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 April 2, 1995
OR
TRANSITION REPORT PURSUANT TO SECTION 13
OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from________to_______
COMMISSION FILE NUMBER 1-3619
--
PFIZER INC.
(Exact name of registrant as specified in its charter)
DELAWARE 13-5315170
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
235 East 42nd Street, New York, New York 10017
(Address of principal executive offices, including zip code)
(212) 573-2323
(Registrant's telephone number, including area code)
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 registrant was
required to file such reports) and (2) has been subject to
such filing requirements for the past 90 days.
YES X NO
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest
practicable date.
At April 28, 1995, there were 315,775,459 shares par value
$.05, of the issuer's common stock outstanding.
<PAGE> 2.
PFIZER INC.
FORM 10-Q
For the Quarter Ended
April 2, 1995
Table of Contents
PART I. FINANCIAL INFORMATION
Item 1.
Financial Statements: Page
Condensed Consolidated Statement of Income for
the three months ended April 2, 1995 and April 3, 1994 3
Condensed Consolidated Balance Sheet at
April 2, 1995, December 31, 1994 and April 3, 1994 4
Condensed Consolidated Statement of Cash Flows for the
three months ended April 2, 1995 and April 3, 1994 5
Notes to Condensed Consolidated Financial Statements 6
Independent Auditors' Report 9
Item 2.
Management's Discussion and Analysis of
Financial Condition and Results of Operations 10
PART II. OTHER INFORMATION
Item 1.
Legal Proceedings 17
Item 6.
Exhibits and Reports on Form 8-K 21
<PAGE> 3.
<TABLE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
PFIZER INC. AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
<CAPTION>
Three Months Ended
April 2, April 3,
1995 1994
(millions of dollars, except per share data)
<S> <C> <C>
Net sales . . . . . . . . . . . . . . . . . . .$2,402.9 $1,982.9
Costs and expenses
Cost of sales . . . . . . . . . . . . . . . 551.5 432.2
Selling, informational and
administrative expenses . . . . . . . . . . 864.8 730.5
Research and development expenses . . . . . . 316.6 254.7
Other deductions--net . . . . . . . . . . . . 39.1 35.5
Income before provision for taxes on
income and minority interests . . . . . . . . 630.9 530.0
Provision for taxes on income . . . . . . . . . 208.2 159.0
Minority interests. . . . . . . . . . . . . . . 2.3 .3
Net income. . . . . . . . . . . . . . . . . . .$ 420.4 $ 370.7
Earnings per common share . . . . . . . . . .$ 1.35 $ 1.18
Cash dividends per common share . . . . . . . .$ .52 $ .47
<FN>
See accompanying Notes to Condensed Consolidated Financial Statements.
</FN>
</TABLE>
<PAGE> 4.
<TABLE>
PFIZER INC. AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED BALANCE SHEET
<CAPTION>
(millions of dollars) April 2, Dec 31, April 3,
1995* 1994** 1994*
ASSETS
<S> <C> <C> <C>
Current Assets
Cash and cash equivalents. . . . . . . . . $ 967.0 $ 1,458.5 $ 796.8
Short-term investments . . . . . . . . . . 553.8 560.1 394.7
Accounts receivable, less allowances
April 2, 1995 - $56.3; Dec. 31, 1994 -
$44.1; April 3, 1994 - $40.0 . . . . . . 1,968.4 1,665.0 1,570.1
Short-term loans . . . . . . . . . . . . . 458.3 361.3 440.9
Inventories
Finished goods . . . . . . . . . . . . . 849.4 528.0 460.7
Work in process. . . . . . . . . . . . . 405.5 534.9 526.3
Raw materials and supplies . . . . . . . 152.9 202.0 187.5
Total inventories. . . . . . . . . . . 1,407.8 1,264.9 1,174.5
Prepaid expenses and taxes . . . . . . . . 469.4 478.6 565.9
Total current assets . . . . . . . . . 5,824.7 5,788.4 4,942.9
Long-term loans and marketable securities. . 739.6 724.3 661.9
Property, plant and equipment, less
accumulated depreciation
April 2, 1995 - $2,010.1;
Dec. 31, 1994 - $1,919.7;
April 3, 1994 - $1,760.9 . . . . . . . . 3,430.6 3,073.2 2,692.8
Goodwill, less accumulated amortization
April 2, 1995 - $53.5; Dec. 31, 1994 -
$48.2; April 3, 1994 - $40.1 . . . . . . . 1,212.3 325.7 261.1
Other assets, deferred taxes and
deferred charges . . . . . . . . . . . . . 1,308.1 1,186.9 1,082.2
Total assets . . . . . . . . . . . . . $12,515.3 $11,098.5 $9,640.9
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Short-term borrowings, including current
portion of long-term debt
April 2, 1995 - $1.3; Dec. 31, 1994 -
$6.5; April 3, 1994 - $3.3 . . . . . . $ 3,115.1 $ 2,220.0 $1,517.8
Accounts payable. . . . . . . . . . . . . 573.2 524.9 449.0
Income taxes payable. . . . . . . . . . . 705.3 731.1 567.9
Accrued compensation and related items. . 348.7 419.0 341.5
Other current liabilities . . . . . . . . 1,035.0 930.9 874.0
Total current liabilities. . . . . . . 5,777.3 4,825.9 3,750.2
Long-term debt . . . . . . . . . . . . . . . 609.9 604.2 570.1
Postretirement benefit obligation other
than pension plans . . . . . . . . . . . . 431.0 432.6 445.1
Deferred taxes on income . . . . . . . . . . 298.3 211.7 230.6
Other non-current liabilities. . . . . . . . 661.3 661.4 769.7
Minority interests . . . . . . . . . . . . . 40.7 38.8 35.5
Total liabilities. . . . . . . . . . . 7,818.5 6,774.6 5,801.2
Shareholders' Equity
Preferred stock. . . . . . . . . . . . . . -- -- --
Common stock . . . . . . . . . . . . . . . 34.1 34.0 33.9
Additional paid-in capital . . . . . . . . 757.9 651.4 355.9
Retained earnings. . . . . . . . . . . . . 6,201.4 5,944.5 5,460.6
Currency translation adjustment and other. 209.4 196.0 70.8
Employee benefit trust . . . . . . . . . . (822.5) (749.3) (540.0)
Common stock in treasury, at cost. . . . . (1,683.5) (1,752.7) (1,541.5)
Total shareholders' equity . . . . . . 4,696.8 4,323.9 3,839.7
Total liabilities and
shareholders' equity. . . . . . . . $12,515.3 $11,098.5 $9,640.9
<FN>
* Unaudited
** Condensed from audited financial statements.
See accompanying Notes to Condensed Consolidated Financial Statements.
</FN>
</TABLE>
<PAGE> 5.
<TABLE>
PFIZER INC. AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
<CAPTION>
(millions of dollars)
Three Months Ended
April 2, April 3,
1995 1994
<S> <C> <C>
Operating Activities
Net income. . . . . . . . . . . . . . . . . . . $ 420.4 $370.7
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization of intangibles. 118.9 71.1
Deferred income amortization. . . . . . . . . (3.3) (3.3)
Other . . . . . . . . . . . . . . . . . . . . 18.6 (5.5)
Changes in operating assets and liabilities,
net of effect of businesses acquired:
Accounts receivable . . . . . . . . . . . . (175.0) (95.5)
Inventories . . . . . . . . . . . . . . . . 18.6 (73.8)
Prepaid and other assets. . . . . . . . . . 186.8 (15.7)
Accounts payable and accrued liabilities. . 14.0 2.5
Income taxes payable. . . . . . . . . . . . (25.2) (39.7)
Other deferred items. . . . . . . . . . . . (16.0) 34.5
Net cash provided by operating activities. . . . 557.8 245.3
Investing Activities
Acquisitions, net of cash acquired. . . . . . . (1,461.9) --
Purchases of property, plant and equipment. . . (196.4) (128.2)
Purchases of short-term investments . . . . . . (447.9) (351.9)
Proceeds from redemptions of short-term
investments . . . . . . . . . . . . . . . . . 485.2 369.9
Purchases of long-term investments. . . . . . . (62.8) (55.7)
Purchases and redemptions of short-term
investments by financial subsidiaries . . . . (.1) 40.1
Decrease in loans and long-term investments
by financial subsidiaries . . . . . . . . . . 37.8 22.6
Other investing activities. . . . . . . . . . . (18.0) 20.3
Net cash used in investing activities . . . . . . (1,664.1) (82.9)
Financing Activities
Increase in short-term debt . . . . . . . . . . 857.2 348.3
Purchases of common stock . . . . . . . . . . . (108.5) (299.2)
Cash dividends paid . . . . . . . . . . . . . . (163.5) (150.8)
Employee benefit transactions . . . . . . . . . 35.7 7.0
Other financing activities. . . . . . . . . . . 2.8 6.5
Net cash provided by/(used in) financing
activities. . . . . . . . . . . . . . . . . . . 623.7 (88.2)
Effect of exchange rate changes on cash and
cash equivalents. . . . . . . . . . . . . . . . (8.9) (6.8)
Net (decrease)/increase in cash and
cash equivalents . . . . . . . . . . . . . . . (491.5) 67.4
Cash and cash equivalents balance at beginning
of period . . . . . . . . . . . . . . . . . . . 1,458.5 729.4
Cash and cash equivalents balance at end
of period . . . . . . . . . . . . . . . . . . . $ 967.0 $796.8
<FN>
See accompanying Notes to Consolidated Financial Statements.
</FN>
</TABLE>
<PAGE> 6.
PFIZER INC. AND SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note 1: Basis of Presentation
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with the rules and regulations of the
United States Securities and Exchange Commission. Accordingly, certain
information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted.
Subsidiaries operating outside the United States generally are included
on the basis of interim periods ended February 26, 1995 and February 27,
1994.
Note 2: Responsibility for Interim Financial Statements
Pfizer Inc. (the "Company") is responsible for the accompanying
unaudited interim financial statements which reflect all normal and
recurring adjustments considered necessary for a fair presentation of
the results for the periods presented.
The interim financial statements should be read in conjunction with the
financial statements and notes thereto included in the Company's latest
annual report on Form 10-K.
The results of operations for the interim period ended April 2, 1995 are
not necessarily indicative of the results which ultimately might be
expected for the current year.
Note 3: Earnings Per Common Share
Earnings per common share are computed by dividing net income by the
weighted average number of common shares and common share equivalents
outstanding. Common share equivalents consist of shares issuable upon
exercise of stock options. The weighted average number of common shares
and common share equivalents totaled 311.3 million and 313.2 million for
the first quarter of 1995 and 1994, respectively.
In April 1995, the Company announced a two-for-one stock split. For
further details, see the footnote "Subsequent Event" on page 8.
Note 4: Currency Impact
An analysis of the changes in the currency translation adjustment for
the three months ended April 2, 1995 is as follows:
(millions of dollars)
Currency translation adjustment December 31, 1994 $194.0
Translation adjustments and hedges 12.5
Currency translation adjustment April 2, 1995 $206.5
The balance sheet caption Currency translation adjustment and other also
includes a net unrealized gain of $2.9 million on investment securities
available for sale.
Exchange gains/(losses) included in "Other deductions--net" were as
follows:
1995 1994
(millions of dollars)
First Quarter $1.7 $(2.1)
<PAGE> 7.
PFIZER INC. AND SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
Note 5: Interest and Income Tax Payments
The Company made interest payments of approximately $47 million and $31
million and income tax payments of approximately $220 million and $178
million during the first quarters of 1995 and 1994, respectively.
Note 6: Acquisitions
In January 1995, the Company acquired the capital stock of certain
subsidiaries of SmithKline Beecham plc operating solely in the animal
health business and certain net assets used in the animal health
business from other SmithKline Beecham plc subsidiaries for
approximately $1.5 billion including direct costs of the acquisition.
The acquisition was substantially financed at closing by the issuance of
commercial paper. The SmithKline Beecham animal health business is a
global business which manufactures and sells products in four principal
categories: vaccines, anti-infectives, productivity enhancers and
parasiticides.
This acquisition has been recorded under the purchase method of
accounting. The results of operations of the acquired business are
included in the Company's consolidated financial statements since
January 1, 1995. The excess of the purchase price over the estimated
fair value of the tangible net assets acquired has been allocated to
identifiable intangibles of approximately $280 million and goodwill of
approximately $800 million. The goodwill and identifiable intangibles
are being amortized on a straight-line basis over periods of 10 to 40
years.
Sales of the SmithKline Beecham animal health business were
approximately $112 million for the first quarter of 1994. Pro forma net
income and earnings per share for the first quarter of 1994 that reflect
this acquisition as if it had occurred as of the beginning of the period
result in a negative impact of approximately 3% on reported amounts.
Pro forma results include a period comparable to the first quarter of
1995 as well as interest expense and amortization of goodwill and other
intangibles related to the acquisition. The pro forma results of
operations are not necessarily indicative of the results of operations
that would have occurred had the acquisition actually occurred as of the
beginning of the period nor is this information indicative of future
consolidated results of operations.
In March 1995, the Company acquired NAMIC U.S.A. Corporation in a stock
for stock transaction valued at approximately $170 million including
direct costs of the acquisition. This acquisition was accounted for
under the purchase method of accounting. Pro forma results of
operations that reflect this acquisition as if it had occurred at the
beginning of the periods presented would not be materially different
from the reported amounts. Results of operations will be included in
the Condensed Consolidated Statement of Income from April 3, 1995.
