As filed with the Securities and Exchange Commission on February 2, 1994
Exhibit Index on Page No. II-8 Registration No. 33-49305
_____________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________
POST-EFFECTIVE AMENDMENT NO. 1 TO
FORM S-8
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
____________________
HUMANA INC.
(Exact name of registrant as specified in its charter)
Delaware 61-0647538
(State or other jurisdiction of (I.R.S. Employee
incorporation or organization) Identification No.)
500 West Main Street
Louisville, Kentucky 40202
(Address of principal executive offices)
_____________________
HUMANA RETIREMENT AND SAVINGS PLAN
(Full title of the plan)
_____________________
Walter E. Neely, Esq. Copy to:
Vice President, General Counsel,
and Secretary William G. Strench, Esq.
Humana Inc. Hirn Reed & Harper
500 West Main Street 2000 Meidinger Tower
Louisville, Kentucky 40202 Louisville, Kentucky 40202
(502) 580-1000 (502) 585-2450
(Name, address and telephone number,
including area code, of agent for service)
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Certain Documents by Reference.
The following documents filed by Humana Inc. (the "Registrant" or
"Company") with the Securities and Exchange Commission (the "Commission")
(File No. 1-5975) are incorporated herein by reference and made a part
hereof:
(a) The Registrant's Annual Report on Form 10-K for the fiscal
year ended August 31, 1992 (In light of the spinoff by Registrant of its
hospital business and as a result of the accounting treatment of the
spinoff, the financial statements included in such 10-K are expressly not
incorporated by reference herein. See Item 3(g) for Registrant's
Financial Statements.);
(b) The Humana Thrift Plan Annual Report on Form 11-K for the
fiscal year ended August 31, 1992 and the Transition Report on Form 11-K
for the transition period from September 1, 1992 to February 28, 1993
filed by the Humana Retirement and Savings Plan (the "Plan") as successor
by merger of the Humana Thrift Plan and the Humana Basic Retirement Plan.
(c) The Registrant's Quarterly Report on Form 10-Q for the
quarters ended November 30, 1992 (In light of the spinoff by Registrant of
its hospital business and as a result of the accounting treatment of the
spinoff, the financial statements included in such 10-Q are expressly not
incorporated by reference herein.), March 31, 1993, June 30, 1993,
September 30, 1993, and the Transition Report on Form 10-Q for the period
September 1, 1992 to December 31, 1992;
(d) The Registrant's Current Reports on Form 8-K dated October 20,
1992, November 13, 1992, December 7, 1992, February 18, 1993 and September
1, 1993;
(e) The description of the Registrant's Common Stock, par value
$.16-2/3 per share (the "Common Stock") contained in the Registrant's
Registration Statement on Form 8-A, as such description may be amended or
updated.
(f) The Registrant's Proxy Statement dated January 22, 1993
("Proxy Statement") filed with the Securities and Exchange Commission on
January 25, 1993, pursuant to Rule 14a-6(c) promulgated under the
Securities Exchange Act of 1934, as amended, and incorporated by reference
as Exhibit 28(a) into the Registrant's Current Report on Form 8-K dated
February 18, 1993; and
(g) The audited consolidated financial statements as of August 31,
1992 and August 31, 1991 and the three years ended August 31, 1992
(including the notes thereto) of the Registrant (captioned in the Proxy
Statement as the financial statements of Humana Health Plans), attached
hereto as Exhibit 99.
All documents subsequently filed by the Registrant and the Plan
pursuant to Sections 13, 14 and 15(d) of the Securities Exchange Act of
1934, prior to the filing of a post-effective amendment to this
registration statement which indicates that all of the securities offered
have been sold or which deregisters all of such shares then remaining
unsold, shall be deemed to be incorporated by reference in this
registration statement and to be a part hereof from the date of filing of
such documents. Any statement contained in a document incorporated or
II-1
deemed to be incorporated by reference herein shall be deemed to be
modified or superseded for purposes of this registration statement to the
extent that a statement contained herein or in any other subsequently
filed document which also is or is deemed to be incorporated by reference
herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this registration statement.
Item 5. Interests of Named Experts and Counsel.
Certain legal matters in connection with the Common Stock offered in
connection with the Company's Plan are being passed upon by Hirn Reed &
Harper. Certain members of the firm own Common Stock of the Registrant,
however, in the aggregate, it is less than 1% of the Common Stock
outstanding.
Item 6. Indemnification of Directors and Officers.
Section 145 of the Delaware General Corporation Law ("GCL") permits
a Delaware corporation to indemnify any person who was or is, or is
threatened to be made, a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of such
corporation) by reason of the fact that such person is or was a director,
officer, employee or agent of such corporation, or is or was serving at
the request of such corporation as a director, officer, employee or agent
of another corporation, partnership, joint venture, trust or other
enterprise. The indemnity may include expenses (including attorneys'
fees) actually and reasonably incurred by such person in connection with
such action, suit or proceeding, provided that such person acted in good
faith and in a manner such person reasonably believed to be in or not
opposed to the best interests of the corporation, and with respect to any
criminal action or proceeding, such person had no reasonable cause to
believe the conduct was unlawful. A Delaware corporation may indemnify
such persons in actions brought by or in the right of the corporation to
procure a judgment in its favor under the same conditions, except that no
indemnification is permitted in respect of any claim, issue or matter as
to which such person has been adjudged to be liable to the corporation
unless and to the extent the Court of Chancery of the State of Delaware,
or the court in which such action or suit is brought, determines upon
application that, in view of all the circumstances of the case, such
person is fairly and reasonably entitled to indemnity for such expenses as
the Court of Chancery or other such court deems proper. To the extent
such person has been successful on the merits or otherwise in defense of
any action referred to above, or in defense of any claim, issue or matter
therein, the corporation must indemnify such person against expenses
(including attorneys' fees) actually and reasonably incurred by such
person in connection therewith. Corporations, under certain
circumstances, may pay expenses incurred by an officer or director in
advance of the final disposition of an action for which indemnification
may be permitted or required. The indemnification and advancement of
expenses provided for or granted pursuant to Section 145 of the GCL are
not exclusive of any other rights to which those seeking indemnification
or advancement of expenses may be entitled under any by-law, agreement,
vote of stockholders or disinterested directors or otherwise. Section 145
further provides that a corporation may maintain insurance against
liabilities for which indemnification is not expressly provided by
statute.
II-2
Article X of the Company's By-Laws essentially provides for the
indemnification of directors, officers, employees and agents of the
Company to the fullest extent authorized under Delaware law.
The Tenth Article of the Company's Restated Certificate of
Incorporation provides that a director of the Company shall not be
personally liable to the Company or its stockholders for monetary damages
for breach of fiduciary duty as a director except for liability (i) for
any breach of the director's duty of loyalty to the Company or its
stockholders, (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the Delaware GCL, or (iv) for any transaction from which
the director derived an improper personal benefit.
The Company has in effect officers and directors liability insurance
policies with various insurance companies. The policies provide indemnity
to the directors and officers of the Company for loss arising from claims
concerning a covered wrongful act where there is no corporate
indemnification The insurance will also reimburse the Company for
indemnification it may be required by statute or the Company's By-laws to
make to any of its directors and officers in connection with a claim by
reason of a wrongful act. The policy covers negligent acts, errors,
omissions, or breach of duty by a director or officer. The principal
exclusions from coverage include the following: (i) claims involving
violations of Section 16(b) of the Securities Exchange Act of 1934; (ii)
dishonest acts; and (iii) libel, slander or non-monetary damages. The
policy provides for a $500,000 deductible self-insurance retention by the
Company. The limit of liability under the policies is $60,000,000 in the
aggregate annually for coverage in excess of deductibles and
participations.
The Company has entered into Indemnity Agreements (the "Agreements")
with its directors and officers ("Indemnitees"), whereby the Company will
indemnify such parties and advance expenses to the fullest extent
permitted by Delaware law.
An Indemnitee will not be entitled to indemnification or advancement
of expenses under the Agreements with respect to any proceeding or claim
brought or made by the Indemnitee against the Company. If the Indemnitee
is not entitled to indemnification of all expenses, he or she may still be
indemnified for a portion of the expenses. The determination of
entitlement to indemnification under the Agreements will be made by a
majority of a quorum of disinterested directors, independent counsel or by
the stockholders of the Company. In the event of a change in control of
the Company (as defined in the Agreements), the determination of
entitlement will be made, if the Indemnitee so elects, by an independent
counsel selected by the Indemnitee, and the Company will have the burden
of proof to overcome a presumption that the Indemnitee is entitled to
indemnification.
The Agreements further provide that to the extent the Company
maintains a liability insurance policy for directors, officers, employees,
agents or fiduciaries, the Indemnitee will be covered by such policy in
accordance with its terms to the maximum extent of the coverage available
for any such officer, director, employee, agent or fiduciary under the
policy. The Agreements will terminate upon the later of: (a) 10 years
after the date the Indemnitee ceases to serve; or (b) the final
termination of all pending proceedings covered thereunder.
II-3
Item 8. Exhibits.
The Exhibit Index immediately preceding the exhibits is incorporated
herein by reference.
The Registrant undertakes to submit the Plan and any amendments
thereto to the Internal Revenue Service ("IRS") in a timely manner and
will make all changes required by the IRS in order to qualify the Plan.
Item 9. Undertakings.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this
registration statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the
registration statement (or the most recent post-
effective amendment thereof) which, individually
or in the aggregate, represent a fundamental
change in the information set forth in the
registration statement;
(iii)To include any material information with respect
to the plan of distribution not previously
disclosed in the registration statement or any
material change to such information in the
registration statement;
Provided, however, that paragraphs (a)(1)(i) and
(a)(1)(ii) do not apply if the information
required to be included in a post-effective
amendment by those paragraphs is contained in
periodic reports filed by the Registrant pursuant
to Section 13 or Section 15(d) of the Securities
Exchange Act of 1934 that are incorporated by
reference in the registration statement.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new registration
statement relating to the securities offered therein,
and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which
remain unsold at the termination of the offering.
(4) The undersigned hereby undertakes that, where
applicable, for purposes of determining any liability
under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or
Section 15(d) of the Securities Exchange Act of 1934
(and each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Securities
II-4
Exchange Act of 1934) that is incorporated by reference
in the registration statement shall be deemed to be a
new registration statement relating to the securities
offered herein, and the offering of such securities at
that time shall be deemed to be the initial bona fide
offering thereof.
Insofar as indemnification for liabilities arising under
the Securities Act of 1933 may be permitted to
directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the
opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in
the Act, and is, therefore, unenforceable. In the event
that a claim for indemnification against such
liabilities (other than the payment by Registrant of
expenses incurred or paid by a director, officer or
controlling person of Registrant in the successful
defense of any action, suit or proceeding) is asserted
by such director, officer or controlling person in
connection with the securities being registered,
Registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against
public policy as expressed in the Act and will be
governed by the final adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Amendment No. 1 to Form S-8 Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Louisville, Commonwealth of Kentucky, on the
2nd day of February, 1994.
HUMANA INC.
By: WALTER E. NEELY
Walter E. Neely
Vice President, General Counsel
and Secretary
II-5
POWER OF ATTORNEY
Know All Men By These Presents, that each person whose signature
appears below constitutes and appoints Walter E. Neely, James E. Murray
and Martha E. Clark, and each of them, his true and lawful attorneys-in-
fact and agents, with full power of substitution and re-substitution, for
him and in his name, place and stead, in any and all capacities, to sign
any and all Amendments (including Post-Effective Amendments) to this
Registration Statement, and to file the same, with all exhibits thereto,
and other documents in connection therewith with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents, and
each of them, full power and authority to do and perform each and every
act and thing requisite and necessary to be done, as fully to all intents
and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or any of them, or
their or his substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Post-effective Amendment No. 1 to Form S-8 Registration Statement has been
signed below by the following persons in the capacities and on the dates
indicated.
BY: *
David A. Jones
Chairman of the Board,
Chief Executive Officer
(Principal Executive Officer) and
Director
DATE: February 2, 1994
BY: *
Wayne T. Smith
President, Chief Operating Officer
and Director
DATE: February 2, 1994
BY: *
W. Roger Drury
Chief Financial Officer
(Principal Financial Officer)
DATE: February 2, 1994
BY: *
James E. Murray
Vice President and Controller
(Principal Accounting Officer)
DATE: February 2, 1994
BY: *
K. Frank Austen, M.D.
Director
DATE: February 2, 1994
II-6
BY: *
Michael E. Gellert
Director
DATE: February 2, 1994
BY: *
David A. Jones, Jr.
Director
DATE: February 2, 1994
BY: *
W. Ann Reynolds, Ph.D.
Director
DATE: February 2, 1994
BY: *
John R. Hall
Director
February 2, 1994
BY: *
Irwin Lerner
Director
February 2, 1994
*By: WALTER E. NEELY
Walter E. Neely
Attorney-in-Fact
February 2, 1994
II-7
Exhibit Index.
4.(i) - Restated Certificate of Incorporation filed with the
Secretary of State of Delaware on November 9, 1989, as
restated pursuant to Item 102(c) of Regulation S-T to
incorporate the amendments set forth in Certificate of
Amendment of Restated Certificate of Incorporation filed
with the Secretary of State of Delaware on January 9, 1992
and the correction set forth in Certificate of Correction
Filed to Correct a Certain Error in the Certificate of
Restated Certificate of Incorporation of Humana Inc. Filed
in the Office of the Secretary of State of Delaware on
November 9, 1989, filed with the Secretary of State of
Delaware on March 23, 1992.
4.(ii) - By-laws as amended. Exhibit 3(b)(2) to the Company's
Current Report on Form 8-K (File No. 1-5975) filed March 5,
1993 is incorporated by reference herein.
* 4.(iii) - Form of Humana Retirement and Savings Plan.
4.(iv) - First and Second Amendments to the Humana Retirement and
Savings Plan.
* 4.(v) - Form of Humana Retirement and Savings Trust.
4.(vi) - First Amendment to the Humana Retirement and Savings Plan
Trust.
4.(vii) - Form of Rights Agreement dated March 5, 1987 between Humana
Inc. and Mid-America Bank of Louisville and Trust Company
(the "Rights Agreement"). Exhibit 1 to the Form SE for the
Registration Statement (File No. 1-5975) on Form 8-A dated
March 9, 1987 is incorporated by reference herein.
4.(viii)- Amendment No. 1, dated December 7, 1992, to the Rights
Agreement. Exhibit 1.1 to the Company's Form 8 (File No.
1-5975) filed December 16, 1992 is incorporated herein by
reference.
4.(ix) - Amendment No. 2, dated March 2, 1993, to the Rights
Agreement. Exhibit 1.2 to the Company's Form 8 (File No.
1-5975) filed March 2, 1993 is incorporated herein by
reference.
* 5 - Opinion of Hirn Reed & Harper, counsel to the Registrant,
as to the validity of the securities registered herein.
