SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended August 2, 1997 or
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from ______________ to
______________
Commission File Number 1-7562
THE GAP, INC.
(Exact name of registrant as specified in its charter)
Delaware 94-1697231
(State of Incorporation) (I.R.S. Employer
Identification No.)
One Harrison
San Francisco, California 94105
(Address of principal executive offices)
Registrant's telephone number, including area code: (415) 427-2000
_______________________
Securities registered pursuant to Section 12(b) of the Act:
Common Stock, $0.05 par value New York Stock Exchange, Inc.
(Title of class) Pacific Stock Exchange, Inc.
(Name of each exchange where registered)
Securities registered pursuant to Section 12(g) of the Act: None
_______________________
Indicate by check mark whether Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's classes of
Common Stock, as of the latest practicable date.
Common Stock, $0.05 par value, 268,114,161 shares as of August 25, 1997
PART 1 THE GAP, INC. AND SUBSIDIARIES
ITEM 1 CONDENSED CONSOLIDATED BALANCE SHEETS
($000) August 2, February 1, August 3,
1997 1997 1996
(Unaudited) (See Note 1) (Unaudited)
ASSETS
Current Assets:
Cash and equivalents $ 220,148 $ 485,644 $ 514,213
Short-term investments 37,454 135,632 74,061
Merchandise inventory 791,925 578,765 573,080
Prepaid expenses and other 151,562 129,214 142,549
Total Current Assets 1,201,089 1,329,255 1,303,903
Property and equipment (net) 1,234,384 1,135,720 1,018,729
Long-term investments 5,465 36,138 53,963
Lease rights and other assets 135,811 125,814 82,705
Total Assets $ 2,576,749 $ 2,626,927 $ 2,459,300
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Notes payable 90,245 40,050 67,196
Accounts payable 384,464 351,754 313,866
Accrued expenses 264,499 282,494 218,655
Income taxes payable 31,402 91,806 32,877
Deferred lease credits and other current liabilities 11,905 8,792 8,902
Total Current Liabilities 782,515 774,896 641,496
Long-term Liabilities:
Deferred lease credits and other liabilities 234,273 197,561 166,395
234,273 197,561 166,395
Stockholders' Equity:
Common stock $.05 par value
Authorized 500,000,000 shares
Issued 318,561,437, 317,864,090
and 317,312,752 shares
Outstanding 268,045,522, 274,517,331
and 283,396,874 shares 15,929 15,895 15,866
Additional paid-in capital 477,052 442,049 415,135
Retained earnings 2,051,955 1,938,352 1,674,266
Foreign currency translation adjustment (6,490) (5,187) (7,468)
Restricted stock plan deferred compensation (38,068) (47,838) (46,903)
Treasury stock, at cost (940,417) (688,801) (399,487)
1,559,961 1,654,470 1,651,409
Total Liabilities and Stockholders' Equity $ 2,576,749 $ 2,626,927 $ 2,459,300
See accompanying notes to consolidated financial statements.
THE GAP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
Thirteen Weeks Ended Twenty-six Weeks Ended
Unaudited August 2, August 3, August 2, August 3,
($000 except per share amounts) 1997 1996 1997 1996
Net sales $ 1,345,221 $ 1,120,335 $ 2,576,407 $ 2,233,489
Costs and expenses
Cost of goods sold and 883,086 720,165 1,672,212 1,419,479
occupancy expenses
Operating expenses 352,462 295,381 664,373 578,008
Net interest income (1,459) (3,956) (6,197) (7,574)
Earnings before income taxes 111,132 108,745 246,019 243,576
Income taxes 41,674 42,955 92,257 96,213
Net earnings $ 69,458 $ 65,790 $ 153,762 $ 147,363
Weighted average number
of shares 269,687,093 286,179,138 271,581,001 287,092,901
Earnings per share $ 0.26 $ 0.23 $ 0.57 $ 0.51
Cash dividends per share $ 0.075 $ 0.075 $ 0.15 $ 0.15
See accompanying notes to consolidated financial statements.
