<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 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 1-12626
EASTMAN CHEMICAL COMPANY
(Exact name of registrant as specified in its charter)
DELAWARE 62-1539359
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
100 N. EASTMAN ROAD
KINGSPORT, TENNESSEE 37660
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (423) 229-2000
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (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
------ ------
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Number of Shares Outstanding at
Class June 30, 1998
Common Stock, par value $0.01 per share 79,241,486
(including rights to purchase shares of
Common Stock or Participating Preferred Stock)
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PAGE 1 OF 23 TOTAL SEQUENTIALLY NUMBERED PAGES
EXHIBIT INDEX ON PAGE 20
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------
ITEM PAGE
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<S> <C>
PART I. FINANCIAL INFORMATION
1. Financial Statements 3-8
2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 9-16
PART II. OTHER INFORMATION
1. Legal Proceedings 17
4. Submission of Matters to a Vote of Security Holders 17
6. Exhibits and Reports on Form 8-K 18
SIGNATURES
Signatures 19
</TABLE>
2
<PAGE> 3
EASTMAN CHEMICAL COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS, COMPREHENSIVE INCOME,
AND RETAINED EARNINGS
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
SECOND QUARTER FIRST SIX MONTHS
1998 1997 1998 1997
<S> <C> <C> <C> <C>
EARNINGS
Sales $ 1,165 $ 1,208 $ 2,313 $ 2,379
Cost of sales 868 925 1,762 1,836
------- ------- ------- -------
Gross profit 297 283 551 543
Selling and general administrative expenses 85 84 160 162
Research and development costs 48 42 94 90
------- ------- ------- -------
Operating earnings 164 157 297 291
Interest expense, net 21 22 42 41
Other income, net 6 6 8 5
------- ------- ------- -------
Earnings before income taxes 149 141 263 255
Provision for income taxes 52 51 92 93
------- ------- ------- -------
Net earnings $ 97 $ 90 $ 171 $ 162
======= ======= ======= =======
Net earnings per share
--Basic earnings per share $ 1.22 $ 1.15 $ 2.17 $ 2.08
======= ======= ======= =======
--Diluted earnings per share $ 1.21 $ 1.14 $ 2.15 $ 2.06
======= ======= ======= =======
COMPREHENSIVE INCOME
Net earnings $ 97 $ 90 $ 171 $ 162
Other comprehensive income (loss) (2) (4) (3) (27)
------- ------- ------- -------
Comprehensive income $ 95 $ 86 $ 168 $ 135
======= ======= ======= =======
RETAINED EARNINGS
Retained earnings at beginning of period $ 2,117 $ 1,966 $ 2,078 $ 1,929
Net earnings 97 90 171 162
Cash dividends declared (35) (34) (70) (69)
------- ------- ------- -------
Retained earnings at end of period $ 2,179 $ 2,022 $ 2,179 $ 2,022
======= ======= ======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE> 4
EASTMAN CHEMICAL COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1998 1997
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 33 $ 29
Receivables 877 793
Inventories 566 511
Other current assets 124 157
------- -------
Total current assets 1,600 1,490
------- -------
Properties
Properties and equipment at cost 8,332 8,104
Less: Accumulated depreciation 4,362 4,223
------- -------
Net properties 3,970 3,881
------- -------
Other noncurrent assets 412 407
------- -------
Total assets $ 5,982 $ 5,778
======= =======
LIABILITIES AND SHAREOWNERS' EQUITY
Current liabilities
Payables and other current liabilities $ 771 $ 954
------- -------
Total current liabilities 771 954
Long-term borrowings 1,853 1,714
Deferred income tax credits 390 397
Postemployment obligations 840 724
Other long-term liabilities 227 236
------- -------
Total liabilities 4,081 4,025
------- -------
Shareowners' equity
Common stock ($0.01 par - 350,000,000 shares authorized;
shares issued - 84,410,052 and 84,144,672) 1 1
Paid-in capital 93 77
Retained earnings 2,179 2,078
Other comprehensive income (loss) (40) (37)
------- -------
2,233 2,119
Less: Treasury stock at cost (5,353,123 and 5,889,311 shares) 332 366
------- -------
Total shareowners' equity 1,901 1,753
------- -------
Total liabilities and shareowners' equity $ 5,982 $ 5,778
======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE> 5
EASTMAN CHEMICAL COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
FIRST SIX MONTHS
1998 1997
<S> <C> <C>
Cash flows from operating activities
Net earnings $ 171 $ 162
------- -------
Adjustments to reconcile net earnings to net
cash provided by operating activities
Depreciation 168 159
Provision (benefit) for deferred income taxes 25 (11)
Increase in receivables (89) (90)
Increase in inventories (56) (26)
Increase (decrease) in incentive pay and
employee benefit liabilities (32) 4
Increase (decrease) in liabilities excluding borrowings,
incentive pay, and employee benefit liabilities (6) 67
Other items, net 28 (2)
------- -------
Total adjustments 38 101
------- -------
Net cash provided by operating activities 209 263
------- -------
Cash flows from investing activities
Additions to properties and equipment (268) (394)
Proceeds from sales of assets 1 2
Capital advances to suppliers (21) (22)
Other items - (2)
------- -------
Net cash used in investing activities (288) (416)
------- -------
Cash flows from financing activities
Net increase (decrease) in commercial paper borrowings 139 (51)
Proceeds from long-term borrowings - 295
Dividends paid to shareowners (70) (70)
Treasury stock purchases - (8)
Other items 14 3
------- -------
Net cash provided by financing activities 83 169
------- -------
Net change in cash and cash equivalents 4 16
Cash and cash equivalents at beginning of period 29 24
------- -------
Cash and cash equivalents at end of period $ 33 $ 40
======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE> 6
EASTMAN CHEMICAL COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying unaudited interim consolidated financial statements have
been prepared by the Company in accordance and consistent with the
accounting policies stated in the Company's 1997 Annual Report on Form 10-K
and should be read in conjunction with the consolidated financial statements
appearing therein. In the opinion of the Company, all adjustments
(consisting only of normal recurring adjustments) necessary for a fair
presentation have been included in the interim consolidated financial
statements. The interim consolidated financial statements are based in part
on approximations and have not been audited by independent accountants.
