SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended September 30, 1998 - Commission File No. 0-17196
MIDWEST GRAIN PRODUCTS, INC.
(Exact Name of Registrant as Specified in Its Charter)
KANSAS 48-0531200
(State or Other Jurisdiction of IRS Employer
Incorporation or Organization) Identification No.
1300 Main Street, Atchison, Kansas 66002
(Address of Principal Executive Offices and Zip Code)
(913) 367-1480
(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 the filing
requirements for at least the past 90 days.
X YES NO
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common stock, no par value
9,700,172 shares outstanding
as of November 1, 1998
INDEX
PART I. FINANCIAL INFORMATION Page
Item 1. Financial Statements
Independent Accountants' Review Report.................. 2
Condensed Consolidated Balance Sheets as of
September 30, 1998 and June 30, 1998.................. 3
Condensed Consolidated Statements of Income for
the Three Months Ended September 30, 1998 and 1997.... 5
Condensed Consolidated Statements of Cash Flows for
the Three Months Ended September 30, 1998 and 1997.... 6
Notes to Condensed Consolidated Financial Statements.... 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations............. 8
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders. 12
Item 6. Exhibits and Reports on Form 8-K................. 12
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[LOGO] Baird, Kurtz & Dobson City Center Square
Certified Public Accountants 1100 Main Street, Suite 2700 http://www.bkd.com
Kansas City, Missouri 64105-2112 Member of
816-221-6300 Fax: 816-221-6380 Moores Rowland
International
- --------------------------------------------------------------------------------
Independent Accountants' Review Report
Board of Directors and Stockholders
Midwest Grain Products, Inc.
Atchison, Kansas 66002
We have reviewed the accompanying condensed consolidated balance sheet of
MIDWEST GRAIN PRODUCTS, INC. and subsidiaries as of September 30, 1998, and the
related condensed consolidated statements of income for the three month periods
ended September 30, 1998 and 1997, and the related condensed consolidated
statements of cash flows for the three-month periods ended September 30, 1998
and 1997. 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 accompanying condensed consolidated financial statements
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 June 30, 1998, and the
related consolidated statements of income, stockholders' equity, and cash flows
for the year then ended (not presented herein); and, in our report dated August
4, 1998, we expressed an unqualified opinion on those consolidated financial
statements. In our opinion, the information set forth in the accompanying
condensed consolidated balance sheet as of June 30, 1998, is fairly stated in
all material respects in relation to the consolidated balance sheet from which
it has been derived.
s/Baird, Kurtz & Dobson
BAIRD, KURTZ & DOBSON
Kansas City, Missouri
October 28, 1998
[BKD Logo}
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MIDWEST GRAIN PRODUCTS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)
ASSETS
September 30, June 30,
1998 1998
------------ --------
(Unaudited)
CURRENT ASSETS
Cash and cash equivalents $ 304 $ 4,723
Receivables 24,504 26,369
Inventories 26,097 20,430
Prepaid expenses 1,341 753
Deferred income taxes 2,343 2,343
Income taxes receivable 898 1,334
------------ ------------
Total Current Assets 55,487 55,952
------------ ------------
PROPERTY AND EQUIPMENT, At cost 219,966 218,590
Less accumulated depreciation 116,359 112,976
------------ ------------
103,607 105,614
------------ ------------
OTHER ASSETS 411 412
------------ ------------
$ 159,505 $ 161,978
============ ============
See Accompanying Notes to Condensed Consolidated
Financial Statements and Independent Accountants'
Review Report
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MIDWEST GRAIN PRODUCTS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (Continued)
(In Thousands)
LIABILITIES AND STOCKHOLDERS' EQUITY
September 30, June 30,
1998 1998
------------- --------
(Unaudited)
CURRENT LIABILITIES
Note payable--bank $ 1,000 $ 1,000
Current maturities of long-term debt 2,296 2,360
Accounts payable 7,511 9,072
Accrued expenses 2,461 3,695
------------ ------------
Total Current Liabilities 13,268 16,127
------------ ------------
LONG-TERM DEBT 25,312 25,536
------------ ------------
POST-RETIREMENT BENEFITS 6,464 6,520
------------ ------------
DEFERRED INCOME TAXES 7,470 7,470
------------ ------------
STOCKHOLDERS' EQUITY
Capital stock
Preferred, 5% noncumulative,
$10 par value; authorized
1,000 shares; issued and
outstanding 437 shares 4 4
Common, no par; authorized
20,000,000 shares; issued
9,765,172 shares 6,715 6,715
Additional paid-in capital 2,485 2,485
Retained earnings 98,579 97,913
------------ ------------
107,783 107,117
Treasury stock, at cost
Common; 1997 - 65,000 shares (792) (792)
