UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended April 4, 1998.
or
[ ] Transition Report Pursuant to Section 13 of 15(d) of
the Securities Exchange Act of 1934
For the transition period from
[ ] to [ ]
Commission file number 1-5224
I.R.S. Employer Identification Number 06-0548860
THE STANLEY WORKS
(a Connecticut Corporation)
1000 Stanley Drive
New Britain, Connecticut 06053
Telephone: (860) 225-5111
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months, 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: shares of the
company's Common Stock ($2.50 par value) were outstanding 88,751,180
as of May 9, 1998.
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
THE STANLEY WORKS AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited, Millions of Dollars Except Per Share Amounts)
First Quarter
1998 1997
------ ------
Net Sales $ 671.9 $ 646.6
Costs and Expenses
Cost of sales 435.0 431.4
Selling, general and
administrative 171.1 153.2
Interest - net 4.8 4.3
Other - net 2.8 3.6
Restructuring and
asset write-offs - (4.6)
------ ------
613.7 587.9
------ ------
Earnings Before
Income Taxes 58.2 58.7
Income Taxes 21.8 22.0
------ ------
Net Earnings $ 36.4 $ 36.7
====== ======
Net Earnings Per Share
of Common Stock
Basic $ 0.41 $ 0.41
====== ======
Diluted $ 0.40 $ 0.41
====== ======
Dividends Per Share $ 0.20 $ 0.185
====== ======
Average Shares Outstanding
(in thousands)
Basic 89,483 89,347
====== ======
Diluted 90,520 90,138
====== ======
See notes to consolidated financial statements.
-1-
THE STANLEY WORKS AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited, Millions of Dollars)
April 4 January 3
1998 1998
-------- --------
ASSETS
Current Assets
Cash and cash equivalents $ 93.2 $ 152.2
Accounts receivable 491.1 472.5
Inventories 331.2 301.2
Other current assets 88.3 79.4
-------- --------
Total Current Assets 1,003.8 1,005.3
Property, plant and equipment 1,167.9 1,166.1
Less: accumulated depreciation (666.3) (652.9)
-------- --------
501.6 513.2
Goodwill and other intangibles 102.1 104.1
Other assets 136.6 136.1
-------- --------
$ 1,744.1 $ 1,758.7
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Short-term borrowings $ 108.6 $ 80.8
Current maturities of long-term debt 15.4 50.0
Accounts payable 159.1 155.5
Accrued expenses 319.5 336.4
-------- --------
Total Current Liabilities 602.6 622.7
Long-term debt 275.3 283.7
Other liabilities 239.1 244.5
Shareholders' Equity
Common stock 230.9 230.9
Retained earnings 823.3 806.6
Accumulated other comprehensive income (81.9) (85.3)
ESOP debt (221.1) (223.8)
-------- --------
751.2 728.4
Less: cost of common stock in treasury 124.1 120.6
-------- --------
Total Shareholders' Equity 627.1 607.8
-------- --------
$ 1,744.1 $ 1,758.7
======== ========
See notes to consolidated financial statements.
-2-
THE STANLEY WORKS AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, Millions of Dollars)
First Quarter
1998 1997
------ ------
Operating Activities
Net earnings $ 36.4 $ 36.7
Depreciation and amortization 19.8 18.5
Restructuring and asset write-offs - (4.6)
Other non-cash items 0.6 12.9
Changes in operating assets
and liabilities (78.2) (60.4)
------ ------
Net cash provided (used) by
operating activities (21.4) 3.1
Investing Activities
Capital expenditures (7.4) (17.2)
Capitalized software - (2.7)
Proceeds from sales of businesses 3.0 34.8
Other (0.8) 0.8
------ ------
Net cash provided (used) by
investing activities (5.2) 15.7
Financing Activities
Payments on long-term borrowings (36.5) (1.6)
Net short-term borrowings 28.2 (0.5)
Proceeds from issuance of common stock 8.9 10.0
Purchase of common stock for treasury (16.2) (17.8)
Cash dividends on common stock (17.8) (16.5)
------ ------
Net cash used by
financing activities (33.4) (26.4)
Effect of Exchange Rate Changes on Cash 1.0 -
------ ------
Decrease in Cash and
Cash Equivalents (59.0) (7.6)
Cash and Cash Equivalents,
Beginning of Period 152.2 84.0
------ ------
Cash and Cash Equivalents,
End of First Quarter $ 93.2 $ 76.4
====== ======
See notes to consolidated financial statements.
