-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CGoZEgHnDIaFLnJzLRXEAviRZzTXNk9gAuHJPuBaOM3WYb4pcFsAy9XQruuQkMQf unmdpkYlXqfq8idgQmQpiQ== 0001017062-98-000460.txt : 19980305 0001017062-98-000460.hdr.sgml : 19980305 ACCESSION NUMBER: 0001017062-98-000460 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19980116 ITEM INFORMATION: FILED AS OF DATE: 19980304 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: UNITED STATES FILTER CORP CENTRAL INDEX KEY: 0000318025 STANDARD INDUSTRIAL CLASSIFICATION: REFRIGERATION & SERVICE INDUSTRY MACHINERY [3580] IRS NUMBER: 330266015 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 000-09534 FILM NUMBER: 98557640 BUSINESS ADDRESS: STREET 1: 40-004 COOK ST CITY: PALM DESERT STATE: CA ZIP: 92211 BUSINESS PHONE: 7603400098 MAIL ADDRESS: STREET 1: 40-004 COOK STREET CITY: PALM DESERT STATE: CA ZIP: 92211 FORMER COMPANY: FORMER CONFORMED NAME: AMERICAN TOXXIC CONTROL INC DATE OF NAME CHANGE: 19910401 FORMER COMPANY: FORMER CONFORMED NAME: NOVAN ENERGY INC DATE OF NAME CHANGE: 19871227 8-K/A 1 FORM 8-K/A DATED 01/16/1998 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------------------- FORM 8-K/A CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported) January 16, 1998 UNITED STATES FILTER CORPORATION -------------------------------- (Exact name of registrant as specified in its charter) Delaware 1-10728 33-0266015 - ------------------------------- ------------- -------------- (State of other jurisdiction of (Commission (I.R.S. Employer incorporation or other organization) File Number) Identification No.) 40-004 Cook Street, Palm Desert, California 92211 ------------------------------------------- ------------ (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (760) 340-0098 -------------- Not Applicable ------------------------------- (Former name or former address, if changed from last report) Item 7 of the Registrant's Current Report on Form 8-K/A dated December 9, 1997 and Item 7 of the Registrant's Current Report on Form 8-K/A dated January 16, 1998 are hereby amended as set forth below. The exhibits referenced therein are not amended hereby. As previously reported on a Current Report on Form 8-K dated December 9, 1997, United States Filter Corporation (the "Company") acquired approximately 96% of the outstanding ordinary shares (the "Memtec Shares") of Memtec Limited ("Memtec") on December 9, 1997, pursuant to a tender offer. Beneficial ownership of the remaining Memtec Shares of the remaining shares was acquired on February 5, 1998. The total purchase price for all Memtec Shares was approximately $399.6 million in cash. As previously reported on a Current Report on Form 8-K dated January 16, 1998, the Company acquired all of the outstanding common stock of The Kinetics Group, Inc. ("Kinetics") effective December 31, 1998 in exchange for 5,803,803 shares of common stock, par value $.01 per share, of the Company. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS (B) PRO FORMA FINANCIAL INFORMATION Unaudited Pro Forma Combined Balance Sheet as of September 30, 1997; Unaudited Pro Forma Combined Statement of Operations for the years ended March 31, 1997 and for the six months ended September 30, 1997; Unaudited Pro Forma Combined Statement of Operations for the years ended March 31, 1996 and 1995; and Notes to Unaudited Pro Forma Combined Financial Information. (C) EXHIBITS 23.1 Consent of Independent Auditors 23.2 Consent of Price Waterhouse 23.3 Consent of Ernst & Young LLP SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this amendment to be signed on its behalf by the undersigned hereunto duly authorized. UNITED STATES FILTER CORPORATION By: /s/ KEVIN L. SPENCE -------------------------- Kevin L. Spence Executive Vice President Date: March 4, 1998 UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION The following unaudited pro forma combined financial information presents the Pro Forma Combined Balance Sheet at September 30, 1997, giving effect to the acquisitions of Memtec (which was accounted for as a purchase as described below) and of Kinetics (which was accounted for as a pooling of interests as described below) as if they had been consummated on that date. Also presented