------------- -------------
106,991 106,325
------------ ------------
Total liabilities and stockholders' equity $ 159,505 $ 161,978
============ ============
See Accompanying Notes to Condensed Consolidated
Financial Statements and Independent Accountants'
Review Report
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MIDWEST GRAIN PRODUCTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
(Unaudited)
1998 1997
------------ ------------
(in thousands, except
per share amounts)
NET SALES $ 51,938 $ 57,623
COST OF SALES 47,509 55,012
---------- ----------
GROSS PROFIT 4,429 2,611
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 2,906 2,644
---------- ----------
1,523 (33)
OTHER OPERATING INCOME 41 14
---------- ----------
INCOME (LOSS) FROM OPERATIONS 1,564 (19)
OTHER INCOME (LOSS) NET
Interest (525) (455)
Other 62 78
---------- ----------
INCOME (LOSS) BEFORE INCOME TAXES 1,101 (396)
PROVISION (CREDIT) FOR INCOME TAXES 435 (161)
---------- -----------
NET INCOME (LOSS) $ 666 $ (235)
========== ===========
EARNINGS (LOSS) PER COMMON SHARE $ 0.07 $(0.02)
========= ===========
See Accompanying Notes to Condensed Consolidated Financial
Statements and Independent Accountants= Review Report
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MIDWEST GRAIN PRODUCTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
(Unaudited)
1998 1997
------------ -------------
(in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ 666 $ (235)
Items not requiring (providing) cash:
Depreciation 3,398 3,460
Gain on sale of equipment (3)
Changes in:
Accounts receivable 1,865 (209)
Inventories (5,667) (1,960)
Prepaid expenses (587) (508)
Accounts payable (1,454) 1,146
Accrued expenses (1,290) (1,197)
Income taxes receivable 436 (911)
---------- -----------
Net cash used in operating activities (2,636) (414)
---------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property and equipment (1,499) (1,179)
Proceeds from sale of equipment 5
---------- -----------
Net cash used in investing activities (1,494) (1,179)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Net advances (payments) on notes payable 2,000 (4,000)
Net payments of long-term debt (2,289)
----------- ------------
Net cash used in financing activities (289) (4,000)
----------- -----------
DECREASE IN CASH AND CASH EQUIVALENTS (4,419) (5,593)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 4,723 6,005
---------- ----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 304 $ 412
========== ==========
See Accompanying Notes to Condensed Consolidated Financial
Statements and Independent Accountants= Review Report
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MIDWEST GRAIN PRODUCTS, INC.
NOTE TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED SEPTEMBER 30, 1998
(Unaudited)
NOTE: GENERAL
In the opinion of management, the accompanying unaudited condensed
consolidated financial statements contain all adjustments necessary to present
fairly the Company's condensed consolidated financial position as of September
30, 1998, and the condensed consolidated results of its operations and its cash
flows for the periods ended September 30, 1998 and 1997, and are of a normal
recurring nature.
See Independent Accountants= Review Report
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MIDWEST GRAIN PRODUCTS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 1998
RESULT OF OPERATIONS
General
The Company's net income of $666,000 in the first quarter of fiscal 1999
represented a sizeable improvement over the net loss of $235,000 that was
experienced in the first quarter of fiscal 1998. The upturn resulted primarily
from lower raw material costs for wheat, corn and milo, and increased
productivity in the Company's wheat gluten processing operations. Reduced grain
prices were due to excellent growing conditions and abundant harvests during the
spring, summer and early fall. Gluten production levels were raised partially in
response to heightened market interest, but mainly in preparation to effectively
satisfy future customer requirements resulting from an expected reduction in
imports of subsidized and artificially priced wheat gluten from the European
Union (E.U.).
On June 1, the White House implemented a three-year quota on imports of foreign
wheat gluten following a unanimous recommendation from the United States
International Trade Commission (ITC). The White House additionally announced
that international negotiations would be pursued to address the underlying cause
of the increase in imports of wheat gluten, particularly from the E.U., or to
otherwise alleviate injury to the domestic industry.
During the first year of implementation, the quota will restrict wheat gluten
imports to 126 million pounds, a reduction of approximately 30% compared to the
amount of gluten imported by the U.S. during the Company's 1998 fiscal year. In
each of the two following years, imports will be allowed to increase by 6%.
