SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 9, 1994
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: 1-4715
The Warnaco Group, Inc.
(Exact name of registrant as specified in its charter)
Delaware 95-4032739
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
90 Park Avenue
New York, New York 10016
(Address of registrant's principal executive offices)
(212) 661-1300
(Registrant's telephone number, including area code)
Copies of all communications to:
The Warnaco Group, Inc.
90 Park Avenue
New York, New York 10016
Attention: Vice President and General Counsel
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 [ ]
The number of shares outstanding of the registrant's Class A Common Stock
as of August 19, 1994 is as follows: 21,010,521.
PART I -- FINANCIAL INFORMATION
Item 1. Financial Statements
THE WARNACO GROUP, INC.
Consolidated Condensed Balance Sheets
(in thousands of dollars)
<TABLE>
<CAPTION>
July 9, January 8,
1994 1994
-------- --------
(unaudited)
Assets
<S> <C> <C>
Current assets:
Cash (restricted $164 and $886, respectively)................................ $ 4,743 $ 4,651
Accounts receivable -- net................................................... 152,332 126,507
Inventories:
Finished goods............................................................. 139,933 120,203
Work in process............................................................ 54,567 65,285
Raw materials.............................................................. 53,935 54,015
-------- --------
Total inventories......................................................... 248,435 239,503
Other current assets........................................................... 28,173 22,148
-------- --------
Total current assets...................................................... 433,683 392,809
-------- --------
Property, plant and equipment (net of accumulated
depreciation of $68,676 and $65,257, respectively)........................... 78,917 73,636
Other assets:
Intangibles and other assets -- net.......................................... 276,380 222,188
-------- --------
$788,980 $688,633
======== ========
Liabilities and Stockholders' Equity
Current liabilities:
Notes payable................................................................ $ 4,758 $ 5,819
Borrowing under revolving credit facility.................................... 180,876 100,523
Current portion of long-term debt............................................ 52,030 49,171
Accounts payable and accrued liabilities..................................... 87,577 112,557
Federal and other income taxes............................................... 1,673 2,778
-------- --------
Total current liabilities................................................. 326,914 270,848
-------- --------
Long-term debt................................................................. 243,938 245,518
Other long-term liabilities.................................................... 18,198 13,132
Stockholders' equity:
Preferred Stock; $.01 par value.............................................. -- --
Common Stock; $.01 par value................................................. 210 202
Capital in excess of par value............................................... 338,098 315,270
Cumulative translation adjustment............................................ (797) 279
Accumulated deficit............................................................ (129,178) (147,225)
Notes receivable for common stock issued....................................... (8,403) (9,391)
-------- --------
Total stockholders' equity................................................ 199,930 159,135
-------- --------
$788,980 $688,633
======== ========
</TABLE>
This statement should be read in conjunction with the accompanying
Notes to Consolidated Condensed Financial Statements.
THE WARNACO GROUP, INC.
Consolidated Condensed Statements of Operations (unaudited)
(in thousands of dollars except share data)
<TABLE>
<CAPTION>
Quarter ended Six months ended
------------------------------ ------------------------------
July 9, 1994 July 3, 1993 July 9, 1994 July 3, 1993
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net revenues................................. $ 190,302(1) $ 158,329 $ 338,033(1) $ 315,079
Cost of goods sold........................... 133,312 110,234 230,667 212,187
----------- ----------- ----------- -----------
Gross profit................................. 56,990 48,095 107,366 102,892
Selling, administrative and general expenses. 38,846 31,831 69,106 64,621
----------- ----------- ----------- -----------
Income before interest and income taxes...... 18,144 16,264 38,260 38,271
Interest expense............................. 8,308 10,283 15,713 20,188
----------- ----------- ----------- -----------
Income before income taxes................... 9,836 5,981 22,547 18,083
Provision for income taxes................... 750 462 1,500 1,812
----------- ----------- ----------- -----------
Income from continuing operations............ 9,086 5,519 21,047 16,271
Cumulative effect of change in method of
accounting for postretirement benefits..... -- -- -- (10,500)
Loss on California earthquake................ -- -- (3,000) --
----------- ----------- ----------- -----------
Net income................................... $ 9,086 $ 5,519 $ 18,047 $ 5,771
=========== =========== =========== ===========
Net income applicable to common
stockholders............................... $ 9,086 $ 5,519 $ 18,047 $ 5,771
=========== =========== =========== ===========
Income (loss) per common share:
Income from continuing operations.......... $ 0.44 $ 0.28 $ 1.03 $ 0.82
Cumulative effect of change in method of
accounting for postretirement benefits... -- -- -- (0.53)
Loss on California earthquake................ -- -- (0.15) --
----------- ----------- ----------- -----------
Net income per common share.................. $ 0.44 $ 0.28 $ 0.88 $ 0.29
=========== =========== =========== ===========
Weighted average number of common
shares outstanding......................... 20,835,560 19,886,362 20,357,371 19,884,040
=========== =========== =========== ===========
</TABLE>
(1) Menswear sales on discontinued brands (Dior, Nicklaus and Puritan) were
lower by $20 million for the second quarter and $35 million for the six
months. All charges associated with discontinued brands were recorded as a
non-recurring expense in the fourth quarter of 1993. Intimate apparel
sales include Calvin Klein men's underwear, which was acquired on March 14,
1994. On a pro forma basis, as though Calvin Klein businesses were
acquired at the beginning of the second quarter of 1993, revenues for that
quarter would have been $10.7 million higher and net income for that
quarter would not have been materially impacted from the reported amounts
in the above statement.
This statement should be read in conjunction with the accompanying
Notes to Consolidated Condensed Financial Statements.
THE WARNACO GROUP, INC.
