UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
---------------
FORM 10-Q
[X] Quarterly Report, Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the Quarterly Period Ended March 31, 1998, or
[ ] Transition Report, Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the Transition Period _____ to ______
Commission File Number 2-88617
QuesTech, Inc.
(Exact name of Registrant as specified in its charter)
--------------
Virginia 54-0844913
- -------------------------------- ------------------------------------
(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
7600-A Leesburg Pike,
Falls Church, Virginia 22043
- -------------------------------- ------------------------------
(Address of principal executive offices) (Zip code)
(703) 760-1000
--------------
(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
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common Stock, $0.05 par value 1,916,004
----------------------------- ------------------
Class Outstanding as of
April 30, 1998
QuesTech, Inc. and Subsidiaries
Form 10-Q
For the Quarter Ended March 31, 1998
I N D E X
Page No.
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PART I. Financial Information
Item 1 Financial Statements
CONDENSED CONSOLIDATED BALANCE SHEET 2
CONSOLIDATED STATEMENTS OF EARNINGS 4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS 5
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY 6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 7
Item 2 Management's Discussion and Analysis of
Financial Condition and Results of Operations 9
PART II. Other Information
Item 1 Legal Proceedings 12
Item 6 Exhibits and Reports on Form 8K 12
Officers' Signatures 13
Index to Exhibits 14
1
QuesTech, Inc. and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEET
ASSETS
Mar. 31 Dec. 31
1998 1997
-------- --------
(Unaudited) (Audited)
----------- ---------
CURRENT ASSETS
Cash and cash equivalents ................ $ 111,600 $ 108,500
Accounts receivable ...................... 14,266,300 13,002,000
Inventories .............................. 116,500 69,200
Prepaid expenses and other ............... 279,400 165,300
Deferred income taxes .................... 239,500 239,500
----------- -----------
Total current assets ................ $15,013,300 $13,584,500
----------- -----------
EQUIPMENT AND LEASEHOLD IMPROVEMENTS - at
cost less accumulated depreciation and
amortization of $6,539,800 and $6,298,200,
respectively ............................. 5,353,400 5,434,400
GOODWILL less accumulated amortization of
$1,764,800 and $1,726,200, respectively .. 1,171,700 1,210,400
DEFERRED INCOME TAXES, net of valuation
allowance of $262,000 .................... 1,369,900 1,369,900
OTHER ASSETS ............................... 2,337,200 2,369,600
----------- -----------
TOTAL ASSETS $25,245,500 $23,968.800
----------- -----------
----------- -----------
The accompanying notes are an integral part of these statements.
2
QuesTech, Inc. and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEET
LIABILITIES AND STOCKHOLDERS' EQUITY
Mar. 31 Dec. 31
1998 1997
--------- --------
(Unaudited) (Audited)
----------- ---------
CURRENT LIABILITIES
Line of Credit ........................... $ 4,937,900 $ 3,919,800
Current maturities of long-term
obligations payable .................... 514,000 511,900
Accounts payable ......................... 1,729,100 2,195,400
Accrued liabilities ...................... 5,649,100 5,095,800
Income taxes
Currently payable ...................... 107,500 --
----------- -----------
Total current liabilities ........... $12,937,600 $11,722,900
LONG-TERM OBLIGATIONS ...................... 1,401,200 1,527,800
INDEBTEDNESS TO RELATED PARTIES ............ 1,574,100 1,542,900
ACCRUED POST-RETIREMENT BENEFIT COST ....... 1,608,000 1,577,000
OTHER LONG-TERM OBLIGATIONS ................ 870,600 894,300
----------- -----------
Total Liabilities ................... $18,391,500 $17,264,900
----------- -----------
STOCKHOLDERS' EQUITY
Common stock - authorized 3,000,000
shares of $.05 par value, issued
1,925,904 and 1,657,304 shares,
outstanding 1,916,004 and 1,618,557
shares at March 31, 1998
and December 31, 1997 ................ 96,300 82,800
Additional paid in capital ............... 5,012,900 2,878,300
Retained earnings ........................ 4,443,900 4,297,900
Less Treasury Stock at cost .............. (30,200) (210,500)
Due from SECT ............................ (2,668,900) (344,600)
----------- -----------
Total Stockholders' Equity .......... $ 6,854,000 $ 6,703,900
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $25,245,500 $23,968,800
----------- -----------
----------- -----------
The accompanying notes are an integral part of these statements.
