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Management believes that Liggett is in compliance in all material respects with the laws regulating cigarette manufacturers. Compliance with federal, state and local provisions regulating the discharge of materials into the environment, or otherwise relating to the protection of the environment, have no material effect on the capital expenditures, earnings or competitive position of Liggett. Information Processing Systems The Company conducts its information processing systems business through its 54.5% subsidiary, MAI Systems Corporation, a Delaware corporation ("MAI"). MAI offers multi-user, mid- range computer systems and related operating system software, network products, horizontal software, maintenance services and, in certain targeted markets, industry-specific application software to businesses throughout the world. MAI purchases for resale a range of computer hardware platforms manufactured by others, which operate in accordance with industry standard "open" systems architecture. MAI currently markets its systems in the United States, Canada, Latin America and the Far East. See Note 2 to the Consolidated Financial Statements for a further discussion of the acquisition of the Company's interest in MAI. The information describing the business of MAI set forth in Item 1 of MAI's Annual Report on Form 10-K for the year ended December 31, 1993 is incorporated herein by reference. Prior to January 27, 1994, the Company owned securities of MAI representing 82.3% of the voting power of MAI. On or about April 12, 1993, MAI filed a voluntary petition under Chapter 11 of the United States Bankruptcy Code (the "Bankruptcy Code"). On November 18, 1993, the United States Bankruptcy Court for the District of Delaware (the "Bankruptcy Court") entered an order confirming a Plan of Reorganization (the "Plan of Reorganization") of MAI, Brooke Acquisition Corp. and CLS Software, Inc. (collectively, the "Debtors"). On January 27, 1994, the Bankruptcy Court entered an order which, among other things, fixed January 27, 1994 as the effective date of the Plan of Reorganization (the "Effective Date"). The Plan of Reorganization provided for, among other things, (i) the satisfaction of substantially all of the Debtors' unsecured (non-priority) indebtedness through the issuance of common stock, $.01 par value (the "New Common Stock"), of MAI and (ii) the cancellation of existing equity interests in the Debtors. Under the Plan of Reorganization, claims against the Debtors were divided into classes according to their similarity and their relative legal and contractual priorities. The Plan of Reorganization further provided that, unless electing cash treatment, holders of allowed unsecured claims were allocated a proportionate amount of shares of New Common Stock of MAI in full satisfaction of their claims. Specifically, each holder of an allowed unsecured claim is to receive one (1) share of New Common Stock per $20 in allowed unsecured claim. Under the Plan of Reorganization there is no recovery for holders of MAl's common stock, and all classes of preferred stock, outstanding prior to the Effective Date. The interests evidenced by these securities were eliminated by operation of the Plan of Reorganization. MAI commenced distribution of New Common Stock to holders of unsecured claims on April 14, 1994. The Company anticipates that, pursuant to the Plan of Reorganization, the Company will receive approximately 44.9% of the outstanding shares of New Common Stock of MAI in respect of the Company's allowed unsecured claims. In addition, on February 1, 1994, the Company acquired, through two transactions, $15 million principal amount of 11.75% senior subordinated notes of MAI, which will be converted into shares of New Common Stock. When converted to New Common Stock, the notes will increase the Company's ownership to approximately 54.5%. 7

Collectible Picture Products and Accessories The Company's collectible picture products and accessories business was conducted in 1993 through SkyBox International Inc. ("SkyBox"), which was an indirect wholly-owned subsidiary of the Company until October 6, 1993. On that date, the Company distributed 6,522,929 shares of common stock of SkyBox to the Company's common stockholders (other than certain management stockholders including the Company's Chairman) (the "SkyBox Distribution"). The SkyBox Distribution resulted in approximately 81.5% of the outstanding shares of SkyBox common stock, representing 46.6% of SkyBox's voting power, being distributed to the Company's stockholders on a pro rata basis. The Company and its subsidiaries retained the remaining common stock of SkyBox as well as all outstanding shares of Series A Voting Cumulative Preferred Stock ("Series A Preferred Stock") of SkyBox, together representing 53.4% of SkyBox's voting power. Subsequent to the SkyBox Distribution, SkyBox redeemed 80 shares of the Series A Preferred Stock and certain vested stock options were exercised, resulting in a further reduction in the Company's voting power of 