UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period from July 1, 1994 to September 30, 1994
Commission file number 1-5406
------------------------------
HOUGHTON MIFFLIN COMPANY
----------------------------------------------------
(Exact name of registrant as specified in its charter)
Massachusetts 04-1456030
------------------------------ ----------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
222 Berkeley Street, Boston 02116 - 3754
----------------------------- ----------------
(Address of principal (Zip Code)
executive offices)
617-351-5000
----------------------------------
Registrant's telephone number, including area code
Not applicable
-----------------------------------
(Former name, former address and former fiscal year,
if changed since last report.)
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 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.
X
Yes ________________ No __________________
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of October 31, 1994.
Class Outstanding at October 31, 1994
----- -------------------------------
Common Stock, $1 par value 14,415,509
Preferred Stock Purchase Rights 14,415,509
1 of 48
Exhibits Index Page 21
HOUGHTON MIFFLIN COMPANY
INDEX
Page No.
Part I. Financial Information
Consolidated Condensed Balance Sheets
September 30, 1994 and 1993 and December 31,1993... 3 - 4
Consolidated Condensed Statements of Income
and Retained Earnings -- Three and Nine
Months Ended September 30, 1994 and 1993......... 5 - 6
Consolidated Condensed Statements of Cash Flows
Nine Months Ended September 30, 1994 and 1993.... 7 - 8
Notes to Unaudited Consolidated Condensed
Financial Statements ......................... 9 - 12
Management's Discussion and Analysis of Financial
Condition and Results of Operations.............. 13 - 20
Part II. Other Information
Item 4. Submission of Matter to a Vote of
Security Holders........................... 21
Item 6. Exhibits and Reports on Form 8-K........... 21
Signatures................................. 21
2
HOUGHTON MIFFLIN COMPANY
CONSOLIDATED CONDENSED BALANCE SHEETS
SEPTEMBER 30, 1994 and 1993 and DECEMBER 31, 1993
(In thousands)
ASSETS
------
September 30 September 30 December 31
1994 1993 1993
------- -------- -----------
(Unaudited) (Unaudited)
Current assets:
Cash and cash
equivalents $ 12,699 $ 36,576 $ 67,242
Marketable securities,
at cost, which
approximates market 1,131 3,750 18,107
------ ----- ------
13,830 40,326 85,349
Accounts receivable 215,037 186,137 116,814
Less allowance for
book returns 11,635 13,467 12,325
------- ------- -------
203,402 172,670 104,489
Inventories:
Finished goods 57,929 60,105 56,479
Work-in-process 3,919 9,365 4,875
Raw materials 2,569 3,147 2,647
------- ------ ------
64,417 72,617 64,001
Prepaid income taxes
and expenses 16,272 16,132 14,010
------- ------- -------
Total current assets 297,921 301,745 267,849
Property, plant and
equipment and book plates
(net of accumulated
depreciation and amort-
ization of $99,940 in
1994, $100,095 in 1993
and $88,139 at
December 31, 1993) 66,782 63,409 66,170
McDougal intangible
assets, net 108,810 - -
Other assets, net 76,961 63,646 64,067
------- --------- --------
$550,474 $ 428,800 $ 398,086
======== ========= ========
See accompanying notes to unaudited
consolidated condensed financial statements.
3
HOUGHTON MIFFLIN COMPANY
CONSOLIDATED CONDENSED BALANCE SHEETS
SEPTEMBER 30, 1994 and 1993, and DECEMBER 31, 1993
(In thousands)
LIABILITIES AND STOCKHOLDERS' EQUITY
- - ------------------------------------
September 30 September 30 December 31
1994 1993 1993
-------- -------- -----------
(Unaudited) (Unaudited)
Current liabilities:
Accounts payable $ 48,013 $ 43,473 $ 33,622
Short-term borrowings 14,980 25,000 24,605
Federal and state
income taxes 21,961 18,930 2,463
Royalties 28,077 27,801 27,696
Salaries, wages
and commissions 11,762 9,803 10,301
Other 14,583 10,320 6,732
Restructuring costs 3,458 6,195 3,896
Current debt maturities - 173 1,955
------- ------- -------
Total current liabilities 142,834 141,695 111,270
Long-term debt 99,430 25,000 26,438
Accrued royalties 3,981 3,136 2,935
Other liabilities 12,421 10,170 9,413
Accrued postretirement
benefits 24,775 23,668 23,948
Stock repurchase
commitment 7,600 - -
Stockholders' equity:
Preferred stock, $1 par value:
500,000 shares authorized:
none issued - - -
Common stock, $1 par value
70,000,000 shares authorized
14,758,726 shares issued 14,759 14,759 14,759
Capital in excess of
par value 19,673 26,921 30,612
Retained earnings 258,994 213,918 211,222
------- ------- -------
293,426 255,598 256,593
Benefits trust assets,
at market value (27,119) (28,984) (31,144)
Common shares held in
treasury, at cost
(348,538 shares at September 30,
1994, 247,649 at September 30,
1993 and 232,459 at
December 31, 1993) ( 6,874) (1,483) (1,367)
------- ------- -------
Total stockholders' equity 259,433 225,131 224,082
------- -------- -------
$ 550,474 $ 428,800 $ 398,086
======= ======= =======
See accompanying notes to unaudited
consolidated condensed financial statements.
4
HOUGHTON MIFFLIN COMPANY
CONSOLIDATED CONDENSED STATEMENTS OF INCOME AND RETAINED EARNINGS
THREE MONTHS ENDED SEPTEMBER 30, 1994, and 1993
(Unaudited, in thousands except per share amounts)
1994 1993
---- ----
Net sales by industry segment:
Educational publishing:
School $ 163,250 $ 132,738
College 35,755 40,229
------- -------
199,005 172,967
General publishing 31,299 35,543
------- -------
230,304 208,510
Costs and expenses:
Cost of sales 88,819 88,284
Selling and administrative 60,472 53,882
------- -------
149,291 142,166
------- -------
Operating income 81,013 66,344
Other income (expense):
Equity in earnings of
InfoSoft International, Inc. 650 -
Interest expense (2,353) (831)
-------- --------
(1,703) (831)
Income before taxes 79,310 65,513
Income tax provision 31,737 23,969
------- --------
Net income 47,573 41,554
Retained earnings at beginning
of period 215,926 175,221
Valuation allowance on
noncurrent marketable equity
securities (1,543) -
Dividends declared ($.215 per share
in 1994, $.205 per share in 1993) (2,962) (2,847)
-------- --------
Retained earnings at end
of period $ 258,994 $ 213,918
======== ========
Net income per share $3.45 $3.00
===== =====
Average number of
common shares 13,789 13,846
======== ========
See accompanying notes to unaudited consolidated condensed
financial statements.
5
HOUGHTON MIFFLIN COMPANY
CONSOLIDATED CONDENSED STATEMENTS OF INCOME AND RETAINED EARNINGS
NINE MONTHS ENDED SEPTEMBER 30, 1994, and 1993
(Unaudited, in thousands except per share amounts)
1994 1993
---- ----
Net sales by industry segment:
Educational publishing:
School $ 267,143 $ 238,882
College 57,972 62,752
------- -------
325,115 301,634
General publishing 71,718 77,801
------- -------
396,833 379,435
Costs and expenses:
Cost of sales 182,351 183,565
Selling and administrative 143,248 134,552
Special charges 6,513 10,560
------- -------
332,112 328,677
------- -------
Operating income 64,721 50,758
Other income (expense):
Gain on sale of interest in
Software Division 36,212 -
Equity in earnings of
InfoSoft International, Inc. 1,221 -
Net interest expense (5,005) (2,160)
------ ------
32,428 (2,160)
-------- -------
Income before taxes and
extraordinary item 97,149 48,598
Income tax provision 37,666 17,505
------- ------
Income before
extraordinary item 59,483 31,093
Extraordinary item, net of taxes
Loss on early extinguishment
of debt (1,239) (1,002)
-------- -------
Net income 58,244 30,091
Retained earnings at beginning
of period 211,222 192,326
Valuation allowance on
noncurrent marketable equity
securities (1,543) -
Dividends declared ($.645 per share
in 1994, $.615 per share in 1993) (8,929) (8,499)
-------- -------
Retained earnings at end
of period $ 258,994 $ 213,918
======== =======
Net income (loss) per share $ 4.21 $2.18
======== =========
Average number of common shares 13,838 13,809
======== =========
See accompanying notes to unaudited consolidated
condensed financial statements.