Consolidated Condensed Statements of Cash Flow (unaudited)
Increase (Decrease) in Cash
(in thousands of dollars)
<TABLE>
<CAPTION>
Quarter ended
----------------------------
July 9, 1994 July 3, 1993
----------- -----------
<S> <C> <C>
Cash flow from operations:
Net income (loss)............................................................ $ 18,047 $ 5,771
Non cash items included in net income:
Depreciation and amortization.............................................. 9,365 10,413
Interest................................................................... 545 1,953
Loss on California earthquake.............................................. 3,000
Cumulative effect of change in method of accounting for
postretirement benefits................................................... -- 10,500
Income taxes paid............................................................ (2,605) (1,587)
Other changes in operating accounts.......................................... (59,655) (62,561)
Other........................................................................ (6,889) (10,629)
-------- --------
Cash used in operations........................................................ (38,192) (46,140)
-------- --------
Cash flow from investing activities:
Net proceeds from sale of fixed assets....................................... 115 448
Purchase of property, plant & equipment...................................... (9,882) (6,791)
Payment for purchase of Calvin Klein underwear businesses and trademarks..... (33,103) --
-------- --------
Cash used in investing activities.............................................. (42,870) (6,343)
-------- --------
Cash flow from financing activities:
Borrowings (repayments) under revolving credit facilities.................... 81,056 58,020
Net proceeds from the sale of Class A common stock and repayment
of notes receivable from employees......................................... 988 751
Repayments of debt........................................................... (9,111) (9,397)
Proceeds from other financings............................................... 8,626 5,593
Increase in deferred financing costs......................................... (405) (3,062)
-------- --------
Cash provided from financing activities........................................ 81,154 51,905
-------- --------
Increase (decrease) in cash.................................................... 92 (578)
Cash at beginning of period.................................................... 4,651 3,763
-------- --------
Cash at end of period.......................................................... $ 4,743 $ 3,185
======== ========
Other changes in operating accounts:
Accounts receivable.......................................................... $(18,001) $ (9,006)
Inventories.................................................................. (3,898) (11,812)
Other current assets......................................................... (6,025) (9,217)
Accounts payable and accrued liabilities..................................... (33,231) (34,338)
Income taxes payable......................................................... 1,500 1,812
-------- --------
$(59,655) $(62,561)
======== ========
Supplemental disclosure of cash flow information:
In the month of March, Warnaco completed the acquisition of
Calvin Klein underwear businesses and trademarks:
Fair value of assets acquired.............................................. $ 69,191
Issuance of common stock in conjunction with the
Calvin Klein acquisition................................................ (22,836)
Liabilities assumed........................................................ (13,252)
--------
Cash paid.................................................................. $ 33,103
========
</TABLE>
This statement should be read in conjunction with the accompanying
Notes to Consolidated Condensed Financial Statements.
THE WARNACO GROUP, INC.
Notes to Consolidated Condensed Financial Statements
1. In the opinion of the Company, the accompanying consolidated
condensed financial statements contained all the adjustments (all of which
were of a normal recurring nature) necessary to present fairly the financial
position of the Company as of July 9, 1994 as well as its results of
operations and cash flows for the periods ended July 9, 1994 and July 3, 1993.
Operating results for interim periods may not be indicative of results for the
full fiscal year.
2. Certain amounts for prior periods have been reclassified to be
comparable with the current period presentation.
3. In the first quarter of 1994, there was a $3.0 million non-operating
charge related to the January 1994 California earthquake.
4. On March 14, 1994, the Company acquired the Calvin Klein worldwide
businesses and trademarks for men's underwear, a worldwide license for Calvin
Klein men's accessories and the Calvin Klein worldwide businesses and
trademarks for women's intimate apparel upon the expiration of an existing
license on December 31, 1994.
5. On June 8, 1994, the Company amended its Credit Agreement to
increase the maximum amount of borrowing available under its revolving loan
facility from $200 million to $235 million to provide flexibility for
future growth.
Item 2.
Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Results of Operations
STATEMENT OF OPERATIONS (selected data)
(amounts in millions of dollars)
<TABLE>
<CAPTION>
Quarter ended Six months ended
------------------------------ ------------------------------
1994 1993 1994 1993
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net revenues................................. $190.3(1) $158.3 $338.0(1) $315.1
Cost of goods sold........................... 133.3 110.2 230.6 212.2
------ ------ ------ ------
Gross profit................................. 57.0 48.1 107.4 102.9
% to net revenues.......................... 30.0% 30.4% 31.8% 32.7%
Selling, administrative and general.......... 38.8 31.8 69.1 64.6
------ ------ ------ ------
Income before interest and income taxes...... 18.2 16.3 38.3 38.3
% to net revenues.......................... 9.5% 10.3% 11.3% 12.2%
Interest expense............................. 8.3 10.3 15.7 20.2
Provision for income taxes................... 0.8 0.5 1.5 1.8
------ ------ ------ ------
Income from continuing operations............ $ 9.1 $ 5.5 $ 21.1 $ 16.3
====== ====== ====== ======
<FN>
(1) Menswear sales on discontinued brands (Dior, Nicklaus and Puritan) were
lower by $20 million for the second quarter and $35 million for the
six months. All charges associated with discontinued brands were
recorded as a non-recurring expense in the fourth quarter of 1993.
Intimate apparel sales include Calvin Klein men's underwear, which was
acquired on March 14, 1994. On a pro forma basis, as though Calvin
Klein businesses were acquired at the beginning of the second quarter
of 1993, revenues for that quarter would have been $10.7 million
higher and net income for that quarter would not have been materially
impacted from the reported amounts in the above statement.
</TABLE>
Net revenues increased 20.2% from $158.3 million in the second quarter of
1993 to $190.3 million in the second quarter of 1994. Net revenues for the six
months ended July 9, 1994 increased 7.3% from $315.1 million in the first half
of 1993 to $338.0 million in the 1994 period.
Intimate Apparel division net revenues increased 40.3% in the second
quarter of 1994 to $141.4 million from $100.8 million in the second quarter of
1993. Included in these revenues are sales of Calvin Klein men's underwear,
which was acquired on March 14, 1994, of $15 million. Excluding the Calvin
Klein sales, Intimate Apparel revenues are up over 25% in the quarter. For the
six months, Intimate Apparel revenues increased 22.2% to $240.5 million from
$196.8 million for the same period last year.