2. INVENTORIES
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
(Dollars in millions) 1998 1997
<S> <C> <C>
At FIFO or average cost (approximates current cost):
Finished goods $ 460 $ 436
Work in process 144 140
Raw materials and supplies 214 211
------- -------
Total inventories at FIFO or average cost 818 787
Reduction to LIFO value (252) (276)
------- -------
Total inventories at LIFO value $ 566 $ 511
======= =======
</TABLE>
Inventories valued on the LIFO method are approximately 70-75% of total
inventories in each of the periods.
3. EARNINGS PER SHARE
<TABLE>
<CAPTION>
SECOND QUARTER FIRST SIX MONTHS
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Shares used for earnings per share calculation
(in millions):
--Basic 79.0 78.2 78.7 77.9
--Diluted 79.9 78.8 79.5 78.5
</TABLE>
Certain shares underlying options outstanding during the second quarters of
1998 and 1997 and at June 30, 1998 and 1997 were excluded from the
computation of diluted earnings per share because the options' exercise
prices were greater than average market price of the common shares. Excluded
from second quarter of 1998 and 1997 calculations were shares underlying
options to purchase 19,461 common shares at a range of prices from $68.3875
to $74.25 and 575,721 common shares at a range of prices from $56.8750 to
$74.25, respectively. Excluded from the year to date 1998 and 1997
calculations were shares underlying options to purchase 77,960 common shares
at a range of prices from $66.125 to $74.25 and 577,277 at a range of prices
from $56.8750 to $74.25, respectively.
Additionally, 200,000 shares underlying an option issued to the Chief
Executive Officer in third quarter 1997 were excluded from diluted earnings
per share calculations because the conditions to exercise had not been met
as to any of the shares as of June 30, 1998.
6
<PAGE> 7
4. HOLSTON DEFENSE CORPORATION
Holston Defense Corporation ("Holston"), a wholly owned subsidiary of the
Company, has, as its sole business, managed the government-owned Holston
Army Ammunition Plant in Kingsport, Tennessee (the "Facility") since 1949
under a series of contracts with the Department of Army (the "DOA"). Holston
is currently managing the Facility under a contract that terminates on
December 31, 1998 (the "Contract"). The DOA has concluded the previously
reported bidding process and has awarded a contract to manage the facility
to a third party commencing January 1, 1999. Accordingly, Holston will not
continue to manage the Facility after termination of the Contract.
The Contract generally provides for payment of a management fee to Holston
and reimbursement by the DOA of allowable costs incurred by Holston for the
operation of the Facility. Holston's operating results historically have
been insignificant to the Company's consolidated sales and earnings.
Pension and other postretirement benefits are currently provided to
Holston's present and past employees under the terms of Holston's plans.
Termination of Holston's management of the Facility will result in
termination payments to certain Holston employees and will require
additional funding for the acceleration of obligations under the pension and
other postretirement benefit plans. Delays in payment or reimbursement by
the DOA of all or portions of these costs will likely require the Company to
advance funds to pay such costs. The Company expects that the DOA will
reimburse the Company for all costs associated with termination of the
Contract.
The Company has previously recognized, in accordance with generally accepted
accounting principles, pension and other postretirement benefit obligations
totaling approximately $95 million. The Company expects that the DOA will
reimburse previously recognized pension and other postretirement benefit
obligations and such amounts will be credited to earnings at the time of
receipt of reimbursement from the DOA. The reimbursements may or may not
occur in a single payment.
The Company is negotiating with the DOA the settlement of postretirement
benefit obligations. The Company's potential obligation for postretirement
benefit obligations, if any, in excess of the negotiated amount will be
recognized as a liability at such time that it is probable and reasonably
estimable that projected benefit obligations exceed assets provided by the
DOA.
In second quarter 1998 the Company recognized additional liabilities of
approximately $35 million for termination and pension curtailment. The
recognition of these liabilities had no effect on earnings because the
Company recorded a receivable from the DOA for the reimbursement of such
amounts. The Company expects that any additional obligations recognized
upon termination of the Contract will be reimbursed by the DOA.
Although the DOA's position with respect to similar contracts is that it has
no legal liability for unfunded postretirement benefit costs, other than
pension obligations, and the DOA may disagree with the specific amount of
other postretirement obligations, it is the opinion of the Company, based on
the Contract terms, applicable law, and legal and equitable precedents, that
substantially all of the other postretirement benefit costs will be paid by
the DOA or recovered from the government in related proceedings, and that
the amounts, if any, not paid or recovered, or the advancement of funds by
the Company pending such reimbursement or recovery, should not have a
material adverse effect on the consolidated financial position or results of
operations of the Company.
<TABLE>
<CAPTION>
5. DIVIDENDS SECOND QUARTER FIRST SIX MONTHS
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Cash dividends declared per share $ .44 $ .44 $ .88 $ .88
</TABLE>
6. SUPPLEMENTAL CASH FLOW INFORMATION
In March 1998 the Company issued 536,188 treasury shares to its Employee
Stock Ownership Plan as partial settlement of the Company's Eastman
Performance Plan payout. The shares issued had a market value of $35 million
and a carrying value of $33 million. In March 1997 the Company issued
611,962 shares of previously unissued common stock with a market value of
$34 million to the Employee Stock Ownership Plan as partial settlement of
the Eastman Performance Plan payout. These noncash transactions are not
reflected in the Consolidated Statements of Cash Flow.
