<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________
FORM 10-Q
[Y] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER: 001-14003
OMEGA PROTEIN CORPORATION
(Exact name of Registrant as specified in its charter)
STATE OF NEVADA 76-0562134
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
1717 ST. JAMES PLACE, SUITE 550
HOUSTON, TEXAS 77056
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
Registrant's telephone number, including area code: (713) 623-0060
_________________
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES Y NO
--- --.
Number of shares outstanding of the Registrant's Common Stock, par value
$0.01 per share, on August 1, 2000: 23,907,789
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OMEGA PROTEIN CORPORATION
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
<TABLE>
<CAPTION>
Item 1. Financial Statements
<S> <C>
Unaudited Condensed Consolidated Balance Sheet as of June 30, 2000
and December 31, 1999........................................................ 3
Unaudited Condensed Consolidated Statement of Operations for the three months
ended and six months ended June 30, 2000 and 1999............................ 4
Unaudited Condensed Consolidated Statement of Cash Flows for the
six months ended June 30, 2000 and 1999...................................... 5
Notes to Unaudited Condensed Consolidated Financial Statements.................. 6
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operation.......................................................... 13
PART II. OTHER INFORMATION
Item 1. Legal Proceedings............................................................... 21
Item 2. Changes in Securities........................................................... 21
Item 3. Quantitative and Qualitative Disclosures About Market Risk...................... 21
Item 4. Submission of Matters to a Vote of Security Holders............................. 21
Item 5. Other Information............................................................... 22
Item 6. Exhibits and Reports on Form 8-K................................................ 22
Signatures............................................................................... 23
Exhibit Index............................................................................ 24
</TABLE>
2
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements and Notes
OMEGA PROTEIN CORPORATION
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999
------------------- ---------------
(in thousands)
<S> <C> <C>
ASSETS
------
Current assets:
Cash and cash equivalents..................................... $ 16,941 $ 15,673
Receivables, net.............................................. 9,539 15,991
Inventories................................................... 47,245 46,112
Prepaid expenses and other current assets..................... 1,519 897
------------------- ---------------
Total current assets....................................... 75,244 78,673
Other assets...................................................... 8,885 7,107
Property and equipment, net....................................... 91,764 90,368
------------------- ---------------
Total assets............................................ $ 175,893 $ 176,148
=================== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Current maturities of long-term debt.......................... $ 1,187 $ 1,146
Accounts payable.............................................. 2,056 2,200
Accrued liabilities........................................... 14,619 11,603
------------------- ---------------
Total current liabilities.................................. 17,862 14,949
Long-term debt.................................................... 15,450 16,069
Deferred income taxes............................................. 120 583
Other liabilities................................................. 375 375
------------------- ---------------
Total liabilities.......................................... 33,807 31,976
------------------- ---------------
Commitments and contingencies
Minority interest................................................. 104 -
------------------- ---------------
Stockholders' equity:
Preferred stock, $0.01 par value; authorized 10,000,000 shares
none issued................................................ - -
Common stock, $0.01 par value; authorized 80,000,000 shares;
24,311, 799 shares and 24,302,126 shares issued and
outstanding, respectively.................................. 243 243
Capital in excess of par value................................ 111,858 111,835
Reinvested earnings, from October 1, 1990..................... 31,916 34,129
Common stock in treasury, at cost -- 413,100 shares............ (2,035) (2,035)
------------------- ---------------
Total stockholders' equity.................................. 141,982 144,172
------------------- ---------------
Total liabilities and stockholders' equity............. $ 175,893 $ 176,148
=================== ===============
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
</TABLE>
3
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OMEGA PROTEIN CORPORATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
----------------------------------- --------------------------------
2000 1999 2000 1999
------------- ------------- ------------- -------------
(in thousands, except per share amounts)
<S> <C> <C> <C> <C>
Revenues........................................ $ 20,873 $ 18,222 $ 40,260 $ 40,377
Cost of sales................................... 20,729 16,883 39,026 32,369
----------- ----------- ----------- -----------
Gross profit.................................... 144 1,339 1,234 8,008
Selling, general, and administrative expense.... 2,005 2,300 4,377 4,488
----------- ----------- ----------- -----------
Operating income (loss)......................... (1,861) (961) (3,143) 3,520
Interest income (expense), net.................. 19 274 (14) 659
Other income (expense), net..................... (158) (120) (250) (208)
----------- ----------- ----------- -----------
Income (loss) before income taxes............... (2,000) (807) (3,407) 3,971
Provision (benefit) for income taxes........... (721) (289) (1,227) 1,429
----------- ----------- ----------- -----------
Net income (loss)............................... $ (1,279) $ (518) $ (2,180) $ 2,542
=========== =========== =========== ===========
Earnings (loss) per share (basic and diluted)... $ (0.05) $ (0.02) $ (0.09) $ 0.11
=========== =========== =========== ===========
Average common shares outstanding............... 23,899 23,897 23,894 24,053
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of the unaudited condensed
consolidated financial statements.
4
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OMEGA PROTEIN CORPORATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Six Months Ended
June 30,
----------------------------------------------------
2000 1999
--------------------- ---------------------
(in thousands)
<S> <C> <C>
Cash flows provided by operating activities:
Net income (loss)................................................... $ (2,180) $ 2,542
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
Loss on disposal of assets, net................................. 94 -
Depreciation and amortization................................... 4,908 4,440
Deferred income taxes........................................... (463) 929
Changes in assets and liabilities:
Receivables................................................. 6,452 1,973
Inventories................................................. (1,133) (15,920)
Accounts payable and accrued liabilities.................... 2,872 6,622
Amounts due to parent....................................... - (36)
Other, net.................................................. (2,899) 284
--------------- ----------------
Total adjustments...................................... 9,831 (1,708)
--------------- ----------------
Net cash provided by operating activities.............. 7,651 834
--------------- ----------------
Cash flows used in investing activities:
Capital expenditures................................................ (5,805) (10,238)
--------------- ----------------
Net cash used in investing activities.................. (5,805) (10,238)
--------------- ----------------
Cash flows used in financing activities:
Principal payments of short and long-term debt obligations.......... (578) (505)
Purchase of Treasury Stock.......................................... - (2,035)
--------------- ----------------
Net cash used in financing activities................. (578) (2,540)
--------------- ----------------
Net increase (decrease) in cash and cash equivalents.................... 1,268 (11,944)
Cash and cash equivalents at beginning of year.......................... 15,673 44,828
--------------- ----------------
Cash and cash equivalents at end of period.............................. $ 16,941 $ 32,884
=============== ================
</TABLE>
The accompanying notes are an integral part of the unaudited condensed
consolidated financial statements.
