SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
________________________________________________________________________
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
June 10, 1998 (April 22, 1998)
SOVRAN SELF STORAGE, INC.
(Exact Name of Registrant as Specified in Charter)
Maryland 1-13820 16-1194043
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) (Identification No.)
5166 Main Street
Williamsville, NY 14221
(Address of Principal Executive Offices)
Registrants telephone number, including area code: (716) 633-1850
NOT APPLICABLE
(Former name or former address, if changed since last report)
________________________________________________________________________
<PAGE>
Item 2. Acquisition or Disposition of Assets
Sovran Self Storage, Inc. (the "Company") consummated during the
period April 22, 1998 through June 10, 1998, the acquisition of 6 self-
storage facilities (the "Acquired Facilities") through Sovran Acquisition
Limited Partnership, L.P. ("OP"), a limited partnership controlled by the
Company. The 6 facilities totaling approximately 433,000 square feet are
located in 5 states and were purchased for approximately $20.1 million.
All of the facilities were acquired from unaffiliated third parties.
The acquisitions were funded by cash generated from operations and
borrowings under the Company's line of credit. Each of the facilities
acquired was used by the seller as a self-storage facility prior to its
acquisition by the Company, and the Company intends to continue the use of
all facilities for that purpose. The Company's management determined the
contract price through arms-length negotiations, after taking into
consideration such factors as: the age and condition of the facility; the
projected amounts of maintenance costs; anticipated capital improvements;
the facility's current revenues; comparable facilities competing in the
applicable market; market rental rates for comparable facilities; the
occupancy rate of the facility; and the estimated amount of taxes, utility
costs, personnel costs and other anticipated expenses.
The following provides certain additional information concerning the 6
Acquired Facilities.
Date of Square
Location Seller Acquisition Price Feet
- -------------------------------------------------------------------------
Warren, OH White Properties, Ltd. 4/22/98 $ 2,358,000 60,230
Warren, OH White Properties, Ltd. 4/22/98 2,313,000 59,137
Waterford, MI Bernard Sherman 4/28/98 6,760,000 140,850
Jackson, MS Opus Group 5/13/98 3,650,000 62,052
Katy, TX Larry Beustring 5/20/98 1,900,000 44,175
Indian
Harbor, FL South Brevard Mini-Stor Ltd. 6/2/98 3,120,000 66,588
----------- -------
$20,101,000 433,032
In addition, the Company has 2 facilities under contract (the "Acquisition
Facilities") for which all contract contingencies are resolved and are
scheduled for closing. Both of the facilities are expected to be acquired
from unaffiliated third parties. The acquisitions will be funded by cash
generated from operations, borrowings under the Company's line of credit,
and the issuance of Operating Partnership units. The facilities are
currently used as self-storage facilities, and the Company intends to
continue the use of all facilities for that purpose. The following
provides certain additional information concerning the two pending
acquisitions.
Anticipated
Date of Estimated Square
Location Seller Acquisition Cost Feet
- --------------------------------------------------------------------------
**Vero Beach, FL William Caldwell 6/12/98 $ 2,260,000 34,450
Humble, TX R. L. Heinrichs 6/15/98 2,275,000 61,864
----------- ------
$ 4,535,000 96,314
** Vero Beach facility opened October 1997.
<PAGE>
Item 5. Other Events
The following unaudited information for the three months ended
March 31, 1998, relates to four facilities acquired since March 31, 1998,
for which the acquisitions were reported in the 8-K/A filed April 17, 1998.
The Historical Summaries of Combined Gross Revenue and Direct Operating
Expenses is included below to update the financial information on these
properties through March 31, 1998:
Date of Square
Location Seller Acquisition Price Feet
- ---------------------------------------------------------------------------
Salem, NH Salem Self Storage, Inc. 4/7/98 3,660,000 62,075
Durham, NC All American Self Storage 4/9/98 3,850,000 67,941
Durham, NC All American Self Storage 4/9/98 4,675,000 79,260
Hendersonville,
TN All American Self Storage 4/9/98 5,225,000 93,665
----------- -------
$17,410,000 302,941
Previously Reported Acquired Facilities
Historical Summaries of Combined Gross
Revenue and Direct Operating Expenses
For the three months ended March 31, 1998
(Unaudited)
(in thousands)
Revenues:
Rental income $ 530
Other income 10
Total revenue 540
Direct Operating Expenses:
Property operations and maintenance 90
Real estate taxes 23
Total direct operating expenses 113
Revenue in excess of direct
operating expenses $ 427
======
See accompanying notes.