7.1%, from 53.4% to 46.3%. In March 1994, SkyBox redeemed an additional 70 shares of Series A Preferred Stock from the Company, reducing the Company's voting power in SkyBox to 39.6%. See Note 12 to the Consolidated Financial Statements for a further description of the SkyBox Distribution. The information describing the business of SkyBox set forth in Item 1 of SkyBox's Annual Report on Form 10-K for the year ended December 31, 1993 is incorporated herein by reference. Other Businesses In addition to its core operations, the Company also has less significant operations in such diverse businesses as computer output microfiche products and various businesses in the Common- wealth of Independent States (the "CIS"), including cigarette manufacturing, real estate development and other businesses. The CQmpany's interests in the CIS are in the early stages and have not, to date, generated a material amount of revenue. In addition, the Company is exploring various sources of external financing for further investment in the CIS. The Company also holds a 41.7% voting interest in New Valley Corporation ("New Valley"), a company predominantly engaged in the electronic delivery of messages, data and transaction services. See Note 1 to the Consolidated Financial Statements for a discussion of the Company's investment in New Valley. Employees At December 31, 1993 the Company and its consolidated subsidiaries, other than those located in the Commonwealth of Independent States, had approximately 1,800 employees, of which approximately 990 were employed by Liggett, approximately 785 were employed by MAI, and the remainder were employed by the Company and its other subsidiaries. Approximately 26% of the Company's employees are hourly employees and are represented by unions. The Company and its consolidated subsidiaries have not experienced any significant work stoppages since 1977, and the Company considers its relationship with its employees and their unions to be good. Item 2. Properties The Company's principal executive offices are located in Miami, Florida. The Company subleases 12,356 square feet of office space in an office building in Miami. The term of the sublease is until February 28, 1999. Substantially all of Liggett's tobacco manufacturing facilities, consisting principally of factories, distribution and storage facilities, are located in or near Durham, North Carolina. Such 8

facilities are both owned and leased. follows: Type The principal properties owned or leased by Liggett are as Approximate Owned or Total Square Location Leased Footage Corporate Office/ Manufacturing Complex Warehouse Storage Facilities Distribution Center Durham, NC Owned 1,350,000 Durham, NC Owned 203,000 Danville, VA Owned 578,000 Durham, NC Leased 240,000 Liggett's Durham, North Carolina facility consists of 16 major structures located on approximately 25 acres. Included are Liggett's manufacturing complex, research facility and corporate offices. The Company leased on terms consistent with those available in the general marketplace a substantial portion of one of its Durham headquarters buildings to SkyBox in June 1993. The Company recently completed leasing the remainder of the building to an unrelated party. Liggett leases the Durham, North Carolina distribution center pursuant to a lease which expires May 31, 1994, and which provides Liggett the option of extending the lease for one additional period of five years. Liggett utilizes approximately 40% of the distribution center and subleases the remaining 60% to a third party. Liggett has an option to purchase the leased property at any time during the term of the lease. MAI's principal offices are located in Irvine, California, where it leases approximately 77,000 square feet of office and warehouse space. The description of MAI's properties set forth in Item 2 of MAl's Annual Report on Form 10-K for the year-ended December 31, 1993 is incorporated herein by reference. SkyBox's principal executive offices are located in Durham, North Carolina. The description of SkyBox's properties set forth in Item 2 of SkyBox's Annual Report on Form 10-K for the year ended December 31, 1993 is incorporated herein by reference. Item 3. Legal Proceedings A description of certain legal proceedings to which the Company is or has been a party is set forth in Note 15 to the Consolidated Financial Statements. The information regarding legal proceedings set forth in Item 3 of each of the MAI and SkyBox Annual Reports on Form 10-K for the year ended December 31, 1993 is incorporated herein by reference. Item 4. Submission of Matters to a Vote of Security Holders None Executive Officers of the Registrant The executive officers of the Company, their respective ages, and the positions held with the Company, are listed below. Each of the executive officers of the Company serves until the election and qualification of his successor or until his death, resignation or removal by the Board of Directors of the Company. The Company's executive officers devote substantially all of their business efforts to the affairs of the Company.

