FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarter Ended May 2, 1998
Commission file number 001-13143
BJ'S WHOLESALE CLUB, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 04-3360747
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Mercer Road
Natick, Massachusetts 01760
(Address of principal executive offices) (Zip Code)
(508) 651-7400
(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
such filing requirements for the past 90 days. Yes X No .
--- ---
The number of shares of the Registrant's common stock outstanding as of May
30, 1998: 37,670,640
PART I FINANCIAL INFORMATION
BJ'S WHOLESALE CLUB, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Thirteen Weeks Ended
-----------------------
May 2, April 26,
1998 1997
----------- ----------
(Dollars in Thousands
except Per Share Amounts)
Net sales $754,752 $664,258
Membership fees and other 18,636 14,689
-------- --------
Total revenues 773,388 678,947
-------- --------
Cost of sales, including buying and occupancy costs 693,579 612,199
Selling, general and administrative expenses 61,464 51,374
Pension termination costs 1,521 -
-------- --------
Operating income 16,824 15,374
Interest on debt and capital leases (net) 132 3,882
-------- --------
Income before income taxes 16,692 11,492
Provision for income taxes 6,510 4,435
-------- --------
Net income $ 10,182 $ 7,057
======== ========
Net income per common share:
Basic and diluted $ 0.27 $ 0.19
======== ========
Number of common shares for earnings per share
computations:
Basic 37,577,777 37,484,937
Diluted 38,232,036 37,484,937
The accompanying notes are an integral part of the financial statements.
BJ'S WHOLESALE CLUB, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
May 2, January 31, April 26,
1998 1998 1997
----------- ----------- -----------
(Dollars in Thousands)
ASSETS
Current assets:
Cash and cash equivalents $ 8,227 $ 12,713 $ -
Marketable securities 95 - -
Accounts receivable 28,274 38,322 22,320
Merchandise inventories 343,434 332,274 317,056
Current deferred income taxes 7,048 6,826 6,186
Prepaid expenses 12,070 14,050 5,312
--------- --------- ---------
Total current assets 399,148 404,185 350,874
--------- --------- ---------
Property at cost:
Land and buildings 290,594 282,619 270,265
Leasehold costs and improvements 42,859 42,541 34,831
Furniture, fixtures and equipment 211,146 207,127 188,243
--------- --------- ---------
544,599 532,287 493,339
Less accumulated depreciation
and amortization 147,265 140,216 114,822
--------- --------- ---------
397,334 392,071 378,517
--------- --------- ---------
Property under capital leases 6,219 6,219 6,219
Less accumulated amortization 1,825 1,784 1,659
--------- --------- ---------
4,394 4,435 4,560
--------- --------- ---------
Other assets 10,379 10,945 10,385
--------- --------- ---------
Total assets $ 811,255 $ 811,636 $ 744,336
========= ========= =========
LIABILITIES
Current liabilities:
Accounts payable $ 206,598 $ 200,386 $ 187,158
Accrued expenses and other
current liabilities 58,870 71,648 58,736
Accrued federal and state
income taxes 3,604 7,009 9,508
Obligations under capital leases
due within one year 189 185 174
--------- --------- ---------
Total current liabilities 269,261 279,228 255,576
--------- --------- ---------
Long-term debt 37,000 42,500 -
Obligations under capital leases,
less portion due within one year 2,387 2,430 2,553
Other noncurrent liabilities 36,099 36,396 28,269
Deferred income taxes 5,067 4,825 3,485
Loans and advances from Waban Inc. - - 171,789
STOCKHOLDERS' EQUITY
Common stock, par value $.01,
authorized 180,000,000 shares,
issued and outstanding 37,665,432,
37,504,214 and 37,484,937 shares 377 375 375
Additional paid-in capital 107,408 102,408 -
Retained earnings 353,656 343,474 282,289
--------- --------- ---------
Total stockholders' equity 461,441 446,257 282,664
--------- --------- ---------
Total liabilities and
stockholders' equity $ 811,255 $ 811,636 $ 744,336
========= ========= =========
The accompanying notes are an integral part of the financial statements.
