<PAGE>
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 quarterly period ended March 28, 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 1-7685
AVERY DENNISON CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 95-1492269
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
150 NORTH ORANGE GROVE BOULEVARD, PASADENA, CALIFORNIA 91103
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (818) 304-2000
Indicate by a check X 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 _____
---
Number of shares of $1 par value common stock outstanding as of April 24, 1998:
117,292,455
<PAGE>
AVERY DENNISON CORPORATION
AND SUBSIDIARIES
INDEX TO FORM 10-Q
------------------
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
Part I. Financial Information (Unaudited):
Financial Statements:
Condensed Consolidated Balance Sheet
March 28, 1998 and December 27, 1997 3
Consolidated Statement of Income
Quarters Ended March 28, 1998 and March 29, 1997 4
Condensed Consolidated Statement of Cash Flows
Quarters Ended March 28, 1998 and March 29, 1997 5
Notes to Consolidated Financial Statements 6
Management's Discussion and Analysis of Results of Operations
and Financial Condition 10
Part II. Other Information:
Quantitative and Qualitative Disclosures About Market Risk 13
Submission of Matters to a Vote of Security Holders,
Exhibits and Reports on Form 8-K 13
Signatures 14
</TABLE>
2
<PAGE>
PART I. FINANCIAL INFORMATION
AVERY DENNISON CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(Dollars in millions)
(Unaudited)
<TABLE>
<CAPTION>
March 28, 1998 December 27, 1997
-------------- -----------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 3.6 $ 3.3
Trade accounts receivable, net 480.9 457.7
Inventories, net 229.7 230.1
Prepaid expenses 22.9 19.6
Other current assets 80.2 82.8
-------------- -----------------
Total current assets 817.3 793.5
Property, plant and equipment, at cost 1,803.0 1,790.5
Accumulated depreciation (817.5) (805.2)
-------------- -----------------
985.5 985.3
Intangibles resulting from business acquisitions, net 131.9 133.7
Other assets 128.6 134.0
-------------- -----------------
$ 2,063.3 $ 2,046.5
============== =================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term debt and current portion of long-term debt $ 48.2 $ 43.6
Accounts payable 247.6 245.3
Other current liabilities 324.6 341.0
-------------- -----------------
Total current liabilities 620.4 629.9
Long-term debt 463.3 404.1
Deferred taxes and other long-term liabilities 172.7 175.3
Shareholders' equity:
Common stock - $1 par value, authorized - 400,000,000 124.1 124.1
shares; issued - 124,126,624 shares at March 28, 1998
and December 27, 1997
Capital in excess of par value 699.5 592.5
Retained earnings 1,093.0 1,063.6
Cumulative foreign currency translation adjustment (31.6) (21.4)
Cost of unallocated ESOP shares (23.4) (23.4)
Minimum pension liability (1.1) (1.1)
Employee stock benefit trusts, 15,943,805 shares
at March 28, 1998 and 16,693,347 shares at
December 27, 1997 (828.8) (730.3)
Treasury stock at cost, 6,262,140 shares at March 28,
1998 and 5,053,046 shares at December 27, 1997 (224.8) (166.8)
-------------- -----------------
Total shareholders' equity 806.9 837.2
-------------- -----------------
$ 2,063.3 $ 2,046.5
============== =================
</TABLE>
See Notes to Consolidated Financial Statements
3
<PAGE>
AVERY DENNISON CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(In millions, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Quarter Ended
--------------------------------
March 28, 1998 March 29, 1997
--------------- ---------------
<S> <C> <C>
Net sales $ 843.6 $ 828.9
Cost of products sold 563.1 566.0
--------------- ---------------
Gross profit 280.5 262.9
Marketing, general and
administrative expense 190.1 180.3
Interest expense 8.1 8.5
--------------- ---------------
Income before taxes 82.3 74.1
Taxes on income 28.1 25.9
--------------- ---------------
Net income $ 54.2 $ 48.2
=============== ===============
Comprehensive income $ 44.0 $ 22.7
=============== ===============
PER SHARE AMOUNTS:
Net income per common share $ .53 $ .47
