FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended December 27, 1997
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 33-96680
HERFF JONES, INC.
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(Exact Name of registrant as specified in its charter)
INDIANA 35-1637714
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(State or other Jurisdiction of (I.R.S. Employer Identification Number)
Incorporation or Organization)
4501 West 62nd Street, Indianapolis, Indiana 46268
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(Address of principal executive offices) (Zip Code)
(317) 297-3740
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(Registrant's telephone number, including area code)
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 No X *
----- ------
* Effective January 30, 1998, registrant is no longer subject to such filing
requirements.
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Number of shares outstanding of the issuer's Common Stock as of February 4,
1998:
Class
Common Stock, without par value 9,562,871
<PAGE>
Preliminary Note:
Effective January 30, 1998, the registrant is no longer subject to
reporting requirements under the Securities Exchange Act of 1934, as
amended. Pursuant to the terms governing its outstanding debt
securities, registrant is filing Part I only of this report on form
10-Q.
INDEX
Part I. - Financial Information Page No.
--------
Condensed Consolidated Statement of Operations -
Second Quarter and Six Months Ended December 27, 1997
and December 28, 1996 3
Condensed Consolidated Balance Sheet -
As of December 27, 1997, June 28, 1997 and December 28, 1996 4
Condensed Consolidated Statement of Cash Flows -
Second Quarter and Six Months Ended December 27, 1997
and December 28, 1996 5
Notes to Condensed Consolidated Financial Statements 6 - 7
Management's Discussion and Analysis of
Financial Condition and Results of Operations 8 -11
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<PAGE>
Part I - Financial Information
Item 1. FINANCIAL STATEMENTS
Herff Jones, Inc.
Condensed Consolidated Statement of Operations
(Amounts in thousands of dollars, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Second Quarter Ended Six Months Ended
------------------------------------- ---------------------------------------
December 27, 1997 December 28, 1996 December 27, 1997 December 28, 1996
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Net sales $ 74,574 $ 68,288 $ 124,638 $ 114,944
Cost of sales (excludes ESOP compensation) 35,984 33,951 65,659 64,073
Selling, general, and administrative expenses
(excludes ESOP compensation) 27,586 23,594 49,715 44,035
ESOP compensation 4,502 3,663 9,557 7,721
----------- ----------- ----------- -----------
Income (loss) from operations 6,502 7,080 (293) (885)
Interest income 1 3 52 8
Interest expense 4,621 5,135 9,091 10,112
----------- ----------- ----------- -----------
Income (loss) before income taxes 1,882 1,948 (9,332) (10,989)
Income taxes (686) (692) 3,400 3,901
----------- ----------- ----------- -----------
Net income (loss) $ 1,196 $ 1,256 $ (5,932) $ (7,088)
=========== =========== =========== ===========
Income (loss) per common share $ 0.47 $ 0.63 $ (2.41) $ (3.66)
=========== =========== =========== ===========
Weighted average number of
common shares outstanding 2,560,604 2,007,307 2,464,775 1,935,281
=========== =========== =========== ===========
</TABLE>
See accompanying notes to unaudited condensed consolidated financial statements.
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<PAGE>
Herff Jones, Inc.
