<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
X Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
----- Exchange Act of 1934
For the quarterly period ended JUNE 30, 1995
-------------
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 1-6247
------
ALZA CORPORATION
----------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 77-0142070
------------------------------------- -------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
950 PAGE MILL ROAD, P.O. BOX 10950, PALO ALTO, CALIFORNIA 94303-0802
--------------------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (415) 494-5000
--------------
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
----- -----
Number of shares outstanding of each of the registrant's classes of common stock
as of July 31, 1995:
Common Stock, $.01 par value - 82,349,514 shares
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PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
ALZA CORPORATION
Condensed Consolidated Statement of Income (unaudited)
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
---------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
REVENUES:
Royalties and fees $ 34,230 $ 27,959 $ 68,192 $ 60,808
Research and development 23,485 17,401 45,185 31,584
Net sales 19,180 19,743 38,006 37,636
Interest and other 6,110 4,046 11,862 7,286
-------- -------- -------- --------
Total revenues 83,005 69,149 163,245 137,314
COSTS AND EXPENSES:
Research and development 24,144 19,426 46,386 36,325
Costs of products shipped 16,738 14,176 33,160 28,018
General, administrative
and marketing 8,398 7,847 16,900 15,957
Interest and other 5,580 4,088 11,175 7,800
-------- -------- -------- --------
Total costs and expenses 54,860 45,537 107,621 88,100
-------- -------- -------- --------
Income before income taxes 28,145 23,612 55,624 49,214
Provision for income taxes 10,695 8,864 21,137 18,849
-------- -------- -------- --------
Net income $ 17,450 $ 14,748 $ 34,487 $ 30,365
-------- -------- -------- --------
-------- -------- -------- --------
Net income per common and
common equivalent share $ .21 $ .18 $ .42 $ .37
-------- -------- -------- --------
-------- -------- -------- --------
Weighted average common and
common equivalent shares 82,413 82,313 82,401 82,309
-------- -------- -------- --------
-------- -------- -------- --------
</TABLE>
See accompanying notes.
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<PAGE>
ALZA CORPORATION
Condensed Consolidated Balance Sheet (unaudited)
(In thousands)
<TABLE>
<CAPTION>
June 30, December 31,
ASSETS 1995 1994
------ ------------- ----------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 77,489 $ 88,844
Short-term investments 305,280 256,084
Receivables, net 94,936 84,879
Inventories, at cost:
Raw materials 19,980 18,264
Work in process 10,307 10,175
Finished goods 4,936 4,976
--------- ---------
Total inventories 35,223 33,415
Prepaid expenses and other current assets 26,455 29,211
--------- ---------
Total current assets 539,383 492,433
Property, plant and equipment 332,082 315,688
Less accumulated depreciation and amortization (75,933) (70,238)
--------- ---------
Net property, plant and equipment 256,149 245,450
Other assets 66,737 68,369
--------- ---------
Total assets $ 862,269 $ 806,252
--------- ---------
--------- ---------
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Accounts payable $ 12,331 $ 20,006
Accrued income taxes 2,224 1,418
Accrued compensation 9,490 10,099
Other current liabilities 27,656 24,465
--------- ---------
Total current liabilities 51,701 55,988
5 1/4% zero coupon convertible subordinated debentures 353,303 344,593
Deferred income taxes 22,436 18,513
Other long-term liabilities 23,732 22,679
Stockholders' equity:
Common stock and additional paid-in capital 308,174 302,967
Unrealized losses on available-for-sale securities, net
of tax effect (547) (7,471)
Retained earnings 103,470 68,983
--------- ---------
Total stockholders' equity 411,097 364,479
--------- ---------
Total liabilities and stockholders' equity $ 862,269 $ 806,252
--------- ---------
--------- ---------
</TABLE>
See accompanying notes.
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<PAGE>
ALZA CORPORATION
Condensed Consolidated Statement of Cash Flows (unaudited)
(In thousands)
<TABLE>
<CAPTION>
Six Months Ended June 30,
1995 1994
------------ -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 34,487 $ 30,365
Non-cash adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 7,217 6,124
Interest on 5 1/4% zero coupon convertible
subordinated debentures 8,710 -
Deferred income taxes 3,923 3,086
Increase in assets:
Receivables (10,057) (8,461)
Inventories (1,808) (6,510)
Prepaid expenses and other current assets (2,064) (1,678)
Increase (decrease) in liabilities:
Accounts payable (7,675) 2,680
Accrued income taxes 806 3,903
Accrued compensation (609) 352
Accrued and other liabilities 4,244 3,564
---------- ---------
Total adjustments 2,687 3,060
---------- ---------
Net cash provided by operating activities 37,174 33,425
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (17,675) (12,867)
Purchases of available-for-sale securities (111,188) (130,356)
Sales of available-for-sale securities 72,356 50,613
Maturities of available-for-sale securities 1,380 59,974
Decrease (increase) in cash surrender value-life
insurance and prepaid premiums 310 (6,434)
Decrease in other assets 1,081 3,184
---------- ---------
Net cash used in investing activities (53,736) (35,886)
CASH FLOWS FROM FINANCING ACTIVITIES:
Maturities of commercial paper, net - (105)
Principal payments on long-term debt - (858)
Issuances of common stock 5,207 5,041
---------- ---------
Net cash provided by financing activities 5,207 4,078
---------- ---------
Net increase (decrease) in cash and cash equivalents (11,355) 1,617
Cash and cash equivalents at beginning of period 88,844 53,683
---------- ---------
Cash and cash equivalents at end of period $ 77,489 $ 55,300
---------- ---------
---------- ---------
</TABLE>
See accompanying notes.
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<PAGE>
ALZA CORPORATION
June 30, 1995
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. BASIS OF PRESENTATION
The information at June 30, 1995 and for the quarter and six months ended
June 30, 1995 and 1994 is unaudited, but includes all adjustments (consisting
only of normal recurring adjustments) which the management of ALZA Corporation
("ALZA") believes necessary for fair presentation of the results for the periods
presented. Interim results are not necessarily indicative of results for the
full year. The condensed consolidated financial statements should be read in
conjunction with the audited consolidated financial statements for the year
ended December 31, 1994 included in ALZA's 1994 Annual Report to Stockholders.
2. SHORT-TERM INVESTMENTS
ALZA has classified its entire investment portfolio, including cash
equivalents of $79.3 million at June 30, 1995, as available-for-sale. Although
ALZA may not dispose of all of the securities in its investment portfolio within
one year, ALZA's investment portfolio is available for current operations and,
therefore, has been classified as a current asset. Investments in the
available-for-sale category are carried at fair value with unrealized gains and
losses recorded as a separate component of stockholders' equity. At June 30,
1995, unrealized losses on available-for-sale securities were $0.5 million, net
of a $0.4 million tax effect.
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ALZA CORPORATION
June 30, 1995
The following is a summary of ALZA's investment portfolio at June 30, 1995.
<TABLE>
<CAPTION>
ESTIMATED
UNREALIZED UNREALIZED FAIR
(In thousands) COST GAINS LOSSES VALUE
--------- ------------ ------------ --------------
<S> <C> <C> <C> <C>
U.S. Treasury securities and
obligations of U.S.
government agencies $175,398 $ 2,238 $(2,826) $174,810
Collateralized mortgage
obligations and asset
backed securities 42,839 136 (465) 42,510
Corporate securities 167,308 526 (538) 167,296
-------- ------- ------- --------
$385,545 $ 2,900 $(3,829) $384,616
-------- ------- ------- --------
-------- ------- ------- --------
</TABLE>
The amortized cost and estimated fair value of debt and marketable equity
securities at June 30, 1995, by contractual maturity, are shown below. Expected
maturities will differ from contractual maturities because the issuers of the
securities may have the right to prepay certain of the obligations without
prepayment penalties.
<TABLE>
<CAPTION>
ESTIMATED
FAIR
(In thousands) COST VALUE
--------- ---------
<S> <C> <C>
Due in one year or less $ 160,785 $ 160,492
Due after one year through four years 123,465 122,470
Due after four years through eight years 101,295 101,654
--------- ---------
$ 385,545 $ 384,616
--------- ---------
--------- ---------
</TABLE>
3. LITIGATION
See Part II, Item 1 of this Quarterly Report on Form 10-Q.
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ALZA CORPORATION
June 30, 1995
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
ALZA Corporation ("ALZA" or the "Company") develops, primarily under joint
development and commercialization agreements with client companies, a broad
range of pharmaceutical products based on ALZA's proprietary therapeutic systems
technologies. ALZA's therapeutic systems can often improve the medical value as
well as the cost-effectiveness of drug compounds by increasing efficacy,
minimizing unpleasant or harmful side effects and/or providing greater patient
compliance.
ALZA is also developing products under an arrangement with Therapeutic
Discovery Corporation ("TDC"). TDC, which commenced operations in 1993, was
formed by ALZA for the purpose of selecting and developing new human
pharmaceutical products combining ALZA's proprietary drug delivery technologies
with various drug compounds, and commercializing such products, most likely
through licensing to ALZA. ALZA and TDC currently have more than 20 products in
the development pipeline, including several in early clinical evaluation.
Additional product candidates are under consideration.
