3	Employee Stock Ownership Plan/ Savings Incentive Plan

The Company has an Employee Stock Ownership Plan (“ESOP”) as part of its voluntary defined contribution plan (Savings Incentive Plan) covering most domestic employees. The ESOP is intended to satisfy all or part of the Company’s obligation to match 50% of employees’ contributions, up to a maximum of 3% of each participant’s salary. To accomplish this, in 1990, the ESOP borrowed $60,000 in a private debt offering and used the proceeds to buy the Company’s ESOP convertible preferred stock. Each share of preferred stock has a guaranteed liquidation value of $59 per share and is convertible into 6.4 shares of the Company’s common stock. The preferred stock pays an annual dividend of $3.835 per share, a portion of which is used by the ESOP, together with the Company’s contributions, to repay the ESOP debt. Since the ESOP debt is guaranteed by the Company, it is reflected on the consolidated balance sheet as short-term and long-term debt with a related amount shown in the shareholders’ equity section as Unearned ESOP compensation.

     The amount of ESOP expense recognized is equal to the cost of the preferred shares allocated to plan participants and the ESOP interest expense for the year, reduced by the amount of dividends paid on the preferred stock.

     Selected financial data pertaining to the ESOP/Savings Incentive Plan follows:

		2003			2002			2001
Total expense of the
Savings Incentive Plan	$	2,626		$	2,737		$	2,989
Compensation expense
(included in total expense above)	$	2,168		$	1,863		$	1,855
Dividends on ESOP shares used
for debt service	$	2,344		$	2,553		$	2,721
Number of preferred shares
allocated at September 30		500,807			476,938			457,921

     The Company guarantees employees’ contributions to the fixed income fund of the Savings Incentive Plan. The amount guaranteed was $120,961 at September 30, 2003.