Condensed Consolidated Balance Sheet
As of December 27, 1997, June 28, 1997, and December 28, 1996
(Amounts in thousands of dollars)
<TABLE>
<CAPTION>
(Unaudited) (Unaudited)
December 27, 1997 June 28, 1997 December 28, 1996
----------------- ------------- -----------------
Assets:
Current Assets
<S> <C> <C> <C>
Cash and cash equivalents $ 1,117 $ 5,843 $ 2,638
Accounts receivable 45,482 55,709 40,168
Inventories 46,241 37,963 44,585
Prepaid expense 6,875 1,816 7,859
Deferred income taxes 9,106 9,106 5,321
--------- --------- ---------
Total Current Assets 108,821 110,437 100,571
Non-Current Assets
Property, plant, and equipment 100,439 94,378 90,602
Accumulated depreciation (49,217) (45,364) (41,741)
--------- --------- ---------
Net Property, Plant, and Equipment 51,222 49,014 48,861
Deferred financing cost, net and other assets 4,296 4,590 5,122
--------- --------- ---------
Total Non-Current Assets 55,518 53,604 53,983
Total Assets $ 164,339 $ 164,041 $ 154,554
========= ========= =========
Liabilities and Shareholders' Equity:
Current Liabilities
Trade accounts payable $ 5,546 $ 5,856 $ 5,145
Salaries and wages payable 5,089 5,048 5,126
Interest payable 5,096 5,082 5,082
Customer deposits 33,499 19,508 32,355
Commissions payable 6,466 16,864 4,697
Income taxes accrued (3,349) 9,547 (4,236)
Other accrued liabilities 7,031 9,613 8,759
Current portion of long-term debt 24,626 10,377 35,097
--------- --------- ---------
Total Current Liabilities 84,004 81,895 92,025
Non-Current Liabilities
Other 3,129 2,239 2,149
Long-term debt 149,459 154,979 160,278
Deferred income taxes 442 443 (211)
--------- --------- ---------
Total Non-Current Liabilities 153,030 157,661 162,216
Total Liabilities 237,034 239,556 254,241
Shareholders' Equity (Deficit)
Common stock 5,694 5,703 5,728
Retained earnings 121,583 128,122 112,056
Deferred compensation (198,183) (206,440) (214,696)
Foreign currency translation (40) 2 8
Excess of cost over market (shares committed
to be released) (1,749) (2,902) (2,783)
--------- --------- ---------
Total Shareholders' Equity (Deficit) (72,695) (75,515) (99,687)
Total Liabilities and Shareholders' Equity (Deficit) $ 164,339 $ 164,041 $ 154,554
========= ========= =========
</TABLE>
See accompanying notes to unaudited condensed consolidated financial statements.
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<PAGE>
Herff Jones, Inc.
Condensed Consolidated Statement of Cash Flows
(Amounts in thousands of dollars)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
-------------------------------------
December 27, 1997 December 28, 1996
----------------- -----------------
Cash flows from operating activities:
<S> <C> <C>
Net income (loss) $ (5,932) $ (7,088)
Adjustments to reconcile net income (loss) to net cash (used)
provided by operating activities:
Depreciation and amortization 3,915 3,428
Amortization and write off of financing cost 294 481
ESOP compensation (before dividend exclusion) 9,740 8,057
Tax benefit (effect) of ESOP (330) 70
Other (42) (3)
(Gain) loss on disposal of property, plant and equipment, net (1) (4)
Increase (decrease) in cash generated by changes in assets
and liabilities
Accounts receivable 10,227 13,898
Inventories (8,278) (7,644)
Prepaid expenses (5,059) (5,208)
Trade accounts payable (310) (2,396)
Salaries and wages 41 1,058
Interest payable 14 (75)
Customer deposits 13,991 12,499
Commissions payable (10,398) (10,160)
Income taxes payable (12,896) (7,436)
Deferred income taxes (1) (292)
Other accrued liabilities (1,692) (1,088)
-------- --------
Total adjustments (785) 5,185
-------- --------
Net cash (used) provided by operating activities $ (6,717) $ (1,903)
Cash flows from investing activities:
Proceeds from disposal of property, plant and equipment 2 10
Capital expenditures (6,124) (3,254)
-------- --------
Net cash (used) provided by investing activities $ (6,122) $ (3,244)
Cash flows from financing activities:
Redemption of common shares (9) --
Premium on stock redemption (37) --
Dividends declared (570) (381)
Increase in revolver, net 13,807 10,122
Payment of long term debt (5,078) (4,679)
Advance term payment -- (5,957)
-------- --------
Net cash (used) provided by financing activities $ 8,113 $ (895)
Cash and cash equivalents:
Net increase (decrease) (4,726) (6,042)
Beginning of period 5,843 8,680
======== ========
End of period $ 1,117 $ 2,638
======== ========
</TABLE>
See accompanying notes to unaudited condensed consolidated financial statements.