are the Pro Forma Combined Statements of Operations for the fiscal year ended March 31, 1997 and the six months ended September 30, 1997, giving effect to the acquisitions of Memtec and Kinetics as if each of such acquisitions had been consummated as of the beginning of the respective periods presented. The Company's fiscal year ends on March 31, Memtec's fiscal year ends on June 30 and Kinetics' fiscal year ends on September 30. The Pro Forma Combined Statement of Operations for the year ended March 31, 1997 combines the results of the Company for such year with the results of Memtec for the year ended June 30, 1997 and the results of Kinetics for the year ended September 30, 1997. The Pro Forma Combined Statement of Operations for the six months ended September 30, 1997 combines the results of each of the Company, Memtec and Kinetics for such six month period. Since the acquisition of Kinetics was accounted for as a pooling of interests, Pro Forma Combined Statements of Operations for the years ended March 31, 1996 and 1995 are also presented. The Pro Forma Combined Statements of Operations for each of these years combines the results of the Company for the years ended March 31, 1996 and 1995 with the results of Kinetics for the years ended September 30, 1996 and 1995, respectively. The Pro Forma Combined Statements of Operations for these years are in effect a restatement of the historical statements of operations of each of the Company and Kinetics and accordingly do not include the results of Memtec, which acquisition was accounted for as a purchase. The pro forma data is based on the historical combined statements of the Company, Memtec and Kinetics giving effect to the Memtec acquisition under the purchase method of accounting, the Kinetics acquisition under the pooling of interests method of accounting and to the assumptions and adjustments (which the Company believes to be reasonable) described in the accompanying Notes to Unaudited Pro Forma Combined Financial Information. Under the purchase method of accounting, assets acquired and liabilities assumed will be recorded at their estimated fair value at the date of acquisition. Under the pooling of interests method of accounting, the recorded assets and liabilities of the separate entities become the recorded assets and liabilities of the combined entity. The pro forma adjustments set forth in the following unaudited pro forma combined financial information are estimated and may differ from the actual adjustments when they become known; however, no material differences are anticipated by the Company. The following unaudited pro forma combined financial information does not reflect certain cost savings that the Company believes may be realized following the Memtec and Kinetics acquisitions. Such cost savings are expected to be realized primarily through the elimination of certain overhead expenses and geographic overlap and the implementation of strict cost controls and standardized operating procedures. Additionally, the Company believes that such acquisitions will enable it to realize increased operating efficiencies and economies of scale including enhanced purchasing power and increased asset utilization. The pro forma data is provided for comparative purposes only. It does not purport to be indicative of the results that actually would have occurred if the acquisitions of Memtec and Kinetics had been consummated on the dates indicated or that may be obtained in the future. The unaudited pro forma combined financial information should be read in conjunction with the notes thereto, the audited consolidated financial statements and notes thereto of Memtec and Kinetics, incorporated herein by reference and the Company's Consolidated Financial Statements and related Notes thereto, incorporated herein by reference. UNAUDITED PRO FORMA COMBINED BALANCE SHEET
