SEC Filing | McCormick & Company, Inc.

SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 Form 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended February 29, 2000 Commission File Number 0-748 ------------------ ------- McCORMICK & COMPANY, INCORPORATED - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Maryland 52-0408290 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 18 Loveton Circle, P. O. Box 6000, Sparks, MD 21152-6000 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (410) 771-7301 ------------------ 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 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. Shares Outstanding March 31, 2000 --------------------- Common Stock 8,737,203 Common Stock Non-Voting 59,959,109

PART I - FINANCIAL INFORMATION ITEM 1 FINANCIAL STATEMENTS McCORMICK & COMPANY, INCORPORATED CONDENSED CONSOLIDATED STATEMENT OF INCOME (UNAUDITED) (in thousands except per share amounts) Three Months Ended Feb. 29, Feb. 28, 2000 1999 ---- ---- Net sales $462,403 $441,543 Cost of goods sold 298,571 296,204 -------- -------- Gross profit 163,832 145,339 Selling, general and administrative expense 125,938 111,355 Special charges 502 - -------- -------- Operating income 37,392 33,984 Interest expense 7,406 8,134 Other expense 1,445 228 -------- -------- Income before income taxes 28,541 25,622 Income taxes 10,189 9,198 -------- -------- Net income from consolidated operations 18,352 16,424 Income from unconsolidated operations 6,065 1,746 -------- -------- Net income $ 24,417 $ 18,170 ======== ======== Earnings per common share - basic and assuming dilution $0.35 $0.25 ======== ======== Cash dividends declared per common share $0.19 $0.17 ======== ======== See notes to condensed consolidated financial statements. (1)

McCORMICK & COMPANY, INCORPORATED CONDENSED CONSOLIDATED BALANCE SHEET (in thousands) Feb. 29, Feb. 28, Nov. 30, 2000 1999 1999 ----------- ----------- ----------- (Unaudited) (Unaudited) ASSETS Current Assets Cash and cash equivalents $ 24,009 $ 16,071 $ 11,961 Accounts receivable, net 180,622 176,367 213,926 Inventories Raw materials and supplies 99,844 108,678 101,608 Finished products and work-in process 147,472 137,714 132,563 ----------- ----------- ----------- 247,316 246,392 234,171 Other current assets 31,041 21,518 30,499 ----------- ----------- ----------- Total current assets 482,988 460,348 490,557 ----------- ----------- ----------- Property, plant and equipment 746,426 725,326 734,982 Less: Accumulated depreciation (384,070) (353,117) (371,731) ----------- ----------- ----------- Total property, plant and equipment, net 362,356 372,209 363,251 ----------- ----------- ----------- Intangible assets, net 144,189 156,761 142,849 Prepaid allowances 123,524 153,729 109,253 Investments and other assets 87,238 74,119 82,869 ----------- ----------- ----------- Total assets $ 1,200,295 $ 1,217,166 $ 1,188,779 =========== =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Short-term borrowings $ 180,550 $ 173,650 $ 92,940 Current portion of long-term debt 7,622 17,114 7,731 Trade accounts payable 142,365 140,020 148,755 Other accrued liabilities 179,516 171,615 221,206 ----------- ----------- ----------- Total current liabilities 510,053 502,399 470,632 ----------- ----------- ----------- Long-term debt 239,871 247,956 241,432 Other long-term liabilities 96,992 99,225 94,293 ----------- ----------- ----------- Total liabilities 846,916 849,580 806,357 ----------- ----------- ----------- Shareholders' Equity Common stock 50,472 49,674 49,761 Common stock non-voting 121,424 120,040 124,041 Retained earnings 215,501 245,744 242,764 Accumulated other comprehensive income (34,018) (47,872) (34,144) ----------- ----------- ----------- Total shareholders' equity 353,379 367,586 382,422 ----------- ----------- ----------- Total liabilities and shareholders' equity $ 1,200,295 $ 1,217,166 $ 1,188,779 =========== =========== =========== See notes to condensed consolidated financial statements. (2)