ALZA markets certain products it has developed and promotes two products
under co-promotion arrangements with client companies. ALZA manufactures all or
a portion of certain clients' requirements for products developed by ALZA, and
also manufactures products marketed by ALZA.
RESULTS OF OPERATIONS
ALZA's net income was $17.5 million or $0.21 per common share for the
quarter ended June 30, 1995 and $34.5 million or $0.42 per common share for the
six months ended June 30, 1995, compared to net income of $14.7 million or $0.18
per common
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ALZA CORPORATION
June 30, 1995
share for the quarter ended June 30, 1994 and $30.4 million or $0.37 per common
share for the six months ended June 30, 1994.
ALZA's net income currently results primarily from royalties and fees from
client companies. Royalties and fees are derived from sales by client companies
of products developed jointly with ALZA, and will vary from quarter to quarter
as a result of changing levels of product sales by client companies and,
occasionally, the receipt by ALZA of certain one-time fees. Because ALZA's
clients generally take responsibility for obtaining necessary regulatory
approvals and make all marketing and commercialization decisions regarding such
products, most of the variables that affect ALZA's royalties and fees are not
directly within ALZA's control. In addition, with increasing pressures for cost
containment in the U.S. health care system, it can be expected that
pharmaceutical product prices, including those of ALZA's royalty-bearing
products, will not increase as quickly as they have in the past, and could
decrease. Within the next several years, ALZA intends to become less dependent
on royalties and fees as ALZA markets more products (including products
developed with TDC); however, there can be no assurance that these expanded
activities will be successful, due to factors such as the current health care
cost containment environment.
Royalties and fees for the quarter and six months ended June 30, 1995
increased to $34.2 million and $68.2 million, respectively, compared to $28.0
million and $60.8 million for the same periods in 1994, primarily due to
royalties on sales by Bayer AG of Adalat CR-Registered Trademark- (which is
marketed by Pfizer Inc in the United States as Procardia XL-Registered
Trademark-). ALZA began receiving royalties on sales of Adalat CR-Registered
Trademark- during the third quarter of 1994. Royalties and fees for the six
months ended June 30, 1995 were reduced by approximately $5 million to reflect
additions to a reserve for a potential adjustment in
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ALZA CORPORATION
June 30, 1995
royalty revenue on U.S. sales of Procardia XL-Registered Trademark- due to a
U.S. patent issued to Bayer AG. Until a further determination is made regarding
this matter, ALZA intends to maintain a reserve sufficient to cover the maximum
potential reduction in Procardia XL-Registered Trademark- royalties as a result
of this patent. Royalties from Procardia XL-Registered Trademark- accounted for
approximately 40% and 45% of ALZA's royalties for the quarter and six months
ended June 30, 1995, respectively, after the reserve discussed above. ALZA
expects that, in the near term, net income will continue to result primarily
from royalty revenue on sales of currently marketed products and additional
products recently approved or now awaiting approval by the U.S. Food and Drug
Administration and regulatory agencies in other countries.
Research and development revenue of $23.5 million for the quarter and $45.2
million for the six months ended June 30, 1995 increased 35% and 43%,
respectively, from the same periods in 1994 due to increased product development
activities undertaken on behalf of TDC. Research and development revenue from
TDC was $14.5 million and $28.6 million for the quarter and six months ended
June 30, 1995, respectively, and $7.6 million and $12.9 million for the
corresponding periods in 1994. ALZA and TDC are parties to a development
agreement pursuant to which ALZA conducts product development activities on
behalf of TDC. ALZA has granted to TDC a royalty-free, perpetual license to use
ALZA's proprietary drug delivery technologies to develop and commercialize
specified TDC products. Because products in early stages of development
generally require lower levels of expenditures, ALZA's research and development
revenue from TDC for any product can be expected to be lower during the early
stages of development. Research and development expenses for the quarter and
six months ended June 30, 1995 increased approximately 24% and 28%,
respectively, from the same
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<PAGE>
ALZA CORPORATION
June 30, 1995
periods in 1994, primarily due to increased product development activities on
behalf of TDC. As additional products are accepted by TDC into its development
pipeline and as products enter later stages of development, ALZA expects both
its total research and development revenues and expenses for TDC products to
increase.
Net sales of $19.2 million for the quarter ended June 30, 1995 were
slightly lower compared to the corresponding period in 1994, due largely to
shipments of launch quantities of Glucotrol XL-Registered Trademark- to Pfizer
Inc in the second quarter of 1994. Net sales for the six months ended
June 30, 1995 were relatively flat compared to the same period in 1994. Costs
of products shipped increased 18% for the quarter and six months ended
June 30, 1995 over the corresponding periods in 1994 partially due to increased
costs associated with ALZA's program to assure compliance with U.S. Food and
Drug Administration regulations for Good Manufacturing Practices. Also
contributing to the higher costs of products shipped for the six months ended
June 30, 1995 were proportionately higher shipments of lower margin products.
ALZA's Vacaville manufacturing facility provides substantial manufacturing
capacity for ALZA-developed products. Because of the nature of the
substantially fixed costs at this facility, costs of products shipped as a
percent of net sales may vary significantly from period to period due to the
utilization of the facility and the mix of products manufactured. ALZA expects
costs of products shipped, as a percent of net sales, to decline over the longer
term through increased utilization of capacity, greater operating efficiencies
and increased production of ALZA-marketed products.
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<PAGE>
ALZA CORPORATION
June 30, 1995
General, administrative and marketing expenses of $8.4 million for the
quarter and $16.9 million for the six months ended June 30, 1995 increased 7%
and 6%, respectively, compared to the same periods in 1994, due primarily to
sales and marketing activities.
Interest and other revenue, which consists primarily of interest income,
increased 51% and 63%, respectively, for the quarter and six months ended June
30, 1995 compared to the same periods in 1994, due to higher invested cash
balances and higher interest rates.
Interest expense for the quarter and six months ended June 30, 1995
increased 36% and 43%, respectively, compared to the same periods in 1994, due
to a higher amount of outstanding debt and a higher interest rate on such debt.
During the first quarter of 1994, interest expense consisted primarily of
interest expense on ALZA's $250 million commercial paper. In mid-1994 ALZA
retired its commercial paper program with proceeds from an offering of 5 1/4%
zero coupon convertible subordinated debentures.
ALZA's effective combined federal and state tax rate for the year ended
1994 and the quarter and six months ended June 30, 1995 was 38%.
LIQUIDITY AND CAPITAL RESOURCES
ALZA invested $17.7 million during the first six months of 1995 in
additions to property, plant and equipment to support its research and
development and manufacturing activities. While ALZA believes its current
facilities and equipment are sufficient to meet its current operating
requirements, ALZA will continue to expand its facilities and equipment to
support its long-term requirements.
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<PAGE>
ALZA CORPORATION
June 30, 1995
ALZA believes that its existing cash balances and investments are adequate
to fund its current cash needs. In addition, should the need arise, ALZA
believes it would be able to borrow additional funds or raise additional capital
in the marketplace. ALZA may consider using its capital to make strategic
investments or to acquire or license technology or products. ALZA may also
enter into strategic alliances with third parties which could provide additional
funding for research and development and support for marketing and sales.
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<PAGE>
ALZA CORPORATION
June 30, 1995
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In December 1991, a patent infringement suit was filed by Ciba-Geigy
("Ciba") against Marion Merrell Dow Inc., now Hoechst Marion Roussel Inc.
("HMR"), and ALZA in connection with the commercialization of Nicoderm-
Registered Trademark-. In October 1994, the Court granted a motion for summary
judgment brought by ALZA and HMR, ruling the patent invalid. That ruling
cleared ALZA and HMR of liability for infringement of the patent. In November
1994, an appeal was filed by Ciba. During January 1995, ALZA and HMR filed a
suit against Ciba and LTS Lohmann Therapy Systems Corporation for infringement
of two U.S. patents issued to ALZA in 1994 relating to the transdermal
administration of nicotine.
During January 1994, a suit was filed against ALZA by Cygnus Therapeutic
Systems ("Cygnus") seeking a declaration of unenforceability and invalidity of
an ALZA patent relating to the transdermal administration of fentanyl and
alleging violation of antitrust laws. In April 1995, the Court granted ALZA's
motion to dismiss the lawsuit. Cygnus has appealed that ruling.
Pharmaceutical companies are subject to product liability claims from time
to time. During the last two years, six product liability suits have been filed
against Janssen Pharmaceutica, Inc. ("Janssen") and ALZA relating to the
Duragesic-Registered Trademark- product. Janssen is managing the defense of the
Duragesic-Registered Trademark- suits in consultation with ALZA under an
agreement between the parties. Historically, the cost of resolution of ALZA's
liability (including product liability) claims has not been significant, and
ALZA is not aware of any asserted or unasserted claims pending against it,
including the suits mentioned above, the
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ALZA CORPORATION
June 30, 1995
resolution of which would have a material adverse impact on the operations or
financial position of the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The annual meeting of stockholders of ALZA was held on May 11, 1995.
(c) 69,469,148 shares were represented at the annual meeting.