THE GAP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Unaudited ($000) Twenty-six Weeks Ended
August 2, 1997 August 3, 1996
Cash Flows from Operating Activities:
Net earnings $ 153,762 $ 147,363
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization (a) 126,540 105,986
Tax benefit from exercise of stock options by
employees and from vesting of restricted stock 12,707 43,526
Change in operating assets and liabilities:
Merchandise inventory (213,821) (90,068)
Prepaid expenses and other (25,251) (14,973)
Accounts payable 36,366 50,131
Accrued expenses (17,525) 24,035
Income taxes payable (60,321) (33,385)
Deferred lease credits and other
long-term liabilities 36,310 17,392
Net cash provided by operating activities 48,767 250,007
Cash Flows from Investing Activities:
Net maturity of short-term investments 137,263 23,463
Purchase of long-term investments (49,188) (31,611)
Sale of long-term investments 40,810 -
Purchase of property and equipment (211,383) (151,033)
Acquisition of lease rights and other assets (10,681) (8,428)
Net cash used for investing activities (93,179) (167,609)
Cash Flows from Financing Activities:
Net increase in notes payable 50,279 44,639
Issuance of common stock 20,782 26,565
Purchase of treasury stock (251,616) (177,427)
Cash dividends paid (40,160) (42,444)
Net cash used for financing activities (220,715) (148,667)
Effect of exchange rate changes on cash (369) 916
Net decrease in cash and equivalents (265,496) (65,353)
Cash and equivalents at beginning of year 485,644 579,566
Cash and equivalents at end of quarter $ 220,148 $ 514,213
See accompanying notes to consolidated financial statements.
(a) Includes amortization of restricted stock.
THE GAP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION
The condensed consolidated balance sheets as of August 2, 1997 and August
3, 1996, and the interim condensed consolidated statements of earnings
and the interim condensed consolidated statements of cash flows for the
thirteen and twenty-six weeks ended August 2, 1997 and August 3, 1996
have been prepared by the Company, without audit. In the opinion of
management, such statements include all adjustments (which include only
normal recurring adjustments) considered necessary to present fairly the
financial position, results of operations and cash flows of the Company
at August 2, 1997 and August 3, 1996, and for all periods presented.
Certain information and footnote disclosures normally included in the
annual financial statements prepared in accordance with generally
accepted accounting principles have been omitted from these interim
financial statements. It is suggested that these condensed consolidated
financial statements be read in conjunction with the consolidated
financial statements and notes thereto included in the Company's annual
report on Form 10-K for the year ended February 1, 1997.
The results of operations for the twenty-six weeks ended August 2, 1997
are not necessarily indicative of the operating results that may be
expected for the year ending January 31, 1998.
2. SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Year-to-date 1997 and 1996 gross interest payments were $1.7 million and
$1.9 million respectively; income tax payments were $140.8 million and
$85.7 million respectively.
3. DERIVATIVES
The Company enters into foreign exchange contracts to reduce exposure to
foreign currency exchange risk. These contracts are primarily designated
and effective as hedges of commitments to purchase merchandise. The market
value gains and losses on these contracts are deferred and recognized as
part of the underlying cost to purchase the merchandise.
During the second quarter, the Company entered into various put option
contracts to repurchase up to 2,000,000 shares of Gap stock. The contracts
have exercise prices ranging from $36.77 to $42.67, with expiration dates
ranging from September 1997 through November 1997.
Also in the second quarter, the Company entered into interest rate swaps
in order to reduce interest rate risk on a substantial portion of its
intended issuance of its long-term debt. The Company intends to amortize
any gain or loss associated with these swaps over the life of the debt
securities.
4. RECLASSIFICATION OF INVESTMENTS
Prior to July 1997, investments were classified as held to maturity and
were carried at amortized cost. In July 1997 the Company sold short-and
long-term debt securities prior to their maturity. The Company used the
proceeds for general corporate purposes. Consequently, at August 2,
1997, all investments are classified as available for sale and are
reported at fair market value. The gains and losses on investments are
deferred and recorded in equity.
5. NEW ACCOUNTING PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board issued Statements
of Accounting Standards No. 130, Reporting Comprehensive Income, which
requires that an enterprise report, by major components and as a single
total, the change in its net assets during the period from non-owner
sources; and No. 131, Disclosures About Segments of an Enterprise and
Related Information, which establishes annual and interim reporting
standards for an enterprise's operating segments and related disclosures
about its products, services, geographic areas and major customers.
