<PAGE>
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 SEPTEMBER 30, 1996
( ) 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 0-12406
IMMUNEX CORPORATION
(exact name of registrant as specified in its charter)
WASHINGTON 51-0346580
- -------------------------------- -------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
51 University Street, Seattle, WA 98101
(Address of principal executive offices)
Registrant's telephone number, including area code (206) 587-0430
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common Stock, $.01 par value 39,602,225
------------------------------ ---------------------------------
Class Outstanding at November 7, 1996
<PAGE>
IMMUNEX CORPORATION
QUARTERLY REPORT ON FORM 10-Q
SEPTEMBER 30, 1996
TABLE OF CONTENTS
Page No.
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PART I. FINANCIAL INFORMATION 3
Item 1. Financial Statements:
a) Consolidated Balance Sheets -
September 30, 1996 and December 31, 1995 4
b) Consolidated Statements of Operations -
for the three-month periods ended September 30, 1996
and September 30, 1995 5
c) Consolidated Statements of Operations -
for the nine-month periods ended September 30, 1996
and September 30, 1995 6
d) Consolidated Statements of Cash Flows -
for the nine-month periods ended September 30, 1996
and September 30, 1995 7
e) Notes to Consolidated Financial Statements 8-9
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10-13
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 14
Item 6. Exhibits and Reports on Form 8-K 14
SIGNATURES 15
2
<PAGE>
PART I. FINANCIAL INFORMATION
FORWARD-LOOKING STATEMENTS
This document includes certain forward-looking statements made pursuant to
the safe harbor provisions of the Private Securities Litigation Reform Act of
1995. The words "believes," "anticipates", "expects" and similar expressions
are intended to identify such forward-looking statements. Such statements are
subject to certain risks and uncertainties that could cause actual results to
differ materially from those anticipated by the statements made by the Company.
Factors which could affect the Company's financial results are described in
Management's Discussion and Analysis and in the Company's latest Annual Report
on Form 10-K filed with the Securities and Exchange Commission. Readers are
cautioned not to place undue reliance on these forward-looking statements,
which speak only as of the date hereof. The Company undertakes no obligation
to publicly release the result of any revisions to these forward-looking
statements that may be made to reflect events or circumstances after the date
hereof or to reflect the occurrence of unanticipated events.
3
<PAGE>
Item 1. FINANCIAL STATEMENTS
IMMUNEX CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands)
September 30, December 31,
1996 1995
------------- ------------
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 38,276 $ 20,437
Accounts receivable, net 20,333 20,697
Inventories 8,280 8,302
Other assets 4,705 979
------------- ------------
Total current assets 71,594 50,415
Property, plant and equipment, net 81,975 87,540
Investment 10,779 2,353
Other assets 31,762 33,729
------------- ------------
$196,110 $174,037
------------- ------------
------------- ------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 17,830 $ 21,660
Accrued compensation and related items 5,128 8,397
Current portion of long-term debt 528 715
Other liabilities 996 2,013
------------- ------------
Total current liabilities 24,482 32,785
Long-term liabilities 4,365 4,609
Shareholders' equity:
Common stock, $.01 par value 634,398 592,470
Guaranty payment receivable from AHP (41,923) (45,288)
Unrealized gain on investments
available-for sale 8,426 --
Accumulated deficit (433,638) (410,539)
------------- ------------
Total shareholder's equity 167,263 136,643
------------- ------------
$196,110 $174,037
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------------- ------------
4
<PAGE>
Item I. FINANCIAL STATEMENTS (continued)
IMMUNEX CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)
Three months Three months
ended ended
September 30, September 30,
1996 1995
------------- -------------
Revenues:
Product sales $ 30,334 $33,464
Royalty and contract revenue 3,023 4,132
------------- ------------
33,357 37,596
Operating expenses:
