SENIOR HIGH
INCOME
PORTFOLIO II, INC.
FUND LOGO
Semi-Annual Report
February 29, 1996
This report, including the financial information herein, is
transmitted to the shareholders of Senior High Income Portfolio II,
Inc. for their information. It is not a prospectus, circular or
representation intended for use in the purchase of shares of the
Fund or any securities mentioned in the report. Past performance
results shown in this report should not be considered a
representation of future performance. The Fund has leveraged its
Common Stock to provide Common Stock shareholders with a potentially
higher rate of return. Leverage creates risk for Common Stock
shareholders, including the likelihood of greater volatility of net
asset value and market price of Common Stock shares, and the risk
that fluctuations in short-term interest rates may reduce the Common
Stock's yield. Statements and other information herein are as dated
and are subject to change.
<PAGE>
Senior High Income
Portfolio II, Inc.
Box 9011
Princeton, NJ
08543-9011
<PAGE>
SENIOR HIGH INCOME PORTFOLIO II, INC.
The Benefits and
Risks of
Leveraging
Senior High Income Portfolio II, Inc. has the ability to utilize
leverage through borrowings or issuance of short-term debt
securities or shares of Preferred Stock. The concept of leveraging
is based on the premise that the cost of assets to be obtained from
leverage will be based on short-term interest rates, which normally
will be lower than the return earned by the fund on its longer-term
portfolio investments. Since the total assets of the fund (including
the assets obtained from leverage) are invested in higher-yielding
portfolio investments, the fund's Common Stock shareholders are the
beneficiaries of the incremental yield. Should the differential
between the underlying interest rates narrow, the incremental yield
"pick up" will be reduced. Furthermore, if long-term interest rates
rise, the Common Stock's net asset value will reflect the full
decline in the entire portfolio holdings therefrom since the assets
obtained from leverage do not fluctuate.
Leverage creates risks for holders of Common Stock including the
likelihood of greater net asset value and market price volatility.
In addition, there is the risk that fluctuations in interest rates
on borrowings (or in the dividend rates on any Preferred Stock, if
the fund were to issue Preferred Stock) may reduce the Common
Stock's yield and negatively impact its market price. If the income
derived from securities purchased with assets received from leverage
exceeds the cost of leverage, the fund's net income will be greater
than if leverage had not been used. Conversely, if the income from
the securities purchased is not sufficient to cover the cost of
leverage, the fund's net income will be less than if leverage had
not been used, and therefore the amount available for distribution
to Common Stock shareholders will be reduced. In this case, the fund
may nevertheless decide to maintain its leveraged position in order
to avoid capital losses on securities purchased with leverage.
However, the fund will not generally utilize leverage if it
anticipates that its leveraged capital structure would result in a
lower rate of return for its Common Stock than would be obtained if
the Common Stock were unleveraged for any significant amount of
time.
<PAGE>
DEAR SHAREHOLDER
For the six months ended February 29, 1996, Senior High Income
Portfolio II, Inc.'s total investment return was +5.93%, based on a
change in per share net asset value from $9.27 to $9.28, and
assuming reinvestment of $0.519 per share income dividends. During
the same period, the net annualized yield of the Portfolio's Common
Stock was 11.22%. Since inception (September 24, 1993) through
February 29, 1996, the total investment return on the Portfolio's
Common Stock was +23.29%, based on a change in per share net asset
value from $9.50 to $9.28, and assuming reinvestment of $2.112 per
share income dividends. At the end of the February period, the
Portfolio was 15.3% leveraged, having borrowed $28 million of its
$80 million line of credit available at an average borrowing cost of
6.37%. (For a further explanation of the benefits and risks of
leveraging, see page 1 of this report to shareholders.)
As of February 29, 1996, the Portfolio paid out a regular monthly
dividend at an annualized rate of 9.25% so that the Portfolio could
maintain a more stable level of distributions. Monthly dividends are
limited to the lesser of the targeted monthly dividend rate in
effect and the amount of previously undistributed net investment
income held by the Portfolio. For Federal income tax purposes, the
Portfolio is required to distribute substantially all of its net
investment income for each calendar year. All net realized long-term
and short-term capital gains, if any, will be distributed to the
Portfolio's shareholders annually. The targeted monthly dividend
rate has increased from an annualized rate of 8.0% since the
Portfolio's inception.
The Environment
On January 31, 1996, the Federal Reserve Board lowered short-term
interest rates for the third time since mid-1995, decreasing the
discount rate it charges on loans to its member banks by 25 basis
points (0.25%) to 5.25% and by pushing the Federal Funds target rate
to 5.25% from 5.50%. The economy ended 1995 with moderate growth
while inflation remained at low levels. However, the Federal Reserve
Board continues to be pre-emptive in its efforts to head off any
sustained economic slowdown.
Portfolio Strategy
At February 29, 1996, more than 90% of the Portfolio's investments
in corporate loans was accruing interest at a yield spread above the
London Interbank Offered Rate (LIBOR). LIBOR is the rate that major
international banks charge each other for US dollar-denominated
deposits outside the United States. LIBOR has historically tracked
very closely with other US short-term interest rates, particularly
the Federal Funds rate. Since the first easing of monetary policy by
the Federal Reserve Board in July 1995, the three-month LIBOR has
fallen from 5.8438% to 5.25%, a decrease of approximately 59 basis
points. Since the average reset on the Portfolio's floating rate
investments is 42 days, the yield on the bank loan portion of the
Portfolio should move up within a one-month--two-month period after
any interest rate increase. At the end of the February period,
floating rate securities made up 50.32% of the market value of the
Portfolio's investments, with an additional 49.68% invested in fixed-
rate high-yield bonds. Approximately $52 million remains available
under the leverage facility.
<PAGE>
The leveraged loan market continued to be strong, particularly
during the last half of 1995. Demand for bank loans was robust, as
banks and other institutional investors competed for the fees and
high spreads available in this sector. This demand created more
liquidity and more of a run up in prices than we have seen in over
18 months. The leveraged bank loan market continues to be an
attractive alternative for corporate borrowers relative to the
coupons and call protection demanded in the high-yield bond market.
Both the high-yield loan and bond markets experienced strong rallies
after the first of the year. The high-yield market continued to
benefit from healthy inflows, interest rate declines and a rallying
equity market. Very strong market technical factors helped to
absorb new issues and still drive up prices in the secondary
market. The market has offered increasingly attractive
spreads compared to the Treasury market and other fixed-income
assets, resulting in substantial cross-over interest that has
exacerbated an already acute supply/demand imbalance.