<PAGE>
Previously Acquired Facilities
Notes to Historical Summaries of Combined Gross
Revenue and Direct Operating Expenses
(in thousands)
1. Basis of Presentation
The Historical Summaries of Combined Gross Revenue and Direct Operating
Expenses (Historical Summaries) have been prepared to comply with the rules
and regulations of the Securities and Exchange Commission for real estate
operations to be acquired. The Historical Summaries are not representative
of the actual operations for the periods presented, as certain expenses
which may not be comparable to the expenses expected to be incurred by the
Company in the proposed future operations of the 4 facilities have been
excluded. Expenses excluded consist of management fees, interest,
depreciation and amortization, and other indirect costs not directly
related to the future operations of the 4 facilities. Rental income is
recognized when due from occupants. Expenses are recognized on the accrual
basis.
2. Unaudited Interim Periods
The unaudited interim Historical Summaries for the three months ended
March 31, 1998, have been prepared in accordance with generally accepted
accounting principles for interim financial information. In the opinion of
management, all adjustments of a normal recurring nature considered
necessary for a fair presentation have been included. Operating results
for the three months ended March 31, 1998, are not necessarily indicative
of future operating results.
3. Use of Estimates
The preparation of the Historical Summaries in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements. Estimates also affect the reported amounts of
revenue and expenses during the reporting period. Actual results could
differ from those estimates.
<PAGE>
Item 7. Financial Statements and Exhibits
Page
(a) Financial Statements Applicable to Real Estate Properties Acquired
* Report of Independent Auditors 6
* Acquired and Acquisition Facilities Historical
Summaries of Combined Gross Revenue and Direct
Operating Expenses for the three months ended
March 31, 1998 and the year ended December 31, 1997 7
* Acquired and Acquisition Facilities Notes to
Historical Summaries of Combined Gross Revenue
and Direct Operating Expenses 8
(b) Pro Forma Financial Information
* Sovran Self Storage, Inc., Pro Forma Combined
Financial Information 10
* Sovran Self Storage, Inc., Pro Forma Combined
Balance Sheet as of March 31, 1998 11
* Sovran Self Storage, Inc., Pro Forma Combined
Statement of Operations
For the three months ended March 31, 1998 12
* Sovran Self Storage, Inc., Pro Forma Combined
Statement of Operations For the Year ended
December 31, 1997 13
* Sovran Self Storage, Inc., Notes to Pro Forma
Combined Financial Statements 14
(c) Exhibits
Exhibit No. Description
23 Consent of Independent Auditors,
Ernst & Young LLP. 16
<PAGE>
Report of Independent Auditors
Board of Directors
Sovran Self Storage, Inc.
We have audited the accompanying Historical Summaries of Combined Gross
Revenue and Direct Operating Expenses (the Historical Summaries) for seven
self storage facilities (the Acquired and Acquisition Facilities) as
described in Note 1, for the year ended December 31, 1997. These
Historical Summaries are the responsibility of the management of Sovran
Self Storage, Inc. Our responsibility is to express an opinion on the
Historical Summaries based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the Historical Summaries are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the Historical
Summaries. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall presentation of the Historical Summaries. We believe that our
audit provides a reasonable basis for our opinion.
The accompanying Historical Summaries were prepared for the purpose of
complying with the rules and regulations of the Securities and Exchange
Commission for inclusion in the Form 8-K of Sovran Self Storage, Inc. as
described in Note 1, and are not intended to be a complete presentation of
the Acquired and Acquisition Facilities revenue and expenses.
In our opinion, the Historical Summaries referred to above present fairly,
in all material respects, the combined gross income and direct operating
expenses of the Acquired and Acquisition Facilities for the year ended
December 31, 1997, in conformity with generally accepted accounting
principles.
