FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For The Quarterly Period Ended March 31, 1996
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 1-3608
WARNER-LAMBERT COMPANY
(Exact name of registrant as specified in its charter)
Delaware 22-1598912
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
201 Tabor Road, Morris Plains, New Jersey
(Address of principal executive offices)
07950
(Zip Code)
Registrant's telephone number, including area code: (201) 540-2000
Indicate by check mark whether the registrant (1) has
filed all reports required to be filed by Section 13
or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to
such filing requirements for the past 90 days.
YES X NO
--- ---
Indicate the number of shares outstanding of each of
the issuer's classes of Common Stock, as of the latest
practicable date.
CLASS Outstanding at April 30, 1996
----- -----------------------------
Common Stock, $1 par value 271,231,634*
*Adjusted to reflect a two-for-one stock split of the Registrant's
Common Stock for stockholders of record as of May 3, 1996.
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
WARNER-LAMBERT COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
March 31, December 31,
1996 1995
----------- ------------
(Dollars in millions)
ASSETS:
Cash and cash equivalents $ 443.7 $ 295.8
Short-term investments 282.8 267.4
Receivables 1,256.3 1,239.5
Inventories 640.1 645.7
Prepaid expenses and other current assets 351.0 329.6
-------- --------
Total current assets 2,973.9 2,778.0
Investments and other assets 595.1 654.3
Equity investments in affiliated companies 253.5 257.5
Property, plant and equipment 1,999.1 2,006.3
Intangible assets 400.7 404.8
-------- --------
Total assets $6,222.3 $6,100.9
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY:
Commercial paper $ 540.5 $ 473.0
Notes payable - banks and other 447.5 421.6
Accounts payable, trade 506.1 523.8
Accrued compensation 147.1 166.3
Other current liabilities 625.5 671.2
Federal, state and foreign income taxes 191.0 169.3
-------- --------
Total current liabilities 2,457.7 2,425.2
Long-term debt 630.9 634.5
Other noncurrent liabilities 723.8 740.4
Minority interests 53.6 54.7
Shareholders' equity:
Preferred stock - none issued - -
Common stock issued: (1996 - 320,660,536
shares; 1995 - 160,330,268 shares) 320.7 160.3
Capital in excess of par value 91.7 217.5
Retained earnings 3,180.0 3,042.9
Cumulative translation adjustments (237.4) (216.3)
Treasury stock, at cost: (1996 - 49,590,766
shares; 1995 - 24,731,378 shares) (998.7) (958.3)
-------- --------
Total shareholders' equity 2,356.3 2,246.1
-------- --------
Total liabilities and shareholders'
equity $6,222.3 $6,100.9
======== ========
See accompanying notes to consolidated financial statements.
WARNER-LAMBERT COMPANY
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months
Ended March 31,
----------------
1996 1995
---- ----
(Dollars in millions, except
per share amounts)
NET SALES $1,829.2 $1,604.6
COSTS AND EXPENSES:
Cost of goods sold 589.6 532.3
Marketing 644.3 539.1
Administrative and general 126.7 103.0
Research and development 129.7 114.3
Other(income)expense, net (50.0) 7.0
-------- --------
Total costs and expenses 1,440.3 1,295.7
-------- --------
INCOME BEFORE INCOME TAXES AND
MINORITY INTERESTS 388.9 308.9
Provision for income taxes 106.9 77.2
Minority interests 32.5 30.3
-------- --------
NET INCOME $ 249.5 $ 201.4
======== ========
PER COMMON SHARE:
Net income* $ .92 $ .75
======== ========
Cash dividends paid* $ .345 $ .325
======== ========
Average number of common shares
outstanding (thousands)* 271,178 269,250
*Restated for two-for-one stock split as described in Note I.
See accompanying notes to consolidated financial statements.