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<PAGE>
Notes to Unaudited Condensed Consolidated Financial Statements
Six Months Ended December 27, 1997
(Amounts in thousands of dollars)
Note 1 - Adjustments
The unaudited condensed consolidated financial statements presented herein
have been prepared by the Company and contain all adjustments (consisting of
only normal recurring adjustments) necessary to present fairly the Company's
financial position as of December 27, 1997, and the results of its
operations and cash flows for the quarter ended December 27, 1997. These
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 Rule 10-01
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. These statements should be read in
conjunction with the consolidated financial statements and notes thereto
included in the Company's Form 10-K for the year ended June 28, 1997.
The Company utilizes a 52/53 week fiscal year for accounting purposes ending
on the last Saturday in June. Fiscal 1997 and fiscal 1998 each contains 52
weeks.
Because of the seasonality of the Company's business, operating results on a
quarterly basis are not indicative of operating results for the full year.
Historically, the second fiscal quarter is the second highest sales quarter,
while the fourth fiscal quarter is the highest, typically including over 40%
of the year's sales.
Note 2 - Allowance for Doubtful Accounts and Returns
December 27, 1997 June 28, 1997 December 28, 1996
----------------- ------------- -----------------
$4,340 $ 5,754 $3,486
Note 3 - Inventories
The components of inventory balances are summarized below:
<TABLE>
<CAPTION>
December 27, 1997 June 28, 1997 December 28, 1996
----------------- ------------- -----------------
<S> <C> <C> <C>
Raw materials and supplies (includes gold) $18,469 $16,736 $19,009
Work-in-process 16,649 13,187 15,970
Finished goods 11,123 8,040 9,606
------ -------- --------
$46,241 $37,963 $44,585
======= ======= =======
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Note 4 - Financing
December 27, 1997 June 28, 1997 December 28, 1996
----------------- ------------- -----------------
Long-Term Debt consists of the following:
<S> <C> <C> <C>
Senior Bank Facility (Revolver) $13,807 $ - $25,161
Senior Bank Facility (Term) 32,678 37,756 42,614
Senior Subordinated Notes 120,000 120,000 120,000
1994 Industrial Development
Revenue Bonds Due in 2019 7,600 7,600 7,600
---------- -------- --------
174,085 165,356 195,375
Less: Current Portion (24,626) (10,377) (35,097)
----------- -------- --------
Long-Term Debt $149,459 $154,979 $160,278
======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
Note 5 - Common Stock
December 27, 1997 June 28, 1997 December 28, 1996
----------------- ------------- -----------------
Common Shares
-------------
<S> <C> <C> <C>
Authorized 16,500,000 16,500,000 16,500,000
Outstanding 9,567,500 9,569,304 9,618,996
</TABLE>
Note 6 - Statement of Shareholders' Equity
<TABLE>
<CAPTION>
Foreign Total
Common Stock Retained Currency Deferred Excess Cost Shareholders'
Shares Amount Earnings Translation Compensation Over Market, Net Equity
------ ------ -------- ----------- ------------ ---------------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance June 28, 1997 9,569,304 $5,703 $128,122 $2 ($206,440) ($2,902) ($75,515)
- ---------------------
Stock Purchases (1,804) (9) (38) - - - (47)
Tax effect of cost over market of
ESOP shares committed to be
released, net - - - - - (330) (330)
Foreign currency translation
adjustment - - - (4) - - (4)
Shares committed to be released - - - - 4,129 906 5,035
Net income for the quarter - - (7,128) - - - (7,128)
--------- ------ -------- ---- --------- ------- --------
Balance September 27, 1997 9,567,500 $5,694 $120,956 ($2) ($202,311) ($2,326) ($77,989)
- --------------------------- ========= ====== ======== ==== ========== ======== =========
Tax effect of cost over market of
ESOP shares committed to be
released, net - - - - - (330) (330)
Dividends declared on allocated
shares ($.28/share) - - (569) - - - (569)
Foreign currency translation
adjustment - - - (38) - - (38)
Shares committed to be released - - - - 4,128 907 5,035
Net income for the quarter - - 1,196 - - - 1,196
--------- ------ -------- ---- --------- ------- --------
