<PAGE> 1
United States
Securities and Exchange Commission
Washington, DC 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the Quarterly Period Ended June 29, 1997
Commission file number 0-19924
RARE Hospitality International, Inc.
(Exact name of registrant as specified in its charter)
Georgia 58-1498312
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I. R. S. Employer
incorporation or organization) Identification No.)
8215 Roswell RD; Bldg 200; Atlanta, GA 30350
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(770) 399-9595
--------------
(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.
XX Yes No
---- ----
Indicate the number of shares outstanding of each of the issuer's
classes of common stock as of the latest practicable date.
Class Outstanding as of August 11, 1997
------ ---------------------------------
Common Stock, no par value 11,667,825 shares
<PAGE> 2
RARE Hospitality International, Inc.
Index
<TABLE>
<CAPTION>
Part I - Financial Information
Item 1. Consolidated Financial Statements Page
----
<S> <C>
Consolidated Balance Sheets . . . . . . . . . . . . . . 3
Consolidated Statements of Earnings . . . . . . . . . . 4
Consolidated Statement of Shareholders' Equity . . . . 5
Consolidated Statements of Cash Flows . . . . . . . . . 6
Notes to the Consolidated Financial Statements . . . . 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations . . . . . . . 8
Part II - Other Information
Item 4. Submission of Matters to a Vote of Security Holders . . . . 12
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . 12
Signature . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
</TABLE>
2
<PAGE> 3
Part I. Financial Information
Item 1. Financial Statements
RARE Hospitality International, Inc.
Consolidated Balance Sheets
(In thousands)
<TABLE>
<CAPTION>
(unaudited)
December 29, June 29,
Assets 1996 1997
------ ---- ----
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 6,478 $ 2,039
Marketable debt securities 861 609
Accounts receivable 2,522 4,805
Inventories 7,883 8,940
Prepaid expenses 1,465 1,503
Pre-opening costs, net 2,665 2,241
-------- --------
Total current assets 21,874 20,137
Property & equipment, net 120,431 132,463
Goodwill and other intangibles, net 6,139 8,589
Deferred income taxes 816 3,316
Other 2,334 2,432
-------- --------
Total assets $151,594 $166,937
======== ========
Liabilities and Shareholders' Equity
- ------------------------------------
Current liabilities:
Accounts payable $ 11,385 $ 4,713
Accrued expenses 8,152 5,257
-------- --------
Total current liabilities 19,537 9,970
Long-term debt 7,100 27,000
Deferred income taxes 272 58
-------- --------
Total liabilities 26,909 37,028
Minority Interest 3,301 3,618
Shareholders' equity:
Preferred stock -- --
Common stock 100,180 100,314
Additional paid-in capital 919 919
Retained earnings 20,231 25,058
Unrealized gain on marketable
debt securities 54 --
-------- --------
Total shareholders' equity 121,384 126,291
-------- --------
Total liabilities and
shareholders' equity $151,594 $166,937
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE> 4
RARE Hospitality International, Inc.
