FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended SEPTEMBER 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission file number: 0-1732
MOSINEE PAPER CORPORATION
(Exact name of registrant as specified in charter)
WISCONSIN 39-0486870
(State of incorporation) (I.R.S Employer Identification
Number)
1244 KRONENWETTER DRIVE
MOSINEE, WISCONSIN 54455-9099
(Address of principal executive office)
Registrant's telephone number, including area code: 715-693-4470
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 report), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
The number of common shares outstanding at September 30, 1997 was 15,201,721.
MOSINEE PAPER CORPORATION
FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 1997
PAGE NO.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statements of
Income, Three Months and Nine Months
Ended September 30, 1997 (unaudited) and
September 30, 1996 (unaudited) 1
Condensed Consolidated Balance
Sheets, September 30, 1997 (unaudited)
and December 31, 1996 (derived from
audited financial statements) 2
Condensed Consolidated Statements
of Cash Flows, Nine Months
Ended September 30, 1997 (unaudited)
and September 30, 1996 (unaudited) 3
Notes to Condensed Consolidated
Financial Statements 4
Item 2. Management's Discussion and
Analysis of Financial Condition
and Results of Operations 5
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 8
Item 5. Other Information 8
Item 6. Exhibits and Reports on Form 8-K 8
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
MOSINEE PAPER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended Nine Months Ended
September 30, September 30,
($ thousands, except 1997 1996 1997 1996
share data - unaudited)
Net sales $89,782 $81,761 $253,293 $237,130
Cost of sales 67,073 58,764 187,542 173,445
Gross profit on sales 22,709 22,997 65,751 63,685
Operating expenses:
Selling 3,052 3,140 9,244 8,487
Administrative 7,711 4,974 16,266 17,299
Total operating expenses 10,763 8,114 25,510 25,786
Income from operations 11,946 14,883 40,241 37,899
Other income (expense):
Interest expense ( 989) (1,056) (2,915) (3,512)
Other 182 72 319 143
Income before income taxes 11,139 13,899 37,645 34,530
Provision for income taxes 4,175 5,620 14,525 13,950
Net income $6,964 $8,279 $23,120 $20,580
Net income per share $0.46 $0.53 $1.52 $1.31
Weighted average common
shares outstanding 15,201,721 15,724,596 15,214,603 15,724,596
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MOSINEE PAPER CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
($ thousands * ) September 30, December 31,
1997 1996
ASSETS
Cash and cash equivalents $ 350 $ 3,150
Receivables, net 31,457 23,407
Inventories 47,236 41,254
Deferred income taxes 8,275 7,225
Other 312 311
Total current assets 87,630 75,347
Property, plant and equipment 398,983 370,085
Less: accumulated depreciation 182,859 170,610
Net depreciated value 216,124 199,475
Other assets 13,021 10,207
TOTAL ASSETS $316,775 $285,029
LIABILITIES
Accounts payable $ 19,926 $ 18,262
Accrued and other liabilities 25,988 27,316
Accrued income taxes 1,569 2,420
Total current liabilities 47,483 47,998
Long-term debt 64,864 48,332
Deferred income taxes 38,685 35,538
Postretirement benefits 16,906 16,125
Other noncurrent liabilities 13,596 11,884
Total liabilities 181,534 159,877
Commitments and contingencies --- ---
Preferred stock of subsidiary 1,255 1,255
STOCKHOLDERS' EQUITY
Preferred stock - $1 par value, authorized
- 1,000,000 shares, none issued
Common stock - no par value, authorized
30,000,000 shares 58,678 58,678
Retained earnings 104,779 83,763
Subtotals 163,457 142,441
Treasury stock at cost (29,471) (18,544)
Total stockholders' equity 133,986 123,897
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $316,775 $285,029
<FN>
*The consolidated balance sheet at September 30, 1997 is unaudited. The
December 31, 1996 consolidated balance sheet is derived from audited financial
statements.