Balance December 27, 1997 9,567,500 $5,694 $121,583 ($40) ($198,183) ($1,749) ($72,695)
- -------------------------- ========= ====== ======== ===== ========== ======== =========
</TABLE>
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<PAGE>
During fiscal 1996 and 1997 the cost of ESOP shares committed to be released was
greater than the estimated fair value of such shares. The excess of cost over
market was recorded as a charge to a separate component of shareholders' equity,
net of the related tax effect. Beginning in fiscal 1998, the estimated fair
value of ESOP shares committed to be released exceeds cost. The excess of market
over cost will be credited to equity, net of the related tax effect, to the
extent of the previous net charges recorded. Thereafter, the excess will be
credited to retained earnings.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
Herff Jones is one of the leading manufacturers of recognition awards,
educational products and graduation-related products for the scholastic market
in the United States. Its product lines include class rings, medals and awards,
diplomas and graduation announcements (also referred to as "fine paper"),
yearbooks, caps and gowns, school photography services and multimedia education
products. The Company historically has sold approximately 80% of its products to
the high school and elementary market and approximately 20% of its products to
the college and commercial or non-scholastic market through a network of
approximately 700 primarily independent sales representatives. The Company
believes that the Herff Jones name is widely recognized in schools and
universities nationwide.
RESULTS OF OPERATIONS
The Company utilizes a 52/53 week year for accounting purposes. Fiscal
1997 and fiscal 1998 each contains 52 weeks. The Company's business is highly
seasonal. Historically, sales in the second fiscal quarter are at the second
highest level of the year. However, because of the seasonality of the Company's
business, operating results on a quarterly or six month basis are not
necessarily indicative of operating results for the full year.
For the second quarter ended December 27, 1997 and December 28, 1996.
General. Net sales rose 9.2% to $74.6 million in fiscal 1998 from $68.3
million in fiscal 1997. Operating profit decreased to $6.5 million in fiscal
1998 from $7.1 million in fiscal 1997. Net income decreased to $1.2 million in
fiscal 1998 from $1.3 million in fiscal 1997.
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<PAGE>
Net Sales. Net sales increased $6.3 million or 9.2% to $74.6 million in
fiscal 1998 from $68.3 million in fiscal 1997. Such increases were due to
increases in the Jewelry, Yearbook, Photography, and Education product lines.
Increases were due primarily to modest price increases and some unit growth.
Cost Of Sales. Cost of sales increased $2.0 million or 5.9% to $36.0
million in fiscal 1998 from $34.0 million in fiscal 1997. Cost of sales as a
percentage of sales decreased to 48.3% in fiscal 1998 from 49.7% in fiscal 1997.
The decrease was due primarily to improved operating performance in the Jewelry
and Education product lines.
Selling, General And Administrative Expenses. Selling, general and
administrative expense increased $4.0 million or 16.9% to $27.6 million in
fiscal 1998 from $23.6 million in fiscal 1997. The increase was primarily
attributable to an increase in the Company's commission expense, resulting from
increased net sales in fiscal 1998 and increased expenses for payroll (which
includes expense for the Long-Term Incentive Plan), depreciation, and sales
incentives. Selling, general and administrative expense as a percentage of sales
is 37.0% in fiscal 1998, compared to 34.6% in fiscal 1997.
ESOP Compensation. ESOP compensation increased $.8 million to $4.5
million in fiscal 1998 from $3.7 million in fiscal 1997. The ESOP compensation
expense increase resulted from an increase in the estimated market value of the
shares committed to be released.
Income from Operations. Operating profit decreased $.6 million to $6.5
million in fiscal 1998 from $7.1 million in fiscal 1997. The decrease was
predominantly due to increased expenses for commissions, ESOP compensation,
payroll, depreciation, and sales incentives.
