FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 1-2116
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Armstrong World Industries, Inc.
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(Exact name of registrant as specified in its charter)
Pennsylvania 23-0366390
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
P. O. Box 3001, Lancaster, Pennsylvania 17604
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (717) 397-0611
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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
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Number of shares of registrant's common stock outstanding as of
April 25, 1997 - 40,828,383
Part I - Financial Information
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Item 1. Financial Statements
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Armstrong World Industries, Inc., and Subsidiaries
Consolidated Statements of Earnings
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(amounts in millions except for per-share data)
Unaudited
Three months
ended March 31
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1997 1996
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NET SALES $ 518.3 $ 501.2
Cost of goods sold 347.0 344.5
Selling, general and administrative expense 100.3 101.7
Equity (earnings) from affiliates (3.8) (2.7)
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Operating income 74.8 57.7
Interest expense 6.3 6.3
Other (income) expenses, net 0.2 (3.1)
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Earnings before income taxes (a) 68.3 54.5
Income taxes 22.8 18.2
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NET EARNINGS $ 45.5 $ 36.3
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Net earnings per share of common stock (b)
Primary $ 1.10 $ 0.88
Fully Diluted $ 1.10 $ 0.81
Average number of common shares outstanding:
Primary 41.3 37.5
Fully diluted 41.3 42.8
Return on average common shareholders' equity 22.3% 17.7%
(a) Depreciation and amortization charged against earnings before income taxes
amounted to $32.3 million in the three months ended March 31, 1997, and
$30.8 million in the three months ended March 31, 1996.
(b) In 1996, primary earnings per share for "net earnings" were determined by
dividing the earnings, after deducting preferred dividends (net of tax
benefit on unallocated ESOP shares), by the average number of common shares
outstanding and shares issuable under stock options, if dilutive. Fully
diluted earnings per share included the shares of common stock outstanding,
as calculated above, and the adjustments to common shares and earnings
required to portray the ESOP convertible preferred shares on an "if
converted" basis unless the effect was antidilutive. During July 1996, the
Employee Stock Ownership Plan (ESOP) and Retirement Savings Plan were
merged resulting in the elimination of convertible preferred shares and an
increase of common shares outstanding by 5.1 million.
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, Earnings per Share (SFAS No.
128). This statement introduces new methods for calculating earnings per
share. The adoption of this standard will not impact results from
operations, financial condition, or long-term liquidity, but will require
the Company to restate earnings per share reported in prior periods to
conform with this statement. This Statement is not expected to have a
material effect on the Company's reported earnings per share amounts. The
new standard is effective for periods ending after December 15, 1997.
See accompanying footnotes to the financial statements beginning on page 7.
2
Armstrong World Industries, Inc., and Subsidiaries
Consolidated Balance Sheets
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(amounts in millions)
Unaudited
Assets March 31, 1997 December 31, 1996
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Current assets:
Cash and cash equivalents $ 31.8 $ 65.4
Accounts receivable less allowance 281.1 216.7
Inventories:
Finished goods $ 158.8 $ 143.7
Work in process 26.5 20.1
Raw materials and supplies 47.1 41.9
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Total inventories 232.4 205.7
Income tax benefits 33.9 49.4
Other current assets 28.6 27.3
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Total current assets 607.8 564.5
Property, plant, and equipment 1,952.8 1,938.9
Less accumulated depreciation and amortization 985.3 974.9
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Net property, plant and equipment 967.5 964.0
Insurance for asbestos-related liabilities (a) 132.0 141.6
Investment in affiliates (b) 213.3 204.3
Other noncurrent assets 270.4 261.2
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Total assets $2,191.0 $2,135.6
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Liabilities and Shareholders' Equity
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Current liabilities:
Short-term debt $ 52.5 $ 14.5
Current installments of long-term debt 25.6 13.7
Accounts payable and accrued expenses 273.2 273.3
Income taxes 24.4 19.5
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Total current liabilities 375.7 321.0
Long-term debt 228.9 219.4
ESOP loan guarantee 221.3 221.3
Postretirement and postemployment benefits 248.3 247.6
Asbestos-related liabilities (a) 132.0 141.6
Other long-term liabilities 153.5 151.9
Deferred income taxes 34.8 30.5
Minority interest in subsidiaries 15.4 12.3
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Total noncurrent liabilities 1,034.2 1,024.6
Shareholders' equity:
Common stock 51.9 51.9
Capital in excess of par value 162.0 162.1
Reduction for ESOP loan guarantee (215.0) (217.4)
Retained earnings 1,251.9 1,222.6
Foreign currency translation (c) 5.0 17.3
Treasury stock (474.7) (446.5)
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Total shareholders' equity 781.1 790.0
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Total liabilities and shareholders' equity $2,191.0 $2,135.6
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See page 4 for explanation of references (a), (b) and (c). Also see
accompanying footnotes to the financial statements beginning on page 7
3
(a) The asbestos-related liability in the amount of $132.0 million represents
the estimated liability and defense cost to resolve approximately 42,000
personal injury claims pending against the Company as of the end of the
first quarter 1997. The insurance asset in the amount of $132.0 million
reflects the Company's belief in the availability of insurance in an amount
covering the liability. See Note 2 beginning on page 7 for additional
details.
(b) Investment in affiliates is primarily comprised of the 33.6 percent
ownership of Dal-Tile as of March 31, 1997, and the 50.0 percent interest
in the WAVE joint venture.
