UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 11-K ANNUAL REPORT Pursuant to Section 15(d) of the Securities Exchange Act of 1934 For the calendar year ended December 31, 1997 A. Full title of the Plan Paychex, Inc. 401(k) Incentive Retirement Plan B. Name and address of issuer of the securities held pursuant to the Plan and the address of its principal executive office: Paychex, Inc. 911 Panorama Trail South Rochester, NY 14625 Financial Statements and Exhibits Financial Statements Page No. Report of Independent Auditors 4 Statement of Net Assets Available for 5 Benefits, with Fund Information - December 31, 1997 Statement of Net Assets Available for 6 Benefits, with Fund Information - December 31, 1996 Statement of Changes in Net Assets 7 Available for Benefits, with Fund Information, for the Year Ended December 31, 1997 Statement of Changes in Net Assets 8 Available for Benefits, with Fund Information, for the Year Ended December 31, 1996 Notes to Financial Statements 9-13 Schedule of Assets Held for Investment Purposes - December 31, 1997 14 Schedule of Reportable Transactions - For the year 15 ended December 31, 1997 Exhibits 23.1 Consent of Ernst & Young LLP 16 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Plan Committee has caused this Annual Report to be signed by the undersigned thereunto duly authorized. Dated: June 25, 1998 PAYCHEX, INC. 401(k) INCENTIVE RETIREMENT PLAN By: /s/ Francis G. Provino ___________________________________ Francis G. Provino 401(k) COMMITTEE MEMBER Ernst & Young Report of Independent Auditors The Plan Committee Paychex, Inc. 401(k) Incentive Retirement Plan Rochester, New York We have audited the accompanying statements of net assets available for benefits of Paychex, Inc. 401(k) Incentive Retirement Plan (the Plan) as of December 31, 1997 and 1996, and the related statements of changes in net assets available for benefits for the years then ended. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan at December 31, 1997 and 1996, and the changes in its net assets available for benefits for the years then ended, in conformity with generally accepted accounting principles. Our audits were performed for the purpose of forming an opinion on the financial statements taken as a whole. The accompanying supplemental schedules of assets held for investment purposes as of December 31, 1997 and reportable transactions for the year then ended are presented for purposes of complying with the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974, and are not a required part of the financial statements. The Fund Information in the statement of net assets available for benefits and the statement of changes in net assets available for benefits is presented for purposes of additional analyses rather than to present the net assets available for benefits and changes in net assets available for benefits of each fund. The supplemental schedules have been subjected to the auditing procedures applied in our audit of the 1997 financial statements and, in our opinion, are fairly stated in all material respects in relation to the 1997 financial statements taken as a whole. April 15, 1998 /s/ Ernst & Young LLP PAYCHEX, INC. 401(K) INCENTIVE RETIREMENT PLAN STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION DECEMBER 31, 1997
Paychex, Inc. Growth Inter- Common and Stable national Combined Stock Income Equity Value Equity Loan Funds Fund Fund Fund Fund Fund Fund ____________ ____________ ____________ ____________ ____________ ____________ ____________ ASSETS Investments at market value: Common Stock of Paychex, Inc. - 2,073,754 Shares (Cost $15,696,884) $104,983,796 $104,983,796 IVT Total Return Fund - 335,712 Shares (Cost $7,681,585) 9,765,850 $ 9,765,850 Invesco Growth Fund - 2,409,455 Shares (Cost $12,850,715) 11,950,895 $ 11,950,895 Invesco Stable Value Fund - 8,343,845 Shares (Cost $8,343,845) 8,343,845 $ 8,343,845 Global Asset Management Fund - 114,131 Shares (Cost $2,927,005) 