Consolidated Statements of Earnings
(In thousands, except per share data)
(unaudited)
<TABLE>
<CAPTION>
Quarters Ended Six Months Ended
June 30, June 29, June 30, June 29,
Revenues: 1996 1997 1996 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Restaurant sales:
LongHorn Steakhouse $ 33,380 $ 41,496 $ 64,086 $ 82,673
Bugaboo Creek Steak House 10,106 10,477 22,102 21,703
The Capital Grille 3,867 9,591 8,635 17,796
Specialty concepts 3,042 2,705 6,330 5,420
-------- -------- -------- --------
Total restaurant sales 50,395 64,269 101,153 127,592
Wholesale meat sales 914 -- 2,547 --
Franchise revenues 69 -- 159 27
-------- -------- -------- --------
Total revenues 51,378 64,269 103,859 127,619
-------- -------- -------- --------
Cost of sales:
Cost of restaurant sales 18,760 24,086 37,007 46,835
Cost of wholesale meat sales 904 -- 2,491 --
Operating expenses - restaurants 22,087 28,935 44,649 57,088
Depreciation and amortization - restaurants 2,684 3,638 5,565 7,162
Operating expenses - meat division 69 -- 234 --
General and administrative expenses 3,434 4,421 7,127 8,759
-------- -------- -------- --------
Total costs and expenses 47,938 61,080 97,073 119,844
-------- -------- -------- --------
Operating income 3,440 3,189 6,786 7,775
Interest (income) expense, net (164) 149 49 299
Minority interest 198 250 266 589
-------- -------- -------- --------
Earnings before income taxes 3,406 2,790 6,471 6,887
Income taxes 1,025 837 2,046 2,060
-------- -------- -------- --------
Net earnings $ 2,381 $ 1,953 $ 4,425 $ 4,827
======== ======== ======== ========
Earnings per common and common
equivalent share $ 0.20 $ 0.17 $ 0.40 $ 0.41
======== ======== ======== ========
Weighted average common and common
equivalent shares outstanding 11,700 11,720 11,100 11,726
======== ======== ======== ========
See accompanying notes to consolidated
financial statements.
</TABLE>
4
<PAGE> 5
RARE Hospitality International, Inc.
Consolidated Statement of Shareholders' Equity
(unaudited, in thousands)
<TABLE>
<CAPTION>
Unrealized
gain/loss on
Common Stock marketable Total
Preferred -------------------- Paid-In Retained debt shareholders'
Stock Shares Amount capital earnings securities equity
----- ------ ------ ------- -------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, December 30, 1996 -- 11,653 $100,180 $919 $20,231 $ 54 $ 121,384
Net earnings -- -- -- -- 2,874 -- 2,874
Exercise of stock options -- 8 72 -- -- -- 72
Unrealized loss on
marketable debt securities -- -- -- -- -- (54) (54)
------- ------ -------- ---- ------- ---- ---------
Balance, March 30, 1997 -- 11,661 100,252 919 23,105 -- 124,276
Net earnings -- -- -- -- 1,953 -- 1,953
Exercise of stock options -- 7 62 -- -- -- 62
------- ------ -------- ---- ------- ---- ---------
Balance, June 29, 1997 -- 11,668 $100,314 $919 $25,058 -- $ 126,291
======= ====== ======== ==== ======= ==== =========
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE> 6
RARE Hospitality International, Inc.
Consolidated Statements of Cash Flows
(unaudited, in thousands)
<TABLE>
<CAPTION>
Six Months Ended
----------------
June 30, June 29,
1996 1997
---- ----
<S> <C> <C>
Operating activities:
Net Earnings $ 4,425 $ 4,827
Adjustments to reconcile Net Earnings to net cash
provided by operating activities:
Depreciation and amortization 5,653 7,251
Changes in working capital accounts (5,226) (13,130)
Minority Interest 186 589
Preopening costs (1,487) (1,798)
Deferred tax (benefit) expense (254) (2,681)
-------- --------
Net cash provided by (used in) operating
activities 3,297 (4,942)
Cash flows from investing activities:
Proceeds from maturity of marketable debt securities -- 252
Purchase of property and equipment (17,080) (16,249)
Net proceeds from marketable securities 10 --
Asset acquisitions -- (3,262)
-------- --------
Net cash used in investing activities (17,070) (19,259)
Cash flows from financing activities:
Proceeds from stock offering, net of expenses 37,638 --
Proceeds from (repayments of)lines of credit 758 19,900
Principal payments on long-term debt (1,025) --
Proceeds from minority partners' contributions 225 1,203
Distributions to minority partners (411) (1,475)
Proceeds from exercise of stock options 589 134
-------- --------
Net cash provided by financing activities 37,774 19,762
Net increase(decrease) in cash 24,001 (4,439)
Cash and cash equivalents, beginning of period 2,427 6,478
-------- --------
Cash and cash equivalents, end of period $ 26,428 $ 2,039
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
6
<PAGE> 7
RARE Hospitality International, Inc.
