UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 02, 2005
Commission File No. 0-23204
BOSS HOLDINGS, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 58-1972066
- --------------------------------------------------------------------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
221 West First Street
Kewanee, Illinois 61443
----------------------------------------
(Address of principal executive offices)
(309) 852-2131
---------------------------
(Issuer's telephone number)
Check whether the registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for at least
the past 90 days. Yes [X] No [ ]
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date.
Class Outstanding at May 3, 2005
- --------------------------------------------------------------------------------
Common Stock, $.25 par value 1,941,957
1
Part I - Financial Information
Item 1. Financial Statements
Boss Holdings, Inc. and Subsidiaries
Consolidated Balance Sheets
(Dollars in Thousands, Except Per Share Data)
(Unaudited)
April 02, December 25,
Assets 2005 2004
- --------------------------------------------------------------------------------
Current Assets:
Cash and cash equivalents ......................... $ 1,219 $ 1,056
Accounts receivable, net .......................... 7,439 7,251
Inventories ....................................... 13,938 14,124
Deferred tax asset ................................ 1,218 1,218
Prepaid expenses and other ........................ 412 484
---------------------
Total current assets ........................ 24,226 24,133
Property and Equipment, net ......................... 3,764 3,829
Other Assets ........................................ 315 249
Intangibles, net of amortization .................... 188 200
Goodwill ............................................ 2,453 2,453
Deferred tax asset .................................. 1,249 1,315
---------------------
$ 32,195 $ 32,179
=====================
Liabilities and Stockholders' Equity
- --------------------------------------------------------------------------------
Current Liabilities:
Accounts payable .................................. $ 1,005 $ 1,173
Current portion of long-term obligations .......... 745 762
Accrued payroll and related expenses .............. 666 853
Accrued liabilities and other ..................... 823 1,306
---------------------
Total current liabilities ................... 3,239 4,094
---------------------
Long-Term Obligations, net of current portion ....... 3,879 3,258
---------------------
Deferred Compensation ............................... 256 222
---------------------
Stockholders' Equity:
Common stock, $.25 par value; 10,000,000 shares ... 487 487
Additional paid-in capital ........................ 68,025 67,776
Accumulated deficit ............................... (41,665) (41,759)
Unearned compensation ............................. (271) (87)
Accumulated other comprehensive deficit ........... (5) (62)
---------------------
26,571 26,355
Less treasury shares, at cost ..................... 1,750 1,750
---------------------
Total stockholders' equity .................. 24,821 24,605
---------------------
$ 32,195 $ 32,179
=====================
The accompanying notes are an integral part of these statements.
2
Boss Holdings, Inc. and Subsidiaries
Consolidated Statements of Operations
(Dollars in Thousands, Except Per Share Data)
(Unaudited)
Quarter Ended Quarter Ended
April 02, March 27,
2005 2004
- --------------------------------------------------------------------------------
Net sales .................................. $ 13,473 $ 10,084
Cost of sales .............................. 10,118 7,668
-----------------------------
Gross profit ....................... 3,355 2,416
Operating expenses ......................... 3,120 2,332
-----------------------------
Operating income ................... 235 84
-----------------------------
Other income (expense):
Interest income ............................ 6 11
Interest expense ........................... (88) (46)
Other ...................................... 1 16
-----------------------------
(81) (19)
-----------------------------
Income before income tax ........... 154 65
Income tax expense ......................... 60 --
-----------------------------
Net income ......................... $ 94 $ 65
=============================
Comprehensive Income ....................... $ 151 $ 56
=============================
Weighed average shares outstanding ......... 1,936,957 1,936,425
Basic earnings per common share ............ $ 0.05 $ 0.03
=============================
Diluted earnings per common share .......... $ 0.04 $ 0.03
=============================
The accompanying notes are an integral part of these statements.
3
Boss Holdings, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(Dollars in Thousands)
(Unaudited)
Three Months Three Months
Ended Ended
April 02, March 27,
2005 2004
- ----------------------------------------------------------------------------------------
Cash Flows from Operating Activities:
Net income .............................................. $ 94 $ 65
Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation and amortization ......................... 121 92
Stock based compensation .............................. 65 11
Deferred tax benefit .................................. 53 --
Changes in assets and liabilities:
(Increase) decrease in accounts receivable .......... (188) 73
Decrease in inventories ............................. 186 21
Decrease in prepaid expenses and other current assets 72 77
(Increase) in other assets .......................... (32) --
Decrease in accounts payable ........................ (168) (139)
Decrease in accrued liabilities ..................... (670) (337)
Increase in other liabilities ....................... 34 --
-------------------------
Net cash used in operating activities ............. (433) (137)
-------------------------
Cash Flows from Investing Activities:
Purchases of property and equipment ..................... (44) (157)
-------------------------
Net cash used in investing activities ............. (44) (157)
-------------------------
Cash Flows from Financing Activities:
Net borrowings (repayment) on revolving line of credit .. 773 (76)
Repayment of long-term obligations ...................... (169) --
Purchase and retirement of stock ........................ -- (101)
-------------------------
Net cash provided by (used in) investing activities 604 (177)
-------------------------
Effect of exchange rates on cash and cash equivalents ... 36 (9)
-------------------------
Increase (decrease) in cash and cash equivalents .. 163 (480)
Cash and cash equivalents:
Beginning of period ..................................... 1,056 4,479
-------------------------
End of period ........................................... $ 1,219 $ 3,999
=========================
The accompanying notes are an integral part of these statements.
