<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Period Ended NOVEMBER 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For The Transition Period From_____________ to _____________
COMMISSION FILE NUMBER 1-8546
SYMS CORP
(Exact name of registrant as specified in its charter)
NEW JERSEY 22-2465228
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
SYMS WAY, SECAUCUS, NEW JERSEY 07094
(Address of principal executive offices) (Zip Code)
(201) 902-9600
(Registrant's telephone number, including area code)
NOT APPLICABLE
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether 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 periods 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
--- ---
At December 31, 1996, the latest practicable date, there were 17,694,015 shares
outstanding of Common Stock, par value $0.05 per share.
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SYMS CORP AND SUBSIDIARIES
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INDEX
<TABLE>
<CAPTION>
PAGE NO.
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<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets as of
November 30, 1996, March 2, 1996 and November 25, 1995 1
Condensed Consolidated Statements of Income for the Thirteen Weeks
and Thirty-Nine Weeks Ended November 30, 1996 and November 25, 1995 2
Condensed Consolidated Statements of Cash Flows for the Thirty-Nine
Weeks Ended November 30, 1996 and November 25, 1995 3
Notes to Condensed Consolidated Financial Statements 4
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 5-7
PART II. OTHER INFORMATION 8
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES 9
</TABLE>
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SYMS CORP AND SUBSIDIARIES
--------------------------
CONDENSED CONSOLIDATED BALANCE SHEETS
- --------------------------------------------------------------------------------
(IN THOUSANDS)
<TABLE>
<CAPTION>
NOVEMBER 30, MARCH 2, NOVEMBER 25,
1996 1996 1995
------------ ------------ ------------
(UNAUDITED) (Note 1) (UNAUDITED)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 4,544 $ 4,804 $ 810
Merchandise inventories 143,074 112,954 128,626
Deferred income taxes 5,994 5,221 1,316
Prepaid expenses and other current assets 2,175 3,521 5,236
------------ ------------ ------------
TOTAL CURRENT ASSETS 155,787 126,500 135,988
PROPERTY AND EQUIPMENT - Net of accumulated
depreciation and amortization 143,193 129,235 129,163
DEFERRED INCOME TAXES 784 -- 111
OTHER ASSETS 6,386 4,409 4,199
------------ ------------ ------------
TOTAL ASSETS $ 306,150 $ 260,144 $ 269,461
============ ============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 56,396 $ 30,900 $ 38,954
Accrued expenses 10,894 9,918 13,494
Obligations to customers 4,623 4,490 4,080
Income taxes payable (Note 2) 8,267 5,331 2,291
Short term borrowings 2,350 -- 4,625
Current portion of obligations under capital lease 387 340 326
------------ ------------ ------------
TOTAL CURRENT LIABILITIES 82,917 50,979 63,770
OBLIGATIONS UNDER CAPITAL LEASE 1,008 1,304 1,395
DEFERRED INCOME TAXES 849 255 --
OTHER LONG TERM LIABILITIES 548 237 --
COMMITMENTS
SHAREHOLDERS' EQUITY
Common stock, par value; $0.05 per share. Authorized 30,000 shares; 17,694
outstanding as of November 30, 1996, March 2, 1996
and November 25, 1995 885 885 885
Preferred stock, par value; $100 per share. Authorized 1,000 shares;
none outstanding -- -- --
Additional paid-in capital 11,709 11,709 11,709
Retained earnings 208,234 194,775 191,702
------------ ------------ ------------
TOTAL SHAREHOLDERS' EQUITY 220,828 207,369 204,296
------------ ------------ ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 306,150 $ 260,144 $ 269,461
============ ============ ============
</TABLE>
NOTES:
(1) The balance sheet at March 2, 1996 has been derived from the audited
financial statements at that date but does not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements.
(2) Income taxes payable for the period ended November 30, 1996 includes
$500,000 in deferred income taxes.
