Form 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1998
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 No. 1-4748
Sun International North America, Inc.
(Exact name of registrant as specified in its charter)
Delaware 59-0763055
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1415 E. Sunrise Blvd., Ft. Lauderdale, FL 33304
(Address of principal executive offices) (Zip Code)
(954) 713-2500
(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 X No
Indicate by check mark whether the registrant has filed all
documents and reports required to be filed by Sections 12, 13 or
15(d) of the Securities Exchange Act of 1934 subsequent to the
distribution of securities under a plan confirmed by a court.
Yes X No
- continued -
Total number of pages 15
<PAGE>
Number of shares outstanding of registrant's common stock as of
September 30, 1998: 100, all of which are owned by one
shareholder. Accordingly there is no current market for any of
such shares.
The registrant meets the conditions set forth in General
Instruction H(1)(a) and (b) of Form 10-Q and is therefore filing
this Form 10-Q with the reduced disclosure format permitted by that
General Instruction.
<PAGE>
SUN INTERNATIONAL NORTH AMERICA, INC.
FORM 10-Q
INDEX
Page Number
Part I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets
at September 30, 1998 and
December 31, 1997 4
Consolidated Statements of
Operations for the Quarter
and Three Quarters Ended
September 30, 1998 and 1997 5
Consolidated Statements of
Cash Flows for the Three
Quarters Ended September 30,
1998 and 1997 6
Notes to Consolidated
Financial Statements 7
Item 2. Management's Discussion and
Analysis of Financial
Condition and Results of
Operations 9
Part II. Other Information
Item 6. Exhibits and Reports on
Form 8-K 13
<PAGE>
PART I. - FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
SUN INTERNATIONAL NORTH AMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousands of Dollars, except par value)
<CAPTION>
September 30, December 31,
1998 1997
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 23,015 $ 46,912
Restricted cash equivalents 96 3,902
Receivables, less allowance for
doubtful accounts of $2,584
and $3,074 7,774 8,691
Inventories 1,651 1,730
Prepaid expenses 2,556 1,961
Due from affiliates 14,836 4,528
49,928 67,724
Land held for investment,
development or resale 54,061 155,368
Property and equipment, net of
accumulated depreciation of $20,638
and $11,630 256,512 249,166
Deferred charges and other assets, net 22,587 21,536
Goodwill, net 97,967 101,410
$481,055 $595,204
LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities:
Current maturities of long-term debt $ 2,707 $ 282
Accounts payable and accrued
liabilities 34,743 46,677
37,450 46,959
Long-term debt, net of current
maturities 206,240 311,258
Deferred income taxes 43,111 46,000
Shareholder's equity:
Common stock - $.01 par value - -
Capital in excess of par 193,008 193,008
Retained earnings (accumulated
deficit) 1,246 (2,021)
194,254 190,987
$481,055 $595,204
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
SUN INTERNATIONAL NORTH AMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands of Dollars)
(Unaudited)
<CAPTION>
Quarter Ended Three Quarters Ended
September 30, September 30,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Revenues:
Casino $63,324 $66,607 $182,322 $190,971
Rooms 5,307 5,458 12,313 12,676
Food and beverage 7,514 7,640 20,454 20,817
Other casino/hotel 3,657 3,786 8,972 8,305
79,802 83,491 224,061 232,769
Less promotional
allowances (8,662) (9,088) (22,102) (21,633)
Net casino and resort
revenues 71,140 74,403 201,959 211,136
Tour operations 3,274 3,688 10,290 12,113
Management fees 1,950 - 3,820 -
Real estate related - 2,261 754 6,724
Other income - 2,609 - 2,609
76,364 82,961 216,823 232,582
Expenses:
Casino 37,312 40,536 112,291 117,681
Rooms 850 600 2,558 2,273
Food and beverage 4,712 4,315 12,511 12,106
Other operating 7,879 7,835 23,254 24,626
Tour operations 3,018 3,465 9,473 11,177
Selling, general and
administrative 9,571 7,429 29,020 26,257
Depreciation and
amortization 4,095 3,674 11,426 10,332
67,437 67,854 200,533 204,452
Operating income 8,927 15,107 16,290 28,130
Other income (expense):
Interest income 491 1,024 3,143 2,659
Interest expense (4,888) (7,138) (16,166) (20,593)
Other - - - 314
Earnings before income taxes
and extraordinary item 4,530 8,993 3,267 10,510
Income tax expense - (4,345) - (5,400)
Earnings before
extraordinary item 4,530 4,648 3,267 5,110
Extraordinary item-loss on
extinguishment of debt (net of
income tax benefit of $2,043) - - - (2,957)
