FORM 10-Q
UNITED STATES
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 July 4, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from to
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Commission File Number 0-18655
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THE FAILURE GROUP, INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 77-0218904
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(State or other jurisdiction (I.R.S. Employer
of incorporation) Identification Number)
149 COMMONWEALTH DRIVE, MENLO PARK, CALIFORNIA 94025
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(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code (650) 326-9400
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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 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
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Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Class Outstanding at August 2, 1997
- ---------------------------- -----------------------------
Common Stock $.001 par value 7,304,238 shares
THE FAILURE GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE QUARTERS AND SIX MONTHS ENDED JULY 4, 1997 AND JUNE 28, 1996
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Quarters Ended Six Months Ended
-------------------- --------------------
July 4, June 28, July 4, June 28,
1997 1996 1997 1996
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Revenues
Professional fees................................ $16,440 $14,340 $32,866 $27,884
Equipment fees and billed expenses............... 2,160 1,455 3,406 2,803
Other revenue.................................... 122 109 327 228
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18,722 15,904 36,599 30,915
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Operating expenses
Professional compensation and related expenses... 11,833 9,563 23,145 18,942
Other operating expenses......................... 3,488 3,355 6,853 6528
General and administrative expenses.............. 1,535 1,441 3,122 2851
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16,856 14,359 33,120 28,321
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Operating income............................... 1,866 1,545 3,479 2,594
Other income and expense
Interest Income (Expense)........................ (317) (318) (479) (693)
Misc. Income (Expense)........................... 508 363 1,025 774
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191 45 546 81
Income before income taxes..................... 2,057 1,590 4,025 2,675
Provision for income taxes............................ 833 644 1,630 1,083
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Income before extraordinary item............... $ 1,224 $ 946 $ 2,395 $ 1,592
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Extraordinary item (net of taxes of $301)............. -- (443) -- (443)
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Net income..................................... $ 1,224 $ 503 $ 2,395 $ 1,149
======= ======= ======= =======
Income per share before extraordinary item............ $ .17 $ .14 $ .34 $ .24
======= ======= ======= =======
Extraordinary item per share.......................... $ - $ (.07) $ -- $ (.07)
======= ======= ======= =======
Net income per share.................................. $ .17 $ .08 $ .34 $ .17
======= ======= ======= =======
Weighted average number of common shares.............. 7,189 6,618 7,012 6,665
======= ======= ======= =======
The accompanying notes are an integral part of these condensed consolidated
financial statements.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
THE FAILURE GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
July 4, 1997 AND JANUARY 3, 1997
(IN THOUSANDS, EXCEPT SHARE DATA)
July 4, 1997 JANUARY 3, 1997
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Assets
Current assets:
Cash and cash equivalents......................................... $ 5,174 $ 4,465
Short-term investments............................................ 7,187 20,271
Accounts receivable, net of allowance for doubtful accounts of
$1,250 and $1,500 at July 4, 1997 and January 3, 1997,
respectively.................................................... 28,296 19,710
Prepaid expenses and other assets................................. 5,173 4,927
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Total current assets......................................... 45,830 49,373
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Property, equipment and leasehold improvements, net................ 29,710 28,789
Other assets....................................................... 9,950 2,416
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$85,490 $80,578
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Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued liabilities.......................... $ 3,231 $ 4,047
Notes payable and current installments of long-term obligations... 625 1,250
Accrued payroll and employee benefits............................. 7,688 5,590
Income taxes payable and deferred income taxes.................... 389 928
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Total current liabilities..................................... 11,933 11,815
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Long-term obligations, net of current installments................. 18,523 18,505
Deferred income taxes.............................................. 987 987
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Total liabilities............................................. 31,443 31,307
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Stockholders' equity:
Common stock, $.001 per value; 20,000,000 shares authorized;
7,902,496 shares issued and outstanding at July 4, 1997
and January 3, 1997............................................ 8 8
Additional paid-in capital........................................ 32,996 33,013
Net unrealized gain on investments................................ 2 56
Retained earnings................................................. 23,928 21,644
Treasury shares, at cost; 598,258 and 1,096,659 shares at
July 4, 1997 and January 3, 1997, respectively................... (2,887) (5,450)
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Total stockholders' equity................................... 54,047 49,271
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$85,490 $80,578
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The accompanying notes are an integral part of these condensed consolidated
financial statements.
