UNITED STATES
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 March 31, 2000
------------------
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: 0-11355
BINDLEY WESTERN INDUSTRIES, INC.
--------------------------------
(Exact name of registrant as specified in its charter)
Indiana 84-0601662
- ------------------------------- ---------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
8909 Purdue Road
Indianapolis, Indiana 46268
---------------------------
(Address of principal executive offices)
(Zip Code)
(317) 704-4000
--------------
(Registrant's telephone number,
including area code)
No Change
(Former name, former address and former fiscal year,
if changed since last report)
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 _________
---------
The number of shares of Common Stock outstanding as of March 31, 2000 was
34,238,271.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
BINDLEY WESTERN INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(000's omitted except share data)
(unaudited)
Three-month period ended
March 31,
----------------------------------
2000 1999
----------------------------------
Revenues:
Net sales from stock $ 1,647,493 $ 1,226,780
Net brokerage sales 830,617 758,385
----------------------------------
Total net sales 2,478,110 1,985,165
Other income 543 483
----------------------------------
2,478,653 1,985,648
----------------------------------
Cost and expenses:
Cost of products sold 2,412,279 1,933,425
Selling, general and administrative 35,050 28,425
Depreciation and amortization 3,057 2,147
Interest 8,302 5,549
Unusual item 26,300
----------------------------------
2,484,988 1,969,546
----------------------------------
Earnings before income taxes (6,335) 16,102
----------------------------------
Provision for income taxes 7,372 6,397
----------------------------------
Net earnings $ (13,707) $ 9,705
==================================
Earnings per share:
Basic $ (0.40) $ 0.29
Diluted $ (0.40) $ 0.27
Average shares outstanding:
Basic 34,108,201 33,066,202
Diluted 34,108,201 36,186,232
(See accompanying notes to consolidated financial statements)
BINDLEY WESTERN INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(000's omitted except share data)
(unaudited)
March 31, December 31,
-----------------------------------
2000 1999
-----------------------------------
Assets
Current assets:
Cash $ 58,154 $ 34,910
Accounts receivable, less allowance for doubtful
accounts of $9,547 for 2000 and 1999 705,637 721,830
Finished goods inventory 874,982 803,021
Deferred income taxes 13,768 13,168
Other current assets 9,802 9,926
-----------------------------------
1,662,343 1,582,855
-----------------------------------
Other assets 16 18
-----------------------------------
Fixed assets, at cost 128,240 129,140
Less: accumulated depreciation (30,608) (27,773)
-----------------------------------
97,632 101,367
-----------------------------------
Intangibles 18,504 18,582
-----------------------------------
Total assets $ 1,778,495 $ 1,702,822
===================================
Liabilities and Shareholders' Equity
Current liabilities:
Short-term borrowings $ 132,194 $ 45,000
Securitized borrowings 349,963 349,963
Accounts payable 840,706 864,271
Other current liabilities 50,913 25,472
-----------------------------------
1,373,776 1,284,706
-----------------------------------
Long-term debt 38,570 38,698
-----------------------------------
Deferred income taxes 4,703 4,703
-----------------------------------
Shareholders' equity:
Common stock, $.01 par value authorized 53,333,333 shares;
issued 35,450,503 and 35,213,201 shares, respectively 3,418 3,415
Special shares, $.01 par value-authorized 1,000,000 shares
Additional paid in capital 226,460 225,459
Note receivable from officer (3,282) (3,228)
Retained earnings 152,331 166,550
-----------------------------------
378,927 392,196
Less: shares in treasury-at cost
1,212,232 and 1,212,232 shares, respectively (17,481) (17,481)
-----------------------------------
Total shareholders' equity 361,446 374,715
-----------------------------------
Commitments and contingencies
-----------------------------------
Total liabilities and shareholders' equity $ 1,778,495 $ 1,702,822
===================================
(See accompanying notes to consolidated financial statements)
BINDLEY WESTERN INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(000's omitted except share data)
(unaudited)
Three-month period ended
March 31,
-------------------------------
