-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, bZxiSMLIM+9o356l4H0eNh8H13uq98X2dCA1Lv7JfbQC+xmWn8jl7GgYJ/ZZNKTI Ac+YxbbSc4GYDHDYzkufhw== 0000037912-94-000032.txt : 19940803 0000037912-94-000032.hdr.sgml : 19940803 ACCESSION NUMBER: 0000037912-94-000032 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19940618 FILED AS OF DATE: 19940729 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FOOD LION INC CENTRAL INDEX KEY: 0000037912 STANDARD INDUSTRIAL CLASSIFICATION: 5411 IRS NUMBER: 560660192 STATE OF INCORPORATION: NC FISCAL YEAR END: 1228 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-06080 FILM NUMBER: 94540913 BUSINESS ADDRESS: STREET 1: P O BOX 1330 STREET 2: 2110 EXECUTIVE DR CITY: SALISBURY STATE: NC ZIP: 28145 BUSINESS PHONE: 7046338250 MAIL ADDRESS: STREET 1: P O BOX 1330 STREET 2: 2110 EXECUTIVE DR CITY: SALISBURY STATE: NC ZIP: 28145 FORMER COMPANY: FORMER CONFORMED NAME: FOOD TOWN STORES INC DATE OF NAME CHANGE: 19830510 10-Q 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 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 June 18, 1994 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 0-6080 FOOD LION, INC. (Exact name of registrant as specified in its charter) NORTH CAROLINA 56-0660192 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) P.O. Box 1330, 2110 Executive Drive Salisbury, NC 28145-1330 (Address of principal executive office) (Zip Code) (704) 633-8250 (Registrant's telephone number) 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 and (2) has been subject to such filing requirements for the past 90 days. Yes X No Outstanding shares of common stock of the Registrant as of July 22, 1994. Class A Common Stock 244,135,824 Class B Common Stock 239,571,114 Page 1 of 17 The Exhibit index is located on page 16. FOOD LION, INC. INDEX TO FORM 10-Q JUNE 18, 1994 PAGE NUMBER Part I. FINANCIAL INFORMATION Item 1. Financial Statements Statements of Income for the 12 and 24 weeks ended June 18, 1994 and June 19, 1993 3 Balance sheets as of June 18, 1994, January 1, 1994 and June 19, 1993 4 Statements of Cash Flows for the 24 weeks ended June 18, 1994 and June 19,1993 5 Notes to Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 7-11 Part II. OTHER INFORMATION Item 1. Legal Proceedings 12 Item 2. Changes in Securities 13 Item 3. Defaults Upon Senior Securities 13 Item 4. Submission of Matters to a Vote of Security 13-14 Holders Item 5. Other Information 14 Item 6. Exhibits and Reports on Form 8-K 14 Signatures 15 Exhibit Index 16 -2- PART I. FINANCIAL INFORMATION Item I. Financial Statements FOOD LION, INC. STATEMENTS OF INCOME (Unaudited) For the 12 Weeks ended June 18, 1994 and June 19, 1993 (Dollars in thousands except per share data)
June 18, 1994 June 19, 1993 12 WEEKS (A) (B) (A) (B) % % Net sales $1,821,905 $1,749,923 100.00 100.00 Cost of goods sold 1,452,105 1,406,087 79.70 80.35 Gross profit 369,800 343,836 20.30 19.65 Selling and administrative expenses 259,659 245,138 14.25 14.01 Interest expense 21,116 15,997 1.16 0.92 Depreciation 31,500 32,632 1.73 1.86 312,275 293,767 17.14 16.79 Income before income taxes 57,525 50,069 3.16 2.86 Provision for income taxes 22,725 19,376 1.25 1.11 Net income $ 34,800 $ 30,693 1.91 1.75 Earnings per share $ .07 $ .06 Dividends per share $ .02 $ .02 Weighted average number of shares outstanding Class A 244,135,824 244,130,202 Class B 239,571,114 239,571,114 Total 483,706,938 483,701,316
-3- PART I. FINANCIAL INFORMATION Item I. Financial Statements FOOD LION, INC. STATEMENTS OF INCOME (Unaudited) For the 24 Weeks ended June 18, 1994 and June 19, 1993 (Dollars in thousands except per share data)
June 18, 1994 June 19, 1993 24 WEEKS (C) (D) (C) (D) % % Net sales $3,625,927 $3,406,748 100.00 100.00 Cost of goods sold 2,892,917 2,746,837 79.78 80.63 Gross profit 733,010 659,911 20.22 19.37 Selling and administrative expenses 517,182 477,236 14.26 14.01 Interest expense 41,668 32,268 1.15 0.95 Depreciation 65,144 64,582 1.80 1.89 623,994 574,086 17.21 16.85 Income before income taxes 109,016 85,825 3.01 2.52 Provision for income taxes 43,060 33,214 1.19 0.98 Net income $ 65,956 $ 52,611 1.82 1.54 Earnings per share $ .14 $ .11 Dividends per share $ .04 $ .04 Weighted average number of shares outstanding Class A 244,135,787 244,127,563 Class B 239,571,114 239,571,114 Total 483,706,901 483,698,677