Since January 1, 1996, the spread between a ten-year A-rated
corporate bond and the Merrill Lynch High Yield Master Index has
widened by over 110 basis points. With such a strong secondary
market, new issues are not only priced aggressively, but the size of
issues is often increased. New issues during the latter half of the
February period were typically priced at spreads tighter than the
secondary market. The spread between the Merrill Lynch High Yield
Master Index and ten-year Treasury securities narrowed from 400
basis points in the prior period to as little as 362 basis points by
the end of January, as price gains were seen in all industry groups
and particularly the lower-rated tiers. Growth sectors, such as the
communications industry, continued to benefit from the positive
reaction to the passage of the telecommunications reform bill.
The high-yield bank loan market remained extremely strong throughout
the six-month period ended February 29, 1996, with demand continuing
to outstrip supply. The fourth quarter of 1995 capped a year of
explosive growth for the secondary loan market. The $9.7 billion in
volume brought the year's total to $33.8 billion, an increase of
more than 60% from 1994. Several factors contributed to this growth
including a 25% rise in leveraged loan issuance to $101 billion. At
the same time, demand from institutional investors continues to
grow. Banks are also increasing their trading activity, using the
secondary market to adjust exposure to sectors and specific credits.
However, contrary to expectations, there was not much overhang in
early 1996 on the origination side, although new-issue demand
remains strong, as banks continue to compete for the fees and high
spreads on agenting and investing in leveraged credits. Loan funds
continued to see substantial inflows, enhancing already solid demand
for funded term loans.
<PAGE>
The credit fundamentals for both the high-yield market and the loan
market remain generally favorable. However, with a 2.1% gross
national product growth rate in 1995, down from 3.5% in 1994, and an
anemic 0.9% rate for the fourth quarter, we remain cautious in both
markets. If a slowing economy pushes the default rate above 5%, the
present market trading levels may not be sustained, as investors
demand higher yield premiums to compensate them for the risk
of default. In general, earnings continue to improve and
issues continue to focus on improving balance sheets. In some
cyclical industries, such as paper, prices appear to have peaked, at
least for the near term. Most of these borrowers used the cash flow
generated by record prices to upgrade plants and pay down debt,
thereby better positioning themselves for the next downturn. These
borrowers appear in much better shape than at the end of their
respective previous downturns, and are capable of generating
operating cash flows at or below previous trough prices. In light of
generating positive prospects for most high-yield issuers, our
primary strategy for the Portfolio was to focus investments in the
new-issue sector where issues come at market clearing prices and the
prices hold up relatively well.
We also selectively sold lower-coupon issues and weaker single B
credits as prices rallied and upside potential diminished. This
freed up assets for floating rate paper, which provides cushion
against interest rate and credit surprises, and for select secondary
high-yield issues which may see "event" upside in the form of an
upgrade, refinancing, or stock offering. Rather than stretch for
yield in either market, we will consider lower-coupon issues that we
expect to become investment grade relatively quickly and prove
liquid in the interim. When neither attractive bank loan nor high-
yield bond opportunities were available, excess cash was used to
reduce outstanding debt under the Fund's leverage facilities.
At February 29, 1996, cash equivalents totaled less than 0.1% of net
assets. The Portfolio is diversified in the floating rate portion
with 22 borrowers across 13 industries and in the fixed-rate portion
with 54 borrowers across 29 industries. The largest industry
concentrations are: paper (12.1% of total assets); retail specialty
(10.6%); broadcast/media (8.1%); food and beverage (8.1%); and
aerospace (5.0%).
In Conclusion
We appreciate your investment in Senior High Income Portfolio II,
Inc.
<PAGE>
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(R. Douglas Henderson)
R. Douglas Henderson
Vice President and Portfolio Manager
April 9, 1996
Shareholders of Senior High Income Portfolio, Inc., Senior High
Income Portfolio II, Inc. and Senior Strategic Income Fund, Inc.
recently approved an Agreement and Plan of Merger. Effective April
15, 1996, Senior High Income Portfolio, Inc. will acquire
substantially all of the assets and liabilities of Senior High
Income Portfolio II, Inc. and Senior Strategic Income Fund, Inc.
Proxy
Results
During the six-month period ended February 29, 1996, Senior High