2000 1999
-------------------------------
Cash flow from operating activities:
Net income $ (13,707) $ 9,705
Adjustments to reconcile net income
to net cash provided (used) by operating activities:
Depreciation and amortization 3,057 2,147
Unusual item 26,300
Deferred income taxes (600) (600)
Gain on sale of fixed assets (134)
Change in assets and liabilities, net of acquisition:
Accounts receivable 16,272 (66,128)
Finished goods inventory (71,939) 13,864
Accounts payable (23,713) (91,587)
Other current assets and liabilities (735) (3,920)
-------------------------------
Net cash used by operating activities (65,199) (136,519)
-------------------------------
Cash flow from investing activities:
Purchase of fixed assets and other assets (3,754) (5,863)
Proceeds from sale of fixed assets 4,960
Acquisition of business (268)
-------------------------------
Net cash provided (used) by investing activities 938 (5,863)
-------------------------------
Cash flow from financing activities:
Proceeds from sale of stock 1,004 1,644
Addition (reduction) in long term debt (127) (10)
Related party note receivable (54) (54)
Payment on note payable Priority Healthcare Corporation (3,350)
Proceeds under line of credit agreement 592,194 401,500
Payments under line of credit agreement (505,000) (298,500)
Proceeds from securitized borrowings 13,800
Purchase of common shares for treasury (5,647)
Dividends (512) (476)
-------------------------------
Net cash provided by financing activities 87,505 108,907
-------------------------------
Net increase (decrease) in cash 23,244 (33,475)
Cash at beginning of period 34,910 42,982
-------------------------------
Cash at end of period $ 58,154 $ 9,507
===============================
(See accompanying notes to consolidated financial statements)
BINDLEY WESTERN INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. All of our financial information includes the results of Bindley Western
Industries, Inc. ("BWI") and Central Pharmacy Services, Inc. ("CPSI") for
all periods presented giving retroactive effect to the merger on August 31,
1999. We have prepared the consolidated financial statements in this report
without audit. We condensed or omitted some information and footnote
disclosures, including significant accounting policies, that would normally
be included in financial statements prepared in accordance with generally
accepted accounting principles. We believe that the financial statements
for the three-month periods ended March 31, 2000 and 1999 include all
necessary adjustments which are of a normal recurring nature, for fair
presentation. These financial statements should be read in conjunction with
the financial statements and notes included in our latest annual report.
Results for any interim period may not be indicative of the results of the
entire year.
2. On March 27, 2000, the Company disclosed in its Form 10-K filing that it
was a potential defendant in an ongoing grand jury investigation being
conducted by the U. S. Attorney's Office in Las Vegas, NV. Then, on April
24, 2000, the Company announced in its first quarter 2000 earnings release
that it had entered into an agreement for the purpose of settling the
subject matter of the government's investigation, subject to court
approval, which is expected to take place by the end of June 2000. Full
details of the tentative settlement cannot be disclosed prior to court
approval.
Under the tentative settlement, the Company has agreed to a one count plea
in which the Company accepts the responsibility for the unlawful acts of
two of its former employees based in San Dimas, CA and to pay a lump sum
fine in the amount of $25 million at the time of court approval. The
tentative settlement satisfies all government claims arising from the
conduct that was disclosed in the March 27 SEC filing and there are no
other claims. Additionally, there is no probation associated with the
settlement.
In conformance with generally accepted accounting principles, the Company
booked the amount of the settlement plus the estimated fees and expenses
associated with its internal investigation and recorded an unusual charge
of $26.3 million ($25.8 million net of tax) for the March 31, 2000 quarter.
3. In a consolidated class action filed in the United States District Court
for the Northern District of Illinois in 1993, the Company, other
pharmaceutical wholesalers and pharmaceutical manufacturers were named as
defendants, In re Brand Name Prescription Drugs Litigation, MDL 997.
