SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 29, 1997
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: 1-13736
U.S. INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of 22-3369326
incorporation or organization) (I.R.S.Employer Identification No.)
101 WOOD AVENUE SOUTH
ISELIN, NJ 08830
(Address of principal executive offices)
(908) 767-0700
(Registrant's telephone number, including area code)
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 May 2, 1997, U.S. Industries, Inc. had one class of common stock, of which
50,233,245 shares were outstanding.
<PAGE>
U.S. INDUSTRIES, INC.
INDEX
Page
No.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
Consolidated Statements of Operations
for the Three and Six Months Ended March 31, 1997 and 1996.. 1
Consolidated Balance Sheets, March 31, 1997
and September 30, 1996...................................... 2
Consolidated Statements of Cash Flows
for the Six Months Ended March 31, 1997 and 1996............ 3
Consolidated Statement of Changes in Stockholders'
Equity for the Six Months Ended March 31, 1997.............. 4
Notes to Consolidated Financial Statements.................. 5
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................... 11
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K........................... 18
SIGNATURE ................................................................ 19
EXHIBIT INDEX
<PAGE>
PART I. FINANCIAL INFORMATION.
ITEM 1. FINANCIAL STATEMENTS.
<TABLE>
<CAPTION>
U.S. INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN MILLIONS EXCEPT PER SHARE DATA)
(UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED
MARCH 31, MARCH 31,
--------- ---------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales $ 559 $ 493 $ 1,070 $ 939
Operating costs and expenses:
Cost of products sold 379 325 718 618
Selling, general and administrative expenses 128 122 252 236
---------- ---------- ---------- ----------
Operating income 52 46 100 85
Interest expense 11 14 23 34
Interest income (1) (2) (2) (4)
Other expense, net - 4 1 4
---------- ---------- ---------- ----------
Income before income taxes, discontinued operations and
extraordinary loss 42 30 78 51
Provision for income taxes 18 14 34 23
---------- ---------- ---------- ----------
Income from continuing operations 24 16 44 28
Discontinued operations:
Income (loss) from operations of discontinued operations
(net of income taxes (benefit) of $1, ($1), $3 and $-) 2 (1) 4 -
Gain on disposal of discontinued operations
(net of income taxes of $23, $-, $24 and $10) 82 - 83 68
---------- ---------- ---------- ----------
Income (loss) from discontinued operations 84 (1) 87 68
---------- ---------- ---------- ----------
Income before extraordinary loss 108 15 131 96
Extraordinary loss (net of income tax benefits of $1 and $16) - - (2) (25)
---------- ---------- ---------- ----------
Net income $ 108 $ 15 $ 129 $ 71
========== ========== ========== ==========
Income from continuing operations per share $ 0.48 $ 0.32 $ 0.87 $ 0.53
Income (loss) from discontinued operations per share 1.66 (0.02) 1.73 1.28
Extraordinary loss per share - - (0.04) (0.46)
---------- ---------- ---------- ----------
Net income per share $ 2.14 $ 0.30 $ 2.56 $ 1.35
========== ========== ========== ==========
Weighted average common shares outstanding 50.6 52.5 50.7 52.9
========== ========== ========== ==========
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
1
<PAGE>
<TABLE>
<CAPTION>
U.S. INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
(IN MILLIONS EXCEPT SHARE DATA)
March 31, September 30,
--------- -------------
1997 1996
---- ----
(unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 26 $ 45
Trade receivables, net of allowance of $40 and $38 396 370
Inventories, net 420 352
Deferred income taxes 45 44
Other current assets 29 22
Net assets held for disposition 47 112
--------------- -------------
Total current assets 963 945
Property, plant and equipment, net of accumulated
depreciation of $379 and $359 310 278
Deferred income taxes 30 28
Other assets 128 115
Goodwill, net 417 416
--------------- -------------
$ 1,848 $ 1,782
=============== =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable $ 1 $ 1
Current maturities of long-term debt 1 16
Trade accounts payable 145 157
Accrued expenses and other liabilities 157 171
Income taxes payable 54 43
--------------- -------------
Total current liabilities 358 388
Long-term debt 685 717
Other liabilities 172 150
--------------- -------------
Total liabilities 1,215 1,255
--------------- -------------
Commitments and contingencies
Stockholders' equity:
Common stock (par value $.01 per share), authorized 200,000,000 shares;
issued 53,903,311 and 53,734,565,
respectively; outstanding 50,684,437 and 51,392,001, respectively) 1 1
Paid in capital 566 563
Retained earnings 158 29
Unearned restricted stock (18) (19)
Other equity (3) (2)
Treasury stock (3,218,874 and 2,342,564 shares, respectively) at cost (71) (45)
--------------- --------------
Total stockholders' equity 633 527
--------------- -------------
$ 1,848 $ 1,782
=============== =============
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
2
<PAGE>
<TABLE>
<CAPTION>
U.S. INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN MILLIONS-UNAUDITED)
SIX MONTHS ENDED
MARCH 31,
---------
1997 1996
---- ----
<S> <C> <C>
OPERATING ACTIVITIES:
Income from continuing operations $ 44 $ 28
Adjustments to reconcile income from continuing operations to net cash
(used in) provided by operating activities of continuing operations:
Depreciation and amortization 26 29
Provision for doubtful accounts 3 4
Gain on sale of excess real estate (1) -
Gain on sale of subsidiary stock (1) -
Changes in operating assets and liabilities, excluding the effects of
acquisitions and dispositions:
Increase in trade receivables (24) (7)
Increase in inventories (34) (23)
Increase in other current assets (7) (5)
Increase in other assets (17) (7)
Decrease in trade accounts payable (14) (1)
Decrease in income taxes payable (17) (9)
Decrease in accrued expenses and other liabilities (12) (3)
Increase in other liabilities 7 2
Other, net 2 1
------------ -----------
NET CASH (USED IN) PROVIDED BY OPERATING
ACTIVITIES OF CONTINUING OPERATIONS (45) 9
------------ -----------