Notes to Consolidated Financial Statements
(unaudited)
1. Basis of Presentation
The consolidated financial statements of RARE Hospitality International, Inc.
(the "Company") as of December 29, 1996 and June 29, 1997 and for the quarters
and six-month periods ended June 29, 1997 (13 week and 26 week periods,
respectively) and June 30, 1996 (the comparable second quarter and first
six-months of 1996 contained 12 weeks and 28 weeks, respectively, for the
Bugaboo Creek Steak House and The Capital Grille restaurants and were calendar
periods for the LongHorn Steakhouse restaurants) have been prepared by the
Company, pursuant to the rules and regulations of the Securities and Exchange
Commission. The information furnished herein reflects all adjustments
(consisting of normal recurring accruals and adjustments) which are, in the
opinion of management, necessary to fairly present the operating results for the
respective periods. Certain information and footnote disclosures normally
presented in annual financial statements prepared in accordance with generally
accepted accounting principles have been omitted pursuant to such rules and
regulations. These financial statements should be read in conjunction with the
consolidated financial statements and notes thereto contained in the Company's
annual report for the year ended December 29, 1996.
Certain prior year amounts in the accompanying consolidated financial statements
have been reclassified to conform to the current year presentation.
2. Income Taxes
Income tax expense for the first six months of 1997 has been provided for based
on the estimated effective tax rate expected to be applicable for the full 1997
fiscal year. The income tax rate of 30% for the six month ended June 29, 1997
differs from applying the statutory federal income tax rate of 34% to pre-tax
income primarily due to employee FICA tip tax credits (a reduction in income tax
expense) offset by state income taxes.
3. Business Combinations and Joint Ventures
On January 27, 1997, the Company purchased the assets of two previously
franchised locations in Greenville and Spartanburg, South Carolina in a
transaction accounted for under the purchase method for approximately $2.0
million in cash. The excess of cost over fair value of tangible assets acquired
was approximately $1.4 million and was recorded as an intangible asset to be
amortized over the 13-year period remaining under the acquired franchise
agreement.
7
<PAGE> 8
On April 5, 1997, the Company paid Longhorn Steaks of Alabama, Inc. $1.2 million
in cash for the termination of the franchise agreement. Longhorn Steaks of
Alabama, Inc. also agreed at that time to close its existing LongHorn Steakhouse
restaurant in Hoover, Alabama and dismiss its lawsuit styled Longhorn Steaks of
Alabama, Inc., William L. Kemp and James E. Adams v. Longhorn Steaks, Inc. and
Richard E. Rivera which was filed on September 13, 1996 in the Circuit Court of
Jefferson County, Alabama, Civil Action No. CV9605485. The purchase price
approximates the fair value of the undeveloped territory and was recorded as an
intangible asset to be amortized over the 13-year period remaining under the
acquired franchise agreement.
Proforma results of operation for the above business combinations are not
significant to the Company.
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
RESULTS OF OPERATIONS
REVENUES
The Company currently derives all of its revenues from restaurant sales, which
increased 27.5% and 26.1% for the second quarter and the six months ended June
29, 1997 compared to the same periods in 1996.
LongHorn Steakhouse:
Sales in the LongHorn Steakhouse restaurants for the second quarter and the six
months ended June 29, 1997 increased 24.3% and 29.0% compared to the same
periods of the prior year. The increase reflects a 20.5% increase in restaurant
weeks for the second quarter of 1997 as compared to the same period of the prior
year, resulting from an increase in the restaurant base from 68 LongHorn
Steakhouse restaurants at the end of the second quarter of 1996 to 82 at the end
of the second quarter of 1997. Average weekly sales for all LongHorn Steakhouse
restaurants in the second quarter of 1997 was $39,597, a 33% increase over the
comparable period in 1996. Same Store Sales for the 59 comparable LongHorn
Steakhouse restaurants increased 0.6% in the second quarter of 1997 as compared
to the same period in 1996. Same store sales for the quarter ended June 29, 1997
consists of sales at restaurants opened prior to January 1, 1995.