Income Portfolio II, Inc. shareholders voted on the following
proposals. The proposals were approved at a special shareholders'
meeting on March 14, 1996. The description of each proposal and
number of shares voted are as follows:
<PAGE>
<TABLE>
<CAPTION>
Shares Voted Shares Voted Shares Voted Broker
For Against Abstain No-Vote
<S> <C> <C> <C> <C>
1. To consider and act upon a proposal to approve the Agreement
and Plan of Merger among the Portfolio, Senior High Income
Portfolio, Inc. and Senior Strategic Income Fund. 9,060,930 211,496 365,149 6,814,930
<CAPTION>
Shares Voted Shares Voted
For Without Authority
<S> <S> <C> <C>
2. To elect the Portfolio's Board of Directors: Ronald W. Forbes 16,070,757 381,748
Cynthia A. Montgomery 16,068,265 384,240
Charles C. Reilly 16,112,686 339,819
Kevin A. Ryan 16,116,397 336,108
Richard R. West 16,116,419 336,086
Arthur Zeikel 16,063,528 388,977
<CAPTION>
Shares Voted Shares Voted Shares Voted
For Against Abstain
<S> <C> <C> <C>
3. To select Deloitte & Touche LLP as the Portfolio's independent auditors. 15,884,220 170,849 397,436
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS
<CAPTION>
S&P Moody's Face Value
INDUSTRIES Rating Rating Amount Corporate Debt Obligations+++ Cost (Note 1b)
<S> <S> <S> <C> <S> <C> <C>
Aerospace--6.0% BB- Ba3 $3,000,000 BE Aerospace, Inc., Senior Notes, 9.75%
due 3/01/2003 $ 3,060,000 $ 3,112,500
Gulfstream Delaware Corp., Term Loan A,
due 3/31/1998:**
NR* NR* 372,340 9.25% to 3/31/1996 372,340 372,340
NR* NR* 1,489,362 7.63% to 4/16/1996 1,489,362 1,489,362
NR* NR* 2,240,000 Gulfstream Delaware Corp., Term Loan
B, due 3/31/1998, 8.82% to 3/08/1996** 2,240,000 2,240,000
B B2 2,000,000 Talley Manufacturing & Technology, Inc.,
10.75% due 10/15/2003 2,000,000 2,040,000
------------ ------------
9,161,702 9,254,202
Automotive Collins and Aikman Corp., Term Loan B,
Products--5.2% due 12/31/2002:**
NR* NR* 2,538,071 7.875% to 3/04/1996 2,538,071 2,538,071
NR* NR* 2,461,929 7.875% to 4/01/1996 2,461,929 2,461,929
B+ B3 1,000,000 Harvard Industries, Inc., Senior Notes,
11.125% due 8/01/2005 1,000,000 1,045,000
B B2 1,000,000 JPS Automotive Products Corp., Senior
Notes, 11.125% due 6/15/2001 1,000,000 1,000,000
B+ Ba3 1,000,000 Walbro Corp., 9.875% due 7/15/2005 996,627 1,035,000
------------ ------------
7,996,627 8,080,000
<PAGE>
Broadcast/ BB- B3 1,000,000 CAI Wireless Systems, Inc., Senior
Media--9.6% Notes, 12.25% due 9/15/2002 1,000,000 1,085,000
Continental Cablevision, Inc.,
Senior Notes:
BB Ba2 1,000,000 8.50% due 9/15/2001 1,052,500 1,080,000
BB+ NR* 1,500,000 ++8.30% due 5/15/2006 1,495,248 1,597,500
B- B3 1,000,000 Granite Broadcasting Corp., Senior
Sub Notes, 10.375% due 5/15/2005 1,000,000 1,035,000
BB+ Ba3 1,000,000 Lenfest Communications, Inc., 8.375%
due 11/01/2005 997,117 993,750
Marcus Cable, Co., Term Loan B, due
4/30/2004:**
NR* NR* 333,333 8.13% to 3/05/1996 333,333 333,333
NR* NR* 2,500,000 8.57% to 3/06/1996 2,500,000 2,500,000
NR* NR* 2,166,667 8.13% to 5/02/1996 2,166,667 2,166,667
B- B3 1,000,000 ++Rifkin Acquisition Partners, Senior
Sub Notes, 11.125% due 1/15/2006 1,000,000 1,030,000
BB B1 2,000,000 Telewest Communications PLC, 9.625%
due 10/01/2006 2,000,000 2,030,000
B B2 1,000,000 Young Broadcasting Corp., Senior
Notes, 10.125% due 2/15/2005 1,000,000 1,040,000
------------ ------------
14,544,865 14,891,250
Building & B- B3 1,000,000 Presley Companies, Senior Notes, 12.50%
Construction due 7/01/2001 1,000,000 920,000
- --0.6%
Building National Gypsum, Term Loan B, due
Products--4.0% 9/20/2003:**
NR* NR* 127,273 8.31% to 3/27/1996 127,273 127,273
NR* NR* 13,636 10% to 3/31/1996 13,636 13,636
NR* NR* 4,545,455 8.50% to 4/26/1996 4,545,455 4,545,455
NR* NR* 309,091 8.25% to 5/28/1996 309,091 309,091
BB- Ba3 1,000,000 Schuller International Group, Senior
Notes, 10.875% due 12/15/2004 1,000,000 1,116,250
------------ ------------
5,995,455 6,111,705
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued)
<CAPTION>
S&P Moody's Face Value
INDUSTRIES Rating Rating Amount Corporate Debt Obligations+++ Cost (Note 1b)
<S> <S> <S> <C> <S> <C> <C>
Chemicals--3.1% BB- B1 $1,000,000 ++Acetex Corporation, Senior Notes,
9.75% due 10/01/2003 $ 995,782 $ 1,030,000
NR* NR* 3,806,063 Inspec Chemical Corp., Term Loan B,
due 12/02/2000, 7.9375% to 3/29/1996** 3,806,063 3,806,063
------------ ------------
4,801,845 4,836,063
Computers--3.2% BB Ba3 4,500,000 Dell Computer Corp., Senior Notes,
11% due 8/15/2000 4,517,142 4,905,000
Consumer B+ Ba3 1,000,000 Coty Inc., Senior Sub Notes, 10.25%
Products--0.7% due 5/01/2005 1,000,000 1,065,000
Diversified B+ B2 1,000,000 J.B. Poindexter & Co., Inc., Senior
Manufacturing-- Notes, 12.50% due 5/15/2004 974,807 805,000
5.4% NR* B2 4,733,666 Thermadyne Co., Term Loan B, due
2/01/2001, 8.375% to 3/12/1996** 4,733,666 4,733,666
B B1 3,000,000 Valcor Inc., 9.625% due 11/01/2003 3,000,000 2,850,000
------------ ------------
8,708,473 8,388,666
Drug Stores NR* NR* 3,089,250 Duane Reade Co., Term Loan A, due
