-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, JUrOA54iyu6LJO37SpljgGUKs21NuPZIStN0FZc+NL3xGB76BsXgSXPXqzgk+geU dJHP80SC9AZWadvo9f85YA== 0000714655-94-000014.txt : 19940817 0000714655-94-000014.hdr.sgml : 19940817 ACCESSION NUMBER: 0000714655-94-000014 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19940630 FILED AS OF DATE: 19940811 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BIOGEN INC CENTRAL INDEX KEY: 0000714655 STANDARD INDUSTRIAL CLASSIFICATION: 2836 IRS NUMBER: 043002117 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-12042 FILM NUMBER: 94542855 BUSINESS ADDRESS: STREET 1: 14 CAMBRIDGE CTR CITY: CAMBRIDGE STATE: MA ZIP: 02142 BUSINESS PHONE: 6172529200 MAIL ADDRESS: ZIP: 00000 FORMER COMPANY: FORMER CONFORMED NAME: BIOGEN NV DATE OF NAME CHANGE: 19880622 10-Q 1 **This conforming paper format document is begin submitted pursuant to rule 901(d) of regulation S-T. SECURITIES AND EXCHANGE COMMISSION Total Pages- 16 WASHINGTON, D.C. 20549 Exhibit Index- 11 FORM 10-Q (Mark one) [X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended June 30, 1994 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 0-12042 BIOGEN, INC. (Exact name of registrant as specified in its charter) Massachusetts 04-3002117 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 14 Cambridge Center, Cambridge, MA 02142 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (617) 252-9200 Former name, former address and former fiscal year, if changed since last report: Not Applicable 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 Number of shares outstanding of each of the issuer's classes of common stock, as of August 5, 1994: Common Stock, par value $0.01 33,036,315 (Title of each class) (Number of Shares) B I O G E N , I N C . Page 2 INDEX Page No. PART I - FINANCIAL INFORMATION Condensed Consolidated Balance Sheets - June 30, 1994 and December 31, 1993 . . . . . . . . . . . . . . .3 Condensed Consolidated Statements of Income - Three months and six months ended June 30, 1994 and 1993. . . . .4 Condensed Consolidated Statements of Cash Flows - Six months ended June 30, 1994 and 1993 . . . . . . . . . . . . .5 Notes to Condensed Consolidated Financial Statements. . . . . . . .6 Management's Discussion and Analysis of Financial Condition and Results of Operations . . . . . . . . . . . . . . .7 Report of Independent Accountants . . . . . . . . . . . . . . . . 10 PART II - OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . 11 * * * * * * * * * * * * * * * * * * Note concerning trademarks: Certain names mentioned in this report are trademarks owned by Biogen, Inc. or its affiliates or licensees. Hirulog(TM) is a trademark of Biogen, Inc. BIOGEN, INC. AND SUBSIDIARIES Page 3 CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) June 30,1994 Dec. 31,1993 (unaudited) ASSETS Current assets Cash and cash equivalents. . . . . . . . . $ 39,053 $ 74,546 Marketable securities. . . . . . . . . . . 250,862 195,805 Accounts receivable. . . . . . . . . . . . 16,604 31,695 Other. . . . . . . . . . . . . . . . . . . 8,188 7,378 -------- -------- Total current assets . . . . . . . . . . . 314,707 309,424 -------- -------- Property and equipment Total cost . . . . . . . . . . . . . . . . 78,954 64,111 Less accumulated depreciation. . . . . . . 28,211 25,611 -------- -------- Property and equipment, net. . . . . . . . 50,743 38,500 -------- -------- Other assets Patents, net . . . . . . . . . . . . . . . 7,322 7,164 Other. . . . . . . . . . . . . . . . . . . 2,025 1,862 -------- -------- Total other assets . . . . . . . . . . . . 9,347 9,026 -------- -------- $374,797 $356,950 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Accounts payable . . . . . . . . . . . . . $ 4,481 $ 2,916 Other current liabilities. . . . . . . . . 28,270 28,860 -------- -------- Total current liabilities. . . . . . . . . 32,751 31,776 -------- -------- Shareholders' equity Common stock . . . . . . . . . . . . . . . 328 323 Additional paid-in capital . . . . . . . . 358,262 353,247 Deficit. . . . . . . . . . . . . . . . . . (16,622) (28,462) Accumulated translation adjustment . . . . 78 66 -------- -------- Total shareholders' equity . . . . . . . . 342,046 325,174 -------- -------- $374,797 $356,950 ======== ======== See Notes to Condensed Consolidated Financial Statements. BIOGEN, INC. AND SUBSIDIARIES Page 4 CONDENSED CONSOLIDATED STATEMENTS OF INCOME (unaudited) (in thousands, except per share amounts) Three Months Six Months Ended June 30, Ended June 30, 1994 1993 1994 1993 REVENUES Royalties and product sales. . . $32,793 $34,714 $73,960 $67,254 Interest . . . . . . . . . . . . 3,986 3,140 7,599 6,021 ------- ------- ------- ------- Total revenues . . . . . . . . . 36,779 37,854 81,559 73,275 ------- ------- ------- ------- EXPENSES Cost of sales. . . . . . . . . . 2,146 3,621 4,617 6,440 Research and development . . . . 26,268 17,140 49,602 32,105 General and administrative . . . 5,607 4,851 11,570 8,804 Other. . . . . . . . . . . . . . 