<PAGE> 8.
PFIZER INC. AND SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
Note 7: Subsequent Event
In April 1995, the Company announced a two-for-one stock split in the
form of a 100 percent stock dividend payable June 30, 1995 to
shareholders of record on June 1, 1995. The split followed a vote by
Pfizer shareholders to increase the number of authorized common shares
from 750 million to 1.5 billion and to decrease the par value from $.10
to $.05 per share. The number of shares and the per share amounts
included in these consolidated financial statements do not reflect the
stock split. A summary of the earnings per common share information
that gives retroactive effect to the stock split for the first quarters
of 1995 and 1994 is as follows:
(millions, except per share data) 1995 1994
Weighted average number of common shares
and common share equivalents outstanding:
As reported 311.3 313.2
Split basis 622.6 626.4
Earnings per common share:
As reported $1.35 $1.18
Split basis $ .68 $ .59
<PAGE> 9.
INDEPENDENT AUDITORS' REPORT
To the Shareholders and Board of Directors of Pfizer Inc.:
We have reviewed the condensed consolidated balance sheet of Pfizer Inc.
and subsidiary companies as of April 2, 1995 and April 3, 1994, and the
related condensed consolidated statements of income and cash flows for
the three month periods then ended. These condensed consolidated
financial statements are the responsibility of the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical
procedures to financial data and making inquiries of persons responsible
for financial and accounting matters. It is substantially less in scope
than an audit conducted in accordance with generally accepted auditing
standards, the objective of which is the expression of an opinion
regarding the financial statements taken as a whole. Accordingly, we do
not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the condensed consolidated financial statements
referred to above for them to be in conformity with generally accepted
accounting principles.
We have previously audited, in accordance with generally accepted
auditing standards, the consolidated balance sheet of Pfizer Inc. and
subsidiary companies as of December 31, 1994, and the related
consolidated statements of income, shareholders' equity and cash flows
for the year then ended (not presented herein); and in our report dated
February 23, 1995, we expressed an unqualified opinion on those
consolidated financial statements. In our opinion, the information set
forth in the accompanying condensed consolidated balance sheet as of
December 31, 1994, is fairly stated, in all material respects, in
relation to the consolidated balance sheet from which it has been
derived.
KPMG Peat Marwick LLP
New York, New York
May 12, 1995
<PAGE> 10.
<TABLE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
PFIZER INC. AND SUBSIDIARY COMPANIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE CONDENSED
CONSOLIDATED STATEMENT OF INCOME
FOR THE PERIODS ENDED APRIL 2, 1995 AND APRIL 3, 1994
<CAPTION>
Percent
(millions of dollars, Increase
except per share data) Comparison
First Quarter 1st Quarter
1995 1994 1995/1994
<S> <C> <C> <C>
Net sales $2,402.9 $1,982.9 21
Cost of sales $ 551.5 $ 432.2 28
% of net sales 22.9% 21.8%
Production margin $1,851.4 $1,550.7 19
% of net sales 77.1% 78.2%
Selling, informational and
administrative expenses $ 864.8 $ 730.5 18
% of net sales 36.0% 36.8%
Research and development expenses $ 316.6 $ 254.7 24
% of net sales 13.2% 12.9%
Other deductions--net $ 39.1 $ 35.5 10
% of net sales 1.6% 1.8%
Income before taxes $ 630.9 $ 530.0 19
% of net sales 26.3% 26.7%
Taxes on income $ 208.2 $ 159.0 31
Effective tax rate 33.0% 30.0%
Net income $ 420.4 $ 370.7 13
% of net sales 17.5% 18.7%
Earnings per common share $ 1.35 $ 1.18 14
Cash dividends per common share $ .52 $ .47 11
<FN>
For explanation of percent changes, see discussion beginning on page 12.
</FN
</TABLE>
<PAGE> 11.
<TABLE>
PFIZER INC. AND SUBSIDIARY COMPANIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE CONSOLIDATED
NET SALES BY BUSINESS SEGMENT
FOR THE PERIODS ENDED APRIL 2, 1995 AND APRIL 3, 1994
(millions of dollars)
<CAPTION>
Percent
Increase/(Decrease)
First Quarter Comparison
% of % of 1st Qtr. 1995
Net Net from
1995 Sales 1994 Sales 1st Qtr. 1994
<C> <C> <C> <C> <C> <C>
$1,967.1 81.9 $1,659.3 83.7 Health Care 19
273.1 11.3 145.3 7.3 Animal Health 88
97.7 4.1 106.5 5.4 Consumer Health Care (8)
65.0 2.7 71.8 3.6 Food Science (9)
$2,402.9 100.0 $1,982.9 100.0 Consolidated 21
<FN>
For explanation of percent changes, see discussion beginning on page 12.
</FN>
</TABLE>
<TABLE>
PFIZER INC. AND SUBSIDIARY COMPANIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE CONSOLIDATED
NET SALES BY GEOGRAPHIC AREA
FOR THE PERIODS ENDED APRIL 2, 1995 AND APRIL 3, 1994
(millions of dollars)
<CAPTION>
Percent
Increase
First Quarter Comparison
% of % of 1st Qtr. 1995
Net Net from
1995 Sales 1994 Sales 1st Qtr. 1994
<C> <C> <C> <C> <C> <C>
$1,297.0 54.0 $1,100.5 55.5 United States 18
526.5 21.9 409.6 20.6 Europe 29
343.6 14.3 281.2 14.2 Asia 22
167.4 7.0 140.6 7.1 Canada/Latin America 19
68.4 2.8 51.0 2.6 Africa/Middle East 34
$2,402.9 100.0 $1,982.9 100.0 Consolidated 21
</TABLE>
<PAGE> 12.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
NET SALES
The following statistical data are provided to assist the reader in
understanding the composition of changes affecting the increase in net
sales.
Sales Growth Analysis
% Increase/(Decrease) Comparison
1st Qtr 1995
from
1st Qtr 1994
Volume 21
Price (3)
Currency 3
Total net sales increase 21
Consolidated net sales increased 21% in the first quarter of 1995 to
$2,402.9 million. Sales growth for the quarter was driven by increased
sales volume of new products and the acquisition of the SmithKline
Beecham animal health business, which the Company acquired in January
1995. The results of operations of the acquired business are included
in the Company's consolidated financial statements since January 1,
1995. Weakness in the U.S. dollar relative to several key foreign
currencies had a 3% positive effect on sales. Excluding the effect of
the SmithKline Beecham animal health business, worldwide sales increased
15% over last year's first quarter. Sales of the SmithKline Beecham
animal health business were approximately $112 million for the first
quarter of 1994. The health care sales performance in the first quarter
versus last year reflects a 20% increase in worldwide sales of
pharmaceuticals and a 12% increase in worldwide sales of hospital
products.
For the first quarter, U.S. pharmaceutical sales increased 17% and
international pharmaceutical sales increased 24% Seven percent of this
international sales increase was due to the favorable impact of foreign
exchange. In the quarter, the combined worldwide sales of the Company's
six newest pharmaceuticals -- Zoloft, Zithromax, Norvasc, Cardura,
Diflucan and Glucotrol XL -- increased 54% and now make up 54% of total
pharmaceutical sales. The following table shows the percentage sales
growth of the Company's major pharmaceuticals for the first quarter of
1995:
Net Sales Growth of Major Pharmaceuticals 1995 vs. 1994
Percentage Increase/(Decrease)
1st Qtr
Zoloft 51
Zithromax 120 (*)
Norvasc 73
Cardura 21
Diflucan 26
Procardia XL (2)
(*) Increase is primarily caused by a rise in demand as a result of a
new marketing campaign launched in the U.S. in November 1994. The
product has also been well received in countries where it was
launched during late 1994, including Germany, France and Canada.
During the first quarter, the Food and Drug Administration (FDA)
approved Cardura for the treatment of benign prostatic hyperplasia an
enlargement of the prostate gland in men. Additionally, the Company
received approvable letters from the FDA for the use of its antibiotic
<PAGE> 13.
Zithromax in pediatric infections and for a new product, cetirizine, a
low sedating antihistamine for the treatment of allergic rhinitis and
chronic uticaria.
Hospital Products Group's sales grew 12% in the first quarter. This
increase was driven by strong growth in the sales of catheters used in
angioplasty and of stents. In March 1995, the Company completed the
acquisition of the NAMIC U.S.A. Corporation which has a line of
cardiovascular products complementary to those of Pfizer.
Animal health sales increased by 88% in the quarter as a result of the
SmithKline Beecham animal health business acquisition. Sales of
Dectomax, an anti-parasitic drug used in cattle, increased substantially
as the worldwide product rollout continued.
Consumer health care sales decreased 8% in the quarter, stemming in part
from U.S. private-label competition for certain products and the
devaluation of the peso in Mexico.
Food science sales declined 9%, reflecting the continuing phase-out of
commodity chemicals in favor of proprietary food products. Sales of
food specialties increased 7%, led by a 30% increase in sales of
Litesse, a low-fat bulking agent.
COSTS AND EXPENSES
As a percentage of net sales, production margin decreased in the first
quarter of 1995 versus the comparable quarter of last year. This
decrease was mainly due to higher royalty expenses and change in
business mix, primarily the impact of acquiring the SmithKline Beecham
animal health business. This acquisition had lower production margins
than Pfizer's overall business and resulted in a higher cost of sales as
a result of the allocation of the purchase price to acquired inventory.
Partially offsetting these effects were improvements in production
margin from the reengineering of manufacturing operations, including the
shutdown of a number of pharmaceutical plants. Selling, informational
and administrative expenses as a percentage of sales decreased in the
first quarter of 1995 compared with the same periods of 1994. This
improvement continues to reflect restrained growth in marketing expenses
relative to the prior year as well as the beneficial impact of the
Company's continuous improvement and restructuring programs. Research
and development (R&D) expenditures increased 24% in the quarter relative
to last year's first quarter due to the rapid advancement of a number of
drug candidates in late stage development.
In 1995, the Company plans to spend approximately $1.4 billion on R&D.
Health care R&D expenses, expressed as a percentage of health care net
sales, was 14.8% in the first quarters of both 1995 and 1994.
Other deductions--net for the first quarters of 1995 and 1994 are
summarized in the following table:
% Incr./
(millions of dollars) 1995 1994 (Dec.)
Interest income (47.7) (22.6) 111
Interest expense 49.5 34.2 45
Other income (2.4) (4.7) (49)
Other deductions 39.7 28.6 39
Other deductions--net 39.1 35.5 10
<PAGE> 14.
The increase in interest income in the first quarter was due to higher
levels of interest earning assets and higher interest rates. The
increase in interest expense was primarily due to higher levels of
borrowings which were mainly used to finance the acquisition of the
SmithKline Beecham animal health business. The increase in other
deductions in the first quarter of 1995 was primarily attributable to
the amortization of goodwill and other intangibles related to the
SmithKline Beecham animal health business acquisition, partially offset
by exchange gains of $1.7 million in 1995 as opposed to exchange losses
of $2.1 million in 1994.
PRE-TAX AND NET INCOME
The Company's effective tax rate increased from 30% in 1994 to 33% this
year as a result of the continuing reduction of the tax benefit from the
Company's Puerto Rican operations as a result of the Omnibus Budget
Reconciliation Act of 1993, the expiration of the R&D tax credit and of
the Section 861 R&D allocation rules during 1995 and changes in the mix
of income by country. The effective tax rate of 33% could decline to
31.5% if current congressional debates about the future of the R&D tax
credit and tax allocation rules are concluded with a favorable result.
OTHER
As a result of the SmithKline Beecham animal health business
acquisition, first quarter 1995 earnings per share were reduced by four
cents. The Company expects the full-year impact of this acquisition to
be non-dilutive.
Pro forma net income and earnings per share for the first quarter of
1994 that reflect the SmithKline Beecham animal health business
acquisition as if it had occurred as of the beginning of the period
result in a negative impact of approximately 3% on reported amounts.
Pro forma results include a period comparable to the first quarter of
1995 as well as interest expense and amortization of goodwill and other
intangibles related to the acquisition.
In the first quarter of 1995, approximately 1.3 million shares were
purchased in the open market at an average cost of $85 per share and
were substantially utilized in the acquisition of NAMIC U.S.A.
Corporation. In the first quarter of 1994, approximately 5.2 million
shares were purchased at an average cost of $58 per share.
In 1993, the Company initiated a restructuring program which included
the consolidation of manufacturing facilities, the demolition of
buildings resulting from the consolidation, reconfiguration and
rehabilitation of remaining facilities and the consolidation of
distribution and administrative organizations and infrastructures,
including the consolidation of finance organizations in Europe.
Through April 2, 1995, completed restructuring initiatives reduced the
workforce by approximately 900 people and resulted in the closing of 10
facilities. The annualized benefit of efficiencies resulting from
completed efforts was approximately $49 million. The full
implementation of such plans is still anticipated to lower annual
operating costs by $130 million. To date, there have been no
reclassifications between the components presented below, nor have there
been significant changes in estimates of the cost of the plan.
<PAGE> 15.