/S/ Ernst & Young LLP
Buffalo, New York
June 9, 1998
<PAGE>
Acquired and Acquisition Facilities
Historical Summaries of Combined Gross
Revenue and Direct Operating Expenses
(in thousands)
Three Months Year ended December 31, 1997
Ended 5 1 2
March 31, 1998 Acquired Acquired Acquisition Total
8 Facilities Facilities Facility Facilities 8
(unaudited) (audited) (unaudited) (audited) Facilities
Revenues:
Rental income $ 871 $ 2,543 $ 270 $ 376 $ 3,189
Other income 11 35 - 5 40
_____ _______ _____ _____ _______
Total revenue 882 2,578 270 381 3,229
Direct Operating
Expenses:
Property operations
and maintenance 196 524 53 97 674
Real estate taxes 64 177 27 42 246
_____ _______ _____ _____ _______
Total direct
operating
expenses 260 701 80 139 920
_____ _______ _____ _____ _______
Revenue in excess
of direct operating
expenses $ 622 $ 1,877 $ 190 $ 242 $ 2,309
===== ======= ===== ===== =======
See accompanying notes.
<PAGE>
Acquired and Acquisition Facilities
Notes to Historical Summaries of Combined Gross
Revenue and Direct Operating Expenses
(in thousands)
1. Basis of Presentation
The historical summaries of combined gross revenue and direct operating
expenses (the "Historical Summaries") relate to the operations of the 8
facilities acquired since April 22, 1998 or which are probable of being
acquired as of June 10, 1998. These 8 facilities, have been, or are
expected to be, acquired from unaffiliated third parties by Sovran
Acquisition Limited Partnership (the "Partnership") for an aggregate
purchase price of $24.6 million. The general partner of the Partnership is
Sovran Self Storage, Inc. (the "Company").
The information presented for the year ended December 31, 1997, represents
the 12 month period ended December 31, 1997, or a period ended within 90
days of that date. In those instances where the information is for a 12
month fiscal period ended within 90 days of December 31, 1997, the
difference in gross revenue and direct operating expenses are not
considered to be material.
The Historical Summaries have been prepared to comply with the rules and
regulations of the Securities and Exchange Commission for real estate
operations to be acquired. The Historical Summaries are not representative
of the actual operations for the periods presented, as certain expenses
which may not be comparable to the expenses expected to be incurred by the
Company in the proposed future operations of the 8 facilities have been
excluded. Expenses excluded consist of management fees, interest,
depreciation and amortization, and other indirect costs not directly
related to the future operations of the 8 facilities. Rental income is
recognized when due from occupants. Expenses are recognized on the accrual
basis.
7 Facilities - Audited
Actual or Anticipated Actual or Anticipated
Location Date of Acquisition Location Date of Acquisition
Acquired Facilities
Warren, OH 4/22/98 Warren, OH 4/22/98
Waterford, MI 4/28/98 Jackson, MS 5/13/98
Indian Harbor, FL 6/2/98
Acquisition Facilities
**Vero Beach, Fl 6/12/98 Humble, TX 6/15/98
** The Vero Beach facility was opened in October 1997. Therefore, the
results of operations of this facility included in the Historical Summary
of Combined Gross Revenue and Direct Operating Expenses for the year ended
December 31, 1997, include only the period from October through December
1997.
1 Facility - Unaudited
Location Date of Acquisition
Katy, TX 5/20/98
<PAGE>
Acquired and Acquisition Facilities
Notes to Historical Summaries of Combined Gross
Revenue and Direct Operating Expenses
(in thousands)
2. Unaudited Interim Periods
The unaudited interim Historical Summaries for the three months ended March
31, 1998, have been prepared in accordance with generally accepted
accounting principles for interim financial information. In the opinion of
management, all adjustments of a normal recurring nature considered
necessary for a fair presentation have been included. Operating results
for the three months ended March 31, 1998, are not necessarily indicative
of future operating results.
3. Use of Estimates
The preparation of the Historical Summaries in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements. Estimates also affect the reported amounts of
revenue and expenses during the reporting period. Actual results could
differ from those estimates.