WARNER-LAMBERT COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months
Ended March 31,
------------------
1996 1995
------------------
(Dollars in millions)
OPERATING ACTIVITIES:
Net income $ 249.5 $ 201.4
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 51.5 48.3
Minority interests 32.5 30.3
Gain on sale of business (75.2) -
Changes in assets and liabilities, net of
effects from acquisitions/dispositions
of businesses:
Receivables (140.2) (38.8)
Inventories (12.0) (72.2)
Accounts payable and
accrued liabilities 59.5 (135.1)
Other, net (47.5) (46.2)
-------- -------
Net cash provided (used)
by operating activities 118.1 (12.3)
-------- -------
INVESTING ACTIVITIES:
Purchases of investments (112.1) (119.9)
Proceeds from sales of investments 154.0 57.5
Capital expenditures (59.6) (67.0)
Proceeds from disposition of business 142.4 -
Other, net (5.6) 1.3
-------- -------
Net cash provided (used)
by investing activities 119.1 (128.1)
-------- -------
FINANCING ACTIVITIES:
Proceeds from borrowings 328.9 238.0
Principal payments on borrowings (263.2) (48.4)
Purchases of treasury stock (51.3) (17.1)
Cash dividends paid (93.6) (87.5)
Distributions paid to minority interests (28.4) (15.2)
Proceeds from exercise of stock options 20.7 12.7
-------- -------
Net cash (used) provided by
financing activities (86.9) 82.5
-------- -------
Effect of exchange rate changes on cash
and cash equivalents (2.4) (6.0)
-------- -------
Net increase (decrease) in cash and cash
equivalents 147.9 (63.9)
Cash and cash equivalents at beginning of year 295.8 217.9
-------- -------
Cash and cash equivalents at end of period $ 443.7 $ 154.0
======== =======
See accompanying notes to consolidated financial statements.
WARNER-LAMBERT COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE A: The interim financial statements presented herein should be read
in conjunction with Warner-Lambert Company's 1995 Annual Report.
NOTE B: The results of operations for the interim periods are not
necessarily indicative of the results for the full year.
NOTE C: In the opinion of management, all adjustments considered
necessary for a fair presentation of the results for the interim
periods have been included in the consolidated financial
statements.
NOTE D: Effective January 1, 1996 the company's international operations
that previously reported financial results on a fiscal-year basis
ending November 30 changed to a calendar-year basis ending
December 31. The change was made primarily to reflect the
results of these operations on a more timely basis. The results
of operations for those subsidiaries for the month of December
1995 are included as a charge of $18.8 million against retained
earnings.
NOTE E: Major classes of inventories were as follows:
March 31, 1996 December 31, 1995
-------------- -----------------
(In millions)
Raw materials $101.9 $110.0
Finishing supplies 48.0 48.0
Work in process 99.3 89.1
Finished goods 390.9 398.6
------ ------
$640.1 $645.7
====== ======
NOTE F: Property, plant and equipment balances were as follows:
March 31, 1996 December 31, 1995
-------------- -----------------
(In millions)
Property, plant and equipment $ 3,434.3 $ 3,416.6
Less accumulated depreciation (1,435.2) (1,410.3)
--------- ---------
Net $ 1,999.1 $ 2,006.3
========= =========
NOTE G: Intangible asset balances were as follows:
March 31, 1996 December 31, 1995
-------------- -----------------
(In millions)
Patents, trademarks,
goodwill and other
intangibles $484.5 $484.8
Less accumulated amortization (83.8) (80.0)
------ ------
Net $400.7 $404.8
====== ======
NOTE H: Included in Other (income) expense, net was interest expense of
$29.2 million for the first quarters of 1996 and 1995.
NOTE I: On April 23, 1996 the stockholders approved an increase in the
number of authorized shares of common stock from 300 million to
500 million in order to effectuate a two-for-one stock split.
The additional shares will be distributed on or about May 17,
1996 to stockholders of record on May 3, 1996. Par value
remained at $1.00 per share. The stock split was reflected in
the March 31, 1996 balance sheet by increasing Common stock
issued and reducing Capital in excess of par value by $160.3
million. In addition, the average number of common shares
outstanding and all per share information has been restated to
reflect the stock split.