Cost of product sales 4,920 5,607
Research and development 22,251 21,124
Selling, general and administrative 17,425 13,506
------------- ------------
44,596 40,237
Operating loss (11,239) (2,641)
Other income (expense):
Interest income 616 336
Interest expense (45) (92)
Other income (expense), net 25 16
------------- ------------
596 260
------------- ------------
Loss before income taxes (10,643) (2,381)
Provision for income taxes 7 79
------------- ------------
Net loss $(10,650) $(2,460)
------------- ------------
------------- ------------
Net loss per common share $ (.27) $ (.06)
------------- ------------
------------- ------------
Number of shares used for per
share amounts 39,602 39,602
------------- ------------
------------- ------------
5
<PAGE>
Item I. FINANCIAL STATEMENTS (continued)
IMMUNEX CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)
Nine months Nine months
ended ended
September 30, September 30,
1996 1995
------------- ------------
Revenues:
Product sales $ 97,631 $103,107
Royalty and contract revenue 19,093 12,614
------------- ------------
116,724 115,721
Operating expenses:
Cost of product sales 16,531 18,523
Research and development 72,557 62,389
Selling, general and administrative 52,160 43,036
------------- ------------
141,248 123,948
Operating loss (24,524) (8,227)
Other income (expense):
Interest income 1,705 858
Interest expense (197) (1,019)
Other income (expense), net 36 (480)
------------- ------------
1,544 (641)
------------- ------------
Loss before income taxes (22,980) (8,868)
Provision for income taxes 119 198
------------- ------------
Net loss $(23,099) $ (9,066)
------------- ------------
------------- ------------
Net loss per common share $ (.58) $ (.23)
------------- ------------
------------- ------------
Number of shares used for per share amounts 39,602 39,586
------------- ------------
------------- ------------
6
<PAGE>
Item I. FINANCIAL STATEMENTS (continued)
IMMUNEX CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Nine months Nine months
ended ended
September 30, September 30,
1996 1995
------------- ------------
Cash flows from operating activities:
Net loss $(23,099) $ (9,066)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation and amortization 11,476 11,997
Accounts receivable 364 (3,448)
Inventories 22 2,892
Accounts payable, accrued compensation and
other current liabilities (7,970) (301)
Other current assets (3,266) 872
------------- ------------
Net cash provided by (used in)
operating activities (22,473) 2,946
------------- ------------
Cash flows from investing activities:
Purchases of property, plant and equipment (3,585) (3,760)
Proceeds from sales and maturities of
securities available-for-sale -- 9,897
Other (965) (340)
------------- ------------
Net cash provided by (used in)
investing activities (4,550) 5,797
------------- ------------
Cash flows from financing activities:
Guaranty payments received from AHP 45,288 35,768
AHP line of credit -- (34,000)
Construction loan pay-off -- (10,600)
Other (426) (418)
------------- ------------
Net cash provided by (used in)
financing activities 44,862 (9,250)
------------- ------------
Net increase (decrease) in cash and cash
equivalents 17,839 (507)
Cash and cash equivalents, beginning of
period 20,437 14,818
------------- ------------
Cash and cash equivalents, end of period $38,276 $14,311
------------- ------------
------------- ------------
7
<PAGE>
NOTE 1. BASIS OF PRESENTATION
The consolidated financial statements included herein have been prepared by
Immunex Corporation without audit, according to the rules and regulations of
the Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been omitted pursuant to
such rules and regulations. The financial statements reflect, in the opinion
of management, all adjustments (which include only normal recurring
adjustments) necessary to present fairly the financial position and results of
operations as of and for the periods indicated. The statements should be read
in conjunction with the financial statements and the notes thereto included in
the Company's Annual Report on Form 10-K for the year ended December 31, 1995.
The results of operations for the nine-month period ended September 30, 1996,
are not necessarily indicative of results to be expected for the entire year
ending December 31, 1996.
