-----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, Pqa5rYgzOvL8Ng8a/2oNIwezIVg46EGoVkJ6QnNXJ+USnNdU4AAUGzxVjblW8fAb hU8AHzA6UkWgvqja5zRN1Q== 0000831967-96-000010.txt : 19960514 0000831967-96-000010.hdr.sgml : 19960514 ACCESSION NUMBER: 0000831967-96-000010 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960513 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: KINETIC CONCEPTS INC /TX/ CENTRAL INDEX KEY: 0000831967 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS FURNITURE & FIXTURES [2590] IRS NUMBER: 741891727 STATE OF INCORPORATION: TX FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-09913 FILM NUMBER: 96562139 BUSINESS ADDRESS: STREET 1: 8023 VANTAGE DR CITY: SAN ANTONIO STATE: TX ZIP: 78230 BUSINESS PHONE: 2103083993 MAIL ADDRESS: STREET 1: P. 0. B0X 659508 CITY: SAN ANTONIO STATE: TX ZIP: 78230 10-Q 1 14 of 14 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly period ended March 31, 1996 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 1-9913 KINETIC CONCEPTS, INC. (Exact name of registrant as specified in its charter) Texas 74-1891727 (State of Incorporation) (I.R.S. Employer Identification No.) 8023 Vantage Drive San Antonio, Texas 78230 (210) 524-9000 (Address of principal executive (Registrant's phone number) offices and zip 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: 44,319,981 shares as of March 31, 1996 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS KINETIC CONCEPTS, INC. AND SUBSIDIARIES Condensed Consolidated Balance Sheets (in thousands) March 31, December 31, 1996 1995 --------- ------------ (unaudited) ASSETS Current assets: Cash and cash equivalents $ 65,107 $ 52,399 Accounts receivable, net 58,469 56,032 Inventories 19,633 18,854 Note receivable from principal shareholder -- 10,291 Prepaid expenses and other 7,169 4,865 -------- -------- Total current assets 150,378 142,441 -------- -------- Net property, plant and equipment 64,195 62,276 Other notes receivable, net 3,187 3,187 Goodwill, less accumulated amortization of $10,950 in 1996 and $10,625 in 1995 13,847 13,968 Other assets, less accumulated amortization of $5,525 in 1996 and $5,638 in 1995 22,802 21,854 -------- -------- $254,409 $243,726 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 4,172 $ 2,512 Accrued expenses 25,862 26,490 Income tax payable 7,956 4,026 -------- -------- Total current liabilities 37,990 33,028 -------- -------- Deferred income taxes, net 661 374 -------- -------- 38,651 33,402 -------- -------- Shareholders' equity: Common stock; issued and outstanding 45,967 in 1996 and 44,331 in 1995 44 44 Additional paid-in capital 11,103 12,123 Retained earnings 204,330 197,290 Cumulative foreign currency translation adjustment 636 1,052 Notes receivable from officers (355) (185) -------- ------- 215,758 210,324 -------- ------- $254,409 $243,726 ======== ======== See accompanying notes to condensed consolidated financial statements. ITEM 1. FINANCIAL STATEMENTS (CONTINUED) - ----------------------------------------- KINETIC CONCEPTS, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Earnings (in thousands, except per share data) (unaudited) Three months ended March 31, -------------------- 1996 1995 -------- --------- Revenue: Rental and service $ 56,790 $ 48,422 Sales and other 10,797 8,605 -------- -------- Total revenue 67,587 57,027 Rental expenses 37,246 33,427 Cost of goods sold 4,043 3,916 -------- -------- 41,289 37,343 -------- -------- Gross profit 26,298 19,684 Selling, general and administrative expenses 12,557 10,107 -------- -------- Operating earnings 13,741 9,577 Net interest income, 970 533 -------- -------- Earnings before income taxes 14,711 10,110 Income taxes 5,897 4,012 -------- -------- Net earnings $ 8,814 $ 6,098 ======== ======== Earnings per common and common equivalent share $ 0.19 $ 0.14 ======== ======== Shares used in earnings per share computations.... 45,967 45,115 ======== ======== See accompanying notes to condensed consolidated financial statements. ITEM 1. FINANCIAL STATEMENTS (CONTINUED) KINETIC CONCEPTS, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flows (in thousands) (unaudited) Three months ended ------------------ March 31, ------------------ 1996 1995 -------- -------- Cash flows from operating activities: Net earnings $ 8,814 $ 6,098 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 5,476 5,814 Provision for uncollectible accounts receivable 408 (48) Change in assets and liabilities: Decrease (increase) in accounts receivable, net (2,920) 1,115 Decrease (increase) in notes receivable -- 2,489 Decrease (increase) in inventory ( 831) (1,349) Decrease (increase) in prepaid and other assets (2,304) (782) Increase (decrease) in accounts payable 1,633 1,508 Increase (decrease) in accrued expenses (670) (3,054) Increase (decrease) in income taxes payable 4,333 656 Increase (decrease) in deferred income taxes (116) 173 ------- ------- Net cash provided by operating activities 13,823 12,620 ------- ------- Cash flows from investing activities: Additions to property, plant and equipment (6,798) (4,427) Decrease (increase) in inventory to be converted into equipment for short-term rental (750) (3,750) Dispositions