3
QuesTech, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
Three Months Ended March 31,
1998 1997
---- ----
Revenues ...................................... $19,164,900 $19,812,700
Operating expenses
Salaries, wages and employee benefits ....... 11,009,500 10,186,800
Other operating expenses .................... 7,675,900 9,275,400
----------- -----------
Total operating expenses .............. $18,685,400 $19,462,200
----------- -----------
Income from operations ................ 479,500 350,500
Interest expense ............................ (226,000) (139,500)
----------- -----------
Earnings before income taxes ........... $ 253,500 $ 211,000
Provision for income taxes .................... (107,500) (89,400)
----------- -----------
Net earnings ........................... $ 146,000 $ 121,600
----------- -----------
----------- -----------
Earnings per share:
Basic .................................. $ .10 $ .08
Diluted ................................ $ .10 $ .08
Weighted Average Number of common shares
outstanding:
Basic .................................. 1,443,062 1,436,862
Diluted ................................ 1,508,404 1,509,610
The accompanying notes are an integral part of these statements.
4
QuesTech, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Three Months
Ended March 31
------------------
1998 1997
---- ----
Increase (Decrease) in Cash and Cash Equivalents
Cash flows from operating activities:
Net earnings ................................ $ 146,000 $ 121,600
Adjustments to reconcile net earnings to
Net cash provided by operating activities:
Depreciation and amortization ............. 304,800 272,700
Increase in value of Deferred Compensation
Plan assets ............................. (45,000) (50,000)
Changes in assets and liabilities ......... (1,089,300) 1,296,600
----------- -----------
Net cash (used in) provided by
operating activities .................. (683,500) 1,640,900
----------- -----------
Cash flows from investing activities:
Capital expenditures ........................ (189,300) (327,600)
----------- -----------
Net cash used in investing activities ... (189,300) (327,600)
----------- -----------
Cash flows from financing activities:
Increase(Decrease) in Line of Credit ........ 1,018,100 (1,227,400)
Cash proceeds from exercise of stock options 4,000 13,600
Repayment of long-term debt ................. (124,500) (97,400)
Repayment of Other Long-Term Obligations .... (21,700) (20,000)
----------- -----------
Net cash provided by (used in) financing
activities ............................ 875,900 (1,331,200)
----------- -----------
Net increase(decrease) in cash ................ 3,100 (17,900)
Cash, beginning of period ..................... 108,500 54,300
----------- -----------
Cash, end of period ........................... $ 111,600 $ 36,400
----------- -----------
----------- -----------
Cash payments for:
Interest .................................... $ 224,100 $ 133,600
Income taxes ................................ 15,800 268,300
Non-cash financing activities:
Issuance of 268,000 shares to the SECT ........ 2,144,000 --
Sale of 28,847 shares of Treasury stock
to the SECT ................................. 180,300 --
The accompanying notes are an integral part of these statements.
5
QuesTech, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED)
Three Months
Ended March 31
-----------------
1998 1997
---- ----
Common Stock:
Beginning balance ......................... $ 82,800 $ 82,500
Exercise of options ....................... 100 200
Issuance of shares to the SECT ............ 13,400 --
----------- -----------
Ending balance ............................ 96,300 82,700
----------- -----------
Additional paid in capital
Beginning balance ......................... 2,878,300 2,835,600
Exercise of options ....................... 3,900 13,300
Issuance of shares to the SECT ............ 2,130,700 --
----------- -----------
Ending balance ............................ 5,012,900 2,848,900
----------- -----------
Retained Earnings
Beginning balance ......................... 4,297,900 3,652,000
Net Earnings .............................. 146,000 121,600
----------- -----------
Ending balance ............................ 4,443,900 3,773,600
----------- -----------
Treasury Shares:
Beginning balance ......................... (210,500) (193,100)
Re-issuance of shares ..................... 180,300 --
Exercise of options ....................... -- --
----------- -----------
Ending balance ............................ (30,200) (193,100)
----------- -----------
Due from SECT
Beginning balance ......................... (344,600) (344,600)
Issuance of shares to the SECT ............ (2,324,300) --
----------- -----------
Ending balance ............................ (2,668,900) (344,600)
----------- -----------
Total Stockholders' Equity .................. $ 6,854,000 $ 6,167,500
----------- -----------
----------- -----------
The accompanying notes are an integral part of these statements.
