-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UwYIcOUylt3WV3hsFXCLvlCxiaTokRRqYRDjyNoKj4RQZYnKA44OyIWCwxFw3ky9 O9V/zxjqQZWdMJoL2jtzpA== 0000950148-96-002376.txt : 19961030 0000950148-96-002376.hdr.sgml : 19961030 ACCESSION NUMBER: 0000950148-96-002376 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961029 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: DIAGNOSTIC PRODUCTS CORP CENTRAL INDEX KEY: 0000702259 STANDARD INDUSTRIAL CLASSIFICATION: IN VITRO & IN VIVO DIAGNOSTIC SUBSTANCES [2835] IRS NUMBER: 952802182 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-09957 FILM NUMBER: 96649185 BUSINESS ADDRESS: STREET 1: 5700 W 96TH ST CITY: LOS ANGELES STATE: CA ZIP: 90045 BUSINESS PHONE: 2137760180 10-Q 1 FORM 10-Q FOR THE PERIOD ENDED SEPTEMEBER 30, 1996 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [x] Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended September 30, 1996 [ ] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from to Commission file number 1-9957 DIAGNOSTIC PRODUCTS CORPORATION (Exact name of registrant as specified in its charter) CALIFORNIA 95-2802182 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 5700 WEST 96TH STREET LOS ANGELES, CALIFORNIA 90045 (Address of principal executive offices) Registrant's telephone number: (213) 776-0180 NO CHANGE (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. [ YES X ][NO ] The number of shares of Common Stock, no par value, outstanding as of September 30, 1996, was 13,560,644. 2 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS. DIAGNOSTIC PRODUCTS CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (unaudited)
(In thousands, except per share data) Three Months Ended Nine Months Ended September 30, September 30, ------------- ------------- 1996 1995 1996 1995 ---- ---- ---- ---- SALES $ 43,359 $ 40,530 $ 129,974 $ 118,265 --------- --------- --------- --------- COSTS AND EXPENSES: Cost of sales 19,868 19,066 55,988 53,299 Selling 9,111 6,951 25,729 20,357 Research and development 4,426 3,970 13,294 11,917 General and administrative 4,552 3,337 13,303 10,651 Equity in income of affiliates (199) (125) (1,002) (740) Investment income (380) (610) (1,144) (1,280) --------- --------- --------- --------- Total costs and expenses 37,378 32,589 106,168 94,204 --------- --------- --------- --------- INCOME BEFORE INCOME TAXES 5,981 7,941 23,806 24,061 PROVISION FOR INCOME TAXES 1,630 2,050 6,390 6,260 --------- --------- --------- --------- NET INCOME $ 4,351 $ 5,891 $ 17,416 $ 17,801 ========= ========= ========= ========= NET INCOME PER SHARE $ .31 $ .43 $ 1.25 $ 1.29 WEIGHTED AVERAGE SHARES AND EQUIVALENTS OUTSTANDING 13,941 13,846 13,956 13,838
1 3 DIAGNOSTIC PRODUCTS CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Dollars in Thousands)
September 30, December 31, 1996 1995 ---- ---- (Unaudited) ASSETS CURRENT ASSETS: Cash and cash equivalents $ 15,361 $ 16,519 Accounts receivable - net of allowance for doubtful accounts of $89 and $77 42,794 40,802 Inventories 41,580 35,521 Prepaid expenses and other current assets 408 358 Deferred income taxes 3,451 3,451 --------- --------- Total current assets 103,594 96,651 PROPERTY, PLANT AND EQUIPMENT: Land and buildings 27,827 27,553 Machinery and equipment 44,352 38,607 Leasehold improvements 6,701 6,635 Construction in progress 925 836 Total 79,805 73,631 --------- --------- Less accumulated depreciation and amortization 35,403 31,707 --------- --------- Property, plant and equipment - net 44,402 41,924 SALES-TYPE AND OPERATING LEASES 20,611 18,128 DEFERRED INCOME TAXES 3,200 3,200 INVESTMENTS IN AFFILIATED COMPANIES 14,762 13,279 EXCESS OF COST OVER NET ASSETS ACQUIRED - Net of amortization of $6,111 and $5,373 15,173 16,280 --------- --------- TOTAL ASSETS $ 201,742 $ 189,462 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Notes payable $ 7,976 Accounts payable 12,847 $ 16,969 Accrued liabilities 4,627 5,708 Income taxes payable 1,078 3,435 --------- --------- Total current liabilities 26,528 26,112 SHAREHOLDERS' EQUITY: Common Stock - no par value, authorized 30,000,000 shares; outstanding 13,560,644 shares and 13,524,051 shares 35,793 35,179 Retained earnings 143,676 131,136 Foreign currency translation adjustments (4,255) (2,965) --------- --------- Total shareholders' equity 175,214 163,350 --------- --------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 201,742 $ 189,462 ========= =========
2 4 DIAGNOSTIC PRODUCTS CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
