ITEM 1. BUSINESS
General
Boole & Babbage, Inc. ("Boole & Babbage" or the "Company"), founded in 1967, develops and markets enterprise automation software solutions for managing service levels in multivendor, distributed computing environments.
The Company's products are used by information systems professionals whose organizations rely on the availability of their computing resources to conduct business. Boole & Babbage is committed to the quality of the products and services it provides to its customers and continually invests in research and development to maintain the quality of its software products.
See Note 7 of Notes to Consolidated Financial Statements for certain financial information with respect to the Company's foreign operations.
Market
Over the last 30 years, systems management has evolved from simply monitoring resource usage in a single mainframe to automated management of client/server applications across the information system enterprise. This includes the monitoring and management of mainframes, servers, networks and applications from disparate vendors and across a myriad of platforms.
The explosive growth of computing resources poses new challenges for systems management. Organizations are increasingly dependent on information systems for their 24x7 operations. If systems fail to deliver service to the internal end-user, there can be an immediate impact on external customers and the bottom line.
Today's typical computing environment includes mainframes, workstations, applications, middleware, databases and Web technologies dispersed throughout the organization. In this scenario, applications become increasingly complex as they support more business functions and are distributed across the enterprise on downsized platforms.
Along with the task of supporting this complex, mission-critical resource, corporate IT departments are under continuous pressure to reduce all the costs associated with information systems and their management--hardware, software, networks and personnel.
Despite recent consolidations, a smaller field of software vendors has been slow to deliver significant integration among systems management tools, while the market continues to demand out-of-the-box interoperability of diverse products.
In the face of these market dynamics, traditional approaches to systems management--which focuses on managing discrete components such as CPUs, subsystems, devices and networks-- cannot meet the challenge of managing the service levels required by the end-users connected to the corporate IT infrastructure. These users demand that systems management focuses on the same mission-critical applications they rely on.
Today, Boole & Babbage is focused on delivering the next generation of service level management tools needed to respond to these challenges with its latest product initiative: Desired State Management. In support of this initiative which is designed to allow organizations to express IT management policies in business terms, Boole & Babbage has introduced a new Windows NT-based, Web-enabled family of clients, called the Explorer, that provide users with increased flexibility and lower complexity in managing the entire enterprise. Additionally, the Company has outlined plans for several other new products, including new servers and agents, and initiatives that support the Desired State Management computing model.
Product Strategy: Service Level Management for Distributed Systems
Simplifying the management of enterprises and ensuring system availability is the driving force behind Boole & Babbage software solutions. Its products enable leading worldwide organizations with large and complex Information Technology (IT) systems to reduce operational costs and improve service delivery. Through advanced interoperability with leading frameworks and a flexible architecture easily scaled to customer requirements, Boole & Babbage products deliver a comprehensive systems management and automation solution for the entire enterprise, including applications, middleware, databases and Web technologies.
The Boole & Babbage set of service level management offerings is an end-to-end open solution -- without any boundaries to the type of IT components that can be reached. If an enterprise has SNMP- and CMIP-managed equipment, or is committed to one of the leading frameworks from IBM/Tivoli, HP or SUN, then Boole & Babbage service level management solutions fit with and complement the customer's specific environment without extensive changes. The Company's products accept any type of alert from non-standard-conforming environments such as legacy, network equipment, environmental systems and/or older midrange systems and allow for implementation through ready-to-use, knowledge bases.
Explorer Family for Proactive Service Level Management
By focusing on service level management at the application level, the new Explorer product architecture allows businesses to reduce the implementation process; lower the burden and costs involved in maintenance; and effectively close the gap between IT management and business units.
Delivering seamless interoperability across all Boole & Babbage product lines from a Web browser or native Microsoft Windows NT-based, graphical user interface, the Explorer family of clients share the same object-oriented technology.
Boole & Babbage has also incorporated a highly-graphical 3D and video user interface, secure remote access and complete platform independence, via a full-function Web browser, to all its Explorer offerings. Products include:
COMMAND/POST Explorer and MAX/Enterprise Explorer for distributed end-to-end enterprise management.
SpaceView Explorer for comprehensive storage management.
Command MQ Explorer for end-to-end management of message-oriented middleware.
MainView Explorer for management of Parallel Sysplex and traditional mainframe environments (available in Q2 1998).
COMMAND/POST: End-to-end Availability Management for Distributed Systems
COMMAND/POST is at the core of the Company's service level management strategy and is installed in more than 500 hundred leading organizations worldwide. COMMAND/POST functions as a central point-of-control for managing and automating all computers, networks and applications. It is integrated with all Boole & Babbage product lines, as well as many of the leading help desk problem management products and frameworks. COMMAND/POST uses a combination of agent- and message-based capabilities to extend the reach and scalability to any level of the enterprise.