of property, plant and equipment 250 185 Decrease in note receivable from principal shareholder 10,000 -- Decrease in finance lease receivables -- 158 Increase in other assets (801) -- ------- ------- Net cash provided (used) by investing activities 1,901 (7,834) ------- ------- Cash flows from financing activities: Borrowings (repayments) of notes payable and long-term obligations -- (296) Repayments of capital lease obligations -- (119) Proceeds from the exercise of stock options 1,141 1,043 Purchase and retirement of treasury stock (2,331) -- Cash dividends paid to shareholders (1,666) (1,649) ------- ------- Net cash used by financing activities (2,856) (1,021) ------- ------- Effect of exchange rate changes on cash and cash equivalents (160) 504 ------- ------- Net increase in cash and cash equivalents 12,708 4,269 Cash and cash equivalents, beginning of year 52,399 43,241 ------- ------- Cash and cash equivalents, end of year $65,107 $47,510 ======= ======= Supplemental disclosure of cash flow information: Cash paid during the first three months for: Interest $ 64 $ 210 Income taxes 310 4,048 See accompanying notes to condensed consolidated financial statements ITEM 1. FINANCIAL STATEMENTS (CONTINUED) - ----------------------------------------- KINETIC CONCEPTS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (1) BASIS OF PRESENTATION --------------------- The financial statements presented herein include the accounts of Kinetic Concepts, Inc. and all subsidiaries (the "Company"). The foregoing financial information reflects all adjustments (consisting only of normal recurring adjustments) which are, in the opinion of management, necessary for a fair presentation of the financial position and results of operations for the interim periods presented. Interim period operating results are not necessarily indicative of the results to be expected for the full fiscal year. The financial information presented for the interim periods is unaudited and subject to year-end audit and adjustments. (2) INVENTORY COMPONENTS -------------------- Inventories are stated at the lower of cost (first-in, first- out) or market (net realizable value). Inventories are comprised of the following (in thousands): March 31, December 31, 1996 1995 --------- ------------ Finished goods $ 2,901 $ 2,890 Work in process 2,310 1,040 Raw materials, supplies and parts 20,422 20,174 ------- ------- 25,633 24,104 Less amounts expected to be converted into equipment for short-term rental (6,000) (5,250) ------- ------- Total inventories $19,633 $18,854 ======= ======= (3) NOTES RECEIVABLE ---------------- In August 1995, the Company loaned $10.0 million to James R. Leininger, M.D., the Company's principal shareholder and chairman of the Company's Board of Directors. The note was secured by a Stock Pledge Agreement covering one million shares of common stock in Kinetic Concepts, Inc. Interest accrued on the note at the annual rate of 7.94%. In January 1996, the note receivable and all accrued interest was collected in full. ITEM 1. FINANCIAL STATEMENTS (CONTINUED) - ----------------------------------------- KINETIC CONCEPTS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (4) SHARES USED IN EARNINGS PER COMMON AND -------------------------------------- COMMON EQUIVALENT SHARE COMPUTATIONS ------------------------------------ The weighted average number of common and common equivalent shares used in the computation of earnings per share is as follows (in thousands): Three months ended March 31, ------------------ 1996 1995 -------- ------- Average outstanding common shares 44,320 43,997 Average common equivalent shares - dilutive effect of option shares 1,647 1,118 ------ ------ Shares used in earnings per share computations 45,967 45,115 ====== ====== Earnings per common and common equivalent share are computed by dividing net earnings by the weighted average number of common and dilutive common equivalent shares outstanding during the period. Dilutive common equivalent shares consist of stock options (using the treasury stock method). Earnings per share computed on a fully diluted basis is not presented as it is not significantly different from earnings per share computed on a primary basis. (5) COMMITMENTS AND CONTINGENCIES ----------------------------- The Company is party to several lawsuits generally incidental to its business and is contesting certain adjustments proposed by the Internal Revenue Service to prior years' tax returns. Provisions have been made in the accompanying financial statements for estimated exposures related to these lawsuits and adjustments. In the opinion of management, the disposition of these items will not have a material effect on the Company's financial statements. (6) NEW PRONOUNCEMENTS ------------------ Effective with the first quarter of 1996, the Company has adopted Statement of Financial Accounting Standards No. 121 "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of." Statement 121 requires that long-lived assets and certain identifiable intangibles to be held and used by an entity be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Adoption of this new pronouncement had no