(Dollars in Thousands) Nine Months Ended September 30, ------------- 1996 1995 ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES: Net Income $ 17,416 $ 17,801 Adjustments to reconcile net income to net cash flows from operating activities: Depreciation and amortization 5,216 4,363 Equity in undistributed income of unconsolidated affiliates (1,002) 243 Accounts receivable (2,435) (3,940) Inventories (6,245) (3,957) Prepaid expenses and other current assets (50) 370 Accounts payable (3,464) (7,077) Accrued liabilities (1,081) (1,151) Income taxes payable (2,315) 1,052 -------- -------- Net Cash Flows from Operating Activities 6,040 7,704 CASH FLOWS FROM (USED FOR) INVESTING ACTIVITIES: Additions to property, plant and equipment (6,654) (5,264) Sales-type and operating leases (3,523) (3,719) Investment in affiliated company (481) (1) -------- -------- Net Cash from (used for) Investing Activities (10,658) (8,984) CASH FLOWS FROM (USED FOR) FINANCING ACTIVITIES: Borrowing 8,072 Proceeds from exercise of stock options 614 6,363 Cash dividends paid (4,876) (4,453) -------- -------- Net Cash from (used for) Financing Activities 3,810 1,910 EFFECT OF EXCHANGE RATE CHANGES ON CASH (350) 491 -------- -------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (1,158) 1,121 CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 16,519 14,833 -------- -------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 15,361 $ 15,954 ======== ========
3 5 DIAGNOSTIC PRODUCTS CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) NOTE 1 -- BASIS OF PRESENTATION The information for the nine months ended September 30, 1996 and 1995 has not been audited by independent accountants, but includes all adjustments (consisting of normal recurring accruals) which are, in the opinion of management, necessary to a fair statement of the results for such periods. Certain information and footnote disclosure normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted pursuant to the requirements of the Securities and Exchange Commission, although the Company believes that the disclosures included in these financial statements are adequate to make the information not misleading. The consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's 1995 annual report on Form 10-K as filed with the Securities and Exchange Commission. The results of operations for the nine-month period ending September 30, 1996 are not necessarily indicative of the results to be expected for the year ended December 31, 1996. Net income per share has been computed using the weighted-average number of common shares and common share equivalents outstanding during each period. Common share equivalents represent the dilutive effect of outstanding stock options. NOTE 2 -- INVENTORIES Inventories by major categories are summarized as follows:
September 30, December 31, 1996 1995 ---- ---- Raw materials $14,617,000 $11,414,000 Work in process 17,003,000 14,567,000 Finished goods 9,960,000 9,540,000 ----------- ----------- Total $41,580,000 $35,521,000 =========== ===========
4 6 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Sales of $43.4 million were achieved in the third quarter of 1996, a 7% increase over the third quarter 1995. Sales for the nine months were a record $130 million, a 10% increase over 1995. The sales increases are principally a result of the continuing increased worldwide acceptance of the fully automated, random access IMMULITE system. The system is expected to account for the greatest amount of growth of all the Company's product lines for the foreseeable future. In periods when the U.S. dollar is strengthening, the effect of translation of the financial statements of the consolidated foreign affiliates is that of lower sales, costs and net income. The stronger U.S. dollar in the third quarter 1996 when compared to the third quarter 1995 resulted in lower reported sales of approximately 1.5% and lower reported net income of .4%. The stronger U.S. dollar in the nine months 1996 when compared to the 1995 period resulted in lower reported sales of approximately 1.8% and lower reported net income of .5%. Despite the 7% growth in sales in the third quarter of 1996 compared to the third quarter of 1995, sales were flat when compared to the second quarter of 1996 due to continued pressure on healthcare expenditures in Europe, particularly in Germany, one of the Company's major markets in Europe, which affected both unit sales and profit margins. Net income declined to 10% and 13% of sales in the three and nine month periods of 1996 compared to 15% of sales in the comparable 1995 periods. This decline was due to the greater rate of growth of selling and general and administrative expenses compared to sales growth. Cost of sales as a percentage of sales were 46% in the third quarter 1996 and 43% in the 1996 nine-month period compared to 47% and 45% in the comparable 1995 periods. Cost of sales as a percentage of sales increased to 46% in the third quarter of 1996 compared to 42% in the first and second quarters of 1996. In the third quarter 1996, lower gross profit margins were a result of the continuing shift of product mix to the IMMULITE product line which, when the instruments and reagents are combined, has lower margins than the traditional RIA products. Profit margins for the IMMULITE products also reflected increasingly strong price competition. Selling costs increased 31% and 26% in the third quarter and nine months of 1996 over 1995. The major component of this increase was due to the inclusion of the Brazilian distributor (acquired September 1, 1995) for all of 1996 but only one month in the 1995 periods. Selling costs as a percentage of sales were 21% in the third quarter 1996 and 20% in the 1996 nine-month period compared to 17% in the comparable 1995 periods. The remainder of the increased