Menswear division net revenues in the second quarter of 1994 of $39.4
million are 19.4% lower than the $48.9 million recorded in the second quarter
of 1993, due primarily to $20 million lower sales in the discontinued brands
which include Dior shirts and ties, Puritan and Nicklaus. Excluding the
discontinued brands, Menswear revenues are up over 36% due to a 36% increase
in the Chaps brands and a 71% increase in Hathaway. Menswear division net
revenues for the six months of $80.8 million are 20.7% lower than the $101.9
million recorded last year, due to $35 million lower sales in the discontinued
brands. Excluding the discontinued brands, Menswear revenues are up over 20%
for the first half with Chaps up over 30%.
Gross profit increased 18.5% from $48.1 million in the second quarter of
1993 to $57.0 million in the second quarter of 1994. Gross profit as a
percentage of net revenues decreased slightly from 30.4% in the second quarter
of 1993 to 30.0% in the second quarter of 1994. Gross profit for the first six
months of 1994 increased 4.3% from $102.9 million in the first half of 1993 to
$107.4 million in the first half of 1994. Gross profit as a percentage of net
revenues decreased from 32.7% for the first half of 1993 to 31.8% for the
first half of 1994, attributable to the higher mix of Fruit of the Loom,
Calvin Klein and Victoria's Secret sales.
Selling, administrative and general expense increased from $31.8 million
(20.1% of net revenues) in the second quarter of 1993 to $38.8 million (20.4%
of net revenues) in the second quarter of 1994. Selling, administrative and
general expenses increased from $64.6 million (20.5% of net revenues) in the
first six months of 1993 to $69.1 million (20.4% of net revenues) for the
first six months of 1994. The decrease in selling, administrative and general
expenses as a percentage of net revenues reflects the reduction in menswear
division operating costs, partially offset by higher marketing expenses in
Intimate Apparel.
Interest expense decreased 19.2% from $10.3 million in second quarter of
1993 to $8.3 million in the second quarter of 1994. The decrease in interest
expense reflects the refinancing of the Company's debt, that was concluded in
October 1993, which lowered the Company's cost of borrowing by 150 basis
points, as well as the Company's investment grade rating achieved in May,
1994, from Standard and Poor's Corporation, which further reduced the cost of
borrowings by another 37 1/2 basis points to LIBOR plus 7/8%. Interest expense
for the six months of 1994 decreased 22.2% from $20.2 million in the first
half of 1993 to $15.7 million.
The provision for income taxes for all periods primarily reflects
accruals for taxes of foreign subsidiaries and accruals for state and local
income taxes.
Income from continuing operations increased 64.6% from $5.5 million in
the second quarter of 1993 to $9.1 million in the second quarter of 1994. For
the six months ended in 1994, income from continuing operations increased
29.4% from $16.3 million in the first half of 1993 to $21.0 million. The
increases in income from continuing operations reflect the increased operating
income and decreased interest expense noted above.
The first quarter of 1994 includes a loss on the California earthquake of
$3.0 million, the deductible portion of the Company's insurance policy
relating to the January 17th California earthquake which temporarily shut down
the Olga distribution center. All other costs are expected to be fully
recovered from insurance.
The first quarter of 1993 includes a one-time non-cash expense of $10.5
million for the cumulative effect of a change in the method of accounting for
employee postretirement benefits which was recorded in accordance with the
provisions of Statement on Financial Accounting Standards No. 106 ("FAS No.
106"). The adoption of FAS No. 106 is not expected to have a material impact
on the results of operations in any future period.
Net income for the second quarter of 1994 increased 64.6% to $9.1 million
compared to $5.5 million for the second quarter of 1993. Net income for the
first six months of 1994 after the $3.0 million one-time charge was $18.0
million, an increase of 213% compared to a net income for the first six months
of 1993 of $5.8 million after the $10.5 million FAS 106 one-time charge noted
above.
Capital Resources and Liquidity
The Company's liquidity requirements arise primarily from its debt
service requirements and the funding of the Company's working capital needs,
primarily inventory and accounts receivable. The Company's borrowing
requirements are seasonal, with peak working capital needs generally arising
at the end of the second quarter and during the third quarter of the fiscal
year. The Company typically generates nearly all of its operating cash flow
in the fourth quarter of the fiscal year reflecting third and fourth quarter
shipments and the sale of inventory built during the first half of the fiscal
year.
During the second quarter of 1994, the Company secured an additional $35
million of revolving credit with its bank group. The increase in borrowing
capability will be used to support growth in the Company's net revenues in
future periods.
Cash used by operating activities in the first half of 1994 was $38.2
million, which is $7.9 million favorable, compared to a use of $46.1 million
in the comparable 1993 period. The favorableness resulted from the higher net
income and a more efficient use of inventory which decreased quarter to
quarter. The use of cash in the first half is attributable to a seasonal
requirement of working capital to support second half revenue growth.
The Company believes that funds available under its existing credit
arrangements and cash flow to be generated from future operations will be
sufficient to meet working capital and capital expenditure needs of the
Company, including interest and principal payments on outstanding debt
obligations, for the foreseeable future.
PART II -- OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
3.1 Restated Certificate of Incorporation of the Company.
(Incorporated herein by reference to Exhibit 3.1 to the
Company's Registration Statement on Form S-1, File No.
33-45877).
3.2 By-Laws of the Company. (Incorporated herein by reference to
Exhibit 3.2 to the Company's Registration Statement on Form
S-1, File No. 33-45877).
4.1 Registration Rights Agreement, dated as of March 14, 1994
between the Company and Calvin Klein, Inc. ("CKI").
(Incorporated herein by reference to Exhibit 4.1 to the
Company's Form 10-Q filed May 24, 1994.)
10.1 Credit Agreement dated as of July 16, 1993 (the "U.S.
$55,000,000 Credit Agreement") among Warnaco Inc., The Bank of
Nova Scotia, as agent, and certain other lenders named therein.
(Incorporated herein by reference to Exhibit 10.1 to the
Company's Form 10-Q filed May 24, 1994.)
10.2 Amendment No. 1 to the U.S. $55,000,000 Credit Agreement dated
as of October 14, 1993. (Incorporated herein by reference to
Exhibit 10.2 to the Company's Form 10-Q filed May 24, 1994.)
10.3 Amendment No. 2 to the U.S. $55,000,000 Credit Agreement dated
as of November 5, 1993. (Incorporated herein by reference to
Exhibit 10.3 to the Company's Form 10-Q filed May 24, 1994.)