THE FAILURE GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six Months Ended July 4, 1997 and JUNE 28, 1996
(in thousands)
Six Months Ended
-----------------------------
July 4, 1997 June 28, 1996
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..............................................
Cash flows from operating activities
Net income, (before extraordinary
item for 1996)................................... $ 2,395 $ 1,592
Adjustments to reconcile net income
to net cash provided by
operating activities
Depreciation and amortization.................... 1,716 1,750
Extraordinary item, retirement of
debt (net of taxes).............................. - (443)
Provision for doubtful accounts.................. 110 939
Changes in operating assets and liabilities
Accounts receivable.............................. (4,512) (3,525)
Prepaid expenses................................. (904) (270)
Accounts payable and accrued liabilities......... (1,829) 566
Accrued payroll and employee benefits ........... 1,378 691
Income taxes payable and current
deferred income tax.............................. (539) 289
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Net cash (used)/provided by
operating activities............................. (2,185) 1,589
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Cash flows from investing activities
Capital expenditures............................. (1,894) (1,405)
Acquisition of PTI, Inc. net of cash
acquired......................................... (7,495) -
Acquisition of BCS, Inc. net of cash
acquired......................................... (314) -
Acquisition of PLG, Inc.......................... - (501)
Sales of short-term investments.................. 15,948 5,227
Purchases of short-term investments.............. (2,945) (8,579)
Other assets..................................... 341 (110)
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Net cash provided/(used) by
investing activities............................. 3,641 (5,368)
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Cash flows from financing activities
Proceeds from borrowings and issuance
of long-term obligations......................... - 8
Repayments of borrowings and
long-term obligations............................ (807) (91)
Net purchases of common stock.................... 60 (1,024)
Net issuance and retirements of
common stock..................................... - 185
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Net cash used by financing activities............ (747) (922)
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Net increase(decrease) in cash and cash
equivalents...................................... 709 (4,701)
Cash and cash equivalents at beginning
of period........................................ 4,465 7,401
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Cash and cash equivalents at end of
period........................................... $ 5,174 $ 2,700
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The accompanying notes are an integral part of these condensed consolidated
financial statements.
THE FAILURE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Fiscal Quarters AND SIX MONTHS ENDED JULY 4, 1997 AND JUNE 28, 1996
NOTE 1: BASIS OF PRESENTATION
The Failure Group, Inc. ("FGI" and, together with its subsidiaries, the
"Company") is a multidisciplinary organization providing engineering consulting,
scientific investigation and information support services. The Company operates
on a 52-53 week fiscal calendar year ending on the Friday closest to the last
day of December.
The accompanying condensed, consolidated financial statements are prepared
in accordance with generally accepted accounting principles and include the
accounts of FGI and its subsidiaries. All significant intercompany transactions
and balances have been eliminated in consolidation. In the opinion of
management, all adjustments which are necessary for the fair presentation of the
condensed consolidated financial statements have been included and all such
adjustments are of a normal and recurring nature. The operating results for the
quarter and six month period ended July 4, 1997, are not necessarily
representative of the results of future quarterly or annual periods.
Administrative compensation expense which had been included in general and
administrative expenses has been reclassified to professional compensation.
Additionally, bad debt expense which had been included in other operating
expense is now included in general and administrative expenses. Prior year
numbers have been restated to conform with the current presentation
NOTE 2: ACQUISITIONS
On August 1, 1996, the Company acquired all the outstanding capital stock of
Environmental Health Strategies, Inc., ("EHS") for a combination of cash and
stock. On January 4, 1997 the Company acquired all the outstanding capital
stock of Broadcast Communication Systems, Inc., ("BCS"). The results of
operations of these Acquisitions have been included in the accompanying,
condensed, consolidated financial statements from the date of their acquisition.