* 23.(i) - Consent of Hirn Reed & Harper, counsel to the Registrant,
included in 5 above.
23.(ii) - Consent of Coopers & Lybrand, independent auditor for the
Registrant.
* 24 - Powers of Attorney for directors and certain officers of
the Registrant as of January 22, 1993 (included on the
signature page of this Registration Statement).
24.(i) - Powers of Attorney of David A. Jones, Jr., Irwin Lerner and
James E. Murray.
99 - Audited consolidated financial statements of Humana Health
Plans.
__________________________
[FN]
*Previously filed.
II-8
Exhibit 4.(i)
RESTATED CERTIFICATE OF INCORPORATION
OF
HUMANA INC.
(Includes subsequent Certificate of Amendment and Certificate of Correction)
HUMANA INC., (originally Heritage House of America Inc. and formerly
Extendicare, Inc.), a corporation organized and existing under and by
virtue of the laws of the State of Delaware, the original Certificate of
Incorporation of which was filed in the office of the Secretary of State
of Delaware on July 27, 1964 and recorded in the office of the Recorder of
Deeds for New Castle County, State of Delaware, on July 28, 1964, and has
heretofore been amended and restated from time to time, does hereby
certify:
That at a regular meeting of the Board of Directors of the above
corporation held on the 2nd day of November, A.D. 1989, in the City of
Louisville, State of Kentucky, for the consideration of the restatement of
the Certificate of Incorporation as hereinafter set forth, and the
directors having voted in favor thereof, the following Restated
Certificate of Incorporation, which only restates and integrates and does
not further amend the provisions of the corporation's Certificate of
Incorporation as theretofore amended, supplemented or restated, there
being no discrepancy between those provisions and the provisions of this
Restated Certificate of Incorporation, was duly adopted in accordance with
Section 245 of the General Corporation Law of the State of Delaware.
FIRST: The name of this corporation is HUMANA INC.
SECOND: The location of its principal office in the State of
Delaware is located at One Rodney Square, 10th and King Streets, in the
City of Wilmington, New Castle County, Delaware 19801, and the name and
address of its Resident Agent is Richard J. Abrams, One Rodney Square,
10th and King Streets, Wilmington, Delaware 19801.
THIRD: The nature of the business and the objects and purposes
proposed to be transacted, promoted and carried on are to do any and all
things herein mentioned as fully and to the same extent as natural persons
might or could do, and in any part of the world, viz.,
(a) To acquire by construction, purchase, exchange or other
means, and thereafter to own, maintain, operate and carry on, or to sell
or otherwise dispose of, sanitariums, nursing homes, rest homes,
convalescence homes, and other establishments suitable for the care and
treatment of elderly, disabled, or convalescent persons.
(b) To adopt, apply for, obtain, register, purchase, lease
or otherwise acquire, and to maintain, protect, hold, use, own, exercise,
develop, operate and introduce, and to sell, lease or grant licenses,
franchises, or other rights in respect of, and assign, pledge or otherwise
dispose of or turn to account, any trademarks, trade names, patents,
patent rights, copyrights, and distinctive marks and rights analogous
thereto, and invention, improvements, processes, formulae and the like,
including such thereof as may be covered by, used in connection with, or
secured or received under Letters Patent of the United States of America
or elsewhere, or otherwise, which may be deemed capable of use in
connection with any of the purposes of the corporation herein stated; and
to acquire, use, exercise or otherwise turn to account licenses in respect
of any such trademarks, trade names, patents, patent rights, copyrights,
inventions, improvements, processes, formulae and the like.
1
(c) To carry on the business of providing administrative,
financial, development, promotion, supervisory, management, technical and
other services to business of all kinds, on a fee, commission, franchise,
rental, sale or other basis.
(d) To engage in manufacturing, processing, buying, selling,
leasing, and otherwise producing, investing or dealing in any product or
article of commerce, or any goods, wares, merchandise, and real or
personal property, of every class and description whatsoever, in any part
of the world.
(e) To acquire by purchase, subscription or otherwise, to
hold, mortgage or pledge, sell, assign, transfer, exchange or otherwise
dispose of shares of the capital stock of, or voting trust certificates
for shares of the capital stock of, and any bonds and other securities or
evidences of indebtedness created by, any other corporation or
corporations organized under the laws of the State of Delaware or of any
other state, or of any country, nation or subdivision thereof, or
government, and to pay therefor, in whole or in part, with cash or other
property or with shares of the capital stock, bonds or other obligations
of this corporation, and, while the owner or holder of any such shares of
the capital stock, or voting trust certificates for shares of the capital
stock, or bonds, or other securities or indebtedness of any such other
corporation or corporations, to possess and exercise in respect thereof
all the rights, powers and privileges of ownership, including the right to
vote thereon and to consent in respect thereof for any and all purposes.
(f) To acquire all or any part of the good will, rights,
property and business of any person, firm, trust, association or
corporation heretofore or hereafter created, to pay for the same in cash
or in stock or bonds of this corporation or otherwise, to hold, utilize,
and in any manner dispose of the whole or any part of the rights and
property so acquired, assume in connection therewith any liabilities of
any such person, firm, trust, association or corporation and conduct in
any lawful manner the whole or any part of the business thus acquired.
(g) To aid by loan, guaranty, subsidy or in any other manner
whatsoever, insofar as may be permitted by law, any person, association,
partnership, corporation or corporations, organized under the laws in the
State of Delaware or of any other state, or of any country, nation or
government, any shares of the capital stock, or voting trust certificates
for shares of the capital stock, or bonds, or other securities or
evidences of indebtedness of which shall be held by or for the
corporation, or in which, or in the welfare of which, the corporation
shall have any interest, and to do any acts or things designed to protect,
preserve, improve or enhance the value of any such shares, voting trust
certificates, bonds, or interest, or other securities or evidences of
indebtedness, and to do any and all acts designed to accomplish any such
purpose.
(h) To guarantee the payments of dividends upon, or any
sinking fund payments in respect of, any shares of the capital stock, or
the payment of the principal of, or interest on, or sinking fund payments
in respect of, any bonds or other securities or evidences of indebtedness,
or the performance of any contract, of any other corporation, trust or
association insofar as and to the extent that a guaranty in respect
thereof by the corporation may be permitted by law.
(i) To enter into, make and perform contracts of every sort
and description with any person, firm, trust, association, corporation,
municipality, body politic, county, state or government or colony or
dependency thereof.
2
(j) To purchase, hold, cancel, reissue, sell or transfer
shares of its own capital stock, provided that it shall not use its funds
or property for the purchase of shares of its own capital stock when such
use would cause any impairment of its capital, and further, that shares of
its own capital stock belonging to it shall not be voted upon directly or
indirectly.
(k) In general, to carry on any business not contrary to the
laws of the State of Delaware.
(l) To make donations for the public welfare or for
charitable, scientific or educational purposes.
(m) To conduct its business, without restriction or limit as
to amount, in all or any of its branches in the State of Delaware and in
any or all other states, territories, possessions, colonies, and
dependencies of the United States of America, and in the District of
Columbia, and in any or all foreign countries to have one or more offices
within and outside the State of Delaware; and to purchase, take on lease
or otherwise acquire, own, hold, develop, operate, lease, mortgage or
pledge, sell, assign, transfer, exchange, or otherwise dispose of or turn
to account, and convey real and personal property of every class and
description or any interest therein, including without limitation
developed or undeveloped mineral properties and any and all types of
interests therein anywhere in the world.
(n) To carry out all or any part of the foregoing objects
and purposes as principal, agent, contractor, or otherwise, either alone
or in conjunction (including partnership) with any person, firm, trust,
association or other corporation, and in any part of the world; and, in
carrying on its business and for the purpose of attaining or furthering
any of its objects or purposes, to make and perform contracts of any kind
and description, to do such acts and things and to exercise any and all
such powers, as a natural person could lawfully make, perform, do or
exercise, provided that the same be not inconsistent with the laws of the
State of Delaware.
(o) To do any and all things necessary, suitable, convenient
or proper for, or in connection with, or incidental to, the accomplishment
of any of the purposes or the attainment of any one or more of the objects
herein enumerated, or designed directly or indirectly to promote the
interests of the corporation, or to enhance the value of any of its
properties; and in general to do any and all things and exercise any and
all powers which it may now or hereafter be lawful for the corporation to
do or to exercise under the laws of the State of Delaware that may now or
hereafter be applicable to the corporation.
It is the intention that, except where otherwise expressed in this
Article THIRD, the objects and purposes specified in any of the forgoing
clauses of this Article shall not in anywise be limited or restricted by
reference to, or inference from, the terms of any other clause of this
Article or of any other Article of this Certificate of Incorporation, but
that the objects and purposes specified in each of the clauses of this
Article shall be regarded as independent objects and purposes.
It is also the intention that said clauses be construed as powers as
well as objects and purposes; and, generally, that the corporation shall
be authorized to exercise and enjoy all other powers, rights and
privileges granted by the laws of the State of Delaware to corporations
organized thereunder, and the enumeration herein of certain powers is not
intended as exclusive of, or a waiver of, any of the powers, rights or
3
privileges granted or conferred by said laws now or hereafter in force;
provided, however, that the corporation shall not carry on any business
nor exercise any powers in any state, district, territory, possession or
country which a corporation organized under the laws of such state,
district, territory, possession or country could not carry on or exercise,
except to the extent permitted or authorized by the laws of such state,
district, territory, possession or country.
FOURTH: The total number of shares of all classes of capital stock
which the Corporation shall have authority to issue is Three Hundred Ten
Million (310,000,000) shares aggregating a total amount of Sixty Million
Dollars ($60,000,000.00), which shall be divided into two classes as
follows:
Three Hundred Million (300,000,000) shares of Common Stock having a
par value of Sixteen and Two-Thirds Cents ($.16-2/3) per share,
aggregating a total amount of Fifty Million Dollars ($50,000,000.00);
Ten Million (10,000,000) shares of Preferred Stock, each of which
shall have a par value of One Dollar ($1.00) per share, aggregating a
total amount of Ten Million Dollars ($10,000,000.00).
The amount of capital with which the corporation shall commence
business is the sum of One Thousand Dollars ($1,000.00).
The designations, voting powers, preferences and relative,
participating, optional or other special rights, qualifications,
limitations or restrictions of the above classes of stock shall be as
follows:
(a) The Board of Directors is authorized to issue shares of
Preferred Stock, from time to time, in such class or classes, and such
series within any class, and such designations, preferences and relative,
participating, optional or other special rights, and qualifications,
limitations or restrictions thereof, as shall be stated and expressed in
the resolution or resolutions providing for the issue of such stock
adopted by the Board of Directors, and as are not stated or expressed in
this Certificate of Incorporation or any amendment thereto including, but
not limited to, determination of any of the following:
(1) The distinctive serial designation and the number
of shares constituting a series;
(2) The dividend rate or rates, whether dividends
shall be cumulative and, if so, from what date, the payment date or dates
for dividends, and the participating or other special rights, if any, with
respect to dividends;
(3) The voting powers, full or limited, if any, of the
shares of such series;
(4) Whether the shares shall be redeemable and, if so,
the price or prices at which, and the terms and conditions on which, the
shares may be redeemed;
(5) The amount or amounts payable upon the shares in
the event of voluntary or involuntary liquidation, dissolution or winding
up of the corporation prior to any payment or distribution of the assets
of the corporation to any class or classes of stock of the corporation
ranking junior to the Preferred Stock;
4
(6) Whether the shares shall be entitled to the
benefit of a sinking or retirement fund to be applied to the purchase or
redemption of shares of a series and, if so entitled, the amount of such
fund and the manner of its application, including the price or prices at
which the shares may be redeemed or purchased through the application of
such fund;
(7) Whether the shares shall be convertible into, or
exchangeable for, shares of any other class or classes or of any other
series of the same or any other class or classes of stock of the
corporation or any other corporation, and if so convertible or
exchangeable, the conversion price or prices, or the rates of exchange,
and the adjustments thereof, if any, at which such conversion or exchange
may be made, and any other terms and conditions of such conversion or
exchange; and
(8) 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 the Certificate of Incorporation.
(b) Subject to the preferential rights of the Preferred
Stock, the holders of the Common Stock shall be entitled to receive, to
the extent permitted by law, such dividends as may be declared from time
to time by the Board of Directors. Except as may be otherwise required by
law or this Certificate of Incorporation, each holder of Common Stock
shall have one vote in respect of each share of stock held by him of
record on the books of the corporation on all matter voted upon by the
stockholders.
(c) Subject to the protective conditions and restrictions of
any outstanding Preferred Stock, any amendment to this Certificate of
Incorporation which shall increase or decrease the authorized capital
stock of any class or classes may be adopted by the affirmative vote of
the holders of a majority of the outstanding shares of the voting stock of
the corporation.
(d) No holder of Preferred or Common Stock shall have any
right as such holder to purchase or subscribe for any security of the
corporation now or hereafter authorized or issued. All such securities may
be issued and disposed of by the Board of Directors to such persons,
firms, corporations and associations for such lawful considerations, and
on such terms, as the Board of Directors in its discretion may determine,
without first offering the same, or any part thereof, to the holders of
Preferred or Common Stock.
(e) There is hereby created a series of Preferred Stock, par
value $1.00 per share out of the authorized but unissued shares of the
capital stock of the corporation, to be designated "Series A Participating
Preferred Stock" ("Participating Preferred Stock") to consist of 2,500,000
shares, of which the preferences and relative and other rights, and the
qualifications, limitations or restrictions thereof, shall be as follows:
1. Future Increase or Decrease. Subject to paragraph
4(e) of this resolution, the number of shares of said series may at any
time or from time to time be increased or decrease by the Board of
Directors notwithstanding that shares of such series may be outstanding at
such time of increase or decrease.
5
2. Dividend Rate. (a) The holders of shares of
Participating 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, quarterly dividends payable in cash on the first day of each
November, February, May and August in each year (each such date being
referred to herein as 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 Participating Preferred Stock, in an
amount per share (rounded to the nearest cent) equal to the greater of (a)
$20 or (b) subject to the provision for adjustment hereinafter set forth,
100 times the aggregate per share amount of all cash dividends and 100
times the aggregate per share amount (payable in kind) of all non-cash
dividends or other distributions other than a dividend payable in shares
of Common Stock or a subdivision of the outstanding shares of Common Stock
(by reclassification or otherwise), declared on the Common Stock, par
value $.16 2/3 per share, of the corporation (the "Common Stock") 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 or fraction of a share of Participating Preferred
Stock. In the event the corporation shall at any time after March 5, 1987
(the "Rights Declaration Date") (i) declare any dividend on Common Stock,
payable in shares of Common Stock, (ii) subdivide the outstanding Common
Stock, or (iii) combine the outstanding Common Stock into a smaller number
of shares, then in each such case the amount to which holders of shares of
Participating Preferred Stock were entitled immediately prior to such
event under clause (b) of the preceding sentence shall be adjusted by
multiplying such amount 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) On or after the first issuance of any share or
fractional share of Participating Preferred Stock, no dividend on Common
Stock shall be declared unless concurrently therewith a dividend or
distribution is declared on the Participating Preferred Stock as provided
in paragraph (a) above; and the declaration of any such dividend on the
Common Stock shall be expressly conditioned upon payment or declaration of
the provision for a dividend on the Participating Preferred Stock as above
provided. In the event no dividend or distribution shall have been
declared on the Common Stock during the period between any Quarterly
Dividend Payment Date and the next subsequent Quarterly Dividend Payment
Date, a dividend of $20 per share on the Participating Preferred Stock
shall nevertheless be payable on such subsequent Quarterly Dividend
Payment Date.