<PAGE>
Sovran Self Storage, Inc.
Pro Forma Combined Financial Information
The following unaudited Pro Forma Combined Balance Sheet as of March 31,
1998 and unaudited Pro Forma Combined Statement of Operations for the three
months ended March 31, 1998 and the year ended December 31, 1997, have been
prepared to reflect the Companys acquisition or expected acquisition of
self storage facilities and the adjustments described in the accompanying
notes. The pro forma combined financial information is based on the
historical financial statements of Sovran Self Storage, Inc. included in
(i.) the Company's 10-Q for the three months ended March 31, 1998, (ii) the
Companys 10-K for the year ended December 31, 1997, (iii) the historical
summaries of combined gross revenue and direct operating expenses included
in the Companys 8-K/A Report dated April 17, 1998, and (iv) the other
financial information in the Company's 1997 Annual Report to Shareholders,
and should be read in conjunction with those financial statements and notes
thereto. The Pro Forma Combined Balance Sheet was prepared as if the 12
facilities that were purchased or are expected to be purchased after March
31, 1998, were acquired at that date. The Pro Forma Combined Statements of
Operations were prepared as if the 44 self storage facilities acquired in
1997 and the 30 facilities acquired or expected to be acquired in 1998 were
purchased at the beginning of 1997. The combined pro forma financial
information is not necessarily indicative of the financial position or
results of operations which actually would have occurred if such
transactions had been consummated on the dates described, nor does it
purport to represent the Company's future financial position or results of
operations.
<PAGE>
<TABLE>
Sovran Self Storage, Inc.
Pro Forma Combined Balance Sheet
March 31, 1998
(in thousands)
(unaudited)
<CAPTION>
Pro Forma Adjustments
_____________________
Sovran Previously Acquired and Sovran
Self Storage Reported Acquisition Self
Historical 4 Facilities 8 Facilities Storage, Inc.
(Note 1) (Note 2) (Note 3) (Pro Forma)
________ ________ ________ ___________
<S> <C> <C> <C> <C>
Assets
Investment in storage facilities,
net $ 376,792 $ 17,410 $ 24,636 $ 418,838
Cash and cash equivalents 2,987 - - 2,987
Accounts receivable 1,204 5 - 1,209
Prepaid expenses and other assets 3,484 - 19 3,503
________ ________ ________ ________
Total assets $ 384,467 $ 17,415 $ 24,655 $ 426,537
========= ========= ========= =========
Liabilities
Line of credit $ 88,000 $ 17,242 $ 24,046 $ 129,288
Accounts payable and accrued
liabilities 5,195 51 122 5,368
Deferred revenue 2,506 122 214 2,842
Accrued dividends 6,659 - - 6,659
Mortgage payable 3,059 - - 3,059
________ ________ ________ ________
Total liabilities 105,419 17,415 24,382 147,216
Minority interest 12,808 - 273 13,081
Shareholders' Equity
Common stock, $.01 par value 123 - - 123
Additional paid-in capital 273,317 - - 273,317
<PAGE>
Unearned restricted stock (28) - - (28)
Dividends in excess of net income (7,172) - - (7,172)
_______ ________ ________ ________
Total shareholder's equity 266,240 - - 266,240
_______ ________ ________ ________
Total liabilities and
shareholder's equity $ 384,467 $ 17,415 $ 24,655 $ 426,537
========= ========= ========= =========
See notes to pro forma combined financial information
</TABLE>
<PAGE>
Sovran Self Storage, Inc.
Pro Forma Combined Statement of Operations
For the Three Months ended March 31, 1998
(in thousands, except per share data) (unaudited)
<TABLE>
<CAPTION>
18 Acquisitions 4 Acquisitions 1998
Prior to Subsequent to 8 Acquired
Sovran March 31, 1998 March 31, 1998 and Acquisition
Self Storage Preacquisition Reported in Facilities included Pro Forma Sovran Self
Historical Pro forma Previous 8-K in this 8-K Adjustments Storage, Inc.