McCORMICK & COMPANY, INCORPORATED CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) (in thousands) Three Months Ended Feb. 29, Feb. 28, 2000 1999 -------- -------- Operating activities Net income $ 24,417 $ 18,170 Adjustments to reconcile net income to net cash (used in) provided by operating activities Depreciation and amortization 14,464 13,563 Special charges 502 -- Income from unconsolidated operations (6,065) (1,746) Changes in operating assets and liabilities (36,039) (14,477) Other 153 186 -------- -------- Net cash (used in) provided by operating activities (2,568) 15,696 -------- -------- Investing activities Capital expenditures (12,334) (9,756) Acquisitions of businesses (3,065) -- Other 139 188 -------- -------- Net cash used in investing activities (15,260) (9,568) -------- -------- Financing activities Short-term borrowings, net 84,517 28,002 Long-term debt repayments (888) (1,861) Common stock issued 104 2,578 Common stock acquired by purchase (40,398) (24,315) Dividends paid (13,205) (12,330) -------- -------- Net cash provided by (used in) financing activities 30,130 (7,926) -------- -------- Effect of exchange rate changes on cash and cash equivalents (254) 158 -------- -------- Increase (decrease) in cash and cash equivalents 12,048 (1,640) Cash and cash equivalents at beginning of period 11,961 17,711 -------- -------- Cash and cash equivalents at end of period $ 24,009 $ 16,071 ======== ======== See notes to condensed consolidated financial statements. (3)

McCORMICK & COMPANY, INCORPORATED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. ACCOUNTING POLICIES BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all the information and notes required by generally accepted accounting principles for complete financial statements. In the opinion of management, the accompanying condensed consolidated financial statements contain all adjustments necessary to present fairly the financial position and the results of operations for the interim periods. The results of consolidated operations for the three month period ended February 29, 2000 are not necessarily indicative of the results to be expected for the full year. Historically, the Company's consolidated sales and net income are lower in the first half of the fiscal year and increase in the second half. For further information, refer to the consolidated financial statements and notes included in the Company's Annual Report on Form 10-K for the year ended November 30, 1999. RECLASSIFICATIONS In the first quarter of 2000, the Company reclassified royalty income to be included in operating income. Amounts previously included in other expense have been reclassified to selling, general and administrative expense. All prior period financial information has been reclassified to conform to the current presentation. Total royalty income for the first quarter of 2000 and 1999 was $2.6 million and $1.3 million, respectively. 2. EARNINGS PER SHARE The following table sets forth the reconciliation of shares outstanding: Three Months Ended Feb. 29, Feb. 28, 2000 1999 ------ ------ (in thousands) Average shares outstanding - basic 69,537 72,326 Effect of dilutive securities: Stock options and Employee stock purchase plan 281 627 ------ ------ Average shares outstanding - assuming dilution 69,818 72,953 ====== ====== (4)

3. COMPREHENSIVE INCOME The following table sets forth the components of comprehensive income: Three Months Ended Feb. 29, Feb. 28, 2000 1999 ---- ---- (in thousands) Net income $ 24,417 $ 18,170 Other comprehensive income: Foreign currency translation adjustments (2,066) (4,356) Derivative financial instruments 2,192 (331) -------- -------- Comprehensive income $ 24,543 $ 13,483 ======== ======== 4. SPECIAL CHARGES During 1999, the Company recorded special charges associated with a plan to streamline operations and an actuarial change. In Europe, the Company announced actions to consolidate certain U.K. facilities, improve efficiencies within previously consolidated European operations and realign operations between the U.K. and other European locations. During the first quarter of 2000, the Company recorded special charges of $0.5 million ($0.4 million after-tax). These charges, which primarily related to other exit costs anticipated in the streamlining actions discussed above, could not be recognized until certain actions were implemented. The Company also utilized $1.6 million of special charge accruals, primarily related to severance and personnel costs. As of February 29, 2000, approximately 230 positions were eliminated under the streamlining program. In total, the Company expects to recognize $2.6 million of special charges and complete the program in 2000. The major components of the special charges (credits) and the remaining accrual balance as of February 29, 2000 follow: Severance Asset Other Actuarial and personnel write- exit method Costs Downs Costs Change Total ------------- ------ ----- --------- ----- (in millions) 1999 - ---- Special charges (credits) $7.9 $15.8 $3.0 $(7.7) $19.0 Amounts utilized (4.0) (15.8) (1.2) 7.7 (13.3) ---- ----- ---- ----- ----- Balance at November 30, 1999 $3.9 $ - $1.8 $ - $5.7 2000 - ---- Special charges 0.1 0.1 0.3 - 0.5 Amounts utilized (1.1) (0.1) (0.4) - (1.6) ---- ---- ---- ---- ---- Balance at February 29, 2000 $2.9 $ - $1.7 $ - $4.6 (5)