(c) Dividends shall begin to accrue and be cumulative on
outstanding shares of Participating Preferred Stock from the Quarterly
Dividend Payment Date next preceding the date of issue of such shares of
Participating Preferred Stock, unless the date of issue of such shares is
prior to the record date for the first Quarterly Dividend Payment Date, in
which case dividends on such shares shall begin to accrue from the date of
issue of such shares, or unless the date of issue is a Quarterly Dividend
Payment Date or is a date after the record date for the determination of
holders of shares of Participating Preferred Stock entitled to receive a
quarterly dividend and before such Quarterly Dividend Payment Date, in
either of which events such dividends shall begin to accrue and be
cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid
dividends shall not bear interest. The Board of Directors may fix a record
date for the determination of holders of shares of Participating Preferred
Stock entitled to receive payment of a dividend or distribution declared
thereon, which record date shall be no more than 30 days prior to the date
fixed for the payment thereof.
6
3. Dissolution, Liquidation and Winding Up.
(a) In the event of any voluntary or involuntary
dissolution, liquidation or winding up of the affairs of the corporation
(hereinafter referred to as a "Liquidation"), the holders of Participating
Preferred Stock shall receive at least $1,000 per share, plus an amount
equal to accrued and unpaid dividends and distributions thereon, whether
or not declared, to the date of such payment, provided that the holders of
shares of Participating Preferred Stock shall be entitled to receive at
least an aggregate amount per share, subject to the provision for
adjustment hereinafter set forth, equal to 100 times the aggregate amount
to be distributed per share to holders of Common Stock (the "Participating
Preferred Liquidation Preference").
(b) In the event the corporation shall at any time declare
or pay any dividend on the Common Stock payable in shares of Common Stock,
or effect a subdivision or combination or consolidation of the outstanding
Common Stock (by reclassification or otherwise than by payment of a
dividend in Common Stock) into a greater or lesser number of shares of
Common Stock, then in each such case the amount which holders of
Participating Preferred Stock were entitled immediately prior to such
event pursuant to the provision set forth in paragraph (a) above, shall be
adjusted by multiplying such amount 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.
4. Voting Rights. The holders of shares of Participating
Preferred Stock shall have the following voting rights:
(a) Each share of Participating Preferred Stock shall
entitle the holder thereof to one (l) vote on all matters submitted to
vote of the stockholders of the Company.
(b) Except as otherwise provided herein, or by law, the
Certificate of Incorporation or the By-Laws, the holders of shares of
Participating 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.
(c) If and whenever dividends on the Participating Preferred
Stock shall be in arrears in an amount equal to six quarterly dividend
payments, then and in such event the holders of the Participating
Preferred Stock, voting separately as a class (subject to the provisions
of subparagraph (d) below), shall be entitled at the next annual meeting
of the stockholders or at any special meeting to elect two (2) directors.
Each share of Participating Preferred Stock shall be entitled to one vote,
and holders of fractional shares shall have the right to a fractional
vote. Upon election, such directors shall become additional directors of
the corporation and the authorized number of directors of the corporation
shall thereupon be automatically increased by such number of directors.
Such right of the holders of Participating Preferred Stock to elect
directors may be exercised until all dividends in default on the
Participating Preferred Stock shall have been paid in full, and dividends
for the current dividend period declared and funds therefor set apart, and
when so paid and set apart, the right of the holders of Participating
Preferred Stock to elect such number of directors shall cease, the term of
such directors shall thereupon terminate, and the authorized number of
directors of the corporation shall thereupon return to the number of
7
authorized directors otherwise in effect, but subject always to the same
provisions for the vesting of such special voting rights in the case of
any such future dividend default or defaults. The fact that dividends have
been paid and set apart as required by the preceding sentence shall be
evidenced by a certificate executed by the President and the chief
financial officer of the corporation and delivered to the Board of
Directors. The directors so elected by holders of Participating Preferred
Stock shall serve until the certificate described in the preceding
sentence shall have been delivered to the Board of Directors or until
their respective successors shall be elected or appointed and qualify.
At any time when such special voting rights have been so
vested in the holders of the Participating Preferred Stock, the Secretary
of the corporation may, and upon the written request of the holders of
record of 10% or more of the number of shares of the Participating
Preferred Stock then outstanding addressed to such Secretary at the
principal office of the corporation in the Commonwealth of Kentucky,
shall, call a special meeting of the holders of the Participating
Preferred Stock for the election of the directors to be elected by them as
hereinabove provided, to be held in the case of such written request
within forty (40) days after delivery of such request, and in either case
to be held at the place and upon the notice provided by law and in the
corporation's By-Laws for the holding of meetings of stockholders;
provided, however, that the Secretary shall not be required to call such
a special meeting (i) if any such request is received less than ninety
(90) days before the date fixed for the next ensuing annual or special
meeting of stockholders or (ii) if at the time any such request is
received, the holders of Participating Preferred Stock are not entitled to
elect such directors by reason of the occurrence of an event specified in
the third sentence of subparagraph (d) below.
(d) If, at any time when the holders of Participating
Preferred Stock are entitled to elect directors pursuant to the foregoing
provisions of this paragraph 4, the holders of any one or more additional
series of Preferred Stock are entitled to elect directors by reason of any
default or event specified in the corporation's Restated Certificate of
Incorporation, as amended, as in effect at the time of the certificate of
designation for such series, and if the terms for such other additional
series so permit, the voting rights of the two or more series then
entitled to vote shall be combined (with each series having a number of
votes proportional to the aggregate liquidation preference of its
outstanding shares). In such case, the holders of Participating Preferred
Stock and of all such other series then entitled so to vote, voting as a
class, shall elect such directors. If the holders of any such other series
have elected such directors prior to the happening of the default or event
permitting the holders of Participating Preferred Stock to elect
directors, or prior to a written request for the holding of a special
meeting being received by the Secretary of the corporation from the
holders of not less than 10% of the then outstanding shares of
Participating Preferred Stock, then such directors so previously elected
will be deemed to have been elected by and on behalf of the holders of
Participating Preferred Stock as well as such other series, without
prejudice to the right of the holders of Participating Preferred Stock to
vote for directors if such previously elected directors shall resign,
cease to serve or fail to stand for reelection while the holders of
Participating Preferred Stock are entitled to vote. If the holders of any
such other series are entitled to elect in excess of two (2) directors,
the Participating Preferred Stock shall not participate in the election of
more than two (2) such directors, and those directors whose terms first
expire shall be deemed to be the directors elected by the holders of
Participating Preferred Stock; provided that, if at the expiration of such
8
terms the holders of Participating Preferred Stock are entitled to vote in
the election of directors pursuant to the provisions of this paragraph 4,
then the Secretary of the corporation shall call a meeting (which meeting
may be the annual meeting or special meeting of stockholders referred to
in subparagraph (c)) of holders of Participating Preferred Stock for the
purpose of electing replacement directors (in accordance with the
provisions of this subparagraph 4) to be held on or prior to the time of
expiration of the expiring terms referred to above.
(e) Except as otherwise set forth herein or required by law,
the corporation's Restated Certificate of Incorporation or By-Laws,
holders of Participating 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. No consent of the holders of
outstanding shares of Participating Preferred Stock at any time
outstanding shall be required in order to permit the Board of Directors
to: (i) increase the number of authorized shares of Participating
Preferred Stock or to decrease such number to a number not below the sum
of the number of shares of Participating Preferred Stock then outstanding
and the number of shares with respect to which there are outstanding
rights to purchase; or (ii) to issue Preferred Stock which is senior to
the Participating Preferred Stock, junior to the Participating Preferred
Stock or on a parity with the Participating Preferred Stock.
5. Redemption. The shares of Participating Preferred Stock shall
not be redeemable.
6. Conversion Rights. The Participating Preferred Stock is not
convertible into Common Stock or any other security of the corporation.
FIFTH: This corporation is to have perpetual existence.
SIXTH: The private property of the stockholders shall not be subject
to the payment of corporate debts to any extent whatsoever.
SEVENTH: In the absence of fraud, no contract or transaction between
the corporation and any other corporation, association or firm, and no act
of the corporation, shall in any way be affected or invalidated by the
fact that any of the directors or officers of the corporation is in
anywise, pecuniarily or otherwise, interested in, or is a shareholder,
director, officer or member of, or is otherwise connected with, such other
corporation, association or firm. A director or officer of the corporation
shall not be disqualified by his office from dealing or contracting with
the corporation, either as vendor, purchaser or otherwise; and any
director or officer of the corporation, or any firm, corporation or
association of which any director or officer is a member, shareholder,
director or officer or with which he is otherwise connected, may, in the
absence of fraud, be a party to, or pecuniarily or otherwise interested
in, any contract or transaction of the corporation; nor shall any such
officer or directors, in the absence of fraud, be liable to account to the
corporation for any profits realized by, from, through or as a result of
any such contract or transaction.
EIGHTH: Whenever a compromise or arrangement is proposed between
this corporation and its creditors or any class of them and/or between
this corporation and its stockholders or any class of them, any court of
equitable jurisdiction within the State of Delaware may, on the
application in a summary way of this corporation or of any creditor or
stockholder thereof, or on the application of any receiver or receivers
appointed for this corporation under the provisions of Title 8, Section
9
291 of the Revised Code of 1953 of said State, or on the application of
trustees in dissolution or of any receiver or receivers appointed for this
corporation under the provisions of Section 279 of the General Corporation
Law of the State of Delaware, order a meeting of the creditors or class of
creditors and/or of the stockholders or class of stockholders, of this
corporation, as the case may be, to be summoned in such manner as the said
court directs. If a majority in number representing three-fourths in value
of the creditors or class of creditors, and/or of the stockholders or
class of stockholders, of this corporation, as the case may be, agree to
any compromise or arrangement and to any reorganization of this
corporation as a consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned
by the Court to which the said application has been made, be binding on
all the creditors or class of creditors, and/or on all the stockholders or
class of stockholders, of this corporation, as the case may be, and also
on this corporation.
NINTH: The following provisions are hereby adopted for the
regulation and management of the business and the conduct of the affairs
of the corporation and for the purposes of creating, limiting, defining
and regulating the rights and powers of the directors and of the
stockholders,
viz.:
(a) The Board of Directors at any regular or special
meeting, and the stockholders at any annual meeting, shall have the power
to make, alter, amend and repeal the By-Laws of the corporation, provided,
however, that By-Laws made or adopted by the Stockholders pursuant to the
powers reserved to Stockholders in the Certificate of Incorporation shall
not be subject to alteration or repeal by the Board of Directors, and
provided further that the Board of Directors or the Stockholders shall not
have authority to authorize the election of directors of the corporation
by cumulative voting, or to classify the directors by terms differing in
dates of expiration, unless by unanimous approval of the Stockholders of
the corporation.
(b) The Board of Directors shall have the power to fix, from
time to time, the amount of the accumulated profits of the corporation to
be reserved as working capital or for any other lawful purpose.
(c) The Board of Directors shall have the power to
determine, from time to time, whether and to what extent and at what times
and places and under what conditions and regulations the accounts and
books of the corporation, or any of them, shall be open to the inspection
of the stockholders; and no stockholder shall have any rights to inspect
any account or book or document of the corporation, except as conferred by
the laws of the State of Delaware, unless and until authorized so to do by
resolution of the Board of Directors or stockholders of the corporation.
(d) The Board of Directors shall have power, without the
assent or vote of the stockholders, to authorize and to cause to be
executed mortgage and liens upon the real and personal property of the
corporation, including after-acquired property.
(e) The Board of Directors shall have power at any time or
from time to time (without any action by the stockholders of the
corporation) to create and issue, whether or not in connection with the
issue and sale of any shares of stock or other securities of the
corporation, rights, options or warrants entitling the holders thereof to
purchase from the corporation any shares of its capital stock of any class
or classes or of any series of any class or classes, such rights, options
10
or warrants to be evidenced by or in such instrument or instruments as
shall be approved by the Board of Directors. The terms upon which, the
time or times, which may be limited or unlimited in duration, at or within
which, and the price or prices at which any such shares may be purchased
from the corporation upon the exercise of any such right, option, or
warrant shall be such as shall be fixed and stated in the resolution or
resolutions adopted by the Board of Directors providing for the creation
and issue of such rights, options, or warrants and, in every case, set
forth or incorporated by reference in the instrument or instruments
evidencing such rights, options or warrants. In the absence of actual
fraud in the transaction, the judgment of the directors as to the
consideration for the issuance of such rights, options or warrants and the
sufficiency thereof shall be conclusive.
(f) Shares of capital stock of the corporation of any class
or classes hereby or hereafter authorized, and any rights, options or
warrants entitling the holders thereof to purchase from the corporation
any shares of its capital stock of any class or classes or of any series
of any class or classes, may be issued by the corporation from time to
time for such legal consideration as may be fixed from time to time by the
Board of Directors. The Board of Directors shall have authority, as
provided by statute, to determine that only a part of the consideration
which shall be received by the corporation for any of the shares of its
capital stock which it shall issue from time to time shall be capital.
(g) The Board of Directors shall have the power to determine
from time to time the use and disposition of any surplus or net profits
over and above the paid in capital stock of the corporation, and the Board
of Directors in its discretion may use and apply any such surplus or
accumulated profits, or any part thereof, in purchasing or acquiring any
bonds or other obligations or shares of the capital stock of the
corporation, to such extent, in such manner and upon such terms as the
Board may deem expedient. Shares of the capital stock of the corporation
so purchased or acquired may be resold unless such shares shall have been
retired for the purpose of decreasing the corporation's capital stock as
provided by law.
(h) Elections shall be by ballot whenever requested by any
person entitled to vote, but unless so requested may be conducted in any
way approved at the meeting of the stockholders at which such election is
held.
(i) The stockholders shall have the power to hold their
meeting within or without the State of Delaware at such places as from
time to time may be designated by the By-Laws or as therein provided; and
the Board of Directors shall have power to hold its meetings at such
places whether within or without said State as from time to time shall be
designated by resolution of the Board of Directors.
(j) The corporation shall have power, subject to the
provisions of the laws of the State of Delaware and of the By-Laws of the
corporation to keep the books of the corporation outside of said State at
such places as may from time to time be designated by resolution of the
Board of Directors.
