness is a leading manufacturer of high-end strength
training machines for home and health club use.
- 7 -
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
The following is a discussion of the results of operations of the
company for the 13 weeks and 39 weeks ended September 26, 1998,
compared with the 13 weeks and 39 weeks ended September 27, 1997,
and changes in financial condition during the 39 weeks ended
September 26, 1998.
Net Sales
Net sales for the third quarter of 1998 were a record $698.5
million, an increase of 16% compared with net sales of $601.4
million in 1997. In the first three quarters of 1998, net sales
rose to $1,990.2 million, which was an improvement of 14% from
1997's net sales of $1,741.4 million. For both the third quarter
and the first nine months, sales rose at all groups, except for the
year-to-date sales at West Bend, which declined modestly. Excluding
the effects of foreign exchange rates, sales rose 16% and 15% for
the third quarter and the first nine months of 1998, respectively.
Costs and Expenses
Cost of products sold as a percentage of net sales was 64.1% for the
third quarter of 1998 compared with 62.6% in the third quarter of
1997. For the first nine months, the rates in 1998 and 1997 were
63.5% and 62.6%, respectively. The increase in both periods was due
to higher manufacturing costs at Wilsonart's first quarter 1998
acquisitions, coupled with lower production levels at Florida Tile.
Delivery, sales and administrative expense as a percent of net sales
was 26.9% and 28.5% for the third quarter and first nine months of
1998, respectively, compared with the 1997 ratios of 28.2% and
29.5%, respectively. The improvement for both periods was due to an
overall decline in expenses as a percentage of sales at Wilsonart
and Florida Tile, along with lower costs at the Food Equipment
Group's European sector resulting from lower marketing expenses as a
percentage of sales as well as benefits from reductions in
personnel. These items more than offset higher new product
development costs at Precor. The non repeat of a provision in 1997
for reduction in force at Food Equipment Europe was also a
contributing factor in the year-to-date positive variance.
Net Interest Expense
Interest expense, net of interest income, was $2.4 million in the
third quarter of 1998 versus $1.8 million in the third quarter of
1997. For the year-to-date period of 1998, net interest expense was
$7.1 million versus $2.6 million in 1997. The increase in net
interest expense for both periods in 1998 was due to a lower cash
position. In addition, a change in the investment vehicles chosen
for cash, resulting in less cash being invested in interest-bearing
instruments affects the year-to-date comparison. The majority of
income on cash investments is included in other income in 1998.
Tax Rate
The company's effective tax rate was 37.3% for the third quarter of
1998 compared with a tax rate of 37.2% for the same period in 1997.
For the first nine months of 1998, the effective tax rate was 38.0%
versus 38.4% for the first nine months of 1997 and 40.6% for the
year ended December 27, 1997. The lower rate for the first nine
months of 1998 reflects the partial utilization of a capital loss.
The full year 1997 rate represents the company's inability to
realize fully the tax benefit of a charge associated with the global
restructuring of the Food Equipment Group.
Net Income
For the third quarter, net income improved 14% to $38.7 million, or
60 cents per diluted share, in 1998 from $33.9 million, or 52 cents
per diluted share, in 1997. For the nine month period, net income
grew 14% to $94.9 million, or $1.47 per diluted share, in 1998 from
$83.0 million, or $1.27 per diluted share, in 1997. For both
periods, an improvement in profitability at Wilsonart and the Food
Equipment Group more than offset a significant shortfall at Florida
Tile, a modest decline at Precor and higher net interest expense.
Segment Results
Food Equipment Group
Net sales for the third quarter of 1998 were $363 million, an
increase of 12% from $323.5 million in 1997. The impact of foreign
exchange rates upon results was minimal. For the first nine months,
net sales improved 9% from $942.6 million in 1997 to $1,030.9
million in 1998. Excluding exchange rate impacts, sales for the
first nine months of 1998 rose 11%. For both the third quarter and
the first nine months, sales growth was driven by improvements in
both the United States and Europe, which, along with the effect of
U.S. acquisitions, more than offset a decline in the Asian Pacific
region. International operations accounted for 38% and 39% of
segment sales for the third quarter and first nine months of 1998,
respectively.
For the third quarter, segment profit of $30.4 million was 10%
higher than 1997's $27.7 million. For the first nine months,
segment profit rose significantly to $76.3 million from $59.1
million in 1997. Increases occurred in both the United States and
Europe, aided by the effect of recent acquisitions. International
operations accounted for 24% and 28% of segment profit for the third
quarter and year to date, respectively.
U.S. sales rose 19% to $225.3 million for the third quarter of 1998.
For the first nine months, sales rose 14% to $627.8 million. For
both periods, the impact of recent acquisitions, improvements in all
of Hobart's channels, as well as growth at Vulcan-Hart, Wolf Range,
Adamatic and Stero more than offset lower export volume. Excluding
acquisitions, sales grew 6% and 4% for the third quarter and first
nine months, respectively. U.S. segment profit of $23.2 million in
the third quarter of 1998 rose 21% from the third quarter of 1997.
For the first nine months of 1998, U.S segment profit rose 18% to
$54.7 million. For both the quarter and year-to-date results, the
growth in U.S. segment profit was due to higher sales and the impact
of recent acquisitions, which more than offset increases in
marketing and administrative expenses.
