NEW JERSEY 22-1024240
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
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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 (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.
On July 29, 1994, 643,265,231 shares of Common Stock, $1.00 par value, were outstanding.
TABLE OF CONTENTS
Part I - Financial Information Page No.
Consolidated Balance Sheet -
July 3, 1994 and January 2, 1994 3
Consolidated Statement of Earnings for the
Six Months Ended July 3, 1994 and
July 4, 1993 5
Consolidated Statement of Cash Flows
for the Six Months Ended July 3, 1994
and July 4, 1993 7
Notes to Consolidated Financial Statements 8
Management's Discussion and Analysis of
Financial Condition and Results of
Operations 12
Signatures 16
Part II - Other Information
Item 4 - Submission of Matters to a
Vote of Security Holders 15
Items 1, 2, 3 and 5 are not applicable
Exhibit Index 17
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July 3, January 2,
1994 1994
Current Assets:
Cash and cash equivalents $ 571 372
Marketable securities (Note 2) 116 104
Accounts receivable, trade, less
allowances $217 (1993 - $170) 2,440 2,107
Inventories (Note 4) 1,901 1,717
Deferred taxes on income 447 399
Prepaid expenses and other
receivables 645 518
Total current assets 6,120 5,217
Marketable securities, non-current,
at cost, which approximates market
value 464 437
Property, plant and equipment, at cost 7,183 6,783
Less accumulated depreciation and
amortization 2,704 2,377
4,479 4,406
Intangible assets, net (Note 5) 975 925
Deferred taxes on income 487 484
Other assets (Note 2) 917 773
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July 3, January 2,
1994 1994
Current Liabilities:
Loans and notes payable $ 585 915
Accounts payable 829 901
Accrued liabilities 1,488 1,283
Taxes on income 295 113
Total current liabilities 3,197 3,212
Long-term debt 1,510 1,493
Deferred tax liability 153 122
Certificates of extra compensation 77 91
Other liabilities 1,884 1,756
Stockholders' equity
Preferred stock - without par
value (authorized and unissued
2,000,000 shares) - -
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Common stock - par value $1.00
per share (authorized 1,080,000,000
shares; issued 767,391,000 and
767,372,000 shares) 767 767
Note receivable from employee stock
ownership plan (73) (84)
Cumulative currency translation
adjustments (50) (338)
Retained earnings (Note 2) 8,455 7,727
9,099 8,072
Less common stock held in treasury,
at cost (123,858,000 & 124,391,000
shares) 2,478 2,504
Total stockholders' equity 6,621 5,568
Total liabilities and stockholders'
equity $13,442 12,242
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(Unaudited; dollars & shares in millions
except per share figures)
Fiscal Quarter Ended July 3, Percent July 4, Percent 1994 to Sales 1993 to Sales
Sales to customers (Note 6) $3,916 100.0 3,541 100.0
Cost of products sold 1,287 32.8 1,148 32.4
Selling, marketing and
administrative expenses 1,558 39.8 1,432 40.4
Research expense 313 8.0 286 8.1
Other income (28) (.7) (13) (.3)
3,130 79.9 2,853 80.6
Earnings before interest and
taxes on income 786 20.1 688 19.4
Interest income 9 .2 15 .4
Interest expense, net of
portion capitalized (33) (.8) (33) (.9)
Earnings before provision
for taxes on income 762 19.5 670 18.9
Provision for taxes on
income (Note 3) 203 5.2 175 4.9
NET EARNINGS $ 559 14.3 495 14.0
NET EARNINGS PER SHARE $ .86 .75
CASH DIVIDENDS PER SHARE $ .29 .26
AVG. SHARES OUTSTANDING 643.3 655.3
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(Unaudited; dollars & shares in millions
except per share figures)
Fiscal Six Months Ended July 3, Percent July 4, Percent 1994 to Sales 1993 to Sales
Sales to customers (Note 6) $7,606 100.0 7,101 100.0
Cost of products sold 2,468 32.5 2,311 32.5
Selling, marketing and
administrative expenses 3,038 39.9 2,868 40.4
Research expense 602 7.9 567 8.0
Other income (50) (.7) (44) (.6)
6,058 79.6 5,702 80.3
