UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------------------
FORM 10-Q
-----------------------------------
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended March 31, 1998
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from ____________ to
__________
------------------------
Commission file number 1-7725
I.R.S. Employer Identification number 36-2687938
COMDISCO, INC.
(a Delaware Corporation)
6111 North River Road
Rosemont, Illinois 60018
Telephone: (847) 698-3000
Name of each Number of shares
Title of exchange on outstanding as of
each class which registered March 31, 1998
-------------- ----------------------- -----------------
Common stock, New York Stock Exchange 76,656,856
$.10 par value Chicago Stock Exchange
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 XX No .
-1-
<PAGE>
Comdisco, Inc. and Subsidiaries
INDEX
Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Statements of Earnings and Retained Earnings --
Three and Six Months Ended March 31, 1998 and 1997 ..................3
Consolidated Balance Sheets --
March 31, 1998 and September 30,1997.................................4
Consolidated Statements of Cash Flows --
Six Months Ended March 31, 1998 and 1997.............................5
Notes to Consolidated Financial Statements............................7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results ofOperations....................................9
PART II OTHER INFORMATION
Item 3. Quantitative and Qualitative Disclosures about Market Risk..........14
Item 6. Exhibits and Reports on Form 8-K....................................15
SIGNATURES..................................................................17
-2-
<PAGE>
PART I. FINANCIAL INFORMATION
Comdisco, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF EARNINGS AND RETAINED EARNINGS (UNAUDITED)
(in millions except per share data)
For the Three and Six Months Ended March 31,1998 and 1997
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
March 31, March 31,
Revenue 1998 1997 1998 1997
------ ------ ------ ------
<S> <C> <C> <C> <C>
Leasing
Operating .................... $ 455 $ 402 $ 903 $ 792
Direct financing ............. 41 36 81 72
Sales-type ................... 72 68 162 132
------ ------ ------ ------
Total leasing ............. 568 506 1,146 996
Sales ............................. 84 59 135 105
Continuity and network services ... 110 85 214 169
Other ............................. 15 40 26 53
------ ------ ------ ------
Total revenue ............. 777 690 1,521 1,323
------ ------ ------ ------
Costs and expenses
Leasing
Operating .................... 365 316 724 621
Sales-type ................... 46 43 106 89
------ ------ ------ ------
Total leasing ............. 411 359 830 710
------ ------ ------ ------
Sales ............................. 74 49 114 79
Continuity and network services ... 90 71 176 142
Selling, general and administrative 61 61 123 120
Interest .......................... 83 73 164 146
Other ............................. -- 25 -- 25
------ ------ ------ ------
Total costs and expenses .. 719 638 1,407 1,222
------ ------ ------ ------
Earnings before income taxes ...... 58 52 114 101
Income taxes ...................... 21 19 41 38
------ ------ ------ ------
Net earnings before preferred dividends 37 33 73 63
Preferred dividends ................. -- (2) (2) (4)
------ ------ ------ ------
Net earnings to common stockholders $ 37 $ 31 $ 71 $ 59
====== ====== ====== ======
Retained earnings at beginning
of period $ 995 $ 881 $ 965 $ 856
Net earnings to common stockholders 37 31 71 59
Cash dividends paid on common stock (3) (4) (7) (7)
------ ------ ------ ------
Retained earnings at end of period $1,029 $ 908 $1,029 $ 908
====== ====== ====== ======
Net earnings per common share:
Earnings per common share--basic $ .49 $ .41 $ .95 $ .80
====== ====== ====== ======
Earnings per common share--diluted $ .45 $ .38 $ .88 $ .75
====== ====== ====== ======
Common shares outstanding
Average common shares outstanding 76 73 75 73
====== ====== ====== ======
Average commons shares
outstanding--diluted .......... 82 78 81 78
====== ====== ====== ======
See accompanying notes to consolidated financial statements
</TABLE>
-3-
<PAGE>
Comdisco, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(in millions except number of shares)
March 31, September 30,
1998 1997
----------- -------------
ASSETS (unaudited) (audited)
Cash and cash equivalents ........................ $ 34 $ 37
Cash - legally restricted ........................ 43 45
Receivables, net ................................. 284 262
Inventory of equipment ........................... 187 157
Leased assets:
Direct financing and sales-type ................ 1,715 1,717
Operating (net of accumulated depreciation) .... 3,711 3,571
------- -------
Net leased assets ............................ 5,426 5,288
Buildings, furniture and other, net .............. 135 140
Other assets ..................................... 426 421
------- -------
$ 6,535 $ 6,350
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Notes payable .................................... $ 1,018 $ 1,024
Term notes payable ............................... 495 497
Senior notes ..................................... 2,588 2,421
Accounts payable ................................. 171 170
Income taxes ..................................... 298 306
Other liabilities ................................ 353 325
Discounted lease rentals ......................... 670 742
------- -------
5,593 5,485
Stockholders' equity:
Preferred stock $.10 par value
Authorized 100,000,000 shares:
8.75% Cumulative Preferred Stock, Series A and B
$25 stated value and liquidation preference,
824,400 shares issued
(3,562,600 at September 30, 1997).............. 21 89
Common stock $.10 par value
Authorized 550,000,000 shares
(200,000,000 at September 30, 1997);
issued 110,480,834 shares
(110,132,636 at September 30, 1997) ........... 11 11
Additional paid-in capital ...................... 273 178
Deferred compensation (ESOP) .................... (1) (3)
Deferred translation adjustment ................ (33) (20)
Retained earnings .............................. 1,029 965
------- -------
1,300 1,220
Common stock held in treasury, at cost ......... (358) (355)
------- -------
Total stockholders' equity ................. 942 865
------- -------
$ 6,535 $ 6,350
======= =======
See accompanying notes to consolidated financial statements.
-4-
<PAGE>
Comdisco, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in millions)
For the Six Months Ended March 31, 1998 and 1997
Increase (decrease) in cash and cash equivalents:
1998 1997
------ ------
Cash flows from operating activities:
Operating lease and other leasing receipts ............... $ 993 $ 808
Direct financing and sales-type leasing receipts ......... 475 410
Sale of direct financing and sales-type leasing receipts . 77 --
Leasing costs, primarily rentals paid .................... (10) (14)
Sales .................................................... 148 118
Sales costs .............................................. (48) (35)
Continuity and network services receipts ................. 195 161
Continuity and network services costs .................... (129) (98)
Other revenue ............................................ 23 29
Litigation settlement .................................... -- 25
Selling, general and administrative expenses ............. (135) (119)
Interest ................................................. (161) (144)
Income taxes ............................................. (35) (37)
------ ------
Net cash provided by operating activities .............. 1,393 1,104
------ ------
Cash flows from investing activities:
Equipment purchased for leasing ........................... (1,433) (1,421)
Investment in continuity and network services facilities .. (43) (29)
Other ..................................................... (11) 1
------ ------
Net cash used in investing activities .................. (1,487) (1,449)
------ ------
Cash flows from financing activities:
Discounted lease proceeds ................................ 179 200
Net increase (decrease) in notes payable ................. (6) 175
Issuance of term notes and senior notes .................. 287 524
Maturities and repurchases of term notes and senior notes (120) (316)
Principal payments on secured debt ....................... (251) (199)
Preferred stock purchased ................................ (68) --
Common stock purchased and placed in treasury ............ (47) (25)
Dividends paid on preferred stock ........................ (2) (4)
Dividends paid on common stock ........................... (7) (7)
Stock Incentive Plan ..................................... 109 --
Decrease in legally restricted cash ..................... 2 --
Other .................................................... 15 6
------ ------
Net cash provided by financing activities .............. 91 354
------ ------
Net increase (decrease) in cash and cash equivalents ........ (3) 9
Cash and cash equivalents at beginning of period ............ 37 29
------ ------
Cash and cash equivalents at end of period .................. $ 34 $ 38
====== ======
-5-
<PAGE>
Comdisco, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) -- CONTINUED
(in millions)
For the Six Months Ended March 31, 1998 and 1997
1998 1997
------ ------
Reconciliation of net earnings to net cash
provided by operating activities:
Net earnings ......................................... $ 73 $ 63
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Leasing costs, primarily
depreciation and amortization .................. 820 696
Leasing revenue, primarily principal portion of
direct financing and sales-type lease rentals .. 322 223
Sale of direct financing and sales-type receivables 77 --
Cost of sales .................................... 66 44
Continuity and network services costs, primarily
depreciation and amortization ................. 47 44
Interest ......................................... 3 2
Income taxes ..................................... 6 2
Other - net ...................................... (21) 30
------ ------
Net cash provided by operating activities $1,393 $1,104
====== ======
See accompanying notes to consolidated financial statements.
-6-
<PAGE>
Comdisco, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
March 31, 1998 and 1997
1. Basis of Presentation
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial statements and with the instructions to Form 10-Q and Rule 10-01 of
Regulation S-X. Accordingly, they do not include all of the information and
disclosures required by generally accepted accounting principles for annual
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. For further information, refer to the consolidated financial
statements and notes thereto included in the Company's Annual Report on Form
10-K for the year ended September 30, 1997.
The balance sheet at September 30, 1997 has been derived from the audited
financial statements included in the Company's Annual Report on Form 10-K for
the year ended September 30, 1997.
Legally restricted cash represents cash and cash equivalents that are restricted
solely for use as collateral in secured borrowings and are not available to
other creditors.
2. Interest-Bearing Liabilities
At March 31, 1998, the Company had $1.6 billion of available domestic and
international borrowing capacity under various lines of credit from commercial
banks and commercial paper facilities.
The average daily borrowings outstanding during the six months ended March 31,
1998 were approximately $4.9 billion, with a related weighted average interest
rate of 6.65%. This compares to average daily borrowings during the first six
months of fiscal 1997 of approximately $4.3 billion, with a related weighted
average interest rate of 6.76%.
3. Senior Notes
On June 23, 1997 the Company filed a registration statement on Form S-3 with the
Securities and Exchange Commission for a shelf offering of up to $1.2 billion of
senior debt securities on terms to be set at the time of each sale (the "1997
Shelf"). On November 6, 1997, the Company filed a Prospectus Supplement
designating $600 million of senior debt securities as "Medium-Term Notes, Series
G," all of which medium-term notes remained available for issuance at March 31,
1998. Pursuant to the 1997 Shelf, the Company, on January 8, 1998, issued $250
million of 6.125% Notes Due January 15, 2003. The Company plans to continue to
be active in issuing senior debt during fiscal 1998, primarily to support the
anticipated growth of the leased assets and, where appropriate, to refinance
maturities of interest-bearing liabilities.
4. Preferred and Common Stock
On September 19, 1997, the Company announced the redemption, effective October
20, 1997, of all shares of the Series A Preferred Stock (2,738,200 shares) at
the redemption price of $25, plus accrued and unpaid dividends.
-7-
<PAGE>
On April 22, 1998, the Board of Directors authorized a two-for-one split of the
Company's common stock to be distributed on June 15, 1998, to holders of record
on May 22, 1998. The reference in the financial statements and notes to common
share data have not been adusted to reflect this split.
On April 22, 1998, the Board of Directors declared a quarterly cash dividend of
$.025 per common share to be paid on June 15, 1998 to holders of record on May
22, 1998.
On February 2, 1998, the Company announced that 106 senior managers of the
Company purchased over three million shares of the Company's common stock for
approximately $109 million (the "Proceeds"). Under the voluntary program, the
senior managers took out full recourse, personal loans to purchase the shares.
The Company has guaranteed repayment of the loans in the event of default. The
purchased shares represented over 4% of the current total shares outstanding. It
is currently anticipated that most of the Proceeds will be used by the Company
to purchase its common stock under the Company's existing repurchase program.
Diluted earnings per common and common equivalent share reflects the assumed
exercise of stock options that would have a dilutive effect on earnings per
common share if exercised.
-8-
<PAGE>
Comdisco, Inc. and Subsidiaries
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Net Earnings
- ------------
Net earnings to common stockholders (hereinafter referred to as "net earnings")
for the three months ended March 31, 1998 was $37 million, or $.45 per diluted
common share, as compared to $31 million, or $.38 per diluted common share, for
the three months ended March 31, 1997. Net earnings for the six months ended
March 31, 1998, were $71 million, or $.88 per diluted common share, as compared
to $59 million, or $.75 per diluted common share, for the year earlier period.