(k) The Board of Directors may, by resolution passed by a
majority of the whole Board, designate two or more of their number to
constitute an Executive Committee, who, to the extent provided in said
resolution or in the By-Laws of the corporation, shall have and exercise
the powers of the Board of Directors in the management of the business and
affairs of the corporation, including the power to authorize the seal of
the corporation to be affixed to all papers which may require it.
11
(l) In addition to the powers and authorities hereinbefore
or by statute expressly conferred upon them, the Board of Directors may
exercise all such powers and do all such acts and things as may be
exercised or done by the corporation; subject, nevertheless, to the
provisions of the laws of the State of Delaware, of this Certificate, and
of the By-Laws of the corporation.
(m) The corporation shall be entitled to treat the person in
whose name any share, right or option is registered as the owner thereof,
for all purposes, and shall not be bound to recognize any equitable or
other claim to or interest in which share, right or option on the part of
any other person, whether or not the corporation shall have notice
thereof, save as may be expressly provided by the laws of the State of
Delaware.
(n) In addition to the powers and authorities hereinbefore
or by statute expressly conferred upon them, the Board of Directors may
exercise all such powers and do all such acts and things as may be
exercised or done by the corporation; subject, nevertheless, to the
provisions of the laws of the State of Delaware, of this Certificate and
of the By-Laws of the corporation.
TENTH: A director of the corporation shall not be personally liable
to the corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director except for liability (i) for any breach of
the director's duty of loyalty to the corporation or its stockholders,
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 174 of the
Delaware General Corporation Law, or (iv) for any transaction from which
the director derived an improper personal benefit.
ELEVENTH: Except as otherwise set forth elsewhere in this Eleventh
Article the affirmative vote of three-fourths of the outstanding shares
entitled to vote thereon shall be required: (a) for the adoption of any
agreement for the merger or consolidation of the corporation with or into
a related company or an affiliate of a related company, (b) to authorize
the sale or lease of all or substantially all of the assets of the
corporation to a related company or affiliate of a related company, or (c)
to authorize the sale or lease to the corporation or any subsidiary of any
assets of a related company or an affiliate of a related company in
exchange for equity securities of the corporation.
A determination of the Board of Directors of the corporation, based
on information known to the Board of Directors and made in good faith,
shall be conclusive as to whether a company, person or other entity is a
related company, an affiliate or an associate and whether a related person
or affiliate thereof beneficially owns more than 5% of any class of equity
securities of the corporation.
The provisions of this Eleventh Article shall not be applicable to
any (i) merger or consolidation of the corporation with or into a related
person or affiliate thereof, (ii) sale or lease of all or any substantial
part of the assets of the corporation to a related person or affiliate
thereof, or (iii) sale or lease of any assets of a related person or
affiliate thereof to the corporation or any subsidiary in exchange for
equity securities of the corporation, if the Board of Directors of the
corporation shall have approved such a transaction with such related
company or affiliate prior to the time that such related company or
affiliate became a holder of more than 5% of any class of equity
securities of the corporation.
12
The provisions of this Eleventh Article shall be in addition to the
requirements of the Delaware Corporation Law and shall not be requirements
of the Delaware Corporation Law and shall not be amended or repealed
without the affirmative vote of three-fourths of the outstanding stock of
the corporation entitled to vote thereon.
For purposes of this Eleventh Article a "related company" in respect
of a given transaction is any company, person or other entity which by
itself or together with its affiliates and associates is the beneficial
owner, directly or indirectly, of more than 5% of any class of equity
securities of the corporation as of the record date for the determination
of stockholders entitled to vote on such transactions. An "affiliate" of
a related company is any company, person or other entity which, directly
or indirectly, through one or more intermediaries, controls or is
controlled by, or is under common control with, the related company. An
"associate" of a related company is any officer, director or beneficial
owner, directly or indirectly, of 5% or more of any class of equity
securities of such related company or any of its affiliates. "Equity
security" is any stock or similar security, or any security, convertible,
with or without consideration, into such a security, or carrying any
warranty to subscribe to or purchase such a security, or any such warrant
or right.
A related company shall be deemed to be the beneficial owner of any
equity securities which it or its affiliates or associates has the right
to acquire pursuant to any agreement or which are beneficially owned,
directly or indirectly, by any other company, person or entity (or an
affiliate or associate of such company, person, or entity) with which it
or its affiliates or associates has any agreement or understanding for the
purpose of acquiring, holding, voting or disposing of any equity
securities of the corporation.
TWELFTH: This corporation reserves the right to amend, alter, change
or repeal any provisions contained in this Certificate of Incorporation in
the manner now or hereafter prescribed by the statue, and all rights
conferred upon stockholders herein are granted subject to this
reservation.
IN WITNESS WHEREOF, HUMANA INC. has caused its corporate seal to be
hereunto affixed and this Restated Certificate of Incorporation to be
signed by Thomas J. Flynn, its Executive Vice President and Alice F.
Newton, its Secretary, this 8th day of November, 1989.
HUMANA INC.
By: THOMAS J. FLYNN
Executive Vice President
By: ALICE F. NEWTON
Secretary
Amended Article Fourth: January 9, 1992
Corrected Article Eleventh: March 23, 1992
13
COMMONWEALTH OF KENTUCKY )
) SS.
COUNTY OF JEFFERSON )
BE IT REMEMBERED, that on this 8th day of November, 1989, personally
came before me, a Notary Public in the County and Commonwealth aforesaid,
Thomas J. Flynn and Alice F. Newton, Executive Vice President and
Secretary, respectively, of HUMANA INC., a corporation of the State of
Delaware, the corporation described in and which executed the foregoing
Restated Certificate of Incorporation, known to me personally to be such,
and, they, the said Thomas J. Flynn and Alice F. Newton, as such Executive
Vice President and Secretary, respectively, duly executed said Certificate
before me and acknowledged the said Certificate to be their act and deed
and the act and deed of said corporation and that the facts stated in said
Certificate are true; that the signatures of the said Executive Vice
President and Secretary, respectively, of said corporation to the
foregoing Certificate are in the handwriting of the said Executive Vice
President and Secretary, respectively, and that the seal affixed to said
Certificate is the corporate seal of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and seal of office
the day and year first above written.
LISA J. BENSON
Notary Public, Jefferson County, Kentucky
My commission expires: October 11, 1993
14
Exhibit 4.(iv)
THE FIRST AMENDMENT
OF THE
HUMANA INC.
RETIREMENT AND SAVINGS PLAN
THIS FIRST AMENDMENT to the Humana Inc. Retirement and Savings Plan
("Plan"), which Plan was amended and restated in its entirety effective
March 1, 1993, further amends and modifies the Plan pursuant to the right
reserved in Article 12 of the Plan, as follows:
A.
Section 6.9(a) is hereby amended by adding the following:
"... Any election as to the time of distribution upon a
Participant's retirement, death or Disability may be made separately with
respect to (i) a Participant's account under the Retirement Plan portion
of the Plan (Employer Retirement and Vested Pension Accounts), and (ii)
his or her accounts under the Thrift Plan portion of the Plan (Employer
Thrift, Voluntary Contribution and Participant Accounts)."
B.
Section 6.10 is hereby amended by adding the following:
"(i) Elections May Apply Separately. A Participant or Beneficiary
may elect the application of any provision of this Section 6.10 to apply
separately to (l) his or her Retirement Plan portion of the Plan (Employer
Retirement and Vested Pension Accounts), and (2) his or her Thrift Plan
portion of the Plan (Employer Thrift, Voluntary Contribution and
Participant Accounts)."
C.
The effective date of this First Amendment to the Plan shall be July
1, 1993.
D.
Except as specifically amended above, the Plan shall remain
unchanged and as amended herein, shall continue in full force and effect.
IN WITNESS WHEREOF, the Company has caused this First Amendment to
the Plan to be executed by its duly authorized officer this 30th day of
November, 1993.
HUMANA INC.
By: /S/ ROBERT A. HORRAR
Title: Vice President of Human
Resources
Attest:
/S/ WALTER E. NEELY
Secretary
Receipt of an executed copy of
the First Amendment of the
Humana Inc. Retirement and Savings
Plan is hereby acknowledged this
1st day of December, 1993.
NATIONAL CITY BANK, KENTUCKY
as Trustee
By: /S/ CLELON B. TATUM, JR.
CLELON B. TATUM, JR.
Title: VICE PRESIDENT
2
THE SECOND AMENDMENT
OF THE
HUMANA RETIREMENT AND SAVINGS PLAN
THIS SECOND AMENDMENT to the Humana Retirement and Savings Plan
("Plan"), which Plan was amended and restated in its entirety effective
March 1, 1993, further amends and modifies the Plan pursuant to the right
reserved in Article 12 of the Plan, as follows:
A.
Section 2.18 is hereby deleted in its entirety and the following
inserted in lieu thereof effective March 1, 1993:
"2.18 Employee. Any person employed by an Employer, or any
other employer required to be aggregated with an Employer under
Sections 414(b), (c), (m) or (o) of the Code; provided, the term
Employee shall not include any person included in a unit of
employees covered by a collective bargaining agreement between
employee representatives and an Employer unless such collective
bargaining agreement expressly provides that such person is eligible
for participation in the Retirement Plan option, the Thrift Plan
option or both Retirement and Thrift Plan options of the Plan. The
term Employee shall include leased employees within the meaning of
Sections 414(n) and (o) of the Code. Notwithstanding the foregoing,
a leased employee shall not be considered an Employee (unless
otherwise provided by the terms of the Plan) if:
(a) such employee is covered by a money purchase pension
plan providing:
(i) a non-integrated employer contribution rate of
at least 10% of compensation, as defined in Section 415(c)(3) of the
Code, but including amounts contributed by the employer pursuant to
a salary reduction agreement which are excludable from the
employee's gross income under Section 125, Section 402(a)(8),
Section 402(h) or Section 403(b) of the Code,
(ii) immediate participation, and
(iii) full and immediate vesting, and
(b) leased employees constitute less than 20% of an
Employer's nonhighly compensated work force within the meaning of
Section 414(n)(1)(C)(ii) of the Code.
B.
Section 2.32 is hereby deleted in its entirety and the following
inserted in lieu thereof:
"2.32 Funds. The Aggressive Growth Fund, the Balanced Fund,
the Employer Common Stock Fund, the International Fund, the Interest
Income Fund, the Small Capitalization Fund, and the Stock Index Fund
are sometimes referred to collectively as Funds."
C.
Section 2.66 is hereby deleted in its entirety and the following
inserted in lieu thereof effective March 1, 1993:
"2.66 Years of Service.
(a) For eligibility purposes for the Pre-tax Saving
Account, the initial Year of Service shall be the 12-month period
commencing on the date Employee first performs an Hour of Service
during which he is credited with 1,000 or more Hours of Service.
The term shall also mean the Plan Year commencing with the Plan Year
in which an Employee's initial 12-month period ends, during which he
has completed 1,000 or more Hours of Service. For a short Plan Year
of less than 12 months, the term shall mean, with respect to an
Employee who is within the 12-month period commencing on the date he
first performed an Hour of Service, the 12-month period commencing
with the first day of the short Plan Year during which short Plan
Year the initial 12-month period ends, and during which 12-month
period the Participant completes 1,000 or more Hours of Service;
with respect to an Employee whose Years of Service for eligibility
purposes are being measured on the basis of the Plan Year, the term
shall mean the 12-month period commencing with the first day of the
short Plan Year, during which the Participant completes 1,000 or
more Hours of Service.
(b) For purposes of eligibility for the Employer
Retirement Account, the initial Year of Service shall be the 12-
month period commencing on the date Employee first performs an Hour
of Service, provided the Employee is credited with 1,000 or more
Hours of Service during such 12-month period. If the Employee is
credited with the initial Year of Service
2
as provided in the preceding sentence, his second Year of Service
with respect to eligibility for the Employer Retirement Account
shall be the 12-month period commencing on the first anniversary of
the date that he first performed an Hour of Service, provided he is
credited with 1,000 or more Hours of Service during such 12-month
period. If an Employee is not credited with a Year of Service in
accordance with the preceding, the Year of Service for purposes of
eligibility for the Employer Retirement Account shall be determined
based upon the Plan Year commencing with the Plan Year in which
occurs the second anniversary of the date he first performed an Hour
of Service. If the Employee is not credited with a Year of Service
in the 12-month period commencing on the date he first performed an
Hour of Service, his Years of Service with respect to the Employer
Retirement Account shall be determined on the basis of the Plan
Year, commencing with the Plan Year in which occurs the first
anniversary of the date he performed an Hour of Service. Each such
Plan Year shall be a Year of Service, provided the Employee is
credited with at least 1,000 Hours of Service. For a short Plan
Year of less than 12 months, the term shall mean, with respect to an
Employee who is in the 12-month period commencing on the date he
first performed an Hour of Service, the 12-month period commencing
with the first day of the short Plan Year during which short Plan
Year the initial 12-month period ends, and during which 12-month
period the Participant completes 1,000 or more Hours of Service;
with respect to an Employee whose Years of Service are being
measured on the basis of anniversaries of the date he first
performed an Hour of Service, the term shall mean the 12-month
period commencing with the first day of the short Plan Year during
which short Plan Year the second anniversary of the date he first
performed an Hour of Service occurred, and during which 12-month
period the Employee completes 1,000 or more Hours of Service; and
with respect to an Employee whose Years of Service are being
measured on the basis of the Plan Year, the 12-month period
commencing on the first day of the short Plan Year, and during which
the Employee completes 1,000 or more Hours of Service.
(c) For purposes of vesting, the Year of Service shall
mean, except as hereinafter provided, a 12-month period beginning on
the date the Employee first performed an Hour of Service and each
anniversary thereof during which the Employee was credited with at
least 1,000 Hours of Service. Notwithstanding the preceding
sentence, if an Employee is not credited with at least 1,000 Hours
of Service in a 12-month period described in the preceding sentence,
thereafter a Year of Service shall mean the Plan Year, beginning
with the Plan Year that begins in the 12-month period described in
the preceding sentence in which the Employee failed to be credited
3
with at least 1,000 Hours of Service. If the Plan Year is of less
than 12 months duration, an Employee whose vesting is being
determined on the basis of Plan Years shall be credited with a Year
of Service if he completes at least 1,000 Hours of Service in a 12-
month period commencing on the first day of the short Plan Year.
(d) In the event that the Employer acquires a facility,
whether by merger, stock acquisition or asset purchase, the Employer
may, at its sole discretion, credit prior service with the
predecessor in calculating Years of Service for this Plan."
D.
Article 2 is hereby amended by adding the following:
"2.67 Aggressive Growth Fund. The Fund within the Trust Fund
which shall be invested up to 100% in common stock and securities
into common stock which have market values appearing low relative to
underlying value or future earnings and growth potential.