For further information, please refer to the Company's Annual Report on Form 10-K for the year ended November 30, 1999. 5. BUSINESS SEGMENTS In the fourth quarter of 1999, the Company adopted SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information." SFAS No. 131 establishes reporting standards for a company's operating segments and related disclosures about its products, services, geographic areas and major customers. The Company operates in three business segments: consumer, industrial and packaging. The consumer and industrial segments manufacture, market and distribute spices, herbs, seasonings, flavorings and other specialty food products throughout the world. The consumer segment sells consumer spices, herbs, extracts, proprietary seasoning blends, sauces and marinades to the consumer food market under a variety of brands, including the McCormick and Schilling brands in the U.S., Club House in Canada, and Schwartz in the U.K. The industrial segment sells to food processors, restaurant chains, distributors, warehouse clubs and institutional operations. The packaging segment manufactures and markets plastic packaging products for food, personal care and other industries, predominantly in the U.S. Tubes and bottles are also produced for the Company's food segments. The Company measures segment performance based on operating income. Intersegment sales are generally accounted for at current market value or cost plus markup. Because of manufacturing integration for certain products within the food segments, inventory cost, including the producing segment's overhead and depreciation, is transferred and recognized in the operating income of the receiving segment. Corporate and eliminations includes general corporate expenses, intercompany eliminations and other charges not directly attributable to the segments. Total Corporate & Consumer Industrial Food Packaging Eliminations Total -------- ---------- ----- --------- ------------ --------- (in millions) Three Months Ended Feb. 29, 2000 - -------------------------------- Net sales $ 203.1 $ 217.3 $ 420.4 $ 42.0 $ -- $ 462.4 Intersegment sales -- 2.5 2.5 8.2 (10.7) -- Operating income 25.7 15.1 40.8 5.3 (8.7) 37.4 Operating income excluding special charges 26.0 15.3 41.3 5.3 (8.7) 37.9 Income from unconsolidated operations 5.7 0.4 6.1 -- -- 6.1 Three Months Ended Feb. 28, 1999 - -------------------------------- Net sales $ 191.5 $ 210.7 $ 402.2 $ 39.3 $ -- $ 441.5 Intersegment sales -- 1.8 1.8 7.1 (8.9) -- Operating income 23.0 13.7 36.7 3.8 (6.5) 34.0 Operating income excluding special charges 23.0 13.7 36.7 3.8 (6.5) 34.0 Income from unconsolidated operations 1.7 -- 1.7 -- -- 1.7 (6)

ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OVERVIEW For the quarter ended February 29, 2000, the Company reported net income of $24.4 million versus $18.2 million for the comparable period last year. Diluted earnings per share were $0.35 for the first quarter of 2000 compared to $0.25 last year. The Company realized improved financial performance throughout its global operations. In the first quarter of 2000, sales, gross profit margin and operating income in each business segment improved versus the comparable period last year. New distribution, new products, favorable product mix and operating efficiencies continued to favorably impact the Company's results. Although the bankruptcy of a significant industrial customer negatively impacted the first quarter of 2000, operating income, excluding special charges, still grew 11.5% versus last year. In addition, the Company's unconsolidated affiliates recorded significant improvement over the comparable period last year. RESULTS OF OPERATIONS Net sales for the quarter ended February 29, 2000 increased 4.7% over the comparable quarter of 1999. Unit volume increased 4.2% as compared to last year, while the combined effects of price and product mix had no impact on sales. Foreign currency exchange rates also had no impact on sales, as unfavorable European impacts were offset by favorable results in Canada, Mexico and Australia. The acquisition of a Hispanic food products business in the first quarter of 2000 contributed 0.5% in sales growth over the prior year. Three months ended Feb. 29, Feb. 28, 2000 1999 ------- -------- (in millions) Net Sales - ---------- Consumer $203.1 $191.5 Industrial 217.3 210.7 Packaging 42.0 39.3 ------- -------- $462.4 $441.5 Consumer sales increased 6.1% due to volume growth throughout the global business. In the Americas, sales increased 7.3% primarily due to strong volume growth in the U.S. In this market, effective promotional and marketing programs, new products, new distribution and the acquisition of a Hispanic food products business increased sales. Consumer sales in Asia were up 22.9% due to new products and market expansion. European sales decreased 0.6%, as unfavorable foreign exchange rates decreased sales by 2.9%. (7)