Bugaboo Creek Steak House:
Same Store Sales in the Bugaboo Creek Steak House restaurants increased 3.7% for
the second quarter and decreased 1.8% for the first six months of 1997 compared
to the same periods of 1996. Average weekly sales for all Bugaboo Creek Steak
House restaurants in the second quarter of 1997 were $57,565, a 5.2% decrease
from the comparable 13 week period for 1996. Sales for the 11 comparable Bugaboo
Creek Steak House restaurants in the second quarter of 1997 decreased 4.7% as
compared to the same 13 week period in 1996, primarily due to a decrease in
customer counts.
8
<PAGE> 9
The Capital Grille:
Same Store Sales in The Capital Grille restaurants for the second quarter and
the six months ended June 29, 1997 increased 148.0% and 106.1% compared to the
same periods of 1996. The increase reflects a 146.2% increase in restaurant
weeks in the second quarter as compared to the same 13 week period of the prior
year, resulting from an increase in the restaurant base from three The Capital
Grille restaurants at the end of the second quarter of 1996 to eight at the end
of the second quarter of 1997. Average weekly sales for all The Capital Grille
restaurants in the second quarter of 1997 were $99,468, a 13% decrease from the
comparable 13 week period of 1996. This decrease is attributable to new store
opening at sales rates lower than the existing base of The Capital Grille
restaurants. Sales for the three comparable The Capital Grille restaurants
increased 9.1% in the second quarter of 1997 as compared to the same period of
1996, which is primarily attributable to an increase in customer counts.
Company-wide:
Wholesale meat sales ceased prior to the second quarter of 1997 compared to $2.5
million in the first six months of the prior year as a new meat distribution
system was implemented for the LongHorn Steakhouse restaurants during the first
two quarters of 1996, thereby eliminating the need for a separate meat
production and distribution facility. Franchise revenues were eliminated by the
beginning of the second quarter of 1997 due to the i) the termination of the
franchise agreement for the Hoover Alabama franchised Longhorn SteakHouse
restaurant, ii) the Company's acquisition of two franchised LongHorn Steakhouse
restaurants in the first quarter of 1997, iii) the closure of two franchised
LongHorn Steakhouse restaurants (one each, in the first and third quarters of
1996), and iv) the formation of a joint venture to operate three previously
franchised LongHorn Steakhouse restaurants in the second quarter of 1996.
COSTS AND EXPENSES
Cost of restaurant sales as a percentage of restaurant sales increased to 37.5%
from 37.2% for the second quarter and 36.7% from 36.6% for the first six months
of 1997 as compared to the respective periods for 1996. The increase was
primarily due to an upgrade of product presentations and the addition of a new
steak in the LongHorn Steakhouse concept. The consumer response to the new
product introduction was stronger than anticipated by management, resulting in
a significant shift in mix and a corresponding increase in food costs.
Restaurant operating expenses as a percentage of restaurant sales increased
to 45.0% from 43.8% for the second quarter and 44.7% from 44.1% for the
first six months of 1997 as compared to the respective periods for 1996.
This was principally due to incremental labor and controllable expenses
associated with the new product introduction and an increased focus on better
execution and higher operating standards in the LongHorn Steakhouse concept.
9
<PAGE> 10
Restaurant depreciation and amortization increased for both the second quarter
and year-to-date. Depreciation and amortization increases related to new unit
construction costs, acquisitions, and ongoing remodel costs.
Meat division operating expenses were eliminated as a percentage of total
revenues in the 1997 periods due to the cessation of meat-cutting and
distribution operations at the Company's meat division during the second quarter
of 1996.