5
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OMEGA PROTEIN CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES
SUMMARY OF OPERATIONS AND BASIS OF PRESENTATION
Business Description
Omega Protein Corporation ("Omega" or the "Company") produces and markets
a variety of products produced from menhaden (a fish found in commercial
quantities), including regular grade and value added specialty fish meals, crude
and refined fish oils and fish solubles. The Company's fish meal products are
used as nutritional feed additives by animal feed manufacturers and by
commercial livestock producers. The Company's crude fish oil is sold to food
producers in Europe, and its refined fish oil products are used in aquaculture
feeds and certain industrial applications. Fish solubles are sold as protein
additives for animal feed and as organic fertilizers.
On January 26, 1998, Marine Genetics Corporation ("Marine Genetics")
merged into Omega, a Nevada corporation, wholly-owned by Zapata Corporation
("Zapata"), with Omega being the surviving entity. Because Omega and Marine
Genetics were both wholly-owned by Zapata the merger was a common control merger
accounted for at historical cost in a manner similar to that in a pooling of
interests accounting. In connection with the merger, all of Marine Genetics
outstanding common stock was converted into Omega Common Stock at the rate of
one share for 19,676 shares of newly issued Omega Common Stock and Omega's pre-
merger outstanding common stock was canceled and treated as treasury stock.
On April 8, 1998, the Company completed an initial public offering
of 8,500,000 of its common stock at a price to the public of $16.00 per share.
On May 7, 1998, the Underwriters exercised their option to acquire 1,275,000
additional shares at the same price. Of the 9,775,000 total shares sold in the
offering, the Company issued and sold 4,600,000 shares, and Zapata sold
5,175,000 shares. Immediately following the offering, Zapata owned approximately
59.7% of the shares of the Company's outstanding common stock.
Change in Fiscal Year
On December 1, 1998, the Company's Board of Directors approved a
change in the Company's fiscal year end from September 30 to December 31,
effective beginning January 1, 1999.
Consolidation
The consolidated financial statements include the accounts of Omega and its
wholly and majority owned subsidiaries. Investments in affiliated companies and
joint ventures representing a 20% to 50% voting interest are accounted for using
the equity method. All significant intercompany accounts and transactions have
been eliminated in consolidation.
On April 5, 2000, the Company acquired for a nominal amount an additional
1% equity interest in a partially owned subsidiary that was previously accounted
for under the equity
6
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method. As a result of the transaction, the Company now owns 51% of the
investment and consolidates its operations.
The unaudited condensed consolidated financial statements included herein
have been prepared by Omega, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. The financial statements
reflect all adjustments that are, in the opinion of management, necessary to
fairly present such information. All such adjustments are of a normal recurring
nature. Although Omega believes that the disclosures are adequate to make the
information presented not misleading, certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations. These unaudited condensed consolidated
financial statements should be read in conjunction with the financial statements
and the notes thereto included in Omega's Annual Report on Form 10-K for the
fiscal year ended December 31, 1999, filed with the Securities and Exchange
Commission on March 9, 2000. The results of operations for the fiscal quarter
ended June 30, 2000 and the six months ended June 30, 2000 are not necessarily
indicative of the results to be expected for any subsequent quarter or the
twelve months ending December 31, 2000.
Revenue Recognition
The Company recognizes revenue for the sale of its products when title to
its products is transferred to the customer.
Inventories
The Company's fishing season runs from mid-April to the end of October in
the Gulf of Mexico and from the beginning of May to the end of December in the
Atlantic. Government regulations preclude the Company from fishing during the
off-seasons. During the off-seasons, the Company incurs costs (i.e., plant and
vessel-related labor, utilities, rent and depreciation) that are directly
related to the Company's infrastructure that will be used in the upcoming
fishing season. Costs that are incurred subsequent to a fish catch are deferred
until the next season and are included with inventory. Fishing product
inventories and materials, parts and supplies are stated at the lower of cost
(average cost) or market.
The Company's inventory cost system considers all costs, both variable and
fixed, associated with an annual fish catch and its processing. The Company's
costing system allocates cost to inventory quantities on a per unit basis as
calculated by a formula that considers total estimated inventoriable costs for a
fishing season (including off-season costs) to total estimated fish catch and
the relative fair market value of the individual products produced. The Company
adjusts the cost of sales, off-season costs and inventory balances at the end of
each quarter based on revised estimates of total inventoriable costs and fish
catch.
Accounting for the Impairment of Long-Lived Assets
The Company accounts for impairment of long-lived assets in accordance with
Statement of Financial Accounting Standards ("SFAS") No. 121, "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
of", which was issued in March 1995. SFAS No. 121 requires that long-lived
assets be reviewed for impairment whenever events or changes in circumstances
indicate that the book value of the asset may not be recoverable. The Company
evaluates at each balance sheet date whether events and circumstances have
occurred that indicate possible operational impairment. In accordance with SFAS
No. 121, the Company
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uses an estimate of the future undiscounted net cash flows of the related asset
or asset grouping over the remaining life in measuring whether its operating
assets are recoverable. During the fourth quarter of Fiscal 1999, the Company
wrote down approximately $2.3 million of impaired long-lived assets. The $2.3
million impairment of certain of the Company's Morgan City in-line processing
equipment was recorded to reduce the value of the assets to their estimated
salvage value. The Company has temporarily closed the in-line processing
facilities at the plant and management has concluded that the affected damaged
equipment will not be repaired but instead will be permanently removed from
service.