1,947 6,088 2,050 7,432 --------- ------- ------- ------- Total expenses . . . . . . . . . 35,968 31,700 67,839 54,781 ------- ------- ------- ------- INCOME BEFORE INCOME TAXES. . . . 811 6,154 13,720 18,494 Income taxes. . . . . . . . . . . 200 510 1,880 1,590 ------- ------- ------- ------- NET INCOME. . . . . . . . . . . . $ 611 $ 5,644 $11,840 $16,904 ======= ======= ======= ======= NET INCOME PER SHARE. . . . . . . $ 0.02 $ 0.17 $ 0.34 $ $0.49 ======= ======= ======= ======= Average shares outstanding. . . . 34,427 34,540 35,084 34,653 ======= ======= ======= ======= See Notes to Condensed Consolidated Financial Statements. BIOGEN, INC. AND SUBSIDIARIES Page 5 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) (in thousands) Six Months Ended June 30, 1994 1993 CASH FLOWS FROM OPERATING ACTIVITIES Net income . . . . . . . . . . . . . . . . . . $ 11,840 $16,904 Adjustments to reconcile net income to net cash provided from operating activities: Depreciation and amortization . . . . . . . . 3,646 3,411 Write-off of investment in joint venture. . . -- 1,803 Other . . . . . . . . . . . . . . . . . . . . 1,345 (472) Changes in: Accounts receivable . . . . . . . . . . . . 15,091 (37) Other current assets. . . . . . . . . . . . (810) (422) Other assets. . . . . . . . . . . . . . . . (163) (196) Accounts payable and other current liabilities. . . . . . . . . 975 9,750 -------- ------- Net cash provided from operating activities. . 31,924 30,741 -------- ------- CASH FLOWS FROM INVESTING ACTIVITIES Purchases of marketable securities, net. . . . (61,308) (36,259) Acquisitions of property and equipment . . . . (14,844) (4,072) Additions to patents . . . . . . . . . . . . . (1,204) (1,745) -------- ------- Net cash used by investing activities. . . . . (77,356) (42,076) -------- ------- CASH FLOWS FROM FINANCING ACTIVITIES Issuance of common stock . . . . . . . . . . . 9,939 2,640 -------- ------- Net cash provided from financing activities. . 9,939 2,640 -------- ------- NET DECREASE IN CASH AND CASH EQUIVALENTS . . . (35,493) (8,695) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD. . . . . . . . . . . . . . 74,546 85,863 -------- ------- CASH AND CASH EQUIVALENTS, END OF PERIOD. . . . . . . . . . . . . . . . . $ 39,053 $77,168 ======== ======= See Notes to Condensed Consolidated Financial Statements. BIOGEN, INC. AND SUBSIDIARIES Page 6 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) 1. In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, consisting of only normal recurring accruals, necessary to present fairly the financial position, results of operations and cash flows of the Company. The Company's accounting policies are described in the Notes to Consolidated Financial Statements in the Company's 1993 Annual Report. Interim results are not necessarily indicative of the operating results for the full year. 2. During the first quarter of 1994, the Company entered into an agreement with a bank to sell certain foreign based accounts receivable, with recourse, up to $14 million per quarter, which approximated the proceeds for the current quarter. The selling price is partially determined by foreign exchange rates at the end of each quarter. 3. During the second quarter of 1994, the Company received $7.1 million from the exercise of 353,600 common stock warrants issued in connection with the research and development arrangement with Biogen Medical Products Limited Partnership ("BMPLP"). Each BMPLP warrant entitled the holder to purchase one share of the Company's common stock and was exercisable at $20 per share. The BMPLP warrants expired on June 30, 1994 with the settlement period extending through July 8, 1994. BMPLP warrants for the purchase of an additional 92,200 shares were exercised during the settlement period. 4. As of January 1, 1994, the Company adopted Statement of Financial Accounting Standards No. 115, Accounting for Certain Investments in Debt and Equity Securities. Under this standard, the Company is required to classify its marketable securities (all of which are debt securities) into one or more of the following categories: held-to- maturity, trading or available-for-sale. All of the Company's marketable securities are classified as available-for sale. Under this statement, these securities are recorded at fair market value and unrealized gains and losses are recorded as part of shareholders' equity. Following is a summary of marketable securities as of June 30, 1994: Fair Unrealized Amortized (dollars in thousands) Value Gains Losses Cost U.S. Government securities $196,297 $ 30 $3,341 $199,608 (average maturity of 24 months) Corporate debt securities 74,065 - 1,608 75,673 (average maturity of 24 months) Proceeds from maturities and other sales of securities, which were reinvested, for the quarter and six months ended June 30, 1994 were $211.5 million and $459.2 million, respectively. Gross realized gains and losses on these sales were not significant. BIOGEN, INC. AND SUBSIDIARIES Page 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations For the second quarter