6
HOUGHTON MIFFLIN COMPANY
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1994 AND 1993
(Unaudited, in thousands of dollars)
1994 1993
---- ----
Cash flows from (used in)
operating activities:
Net income $ 58,244 $ 30,091
Adjustments to reconcile
net income to net cash
used in operating activities:
Gain on sale of interest in
Software Division (36,212) -
Equity earnings in InfoSoft
International, Inc. (1,221) -
Depreciation and amortization 34,997 32,562
Loss on early extinguishment
of debt, net of taxes 1,239 1,002
------ ------
57,047 63,655
Changes in operating assets and
liabilities:
Accounts receivable (99,363) (85,803)
Inventories 13,965 (11,070)
Royalty advances, net 1,078 508
Accounts payable 9,695 15,496
Income taxes 20,064 14,057
Salaries, wages and commissions 89 (510)
Other, net 3,464 11,096
------- -------
(51,008) (56,226)
-------- -------
Net cash from operating
activities 6,039 7,429
------- -------
Cash flows from (used in)
investing activities:
Acquisition of McDougal,
net of cash acquired (130,342) -
Dividend received from InfoSoft
International, Inc. 32,860 -
Book plate expenditures (18,100) (18,440)
Property, plant, and equipment
expenditures (5,567) (9,282)
Marketable securities 16,976 25,214
Sale of building and equipment - 1,020
------- --------
Net cash used in
investing activities (104,173) (1,488)
-------- -------
Cash flows from (used in)
financing activities:
Dividends on common stock (8,929) (8,499)
Issuance (repayment) of commercial paper (9,625) 25,000
Issuance of long-term debt 99,415 -
Senior notes prepayment (26,960) (26,511)
Purchase of common stock (12,923) (653)
Exercise of stock options 779 1,865
Proceeds from rate lock 1,404 -
Put option proceeds 430 -
Capital lease payments - (208)
------- --------
Net cash from financing
activities 43,591 (9,006)
--------- --------
Effect of exchange rate
changes on cash - (30)
-------- -------
Net decrease in cash and
cash equivalents (54,543) (3,095)
Cash and cash equivalents
at beginning of year 67,242 39,671
-------- -------
Cash and cash equivalents at
end of period 12,699 36,576
Marketable securities at end
of period 1,131 3,750
-------- -------
$ 13,830 $ 40,326
======= ======
See accompanying notes to unaudited consolidated condensed
financial statements.
7
HOUGHTON MIFFLIN COMPANY
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS con't
NINE MONTHS ENDED SEPTEMBER 30, 1994 AND 1993
(Unaudited, in thousands of dollars)
1994 1993
----- ------
Supplementary information:
Income taxes paid $17,192 $ 3,418
Interest paid $ 2,753 $ 2,316
See accompanying notes to unaudited
consolidated condensed financial statements.
8
HOUGHTON MIFFLIN COMPANY
NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL INFORMATION
(1) All normal and recurring adjustments that are, in the
opinion of management, necessary for the fair presentation
of the results for the interim period have been included.
The information contained in the interim financial
statements should be read in conjunction with the Company's
most recent Annual Report on Form 10-K filed with the
Securities and Exchange Commission.
Results of interim periods are not necessarily indicative
of results to be expected for the year as a whole. The
effect of seasonal business fluctuations and the occurrence
of many costs and expenses in annual cycles require certain
estimations in the determination of interim results.
Certain reclassifications have been made to prior period
financial statements in order to conform to the
presentation used in the 1994 interim financial statements.
(2) The Company acquired McDougal, Littell & Company
("McDougal"), a leading publisher of high school
and elementary textbooks on March 1, 1994. The total
acquisition cost was $140 million, of which $128 million
was paid to the former stockholders, $10 million
represents liabilities of McDougal paid out of corporate
funds immediately prior to the acquisition, and $2 million
represents other third party acquisition costs.
The acquisition cost was initially financed through a
combination of operating cash and $100 million in
short-term bank debt. The short-term bank debt was repaid
on April 5, 1994, with the proceeds from a $100 million
public debt offering ("Notes"). The Notes are unsecured
obligations which mature on April 1, 2004, and bear
interest at 7.125%, payable semi-annually.
The acquisition was accounted for as a purchase and the
results of operations have been included in the
consolidated financial statements since the date of
acquisition. The cost of the acquisition has been allocated
on the basis of the estimated fair market value of the
assets acquired and the liabilities assumed. The amounts
eventually allocable to publishing rights and goodwill are
9
HOUGHTON MIFFLIN COMPANY
NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL INFORMATION
-- Continued--
currently shown as intangible assets in the consolidated
condensed balance sheet. The intangible assets are
currently being amortized on a straight-line basis over a
period of approximately twenty years.
The following summary, presented on a pro forma basis,
combines the consolidated results of operations as if
McDougal had been acquired as of January 1, 1993. Pro
forma adjustments reflecting anticipated efficiencies
in operations resulting from a transaction are, under most
circumstances, not permitted. As a result of the
limitations imposed with regard to the type of permitted
pro forma adjustments, the Company believes that this
unaudited pro forma consolidated information is not
indicative of future results of operations, nor the
results of historical operations had the acquisition of
McDougal, Littell and Company been consummated as of the
assumed date.
(Unaudited)
Three Months Ended
(In millions, except September 30,
per share amounts) 1994 1993
--------------------- ---------------------
Net sales $ 230.3 $ 243.2
Net income $ 47.6 $ 50.2
Net income per share $ 3.45 $ 3.63
(Unaudited)
Nine Months Ended
(In millions, except September 30,
per share amounts) 1994 1993
--------------------- ----------------------
Net sales $ 398.6 $ 435.2
Income before
extraordinary item $ 53.5 $ 33.2
Net income $ 52.3 $ 32.2
Net income per share $ 3.78 $ 2.32
10
HOUGHTON MIFFLIN COMPANY
NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL INFORMATION
-- Continued--
(3) In March 1994, the Company's former Software Division
completed a public offering of 3,450,000 shares at an
offering price of $15 per share. In connection with the
public offering, the Company received a cash dividend of
$32,860,000 from the successor company to the Software
Division, InfoSoft International, Inc. ("InfoSoft"). The
Company's ownership interest in InfoSoft after the
offering was 40.1%.
An after-tax gain of $22.8 million, or $1.65 per share,
was recognized in connection with the InfoSoft public
offering.
The Company's recognition of earnings from its investment
in InfoSoft is based upon the equity method of accounting.
The equity earnings included in the Company's results of
operations are based primarily upon the Software Division's
historical results adjusted for the current business
environment. Accordingly, differences between estimated
equity income and actual InfoSoft earnings will be
reflected in the subsequent quarter.
(4) The Company has incurred pre-tax special charges of $6.5
million and $10.6 million for the nine months ended
September 30, 1994, and 1993, respectively. These charges
relate primarily to corporate and divisional staff
reductions and the consolidation of Company owned and
leased facilities.
(5) In March 1994, the Company completed the early redemption
of $25 million of 8.78% senior notes scheduled to mature in
March 1997. The refinancing cost of $1.2 million, or $.09
per share, was net of an income tax benefit of $.8 million.
The Company financed the early redemption of the senior
notes with operating cash and a portion of the net proceeds
received in connection with the InfoSoft public offering.
See Note 3.
In June 1993, the Company reported a refinancing cost
related to the early redemption of $25 million of 8.78%
senior notes due December 1994, for an after-tax loss of
$1.0 million, or $.07 per share.
11
HOUGHTON MIFFLIN COMPANY
NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL INFORMATION
-- Continued--
(6) In August 1994, the Company sold put options on 200,000
shares of its common stock. The put options are
exercisable in August 1995 at a price of $38.00 per share.
The total exercise price of $7.6 million has been
reflected in the Company's financial statements as a
liability with the offset as a reduction of capital in
excess of par value. The proceeds from the issuance of
the put options have been included in capital in excess of
par value.
(7) The Board of Directors, at its October 26, 1994 meeting,
increased the quarterly dividend to $.225 per share from
$.215 per share. The quarterly dividend is payable on
November 23, 1994 to shareholders of record on
November 9, 1994.
12
MANAGEMENT'S DISCUSSION AND ANALYSIS
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Third Quarter 1994 versus Third Quarter 1993
- - -------------------------------------------------
Net sales for the third quarter ended September 30, 1994, were
$230.3 million, an increase of $21.8 million, or 10.5%, from
the third quarter of 1993. Net income was $47.6 million, or
$3.45 per share, compared with $41.5 million, or $3.00 per
share, for a 14.5% increase from the same period in 1993.
Net sales from the Company's educational publishing segment
increased by $26.0 million, or 15.1%, from last year's third
quarter. Net sales increases from McDougal, acquired on
March 1, 1994, more than offset sales decreases in other
educational publishing segment components. School Division
sales, exclusive of McDougal, decreased 7.4%, or $8.7 million,
from last year's third quarter mainly due to the existence of
significant state adoption opportunities in 1993 for elementary
school reading products. The decrease in School Division
revenues was partially offset by the open-territory sales for
reading and the Company's new elementary school mathematics
program. The Riverside Publishing Company ("Riverside")
reported a sales increase of 6.3% over the same period in 1993.
The educational testing market continues its shift from
norm-referenced standardized tests to customized
13
criterion-referenced tests. The transition continues to affect
Riverside as it develops its expertise in criterion-referenced
tests and its diversification of its product base to include
more clinical and guidance assessment products. The College
Division, which continues to operate in a difficult industry,
reported an 11% decrease in net sales from the third quarter of
1993 primarily due to 1993's favorable returns experience.