3,251,581 $ 3,251,581 Invesco Funds Group - IMF - Cash Reserves (Cost $3,488,465) 3,488,465 3,488,465 Participant Loans Receivable 4,601,770 $ 4,601,770 ____________ ____________ ____________ ____________ ____________ ____________ ____________ TOTAL ASSETS $146,386,202 $108,472,261 $ 9,765,850 $ 11,950,895 $ 8,343,845 $ 3,251,581 $ 4,601,770 LIABILITIES Withdrawals payable to terminated participants - Note E - - - - - - - ____________ ____________ ____________ ____________ ____________ ____________ ____________ NET ASSETS AVAILABLE FOR BENEFITS $146,386,202 $108,472,261 $ 9,765,850 $ 11,950,895 $ 8,343,845 $ 3,251,581 $ 4,601,770 ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________
See accompanying notes to financial statements. PAYCHEX, INC. 401(K) INCENTIVE RETIREMENT PLAN STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION DECEMBER 31, 1996
Paychex, Inc. Growth Inter- Common and Stable national Combined Stock Income Equity Value Equity Loan Funds Fund Fund Fund Fund Fund Fund ____________ ____________ ____________ ____________ ____________ ____________ ____________ ASSETS Investments at market value: Common Stock of Paychex, Inc. - 1,441,371 Shares (Cost $15,780,069) $ 74,140,260 $ 74,140,260 IVT Total Return Fund - 277,021 Shares (Cost $5,576,820) 6,731,622 $ 6,731,622 Invesco Growth Fund - 1,494,054 Shares (Cost $7,753,188) 7,754,138 $ 7,754,138 Invesco Stable Value Fund - 4,770,421 Shares (Cost $4,770,421) 4,770,421 $ 4,770,421 Global Asset Management Fund - 44,015 Shares (Cost $906,659) 1,018,937 $ 1,018,937 Invesco Funds Group - IMF - Cash Reserves (Cost $2,151,302) 2,151,302 2,151,302 Participant Loans Receivable 3,943,887 $ 3,943,887 ____________ ____________ ____________ ____________ ____________ ____________ ____________ TOTAL ASSETS $100,510,567 $ 76,291,562 $ 6,731,622 $ 7,754,138 $ 4,770,421 $ 1,018,937 $ 3,943,887 LIABILITIES Withdrawals payable to terminated participants - Note E - - - - - - - ____________ ____________ ____________ ____________ ____________ ____________ ____________ NET ASSETS AVAILABLE FOR BENEFITS $100,510,567 $ 76,291,562 $ 6,731,622 $ 7,754,138 $ 4,770,421 $ 1,018,937 $ 3,943,887 ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________
See accompanying notes to financial statements. PAYCHEX, INC. 401(K) INCENTIVE RETIREMENT PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION FOR THE YEAR ENDED DECEMBER 31, 1997
Paychex, Inc. Growth Inter- Common and Stable national Combined Stock Income Equity Value Equity Loan Funds Fund Fund Fund Fund Fund Fund ____________ ____________ ____________ ____________ ____________ ____________ ____________ Interest and dividend income $ 4,788,658 $ 721,000 $ 378,090 $ 2,879,245 $ 341,527 $ 140,142 $ 328,654 Net appreciation (depreciation) in fair market value of investments - 35,395,070 34,475,686 1,338,336 (737,202) - 318,250 - Contributions: Participants 9,385,043 6,236,857 855,142 1,351,156 455,924 485,964 - Employer 2,936,872 1,985,332 264,705 413,421 163,904 109,510 - ____________ ____________ ____________ ____________ ____________ ____________ ____________ 52,505,643 43,418,875 2,836,273 3,906,620 961,355 1,053,866 328,654 Withdrawals by terminated - participants (6,630,008) (4,562,619) (698,662) (475,619) (703,057) (190,051) Transfers between funds - (6,675,557) 896,617 765,756 3,315,126 1,368,829 329,229 ____________ ____________ ____________ ____________ ____________ ____________ ____________ CHANGE IN NET ASSETS 45,875,635 32,180,699 3,034,228 4,196,757 3,573,424 2,232,644 657,883 Net assets available for benefits at beginning of year 100,510,567 76,291,562 6,731,622 7,754,138 4,770,421 1,018,937 3,943,887 ____________ ____________ ____________ ____________ ____________ ____________ ____________ NET ASSETS AVAILABLE FOR BENEFITS $146,386,202 $108,472,261 $ 9,765,850 $11,950,895 $ 8,343,845 $ 3,251,581 $ 4,601,770 ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________
See accompanying notes to financial statements.