(c) Foreign currency translation, reported as a separate component of
shareholders' equity, is detailed as follows:
Balance at beginning of year $ 17.3
Three months' translation adjustments and
hedging of foreign investments (12.4)
Allocated income taxes 0.1
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Balance at March 31, 1997 $ 5.0
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4
Armstrong World Industries, Inc., and Subsidiaries
Consolidated Statements of Cash Flows--Unaudited
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(amounts in millions)
Three Months Ended
March 31
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1997 1996
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Cash flows from operating activities:
Net earnings $ 45.5 $ 36.3
Adjustments to reconcile net earnings to net cash
(used for) provided by operating activities:
Depreciation and amortization 32.3 30.8
Deferred income taxes 3.8 1.0
Equity change in affiliates (4.6) (3.8)
Restructuring payments (10.1) (9.5)
Changes in operating assets and liabilities net of
effect of restructuring and acquisitions:
(Increase) in receivables (63.5) (33.1)
(Increase) decrease in inventories (23.6) 7.4
Decrease (increase) in other current assets 10.9 (7.7)
(Increase) in other noncurrent assets (14.1) (25.5)
Increase (decrease) in accounts payable
and accrued expenses 14.0 (14.2)
Increase in income taxes payable 7.6 11.3
Increase in other long-term liabilities 6.4 8.3
Other, net 1.8 (3.8)
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Net cash provided by (used for) operating activities 6.4 (2.5)
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Cash flows from investing activities:
Purchases of property, plant and equipment (28.4) (48.4)
Investment in computer software (1.8) (1.7)
Acquisitions and investment in joint ventures (6.3) --
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Net cash (used for) investing activities (36.5) (50.1)
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Cash flows from financing activities:
Increase in short-term debt 35.5 3.0
Issuance of long-term debt 7.2 --
Reduction of long-term debt -- (35.0)
Cash dividends paid (16.4) (13.4)
Preferred stock redemption -- (18.4)
Purchase of common stock for the treasury (30.9) (18.3)
Proceeds from exercised stock options 2.0 1.8
Other, net 0.1 (5.2)
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Net cash (used for) financing activities (2.5) (85.5)
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Effect of exchange rate changes on cash and cash equivalents (1.0) (0.3)
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Net (decrease) in cash and cash equivalents $(33.6) $(138.4)
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Cash and cash equivalents at beginning of period $ 65.4 $ 256.9
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Cash and cash equivalents at end of period $ 31.8 $ 118.5
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Supplemental cash flow information:
Interest paid $ 0.7 $ 1.7
Income taxes paid $ 4.3 $ 10.9
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Supplemental schedule of non-cash investing and financing activities:
The Company purchased 51 percent of the capital stock of Holmsund Golv AB in
March 1997 for $0.8 million. In conjunction with the acquisition, assets acquired
and liabilities assumed were as follows (millions):
Fair Value of assets acquired $ 25.2
Cash paid for the capital stock 0.8
Minority interest 0.7
Debt assumed 17.5
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Other long-term liabilities assumed $ 6.2
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See accompanying notes to the financial statements beginning on page 7.
5
Armstrong World Industries, Inc., and Subsidiaries
Industry Segment Financial Data
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(amounts in millions)
Unaudited
Three Months
ended March 31
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1997 1996
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Net trade sales:
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Floor coverings $ 252.4 $ 240.0
Building products 182.0 175.1
Industry products 83.9 86.1
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Total net sales $ 518.3 $ 501.2
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Operating income:
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Floor coverings $ 33.0 $ 26.7
Building products 29.3 25.8
Industry products 11.2 10.0
Ceramic tile 0.7 0.9
Unallocated corporate (expense) 0.6 (5.7)
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Total operating income $ 74.8 $ 57.7
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6
Note 1. Operating results for the first quarter of 1997, compared with the
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corresponding period of 1996 included in this report, are unaudited. However,
these results have been reviewed by the Company's independent public
accountants, KPMG Peat Marwick LLP, in accordance with the established
professional standards and procedures for a limited review.
In the opinion of management, all adjustments of a normal recurring nature have
been included to provide a fair statement of the results for the reporting
periods presented. Three months' results are not necessarily indicative of
annual earnings.
Note 2.
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OVERVIEW OF ASBESTOS-RELATED LEGAL PROCEEDINGS
Asbestos-Related Litigation
The Company is one of many defendants in pending lawsuits and claims involving,
as of March 31, 1997, approximately 42,000 individuals alleging personal injury
from exposure to asbestos. This number includes approximately 19,500 individuals
from the approximately 87,000 individuals who opted out of the settlement class
action (Georgine v. Amchem) referred to below. About 21,600 claims from
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purported settlement class members were received as of March 31, 1997, although
many do not qualify at this time for payment.
Nearly all the personal injury suits and claims, except Georgine claims, seek
general and punitive damages arising from alleged exposures, at various times,
from World War II onward, to asbestos-containing products. Claims against the
Company generally involve allegations of negligence, strict liability, breach of
warranty and conspiracy with respect to its involvement with insulation
products. The Company discontinued the sale of all asbestos-containing
insulation products in 1969. The claims generally allege that injury may be
determined many years (up to 40 years) after first exposure to asbestos. Nearly
all suits name many defendants, and over 100 different companies are reportedly
involved. The Company believes that many current plaintiffs are unimpaired. A
few state and federal judges have consolidated numbers of asbestos-related
personal injury cases for trial, which the Company has generally opposed as
unfair. A large number of suits and claims have either been put on inactive
lists, settled, dismissed or otherwise resolved, and the Company is generally
involved in all stages of claims resolution and litigation, including trials and
appeals. While the number of pending cases has decreased during the past several
years in substantial part due to the Georgine settlement class action, neither
the rate of future dispositions nor the number of future potential unasserted
claims can be reasonably predicted at this time.
Attention has been given by various parties to securing a comprehensive
resolution of pending and future personal injury claims. The Judicial Panel for
Multidistrict Litigation ordered the transfer of all pending federal cases to
the Eastern District of Pennsylvania in Philadelphia for pretrial purposes. The
Company has supported this transfer. Some cases are periodically released for
trial, although the issue of punitive damages is retained by the transferee
Court. State court cases have not been directly affected by the transfer. The
transferee Court has been instrumental in having the parties resolve large
numbers of cases in various jurisdictions and has been receptive to different
approaches to the resolution of claims.
Georgine Settlement Class Action
Georgine v. Amchem is a settlement class action filed in the Eastern District of
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Pennsylvania on January 15, 1993, that includes essentially all future asbestos-
related personal injury claims against members, including the Company, of the
Center for Claims Resolution ("Center") referred to below. It is designed to
establish a non-litigation system for the resolution of such claims against
Center members. Other companies may be able to join the class action later. The
settlement offers a method for prompt compensation to claimants who were
occupationally exposed to asbestos if they meet certain exposure and medical
criteria. Compensation amounts are derived from historical settlement data.