4
Boss Holdings, Inc.
and Subsidiaries
Notes to Unaudited Consolidated Financial Statements (Dollars in Thousands,
Except Per Share Data)
- --------------------------------------------------------------------------------
Note 1. Basis of Presentation
The consolidated financial statements included in this report have been prepared
by Boss Holdings, Inc. (the "Company") pursuant to the rules and regulations of
the Securities and Exchange Commission for interim reporting and include all
normal and recurring adjustments which are, in the opinion of management,
necessary for a fair presentation. These financial statements have not been
audited by an independent accountant. The consolidated financial statements
include the accounts of the Company and its subsidiaries.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with accounting principles generally accepted
in the United States of America have been condensed or omitted pursuant to such
rules and regulations for interim reporting. The Company believes that the
disclosures are adequate to prevent the information from being misleading.
However, these financial statements should be read in conjunction with the
financial statements and notes thereto included in the Company's Annual Report
on Form 10-K, for the year ended December 25, 2004. The financial data for the
interim periods presented may not necessarily reflect the results to be
anticipated for the complete year.
Note 2. Earnings Per Share
The following table sets forth the computation of basic and diluted earnings per
share:
Quarter Ended
-------------------------
April 02, March 27,
2005 2004
-------------------------
Numerator for basic and diluted net earnings
per common share, earnings attributable
to common stockholders ......................... $ 94 $ 65
=========================
Denominator for basic net earnings
per common share, weighted
average shares outstanding ..................... 1,936,957 1,936,425
Effective of dilutive securities,
employee stock options ......................... 239,734 235,294
-------------------------
Denominator for diluted earnings
per common share ......................... 2,176,691 2,171,719
=========================
Basic earnings per common share .................. $ 0.05 $ 0.03
=========================
Diluted earnings per common share ................ $ 0.04 $ 0.03
=========================
Note 3. Stock Based Compensation and Recent Accounting Pronouncements
At April 2, 2005, the Company had two stock option plans providing for the
issuance of options covering up to 425,000 shares of common stock to be issued
to officers, directors, or consultants to the Company. In addition, during the
second quarter of 2004 the Company adopted an equity-based incentive program
allowing the issuance of some or all of the following: stock options, stock
appreciation rights, performance based stock awards and restricted stock units.
The 2004 plan provides for the issuance of up to 150,000 shares of common stock.
5
Stock option transactions are summarized as follows:
Three Months Ended Year Ended
April 02, 2005 December 25, 2004
-------------------------------------------
Weighted Weighted
Average Average
Exercise Exercise
Shares Price Shares Price
------------------------------------------
Outstanding, beginning of period ........ 366,914 $ 2.59 361,080 $ 2.25
Granted ............................... 62,000 7.50 24,500 7.00
Exercised ............................. -- -- (18,666) 1.80
------------------------------------------
Outstanding, end of period .............. 428,914 $ 3.30 366,914 $ 2.59
==========================================
On December 16, 2004, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 123(R), "Share-Based Payment", which is a revision of SFAS No. 123 and
supersedes APB Opinion No. 25 and SFAS 148. SFAS No. 123(R) requires all
share-based payments to employees, including grants of employee stock options,
to be valued at fair value on the date of grant and to be expensed over the
applicable vesting period. Pro forma disclosure of the income statement effects
of share-based payments is no longer an alternative. During the fourth quarter
of 2004, the Company elected to early adopt SFAS No. 123(R) using the modified
retrospective method. Under this approach all prior periods presented have been
restated to reflect the compensation cost that would have been recognized had
the recognition provisions of SFAS No. 123 been applied to all awards granted to
employees after January 1, 1995. The impact of the adoption of SFAS No. 123(R)
was to reduce net income by $11 and basic earnings per share by $0.01 for the
three months ended March 27, 2004.
Note 4. Comprehensive Income
SFAS No. 130 "Reporting Comprehensive Income," establishes standards for
reporting comprehensive income and its components in financial statements.