costs are a result of the continued expansion of the marketing and sales effort for the IMMULITE product line and in preparation for the launch of the IMMULITE 2000 in 1997. Research and development expenses increased 11% in the 1996 third quarter over 1995. In the 1996 nine-month period, the expenses increased 12% over 1995. These expenditures have increased to support the IMMULITE system. In the 1996 and 1995 third quarter and nine-month periods, the research and development costs as a percentage of sales were 10% in each period. General and administrative costs increased in the third quarter and nine months of 1996 over 1995. The major component of this increase was due to the inclusion of the Brazilian distributor (acquired September 1, 1995) for all of 1996 but only one month in the 1995 periods. General and administrative expenses were about 10% of sales in the 1996 third quarter and nine-month period compared to 8% and 9% in the comparable 1995 periods. Included in general and administrative expenses is the amortization of the excess of cost over net assets acquired and minority interest. Equity in income of affiliates, which increased 59% in the 1996 third quarter compared to the 1995 quarter and increased 35% in the 1996 nine-month period over the 1995 period, represents the Company's share of earnings of nonconsolidated affiliates, principally the 45%-owned Italian affiliate. Profitability in Italy which in prior quarters had declined was modestly higher in the 1996 third quarter and nine months when compared to 1995. The other affiliates reported increases in their third quarter and nine months net income. 5 7 The Company's effective tax rate includes Federal, state and foreign taxes. The 1996 rate of 27% approximates the 1995 rate of 26%. The Company has adequate working capital and sources of capital (including a $10 million unsecured line of credit, $7 million unused at September 30, 1996) to carry on its current business and to meet its existing capital requirements. Cash flow from operating activities was $6.0 million in 1996 nine months as compared to $7.7 million in 1995 period. During the first quarter of 1995, the Company paid a quarterly cash dividend of $.10 per share. Commencing with the second quarter of 1995, the quarterly dividend was increased to $.12 per share. PART II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) Exhibits 10.1 1990 Stock Option Plan, as amended 27 Financial Data Schedule (b) Reports on Form 8-K. None. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. DIAGNOSTIC PRODUCTS CORPORATION (Registrant)
OCTOBER 29, 1996 SIGI ZIERING - -------------------------------------- --------------------------------------------- Date Sigi Ziering, Ph.D., Chairman of the Board Chief Executive Officer OCTOBER 29, 1996 JULIAN R. BOCKSERMAN - -------------------------------------- --------------------------------------------- Date Julian R. Bockserman, Vice President Chief Financial Officer
6 EX-10.1 2 AMENDED 1990 STOCK OPTION PLAN 1 Exhibit 10.1 DIAGNOSTIC PRODUCTS CORPORATION 1990 STOCK OPTION PLAN AMENDED AND RESTATED AS OF AUGUST 21, 1996 1. PURPOSE The purpose of the 1990 Stock Option Plan (the "Plan") is to further the interests of Diagnostic Products Corporation (the "Company") and its subsidiary corporations ("Subsidiaries") (as such term is defined in Section 425(f) of the Internal Revenue Code of 1986, as amended (the "Code")), by encouraging and enabling selected employees, directors, consultants and advisors of the Company and its Subsidiaries, upon whose judgment, initiative and effort the Company is largely dependent for the successful conduct of its business, to acquire a proprietary interest in the Company by ownership of its stock through the exercise of stock options to be granted hereunder. 2. AUTHORITY TO GRANT OPTIONS Options granted under the Plan may be either "incentive stock options" within the meaning of Section 422A of the Code, or options that do not qualify as incentive stock options or which are designated "non-qualified options" ("non-qualified options"). The aggregate number of shares of Common Stock of the Company which may hereafter be issued pursuant to the exercise of options granted hereunder shall not exceed one million (1,000,000) shares, subject, however, to the provisions of paragraph 5(h) hereof. In the event that any outstanding option under the Plan for any reason expires or is terminated without having been exercised in full, the shares of Common Stock allocable to the unexercised portion of such option may again be subjected to an option under the Plan. 3. ADMINISTRATION Subject to the specific provisions hereinafter set forth, the Plan shall be administered by the Board of Directors or by a committee consisting of at least two directors appointed by the Board of Directors of the Company (the Board or such committee being referred to herein as the "Committee"). Members of the Committee shall serve at the discretion of the Board of Directors. Subject to the provisions of the Plan, the Committee shall establish rules and regulations which it may deem appropriate for the proper administration of the Plan, interpret and make