-----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, C3Z25Qn08lgoaFifk3ZtBPJBiEEitenM0VQ6vym4ur7SrB/H5tZh/sBtCcCEYDFX 1WhyG4RTNhw/Xqr/qp+6PA== 0000086312-97-000028.txt : 19971114 0000086312-97-000028.hdr.sgml : 19971114 ACCESSION NUMBER: 0000086312-97-000028 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971112 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ST PAUL COMPANIES INC /MN/ CENTRAL INDEX KEY: 0000086312 STANDARD INDUSTRIAL CLASSIFICATION: FIRE, MARINE & CASUALTY INSURANCE [6331] IRS NUMBER: 410518860 STATE OF INCORPORATION: MN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-10898 FILM NUMBER: 97714699 BUSINESS ADDRESS: STREET 1: 385 WASHINGTON ST CITY: SAINT PAUL STATE: MN ZIP: 55102 BUSINESS PHONE: 6122217911 FORMER COMPANY: FORMER CONFORMED NAME: SAINT PAUL COMPANIES INC DATE OF NAME CHANGE: 19900730 10-Q 1 10-Q 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 September 30, 1997 ------------------ 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 0-3021 ------ THE ST. PAUL COMPANIES, INC. ---------------------------- (Exact name of Registrant as specified in its charter) Minnesota 41-0518860 ------------------------ -------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 385 Washington St., Saint Paul, MN 55102 ---------------------------------- --------- (Address of principal executive (Zip Code) offices) Registrant's telephone number, including area code (612) 310-7911 ------------- Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes X No ------ ------ The number of shares of the Registrant's Common Stock, without par value, outstanding at November 10, 1997, was 83,640,143. THE ST. PAUL COMPANIES, INC. AND SUBSIDIARIES TABLE OF CONTENTS Page No. -------- PART I. FINANCIAL INFORMATION Consolidated Statements of Income (Unaudited), Three and Nine Months Ended September 30, 1997 and 1996 3 Consolidated Balance Sheets, September 30, 1997 (Unaudited) and December 31, 1996 4 Consolidated Statements of Shareholders' Equity, Nine Months Ended September 30, 1997 (Unaudited) and Twelve Months Ended December 31, 1996 6 Consolidated Statements of Cash Flows (Unaudited), Nine Months Ended September 30, 1997 and 1996 7 Notes to Consolidated Financial Statements (Unaudited) 8 Management's Discussion and Analysis of Financial Condition and Results of Operations 15 PART II. OTHER INFORMATION Item 1 through Item 6 23 Signatures 24 EXHIBIT INDEX 25 PART I FINANCIAL INFORMATION THE ST. PAUL COMPANIES, INC. AND SUBSIDIARIES Consolidated Statements of Income Unaudited (In thousands) Three Months Ended Nine Months Ended September 30 September 30 ------------------- ------------------ 1997 1996 1997 1996 ---- ---- ---- ---- Revenues: Premiums earned $1,154,691 1,168,908 3,491,441 3,254,868 Net investment income 223,528 204,980 659,760 594,160 Realized investment gains 47,312 37,556 310,818 132,981 Investment banking-asset management 61,939 55,544 180,299 161,468 Other 9,578 9,170 32,644 27,046 --------- --------- --------- --------- Total revenues 1,497,048 1,476,158 4,674,962 4,170,523 --------- --------- --------- --------- Expenses: Insurance losses and loss adjustment expenses 825,867 905,943 2,540,230 2,440,204 Policy acquisition expenses 252,593 249,736 780,067 712,015 Operating and administrative 216,018 204,556 598,508 551,918 --------- --------- --------- --------- Total expenses 1,294,478 1,360,235 3,918,805 3,704,137 --------- --------- --------- --------- Income from continuing operations before income taxes 202,570 115,923 756,157 466,386 Income tax expense (benefit): Federal current 47,214 17,874 204,658 90,956 Other (8,048) (16,774) (34,728) (19,099) --------- --------- --------- --------- Total income tax expense 39,166 1,100 169,930 71,857 --------- --------- --------- --------- Income from continuing operations 163,404 114,823 586,227 394,529 Discontinued operations: Operating loss, net of taxes - (1,889) - (22,721) Gain (loss) on disposal, net of taxes - 16,000 (67,750) 16,000 --------- --------- --------- --------- Gain (loss) from discontinued operations - 14,111 (67,750) (6,721) --------- --------- --------- --------- Net income $163,404 128,934 518,477 387,808 ========= ========= ========= ========= Primary earnings per common share: Income from continuing operations $ 1.88 1.33 6.82 4.58 Gain (loss) from discontinued operations - 0.17 (0.81) (.08) --------- --------- --------- --------- Net income $ 1.88 1.50 6.01 4.50 ========= ========= ========= ========= Fully diluted earnings per common share: Income from continuing operations $1.76 1.26 6.35 4.31 Gain (loss) from discontinued operations - .16 (0.73) (.07) --------- --------- --------- --------- Net income $ 1.76 1.42 5.62 4.24 ========= ========= ========= ========= Dividends declared on common stock $ 0.47 0.44 1.41 1.32 ========= ========= ========= ========= See notes to consolidated financial statements. THE ST. PAUL COMPANIES, INC. AND SUBSIDIARIES Consolidated Balance Sheets (In thousands) September 30, December 31, ASSETS 1997 1996 - ------ ------------ ----------- (Unaudited) Investments: Fixed maturities, at estimated market value $12,295,571 11,944,085 Equities, at estimated market value 1,011,309 808,295 Real estate, at cost less accumulated depreciation of $89,017 (1996; $81,764) 731,138 693,910 Venture capital, at estimated market value 455,618 586,222 Other investments 43,827 43,311 Short-term investments, at cost 428,590 289,793 ---------- ---------- Total investments 14,966,053 14,365,616 Cash 36,931 37,214 Investment banking inventory securities 59,580 143,594 Reinsurance recoverables: Unpaid losses 1,864,214 1,890,105 Paid losses 50,720 68,692 Receivables: Underwriting premiums 1,559,817 1,558,967 Interest and dividends 220,135 213,883 Other 117,118 104,865 Deferred policy acquisition expenses 403,771 401,768 Ceded unearned premiums 206,032 243,663 Deferred income taxes 900,559 908,220 Office properties and equipment, at cost less accumulated depreciation of $249,683 (1996; $217,454) 286,128 281,093 Goodwill 383,132 167,338 Other assets 406,509 295,958 ---------- ---------- Total assets $21,460,699 20,680,976 ========== ========== See notes to consolidated financial statements. THE ST. PAUL COMPANIES, INC. AND SUBSIDIARIES Consolidated Balance Sheets (continued) (In thousands) September 30, December 31, LIABILITIES AND SHAREHOLDERS' EQUITY 1997 1996 - ------------------------------------ ----------- ----------- (Unaudited) Liabilities: Insurance reserves: Losses and loss adjustment expenses $11,818,140 11,673,148 Unearned premiums 2,440,565 2,566,551 ---------- ---------- Total insurance reserves 14,258,705 14,239,699 Debt 762,450 