SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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 December 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 0-17272
__________________
TECHNE CORPORATION
(Exact name of registrant as specified in its charter)
MINNESOTA 41-1427402
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
614 MCKINLEY PLACE N.E.
MINNEAPOLIS, MN 55413 (612) 379-8854
(Address of principal (Registrant's telephone number,
executive offices) (Zip Code) 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 ( )
At February 2, 2001, 41,457,790 shares of the Company's Common Stock (par
value $.01) were outstanding.
ITEM 1 - FINANCIAL STATEMENTS
TECHNE CORPORATION & SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
12/31/00 6/30/00
------------ ------------
ASSETS
Cash and cash equivalents $ 16,855,236 $ 17,356,108
Short-term investments 63,930,605 42,468,183
Accounts receivable (net) 15,382,233 15,600,868
Inventories 4,854,846 4,651,615
Income taxes receivable - 3,290,314
Deferred income taxes 2,514,000 2,440,000
Other current assets 846,744 494,117
------------ ------------
Total current assets 104,383,664 86,301,205
Deferred income taxes 4,109,000 3,938,000
Property and equipment (net) 47,176,209 46,266,177
Intangible assets (net) 31,890,873 36,335,500
Other assets 7,515,780 7,568,699
------------ ------------
TOTAL ASSETS $195,075,526 $180,409,581
============ ============
LIABILITIES & EQUITY
Trade accounts payable $ 3,524,564 $ 2,630,164
Salary and related accruals 2,004,086 2,998,696
Other payables 6,003,336 6,107,979
Income taxes payable 2,309,989 -
Current portion of long-term debt 854,086 824,315
------------ ------------
Total current liabilities 14,696,061 12,561,154
Royalty payable 5,846,000 7,768,000
Long-term debt 18,502,300 18,935,049
Common stock, par value $.01 per
share; authorized 100,000,000;
issued and outstanding 41,454,290
and 41,381,998, respectively 414,543 413,820
Additional paid-in capital 53,819,315 52,857,444
Retained earnings 102,413,334 88,336,230
Accumulated other comprehensive loss (616,027) (462,116)
------------ ------------
Total stockholders' equity 156,031,165 141,145,378
------------ ------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $195,075,526 $180,409,581
============ ============
See notes to unaudited Consolidated Financial Statements.
TECHNE CORPORATION & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
QUARTER ENDED SIX MONTHS ENDED
------------------------ ------------------------
12/31/00 12/31/99 12/31/00 12/31/99
----------- ----------- ----------- -----------
Sales $26,688,666 $25,126,839 $54,410,229 $49,747,892
Cost of sales 6,766,978 6,977,732 13,571,167 13,974,502
----------- ----------- ----------- -----------
Gross margin 19,921,688 18,149,107 40,839,062 35,773,390
Operating expenses
(income):
Selling, general and
administrative 4,154,722 4,723,955 8,629,248 9,129,153
Research and
development 3,594,500 2,660,928 6,863,209 5,851,823
Amortization expense 2,222,313 2,307,312 4,444,627 4,614,625
Interest expense 350,009 364,093 703,634 731,191
Interest income (835,366) (292,244) (1,520,216) (528,704)
----------- ----------- ----------- -----------
9,486,178 9,764,044 19,120,502 19,798,088
----------- ----------- ----------- -----------
Earnings before
income taxes 10,435,510 8,385,063 21,718,560 15,975,302
Income taxes 3,453,000 2,821,000 7,233,000 5,563,000
----------- ----------- ----------- -----------
Net earnings $ 6,982,510 $ 5,564,063 $14,485,560 $10,412,302
=========== =========== =========== ===========
Earnings per share
(Note D):
Basic earnings per
share $ 0.17 $ 0.14 $ 0.35 $ 0.26
Diluted earnings per
share $ 0.16 $ 0.13 $ 0.34 $ 0.25
Weighted average common
shares outstanding:
Basic 41,457,269 40,353,126 41,436,094 40,327,246
Diluted 42,840,275 42,121,092 42,800,185 41,884,244
See notes to unaudited Consolidated Financial Statements.