Earnings before interest and
taxes on income 1,548 20.4 1,399 19.7
Interest income 19 .2 35 .5
Interest expense, net of
portion capitalized (69) (.9) (64) (.9)
Earnings before provision
for taxes on income 1,498 19.7 1,370 19.3
Provision for taxes on
income (Note 3) 395 5.2 372 5.2
NET EARNINGS $1,103 14.5 998 14.1
NET EARNINGS PER SHARE $ 1.71 1.52
CASH DIVIDENDS PER SHARE $ .55 .49
AVG. SHARES OUTSTANDING 643.2 655.4
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Fiscal Six Months Ended
July 3, July 4,
1994 1993
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings $1,103 998
Adjustments to reconcile net earnings to
cash flows from operating activities:
Depreciation and amortization of
property and intangibles 354 316
Increase in accounts receivable, trade,
less allowances (263) (317)
Increase in inventories (100) (153)
Changes in other assets and liabilities 132 (42)
NET CASH FLOWS FROM OPERATING ACTIVITIES 1,226 802
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CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property, plant and equipment (327) (375)
Proceeds from the disposal of assets 102 14
Acquisition of businesses, net of cash
acquired - (24)
Other, principally marketable securities (132) (18)
NET CASH USED BY INVESTING ACTIVITIES (357) (403)
CASH FLOWS FROM FINANCING ACTIVITIES
Dividends to stockholders (354) (321)
Repurchase of common stock (39) (64)
Proceeds from short-term debt 213 85
Retirement of short-term debt (466) (161)
Proceeds from long-term debt 11 155
Retirement of long-term debt (88) (221)
Proceeds from the exercise of stock
options 27 17
NET CASH USED BY FINANCING
ACTIVITIES (696) (510)
EFFECT OF EXCHANGE RATE CHANGES ON CASH
AND CASH EQUIVALENTS 26 (39)
INCREASE/(DECREASE) IN CASH AND CASH
EQUIVALENTS 199 (150)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 372 745
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CASH AND CASH EQUIVALENTS, END OF PERIOD $ 571 595
NOTE 2 - ADOPTION OF SFAS NO. 115 - Effective January 3, 1994, the
Company adopted Statement of Financial Accounting Standards (SFAS)
No. 115, "Accounting for Certain Investments in Debt and Equity
Securities". Investments subject to this standard are required to
be carried at fair value, unless they are held to maturity. There
was no effect on income as a result of adopting SFAS No. 115.
The fair value of investment securities subject to the
provisions of SFAS No. 115, totaled $203 million at July 3, 1994,
which exceeded the carrying amount by $20 million.
This unrealized gain was credited to Stockholders' Equity at
July 3, 1994 net of deferred income taxes of $7 million. These
investment securities are included in Marketable Securities Current
and Other Assets on the balance sheet.
The effective income tax rates for 1994 and 1993 are as follows:
1994 1993
First Quarter 26.1% 28.1%
Second Quarter 26.6 26.1
First Half 26.4 27.2
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The effective income tax rates for the first half of 1994 and 1993 are 26.4% and 27.2%, respectively, as compared to the U.S. federal statutory rate of 35%. The major reason for this difference is the result of domestic subsidiaries operating in Puerto Rico under a grant providing for tax relief.
NOTE 4 - INVENTORIES
(Dollars in Millions) July 3, 1994 Jan. 2, 1994
Raw materials and supplies $ 527 448
Goods in process 485 485
Finished goods 889 784
$ 1,901 1,717
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NOTE 5 - INTANGIBLE ASSETS
(Dollars in Millions) July 3, 1994 Jan. 2, 1994
Intangible assets $ 1,332 1,255
Less accumulated amortization 357 330
$ 975 925
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The excess of the cost over the fair value of net assets of purchased businesses is recorded as goodwill and is amortized on a straight-line basis over periods of 40 years or less. The cost of other acquired intangibles is amortized on a straight-line basis over their estimated useful lives.