689,141 Payables: Income taxes 273,632 219,081 Reinsurance premiums 144,992 181,524 Accrued expenses and other 671,980 484,062 Other liabilities 693,699 656,649 ---------- ---------- Total liabilities 16,805,458 16,470,156 ---------- ---------- Company-obligated mandatorily redeemable preferred securities of St. Paul Capital L.L.C. 207,000 207,000 ---------- ---------- Shareholders' equity: Preferred: Series B convertible preferred stock; 1,450 shares authorized; 965 shares outstanding (985 shares in 1996) 139,575 142,131 Guaranteed obligation - PSOP (121,167) (126,068) ---------- ---------- Total preferred shareholders' equity 18,408 16,063 ---------- ---------- Common: Common stock, 240,000 shares authorized; 83,582 shares outstanding (83,198 shares in 1996) 503,879 475,710 Retained earnings 3,307,321 2,935,928 Guaranteed obligation - ESOP (11,231) (20,353) Unrealized appreciation of investments 644,528 616,968 Unrealized loss on foreign currency translation (14,664) (20,496) ---------- ---------- Total common shareholders' equity 4,429,833 3,987,757 ---------- ---------- Total shareholders' equity 4,448,241 4,003,820 ---------- ---------- Total liabilities, redeemable preferred securities and shareholders' equity $21,460,699 20,680,976 ========== ========== See notes to consolidated financial statements. THE ST. PAUL COMPANIES, INC. AND SUBSIDIARIES Consolidated Statements of Shareholders' Equity (In thousands) Nine Twelve Months Ended Months Ended September 30, December 31, 1997 1996 ------------ ------------ Preferred shareholders' equity: (Unaudited) Series B convertible preferred stock: Beginning of period $142,131 144,165 Change during period (2,556) (2,034) ---------- ---------- End of period 139,575 142,131 ---------- ---------- Guaranteed obligation - PSOP: Beginning of period (126,068) (133,293) Principal payments 4,901 7,225 ---------- ---------- End of period (121,167) (126,068) ---------- ---------- Total preferred shareholders' equity 18,408 16,063 ---------- ---------- Common shareholders' equity: Common stock: Beginning of period 475,710 460,458 Stock issued under stock incentive plans 30,295 21,393 Stock issued for acquisition - 1,664 Reacquired common shares (2,126) (7,805) ---------- ---------- End of period 503,879 475,710 ---------- ---------- Retained earnings: Beginning of period 2,935,928 2,704,075 Net income 518,477 450,099 Dividends declared on common stock (117,517) (145,956) Dividends declared on PSOP preferred stock, net of taxes (6,516) (8,664) Reacquired common shares (24,377) (67,445) Tax benefit on employee stock options and awards 1,326 3,819 ---------- ---------- End of period 3,307,321 2,935,928 ---------- ---------- Guaranteed obligation - ESOP: Beginning of period (20,353) (32,294) Principal payments 9,122 11,941 ---------- ---------- End of period (11,231) (20,353) ---------- ---------- Unrealized appreciation of investments, net of taxes: Beginning of period 616,968 627,791 Change during the period 27,560 (10,823) ---------- ---------- End of period 644,528 616,968 ---------- ---------- Unrealized loss on foreign currency translation, net of taxes: Beginning of period (20,496) (40,781) Currency translation adjustments 5,832 (5,309) Realized loss relating to discontinued operations - 25,594 ---------- ---------- End of period (14,664) (20,496) ---------- ---------- Total common shareholders' equity 4,429,833 3,987,757 ---------- ---------- Total shareholders' equity $ 4,448,241 4,003,820 ========== ========== See notes to consolidated financial statements. THE ST. PAUL COMPANIES, INC. AND SUBSIDIARIES Consolidated Statements of Cash Flows Unaudited (In thousands) Nine Months Ended September 30 -------------------- 1997 1996 ---- ---- OPERATING ACTIVITIES Underwriting: Net income 563,791 374,034 Adjustments: Change in net insurance reserves 26,278 362,377 Change in underwriting premiums receivable 28,718 (51,027) Deferred tax benefit (28,301) (27,823) Realized investment gains (304,482) (124,944) Other 106,333 182,695 --------- --------- Total underwriting 392,337 715,312 --------- --------- Investment banking-asset management: Net income 40,557 41,100 Adjustments: Change in inventory securities 84,105 111,950 Change in short-term investments 58,896 (58,457) Change in short-term borrowings - (25,000) Change in open security transactions 5,548 (1,502) Other 6,399 16,319 --------- --------- Total investment banking-asset management 195,505 84,410 --------- --------- Parent company and consolidating eliminations: Net loss from continuing operations (18,121) (20,605) Adjustments: Realized investment gains (6,336) (8,037) Other (19,180) (16,494) --------- --------- Total parent company and consolidating eliminations (43,637) (45,136) --------- --------- Net cash provided by operating activities 544,205 754,586 --------- --------- Cash outflow resulting from sale of discontinued operations (44,776) - --------- --------- INVESTING ACTIVITIES Purchase of investments (2,363,090) (2,241,359) Proceeds from sales and maturities of investments 2,216,935 1,823,783 Change in short-term investments (191,704) 10,760 Change in open security transactions 59,465 16,925 Net purchases of office properties and equipment (38,465) (24,864) Acquisitions (149,263) (184,568) Other 23,999 (13,757) --------- --------- Net cash used in investing activities (442,123) (613,080) --------- --------- FINANCING ACTIVITIES Dividends paid on common and preferred stock (123,735) (115,808) Proceeds from issuance of debt 181,386 44,238 Repayment of debt (100,000) - Repurchase of common shares (26,503) (60,310) Other 11,286 (1,406) --------- --------- Net cash used in financing activities (57,566) (133,286) --------- --------- Effect of exchange rate changes on cash (23) (49) --------- --------- Increase (decrease) in cash (283) 8,171 Cash at beginning of period 37,214 25,475 --------- --------- Cash at end of period 36,931 33,646 ========= ========= See notes to consolidated financial statements. THE ST. PAUL COMPANIES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements Unaudited September 30, 1997 Note 1 Basis of Presentation - ----------------------------- The financial statements include The St. Paul Companies, Inc. and subsidiaries, and have been prepared in conformity with generally accepted accounting principles. These consolidated financial statements rely, in part, on estimates. In the opinion of management, all necessary adjustments have been reflected for a fair presentation of the results of operations, financial position and cash flows in the accompanying unaudited consolidated financial statements. The results for the period are not necessarily