Income Taxes
The Company utilizes the liability method to account for income taxes. This
method requires the recognition of deferred tax assets and liabilities for the
expected future tax consequences of existing temporary differences between the
financial reporting and tax reporting basis of assets and liabilities, and
operating loss and tax credit carryforwards for tax purposes.
Property, Equipment and Depreciation
Property and equipment are initially recorded at cost except as adjusted by
the quasi-reorganization as of October 1, 1990. Because of the quasi-
reorganization, the carrying value of the assets was reduced to estimated fair
value.
Depreciation of property and equipment is computed by the straight-line
method at rates expected to amortize the cost of property and equipment, net of
salvage value, over their estimated useful lives. Estimated useful lives of
assets acquired new, determined as of the date of acquisition are as follows:
USEFUL LIVES
(YEARS)
-----------
Fishing vessels and fish processing plants............... 15-20
Furniture and fixtures................................... 3-10
Replacements and major improvements are capitalized; maintenance and
repairs are charged to expense as incurred. Upon sale or retirement, the costs
and related accumulated depreciation are eliminated from the accounts. Any
resulting gains or losses are included in the statement of operations. The
Company periodically evaluates its long-lived assets for impairment if events or
changes in circumstances indicate that the carrying amount of an asset may not
be recoverable.
Concentrations of Credit Risk
Financial instruments that potentially subject the Company to concentration
of credit risk consist principally of cash and trade accounts receivable. The
Company's customer base generally remains consistent from year to year. The
Company performs ongoing credit evaluations of its customers and generally does
not require material collateral. The Company maintains reserves for potential
credit losses and such losses have historically been within management's
expectations.
At June 30, 2000 and December 31, 1999, the Company had cash deposits
concentrated primarily in two major banks. In addition, the Company had
Certificates of Deposit and commercial quality grade A2P2 rated or better
securities paper with companies and financial
8
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institutions. As a result of the foregoing, the Company believes that credit
risk in such investments is minimal.
Earnings Per Share
Basic earnings per share were computed by dividing income by the weighted
average number of common shares outstanding. Diluted earnings per share were
computed by dividing income by the sum of the weighted average number of common
shares outstanding and the effect of any dilutive stock options.
Recently Issued Accounting Standards
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities" which, as amended, is effective for fiscal
years beginning after June 15, 2000. SFAS 133 establishes standards requiring
all derivatives to be recognized in the statement of financial position as
either assets or liabilities and measured at fair value. The Company will adopt
the provisions of the statement in Fiscal 2001. The Company anticipates that
implementing the provisions of SFAS 133 will not have a significant impact on
the Company's existing operations.
The Company is reviewing SEC Staff Accounting Bulletin ("SAB") No. 101,
"Revenue Recognition in Financial Statements." However, at this time, the effect
of the bulletin on the Company's consolidated financial condition and results of
operations has not been determined, and it is not known if the impact, if any,
would be material. Implementation of SAB 101, as amended, is required no later
than the fourth quarter of Fiscal 2000.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Quasi-Reorganization
In connection with the comprehensive restructuring accomplished in
1991, the Company, in conjunction with Zapata, implemented, for accounting
purposes, a "quasi-reorganization," an elective accounting procedure that
permits a company that has emerged from previous financial difficulty to restate
its accounts and establish a fresh start in an accounting sense. After
implementation of the accounting quasi-reorganization, the Company's assets and
liabilities were revalued and its deficit in reinvested earnings was charged to
capital in excess of par value. The Company effected the accounting quasi-
reorganization as of October 1, 1990.
9
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NOTE 2. ACCOUNTS RECEIVABLE
Accounts receivable as of June 30, 2000 and December 31, 1999 are
summarized as follows:
JUNE DECEMBER
2000 1999
---------- --------
(IN THOUSANDS)
Trade.................................... $ 6,042 $ 8,717
Insurance................................ 2,107 1,354
Employee................................. 136 60
Income tax............................... 983 5,300
Other.................................... 474 748
---------- --------
Total accounts receivable................ 9,742 16,179
Less: allowance for doubtful accounts.... (203) (188)
-------- --------
Receivables, net......................... $ 9,539 $ 15,991
========== ========
NOTE 3. INVENTORY
Inventory as of June 30, 2000 and December 31, 1999 is summarized as
follows:
JUNE DECEMBER
2000 1999
-------- --------
(IN THOUSANDS)
Fish meal................................ $ 12,647 $ 24,195
Fish oil................................. 5,644 8,445
Fish solubles............................ 871 1,538
Off-season cost.......................... 23,457 7,282
Materials & supplies..................... 4,626 4,633
Other.................................... 102 121
Less: oil inventory reserve.............. (102) (102)
-------- --------
Total inventory.......................... $ 47,245 $ 46,112
======== ========
Note 4. Other Assets
Other assets as of June 30, 2000 and December 31, 1999 are summarized as
follows:
JUNE DECEMBER
2000 1999
-------- --------
(IN THOUSANDS)
Fishing nets............................. $ 1,579 $ 1,258
Prepaid pension cost..................... 3,307 3,190
Insurance receivable..................... 2,961 1,830
Title XI loan origination fee............ 302 339
Note receivable.......................... 373 35
Deposits................................. 131 116
Investments in unconsolidated affiliates. - 58
Miscellaneous............................ 232 281
-------- --------
Total other assets....................... $ 8,885 $ 7,107
======== ========
Amortization expense for fishing nets amounted to approximately $482,000
and $400,000 for the six months ended June 30, 2000 and 1999, respectively.