Adoption of these standards will not impact the Company's consolidated
financial position, results of operations or cash flows, and any effect
will be limited to the form and content of its disclosures. Both
statements are effective for fiscal years beginning after December 15,
1997, with earlier application permitted.
Deloitte &
Touche LLP
50 Fremont Street Telephone:(415) 247-4000
San Francisco, California 94105-2230 Facsimile:(415) 247-4329
INDEPENDENT ACCOUNTANTS' REPORT
To the Board of Directors and Stockholders of
The Gap, Inc.:
We have reviewed the accompanying condensed consolidated balance sheets of
The Gap, Inc. and subsidiaries as of August 2, 1997 and August 3, 1996 and
the related condensed consolidated statements of earnings for the thirteen
and twenty-six week periods ended August 2, 1997 and August 3, 1996 and
condensed consolidated statements of cash flows for the twenty-six week
periods ended August 2, 1997 and August 3, 1996. These financial statements
are the responsibility of the Company's management.
We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures
to financial data and of making inquiries of persons responsible for
financial and accounting matters. It is substantially less in scope than an
audit conducted in accordance with generally accepted auditing standards,
the objective of which is the expression of an opinion regarding the
financial statements taken as a whole. Accordingly, we do not express such
an opinion.
Based on our reviews, we are not aware of any material modifications that
should be made to such consolidated financial statements for them to be in
conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of The Gap, Inc. and subsidiaries
as of February 1, 1997, and the related consolidated statements of earnings,
stockholders' equity and cash flows for the year then ended (not presented
herein); and in our report dated February 27, 1997, we expressed an
unqualified opinion on those consolidated financial statements. In our
opinion, the information set forth in the accompanying consolidated balance
sheet as of February 1, 1997 is fairly stated, in all material respects, in
relation to the consolidated balance sheet from which it was derived.
/s/ Deloitte & Touche LLP
San Francisco, California
August 12, 1997
THE GAP, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
The information below contains certain forward-looking statements which reflect
the Company's current view with respect to future events and financial
performance. Wherever used, the words "expect," "plan," "anticipate,"
"believe," and similar expressions identify forward-looking statements.
Any such forward-looking statements are subject to risks and uncertainties that
could cause the Company's actual results of operations to differ materially
from historical results or current expectations. Some of these risks include,
without limitation, ongoing competitive pressures in the apparel industry, a
continuation or exacerbation of the current over-capacity problem affecting the
industry, and/or changes in the level of consumer spending or preferences in
apparel, and other factors that may be described in the Company's filings with
the Securities and Exchange Commission. Future economic and industry trends
that could potentially impact revenues and profitability remain difficult to
predict.
The Company does not undertake to publicly update or revise its forward-looking
statements even if experience or future changes make it clear that any
projected results expressed or implied therein will not be realized.
RESULTS OF OPERATIONS
Net Sales
Thirteen Weeks Ended Twenty-six Weeks Ended
August 2, 1997 August 3, 1996 August 2, 1997 August 3, 1996
Net sales ($000) 1,345,221 1,120,335 2,576,407 2,233,489
Total net sales 20 29 15 30
growth percentage
Comparable store sales 4 9 0 9
growth percentage
Net sales per average 99 96 194 194
square foot ($)
Square footage of gross store
space at period end (000) 13,750 11,805
Fifty-two Fifty-three
weeks ended weeks ended
August 2, 1997 August 3, 1996
Number of
New stores 254 219
Expanded stores 56 47
Closed stores 27 47
The increases in second quarter and the first half of 1997 net sales over the
same periods last year were attributable to the increase in retail selling
space, both through the opening of new stores (net of stores closed) and the
expansion of existing stores. Growth in comparable stores sales also
contributed to the increase in net sales for the quarter.