indicative of the results to be expected for the entire year. Reference should be made to the "Notes to Consolidated Financial Statements" on pages 53 to 69 of the Registrant's annual report to shareholders for the year ended December 31, 1996. The amounts in those notes have not changed except as a result of transactions in the ordinary course of business or as otherwise disclosed in these notes. Some figures in the 1996 consolidated financial statements have been reclassified to conform with the 1997 presentation. These reclassifications had no effect on net income or shareholders' equity, as previously reported. THE ST. PAUL COMPANIES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements, Continued Note 2 Earnings per Share - -------------------------- Earnings per common share (EPS) amounts were calculated by dividing net income, as adjusted, by the adjusted average common shares outstanding. Three Months Ended Nine Months Ended September 30 September 30 ------------------ ----------------- 1997 1996 1997 1996 ------ ------ ------ ------ (In thousands) PRIMARY Net income, as reported $163,404 128,934 518,477 387,808 PSOP preferred dividends declared (net of taxes) (2,163) (2,179) (6,516) (6,503) Premium on preferred shares redeemed (1,523) (224) (2,434) (664) -------- -------- -------- -------- Net income, as adjusted $ 159,718 126,531 509,527 380,641 ======== ======== ======== ======== FULLY DILUTED Net income, as reported $163,404 128,934 518,477 387,808 Dividends on monthly income preferred securities (net of taxes) 2,018 2,018 6,055 6,055 Additional PSOP expense (net of taxes) due to assumed conversion of preferred stock (659) (752) (1,995) (2,265) Premium on preferred shares redeemed (1,523) (224) (2,434) (664) -------- -------- -------- -------- Net income, as adjusted $ 163,240 129,976 520,103 390,934 ======== ======== ======== ======== ADJUSTED AVERAGE COMMON SHARES OUTSTANDING Primary 85,024 84,254 84,796 84,644 ======== ======== ======== ======== Fully diluted 92,518 91,840 92,496 92,179 ======== ======== ======== ======== Adjusted average common shares outstanding include the common and common equivalent shares outstanding for the period and, for fully diluted EPS, common shares that would be issuable upon conversion of PSOP preferred stock and the company-obligated mandatorily redeemable preferred securities of St. Paul Capital L.L.C. (monthly income preferred securities). THE ST. PAUL COMPANIES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements, Continued Note 3 Investments - ------------------- Investment Activity. A summary of investment transactions is presented below. Nine Months Ended September 30 ------------------------------ 1997 1996 ------ ------ (In thousands) Purchases: Fixed maturities $1,136,367 1,418,142 Equities 1,028,635 700,308 Real estate 82,077 18,807 Venture capital 98,360 74,375 Other investments 17,651 29,727 --------- --------- Total purchases 2,363,090 2,241,359 --------- --------- Proceeds from sales and maturities: Fixed maturities: Sales 450,860 390,401 Maturities and redemptions 441,532 637,362 Equities 1,041,505 682,462 Venture capital 241,854 102,741 Real estate 37,662 8,577 Other investments 3,522 2,240 --------- --------- Total sales and maturities 2,216,935 1,823,783 --------- --------- Net purchases $ 146,155 417,576 ========= ========= Change in Unrealized Appreciation. The increase (decrease) in unrealized appreciation of investments recorded in common shareholders' equity was as follows: Nine Months Ended Twelve Months Ended September 30, 1997 December 31, 1996 ------------------ -------------------- (In thousands) Fixed maturities $86,517 (198,855) Equities 84,513 25,975 Venture capital (128,903) 163,110 ----------- ----------- Total change in pretax unrealized appreciation 42,127 (9,770) Decrease in deferred tax asset (14,567) (1,053) ----------- ----------- Total change in unrealized appreciation, net of taxes $27,560 (10,823) =========== =========== THE ST. PAUL COMPANIES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements, Continued Note 4 Income Taxes - -------------------- The components of income tax expense on continuing operations are as follows: Three Months Ended Nine Months Ended September 30 September 30 ------------------ ------------------- 1997 1996 1997 1996 ------ ------ ------ ------ (In thousands) Federal current tax expense $47,214 17,874 204,658 90,956 Federal deferred tax benefit (15,933) (24,375) (54,959) (40,393) -------- -------- -------- -------- Total federal income tax expense (benefit) 31,281 (6,501) 149,699 50,563 Foreign income taxes 6,383 6,249 15,712 17,082 State income taxes 1,502 1,352 4,519 4,212 -------- -------- -------- -------- Total income tax expense on continuing operations $39,166 1,100 169,930 71,857 ======== ======== ======== ======== Note 5 Contingent Liabilities - ------------------------------ In the ordinary course of conducting business, the company and some of its subsidiaries have been named as defendants in various lawsuits. Some of these lawsuits attempt to establish liability under insurance contracts issued by those companies. Plaintiffs in these lawsuits are asking for money damages or to have the court direct the activities of our operations in certain ways. Although it is possible that the settlement of a contingency may be material to the company's results of operations and liquidity in the period in which the settlement occurs, the company believes that the total amounts that it or its subsidiaries will ultimately have to pay in all of these lawsuits will have no material effect on its overall financial position. In some cases, plaintiffs seek to establish coverage for their liability under environmental protection laws. See "Environmental and Asbestos Claims" in Management's Discussion and Analysis for information on these claims. THE ST. PAUL COMPANIES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements, Continued Note 6 Debt - ------------ Debt consists of the following: September 30, December 31, 1997 1996 ------------------- ------------------ Book Fair Book Fair Value Value Value Value ------ ------ ------ ------ (In thousands) Medium-term notes $511,922 524,800 430,427 435,500 Commercial paper 206,751 206,751 131,610 131,610 Nuveen notes payable 25,000 25,000 - - Real estate mortgage debt 13,220 13,300 13,220 13,220 Guaranteed ESOP debt 5,557 5,600 13,890 14,000 9 3/8% notes - - 99,994 101,500 ------- ------- ------- ------- Total debt $762,450 775,451 689,141 695,830 ======= ======= ======= ======= Note 7 Reinsurance - ------------------- The company's consolidated financial statements reflect the effects