As of September 30, 1997 ---------------------------------------------------------------------------- Historical Pro Forma ------------------------------------- ------------------------------------ Adjustments Increase Company Memtec Kinetics (Decrease) Notes Combined ---------- -------- -------- ---------- ---------- ---------- Current Assets: (in thousands) Cash $ 32,622 $ 21,142 $ 8,907 $ 62,671 Short-term investments 483 - - 483 Accounts receivable, net 618,256 46,371 91,925 756,552 Cost and estimated earnings in excess of billings on uncompleted contracts 121,494 - 22,773 144,267 Inventories 303,960 48,401 2,718 355,079 Prepaid expenses 13,677 - 891 14,568 Deferred taxes 38,969 4,844 14,563 58,376 Other current assets 41,247 8,530 - 49,777 ---------- -------- -------- ---------- Total current assets 1,170,708 129,288 141,777 1,441,773 ---------- -------- -------- ---------- Property, plant and equipment, net 597,987 96,248 22,847 717,082 Investment in leasehold interests, net 22,916 - - 22,916 Cost in excess of net assets of businesses acquired, net 903,982 57,519 - 961,501 Other assets 109,373 19,459 4,611 (11,231) a(i) 122,212 ---------- -------- -------- ---------- $2,804,966 $302,514 $169,235 $3,265,484 ========== ======== ======== ========== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 278,233 $ 13,679 $ 36,758 $ 328,670 Accrued liabilities 272,633 29,533 36,200 338,366 Current portion of long-term debt 10,699 3,447 1,150 15,296 Billings in excess of costs and estimated earnings on uncompleted contracts 58,012 - 19,258 77,270 Other current liabilities 43,997 567 4,856 49,420 ---------- -------- -------- ---------- Total current liabilities 663,574 47,226 98,222 809,022 ---------- -------- -------- ---------- Notes payable 6,346 - 33,770 388,364 a(ii) 428,480 Long-term debt, excluding current portion 60,521 75,032 19,178 154,731 Convertible subordinated debentures 554,000 - - 554,000 Deferred taxes 13,110 5,017 677 18,804 Other liabilities 43,679 6,853 408 50,940 ---------- -------- -------- ---------- Total liabilities 1,341,230 134,128 152,255 2,015,977 ---------- -------- -------- ---------- Preferred stock - - 10,088 (10,088) a(iii) - Shareholders' equity: Common stock 929 20,047 8 (19,997) a(iii),a(iv) 987 Additional paid-in capital 1,384,570 157,210 13,692 (147,172) a(iii),a(iv) 1,408,300 Currency translation adjustment (34,579) (10,552) - 10,552 a(iv) (34,579) Retained earnings (accumulated deficit) 112,816 1,681 (6,808) (232,890) a(iv),a(v) (125,201) ---------- -------- -------- ---------- Total shareholders' equity 1,463,736 168,386 6,892 1,249,507 ---------- -------- -------- ---------- $2,804,966 $302,514 169,235 $3,265,484 ========== ======== ======== ==========
The accompanying notes are an integral part of these pro forma combined financial data. UNAUDITED COMBINED STATEMENT OF OPERATIONS
Fiscal Year Ended March 31, 1997 -------------------------------------------------------------------------------------- Historical Pro Forma ----------------------------------------- ----------------------------------------- Adjustments Increase Company Memtec Kinetics (Decrease) Notes Combined ----------- ----------- ----------- ----------- ----------- ----------- (in thousands, except per share data) Revenues $1,376,601 $ 243,616 $387,805 $2,008,022 Cost of sales 1,026,248 155,638 350,367 1,532,253 ----------- ----------- ----------- ----------- Gross profit 350,353 87,978 37,438 475,769 Selling, general and administrative expenses 261,859 72,702 54,331 388,892 Merger and Restructuring expenses 5,581 1,677 - 7,258 ----------- ----------- ----------- ----------- 267,440 74,379 54,331 396,150 ----------- ----------- ----------- ----------- Operating income 82,913 13,599 (16,893) 79,619 Other income (expense): Interest expense (22,585) (5,613) (3,924) (22,991) b(i) (55,113) Interest and other income 3,350 816 328 4,494 ----------- ----------- ----------- ----------- (19,235) (4,797) (3,596) (50,619) Income before income tax expense 63,678 8,802 (20,489) 29,000 Income tax expense 17,481 1,306 (6,800) (6,323) b(ii) 5,664 ----------- ----------- ----------- ----------- Net income $ 46,197 $ 7,496 $(13,689) $ 23,336 =========== =========== =========== =========== Net income per common share $ 0.77 $ 0.35 =========== =========== Net income per common share excluding certain charges $ 0.83 c c $ 0.77 =========== =========== Weighted average number of shares outstanding 60,324 66,127 =========== =========== The accompanying notes are an integral part of these pro forma combined financial data.