Stockholders approved the following proposals:
(i) Election of Class II Directors:
VOTES VOTES
FOR WITHHELD
---------- --------
Dr. Robert J. Glaser 68,608,542 860,606
Dean O. Morton 68,691,752 777,396
(ii) An amendment and restatement of ALZA's 1992 Stock Option
Plan to (i) increase by 3,000,000 the number of shares of common stock
reserved for issuance under the plan; (ii) to limit the number of
shares as to which options may be granted to any participant under the
plan in any one year period and in connection with an offer of
employment; (iii) to provide for grants of restricted stock under the
plan; and (iv) to rename the plan the ALZA Corporation Amended and
Restated Stock Plan. There were 54,959,655 votes in favor of the
amendment, 11,383,995 votes against, 1,758,172 abstentions and
1,367,326 broker non-votes.
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<PAGE>
ALZA CORPORATION
June 30, 1995
(iii) An amendment and restatement of ALZA's 1984 Employee Stock
Purchase Plan (i) to increase by 500,000 the number of shares of
common stock reserved for issuance under the plan; (ii) to provide for
semi-annual (in lieu of annual) purchases and enrollments; and (iii)
to rename the plan the ALZA Corporation Amended and Restated Employee
Stock Purchase Plan. There were 64,315,853 votes in favor of the
amendment, 1,654,361 votes against, 1,753,563 abstentions and
1,745,371 broker non-votes.
(iv) The ratification of the appointment of Ernst & Young LLP as
ALZA's independent auditors for the fiscal year ended December 31,
1995. There were 68,068,969 votes in favor, 948,982 votes against,
451,197 abstentions and no broker non-votes.
Stockholders rejected a stockholder proposal to recommend that
ALZA's Board of Directors take the necessary steps to adopt and
implement a policy of cumulative voting for all elections of
directors. There were 16,005,051 votes in favor of the amendment,
39,014,464 votes against, 2,288,981 abstentions and 12,160,652 broker
non-votes.
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<PAGE>
ALZA CORPORATION
June 30, 1995
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
3.2 Composite By-laws of ALZA Corporation as restated on
February 10, 1994 and amended on August 11, 1994 and
February 16, 1995
10.2 ALZA Corporation Amended and Restated Stock Plan
11 Statement regarding weighted average common and common equivalent
shares used in computation of per share earnings
27 Financial Data Schedule
(b) No reports on Form 8-K were filed during the quarter
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<PAGE>
ALZA CORPORATION
June 30, 1995
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.
ALZA CORPORATION
Date: August 11, 1995 By: /s/ Dr. Ernest Mario
------------------------------
Dr. Ernest Mario
Co-Chairman and
Chief Executive Officer
Date: August 11, 1995 By: /s/ Bruce C. Cozadd
------------------------------
Bruce C. Cozadd
Vice President and Chief
Financial Officer
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ALZA CORPORATION
June 30, 1995
EXHIBIT INDEX
EXHIBIT
-------
3.2 Composite By-laws of ALZA Corporation as restated on February 10, 1994
and amended on August 11, 1994 and February 16, 1995
10.2 ALZA Corporation Amended and Restated Stock Plan
11 Statement regarding weighted average common and common equivalent
shares used in computation of per share earnings
27 Financial Data Schedule
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<PAGE>
Exhibit 3.2
COMPOSITE BYLAWS
OF
ALZA CORPORATION
REGISTERED OFFICE AND REGISTERED AGENT
1. REGISTERED OFFICE. The registered office of the corporation shall be
in the City of Wilmington County of New Castle, State of Delaware.
2. OTHER OFFICES. The corporation may also have offices at such other
places, both within or without the State of Delaware, as the Board of Directors
may from time to time determine or the business of the corporation may require.
MEETINGS OF STOCKHOLDERS
3. TIME AND PLACE OF MEETINGS. All meetings of the stockholders shall be
held at such time and place, either within or without the State of Delaware, as
shall be fixed by the Board of Directors and stated in the notice or waiver of
notice of the meeting.
4. ANNUAL MEETING. An annual meeting of the stockholders for the
election of directors and for the transaction of such other business as may
properly come before the meeting shall be held on such date and at such time and
place as the Board of Directors shall each year designate.
5. SPECIAL MEETINGS. Special meetings of the stockholders, for any
purpose or purposes prescribed in the notice of meeting, may be called only by
the Board of Directors, the Chairman of the Board or the President of the
corporation.
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6. NO ACTION WITHOUT MEETING. At any time when the corporation has more
than one stockholder of any class of capital stock, no action required to be
taken or which may be taken at any annual or special meeting of the stockholders
of such class of capital stock of the corporation may be taken without a
meeting, and the power of stockholders to consent in writing without a meeting,
to the taking of any action is specifically denied.
7. NOTICE.
(a) Written notice of the place, date, and time of all meetings of the
stockholders shall be given not less than ten nor more than 60 days before the
date on which the meeting is to be held to each stockholder entitled to vote at
such meeting, except as otherwise provided herein or required by law (meaning,
here and hereinafter, as required from time to time by the Delaware General
Corporation Law or the Certificate of Incorporation of the corporation).
(b) When a meeting is adjourned to another place, date or time, written
notice need not be given of the adjourned meeting if the place, date and time
thereof are announced at the meeting at which the adjournment is taken and the
adjournment is for not more than thirty days; provided, however, that if the
date of any adjourned meeting is more than thirty days after the date for which
the meeting was originally noticed, or if a new record date is fixed for the
adjourned meeting, written notice of the place, date and time of the adjourned
meeting shall be given in conformity herewith. At any adjourned meeting, any
business may be transacted which might have been transacted at the original
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meeting.
8. NOMINATIONS AND PROPOSALS.
(a) The Board of Directors of the corporation may nominate candidates for
election as directors of the corporation and may propose such other matters for
approval of the stockholders as the board deems necessary or appropriate.
(b) Any stockholder entitled to vote for directors may nominate candidates
for election as directors of the corporation; provided, however, that so long as
the corporation has more than one stockholder, no nominations for director of
the corporation by any person other than the Board of Directors shall be
presented to any meeting of stockholders unless the person making the nomination
is a record stockholder and shall have delivered a written notice to the
Secretary of the corporation no later than the close of business 60 days in
advance of the stockholder meeting or ten days after the date on which notice of
the meeting is first given to the stockholders, whichever is later. Such notice
shall (i) set forth the name and address of the person advancing such nomination
and the nominee, together with such information concerning the person making the
nomination and the nominee as would be required by the appropriate Rules and
Regulations of the Securities and Exchange Commission to be included in a proxy
statement soliciting proxies for the election of such nominee, and (ii) shall
include the duly executed written consent of such nominee to serve as director
if elected.
(c) No proposal by any person other than the Board of Directors shall be
submitted for the approval of the stockholders at any regular or special meeting
of the stockholders of the
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corporation unless the person advancing such proposal shall have delivered a
written notice to the Secretary of the corporation no later than the close of
business 60 days in advance of the stockholder meeting or ten days after the
date on which notice of the meeting is first given to the stockholders,
whichever is later. Such notice shall set forth the name and address of the
person advancing the proposal, any material interest of such person in the
proposal, and such other information concerning the person making such proposal
and the proposal itself as would be required by the appropriate Rules and
Regulations of the Securities and Exchange Commission to be included in a proxy
statement soliciting proxies for the proposal.
9. QUORUM AND REQUIRED VOTE.
(a) At any meeting of the stockholders, the holders of a majority of all
of the shares of the stock entitled to vote on the subject matter at the
meeting, present in person or by proxy shall constitute a quorum, unless or
except to the extent that the presence of a larger number may be required by
law. Except as provided in Section 42 of these bylaws or as may be required by
law, the affirmative vote of a majority of shares present in person or
represented by proxy at the meeting and entitled to vote on the subject matter
shall be the act of the stockholders.
(b) If a quorum shall fail to attend any meeting, the chairman of the
meeting or the holders of a majority of the shares of stock entitled to vote who
are present, in person or by proxy, may adjourn the meeting to another place,
date or time.
(c) If a notice of any adjourned special meeting of stockholders is sent
to all stockholders entitled to vote
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thereat, stating that it will be held with those present constituting a quorum,
then, except as provided in Section 42 of these bylaws or as otherwise required
by law, those present at such adjourned meeting shall constitute a quorum, and
all matters shall be determined by a majority of the votes cast at such meeting.
10. VOTE REQUIRED FOR BUSINESS COMBINATION.
(a) In addition to any affirmative vote required by law or this
Certificate of Incorporation, and except as expressly provided in Subparagraph
(b) of this Section 10, any Business Combination (as hereinafter defined) with a
Related Person (as hereinafter defined) shall require the affirmative vote of
the holders of at least eighty percent of the voting power of all of the then
outstanding shares of all classes of stock of the corporation entitled to vote
for the election of directors (the "Voting Stock"), voting together as a single
class. Such affirmative vote shall be required notwithstanding the fact that no
vote may be required, or that a lesser percentage may be specified, by law or in
any agreement.
