<PAGE> 1
THE FINANCE COMPANY OF PENNSYLVANIA
FOUNDED 1871
[SWIRL ARTWORK]
ANNUAL REPORT
DECEMBER 31, 1998
<PAGE> 2
THE FINANCE COMPANY OF PENNSYLVANIA
226 WALNUT STREET
PHILADELPHIA, PA 19106
BOARD OF DIRECTORS
Charles E. Mather III
<TABLE>
<S> <C>
Shaun F. O'Malley Jonathan D. Scott
Herbert S. Riband, Jr. Frank A. Wood, Jr.
</TABLE>
OFFICERS
Charles E. Mather III, President
Frank A. Wood, Jr., Secretary-Treasurer
Doranne H. Case, Asst. Secretary-Treasurer
Mary Ellen Christ, Assistant Secretary
<PAGE> 3
THE FINANCE COMPANY OF PENNSYLVANIA
226 WALNUT STREET
PHILADELPHIA, PA 19106
February 12, 1999
TO OUR SHAREHOLDERS:
We are pleased to submit your Company's one hundred and twenty-seventh
Annual Report.
The following is a summary of financial information for the years 1994 to
1998:
<TABLE>
<CAPTION>
NET DIVIDENDS PAID DEC. 31
INVESTMENT ---------------- NET ASSET
YEAR INCOME REGULAR EXTRA* VALUE
- ---- ---------- ------- ------ ---------
<S> <C> <C> <C> <C>
1994 $23.05 $11.00 $11.99 $ 568.74
1995 24.80 11.00 15.73 736.90
1996 25.65 11.00 14.67 827.81
1997 25.22 11.00 14.33 1,052.11
1998 25.49 12.00 13.54 1,067.46
</TABLE>
As a Regulated Investment Company, the Company is required to pay to its
shareholders at least 98% of its ordinary income for the calendar year 1998 or
pay a 4% non-deductible Federal Excise Tax on its undistributed ordinary income.
Your Board of Directors has elected to distribute 100% of the ordinary income.
We are pleased that this year, the company has been able to increase the
dividend. As we look toward the future, with declining yields on equities and
lower returns on fixed income, our ability to sustain this performance will
become increasingly difficult.
On January 29, 1999, the Company paid to the Shareholders of record on
December 31, 1998, the regular quarterly dividend of $3.00 and an extra dividend
of $13.54, making a total dividend of $16.54. The tax law also requires that the
final dividend, although paid in 1999, is taxable to the shareholders in 1998.
In addition to this dividend, in 1998 the Company paid to the shareholders three
regular dividends of $3.00 on March 31, June 30 and September 30, for a total of
$12.00 in regular dividends.
Common stocks constitute 84.35% of the portfolio of investments at market
on December 31, 1998, compared with 83.46% one year earlier.
Our Investment Adviser, Cooke & Bieler, Inc., is present at each of our
Board Meetings and is available for consultation throughout the year.
THE FINANCE COMPANY OF PENNSYLVANIA thanks you for your continued interest
and support of our company as we enter 1999.
/s/Charles E. Mather III
Charles E. Mather III, President
*Includes short term capital gain of $1.97 in 1995 and $.27 in 1996.
<PAGE> 4
[DELOITTE & TOUCHE LLP LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders
of The Finance Company of Pennsylvania:
We have audited the accompanying statement of assets and liabilities,
including the portfolio of investments, of The Finance Company of Pennsylvania
(the "Company") as of December 31, 1998, the related statement of operations for
the year then ended, the statements of changes in net assets for the years ended
December 31, 1998 and 1997, and the condensed financial information for each of
the years in the five-year period ended December 31, 1998. These financial
statements and the condensed financial information are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements and the condensed financial information 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 and the condensed
financial information are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned at December 31, 1998 by correspondence with the custodian. 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, such financial statements and condensed financial
information present fairly, in all material respects, the financial position of
The Finance Company of Pennsylvania at December 31, 1998, the results of its
operations, the changes in its net assets, and the condensed financial
information for the respective stated periods in conformity with generally
accepted accounting principles.