Within the quota, separate quotas for the E.U., Australia and all other
non-excluded countries were assessed. Countries excluded from the quota are
Canada, Mexico, Israel and the beneficiary countries of the Caribbean Basin
Economic Recovery Act or the Andean Trade Preferences Act.
According to recent government data, by early November 1998, the E.U.'s quota of
54 million pounds for the first 12-month quota period was already filled. The
first year quota period ends May 31, 1998. As a result, the Company expects a
more fair and stable competitive environment to exist in the U.S. wheat gluten
market for much of the remainder of the current fiscal year.
The quota on imported gluten is consistent with the type of remedy requested by
the Company and the Wheat Gluten Industry Council (WGIC) of the U.S. That
request was made in a petition that was filed by the WGIC on September 19, 1997
under Section 201 of the Trade Act of 1974. The petition was filed on the
grounds that the U.S. wheat gluten industry has been seriously injured by the
surge in low priced wheat gluten imports from the E.U. Profits from their highly
subsidized and protected wheat starch business have allowed E.U. producers to
unload huge surpluses of wheat gluten, a co-product, in the U.S. market at
prices below U.S. production costs. In recent years, this has forced domestic
producers to drastically under-utilize production capacities and relinquish
sizeable percentages of market share.
The Company expects the import quota to help establish a more level playing
field in the U.S. wheat gluten market by offsetting lopsided trade advantages
provided by the E.U. to E.U. producers. As a result, the Company increased
gluten production levels to effectively supply future customer needs. In
addition, the Company has intensified efforts to develop and market specialty
wheat gluten products in niches that will be less affected by foreign
competition. -8-
MIDWEST GRAIN PRODUCTS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
THREE MONTHS ENDED SEPTEMBER 30, 1998
The Company's production of food grade alcohol for beverage and industrial
applications declined in the first quarter of fiscal 1999, compared to the prior
year, due to a decline in demand. The production of fuel grade alcohol was
essentially even with the amount produced in the first quarter of fiscal 1998.
Prices for beverage and fuel grade alcohol decreased, compared to the prior
year's first quarter levels. The decrease in beverage alcohol prices was
partially due to the effects of lower costs for corn and milo, the principal raw
materials used in the Company's alcohol production process. Increased supplies
of alcohol throughout the industry also contributed to this decline. The fall in
fuel alcohol prices was caused principally by a decline in gasoline prices.
Although total alcohol production decreased, unit sales of distillers feed, the
principal by-product of the distillation, rose compared to a year ago. This
increase; however, was offset by a fall in selling prices.
While production of the Company's premium wheat starch noticeably increased
above the fiscal 1998 fourth quarter level, it was down compared to last year's
first quarter amount. The average selling price, however, remained approximately
the same.
With consistently lower grain costs, improved conditions in the wheat gluten
market, a realization of stable energy costs and improved production
efficiencies, the Company expects to strengthen its competitive abilities and
improve profitability going forward.
Sales
Net sales in the first quarter of fiscal 1999 were down approximately $5.7
million compared to net sales in the first quarter of fiscal 1998. The decrease
resulted mainly from lower selling prices for beverage and fuel grade alcohol
and reduced alcohol and starch volumes. The drop in selling prices for fuel
grade alcohol tracked a decline in gasoline prices. Sales of food grade alcohol
for beverage and industrial applications during the quarter were down compared
to sales during the first quarter the prior year, due largely to a decrease in
unit sales. The price decrease for beverage alcohol reflected both a decline in
demand and a reduction in raw material prices for corn and milo. Sales of
distillers feed, a by-product of the alcohol production process, were also down
compared with sales a year ago as lower selling prices somewhat offset an
increase in units sold.
Wheat gluten sales were higher than sales during the first quarter of fiscal
1998 as the Company increased production in preparation for satisfying market
requirements resulting from the expected realization of a fair competitive
environment. An increase in wheat gluten selling prices compared to the prior
year's first quarter contributed to the sales improvement.
Sales of wheat starch decreased as the result of lower unit sales, while selling
prices for this product remained essentially unchanged compared to the first
quarter of fiscal 1998.
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MIDWEST GRAIN PRODUCTS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
THREE MONTHS ENDED SEPTEMBER 30, 1998
Cost of Sales
The cost of sales in the first quarter of fiscal 1999 decreased by approximately
$7.5 million compared to cost of sales in the first quarter of fiscal 1998. This
occurred principally as the result of lower raw material costs for grain.
Reduced energy costs, lower maintenance and repair costs, and decreased
insurance costs were other major items which contributed to the reduction in
total cost of sales.