NOTE 2. ACCOUNTING POLICIES
INVENTORIES
Inventories are stated at the lower of cost, using a weighted-average method, or
market. The components of inventories are as follows (in thousands):
September 30, December 31,
1996 1995
------------- ------------
Raw materials $1,309 $1,295
Work in process 2,949 3,947
Finished goods 4,022 3,060
------------- ------------
Totals $8,280 $8,302
------------- ------------
------------- ------------
INVESTMENT
The Company has an ownership interest in Targeted Genetics Corporation ("TGC"),
a biotechnology company engaged in developing human gene therapy products for
the treatment of acquired and inherited diseases. In June 1996, TGC completed
an offering of common stock and issued additional shares of common stock
pursuant to a merger. The issuance of the additional shares of stock reduced
Immunex's ownership interest from 21 percent to 13 percent. As a result of the
decrease in ownership percentage, Immunex was required to change from the
equity method of accounting for its investment in TGC to the provisions of
Statement of Financial Accounting Standards no. 115, "Accounting for Certain
Investments in Debt and Equity Securities." Accordingly, the Company's
investment in TGC is recorded at market value and the unrealized gain of $8.4
million is reflected as a component of shareholders' equity on the Company's
balance sheet.
8
<PAGE>
NOTE 3. CONTINGENT LIABILITIES
On November 1, 1996, the Company announced that it had agreed with Cistron
Biotechnology, Inc. ("Cistron") to settle all of Cistron's claims against the
Company and two former officers of Immunex. The settlement was negotiated with
the assistance of United States District Court Judge William L. Dwyer, who
presided over the case. This litigation, first filed in September 1993 and
consolidated in the U.S. District Court in Seattle, was based on claims by
Cistron that Immunex and the former officers misappropriated certain Cistron
proprietary information regarding interleukin-1 beta ("IL-1B") in 1984.
Cistron's claims included misappropriation of trade secrets, unfair
competition, breach of contract, and breach of a confidential relationship.
The terms of the settlement include payments by the defendants over a four
year period totaling $21 million. The first payment, $11 million, will be made
in November 1996, to be followed by three successive annual payments of $3
million in November 1997, 1998 and 1999, and a final $1 million payment in
November 2000. Immunex will also assign certain IL-1B patents to Cistron.
Under the terms of the settlement, neither Immunex nor Steven Gillis and
Christopher S. Henney, the former officers, concede or admit any liability or
wrongdoing. The court made no determination of the merits of any allegations
and under the terms of the settlement all claims are dismissed with prejudice.
Cistron had sought damages of $26 to $67 million, plus exemplary damages and
attorneys' fees under Washington law.
Immunex is pursuing claims against its director's and officer's liability
insurers for up to $10 million of the amounts to be paid in settlement. The
insurers have disputed the coverage available under the applicable policies and
there can be no assurance that Immunex will recover the amounts sought.
Immunex will record a charge of approximately $18 million to its 1996
earnings, representing the discounted value of its obligations under the
settlement. The charge does not reflect any provision for amounts that may be
recoverable under insurance policies.
9
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
OVERVIEW
Operating expenses have increased during the three and nine-month periods
ended September 30, 1996 versus the comparable 1995 periods, reflecting
increased investment in the Company's research and development effort and
expenditures related to selling, marketing and legal activities. Concurrently,
product sales and other operating revenues, in total, have not increased from
1995 levels. As a result, the net loss has increased to $10.7 million and
$23.1 from $2.5 million and $9.1 million for the comparable three and nine
months ended September 30, 1996 and 1995, respectively.
REVENUES
Product sales totaled $30.3 million and $97.6 million during the three and
nine months ended September 30, 1996, respectively, compared to $33.5 million
and $103.1 million during the same periods in 1995. Net sales of
LEUKINE-Registered Trademark- (sargramostim) totaled $9.2 million for the
current quarter, compared to $10.1 million in the third quarter of 1995. Sales
of LEUKINE in the third quarter declined due to the effect of the sales launch
of a new package configuration in the second quarter of 1996. Sales to
distributors were greater than normal during the second quarter as they built
up inventories of the new package. For the nine months ended September 30,
1996, sales of LEUKINE have increased, compared to 1995 levels. Net LEUKINE
sales increased to $33.0 million versus $30.5 million for the nine-month
periods ended September 30, 1996 and 1995, respectively.