BJ'S WHOLESALE CLUB, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Thirteen Weeks Ended
--------------------
May 2, April 26,
1998 1997
--------- ---------
(Dollars in Thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $10,182 $ 7,057
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization of property 9,913 9,092
Loss on property disposals 34 128
Other noncash items (net) 40 -
Deferred income taxes 20 303
Increase (decrease) in cash
due to changes in:
Accounts receivable 10,048 11,686
Merchandise inventories (11,160) (21,840)
Prepaid expenses 1,980 779
Other assets 554 (247)
Accounts payable 6,212 (12,866)
Accrued expenses (7,575) (4,393)
Accrued income taxes (3,405) (2,923)
Other noncurrent liabilities (297) (197)
------- -------
Net cash provided by (used in) operating
activities 16,546 (13,421)
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of marketable securities (95) -
Property additions (20,521) (10,293)
Property disposals 149 34
------- -------
Net cash used in investing activities (20,467) (10,259)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of capital lease obligations (39) (28)
Repayment of long-term debt (5,500) -
Proceeds from sale and issuance of common stock 3,786 -
Contribution to capital by Waban Inc. 1,188 -
Increase in loans and advances from Waban Inc. - 23,708
------- -------
Net cash provided by (used in) financing
activities (565) 23,680
------- -------
Net decrease in cash and cash equivalents (4,486) -
Cash and cash equivalents at beginning of year 12,713 -
------- -------
Cash and cash equivalents at end of period $ 8,227 $ -
======= =======
Supplemental cash flow information:
Interest paid $ 230 $ 3,891
Income taxes paid 9,895 7,055
The accompanying notes are an integral part of the financial statements.
BJ'S WHOLESALE CLUB, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Unaudited)
(Dollars in Thousands except Per Share Amounts)
----------------------------------------------
Common
Stock Additional Total
Par Value Paid-In Retained Stockholders'
$.01 Capital Earnings Equity
---------- ---------- --------- ------------
Balance, January 25, 1997 $ 375 $ - $275,232 $275,607
Net income - - 7,057 7,057
---- ------- ------- -------
Balance, April 26, 1997 $ 375 $ - $282,289 $282,664
==== ======= ======= =======
Balance, January 31, 1998 $ 375 $102,408 $343,474 $446,257
Net income - - 10,182 10,182
Sale and issuance of common
stock 2 3,812 - 3,814
Contribution to capital by
Waban Inc. - 1,188 - 1,188
---- ------- ------- -------
Balance, May 2, 1998 $ 377 $107,408 $353,656 $461,441
==== ======= ======= =======
The accompanying notes are an integral part of the financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BJ's Wholesale Club, Inc. ("BJ's" or the "Company"), which previously had
been a wholly owned subsidiary of Waban Inc. ("Waban"), became a separate and
independent public entity on July 28, 1997, when Waban distributed to its
stockholders on a pro rata basis all of the Company's outstanding common
stock (the "spin-off"). The financial statements of the Company include the
financial statements of those subsidiaries of Waban which, prior to the spin-
off, operated Waban's BJ's Wholesale Club Division.
As of July 26, 1997, Waban transferred all of the assets and liabilities of
its BJ's Wholesale Club Division to the Company and contributed all of the
Company's intercompany debt of $101.3 million to the Company's equity.
The historical capitalization of the Company was retroactively restated to
reflect the issuance of 37,484,937 shares of common stock, the number of
shares of the Company's common stock distributed to Waban's stockholders on
July 28, 1997.
2. The results for the first three months are not necessarily indicative of
the results for the full fiscal year because, among other things, the
Company's business, in common with the business of retailers generally, is
subject to seasonal influences. The Company's sales and operating income
have typically been strongest in the Christmas holiday season and lowest in
the first quarter of each fiscal year.
3. The interim financial statements are unaudited and reflect all normal
recurring adjustments considered necessary by the Company for a fair
presentation of its financial statements in accordance with generally
accepted accounting principles.
4. These interim financial statements should be read in conjunction with the
consolidated financial statements and related notes contained in the
Company's Annual Report on Form 10-K for the fiscal year ended January 31,
1998.