NOTE J: In March 1996, Warner-Lambert sold Warner Chilcott Laboratories,
its generic pharmaceutical business. Proceeds were approximately
$142.4 million subject to a final working capital valuation to be
settled in May 1996. The sale resulted in a pretax gain of $75.2
million, which is included in Other (income) expense, net. On an
after tax basis, the gain was $45.7 million or $.17 per share.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
FIRST QUARTER ENDED MARCH 31, 1996
- -----------------------------------
COMPARED WITH CORRESPONDING PERIOD IN 1995
- ------------------------------------------
NET SALES
- ---------
Sales for the first quarter of 1996 of $1,829 million were 14 percent
higher than 1995 first quarter sales. Unit volume growth was 12
percent, price increases added 4 percent and foreign exchange rate
changes had an unfavorable impact of 2 percent. U.S. sales increased
$104 million or 15 percent to $783 million. International sales
increased $120 million or 13 percent to $1,046 million. At constant
exchange rates, international sales increased 16 percent from the same
period last year.
Effective January 1, 1996 the company's international operations
changed their reporting period from a fiscal-year basis ending
November 30 to a calendar-year basis ending December 31. (See Note D.)
All references to the first quarter include the calendar three-month
period ended March 31, 1996 and the fiscal three-month period ended
February 28, 1995 for international operations.
SEGMENT SALES
- -------------
THREE MONTHS ENDED MARCH 31,
----------------------------
Percent
(Dollars in Millions) 1996 1995 Increase
------ ------ --------
Pharmaceutical $ 659 $ 583 13 %
Consumer Health Care 701 615 14
Confectionery 469 407 15
------- -------
Consolidated Net Sales $1,829 $1,605 14 %
======= =======
Pharmaceutical sales in the U.S. increased 17 percent to $323 million
in the first quarter of 1996. The company believes that sales
benefited from inventory stocking in anticipation of a price increase
effective March 1 and that sales growth will not be as strong for the
remainder of 1996. Products with significant sales growth included
the add-on epilepsy therapy NEURONTIN, the anticonvulsant DILANTIN,
the oral contraceptive LOESTRIN, the cardiovascular drug ACCUPRIL and
CAPSUGEL empty hard-gelatin capsules. In March, Warner-Lambert sold
its Warner Chilcott generic pharmaceutical business. (See Note J.)
Sales of this business for the twelve months of 1995 were
approximately $125 million.
Warner-Lambert plans to file 8 New Drug Applications (NDA) or
Supplements with the US Food and Drug Administration (FDA) in 1996.
These filings include 3 new chemical entities, all of which are in
late-stage development and are anticipated to be commercially
significant. They are atorvastatin, a lipid regulator, troglitazone,
an insulin-enhancing medication for Type II diabetes and OMNICEF, an
anti-infective. In April, the company announced that it had signed a
letter of intent with Pfizer Inc. to co-promote atorvastatin in the
U.S. and on a broad basis in the international marketplace.
International pharmaceutical sales for the first quarter of 1996 were
$336 million, a 10 percent increase, or 9 percent at constant exchange
rates. Major contributors to international sales growth were
ACCUPRIL, CAPSUGEL and NEURONTIN.
Consumer health care segment sales reflect the reclassification of
HALLS cough tablets to the confectionery segment in both 1996 and
1995. HALLS is primarily marketed as a confectionery product outside
the U.S. and is managed by the company's confectionery team throughout
the world. With sales overseas more than double the sales in the U.S.,
management believes that it is more representative to report HALLS as
a confectionery product.
Consumer health care product sales in the U.S. increased 16 percent to
$330 million in the first quarter of 1996. Sales growth of 4 percent
is attributable to sales of COOL MINT LISTERINE toothpaste, which was
introduced in August 1995. Products with U.S. sales growth included
LISTERINE Antiseptic mouthwash, SUDAFED cold medication, BENADRYL
allergy medication, the company's wet-shaving products and NEOSPORIN
topical anti-infective. International sales increased 12 percent to
$371 million, or 13 percent at constant exchange rates. Major
contributors to international sales growth included the company's wet-
shaving products, TETRA aquarium products and LISTERINE.
In December 1993 Warner-Lambert signed separate agreements with both
Wellcome plc (Wellcome) and Glaxo plc (Glaxo) governing the
establishment of joint ventures in various countries to develop and
market a broad range of nonprescription consumer health care products.
Glaxo acquired Wellcome in 1995 and changed the name of the combined
company to Glaxo Wellcome.