of assumed and ceded reinsurance transactions. Assumed reinsurance refers to the company's acceptance of certain insurance risks that other insurance companies have underwritten. Ceded reinsurance involves transferring certain insurance risks the company has underwritten to other insurance companies who agree to share these risks. The primary purpose of ceded reinsurance is to protect the company from potential losses in excess of the amount it is prepared to accept. The company expects those with whom it has ceded reinsurance to honor their obligations. In the event these companies are unable to honor their obligations, the company will pay these amounts. The company has established allowances for possible nonpayment of amounts due to it. THE ST. PAUL COMPANIES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements, Continued The effect of assumed and ceded reinsurance on premiums written, premiums earned and insurance losses and loss adjustment expenses is as follows: Three Months Ended Nine Months Ended September 30 September 30 ------------------ ------------------ 1997 1996 1997 1996 ------ ------ ------ ------ (In thousands) Premiums written: Direct $1,083,347 1,120,234 2,903,887 2,813,855 Assumed 198,798 273,631 786,483 789,490 Ceded (99,308) (146,895) (292,028) (343,838) --------- --------- --------- --------- Net premiums written $1,182,837 1,246,970 3,398,342 3,259,507 ========= ========= ========= ========= Premiums earned: Direct $1,034,808 1,045,971 3,084,273 2,891,156 Assumed 230,865 270,119 738,278 749,765 Ceded (110,982) (147,182) (331,110) (386,053) --------- --------- --------- --------- Net premiums earned $1,154,691 1,168,908 3,491,441 3,254,868 ========= ========= ========= ========= Insurance losses and loss adjustment expenses: Direct $767,907 830,977 2,272,125 2,127,265 Assumed 157,607 151,748 487,794 531,170 Ceded (99,647) (76,782) (219,689) (218,231) --------- --------- --------- --------- Net insurance losses and loss adjustment expenses $825,867 905,943 2,540,230 2,440,204 ========= ========= ========= ========= THE ST. PAUL COMPANIES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements, Continued Note 8 Discontinued Operations - ------------------------------- In May 1997, The St. Paul completed the sale of its brokerage operation, Minet, to Aon Corporation. The St. Paul's gross proceeds from the sale were approximately equal to its remaining carrying value of Minet. In connection with the transaction, The St. Paul agreed to indemnify Aon against most preclosing liabilities of the Minet businesses. The company recorded a net after-tax loss on disposal of $67.8 million in the first quarter of 1997, which resulted primarily from The St. Paul's agreement to be responsible for certain severance, employee benefits, future lease commitments and other costs relating to Minet. The following summarizes discontinued operations for the third quarter and first nine months of 1997 and 1996: Three Months Ended, Nine Months Ended September 30 September 30 ------------------- ----------------- 1997 1996 1997 1996 ------ ------ ------ ------ (In thousands) Operating loss, before income taxes $ - (2,447) - (20,379) Income tax expense - 558 - (2,342) ------- ------- ------- ------- Operating loss, net of taxes - (1,889) - (22,721) ------- ------- ------- ------- Loss on disposal, before income taxes - (250,000) (103,280) (250,000) Income tax benefit - 266,000 35,530 266,000 ------- ------- ------- ------- Gain (loss) on disposal, net of taxes - 16,000 (67,750) 16,000 ------- ------- ------- ------- Gain (loss) from discontinued operations $ 14,111 (67,750) (6,721) ======= ======= ======= ======= THE ST. PAUL COMPANIES, INC. AND SUBSIDIARIES Management's Discussion and Analysis of Financial Condition and Results of Operations September 30, 1997 Consolidated Results -------------------- The St. Paul's consolidated pretax income from continuing operations totaled $203 million in the third quarter of 1997, an increase of 75% over pretax income of $116 million in the same period of 1996. Improvement in underwriting results and growth in investment income were the primary factors driving the increase in third quarter 1997 earnings. Pretax earnings of $756 million through nine months of 1997 were $290 million higher than the same period of 1996, largely the result of increases of $178 million and $66 million in realized investment gains and investment income, respectively. The St. Paul's net income of $518 million for the first nine months of 1997 includes an after-tax loss from discontinued operations of $67.8 million relating to the sale of its brokerage operation, Minet. Refer to Note 8 on page 14 of this report for further information regarding The St. Paul's discontinued operations. Consolidated revenues in the third quarter totaled $1.50 billion, a slight increase over third quarter 1996 revenues of $1.48 billion. Year-to-date revenues of $4.67 billion in 1997 were $504 million, or 12%, higher than the same period of 1996. Growth in premiums earned, investment income and realized investment gains accounted for the increased revenue through the first nine months of 1997. The following table summarizes The St. Paul's results for the third quarter and year-to-date. Three Months Nine Months Ended September 30 Ended September 30 (in millions) ------------------ ------------------ 1997 1996 1997 1996 Pretax income (loss): ---- ---- ---- ---- Underwriting: GAAP underwriting result $(32) (87) (140) (168) Net investment income 220 202 655 585 Realized investment gains 45 36 304 125 Other (30) (40) (65) (88) --- --- --- --- Total underwriting 203 111 754 454 Investment banking- asset management 23 23 67 67 Parent and other (23) (18) (65) (55) --- --- --- --- Income from continuing operations before income taxes 203 116 756 466 Income tax expense 40 1 170 71 --- --- --- --- Income from continuing operations 163 115 586 395 Income (loss) from discontinued operations, net of taxes - 14 (68) (7) --- --- --- --- Net income $163 129 518 388 === === === === Fully diluted net income per common share $1.76 1.42 5.62 4.24 ==== ==== ==== ==== Income tax expense for the third quarter of 1996 was nominal due to a downward revision in The St. Paul's estimated annual effective tax rate for 1996. The effective tax rate for the first nine months of 1997 is higher than the comparable 1996 period, due to much higher projected annual earnings for 1997. This projection is driven by substantial additional realized investment gains and improved underwriting results, both of which generate income tax expense predominantly at the statutory income tax rate of 35% and thereby