European sales rose 8% for the third quarter of 1998 to $112.9
million. On a local currency basis, European sales improved by 5%
for the third quarter as a result of gains in several countries,
notably the U.K., Italy (Eurotec) and Germany, which more than
offset a decline in sales in France resulting from the announcement
of the pending closure of its major manufacturing plant. European
segment profit was $6.7 million for the third quarter of 1998,
versus $6.0 million for the same period last year. The change was
due to the higher sales, as well as an improved cost structure. For
the first nine months of 1998, sales climbed 6% to $330.3 million,
or 8% on a local currency basis. Growth in the U.K. and Germany,
coupled with the inclusion of Eurotec, which contributed nine months
of sales in 1998 versus six months last year, were the major factors
for the improvement. For the 1998 year-to-date period, segment
profit of $19.8 million was almost double the amount for the same
period last year. The growth in profit was due to the higher sales
and the absence in 1998 of a $4.1 million provision for
organizational changes and manufacturing realignments.
Sales for the other international operations of $24.8 million fell
by 17% in the third quarter of 1998. Year-to-date, sales of $72.8
million dropped 8%. On a local currency basis, sales decreased 9%
and 1% for the third quarter and first nine months, respectively.
The decline in the quarter was due to weakness in the Asian Pacific
markets, especially Hong Kong, where a major project was completed
last year, offsetting slight growth in Latin America. For the
year-to-date period, strength in Canada and Latin America,
especially Mexico and Argentina, offset a decline in the Asian
Pacific region. Other international segment profit for both the
third quarter and the year-to-date period fell significantly, to
$0.5 million and $1.8 million, respectively. Lower Canadian
production volume and the weak Asian markets hurt profitability in
both periods. Year-to-date profit declined despite the non repeat
of a 1997 provision of $2 million to close the Australian plant.
Decorative Products
Net sales were $256.2 million for the third quarter of 1998, an
improvement of 24% compared with $206.3 million in the same period
in 1997. For the first nine months, sales grew 26% to $745.3
million from $589.4 million in 1997. Record sales at Wilsonart,
aided by the acquisitions made early in the first quarter of 1998,
were responsible for the growth in both periods. Segment profit of
$29.6 million in the third quarter of 1998 was a 24% improvement
from a profit of $23.9 million in the same period in 1997.
Year-to-date, segment profit grew 11% to $75 million.
Wilsonart reported record sales and profit for both the third
quarter and first nine months of 1998. Sales increased 27% versus
the third quarter of 1997, and 32% over the first nine months of
last year. The growth in both periods reflects an increase in
domestic laminate volume, significant growth in international sales,
continued strength in new products, as well as the impact of the
acquisitions of Arborite and Resopal. Absent the acquisitions,
sales would have grown 10% and 15% for the third quarter and first
nine months, respectively. Wilsonart segment profit rose 27% and
25% for the quarter and year-to-date, respectively, on higher volume
and improved pricing, despite somewhat higher manufacturing costs
and increased operating expenses due to international expansion,
domestic distribution and information services. Increased marketing
expense associated with new product introductions was an additional
negative factor in the year-to-date comparison.
Florida Tile's sales rose 10% and 3% for the third quarter and the
first nine months of 1998, respectively, as a result of higher sales
of imported products and increased sales through company-owned
distribution centers. A significantly higher segment loss at
Florida Tile was reported for both periods, reflecting lower
production intended to reduce inventory levels.
Consumer Products
Net sales were $79.3 million for the third quarter of 1998, an
increase of 11% compared with $71.6 million in 1997. Year to date,
sales rose 2% from $209.4 million to $214 million in 1998. Segment
profit for the third quarter was essentially flat versus last year
at $7.0 million. For the first nine months, segment profit declined
10% to $17.7 million from $19.5 million last year.
For the quarter, West Bend sales grew 3% from 1997, but year-to-date
sales fell 8% from last year. Housewares sales improved 2% for the
quarter, reflecting growth in slow cooker volume. First nine months
sales of 1998 fell 13% from the same period last year as a result of
lower breadmaker volume and pricing. Direct-to-the-home products
sales rose 7% and 2% for the third quarter and the first nine months
of 1998, respectively, as a result of higher volume and pricing.
West Bend's segment profit increased modestly for the quarter,
mainly reflecting higher volume. For the year-to-date comparison,
lower Housewares volume more than offset improved cookware
manufacturing efficiencies and lower operating expenses, resulting
in a significant decline from 1997.
Precor sales grew 28% and 23% to record levels for the third quarter
and the first nine months of 1998, respectively. For both periods,
a continued increase in sales of the elliptical cross trainer
product, higher volume in club treadmills, and growth in
international volume drove the increase. For the year-to-date
comparison, the growth was achieved despite a decline in treadmills
for home use. Precor's segment profit decreased somewhat for both
the quarter and the first nine months of 1998 as a result of
intensified new product development efforts.
