SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
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 0-8360
IHOP CORP.
(Exact name of registrant as specified in its charter)
Delaware 95-3038279
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
525 North Brand Boulevard, Glendale, California 91203-1903
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (818) 240-6055
Not Applicable
(Former name, former address and former fiscal year, if changed since last
report.)
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
----- -----
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Class Outstanding as of June 30, 1998
----- -------------------------------
Common Stock, $.01 par value 9,851,158
PART I. FINANCIAL INFORMATION
- --------------------------------
Item 1. Financial Statements
CONSOLIDATED BALANCE SHEETS IHOP CORP. AND SUBSIDIARIES
(In thousands, except share amounts)
- --------------------------------------------------------------------------------
June 30, December 31,
1998 1997
------------ -----------
Assets
Current assets
Cash and cash equivalents $ 3,022 $ 5,964
Receivables 30,590 30,490
Reacquired franchises and equipment held for sale, net 2,460 2,321
Inventories 1,247 1,378
Prepaid expenses 143 629
-------- --------
Total current assets 37,462 40,782
-------- --------
Long-term receivables 184,509 171,967
Property and equipment, net 161,542 142,751
Reacquired franchises and equipment held for sale, net 13,942 13,151
Excess of costs over net assets acquired, net 12,268 12,481
Other assets 1,439 1,461
-------- --------
Total assets $411,162 $382,593
======== ========
Liabilities and Shareholders' Equity
Current liabilities
Current maturities of long-term debt $ 5,003 $ 4,973
Accounts payable 17,088 20,626
Accrued employee compensation and benefits 4,273 4,595
Other accrued expenses 5,516 4,602
Deferred income taxes 3,350 3,468
Capital lease obligations 1,197 1,062
-------- --------
Total current liabilities 36,427 39,326
-------- --------
Long-term debt 61,241 54,950
Deferred income taxes 30,845 28,862
Capital lease obligations and other 111,508 103,271
Shareholders' equity
Preferred stock, $1 par value, 10,000,000 shares authorized;
shares issued and outstanding: no shares - -
Common stock, $.01 par value, 40,000,000 shares authorized;
shares issued and outstanding: June 30, 1998, 9,851,158
shares (net of 3,080 treasury shares); December 31, 1997, 9,709,261
shares (net of 1,529 treasury shares) 98 97
Additional paid-in capital 59,136 54,629
Retained earnings 111,322 100,158
Contribution to ESOP 585 1,300
-------- --------
Total shareholders' equity 171,141 156,184
-------- --------
Total liabilities and shareholders' equity $411,162 $382,593
======== ========
See the accompanying notes to the consolidated financial statements.
2
CONSOLIDATED STATEMENTS OF OPERATIONS IHOP CORP. AND SUBSIDIARIES
(In thousands, except per share amounts)
- --------------------------------------------------------------------------------
Three Months Ended Six Months Ended
June 30, June 30,
---------------------------------- ---------------------------------
1998 1997 1998 1997
----------------- --------------- --------------- ----------------
Revenues
Franchise operations
Rent $ 9,480 $ 8,253 $ 18,464 $16,349
Service fees and other 22,338 19,880 44,154 38,713
------- ------- -------- -------
31,818 28,133 62,618 55,062
Company operations 18,351 14,794 36,036 28,842
Other 15,416 8,647 22,808 14,111
------- ------- -------- -------
Total revenues 65,585 51,574 121,462 98,015
------- ------- -------- -------
Costs and Expenses
Franchise operations
Rent 4,884 4,359 9,638 8,553
Other direct costs 9,010 8,129 17,840 15,850
------- ------- -------- -------
13,894 12,488 27,478 24,403
Company operations 17,208 13,599 33,657 27,024
Field, corporate and administrative 8,599 7,435 16,383 14,488
Depreciation and amortization 2,815 2,464 5,506 4,913
Interest 4,107 3,499 8,216 7,005
Other 8,366 3,831 11,920 6,104
------- ------- -------- -------
Total costs and expenses 54,989 43,316 103,160 83,937
------- ------- -------- -------
Income before income taxes 10,596 8,258 18,302 14,078
Provision for income taxes 4,133 3,220 7,138 5,490
------- ------- -------- -------
Net income $ 6,463 $ 5,038 $ 11,164 $ 8,588
======= ======= ======== =======
Net Income Per Share
Basic $ .66 $ .53 $ 1.14 $ .90
======= ======= ======== =======
Diluted $ .64 $ .52 $ 1.12 $ .89
======= ======= ======== =======
Weighted Average Shares Outstanding
Basic 9,838 9,558 9,794 9,522
======= ======= ======== =======
Diluted 10,047 9,676 9,981 9,623
======= ======= ======== =======
See the accompanying notes to the consolidated financial statements.