Name A~le Bennett S. LeBow 56 Gerald E. Sauter 50 Position Chairman of the Board, President, Chief Execu- tive Officer and Treasurer Vice President, Chief Financial Officer and Secretary Mr. LeBow has been Chairman of the Board, President and Chief Executive Officer and Treasurer of the Company since June 1990 and has been a director of the Company since October 1986. For more than five years, Mr. LeBow's principal occupation has been as an investor in and officer and/or director of privately and publicly held companies and a financial consultant. He has been a director, the President and Treasurer of BGLS Inc. ("BGLS"), a subsidiary of the Company which is in the business of acquiring other companies and holds the Company's interests in Liggett, MAI and SkyBox, since November 1990. Mr. LeBow has been a director of Liggett since June 1990 and Chairman of the Board of Directors of Liggett from July 1990 to May 1993. Mr. LeBow was Chairman of MAI from before 1987 to January 1990, and has been Chairman of the Board since November 1990. He was Chief Executive Officer of MAI from November 1990 to April 1993. In April 1993, MAI filed for protection under Chapter 11 of the federal Bankruptcy Code. MAI emerged from bankruptcy in November 1993. Mr. LeBow has been a director of New Valley since December 1987 and Chairman of the Board since January 1988. In April 1993, New Valley filed for protection under Chapter 11 of the federal Bankruptcy Code. Mr. LeBow has been a director of SkyBox since June 1990 and Chairman of the Board of SkyBox from July 1990 until March 1994. Mr. Sauter has been Vice President and Chief Financial Officer of the Company since April 1993 and Secretary since December 1993. He has been employed by Brooke Management Inc. ("BMI"), a subsidiary of the Company, in various capacities since before 1989. He also has been a director, Vice President and Treasurer of Eve Holdings, Inc., a wholly-owned subsidiary of Liggett, since October 1992. 10

PART II Item 5. Market for the Registrant's Common Equity and Related Stockholder Matters The information set forth in Note 21 to the Consolidated Financial Statements is incorporated by reference herein. Item 6. Selected Financial Data The following selected financial data should be read in conjunction with the Consolidated Financial Statements and the notes thereto included elsewhere in this Report. On November 19, 1990, the Company acquired its indirect parent, Brooke Partners, L.P. ("Partners"), by means of a merger (the "Merger") of Partners indirectly into the Company. Partners, which had indirectly owned 83% of the Company's Common Stock, was previously a holding company. The Merger has been recorded in a manner similar to a pooling of interests since the entities involved were under common control. Accordingly, the Company's prior years' financial statements were restated to include Partners and its subsidiaries. The Company elected to change its fiscal year end from March 31 to December 31, effective for the period ending December 31, 1989. 11

STATEMENT OF OPERATIONS INFORMATION: Revenues (1) Restructuring Charges (2) Equity in Gain (Losses) of New Valley (3) Gain on Reversal of New Valley Losses (3) Equity in Earnings of Skybox Write off of Goodwill Gain on Transfer of Assets Income (loss) From Continuing Operations Income (loss) From Continuing Operations Per Share (6) Cash Dividends Per Common Share (4) (6) BALANCE SHEET INFORMATION (AT PERIOD END}: Current Assets Total Assets CVR Liability, Short-Term (5) Current Liabilities Notes Payable, Long-Term Debt and Other Obligations, Less Current Portion Share of New Valley Net Liabilities Noncurrent Employee Benefits, Deferred Credits and Other Long-Term Liabilities CVR Liability, Long Term (5) Minority Interest Preferred Stock of Subsidiary Stockholders' Equity (Deficit) YEAR ENDED DECEMBER 31, 1993 .1992 1991 1990 (dollars in thousands, except per share amounts) $673,451 $999,448 $1,128,524 (8,713) (8,474) (39,747) 14,437 (145,690) 22,187 (7,227) (224,843) (147,754) (0.74) (11.39) (6.83) 0.42 $1,O98,738 (59,700) 15,118 433,380 NINE MONTHS ENDED DECEMBER 31~ 1989 $ 434,477 $114,411 $256,160 $299,552 164,819 366,206 581,252 44,943 220,207 493,631 467,019 389,671 452,188 329,845 (30,622) 69,623 65.332 89,329 23,971 2,150 7,289 (514,682) (644,945) (338,349) 375,879 (37,884) 15.69 (1.58) 0.70 0.56 0.42 $420,684 $533,029 732,904 837,444 357,160 247,910 439,403 553,831 433,380 68,366 43,552 14,814 10,508 47,857 (157,347) (489,086) (1) (2) (3) (4) (5) Revenues include federal excise taxes of $127,341, $147,701, $171,029, $139,464, and $103,308, respectively. See Note 8 to the Consolidated Financial Statements for information regarding the restructuring charges. See Note 1 to the Consolidated Financial Statements for information concerning the Company's investment in New Valley. Currently, the Company's investment in New Valley is carried at $0 and the Company has no intention or commitment to fund future New Valley operations. Cash dividends declared per common share exclude other distributions. See Consolidated Statements of Stockholders' Equity (Deficit). See Notes 12 and 15 to the Consolidated Financial Statements for information regarding contingent value rights ("CVRs"). Per share computations included the impact of the CVR liability as described in Note 1 (o) to the Consolidated Financial Statements. 12

