8-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of Earliest Event Reported): April 14, 2003

NOVELLUS SYSTEMS, INC.

(Exact Name of Registrant as Specified in its Charter)

California
(State or Other Jurisdiction of Incorporation)

0-17157
(Commission File Number) 77-0024666
(I.R.S. Employer Identification No.)

4000 North First Street, San Jose, California 95134
(Address of Principal Executive Offices) (Zip Code)

(408) 943-9700
(Registrant’s Telephone Number, Including Area Code)

Not Applicable
(Former Name or Former Address, if Changed Since Last Report)

TABLE OF CONTENTS

	Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
	Item 9. Regulation FD Disclosure.
SIGNATURES
EXHIBIT INDEX
EXHIBIT 99.1

Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.

     (c)  Exhibits.

The exhibit listed below is being furnished with this Form 8-K.

Exhibit
Number	Description
99.1	First Quarter 2003 Earnings Release dated April 14, 2003.

Item 9. Regulation FD Disclosure.

On April 14, 2003, Novellus Systems, Inc. (the “Company”) announced via press release the Company’s results for its first quarter ended March 29, 2003. A copy of the Company’s press release is attached hereto as Exhibit 99.1. This Form 8-K and the attached exhibit are provided under Item 12 of Form 8-K and are furnished to, but not filed with, the Securities and Exchange Commission.

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 hereunto duly authorized.

	NOVELLUS SYSTEMS, INC.
	By:	/s/ Kevin S. Royal Kevin S. Royal Vice President and Chief Financial Officer
Date: April 14, 2003

2

EXHIBIT INDEX

Exhibit
Number	Description
99.1	First Quarter 2003 Earnings Release dated April 14, 2003.