Net income per common share, assuming dilution .52 .45
Dividends .21 .17
AVERAGE SHARES OUTSTANDING:
Common shares 102.2 103.5
Common shares, assuming dilution 105.0 106.6
</TABLE>
See Notes to Consolidated Financial Statements
4
<PAGE>
AVERY DENNISON CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(In millions)
(Unaudited)
<TABLE>
<CAPTION>
Quarter Ended
----------------------------------
March 28, 1998 March 29, 1997
---------------- ----------------
<S> <C> <C>
OPERATING ACTIVITIES:
- ---------------------
Net income $ 54.2 $ 48.2
Adjustments to reconcile net income to net cash provided
by (used in) operating activities:
Depreciation 27.1 26.0
Amortization 2.9 2.8
Deferred taxes (.7) 1.7
Net change in assets and liabilities, net of the effect of
foreign currency translation and acquisitions (35.2) (42.4)
---------------- ----------------
Net cash provided by operating activities 48.3 36.3
---------------- ----------------
INVESTING ACTIVITIES:
- ---------------------
Purchase of property, plant and equipment (36.8) (31.7)
Net (payments)/proceeds from acquisitions and sale of assets (2.7) 5.0
Other 1.3 1.5
---------------- ----------------
Net cash used in investing activities (38.2) (25.2)
---------------- ----------------
FINANCING ACTIVITIES:
- ---------------------
Net increase in short-term debt 96.4 82.2
Net decrease in long-term debt (31.8) (52.0)
Dividends paid (24.8) (20.7)
Purchase of treasury stock (58.0) (19.6)
Proceeds from exercise of stock options 10.5 4.1
Other (2.1) (3.2)
---------------- ----------------
Net cash used in financing activities (9.8) (9.2)
---------------- ----------------
Effect of foreign currency translation on cash balances -- (.2)
---------------- ----------------
Increase in cash and cash equivalents .3 1.7
---------------- ----------------
Cash and cash equivalents, beginning of period 3.3 3.8
---------------- ----------------
Cash and cash equivalents, end of period $ 3.6 $ 5.5
================ ================
</TABLE>
See Notes to Consolidated Financial Statements
5
<PAGE>
AVERY DENNISON CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. GENERAL
The accompanying unaudited consolidated financial statements include normal
recurring adjustments necessary for a fair presentation of the Company's
interim results. Certain prior year amounts have been reclassified to conform
with current year presentation. The condensed financial statements and notes
in this Form 10-Q are presented as permitted by Regulation S-X, and as such,
they do not contain certain information included in the Company's 1997 annual
financial statements and notes.
The first quarters of 1998 and 1997 consisted of thirteen-week periods ending
March 28, 1998 and March 29, 1997, respectively. The interim results of
operations are not necessarily indicative of future financial results.
2. COMPREHENSIVE INCOME
SFAS No. 130, "Reporting Comprehensive Income", was adopted during the first
quarter of 1998. The standard establishes guidelines for the reporting and
display of comprehensive income and its components in financial statements.
Comprehensive income includes foreign currency translation adjustments and
adjustments to the minimum pension liability that are currently presented as
components of shareholders' equity. Companies are required to report total
comprehensive income for interim periods beginning first quarter of 1998.
Disclosure of comprehensive income and its components will be required
beginning fiscal year end 1998.
3. FOREIGN CURRENCY TRANSLATION
Transactions in foreign currencies and translation of financial statements
operating in hyperinflationary economies (Mexican operations for 1998 and
1997, and Brazilian operations for 1997) resulted in losses of $1 million and
$.6 million for the first quarters ended 1998 and 1997, respectively.
4. FINANCIAL INSTRUMENTS
The Company enters into foreign exchange forward and option contracts and
interest rate contracts to manage exposure to fluctuations in foreign
currency exchange and interest rates. The Company does not hold or purchase
any foreign currency or interest rate contracts for trading purposes.