-3a- FOOD LION, INC. BALANCE SHEETS (Dollars in thousands) (Unaudited)
June 18, 1994 January 1, 1994 June 19, 1993 Assets Current assets: Cash and cash equivalents $ 260,201 $ 46,066 $ 149,244 Receivables 93,719 109,952 95,543 Inventories 797,520 929,138 861,670 Prepaid expenses and other 55,617 54,316 49,844 Total current assets 1,207,057 1,139,472 1,156,301 Property, at cost, less accumulated depreciation 1,328,189 1,364,211 1,413,042 Total assets $2,535,246 $2,503,683 $2,569,343 Liabilities and Shareholders' Equity Current Liabilities: Notes payable $ 10,007 $ 45,000 Accounts payable, trade $ 351,194 346,799 322,214 Accrued expenses 244,643 241,187 262,796 Long-term debt - current 97 183 329 Capital lease obligations - current 7,435 7,108 5,551 Other liabilities - current 3,307 3,880 282 Income taxes payable 8,469 10,107 10,936 Total current liabilities 615,145 619,271 647,108 Long-term debt 569,300 569,350 569,761 Capital lease obligations 295,335 301,541 267,083 Deferred income taxes 36,587 36,587 89,018 Deferred compensation 544 571 1,724 Other liabilities 55,847 58,809 7,301 Total liabilities 1,572,758 1,586,129 1,581,995 Shareholders' Equity: Class A non-voting common stock, $.50 par value 122,068 122,066 122,065 Class B voting common stock, $.50 par value 119,786 119,786 119,786 Additional capital 309 289 282 Retained earnings 720,325 675,413 745,215 Total shareholders' equity 962,488 917,554 987,348 Total liabilities and shareholders' equity $2,535,246 $2,503,683 $2,569,343
-4- FOOD LION, INC. STATEMENTS OF CASH FLOWS (Unaudited) For the 24 Weeks ended June 18, 1994 and June 19, 1993 (Dollars in thousands)
24 Weeks June 18, 1994 June 19, 1993 Cash flows from operating activities Net income $ 65,956 $ 52,611 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 65,144 64,582 Loss on disposals of property 153 8 Changes in operating assets and liabilities: Receivables 16,233 444 Inventories 131,618 34,715 Prepaid expenses and other ( 1,301) 1,410 Accounts payable and accrued expenses 6,419 64,166 Income taxes payable ( 1,638) 10,936 Deferred income taxes 0 4,950 Deferred compensation ( 27) 0 Other liabilities ( 3,535) ( 247) Total adjustments 213,066 180,964 Net cash provided by operating activities 279,022 233,575 Cash flows from investing activities Proceeds from disposal of property 1,875 307 Capital expenditures ( 32,042) ( 80,061) Net cash used in investing activities ( 30,167) ( 79,754) Cash flows from financing activities Net payments under short-term borrowings ( 10,007) ( 414,750) Principal payments under capital lease obligations( 3,555) ( 2,796) Principal payments on long-term debt ( 136) ( 172) Proceeds from issuance of common stock 22 61 Proceeds from issuance of long-term debt 0 329,000 Dividends paid ( 21,044) ( 21,043) Net cash used in financing activities ( 34,720) ( 109,700) Net increase (decrease) in cash and cash equivalents 214,135 ( 44,121) Cash and cash equivalents at beginning of period 46,066 105,123 Cash and cash equivalents at end of period $260,201 $149,244
-5- Notes to Financial Statements (Dollars in thousands) 1) Basis of Presentation: The accompanying financial statements are presented in accordance with the requirements of Form 10-Q and, consequently, do not include all the disclosures normally required by generally accepted accounting principles or those normally made in the Annual Report on Form 10-K of Food Lion, Inc. (the "Company"). Accordingly, the reader of this Form 10-Q should refer to the Company's Form 10-K for the year ended January 1, 1994 for further information. The financial information has been prepared in accordance with the Company's customary accounting practices and has not been audited. In the opinion of management, the financial information includes all adjustments consisting of normal recurring accruals necessary for a fair presentation of interim results. 