SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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Form 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
Commission File No. 1-7797
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PHH Corporation
(Exact name of Registrant as specified in its charter)
Maryland 52-0551284
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
6 Sylvan Way
Parsippany, New Jersey 07054
(Address of principal executive office) (Zip Code)
(973) 428-9700
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if applicable)
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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 and 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 Company 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.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
PHH CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
ASSETS September 30, December 31,
1997 1996
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CURRENT ASSETS
Cash and cash equivalents ........................... $ 11,667 $ 13,779
Restricted cash ..................................... 23,825 89,849
Accounts and notes receivable,
net of allowance for doubtful accounts ........... 669,208 540,569
Other current assets ................................ 149,968 70,598
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TOTAL CURRENT ASSETS ................................ 854,668 714,795
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Property and equipment - net ........................ 82,121 92,145
Excess of cost over fair value of net assets acquired
net of accumulated amortization ................. 22,366 47,279
Other assets ........................................ 160,957 119,288
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Total assets exclusive of assets
management and mortgage programs ................. 1,120,112 973,507
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Assets under management and mortgage programs:
Net investment in leases and leased vehicles ..... 3,547,217 3,418,666
Relocation receivables ........................... 587,310 647,664
Mortgage loans held for sale ..................... 1,162,220 1,248,299
Mortgage servicing rights and fees ............... 305,428 288,943
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5,602,175 5,603,572
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TOTAL ASSETS ........................................ $6,722,287 $6,577,079
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See accompanying notes to consolidated financial statements
PHH CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
LIABILITIES AND SHAREHOLDERS' EQUITY September 30, December 31,
1997 1996
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Accounts payable and other current liabilities ........... $ 618,953 $ 492,583
Deferred revenue ......................................... 49,213 42,045
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Total liabilities exclusive of liabilities under programs 668,166 534,628
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Liabilities under management and mortgage programs:
Debt .................................................. 4,952,083 5,089,943
Deferred income taxes ................................. 300,683 281,948
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Total liabilities under management and mortgage programs . 5,252,766 5,371,891
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Commitments and contingencies
SHAREHOLDERS' EQUITY
Preferred stock - authorized 3,000,000 shares ............ -- --
Common stock, no par value - authorized 75,000,000 shares;
issued 100 and 34,956,835 shares, respectively ........ 289,168 101,155
Retained earnings ........................................ 522,706 577,769
Currency translation adjustment .......................... (10,519) (8,364)
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TOTAL SHAREHOLDERS' EQUITY ............................... 801,355 670,560
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY ............... $ 6,722,287 $ 6,577,079
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See accompanying notes to consolidated financial statements.
PHH CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands)
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------------- ----------------------------
1997 1996 1997 1996
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REVENUES:
Service fees, net:
Fleet management services $ 46,659 $ 44,766 $ 163,486 $ 151,817
Relocation services, net of interest 112,034 70,746 266,868 204,463
Mortgage services (net of amortization of
mortgage servicing rights and fees and
interest of $35,376, $30,613, $95,740
and $86,081, respectively 51,602 40,513 127,731 95,667
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Service fees, net 210,295 156,025 558,085 451,947
Fleet leasing (net of depreciation and interest
of $307,908, $283,085, $892,186 and
$839,080, respectively 13,148 14,297 42,905 41,016
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Net revenues 223,443 170,322 600,990 492,963
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EXPENSES:
Operating and administrative 142,126 122,958 385,678 360,647
Merger and restructuring charge associated
with business combination -- -- 235,312 --
Depreciation and amortization 5,816 7,500 18,675 21,077
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Total expenses 147,942 130,458 639,665 381,724
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Income (loss) before income taxes 75,501 39,864 (38,675) 111,239
Provision for income taxes 30,707 16,061 28,290 45,438
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Net income (loss) $ 44,794 $ 23,803 $ (66,965) $ 65,801
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See accompanying notes to consolidated financial statements.