increase The St. Paul's annual estimated effective tax rate for 1997. THE ST. PAUL COMPANIES, INC. AND SUBSIDIARIES Management's Discussion, Continued Underwriting ------------ The following summarizes key financial results by underwriting operation: % of Three Months Nine Months 1997 Ended September 30 Ended September 30 Written ------------------ ------------------ ($ in Millions) Premiums 1997 1996 1997 1996 --------- ---- ---- ---- ---- Specialized Commercial: Written Premiums 28% $334 342 961 947 Underwriting Result $26 18 11 27 Combined Ratio 92.5 93.3 99.1 97.3 Commercial: Written Premiums 20% $216 220 667 530 Underwriting Result ($22) (35) (50) (46) Combined Ratio 110.9 117.0 110.4 109.8 Personal Insurance: Written Premiums 17% $203 193 583 546 Underwriting Result ($17) (61) (53) (150) Combined Ratio 107.9 133.3 108.9 128.0 Medical Services: Written Premiums 11% $190 201 372 401 Underwriting Result ($1) 7 7 47 Combined Ratio 100.2 92.7 101.9 92.0 ---- ----- ----- ----- ----- Total St. Paul Fire & Marine: Written Premiums 76% $943 956 2,583 2,424 Underwriting Result ($14) (71) (85) (122) Combined Ratio 101.3 106.9 104.6 105.7 St. Paul International Underwriting: Written Premiums 7% $80 118 227 229 Underwriting Result ($13) (4) (34) (16) Combined Ratio 114.0 100.0 115.2 106.2 ---- ----- ----- ----- ----- Total Worldwide Insurance Operations: Written Premiums 83% $1,023 1,074 2,810 2,653 Underwriting Result ($27) (75) (119) (138) Combined Ratio 102.3 106.2 105.3 105.8 St. Paul Re: Written Premiums 17% $160 173 588 607 Underwriting Result ($5) (12) (21) (30) Combined Ratio 104.7 108.6 103.2 104.8 ---- ----- ----- ----- ----- Total Underwriting: Written Premiums 100% $1,183 1,247 3,398 3,260 GAAP Underwriting Result ($32) (87) (140) (168) Statutory Combined Ratio: Loss and Loss Expense Ratio 71.5 77.5 72.8 75.0 Underwriting Expense Ratio 31.0 29.1 32.2 30.6 ----- ----- ----- ----- Combined Ratio 102.5 106.6 105.0 105.6 ===== ===== ===== ===== Combined Ratio Incl. Policyholders' Dividends 103.5 106.9 105.6 105.8 ===== ===== ===== ===== THE ST. PAUL COMPANIES, INC. AND SUBSIDIARIES Management's Discussion, Continued Written Premiums - ---------------- Third quarter 1997 written premiums of $1.18 billion decreased 5% from comparable 1996 premiums of $1.25 billion. The St. Paul's Specialized Commercial and Commercial operations experienced premium declines of 3% and 2%, respectively, reflecting competitive conditions throughout the many commercial market sectors served by those operations. Personal Insurance volume of $203 million grew 5% over 1996, primarily due to price increases on policies renewed during the quarter. Medical Services' premiums were down 5%, to $190 million, in the third quarter of 1997. The medical liability insurance market remains intensely competitive. International's 31% third quarter premium decline compared with 1996 was distorted by differences in the timing of recording premiums; by year-end 1997, premiums for both years are expected to be comparable. For the first nine months of 1997, consolidated premiums were 4% ahead of 1996. In August 1996, The St. Paul acquired Northbrook Holdings, Inc. and its three commercial underwriting companies (Northbrook). Through the first nine months of 1997, Northbrook accounted for $145 million of incremental premiums in The St. Paul's underwriting operations. Factoring out the Northbrook impact, consolidated premiums for the first nine months of 1997 were virtually level with the same period of 1996. Medical Services premiums for the first nine months were down 7% from the same period of 1996. International's year-to-date premiums of $227 million were slightly below 1996 premiums of $230 million. Underwriting Results - -------------------- The third quarter 1997 GAAP underwriting loss was $32 million, an improvement of $55 million over 1996's third quarter loss of $87 million. Significant improvement in Personal Insurance's core underwriting results and a decline in catastrophe losses were the primary factors contributing to the 1997 result. Key factors in the change in third quarter underwriting results from 1996 were as follows: - Personal Insurance - $44 million better than 1996 - A $13 million decline in catastrophe losses, improvement in current year noncatastrophe loss experience and expense control initiatives were all factors in the substantial improvement over 1996. - Commercial - $13 million better than 1996 - Favorable current year noncatastrophe loss experience accounted for the improvement over 1996. Catastrophe losses totaled $16 million in the quarter, compared with $11 million in last year's third quarter. - Specialized Commercial - $8 million better than 1996 - Catastrophe losses declined, driving the improvement in underwriting results. - Reinsurance - $7 million better than 1996 - Reduced catastrophe losses were the primary factor in the improvement over 1996. - International - $9 million worse than 1996 - Start-up costs for new operations being developed in Europe and certain emerging markets, and difficult market conditions in the United Kingdom negatively impacted underwriting results in the third quarter. THE ST. PAUL COMPANIES, INC. AND SUBSIDIARIES Management's Discussion, Continued The year-to-date GAAP underwriting loss of $140 million was $28 million better than the 1996 nine-month loss of $168 million. Personal insurance underwriting results were $97 million better than last year, but that improvement was partially offset by a $40 million decline in Medical Services' profitability and a $18 million increase in International's underwriting loss. Total catastrophe losses through nine months of $97 million were down significantly from losses of $181 million in the same period of 1996. The decline in catastrophes accounted for approximately $40 million of the improvement in Personal Insurance results in 1997. The decline in Medical Services' underwriting profit was due to an increase in losses and declining prices. Investments - ----------- Pretax investment income in the underwriting segment for the third quarter was $220 million, up 9% from $202 million in 1996. Year-to-date investment income increased by $70 million, or 12%, over last year. Approximately half of the increase through nine months of 1997 was attributable to income earned on fixed maturity investments acquired in last year's Northbrook purchase. Another factor contributing to investment income growth was strong investment cash flows over the last twelve months, which have fueled growth in invested assets. New money available for fixed maturity investments so far in 1997 has been predominantly directed