(b) The provisions of this Section 10 shall not apply to any Business
Combination if:
(i) A majority of the Continuing Directors (as hereinafter defined)
of the corporation then in office has by resolution approved the Business
Combination either in advance of or subsequent to such Related Person's having
become a Related Person;
(ii) The Business Combination is solely between the
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corporation and another corporation, one hundred percent of the Voting Stock of
which is owned directly or indirectly by the corporation; or
(iii) The Business Combination is a merger or consolidation and the
cash or fair market value (as determined by a majority of the Continuing
Directors) of the property, securities or other consideration to be received per
share by holders of stock of the corporation in the Business Combination is not
less than the Highest Per Share Price or the Highest Equivalent Price (as these
terms are hereinafter defined) paid by the Related Person in acquiring any of
the corporation's stock.
(c) For the purpose of this Section 10:
(i) The term "Business Combination" shall mean (A) any merger or
consolidation of the corporation with or into a Related Person, (B) any sale,
lease, exchange, transfer or other disposition, including, without limitation, a
mortgage or any other security device, of assets of the corporation or any
subsidiary of the corporation, to a Related Person if such assets constitute a
Substantial Part (as hereinafter defined), (C) any merger or consolidation of a
Related Person with or into the corporation or a subsidiary of the corporation,
(D) the issuance of any securities of the corporation or a subsidiary of the
corporation to a Related Person, (E) any recapitalization that would have the
effect of increasing the voting power in the corporation of a Related Person,
and (F) any agreement, contract or other arrangement providing for any of the
transactions described in this definition of Business Combination.
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(ii) The term "Related Person" shall mean any individual,
corporation or other entity which, alone or together with (A) its "Affiliates"
and "Associates" (as defined in Rule 12b-2 of the General Rules and Regulations
under the Securities Exchange Act of 1934 as in effect at the date of the
adoption of this Section 10 by the stockholders of the corporation
(collectively, and as so in effect, the "Exchange Act")) or (B) members of a
"group" (as defined with reference to Section 13(d)(3) of the Exchange Act) of
which such individual, corporation or other entity is a member, "beneficially
owns" (as defined in Rule 13d-3 of the Exchange Act) shares of the outstanding
common stock of the corporation which, in the aggregate, have (or, in the case
of convertible securities, would have, if such convertible securities were, at
the time the determination is being made, convertible and had been converted) 20
percent or more of the total combined power to elect directors of the
corporation.
(iii) For the purposes of subparagraph (b)(iii) of this Section 10,
the term "other consideration to be received" shall include, without limitation,
common stock of the corporation retained by its existing stockholders in the
event of a Business Combination in which the corporation is the surviving
corporation.
(iv) The term "Continuing Director" shall mean a director who is
unaffiliated with the Related Person and who was a member of the Board of
Directors of the corporation immediately prior to the time that the Related
Person involved in a Business Combination became a Related Person.
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(v) The term "Substantial Part" shall mean assets having a book
value in excess of 30 percent of the book value of the total consolidated assets
of the corporation and its subsidiaries taken as a whole as of the end of its
most recent fiscal year ended prior to the time the determination is made.
(vi) The terms "Highest Per Share Price" and "Highest Equivalent
Price" shall mean the following: If there is only one class of capital stock of
the corporation issued and outstanding, the Highest Per Share Price shall mean
the highest price that can be determined by a majority of the Continuing
Directors then in office to have been paid at any time by the Related Person for
any share or shares of that class of capital stock. If there is more than one
class of capital stock of the corporation issued and outstanding, the Highest
Equivalent Price shall mean, with respect to each class of capital stock of the
corporation, the amount determined by a majority of the Continuing Directors
then in office, on whatever basis they believe is appropriate, to be the highest
per share price equivalent to the highest per share price that can be determined
to have been paid at any time by the Related Person for any share or shares of
any class of capital stock of the corporation. In determining the Highest Per
Share Price and Highest Equivalent Price, all purchases by the Related Person
shall be taken into account regardless of whether the shares were purchased
before or after the Related Person became a Related Person. Also, the Highest
Per Share Price and the Highest Equivalent Price shall include any brokerage
commissions, transfer taxes and soliciting dealers' fees paid by the Related
Person with respect to the shares of capital stock of the
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corporation acquired by the Related Person.
(d) A majority of the Continuing Directors of the corporation then in
office (including directors purporting, in good faith, to be Continuing
Directors) shall have the power and duty to determine, for the purposes of this
Section 10, on the basis of information then known to them, whether any
individual, corporation or other entity is a Related Person. Any such
determination made in good faith shall be conclusive and binding for all
purposes of this Section 10.
(e) The provisions set forth in this Section 10 may not be repealed or
amended in any respect without:
(i) The affirmative vote of not less than 80 percent of the Board
of Directors and of a majority of the Continuing Directors then in office, and
(ii) The affirmative vote of the holders of 80 percent or more of
the Voting Stock, voting together as a single class;
PROVIDED, HOWEVER, that the provisions of this paragraph (e) shall not apply to
any amendment or repeal of any provision of this Section 10 that is recommended
to the stockholders by a resolution adopted by (A) a majority of the Board of
Directors, and (B) not less than 80 percent of the Continuing Directors then in
office, in which case any such amendment or repeal shall require only the
affirmative vote of a majority of the Voting Stock.
11. ORGANIZATIONS. The Chairman of the Board or, in his or
her absence, the President of the corporation or, in the absence
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of both, such person as may be designated by the Board of Directors or, if there
is no such designation, such person as may be chosen by the holders of a
majority of the shares entitled to vote who are present, in person or by proxy,
shall call to order any meeting of the stockholders and act as chairman of the
meeting.
12. CONDUCT OF BUSINESS. The Chairman of any meeting of stockholders
shall determine the order of business and the procedure at the meeting,
including such regulation of the manner of voting and the conduct of discussion
as seem to him or her in order.
13. PROXIES AND VOTING. At any meeting of the stockholders, every
stockholder entitled to vote may vote in person or by proxy authorized by an
instrument in writing filed in accordance with the procedures established for
the meeting.
14. STOCK LIST. A complete list of stockholders entitled to vote at any
meeting of stockholders, arranged in alphabetical order and showing the address
of each such stockholder and the number of shares of each class registered in
his or her name, shall be open to the examination of any stockholder, for any
purpose germane to the meeting, during ordinary business hours for a period of
at least ten days prior to the meeting, either at a place within the city where
the meeting is to be held, which place shall be specified in the notice of the
meeting or, if not so specified, at the place where the meeting is to be held.
The stock list shall also be kept at the place of the meeting during the whole
time thereof and shall be open to the examination of any stockholder present.
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BOARD OF DIRECTORS
15. POWERS. The business and affairs of the corporation shall be managed
by or under the direction of its Board of Directors.
16. NUMBER, CLASSIFICATION AND TERM OF OFFICE. The number of directors of
the corporation who shall constitute the whole board shall be nine but may be
increased or decreased from time to time either by a resolution or bylaw duly
adopted by the Board of Directors. The Board of Directors shall be and is
divided into three classes: Class I, Class II and Class III, which shall be as
nearly equal in number as possible. Each director shall serve for a term ending
on the date of the third annual meeting of stockholders following the annual
meeting at which the director was elected; provided, however, that each initial
director in Class I shall hold office until the annual meeting of stockholders
in 1988; each initial director in Class II shall hold office until the annual
meeting of stockholders in 1989; and each initial director in Class III shall
hold office until the annual meeting of stockholders in 1990. Notwithstanding
the foregoing, each director shall serve until his successor is duly elected and
qualified or until his death, resignation or removal.
[Section 16 amended by the Board
of Directors on February 16, 1995,
effective May 11, 1995]
17. REMOVAL. Any director may be removed from office, only with cause, by
the holders of a majority of the shares entitled to vote in an election of
directors.
18. RESIGNATIONS. A director may resign at any time by giving written
notice to the corporation. Such resignation shall be effective when given
unless the director specifies a later time. The resignation shall be effective
regardless of whether
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it is accepted by the corporation.
19. NEWLY-CREATED DIRECTORSHIPS AND VACANCIES. In the event of any
increase or decrease in the authorized number of directors, any newly-created or
eliminated directorships resulting from such increase or decrease shall be
apportioned by the Board of Directors among the three classes of directors so as
to maintain such classes as nearly equal in number as possible. No decrease in
the number of directors constituting the Board of Directors shall shorten the
term of any incumbent director. Newly-created directorships resulting from any
increase in the number of directors and any vacancies on the Board of Directors
resulting from death, resignation, disqualification, removal or other cause
shall be filled by the affirmative vote of a majority of the remaining directors
then in office (and not by stockholders), even though less than a quorum of the
Board of Directors. Any director elected in accordance with the preceding
sentence shall hold office for the remainder of the full term of the class of
directors in which the new directorship was created or the vacancy occurred and
until such director's successor shall have been elected and qualified.
20. REGULAR MEETINGS. Regular meetings of the Board of Directors shall be
held at such place or places, on such date or dates, and at such time or times
as shall have been established by the Board of Directors and publicized among
all directors. A notice of each regular meeting shall not be required.
21. SPECIAL MEETINGS. Special meetings of the Board of Directors may be
called by the Chairman of the Board, the President or any two directors.
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22. NOTICE OF MEETINGS.