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations In~oduc~on The following discussion should be read in conjunction with the Consolidated Financial Statements and notes thereto included elsewhere in this Report. All dollar amounts are in thousands. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company has suffered recurring operating losses and had a net capital deficiency of $514,682 at December 31, 1993. In addition, the Company believes it resolved the Contingent Value Rights ("CVR") liability (estimated at $46,000 at September 30, 1993) through the distribution of SkyBox common stock and subsequent cash payment (see Note 12 to the Consolidated Financial Statements). However, a group of CVR holders filed a complaint concerning the legality of the distribution and the valuation of the distribution, among other issues. Management believes the allegations contained in the complaint are without merit and intends to vigorously defend the suit. There can, however, be no assurance as to the ultimate outcome of the suit. The Company believes it will have sufficient liquidity for 1994. This is based on, among other things, forecasts of cash flow for the principal operating companies which indicate that they will be self-sufficient, satisfactory resolution of the CVR suit, the consummation of the agreement with certain holders to exchange the equity that the Company expects to receive in the reorganized New Valley (Note 7 to the Consolidated Financial Statements) and the sale/redemption of SkyBox preferred and common interest for approximately $45,000. There is no assurance that the Company will be successful in accomplishing the matters described in the preceding paragraph. Accordingly, these matters raise substantial doubt about the Company meeting its liquidity needs and its ability to continue as a going concern. Revenues and cost of goods sold for the Tobacco segment both include federal excise taxes. The operating results for the periods presented were not significantly affected by inflation. The Company's Consolidated Financial Statements include the accounts of Liggett, MAI and, for the period through October 1, 1993, SkyBox, and other less significant subsidiaries. On December 21, 1992, the Company determined to dispose of MAI by selling its interest. At that time, in addition to an equity interest of 87.2%, the Company held $37,600 of MAI's indebtedness. On April 12, 1993, MAI filed a voluntary petition under the Bankruptcy Code and emerged from bankruptcy on November 18, 1993. See "Business--Information Processing Systems." Under the Plan of Reorganization, the Company received zero for its equity ownership and a 44.9% common stock interest for the MAI debt it held. As a result of the significant change in circumstances, the Company decided in November 1993 to retain the 44.9% interest. Further, in January 1994 the Company renegotiated a December 1992 agreement with an unrelated third party which contained put and call features involving the acquisition of additional MAI debt. When combined with the equity interest received in the reorganization, the Company's total equity in MAI approximates 54.5%. Depending on the outcome of various disputed claims, the Company's equity interest may increase up to 57%. As a result of the foregoing, the Company has included MAI in the Consolidated Financial Statements for all periods presented. Results for the years ended December 31, 1992 and 1991 reflect MAI results on a three-month lag since, in those periods, MAI's year end was September 30. See Note 2 to the Consolidated Financial Statements for a more complete discussion regarding the Company's accounting for its investment in MAI. 13

On October 6, 1993, the Company distributed to holders of record of its Common Stock at September 20, 1993 one share of common stock of its subsidiary, SkyBox, for each of the 6,522,929 shares of Brooke Common Stock then outstanding, representing 81.5% of the SkyBox common stock and 46.6% of its direct voting power. Further, on October 28, 1993, SkyBox redeemed 80 shares of its Series A Preferred Stock from the Company. This resulted in a 7.1% reduction of the Company's direct voting power in SkyBox from 53.4% to 46.3%. Accordingly, for the fourth quarter of 1993, SkyBox is accounted for on the equity method° See "Business--Collectible Picture Products and Accessories." For purposes of this discussion and other consolidated financial statement reporting, the Company has defined its significant business segments as Tobacco (Liggett), Information Processing Systems (MAI), and up to October 1, 1993, Collectible Picture Products (SkyBox). Recent Developments in the Cigarette Industry Proposed Excise Tax Increases Both net sales and cost of sales include federal excise taxes. The excise tax rate was $12.00 per 1,000 cigarettes in 1993 and $10.00 in 1992 