Income from discontinued operations 87 68
Adjustments to reconcile income from discontinued operations to
net cash provided by discontinued operations:
Gain on disposal of net assets held for disposition (83) (68)
Decrease in net assets held for disposition 5 17
------------ -----------
NET CASH PROVIDED BY DISCONTINUED OPERATIONS 9 17
------------ -----------
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES (36) 26
------------ -----------
INVESTING ACTIVITIES:
Proceeds from sale of net assets held for disposition 186 170
Proceeds from sale of subsidiary stock 4 -
Acquisition of companies, net of cash acquired (67) -
Purchases of property, plant and equipment (35) (20)
Proceeds from real estate transactions 5 11
------------ -----------
NET CASH PROVIDED BY INVESTING ACTIVITIES 93 161
------------ -----------
FINANCING ACTIVITIES:
Proceeds from long-term debt 1,125 796
Repayment of long-term debt (1,172) (959)
Repayment of notes payable - (3)
Purchase of treasury stock (27) (35)
Proceeds from exercise of stock options 2 -
------------ -----------
NET CASH USED IN FINANCING ACTIVITIES (72) (201)
------------ ------------
Effect of exchange rate changes on cash (4) -
DECREASE IN CASH AND CASH EQUIVALENTS (19) (14)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 45 51
------------ -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 26 $ 37
============ ===========
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
3
<PAGE>
<TABLE>
<CAPTION>
U.S. INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED MARCH 31, 1997
(IN MILLIONS EXCEPT SHARE DATA)
(UNAUDITED)
Unearned Total
Common Paid in Retained Restricted Other Treasury Stockholders'
Stock Capital Earnings Stock Equity Stock Equity
----- ------- -------- ----- ------ ----- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at September 30, 1996 $ 1 $ 563 $ 29 $ (19) $ (2) $ (45) $ 527
Net income 129 129
Amortization of unearned restricted
stock 3 3
Purchase of 941,666 shares of common
stock (27) (27)
Common stock issued (168,746 shares)
upon exercise of options - 2 2
Treasury stock issued (65,356 shares) to
employees and directors - 1 (2) 1 -
Translation adjustment (1) (1)
--------- ---------- ---------- ----------- ---------- --------- ---------
Balance at March 31, 1997 $ 1 $ 566 $ 158 $ (18) $ (3) $ (71) $ 633
========= ========== ========== =========== ========== ========= =========
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
4
<PAGE>
U.S. INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997
NOTE 1 - BASIS OF PRESENTATION
U.S. Industries, Inc. (together with its subsidiaries, the "Company") is a
diversified manufacturer of consumer and industrial products. The Company was
incorporated in Delaware in February 1995, and has been publicly-owned since May
31, 1995, at which time Hanson PLC ("Hanson") paid a dividend to its
shareholders of the Company's common stock. Prior to May 31, 1995, the Company
was a wholly-owned subsidiary of Hanson. Certain businesses, assets and
liabilities were transferred to the Company by Hanson pursuant to transactions
consummated on May 31, 1995 and June 5, 1995 (collectively, the "Demerger").
The accompanying financial statements have been prepared in accordance with
generally accepted accounting principles for interim financial information,
Article 10 of Regulation S-X and with the instructions to Form 10-Q.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
The interim financial data for the three and six months ended March 31, 1997 and
1996 are unaudited and, in the opinion of management, reflect all necessary
adjustments for a fair presentation of the financial position and results of
operations for the interim periods on a consistent basis. Such adjustments were
of a normal and recurring nature. The results of operations for the three and
six month periods ended March 31, 1997 are not necessarily indicative of those
for the full fiscal year ending September 27, 1997. For further information,
refer to the Consolidated (Combined) Financial Statements and footnotes thereto
included in the Company's Annual Report on Form 10-K for the fiscal year ended
September 28, 1996.
The Company's fiscal year ends on the Saturday nearest to September 30. All
three and six month data contained herein reflect results of operations for the
13-week and 26-week periods ended on the Saturday closest to March 31, but are
presented as of such date for convenience.
Prior periods presented have been restated to reflect divestitures and formal
plans to sell businesses included in net assets held for disposition as well as
the retention of a business previously identified as a discontinued operation.
See Note 4.
In January 1997, an initial public offering of 25% of the shares of Jade
Technologies Singapore Ltd ("Jade") was completed. The offering generated
proceeds of $4 million and resulted in a pre-tax gain of $1 million. Minority
interest of $3 million was recorded in other liabilities.
NOTE 2 - INVENTORIES
Inventories consist of the following:
(in millions)
March 31, September 30,
--------- -------------
1997 1996
---- ----
(unaudited)
Finished products $ 202 $ 183
Work-in process 99 72
Raw materials 119 97
------------------ ------------------
Inventories, net $ 420 $ 352
================== ==================
5
<PAGE>
NOTE 3 - DEPRECIATION AND AMORTIZATION
Depreciation and amortization consists of the following:
<TABLE>
<CAPTION>
(in millions-unaudited)
Six Months Ended
March 31,
---------
1997 1996
---- ----
<S> <C> <C>
Depreciation $ 20 $ 18
Amortization of goodwill 7 6
Amortization of unearned restricted stock 3 3
Amortization of deferred income (4) -
Amortization of deferred financing costs - 2
---------------- ---------------
$ 26 $ 29
================ ===============
</TABLE>
NOTE 4 - DISCONTINUED OPERATIONS
In the first quarter of fiscal 1996, the Company sold Blue Mountain Industries
and the Office Furniture Group for an aggregate of $165 million in cash and a
note for $5 million (which was collected in the second quarter of fiscal 1996).
In October 1996, the Company sold Tubular Textile Machinery for $21 million in
cash and a note for $1 million.
In January 1997, the Company sold SCM Metals Products, Inc. and the assets of
QPF, Inc. for an aggregate of $165 million in cash.