PHH CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Nine Months Ended
September 30,
1997 1996
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Operating Activities:
Net income (loss) $ (66,965) $ 65,801
Restructuring charge 235,312 --
Restructuring related payments (113,173) --
Depreciation and amortization 18,675 21,077
Increase (decrease) from changes in: Assets under management programs:
Depreciation and amortization under management
and mortgage programs 812,309 764,173
Mortgage loans held for sale 86,079 (318,767)
Other operating activity (38,389) 79,502
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Net cash provided by operating activities 933,848 611,786
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Investing activities:
Assets under management programs:
Investment in leases and leased vehicles (1,565,857) (1,217,700)
Repayment of investment in leases and leased vehicles 615,153 470,193
Equity advances on homes under management (4,185,486) (2,347,351)
Repayment of advances on homes under management 4,341,295 2,377,103
Additions to originated mortgage servicing rights (147,608) (115,219)
Additions to property and equipment, net (15,402) (12,377)
Proceeds from sale of subsidiary -- 38,018
All other investing activities 57,161 (1,052)
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Net cash used in investing activities (900,744) (808,385)
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Financing activities:
Proceeds from issuance of other borrowings 2,129,157 1,296,105
Principal payments on other borrowings (1,575,852) (1,196,294)
Net change in short term borrowings
under management and mortgage programs (693,891) 114,518
Parent company capital contribution 90,000 --
Stock option plan transactions 22,014 8,857
Payment of dividends (6,644) (18,356)
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Net cash provided by (used in) financing activities (35,216) 204,830
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Increase (decrease) in cash (2,112) 8,231
Cash at beginning of period 13,779 11,091
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Cash at end of period $ 11,667 $ 19,322
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See accompanying notes to consolidated financial statements.
PHH CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SUMMARY OF ACCOUNTING POLICIES
1. Basis of Presentation
In the opinion of management, the accompanying unaudited consolidated
financial statements of PHH Corporation (the "Company") included in this
Form 10-Q reflect all adjustments necessary for a fair presentation of such
financial statements. There were no adjustments of an unusual nature
recorded during the nine month period ended September 30, 1997 and 1996
except for a one-time pre-tax merger and restructuring charge of $235.3
million ($182.7 million after tax), (see Note 3). The results of operations
for the periods presented are not necessarily indicative of the results to
be expected for the full year.
For further information, refer to the consolidated financial statements and
footnotes included in the Company's financial statements included as part
of the transition report on Form 10-K for the eight-month period ended
December 31, 1996.
Certain reclassifications have been made to the Company's consolidated
financial statements to conform with the presentation utilized by HFS
Incorporated ("HFS"), its parent company.
2. Merger with HFS Incorporated
Pursuant to a merger agreement (the "HFS Merger Agreement") by and among
the Company, HFS and Mercury Acquisition Corp. ("Mercury"), a wholly owned
subsidiary of HFS, effective April 30, 1997, Mercury was merged into the
Company, with the Company being the surviving corporation, and the Company
became a wholly owned subsidiary of HFS (the "HFS Merger"). In connection
with the Merger, all outstanding shares of the Company's common stock,
including shares issued to holders of the Company's employee stock options,
were converted into approximately 30.3 million shares of HFS common stock.
The 30.3 million shares of HFS common stock issued to shareholders and
option holders of the Company represented 19.2% of the total outstanding
shares of HFS at April 30, 1997.
Under the change in control provisions of certain grantor trusts
established in connection with the Company's Senior Executive Severance
Plan, Supplemental Executive Retirement Plan and the PHH Excess Benefits
Plan (collectively, the "Plans"), the Company was required to fund the
trusts for the present value of amounts expected to be paid under the
Plans, a large portion of which was due and paid on April 30, 1997. The
funded and unpaid amounts of the grantor trusts are shown as restricted
cash in the Consolidated Balance Sheets.