EX-99.1 3 f89214exv99w1.txt EXHIBIT 99.1 EXHIBIT 99.1 CONTACTS: Kevin S. Royal Robin S. Yim Vice President and Chief Financial Officer Vice President, Treasurer Novellus Systems, Inc. Novellus Systems, Inc. Phone: (408) 943-9700 Phone: (408) 943-9700 FOR IMMEDIATE RELEASE NOVELLUS SYSTEMS REPORTS RESULTS FOR THE FIRST QUARTER 2003 SAN JOSE, Calif., April 14, 2003 -- Novellus Systems, Inc. (Nasdaq NM: NVLS) today reported net sales and results of operations for its first quarter ended March 29, 2003. Net sales for the quarter were $238.4 million, up 9.6 percent from $217.6 million in the fourth quarter of 2002 and up 40.5 percent from the first quarter 2002 net sales of $169.7 million. Net income for the first quarter of 2003 was $11.9 million or $0.08 per diluted share, up $8.9 million or 296.7 percent from the fourth quarter 2002 net income of $3.0 million or $0.02 per diluted share. Net income for the first quarter of 2003 increased $8.1 million or 213.2 percent from the first quarter 2002 net income of $3.8 million or $0.03 per diluted share. Net income for the first quarter of 2003 was $11.9 million or $0.08 per diluted share and did not include any unusual charges or benefits. The fourth quarter 2002 results included $3.2 million of restructuring and severance charges and a $9.0 million in-process research and development charge related to the acquisition of SpeedFam-IPEC, Inc. Without these charges, the fourth quarter 2002 net income would have been $14.0 million or $0.09 per diluted share. The first quarter 2002 results included a net benefit of $9.0 million. This net benefit reflects the combined effect of a $7.7 million benefit for recovery of a receivable previously reserved and a $4.6 million gain on a sale of an investment, offset by $3.3 million of severance payments. The $4.6 million gain on the sale of investment is classified in other income. Without these charges and benefits, the first quarter 2002 results would have been a net loss of $3.3 million or $(0.02) per diluted share. The financial measures presented above, which exclude certain charges, are not in accordance with Accounting Principles Generally Accepted in the United States of America (GAAP). The non-GAAP financial measures are considered useful to investors by company management as they provide insight into the results of ongoing operations. Shipments of $235.2 million in the first quarter of 2003 represent an increase of $44.2 million or 23.1 percent compared to $191.0 million reported in the fourth quarter of 2002. Deferred revenue at the end of the first quarter of 2003 was $127.0 million, a decrease of $3.1 million or 2.4 percent from $130.1 million at the end of the fourth quarter of 2002. Cash, cash equivalents and short-term investments as of March 29, 2003 were $929.8 million, a decrease of $90.2 million or 8.8 percent from the fourth quarter of 2002 ending balance of $1.02 billion. The decrease was primarily due to the repayment of SpeedFam-IPEC's convertible debt at a redemption price of $117.1 million and accrued interest of $2.2 million, offset by positive cash generated from operations which included $18.5 million from an income tax refund. Richard S. Hill, chairman and chief executive officer, said, "The demand for semiconductor capital equipment remains sluggish. However, in this challenging environment, we will continue to focus our efforts in areas with the best growth opportunities, continue to deploy advanced technologies, and use our financial strength to forge ahead with strategic research and development projects." 1 "SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995: The statements regarding (i) sluggish demand for semiconductor capital equipment, (ii) our continued focus on areas with the best growth opportunities, (iii) our continued deployment of advanced technologies, and (iv) our use of our financial strength to carry on strategic research and development projects, as well as other matters discussed in this news release that are not purely historical data, are forward-looking statements. The forward-looking statements involve risks and uncertainties, including, but not limited to, a severe downturn in the demand for semiconductor capital equipment, our inability to accurately identify the best areas of growth opportunities, unanticipated difficulties in our deployment of advanced technologies, our inability to allocate sufficient funds to strategic research and development projects, and other risks indicated in our filings with the Securities and Exchange Commission (SEC). Actual results could differ materially. We assume no obligation to update this information. For more details, please refer to our SEC filings, including our Annual Report on Form 10-K for the year ended December 31, 2002. ABOUT NOVELLUS: Novellus Systems, Inc., an S&P 500 company, manufactures, markets and services advanced deposition, surface preparation and chemical mechanical planarization equipment for today's advanced integrated circuits. Our products are designed for high-volume production of advanced, leading-edge semiconductor devices at the lowest possible cost. Headquartered in San Jose, Calif., with subsidiaries throughout the United States, as well as in the United Kingdom, France, Germany, the Netherlands, Ireland, Israel, India, China, Japan, Korea, Malaysia, Singapore and Taiwan, we are a publicly traded company on the Nasdaq stock exchange (Nasdaq: NVLS) and a component of the Nasdaq-100 Index. Additional information about Novellus is available on our home page at www.novellus.com. 2 NOVELLUS SYSTEMS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts) THREE MONTHS ENDED --------------------------------------- (Unaudited) MARCH 29 DECEMBER 31 MARCH 30 2003 2002 2002 - ----------------------------------------------------------------------------------------------- Net sales $238,410 $217,637 $169,679 Cost of sales 128,596 121,589 98,149 -------- -------- -------- Gross profit 109,814 96,048 71,530 % 46.1% 44.1% 42.2% Operating expenses: Selling, general and administrative 42,631 36,868 34,686 Research and development 57,006 51,323 54,046 Acquired in-process research and development -- 9,003 -- Restructuring and other charges (benefits) -- 3,194 (4,389) -------- -------- -------- Total operating expenses 99,637 100,388 84,343 % 41.8% 46.1% 49.7% Income (loss) from operations 10,177 (4,340) (12,813) % 4.3% -2.0% -7.6% Other income, net 5,652 7,328 17,669 -------- -------- -------- Income before income taxes 15,829 2,988 4,856 Provision for income taxes 3,957 -- 1,020 -------- -------- -------- Net income $ 11,872 $ 2,988 $ 3,836 ======== ======== ======== Net income per share: Basic net income per share $ 0.08 $ 0.02 $ 0.03 ======== ======== ======== Diluted net income per share $ 0.08 $ 0.02 $ 0.03 ======== ======== ======== Shares used in basic per share calculation 149,434 144,416 144,255 ======== ======== ======== Shares used in diluted per share calculation 152,229 147,219 150,624 ======== ======== ========