10
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NOTE 5. PROPERTY AND EQUIPMENT
Property and equipment at June 30, 2000 and December 31, 1999 are
summarized as follows:
JUNE DECEMBER
2000 1999
-------- ---------
(IN THOUSANDS)
Land........................................... $ 5,390 $ 5,390
Plant assets................................... 67,469 64,498
Fishing vessels................................ 68,402 66,859
Furniture and fixtures......................... 1,730 1,730
Other.......................................... 5,805 4,572
-------- ---------
Total property and equipment................... 148,796 143,049
Less: accumulated depreciation and impairment.. (57,032) (52,681)
-------- ---------
Property and equipment, net.................... $ 91,764 $ 90,368
======== =========
Depreciation expense for the six months ended June 30, 2000 and 1999 was
approximately $4.4 million and $3.9 million, respectively.
NOTE 6. NOTES PAYABLE AND LONG-TERM DEBT
At June 30, 2000 and December 31, 1999, the Company's long-term debt
consisted of the following:
<TABLE>
<CAPTION>
JUNE DECEMBER
2000 1999
------------- -----------
<S> <C> <C>
U.S. government guaranteed obligations (Title XI loan) collateralized by
a first lien on certain vessels and certain plant assets:
Amounts due in installments through 2014, interest from 6.63% to 8.25%....... $ 15,130 $ 15,564
Amounts due in installments through 2014, interest at Eurodollar rates
plus 0.45%; 6.73% and 5.96% at June 30, 2000 and December 31, 1999,
respectively............................................................... 1,131 1,171
Other debt at 8% at June 30, 2000 and December 31, 1999 respectively............... 376 480
------------- ------------
Total debt......................................................................... 16,637 17,215
Less: current maturities........................................... (1,187) (1,146)
------------- ------------
Long-term debt..................................................................... $ 15,450 $ 16,069
============= ============
</TABLE>
At June 30, 2000 and December 31, 1999, the estimated fair value of debt
obligations approximated book value.
On December 22, 1999, the Company closed on its Fiscal 1999 Title XI
application and received $5.6 million of Title XI borrowings for qualified Title
XI projects. Originally, the Company was authorized to receive up to $20.6
million in loans under the Title XI program, and has used the entire amount
authorized under such program. The Company's current Title XI borrowings are
secured by liens on 17 fishing vessels and mortgages on the Company's Reedville,
Virginia and Abbeville, Louisiana plants. At June 30, 2000 and December 31,
1999, the Company was in compliance with all restrictive covenants contained in
the Title XI borrowing agreements. To date the Company has used $20.6 million of
the authorized Title XI funds.
On August 11, 1998 the Company entered into a two year $20.0 million
revolving credit agreement with SunTrust Bank, South Florida, N.A. (the "Credit
Facility"). Borrowings under
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this facility may be used for working capital and capital expenditures. Interest
accrues on borrowings that will be outstanding under the Credit Facility at the
Company's election, either (i) the bank's prime rate less 75 basis points, or
(ii) LIBOR plus a margin based on the Company's financial performance. The
Credit Facility requires a per annum commitment fee of one-eighth of a percent
(0.125%) on the average daily unused portion of the commitment of the lender. In
addition, the payment of cash dividends is limited by the terms of the Credit
Facility which states that in any fiscal year of the Credit Facility, the
Company shall not pay or declare dividends in excess of fifty percent (50%) of
its consolidated net income. At June 30, 2000 and December 31, 1999, the Company
could not have declared and paid dividends within the limitations of the Credit
Facility. Under the most restrictive of these covenants, the Company is required
to maintain a current ratio of at least 1.25:1 and maintain a debt to equity
ratio of not more than 2:1. Covenants also limit capital expenditures and
investments. The Credit Facility is collateralized by all of the Company's trade
receivables, inventory and specific computer equipment. The Company and its
subsidiaries are required to comply with certain financial covenants, including
maintenance of a minimum tangible net worth, debt to tangible net worth ratio,
funded debt to cash flow ratio and fixed charges ratio, and certain other
covenants. At June 30, 2000 and December 31, 1999, the Company was in compliance
with all restrictive covenants. As of June 30, 2000 and December 31, 1999, the
Company had no borrowings outstanding under the Credit Facility. The Credit
Facility expired on July 2, 2000. Although no assurance can be given that a new
Credit Facility will be finalized, the Company is currently in discussion with
different banks to provide a new Credit Facility.
Note 7. Accrued Liabilities
Accrued liabilities as of June 30, 2000 and December 31, 1999 are
summarized as follows:
JUNE DECEMBER
2000 1999
------- --------
(IN THOUSANDS)
Salary and benefits.................... $ 4,227 $ 3,625
Insurance.............................. 7,366 5,101
Taxes, other than income tax........... 530 8
Federal and state income taxes......... 189 271
Trade creditors........................ 1,791 2,518
Other.................................. 516 80
------- -------
Total accrued liabilities.............. $14,619 $11,603
======= =======
NOTE 8. CERTAIN TRANSACTIONS AND ARRANGEMENTS BETWEEN THE COMPANY AND ZAPATA
The Company provided to Zapata payroll and certain administrative services
billed at their approximate cost. During the six-month period ended June 30,
fees billed for these services totaled $2,900. During the six-month period ended
June 30, 1999, fees billed for these services totaled $96,797. The cost of such
services were based on the estimated percentage of time that employees spent
working on the other party's matters as a percent of total time worked. The
Company's management deemed this allocation method to be reasonable.