COMMAND/POST finds problems and pinpoints the actual causes of enterprise system failures, triggers rapid corrective actions, interacts with problem management systems and escalates problem resolution to the appropriate level to ensure rapid restoration of service. It targets and solves network problems such as node failures or the rerouting of data over a less-congested path. Customers gain increases in application availability while limiting required manual intervention by systems management professionals.
By consolidating enterprise information to a central console, operational staffing requirements are reduced, freeing up resources for more strategic functions while the overall control of the complex information system infrastructure is enhanced. In the last four years, COMMAND/POST has emerged as a valuable tool for centralized, proactive Help Desk management, an area of renewed focus for corporate enterprises. And through partnerships with other market leaders such as HP, IBM/Tivoli and SUN, COMMAND/POST has gained acceptance as the system integrator for various point solutions. These partnerships deliver to COMMAND/POST users the benefits of integrated, complementary products from customers' preferred vendors.
COMMAND/POST provides:
Immediate improvements in availability and performance through automated recovery and failure prevention across WANs, LANs, mainframes and minicomputers.
Low-cost implementation of connectivity through packaged interfaces and tools for message and alert filtering.
An open architecture through interfaces to virtually any device.
Increased operator productivity through console and alert consolidation, a graphical interface and graphical representations of enterprise configuration.
Customization of data presentation on the UNIX workstation.
COMMAND/POST Power Modules: Distributed Enterprise Intelligence
Power Modules are agent-based solutions for managing a variety of different operating system platforms, middleware and applications. Power Modules exist for multiple versions of UNIX, Windows NT, OS/2, NetWare, IBM MQSeries, Microsoft MSMQ and SAP R/3.
Each Power Module is focused on increasing availability by providing surveillance and resolution of conditions that can affect applications, servers or workstations. Integrated management of Power Modules and the alerts they generate is performed from either the enterprise central point of control at a COMMAND/POST console, or from a local domain-level COMMAND/POST console.
MainView: Mainframe and Parallel Sysplex Server Management
The Boole & Babbage integrated MainView family of products provides automation and performance management for the IBM S/390 servers, ES/9000 series processors and to the CMOS based highly Parallel Sysplex servers. MainView products provide flexibility and efficiency in data collection across multiple MVS systems including Sysplex environments. On a single screen, application-focused views help ensure that service and availability goals are being met across the entire enterprise.
In the mainframe area, IBM has announced several aggressive and strategic initiatives, destined to position the MVS operating system as an enterprise server operating system. With the introduction of the System/390 Parallel processors, which essentially reproduce the MVS operating system on a chip, IBM has given an indication of its plan to accommodate market demand for more efficient parallel processors.
Customers benefit from greater efficiency and cost reduction with parallel processors, however, they are also faced with an attendant increase in system complexity. Boole & Babbage was the first software vendor to offer products specifically designed to handle the systems management needs of the Parallel Sysplex environment.
The Company's mainframe products operate only with certain IBM operating systems. IBM has often modified or changed its operating systems and introduced new computer systems. The Company believes that IBM's successive operating systems and mainframe architectures have been and will be designed to allow IBM customers to enhance their systems and use new software as well as to modify and use their existing software. The Company must adapt its products to accommodate these IBM changes in order to license its products to new customers and to obtain maintenance contracts from existing customers.
Boole & Babbage works closely with IBM to ensure that its products are kept current with their product releases. The companies exchange information and work cooperatively to ensure consistent service to their mutual customers. IBM is also a customer and user of Boole & Babbage products.
While it is not anticipated that parallel processors will immediately replace all traditional mainframes, Boole & Babbage is well positioned for the coexistence of both types of processors as they evolve to new roles. In fact, many large firms are investing in Boole & Babbage Sysplex-ready products in order to prepare their systems management infrastructure for a smooth transition to parallel processors. The flexibility of the MainView architecture is beneficial in both a parallel processing environment and in traditional mainframe computing by making it possible to group resource activities in ways that are meaningful to a particular business.
Command MQ: End-to-end Middleware Management
Command MQ is a fully integrated solution that provides availability management and automation, performance and operations management, and configuration and administration of distributed message-queuing middleware networks. Based on the Boole & Babbage agent and message-based technology, Command MQ's coverage of MQSeries spans MVS, HP-UX, Sun Solaris, DEC VMS, UNIX, AIX, OS/400, OS/2, Microsoft's MSMQ and Windows NT operating environments.