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MOSINEE PAPER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended
September 30,
($ thousands - unaudited) 1997 1996
Cash flows from operating activities:
Net income $ 23,120 $ 20,580
Provision for depreciation, depletion
and amortization 14,177 13,014
Recognition of deferred revenue ( 30) ( 30)
Provision for losses on accounts receivable 24 224
Gain on property, plant and equipment
disposals ( 296) ( 136)
Deferred income taxes 2,097 7,350
Changes in operating assets and liabilities:
Receivables ( 5,372) ( 510)
Inventories ( 3,213) ( 5,410)
Other assets ( 4,497) ( 2,621)
Accounts payable and other liabilities 2,361 4,015
Accrued income taxes ( 851) 839
Net cash provided by operating activities 27,520 37,315
Cash flows from investing activities:
Capital expenditures ( 25,170) ( 16,564)
Acquisition of B & J Supply ( 6,235)
Proceeds from property, plant and
equipment disposals 450 311
Net cash used in investing activities ( 30,955) ( 16,253)
Cash flows from financing activities:
Borrowings (payments) under credit agreements 14,503 ( 19,058)
Dividends paid ( 2,941) ( 2,385)
Payments for purchase of company stock ( 10,927) ( 20)
Net cash provided by (used in) financing
activities 635 ( 21,463)
Net decrease in cash and cash equivalents ( 2,800) ( 401)
Cash and cash equivalents at beginning of year 3,150 2,416
Cash and cash equivalents at end of period $ 350 $ 2,015
Supplemental Cash Flow Information:
Interest paid - net of amount capitalized $ 2,867 $ 3,784
Income taxes paid 13,279 5,762
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MOSINEE PAPER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The accompanying financial statements, in the opinion of management,
reflect all adjustments which are normal and recurring in nature and
which are necessary for a fair statement of the results for the
periods presented. Some adjustments involve estimates which may
require revision in subsequent interim periods or at year-end. In all
regards, the financial statements have been presented in accordance
with generally accepted accounting principles.
2. Inventories consist of the following:
($ thousands) Sept. 30, Dec. 31,
1997 1996
Raw material $19,991 $18,154
Finished goods and work in process 24,637 20,764
Supplies 9,873 8,944
Subtotal 54,501 47,862
Less: LIFO reserve 7,265 6,608
Net inventories $47,236 $41,254
3. Earnings per share of common stock is based on the weighted average
number of common shares outstanding and gives effect to applicable
preferred stock dividends. Sorg Paper Company preferred stock
dividends in arrears for the nine months ended September 30, 1997 and
1996 were $51,840.
4. Net income includes expenses for incentive compensation plans based
upon the company's stock price. The company calculates this liability
using the average price of Mosinee Paper's stock at the close of each
fiscal quarter as if all earned incentive compensation plans had been
exercised on that day. For the three months ended September 30, 1997,
these plans resulted in an after-tax expense of $2,416,000 or $0.16
per share, compared to the third quarter of 1996 which produced an
after-tax expense of $183,000 or $0.01 per share. For the year-to-
date in 1997 these plans resulted in an after-tax expense of
$2,564,000 or $0.17 per share, compared to an after-tax expense of
$2,139,000 or $0.14 per share for the same period of 1996.
5. Prior year per share data has been restated for a 3 for 2 stock split
on May 15, 1997.
6. Certain legal proceedings are described under Part II, Item 1 of this
report.
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7. Refer to notes to the financial statements which appear in the 1996
annual report for the company's accounting policies which are
pertinent to these statements.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(All $ amounts are in thousands, except per share
amounts)
On August 25, 1997, the company announced a proposed merger with Wausau
Paper Mills Company. This report does not reflect any effect of the
proposed merger with Wausau Paper Mills Company.
RESULTS OF OPERATIONS
Quarterly and year-to-date sales increases produced record earnings before
stock incentive program charges. For the third quarter, sales of $89,782
increased 10% over the $81,761 reported for the third quarter last year.