Pro Forma Combined Statement of Operations (Unaudited)
Six Months Ended September 30, 1997 ---------------------------------------------------------------------------- Historical Pro Forma ----------------------------------- ------------------------------------ Adjustments Increase Company Memtec Kinetics (Decrease) Notes Combined ---------- ------ -------- ------------ ----- --------- (In thousands, except per share data) C> Revenues $1,289,722 $130,095 $227,404 $1,647,221 Cost of sales 971,117 81,100 205,585 1,257,802 ---------- -------- -------- ---------- Gross profit 318,605 48,995 21,819 389,419 Selling, general and administrative expenses 234,676 37,974 31,392 304,042 Merger and restructuring expenses - 2,714 - 2,714 ---------- -------- -------- ---------- 234,676 40,688 31,392 306,756 ---------- -------- -------- ---------- Operating income 83,929 8,307 (9,573) 82,663 ---------- -------- -------- ---------- Other income (expense): Interest expense (18,389) (2,767) (2,787) (11,496) b (i) (35,439) Interest and other income 1,087 39 136 1,262 ---------- -------- -------- ---------- (17,302) (2,728) (2,651) (34,177) ---------- -------- -------- ---------- Income before income tax expense 66,627 5,579 (12,224) 48,486 Income tax expense 21,357 2,631 (3,748) (3,690) b (ii) 16,550 ---------- -------- -------- ---------- Net income $ 45,270 $ 2,948 $ (8,476) $ 31,936 ========== ======== ======== ========== Net income per common share $ 0.55 $ 0.36 ========== ========== Net income per common share excluding certain charges $ 0.55 $ 0.51 ========== ========== Weighted average number of shares outstanding 82,968 88,771 ========== ==========
The accompanying notes are an integral part of these pro forma combined financial data.
UNAUDITED COMBINED STATEMENT OF OPERATIONS FISCAL YEAR ENDED MARCH 31, 1996 ------------------------------------------------------------------------ Historical Pro Forma ------------------------- ------------------------------------------- Adjustments Increase Company Kinetics (Decrease) Notes Combined -------- -------- --------------- --------- ---------- (In thousands, except per share data) Revenues $812,322 $278,423 $1,090,745 Cost of sales 606,226 230,747 836,973 -------- -------- ---------- Gross profit 206,096 47,676 253,772 Selling, general and administrative expenses 160,714 31,673 192,387 -------- -------- ---------- Operating income 45,382 16,003 61,385 -------- -------- ---------- Other income (expense): Interest expense (15,212) (1,068) (16,280) Interest and other income 4,979 944 5,923 -------- -------- ---------- (10,233) (124) (10,357) -------- -------- ---------- Income before income tax expense 35,149 15,879 51,028 Income tax expense 13,182 7,147 20,329 -------- -------- ---------- Net income $ 21,967 $ 8,732 $30,699 ======== ======== ========== Net income per common share $0.49 $0.61 ======== ========== Weighted average number of shares outstanding 43,688 49,491 ======== ========== The accompanying notes are an integral part of these pro forma combined financial data.
UNAUDITED COMBINED STATEMENT OF OPERATIONS
Fiscal Year Ended March 31, 1995 -------------------------------------------------------------------------------- Historical Pro Forma --------------------------- ----------------------------------------------- Adjustments Increase Company Kinetics (Decrease) Notes Combined ----------- ----------- ------------- ----------- ----------- (In thousands, except per share data) Revenues $600,832 $229,933 $830,765 Cost of sales 463,959 194,875 658,834 ----------- ----------- ----------- Gross profit 136,873 35,058 171,931 Selling, general and administrative expenses 108,826 22,384 131,210 ----------- ----------- ----------- Operating income 28,047 12,674 40,721 ----------- ----------- ----------- Other income (expense): Interest expense (8,058) (749) (8,807) Interest and other income 1,280 331 1,611 ----------- ----------- ----------- (6,778) (418) (7,196) ----------- ----------- ----------- Income before income tax expense 21,269 12,256 33,525 Income tax expense 6,002 2,902 8,904 ----------- ----------- ----------- Net income $ 15,267 $ 9,354 $ 24,621 =========== =========== =========== Net income per common share $ 0.49 $ 0.67 =========== =========== Weighted average number of shares outstanding 29,763 35,566 =========== =========== The accompanying notes are an integral part of these pro forma combined financial data.