The general publishing segment's net sales decreased $4.2
million, or 11.9%, from the same quarter in 1993. However,
segment sales were flat in comparison to the third quarter of
1993 when adjusted for the sales reported by the Company's
former Software Division.
Operating income for the quarter was $81.0 million, a 22.1%
increase over last year's $66.3 million. Third quarter cost of
sales were flat with the third quarter of 1993. Total cost of
sales as a percentage of sales declined to 38.6% from 42.3% in
1993's third quarter reflecting lower manufacturing costs and
sales product mix. Selling and administrative costs were $6.6
million higher than the prior year's third quarter. McDougal
added $6.8 million in costs and $1.5 million of intangible
asset amortization to selling and administrative expenses. Net
interest expense increased by $1.5 million primarily due to the
debt service requirements related to the April 1994 issuance of
14
$100 million of 7.125% Notes to finance the McDougal acquisition.
Nine Months Ended September 30, 1994 and 1993
- - ---------------------------------------------
Net sales for the nine months ended September 30, 1994 rose
$17.4 million, or 4.6%, to $398.8 from 1993's $379.4 million.
Net income was $58.2 million, or $4.21 per share, from the
$30.1 million, or $2.18 per share, reported for the nine months
ended September 30, 1993. Net income for 1994 was $40.7
million, or $2.94 per share, after pro forma adjustment for
special income and expense items, and an extraordinary
financing loss. This compared with $37.7 million, or $2.73 per
share in 1993, after pro forma adjustment for special charges
and an extraordinary financing loss.
Special items reported in the first nine months of 1994 included
a $22.8 million, or $1.65 per share, after-tax gain recognized
in connection with the public offering of the Company's former
Software Division, charges of $4.0 million, or $.29 per share,
for the completion of the restructuring actions initiated in
1991, and $1.2 million, or $.09 per share, for the prepayment
costs related to the early retirement of $25 million of
long-term debt. In the first nine months of 1993, after-tax
special charges of $6.6 million, or $.48 per share, and costs
of $1.0 million, or $.07 per share, for the early debt retirement
15
of $25 million of senior notes due in 1994 were reported.
Educational publishing segment sales increased by $23.5 million,
or 7.8%, in the first nine months compared to the same period
in 1993. The 1994 revenue contribution from McDougal was $58
million. School Division sales, exclusive of McDougal,
decreased by 15.1%, or $29.9 million, from 1993. The decrease
is predominantly due to the elementary reading state adoption
opportunities which were present in 1993. Riverside's sales
were relatively flat compared to the same period in 1993
primarily due to changes taking place in the educational
testing market, as previously discussed. Net sales for the
College Division, which continues to operate in a difficult
industry, were down by 7.6% from the comparable period in 1993,
principally due to 1993's favorable returns experience.
The general publishing segment sales decreased $6.1 million, or
7.8%, from the same period in 1993. Adjusted for the
disposition of the Software Division in the first quarter, same
segment sales were up $1.8 million, or 2.7%, in the first nine
months of 1994. The sales gains were realized in the juvenile
and guide titles.
Operating income after special charges was $64.7 million, an
increase of approximately $14.0 million, or 27.5%, over last
year's $50.8 million. Cost of sales were down slightly from
the same nine-month period in 1993. Selling and administrative
16
expenses increased by $8.7 million from 1993 to 1994. The
incremental costs from McDougal totaled $14.7 million before
intangible asset amortization of $3.6 million. Excluding the
effect of McDougal, total Company selling and administrative
expenses would have declined approximately $6.0 million, or
4.4%, from the nine-months ended September 30, 1993. This
decrease is due in large part to the restructuring actions
taken in 1994 and prior years. The pre-tax special charges of
$6.5 million and $10.6 million incurred in the first quarter of
1994 and the second quarter of 1993, respectively, relate to
the restructuring actions initiated in 1991. Net interest
expense increased $2.8 million in 1994 primarily due to the
debt service requirement of the $100 million of 7.125% Notes
issued in April 1994.
The Company's effective tax rate for the first nine months of
1994 was approximately 39% compared with 36% for the calendar
year 1993. The Company's effective tax rate for 1994 is
estimated at 39%. The increase over the 1993 effective tax rate
of 36% reflects the impact of federal tax law changes enacted
in 1993 which became effective on January 1, 1994, and the
intangible asset amortization expense related to the McDougal
acquisition.
The Company reported in July 1994 that the California Curriculum
Commission had not recommended the new K-6 mathematics program
17
for state wide adoption. On October 14, 1994, the California
State Board of Education voted to add the Company's K-6
mathematics program to the list of programs adopted for 1995.
Liquidity and Capital Resources
- - ----------------------------------
The Company's total cash position including marketable
securities at September 30, 1994, was $13.8 million, compared
with $40.3 million at September 30, 1993. The Company's total
short-term and long-term borrowing position at September 30,
1994 was $114.4 million, compared with $50.2 million at
September 30, 1993. The Company issued $100 million ($99.4
discounted value) of long-term debt in connection with the
McDougal acquisition and repaid $35.2 million of short and
long-term debt since September 30, 1993. Cash flow from
operations was $6.0 million, compared to $7.4 million from 1993.
In March 1994, the Company acquired McDougal, Littell & Company,
a leading publisher of educational products, for $130.3 million
in net cash, including investment advisory and other third
party costs. The total acquisition cost was financed through a
combination of existing cash balances and a public debt
offering of $100 million of 7.125% notes due 2004.
The Company's former Software Division successfully completed a
18
public offering in March 1994. In connection with the public
offering, the Company received a pre-tax cash dividend of $32.8
million from the successor company, InfoSoft International, Inc.
In March 1994, the Company prepaid $25 million of 8.78% senior
notes due March 1997. The funds used to prepay this obligation
were derived from a combination of the InfoSoft International,
Inc. dividend and operating cash. In June 1993, the Company
redeemed $25 million of 8.78% senior notes due December 1994.
The proceeds from issued commercial paper were used to prepay
these senior notes.
Capital expenditures for the nine months ended September 30,
1994 were $23.7 million. This represents a decrease of $4.1
million from the same period in 1993. The decrease in fixed
asset expenditures is related primarily to the 1993 relocation
and consolidation of facilities to the Company's new Boston
headquarters.
During 1994, the Company used approximately $12.9 million to
purchase 319,000 shares of common stock in the open market. In
August 1994, it was announced that senior management and members
of the Board of Directors purchased shares of common stock from
the Company equivalent to approximately 1% of the Company's
current outstanding shares. These purchases were made pursuant
to separate plans designed to increase share ownership levels.
19
The Company's available resources at September 30, 1994, plus
funds expected to be generated from operating activities and
available short-term borrowing facilities are believed to be
sufficient to meet total cash requirements for the foreseeable
future.
20
PART II. OTHER INFORMATION
Item 4. Submission of Matter to a Vote of Security Holders
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit No. 10 (iii) (A), 1994 Executive Stock
Purchase Plan , pages 22 - 29;
Exhibit No. 10 (iii) (A), Form of Option Grant
and Exercise Agreement, pages 30 - 33;
Exhibit No. 10 (iii) (A), Non-Employee Directors
Stock Purchase Plan pages 34 - 40;
Exhibit No. 10 (iii) (A), Forms of Stock Purchase
Agreement, pages 41 - 47;
Exhibit 27, Financial Data Schedules
(b) Report on Form 8-K
None.
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.
HOUGHTON MIFFLIN COMPANY
------------------------
Registrant
Dated: November 11, 1994 /S/ Stephen O. Jaeger
------------------------
Stephen O. Jaeger
Executive Vice President,
Chief Financial Officer, and
Treasurer
Dated: November 11, 1994 /S/ Michael J. Lindgren
------------------------
Michael J. Lindgren
Vice President
and Controller
21
1. Purpose. The Houghton Mifflin Company 1994 Executive
Stock Purchase Plan ("Plan"), adopted pursuant to the Houghton
Mifflin Company 1992 Stock Compensation Plan (the "1992 Plan"),
is designed to facilitate the immediate purchase, by the Senior
Corporate Officers of Houghton Mifflin Company and its
subsidiaries (collectively, the "Company"), of the Company's
common stock, par value $1.00 per share ("Common Stock"). The
purchases facilitated by the Plan are intended to achieve the
following specific purposes:
a. more closely align Senior Corporate Officers'
financial rewards with the financial rewards realized by other
Company stockholders;
b. increase Senior Corporate Officers' motivation
to manage the Company as owners; and
c. increase the ownership of Common Stock among
Senior Corporate Officers of the Company.
2. Eligibility and Participation. Individuals eligible to
participate are those granted options to purchase shares of
Common Stock by vote of the Compensation and Nominating
Committee of the Company's Board of Directors (the "Committee")
on August 24, 1994. To become a Plan participant
("Participant"), an eligible individual must:
a. submit a completed and executed Option Grant and
Exercise Agreement; and
b. promptly complete and execute all necessary
agreements and other documents relating to the
Plan and the loans contemplated by Section 3
hereof.
The agreements and other documents specified in this Section
2 must be in such form and must be submitted at such times and
to such Company officers as are specified by the Company. No
eligible individual is required to participate in the Plan.