Under limited circumstances and in limited numbers, qualifying claimants may
choose to arbitrate or litigate certain claims after they are processed within
the system. No punitive damages will be paid under the proposed
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settlement. The settlement is designed to minimize transactional costs,
including attorneys fees, and to relieve the burden of asbestos-related
litigation on the courts. Each member of the Center is obligated for its own
fixed share of compensation and fees. Potential claimants who neither filed a
prior lawsuit against Center members nor filed an exclusion request are subject
to the class action. The class action does not include claims deemed otherwise
not covered by the class action settlement, or claims for property damage.
Annual case flow caps and compensation ranges for each medical category
(including amounts paid even more promptly under simplified payment procedures)
are established for an initial period of ten years. Case flow caps may be
increased if they were substantially exceeded during the previous five-year
period. The case flow figures and annual compensation levels are subject to
renegotiation after the initial ten-year period. Approximately 87,000
individuals have filed exclusion requests and have thus opted out of the
settlement. Such opt outs are not claims but are reservations of rights possibly
to bring claims in the future. The settlement will become final only after
certain issues, including insurance coverage, are resolved and appeals are
exhausted, a process which could take several years. The Center members stated
their intention to resolve over a five-year period the claims pending when the
class action was filed, and a significant number have been settled or are in
negotiations.
The Center members are seeking agreement from insurance carriers or a binding
judgment against them that the class action settlement will not jeopardize
existing insurance coverage; the class action is contingent upon such an
agreement or judgment. For carriers that do not agree, this matter will proceed
through alternative dispute resolution (for carriers that subscribed to the
Wellington Agreement referred to below), or through litigation.
On May 10, 1996, a three-judge panel of the U.S. Court of Appeals for the Third
Circuit issued an adverse decision in an appeal from the preliminary injunction
by the District Court that enjoined members of the Georgine class from
proceeding against Center members in the tort system. The Court of Appeals
decision ruled against maintaining the settlement class action, ordered that the
preliminary injunction be vacated, and ordered decertification of the class. The
Court ruled broadly that the case does not meet the requirements for class
certification under Federal Rule of Civil Procedure 23, concluding that a class
action cannot be certified for purposes of settlement unless it can be certified
for full-scale litigation. The Company believes that the Court erred in several
important respects. The Company believes that the Court's ruling was not
consistent with rulings of several other courts that have considered Rule 23
issues in comparable cases. In particular, the recent ruling in the Ahearn case
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by the Fifth Circuit Court of Appeals reached a contrary conclusion on a central
Rule 23 issue in Georgine.
On November 1, 1996, the U.S. Supreme Court accepted the Center's petition for
certiorari and the appeal was argued on February 18, 1997. A decision from the
Supreme Court is likely by July 1997. The preliminary injunction will remain in
place while the case is pending in the Supreme Court. The Center's counsel
believes there to be substantial grounds for the Supreme Court to reverse the
Court of Appeals' decision.
The Company remains optimistic that a form of future claimants settlement class
action may ultimately be approved, although the courts may not uphold the
Georgine settlement class action, and may not uphold the companion insurance
action or, even if upheld, there is a potential that judicial action might
result in substantive modification of this settlement.
If the final resolution by the Supreme Court is not favorable to the Center
members, the District Court's injunction will likely be lifted and a large
number of lawsuits might be filed within a short time against the Center
members, resulting in a likely increase in the number of subsequent pending
cases in the tort system against the Company. In due course, the consequences
from lifting the injunction could result in presently undeterminable, but likely
higher, liability and defense costs under a claims resolution mechanism
alternative to Georgine which the Company believes would likely be negotiated.
Even if the appeal to the Supreme Court is successful, various issues remain to
be resolved and the potential exists that those issues will cause the class
action
8
ultimately not to succeed or to be substantially modified. Similarly, the
potential exists that the companion insurance action will not be successful.
Insurance Carriers/Wellington Agreement
The Company's primary and excess insurance carriers have provided defense and
indemnity coverage for asbestos-related personal injury claims, and the primary
insurers are providing defense coverage for property damage claims.
Various insurance carriers provide products and non-products coverages for the
Company's asbestos-related personal injury claims and product coverage for
property damage claims. Most policies providing products coverage for personal
injury claims have been exhausted. The insurance carriers that currently provide
coverage or whose policies have provided or are believed to provide personal
injury products and non-products or property damage coverages are as follows:
Reliance Insurance Company; Aetna Casualty and Surety Company; Liberty Mutual
Insurance Companies; Travelers Insurance Company; Fireman's Fund Insurance
Company; Insurance Company of North America; Lloyds of London; various London
market companies; Fidelity and Casualty Insurance Company; First State Insurance
Company; U.S. Fire Insurance Company; Home Insurance Company; Great American
Insurance Company; American Home Assurance Company and National Union Fire
Insurance Company (known as the AIG Companies); Central National Insurance
Company; Interstate Insurance Company; Puritan Insurance Company; and Commercial
Union Insurance Company. Midland Insurance Company, an excess carrier that
provided $25 million of bodily injury products coverage, is insolvent; the
Company is pursuing claims with the state guaranty associations. The gap in
coverage created by the Midland insolvency was covered by other insurance.
Certain companies in the London block of coverage and certain carriers providing
coverage at the excess level for property damage claims only have also become
insolvent. In addition, certain insurance carriers that were not in the
Company's California insurance litigation also provide insurance for asbestos-
related property damage claims.
The Company along with 52 other companies (defendants in the asbestos-related
litigation and certain of their insurers) signed the 1985 Agreement Concerning
Asbestos-Related Claims (the "Wellington Agreement"). This Agreement provided
for a final settlement of nearly all disputes concerning insurance for asbestos-
related personal injury claims between the Company and three of its primary
insurers and seven of its excess insurers that subscribed to the Wellington
Agreement. The one primary insurer that did not sign the Wellington Agreement
had earlier entered into the Interim Agreement with the Company and had paid
into the Wellington Asbestos Claims Facility (the "Facility"). The Wellington
Agreement provides for those insurers to indemnify the Company up to the policy
limits for claims that trigger policies in the insurance coverage period, and
nearly all claims against the Company fall within the coverage period; both
defense and indemnity are paid under the policies and there are no deductibles
under the applicable Company policies. The Wellington Agreement addresses both
products and non-products insurance coverage.
