<PAGE>
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT FOR THE PERIOD ENDED MARCH 31, 1994 PURSUANT TO SECTION 13
OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number 1-6157
HELLER FINANCIAL, INC.
----------------------
(Exact name of registrant as specified in its charter)
Delaware 36-1208070
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
500 W. Monroe Street, Chicago, Illinois 60661
- --------------------------------------- -------------------
(Address of principal executive offices) (Zip Code)
(312) 441-7000
--------------
(Registrant's telephone number, including area code)
None
----
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
100 shares of Common Stock, $.25 par value, outstanding at May 2, 1994.
================================================================================
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
HELLER FINANCIAL, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(in thousands, except for information on shares)
<TABLE>
<CAPTION>
ASSETS March 31, December 31,
1994 1993
----------- ------------
(unaudited)
<S> <C> <C>
Cash and cash equivalents........................................ $ 73,529 $ 170,358
Receivables
Commercial loans
Term loans...................................................... 2,874,576 2,806,595
Revolving loans................................................. 1,056,132 934,809
Real estate loans................................................ 1,959,011 1,886,366
Factored accounts receivable..................................... 846,290 720,658
Equipment loans and leases....................................... 715,348 657,544
Other receivables................................................ 7,524 6,536
---------- ----------
Total receivables............................................... 7,458,881 7,012,508
Less: Allowance for losses....................................... 221,062 211,357
---------- ----------
Net receivables................................................. 7,237,819 6,801,151
Investments and other assets (Note 2)............................ 932,405 941,089
---------- ----------
$8,243,753 $7,912,598
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Senior debt
Commercial paper and short-term borrowings...................... $2,402,978 $1,981,370
Notes and debentures (Note 3)................................... 3,790,660 3,893,084
Junior subordinated notes (Note 3)............................... - 74,993
---------- ----------
Total debt...................................................... 6,193,638 5,949,447
Credit balances of factoring clients............................. 504,345 433,291
Other payables and accruals...................................... 238,270 242,325
---------- ----------
Total liabilities............................................... 6,936,253 6,625,063
Minority interest in equity of Heller International Group, Inc... 35,230 35,019
Stockholders' equity
Cumulative Perpetual Senior Preferred Stock, Series A
($.01 Par Value; 8.125% of $25 stated value;
5,000,000 shares authorized and outstanding).................... 125,000 125,000
Cumulative Convertible Preferred Stock, Series D
(No Par Value; 1/2% under prime; 1,000 shares
authorized and outstanding)..................................... 25,000 25,000
Common Stock ($.25 Par Value; 1,000 shares authorized;
100 shares outstanding) and additional paid-in capital.......... 663,067 663,067
Retained earnings................................................ 459,203 439,449
---------- ----------
Total stockholders' equity...................................... 1,272,270 1,252,516
---------- ----------
$8,243,753 $7,912,598
========== ==========
</TABLE>
The accompanying Notes to Consolidated Condensed Financial Statements
are an integral part of these statements.
2
<PAGE>
HELLER FINANCIAL, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(in thousands)
<TABLE>
<CAPTION>
For the Three
Months Ended
March 31,
------------------
1994 1993
-------- --------
(unaudited)
<S> <C> <C>
Interest income.......................... $151,306 $153,476
Interest expense......................... 69,416 67,222
-------- --------
Net interest income..................... 81,890 86,254
Fees and other income.................... 52,810 25,525
Income of unconsolidated joint ventures.. 5,190 5,748
-------- --------
Operating revenues...................... 139,890 117,527
Operating expenses....................... 45,483 43,106
Provision for losses..................... 49,897 48,369
-------- --------
Income before income taxes.............. 44,510 26,052
Income tax provision..................... 16,793 587
-------- --------
Net income............................... $ 27,717 $ 25,465
======== ========
</TABLE>
The accompanying Notes to Consolidated Condensed Financial Statements
are an integral part of these statements.