3. Payment of Exercise Price. Each Participant must deliver
consideration equivalent to 100% of the price for the shares of
the Common Stock purchased pursuant to this Plan ("Purchased
Shares") at the time, place and manner specified by the
Company. The Purchased Shares will not be issued in the
22
Participant's name until the Company has received such
consideration. The Company may arrange for each Participant
to obtain a loan from a third party ("Third Party Loan") or
directly provide a loan (collectively, "Permanent Loan") as
consideration to fund the purchase of the Purchased Shares;
however, the initial interim funding of the purchase price will
be provided by a loan ("Interim Loan") from the Company to the
Participant with an interest rate equal to 50 basis points above
the average 90-day posted commercial paper rates, as provided by
the Company's two commercial paper agents, Merrill Lynch Pierce
Fenner & Smith Inc. and CS First Boston Corporation. The term
of the Permanent Loan will end no later than 90 days after the
fifth Anniversary (as defined in Section 7 hereof), except as
provided in Section 11 hereof or if the loan is fully prepaid at
an earlier date. If the third party financing is arranged, each
Participant shall sign a letter of direction which directs all
of his or her Third Party Loan proceeds to be paid directly to
the Company in payment of the Interim Loan or the Permanent
Loan. The Participant is responsible for satisfying all of the
lending requirements to qualify for the Third Party Loan. The
Participant is fully obligated to repay all principal, interest
and any prepayment fees on the Participant's loan when due and
payable. While the Interim Loan is outstanding, wherever the
context requires in this Plan, references to the third party as
lender shall be deemed to be references to the Company as lender.
4. Loan Guarantee. With respect to a Third Party Loan, if
any, the Company may be required to guarantee repayment to the
lender of 100% of all principal, interest, prepayment fees and
other obligations of each Participant under the Participant's
loan described in Section 3 hereof. The Company's loan
guarantee may be a condition to the loan arrangement the
Participant makes with the third party The terms and
conditions of the guarantee shall be as agreed by the Company
and the lender. As stated in Section 3 hereof, each Participant
is fully obligated to repay to the lender all principal,
interest and any prepayment fees on the Participant's loan when
due and payable. The Company may take all action relating to
the Participant and his or her assets which the Committee deems
reasonable and necessary to provide security for the Interim
Loan or Permanent Loan provided by the Company or for the
Company's guarantee of the Participant's Third Party Loan
(including, without limitation, a pledge of the Purchased
Shares) and to obtain full reimbursement for any payments the
Company becomes obligated to make to a third party under its
guarantee of the Participant's loan.
5. Registration of Shares. The Purchased Shares will be
registered in the name of the Participant. Each certificate
may bear a legend referring to the Plan and the agreements
between the Participant and the Company relating to the
23
Purchased Shares. The certificates for the Purchased Shares,
together with all non-cash and other extraordinary dividends on
the Purchased Shares, will be held by the Company until all
restrictions on the Purchased Shares have lapsed and any loan
to the Participant referred to in Section 3 hereof is no longer
outstanding. Each Participant shall deliver to the Company a
stock power endorsed in blank with respect to the Purchased
Shares.
6. Stockholder Rights. During the period in which the
Purchased Shares are subject to pledge or restrictions on
transfer, each Participant will have all other rights of a
stockholder with respect to the Purchased Shares, including
the right to vote the Purchased Shares and the right to receive
all regular cash dividends paid with respect to the Purchased
Shares. To the extent required by the Plan, the loan
agreements and other documents relating to the Plan, the
Company's Transfer Agent will be irrevocably directed to
deliver all such dividends directly to the Company for payment
of loan interest on the Permanent Loan. Any regular cash
dividends with respect to the Purchased Shares in excess of
required interest payments will, at the Participant's option,
either be paid directly to the Participant or deposited in a
bank account designated by the Participant.
7. Restrictions on Sale of Purchased Shares. Each
Participant is permitted to sell all or any portion of the
Purchased Shares, subject to the following restrictions:
a. except in the event of death, disability (as
determined by the Company, in its sole discretion), or certain
terminations of employment, as described in Section 11, 12
or 13 hereof, or a Change in Control as defined in Section 14
hereof, no Participant may sell any portion of the Purchased
Shares before the first anniversary of the Participant's
payment of the exercise price (hereinafter, each such
equential anniversary may be called an "Anniversary");
b. no Participant may sell any portion of the
Purchased Shares unless all principal, interest and any
prepayment fees due on the loan contemplated by Section 3
hereof have previously been paid or all proceeds of the sale
are simultaneously applied first to the payment of all such
principal, interest and prepayment fees; and
c. the Company has the right to impose additional
restrictions on the timing, amount and form of the sale of
the Purchased Shares with respect to any Participant to the
extent it determines that such restrictions are necessary or
advisable in order to comply with any applicable law. Each
Participant must notify the Company of his or her intention to
24
sell the Purchased Shares before such a sale may be implemented.
The Company may elect, by notice directed to the Participant
on the business day immediately following receipt of such
notification, to allow the Participant to sell the Purchased
Shares in the open market or to repurchase the Purchased Shares
itself. If the Company repurchases the Purchased Shares, the
purchase price will be the average closing sale price of a
share of Common Stock as reported in the New York Stock Exchange
Composite Index over the six-day period consisting of the three
trading days before and the three trading days after the
notification to the Company of the intent to sell.
8. Risk Sharing and Risk Sharing Payment. To the extent
and upon the conditions set forth in Sections 10 through 14
hereof, the Company will share the "Loss" (if any) or the
"Gain" (if any) which any Participant incurs upon the sale of
all or a portion of the Participant's Purchased Shares. "Gain"
and "Loss" shall be determined in accordance with Section 9
hereof. Except as set forth in Sections 11 through 14 hereof,
the Company will share in any Loss so incurred only if the
Participant remains employed by the Company until at least the
first Anniversary. If Participant sells any portion of the
Purchased Shares at a Loss prior to the fifth Anniversary and
if the Participant is responsible for less than 100% of that
Loss under Sections 10 through 14 hereof, the Company will
assume the portion of the Loss for which the Participant is
not responsible by delivering cash equal to such portion (the
"Risk Sharing Payment") (less the amount of any anticipatory
payment referred to below) directly to the Participant within
the five days immediately following the repayment of the
Participant's loan under Section 3. The Company shall also,
if requested by the Participant upon five days' notice, make an
anticipatory cash Risk Sharing Payment, to the extent
reasonably ascertainable, to the Participant at the time of
the Participant's loan repayment under Section 3 in order to
facilitate the repayment of such loan. The Company anticipates
that the Risk Sharing Payment will constitute compensation to
the Participant, subject to tax withholding and reporting.
9. Calculation of Gain or Loss. Gain or Loss shall be
computed by reference to the sale price for the Purchased
Shares sold and the cost basis thereof, without giving effect
to any tax consequences of the transactions. The cost basis
shall be the actual purchase price for the Purchased Shares set
forth in the Option Grant and Exercise Agreement plus interest
on the Permanent Loan (but except as provided in Sections 10
through 14 hereof, shall not include prepayment fees for the
Participant's early loan payment) less cash dividends received
with respect to the Purchased Shares through the date of sale
and the value of non-cash dividends or distributions, if any,
with respect to the Purchased Shares through the date of sale
measured at the time of sale of such non-cash dividend or
25
distribution or the time of sale of the Purchased Shares,
whichever is earlier. The sale price shall be the actual sales
price received by the Participant less reasonable and customary
brokerage commissions and other incidental transaction costs
directly incurred in the sale transaction. The Gain or Loss
with respect to the Purchased Shares of any Participant will be
measured on a per share basis prorated for the proportion of
Purchased Shares sold to Purchased Shares owned.
10. Participant's Share of Gain or Loss, Generally. Subject
to Sections 11 through 14 hereof, upon the sale of all or any
portion of a Participant's Purchased Shares on or after the
first Anniversary but before the fifth Anniversary
a. if any portion of the Purchased Shares is sold before
the third Anniversary, the Participant
1) is responsible for 100% of the Loss on
that portion of the Purchased Shares; and
2) is entitled to receive 50% of the Gain on
that portion of the Purchased Shares; and
b. if any portion of the Purchased Shares is sold on or
after the third Anniversary, the Participant
1) is responsible for 50% of the Loss on
that portion of the Purchased Shares; and
2) is entitled to receive 100% of the Gain on
that portion of the Purchased Shares.
The Committee may, upon recommendation of the Company's chief
executive officer, modify the risk sharing allocations in
Sections 10 through 13 hereof or may include prepayment fees
in the calculation of Gain or Loss where otherwise not included
in order to accommodate the personal hardship of any
Participant when no other resources are reasonably available
to the Participant.