3. Merger and Restructuring Charge
In connection with the above-referenced mergers, the Company recorded a
one-time merger and restructuring charge (the "Charge") during the second
quarter of 1997 of $235.3 million ($182.7 million after tax). The Charge
includes severance, facility and system consolidations and termination
costs associated with exiting certain activities, and other merger-related
costs associated with the restructuring of the Company's businesses. The
cost was partially funded with a capital infusion of $136.0 million from
HFS, the Company's parent. The charge is summarized by type as follows
($000's):
Personnel related $137.8
Professional fees 25.6
Business terminations 44.8
Facility related and other 27.1
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Total $235.3
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Personnel related charges are comprised of costs incurred in connection
with employee reductions associated with the merger of HFS's relocation
businesses with and into the Company's relocation service business and the
consolidation of corporate activities. Personnel related charges include
termination benefits such as severance, medical and other benefits. Also
included in personnel related charges are supplemental retirement benefits
resulting from a change of control in connection with the HFS Merger.
Several grantor trusts were established and funded by the Company to pay
such benefits in accordance with the terms of the HFS Merger Agreement.
Full implementation of the restructuring plan will result in the
termination of approximately 500 employees substantially all of whom are
located in North America. As of September 30, 1997, 369 employees were
terminated. Professional fees are primarily comprised of investment
banking, accounting and legal fees incurred in connection with the HFS
Merger. Business termination charges relate to the exiting of certain
activities associated with fleet management, mortgage services and
ancillary operations in accordance with the strategic restructuring plan.
Facility related expenses include costs associated with contract and lease
terminations, asset disposals and other charges incurred in connection with
the consolidation and closure of excess space.
The Company anticipates that approximately $190.3 million will be paid in
cash in connection with the Charge of which $113.2 million was paid through
September 30, 1997. The remaining cash portion of the Charge will be
financed through cash generated from operations and borrowings under the
Company's or HFS's credit facilities. It is currently anticipated that the
restructuring plan will be completed in early 1998. Revenue and operating
results from activities hat will not be continued are not material to the
results of operations of the Company.
4. Pending Merger of HFS with CUC International Inc.
On May 27, 1997, HFS entered into a definitive merger agreement (the "CUC
Merger") with CUC International Inc. ("CUC") pursuant to which the Company
is expected to merge with and into CUC. As a result of the CUC Merger, each
share of HFS' common stock shall be converted into the right to receive
2.4031 shares of CUC common stock. CUC is a leading technology-driven,
membership-based consumer services company, providing its members with
access to a variety of goods and services worldwide, including such
services as shopping, travel, auto, dining, home improvement, lifestyle,
vacation exchange, credit card and checking account enhancement packages,
financial products and discount programs. The CUC Merger received approval
from the respective shareholders of HFS and CUC on October 1, 1997 and is
contingent upon Federal Trade Commission approval. The CUC Merger will be
accounted for as a pooling of interests.
5. Change in Fiscal Year
On April 30, 1997, the Company's fiscal year was changed from a year ending
on April 30, to a year ending on December 31, and, accordingly, the Company
filed its transition report on Form 10-K for the eight-month
period ended December 31, 1996. The Company's next full year will be for
the period January 1, 1997 to December 31, 1997.
6. Merger of HFS's Relocation Businesses
In June 1997, HFS merged its Coldwell Banker Relocation Services, Inc.
("CBRS") and Worldwide Relocation Management, Inc. ("WRM") relocation
businesses with and into the Company (the "Relocation Merger"). The
transaction has been accounted for at historical cost with the operations
of CBRS and WRM included since April 30, 1997, the date on which common
control was established. Accordingly, the earnings of the CBRS and WRM of
$26.8 million before tax and $15.8 million after tax for the five months
ended September 30, 1997 are included in the year-to-date results.
The following information reflects pro forma statements of income data for
three-month and the nine-month periods ended September 30, 1997 and 1996
assuming the merger with CBRS and WRM occurred on January 1, 1996.
Three-months ended Nine-months ended
September 30, September 30,
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1997 1996 1997 1996
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Net revenue $ 222,483 $ 200,821 $ 633,885 $ 575,804
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Net income (loss) $ 44,794 $ 31,047 $ (62,961) $ 80,487
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8
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
RESULTS OF OPERATIONS
All comparisons within the following discussion are to the same period of the
previous year, unless otherwise stated.