The increase in net earnings in the three and six months ended March 31, 1998
compared to the year earlier periods is primarily due to an increase in earnings
contributions from remarketing and continuity services activities. Earnings per
share in the current year periods benefited from a lower effective tax rate of
36.0% compared to 38.0% in fiscal 1997.
The Company's operating results are subject to quarterly fluctuations resulting
from a variety of factors, including the volume of new leases written, product
announcements by manufacturers, economic conditions, interest rate fluctuations
and variations in the financial mix of leases written. The financial mix of
leases written in a quarter is a result of a combination of factors, including,
but not limited to, changes in customer demands and/or requirements, new product
announcements, price changes, changes in delivery dates, changes in maintenance
policies and the pricing policies of equipment manufacturers, and price
competition from other lessors and finance companies. Additionally, the growth
in leasing volume during the last eight fiscal quarters has the effect of
increasing the proportion of leases for new equipment ("New Leases") to total
leases. New Leases traditionally have lower earnings contributions than leases
with remarketed equipment. Therefore, increasing lease volume activities
initially has the impact of putting pressure on leasing margins.
Business Outlook
- ----------------
Leasing volume, as measured by the cost of equipment placed on lease, increased
in the three and six months ended March 31, 1998 as compared to both the year
earlier periods and the prior quarter. The growth in leasing volume is expected
to have a positive impact on leasing revenue in future periods and will provide
equipment for remarketing.
Cost of equipment placed on lease was $783 million during the quarter ended
March 31, 1998. This compares to cost of equipment placed on lease of $754
million and $722 million during the quarters ended March 31, 1997 and December
31, 1997, respectively. During the six months ended March 31, 1998, cost of
equipment placed on lease totaled $1.5 billion compared to $1.4 billion during
the six months ended March 31, 1997. In the current quarter, information
technology services had worldwide cost of equipment placed on lease of $563
million, compared to $656 million in the year earlier quarter. Diversified
technology services had worldwide cost of equipment placed on lease of $220
million, compared to $98 million in the year earlier period. The increase in
cost of equipment placed on lease was primarily from North American operations.
Remarketing activity, an important contributor to quarterly earnings, was at
approximately the same level in the current quarter as compared to the year
earlier. To meet its quarterly earnings goals, remarketing contributions have to
be at or greater than the level achieved in the current fiscal quarter. While
the Company is devoting resources to its remarketing activities, there can be no
assurance that the Company will achieve the appropriate level of activity
necessary to meet the Company's desired operating results.
The Company continues to monitor volatility in large systems fair market values,
which during the last eighteen months in particular, have declined faster and
exhibited greater volatility than historical trends would have otherwise
indicated. As a result, there is no assurance that fair market values on large
systems will stabilize or that further rapid declines in the value of such
systems will not occur in the near term. To the extent that declines in fair
market values exceed the Company's current estimates, there could be an adverse
effect on the Company's operating results.
-9-
<PAGE>
Continuity and network services had its tenth consecutive record quarter with
pretax earnings of $20 million. This compares to pretax earnings of $18 million
in the first quarter of fiscal 1998 and $14 million in the same quarter of the
prior fiscal year. Revenue from continuity contracts, which is recognized
monthly during the noncancelable continuity contract and is therefore recurring
and predictable, was approximately $75 million, $69 million and $74 million
during the three months ended March 31, 1998 and 1997, and December 31, 1997,
respectively, representing approximately 68%, 81% and 71% of continuity and
network services revenue. Revenue from the Company's Millennium Testing Services
("MTS") continues to be significantly below the Company's targets for fiscal
1998. This shortfall in MTS revenue may indicate that companies are still
working on the coding for the Year 2000 and are not yet ready to test their
program changes. The Company has been successful in containing costs to maintain
and improve margins in its services operations. However, to attain its services
earnings contribution goals for fiscal 1998, the Company will have to expand its
contract subscription base (through new contract signings and contract renewals)
and increase its revenues from consulting services.
The industry in which the Company operates is evolving, and the Company's
business is becoming more service oriented, with the business driven by the
Company's service capabilities, including life cycle management and continuity
services. One of the impacts of this changing business model is the lengthening
of the sales cycle--the length of time between initial sales contact and final
delivery of contracts--as compared to its traditional leasing business. This
increase in sales cycle results in an increase in "backlog" (or negotiations in
progress) which ultimately impacts the timing of revenue, earnings and volume
recognition. In addition, the Company's ability to obtain new business from
customers depends on its ability to anticipate technological changes, develop
services to meet customer requirements and to achieve delivery of services that
meet customer requirements.
Three months ended March 31, 1998
- ---------------------------------
Total revenue for the three months ended March 31, 1998 was $777 million,
compared to $690 million, including the $25 million litigation settlement (see
following discussion), in the prior year quarter and $744 million in the quarter
ended December 31, 1997. The increase in the current quarter compared to the
prior year quarter was primarily due to higher total leasing revenue,
principally from operating leases, and higher revenue from continuity services
and sales. Total leasing revenue of $568 million for the quarter ended March 31,
1998 represented an increase of 12% compared to the year earlier period. Sales
revenue increased 42% compared to the year earlier quarter, reflecting the
Company's emphasis on remarketing.
The increase in New Leases, particularly during the last twelve months, coupled
with lower margins on large systems transactions, has resulted in lower margins
on leasing, particularly for operating leases. Operating lease revenue minus
operating lease cost was $90 million, or 19.8% of operating lease revenue
(collectively, the "Operating Lease Margin"), and $86 million, or 21.4% of
operating lease revenue, in the three months ended March 31, 1998 and 1997,
respectively. The Operating Lease Margin was $89 million, or 19.9% in the
quarter ended December 31, 1997. The increase in lease volume, particularly
during the last twelve months, coupled with lower margins on large systems
transactions (mainframes and related peripherals, including DASD and tape
-10-
<PAGE>
drives), has resulted in lower margins on leasing, particularly for operating
leases.
Revenue from sales, which includes remarketing by selling and buy/sell
activities, totaled $84 million in the second quarter of fiscal 1997 compared to
$59 million in the year earlier quarter. The increase in sales revenue in the
current quarter is primarily due to higher sales revenue from international
operations. Sales from distributed systems equipment which generally have higher
margins as compared to large system sales, decreased in the current year period
compared to the year earlier period. Margins on sales were 12% and 17% in the
quarters ended March 31, 1998 and 1997, respectively.
Revenue from continuity and network services activities for the three months
ended March 31, 1998 and 1997 was $110 million and $85 million, respectively, a
29% increase. Cost of continuity and network services activities for the three
months ended March 31, 1998 was $90 million and $71 million, respectively, a 27%
increase.
Other revenue for the three months ended March 31, 1998 and 1997 was $15 million
and $40 million, respectively. Other revenue for the three months ended March
31, 1997 includes a gain of $25 million ($16 million after-tax, or $.20 per
common share) resulting from the receipt of amounts in settlement of litigation.
Revenue from the sale of equity positions held as a result of the Company's
lease financing transactions with early-stage high technology companies
(referred to as Comdisco Ventures, part of the Company's Diversified
Technologies Group) was $5 million and $1 million in the quarters ended March
31, 1998 and 1997, respectively. In addition, in the second quarter of fiscal
1997, the Company recorded approximately $10 million of gains from the sale of
other investments owned by the Company.
Total costs and expenses for the quarter ended March 31, 1998 were $719 million
compared to $638 million in the prior year period. The increase in total costs
and expenses is primarily due to the growth in leasing volume including higher
interest expense, increased leasing costs related to increasing operating lease
revenue, offset by a one-time charge of $25 million (see discussion below) in
the second quarter of fiscal 1997.
In the second quarter of fiscal 1997, the Company recorded a noncash,
non-operating charge of $25 million ($16 million after-tax, or $.20 per diluted
common share) as a one-time addition to the equipment valuation allowance. The
addition to the equipment valuation allowance reflected the surge in distributed
equipment volume during the prior three fiscal quarters and the rapid level of
technological change associated with such equipment, continued declines in the
fair market value of large systems.
Interest expense for the three months ended March 31, 1998 totaled $83 million
in comparison to $73 million in the quarter ended March 31, 1997 and $81 million
in the quarter ended December 31, 1997. The increase in the current quarter
compared to the year earlier quarter is due to higher average daily borrowings
resulting from increased leased assets and the related increase in equipment
purchased for lease during both the current quarter and the first fiscal quarter
compared to the year earlier periods.
Six Months Ended March 31, 1998
- -------------------------------
Total revenue was $1.5 billion and $1.3 billion for the six months ended March
31, 1998 and 1997, respectively. Total leasing revenue of $1.1 billion for the
six months ended March 31, 1998, represented an increase of 15% compared to the
year earlier period.
Revenue from sales, which includes remarketing and buy/sell activities, totaled
$135 million for the six months ended March 31, 1998 compared to $105 million in
the year earlier quarter. Sales from distributed systems equipment, which
generally have higher margins as compared to large system sales,
-11-
<PAGE>
decreased in the current year period compared to the year earlier period.
Margins on sales were 16% and 25% in the six months ended March 31, 1998 and
1997, respectively.
The Operating Lease Margin was $179 million, or 19.8% of operating lease
revenue, and $171 million, or 21.6% of operating lease revenue, in the six
months ended March 31, 1998 and 1997, respectively. The increase in lease
volume, particularly during the last twelve months, coupled with lower margins
on large systems transactions, has resulted in lower margins on leasing,
particularly for operating leases.
Selling, general and administrative expenses totaled $123 million and $120
million for the six months ended March 31, 1998 and 1997, respectively. The
Company has focused its operational efforts on cost containment and has been
able to manage the growth in its leased assets without incurring additional
selling, general and administrative expenses.
Interest expense was $164 million for the six months ended March 31, 1998 as
compared to $146 million for the year earlier period. The increase in interest
expense is primarily due to higher average daily borrowings offset by lower
interest rates.
Financial Condition
- -------------------
The Company's current financial resources and estimated future cash flows from
operations are considered adequate to fund anticipated growth and operating
requirements. The Company utilizes a variety of financial instruments to fund
its short and long-term needs.
Capital expenditures for equipment are generally financed by cash provided by
operating activities, recourse debt, or by assigning the noncancelable lease
rentals to various financial institutions at fixed interest rates on a
nonrecourse basis. Cash provided by operating activities for the six months
ended March 31, 1998 was $1.4 billion compared to $1.1 billion in the year
earlier period. Cash provided by operations has been used to finance equipment
purchases and, accordingly, had a positive impact on the level of borrowing
required to support the Company's investment in its lease portfolio. The Company
expects this trend to continue, with cash flow from leasing and remarketing
reinvested in the equipment portfolio.
Note on Forward-Looking Information
- -----------------------------------
Certain statements herein and in the future filings by the Company with the
Securities and Exchange Commission and in the company's written and oral
statements made by or with the approval of an authorized executive officer
constitute "forward-looking statements" within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934,
and the Company intends that such forward-looking statements be subject to the
safe harbors created thereby. The words and phrases "looking ahead," "we are
confident," "should be," "will be," "predicted," "believe," "expect" and
"anticipate" and similar expressions identify forward-looking statements. These
forward-looking statements reflect the Company's current views with respect to
future events and financial performance, but are subject to many uncertainties
and factors relating to the Company's operations and business environment which
may cause the actual results of the company to be materially different from any
future results expressed or implied by such forward-looking statements. Examples
of such uncertainties include, but are not limited to, the volume of New Leases,
fair market value volatility in large systems, changes in customer demand and
requirements, attaining the expected level of remarketing (which will require
equipment for remarketing, appropriate sales force education and incentive and a
knowledge of the customer and customer requirements), financial mix of leases
written, new product announcements, the
-12-
<PAGE>
ability of the company to expand its contract subscription base and increase its
revenues from consulting services (including MTS service revenue), continued
growth of the semiconductor industry, trend of movement to client/server
environment, competition, including competition from other technology service
providers, reductions in technology budgets and related spending plans and price
competition from other technology service providers. The growth in leasing
volume during the last two fiscal years has increased the proportion of leases
for new equipment to total leases. New Leases traditionally have lower earnings
contributions than leases for remarketed equipment. Accordingly, the increase in
lease volume has put pressure on leasing margins. With respect to economic
conditions, a recession can cause customers to put off new investments and
increase the Company's bad debt experience. In addition, the recent economic
turmoil in Asia may have an impact on the region's semiconductor manufacturing
industry, which in turn would have an impact on the Company's diversified
technology business. Continued pressures on credit in Asia and the Asian economy
in general, could also impact the domestic economy and/or the Company's
multinational customer base. The financial mix of leases written in a quarter is
a result of a combination of factors, including, but not limited to, changes in
customer demands and/or requirements, new product announcements, price changes,
changes in delivery dates, changes in maintenance policies and the pricing
policies of equipment manufacturers, and price competition from other lessors.