The following table indicates the status of the restructuring charges by
component:
<TABLE>
<CAPTION>
Utilization Reserves
(millions of dollars) 1993 Through 1st Remaining
Restructuring Year-End Quarter at April 2,
Charges 1994 1995 1995
<S> <C> <C> <C> <C>
Employee severance
payments $230.7 $ 52.3 $12.3 $166.1
Operating assets to be
sold/disposed of 211.7 105.8 1.8 104.1
Closed facilities'
costs 101.1 20.1 5.6 75.4
Currency translation
adjustment related
to the liquidation/
disposal of business 57.8 57.8 -- --
Administrative
infrastructures 37.6 34.4 -- 3.2
Lease and third party
contract termination
costs 37.0 21.6 .1 15.3
Other 14.3 10.2 .9 3.2
$690.2 $302.2 $20.7 $367.3
</TABLE>
Closed facilities' costs relate primarily to the rationalization of
manufacturing capacity and the demolition of structures within certain
manufacturing facilities. Administrative infrastructure costs relate
primarily to consulting costs involved in restructuring the
administrative support organizations and distribution centers.
Writedowns of operating assets, which primarily involve manufacturing
rationalizations, are considered utilized and the reserve charged when
the asset is sold or otherwise disposed of by the Company.
In April 1995, the Company announced a two-for-one stock split in the
form of a 100 percent stock dividend payable June 30, 1995 to
shareholders of record on June 1, 1995. The split followed a vote in
April 1995 by Pfizer shareholders to increase the number of authorized
common shares from 750 million to 1.5 billion and to decrease the par
value from $.10 to $.05 per share. The number of shares and the per
share amounts included in these consolidated financial statements are
presented before giving effect to the stock split. Pro forma earnings
per common share on a post-split basis for the first quarters of 1995
and 1994 would have been $.68 and $.59, respectively.
<PAGE> 16.
ANALYSIS OF LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents and short-term investments totaled $1,520.8
million at April 2, 1995 as compared to $2,018.6 million at December 31,
1994. Total borrowings were $3,725.0 million at April 2, 1995 as
compared with $2,824.2 million at December 31, 1994. Working capital at
April 2, 1995 decreased versus December 31, 1994 and April 3, 1994. The
decrease from both periods was primarily attributable to increased
short-term borrowings used to finance the SmithKline Beecham animal
health business acquisition.
<TABLE>
<CAPTION>
April 2, Dec. 31, April 3,
1995 1994 1994
<S> <C> <C> <C>
Working capital (millions of dollars) $47.4 $962.5 $1,192.7
Current ratio 1.01:1 1.20:1 1.32:1
Debt to total capitalization (percentage)* 44% 40% 35%
Shareholders' equity per common share** $15.32 $14.20 $12.55
Days of sales outstanding - trade
accounts receivable 71 60 69
Months of inventory on hand 8.6 8.6 8.6
<FN>
* Represents total short and long-term borrowings divided by the sum of
total short and long-term borrowings and total shareholders' equity.
** Represents total shareholders' equity divided by the actual number of
common shares outstanding.
</FN>
</TABLE>
<PAGE> 17.
FORM 10-Q
PART II - OTHER INFORMATION
Item 1: Legal Proceedings
The Company is involved in a number of claims and litigations,
including product liability claims and litigations considered normal in
the nature of its businesses. These include suits involving various
pharmaceutical and hospital products that allege either reaction to or
injury from use of the product.
As previously disclosed, numerous claims have been brought against
the Company and Shiley Incorporated, a wholly owned subsidiary, alleging
either personal injury from fracture of 60(degree) or 70(degree) Shiley
Convexo-Concave (C/C) heart valves, or anxiety that properly functioning
implanted valves might fracture in the future, or, in a few cases,
personal injury from a prophylactic replacement of a functioning valve.
In an attempt to resolve all claims alleging anxiety that properly
functioning valves might fracture in the future, the Company entered
into a settlement agreement in January 1992 in Bowling v. Shiley et al.,
a case brought in the United States District Court for the Southern
District of Ohio that establishes a worldwide settlement class of people
with C/C heart valves and their spouses, except those who elect to
exclude themselves. The settlement provides for a Consultation Fund of
$90 to $140 million (depending on the number of claims filed) from which
valve recipients who make claims will receive payments that are intended
to cover their cost of consultation with cardiologists or other health
care providers with respect to their valves. The settlement agreement
establishes a second fund of at least $75 million to support C/C
valve-related research, including the development of techniques to
identify valve recipients who may have significant risk of fracture, and
to cover the unreimbursed medical expenses that valve recipients may
incur for certain procedures related to the valves. The Company's
obligation as to coverage of these unreimbursed medical expenses is not
subject to any dollar limitation. Following a hearing on the fairness
of the settlement, it was approved by the court on August 19, 1992. An
appeal of the court's approval of the settlement was dismissed on
December 20, 1993 by the United States Court of Appeals for the Sixth
Circuit. A motion for rehearing en banc was denied on March 8, 1994,
and the U.S. Supreme Court denied a writ of certiorari on October 4,
1994. It is expected that most of the costs arising from the Bowling
class settlement will be covered by insurance and the proceeds of the
sale of certain product lines of the Shiley businesses in 1992. Of
approximately 900 implantees (and spouses of some of them) who opted out
of the Bowling settlement class, approximately ten have cases pending;
approximately 792 have been resolved; and approximately 100 have never
filed a case or claim.
Several claims relating to elective reoperations of valve
recipients are currently pending. Some of these claims relate to
elective reoperations covered by the Bowling class settlement described
above, and, therefore, the claimants are entitled to certain benefits in
accordance with the settlement. Such claimants, if they irrevocably
waive all of the benefits of the settlement, may pursue separate
litigation to recover damages in spite of the class settlement. The
Company is defending these claims.
Generally, the plaintiffs in all of the pending heart valve
litigations discussed above seek money damages. Based on the experience
of the Company in defending these claims to date, including available
insurance and reserves, the Company is of the opinion that these actions
should not have a material adverse effect on the financial position or
the results of operations of the Company.
On September 30, 1993, Dairyland Insurance Co., a carrier
providing excess liability coverage ("excess carrier") in the early
1980s, commenced an action in the California Superior Court in Orange
<PAGE> 18.
County, seeking a declaratory judgment that it was not obligated to
provide insurance coverage for Shiley heart valve liability claims. On
October 8, 1993, Pfizer filed cross-complaints against Dairyland and
filed third-party complaints against 73 other excess carriers who sold
excess liability policies covering periods from 1978 to 1985, seeking
damages and declaratory judgments that they are obligated to pay for
defense and indemnity to the extent not paid by other carriers. These
actions are currently in pretrial discovery and settlements have been
reached with several small carriers.
The Company's operations are subject to federal, state, and local
environmental laws and regulations. Under the Comprehensive
Environmental Response Compensation and Liability Act of 1980, as
amended ("CERCLA" or "Superfund"), and, in some cases the Resource
Conservation and Recovery Act of 1976, as amended, the Company has been
designated as a potentially responsible party by the United States
Environmental Protection Agency with respect to certain waste sites with
which the Company may have had direct or indirect involvement. Similar
designations have been made by some state environmental agencies under
applicable state superfund laws. Such designations are made regardless
of the extent of the Company's involvement. There are also claims that
the Company may be a responsible party or participant with respect to
several waste sites in foreign countries. Such claims have been made by
the filing of a complaint, the issuance of an administrative directive
or order, or the issuance of a notice or demand letter. These claims
are in various stages of administrative or judicial proceedings. They
include demands for recovery of past governmental costs and for future
investigative or remedial actions. In many cases, the dollar amount of
the claim is not specified. In most cases, claims have been asserted
against a number of other entities for the same recovery or other relief
as was asserted against the Company. The Company is currently
participating in remedial action at a number of sites under federal,
state and local laws.
To the extent possible with the limited amount of information
available at this time, the Company has evaluated its responsibility for
costs and related liability with respect to the above sites and is of
the opinion that the Company's liability with respect to these sites
should not have a material adverse effect on the financial position or
the results of operations of the Company. In arriving at this
conclusion, the Company has considered, among other things, the payments
that have been made with respect to the sites in the past; the factors,
such as volume and relative toxicity, ordinarily applied to allocate
defense and remedial costs at such sites; the probable costs to be paid
by the other potentially responsible parties; total projected remedial
costs for a site, if known; existing technology; and the currently
enacted laws and regulations. The Company anticipates that a portion of
these costs and related liability will be covered by available
insurance.
Through the early 1970s, Pfizer (Minerals Division) and Quigley
Company, Inc., a wholly owned subsidiary, sold a minimal amount of one
construction product and several refractory products containing some
asbestos. These sales were discontinued thereafter. Although these
sales represented a minor market share, the Company has been named as
one of a number of defendants in numerous lawsuits. These actions, and
actions related to the Company's sale of talc products in the past,
claim personal injury resulting from exposure to asbestos-containing
products, and nearly all seek general and punitive damages. In these
actions, the Company or Quigley is typically one of a number of
defendants, and both are members of the Center for Claims Resolution
(the "CCR"), a joint defense organization that is defending these
claims. The Company and Quigley are responsible for varying percentages
of defense and liability payments for all members of the CCR. Prior to
September 1990, the cases involving talc products were defended by the
CCR, but the Company is now overseeing its own defense of these actions.
A number of cases alleging property damage from asbestos-containing
products installed in buildings have also been brought against Pfizer.
<PAGE> 19.
On January 15, 1993, a class action complaint and settlement
agreement were filed in the United States District Court for the Eastern
District of Pennsylvania involving all personal injury claims by persons
who have been exposed to asbestos-containing products but who have not
yet filed a personal injury action against the twenty members of the
CCR. The settlement agreement establishes a claims-processing mechanism
that will provide historic settlement values upon proof of impaired
medical condition as well as claims-processing rates over ten years. In
addition, the shares allocated to the CCR members eliminate joint and
several liability. The court has determined that the settlement is fair
and reasonable. Subsequently, the court entered an injunction enforcing
its determination. An appeal from that injunction is pending in the
United States Court of Appeals for the Third Circuit.
At approximately the time it filed the future claims class action,
the CCR settled approximately 16,360 personal injury cases on behalf of
Pfizer and Quigley. CCR has continued to settle remaining and opt-out
cases and claims on a similar basis to past settlements. The total
pending number of cases as of April 30, 1995 is 16,411 asbestos cases
against Quigley, 5,359 asbestos cases against Pfizer Inc., and 104 talc
cases against Pfizer Inc.
Costs incurred by the Company in defending the asbestos personal
injury claims and the property damage claims, as well as settlements and
damage awards in connection therewith, are largely insured against under
policies issued by several primary insurance carriers and a number of
excess carriers. The Company believes that its costs incurred in
defending and ultimately disposing of the asbestos personal injury
claims, as well as the property damage claims, will be largely covered
by insurance policies issued by carriers that agreed to provide
coverage, subject to deductibles, exclusions, retentions and policy
limits. In connection with the future claims settlement, the defendants
commenced a third-party action against their respective excess insurance
carriers that have not agreed to provide coverage seeking a declaratory
judgment that (a) the future claims settlement is fair and reasonable as
to the carriers; (b) the carriers had adequate notice of the future
claims class settlement; and (c) the carriers are obligated to provide
coverage for asbestos personal injury claims. Based on the Company's
experience in defending the claims to date and the amount of insurance
coverage available, the Company is of the opinion that the actions
should not ultimately have a material adverse effect on the financial
position or the results of operations of the Company.
In connection with the divestiture of Minerals Technologies Inc.
(MTI), to which the net assets of the Pfizer Minerals and the Quigley
businesses were transferred, Pfizer and Quigley agreed to indemnify MTI
against any liability with respect to products manufactured and sold
prior to October 30, 1992, as well as against liability for certain
environmental matters.
The Company has been named, together with numerous other
manufacturers of brand name prescription drugs and certain companies
that distribute brand name prescription drugs, in suits brought by
retail pharmacy companies in federal and state courts. The federal
cases consist principally of a class action by retail pharmacies
(including approximately 30 named plaintiffs), as well as additional
actions by approximately 3,100 individual retail pharmacies (the
"individual actions"). These cases, all of which have been or are in
the process of being transferred to the United States District Court for
the Northern District of Illinois for coordinated treatment claim that
the defendant drug manufacturers have violated the Sherman Act in that
they allegedly agreed with each other (and, as alleged in some cases,
with wholesalers) not to extend to retail pharmacy companies the same
discounts allegedly extended to managed care companies, mail order
pharmacies and certain other institutional purchasers. In addition, the
individual actions also allege violations of the Robinson-Patman Act in
that the manufacturers allegedly have unlawfully discriminated against
retail pharmacy companies by not extending them such discounts. State
court actions are pending in California, Minnesota, Washington State and
<PAGE> 20.
Wisconsin; a further Alabama state court action has now been removed to
federal court.
The federal court has certified a class consisting of all persons
or entities who, since October 15, 1989, bought prescription brand name
drugs from any manufacturer or wholesaler defendant, but specifically
excluding government entities, mail order pharmacies, HMOs, hospitals,
clinics and nursing homes. The federal court had denied a motion for
certification made by a purported class of Alabama consumers (in a case
that was originally filed in state court, then removed to federal
court). In the state cases, other than the recently removed Alabama
case, motions for class certification are pending or anticipated.
The Company believes that these cases are without merit and is
vigorously defending them.
FDA administrative proceedings relating to Plax are pending,
principally an industry-wide call for data on all anti-plaque products
by the FDA. The call for data notice specified that products that have
been marketed for a material time and to a material extent may remain on
the market pending FDA review of the data, provided the manufacturer has
a good faith belief that the product is generally recognized as safe and
effective and is not misbranded. The Company believes that Plax
satisfied these requirements and prepared a response to the FDA's
request, which was filed on June 17, 1991. This filing, as well as the
filings of other manufacturers, is still under review and is currently
being considered by an FDA Advisory Committee.