Notes To Unaudited Pro Forma Combined Financial Information a. The Pro Forma Combined Balance Sheet has been prepared to reflect the acquisition of Memtec under the purchase method of accounting. Including transaction costs estimated at approximately $13.0 million, the equity purchase price for Memtec was approximately $399.6 million in cash. The estimated net book value, as adjusted, of Memtec and the estimated fair value of its net assets as of the closing date is assumed to be $168.4 million. The purchase price was allocated to the assets of Memtec based on their estimated respective fair value. In connection with the acquisition of Memtec, the Company acquired certain in-process research and development projects that had not reached technological feasibility and that had no alternative future uses. Such projects were valued using a risk adjusted cash flow model under which expected future cash flows were discounted, taking into account risks related to existing and future markets and assessments of the life expectancy of such projects. The estimated value of such in-process research and development projects was $231.2 million at September 30, 1997 ($299.5 million at the closing date of December 9, 1997) and was recorded as a charge to retained earnings in the accompanying Pro Forma Combined Balance Sheet. The Pro Forma Combined Balance Sheet has been prepared to reflect the acquisition of Kinetics under the pooling of interests method of accounting. The Company acquired all of the outstanding capital stock of Kinetics in exchange for 5,803,803 shares of the Company's Common Stock (0.5824 shares of the Company's Common Stock for each outstanding share of Kinetics common stock). Pursuant to the pooling of interest method of accounting, the recorded assets and liabilities of each of the Company and Kinetics have been recorded as the assets and liabilities of the combined entity. The Pro Forma Combined Balance Sheet has been adjusted as follows: (i) To eliminate the recorded investment in Memtec of $11.2 million for the purchase of Memtec shares prior to the Memtec Offer. (ii) To record the incurrence of $388.4 million of indebtedness under the Senior Credit Facility with an assumed effective interest rate of 5.92%. Such indebtedness was incurred to fund the purchase of a portion of the Memtec Shares and to pay certain related fees and expenses. (iii) To reflect the conversion of Kinetics preferred stock into Kinetics common stock. Such conversion increased Kinetics common equity account and additional paid-in capital account by $50,000 and $10.0 million, respectively. (iv) To eliminate the equity of Memtec. (v) To record the impact on retained earnings for the charge of $231.2 million related to the purchase of in-process research and development projects. b. For the fiscal year ended March 31, 1997, the historical results of operations of Memtec reflects its operations for the twelve months ended June 30, 1997 and the historical results of operations of Kinetics reflects its operations for the twelve months ended September 30, 1997. The pro forma data for the six months ended September 30, 1997 combines the results of each of the Company, Memtec and Kinetics for such six month period. The Pro Forma Combined Statements of Operations give effect to the following adjustments:
Fiscal Year Ended Six Months Ended March 31, 1997 September 30, 1997 (in thousands) (i) To adjust interest expense related to indebtedness of $388.4 million incurred under the Senior Credit Facility to finance the acquisition of a portion of the Memtec Shares and to pay certain related fees and expenses. Interest on such indebtedness is assumed to be at an effective rate of 5.92% per annum $ (22,991) $ (11,496) ========= ========= (ii) To adjust the provision for income taxes to reflect the income tax effect of the pro forma adjustments $ (6,323) $ (3,690) ========= =========