Foreign exchange forward and option contracts that hedge existing assets,
liabilities or firm commitments are measured at fair value and the related
gains and losses on these contracts are recognized in net income currently.
Foreign exchange forward and option contracts that hedge forecasted
transactions are measured at fair value and the related gains and losses on
these contracts are deferred and subsequently recognized in net income in the
period in which the underlying transaction is consummated. In the event that
an anticipated transaction is no longer likely to occur, the Company
recognizes the change in fair value of the instrument in net income
currently.
6
<PAGE>
AVERY DENNISON CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
4. FINANCIAL INSTRUMENTS (CONTINUED)
Gains and losses resulting from foreign exchange forward and option contracts
are recorded in the same category as the related item being hedged. Cash
flows from the use of financial instruments are reported in the same category
as the hedged item in the Condensed Consolidated Statement of Cash Flows.
Gains and losses on contracts used to hedge the value of investments in
certain foreign subsidiaries are included in the cumulative foreign currency
translation adjustment component of shareholders' equity.
The net amounts paid or received on interest rate agreements are recognized
as adjustments to interest expense over the terms of the agreements. Contract
premiums paid, if any, are amortized to interest expense over the terms of
the underlying instruments.
5. INVENTORIES
Inventories consisted of (in millions):
<TABLE>
<CAPTION>
March 28, 1998 December 27, 1997
-------------- -----------------
<S> <C> <C>
Raw materials $ 73.4 $ 74.4
Work-in-progress 70.2 70.9
Finished goods 116.0 114.7
LIFO adjustment (29.9) (29.9)
-------------- -----------------
$229.7 $230.1
============== =================
</TABLE>
6. INTANGIBLES RESULTING FROM BUSINESS ACQUISITIONS
Accumulated amortization of intangible assets at March 28, 1998 and December
27, 1997 was $50.5 million and $49.4 million, respectively.
7. RESEARCH AND DEVELOPMENT
Research and development expense for the first quarters of 1998 and 1997 was
$16.2 million and $14.5 million, respectively.
8. CONTINGENCIES
The Company has been designated by the U.S. Environmental Protection Agency
(EPA) and/or other responsible state agencies as a potentially responsible
party (PRP) at 16 waste disposal or waste recycling sites which are the
subject of separate investigations or proceedings concerning alleged soil
and/or groundwater contamination and for which no settlement of the Company's
liability has been agreed upon. Litigation has been initiated by a
governmental authority with respect to two of these sites, but the Company
does not believe that any such proceedings will result in the imposition of
monetary sanctions. The Company is participating with other PRPs at all such
sites, and anticipates that its share of cleanup costs will be determined
pursuant to remedial agreements entered into in the normal course of
negotiations with the EPA or other governmental authorities.
7
<PAGE>
AVERY DENNISON CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
8. CONTINGENCIES (CONTINUED)
The Company has accrued liabilities for all sites, including sites in which
governmental agencies have designated the Company as a PRP, where it is
probable that a loss will be incurred and the minimum cost or amount of loss
can be reasonably estimated. However, because of the uncertainties associated
with environmental assessment and remediation activities, future expense to
remediate the currently identified sites, and sites which could be identified
in the future for cleanup, could be higher than the liability currently
accrued. Based on current site assessments, management believes that the
potential liability over the amounts currently accrued would not materially
affect the Company.
The Company and its subsidiaries are involved in various other lawsuits,
claims and inquiries, most of which are routine to the nature of the
business. In the opinion of management, the resolution of these matters will
not materially affect the Company.
9. NET INCOME PER SHARE
Statement of Financial Accounting Standards (SFAS) No. 128, "Earnings Per
Share", was adopted in the fourth quarter of 1997 and supersedes the
Company's previous standards for computing net income per share under
Accounting Principles Board No. 15. The new standard requires dual
presentation of net income per common share and net income per common share,
assuming dilution, on the face of the income statement. All prior year net
income per share data has been restated for 1997 in accordance with the new
standard.