3
CONSOLIDATED STATEMENTS OF CASH FLOWS IHOP CORP. AND SUBSIDIARIES
(In thousands)
- --------------------------------------------------------------------------------
Six Months Ended
June 30,
-----------------------------------
1998 1997
--------------- ---------------
Cash flows from operating activities
Net income $ 11,164 $ 8,588
Adjustments to reconcile net income to cash provided
by operating activities
Depreciation and amortization 5,506 4,913
Deferred taxes 1,865 77
Contribution to ESOP 585 500
Change in current assets and liabilities
Accounts receivable 444 (428)
Inventories 131 (173)
Prepaid expenses 486 442
Accounts payable (3,538) (1,406)
Accrued employee compensation and benefits (322) 1,495
Other accrued expenses 914 (996)
Other, net 3,023 1,660
-------- --------
Cash provided by operating activities 20,258 14,672
-------- --------
Cash flows from investing activities
Additions to property and equipment (36,750) (24,263)
Proceeds from sale and leaseback arrangements 5,570 6,241
Additions to notes, equipment contracts and direct financing
leases receivable (5,437) (3,296)
Principal receipts from notes, equipment
contracts and direct financing leases receivable 4,696 3,869
Additions to reacquired franchises held for sale (651) (765)
-------- --------
Cash used by investing activities (32,572) (18,214)
-------- --------
Cash flows from financing activities
Proceeds from issuance of long-term debt 6,535 20
Repayment of long-term debt (29) (35)
Principal payments on capital lease obligations (342) (320)
Exercise of stock options 3,208 1,879
-------- --------
Cash provided by financing activities 9,372 1,544
-------- --------
Net change in cash and cash equivalents (2,942) (1,998)
Cash and cash equivalents at beginning of period 5,964 8,658
-------- --------
Cash and cash equivalents at end of period $ 3,022 $ 6,660
======== ========
Supplemental disclosures
Interest paid, net of capitalized amounts $ 8,028 $ 6,954
Income taxes paid 4,597 5,532
Capital lease obligations incurred 9,225 5,973
See the accompanying notes to the consolidated financial statements.
4
IHOP CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATMENTS
- --------------------------------------------------------------------------------
1. The accompanying consolidated financial statements for the six months ended
June 30, 1998 and 1997, have been prepared in accordance with generally
accepted accounting principles ("GAAP"). These financial statements have not
been audited by independent public accountants but include all adjustments,
consisting of normal, recurring accruals, which in the opinion of management
of IHOP Corp. and Subsidiaries ("IHOP" or the "Company") are necessary for a
fair presentation of the financial position and the results of operations
for the periods presented. The accompanying consolidated balance sheet as of
December 31, 1997, has been derived from audited financial statements, but
does not include all disclosures required by GAAP. The results of operations
for the six months ended June 30, 1998, are not necessarily indicative of
the results to be expected for the full year ending December 31, 1998.
2. In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 133 "Accounting for Derivative
Instruments and Hedging Activities," which establishes a new model for
accounting for derivatives and hedging activities and supersedes and amends
a number of existing standards. Upon implementation, all derivatives are
required to be recognized on the balance sheet as either assets or
liabilities and measured at fair value. SFAS No. 133 is effective for fiscal
years beginning after June 15, 1999, but earlier application is permitted.
Management believes that adoption of SFAS No. 133 will not have any material
impact on the company's financial position or results of operations.