7
<PAGE> 8
7. COMPREHENSIVE INCOME
The Company adopted SFAS No. 130, "Reporting Comprehensive Income" in 1998.
Components of other comprehensive income (loss) are cumulative translation
adjustments and minimum pension liabilities. Amounts of other comprehensive
income (loss) are presented net of applicable taxes. Because cumulative
translation adjustments are considered a component of permanently invested
unremitted earnings of subsidiaries outside the United States, no taxes are
provided on such amounts.
8
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
This Management's Discussion and Analysis of Financial Condition and Results of
Operations should be read in conjunction with the Company's Consolidated
Financial Statements and Management's Discussion and Analysis contained in the
1997 Annual Report on Form 10-K and the unaudited interim consolidated financial
statements included elsewhere in this report. All references to earnings per
share contained in this report are basic earnings per share unless otherwise
noted.
RESULTS OF OPERATIONS
EARNINGS
<TABLE>
<CAPTION>
(Dollars in millions, except SECOND QUARTER FIRST SIX MONTHS
per share amounts) 1998 1997 CHANGE 1998 1997 CHANGE
<S> <C> <C> <C> <C> <C> <C>
Operating earnings $ 164 $ 157 4% $ 297 $ 291 2%
Net earnings 97 90 8% 171 162 6%
Net earnings per share
--Basic Earnings Per Share 1.22 1.15 6% 2.17 2.08 4%
--Diluted Earnings Per Share 1.21 1.14 6% 2.15 2.06 4%
</TABLE>
The Company's earnings overall for the quarter and six months improved as a
result of higher sales volumes and lower costs for most major raw materials
including propane feedstock, paraxylene, purified terephthalic acid ("PTA"),
ethylene glycol and natural gas. The decrease in raw materials costs exceeded
the erosion in selling prices which occurred in most product lines and margins
generally improved. During second quarter the Company's new plants in Rotterdam
began operations for the production of EASTAPAK polymers and PTA, a raw material
used in the production of EASTAPAK polymers. Additionally, the Company's new
EASTAPAK polymer plant in Argentina and copolyester manufacturing facility in
Malaysia began operations. Preproduction costs were higher for the quarter and
six months, but will decrease as a result of the startup late in second
quarter of these new manufacturing sites.
Operating results for the quarter and six months reflected substantial
improvement in results for container plastics but continuing tough comparisons
for fibers. Container plastics results reflected higher selling prices and lower
unit costs attributable mainly to favorable raw material costs and efficient
plant operations. However, fibers sales and earnings continued to reflect
industry overcapacity and lower sales, mainly in China.
Productivity gains and cost structure improvements achieved as a result of the
Company's Advantaged Cost 2000 initiative and a lower effective tax rate had a
positive effect on results for the quarter and six months. Income from equity
investments was slightly lower for the quarter but higher for six months. A
stronger U.S. dollar produced an unfavorable effect on sales denominated in
currencies other than U.S. dollars, although the earnings impact was largely
offset by gains realized on currency hedging transactions. The negative effect
on net earnings from foreign currency fluctuations was not significant.
9
<PAGE> 10
SUMMARY BY INDUSTRY SEGMENT
SPECIALTY AND PERFORMANCE SEGMENT
<TABLE>
<CAPTION>
SECOND QUARTER FIRST SIX MONTHS
(Dollars in millions) 1998 1997 CHANGE 1998 1997 CHANGE
<S> <C> <C> <C> <C> <C> <C>
Sales $643 $675 (5)% $1,263 $1,344 (6)%
Operating earnings 104 120 (13)% 200 248 (19)%
</TABLE>
Significantly lower sales volume and prices for acetate tow reflecting industry
overcapacity, mainly in China, substantially decreased sales and earnings for
the quarter and six months for the segment overall. Higher volumes and selling
prices for specialty plastics reflected strong sales in Europe and North America
and growth in the demand for SPECTAR and EASTAR. Fine chemicals results for six
months reflected a decline in customer demand and timing related to several
custom projects, although for the quarter, revenues and earnings were up
slightly. Sales for coatings, inks and resins for the quarter and six months
declined due to generally lower selling prices, a shift in the mix of products
sold, and industry overcapacity. Performance chemicals sales declined,
reflecting the effect of businesses discontinued in 1997 and decreased volume
and selling prices for sorbates attributable to industry overcapacity. Operating
earnings for the segment overall were positively impacted by significantly lower
costs for raw materials and energy and cost structure improvements, but
negatively impacted by lower sales and earnings for fibers.
CORE PLASTICS SEGMENT
<TABLE>
<CAPTION>
SECOND QUARTER FIRST SIX MONTHS
(Dollars in millions) 1998 1997 CHANGE 1998 1997 CHANGE
<S> <C> <C> <C> <C> <C> <C>
Sales $349 $ 351 (1)% $689 $ 669 3%
Operating earnings (loss) 23 (3) >100% 22 (25) >100%
</TABLE>
Container plastics results improved significantly for the quarter and six months
due to higher EASTAPAK polymers selling prices and lower raw materials costs.
Preproduction costs related to new manufacturing sites were higher than 1997 for
the quarter and six months, but are expected to decline following the second
quarter startup of new facilities in Rotterdam and Argentina. Polyethylene
selling prices and margins were negatively impacted by the effect of excess
industry capacities for ethylene and polyethylene. However, this was offset
partially by increased sales of specialty grade polyethylene performance
polymers and lower raw materials cost. Segment earnings were positively impacted
by cost structure improvements.
CHEMICAL INTERMEDIATES SEGMENT
<TABLE>
<CAPTION>
SECOND QUARTER FIRST SIX MONTHS
(Dollars in millions) 1998 1997 CHANGE 1998 1997 CHANGE
<S> <C> <C> <C> <C> <C> <C>
Sales $173 $182 (5)% $361 $366 (1)%
Operating earnings 37 40 (8)% 75 68 10%
</TABLE>
Generally lower selling prices attributable to excess industry capacity and
competitive market conditions negatively impacted sales and earnings for the
quarter and six months, but the effect was partially offset by higher volumes,
favorable product mix, cost structure improvements and favorable raw materials
and energy costs.