effect on the financial statements for the period. During October 1995, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 123 "Accounting for Stock-Based Compensation," effective for fiscal years beginning after December 15, 1995. The new statement allows companies to continue accounting for stock- based compensation under the provisions of APB Opinion 25 "Accounting for Stock Issued to Employees"; however, companies are encouraged to adopt a new accounting method based on the estimated fair value of employee stock options. ITEM 1. FINANCIAL STATEMENTS (CONTINUED) - ----------------------------------------- KINETIC CONCEPTS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Companies that do not follow the new fair value based method will be required to provide expanded disclosures in footnotes to the financial statements. The Company has elected to continue to account for its employee stock compensation plans as prescribed under Opinion 25 and will make the pro forma disclosures of net income and earnings per share required by Statement 123 beginning with its financial statements for the year ended December 31, 1996. Independent Auditors' Report The Board of Directors Kinetic Concepts, Inc.: We have reviewed the condensed consolidated balance sheet of Kinetic Concepts, Inc. and subsidiaries as of March 31, 1996, and the related condensed consolidated statements of earnings for the three month periods ended March 31, 1996 and 1995 and the condensed consolidated statements of cash flows for the three month periods ended March 31, 1996 and 1995. These condensed consolidated financial statements are the responsibility of the Company's management. We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical review procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to the condensed consolidated financial statements referred to above for them to be in conformity with generally accepted accounting principles. We have previously audited, in accordance with generally accepted auditing standards, the consolidated balance sheet of Kinetic Concepts, Inc. and subsidiaries as of December 31, 1995, and the related consolidated statements of earnings, capital accounts, and cash flows for the year then ended (not presented herein); and in our report dated February 6, 1996, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, 1995, is fairly presented, in all material respects, in relation to the consolidated balance sheet from which it has been derived. /s/ KPMG PEAT MARWICK LLP ------------------------- KPMG Peat Marwick LLP San Antonio, Texas April 17, 1996 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - ------------------------------------------------ Results of Operations First Quarter of 1996 Compared to First Quarter of 1995 - ------------------------------------------------------- The following table sets forth, for the periods indicated, the percentage relationship of each item to total revenue as well as the change in each line item as compared to the first quarter of the prior year ($ in thousands): Three Months Ended March 31, ---------------------------- Revenue Increase Relationship (Decrease) ------------ ---------- 1996 1995 $ Pct ---- ---- ------- ---- Revenue: Rental and service 84% 85% $ 8,368 17% Sales and other 16 15 2,192 25 ---- ---- -------- ---- 100% 100% 10,560 19 Rental expenses 55 59 3,819 11 Cost of goods sold 6 7 127 3 ---- ---- -------- ---- Gross profit 39 34 6,614 34 Selling, general and administrative expenses 19 17 2,450 24 ---- ---- -------- ---- Operating earnings 20 17 4,164 43 Net interest (1) (1) 437 82 ---- ---- -------- ---- Earnings before income taxes 22 18 4,601 46 Income taxes 9 7 1,885 47 ---- ---- -------- ---- Net earnings 13% 11% $ 2,716 45% ==== ==== ======== The Company's revenue is derived from four primary markets. The following table sets forth the amount of revenue derived from each of these markets for the periods indicated ($ in millions): Three months ended March 31, ------------------ 1996 1995 ------- ------- Acute/Extended $42.1 $34.3 HomeCare 3.8 3.7 International 17.3 13.7 Medical Devices 4.4 3.7 Other (1) -- 1.6 ------- ------- $67.6 $57.0 ======= ======= (1) Consists of revenue of KCI Financial Services, which was sold by the Company in June 1995. Total revenue in the first quarter of 1996 increased by $10.6 million or 19% to $67.6 million from $57.0 million in the first quarter of 1995. Revenue from the Company's specialty patient surface business was $45.9 million, up $7.9 million or 21% from the first quarter of 1995. This increase was due to new product introductions, primarily the TriaDyne and increased patient days in the nursing home and rehabilitation (extended care) market. Revenue in the Home Care segment increased slightly from the prior-year period, however, patient days were up nearly 30% ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) - ------------------------------------------------------------ from the first three months of 1995. This change in average rental price reflects the Company's shift to an independent dealer network during 1995. The dealer network provides access to a larger patient population, however, revenue