This sales increase resulted from $9 million in volume increases offset by
$7 million in price decreases. Sales for the quarter of B & J Supply,
acquired April 1, 1997, accounted for the remaining $6 million increase.
Product sales mix had little effect on the change in sales. Year-to-date
sales of $253,293 increased 7% over the $237,130 reported for the same
nine month period last year. This increase followed the same trends as
the quarterly sales increase. Volume increases of $20 million were offset
by $14 million of price decreases, with the difference in the total sales
increase being the additional sales from B & J Supply. The volume
increases and pricing decreases were shared equally between the specialty
paper sales and the towel and tissue sales.
Cost of sales for the third quarter of $67,073 increased 14% over the
$58,764 reported for the third quarter of 1996. As a percent of net
sales, cost of sales increased to 75% from the year earlier level of 72%
primarily due to increased costs for pulp and wastepaper. For the nine
months year-to-date, cost of sales of $187,542 increased 8% over the
$173,445 reported for the same period last year. As a percent of net
sales, cost of sales increased 1% to the current level of 74%. This is
mainly due to raw material costs rising faster than sales price relief.
Gross profit, reflecting the above, decreased 1% to $22,709 for the third
quarter from the $22,997 reported for the same period last year. Gross
profit as a percent of sales for the quarter decreased to 25% compared to
the 28% for the third quarter last year. On a year-to-date basis, gross
profit of $65,751 increased 3% over the $63,685 reported last year. The
gross profit margin for 1997 is 26%, down from last year's level of 27%.
This reduction in margins is due principally to higher raw material costs
offset by a continued emphasis on cost reduction programs and higher
operating efficiencies.
Operating expenses for the third quarter of $10,763 increased 33%, over
the $8,114 reported for the third quarter last year. Selling expenses
decreased 3% from the third quarter last year, while administrative
expenses, excluding the effect of expense for incentive compensation
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programs based on the market price of the company's stock, declined $821,
or 18% from the same period last year. For the third quarter this year and
last year, a rise in stock prices increased the liability for incentive
compensation programs resulting in an expense of $3,865 in 1997 compared
to $307 in 1996. For the nine months year-to-date, incentive compensation
based on the company's stock price is an expense of $4,174 for 1997
compared to an expense of $3,588 last year. For both the quarter and nine
month period this year, general inflationary increases in operating
expenses, along with increases in basic employee compensation and
retirement expense were offset by a reduction in costs for bonus programs
and company contributions to 401-K plans, as well as, general cost
reduction programs in other areas.
Reflecting the above, income from operations for the third quarter of
$11,946 decreased $2,937, or 20% from the year earlier level of $14,883.
Year-to-date income from operations of $40,241 increased 6% over the
$37,899 reported for the same period last year. Excluding the effects of
the incentive compensation based on the company's stock price, income from
operations for the third quarter 1997 would have been $15,811, or 4% over
the year earlier level of $15,190, and year-to-date levels would have been
$44,415 for 1997 and $41,487 for 1996.
Interest expense decreased 6% for the quarter and 17% year-to-date
reflecting the decrease in the average principal balance of outstanding
long-term debt for the nine months of 1997 compared to the same period of
1996. See "Liquidity and Capital Resources" below with respect to current
level indebtedness. Interest rates in effect remained relatively the same
when comparing the third quarter and year-to-date of 1997 to the same
periods of 1996. Other income and expense of $319 and $143 for the first
nine months of 1997 and 1996, respectively, is primarily due to gains on
disposals of assets.
As a result, income before taxes reached $11,139 for the third quarter of
1997 compared to $13,899 during the same period in 1996, a decrease of
20%. Pretax income for nine months of 1997 was $37,645, or 9% over the
$34,530 reported last year. The provisions for income taxes of $4,175 and
$5,620, for the third quarters of 1997 and 1996 and year-to-date
provisions of $14,525 and $13,950, respectively, are based on an
effective income tax rate of approximately 38.5% for 1997 and 40.4% for
1996.