11. Participant's Share after Death or Disability. If a
Participant's employment with the Company terminates because
of the Participant's death or disability (as determined by the
Company in its sole discretion) at any time prior to the fifth
Anniversary, the Participant (or the Participant's legal
representative) may thereafter sell all or any portion of the
Purchased Shares subject to the conditions specified in
subsections 7(b) and (c) hereof (but not subject to subsection
7(a) hereof). Upon the death of a Participant, his or her loan
will become immediately due and payable. With respect to the
Purchased Shares sold after the Participant's death or
disability and prior to the fifth Anniversary, the Participant
(or the Participant's legal representative) is not responsible
26
for any Loss on the sale of the Purchased Shares but is
entitled to receive 100% of the Gain on the sale of the
Purchased Shares. Gain or Loss shall be determined under this
Section 11 in the same manner as Gain or Loss under Section 9,
except that any prepayment penalties for early loan repayment
shall be added to the cost basis of the Purchased Shares sold.
12. Participant's Share after Employment Termination by
Transaction. If a Participant's employment with the Company
terminates because of an acquisition, divestiture, merger,
spin-off or similar transaction ("Transaction"), the
Participant may sell all or any portion of the Purchased Shares,
subject to the conditions specified in subsections 7(b) and (c)
hereof, but not those of subsection 7(a) hereof. With respect
to the risk sharing provisions of Sections 8 and 9 hereof, if
the Participant's employment terminates prior to the fifth
Anniversary, the Participant will be
a. entitled to receive 100% of the Gain on the sale of
Purchased Shares;
b. entitled to receive reimbursement from the Company
for any prepayment penalties for the Participant's early loan
repayment to the extent of any Loss; and
c. responsible for such other portion, if any, of the
Loss as is determined by the Committee.
In all other respects, the Participant whose employment is
terminated because of a Transaction will remain subject to all
of the terms and conditions of the Plan.
13. Participant's Share after Other Employment Termination.
(1) If a Participant's employment with the Company terminates
voluntarily, the following will apply:
a. if the Participant's employment with the Company
terminates on or after the first Anniversary, he or she will
remain subject to all of the terms and conditions of the Plan,
as if his or her employment had not terminated, including
specifically the risk sharing provisions of Sections 8 through
10 hereof.
b. if the Participant's employment with the Company
terminates before the first Anniversary, he or she is:
1) permitted to sell the Purchased Shares
subject to the restrictions specified in subsections 7(b)
and (c) hereof (but not subject to subsection 7(a) hereof);
2) responsible for 100% of the Loss on the
sale of the Purchased Shares; and
3) entitled to receive 50% of the Gain on the
27
sale of the Purchased Shares; the remaining 50% of the Gain
must be paid to the Company simultaneously with the sale.
(2) If a Participant's employment with the Company terminates
involuntarily, he or she is:
a. permitted to sell the Purchased Shares subject to
the restrictions specified in subsections 7(b) and (c) hereof
(but not subject to subsection 7(a) hereof);
b. entitled to receive 100% of the Gain on the sale of
Purchased Shares;
c. entitled to receive reimbursement from the Company
for any prepayment penalties for the Participant's early loan
repayment to the extent of any Loss; and
d. responsible for such other portion, if any, of the
Loss as is determined by the Committee.
14. Change in Control. In the event of a Change in Control
prior to the fifth Anniversary, the restrictions on the sale
of the Purchased Shares specified in subsection 7(a) hereof will
lapse immediately, each Participant employed by the Company
immediately before the Change in Control will be deemed to
have been employed by the Company until the first Anniversary,
and the Participant will not be responsible for any Loss on the
sale of the Purchased Shares but will be entitled to receive
100% of any Gain on the sale of the Purchased Shares. Gain or
Loss shall be determined under this Section 14 in the same
manner as Gain or Loss under Section 9, except that any
prepayment penalties due for the Participant's early loan
payment shall be added to the cost basis of the Purchased
Shares sold.
A Change in Control shall be deemed to have occurred if:
a. any person as defined in subsection (e) of this
Section 14 is or becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), directly or indirectly, of
securities of the Company representing 25% or more of the
combined voting power of the Company's then outstanding
securities;
b. during any period of no more than two consecutive
years (not including any period prior to the adoption of this
Plan) individuals who at the beginning of such period
constitute the Board of Directors of the Company and any new
director (other than a director designated by a person who has
28
entered into an agreement with the Company to effect a
transaction described in subsection (a), (c) or (d) of this
Section 14) whose election by the Board or nomination for
election by the Company's stockholders was approved by a vote
of at least two-thirds (2/3) of the directors then still in
office who either were directors at the beginning of the period
or whose election or whose nomination for election was
previously so approved, cease for any reason to constitute a
majority thereof;
c. the stockholders of the Company approve a merger or
consolidation of the Company with any other entity, other than
(i) a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity)
more than 75% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation, or (ii) a
merger or consolidation effected to implement a recapitalization
of the Company (or similar transaction) in which no person
acquires 25% or more of the combined voting power of the
Company's then outstanding securities; or
d. the stockholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the
sale or disposition by the Company of all or substantially all
of the Company's assets.
e. As used in subsection (a) of this Section 14, the
term "person" has the meaning given such term in
Section 3(a)(9) of the Exchange Act, as modified and used
in Sections 13(d) and 14(d) of the Exchange Act, but excludes
(i) the Company, (ii) any trustee or other fiduciary holding
securities under an employee benefit plan of the Company (or of
any subsidiary of the Company) and (iii) any corporation owned,
directly or indirectly by the stockholders of the Company in
substantially the same proportions as their ownership of stock
of the Company.
15. 1992 Plan and Amendment of this Plan. The Plan is
governed by the provisions of the 1992 Plan, except as
otherwise expressly stated herein. Subject to the provisions
of the 1992 Plan, the Committee may amend the Plan at any time
it determines an amendment to be in the best interests of the
Company. In accordance with the 1992 Plan, no such amendment
may adversely affect the rights of a Participant without the
consent of the Participant.
29
No. of Shares: As of August 24, 1994
Pursuant to its 1992 Stock Compensation Plan (the "Plan"),
approved on April 29, 1992 by its stockholders, and pursuant to
its 1994 Executive Stock Purchase Plan established thereunder
(the "Purchase Plan"), Houghton Mifflin Company (the "Company")
hereby grants to ___ (the "Optionee") an option
(the "Option") to purchase on the date hereof all or any part
of ___ shares (the "Option Shares") of common stock of the
Company, par value $1.00 per share (the "Common Stock"), at a
price of $42.625 per share, subject to the terms and conditions
set forth herein and in the Plan and the Purchase Plan.
1. Manner of Exercise. The Optionee may exercise this Option
and elect to purchase some or all of the Option Shares by
delivering to the Company on the date hereof an executed copy
of this Agreement, specifying the number of Option Shares to be
purchased (the "Purchased Shares"). Said executed agreement
shall be accompanied by payment for the Option Shares with
loans to the Optionee as described in Paragraph 2 hereof. No
certificates for the Purchased Shares will be issued to the
Optionee until the Company has completed all steps required by
law to be taken in connection with the issue and sale of the
Purchased Shares, including, without limitation, receipt of any
agreements or representations from the Optionee necessary to
prevent a resale or distribution of the Purchased Shares in
violation of federal or state securities laws. In accordance
with the Purchase Plan, the certificates representing the
Purchased Shares issued to the Optionee will be held by the
Company until all restrictions on such shares have lapsed and
the Permanent Loan referred to in Paragraph 2 hereof is no
longer outstanding. In the event that the Optionee fails to
exercise this Option by timely delivery of an executed copy of
this Agreement as provided in this paragraph, the Option
granted hereby shall terminate and be of no further force
and effect.
2. Financing of Exercise Price. In order to permit the
Optionee to exercise the Option, the Company will extend to
the Optionee an interim loan (the "Interim Loan") to fund up
to 100% of the purchase price for the Purchased Shares and will
assist the Optionee in arranging financing either from a third
party or directly from the Company (the "Permanent Loan") to
repay the Interim Loan. In connection with the Interim Loan,
30
the Optionee is delivering to the Company simultaneously
herewith such documentation as the Company may require to
evidence the Interim Loan, including any documentation the
Company may require in connection with the pledge of the
Purchased Shares as security therefor. As security for the
obligation of the Optionee under the Interim Loan or Permanent
Loan, and in connection with any Permanent Loan directly from
the Company or a guarantee by the Company of the repayment of
a third party loan as described in Section 4 of the Purchase
Plan, the Optionee is granting to the Company a security
interest in the Purchased Shares and will execute such
documents and take such other action as the Company may
require to evidence and perfect such security interest, such
grant to become effective upon delivery of an executed copy
of this Agreement as set forth in Paragraph 1 hereof. The
Optionee further agrees that the Company may take all action
which the Company deems reasonable and necessary for the
Company to provide security for the Interim Loan and Permanent
Loan and any third party guarantee and to obtain full
reimbursement for any payments it becomes obligated to make
to a third party under the Company's guarantee of any
Participant's loan.
The Optionee understands and acknowledges the Optionee's
obligation to proceed with such arrangements as may be
necessary to obtain the Permanent Loan and repay the Interim
Loan. The Optionee will provide such documentation as may be
required by the Company to ensure that the proceeds, if any,
of the Permanent Loan will be paid directly to the Company in
repayment of the Interim Loan.