Comprehensive income, as defined, refers to revenues, expenses, gains and losses
that are not included in net income but rather are recorded directly in
stockholders' equity, which for the Company is comprised of foreign currency
translation adjustments and unrealized gains and losses on interest rate swap
agreements. The following table summarizes the components of comprehensive
income:
Three Months Ended
April 02, 2005 March 27, 2004
---------------------------------
Net income .................................................. $ 94 $ 65
Other comprehensive income
Foreign currency translation adjustments .................. 36 (9)
Unrealized gain on interest rate swap agreements,
net of $13 of income taxes .............................. 21 --
---------------------------------
Total comprehensive income .................................. $151 $ 56
=================================
Note 5. Reclassifications
Certain income and expense items have been reclassified, with no effect on net
income or earnings per common share, to be consistent with the classifications
adopted for the quarter ended April 2, 2005. Such reclassifications include the
treatment of certain advertising costs as reductions of revenue and warehousing
expenses as cost of goods sold rather than operating expenses.
Note 6. Operating Segments and Related Information
The Company operates in the work gloves and protective wear segment through its
Boss Manufacturing Company subsidiary, which imports, markets and distributes
gloves, boots and rainwear products. In addition, through Boss Pet and the
Warren Pet Products division of BMHI, the Company imports and markets a line of
pet supplies including dog and cat toys, collars, leads, chains and rawhide
products. Through its recently acquired Galaxy Balloons subsidiary, the Company
also markets custom imprinted balloons, balls and other primarily inflatable
products.
6
The following table provides summarized information concerning the Company's
reportable segments. In this table, the Company's corporate operations are
grouped into a miscellaneous column entitled, "Corporate and Other."
Work Gloves and Promotional and Corporate
Protective Wear Pet Supplies Specialty Products and Other Total
---------------------------------------------------------------------------------------------------
2005 2004 2005 2004 2005 2004 2005 2004 2005 2004
---------------------------------------------------------------------------------------------------
Revenue ......... $ 9,164 $ 8,054 $ 2,545 $ 1,761 $ 1,764 $ 269 $ -- $ -- $13,473 $10,084
Earnings (loss)
from operations $ 138 $ 233 $ 390 $ 53 $ 1 $ 66 $ (294) $ (268) $ 235 $ 84
Total assets .... 19,740 18,470 4,374 3,496 4,799 485 3,282 3,812 32,195 26,263
Intangibles ..... -- -- -- -- 2,641 -- -- -- 2,641 --
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Results of Operations
Certain statements, other than statements of historical fact, included in this
Quarterly Report including, without limitation, the statements under
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" are, or may be deemed to be, forward-looking statements that involve
significant risks and uncertainties, and accordingly, there is no assurance that
these expectations will be correct. These expectations are based upon many
assumptions that the registrant believes to be reasonable, but such assumptions
ultimately may prove to be materially inaccurate or incomplete, in whole or in
part and, therefore, undue reliance should not be placed on them. Several
factors which could cause actual results to differ materially from those
discussed in such forward-looking statements include, but are not limited to:
availability and pricing of goods purchased from international suppliers,
unusual weather patterns which could affect domestic demand for the registrant's
products, pricing policies of competitors, the ability to attract and retain
employees in key positions and uncertainties and changes in general economic
conditions. The words "believe," "expect", "anticipate", "should", "could" and
other expressions that indicate future events and trends identify
forward-looking statements. All subsequent forward-looking statements
attributable to the registrant or persons acting on its behalf are expressly
qualified in their entirety.
Sales
Quarter
Sales by Segment ---------------------
$(000) 2005 2004
- --------------------------------------------------------------------------------
Work gloves and protective wear .................. 9,164 8,054
---------------------
Pet supplies ..................................... 2,545 1,761
---------------------
Promotional & Specialty Products ................. 1,764 269
---------------------
Totals sales ..................................... 13,473 10,084
---------------------
Total revenues for the three months ended April 2, 2005 increased $3,389,000 or
33.6% from the comparable quarter in 2004, with sales up significantly in each
of the Company's operating segments. Sales for the first quarter of 2005
benefited from an extra week, with the current year quarter including 14 weeks
compared to 13 during the first quarter of 2004. The Company's largest sales
growth occurred in the promotional and specialty products segment, where
revenues increased $1,495,000 due to the acquisition of Galaxy Balloons during
the third quarter of 2004. Sales at Galaxy were in line with management
projections for the quarter and up approximately 10% from the comparable period
in 2004 prior to the acquisition on a comparable increase in unit volume. Galaxy
sales have historically exhibited significant seasonality, with sales reaching a
seasonal low during the holiday season through January, then building to a
seasonal peak in late summer.