3
<PAGE>
HELLER FINANCIAL, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the Three Months
Ended March 31,
(in thousands)
1994 1993
---------- -----------
(unaudited)
<S> <C> <C>
OPERATING ACTIVITIES
Net income................................................ $ 27,717 $ 25,465
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision for losses..................................... 49,897 48,369
Loans originated for resale.............................. (15,928) (9,264)
Net proceeds from sales of loans originated for resale... 17,155 9,632
(Increase) decrease in deferred tax asset................ 10,374 (7,900)
Undistributed income of unconsolidated joint ventures.... (5,587) (5,748)
Decrease in interest payable............................. (10,902) (15,986)
Other.................................................... 1,349 295
--------- ---------
Net cash provided by operating activities............... 74,075 44,863
INVESTING ACTIVITIES
Longer-term loans funded.................................. (689,938) (206,046)
Collections of principal.................................. 418,976 259,478
Sales of longer-term loans................................ 64,522 40,066
Net increase in short-term loans and
advances to factoring clients............................ (231,291) (123,936)
Investment in equity interests and other investments...... (8,053) (4,659)
Sales of investments and equipment on lease............... 27,998 1,427
Other..................................................... 8,996 (416)
--------- ---------
Net cash used for investing activities.................. (408,790) (34,086)
FINANCING ACTIVITIES
Senior note issues........................................ 42,000 328,205
Retirement of notes and debentures........................ (219,500) (168,000)
Increase (decrease) in commercial paper and
other short-term borrowings.............................. 421,608 (116,038)
Dividends paid on preferred stock......................... (2,852) (2,883)
Other..................................................... (3,391) (11,894)
--------- ---------
Net cash provided by financing activities............... 237,865 29,390
Effect of exchange rates on cash.......................... 21 (6,424)
--------- ---------
Increase (decrease) in cash and cash equivalents.......... (96,829) 33,743
Cash and cash equivalents at the beginning of the period.. 170,358 47,568
--------- ---------
Cash and cash equivalents at the end of the period........ $ 73,529 $ 81,311
========= =========
</TABLE>
The accompanying Notes to Consolidated Condensed Financial Statements
are an integral part of these statements.
4
<PAGE>
HELLER FINANCIAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(unaudited)
(1) Basis of Presentation
These consolidated condensed financial statements should be read in
conjunction with the financial statements and notes included in the annual
report on Form 10-K of Heller Financial, Inc. (the "Company") for the year
ended December 31, 1993. In the opinion of management, all adjustments
considered necessary for a fair presentation have been included in these
financial statements and were of a normal, recurring nature.
(2) Investments and Other Assets
In accordance with Statement of Financial Accounting Standards ("SFAS") No.
115, "Accounting for Certain Investments in Debt and Equity Securities," the
Company has classified its marketable equity securities portfolio as securities
available for sale. These securities are primarily received in conjunction with
financings and are carried at their fair values using the specific
identification method. During the first quarter of 1994, the Company recognized
$0.3 million of gross unrealized gains and $4.7 million of gross unrealized
losses on these securities, net of $1.8 million of tax benefits, recorded in
stockholders' equity.
(3) Debt
The Company issued and retired the following notes and debentures during
the first three months of 1994:
<TABLE>
<CAPTION>
Principal
Amount
---------
(in thousands)
<S> <C>
Issuances:
Senior Debt - Notes and Debentures
Variable rate series F medium-term notes due March 31, 1997..... $ 17,000
Variable rate series F medium-term notes due March 31, 1999..... 25,000
--------
$ 42,000
========
Retirements:
Senior Debt - Notes and Debentures
9.8% medium-term notes due February 15, 1994.................... $ 16,500
Variable rate notes due on various dates ranging from
January 4, 1994 to March 11, 1994.............................. 118,000
6.45% notes due February 15, 1994............................... 10,000
Junior Subordinated Notes and Debentures
13% junior notes due September 15, 1994......................... 75,000
--------
$219,500
========
</TABLE>
During the first three months of 1994, the Company entered into swap
agreements to convert $42 million of variable rate debt from the two-year
Constant Maturity Treasury Index to the three month London Inter-bank Offered
Rate.