The Company undertakes no obligation to publicly update or revise any
forward-looking statements whether as a result of new information, further
events or otherwise.
-13-
<PAGE>
Part II Other Information
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Not applicable.
Item 6. Exhibits and Reports on Form 8-K.
a) Exhibits:
Exhibit No. Description of Exhibit
- ----------- -------------------------
3.01 Restated Certificate of Incorporation of Registrant dated February 12, 1988
Incorporated by reference to Exhibit 4.1 filed with the Company's
Registration Statement on Forms S-8 and S-3, File No. 33-20715, filed
March 8, 1988.
3.02 Certificate of amendment of Restated Certificate of Incorporation
Incorporated by reference to Exhibit 3.02 filed with the Company's
Quarterly Report on Form 10-Q for the quarter ended December 31, 1997,
File No. 1-7725.
3.03 By-Laws of Registrant dated November 4, 1997
Incorporated by reference to Exhibit 4.1 filed with the Company's Current
Report on Form 8-K dated November 12, 1997, as filed with the Commission
November 14, 1997, File No. 1-7725.
3.04 Certificate of Designations with respect to the Company's 8 3/4% Cumulative
Preferred Stock, Series B, as filed with the Secretary of the State of
Delaware on July 2, 1994.
Incorporated by reference to Exhibit 4.1 filed with the Company's Current
Report on Form 8-K dated June 30, 1994, as filed with the Commission
July 21, 1994, File No. 1-7725.
3.05 Certificate of Designation, Preferences and Right of Series C Junior
Participating Preferred Stock
Incorporated by reference to Exhibit 4.1 filed with the Company's Current
Report on Form 8-K dated November 5, 1997, as filed with the Commission
November 6, 1997, File No. 1-7725)
4.01 Rights Agreement, dated as of November 17, 1997, between the Registrant and
ChaseMellon Shareholder Services, L.L.C., as Rights Agent, which includes
as Exhibit A thereto the Certificate of Designation, Preferences and Right
of Series C Junior Participating Preferred Stock and as Exhibit B thereto
the Form of Rights Certificate.
Incorporated by reference to Exhibit 4.1 filed with the Company's Current
Report on Form 8-K dated November 5, 1997, as filed with the Commission
November 6, 1997 File No. 1-7725.
-14-
<PAGE>
Exhibit No. Description of Exhibit
- ----------- -------------------------
4.02 Indenture Agreement between Registrant and Yasuda Bank and Trust Company
(USA), as Trustee dated as of December 1, 1995
Incorporated by reference to Exhibit 4.1 filed with the Company's Current
Report on Form 8-K dated January 12, 1996, as filed with the Commission
on January 17, 1996, File No. 1-7725, the copy of the Indenture dated as
of December 1, 1995 between the Registrant and Yasuda Bank and Trust
Company (USA), as Trustee.
10.01 Amended and Restated Comdisco, Inc. 1998 Employee Stock Purchase Plan
10.01 Amended and Restated Comdisco, Inc. International Employee Stock Purchase
Plan
11 Computation of Earnings Per Common Share
12 Ratio of Earnings to Fixed Charges
27 Financial Data Schedule
b) Reports on Form 8-K:
none.
-15-
<PAGE>
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.
COMDISCO, INC.
Registrant
Date: May 14, 1998 /s/ John J. Vosicky
-------------------
John J. Vosicky
Executive Vice President and
Chief Financial Officer
-16-
Exhibit 10.01
AMENDED AND RESTATED COMDISCO, INC.
1998 EMPLOYEE STOCK PURCHASE PLAN
I. PURPOSE OF THE PLAN
This 1998 Employee Stock Purchase Plan is intended to promote the interests of
Comdisco, Inc. by providing eligible employees in the United States with the
opportunity to share in the fortunes of the Corporation by acquiring a
proprietary interest in the Corporation through participation in a payroll
deduction based employee stock purchase plan designed to qualify under Section
423 of the Code.
Capitalized terms herein shall have the meanings assigned to such terms in the
attached Appendix.
II. ADMINISTRATION OF THE PLAN
The Plan Administrator shall have full authority to interpret and construe any
provision of the Plan and to adopt such rules and regulations for administering
the Plan as it may deem necessary in order to comply with the requirements of
Code Section 423. The Plan Administrator shall have authority to delegate
ministerial tasks related to the Plan to the Corporation's Human Resources,
Accounting, Tax and Payroll Departments. Decisions of the Plan Administrator
shall be final and binding on all parties having an interest in the Plan. The
Plan Administrator shall not be liable for any action or determination made in
good faith with respect to the Plan or any right granted under it.
III. STOCK SUBJECT TO PLAN
A. The stock purchasable under the Plan shall be shares of authorized but
unissued or reacquired Common Stock, including shares of Common Stock purchased
on the open market. Subject to the provision for increase, the maximum number of
shares of the Corporation's Common Stock which shall be available for sale under
the Plan and the International Plan shall be 3% of the shares of the
Corporation's Common Stock issued and outstanding on the Effective Date. The
maximum number of shares of the Corporation's Common Stock which shall be
available for sale under the Plan and the International Plan shall be increased
on the first day of each fiscal year, beginning in the fiscal year ended
September 30, 1999, by an amount equal to (x) 3% of the shares of the
Corporation's Common Stock issued and outstanding on the last day of the
immediately preceding fiscal year less (y) the number of shares available for
future option grants under the Plan and the International Plan on the last day
of the immediately preceding fiscal year.
B. Should any change be made to the Common Stock by reason of any stock split,
stock dividend, recapitalization, combination of shares, exchange of shares or
other change affecting the outstanding Common Stock as a class without the
Corporation's receipt of consideration, appropriate adjustments shall be made to
(i) the maximum number and class of securities issuable in the aggregate under
the Plan and the International Plan, (ii) the maximum number and class of
securities purchasable per Participant on any one Purchase Date and (iii) the
number and class of securities and the price per share in effect under each
outstanding purchase right in order to prevent the dilution or enlargement of
benefits thereunder.
IV. OFFERING PERIODS
A. Shares of Common Stock shall be offered for purchase under the Plan through a
series of successive offering periods until such time as (i) the maximum number
of shares of Common Stock available for issuance in the aggregate under the Plan
and the International Plan shall have been purchased or (ii) the Plan shall have
been sooner terminated.
B. Each offering period shall be of such duration (not to exceed twenty-seven
(27) months) as determined by the Plan Administrator prior to the start date.
Semi-annual offering periods shall commence as of the first business day in
April and October, respectively, and terminate on the last business day in March
and September, respectively, of each calendar year, unless otherwise designated
by the Plan Administrator.
C. Each offering period shall be comprised of a series of one or more successive
Purchase Intervals. Purchase Intervals shall be three-month periods ending March
31, June 30, September 30 and December 31 of each year. The Initial Purchase
Interval in effect under the initial offering period shall commence on the
Effective Date and terminate on the last business day in June, 1998.
V. ELIGIBILITY
A. Each individual who is an Eligible Employee on the start date of any offering
period under the Plan may enter that offering period on such start date provided
he or she remains an Eligible Employee, by completing and submitting the
appropriate form at designated times. An employee may actively participate in
only one corporation sponsored stock purchase plan at a time.
B. The date an individual enters an offering period shall be designated his or
her Entry Date for purposes of that offering period.
C. To participate in the Plan for a particular offering period, the Eligible
Employee must complete the enrollment form(s) prescribed by the Plan
Administrator (including a stock purchase agreement and a payroll deduction
authorization) and file such form(s) with the Plan Administrator (or its
designate) on or before his or her scheduled Entry Date. In such forms, the
Eligible Employee must state the percentage of Base Salary or Base Salary and
Commission/Bonus Payments to be deducted from the Eligible Employee's paycheck.
Eligible Employees may enter the Plan only at the beginning of an offering
period (the first business day of April and October, respectively). The Eligible
Employee will be deemed to have elected to continue to participate at the same
contribution previously selected (subject to the limitations in Article VI and
VIII) and will automatically be enrolled in subsequent offering periods at the
same level unless the Eligible Employee files a new enrollment form, withdraws,
changes participation levels or becomes ineligible.
VI. PAYMENT FOR THE SHARES
A. The Participant shall authorize the percentage of Base Salary or Base Salary
and Commission/Bonus Payments which may be applied to the acquisition of shares
of Common Stock under the Purchase Plan during the offering period by such
Participant. Such Authorization shall be delivered to the Plan Administrator (or
its designate). Such percentage may be any multiple of one percent (l%) of the
Base Salary or Base Salary and Commission/Bonus Payments paid to the Participant
during each Purchase Interval within that offering period, up to a maximum of
ten percent (10%). Whenever an increase, decrease or adjustment in a
participating employee's Base Salary or Base Salary and Commission/Bonus
Payments is reflected on a pay day within a Purchase Interval, the amount of
said Participant's deductions will be automatically adjusted to reflect such
change, unless the Participant indicates otherwise.
B. The deduction percentage specified by the Participant shall continue in
effect throughout the offering period, the Participant may, at any time during
the offering period, reduce his or her rate of payroll deduction to become
effective on the next Purchase Interval after timely filing of the appropriate
form with the Plan Administrator. A Change Authorization must be received in
writing by the Plan Administrator (or its designate) at least 15 days before the
next Purchase Interval. The Participant may not, however, effect more than one
(l) such reduction per Purchase Interval.
C. Payroll deductions shall begin on the first pay day following the
Participant's Entry Date into the offering period and shall (unless sooner
terminated by the Participant) continue through the pay day ending with or
immediately prior to the last day of the offering period. The payroll deductions
so collected shall be credited to the Participant's book account under the Plan.
Participants shall receive periodic statements detailing their account balances.
A Participant may not make any additional payments on such account nor may
payment for shares be made other than by payroll deductions. The funds allocated
to an employee's account shall remain the property of the respective employee at
all times. Except to the extent otherwise provided by the Plan Administrator, no
interest shall be paid on the balance from time to time outstanding in such
account and the amounts collected from the Participant shall not be held in any
segregated account or trust fund and may be commingled with the general assets
of the Corporation and used for general corporate purposes.
D. Payroll deductions shall automatically cease upon the termination of the
Participant's purchase right (as set forth in Section VII (E) below) in
accordance with the provisions of the Plan.
E. The Participant's acquisition of Common Stock under the Plan on any Purchase
Date shall neither limit nor require the Participant's acquisition of Common
Stock on any subsequent Purchase Date, whether within the same or a different
offering period.
VII. PURCHASE RIGHTS
A. GRANT OF PURCHASE RIGHT. As soon as practicable after the Corporation has
satisfied the requirements of the applicable federal and state securities laws
relating to the offer and sale of Common Stock to Eligible Employees pursuant to
this Plan, a Participant shall be granted a separate purchase right for each
offering period in which he or she participates. The purchase right shall be
granted on the Participant's Entry Date into the offering period and shall
provide the Participant with the right to purchase shares of Common Stock, in a
series of successive installments over the remainder of such offering period on
the condition that such employee remains eligible to participate in the Plan
throughout such offering period, upon the terms set forth below. The Participant
shall execute a stock purchase agreement embodying such terms and such other
provisions (not inconsistent with the Plan) as the Plan Administrator may deem
advisable.
Under no circumstances shall purchase rights be granted under the Plan to any
Eligible Employee if such individual would, immediately after the grant, own
(within the meaning of Code Section 424(d)) or hold outstanding options or other
rights to purchase, stock possessing five percent (5%) or more of the total
combined voting power or value of all classes of stock of the Corporation or any
Corporate Affiliate.