Upon completion of the Company's initial public offering in April 1998, the
Company and Zapata entered into certain agreements that include the Separation,
Sublease, Registration Rights, Tax Indemnity and Administrative Services
Agreements. The Separation Agreement required the Company to repay $33.3 million
of indebtedness owed by the Company to Zapata contemporaneously with the
consummation of the Company's initial public offering and also prohibits Zapata
from competing with the Company for a period of five years. The Sublease
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Agreement provides for the Company to lease its principal corporate offices in
Houston, Texas from Zapata and provides for the Company to utilize certain
shared office equipment for no additional charge. The Registration Rights
Agreement sets forth the rights and responsibilities of each party concerning
certain registration filings and provides for the sharing of fees and expenses
related to such filings. The Tax Indemnity Agreement requires the Company to be
responsible for federal, state and local income taxes from its operations and
the Administrative Services Agreement allows the Company to provide certain
administrative services to Zapata at the Company's estimated cost.
NOTE 9. COMMITMENTS AND CONTINGENCIES
Litigation
The Company is defending various claims and litigation arising from its
operations. In the opinion of management, uninsured losses, if any, resulting
from these matters will not have a material adverse effect on the Company's
results of operations, cash flows or financial position.
Environmental Matters
The Company is subject to various possible claims and lawsuits regarding
environmental matters. Management believes that costs, if any, related to these
matters will not have a material adverse effect on the results of operations,
cash flows or financial position of the Company.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Forward-looking statements in this Form 10-Q, future filings by the Company
with the Securities and Exchange Commission (the "Commission"), the Company's
press releases and oral statements by authorized officers of the Company are
intended to be subject to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Investors are cautioned that all forward-looking
statements involve risks and uncertainty, including without limitation, the
risks set forth under the caption "Significant Factors that May Affect Forward
Looking Statements" appearing in Item 2 "Management's Discussion and Analysis of
Financial Condition and Results of Operations." The Company believes that
forward-looking statements made by it are based on reasonable expectations.
However, no assurances can be given that actual results will not differ
materially from those contained in such forward-looking statements. Forward-
looking statements involve statements that are predictive in nature, which
depend upon or refer to future events or conditions, which include the words
"estimate," "project," "anticipate," "expect," "predict," "believe" and similar
expressions. The Company assumes no obligation to update forward-looking
statements.
General
As used herein, the term "Omega" or the "Company" refers to Omega Protein
Corporation and its consolidated subsidiaries, as applicable. All references
herein to a "fiscal" year refers to the 12-month period ended December 31 of
such year. The Company's principal executive
13
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offices are located at 1717 St. James Place, Suite 550, Houston, Texas 77056
(Telephone: (713)623-0060).
Omega is the largest producer of protein-rich meal and oil derived from
marine sources in the United States. The Company's products are produced from
menhaden (a fish found in commercial quantities), including regular grade and
value added specialty fish meals, crude and refined fish oils and fish solubles.
The Company's fish meal products are used as nutritional feed additives by
animal feed manufacturers and by commercial livestock and poultry farmers. The
Company's crude fish oil is sold to food producers in Europe and its refined
fish oil products are used in health foods, aquaculture feeds and certain
industrial applications. Fish solubles are sold as protein additives for animal
feed and as organic fertilizers.
The fish catch is processed into regular grade fish meal, specialty fish
meals, fish oils and fish solubles at the Company's four processing plants
located in Virginia, Mississippi and Louisiana. The Company owns 65 fishing
vessels (53 of which were directly involved in the harvesting operations during
Fiscal 1999) and owns 33 and leases 11 aircraft (of which 41 were directly
involved in the harvesting operations) that are used to harvest menhaden in
coastal waters along the U.S. mid-Atlantic and Gulf of Mexico coasts. In 2000,
the Company has converted four of its fishing vessels to "carry vessels" which
will not engage in active fishing but will instead carry fish catch from the
Company's offshore fishing vessels to its plants. The Company believes that this
utilization will increase the amount of time that the bulk of its vessels remain
offshore in production areas and therefore increase the Company's fish catch per
vessel employed. Accordingly, the Company has reduced the total number of
vessels directly involved in the fishing effort during Fiscal 2000 to 40
vessels. Additionally, the Company has elected to temporarily cease its in-line
processing operations at its Morgan City plant location during Fiscal 2000 in
reaction to the continuing depressed prices received for the Company's products.
Certain damaged processing equipment at this facility will be removed and
scrapped.
The Company's harvesting season generally extends from May through December
on the mid-Atlantic coast and from April through October on the Gulf coast.
During the off season, the Company fills purchase orders from the inventory it
has accumulated during the fishing season. Prices for the Company's products
tend to be lower during the fishing season when product is more abundant than in
the off season. Throughout the entire year, prices are significantly influenced
by supply and demand in world markets for competing products, particularly
soybean meal for its fish meal products and vegetable oils and fats for its fish
oil products when used as an alternative to vegetable oils and fats. During
Fiscal 1999 and the six months ending June 30, 2000, world grain and oilseed
markets were burdened by excess supplies relative to demand which, in turn,
resulted in prices for most major commodities being sharply lower than in
previous years. Correspondingly, the Company's product prices have been
adversely impacted during these periods, resulting in decreased gross margins,
and the recording of $18.2 million in inventory write-downs during Fiscal 1999.
Although management believes the net realizable value of inventory held as of
June 30, 2000, approximates its costs, it is possible that in the event prices
decrease during the third quarter Fiscal 2000, a downward valuation of its
existing inventories in Fiscal 2000 may be required. Accordingly, it is possible
that gross profit margins may continue to decline in prospective quarters.
14
<PAGE>
In an effort to reduce price volatility and to generate higher, more
consistent profit margins, the Company is continuing its efforts towards the
production and marketing of specialty meal products, which generally have higher
margins than the Company's regular grade meal product.
Additionally, the Company is introducing its refined fish oil into the U.S.
food market where initial marketing efforts have indicated significantly
increased margin opportunities and more stable demand requirements over the
Company's traditional crude fish oil markets. Also, the Company has implemented
several cost-cutting measures during Fiscal 2000. These include, among other
items, a reduction in fishing vessels, spotter planes, temporary closure of
in-line processing facilities at its highest cost plant and implementation of a
carry-vessel concept.