Warner-Lambert's agreement with Wellcome called for both companies to
contribute to the Warner Wellcome joint venture operations current and
future over-the-counter (OTC) products. Joint venture operations
formed pursuant to a global principles agreement began in 1994 in the
U.S., Canada, Australia, New Zealand and certain countries in Europe.
Warner-Lambert has consolidated the financial results of the Warner
Wellcome joint venture operations.
In December 1995 Warner-Lambert signed a letter of intent to purchase
Glaxo Wellcome's interest in the Warner Wellcome joint venture
operations for a purchase price of $1.05 billion. The transaction is
subject to negotiation and completion of a final agreement and the
receipt of necessary regulatory approvals. During the negotiation
period Warner-Lambert retains its rights under the original Wellcome
joint venture agreement, including those relating to the Wellcome
acquisition by Glaxo.
Warner-Lambert and Glaxo formed a joint venture in the U.S. (referred
to as Glaxo Warner-Lambert) to develop, seek approval of and market
OTC versions of Glaxo prescription drugs in the U.S., including
ZANTAC, Glaxo Wellcome's pharmaceutical product for ulcer treatment.
As part of the letter of intent that Warner-Lambert and Glaxo Wellcome
signed in December 1995, the Glaxo Warner-Lambert joint venture will
be restructured so that in addition to developing and marketing OTC
versions of Glaxo prescription drugs, it will also develop and market
Wellcome's OTC switch products, including ZOVIRAX cold sore cream.
In April 1996 Warner Wellcome began U.S. marketing of ZANTAC 75, an
OTC version of Glaxo Wellcome's prescription drug ZANTAC, for the
treatment of episodic heartburn, acid indigestion and sour stomach.
ZANTAC 75 has been marketed for OTC use in the U.K. by Warner Wellcome
as a treatment for these same symptoms. Warner Wellcome has also been
marketing in the U.K. an allergy nasal spray, BECONASE, an OTC version
of Glaxo Wellcome's prescription drug. Warner-Lambert uses the equity
method of accounting to record its share of profits and losses in the
Glaxo Warner-Lambert joint venture. Due to the substantial marketing
expenses that will be incurred with the U.S. launch of ZANTAC 75 the
company anticipates recording a loss from the joint venture in 1996.
First quarter 1996 and 1995 confectionery sales reflect the
reclassification of HALLS from the consumer health care segment.
Confectionery sales in the U.S. increased 11 percent to $129 million
in the first quarter of 1996. Products with U.S. sales growth included
HALLS, CERTS breath mints and BURST gums (benefiting from the
introduction of FRUIT*A*BURST in August 1995). International sales
were $340 million, an increase of 17 percent, or 26 percent at
constant exchange rates. The decline in the value of the Mexican peso
adversely impacted this segment's sales by $19 million. Products with
strong international sales growth included HALLS, TRIDENT, BUBBALOO
bubble gum, CLORETS gums and mints and CHICLETS candy-coated gum.
COSTS AND EXPENSES
- ------------------
Cost of goods sold was 11 percent higher than the first quarter of
1995. Cost of goods sold as a percentage of net sales fell to 32.2%
from 33.2% in 1995. The improvement in the company's ratio is
attributable to the decline in the cost of goods ratio in the U.S.
pharmaceutical business. This business's ratio was lower due to a
favorable product mix and higher volume.
Marketing expense in the first quarter of 1996 increased 19 percent
from the prior-year quarter, with spending increasing faster than
sales growth in each reporting segment. Marketing expense increased
in the consumer health care segment in the U.S. primarily to support
COOLMINT LISTERINE toothpaste and worldwide to support the company's
new wet-shaving products. In the pharmaceutical segment most of the
spending increase was in the U.S. with greater support for NEURONTIN,
ACCUPRIL and LOESTRIN. In the confectionery segment spending
increased throughout the world. As a percentage of net sales,
marketing expense in the first quarter of 1996 was 35.2% compared with
33.6% in 1995.
Administrative and general expense in the first quarter of 1996
increased 23 percent from the first quarter of 1995. Major components
of this increase included higher pension expense, primarily as a
result of a lower discount rate and higher expenses for certain
employee benefits. As a percentage of net sales, administrative and
general expense in the first quarter of 1996 was 6.9% compared with
6.4% for the first quarter of 1995. For the full year of 1995,
administrative and general expense as a percentage of net sales was
6.9%.