B. EXERCISE OF THE PURCHASE RIGHT. Each purchase right shall be automatically
exercised in installments on each successive Purchase Date within the offering
period, and shares of Common Stock shall accordingly be purchased on behalf of
each Participant (other than any Participant whose payroll deductions have
previously been refunded pursuant to the Termination of Purchase Right
provisions below) on such date. The purchase shall be effected by applying the
Participant's payroll deductions for the Purchase Interval ending on such
Purchase Date to the purchase of whole shares of Common Stock (subject to the
limitation on the maximum number of shares purchasable per Participant on any
one Purchase Date) at the purchase price in effect for the Participant for that
Purchase Date. If a Participant is not an Eligible Employee on the last business
day of a Purchase Interval, he or she shall not be entitled to exercise his or
her Purchase Right.
C. PURCHASE PRICE. The purchase price per share at which Common Stock will be
purchased on the Participant's behalf on each Purchase Date shall for each
offering period be established by the Plan Administrator, provided however, that
the purchase price shall not be less than eighty five percent (85%) of the lower
of (y) the Subscription Price relating to that offering period or (z) Market
Price. The initial purchase price for the initial and each subsequent offering
period, until changed by the Plan Administrator, shall be the lesser of 90% (i)
the Subscription Price or the (ii) the Market Price.
D. NUMBER OF PURCHASABLE SHARES. The number of shares of Common Stock
purchasable by a Participant on each Purchase Date shall be the number of whole
or fractional shares obtained by dividing the amount collected from the
Participant through payroll deductions during the Purchase Interval ending with
that Purchase Date by the purchase price per share in effect for that Purchase
Date. However, the maximum number of shares of Common Stock purchasable per
participant in any one calendar year shall not exceed two thousand five hundred
(2,500) shares, subject to periodic adjustments in the event of certain changes
in the Corporation's capitalization.
E. TERMINATION OF PURCHASE RIGHT. The following provisions shall govern the
termination of outstanding purchase rights:
(i) A Participant may, at any time prior to the next scheduled Purchase
Date in the offering period, terminate his or her outstanding purchase right by
filing the appropriate form with the Plan Administrator (or its designate), and
no further payroll deductions shall be collected from the Participant with
respect to the terminated purchase right. Any payroll deductions collected
during the Purchase Interval in which such termination occurs shall, at the
Participant's election, be immediately refunded or held for the purchase of
shares on the next Purchase Date. If no such election is made at the time such
purchase right is terminated, then the payroll deductions collected with respect
to the terminated right shall be refunded as soon as possible.
(ii) The termination of such purchase right shall be irrevocable, and
the Participant may not subsequently rejoin the offering period for which the
terminated purchase right was granted. In order to resume participation in any
subsequent offering period, such individual must re-enroll in the Plan (by
making a timely filing of the prescribed enrollment forms) on or before his or
her scheduled Entry Date into that offering period.
(iii) Should the Participant cease to remain an Eligible Employee for
any reason (including death, disability or change in status) while his or her
purchase right remains outstanding, then that purchase right shall immediately
terminate, and all of the Participant's payroll deductions for the Purchase
Interval in which the purchase right so terminates shall be immediately
refunded. However, should the Participant cease to remain in active service by
reason of an approved unpaid leave of absence, then the Participant shall have
the right, exercisable up until the last business day of the Purchase Interval
in which such leave commences, to (a) withdraw all of the payroll deductions
collected to date on his or her behalf for that Purchase Interval or (b) have
such funds held for the purchase of shares on his or her behalf on the next
scheduled Purchase Date. In no event, however, shall any further payroll
deductions be collected on the Participant's behalf during such leave. Upon the
Participant's return to active service, his or her payroll deductions under the
Plan shall automatically resume at the rate in effect at the time the leave
began, unless the Participant withdraws from the Plan prior to his or her
return.
F. TRANSFER OF EMPLOYMENT. In the event that an Eligible Employee of the
Corporation who is a participant in the Plan is transferred and becomes an
Eligible Employee of a Foreign Subsidiary during an offering period in effect
under the Plan, such individual shall automatically become a Participant under
the International Plan for the duration of the Purchase Interval in effect at
that time under the International Plan and shall continue to participate in such
plan unless otherwise terminated and the balance in such individual's book
account maintained under the Plan shall be transferred as a balance to a book
account opened for such individual under the International Plan. Such balance,
together with all other payroll deductions collected from such individual by the
Foreign Subsidiary for the remainder of the Purchase Interval under the
International Plan (as converted into U.S. Dollars), shall be applied on the
next Purchase Date to the purchase of Stock under the International Plan.
G. CORPORATE TRANSACTION. Each outstanding purchase right shall automatically be
exercised, immediately prior to the effective date of any Corporate Transaction,
by applying the payroll deductions of each Participant for the Purchase Interval
in which such Corporate Transaction occurs to the purchase of whole or
fractional shares of Common Stock at a purchase price per share equal to that
percentage then in effect under Section VII (C) (initially 90%) of the lower of
(i) the Subscription Price for the offering period in which such Corporate
Transaction occurs or (ii) the Fair Market Value per share of Common Stock
immediately prior to the effective date of such Corporate Transaction. However,
the applicable limitation on the number of shares of Common Stock purchasable
per Participant shall continue to apply to any such purchase.
The Corporation shall use its best efforts to provide at least ten (10) days
prior written notice of the occurrence of any Corporate Transaction, and
Participants shall, following the receipt of such notice, have the right to
terminate their outstanding purchase rights prior to the effective date of the
Corporate Transaction.
H. PRORATION OF PURCHASE RIGHTS. If at the termination of any Purchase Interval
the total number of shares which would otherwise be subject to options granted
pursuant to Section VII A hereof exceeds the number of shares then available
under the Plan and the International Plan (after deduction of all shares for
which options have been exercised or are then outstanding), the Corporation
shall promptly notify the Participants of the Plan and the International Plan,
and shall, in its sole discretion (i) make a pro rata allocation of the shares
remaining available for option grant in as uniform a manner as shall be
practicable and as it shall determine to be equitable, (ii) terminate the
offering period without issuance of any shares or (iii) obtain shareholder
approval of an increase in the number of shares authorized under the Plan and
the International Plan such that all options could be exercised in full.
The Corporation may delay determining which of (i), (ii) or (iii) above it shall
decide to effect, and may accordingly delay issuance of any shares under the
Plan and the International Plan, for such time as is necessary to attempt to
obtain shareholder approval of any increase in shares authorized under the Plan
and the International Plan. The Corporation shall promptly notify Participants
of its determination to effect (i), (ii) or (iii) above upon making such
decision. A Participant may withdraw all but not less than all payroll
deductions credited to his or her account under the Plan at any time prior to
such notification from the Corporation. In the event the Corporation determines
to effect (i) or (ii) above, it shall promptly upon such determination return to
each Participant all payroll deductions not applied towards the purchase of
shares.
I. ASSIGNABILITY. The purchase right shall be exercisable during the
Participant's lifetime only by the Participant and shall not be assignable or
transferable by the Participant other than by will or the laws of descent and
such right and interest shall not be liable for, or subject to, the debts,
contracts or liabilities of the employee. If any such action is taken by the
employee, or any claim is asserted by any other party in respect of such right
and interest whether by garnishment, levy, attachment or otherwise, such action
or claim will be treated as an election to withdraw funds in accordance with
Section VII E.
J. SHAREHOLDER RIGHTS. A Participant shall have no shareholder rights with
respect to the shares subject to his or her outstanding purchase right until the
shares are purchased on the Participant's behalf in accordance with the
provisions of the Plan and the Participant has become a holder of record of the
purchased shares.
VIII. ACCRUAL LIMITATIONS
A. No Participant shall be entitled to accrue rights to acquire Common Stock
pursuant to any purchase right outstanding under this Plan if and to the extent
such accrual, when aggregated with (i) rights to purchase Common Stock accrued
under any other purchase right granted under this Plan and (ii) similar rights
accrued under other employee stock purchase plans (within the meaning of Code
Section 423) of the Corporation or any Corporate Affiliate, would otherwise
permit such Participant to purchase more than Twenty-Five Thousand Dollars
($25,000) worth of stock of the Corporation or any Corporate Affiliate
(determined on the basis of the Fair Market Value per share of such stock on the
date or dates such rights are granted) for each calendar year such rights are at
any time outstanding.
B. For purposes of applying such accrual limitations to the purchase rights
granted under the Plan, the following provisions shall be in effect:
(i) The right to acquire Common Stock under each outstanding purchase
right shall accrue in a series of installments on each successive Purchase Date
during the offering period on which such right remains outstanding.
(ii) No right to acquire Common Stock under any outstanding purchase
right shall accrue to the extent the Participant has already accrued in the same
calendar year the right to acquire Common Stock under one (1) or more other
purchase rights in an amount equal to Twenty-Five Thousand Dollars ($25,000)
worth of Common Stock (determined on the basis of the Fair Market Value per
share on the date or dates of grant) for each calendar year such rights were at
any time outstanding.
C. If by reason of such accrual limitations, any purchase right of a Participant
does not accrue for a particular Purchase Interval, then the payroll deductions
which the Participant made during that Purchase Interval with respect to such
purchase right shall be promptly refunded.
D. In the event there is any conflict between the provisions of this Article and
one or more provisions of the Plan or any instrument issued thereunder, the
provisions of this Article shall be controlling.
IX. EFFECTIVE DATE AND TERM OF THE PLAN
A. The Plan was adopted by the Board on November 4, 1997 and shall become
effective on the Effective Date, provided no purchase rights granted under the
Plan shall be exercised, and no shares of Common Stock shall be issued
hereunder, until (i) the Plan shall have been approved by the shareholders of
the Corporation and (ii) the Corporation shall have complied with all applicable
requirements of the 1933 Act (including the registration of the shares of Common
Stock issuable under the Plan on a Form S-8 registration statement filed with
the Securities and Exchange Commission), all applicable listing requirements of
any stock exchange (or the NASDAQ National Market, if applicable) on which the
Common Stock is listed for trading and all other applicable requirements
established by law or regulation. In the event such shareholder approval is not
obtained, or such compliance is not effected, within twelve (12) months after
the date on which the Plan is adopted by the Board, the Plan shall terminate and
have no further force or effect and all sums collected from Participants during
the initial offering period hereunder shall be refunded.
B. Unless sooner terminated by the Board, the Plan shall terminate upon the
earliest to occur of (i) the last business day in December, 2008, (ii) the date
on which all shares available for issuance in the aggregate under the Plan and
the International Plan shall have been sold pursuant to purchase rights
exercised under such plans or (iii) the date on which all purchase rights are
exercised in connection with a Corporate Transaction. No further purchase rights
shall be granted or exercised, and no further payroll deductions shall be
collected, under the Plan following such termination.
X. ISSUANCE OF STOCK
Upon purchase of one or more full or fractional shares by a Participant
hereunder, such purchase shall be recorded on the stock transfer records of the
Corporation in book entry form in the name of the Participant to reflect the
shares purchased at that time. Certificates shall be issued only upon the
Participant's request for full shares and also, when necessary to comply with
transaction requirements outside the United States. To request certificates,
Participant may call Merrill Lynch Service Center at 1-800-621-3777. In the
event a Participant terminates his or her account, any fractional share held in
the account will be paid to the Participant in cash. Participants shall receive
periodic statements detailing their account balances. A Participant will receive
Statements of Ownership for stock purchased under the Plan, or may elect to
receive stock certificates instead of Statements of Ownership.
Stock purchased under the Plan will be issued only in the name of the
Participant, or if his or her Authorization so specifies, in the name of
Participant and another person of legal age as joint tenants with rights of
survivorship.
The Plan Administrator, at its sole discretion, may determine that the shares
shall be delivered by (1) issuing and delivering to the Participant a
certificate for the number of shares purchased by such Participant on an
exercise date; (2) issuing and delivering a certificate or certificates for the
number of share purchased by all Participants on an exercise date to a member
firm of the New York Stock Exchange which is also a member of the National
Association of Securities Dealers, as selected by the Plan Administrator from
time to time, which shares shall be maintained by such member firm in separate
brokerage accounts for each Participant; or (3) issuing and delivering a
certificate or certificates for the number of shares purchased by all
Participants on an exercise date to a bank or trust company or affiliate
thereof, as selected by the Plan Administrator from time to time which shares
shall be maintained by such bank or trust company or affiliate in separate
accounts for each Participant. Each certificate or account, as the case may be,
may be in the name of the Participant, or, if the Participant designates on the
form prescribed by the Plan Administrator, in the Participant's name jointly
with another individual, with right of survivorship.