2) Supplemental Disclosure of Cash Flow Information: Cash paid during the period for: June 18, 1994 June 19, 1993 Interest (net of amounts $39,487 $31,751 capitalized)* Income taxes 44,616 21,408 *Interest capitalized 389 1,805 Capital lease obligations of $14,545 and $24,686 were incurred in the 24 week period of 1994 and 1993, respectively. Capital lease retirements of $16,869 and $0 were recorded in the 24 week period of 1994 and 1993, respectively. The Company considers all highly liquid investment instruments purchased with an original maturity of three months or less to be cash equivalents. -6- Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. RESULTS OF OPERATIONS (12 and 24 weeks ended June 18, 1994 compared to 12 and 24 weeks ended June 19, 1993) Net sales increased 4.1% and 6.4% for the quarter and year to date, respectively. Same store sales (including all comparable stores) increased 2.8% and 2.9% for the second quarter and year to date, respectively. Same store sales, excluding sales for the 84 closed stores, increased 2.8% for the quarter and 3.1% year to date. As of the second quarter, the Company completed the first phase of its 1994-95 business plan, by closing 84 underperforming stores. During the fourth quarter of 1993, Food Lion established a pre-tax charge against 1993 earnings of $170.5 million to cover management's best estimate of the costs associated with these store closings. These costs include the write-down of store assets ($87.1 million) to reflect estimated realizable values, the unrealizable portion of the present value of remaining rent payments on leased stores ($55.1 million), and other costs associated with the store closings such as legal expenses, relocation expenses and costs to store and transfer reusable equipment ($28.3 million). In estimating the store closing reserve related to the store properties, the Company considered many factors including individual market conditions, competitive activity, Food Lion's history of successfully disposing idle properties, the market knowledge of its real estate experts and the recommendations of an independent consultant engaged to evaluate the fair value of the specific properties involved. The discount rate used to measure the present value of remaining rent payments on leased stores was 8%, representing the Company's incremental borrowing rate. After computing the present value of the remaining lease payments the Company, in conjunction with independent consultants, estimated that 37% of this obligation would be realizable through sublease activities, early lease terminations and lease assignment opportunities. As a result, a charge of $55.1 was calculated representing the estimated unrealizable portion of this lease obligation. Actual rent payments for the closed stores that are leased will be made during the years 1994 through 2017 (actual remaining lease terms) or until successful lease termination or lease assignment is arranged. The interest portion of these rent payments will be charged to earnings as incurred each year during the remaining lease terms. Additional cash outlays related to the store closing charge will be the "other costs" ($28.3 million) previously described above. -7- The decision to close stores comes as part of Food Lion's on-going review of individual profitability. By closing unprofitable stores, the Company eliminates the operating losses of these stores which enhances future profits. During 1993 the Company recorded approximately $30 million in annual pre-tax losses attributable to these stores that will not recur in future years. Because these stores were scheduled to close throughout the first two quarters of 1994, the Company will not recognize the total annual benefit of these store closings until 1995. The 1994-1195 business plan also includes opening new stores and renovating existing stores. During 1994, Food Lion plans to open 30-35 new stores, down from an earlier projection of around 40 new stores due primarily to delays in construction. The Company is on track to complete around 60 renovations to existing stores during 1994. During the first half of 1994, Food Lion opened 13 new stores, replaced two older stores with new Food Lion locations, completed renovations to existing stores and closed 84 unprofitable stores. The second year