LIQUIDITY AND CAPITAL RESOURCES
Prior to Omega's initial public offering in April 1998, Zapata, as the sole
stockholder of Omega, caused cash to be moved between Omega and Zapata as each
company had cash needs. As a result of the offering, Omega and Zapata are now
separate public companies and each entity's capital resources and liquidity is
legally independent of the other and dedicated to its own operations. As a
result, the historical liquidity and capital resources of the Company may not be
indicative of the Company's future liquidity and capital resources.
The Company's primary sources of liquidity and capital resources have been
cash flows from operations, proceeds from initial public offering, pre-initial
public offering borrowings from Zapata, bank credit facilities and term loans
from various lenders provided pursuant to the Title XI of the Marine Act of 1936
("Title XI"). These sources of cash flows have been used for capital
expenditures (including acquisitions) and payment of long-term debt. The Company
expects to finance future expenditures through existing cash balances and
internally generated cash flows and, if necessary, through funds available from
credit facilities or other borrowings.
Under the Title XI program offered through National Marine Fisheries
Service, the Company had the ability to secure loans for fishing vessels and
shoreside capital expenditures and maintenance through lenders with terms
generally ranging between 12 and 20 years at an interest rate between 6% and 8%
per annum which were enhanced with a government guaranty to the lender for up to
80% of the financing. The Company's current Title XI borrowings are secured by
liens on 17 fishing vessels and mortgages on the Company's Reedville, Virginia
and Abbeville, Louisiana plants. To date, the Company has used the entire $20.6
million amount authorized under the program. Similar programs may be available
for future vessel financing.
Omega had an unrestricted cash balance of $16.9 million at June 30, 2000,
up $1.3 million from December 31, 1999. This increase was due primarily to a
$7.7 million increase in cash provided by operating activities.
15
<PAGE>
Investing activities used $5.8 million in the six months ended June 30,
2000 and $10.2 million during the six months ended June 30, 1999. The Company's
investing activities consisted mainly of capital expenditures for equipment
purchases and equipment replacements in the six month periods ended June 30,
2000 and 1999.
Net financing activities used $578,000 to repay debt obligations during the
six month period ended June 30, 2000, compared with $2.5 million cash used by
net financing activities for the six months ended June 30, 1999. Debt obligation
repayments totalled $505,000 and $2.0 million was used to repurchase treasury
stock for the six months ended June 30, 1999.
The Company believes that its existing cash, cash equivalents and short-
term investments, will be sufficient to meet its working capital and capital
expenditure requirements through at least the end of 2000.
RESULTS OF OPERATIONS
The following table sets forth as a percentage of revenues certain items of
the Company's operations for each of the indicated periods:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
---------------------------------- -------------------------------------
2000 1999 2000 1999
----------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues............................. 100.0% 100.0% 100.0% 100.0%
Cost of sales........................ 99.3 92.7 96.9 80.2
----------- ------------- ------------- -------------
Gross profit......................... 0.7 7.3 3.1 19.8
Selling, general and administrative.. 9.6 12.6 10.9 11.1
----------- ------------- ------------- -------------
Operating income (loss).............. (8.9) (5.3) (7.8) 8.7
Interest income (expense), net....... 0.1 1.5 (0.1) 1.6
Other (expense) income, net.......... (0.8) (0.6) (0.6) (0.5)
----------- ------------- ------------- -------------
Income (loss) before income taxes.... (9.6) (4.4) (8.5) 9.8
Provision (benefit) for income taxes. (3.5) (1.6) (3.1) 3.5
----------- ------------- ------------- -------------
Net income (loss).................... (6.1) (2.8) (5.4) 6.3
=========== ============= ============= =============
</TABLE>
16
<PAGE>
INTERIM RESULTS FOR THE SECOND QUARTER ENDED JUNE 30, 2000 AND 1999
REVENUES. For the current quarter ended June 30, 2000 revenue increased
$2.7 million, or 14.5% from $18.2 million in the quarter ended June 30, 1999.
The increase was attributable to a 55.0% increase in sales volumes for the
Company's fish meal during the current quarter as compared to the previous
quarter ended June 30, 1999. The increase in revenues was partially offset by a
decrease in the selling prices for the company's fish meal and fish oil of 16.8%
and 15.0%, respectively.
COST OF SALES. Cost of sales, including depreciation and amortization, for
the current quarter ended June 30, 2000 was $20.7 million, a 22.8% increase from
$16.9 million in the quarter ended June 30, 1999. Cost of sales as a percent of
revenues was 99.3% in the current quarter ended June 30, 2000 as compared to
92.7% in the quarter ended June 30, 1999. The 6.6% increase in cost of sales as
a percent of revenues is due primarily to a 55.0% increase in fish meal sales
volumes, along with a 16.8% and 15.0% decline in the Company's selling prices
for fish meal and fish oil, respectively. Per ton cost of sales were 6.9% lower
in the current quarter ended June 30, 2000 as compared to the quarter ended June
30, 1999, due mainly to lower inventory costs carried forward from Fiscal 1999.
The lower inventory cost carried forward from Fiscal 1999 resulted from the
Company's inventory write-down during the third and fourth quarters of Fiscal
1999 of $14.5 million and $3.7 million respectively. The Fiscal 1999 inventory
write-downs resulted from cyclical market declines on the inventory values of
the Company's fish meal and fish oil.
GROSS PROFIT. Gross profit decreased $1.2 million or 89.2% from $1.3
million in the quarter ended June 30, 1999 to $144,000 in the current quarter
ended June 30, 2000. As a percentage of revenues, the Company's gross profit
margin decreased 6.6% in the current quarter ended June 30, 2000, compared to
the same period in the prior fiscal year. The decline in gross profit was
primarily due to a 16.8% and a 15.0% decline in selling prices for the Company's
fish meal and fish oil, respectively during the current quarter ended June 30,
2000. This decline in selling prices resulted from downward cyclical pricing
pressures on the Company's fishing product inventories resulting in lower gross
margins in the current quarter ended June 30, 2000 as compared to the quarter
ended June 30, 1999.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses decreased $300,000 or 12.8% from $2.3 million in the
three month period ended June 30, 1999 compared to $2.0 million in the quarter
ended June 30, 2000. The decrease was primarily due to a reduction in
staff and related employee costs.