Research and development expense increased 14 percent in the first
quarter of 1996 reflecting higher spending on Phase III clinical
trials. As a percentage of net sales, research and development
expense was 7.1% in both the first quarters of 1996 and 1995.
Other (income) expense, net in the first quarter of 1996 included a
gain on the sale of the Warner Chilcott business of $75 million.
In 1993 the company recorded a net restructuring charge of $525
million pretax ($360 million after tax) and in 1991 the company
recorded a net restructuring charge of $544 million pretax ($418
million after tax). The company had reserve balances related to these
programs of $228 million at March 31, 1996. The company is unaware of
any event that would significantly change spending or anticipated
savings with respect to the 1993 and 1991 restructuring actions.
INCOME TAXES
- ------------
THREE MONTHS ENDED MARCH 31,
----------------------------
1996 1995
---- ----
Effective tax rate:
As reported 27.5% 25.0%
After minority interests 30.0% 27.7%
The increases in the company's effective tax rates on a reported basis
and after minority interests in the first quarter of 1996 compared
with the same period in 1995 were principally due to the 39.4 percent
effective tax rate on the gain on the sale of Warner Chilcott. In
addition, the rates increased due to the expiration of the research
and development tax credit.
NET INCOME
- ----------
Net income and earnings per share for the first quarter of 1996
increased 24 percent and 23 percent, respectively. Excluding the gain
on the sale of the Warner Chilcott business and provisions for certain
legal matters, earnings per share increased 5 percent.
Liquidity and Financial Condition
- ---------------------------------
Cash and cash equivalents amounted to $444 million at March 31, 1996,
an increase of $148 million from December 31, 1995. The company also
holds $446 million in short-term investments and other nonequity
securities (included in investments and other assets) that do not
qualify as cash equivalents, representing a decrease of $46 million
since December 31, 1995. Net debt (total debt less cash and cash
equivalents, short-term investments and other nonequity securities) of
$729 million at March 31, 1996 fell $12 million from December 31,
1995.
Planned capital expenditures for 1996 are estimated to be $450
million. These expenditures include the consolidation and upgrading
of manufacturing facilities in connection with the company's
restructuring plans announced in 1993 and 1991, plant expansions and
improvements.
The company expects to finalize its purchase of Glaxo Wellcome's
interests in the Warner Wellcome joint venture operations for $1.05
billion in mid-1996. Management anticipates that it will borrow the
funds to complete this transaction.
In April 1996, company stockholders approved an increase in the number
of authorized common shares from 300 million to 500 million in order
to effectuate a two-for-one stock split. The split will apply to all
shares of record held on May 3, 1996. (See Note I.)
Other
- -----
During the first quarter of 1996 the company continued its strategy
initiated in 1995 to revitalize its core businesses through the sale
of selected products, non-strategic businesses and nonproductive
assets. These sales would allow the company to support its core
businesses, Phase III pharmaceutical compounds, strategic market
development, new product launches and marketing of ZANTAC 75, and
would have a positive impact on the company's reported earnings per
share. The company sold its PRO toothbrush business in 1995 and its
Warner Chilcott business in the first quarter of 1996. Following a
comprehensive, strategic review of the TETRA pet care and aquarium
products operations, the company is no longer seeking a buyer for this
business.
All product names appearing in capital letters are registered
trademarks of Warner-Lambert Company, its affiliates, related
companies or its licensors. BECONASE, NEOSPORIN, SUDAFED, ZANTAC,
ZANTAC 75 and ZOVIRAX are registered trademarks of Glaxo Wellcome or
its affiliates.
PART II - OTHER INFORMATION
---------------------------
Item 1. Legal Proceedings
-----------------
In September 1993, Warner-Lambert received a Complaint
and Compliance Order from the Environmental Protection Agency (the
"EPA") seeking penalties of $268,000 for alleged violations of the
Resource Conservation and Recovery Act, Boilers and Industrial
Furnace regulations. Warner-Lambert is contesting the allegations
contained within the Complaint and has entered into negotiations
with the EPA in an attempt to resolve these issues. Although it is
too early to predict the outcome of this action, Warner-Lambert does
not at present expect this litigation to have a material adverse
effect on its financial position, liquidity, cash flow or results of
operations.