In connection with the purchase of raw materials, principally corn and wheat,
for anticipated operating requirements, the Company enters into commodity
contracts to reduce the risk of future grain price increases. The contracts are
accounted for as hedges and, accordingly, gains and losses are deferred and
recognized in cost of sales as part of contract costs when contract positions
are settled and as related products are sold. For the first quarter of fiscal
1999, raw material costs included a net loss of $1,036,000 on contracts settled
during the quarter compared to a net income of $605,000 for the first quarter of
fiscal 1998.
Selling, General and Administrative Expenses
Selling, general and administrative expenses in the first quarter of fiscal 1999
increased by approximately $262,000 above selling, general and administrative
expenses in the first quarter of fiscal 1998. The majority of this increase
resulted from an additional reserve of $400,000 for bad debts and costs related
to research activities to strengthen the Company's development and sales of
value-added specialty products made from wheat. Those increases were partially
offset by a reduction in costs of employee benefit plans, commissions and
professional services.
The consolidated effective income tax rate is consistent for all periods. The
general effects of inflation were minimal.
Net Income
As the result of the foregoing factors, the Company experienced net income of
$666,000 in the first quarter of fiscal 1999 compared to a net loss of $235,000
in the first quarter of fiscal 1998.
LIQUIDITY AND CAPITAL RESOURCES
The following table is presented as a measure of the Company's liquidity and
financial condition:
September 30, June 30,
1998 1998
------------- ----------
(in thousands)
Cash and cash equivalents $ 304 $ 4,723
Working capital 42,219 39,825
Amounts available under lines of credit 28,000 30,000
Notes payable and long-term debt 28,608 28,896
Stockholders' equity 106,991 106,325
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MIDWEST GRAIN PRODUCTS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
THREE MONTHS ENDED SEPTEMBER 30, 1998
The first quarter of fiscal 1999 saw the Company raise its production levels,
building its inventories to meet customer needs for wheat gluten. The increased
customer requirements are a result of the three-year import quota to create a
more fair and stable competitive environment. The planned inventory buildup,
together with ongoing capital improvements, has impacted short-term liquidity.
The Company anticipates higher inventory and receivable levels during the second
quarter as well to meet customer needs.
At September 30, 1998, the Company had $3.7 million committed to improvements
and replacements of existing equipment.
Since 1996, the Company has recognized the need to ensure its operations will
not be adversely impacted by Year 2000 software failures. New hardware and
software has been acquired and installed for the core financial applications.
All core financial modules, except order entry, have been tested successfully.
The order entry module is in final modification and testing. The total costs
incurred to date approximate $200,000. Conversion to the new system is expected
to be completed during fiscal 1999. The Company expects no additional
significant costs to achieve Year 2000 compliance for these applications. Due to
the stage of completion, testing of these applications as well as the
non-complexity of the systems, the Company fully anticipates being compliant far
in advance of December 31, 1999.
The Company also has surveyed its plant operations to determine which electrical
and other instrumentation equipment relies on date-sensitive software and
hardware. For those applications which have been identified, the Company has
received bids to modify the equipment. In some cases, testing of certain
equipment has already been completed. The cost to convert and test the
identified processes is expected to be less than $100,000. The Company
anticipates having the conversions completed and tested during fiscal 1999.
Should these conversions not be completed on a timely basis, the Company would
be able to produce all products except specialty and modified wheat glutens and
starches.
The Company is also in the process of surveying key vendors and customers
regarding their abilities to achieve the Year 2000 compliance. Initial results
of the surveys indicate these companies are knowledgeable of Year 2000 issues
and are in the process of complying or have already complied.
The Company continues to maintain a strong working capital position and a low
debt-to-equity ratio while generating strong earnings before interest, taxes and
depreciation. Management believes this strong financial position and available
lines of credit will allow the Company to effectively supply the increased
customer needs for vital wheat gluten when foreign quotas are reached as well as
its other products.
FORWARD-LOOKING INFORMATION
This report contains forward-looking statements as well as historical
information. Forward-looking statements are identified by or are associated with
such words as "intend," "believe," "estimate," "expect," "anticipate," "hopeful"
"should," "may" and similar expressions. They reflect management's current
beliefs and estimates of future economic circumstances, industry conditions,
Company performance and financial results and are not guarantees of future
performance. The forward-looking statements are based on many assumptions and
factors including those relating to grain prices, gasoline prices, energy costs,
product pricing, competitive environment and related market conditions,
operating efficiencies, access to capital and actions of governments. Any
changes in the assumptions or factors could produce materially different results
than those predicted and could impact stock values.