Net earnings $ 4,530 $ 4,648 $ 3,267 $ 2,153
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
SUN INTERNATIONAL NORTH AMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands of Dollars)
(Unaudited)
<CAPTION>
Three Quarters Ended
September 30,
1998 1997
<S> <C> <C>
Cash flows from operating activities:
Reconciliation of net earnings to net
cash provided by operating activities:
Net earnings $ 3,267 $ 2,153
Extraordinary loss on extinguishment of
debt, net of income tax benefit - 2,957
Depreciation and amortization 11,864 10,618
Utilization of tax benefits acquired in
merger - 5,152
Provision for doubtful receivables 535 730
Provision for discount on CRDA obligations,
net of amortization 444 901
Gain on asset disposition - (314)
Net change in working capital accounts (12,914) (8,786)
Net cash provided by operating activities 3,196 13,411
Cash flows from investing activities:
Payments for capital expenditures (19,938) (25,364)
Proceeds from the sale of land 110,000 7,435
Payments for expense of merger (745) (7,465)
CRDA deposits and bond purchases (2,164) (2,286)
Advances to affiliates (10,350) (2,418)
Net cash provided by (used in) investing
activities 76,803 (30,098)
Cash flows from financing activities:
Proceeds from issuance of debt - 199,084
Payments to secure borrowings - (6,460)
Repayment of debt (107,702) (154,190)
Subsidiary cash and equivalents at date of
contribution - 1,159
Net cash provided by (used in)
financing activities (107,702) 39,593
Net increase (decrease) in cash and cash
equivalents (27,703) 22,906
Cash and cash equivalents at beginning of
period 50,814 33,805
Cash and cash equivalents at end of period $ 23,111 $ 56,711
See notes to consolidated financial statements.
</TABLE>
<PAGE>
SUN INTERNATIONAL NORTH AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. General:
The accompanying consolidated interim financial statements, which are
unaudited, include the operations of Sun International North America, Inc.
("SINA") and its subsidiaries. The term "Company" as used herein includes
SINA and its subsidiaries SINA was known as Griffin Gaming & Entertainment,
Inc. ("GGE") until February 6, 1997. "SINA" is used herein to refer to the
corporation both before and after its name change. SINA is a wholly owned
subsidiary of Sun International Hotels Limited ("SIHL").
While the accompanying interim financial information is unaudited,
management of the Company believes that all adjustments necessary for a fair
presentation of these interim results have been made and all such adjustments
are of a normal recurring nature. The seasonality of the business is
described in Management's Discussion and Analysis of Financial Condition and
Results of Operations in the SINA 1997 Form 10-K. The results of operations
for the three-month and nine-month periods presented are not necessarily
indicative of the results to be expected for the entire fiscal year ending
December 31, 1998.
The notes presented herein are intended to provide supplemental
disclosure of items of significance occurring subsequent to December 31, 1997
and should be read in conjunction with the Notes to Consolidated Financial
Statements contained in pages 40 through 54 of the SINA 1997 Form 10-K.
B. Reverse Repurchase Agreements:
Cash equivalents at September 30, 1998 included $8.0 million of reverse
repurchase agreements (federal government securities purchased under
agreements to resell those securities) under which the Company had not taken
delivery of the underlying securities. These agreements matured during the
first week of October 1998.
C. Management Fees:
Effective January 1, 1998, the Company entered into an agreement to
provide management services to certain affiliated companies. Management fees
are earned based upon the level of services provided to such affiliates.
D. Sale of Showboat Land and Redemption of Showboat Notes:
Prior to January 1998, the Company leased (the "Showboat Lease") 10
acres of land (the "Showboat Land") to a subsidiary of Showboat, Inc., a
resort and casino operator. Lease payments received pursuant to the Showboat
Lease were passed through to the holders of the Company's $105.3 million
First Mortgage Non-Recourse Pass-Through Notes due June 30, 2000 (the
"Showboat Notes"). On January 29, 1998, the Company sold the Showboat Land
for proceeds of $110.0 million. The majority of the proceeds were used to
redeem the Showboat Notes effective February 28, 1998.
<PAGE>
E. Statements of Cash Flows:
Supplemental disclosures required by Statement of Financial Accounting
Standards No. 95 "Statement of Cash Flows" are presented below.