-3-
THE STANLEY WORKS AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES
IN SHAREHOLDERS' EQUITY
(Unaudited, Millions of Dollars)
Accumulated
Other
Compre- Total
Common Retained hensive ESOP Treasury Shareholders'
Stock Earnings Income Debt Stock Equity
---------------------------------------------------------
Balance Jan 3, 1998 $ 230.9 $ 806.6 $(85.3) $(223.8) $(120.6) $ 607.8
Comprehensive income:
Net earnings 36.4
Foreign currency
translation 3.4
Total comprehensive
income 39.8
Cash dividends
declared (17.8) (17.8)
Net common stock
activity (5.1) (3.5) (8.6)
Tax benefit related
to stock options 2.5 2.5
ESOP debt 2.7 2.7
ESOP tax benefit 0.7 0.7
---------------------------------------------------------
Balance Apr 4, 1998 $ 230.9 $ 823.3 $(81.9) $(221.1) $(124.1) $627.1
=========================================================
Accumulated
Other
Compre- Total
Common Retained hensive ESOP Treasury Shareholders'
Stock Earnings Income Debt Stock Equity
---------------------------------------------------------
Balance Dec 28,1996 $ 230.9 $ 919.0 $(45.5) $(234.8) $(89.5) $ 780.1
Comprehensive income:
Net earnings 36.7
Foreign currency
translation (6.4)
Total comprehensive
income 30.3
Cash dividends
declared (16.4) (16.4)
Net common stock
activity (3.4) (4.5) (7.9)
Tax benefit related
to stock options 2.6 2.6
ESOP debt 2.5 2.5
ESOP tax benefit 0.7 0.7
---------------------------------------------------------
Balance Mar 29,1997 $ 230.9 $ 939.2 $(51.9) $(232.3) $(94.0) $791.9
=========================================================
See notes to consolidated financial statements.
-4-
THE STANLEY WORKS AND SUBSIDIARIES
NOTES TO (Unaudited) CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
April 4, 1998
NOTE A - Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles
for interim financial statements and with the instructions to Form 10-Q and
Article 10 of Regulation S-X and do not include all of the information
and footnotes required by generally accepted accounting principles for
complete financial statements. In the opinion of management, all adjustments
considered necessary for a fair presentation of the results of operations for
the interim periods have been included. For further information, refer to the
consolidated financial statements and footnotes included in the company's
Annual Report on Form 10-K for the year ended January 3, 1998.
NOTE B - Earnings Per Share Computation
The following table reconciles the weighted average shares outstanding used to
calculate basic and diluted earnings per share.
1998 1997
---------- ----------
Net earnings -
basic and diluted $ 36.4 $ 36.7
========== ==========
Basic earnings per share -
weighted average shares 89,483,372 89,347,279
Dilutive effect of
employee stock options 1,036,763 790,378
---------- ----------
Diluted earnings per share -
weighted average shares 90,520,135 90,137,657
========== ==========
Earnings per share:
Basic $ 0.41 $ 0.41
========== ==========
Diluted $ 0.40 $ 0.41
========== ==========
NOTE C - Inventories
The components of inventories at the end of the first quarter of 1998
and at year-end 1997, in millions of dollars, is as follows:
April 4 January 3
1998 1998
------ ------
Finished products $ 223.7 $ 203.7
Work in process 61.0 51.9
Raw materials 44.1 43.8
Supplies 2.4 1.8
------ ------
$ 331.2 $ 301.2
====== ======
-5-
NOTE D - Cash Flow Information
Interest paid during the first quarters of 1998 and 1997 amounted to $ 6.9
million and $5.1 million, respectively.