5. Interest on debt and capital leases (net) included interest on
intercompany indebtedness to Waban of $3.9 million in the three months ended
April 26, 1997.
Selling, general and administrative expenses included certain
allocations of overhead incurred by Waban that supported the Company's
business prior to the spin-off. These allocated expenses totaled $1.2
million in the three months ended April 26, 1997.
6. Under Waban's cash management system, checks issued by its divisions but
not yet presented to banks resulted in overdraft balances for accounting
purposes in certain periods. The Company had an overdraft balance of $8.5
million as of April 26, 1997, which is included in accrued expenses and other
current liabilities on the balance sheet.
7. Effective July 26, 1997, Waban's Board of Directors approved the
termination of the Waban Inc. Retirement Plan, in which certain of the
Company's employees participated. In accordance with generally accepted
accounting principles, the costs to terminate the Plan were not recognized
until the Plan was settled, which occurred in this year's first quarter.
Accordingly, during the quarter ended May 2, 1998, the Company recorded a
pre-tax charge of $1.5 million in connection with the settlement of the Plan.
On a post-tax basis, this charge amounted to $.9 million, or $.02 per share.
8. The following details the calculation of earnings per share for the
periods presented below:
Thirteen Weeks Ended
-----------------------------
May 2, April 26,
1998 1997
----- --------
Net income $10,182,000 $ 7,057,000
=========== ===========
Weighted-average number of common
shares outstanding, used for basic
computation 37,577,777 37,484,937
Plus: Incremental shares from assumed
conversion of stock options 654,259 -
----------- -----------
Weighted-average number of common
and dilutive potential common
shares outstanding 38,232,036 37,484,937
=========== ===========
Basic and diluted net income per
common share $0.27 $0.19
===== =====
9. The Company operated 87 clubs on May 2, 1998 versus 80 clubs on April 26,
1997.
10. Certain amounts in the prior year's financial statements have been
reclassified for comparative purposes.
Management's Discussion and Analysis
of Financial Condition and Results of Operations
Thirteen Weeks (First Quarter) Ended May 2, 1998 versus Thirteen Weeks Ended
April 26, 1997.
Results of Operations
- ---------------------
Net sales for the first quarter ended May 2, 1998 rose 13.6% to $755 million
from $664 million reported in last year's first quarter. This increase was
due to the opening of new stores and to a comparable store sales increase of
6.0%. This year's first quarter sales benefited from a mild winter and
warmer-than-normal early spring weather, which generated strong seasonal
sales.
Total revenues in the first quarter included membership fees of $16.6 million
versus $13.0 million in last year's first quarter, an increase of 27.1%.
This year's results benefited from an increase in the membership fee for
"Inner Circle" members from $30.00 to $35.00, effective February 1, 1998.
Business membership fees were not changed.
Cost of sales (including buying and occupancy costs) was 91.9% of net sales
in this year's first quarter versus 92.2% in the comparable period last year.
This improvement reflected the leveraging of certain fixed buying and
occupancy costs on strong comparable store sales and slightly higher
merchandise gross margins.
Selling, general and administrative ("SG&A") expenses were 8.1% of net sales
in the first quarter versus 7.7% in last year's comparable period. This
increase was attributable mainly to higher credit, marketing and preopening
costs, as well as increased expenses incurred as a result of the Company
operating as a separate, publicly owned entity. Higher credit expenses were
due both to the strong acceptance of VISA by BJ's members and to increased
costs for the Company's co-branded MasterCard. Increased marketing costs
were incurred to support the Company's entry into the Cleveland, Ohio, market
and higher preopening expenses resulted from opening three new clubs during
the first quarter of this year compared with no new clubs in the same period
last year.
Effective July 26, 1997, Waban Inc.'s Board of Directors approved the
termination of the Waban Inc. Retirement Plan, in which certain of the
Company's employees participated. In accordance with generally accepted
accounting principles, the costs to terminate the Plan were not recognized
until the Plan was settled, which occurred in this year's first quarter.