6
QuesTech, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
March 31, 1998 and 1997
(Unaudited)
1. General
The accompanying unaudited condensed consolidated financial statements have
been prepared pursuant to the rules and regulations of the Securities and
Exchange Commission. Certain information and note disclosures normally included
in the annual financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant to those
rules and regulations, although the company believes that the disclosures made
are adequate to make the information presented not misleading.
In the opinion of management, the accompanying condensed financial
statements for the periods presented reflect all adjustments and
reclassifications that are necessary for fair presentation. It is suggested that
these condensed financial statements be read in conjunction with the
consolidated financial statements and the notes thereto included in the
company's latest annual report to the Securities and Exchange Commission on Form
10-K.
2. Earnings Per Share
In 1997 the Financial Accounting Standards Board issued Financial
Accounting Standard No. 128 (SFAS 128), "Earnings Per Share." This Statement
replaces the presentation of primary EPS with a presentation of basic EPS. It
also requires dual presentation of basic and diluted EPS on the face of the
income statement for all entities with complex capital structures and requires a
reconciliation of the numerator and denominator of the basic EPS computation to
the numerator and denominator in the diluted EPS computation. Basic EPS ignores
potential dilution and is computed by dividing income available to common
stockholders by the weighted-average number of common shares outstanding for the
period. Diluted EPS reflects potential dilution, dilution that would occur if
securities were converted into common stock or other contracts to issue common
stock were exercised, resulting in the issuance of addition common stock that
would share in the earnings of the entity. In complying with the requirements of
SFAS No. 128, the Company has restated all prior period EPS data.
Although outstanding, the shares held by the Company-controlled Stock
Employee Compensation Trust ("SECT") are excluded from the weighted average
number of shares, for purposes of calculating earnings per share. As of March
31, 1998, a total of 366,600 shares are subject to outstanding stock option
7
agreements and if dilutive, are accounted for as common stock equivalents
under the treasury stock method. The strike prices of these options range
from $4.00 to $7.70 per share. The average bid price of the Company's stock
for the quarter ended March 31, 1998 was $6.83 per share.
The following table reconciles basic and diluted EPS:
Three Months
Ended March 31
------------------
1998 1997
---- ----
Numerator
Net Income $ 146,000 $ 121,600
---------- ----------
---------- ----------
Denominator
Denominator for basic EPS-weighted
average shares 1,443,062 1,436,862
Effect of dilutive securities stock options 65,342 72,748
---------- ----------
Denominator for diluted EPS 1,508,404 1,509,610
---------- ----------
---------- ----------
Disclosures about Segments of an Enterprise and Related Information
The Financial Accounting Standards Board recently issued Statement of
Financial Accounting Standards No. 131 (SFAS 131), "Disclosures about Segments
of an Enterprise and Related Information," effective for periods beginning after
December 15, 1997. This Statement establishes standards for the way that public
business enterprises report information about operating segments in annual
financial statements and requires that those enterprises report selected
information about operating segments in interim financial reports issued to
shareholders. It also establishes standards for related disclosures about
products and services, geographic areas, and major customers.
The Statement need not be applied to interim financial statements in the
initial year of its application, but comparative information for interim periods
in the initial year of application shall be reported in financial statements for
interim periods in the second year of application. The Company has opted to
comply with the Statement's requirements effective with its filing of the 1998
10-K.