Income taxes paid during the first quarters of 1998 and 1997 were $ 9.4
million and $17.3 million, respectively.
Note E - Subsequent Event
On April 23, 1998 the company signed a definitive agreement to acquire 90% of
the outstanding common shares of ZAG Industries, Ltd. an innovator of plastic
storage products. The acquisition will be accounted for by the purchase
method of accounting. This transaction is expected to close by the third
quarter of this year and is not expected to be material to the company's
financial position or results of operations.
Note F - Comprehensive Income
In June of 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 130 "Reporting Comprehensive
Income". The Statement, which the company adopted in the first quarter of
1998, establishes standards for reporting and displaying comprehensive income
and its components in financial statements. Where applicable, earlier
periods have been restated to conform to the standards set forth in SFAS No.
130. The company's comprehensive income consists of net earnings and foreign
currency translation adjustments. The company does not provide for U.S.
income taxes on foreign currency translation adjustments because undistributed
earnings of foreign subsidiaries are considered to be invested indefinitely or
will be remitted substantially free of additional tax. Accumulated other
comprehensive income consists of foreign currency translation adjustments.
-6-
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations
The attached table, "Price/Volume Information" provides detail of the changes
in net sales by business segment and geographic region. In addition, the
attached tables, "Business Segment Information", provide clarification of
reported operating results for the first quarter of 1998 and 1997, reconciling
them with pro-forma or "core" results. Core results exclude restructuring
charges and restructuring-related transition costs associated with the
company's restructuring plans, as well as certain other non-recurring costs.
Restructuring charges include the severance associated with employment
reductions, write-downs of assets either disposed of or impaired as a result
of the initiatives or other business factors, environmental costs of
remediating facilities to be closed or vacated and other similar exit costs.
The restructuring-related transition costs are additional costs resulting from
these major initiatives that are classified as period operating expenses
within cost of sales or selling, general and administrative expense
categories. These include the costs of moving production equipment, operating
duplicative facilities while transferring production or distribution,
consulting costs incurred in planning and implementing changes and other types
of costs that have been incurred to facilitate the changes encompassed by the
restructuring initiatives. Management judgmentally determines which costs
should be classified as transition costs based on the criteria of whether the
costs are unusual in nature and are expected to cease when the transition
activities related to these initiatives end. In addition, other non-recurring
costs relate to the year 2000 systems compliance activities. Because the
presence of restructuring charges, transition and other non-recurring costs
makes it difficult to see the underlying trends within the company's
businesses, the company also presents its results on a pro forma or "core"
basis, which excludes these charges incurred in the period being presented.
Net sales for the first quarter were $672 million, up 4% from sales of $647
million in the same quarter of last year. Pricing continued to have a
negative effect, especially in North American consumer and construction
businesses, although the declines were the smallest since the first quarter of
1997. Volume increases from the recently acquired Atro business were offset
by the effects of two divestitures: the garage related products business and
the Access Technologies' European business. Foreign currency translation also
reduced sales by 1%. Unit sales volume from ongoing businesses increased 6%
over the prior year quarter. This increase was led by the Mac Tools and the
storage systems components of the mechanics tools business, fastening systems
and mirrored closet doors in North America. In addition, European sales,
primarily carpenter's tools, continued to experience strong gains over the
prior year. The North American and European markets for the company's
products continue to be extremely strong and made a substantial contribution
to the sales gains achieved in the first quarter.
Gross profit of $237 million increased 10% from $215 million reported in 1997.
Gross profit as a percent of sales increased from 33.3% to 35.3%. The cost of
sales in the first quarter reflected $4 million of restructuring-related
transition costs, primarily for plant rationalization activities, as compared
with $5 million in the first quarter of 1997. Excluding transition costs, on
a core basis, gross profit margin as a percent of sales increased to 35.9%
from 34.1%. The MacDirect (TM) program provided an approximately one
-7-
percentage point increase in gross margins over the prior year quarter. In
addition, higher production volume and savings from productivity initiatives
affected the consumer tools, mechanics tools and Mac Tools margins positively.