(Note 1) (Note 4) (Note 4) (Note 4) (Note 6) Pro Forma
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Rental income $14,175 $ 950 $ 530 $ 871 $ - $ 16,526
Interest and
other income 200 28 10 11 - 249
Total revenue 14,375 978 540 882 - 16,775
Expenses:
Property operations
and maintenance 2,818 223 90 196 - 3,327
Real estate
taxes 1,188 76 23 64 - 1,351
General and
administrative 854 43 - - 8 (a) 905
Interest 1,215 435 - - 645 (b) 2,295
Depreciation and
amortization 2,097 146 - - 211 (c) 2,454
Total expenses 8,172 923 113 260 864 10,332
Income before
minority interest
and extraordinary
item 6,203 55 427 622 (864) 6,443
Minority interest (205) (2) - - (11) (d) (218)
Income before
extraordinary
item 5,998 53 427 622 (875) 6,225
<PAGE>
Extraordinary
item - extinguishment
of debt 350 - - - - 350
Net income $ 5,648 $ 53 $ 427 $ 622 $ (875) $ 5,875
=====================================================================================
Earnings per share
before extra-
ordinary item -
basic $ 0.49 $ 0.50(e)
Extraordinary
item (0.03) (0.02)
_______ _______
Earnings per
share - basic $ 0.46 $ 0.48
======= =======
Earnings per
share - diluted $ 0.46 $ 0.47
======= =======
Dividends declared
per share $ 0.54 $ 0.54
======= =======
Common shares
used in basic
per share
calculation 12,289,467 12,330,963
See notes to pro forma combined financial information
</TABLE>
<PAGE>
Sovran Self Storage, Inc.
Pro Forma Combined Statement of Operations
For the Year ended December 31, 1997
(in thousands, except per share data) (unaudited)
<TABLE>
<CAPTION>
1997 1998
Sovran Acquisitions 30 Acquired
Self Storage Preacquisition and Acquisition Pro Forma Sovran
Historical Pro forma Facilities Adjustments Self Storage, Inc.
(Note 1) (Note 5) (Note 5) (Note 6) Pro Forma
________________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
Revenues:
Rental income $ 48,584 $ 4,680 $ 11,922 $ - $65,186
Interest and
other income 770 51 221 - 1,042
________________________________________________________________________________________
Total revenue 49,354 4,731 12,143 66,228
Expenses:
Property operations
and maintenance 9,708 1,020 2,490 - 13,218
Real estate taxes 3,955 397 844 - 5,196
General and
administrative 2,757 43 - 163 (a) 2,963
Interest 2,166 1,001 - 5,844 (b) 9,011
Depreciation and
amortization 7,005 737 - 1,929 (c) 9,671
________________________________________________________________________________________
Total expenses 25,591 3,198 3,334 7,936 40,059
________________________________________________________________________________________
Income before minority
interest 23,763 1,533 8,809 (7,936) 26,169
Minority interest (644) (241) - (52) (d) (937)
________________________________________________________________________________________
Net income $ 23,119 $ 1,292 $ 8,809 $ (7,988) $25,232
========================================================================================
<PAGE>
Earnings per
share-basic $ 1.97 $ 2.05(e)
-diluted $ 1.96 $ 2.04
Dividends declared
per share $ 2.12 $ 2.12
Common shares used
in basic per share
calculation 11,759,000 12,330,963
See notes to pro forma combined financial information
</TABLE>
<PAGE>
Sovran Self Storage, Inc.
Notes to Pro Forma Combined Financial Statements
(in thousands, except per share data)
(unaudited)
1. Sovran Self Storage Historical
The consolidated balance sheet and statement of operations as of and for
the three months ended March 31, 1998 and the year ended December 31, 1997,
include the accounts of Sovran Self Storage, Inc. (the "Company"), Sovran
Acquisition Limited Partnership (the "Partnership"), and Sovran Holdings,
Inc., a wholly-owned subsidiary of the Company.