On April 30, 1997, HFS Incorporated ("HFS") acquired the Company by merger (the
"HFS Merger"), issuing 30.3 million shares of HFS common stock in exchange for
all of the outstanding common stock of the Company. The transaction was
accounted for as a pooling of interests.
In June 1997, HFS merged its Coldwell Banker Relocation Services, Inc. ("CBRS")
and Worldwide Relocation Management, Inc. ("WRM") relocation businesses with and
into the Company. The transaction has been accounted for at historical cost with
the operations of CBRS and WRM included since April 30, 1997, the date on which
common control was established.
In connection with the above-referenced mergers, the Company recorded a one-time
merger and restructuring charge (the "Charge") during the second quarter of 1997
of $235.3 million ($182.7 million after tax). The charge includes severance,
facility and system consolidations and terminations, costs associated with
exiting certain activities, and other merger-related costs associated with the
restructuring of the PHH businesses. The cost was partially funded with a
capital infusion of $136.0 million from HFS, the Company's parent.
The Charge was comprised of approximately $137.8 million of personnel related
expenses, $25.6 million of professional fees, $44.8 million of business
termination costs, $27.1 million of facility related expenses and other expenses
directly associated with the above-referenced merger. Personnel related charges
are comprised of costs incurred in connection with employee reductions
associated with the combination of the Company's relocation service businesses
and the consolidation of corporate activities. Personnel related charges include
termination benefits such as severance, medical and other benefits. Also
included in personnel related charges are supplemental retirement benefits
resulting from the change of control. Several grantor trusts were established
and funded by the Company to pay such benefits in accordance with the terms of
the HFS merger agreement. Full implementation of the restructuring plan will
result in the termination of approximately 500 employees, substantially all of
whom are located in North America and of whom 369 employees were terminated as
of September 30, 1997. Professional fees are primarily comprised of investment
banking, accounting and legal fees incurred in connection with the HFS Merger.
Business termination charges relate to the exit of certain activities associated
with fleet management, mortgage services and ancillary operations in accordance
with the Company's revised strategic plan. Facility related expenses include
costs associated with contract and lease terminations, asset disposals and other
charges incurred in the consolidation and closure of excess space.
The Company anticipates that approximately $190.3 million will be paid in cash
in connection with the Charge of which $113.2 million was paid through September
30, 1997. The remaining cash portion of the Charge will be financed through cash
generated from operations and borrowings under the Company's or HFS's credit
facilities. It is currently anticipated that the restructuring plan will be
completed in early 1998 and will result in pre-tax savings of approximately $100
million with the full benefit of cost reductions beginning in 1998. Revenue and
operating results from activities that will not be continued are not material to
the results of operations of the Company.
Excluding the charge, income before tax and net income would have increased to
$196.6 million and $115.7
million, respectively for the nine-month period ended September 30, 1997,
reflecting increases from each of the Company's business segments.
Three month period ended September 30, 1997 vs. September 30, 1996
Net revenue increased 31% to $222.5 million for the three-month period ended
September 30, 1997. Fleet management services net revenue increased 4% in the
three-month period primarily due to increases in fuel management programs and
vehicle maintenance programs. The Company sold certain of its credit card
operations in January 1997 and subsequently participated in such credit card
operations as a joint venture partner. Accordingly, the Company records revenue
based on the equity in earnings in such joint venture. As a result, revenue in
1997 includes revenue, net of expenses, from the joint venture, compared to
gross revenue received from corresponding, wholly-owned credit card operations
in 1996. Assuming the joint venture commenced January 1, 1996, net revenue from
fleet management services would have reflected an increase of 12% in the
three-month period. Relocation services net revenue increased 58% in the
three-month period ended September 30, 1997. Relocation services net revenue for
the three months ended September 30, 1997 includes the results of the merged
entities of CBRS and WRM. Assuming the merger with CBRS and WRM occurred January
1, 1996, pro forma relocation services net revenue increased 11% in 1997
compared to 1996. The increase in pro forma net revenue was primarily
attributable to an increase in referral fees from home sale transactions.