Selling, general and administrative expenses increased to $171 million in the
first quarter 1998 from $153 million in 1997. As a percent of sales, these
expenses increased from 23.7% to 25.5%. This increase reflected
restructuring-related transition and other non-recurring costs of $12 million
in the first quarter of 1998 as compared with $5 million last year. This
increase resulted from costs related to systems conversions for the Year 2000
remediation (a large part of which standardizes the company's computer
platforms), consulting and duplicative facility costs for centralizing North
American distribution and other expenses related to the reorganization and
centralization of support functions. The restructuring related transition
costs incurred last year related primarily to the centralization of North
American order management and distribution. On a core basis, excluding these
transition costs, selling, general and administration expenses would have been
23.7% of sales in 1998 as compared with 23.0% of sales in 1997. Two factors
caused the increase in operating expenses as a percent of sales. The larger
factor was the growth of the MacDirect (TM) venture. Higher gross margins and
selling expenses are inherent in the growth of the MacDirect (TM) venture
where the additional volume is generated from a direct sales force rather than
through independent distributors. Additionally, as planned, the early stages
of the restructuring program to reallocate resources brings about a positive
effect on gross margins, but also increases marketing, advertising and product
development spending. Increased spending on growth programs is being closely
monitored and is limited to the extent of restructuring savings actually
achieved.
Net interest expense of $4.8 million, was slightly higher than the first
quarter of 1997 due to higher net borrowings. A slight decrease in Other, net
expense resulted from lower charges for environmental remediation and currency
losses. In 1997, a net restructuring gain of $4.6 million reflected gains on
divested businesses of $6.7 million offset by severance and other exit costs
associated with restructuring.
Reported net income of $36.4 million, or $.41 per basic share was slightly
lower than the $36.7 million, or $.41 per basic share reported in the prior
year quarter. Diluted earnings per share was $.40 per share in 1998 versus
$.41 per share in 1997. On a core basis, net earnings increased 17% to $46.6
million, or $.51 per diluted share, from $40.0 million, or $.44 per diluted
share, in 1997.
In the Tools segment overall, first quarter unit volume sales increased 7%
over the prior year. Consumer tools growth was 3%, with strength in Canada
and Europe. Industrial tools increased 12%, attributable to double-digit
growth in Mac Tools in the U.S. Engineered tools increased 7% in unit volume,
with strong volumes in the air tools business and a continuation of sales
strength of fastening tools and fasteners in North America, Europe and Latin
America, despite an increasingly difficult pricing environment. Core
operating profits in the Tools segment for the quarter increased to 14.6% of
sales, from 13.4% in the prior year quarter. Though there was continued
pricing pressure in fastening systems from low cost Asian imports, it was more
than offset by volume, savings from productivity initiatives and continued
performance improvements in the mechanics tools operations.
-8-
The Hardware segment experienced 7% unit volume growth in the first quarter,
primarily from continued strong demand for Home Decor products in the U.S. and
Canada. Traditional hardware volumes were flat with last year's first quarter
levels while core operating profits for this segment rebounded to 16.4% of
sales, from 15.1% in the prior year.
The Specialty Hardware segment experienced 1% unit volume growth; Access
Technologies business sales volumes were up nearly 5% in the U.S. and the
remaining components of the segment were flat. Core operating profits showed
a decline in profitability to 3.3% of sales, down from the 4.4% reported in
last year's quarter. This is attributable to losses in the European Access
Technologies' business prior to its disposition. Continuing elements of this
segment yielded profit increases to approximately 5% of sales.