- --5.2% 9/30/1997, 9.75% to 5/31/1996** 3,089,250 3,089,250
NR* Ba3 4,937,186 Thrifty Payless, Inc., Term Loan B,
due 9/30/2001, 8.8125% to 3/22/1996** 4,937,186 4,937,186
------------ ------------
8,026,436 8,026,436
Energy--2.6% B- B1 2,000,000 ++KCS Energy, Inc., 11% due 1/15/2003 2,000,000 2,070,000
BB- B1 2,000,000 Maxus Energy Corp., 9.375% due
11/01/2003 1,920,938 2,020,000
------------ ------------
3,920,938 4,090,000
Fertilizers BB- B1 3,750,000 Sherritt Gordon Ltd., 9.75% due
- --2.5% 4/01/2003 3,762,500 3,937,500
<PAGE>
Food & NR* NR* 4,931,741 President Baking Company, Inc.,
Beverage--9.6% Term Loan B, due 9/30/2000, 8.4375%
to 3/29/1996** 4,931,741 4,931,741
SC International Services, Inc.,
Term Loan B, due 9/15/2001:**
NR* B2 20,211 8.3125% to 3/15/1996 20,211 20,211
NR* B2 725,528 8.5625% to 3/19/1996 725,528 725,528
NR* B2 857,002 8.8125% to 3/19/1996 857,002 857,002
NR* B2 379,077 8.5625% to 4/19/1996 379,077 379,077
SC International Services, Inc., Term
Loan B, due 9/15/2002:**
NR* B2 24,579 8.3125% to 3/15/1996 24,579 24,579
NR* B2 904,172 8.5625% to 3/19/1996 904,172 904,172
NR* B2 1,318,788 8.8125% to 3/19/1996 1,318,788 1,318,788
NR* B2 222,256 8.5625% to 4/19/1996 222,256 222,256
SC International Services, Inc., Term
Loan C, due 9/15/2003:**
NR* B2 5,920 8.5625% to 3/15/1996 5,920 5,920
NR* B2 199,450 8.8125% to 3/19/1996 199,450 199,450
NR* B2 290,909 9.0625% to 3/19/1996 290,909 290,909
NR* B2 48,529 8.8125% to 4/19/1996 48,529 48,529
Specialty Foods Corp., Term Loan B,
due 4/30/2001:**
NR* B2 3,333,333 7.8125% to 4/22/1996 3,333,333 3,333,333
NR* B2 1,659,524 7.75% to 4/26/1996 1,659,524 1,659,524
------------ ------------
14,921,019 14,921,019
Forest Products BB B1 1,000,000 Tembec Finance Corp., Senior Notes,
- --0.6% 9.875% due 9/30/2005 1,000,000 950,000
Grocery--3.3% B- B3 1,500,000 Bruno's Supermarkets, Senior Sub
Notes, 10.50% due 8/01/2005 1,500,000 1,455,000
BB- Ba3 4,000,000 The Penn Traffic Company, 8.625%
due 12/15/2003 3,993,019 3,640,000
------------ ------------
5,493,019 5,095,000
Health B B2 1,000,000 Grancare Inc., Senior Sub Notes,
Services-- 9.375% due 9/15/2005 1,000,000 1,010,000
4.8% B B2 1,000,000 Integrated Health Services, Inc.,
Senior Sub Notes, 10.75% due 7/15/2004 1,000,000 1,060,000
B B2 4,040,000 MEDIQ/PRN Life Support Services,
Inc., Senior Secured Notes, 12.125%
due 7/01/1999 4,111,368 4,221,800
B B2 1,000,000 Magellan Health Services, Inc., Senior
Sub Notes, 11.25% due 4/15/2004 1,000,000 1,120,000
------------ ------------
7,111,368 7,411,800
<PAGE>
Hotels & BB- B1 3,000,000 Host Marriott Corp., 9.50% due
Motels-- 5/15/2005 2,914,509 3,000,000
2.6% B+ Ba3 1,000,000 Prime Hospitality Corp., Senior
Notes, 9.25% due 1/15/2006 996,760 1,000,000
------------ ------------
3,911,269 4,000,000
Leasing & BB- B1 2,000,000 The Scotsman Group, Inc., 9.50% due
Rental 12/15/2000 2,000,000 2,060,000
Services--
1.3%
Leisure & B- B3 1,000,000 Alliance Entertainment Corp., Senior
Entertainment Sub Notes, 11.25% due 7/15/2005 1,002,500 1,005,000
- --0.6%
Manufacturing B- B3 1,000,000 ++Crain Industries, Inc., Senior
- --0.7% Sub Notes, 13.50% due 8/15/2005 1,000,000 1,040,000
Marking B+ B2 1,000,000 Monarch Acquisition Corp., Senior
Devices-- Notes, 12.50% due 7/01/2003 1,000,000 1,080,000
0.7%
Materials, NR* NR* 500,000 ++Alvey Systems, Inc., Senior
Handling & Sub Notes, 11.375% due 1/31/2003 500,000 511,250
Storage--2.3% B+ B3 3,000,000 Americold Corp., First Mortgage Notes,
Series B, 11.50% due 3/01/2005 3,067,500 3,120,000
------------ ------------
3,567,500 3,631,250
Metals--5.8% B B1 2,000,000 Algoma Steel, Inc., 12.375% due
7/15/2005 1,809,114 1,932,500
B B2 1,000,000 GS Technologies, 12% due 9/01/2004 992,705 1,000,000
B B1 1,000,000 Gulf States Steel Corp., Senior Notes,
13.50% due 4/15/2003 989,704 915,000
B B2 2,000,000 Jorgensen (Earle M.) Co., 10.75% due
3/01/2000 2,065,000 1,950,000
B+ B1 2,000,000 WCI Steel Inc., 10.50% due 3/01/2002 2,000,000 2,030,000
B B2 1,190,000 Weirton Steel Corp., Senior Notes,
10.75% due 6/01/2005 1,172,895 1,151,325
------------ ------------
9,029,418 8,978,825
<PAGE>
Musical NR* B1 1,000,000 Selmer Co., Inc., Senior Sub Notes,
Instruments 11% due 5/15/2005 1,000,000 1,060,000
- --0.7%
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded)
<CAPTION>
S&P Moody's Face Value
INDUSTRIES Rating Rating Amount Corporate Debt Obligations+++ Cost (Note 1b)
<S> <S> <S> <C> <S> <C> <C>
Nautical Sperry Marine, Inc., Term Loan,
Systems-- due 11/15/2000:**
1.8% NR* NR* $ 85,366 8.5625% to 3/29/1996 $ 85,366 $ 85,366
NR* NR* 1,169,157 9.1875% to 3/29/1996 1,169,157 1,169,157
NR* NR* 1,519,868 8.8125% to 6/28/1996 1,519,868 1,519,868
------------ ------------
2,774,391 2,774,391
Paper--14.4% Fort Howard Corp., Term Loan A, due
12/31/2002:**
NR* Ba3 2,500,000 8.82% to 3/19/1996 2,500,000 2,500,000
NR* Ba3 2,500,000 8.66% to 6/19/1996 2,500,000 2,500,000
B B3 1,000,000 Gaylord Container Corp., Senior
Notes, 11.50% due 5/15/2001 986,498 1,040,000
Jefferson Smurfit/Container Corp.