Mortgage services net revenues increased 27% in the three-month period ended
September 30, 1997, primarily due to a $4.9 million (41%) increase in loan
servicing fees and a $6.2 million (22%) increase in loan origination revenue,
resulting from an increase in loan closings.
Nine month period ended September 30, 1997 vs September 30, 1996
Net revenue increased 22% to $601.0 million in the nine-month period ended
September 30, 1997. Fleet management services net revenue increased 8% primarily
due to increases mentioned above. Relocation services net revenue increased 31%
in the nine-month period due to the CBRS and WRM merger. Assuming the merger
with CBRS and WRM occurred January 1, 1996, pro forma relocation services net
revenue increased $12.8 million (4%) for the nine-month period ended September
30, 1997 primarily as a result of an $11.8 million increase in home sale
assistance revenue. Mortgage services net revenue increased $32.1 million (34%)
in the nine-month period primarily due to a $25.5 million (43%) increase in loan
origination revenue and an a $6.5 million (18%) increase in revenue from the
servicing portfolio.
Exclusive of the Charge, total expenses in the three-month and nine-month
periods increased 13% and 6% respectively due to the merger of CBRS and WRM.
Excluding the effects of CBRS and WRM, operating expense in both the three-month
period and the nine-month period decreased 1% and 3%, respectively. Such decline
was a result of operational efficiencies realized from the second quarter
restructuring of the Company's operations, partially offset by an increase in
mortgage services operating expenses due to current and anticipated increased
loan origination volume. Depreciation and amortization expense declined in both
the three-month and nine-month period primarily due to reduced amortization
expense associated with capitalized software costs.
LIQUIDITY AND CAPITAL RESOURCES
The Company manages its funding sources to ensure adequate liquidity.
The sources of liquidity fall into three general areas: ongoing liquidation of
assets under management, global
capital markets, and committed credit agreements with various high-quality
domestic and international banks. In the ordinary course of business, the
liquidation of assets under management programs, as well as cash flows generated
from operating activities, provide the cash flow necessary for the repayment of
existing liabilities. For the nine months ended September 30, 1997, cash
provided by operating activities increased $322.1 million to $933.8 million in
1997 compared to 1996, primarily due to increased depreciation on vehicles under
operating leases and the timing of operating activities, including a decrease in
mortgage loans held for sale in nine-months 1997 compared with an increase in
nine-months 1996. Cash used in investing activities increased $92.4 million in
nine-months 1997 compared to nine-months 1996, primarily as a result of an
increase in the net investment in assets under management programs.
Using historical information, the Company projects the time period that a
client's vehicle will be in service or the length of time that a home will be
held in inventory before being sold on behalf of the client. Once the relevant
asset characteristics are projected, the Company generally matches the projected
dollar amount, interest rate and maturity characteristics of the assets within
the overall funding program. This is accomplished through stated debt terms or
effectively modifying such terms through other instruments, primarily interest
rate swap agreements and revolving credit agreements. Within mortgage banking
services, the company funds the mortgage loans on a short-term basis until sale
to unrelated investors which generally occurs within sixty days. Interest rate
risk on mortgages originated for sale is managed through the use of forward
delivery contracts, financial futures and options. Such financial derivatives
are also used as a hedge to minimize earnings volatility as it relates to
mortgage servicing assets.
The Company has maintained broad access to global capital markets by maintaining
the quality of its assets under management. This is achieved by establishing
credit standards to minimize credit risk and the potential for losses. Depending
upon asset growth and financial market conditions, the Company utilizes the
United States, European and Canadian commercial paper markets, as well as other
cost-effective short-term instruments. In addition, the Company utilizes the
public and private debt markets to issue unsecured senior corporate debt.
Augmenting these sources, the Company has reduced outstanding debt by the sale
or transfer of managed assets to third parties while retaining fee-related
servicing responsibility. The Company's aggregate commercial paper outstanding
totaled $2.5 billion and $3.1 billion at September 30, 1997 and December 31,
1996, respectively. At September 30, 1997, $2.3 billion in medium-term notes and
$0.2 billion in other debt securities were outstanding compared to $1.7 billion
and $0.3 billion, respectively, at December 31, 1996. The Company maintains a
leverage ratio under 8 to 1.