The Wellington Agreement also provided for the establishment of the Asbestos
Claims Facility to evaluate, settle, pay and defend all personal injury claims
against member companies. Liability payments and allocated expenses were
allocated by formula to each member. The Facility was dissolved when certain
members raised concerns about their share of liability payments and allocated
expenses and certain insurers raised concerns about defense costs and Facility
operating expenses.
Center for Claims Resolution
Following the dissolution of the Facility, the Center was created in October
1988 by Armstrong and 20 other companies, all of which were former members of
the Facility. Insurance carriers did not become members of the Center, although
a number of carriers signed an agreement to provide approximately 70% of the
financial support for the Center's operational costs during its first year of
operation; they are represented ex officio on the Center's governing board. The
Center adopted many of the conceptual features of the Facility, and the members'
insurers generally provide coverage under the Wellington Agreement. The Center
has revised the formula for shares of liability payments and defense costs over
time and has defended the members' interests and addressed the claims in a
manner consistent with the prompt, fair resolution of meritorious claims. The
share adjustments have resulted in some increased liability share for the
Company. In the settlement class action, each member will pay its own
9
fixed share of every claim. If a member withdraws, the shares of remaining
members will not change. The Center members have reached agreement annually with
the insurers relating to the continuing operation of the Center and expect that
the insurers will provide funding for the Center's operating expenses for its
ninth year of operation. The Center processes pending claims as well as future
claims in the settlement class action.
An increase in the utilization of the Company's insurance has occurred as a
result of the class action settlement and the commitment at the time to attempt
to resolve pending claims within five years. A substantial portion of the
insurance asset involves non-products insurance which is in alternate dispute
resolution. While the Company is seeking resolution of key issues in the
alternate dispute resolution process during 1997, a shortfall may develop
between available insurance and amounts necessary to pay claims, and that
shortfall may occur in the third quarter of 1997 or earlier, depending on the
timing of availability of certain coverages. The Company does not believe that
such shortfall would be material either to the financial condition of the
Company or to its liquidity. Aside from the class action settlement, no forecast
can be made for future years regarding either the rate of claims, the rate of
pending and future claims resolution by the Center, or the rate of utilization
of Company insurance. If the settlement class action is ultimately successful,
projections of the rate of disposition of future cases may be possible.
Property Damage Litigation
The Company is also one of many defendants in a total of 11 pending lawsuits and
claims as of March 31, 1997, brought by public and private building owners.
These lawsuits and claims include allegations of damage to buildings caused by
asbestos-containing products and generally claim compensatory and punitive
damages and equitable relief, including reimbursement of expenditures, for
removal and replacement of such products. The claims appear to be aimed at
friable (easily crumbled) asbestos-containing products, although allegations in
some suits encompass all asbestos-containing products, including allegations
with respect to previously installed asbestos-containing resilient flooring.
Among the lawsuits that have been resolved are four class actions that had been
certified, each involving a distinct class of building owner: public and private
schools; Michigan state public and private schools; colleges and universities;
and private property owners who leased facilities to the federal government. The
Company vigorously denies the validity of the allegations against it in these
suits and claims. Increasing defense costs, paid by the Company's insurance
carriers either under reservation or settlement arrangement, will be incurred.
These suits and claims were not handled by the former Facility nor are they
being handled by the Center. Defense and indemnity coverage has been addressed
in the California insurance coverage lawsuit discussed below.
Certain co-defendant companies have filed for reorganization under Chapter 11 of
the Federal Bankruptcy Code. As a consequence, litigation against them (with
several exceptions) has been stayed or restricted. Due to the uncertainties
involved, the long-term effect of these proceedings on the litigation cannot be
predicted.
California Insurance Coverage Lawsuit
The trial court issued final decisions in various phases in the insurance
lawsuit filed by the Company in California, including a decision that the
trigger of coverage for personal injury claims was continuous from exposure
through death or filing of a claim. The court also found that a triggered
insurance policy should respond with full indemnification up to exhaustion of
the policy limits. The court concluded that any defense obligation ceases upon
exhaustion of policy limits. Although not as comprehensive, another decision
established favorable defense and indemnity coverage for property damage claims
holding that coverage would be in effect during the period of installation and
during any subsequent period in which a release of fibers occurred. The
California appellate courts substantially upheld the trial court, and that
insurance coverage litigation is now concluded. The Company has resolved
personal injury products coverage matters with all of its solvent carriers
except one small excess carrier.
After concluding the last phase of the trial against one of its primary
carriers, which is also an excess carrier, the Company and the carrier reached a
settlement agreement on March 31, 1989. Under the terms of the settlement
agreement, coverage is
10
provided for asbestos-related bodily injury and property damage claims generally
consistent with the interim rulings of the California trial court and
complementary to the Wellington Agreement. The parties also agreed that a
certain minimum and maximum percentage of indemnity and allocated expenses
incurred with respect to asbestos-related personal injury claims would be deemed
allocable to non-products claims coverage and that the percentage amount would
be negotiated or otherwise decided between the Company and the insurance
carrier.
Non-Products Insurance Coverage
Non-products insurance coverage is included in the Company's primary and a
number of excess policies for certain types of claims. The settlement agreement
referenced above with a primary carrier included a provision for non-products
claims. Non-products claims include among other things those claims that may
have arisen out of exposure during installation of asbestos materials.
Negotiations have been undertaken with the Company's primary insurance carriers
to categorize the percentage of previously resolved and yet to be resolved
asbestos-related personal injury claims as non-products claims and to establish
the entitlement to such coverage. The additional coverage potentially available
to pay such claims is substantial, and at the primary level, includes defense
costs in addition to limits. All the carriers raise various reasons why they
should not pay their coverage obligations, including contractual defenses,
waiver, laches and statutes of limitations. One primary carrier alleges that it
is no longer bound by the Wellington Agreement, and another alleges that the
Company agreed to limit its claims for non-products coverage against that
carrier at the time the Wellington Agreement was signed. The Company has
initiated an alternative dispute resolution proceeding against the carriers.