Plaintiffs alleged that pharmaceutical manufacturers and wholesalers
conspired to fix prices of brand-name prescription drugs sold to retail
pharmacies at artificially high levels in violation of the federal
antitrust laws. The plaintiffs sought injunctive relief, unspecified treble
damages, costs, interest and attorneys' fees. The Company denied the
complaint allegations.
Several of the manufacturer defendants and the class plaintiffs have
reached settlement agreements. Under these agreements, the settling
manufacturer defendants retain certain contingent liabilities under the
October 21, 1994 agreement discussed below. The trial against the remaining
defendants, including the Company, began on September 14, 1998. On November
30, 1998, the Court granted all remaining defendants' motions for judgments
as a matter of law, dismissing all In re Brand Name Prescription Drugs
class claims against the Company and other defendants. The class plaintiffs
appealed the Court's ruling and, on July 13, 1999, the appeals court
dismissed the wholesalers, including the Company, from the case. On
February 22, 2000, the United States Supreme Court denied the plaintiffs'
petition for certiorari, thus concluding the In re Brand Name Prescription
Drugs class action litigation.
At this time, the Company is a defendant in 115 additional cases brought by
plaintiffs who "opted out" of the federal class action described above. One
hundred eleven of these complaints contain allegations and claims for
relief that are substantially similar to those in the federal class action.
The four remaining complaints add allegations that the defendants' conduct
violated state law. The damages period in these cases begins in October
1993. The Company has denied the allegations in all of these complaints.
Discovery in the opt out cases is currently ongoing and no trial dates have
yet been scheduled.
On November 20, 1997, two additional complaints were filed in the MDL 997
proceeding by Eckerd Corporation and American Drug Stores naming certain
pharmaceutical manufacturers and wholesalers, including the Company, as
defendants. These complaints contain allegations and claims for relief that
are substantially similar to those in the federal class action. The Company
has denied the allegations in these complaints. No trial date has been set
in these cases.
On July 1, 1996, the Company and several other wholesalers were joined as
the defendants in a seventh amended and restated complaint filed in the
Circuit Court of Greene County, Alabama, Durrett v. The Upjohn Company,
Civil Action No. 94-029. An order dismissing the action and taxing costs
against the plaintiffs was entered by the Circuit Court on November 29,
1999.
On June 16, 1998, a suit was filed in the Circuit Court for Cocke County,
Tennessee purportedly on behalf of consumers of prescription drugs in the
following states: Tennessee, Alabama, Arizona, Florida, Kansas, Maine,
Michigan, Minnesota, New Mexico, North Carolina, North Dakota, South
Dakota, West Virginia and Wisconsin. Graves et al. v. Abbott Laboratories
et al., Civil Action No. 25,109-II. The complaint charges that
pharmaceutical manufacturers and wholesalers, including the Company,
engaged in a price-fixing conspiracy in violation of Tennessee's Trade
Practices Act and Consumer Protection Act, and the unfair or deceptive
trade practices statutes of the other jurisdictions named therein. The
Company has denied the allegations of the complaint and all proceedings in
this suit have been stayed until further order of the Circuit Court.
On October 21, 1994, the Company entered into an agreement with the other
wholesalers and pharmaceutical manufacturers covering all of the cases
listed above. Among other things, the agreement provides that for all
judgments that might be entered against both the manufacturer and
wholesaler defendants, the Company's total exposure for joint and several
liability is limited to $1 million and the wholesaler defendants are
indemnified for $9 million in related legal fees and expenses. As a result
of the previously noted settlements, we have periodically received
reimbursement of our legal fees and expenses in excess of our proportionate
share of the $9 million, and we expect to receive reimbursement of
substantially all of such fees and expenses in the future.
The Company is unable to form a reasonably reliable conclusion regarding
the likelihood of a favorable or unfavorable outcome of these cases, each
of which is being defended vigorously. The Company believes the allegations
of liability are without merit with regard to the wholesaler defendants and
that the attendant liability of the Company, if any, would not have a
material adverse effect on the Company's financial condition or liquidity.
Adverse decisions, although not anticipated, could have a material adverse
effect on the Company's results of operations.