In the second quarter of fiscal 1997, the Company decided to retain Bearing
Inspection, Inc. ("Bearing") as a continuing operation. Bearing was identified
and accounted for as a discontinued operation since the Demerger. Also, during
the second quarter of fiscal 1997, the Company adopted a formal plan to dispose
of Native Textiles ("Native"). At March 31, 1997, Native and an equity
investment in Ground Round Restaurants, Inc. are classified as discontinued
operations.
The following are the results of the discontinued operations:
(in millions-unaudited)
Three Months Ended Six Months Ended
March 31, March 31,
--------- ---------
1997 1996 1997 1996
---- ---- ---- ----
Net sales $ 31 $ 123 $ 89 $ 263
Pre-tax income 3 (2) 7 -
6
<PAGE>
NOTE 4 - DISCONTINUED OPERATIONS (CONTINUED)
Amounts classified as net assets held for disposition relate to the businesses
and equity investment accounted for as discontinued operations and consist of
the following after accrual for anticipated net-of-tax losses on dispositions
not yet consummated:
(in millions)
March 31, September 30,
--------- -------------
1997 1996
---- ----
(unaudited)
Net current assets $ 35 $ 50
Property, plant and equipment, net 12 72
Other non-current liabilities, net - (10)
----------------- ----------------
Net assets held for disposition 47 112
================= ================
NOTE 5 - LONG-TERM DEBT
Long-term debt consists of the following:
(in millions)
March 31, September 30,
--------- -------------
1997 1996
---- ----
(unaudited)
7.25% Senior Notes, net $ 123 $ -
Term loan - 370
Revolving credit facility 500 250
Other long-term debt 63 113
----------------- ------------------
686 733
Less current maturities 1 16
----------------- ------------------
Long-term debt 685 717
================= ==================
On December 12, 1996, USI American Holdings, Inc. ("USIAH"), a wholly owned
subsidiary of the Company, issued $125 million aggregate principal amount of
7.25% Senior Notes due December 1, 2006 (the "Notes"). The net cash proceeds
were $123 million after transaction fees and discounts. The Notes bear interest
at 7.25% payable semiannually on June 1 and December 1, commencing June 1, 1997,
and are redeemable at any time at the option of the issuer, in whole or in part,
at a redemption price equal to the greater of (i) 100% of the principal amount
to be redeemed, or (ii) the sum of the present values of the remaining scheduled
payments of principal and interest on the Notes to be redeemed, discounted at a
rate based on the yield to maturity of comparable U.S. Government securities
plus 10 basis points, plus, in each case, accrued interest to the date of
redemption. The Notes are fully and unconditionally guaranteed by the Company.
The Notes are unsecured but the indenture places restrictions on, among other
things, liens, subsidiary indebtedness and dividends. USIAH is currently
offering to exchange the Notes, which were not registered under the Securities
Act of 1933, for registered notes having substantially the same terms as the
Notes. See Note 8 for summary financial information of USIAH.
The proceeds from the sale of the Notes were used to repay a portion of the term
loan under the Company's then existing credit agreement (the "Previous Credit
Agreement"), the remainder of which was repaid using proceeds from the initial
borrowing under a credit agreement dated as of December 12, 1996 (the "New
Credit Agreement") consisting of a five year unsecured revolving line of credit
of up to an aggregate amount of $750 million. The revolving credit commitment
will be permanently reduced by $100 million on December 12, 1999 and by an
additional $150 million on December 12, 2000.
7
<PAGE>
NOTE 5 - LONG-TERM DEBT (CONTINUED)
The New Credit Agreement includes (i) committed advances ("Committed Advances")
and (ii) uncommitted bid option advances. The Committed Advances are at lower
borrowing spreads than the previous Credit Agreement and bear interest based on,
at the option of the Company, (i) specified spreads over the London Interbank
Offered Rate ("LIBOR") or (ii) the higher of the rate of interest publicly
announced by Bank of America in San Francisco, California as its reference rate
or 50 basis points above the federal funds rate in effect on such date (the
"Base Rate"). The spreads on the LIBOR-based borrowings range between 15 and
62.5 basis points, based upon the Company's senior unsecured debt ratings for
the relevant period. At March 31, 1997 three-month LIBOR was 5.78% per annum and
the spread over LIBOR was 25 basis points. A facility fee will accrue and be
payable on a quarterly basis in arrears to the lenders under the New Credit
Agreement on the full amount of the facility, regardless of the amount utilized.
The facility fee ranges between 7.5 and 25 basis points per annum, based upon
the Company's senior unsecured debt ratings for the relevant period. At March
31, 1997, the facility fee was 12.5 basis points per annum.
The New Credit Agreement places restrictions on, among other things, liens,
mergers, consolidations and additional indebtedness. Its financial covenants
require the Company to comply with a maximum ratio of total funded debt to
capital and a consolidated leverage ratio.
In conjunction with the repayment of all outstanding indebtedness under the
Previous Credit Agreement, in the first quarter of fiscal 1997, a net-of-tax,
non-cash, extraordinary charge of $2 million was incurred to write-off
unamortized deferred financing costs and to accrue for previously deferred
losses associated with interest rate protection agreements. In the first quarter
of fiscal 1996, in connection with entering into the Previous Credit Agreement,
the Company recorded a net-of-tax, non-cash extraordinary charge of $25 million
to write-off unamortized deferred financing costs and to accrue for previously
deferred losses associated with interest rate protection agreements.
On December 12, 1996 the Company paid approximately $2 million to settle
interest rate protection agreements entered into in connection with the Notes.
This amount will be amortized over the life of the Notes as deferred financing
costs.