This proceeding is in the mediation phase. If coverage is not mutually resolved
during that phase with the help of a neutral party, the issues will be resolved
in binding arbitration; a process which now also has been commenced. Other
proceedings against several non-Wellington carriers may become necessary.
ACandS, Inc., a former subsidiary of the Company, has coverage rights under some
of the Company's insurance policies for certain insurance periods, and has
accessed such coverage on the same basis as the Company. It was a subscriber to
the Wellington Agreement, but is not a member of the Center. The Company and
ACandS, Inc., have negotiated a settlement agreement which reserves for ACandS,
Inc. a certain amount of insurance from the joint policies solely for its own
use for asbestos-related claims.
Based upon the Company's experience with this litigation and the disputes with
its insurance carriers, a reserve was recorded in June 1983 to cover estimated
potential liability, and settlement costs and legal and administrative costs not
covered under an Interim Agreement, the cost of litigation against the Company's
insurance carriers, and other factors involved in the litigation that are
referred to herein about which uncertainties exist. As a result of the
Wellington Agreement, the reserve was reduced for that portion associated with
personal injury suits and claims. In an insurance settlement on March 31, 1989,
the Company received $11.0 million, of which approximately $4.4 million was
credited to income and nearly all of the balance was recorded as an increase to
its reserve. Costs of litigation against insurance carriers and other legal
costs indirectly related to asbestos litigation will be expensed outside the
reserve.
Conclusions
The Company does not know how many claims will be filed against it in the
future, nor the details thereof or of pending suits not fully reviewed, nor the
expense and any liability that may ultimately result therefrom, nor does the
Company know whether the settlement class action will ultimately succeed, the
number of individuals who ultimately will be deemed to have opted out or who
could file claims outside the settlement class action, nor the annual claims
flow caps to be negotiated after the initial ten-year period for the settlement
class action or the compensation levels to be negotiated for such claims, nor
whether, if needed, an alternative to the Georgine settlement vehicle may
ultimately emerge, or the ultimate liability if such alternative does not
emerge, or the scope of its non-products coverage ultimately deemed available.
Subject to the uncertainties and limitations referred to in this note and based
upon its experience and other factors also referred to in this note, the Company
believes
11
that the estimated $132.0 million in liability and defense costs recorded on the
balance sheet will be incurred to resolve an estimated 42,000 asbestos-related
personal injury claims pending against the Company as of March 31, 1997. In
addition to the currently estimated pending claims and claims filed by those who
have opted out of the settlement class action, claims otherwise determined not
to be subject to the settlement class action will be resolved outside the
settlement class action. The Company does not know how many claims ultimately
may be filed by claimants who have opted out of the class action or who are
determined not to be subject to the settlement class action, or if the
preliminary injunction is vacated, the number of claims that then would not be
subject to the class action constraints.
An insurance asset in the amount of $132.0 million recorded on the balance sheet
reflects the Company's belief in the availability of insurance in this amount to
cover the liability in like amount referred to above. Such insurance has either
been agreed upon or is probable of recovery through negotiation, alternative
dispute resolution or litigation. A substantial portion of the insurance asset
involves non-products insurance which is in alternative dispute resolution.
While the Company is seeking resolution of the key issues in the alternative
dispute resolution process during 1997, a shortfall may develop between
available insurance and amounts necessary to pay claims that may occur in the
third quarter of 1997 or possibly in the second quarter, depending on the timing
of the availability of certain coverages. The Company believes such shortfall
would not be material either to the financial condition of the Company or to its
liquidity. The Company also notes that, based on maximum mathematical
projections covering a ten-year period from 1994 to 2004, its estimated cost in
Georgine reflects a reasonably possible additional liability of $245 million. If
Georgine is not ultimately approved, the Company believes that a claims
resolution mechanism alternative to the Georgine settlement will likely be
negotiated, albeit at a likely higher liability and defense costs. A portion of
such additional liability may not be covered by the Company's ultimately
applicable insurance recovery. However, the Company believes that any after-tax
impact on the difference between the aggregate of the estimated liability for
pending cases and the estimated cost for the ten-year maximum mathematical
projection or in the cost of an alternative settlement format, and the probable
insurance recovery, would not be material either to the financial condition of
the Company or to its liquidity, although it could be material to earnings if it
is determined in a future period to be appropriate to record a reserve for this
difference. The period in which such a reserve may be recorded and the amount of
any reserve that may be appropriate cannot be determined at this time. Subject
to the uncertainties and limitations referred to elsewhere in this note and
based upon its experience and other factors referred to above, the Company
believes it is probable that substantially all of the expenses and any liability
payments associated with the asbestos-related property damage claims will be
paid under an insurance coverage settlement agreement and through coverage from
the outcome of the California insurance litigation.
Even though uncertainties still remain as to the potential number of unasserted
claims, liability resulting therefrom, and the ultimate scope of its insurance
coverage, after consideration of the factors involved, including the Wellington
Agreement, settlements with other insurance carriers, the results of the
California insurance coverage litigation, the remaining reserve, the
establishment of the Center, the Georgine settlement class action and the
likelihood that if Georgine is not ultimately upheld, an alternative to Georgine
would be negotiated, and its experience, the Company believes the asbestos-
related lawsuits and claims against the Company would not be material either to
the financial condition of the Company or to its liquidity, although as stated
above, the net effect of any future liabilities recorded in excess of insurance
assets could be material to earnings in such future period.
--------------------------
TINS Litigation
In 1984, suit was filed against the Company in the U. S. District Court for the
District of New Jersey (the "Court") by The Industry Network System, Inc.
(TINS), a producer of video magazines in cassette form, and Elliot Fineman, a
consultant (Fineman and The Industry Network System, Inc. v. Armstrong World
----------------------------------------------------------------
Industries, Inc.,
- ----------------
12
C.A. No. 84-3837 JWB). At trial, TINS claimed, among other things, that the
Company had improperly interfered with a tentative contract which TINS had with
an independent distributor of the Company's flooring products and further
claimed that the Company used its alleged monopoly power in resilient floor
coverings to obtain a monopoly in the video magazine market for floor covering
retailers in violation of federal antitrust laws. The Company denied all
allegations. On April 19, 1991, the jury rendered a verdict in the case, which
as entered by the court in its order of judgment, awarded the plaintiffs the
alternative, after all post-trial motions and appeals were completed, of either
their total tort claim damages (including punitive damages), certain pre-
judgment interest, and post-judgment interest or their trebled antitrust claim
damages, post-judgment interest and attorneys fees. The higher amount awarded to
the plaintiffs as a result of these actions totaled $224 million in tort claim
damages and pre-judgment interest, including $200 million in punitive damages.