Reflecting the above, net income for the third quarter 1997 of $6,964, or
$0.46 per share, declined from the $8,279, or $0.53 per share reported for
the same period last year. For the nine months, net income increased 12%
from the $20,580, or $1.31 per share reported last year, to $23,120, or
$1.52 for 1997.
LIQUIDITY AND CAPITAL RESOURCES
Cash provided by operating activities for the first nine months of 1997 of
$27,520 decreased nearly $10 million from the $37,315 provided during the
first nine months of 1996, with improved net income from operating
activities being offset by lower tax deferrals and an
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increase in accounts receivable from the increased sales volume. Cash
used in investing activities included $25,170 of capital expenditures
and $6,235 for the acquisition of B & J Supply. These capital
expenditures were partially offset by $450 of proceeds from the disposal
of capital assets. The primary capital spending during this period was
$8,109 for towel and tissue equipment at the Bay West Paper converting
operation for added capacity to keep pace with Bay West's sales volume
increases.
Cash provided by or utilized in financing activities consisted of
borrowings under credit agreements of $14,503 for the nine months of 1997,
compared to payments on credit agreements last year of $19,058. Cash
dividends were paid to shareholders of $2,941 and $2,385 for the nine
months of 1997 and 1996, respectively. The company also utilized $10,927
of cash to buy back its own stock in 1997. Cash provided from operations
and financing activities less amounts utilized in investing activities
reduced cash by $2,800 from the year-end level of $3,150.
As of March 31, 1997, the company maintained a credit agreement with one
bank acting as agent and certain financial institutions as lenders to
issue up to $65,000 of unsecured borrowing less the amount of commercial
paper outstanding. This agreement was amended and restated on April 9,
1997, and expires on April 9, 2002, allowing for unsecured borrowings of
$90,000. The company also maintains a loan agreement with another bank
for $20,000, making the current total amount available for borrowing of
$110,000. As of September 30, 1997, the company had issued and outstanding
$24,264 of commercial paper and had other borrowings under the agreements
of $40,600 for a total debt of $64,864. This leaves approximately $45,000
currently available to supplement cash provided from operations for use in
the business which, at the present time, the company believes to be
adequate for the operation of the business and planned capital
expenditures.
Long-term debt as a percent of total capitalization increased to 32.6%
from the prior year-end level of 28.1%. Working capital of $40,147
increased $12,798 from the end of 1996 reflecting a significant increase
in accounts receivable due to the increased sales volume and increased
inventories due to various operating needs. The current ratio, reflecting
this increase, improved to 1.85:1 at September 30, 1997 from the year end
level of 1.57:1.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS:
On November 3, 1997, the Ohio Environmental Protection Agency issued a
draft permit which includes limitations on photoreactive compound
emissions at the Company's Bay West facility. The Company believes that
the proposed limitations are too restrictive and will seek to modify the
limitations in further permit discussions to be held with the Ohio
Environmental Protection Agency.
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On May 13, 1997, the State of Florida filed a civil complaint in the
Northern District of Florida against ten manufacturers of commercial
sanitary paper products, including the company's wholly-owned subsidiary,
Bay West Paper Corporation, alleging a conspiracy to fix prices starting
at least as early as 1993. In addition, on May 13, 1997, a private class
action suit was filed in the Northern District of Florida against the
same defendants, also alleging a conspiracy to fix prices. Related class
action suits have been filed in federal district courts in at least four
states and in the state courts of California and Tennessee. The
defendants have filed a motion in the California and Tennessee state
court proceedings to remove the cases to federal court. The defendants
in the private class action suits have filed a motion to transfer and
consolidate the suits with the multidistrict litigation panel. The
company intends to vigorously defend these suits. While the company
does not believe, based on the information now available, that these
suits will have a material adverse effect on the operations,
liquidity or consolidated financial condition of the company, these
suits are only recently filed and there can be no assurance as to the
effect of their outcome on the company.