Interest Expense. Interest expense decreased $.5 million to $4.6
million in the second quarter of fiscal 1998 from $5.1 million in the
corresponding quarter of fiscal 1997 due to a reduction of average debt
outstanding.
Income Tax. The second quarter income tax was $.7 million in both
fiscal 1998 and in fiscal 1997.
Net Income. The second quarter net income decreased to $1.2 million
from $1.3 million in fiscal 1997. The decrease was primarily attributable to
increased ESOP compensation and selling, general and administrative expenses, as
discussed above, partially offset by reduced interest cost and improved
operating performance in the Jewelry and Education product lines.
For the six months ended December 27, 1997 and December 28, 1996.
General. Net sales rose 8.4% to $124.6 million in fiscal 1998 from
$114.9 million in fiscal 1997. Operating losses were $.3 million in fiscal 1998
compared to $.9 million in fiscal 1997. Net losses were $5.9 million in fiscal
1998 compared to a net loss of $7.1 million in fiscal 1997.
Net Sales. Net sales increased $9.7 million or 8.4% to $124.6 million
in fiscal 1998 from $114.9 million in fiscal 1997 due to sales increases in all
product lines, with the most significant increases in the Jewelry, Fine Paper,
Photography and Education product lines. Increases were due primarily to modest
price increases and some unit growth.
-9-
<PAGE>
Cost Of Sales. Cost of sales increased $1.6 million or 2.5% to $65.7
million in fiscal 1998 from $64.1 million in fiscal 1997, primarily as a
function of increased sales. Cost of sales as a percentage of sales decreased to
52.7% in fiscal 1998 from 55.8% in fiscal 1997, primarily because of improved
operating performance in the Jewelry and Education product lines.
Selling, General And Administrative Expenses. Selling, general and
administrative expense increased $5.7 million or 13.0% to $49.7 million in
fiscal 1998 from $44.0 million in fiscal 1997. The increase was primarily
attributable to increases in the Company's commission expense resulting from
increased net sales in fiscal 1998, coupled with increases in selling, general
and administrative expense resulting from compensation expense under the
Long-Term Incentive Plan. Selling, general and administrative
expense as a percentage of sales increased to 39.9% in fiscal 1998, from 38.3%
in fiscal 1997, primarily due to the cost of commission expense and the
Long-Term Incentive Plan.
ESOP Compensation. ESOP compensation increased $1.9 million to $9.6
million in fiscal 1998 from $7.7 million in fiscal 1997. The increase in the
current year expense over the comparable prior year amount results from an
increase in the estimated market value of the shares committed to be released.
Loss from Operations. Operating losses were $.3 million in fiscal 1998
compared to $.9 million in fiscal 1997. The improvement was predominantly due to
increased profitability in the Jewelry and Education product lines, partially
offset by increased ESOP compensation expense and selling, general and
administrative expenses, as described above.
Net Interest. Net interest expense decreased $1.1 million to $9.0
million in the first six months of fiscal 1998 from $10.1 million in the
corresponding six months of fiscal 1997, due to a reduction in the average debt
outstanding.
Income Tax Benefit. The income tax benefit decreased to $3.4 million in
fiscal 1998 compared to $3.9 million in fiscal 1997 due to a decrease in the
loss for the six month period.
Net Income (Loss). Net losses decreased $1.2 million to a loss of $5.9
million in fiscal 1998 from a loss of $7.1 in fiscal 1997. The decreased loss
was primarily attributable to increased profitability in the Jewelry and
Education product lines, coupled with a decrease in interest expense, offset
somewhat by increased ESOP compensation expense and higher selling, general and
administrative expenses.