of America, Term Loan B, due
4/30/2002:**
NR* Ba3 816,666 8.3125% to 3/20/1996 816,666 816,666
NR* Ba3 2,900,000 8.3125% to 3/22/1996 2,900,000 2,900,000
BB- Ba3 1,000,000 Repap New Brunswick Inc., Senior
Notes, 9.875% due 7/15/2000 1,000,000 1,010,000
NR* Ba2 4,410,059 S.D. Warren Co., Term Loan B, due
12/19/2002, 8.32% to 3/27/1996** 4,410,059 4,410,059
Stone Container Corp., Term Loan B,
due 4/01/2000:**
NR* Ba3 3,712,500 8.75% to 3/18/1996 3,712,500 3,712,500
NR* Ba3 3,412,500 8.4375% to 4/22/1996 3,412,500 3,412,500
------------ ------------
22,238,223 22,301,725
<PAGE>
Retail-- Federated Department Stores, Term
Specialty-- Loan, due 3/31/2000:**
12.6% NR* Ba1 3,125,000 6.25% to 4/29/1996 3,125,000 3,125,000
NR* Ba1 1,875,000 6.4375% to 5/29/1996 1,875,000 1,875,000
Music Acquisition Corp., Inc., Term
Loan B, due 8/31/2001:**
NR* NR* 1,812,500 8.8125% to 3/20/1996 1,788,576 1,776,250
NR* NR* 3,062,500 9.75% to 5/31/1996 3,022,027 3,001,250
NR* NR* 7,682,342 Saks & Co., Term Loan B, due
6/30/2000, 8.75% to 5/09/1996** 7,682,342 7,682,342
B+ B1 2,000,000 Specialty Retailers, Inc., Series A,
10% due 8/15/2000 2,007,500 1,960,000
------------ ------------
19,500,445 19,419,842
Shipping--3.6% BB- Ba2 2,500,000 Eletson Holdings, Inc., First Pre-
ferred Mortgage Notes, 9.25% due
11/15/2003 2,525,000 2,500,000
BB- Ba2 1,000,000 Stena AB, 10.50% due 12/15/2005 1,000,000 1,025,000
BB Ba2 2,000,000 Teekay Shipping, Inc., First Preferred
Mortgage Notes, 9.625% due 7/15/2003 2,012,500 2,090,000
------------ ------------
5,537,500 5,615,000
Transportation NR* B3 1,500,000 Ameritruck Distribution Corp., Senior
- --1.0% Sub Notes, 12.25% due 11/15/2005 1,482,445 1,470,000
Utilities--1.0% BB Ba2 1,000,000 Cleveland Electric Illuminating
Company, First Mortgage Notes,
9.50% due 5/15/2005 998,175 1,040,000
B+ B1 460,000 First PV Funding Corp., 10.30% due
1/15/2014 436,539 483,000
------------ ------------
1,434,714 1,523,000
Waste BB- B3 1,000,000 ++Norcal Waste Systems Inc., 12.50%
Management--0.7% due 11/15/2005 975,795 1,045,000
Total Corporate Debt Obligations--
116.2% 178,415,589 179,887,674
Shares
Held Warrants
<PAGE>
Metals--0.0% NR* NR* 1,000 ++Gulf States Steel Corp. (a) 11,000 250
Total Warrants--0.0% 11,000 250
Face
Amount Short-Term Securities
Commercial $ 551,000 General Electric Capital Corp., 5.42%
Paper***--0.4% due 3/01/1996 551,000 551,000
Total Investments in Short-Term
Securities--0.4% 551,000 551,000
Total Investments--116.6% $178,977,589 180,438,924
============
Liabilities in Excess of Other
Assets--(16.6%) (25,581,421)
------------
Net Assets--100.0% $154,857,503
============
<FN>
*Not Rated.
**Floating or Variable Rate Corporate Debt--The interest rates on
floating or variable rate corporate debt are subject to change
periodically based on the change in the prime rate of a US Bank,
LIBOR (London Interbank Offered Rate), or, in some cases, another
base lending rate. The interest rates shown are those in effect at
February 29, 1996.
***Commercial Paper is traded on a discount basis; the interest
rates shown are the discount rates paid at the time of purchase by
the Portfolio.
(a)Warrants entitle the Fund to purchase a predetermined number
of shares of common stock. The purchase price and the number of
shares are subject to adjustment under certain conditions until the
expiration date.
+++Corporate Loans represent 58.9% of the Fund's net assets.
++Restricted securities as to resale. The value of the Fund's investment in
restricted securities was approximately $8,324,000, representing
5.4% of net assets.
<PAGE>
<CAPTION>
Acquisition Value
Issue Date Cost (Note 1b)
<S> <C> <C> <C>
Acetex Corporation, Senior
Notes, 9.75% due 10/01/2003 9/22/1995 $ 995,782 $1,030,000
Alvey Systems, Inc., 11.375%
due 1/31/2003 1/19/1996 500,000 511,250
Continental Cablevision, Inc.,
Senior Notes, 8.30%
due 5/15/2006 12/08/1995 1,495,248 1,597,500
Crain Industries, Inc.,
Senior Sub Notes, 13.50%
due 8/15/2005 8/22/1995 1,000,000 1,040,000
Gulf States Steel Corp. 4/12/1995 11,000 250
KCS Energy Inc.,
11% due 1/15/2003 1/19/1996 2,000,000 2,070,000
Norcal Waste Systems Inc.,
12.50% due 11/16/1997 11/15/1995 975,795 1,045,000
Rifkin Acquisition Partners,
Senior Sub Notes, 11.125%
due 1/15/2006 1/29/1996 1,000,000 1,030,000
Total $7,977,825 $8,324,000
========== ==========
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENT OF ASSETS, LIABILITIES AND CAPITAL
<CAPTION>
As of February 29, 1996
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$178,977,589)(Note 1b) $180,438,924
Cash 19,331
Receivables:
Interest receivable $ 3,287,600
Securities sold 126,194
Paydowns 56,140 3,469,934
------------
Deferred facility expense (Note 5) 11,853
Deferred organization expenses (Note 1f) 48,500
Prepaid expenses and other assets 6,705
------------
Total assets 183,995,247
------------
Liabilities: Payables:
Loans (Note 5) 28,000,000
Securities purchased 126,194
Investment adviser (Note 2) 77,845
Commitment fees 7,340
Interest on loans (Note 5) 6,471 28,217,850
------------
Deferred income (Note 1e) 903,523
Accrued expenses and other liabilities 16,371
------------
Total liabilities 29,137,744
------------
<PAGE>
Net Assets: Net assets $154,857,503
============
Capital: Common Stock, par value $.10 per share; 200,000,000 shares
authorized (16,692,514 shares issued and outstanding) $ 1,669,251
Paid-in capital in excess of par 156,675,735
Undistributed investment income--net 1,502,072
Accumulated realized capital losses on investments--net (Note 6) (6,450,890)
Unrealized appreciation on investments--net 1,461,335
------------
Total capital--Equivalent to $9.28 net asset value per share of
Common Stock (market price--$9.25) $154,857,503
============
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENT OF OPERATIONS
<CAPTION>
For the Six Months Ended February 29, 1996
<S> <S> <C>
Investment Income Interest and discount earned $ 9,822,263
(Note 1e): Facility and other fees 218,870
------------
Total income 10,041,133
------------