Financial Condition
In early fiscal 1998, the company completed the acquisition of the
Resopal and Arborite decorative laminate businesses from Forbo
Holdings AG for approximately $16 million including the assumption
of $6 million of debt. In addition, the company purchased Somat
Corporation for approximately $4 million and Wittco Foodservice
Equipment, Inc. for approximately $6 million. In the second
quarter, the company completed the acquisition of Traulsen & Co.,
Inc. for approximately $42 million including the assumption of $4
million of debt. In the early part of the fourth quarter, the
company acquired M.B.M. S.p.A. for approximately $30 million,
including the assumption of $4 million of debt; Pacific Fitness
Corporation for $7 million; and certain assets of Direct Worktops
Limited for approximately $60 million. Funds used to purchase these
companies came from available cash and commercial paper.
Net cash provided by operating activities in the first nine months
of 1998 was $107.1 million compared with $114 million in the first
nine months of 1997. Lower 1998 cash generation primarily resulted
from a decrease in accounts payable and accrued liability balances
in 1998 versus an increase in 1997, as well as higher net income tax
payments. This more than offset an increase in net income as well
as a lower growth in inventories, primarily at Florida Tile and
Wilsonart.
Net cash used in investing activities in 1998 was $141.8 million
versus cash provided by investing activities of $3.6 million in
1997. This reflects the acquisitions made to date during 1998 of
Arborite, Resopal, Somat, Wittco and Traulsen, versus only Eurotec
in 1997. Capital expenditures increased to $78.5 million in 1998
versus $57.6 million in 1997, due to higher spending at Wilsonart.
Net cash provided by investing activities last year was driven by
sales of short-term investments.
Net cash used in financing activities was $41 million for the first
nine months of 1998 versus $55.5 million in 1997. The decrease
between years in cash used for financing activities reflects a
slight increase in borrowings during 1998 versus a paydown of
short-term debt last year.
The total debt-to-capital ratio at the end of the third quarter of
1998 was 12.5%, compared with 11.8% percent at the end of the third
quarter of 1997, and 12.3% percent at December 27, 1997. The
increase in 1998 was due to higher foreign short-term debt levels.
Working capital as of September 26, 1998 decreased by $20.4 million
from December 27, 1997. Cash and cash equivalents decreased,
reflecting the purchase of several acquisitions in 1998. Accrued
liabilities increased, offsetting higher accounts and notes
receivable and net inventories, all due to the balance sheet effects
of the recent acquisitions. In addition, inventories rose due to a
seasonal inventory build.
As of September 26, 1998, unused lines of credit were approximately
$411.1 million, including $250 million under a revolving credit
agreement that expires in October 2002. In August 1998, the
company filed with the Securities and Exchange Commission a shelf
registration statement increasing to $250 million the amount of debt
securities registered for issuance from time to time. The funds
raised would be used for general corporate purposes. Cash generated
from the issuance of long-term debt, future cash flows, lines of
credit, and other short-term financing is expected to be adequate to
fund operating and investing activities.
In August 1996, the company announced that it would repurchase 6
million of its shares, with volume and timing to depend on market
conditions. Purchases will be made in the open market or through
other transactions and will be financed through available cash, cash
flow from operations or issuance of additional debt. Under this
plan, through September 26, 1998, and November 2, 1998,
respectively, the company has repurchased 3,100,400 shares and
3,244,900 shares at an average cost of $28 per share for both
periods.
Accounting Pronouncements
Effective for fiscal year 1998, the company adopted the American
Institute of Certified Public Accountants' Statement of Position
(SOP) 98-1, "Accounting for the Costs of Computer Software Developed
or Obtained for Internal Use." The statement requires
capitalization of certain costs incurred in the development of
internal-use software, including external direct material and
service costs, employee payroll and payroll-related costs, and
capitalized interest. Prior to adoption of SOP 98-1, the company
expensed these costs as incurred. The effect of this change in
accounting principle on earnings in 1998 is immaterial.
In June 1998, Statement of Financial Accounting Standards No. 133
(SFAS No. 133), "Accounting for Derivative Instruments and Hedging
Activities," was issued. This statement is required to be adopted
for fiscal years beginning after June 15, 1999. The statement
requires that all derivatives be recorded at fair value (marked to
market) on the balance sheet. Accounting for gains and losses
arising from changes in the fair value of a derivative would depend
upon the intended use of the derivative. For a derivative
designated as a hedge of an asset, liability, or a firm commitment
which is subject to exposure to changes in fair value, the gain or
loss would be recognized in earnings in the period of change,
together with the offsetting loss or gain on the hedged item. For a
derivative designated as a hedge of cash flows of a forecasted
transaction, the gain or loss would be included in comprehensive
income and subsequently recognized in earnings in the same period
the scheduled transaction occurs. For a derivative designated as a
hedge of the net investment in a foreign operation, the gains and
losses would be included in comprehensive income. Finally, gains
and losses for all other derivatives that cannot be designated as a
hedge would be recognized in earnings in the period of change. The
company does not anticipate that there will be a material impact on
the results of operations or financial position as a result of the
adoption of SFAS No. 133.
Year 2000
The company continues to evaluate and adjust all known date-
sensitive systems and equipment for Year 2000 compliance. The
assessment phase of the company's Year 2000 project includes both
information technology as well as non-information technology
equipment.