A consolidated class action on behalf of persons who allegedly
purchased Pfizer common stock during the March 24, 1989 through February
26, 1990 period is pending in the United States District Court for the
Southern District of New York. This lawsuit, which commenced on July
13, 1990, alleges that the Company and certain officers and former
directors and officers violated federal securities law by failing to
disclose potential liability arising out of personal injury suits
involving Shiley heart valves and seeks damages in an unspecified
amount. The defendants in this action believe that the suit is without
merit and are vigorously defending it. A derivative action commenced on
April 2, 1990 against certain directors and officers and former
directors and officers alleging breaches of fiduciary duty and other
common law violations in connection with the manufacture and
distribution of Shiley heart valves is pending in the Superior Court,
Orange County, California. The complaint seeks, among other forms of
relief, damages in an unspecified amount. The defendants in the action
believe that the suit is without merit and are vigorously defending it.
On January 28, 1993, a purported class action entitled Kearse v.
Pfizer Inc. and Howmedica Inc. was commenced in the United States
District Court for the Northern District of Ohio. Howmedica Inc.
("Howmedica") is a wholly owned subsidiary of the Company. The action
sought monetary and injunctive relief, including medical monitoring, on
behalf of patients implanted with the Howmedica P.C.A. one-piece
acetabular hip component, which was manufactured by Howmedica from 1983
to 1990. The complaint alleged that the prostheses were defectively
designed and manufactured and posed undisclosed risks to implantees. On
August 3, 1993, a virtually identical purported class action,
Bradshaw/Davids v. Pfizer Inc. and Howmedica Inc., was brought and the
Kearse case was subsequently voluntarily dismissed. The federal
magistrate judge has recommended that the court deny the plaintiffs'
motion to certify the case as a class action. The Company believes that
the suit is without merit and is vigorously defending it.
During 1994, seven purported class actions were filed against
American Medical Systems ("AMS") in federal courts in South Carolina
(later transferred to Minnesota), California, Minnesota (2), Indiana,
Ohio and Louisiana. In January 1995, an additional purported class
action was filed in state court in Louisiana, replicating the federal
suit. The California and Indiana suits and one Minnesota suit also name
<PAGE> 21.
Pfizer Inc. as a defendant, based on its ownership of AMS. The suits
seek monetary and injunctive relief on the basis of allegations that
implantable penile prostheses are prone to unreasonably high rates of
mechanical failure and/or various autoimmune diseases as a result of
silicone materials. On September 30, 1994, the federal Judicial Panel
on Multidistrict Litigation denied the various plaintiffs' motions to
consolidate or coordinate the cases for pretrial proceedings. On
February 28, 1995, the Court in the Ohio suit conditionally granted
plaintiffs' motion for class certification and on March 3, 1995, the
Court in the California suit denied plaintiffs' motion for class
certification. A petition for mandamus to review the Ohio certification
is pending in the Sixth Circuit Court of Appeals. The Company believes
the suits are without merit and is vigorously defending them.
Item 6: Exhibits and Reports on Form 8-K
(a) Exhibits
1) Exhibit 3(i) - Restated Certificate of Incorporation
dated April 1995
2) Exhibit 11 - Computation of Earnings Per Common
Share
3) Exhibit 12 - Computation of Ratio of Earnings to
Fixed Charges
4) Exhibit 15 - Accountants' Acknowledgment
5) Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K
The following reports on Form 8-K were filed during the
first quarter ended April 2, 1995:
1) A report on Form 8-K related to the reporting of the
Company's fourth quarter and full year 1994 financial
results was filed on January 26, 1995.
2) A report on Form 8-K related to the acquisition of the
SmithKline Beecham animal health business was filed on
February 7, 1995 and amended on May 10, 1995.
3) A report on Form 8-K was filed on March 1, 1995. This
report was related to the announcement that the
Company's Board of Directors would vote on a two-for-
one split on April 27, 1995 and that at the Company's
annual meeting on that same date the shareholders
would vote on a proposal to increase the authorized
shares and to reduce the par value of Pfizer common
stock.
<PAGE> 22.
PFIZER INC. AND SUBSIDIARY COMPANIES
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 thereto duly authorized.
Pfizer Inc.
(Registrant)
Date: May 12, 1995
H. V. Ryan, Controller
(Principal Accounting Officer and
Duly Authorized Officer)
<PAGE> 23.
Exhibit 3(i)
RESTATED
CERTIFICATE OF INCORPORATION
OF
PFIZER INC.
Pfizer Inc., a corporation organized and existing under the laws
of the State of Delaware, HEREBY CERTIFIES AS FOLLOWS:
1. The name of the corporation is Pfizer Inc. The name under
which it was originally incorporated was Chas. Pfizer & Co., Inc. The
date of filing its original Certificate of Incorporation with the
Secretary of State was June 2, 1942.
2. This Restated Certificate of Incorporation was duly adopted in
accordance with Section 245 of the General Corporation Law of Delaware.
3. This Restated Certificate of Incorporation only restates and
integrates and does not further amend the provisions of the Certificate
of Incorporation as amended or supplemented heretofore and there is no
discrepancy between this Restated Certificate of Incorporation and the
text of the Certificate of Incorporation as amended or supplemented
heretofore.
4. The text of the Certificate of Incorporation as amended or
supplemented heretofore is hereby restated without further amendments or
changes to read as herein set forth in full:
FIRST: The name of the Corporation is and shall be Pfizer Inc.
(hereinafter in this Restated Certificate of Incorporation called the
"Corporation").
SECOND: The principal office and place of business of the Corporation
in the State of Delaware is located at 1209 Orange Street, in the City
of Wilmington, County of New Castle; and the name and post office
address of the registered agent of the Corporation in the State of
Delaware is The Corporation Trust Company, 1209 Orange Street, in the
City of Wilmington, County of New Castle, Delaware.
THIRD: The nature of the business, or objects or purposes to be
transacted, promoted or carried on are as follows:
To carry on the business of chemists, druggists, chemical
manufacturers, importers, exporters, manufacturers of and dealers in
chemical, pharmaceutical, medicinal, and other preparations and
chemicals.
To engage in, conduct, perform or participate in every kind of
commercial, agricultural, mercantile, manufacturing, mining,
transportation, industrial or other enterprise, business, work,
contract, undertaking, venture or operation.
To buy, sell, manufacture, refine, import, export and deal in all
products, goods, wares, merchandise, substances, apparatus, and property
of every kind, nature and description, and to construct, maintain, and
alter any buildings, works or mines.
To enter into, make and perform contracts of every kind with any
person, firm or corporation.
To take out patents, trade-marks, trade names and copyrights,
acquire those taken out by others, acquire or grant licenses in respect
of any of the foregoing, or work, transfer, or do whatever else with
them may be thought fit.
To acquire the good-will, property, rights, franchises, contracts
and assets of every kind and undertake the liabilities of any person,
firm, association or corporation, either wholly or in part, and pay for
<PAGE> 24.
the same in the stock, bonds or other obligations of the Corporation or
otherwise.
To purchase, hold, own, sell, assign, transfer, mortgage, pledge
or otherwise dispose of shares of the capital stock of any other
corporation or corporations, association or associations, of any state,
territory or country, and while owner of such stock, to exercise all the
rights, powers and privileges of ownership including the right to vote
thereon.
To issue bonds, debentures or obligations of the Corporation, at
the options of the Corporation, secure the same by mortgage, pledge,
deed of trust or otherwise, and dispose of and market the same.
To purchase, hold and re-issue the shares of its capital stock and
its bonds and other obligations.
To do all and everything necessary, suitable, convenient or proper
for the accomplishment of any of the purposes or the attainment of one
or more of the objects herein enumerated, or
of the powers herein named, or which shall at any time appear conducive
to or expedient for the protection, or benefit of the Corporation,
either as holder of, or interested in, any property or otherwise, to the
same extent as natural persons might or could do, in any part of the
world.
To conduct any of its business in the State of Delaware and
elsewhere, including in the term "elsewhere" any of the states,
districts, territories, colonies or dependencies of the United States,
and in any and all foreign countries and to have one or more offices,
and to hold, purchase, mortgage and convey real
and personal property, without limit as to amount, within or
(except as and when forbidden by local laws) without the State of
Delaware.
To carry on any other business to any extent and in any manner not
prohibited by the laws of Delaware or, where the Corporation may seek to
do such business elsewhere, by local laws.
The foregoing clauses shall be construed both as objects and
powers, but no recitation or declaration of specific or special objects
or powers herein enumerated shall be deemed to be exclusive; but in each
and every instance it is hereby expressly declared that all other
powers, not inconsistent therewith, now or hereafter permitted or
granted under the laws of Delaware, or by the laws of any other state or
country into which the Corporation may go or seek to do business, are
hereby expressly included as if such other or general powers were herein
set forth.
FOURTH:
A. Authorized Shares and Classes of Stock.
The total number of shares and classes of stock that the Company
shall have authority to issue is one billion five hundred twelve million
(1,512,000,000) shares, which shall be divided into two classes, as
follows: twelve million (12,000,000) shares of Preferred Stock, without
par value, and one billion five hundred million (1,500,000,000) shares
of Common Stock of the par value of $.05 per share.
B. Designations, Powers, Preferences and Rights,
in Respect of the Shares of Preferred Stock.
(1) Shares of the Preferred Stock may be issued in one or more
series at such time or times and for such consideration or
considerations as the Board of Directors may determine. All shares of
any one series shall be of equal rank and identical in all respects.
(2) Authority is hereby expressly granted to the Board of
Directors to fix from time to time, by resolution or resolutions
<PAGE> 25.
providing for the issue of any series of Preferred Stock, the
designation of such series, and the powers, preferences and rights of
the shares of such series, and the qualifications, limitations or
restrictions thereof, including the following:
(a) The distinctive designation and number of shares
comprising such series, which number may (except where otherwise
provided by the Board of Directors in creating such series) be
increased or decreased (but not below the number of shares then
outstanding) from time to time by like action of the Board of
Directors;
(b) The dividend rate or rates on the shares of such series
and the preferences, if any, over any other series (or of any
other series over such series) with respect to dividends, the
terms and conditions upon which and the periods in respect of
which dividends shall be payable, whether and upon what conditions
such dividends shall be cumulative and, if cumulative, the date or
dates from which dividends shall accumulate;
(c) Whether or not the shares of such series shall be
redeemable, the limitations and restrictions with respect to such
redemptions, the time or times when, the price or prices at which
and the manner in which such shares shall be redeemable, including
the manner of selecting shares of such series for redemption if
less than all shares are to be redeemed;
(d) The rights to which the holders of shares and such
series shall be entitled, and the preferences, if any, over any
other series (or of any other series over such series), upon the
voluntary or involuntary liquidation, dissolution, distribution of
assets or winding-up of the Corporation, which rights may vary
depending on whether such liquidation, dissolution, distribution
or winding-up is voluntary or involuntary, and, if voluntary, may
vary at different dates;
(e) Whether or not the shares of such series shall be
subject to the operation of a purchase, retirement or sinking
fund, and, if so, whether and upon what conditions such purchase,
retirement or sinking fund shall be cumulative or noncumulative,
the extent to which and the manner in which such fund shall be
applied to the purchase or redemption of the shares of such series
for retirement or to other corporate purposes and the terms and
provisions relative to the operation thereof;
(f) Whether or not the shares of such series shall be
convertible into or exchangeable for shares of stock of any other
class or classes, or any other series of the same class and, if so
convertible or exchangeable, the price or prices or the rate or
rates of conversion or exchange and the method, if any, of
adjusting the same, and any other terms and conditions of such
conversion or exchange;
(g) The voting powers, full and/or limited, if any, of the
shares of such series; and whether or not and under what
conditions the shares of such series (alone or together with the
shares of one or more other series having similar provisions)
shall be entitled to vote separately as a single class, for the
election of one or more additional directors of the Corporation in
case of dividend arrearages or other specified events, or upon
other matters;
(h) Whether or not the issuance of any additional shares of
such series, or of any shares of any other series, shall be
subject to restrictions as to issuance, or as to the powers,
preferences or rights of any such other series;
(i) Whether or not the holders of shares of such series
shall be entitled, as a matter of right, to subscribe for or
<PAGE> 26.
purchase any part of any new or additional issue of stock of any
class or of securities convertible into stock of any class and, if
so entitled, the qualifications, conditions, limitations and
restrictions of such right; and
(j) Any other preferences, privileges and powers, and
relative, participating, optional or other special rights, and
qualifications, limitations or restrictions of such series, as the
Board of Directors may deem advisable and as shall not be
inconsistent with the provisions of this Certificate of
Incorporation.