3 NOVELLUS SYSTEMS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (EXCLUDING CERTAIN UNUSUAL CHARGES AND BENEFITS) (1)

(In thousands, except per share amounts) THREE MONTHS ENDED (Unaudited) ----------------------------------- MARCH 29 DECEMBER 31 MARCH 30 2003 2002 2002 - ---------------------------------------------------------------------------------------- Net sales $238,410 $217,637 $169,679 Cost of sales 128,596 121,589 98,149 -------- -------- -------- Gross profit 109,814 96,048 71,530 % 46.1% 44.1% 42.2% Operating expenses: Selling, general and administrative 42,631 36,868 34,686 Research and development 57,006 51,323 54,046 -------- -------- -------- Total operating expenses 99,637 88,191 88,732 % 41.8% 40.5% 52.3% Income (loss) from operations 10,177 7,857 (17,202) % 4.3% 3.6% -10.1% Other income, net 5,652 7,328 13,066 -------- -------- -------- Income (loss) before income taxes 15,829 15,185 (4,136) Provision (benefit) for income taxes 3,957 1,229 (868) -------- -------- -------- Net income (loss) $ 11,872 $ 13,956 $ (3,268) ======== ======== ======== Net income per share: Basic net income (loss) per share $ 0.08 $ 0.10 $ (0.02) ======== ======== ======== Diluted net income (loss) per share $ 0.08 $ 0.09 $ (0.02) ======== ======== ======== Shares used in basic per share calculation 149,434 144,416 144,255 ======== ======== ======== Shares used in diluted per share calculation 152,229 147,219 144,255 ======== ======== ========

A reconciliation of our net income (loss) excluding certain unusual charges and benefits to our net income (loss) under accounting principles generally accepted in the United States of America is presented below: NET INCOME (LOSS) EXCLUDING UNUSUAL CHARGES AND BENEFITS $ 11,872 $ 13,956 $ (3,268) UNUSUAL BENEFITS (CHARGES): Acquired in-process research and development -- (9,003) -- Severance charges -- (3,194) (3,272) Bad debt recovery -- -- 7,662 Gain on a sale of investment -- -- 4,602 -------- -------- -------- Total benefits (charges) -- (12,197) 8,992 Adjustments on provision for income taxes -- 1,229 (1,888) -------- -------- -------- NET INCOME $11,872 $ 2,988 $ 3,836 ======== ======== ======== (1) The condensed consolidated statements of operations (excluding certain unusual charges and benefits) are intended to present our operating results, excluding certain unusual charges, benefits and related adjustments on provisions for income taxes. These condensed consolidated statements of operations are not in accordance with or an alternative for accounting principles generally accepted in the United States of America and may be different from similar measures by other companies. 4 NOVELLUS SYSTEMS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands) MARCH 29 DECEMBER 31 2003 2002 (Unaudited) * - ------------------------------------------------------------------------------ ASSETS CURRENT ASSETS: Cash and short-term investments $ 929,800 $1,019,652 Accounts receivable, net 203,639 192,862 Inventories 253,040 257,358 Deferred income taxes and other current assets 140,005 164,062 ---------- ---------- TOTAL CURRENT ASSETS 1,526,484 1,633,934 Property and equipment, net 174,301 179,926 Notes receivable 397,429 397,429 Goodwill 163,136 163,136 Intangible and other assets 114,639 119,569 ---------- ---------- TOTAL ASSETS $2,375,989 $2,493,994 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable and accrued liabilities $ 169,344 $ 192,691 Deferred profit 60,449 55,613 Income taxes payable 6,401 14,070 Short-term obligations -- 2,799 Convertible subordinated debentures -- 116,437 ---------- ---------- Total current liabilities 236,194 381,610 Deferred income tax liabilities 20,192 19,502 Other liabilities 37,181 37,194 ---------- ---------- Total liabilities 293,567 438,306 ---------- ---------- SHAREHOLDERS' EQUITY: Common stock 1,503,540 1,487,281 Retained earnings and accumulated other comprehensive income 578,882 568,407 ---------- ---------- Total shareholders' equity 2,082,422 2,055,688 ---------- ---------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $2,375,989 $2,493,994 ========== ==========