Accordingly, during the quarter ended May 2, 1998, the Company recorded a
pre-tax charge of $1.5 million in connection with the settlement of the Plan.
On a post-tax basis, this charge amounted to $.9 million, or $.02 per share.
The components of net interest expense were as follows (in thousands):
Thirteen Weeks Ended
---------------------
May 2, April 26,
1998 1997
---- ----
Interest expense on debt $ 197 $3,820
Interest income (133) (9)
------ ------
Interest on debt (net) 64 3,811
Interest on capital leases 68 71
------ ------
Interest on debt and capital leases (net) $ 132 $3,882
====== ======
Interest expense on debt was net of capitalized interest of $133,000 in this
year's first quarter and $80,000 in last year's first quarter. As described
in more detail below, the decrease in interest expense in this year's first
quarter as compared to last year's first quarter is due to significantly
lower borrowing levels and interest rates applied to those borrowings.
The Company's first quarter provision for income taxes was 39.0% of pre-tax
income this year versus 38.6% in last year's first quarter.
Net income for the first quarter rose to $10.2 million, or $.27 per share,
from $7.1 million, or $.19 per share, in last year's first quarter.
BJ's Wholesale Club, Inc. commenced operations as a separate entity
immediately following its July 28, 1997 spin-off from Waban Inc. Therefore,
reported financial results through the first half of 1997 reflect BJ's
historical position as a division of Waban Inc. and, as such, may not be
indicative of performance after the spin-off. As a separate, publicly owned
company, BJ's is incurring corporate overhead costs approximately $.5 million
per quarter higher than the amounts included in the historical financial
statements for periods preceding the spin-off. However, interest on
intercompany borrowings at an annual rate of 10% prior to the spin-off has
been replaced by interest on bank borrowings at an assumed rate of
approximately 6.5% per year, and the level of debt has been reduced
substantially by the contribution to capital of $101.3 million of BJ's
intercompany debt in connection with the spin-off. Restating last year's
historical results for these changes, and reflecting common stock equivalents
expected to be included in earnings per share calculations after the spin-off,
and excluding this year's pension termination charge, first quarter net
income rose 34.7% to $11.1 million from $8.2 million in the first quarter of
1997; diluted earnings per share rose 31.8% to $.29 compared with $.22 in the
first quarter of 1997; and operating income rose 23.3% to $18.3 million from
$14.9 million in the first quarter of 1997.
Over the remainder of the year, the Company expects to continue to benefit
from the increase in Inner Circle membership fees, but this benefit is
expected to be largely offset by the same factors that affected the first
quarter, namely higher preopening costs (resulting from a significant
increase over last year in the number of planned new club openings),
increased credit expenses and a higher-than-usual level of marketing expenses
to support the Company's entry into the Cleveland market. The impact of
these factors will vary from quarter to quarter due to, among other things,
timing issues associated with membership fee revenue, new club openings and
the cycling of the Company's acceptance of VISA. Additionally, the Company
will not benefit from the impact of the 53-week fiscal year, as it did in
1997.
The Company has worked for several years to prepare its financial,
merchandising and other computer-based systems for the Year 2000. The
Company estimates that its Year 2000 implementation effort was approximately
80% complete at the end of 1997 and will be substantially complete by the end
of 1998 without any material adverse effect on its results of operations,
financial position or cash flows. Additionally, the Company is working with
key vendors and other third parties with whom it does business to minimize
the potential adverse impact on the Company if they fail to address the Year
2000 issue successfully. There can be no assurance that the third parties
with whom the Company does business will be successful in addressing the Year
2000 issue or that any such failure to successfully address the issue will
not have an adverse effect on the Company's financial condition and results
of operations.
Seasonality
- -----------
The Company's business, in common with the business of retailers generally,
is subject to seasonal influences. The Company's sales and operating income
have typically been strongest in the Christmas holiday season and lowest in
the first quarter of each fiscal year.