Cash used in financing activities decreased by $240.0 million for the nine
months ended September 30, 1997 compared to the same prior year period,
primarily as a result of a net increase in the repayments of borrowings to fund
the purchase of assets under management and mortgage programs. From a risk
management standpoint, borrowings not in the local currency of the business unit
are converted to the local currency through the use of foreign currency forward
contracts.
To provide additional financial flexibility, the Company's current policy is to
ensure that minimum committed bank facilities aggregate 80% of the average
amount of outstanding commercial paper. The Company has $2.5 billion in
committed and unsecured credit facilities. These facilities are backed by 22
domestic and foreign banks and are comprised of $1.25 billion of lines maturing
in 364 days or less and $1.25 billion maturing on March 10, 2002. In addition,
the Company has approximately $300 million of uncommitted lines of credit with
various financial institutions. Management closely evaluates not only the credit
quality of the banks but the terms of the various agreements to ensure ongoing
availability. The full amount of the Company's committed facilities at September
30, 1997, was undrawn and available. Management believes that its current policy
provides adequate protection should volatility in the financial markets limit
the Company's access to commercial paper or medium-term notes
funding.
These established means of effectively matching floating and fixed interest rate
and maturity characteristics of funding to related assets, the variety of
short-and long-term domestic and international funding sources, and the
committed banking facilities minimize the Company's exposure to interest rate
and liquidity risk.
The Company and HFS currently operate under policies limiting (a) the payment of
dividends on the Company's capital stock to 40% of its net income on an annual
basis, less the outstanding principal balance of loans from the Company to HFS
as of the date of any proposed dividend payment, and (b) the outstanding
principal balance of loans from the Company to HFS to 40% of its net income on
an annual basis, less payment of dividends on the Company's capital stock during
such year.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit
No. Description
10.1 SECOND AMENDMENT, dated as of September 26, 1997 (the "Second
Amendment"), to (i) 364-day Competitive Advance and Revolving
Credit Agreement, dated as of March 4, 1997 (as heretofore and
hereafter amended, supplemented or otherwise modified from time to
time, the "364-Day Credit Agreement"), PHH Corporation (the
"Borrower"), PHH Vehicle Management Services, Inc., the Lenders
referred to therein, the Chase Manhattan Bank of Canada, as agent
for the US Lenders (in such capacity, the "Administrative Agent"),
and The Chase Manhattan Bank of Canada, as administrative agent
for the Canadian Lenders (in such capacity, the "Canadian Agent";
and (ii) the Five Year Competitive Advance and Revolving Credit
Agreement, dated as of March 4, 1997, among the Borrower, the
Lenders referred to therein and the Administrative Agent.
27 Financial Data Schedule
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PHH CORPORATION
Date: November 14, 1997 By: /s/ Scott E. Forbes
------------------------
Scott E. Forbes
Senior Vice President and
Chief Accounting Officer
EXHIBIT INDEX
Exhibit
No. Description
10.1 SECOND AMENDMENT, dated as of September 26, 1997 (the "Second
Amendment"), to (i) 364-day Competitive Advance and Revolving
Credit Agreement, dated as of March 4, 1997 (as heretofore and
hereafter amended, supplemented or otherwise modified from
time to time, the "364-Day Credit Agreement"), PHH Corporation
(the "Borrower"), PHH Vehicle Management Services, Inc., the
Lenders referred to therein, the Chase Manhattan Bank of
Canada, as agent for the US Lenders (in such capacity, the
"Administrative Agent"), and The Chase Manhattan Bank of
Canada, as administrative agent for the Canadian Lenders (in
such capacity, the "Canadian Agent"; and (ii) the Five Year
Competitive Advance and Revolving Credit Agreement, dated as
of March 4, 1997, among the Borrower, the Lenders referred to
therein and the Administrative Agent.
27 Financial Data Schedule