TECHNE CORPORATION & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
SIX MONTHS ENDED
--------------------------
12/31/00 12/31/99
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 14,485,560 $ 10,412,302
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization 6,274,267 6,143,922
Deferred income taxes (258,000) (596,000)
Other 552,919 284,357
Change in current assets and current
liabilities:
(Increase) decrease in:
Accounts receivable 146,581 456,389
Inventories (212,233) 1,589,316
Other current assets (350,821) 31,341
Increase (decrease) in:
Trade account/other payables (1,209,832) (892,861)
Salary and related accruals (989,559) (216,698)
Income taxes, net 5,831,027 (71,635)
------------ ------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 24,269,909 17,140,433
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of short-term investments (34,000,954) (10,400,000)
Proceeds from sale of short-term investments 12,538,532 6,122,938
Additions to property and equipment (2,747,232) (24,651,700)
Real estate deposit - (2,000,000)
Increase in other long term assets (500,000) (1,450,000)
------------ ------------
NET CASH USED IN INVESTING ACTIVITIES (24,709,654) (32,378,762)
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock 733,142 729,628
Proceeds from issuance of long-term debt - 20,400,000
Payments on long-term debt (402,978) (251,704)
Repurchase of common stock (400,004) -
------------ ------------
NET CASH (USED IN) PROVIDED BY FINANCING
ACTIVITIES (69,840) 20,877,924
EFFECT OF EXCHANGE RATE CHANGES ON CASH 8,713 286,069
------------ ------------
NET CHANGE IN CASH AND EQUIVALENTS (500,872) 5,925,664
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD 17,356,108 12,769,468
------------ ------------
CASH AND EQUIVALENTS AT END OF PERIOD $ 16,855,236 $ 18,695,132
============ ============
See notes to unaudited Consolidated Financial Statements.
TECHNE CORPORATION & SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
A. BASIS OF PRESENTATION:
The unaudited Consolidated Financial Statements have been prepared in
accordance with generally accepted accounting principles and with
instructions to Form 10-Q and Article 10 of Regulation S-X.
The accompanying unaudited Consolidated Financial Statements reflect all
adjustments which are, in the opinion of management, necessary to a fair
presentation of the results for the interim periods presented. All such
adjustments are of a normal recurring nature.
A summary of significant accounting policies followed by the Company is
detailed in the Annual Report to Shareholders for Fiscal 2000. The Company
follows these policies in preparation of the interim Financial Statements.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. It is suggested that the
Consolidated Financial Statements be read in conjunction with the Company's
Consolidated Financial Statements and Notes thereto for the fiscal year ended
June 30, 2000 included in the Company's Annual Report to Shareholders for
Fiscal 2000.
Certain Consolidated Balance Sheet captions appearing in this interim report
are as follows:
12/31/00 6/30/00
----------- -----------
ACCOUNTS RECEIVABLE
Accounts receivable $15,542,233 $15,762,868
Less reserve for bad debts 160,000 162,000
----------- -----------
NET ACCOUNTS RECEIVABLE $15,382,233 $15,600,868
=========== ===========
INVENTORIES
Raw materials $ 2,246,917 $ 2,288,719
Supplies 131,041 124,732
Finished goods 2,476,888 2,238,164
----------- -----------
TOTAL INVENTORIES $ 4,854,846 $ 4,651,615
=========== ===========
FIXED ASSETS
Land $ 871,000 $ 871,000
Buildings and improvements 45,107,246 43,965,312
Laboratory equipment 15,563,897 14,114,039
Office equipment 3,664,858 3,535,164
Leasehold improvements 149,767 180,770
----------- -----------
65,356,768 62,666,285
Less accumulated depreciation
and amortization 18,180,559 16,400,108
----------- -----------
NET FIXED ASSETS $47,176,209 $46,266,177
=========== ===========
INTANGIBLE ASSETS
Customer list $18,010,000 $18,010,000
Technology licensing agreements 500,000 500,000
Goodwill 39,075,089 39,075,089
----------- -----------
57,585,089 57,585,089
Less accumulated amortization 25,694,216 21,249,589
----------- -----------
NET INTANGIBLE ASSETS $31,890,873 $36,335,500
=========== ===========
Effective July 1, 2000, the Company adopted Financial Accounting Standards
No. 133, "Accounting for Derivative Instruments and Hedging Activities,"
which provides guidance on accounting for derivatives and hedge transactions.
The adoption of this pronouncement did not impact operating results or
financial position.
In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin (SAB) No. 101, "Revenue Recognition in Financial
Statements," which provides guidance in applying generally accepted
accounting principles to revenue recognition in financial statements. The
application of this SAB did not have a material impact on the Company's
reported operating results or financial position.