OPERATING INCOME (LOSS). As a result of the factors discussed above, the
Company's operating loss increased $900,000 from a $961,000 loss in the quarter
ended June 30, 1999 to a loss of $1.9 million for the quarter ended June 30,
2000. As a percentage of revenue, operating loss increased from 5.3% in the
quarter ended June 30, 1999 to 8.9% in the period ended June 30, 2000.
INTEREST INCOME (EXPENSE), NET. Interest income, net decreased by $255,000
in the quarter ended June 30, 2000 as compared to the previous quarter ended
June 30, 1999. The decrease in net interest income was due to the reduction of
cash and cash equivalents available for investment purposes during the quarter
ended June 30, 2000 as compared to the previous quarter ended June 30, 1999.
17
<PAGE>
OTHER INCOME (EXPENSE), NET. Other expense, net increased $38,000 in the
current quarter ended June 30, 2000 over the previous quarter ended June 30,
1999. This increase was primarily due to minority interest in net income of a
consolidated subsidiary for the current three months ended June 30, 2000. On
April 5, 2000, the Company acquired an additional 1% interest that was
previously accounted for under the equity method. As a result of the transition,
the Company now owns 51% of the investment and consolidates its operations.
Minority interests are not material in relation to the consolidated results of
operation.
PROVISION (BENEFIT) FOR INCOME TAXES. The Company recorded a $721,000
benefit for income tax for the quarter ended June 30, 2000. This represents an
effective tax rate of 36.0% on a $2.0 million loss in comparison to a $289,000
tax benefit for income tax expense in the quarter ended June 30, 1999,
representing an effective tax rate of 36.0%. The effective tax rate approximates
the applicable combined state and federal statutory tax rates for the respective
periods.
INTERIM RESULTS FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND 1999
REVENUES. For the six months ended June 30, 2000, revenues decreased
$117,000 or 0.3% from $40.4 million for the six months ended June 30, 1999 to
$40.3 million for the six months ended June 30, 2000. This decrease was
attributable to lower selling prices for the Company's fish meal and fish oil of
23.3% and 37.1% respectively during the current six months ended June 30, 2000
as compared to the six months ended June 30, 1999. The decrease in revenues was
partially offset by a 31.7% increase in sales volumes for the Company's fish
meal during the six months ended June 30, 2000 as compared to the six months
ended June 30, 1999.
COST OF SALES. Cost of sales, including depreciation and amortization, for
the six months ended June 30, 2000 was $39.0 million, a 20.6% increase from
$32.4 million for the previous six month period ended June 30, 1999. Cost of
sales as a percentage of revenues was 96.9% in the current six month period
ended June 30, 2000 as compared to 80.2% in the six month period ended
June 30, 1999. The increase in cost of sales as a percentage of revenue is due
primarily to a 31.7% increase in fish meal sales volumes along with 23.3% and
37.1% declines in the Company's selling prices for fish meal and fish oil,
respectively. Per ton cost of sales were 12.4% lower for the current six month
period ended June 30, 2000 as compared to the six month period ended June 30,
1999. The lower inventory cost carried forward from Fiscal 1999 resulted from
the Company's inventory write-down during the third and fourth quarters of
Fiscal 1999 of $14.5 million and $3.7 million, respectively. The Fiscal 1999
inventory write-downs resulted from cyclical market declines on inventory values
of the Company's fish meal and fish oil.
GROSS PROFIT. Gross Profit decreased $6.8 million or 84.6% from $8.0
million in the six month period ended June 30, 1999 to $1.2 million in the
current six month period ended June 30, 2000. As a percentage of revenues, the
Company's gross profit decreased 16.7% in the current six month period ended
June 30, 2000 as compared to the same six month period in the previous fiscal
year. The decline in gross profit is primarily due to a 23.3% and 37.1% decline
in the Company's fish meal and fish oil prices, respectively. This decline in
selling prices resulted from downward cyclical pricing pressures on the
Company's fishing product inventories resulting in lower gross margins in the
current six months ended June 30, 2000 as compared to the six months ended
June 30, 1999.
18
<PAGE>
SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES. Selling, general, and
administrative expenses decreased $111,000 or 2.5% from $4.5 million for the six
months ended June 30, 1999 to $4.4 million for the current six months ended
June 30, 2000. The decrease was primarily due to a reduction in staff and
related employee costs.
OPERATING INCOME (LOSS). As a result of the factors discussed above the
Company's operating income decreased $6.6 million from $3.5 million for the six
months ended June 30, 1999 to an operating loss of $3.1 million for the current
six months ended June 30, 2000. As a percentage of revenues, operating income
decreased from 8.7% for the six months ended June 30, 1999 to an operating loss
of 7.8% for the current six months ended June 30, 2000.
INTEREST INCOME (EXPENSE), NET. Interest income, net decreased by $673,000
from net interest income in the six month period ended June 30, 1999 to net
interest expense in the current six month period ended June 30, 2000. The
decrease in net interest income was due to the reduction of cash and cash
equivalents available for investment purposes during the six months ended
June 30, 2000 as compared to the six months ended June 30, 1999.
OTHER INCOME (EXPENSE), NET. Other expense, net increased $42,000 in the
current six month period ended June 30, 2000 as compared to the six month period
ended June 30, 1999. This increase was primarily due to minority interest in net
income of a consolidated subsidiary for the current six months ended
June 30, 2000. On April 5, 2000, the Company acquired for a nominal amount an
additional 1% equity interest in a partially owned subsidiary that was
previously accounted for under the equity method. As a result of the
transaction, the Company now owns 51.0% of the investment and consolidates its
operations. Minority interests are not material in relation to the consolidated
results of operation.
