FORM 10-Q
------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 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 Numbers 33-31940; 33-39345; 33-57052; 333-02249
Protective Life Insurance Company
(Exact name of registrant as specified in its charter)
Tennessee 63-0169720
(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
2801 Highway 280 South
Birmingham, Alabama 35223
(Address of principal executive offices and zip code)
(205) 879-9230
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES [X] NO [ ]
Number of shares of Common Stock, $1.00 par value, outstanding as of May 9,
1997: 5,000,000 shares.
The registrant meets the conditions set forth in General Instruction H(1)(a) and
(b) of Form 10-Q and is therefore filing this form with the reduced disclosure
format pursuant to General Instruction H(2).
PROTECTIVE LIFE INSURANCE COMPANY
INDEX
Page Number
Part I. Financial Information:
Item 1. Financial Statements:
Report of Independent Accountants...................................
Consolidated Condensed Statements of Income for the Three Months
ended March 31, 1997 and 1996 (unaudited).........................
Consolidated Condensed Balance Sheets as of March 31, 1997
(unaudited) and December 31, 1996.................................
Consolidated Condensed Statements of Cash Flows for the
Three Months ended March 31, 1997 and 1996 (unaudited)..........
Notes to Consolidated Condensed Financial Statements (unaudited)....
Item 2. Management's Narrative Analysis of the Results of Operations...
Part II. Other Information:
Item 6. Exhibits and Reports on Form 8-K.................................
Signature...................................................................
REPORT OF INDEPENDENT ACCOUNTANTS
To the Directors and Stockholder
Protective Life Insurance Company
Birmingham, Alabama
We have reviewed the accompanying consolidated condensed balance sheet of
Protective Life Insurance Company and subsidiaries as of March 31, 1997, and the
related consolidated condensed statements of income and consolidated condensed
statements of cash flows for the three-month periods ended March 31, 1997 and
1996. These financial statements are the responsibility of the Company's
management.
We conducted our review 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 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 review, we are not aware of any material modifications that should
be made to the consolidated condensed financial statements referred to above 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 as of December 31, 1996, and the
related consolidated statements of income, stockholder's equity, and cash flows
for the year then ended (not presented herein); and in our report dated February
11, 1997, we expressed an unqualified opinion on those consolidated financial
statements. In our opinion, the information set forth in the accompanying
consolidated condensed balance sheet as of December 31, 1996, is fairly stated
in all material respects in relation to the consolidated balance sheet from
which it has been derived.
COOPERS & LYBRAND L.L.P.
Birmingham, Alabama
April 23, 1997
2
PROTECTIVE LIFE INSURANCE COMPANY
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Dollars in thousands)
(Unaudited)
THREE MONTHS ENDED
MARCH 31
-----------------------
REVENUES 1997 1996
Premiums and policy fees (net of reinsurance ceded:
1997 - $54,509; 1996 - $78,303) $120,377 $ 108,667
Net investment income 123,596 118,343
Realized investment gains (losses) (418) 4,421
Other income 807 1,947
---------- ---------
244,362 233,378
BENEFITS AND EXPENSES
Benefits and settlement expenses (net of reinsurance ceded:
1997 - $33,536; 1996 - $56,751) 157,702 149,228
Amortization of deferred policy acquisition costs 20,827 21,819
Other operating expenses (net of reinsurance ceded:
1997 - $14,254; 1996 - $17,802) 32,081 32,757
-------- --------
210,610 203,804
INCOME BEFORE INCOME TAX 33,752 29,574
Income tax expense 11,571 10,614
-------- --------
NET INCOME $ 22,181 $ 18,960
======== ========
See notes to consolidated condensed financial statements
3
PROTECTIVE LIFE INSURANCE COMPANY
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in thousands)
MARCH 31 DECEMBER 31
1997 1996
--------------------- -------------
(Unaudited)
ASSETS
Investments:
Fixed maturities $4,674,781 $4,662,997
Equity securities 37,255 35,250
Mortgage loans on real estate 1,580,600 1,503,781
Investment in real estate, net 11,641 14,172
Policy loans 166,527 166,704
Other long-term investments 25,946 29,193
Short-term investments 73,935 101,215
----------- -----------
Total investments 6,570,685 6,513,312
Cash 35,801 114,384
Accrued investment income 72,288 70,541
Accounts and premiums receivable, net 34,900 43,469
Reinsurance receivables 335,838 332,614
Deferred policy acquisition costs 502,392 488,201
Property and equipment, net 35,886 35,489
Other assets 13,619 14,636
Assets held in separate accounts 603,630 550,697
----------- -----------
TOTAL ASSETS $8,205,039 $8,163,343