The company is using both internal and external resources to
identify and test the systems for Year 2000 compliance, and to
reprogram or replace them when necessary. It is presently
anticipated that such efforts will be completed by mid-1999. The
company expects to spend approximately $14.5 million in 1998 and
1999 to modify its systems. These costs will be expensed as
incurred. All of these costs are being funded through operating
cash flows.
As part of its remediation efforts, the company has initiated formal
communications with significant suppliers and customers to determine
the extent to which the company's systems and operations are
vulnerable to any failure by those third parties to remediate their
Year 2000 problems. There can be no guarantee, however, that the
systems of those other companies will be converted in a timely
fashion and would not have an adverse effect on the company.
Management believes, however, that ongoing communication with and
assessment of these third parties will minimize these risks.
The company will also evaluate the extent of contingency plans
needed based upon communications with suppliers and customers and
assessment of outside risks. Contingency plans would be finalized
during 1999.
The costs of the compliance effort and the date by which the company
believes it will complete the Year 2000 modifications are based upon
management's best estimates. There can be no guarantee that these
estimates will be achieved, however, and actual results could differ
materially from those anticipated.
<PAGE>
PART II
OTHER INFORMATION
Item 5. Other Information
The by-laws of the company have been amended to provide that to be
timely a stockholder's notice of business to be brought before an
annual meeting (other than stockholder proposals to be included in
the proxy statement) must be received at the principal executive
offices of the Corporation not more than 120 days nor less than 90
days prior to the anniversary date of the prior year's annual
meeting.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits (numbered in accordance with Item 601 of
Regulation S-K)
(3) Amended By-Laws
(27) Financial Data Schedules for the third quarter
of 1998 and 1997 are filed as an exhibit to this
Report.
(b) Reports on Form 8-K
During the quarter, the Registrant did not file any
current reports on Form 8-K.
<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.
PREMARK INTERNATIONAL, INC.
By: John M. Costigan
------------------------
Senior Vice President,
General Counsel and Secretary
By: Lawrence B. Skatoff
------------------------
Senior Vice President and
Chief Financial Officer
Deerfield, Illinois
November 4, 1998
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
(3) Amended By-Laws
(27) Financial Data Schedules for
the third fiscal quarter of 1998
and 1997 are filed as exhibits to
this Report.
By-Laws
of
Premark International, Inc.
(As amended November 4, 1998)
ARTICLE I
Stockholders
Section 1. The annual meeting of the stockholders of the Corporation
shall be held on the Wednesday before the first Thursday in May of each year
(or if said day is a legal holiday, then on the next succeeding day not a
holiday) or on such other date, and at such time and at such place within or
without the State of Delaware, as may be fixed by the Board of Directors, for
the purpose of electing directors and for the transaction of such other
business as may properly be brought before the meeting.
Section 2. (a) Subject to the rights of the holders of any class or
series of stock having a preference over the Common Stock of the Corporation
as to dividends or upon liquidation ("Preferred Stock"), any action required
or permitted to be taken by the stockholders of the Corporation must be
effected at an annual or special meeting of stockholders of the Corporation
and may not be effected by any consent in writing by such stockholders.
Subject to the rights of the holders of any class or series of Preferred
Stock, special meetings of stockholders of the Corporation may be called only
by the Board of Directors pursuant to a resolution adopted by a majority of
the Whole Board (as such term is defined in Article EIGHTH of the
Corporation's Restated Certificate of Incorporation (the "Certificate of
Incorporation")).
(b) Special meetings of the stockholders may be held at such time and at
such place within or without the State of Delaware, as may be stated in the
call.
Section 3. Notice of the time and place of every meeting of stockholders
shall be delivered personally or mailed at least ten days and not more than
sixty days prior thereto to each stockholder of record entitled to vote at his
address as it appears on the records of the Corporation. Such further notice
shall be given as may be required by law. Business transacted at any special
meeting shall be confined to the purpose or purposes stated in the notice of
such special meeting. Meetings may be held without notice if all stockholders
entitled to vote are present or if notice is waived by those not present.
Section 4. Except as otherwise provided by law or by the Certificate of
Incorporation, the presence, in person or by proxy, of the holders of record
of shares of capital stock of the Corporation entitling the holders thereof to
cast a majority of the votes (after giving effect to the provisions of Article
NINTH of the Certificate of Incorporation) entitled to be cast by the holders
of shares of capital stock of the Corporation entitled to vote shall
constitute a quorum at all meetings of the stockholders. The chairman of the
meeting or the holders of record of a majority of such shares so present or
represented may adjourn the meeting from time to time, whether or not there is
such a quorum. No notice of the time and place of adjourned meetings need be
given except as required by law.
Section 5. Election of directors at all meetings of the stockholders at
which directors are to be elected shall be by ballot, and, except as otherwise
set forth in any Preferred Stock Designation (as defined in Article FOURTH of
the Certificate of Incorporation) with respect to the right of the holders of
any class or series of Preferred Stock to elect additional directors under
specified circumstances, a plurality of the votes cast thereat shall elect.