On March 30, 1994 the Company entered into an agreement with Freedom Asset
Funding Corporation ("Freedom"), which expires in March of 1999. Under the
agreement, the Company may sell to Freedom with limited recourse an undivided
interest of up to $500 million in a designated pool of its factoring accounts
receivable. While the Fuji Bank & Trust Company will act as the administrative
agent and the Fuji Bank, Limited ("Fuji Bank") will act as the agent for a $500
million liquidity facility provided to Freedom, $435 million of this facility
has been participated out to a group of unaffiliated commercial banks. The
Freedom agreement replaces a $500 million receivables sales arrangement with
Dynamic Funding Corporation, under which Fuji Bank provided all but $65 million
of the underlying liquidity facility.
5
<PAGE>
During April, 1994, the Company issued $235 million of senior notes.
(4) Derivative Financial Instruments
The Company is a party to interest rate, currency, and basis swap
agreements which are used to manage exposure to fluctuations in interest and
currency exchange rates arising from normal business operations. The Company
generally enters into such agreements in conjunction with the issuance of debt,
in order to match the interest rate and currency characteristics of its assets
and liabilities. The swap agreements are held to maturity and the income or
expense on such agreements is recorded as an adjustment to the Company's
interest expense. The Company continually monitors its position with respect to
derivative financial instruments as part of its overall asset and liability
management program and does not utilize speculative derivative products for the
purpose of generating earnings from changes in market conditions.
(5) Redeemable Preferred Stock
The Company has authorized the issuance of 100,000 shares of a series of
preferred stock designated NW Preferred Stock, Class B (No Par Value) ("NW
Preferred Stock"), pursuant to the "Keep Well Agreement" between the Company and
Fuji Bank wherein, among other things, Fuji Bank has agreed to purchase NW
Preferred Stock in an amount required to maintain the Company's net worth at
$500 million. The Company's net worth at March 31, 1994 was $1,272 million. No
purchases of NW Preferred Stock have been made by Fuji Bank under this
agreement.
(6) Foreign Currency Translation and Hedging Financial Instruments
The Company periodically enters into currency exchange contracts to hedge
its exposure to foreign currency fluctuations from its earnings and investments
in subsidiaries outside of the United States. The effects of the net investment
hedges are accumulated in stockholders' equity, net of related taxes, until the
investment is sold or substantially liquidated. The effects of net income hedges
are included in the determination of net income. During the three months ended
March 31, 1994, the Company incurred $2.5 million of losses, net of tax, from
translation of foreign currency financial statements and the related hedges of
the net investments in subsidiaries outside the United States.
(7) Statement of Cash Flows
There were certain noncash investing activities which occurred during the
three month period ended March 31, 1994, including the conversion of an $88
million repossessed asset to preferred stock investments after a significant
cash equity infusion into the repossessed company by an independent third party.
Additionally, $23 million of receivables were classified as repossessed assets
and a $10 million senior participation liability was recorded. During the
comparable 1993 period, $51 million of accounts receivable were classified as
repossessed assets and $5 million of repossessed assets were returned to
accounts receivable.
(8) Related Party Transactions
The Company entered into a $200 million interest rate swap agreement with
Heller International Corporation (the "Parent"), effective January 13, 1994,
which expires December 15, 2000. The purpose of the agreement is to manage the
Company's exposure to interest rate fluctuations. Under this agreement, the
Company pays interest to the Parent at a variable rate based on the commercial
paper rate published by the Board of Governors of the Federal Reserve System and
the Parent pays interest to the Company at a fixed rate of 5.57%, based upon the
prevailing market rates for such transactions.