========== ==========
LIABILITIES
Policy liabilities and accruals $2,722,256 $2,706,002
Guaranteed investment contract deposits 2,474,605 2,474,728
Annuity deposits 1,344,933 1,331,067
Other policyholders' funds 146,076 142,221
Other liabilities 104,782 117,847
Accrued income taxes 12,147 1,854
Deferred income taxes 16,212 37,722
Indebtedness to related parties 20,865 25,014
Liabilities related to separate accounts 603,630 550,697
----------- -----------
TOTAL LIABILITIES 7,445,506 7,387,152
---------- ----------
COMMITMENTS AND CONTINGENT LIABILITIES - NOTE B
STOCKHOLDER'S EQUITY
Preferred Stock, $1.00 par value, shares authorized and
issued: 2,000, liquidation preference $2,000 2 2
Common Stock, $1 par value
Shares authorized and issued: 5,000,000 5,000 5,000
Additional paid-in capital 237,992 237,992
Net unrealized gains (losses) on investments
(net of income tax: 1997 - ($17,420); 1996 - $3,601) (32,352) 6,688
Retained earnings 554,268 532,088
Note receivable from PLC
Employee Stock Ownership Plan (5,377) (5,579)
------------ ------------
TOTAL STOCKHOLDER'S EQUITY 759,533 776,191
----------- -----------
$8,205,039 $8,163,343
========== ==========
See notes to consolidated condensed financial statements
4
PROTECTIVE LIFE INSURANCE COMPANY
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
THREE MONTHS ENDED
MARCH 31
1997 1996
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 22,181 $ 18,960
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of deferred policy acquisition 20,827 21,819
Capitalization of deferred policy acquisition costs (25,231) (20,333)
Depreciation expense 1,402 1,310
Deferred income tax (488) 1,262
Accrued income tax 10,293 906
Interest credited to universal life and investment products 41,239 69,895
Policy fees assessed on universal life and investment products 31,163 26,535
Change in accrued investment income and other receivables 3,597 (22,014)
Change in policy liabilities and other policyholders'
funds of traditional life and health products 93,341 86,495
Change in other liabilities (13,065) (4,602)
Other (net) 660 (2,278)
------------- ------------
Net cash provided by operating activities 185,919 177,955
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Maturities and principal reductions of investments
Investments available for sale 774,451 186,107
Other 28,655 20,728
Sale of investments
Investments available for sale 550,101 351,445
Other 2,766 554,969
Cost of investments acquired
Investments available for sale (1,454,639) (1,286,996)
Other (89,573) (119,178)
Acquisitions and bulk reinsurance assumptions 116,220
Purchase of property and equipment (1,764) (1,392)
Sale of property and equipment 9 31
--------------- --------------
Net cash used in investing activities (189,994) (178,066)
------------ -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings under line of credit arrangements and debt 504,100 419,500
Principal payments on line of credit arrangements and debt (504,100) (419,500)
Principal payment on surplus note to PLC (4,943) (3,115)
Investment product deposits and change in universal life deposits 174,968 256,047
Investment product withdrawals (244,533) (254,493)
------------ -----------
Net cash provided by financing activities (74,508) (1,561)
------------ ------------
INCREASE (DECREASE) IN CASH (78,583) (1,672)
CASH AT BEGINNING OF PERIOD 114,384 6,198
------------ ------------
CASH AT END OF PERIOD $ 35,801 $ 4,526
============ ============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period:
Interest on notes and mortgages payable $ (1,151) $ (1,625)
Income taxes $ (1,858) $ (8,446)
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND
FINANCING ACTIVITIES
Reduction of principal on note from ESOP $ 202 $ 186
Acquisitions and bulk reinsurance assumptions
Assets acquired $138,564
Liabilities assumed (169,287)
----------
Net $ (30,723)
===========
See notes to consolidated condensed financial statements
5
PROTECTIVE LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited consolidated condensed financial statements
of Protective Life Insurance Company ("Protective Life") have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Rule 10-01 of Regulation
S-X. Accordingly, they do not include all of the disclosures required by
generally accepted accounting principles for complete financial statements. In
the opinion of management, all adjustments (consisting of normal recurring
accruals) necessary for a fair presentation have been included. Operating
results for the three month period ended March 31, 1997, are not necessarily
indicative of the results that may be expected for the year ending December 31,
1997. The year-end consolidated condensed balance sheet data was derived from
audited financial statements, but does not include all disclosures required by
generally accepted accounting principles. For further information, refer to the
consolidated financial statements and notes thereto included in Protective
Life's annual report on Form 10-K for the year ended December 31, 1996.