5
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations
The following table sets forth certain operating data for IHOP restaurants:
Three Months Six Months
Ended June 30, Ended June 30,
----------------------------------- -------------------------------------
1998 1997 1998 1997
----------------- ---------------- ------------------ -----------------
(Dollars in thousands)
Restaurant Data
Effective restaurants (a)
Franchise 572 536 569 534
Company 76 63 75 62
Area license 146 139 145 138
-------- -------- -------- --------
Total 794 738 789 734
======== ======== ======== ========
System-wide
Sales (b) $250,346 $221,066 $497,758 $437,525
Percent increase 13.2% 14.2% 13.8% 14.2%
Average sales per effective
restaurant $ 315 $ 299 $ 631 $ 596
Percent increase 5.4% 6.0% 5.9% 6.1%
Comparable average sales
per restaurant (c) $ 327 $ 309 $ 653 $ 610
Percent increase 2.5% 4.2% 3.4% 4.2%
Franchise
Sales $198,691 $173,744 $393,240 $342,291
Percent increase 14.4% 15.5% 14.9% 15.2%
Average sales per effective
restaurant $ 347 $ 324 $ 691 $ 641
Percent increase 7.1% 6.9% 7.8% 6.7%
Comparable average sales
per restaurant (c) $ 338 $ 318 $ 675 $ 629
Percent increase 2.6% 4.3% 3.6% 4.3%
Company
Sales $ 18,351 $ 14,794 $ 36,036 $ 28,842
Percent increase 24.0% 13.9% 24.9% 18.0%
Average sales per effective
restaurant $ 241 $ 235 $ 480 $ 465
Percent increase 2.6% 1.3% 3.2% 2.6%
Area License
Sales $ 33,304 $ 32,528 $ 68,482 $ 66,392
Percent increase 2.4% 8.3% 3.1% 8.3%
Average sales per effective
restaurant $ 228 $ 234 $ 472 $ 481
Percent change (2.6)% 3.5% (1.9)% 3.7%
- ------------------
(a) "Effective restaurants" are the number of restaurants in a given fiscal
period adjusted to account for restaurants open only a portion of the
period.
(b) "System-wide sales" are retail sales of franchisees, area licensees and
Company-operated restaurants, as reported to the Company.
(c) "Comparable average sales" reflects sales for restaurants that are operated
for the entire fiscal period in which they are being compared. Comparable
average sales do not include data on restaurants located in Florida and
Japan.
6
The following table summarizes IHOP's restaurant development and franchising
activity:
Three Months Six Months
Ended June 30, Ended June 30,
----------------------------- --------------------------------
1998 1997 1998 1997
-------------- ------------- --------------- ---------------
RESTAURANT DEVELOPMENT ACTIVITY (a)
- ----------------------------------------------
IHOP - beginning of period 792 734 787 729
New openings
IHOP-developed 15 10 22 14
Investor program 4 3 6 3
Area license 1 2 2 4
---- ---- ---- ----
Total new openings 20 15 30 21
Closings
Company and franchise (8) (3) (12) (4)
Area license - - (1) -
---- ---- ---- ----
IHOP - end of period 804 746 804 746
==== ==== ==== ====
Summary - end of period
Franchise 586 543 586 543
Company 72 63 72 63
Area license 146 140 146 140
---- ---- ---- ----
Total IHOP 804 746 804 746
==== ==== ==== ====
RESTAURANT FRANCHISING ACTIVITY (a)
- ----------------------------------------------
IHOP-developed 18 10 24 15
Investor program 4 3 6 3
Rehabilitated and refranchised 2 - 3 1
---- ---- ---- ----
Total restaurants franchised 24 13 33 19
Reacquired by Company (2) (2) (9) (8)
Closed (6) (2) (9) (3)
---- ---- ---- ----
Net addition 16 9 15 8
==== ==== ==== ====
- -----------------------------
(a) The Company reports restaurants in Canada as franchise restaurants although
the eleven restaurants are operated under an area license agreement.