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
RESULTS OF OPERATIONS
Three Months Ended
March 31,
---------
Percent
1994 1993 Change
------ --------- --------
(dollars in millions)
<S> <C> <C> <C>
Interest income.......................... $151.3 $153.5 (1)%
Interest expense......................... 69.4 67.2 3
------ ------
Net interest income.................. 81.9 86.3 (5)
Fees and other income.................... 52.8 25.5 107
Income of unconsolidated joint ventures.. 5.2 5.7 (9)
------ ------
Operating revenues................... 139.9 117.5 19
Operating expenses....................... 45.5 43.1 6
Provision for losses..................... 49.9 48.3 3
------ ------
Income before income taxes........... 44.5 26.1 70
Income tax provision..................... 16.8 .6 *
------ ------
Net income........................... $ 27.7 $ 25.5 9
====== ======
</TABLE>
* Percentage not meaningful
The Company achieved an $18 million or 70% increase in income before income
taxes reflecting higher gains on investments, fees and other income from a
number of product categories. Net income increased $2 million or 9% as the
provision for income taxes approached the statutory rate from a nominal level in
the prior year.
Net interest income was 5% lower as modest funding spread compression and
a 3% lower average earning funds level more than offset reduced costs of
carrying nonearning assets. While earning funds grew during the quarter, the
level of average earning funds was lower than the prior year first quarter due
to the decrease in funds during the last nine months of 1993. This effect was
partially offset by the rise in market interest rates. The rates on 82% of
average earning funds employed were based on floating indices such as the
average three month London Interbank Offered Rate, which increased to 3.5% from
3.3%. Similarly, the effect of the increase in the average borrowing rate to
4.6% from 4.3% was partially offset by the reduction in average borrowings
outstanding, resulting in a net increase in interest expense.
Fees and other income in the first quarter were higher due to a $17
million increase in gains from the sale of equity investments and a $9 million
increase in income from real estate and asset based financing activities.
Higher operating expenses principally reflect costs related to business
initiatives in the asset based product category as costs in other core
businesses continue to be controlled.
The provision for losses was relatively stable for the three month period,
as the Company maintained the allowance for losses at 3% of receivables even as
the level of problem loans receded and the performance of new financings over
the past three years remained strong. The allowance at March 31, 1994
represented 101% of nonearning receivables.
The Company's effective tax rate increased to 38% for the quarter compared
to 2% for the prior year period, in which deferred tax benefits were recognized.
7
<PAGE>
PORTFOLIO COMPOSITION
During the first three months of 1994, lending assets and investments
increased $456 million or 6% as the Company continued to make progress in
diversifying its assets and sources of income. Asset based financing increased
$311 million to 22% of total lending assets and investments, due to growth in
each asset based product category as well as the seasonal increase in factored
receivables. Corporate financings which remained relatively flat during the
first quarter, decreased to 44% of the portfolio and less than half of total
revenues.
<TABLE>
<CAPTION>
Lending Assets and Investments as of
March 31, December 31,
------------------ ------------------
1994 Percent 1993 Percent
-------- -------- -------- --------
BY PRODUCT CATEGORY: (dollars in millions)
<S> <C> <C> <C> <C>
Corporate financing................................ $3,602.3 44% $3,571.9 46%
Real estate financing.............................. 2,036.9 25 1,956.5 25
Asset based financing.............................. 1,823.2 22 1,512.5 20
Specialized financing and investments.............. 438.9 5 416.6 5
International factoring and asset based financing.. 297.3 4 285.1 4
-------- --- -------- ---
Total lending assets and investments........... $8,198.6 100% $7,742.6 100%
======== === ======== ===
BY ASSET TYPE:
Receivables........................................ $7,458.9 91% $7,012.5 90%
Repossessed assets................................. 152.0 2 215.8 3
-------- --- -------- ---
Total lending assets........................... $7,610.9 93% $7,228.3 93%
International joint ventures....................... 152.5 2 143.8 2
Other investments.................................. 435.2 5 370.5 5
-------- --- -------- ---
Total investments............................. $ 587.7 7% $ 514.3 7%
-------- --- -------- ---
Total lending assets and investments.......... $8,198.6 100% $7,742.6 100%
======== === ======== ===
Total Revenues
for the three months ended March 31,
-------------------------------------
1994 Percent 1993 Percent
-------- ------- -------- -------
(dollars in thousands)
Corporate financing................................ $101,281 48% $102,579 56%
Real estate financing.............................. 46,267 22 34,405 19
Asset based financing.............................. 46,022 22 31,546 17
Specialized financing and investments.............. 7,190 4 7,331 4
International factoring and asset based financing.. 8,546 4 8,888 4
-------- --- -------- ---
Total revenues................................ $209,306 100% $184,749 100%
======== === ======== ===
</TABLE>
The Company funded $418 million of corporate financings compared to $138
million in the prior year quarter. Total corporate financing funds employed
remained relatively stable as $428 million of lending assets were paid down or
syndicated during the quarter. The average transaction size of new financings
was $1.6 million (8%) lower than the average corporate financing as of December
31, 1993, consistent with the Company's strategy to finance smaller individual
transactions. At March 31, 1994, the Company was contractually committed to
finance an additional $619 million to new and existing borrowers. Corporate
financings are commonly considered by regulatory agencies to be highly leveraged
transactions.