Recent Accounting Standards
- ---------------------------
The Accounting Standards Executive Committee of the American Institute of
Certified Public Accountants issued Statement of Position ("SOP") 98-1,
"Accounting for the Costs of Computer Software Developed or Obtained for
Internal Use," in March 1998 and SOP 98-5, "Reporting on the Costs of Start-Up
Activities," in April 1998.
SOP 98-1 provides guidance as to whether certain internal-use software costs
should be capitalized as a long-lived asset or expensed when incurred and
becomes effective in the Company's fiscal year ending January 29, 2000, but
may be adopted earlier. The Company is in the process of evaluating the
requirements of SOP 98-1, but does not expect that it will materially affect
its results of operations, financial position or cash flows. The Company has
not yet decided whether it will adopt this standard in 1998.
SOP 98-5 provides guidance on the financial reporting of start-up costs and
organization costs and also becomes effective in the Company's fiscal year
ending January 29, 2000, but may be adopted earlier. This pronouncement will
change the way the Company accounts for preopening costs incurred in
connection with opening a facility. The Company currently charges preopening
costs to operations within the fiscal year that a new facility opens,
amortizing such costs between the date the facility opens and the end of the
fiscal year. SOP 98-5 will require all preopening costs to be expensed when
incurred. The general effect of SOP 98-5 on the Company will be to
accelerate the recognition of preopening expenses. The initial application
of SOP 98-5 must be reported as a cumulative effect of a change in accounting
principle. The Company has not yet decided whether it will adopt this
standard in 1998.
Since June 1997, Statement of Financial Accounting Standards ("SFAS") No.
130, "Reporting Comprehensive Income," SFAS No. 131, "Disclosures about
Segments of an Enterprise and Related Information," and SFAS No. 132,
"Employers' Disclosure about Pensions and Other Postretirement Benefits,"
were issued. These statements become effective in the Company's current
fiscal year ending January 30, 1999. The adoption of these statements is
expected to have no material impact on the Company's results of operations,
financial position or cash flows and to produce no major changes in current
disclosures.
Liquidity and Capital Resources
- -------------------------------
Net cash provided by operating activities was $16.5 million in the first
quarter of 1998. A total of $13.4 million was used in operating activities
in last year's comparable period. The increase in cash provided by operating
activities was attributable primarily to a lower accounts payable-to-inventory
ratio at the beginning of this year, as compared to the beginning
of last year.
Cash expended for property additions was $20.5 million in the first quarter
of 1998 versus $10.3 million in the first quarter of 1997. The Company
opened three new clubs in this year's first quarter, including the Company's
first club in the Cleveland market. No new clubs were opened in last year's
first quarter.
The Company's capital expenditures are expected to total approximately $100
million in 1998, based on opening a total of twelve to thirteen new clubs,
including the expected opening of approximately three new clubs in the
Cleveland market. The timing of actual club openings and the amount of
related expenditures could vary from these estimates due, among other things,
to the complexity of the real estate development process.
Prior to the spin-off, the Company's operations and expansion were financed
through loans advanced by Waban as needed. In July 1997, the Company entered
into a $200 million unsecured credit agreement with a group of banks which
expires July 9, 2002. The agreement, which was amended in December 1997,
includes a $50 million sub-facility for letters of credit, of which $13.8
million was outstanding at May 2, 1998. The Company is required to pay an
annual facility fee which is currently 0.125% of the total commitment.
Interest on borrowings is payable at the Company's option either at (a) the
Eurodollar rate plus a margin which is currently 0.275%, (b) the agent bank's
prime rate or (c) a rate determined by competitive bidding. The facility fee
and Eurodollar margin are both subject to change based upon the Company's
fixed charge coverage ratio. The agreement contains covenants which, among
other things, include minimum net worth and fixed charge coverage
requirements and a maximum funded debt-to-capital limitation, and which
prohibit the payment of cash dividends on the Company's common stock.
The Company also maintains a separate line in the amount of $30 million for
letters of credit, primarily to support the purchase of inventories, of which
$8.5 million was outstanding at May 2, 1998, and an additional $20 million
uncommitted credit line for short-term borrowings.