The following discussion and analysis provides information management believes
is relevant to an assessment and understanding of the Company's consolidated
results of operations and financial condition. The discussion should be read in
conjunction with the consolidated financial statements and notes thereto
contained in the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997. Certain forward-looking statements are contained in this
quarterly report. They use such words as "may," "will," "expect," "believe,"
"plan," or other similar terminology. These statements involve known and unknown
risks, uncertainties and other factors, which may cause the actual results to be
materially different than those expressed or implied in such statements. These
factors include, but are not limited to: availability of suitable locations and
terms of the sites designated for development; legislation and government
regulation including the ability to obtain satisfactory regulatory approvals;
conditions beyond the Company's control such as weather or natural disasters;
availability and cost of materials and labor; cost and availability of capital;
competition; continuing acceptance of the International House of Pancakes brand
and concept by guests and franchisees; the Company's overall marketing,
operational and financial performance; economic and political conditions;
adoption of new, or changes in, accounting policies and practices; and other
factors discussed from time to time in the Company's filings with the Securities
and Exchange Commission. Forward-looking information is provided by the Company
pursuant to the safe harbor established under the Private
7
Securities Litigation Reform Act of 1995 and should be evaluated in the context
of these factors. In addition, the Company disclaims any intent or obligation to
update these forward-looking statements.
IHOP's quarterly results are subject to seasonal fluctuation with sales
generally higher in the warmer months and during holiday periods. IHOP's
results of operations are impacted by the timing of additions of new
restaurants, by the timing of the franchising of those restaurants, and by the
number of restaurants in the Company's inventory of restaurants that are
available for refranchising. Revenues from sales of franchises and equipment
and their associated costs of sales are affected by the mix and number of
restaurants franchised, as follows: (i) franchise rights with respect to
restaurants newly developed by IHOP normally sell for a franchise fee of
$200,000 to $350,000, and such restaurants have little if any franchise cost of
sales and have equipment in excess of $300,000 that is usually sold at a price
that includes little or no profit margin; (ii) franchise rights with respect to
restaurants developed by franchisees normally sell for a franchise fee of
$50,000, have minor associated franchise cost of sales and do not include an
equipment sale; and (iii) previously reacquired franchises normally sell for a
franchise fee of $100,000 to $300,000, include an equipment sale, and may have
substantial costs of sales associated with both the franchise and the equipment.
As a consequence of the foregoing and other factors, the results of operations
for the six months ended June 30, 1998, are not necessarily indicative of the
results to be expected for the full year ending December 31, 1998.
System-wide retail sales grew 13.2% for the second quarter and 13.8% for the
first six months of 1998 over system-wide retail sales for the comparable 1997
periods. This was due to growth in the number of effective restaurants of 7.6%
and 7.5%, respectively, and increases in average per unit revenues of 5.4% and
5.9%, respectively, over the comparable prior year periods. System-wide
comparable average sales per restaurant (exclusive of area license restaurants
in Florida and Japan) grew 2.5% for the second quarter and 3.4% for the first
six months of 1998 over those in the comparable 1997 periods. Management
continues to pursue growth in sales through the Company's restaurant development
program, its advertising and marketing efforts, improvements in customer service
and operations, and the Company's remodeling program.
Franchise operations revenues for the second quarter and first six months of
1998 grew 13.1% and 13.7%, respectively, over revenues for the comparable 1997
periods. This was primarily due to increases in average per unit revenues of
7.1% and 7.8% coupled with growth in the number of effective franchised units of
6.7% and 6.6% for the second quarter and the first six months, respectively,
over the prior year periods. Franchise operations costs and expenses for the
second quarter and first six months of 1998 increased 11.3% and 12.6%,
respectively, over costs and expenses for the comparable 1997 periods. As a
result of franchise revenues increasing in excess of franchise expenses, the
margin from franchise operations improved to 56.3% and 56.1% in the second
quarter and first six months of 1998, respectively, versus 55.6% and 55.7% in
the comparable 1997 periods. The margin improved primarily because of increased
interest income associated with IHOP's financing of sales of franchises and
equipment to its franchisees.