(For supplemental analysis of Specialty and Performance, Core Plastics, and
Chemical Intermediates segment results, see Exhibit 99.01 to this Form 10-Q.)
10
<PAGE> 11
SUMMARY BY CUSTOMER LOCATION
SALES BY REGION
<TABLE>
<CAPTION>
SECOND QUARTER FIRST SIX MONTHS
(Dollars in millions) 1998 1997 CHANGE 1998 1997 CHANGE
<S> <C> <C> <C> <C> <C> <C>
United States and Canada $778 $784 (1)% $1,532 $1,547 (1)%
Asia Pacific 106 140 (24) 204 271 (25)
Europe, Middle East, and Africa 195 202 (3) 402 394 2
Latin America 86 82 5 175 167 5
</TABLE>
Sales in the United States for second quarter 1998 were $727 million, down 2%
from 1997 second quarter sales of $742 million. For six months, sales in the
United States were $1,440 million compared to $1,462 million in 1997. For the
quarter and six months, higher overall sales volume was offset by overall lower
selling prices and the effect of a shift in the mix of products sold.
Sales outside the United States for second quarter 1998 were $438 million, down
6% from 1997 second quarter sales of $466 million. Sales outside the United
States were 38% of total sales in second quarter 1998 compared with 39% for
second quarter 1997. For six months, sales outside the United States were $873
million, a decline of 5% from 1997 sales of $917 million. Decreased sales in
Asia Pacific for the quarter and six months are mainly a result of lower sales
volumes and prices for acetate tow resulting from excess industry capacity,
although some decline is attributable to the region's economic situation. Sales
in Europe, Middle East and Africa reflect lower volume for the quarter although
volume for the year is still well above 1997. A strong U.S. dollar against
foreign currencies resulted in unfavorable currency exchange effects, primarily
in Europe.
SUMMARY OF CONSOLIDATED RESULTS
<TABLE>
<CAPTION>
SECOND QUARTER FIRST SIX MONTHS
(Dollars in millions) 1998 1997 CHANGE 1998 1997 CHANGE
<S> <C> <C> <C> <C> <C> <C>
SALES $1,165 $1,208 (4)% $2,313 $2,379 (3)%
</TABLE>
Sales for six months reflect significantly higher volumes and prices for the
Company's container and specialty plastics, lower volumes and prices for fibers
and performance chemicals, decreased customer demand for fine chemicals, and
generally lower selling prices in other product lines. For the quarter, higher
selling prices for specialty plastics, container plastics, and fine chemicals
were offset by overall lower selling prices in other product lines and a shift
in the mix of products sold. For the quarter and six months, sales were
negatively affected by the strength of the U.S. dollar against foreign
currencies, primarily in Europe.
<TABLE>
<CAPTION>
SECOND QUARTER FIRST SIX MONTHS
(Dollars in millions) 1998 1997 CHANGE 1998 1997 CHANGE
<S> <C> <C> <C> <C> <C>
GROSS PROFIT $ 297 $ 283 5% $ 551 $ 543 1%
As a percentage of sales 25.5% 23.4% 23.8% 22.8%
</TABLE>
Although selling prices were generally lower, margins improved due to
significantly lower raw materials and energy costs and productivity gains,
offset somewhat by higher preproduction costs and a shift in the mix of products
sold.
11
<PAGE> 12
<TABLE>
<CAPTION>
SECOND QUARTER FIRST SIX MONTHS
(Dollars in millions) 1998 1997 CHANGE 1998 1997 CHANGE
<S> <C> <C> <C> <C> <C> <C>
SELLING AND GENERAL
ADMINISTRATIVE EXPENSES $ 85 $ 84 1% $ 160 $162 (1)%
As a percentage of sales 7.3% 7.0% 6.9% 6.8%
</TABLE>
<TABLE>
<CAPTION>
SECOND QUARTER FIRST SIX MONTHS
(Dollars in millions) 1998 1997 CHANGE 1998 1997 CHANGE
<S> <C> <C> <C> <C> <C> <C>
RESEARCH AND
DEVELOPMENT COSTS $ 48 $ 42 14% $ 94 $ 90 4%
As a percentage of sales 4.1% 3.5% 4.1% 3.8%
</TABLE>
<TABLE>
<CAPTION>
SECOND QUARTER FIRST SIX MONTHS
(Dollars in millions) 1998 1997 CHANGE 1998 1997 CHANGE
<S> <C> <C> <C> <C> <C> <C>
INTEREST COSTS $33 $31 $65 $60
LESS CAPITALIZED INTEREST 12 9 23 19
--- --- --- ---
NET INTEREST EXPENSE $21 $22 (5)% $42 $41 2%
=== === === ===
</TABLE>
Interest costs were higher for the quarter and six months as a result of an
increase in long-term borrowings consistent with the Company's capital expansion
and operating activities.
<TABLE>
<CAPTION>
SECOND QUARTER FIRST SIX MONTHS
(Dollars in millions) 1998 1997 CHANGE 1998 1997 CHANGE
<S> <C> <C> <C> <C> <C> <C>
OTHER INCOME, NET $6 $6 -% $8 $5 60%
</TABLE>
Other income and other charges include interest income, royalty income, gains
and losses on asset sales, results from equity investments, foreign exchange
transactions, and other items.