Industrial sales increased 3.1%, primarily due to volume growth. In the Americas, sales increased 6.0% as both volume and the combination of price and product mix improved due to distribution gains at warehouse clubs, broadline distributor growth and improved performance in Mexico. European sales decreased 7.7% versus the prior period as continued strong competition and unfavorable foreign exchange rates negatively impacted the business. Sales in Asia were down 3.0% versus the prior year due unfavorable price and product mix, primarily in China. Packaging sales increased 6.9% versus the prior year, as improved market conditions continued to fuel volume growth. Gross profit margin increased to 35.4% from 32.9% in the first quarter of last year. Gross profit margins were favorably impacted by global growth in the higher margin consumer segment. Within the industrial segment, increased sales of higher margin compound flavor products, new products and increased sales to foodservice customers improved margins. Increased volumes and improved operating efficiencies continued to increase margins in the packaging segment. Selling, general and administrative expenses increased in the first quarter ended February 29, 2000 as compared to last year in both dollar terms and as a percentage of net sales. These increases were primarily due to expenditures in support of higher sales and income levels, including promotional spending in support of new products, primarily in the consumer segment, and incentive-based employee compensation. In addition, the Company reserved $3.8 million for the bankruptcy of AmeriServe, an industrial customer. Three months ended Feb. 29, Feb. 28, 2000 1999 -------- -------- (in millions) Operating Income - ---------------- Consumer $25.7 $23.0 Industrial 15.1 13.7 Packaging 5.3 3.8 ------ -------- Combined segments (1) $46.1 $40.5 Operating income excluding - -------------------------- special charges --------------- Consumer $26.0 $23.0 Industrial 15.3 13.7 Packaging 5.3 3.8 ------ -------- Combined segments (1) $46.6 $40.5 (1)- Excludes impact of general corporate expenses included as Corporate & Eliminations. See Note 5 in the Notes to Condensed Consolidated Financial Statements. (8)

Operating income margin, excluding special charges, increased to 8.2% from 7.7% for the three months ended February 29, 2000 as compared to last year. Operating income, excluding special charges, increased $3.9 million or 11.5%. Consumer operating income improved 13.0% versus the prior period due to increased sales and higher levels of royalty income. Industrial operating income increased 11.7% due to product mix and operating efficiencies, partially offset by the reserve for bad debt. Packaging operating income grew 39.5% due to higher volumes and operating efficiencies. Interest expense for the first quarter of 2000 decreased $0.7 million versus the comparable period last year. Although short-term interest rates for the quarter rose versus last year's comparable period, the retirement of higher interest rate, long term debt in 1999 and a greater weighting to short-term debt in the first quarter favorably impacted the Company. Total debt levels in the first quarter of 2000 were also less than the comparable period last year. Other expense for the first quarter of 1999 included $1.2 million of income from the three year non-compete agreement with Calpine Corporation. This agreement, entered into as a part of the 1996 sale of Gilroy Energy Company, Inc., ended in 1999. The effective tax rate for the first quarter of 2000 was 35.7% versus 35.9% in the first quarter of last year. Income from unconsolidated operations increased to $6.1 million in the first quarter of 2000 from $1.7 million in the comparable quarter last year. The increase is primarily due to improved sales and income at our Mexican joint venture. Signature Brands and the Company's joint ventures in Japan also improved their results over last year. SPECIAL CHARGES In 1999, the Company announced plans to streamline operations. During the first quarter of 2000, the Company recorded special charges of $0.5 million ($0.4 million after-tax). These charges, which primarily related to other exit costs anticipated in these streamlining actions, could not be recognized until certain actions were implemented. For further information, please refer to Note 4 in the Notes to Condensed Consolidated Financial Statements and the Company's Annual Report on Form 10-K for the year ended November 30, 1999. MARKET RISK SENSITIVITY FOREIGN CURRENCY The fair value of the Company's entire portfolio of forward and option contracts was $0.4 million and $0.5 million as of February 29, 2000 and February 28, 1999, respectively. (9)