(a) Special meetings, and regular meetings not fixed as provided in these
Bylaws, shall be held upon four days' notice by mail or two days' notice
delivered personally or by telephone or telegraph to each director who does not
waive such notice. The notice shall state the place, date and time of the
meeting. Unless otherwise indicated in the notice, any and all business may be
transacted at a special meeting.
(b) Notice of a reconvened meeting need not be given if the place, date
and time of the reconvened meeting are announced at the meeting at which the
adjournment is taken and the adjournment is not for more than 24 hours. If a
meeting is adjourned for more than 24 hours, notice of the reconvened meeting
shall be given prior to the time of that reconvened meeting to the directors who
were not present at the time of the adjournment.
23. ACTION WITHOUT MEETING. Except as required by law, any action
required or permitted to be taken at any meeting of the Board of Directors or
any committee thereof may be taken without a meeting if all members of the Board
of Directors or any committee thereof, as the case may be, consent thereto in
writing, and the writing or writings are filed with the minutes of the Board of
Directors or committee.
24. MEETING BY TELEPHONE. Except as required by law, members of the Board
of Directors or any committee thereof may participate in the meeting of the
Board of Directors or committee by means of conference telephone or similar
communications equipment if all persons who participate in the meeting can hear
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each other. Such participation in a meeting shall constitute presence in person
at such meeting.
25. QUORUM AND MANNER OF ACTING. At any meeting of the Board of
Directors, a majority of the directors then in office shall constitute a quorum
for all purposes. A meeting at which a quorum is initially present may continue
to transact business notwithstanding the withdrawal of directors. If a quorum
shall fail to attend any meeting, a majority of those present may adjourn the
meeting to another place, date or time, without further notice or waiver
thereof. Except as provided herein, the act of the majority of the directors
present at any meeting at which a quorum is present shall be the act of the
Board of Directors.
26. COMMITTEES OF THE BOARD OF DIRECTORS. The Board of Directors by a
vote of a majority of the whole Board, may from time to time designate
committees of the Board, with such lawfully delegable powers and duties as it
thereby confers, to serve at the pleasure of the Board and shall for those
committees and any others provided for herein, elect a director or directors to
serve as the member or members, designating, if it desires, other directors as
alternate members who may replace any absent or disqualified member at any
meeting of the committee. Any committee so designated may exercise the power
and authority of the Board of Directors to declare a dividend or to authorize
the issuance of stock if the resolution which designates the committee or a
supplemental resolution of the Board of Directors shall so provide. The
principles set forth in Sections 15
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through 25 of these Bylaws shall apply to committees of the Board of Directors
and to actions taken by such committees. All members of any Audit Committee of
this Company designated by the Board of Directors shall be directors who are not
also employees of the corporation.
27. COMPENSATION OF DIRECTORS. Unless otherwise restricted by the
Certificate of Incorporation or these Bylaws, the Board of Directors shall have
the authority to fix the compensation of directors. The directors may be paid
their expenses, if any, of attendance at each meeting of the Board of Directors
or a committee thereof, and may receive fixed fees and other compensation for
their services as directors. No such payment shall preclude any director from
serving the corporation in any other capacity and receiving compensation for
such service.
OFFICERS
28. TITLES. The officers of the corporation shall be chosen by the Board
of Directors and shall include a Chairman of the Board or a President or both, a
Secretary and a Treasurer. The Board of Directors may also appoint one or more
Vice Presidents, Assistant Secretaries, Assistant Treasurers or other officers.
Any number of offices may be held by the same person. All officers shall perform
their duties and exercise their powers subject to the Board of Directors.
29. ELECTION, TERM OF OFFICE AND VACANCIES. The officers shall be elected
annually by the Board of Directors at its regular meeting following the annual
meeting of the stockholders,
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and each officer shall hold office until the next annual election of officers
and until the officer's successor is elected and qualified, or until the
officer's death, resignation or removal. Any officer may be removed at any
time, with or without cause, by the Board of Directors. Any vacancy occurring
in any office may be filled by the Board of Directors.
30. RESIGNATION. Any officer may resign at any time upon notice to the
corporation without prejudice to the rights, if any, of the corporation under
any contract to which the officer is a party. The resignation of an officer
shall be effective when given unless the officer specifies a later time. The
resignation shall be effective regardless of whether it is accepted by the
corporation.
31. CHIEF EXECUTIVE OFFICER. The Board of Directors shall designate
either the Chairman of the Board or the President as the chief executive officer
and may prescribe the duties and powers of the chief executive officer. In the
absence of such a designation, the Chairman of the Board shall be the chief
executive officer. If there is no Chairman of the Board, the President shall be
the chief executive officer. Subject to the provisions of these Bylaws and to
the direction of the Board of Directors, the chief executive officer shall have
the responsibility for the general management and control of the business and
affairs of the corporation and shall perform all duties and have all powers
which are commonly incident to the office of chief executive or which are
delegated to him or her by the Board of Directors. Either the Chairman of the
Board or the
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President and such other officers as may, from time to time, be expressly
designated by the Board of Directors shall have power to sign all stock
certificates, contracts and other instruments of the corporation which are
authorized.
32. SECRETARY AND ASSISTANT SECRETARIES. The Secretary shall issue all
authorized notices for, and shall keep minutes of, all meetings of the
stockholders and the Board of Directors. He or she shall have charge of the
corporate books and shall perform such other duties as the Board of Directors
may from time to time prescribe. At the request of the Secretary, or in the
Secretary's absence or disability, any Assistant Secretary shall perform any of
the duties of the Secretary and when so acting shall have all the powers of, and
be subject to all the restrictions upon, the Secretary.
33. TREASURER AND ASSISTANT TREASURERS. Unless the Board of Directors
designates another chief financial officer, the Treasurer shall be the chief
financial officer of the corporation. Unless otherwise determined by the Board
of Directors or the chief executive officer, the Treasurer shall have custody of
the corporate funds and securities, shall keep adequate and correct accounts of
the corporation's properties and business transactions, shall disburse such
funds of the corporation as may be ordered by the Board or the chief executive
officer (taking proper vouchers for such disbursements), and shall render to the
chief executive officer and the Board, at regular meetings of the Board or
whenever the Board may require, an account of all transactions and the financial
condition of the
17
<PAGE>
corporation. At the request of the Treasurer, or in the Treasurer's absence or
disability, any Assistant Treasurer may perform any of the duties of the
Treasurer and when so acting, shall have all the powers of, and be subject to
all the restrictions upon, the Treasurer.
34. OTHER OFFICERS. The other officers of the corporation, if any, shall
exercise such powers and perform such duties as the Board of Directors or the
chief executive officer shall prescribe.
35. COMPENSATION. The Board of Directors shall fix the compensation of
the chief executive officer and may fix the compensation of other employees of
the corporation, including the other officers. If the Board does not fix the
compensation of the other officers, the chief executive officer shall fix such
compensation.
36. ACTIONS WITH RESPECT TO SECURITIES OF OTHER CORPORATIONS. Unless
otherwise directed by the Board of Directors, the Chairman of the Board, the
President or any officer of the corporation authorized by the Chairman of the
Board or the President, shall have power to vote and otherwise act on behalf of
the corporation, in person or by proxy, at any meeting of stockholders of, or
with respect to any action of stockholders of, any other corporation in which
the corporation may hold securities and otherwise shall have power to exercise
any and all rights and powers which the corporation may possess by reason of its
ownership of securities in such other corporation.
18
<PAGE>
STOCK AND DIVIDENDS
37. CERTIFICATES OF STOCK. Each stockholder shall be entitled to a
certificate signed by, or in the name of, the corporation by the Chairman, the
President or a Vice President, and by the Secretary or an Assistant Secretary,
or the Treasurer or an Assistant Treasurer, certifying the number of shares
owned by him or her. Any or all of the signatures on the certificates may be
facsimile.
38. TRANSFERS OF STOCK. Transfers of stock shall be made only upon the
transfer books of the corporation kept at an office of the corporation or by
transfer agents designated to transfer shares of the stock of the corporation.
Except where a certificate is issued in accordance with the next sentence of
this Section, an outstanding certificate for the number of shares involved shall
be surrendered for cancellation before a new certificate is issued therefor. In
the event of the loss, theft or destruction of any certificate of stock, another
may be issued in its place pursuant to such regulations as the Board of
Directors may establish concerning proof of such loss, theft or destruction and
concerning the giving of a satisfactory bond or bonds of indemnity.
39. REGULATIONS. The issue, transfer, conversion and registration of
certificates of stock shall be governed by such other regulations as the Board
of Directors may establish.
RECORD DATE
40. RECORD DATE. In order that the corporation may determine the
stockholders entitled to notice of or to vote at
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any meeting of stockholders or any adjournment thereof, or entitled to receive
payment of any dividend or other distribution or allotment of any rights, or
entitled to exercise any rights in respect of any change, conversion or exchange
of stock or for the purpose of any other lawful action, the Board of Directors
may fix in advance, a record date, which shall not be more than 60 nor less than
ten days before the date of such meeting, nor more than 60 days prior to any
other action. If no record date is fixed, the record date (1) for determining
stockholders entitled to notice of or to vote at a meeting of stockholders shall
be at the close of business on the day next preceding the day on which notice is
given or, if notice is waived, at the close of business on the day next
preceding the day on which the meeting is held; and (2) for determining
stockholders for any other purpose shall be at the close of business on the day
on which the Board of Directors adopts the resolution relating thereto. A
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting; provided,
however, that the Board of Directors may fix a new record date for the
reconvened meeting.