Except as otherwise provided by law, the Certificate of Incorporation, any
Preferred Stock Designation, the By-Laws of the Corporation or resolution
adopted by the Whole Board, all matters other than the election of directors
submitted to the stockholders at any meeting shall be decided by a majority of
the votes cast with respect thereto.
Section 6. (a) At any annual
meeting of the stockholders, only such business shall be conducted as shall
have been brought before the meeting (i) by or at the direction of the Board
of Directors or (ii) by any stockholder of the Corporation who is entitled to
vote with respect thereto and who complies with the notice procedures set
forth in this Section 6(a). For business to be properly brought before an
annual meeting by a stockholder, the stockholder must have given timely notice
thereof in writing to the Secretary of the Corporation. To be timely, a
stockholder's notice must be received at the principal executive offices of
the Corporation not more than 120 days nor less than 90 days prior to the
anniversary date of the prior year's annual meeting. If during the prior year
the Corporation did not hold an annual meeting, or if the date of the meeting
has changed more than 30 days from the prior year, then notice must be
received not later than 10 days following the first public announcement of the
date of such annual meeting. A stockholder's notice to the Secretary shall set
forth as to each matter such stockholder proposes to bring before the annual
meeting (i) a brief description of the business desired to be brought before
the annual meeting and the reasons for conducting such business at the annual
meeting, (ii) the name and address, as they appear on the Corporation's books,
of the stockholder proposing such business, (iii) the class and number of
shares of the Corporation's capital stock that are beneficially owned by such
stockholder and (iv) any material interest of such stockholder in such
business. Notwithstanding anything in the By-Laws to the contrary, no business
shall be brought before or conducted at an annual meeting except in accordance
with the provisions of this Section 6(a). The officer of the Corporation or
other person presiding over the annual meeting shall, if the facts so warrant,
determine and declare to the meeting that business was not properly brought
before the meeting in accordance with the provisions of this Section 6(a) and,
if he should so determine, he shall so declare to the meeting and any such
business so determined to be not properly brought before the meeting shall not
be transacted.
At any special meeting of the stockholders, only such business shall be
conducted as shall have been brought before the meeting by or at the direction
of the Board of Directors.
(b) Only persons who are nominated in accordance with the procedures set
forth in these By-Laws shall be eligible for election as directors.
Nominations of persons for election to the Board of Directors of the
Corporation may be made at a meeting of stockholders at which directors are to
be elected only (i) by or at the direction of the Board of Directors or (ii)
by any stockholder of the Corporation entitled to vote for the election of
directors at the meeting who complies with the notice procedures set forth in
this Section 6(b). Such nominations, other than those made by or at the
direction of the Board of Directors, shall be made by timely notice in writing
to the Secretary of the Corporation. To be timely, a stockholder's notice must
be received at the principal executive offices of the Corporation not more
than 120 days nor less than 90 days prior to the anniversary date of the prior
year's annual meeting. If during the prior year the Corporation did not hold
an annual meeting, or if the date of the meeting has changed more than 30 days
from the prior year, then notice must be received not later than 10 days
following the first public announcement of the date of such annual meeting.
Such stockholder's notice shall set forth (i) as to each person whom such
stockholder proposes to nominate for election or re-election as a director,
all information relating to such person that is required to be disclosed in
solicitations of proxies for election of directors, or is otherwise required,
in each case pursuant to Regulation 14A under the Securities Exchange Act of
1934, as amended (including such person's written consent to being named in
the proxy statement as a nominee and to serving as a director if elected); and
(ii) as to the stockholder giving the notice (x) the name and address, as they
appear on the Corporation's books, of such stockholder and (y) the class and
number of shares of the Corporation's capital stock that are beneficially
owned by such stockholder. At the request of the Board of Directors any person
nominated by the Board of Directors for election as a director shall furnish
to the Secretary of the Corporation that information required to be set forth
in a stockholder's notice of nomination which pertains to the nominee. No
person shall be eligible for election as a director of the Corporation unless
nominated in accordance with the provisions of this Section 6(b). The officer
of the Corporation or other person presiding at the meeting shall, if the
facts so warrant, determine and declare to the meeting that a nomination was
not made in accordance with such provisions and, if he should so determine, he
shall so declare to the meeting and the defective nomination shall be
disregarded.
Section 7. (a) The Board of Directors by resolution
shall appoint one or more inspectors, which inspector or inspectors may
include individuals who serve the Corporation in other capacities, including,
without limitation, as officers, employees, agents or representatives of the
Corporation, to act at a meeting of stockholders and make a written report
thereof. One or more persons may be designated as alternate inspectors to
replace any inspector who fails to act. If any inspectors or alternates who
have been appointed are unable to act at a meeting of stockholders, the
Chairman of the meeting shall appoint one or more inspectors to act at the
meeting. Each inspector, before discharging his or her duties, shall take and
sign an oath faithfully to execute the duties of inspector with strict
impartiality and according to the best of his or her ability. The inspectors
shall have the duties prescribed by the General Corporation Law of the State
of Delaware.
(b) The Chairman of the meeting or the Secretary of the Corporation
shall fix and announce at the meeting the date and time of the opening and the
closing of the polls for each matter upon which the stockholders will vote at
a meeting.