Liquidity and Sources of Capital
Operations generated a $21 million net cash outflow in the first quarter of
1998. Typically cash generated in the first quarter is the lowest of the year
due to the slight seasonality of sales and business patterns. Inventory
levels in the first quarter increased approximately $30 million from the
beginning of the year. This increase reflects the company's priority
commitment to improving customer service. In addition, the company has
implemented a SKU reduction program as well as an initiative to improve
production planning. The short-term inventory build is not expected to be a
significant ongoing cash requirement and will be diminished as longer term
improvements, including SKU reduction and improved production planning, are
achieved. In addition, approximately $8 million in cash payments related to
restructuring, primarily severance were made in the first quarter of 1998,
resulting in net restructuring reserves of $196 million at the end of the
quarter.
Capital expenditures of $7 million in the first quarter were abnormally low
compared with prior year spending levels. A major component of the company's
restructuring initiative is the improvement of manufacturing efficiency
through the establishment of the Stanley Production System. Activities
associated with the SPS have temporarily reduced the capital required to
expand or improve capacity. The total anticipated spending for capital has
not yet been determined, however, it is likely to be lower than the annual
capital spending in prior years.
Other Issues
The company is reviewing its products and manufacturing strategies in light of
the December 1, 1997 Federal Trade Commission announcement of the Commission's
enforcement policy with respect to "Made in USA" labeling. In some cases,
this review will result in the company's increasing the domestic content of
products or changing the labeling of products. The impact of these changes on
the company's results of operations and financial position is not expected to
be material.
Subsequent Event
On April 23, 1998, the company signed a definitive agreement to acquire 90% of
the outstanding common shares of ZAG Industries Ltd., an innovator of plastic
storage products. The acquisition will be accounted for by the purchase
method of accounting. This transaction is expected to close by the third
quarter of this year and is not expected to be material to the company's
financial position or results of operations.
-9-
THE STANLEY WORKS AND SUBSIDIARIES
PRICE/VOLUME INFORMATION
(Unaudited, Millions of Dollars)
NET SALES
First Quarter
-----------------------------------------------------
Unit ACQ/
1998 Price Volume DVT Currency 1997
-----------------------------------------------------
INDUSTRY SEGMENTS
Tools
Consumer $ 176.6 1 % 3% (1)% (4)% $ 178.0
Industrial 147.5 (1)% 12% - - 132.6
Engineered 188.4 (2)% 7% 6 % (2)% 172.1
------ -----
Total Tools 512.5 (1)% 7% 2 % (2)% 482.7
Hardware 96.3 (3)% 7% - (1)% 93.1
Specialty Hardware 63.1 2 % 1% (13)% (1)% 70.8
------ ------
Consolidated $ 671.9 (1)% 6% - % (1)% $ 646.6
====== ======
GEOGRAPHIC AREAS
United States $ 475.7 (1)% 7% (2)% - $ 455.8
Europe 119.9 1 % 7% 8 % (5)% 107.8
Other Areas 76.3 1 % - (2)% (7)% 83.0
------ ------
Consolidated $ 671.9 (1)% 6% - (1)% $ 646.6
====== ======
-10-
THE STANLEY WORKS AND SUBSIDIARIES
BUSINESS SEGMENT INFORMATION
(Unaudited, Millions of Dollars)
OPERATING PROFIT
First Quarter 1998
------------------------------------------------------
Related Core
Restrg Transition Profit
Reported Charges Costs Core Margin
------------------------------------------------------
INDUSTRY SEGMENTS
Tools $ 62.9 $ - $ 12.0 $ 74.9 14.6%
Hardware 13.7 - 2.1 15.8 16.4%
Specialty Hardware (0.1) - 2.2 2.1 3.3%
------ ------ ------ ------
Total 76.5 - 16.3 92.8 13.8%
Net corporate -
expenses (11.5) - - (11.5)
Interest expense (6.8) - - (6.8)
------ ------ ------ ------
Earnings before
income taxes $ 58.2 $ - $ 16.3 $ 74.5
====== ====== ====== ======
GEOGRAPHIC AREAS
United States $ 55.2 $ - $ 14.3 $ 69.5 14.6%