8
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
RESULTS OF OPERATIONS
The following table sets forth major items included in the Unaudited
Consolidated Statement of Earnings as a percentage of revenue.
Three Months Ended
March 31
------------------
1998 1997
---- ----
Revenues 100.00% 100.00%
Operating Expenses 97.50% 98.23%
------ ------
Income from operations 2.50% 1.77%
Interest (1.18%) (.70%)
Provision for income taxes (.56%) (.45%)
------ ------
Net Earnings .76% .62%
------ ------
------ ------
Revenues for the three months ended March 31, 1998 were $19.2 million,
down 3% when compared with the same period in 1997. Revenues were impacted by
a revenue decline in the government contracts segment, as a result of the
transition of work associated with the Company's largest contract, TEFS, from
the former Vint Hills Farm Station in Warrenton, Virginia to Fort Monmouth,
New Jersey adjacent to the Army's Communications Electronics Command. TEFS'
revenues accounted for only 30% of the Company's combined government contract
revenues during the first quarter of 1998, as compared to 37% during the same
period last year. In addition, revenues from another large Army contract,
HTRD, declined as it nears completion this year. Revenue reductions from
these two contracts were partially mitigated by growth in new business,
particularly in video graphics production and technical and engineering
acquisition support.
In the commercial segment, revenues were $16,700 during the first quarter
of 1998. Production, which was expected to commence in March, 1998, has been
postponed until the second quarter of 1998 at the request of the customer. There
were no reportable revenues during the first quarter of 1997.
Salaries, wages and employee benefits as a component of total operating
expenses increased as a result of additional direct labor requirements for
contracts awarded late 1997. Other operating expenses declined as a result of
reduced contractual requirements for pass-through expenses, primarily for
TEFS, and delays in bid and proposal (B & P) expenditures. Management expects
B & P expenditures to increase during the course of the year. In addition,
management undertook a major cost containment initiative in order to temper
the rate of increase of certain indirect expenses, thereby benefiting
profitability of certain T & M (time and materials) contracts. In the
aggregate, total operating expenses for the first quarter of 1998 declined by
approximately 4% when compared with the same period last year.
9
Income from operations at March 31, 1998, was $479,500, up 37% compared to
the same period last year. Expense decline and improved margins on certain
contracts contributed to the growth in income from operations.
During the first quarter of 1998, pretax income was $253,500, which
increased 20% over the same period in 1997 notwithstanding the increased
interest expense arising from higher levels of borrowing under the line of
credit. Earnings per share were $.10 on net earnings of $146,000, up 25% and 20%
respectively over the same period last year, when earnings per share were $.08
on net earnings of $121,600.
LIQUIDITY AND CAPITAL RESOURCES
The following table sets forth certain financial data with respect to
changes in the Company's liquidity and capital resources since December 31, 1997
(in thousands of dollars except for ratios):
3/31/98 12/31/97 NET CHANGES
------- -------- -----------
Working capital $ 2,075 $ 1,862 $ 213
Current assets 15,013 13,585 1,428
Current liabilities 12,938 11,723 1,215
Working capital ratio (1) 1.16 1.16 --
(1) Current assets over current liabilities.
During the first quarter of 1998, the Company used borrowings under its
line of credit facility to finance its operations and capital expenditures.
Capital expenditures were incurred primarily to expand the Company's wide
area network by two additional sites and to upgrade PC (personal computers)
equipment. Cash flows from operations were impacted by a recent increase in
receivables, pending receipt of additional funding.
In addition, during the first quarter of 1998, the Company allocated
268,000 shares of newly issued common stock and re-issued 28,847 shares of
Treasury stock to the SECT. In consideration for the subject shares, the SECT
executed a promissory note to the Company in the amount of $2.3 million. The
note will be liquidated upon the SECT's release of shares of stock to fund the
exercise of stock options granted to certain Company employees under the
Company's various stock option plans.
Subsequent to the date of the financial statements, the Company
renegotiated an increase in its line of credit from $6 million to $8 million
and an extension of the term to March 31, 1999. Other terms of the agreement
did not materially change.