In order to manage its floating interest rate exposure, the Company entered into
interest rate protection agreements whereby the Company receives a floating rate
based on three-month LIBOR and pays a weighted average fixed rate. Currently the
interest rates range from 6.23% to 6.95% per annum. The aggregate notional
amounts and periods covered by such agreements are as follows:
March 31, 1997 through May 30, 1997.....................$500 million
May 30, 1997 through September 30, 1997.................$450 million
September 30, 1997 through May 28, 1999.................$300 million
May 28, 1999 through September 30, 1999.................$200 million
All interest rate protection agreements are of notional amounts and maturities
that relate to specific portions of outstanding debt, and accordingly, are
accounted for as hedge transactions.
Other long-term debt at March 31, 1997 includes $44 million of notes payable
with maturities due within one year which the Company expects to repay using
borrowings under the New Credit Agreement. Of this amount, $39 million was
borrowed under uncommitted short-term lines of credit with aggregate
availability of $197 million.
NOTE 6 - COMMITMENTS AND CONTINGENCIES
Certain present and former operating sites, or portions thereof, currently or
previously owned and/or leased by current or former operating units of the
Company are the subject of investigations, monitoring or remediation under the
federal Comprehensive Environmental Response, Compensation and Liability Act
("CERCLA" or "superfund"), the Federal Resource Conservation and Recovery Act or
comparable state statutes or agreements with third parties. These proceedings
are in various stages ranging from initial investigations to active settlement
negotiations to implementation of the clean-up or remediation of sites.
8
<PAGE>
NOTE 6 - COMMITMENTS AND CONTINGENCIES (CONTINUED)
A number of present and former operating units of the Company have been named as
Potentially Responsible Parties ("PRPs") at approximately 14 off-site disposal
sites under CERCLA or comparable state statutes in a number of federal and state
proceedings. The operating units of the Company are working with the
governmental agencies involved and other PRPs to address environmental claims in
a responsible and appropriate manner.
At March 31, 1997, the Company had accrued $15 million for known environmental
related matters. The Company believes that the range of liability for such
matters is between $8 million and $21 million.
Also, certain of the Company's subsidiaries are defendants or plaintiffs in
lawsuits that have arisen in the normal course of business. While certain of
these matters involve substantial amounts, it is management's opinion, based on
the advice of counsel, that the ultimate resolution of such litigation and
environmental matters will not have a material adverse effect on the Company's
financial condition, results of operations or cash flows.
NOTE 7 - ACQUISITIONS
In January 1997, the Company purchased the assets of Woodings-Verona Tool Works,
Inc. ("Woodings-Verona") for $5 million in cash plus the assumption of $1
million of debt, subject to post-closing audit adjustment. Woodings-Verona
manufactures hot-forged heavy striking tools including sledge hammers, axes,
bars, picks and railroad tools.
In March 1997, the Company purchased certain assets of the outdoor furniture
division of Sunbeam Corporation for approximately $62 million in cash, prior to
additional post-closing audit adjustments and consideration of restructuring
costs. The acquired business, now known as Sunlite Casual Furniture, Inc.
("Sunlite"), manufactures casual outdoor furniture.
These transactions have been accounted for as purchases and their results are
included in the financial statements from the date of acquisition. The
allocation of purchase price is preliminary and subject to adjustment upon
receipt of final valuation information and management's final estimates as to
the fair value of the respective assets acquired and liabilities assumed.
NOTE 8 - SUMMARIZED FINANCIAL INFORMATION OF SUBSIDIARY
Summarized consolidated financial information of USIAH, the issuer of the Notes,
is as follows:
<TABLE>
<CAPTION>
(IN MILLIONS-UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED
MARCH 31, MARCH 31,
--------- ---------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Income Statement Data:
Net sales $ 559 $ 493 $ 1,070 $ 939
Gross profit 180 168 352 321
Income from continuing operations 25 17 46 30
Net income 109 16 131 73
</TABLE>
(IN MILLIONS)
MARCH 31, SEPTEMBER 30,
--------- -------------
1997 1996
---- ----
(UNAUDITED)
Balance Sheet Data:
Current assets $ 963 $ 945
Non-current assets 885 837
Current liabilities 357 388
Non-current liabilities 857 867
Separate consolidated financial statements of USIAH are not presented as
management has determined that they would not be material to investors.
9
<PAGE>
NOTE 9 - NEW ACCOUNTING PRONOUNCEMENT
In February 1997, the Financial Accounting Standards Board issued Statement No.
128, "Earnings Per Share", which the Company is required to adopt for the period
ended December 31, 1997. At that time, the Company will be required to change
the method currently used to compute earnings per share, restate all prior
periods and present diluted earnings per share. The Company believes adoption of
Statement No. 128 will not have a material impact on earnings per share
information currently presented.
NOTE 10 - SUBSEQUENT EVENT
In May 1997, the Company purchased Britains Petite Limited for $9 million in
cash, subject to post-closing audit adjustment. Britains Petite Limited, located
in Nottingham, England, is a manufacturer of military soldier collectibles,
metal and plastic models of agricultural vehicles, figures, animals, buildings
and accessories and preschool plastic toys.
10
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
The Company's operations are grouped into two segments: Consumer and Industrial
Products. As of March 31, 1997, the Bath Products Operations were reclassified
to the Consumer Group and the Lighting Products and Systems Operations, which
are predominately commercial lighting, were reclassified to the Industrial
Group, to better reflect product classification. The outdoor furniture
operations, acquired in March 1997, are included in the Bath and Outdoor
Products Operations. The results of all operations sold or classified as
discontinued operations are excluded from the table below for all periods
presented and are discussed separately under "Discontinued Operations". See Note
4 to the Consolidated Financial Statements.
RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
(IN MILLIONS)
THREE MONTHS ENDED SIX MONTHS ENDED
MARCH 31, MARCH 31,
--------- ---------
1997 1996 1997 1996
---- ---- ----- ----
<S> <C> <C> <C> <C>
NET SALES
Consumer Group
Housewares .......................................... $ 132 $ 115 $ 243 $ 201
Recreation and Leisure............................... 61 60 136 127
Footwear............................................. 38 43 76 86
Bath and Outdoor Products............................ 95 70 163 130
----------- ----------- ---------- ---------
326 288 618 544
Industrial Group
Lighting Products and Systems........................ 134 126 265 245
Other Industrial Products............................ 99 79 187 150
----------- ----------- ---------- ---------
233 205 452 395
TOTAL NET SALES................................... $ 559 $ 493 $ 1,070 $ 939
=========== =========== ========== =========
OPERATING INCOME
Consumer Group
Housewares........................................... $ 25 $ 26 $ 46 $ 44
Recreation and Leisure............................... - (1) 5 1
Footwear ............................................ 4 5 8 9
Bath and Outdoor Products............................ 12 10 18 17
----------- ----------- ---------- ---------
41 40 77 71
----------- ----------- ---------- ---------
Industrial Group
Lighting Products and Systems........................ 9 8 19 16
Other Industrial Products............................ 8 5 17 11
----------- ----------- ---------- ---------
17 13 36 27
----------- ----------- ---------- ---------
Corporate expenses ...................................... (6) (7) (13) (13)
----------- ----------- ---------- ---------
TOTAL OPERATING INCOME........................... $ 52 $ 46 $ 100 $ 85
=========== =========== ========== =========
</TABLE>
11
<PAGE>
DISCLOSURE CONCERNING FORWARD-LOOKING STATEMENTS
All statements, other than statements of historical fact, included in the
following Management's Discussion or elsewhere in this Quarterly Report are, or
may deemed to be, forward-looking statements within the meaning of Section 27A
of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of
1934. Various economic and competitive factors could cause actual results to
differ materially from those discussed in such forward-looking statements,
including factors which are outside of the control of the Company, such as
interest rates, consumer spending patterns, availability of consumer credit,
levels of residential and commercial construction, levels of automotive
production and changes in raw material costs, along with the other factors noted
in this Quarterly Report and the Company's Annual Report on Form 10-K for fiscal
1996 with respect to the Company's businesses.
THREE MONTHS ENDED MARCH 31, 1997
COMPARED TO THREE MONTHS ENDED MARCH 31, 1996
INTRODUCTION
The Company had sales of $559 million and operating income of $52 million for
the quarter ended March 31, 1997, increases of $66 million (13.4%) and $6
million (13.0%), respectively, compared to the second quarter of fiscal 1996.
CONSUMER GROUP
The Consumer Group had sales of $326 million and operating income of $41 million
for the quarter ended March 31, 1997, increases of $38 million (13.2%) and $1
million (2.5%), respectively, over the second quarter of fiscal 1996.
The Housewares Operations had sales of $132 million and operating income of $25
million for the quarter ended March 31, 1997, an increase of $17 million (14.8%)
and a decrease of $1 million (3.8%), respectively, over the second quarter of
fiscal 1996. The Company had higher sales due primarily to the inclusion of the
Company's ladder subsidiary and higher revenue from sales of vacuum cleaners,
particularly in Central and Eastern Europe, offset by weakness in domestic
vacuum cleaner sales and a sales decline in winter tools as a result of the mild
winter in the Northeast.
The Recreation and Leisure Operations had sales of $61 million with break-even
operating results for the quarter ended March 31, 1997, an increase of $1
million (1.7%) and $1 million, respectively, from the second quarter of fiscal
1996. The improvement in operating income was due to reduced losses on
promotional toy sales and lower period costs incurred to support the promotional
toy category. The Company made the decision to exit the promotional toy category
in fiscal 1996 and has since realized benefits through reduced closeouts and
lower promotional costs. Golf putter sales increased substantially, offsetting
the decline in toy sales. However, operating income for golf clubs declined due
to advertising and promotional costs for new product introductions.
The Footwear Operations had sales of $38 million and operating income of $4
million for the quarter ended March 31, 1997, decreases of $5 million (11.6%)
and $1 million (20.0%), respectively, from the second quarter of fiscal 1996.
The Footwear Operations suffered from continuing competitive market conditions.
The western footwear category, in particular, was negatively impacted by
promotional pricing and aggressive terms which have reduced both sales and
profits.
The Bath and Outdoor Products Operations had sales of $95 million and operating
income of $12 million for the quarter ended March 31, 1997, increases of $25
million (35.7%) and $2 million (20.0%), respectively, from the second quarter of
fiscal 1996. The Bath Products Operations experienced strong sales growth in the
United States as it expanded distribution into the do-it-yourself ("DIY")
market. The Company also benefitted from an excellent contribution from its
above ground pool company, which was acquired in the third quarter of fiscal
1996. Results from the European operations were below prior year primarily due
to soft market conditions. The Outdoor Products Operations, which consist of
the Sunlite businesses acquired in March, 1997, had a minimal contribution to
operating income.
12
<PAGE>
INDUSTRIAL GROUP
The Industrial Group had sales of $233 million and operating income of $17
million for the quarter ended March 31, 1997, increases of $28 million (13.7%)
and $4 million (30.8%), respectively, from the second quarter of fiscal 1996.
The Lighting Products and Systems Operations had sales of $134 million and
operating income of $9 million for the quarter ended March 31, 1997, increases
of $8 million (6.3%) and $1 million (12.5%), respectively, over the second
quarter of fiscal 1996. The Lighting Products and Systems Operations benefitted
from strong sales of outdoor and residential lighting products. The strong
performances in these markets offset weaker pricing and, accordingly, a lower
operating income contribution from the Company's commercial and industrial
lighting operations.
The Other Industrial Products Operations had sales of $99 million and operating
income of $8 million for the quarter ended March 31, 1997, increases of $20
million (25.3%) and $3 million (60.0%), respectively, from the second quarter of
fiscal 1996. The Other Industrial Products Operations had higher sales in each
of its automotive products companies and its bearing refurbishing operation. In
particular, its concentration in the sport utility vehicle market resulted in
strong increases over the comparable period in the prior fiscal year in sales of
fabricated metal components. The Company's automotive leather business improved
sales to Japanese automotive manufacturers. Sales of Japanese imports in the
U.S. have increased, in part, due to a weaker Yen. However, lower yields due to
reduced availability of quality hides negatively impacted margins. The Company's
leadframe business experienced a decline in sales and income due to the downturn
in the semiconductor market.