LIQUIDITY, CAPITAL RESOURCES AND OTHER FINANCIAL DATA
<TABLE>
<CAPTION>
FINANCIAL INDICATORS 1998 1997
<S> <C> <C>
For the first six months
Ratio of earnings to fixed charges 4.2x 4.4x
At the period ended June 30 and December 31
Current ratio 2.1x 1.6x
Percent of long-term borrowings to total capital 49% 49%
Percent of floating-rate borrowings to total borrowings 19% 12%
CASH FLOW FIRST SIX MONTHS
(Dollars in millions) 1998 1997
Net cash provided by (used in)
Operating activities $ 209 $ 263
Investing activities (288) (416)
Financing activities 83 169
----- -----
Net change in cash and cash equivalents $ 4 $ 16
===== =====
Cash and cash equivalents at end of period $ 33 $ 40
===== =====
</TABLE>
12
<PAGE> 13
Cash provided by operating activities decreased from six months 1997 due
primarily to an increase in inventories related to new manufacturing sites and
the funding of pension obligations, partially offset by changes to employee
benefits, incentive pay and other liabilities. Cash used in investing activities
declined as a result of reduced capital expansion activity in 1998. Cash
provided by financing activities reflects an increase in commercial paper
borrowings in 1998, proceeds received in 1997 from a $300 million issuance of
7.60% debentures due February 1, 2027 which were used to repay commercial paper
borrowings outstanding at that time, treasury stock purchases in 1997, and the
payment of dividends in both years.
CAPITAL EXPENDITURES AND OTHER COMMITMENTS
Eastman anticipates that total capital expenditures in 1998 will be
approximately $550 million and depreciation expense is expected to be
approximately $350 million. For 1999 the Company's preliminary estimate is that
capital expenditures will be approximately the same as or lower than 1998.
Long-term commitments related to planned capital expenditures are not material.
LIQUIDITY
Eastman has access to an $800 million revolving credit facility ("Credit
Facility") expiring in December 2000. Although the Company does not have any
amounts outstanding under the Credit Facility, any such borrowings would be
subject to interest at varying spreads above quoted market rates, principally
LIBOR. The Credit Facility also requires a facility fee on the total commitment
that varies based on Eastman's credit rating. The annual rate for such fee was
0.075% as of June 30, 1998. The Credit Facility contains a number of covenants
and events of default, including the maintenance of certain financial ratios.
Eastman was in compliance with all such covenants for all periods.
Eastman utilizes commercial paper, generally with maturities of 90 days or less,
to meet its liquidity needs. The Company's commercial paper, supported by the
Credit Facility, is classified as long-term borrowings because the Company has
the ability and intent to refinance such borrowings long-term. As of June 30,
1998 the Company's commercial paper outstanding balance was $352 million at an
effective interest rate of 5.73%. At June 30, 1997 the Company's commercial
paper outstanding balance was $204 million at an effective interest rate of
5.59%.
The Company repurchased a total of 5,935,301 shares of common stock during 1995,
1996 and 1997 at a cost of $369 million, and is currently authorized to purchase
up to an additional $231 million of its common stock. Repurchased shares may be
used to meet common stock requirements for compensation and benefit plans and
other corporate purposes. In March 1998 the Company issued 536,188 treasury
shares to the Eastman Employee Stock Ownership Plan in partial settlement of the
1997 Eastman Performance Plan obligation.
Existing sources of capital, together with cash flows from operations, are
expected to be sufficient to meet the Company's foreseeable cash flow
requirements.
<TABLE>
<CAPTION>
DIVIDENDS SECOND QUARTER FIRST SIX MONTHS
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Cash dividends declared per share $ .44 $ .44 $ .88 $ .88
</TABLE>
YEAR 2000 ISSUE
The year 2000 issue is the result of computer programs written using two digits
rather than four to define the applicable year. Without corrective action,
programs with time-sensitive software could potentially recognize a date ending
in "00" as the year 1900 rather than the year 2000, causing many computer
applications to fail or create erroneous results. This is a significant issue
for most, if not all, companies, with far reaching implications, some of which
cannot be anticipated or predicted with any degree of certainty.
13
<PAGE> 14
The Company's internal assessment and remediation effort can be summarized in
three categories: computerized business systems; computerized distributed
control systems for manufacturing; and other devices using embedded chips which
may have a date function.
Remediation and final testing of the Company's business computer systems is
nearly complete. Very few problems have surfaced in this area, primarily because
of the Company's aggressive implementation of enterprise software and
standardized desktop/office software earlier in this decade.
Identification of potential date dependent manufacturing distributed control
systems and devices is nearly complete. Parallel assessment and remediation is
proceeding. A testing plan has been approved by senior management, which will
test manufacturing distributed control systems and a representative sample of
programmable logic controllers and control system devices that may have date
functions. The Company's current goal for manufacturing distributed control
systems is to complete assessment, testing and most of the remediation or
workaround solutions on critical control loops early in 1999. However, because
of plant scheduling and equipment lead times, some work may occur later in the
year. Low priority control loops may not be tested or remediated and would be
managed by contingency plans. Although some risk is inherent with this plan, the
Company believes the risk is controllable with contingency plans being
developed and that this plan does not pose significant problems for the
Company's various manufacturing distributed control systems.
Testing, remediation or workaround solutions for other devices with embedded
chips continues on a schedule with a targeted completion of end of year 1998.
As a result of assessments, modifications, upgrades, or replacements planned,
ongoing or already completed, the Company believes the year 2000 issue will not
pose significant problems for the Company's business, processes and operations.
The Company believes that the costs of modifications, upgrades, or replacements
of software, hardware, or capital equipment which would not be incurred but for
year 2000 compatibility requirements have not and will not have a material
impact on the Company's financial position or results of operations.
The Company has identified and is communicating with customers, suppliers, and
other critical service providers to determine if entities with which the Company
transacts business have an effective plan in place to address the year 2000
issue, and to determine the extent of the Company's vulnerability to the failure
of third parties to remediate their own year 2000 issue. The Company is relying
on statements from our service and goods suppliers and is not auditing
suppliers' preparation plans. Risks associated with this approach are being
identified and contingency plans will be developed as needed.