(3) The shares of each series of Preferred Stock shall entitle the
holders thereof to receive, when, as and if declared by the Board of
Directors out of funds legally available for dividends, cash dividends
at the rate, under the conditions, for the periods and on the dates
fixed by the resolution or resolutions of the Board of Directors
pursuant to authority granted in this Section B, for each series, and no
more, before any dividends on the Common Stock, other than dividends
payable in Common Stock, shall be paid or set apart for payment. No
dividends shall be paid or declared or set apart for payment on any
particular series of Preferred Stock in respect of any period unless
dividends shall be or have been paid, or declared and set apart for
payment, pro rata on all shares of Preferred Stock at the time
outstanding of each other series which ranks equally as to dividends
with such particular series, so that the amount of dividends declared on
such particular series shall bear the same ratio to the amount declared
on each such other series as the dividend rate of such particular series
shall bear to the dividend rate of such other series. No dividends
shall be deemed to have accrued on any share of Preferred Stock of any
series with respect to any period prior to the date of original issue of
such share or the dividend payment date immediately preceding or
following such date of original issue, as may be provided in the
resolution or resolutions creating such series. The Preferred Stock
shall not be entitled to participate in any dividends declared and paid
on the Common Stock, whether payable in cash, stock or otherwise.
Accruals of dividends shall not bear interest.
(4) Any redemption of Preferred Stock shall be effected by notice
duly given as hereinafter specified and by payment at the redemption
price of the Preferred Stock to be redeemed. In case of redemption of a
part only of a series of the Preferred Stock at the time outstanding,
the selection of shares for redemption may be made either by lot or pro
rata or in such other manner as shall be determined by the Board of
Directors. Notice of every such redemption, stating the redemption date
and price, the place of payment, and the expiration date of then
existing rights, if any, of conversion or exchange, shall be given by
publication, not less than 30 nor more than 60 days prior to the date
fixed for redemption, at least twice in a newspaper customarily
published at least once a day for at least five days in each calendar
week and of general circulation in New York, New York, whether or not
published on Saturdays, Sundays, or holidays. Notice of such redemption
may also be mailed not less than 30 nor more than 60 days prior to the
date fixed for redemption to the holders of record of the shares so to
be redeemed at their respective addresses as the same shall appear on
the books of the Corporation, but no failure to mail such notice or any
defect therein or in the mailing thereof shall affect the validity of
such redemption proceedings. If
(a) such notice of redemption by publication shall have been
duly given or the Corporation shall have given to a bank or trust
company in New York, New York designated by the Board of Directors
and having capital and surplus of at least Two Million Dollars
($2,000,000), irrevocable authorization promptly to give such
notice; and
(b) on or before the redemption date specified in such
notice the funds or other property necessary for such redemption
shall have been deposited by the Corporation with such bank or
<PAGE> 27.
trust company, designated in such notice, in trust for the pro
rata benefit of the holders of the shares so called for
redemption, then, notwithstanding that any certificate for shares
so called for redemption shall not have been surrendered for
cancellation, from and after the time of such deposit all shares
of the Preferred Stock so called for redemption shall no longer be
deemed to be outstanding and all rights with respect to such
shares shall forthwith cease and terminate, except only
(i) the right of the holders thereof to receive from
such bank or trust company the funds or other property so
deposited, without interest, upon surrender (and
endorsement, if required by the Board of Directors) of the
certificates for such shares, and
(ii) the rights of conversion or exchange, if any, not
theretofore expired.
Any funds or other property so deposited and unclaimed at
the end of six years from such redemption date shall be released
or repaid to the Corporation, after which the holders of the
shares so called for redemption shall look only to the Corporation
for payment thereof.
(5) Shares of Preferred Stock which have been redeemed or
converted, or which have been issued and reacquired in any manner and
retired, shall have the status of authorized and unissued Preferred
Stock and may be reissued by the Board of Directors as shares of the
same or any other series.
(6) In the event of any voluntary or involuntary liquidation,
dissolution, distribution of assets or winding-up of the Corporation,
the holders of the shares of each series of Preferred Stock then
outstanding shall be entitled to receive out of the net assets of the
Corporation, but only in accordance with the preference, if any,
provided for such series, before any distribution or payment shall be
made to the holders of the Common Stock, the amount per share fixed by
the resolution or resolutions of the Board of Directors to be received
by the holders of shares of each such series on such voluntary or
involuntary liquidation, dissolution, distribution of assets or
winding-up, as the case may be. If such payment shall have been made in
full, to the holders of all outstanding Preferred Stock of all series,
or duly provided for, the remaining assets of the Corporation shall be
available for distribution among the holders of the Common Stock. If
upon any such liquidation, dissolution, distribution, of assets or
winding-up, the net assets of the Corporation available for distribution
among the holders of any one or more series of the Preferred Stock which
(a) are entitled to a preference over the holders of the Common Stock
upon such liquidation, dissolution, distribution of assets or
winding-up, and (b) rank equally in connection therewith, shall be
insufficient to make payment in full of the preferential amount to which
the holders of such shares shall be entitled, then such assets shall be
distributed among the holders of each such series of the Preferred Stock
ratably according to the respective amounts to which they would be
entitled in respect of the shares held by them upon such distribution if
all amounts payable on or with respect to such shares were paid in full.
Neither the consolidation or merger of the Corporation, nor the sale,
lease or conveyance of all or part of its assets, shall be deemed a
liquidation, dissolution, distribution of assets or winding-up of the
Corporation within the meaning of the foregoing provisions.
(7) Unless and except to the extent otherwise required by law or
provided in the resolution or resolutions of the Board of Directors
pursuant to this Section B, the shares of Preferred Stock shall have no
voting power with respect to any matter whatsoever, including, but not
limited to, any action to
<PAGE> 28.
(a) increase the authorized number of shares of the
Preferred Stock or of any series thereof,
(b) create shares of stock of any class ranking prior to or
on a parity with any series of the Preferred Stock with respect to
any preferences or voting powers, and
(c) authorize a new series of the Preferred Stock having
preferences or voting powers ranking prior to or on a parity with
any series of the Preferred Stock with respect to any preferences
or voting powers.
In no event shall the Preferred Stock be entitled to more than one vote
in respect of each share of stock.
C. Limitations, Relative Rights and Powers
in Respect of Shares of Common Stock.
(l) After the requirements with respect to preferential dividends,
if any, on the Preferred Stock (fixed pursuant to Section B) shall have
been met and after the Corporation shall have complied with all the
requirements, if any, with respect to the setting aside of sums as
purchase, retirement or sinking funds (fixed pursuant to Section B),
then and not otherwise the holders of Common Stock shall be entitled to
receive such dividends as may be declared from time to time by the Board
of Directors.
(2) After distribution in full of the preferential amount, if any,
(fixed pursuant to Section B) to be distributed to the holders of
Preferred Stock in the event of the voluntary or involuntary
liquidation, dissolution, distribution of assets or winding-up of the
Corporation, the holders of the Common Stock shall be entitled to
receive all the remaining assets of the Corporation of whatever kind
available for the distribution to stockholders ratably in proportion to
the number of shares of Common Stock held by them respectively.
(3) Except as may be otherwise required by law or by this
Certificate of Incorporation, each holder of Common Stock shall have one
vote in respect of each share of stock held by him on all matters voted
upon by the stockholders.
D. Other Provisions.
(l) Except as may be provided in the resolution or resolutions of
the Board of Directors pursuant to Section B with respect to any series
of Preferred Stock, no holder of stock of
any class of the Corporation shall be entitled as of right to purchase
or subscribe for any part of any unissued stock of any class, or of any
additional stock of any class of Capital Stock of the Corporation, or to
any bonds, certificates of indebtedness, debentures, or other securities
convertible into stock of the Corporation, now or hereafter authorized,
but any such stock or other securities convertible into stock may be
issued and disposed of pursuant to resolution by the Board of Directors
to such persons, firms, corporations or associations and upon such terms
and for such consideration as the Board of Directors in the exercise of
its discretion may determine and as may be permitted by law. Any and
all shares of stock so issued for which the consideration so fixed has
been paid or delivered to the Corporation shall be fully paid and not
liable to any further call.
(2) In no case shall fractions of shares of any class of stock be
issued by the Corporation, but in lieu thereof the Corporation shall, at
its option, make a cash adjustment or issue fractional Scrip
Certificates, in such form and in such denominations as shall from time
to time be determined by the Board of Directors. Such Scrip
Certificates shall be exchangeable on or before such date or dates as
the Board of Directors may determine, when surrendered with other
<PAGE> 29.
similar Scrip Certificates in sufficient aggregate amounts, for
certificates for fully paid and non-assessable full shares of the
respective stocks for which such Scrip Certificates are exchangeable,
and new Scrip Certificates of a like tenor for the remaining fraction of
a share, if any. Such Scrip Certificates shall not entitle any holder
thereof to voting rights, dividend rights or any other rights of a
stockholder or any rights other than the rights therein set forth, and
no dividend or interest shall be payable or shall accrue with respect to
Scrip Certificates or the interests represented thereby. All such Scrip
Certificates which are not surrendered in exchange for shares of stock
on or before their respective expiration dates shall thereafter be void
and of no effect whatever.
(3) The minimum amount of capital with which the Corporation will
commence business is $1,000.
SERIES A JUNIOR PREFERRED STOCK
Pursuant to authority conferred by this Article FOURTH upon the
Board of Directors of the Corporation, the Board of Directors, pursuant
to the Amended and Restated Certificate of Designations filed in the
Office of the Secretary of State of the State of Delaware on June 22,
1989, has provided for a series of Preferred Stock of the Corporation
and has stated the designation and number shares, and has fixed the
relative rights, preferences, and limitations thereof as follows:
Series A Preferred Stock:
"RESOLVED, the designation and amount of a series of
Preferred Stock of the Company previously designated as "Series A
Junior Participating Preferred Stock," and the voting powers,
preferences and relative, participating, optional or other special
rights of the shares of such series, and the qualifications,
limitations or restrictions thereof, are hereby amended and
restated to read in their entirety as follows:
Section 1. Designation and Amount. The shares of such series
shall be designated as "Series A Junior Preferred Stock" (the "Series A
Preferred Stock") and the number of shares constituting such series
shall be 1,900,000.
Section 2. Dividends and Distributions.
A. Subject to the provisions for adjustment hereinafter set
forth, the holders of shares of Series A Preferred Stock shall be
entitled to receive, when, as and if declared by the Board of Directors
out of funds legally available for the purpose, (i) in the event the
Board of Directors of the Company shall, at any time after the issuance
of any share of Series A Preferred Stock, declare a cash dividend
payable on the Common Stock, $.05 par value per share, of the Company
(the "Common Stock"), a preferential cash dividend in an amount per
share (rounded to the nearest cent) equal to 100 times the per share
amount of such cash dividend declared on a share of the Common Stock and
(ii) a preferential cash dividend (the "Preferential Dividends"), if
any, on the first day of January, April, July and October of each year
(each a "Quarterly Dividend Payment Date"), commencing on the first
Quarterly Dividend Payment Date after the first issuance of a share or
fraction of a share of Series A Preferred Stock, in an amount equal to
$10 per share of Series A Preferred Stock less the per share amount of
all cash dividends declared on the Series A Preferred Stock pursuant to
clause (i) of this sentence since the immediately preceding Quarterly
Dividend Payment Date or, with respect to the first Quarterly Dividend
Payment Date, since the first issuance of any share of Series A
Preferred Stock. In the event the Board of Directors of the Company
shall, at any time after the issuance of any share of Series A Preferred
Stock, declare a distribution on the shares of Common Stock of the
Company, whether by way of a dividend or a reclassification of stock, a
recapitalization, reorganization or partial liquidation of the Company
or otherwise, which is payable in cash or any debt security, debt
<PAGE> 30.
instrument, real or personal property or any other property (other than
cash dividends subject to the immediately preceding sentence, a
distribution of shares of Common Stock or other capital stock of the
Company or a distribution of rights or warrants to acquire any such
share, including any debt security convertible into or exchangeable for
any such share, at a price less than the Fair Market Value of such
share), then and in each such event each holder of Series A Preferred
Stock shall be entitled to receive, when, as and if declared by the
Board of Directors, out of funds legally available for the purpose, a
preferential distribution on each then outstanding share of Series A
Preferred Stock of the Company, in like kind, in an amount equal to 100
times the amount of such distribution paid on a share of Common Stock
(subject to the provisions for adjustment hereinafter set forth). The
dividends and distributions on the Series A Preferred Stock to which
holders thereof are entitled pursuant to clause (i) of the first
sentence of this paragraph and pursuant to the second sentence of this
paragraph are hereinafter referred to as "Series A Dividends" and the
multiple of such cash and non-cash dividends on the Common Stock
applicable to the determination of the Series A Dividends, which shall
be 100 initially but shall be adjusted from time to time as hereinafter
provided, is hereinafter referred to as the "Dividend Multiple". In the
event the Company shall at any time after October 5, 1987 declare or pay
any dividend or make any distribution on Common Stock payable in shares
of Common Stock, or effect a subdivision or split or a combination,
consolidation or reverse split of the outstanding shares of Common Stock
into a greater or lesser number of shares of Common Stock, then in each
such case the Dividend Multiple thereafter applicable to the
determination of the amount of the Series A Dividends which holders of
shares of Series A Preferred Stock shall be entitled to receive shall be
the Dividend Multiple applicable immediately prior to such event
multiplied by a fraction the numerator of which is the number of shares
of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) So long as any shares of Series A Preferred Stock are
outstanding, no dividend or other distribution (other than a dividend or
distribution paid in shares of Common Stock) shall be paid or set apart
for payment by the Company on the Common Stock, unless, in each case,
the full dividends on all outstanding shares of Series A Preferred Stock
to which the holders thereof are entitled shall have been paid. No
dividends shall be paid or declared or set apart for payment on the
Series A Preferred Stock in respect of any period unless dividends shall
be or have been paid, or declared and set apart for payment, pro rata on
all shares of Preferred Stock at the time outstanding of each other
series which ranks equally as to dividends with the Series A Preferred
Stock so that the amount of dividends declared on the Series A Preferred
Stock shall bear the same ratio to the amount declared on each such
other series as the accrued dividends on the Series A Preferred Stock
shall bear to the accrued dividends on each such other series. Holders
of shares of Series A Preferred Stock shall not be entitled to any
dividend, whether payable in cash, property or stock, in excess of full
dividends, as herein provided, on shares of Series A Preferred Stock.