Notwithstanding the preceding, the Fund may invest in, among other
investments, convertible securities, warrants, preferred stock,
bonds, foreign securities, covered call options, put options and
repurchase agreements. The Aggressive Growth Fund may also be
invested in cash equivalent securities, such as treasury bills,
commercial paper and certificates of deposits as may be determined
by the Trustee or Fund manager.
2.68 Balanced Fund. The Fund within the Trust Fund which shall
be invested up to 100% in common stock and preferred stock, straight
debt issues (including government securities) or debt securities
with equity conversion or purchase rights, in cash and cash
equivalents, the objective of which investments is to emphasize
current income and preservation of capital while secondarily
striving to attain capital growth.
2.69 International Fund. The Fund within the Trust Fund which
shall be invested up to 100% in equity securities, American
Depositary Receipts and European Depositary Receipts, securities
convertible into common stock, government securities, and non-
convertible preferred stocks of issuers domiciled outside the United
States so as to achieve long term growth of capital. The
International Fund may be invested in cash equivalent securities,
such as U.S. treasury bills, commercial paper and certificates of
deposits as may be determined by the Trustee or Fund manager.
4
2.70 Small Capitalization Fund. The Fund within the Trust Fund
which shall be invested up to 100% in equity securities or
Securities convertible into common stock consisting primarily of
emerging growth companies and companies selected for investment
because of their unique situation; provided that the Small
Capitalization Fund may be invested in cash equivalent securities,
such as treasury bills, commercial paper and certificates of
deposits as may be determined by the Trustee or Fund manager."
E.
Section 4.2(b) is hereby deleted in its entirety and the following
inserted in lieu thereof:
"(b) Effective January 1, 1994, and for Plan Years
thereafter, each Participant may elect to defer a portion of his
income to be contributed to his Participant Account by his Employer
on his behalf. Participant Deferrals shall be in any amount between
1% and 14% of the Participant's Compensation for the Plan Year;
provided, that the total Participant Deferrals may not exceed the
dollar amount specified in Section 402(g) of the Code in any
calendar year. The dollar limitation shall be adjusted annually as
provided in Code Section 415(d) pursuant to Regulations. This
adjusted limitation shall be effective as of January 1 of each
calendar year."
F.
Section 5.4(b) is hereby deleted in its entirety and following
inserted in lieu thereof:
"(b) Annual additions shall mean the sum of the
following amounts credited to a Participant's Account for the
limitation year under all defined contribution plans maintained by
an Employer:
(i) Participant Deferrals,
(ii) Voluntary Contributions,
(iii) Participant Contributions,
(iv) Employer Contributions,
5
(v) Forfeitures, and
(vi) Amounts allocated after March 31, 1984 to an
individual medical account, as defined in Section 415(1)(2) of the
Code, which is part of a pension or annuity plan maintained by an
Employer are treated as annual additions to a defined contribution
plan. Also, amounts which are attributable to post-retirement
medical benefits allocated to the separate account of a Key
Employee, as defined in Section 419A(d)(3), under a welfare benefit
fund as defined in Section 419(e), maintained by an Employer, are
treated as annual additions to a defined contribution plan.
For purposes of the limitations of this section, Compensation shall
mean all wages, salaries, fees for professional service and other
amounts received for personal service actually rendered in the
course of employment with an Employer for the limitation year, as
defined in Section 415(c)(3), excluding, however, any Participant
Deferral amounts. The limitation year shall be the Plan Year."
G.
Sections 5.10 and 5.11 are hereby deleted in their entirety and the
following inserted in lieu thereof:
"5.10 Participant Election of Investment of Participant
Contributions and Deferrals and Voluntary Contributions and
accounts.
(a) As of each Anniversary Date, a Participant may
direct on a form prescribed by and filed with the Plan Administrator
(or by utilization of the voice response system, as determined by
the Plan Administrator), the portion of his Participant
Contributions and Deferrals to be invested in each Fund in 1%
increments; provided that, effective July 1, 1993, such elections
may be made on a quarterly basis and, effective January 1, 1994,
such elections may be made on a monthly basis (January 1, February
1, March 1, etc.). In the absence of any such direction, 100% of
the Participant Contributions and Deferrals shall be invested in the
same manner as Contributions, if any, are being invested, or in the
Interest Income Fund. A change in investment direction for future
Participant Contributions and Deferrals shall be effective as soon
as reasonably and administratively practicable within the terms of
the administration system. A Participant's future
6
Voluntary Contributions shall be invested in the same manner as his
Participant Contributions and Deferrals.
(b) Notwithstanding the above to the contrary, as of the
end of any Plan Year (or any quarterly election date effective June
30, 1993 or monthly election date effective January 31, 1994) by
written notice filed with the Plan Administrator prior to such
election date (or by utilization of the voice response system as
determined by the Plan Administrator), a Participant may elect a
restructuring of the investments in his Accounts other than his
Employer Thrift Accounts by electing to have the assets attributable
to the applicable Account transferred from one or more Funds to
another Fund or Funds pursuant to an asset allocation approach in 1%
increments as selected by the Participant. The restructuring shall
be effective as soon as reasonably and administratively practicable
within the terms of the administration system, and shall remain in
effect until it is subsequently changed in accordance with the terms
of this Section 5.10. The Plan Administrator shall direct the
Trustee to transfer the aggregate values among Funds as soon as
practical after the Valuation Date.
5.11 Participant Election of Investment of Employer Retirement
Contributions and Accounts.
(a) For each Plan Year (or quarterly election date
effective July 1, 1993 or monthly election date effective January 1,
1994), a Participant may direct on a form prescribed by and filed
with the Plan Administrator (or by utilization of the voice response
system as determined by the Plan Administrator), the portion of his
Employer Retirement Contribution to be invested in each Fund in 1%
increments. In the absence of any change in such direction in a
Plan Year, the Employer Retirement Contribution shall continue to be
invested in the Funds as specified by the Participant's last
direction. In the absence of any such direction, 100% of the
Employer Retirement Contribution shall be invested in the same
manner as Contributions, if any, are being invested, or in the
Interest Income Fund.
(b) As of the end of any Plan Year (or quarterly
election date effective June 30, 1993 or monthly election date
effective January 31, 1994), a Participant may direct on a form
prescribed by and filed with the Plan Administrator (or by
utilization of the voice response system as determined by the Plan
Administrator), a restructure of the investments in his Employer
Retirement Account by electing to have the value of his Account
Balance in the Account transferred from one or more Funds to another
Fund or Funds pursuant to an asset
7
allocation approach in 1% increments as selected by the Participant.
The restructuring shall be effective on the first day of the Plan
Year (or monthly election date effective January 1, 1994)
immediately following the date by which a Participant provides a new
restructuring form to the Plan Administrator. The restructure shall
apply to the Participant's Account Balance determined as of such
Valuation Date but prior to crediting the Retirement Contribution
for such Plan Year. The Plan Administrator shall direct the Trustee
to transfer the aggregate values among Funds as soon as practical
after the Valuation Date.
(c) A Participant's direction under (b), above, shall be
deemed to also be a direction concerning his Vested Pension Account,
if any."
H.
Section 6.5(b) is amended by adding the following effective January
1, 1994:
"(iii) Notwithstanding the above to the contrary, if a
Participant has completed 5 or more Years of Service, he shall in
addition be entitled to the Account Balance of his Employer Thrift
Account as of the Valuation Date immediately following the date of
his Termination of Employment, increased by any Contributions made
on his behalf since such Valuation Date and decreased by any
withdrawals from his Employer Thrift Account since such Valuation
Date, subject, however, to the provisions of Section 6.6; provided,
however, if the Participant is receiving a deferred distribution,
his Benefit shall be determined as of the Valuation Date immediately
following the distribution request date."
I.
Section 6.9(f) is hereby deleted in its entirety and the following
inserted in lieu thereof effective March 1, 1993:
"(f) Notwithstanding anything in this Article 6 to the
contrary, benefits payable to an alternate payee pursuant to a
"qualified domestic relations order" as described in Section 414(p)
of the Code would be paid in a single lump sum as soon as
administratively practicable after the Plan Administrator receives
a domestic relations order and determines that it is "qualified"
under Section 414(p) of the Code, which may be prior to the
Participant's death, Disability, retirement or Termination of
Employment."
8
J.
Section 6.10(h)(i) is hereby deleted in its entirety and the
following inserted in lieu thereof effective January 1, 1993:
"(i) Effective January 1, 1993, a Participant who is
entitled to a distribution of his vested Account Balance shall be
entitled to elect to make a direct rollover of his Benefit which
constitutes an "eligible rollover distribution" to another "eligible
retirement plan" pursuant to the requirements of Section 401(a)(31)
of the Code. Also effective January 1, 1993, a Participant who has
not separated from service and is entitled to a distribution of his
vested Account Balances in an amount equal to $200 or more shall be
entitled to elect to make a direct rollover of his Benefit which
constitutes an "eligible rollover distribution" to another "eligible
retirement plan" pursuant to the requirements of Section 401(a)(31)
of the Code." An "eligible rollover distribution" for this purpose
is any distribution of all or any portion of the balance to the
credit of the Employee under the Plan excluding
(A) any distribution that is one of a series of
substantially equal periodic payments (not less frequently
than annually) made over any one of the following periods:
(l) the life expectancy of the Participant
(or joint lives of the Participant and his designated
Beneficiary);
(2) the life expectancy of the Participant
(or the joint life and last survivor expectancy of the
Participant and the Participant's designated Beneficiary); or
(3) a specified period of ten years or more,
(B) minimum distributions required under Section
401(a)(9) of the Code,
(C) any portion of a distribution that is not
includable in gross income (determined without regard to the
exclusion for net unrealized appreciation described in Section
402(e)(4) of the Code),
(D) dividends paid on Common Stock as described in
Code Section 404(k),
9
(E) Participant loans that are deemed
distributions, and
(F) similar items designated by the Commissioner
of Internal Revenue in revenue rulings, notices, and other
guidance of general applicability.
An "eligible retirement plan" for this purpose is defined under Code
Section 402(C)(8)(B) to mean an individual retirement plan described
in Code Section 408 or a qualified plan described in Section 401(a)
of the Code. A direct rollover shall be accomplished by direct
transfer by the Trustee of all or a portion of the Benefit to the
trustee of the transferee plan by any reasonable method permitted by
regulations."
K.
Article 6 is hereby amended by adding the following effective March
1, 1993:
"6.12 Withdrawals By Former Terminated Participants. A
Participant who separates from service shall not be entitled to
receive a partial distribution from any Account."
L.
Section 7.2(a) is hereby deleted in its entirety and the following
inserted in lieu thereof:
"(a) The aggregate of the loans to a Participant shall
not exceed at any time the lesser of (i) $50,000, or (ii) 50% of the
vested portion of his Participant Contribution Accounts
(attributable to both after-tax Participant Contributions and pre-
tax Participant Deferrals) and Voluntary Contribution Accounts plus
his Employer Thrift Accounts to which he would be entitled to under
Section 7.5 if he incurred a Termination of Employment. No
Participant loan shall exceed the present value of such vested
Account Balances and no loan shall be in an amount which is less
than $500. Loans shall not be made available to Highly Compensated
Employees in an amount greater than the amount made available to
other Employees. A Participant may not have more than two loans
outstanding at any time."
10
M.
Section 7.4(a) is hereby deleted in its entirety and the following
inserted in lieu thereof:
"(a) All such loans shall be repaid by the Participant
when determined by the Plan Administrator, provided, under no
circumstances shall the repayment be later than four years from the
date made, unless such loan is used to acquire a dwelling unit
which, within a reasonable time (determined at the time the loan is
made), will be used as the principal residence of the Participant,
in which case the repayment shall be made no later than ten years.
No loan repayment schedule shall be for a period of less than one
year, except in the event of prepayment of the entire outstanding
loan balance. A loan may be prepaid only by making application to
the Plan Administrator for early repayment and may be accomplished
only by full lump sum repayment at the close of the month following
the month such request is made and approved by the Plan
Administrator. Equal installments of principal and interest shall
be made on the loan each payroll period by automatic payroll
deduction, until such time as the loan is repaid; provided, however,
that the Participant may prepay the entire remaining loan balance.
The minimum installment payment per payroll period shall not be less
than $10. Each Participant to whom a loan is made shall execute a
negotiable promissory note for such loan and shall secure the
payment of principal and interest on such promissory note by an
assignment of the Participant's interest in the Trust Fund."
N.
Section 7.4(d) is hereby deleted in its entirety and the following
inserted in lieu thereof:
"(d) If a Participant incurs a lay-off or takes an
unpaid leave of absence, any outstanding loan will be held in
suspension for up to six months. Following such six month period,
the Participant will be treated as terminated and the loan will be
placed in default."
0.
Section 8.2(a) is hereby deleted in its entirety and the following
inserted in lieu thereof:
11
"(a) Hardship Withdrawals By Participants. Effective
January 1, 1994, in the event funds are needed because of extreme
financial hardship, the Committee may, in its sole discretion,
permit a Participant who is an Employee to make a withdrawal of his
Participant Deferrals, after tax Participant or Voluntary
Contribution Accounts and non-forfeitable Employer Thrift
Contributions as of the Valuation Date immediately following the
date of withdrawal request. A Participant's withdrawal request
shall not be approved in an amount less than $500 for any withdrawal
unless the Participant's vested interest in the Plan available for
hardship withdrawal under this Section 8.2 is less than $500, in
which case the Participant's request may be approved. For purposes
of this section, hardship is defined as an immediate and heavy
financial need of the Participant where he lacks other available
resources to meet such need."
P.
Section 13.1 is hereby deleted in its entirety and the following
inserted in lieu thereof:
"13.1 Adoption of Plan and Trust by Related Employer. The
Board of Directors may designate any Related Employer to become an
Employer. Any related Employer so designated may adopt the Plan and
Trust with the approval of the Sponsoring Employer. Such Related
Employer shall be subject to the terms and provisions of the Plan
and Trust, with such variations as shall be approved by the Plan
Administrator, including, but not limited to, participation in only
the Retirement Plan portion of the Plan or only the Thrift Plan
portion of the Plan. A Related Employer may limit its adoption of
the Plan to one or more of its groups of employees, divisions,
locations or operations."
Q.
The effective date of this Second Amendment to the Plan shall be
January 1, 1994, except as otherwise provided.
R.
Except as specifically amended above, the Plan shall remain unchanged and
as amended herein, shall continue in full force and effect.
12
IN WITNESS WHEREOF, the Company has caused this Second Amendment to
the Plan to be executed by its duly authorized officer this 30th day of
November, 1993.
HUMANA INC.
By: /S/ WALTER E. NEELY
Title: VICE PRESIDENT
Attest:
/S/ MARTHA E. CLARK
Associate Secretary
Receipt of an executed copy of the
Second Amendment of the Humana
Retirement and Savings Plan is
hereby acknowledged this
30th day of November, 1993.
NATIONAL CITY BANK, KENTUCKY
as Trustee
By: /S/ CLELON D. TATUM, JR.
CLELON D. TATUM, JR.