10
YEAR 2000 ISSUE
Management has undertaken an investigation of whether the Company will
be adversely impacted by the issue of whether its systems are year 2000
compliant. Based on this review, management has determined that a material
adverse impact on the Company's financial statements is unlikely.
INFLATION
During the first quarter of 1998, the impact of inflation on the Company's
costs has been minimal. Inflationary costs are normally anticipated in the
pricing structure of contracts and recovered through the reimbursement of
contract costs incurred.
BACKLOG
Set forth in the table below is the Company's funded and unfunded backlog
as of March 31, 1998 and March 31, 1997.
Funded Backlog Unfunded Backlog
-------------- ----------------
March 31 March 31
-------- --------
1998 1997 1998 1997
---- ---- ---- ----
$43,334,536 $37,117,900 $315,916,164 $360,272,800
"Backlog" is the aggregate contract revenues remaining to be earned under
written contracts as of the stated date. "Funded backlog" is that portion which
is covered by funding appropriations to and allotments by the procuring
agencies. "Unfunded backlog" is that portion of backlog equal to the backlog
less the funded backlog. Although there can be no assurance that unfunded
backlog will become funded backlog, historically a majority of the Company's
unfunded backlog has eventually been converted into funded backlog.
11
PART II
Item 1. Legal Proceedings
The Company, including its subsidiaries, are not subject to any material
pending legal proceedings, and none of the assets of the Company or its
subsidiaries are subject to any such proceedings, other than routine litigation,
if any, incidental to the business and against which the Company is either
adequately insured, or which is not material.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits required in connection with this quarterly report on Form 10-Q
are listed in the Exhibit Index following the signature page. Certain of such
exhibits, which have heretofore been filed with the Securities and Exchange
Commission and which are designated by reference to their exhibit numbers in
prior filings are incorporated herein as exhibits by such reference and made a
part hereof.
(b) No reports on Form 8-K were filed during the quarter ended March 31,
1998.
12
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.
QuesTech, Inc.
--------------------------------
(Registrant)
Date: May 6, 1998 V. L. Salvatori
---------------------- --------------------------------
Vincent L. Salvatori
Chief Executive Officer and
Chairman of the Board
Date: May 6, 1998 J. P. O'Connell, Jr.
---------------------- --------------------------------
Joseph P. O'Connell, Jr.
Vice President and
Chief Financial Officer
13
INDEX TO EXHIBITS
Sequential
Exhibit No. Description page numbers
- ----------- ----------- ------------
3 Restated Articles of Incorporation *
and Bylaws of the Registrant,
incorporated by reference to Exhibit 3
of the Registrant's Registration
No. 2-88617
10.1 Officer and Managers Discretionary *
Bonus Plan, as amended and restated,
incorporated by reference to
Exhibit 10(d) of Registrant's Annual
Report on Form 10-K for the
period ended December 31, 1987
10.2 QuesTech Variable Deferral Plan *
incorporated by reference to Exhibit
10(k) of Registrant's Annual Report
on Form 10-K for the period
ended December 31, 1987
10.3 Limited Partnership Agreement with *
respect to the Kitty Hawk Office Center
incorporated by reference to Exhibit 10(v)
of Registrant's Annual Report on Form
10-K for the period ended December 31, 1989
10.5 Amended QuesTech, Inc. Officers and *
Managers Deferred Compensation Plan
incorporated by reference to Exhibit 10(t)
of Registrant's Annual Report on Form 10-K
for the period ended December 31, 1992
10.6 Lease dated November 24, 1993 between *
Louis Esposito and the Registrant
incorporated by reference to Exhibit
10(x) of Registrant's Annual Report
on Form 10-K for the period ended
December 31, 1993
10.7 QuesTech, Inc. Stock Employee Compen- *