Three Quarters Ended
September 30,
(In Thousands of Dollars) 1998 1997
Interest paid $24,228 $26,061
Income taxes paid (refunded), net 1,753 (129)
Noncash investing and financing
activities:
Increase due to contributed subsidiary:
Assets - 14,018
Liabilities - 14,010
Shareholder's equity - 8
Increase in liabilities
for additions to other assets 118 103
_____________________________________________________________________
F. Commitments and Contingencies:
Casino Reinvestment Development Authority ("CRDA")
The New Jersey Casino Control Act, as amended, requires SINA to purchase
bonds issued by the CRDA, or to make other investments authorized by the
CRDA, in an amount equal to 1.25% of its gross gaming revenues, as defined.
The CRDA bonds have interest rates ranging from 3.9% to 7.0% and have
repayment terms of between 20 and 50 years.
At September 30, 1998, SINA had $10.5 million face value of bonds issued
by the CRDA and had $15.5 million on deposit with the CRDA.
These bonds and deposits, net of an estimated discount to reflect the
below-market interest rates payable on the bonds, are included in deferred
charges and other assets in the accompanying Consolidated Balance Sheets.
Litigation
SINA and certain of its subsidiaries are defendants in certain
litigation. Except for items disclosed in the 1997 SINA 10-K, in the opinion
of management, based upon advice of counsel, the aggregate liability, if any,
arising from such litigation will not have a material adverse effect on the
accompanying consolidated financial statements.
A complaint was filed in December 1997, on behalf of a plaintiff and a
purported class of GGE shareholders against SIHL, GGE and various affiliates,
directors and officers of SIHL and GGE. The complaint alleges that the Proxy
Statement and Prospectus issued by SIHL and GGE in November 1996, in
connection with their merger, was false and misleading with regard to
<PAGE>
statements made about a License and Services Agreement entered into between
GGE and The Griffin Group. The Company believes that the case is without
merit and intends to vigorously defend its actions.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
FINANCIAL CONDITION
Liquidity
At September 30, 1998 the Company's working capital amounted to $12.5
million which included unrestricted cash and equivalents of $23.0 million.
Unrestricted cash is required for day-to-day operations of the Resorts Casino
Hotel, including approximately $15.0 million of currency and coin on hand
which amount varies by days of the week, holidays and seasons.
At September 30, 1998 the Company had advanced a net $14.8 million to
affiliated companies. Such amounts are payable on demand by the Company.
In January 1998, the Company sold the land under the Showboat Casino
Hotel in Atlantic City for proceeds of $110.0 million. The majority of the
proceeds were used to redeem the $105.3 million Showboat Notes, effective
February 28, 1998.
Capital Expenditures and Resources
As previously announced, the Company is planning to renovate the
existing 500-room hotel tower as well as completing modest enhancements to
the public areas. Although the Company is evaluating the possibility of
developing a larger project on its undeveloped real estate in Atlantic City,
the planning of any future expansion is still in the preliminary stages and
the scope and timing of such development is uncertain.
Management believes that existing cash balances, available borrowing
facilities and operating cash flows will provide the Company with sufficient
resources to meet its existing debt obligations and foreseeable capital
expenditure requirements with respect to current operations for at least the
next twelve months. In addition, the Company may request reimbursement of
amounts advanced to affiliated companies.
RESULTS OF OPERATIONS - Quarter and Three Quarters Ended September 1998
Compared to 1997
Revenues
Casino and Resort Revenues
Third Quarter
Gaming revenues were $63.3 million and $66.6 million for the quarters
ended September 30, 1998 and 1997, respectively. This decrease of $3.3
million or 5.0% from the comparable period in 1997 consisted of decreases in
slot revenues, table games revenues and simulcast revenues.
Slot revenues were $46.1 million for the quarter ended September 30,
1998, a decrease of $500,000 or 1.1% from 1997. This decrease was due to a
decrease in slot handle (dollar amounts wagered) of $45.9 million or 8.6% to
<PAGE>
$487.6 million for the quarter ended September 30, 1998, as compared to 1997.
Management is continuing the process of upgrading its slot product. During
the month of July 1998, Resorts entered into an agreement to lease 41 new
slot machines, replacing older, less popular ones, which can be replaced at
no cost with new product if customer demand should change. The primary focus
of the new slot product was in Resorts' $0.25 denomination machines.
Resorts' slot handle for $0.25 denomination machines was $251.8 million for
the quarter ended September 30, 1998 compared to $239.9 million in 1997.
Table games revenues were $16.6 million for the quarter ended September
30, 1998, a decrease of $2.0 million or 10.8% from 1997. This decrease was
due to a reduction in table games drop (the dollar amount of chips purchased)
of $22.7 million or 17.6% to $106.4 million for the quarter ended September
30, 1998 from 1997.