of the Company's 1994-1995 business plan calls for opening an additional 40 new stores and renovating between 100 and 120 existing locations. The Company's gross profit margins increased 0.65% and 0.85%, for the quarter and year to date, respectively, as compared to the same periods in 1993. The improvement over last year is primarily due to an increase in customer traffic in the meat department, which generates a higher profit margin. In addition, last years gross profit margins were lower, due to heavy promotional activity in the early months of 1993 designed to increase customer traffic and sales. Although at the end of the second quarter of 1994, the level of promotional activity has decreased as compared to a year ago, the Company continues promotional activity that is greater than historical levels. Currently, promotional activity is designed to specifically target certain geographic areas in an effort to increase sales and profits in these areas. For the quarter and year to date, Selling and Administrative Expenses increased 0.24% of sales and 0.25% of sales, respectively. Primary contributors to this increase are store salaries, store benefits and increased Workers' Compensation reserves, and increases in store operating expenses such as utilities and general maintenance and repair expenses. Over the past few quarters, Food Lion has accelerated some routine store maintenance and repair efforts, based on suggestions received from customers, in order to better ensure superior store conditions and excellent customer service. In addition, the Company has incurred an increase in advertising, legal and public relations costs associated with addressing continuing tactics from the United Food and Commercial Workers Union Internationals' -8- "Corporate Campaign" to discredit or damage Food Lion's credibility. Store benefits include expenses for the Company's profit sharing plan. The Company has a non-contributory profit sharing plan covering all employees. Contributions to the profit sharing plan are made at the discretion of the Board of Directors. Historically, the Company has contributed 15% of the wages of eligible employees on an annual basis. In light of decreased profits for the 1993 fiscal year, the Board of Directors approved a contribution equal to 10% of 1993 wages. This contribution totaled $62.2 million. The 1993 contribution was 24% lower than the 1992 contribution. Although the contribution was higher in terms of percentage of income before taxes, in an effort to recognize the performance of the Company's employees in 1993, the Board did not believe a further reduction would be prudent for 1993. The 1993 profit sharing contribution had no effect on dividends paid to the Company's shareholders, and future dividend payments will not be affected by future profit sharing contributions. The 1994 profit sharing contribution will not be determined until the 1994 results have been finalized and evaluated. Although the Company anticipates some continued pressure on expenses over the next several months, Food Lion expects expenses as a percentage of sales to decrease during 1994. Interest expense increased 0.24% of sales during the second quarter of 1994 and 0.20% of sales year to date primarily due to a higher interest rate on long-term financing that replaced short- term borrowings outstanding during the second quarter of 1993. In addition, interest increased due to the amortization of rent obligations on the 1994 store closings and lower capitalized interest resulting from a decrease in construction. Depreciation decreased 0.13% and 0.09% for the quarter and year to date, respectively. The decrease is due to a higher sales base available this year over last year to absorb fixed costs, as well as, fewer store openings and additional store closings through the second quarter of 1994. Liquidity and Capital Resources Cash provided by operating activities totaled $279.0 million for the 24 weeks ended June 18, 1994 compared with $233.6 for the same period last year. This increase is primarily due to a decrease in inventory resulting from improved inventory management, offset partially by a decrease in accrued expenses. This