See notes to condensed consolidated financial statements
1
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SYMS CORP AND SUBSIDIARIES
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CONDENSED CONSOLIDATED STATEMENTS OF INCOME
- --------------------------------------------------------------------------------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED
-------------------- -----------------------
NOVEMBER 30, NOVEMBER 25, NOVEMBER 30, NOVEMBER 25,
1996 1995 1996 1995
---- ---- ---- ----
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Net Sales $ 96,225 $ 93,439 $ 254,730 $ 245,506
Cost of goods sold 54,731 58,862 156,647 159,221
------------ ------------ ------------ ------------
Gross profit 41,494 34,577 98,083 86,285
Expenses:
Selling, general and administrative 17,913 17,647 52,536 52,136
Advertising 2,410 2,876 5,293 5,460
Occupancy 3,666 3,017 10,349 9,343
Depreciation and amortization 2,034 1,947 5,864 5,813
Provision for special charges -- (484) -- 716
------------ ------------ ------------ ------------
Income from operations 15,471 9,574 24,041 12,817
Interest expense - net 184 148 220 380
------------ ------------ ------------ ------------
Income before income taxes 15,287 9,426 23,821 12,437
Provision for income taxes 6,650 3,865 10,362 5,099
------------ ------------ ------------ ------------
Net income $ 8,637 $ 5,561 $ 13,459 $ 7,338
============ ============ ============ ============
Net income per share $ 0.49 $ 0.31 $ 0.76 $ 0.41
============ ============ ============ ============
Weighted average shares outstanding 17,694 17,694 17,694 17,694
============ ============ ============ ============
</TABLE>
See notes to condensed consolidated financial statements
2
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SYMS CORP AND SUBSIDIARIES
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
- --------------------------------------------------------------------------------
(IN THOUSANDS)
<TABLE>
<CAPTION>
THIRTY-NINE WEEKS ENDED
-----------------------
NOVEMBER 30 NOVEMBER 25
1996 1995
---- ----
(Unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 13,459 $ 7,338
Adjustments to reconcile net income to net cash provided by (used in)
operating activities:
Depreciation and amortization 5,864 5,813
Deferred income taxes (463) --
(Gain) on sale of property and equipment (38) (57)
Loss on disposal of assets 244 1,087
Changes in operating assets and liabilities:
(Increase) in merchandising inventories (30,120) (18,366)
Decrease in prepaid expenses and
other current assets 1,346 443
(Increase) in other assets (1,977) (64)
Increase in accounts payable 25,496 3,333
Increase in accrued expenses 976 4,779
Increase (decrease) in obligations to customers 133 (681)
Increase in other long term liabilities 311 --
Increase (decrease) in income taxes 2,436 (3,285)
------------ ------------
Net cash provided by operating activities 17,667 340
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Expenditures for property and equipment (20,078) (2,445)
Proceeds from sale of property and equipment 50 93
------------ ------------
Net cash (used in) investing activities (20,028) (2,352)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of obligations under capital lease (249) (210)
Revolving line of credit borrowings - net 2,350 2,575
------------ ------------
Net cash provided by financing activities 2,101 2,365
------------ ------------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (260) 353
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 4,804 457
------------ ------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 4,544 $ 810
============ ============
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the period for:
Interest (net of amount capitalized) $ 261 $ 358
============ ============
Income taxes paid - net $ 5,891 $ 8,404
============ ============
</TABLE>
See notes to condensed consolidated financial statements
3
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SYMS CORP AND SUBSIDIARIES
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THIRTEEN AND THIRTY-NINE WEEKS ENDED NOVEMBER 30, 1996 AND NOVEMBER 25, 1995
- --------------------------------------------------------------------------------
(UNAUDITED)
.
NOTE 1 - THE COMPANY
Syms Corp (the "Company") operates a chain of forty "off-price" clothing stores
(thirty-eight at March 2, 1996) located throughout the Northeast, Middle
Atlantic, Midwest, Southeast and Southwest. Each store offers a broad range of
first quality, in season merchandise bearing nationally recognized designer or
brand-name labels for men, women and children.