ITEM 5. OTHER INFORMATION:
ACQUISITION OF B & J SUPPLY
On April 1, 1997, the company acquired the business and assets of B & J
Supply, Inc. of Appleton, Wisconsin, a converter and nationwide supplier
of school papers, with a net asset purchase of $6.2 million and payment of
B & J Supply's existing debt of $2 million.
MOSINEE PAPER CORPORATION - WAUSAU PAPERS MILLS COMPANY MERGER
On August 24, 1997, the Company, Wausau Paper Mills Company ("Wausau"),
and WPM Holdings, Inc., a wholly-owned subsidiary of Wausau ("Merger
Sub"), entered into an Agreement and Plan of Merger (the "Merger
Agreement") pursuant to which Merger Sub will be merged with and into the
company (the "Merger") with the company being the surviving corporation.
Under the terms of the Merger Agreement, which was unanimously approved by
the Boards of Directors of the company and Wausau, each outstanding share
of company common stock will be converted into the right to receive 1.4
shares of Wausau common stock, with cash paid in lieu of fractional
shares. The Merger, which is subject to approval by the shareholders of
both the company and Wausau, regulatory approval and other customary
conditions, will be accounted for as a pooling of interests and is
expected to close by the end of calendar 1997.
Wausau operates paper mills in Wisconsin, New Hampshire and Maine and is a
leading producer of a wide range of virgin and recycled printing and
writing papers, two-thirds of which are colored papers, including
Astrobrights<reg-trade-mark>, a 25-year old national brand. These premium
printing and writing papers serve four major categories: text and cover,
index and bristol, imaging, and offset. More than 80% of Wausau's writing
and printing paper is sold in sheet form to paper distributors, the
remaining 20% is sold to converters that serve the greeting card and
announcement industry. In addition, Wausau is one of the nation's largest
manufacturers of supercalendered backing papers for pressure-sensitive
labeling applications.
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The company also manufactures specialty papers for a broad range of food
and medical and industrial applications, including protective barrier
papers for pet food, microwave popcorn and lightweight paper for
sterilized medical packaging. Wausau had revenues of $570 million and
net income of $48.9 million for its fiscal year ended August 31, 1997.
CAUTIONARY STATEMENT
This quarterly report contains certain of management's expectations and
other forward-looking information regarding the company. While the
company believes that these forward-looking statements are based on
reasonable assumptions, all such statements involve risk and
uncertainties that could cause actual results to differ materially from
those contemplated in this report. The assumptions, risks and
uncertainties relating to the forward-looking statements in this report
include those described under the caption "Cautionary Statements
Regarding Forward-looking Information" in the company's Form 10-K for
the year ended December 31, 1996 and, from time to time, in the
company's other filings with the Securities and Exchange Commission.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K:
(a) Exhibits required by Item 601 of Regulation S-K
The following exhibits are filed with the Securities and Exchange
Commission as part of this report.
INCORPORATED
EXHIBIT<dagger>
2.1 Agreement and Plan of Merger dated August 24,
1997 among Registrant, Wausau Paper Mills
Company, and WPM Holdings, Inc. ................... 99.1(1)
3.1 Restated Articles of Incorporation, as last
amended April 26, 1995 ............................ 3(i)(2)
3.2 Restated Bylaws, as last amended April 16, 1992.... 3(b)(3)
3.3 Preferred Share Rights Agreement
dated July 1, 1996 ................................ l(4)
3.4 Amendment No. 1 to Rights Agreement dated
August 24, 1997 ................................... 99.2(1)
3.5 Restated Articles of Incorporation
and Restated Bylaws (see Exhibit 3.1 and 3.2)
10.1* Deferred Compensation Plan for Directors,
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as amended August 24, 1997