XI. AMENDMENT OF THE PLAN
The Board may alter, amend, suspend or discontinue the Plan at any time to
become effective immediately following the close of any Purchase Interval.
However, certain amendments may require shareholder approval pursuant to
applicable laws or regulations.
Any such amendment or termination of the Plan shall not affect options already
granted hereunder and such options shall remain in full force and effect as if
this Plan had not been amended or terminated.
XII. NOTICES
All notices or other communications by a Participant to the Corporation under or
in connection with the Plan shall be deemed to have been duly given when
received in the form specified by the Corporation at the location, or by the
person, designated by the Corporation for the receipt thereof. All notices or
other communications to a Participant by the Corporation shall be deemed to have
been duly given when sent by the Corporation by regular mail to the address of
the Participant on the human resources records of the Corporation or when posted
on any general electronic messaging and bulletin board system utilized by the
Corporation.
XIII. LIMITATIONS ON SALE OF STOCK PURCHASED UNDER THE PLAN
The Plan is intended to provide Common Stock for investment and not for resale.
The Corporation does not, however, intend to restrict or influence any employee
in the conduct of his or her own affairs. Subject to the Corporation's
compliance with applicable federal and state securities laws, Participant may,
therefore, sell stock purchased under the Plan at any time he or she chooses.
The Participant assumes the risk of any market fluctuations in the price of such
stock.
XIV. GOVERNMENTAL REGULATION
The Corporation's obligation to sell and deliver shares of the
Corporation's Common Stock under this Plan is subject to the approval of any
governmental authority, domestic or foreign, required in connection with the
authorization, issuance or sale of such stock.
XV. GENERAL PROVISIONS
A. All costs and expenses incurred in the administration of the Plan shall be
paid by the Corporation, however, each Plan Participant shall bear all costs and
expenses incurred by such individual in the sale, other disposition or transfer
of any shares purchased under the Plan.
B. Nothing in the Plan shall confer upon the Participant any right to continue
in the employ of the Corporation or any Corporate Affiliate for any period of
specific duration or interfere with or otherwise restrict in any way the rights
of the Corporation (or any Corporate Affiliate employing such person) or of the
Participant, which rights are hereby expressly reserved by each, to terminate
such person's employment at any time for any reason, with or without cause.
C. The provisions of the Plan shall be governed by the laws of the State of
Illinois without resort to that State's conflict-of-laws rules.
D. As a condition to the exercise of an option, the Corporation may require the
person exercising such option to represent and warrant at the time of any such
exercise that the shares are being purchased only for investment and without any
present intention to sell or distribute such shares if, in the opinion of
counsel for the Corporation, such a representation is required by any of the
aforementioned applicable provisions of law.
<PAGE>
SCHEDULE A
CORPORATIONS PARTICIPATING IN
1998 EMPLOYEE STOCK PURCHASE PLAN
AS OF THE EFFECTIVE DATE
A. General Operating Subsidiaries
CDC Realty, Inc.
CDS Foreign Holdings, Inc.
Comdisco Financial Services, Inc.
Comdisco Healthcare Group, Inc.
(f/k/a Comdisco Medical Equipment Group, Inc.
[f/k/a Comdisco Medical Leasing Group, Inc.])
Comdisco Investment Group, Inc.
Comdisco Maintenance Services, Inc.
Comdisco Medical Exchange, Inc.
Comdisco Network Services, Inc.
(f/k/a COM-L 1989-B Corporation)
Comdisco Systems, Inc.
Comdisco Trade, Inc.
Computer Discount Corporation
B. Specific Purpose Subsidiaries
CFS Railcar, Inc.
COM-L 1989-A Corporation
Comdisco Canada Finance, L.L.C. (Delaware Corp.)
Comdisco Receivables, Inc.
Commedco, Inc.
CDO RM, Inc.
CDO Capital, L.L.C.
<PAGE>
APPENDIX
The following definitions shall be in effect under the Plan:
A. BOARD shall mean the Corporation's Board of Directors.
B. BASE SALARY shall mean the regular base salary paid to a Participant by one
or more Participating Companies during such individual's period of participation
in one or more offering periods under the Plan. The following items of
compensation shall NOT be included in Base Salary: (i) all overtime payments,
bonuses, commissions (other than those functioning as base salary equivalents),
profit-sharing distributions and other incentive-type payments and (ii) any and
all contributions made on the Participant's behalf by the Corporation or any
Corporate Affiliate under any employee benefit or welfare plan now or hereafter
established.
C. CODE shall mean the U.S. Internal Revenue Code of 1986, as amended.
D. COMMISSION/BONUS PAYMENTS shall mean all non-Base Salary cash payments paid
to a Participant by one or more participating companies during such individuals
period of participation in one or more offering periods under the Plan. In
addition to Base Salary, exclusions from Commission/Bonus Payments shall include
without limitation: (i) all overtime payments (other than those functioning as
base salary equivalents) reimbursement for expenses and profit sharing
distributions, and (ii) any and all contributions made on the Participant's
behalf by the Corporation or any Corporate Affiliate under any employee benefit
or welfare plan now or hereafter established.
E. COMMON STOCK shall mean the Corporation's common stock $0.10 par value.
F. CORPORATE AFFILIATE shall mean any "parent" or "subsidiary" corporation of
the Corporation, whether now existing or subsequently established. "Parent" and
"subsidiary" shall be determined as follows:
(i) "parent" shall mean any corporation (other than the Corporation) in
an unbroken chain of corporations ending with the Corporation, provided each
corporation in the unbroken chain (other than the Corporation) owns, at the time
of the determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain, and
(ii) "subsidiary" shall mean any corporation (other than the
Corporation) in an unbroken chain of corporations beginning with the
Corporation, provided each corporation (other than the last corporation) in the
unbroken chain owns, at the time of determination, stock possessing fifty
percent (50%) or more of the total combined voting power of all classes of stock
in one of the other corporations in such chain.
G. CORPORATE TRANSACTION shall mean either of the following shareholder-approved
transactions to which the Corporation is a party:
(i) a merger or consolidation in which securities possessing more than
fifty percent (50%) of the total combined voting power of the Corporation's
outstanding securities are transferred to a person or persons different from the
persons holding those securities immediately prior to such transaction, or
(ii) the sale, transfer or other disposition of all or substantially
all of the assets of the Corporation in complete liquidation or dissolution of
the Corporation.
H. CORPORATION shall mean Comdisco, Inc., a Delaware corporation, and any
corporate successor to all or substantially all of the assets or voting stock of
Comdisco, Inc. which shall by appropriate action adopt the Plan.
I. EFFECTIVE DATE shall mean the first business day in April, 1998. Any
Corporate Affiliate which becomes a Participating Corporation after such
Effective Date shall designate a subsequent Effective Date with respect to its
employee-Participants.
J. ELIGIBLE EMPLOYEE shall mean any person who is a resident in the United
States and who is employed and has been continuously employed for at least one
year as of the start date of an offering period by a Participating Corporation
on a basis under which he or she is regularly expected to render more than
twenty (20) hours of service per week for more than five (5) months per calendar
year for earnings considered wages under Code Section 3401(a), and who are not
designated by the Corporation as officers under Section 16 of the Securities
Exchange Act of 1934, as amended.
K. ENTRY DATE shall mean the date an Eligible Employee first commences
participation in the offering period in effect under the Plan. The earliest
Entry Date under the Plan shall be the Effective Date. Unless otherwise provided
by the Plan Administrator, all subsequent Entry Dates shall be the first
business day in April and October of each calendar year.
L. FAIR MARKET VALUE per share of Common Stock on any relevant date shall be
determined in accordance with the following provisions:
(i) If the Common Stock is at the time traded on the NASDAQ National
Market, then the Fair Market Value shall be the closing selling price per share
of Common Stock on the date in question, as such price is reported by the
National Association of Securities Dealers on the NASDAQ National Market or any
successor system. If there is no closing selling price for the Common Stock on
the date in question, then the Fair Market Value shall be the closing selling
price on the last preceding date for which such quotation exists.
(ii) If the Common Stock is at the time listed on any Stock Exchange,
then the Fair Market Value shall be the closing selling price per share of
Common Stock on the date in question on the Stock Exchange determined by the
Plan Administrator to be the primary market for the Common Stock, as such price
is officially quoted in the composite tape of transactions on such exchange.
Initially the primary market is designated to be the New York Stock Exchange. If
there is no closing selling price for the Common Stock on the date in question,
then the Fair Market Value shall be the closing selling price on the last
preceding date for which such quotation exists.
M. FOREIGN SUBSIDIARY shall mean any Corporate Affiliate which employs Eligible
Employees outside the United States and which may be authorized from time to
time by the Board to participate in the International Plan.
N. INTERNATIONAL PLAN shall mean the Corporation's 1998 International Employee
Stock Purchase Plan
O. MARKET PRICE shall be the closing selling price of the Common Stock on the
New York Stock Exchange (or such other Stock Exchange designated as the primary
market by the Plan Administrator) on the day prior to the Purchase Date or, if
the Corporation purchases such Common Stock, the actual cost to the Corporation
per share (exclusive of brokerage fees and expenses) on the Purchase Date.
P. 1933 ACT shall mean U.S. Securities Act of 1933, as amended.
Q. PARTICIPANT shall mean any Eligible Employee of a Participating Corporation
who is actively participating in the Plan.
R. PARTICIPATING CORPORATION shall mean the Corporation and such Corporate
Affiliate or Affiliates as may be authorized form time to time by the Board to
extend the benefits of the Plan to their Eligible Employees. The Participating
Corporations in the Plan as of the Effective Date are listed in the attached
Schedule A.
S. PLAN shall mean the Corporation's 1998 Employee Stock Purchase Plan, as set
forth in this document.
T. PLAN ADMINISTRATOR shall mean the committee of two (2) or more non-employee
Board members appointed by the Board to administer the Plan, none of whom shall
be eligible to participate in the Plan.
U. PURCHASE DATE shall mean the last business day of each Purchase Interval. The
initial Purchase Date shall be the last business day in June, 1998.
V. PURCHASE INTERVAL shall mean each successive three (3)-month period within
the offering period at the end of which there shall be purchased shares of
Common Stock on behalf of each Participant. The initial Purchase Interval,
however, shall end on the last business day in June, 1998.
W. STOCK EXCHANGE shall mean either the American Stock Exchange or the New York
Stock Exchange.
X. SUBSCRIPTION PRICE shall mean the closing price of the Common Stock on the
New York Stock Exchange (or such other Stock Exchange designated as the primary
market by the Plan Administrator) on the start date (the first business day of
April and October, respectively) of an offering period.
AMENDED AND RESTATED COMDISCO, INC.
1998 INTERNATIONAL EMPLOYEE STOCK PURCHASE PLAN
I. PURPOSE OF THE PLAN
This 1998 International Employee Stock Purchase Plan is intended to promote the
interests of Comdisco, Inc. by providing eligible employees of the Corporation's
Foreign Subsidiaries with the opportunity to share in the fortunes of the
Corporation by acquiring a proprietary interest in the Corporation through the
purchase of shares of the Corporation's Common Stock at periodic intervals. The
Plan is designed to encourage Eligible Employees to remain in the employ of the
Corporation's Foreign Subsidiaries.
Capitalized terms herein shall have the meanings assigned to such terms in the
attached Appendix.
II. ADMINISTRATION OF THE PLAN
The Plan Administrator shall have full authority to interpret and construe any
provision of the Plan and to adopt such rules and regulations for administering
the Plan as it may deem necessary. The Plan Administrator shall have authority
to delegate ministerial tasks related to the Plan to the Corporation's Human
Resources, Accounting, Tax and Payroll Departments of Subsidiaries which employ
Participants. Decisions of the Plan Administrator shall be final and binding on
all parties having an interest in the Plan. The Plan Administrator shall not be
liable for any action or determination made in good faith with respect to the
Plan or any right granted under it.