General and administrative expenses as a percentage of total revenues increased
to 6.9% from 6.7% for the second quarter and remained constant at 6.9% for the
first six months of 1997 as compared to the same periods of the prior year. This
increase was primarily attributable to increased costs associated with the
Company's accelerated new restaurant opening program partially offset by
reductions in headcount at the support office in Providence resulting from the
merger of the Company and Bugaboo Creek Steak House, Inc.
As a result of the relationships between revenues and expenses discussed above,
the Company's operating income decreased to $3.2 million for the second quarter
of 1997 as compared to $3.4 million for the corresponding period of the prior
year.
Interest expense, net increased to $149 thousand in interest expense in the
second quarter of 1997 from $164 thousand in interest income for the same period
of the prior year due to an increase in the average balance outstanding under
the Company's revolving credit agreements.
Minority interest expense increased to $250 thousand for the second quarter of
1997 from $198 thousand for the same period of the prior year due to an increase
in the number and profitability of LongHorn Steakhouse restaurants operated
under joint venture agreements.
Income tax expense for the second quarter of both 1997 and 1996 was 30.0% of
earnings before income taxes. The Company's effective income tax rate differs
from applying the statutory federal income tax rate of 34% to pre-tax income
primarily due to employee FICA tip tax credits offset by state income taxes.
Net earnings decreased to $2.0 million for the second quarter of 1997 from net
earnings of $2.4 million for the second quarter of 1996, reflecting the net
effect of the items discussed above.
Liquidity and Capital Resources:
The Company requires capital primarily for the development of new restaurants,
selected acquisitions and the remodeling of existing restaurants. During the
first six months of 1997 the Company's principal sources of working capital were
cash provided by borrowings under the Company's revolving line of credit ($19.9
million). The principal uses of working capital were Capital expenditures ($16.2
million) for new and improved facilities and the acquisition of franchise and
joint venture restaurant interests ($3.3 million). As of June 29, 1997, $27
million was outstanding and $33 million was available under the Company's $60
million revolving credit facility which, coupled with internally generated
funds, should fund expansion through 1998.
10
<PAGE> 11
The Company opened 20 Company-owned and joint venture restaurants during 1996
and acquired three. The Company intends to open approximately 17 Company-owned
and joint venture Longhorn Steakhouse restaurants, three Bugaboo Steakhouse
restaurant and four The Capital Grille restaurants in fiscal year 1997. The
Company estimates that its capital expenditures for fiscal year 1997 (before
contributions from joint venture partners) will be approximately $50-55 million.
During the first six months of 1997, the Company opened four LongHorn Steakhouse
and two The Capital Grille restaurants and acquired two LongHorn Steakhouse
restaurants from a franchisee.
As of June 29, 1997 the Company had approximately $2 million in cash on hand.
Impact of Recently Issued Accounting Pronouncements
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, "Earnings per Share" ("SFAS 128") and
Statement of Financial Accounting Standards No. 129, "Disclosure of Information
About Capital Structure" ("SFAS 129"), both of which are required to be adopted
for the Company's 1997 fiscal year. SFAS No. 128 specifies the computation,
presentation, and disclosure requirements for earnings per share ("EPS"), and is
designed to improve the EPS information provided in financial statements by
simplifying the existing computational guidelines, revising the disclosure
requirements, and increasing the comparability of EPS data on an international
basis. The Company has not yet determined the effect on operating results of
implementing SFAS 128, however, the adoption of this statement is not expected
to have a material adverse effect on the consolidated financial condition.
SFAS 129 consolidates the existing requirements to disclose certain information
about an entity's capital structure and is not expected to change the Company's
current capital structure disclosures.
SUBSEQUENT EVENT
On August 4, 1997, the Company announced the resignation of Richard E. Rivera
from his positions as President, Chief Executive Officer and a director of the
Company, to pursue other interests. The Company's Board of Directors has
appointed a committee to search for a permanent replacement for Mr. Rivera. In
the interim, George W. McKerrow, Jr., Chairman, has been elected President and
Chief Executive Officer, positions he held prior to Mr. Rivera's joining the
Company in 1994.