INTEREST RATES The fair value of the Company's forward starting interest rate swaps was $5.9 million and ($0.5) million as of February 29, 2000. The Company intends to hold the interest rate swaps until maturity. FINANCIAL CONDITION In the Condensed Consolidated Statement of Cash Flows, cash flows from operating activities decreased from a cash inflow of $15.7 million to a cash outflow of $2.6 million for the three months ended February 28, 1999 and February 29, 2000, respectively. This decrease is primarily due to changes in working capital components. Compared to the prior year, cash flows related to inventory were unfavorable due to the significant improvements experienced in the first quarter of 1999, while prepaid allowances were unfavorable due to the timing of customer contract renewals. In addition, other liabilities were unfavorable due to the payment of incentive-based employee compensation costs. Investing activities used cash of $15.3 million in the first three months of 2000 versus $9.6 million in the comparable period of 1999. Although capital expenditures increased versus the prior year, the Company maintained its capital expenditures at depreciation levels. In the first quarter of 2000, the Company acquired a regional line of Hispanic food products in the U.S. These products, which include spices, herbs, chili pods and other authentic Hispanic food products, will expand the Company's existing business in this category. Cash flows from financing activities include the purchase of 1.4 million shares of common stock under the Company's previously announced $250 million share repurchase program. Through February 29, 2000, 2.8 million shares were purchased under this program. The Company's ratio of debt to total capital was 54.8% as of February 29, 2000, up slightly from 54.4% at February 28, 1999 and up from 47.2% at November 30, 1999. The increase since year end was due to the Company's historical trend of lower income in the first half of the fiscal year and the effect of the share repurchase program. Management believes that internally generated funds and its existing sources of liquidity are sufficient to meet current and anticipated financing requirements over the next 12 months. YEAR 2000 In prior years, the Company discussed the nature and progress of its plans to become Year 2000 (Y2K) ready. As a result of these plans, the Company has not experienced significant Y2K issues subsequent to 1999's fiscal year end. The Company will continue to monitor business-critical information technology applications and critical third parties throughout the year 2000. (10)

FORWARD-LOOKING INFORMATION Certain statements contained in this report, including those related to special charge project spending and completion, Y2K readiness, the stock repurchase program, the holding period and market risks associated with financial instruments, the impact of foreign exchange fluctuations and the adequacy of internally generated funds and existing sources of liquidity are "forward-looking statements" within the meaning of Section 21E of the Securities and Exchange Act of 1934. Forward-looking statements are based on management's current views and assumptions and involve risks and uncertainties that could significantly affect expected results. Operating results could be materially affected by external factors such as: actions of competitors, customer relationships, actual amounts and timing of special charge items, including severance payments, removal and disposal costs and final negotiation of third-party contracts, third party Y2K readiness, the impact of stock market conditions on the stock repurchase program, fluctuations in the cost and availability of supply-chain resources and global economic conditions, including interest and currency rate fluctuations and inflation rates. ITEM 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK For information regarding the Company's exposure to certain market risks, see Item 7A, Quantitative and Qualitative Disclosures About Market Risk, in the Company's Annual Report on Form 10-K for the year ended November 30, 1999. Except as described in the Management's Discussion and Analysis of Financial Condition and Results of Operations, there have been no significant changes in the Company's financial instrument portfolio or market risk exposures since year end. (11)

PART II - OTHER INFORMATION Item 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits See Exhibit Index at pages 14-16 of this Report on Form 10-Q. (b) Reports on Form 8-K. None. (12)

SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. McCORMICK & COMPANY, INCORPORATED Date: APRIL 13, 2000 By: /s/ Francis A. Contino ----------------------- ------------------------------- Francis A. Contino Executive Vice President & Chief Financial Officer Date: APRIL 13, 2000 By: /s/ Kenneth A. Kelly, Jr. -------------------------- ------------------------------ Kenneth A. Kelly, Jr. Vice President & Controller (13)