toward taxable securities due to The St. Paul's current consolidated tax position. The weighted average pretax yield on the underwriting segment's fixed maturities portfolio was 7.0% at Sept. 30, 1997, down slightly from 7.1% at the same time a year ago. Pretax realized investment gains totaled $45 million in the third quarter, compared with gains of $36 million in last year's third quarter. Year-to-date pretax gains in 1997 of $304 million were well ahead of last year's nine-month gains of $125 million. Sales of venture capital and equity security investments in favorable market conditions accounted for virtually all of 1997's gains. The sale of a single venture capital investment generated pretax gains of $129 million in 1997. Environmental and Asbestos Claims --------------------------------- The St. Paul's underwriting operations continue to receive claims under policies written many years ago alleging injuries from environmental pollution or alleging covered property damages for the cost to clean up polluted sites. These operations also receive asbestos claims arising out of product liability coverages under general liability policies. Significant legal issues, primarily pertaining to issues of coverage, exist with regard to the company's alleged liability for both environmental and asbestos claims. In the company's opinion, court decisions in certain jurisdictions have tended to expand insurance coverage beyond the intent of the original policies. The underwriting operations' ultimate liability for environmental claims is difficult to estimate. Insured parties have submitted claims for losses not covered in the insurance policy, and the ultimate resolution of these claims may be subject to lengthy litigation. In addition, variables, such as the length of time necessary to clean up a polluted site, controversies surrounding the identity of the responsible party and the degree of remediation deemed necessary, make it difficult to estimate the total cost of an environmental claim. THE ST. PAUL COMPANIES, INC. AND SUBSIDIARIES Management's Discussion, Continued Estimating the ultimate liability for asbestos claims is equally difficult. The primary factors influencing the estimate of the total cost of these claims are case law and a history of prior claims experience, both of which are still developing. In 1995, The St. Paul's underwriting operations recorded additional gross reserves of $360 million and specifically reallocated $113 million of previously recorded net reserves for North American environmental and asbestos losses on policies written in the United Kingdom prior to 1980. The following table represents a reconciliation of total gross and net environmental reserve development for the nine months ended September 30, 1997, and the years ended Dec. 31, 1996 and 1995. Amounts in the "net" column are reduced by reinsurance recoverables. Environmental - ------------- 1997 (nine months) 1996 1995 ----------- ------------ ------------ (in millions) Gross Net Gross Net Gross Net ----- --- ----- ---- ----- --- Beginning reserves $581 368 528 319 275 200 Reserves acquired - - 18 7 - - Incurred losses 14 19 67 72 59 68 Reserve reallocation - - - - 233 79 Paid losses (28) (19) (32) (30) (39) (28) ---- ---- ---- ---- ---- ---- Ending reserves $567 368 581 368 528 319 ==== ==== ==== ==== ==== ==== Many significant environmental claims currently being brought against insurance companies arise out of contamination that occurred 20 to 30 years ago. Since 1970, the underwriting operations' General Liability policy form has included a specific pollution exclusion, and, since 1986, an industry standard absolute pollution exclusion for policies underwritten in the United States. The following table represents a reconciliation of total gross and net reserve development for asbestos claims for the nine months ended September 30, 1997, and the years ended Dec. 31, 1996 and 1995: Asbestos - -------- 1997 (nine months) 1996 1995 ------------ ------------ ------------- (in millions) Gross Net Gross Net Gross Net ----- --- ----- --- ----- --- Beginning reserves $278 169 283 158 185 145 Reserves acquired - - 6 6 - - Incurred losses 18 (4) 12 18 (13) (9) Reserve reallocation - - - - 127 34 Paid losses (19) (9) (23) (13) (16) (12) ---- ---- ---- ---- ---- ---- Ending reserves $277 156 278 169 283 158 ==== ==== ==== ==== ==== ==== THE ST. PAUL COMPANIES, INC. AND SUBSIDIARIES Management's Discussion, Continued Most of the asbestos claims the company has received pertain to policies written prior to 1986. Since 1986, for policies underwritten in the United States, the underwriting operations' Commercial General Liability policy has included the industry standard absolute pollution exclusion, which the company believes applies to asbestos claims. Based on all information currently available, The St. Paul's reserves for environmental and asbestos losses represent its best estimate of its ultimate liability for such losses. Because of the difficulty inherent in estimating such losses, however, the company cannot give assurances that its ultimate liability for environmental and asbestos losses will, in fact, match current reserves. The company continues to evaluate new information and developing loss patterns, but it believes any future additional loss provisions for environmental and asbestos claims will not materially impact its results of operations, liquidity or financial position. Total gross environmental and asbestos reserves at September 30, 1997, of $844 million represented approximately 7% of gross consolidated reserves of $11.82 billion. Investment Banking-Asset Management ----------------------------------- The company's portion of third quarter pretax earnings of The John Nuveen Company (Nuveen) was $23 million, level with the same period of 1996. Through the first nine months of 1997, the company's portion was $67 million, also level with the comparable period of 1996. The company currently owns 77% of Nuveen. Nuveen's asset management fee revenue of $57 million for the third quarter was $10 million, or 22%, higher than in the same period of 1996. Nuveen has made two acquisitions in 1997 which have expanded its product base and significantly added to its managed asset base. In January, Nuveen acquired Flagship Resources, Inc., a tax-exempt mutual fund and money management firm. The total cost of that acquisition was $63 million (substantially all of which represented goodwill), plus as much as an additional $20 million, contingent upon meeting future growth targets. Nuveen partially funded the Flagship purchase by the issuance of $45 million of preferred stock. In