received from dealers is less than that which the Company would receive from direct sales because revenue from dealers is net of dealer service expenses. Revenue from the Company's international operations was $17.3 million, up 26% from the first quarter of 1995. Increased market penetration and increased sales contributed towards the higher revenue. Revenue from medical device operations increased 19% to $4.4 million in the first quarter of 1996 due primarily to greater market penetration. Rental expenses were 66% of total rental revenue in the first quarter of 1996 compared to 69% in the first quarter of 1995. This decrease is primarily attributable to the increase in rental revenue, as the majority of rental expenses are relatively fixed, combined with reduced depreciation on the rental fleet. Gross profit increased $6.6 million or 34% to $26.3 million in the first quarter of 1996 from $19.7 million in the first quarter of 1995 due to the increase in revenue as well as the controlled growth in rental expenses. Selling, general and administrative expenses increased $2.5 million, or 24%, to $12.6 million in the first quarter of 1996 from $10.1 million in the first quarter of 1995. As a percentage of total revenue, selling, general and administrative expenses were at 19% in the first quarter of 1996 as compared with 18% in the first quarter of 1995. The increase is due in part to costs associated with certain key investments, e.g. improved marketing and information systems. Operating earnings for the period increased $4.2 million, or 43%, to $13.7 million compared to $9.6 million in the prior-year quarter resulting largely from broad-based revenue growth. Net interest income for the three months ended March 31, 1996 was $1 million compared to $0.5 million in the prior year. This increase was due to interest recognized on the note receivable from Mediq/PRN. Interest on this note is paid quarterly, in arrears, beginning in 1996. The Company's effective income tax rate in the first quarter of 1996 was 40%, consistent with the first quarter of 1995. Net earnings increased $2.7 million, or 45%, to $8.8 million in the first quarter of 1996 from $6.1 million in the first quarter of 1995. This increase was due to the relative decrease in rental expenses, increased net interest income and the change in revenue as discussed above. Financial Condition - ------------------- The change in revenue and expenses experienced by the Company during the first quarter of 1996 and other factors resulted in changes to the Company's balance sheet as follows: ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) - ----------------------------------------------------------- Inventory at March 31, 1996 increased $0.7 million, or 4%, to $19.6 million from $18.9 million at December 31, 1995 primarily due to new product introductions and further market expansion internationally. In late 1995, the Company began operations in both Italy and Sweden. The note receivable from principal shareholder at December 31, 1995 of $10.3 million, including accrued interest, was collected in full during the first quarter. Net property, plant and equipment at March 31, 1996 increased $1.9 million, or 3%, to $64.2 million from $62.3 million at December 31, 1995 due to additions to rental equipment and computer hardware/software in excess of depreciation and dispositions. Capital expenditures were $6.8 million during the first quarter of 1996 as the Company invested in new products for its rental fleet and new computer systems. Accrued expenses at March 31, 1996 decreased $0.6 million, or 2%, to $25.9 million from $26.5 million at December 31, 1995 due primarily to the payment of 1995 management bonuses in the first quarter of 1996. Market Trends - ------------- The health care industry is facing various challenges, including increased pressure on health care providers to control costs, the accelerating migration of patients from acute care facilities into extended care (e.g. skilled nursing facilities and rehabilitation centers) and home care settings, the consolidation of health care providers and national and regional group purchasing organizations and the growing demand for clinically proven and cost effective therapies. In addition, Congress continues to debate federal health care expenditures in an attempt to slow the rate of growth and balance the federal budget. As a result, the Company believes that health care providers will continue to experience heightened cost control pressures. Industry trends including pricing pressures, the consolidation of health care providers and national and regional group purchasing organizations and a shift in market demand toward lower- priced products such as mattress overlays have had the impact of reducing the Company's average daily rental rates on its products. These industry trends, together with the increasing migration of patients from acute care to extended and home care settings have had an effect of reducing the Company's historical revenue from acute care facilities. The Company expects these industry trends to continue. The Company is addressing these trends by increasing its marketing efforts