sation Trust incorporated by reference
to Exhibit 10(y) of Registrant's Annual
Report on Form 10-K for the
14
period ended December 31, 1993
(a) Amended and Restated Stock *
Employee Compensation Trust
incorporated by reference to
Exhibit 10(q) of Registrant's
Annual Report on Form 10-K for
the period ended December 31, 1995
(b) Amended and Restated Stock Employee 32
Compensation Trust dated March 25,
1998
10.8 1994 Incentive Stock Option Plan *
incorporated by reference to Exhibit 10(aa)
of Registrant's Annual Report on Form 10-K
for the period ended December 31, 1994
(a) Amendment to 1994 Incentive Stock *
Option Plan dated November 15,
1995 incorporated by reference to
Exhibit 10(p) of Registrant's
Annual Report on Form 10-K for
the period ended December 31, 1995
10.9 Lease dated March 14, 1995 between John *
Hancock Mutual Life Insurance Company
and the Registrant incorporated by
reference to Exhibit 10(cc) of Regis-
trant's Annual Report on the Form 10-K
for the period ended December 31, 1994
10.10 Amended and Restated Loan and Security *
Agreement between Signet Bank and the
Registrant, dated June 3, 1996 incorp-
orated by reference to Exhibit 10(r) of
Registrant's Quarterly Report on Form
10-Q for the period ended June 30, 1996
(a) Amendment No. 1, dated May 31, 1997 *
1997, to the Amended and Restated
Loan and Security Agreement between
between Signet Bank and Registrant,
incorporated by reference to
Exhibit 10(t) of Registrant's
Quarterly Report on Form 10-Q for
the period ended June 30, 1997
15
(b) Amendment No. 2, dated December 23, *
1997, to the Amended and Restated
Loan and Security Agreement between
Signet Bank and Registrant, incorpor-
ated by reference to Exhibit 10.10(b)
of registrant's Annual Report on
Form 10-K for the period ended
December 31, 1997
(c) Amendment No. 3, dated April 5, 1998, 19
to the Amended and Restated Loan and
Security Agreement between First
Union National Bank, successor by
merger to Signet Bank and Registrant
(d) Amendment No. 4, dated April 28, 1998, 26
to the Amended and Restated Loan and
Security Agreement between First
Union National Bank, successor by
merger to Signet Bank and Registrant
10.11 Equipment Lease between General *
Electric Capital Corporation and
Registrant, dated October 24, 1996
incorporated by reference to Exhibit 10(x)
of Registrant's Quarterly Report on Form 10-Q
for the period ended September 30, 1996
10.12 1996 Incentive Stock Option Plan dated *
May 24, 1996, incorporated by reference to
Exhibit 10(a)(i) of Registrant's Annual Report
on Form 10-K for the period ended
December 31, 1996
(a) Amendment No. 1, dated March 15, *
1997, to 1996 Incentive Stock
Option Plan, incorporated by
reference to Exhibit 10.12(a) of
Registrant's Annual Report on
Form 10-K for the period ended
December 31, 1997
10.13 Stock Option Plan for Non-employee *
Directors, dated November 1, 1996,
incorporated by reference to Exhibit
10(a)(ii) of Registrant's Annual
Report on Form 10-K for the period
ended December 31, 1996
16
10.14 Sixth Amended Employment Agreement *
between Vincent L. Salvatori and Registrant,
dated November 24, 1997, incorporated by
reference to Exhibit 10.14 of Registrant's
Annual Report on Form 10-K for the period
ended December 31, 1997
10.15 Third Amended Employment Agreement *
between Gerald F. Mayefskie and Registrant,
dated November 17, 1997, incorporated by
reference to Exhibit 10.15 of Registrant's
Annual Report on Form 10-K for the period
ended December 31, 1997
10.16 First Amendment to Deed of Lease *
between John Hancock Mutual Life
Insurance Company and the Registrant,
dated December 31, 1997, incorporated
by reference to Exhibit 10.16 of
Registrant's Annual Report on Form
10-K for the period ended
December 31, 1997
21 Subsidiaries of the Registrant, *
incorporated by reference to Exhibit
21 of Registrant's Annual Report on
Form 10-K for the period ended
December 31, 1997
27 Financial Data Schedule 48
* Previously filed; incorporated herein by reference.
17