Beginning in late 1993, Warner-Lambert, along with
numerous other pharmaceutical manufacturers and wholesalers, has
been sued in a number of state and federal antitrust lawsuits by
retail pharmacies seeking treble damages and injunctive relief.
These actions arise from alleged price discrimination by which the
defendant drug companies, acting alone or in concert, are alleged to
have favored institutions, managed care entities, mail order
pharmacies and other buyers with lower prices for brand name
prescription drugs than those afforded to plaintiff retailers. The
federal cases have been consolidated by the Judicial Panel on
Multidistrict Litigation and transferred to the U.S. District Court
for the Northern District of Illinois for pre-trial proceedings.
Warner-Lambert agreed to settle part of the consolidated federal
cases, specifically, the class action conspiracy lawsuit, for a
total of $15.1 million, to be paid in four equal installments of
$3.775 million in February of 1996, 1997, 1998 and 1999,
respectively. This settlement was denied approval by the U.S.
District Court for the Northern District of Illinois because the
settlement did not include injunctive relief. Warner-Lambert has
agreed to an amendment of the original settlement agreement. This
amendment provides for the same payments, namely $15.1 million, and
obligates Warner-Lambert, among other things, not to refuse to
discount its drugs to retail pharmacies solely based on their status
as retailers. At present, Warner-Lambert cannot predict the outcome
of the remaining federal lawsuits.
The state cases pending in California have been
coordinated in the Superior Court of California, County of San
Francisco. Warner-Lambert has also been named as a defendant in
actions in state courts in Alabama, Minnesota and Wisconsin brought
by classes of pharmacies, each arising from the same allegations of
price discrimination. In addition, the Company is named in class
action complaints filed in the states of Alabama, Arizona, Colorado,
Maine, Michigan, Minnesota, New York, Washington and Wisconsin and
in the District of Columbia, brought by classes of consumers who
purchased brand name prescription drugs at retail pharmacies. These
cases also arise from the same allegations of price discrimination.
Warner-Lambert believes that these actions are without merit and
will defend itself vigorously. Although it is too early to predict
the outcome of the remaining actions, Warner-Lambert does not at
present expect this litigation to have a material adverse effect on
its financial position, liquidity, cash flow or results of
operations.
In 1994, Warner-Lambert received an enforcement action
letter and draft complaint from the Department of Justice (the
"Department") alleging violation of the Clean Water Act with regard
to the operation of the wastewater treatment plant at its Vega Baja,
Puerto Rico facility. Warner-Lambert is negotiating a resolution of
this matter with the Department and is continuing to work with the
EPA, Region II, to maintain the facility's compliance with the Clean
Water Act. The Company cannot predict the outcome of this matter at
this time.
In addition, the Environmental Crimes Section of the
Department is conducting an inquiry of Warner-Lambert and certain
present and former employees, relating to historical compliance of
the Vega Baja, Puerto Rico wastewater treatment facility with the
Clean Water Act and the discharge permit issued to the facility.
Warner-Lambert is cooperating fully with this inquiry and cannot
predict its outcome at this time.
Warner-Lambert is also involved in various administrative
or judicial proceedings related to environmental actions initiated
by the EPA under the Comprehensive Environmental Response,
Compensation and Liability Act (also known as Superfund) or by state
authorities under similar state legislation, or by third parties.
While it is not possible to predict with certainty the outcome of
such matters or the total cost of remediation, Warner-Lambert
believes it is unlikely that their ultimate disposition will have a
material adverse effect on Warner-Lambert's financial position,
liquidity, cash flow or results of operations for any year.
Warner-Lambert Inc., a wholly-owned subsidiary of
Warner-Lambert, has been named as a defendant in class actions filed
in Puerto Rico Superior Court by current and former employees from
the Vega Baja, Carolina and Fajardo plants, as well as Kelly
Services temporary employees assigned to those plants. The lawsuits
seek monetary relief for alleged violations of local statutes and
decrees relating to meal period payments, minimum wage, overtime and
vacation pay. Warner-Lambert believes that these actions are
without merit and will defend these actions vigorously. Although it
is too early to predict the outcome of these actions, Warner-Lambert
does not at present expect these lawsuits to have a material adverse
effect on the Company's financial position, liquidity, cash flow or
results of operations.