Cash and cash equivalents totaled $8.2 million as of May 2, 1998. Borrowings
as of May 2, 1998 consisted of $18 million under the Company's bank credit
agreement and $19 million under its uncommitted credit line. The Company
expects that its current resources, together with anticipated cash flow from
operations, will be sufficient to finance its operations through January 30,
1999. However, the Company may from time to time seek to obtain additional
financing.
Factors Which Could Affect Future Operating Results
- ---------------------------------------------------
This report contains a number of "forward-looking statements," including
statements regarding expenses expected to be incurred by BJ's as a stand-alone
entity, planned capital expenditures, planned store openings and other
information with respect to the Company's plans and strategies. Any
statements contained herein that are not statements of historical fact may be
deemed to be forward-looking statements. Without limiting the foregoing, the
words "believes," "anticipates," "plans," "expects" and similar expressions
are intended to identify forward-looking statements. There are a number of
important factors that could cause actual events or the Company's actual
results to differ materially from those indicated by such forward-looking
statements, including, without limitation, economic and weather conditions
and state and local regulation in the Company's markets; competitive
conditions; the ability of the Company to continue its transition to being a
stand-alone entity; contingent liabilities under the Company's
indemnification agreement with The TJX Companies, Inc.; and events which
might cause the Company's spin-off from Waban not to qualify for tax-free
treatment. Each of these factors is discussed in more detail in the
Company's Annual Report on Form 10-K for the fiscal year ended January 31,
1998.
Other factors which could affect future operating results of the Company
include, without limitation, the successful implementation of the Company's
Year 2000 remediation plans and new club opening plans discussed above.
Quantitative and Qualitative Disclosures About Market Risk
- ----------------------------------------------------------
Not applicable.
PART II. OTHER INFORMATION
Item 2 - Changes in Securities
---------------------
On May 28, 1998, the Board of Directors amended the By-Laws of the
Company to allow a stockholder to vote at all stockholder meetings
by written proxy executed in writing by the stockholder or his or
her attorney-in-fact or in such other manner permitted by the
General Corporation Law of the State of Delaware. Previously,
every proxy was required to be signed by the stockholder or by
his or her attorney-in-fact.
Item 4 - Submission of Matters to a Vote of Security Holders
---------------------------------------------------
At the 1998 Annual Meeting of Stockholders of the Company (the
"Annual Meeting") held on May 28, 1998, the re-election of S. James
Coppersmith, Thomas J. Shields and Herbert J. Zarkin was acted
upon by the stockholders of the Company.
The number of shares of common stock outstanding and entitled to
vote at the Annual Meeting was 37,643,962. The other directors
of the Company, whose terms of office as directors continued
after the Annual Meeting, are Kerry L. Hamilton, Allyn L. Levy,
John J. Nugent, Lorne R. Waxlax and Edward J. Weisberger.
Subsequent to the Annual Meeting, Bert N. Mitchell was elected as
a new director of the Company by the Board of Directors to fill a
vacancy created by the expansion of the size of the Board on May
28, 1998. The results of the voting on the re-election of direct-
ors are set forth below:
Votes Votes Votes Absten- Broker
For Withheld Against tions Non-Votes
----- -------- ------- ------- ---------
Election of Directors:
S. James Coppersmith 31,706,074 444,532 N/A N/A N/A
Thomas J. Shields 31,708,609 441,997 N/A N/A N/A
Herbert J. Zarkin 31,687,618 462,988 N/A N/A N/A
Item 6 - Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits
3.2 Amended and Restated By-Laws
27.0 Financial Data Schedule
(b) Reports on Form 8-K
The Company did not file any reports on Form 8-K with the
Securities and Exchange Commission during the quarter ended
May 2, 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.
BJ'S WHOLESALE CLUB, INC.
-------------------------
(Registrant)
Date: June 11, 1998 /S/ JOHN J. NUGENT
------------- -------------------------
John J. Nugent
President and Chief Executive Officer
(Principal Executive Officer)
Date: June 11, 1998 /S/ FRANK D. FORWARD
------------- -------------------------
Frank D. Forward
Executive Vice President and
Chief Financial Officer
(Principal Financial and
Accounting Officer)