WAIVER OF NOTICE
41. WAIVER OF NOTICE. Whenever notice is required to be given by law or
these Bylaws, a written waiver of notice, signed by the person entitled to
notice, whether before or after the time stated therein, shall be deemed
equivalent to notice. Attendance of a person at a meeting shall constitute a
waiver of notice of such meeting, except when the person attends a meeting
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<PAGE>
for the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened. Unless so required by the Certificate of Incorporation or these
Bylaws, neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the stockholders, directors or members of a
committee of directors need be specified in any written waiver of notice.
AMENDMENTS
42. AMENDMENTS. These Bylaws may be amended or repealed or new bylaws may
be adopted by the stockholders or by the Board of Directors. Notwithstanding
the foregoing, no provision of Section 10 may be amended or repealed except in
accordance with Section 10(e) and no provision of Sections 16 or 19 may be
amended or repealed except by a resolution adopted by the affirmative vote of
not less than 75% of the members of the Board of Directors or by the affirmative
vote of the holders of at least 80% of the outstanding shares of capital stock
entitled to vote in an election of directors.
MISCELLANEOUS
43. FISCAL YEAR. The fiscal year of the corporation shall be as fixed by
the Board of Directors.
44. TIME PERIODS. In applying any provision of these Bylaws which
requires that an act be done or not done within a specified number of days prior
to an event or that an act be done during a period of a specified number of days
prior to an event,
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calendar days shall be used, the day of the doing of the act shall be excluded,
and the day of the event shall be included.
45. FACSIMILE SIGNATURES. In addition to the provisions for use of
facsimile signatures elsewhere specifically authorized in these Bylaws,
facsimile signatures of any officer or officers of the corporation may be used
whenever and as authorized by the Board of Directors.
46. CORPORATE SEAL. The Board of Directors may provide a suitable seal,
containing the name of the corporation, which seal shall be in the charge of the
Secretary. Duplicates of the seal may be kept and used by the Treasurer or by
an Assistant Secretary or Assistant Treasurer.
47. RELIANCE UPON BOOKS, REPORTS AND RECORDS. Each director, each member
of any committee designated by the Board of Directors, and each officer of the
corporation shall, in the performance of his or her duties, be fully protected
in relying in good faith upon the books of account or other records of the
corporation, including reports made to the corporation by any of its officers,
by an independent certified public accountant or by an appraiser.
48. INDEMNIFICATION OF EMPLOYEES. Each person who was or is made a party
or is threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative ("a
proceeding"), because he or she is or was an employee of the corporation or is
or was serving at the request of the corporation as a director, officer,
employee, agent or trustee of another corporation, partnership, joint venture,
trust or other enterprise (including service with respect to employee benefit
plans from the date of plan adoption), shall be indemnified and held harmless by
the corporation against all expense, liability and loss (including attorneys'
fees, judgments, penalties, fines, Employee Retirement Income Security Act of
1974 excise taxes or penalties, and amounts paid or to be paid in settlement)
reasonably incurred or suffered by such person in connection therewith; provided
in any event that such person acted in good faith and in a manner he or she
reasonably believed to be in, or not opposed to, the best interests of the
corporation; and provided further that the corporation shall indemnify any such
person seeking indemnification in connection with a proceeding (or part thereof)
initiated by such person only if the proceeding (or part thereof) was authorized
by the Board of Directors of the corporation. Such indemnification shall
continue as to a person who has ceased to be an employee and shall inure to the
benefit of his or her heirs, executors or administrators.
[Section 48 adopted by the Board
of Directors on August 11, 1994]
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Exhibit 10.2
ALZA CORPORATION
AMENDED AND RESTATED STOCK PLAN
1. PURPOSE. The purpose of this ALZA Corporation Amended and Restated
Stock Plan (the "Plan") is to attract, retain and motivate key employees
(including employees who are also directors), directors and consultants of ALZA
Corporation (the "Company") and its subsidiaries by giving them the opportunity
to acquire stock ownership in the Company. Grants under this Plan may consist
of incentive stock options, intended to satisfy the requirements of Section 422
of the Internal Revenue Code of 1986, as it may be amended from time to time
(the "Code"), or nonstatutory stock options (in either case, where unspecified,
"options"). This Plan also provides for the award of restricted stock.
2. EFFECTIVE DATE AND TERM OF PLAN. The effective date of
this Plan is May 4, 1992, the date of the approval of the 1992 Stock Option Plan
by the Company's stockholders. This Plan shall terminate automatically ten (10)
years after its effective date unless terminated earlier by the Board of
Directors (the "Board") under Section 13 hereof. No grant of options or
restricted stock shall be made after termination of this Plan, but all grants
made prior to termination shall remain in effect in accordance with their terms.
3. SHARES SUBJECT TO THE PLAN.
(a) NUMBER AND SOURCE OF SHARES. Subject to the provisions of
Section 9, the total number of shares of stock
<PAGE>
reserved for grants under this Plan is 6,000,000 shares of Common Stock, $. 01
par value, of the Company (the "Stock"). If any option terminates or expires
without being exercised in full, or if any shares of Stock issued as restricted
stock are forfeited prior to conferring on their holder benefits of ownership
other than voting rights or accumulated dividends that are not realized, the
shares issuable under such option or so forfeited shall become available again
for grant under this Plan. The shares to be issued hereunder may consist of
authorized and unissued shares or treasury shares.
(b) INDIVIDUAL LIMITATION. The Company may not grant options
covering in the aggregate more than 200,000 shares of Stock (subject to
adjustments and substitutions as required under Section 9 below) to any one
participant in any one-year period, except that, at the time of an offer of
employment, the Company may grant options covering in the aggregate up to
750,000 shares of Stock (subject to adjustments and substitutions as required
under Section 9 below).
4. ADMINISTRATION OF THE PLAN. This Plan shall be administered by the
Board or by a committee that meets the requirements of Rule 16b-3 under the
Securities Exchange Act of 1934 as in effect from time to time (in either case,
the "Administrator"). The Administrator may delegate nondiscretionary
administrative duties to such employees of the Company or a subsidiary as it
deems proper. The Administrator may also make rules and regulations which it
deems useful to administer this Plan. Any decision or action of the
Administrator in connection with this Plan or any options or
-2-
<PAGE>
restricted stock granted or shares of Stock purchased under this Plan shall be
final and binding. No member of the Board shall be liable for any decision,
action or omission respecting this Plan, or any options or restricted stock
granted or shares of Stock issued under this Plan.
5. ELIGIBILITY.
(a) Incentive stock options may be granted under this Plan only to
employees of the Company or a subsidiary, including employees who may also be
officers or directors of the Company or any subsidiary of the Company.
Nonstatutory options and restricted stock may be granted to employees (including
employees who are also directors), directors, consultants and potential
employees (in contemplation of and subject to employment) of the Company or any
subsidiary of the Company; provided, however, that grants to directors who are
not also employees of the Company may be made only in accordance with Section
5(b) below. Participants in this Plan shall be recommended for grants hereunder
by the Chief Executive Officer or Chief Operating Officer of the Company and
approved by the Administrator. Determination by the Administrator as to
eligibility shall be conclusive.
(b) Notwithstanding any other provision of this Plan, directors who
are not also employees of the Company may receive grants under this Plan only in
accordance with this Section 5(b). Automatically and in connection with the
offer of directorship to a person who is not an employee of the Company, and
subject to that person becoming a director of the Company within the time period
set forth in the offer, the person shall be granted a nonstatutory option to
purchase 20,000 shares of Stock at the
-3-
<PAGE>
fair market value of the Stock on the date of the offer. Such option shall vest
in five equal annual increments of 4,000 shares for each increment, beginning on
the first anniversary of the date on which the person first attends a meeting of
the Board following his or her election as a director (the "Service Date"), and
shall be exercisable until the date that is ten (10) years after the date of
grant. Assuming that the director is a non-employee director on the fifth
anniversary of his or her Service Date, such director automatically shall be
granted on such fifth anniversary of his or her Service Date a further
nonstatutory option to purchase 10,000 shares of Stock at the fair market value
of the Stock on the date of the grant. Such additional option shall vest in
five equal annual increments of 2,000 shares each, beginning one year after the
date of grant, and shall be exercisable until the date that is ten (10) years
after the date of grant. Thereafter, on each subsequent fifth anniversary of
his or her Service Date, assuming the director is then a non- employee director,
a further option to purchase an additional 10,000 shares of Stock automatically
shall be granted to such director on the same basis as set forth in the
preceding sentence. The Service Date for a director who is also an employee of
the Company but who terminates employment with the Company while remaining a
director shall, for purposes of this Section 5(b), be deemed to be the date on
which such director first attends a meeting of the Board following the
termination of his or her employment with the Company. If such director has not
been granted options to purchase Stock within five years prior to his or her
Service Date, he or she automatically shall be granted
-4-
<PAGE>
a nonstatutory option to purchase 20,000 shares of Stock on the same basis as
set forth above for a grant to a person becoming a director of the Company; and,
thereafter, on each subsequent fifth anniversary of his or her Service Date,
assuming the director is then a non-employee director, a further option to
purchase an additional 10,000 shares of Stock automatically shall be granted to
such director on the same basis as set forth above for further options.