8
<PAGE>
NONEARNING AND TROUBLED ACCOUNT ACTIVITY
<TABLE>
<CAPTION>
March 31, December 31, Percent
1994 1993 Change
--------- ------------- --------
(dollars in millions)
<S> <C> <C> <C>
Lending Assets and Investments:
Receivables......................................... $7,458.9 $7,012.5
Repossessed assets.................................. 152.0 215.8
-------- --------
Total lending assets.............................. 7,610.9 7,228.3 5%
=======
Investments......................................... 587.7 514.3
-------- --------
Total lending assets and investments.............. $8,198.6 $7,742.6 6%
======== ======== =======
Nonearning Assets:
Nonearning receivables.............................. $ 219.4 $ 214.1
Repossessed assets.................................. 152.0 215.8
-------- --------
Total nonearning assets........................... $ 371.4 $ 429.9 (14)%
======== ======== =======
Ratio of nonearning receivables to
receivables...................................... 2.9% 3.1%
======== ========
Ratio of nonearning assets to total
lending assets.................................... 4.9% 5.9%
======== ========
Allowances for Losses:
Allowance for losses on receivables................ $ 221.1 $ 211.4 5%
=======
Valuation allowance for repossessed assets......... 15.6 15.2
-------- --------
Total allowance for losses....................... $ 236.7 $ 226.6
======== ========
Ratio of allowance for losses on
receivables to receivables....................... 3.0% 3.0%
======== ========
Ratio of allowance for losses on
receivables to nonearning receivables............ 101% 99%
======== ========
Delinquencies:
Earning loans delinquent 60 days or more........... $ 157.9 $ 145.1
Ratio of earning loans delinquent 60 days
or more to receivables........................... 2.1% 2.1%
======== ========
For the three months ended
March 31,
1994 1993
-------- --------
(dollars in millions)
Writedowns:
Net writedowns on receivables...................... $ 35.7 $ 33.6
Net writedowns/(recoveries) on repossessed assets.. 4.0 (.1)
-------- --------
Total net writedowns............................. $ 39.7 $ 33.5
======== ========
</TABLE>
Portfolio quality continued to improve during the first quarter as
nonearning assets were reduced by $59 million and delinquent earning accounts
remained stable at 2.1% of receivables. Loans defined as troubled debt
restructures remained at $53 million. The reduction in nonearning assets,
principally reflected the resolution of one large corporate financing account.
Corporate financings underwritten prior to 1990 and general purpose office
buildings continued to account for the majority of net writedowns during the
first quarter of 1994, while the increase in net writedowns was primarily due to
factoring client writeoffs.
Corporate financing nonearning assets were reduced by $61 million
reflecting the resolution of one large account which was previously classified
as a repossessed asset. The resolution included a significant equity infusion by
an independent third party and the conversion of the Company's remaining
position to preferred equity investments. While portfolio quality has improved,
net writedowns of corporate financings were relatively stable at $18 million
compared to $17 million for the prior year three month period, as the Company
addressed one large problem account which was underwritten prior to 1990.