PROVISION FOR INCOME TAXES. The Company recorded a $1.2 million benefit for
income taxes for the current six months ended June 30, 2000. This represents an
effective tax rate of 36.0% in comparison to a provision for income tax expense
of $1.4 million for the six months ended June 30, 1999 which represents an
effective tax rate of 36.0%.
SEASONAL AND QUARTERLY RESULTS
The Company's menhaden harvesting and processing business is seasonal in
nature. The Company generally has higher sales during the menhaden harvesting
season (which includes the three-month periods ending June 30 and September 30)
due to increased product availability, but prices during the fishing season tend
to be lower than during the off season. As a result, the Company's quarterly
operating results have fluctuated in the past and may fluctuate in the future.
In addition, from time to time the Company defers sales of inventory based on
worldwide prices for competing products that affect prices for the Company's
products which may affect comparable period comparisons.
SIGNIFICANT FACTORS THAT MAY AFFECT FORWARD-LOOKING STATEMENTS
The Company wishes to caution investors that the following significant
factors, and those factors described elsewhere in this Report, in other filings
by the Company with the SEC from time to time and in press releases issued by
the Company, could affect the Company's actual results of operations causing
such results to differ materially from those expressed in any forward-looking
statements made by or on behalf of the Company:
19
<PAGE>
1. The Company's ability to meet its raw material requirements through its
annual menhaden harvest, which is subject to fluctuation due to natural
conditions over which the Company has no control, such as varying fish
population, adverse weather conditions and disease.
2. The impact on the prices for the Company's products of worldwide supply and
demand relationships over which the Company has no control and which tend to
fluctuate to a significant extent over the course of a year and from year to
year.
3. The impact of a violation by the Company of federal, state and local laws
and regulations relating to menhaden fishing and the protection of the
environment and the health and safety of its employees or of the adoption of
new laws and regulations, or stricter interpretations of existing laws or
regulations that materially adversely affect the Company's business.
4. The impact if the Company cannot harvest menhaden in U.S. jurisdictional
waters if the Company fails to comply with the U.S. citizenship ownership
requirements.
5. Risks inherent with the Company's venture into the sale of refined, non-
hydrogenated menhaden oil for consumption in the U.S., including the
unproven market for this product.
6. Fluctuations in the Company's quarterly operating results due to the
seasonality of the Company's business and the Company's deferral of sales of
inventory based on worldwide prices for competing products.
7. The ability of the Company to retain and recruit key officers and qualified
personnel, vessel captains and crew members.
8. Risks associated with the strength of local currencies of the countries in
which its products are sold, changes in social, political and economic
conditions inherent in foreign investment and international trade in such
countries, changes in U.S. laws and regulations relating to foreign
investment and trade, changes of tax or other laws, partial or total
expatriation, currency exchange rate fluctuations and restrictions on
currency repatriation, the disruption of labor, political disturbances,
insurrection or war and the effect of requirements of partial local
ownership of operations in certain countries.
9. Risks related to unanticipated material adverse outcomes in any pending
litigation or any other unfavorable outcomes or settlements. There can be no
assurance that the Company will prevail in any pending litigation and to the
extent that the Company sustains losses growing out of any pending
litigation which are not presently reserved or otherwise provided for or
insured against, its business, results of operations and financial condition
could be adversely affected.
10. In the future, the Company may undertake acquisitions, although there is no
assurance this will occur. Further, there can be no assurance that the
Company will be able to profitably manage future businesses it may acquire
or successfully integrate future businesses it may acquire into the Company
without substantial costs, delays or other problems which could have a
material adverse effect on the Company's business, results of operations and
financial condition.
20
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is involved in various claims and disputes arising in the
normal course of business, including claims made by employees under the Jones
Act which generally are covered by the Company's insurance. The Company believes
that it has adequate insurance coverage for all existing matters and that the
outcome of all pending proceedings, individually and in the aggregate, will not
have a material adverse effect upon the Company's business, results of
operations, cash flows or financial position.
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not Applicable
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On June 27, 2000, the Company held its 2000 Annual Meeting of Stockholders. The
matters voted on at the meeting and the results of the meeting are as follows:
A. Election of Class II Directors
Stockholders elected the persons listed below as Class II directors whose
terms expire at the 2003 Annual Meeting of Stockholders. Results by nominee
were:
VOTED FOR AUTHORITY WITHHELD
----------- ------------------
Malcolm I. Glazer 21,581,080 1,764,167
Avram A. Glazer 21,581,080 1,764,167
There were no broker non-votes. The Class I directors, whose terms expire
at the 2002 Annual Meeting of Stockholders, are Gary L. Allee and William
Lands. The Class III director, whose term expires at the 2001 Annual
Meeting of Stockholders, is Joseph L. von Rosenberg, III.
B. Approval of 2000 Long-Term Incentive Plan
Stockholders approved the Company's 2000 Long-Term Incentive Plan with
15,438,628 shares voted for, 5,648,340 shares voted against, 36,140
abstentions and 2,222,139 broker non-votes.
C. Ratification of Appointment of Independent Public Accountants.
Stockholders ratified the appointment of PricewaterhouseCoopers, LLP as the
Company independent public accountants for the fiscal year ending December
31, 2000, with 23,321,797 shares voted for, 18,850 shares voted against,
4,600 abstentions and no broker non-votes.
21
<PAGE>
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
27.1 - Financial Data Schedule
(b) Reports on Form 8-K:
None
22
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
OMEGA PROTEIN CORPORATION
(Registrant)
August 10, 2000 By: /s/ ROBERT W. STOCKTON
----------------------------------
(Executive Vice President, Chief
Financial Officer and Corporate Secretary)
23
<PAGE>
EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION
-------------- -----------
27.1 - Financial Data Schedule
24