FINANCIAL CONDITION AND LIQUIDITY
The Company's business is highly seasonal. Historically the first six
months requires the use of working capital due to losses from operations, caused
by relatively low shipping of product; the absorption of fixed costs that are
incurred evenly throughout the year; the build up of inventories for the
pre-Christmas photography and class ring activity; the payment of the Company's
income taxes from the previous fiscal year; and the settlement of commission
accounts with the Company's independent sales representatives. This is partially
offset by the reduction of accounts receivable resulting from payment for
products shipped prior to graduations in the fourth quarter of the previous
fiscal year and the receipt of customer deposits for products that ship in the
spring.
The cash flow pattern and expectations of the Company's highly seasonal
business result in the classification, at December 27, 1997, of $13.8 million of
the senior bank facility (revolver) as a current liability, although payment
within the next year is not necessarily required by the terms of the Company's
financing arrangements.
Capital expenditures were $6.1 million and $3.3 million in the first
six months of fiscal 1998 and 1997, respectively. The increase over the prior
year is attributable to increased expenditures for equipment in the Scholastic
and Yearbook product lines, mostly related to information technology purchases.
Income taxes accrued are a negative $3.3 million at December 27, 1997
compared to $9.5 million at June 28, 1997 and a negative $4.2 million at
December 28, 1996. The decrease from June is the result of the payment of taxes
for the prior fiscal year, coupled with the provision for the tax benefit
associated with the seasonal losses this year. The decreased tax benefit at the
end of the second quarter compared to the prior year second quarter end is the
result of the lower pre-tax loss in this fiscal year compared to the prior
fiscal year.
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<PAGE>
For the six months ended December 27, 1997, cash and cash equivalents
declined $4.7 million to $1.1 million as compared to a decrease of $6.0 million
to $2.6 million for the six months ended December 28, 1996.
Cash used in operating activities was $6.7 million in the six months
ended December 27, 1997, compared to $1.9 million in the six months ended
December 28, 1996, as described below.
Net losses were $5.9 million in the six months of fiscal 1998 compared
to $7.1 million in fiscal 1997. This was primarily attributable to increases in
the Jewelry, Photography and Education product lines, coupled with a decrease in
interest expense, partially offset by an increase in ESOP compensation expense
and higher selling, general and administrative expenses.
Accounts Receivable decreased $10.2 million in the first six months of
fiscal 1998 compared to a decline of $13.9 million in fiscal 1997. The reduction
in the decline was primarily the result of increased sales in the first six
months of fiscal 1998 compared with fiscal 1997.
Customer deposits increased $14.0 million in the first six months of
fiscal 1998 compared to an increase of $12.5 million in fiscal 1997. The larger
increase was attributable to increases in deposits for spring sales in the
Yearbook and Photography product lines.
Income taxes accrued decreased $12.9 million in the first six months of
fiscal 1998 compared to a decrease of $7.4 million in fiscal 1997. The increase
in the decline was primarily attributable to a decrease in the pre-tax loss the
first six months of fiscal 1998 compared to fiscal 1997 and a higher payment of
taxes related to the prior fiscal year.
Net cash used by investing activities was $6.1 million for the six
months ended December 27, 1997 compared to $3.2 million in the six months ended
December 28, 1996. The increase over prior year is attributable to higher 1998
capital expenditures in the Scholastic and Yearbook product lines.
Net cash provided by financing activities was $8.1 million in the six
months ended December 27, 1997 compared to $.9 million used in the six months
ended December 28, 1996. The Company's financing arrangements in fiscal 1997
required an additional, "advanced" payment on the term loan of $5, 957 in the
first half of fiscal 1997. Subsequently a 1997 amendment to those financing
arrangements eliminated the requirement for advanced payments; therefore, there
was not a corresponding advanced payment made during the six months ended
December 27, 1997, which was the primary reason for the increase in cash
provided by financing activities.
Deferred Compensation at December 27, 1997 decreased to $198.2 million
from $206.4 million at June 28, 1997 and $214.7 million at December 28, 1996.
The decrease is the result of recording ESOP shares committed to be released.
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<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act as of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HERFF JONES, INC.
(Registrant)
By: /s/ Lawrence F. Fehr
--------------------------
Lawrence F. Fehr
Vice President and
Chief Financial Officer
February 9, 1998
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