Expenses: Loan interest expense (Note 5) 1,609,753
Investment advisory fees (Note 2) 507,969
Accounting services (Note 2) 57,619
Borrowing costs (Note 5) 48,464
Professional fees 47,526
Printing and shareholder reports 27,079
Transfer agent fees (Note 2) 17,743
Custodian fees 12,345
Directors' fees and expenses 12,150
Amortization of organization expenses (Note 1f) 7,891
Pricing services 1,764
Listing fees 126
Other 22,287
------------
Total expenses 2,372,716
------------
Investment income--net 7,668,417
------------
<PAGE>
Realized & Realized loss on investments--net (3,399,729)
Unrealized Gain Change in unrealized appreciation/depreciation on investments--net 4,500,085
(Loss) on ------------
Investments Net Increase in Net Assets Resulting from Operations $ 8,768,773
- --Net (Notes 1c, ============
1e & 3):
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
<CAPTION>
For the
Six Months For the
Ended Year Ended
February 29, August 31,
Increase (Decrease) in Net Assets: 1996 1995
<S> <S> <C> <C>
Operations: Investment income--net $ 7,668,417 $ 15,811,564
Realized loss on investments--net (3,399,729) (1,837,439)
Change in unrealized appreciation/depreciation on
investments--net 4,500,085 1,061,216
------------ ------------
Net increase in net assets resulting from operations 8,768,773 15,035,341
------------ ------------
Dividends to Investment income--net (8,638,452) (14,716,379)
Shareholders ------------ ------------
(Note 1g): Net decrease in net assets resulting from dividends to
shareholders (8,638,452) (14,716,379)
------------ ------------
Capital Share Value of shares issued to Common Stock shareholders in
Transactions reinvestment of dividends 756,677 --
(Note 4): ------------ ------------
Net increase in net assets resulting from capital share
transactions 756,677 --
------------ ------------
Net Assets: Total increase in net assets 886,998 318,962
Beginning of period 153,970,505 153,651,543
------------ ------------
End of period* $154,857,503 $153,970,505
============ ============
<PAGE>
<FN>
*Undistributed investment income--net $ 1,502,072 $ 2,527,660
============ ============
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENT OF CASH FLOWS
For the Six Months Ended February 29, 1996
<S> <S> <C>
Cash Provided by Net increase in net assets resulting from operations $ 8,768,773
Operating Adjustments to reconcile net increase in net assets resulting
Activities: from operations to net cash provided by operating activities:
Decrease in receivables 123,141
Decrease in other liabilities (276,214)
Realized and unrealized gain on investments--net (1,100,356)
Amortization of premium and discount--net (171,151)
------------
Net cash provided by operating activities 7,344,193
------------
Cash Provided by Proceeds from sales of long-term investments 53,571,135
Investing Purchases of long-term investments (35,703,031)
Activities: Purchases of short-term investments (68,061,266)
Proceeds from sales and maturities of short-term investments 67,939,000
------------
Net cash provided by investing activities 17,745,838
------------
Cash Used for Cash receipts from borrowings 34,000,000
Financing Cash payments on borrowings (51,000,000)
Activities: Dividends paid to shareholders (8,294,751)
------------
Net cash used for financing activities (25,294,751)
------------
Cash: Net decrease in cash (204,720)
Cash at beginning of period 224,051
------------
Cash at end of period $ 19,331
============
Cash Flow Cash paid for interest $ 1,816,820
Information: ============
<PAGE>
Noncash Capital shares issued in reinvestment of dividends paid to shareholders $ 756,677
Financing ============
Activities:
See Notes to Financial Statements.
</TABLE>
<TABLE>
FINANCIAL HIHGLIGHTS
<CAPTION>
For the For the
The following per share data and ratios have been derived Six Months For the Period
from information provided in the financial statements. Ended Year Ended Sept. 24, 1993++
Feb. 29, Aug. 31, to Aug. 31,
Increase (Decrease) in Net Asset Value: 1996 1995 1994
<S> <S> <C> <C> <C>
Per Share Net asset value, beginning of period $ 9.27 $ 9.25 $ 9.50
Operating ------------ ------------ ------------
Performance: Investment income--net .46 .95 .79
Realized and unrealized gain (loss) on
investments--net .07 (.04) (.32)
------------ ------------ ------------
Total from investment operations .53 .91 .47
------------ ------------ ------------
Less dividends from investment income--net (.52) (.89) (.71)
Capital charge resulting from the issuance of
Common Stock -- -- (.01)
------------ ------------ ------------
Net asset value, end of period $ 9.28 $ 9.27 $ 9.25
============ ============ ============
Market price per share, end of period $ 9.25 $ 9.00 $ 8.875
============ ============ ============
Total Investment Based on net asset value per share 5.93%+++ 10.77% 5.08%+++
Return:** ============ ============ ============
Based on market price per share 8.75%+++ 12.09% (4.22%)+++
============ ============ ============
Ratios to Expenses, net of reimbursement and excluding
Average Net interest expense 1.00%* 1.08% 1.51%*
Assets: ============ ============ ============
Expenses, net of reimbursement 3.10%* 3.63% 2.17%*
============ ============ ============
Expenses 3.10%* 3.63% 2.34%*
============ ============ ============
Investment income--net 10.02%* 10.35% 7.14%*
============ ============ ============
<PAGE>
Supplemental Net assets, end of period (in thousands) $ 154,858 $ 153,971 $ 153,652
Data: ============ ============ ============
Portfolio turnover 18.04% 51.51% 52.37%
============ ============ ============
Leverage: Amount of borrowings (in thousands) $ 28,000 $ 45,000 $ 60,000
============ ============ ============
Asset coverage per $1,000 $ 6,531 $ 4,422 $ 3,561
============ ============ ============
<FN>
*Annualized.
**Total investment returns based on market value, which can be
significantly greater or lesser than the net asset value, may result
in substantially different returns. Total investment returns exclude
the effects of sales loads.