On June 20, 1991, the Court granted judgment for the Company notwithstanding the
jury's verdict, thereby overturning the jury's award of damages and dismissing
the plaintiffs' claims with prejudice. Furthermore, on June 25, 1991, the Court
ruled that, in the event of a successful appeal restoring the jury's verdict in
the case, the Company would be entitled to a new trial on the matter.
On October 28, 1992, the United States Court of Appeals for the Third Circuit
issued an opinion in Fineman v. Armstrong World Industries, Inc. (No. 91-5613).
------------------------------------------
The appeal was taken to the Court of Appeals from the two June 1991 orders of
the United States District Court in the case. In its decision on the plaintiff's
appeal of these rulings, the Court of Appeals sustained the U. S. District
Court's decision granting the Company a new trial, but overturned in certain
respects the District Court's grant of judgment for the Company notwithstanding
the jury's verdict.
The Court of Appeals affirmed the trial judge's order granting Armstrong a new
trial on all claims of plaintiffs remaining after the appeal; affirmed the trial
judge's order granting judgment in favor of Armstrong on the alleged actual
monopolization claim; affirmed the trial judge's order granting judgment in
favor of Armstrong on the alleged attempt to monopolize claim; did not disturb
the District Court's order dismissing the alleged conspiracy to monopolize
claim; affirmed the trial judge's order dismissing all of Fineman's personal
claims, both tort and antitrust; and affirmed the trial judge's ruling that
plaintiffs could not recover the aggregate amount of all damages awarded by the
jury and instead must elect damages awarded on one legal theory. However, the
Third Circuit, contrary to Armstrong's arguments, reversed the trial judge's
judgment for Armstrong on TINS' claim for an alleged violation of Section 1 of
the Sherman Act; reversed the trial judge's judgment in favor of Armstrong on
TINS' claim for tortious interference; reversed the trial judge's judgment in
favor of Armstrong on TINS' claim for punitive damages; and reversed the trial
judge's ruling that had dismissed TINS' alleged breach of contract claim.
The Court of Appeals, in affirming the trial court's new trial order, agreed
that the trial court did not abuse its discretion in determining that the jury's
verdict was "clearly against the weight of the evidence" and that a new trial
was required due to the misconduct of plaintiffs' counsel.
The foregoing summary of the Third Circuit's opinion is qualified in its
entirety by reference thereto.
The Court of Appeals granted the Company's motion to stay return of the case to
the District Court pending the Company's Petition for Certiorari to the Supreme
Court appealing certain antitrust rulings of the Court of Appeals. The Company
was informed on February 22, 1993, that the Supreme Court denied its Petition.
After the case was remanded by the Third Circuit Court of Appeals in
Philadelphia to the U.S. District Court in Newark, New Jersey, a new trial
commenced on April 26, 1994. TINS claimed damages in the form of lost profits
ranging from approximately $19 million to approximately $56 million. Plaintiff
also claimed punitive damages in conjunction with its request for tort damages.
Other damages sought included reimbursement of attorneys' fees and interest,
including prejudgment interest.
On August 19, 1994, the jury returned a verdict in favor of the Company finding
that the Company had not caused damages to TINS. The court subsequently entered
judgment in the Company's favor based upon the verdict. TINS motion for a new
trial based upon
13
alleged inaccurate jury instructions and alleged improper evidentiary rulings
during the trial, was denied and TINS filed an appeal with the U.S. Court of
Appeals for the Third Circuit. On October 11, 1995, the case was argued before a
panel of the U.S. Court of Appeals for the Third Circuit, and on October 20,
1995, the Court issued a Judgment Order affirming the 1994 District Court
verdict in favor of the Company. On November 2, 1995, TINS filed a Petition for
Rehearing by the same panel which was denied on December 5, 1995. On January 24,
1996, TINS filed a motion seeking further appellate review by the Circuit Court;
that motion has been denied. Also denied was a motion by TINS before the
District Court to rescind an earlier 1984 agreement of settlement. TINS has
appealed this later decision to the Circuit Court, which has calendared the
appeal for June 1997. If the denial of the motion were reversed on appeal, TINS
could possibly be entitled to litigate claims that had been resolved by means of
the settlement agreement.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
- --------------------------------------------------------------------------------
of Operations
- -------------
Financial Condition
- -------------------
As shown on the Consolidated Statements of Cash Flows (see page 5), cash
provided by operating activities, supplemented by increases in short- and long-
term debt and proceeds from exercised stock options, covered normal working
capital requirements, purchases of property, plant, and equipment, payment of
cash dividends, payments related to restructuring activities, acquisitions and
investments in joint ventures.
Under the board-approved 5.5 million common share repurchase plan, Armstrong has
repurchased approximately 2,714,000 shares through March 31, 1997, including
334,000 repurchased in the first quarter of this year. In addition, 112,700 ESOP
shares were purchased since the beginning of the year. Total cash used for these
first-quarter purchases was $30.9 million.
Working capital was $232.1 million as of March 31, 1997, $11.4 million lower
than the $243.5 million recorded at year-end 1996. The reduction in working
capital resulted primarily from the $33.6 million decrease in cash and the $14.2
million decrease in other assets. The working capital decrease was offset in
part by higher levels of accounts receivable, inventories, short-term debt and
current installments of long-term debt and income taxes. Higher sales levels
later in the quarter, the extension of terms for buyers of Quest merchandising
systems and the acquisition of receivables of Holmsund GOLV AB were the primary
reasons for the $64.4 million increase in receivables. The $26.7 million
increase in inventories was primarily related to the higher levels of laminate
flooring products and residential sheet flooring products in advance of new
product launches, the acquisition of inventories of Holmsund GOLV AB and the
building of inventories in anticipation of higher seasonal sales.