NOTE 2 - BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the thirteen and thirty-nine week periods
ended November 30, 1996 are not necessarily indicative of the results that may
be expected for the entire fiscal year ending March 1, 1997. Certain
reclassifications of prior year amounts have been made to conform to current
year classifications. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Company's annual
report on Form 10-K for the fiscal year ended March 2, 1996.
NOTE 3 - ACCOUNTING PERIOD
The Company changed its fiscal year end to the Saturday nearest to the end of
February. This change was reported on March 17, 1995. The fiscal year ending
March 1, 1997 will be comprised of 52 weeks. The fiscal year ended March 2, 1996
was comprised of 53 weeks.
NOTE 4 - MERCHANDISE INVENTORIES
Merchandise inventories are stated at the lower of cost (first in, first out) or
market, as determined by the retail inventory method.
NOTE 5 - BANK CREDIT FACILITIES
The Company has an unsecured revolving credit agreement with a bank for a line
of credit not to exceed $40,000,000 through December 1, 1997. Interest on
individual advances is payable quarterly at 1 1/2% per annum below the bank's
base rate, except that at the time of advance, the Company has the option to
select an interest rate based upon one of two other alternative calculations,
with such rate to be fixed for a period not to exceed 90 days. The interest rate
on short term borrowings was 6.75% at November 30, 1996. The average daily
unused portion is subject to a commitment fee of 1/8 of 1% per annum. The
Company had outstanding borrowings of $2,350,000, $0, and $4,625,000 as of
November 30, 1996, March 2, 1996 and November 25, 1995, respectively.
The agreement contains financial covenants, with respect to consolidated
tangible net worth, as defined, working capital and maximum capital
expenditures, including dividends, as well as other financial ratios.
In addition, the Company has a separate $10,000,000 credit facility with another
bank available for the issuance of letters of credit for the purchase of
merchandise. This agreement may be canceled at any time by either party. At
November 30, 1996, March 2, 1996 and November 25, 1995 the Company had
$4,202,000, $3,786,000 and $3,445,000, respectively, in outstanding letters of
credit.
NOTE 6 - PROVISION FOR SPECIAL CHARGES
The credit to the provision for special charges during the thirteen weeks ended
November 25, 1995 in the amount of $484,000 adjusted an amount previously
provided for store closing costs.
4
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SYMS CORP AND SUBSIDIARIES
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
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RESULTS OF OPERATIONS
Thirteen and Thirty-Nine Weeks Ended November 30, 1996 Compared to Thirteen and
Thirty-Nine Weeks Ended November 25, 1995
Net sales of $96,225,000 for the thirteen weeks ended November 30, 1996
increased $2,786,000 (3.0%) as compared to net sales of $93,439,000 for the
thirteen weeks ended November 25, 1995. For the thirty-nine weeks ended
November 30, 1996 net sales increased $9,224,000 (3.8%) to $254,730,000 as
compared to net sales of $245,506,000 for the thirty-nine weeks ended November
25, 1995. Three new stores (Sharonville, Pittsburgh, and an additional store in
New York City) were included in the thirty-nine weeks ended November 30, 1996.
Comparable store net sales decreased 1.4% for the thirteen weeks and increased
1.2% for the thirty-nine weeks ended November 30, 1996 from the 1995 periods.
The 3.8% increase in net sales was, for the most part, the result of an
increase in the number of stores as compared to last year.
Gross profit for the thirteen weeks ended November 30, 1996 was $41,494,000, an
increase of $6,917,000 (20.0%) as compared to $34,577,000 for the fiscal period
ended November 25, 1995. Gross profit for the current year's third quarter
increased principally from higher margins and to a lesser extent from an
increase in net sales. Gross profit for the thirty-nine weeks ended November 30,
1996 was $98,083,000, an increase of $11,798,000 (13.7%) as compared to
$86,285,000 for the fiscal period ended November 25, 1995. Gross profit for the
thirty-nine weeks ended November 30, 1996 increased mainly from an increase in
gross margin percentage to 38.5% from 35.1% and to a lesser extent from an
increase in net sales during the thirty-nine week period of the current year.