* The December 31, 2002 condensed consolidated balance sheet was derived from our audited consolidated financial statements. 5 -----END PRIVACY-ENHANCED MESSAGE-----

EX-99.1

                                                                    EXHIBIT 99.1

CONTACTS: Kevin S. Royal                         Robin S. Yim
Vice President and Chief Financial Officer       Vice President, Treasurer
Novellus Systems, Inc.                           Novellus Systems, Inc.
Phone: (408) 943-9700                            Phone: (408) 943-9700

FOR IMMEDIATE RELEASE

NOVELLUS SYSTEMS REPORTS RESULTS FOR THE FIRST QUARTER 2003

SAN JOSE, Calif., April 14, 2003 -- Novellus Systems, Inc. (Nasdaq NM: NVLS)
today reported net sales and results of operations for its first quarter ended
March 29, 2003. Net sales for the quarter were $238.4 million, up 9.6 percent
from $217.6 million in the fourth quarter of 2002 and up 40.5 percent from the
first quarter 2002 net sales of $169.7 million. Net income for the first
quarter of 2003 was $11.9 million or $0.08 per diluted share, up $8.9 million
or 296.7 percent from the fourth quarter 2002 net income of $3.0 million or
$0.02 per diluted share. Net income for the first quarter of 2003 increased
$8.1 million or 213.2 percent from the first quarter 2002 net income of
$3.8 million or $0.03 per diluted share.

Net income for the first quarter of 2003 was $11.9 million or $0.08 per diluted
share and did not include any unusual charges or benefits. The fourth quarter
2002 results included $3.2 million of restructuring and severance charges and a
$9.0 million in-process research and development charge related to the
acquisition of SpeedFam-IPEC, Inc. Without these charges, the fourth quarter
2002 net income would have been $14.0 million or $0.09 per diluted share. The
first quarter 2002 results included a net benefit of $9.0 million. This net
benefit reflects the combined effect of a $7.7 million benefit for recovery of a
receivable previously reserved and a $4.6 million gain on a sale of an
investment, offset by $3.3 million of severance payments. The $4.6 million gain
on the sale of investment is classified in other income. Without these charges
and benefits, the first quarter 2002 results would have been a net loss of $3.3
million or $(0.02) per diluted share. The financial measures presented above,
which exclude certain charges, are not in accordance with Accounting Principles
Generally Accepted in the United States of America (GAAP). The non-GAAP
financial measures are considered useful to investors by company management as
they provide insight into the results of ongoing operations.

Shipments of $235.2 million in the first quarter of 2003 represent an increase
of $44.2 million or 23.1 percent compared to $191.0 million reported in the
fourth quarter of 2002. Deferred revenue at the end of the first quarter of 2003
was $127.0 million, a decrease of $3.1 million or 2.4 percent from $130.1
million at the end of the fourth quarter of 2002.

Cash, cash equivalents and short-term investments as of March 29, 2003 were
$929.8 million, a decrease of $90.2 million or 8.8 percent from the fourth
quarter of 2002 ending balance of $1.02 billion. The decrease was primarily due
to the repayment of SpeedFam-IPEC's convertible debt at a redemption price of
$117.1 million and accrued interest of $2.2 million, offset by positive cash
generated from operations which included $18.5 million from an income tax
refund.

Richard S. Hill, chairman and chief executive officer, said, "The demand for
semiconductor capital equipment remains sluggish. However, in this challenging
environment, we will continue to focus our efforts in areas with the best growth
opportunities, continue to deploy advanced technologies, and use our financial
strength to forge ahead with strategic research and development projects."

                                       1


"SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995:

The statements regarding (i) sluggish demand for semiconductor capital
equipment, (ii) our continued focus on areas with the best growth opportunities,
(iii) our continued deployment of advanced technologies, and (iv) our use of our
financial strength to carry on strategic research and development projects, as
well as other matters discussed in this news release that are not purely
historical data, are forward-looking statements. The forward-looking statements
involve risks and uncertainties, including, but not limited to, a severe
downturn in the demand for semiconductor capital equipment, our inability to
accurately identify the best areas of growth opportunities, unanticipated
difficulties in our deployment of advanced technologies, our inability to
allocate sufficient funds to strategic research and development projects, and
other risks indicated in our filings with the Securities and Exchange Commission
(SEC). Actual results could differ materially. We assume no obligation to update
this information. For more details, please refer to our SEC filings, including
our Annual Report on Form 10-K for the year ended December 31, 2002.