9
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
During the first three months of 1994, the Company increased its commercial
paper by $420 million and issued $42 million of senior notes. These funds and
the cash from operations, which increased 65% from the prior year, were used to
retire $220 million of notes and debentures and to finance growth as new
business funding more than doubled for the quarter. The ratio of commercial
paper and short-term borrowings to total debt increased from 33% at December 31,
1994 to 39% at March 31, 1994. In April, this ratio was reduced as the Company
issued $235 million in senior notes. Leverage increased to 4.9X from 4.7X at
December 31, 1993, primarily due to the increased debt used to finance portfolio
growth. The levels of commercial paper and short term borrowings and leverage
are within the ranges targeted by the Company to maintain its financial
strength.
On March 30, 1994 the Company increased its liquidity support from
unaffiliated financial institutions by entering into an agreement with Freedom
Asset Funding Corporation ("Freedom") to sell an undivided interest in a
designated pool of factored accounts receivable of up to $500 million. Under
the Freedom agreement, the amount of liquidity provided by unaffiliated
financial institutions increased to $435 million from $65 million under the
Dynamic Funding Agreement, which it replaced.
At March 31, 1994, the Company had unused bank credit facilities of $2.1
billion, liquidity support of $500 million from Fuji Bank under the "Keep Well
Agreement" and $494 million available under the Freedom factored accounts
receivable sale program, which provide the Company with an aggregate amount of
$3.1 billion of committed credit and sale facilities. Total committed credit
and sale facilities represent 134% of outstanding commercial paper, while total
committed credit and sale facilities from unaffiliated financial institutions
represent 110% of outstanding commercial paper.
10
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
(12) Computation of Ratio of Earnings to Combined Fixed Charges
and Preferred Stock Dividends
(b) Reports on Form 8-K
On January 28, 1994, the Company filed with the U.S. Securities
and Exchange Commission a Current Report on Form 8-K, dated
January 27, 1994, to announce the Company's earnings for the
year ended December 31, 1993.
On May 2, 1994, the Company filed with the U.S. Securities and
Exchange Commission a Current Report on Form 8-K, dated May 2,
1994, to provide a Specimen Note for the $200 million of Floating
Rate Notes due April 27, 1999.
11
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this quarterly report to be signed on its behalf by
the undersigned thereunto duly authorized.
HELLER FINANCIAL, INC.
By: Richard J. Almeida
-----------------------------------------------
Richard J. Almeida
Executive Vice President and
Chief Financial Officer
By: Anthony O'B. Beirne
-----------------------------------------------
Anthony O'B. Beirne
Senior Vice President, Controller and
Chief Accounting Officer
Date: May 2, 1994
12
<PAGE>
EXHIBIT (12)
HELLER FINANCIAL, INC. AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS
TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
(unaudited)
<TABLE>
<CAPTION>
Three Months
Ended
March 31, 1994
----------------------
(dollars in thousands)
<S> <C>
Net income before income taxes and minority interest in
income of Heller International Group, Inc............. $ 45,349
Add-Fixed charges
Interest and debt expense............................. 69,416
One-third of rentals.................................. 1,401
--------
Total fixed charges................................ 70,817
--------
Net income, as adjusted................................... 116,166
--------
Ratio of earnings to fixed charges........................ 1.64
========
Preferred stock dividends on a pre-tax basis.............. 4,580
Total combined fixed charges and
preferred stock dividend........................... $ 75,397
--------
Ratio of earnings to combined fixed charges and
preferred stock dividends................................. 1.54
========
</TABLE>
For purposes of computing the ratio of earnings to combined fixed charges
and preferred stock dividends, "earnings" includes income before income taxes
and fixed charges. "Combined fixed charges and preferred stock dividends"
includes interest on all indebtedness, one third of annual rentals (approximate
portion representing interest) and preferred stock dividends on a pre-tax basis.
13