Accruals of dividends shall not bear interest.
C. Preferential Dividends shall begin to accrue on outstanding
shares of Series A Preferred Stock from the Quarterly Dividend Payment
Date next preceding the date of issuance of any shares of Series A
Preferred Stock. Accrued but unpaid Preferential Dividends shall
cumulate but shall not bear interest. Preferential Dividends paid on
the shares of Series A Preferred Stock in an amount less than the total
amount of such dividends at the time accrued and payable on such shares
shall be allocated pro rata on a share-by-share basis among all such
shares at the time outstanding.
Section 3. Voting Rights. The holders of shares of Series A
Preferred Stock shall have the following voting rights:
(A) Each share of Series A Preferred Stock shall entitle the
<PAGE> 31.
holder thereof to 1 vote on all matters submitted to a vote of the
stockholders of the Company. Except as otherwise provided herein, in
the Restated Certificate of Incorporation or by law, the holders of
shares of Series A Preferred Stock and the holders of shares of Common
Stock shall vote together as one class on all matters submitted to a
vote of stockholders of the Company.
(B) In the event that the Preferential Dividends accrued on the
Series A Preferred Stock for four or more quarterly dividend periods,
whether consecutive or not, shall not have been declared and paid or set
apart for payment, the holders of record of the Series A Preferred
Stock, together with any other series of Preferred Stock in respect of
which the following right is expressly granted by the authorizing
resolutions included in the Certificate of Designations therefor, shall
have the right, at the next meeting of stockholders called for the
election of directors, to elect two members to the Board of Directors,
which directors shall be in addition to the number required by the
By-laws prior to such event, to serve until the next Annual Meeting and
until their successors are elected and qualified or their earlier
resignation, removal or incapacity or until such earlier time as all
accrued and unpaid Preferential Dividends upon the outstanding shares of
Series A Preferred Stock shall have been paid (or set aside for payment)
in full. The holders of shares of Series A Preferred Stock shall
continue to have the right to elect directors as provided by the
immediately preceding sentence until all accrued and unpaid Preferential
Dividends upon the outstanding shares of Series A Preferred Stock shall
have been paid (or set aside for payment) in full. Such directors may
be removed and replaced by such stockholders, and vacancies in such
directorships may be filled only by such stockholders (or by the
remaining director elected by such stockholders, if there be one) in the
manner permitted by law; provided, however, that any such action by
stockholders shall be taken at a meeting of stockholders and shall not
be taken by written consent thereto.
(C) Except as otherwise required by the Restated Certificate of
Incorporation or by law or set forth herein, holders of Series A
Preferred Stock shall have no special voting rights and their consent
shall not be required (except to the extent they are entitled to vote
with holders of Common Stock as set forth herein) for the taking of any
corporate action.
Section 4. Certain Restrictions.
(A) Whenever Preferential Dividends or the Series A Dividends
are in arrears or the Company shall be in default of payment thereof,
thereafter and until all accrued and unpaid Preferential Dividends and
the Series A Dividends, whether or not declared, on shares of Series A
Preferred Stock outstanding shall have been paid or set aside for
payment in full, and in addition to any and all other rights which any
holder of shares of Series A Preferred Stock may have in such
circumstances, the Company shall not
(i) declare or pay dividends on, make any other distribu-
tions on (other than a dividend or distribution paid in shares of
Common Stock), or redeem or purchase or otherwise acquire for
consideration, any shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the
Series A Preferred Stock;
(ii) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity as to
dividends with the Series A Preferred Stock, unless dividends are
paid ratably on the Series A Preferred Stock and all such parity
stock on which dividends are payable or in arrears in proportion
to the total amounts to which the holders of all such shares are
then entitled if the full dividends accrued thereon were to be
paid;
(iii) except as permitted by subparagraph (iv) of this
<PAGE> 32.
paragraph 4(A), redeem or purchase or otherwise acquire for
consideration shares of any stock ranking on a parity (either as
to dividends or upon liquidation, dissolution or winding up) with
the Series A Preferred Stock, provided that the Company may at any
time redeem, purchase or otherwise acquire shares of any such
parity stock in exchange for shares of any stock of the Company
ranking junior (both as to dividends and upon liquidation,
dissolution or winding up) to the Series A Preferred Stock: or
(iv) purchase or otherwise acquire for consideration any
shares of Series A Preferred Stock, or any shares of stock ranking
on a parity with the Series A Preferred Stock (either as to
dividends or upon liquidation, dissolution or winding up), except
in accordance with a purchase offer made to all holders of such
shares upon such terms as the Board of Directors, after consid-
eration of the respective annual dividend rates and other relative
rights and preferences of the respective series and classes, shall
determine in good faith will result in fair and equitable
treatment among the respective series or classes.
(B) The Company shall not permit any Subsidiary (as hereinafter
defined) of the Company to purchase or otherwise acquire for
consideration any shares of stock of the Company unless the Company
could, under paragraph (A) of this Section 4, purchase or otherwise
acquire such shares at such time and in such manner. A "Subsidiary" of
the Company shall mean any corporation or other entity of which
securities or other ownership interests having ordinary voting power
sufficient to elect a majority of the board of directors or other
persons performing similar functions are beneficially owned, directly or
indirectly, by the Company or by any corporation or other entity that is
otherwise controlled by the Company.
(C) The Company shall not issue any shares of Series A Preferred
Stock except upon exercise of Rights issued pursuant to that certain
Rights Agreement, dated as of September 24, 1987, as amended by First
Amendment to Rights Agreement, dated as of
May 25, 1989, between the Company and The Chase Manhattan Bank, N.A., a
copy of which is on file with the Secretary of the Company at its
principal executive office and shall be made available to stockholders
of record without charge upon written request therefor addressed to said
Secretary. Notwithstanding the foregoing sentence, nothing contained in
the provisions hereof shall prohibit or restrict the Company from
issuing for any purpose any series of Preferred Stock with rights and
privileges similar to, different from, or greater than, those of the
Series A Preferred Stock.
Section 5. Reacquired Shares. Any shares of Series A Preferred
Stock purchased or otherwise acquired by the Company in any manner
whatsoever shall be retired and cancelled promptly after the acquisition
thereof. All such shares upon their retirement and cancellation shall
become authorized but unissued shares of Preferred Stock, without
designation as to series, and such shares may be reissued as part of a
new series of Preferred Stock to be created by resolution or resolutions
of the Board of Directors.
Section 6. Liquidation, Dissolution or Winding Up. Upon any
voluntary or involuntary liquidation, dissolution or winding up of the
Company, no distribution shall be made (i) to the holders of shares of
stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Preferred Stock unless the
holders of shares of Series A Preferred Stock shall have received,
subject to adjustment as hereinafter provided, (A) $300 per
one-hundredth share plus an amount equal to accrued and unpaid dividends
and distributions thereon, whether or not declared, to the date of such
payment, or (B) if greater than the amount specified in clause (i)(A) of
this sentence, an amount equal to 100 times the aggregate amount to be
distributed per share to holders of Common Stock, as the same may be
adjusted as hereinafter provided, and (ii) to the holders of stock
ranking on a parity upon liquidation, dissolution or winding up
with the
<PAGE> 33
Series A Preferred Stock, unless simultaneously therewith distributions
are made ratably on the Series A Preferred Stock and all other shares of
such parity stock in proportion to the total amounts to which the
holders of shares of Series A Preferred Stock are entitled under clause
(i)(A) of this sentence and to which the holders of such parity shares
are entitled, in each case upon such liquidation, dissolution or winding
up. The amount to which holders of Series A Preferred Stock may be
entitled upon liquidation, dissolution or winding up of the Company
pursuant to clause (i)(B) of the foregoing sentence is hereinafter
referred to as the "Participating Liquidation Amount" and the multiple
of the amount to be distributed to holders of shares of Common Stock
upon the liquidation, dissolution or winding up of the Company
applicable pursuant to said clause to the determination of the
Participating Liquidation Amount, as said multiple may be adjusted from
time to time as hereinafter provided, is hereinafter referred to as the
"Liquidation Multiple". In the event the Company shall at any time
after October 5, 1987 declare or pay any dividend on Common Stock
payable in shares of Common Stock, or effect a subdivision or split or a
combination, consolidation or reverse split of the outstanding shares of
Common Stock into a greater or lesser number of shares of Common Stock,
then in each such case the Liquidation Multiple thereafter applicable to
the determination of the Participating Liquidation Amount to which
holders of Series A Preferred Stock shall be entitled after such event
shall be the Liquidation Multiple applicable immediately prior to such
event multiplied by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 7. Certain Reclassifications and Other Events.
(A) In the event that holders of shares of Common Stock of the
Company receive after October 5, 1987 in respect of their shares of
Common Stock any share of capital stock of the Company (other than any
share of Common Stock of the Company), whether by way of
reclassification, recapitalization, reorganization, dividend or other
distribution or otherwise (a "Transaction"), then and in each such event
the dividend rights and rights upon the liquidation, dissolution or
winding up of the Company of the shares of Series A Preferred Stock
shall be adjusted so that after such event the holders of Series A
Preferred Stock shall be entitled, in respect of each share of Series A
Preferred Stock held, in addition to such rights in respect thereof to
which such holder was entitled immediately prior to such adjustment, to
(i) such additional dividends as equal the Dividend Multiple in effect
immediately prior to such Transaction multiplied by the additional
dividends which the holder of a share of Common Stock shall be entitled
to receive by virtue of the receipt in the Transaction of such capital
stock and (ii) such additional distributions upon liquidation,
dissolution or winding up of the Company as equal the Liquidation
Multiple in effect immediately prior to such Transaction multiplied by
the additional amount which the holder of a share of Common Stock shall
be entitled to receive upon liquidation, dissolution or winding up of
the Company by virtue of the receipt in the Transaction of such capital
stock, as the case may be, all as provided by the terms of such capital
stock.
(B) In the event that holders of shares of Common Stock of the
Company receive after October 5, 1987 in respect of their shares of
Common Stock any right or warrant to purchase Common Stock (including as
such a right, for all purposes of this paragraph, any security
convertible into or exchangeable for Common Stock) at a purchase price
per share less than the Fair Market Value (as hereinafter defined) of a
share of Common Stock on the date of issuance of such right or warrant,
then and in each such event the dividend rights and rights upon the
liquidation, dissolution or winding up of the Company of the shares of
Series A Preferred Stock shall each be adjusted so that after such event
the Dividend Multiple and the Liquidation Multiple shall each be the
product of the Dividend Multiple and the Liquidation Multiple, as the
case may be, in effect immediately prior to such event multiplied by a
<PAGE> 34.
fraction the numerator of which shall be the number of shares of Common
Stock outstanding immediately before such issuance of rights or warrants
plus the maximum number of shares of Common Stock which could be
acquired upon exercise in full of all such rights or warrants and the
denominator of which shall be the number of shares of Common Stock
outstanding immediately before such issuance of rights or warrants plus
the number of shares of Common Stock which could be purchased, at the
Fair Market Value of the Common Stock at the time of such issuance, by
the maximum aggregate consideration payable upon exercise in full of all
such rights or warrants.
(C) In the event that holders of shares of Common Stock of the
Company receive after October 5, 1987 in respect of their shares of
Common Stock any right or warrant to purchase capital stock of the
Company (other than shares of Common Stock), including as such a right,
for all purposes of this paragraph, any security convertible into or
exchangeable for capital stock of the Company (other than Common Stock),
at a purchase price per share less than the Fair Market Value of such
shares of capital stock on the date of issuance of such right or
warrant, then and in each such event the dividend rights and rights upon
liquidation, dissolution or winding up of the Company of the shares of
Series A Preferred Stock shall each be adjusted so that after such event
each holder of a share of Series A Preferred Stock shall be entitled, in
respect of each share of Series A Preferred Stock held, in addition to
such rights in respect thereof to which such holder was entitled
immediately prior to such event, to receive (i) such additional
dividends as equal the Dividend Multiple in effect immediately prior to
such event multiplied, first, by the additional dividends to which the
holder of a share of Common Stock shall be entitled upon exercise of
such right or warrant by virtue of the capital stock which could be
acquired upon such exercise and multiplied again by the Discount
Fraction (as hereinafter defined) and (ii) such additional distributions
upon liquidation, dissolution or winding up of the Company as equal the
Liquidation Multiple in effect immediately prior to such event
multiplied, first, by the additional amount which the holder of a share
of Common Stock shall be entitled to receive upon liquidation,
dissolution or winding up of the Company upon exercise of such right or
warrant by virtue of the capital stock which could be acquired upon such
exercise and multiplied again by the Discount Fraction. For purposes of
this paragraph, the "Discount Fraction" shall be a fraction the
numerator of which shall be the difference between the Fair Market Value
of a share of the capital stock subject to a right or warrant
distributed to holders of shares of Common Stock of the Company as
contemplated by this paragraph immediately after the distribution
thereof and the purchase price per share for such share of capital stock
pursuant to such right or warrant and the denominator of which shall be
the Fair Market Value of a share of such capital stock immediately after
the distribution of such right or warrant.