and 1991. Several proposals have been made to increase this tax by differing amounts in 1994. The current administration has introduced budget legislation that increases this tax to $49.50 per 1,000 cigarettes. In addition, the Health Subcommittee of the Ways and Means Committee of the U.S. House of Representatives voted on March 22, 1994 to report a bill that would raise cigarette taxes to $74.50 per 1,000 cigarettes ($1.49 a pack). Although a lengthy congressional debate is anticipated, such substantial tax increases if enacted could accelerate the trend away from smoking and have an unfavorable effect on Liggett's future sales. Competitive Activity The United States cigarette industry had three price tiers from 1989 to 1993 - full-price, branded discount and generic. Cigarette prices in all tiers were raised several times annually, with the price differentials between the tiers increasing. Between March 1991 and November 1992 the price gap between full-price branded cigarettes and generics increased from $24.40 to $37.90 per 1,000 cigarettes ($0.49 to $0.76 per pack). As a result, during 1992 and continuing into the first half of 1993, the price/value (branded discount and generic) tiers increased market share from 24.9% to 35.8%. In July 1993, the two largest manufacturers announced significant changes in their list pricing structure and reduced the price of premium brands by $0.40 a pack to 1989-90 levels. Also, the two manufacturers announced that certain retail and trade discounts offered on certain deep discount cigarettes would be discontinued, resulting in a net price increase for those brands. Subsequently, the remaining manufacturers announced price changes identical to those of the two largest manufacturers. These changes consolidated the lower two price tiers into one list price tier and significantly reduced the list price gap between the full-price tier and the deep discount tier from 43% to approximately 25%. 14

Results of Operations Year Ended December 31, 1993 Compared to Year Ended December 31, 1992. Revenues. Consolidated revenues were $673,451 for the year ended December 31, 1993 compared to $999,448 for the year ended December 31, 1992, a decrease of $325,997. This decrease reflects decreases in revenues in each of the Company's segments, as discussed below. Net sales for the Tobacco segment were $473,393 for the year ended December 31, 1993 compared to $605,819 for the same period last year. This 21.9% decrease in revenues was primarily due to a 25.0% decline in unit sales volume and a 5.8% decline in revenues due to the effects of changes in sales mix which were partially offset by price decreases in the full-price branded and branded discount products in the third and fourth quarters. The decrease in unit sales volume was comprised of declines in full-price branded, generic and branded discount cigarette unit sales of approximately 34%, 17% and 44%, respectively. These declines were partially offset by an increase in volume in the less significant international segment. The decrease in full-price branded unit sales is a result of Liggett's renewed emphasis on the discount segment as well as current industry trends, which showed a 21.4% decrease in this segment's shipments for the year ended December 31, 1993. The decrease in price/value cigarette volume, which includes generic and branded discount cigarettes, was primarily due to increased unit sales by certain other manufacturers as a result of expanded promotional efforts and the effects of other cigarette manufacturers competing in this segment. Liggett believes certain other cigarette manufacturers used their greater resources by requiring purchases by distributors of discount brands as a condition to participation in rebate programs tied to their full-price products ("leveraging") and providing large up-front payments to distributors in the third and fourth quarters of 1992. Liggett believes that at least one of these other cigarette manufacturers continued to offer large up-front payments in the first half of 1993 and the leveraging programs are continuing. In addition, Liggett believes that the decrease in branded discount volume was caused by the effects of the proliferation of price/value products offered by other manufacturers and Liggett's lower promotional spending for branded discount products in 1993. Liggett believes that, to the extent that prices and margins increase, the effects of these promotional activities by competitors will become less severe° Revenue from the Information Processing Systems segment declined approximately $164,079 or 58.7% when compared to the prior year, reflecting decreases in both net sales and service fee revenue. Approximately $123,746 or 75.4% of the total $164,079 decrease is attributable to the elimination of the European subsidiaries in connection with the foreclosure in March 1993. See "--Interest Expense." Excluding the impact of the foreclosure, revenue for the year ended December 31, 1993 decreased by $40,333 or 33.7% when compared to the twelve months ended December 31, 1992. Of the $40,333 decline, $28,846 was due to