ended June 30, 1994, the Company reported net income of $0.6 million or $0.02 per share as compared to net income of $5.6 million or $0.17 per share in the second quarter of 1993. For the six months ended June 30, 1994, the Company had net income of $11.8 million or $0.34 per share as compared to net income of $16.9 million or $0.49 per share for the comparable period of 1993. Total revenues for the second quarter of 1994 were $36.8 million, as compared to $37.9 million in the comparable quarter of 1993. For the current six-month period, total revenues were $81.6 million as compared to $73.3 million in 1993. Revenues for the current quarter were lower than the second quarter of 1993 due mostly to a decrease in royalties received from Schering-Plough Corporation ("Schering-Plough"), the Company's licensee for alpha interferon. Royalties from alpha interferon sales by Schering-Plough declined in the current quarter as compared to the second quarter in 1993, due primarily to lower sales in Japan. Sales in Japan declined due mostly to a 17 percent government-mandated decrease in the price of alpha interferon, effective on April 1, together with a softer overall market for the product in that country. Revenues for the current six-month period increased over the 1993 period primarily due to royalties received from Eli Lilly and Co. ("Lilly") partially offset by a decrease in royalties received from Schering-Plough. During the first quarter of 1994, the Company signed a licensing agreement with Lilly covering certain patent rights for gene expression methods. Under this agreement, Lilly paid the Company approximately $10 million in royalties that related to sales occurring before 1994. The Company, in general, expects continued increases in sales of licensed products but at lower growth rates than had been experienced during 1992 and 1993. However, there are numerous health care reform initiatives currently underway in the United States and other major pharmaceutical markets and it is not yet clear what effect, if any, these initiatives or other developments may have on product sales by the Company's licensees. In addition, these sales levels may fluctuate from quarter to quarter due to the timing and extent of major events such as new indication approvals or licensing arrangements. Interest income for the current quarter and six-month period increased from the comparable 1993 amounts due primarily to the higher level of invested funds. Total expenses for the second quarter of 1994 were $36.0 million as compared to $31.7 million in the 1993 quarter. Research and development expense increased $9.1 million, due to the expanded clinical development of the Company's lead drug candidates, Hirulog (TM) thrombin inhibitor and recombinant beta interferon. Both drug candidates are in Phase II and Phase III clinical trials for a variety of indications. The Company expects its research and development costs to continue to increase as it expands the clinical programs for Hirulog (TM), recombinant beta interferon and other therapeutics. On July 26, 1994, the Company announced results of its Phase III trial of recombinant beta interferon in patients with active relapsing and relapsing remitting multiple sclerosis. The Company intends to seek licensure in the United States and market approval in Europe in the first half of 1995 and Page 8 will begin incurring significant additional expenses for this commercialization stage. General and administrative expenses increased by $0.8 million due mostly to higher costs related to market development efforts, legal and personnel related costs. Other expenses decreased primarily due to a charge in the prior year's quarter for a patent settlement between Schering-Plough and Genentech, Inc. ("Genentech") relating to the production of alpha interferon by Schering-Plough. For the six-month period ended June 30, 1994, total expenses were $67.8 million as compared to $54.8 million in 1993. Research and development expenses increased $17.5 million, due to the expanded clinical development of the Company's lead drug candidates, Hirulog (TM) thrombin inhibitor and recombinant beta interferon. General and administrative expenses increased $2.8 million due mostly to higher costs related to market development efforts, legal and personnel related costs. Other expenses decreased $5.4 million primarily due to the charge related to the Genentech/Schering- Plough settlement in the second quarter of 1993. Income tax expense for the 1994 and 1993 periods were substantially less than the amount computed at U.S. federal statutory rates because of the utilization of net operating loss carryforwards. Financial Condition At June 30, 1994, cash, cash equivalents and marketable securities amounted to $289.9 million, a $19.6 million increase from the $270.4 million on hand at the end of 1993. Working capital increased $4.3 million to $282.0 million. Net cash provided from operating activities for the six months ended June 30, 1994 was $31.9 million while the Company's common