(D) For purposes of this Section 7, the "Fair Market Value" of a
share of capital stock of the Company (including a share of Common
Stock) on any date shall be deemed to be the average of the daily
closing price per share thereof over the 30 consecutive Trading Days (as
such term is hereinafter defined) immediately prior to such date;
provided, however, that, in the event that such Fair Market Value of any
such share of capital stock is determined during a period which includes
any date that is within 30 Trading Days after (i) the ex-dividend date
for a dividend or distribution on stock payable in shares of such stock
or securities convertible into shares of such stock, or (ii) the
effective date of any subdivision, split, combination, consolidation,
reverse stock split or reclassification of such stock, then, and in each
such case, the Fair Market Value shall be appropriately adjusted by the
Board of Directors of the Company to take into account ex-dividend or
post-effective date trading. The closing price for any day shall be the
last sale price, regular way, or, in case, no such sale takes place on
such day, the average of the closing bid and asked prices, regular way
(in either case, as reported in the applicable transaction reporting
system with respect to securities listed or admitted to trading on the
New York Stock Exchange), or, if the shares are not listed or admitted
<PAGE> 35.
to trading on the New York Stock Exchange, as reported in the applicable
transaction reporting system with respect to securities listed on the
principal national securities exchange on which the shares are listed or
admitted to trading or, if the shares are not listed or admitted to
trading on any national securities exchange, the last quoted price or,
if not so quoted, the average of the high bid and low asked prices in
the over-the-counter market, as reported by the National Association of
Securities Dealers, Inc. Automated Quotation System ("NASDAQ") or such
other system then in use, or if on any such date the shares are not
quoted by any such organization, the average of the closing bid and
asked prices as furnished by a professional market maker making a market
in the shares selected by the Board of Directors of the Company. The
term "Trading Day" shall mean a day on which the principal national
securities exchange on which the shares are listed or admitted to
trading is open for the transaction of business or, if the shares are
not listed or admitted to trading on any national securities exchange,
on which the New York Stock Exchange or such other national securities
exchange as may be selected by the Board of Directors of the Company is
open. If the shares are not publicly held or not so listed or traded on
any day within the period of 30 Trading Days applicable to the
determination of Fair Market Value thereof as aforesaid, "Fair Market
Value" shall mean the fair market value thereof per share as determined
in good faith by the Board of Directors of the Company. In either case
referred to in the foregoing sentence, the determination of Fair Market
Value shall be described in a statement filed with the Secretary of the
Company.
Section 8. Consolidation, Merger, etc. In case the Company shall
enter into any consolidation, merger, combination or other transaction
in which the shares of Common Stock are exchanged for or changed into
other stock or securities, cash and/or any other property, then in any
such case each outstanding share of Series A Preferred Stock shall at
the same time be similarly exchanged for or changed into the aggregate
amount of stock, securities, cash and/or other property (payable in like
kind), as the case may be, for which or into which each share of Common
Stock is changed or exchanged multiplied by the higher of the Dividend
Multiple or the Liquidation Multiple in effect immediately prior to such
event.
Section 9. Effective Time of Adjustments.
(A) Adjustments to the Series A Preferred Stock required by the
provisions hereof shall be effective as of the time at which the event
requiring such adjustments occurs.
(B) The Company shall give prompt written notice to each holder
of a share of Series A Preferred Stock of the effect of any adjustment
to the dividend rights or rights upon liquidation, dissolution or
winding up of the Company of such shares required by the provisions
hereof. Notwithstanding the foregoing sentence, the failure of the
Company to give such notice shall not affect the validity of or the
force or effect of or the requirement for such adjustment.
Section 10. No Redemption. The shares of Series A Preferred
Stock shall not be redeemable at the option of the Company or any holder
thereof. Notwithstanding the foregoing sentence of this Section, the
Company may acquire shares of Series A Preferred Stock in any other
manner permitted by law, the provisions hereof and the Restated
Certificate of Incorporation of the Company.
Section 11. Ranking. Unless otherwise provided in the Restated
Certificate of Incorporation of the Company or a Certificate of
Designations relating to a subsequent series of preferred stock of the
Company, the Series A Preferred Stock shall rank junior to all other
series of the Company's Preferred Stock as to the payment of dividends
and the distribution of assets on liquidation, dissolution or winding up
and senior to the Common Stock.
Section 12. Amendment. The provisions hereof and the Restated
Certificate of Incorporation of the Company shall not be amended in any
<PAGE> 36.
manner which would adversely affect the rights, privileges or powers of
the Series A Preferred Stock without, in addition to any other vote of
stockholders required by law, the affirmative vote of the holders to
two-thirds or more of the outstanding shares of Series A Preferred
Stock, voting together as a single class."
FIFTH: The private property of the stockholders shall not be subject
to the payment of corporate debts to any extent whatever.
SIXTH: The Corporation shall have perpetual existence.
SEVENTH: The following provisions are inserted for the management of
the business and for the conduct of the affairs of the Corporation, and
it is expressly provided that the same are intended to be in furtherance
and not in limitation or exclusion of the powers conferred by statute:
(1) The number of directors of the Corporation (exclusive of
directors (the "Preferred Stock Directors") who may be elected by the
holders of any one or more series of Preferred Stock which may at any
time be outstanding, voting separately as a class or classes) shall not
be less than ten nor more than eighteen, the exact number within said
limits to be fixed from time to time solely by resolution of the Board
of Directors, acting by not less than a majority of the directors then
in office.
(2) The Board of Directors (exclusive of Preferred Stock
Directors) shall be divided into three classes, with the term of office
of one class expiring each year. At the annual meeting of shareholders
in 1985, five directors of the first class shall be elected to hold
office for a term expiring at the annual meeting of shareholders in
1986, six directors of the second class shall be elected to hold office
for a term expiring at the annual meeting of shareholders in 1987 and
six directors of the third class shall be elected to hold office for a
term expiring at the annual meeting of shareholders in 1988. Commencing
with the annual meeting of shareholders in 1986, directors of each class
the term of which shall then expire shall be elected to hold office for
a three-year term and until the election and qualification of their
respective successors in office. In case of any increase in the number
of directors (other than Preferred Stock Directors), the number of
directors in each class shall be as nearly equal as possible. Election
of directors need not be by ballot unless the By-laws so provide.
(3) Subject to the rights of the holders of any one or more series
of Preferred Stock then outstanding, newly created directorships
resulting from any increase in the authorized number of directors or any
vacancies in the Board of Directors resulting from death, resignation,
retirement, disqualification, removal from office or other cause shall
be filled solely by the Board of Directors, acting by not less than a
majority of the Directors then in office. Any director so chosen shall
hold office until the next election of the class for which such
directors shall have been chosen and until his successor shall be
elected and qualified. No decrease in the number of directors shall
shorten the term of any incumbent director.
(4) Subject to the rights of the holders of any one or more series
of Preferred Stock then outstanding, any director, or the entire Board
of Directors, may be removed from office at any time, but only for cause
and only by the affirmative vote of at least 80% of all of the
outstanding shares of capital stock of the Corporation as are entitled
to vote generally in the election of directors ("Voting Stock"), voting
together as a single class.
(5) The By-laws may prescribe the number of directors necessary to
constitute a quorum and such number may be less than a majority of the
total number of directors, but shall not be less than one-third of the
total number of directors.
<PAGE> 37.
(6) Both shareholders and directors shall have power, if the
By-laws of the Corporation so provide, to hold their meetings either
within or without the State of Delaware, to have one or more offices in
addition to the principal office in the State of Delaware, and to keep
the books of the Corporation (subject to the provisions of the statutes)
outside of the State of Delaware at such places as may from time to time
be designated by them.
(7) The Board of Directors shall have power to determine from time
to time whether and if allowed under what conditions and regulations the
accounts, and except as otherwise provided by statute or by this
Certificate of Incorporation, the books of the Corporation shall be open
to the inspection of the shareholders, and the shareholders' rights in
this respect are and shall be restricted or limited accordingly, and no
shareholder shall have any right to inspect any account or book or
document of the Corporation except as conferred by statute or by this
Certificate of Incorporation, or authorized by the Board of Directors or
by a resolution of the shareholders.
(8) The Board of Directors shall have the power to adopt, amend or
repeal the By-laws of the Corporation.
(9) The Board of Directors acting by a majority of the whole board
shall have power to appoint three or more of their number to constitute
an Executive Committee, which Committee shall, when the Board of
Directors is not in session and subject to the By-laws, have and
exercise any or all of the powers of the Board of Directors in the
management of the business and affairs of the Corporation and shall have
power to authorize the seal of the Corporation to be affixed to all
papers which may require it. The Board of Directors acting by a
majority of the whole board shall also have power to appoint any other
committee or committees, such committees to have and exercise such
powers as shall be conferred by the Board of Directors or be authorized
by the By-laws.
(10) Except as may be otherwise provided by statute or in this
Certificate of Incorporation, the business and affairs of this
Corporation shall be managed under the direction of the Board of
Directors.
(11) Directors, for their services as such, may be paid such
compensation as may be fixed from time to time by the Board of
Directors.
(12) The Board of Directors shall have power from time to time to
fix and determine and vary the amount of the working capital of the
Corporation and, subject to any restrictions contained in the
Certificate of Incorporation, to direct and determine the use and
disposition of any surplus over and above the capital stock paid in, and
in its discretion to use and apply any such surplus in purchasing or
acquiring property, bonds or other obligations of the Corporation or
shares of its own capital stock, to such extent and in such manner and
upon such terms as the Board of Directors shall deem expedient, but any
shares of such capital stock so purchased or acquired may be resold
unless such shares shall have been retired in the manner provided by law
for the purpose of decreasing the Corporation's capital stock.
(13) Notwithstanding any other provision of law which might
otherwise permit a lesser vote or no vote, but in addition to any
affirmative vote of the holders of any particular class of Voting Stock
required by law or this Certificate of Incorporation, the affirmative
vote of the holders of at least 80% of all of the then outstanding
shares of Voting Stock, voting together as a single class, shall be
required to alter, amend or repeal paragraphs (1), (2), (3), (4), (5),
(8), (10) or this paragraph (13) of this Article SEVENTH.
(14) The liability of the Corporation's Directors to the
Corporation or its shareholders shall be eliminated to the fullest
extent permitted by the Delaware General Corporation Law as amended from
<PAGE> 38.
time to time. No amendment to or repeal of this paragraph (14) of
Article SEVENTH shall apply to or have any effect on the liability or
alleged liability of any director of the Corporation for or with respect
to any acts or omissions of such director occurring prior to such
amendment or repeal.
Notwithstanding any other provision of law which might otherwise
permit a lesser vote or no vote, but in addition to any affirmative vote
of the holders of any particular class of Voting Stock required by law
or this Certificate of Incorporation, the affirmative vote of the
holders of at least 80% of all of the then outstanding shares of Voting
Stock, voting together as a single class, shall be required to alter,
amend or repeal this paragraph (14) of this Article SEVENTH.
(15) Any action required or permitted to be taken by the
shareholders of the Corporation must be effected solely at a duly called
annual or special meeting of such holders and may not be effected by any
consent in writing by such holders.
EIGHTH:
A. Applicability of Article.
Except as otherwise expressly provided in Section C of this
Article EIGHTH, none of the actions or transactions listed below shall
be effected by the Corporation, or approved by the Corporation as a
shareholder of any majority-owned subsidiary of the Corporation if, as
of the record date for the determination of the shareholders entitled to
vote thereon, any Related Person (as hereinafter defined) exists, unless
the applicable requirements of Sections B, C, D, E and F of this Article
EIGHTH
are fully complied with:
(1) any merger or consolidation of the Corporation or any of its
subsidiaries into or with such Related Person;
(2) any sale, lease, exchange or other disposition of all or any
substantial part of the assets of the Corporation or any of its
majority-owned subsidiaries to or with such Related Person;
(3) the issuance or delivery of any Voting Stock, or securities
convertible into or exchangeable or exercisable for any Voting Stock, or
of voting securities of any of the Corporation's majority-owned
subsidiaries to such Related Person in exchange for cash, other assets
or securities, or a combination thereof; or
(4) any voluntary dissolution or liquidation of the Corporation.
B. Stockholder Vote Required.
The actions and transactions described in Section A of this
Article EIGHTH shall have been authorized by the affirmative vote of at
least 80% of all of the outstanding shares of Voting Stock, voting
together as a single class.
C. Minimum Price Required.
Notwithstanding Section B hereof, the 80% voting requirement shall
not be applicable if (1) any action or transaction specified in Section
A hereof is approved by the Corporation's Board of Directors and by a
majority of the Continuing Directors (as hereinafter defined); provided,
however, that if there are not at least five Continuing Directors this
exception for approval by the Board of Directors shall not be applicable
or (2) in the case of any action or transaction pursuant to which the
holders of the capital stock of the Corporation are entitled to receive
cash, property, securities or other consideration, the cash or fair
market value of the property, securities or
other consideration to be received per share by holders of the capital
stock of the Corporation in such action or transaction is not less than
the higher of (a) the highest price per share paid by the Related Person
<PAGE> 39.
in acquiring any of its holdings of capital stock of the Corporation, or
(b) the highest closing sale price on any day either since the Related
Person acquired its first share of capital stock of the Corporation
which it continues to own or control or during the five years preceding
the date of consideration of the action or transaction by the
Corporation's Board of Directors, whichever period is shorter; such
highest closing sale price shall be determined by the reports of closing
sale prices on the Composite Tape for New York Exchange Listed Stocks
or, if such stock is not quoted on the Composite Tape on the New York
Stock Exchange or other principal United States securities exchange on
which such stock is listed or, for any period when such stock is not
listed on any such exchange, the highest closing bid quotation with
respect to a share of such stock on the National Association of
Securities Dealers, Inc. Automated Quotation System; such price, in
either case (a) or (b), to be proportionately adjusted for any
subsequent increase or decrease in the number of issued shares of the
Corporation's capital stock resulting from a subdivision or
consolidation of shares or any other capital adjustments, the payment of
a stock dividend, or other increase or decrease in such shares of
capital stock effected without receipt of consideration by the
Corporation.