DELOITTE & TOUCHE LLP
Philadelphia, Pennsylvania
January 22, 1999
<PAGE> 5
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1998
<TABLE>
<S> <C>
ASSETS
INVESTMENTS-AT MARKET OR FAIR VALUE (NOTE 1):
SHORT-TERM SECURITIES (IDENTIFIED COST
$3,912,602)................................ $ 3,912,489
U.S. TREASURY NOTES (IDENTIFIED COST
$5,472,000)................................... 5,673,328
COMMON STOCKS (IDENTIFIED COST $11,467,996)
INCLUDING AFFILIATE (NOTE 2)............... 51,667,627
-----------
TOTAL INVESTMENTS..................... 61,253,444
CASH.................................................. 273,312
ACCRUED INTEREST AND DIVIDENDS RECEIVABLE............. 204,919
PREPAID EXPENSES...................................... 15,526
OTHER ASSETS.......................................... 5,950
-----------
TOTAL................................. 61,753,151
-----------
LIABILITIES
DIVIDENDS PAYABLE (NOTE 6)............................ 928,645
ACCRUED EXPENSES AND TAXES (NOTE 1)................... 1,242,028
-----------
TOTAL................................. 2,170,673
-----------
NET ASSETS
NET ASSETS (WITH INVESTMENTS AT MARKET OR FAIR VALUE)
EQUIVALENT TO $1,067.46 PER SHARE ON SHARES OF
55,817 $10 PAR VALUE CAPITAL STOCK OUTSTANDING AT
DECEMBER 31, 1998 (AUTHORIZED 232,000 SHARES).... $59,582,478
===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
2
<PAGE> 6
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1998
SHORT-TERM SECURITIES -- 6.39%
<TABLE>
<CAPTION>
Aggregate
Quoted
Face Value/ Identified Market Price
Principal Amount Cost (Note 1)
---------------- ---------- ------------
<C> <S> <C> <C>
2,114,016 FED FUND........................ $2,114,016 $2,114,016
696,369 FEDERAL TRUST FUND.............. 696,369 696,369
10,000 TREASURY TRUST FUND............. 10,000 10,000
500,000 U.S. TREAS. BILL; 1/21/99....... 498,769 498,764
600,000 U.S. TREAS. BILL; 4/1/99........ 593,448 593,340
---------- ----------
TOTAL........................... 3,912,602 3,912,489
---------- ----------
</TABLE>
U.S. TREASURY NOTES -- 9.26%
<TABLE>
<CAPTION>
Principal
Amount
- ---------------------
<C> <S> <C> <C>
900,000 U.S. TREASURY NOTES 8 7/8% DUE
2/15/99.................... 900,042 904,219
700,000 U.S. TREASURY NOTES 7 3/4% DUE
1/31/00.................... 699,752 722,312
500,000 U.S. TREASURY NOTES 5 3/8%
DUE 6/30/00................ 499,205 505,156
1,000,000 U.S. TREASURY NOTES 7 7/8% DUE
8/15/01.................... 1,029,879 1,078,437
750,000 U.S. TREASURY NOTES 6 3/8% DUE
8/15/02.................... 757,033 791,016
1,000,000 U.S. TREASURY NOTES 7 1/4%
DUE 8/15/04................ 1,088,104 1,124,375
500,000 U.S. TREASURY NOTES 6 1/2% DUE
5/15/05.................... 497,985 547,813
---------- ----------
TOTAL........................... 5,472,000 5,673,328
---------- ----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
3
<PAGE> 7
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1998
COMMON STOCKS -- 84.35%
<TABLE>
<CAPTION>
Aggregate
Quoted
Number Identified Market Price
of Shares Cost (Note 1)
- --------------------- ----------- ------------
<C> <S> <C> <C>
PETROLEUM AND MINING -- 7.56%
32,000 EXXON CORP..................... $ 91,444 $ 2,340,000
20,000 MOBIL CORP. ................... 62,715 1,742,500
30,000 PENN VIRGINIA CORP. ........... 22,382 551,250
----------- -----------
TOTAL.......................... 176,541 4,633,750
----------- -----------
BANKING, INSURANCE AND FINANCIAL
HOLDING COMPANIES -- 40.98%
16,500 MARSH & MCLENNAN, INC. ........ 428,861 964,219
434,000 PNC BANK CORP. ................ 262,209 23,436,000
10,000 STATE STREET CORP. ............ 152,542 701,250
----------- -----------
TOTAL.......................... 843,612 25,101,469
----------- -----------
MANUFACTURING AND DIVERSIFIED -- 21.09%
16,573 AMP, INC. ..................... 494,677 862,832
7,000 AVON PRODUCTS.................. 190,663 309,750
5,000 BOEING CO. .................... 245,662 163,125
23,000 CORNING INC. .................. 662,567 1,035,000
29,000 DOVER CORP. ................... 261,750 1,062,125
6,000 DOW CHEMICAL CO. .............. 116,337 545,625
12,000 EMERSON ELECTRIC............... 181,980 726,000
28,500 GENUINE PARTS.................. 469,072 952,969
15,000 HASBRO......................... 422,456 541,875
6,000 INT'L BUSINESS MACHINES........ 310,335 1,106,250
10,000 MINNESOTA MINING & MFG. CO. ... 170,764 711,250