In accordance with SFAS No. 128, net income per common share amounts were
computed as follows:
(In millions, except per share amounts)
<TABLE>
<CAPTION>
March 28, 1998 March 29, 1997
-------------- --------------
<S> <C> <C>
(A) Net income available to common shareholders $ 54.2 $ 48.2
============== ==============
(B) Weighted average number of common shares
outstanding 102.2 103.5
Additional common shares issuable under
employee stock options using the treasury
stock method 2.8 3.1
-------------- --------------
(C) Weighted average number of common shares
outstanding assuming the exercise of stock
options 105.0 106.6
============== ==============
Net income per common share (A) / (B) $ .53 $ .47
============== ==============
Net income per common share,
assuming dilution (A) / (C) .52 .45
============== ==============
</TABLE>
8
<PAGE>
AVERY DENNISON CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
10. FUTURE ACCOUNTING REQUIREMENTS
In June 1997, the FASB issued SFAS No. 131, "Disclosures About Segments of
an Enterprise and Related Information". The standard establishes guidelines
for reporting information on operating segments in interim and annual
financial statements. The new standard will be effective for the 1998
fiscal year. Abbreviated quarterly disclosure will be required beginning
first quarter of 1999, and will include both 1999 and 1998 information. The
Company does not believe that the new standard will have a material impact
on the reporting of its segments.
9
<PAGE>
AVERY DENNISON CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
RESULTS OF OPERATIONS: FOR THE QUARTER
- --------------------------------------
Quarterly sales increased to $843.6 million, a 1.8 percent increase over first
quarter 1997 sales of $828.9 million. Excluding changes in foreign currency
rates, sales increased 5.1 percent.
The gross profit margin increased to 33.3 percent for the quarter compared to
31.7 percent for the first quarter of 1997. The improvement was due to ongoing
cost reduction programs, increased productivity and improved product mix.
Marketing, general and administrative expense, as a percent of sales, increased
to 22.5 percent from 21.8 percent for the first quarter of 1997, primarily due
to increases in marketing and research and development expenses, reflecting the
Company's focus on marketing promotion and new product development expenses.
Interest expense decreased to $8.1 million for the quarter compared to $8.5
million a year ago due to lower average debt. Income before taxes, as a percent
of sales, increased to 9.8 percent from 8.9 percent a year ago, primarily as a
result of the strong improvement in gross profit. The effective tax rate was
34.1 percent for the first quarter of 1998 compared to 35 percent for the first
quarter of 1997, primarily due to an increase in U.S. tax credits for research
and experimentation. The Company estimates that the effective tax rate for 1998
will be 34 to 34.5 percent.
Net income increased 12.4 percent to $54.2 million compared to $48.2 million in
the first quarter of 1997. Net income, as a percent of sales, increased to 6.4
percent from 5.8 percent a year ago. Net income per common share for the quarter
was $.53 compared to $.47 in the same period last year, a 12.8 percent increase.
Net income per common share, assuming dilution, was $.52 for the first quarter
of 1998 and $.45 for the first quarter of 1997, a 15.6 percent increase year
over year.
Results of Operations by Business Sector
The Pressure-sensitive adhesives and materials sector reported increased sales
and profitability for the first quarter of 1998 compared to the same period last
year. The U.S. operations reported sales and profitability growth for the
quarter, primarily led by increased sales in its films businesses. Sales for the
international businesses were impacted by changes in foreign currency rates.
However, profitability for the international businesses improved primarily due
to an increase in unit volume and the impact of geographic expansion.
The Consumer and converted products sector reported increased sales and
profitability for the first quarter of 1998 compared to 1997. Increased sales in
the U.S. continue to be led by growth of Avery-brand products and other consumer
products. Profitability improved primarily as a result of new products, an
improved product mix and cost control. Sales and profitability for the
international businesses improved primarily due to higher unit volume and the
impact of geographic expansion, which was partially offset by changes in foreign
currency rates.