From a single console, Command MQ presents a consummate view of the availability and performance of the middleware layer network and how it is affecting the mission-critical applications it supports. Command MQ is capable of monitoring all middleware internal network components, such as queue managers, queues and channels, as well as the physical resources that constitute the external network.
Command MQ is highly interoperable with enterprise management consoles, including HP OpenView, Tivoli TME 10, SunSoft Solstice and Boole & Babbage COMMAND/POST.
SpaceView: End-to-end Storage Management and Automation
Boole & Babbage sells products that address the control and automation of mainframe and client/server disk (DASD) storage subsystems.
Its SpaceView offering provides enterprisewide, integrated storage management. Over 3,000 data centers worldwide use the SpaceView family of products to automate storage management across the enterprise. Components of SpaceView dynamically recover from errors caused by space shortages, extend IBM's storage management utilities with more sophisticated file placement and better control of archiving, report on disk utilization by physical volume or by business application, and increase performance of specific types of jobs through extensive buffering.
Third-party Products
The Company also sells a number of products from independent software vendors; these third-party products complement the Company's strategy by adding applications such as Scheduling, Tape, Output and Printing management, JCL management, Desktop to Mainframe Connectivity etc. The following companies provide products for the European and international market: Diversified Software Systems, Inc., New Dimension Software, Simware, Inc., and Tone Software Corporation.
COMMAND/POST, MainView and MAX/Enterprise are registered trademarks of Boole & Babbage, Inc. SpaceView is a trademark of Boole & Babbage, Inc. IBM is a registered trademark of International Business Machines Corporation. MVS, CICS, IMS, DB2, NetView and SystemView are trademarks of International Business Machines Corporation.
Customer Support and Product Maintenance
The Company offers product maintenance, which includes maintenance and updating of product capabilities to accommodate changes in a customer's hardware and software. An initial period, ranging from six months to one year, of maintenance is included in all of the Company's software licenses. Thereafter, the Company offers optional maintenance renewals at prices that generally range from 15% to 20% annually of the current product price. Customers may also elect to purchase advance maintenance at the time of product licensing for maintenance periods beyond the first year. The Company also provides extensive computer-supported problem solving capabilities over the telephone for its customers as part of their maintenance contracts. The Company believes that support of its customers and products is very important, and it continually attempts to improve its support systems and techniques. The Company's current annual maintenance cancellation rate is approximately 10%.
Consulting, Education and Computer Services
Consulting and educational services with regard to the application of Boole & Babbage products are provided to customers on a fee basis. The Company's computer services division provides mainframe computing services on a time-sharing basis to corporate affiliates and non-affiliates.
Marketing and Customers
The Company sells its products domestically through its own distribution division, Boole & Babbage North America. In Europe, the Company's products are sold through its European subsidiary, Boole & Babbage Europe. In areas outside of North America and Europe, the Company has a wholly-owned sales subsidiary, Boole & Babbage Australasia Pty. Ltd, in Australia and a majority-owned sales subsidiary, Joint Systems & Technology, in Japan. In addition to its own sales staff, the Company has agreements with several independent marketing agents who serve international markets in which the Company has not established sales offices.
The process of configuring the Company's products to meet the specific hardware and software requirements of the environments in which they will be used is rapid; consequently, shipments are generally made within one week of the time the order is received. In addition, the Company offers its customers the opportunity to use its products on a trial basis such that upon final acceptance by the customer, full installation has already been completed. Accordingly, the Company has no significant backlog of orders at any time.
The Company's customers are generally large corporate and government organizations including industrial companies, commercial banks, insurance companies, communications companies, retailers, transportation companies, utilities, health care and educational institutions, and federal, state and local governments. No customer accounted for greater than 10% of the Company's revenue in 1997, 1996 or 1995.
The Company's commitment to customer satisfaction and service is reflected in its policies regarding day-to-day operations and product maintenance, as well as in its efforts to establish forums for customer interaction and dialogue.
Boole & Babbage has more than 12,500 products installed at more than 6,000 sites worldwide. In each of the last three fiscal years, a large portion of the Company's product revenue was from additional licensing by existing customers of either new products or products for additional sites.
Research and Development
The computer hardware and software industries are characterized by rapid technological change, which requires a continuing high level of expenditures for the development and maintenance of software products. It is customary for modifications to be made to a software product as experience with its use grows or as changes in manufactures' hardware and software so require. In 1997 the Company reinvested 16% of its Boole product revenues in R&D activities aimed at both enhancing the existing products and adding several new ones. R&D costs net of amounts capitalized were $22,357,000, $20,872,000 and $20,113,000 for the years ended September 30, 1997, 1996 and 1995, respectively.