(Dollars in Millions)
SALES BY SEGMENT OF BUSINESS
Second Quarter Six Months
Percent
Percent Increase
1994 1993 Increase 1994 1993 (Decrease)
Consumer
Domestic $ 624 608 2.6 1,294 1,310 (1.2)
International 646 576 12.2 1,255 1,151 9.0
1,270 1,184 7.3% 2,549 2,461 3.6%
Pharmaceutical
Domestic $ 541 428 26.4 1,037 857 21.0
International 767 691 11.0 1,461 1,374 6.3
1,308 1,119 16.9% 2,498 2,231 12.0%
Professional
Domestic $ 744 712 4.5 1,425 1,381 3.2
International 594 526 12.9 1,134 1,028 10.3
1,338 1,238 8.1% 2,559 2,409 6.2%
Domestic $1,909 1,748 9.2 3,756 3,548 5.9
International 2,007 1,793 11.9 3,850 3,553 8.4
Worldwide $3,916 3,541 10.6% 7,606 7,101 7.1%
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SALES BY GEOGRAPHIC AREAS
Second Quarter Six Months
Percent Percent
1994 1993 Increase 1994 1993 Increase
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U.S. $1,909 1,748 9.2 3,756 3,548 5.9
Europe 1,176 1,078 9.1 2,249 2,130 5.6
Western Hemisphere
excluding U.S. 356 326 9.2 687 660 4.1
Africa, Asia and
Pacific 475 389 22.1 914 763 19.8
Total $3,916 3,541 10.6% 7,606 7,101 7.1%
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SALES AND EARNINGS
Consolidated sales for the first six months of 1994 of $7,606 million exceeded sales of $7,101 million for the first six months of 1993 by 7.1%. The strength of the U.S. dollar relative to foreign currencies decreased sales for the first six months of 1994 by 1.6%. Excluding currency, sales increased 8.7% on an operational basis for the first six months of 1994. Consolidated net earnings for the first six months of 1994 were $1,103 million, compared with net earnings of $998 million for the first six months of 1993. Earnings per share for the first six months of 1994 were $1.71 compared with $1.52 for the same period a year ago. Net earnings and earnings per share rose 10.5% and 12.5%, respectively.
Consolidated sales for the second quarter of 1994 were $3,916 million, an increase of 10.6% over 1993 second quarter sales of $3,541 million. The effect of the stronger U.S. dollar relative to foreign currencies decreased second quarter sales by 1.1%. Excluding the effect of currency exchange rates, sales would have increased 11.7%. Consolidated net earnings for the second quarter of 1994 were $559 million, compared with $495 million for the same period a year ago, an increase of 12.9%. Earnings per share for the second quarter of 1994 rose 14.7% to $.86 compared with $.75 in the 1993 period.
LIQUIDITY AND CAPITAL RESOURCES
Net debt (borrowings net of cash and current marketable
securities) was 17.5% of net capital compared with 25.8% at the end
of 1993. Net debt decreased by $524 million during the first six
months of 1994 to $1.41 billion at July 3, 1994. Total debt
represented 24.0% of total capital (stockholders' equity and total
borrowings) at quarter end, compared with 30.2% at the end of 1993.
Additions to property, plant and equipment were $327 million for
the first six months of 1994, compared with $375 for the same
period in 1993.
On July 18, 1994, the Board of Directors approved a regular
quarterly dividend of 29 cents per share payable on September 6,
1994 to shareholders of record as of August 16, 1994.
Item 4. Submission of Matters to a Vote of Security Holders
(a) The annual meeting of the stockholders of the Company was held on April 28, 1994.