The 3.4% improvement in gross profit percentage resulted primarily from
increased levels of opportunistic and in-season purchases which created better
values for the Company's customers and lower markdowns.
Selling, general and administrative expense increased $266,000 to $17,913,000
(18.6% as a percentage of net sales) for the thirteen weeks ended November 30,
1996 as compared to $17,647,000 (18.9% as a percentage of net sales) for the
thirteen weeks ended November 25, 1995. Selling, general and administrative
expense increased $400,000 to $52,536,000 (20.6%) for the thirty-nine weeks
ended November 30, 1996 as compared to $52,136,000 (21.2%) for the thirty-nine
weeks ended November 25, 1995.
Advertising expense for the thirteen weeks ended November 30, 1996 decreased to
$2,410,000, as compared to $2,876,000 in the thirteen week period ended November
25, 1995. Advertising expense for the thirty-nine weeks ended November 30, 1996
decreased slightly to $5,293,000, as compared to $5,460,000 in the thirty-nine
week period ended November 25, 1995.
Occupancy costs were $3,666,000 (3.8% as a percentage of net sales) for the
thirteen week period ended November 30, 1996, up from $3,017,000 (3.2% as a
percentage of net sales) for the thirteen week period ended November 25, 1995.
Occupancy costs were $10,349,000 (4.1%) for the thirty-nine week period ended
November 30, 1996, up from $9,343,000 (3.8%) for the thirty-nine week period
ended November 25, 1995. The increases in both the thirteen and thirty-nine week
periods resulted from four additional leased locations this year.
Depreciation and amortization amounted to $2,034,000 for the thirteen week
period ended November 30, 1996, an increase of $87,000, as compared to
$1,947,000 for the thirteen weeks ended November 25, 1995. Depreciation and
amortization amounted to $5,864,000 for the thirty-nine week period ended
November 30, 1996, an increase of $51,000, as compared to $5,813,000 for the
thirty-nine weeks ended November 25, 1995.
5
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SYMS CORP AND SUBSIDIARIES
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The credit to the provision for special charges during the thirteen weeks ended
November 25, 1995 in the amount of $484,000 adjusted an amount previously
provided for store closing costs. The provision for special charges for the
thirty-nine weeks ended November 25, 1995 of $716,000 includes costs associated
with the store closings.
Income before income taxes for the thirteen weeks ended November 30, 1996 of
$15,287,000 increased $5,861,000 as compared to $9,426,000 for the thirteen
weeks ended November 25, 1995. Income before income taxes for the thirty-nine
weeks ended November 30, 1996 of $23,821,000 increased $11,384,000 as compared
to $12,437,000 for the thirty-nine weeks ended November 25, 1995. As discussed
above, the increase in income before income taxes, for the current year's
thirty-nine week period, reflects, for the most part, higher gross profit,
offset somewhat by increased selling, general and administrative expenses and
increased occupancy expense, and no special charges in the current period.
For the thirteen and thirty-nine week periods ended November 30, 1996 the
effective income tax rate was 43.5% as compared to 41.0% last year. Last year's
rate was favorably impacted by the recognition of certain tax reserves provided
for previous years that were no longer deemed necessary.
LIQUIDITY AND CAPITAL RESOURCES
Working capital at November 30, 1996 was $72,870,000, an increase of $652,000
from $72,218,000 as of November 25, 1995, and the ratio of current assets to
current liabilities was 1.88 to 1 as compared to 2.13 to 1 at November 30, 1996
and November 25, 1995, respectively.
Net cash provided by operating activities totaled $17,667,000 for the
thirty-nine weeks ended November 30, 1996, an increase of $17,327,000 as
compared to $340,000 for the thirty-nine weeks ended November 25, 1995. Net
income for 1996 amounted to $13,459,000 compared to $7,338,000 in 1995, an
increase of $6,121,000.