decrease in accrued expenses is primarily due to the funding of the Company's -9- 1993 profit sharing plan contribution during the first quarter. Historically, the Company's profit sharing plan contribution has been funded in September of each year. Capital expenditures totaled $32.0 million for the 24 weeks ended June 18, 1994 compared with $80.1 million for the same period in 1993. This decrease is primarily due to fewer new store openings coupled with an increased focus on less costly renovations to existing stores. As discussed above, the Company's 1994-1995 business plan calls for opening approximately 30-35 new stores and renovating an estimated 60 existing locations. As of the second quarter of 1994, 13 new stores were opened, two older stores were replaced with new Food Lion locations, and renovations to 16 existing stores were completed. The majority of the new store openings will be opened under conventional leasing arrangements, therefore the impact on liquidity of owning stores will be insignificant. Significant cash capital expenditures currently estimated for the remainder of 1994 is as follows: Store renovations and new store openings $40 million Distribution Center expansion $ 4 million Land costs $ 7 million For the foreseeable future, the Company's cash capital expenditures will be financed through funds generated from Operations and with existing bank and credit lines, along with other debt, if necessary. Also, during the second quarter of 1994, Food Lion closed the remaining 30 of the 84 unprofitable stores scheduled to close during 1994. The Company established a $170.5 million reserve in the fourth quarter of 1993 to cover the costs to close the 84 stores; therefore, Food Lion does not expect a significant impact on liquidity in 1994 resulting from these store closings. The Company will consider the possibility of sale-leaseback transactions on certain free-standing, company owned stores in the future if advantageous opportunities are presented by potential lessors. The Company maintains the following bank and credit lines: $250 million commercial paper program which is outlined in the table below: -10- Commercial Paper Program (Dollars in millions) 1994 1993 Outstanding borrowings at end of second quarter $ 0 $ 30.0 Average borrowings 0 85.3 Maximum amount outstanding 0 100.0 Daily weighted average interest rate N/A 3.25% A renewable 364-day credit facility with a syndicate of commercial banks providing $300 million in formal lines of credit. There were no borrowings against these lines during the second quarter or as of June 18, 1994. Additional short-term lines of credit totaling $43 million. These lines of credit are available when needed. The Company is not required to maintain compensating balances and borrowings may occur periodically. The Company had no borrowings under these lines during the second quarter or as of June 18, 1994. Periodic short-term borrowings under informal credit arrangements, which are available to the Company at the discretion of the lender (see table below): Informal Credit Arrangements (Dollars in millions) 1994 1993 Outstanding borrowings at end of second quarter $ 0 $ 5.0 Average borrowings 0 121.3 Maximum amount outstanding 0 203.6 Daily weighted average interest rate N/A 3.40% -11- Part II OTHER INFORMATION Item 1. Legal Proceedings The Company has had no significant developments related to legal matters since the Item 3. disclosure previously included in the Company's Form 10-K filed on March 31, 1994, other than discussed below: On February 16, 1994, plaintiff Sarah Bullock, an African-American female filed a motion to amend her federal district court complaint in Bullock v. Food Lion, Inc. No. 93-CV-51-ATH (M.D. Ga.), a pending individual plaintiff suit in which Ms. Bullock alleges that she was denied a promotion and discharged because of her race, by adding 10 named additional plaintiffs and company- wide class action allegations of race discrimination in violation of Title VII of the Civil Rights Act of 1964 and 42 U.S.C. 1981. By order dated May 4, 1994, the court denied plaintiff's motion to amend seeking class certification. The individual claim of