Cost of Goods Sold and Occupancy Expenses
Cost of goods sold and occupancy expenses as a percentage of net sales
increased to 65.6 percent for the second quarter of 1997 from 64.3 percent for
the same period in 1996. The 1.3 percentage point decrease in gross margin net
of occupancy expenses was attributable to a 2.0 percentage point decrease in
merchandise margins as a percentage of net sales, offset by a .7 percentage
point decrease in occupancy expenses as a percentage of net sales.
For the first half of 1997, cost of goods sold and occupancy expenses as a
percentage of net sales increased to 64.9 percent from 63.5 percent for the
same period in 1996. The 1.4 percentage point decrease in gross margin net of
occupancy expenses was attributable to a 1.6 percentage point decrease in
merchandise margins as a percentage of net sales offset by a .2 percentage
point decrease in occupancy expenses as a percentage of net sales.
For the second quarter and first half of 1997, decreases in merchandise margins
as a percentage of net sales resulted from a smaller percentage of merchandise
sold at regular prices when compared to the same periods last year. Margin
achieved on marked-down goods was also lower than that of last year.
The Company reviews its inventory levels in order to identify slow-moving
merchandise and broken assortments (items no longer in stock in a sufficient
range of sizes) and uses markdowns to clear merchandise. Such markdowns may
have an adverse impact on earnings depending upon the extent of the markdowns
and amount of inventory affected.
For the second quarter and first half of 1997, occupancy expenses decreased as
a percentage of net sales when compared to the same periods last year. The
decrease in occupancy expenses as a percentage of net sales for the quarter was
primarily attributable to leverage achieved through increases in comparable
store sales. The growth of the Old Navy division, with lower occupancy
expenses when compared to other divisions, primarily caused the decrease in the
first half of 1997 from the same period in 1996.
Operating Expenses
Operating expenses as a percentage of net sales decreased to 26.2 percent for
the second quarter of 1997 from 26.4 percent for the same period in 1996. The
.2 percentage point decrease was primarily attributable to a .4 percentage
point decrease in charitable contributions expense and a .5 percentage point
decrease in incentive bonus accruals and stock-based compensation, offset by a
planned .7 percentage point increase in advertising/marketing costs to support
the Company's brands. The decrease in charitable contributions expense
represents a beneficial comparison between 1997 and 1996, as the Company, in
1996, made an additional contribution to the Gap Foundation.
Incentive bonus is accrued quarterly based on year-to-date performance measured
against established targets. The rate of accrual in 1997 was lower than that
in 1996.
For the first half of 1997, operating expenses as a percentage of net sales
were essentially flat at 25.8 percent when compared to the same period in 1996.
A .7 percentage point increase in advertising/marketing costs offset a .5
percentage point decrease in incentive bonus accruals and stock-based
compensation, and a .3 percentage point decrease in charitable contributions
expense.
Net Interest Income/Expense
Net interest income was approximately $1.5 million for the second quarter and
$6.2 million for the first half of 1997 compared to net interest income of $4.0
million and $7.6 million for the same periods in 1996. The change in 1997 from
1996 was due to a decrease in average investments for the quarter and year-to-
date periods.
Income Taxes
The effective tax rate was 37.5 percent for the first half of 1997 compared to
39.5 percent for the first half of 1996. The decrease in the effective tax
rate was a result of the impact from tax planning initiatives to support
changing business needs.
LIQUIDITY AND CAPITAL RESOURCES
The following sets forth certain measures of the Company's liquidity:
Twenty-six weeks ended
August 2, 1997 August 3, 1996
Cash provided by operating activities ($000) $48,767 $250,007
Working capital ($000) $418,574 $662,407
Current ratio 1.5:1 2.0:1
For the twenty-six weeks ended August 2, 1997, the decrease in cash flows
provided by operating activities was primarily attributable to an increased
investment in inventory and the timing of certain payables and accrued
expenses, including income taxes.
The Company funds inventory expenditures during normal and peak periods through
a combination of cash flows provided by operations and normal trade credit
arrangements. The Company's business follows a seasonal pattern, peaking over
a total of about ten to twelve weeks during the late summer and holiday
periods.