DISCONTINUED OPERATIONS
During the quarter ended March 31, 1997, due to improving results and prospects,
the Company decided to retain Bearing Inspections, Inc. ("Bearing") as part of
its continuing operations. Bearing was identified for disposition at the time of
the Demerger and had been accounted for as a discontinued operation since that
time. Also, during the quarter ended March 31, 1997, the Company adopted a
formal plan to dispose of Native Textiles ("Native"). The impact of the
decisions to retain Bearing and dispose of Native was not material to the
Company.
The Company had income from discontinued operations of $84 million, net-of-tax,
for the quarter ended March 31, 1997, consisting of gains on disposals of
discontinued operations of $82 million and income from operations of
discontinued operations of $2 million. The gains on dispositions resulted from
the sales of SCM Metals Products, Inc. and the assets of QPF Inc. for an
aggregate of $165 million in cash. The income from operations of discontinued
operations consisted of the results of the companies sold, Native and an equity
investment in Ground Round Restaurants, Inc. Discontinued operations are not
expected to have a material impact on the future operations or liquidity of the
Company.
For the quarter ended March 31, 1996, the Company had a loss from the operations
of discontinued operations of $1 million, net of tax. The loss from operations
of discontinued operations consisted of the results of the companies noted
above, Tubular Textile Machinery, which was sold in the first quarter of fiscal
1997 and the companies sold during fiscal 1996.
INTEREST AND TAXES
Interest expense was $11 million for the quarter ended March 31, 1997, a $3
million (21.4%) decrease from the comparable period of fiscal 1996. The decrease
reflects lower levels of debt outstanding. Interest income was $1 million for
the quarter ended March 31, 1997, a $1 million (50%) decrease from the
comparable period of fiscal 1996.
The provision for income taxes on continuing operations was $18 million for the
quarter ended March 31, 1997, on pre-tax income of $42 million (a 42.9%
effective tax rate) as compared to a $14 million provision on pre-tax income of
$30 million (a 46.7% effective tax rate) in the comparable period of fiscal
1996. The decrease in the effective tax rate is attributable to reduced state
and foreign taxes.
13
<PAGE>
SIX MONTHS ENDED MARCH 31, 1997
COMPARED TO SIX MONTHS ENDED MARCH 31, 1996
Introduction
The Company had sales of $1,070 million and operating income of $100 million for
the six months ended March 31, 1997, increases of $131 million (14.0%) and $15
million (17.6%), respectively, compared to the first six months of fiscal 1996.
CONSUMER GROUP
The Consumer Group had sales of $618 million and operating income of $77 million
for the six months ended March 31, 1997, increases of $74 million (13.6%) and $6
million (8.5%), respectively, over the first six months of fiscal 1996.
The Housewares Operations had sales of $243 million and operating income of $46
million for the six months ended March 31, 1997, increases of $42 million
(20.9%) and $2 million (4.5%), respectively, over the first six months of fiscal
1996. The increases reflect growth of international vacuum cleaner sales and the
first time inclusion of the Company's ladder operations. Growth in higher-margin
international vacuum cleaner sales offset weakness in domestic vacuum cleaner
sales. Contribution from winter tool sales declined as a result of the mild
winter experienced in the Northeast during the second quarter of the current
year. The Company's ladder subsidiary contributed to the increase in sales and
operating income in the current year.
The Recreation and Leisure Operations had sales of $136 million and operating
income of $5 million for the six months ended March 31, 1997, increases of $9
million (7.1%) and $4 million (400.0%), respectively, from the first six months
of fiscal 1996. The increase in operating income reflects an improvement in the
results of the toy operations. Following the Company's exit from the promotional
toy business, the agricultural and collectible toy categories performed
particularly well relative to the comparable period of the prior year. The
contribution from increased sales of golf putters during the current period was
offset by advertising and promotional costs incurred to launch the Company's new
line of titanium golf irons.
The Footwear Operations had sales of $76 million and operating income of $8
million for the six months ended March 31, 1997, decreases of $10 million
(11.6%) and $1 million (11.1%), respectively, compared to the first six months
of fiscal 1996. The Footwear Operations suffered from weak market conditions,
particularly in the high margin western footwear category.
The Bath and Outdoor Products Operations had sales of $163 million and operating
income of $18 million for the six months ended March 31, 1997, increases of $33
million (25.4%) and $1 million (5.9%), respectively, compared to the first six
months of fiscal 1996. While domestic sales of bath products continued to grow,
the trend toward lower priced units also continued, which resulted in reduced
marginal operating income. Results from European operations were below the prior
year primarily due to soft market conditions. The Company benefitted from
strength in sales at its above ground pool company.
INDUSTRIAL GROUP
The Industrial Group had sales of $452 million and operating income of $36
million for the six months ended March 31, 1997, increases of $57 million
(14.4%) and $9 million (33.3%), respectively, over the first six months of
fiscal 1996.
The Lighting Products and Systems Operations had sales of $265 million and
operating income of $19 million for the six months ended March 31, 1997,
increases of $20 million (8.2%) and $3 million (18.8%), respectively, over the
first six months of fiscal 1996. The Lighting Products and Systems Operations
benefitted from strong sales and improved operating margins in the outdoor and
residential lighting businesses. These gains offset lower margins in the
commercial and industrial lighting businesses.
The Other Industrial Products Group had sales of $187 million and operating
income of $17 million for the six months ended March 31, 1997, increases of $37
million (24.7%) and $6 million (54.5%), respectively, over the first six months
of fiscal 1996. All of the Company's automotive operations experienced strong
increases over the prior fiscal year. These results reflect strong sales volume
at the Company's automotive leather operations, metal
14
<PAGE>
parts fabrication and plastic automotive components businesses. Sales and
operating income further benefitted from higher automotive leather selling
prices.