III. STOCK SUBJECT TO PLAN
A. The stock purchasable under the Plan shall be shares of authorized but
unissued or reacquired Common Stock, including shares of Common Stock purchased
on the open market. Subject to the provision for increase, the maximum number of
shares of the Corporation's Common Stock which shall be available for sale under
the Plan and the U.S. Plan shall be 3% of the shares of the Corporation's Common
Stock issued and outstanding on the Effective Date. The maximum number of shares
of the Corporation's Common Stock which shall be available for sale under the
Plan and the U.S. Plan shall be increased on the first day of each fiscal year,
beginning in the fiscal year ended September 30, 1999, by an amount equal to (x)
3% of the shares of the Corporation's Common Stock issued and outstanding on the
last day of the immediately preceding fiscal year less (y) the number of shares
available for future option grants under the Plan and the U.S. Plan on the last
day of the immediately preceding fiscal year.
B. Should any change be made to the Common Stock by reason of any stock split,
stock dividend, recapitalization, combination of shares, exchange of shares or
other change affecting the outstanding Common Stock as a class without the
Corporation's receipt of consideration, appropriate adjustments shall be made to
(i) the maximum number and class of securities issuable in the aggregate under
the Plan and the U.S. Plan, (ii) the maximum number and class of securities
purchasable per Participant on any one Purchase Date and (iii) the number and
class of securities and the price per share in effect under each outstanding
purchase right in order to prevent the dilution or enlargement of benefits
thereunder.
IV. OFFERING PERIODS
A. Shares of Common Stock shall be offered for purchase under the Plan through a
series of successive offering periods until such time as (i) the maximum number
of shares of Common Stock available for issuance, in the aggregate, under the
Plan and the U.S. Plan shall have been purchased or (ii) the Plan shall have
been sooner terminated.
B. Each offering period shall be of such duration (not to exceed twenty-seven
(27) months) as determined by the Plan Administrator prior to the start date.
The Effective Date of the Plan shall be April 1, 1998. The initial offering
period shall commence on October 1, 1998, and terminate on the last business day
in March, 1999 except for Comdisco Inc.'s Canadian subsidiary, Comdisco Canada
Ltd. Comdisco Canada Ltd.'s initial offering period shall commence on April 1,
1998 and shall terminate on the last business day of September, 1998. Unless
otherwise designated by the Plan Administrator, subsequent semi-annual offering
periods shall commence as of the first business day in April and shall terminate
on the last business day in September, and shall commence on the first business
day in October and shall terminate on the last business day in March.
C. Each offering period shall be comprised of a series of one or more successive
Purchase Intervals. Purchase Intervals shall be three-month periods ending the
last business day of March, June, September and December of each year. The
initial Purchase Interval in effect under the initial offering period shall
commence on October 1, 1998 and terminate on the last business day in December,
l998 except for Comdisco Canada Ltd. Comdisco Canada Ltd.'s initial Purchase
Interval in effect under the initial offering period shall commence on the
Effective Date and terminate on the last business day of June, 1998..
V. ELIGIBILITY
A. Each individual who is an Eligible Employee on the start date of any offering
period under the Plan may enter that offering period on such start date provided
he or she remains an Eligible Employee, by completing and submitting the
appropriate form at designated times. An employee may actively participate in
only one corporation sponsored stock purchase plan at a time.
B. The date an individual enters an offering period shall be designated his or
her Entry Date for purposes of that offering period.
C. To participate in the Plan for a particular offering period, the Eligible
Employee must complete the enrollment form(s) prescribed by the Plan
Administrator (including a stock purchase agreement and a payroll deduction
authorization) and file such form(s) with the Plan Administrator (or its
designate) on or before his or her scheduled Entry Date. In such forms, the
Eligible Employee must state the percentage of Base Salary or Base Salary and
Commission/Bonus Payments to be deducted from the Eligible Employee's paycheck.
Eligible Employees may enter the Plan only at the beginning of an offering
period (the first business day of April and October, respectively). The Eligible
Employee will be deemed to have elected to continue to participate at the same
contribution previously selected (subject to the limitations in Article VI and
VIII) and will automatically be enrolled in subsequent offering periods at the
same level unless the Eligible Employee files a new enrollment form, withdraws,
changes the participation level or becomes ineligible.
VI. PAYMENT FOR THE SHARES
A. Except to the extent otherwise provided in the Plan (or any Addendum thereto)
or authorized by the Plan Administrator, the purchase price for the shares of
Common Stock acquired under the Plan shall be paid from accumulated payroll
deductions authorized by the Participant.
B. The Participant shall authorize the percentage of Base Salary or Base Salary
and Commission/Bonus Payments which may be applied to the acquisition of shares
of Common Stock under the Purchase Plan during the offering period by such
Participant. Such Authorization shall be delivered to each participating Foreign
Subsidiaries Plan Administrator (or its designate). Such percentage may be any
multiple of one percent (1%) of the Base Salary or Base Salary and
Commission/Bonus Payments paid to the Participant during each Purchase Interval
within that offering period, up to a maximum of ten percent (10%). Whenever an
increase, decrease or adjustment in a participating employee's Base Salary or
Base Salary and Commission/Bonus Payments is reflected on a pay day within a
Purchase Interval, the amount of said Participant's deductions will be
automatically adjusted to reflect such change, unless the Participant indicates
otherwise.
C. The deduction percentage specified by the Participant shall continue in
effect throughout the offering period, except that, the Participant may, at any
time during the offering period, reduce his or her rate of payroll deduction to
become effective on the next Purchase Interval after timely filing of the
appropriate form with the Plan Administrator. A change authorization must be
received in writing by the Plan Administrator (or its designate) at least
fifteen (15) days before the next Purchase Interval. The Participant may not,
however, effect more than one (l) such reduction per Purchase Interval.
D. Payroll deductions shall begin on the first pay day following the
Participant's Entry Date into the offering period and shall (unless sooner
terminated by the Participant) continue through the pay day ending with or
immediately prior to the last day of the offering period. The payroll deductions
so collected shall be credited to the Participant's book account under the Plan,
initially in the currency in which paid by the Foreign Subsidiary. Participants
shall receive periodic statements detailing their account balances. A
Participant may not make any additional payments in such account nor may payment
for shares be made other than by payroll deduction. The funds allocated to an
employee's account shall remain the property of the respective employee at all
times. Except to the extent otherwise provided by the Plan Administrator (or any
Addendum to the Plan), no interest shall be paid on the balance from time to
time outstanding in such account and the amounts collected from the Participant
shall not be held in any segregated account or trust fund and may be commingled
with the general assets of the Corporation and used for general corporate
purposes.
E. The payroll deductions credited to each Participant's book account during
each Purchase Interval shall be converted into U.S. Dollars on the Exchange Date
for that Purchase Interval on the basis of the exchange rate in effect on such
date. The Plan Administrator shall have the absolute discretion to determine the
applicable exchange rate to be in effect for each Exchange Date by any
reasonable method (including, without limitation, the exchange rate actually
available in the ordinary course of business on such date). Any changes or
fluctuations in the exchange rate at which the payroll deductions collected on
the Participant's behalf are converted into U.S. Dollars on such Exchange Date
shall be borne solely by the Participant.
F. Payroll deductions shall automatically cease upon the termination of the
Participant's purchase right (as set forth in Section VII (E) below) in
accordance with the provisions of the Plan.
G. The Participant's acquisition of Common Stock under the Plan on any Purchase
Date shall neither limit nor require the Participant's acquisition of Common
Stock on any subsequent Purchase Date, whether within the same or a different
offering period.
VII. PURCHASE RIGHTS
A. GRANT OF PURCHASE RIGHT. As soon as practicable after the Corporation has
satisfied the requirements of the applicable foreign securities laws relating to
the offer and sale of Common Stock to Eligible Employees pursuant to this Plan,
a Participant shall be granted a separate purchase right for each offering
period in which he or she participates. The purchase right shall be granted on
the Participant's Entry Date into the offering period and shall provide the
Participant with the right to purchase shares of Common Stock, in a series of
successive installments over the remainder of such offering period on the
condition that such employee remains eligible to participate in the Plan
throughout such offering period, upon the terms set forth below. The Participant
shall execute a stock purchase agreement embodying such terms and such other
provisions (not inconsistent with the Plan) as the Plan Administrator may deem
advisable.
Under no circumstances shall purchase rights be granted under the Plan to any
Eligible Employee if such individual would, immediately after the grant, own
(within the meaning of the United States Internal Revenue Code Section 424(d))
or hold outstanding options or other rights to purchase, stock possessing five
percent (5%) or more of the total combined voting power or value of all classes
of stock of the Corporation or any Corporate Affiliate.
B. EXERCISE OF THE PURCHASE RIGHT. Each purchase right shall be automatically
exercised in installments on each successive Purchase Date within the offering
period, and shares of Common Stock shall accordingly be purchased on behalf of
each Participant (other than any Participant whose payroll deductions have
previously been refunded pursuant to the Termination of Purchase Right
provisions below) on such date. The purchase shall be effected by applying the
Participant's payroll deductions (as converted into U.S. Dollars) for the
Purchase Interval ending on such Purchase Date to the purchase of whole shares
of Common Stock (subject to the limitation on the maximum number of shares
purchasable per Participant on any one Purchase Date) at the purchase price in
effect for the Participant for that Purchase Date. If a Participant is not an
Eligible Employee on the last business day of a Purchase Interval, he or she
shall not be entitled to exercise his or her Purchase Right.
C. PURCHASE PRICE. The purchase price per share at which Common Stock will be
purchased on the Participant's behalf on each Purchase Date shall for each
offering period be established by the Plan Administrator, provided however, that
the purchase price shall not be less than eighty five percent (85%) of the lower
of (y) the Subscription Price relating to that offering period or (z) the Market
Price. The initial purchase price for the initial and each subsequent offering
period, until changed by the Plan Administrator, shall be the lesser of 90% of
(i) the Subscription Price or the (ii) the Market Price.
D. NUMBER OF PURCHASABLE SHARES. The number of shares of Common Stock
purchasable by a Participant on each Purchase Date shall be the number of whole
or fractional shares obtained by dividing the amount collected from the
Participant through payroll deductions (as converted into U.S. Dollars) during
the Purchase Interval ending with that Purchase Date by the purchase price per
share in effect for that Purchase Date. However, the maximum number of shares of
Common Stock purchasable per Participant in any one calendar year shall not
exceed two thousand five hundred (2,500) shares, subject to periodic adjustments
in the event of certain changes in the Corporation's capitalization.
E. TERMINATION OF PURCHASE RIGHT. The following provisions shall govern the
termination of outstanding purchase rights:
(i) A Participant may, at any time prior to the next scheduled Purchase
Date in the offering period, terminate his or her outstanding purchase right by
filing the appropriate form with the Plan Administrator (or its designate), and
no further payroll deductions shall be collected from the Participant with
respect to the terminated purchase right. Any payroll deductions collected
during the Purchase Interval in which such termination occurs shall, at the
Participant's election, be immediately refunded, in the currency in which
collected, or held for the purchase of shares on the next Purchase Date. If no
such election is made at the time such purchase right is terminated, then the
payroll deductions collected with respect to the terminated right shall be
refunded as soon as possible.
(ii) The termination of such purchase right shall be irrevocable, and
the Participant may not subsequently rejoin the offering period for which the
terminated purchase right was granted. In order to resume participation in any
subsequent offering period, such individual must re-enroll in the Plan (by
making a timely filing of the prescribed enrollment forms) on or before his or
her scheduled Entry Date into that offering period.
(iii) Should the Participant cease to remain an Eligible Employee for
any reason (including death, disability or change in status) while his or her
purchase right remains outstanding, then that purchase right shall immediately
terminate, and all of the Participant's payroll deductions for the Purchase
Interval in which the purchase right so terminates shall be immediately refunded
in the currency in which collected. However, should the Participant cease to
remain in active service by reason of an approved unpaid leave of absence, then
the Participant shall have the right, exercisable up until the last business day
of the Purchase Interval in which such leave commences, to (a) withdraw all of
the payroll deductions collected to date on his or her behalf for that Purchase
Interval or (b) have such funds held for the purchase of shares on his or her
behalf on the next scheduled Purchase Date. In no event, however, shall any
further payroll deductions be collected on the Participant's behalf during such
leave. Upon the Participant's return to active service, his or her payroll
deductions under the Plan shall automatically resume at the rate in effect at
the time the leave began, unless the Participant withdraws from the Plan prior
to his or her return.