10
<PAGE>
AVERY DENNISON CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
(Continued)
FINANCIAL CONDITION
- -------------------
Average working capital, excluding short-term debt, as a percentage of sales,
decreased to 7.3 percent from 8.4 percent a year ago. The decrease was primarily
due to increased sales, improved inventory turnover and better payables
management programs. The average number of days sales outstanding in accounts
receivable increased to 52 days compared to 51 days a year ago; average
inventory turns for the first quarter of 1998 and 1997 were 9.8 turns and 9.6
turns, respectively.
Net cash flows provided by operating activities totaled $48.3 million for the
first quarter of 1998 compared to $36.3 million for the first quarter of 1997.
The increase in net cash flows provided by operating activities is primarily due
to a reduction in working capital requirements and the Company's improved
profitability.
Capital spending for the quarter was $36.8 million compared to $31.7 million a
year ago. Total capital spending for 1998 is expected to be approximately $175
million to $200 million. In addition to cash flows from operations, the Company
has more than adequate financing arrangements to conduct its operations.
During the first quarter of 1998, total debt increased $63.8 million to $511.5
million from year end 1997. Total debt to total capital was 38.8 percent as of
the end of the first quarter of 1998 and 34.8 percent at year end 1997. During
the fourth quarter of 1996, the Company registered with the Securities and
Exchange Commission, $150 million in principal amount of uncollaterized medium-
term notes, of which $60 million in notes had been issued as of year end 1997.
No notes were issued in the first quarter of 1998. Proceeds from the medium-term
notes have been used to reduce debt and for other general corporate purposes.
Shareholders' equity decreased to $806.9 million from $837.2 million at year end
1997. During the first quarter of 1998, the Company purchased 1.2 million shares
of common stock at a cost of $58 million. The market value of shares held in the
employee stock benefit trust, after the issuance of shares under the Company's
stock and incentive plans, increased during the quarter by $98.4 million to
$828.1 million from year end 1997.
FUTURE ACCOUNTING REQUIREMENTS
- ------------------------------
In June 1997, the FASB issued SFAS No. 131, "Disclosures About Segments of an
Enterprise and Related Information". The standard establishes guidelines for
reporting information on operating segments in interim and annual financial
statements. The new rules will be effective for the 1998 fiscal year.
Abbreviated quarterly disclosure will be required beginning first quarter of
1999, and will include both 1999 and 1998 information. The Company does not
believe that the new standard will have a material impact on the reporting of
its segments.
11
<PAGE>
AVERY DENNISON CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
(Continued)
SAFE HARBOR STATEMENT
- ---------------------
Except for historical information contained herein, the matters discussed in the
Management's Discussion and Analysis of Results of Operations and Financial
Condition and other sections of this Form 10-Q contain "forward-looking
statements" within the meaning of the Private Securities Reform Act of 1995.
These statements, which are not statements of historical fact, may contain
estimates, assumptions, projections and/or expectations regarding future events.
Such forward-looking statements, and financial or other business targets, are
subject to certain risks and uncertainties which could cause actual results to
differ materially from any future results, performance or achievements of the
Company expressed or implied by such forward-looking statements. Such risks and
uncertainties are discussed in more detail in the Company's Annual Report on
Form 10-K for the year ended December 27, 1997 and include, but are not limited
to, risks and uncertainties relating to investment in new production facilities,
timely development and successful marketing of new products, impact of
competitive products and pricing, customer and supplier and manufacturing
concentrations, changes in customer order patterns, increased competition,
litigation risks, fluctuations in foreign exchange rates or other risks
associated with foreign operations, changes in economic or political conditions,
and other factors.
Any forward looking statements should be considered in light of the factors
detailed in Exhibit 99 in the Company's Annual Report on Form 10-K for the year
ended December 27, 1997.
The Company's forward-looking statements represent its judgment only on the
dates such statements were made. By making any forward-looking statements, the
Company assumes no duty to update them to reflect new, changed or unanticipated
events or circumstances.