September, Nuveen finalized its acquisition of Rittenhouse Financial Services, Inc., which manages individual equity and balanced accounts for affluent investors. The total cost of that acquisition was approximately $145 million, the majority of which also represented goodwill. As the result of these acquisitions, Nuveen's assets under management grew to $48.1 billion at September 30, 1997, an increase of 45% since year-end 1996. Capital Resources ----------------- The St. Paul's total capitalization (debt and equity) grew to $5.4 billion at Sept. 30, 1997, an increase of $518 million, or 11%, since year-end 1996. Common shareholders' equity grew to a new high of $4.43 billion at the end of the third quarter, driven by the company's record nine-month net income of $518 million. Strong bond markets in 1997 pushed the after-tax unrealized appreciation on The St. Paul's fixed maturities portfolio to $362 million at quarter-end. The after-tax unrealized appreciation on the company's equity and venture capital portfolios fell by $28 million since the end of 1996, reflecting sales of investments that generated substantial realized gains through the first nine months of 1997. THE ST. PAUL COMPANIES, INC. AND SUBSIDIARIES Management's Discussion, Continued The St. Paul repurchased and retired 353,900 of its common shares in 1997 for a total cost of $26.4 million. The majority of these repurchases occurred in the third quarter. The St. Paul may continue its repurchase program in the future when such purchases are deemed an appropriate use of capital. Total debt outstanding at the end of September was $762 million, up 11% from $689 million at the end of 1996. The company has issued $82 million of medium-term notes through the first nine months of 1997. The $512 million of such notes outstanding at quarter-end bear a weighted average interest rate of 7.1% and account for nearly 70% of The St. Paul's total debt outstanding. Commercial paper outstanding has increased by $75 million in 1997. In June 1997, The St. Paul's $100 million, 9-3/8% Notes matured. Debt outstanding at Sept. 30 included $25 million of debt issued by Nuveen in connection with its acquisition of Rittenhouse Financial Services in September. The balance of Nuveen's acquisition of Rittenhouse was financed with internal funds. Debt as a percentage of total capitalization at Sept. 30, 1997, was 14%, unchanged from year-end 1996. The company anticipates that any major capital expenditures during the fourth quarter of 1997 would involve acquisitions of existing businesses or common stock repurchases; there are no major capital improvements planned. The company's ratio of earnings to fixed charges was 14.39 for the first nine months of 1997, compared with 10.02 for the same period of 1996. The company's ratio of earnings to combined fixed charges and preferred stock dividends was 10.29 for the first nine months of 1997, compared with 6.96 for the same period of 1996. Fixed charges consist of interest expense before reduction for capitalized interest and one-third of rental expense, which is considered to be representative of an interest factor. Liquidity --------- Liquidity refers to the company's ability to generate sufficient funds to meet the cash requirements of its business operations. Net cash provided by operations was $544 million in the first nine months of 1997, compared with $755 million in 1996. Although The St. Paul's operational cash flows have declined in 1997, the company's overall liquidity position remains strong due to funds provided from substantial realized investment gains in the underwriting segment. Impact of Accounting Pronouncements to be Adopted in the Future --------------------------------------------------------------- In February 1997, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 128, "Earnings Per Share," which revises the calculation and presentation provisions of Accounting Principles Board Opinion No. 15 and its related interpretations. SFAS No. 128 is effective for fiscal years and interim periods ending after December 15, 1997. It replaces the presentation of primary earnings per share with "basic earnings per share," and fully diluted earnings per share with "diluted earnings per share." If the provisions of SFAS No. 128 had been applied for the nine months ended September 30, 1997 and 1996, basic earnings per share would have been $6.94 and $4.64, respectively, for income from continuing operations, and $6.13 and $4.56, respectively, for net income. Diluted earnings per share would have been the same as fully diluted earnings per share for both periods. THE ST. PAUL COMPANIES, INC. AND SUBSIDIARIES Management's Discussion, Continued In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive Income," which establishes standards for reporting and display of comprehensive income and its components in a full set of general-purpose financial statements. Comprehensive income includes all changes in equity during a period except those resulting from investments by owners and distributions to owners. SFAS No. 130 is effective for fiscal years beginning after December 15, 1997. The St. Paul currently intends to adopt the provisions of this Statement for the year ended December 31, 1997. This adoption will not impact The St. Paul's net income in 1997 or succeeding years. Also in June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information," which establishes standards for the way public enterprises report information about operating segments in annual financial statements and requires that those enterprises report selected segment information in interim financial reports. SFAS No. 131 is effective for fiscal years beginning after December 15, 1997. The St. Paul currently intends to adopt the provisions of this Statement for its 1997 annual financial statements. This adoption is not expected to materially change The St. Paul's current segment disclosures and will have no impact on net income in 1997 and succeeding years. PART II OTHER INFORMATION Item 1. Legal Proceedings. The information set forth in Note 5 to the consolidated financial statements is incorporated herein by reference. Item 2. Changes in Securities. Not applicable. Item 3. Defaults Upon Senior Securities. Not applicable. Item 4. Submission of Matters to a Vote of Security Holders. Not applicable. Item 5. Other Information. Not applicable. Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits. An Exhibit Index is set forth as the last page in this document. (b) Reports on Form 8-K. 1) The St. Paul filed a Form 8-K Current Report dated July 28, 1997, announcing its financial results for the quarter ended June 30, 1997. 