Protective Life is a wholly-owned subsidiary of Protective Life
Corporation ("PLC").
NOTE B - COMMITMENTS AND CONTINGENT LIABILITIES
Under insurance guaranty fund laws in most states, insurance companies
doing business therein can be assessed up to prescribed limits for policyholder
losses incurred by insolvent companies. Protective Life does not believe such
assessments will be materially different from amounts already provided for in
the financial statements. Most of these laws do provide, however, that an
assessment may be excused or deferred if it would threaten an insurer's own
financial strength.
A number of civil jury verdicts have been returned against life and
health insurers in the jurisdictions in which Protective Life does business
involving the insurers' sales practices, alleged agent misconduct, failure to
properly supervise agents, and other matters. Increasingly these lawsuits have
resulted in the award of substantial judgments against the insurers that are
disproportionate to the actual damages, including material amounts of punitive
damages. In some states (including Alabama), juries have substantial discretion
in awarding punitive damages which creates the potential for unpredictable
material adverse judgments in any given punitive damages suit. Protective
Life and its subsidiaries, like other life and health insurers, in the ordinary
course of business, are involved in such litigation. The outcome of any such
litigation cannot be predicted with certainty. In addition, in some lawsuits
involving insurers' sales practices, insurers have made material settlement
payments to end litigation.
Pending litigation includes a class action filed in Jefferson County
(Birmingham), Alabama with respect to the refund of certain cancer insurance
premiums. Although the outcome of any
6
litigation cannot be predicted with certainty, Protective Life believes that at
the present time there are no pending or threatened lawsuits that are reasonably
likely to have a material adverse effect on the financial position, results of
operations, or liquidity of Protective Life.
NOTE C - STATUTORY REPORTING PRACTICES
Financial statements prepared in conformity with generally accepted
accounting principles (i.e., GAAP) differ in some respects from the statutory
accounting practices prescribed or permitted by insurance regulatory
authorities. At March 31, 1997, and for the three months then ended, Protective
Life and its life insurance subsidiaries had consolidated stockholder's equity
and net income prepared in conformity with statutory reporting practices of
$493.1 million and $22.4 million, respectively.
NOTE D - INVESTMENTS
At December 31, 1993, Protective Life adopted Statement of Financial
Accounting Standards ("SFAS") No. 115, "Accounting for Certain Investments in
Debt and Equity Securities." For purposes of adopting SFAS No. 115 Protective
Life has classified all of its investments in fixed maturities, equity
securities, and short-term investments as "available for sale." As prescribed in
SFAS No. 115, these investments are recorded at their market values with the
resulting net unrealized gain or loss, net of income tax and a related
adjustment to deferred policy acquisition costs, recorded as a component of
stockholder's equity.
Protective Life's balance sheets at March 31, 1997 and December 31,
1996, prepared on the basis of reporting investments at amortized cost rather
than at market values, are as follows:
MARCH 31, 1997 DECEMBER 31, 1996
-------------- -----------------
(IN THOUSANDS)
Total investments $6,622,481 $6,495,259
Deferred policy acquisition costs 500,368 495,965
All other assets 1,131,962 1,161,830
---------- ----------
$8,254,811 $8,153,054
========== ==========
Deferred income taxes $ 33,632 $ 34,121
All other liabilities 7,429,294 7,349,430
---------- ----------
7,462,926 7,383,551
Stockholder's equity 791,885 769,503
----------- -----------
$8,254,811 $8,153,054
========== ==========
NOTE E - RECENTLY ADOPTED ACCOUNTING STANDARDS
In June 1996 the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 125, "Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities." This
statement is effective for transactions entered into after January 1, 1997.
7
NOTE F - RECLASSIFICATIONS
Certain reclassifications have been made in the previously reported
financial statements and accompanying notes to make the prior year amounts
comparable to those of the current year. Such reclassifications had no effect on
previously reported net income, total assets, or stockholder's equity.
NOTE G - SUBSEQUENT EVENT
On April 8, 1997, Protective Life announced it had reached an agreement
to acquire all of the outstanding capital stock of West Coast Life Insurance
Company ("West Coast Life"). The agreement is subject to regulatory approval and
certain customary closing conditions and is expected to be financed from
internal sources. At December 31, 1996, West Coast Life had $9.5 billion of life
insurance in force, total statutory assets of $752 million and $106 million of
annual premium. The purchase price is approximately $257 million. Protective
Life expects to operate West Coast Life as a subsidiary, with its headquarters
in California, and retain West Coast Life's sales force.