4. On June 25, 1999, a 4-for-3 stock split of our common stock was paid in the
form of a stock dividend to shareholders of record at the close of business
on June 11, 1999. We restated all historical weighted average shares and
per share amounts in this report to reflect these stock splits. Share
amounts in the Consolidated Balance Sheets reflect the actual share amounts
outstanding for each period presented.
5. Giving effect of the CPSI merger, we have two reportable segments. These
segments are BWI and Nuclear Pharmacy. These segments conducted
substantially all of their business within the United States. The BWI
segment specialized in the distribution of pharmaceuticals and related
health care products to chain drug companies which operate their own
warehouses, individual drug stores, supermarkets and mass retailers with
their own pharmacies, hospitals, clinics, HMOs, state and federal
government agencies and other health care providers. The Nuclear Pharmacy
segment prepares and delivers unit dose radiopharmaceuticals for use in
nuclear imaging procedures in hospitals and clinics. Our segments have
separate management teams and infrastructures to meet the specific needs of
our customers and our marketing strategies.
Segment information for the three-month periods ended March 31, 1999 and
2000 was as follows:
Nuclear
(in thousands) BWI Pharmacy Total
----------- ---------- -----------
Three-months ended March 31, 1999
Revenues $ 1,974,957 $ 10,208 $ 1,985,165
Segment operating earnings 20,352 1,299 21,651
Interest Expense (5,549)
-------------
Earnings before income taxes 16,102
=============
Three-months ended March 31, 2000
Revenues $2,463,815 $ 14,295 $ 2,478,110
Segment operating earnings 26,229 2,038 28,267
Interest Expense (8,302)
Unusual item (26,300)
-------------
Earnings before income taxes (6,335)
=============
Operating earnings, as opposed to net earnings, has been determined to be a
better indicator of a segment's operating profitability for management
purposes.
6. The following is a reconciliation of the numerators and denominators of the
basic and diluted earnings per share computations for the three month
periods ended March 31, 2000 and 1999:
Three-month period ended
March 31,
-------------------------------------------------- ---------------------
(in thousands, except share data) 2000 1999
-------------------------------------------------- ---------------------
Basic:
Net earnings ($ 13,707) $ 9,705
Weighted shares
outstanding 34,108,201 22,607,433
1999 4 for 3 stock split 7,536,714
Shares issued in CPSI merger 2,922,055
Basic shares
outstanding 34,108,201 33,066,202
Per share amount ($ .40) $ .29
Diluted:
Net earnings ($ 13,707) $ 9,705
Weighted shares
outstanding 34,108,201 22,607,433
Stock options 2,123,406
1999 4 for 3 stock split 8,533,338
Shares issued in CPSI merger 2,922,055
Diluted Shares 34,108,201 36,186,232
Per share amount ($ .40) $ .27
The diluted average shares outstanding does not include 2,952,813 potential
common shares because they would be anti-dilutive.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Overview
On August 31, 1999, Bindley Western Industries, Inc. ("BWI") completed
the merger with Central Pharmacy Services, Inc. ("CPSI") of Atlanta, Georgia for
approximately $55 million of BWI Common Stock. CPSI operates specialized
pharmacies that prepare and deliver unit dose radiopharmaceuticals for use in
nuclear imaging procedures in hospitals and clinics. The transaction was
accounted for as a pooling of interests and the financial statements for the
three months ended March 31, 1999 have been restated to give effect to the
combination. CPSI represents the Nuclear Pharmacy segment of our business.
Results of Operations
Net sales of $2,478 million for the first three months of 2000
represented a 24.8% increase over the first three months of 1999. Nuclear
Pharmacy sales accounted for less than 1% of sales for the three months of both
2000 and 1999. Brokerage type sales ("brokerage sales") in 2000 experienced a
9.5% increase for the first three months when compared to the same period in
1999. This increase is the result of increased sales to existing customers.
Although brokerage sales generate very little gross margin, they provide
increased working capital and support our programs to attract more direct store
delivery business from chain warehouse customers. Sales from inventory ("from
stock sales") increased 34% in the first three months of 2000 when compared to
the first three months of 1999. From stock sales include sales from inventory to
chain warehouse customers and direct store delivery sales. We continued to
expand our presence in the direct store delivery portion of the business through
increased sales to existing customers and the addition of new customers. Direct
store delivery sales increased by 36% for the first three months of 2000 when
compared to the first three months of 1999. As a percentage of total sales,
direct store delivery sales increased from 60% for the first three months of
1999 to 65% for the first three months of 2000. In both the first three months
of 2000 and 1999, the increase related to price increases was approximately
equal to the increase in the Consumer Price Index.