The inclusion of these Acquisitions are considered immaterial, and thus separate
disclosure is not provided. These collective purchases are herein referred to
as the "Acquired Businesses".
On April 28, 1997, the Company announced the signing of a definitive agreement
to acquire Performance Technologies, Incorporated, d.b.a. PTI Environmental
Services ("PTI"), a privately-held environmental science and engineering firm.
The acquisition was consummated on May 16, 1997, whereby FGI acquired all of the
stock of PTI for approximately $7.5 million in cash and 480,002 shares of stock
valued at approximately $2.4 million. The acquisition was accounted for under
the purchase method of accounting and, accordingly, the purchase price was
allocated to the net assets acquired based on the estimated fair market value at
the date of acquisition. The Company recorded approximately $7.2 million as
goodwill, which reflects the excess of the purchase price over the fair value of
the net assets acquired. The goodwill will be amortized over twenty years using
the straight-line method.
The results of operations of PTI have been included in the accompanying
condensed, consolidated financial statements from the date of acquisition.
Results of operations for the quarter and year-to-date ended July 4, 1997 and
June 28, 1996, assuming the Company and PTI were combined at the beginning of
that period, would have been as follows (in thousands, except per share data):
EHS, BCS and PTI are herein referred as the "Acquisitions".
Quarter Ended Six Months Ended
July 4, 1997 July 4, 1997
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Revenues $20,257 $41,248
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Net income $ 1,009 $ 2,425
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Net income per share $ 0.14 $ 0.35
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NOTE 3: RECENT ACCOUNTING PRONOUNCEMENTS
In January 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 128, "Earnings Per Share". SFAS
128 requires the presentation of basic earning per share ("EPS") and, for
companies with complex capital structures or potentially dilutive securities,
such as convertible debt, options and warrants, diluted EPS. SFAS No. 128 is
effective for the annual and interim periods ending after December 15, 1997. The
Company expects that basic EPS will be higher than primary earnings per share as
presented in the accompanying consolidated financial statements and that diluted
EPS will not differ materially from fully diluted earning per share as presented
in the accompanying consolidated financial statements.
In June 1997, the FASB issued SFAS 130, "Reporting Comprehensive Income". This
Statement establishes standards for reporting and displaying comprehensive
income and its components in the financial statements. It requires that a
company classify items of other comprehensive income, as defined by accounting
standards, by their nature (e.g., unrealized gains or losses on securities) in a
financial statement, but does not require a specific format for that statement.
The Company is in the process of determining its preferred format. The
accumulated balance of other comprehensive income is to be displayed separately
from retained earnings and additional paid-in capital in the equity section of
the balance sheet.
This Statement is effective with the fiscal 1998 financial statements.
Reclassification of financial statements for earlier periods provided for
comparative purposes is required.
In June 1997, the FASB issued SFAS 131, "Disclosures about Segments of an
Enterprise and Related Information". The Statement requires that a public
business enterprise report financial and descriptive information about its
reportable operating segments on the basis that is used internally for
evaluating segment performance and deciding how to allocate resources to
segments.
This statement is effective with the year-end 1998 financial statements.
Comparative information for interim periods in the initial year of application,
1998, is to be reported in financial statement for interim periods in the second
year of application, 1999.
Note 4: SUPPLEMENTAL CASH FLOW INFORMATION
The following is supplemental disclosure of cash flow information, in
thousands.
Six Months Ended
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July 4, 1997 June 28, 1996
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Cash paid during the period:
Interest $ 912 $1,196
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Income taxes $2,083 $ 490
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the attached
unaudited, condensed, consolidated financial statements and notes thereto and
with the Company's audited consolidated financial statements and notes thereto
for the fiscal year ended January 3, 1997, which is contained in the CompanyOs
1996 Annual Report.
General
The Company derives most of its revenues from professional service activities.