determinations under the Plan which shall be final, conclusive and binding upon all persons, including, without limitation, the Company, the shareholders, the directors and any persons having any interests in any options which may be granted under the Plan. 2 4. ELIGIBILITY (a) Incentive options may be granted only to employees of the Company or its Subsidiaries. Non-qualified options may be granted to employees, directors, consultants and advisors of the Company or its Subsidiaries, provided that any consultant or advisor must render bona fide services to the Company or its Subsidiaries (which services are not in connection with the offer or sale of securities in a capital-raising transaction). An optionee may hold more than one option, but only on the terms and subject to the restrictions hereafter set forth. (b) Subject to paragraph 4(c), no person who would be considered to own by reason of Section 425(d) of the Code more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or any Subsidiary of the Company at the time such option is granted, shall be eligible to receive an incentive option hereunder. (c) Paragraph 4(b) shall not apply if at the time such incentive option is granted the option price is at least 110 percent (110%) of the fair market value of the stock subject to the option and such incentive option by its terms is not exercisable after the expiration of five years from the date such option is granted. 5. TERMS AND CONDITIONS OF OPTIONS The Committee shall determine the persons to whom options shall be granted, the time options shall be granted, the number of shares subject to option and, subject to the provisions hereof, the terms and conditions of the options. Options granted pursuant to the Plan shall be evidenced by an agreement in such form as the Committee shall from time to time approve. (a) NUMBER OF SHARES. Options may be granted to such persons, and in such amounts, as the Committee, in its discretion, may from time to time determine; provided, however, that the aggregate fair market value (at the date of grant) of shares subject to incentive options (granted under the Plan or any other plans of the Company or its Subsidiaries) that first become exercisable in any calendar year shall not exceed $100,000. (b) OPTION PRICE. Each option shall state the option price, which in the case of incentive options shall not be less than 100% of the fair market value (110% with respect to the optionees who are 10% or more shareholders of the Company as described in paragraph 4(b)) of the Common Stock on the date of grant, and in the case of non-qualified options, shall not be less than 85% of the fair market value per share on the date of grant. The "fair market value per share" shall mean the mean between the highest and lowest quoted selling prices of the Common Stock on the applicable date or, if not available, the mean between the bona fide bid and asked prices of the Common Stock on such date. In any situation not covered above or if there were not sales on the date of the grant of an option, the fair market value shall be determined by the Committee in accordance with Section 20.2031-2 of the Federal Estate Tax Regulations. Subject to the foregoing, the Committee in fixing the option price shall have full authority and discretion and be fully protected in doing so. (c) MEDIUM AND TIME OF PAYMENT. Payment of the option price shall be made to the Company in such manner permitted by law as determined by the Committee, which may include cash (including check, bank draft or money order) or delivery of shares of the Company's Common Stock already owned by the optionee or a combination of Common Stock and cash. The fair market value of Common Stock so delivered shall be determined as of the date of exercise in the manner set forth in paragraph 5(b). 3 (d) TERM AND EXERCISE OF OPTIONS. The shares covered by an option may be purchased at once or in installments, as the Committee may determine at the time of grant or in a subsequent amendment of the option. Incentive options shall expire ten years (five years with respect to optionees who are more than 10% shareholders of the Company as described in paragraph 4(b)) after the date of grant or such earlier date as may be determined by the Committee. Non-qualified options shall expire not more than ten years plus one month from the date of grant or such earlier date as may be determined by the Committee. An optionee may exercise a part of the option from the date that part first becomes exercisable until the option expires or is otherwise terminated. Not less than ten shares may be purchased at any one time unless the number purchased is the total number at the time purchasable under the option. To the extent not exercised, installments shall accumulate. As a condition to the exercise, in whole or in part, of any option, the Committee may in its sole discretion require the optionee to pay, in addition to the purchase price of the shares covered by the option, an amount equal to any federal, state and local taxes that the Committee has determined are required to be paid in connection with the exercise of such option in order to enable the Company