10.4 Amendment No. 3 to the U.S. $55,000,000 Credit Agreement dated
as of January 7, 1994. (Incorporated herein by reference to
Exhibit 10.4 to the Company's Form 10-Q filed May 24, 1994.)
10.5 Amendment No. 4 to the U.S. $55,000,000 Credit Agreement dated
as of April 25, 1994. (Incorporated herein by reference to
Exhibit 10.5 to the Company's Form 10-Q filed May 24, 1994.)
10.6 Amendment No. 5 to the U.S. $55,000,000 Credit Agreement dated
as of August 12, 1994.
10.7 Acquisition Agreement dated March 14, 1994 by and among CKI,
the Company and Warnaco Inc. (Incorporated herein by reference
to Exhibit 10.6 to the Company's Form 10-Q filed May 24, 1994.)
10.8 U.S. $500,000,000 Credit Agreement dated as of October 14, 1993
(the "U.S. $500,000,000 Credit Agreement") among the Company,
Warnaco Inc., The Bank of Nova Scotia, as co-managing agent and
paying agent, Citicorp U.S.A., as co-managing agent and
documentation and collateral agent, and certain other lenders
named therein. (Incorporated herein by reference to Exhibit
10-1 to the Company's Form 10-Q filed November 16, 1993).
10.9 Amendment No. 1 to the U.S. $500,000,000 Credit Agreement,
dated June 8, 1994.
10.10 Employment Agreement, dated as of January 6, 1991, between the
Company and Linda J. Wachner. (Incorporated herein by
reference to Exhibit 10.7 to the Company's Registration
Statement on Form S-1, File No. 33-45877).
10.11 Incentive Compensation Plan. (Incorporated herein by reference
to Exhibit 10.8 to the Company's Registration Statement on
Form S-1, File No. 33-45877).
10.12 1991 Stock Option Plan. (Incorporated herein by reference to
Exhibit 10.9 to the Company's Registration Statement on Form
S-1, File No. 33-45877).
10.13 Amended and Restated 1988 Employee Stock Purchase Plan, as
amended. (Incorporated herein by reference to Exhibit 10.10 to
the Company's Registration Statement on Form S-1, File No.
33-45877).
10.14 Warnaco Employee Retirement Plan. (Incorporated herein by
reference to Exhibit 10.11 to the Company's Registration
Statement on Form S-1, File No. 33-45877).
10.15 Executive Management Agreement dated as of May 9, 1991 between
the Company, Warnaco and The Spectrum Group, Inc. (Incorporated
herein by reference to Exhibit 10.13 to the Company's
Registration Statement on Form S-1, File No. 33-45877).
10.16 1993 Stock Plan for non-employee directors. (Incorporated
herein by reference to the Company's Proxy Statement for its
1994 Annual Meeting of Shareholders).
10.17 Amended and Restated 1993 Stock Plan. (Incorporated herein by
reference to the Company's Proxy Statement for its 1994 Annual
Meeting of Shareholders).
10.18 The Warnaco Group, Inc. Supplemental Incentive Compensation
Plan. (Incorporated herein by reference to the Company's Proxy
Statement for its 1994 Annual Meeting of Shareholders).
11.1 Earnings per share.
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.
THE WARNACO GROUP, INC.
Date: August 23, 1994
By: /s/ DARIUSH ASHRAFI
--------------------------------
Dariush Ashrafi
Director, Senior Vice President
and Chief Financial Officer
Principal Financial Officer
Date: August 23, 1994
By: /s/ WILLIAM S. FINKELSTEIN
--------------------------------
William S. Finkelstein
Senior Vice President and
Corporate Controller
Principal Accounting Officer
[CONFORMED COPY]
FIFTH AMENDMENT TO
CREDIT AGREEMENT
This FIFTH AMENDMENT TO CREDIT AGREEMENT, dated as of August 12, 1994
(this "Amendatory Agreement"), among WARNACO INC. (the "Borrower"), the
various financial institutions signatories hereto (the "Lenders") and THE BANK
OF NOVA SCOTIA, as agent (the "Agent") for the Lenders,
W I T N E S S E T H:
WHEREAS, the Borrower, the Lenders and the Agent are parties to a Credit
Agreement, dated as of July 16, 1993 (as amended or otherwise modified to the
date hereof, the "Existing Credit Agreement");
WHEREAS, the Borrower has requested that the Lenders amend the Existing
Credit Agreement in certain respects; and
WHEREAS, the Lenders have agreed, subject to the terms and conditions
hereinafter set forth, to amend the Existing Credit Agreement in certain
respects as provided below (the Existing Credit Agreement, as so amended by
this Amendatory Agreement, being referred to as the "Credit Agreement");
NOW, THEREFORE, in consideration of the agreements herein contained, the
parties hereto agree as follows:
PART I
DEFINITIONS
SUBPART 1.1. Certain Definitions. The following terms (whether or not
underscored) when used in this Amendatory Agreement shall have the following
meanings (such meanings to be equally applicable to the singular and plural
form thereof):
"Agent" is defined in the preamble.
"Amendatory Agreement" is defined in the preamble.
"Amendment No. 5" is defined in Subpart 3.1.
"Borrower" is defined in the preamble.
"Credit Agreement" is defined in the third recital.
"Existing Credit Agreement" is defined in the first recital.
"Fifth Amendment Effective Date" is defined in Subpart 3.1.
"Lenders" is defined in the preamble.
SUBPART 1.2. Other Definitions. Terms for which meanings are provided
in the Existing Credit Agreement are, unless otherwise defined herein or the
context otherwise requires, used in this Amendatory Agreement with such
meanings.
<PAGE>
PART II
AMENDMENTS TO THE
EXISTING CREDIT AGREEMENT
Effective on (and subject to the occurrence of) the Fifth Amendment
Effective Date, the Existing Credit Agreement is hereby amended in accordance
with Subparts 2.1 through 2.2; except as so amended, the Existing Credit
Agreement shall continue in full force and effect.
SUBPART 2.1. Amendments to Article I. Article I of the Existing Credit
Agreement is hereby amended in accordance with Subparts 2.1.1 through 2.1.2.