++Commencement of Operations.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
Senior High Income Portfolio II, Inc. (the "Fund") is registered
under the Investment Company Act of 1940 as a non-diversified,
closed-end management investment company. These unaudited financial
statements reflect all adjustments which are, in the opinion of
management, necessary to a fair statement of the results for the
interim period presented. All such adjustments are of a normal
recurring nature. The Fund determines and makes available for
publication the net asset value of its Common Stock on a weekly
basis. The Fund's Common Stock is listed on the New York Stock
Exchange under the symbol SAL.
(a) Corporate debt obligations--The Fund invests principally in
senior debt obligations ("Senior Debt") of companies, including
corporate loans made by banks and other financial institutions and
both privately and publicly offered corporate bonds and notes.
Because agents and intermediaries are primarily commercial banks,
the Fund's investment in corporate loans could be considered
concentrated in financial institutions.
<PAGE>
(b) Valuation of investments--Portfolio securities are valued on the
basis of prices furnished by one or more pricing services, which
determines prices for normal, institutional-size trading units. In
certain circumstances, portfolio securities are valued at the last
sale price on the exchange that is the primary market for such
securities, or the last quoted bid price for those securities for
which the over-the-counter market is the primary market or for
listed securities in which there were no sales during the day. The
value of interest rate swaps, caps, and floors is determined in
accordance with a formula and then confirmed periodically by
obtaining a bank quotation. Positions in options are valued at the
last sale price on the market where any such option is principally
traded. Obligations with remaining maturities of sixty days or less
are valued at amortized cost unless this method no longer produces
fair valuations. Securities for which there exist no price
quotations or valuations and all other assets are valued at fair
value as determined in good faith by or on behalf of the Board of
Directors of the Fund. Since corporate loans are purchased and sold
primarily at par value, the Fund values the loans at par, unless
Fund Asset Management, L.P. ("FAM") determines par does not
represent fair value. In the event such a determination is made,
fair value will be determined in accordance with guidelines approved
by the Fund's Board of Directors. Determination of fair value
involves subjective judgment, as the actual market value of
particular corporate loans can be established only by negotiation
between the parties in a sales transaction.
(c) Derivative financial instruments--The Fund may engage in various
portfolio strategies to seek to increase its return by hedging its
portfolio against adverse movements in the debt markets. Losses may
arise due to changes in the value of the contract or if the
counterparty does not perform under the contract.
* Financial futures contracts--The Fund may purchase or sell
interest rate futures contracts and options on such futures
contracts for the purpose of hedging the market risk on existing
securities or the intended purchase of securities. Futures contracts
are contracts for delayed delivery of securities at a specific
future date and at a specific price or yield. Upon entering into a
contract, the Fund deposits and maintains as collateral such initial
margin as required by the exchange on which the transaction is
effected. Pursuant to the contract, the Fund agrees to receive from
or pay to the broker an amount of cash equal to the daily
fluctuation in value of the contract. Such receipts or payments are
known as variation margin and are recorded by the Fund as unrealized
gains or losses. When the contract is closed, the Fund records a
realized gain or loss equal to the difference between the value of
the contract at the time it was opened and the value at the time it
was closed.
<PAGE>
* Options--The Fund is authorized to write and purchase call and put
options. When the Fund writes an option, an amount equal to the
premium received by the Fund is reflected as an asset and an
equivalent liability. The amount of the liability is subsequently
marked to market to reflect the current market value of the option
written. When a security is purchased or sold through an exercise of
an option, the related premium paid (or received) is added to (or
deducted from) the basis of the security acquired or deducted from
(or added to) the proceeds of the security sold. When an option
expires (or the Fund enters into a closing transaction), the Fund
realizes a gain or loss on the option to the extent of the premiums
received or paid (or gain or loss to the extent the cost of the
closing transaction is less than or exceeds the premiums paid or
received).
Written and purchased options are non-income producing investments.
NOTES TO FINANCIAL STATEMENTS (concluded)
* Interest rate transactions--The Fund is authorized to enter into
interest rate swaps and purchase or sell interest rate caps and
floors. In an interest rate swap, the Fund exchanges with another
party their respective commitments to pay or receive interest on a
specified notional principal amount. The purchase of an interest
rate cap (or floor) entitles the purchaser, to the extent that a
specified index exceeds (or falls below) a predetermined interest
rate, to receive payments of interest equal to the difference
between the index and the predetermined rate on a notional principal
amount from the party selling such interest rate cap (or floor).
(d) Income taxes--It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute substantially all of its
taxable income to its shareholders. Therefore, no Federal income tax
provision is required.
(e) Security transactions and investment income--Security
transactions are recorded on the dates the transactions are entered
into (the trade dates). Interest income is recognized on the accrual
basis. Realized gains and losses on security transactions are
determined on the identified cost basis. Facility fees are accreted
to income over the term of the related loan. For income tax purposes
as of September 1, 1994, the corporate loans are treated as discount
obligations.
<PAGE>
(f) Deferred organization expenses--Deferred organization expenses
are amortized on a straight-line basis over a five-year period.
(g) Dividends and distributions--Dividends from net investment
income are declared and paid monthly. Distributions of capital gains
are recorded on the ex-dividend dates. The Fund may at times pay out
less than the entire amount of net investment income earned in any
particular period and may at times pay out such accumulated
undistributed income in other periods to permit the Fund to maintain
a more stable level of distributions.
2. Investment Advisory Agreement with Affiliates:
The Fund has entered into an Investment Advisory Agreement with FAM.
The general partner of FAM is Princeton Services, Inc. ("PSI"), an
indirect wholly-owned subsidiary of Merrill Lynch & Co., Inc. ("ML &
Co."), which is the limited partner.
FAM is responsible for the management of the Fund's portfolio and
provides the necessary personnel, facilities, equipment and certain
other services necessary to the operations of the Fund. For such
services, the Fund pays a monthly fee at an annual rate of 0.50% of
the Fund's average weekly net assets plus the proceeds of any
outstanding borrowings used for leverage.
Accounting services are provided to the Fund by FAM at cost.
During the six months ended February 29, 1996, the Fund paid Merrill
Lynch Security Pricing Service, an affiliate of Merrill Lynch,
Pierce, Fenner & Smith Inc. ("MLPF&S"), $1,142 for security price
quotations to compute the net asset value of the Fund.
Certain officers and/or directors of the Fund are officers and/or
directors of FAM, PSI, MLPF&S, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the six months ended February 29, 1996 were $35,829,225 and
$53,753,469, respectively.