Sales of NOVANTRONE-Registered Trademark- (mitoxantrone) declined during
both the three and nine-month periods ended September 30, 1996, totaling $9.9
million and $27.7 million, respectively, compared to $10.8 million and $31.3
million in the respective 1995 periods. Following a decline in NOVANTRONE
sales during the first quarter of 1996, sales have returned to near historical
levels, totaling $9.9 million in both the second and third quarters of 1996.
Sales of leucovorin calcium have declined from 1995 sales levels and are
expected to continue to decrease as a result of increased generic competition.
The decline has been partially mitigated by bulk sales of leucovorin calcium
during both the first and second quarter of 1996.
The Company received approval to market a liquid formulation of LEUKINE
from the U.S. Food and Drug Administration on November 7, 1996 and continues to
make progress towards the approval of NOVANTRONE in treatment of advanced
prostate cancer. There can be no assurances as to the likelihood or timing of
the NOVANTRONE approval, or the impact, if any these approvals may have on
future product sales.
10
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS, CONTINUED
For the three months ended September 30, 1996 and 1995, royalty and
contract revenue totaled $3.0 million and $4.1 million, respectively. The
decrease in the comparable periods reflects a decline in contract manufacturing
activity. Beginning in the second quarter of 1996, the Company has focused much
of its manufacturing resources towards the scale-up and production of tumor
necrosis factor receptor ("TNFR"), a product entering phase III clinical trials,
in order to meet its clinical needs. As a result, certain manufacturing
resources have not been, nor are they expected to be, available for contract
manufacturing services. For the nine-month period ended September 30, 1996,
royalty and contract revenue increased 51% to $19.1 million, compared to $12.6
million for the 1995 nine-month period. A substantial increase in license fee
income during the nine-months ended September 30, 1996 is the primary reason for
the increase. The Company entered into several new license agreements during
the current year, generating license fee income of $4.8 million and has earned
an additional $5.0 million under existing license agreements with American Home
Products Corporation ("AHP"). In July 1996, the Company and AHP revised one of
these agreements that related to development of TNFR. Under the previous
agreement, AHP was contributing $1.0 million per quarter through 1997 to support
development of TNFR. As a result of the revised agreement, these payments
ceased effective July 1, 1996. Under the new agreement, Immunex and AHP are
sharing, on an equal basis, the costs of developing TNFR in North America and
Europe.
OPERATING EXPENSES
Cost of product sales was $4.9 million, or 16.2% of product sales and $5.6
million or 16.8% of product sales for the quarters ended September 30, 1996 and
1995, respectively. For the nine months ended September 30, 1996 and 1995,
cost of product sales was $16.5 million, or 16.9% of product sales and $18.5
million, or 18.0% of product sales, respectively. The decrease in the cost of
sales percentage for both the 1996 three and nine-month periods is due
primarily to a decrease in period manufacturing costs charged to cost of goods
sold during the current year periods, partially offset by declining profit
margins on sales of leucovorin calcium. As noted above, leucovorin calcium has
experienced increased generic competition in the current year, resulting in
declining average selling prices. Other factors contributing to the decrease
in the cost of sales percentage for the comparable 1996 and 1995 nine-month
periods include the cost of the bulk sales of leucovorin calcium, discussed
above, and the launch of THIOPLEX-Registered Trademark- (thiotepa for
injection) in early 1995. THIOPLEX, which replaced thiotepa during the first
quarter of 1995, has a lower production cost than thiotepa.
Research and development expense increased to $22.3 million from $21.1
million and to $72.6 million from $62.4 million for the three and nine months
ended September 30, 1996 and 1995, respectively. The increase reflects a
significant expansion of clinical studies and investments in large-scale
manufacturing for the TNFR program. In spite of promising early results on
TNFR, there remain major tasks that must be accomplished before the product can
be commercialized. These tasks include successfully manufacturing product to
conduct phase III trials, completing such trials to permit regulatory filing on
a competitive basis and scaling-up TNFR production to commercial quantities.
Delays in completing these tasks could delay the development program for TNFR.