B. EARNINGS PER SHARE:
Shares used in the earnings per share computations are as follows:
QUARTER ENDED SIX MONTHS ENDED
---------------------- ----------------------
12/31/00 12/31/99 12/31/00 12/31/99
---------- ---------- ---------- ----------
Weighted average
common shares
outstanding-basic 41,457,269 40,353,126 41,436,094 40,327,246
Dilutive effect of
stock options
and warrants 1,383,006 1,767,966 1,364,091 1,556,998
---------- ---------- ---------- ----------
Average common shares
outstanding-diluted 42,840,275 42,121,092 42,800,185 41,884,244
========== ========== ========== ==========
C. SEGMENT INFORMATION:
Following is financial information relating to the Company's operating
segments:
QUARTER ENDED SIX MONTHS ENDED
------------------------ ------------------------
12/31/00 12/31/99 12/31/00 12/31/99
----------- ----------- ----------- -----------
External sales
Hematology $ 3,677,677 $ 3,220,811 $ 7,185,894 $ 6,384,499
Biotechnology 16,585,983 15,459,607 34,506,898 30,533,927
R&D Systems Europe 6,425,006 6,446,421 12,717,437 12,829,466
----------- ----------- ----------- -----------
Total external sales $26,688,666 $25,126,839 $54,410,229 $49,747,892
=========== =========== =========== ===========
Intersegment sales
Hematology $ -- $ -- $ -- $ --
Biotechnology 3,884,920 3,269,989 7,285,577 6,456,418
R&D Systems Europe 16,130 22,361 37,382 83,631
----------- ----------- ----------- -----------
Total intersegment
sales $ 3,901,050 $ 3,292,350 $ 7,322,959 $ 6,540,049
=========== =========== =========== ===========
Income before taxes
Hematology $ 1,363,492 $ 946,697 $ 2,448,650 $ 1,876,671
Biotechnology 8,792,524 6,458,576 18,365,809 13,031,572
R&D Systems Europe 1,228,255 1,229,794 2,361,067 2,276,095
Corporate and other (948,761) (250,004) (1,456,966) (1,209,036)
----------- ----------- ----------- -----------
Total income
before taxes $10,435,510 $ 8,385,063 $21,718,560 $15,975,302
=========== =========== =========== ===========
D. STOCK SPLIT:
On November 9, 2000, the Company declared a two-for-one stock split to be
effected in the form of a 100% stock dividend to shareholders of record on
November 24, 2000. The payment date for the stock split was December 1,
2000. All earnings per share and share amounts included in these financial
statements have been restated to reflect the stock split. The shareholders
also approved an amendment to the Company's Articles of Incorporation to
increase authorized common stock from 50,000,000 to 100,000,000 shares.
E. CONTINGENCIES:
A party has presented invoices in the amount of $28 million for materials
provided to the Company over past years, allegedly pursuant to a contract
under which no accounting or invoices were rendered for nine years. The
Company has brought a declaratory judgement action seeking to have the court
declare that no amount is owed. The Company's management believes that no
material amount is owed, that it has claims against the other party, and
that the ultimate resolution of the matter will not have a material adverse
effect on the financial condition or results of operations of the Company.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations Quarter and Six Months Ended December 31, 2000
vs. Quarter and Six Months Ended December 31, 1999
Techne Corporation (Techne) has two operating subsidiaries: Research and
Diagnostic Systems, Inc. (R&D Systems) located in Minneapolis, Minnesota and
R&D Systems Europe Ltd. (R&D Europe) located in Abingdon, England. R&D
Systems has two divisions: Biotechnology and Hematology. The Biotechnology
Division's principal products are purified cytokines (proteins), antibodies
and assay kits, which are sold primarily to biomedical researchers at
pharmaceutical companies and academic and government research laboratories.
The Hematology Division's principal products are whole blood hematology
controls and calibrators which are sold to hospital and clinical laboratories
to check the performance of their hematology instruments to assure the
accuracy of hematology test results. R&D Europe sells R&D Systems'
biotechnology products in Europe, both directly and through a sales
subsidiary in Germany. The Company has a foreign sales corporation, Techne
Export Inc.
The Company has an equity interest in ChemoCentryx, Inc. (CCX), a technology
and drug development company working in the area of chemokines. Chemokines
are cytokines which regulate the trafficking patterns of leukocytes, the
effector cells of the human immune system. In conjunction with the equity
investment and joint research efforts, Techne obtains exclusive worldwide
research and diagnostic marketing rights to chemokine proteins, antibodies
and receptors discovered or developed by CCX or R&D Systems. The Company
accounts for this investment under the equity method of accounting and
recognizes 100% of the losses of CCX due to the limited amount of cash
consideration provided by the holders of the common shares of CCX. The
Company's investment in CCX was $3,171,237 and $3,553,516 at December 31,
2000 and June 30, 2000, respectively.
Net Sales
Net sales for the quarter ended December 31, 2000 were $26,688,666, an
increase of $1,561,827 (6%) from the quarter ended December 31, 1999.