The ratio of current assets to current liabilities was 1.62 to 1 as of March 31,
1997 compared with 1.76 to 1 as of December 31, 1996 primarily due to the higher
levels of receivables, inventories and short-term debt and lower levels of cash
in comparison to the end of 1996.
Long-term debt of $228.9 million, excluding the Company's guarantee of the ESOP
loan, increased $9.5 million in the first quarter of 1997. At March 31, 1997
long-term debt represented 17.5 percent of total capital compared with 17.4
percent at the end of 1996. The March 31, 1997 and 1996 year-end ratios of total
debt (including the Company's financing of the ESOP loan) as a percent of total
capital were 40.3 percent and 37.2 percent, respectively.
The Company is involved in significant asbestos-related litigation which is
described more fully under "Litigation" on pages 7-12 and which should be read
in connection with this discussion and analysis. The Company does not know how
many claims will be filed against it in the future, nor the details thereof or
of pending suits not fully reviewed, nor the expense and any liability that may
ultimately result therefrom, nor does the Company know whether the settlement
class action will ultimately succeed, the number of individuals who ultimately
will be deemed to have opted out or who could file claims outside the settlement
class action, nor the annual claims flow caps to be negotiated after the initial
ten-year period for the settlement class action or the compensation levels to be
negotiated for such claims, nor whether, if needed, an alternative to the
Georgine settlement vehicle may ultimately emerge, or the ultimate
14
liability if such alternative does not emerge, or the scope of its non-products
coverage ultimately deemed available.
Subject to the uncertainties and limitations referred to in note 2 to the
financial statements and based upon its experience and other factors also
referred to in that note, the Company believes that the estimated $132.0 million
in liability and defense costs recorded on the balance sheet will be incurred to
resolve an estimated 42,000 asbestos-related personal injury claims pending
against the Company as of March 31, 1997. In addition to the currently
estimated pending claims and claims filed by those who have opted out of the
settlement class action, claims otherwise determined not to be subject to the
settlement class action will be resolved outside the settlement class action.
The Company does not know how many claims ultimately may be filed by claimants
who have opted out of the class action or who are determined not to be subject
to the settlement class action, or if the preliminary injunction is vacated, the
number of claims that then would not be subject to the class action constraints.
An insurance asset in the amount of $132.0 million recorded on the balance sheet
reflects the Company's belief in the availability of insurance in this amount to
cover the liability in like amount referred to above. Such insurance has either
been agreed upon or is probable of recovery through negotiation, alternative
dispute resolution or litigation. A substantial portion of the insurance asset
involves non-products insurance which is in alternative dispute resolution.
While the Company is seeking resolution of the key issues in the alternative
dispute resolution process during 1997, a shortfall may develop between
available insurance and amounts necessary to pay claims that may occur in the
third quarter of 1997 or possibly in the second quarter, depending on the timing
of the availability of certain coverages. The Company believes such shortfall
would not be material either to the financial condition of the Company or to its
liquidity. The Company also notes that, based on maximum mathematical
projections covering a ten-year period from 1994 to 2004, its estimated cost in
Georgine reflects a reasonably possible additional liability of $245 million.
If Georgine is not ultimately approved, the Company believes that a claims
resolution mechanism alternative to the Georgine settlement will likely be
negotiated, albeit at a likely higher liability and defense costs. A portion of
such additional liability may not be covered by the Company's ultimately
applicable insurance recovery. However, the Company believes that any after-tax
impact on the difference between the aggregate of the estimated liability for
pending cases and the estimated cost for the ten-year maximum mathematical
projection or in the cost of an alternative settlement format, and the probable
insurance recovery, would not be material either to the financial condition of
the Company or to its liquidity, although it could be material to earnings if it
is determined in a future period to be appropriate to record a reserve for this
difference. The period in which such a reserve may be recorded and the amount
of any reserve that may be appropriate cannot be determined at this time.
Subject to the uncertainties and limitations referred to elsewhere in this note
and based upon its experience and other factors referred to above, the Company
believes it is probable that substantially all of the expenses and any liability
payments associated with the asbestos-related property damage claims will be
paid under an insurance coverage settlement agreement and through coverage from
the outcome of the California insurance litigation.
Even though uncertainties still remain as to the potential number of unasserted
claims, liability resulting therefrom, and the ultimate scope of its insurance
coverage, after consideration of the factors involved, including the Wellington
Agreement, settlements with other insurance carriers, the results of the
California insurance coverage litigation, the remaining reserve, the
establishment of the Center, the Georgine settlement class action and the
likelihood that if Georgine is not ultimately upheld, an alternative to Georgine
would be negotiated, and its experience, the Company believes the asbestos-
related lawsuits and claims against the Company would not be material either to
the financial condition of the Company or to its liquidity, although as stated
above, the net effect of any future liabilities recorded in excess of insurance
assets could be material to earnings in such future period.
It is management's opinion that the Company has sufficient financial strength to
warrant the required support from lending institutions and financial markets.
15
Consolidated Results
- --------------------
Record first-quarter 1997 net sales of $518.3 million increased 3.4 percent from
the $501.2 million of the first quarter 1996. Strength in commercial ceilings
and floor tile in North America was the primary reason for the increase. By
geographic region, North American sales increased 6.9 percent, Pacific Area
sales grew 9.7 percent and European sales declined 4.1 percent. The European
sales decline was principally due to the stronger U.S. dollar, continued
relatively weak market conditions and competitive pressure in the Building and
Industry Products segments.
Net earnings for the first-quarter 1997 were $45.5 million compared with $36.3
million for the same period in 1996, which had been adversely impacted by severe
winter weather. Net earnings per share of common stock were $1.10 per share
compared with $0.88 on a primary basis and $0.81 on a fully diluted basis for
the first quarter of 1996.
Cost of goods sold as a percent of sales in the first quarter was 66.9 percent
compared with 68.7 percent last year and 69.2 percent in the fourth-quarter
1996. The primary reasons for the decrease were the milder winter along with
some lower raw material prices and continued productivity improvements.
In the first quarter of 1997, the effective tax rate was 33.4 percent and was
unchanged from the first quarter of 1996.