ABOUT NOVELLUS:

Novellus Systems, Inc., an S&P 500 company, manufactures, markets and services
advanced deposition, surface preparation and chemical mechanical planarization
equipment for today's advanced integrated circuits. Our products are designed
for high-volume production of advanced, leading-edge semiconductor devices at
the lowest possible cost. Headquartered in San Jose, Calif., with subsidiaries
throughout the United States, as well as in the United Kingdom, France, Germany,
the Netherlands, Ireland, Israel, India, China, Japan, Korea, Malaysia,
Singapore and Taiwan, we are a publicly traded company on the Nasdaq stock
exchange (Nasdaq: NVLS) and a component of the Nasdaq-100 Index. Additional
information about Novellus is available on our home page at www.novellus.com.


                                       2


                             NOVELLUS SYSTEMS, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS





(In thousands, except per share amounts)                          THREE MONTHS ENDED
                                                        ---------------------------------------
(Unaudited)                                             MARCH 29      DECEMBER 31      MARCH 30
                                                           2003           2002            2002
- -----------------------------------------------------------------------------------------------
                                                                             
Net sales                                               $238,410       $217,637        $169,679
Cost of sales                                            128,596        121,589          98,149
                                                        --------       --------        --------
       Gross profit                                      109,814         96,048          71,530
       %                                                    46.1%          44.1%           42.2%
Operating expenses:
       Selling, general and administrative                42,631         36,868          34,686
       Research and development                           57,006         51,323          54,046
       Acquired in-process research and development           --          9,003              --
       Restructuring and other charges (benefits)             --          3,194          (4,389)
                                                        --------       --------        --------

Total operating expenses                                  99,637        100,388          84,343
       %                                                    41.8%          46.1%           49.7%

Income (loss) from operations                             10,177         (4,340)        (12,813)
       %                                                     4.3%         -2.0%           -7.6%

Other income, net                                          5,652          7,328          17,669
                                                        --------       --------        --------

Income before income taxes                                15,829          2,988           4,856
Provision for income taxes                                 3,957             --           1,020
                                                        --------       --------        --------

Net income                                              $ 11,872       $  2,988        $  3,836
                                                        ========       ========        ========

Net income per share:
       Basic net income per share                       $   0.08       $   0.02        $   0.03
                                                        ========       ========        ========
       Diluted net income per share                     $   0.08       $   0.02        $   0.03
                                                        ========       ========        ========

Shares used in basic per share calculation               149,434        144,416         144,255
                                                        ========       ========        ========
Shares used in diluted per share calculation             152,229        147,219         150,624
                                                        ========       ========        ========



                                       3


                             NOVELLUS SYSTEMS, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                (EXCLUDING CERTAIN UNUSUAL CHARGES AND BENEFITS) (1)




(In thousands, except per share amounts)                      THREE MONTHS ENDED
(Unaudited)                                          -----------------------------------
                                                      MARCH 29    DECEMBER 31   MARCH 30
                                                        2003         2002         2002
- ----------------------------------------------------------------------------------------
                                                                      
Net sales                                             $238,410     $217,637     $169,679
Cost of sales                                          128,596      121,589       98,149
                                                      --------     --------     --------

         Gross profit                                  109,814       96,048       71,530
         %                                                46.1%        44.1%        42.2%

Operating expenses:
         Selling, general and administrative            42,631       36,868       34,686
         Research and development                       57,006       51,323       54,046
                                                      --------     --------     --------

Total operating expenses                                99,637       88,191       88,732
         %                                                41.8%        40.5%        52.3%

Income (loss) from operations                           10,177        7,857      (17,202)
         %                                                 4.3%         3.6%       -10.1%

Other income, net                                        5,652        7,328       13,066
                                                      --------     --------     --------