Since there are other companies developing TNF inhibitors for rheumatoid
arthritis, delays could adversely affect the Company's ability to gain market
share in a competitive market. In addition, LEUKINE and NOVANTRONE development
and clinical expenditures have increased during 1996 in pursuit of new
indications. Obligations under third party collaborative funding agreements,
excluding the AHP research and development agreements as discussed below,
increased for the comparable 1995 and 1996 nine-month periods, from $2.6
million to $3.6 million, respectively. Expenses under these agreements for the
third quarter of 1996 approximated the 1995 third quarter amount.
11
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS, CONTINUED
In July 1996, Immunex and AHP amended their agreements related to research
and development of new oncology products and development of TNFR. Under the
terms of the superseded research and development agreement, the Company was
obligated to contribute $26.1 million in 1996, up to $38.3 million in 1997 and
50% of AHP's oncology research and development expenses thereafter. Under the
revised agreement, Immunex will be funding 50% of AHP's oncology discovery
research expenditures, up to a maximum amount of $16 million per year (adjusted
annually for inflation after 1996) and has the option to elect which products
it will continue to support beyond the discovery stage. Effective July 1,
1996, Immunex's funding of AHP's oncology research program decreased from $6.5
million per quarter for the first two quarters of 1996 to $4.0 million in the
third quarter of 1996. For the three and nine months ended September 30, 1995,
expenses incurred under the superseded research and development agreement
totaled $4.0 million and $11.9 million, respectively. As noted above, Immunex
and AHP have also agreed to equally share the costs of developing TNFR in North
America and Europe. As a result of this agreement, the costs for development
of TNFR are net of AHP's third quarter 1996 obligation to Immunex under the
cost sharing agreement, totaling approximately $1.4 million.
Selling, general and administrative expense for the three and nine months
ended September 30, 1996 was $17.4 million and $52.2 million, respectively,
compared to $13.5 million and $43.0 million for the same 1995 three and nine
month-periods. The increase in expense levels for both the three and nine
months ended September 30, 1996 is due primarily to expenditures to support
selling and marketing activities related to the Company's existing product
line. In addition, the Company has incurred increased recruiting, relocation
and training costs related to its sales force. In January 1996, following
AHP's November 1995 offer to buy all outstanding shares of the Company's common
stock, the Company experienced excessive turnover of field sales personnel. It
has taken much of the year to staff, train and integrate the newly hired sales
representatives into the field. The 1996 expense level includes charges
related to two separate events. During the first quarter of 1996, the Company
incurred expenses of $1.5 million related to the adoption of certain employee
retention programs, investment banking, legal and other fees following AHP's
offer to buy all outstanding shares of the Company's common stock. The offer
was subsequently rejected by a special committee of Immunex's board of
directors. In the third quarter of 1996, severance payments under an employment
agreement totaling approximately $1.0 million were made to a former officer of
the Company. Other cost increases include legal defense costs associated with
litigation between the Company and Cistron Biotechnology, Inc. and expanded
investment in information technologies.
OTHER INCOME (EXPENSE)
Other income (expense) improved during both the comparable three and
nine-month periods ended September 30, 1996 and 1995, due to increased interest
income combined with decreased interest expense. Following the receipt of
$35.8 million from AHP in March 1995, as settlement of the 1994 revenue
shortfall obligation, the Company paid the $34.0 million outstanding balance on
its loan with AHP and made the final $10.6 million payment on its construction
loan. Other income (expense) during the nine months ended September 30, 1995
includes losses from the Company's equity investment in Targeted Genetics
Corporation ("TGC"). In June 1996, TGC completed an offering of common stock
and issued additional shares of common stock pursuant to a merger. The
dilution of Immunex's ownership percentage resulted in a change in accounting
for its investment in TGC and as a result, the Company is no longer required to
recognize its share of TGC's losses.
12
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS, CONTINUED
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents totaled $38.3 million and $20.4 million at
September 30, 1996 and December 31, 1995, respectively. During the nine months
ended September 30, 1996, the Company utilized its cash reserves to fund
operating activities and investments in property, plant and equipment.