Industry Segment Results
- ------------------------
In the floor coverings segment, sales were 5.2 percent higher than 1996's first
quarter while operating income was up 23.3 percent. The majority of the sales
increase was in U.S. commercial sales, sales through the home centers, and the
addition of a new line of laminate floors. European sales increased, primarily
due to growth in shipments into Eastern Europe. The operating income growth from
the prior year reflects the increased sales and productivity improvements, which
were partially offset by some higher U.S. raw material costs and startup costs
for the laminate flooring business.
The building products segment recorded an increase in sales of 3.9 percent when
compared with 1996's first quarter. North American sales increased due to strong
unit growth in commercial ceilings and some selling price gains, but were
somewhat offset by a sales decline in Europe which has been affected by a weak
economy and competitive pressures. Pacific Area sales increased, assisted by
customer shipments from the new Shanghai, China ceiling plant. Operating income
increased 13.8 percent reflecting the increased sales, milder weather compared
to 1996, improved productivity, some lower raw material costs and the increase
in operating income from the WAVE grid joint venture.
Industry products 1997 first-quarter net sales, which decreased 2.6 percent when
compared with 1996's first quarter, would have increased 2.6 percent without the
translation effects of the stronger U.S. dollar. Insulation products recorded
lower sales, which continued to be affected by the stronger U.S. dollar, soft
economies in Europe and competitive pressures. Sales for the gasket and
specialty paper business decreased due to a weaker automotive market. Operating
income for the entire segment increased over 12 percent reflecting continued
efforts to reduce manufacturing costs in the Insulation and Gasket and Specialty
Paper Products businesses. Textile products reported an operating profit in the
first quarter 1997 versus last year's operating loss.
In the ceramic tile segment, the first-quarter 1997 results of $0.7 million
represent Armstrong's 33.6 percent share as of March 31, 1997 of the anticipated
after-tax net income of Dal-Tile and the amortization of Armstrong's initial
investment in Dal-Tile. Overall results reflect Dal-Tile's nearly flat year-on-
year sales and additional operating costs related to the upgrading of their
computer systems.
First quarter 1997 unallocated corporate expense decreased $6.3 million from
1996's first quarter due to corporate cost reductions resulting from earlier
restructuring actions, lower consulting fees and some higher pension credits.
16
This Quarterly Report on Form 10-Q contains forward-looking statements (within
the meaning of the Private Securities Litigation Reform Act of 1995) regarding
the Company's earnings, liquidity and financial conditions (including with
respect to the ultimate outcome of the Company's asbestos-related litigation and
in that regard the likelihood that an alternative to the Georgine settlement
--------
will be negotiated and that products insurance coverage will be available). Such
forward-looking statements include statements using the words "believe,"
"expect," and "estimate" and similar expressions. Actual results may differ
materially as a result of the uncertainties identified in connection with those
statements or if the factors on which the Company's conclusions are based do not
conform to the Company's expectations.
17
Independent Accountants' Report
-------------------------------
The Board of Directors
Armstrong World Industries, Inc.:
We have reviewed the condensed consolidated balance sheet of Armstrong World
Industries, Inc. and subsidiaries as of March 31, 1997, and the related
condensed consolidated statements of operations for the three-month period ended
March 31, 1997, and 1996, and the condensed consolidated statements of cash
flows for the three-month periods then ended. These condensed financial
statements are the responsibility of the Company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
an expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the condensed consolidated financial statements referred to above for
them to be in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of Armstrong World Industries, Inc.
and subsidiaries as of December 31, 1996, and the related consolidated
statements of earnings, cash flows and shareholders' equity for the year then
ended (not presented herein); and our report dated February 14, 1997, we have
expressed an unqualified opinion on those consolidated financial statements. In
our opinion, the information set forth in the accompanying condensed
consolidated balance sheet as of December 31, 1996, is fairly presented, in all
material respects, in relation to the consolidated balance sheet from which it
has been derived.
KPMG PEAT MARWICK LLP
Philadelphia, Pennsylvania
May 12, 1997
18
Part II - Other Information
---------------------------
Item 1. Legal Proceedings
- --------------------------
Information required by this item is presented in Note 2 of the notes to the
Company's consolidated financial statements included in Part I, Item 1 hereof,
and is incorporated herein by reference.
Item 5. Other Information
- --------------------------
The Company held its annual meeting of shareholders on April 28, 1997. The vote
on each matter presented to the shareholders was as follows:
1. Election of Directors
For Withheld
--- --------
Van C. Campbell 35,004,961 446,008
J. Phillip Samper 34,992,603 446,008
In addition, each of the following directors continued in office after the
meeting: H. Jesse Arnelle, Donald C. Clark, George A. Lorch, E. Allen Deaver,
James E. Marley, and Jerre L. Stead.
2. 1993 Long-Term Stock Incentive Plan Amendment
For Against Abstain
--- ------- -------
32,452,316 2,698,851 293,662
3. Shareholder Proposal to Modify the Company's Confidential Voting Policy
For Against Abstain Broker Nonvotes
--- ------- ------- ---------------
16,956,112 16,408,868 452,879 1,626,930
The Shareholder proposal to Modify the Company's Confidential Voting Policy
was not approved because it failed to receive the requisite majority of votes
present in person or by proxy at the meeting.
Item 6. Exhibits and Reports on Form 8-K
- -----------------------------------------
(a) The following exhibits are filed as a part of the Quarterly Report on
Form 10-Q:
Exhibits
--------
No. 11(a) Computation for Primary Earnings Per Share
No. 11(b) Computation for Fully Diluted Earnings Per Share
No. 15 Letter re Unaudited Interim Financial Information
No. 27 Financial Data Schedule
(b) No reports on Form 8-K were filed during the quarter for which this report
is filed.
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.
Armstrong World Industries, Inc.
By: /s/ L. A. Pulkrabek
------------------------------
L. A. Pulkrabek, Senior
Vice President, Secretary and
General Counsel
By: /s/ B. A. Leech, Jr.
-------------------------------
B. A. Leech, Jr., Controller
(Principal Accounting Officer)
Date: May 12, 1997
20
Exhibit Index
-------------
Exhibit No.
- -----------
No. 11(a) Computation for Primary Earnings Per Share
No. 11(b) Computation for Fully Diluted Earnings Per Share
No. 15 Letter re Unaudited Interim Financial Information
No. 27 Financial Data Schedule
21