Revenues from professional services are mostly derived under "time and expenses"
and "fixed-fee" billing arrangements, and are recorded as work is performed.
Professional fees are a function of the total number of hours billed to clients
and the associated hourly billing rates or fixed-fee arrangement with the
client. The Company also derives revenue from equipment fees and net billed
expenses which consist primarily of fees charged to clients for use of the
Company's equipment and facilities in connection with services provided. Other
revenue is generated primarily from photographic services. The Company's
principal expenses are professional compensation and related expenses.
RESULTS OF OPERATIONS
1997 fiscal quarter and six months ended July 4, 1997 compared to 1996 fiscal
quarter and six months ended June 28, 1996
Revenues for the 1997 second quarter increased by 18% to $18.7 million, as
compared to $15.9 million for the second quarter of 1996. Additionally,
revenues for the first six months in 1997 increased 18% to $36.6 million as
compared to $30.9 million for the comparable period of the prior year. These
increases were partially a result of the inclusion of the Acquired Businesses
totaling $1.5 million for the 1997 second quarter and $2.5 million on a year to
date basis. Additionally, the acquisition of PTI contributed $1.7 million in
revenues for the second quarter and six months ending July 4, 1997. Excluding
ll Acquisitions, revenues for the second quarter decreased 2% over the same
quarter of the prior year, but comparable year-to-date revenues increased 5%.
Professional fees for the second quarter and first six months of 1997 increased
15% and 18%, respectively. Second quarter professional fees revenues were $16.4
million compared to $14.3 million for the same period of the prior year, while
year-to-date professional fee revenues were $32.9 million for 1997 compared to
$27.9 million for 1996. These revenues include $1.5 million of Acquired Business
revenues for the quarter and $2.5 million of revenues year-to-date combined with
$855,000 of PTI quarterly and year-to-date revenues. Excluding these revenues,
professional fees for the second quarter decreased by 1% as a result of a
reduction in billable hours, while year-to-date 1997 professional fees revenues
increased 6% due to a higher average billable rate.
Equipment fees and net billed expenses were 48% and 22% higher than the
comparable six month period and year-to-date period in the prior year. Excluding
$830,000 of PTI quarterly and year-to-date revenues, equipment fees decreased
for the comparable quarter by 9% and for the comparable year by 8%. This
decrease was a result of a decline in the usage of the Company's software and
database equipment.
The principal focus of the Company is to increase its revenues and contain its
level of spending. To accomplish this goal the Company continues to expand and
diversify its practice areas by leveraging senior
personnel, continued focus on marketing initiatives, development of new markets,
expansion of existing branch offices and continued exploration of potential
Acquisitions. Additionally, the Company will remain vigilant with regards to its
focus on cost management. However, there can be no assurance that the Company
will be able to achieve these goals.
Professional compensation and related expense increased by 24% to $11.8 million
in the second quarter of 1997 compared to $9.6 million for the same period in
1996. Compensation from the Acquired Businesses contributed $749,000, while PTI
contributed $1.1 million. Excluding the Acquisitions, compensation increased
4% over the same quarter of the previous year, which was attributable to a
Company-wide salary increase, which took effect in April 1997. Professional
compensation, as a percentage of total revenues, excluding the effect of the
Acquisitions, increased to 64% for the second quarter of 1997 as compared to 60%
for the second quarter of 1996. Professional compensation and related expenses
for the first six-month period ending July 4, 1997 and June 28, 1996, increased
22% to $23.1 million for 1997 to $18.9 million for 1996. Excluding compensation
from the Acquired Businesses of $1.5 million and PTI's compensation of $1.1
million, these expenses increased 9% over the comparable six month period,
resulting from a Company-wide salary increase. Professional compensation and
related expenses excluding the Acquisitions represented 66% of total revenues
for the first six months of 1997 compared to 61% for the first six months of
1996.