reduced net sales after exclusion of the European subsidiaries. The reduction in net sales is attributable to a significant reduction in MAI's sales force during the latter part of 1992 along with the divestiture of several vertical software products. Service fee revenue declined $11,487 or 20.2% when compared to the twelve months ended September 30, 1992, after adjusting for the exclusion of the European subsidiaries. The decrease in service fee revenue is due to a decrease in the North American maintenance base, a trend which, in view of MAI's current level of hardware sales and migration of MAI's customers to platforms for which MAI does not furnish maintenance services, is likely to continue. MAI has initiatives in place which are intended to mitigate this reduction in maintenance revenue, but there can be no assurance that such initiatives will be successful. Collectible Picture Products segment revenues of $65,119 for the nine months ended September 30, 1993 were comprised principally of sales of sports and entertainment trading cards. 15

This compares with revenues of $87,287 for the year ended December 31, 1992, or a decrease of $22,168. When compared to revenues for the corresponding nine months of 1992, revenues increased by $200. Gross Profit. Consolidated gross profit for the Company was $335,774 for the year ended December 31, 1993, compared to $450,604 for the similar period last year. This $114,830 decrease is primarily attributable to decreases in gross profit for the Tobacco and Information Processing Systems segments, and partially offset by an increase in the gross profit for the Collectible Picture Products segment. Gross profit for the Tobacco segment was $256,145 for the year ended December 31, 1993, a decrease of $69,605 from $325,750 last year. This decrease was primarily the result of a 25% reduction in unit volume mentioned above. Gross profit as a percent of revenues (excluding federal excise taxes) increased to 74.0% for the year ended December 31, 1993 compared to 71.1 % for the same period in 1992, due primarily to an increase in selling prices and reduction in cost of sales, due to lower material costs. While there can be no prediction as to the frequency or extent of future price changes and their effect on net sales in light of significant list price decreases in July 1993, other cigarette manufacturers and Liggett had a general list price increase in November 1993. Liggett increased production levels during the fourth quarter of 1993 due to increased demand for its products. Liggett's sales increased from 2.76 billion units in the third quarter of 1993 to 3.22 billion units in the fourth quarter of 1993. Gross profit for the Information Processing Systems segment decreased $59,839 when compared to the prior year and was primarily attributable to the lower revenue volume mentioned above. As a percentage of revenue, gross profit margin remained relatively unchanged from the prior ~/ear as an improved net sales margin was offset by a lower service fee margin. The slightly higher sales margin reflects the benefit of MAI's cost savings efforts coupled with the sale of used equipment from customer trade-ins which have been selling at favorable gross profit margins. The decline in service fee gross margin is attributable to certain fixed costs that are not able to be reduced proportionally as the maintenance base decreased. Collectible Picture Products segment gross profit was $33,583 for the nine months ended September 30, 1993, compared to $18,817 for the twelve months ended December 31, 1992. This represents an increase of $14,766. When compared to gross profit for the corresponding nine months of 1992, gross profit increased $12,347. This increase is attributable to lower 1993 provision for inventory obsolescence and sales return and a change in sales mix. Expenses. Consolidated operating, selling, administrative and general expenses were $304,135 for the year ended December 31, 1993 compared to $472,999 for the year ended December 31, 1992. This decrease of $168,864 reflects reductions at the corporate level and in all business segments. Operating, selling, administrative and general expenses for the Tobacco segment were $249,900 for the year ended December 31, 1993 compared to $273,062 for the year ended December 31, 1992 or a decrease of $23,162. In order to reduce operating costs to levels more consistent with reduced revenues, Liggett reduced its overall headcount by 235 headquarters and manufacturing employees in April and May 1993. This resulted in a $5,565 charge ($2,531 of which is included in cost of sales) to operating income in the second quarter. Furthermore, Liggett restructured its field sales force in January 1994 by eliminating 150 permanent field sales positions and adding approximately 300 part-time positions and recorded a $3,000 severance charge against operating income in the fourth quarter of 1993. All charges described above are 1993 cash charges other than the $3,000 severance charge accrued in the fourth quarter of 1993, and relate entirely to severance and related benefits associated with 16