The Company has committed credit facilities totalling $950 million, consisting
of an $800 million, 364-day revolving credit facility, and a $150 million, 5-
year revolving credit facility through June 30, 2002. These credit facilities
provide for the issuance of up to $450 million in letters of credit. The
Company has additional uncommitted credit facilities of $300 million for the
issuance of letters of credit. At August 2, 1997, the Company had outstanding
letters of credit of approximately $593 million.
To ensure long-term financial flexibility, management plans to issue $500
million of 10-year debt securities in the third quarter. The Company is filing
a registration statement with the Securities and Exchange Commission with
respect to these securities. The proceeds from this issuance are intended to
be used for general corporate purposes, including store expansion, brand
investment, development of additional distribution channels and repurchases
of the Company's common stock pursuant to its ongoing share repurchase
program. No assurances can be given that the Company will issue these
long-term debt securities.
For the twenty-six weeks ended August 2, 1997, capital expenditures net of
construction allowances and dispositions, totaled approximately $209 million.
These expenditures included the addition of 141 new stores, the expansion of 36
stores and the remodeling of certain stores, resulting in a net increase in
store space of approximately 1.1 million square feet or 9 percent since
February 1, 1997.
For 1997, the Company expects capital expenditures to total at least $450
million, net of construction allowances, representing the addition of at least
275 new stores, the expansion of at least 75 stores, and the remodeling of
certain stores. Planned expenditures also include amounts for corporate
offices, distribution centers, and equipment. The Company expects to fund such
capital expenditures through a combination of cash flow from operations and
other sources of financing. Square footage growth is expected to be
approximately 18 percent before store closings. New stores are generally
expected to be leased.
The Company is nearing completion on corporate offices in San Bruno,
California. The cost of completion is included above in the capital
expenditures projected for 1997. The Company continues to explore alternatives
for additional corporate offices in San Francisco and San Bruno, California.
In October 1996, the Board of Directors approved a program under which the
Company may repurchase up to 30 million shares of its outstanding common stock
in the open market over a three-year period. During the second quarter, the
Company acquired 3.5 million shares for approximately $131 million. To date
under this program, 12.0 million shares have been repurchased for approximately
$392 million.
During the second quarter the Company entered into various put option
contracts to repurchase up to 2,000,000 shares of Gap stock. The contracts
have exercise prices ranging from $36.77 to $42.67, with expiration dates
ranging from September 1997 through November 1997.
The Company enters into foreign exchange contracts to reduce exposure to
foreign currency exchange risk. These contracts are primarily designated
and effective as hedges of commitments to purchase merchandise. During
the second quarter, the Company entered into interest rate swaps in order
to reduce interest rate risk on a substantial portion of its intended
issuance of its long-term debt.
PART II
OTHER INFORMATION
Item 4. Submissions of Matters to a Vote of Security Holders
a) On May 20, 1997, the Annual Meeting of Stockholders of the Company
was held in San Francisco, California. There were 273,698,780 shares of common
stock outstanding on the record date and entitled to vote at the Annual
Meeting.
b) The following directors were elected:
Vote For Vote Withheld
Adrian D.P. Bellamy 248,595,894 837,887
John G. Bowes 248,594,133 839,647
Millard S. Drexler 248,563,883 869,897
Donald G. Fisher 248,563,913 869,867
Doris F. Fisher 248,565,822 867,959
Robert J. Fisher 248,566,823 866,957
Lucie J. Fjeldstad 248,595,795 837,986
William A. Hasler 253,595,123 838,658
John M. Lillie 248,596,917 836,863
Charles R. Schwab 248,594,941 838,840
Brooks Walker, Jr. 248,595,105 838,676
There were no abstentions and no broker non-votes.
c) The selection of Deloitte & Touche, LLP as independent auditors for
the fiscal year ending January 31, 1998 was ratified with 249,115,349 votes in
favor and 68,273 against.
There were 250,158 abstentions.
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits
(10.1) Amendment Number 1 to the Registrant's 1996
Stock Option and Award Plan
(10.2) Termination Agreement dated July 1, 1997 related to Credit
Agreement dated August 1, 1995 between the Registrant and
Citicorp USA Inc.