Gross margin of $65.8 million for the first three months of 2000
represented an increase of 27% over the first three months of 1999. In both
periods, the pressure on sell side margins continued to be a significant factor
and the purchasing gains associated with pharmaceutical price inflation remained
relatively constant. Gross margin as a percentage of net sales increased to
2.66% for the first three months of 2000 from 2.61% for the first three months
of 1999. This increase in gross margin was the result of the change in mix away
from the lower margin brokerage sales to the higher margin from stock sales in
the BWI segment and also the increased sales of the higher margin Nuclear
Pharmacy segment.
Other income is attributable primarily to finance charges on customers'
receivables and gains on the sale of fixed assets.
Selling, general and administrative ("SGA") expense increased 23% from
$28.4 million for the first three months of 1999 to $35.0 million for the first
three months of 2000. This increase is the result of expenses associated with
the new distribution centers opened in 1999 in Milwaukee, Wisconsin, Kansas
City, Missouri and Denver, Colorado, normal inflationary increases and increased
variable costs to support our growing direct store delivery programs in the BWI
segment. These variable costs include, among others, delivery expenses,
warehouse expenses and labor costs. The remainder of the increase is associated
with the continued expansion, and the opening of new specialized pharmacies, in
our Nuclear Pharmacy segment. Our commitment to growth in both our direct store
delivery sales and our Nuclear Pharmacy segment will result in increased SGA in
the future. However, total SGA expense as a percent of from stock sales for the
first three months decreased from 2.3% in 1999 to 2.1% in 2000. We remain
focused on controlling SGA through improved technology, better asset management
and opportunities to consolidate distribution centers.
Depreciation and amortization expense increased as a result of the
building of new facilities, expansion and automation of existing facilities and
investments in management information systems. Depreciation and amortization
expense increased from $2.1 million in the first three months of 1999 to $3.1
million in the first three months of 2000.
Interest expense for the three-month period increased from $5.5 million
in 1999 to $8.3 million in 2000. The average short-term borrowings outstanding
for the three-month period in 1999 were $335 million at an average short-term
interest rate of 5.1%, as compared to $449 million at an average short-term
interest rate of 6.2% in 2000. At March 31, 2000, CPSI had outstanding
borrowings on their line of credit of $2.2 million at a short-term interest rate
of 9%.
The provision for income taxes represented approximately 39.7% of
earnings before taxes for the first three months of 1999 and 39.5% of earnings
before taxes and the effect of the nondeductible element of the unusual item for
the first three months of 2000.
Liquidity-Capital Resources
For the three-month period ended March 31, 2000, our operations
consumed $65 million in cash. The use of funds resulted from an increase
inventories and a decrease in accounts payable. These uses were offset by a
decrease in accounts receivables. The increase in inventories resulted from
increased purchases necessitated by the increase in direct store delivery sales
and the continued stocking of our new facilities in Kansas City, Missouri and
Denver, Colorado. The decrease in accounts payable is attributed to the timing
of payments of invoices related to inventory purchases while the decrease in
accounts receivables resulted from the timing of brokerage sales. We continue to
closely monitor working capital in relation to economic and competitive
conditions. However, our emphasis on direct store delivery business will
continue to require both net working capital and cash.