Simulcast revenues were $588,000 for the quarter ended September 30,
1998, a decrease of $86,000 or 12.8% from 1997.
There were no poker or keno revenues for the quarter ended September 30,
1998. In March 1998, management elected to eliminate both poker and keno as
a result of less-than-desired operating results and customer demand. Poker
and Keno revenues in the third quarter of 1997 totaled $730,000.
Other revenues were $16.5 million for the quarter ended September 30,
1998, a decrease of $400,000 or 2.4% from 1997. Other revenues include
revenues from rooms, food and beverage, and miscellaneous items. The
decrease is primarily attributable to a $100,000 or 1.6% decrease in food and
beverage revenues to $7.5 million for the quarter ended September 30, 1998
from the comparable period in 1997. The decrease is primarily due to a
decrease in complimentary items given to patrons. Also contributing to the
decrease is a decrease in rooms revenue due to a $2.34 or 2.5% decrease in
the average room rate from 1997.
Three Quarters
Gaming revenues were $182.3 million for the three quarters ended
September 30, 1998, a decrease of $8.6 million or 4.5% from gaming revenues
of $191.0 million in 1997. This decrease in gaming revenues consisted of a
reduction in table games revenues partially offset by an increase in slot
revenues.
Slot revenues were $133.3 million for the three quarters ended September
30, 1998, an increase of $900,000 or 0.7% from 1997. This increase was due
to an increase in slot hold percentage (ratio of casino win to total amount
of chips purchased) by 0.5 percentage points to 9.3%. Management is
continuing the process of upgrading its slot product. Throughout the year,
Resorts reconfigured the gaming floor to improve efficiency and add
additional slot machines. In June 1998, 60 slot machines were added and 4
table games were removed. In July 1998, Resorts entered into an agreement to
lease 41 new slot machines. As a result of these changes, Resorts has added
approximately 238 new slot machines, replacing older, less popular ones,
which can be replaced at no cost with new product if customer demand should
change. The primary focus of the new slot product was in Resorts' $0.25
denomination machines. Resorts' slot handle for $0.25 denomination machines
was $731.6 million for the three quarters ended September 30, 1998 compared
to $635.0 million in 1997.
<PAGE>
Table games revenues were $47.3 million for the three quarters ended
September 30, 1998, a decrease of $6.9 million or 12.7% from 1997. This
decrease was due to a combination of a reduction in table games drop by $35.9
million or 10.2% to $316.9 million for the three quarters ended September 30,
1998, and a reduction in hold percentage (ratio of casino win to total amount
of chips purchased) of 0.5 percentage points to 14.9% for the three quarters
ended September 30, 1998.
Simulcast revenues were $1.6 million for the three quarters ended
September 30, 1998, a decrease of $400,000 or 20.0% from 1997.
Poker and Keno revenues were $134,000 for the three quarters ended
September 30, 1998, a decrease of $2,166,000 from $2.3 million for the
comparable period in 1997. In March 1998, management elected to eliminate
both poker and keno as a result of less-than-desired operating results and
customer demand.
Other revenues were $41.7 million for the nine months ended September
30, 1998, a decrease of $100,000 or 0.2% from other revenues of $41.8 million
in 1997. Other revenues include revenues from rooms, food and beverage, and
miscellaneous items.
Tour Operations
Through a wholly owned subsidiary, the Company operates as a tour
operator and wholesaler of tour packages and provides reservations services,
which includes services to affiliated properties in The Bahamas. Revenues
were lower in the third quarter of 1998 as Hurricane Georges negatively
impacted call volumes. The first three quarters of 1998 were also adversely
impacted by mild weather in the US northeast during the first quarter of the
year which resulted in lower customer volumes and reduced revenues.
Management Fees
Effective January 1, 1998, the Company entered into an agreement to
provide management services to certain affiliated companies. Management fees
are earned based upon the level of services provided to such affiliates.
Real Estate Related
Real estate related revenues consisted of lease receipts related to the
land under the Showboat Casino Hotel. As the Company sold this land
effective January 28, 1998, only one month's rent was included in the first
three quarters of 1998.
Other Income
These revenues in 1997 represent priority payments from an affiliated
partnership to repay capital contributions.
Expenses
Casino and Resort Expenses
Gaming costs and expenses were $37.3 million and $40.5 million for the
quarter ended September 30, 1998 and 1997, respectively, a decrease of $3.2
million or 8.0%.