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PART II
OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
The annual meeting of stockholders of the Company was held on
October 8, 1998. The following actions were taken at the meeting:
1. Tom MacLeod, Jr. was elected to the office of Group A Director for a
term expiring in 2001 with 6,715,491 common share votes for his election and
212,255 votes withheld.
2. Cloud L. Cray, Jr. was elected to the office of Group B Director for
a term expiring in 2001 with 418 preferred share votes for his election and 0
votes withheld.
3. Robert J. Reintjes was elected to the office of Group B Director for
a term expiring in 2000 with 418 preferred share votes for his election and 0
votes withheld.
4. A proposal to approve the Midwest Grain Products, Inc. 1998 Stock
Incentive Plan for Salaried Employees was approved with 5,310,244 common share
votes and 397 preferred share votes for approval, 569,982 common share votes
against approval and 1,047,520 common shares and 21 preferred shares abstaining.
5. A proposal to amend the Midwest Grain Products, Inc. Stock Incentive
Plan of 1996 was approved with 5,294,708 common share votes and 397 preferred
share votes for approval, 562,203 common share votes against approval and
1,070,835 common shares and 21 preferred shares abstaining.
6. A proposal to approve amendments to the Midwest Grain Products, Inc.
1996 Stock Option Plan for Outside Directors and options granted thereunder were
approved with 5,573,505 common share votes and 384 preferred share votes for
approval, 280,586 common share votes and 13 preferred share votes against
approval and 1,073,655 common and 21 preferred shares abstaining.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.1 Copy of amendment to Midwest Grain Products, Inc. Stock Incentive Plan
of 1996.
10.2 Copy of amendment to Midwest Grain Products, Inc. 1996 Stock Option
Plan for Outside Directors.
10.3 Copy of amendments to Options granted under Midwest Grain Products,
Inc. Stock Option Plans.
10.4 Form of Option Agreement for the grant of Options under the Midwest
Grain Products, Inc. 1996 Stock Option Plan for Outside Directors, as amended.
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10.5 Form of Amended Option Agreements for the grant of Options under the
Midwest Grain Products, Inc. 1998 Stock Incentive Plan for Salaried Employees.
10.6 Form of Option Agreement for the grant of Options under the Midwest
Grain Products, Inc. Stock Incentive Plan of 1996, as amended.
15.1 Letter from independent public accountants pursuant to paragraph (d)
of Rule 10-01 of Regulation S-X (incorporated by reference to Independent
Accountants' Review Report at page 2 hereof).
15.2 Letter from independent public accountants concerning the use of its
Review Report in the Company's Registration Statement No. 333-51849.
20 Letter to stockholders for the three months ended September 30, 1998.
27 Financial data schedule.
(b) Reports on Form 8-K
The Company has filed no reports on Form 8-K during the quarter ended
September 30, 1998.
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.
MIDWEST GRAIN PRODUCTS, INC.
s/ Laidacker M. Seaberg
By _________________________________
Date: November 12, 1998 Ladd M. Seaberg, President
and Chief Executive Officer
s/Robert G. Booe
By _________________________________
Date: November 12, 1998 Robert G. Booe, Vice President
and Chief Financial Officer
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EXHIBIT INDEX
Exhibit
Number Description
------ -----------
10.1 Copy of amendment to Midwest Grain Products, Inc. Stock Incentive
Plan of 1996.
10.2 Copy of amendment to Midwest Grain Products, Inc. 1996 Stock
Option Plan for Outside Directors.
10.3 Copy of amendments to Options granted under Midwest Grain
Products, Inc. Stock Option Plans.
10.4 Form of Option Agreement for the grant of Options under the
Midwest Grain Products, Inc. 1996 Stock Option Plan for Outside
Directors, as amended.
10.5 Form of Amended Option Agreements for the grant of Options under
the Midwest Grain Products, Inc. 1998 Stock Incentive Plan for
Salaried Employees.
10.6 Form of Option Agreement for the grant of Options under the
Midwest Grain Products, Inc. Stock Incentive Plan of 1996, as
amended.
15.1 Letter from independent public accountants pursuant to paragraph
(d) of Rule 10- 01 of Regulation S-X (incorporated by reference
to Independent Accountants' Review Report at page 2 hereof).
15.2 Letter from independent public accountants concerning the use of
its Review Report in the Company's Registration Statement No.
333-51849.
20 Letter to stockholders for the three months ended September 30,
1998.
27 Financial data schedule.