SUBPART 2.1.1. Section 1.1 of the Existing Credit Agreement is hereby
amended by inserting the following definitions in such Section in the
appropriate alphabetical sequence:
"Amendment No. 5" means the Fifth Amendment, dated as of August
__, 1994, to this Agreement among the Borrower, the Lenders and the
Agent.
"Fifth Amendment Effective Date" is defined in Subpart 3.1 of
Amendment No. 5.
SUBPART 2.1.2. Section 1.1 of the Existing Credit Agreement is hereby
further amended as follows:
(a) the definition of "Initial Percentage" is hereby deleted in
its entirety;
(b) the definition of "Letter of Credit Availability" is hereby
amended in its entirety to read as follows:
"`Letter of Credit Availability' means, at any time,
$50,000,000 minus the aggregate amount of all Letter of Credit
Outstandings.";
(c) the definition of "Loan Commitment Amount" is hereby amended
in its entirety to read as follows:
"`Loan Commitment Amount' means $30,000,000, as such amount
may be reduced by Section 2.2."; and
(d) the definition of "Percentage" is hereby amended in its
entirety to read as follows:
"`Percentage' means, relative to any Lender, the percentage
set forth opposite its signature hereto or set forth in a Lender
Assignment Agreement, as such percentage may be adjusted from
time to time pursuant to the terms hereof or a Lender
Assignment Agreement executed by such Lender and its Assignee
Lender and delivered pursuant to Section 11.11."
SUBPART 2.2. Amendments to Article II. Article II of the Existing
Credit Agreement is hereby amended in accordance with Subpart 2.2.1.
SUBPART 2.2.1. Clause (a)(i) of Section 2.1.3 of the Existing Credit
Agreement is hereby amended by deleting the figure "$55,000,000" appearing
therein, and inserting "$80,000,000" in place thereof.
<PAGE>
PART III
CONDITIONS TO EFFECTIVENESS
SUBPART 3.1. Fifth Amendment Effective Date. This Amendatory Agreement
(and the amendments and modifications contained herein) shall become
effective, and shall thereafter be referred to as "Amendment No. 5", on the
date (the "Fifth Amendment Effective Date") when all of the conditions set
forth in this Subpart 3.1 have been satisfied.
SUBPART 3.1.1. Execution of Counterparts. The Agent shall have
received counterparts of this Amendatory Agreement, duly executed and
delivered on behalf of the Borrower and the Required Lenders.
SUBPART 3.1.2. Legal Details, etc. All documents executed or
submitted pursuant hereto shall be satisfactory in form and substance to the
Agent and its counsel. The Agent and its counsel shall have received all
information and such counterpart originals or such certified or other copies
or such materials, as the Agent or its counsel may reasonably request, and all
legal matters incident to the transactions contemplated by this Amendatory
Agreement shall be satisfactory to the Agent and its counsel.
PART IV
MISCELLANEOUS
SUBPART 4.1. Cross-References. References in this Amendatory Agreement
to any Part or Subpart are, unless otherwise specified or otherwise required
by the context, to such Part or Subpart of this Amendatory Agreement.
SUBPART 4.2. Loan Document Pursuant to Existing Credit Agreement. This
Amendatory Agreement is a Loan Document executed pursuant to the Existing
Credit Agreement and shall be construed, administered and applied in
accordance with all of the terms and provisions of the Existing Credit
Agreement.
SUBPART 4.3. Successors and Assigns. This Amendatory Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns.
SUBPART 4.4. Counterparts. This Amendatory Agreement may be executed
by the parties hereto in several counterparts, each of which when executed and
delivered shall be deemed to be an original and all of which shall constitute
together but one and the same agreement.
SUBPART 4.5. Governing Law. THIS AMENDATORY AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF
NEW YORK.
IN WITNESS WHEREOF, the parties hereto have caused this Amendatory
Agreement to be executed by their respective officers as of the day and year
first above written.
WARNACO INC.
By /s/ Dariush Ashrafi
--------------------------------
Title: Senior Vice President/
Chief Financial Officer
<PAGE>
THE BANK OF NOVA SCOTIA,
as Agent, as Issuer and as Lender
By /s/ Terry K. Fryett
--------------------------------
Title: Vice President
MITSUI NEVITT CAPITAL CORPORATION
By /s/ Peter Nevitt
--------------------------------
Title: President
SOCIETE GENERALE, NEW YORK BRANCH
By /s/ John W. Stelwagon
--------------------------------
Title: Vice President
EXHIBIT 10.9
AMENDMENT NO. 1
Dated as of June 8, 1994
This AMENDMENT No. 1 among WARNACO INC., a Delaware
corporation (the "Borrower"), THE WARNACO GROUP, INC., a
Delaware corporation the financial institutions parties to
the Credit Agreement referred to below (the "Lenders"), THE
BANK OF NOVA SCOTIA ("Scotiabank") and CITICORP USA, INC.
("Citicorp"), as Managing Agents (the "Managing Agents") for
the Lenders thereunder, Citicorp, as Documentation Agent (the
"Documentation Agent") and Collateral Agent (the "Collateral
Agent") for the Lenders thereunder and Scotiabank, as Paying
Agent (the "Paying Agent") for the Lenders thereunder and as
Swing Line Bank and an Issuing Bank thereunder.
PRELIMINARY STATEMENTS:
(1) The Borrower, Group, the Lenders, the Managing
Agents, the Documentation Agent, the Collateral Agent and the
Paying Agent have entered into a Credit Agreement dated as of
October 14, 1993 (the "Credit Agreement"; the terms defined
therein being used herein as therein defined unless otherwise
defined herein).
(2) The Borrower desires to increase the
Revolving Credit Facility by $35,000,000, from $200,000,000
to $235,000,000, in order to accommodate its working capital
needs and other corporate purposes, and accordingly has
requested that the Lenders agree to such increase.
(3) The Borrower desires to amend certain other
provisions of the Credit Agreement, including, among other
things, the tax provisions applicable to Lenders organized
under the laws of a jurisdiction outside the United States.
(4) The Lenders are, on the terms and conditions
stated below, willing to grant the request of the Borrower
and the Borrower and the Lenders have agreed to amend the
Credit Agreement as hereinafter set forth.