c. During the fiscal year ended March 31, 1997, the Company recorded merger expenses of $5.6 million related to the acquisition of Davis Water & Waste Industries, Inc. ("Davis"). Such expenses consisted primarily of investment banking fees, printing fees, stock transfer fees, legal fees, accounting fees, governmental filing fees and certain other costs related to existing Davis pension plans and change of control payments. During the fiscal year ended June 30, 1997 and the six months ended September 30, 1997, Memtec recorded restructuring expenses of $1.7 million and $2.7 million, respectively. Such restructuring expenses related to employee terminations and asset write-downs at Memtec's French operations. The restructuring was performed to focus Memtec's French operations on global brands and away from non-core businesses. During the fiscal year ended September 30, 1997 and the six months ended September 30, 1997, Kinetics recorded non-recurring charges of $32.8 million and $17.3 million, respectively. During the fiscal year ended September 30, 1997, Kinetics recorded in cost of sales non-recurring charges of $26.0 million related to certain unreimbursed project costs, $24.8 million of which were for Asian-based customers including $20.0 million for a single project for an Asian-based customer. Additional non-recurring charges during the fiscal year ended September 30, 1997 of $6.8 million were included in Kinetics' selling, general and administrative expenses. These charges related to increases in Kinetics allowance for doubtful accounts, the write- off of certain receivables, the write-down of certain assets and the establishment of certain accruals. During the six months ended September 30, 1997, Kinetics recorded in cost of sales non-recurring charges of $13.7 million related to unreimbursed project costs, $13.4 million of which were for Asian-based customers including $10.3 million for a single project for an Asian based customer. Additionally, during the six months ended September 30, 1997, Kinetics recorded non-recurring charges in selling, general and administrative expenses of $3.6 million related to increases in Kinetics allowance for doubtful accounts, the write-off of certain receivables, the write-down of certain assets and the establishment of certain accruals. Excluding the effects of each of the charges identified above, gross profit, operating income, net income and net income per common share for the fiscal year ended March 31, 1997 and the six months ended September 30, 1997 would have been: Pro Forma ---------------------------- (in thousands, except per share data) Fiscal Year Ended March 31, 1997: Gross Profit $501,769 Operating income 119,706 Net income 50,746 Net income per common share 0.77 Fiscal Year Ended March 31, 1997: Gross Profit $403,102 Operating income 102,682 Net income 45,369 Net income per common share 0.51 EX-23.1 2 CONSENT OF KPMG PEAT MARWICK LLP EXHIBIT 23.1 CONSENT OF INDEPENDENT AUDITORS To the Board of Directors and Shareholders of United States Filter Corporation: We consent to the incorporation by reference on Form 8-K/A dated January 16, 1998 of United States Filter Corporation of our report dated June 6, 1997, relating to the consolidated balance sheets of United States Filter Corporation as of March 31, 1996 and 1997, and the related consolidated statements of income, shareholders' equity and cash flows for each of the years in the three- year period ended March 31, 1997, which report appears in the Annual Report Form 10-K of United States Filter Corporation for the fiscal year ended March 31, 1997. /s/ KPMG PEAT MARWICK LLP KPMG PEAT MARWICK LLP Orange County, California March 3, 1998 EX-23.2 3 CONSENT OF PRICE WATERHOUSE EXHIBIT 23.2 CONSENT OF PRICE WATERHOUSE We hereby consent to the incorporation by reference in this Form 8-K/A of United States Filter Corporation of our report dated September 25, 1997 relating to the consolidated balance sheets of Memtec Limited at June 30, 1997 and 1996 and the related consolidated statements of income, cash flows and of shareholder's equity for each of the three years in the period ended June 30, 1997, which appears on page F-2 of the Form 8-K/A of United States Filter Corporation dated February 6, 1998. /s/ PRICE WATERHOUSE Price Waterhouse Sydney March 4, 1998 EX-23.3 4 CONSENT OF ERNST & YOUNG LLP EXHIBIT 23.3 Consent of Ernst & Young LLP We consent to the incorporation by reference in the Current Reports on Form 8-K/A dated December 9, 1997 and January 16, 1998, as amended effective March 4, 1998, of United States Filter Corporation of our report dated January 16, 1998, with respect to the financial statements of The Kinetics Group, Inc. included in the Current Report on Form 8-K/A dated February 6, 1998 of United States Filter Corporation, filed with the Securities and Exchange Commission. /s/ ERNST & YOUNG, LLP ERNST & YOUNG, LLP Walnut Creek, California March 3, 1998 -----END PRIVACY-ENHANCED MESSAGE-----