However, if such director has been granted options to purchase Stock within five
years prior to his or her Service Date, he or she shall automatically be granted
a nonstatutory option to purchase 10,000 shares of Stock on the same basis as
set forth above for further options on the fifth anniversary of the date of the
last grant of options by the Company to such person prior to the termination of
his or her employment with the Company (the "Initial Grant Date"); and,
thereafter, on each subsequent fifth anniversary of his or her Initial Grant
Date, assuming the director is then a non-employee director, a further option to
purchase an additional 10,000 shares of Stock automatically shall be granted to
such director on the same basis as set forth above for further options.
6. OPTIONS.
(a) GRANT. The Administrator may, in its discretion, grant options
under this Plan at any time and from time to time before the expiration of this
Plan. The Administrator shall specify the date of grant or, if it fails to, the
date of grant shall be the date of the action taken by the Administrator to
grant the option (in either case, the "Grant Date"). If an incentive stock
option is approved in anticipation of employment,
-5-
<PAGE>
the Grant Date shall in any event not be prior to the date the intended optionee
is first treated as an employee of the Company or any subsidiary for payroll
purposes.
(b) OPTION AGREEMENTS. As soon as practicable after the Grant Date,
the Company will provide the optionee a written stock option agreement (the
"Option Agreement"), which designates the option as an incentive stock option or
nonstatutory option and which identifies the Grant Date, the number of shares of
Stock covered by the option, the option price and the terms and conditions for
exercise of the option.
(c) TERMS AND CONDITIONS OF OPTIONS. Options granted under this Plan
shall be subject to the following additional terms and conditions and such other
terms and conditions not inconsistent with this Plan as the Administrator may
impose:
(i) EXERCISE OF OPTION. In order to exercise all or any portion
of an incentive stock option granted under this Plan (or any other option which,
by its terms, so requires), an optionee must remain in the employ of the Company
or a subsidiary of the Company until the date on which the option (or portion
thereof) becomes exercisable (the "Vesting Date"). An option shall be partially
exercisable on or after each Vesting Date with respect to the percentage of
total shares of Stock covered by the option set out in the Option Agreement.
If an option (or portion thereof) is not exercised on the earliest
Vesting Date on which it becomes exercisable, it may be exercised thereafter at
any time prior to its expiration date; provided, however, that in no event may
an incentive stock option granted under this Plan be exercised more than ten
(10) years
-6-
<PAGE>
from the Grant Date. If the Company grants an incentive stock option to an
optionee who owns, on the Grant Date, directly or by attribution, stock
possessing more than ten percent (10%) of the total combined voting power of all
classes of stock of the company or any subsidiary, the option shall not be
exercisable more than five (5) years after the Grant Date.
Notwithstanding any other provision of this Plan, to the extent
required by Section 422(d) of the Code, the aggregate value of all shares first
becoming exercisable by an optionee during any year, under all incentive stock
options granted to such optionee covering stock of the Company (or any company
which, at the time of grant, was a parent or subsidiary of the Company), shall
not exceed $100,000 or such other amount as may be in effect from time to time.
If by their terms such incentive stock options, when taken together, would first
become exercisable at a faster rate then, except as otherwise specifically
provided by the Administrator in its discretion, the portion thereof which
exceeds such amount shall be nonstatutory options. For this purpose, value
shall be the fair market value of the option stock when the options were granted
and options shall be taken into account in the order in which they were granted.
In no event may the operation of this Section 6(c)(i) cause an option to vest
before its terms or, having vested, cease to be vested.
Nonstatutory options granted to employees under this Plan shall be
exercisable until ten (10) years after the Grant Date, unless the Administrator
shall determine otherwise.
-7-
<PAGE>
(ii) OPTION PRICE. The option price of incentive stock options
shall be at least one-hundred percent (100%) of the fair market value of the
shares covered by the option on the Grant Date, as determined in good faith by
the Administrator and, in the case of nonstatutory options, shall be at least
one- hundred percent (100%) of the fair market value of the shares covered by
the option on the Grant Date unless the Administrator specifically determines
otherwise, in which event the option price of such nonstatutory options shall
not be less than eighty- five percent (85%) of the fair market value of the
shares covered thereby on the Grant Date, determined in the same manner. If the
Company grants an incentive stock option to an optionee owning on the Grant
Date, directly or by attribution, shares possessing more than ten percent (10%)
of the total combined voting power of all classes of stock of the Company or any
subsidiary, the option price shall be at least one-hundred ten percent (110%) of
the fair market value of the shares covered by the option on the Grant Date
determined in the same manner.
(iii) METHOD OF EXERCISE. To the extent the right to purchase
shares has accrued, an option (or portion thereof) may be exercised from time to
time in accordance with its terms by written notice from the optionee to the
Company stating the number of shares with respect to which the option is being
exercised and accompanied by payment in full of the exercise price of the
shares. Payment may be made in cash, by check, or by delivery of shares of
Stock (duly endorsed in favor of the Company or accompanied by a duly endorsed
stock power), by a combination of the above, or any other form of consideration
-8-
<PAGE>
approved by the Administrator (including payment in accordance with a cashless
exercise program as permitted under Regulation T promulgated by the Federal
Reserve Board, as amended from time to time). Any shares delivered to the
Company as payment upon exercise of an option shall be valued at their fair
market value as of the date of exercise of the option determined in good faith
by the Administrator. Options may not be exercised by any optionee by the
delivery of shares of stock more frequently than once every six months.
(iv) RESTRICTIONS ON OPTION SHARES. At the time it grants
options under this Plan, the Company may retain for itself (or others) rights to
purchase the shares acquired under the option or impose other restrictions on
the shares. The terms and conditions of any such rights or other restrictions
shall be set forth in the Option Agreement evidencing the option.
(v) NONASSIGNABILITY OF OPTION RIGHTS. No option shall be
transferable other than by will or by the laws of descent and distribution or a
qualified domestic relations order and, otherwise during the lifetime of an
optionee, only the optionee may exercise an option.
(vi) EXERCISE AFTER TERMINATION OF SERVICE OR DEATH. If for any
reason other than permanent and total disability or death, an optionee ceases to
be employed by, or a consultant or director to (if such relationship forms the
sole basis for the grant), the Company or a subsidiary, options held at the date
of such termination (to the extent then exercisable) may be exercised at any
time within three months after the date of such termination (but in no event
after the expiration date of
-9-
<PAGE>
the option as set forth in the Option Agreement). If an optionee becomes
permanently and totally disabled (within the meaning of Section 22(e)(3) of the
Code) or dies while employed by, or a consultant or director to, the Company or
a subsidiary, (or, if the optionee dies within the period that the option
remains exercisable after termination of employment, consultancy or
directorship), options then held (to the extent then exercisable) may be
exercised by the optionee, the optionee's personal representative, or by the
person to whom the option is transferred by will or the laws of descent and
distribution, at any time within one year after the disability or death or any
lesser period specified in the Option Agreement (but in no event after the
expiration date of the option as set forth in the Option Agreement).
7. RESTRICTED STOCK.
(a) GRANT. The Administrator may grant restricted stock under this
Plan at any time and from time to time before the expiration of this Plan.
(b) RESTRICTED STOCK AGREEMENT. As soon as practicable after the
grant of restricted stock, which in no event shall be later than thirty (30)
days after the grant date of the restricted stock, the Company will provide the
participant with a written restricted stock agreement setting forth the terms
and conditions of the grant (the "Restricted Stock Agreement").
(c) PRICE. Participants awarded restricted stock, within fifteen
(15) days of receipt of the Restricted Stock Agreement, shall pay to the Company
an amount equal to the par value of the Stock subject to the grant. If such
payment is not
-10-
<PAGE>
made and received by the Company by such date, the grant of restricted stock
shall lapse.
(d) RESTRICTIONS. Subject to the provisions of the Plan and the
Restricted Stock Agreement, during a period set by the Administrator, commencing
with, and not exceeding ten (10) years from, the grant date of the restricted
stock (the "Restriction Period"), the participant shall not be permitted to
sell, assign, transfer, pledge or otherwise encumber shares of restricted stock.
Within these limits, the Administrator may provide for the lapse of such
restrictions in installments and may accelerate or waive such restrictions, in
whole or in part, based on service, performance or such other factors or
criteria as the Administrator may determine.
(e) DIVIDENDS. Unless otherwise determined by the Administrator,
cash dividends with respect to shares of restricted stock shall be automatically
reinvested in additional restricted stock, and dividends payable in Stock shall
be paid in the form of restricted stock.
(f) TERMINATION. Except to the extent otherwise provided in the
Restricted Stock Agreement and pursuant to Section 7(d), upon termination of a
participant's employment for any reason during the Restriction Period, all
shares still subject to restriction shall be forfeited by the participant.