HOLSTON DEFENSE CORPORATION
Holston Defense Corporation, a wholly owned subsidiary of the Company, has
managed the government-owned Holston Army Ammunition Plant in Kingsport,
Tennessee since 1949 under contract with the Department of Army. The current
contract will terminate December 31, 1998. The DOA has concluded the previously
reported bidding process and has awarded a contract to manage the facility to a
third party commencing January 1, 1999. Accordingly, Holston Defense Corporation
will not continue to manage the facility after termination of the contract. The
Company has recognized liabilities associated with Holston's curtailment of
pension, other postretirement benefits and other termination costs in accordance
with generally accepted accounting principles.
The recording in second quarter 1998 of previously unrecognized liabilities had
no effect on earnings because the Company also recorded a receivable from the
DOA for reimbursement of such amounts. Reimbursement of certain previously
recognized pension and postretirement benefit costs will be credited to earnings
at the time of receipt of reimbursement from the DOA. The Company expects the
DOA to reimburse substantially all such costs and payments, but delays in
reimbursement may require the Company to advance funds to pay such costs. The
Company expects no significant impact on financial position or results of
operations related to termination of the contract. See Note 4 to Consolidated
Financial Statements.
14
<PAGE> 15
RECENTLY ISSUED ACCOUNTING STANDARDS
In June 1997 the FASB issued SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information," which requires enterprises to report
selected information about operating segments and related disclosures about
products and services, geographic areas, and major customers. The Company will
adopt this standard effective with yearend 1998 financial reporting and is
evaluating the impact of this standard on its current segment reporting.
In February 1998 the FASB issued SFAS No. 132, "Employers' Disclosures about
Pensions and Other Postretirement Benefits," which standardizes and improves
disclosures related to pensions and other postretirement benefits. The Company
will comply with the new disclosure requirements of this standard which become
effective for the Company's yearend 1998 financial reporting.
In June 1998 the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities," which standardizes the accounting for
derivative instruments, including certain derivative instruments embedded in
other contracts, by requiring that an entity recognize those items as assets or
liabilities in the statement of financial position and measure them at fair
value. The Company is evaluating the effect of this standard on its financial
statements and will comply with requirements of the new standard which become
effective for the Company's 2000 financial reporting cycle. Given our existing
activities, the Company expects no material affect on net earnings, but the
standard will impact other comprehensive income.
Statement of Position ("SOP") 98-1, "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use," was issued by the American
Institute of Certified Public Accountants in March 1998 and requires
capitalization of certain internal-use computer software costs. The Company will
comply with the requirements of this SOP effective for the Company's 1999
financial reporting. The Company's current practice has been to expense such
costs as incurred. Consequently, in the first year of adoption, the standard
will likely result in a favorable effect on earnings.
OUTLOOK
The Company expects sales and earnings for 1998 to be higher than 1997.
Generally lower selling prices for 1998 are expected to partially offset the
effect of higher sales volumes generated by new capacities and market growth.
Ethylene and propylene derivatives such as polyethylene and oxo chemicals will
continue to experience price and margin pressure in the second half of 1998 as a
result of additional industry capacity. Significant continued SPECTAR copolymer
volume growth is expected for the remainder of the year due to strong demand and
added production capacity in Malaysia. Acetate tow volume is expected to
stabilize in the second half of 1998 as new industry capacity is absorbed, but
prices will not improve from second quarter levels and margin pressure is
expected to continue. Modest growth in sales revenue for 1998 is expected for
fine chemicals based on increased volumes of pharmaceutical and agrochemical
intermediates and the impact of new Epoxybutene-based derivatives. Within the
Core Plastics segment, demand for EASTAPAK polymers is expected to continue to
grow for the remainder of the year as new applications are developed and as
applications move away from alternative packaging materials. Higher revenues and
operating earnings for container plastics are expected for the remainder of
1998, but the Company continues to explore options for diminishing the impact of
this business on its portfolio. Recently introduced polyethylene performance
polymers, MXSTEN and TENITE HIFOR, are expected to provide more profitable and
less cyclical niche markets as they gain market acceptance through the remainder
of 1998. Within the Chemical Intermediates segment, the completed oxo plant
expansion is expected to produce continued volume gains for the remainder of
1998, although prices are expected to experience pressure due to industry
overcapacity.
Following the second quarter 1998 startup of three new manufacturing facilities,
capitalized interest and preproduction expenses are expected to decrease, but
interest expense and depreciation are expected to increase.
The Company is making good progress toward its Advantaged Cost 2000 initiative
of $500 million in cost structure improvements by the year 2000. Improvements in
labor and material costs and productivity gains totaling over $100 million were
achieved in 1997. The Company expects to meet its 1998 goal through on-going
business process improvements and increased volumes from new and existing
plants.
Due to our limited exposure in Asia, the Company has experienced minor impact
from the Asian financial crisis. If demand continues to weaken in Asia, it may
have an indirect impact on our business in other regions.
15
<PAGE> 16
The above-stated expectations, other forward-looking statements in this report,
and other statements of the Company relating to matters such as cost reduction
targets; planned capacity increases and capital spending; the year 2000 issue;
the Asian financial crisis; expected tax rates and depreciation; and supply and
demand, volumes, price, costs, margins, and sales and earnings expectations and
strategies for individual products, businesses, and segments, as well as for the
whole of the Company, are based upon certain underlying assumptions. These
assumptions are in turn based upon internal estimates and analyses of current
market conditions and trends, management plans and strategies, economic
conditions, and other factors and are subject to risks and uncertainties
inherent in projecting future conditions and results.