Title: VICE PRESIDENT
13
Exhibit 4.(vi)
THE FIRST AMENDMENT
OF THE
HUMANA RETIREMENT AND SAVINGS TRUST
THIS FIRST AMENDMENT of the Humana Retirement and Savings Trust
("Trust"), which Trust was amended and restated in its entirety effective
March 1, 1993, further amends and modifies the Trust pursuant to the right
reserved in Article 7 of the Trust, as follows:
A.
Section 6.1 is hereby amended in its entirety to read as follows:
"(a) The Trustee shall establish and maintain within
the Trust Fund the following Funds:
Aggressive Growth Invested primarily in common stock and
Fund securities convertible into common stock
which have market values appearing low
relative to underlying value or future
earnings and growth potential.
Notwithstanding the preceding, the Fund may
invest in, among other investments,
convertible securities, warrants, preferred
stock, bonds, foreign securities, covered
call options, put options and repurchase
agreements. The Fund may also be invested
in cash equivalent securities such as
Treasury bills, commercial paper and
certificates of deposit.
Balanced Fund Invested in common stock and preferred
stock, straight debt issues (including
government securities) or debt securities
with equity conversion or purchase rights,
in cash and cash equivalents, the objective
of which investments is to emphasize
current income while secondarily striving
to attain capital growth.
Employer Common Invested up to 100% in common stock. Fund
Stock Fund may be invested in cash equivalent
securities, such as Treasury bills,
commercial paper and certificates of
deposit, at such times as shares of common
stock are not available for purchase or the
Trustee determines that the purchase of
common stock would not be authorized under
Section 404(a) of ERISA. All Employer
Thrift Contributions shall be invested in
the Employer Common Stock Fund.
Interest Income Fund Invested in obligations of the United
States and United States Government
agencies, bonds, debentures, notes or other
evidences of indebtedness, shares of
preferred stock and any other property the
rate of return from which is established by
the instrument evidencing the investments,
including principal and interest contracts
of banks and insurance companies and other
lower risk, income-producing instruments;
provided that the proceeds of assets of the
Interest Income Fund pending their
distribution or transfer to another Fund
and funds received pending investment in
the form described immediately above may be
invested, if the Trustee so determines, in
cash equivalent investments.
International Fund Invested in equity securities, American
Depositary Receipts, European Depositary
Receipts, securities convertible into
common stock, government securities, and
non-convertible preferred stocks of issuers
domiciled outside the United States so as
to achieve long term growth of capital.
The Fund may also invest in cash equivalent
securities, such as Treasury bills,
commercial paper and certificates of
deposit.
Small Capitalization Invested in equity securities consisting
Fund primarily of emerging growth companies and
companies selected for investment because
of their unique situation. The Fund may
also invest in cash equivalent securities,
such as Treasury bills, commercial paper
and certificates of deposit.
2
Stock Index Fund Invested primarily in common stocks and
other securities, the objective of which is
to match the return of the S & P 500 Stock
Index."
B.
The effective date of this First Amendment to the Trust shall be
January 1, 1994.
C.
Except as specifically amended above, the Trust shall remain
unchanged and as amended herein, shall continue in full force and effect.
IN WITNESS WHEREOF, the Company has caused this First Amendment to
the Trust to be executed by its duly authorized officer this 30th day of
November, 1993.
HUMANA INC.
By: /S/ WALTER E. NEELY
Title: VICE PRESIDENT
Receipt of an executed copy
of the First Amendment of the
Humana Retirement and Savings
Trust is hereby acknowledged
this 30th day of November,
1993.
NATIONAL CITY BANK, KENTUCKY
as Trustee
By: /S/ CLELON B. TATUM, JR.
CLELON B. TATUM, JR.
Title: VICE PRESIDENT
3
Exhibit 23.(ii)
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this registration
statement of Humana Inc. on Post - Effective Amendment No. 1 to Form S-8
of our report dated October 20, 1992, except as to the information
presented in Note 13, for which the date is November 13, 1992, on our
audits of the consolidated financial statements and financial statement
schedules of the health plan operations of Humana Inc. as of August 31,
1992 and 1991, and for each of the three years in the period ended August
31, 1992, which report is included on page 110 of Humana's Proxy Statement
dated January 22, 1993 and on page 2 in Exhibit 99 of this Post -
Effective Amendment No. 1 to Form S-8. In addition, we consent to the
incorporation by reference herein of our report dated July 2, 1993 on our
audits of the financial statements and supplemental schedules of the
Humana Thrift Plan as of February 28, 1993 and August 31, 1992, and for
the six months ended February 28, 1993 and the year ended August 31, 1992,
which report is included in the Transition Report on Form 11-K filed
August 17, 1993 (File No. 1-5975). In addition, we consent to the
incorporation by reference herein of our report dated January 6, 1993,
except as to the information presented in Note 3, for which the date is
January 29, 1993, on our audits of the financial statements and
supplemental schedules of the Humana Thrift Plan as of August 31, 1992 and
1991, and for each of the two years in the period ended August 31, 1992,
which report is included in the Annual Report on Form 11-K filed February
22, 1993 (File No. 1-5975).
COOPERS & LYBRAND
Louisville, Kentucky
February 1, 1994
Exhibit 24.(i)
POWER OF ATTORNEY
Know All Men By These Presents, that the undersigned constitutes and
appoints Walter E. Neely and Martha E. Clark, and each of them, his true
and lawful attorneys-in-fact and agents, with full power of substitution
and re-substitution, for him and in his name, place and stead, in any and
all capacities, to sign any and all Amendments (including Post-Effective
Amendments) to the Registration Statement of Humana Inc. on Form S-8 (Reg.
No. 33-49305), and to file the same, with all exhibits thereto, and other
documents in connection therewith with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of
them, full power and authority to do and perform each and every act and
thing requisite and necessary to be done, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or any of them, or
their or his substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
By: /S/ JAMES E. MURRAY
JAMES E. MURRAY
Vice President and Controller
(Principal Accounting Officer)
January 24, 1994
POWER OF ATTORNEY
Know All Men By These Presents, that the undersigned constitutes and
appoints Walter E. Neely, James E. Murray and Martha E. Clark, and each of
them, his true and lawful attorneys-in-fact and agents, with full power of
substitution and re-substitution, for him and in his name, place and
stead, in any and all capacities, to sign any and all Amendments
(including Post-Effective Amendments) to the Registration Statement of
Humana Inc. on Form S-8 (Reg. No. 33-49305), and to file the same, with
all exhibits thereto, and other documents in connection therewith with the
Securities and Exchange Commission, granting unto said attorneys-in-fact
and agents, and each of them, full power and authority to do and perform
each and every act and thing requisite and necessary to be done, as fully
to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or any
of them, or their or his substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
By: /S/ IRWIN LERNER
IRWIN LERNER
Director
January 25, 1994
POWER OF ATTORNEY
Know All Men By These Presents, that the undersigned constitutes and
appoints Walter E. Neely, James E. Murray and Martha E. Clark, and each of
them, his true and lawful attorneys-in-fact and agents, with full power of
substitution and re-substitution, for him and in his name, place and
stead, in any and all capacities, to sign any and all Amendments
(including Post-Effective Amendments) to the Registration Statement of
Humana Inc. on Form S-8 (Reg. No. 33-49305), and to file the same, with
all exhibits thereto, and other documents in connection therewith with the
Securities and Exchange Commission, granting unto said attorneys-in-fact
and agents, and each of them, full power and authority to do and perform
each and every act and thing requisite and necessary to be done, as fully
to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or any
of them, or their or his substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
By: /S/ DAVID A. JONES, JR.
DAVID A. JONES, JR.
Director
January 25, 1994
EXHIBIT 99
INTRODUCTORY NOTE
The financial statements attached to this Exhibit 99, which are
captioned as the Humana Health Plans, became the historical financial
statements of Humana Inc. as a result of accounting treatment of the
spinoff by the Registrant of its hospital business on March 1, 1993. In
addition, Humana Inc. changed its fiscal year end from August 31 to
December 31, effective March 1, 1993.
HUMANA HEALTH PLANS
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
Page(b)
Consolidated Financial Statements:
Report of Independent Accountants 2
Consolidated Balance Sheet at August 31, 1992 and 1991 3
Consolidated Statement of Operations for the years ended
August 31, 1992, 1991 and 1990 4
Consolidated Statement of Changes in Equity for the years
ended August 31, 1992, 1991 and 1990 5
Consolidated Statement of Cash Flows for the years ended
August 31, 1992, 1991 and 1990 6
Notes to Consolidated Financial Statements 7
Financial Statement Schedules:
Schedule I--Marketable Securities--Other Investments 9(a)
Schedule II--Amounts Receivable From Related Parties and
Underwriters, Promoters, and Employees Other Than
Related Parties for the years ended August 31, 1992, 1991
and 1990 16
Schedule III--Parent Company Financial Information
at August 31, 1992 and 1991 and for the years ended
August 31, 1992, 1991 and 1990 17
Schedule V--Property, Plant and Equipment for the
years ended August 31, 1992, 1991 and 1990 20
Schedule VI--Accumulated Depreciation, Depletion
and Amortization of Property, Plant and Equipment
for the years ended August 31, 1992, 1991 and 1990 21
Schedule VIII--Valuation and Qualifying Accounts for
the years ended August 31, 1992, 1991 and 1990 22
(a) See Note 4 of Notes to Consolidated Financial Statements.
(b) Pages 3 through 15 and 16 through 22 correspond to pages 111 through 123
and 129 through 135 referenced in the Report of Independent Accountants on
page 2.
1
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders
Humana Inc.
We have audited the consolidated financial statements on pages 111
through 123 and the financial statement schedules on pages 129 through 135
of the health plan operations of Humana Inc. ("Humana Health Plans").
These financial statements and financial statement schedules are the
responsibility of the management of Humana Inc. Our responsibility is to
express an opinion on these financial statements and financial statement
schedules based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing
the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Humana Health Plans as of August 31, 1992 and 1991, and the consolidated
results of operations and cash flows for each of the three years in the
period ended August 31, 1992 in conformity with generally accepted
accounting principles. In addition, in our opinion, the financial
statement schedules referred to above, when considered in relation to the
basic financial statements taken as a whole, present fairly, in all
material respects, the information required to be included therein.
As discussed in Note 5 to the consolidated financial statements,
effective September 1, 1991, Humana Health Plans adopted the provisions of
Statement of Financial Accounting Standards No. 109, "Accounting for
Income Taxes."
COOPERS & LYBRAND
Louisville, Kentucky
October 20, 1992, except as to the
information presented in Note 13,
for which the date is November 13, 1992.
2
HUMANA HEALTH PLANS
CONSOLIDATED BALANCE SHEET
August 31, 1992 and 1991
(Dollars in millions)
1992 1991
ASSETS
Current assets:
Cash and cash equivalents $ 69 $ 154
Marketable securities 80 87
Premiums receivable, less allowance for loss
of $11-1992 and $9-1991 49 45
Deferred income taxes 118 23
Other 19 24
Total current assets 335 333
Property and equipment, at cost:
Land 22 22
Buildings 192 222
Equipment 216 190
430 434
Accumulated depreciation 131 100
299 334
Other assets:
Long-term marketable securities 282 245
Cost in excess of net tangible assets acquired 70 75
Deferred income taxes 10 -
Other 15 18
377 338
TOTAL ASSETS $1,011 $1,005
LIABILITIES AND EQUITY
Current liabilities:
Medical costs payable:
Galen hospitals $ 39 $ 45
Other 342 272
Trade accounts payable and accrued expenses 139 106
Unearned premium revenues - 83
Income taxes payable 39 23
Total current liabilities 559 529
Long-term debt 21 22
Deferred income taxes - 21
Other 64 26
Total liabilities 644 598
Commitments and contingencies
Equity 367 407
TOTAL LIABILITIES AND EQUITY $1,011 $1,005
The accompanying notes are an integral part of the consolidated financial statements.
3
HUMANA HEALTH PLANS
CONSOLIDATED STATEMENT OF OPERATIONS
For the years ended August 31, 1992, 1991 and 1990
(Dollars in millions except per share results)
1992 1991 1990
Revenues:
Premiums $2,774 $2,233 $1,494
Interest 37 36 31
2,811 2,269 1,525
Operating expenses:
Medical costs:
Galen hospitals 434 368 240
Other 1,949 1,517 1,045
Selling, general and administrative 357 321 225
Depreciation and amortization 52 38 28
Restructuring and unusual charges 171 - -
2,963 2,244 1,538
Income (loss) from operations (152) 25 (13)
Interest expense (income) 12 11 (4)
Income (loss) before income taxes (164) 14 (9)
Provision (benefit) for income taxes:
Current 76 9 (8)
Deferred (126) (4) 3
(50) 5 (5)
Net income (loss) $ (114) $ 9 $ (4)
Earnings (loss) per common share $ (.72) $ .06 $ (.03)
The accompanying notes are an integral part of the consolidated financial statements.
4
HUMANA HEALTH PLANS
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the years ended August 31, 1992, 1991 and 1990
(Dollars in millions)
1992 1991 1990
Balance, beginning of year $407 $216 $269
Net income (loss) (114) 9 (4)
Equity funding from (to) Galen 74 176 (48)
Other - 6 (1)
Balance, end of year $367 $407 $216
The accompanying notes are an integral part of the consolidated financial statements.
5
HUMANA HEALTH PLANS
CONSOLIDATED STATEMENT OF CASH FLOWS
For the years ended August 31, 1992, 1991 and 1990
(Dollars in millions)
1992 1991 1990
Cash flows from operating activities:
Net income (loss) $(114) $ 9 $ (4)
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:
Restructuring and unusual charges 171 - -
Depreciation and amortization 52 38 28
Deferred income taxes (126) (4) 3
Changes in operating assets and liabilities:
Premiums receivable (4) (15) 20
Other current assets 6 (5) (5)
Medical costs payable 3 (6) 48
Trade accounts payable and accrued expenses 18 9 19
Unearned premium revenues (83) 19 64
Income taxes payable 16 19 (13)
Other 4 2 5
Net cash provided by (used in) operating
activities (57) 66 165
Cash flows from investing activities:
Acquisition of health plans (42) (60) -
Purchase of property and equipment (47) (107) (27)
Disposition of property and equipment 2 2 -
Change in marketable securities (7) (86) 46
Other (4) (4) (3)
Net cash provided by (used in) investing
activities (98) (255) 16
Cash flows from financing activities:
Equity funding from (to) Galen 74 176 (48)
Other (4) (3) -
Net cash provided by (used in) financing
activities 70 173 (48)
Increase (decrease) in cash and cash equivalents (85) (16) 133
Cash and cash equivalents at beginning of period 154 170 37
Cash and cash equivalents at end of period $ 69 $154 $170
Interest payments $ 27 $ - $ 9
Income tax payments (refunds), net 55 (23) -
The accompanying notes are an integral part of the consolidated financial statements.