8. PAYMENT OF TAXES.
(a) The exercise of an option (regardless of the form of payment for
exercise of the option) or the transfer or other disposition of restricted stock
shall be conditioned upon payment in cash, or provision satisfactory to the
Administrator for
-11-
<PAGE>
payment to the Company, of any federal and state withholding taxes which, in the
Administrator's judgement, are payable in connection therewith.
(b) If and to the extent consented to by the Administrator in its
sole discretion at any time after an election pursuant to this Section 8(b) is
made, a participant may elect in writing to have Stock to be obtained upon
exercise of an option or lapse of restrictions applicable to restricted stock
withheld by the Company on behalf of the optionee to pay the amount of tax
required by law (as determined by the Company) to be withheld. Any such
election by a participant subject (in the view of the Company) to the "short
swing" profit rules of the Securities and Exchange Commission shall be subject
to the following limitations: (i) such election must be made at least six months
before the date that the amount of tax to be withheld in connection with such
exercise or lapse of restrictions is determined (the "Tax Date") and shall be
irrevocable; or (ii) such election (A) must be made in (or made earlier to take
effect in) any ten-day period beginning on the third business day following the
date of release for publication of the Company's quarterly or annual summary
statements of earnings and (B) the option or restricted stock must be held at
least six months prior to the Tax Date. Any shares or other securities so
withheld will be valued by the Company as of the Tax Date. The right to so
withhold shares shall relate separately to each option or any increment thereof.
(c) If and to the extent consented to by the Administrator in the
manner described in Section 8(b), an
-12-
<PAGE>
optionee may elect at any time to deliver previously owned shares of Stock to
satisfy the tax obligations in connection with such options or restricted stock.
9. ADJUSTMENT FOR CHANGES IN CAPITALIZATION. The existence of
outstanding options shall not affect the Company's right to effect adjustments,
recapitalization, reorganizations, or other changes in its or any other
corporation's capital structure or business, any merger or consolidation, any
issuance of bonds, debentures, preferred or prior preference stock ahead of or
affecting the Stock, the dissolution or liquidation of the Company's, or any
other corporation's, assets or business, or any other corporate act whether
similar to the events described above or otherwise. Subject to Section 10, if
the number of outstanding shares of Stock is increased or decreased in number or
changed into or exchanged for a different number or kind of securities of the
Company or any other corporation by reason of a recapitalization,
reclassification, stock split, combination of shares, stock dividend or other
event, the number and kind of securities with respect to which options or
restricted stock may be granted under this Plan, the individual limitations
under Section 3(b) above, the number and kind of securities as to which
outstanding options may be exercised, the option price at which outstanding
options may be exercised hereunder shall be proportionately adjusted.
10. DISSOLUTION, LIQUIDATION, MERGER. In the event of a dissolution or
liquidation of the Company, a merger or consolidation in which the Company is
not the surviving corporation, a reverse merger in which the Company is the
-13-
<PAGE>
surviving corporation but in which more than fifty percent (50%) of the shares
of its Stock outstanding before the merger are held, after the merger, by
holders different from those immediately prior to the merger, or a sale of more
than eighty percent (80%) of the assets of the Company, (a) the time at which
each outstanding option may be exercised (subject, in the case of incentive
stock options, to the limitations on exercisability set forth in Section 6(c)(i)
of this Plan) shall be accelerated at a time such that the optionee (upon
exercise of the option) would be eligible to receive the consideration payable
to holders of Stock in connection with such liquidation, dissolution, merger,
consolidation, reverse merger or sale, and (b) the restrictions applicable to
any restricted stock shall lapse.
11. RIGHTS AS STOCKHOLDER. Unless the Plan or the Administrator expressly
specify otherwise, a participant shall have no rights as a stockholder with
respect to any shares of Stock covered by a grant hereunder until the date of
issuance (as evidenced by the appropriate entry on the books of the Company or a
duly authorized transfer agent) of a certificate representing the shares of
Stock. Subject to Sections 9 and 10, no adjustment shall be made for dividends
or other rights for which the record date is prior to the date the certificate
is issued.
12. DISQUALIFYING DISPOSITIONS. If shares of Stock acquired upon exercise
of an incentive stock option are disposed of in a "disqualifying disposition"
(within the meaning of Section 422 of the Code), the holder of the shares shall
notify the Company in writing, within five days after the disposition, of the
date and the terms of such disposition. In the event of
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<PAGE>
any such disposition, the holder will comply with any other requirements imposed
by the Company in order to enable the Company to secure the related income tax
deduction to which it is entitled.
13. TERMINATION OR AMENDMENT.
(a) The Board may amend, alter or discontinue this Plan, but no
amendment, alteration or discontinuance shall be made which would impair the
rights of a participant under an outstanding grant without the participant's
consent. In addition, the Board may not amend or alter the Plan without the
approval of stockholders of the Company entitled to vote at a duly held
stockholders' meeting or by an action by written consent and, if at a meeting, a
quorum of the voting power of the Company is represented in person or by proxy,
where such amendment or alteration would, except as expressly provided in the
Plan, increase the total number of shares reserved for issuance pursuant to
grants under the Plan or in such other circumstances as the Board deems
appropriate to comply with Rule 16b-3 or with Section 422 of the Code or
otherwise.
(b) Notwithstanding Section 13(a), except as may be necessary to
comport with changes in the Code, the Employee Retirement Income Security Act,
or the rules thereunder, the Plan shall not be amended more than once every six
months if any such amendment would have the effect of amending in any way the
provisions set forth in Section 5(b) of the Plan relating to automatic stock
option grants to directors.
14. PARENT AND SUBSIDIARY. As used in this Plan, "parent" and
"subsidiary" mean any corporation in an unbroken chain of
-15-
<PAGE>
corporations which includes the Company if, at the relevant time, each of the
corporations other than the last corporation in the chain owns stock possessing
more than fifty percent (50%) of the total combined voting power of all classes
of stock of one of the other corporations in the chain.
15. GOVERNING LAW. This Plan and the rights of all persons under this
Plan shall be construed in accordance with and under applicable provisions of
the Code and the laws of the State of California.
* * * * * * * * *
The Board adopted the ALZA Corporation 1992 Stock Option Plan on
January 30, 1992 and the stockholders approved it on May 4, 1992. The Board
amended the ALZA Corporation 1992 Stock Option Plan on February 16, 1995,
renaming it the ALZA Corporation Amended and Restated Stock Plan and the
stockholders approved the amendments on May 11, 1995.
-16-
<PAGE>
ALZA CORPORATION
June 30, 1995
EXHIBIT 11
Statement Regarding Weighted Average Common and Common
Equivalent Shares Used in Computation of Per Share Earnings
(In thousands)
<TABLE>
<CAPTION>
PRIMARY
-------------------------------------------------------
QUARTER ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
1995 1994 1995 1994
------- ------- ------- --------
<S> <C> <C> <C> <C>
Common stock 82,163 81,750 82,118 81,701
$25 warrants - - - -
$65 warrants - - - -
5 1/4% zero coupon
convertible
subordinated
debentures - - - -
Stock options 250 563 283 608
------ ------ ------ ------
Average shares 82,413 82,313 82,401 82,309
------ ------ ------ ------
------ ------ ------ ------
</TABLE>
<TABLE>
<CAPTION>
FULLY DILUTED
-------------------------------------------------------
QUARTER ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
1995 1994 1995 1994
------- ------- ------- --------
<S> <C> <C> <C> <C>
Common stock 82,163 81,750 82,118 81,701
$25 warrants - - - -
$65 warrants - - - -
5 1/4% zero coupon
convertible
subordinated
debentures - - - -
Stock options 451 564 384 608
------ ------ ------ ------
Average shares 82,614 82,314 82,502 82,309
------ ------ ------ ------
------ ------ ------ ------
</TABLE>
<PAGE>
ALZA CORPORATION
June 30, 1995
Primary and fully diluted earnings per share are based on weighted average
common and dilutive common equivalent shares, including ALZA common stock,
warrants and options, for the period each was outstanding. The 5 1/4% zero
coupon convertible subordinated debentures (issued in July 1994) are considered
common stock equivalents; they were antidilutive for the quarter and six months
ended June 30, 1995.
Fully diluted earnings per share are not presented on the face of the
condensed consolidated statement of income (unaudited) since dilution is less
than 3% for each period presented.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS INCLUDED IN ITEM 1 OF FORM 10-Q DATED JUNE 30, 1995 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 77
<SECURITIES> 305
<RECEIVABLES> 95
<ALLOWANCES> 0
<INVENTORY> 35
<CURRENT-ASSETS> 539
<PP&E> 332
<DEPRECIATION> 76
<TOTAL-ASSETS> 862
<CURRENT-LIABILITIES> 52
<BONDS> 353
<COMMON> 308
0
0
<OTHER-SE> 103
<TOTAL-LIABILITY-AND-EQUITY> 862
<SALES> 38
<TOTAL-REVENUES> 163
<CGS> 33
<TOTAL-COSTS> 108
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 11
<INCOME-PRETAX> 56
<INCOME-TAX> 21
<INCOME-CONTINUING> 34
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 34
<EPS-PRIMARY> .42
<EPS-DILUTED> .42
</TABLE>