F TRANSFER OF EMPLOYMENT. In the event that a Participant who is an Eligible
Employee of a Foreign Subsidiary is transferred and becomes an Eligible Employee
of the Corporation during an offering period in effect under the Plan, such
individual shall continue to remain a Participant in the Plan and payroll
deductions shall continue to be collected until the next Purchase Date as if the
Participant had remained an Eligible Employee of the Foreign Subsidiary.
In the event that an Eligible Employee of the Corporation who is a participant
in the U.S. Plan is transferred and becomes an Eligible Employee of a Foreign
Subsidiary during an offering period in effect under the U.S. Plan, such
individual shall automatically become a Participant under the Plan for the
duration of the Purchase Interval in effect at that time under the Plan and the
balance in such individual's book account maintained under the U.S. Plan shall
be transferred as a balance to a book account opened for such individual under
the Plan. Such balance, together with all other payroll deductions collected
from such individual by the Foreign Subsidiary for the remainder of the Purchase
Interval under the Plan (as converted into U.S. Dollars), shall be applied on
the next Purchase Date to the purchase of Stock under the Plan.
G CORPORATE TRANSACTION. Each outstanding purchase right shall automatically be
exercised, immediately prior to the effective date of any Corporate Transaction,
by applying the payroll deductions (as converted into U.S. Dollars) of each
Participant for the Purchase Interval in which such Corporate Transaction occurs
to the purchase of whole or fractional shares of Common Stock at a purchase
price per share equal to that percentage then in effect under Section VII (C)
(initially 90%) of the lower of (i) the Subscription Price for the offering
period in which such Corporate Transaction occurs or (ii) the Fair Market Value
per share of Common Stock immediately prior to the effective date of such
Corporate Transaction. However, the applicable limitation on the number of
shares of Common Stock purchasable per Participant shall continue to apply to
any such purchase. Payroll deductions not yet converted into U.S. Dollars at the
time of the Corporate Transaction shall be converted from the currency in which
paid by the Foreign Subsidiary into U.S. Dollars on the basis of the exchange
rate in effect as determined by Plan Administrator at the time of the Corporate
Transaction.
The Corporation shall use its best efforts to provide at least ten (10) days
prior written notice of the occurrence of any Corporate Transaction, and
Participants shall, following the receipt of such notice, have the right to
terminate their outstanding purchase rights prior to the effective date of the
Corporate Transaction.
H PRORATION OF PURCHASE RIGHTS. If at the termination of any Purchase Interval
the total number of shares which would otherwise be subject to options granted
pursuant to Section VII A hereof exceeds the number of shares then available
under the Plan and the U.S. Plan (after deduction of all shares for which
options have been exercised or are then outstanding), the Corporation shall
promptly notify the Participants of the Plan and U.S. Plan, and shall, in its
sole discretion (i) make a pro rata allocation of the shares remaining available
for option grant in as uniform a manner as shall be practicable and as it shall
determine to be equitable, (ii) terminate the offering period without issuance
of any shares or (iii) obtain shareholder approval of an increase in the number
of shares authorized under the Plan and the U.S. Plan such that all options
could be exercised in full.
The Corporation may delay determining which of (i), (ii) or (iii) above it shall
decide to effect, and may accordingly delay issuance of any shares under the
Plan and the U.S. Plan, for such time as is necessary to attempt to obtain
shareholder approval of any increase in shares authorized under the Plan and the
U.S. Plan. The Corporation shall promptly notify Participants of its
determination to effect (i), (ii) or (iii) above upon making such decision. A
Participant may withdraw all but not less than all payroll deductions credited
to his or her account under the Plan at any time prior to such notification from
the Corporation. In the event the Corporation determines to effect (i) or (ii)
above, it shall promptly upon such determination return to each Participant all
payroll deductions not applied towards the purchase of shares.
I. ASSIGNABILITY. The purchase right shall be exercisable during the
Participant's lifetime only by the Participant and shall not be assignable or
transferable by the Participant other than by will or the laws of descent and
such right and interest shall not be liable for, or subject to, the debts,
contracts or liabilities of the employee. If any such action is taken by the
employee, or any claim is asserted by any other party in respect of such right
and interest whether by garnishment, levy, attachment or otherwise, such action
or claim will be treated as an election to withdraw funds in accordance with
Section VII F.
J. SHAREHOLDER RIGHTS. A Participant shall have no shareholder rights with
respect to the shares subject to his or her outstanding purchase right until the
shares are purchased on the Participant's behalf in accordance with the
provisions of the Plan and the Participant has become a holder of record of the
purchased shares.
VIII. ACCRUAL LIMITATIONS
A. No Participant shall be entitled to accrue rights to acquire Common Stock
pursuant to any purchase right outstanding under this Plan if and to the extent
such accrual, when aggregated with (i) rights to purchase Common Stock accrued
under any other purchase right granted under this Plan and (ii) similar rights
accrued under other employee stock purchase plans of the Corporation or any
Corporate Affiliate, would otherwise permit such Participant to purchase more
than Twenty-Five Thousand U.S. Dollars (U.S. $25,000) worth of stock of the
Corporation or any Corporate Affiliate (determined on the basis of the Fair
Market Value per share of such stock on the date or dates such rights are
granted) for each calendar year such rights are at any time outstanding.
B. For purposes of applying such accrual limitations to the purchase rights
granted under the Plan, the following provisions shall be in effect:
(i) The right to acquire Common Stock under each outstanding purchase
right shall accrue in a series of installments on each successive Purchase Date
during the offering period on which such right remains outstanding.
(ii) No right to acquire Common Stock under any outstanding purchase
right shall accrue to the extent the Participant has already accrued in the same
calendar year the right to acquire Common Stock under one (1) or more other
purchase rights at a rate equal to Twenty-Five Thousand U.S. Dollars (U.S.
$25,000) worth of Common Stock (determined on the basis of the Fair Market Value
per share on the date or dates of grant) for each calendar year such rights were
at any time outstanding.
C. If by reason of such accrual limitations, any purchase right of a Participant
does not accrue for a particular Purchase Interval, then the payroll deductions
which the Participant made during that Purchase Interval with respect to such
purchase right shall be promptly refunded.
D. In the event there is any conflict between the provisions of this Article and
one or more provisions of the Plan or any instrument issued thereunder, the
provisions of this Article shall be controlling.
IX. EFFECTIVE DATE AND TERM OF THE PLAN
A. The Plan was adopted by the Board on November 4, 1997 and shall become
effective on the Effective Date, provided no purchase rights granted under the
Plan shall be exercised, and no shares of Common Stock shall be issued
hereunder, until the Corporation shall have complied with all applicable
requirements of the 1933 Act and all applicable listing requirements of any
stock exchange (or the NASDAQ National Market, if applicable) on which the
Common Stock is listed for trading and all other applicable requirements
established by law or regulation.
B. Unless sooner terminated by the Board, the Plan shall terminate upon the
earliest to occur of (i) the last business day in December, 2008, (ii) the date
on which all shares available for issuance in the aggregate under the Plan and
the U.S. Plan shall have been sold pursuant to purchase rights exercised under
such plans or (iii) the date on which all purchase rights are exercised in
connection with a Corporate Transaction. No further purchase rights shall be
granted or exercised, and no further payroll deductions shall be collected,
under the Plan following such termination.
X. ISSUANCE OF STOCK
Upon purchase of one or more full or fractional shares by a Participant
hereunder, such purchase shall be recorded on the stock transfer records of the
Corporation in book entry form in the name of the Participant to reflect the
shares purchased at that time. Certificates shall be issued only upon the
Participant's request for full shares and also, when necessary to comply with
transaction requirements outside the United States. To request certificates,
Participants may call Merrill Lynch Service Center at 1-732-563-7304 (Canada
residents call 1-888-397-1111). In the event a Participant terminates his or her
account, any fractional share held in the account will be paid to the
Participant in cash. Participant shall receive periodic statements detailing
their account balances. A Participant will receive Statements of Ownership for
stock purchased under the Plan, or may elect to receive stock certificates
instead of Statements of Ownership.
Stock purchased under the Plan will be issued only in the name of the
Participant, or if his or her Authorization so specifies, in the name of
Participant and another person of legal age as joint tenants and, if permitted
by local law, with rights of survivorship.
The Plan Administrator, at its sole discretion, may determine that the shares
shall be delivered by (1) issuing and delivering to the Participant a
certificate for the number of shares purchased by such Participant on an
exercise date; (2) issuing and delivering a certificate or certificates for the
number of share purchased by all Participants on an exercise date to a member
firm of the New York Stock Exchange which is also a member of the National
Association of Securities Dealers, as selected by the Plan Administrator from
time to time, which shares shall be maintained by such member firm in separate
brokerage accounts for each Participant; or (3) issuing and delivering a
certificate or certificates for the number of shares purchased by all
Participants on an exercise date to a bank or trust company or affiliate
thereof, as selected by the Plan Administrator from time to time which shares
shall be maintained by such bank or trust company or affiliate in separate
accounts for each Participant. Each certificate or account, as the case may be,
may be in the name of the Participant, or, if the Participant designates on the
form prescribed by the Plan Administrator, in the Participant's name jointly
with another individual and, if permitted by local law, with right of
survivorship.
XI. AMENDMENT OF THE PLAN
The Board may alter, amend, suspend or discontinue the Plan at any time to
become effective immediately following the close of any Purchase Interval.
However, certain amendments may require shareholder approval pursuant to
applicable laws or regulations.
Any such amendment or termination of the Plan shall not affect options already
granted hereunder and such options shall remain in full force and effect as if
this Plan had not been amended or terminated.
XII. NOTICES
All notices or other communications by a Participant to the Corporation under or
in connection with the Plan shall be deemed to have been duly given when
received in the form specified by the Corporation at the location, or by the
person, designated by the Corporation for the receipt thereof. All notices or
other communications to a Participant by the Corporation shall be deemed to have
been duly given when sent by the Corporation by regular mail to the address of
the Participant on the human resources records of the Corporation or when posted
on any general electronic messaging and bulletin board system utilized by the
Corporation.
XIII. LIMITATIONS ON SALE OF STOCK PURCHASED UNDER THE PLAN
The Plan is intended to provide Common Stock for investment and not for resale.
The Corporation does not, however, intend to restrict or influence any employee
in the conduct of his or her own affairs. Subject to the Corporation's
compliance with applicable United States federal and state securities laws, a
Participant may, therefore, sell stock purchased under the Plan at any time he
or she chooses. The Participant assumes the risk of any market fluctuations in
the price of such stock.
XIV. GOVERNMENTAL REGULATION
The Corporation's obligation to sell and deliver shares of the Corporation's
Common Stock under this Plan is subject to the approval of any governmental
authority, domestic or foreign, required in connection with the authorization,
issuance or sale of such stock.
XV. GENERAL PROVISIONS
A. All costs and expenses incurred in the administration of the Plan shall be
paid by the Corporation, however, each Plan Participant shall bear all costs and
expenses incurred by such individual in the sale, other disposition or transfer
of any shares purchased under the Plan.
B. Nothing in the Plan shall confer upon the Participant any right to continue
in the employ of the Corporation or any Corporate Affiliate for any period of
specific duration or interfere with or otherwise restrict in any way the rights
of the Corporation (or any Corporate Affiliate employing such person) or of the
Participant, which rights are hereby expressly reserved by each, to terminate
such person's employment at any time for any reason, with or without cause.
C. Except to the extent otherwise provided in any Addendum to the Plan, the
provisions of the Plan shall be governed by the laws of the State of Illinois
without resort to that State's conflict-of-laws rules.
D. A Foreign Subsidiary or the Plan Administrator, as the case may be, shall
have the right to deduct from any payment to be made under this Plan, or to
otherwise require, prior to the issuance or delivery of any shares of Common
Stock or the payment of any cash, payment by each Participant of any tax
required by applicable law to be withheld.
E. Additional provisions for individual Foreign Subsidiaries may be incorporated
in one or more Addenda to the Plan. Such Addenda shall have full force and
effect with respect to the Foreign Subsidiaries to which they apply. In the
event a conflict between the provisions of such an Addendum and one or more
other provisions of the Plan, the provisions of the Addendum shall be
controlling.