3. Terms of Purchase Plan; Restrictions on Sale and Risk
Sharing. The Company and the Optionee acknowledge and
agree that the Purchased Shares will be subject to all of
the terms and conditions set forth in the Plan and the Purchase
Plan, including, without limitation, the restrictions on the
sale of the Purchased Shares set forth in Section 7 of the
Purchase Plan and the risk sharing provisions set forth in
Sections 8 through 14 of the Purchase Plan pursuant to which
the Company, to the extent and upon the conditions set forth
in the Purchase Plan, will share the "Loss" (as such term is
defined in the Purchase Plan), if any, or the "Gain" (as such
term is defined in the Purchase Plan), if any, which the
Optionee incurs upon the sale of the Purchased Shares.
4. Transferability. This Option is personal to the
Optionee, is not transferable by the Optionee in any manner
by operation of law or otherwise, and is exercisable only on
the date hereof and only by the Optionee.
5. Termination of Employment. This Option will not confer
31
upon the Optionee any right with respect to continuance of
employment by the Company or a Subsidiary (as defined in the
Plan), nor will it interfere in any way with any right of the
Optionee's employer to terminate the Optionee's employment at
any time.
6. Miscellaneous. Notices hereunder shall be mailed or
delivered to the Company at its principal place of business,
222 Berkeley Street, Boston, Massachusetts 02116, Attention:
Treasurer, and shall be mailed or delivered to the Optionee
at the Optionee's address set forth below, or in either case
at such other address as one party may subsequently furnish to
the other party in writing. This Agreement is entered into by
the Optionee and the Company pursuant to the terms and
provisions of the Plan and the Purchase Plan and expressly
incorporates herein all of the terms and provisions of the Plan
and the Purchase Plan. Notwithstanding anything in this
Agreement to the contrary, in the event that any inconsistency
arises between any term or provision of the Plan or the
Purchase Plan and any term or provision of this Agreement,
then the applicable term or provision of the Plan or the
Purchase Plan, as the case may be, shall control.
7. Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the Commonwealth
of Massachusetts without regard to principles thereof relating
to conflicts of law.
8. Income Tax Withholding. In connection with the exercise
of all or any part of the Option granted hereunder and all
arrangements and transactions relating to the Purchased Shares,
the Company is expressly authorized to take any and all steps it
deems necessary to comply with its tax withholding obligations
under state and federal laws, including without limitation (i)
withholding cash in an amount sufficient to satisfy the
Company's tax withholding obligations with respect to the
Optionee from the compensation then or thereafter payable to
the Optionee, (ii) conditioning the delivery of stock to the
Optionee upon the payment to the Company of an amount
sufficient to satisfy the Company's tax withholding obligations
with respect to the Optionee, or (iii) reducing the number of
shares deliverable to the Optionee by such number as is
sufficient in value to satisfy the Company's tax withholding
obligations with respect to the Optionee, provided that such
reduction does not cause the Optionee to incur liability under
Section 16(b) of the Securities Exchange Act of 1934, as
amended.
32
HOUGHTON MIFFLIN COMPANY
By: _______________________
Susan Hardy
Assistant Treasurer
Receipt of the Option and its terms and conditions are hereby
acknowledged and agreed to, and notice of the exercise of the
Option as to the number of Shares set forth below is hereby
given, as of August , 1994.
Number of shares ___________________________
as to which Option Name:
exercised:
___________________________
(Address)
___________________________
(City, State, Zip)
33
1. Purpose. The Houghton Mifflin Company 1994 Non-Employee
Director Stock Purchase Plan ("Director Plan") is designed to
facilitate the immediate purchase, by members of the Board of
Directors of Houghton Mifflin Company ("Company") who are not
employees of the Company (hereinafter, "Directors"), of shares
of the Company's common stock, par value $1.00 per share
("Common Stock"). The purchases facilitated by the Director
Plan are intended to increase the ownership of the Common Stock
by Directors at a time when Senior Corporate Officers of the
Company have committed to significantly increase their own
Common Stock ownership levels.
2. Eligibility and Participation. Individuals eligible to
participate are members of the Board of Directors of the
Company ("Board") who are not employees of the Company. The
maximum purchase permitted a Director under the Director Plan
is 2,000 shares of Common Stock; the minimum purchase
requirement for participation is 1,000 shares of Common Stock.
To become a Director Plan participant ("Participant"), an
eligible individual must:
a. submit a completed and executed Stock Purchase
Agreement; and
b. promptly complete and execute all necessary
agreements and other documents relating to the
Director Plan and the loan(s) contemplated by
Section 3 hereof.
The agreements and other documents specified in this Section 2
must be in such form and must be submitted at such times and
to such Company officers as are specified by the Company.
No eligible individual is required to participate in the
Director Plan.
3. Payment of Exercise Price. Each Participant must deliver
consideration equivalent to 100% of the price for the shares
of the Common Stock purchased pursuant to this Director Plan
("Purchased Shares") at the time, place and manner specified
by the Company. The Purchased Shares will not be issued in
34
the Participant's name until the Company has received such
consideration. The Company may arrange for each Participant
to obtain a loan from a third party (the "Third Party Loan")
or directly provide a loan (collectively "Permanent Loan") as
consideration to fund the purchase of the Purchased Shares;
however, the initial interim funding of the purchase will be
provided by a loan ("Interim Loan") from the Company to the
Participant with an interest rate equal to 50 basis points
above the average 90-day posted commercial paper rates, as
provided by the Company's two commercial paper agents, Merrill
Lynch Pierce Fenner & Smith Inc. and CS First Boston
Corporation. The term of the Permanent Loan will end no
later than 90 days after the fifth Anniversary (as defined in
Section 7 hereof), except as provided in Section 11 hereof or
if the loan is fully prepaid at an earlier date. If third party
financing is arranged, each Participant shall sign a letter
of direction which directs all of his or her Third Party Loan
proceeds to be paid directly to the Company in payment of the
Interim Loan or the Permanent Loan. The Participant is
responsible for satisfying all of the lending requirements to
qualify for the Third Party Loan. The Participant is fully
obligated to repay all principal, interest and any prepayment
fees on the Participant's loan when due and payable. While the
loan from the Company to a Participant is outstanding, wherever
the context requires in this Director Plan, references to the
third party as lender shall be deemed to be references to the
Company as lender.
4. Loan Guarantee. With respect to a Third Party Loan, if
any, the Company may be required to guarantee repayment to the
lender of 100% of all principal, interest, prepayment fees and
other obligations of each Participant under the Participant's
loan described in Section 3 hereof. The Company's loan
guarantee may be a condition to the loan arrangement the
Participant makes with the third party. The terms and
conditions of the guarantee shall be as agreed by the Company
and the lender. As stated in Section 3 hereof, each
Participant is fully obligated to repay to the lender all
principal, interest and any prepayment fees on the
Participant's loan when due and payable. The Company may take
all action relating to the Participant and his or her assets
which the Company deems reasonable and necessary to obtain full
reimbursement for any payments it becomes obligated to make to
a third party under its guarantee of the Participant's loan.
5. Registration of Shares. The Purchased Shares will be
registered in the name of the Participant. Each certificate
35
may bear a legend referring to the Director Plan and the
agreements between the Participant and the Company relating
to the Purchased Shares.
6. Stockholder Rights. During the period in which the
Purchased Shares are subject to restrictions hereunder, each
Participant will have all other rights of a stockholder with
respect to the Purchased Shares, including the right to vote
the Purchased Shares and the right to receive all dividends
and other distributions with respect to the Purchased Shares.
To the extent required by the Director Plan, the loan
agreements and other documents relating to the Director Plan,
the Company's Transfer Agent will be irrevocably directed to
deliver all such dividends directly to the Company for payment
of loan interest on the Permanent Loan. Any dividends with
respect to the Purchased Shares in excess of required interest
payments will, at the Participant's option, either be paid
directly to the Participant or deposited in a bank account
designated by the Participant.
7. Restrictions on Sale of Purchased Shares. Each
Participant is permitted to sell all or any portion of the
Purchased Shares, subject to the following restrictions:
a. except in the event of death, disability (as
determined by the Company, in its sole discretion), or certain
terminations of service as a Director of the Company, as
described in Section 11 hereof, or a Change in Control as
defined in Section 12 hereof, no Participant may sell any
portion of the Purchased Shares before the first anniversary
of the Participant's payment of the exercise price (hereinafter,
each such sequential anniversary may be called an
"Anniversary");
b. no Participant may sell any portion of the
Purchased Shares unless all principal, interest and any
prepayment fees due on the loan contemplated by Section 3
hereof have previously been paid or all proceeds of the sale
are simultaneously applied first to the payment of all such
principal, interest and prepayment fees; and
c. the Company has the right to impose additional
restrictions on the timing, amount and form of the sale of
the Purchased Shares with respect to any Participant to the
extent it determines that such restrictions are necessary or
advisable in order to comply with any applicable law. Each
Participant must notify the Company of his or her intention
36
to sell the Purchased Shares before such a sale is
implemented. The Company may elect, by notice directed to the
Participant on the business day immediately following receipt
of such notification, to allow the Participant to sell the
Purchased Shares in the open market or to repurchase the
Purchased Shares itself. If the Company repurchases the
Purchased Shares, the purchase price will be the average
closing sale price of a share of Common Stock on the New York
Stock Exchange Composite Index over the six-day period
consisting of the three trading days before and the three
trading days after the notification to the Company of the
intent to sell.