2) The St. Paul filed a Form 8-K Current Report dated October 27, 1997, announcing its financial results for the quarter ended September 30, 1997. 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. THE ST. PAUL COMPANIES, INC. (Registrant) Date: November 12, 1997 By /s/ Bruce A. Backberg --------------------- Bruce A. Backberg Senior Vice President, Chief Legal Counsel and Corporate Secretary (Authorized Signatory) Date: November 12, 1997 By /s/ Howard E. Dalton -------------------- Howard E. Dalton Senior Vice President Chief Accounting Officer EXHIBIT INDEX ---------------------- Method of Exhibit Filing - ------- --------- (2) Plan of acquisition, reorganization, arrangement, liquidation or succession*.............................. (3) Articles of incorporation and by-laws*. ................... (4) Instruments defining the rights of security holders, including indentures*................................... (10) Material contracts*........................................ (11) Statement re computation of per share earnings**...........(1) (12) Statement re computation of ratios**.......................(1) (15) Letter re unaudited interim financial information*......... (18) Letter re change in accounting principles*................. (19) Report furnished to security holders*...................... (22) Published report regarding matters submitted to vote of security holders*............................... (23) Consents of experts and counsel*........................... (24) Power of attorney*......................................... (27) Financial data schedule**..................................(1) (99) Additional exhibits*....................................... * These items are not applicable. ** This exhibit is included only with the copies of this report that are filed with the Securities and Exchange Commission. However, a copy of the exhibit may be obtained from the Registrant for a reasonable fee by writing to Legal Services, The St. Paul Companies, Inc., 385 Washington Street, Saint Paul, MN 55102. (1) Filed electronically. EX-11 2 Exhibit 11 THE ST. PAUL COMPANIES, INC. AND SUBSIDIARIES Computation of Earnings Per Share (In thousands) Three Months Ended Nine Months Ended September 30 September 30 ------------------- ----------------- 1997 1996 1997 1996 ----- ----- ----- ----- EARNINGS: Primary: Net income, as reported $163,404 128,934 518,477 387,808 PSOP preferred dividends declared (net of taxes) (2,163) (2,179) (6,516) (6,503) Premium on preferred shares redeemed (1,523) (224) (2,434) (664) -------- -------- -------- -------- Net income, as adjusted $159,718 126,531 509,527 380,641 ======== ======== ======== ======== Fully diluted: Net income, as reported $163,404 128,934 518,477 387,808 Dividends on monthly income preferred securities (net of taxes) 2,018 2,018 6,055 6,055 Additional PSOP expense (net of taxes) due to assumed conversion of preferred stock (659) (752) (1,995) (2,265) Premium on preferred shares redeemed (1,523) (224) (2,434) (664) -------- -------- -------- -------- Net income, as adjusted $163,240 129,976 520,103 390,934 ======== ======== ======== ======== SHARES: Primary: Weighted average number of common shares outstanding, per consolidated financial statements 83,658 83,286 83,546 83,594 Additional dilutive effect of assumed exercise of outstanding stock options (based on treasury stock method using average market price) 1,366 968 1,250 1,050 -------- -------- -------- -------- Weighted average, as adjusted 85,024 84,254 84,796 84,644 ======== ======== ======== ======== Fully diluted: Weighted average number of common shares outstanding, per consolidated financial statements 83,658 83,286 83,546 83,594 Additional dilutive effect of: Assumed conversion of PSOP preferred stock 3,880 3,963 3,909 3,977 Assumed conversion of monthly income preferred securities 3,509 3,509 3,509 3,509 Assumed exercise of outstanding stock options (based on treasury stock method using market price at end of period) 1,471 1,082 1,532 1,099 -------- -------- -------- -------- Weighted average, as adjusted 92,518 91,840 92,496 92,179 ======== ======== ======== ======== EARNINGS PER COMMON SHARE: Primary $1.88 1.50 6.01 4.50 Fully diluted $1.76 1.42 5.62 4.24 EX-12 3 THE ST. PAUL COMPANIES, INC. AND SUBSIDIARIES Exhibit 12 Computation of Ratios (In thousands, except ratios) Three Months Ended Nine Months Ended September 30 September 30 ------------------ ----------------- 1997 1996 1997 1996 ----- ----- ----- ----- EARNINGS: Income from continuing operations before income taxes $202,570 115,923 756,157 466,386 Add: fixed charges 19,091 18,067 56,488 51,703 -------- -------- -------- -------- Income, as adjusted $221,661 133,990 812,645 518,089 ======== ======== ======== ======== FIXED CHARGES: Interest costs $13,576 13,072 40,402 38,220 Rental expense (1) 5,515 4,995 16,086 13,483 -------- -------- -------- -------- Total fixed charges $19,091 18,067 56,488 51,703 ======== ======== ======== ======== FIXED CHARGES AND PREFERRED STOCK DIVIDENDS: Fixed charges $19,091 18,067 56,488 51,703 PSOP preferred stock dividends 4,352 4,458 13,168 13,422 Dividends on monthly income preferred securities 3,105 3,105 9,315 9,315 -------- -------- -------- -------- Total fixed charges and preferred stock dividends $26,548 25,630 78,971 74,440 ======== ======== ======== ======== Ratio of earnings to fixed charges 11.61 7.42 14.39 10.02 ======== ======== ======== ======== Ratio of earnings to combined fixed charges and preferred stock dividends 8.35 5.23 10.29 6.96 ======== ======== ======== ======== (1) Interest portion deemed implicit in total rent expense. EX-27 4
7 1,000 9-MOS 9-MOS 9-MOS DEC-31-1997 DEC-31-1996 DEC-31-1995 SEP-30-1997 SEP-30-1996 SEP-30-1995 12,295,571 11,581,950 9,916,552 0 0 0 0 0 0 1,011,309 840,369 732,991 0 0 0 731,138 609,245 614,652 14,966,053 14,119,951 12,185,616 36,931 33,646 12,158 50,720 59,654 84,176 403,771 406,254 364,313 21,460,699 20,631,765 17,718,499 11,818,140 11,735,119 9,817,471 2,440,565 2,578,197 2,325,602 0 0 0 0 0 0 762,450 707,560 613,935 207,000 207,000 207,000 18,408 16,765 11,456 503,879 465,827 460,145 3,925,954 3,391,040 3,023,953 21,460,699 20,631,765 17,718,499 3,491,441 3,254,868 2,931,214 659,760 594,160 549,124 310,818 132,981 38,060 212,943 188,514 188,891 2,540,230 2,440,204 2,118,131 780,067 712,015 642,785 598,508 551,918 463,131 756,157 466,386 483,242 169,930 71,857 100,409 586,227 394,529 382,833 (67,750) (6,721) (16,871) 0 0 0 0 0 0 518,477 387,808 365,962 6.01 4.50 4.21 5.62 4.24 4.00 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
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