<PAGE>
Gaming costs and expenses were $112.3 million and $117.7 million for the
three quarters ended September 30, 1998 and 1997, respectively, a decrease of
$5.5 million or 4.6%.
The decrease in both these periods represents costs and expenses
associated with table games, slot operations and promotional items and was
primarily due to management's continuing cost reductions associated with
discontinued marketing segments that did not provide incremental profit.
Tour Operations
The reduced tour operation expenses reflect the reduced volume of
business during the periods presented.
Selling General and Administrative
Selling, general and administrative costs were higher in the third
quarter and first three quarters of 1998 as compared to 1997 by $2.1 million
and $2.8 million, respectively. The unfavorable variance in both periods was
mainly due to the opening in January 1998 of a marketing and public relations
office in New York. In the three quarters ended September 30, 1998 these
increased costs were partially offset by cost savings at the operating
property.
Interest Expense
Interest expense is lower in the periods presented due primarily to the
repayment of the Showboat Notes.
Year 2000 Issues
The Company is currently working to resolve the potential impact of the
year 2000 on its information processing systems. The year 2000 issue relates
to the ability of the systems to properly distinguish between the years 1900
and 2000. Based on preliminary information, the cost of addressing potential
problems is not anticipated to have a material adverse impact on the
Company's financial position, results of operations or cash flows in future
periods. The Company plans to devote the necessary resources to resolve all
significant year 2000 issues in a timely manner and has hired an outside
consultant to assist in this matter.
Forward Looking Statements
The statements contained herein include forward looking statements based
on management's current expectations of SINA's future performance.
Predictions relating to future performance are inherently uncertain and
subject to a number of risks. Consequently, SINA's actual results could
differ materially from the expectations expressed in the preceding
paragraphs. Factors that could cause SINA's actual results to differ
materially from the expected results include, among other things: the
intensely competitive nature of the casino gaming industry; increases in the
number of competitors in the market in which SINA operates; the seasonality
of the industry in the market in which SINA operates; the susceptibility of
SINA's operating results to adverse weather conditions and natural disasters;
changes in governmental regulations governing SINA's activities and other
risks detailed in SINA's filings with the Securities and Exchange Commission.
<PAGE>
PART II. - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
The following Part I exhibits are filed herewith:
Exhibit
Number Exhibit
(27) Financial data schedule as of September 30, 1998.
b. Reports on Form 8-K
No Current Report on Form 8-K was filed by SINA covering an event during
the third quarter of 1998. No amendments to previously filed Forms 8-K were
filed during the third quarter of 1998.
<PAGE>
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.
SUN INTERNATIONAL NORTH AMERICA, INC.
(Registrant)
/s/ John Allison
John Allison
Executive Vice President - Finance
(Authorized Officer of Registrant
and Chief Financial Officer)
Date: November 13, 1998
<PAGE>
SUN INTERNATIONAL NORTH AMERICA, INC.
Form 10-Q for the quarterly period
ended September 30, 1998
EXHIBIT INDEX
Exhibit
Number Exhibit Page Number in Form 10-Q
(27) Financial data schedule Page 16
as of September 30, 1998.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM SUN
INTERNATIONAL NORTH AMERICA, INC.'S CONSOLIDATED FINANCIAL STATEMENTS AND NOTES
THERETO INCLUDED IN THE FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1998,
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> $23,111<F1>
<SECURITIES> 0
<RECEIVABLES> $6,413
<ALLOWANCES> $2,584
<INVENTORY> $1,651
<CURRENT-ASSETS> $49,928
<PP&E> $277,150
<DEPRECIATION> $20,638
<TOTAL-ASSETS> $481,055
<CURRENT-LIABILITIES> $37,450
<BONDS> $206,240<F2>
<COMMON> 0
0
0
<OTHER-SE> $194,254
<TOTAL-LIABILITY-AND-EQUITY> $481,055
<SALES> 0
<TOTAL-REVENUES> $216,823
<CGS> 0
<TOTAL-COSTS> $160,087
<OTHER-EXPENSES> $11,426<F3>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> $16,166
<INCOME-PRETAX> $3,267
<INCOME-TAX> 0
<INCOME-CONTINUING> $3,267
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> $3,267
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>INCLUDES NON-RESTRICTED CASH EQUIVALENTS OF $12,035 AND RESTRICTED CASH
EQUIVALENTS OF $96.
<F2>NET OF UNAMORTIZED DISCOUNTS.
<F4>DEPRECIATION AND AMORTIZATION EXPENSE.
</FN>
</TABLE>