Net realized and unrealized gains (losses) as of February 29, 1996
were as follows:
Realized Unrealized
Losses Gains
Long-term investments $(3,399,729) $1,461,335
----------- ----------
Total $(3,399,729) $1,461,335
=========== ==========
<PAGE>
As of February 29, 1996, net unrealized appreciation for financial
reporting and Federal income tax purposes aggregated $1,461,335, of
which $2,652,599 related to appreciated securities and $1,191,264
related to depreciated securities. The aggregate cost of investments
at February 29, 1996 for Federal income tax purposes was $179,041,986.
4. Capital Share Transaction:
The Fund is authorized to issue 200,000,000 shares of capital stock
par value $.10, all of which are initially classified as Common
Stock. The Board of Directors is authorized, however, to classify
and reclassify any unissued shares of capital stock without approval
of the holders of Common Stock.
For the six months ended February 29, 1996, shares issued and
outstanding increased by $81,987 to $16,692,514 as a result of
dividend reinvestment. At February 29, 1996, total paid-in capital
amounted to $158,344,986.
5. Short-Term Borrowings:
On October 26, 1993, the Fund entered into a credit facility with a
syndicate of banks led by The Bank of New York consisting of a one-
year $60,000,000 revolving credit facility bearing interest on
outstanding balances at an alternate base rate plus 0.20% and/or
LIBOR plus 1.20% and a two-year $20,000,000 term loan facility
bearing interest on outstanding balances at an alternate base rate
plus 0.45% and/or LIBOR plus 1.25%. On October 20, 1994, this credit
facility and all outstanding balances thereunder were refinanced by
a one-year $80,000,000 revolving credit facility extended by a
syndicate of banks led by The Bank of New York and bearing interest
on outstanding balances at the Federal Funds rate plus 1.00% and/or
an alternate base rate plus 0% and/or LIBOR plus 1.00%. On October
19, 1995, the existing credit facility was extended for an
additional year and amended to reduce the applicable interest rates
on outstanding balances to Federal Funds rate plus 0.55% and/or
alternate base rate plus 0% and/or LIBOR plus 0.55%. For the six
months ended February 29, 1996, the maximum amount borrowed was
$61,000,000, the average amount borrowed was approximately
$50,659,000 and the daily weighted average interest rate was 6.37%.
For the six months ended February 29, 1996, facility and commitment
fees aggregated approximately $48,464.
6. Capital Loss Carryforward:
At August 31, 1995, the Fund had a net capital loss carryforward of
approximately $1,273,000, all of which expires in 2003. This amount
will be available to offset like amounts of any future taxable
gains.
<PAGE>
7. Subsequent Event:
On March 8, 1996, the Board of Directors of the Fund declared an
ordinary income dividend in the amount of $0.073493 per share,
payable on March 29, 1996 to shareholders of record as of March 19,
1996. Additionally, on April 8, 1996, the Board of Directors of the
Fund declared an ordinary income dividend in the amount of $0.115202
per share, payable on April 19, 1996 to shareholders of record as of
April 12, 1996.
8. Reorganization Plan:
On April 15, 1996, pursuant to an agreement and plan of reorganization
approved by shareholders, Senior High Income Portfolio, Inc. acquired
substantially all of the assets and liabilities of the Fund and
Senior Strategic Income Fund, Inc. in exchange for newly issued
shares of Senior High Income Portfolio, Inc. Senior High Income
Portfolio, Inc. and Senior Strategic Income Fund, Inc. are registered,
non-diversified, closed-end management investment companies. All
three entities have a similar investment objective and are managed by
FAM. On April 15, 1996, the total net assets of the merged Fund
was $449,986,715.
PER SHARE INFORMATION
<TABLE>
Per Share
Selected Quarterly
Financial Data*
<CAPTION>
Net Realized Unrealized Dividends
Investment Gains Gains Net Investment Income
For the Quarter Income (Losses) (Losses) Common
<S> <C> <C> <C> <C>
March 1, 1994 to May 31, 1994 $.21 $(.03) $(.37) $.20
June 1, 1994 to August 31, 1994 .23 (.07) (.04) .21
September 1, 1994 to November 30, 1994 .22 --+++ (.19) .21
December 1, 1994 to February 28, 1995 .23 (.06) .16 .22
March 1, 1995 to May 31, 1995 .25 (.04) .17 .22
June 1, 1995 to August 31, 1995 .25 (.01) (.07) .24
September 1, 1995 to November 30, 1995 .23 (.23) .10 .23
December 1, 1995 to February 29, 1996 .23 .02 .17 .29
<PAGE>
<CAPTION>
Net Asset Value Market Price**
For the Quarter High Low High Low Volume***
<S> <C> <C> <C> <C> <C>
March 1, 1994 to May 31, 1994 $9.71 $9.27 $9.75 $8.625 1,422
June 1, 1994 to August 31, 1994 9.39 9.22 9.375 8.375 1,751
September 1, 1994 to November 30, 1994 9.27 9.06 9.00 7.875 2,205
December 1, 1994 to February 28, 1995 9.18 8.97 9.00 8.25 1,616
March 1, 1995 to May 31, 1995 9.34 9.17 8.875 8.25 2,067
June 1, 1995 to August 31, 1995 9.38 9.25 9.125 8.625 2,438
September 1, 1995 to November 30, 1995 9.33 9.13 9.50 9.00 1,609
December 1, 1995 to February 29, 1996 9.37 9.08 9.375 8.625 2,116
<FN>
*Calculations are based upon shares of Common Stock outstanding at
the end of each quarter.
**As reported in the consolidated transaction reporting system.
***In thousands.
+++Amount is less than $.01 per share.
</TABLE>
OFFICERS AND DIRECTORS
Arthur Zeikel, President and Director
Ronald W. Forbes, Director
Cynthia A. Montgomery, Director
Charles C. Reilly, Director
Kevin A. Ryan, Director
Richard R. West, Director
Terry K. Glenn, Executive Vice President
N. John Hewitt, Senior Vice President
Donald C. Burke, Vice President
John W. Fraser, Vice President
R. Douglas Henderson, Vice President
Gerald M. Richard, Treasurer
Patrick D. Sweeney, Secretary
Custodian and Transfer Agent
The Bank of New York
90 Washington Street, 12th Floor
New York, New York 10286
NYSE Symbol
SAL