SECTION 1. Amendments to Credit Agreement. The
Credit Agreement is, effective as of the date hereof and
subject to the satisfaction of the conditions precedent set
forth in Section 3 hereof, hereby amended as follows:
(a) Section 2.01(d) is amended in full to read as
follows:
"(d) Clean-Down. Notwithstanding the
provisions of Sections 2.01(b), 2.01(c) and 2.13,
so long as the Collateral Release Date shall not
have occurred, no Borrowings may be made under
Section 2.01(b) or 2.01(c) and no Letters of Credit
may be requested to be issued under Section 2.13
during the last 30 days of (i) the Fiscal Year
ending on or about December 31, 1994 unless (A) the
aggregate principal amount of Revolving Credit
Advances, Letter of Credit Advances and Swing Line
Advances outstanding after giving effect to such
Borrowing or the issuance of such Letter of Credit
shall not exceed $115,000,000 or (B) there shall
have been a period of at least 30 consecutive days
during such Fiscal Year when the aggregate
principal amount of Revolving Credit Advances,
Letter of Credit Advances and Swing Line Advances
outstanding did not exceed $115,000,000, (ii) the
Fiscal Year ending on or about December 31, 1995
unless (A) the aggregate principal amount of
Revolving Credit Advances, Letter of Credit
Advances and Swing Line Advances outstanding after
giving effect to such Borrowing or the issuance of
such Letter of Credit shall not exceed $165,000,000
or (B) there shall have been a period of at least
30 consecutive days during such Fiscal Year when
the aggregate principal amount of Revolving Credit
Advances, Letter of Credit Advances and Swing Line
Advances outstanding did not exceed $165,000,000
and (iii) the Fiscal Year ending on or about
December 31, 1996 and each Fiscal Year thereafter
unless (A) the aggregate principal amount of
Revolving Credit Advances, Letter of Credit
Advances and Swing Line Advances outstanding after
giving effect to such Borrowing or the issuance of
such Letter of Credit shall not exceed $130,000,000
or (B) there shall have been a period of at least
30 consecutive days during such Fiscal Year when
the aggregate principal amount of Revolving Credit
Advances, Letter of Credit Advances and Swing Line
Advances outstanding did not exceed $130,000,000."
(b) Section 2.05(b)(v) is amended in full to read
as follows:
"(v) So long as the Collateral Release Date
shall not have occurred, the Borrower shall (A) on
the 30th day preceding the last day of the Fiscal
Year ending on or about December 31, 1994, prepay
an aggregate principal amount of the Revolving
Credit Advances comprising part of the same
Borrowings, the Letter of Credit Advances and the
Swing Line Advances equal to the amount by which
the aggregate principal amount of the Revolving
Credit Advances, Letter of Credit Advances and
Swing Line Advances then outstanding exceeds
$115,000,000, unless there shall have been a period
of at least 30 consecutive days during such Fiscal
Year when the aggregate principal amount of
Revolving Credit Advances, Letter of Credit
Advances and Swing Line Advances outstanding did
not exceed $115,000,000, (B) on the 30th day
preceding the last day of the Fiscal Year ending on
or about December 31, 1995, prepay an aggregate
principal amount of the Revolving Credit Advances
comprising part of the same Borrowings, the Letter
of Credit Advances and the Swing Line Advances
equal to the amount by which the aggregate
principal amount of the Revolving Credit Advances,
Letter of Credit Advances and Swing Line Advances
then outstanding exceeds $165,000,000, unless there
shall have been a period of at least 30 consecutive
days during such Fiscal Year when the aggregate
principal amount of Revolving Credit Advances,
Letter of Credit Advances and Swing Line Advances
outstanding did not exceed $165,000,000, and (C) on
the 30th day preceding the last day of each
subsequent Fiscal Year, prepay an aggregate
principal amount of the Revolving Credit Advances
comprising part of the same Borrowings, Letter of
Credit Advances and the Swing Line Advances equal
to the amount by which the aggregate principal
amount of the Revolving Credit Advances, Letter of
Credit Advances and Swing Line Advances then
outstanding exceeds $130,000,000, unless there
shall have been a period of at least 30 consecutive
days during such subsequent Fiscal Year when the
aggregate principal amount of Revolving Credit
Advances, Letter of Credit Advances and Swing Line
Advances outstanding did not exceed $130,000,000."
(c) The first sentence of Section 2.11(e) is
amended by (i) adding immediately after the words "or
any successor" the words "or alternative", (ii) deleting
the phrase "entitled to benefits under an income tax
treaty to which the United States is a party that
reduces the rate of" and substituting therefor the
phrase "exempt from or is entitled to a reduced rate of
United States" and (iii) deleting the phrase "or
certifying that the income receivable pursuant to this
Agreement or the Notes is effectively connected with the
conduct of a trade or business in the United States" at
the end thereof.
(d) Section 8.07(c) is amended by (i) adding
immediately after the words "The Paying Agent" in the
first sentence thereof the phrase", acting for this
purpose as the agent of the Borrower," and (ii) deleting
the word "may" in the second sentence thereof and
substituting therefor the word "shall".
(e) Section 8.07(d) is amended by adding after the
first sentence thereof the following sentence:
"Such Assignment and Acceptance shall not become
effective until the information contained therein
is recorded in the Register by the Paying Agent."
(f) Schedule 1 to the Credit Agreement is amended
in full to read as set forth in Annex A hereto.
SECTION 2. Consent. The parties hereto consent
to the exchange of the Notes currently held by Restructured
Obligations Backed by Senior Assets B.V. ("ROSA") and
Stichting Restructured Obligations Backed by Senior Assets 2
("ROSA2") with Notes substantially in the form of Exhibit C-l
to the Credit Agreement, except that such Notes shall be
payable to ROSA or ROSA2 or their registered assigns. Such
Notes may not be exchanged for Notes in any other form,
including, without limitation, at any time after an
assignment by ROSA or ROSA2 pursuant to Section 8.07 of the
Credit Agreement. Each such Note shall constitute a "Note"
under the Credit Agreement for all purposes.