Competition
The computer software industry is highly competitive. There are several large software vendors that have substantially greater financial and technical resources than the Company; in the future, these companies may develop and market products similar to those offered by Boole & Babbage. Competitive products are currently offered by a number of independent software companies. The most important consideration for customers of performance capacity management, automated operations, and network management software are product and product line capability, integration, on-going product enhancement, ease of installation and use, reliability and quality of technical support, documentation and training, name recognition, vendor experience and stability, and, to a lesser extent, price. The Company believes that it competes favorably in all of these areas.
Product Protection
The Company relies on a combination of contract, patent, copyright and trade secret laws, as well as various other measures, to protect its rights with respect to its software products. The Company seeks protection of its proprietary interest in its products and trade secrets and holds registered related documentation. The Company does not believe that any single contract, patent, or copyright or trademark is material to its business as a whole. The Company does not sell or transfer title to its products to customers. The products are licensed on a "right-to-use" basis pursuant to a perpetual license, which is nontransferable and restricts use of the products to the customer's internal purposes on specified computers at specified sites.
Employees
As of November 30, 1997 Boole & Babbage employed approximately 880 persons, including sales, marketing and related activities; product development and customer support; and management, administration and finance. Of such employees, approximately 544 are employed in the United States and approximately 349 are employed in foreign countries. The Company believes that its employee relations are good.
ITEM 2.
ITEM 2. PROPERTIES
Boole & Babbage's principal administrative, marketing, research and development and support groups are located in one facility in San Jose, California. This facility is occupied under a lease that expires on March 31, 2000. The Company believes that this facility is adequate for its current needs and that suitable additional or substitute space will be available as needed to accommodate physical expansion of the Company's operations. In addition, the Company leases several sales and service facilities throughout North America, Europe, Japan and Australia under leases that expire on dates ranging through 2018.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS
Not applicable.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the fourth quarter ended September 30, 1997.
PART II
ITEM 5.
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
The information contained under the caption "Market for the Registrant's Common Stock and Related Stockholder Matters" on page 20 of the 1997 Annual Report to Stockholders is incorporated herein by reference. On January 16, 1997, pursuant to an Agreement and Plan of Merger and Reorganization among Boole & Babbage, MAXM Systems Corporation ("MAXM") and Minimum Acquisition Sub, Inc., Boole & Babbage acquired all of the capital stock of MAXM. In connection with and in consideration for the acquisition of MAXM by Boole Babbage, an aggregate of 1,137,115 shares of Boole & Babbage Common Stock were issued to the shareholders of MAXM, subject to an escrow agreement pursuant to which 10% of such shares are being held by an independent third party escrow agent. The issuance of Common Stock by Boole & Babbage was not registered with the Securities and Exchange Commission in reliance upon the exemptions provided by Section 4(2) of the Securities Act of 1933 and Rule 506 thereunder.
ITEM 6.
ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA
The information contained under the caption, "Selected Consolidated Financial Data" in the 1997 Annual Report to Stockholders on page 1 is incorporated herein by reference.
ITEM 7.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The information contained under the caption, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the 1997 Annual Report to Stockholders on pages 3 - 8 is incorporated herein by reference.
ITEM 7A.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Consolidated financial statements for Boole & Babbage, Inc. are contained on pages 9 - 12 of the 1997 Annual Report to Stockholders and are incorporated herein by reference. Supplementary data is contained on page 1 of the 1997 Annual Report to Stockholders and is incorporated herein by reference.
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES
Not applicable.
PART III
ITEM 10.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by this Item is incorporated herein by reference to the Company's Proxy Statement dated January 15, 1998 under the captions "Proposal 1" and "Additional Information."
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this Item is incorporated herein by reference to the Company's Proxy Statement dated January 15, 1998 under the captions "Proposal 1," "Executive Compensation," "Stock Option Grants and Exercises" and "Compensation Committee Report."
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this Item is incorporated herein by reference to the Company's Proxy Statement dated January 15, 1998 under the caption "Security Ownership of Management and Principal Stockholders."
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this Item is incorporated herein by reference to the Company's Proxy Statement dated January 15, 1998 under the caption "Certain Transactions."