8
ITEM 2. MANAGEMENT'S NARRATIVE ANALYSIS OF THE
RESULTS OF OPERATIONS
Protective Life Insurance Company ("Protective Life") is a wholly-owned
and the principal operating subsidiary of Protective Life Corporation ("PLC"),
an insurance holding company whose common stock is traded on the New York Stock
Exchange. Founded in 1907, Protective Life provides financial services through
the production, distribution, and administration of insurance and investment
products.
In accordance with General Instruction H(2)(a), Protective Life
includes the following analysis with the reduced disclosure format.
Protective Life has six operating divisions: Acquisitions, Financial
Institutions, Group, Guaranteed Investment Contracts, Individual Life, and
Investment Products. Protective Life also has an additional business segment
which is described herein as Corporate and Other.
Revenues
The following table sets forth revenues by source for the period shown,
and the percentage change from the prior period:
THREE MONTHS PERCENTAGE
ENDED INCREASE/
MARCH 31 (DECREASE)
(in Thousands)
1997 1996
---- ----
Premiums and policy fees $120,377 $108,667 10.8%
Net investment income 123,596 118,343 4.4
Realized investment gains (418) 4,421 (109.5)
Other income 807 1,947 (58.6)
---------- ---------
$244,362 $233,378
========== =========
Premiums and policy fees increased $11.7 million or 10.8% in the first
three months of 1997 over the first three months of 1996. The coinsurance by the
Acquisitions Division of two blocks of policies in the fourth quarter of 1996
resulted in a $2.3 million increase in premiums and policy fees. Decreases in
older acquired blocks resulted in a $2.3 million decrease in premiums and policy
fees. Premiums and policy fees from the Financial Institutions Division
increased slightly in the first three months of 1997 as compared to the first
three months of 1996. The reinsurance of a block of policies in the second
quarter of 1996 represented a $5.0 million increase in premium and policy fees.
This increase was largely offset by decreases resulting from a reinsurance
arrangement begun in 1995, whereby most of the Division's new credit sales are
being ceded to a reinsurer. Premium and policy fees from the Group Division
increased $7.8 million in the first three months of 1997 as compared to the same
period in 1996. Premium and policy fees related to the Group Division's dental
business increased $4.5 million in the first three months
9
of 1997 as compared to the same period in 1996. This increase was partially
offset by decreases in traditional group health premiums. Increases in premiums
and policy fees from the Individual Life and Investment Product Divisions were
$3.2 million and $0.6 million, respectively.
Net investment income in the first three months of 1997 increased by
$5.6 million over the corresponding period of the preceding year, primarily due
to increases in the average amount of invested assets. Invested assets have
increased primarily due to receiving annuity deposits and to acquisitions. The
assumption of a block of policies in the second quarter of 1996 and two blocks
of policies in the fourth quarter of 1996 resulted in an increase in net
investment income of $2.7 million in the first three months of 1997 as compared
to the same period in 1996.
Protective Life generally purchases its investments with the intent to
hold to maturity by purchasing investments that match future cash-flow needs.
However, Protective Life may sell any of its investments to maintain approximate
matching of assets and liabilities. Accordingly, Protective Life has classified
its fixed maturities and certain other securities as "available for sale." The
sales of investments that have occurred have resulted principally from portfolio
management decisions to maintain approximate matching of assets and liabilities.
Realized investment losses for the first three months of 1997 were $0.4
million as compared to realized investment gains of $4.4 million in the
corresponding period of 1996. In the 1996 first quarter, Protective Life sold
$554 million of its commercial mortgage loans in a securitization transaction,
resulting in a $6.1 million realized investment gain.
Other income consists primarily of fees from
administrative-services-only types of group accident and health insurance
contracts, and from rental of space in its administrative building to PLC and
affiliates.
Income Before Income Tax
The following table sets forth income or loss before income tax by
business segment for the periods shown:
INCOME (LOSS) BEFORE INCOME TAX
THREE MONTHS ENDED MARCH 31
(IN THOUSANDS)
BUSINESS SEGMENT 1997 1996
---------------- ---- ----
Acquisitions $15,155 $13,963
Financial Institutions 2,832 1,482
Group 2,479 3,092
Guaranteed Investment Contracts 6,189 6,576
Individual Life 6,274 3,957
Investment Products 2,696 2,732
Corporate and Other (2,034) (2,918)
Unallocated Realized Investment Gains (Losses) 161 690
------- -------
$33,752 $29,574
======= =======
10
Pretax earnings from the Acquisitions Division increased $1.2 million
in the first three months of 1997 as compared to the same period of 1996.