(10.3) $800,000,000 Credit Agreement dated as of July 1, 1997
between the Registrant; Citicorp USA INC.; Bank Of America
National; Trust & Savings Association; The Hongkong and
Shanghai Banking Corporation Limited; Nationsbank Of Texas,
N.A.; The Royal Bank Of Canada; Bank Of Montreal; Societe
Generale; The Fuji Bank, Limited; Morgan Guaranty Trust
Company Of New York; The Sumitomo Bank Limited; Deutsche Bank
AG New York Branch And/Or Cayman Islands Branch; Union Bank
Of Switzerland, New York Branch; U.S. National Bank Of
Oregon; and Citibank, N.A.
(10.4) $150,000,000 Credit Agreement dated as of July 1, 1997
between the Registrant; Citicorp USA INC.; Bank Of America
National; Trust & Savings Association; The Hongkong and
Shanghai Banking Corporation Limited; Nationsbank Of Texas,
N.A.; The Royal Bank Of Canada; Bank Of Montreal; Societe
Generale; The Fuji Bank, Limited; Morgan Guaranty Trust
Company Of New York; The Sumitomo Bank Limited; Deutsche Bank
AG New York Branch And/Or Cayman Islands Branch; Union Bank
Of Switzerland, New York Branch; U.S. National Bank Of
Oregon; and Citibank, N.A.
(10.5) Form of Nonqualified Stock Option Agreement for employees
under Registrant's 1996 Stock Option and Award Plan.
(10.6) Form of Nonqualified Stock Option Agreement for directors
under Registrant's 1996 Stock Option and Award Plan.
(10.7) Form of Restricted Stock Agreement under Registrant's 1996
Stock Option and Award Plan.
(11) Computation of Earnings per Share
(15) Letter re: Unaudited Interim Financial Information
(27) Financial Data Schedule
b) The Company did not file any reports on Form 8-K during the three
months ended August 2, 1997.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE GAP, INC.
Date: August 26, 1997 By /s/ Warren R. Hashagen
Warren R. Hashagen
Chief Financial Officer
(Principal financial officer
of the registrant)
Date: August 26, 1997 By /s/ Millard S. Drexler
Millard S. Drexler
President and Chief Executive
Officer
EXHIBIT INDEX
(10.1) Amendment Number 1 to the Registrant's 1996 Stock Option and
Award Plan
(10.2) Termination Agreement dated July 1, 1997 related to Credit
Agreement dated August 1, 1995 between the Registrant and
Citicorp USA Inc.
(10.3) $800,000,000 Credit Agreement dated as of July 1, 1997
between the Registrant; Citicorp USA INC.; Bank Of America
National; Trust & Savings Association; The Hongkong and
Shanghai Banking Corporation Limited; Nationsbank Of Texas,
N.A.; The Royal Bank Of Canada; Bank Of Montreal; Societe
Generale; The Fuji Bank, Limited; Morgan Guaranty Trust
Company Of New York; The Sumitomo Bank Limited; Deutsche Bank
AG New York Branch And/Or Cayman Islands Branch; Union Bank
Of Switzerland, New York Branch; U.S. National Bank Of
Oregon; and Citibank, N.A.
(10.4) $150,000,000 Credit Agreement dated as of July 1, 1997
between the Registrant; Citicorp USA INC.; Bank Of America
National; Trust & Savings Association; The Hongkong and
Shanghai Banking Corporation Limited; Nationsbank Of Texas,
N.A.; The Royal Bank Of Canada; Bank Of Montreal; Societe
Generale; The Fuji Bank, Limited; Morgan Guaranty Trust
Company Of New York; The Sumitomo Bank Limited; Deutsche Bank
AG New York Branch And/Or Cayman Islands Branch; Union Bank
Of Switzerland, New York Branch; U.S. National Bank Of
Oregon; and Citibank, N.A.
(10.5) Form of Nonqualified Stock Option Agreement for employees
under Registrant's 1996 Stock Option and Award Plan.
(10.6) Form of Nonqualified Stock Option Agreement for directors
under Registrant's 1996 Stock Option and Award Plan.
(10.7) Form of Restricted Stock Agreement under Registrant's 1996
Stock Option and Award Plan.
(11) Computation of Earnings per Share
(15) Letter re: Unaudited Interim Financial Information
(27) Financial Data Schedule