10.2* 1985 Executive Stock Option
Plan, as amended August 24, 1997
10.3* Mosinee Paper Corporation 1988 Stock
Appreciation Rights Plan, as amended 4/18/91 ...... 10(c)(6)
10.4* 1996 and 1997 Incentive Compensation
Plan for Corporate Executive Officers ............. 10(d)(7)
10.5* Supplemental Retirement Benefit
Plan dated October 17, 1991,
as amended August 24, 1997
10.6* Supplemental Retirement Benefit Agreement
dated November 15, 1991 .......................... 10(f)(6)
10.7* 1994 Executive Stock Option Plan,
as amended August 24, 1997
10.8* Mosinee Supplemental Retirement Plan,
as amended August 24, 1997
10.9* Daniel R. Olvey Change of Control
Employment Agreement dated August 24, 1997
10.10* Gary P. Peterson Change of Control
Employment Agreement dated August 24, 1997
10.11* Stuart R. Carlson Change of Control
Employment Agreement dated August 24, 1997
10.12* Dennis M. Urbanek Change of Control
Employment Agreement dated August 24, 1997
10.13* David L. Canavera Change of Control
Employment Agreement dated August 24, 1997
10.14* Change of Control Severance Policy
dated August 24, 1997
* Denotes Executive Compensation Plans and Arrangements
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21.1 - Subsidiaries of Registrant ...................... 22(3)
27.1 - Financial data schedule
Where exhibit has been previously filed and is incorporated herein by
reference, exhibit numbers set forth herein correspond to the exhibit
number where such exhibit can be found in the following reports of the
registrant (Commission File No. 0-1732) filed with the Securities and
Exchange Commission:
(1) Current Report on Form 8-K dated August 24, 1997
(2) Quarterly report on Form 10-Q for the period ended June 30, 1996
(3) Annual Report on Form 10-K for the fiscal year ended December 31,
1992
(4) Form 8-A dated July 2, 1996
(5) Quarterly report on Form 10-Q for the period ended September 30,
1996
(6) Annual Report on Form 10-K for the fiscal year ended December 31,
1995
(7) Annual Report on Form 10-K for the fiscal year ended December 31,
1996
(8) Annual Report on Form 10-K for the fiscal year ended December 31,
1993
(b) Reports on Form 8-K:
The company filed a Form 8-K dated August 24, 1997 with respect
to the proposed merger with Wausau Paper Mills Company described under
Item 5.
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.
MOSINEE PAPER CORPORATION
November 6, 1997 GARY P. PETERSON
Gary P. Peterson
Senior Vice President-Finance,
Secretary and Treasurer
(On behalf of the Registrant and as
Principal Financial Officer)
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EXHIBIT INDEX<dagger>
TO
FORM 10-Q
OF
MOSINEE PAPER CORPORATION
FOR THE PERIOD ENDED SEPTEMBER 30, 1997
Pursuant to Section 102(d) of Regulation S-T
(17 C.F.R. <section>232.102(d))
EXHIBIT 10 - MATERIAL CONTRACTS*
10.1* Deferred Compensation Plan for Directors
as amended August 24, 1997
10.2* 1985 Executive Stock Option
Plan as amended August 24, 1997
10.5* Supplemental Retirement Benefit
Plan dated October 17, 1991,
as amended August 24, 1997
10.7* 1994 Executive Stock Option Plan,
as amended August 24, 1997
10.8* Mosinee Supplemental Retirement Plan
as amended August 24, 1997
10.9* Daniel R. Olvey Change of Control
Employment Agreement dated August 24, 1997
10.10* Gary P. Peterson Change of Control
Employment Agreement dated August 24, 1997
10.11* Stuart R. Carlson Change of Control
Employment Agreement dated August 24, 1997
10.12* Dennis M. Urbanek Change of Control
Employment Agreement dated August 24, 1997
10.13* David L. Canavera Change of Control
Employment Agreement dated August 24, 1997
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10.14* Change of Control Severance Policy
dated August 24, 1997
*All exhibits represent executive compensation plans and
arrangements.
EXHIBIT 27 - FINANCIAL DATA SCHEDULE
<dagger>Exhibits required by Item 601 of Regulation S-K which have
been previously filed and are incorporated by reference are set forth
in Part IV, Item 14(c) of the Form 10-Q to which this Exhibit Index
relates.
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