Earnings from the Acquisitions Division are expected to decline over time (due
to the lapsing of policies resulting from deaths of insureds or terminations of
coverage) unless new acquisitions are made. The Division's three most recent
acquisitions resulted in a $0.9 million increase in pretax earnings. Older
acquired blocks represented a $0.3 million increase in the first three months of
1997 as compared to the same period in 1996 primarily due to improved mortality
experience.
Pretax earnings of the Financial Institutions Division were $1.4
million higher in the first three months of 1997 as compared to the same period
in 1996. Included in the Division's 1997 results are earnings from the
coinsurance of a block of policies in the second quarter of 1996.
Group Division pretax earnings were $0.6 million lower in the first
three months of 1997 as compared to the first three months of 1996. Lower cancer
earnings were largely offset by improved traditional group life and health
results. Dental earnings were $0.9 million in the first quarter of 1997 as
compared to $1.4 million in the first quarter of 1996. The Division recently
announced its intention to exit the traditional group major medical business
implementing its strategy to focus primarily on dental products. This decision
is not expected to have a significant effect on the Division's results.
The Guaranteed Investment Contract ("GIC") Division had pretax
operating earnings of $6.9 million in the first three months of 1997 and $9.0
million in the corresponding period of 1996. In December, 1996, the Company sold
a major portion of its bank loan participations in a securitization transaction
which reduced the Division's earnings. In addition, the Division has shortened
the duration of its invested assets which also reduced earnings. Realized
investment losses associated with this Division in the first three months of
1997 were $0.7 million as compared to $2.4 million in the same period last year.
As a result, total pretax earnings were $6.2 million in the first three months
of 1997 compared to $6.6 million for the same period last year.
The Individual Life Division had pretax operating earnings of $6.3
million in the first three months of 1997 as compared to $2.9 million in the
same period of 1996. Earnings from Empire General (an insurance subsidiary which
distributes products through brokerage general agencies) improved $1.6 million
in the first quarter of 1997 as compared to the same period of 1996. The
Division's earnings also increased due to improved mortality experience and
lower expenses related to new marketing ventures. Realized investment gains, net
of related amortization of deferred policy acquisition costs, associated with
this Division were $1.1 million in 1996. As a result, total pretax earnings were
$6.3 million in the first three months of 1997 as compared to $4.0 million in
the first three months of 1996.
Investment Products Division pretax operating earnings in the first
three months of 1997 of $2.7 million were $0.7 million higher than the same
period of 1996. Variable annuity earnings improved $1.2 million. Realized
investment gains associated with the Division, net of related amortization of
deferred policy acquisition costs, were less than $0.1 million as compared to
$0.7 million last year, resulting in total pretax earnings of $2.7 million in
the first three months of 1997 as compared to $2.7 million in the same period of
1996.
The Corporate and Other segment consists of several small insurance
lines of business, net investment income and other operating expenses not
identified with the preceding operating
11
divisions (including interest on substantially all debt), and the operations of
a small noninsurance subsidiary. Pretax losses for this segment were $0.9
million lower the first three months of 1997 as compared to the first three
months of 1996.
Income Taxes
The following table sets forth the effective tax rates for the periods
shown:
THREE MONTHS
ENDED ESTIMATED EFFECTIVE
MARCH 31 INCOME TAX RATES
------------ -------------------
1996 34.1%
1997 34.3
The effective income tax rate for the full year of 1996 was 34.1%.
Management's estimate of the effective income tax rate for 1997 is 34%.
Net Income
The following table sets forth net income for the periods shown, and
the percentage change from the prior period:
NET INCOME
-----------------------------------------
THREE MONTHS PERCENTAGE
ENDED TOTAL INCREASE/
MARCH 31 (IN THOUSANDS) (DECREASE)
------------ --------------- ------------
1996 $18,960 (2.1%)
1997 22,181 17.0
Compared to the same period in 1996, net income in the first three
months of 1997 increased $3.2 million, reflecting improved operating earnings in
the Acquisitions, Financial Institutions, and Individual Life Divisions and the
Corporate and Other segment which were offset by lower earnings in the Group,
Guaranteed Investment Contracts, and Investment Products Divisions and lower
realized investment gains (net of related amortization of deferred policy
acquisition costs).
12
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 27 - Financial Data Schedule
Exhibit 99 - Safe Harbor for Forward-Looking Statements
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PROTECTIVE LIFE INSURANCE COMPANY
Date: May 14, 1997 /s/ Jerry W. DeFoor
-------------------
Jerry W. DeFoor
Vice President and Controller,
and Chief Accounting Officer
(Duly authorized officer)
13