to claim a deduction or otherwise. Furthermore, if any optionee disposes of any shares of stock acquired by exercise of an incentive option prior to the expiration of either of the holding periods specified in Section 422A(a)(1) of the Code, the optionee shall pay to the Company, or the Company shall have the right to withhold from any payments to be made to the optionee, an amount equal to any federal, state and local taxes that the Committee has determined are required to be paid in connection with the exercise of such option in order to enable the Company to claim a deduction or otherwise. (e) TERMINATION OF EMPLOYMENT EXCEPT BY DEATH AND DISABILITY. Except as the Committee may determine otherwise at any time with respect to any particular non-qualified option granted hereunder, in the event that an optionee shall cease to be employed or retained by the Company or a Subsidiary for any reason other than his death or disability and shall be no longer in the employ of or providing services to any of them, such optionee shall have the right to exercise the option to the extent the option was exercisable on the date of termination until the earlier of three months after such termination or the expiration of the term of the option. Whether authorized leave of absence or absence for military or governmental service shall constitute termination of employment, for the purposes of the Plan, shall be determined by the Committee, which determination shall be final and conclusive. (f) DEATH OR DISABILITY OF OPTIONEE. Except as the Committee may determine otherwise at any time with respect to any particular non-qualified option granted hereunder, if an optionee shall die while in the employ or service of the Company or a Subsidiary or within a period of three months after the termination of his employment or service with the Company or a Subsidiary, either voluntarily or by operation of law, any options granted to him shall expire on the earlier of one year from the date of death or the expiration of the term of the option. During the period between the optionee's death and the expiration of the option, the option may be exercised by the person or persons to whom the optionee's rights under the option have passed by will or by the laws of descent and distribution, but only to the extent that it was exercisable on the date of death. Except as the Committee may determine otherwise at any time with respect to any particular non-qualified option granted hereunder, if an optionee's employment or service with the Company or a Subsidiary shall terminate due to the optionee's permanent disability (as defined by Section 22(e)(3) of the Code), any options granted to him shall terminate on the earlier of one year from the date of such termination or the expiration of the term of the option. During such period, the option shall be exercisable only to the extent it was exercisable on the day of termination due to permanent disability. 4 (g) NON-TRANSFERABILITY OF OPTIONS. No option shall be assignable or transferable by the optionee, either voluntarily or by operation of law, other than by will or the laws of descent and distribution, and options shall be exercisable during the optionee's lifetime only by the optionee. (h) ADJUSTMENTS. If the number of outstanding shares of Common Stock is increased or decreased, or if such shares are exchanged for a different number or kind of shares or securities of the Company through reorganization, merger, recapitalization, reclassification, stock dividend, stock split, combination of shares or other similar transaction, the aggregate number of shares of Common Stock subject to the Plan as provided in paragraph 2 hereof and the shares of Common Stock subject to issued and outstanding options under the Plan shall be appropriately and proportionately adjusted by the Committee. Any such adjustment in the outstanding options shall be made without change in the aggregate purchase price applicable to the unexercised portion of the option but with an appropriate adjustment in the price for each share or other unit of any security covered by the option. No adjustment shall be made on account of any transaction or event not specifically set forth in this paragraph 5(h), including, without limitation, the issuance of Common Stock for consideration. Subject to any required action by the shareholders, if the Company shall be the surviving corporation in any merger or consolidation, each outstanding option shall pertain to and apply to the securities to which a holder of the number of shares of Common Stock subject to the option would have been entitled. In the event of the dissolution or liquidation of the Company or a merger or consolidation in which the Company is not the surviving corporation, or a sale of all or substantially all of the Company's assets, all outstanding options shall terminate on the date of any such event unless the Committee takes action, if any, as the Committee in its discretion may deem appropriate to accelerate the time within which and the extent to which options may be exercised or to provide for the assumption of options by the surviving, consolidated, successor or