F. As a condition to the exercise of an option, the Corporation may require the
person exercising such option to represent and warrant at the time of any such
exercise that the shares are being purchased only for investment and without any
present intention to sell or distribute such shares if, in the opinion of
counsel for the Corporation, such a representation is required by any of the
aforementioned applicable provisions of law.
<PAGE>
SCHEDULE A
FOREIGN SUBSIDIARIES PARTICIPATING IN
1998 INTERNATIONAL EMPLOYEE STOCK PURCHASE PLAN
AS OF THE EFFECTIVE DATE
General Operating Subsidiaries
Comdisco Canada Ltd.
Comdisco Continuity Services Canada Ltd.
Comdisco Deutschland GmbH
Comdisco Handelsgesellschaft M.B.H.
Comdisco Continuity Services (France)
Promodata SNC
Comdisco Nederland B.V.
Comdisco (Switzerland), S.A.
Comdisco United Kingdom Limited
Comdisco Direct (UK) Limited
Comdisco Continuity Services (UK) Limited
Comdisco Australia Pty. Ltd.
<PAGE>
APPENDIX
The following definitions shall be in effect under the Plan:
A. BOARD shall mean the Corporation's Board of Directors.
B. BASE SALARY shall mean the regular base salary paid to a Participant by one
or more Participating Companies during such individual's period of participation
in one or more offering periods under the Plan. The following items of
compensation shall NOT be included in Base Salary: (i) all overtime payments,
bonuses, commissions (other than those functioning as base salary equivalents),
profit-sharing distributions and other incentive-type payments and (ii) any and
all contributions made on the Participant's behalf by the Corporation or any
Corporate Affiliate under any employee benefit or welfare plan now or hereafter
established.
C. CODE shall mean the U.S. Internal Revenue Code of 1986, as amended.
D. COMMISSION/BONUS PAYMENTS shall mean all non-Base Salary cash payments paid
to a Participant by one or more participating companies during such individuals
period of participation in one or more offering periods under the Plan. In
addition to Base Salary, exclusions from Commission/Bonus Payments shall include
without limitation: (i) all overtime payments (other than those functioning as
base salary equivalents), reimbursement for expenses and profit sharing
distributions, and (ii) any and all contributions made on the Participant's
behalf by the Corporation or any Corporate Affiliate under any employee benefit
or welfare plan now or hereafter established.
E. COMMON STOCK shall mean the Corporation's common stock $0.10 par value.
F. CORPORATE AFFILIATE shall mean any "parent" or "subsidiary" corporation of
the Corporation, whether now existing or subsequently established. "Parent" and
"subsidiary" shall be determined as follows:
(i) "parent" shall mean any corporation (other than the Corporation) in
an unbroken chain of corporations ending with the Corporation, provided each
corporation in the unbroken chain (other than the Corporation) owns, at the time
of the determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain, and
(ii) "subsidiary" shall mean any corporation (other than the
Corporation) in an unbroken chain of corporations beginning with the
Corporation, provided each corporation (other than the last corporation) in the
unbroken chain owns, at the time of determination, stock possessing fifty
percent (50%) or more of the total combined voting power of all classes of stock
in one of the other corporations in such chain.
G. CORPORATE TRANSACTION shall mean either of the following shareholder-approved
transactions to which the Corporation is a party:
(i) a merger or consolidation in which securities possessing more than
fifty percent (50%) of the total combined voting power of the Corporation's
outstanding securities are transferred to a person or persons different from the
persons holding those securities immediately prior to such transaction, or
(ii) the sale, transfer or other disposition of all or substantially
all of the assets of the Corporation in complete liquidation or dissolution of
the Corporation.
H. CORPORATION shall mean Comdisco, Inc., a Delaware corporation, and any
corporate successor to all or substantially all of the assets or voting stock of
Comdisco, Inc. which shall by appropriate action adopt the Plan.
I. EFFECTIVE DATE shall mean the first business day in April, 1998. Any Foreign
Subsidiary which elects, with the approval of the Board, to extend the benefits
of this Plan to its employees after such Effective Date shall designate a
subsequent Effective Date with respect to its employee-Participants provided
such subsequent Effective Date shall be the first business day of either April
or October as determined by such Foreign Subsidiary.
J. ELIGIBLE EMPLOYEE shall mean any person who is employed and has been
continuously employed for at least one year as of the start date of an offering
period, by a Foreign Subsidiary on a basis under which he or she is regularly
expected to render more than twenty (20) hours of service per week for more than
five (5) months per calendar year for earnings considered wages under Code
Section 3401(a), and who are not designated by the Corporation as officers under
Section 16 of the Securities Exchange Act of 1934, as amended.
K. ENTRY DATE shall mean the date an Eligible Employee first commences
participation in the offering period in effect under the Plan. The earliest
Entry Date under the Plan shall be the Effective Date. Unless otherwise provided
by the Plan Administrator, all subsequent Entry Dates shall be the first
business day in April and October of each calendar year.
L. EXCHANGE DATE shall mean the last U.S.business day of each Purchase Interval,
on which date the foreign currency payroll deductions collected on behalf of
the Participants during that period are to be converted into U.S. Dollars.
M. FAIR MARKET VALUE per share of Common Stock on any relevant date shall be
determined in accordance with the following provisions:
(i) If the Common Stock is at the time traded on the NASDAQ National
Market, then the Fair Market Value shall be the U.S. Dollar closing selling
price per share of Common Stock on the date in question, as such price is
reported by the National Association of Securities Dealers on the NASDAQ
National Market or any successor system. If there is no closing selling price
for the Common Stock on the date in question, then the Fair Market Value shall
be the U.S. Dollar closing selling price on the last preceding date for which
such quotation exists.
(ii) If the Common Stock is at the time listed on any Stock Exchange,
then the Fair Market Value shall be the U.S. Dollar closing selling price per
share of Common Stock on the date in question on the Stock Exchange determined
by the Plan Administrator to be the primary market for the Common Stock, as such
price is officially quoted in the composite tape of transactions on such
exchange. Initially the primary market is designated to be the New York Stock
Exchange. If there is no U.S. Dollar closing selling price for the Common Stock
on the date in question, then the Fair Market Value shall be the closing selling
price on the last preceding date for which such quotation exists.
N. FOREIGN SUBSIDIARY shall mean any Corporate Affiliate which employs Eligible
Employees outside the United States and which may be authorized from time to
time by the Board to extend the benefits of the Plan to its Eligible Employees.
The Foreign Subsidiaries participating in the Plan as of the Effective Date are
listed in attached Schedule A.
O. MARKET PRICE shall be the closing selling price of the Common Stock on the
New York Stock Exchange (or such other Stock Exchange designated as the primary
market by the Plan Administrator) on the day prior to the Purchase Date or, if
the Corporation purchases such Common Stock, the actual cost to the Corporation
per share (exclusive of brokerage fees and expenses) on the Purchase Date.
P. 1933 ACT shall mean U.S. Securities Act of 1933, as amended.
Q. PARTICIPANT shall mean any Eligible Employee of a Foreign Subsidiary who is
actively participating in the Plan.
R. PLAN shall mean the Corporation's 1998 International Employee Stock Purchase
Plan, as amended and restated, as set forth in this document.
S. PLAN ADMINISTRATOR shall mean the committee of two (2) or more non-employee
Board members appointed by the Board to administer the Plan, none of whom shall
be eligible to participate in the Plan.
T. PURCHASE DATE shall mean the last business day of each Purchase Interval. The
initial Purchase Date shall be the last business day in June, 1998.
U. PURCHASE INTERVAL shall mean each successive three (3)-month period within
the offering period at the end of which there shall be purchased shares of
Common Stock on behalf of each Participant. The initial Purchase Interval,
however, shall end on the last business day in June, 1998.
V. STOCK EXCHANGE shall mean either the American Stock Exchange or the New York
Stock Exchange.
W. SUBSCRIPTION PRICE shall mean the closing price of the Common Stock on the
New York Stock Exchange (or such other Stock Exchange designated as the primary
market by the Plan Administrator) on the start date (the first business day of
April and October, respectively) of an offering period.
X. U.S. PLAN shall mean the Comdisco, Inc. 1998 Employee Stock Purchase Plan,
as amended and restated.
Comdisco, Inc. and Subsidiaries Exhibit 11
COMPUTATION OF EARNINGS PER COMMON SHARE
(in millions except per share data)
Average shares used in computing net earnings per common and common equivalent
share were as follows:
<TABLE>
<CAPTION>
Three Months Six Months
ended ended
March 31 March 31
------------- -------------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Average shares outstanding--basic 76 73 75 73
Effect of dilutive options 6 5 6 5
----- ----- ----- -----
Average shares outstanding--diluted 82 78 81 78
===== ===== ===== =====
Net earnings to common stockholders $ 37 $ 31 $ 71 $ 59
===== ===== ===== =====
Net earnings per common share:
Basic $ .49 $ .41 $ .95 $ .80
===== ===== ===== =====
Diluted $ .45 $ .38 $ .88 $ .75
===== ===== ===== =====
</TABLE>
-18-
Comdisco, Inc. and Subsidiaries
Exhibit 12
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(dollars in millions)
<TABLE>
<CAPTION>
Six months ended
March 31, For the years ended September 30,
----------- ------------------------------------
1998 1997 1997 1996 1995 1994 1993
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Fixed charges
Interest expense <F1> $165 $147 $301 $267 $278 $266 $295
Approximate portion of
rental expense representative
of an interest factor 2 2 4 7 11 13 22
---- ---- ---- ---- ---- ---- ----
Fixed charges 167 149 305 274 289 279 317
Earnings from continuing operations
before income taxes,
extraordinary item, and cumulative
effect of change in accounting principle,
net of preferred stock dividends 112 97 203 176 160 80 137
---- ---- ---- ---- ---- ---- ----
Earnings from continuing operations
before income taxes, extraordinary item,
and cumulative effect of change
in accounting principle, net of preferred
stock dividends, plus fixed charges $279 $246 $508 $450 $449 $359 $454
==== ==== ==== ==== ==== ==== ====
Ratio of earnings to fixed charges 1.67 1.65 1.67 1.64 1.55 1.29 1.43
==== ==== ==== ==== ==== ==== ====
Rental expense:
Equipment subleases $ 3 $ 4 $ 6 $ 14 $ 22 $ 30 $ 57
Office space, furniture, etc. 4 3 7 8 10 8 8
---- ---- ---- ---- ---- ---- ----
Total $ 7 $ 7 $ 13 $ 22 $ 32 $ 38 $ 65
==== ==== ==== ==== ==== ==== ====
1/3 of rental expense $ 2 $ 2 $ 4 $ 7 $ 11 $ 13 $ 22
==== ==== ==== ==== ==== ==== ====
<FN>
<F1> Includes interest expense incurred by business continuity and network
services and included in business continuity and network services expenses on
the statements of earnings.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This Schedule contains summary financial information extracted from the
Quarterly Report on Form 10-Q for the quarter ended March 31, 1998 and is
qualified in its entirety by reference to such financial statments.
</LEGEND>
<CIK> 0000722487
<NAME> Comdisco, Inc.
<MULTIPLIER> 1,000,000
<CURRENCY> dollars
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> Oct-01-1997
<PERIOD-END> Mar-31-1998
<EXCHANGE-RATE> 1
<CASH> 34
<SECURITIES> 0
<RECEIVABLES> 305
<ALLOWANCES> 21
<INVENTORY> 187
<CURRENT-ASSETS> 2,617
<PP&E> 7,823
<DEPRECIATION> 2,397
<TOTAL-ASSETS> 6,535
<CURRENT-LIABILITIES> 1,513
<BONDS> 2,588
0
21
<COMMON> 11
<OTHER-SE> 910
<TOTAL-LIABILITY-AND-EQUITY> 6,535
<SALES> 1,146
<TOTAL-REVENUES> 1,521
<CGS> 830
<TOTAL-COSTS> 1,243
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 164
<INCOME-PRETAX> 114
<INCOME-TAX> 41
<INCOME-CONTINUING> 73
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 71
<EPS-PRIMARY> 0.950
<EPS-DILUTED> 0.880
</TABLE>