2. Balance Sheet - Pro Forma Adjustments Previously Reported 4 Facilities
These adjustments reflect the 4 acquisitions that occurred subsequent to
March 31, 1998, that were reported in the Companys 8-K/A Report filed April
17, 1998, and were not included in the Sovran Self Storage Historical March
31, 1998 balance sheet. See Item 5 of this 8-K for more information on
these properties. The cash portion of the purchase price is considered to
be an increase in the amounts outstanding under the Companys line of
credit. The partnership units issued in connection with certain of these
facilities is recorded as minority interest.
3. Balance Sheet - Pro Forma Adjustments 8 facilities
This adjustment reflects the acquisition or expected acquisition of the 8
facilities detailed in Item 2 of this 8-K that have been or are probable of
being purchased subsequent to March 31, 1998. The cash portion of the
purchase price is considered to be an increase in the amounts outstanding
under the Companys line of credit. The partnership units issued in
connection with certain of these facilities is recorded as minority
interest.
4. Statement of Operations March 31, 1998
18 Acquisitions Prior to March 31, 1998
The statements of operations for the 18 acquisitions prior to March 31,
1998 reflect the results of operations for these facilities for the period
not owned by the Company during the three months ended March 31, 1998.
4 Acquisitions Subsequent to March 31, 1998 Reported in Previous 8-K
The statements of operations for the 4 acquisitions subsequent to March 31,
1998 reflect the results of operations for these facilities for the period
March 31, 1998 which is detailed in Item 5 of this 8-K.
1998 8 Acquired and Acquisition Facilities
The statements of operations for the 8 Acquired and Acquisition Facilities
reflect the results of operations for these facilities for the three months
ended March 31, 1998, which are reported in the Historical Summaries of
Combined Gross Revenue and Direct Operating Expenses included elsewhere
herein.
<PAGE>
Sovran Self Storage, Inc.
Notes to Pro Forma Combined Financial Statements
(in thousands, except per share data)
(unaudited)
5. Statement of Operations December 31, 1997
1997 Acquisitions Preacquisition Pro forma
The statements of operations for the 44 acquisitions prior to December 31,
1997 reflect the results of operations for these facilities for the period
not owned by the Company during the year ended December 31, 1997.
1998 30 Acquired and Acquisition Facilities
The statements of operations for the 30 Acquired and Acquisition Facilities
reflect the results of operations for these facilities for the three months
ended March 31, 1998, which are reported in the Historical Summaries of
Combined Gross Revenue and Direct Operating Expenses included elsewhere
herein (8 facilities) and in the Companys 8-K/A filed April 17, 1998.
6. Pro Forma Adjustments - Statement of Operations
(a) To reflect an estimated increase in general and administrative
expenses based on results subsequent to acquisition.
(b) To reflect interest expense on the line of credit utilized to fund the
purchase of the acquired or acquisition facilities.
(c) To record additional depreciation expense related to the facilities
based on a 39 year life.
(d) To adjust minority interest based on adjustments to net income of the
Company and additional average of operating partnership units
outstanding.
(e) Pro forma earnings per share calculated as if the shares outstanding
at March 31, 1998 had been outstanding for the entire period
presented.
<PAGE>
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration Statement
(Form S-8 No. 333-08883) of Sovran Self Storage, Inc. and in the related
Prospectus of our report dated June 9, 1998, with respect to the historical
summaries of combined gross revenue and direct operating expenses in this
Form 8-K for the year ended December 31, 1997.
We also consent to the incorporation by reference in the Registration
Statement (Form S-8 No. 333-21679) pertaining to the 1995 Award and Option
Plan and the 1995 Directors Stock Option Plan of Sovran Self Storage, Inc.
of our report dated June 9, 1998, with respect to the historical summaries
of combined gross revenue and direct operating expenses in this Form 8-K
for the year ended December 31, 1997.
We also consent to the incorporation by reference in the Registration
Statement (Form S-3 No. 333-51169) of Sovran Self Storage, Inc. and Sovran
Acquisition Limited Partnership and in the related Prospectus of our report
dated June 9, 1998, with respect to the historical summaries of combined
gross revenue and direct operating expenses in this Form 8-K for the year
ended December 31, 1997.
/S/ Ernst & Young LLP
Buffalo, New York
June 9, 1998
<PAGE>