The forward-looking statements in this Management's Discussion and Analysis are
based upon the following assumptions and those mentioned in the context of the
specific statements: relatively stable economic business conditions in North
America, continued improvement in business conditions in Europe, and continued
growth in Latin America, supporting continued good overall demand for the
Company's products; no significant direct or indirect impact on results of
operations due to the Asian financial crisis; downward pressure on selling
prices overall; continued demand growth worldwide for EASTAPAK polymers;
continued capacity additions within the PET industry worldwide; capacity
additions within the ethylene industry worldwide; declines in preproduction
expenses related to new manufacturing facilities; realization of recent EASTAPAK
polymers price increases; stabilization of acetate tow demand and volume;
availability of key purchased raw materials with stabilization of or no
significant increase in costs; continuing good market reception of new
polyethylene products and continued shift of polyethylene product mix to less
commodity products; availability of announced manufacturing capacity increases
for container plastics, SPECTAR, coatings, and oxo products; and labor and
material productivity gains sufficient to meet targeted cost structure
reductions. Actual results could differ materially from current expectations if
one or more of these assumptions prove to be inaccurate or are unrealized.
- -----------------------------------
EASTAPAK, SPECTAR, EASTAR, MXSTEN, TENITE and TENITE HIFOR are trademarks of
Eastman Chemical Company.
16
<PAGE> 17
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
As previously reported, in May 1997 the Company received notice from
the Tennessee Department of Environment and Conservation ("TDEC")
alleging that the manner in which hazardous waste was fed into certain
boilers at the Tennessee Eastman facility in Kingsport, Tennessee
violated provisions of the Tennessee Hazardous Waste Management Act.
Based upon subsequent communications with the TDEC and the U.S.
Environmental Protection Agency, the Company believes that these
agencies may be contemplating enforcement proceedings which, if
commenced, could result in monetary sanctions in excess of the
$100,000 threshold of Regulation S-K, Item 103, Instruction 5.C. under
the Securities Exchange Act of 1934 for reporting such contemplated
proceedings in this Report.
The Company's operations are parties to or targets of lawsuits,
claims, investigations, and proceedings, including product liability,
personal injury, patent, commercial, contract, environmental,
antitrust, health and safety, and employment matters, which are being
handled and defended in the ordinary course of business. While the
Company is unable to predict the outcome of these matters, it does not
believe, based upon currently available facts, that the ultimate
resolution of any of such pending matters, including the TDEC
allegations described in the preceding paragraph, will have a material
adverse effect on the Company's financial position or results of
operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company's 1998 Annual Meeting of Shareowners was held on May 7,
1998. Two items of business were acted upon at the meeting: (i)
election of three directors to serve in the class for which the term
in office expires at the Annual Meeting of Shareowners in 2001 and
until their successors are duly elected and qualified; and (ii)
ratification of the appointment of PricewaterhouseCoopers LLP as
independent accountants for the Company until the Annual Meeting of
Shareowners in 1999.
The results of the voting for the election of directors were as
follows:
<TABLE>
<CAPTION>
Votes Broker
Nominee Votes For Withheld Abstentions Nonvotes
----------- --------- -------- -------------- -----------
<S> <C> <C> <C> <C>
H. Jesse Arnelle 59,596,751 622,878 0 0
R. Wiley Bourne, Jr. 59,625,642 593,987 0 0
Dr. John A. White 59,618,295 601,334 0 0
</TABLE>
Accordingly, each of the three nominees received a plurality of the
votes cast and was elected.
The results of the voting on the ratification of the appointment of
PricewaterhouseCoopers LLP as independent accountants were as follows:
<TABLE>
<CAPTION>
Votes For Votes Against Abstentions Broker Nonvotes
------------ ----------------- -------------- --------------------
<S> <C> <C> <C>
60,010,872 101,891 106,866 0
</TABLE>
Accordingly, the number of affirmative votes cast on the proposal
constituted a majority of the votes cast on the proposal at the
meeting, and the appointment of PricewaterhouseCoopers LLP as
independent accountants was ratified.
17
<PAGE> 18
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits filed as part of this report are listed in the Exhibit
Index appearing on page 20.
(b) Reports on Form 8-K
The Company did not file any reports on Form 8-K during the
quarter ended June 30, 1998.
18
<PAGE> 19
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.
Eastman Chemical Company
Date: July 29, 1998 By: /s/ Allan R. Rothwell
-----------------------------------
Allan R. Rothwell
Senior Vice President and
Chief Financial Officer
(On behalf of the Registrant and as
Principal Financial Officer)
19
<PAGE> 20
<TABLE>
<CAPTION>
EXHIBIT INDEX
EXHIBIT DESCRIPTION SEQUENTIAL
NUMBER PAGE
NUMBER
<S> <C> <C>
3.01 Amended and Restated Certificate of Incorporation of
Eastman Chemical Company (incorporated herein by reference
to Exhibit 3.01 to Eastman Chemical Company's Registration