Other operating expenses in the second quarter and first six months of 1997
increased 4% and 5%, respectively. This increase for the quarter included
$197,000 of the Acquired Businesses operating expenses and $248,000 of PTI
expenses. Year-to-date, there were $373,000 of Acquired Businesses expenses,
coupled with $248,000 of PTI expenses. Excluding the Acquisitions, other
operating expenses for the quarter and year-to-date were $3.0 million compared
to $3.4 million, and $6.2 million compared to $6.5 million, respectively. These
decreases on a quarterly and yearly comparison over the prior quarter and year
can be attributed to a decline of 30% and 16%, respectively, in computer
expenses and a 17% and 20%, respectively, decline in depreciation expense as a
result of replacing the Company's accounting software. Other operating
expenses, excluding the Acquisitions were 20% of total revenues for the second
quarter and first six months of 1997 as compared to 21% for the comparable
quarter and six month period in 1996.
General and administrative expenses ("G&A") in the second fiscal quarter of 1997
were $1.5 million as compared to $1.4 million for the same period of the
previous year. This amount included $277,000 of Acquired Businesses G&A
expenses, plus $187,000 of PTI G&A expenses. Excluding the Acquisitions, G&A
decreased by 26%. This decrease can be attributed to a decrease in bad debt
expense as the result of significant collections of older receivables and a 49%
decrease in marketing expense. G&A expenses excluding the Acquired Businesses
represented 7% of total revenues for the second quarter of 1997 and 9% for the
second quarter of 1996. For the first six months of 1997, G&A increased 10% to
$3.1 million as compared to $2.9 million for the corresponding period in 1996.
Excluding the $488,000 of Acquired Businesses G&A expenses, plus $187,000 of PTI
expenses, the decrease was primarily attributable to a decline in bad debt
expense and a decrease in marketing expense as a result of cost cutting
measures. G&A expense, excluding the Acquisitions, represented 8% of total
revenues for the first six month period in 1997 as compared to 9% for the
comparable period of 1996.
Other income (expense) consisted primarily of interest expense on the Company's
mortgage obligation, net of investment income earned on available cash and
short-term investment and rental income from leasing excess space in the
Company-owned operating facilities located in Menlo Park, California. Included
in other income (expense) was a $5k gain and a $23k loss from sales of
marketable securities in 1997 compared to a $4k gain and a $29k loss in 1996.
The primary changes in other income (expense) for the second quarters and the
first six-month periods of 1997 and 1996 were derived from higher rental income
and lower interest expense due to refinancing the building mortgage offset by
reduced investment income as a result of a decline in short-term investments and
lower interest rates.
In August 1996, the Company refinanced its building mortgage which held a 10.75
percent fixed rate note, amortized on a 30-year basis with the balance due in
1999, to the new note in the amount of $18.7 million, having a 15-year term
with a floating rate tied to LIBOR. This note is collateralized by the building
and the rate is subject to adjustment every six months.
LIQUIDITY AND CAPITAL RESOURCES
1997 fiscal quarter and six months ended July 4, 1997 compared to 1996 fiscal
quarter and six months ended June 28, 1996
Net cash used by operating activities was $2.2 million in the first six months
of 1997 compared to net cash provided of $1.6 million for the comparable period
in 1996. This decrease in cash provided by operating activities can be
attributable to higher outstanding Accounts Receivable compared to the prior
year due to increased revenues and the impact of the Acquisitions. Accounts
receivable represented 115 days of revenue at July 4, 1997 compared with 125
days at June 28, 1996. This decrease was primarily attributable to a 4 day
reduction in the collection of accounts receivable as a result of stronger
collection policies and a 6 day decline in the billings of our work-in-process.
Additionally, there was a significant amount of general accounts payable
expenses paid during the period to reduce the outstanding payable balance.
Net cash provided by investing activities for 1997 was $3.6 million as compared
to net cash used by investing activity of $5.4 million for 1996. This increase
was a result of the sales of short-term investments, partially offset by the
cash used to purchase the equity of the Acquired Businesses and PTI.