6
HUMANA HEALTH PLANS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1--REPORTING ENTITY
Basis of Presentation
On August 27, 1992, the Board of Directors authorized management to
proceed with the separation of Humana Inc. into two publicly held
corporations, one to operate the acute-care hospital business and the
other to operate the health plan business (the "Distribution"). The
Board's action is subject to, among other things, stockholder approval and
a favorable ruling on the tax-free nature of the transaction by the
Internal Revenue Service ("IRS"). Management anticipates that the
transaction will be completed on or about March 1, 1993.
The Distribution will be effected through the distribution to
stockholders of Humana Inc. of all of the outstanding shares of common
stock of a new hospital holding company, Galen Health Care, Inc.
("Galen"). Subsequent to the Distribution, Humana Inc. will be the legal
entity that will continue to operate the health plan business.
As used in the accompanying consolidated financial statements, the
term "Humana Health Plans" refers to the operations of the health plan
business, the term "Galen" refers to the operations of the hospital
business, and the term "Humana Inc." refers to the pre-Distribution
consolidated entity which operates both the hospital and health plan
businesses.
In anticipation of the Distribution, certain allocations and
estimates have been made by management in the accompanying consolidated
financial statements to present the results of operations of Humana Health
Plans as a separate entity. The operating results of Humana Health Plans
include certain previously unallocated corporate costs and net interest
expense (income). Corporate costs include shared administrative costs
such as management information systems, financing, recruiting, personnel
development, accounting, legal advice, public relations, marketing,
insurance, purchasing , and risk and quality management. Total costs
allocated to Humana Health Plans were $94 million, $85 million and $62
million for the years ended August 31, 1992, 1991 and 1990, respectively.
Net interest expense (income) amounting to $12 million, $11 million and
$(4) million for the years ended August 31, 1992, 1991 and 1990,
respectively, has also been allocated to Humana Health Plans and relates
primarily to disputed income tax issues in connection with current
deductibility of medical costs payable.
Organization and Operations
Humana Health Plans operates health maintenance organizations
("HMOs") and preferred provider organizations ("PPOs") which provide
managed care services to commercial customer groups and individuals
eligible for the Medicare Program under contractual agreements between
Humana Health Plans and the Health Care Financing Administration ("HCFA").
NOTE 2--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Consolidation
The consolidated financial statements include all subsidiaries of
Humana Health Plans. Intercompany transactions have been eliminated.
Cash and Cash Equivalents
Cash and cash equivalents includes cash, money market funds,
commercial paper and certain U.S. Government securities with an original
maturity of three months or less.
7
HUMANA HEALTH PLANS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Marketable Securities
Marketable equity securities are stated at the lower of aggregate
cost or market. As a result of management's ability and intent to hold
investments to maturity, debt securities are carried at amortized cost
which approximates market. See Note 4.
Property and Equipment
Depreciation is computed using the straight-line method over
estimated useful lives ranging generally from 3 to 25 years. Depreciation
expense was $34 million, $22 million and $15 million for the years ended
August 31, 1992, 1991 and 1990, respectively. Replacements and major
improvements are capitalized while repairs and maintenance costs are
charged to expense in the period incurred.
Cost in Excess of Net Tangible Assets Acquired
Cost in excess of net tangible assets acquired represents the
unamortized excess of the cost over the fair value of net tangible assets
acquired which is amortized on a straight-line basis over periods not
exceeding 14 years. As of August 31, 1992 and 1991, accumulated
amortization totaled $58 million and $51 million, respectively. See
Note 10.
Financial Instruments
In December 1991 the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 107, "Disclosures About
Fair Value of Financial Instruments," which requires disclosure of the
fair value of financial instruments, including liabilities, for which it
is practicable to estimate such values. Humana Health Plans intends to
adopt the provisions of this Statement in 1993.
Premiums
Premiums from Humana Health Plans' members are reported as revenues
in the month in which members are entitled to receive managed care
services. HCFA premiums received in advance are recorded as unearned
premium revenues.
For the years ended August 31, 1992, 1991 and 1990, Humana Health
Plans earned premiums from its contracts with HCFA of approximately $1,073
million, $898 million and $653 million, respectively.
Medical Costs
Medical costs include claim payments and estimates of future
payments to be made for medical claims incurred prior to the balance sheet
date. Estimates for future payments relating to services incurred in
current and prior periods are continually reviewed by management, and to
the extent necessary, adjustments are reflected in current operations. In
addition to medical claims, Humana Health Plans pays certain physician
salaries and predetermined capitation costs. Capitation costs represent
monthly fees paid to participating primary care physicians and other
medical specialists for the provision of medical care to Humana Health
Plans' members.
Professional Liability Insurance Claims
Provisions for loss for professional liability risks are based upon
actuarially determined estimates. To the extent subsequent claims
information varies from management's estimates, earnings are charged or
credited. See Note 6.
8
HUMANA HEALTH PLANS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Income Taxes
The provision for income taxes reflected in the consolidated
financial statements represents Humana Health Plans' proportionate share
of Humana Inc.'s income tax expense which approximates the expense which
would have been recognized had Humana Health Plans filed separate tax
returns. See Note 5.
Earnings per Common Share
A 3-for-2 stock split of Humana Inc. common stock was distributed in
August 1991. Retroactive recognition has been given to this split in the
consolidated financial statements and notes.
Earnings per common share are based upon the weighted average number
of Humana Inc. common shares outstanding adjusted in 1990 for the dilutive
effect of common stock options and convertible debentures. Shares used in
computing earnings per common share are 158,490,279 for 1992, 157,359,253
for 1991 and 157,332,281 for 1990.
Fully diluted earnings per common share for 1990 is not presented
because it approximates earnings per common share.
NOTE 3--RESTRUCTURING AND UNUSUAL CHARGES
In the fourth quarter of 1992, Humana Health Plans recorded
restructuring charges amounting to $131 million in connection with the
Board's decision to effect the Distribution and management's plans for the
continuing operations of Humana Health Plans. These charges included
$76 million related to the writedown of operating assets, product
discontinuances and market closures, $45 million related to administrative
facility asset writedowns and systems conversion costs associated with the
Distribution and $10 million related to the planned sales of certain other
assets.
In addition, Humana Health Plans recorded unusual charges of $25
million related to contract disputes and $15 million related to costs
incurred for Hurricane Andrew relief efforts.
NOTE 4--INVESTMENTS
Marketable securities at August 31 includes the following (dollars
in millions):
1992 1991
Market Market
Cost Value Cost Value
U.S. Government securities $39 $39 $11 $11
Tax exempt municipal bonds 13 13 53 53
Certificates of deposit 3 3 2 2
Corporate bonds 3 4 - -
Redeemable preferred stocks 22 22 21 21
$80 $81 $87 $87
9
HUMANA HEALTH PLANS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Long-term marketable securities at August 31 includes the following
(dollars in millions):
1992 1991
Market Market
Cost Value Cost Value
U.S. Government securities:
Agency notes $ 3 $ 3 $ 5 $ 5
Collateralized mortgage
obligations 64 66 44 45
Treasury notes 22 22 15 15
Other 1 1 1 1
90 92 65 66
Tax exempt municipal bonds 115 117 108 108
Corporate bonds 19 20 48 49
Certificates of deposit 3 3 2 2
Marketable equity securities 40 41 22 21
Other 15 15 - -
$282 $288 $245 $246
Included in long-term marketable securities at August 31, 1992, are
$17 million of statutory insurance deposits (primarily U.S. Treasury
notes) which are restricted under certain regulations promulgated by
departments of insurance in the states in which Humana Health Plans
operates.
NOTE 5--INCOME TAXES
Effective September 1, 1991, Humana Health Plans adopted the
provisions of Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes," which requires, among other things,
recognition of deferred income taxes using statutory rates at which such
temporary differences are expected to affect taxable income in future
years. The cumulative effect of this change did not materially impact the
financial position or results of operations of Humana Health Plans.
The income tax provision (benefit) was different from the amount
computed using the federal statutory income tax rate for the years ended
August 31 due to the following (dollars in millions):
1992 1991 1990
Income tax provision (benefit) at
federal statutory rate $(56) $ 5 $(3)
State income taxes, net of federal benefit (4) 1 (1)
Amortization 19 8 1
Tax exempt investment income (4) (4) (3)
Other items, net (5) (5) 1
Provision (benefit) for income taxes $(50) $ 5 $(5)
The significant components of the deferred tax provision (benefit)
for the years ended August 31 relate to the following (dollars in
millions):
1992 1991 1990
Medical costs payable $ (77) $(3) $ 5
Depreciation 2 3 2
Restructuring and unusual charges (52) - -
Other 1 (4) (4)
$(126) $(4) $ 3
10
HUMANA HEALTH PLANS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Cumulative temporary differences which give rise to deferred tax
assets and liabilities as of August 31, 1992 were as follows (dollars in
millions):
Assets Liabilities
Medical costs payable $ 86 $ -
Depreciation - 17
Deferred compensation 7 -
Accrued interest 6 -
Doubtful accounts 6 -
Restructuring and unusual charges 32 -
Other 10 2
Total $147 $19
Management believes that the deferred tax assets in the table above
will ultimately be realized. Management's conclusion is based primarily
on the existence of sufficient taxable income within the allowable
carryback periods to realize the tax benefits of deductible temporary
differences recorded at August 31, 1992.
In 1992 Humana Health Plans paid the IRS $91 million, including
interest, of disputed amounts for years 1988 and 1989, primarily in
connection with the current deductibility of medical costs payable.
Humana Health Plans intends to pursue favorable resolution of this issue.
Results of operations were not affected by the payment.
At August 31, 1992, Humana Health Plans had net operating loss
carryforwards of approximately $37 million related to a 1992 acquisition.
These loss carryforwards, if unused to offset future taxable income of the
acquired subsidiary, will expire in 2000 through 2007.
NOTE 6--PROFESSIONAL LIABILITY RISKS
Humana Health Plans' professional liability risks are currently
insured through a wholly owned subsidiary of Humana Inc. Provisions for
such risks underwritten by the subsidiary, including expenses incident to
claim settlements, were $11 million, $8 million and $5 million for the
years ended August 31, 1992, 1991 and 1990, respectively. Amounts equal
to provision for loss are funded annually. In connection with the
Distribution, Humana Health Plans will establish a wholly owned subsidiary
which will insure all Humana Health Plans' professional liability risks
for periods subsequent to the Distribution and will reinsure such risks
for periods prior thereto.
Allowance for professional liability risks and the equivalent
amounts of marketable securities related to the funding thereof included
in the accompanying consolidated balance sheet were $28 million and $21
million at August 31, 1992 and 1991, respectively. See Note 4.
NOTE 7--LONG-TERM DEBT
Long-term debt at August 31, 1992, and 1991 is comprised of a $20
million note payable to the State of Florida Department of Insurance (the
"Department") related to the 1987 acquisition of a health plan which was
being held in receivership by the Department at the time it was acquired.
The note is payable when an Order of Final Distribution (which is
currently not anticipated during the next fiscal year) of assets is
entered by the Department and is collateralized by a $20 million
irrevocable letter of credit. As a result of the note being executed
without interest, interest was imputed at 8.25% with the resulting
discount being fully accreted by 1992. Total accretion charged to expense
was $1.2 million, $1.5 million and $1.4 million for the years ended
August 31, 1992, 1991 and 1990, respectively. Other long-term debt at
August 31, 1992 and 1991 relates to capital lease obligations. See Note
9.
11
HUMANA HEALTH PLANS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 8--EQUITY
For accounting purposes the historical equity of Humana Health Plans
consists of the net assets contributed by Galen. At the Distribution,
both Humana Health Plans and Galen will have 300,000,000 authorized shares
of common stock and the same number of shares outstanding, which totaled
158,739,787 at August 31, 1992.
Humana Inc. has plans under which options to purchase common stock
have been granted to officers, certain directors and key employees.
Options were granted at not less than market price on the date of grant.
Exercise provisions vary, but most options are exercisable in whole or in
part beginning one to three years after grant and ending ten years after
grant.
The following shares of common stock of Humana Inc. were reserved at
August 31, 1992:
Stock option plans 6,315,599
Thrift and retirement plans 4,559,589
Other 1,093,367
Total 11,968,555
Humana Inc.'s option plans for the years ended August 31, 1992, 1991
and 1990 are summarized below:
Balance, August 31, 1989 5,420,027 $ 8.25 to $22.75
Granted 49,500 22.88 to 32.04
Exercised (905,975) 8.25 to 18.17
Cancelled or lapsed (249) 13.63
Balance, August 31, 1990 4,563,303 8.25 to 32.04
Granted 896,475 25.50 to 31.46
Exercised (2,067,397) 8.25 to 22.88
Cancelled or lapsed (33,557) 11.42 to 29.13
Balance, August 31, 1991 3,358,824 10.26 to 32.04
Granted 817,650 23.56 to 28.38
Exercised (659,288) 10.26 to 29.13
Cancelled or lapsed (31,871) 11.42 to 29.13
Balance, August 31, 1992 3,485,315 $11.42 to $32.04
At August 31, 1992, options for 2,260,516 shares were exercisable.
Shares of common stock available for future grants were 2,830,284 at
August 31, 1992 and 3,616,786 at August 31, 1991.
In connection with the Distribution, existing stock option plans
will become the obligation of both Humana Health Plans and Galen, and
certain vesting and exercise provisions thereof will be modified.
Humana Inc. has a shareholder rights plan under which common
stockholders have the right to purchase Series A Participating Preferred
Stock. Such rights are exercisable in the event of the accumulation of or
tender offer for certain percentages of Humana Inc.'s common stock. The
rights will expire in 1997 unless redeemed earlier by Humana Inc.; no such
rights were exercisable at August 31, 1992. Humana Health Plans intends
to maintain this plan subsequent to the Distribution.
As a result of current and pending state regulatory requirements,
Humana Health Plans must maintain various levels of equity in certain of
its subsidiaries, which limits Humana Health Plans' ability to pay
dividends. At August 31, 1992, $156 million of equity was restricted
under these regulations.
12
HUMANA HEALTH PLANS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 9--COMMITMENTS AND CONTINGENCIES
Commitments
Humana Health Plans leases certain properties, buildings and
equipment under operating lease arrangements. Operating lease rental
payments charged to expense aggregated $22 million, $17 million and
$11 million for the years ended August 31, 1992, 1991 and 1990,
respectively. Of these amounts $10 million, $6 million and $3 million is
related to the operation of Humana Health Plans' wholly owned clinics and
therefore have been included in medical costs in the accompanying
consolidated statement of operations for the years ended August 31, 1992,
1991 and 1990, respectively.
Future minimum rental payments required under operating leases as of
August 31, 1992 which have initial or remaining non-cancelable lease terms
in excess of one year are as follows (dollars in millions):
1993 $15
1994 14
1995 13
1996 10
1997 5
Thereafter 17
$74
Contingencies
Certain contracts and financial instruments are subject to credit
risks associated with third parties to the transactions. Humana Health
Plans maintains policies which attempt to limit concentration of such
risks and related losses in connection with such activities as investment,
credit and collection and insurance. As a result, management believes
that there are no significant concentrations of credit risks at August 31,
1992.