DISCONTINUED OPERATIONS AND EXTRAORDINARY LOSS
During the six months ended March 31, 1997, due to improving results and
business prospects, the Company decided to retain Bearing as part of its
continuing operations. Bearing was identified for disposition at the time of the
Demerger and had been accounted for as a discontinued operation since that time.
Also, during the six months ended March 31, 1997, the Company adopted a formal
plan to dispose of Native. The impact of the decisions to retain Bearing and
dispose of Native was not material to the Company.
The Company had income from discontinued operations of $87 million, net of tax,
for the six months ended March 31, 1997, consisting of gains on disposals of
discontinued operations of $83 million and income from operations of
discontinued operations of $4 million. The gains on dispositions resulted from
the sales of Tubular Textile Machinery, SCM Metals Products, Inc. and the assets
of QPF, Inc., for an aggregate of $186 in cash and a note for $1 million. The
income from operations of discontinued operations consisted of the results of
the above named sold companies as well as Native and an equity investment in
Ground Round Restaurants, Inc. Discontinued operations are not expected to have
a material impact on the future operations or liquidity of the Company.
For the six months ended March 31, 1996, the Company had income from
discontinued operations of $68 million, net-of-tax, consisting of gains on
disposals of discontinued operations of $68 million and break-even results from
operations of discontinued operations. The gains on dispositions resulted from
the sales of Blue Mountain Industries and the Office Furniture Group for an
aggregate of $165 million in cash and a note for $5 million, which was collected
in the second quarter of fiscal 1996. The results from operations of
discontinued operations consisted of the companies noted above and the companies
sold during fiscal 1996.
In conjunction with the repayment of all outstanding indebtedness under the
Previous Credit Agreement, during the first quarter of fiscal 1997, a
net-of-tax, non-cash, extraordinary charge of $2 million was incurred to
write-off unamortized deferred financing costs and to accrue for previously
deferred losses associated with interest rate protection agreements.
In connection with the Company's entering into the Previous Credit Agreement,
during the first quarter of fiscal 1996, a net-of-tax, noncash, extraordinary
charge of $25 million was incurred to write-off unamortized deferred financing
costs and to accrue for previously deferred losses associated with the interest
rate protection agreements.
INTEREST AND TAXES
Interest expense was $23 million for the six months ended March 31, 1997, an $11
million (32.4%) decrease from the comparable period of fiscal 1996. The decrease
reflects lower levels of debt outstanding and lower average interest rates.
Interest income was $2 million for the six months ended March 31, 1997, a $2
million (50.0%) decrease from the comparable period of fiscal 1996.
The provision for income taxes on continuing operations was $34 million for the
six months ended March 31, 1997, on pre-tax income of $78 million (a 43.6%
effective tax rate) as compared to a $23 million provision on pre-tax income of
$51 million (a 45.1% effective tax rate) in the comparable period of fiscal
1996. The decrease in the effective tax rate is attributable to reduced state
and foreign taxes.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary sources of liquidity and capital resources are cash
provided from operations, borrowings under the New Credit Agreement and proceeds
from the issuance of the Notes described below.
Net cash used in operating activities was $36 million for the six months ended
March 31, 1997 compared to net cash provided of $26 million for the comparable
period of fiscal 1996. In the current period, continuing operations used $45
million compared to generating $9 million for the comparable period of fiscal
1996. This change relates primarily to increases in cash payments to vendors,
seasonal increases in receivables and increased inventory build from the
seasonal cash requirements of the Company's operations.
15
<PAGE>
Net cash provided by investing activities was $93 million for the six months
ended March 31, 1997 compared to $161 million for the comparable period of
fiscal 1996. The six months ended March 31, 1997 included proceeds of $186
million from the sale of net assets held for disposition, which resulted in an
after-tax gain of $83 million, $5 million from real estate transactions and $4
million from the sale of a subsidiary's stock. Partially offsetting the proceeds
were capital expenditures of $35 million and acquisition of companies for $67
million. The prior year period included $170 million generated from the sale of
net assets held for disposition, which resulted in an after-tax gain of $68
million.
Net cash used in financing activities was $72 million for the six months ended
March 31, 1997 compared to $201 million for the comparable period of fiscal
1996. In the first six months of fiscal 1996, proceeds from the sale of
businesses resulted in a significant prepayment of debt. This period included
repayments under long-term debt in excess of new borrowings totaling $47 million
and the purchase of $27 million of the Company's common stock for treasury.
On December 12, 1996, USI American Holdings, Inc. ("USIAH"), a wholly owned
subsidiary of the Company, issued $125 million aggregate principal amount of
7.25% Senior Notes due December 1, 2006 (the "Notes"). The net cash proceeds
were $123 million after transaction fees and discounts. The Notes bear interest
at 7.25% payable semiannually on June 1 and December 1, commencing June 1, 1997,
and are redeemable at any time at the option of the issuer, in whole or in part,
at a redemption price equal to the greater of (i) 100% of the principal amount
to be redeemed, or (ii) the sum of the present values of the remaining scheduled
payments of principal and interest on the Notes to be redeemed, discounted at a
rate based on the yield to maturity of comparable U.S. Government securities
plus 10 basis points, plus, in each case, accrued interest to the date of
redemption. The Notes are fully and unconditionally guaranteed by the Company.
The Notes are unsecured but the indenture places restrictions on, among other
things, liens, subsidiary indebtedness and dividends. USIAH is currently
offering to exchange the Notes, which were not registered under the Securities
Act of 1933, for registered notes having substantially the same terms as the
Notes.