SECTION 3. Conditions of Effectiveness. This
Amendment shall become effective when, and only when, on or
before June 8, 1994, the Documentation Agent shall have
received (i) counterparts of this Amendment executed by the
Borrower, Group and all of the Lenders or, as to any of the
Lenders, advice satisfactory to the Documentation Agent that
such Lenders have executed this Amendment, (ii) an amendment
fee of 4 basis points calculated on the sum of the aggregate
Revolving Credit Commitments outstanding (prior to giving
effect to this Amendment) plus the outstanding Term Advances,
payable to the Documentation Agent for the ratable benefit of
the Lenders, (iii) a commitment fee of 12.5 basis points
calculated on the amount of the increase in the Revolving
Credit Commitments pursuant to this Amendment, payable to the
Documentation Agent for the ratable benefit of the Lenders
increasing their Revolving Credit Commitments, based on each
such Lender's increase, and (iv) such other fees as may be
set forth in that certain letter dated May 11, 1994 from the
Managing Agents to the Borrower, payable to the Documentation
Agent for the ratable benefit of the Managing Agents. Section
1 hereof shall become effective when, and only when, on or
before June 8, 1994, the Documentation Agent shall have
additionally received all of the following documents, each
document (unless otherwise indicated) being dated the date of
receipt thereof by the Documentation Agent (which date shall
be the same for all such documents), in form and substance
satisfactory to the Documentation Agent:
(a) Certified copies of (i) the resolutions of the
Board of Directors of (x) each of the Borrower and Group
approving this Amendment and the matters contemplated
hereby and (y) each other Guarantor evidencing approval
of the Consent and the matters contemplated hereby and
(ii) all documents evidencing other necessary corporate
action and governmental approvals, if any, with respect
to this Amendment, the Consent and the matters
contemplated hereby and thereby.
(b) A certificate of the Secretary or an Assistant
Secretary of each of the Borrower, Group and the other
Guarantors, certifying the names and true signatures of
its officers authorized to sign this Amendment or the
Consent and the other documents to be delivered
hereunder.
(c) If required by the Managing Agents, an
amendment to each Mortgage, in form and substance
satisfactory to the Managing Agents, duly executed by
the Loan Party party to such Mortgage, and endorsements
to American Land Title Association Lender's Extended
Coverage title insurance policies in form and substance
satisfactory to the Collateral Agent.
(d) Counterparts of the Consent appended hereto
(the "Consent"), executed by the Guarantors (other than
Group).
(e) A favorable opinion of Skadden, Arps, Slate,
Meagher & Flom, counsel for the Loan Parties, to the
effect that this Amendment and the Consent have been
duly authorized, executed and delivered by the Loan
Parties party thereto and as to the matters referred to
in Section 4 hereof (other than subsection (e) thereof),
and as to such other matters as any Lender through the
Managing Agents may reasonable request.
(f) A certificate signed by a duly authorized
officer of the Borrower and Group stating that:
(i) The representations and warranties
contained in Section 4 hereof and in the Loan
Documents, as amended hereby, are correct on and as
of the date of such certificate as though made on
and as of such date other than any such
representations or warranties that, by their terms,
refer to a date other than the date of such
certificate, and
(ii) No event has occurred and is continuing
that constitutes a Default.
SECTION 4. Representations and Warranties of
the Borrower. Each of Group and the Borrower represents and
warrants as follows:
(a) Each Loan Party (i) is a corporation duly
organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation, (ii)
is duly qualified and in good standing as a foreign
corporation in each other jurisdiction in which it owns
or leases property or in which the conduct of its
business requires it to so qualify or be licensed except
where the failure to so qualify or be licensed would not
have a Material Adverse Effect and (iii) has all
requisite corporate power and authority to own or lease
and operate its properties and to carry on its business
as now conducted and as proposed to be conducted.
(b) The execution, delivery and performance of
this Amendment of each Loan Party party hereto and of
the Consent by each Loan Party party thereto and of the
Loan Documents, as amended hereby, to which such Loan
Party is or is to be a party, and the consummation of
the transactions contemplated hereby and thereby, are
within such Loan Party's corporate powers, have been
dull authorized by all necessary corporate action, and
do not (i) contravene such Loan Party's charter or by-laws,
(ii) violate any law (including, without
limitation, the Securities Exchange Act of 1934 and the
Racketeer Influenced and Corrupt Organizations Chapter
of the Organized Crime Control Act of 1970), rule,
regulation (including, without limitation, Regulation X
of the Board of Governors of the Federal Reserve
System), order, writ, judgment, injunction, decree,
determination or award, (iii) conflict with or result in
the breach of, or constitute a default under, any
contract, loan agreement, indenture, mortgage, deed of
trust, lease or other instrument binding on or affecting
any Loan Party, any of its Subsidiaries or any of their
properties or (iv) except for the Liens created by the
Collateral Documents, result in or require the creation
or imposition of any Lien upon or with respect to any of
the properties of any Loan Party or any of its
Subsidiaries.
(c) No authorization or approval or other action
by, and no notice to or filing with, any governmental
authority or regulatory body or any other third party is
required for the due execution, delivery, recordation,
filing or performance of this Amendment or the Consent
by any Loan Party party thereto, or of any of the Loan
Documents, as amended hereby, to which such Loan Party
is or is to be a party, or for the consummation of the
transactions contemplated hereby or thereby.
(d) This Amendment has been, and the Consent when
delivered hereunder will have been, duly executed and
delivered by each Loan Party party thereto. This
Amendment and each of the Loan Documents, as amended
hereby, constitute, and the Consent when delivered
hereunder will constitute, the legal, valid and binding
obligation of each Loan Party party thereto, enforceable
against such Loan Party in accordance with its terms.
(e) The Consolidated balance sheets of Group and
its Subsidiaries as at January 2, 1993 and January 8,
1994, and the related Consolidated statements of
operations, stockholders' equity (deficit) and cash flow
of Group and its Subsidiaries for the fiscal years then
ended, accompanied by an opinion of Ernst & Young,
independent public accountants, copies of which have
been furnished to each Lender, fairly present, the
Consolidated financial condition of Group and its
Subsidiaries as at such dates and the Consolidated
results of the operations of Group and its Subsidiaries
for the periods ended on such dates, all in accordance
with generally accepted accounting principles applied on
a consistent basis, and since January 2, 1993, there has
been no Material Adverse Change.