During the ordinary course of business, Humana Health Plans is
subject to pending and threatened legal actions. Management of Humana
Health Plans does not believe that any of these actions will have a
material adverse effect on its operations or financial position.
In connection with the previously described Distribution, Humana
Health Plans will assume liability for specified claims and will share
risks with respect to certain litigation and other contingencies, both
identified and unknown.
The financial statements of Humana Health Plans reflect the effect
of Galen's anticipated assumption of substantially all of Humana Inc.'s
long-term debt. In the event that all or part of the assumption does not
occur prior to the Distribution, Humana Health Plans would remain
primarily liable for such debt to the obligee thereunder. Humana Health
Plans and Galen have agreed that Galen would pay all amounts and otherwise
satisfy all obligations related to such long-term debt. In the case of
any Humana Inc. long-term debt proposed to be assumed by Galen in the
Distribution, to the extent that Humana Health Plans and Galen are unable
to obtain consents from holders of such debt to the assumption by Galen of
primary liability for such debt, the amount of such debt will be reflected
as a liability of Humana Health Plans in its financial statements
(although Humana Health Plans' financial statements will also reflect as
an asset a receivable from Galen in an equal amount, which will accrue
interest and will be payable on the same terms as such Humana Inc.
long-term debt). Furthermore, Humana Health Plans may be contingently
liable as guarantor of certain Humana Inc. long-term debt assumed by Galen
in the Distribution. At August 31, 1992, outstanding Humana Inc.
long-term debt expected to become the obligation of Galen aggregated
approximately $703 million.
Humana Health Plans' Medicare Risk contracts with HCFA are renewed
for a one-year term each December 31 unless terminated 90 days prior
thereto. The loss of these contracts or significant changes in the
Medicare Risk program, including reductions in payments or increases in
benefits without corresponding increases in payments, would have a
material adverse affect on the revenues, profitability and business
prospects of Humana Health Plans.
13
HUMANA HEALTH PLANS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 10--ACQUISITIONS
On September 1, 1990, Humana Health Plans purchased all the
outstanding common stock of Prime Health Kansas City, Inc., an
82,000-member staff model HMO, for $28 million. On March 1, 1991, Humana
Health Plans acquired substantially all of the operating assets of Michael
Reese Health Plans Inc. ("Michael Reese") for $52 million. Michael Reese,
a staff model HMO, had approximately 244,000 members. On April 1, 1992,
Humana Health Plans purchased all the outstanding shares of HealthChicago,
Inc., a 61,400-member HMO, for approximately $37 million.
Each of the above acquisitions and certain other minor acquisitions
were accounted for by the purchase method. The total cost in excess of
net tangible assets acquired for all acquisitions totaled approximately
$44 million and is being amortized over periods ranging from 7 to 14
years.
The results of operations associated with all the previously
mentioned acquisitions have been included in the accompanying consolidated
statement of operations since the date of the respective acquisitions.
The following unaudited pro forma summary presents the results of
operations of Humana Health Plans as if the acquisitions had occurred on
September 1, 1990. The pro forma results for the years ended August 31,
1992 and 1991 have been presented for comparative purposes only and do not
purport to be indicative of what would have occurred had the acquisitions
been consummated at the beginning of fiscal 1991 or of results which may
occur in the future (dollars in millions):
1992 1991
Revenues $2,869 $2,537
Net income (loss) $ (117) $ 4
NOTE 11--EMPLOYEE BENEFIT PLANS
Humana Inc. maintains noncontributory defined contribution
retirement plans covering substantially all Humana Health Plans'
employees. Benefits are determined as a percentage of a participant's
earned income and are vested annually. Retirement plan expense for Humana
Health Plans was $9 million, $6 million and $4 million for the years ended
August 31, 1992, 1991 and 1990, respectively. Amounts equal to retirement
plan expense are funded annually.
Humana Inc. also maintains a contributory thrift plan covering
substantially all employees whereby the employee can contribute up to 10%
of their compensation with Humana Inc. matching 50% of the employee's
contribution up to a maximum of 6% of total compensation. Humana Health
Plans contributions charged to expense amounted to $3 million, $2 million
and $1 million for the years ended August 31, 1992, 1991 and 1990,
respectively. Contributions are funded periodically during the year.
In connection with the Distribution, Galen employees participating
in Humana Inc.'s Retirement Plan and Thrift Plan will be separated from
the Humana Inc. plans. Thereafter, separate plans for the benefit of
Humana Health Plans and Galen employees will be maintained.
In December 1990 the Financial Accounting Standards Board issued
Statement No. 106 requiring a change in accounting for the cost of
postretirement benefits other than retirement plans. Humana Health Plans
does not provide postretirement benefits to its employees other than
retirement plans.
NOTE 12--TRANSACTIONS WITH GALEN
Humana Health Plans' members receive medical care from various
providers including Galen hospitals.
In connection with the Distribution, Galen and Humana Health Plans
will enter into certain agreements which will become effective upon the
actual separation of the two businesses. The agreements are intended to
facilitate orderly changes from an integrated health care company to
separate unaffiliated hospital and health plan businesses in a way which
14
HUMANA HEALTH PLANS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
is minimally disruptive to each entity. Principal contracts are
summarized below:
Operations--Galen will provide medical services to members of
Humana Health Plans for three years. The contract will include,
among other things, payment rates for various inpatient and
outpatient services and annual increases therein, and hospital
utilization guarantees and related penalties.
Liabilities and Indemnification--Each entity will assume
liability for specified claims. The entities will also share risks
with respect to certain litigation and other contingencies, both
identified and unknown.
Income Taxes--Each entity will enter into risk-sharing
arrangements in connection with the ultimate resolution of various
income tax related disputes.
Administration--These agreements will relate to leasing of
certain administrative facilities, division of information systems,
employee benefit and stock option plans, and various administrative
service arrangements.
A portion of the capitalization of Humana Health Plans will be
provided by Galen in the form of Notes payable to Humana Health Plans in
the aggregate principal amount of approximately $250 million. These notes
will bear interest at an annual rate of approximately 5% and will be
payable over five years. For accounting purposes, the effect of the Notes
cannot be included in Humana Health Plans' assets or common stockholders'
equity until cash payments are received. In addition, it is expected that
Humana Health Plans will receive approximately $135 million in cash from
Galen at the time of the Distribution.
Interest income on amounts due from Galen was $13 million, $10
million and $5 million for the years ended August 31, 1992, 1991 and 1990,
respectively.
NOTE 13--SUBSEQUENT EVENT
In view of the capital to be provided to Humana Health Plans by
Galen in the Distribution, the need of Galen to be financially positioned
after the Distribution to attract business from other sources,
uncertainties regarding the effects of the Distribution, and to provide
Galen with the resources to take advantage of opportunities in the future,
the Humana Inc. Board of Directors determined on November 12, 1992, to
eliminate the payment of future dividends on its common stock after the
dividend payment on February 1, 1993, to stockholders of record on
January 4, 1993.
15
HUMANA HEALTH PLANS
SCHEDULE II--AMOUNTS RECEIVABLE FROM RELATED PARTIES
AND UNDERWRITERS, PROMOTERS, AND EMPLOYEES OTHER THAN RELATED PARTIES
For the years ended August 31, 1992, 1991 and 1990
(Dollars in thousands)
Balance at Balance at
Beginning Amounts End of Period
of Period Additions Collected Current Not Current
Year ended August 31, 1990:
Patricia Davis $ - $ 90 $ - $ 18 $ 72
Patricia Davis - 28 28 - -
$ - $118 $ 28 $ 18 $ 72
Year ended August 31, 1991:
Patricia Davis $ 90 $ - $ 18 $ 18 $ 54
David Jarboe - 283 223 - 60
$ 90 $283 $241 $ 18 $114
Year ended August 31, 1992:
Patricia Davis $ 72 $ - $ 18 $ 18(a) $ 36(a)
David Jarboe 60 - - - 60(b)
Mike McCallister - 188 - 188(b) -
$132 $188 $ 18 $206 $ 96
(a) Interest at prime plus 1%; collateralized by deed of trust on personal residence; payable
either in periodic installments or upon termination of employment, sale of residence or
default on any collateral instrument having priority over Humana Inc.'s deed of trust.
(b) Noninterest bearing; collateralized by deed of trust on personal residence; payable either
in periodic installments or upon termination of employment, sale of residence or default
on any collateral instrument having priority over Humana Inc.'s deed of trust.
16
HUMANA HEALTH PLANS
SCHEDULE III--PARENT COMPANY FINANCIAL INFORMATION(a)
CONDENSED BALANCE SHEET
August 31, 1992 and 1991
(Dollars in millions)
ASSETS
1992 1991
Current assets $ 15 $ 14
Property and equipment, net 153 196
Investments in subsidiaries 340 312
Investments related to professional liability risks 28 21
Other 17 16
TOTAL ASSETS $553 $559
LIABILITIES AND EQUITY
Current liabilities $129 $109
Allowance for professional liability risks 28 21
Other 29 22
186 152
Equity 367 407
TOTAL LIABILITIES AND EQUITY $553 $559
(a) The above schedule includes financial information relating to the parent company of Humana
Health Plans. Parent company financial information has been derived from the Consolidated
Financial Statements of Humana Health Plans, and excludes the accounts of all operating
subsidiaries. This information should be read in conjunction with the Consolidated
Financial Statements of Humana Health Plans.
17
HUMANA HEALTH PLANS
SCHEDULE III--PARENT COMPANY FINANCIAL INFORMATION(a)
CONDENSED STATEMENT OF OPERATIONS
For the years ended August 31, 1992, 1991 and 1990
(Dollars in millions)
1992 1991 1990
Revenues:
Management fees charged to operating subsidiaries $ 71 $ 54 $ 38
Interest income 1 1 1
72 55 39
Expenses:
Selling, general and administrative 116 117 90
Depreciation and amortization 19 12 11
Restructuring and unusual charges 58 - -
Interest expense (income) 13 12 (3)
206 141 98
Loss before equity in income (loss) of subsidiaries (134) (86) (59)
Equity in income (loss) of subsidiaries (25) 64 31
Loss before income taxes (159) (22) (28)
Income tax benefit (45) (31) (24)
Net income (loss) $(114) $ 9 $ (4)
(a) The above schedule includes financial information relating to the parent company of Humana
Health Plans. Parent company financial information has been derived from the Consolidated
Financial Statements of Humana Health Plans, and excludes the accounts of all operating
subsidiaries. This information should be read in conjunction with the Consolidated
Financial Statements of Humana Health Plans.
18
HUMANA HEALTH PLANS
SCHEDULE III -- PARENT COMPANY FINANCIAL INFORMATION(a)
CONDENSED STATEMENT OF CASH FLOWS
For the years ended August 31, 1992, 1991 and 1990
(Dollars in millions)
1992 1991 1990
Cash flows from operating activities:
Net income (loss) $(114) $ 9 $ (4)
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Restructuring and unusual charges 58 - -
Depreciation and amortization 19 12 11
Deferred income taxes (21) (2) 1
Equity in (income) loss of subsidiaries 25 (64) (31)
Other 42 11 72
Net cash provided by (used in) operating
activities 9 (34) 49
Cash flows from investing activities:
Net change in property and equipment (18) (74) (15)
Change in investments related to professional
liability risks (7) (5) (6)
Parent funding to operating subsidiaries (77) (103) (9)
Dividends from operating subsidiaries 24 44 29
Net cash provided by (used in) investing
activities (78) (138) (1)
Cash flows from financing activities:
Equity funding from (to) Galen 74 176 (48)
Other (5) (4) -
Net cash provided by (used in) financing
activities 69 172 (48)
Change in cash and cash equivalents - - -
Cash and cash equivalents at beginning of period - - -
Cash and cash equivalents at end of period $ - $ - $ -
(a) The above schedule includes financial information relating to the parent company of Humana
Health Plans. Parent company financial information has been derived from the Consolidated
Financial Statements of Humana Health Plans, and excludes the accounts of all operating
subsidiaries. This information should be read in conjunction with the Consolidated
Financial Statements of Humana Health Plans.
19
HUMANA HEALTH PLANS
SCHEDULE V--PROPERTY, PLANT AND EQUIPMENT
For the years ended August 31, 1992, 1991 and 1990
(Dollars in millions)
Balance at Balance
Beginning Additions Retirements at End of
of Period at Cost or Sales Other Period
Year ended August 31, 1990:
Land $ 7 $ 2 $(1) $ 8
Buildings 103 4 - 107
Equipment 112 21 (1) 132
$222 $27 $(2) $247
Year ended August 31, 1991:
Land $ 8 $ 14 $ - $ 22
Buildings 107 115 - 222
Equipment 132 61 (3) 190
$247 $190 $(3) $434
Year ended August 31, 1992:
Land $ 22 $ - $ - $ - $ 22
Buildings 222 12 (1) (41)(a) 192
Equipment 190 37 (4) (7)(a) 216
$434 $ 49 $(5) $(48) $430
(a) During the fourth quarter of 1992 Humana Health Plans recorded writedowns of assets related
to administrative facilities and markets with significant declines in operations, and losses
associated with the planned sales of certain other assets. See Note 3 of Notes to
Consolidated Financial Statements.
20
HUMANA HEALTH PLANS
SCHEDULE VI--ACCUMULATED DEPRECIATION, DEPLETION AND
AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT
For the years ended August 31, 1992, 1991 and 1990
(Dollars in millions)
Additions Balance
Balance at Charged to at
Beginning Costs and Retirements End of
of Period Expenses or Sales Period
Year ended August 31, 1990:
Buildings $ 11 $ 3 $(1) $ 13
Equipment 55 12 (1) 66
$ 66 $15 $(2) $ 79
Year ended August 31, 1991:
Buildings $ 13 $ 8 $ - $ 21
Equipment 66 14 (1) 79
$ 79 $22 $(1) $100
Year ended August 31, 1992:
Buildings $ 21 $11 $ - $ 32
Equipment 79 23 (3) 99
$100 $34 $(3) $131
21
HUMANA HEALTH PLANS
SCHEDULE VIII--VALUATION AND QUALIFYING ACCOUNTS
For the years ended August 31, 1992, 1991 and 1990
(Dollars in millions)
Additions Balance
Balance at Charged to at
Beginning Costs and Deductions End of
of Period Expenses or Payments Period
Allowance for loss on premiums receivable:
Year ended August 31, 1990 $ 9 $17 $(16) $10
Year ended August 31, 1991 10 3 (4) 9
Year ended August 31, 1992 9 7 (5) 11
Allowance for loss on long-term receivables:
Year ended August 31, 1990 $ - $ - $ - $ -
Year ended August 31, 1991 - 2 - 2
Year ended August 31, 1992 2 2 - 4
22