D. Restrictions on Certain Actions.
After becoming a Related Person and prior to consummation of such
action or transaction (1) such Related Person shall not have acquired
from the Corporation or any of its majority-owned subsidiaries any newly
issued or treasury shares of capital stock or any newly issued
securities convertible into or exchangeable for capital stock of the
Corporation or any of its majority-owned subsidiaries, directly or
indirectly (except upon conversion or exchange of convertible or
exchangeable securities acquired by it prior to becoming a Related
Person or as a result of a pro rata stock dividend or stock split or
other distribution of stock to all shareholders pro rata); (2) such
Related Person shall not have received the benefit directly or
indirectly (except proportionately as a shareholder) of any loans,
advances, guarantees, pledges or other financial assistance or tax
credits provided by the Corporation or any of its majority-owned
subsidiaries, or made any major changes in the Corporation's or any of
its majority-owned subsidiaries' businesses or capital structures or
reduced the current rate of dividends payable on the Corporation's
capital stock below the rate in effect immediately prior to the time
such Related Person became a Related Person (the current rate of
dividends being the ratio of the current dividend to the net income of
the Corporation for the full fiscal quarter immediately preceding the
quarter in which such dividend is paid; and the rate of dividends in
effect immediately prior to the time such Related Person became a
Related Person being the ratio of (a) the aggregate dividends paid
during the four full fiscal quarters immediately preceding the time such
Related Person became a Related Person to (b) the aggregate net income
of the Corporation for the four successive full fiscal quarters
immediately preceding the last quarter in which such dividends were
paid); and (3) such Related Person shall have taken all required actions
to ensure that the Corporation's Board of Directors includes
representation by Continuing Directors (as hereinafter defined) at least
proportionate to the stockholdings of the Corporation's remaining public
shareholders (as hereinafter defined), with a Continuing Director to
occupy any Board position resulting from a fraction and, in any event,
with at least one Continuing Director to serve on the Board so long as
there are any remaining public shareholders.
E. Proxy Statement Required.
A proxy statement responsive to the requirements of the Securities
Exchange Act of 1934, as amended, whether or not the Corporation is then
subject to such requirements, shall be mailed to the shareholders of the
Corporation for the purpose of soliciting shareholder approval of such
action or transaction and shall contain at the front thereof, in a
prominent place, any recommendations as to the advisability or
<PAGE> 40.
inadvisability of the action or transaction which the Continuing
Directors may choose to state.
F. Certain Definitions.
For the purpose of this Article EIGHTH, (1) the term "Related
Person" shall mean any other corporation, person or entity (including
any Affiliate thereof), other than this Corporation, any of its
subsidiaries or any officer or employee thereof who holds only voting
power pursuant to proxies which beneficially owns or controls, directly
or indirectly, 10% or more of the outstanding shares of Voting Stock,
(2) a Related Person shall be deemed to own or control, directly or
indirectly, any outstanding shares of Voting Stock owned by it of record
or beneficially, including without limitation shares (a) which it has
the right to acquire pursuant to any agreement, or upon exercise of
conversion rights, warrants or options, or otherwise or (b) which are
beneficially owned, directly or indirectly (including shares deemed
owned through application of clause (a) above), by any other
corporation, person or other entity (x) with which it or its Affiliate
or Associate (as hereinafter defined) has any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or disposing
of Voting Stock or (y) which is its "Affiliate" (other than the
Corporation) or "Associate" (other than the Corporation) as those terms
are defined in the General Rules and Regulations under the Securities
Exchange Act of 1934, as amended; (3) the term "Voting Stock" shall mean
such shares of capital stock of the Corporation as are entitled to vote
generally in the election of directors; (4) the term "Continuing
Director" shall mean a director who was a member of the Board of
Directors of the Corporation immediately prior to the time that any
Related Person involved in the proposed action or transaction became a
Related Person or a director nominated by a majority of the remaining
Continuing Directors; and (5) the term "remaining public shareholders"
shall mean the holders of the Corporation's capital stock other than the
Related Person.
G. Determinations by the Board of Directors.
The Board of Directors of the Corporation shall have the power and
duty to determine for the purposes of this Article EIGHTH, on the basis
of information then known to the Board of Directors, whether (1) any
Related Person exists or is an Affiliate or an Associate of another and
(2) any proposed sale, lease, exchange, or other disposition of part of
the assets of the Corporation or any majority-owned subsidiary involves
a substantial part of the assets of the Corporation or any of its
subsidiaries. Any such determination by the Board of Directors shall be
conclusive and binding for all purposes.
H. Alteration, Amendment or Repeal.
Notwithstanding any other provision of law which might otherwise
permit a lesser vote or no vote, but in addition to any affirmative vote
of the holders of any particular class of Voting Stock required by law
or this Certificate of Incorporation, the affirmative vote of the
holders of at least 80% of all of the then outstanding shares of Voting
Stock, voting together as a single class, shall be required to alter,
amend or repeal this Article EIGHTH.
NINTH: The Corporation reserves the right to amend, alter, change
or repeal any provision contained in this Certificate of
Incorporation in the manner now or hereafter prescribed by statute and
all rights conferred upon the stockholders herein are granted subject to
this reservation.
IN WITNESS WHEREOF, said PFIZER INC. has caused its corporate seal
to be hereunto affixed and this certificate to be signed by
C. L. Clemente its Secretary and attested by Terence J. Gallagher, its
Assistant Secretary, this 27th day of April, 1995.
<PAGE> 41.
PFIZER INC. PFIZER INC.
Corporate
Seal
1942
Delaware By s/ C. L. CLEMENTE
Secretary
ATTEST:
By s/ TERENCE J. GALLAGHER
Assistant Secretary
<PAGE> 42.
Exhibit 11
<TABLE>
PFIZER INC. AND SUBSIDIARY COMPANIES
COMPUTATION OF EARNINGS PER COMMON SHARE
(millions, except per share data)
(Unaudited)
<CAPTION>
Three Months Ended
April 2, April 3,
1995 1994
<S> <C> <C>
Net income $420.4 $370.7
Weighted average number of common
shares outstanding 305.3 309.1
Common share equivalents (a) 6.0 4.1
Weighted average number of common
shares and common share equivalents
used to compute earnings per common
share 311.3 313.2
Earnings per common share $ 1.35 $ 1.18
Net income for fully diluted
earnings per common share computation $420.4 $370.7
Weighted average number of common
shares outstanding 305.3 309.1
Common share equivalents and other
dilutive securities (a) 6.8 4.2
Weighted average number of common
shares and common share equivalents
used to compute fully diluted earnings
per common share 312.1 313.3
Fully diluted earnings per common share(b) $ 1.35 $ 1.18
<FN>
(a) Includes common share equivalents applicable to stock option
plans.
(b) This calculation is submitted in accordance with Regulation S-K
item 601(b) (11) although not required by footnote 2 to paragraph 14 of
APB Opinion No. 15 because it results in dilution of less than 3%.
Note: In April 1995, the Company announced a two-for-one stock split in
the form of a 100 percent stock dividend payable June 30, 1995 to
shareholders of record on June 1, 1995. The above common share data
reflect reported information that has not been adjusted for this two-
for-one split.
</FN>
</TABLE>
<PAGE> 43.
Exhibit 12
<TABLE>
PFIZER INC. AND SUBSIDIARY COMPANIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES (a)
(millions of dollars)
(Unaudited)
<CAPTION>
Three
Months
Ended
April 2, Year Ended December 31,
1995 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C> <C>
Determination of
earnings:
Income before
provision for
taxes on income,
minority interests,
and cumulative
effect of
accounting
changes $630.9 $1,861.5 $851.4 $1,534.8 $ 943.7 $1,103.3
Less:
Minority
interests 2.3 4.6 2.6 2.7 3.2 4.2
Undistributed
earnings/
(losses) of
unconsolidated
subsidiaries (2.8) (.7) .7 8.5 .8 (.3)
Adjusted income 631.4 1,857.6 848.1 1,523.6 939.7 1,099.4
Fixed charges 57.5 158.4 135.6 130.1 155.2 153.8
Total earnings
as defined $688.9 $2,016.0 $983.7 $1,653.7 $1,094.9 $1,253.2
Fixed charges and
other:
Rents $ 7.8 $ 31.5 $ 29.1 $ 26.7 $ 25.1 $ 21.3
Interest 49.7 126.9 106.5 103.4 130.1 132.5
Fixed charges 57.5 158.4 135.6 130.1 155.2 153.8
Capitalized
interest 2.1 14.7 14.0 12.2 8.0 9.9
Total fixed
charges $ 59.6 $ 173.1 $149.6 $ 142.3 $ 163.2 $ 163.7
Ratio of earnings
to fixed charges 11.6 11.6 6.6 11.6 6.7 7.7
<FN>
(a) The ratio of earnings to fixed charges represents the historical ratio
of the Company and is calculated on a total enterprise basis. The ratio
is computed by dividing the sum of earnings before provision of taxes
and fixed charges (excluding capitalized interest) by fixed charges.
Fixed charges represent interest (including capitalized interest) and
amortization of debt discount and one-third of rental expense which the
Company believes to be a conservative estimate of an interest factor in
its leases, which are not material.
</FN>
</TABLE>
<PAGE> 44.
Exhibit 15
ACCOUNTANTS' ACKNOWLEDGMENT
Board of Directors
Pfizer Inc.:
We hereby acknowledge the incorporation by reference of our report dated
May 12, 1995, included within the Quarterly Report on Form 10-Q of Pfizer Inc.
for the quarter ended April 2, 1995 in the Prospectus dated December 27, 1972,
as supplemented February 6, 1973, of Pfizer Inc., filed under the Securities
Act of 1933 in Registration Statement on Form S-16 dated October 27, 1972
(File No. 2-46157), as amended, in the Prospectus dated June 14, 1979, of
Pfizer Inc., in the Registration Statement on Form S-16 dated April 26, 1979
(File No. 2-64610), as amended, in the Registration Statement on Form S-15
dated December 13, 1982 (File No. 2-80884), as amended, in the Registration
Statement on Form S-8 dated October 27, 1983 (File No. 2-87473), as amended,
in the Registration Statement on Form S-8 dated March 22, 1990 (File No. 33-
34139), in the Registration Statement on Form S-8 dated January 24, 1991 (File
No. 33-38708), in the Registration Statement on Form S-3 dated June 26, 1991
(File No. 33-41367), as amended, in the Registration Statement on Form S-8
dated November 18, 1991 (File No. 33-44053), in the Registration Statement on
Form S-3 dated May 27, 1993 (File No. 33-49629), in the Registration Statement
on Form S-8 dated May 27, 1993 (File No. 33-49631), in the Registration
Statement on Form S-8 dated May 19, 1994 (File No. 33-53713), in the
Registration Statement on Form S-8 dated October 5, 1994 (File No. 33-55771),
in the Registration Statement on Form S-3 dated November 14, 1994 (File No.
33-56435), in the Registration Statement on Form S-8 dated December 20, 1994
(File No 33-56979) and in the Registration Statement on Form S-4 dated
February 14, 1995 (File No. 33-57709).
Pursuant to Rule 436(c) under the Securities Act of 1933, such report is
not considered a part of a registration statement prepared or certified by an
accountant or a report prepared or certified by an accountant within the
meaning of sections 7 and 11 of the Act.
KPMG Peat Marwick LLP
New York, New York
May 12, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM PFIZER INC.
AND SUBSIDIARY COMPANIES CONDENSED CONSOLIDATED BALANCE SHEET AND CONDENSED
STATEMENT OF INCOME FOR THE PERIOD ENDED APRIL 2, 1995 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> APR-02-1995
<CASH> 967
<SECURITIES> 554
<RECEIVABLES> 2,025
<ALLOWANCES> (56)
<INVENTORY> 1,408
<CURRENT-ASSETS> 5,825
<PP&E> 5,441
<DEPRECIATION> (2,010)
<TOTAL-ASSETS> 12,515
<CURRENT-LIABILITIES> 5,777
<BONDS> 610
<COMMON> 34
0
0
<OTHER-SE> 4,663
<TOTAL-LIABILITY-AND-EQUITY> 12,515
<SALES> 2,403
<TOTAL-REVENUES> 2,403
<CGS> 552
<TOTAL-COSTS> 552
<OTHER-EXPENSES> 1,181
<LOSS-PROVISION> 5
<INTEREST-EXPENSE> 50
<INCOME-PRETAX> 631
<INCOME-TAX> 208
<INCOME-CONTINUING> 420
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 420
<EPS-PRIMARY> 1.35
<EPS-DILUTED> 1.35
</TABLE>