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
(a) The Annual Meeting of Shareholders of Warner-
Lambert was held on April 23, 1996.
(b) Proxies for such meeting were solicited pursuant to
the definitive Proxy Statement of Warner-Lambert relating to the
Annual Meeting of Shareholders held on April 23, 1996, which was
filed with the Securities and Exchange Commission via EDGARLINK
software on March 7, 1996.
(c) The following describes the matters voted upon at
such meeting and sets forth the number of votes cast for, against or
withheld and the number of abstentions as to each such matter.
Except with respect to Item (ii), there were no broker non-votes.
(i) Election of Directors:
Number of Shares
Number of Shares Withheld From
Nominee Voted For Voting For
- -------------------- ---------------- ----------------
Robert N. Burt 118,073,725 702,827
Donald C. Clark 118,069,147 707,405
Lodewijk J. R. de Vink 118,058,066 718,486
John A. Georges 118,054,271 722,281
Melvin R. Goodes 117,990,388 786,164
William H. Gray III 117,975,705 800,847
William R. Howell 118,044,992 731,560
LaSalle D. Leffall, Jr. 118,066,910 709,642
Patricia Shontz Longe 118,070,069 706,483
Alex J. Mandl 118,071,540 705,012
Lawrence G. Rawl 118,012,900 763,652
Michael I. Sovern 118,044,120 732,432
Joseph D. Williams 117,937,473 839,079
(ii) Warner-Lambert Company 1996 Stock Plan:
Number Number Number of Shares Number
of Shares of Shares Abstaining of Broker
Voted For Voted Against From Voting Non-Votes
- ---------- ------------- ----------- ---------
62,549,241 47,452,764 927,276 7,847,271
(iii) Appointment of Independent Accountants for 1996:
Number of Shares
Number of Shares Number of Shares Abstaining From
Voted For Voted Against Voting
----------- ------------- ----------
118,282,416 235,733 258,403
(iv) Amendment to Warner-Lambert's Certificate of
Incorporation to increase the authorized shares of Common Stock to
effect a two-for-one stock split:
Number of Shares
Number of Shares Number of Shares Abstaining From
Voted For Voted Against Voting
----------- ------------- ----------
116,211,262 1,954,961 610,329
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits
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(10) Material Contracts
(a) Warner-Lambert Excess Savings Plan,
formerly Warner-Lambert Supplemental
Savings Plan, as amended to January 22,
1996.
(b) Form of Stock Option Agreement,
effective as of February 27, 1996.
(12) Computation of Ratio of Earnings to Fixed
Charges.
(27) Financial Data Schedule (EDGAR filing only).
(b) Reports on Form 8-K
-------------------
A Current Report on Form 8-K, dated January 23,
1996, was filed with the Securities and Exchange
Commission in connection with a proposal to effect
a two-for-one stock split of Warner-Lambert's
Common Stock, contingent upon stockholder approval
of a proposed amendment to Warner-Lambert's
Certificate of Incorporation to increase the
authorized shares of Common Stock.
S I G N A T U R E S
-------------------
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.
WARNER-LAMBERT COMPANY
(Registrant)
Date: May 10, 1996 By: Ernest J. Larini
----------------
Vice President and
Chief Financial Officer
(Principal Financial Officer)
Date: May 10, 1996 By: Joseph E. Lynch
---------------
Vice President and Controller
(Principal Accounting Officer)
EXHIBIT INDEX
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Exhibit No. Exhibit Page No.
- ----------- ------- --------
(10) (a) Warner-Lambert Excess Savings
Plan, formerly Warner-Lambert
Supplemental Savings Plan, as
amended to January 22, 1996.
(10) (b) Form of Stock Option Agreement,
effective as of February 27, 1996.
(12) Computation of Ratio of Earnings
to Fixed Charges.
(27) Financial Data Schedule (filed
electronically).