12
<PAGE>
PART II. OTHER INFORMATION
AVERY DENNISON CORPORATION
AND SUBSIDIARIES
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
- ------- ----------------------------------------------------------
There are no material changes in the information provided in Item 7A of the
Company's Form 10-K for the fiscal year ended December 27, 1997.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- ------- ---------------------------------------------------
The registrant held its annual stockholders' meeting on April 23, 1998. The
stockholders voted to reelect four directors to the Board of Directors as
follows:
<TABLE>
<CAPTION>
Number of Shares Votes/1/
------------------------
For Withheld
------------ ----------
<S> <C> <C>
Frank V. Cahouet 106,927,454 2,003,661
Peter W. Mullin 106,375,298 2,555,817
Joan T. Bok 106,618,373 2,312,742
Philip M. Neal 107,053,732 1,877,383
</TABLE>
/1/There were no abstentions or shares otherwise not voted by brokers.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- ------------------------------------------
a. Exhibit 12: Computation of Ratio of Earnings to Fixed Charges
b. Exhibit 27: Financial Data Schedule
c. Reports on Form 8-K: There were no reports on Form 8-K filed for the three
months ended March 28, 1998.
13
<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.
AVERY DENNISON CORPORATION
--------------------------
(Registrant)
/s/ Robert M. Calderoni
--------------------------
Robert M. Calderoni
Senior Vice President, Finance and
Chief Financial Officer
(Principal Financial Officer)
/s/ Thomas E. Miller
--------------------------
Thomas E. Miller
Vice President and Controller
(Chief Accounting Officer)
May 8, 1998
14
<PAGE>
EXHIBIT 12
<TABLE>
<CAPTION>
Three Months Ended
---------------------------------
March 28, 1998 March 29, 1997
--------------- ---------------
<S> <C> <C>
Earnings:
Income before taxes $ 82.3 $ 74.1
Add: Fixed Charges* 12.9 13.1
Amortization of capitalized interest .4 1.3
Less: Capitalized interest (1.1) (.8)
--------------- ---------------
$ 94.5 $ 87.7
=============== ===============
*Fixed Charges:
Interest expense $ 8.1 $ 8.5
Capitalized interest 1.1 .8
Amortization of debt issuance costs .1 .1
Interest portion of leases 3.6 3.7
--------------- ---------------
$ 12.9 $ 13.1
=============== ===============
Ratio of Earnings to Fixed Charges 7.3 6.7
=============== ===============
</TABLE>
The ratios of earnings to fixed charges were computed by dividing earnings by
fixed charges. For this purpose, "earnings" consist of income before taxes plus
fixed charges (excluding capitalized interest), and "fixed charges" consist of
interest expense, capitalized interest, amortization of debt issuance costs and
the portion of rent expense (estimated to be 35%) on operating leases deemed
representative of interest.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED BALANCE SHEET AND THE CONSOLIDATED STATEMENT OF INCOME
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-02-1998
<PERIOD-START> DEC-29-1997
<PERIOD-END> MAR-28-1998
<CASH> 3,600
<SECURITIES> 0
<RECEIVABLES> 480,900<F1>
<ALLOWANCES> 0<F1>
<INVENTORY> 229,700
<CURRENT-ASSETS> 817,300
<PP&E> 1,803,000
<DEPRECIATION> 817,500
<TOTAL-ASSETS> 2,063,300
<CURRENT-LIABILITIES> 620,400
<BONDS> 463,300
0
0
<COMMON> 124,100
<OTHER-SE> 682,800
<TOTAL-LIABILITY-AND-EQUITY> 2,063,300
<SALES> 843,600
<TOTAL-REVENUES> 843,600
<CGS> 563,100
<TOTAL-COSTS> 563,100
<OTHER-EXPENSES> 190,100
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,100
<INCOME-PRETAX> 82,300
<INCOME-TAX> 28,100
<INCOME-CONTINUING> 54,200
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 54,200
<EPS-PRIMARY> .53<F2>
<EPS-DILUTED> .52
<FN>
<F1> ACCOUNTS RECEIVABLE ARE SHOWN NET OF ANY ALLOWANCES.
<F2> REPRESENTS EPS BASIC.
</FN>
</TABLE>