ARTICLE II
Directors
Section 1. (a) Subject to the rights of the holders of any class or
series of Preferred Stock to elect directors under specified circumstances,
the number of directors shall be fixed from time to time exclusively by the
Board of Directors pursuant to a resolution adopted by a majority of the Whole
Board. The directors, other than those who may be elected by the holders of
any class or series of Preferred Stock, shall be divided, with respect to the
time for which they severally hold office, into three classes, with the term
of office of the first class to expire at the 1987 annual meeting of
stockholders, the term of office of the second class to expire at the 1988
annual meeting of stockholders and the term of office of the third class to
expire at the 1989 annual meeting of stockholders, with each director to hold
office until his or her successor shall have been duly elected and qualified.
At each annual meeting of stockholders, commencing with the 1987 annual
meeting, (i) directors elected to succeed those directors whose terms then
expire shall be elected for a term of office to expire at the third succeeding
annual meeting of stockholders after their election, with each director to
hold office until his or her successor shall have been duly elected and
qualified and (ii), if authorized by a resolution of the Board of Directors,
directors may be elected to fill any vacancy on the Board of Directors
regardless of how such vacancy shall have been created.
(b) A whole number of directors equal to at least one third of the Whole
Board shall constitute a quorum for the transaction of business, but if at any
meeting of the Board of Directors there shall be less than a quorum present a
majority of those present may adjourn the meeting from time to time until a
quorum shall have been obtained.
(c) Subject to the rights of the holders of any class or series of
Preferred Stock, and unless the Board of Directors otherwise determines, newly
created directorships resulting from any increase in the authorized number of
directors or any vacancies in the Board of Directors resulting from death,
resignation, retirement, disqualification, removal from office or other cause
may be filled only by a majority vote of the directors then in office, though
less than a quorum, and directors so chosen shall hold office for a term
expiring at the annual meeting of stockholders at which the term of office of
the class to which they have been elected expires and until such director's
successor shall have been duly elected and qualified. No decrease in the
number of authorized directors constituting the Whole Board shall shorten the
term of any incumbent director.
(d) Subject to the rights of the holders of any class or series of
Preferred Stock, any director, or the entire Board of Directors, may be
removed from office at any time, but only for cause and only by the
affirmative vote of the holders of at least a majority of the voting power of
all of the then-outstanding shares of capital stock of the Corporation
entitled to vote generally in the election of directors (the "Voting Stock")
(after giving effect to the provisions of Article NINTH of the Certificate of
Incorporation), voting together as a single class.
Section 2. Meetings of the Board of Directors shall be held at such
place within or without the State of Delaware, as may from time to time be fixed
by, or determined in the manner provided by, resolution of the Board, or as
may be specified in the call of any meeting. Regular meetings of the Board of
Directors shall be held at such times as may from time to time be fixed by, or
determined in the manner provided by, resolution of the Board, and special
meetings may be held at any time upon the call of the Executive Committee or
of the Chairman of the Board of Directors by oral, telegraphic or written
notice, duly served on or sent or mailed to each director not less than two
days before such meeting. A meeting of the Board may be held without notice
immediately after the annual meeting of stockholders at the same place at
which such meeting was held. Notice need not be given of regular meetings of
the Board held at times and places fixed by resolution of the Board. A meeting
may be held at any time without notice if all the directors are present or if
those not present waive notice of the meeting in writing, either before or
after such meeting.
Section 3. The Board of Directors may, in its discretion, by resolution
passed by a majority of the Whole Board, designate an Executive Committee to
consist of the Chairman of the Board of Directors and such number of other
directors as the Board may from time to time determine (not less than three),
which Committee, to the extent provided in said resolution, shall have, and
may exercise when the Board is not in session, the powers of the Board in the
management of the business and affairs of the Corporation, except the power to
change the membership or to fill vacancies in the Board or said Committee. The
Board shall have the power at any time to change the membership of said
Committee (subject to the requirement that the Chairman of the Board be a
member thereof), to fill vacancies in it, or to dissolve it. The Executive
Committee may make rules for the conduct of its business and may appoint such
committees and assistants as it shall from time to time deem necessary .
Section 4. The Board of Directors may from time to time, in its
discretion, by resolution passed by a majority of the Whole Board, designate,
and appoint, from the directors, other committees of one or more persons which
shall have and may exercise such lawfully delegable powers and duties
conferred or authorized by the resolutions of designation and appointment. The
Board shall have power at any time to change the members of any such
committee, to fill vacancies, and to discharge any such committee.
Section 5. Unless the Board shall provide otherwise, the presence of
one-half of the total membership of any committee of the Board shall
constitute a quorum for the transaction of business at any meeting of such
committee and the act of a majority of those present shall be necessary and
sufficient for the taking of any action thereat.
Section 6. The Executive Committee, and any other committee so
designated if the resolution which designates such committee or a supplemental
resolution of the Board shall so provide, may exercise the power and authority
of the Board to declare a dividend, to authorize the issuance of stock or to
adopt a certificate of ownership and merger pursuant to Section 253 of the
Delaware General Corporation Law.
ARTICLE III
Officers
Section 1. The Board of Directors as soon as may be practicable after
the annual meeting of stockholders shall choose a Chairman of the Board of
Directors, a Secretary and a Treasurer and from time to time may choose such
other officers (including, without limitation, a President) as it may deem
proper. The Chairman of the Board of Directors shall be chosen from the
directors.