On March 27, 2000, the Company disclosed in its Form 10-K filing that
it was a potential defendant in an ongoing grand jury investigation being
conducted by the U. S. Attorney's Office in Las Vegas, NV. Then, on April 24,
2000, the Company announced in its first quarter 2000 earnings release that it
had entered into an agreement for the purpose of settling the subject matter of
the government's investigation, subject to court approval, which is expected to
take place by the end of June 2000. Full details of the tentative settlement
cannot be disclosed prior to court approval.
Under the tentative settlement, the Company has agreed to a one count
plea in which the Company accepts the responsibility for the unlawful acts of
two of its former employees based in San Dimas, CA and to pay a lump sum fine in
the amount of $25 million at the time of court approval. The tentative
settlement satisfies all government claims arising from the conduct that was
disclosed in the March 27 SEC filing and there are no other claims.
Additionally, there is no probation associated with the settlement.
In conformance with generally accepted accounting principles, the
Company booked the amount of the settlement plus the estimated fees and expenses
associated with its internal investigation and recorded an unusual charge of
$26.3 million ($25.8 million net of tax) for the March 31, 2000 quarter.
Capital expenditures were $3.7 million during the first three months of
2000. These were predominantly for distribution centers, the expansion and
automation of existing distribution centers and the investment in additional
management information systems.
Under our receivables securitization facility, we sell substantially all of
our receivables arising in connection with the sale of goods or the rendering of
services to Bindley Western Funding Corporation ("Funding Corp."), a wholly
owned special purpose corporation subsidiary. The receivables are sold to
Funding Corp. on a continuous basis. The cash generated by sales of interests in
the receivables and from collections on the receivables retained is used by
Funding Corp. to purchase additional receivables. The assets of Funding Corp.
are available first to satisfy any claims of Funding Corp. creditors.
Funding Corp. sells our receivables at specified discount rates to a
group of banks. At March 31, 2000, there were $350 million of receivables
interests outstanding that have been sold at an annual average discount rate of
6.0%. We account for the receivables facility as a financing transaction in our
consolidated financial statements.
Our bank credit facility allows us to borrow up to $150 million. The
net increase in borrowings under our bank credit agreement was $85 million
during the three-month period.
We believe that our cash on hand, cash equivalents, line of credit and
working capital management efforts are sufficient to meet our future working
capital requirements.
Our principal working capital needs are for inventory and accounts
receivables. We sell inventory to our chain warehouse and other customers on
various payment terms. This requires significant working capital to finance
inventory purchases and entails accounts receivables exposure in the event any
of our chain warehouse or other significant customers encounter financial
difficulties. Although we monitor closely the creditworthiness of our major
customers and, when feasible, obtain security interests in the inventory sold,
we cannot assure you that we will not incur the write off or write down of chain
warehouse customer or other significant accounts receivables in the future.
Forward-Looking Statements
We make forward-looking statements in this report which represent our
expectations or beliefs about future events and financial performance.
Forward-looking statements are subject to known and unknown risks and
uncertainties, including:
o changes in interest rates;
o competitive pressures;
o changes in customer mix;
o financial stability of major customers and key suppliers;
o investment procurement opportunities;
o asserted and unasserted claims; and
o changes in governmental regulations or the interpretation and
enforcement of these regulations;
In light of these risks, uncertainties and assumptions, the
forward-looking events discussed in this report might not occur. In addition,
actual results could differ materially from those suggested by the
forward-looking statements, and therefore you should not place undue reliance on
the forward-looking statements. We undertake no obligation to publicly update or
revise any forward-looking statements, whether as a result of new information,
future events or otherwise.
Item 3. Qualitative and Quantitative Disclosures About Market Risks
There have been no material changes in our market risk exposure from the risks
described in our Annual Report on Form 10-K for the year ended December 31,
1999.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
The information set forth in Note 2 to the Notes to Consolidated
Financial Statements set forth elsewhere in this Report is incorporated herein
by reference.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27. Selected Financial Data Schedule
(b) Reports on Form 8-K
None
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.
May 15, 2000 BINDLEY WESTERN INDUSTRIES, INC.
BY /s/ Thomas J. Salentine
Thomas J. Salentine
Executive Vice President
(Principal Financial Officer)