8. Risk Sharing and Risk Sharing Payment. To the extent
and upon the conditions set forth in Sections 10 through 12
hereof, the Company will share the "Loss" (if any) or the
"Gain" (if any) which any Participant incurs upon the sale of
all or a portion of the Participant's Purchased Shares. "Gain"
and "Loss" shall be determined in accordance with Section 9
hereof. If a Participant sells any portion of the Purchased
Shares at a Loss prior to the fifth Anniversary and if the
Participant is not responsible for that Loss under Section 11
hereof, the Company will assume the portion of the Loss for
which the Participant is not responsible by delivering cash
equal to such portion (the "Risk Sharing Payment") (less the
amount of any anticipatory payment referred to below) directly
to the Participant within the five days immediately following
the repayment of the Participant's loan under Section 3. The
Company shall also, if requested by the Participant upon five
days' notice, make an anticipatory cash Risk Sharing Payment,
to the extent reasonably ascertainable, to the Participant at
the time of the Participant's loan repayment under Section 3
in order to facilitate the repayment of such loan. The
Company anticipates that the Risk Sharing Payment will
constitute compensation to the Participant, subject to tax
withholding and reporting.
9. Calculation of Gain or Loss. Gain or Loss shall be
computed by reference to the sale price for the Purchased
Shares sold and the cost basis thereof, without giving effect
to any tax consequences of the transactions. The cost basis
shall be the actual purchase price set forth in the Stock
Purchase Agreement for the Purchased Shares plus interest on
the Permanent Loan (but, except as provided in Section 11
hereof, shall not include prepayment fees for the Participant's
early loan payment) less cash dividends received with respect
to the Purchased Shares through the date of sale and the value
37
of non-cash dividends or distributions, if any, with respect to
the Purchased Shares through the date of sale measured at the
time of sale of such non-cash dividend or distribution or the
time of sale of the Purchased Shares, whichever is earlier.
The sale price shall be the actual sales price received by the
Participant less reasonable and customary brokerage commissions
and other incidental transaction costs directly incurred in the
sale transaction. The Gain or Loss with respect to the
Purchased Shares of any Participant will be measured on a per
share basis prorated for the proportion of Purchased Shares
sold to Purchased Shares owned.
10. Participant's Share of Gain, Generally. Subject to
Sections 11 and 12 hereof, upon the sale of all or any portion
of a Participant's Purchased Shares before the third
Anniversary, the Participant shall be entitled to receive 50%
of the Gain on that portion of the Purchased Shares, and the
Company the other 50%. If any portion of the Purchased Shares
is sold on or after the third Anniversary, the Participant
shall be entitled to receive 100% of the Gain on that portion
of the Purchased Shares.
11. Participant's Share after Death or Disability. If a
Participant's service as a Director of the Company terminates
because of the Participant's death or disability (as determined
by the Company in its sole discretion) at any time prior to
the fifth Anniversary, the Participant (or the Participant's
legal representative) may thereafter sell all or any portion of
the Purchased Shares subject to the conditions specified in
subsections 7(b) and (c) hereof (but not subject to subsection
7(a) hereof). Upon the death of a Participant, his or her loan
will become immediately due and payable. With respect to the
Purchased Shares sold after the Participant's death or
disability and prior to the fifth Anniversary, the Participant
(or the Participant's legal representative) is not responsible
for any Loss on the sale of the Purchased Shares but is
entitled to receive 100% of the Gain on the sale of the
Purchased Shares. Gain or Loss shall be determined under this
Section 11 in the same manner as Gain or Loss under Section 9,
except that any prepayment penalties for early loan repayment
are includable in the measurement of Gain or Loss.
12. Change in Control. In the event of a Change in Control,
the restrictions on the sale of the Purchased Shares specified
in subsection 7(a) hereof will lapse immediately, each
Participant serving as a Director immediately before the Change
38
in Control will be deemed to have served as a Director of the
Company until the first Anniversary, and the Participant will
be entitled to receive 100% of any Gain on the sale of the
Purchased Shares.
A Change in Control shall be deemed to have occurred if:
a. any person as defined in subsection (e) of this
Section 14 is or becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act")), directly or indirectly, of
securities of the Company representing 25% or more of the
combined voting power of the Company's then outstanding
securities;
b. during any period of no more than two consecutive
years (not including any period prior to the adoption of this
Director Plan) individuals who at the beginning of such period
constitute the Board and any new director (other than a
director designated by a person who has entered into an
agreement with the Company to effect a transaction described in
subsection (a), (c) or (d) of this Section 14) whose election
by the Board or nomination for election by the Company's
stockholders was approved by a vote of at least two-thirds
(2/3) of the directors then still in office who either were
directors at the beginning of the period or whose election or
whose nomination for election was previously so approved,
cease for any reason to constitute at least a majority thereof;
c. the stockholders of the Company approve a merger
or consolidation of the Company with any other entity, other
than (i) a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the
surviving entity) more than 75% of the combined voting power
of the voting securities of the Company or such surviving
entity outstanding immediately after such merger or
consolidation, or (ii) a merger or consolidation effected to
implement a recapitalization of the Company (or similar
transaction) in which no person acquires 25% or more of the
combined voting power of the Company's then outstanding
securities; or
d. the stockholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the
sale or disposition by the Company of all or substantially all
of the Company's assets.
e. As used in subsection (a) of this Section 14, the
39
term "person" has the meaning given such term in Section 3(a)(9)
of the Exchange Act, as modified and used in Sections 13(d)
and 14(d) of the Exchange Act, but excludes (i) the Company,
(ii) any trustee or other fiduciary holding securities under
an employee benefit plan of the Company (or of any subsidiary
of the Company) and (iii) any corporation owned, directly or
indirectly by the stockholders of the Company in substantially
the same proportions as their ownership of stock of the Company.
13. Amendment of this Director Plan. The Board may amend the
Director Plan at any time it determines an amendment to be in
the best interests of the Company; provided, however, that
without the consent of the Participant, no amendment may impair
or adversely affect the rights of a Participant hereunder.
40
THIS AGREEMENT is made and entered into as of
this 24th day of August, 1994, by and between (the "Participant")
and Houghton Mifflin Company (the "Company").
WHEREAS, the Company has established the
1994 Non-Executive Director Stock Purchase Plan established
thereunder (the "Director Plan"); and
WHEREAS, the undersigned desires to purchase from
the Company and the Company desires to sell to the Participant
_______ shares (the"Purchased Shares") of the common stock of
the Company, par value $1.00 per share, at a price of $42.625
per share, subject to the terms and conditions set forth herein
and in the Director Plan; and
WHEREAS, concurrently herewith the Company is
extending to the Participant an interim loan (the "Interim
Loan") to fund up to 100% of the purchase price for the
Purchased Shares;
NOW, THEREFORE, in consideration of the foregoing and for
other consideration, the receipt and sufficiency of which is
hereby acknowledged, the Participant and the Company hereby
agree as follows:
1. Purchase of Shares. The Participant hereby
purchases from the Company and the Company hereby sells to
the Participant the Purchased Shares. No certificates for the
Purchased Shares will be issued to the Participant until the
Company has completed all steps required by law to be taken
in connection with the issue and sale of the Purchased Shares,
including, without limitation, receipt of any agreements or
representations from the Participant necessary to prevent a
resale or distribution of the Purchased Shares in violation
of federal or state securities laws.
2. Financing Obligations. Payment for the
Purchased Shares is being obtained by the Participant from
the Interim Loan and, in connection with the Interim Loan,
the Participant is delivering to the Company simultaneously
herewith such documentation as the Company may require to
evidence the Interim Loan. The Company may assist the
Participant in arranging financing either from a third party
41
or directly from the Company (the "Permanent Loan") to
repay the Interim Loan. The Company may be required to guarantee
the Participant's obligations under any third party loan. The
Participant agrees that the Company may take all action which
the Company deems reasonable and necessary for the Company to
obtain full reimbursement for any payments it becomes obligated
to make to a third party under the Company's guarantee of
the Participant's loan. The Participant understands and
acknowledges the Participant's obligation to proceed with such
arrangements as may be necessary to obtain the Permanent
Loan and to repay the Interim Loan. The Participant will
provide such documentation as may be required by the Company
to ensure that the proceeds, if any, of the Permanent Loan
will be paid directly to the Company in repayment of the
Interim Loan.