11
<PAGE> 12
Part II - Other Information
Item 4. Submission of Matters to a Vote of Securities Holders
The 1997 Annual Meeting of Shareholders of the Company was Held on May 20, 1997.
Holders of 11,662,525 shares of the Company's common stock were entitled to vote
at that meeting. At the Annual meeting, the shareholders elected three Class II
directors with a term, which will expire at the 2000 Annual Meeting. As to each
of the following named individuals, the holders of the indicated number of
shares of the Company's common stock voted for his election and the holders of
the indicated number of shares withheld authority to vote for his election and
there were no broker non-votes:
<TABLE>
<CAPTION>
Shares Voting Shares Withholding
For Authority
<S> <C> <C>
Class II
George W. McKerrow, Jr. 10,744,410 14,916
Richard E. Rivera 10,744,410 14,916
Edward P. Grace III 10,744,410 14,916
</TABLE>
The following directors' terms of office continue after the meeting and expire
at the annual meeting of shareholders in the year indicated.
Class I
Donald L. Chapman 1999
George W. McKerrow, Sr. 1999
John C Metz. 1999
Class III
John G. Pawley 1998
Ronald W. San Martin 1998
There is currently a vacant director's position in Class III. The resignation of
Richard E. Rivera creates a vacant position in Class II.
The shareholders ratified the selection of KPMG Peat Marwick LLP as independent
auditors for the Company for the fiscal year ending December 28, 1997. The
holders of 10,744,056 shares of common stock voted in favor of the ratification,
holders of 11,118 shares voted against and holders of 4,152 shares abstained.
There were no broker non-votes.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits Filed.
27 Financial Data Schedule (for SEC use only).
(b) Reports filed on Form 8-K.
None.
12
<PAGE> 13
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.
RARE Hospitality International, Inc.
Date: August 14, 1997 /s/Anne D. Huemme
-------------------------- --------------------------------------------
Anne D. Huemme
Chief Financial Officer and
Officer (Chief Financial
Officer and Principal
Accounting Officer)
13
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AT JUNE 29, 1997 AND THE CONSOLIDATED STATEMENT OF
EARNINGS FOR THE 26 WEEKS ENDED JUNE 29, 1997 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH 10-Q FOR THE QUARTERLY PERIOD ENDED JUNE 29, 1997.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-28-1997
<PERIOD-START> DEC-30-1996
<PERIOD-END> JUN-29-1997
<CASH> 2,039,000
<SECURITIES> 609,000
<RECEIVABLES> 4,805,000
<ALLOWANCES> 0
<INVENTORY> 8,940,000
<CURRENT-ASSETS> 20,137,000
<PP&E> 132,463,000<F1>
<DEPRECIATION> 0
<TOTAL-ASSETS> 166,937,000
<CURRENT-LIABILITIES> 9,970,000
<BONDS> 27,000,000
0
0
<COMMON> 100,314,000
<OTHER-SE> 25,977,000
<TOTAL-LIABILITY-AND-EQUITY> 166,937,000
<SALES> 127,592,000
<TOTAL-REVENUES> 127,619,000
<CGS> 46,835,000
<TOTAL-COSTS> 119,844,000
<OTHER-EXPENSES> 589,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 299,000
<INCOME-PRETAX> 6,887,000
<INCOME-TAX> 2,060,000
<INCOME-CONTINUING> 4,827,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,827,000
<EPS-PRIMARY> 0.41<F2>
<EPS-DILUTED> 0.41
<FN>
<F1>ASSET VALUES REPRESENT NET AMOUNTS
<F2>PRIMARY EPS IS CALCULATED USING A WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING
OF 11,726,000
</FN>
</TABLE>