PAYCHEX, INC. 401(K) INCENTIVE RETIREMENT PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION FOR THE YEAR ENDED DECEMBER 31, 1996 Paychex, Inc. Growth Inter- Common and Stable national Combined Stock Income Equity Value Equity Loan Funds Fund Fund Fund Fund Fund Fund ____________ ____________ ____________ ____________ ____________ ____________ ____________ Interest and dividend income $ 2,213,420 $ 436,130 $ 252,674 $ 997,995 $ 272,664 $ 4,726 $ 249,231 Net appreciation (depreciation) in fair market value of investments - 26,552,916 25,548,295 549,162 332,578 - 122,881 - Contributions: Participants 6,992,391 4,800,726 734,859 951,367 418,861 86,578 - Employer 2,393,697 1,626,893 247,861 319,456 174,691 24,796 - ____________ ____________ ____________ ____________ ____________ ____________ ____________ 38,152,424 32,412,044 1,784,556 2,601,396 866,216 238,981 249,231 Withdrawals by terminated - participants (4,105,947) (2,703,140) (425,286) (522,217) (446,936) (8,368) Transfers between funds - 203,740 (931,193) (1,230,822) 414,503 788,324 755,448 ____________ ____________ ____________ ____________ ____________ ____________ ____________ CHANGE IN NET ASSETS 34,046,477 29,912,644 428,077 848,357 833,783 1,018,937 1,004,679 Net assets available for benefits at beginning of year 66,464,090 46,378,918 6,303,545 6,905,781 3,936,638 - 2,939,208 ____________ ____________ ____________ ____________ ____________ ____________ ____________ NET ASSETS AVAILABLE FOR BENEFITS $100,510,567 $ 76,291,562 $ 6,731,622 $ 7,754,138 $ 4,770,421 $ 1,018,937 $ 3,943,887 ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________
See accompanying notes to financial statements. PAYCHEX, INC. 401(k) INCENTIVE RETIREMENT PLAN NOTES TO FINANCIAL STATEMENTS NOTE A. SIGNIFICANT ACCOUNTING POLICIES The financial statements of the Paychex, Inc. 401(k) Incentive Retirement Plan (the Plan) are prepared on the accrual basis in accordance with generally accepted accounting principles. Administrative expenses of the Plan are paid by Paychex, Inc. (the "Company"). Investments in Paychex, Inc. Common Stock are carried at market value determined on the basis of quoted market (bid) price. The underlying investments of the mutual funds (excluding the Stable Value Fund) are valued at market, as reported by Invesco, based on the last reported sales price or bid price in the market where the investments are primarily traded or by a pricing service. The value of the Stable Value Fund is determined in the manner set forth above except that guaranteed income contracts, annuities, and other assets that provide for benefit payments or withdrawals on a contractual basis and with respect to which there is no active trading market are valued at their fair value as determined by Invesco, which in the case of such investments, is generally deemed to be at book value (cost plus accrued income). Short-term investments are valued at cost which approximates market value. Securities transactions are accounted for on the trade dates. Realized gains and losses from securities transactions are computed on the average cost basis. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts of net assets available for benefits at the date of the financial statements, and the reported amounts of changes in net assets available for benefits during the reporting period. Actual results could differ from those estimates. NOTE B. PLAN DESCRIPTION AND BENEFITS The plan provides for various investment options in any combination of Paychex, Inc. stock and various mutual funds. Investment securities are exposed to various risks such as interest rate, market and credit risks. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially effect participants' account balances and the amounts reported in the statement of net assets available for benefits. The Plan is a defined contribution plan established July 1, 1984. Company employees must be employed one year in which a minimum of 1,000 hours has been worked to be eligible for participation in the Plan. At the employee's option, contributions are invested in one or more of the following funds:
Number of Participants ______________________ December 31, December 31, 1997 1996 ____ ____ Paychex, Inc. Common Stock Fund 3,026 2,797 Growth & Income Fund 1,477 1,235 Equity Fund 1,947 1,571 Stable Value Fund 1,116 1,006 International Equity Fund 766 277
NOTES TO FINANCIAL STATEMENTS (CONTINUED) Employees may contribute up to 15% of their compensation to the Plan through payroll deductions, subject to the limit established by the Internal Revenue Code. Discretionary employer contributions are equal to 50% of the participants elective contribution, but not to exceed 3% of the participant's compensation. The Company may elect to make an additional discretionary contribution to the Plan, but has not done so for the years ended December 31, 1997 and 1996. Each participant is fully vested as to their elective contributions and rollover contributions as well as any earnings or losses on them. Employees are fully vested with respect to Company matching contributions upon completion of three years of service. Any nonvested Company matching contributions existing at the time a participant withdraws from the Plan are forfeited and available to Paychex, Inc. to reduce future contributions. Upon termination of the Plan, all participant's rights to accrued benefits are 100% nonforfeitable. The Plan allows participants to borrow up to 50% of the vested balance from their account. Bi-weekly or weekly payroll deductions are required to repay the loan within five years. Loans used for the purchase of a principal residence are required to be repaid within ten years. The rate of interest is Prime plus 1% at the time the loan is disbursed. The plan presents in the statement of changes in net assets available for benefits the net appreciation (depreciation) in the fair value of its investments which consists of the realized gains or losses and the unrealized appreciation (depreciation) on those investments. The Plan is subject to the requirements of the Employee Retirement Income Security Act of 1974. A complete description of the Plan, including eligibility, contribution, investment, vesting and withdrawal provisions, is contained in the official plan document which governs the operation of the Plan. The Plan Adoption Agreement was restated in 1996 to incorporate an amendment on eligibility. An employee will become a participant in the Plan on the first day of the month immediately following the completion of the service requirement. NOTE C. TAX STATUS The Plan is designed as a qualified plan under Section 401(a) and 401(k) of the Internal Revenue Code. Accordingly, no provision for Federal income taxes has been made. The Company has received a favorable determination letter from the Internal Revenue Service regarding the qualification of the plan. Employer contributions and investment income of the Plan are not taxable to the participants until withdrawn or distributed. In addition, net unrealized appreciation on any shares of Paychex, Inc. common stock distributed to a participant upon termination of employment is not taxed until the time of disposition of such shares, unless the participant elects to be taxed at the time of distribution. The Paychex, Inc. 401(k) Plan Committee is not aware of any course of action or series of events that have occurred that might adversely affect the Plan's qualified status. NOTES TO FINANCIAL STATEMENTS (CONTINUED) NOTE D. INVESTMENTS The net realized gain on disposition of investments is as follows:
Paychex, Inc. Growth Inter- Common and national Combined Stock Income Equity Equity Funds Fund Fund Fund Fund ___________ ___________ ___________ ___________ ___________ Year Ended December 31, 1997: Amount realized $26,446,408 $21,647,155 $ 1,863,040 $ 2,130,987 $ 805,226 Average cost 22,219,050 18,098,190 1,454,167 1,967,419 699,274 ___________ ___________ ___________ ___________ ___________ Net realized gain $ 4,227,358 $ 3,548,965 $ 408,873 $ 163,568 $ 105,952 ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ Year Ended December 31, 1996: Amount realized $20,959,915 $15,144,002 $ 2,390,860 $ 3,244,305 $ 180,748 Average cost 19,532,969 14,245,108 2,006,979 3,110,737 170,145 ___________ ___________ ___________ ___________ ___________ Net realized gain $ 1,426,946 $ 898,894 $ 383,881 $ 133,568 $ 10,603 ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________
NOTES TO FINANCIAL STATEMENTS (CONTINUED) The unrealized appreciation (depreciation) in fair value of investments included in net assets available for plan benefits is as follows:
Paychex, Inc. Growth Inter- Common and national Combined Stock Income Equity Equity Funds Fund Fund Fund Fund ___________ ___________ ___________ ___________ ___________ Year Ended December 31, 1997: Balance at beginning of year $59,628,221 $58,360,191 $ 1,154,802 $ 950 $ 112,278 Change for the year 31,167,712 30,926,721 929,463 (900,770) 212,298 ___________ ___________ ___________ ___________ ___________ Balance at end of year $90,795,933 $89,286,912 $ 2,084,265 $ (899,820) $ 324,576 ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ Year Ended December 31, 1996: Balance at beginning of year $34,502,251 $33,710,790 $ 989,521 $ (198,060) $ - Change for the year 25,125,970 24,649,401 165,281 199,010 112,278 ___________ ___________ ___________ ___________ ___________ Balance at end of year $59,628,221 $58,360,191 $ 1,154,802 $ 950 $ 112,278 ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________
NOTES TO FINANCIAL STATEMENTS (CONTINUED) NOTE E. BENEFIT PAYMENTS The AICPA Audit and Accounting Guide "Audit of Employee Benefit Plans" requires the Plan to disclose, in the footnotes to the financial statements, the amount of assets that have been allocated but not yet paid to participants who have withdrawn from the Plan as of year end; the amount should not be classified as a liability in the statement of net assets available for benefits. As such, the financial statements do not contain an accrual for benefit payments liability as of December 31, 1997. Amounts allocated to withdrawn participants are required to be reported on Form 5500. The following is a reconciliation of net assets available for benefits at December 31, 1997 per the financial statement to the 1997 Form 5500:
December 31, 1997 Net assets available for benefits per Statement of Net Assets Available for Benefits by Funds and Combined- December 31, 1997 $ 146,386,202 Amounts allocated to withdrawn participants ( 1,036,176) _________________ Net assets available for benefits per the Form 5500 $ 145,350,026 _________________ _________________
The following is a reconciliation of benefits paid to participants per the 1997 financial statements to the 1997 Form 5500:
Year ended December 31, 1997 Withdrawals by Terminated Participants per Statement of Changes In Net Assets Available for Benefits by Funds and Combined - December 31, 1997 $ 6,630,008 Add: Amounts allocated to withdrawn participants at December 31, 1997 1,036,176 Deduct: Amounts allocated to withdrawn participants at December 31, 1996 (385,764) _________________ Benefits paid to participants per the Form 5500 $ 7,280,420 _________________ _________________