Sales for the six months ended December 31, 2000 increased $4,662,337 (9%)
from $49,747,892 to $54,410,229. R&D Systems' Biotechnology Division sales
increased $1,126,376 (7%) and $3,972,971 (13%) and R&D Systems' Hematology
Division sales increased $456,866 (14%) and $801,395 (13%) for the quarter
and six months, respectively. R&D Europe sales decreased $21,415 (.3%) and
$112,029 (1%) for the quarter and six months ended December 31, 2000. The
Biotechnology Division sales increase for the quarter was lower than
expected due to two fewer prime shipping days during the quarter as compared
to last year, slower than normal sales during the current Thanksgiving and
Christmas holiday period and three large bulk orders in the second quarter of
last year which resulted in an unusually large sales increase of 24% for that
quarter. The increase in Hematology sales was due mainly to increased OEM
sales. R&D Europe's decline in revenue was entirely a result of changes in
foreign currency exchange rates. In British Pounds, R&D Europe's sales
increased 11% and 10% over the second quarter and first six months of last
year. Adjusted for all changes in exchange rates, R&D Europe's revenues for
the second quarter and first six months of fiscal 2001 would have been
approximately $1.0 million and $1.9 million higher than reported.
Gross Margins
Gross margins, as a percentage of sales, increased from the prior year.
Margins for the second quarter of fiscal 2001 were 74.6% compared to 72.2%
for the same quarter in fiscal 2000. Margins for the six months ended
December 31, 2000 were 75.1% compared to 71.9% for the same period in fiscal
2000.
Biotechnology Division margins increased from 73.7% to 78.2% for the quarter
and from 73.5% to 78.7% for the six months ended December 31, 2000. Margins
in the first six months of last year were affected by the higher cost of
inventory acquired from Genzyme Corporation. R&D Europe gross margins
decreased from 43.2% to 35.4% for the quarter and from 44.0% to 37.3% for the
six months ended December 31, 2000 as a result of changes in exchange rates.
Hematology Division gross margins increased slightly from 48.5% to 48.9% for
the quarter and decreased slightly from 47.1% to 46.7% for the six months as
a result of changes in product mix.
Selling, General and Administrative Expenses
Selling, general and administrative expenses decreased $569,233 (12%) and
$499,905 (5%) from the second quarter and first six months of last year.
This was mainly the result of exchange rate changes, lower profit sharing
accruals and the timing of certain printing and promotion expenses. It is
anticipated that printing and promotion expenses will accelerate in the
third and fourth quarters of fiscal 2001.
Research and Development Expenses
Research and development expenses increased $933,572 (35%) and $1,011,386
(17%) for the quarter and six months ended December 31, 2000. Research
and development expenses by R&D Systems increased $478,000 (17%) and
$936,000 (17%) for the quarter and six months, respectively. The R&D Systems
research expense increase relates to products currently under development,
many of which are expected to be released in fiscal 2001. Products
currently under development include both biotechnology and hematology
products. Research expenses related to ChemoCentryx increased $538,000 and
$267,000 for the quarter and six months ended December 31, 2000 as a result
of increased spending. The increases in research and development expenses
by R&D Systems and ChemoCentryx were offset by a reduction in R&D Europe
research expenses as a result of the cancellation of a research agreement
with British Biotechnology Group plc. and the completion of the transfer of
all R&D Europe research activities to R&D Systems.
Net Earnings
Earnings before income taxes increased $2,050,447 from $8,385,063 in the
second quarter of fiscal 2000 to $10,435,510 in the second quarter of fiscal
2001. Earnings before taxes for the six months increased $5,743,258 from
$15,975,302 to $21,718,560. The increase in earnings before income taxes was
due primarily to the increase in sales and improved gross margins discussed
previously.
Income taxes for the quarter and six months ended December 31, 2000 were
provided at a rate of approximately 33% of consolidated pretax earnings
compared to 34% and 35% for the quarter and first six months of the prior
year. The decrease in tax rate from the prior year is due primarily to an
increase in tax exempt interest income. U.S. federal taxes have been
reduced by the credit for research and development expenditures and the
benefit of the foreign sales corporation. Foreign income taxes have been
provided at rates which approximate the tax rates in the United Kingdom and
Germany.
Liquidity and Capital Resources
At December 31, 2000, cash and cash equivalents and short-term investments
were $80,785,841 compared to $59,824,291 at June 30, 2000. The Company
believes it can meet its future cash, working capital and capital addition
requirements through currently available funds, cash generated from
operations and maturities of short-term investments. The Company has an
unsecured line of credit of $750,000. The interest rate on the line of
credit is at prime. There were no borrowings on the line in the prior or
current fiscal years.