(b) The Stockholders elected all the Company's nominees for director and approved the appointment of Coopers & Lybrand as the Company's independent auditors for 1994. The votes were as follows:
1. Election of Directors:
For Withheld
J. W. Black 542,406,690 8,094,799
G. N. Burrow 542,537,573 7,963,916
R. E. Campbell 542,565,396 7,936,093
J. G. Cooney 542,346,880 8,154,609
P. M. Hawley 541,424,885 9,076,604
C. H. Johnson 542,551,895 7,949,594
A. D. Jordan 542,396,925 8,131,564
A. G. Langbo 542,542,096 7,959,393
R. S. Larsen 542,501,351 8,000,138
J. S. Mayo 542,644,063 7,857,426
T. S. Murphy 542,444,134 8,057,355
P. J. Rizzo 542,451,544 8,049,945
M. F. Singer 542,505,018 7,996,471
R. B. Smith 539,909,760 10,591,729
R. N. Wilson 542,444,154 8,057,335
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2. Approval of Appointment of Coopers & Lybrand:
For 547,463,613 Against 1,464,730 Abstain 1,573,146 |
(c) A stockholder proposal on pharmaceutical pricing. The vote on this proposal was as follows:
For 17,317,012 Against 446,420,832 Abstain 15,607,035 |
(d) A scheduled stockholder proposal on Executive Compensation was not presented at the meeting.
- - - - 15 -
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.
Date: August 12, 1994 By C. H. Johnson
C. H. Johnson
(Vice President, Finance)
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Date: August 12, 1994 By A. W. Roulston
A. W. Roulston
(Corporate Controller)
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Regulation S-K Description Exhibit Table of Page Item No. Exhibit No. |
11 Calculation of Earnings 18 - 19
Fiscal Quarter Ended
July 3, July 4,
1994 1993
1. Net Earnings ................ $ 559 495
2. Average number of shares outstanding
during the period............ 643.3 655.3
3. Earnings per share based upon average
outstanding shares (1 / 2) $ .86 .75
4. Fully diluted earnings per share:
a. Average number of shares out-
standing during the period. 643.3 655.3
b. Shares issuable under stock
compensation agreements at
quarter-end .............. .3 .7
c. Shares reserved under the stock
option plan for which the
market price at end of quarter
exceeds the option price.. 16.0 19.0
d. Aggregate proceeds to the Company
from the exercise of
options in 4c ............ 413 530
e. Market price of the Company's
common stock at fiscal
quarter-end............... 42.88 39.88
f. Shares which could be repurchased
under the treasury stock method
(4d / 4e) ................ 9.6 13.3
g. Addition to average outstanding
shares (4b + 4c - 4f)..... 6.7 6.4
h. Shares for fully diluted earnings
per share calculation
(4a + 4g) ................ 650.0 661.7
i. Fully diluted earnings per share
(1 / 4h) ................. $ .86 .75
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Fiscal
Six Months Ended
July 3, July 4,
1994 1993
1. Net Earnings ................ $1,103 998
2. Average number of shares outstanding
during the period............ 643.2 655.4
3. Earnings per share based upon average
outstanding shares (1 / 2) $ 1.71 1.52
4. Fully diluted earnings per share:
a. Average number of shares out-
standing during the period. 643.2 655.4
b. Shares issuable under stock
compensation agreements at
quarter-end .............. .3 .7
c. Shares reserved under the stock
option plan for which the
market price at end of quarter
exceeds the option price.. 16.0 19.0
d. Aggregate proceeds to the Company
from the exercise of
options in 4c ............ 413 530
e. Market price of the Company's
common stock at fiscal
quarter-end............... 42.88 39.88
f. Shares which could be repurchased
under the treasury stock method
(4d / 4e) ................ 9.6 13.3
g. Addition to average outstanding
shares (4b + 4c - 4f)..... 6.7 6.4
h. Shares for fully diluted earnings
per share calculation
(4a + 4g) ................ 649.9 661.8
i. Fully diluted earnings per share
(1 / 4h) ................. $ 1.70 1.51
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