Statement on Form S-1, File No. 33-72364, as amended)
3.02 Amended and Restated By-laws of Eastman Chemical Company, as
amended October 1, 1994 (incorporated by reference to Exhibit
3.02 to Eastman Chemical Company's Annual Report on Form 10-K
for the year ended December 31, 1994)
4.01 Form of Eastman Chemical Company Common Stock certificate
(incorporated herein by reference to Exhibit 3.02 to Eastman
Chemical Company's Annual Report on Form 10-K for the year
ended December 31, 1993)
4.02 Stockholder Protection Rights Agreement dated as of December
13, 1993, between Eastman Chemical Company and First Chicago
Trust Company of New York, as Rights Agent (incorporated
herein by reference to Exhibit 4.4 to Eastman Chemical
Company's Registration Statement on Form S-8 relating to the
Eastman Investment Plan, File No. 33-73810)
4.03 Indenture, dated as of January 10, 1994, between Eastman
Chemical Company and The Bank of New York, as Trustee
(incorporated herein by reference to Exhibit 4(a) to Eastman
Chemical Company's current report on Form 8-K dated January
10, 1994 (the "8-K"))
4.04 Form of 6 3/8% Notes due January 15, 2004 (incorporated herein
by reference to Exhibit 4(c) to the 8-K)
4.05 Form of 7 1/4% Debentures due January 15, 2024
(incorporated herein by reference to Exhibit 4(d) to the
8-K)
4.06 Officers' Certificate pursuant to Sections 201 and 301 of the
Indenture (incorporated herein by reference to Exhibit 4(a) to
Eastman Chemical Company's Current Report on Form 8-K dated
June 8, 1994 (the "June 8-K"))
4.07 Form of 7 5/8% Debentures due June 15, 2024 (incorporated
herein by reference to Exhibit 4(b) to the June 8-K)
4.08 Form of 7.60% Debenture due February 1, 2027 (incorporated
herein by reference to Exhibit 4.08 to Eastman Chemical
Company's Annual Report on Form 10-K for the year ended
December 31, 1996 (the "1996 10-K"))
</TABLE>
20
<PAGE> 21
<TABLE>
<CAPTION>
EXHIBIT INDEX
EXHIBIT DESCRIPTION SEQUENTIAL
NUMBER PAGE
NUMBER
<S> <C> <C>
4.09 Officer's Certificate pursuant to Sections 201 and 301 of
the Indenture related to 7.60% Debentures due February 1,
2027 (incorporated herein by reference to Exhibit 4.09 to
the 1996 10-K)
4.10 Credit Agreement, dated as of December 19, 1995 (the "Credit
Agreement") among Eastman Chemical Company, the Lenders named
therein, and The Chase Manhattan Bank, as Agent (incorporated
herein by reference to Exhibit 4.08 to Eastman Chemical
Company's Annual Report on Form 10-K for the year ended
December 31, 1995)
12.01 Statement re Computation of Ratios of Earnings to Fixed Charges 22
27.01 Financial Data Schedule (for SEC use only)
99.01 Supplemental Business Segment Information 23
</TABLE>
21
<PAGE> 1
EXHIBIT 12.01
EASTMAN CHEMICAL COMPANY AND SUBSIDIARIES
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
SECOND QUARTER FIRST SIX MONTHS
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Earnings before provision for income taxes $149 $141 $263 $255
Add:
Interest expense, net 21 22 42 41
Rental expense (1) 6 7 12 12
Amortization of capitalized interest 4 4 8 7
---- ---- ---- ----
Earnings as adjusted $180 $174 $325 $315
==== ==== ==== ====
Fixed charges:
Interest expense, net $ 21 $ 22 $ 42 $ 41
Rental expense (1) 6 7 12 12
Capitalized interest 12 9 23 19
---- ---- ---- ----
Total fixed charges $ 39 $ 38 $ 77 $ 72
==== ==== ==== ====
Ratio of earnings to fixed charges 4.6x 4.6x 4.2x 4.4x
==== ==== ==== ====
</TABLE>
-----------------------------
(1) For all periods presented, interest component of rental expense is
estimated to equal one-third of such expense.
22
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF EASTMAN CHEMICAL COMPANY FOR THE SIX MONTHS ENDED JUNE
30, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<EXCHANGE-RATE> 1
<CASH> 33
<SECURITIES> 0
<RECEIVABLES> 877<F1>
<ALLOWANCES> 0
<INVENTORY> 566
<CURRENT-ASSETS> 1,600
<PP&E> 8,332
<DEPRECIATION> 4,362
<TOTAL-ASSETS> 5,982
<CURRENT-LIABILITIES> 771
<BONDS> 1,853
0
0
<COMMON> 1
<OTHER-SE> 1,900
<TOTAL-LIABILITY-AND-EQUITY> 5,982
<SALES> 2,313
<TOTAL-REVENUES> 2,313
<CGS> 1,762
<TOTAL-COSTS> 1,762
<OTHER-EXPENSES> 254
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 42
<INCOME-PRETAX> 263
<INCOME-TAX> 92
<INCOME-CONTINUING> 171
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 171
<EPS-PRIMARY> 2.17
<EPS-DILUTED> 2.15
<FN>
<F1>Asset values represent net amounts
</FN>
</TABLE>
<PAGE> 1
EXHIBIT 99.01
EASTMAN CHEMICAL COMPANY AND SUBSIDIARIES
SUPPLEMENTAL BUSINESS SEGMENT INFORMATION
1998 CHANGE FROM 1997
<TABLE>
<CAPTION>
SECOND QUARTER FIRST SIX MONTHS
% CHANGE % CHANGE
SALES OPERATING SALES OPERATING
REVENUE EARNINGS(1) REVENUE EARNINGS(1)
-------- ----------- ------- ------------
<S> <C> <C> <C> <C>
SPECIALTY & PERFORMANCE SEGMENT
Specialty plastics 7% ++ 9% ++
Performance chemicals (11)% - (10)% -
Fine chemicals 4% + (7)% --
Fibers (10)% -- (14)% --
Coatings, inks & resins (7)% - (4)% 0
Total Segment (5)% (13)% (6)% (19)%
====== ==== ==== =====
CORE PLASTICS SEGMENT
Container plastics 6% ++ 12% ++
Flexible plastics (11)% -- (11)% --
Total Segment (1)% >100% 3% >100%
====== ==== ===== =====
CHEMICAL INTERMEDIATES SEGMENT
Industrial intermediates (5)% - (1)% +
Total Segment (5)% (8)% (1)% 10%
====== ==== ==== =====
Total Eastman (4)% 4% (3)% 2%
====== ==== ==== =====
</TABLE>
- ---------------------------------
(1) 0 = Change of approximately 0 - 2% (+ or -)
+ = Increase of approximately 2 - 10%
++ = Increase of greater than 10%
- = Decrease of approximately (2) - (10)%
-- = Decrease of greater than (10%)
Sm = Negligible change in dollar amount
Nm = Not meaningful
23