Net cash used in investing activities was $20,028,000 and $2,352,000 for the
thirty-nine weeks ended November 30, 1996 and November 25, 1995, respectively.
Expenditures for property and equipment for the nine months ended November 30,
1996 ($20,078,000) include the cost of a new store in Pittsburgh, PA, a second
Manhattan store located on 54th Street, expanding the Secaucus, NJ distribution
center and costs associated with a Fall 1997 relocation of a leased store to an
owned store.
Net cash provided by financing activities was $2,101,000 for the thirty-nine
weeks ended November 30, 1996, compared to $2,365,000 in 1995. As of November
30, 1996 and November 25, 1995, the Company had net borrowings of $2,350,000 and
$4,625,000, respectively, under its revolving credit agreement.
The Company has a revolving credit agreement with a bank for a line of credit
not to exceed $40,000,000 through December 1, 1997. At December 1, 1997 the
Company has the option to reduce this commitment to zero or convert the
revolving credit agreement to a term loan with a maturity date of December 1,
2000. Except for funds provided from such credit agreement, the Company has
satisfied its operating and capital expenditure requirements, including those
for the opening and expansion of stores, from internally generated funds. For
the thirty-nine weeks ended November 30, 1996 under the revolving credit
agreement, the borrowings peaked at $21,450,000 and the average amount of
borrowings was $4,687,000 with a weighted average interest rate of 5.96%. For
the thirty-nine weeks ended November 25, 1995 borrowings under the revolving
credit agreement peaked at $16,135,000 and average borrowings were $4,596,000
with a weighted average interest rate of 7.33%.
The Company estimates that capital expenditures for the fiscal year ending March
1, 1997 will be approximately $23,000,000, including the opening of a new store
in Pittsburgh, PA, a second Manhattan store located on 54th Street, expanding
the Secaucus, New Jersey distribution center by 40,000 square feet and costs
associated with a Fall 1997 relocation of a leased store to an owned store.
6
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SYMS CORP AND SUBSIDIARIES
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Management believes that existing cash, internally generated funds, trade credit
and funds available from the revolving credit agreement will be sufficient for
working capital and capital expenditure requirements for the fiscal year ending
March 1, 1997.
IMPACT OF INFLATION AND CHANGING PRICES
Although the Company cannot accurately determine the precise effect of inflation
on its operations, it does not believe inflation has had a material effect on
sales or results of operations.
7
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SYMS CORP AND SUBSIDIARIES
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PART II. OTHER INFORMATION
- --------------------------------------------------------------------------------
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K - During the quarter ended November 30, 1996 no
reports on Form 8-K were filed.
8
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SYMS CORP AND SUBSIDIARIES
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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.
SYMS CORP
DATE: JANUARY 8, 1996 BY /s/ MARCY SYMS MERNS
-------------------------
MARCY SYMS MERNS
PRESIDENT
BY /s/ THOMAS M. COLEMAN
-------------------------
THOMAS M. COLEMAN
VICE PRESIDENT &
CHIEF FINANCIAL OFFICER
(Principal Financial
Officer & Chief
Accounting Officer)
9
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-01-1997
<PERIOD-END> NOV-30-1996
<CASH> 4,544
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 143,074
<CURRENT-ASSETS> 155,787
<PP&E> 213,038
<DEPRECIATION> 69,845
<TOTAL-ASSETS> 306,150
<CURRENT-LIABILITIES> 82,917
<BONDS> 1,008
0
0
<COMMON> 885
<OTHER-SE> 219,943
<TOTAL-LIABILITY-AND-EQUITY> 306,150
<SALES> 254,730
<TOTAL-REVENUES> 254,730
<CGS> 156,647
<TOTAL-COSTS> 156,647
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 220
<INCOME-PRETAX> 23,821
<INCOME-TAX> 10,362
<INCOME-CONTINUING> 13,459
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 13,459
<EPS-PRIMARY> 0.76
<EPS-DILUTED> 0.76
</TABLE>