Section 2. The term of office of all officers shall be until the next
annual election of officers and until their respective successors are chosen,
but any officer may be removed from office at any time by the affirmative vote
of a majority of the members of the Whole Board.
Section 3. All officers chosen by the Board of Directors shall each have
such powers and duties as generally pertain to their respective offices,
subject to the specific provisions of this ARTICLE III. Such officers shall
also have such powers and duties as from time to time may be conferred by the
Board of Directors or by any committee thereof.
Section 4. The Chairman of the Board shall preside at all meetings of
the stockholders and of the Board of Directors. He shall make reports to the
Board of Directors and the stockholders, and shall perform all such other
duties as are properly required of him by the Board of Directors.
The Chief Executive Officer shall have general management and oversight
of the administration and operation of the Corporation's business and general
supervision of its policies and affairs.
The President (if one shall have been chosen by the Board of Directors)
shall act in a general executive capacity and shall assist the Chairman of the
Board of Directors in the administration and operation of the Corporation's
business and in the supervision of its policies and affairs. During the
absence or disability of the Chairman of the Board of Directors, the President
(if one shall have been chosen by the Board of Directors) shall have and
exercise all the powers of the Chairman of the Board of Directors.
Each meeting of the stockholders and of the Board of Directors shall be
presided over by the Chairman of the Board of Directors or, in his absence,
the President, if one shall have been chosen by the Board of Directors, or in
his absence, by such officer as has been designated by the Board of Directors
or, in his absence, by such officer or other person as is chosen at the
meeting. The Secretary or, in his absence, the General Counsel of the
Corporation or such officer as has been designated by the Board of Directors
or, in his absence, such officer or other person as is chosen by the person
presiding, shall act as secretary of each such meeting.
ARTICLE IV
Certificates of Stock
The interest of each stockholder of the Corporation shall be evidenced by
certificates for shares of stock in such form as the Board of Directors may
from time to time prescribe, unless it shall be determined by, or pursuant to,
a resolution adopted by the Board of Directors that the shares representing
such interest be uncertificated. The shares of the stock of the Corporation
shall be transferred on the books of the Corporation by the holder thereof in
person or by his attorney, upon surrender for cancellation of certificates for
the same number of shares, with an assignment and power of transfer endorsed
thereon or attached thereto, duly executed, with such proof of the
authenticity of the signature as the Corporation or its agents may reasonably
require.
The certificates of stock shall be signed, countersigned and registered
in such manner as the Board of Directors may by resolution prescribe, which
resolution may permit all or any of the signatures on such certificates to be
in facsimile. In case any officer, transfer agent or registrar who has signed
or whose facsimile signature has been placed upon a certificate has ceased to
be such officer, transfer agent or registrar before such certificate is
issued, it may be issued by the Corporation with the same effect as if he were
such officer, transfer agent or registrar at the date of issue.
ARTICLE V
Checks, Notes, Etc.
All checks on the Corporation's bank accounts and all drafts, bills of
exchange and promissory notes, and all acceptances, obligations and other
instruments for the payment of money, shall be signed by such person or
persons as shall be thereunto authorized from time to time by the Board of
Directors or by the committee or officer or officers of the Corporation to
whom the Board shall have delegated the power to authorize such signing;
provided, however, that the signature of any person so authorized on checks
and drafts drawn on the Corporation's dividend and special accounts may be in
facsimile if the Board of Directors or the committee or officer or officers,
whichever shall have authorized such person to sign such checks or drafts,
shall have authorized such person to sign in facsimile; and provided further
that in case notes or other instruments for the payment of money (other than
notes, bonds or debentures issued under a trust instrument of the Corporation)
are required to be signed by two persons, the signature thereon of only one of
the persons signing any such note or other instrument may be in facsimile, and
that in the case of notes, bonds or debentures issued under a trust instrument
of the Corporation and required to be signed by two officers of the
Corporation, the signatures of both such officers may be in facsimile if
specifically authorized and directed by the Board of Directors of the
Corporation and if such notes, bonds or debentures are required to be
authenticated by a corporate trustee which is a party to the trust instrument;
and provided further that in case any person or persons who shall have signed
any such note or other instrument, either manually or in facsimile, shall have
ceased to be a person or persons so authorized to sign any such note or other
instrument, whether because of death or by reason of any other fact or
circumstance, before such note or other instrument shall have been delivered
by the Corporation, such note or other instrument may, nevertheless, be
adopted by the Corporation and be issued and delivered as though the person or
persons who so signed such note or other instrument had not ceased to be such
a person or persons.
ARTICLE VI
Offices
The Corporation may have offices outside of the State of Delaware at
such places as shall be determined from time to time by the directors.