3. Terms of Purchase Plan; Restrictions on Sale
and Risk Sharing. The Participant acknowledges and agrees that
the Purchased Shares are subject to all of the terms and
conditions set forth in the Director Plan, including, without
limitation,the restrictions on the sale of the Purchased Shares
set forth in Section 7 of the Director Plan and the risk
sharing provisions set forth in Sections 8 through 12 of the
Director Plan pursuant to which the Company, to the extent and
upon the conditions set forth in the Director Plan, will share
the "Loss" (as such term is defined in the Director Plan), if
any, or the "Gain" (as such term is defined in the Director
Plan), if any, which the Participant incurs upon the sale of
the Purchased Shares.
4. Stock Certificate Legend. Certificates for the
Purchased Shares may bear a legend referring to the Director
Plan and the agreements between the Participant and the Company
relating to the Purchased Shares.
5. Transfer of Securities. The Participant
acknowledges that the Purchased Shares have not been registered
under the Securities Act of 1933, as amended (the "Securities
Act"), and may be sold or disposed of in the absence of such
registration only pursuant to an exemption therefrom. The
Participant agrees that the certificate or certificates for
the Purchased Shares may bear a legend to the following effect:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE
ACQUIRED IN A TRANSACTION NOT INVOLVING A PUBLIC
OFFERING UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"). THE SECURITIES REPRESENTED
BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT, OR UNDER ANY STATE SECURITIES
42
OR "BLUE SKY" LAWS. THE SECURITIES REPRESENTED BY
THIS CERTIFICATE MAY NOT BE OFFERED FOR SALE,
TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED
OR OTHERWISE ENCUMBERED OR DISPOSED OF (A "TRANSFER")
UNLESS SUCH TRANSFER IS MADE PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR
AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
ACT AND UNDER ANY APPLICABLE STATE SECURITIES OR
"BLUE SKY" LAWS."
6. Miscellaneous. Notices hereunder shall be
mailed or delivered to the Company at its principal place of
business, 222 Berkeley Street, Boston, Massachusetts 02116,
Attention: Treasurer, and shall be mailed or delivered to the
Participant at the Participant's address set forth below, or in
either case at such other address as one party may subsequently
furnish to the other party in writing. This Agreement is
entered into by the Participant and the Company pursuant to the
terms and provisions of the Director Plan and expressly
incorporates herein all of the terms and provisions thereof.
Notwithstanding anything in this Agreement to the contrary, in
the event that any inconsistency arises between any term or
provision of the Director Plan and any term or provision of
this Agreement, then the applicable term or provision of the
Director Plan shall control.
7. Governing Law. This Agreement shall be
governed and construed in accordance with the laws of the
Commonwealth of Massachusetts without regard to principles
thereof relating to conflicts of law.
IN WITNESS WHEREOF, the Participant and the Company have
executed this Agreement as of the date first above written.
HOUGHTON MIFFLIN COMPANY
By: ______________________
Susan Hardy
Assistant Treasurer
___________________________
Name:
43
___________________________
(Address)
___________________________
(City, State, Zip)
44
THIS AGREEMENT is made and entered into as of this
24th day of August, 1994, by and between (the
"Participant") and Houghton Mifflin Company (the "Company").
WHEREAS, the undersigned desires to purchase from the
Company and the Company desires to sell to the Participant
shares (the "Purchased Shares") of the common stock of
the Company, par value $1.00 per share, at a price of $42.625
per share, subject to the terms and conditions set forth
herein and in the Director Plan; and
WHEREAS, concurrently herewith the Company is
extending to the Participant an interim loan (the "Interim Loan")
to fund up to 100% of the purchase price for the Purchased
Shares;
NOW, THEREFORE, in consideration of the foregoing and for
other consideration, the receipt and sufficiency of which is
hereby acknowledged, the Participant and the Company hereby
agree as follows:
1. Purchase of Shares. The Participant hereby purchases
from the Company and the Company hereby sells to the Participant
the Purchased Shares. No certificates for the Purchased Shares
will be issued to the Participant until the Company has
completed all steps required by law to be taken in connection
with the issue and sale of the Purchased Shares, including,
without limitation, receipt of any agreements or representations
from the Participant necessary to prevent a resale or
distribution of the Purchased Shares in violation of federal
or state securities laws.
2. Financing Obligations. Payment for the Purchased
Shares is being obtained by the Participant from the Interim
Loan and, in connection with the Interim Loan, the Participant
is delivering to the Company simultaneously herewith such
documentation as the Company may require to evidence the Interim
Loan. If the Participant does not repay the Interim Loan in
cash, the Company may assist the Participant in arranging
financing either from a third party or directly from the Company
(the "Permanent Loan") to repay the Interim Loan. The Company
may be required to guarantee the Participant's obligations
under any third party loan. The Participant agrees that the
45
Company may take all action which the Company deems reasonable
and necessary for the Company to obtain full reimbursement for
any payments it becomes obligated to make to a third party
under the Company's guarantee of the Participant's loan. The
Participant understands and acknowledges the Participant's
obligation to proceed with such arrangements as may be
necessary to obtain the Permanent Loan and to repay the Interim
Loan. The Participant will provide such documentation as may
be required by the Company to ensure that the proceeds, if any,
of the Permanent Loan will be paid directly to the Company in
repayment of the Interim Loan.
3. Terms of Purchase Plan; Restrictions on Sale and
Risk Sharing. In the event that Participant enters into a
Permanent Loan, the Participant acknowledges and agrees that
the Purchased Shares are subject to all of the terms and
conditions set forth in the Company's 1994 Non-Executive
Director Stock Purchase Plan (the "Director Plan"), including,
without limitation, the restrictions on the sale of the
Purchased Shares set forth in Section 7 of the Director Plan
and the risk sharing provisions set forth in Sections 8 through
12 of the Director Plan pursuant to which the Company, to the
extent and upon the conditions set forth in the Director Plan,
will share the "Loss" (as such term is defined in the Director
Plan), if any, or the "Gain" (as such term is defined in the
Director Plan), if any, which the Participant incurs upon the
sale of the Purchased Shares.
4. Stock Certificate Legend. Certificates for the
Purchased Shares may bear a legend referring to the Director
Plan, if applicable, and the agreements between the Participant
and the Company relating to the Purchased Shares.
5. Transfer of Securities. The Participant acknowledges
that the Purchased Shares have not been registered under the
Securities Act of 1933, as amended (the "Securities Act"), and
may be sold or disposed of in the absence of such registration
only pursuant to an exemption therefrom. The Participant
agrees that the certificate or certificates for the Purchased
Shares may bear a legend to the following effect:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ACQUIRED
IN A TRANSACTION NOT INVOLVING A PUBLIC OFFERING UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT").
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT, OR UNDER ANY STATE
SECURITIES OR "BLUE SKY" LAWS. THE SECURITIES REPRESENTED BY
THIS CERTIFICATE MAY NOT BE OFFERED FOR SALE, TRANSFERRED, SOLD,
ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE ENCUMBERED OR
DISPOSED OF (A "TRANSFER") UNLESS SUCH TRANSFER IS MADE
46
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OR AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT AND UNDER ANY APPLICABLE STATE SECURITIES OR
"BLUE SKY" LAWS."
6. Miscellaneous. Notices hereunder shall be mailed
or delivered to the Company at its principal place of business,
222 Berkeley Street, Boston, Massachusetts 02116, Attention:
Treasurer, and shall be mailed or delivered to the Participant
at the Participant's address set forth below, or in either case
at such other address as one party may subsequently furnish to
the other party in writing. If the Participant enters into a
Permanent Loan, all of the terms and provisions of the Director
Plan shall be expressly incorporated herein. In such case,
notwithstanding anything in this Agreement to the contrary,
in the event that any inconsistency arises between any term or
provision of the Director Plan and any term or provision of
this Agreement, then the applicable term or provision of the
Director Plan shall control.
7. Governing Law. This Agreement shall be governed
and construed in accordance with the laws of the Commonwealth of
Massachusetts without regard to principles thereof relating to
conflicts of law.
IN WITNESS WHEREOF, the Participant and the Company have
executed this Agreement as of the date first above written.
HOUGHTON MIFFLIN COMPANY
By: ______________________
Susan E. Hardy
Assistant Treasurer
___________________________
Name:
___________________________
(Address)
___________________________
(City, State, Zip)
47
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> SEP-30-1994
<CASH> 12,699
<SECURITIES> 1,131
<RECEIVABLES> 215,037
<ALLOWANCES> 11,635
<INVENTORY> 64,417
<CURRENT-ASSETS> 297,921
<PP&E> 166,722
<DEPRECIATION> 99,940
<TOTAL-ASSETS> 550,474
<CURRENT-LIABILITIES> 142,834
<BONDS> 0
<COMMON> 14,759
0
0
<OTHER-SE> 244,674
<TOTAL-LIABILITY-AND-EQUITY> 550,474
<SALES> 396,833
<TOTAL-REVENUES> 396,833
<CGS> 182,351
<TOTAL-COSTS> 332,112
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,005
<INCOME-PRETAX> 97,149
<INCOME-TAX> 37,666
<INCOME-CONTINUING> 59,483
<DISCONTINUED> 0
<EXTRAORDINARY> (1,239)
<CHANGES> 0
<NET-INCOME> 58,244
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</TABLE>