transferee corporation(s). Adjustments under this paragraph 5(h) shall be made by the Committee, whose determination as to which adjustments shall be made, and the extent thereof, shall be final, binding and conclusive. No fractional shares of stock shall be issued under the Plan or in connection with any such adjustment. The grant of an option pursuant to the Plan shall not affect in any way the right or power of the Company to make any adjustment, reclassification, reorganization or change of its capital or business structure or to merge or to consolidate or to dissolve, liquidate or sell or transfer all or any part of its business or assets. (i) RIGHTS AS A SHAREHOLDER. No person entitled to exercise any option shall have any rights as a shareholder with respect to any shares covered by the option until the date such person has become the holder of record of such shares. No adjustment shall be made for dividends (ordinary or extraordinary, whether in cash, securities or other property) or distributions or other rights for which the record date is prior to the date such person becomes the holder of record of such shares, except as provided in paragraph 5(h) hereof. (j) MODIFICATION, EXTENSION AND RENEWAL OF OPTIONS. Subject to the terms and conditions and within the limitations of the Plan, the Committee may modify, extend or renew outstanding options granted under the Plan. Notwithstanding the foregoing, however, no modification of an option shall, without the consent of the optionee, alter or impair any right or obligation under any option theretofore granted under the Plan in a manner adverse to the optionee. 5 (k) INVESTMENT PURPOSE. Each option under the Plan shall be granted on the condition that the purchases of stock thereunder shall be for investment purposes, and not with a view to resale or distribution, unless the stock subject to such option is registered under the Securities Act of 1933, as amended, or the resale of such stock without such registration would otherwise be permissible under the Securities Act of 1933, as amended, or any other applicable law, regulation, or rule of any governmental agency. (l) OTHER PROVISIONS. The option agreements authorized under the Plan shall contain such other provisions, including, without limitation, restrictions upon the exercise of the option, as the Committee shall deem advisable. 6. INDEMNIFICATION OF COMMITTEE In addition to such other rights of indemnification as they may have, the members of the Committee shall be indemnified by the Company against their reasonable expenses, including attorneys' fees actually and necessarily incurred in connection with the defense of any action, suit or proceeding, or in connection with any appeal therein, to which they or any of them may be a party by reason of any action taken or failure to act under or in connection with the Plan or any option granted thereunder, and against all amounts paid by them in settlement thereof (provided such settlement is approved by independent legal counsel selected by the Company) or paid by them in satisfaction of a judgment in any such action, suit or proceeding, except in relation to matters as to which it shall be adjudged in such action, suit or proceeding that such Committee member is liable for gross negligence or intentional misconduct in the performance of his duties; provided that within sixty days after institution of any such action, suit or proceeding, a Committee member shall in writing offer the Company the opportunity, at its own expense, to handle and defend the same. 7. TERM AND AMENDMENT OF THE PLAN The Plan shall remain in effect until all shares covered by options granted under the Plan have been purchased or all rights to acquire the shares have lapsed. No stock option shall be granted under the Plan after December 7, 2000. The Board of Directors of the Company may, insofar as permitted by law, from time to time, with respect to any shares at the time not subject to options, suspend or discontinue the Plan or revise or amend it in any respect whatsoever except that, without the approval of the shareholders, no such revision or amendment shall change the number of shares subject to the Plan or change the designation of the persons eligible to receive incentive options under the Plan. Other amendments or modifications to the Plan shall be approved by the shareholders only if such approval is required by the Code, by any rule promulgated by the Securities and Exchange Commission pursuant to Section 16 of the Securities Exchange Act of 1934, as amended, by any rule of the New York Stock Exchange, or if the Committee determines that such approval is necessary and appropriate. 8. ADOPTION AND EFFECTIVENESS OF PLAN The Plan was adopted by resolution of the Board of Directors on December 8, 1990, and approved by the shareholders on May 8, 1991. EX-27 3 FINANCIAL DATA SCHEDULE
5 1,000 US DOLLARS 9-MOS DEC-31-1996 JAN-01-1996 SEP-30-1996 1 15,361 0 42,794 89 41,580 103,594 79,805 35,403 201,742 26,528 0 0 0 35,793 143,676 201,742 129,974 129,974 55,988 55,988 50,180 0 0 23,806 6,390 17,416 0 0 0 17,416 1.25 0
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