PART IV
ITEM 14.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) The following documents are filed as a part of this Report:
1. Financial Statements. The following Consolidated Financial Statements of Boole & Babbage, Inc. and Report of Independent Auditors are incorporated by reference to Registrant's 1997 Annual Report to Stockholders:
Page in Exhibit 13.1
Consolidated Statements of Income-Years Ended September 30, 1997, 1996 and 1995.......................... 9
Consolidated Balance Sheets-September 30, 1997, 1996 and 1995................................................... 10
Consolidated Statements of Stockholders' Equity- Years Ended September 30, 1997, 1996 and 1995.............. 11
Consolidated Statements of Cash Flows-Years Ended September 30, 1997, 1996 and 1995.......................... 12
Notes to Consolidated Financial Statements................. 13
Report of Ernst & Young LLP, Independent Auditors.......... 20
2. Financial Statement Schedule. The following financial statement schedule of Boole & Babbage, Inc. is filed as part of this Report and should be read in conjunction with the Consolidated Financial Statements of Boole & Babbage, Inc.:
Schedule for the fiscal years ended September 30, 1997, 1996 and 1995:
Schedule Page -------- ---- II- Valuation and Qualifying Accounts..................... 14
All other schedules are omitted since the required information is not present or is not present in amounts sufficient to require submission of the schedules, or because the information required is included in the Consolidated Financial Statements and notes thereto included in the 1997 Annual Report to Stockholders, filed as Exhibit 13.1.
3. Exhibits. The exhibits listed in Item 14(c) are filed as part of this Annual Report.
(b) The Company did not file any reports on Form 8-K during the quarter ended September 30, 1997.
(c) Exhibit Number Description ------ -----------
3.1 Restated Certificate of Incorporation of Registrant. (1)
3.2 Bylaws of Registrant. (2)
4.1 Reference is made to Exhibits 3.1 and 3.2.
10.1 1986 Incentive Stock Option Plan, as amended, and related grant forms. (3)
10.2 1986 Supplemental Stock Option Plan, as amended, and related grant forms. (3)
10.3 Employee Stock Purchase Plan. (4)
10.4 Form of Indemnity Agreement between Registrant and its officers and directors. (1)
10.5 1993 Nonemployee Directors' Stock Option Plan, as amended, and related grant forms. (5)
10.6 1995 Stock Option Plan, as amended, and related grant forms. (6)
11.1 Computation of net income per share. (7)
13.1 1997 Annual Report to Stockholders. (7)
21.1 Subsidiaries of Registrant. (7)
23.1 Consent of Ernst & Young LLP, Independent Accountants. (7)
23.2 Report of Coopers & Lybrand LLP, Independent Accountants. (7)
23.3 Consent of Coopers & Lybrand LLP, Independent Accountants. (7)
27.1 Financial Data Schedule. (7)
(1) Previously filed as an exhibit to the definitive Proxy Statement for January 20, 1987 Annual Meeting of Stockholders and incorporated herein by reference.
(2) Previously filed as an exhibit to the Annual Report on Form 10-K for the year ended September 30, 1989, and incorporated herein by reference.
(3) Previously filed as an exhibit to the Registration Statement on Form S-8 (Registration No. 33-65145) and incorporated herein by reference.
(4) Previously filed as an exhibit to the Registration Statement on Form S-8 (Registration No. 333-32341) and incorporated herein by reference.
(5) Previously filed as an exhibit to the Registration Statement on Form S-8 (Registration No. 33-79782) and incorporated herein by reference.
(6) Previously filed as an exhibit to the Registration Statement on Form S-8 (Registration No. 333-02723) and incorporated herein by reference.
(7) Filed as an exhibit to this Annual Report on Form 10-K.
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as express in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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 on the 22nd day of December 1997.
BOOLE & BABBAGE, INC.
By: \Arthur F. Knapp, Jr.\ ------------------------- Arthur F. Knapp, Jr. Chief Financial Officer (Principal Financial and Accounting Officer)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears on the following page constitutes and appoints Paul E. Newton and Arthur F. Knapp, Jr. his attorneys-in-fact for him in any and all capacities, to sign any amendments to this Report on Form 10-K, and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that the said attorney-in-fact, or his substitute or substitutes, may do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities indicated on the 22nd day of December 1997.
\Johannes S. Bruggeling\ \Terry R. McGowan\ - ------------------------ ------------------ Johannes S. Bruggeling Terry R. McGowan Executive Vice President and Director Director
\Raymond E. Cairns\ \Paul E. Newton\ - ------------------- ---------------- Raymond E. Cairns Paul E. Newton Director President and Director
\Franklin P. Johnson, Jr.\ \Carl H. Reynolds\ - -------------------------- ------------------ Franklin P. Johnson, Jr. Carl H. Reynolds Chairman of the Board of Directors Director