stock option and purchase plans provided $2.8 million. The Company also received $7.1 million in the second quarter of 1994 from the exercise of 353,600 common stock warrants issued in connection with the research and development arrangement with Biogen Medical Products Limited Partnership ("BMPLP"). Each BMPLP warrant entitled the holder to purchase one share of the Company's common stock and was exercisable at $20 per share. The BMPLP warrants expired on June 30, 1994 with the settlement period extending through July 8, 1994. BMPLP warrants for the purchase of an additional 92,200 shares were exercised during the settlement period. Outflows of cash included investments in property and equipment and patents of $16.0 million. The decrease in accounts receivable is primarily attributed to an agreement the Company entered into with a bank in the first quarter of 1994 to sell certain accounts receivable. The Company is the general partner of BMPLP. BMPLP was formed for the development of commercial products based on gamma interferon and interleukin-2 (the "partnership products"). The Company agreed to extend the term of the development contract with BMPLP until December 31, 1994. The Company has not incurred any significant costs with respect to BMPLP in 1994 but has the option to provide up to $9.2 million to BMPLP to continue development of the partnership products. During the fourth quarter of 1993, the Company commenced construction of a 150,000 square foot building in Cambridge, Massachusetts to house research laboratories and offices. The anticipated cost of construction, including land, is approximately $40 million. As of June 30, 1994 the Company had commitments totaling approximately $5 million on this project. Upon completion of the building in 1995, the Company has the option, subject to certain conditions, to obtain a secured term loan with a bank for up to $25 million for a period of up to ten years. Page 9 In the second quarter of 1994 the Company made a payment of $2.6 million to SmithKline Beecham plc ("SmithKline"), which amount had been previously reserved, in settlement of the dispute between the Company and SmithKline regarding the rate of royalties payable from international sales of hepatitis B vaccines by SmithKline. In the first quarter of 1993, SmithKline initiated arbitration in the United States regarding similar royalty provisions in a separate agreement governing sales of hepatitis B vaccines by SmithKline in the United States. The amount in dispute as of June 30, 1994 was approximately $16 million. The Company believes that an adverse ruling in the United States is not probable. The Company believes that the financial resources available to it, including its current working capital and its existing and anticipated contractual relationships, may be sufficient to finance its planned operations and capital expenditures for the near term. However, the Company expects that it may have additional funding needs, the extent of which will depend upon the level of royalties and product sales, the outcome of clinical trial programs, the receipt and timing of required regulatory approvals for products, the results of research and development efforts and business expansion opportunities. Accordingly, from time to time, the Company may obtain funding through various means which could include collaborative agreements, lease financings, sales of equity or debt securities and other financing arrangements. Page 10 With respect to the unaudited condensed consolidated financial information of Biogen, Inc. and its subsidiaries at June 30, 1994 and for the three month and six month periods ended June 30, 1994 and 1993, Price Waterhouse reported that they have applied limited procedures in accordance with professional standards for a review of such information. However, their separate report dated July 18, 1994 appearing herein, states that they did not audit and they do not express an opinion on that unaudited condensed consolidated financial information. Price Waterhouse has not carried out any significant or additional audit tests beyond those which would have been necessary if their report had not been included. Accordingly, the degree of reliance on their report on such information should be restricted in light of the limited nature of the review procedures applied. Price Waterhouse is not subject to the liability provisions of Section 11 of the Securities Act of 1933 for their report on the unaudited condensed consolidated financial information because that report is not a "report" or a "part" of the registration statement prepared or certified by Price Waterhouse within the meaning of sections 7 and 11 of the Act. REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors and Shareholders of Biogen, Inc. We have reviewed the accompanying condensed consolidated balance sheet of Biogen, Inc. and its subsidiaries as of June 30, 1994, and the related condensed consolidated statements of income for the three month and six month periods ended June 30, 1994 