The proceeds from the sale of the Notes were used to repay a portion of the term
loan under the Company's then existing credit agreement (the "Previous Credit
Agreement"), the remainder of which was repaid using proceeds from the initial
borrowing under a credit agreement dated as of December 12, 1996 (the "New
Credit Agreement") consisting of a five year unsecured revolving line of credit
of up to an aggregate amount of $750 million. The revolving credit commitment
will be permanently reduced by $100 million on December 12, 1999 and by an
additional $150 million on December 12, 2000.
The New Credit Agreement includes (i) committed advances ("Committed Advances")
and (ii) uncommitted bid option advances. The Committed Advances are at lower
borrowing spreads than the previous Credit Agreement and bear interest based on,
at the option of the Company, (i) specified spreads over the London Interbank
Offered Rate ("LIBOR") or (ii) the higher of the rate of interest publicly
announced by Bank of America in San Francisco, California as its reference rate
or 50 basis points above the federal funds rate in effect on such date (the
"Base Rate"). The spreads on the LIBOR-based borrowings range between 15 and
62.5 basis points, based upon the Company's senior unsecured debt ratings for
the relevant period. At March 31, 1997 three-month LIBOR was 5.78% per annum and
the spread over LIBOR was 25 basis points. A facility fee will accrue and be
payable on a quarterly basis in arrears to the lenders under the New Credit
Agreement on the full amount of the facility, regardless of the amount utilized.
The facility fee ranges between 7.5 and 25 basis points per annum, based upon
the Company's senior unsecured debt ratings for the relevant period. At March
31, 1997, the facility fee was 12.5 basis points per annum.
The New Credit Agreement places restrictions on, among other things, liens,
mergers, consolidations and additional indebtedness. Its financial covenants
require the Company to comply with maximum ratio of total funded debt to capital
and a consolidated leverage ratio.
On December 12, 1996 the Company paid approximately $2 million to settle
interest rate protection agreements entered into in connection with the Notes.
This amount will be amortized over the life of the Notes as deferred financing
costs.
In order to manage its floating interest rate exposure, the Company entered into
interest rate protection agreements whereby the Company receives a floating rate
based on three-month LIBOR and pays a weighted average fixed rate. Currently the
interest rates range from 6.23% to 6.95% per annum. The aggregate notional
amounts and periods covered by such agreements are as follows:
16
<PAGE>
March 31, 1997 through May 30, 1997......................$500 million
May 30, 1997 through September 30, 1997..................$450 million
September 30, 1997 through May 28, 1999..................$300 million
May 28, 1999 through September 30, 1999..................$200 million
All interest rate protection agreements are of notional amounts and maturities
that relate to specific portions of outstanding debt and accordingly, are
accounted for as hedge transactions.
Other long-term debt at March 31, 1997 includes $44 million of notes payable
with maturities due within one year which the Company expects to repay using
borrowings under the New Credit Agreement. Of this amount, $39 million was
borrowed under uncommitted short-term lines of credit with aggregate
availability of $197 million.
OUTLOOK
With a strong U.S. economy and healthy consumer spending, the company expects to
achieve full year earnings per share at the upper end of a range of $2.15 -
$2.20 per share. See "Disclosure Concerning Forward-Looking Statements."
17
<PAGE>
PART II. OTHER INFORMATION.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
27 Financial Data Schedule
(b) Reports on Form 8-K
The Company filed a Current Report on Form 8-K, responsive to
Item 4 of such Form, on March 19, 1997, relating to the dismissal
of Deloitte & Touche LLP ("D&T") and the engagement of Price
Waterhouse LLP ("PW") as the auditors of certain of the
subsidiaries of the Company, the Automotive Group Companies
("Automotive"), effective May 1, 1995. As reported in the Form
8-K, during the two most recent fiscal years prior to such
effective date, there were no disagreements between the Company
or Automotive and D&T on any matter of accounting principles or
practices, financial statement disclosure or auditing scope or
procedure. No financial statements were filed.
The Company also filed a Current Report on Form 8-K, responsive
to Item 4 of such Form, on March 19, 1997, relating to the
dismissal of Ernst & Young LLP ("E&Y") and the engagement of PW
as the auditors of certain of the subsidiaries of the Company,
the Jacuzzi Companies ("Jacuzzi"), effective January 2, 1996. As
reported in the Form 8-K, during the two most recent fiscal years
prior to such effective date, there were no disagreements between
the Company or Jacuzzi and E&Y on any matter of accounting
principles or practices, financial statement disclosure or
auditing scope or procedure. No financial statements were filed.
18
<PAGE>
SIGNATURE
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.
U.S. INDUSTRIES, INC.
Date: May 13, 1997
/s/ Frank R. Reilly
-------------------------------
Frank R. Reilly
Senior Vice President and
Chief Financial Officer
(Principal Financial Officer)
19
<PAGE>
U.S. INDUSTRIES, INC.
EXHIBIT INDEX
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS CONTAINED IN THE BODY OF THE ACCOMPANYING FORM 10-Q AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-28-1996
<PERIOD-END> MAR-29-1997
<CASH> 26
<SECURITIES> 0
<RECEIVABLES> 436
<ALLOWANCES> 40
<INVENTORY> 420
<CURRENT-ASSETS> 963
<PP&E> 689
<DEPRECIATION> 310
<TOTAL-ASSETS> 1,848
<CURRENT-LIABILITIES> 358
<BONDS> 685
0
0
<COMMON> 1
<OTHER-SE> 632
<TOTAL-LIABILITY-AND-EQUITY> 1,848
<SALES> 1,070
<TOTAL-REVENUES> 1,070
<CGS> 718
<TOTAL-COSTS> 718
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 3
<INTEREST-EXPENSE> 23
<INCOME-PRETAX> 78
<INCOME-TAX> 34
<INCOME-CONTINUING> 44
<DISCONTINUED> 87
<EXTRAORDINARY> (2)
<CHANGES> 0
<NET-INCOME> 129
<EPS-PRIMARY> 2.56
<EPS-DILUTED> 2.56
</TABLE>