the original party was settled shortly thereafter, thereby terminating the Bullock action. The ten plaintiffs who unsuccessfully sought to join the Bullock action and three additional plaintiffs subsequently filed an action on May 19, 1994 in the United States District Court for the Eastern District of Virginia styled Sutton, et al. v. Food Lion, Inc., Civil Action No. 3:94CV322 (E.D. Va.). The complaint alleges a pattern and practice of discrimination in hiring, promotions, discipline, discharge, allocation of hours, awarding full-time status, and wages. The amended complaint seeks certification of a class defined as all past and present black employees at Food Lion and all black applicants for employment, and seeks remedies including broad injunctive relief, monetary damages, reasonable attorneys' fees, and expenses. No motion for class certification has yet to be filed, no class has been certified and the plaintiffs have not yet specified an amount of monetary damages alleged to have been suffered by the class. While at this time the Company cannot evaluate the consequences of an adverse judgment, the Company intends to vigorously defend this action. -12- Item 2. Change in Securities This item is not applicable. Item 3. Defaults Upon Senior Securities This item is not applicable. Item 4. Submission of Matters to a Vote of Security Holders (a). The Company held its Annual Meeting of Shareholders on May 5, 1994. (b). Not applicable. (c). Matters voted upon at the meeting: Election of Directors Broker For Witheld Non-Votes Pierre Olivier Beckers 203,730,536 529,657 35,310,921 Dan A. Boone 203,705,338 554,855 35,310,921 Jacqueline Kelly Callomore 203,559,316 700,877 35,310,921 William G. Ferguson 203,570,976 689,217 35,310,921 Dr. Bernard W. Franklin 202,802,693 1,457,500 35,310,921 E. Charles De Cooman D'Herlinckhove 203,741,043 519,150 35,310,921 Gui De Vaucleroy 203,745,135 515,058 35,310,921 Jacques LeClercq 203,740,909 519,284 35,310,921 Tom E. Smith 203,431,220 828,973 35,310,921 John P. Watkins 203,735,466 524,727 35,310,921 -13- Appointment of Independent Accountants For Against Abstain Broker Non- Votes Coopers & Lybrand 203,975,419 168,246 116,528 35,310,921 Amendment of 1991 Employee Stock Option Plan For Against Abstain Broker Non-Votes 194,398,367 4,303,150 5,558,676 35,310,921 Shareholder proposal for the Disclosure of Profit Sharing balances of Key Executives For Against Abstain Broker Non Votes 13,072,405 168,152,375 4,291,188 54,055,146 (a). Not applicable. Item 5. Other Information This item is not applicable. Item 6. Exhibits and Reports on Form 8-K (a). Exhibits 11-Computation of Earnings per Share. (b). The Company did not file a report on Form 8-K for the period ended June 18, 1994. -14- 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. FOOD LION, INC. Registrant DATE BY: Carol M. Herndon Corporate Controller Principal Accounting Officer -15- EXHIBIT INDEX SEQ. PAGE EXHIBIT # DESCRIPTION NO. 11 Computation of Earnings per Share 17 -16- EX-11 2 Exhibit 11 COMPUTATION OF EARNINGS PER SHARE (Amounts in thousands except per share amounts) June 18, 1994 June 19, 1993 PRIMARY NET INCOME $ 65,956 $ 52,611 WEIGHTED AVERAGE COMMON SHARES AND OTHER COMMON STOCK EQUIVALENTS: COMMON STOCK OUTSTANDING 483,707 483,699 STOCK OPTIONS 0 0 483,707 483,699 (*) SHARES USED IN COMPUTATION 483,707 483,699 PRIMARY EARNINGS PER SHARE $ .1364 $ .1088 FULLY DILUTED NET INCOME $ 65,956 $ 52,611 ELIMINATION OF INTEREST EXPENSE, NET OF RELATED TAX EFFECT, APPLICABLE TO 5% CONVERTIBLE SUBORDINATED DEBENTURES DUE 2003 1,614 48 ADJUSTED INCOME APPLICABLE TO COMMON STOCK $ 67,570 $ 52,659 WEIGHTED AVERAGE COMMON SHARES AND OTHER COMMON STOCK EQUIVALENTS: COMMON STOCK OUTSTANDING 483,707 483,699 STOCK OPTIONS 15 0 SHARES ISSUABLE UPON CONVERSION OF 5% CONVERTIBLE SUBORDINATED DEBENTURES DUE 2003 (AS OF DATE OF ISSUE 14,557 607 JUNE 14, 1993) 498,279 484,306 (*) SHARES USED IN COMPUTATION 498,279 484,306 FULLY DILUTED EARNINGS PER SHARE $ .1356 $ .1087 (*)Note: Dilution is less than 3%. Therefore, common stock equivalents have been excluded from the total weighted average common shares. -17- -----END PRIVACY-ENHANCED MESSAGE-----