Net cash used by financing activities was $747,000 in the first six months of
fiscal 1997 compared to $922,000 in the comparable period of fiscal 1996. The
decline in cash used over the prior year was a result of the Company
repurchasing 177,000 shares of its common stock in 1996, compared to no stock in
1997, offset somewhat by the principal pay- down of the Company's mortgage.
At July 4, 1997, the Company had $5.2 million in cash balances, $7.2 million in
short-term investments and a $10 million line of credit agreement renewed in
August of 1997. There have been no borrowings against this line of credit in
1997. The Company's long-term obligations on July 4, 1997, consisted primarily
of a mortgage obligation for the Company's office facility in the San Francisco
area in the amount of $18.1 million which was refinanced as of August 1, 1996.
(See "Results of Operations" for the details of the refinancing). Management
believes that its existing cash and short-term investment balances, together
with existing bank credit facilities and funds generated from operations, will
provide adequate cash to fund the Company's anticipated cash needs through at
least the next twelve-month period.
PART II - OTHER INFORMATION
Item 2. CHANGES IN SECURITIES
On May 16, the Company issued 480,002 shares of its Common Stock in connection
with the acquisition of PTI as described in the Company's Current Report on Form
8-K, as amended filed with the Securities and Exchange Commission (the
"Commission") on May 30, 1997. The issuance of the Common Stock was deemed to be
exempt from registration under the Securities Act of 1933, as amended (the
"Act") in reliance on Section 4(2) of the Act and Rule 506 of Regulation D
promulgated under the Act. In such transaction, the recipients of the Common
Stock represented their intentions to acquire the securities for investment only
and not with a view to or for sale in connection with any distribution thereof
and appropriate legends were affixed to the securities issued in such
transaction.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the Company's 1997 Annual Meeting of Stockholders held on July 23, 1997 (the
"Annual Meeting"), the following individuals were elected to the Board of
Directors:
BROKER
FOR WITHHELD NON-VOTES
--------- --------- ---------
Michael R. Gaulke 5,821,690 902,569 N/A
Samuel H. Armacost 5,819,163 905,096 N/A
Barbara Barrett 5,822,424 901,835 N/A
Robert A. Kadlec 5,296,579 1,427,680 N/A
Jon R. Katzenbach 5,819,729 904,530 N/A
Edward J. Keith 5,820,020 904,239 N/A
Subbaiah V. Malladi 5,223,224 1,501,035 N/A
Roger L. McCarthy 5,687,311 1,036,948 N/A
George T. VanGilder 5,823,724 900,535 N/A
The following proposals were approved by the stockholders at the Company's
Annual Meeting:
FOR AGAINST VOTES BROKER
VOTES VOTES WITHHELD NON-VOTE
--------- --------- -------- --------
1. To amend the Company's 5,851,519 629,685 27,695 215,360
Bylaws to increase the number
of directors to nine and to
eliminate the requirement for
shareholder approval to change
the authorized number of directors
2. To amend the Company's 1990 4,379,833 1,404,820 41,353 898,253
Stock Option and Rights Plan
by increasing the number of shares
reserved for issuance by 450,000
shares
3. Appointment of KPMG Peat 6,715,370 5,375 3,514 0
Marwick LLP as independent
auditors for the period ending
January 2, 1998
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit 11.1, "Statement Regarding Computation of Net Income Per Share"
Exhibit 27.1 "Financial Data Schedule"
(b) On July 30, 1997, the Company filed with the Commission Form 8-K/A, which
was amendment number 1 to the Company's Current Report on Form 8-K with the
Commission on May 30, 1997, regarding the acquisition of PTI.
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.
THE FAILURE GROUP, INC.
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Registrant
Date: August 14, 1997 /s/ Michael R. Gaulke
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Michael R. Gaulke, President and CEO
Index to Exhibits
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Exhibit
Number Description of Document Page
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11.1 Statement Regarding Computation of Net Income 11
Per Share
27.1 Financial Data Schedule 12