24,000 MOTOROLA ...................... 1,155,551 1,465,500
25,000 PALL CORP. .................... 579,250 632,813
11,000 RAYCHEM........................ 242,550 355,437
20,000 RUBBERMAID INC. ............... 474,275 628,750
10,000 SNAP-ON INC. .................. 302,187 348,125
30,000 SHERWIN WILLIAMS CO. .......... 481,800 881,250
5,000 XEROX CORP. ................... 234,100 590,000
------------------------------- ----------- -----------
TOTAL.......................... 6,995,976 12,918,676
------------------------------- ----------- -----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
4
<PAGE> 8
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1998
COMMON STOCKS -- CONCLUDED
<TABLE>
<CAPTION>
Aggregate
Quoted
Number Identified Market Price
of Shares Cost (Note 1)
- --------------------- ----------- ------------
<C> <S> <C> <C>
PHARMACEUTICALS -- 2.66%
8,000 JOHNSON & JOHNSON.............. $ 88,070 $ 671,000
6,500 MERCK & CO. ................... 146,402 958,750
----------- -----------
TOTAL.......................... 234,472 1,629,750
----------- -----------
COMMUNICATIONS -- 1.76%
20,000 BELL ATLANTIC CORP. ........... 178,287 1,080,000
----------- -----------
FOOD/RETAIL -- 2.19%
20,000 COCA-COLA CO. ................. 23,981 1,340,000
----------- -----------
INTERNATIONAL FUNDS -- 3.39%
80,496 SCUDDER INT'L EQUITY INVEST.
TR. ...................... 1,943,728 2,073,573
----------- -----------
SMALL CAP FUNDS -- 1.44%
69,881 KALMAR SMALL CAP FUND.......... 1,000,000 883,997
----------- -----------
DIVERSIFIED HOLDING -- 3.28%
732 PENNSYLVANIA WAREHOUSING AND
SAFE DEPOSIT COMPANY (NOTE
2)........................ 71,399 2,006,412
----------- -----------
TOTAL COMMON STOCKS............ 11,467,996 51,667,627
----------- -----------
TOTAL INVESTMENTS.............. $20,852,598 $61,253,444
=========== ===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
5
<PAGE> 9
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
INCOME:
DIVIDENDS (INCLUDING DIVIDENDS FROM
AFFILIATE -- NOTE 2)................... $ 1,459,807
INTEREST.................................... 413,809
-----------
TOTAL.................................. 1,873,616
EXPENSES:
COMPENSATION................... $ 111,400
TAXES OTHER THAN INCOME
TAXES........................ 25,736
DIRECTORS' FEES (NOTE 5)....... 46,575
INVESTMENT ADVISORY FEES
(NOTE 5)..................... 123,293
LEGAL.......................... 10,842
AUDITING & ACCOUNTING.......... 50,450
CUSTODIAN...................... 16,151
INSURANCE...................... 20,658
OTHER OFFICE AND
ADMINISTRATIVE............... 35,714
-----------
TOTAL.................................. 440,819
-----------
NET INVESTMENT INCOME............................. 1,432,797
-----------
REALIZED AND UNREALIZED GAIN ON
INVESTMENTS (NOTE 3):
REALIZED GAIN FROM SECURITY
TRANSACTIONS (EXCLUDING
SHORT-TERM INVESTMENTS):
PROCEEDS FROM SALES............ $ 6,255,721
COST OF SECURITIES SOLD........ 2,746,932
-----------
NET REALIZED GAIN...................... 3,508,789
UNREALIZED APPRECIATION OF
INVESTMENTS:
AT JANUARY 1, 1998............. 41,823,661
AT DECEMBER 31, 1998........... 40,400,846
-----------
DECREASE IN NET UNREALIZED APPRECIATION........... (1,422,815)
-----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS........ 2,085,974
CAPITAL GAINS TAX PAYABLE ON BEHALF OF SHAREHOLDERS
(NOTE 1)............................................. (1,218,450)
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS... $ 2,300,321
===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
6
<PAGE> 10
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
1998 1997
----------- -----------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS:
NET INVESTMENT INCOME................ $ 1,432,797 $ 1,443,971
NET REALIZED GAIN ON INVESTMENTS..... 3,508,789 2,678,716
(DECREASE) INCREASE IN NET UNREALIZED
APPRECIATION ON INVESTMENTS....... (1,422,815) 11,032,034
CAPITAL GAINS TAX PAYABLE ON BEHALF
OF SHAREHOLDERS (NOTE 1).......... (1,218,450) (929,093)
----------- -----------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS................... 2,300,321 14,225,628
UNDISTRIBUTED INVESTMENT INCOME
INCLUDED IN PRICE OF SHARES
REDEEMED.......................... (4,941) (10,922)
REALIZED GAIN FROM SECURITY
TRANSACTIONS INCLUDED IN PRICE OF
SHARES REDEEMED................... (27,502) (24,166)