(f) There is no action, suit, investigation,
litigation or proceeding affecting any Loan Party or any
of its Subsidiaries, including any Environmental Action,
pending or threatened before any court, governmental
agency or arbitrator that (i) purports to affect the
legality, validity or enforceability of this Amendment,
the Consent or any other Loan Document, as amended
hereby or the consummation of the transactions
contemplated hereby or thereby or (ii) except as set
forth on Schedule 4.01(i) to the Credit Agreement, is or
would be reasonably likely to have a Material Adverse
Effect. There has been no adverse change in the status,
or financial effect on any Loan Party or any of their
Subsidiaries, of the Disclosed Litigation from that
described on Schedule 4.01(i) to the Credit Agreement on
the date thereof or except as has been disclosed to the
Agents and the Lenders.
(g) The Collateral Documents and the pledge and
assignment of the Collateral pursuant thereto create a
valid and perfected first priority security interest in
the Collateral, securing the payment of the Obligations
of the Loan Parties under the Loan Documents, as amended
hereby, all filings and other actions necessary or
desirable to perfect and protect such security interest
have been duly taken, and the execution, delivery and
performance of this Amendment and the Consent do not
adversely affect the aforesaid Liens created under such
Collateral Documents.
SECTION 5. Reference to and Effect on the Loan
Documents. (a) Upon the effectiveness of Section 1 hereof,
on and after the date hereof each reference in the Credit
Agreement to "this Agreement", "hereunder", "hereof " or
words of like import referring to the Credit Agreement, and
each reference in the other Loan Documents to "the Credit
Agreement", "thereunder", "thereof" or words of like import
referring to the Credit Agreement, shall mean and be a
reference to the Credit Agreement as amended hereby.
(b) Except as specifically amended above, the
Credit Agreement and the Notes, and all other Loan Documents,
are and shall continue to be in full force and effect and are
hereby in all respects ratified and confirmed. Without
limiting the generality of the foregoing, the Collateral
Agreements and all of the Collateral described therein do and
shall continue to secure the payment of all obligations of
the Loan Parties under the Credit Agreement, the Notes and the other
Loan Documents, in each case as amended hereby.
(c) The execution, delivery and effectiveness
of this Amendment shall not, except as expressly provided herein,
operate as a waiver of any right, power or remedy of any Lender either
Managing Agent, the Documentation Agent, the Collateral Agent or the
Paying Agent under any of the Loan Documents, nor constitute a waiver of
any provision of any of the Loan Documents.
SECTION 6. Execution in Counterparts. This Amendment may be
executed in any number of counterparts and by different parties hereto
in separate counterparts, each of which when so executed and delivered
shall be deemed to be an original and all of which taken together shall
constitute but one and the same agreement. Delivery of an executed
counterpart of a signature page to this Agreement by telecopier shall be
effective as delivery of a manually executed counterpart of this
Agreement.
SECTION 7. Governing Law. This Amendment shall be governed
by, and construed in accordance with, the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed by their respective officers thereunto duly
authorized, as of the date first above written.
WARNACO INC.
By______________________________________
Title:
THE WARNACO GROUP, INC.
By______________________________________
Title:
THE BANK OF NOVA SCOTIA, as
Managing Agent, Paying Agent,
Swing Line Bank and an
Issuing Bank
By______________________________________
Title:
CITICORP USA, INC., as Managing
Agent, Documentation Agent
and Collateral Agent
By______________________________________
Title:
Lenders
THE BANK OF CALIFORNIA, N.A.
By______________________________________
Title:
THE BANK OF NEW YORK
By______________________________________
Title:
THE BANK OF NOVA SCOTIA
By______________________________________
Title:
CHEMICAL BANK
By______________________________________
Title:
CITICORP USA, INC.
By______________________________________
Title:
CREDIT SUISSE
By______________________________________
Title:
By______________________________________
Title:
THE FUJI BANK, LTD.
By______________________________________
Title:
GENERAL ELECTRIC CAPITAL
CORPORATION
By______________________________________
Title:
IBJ SCHRODER BANK AND TRUST CO.
By______________________________________
Title:
PROSPECT STREET SENIOR GROUP
By______________________________________
Title:
RESTRUCTURED OBLIGATIONS BACKED
BY SENIOR ASSETS B.V.
By______________________________________
Title:
STICHTING RESTRUCTURED
OBLIGATIONS BACKED BY SENIOR
ASSETS 2
By______________________________________
Title:
EXHIBIT 11.1
THE WARNACO GROUP, INC.
Calculation of Income (Loss) per Common Share
(in thousands except share data)
<TABLE>
<CAPTION>
Quarter ended Six months ended
------------------------------ ------------------------------
1994 1993 1994 1993
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Income from continuing operations applic-
able to Common Shareholders................ $ 9,086 $ 5,519 $ 21,047 $ 16,271
Cumulative effect of change in the method
of accounting for postretirement benefits.. -- -- -- (10,500)
Loss on earthquake........................... -- -- (3,000) --
----------- ----------- ----------- -----------
Net income................................... $ 9,086 $ 5,519 $ 18,047 $ 5,771
=========== =========== =========== ===========
Weighted average number of shares actually
outstanding during the year................ 19,217,822 18,037,500 18,804,960 18,037,500
Add common equivalent shares as part of
IPO(a)..................................... 1,671,737 1,848,862 1,552,412 1,846,540
----------- ----------- ----------- -----------
Weighted average number of shares used
in calculation of primary income per
share..................................... 20,835,559 19,886,362 20,357,372 19,884,040
=========== =========== =========== ===========
Income (Loss) per common share:
Income from continuing operations applic-
able to common shareholders................ $ 0.44 $ 0.28 $ 1.03 $ 0.82
Cumulative effect of change in the method
of accounting for postretirement
benefits................................. -- -- -- (0.53)
Loss on earthquake......................... -- -- (0.15) --
----------- ----------- ----------- -----------
Net income per common share.................. $ 0.44 $ 0.28 $ 0.88 $ 0.29
=========== =========== =========== ===========
- ------------------
<FN>
(a) Represents additional shares under the Employee Stock Plan and Company
Option Plan for which portions of the exercisable price are below average
price during the quarter.
</TABLE>