Income (loss) before income taxes                       15,829       15,185       (4,136)
Provision (benefit) for income taxes                     3,957        1,229         (868)
                                                      --------     --------     --------

Net income (loss)                                     $ 11,872     $ 13,956     $ (3,268)
                                                      ========     ========     ========

Net income per share:
         Basic net income (loss) per share            $   0.08     $   0.10     $  (0.02)
                                                      ========     ========     ========
         Diluted net income (loss) per share          $   0.08     $   0.09     $  (0.02)
                                                      ========     ========     ========

Shares used in basic per share calculation             149,434      144,416      144,255
                                                      ========     ========     ========
Shares used in diluted per share calculation           152,229      147,219      144,255
                                                      ========     ========     ========


A reconciliation of our net income (loss) excluding certain unusual charges and
benefits to our net income (loss) under accounting principles generally accepted
in the United States of America is presented below:

                                                                        
NET INCOME (LOSS) EXCLUDING UNUSUAL CHARGES
      AND BENEFITS                                    $ 11,872     $ 13,956     $ (3,268)

UNUSUAL BENEFITS (CHARGES):
      Acquired in-process research and development          --       (9,003)          --
      Severance charges                                     --       (3,194)      (3,272)
      Bad debt recovery                                     --           --        7,662
      Gain on a sale of investment                          --           --        4,602
                                                      --------     --------     --------
         Total  benefits (charges)                          --      (12,197)       8,992

      Adjustments on provision for income taxes             --        1,229       (1,888)
                                                      --------     --------     --------
NET INCOME                                             $11,872     $  2,988      $ 3,836
                                                      ========     ========     ========



(1)   The condensed consolidated statements of operations (excluding certain
      unusual charges and benefits) are intended to present our operating
      results, excluding certain unusual charges, benefits and related
      adjustments on provisions for income taxes. These condensed consolidated
      statements of operations are not in accordance with or an alternative for
      accounting principles generally accepted in the United States of America
      and may be different from similar measures by other companies.


                                       4


                             NOVELLUS SYSTEMS, INC.
                      CONDENSED CONSOLIDATED BALANCE SHEETS


(In thousands)                                        MARCH 29      DECEMBER 31
                                                        2003            2002
                                                     (Unaudited)         *
- ------------------------------------------------------------------------------
                                                              
                ASSETS
   CURRENT ASSETS:
      Cash and short-term investments                $  929,800     $1,019,652
      Accounts receivable, net                          203,639        192,862
      Inventories                                       253,040        257,358
      Deferred income taxes and other current assets    140,005        164,062
                                                     ----------     ----------
         TOTAL CURRENT ASSETS                         1,526,484      1,633,934

   Property and equipment, net                          174,301        179,926
   Notes receivable                                     397,429        397,429
   Goodwill                                             163,136        163,136
   Intangible and other assets                          114,639        119,569
                                                     ----------     ----------

   TOTAL ASSETS                                      $2,375,989     $2,493,994
                                                     ==========     ==========

      LIABILITIES AND SHAREHOLDERS' EQUITY
   CURRENT LIABILITIES:
      Accounts payable and accrued liabilities       $  169,344     $  192,691
      Deferred profit                                    60,449         55,613
      Income taxes payable                                6,401         14,070
      Short-term obligations                                 --          2,799
      Convertible subordinated debentures                    --        116,437
                                                     ----------     ----------
         Total current liabilities                      236,194        381,610

   Deferred income tax liabilities                       20,192         19,502
   Other liabilities                                     37,181         37,194
                                                     ----------     ----------
   Total liabilities                                    293,567        438,306
                                                     ----------     ----------

   SHAREHOLDERS' EQUITY:
      Common stock                                    1,503,540      1,487,281
      Retained earnings and accumulated other
        comprehensive income                            578,882        568,407
                                                     ----------     ----------
         Total shareholders' equity                   2,082,422      2,055,688
                                                     ----------     ----------

   TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY        $2,375,989     $2,493,994
                                                     ==========     ==========


*     The December 31, 2002 condensed consolidated balance sheet was derived
      from our audited consolidated financial statements.


                                       5