beyond its existing base of more than 1000 acute care hospitals to market to an additional 2000 medium to large hospitals in which the Company has a relatively small presence. The Company further believes that the introductions of the TriaDyne and BariKare beds will enable it to further penetrate this market. More recently, sales have increased as a portion of the Company's revenue. The Company believes this trend will continue because certain U.S. health care providers are purchasing products that are less expensive and easier to maintain such as medial devices, mattress overlays and mattress replacement systems. In addition, international health care providers tend to purchase products more often than U.S. health care providers, and the Company's revenue from international operations represents an increasing portion of the Company's total revenue. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) - ------------------------------------------------------------ Legal Proceedings - ----------------- The Company is party to several lawsuits arising in the ordinary course of its business and is contesting adjustments proposed by the Internal Revenue Service to prior years' tax returns. Provisions have been made in the Company's financial statements for estimated exposures related to these lawsuits and adjustments. See "Item 1. Financial Statements". In the opinion of management, the disposition of these items will not have a material adverse effect on the Company's business, financial condition or results of operations. The manufacturing and marketing of medical products necessarily entails an inherent risk of product liability claims. The Company currently has certain liability claims pending for which provision has been made in the Company's financial statements. Management believes that resolution of these claims will not have a material adverse effect on the Company's business, financial condition or results of operations. The Company has not experienced any significant losses due to product liability claims and currently maintains umbrella liability insurance coverage. Liquidity and Capital Resources - ------------------------------- During the first quarter of 1995, the Company generated net cash provided by operating activities of $13.8 million compared to $12.6 million in the prior year period. At March 31, 1996, cash and cash equivalents totaling $65.1 million were available for general corporate purposes. Additionally, the Company maintains a Credit Agreement with a bank as an agent for itself and certain other financial institutions. The Credit Agreement currently permits borrowings of up to $50.0 million. At March 31, 1996, the entire amount of the Credit Agreement was available. The Company believes that current cash reserves combined with operating cash flows during the next twelve month period will be sufficient to provide for new investments in equipment and any working capital needed during the period. At March 31, 1996, the Company was committed to purchase approximately $700,000 of inventory associated with a new product over the remainder of this year. The Company did not have any other material purchase commitments. PART II - OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) EXHIBITS A list of all exhibits filed or included as part of this quarterly report on Form 10-Q is as follows: EXHIBIT BY REFERENCE DESCRIPTION ------- ------------ ------------ 15 Filed herewith Letter from KPMG Peat Marwick LLP dated April 17, 1996 27 Filed herewith Financial Data Schedule (b) REPORTS ON FORM 8-K No reports on Form 8-K have been filed during the quarter for which this report is filed. 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. KINETIC CONCEPTS, INC. (REGISTRANT) By: /s/ JAMES R. LEININGER, M.D. ----------------------------- James R. Leininger, M.D. Chairman of the Board By: /s/ RAYMOND R. HANNIGAN ------------------------ Raymond R. Hannigan President and Chief Executive Officer By: /s/ BIANCA A. RHODES --------------------- Bianca A. Rhodes Senior Vice President, Chief Financial Officer and Chief Accounting Officer Date: May 14, 1996 EX-15 2 Kinetic Concepts, Inc. San Antonio, Texas Ladies and Gentlemen: Re: Registration Statement on Form 10-Q With respect to the subject registration statement on Form 10Q, we acknowledge our awareness of the use therein of our report dated April 17, 1996 related to our review of interim financial information. Pursuant to Rule 436(c) under the Securities Act of 1933, such report is not considered part of a registration statement prepared or certified by an accountant or a report prepared or certified by an accountant within the meaning of sections 7 and 11 of the Act. Very truly yours, /s/ KPMG PEAT MARWICK LLP ------------------------- KPMG Peat Marwick LLP San Antonio, Texas May 14, 1996 EX-27 3
5 3-MOS DEC-31-1995 MAR-31-1996 65,107,163 0 65,474,388 (7,005,355) 19,632,645 150,378,244 180,948,501 (116,753,288) 254,409,352 37,388,379 0 0 0 44,327 215,713,700 254,409,351 10,796,929 67,587,271 4,042,774 49,803,427 0 398,231 (2,016,088) 14,711,010 5,897,204 8,813,807 0 0 0 8,813,807 0.19 0.19
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