and 1993 and of cash flows for the six month periods ended June 30, 1994 and 1993. This financial information is 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 audit 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 accompanying condensed consolidated financial information for it to be in conformity with generally accepted accounting principles. We previously audited in accordance with generally accepted auditing standards, the consolidated balance sheet as of December 31, 1993, and the related consolidated statements of income, of cash flows and of shareholders' equity for the year then ended (not presented herein), and in our report dated January 20, 1994 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, 1993, is fairly stated in all material respects in relation to the consolidated balance sheet from which it has been derived. /s/ Price Waterhouse - - --------------------- Boston, Massachusetts July 18, 1994 PART II - OTHER INFORMATION Page 11 Item 4 - Submission of Matters to a Vote of Security Holders (a) The information set forth in this Item 4 relates to matters submitted to a vote of the holders of Common Stock held at the Annual Meeting of Stockholders of Biogen, Inc. on June 3, 1994. (b) Not Applicable (c) A proposal (i) to elect Alexander G. Bearn, Harold W. Buirkle and James L. Vincent to serve for three year terms ending in 1997 and until their successors are duly elected and qualified and (ii) to elect Phillip A. Sharp to serve for a two-year term ending in 1996 and until his successor is duly elected and qualified was approved with the following vote: Nominee For Against Alexander G. Bearn 28,819,501 464,555 Harold W. Buirkle 28,812,585 471,471 James L. Vincent 28,829,792 454,264 Phillip A. Sharp 28,861,387 422,669 A proposal to ratify the selection of Price Waterhouse as the Company's independent accountants for the fiscal year ending December 31, 1994 was approved with 29,186,540 affirmative votes and 19,976 negative votes cast along with 77,540 abstentions. (d) Not applicable Item 6 - Exhibits and Reports on Form 8-K (a) Exhibits No. 11 Computation of Earnings per Share. No. 15 Letter from Price Waterhouse. (b) There were no reports on Form 8-K filed for the quarter ended June 30, 1994. 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. BIOGEN, INC. Dated: August 11, 1994 /s/Timothy M. Kish ---------------------------------- Timothy M. Kish Vice President-Finance and Chief Financial Officer EXHIBITS Index to Exhibits. No. 11 Computation of Earnings per Share. No. 15 Letter from Price Waterhouse. EX-11 2 EXHIBIT 11 EXHIBIT 11 BIOGEN, INC. and SUBSIDIARIES Computation of Earnings Per Share (unaudited) (in thousands, except per share amounts) Three Months Six Months Ended June 30, Ended June 30, 1994 1993 1994 1993 Primary earnings per share Weighted average number of shares outstanding . . . . . . . 32,556 31,901 32,479 31,848 Shares deemed outstanding from the assumed exercise of stock options and warrants . . . . . . 1,871 2,639 2,605 2,805 ------- ------- ------- ------- Total . . . . . . . . . . . . . . 34,427 34,540 35,084 34,653 ======= ======= ======= ======= Net income. . . . . . . . . . . . $ 611 $ 5,644 $11,840 $16,904 ======= ======= ======= ======= Primary earnings per share of common stock. . . . . . $ 0.02 $ 0.17 $ 0.34 $ 0.49 ======= ======= ======= ======= Fully diluted earnings per share (a) Weighted average number of shares outstanding . . . . . . . 32,556 31,901 32,479 31,848 Shares deemed outstanding from the assumed exercise of stock options and warrants . . . . . . 1,871 2,639 2,605 2,805 ------- ------- ------- ------- Total . . . . . . . . . . . . . . 34,427 34,540 35,084 34,653 ======= ======= ======= ======= Net income . . . . . . . . . . . $ 611 $ 5,644 $11,840 $16,904 ======= ======= ======= ======= Fully diluted earnings per share of common stock. . . . $ 0.02 $ 0.17 $ 0.34 $ 0.49 ======= ======= ======= ======= (a) 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%. EX-15 3 EXHIBIT 15 EXHIBIT 15 Securities and Exchange Commission 450 Fifth Street, N.W. Washington, D.C. 20549 Dear Sirs: We are aware that our report dated July 18, 1994 (issued pursuant to the provisions of Statement on Auditing Standards No. 71) on the unaudited condensed consolidated balance sheet of Biogen, Inc. and subsidiaries at June 30, 1994, and the related condensed consolidated statements of income for the three month and six month periods then ended and of cash flows for the six month period then ended, is incorporated by reference in the Prospectuses constituting part of its Registration Statements on Form S-8, as amended (Nos. 2-87550, 2-96157, 33-9827, 33-14742, 33-37312, 33-22378 and 33-41077 and as filed on September 21, 1993) and on Form S-3, as amended (Nos. 33-14741, 33-14743, 33-20183 and 33-51639). We are also aware of our responsibilities under the Securities Act of 1933. Yours very truly, /s/ Price Waterhouse - - -------------------- Boston, Massachusetts July 18, 1994 -----END PRIVACY-ENHANCED MESSAGE-----