Company-operated restaurant revenues for the second quarter and first six months
of 1998 grew 24.0% and 24.9%, respectively, over revenues for the comparable
1997 periods. This was primarily due to increases in the number of effective
Company-operated restaurants of 20.6% and 21.0%, respectively, and in the
revenues per effective Company-operated restaurant of 2.6% and 3.2%,
respectively, in the second quarter and first six months of 1998 over the
comparable 1997 periods. Company-operated restaurant costs and expenses for the
second quarter and first six months of 1998 increased 26.5% and 24.5%,
respectively, over costs and expenses for the comparable 1997 periods. Margin
at Company-operated restaurants was 6.2% in the second quarter and 6.6% for the
first six months of 1998 versus 8.1% for the second quarter and 6.3% in the
first six months of 1997. The change in margin for the second quarter was
primarily due to increases in salaries and wages as a percentage of revenues.
Other revenues for the second quarter and first six months of 1998 grew 78.3%
and 61.6%, respectively, over other revenues for the comparable 1997 periods.
The primary reasons for the increases were (a) growth in the sales of franchises
and equipment to $12,029,000 in the second
8
quarter and to $16,076,000 in the first six months from $6,108,000 and
$9,032,000 in the respective prior year periods, and (b) growth in interest
income from direct financing leases. The Company franchised 24 and 33
restaurants in the second quarter and first six months of 1998, respectively,
versus 13 and 19 restaurants in the comparable 1997 periods. Other costs and
expenses for the second quarter and first six months of 1998 increased 118.4%
and 95.3%, respectively, over the comparable 1997 periods. The increases were
primarily due to higher franchise and equipment cost of sales of $6,828,000 in
the second quarter and $9,167,000 in the first six months of 1998 versus
$3,228,000 and $4,883,000 in the comparable 1997 periods.
Field, corporate and administrative expenses for the second quarter and first
six months of 1998 increased 15.7% and 13.1%, respectively, over the comparable
1997 periods. The increases were principally due to (a) increases in employee
related compensation and expenses and (b) travel and conference costs associated
with IHOP's national franchisee convention which took place in the second
quarter of 1998. Field, corporate and administrative expenses were 3.4% and
3.3% of system-wide sales in the second quarter and first six months of 1998,
respectively, the same percentages as in the comparable 1997 periods.
Depreciation and amortization expense increased 14.2% and 12.1% in the second
quarter and first six months of 1998, respectively, over the comparable 1997
periods primarily reflecting the addition of new, larger restaurants.
Interest expense increased 17.4% and 17.3% in the second quarter and first six
months of 1998, respectively, over the comparable 1997 periods primarily due to
interest associated with increased capital lease obligations.
Provision for income taxes was 39.0% of income before income taxes in the second
quarter and first six months of both 1998 and 1997.
The balance of long-term receivables at June 30, 1998, increased over that of
the prior year end primarily due to IHOP's financing activities associated with
the sale of franchises and equipment and the leasing of restaurants to its
franchisees.
Balances of property and equipment, net and capital lease obligations and other
at June 30, 1998, increased over those of the prior year end primarily due to
new restaurant development and the Company's capital lease obligations
associated with that development.
Liquidity and Capital Resources
- -------------------------------
The Company invests available funds into its business through the development of
additional restaurants and the remodeling of older, Company-operated
restaurants.
In 1998, IHOP and its franchisees and area licensees plan to develop and open
approximately 70 to 85 restaurants. Included in that number are the development
of 50 to 60 new restaurants by the Company and the development of 20 to 25
restaurants by IHOP franchisees and area licensees. Capital expenditure
projections for 1998, which includes IHOP's investment in the development of new
restaurants, are approximately $60 to $75 million. In November 1998, the third
annual installment of $4.6 million in principal becomes due on the Company's
senior notes due 2002. The Company expects that funds from operations, sale and
leaseback arrangements (estimated to be about $35 million) and its revolving
line of credit will be sufficient to cover its operating requirements, its
budgeted capital expenditures and its principal repayment on its senior notes in
1998. At June 30, 1998, $13.7 million was available to be borrowed under the
Company's unsecured bank revolving credit agreement. In June 1998, the
Company's unsecured bank revolving credit agreement was extended one year,
through June 30, 2001, under similar terms and conditions, although certain
borrowings would be subject to more favorable interest rates.