Operating activities used cash of $22.5 million for the first nine months of
1996, reflecting an increase in the net loss, payments on outstanding
liabilities, insurance prepayments and prepayments under the AHP research
agreement. Investments in property, plant and equipment utilized an additional
$3.6 million. In March 1996, the Company received $45.3 million from AHP as
settlement of the 1995 revenue shortfall obligation. The Company expects to
receive an additional $56 million and $60 million under this agreement in 1997
and 1998, respectively.
The Company is currently evaluating certain property in the vicinity of
its corporate headquarters for possible development and relocation of its
corporate offices and research facilities. The Company has an option on the
property and has performed initial environmental impact and other site studies.
The option to acquire this property has been extended and the decision whether
to move forward with the acquisition has been delayed until the first quarter
of 1997.
Operating activities are expected to result in the continued use of cash.
Existing cash reserves are believed to be sufficient to support the Company's
operating requirements, planned capital expenditures and payment commitments
related to settlement of litigation for the remainder of 1996.
SUBSEQUENT EVENTS
On November 1, 1996, the Company announced it had agreed to settle all of
Cistron's claims against the Company and two former officers. See Notes to the
Consolidated Financial Statements for a description of the settlement of
litigation between Immunex and Cistron.
13
<PAGE>
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
See Notes to the Consolidated Financial Statements for a description of the
status of litigation between Immunex and Cistron Biotechnology, Inc.
The description of additional legal proceedings is incorporated by reference to
Item 3 of the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1995.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
None
(b) REPORTS ON FORM 8-K
A current report on Form 8-K dated July 1, 1996, was filed with the
Securities and Exchange Commission reporting that the Board of Directors of
Immunex Corporation had approved the terms of revised and amended research
agreements among Immunex, American Cyanamid Company ("Cyanamid") and AHP.
Following such approval, Immunex, Cyanamid and AHP entered into a new Research
Agreement effective July 1, 1996, which terminates and replaces the Research
and Development Agreement between Immunex and Cyanamid dated as of June 1,
1993. Effective July 1, 1996 Immunex and AHP also entered into a new TNFR
License and Development Agreement and amended the Immunex New Oncology Product
License Agreement between Immunex and Cyanamid dated June 1, 1993.
14
<PAGE>
SIGNATURES
Pursuant to 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.
IMMUNEX CORPORATION
Date: November 8, 1996 /s/ Edward V. Fritzky
----------------------- ----------------------------
Edward V. Fritzky, Chairman
and Chief Executive Officer
(Principal Executive Officer)
Date: November 8, 1996 /s/ Douglas G. Southern
----------------------- ----------------------------
Douglas G. Southern, Senior
Vice President and
Chief Financial Officer
(Principal Financial and
Accounting Officer)
15
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AS OF SEPTEMBER 30, 1996, AND THE CONSOLIDATED
STATEMENT OF OPERATIONS FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 1996, AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 38,276
<SECURITIES> 0
<RECEIVABLES> 16,489
<ALLOWANCES> 667
<INVENTORY> 8,280
<CURRENT-ASSETS> 71,594
<PP&E> 117,002
<DEPRECIATION> 35,027
<TOTAL-ASSETS> 196,110
<CURRENT-LIABILITIES> 24,482
<BONDS> 0
634,398
0
<COMMON> 0
<OTHER-SE> (467,135)
<TOTAL-LIABILITY-AND-EQUITY> 196,110
<SALES> 97,631
<TOTAL-REVENUES> 116,724
<CGS> 16,531
<TOTAL-COSTS> 141,248
<OTHER-EXPENSES> 36
<LOSS-PROVISION> 130
<INTEREST-EXPENSE> 197
<INCOME-PRETAX> (22,980)
<INCOME-TAX> 119
<INCOME-CONTINUING> (23,099)
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<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (23,099)
<EPS-PRIMARY> (.58)
<EPS-DILUTED> (.58)
</TABLE>