DIVIDENDS TO SHAREHOLDERS FROM NET
INVESTMENT INCOME................. (1,427,702) (1,433,374)
CAPITAL SHARE TRANSACTIONS:
(EXCLUSIVE OF AMOUNTS ALLOCATED TO
INVESTMENT INCOME AND NET REALIZED
GAIN FROM SECURITY TRANSACTIONS)
(NOTE 1):
COST OF SHARES OF CAPITAL STOCK
REDEEMED..................... (621,152) (1,163,998)
----------- -----------
TOTAL INCREASE IN NET ASSETS......... 219,024 11,593,168
NET ASSETS:
BEGINNING OF YEAR.................... 59,363,454 47,770,286
----------- -----------
END OF YEAR [INCLUDING UNDISTRIBUTED
NET INVESTMENT LOSS OF $269,302
AND $269,456 RESPECTIVELY]........ $59,582,478 $59,363,454
=========== ===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
7
<PAGE> 11
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
1. SIGNIFICANT ACCOUNTING POLICIES
The Company is registered under the Investment Company Act of 1940, as
amended, as a regulated open-end investment company. On April 21, 1964, the
stockholders approved amendments to the Articles of Incorporation whereby, since
that date, the Company has held itself ready to redeem any of its outstanding
shares at net asset value. Net asset value for redemptions is determined at the
close of business on the day of formal tender of shares or the next day on which
the New York Stock Exchange is open. Transactions in capital stock were as
follows:
<TABLE>
<CAPTION>
Number Aggregate
of Shares amount
--------- ----------
<S> <C> <C>
Shares redeemed:
Year Ended December 31, 1998............. 606 $ 653,594
Year Ended December 31, 1997............. 1,284 $1,199,086
</TABLE>
The following is a summary of significant accounting policies consistently
followed by the Company in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles for
investment companies.
Portfolio Valuation
Investments are valued using published bid quotes as of December 31, 1998.
Costs used to determine realized gain or loss from securities transactions are
those of the specific securities sold. Investments in non-marketable securities
are valued at fair value as determined by the Board of Directors (see Note 2).
Federal Income Taxes
No provision has been made for Federal income taxes other than capital
gains tax because the Company has elected to be taxed as a regulated investment
company meeting certain requirements of the Internal Revenue Code. As such, the
Company is paying the applicable Federal capital gains tax for shareholders and
retaining the net balance for reinvestment, except to the extent that such gains
are considered to have been distributed to redeeming shareholders.
8
<PAGE> 12
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires estimates and assumptions that affect
the reported amounts of assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the reporting
period. The Company's financial statements include amounts that are based on
management's best estimates and judgments. Actual results could differ from
those estimates.
Other
As is common in the industry, security transactions are accounted for on
the trade date. Dividend income and distributions to shareholders are recorded
on the ex-dividend date.
2. NON-MARKETABLE SECURITY OF AFFILIATE
There is no ready market for the below listed security. Fair value is
established by the Board of Directors of The Finance Company of Pennsylvania.
The Pennsylvania Warehousing and Safe Deposit Company is defined as an
affiliate under the Investment Company Act of 1940 in that the Company owns 5%
or more of the outstanding voting securities of such company. Further, if at the
time of public sale of any of these shares the Company would be deemed a
"control person," it would be necessary to register said shares under the
Securities Act of 1933 prior to their sale.
<TABLE>
<CAPTION>
For the
year ended
December 31, 1998 December 31,
--------------------------------- 1998
Percent Identified Fair Dividend
Shares Owned Cost Value Income
- ------ ------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C>
732 Pennsylvania
Warehousing
and Safe
Deposit
Company 16.92% $71,399 $2,006,412 $84,180
====== ======= ========== =======
</TABLE>
9
<PAGE> 13
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
3. PURCHASES AND SALES OF SECURITIES
The aggregate cost of securities purchased, the proceeds from sales and
maturities of investments, and the cost of securities sold (excluding U.S.