EXHIBIT INDEX ITEM 601 EXHIBIT NUMBER REFERENCE OR PAGE (2) Plan of acquisition, reorganization, arrangement, liquidation or succession Not applicable. (3) Articles of Incorporation and By-Laws Restatement of Charter of McCormick & Incorporated by reference from Registration Company, Incorporated dated April l6, 1990 Form S-8, Registration No. 33-39582 as filed with the Securities and Exchange Commission on March 25, 1991. Articles of Amendment to Charter of Incorporated by reference from Registration Form McCormick & Company, Incorporated S-8 Registration Statement No. 33-59842 as dated April 1, 1992 filed with the Securities and Exchange Commission on March 19, 1993. By-laws of McCormick & Company, Incorporated by reference from Registrant's Form Incorporated-Restated and 10-Q for the quarter ended May 31, 1996 as Amended as of June 17, 1996. filed with the Securities and Exchange Commission on July 12, 1996. (4) Instruments defining the rights of With respect to rights of holders of equity security holders, including securities, see Exhibit 3 (Restatement of Charter). indentures. No instrument of Registrant with respect to long-term debt involves an amount of authorized securities which exceeds 10 percent of the total assets of the Registrant and its subsidiaries on a consolidated basis. Registrant agrees to furnish a copy of any instrument upon request of the Securities and Exchange Commission. (14)

(10) Material contracts. (i) Registrant's supplemental pension plan for certain senior officers is described in the McCormick Supplemental Executive Retirement Plan, a copy of which was attached as Exhibit 10.1 to the Registrant's Report on Form 10-K for the fiscal year 1992 as filed with the Securities and Exchange Commission on February 17, 1993, which report is incorporated by reference. (ii) Stock option plans, in which directors, officers and certain other management employees participate, are described in Registrant's S-8 Registration Statements Nos. 33-33725 and 33-23727 as filed with the Securities and Exchange Commission on March 2, 1990 and March 23, 1997, respectively, which statements are incorporated by reference. (iii) Asset Purchase Agreement among the Registrant, Gilroy Foods, Inc. and ConAgra, Inc. dated August 28, 1996, which agreement is incorporated by reference from Registrant's Report on Form 8-K as filed with the Securities and Exchange Commission on September 13, 1996. (iv) Asset Purchase Agreement among the Registrant, Gilroy Energy Company, Inc. and Calpine Gilroy Cogen, L.P., dated August 28, 1996, which agreement is incorporated by reference from Registrant's Report on Form 8-K as filed with the Securities and Exchange Commission on September 13, 1996. (v) Mid-Term Incentive Program provided to a limited number of senior executives, a description of which is incorporated by reference from pages 19 and 20 of the Registrant's definitive Proxy Statement dated February 18, 1998, as filed with the Securities and Exchange Commission on February 17, 1998, which pages are incorporated by reference. (vi) Amendment to the Letter Agreement between Registrant and Charles P. McCormick, Jr. effective December 1, 1998, which letter is attached as Exhibit 10.1 to the Registrant's Report on Form 10-K for the fiscal year 1998, as filed with the Securities and Exchange Commission on February 24, 1999, which report is incorporated by reference. (vii) Directors' Non-Qualified Stock Option Plan provided to members of the Registrant's Board of Directors who are not also employees of the Registrant, is described in Registrant's S-8 Registration Statement No. 333-74963 as filed with the Securities and Exchange Commission on March 24, 1999, which statement is incorporated by reference. (15)

(viii) Deferred Compensation Plan in which directors, officers and certain other management employees participate, a description of which is incorporated by reference from the Registrant's S-8 Registration Statement No. 333-93231 as filed with the Securities and Exchange Commission on December 12, 1999, which statement is incorporated by reference. (11) Statement re computation of per-share Not applicable. earnings. (15) Letter re unaudited interim financial Not applicable. information. (18) Letter re change in accounting Not applicable. principles. (19) Report furnished to security holders. Not applicable. (22) Published report regarding matters Not applicable. submitted to vote of securities holders. (23) Consent of experts. Not applicable. (24) Power of attorney. Not applicable. (27) Financial data schedule. Submitted in electronic format only. (99) Additional exhibits. Not applicable. (16)

5 1,000 3-MOS NOV-30-2000 FEB-29-2000 24,009 0 188,529 7,907 247,316 482,988 746,426 384,070 1,200,295 510,053 239,871 0 0 171,896 181,483 1,200,295 462,403 462,403 298,571 126,440 (1,445) 0 7,406 28,541 10,189 24,417 0 0 0 24,417 0.35 0.35