Cash Flows From Operating Activities
The Company generated cash of $24,269,909 from operating activities in the
first six months of fiscal 2001 compared to $17,140,433 for the first six
months of fiscal 2000. The increase was mainly the result of increased net
earnings and an increase in income taxes payable during the first six months
of fiscal 2001.
Cash Flows From Investing Activities
During the six months ended December 31, 2000 and December 31, 1999,
short-term investments increased by $21,462,422 and $4,277,062, respectively.
The Company's investment policy is to place excess cash in short-term
tax-exempt bonds. The objective of this policy is to obtain the highest
possible return with the lowest risk, while keeping the funds accessible.
Capital expenditures for fixed assets for the first six months of fiscal 2001
and 2000 were $2,747,232 and $24,651,700 (including $21.9 million for the
purchase of R&D Systems' Minneapolis facility), respectively. Included in
the fiscal 2001 and 2000 additions were $1,142,000 and $1,921,000 for
building improvements related to remodeling of facilities by R&D Systems.
The remaining capital additions in fiscal 2001 and 2000 were for laboratory
and computer equipment. Total expenditures for capital additions and
building improvements planned for the remainder of fiscal 2001 are expected
to cost approximately $4 million and are expected to be financed through
currently available funds and cash generated from operating activities.
During the first six months of fiscal 2000, the Company invested an
additional $1 million in ChemoCentryx, Inc. The Company also paid $2
million and issued warrants to purchase 120,000 shares of common stock as
a deposit on an option to purchase property adjacent to its Minneapolis
facility.
Cash Flows From Financing Activities
Cash of $733,142 and $729,628 was received during the six months ended
December 31, 2000 and 1999, respectively, for the exercise of options for
81,516 and 126,540 shares of common stock. During the first six months of
fiscal 2001 and 2000 options for 1,000 and 19,584 shares of common stock
were exercised by the surrender of 224 and 6,950 shares of the Company's
common stock with fair market values of $8,554 and $112,271, respectively.
During the first six months of fiscal 2001, the Company purchased and
retired 10,000 shares of Company common stock at a market value of $400,004.
The Board of Directors has authorized the Company, subject to market
conditions and share price, to purchase and retire up to $20 million of its
common stock. From the start of the repurchase program through February 2,
2001, 1,311,200 shares have been purchased at a market value of $9,154,118.
The Company has never paid cash dividends and has no plans to do so in
fiscal 2001.
ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
At December 31, 2000, the Company had an investment portfolio of fixed
income securities, excluding those classified as cash and cash equivalents,
of $63,930,605. These securities, like all fixed income instruments, are
subject to interest rate risk and will decline in value if market interest
rates increase. However, the Company has the ability to hold its fixed
income investments until maturity and therefore the Company does not expect
any such increase in interest rates to have an adverse impact on income or
cash flows.
The Company operates internationally, and thus is subject to potentially
adverse movements in foreign currency rate changes. The Company does not
enter into foreign exchange forward contracts to reduce its exposure to
foreign currency rate changes on intercompany foreign currency denominated
balance sheet positions.
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
The information required by Item 1 is contained in the Company's Form 10-Q
for the quarter ended September 30, 2000, which is incorporated herein by
reference.
ITEM 2 - CHANGES IN SECURITIES
None
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4 - SUBMISSION OF MATTERS TO VOTE OF SHAREHOLDERS
Information relating to the Company's Annual Meeting of Shareholders, held
on November 9, 2000 is contained in the Company's Form 10-Q for the quarter
ended September 30, 2000, which is incorporated herein by reference.
ITEM 5 - OTHER INFORMATION
Forward Looking Information and Cautionary Statements: Statements in this
filing, and elsewhere, which look forward in time involve risks and
uncertainties which may affect the actual results of operations. The
following important factors, among others, have affected and, in the future,
could affect the Company's actual results: the introduction and acceptance
of new biotechnology and hematology products, the levels and particular
directions of research into cytokines by the Company's customers, the impact
of the growing number of producers of cytokine research products and related
price competition, the retention of hematology OEM and proficiency survey
business, the impact of changes in foreign currency exchange rates, the
outcome of litigation involving the Company and the costs and results of
research and product development efforts of the Company and of companies in
which the Company has invested or with which it has formed strategic
relationships.
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
A. EXHIBITS
None.
B. REPORTS ON FORM 8-K
No reports on Form 8-K were filed during the quarter ended December 31,
2000.
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.
TECHNE CORPORATION
(Company)
Date: February 13, 2001 Thomas E. Oland
------------------------------
President, Chief Executive and
Financial Officer