Government short-term securities) for the year ended December 31, 1998 were:
<TABLE>
<CAPTION>
Historical Cost of
Cost of Proceeds from Securities
Investments Sales and Sold and
Purchased Maturities Matured
----------- ------------- ----------
<S> <C> <C> <C>
Common stocks.............. $ 3,028,848 $ 5,255,721 $ 1,746,932
U.S. Treasury Notes........ 1,592,318 1,000,000 1,000,000
Short-term securities...... 6,701,279 8,002,822 8,002,822
----------- ----------- -----------
Total................. $11,322,445 $14,258,543 $10,749,754
=========== =========== ===========
</TABLE>
4. LEASE
The Company rents office space under a lease expiring in April 1999. The
lessor Company's President also serves on the Board of Directors of the Company.
Minimum annual rental for this space is $5,400.
5. OTHER INFORMATION FOR THE YEAR ENDED
DECEMBER 31, 1998
Directors of the Company, who are not also employees, are paid a fee for
attendance at meetings of the Board of Directors and its committees.
Compensation of officers amounted to $111,400.
Investment advisory fees payable monthly to Cooke & Bieler, Inc., are based
on the monthly closing portfolio value, less the value of certain investments at
an annual rate of .5 of 1%.
6. SUBSEQUENT EVENT
A dividend from net investment income of $923,213 was declared on December
9, 1998 payable at $16.54 per share on January 29, 1999 to shareholders of
record on December 31, 1998.
10
<PAGE> 14
CONDENSED FINANCIAL INFORMATION
Selected data for each share of capital stock outstanding throughout each
period:
<TABLE>
<CAPTION>
Year Ended December 31
1998 1997 1996 1995 1994
------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------
Investment income......... $ 33.33 $ 32.49 $ 32.33 $ 30.77 $ 28.64
Expenses.................. 7.84 7.27 6.68 5.97 5.59
--------- --------- ------- ------- -------
Net investment income..... 25.49 25.22 25.65 24.80 23.05
Dividends from net
investment income....... (25.54) (25.33) (25.67) (26.73) (22.99)
Net realized gain (loss)
and increase (decrease)
in unrealized
appreciation............ 15.40 224.41 90.93 170.09 (77.72)
--------- --------- ------- ------- -------
Net increase (decrease) in
net asset value......... 15.35 224.30 90.91 168.16 (77.66)
Net asset value:
Beginning of year....... 1,052.11 827.81 736.90 568.74 646.40
--------- --------- ------- ------- -------
End of year............. $1,067.46 $1,052.11 $827.81 $736.90 $568.74
========= ========= ======= ======= =======
Annual ratio of expenses
to average net assets... 0.74% 0.78% 0.86% 0.89% 0.89%
Annual ratio of net
investment income to
average net assets...... 2.42% 2.68% 3.32% 3.72% 3.68%
Annual portfolio turnover
rate.................... 8.13% 10.44% 5.29% 4.67% 9.17%
Number of shares
outstanding at end of
period (in thousands)... 55 56 58 58 59
</TABLE>
See Notes to Financial Statements
11
<PAGE> 15
CHANGES IN THE PORTFOLIO OF INVESTMENTS
(EXCLUSIVE OF SHORT-TERM INVESTMENTS)
FOR THE SIX MONTHS ENDED DECEMBER 31, 1998
PURCHASES
<TABLE>
<CAPTION>
Changes Balance
During December 31,
the Period 1998
---------- ------------
Number of Shares
-------------------------
<S> <C> <C>
Avon Products............................ 7,000 7,000
Snap-On Inc.............................. 10,000 10,000
Raychem.................................. 11,000 11,000
Motorola................................. 12,000 24,000
</TABLE>
SALES
<TABLE>
<CAPTION>
Number of Shares
-------------------------
<S> <C> <C>
AMP Inc.................................. 2,427 16,573
Boeing Co. .............................. 7,000 5,000
Fluor Corp............................... 10,000 --
Int'l Business Machines.................. 1,000 6,000
Int'l Flavors & Fragrances............... 8,000 --
Merck & Co. ............................. 1,000 6,500
</TABLE>
YEAR 2000
Year 2000 compliance relates to the ability of computer hardware and
software to respond to the problems posed by the fact that computer programs
have traditionally been written using two digits rather than four to define the
applicable year. As a consequence, unless modified, computer programs and
systems will not be able to differentiate between the year 2000 and 1900, which
could result in system failures and the generation of erroneous data. The
Company has formulated a plan with respect to becoming year 2000 compliant,
involving the implementation of a new computer system that is year 2000
compliant as well as obtaining representations from outside service providers
that they are year 2000 compliant. The Company expects to complete its plan and
therefore be year 2000 compliant by the end of the first quarter of 1999. To
date, the Company has not incurred, nor does it expect to incur any significant
costs with respect to becoming year 2000 compliant.
12