9
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not applicable.
Part II. OTHER INFORMATION
- ---------------------------
Item 4. Submission of Matters to a Vote of Security Holders.
The annual meeting of shareholders (the "Meeting") was held on May 12, 1998.
Shareholders voted in person or by proxy for the following purposes.
(a) Shareholders voted to elect three Class I directors, each to serve for a
term of three years, as follows:
Votes Votes
Nominee For Withheld
- -------------------- --------- --------
Frank Edelstein 8,535,361 158,463
Neven C. Hulsey 8,535,761 158,063
Caroline W. Nahas 8,535,429 158,395
There were no abstentions or broker non-votes. Directors whose terms of office
continued after the Meeting were H. Frederick Christie, Michael S. Gordon,
Richard K. Herzer, Larry Alan Kay, Dennis M. Leifheit and Patrick W. Rose.
(b) Shareholders voted to approve and ratify the amendment of the IHOP Corp.
1991 Stock Incentive Plan to increase the number of shares available for
issuance thereunder to 1,880,000 from 1,380,000. 4,293,216 shares were voted for
this proposal, 3,634,243 were voted against, there were 38,150 abstentions and
728,215 broker non-votes.
(c) Shareholders voted to approve and ratify the appointment of Coopers &
Lybrand L.L.P. as the Company's independent accountants for the year ending
December 31, 1998. 8,667,650 shares were voted for this proposal, 7,299 were
voted against, there were 18,875 abstentions and no broker non-votes. On July 1,
1998, Coopers & Lybrand L.L.P. merged with Price Waterhouse L.L.P. to form
PricewaterhouseCoopers L.L.P.
(d) A shareholder proposal was submitted at the Meeting for consideration by
shareholders. The proposal requested that the Board of Directors adopt a policy
making all of IHOP's company-operated restaurants smoke-free by January 1, 1999,
and that, beginning in 1999, all new franchised facilities be smoke-free and all
renewals of franchise agreements require that the affected restaurant be smoke-
free. 242,414 shares were voted for this proposal, 7,451,308 were voted against,
there were 271,887 abstentions and 728,215 broker non-votes.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
Exhibits not incorporated by reference are filed herewith. The remainder of the
exhibits have heretofore been filed with the Commission and are incorporated
herein by reference.
3.1 Certificate of Incorporation of IHOP Corp. Exhibit 3.1 to IHOP Corp.'s
Form 10-K for the fiscal year ended December 31, 1997, Commission file
number 0-8360, (the "1997 Form 10-K") is hereby incorporated by
reference.
3.2 Bylaws of IHOP Corp. Exhibit 3.2 to IHOP Corp.'s 1997 Form 10-K is
hereby incorporated by reference.
4.0 Fifth Amendment to Letter Agreement, dated as of June 30, 1998, among
International House of Pancakes, Inc., IHOP Corp. and Bank of America
National Trust and Savings
10
Association (successor by merger to Bank of
America Illinois).
10.0 IHOP Corp. 1991 Stock Incentive Plan as Amended and Restated February
24, 1998. Annex "A" to the IHOP Corp. Proxy Statement for Annual Meeting
of Shareholders to be Held on Tuesday, May 12, 1998, is hereby
incorporated by reference.
11.0 Statement Regarding Computation of Per Share Earnings
27.0 Financial Data Schedule
(b) No reports on Form 8-K were filed during the quarter ended June 30, 1998.
11
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.
IHOP CORP.
----------
(Registrant)
July 29, 1998 BY: /s/ Richard K. Herzer
- --------------- ---------------------
(Date) Richard K. Herzer
Chairman of the Board,
President and Chief Executive
Officer (Principal Executive
Officer)
July 29, 1998 BY: /s/ Frederick G. Silny
- --------------- ----------------------
(Date) Frederick G. Silny
Vice President-Finance and
Treasurer (Principal Financial
Officer)
12