Europe 13.4 - 1.3 14.7 12.3%
Other Areas 7.9 - 0.7 8.6 11.3%
------ ------ ------ ------
Total $ 76.5 $ - $ 16.3 $ 92.8 13.8%
====== ====== ====== ======
First Quarter 1997
-------------------------------------------------------
Restrg Related Core
& Other Transition Profit
Reported Charges Costs Core Margin
-------------------------------------------------------
INDUSTRY SEGMENTS
Tools $ 56.0 $ 1.1 $ 7.6 $ 64.7 13.4%
Hardware 11.8 0.4 1.9 14.1 15.1%
Specialty Hardware 2.3 0.6 0.2 3.1 4.4%
------ ------ ------ ------
Total 70.1 2.1 9.7 81.9 12.7%
Net corporate
expenses (5.8) (6.7) 0.1 (12.4)
Interest expense (5.6) - - (5.6)
------ ------ ------ ------
Earnings before
income taxes $ 58.7 $ (4.6) $ 9.8 $ 63.9
====== ====== ====== ======
GEOGRAPHIC AREAS
United States $ 53.2 $ 1.2 $ 7.6 $ 62.0 13.6%
Europe 11.3 0.4 1.1 12.8 11.9%
Other Areas 5.6 0.5 1.0 7.1 8.6%
------ ------ ------ ------
Total $ 70.1 $ 2.1 $ 9.7 $ 81.9 12.7%
====== ====== ====== ======
-11-
PART II OTHER INFORMATION
Item 2. - Changes in Securities and Use of Proceeds
(c) Recent Sales of Unregistered Securities
(1) During the first fiscal quarter of 1998, 1,616 shares were issued to
certain participants in the Company's U.K. Savings Related Share Plans (the
"Savings Plan") who elected at the end of the five year savings period to
receive the accumulated savings in the form of shares of the Company's stock
rather than cash.
(2) Participation in the Savings Plan is offered to all employees of the
Company's subsidiaries in the United Kingdom.
(3) The total dollar value of the shares issued during the quarter was
$27,263.35.
520 shares were issued at $18.15 per share with an aggregate value of
$9,438.00
490 shares were issued at $15.33335 per share with an aggregate value of
$7,611.34
550 shares were issued at $15.88335 per share with an aggregate value of
$8,735.84
42 shares were issued at $24.15 per share with an aggregate value of
$1,014.30
14 shares were issued at $33.1333 per share with an aggregate value of
$463.87
(4) Neither the options nor the underlying shares have been registered in
reliance on an exemption from registration found in several no-action letters
issued by the Division of Corporation Finance of the Securities and Exchange
Commission. Registration is not required because the Company is a reporting
company under the Securities Exchange Act of 1934, its shares are actively
traded, the number of shares issuable under the Savings Plans is small
relative to the number of shares outstanding, all eligible employees are
entitled to participate, the shares are being issued in connection with the
employees' compensation, not in lieu of it and there is no negotiation between
the Company and the employee regarding the grant.
(5) Under the Savings Plans, employees are given the right to buy a specified
number of shares with the proceeds of a "Save-as-You-Earn" savings contract.
Under the savings contract, the employee authorizes 60 monthly deductions from
his or her paycheck At the end of the five year period, the employee may
elect to (i) use all or a part of the accumulated savings to buy all or some
of the shares under the employee's options, (ii) leave the accumulated savings
with the financial institution that has custody of the funds for an additional
two years or (iii) take a cash distribution of the accumulated savings. The
option to purchase shares will lapse at the end of the five year period if not
exercised at that time.
-12-
Item 6. - Exhibits and Reports on Form 8-K
(a) Exhibits
(1) See Exhibit Index on page 14
(b) Reports on Form 8-K.
(1) Registrant filed a Current Report on Form 8-K, dated January 29,
1998, in respect of the Registrant's press release announcing
year end results.
Signature
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 STANLEY WORKS
Date: May 19, 1998 By: Theresa F. Yerkes
Theresa F. Yerkes
Vice President and
Controller (Chief Financial
Officer, Chief Accounting
Officer and Authorized
Signatory of the Registrant)
-13-
EXHIBIT INDEX
(12) Statement re Computation of Ratios
(27) Financial Data Schedule
-14-