NOTE F. ADDITION OF NEW FUND Effective April 1, 1996 the Company began offering an International Equity Fund as an additional investment option for the 401(k) participants. The fund is managed by Global Asset Management Funds, Inc. and seeks capital appreciation through investing in equity markets worldwide, excluding those in the USA. Effective January 1, 1998 the Company will offer the IRT 500 Index Fund through Invesco as an additional investment option for the 401(k) participants. The investment objective of this Fund is to provide total investment returns that closely replicate the total returns generated by the Standard & Poor's Composite Stock Index (S&P500). NOTE G. SUBSEQUENT EVENT Sub-event Effective January 1, 1998, the employees of Paychex Business Solutions (PBS), a wholly owned subsidiary of Paychex, Inc., will be participating in the Plan. In February 1998, the assets of the PBS 401(k) retirement plan were merged into the Plan. SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES PAYCHEX, INC. 401(k) INCENTIVE RETIREMENT PLAN DECEMBER 31, 1997
Description of Investment Identity of Issue, including Maturity Date, Borrower, Lessor Rate of Interest, Collateral, Current or Similar Party Par or Maturity Value Cost Value __________________ _____________________________ ___________ ___________ Paychex, Inc. Common Paychex, Inc. 2,073,754 shares of common Stock $15,696,884 $104,983,796 Stock Fund Invesco Funds Group 3,488,465 shares of the IMF- Cash Reserves Fund 3,488,465 3,488,465 ___________ ___________ $19,185,349 $108,472,261 Growth and Income Fund Invesco Funds Group 335,712 shares of the IVT Total Return Fund 7,681,585 9,765,850 Equity Fund Invesco Funds Group 2,409,455 shares of the Invesco Growth Fund 12,850,715 11,950,895 Stable Value Fund Invesco Funds Group 8,343,845 shares of the Invesco Stable Value Fund 8,343,845 8,343,845 International Equity Fund Global Asset Management 114,131 shares of the Global Funds, Inc. Asset Management Fund 2,927,005 3,251,581 Participant Loans * 4,601,770 4,601,770 ___________ ___________ $55,590,269 $146,386,202 ___________ ____________ ___________ ____________
There were no investment assets acquired and disposed of during the year which are reportable under the requirements of Section 2520.103-11 of the Department of Labor's rules and regulations. * Loans to participants have various maturity dates and bear interest at rates ranging from 7% to 11 1/2%. SCHEDULE OF REPORTABLE TRANSACTIONS PAYCHEX, INC. 401(k) INCENTIVE RETIREMENT PLAN YEAR ENDED DECEMBER 31, 1997
Identity of Issue, Borrower, Lessor, or Description Current Value Similar of Purchase Sales As of Trans- Gain Party Investment Price Price action Date (Loss) ____________ ___________ __________ __________ _____________ ______ Category (iii) - A series of securities transactions in excess of 5% of plan assets: Paychex, Inc. Common Invesco IMF-Cash $ 18,430,587 $ 18,430,587 Stock Fund Funds Reserves $ 17,093,424 $ 17,093,424 Group Equity Fund Invesco Invesco $ 7,068,977 $ 7,068,977 Funds Growth Fund $ 2,135,017 $ 2,135,017 Group Total Return Fund Invesco Invesco $ 3,559,234 $ 3,559,234 Funds Total Return $ 1,863,392 $ 1,863,392 Group Fund Stable Value Fund Invesco IRT Stable $ 6,802,151 $ 6,802,151 Funds Value Fund $ 3,228,727 $ 3,228,727 Group
There were no reportable transactions under categories (i), (ii) or (iv). EXHIBIT 23.1 Consent of Independent Auditors (To come from E&Y) We consent to the incorporation by reference in the Registration Statement below, of our report dated April 15, 1998, with respect to the financial statements and schedules of Paychex, Inc. 401(k) Incentive Retirement Plan included in this Annual Report (Form 11-K) for the year ended December 31, 1997 a. Form S-8 - Paychex, Inc. 401(k) Incentive Retirement Plan - as filed with the Securities and Exchange Commission on October 2, 1992 (No.33-52838). June 25, 1998 /s/ Ernst & Young, LLP Dated: June 25, 1998 Securities & Exchange Commission 450 5th Street, N.W. Washington, D.c. 20549-1004 Attn: Filing Desk, Stop 1-4 RE: Form 11-K Paychex, Inc. Commission File No. 0-11330 Dear Sir or Madame: Pursuant to Section 15(d) of the Securities Act of 1934, attached is Form 11-K for the year ended December 31, 1997 for Paychex, Inc. This filing is being effected by direct transmission to the Commission's EDGAR system. Very truly yours, /s/ Timothy W. Bahr ____________________ Timothy W. Bahr Reporting Manager TWB/dmm