ARTICLE VII
Amendments
These By-Laws may be amended, added to, rescinded or repealed at any
meeting of the Board of Directors or of the stockholders, provided notice of
the proposed change was given in the notice of the meeting and, in the case of
a meeting of the Board of Directors, in a notice given no less than
twenty-four hours prior to the meeting; provided, however, that, in the case
of amendments by stockholders, notwithstanding any other provisions of these
By-Laws or any provision of law which might otherwise permit a lesser vote or
no vote, but in addition to any affirmative vote of the holders of any
particular class or series of the stock required by law, the Certificate of
Incorporation or these By-Laws, the affirmative vote of the holders of at
least 80 percent of the voting power of the then outstanding Voting Stock,
voting together as a single class, shall be required to alter, amend or repeal
any provision of these By-Laws.
ARTICLE VIII
Emergency Provisions
During any emergency resulting from an attack on the United States or on
a locality in which the Corporation conducts its business or customarily holds
meetings of its Board of Directors or its stockholders, or during any nuclear
or atomic disaster, or during the existence of any catastrophe, or other
similar emergency condition, as a result of which a quorum of the Board of
Directors of the Corporation or of the Executive Committee of the Board of
Directors cannot readily be convened for action, the following provisions
shall apply, notwithstanding any other provisions of the By-Laws of the
Corporation:
1. An emergency meeting or meetings of the Board of Directors or of
the surviving members thereof shall be called by the Chairman of the Board, if
available, or, if he is not available, the Chairman on the Executive
Committee, or, if he is not available, by any other director or directors; any
such meeting to be held at such time and place and upon such notice, if any,
as the person or persons calling the meeting shall deem proper. The Board may
take any action at any such meeting which it deems necessary and appropriate
to meet the emergency.
2. Vacancies in the Board of Directors shall be filled as soon as
practicable in the manner specified in Section l of ARTICLE II of these
By-Laws. In filling vacancies, consideration shall be given to senior officers
of the Corporation.
3. The presence of the smallest number of directors permitted by law to
constitute a quorum, but not less than three, shall be sufficient for the
transaction of business at emergency meetings of the Board of Directors,
except that if there are less than three surviving directors, the surviving
director or directors, although less than a quorum, may fill vacancies in the
Board.
4. The By-Laws may be amended by the Board of Directors without notice
of the proposed amendment being given in the notice of the meeting.
5. Without limiting the generality of the foregoing, the Board of
Directors is authorized to make all necessary determinations of fact regarding
the extent and severity of the emergency and the availability of members of
the Board of Directors; to designate and replace officers, agents and a
chairman, adopt rules of procedures and fill vacancies.
6. The emergency powers provided in this ARTICLE VIII shall be in
addition to any powers provided by law.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM PREMARK
INTERNATIONAL, INC.'S THIRD QUARTER 1998 FINANCIAL STATEMENTS AS FILED IN ITS
QUARTERLY REPORT ON FORM 10-Q 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-26-1998
<PERIOD-START> DEC-28-1997
<PERIOD-END> SEP-26-1998
<CASH> 74,700
<SECURITIES> 0
<RECEIVABLES> 473,400
<ALLOWANCES> 21,000
<INVENTORY> 449,200
<CURRENT-ASSETS> 1,095,400
<PP&E> 1,111,300
<DEPRECIATION> 598,400
<TOTAL-ASSETS> 1,904,000
<CURRENT-LIABILITIES> 583,700
<BONDS> 112,100
0
0
<COMMON> 69,000
<OTHER-SE> 900,900
<TOTAL-LIABILITY-AND-EQUITY> 1,904,000
<SALES> 1,990,200
<TOTAL-REVENUES> 1,990,200
<CGS> 1,264,700
<TOTAL-COSTS> 1,264,700
<OTHER-EXPENSES> (1,500)
<LOSS-PROVISION> 3,300
<INTEREST-EXPENSE> 9,900
<INCOME-PRETAX> 153,100
<INCOME-TAX> 58,200
<INCOME-CONTINUING> 94,900
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 94,900
<EPS-PRIMARY> 1.53
<EPS-DILUTED> 1.47
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM PREMARK
INTERNATIONAL, INC.'S THIRD QUARTER 1997 FINANCIAL STATEMENTS AS FILED IN ITS
QUARTERLY REPORT ON FORM 10-Q 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-27-1997
<PERIOD-START> DEC-29-1996
<PERIOD-END> SEP-27-1997
<CASH> 189,700
<SECURITIES> 0
<RECEIVABLES> 412,000
<ALLOWANCES> 18,900
<INVENTORY> 399,700
<CURRENT-ASSETS> 1,088,000
<PP&E> 980,300
<DEPRECIATION> 552,400
<TOTAL-ASSETS> 1,720,800
<CURRENT-LIABILITIES> 499,900
<BONDS> 112,500
0
0
<COMMON> 69,000
<OTHER-SE> 841,600
<TOTAL-LIABILITY-AND-EQUITY> 1,720,800
<SALES> 1,741,400
<TOTAL-REVENUES> 1,741,400
<CGS> 1,089,800
<TOTAL-COSTS> 1,089,800
<OTHER-EXPENSES> 100
<LOSS-PROVISION> 4,125
<INTEREST-EXPENSE> 8,900
<INCOME-PRETAX> 134,800
<INCOME-TAX> 51,800
<INCOME-CONTINUING> 83,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 83,000
<EPS-PRIMARY> 1.33
<EPS-DILUTED> 1.27
</TABLE>