7
In the Company's work gloves and protective wear segment, sales increased
$1,110,000, or 13.8%, during the first quarter of 2005 compared to 2004. This
increase was due primarily to sales growth in the domestic industrial market
where sales were up approximately 20% on a comparable increase in unit volume.
The Company continues to benefit from its efforts to broaden its base of
distributors served, expand utilization of manufacturer's representative groups
in certain areas and broaden the product line to provide specialized products
for application driven customer needs. Sales in the domestic consumer market
increased 8% due primarily to increased sales of CAT(R) branded gloves and
rainwear. Sales in this segment are historically lower during warm weather
months. The Company anticipates the sales growth trend in the industrial market
to continue, while sales growth in the consumer market may be more limited with
selling prices and margins under pressure from retail customers.
In the pet supplies segment, sales increased $784,000 during the first quarter
of 2005 compared to 2004 on improved revenues at the Company's Boss Pet and
Warren Pet operations. Warren Pet sales increased due to the addition of a
potentially significant new account during the first quarter as well as sales
growth at its largest two customers. Boss Pet sales increased due primarily to
sales growth from its existing customer base, and also continued to expand its
customer base during the quarter.
Cost of Sales
Cost of Sales by Segment
$(000) Quarter
----------------------------------
2005 2004
----------------------------------
$ % $ %
- --------------------------------------------------------------------------------
Work gloves and protective wear .......... 7,058 77.0% 6,178 76.7%
----------------------------------
Pet supplies ............................. 1,775 69.7% 1,348 76.5%
----------------------------------
Promotional & Specialty Products ......... 1,285 72.8% 142 52.8%
----------------------------------
Totals cost of sales ..................... 10,118 75.1% 7,668 76.0%
----------------------------------
Cost of sales for the three months ended April 2, 2005 totaled $10,118,000, up
$2,450,000 from the corresponding period of 2004, with cost of sales as a
percentage of sales down 0.9% from the prior year. This decrease in the cost of
sales percentage was primarily attributable to improved margins in the pet
supplies segment, which benefited from the completion of its transition to
higher margin imported goods. In addition, margins improved due a change in the
sales mix with the pet supplies and promotional and specialty products segments
generating 32% of sales in 2005 compared to 20% in the prior year. Margins in
these segments have historically been greater than in the work gloves and
protective wear segment.
Costs have stabilized in comparison to prior years, with import costs on certain
goods, particularly in the work glove and protective wear segment increasing
during the first quarter. Such increases had a negative impact on margins during
the quarter due to competitive pressure on selling prices. The Company
anticipates continued pressure on margins in the work glove and protective wear
segment.
Operating Expenses
Operating Expenses
by Segment $(000) Quarter
-----------------------------------
2005 2004
-----------------------------------
$ % $ %
- -------------------------------------------------------------------------------
Work gloves and protective wear ........ 1,968 21.5% 1,643 20.4%
-----------------------------------
Pet supplies ........................... 380 14.9% 360 20.4%
-----------------------------------
Promotional & Specialty Products ....... 478 27.1% 61 22.7%
-----------------------------------
Corporate and other .................... 294 -- 268 --
-----------------------------------
Total operating expenses ............... 3,120 23.2% 2,332 23.1%
-----------------------------------
8
Total operating expenses increased $788,000 during the first quarter of 2005
compared to the corresponding period in 2004, up 0.1% as a percentage of sales.
The largest portion of this increase occurred in the promotional and specialty
segment and was attributable to the acquisition of Galaxy. In addition,
operating expenses increased $325,000 in the work gloves and protective wear
segment due primarily to higher selling expenses. Selling expenses increased due
to higher commissions and direct selling expenses in addition to the Company's
start-up costs on outdoor products. In the corporate and other segment,
operating expenses increased $26,000 due to an increase in stock based
compensation expense. Stock option expense totaled $65,000 in the first quarter
of 2005 compared to $11,000 in 2004.
Earnings (Loss) From Operations
Operations by Segment
$(000) Quarter
-------------------------------------
2005 2004
-------------------------------------
$ % $ %
- --------------------------------------------------------------------------------
Work gloves and protective wear ........ 138 1.5% 233 2.9%
-------------------------------------
Pet supplies ........................... 390 15.3% 53 3.0%
-------------------------------------
Promotional & Specialty Products ....... 1 0.1% 66 24.5%
-------------------------------------
Corporate and other .................... (294) -- (268) --
-------------------------------------
Total operating income (loss) .......... 235 1.7% 84 0.8%
-------------------------------------
On a consolidated basis, the Company's operating earnings for the first quarter
of 2005 increased by $151,000 compared to the 2004 due to improved earnings in
the pet supplies segment attributable to increased sales and improved margins.
Despite higher sales in the work gloves and protective wear segment, operating
earnings declined due to lower margins and increased selling and other operating
expenses. Operating earnings also declined in the promotional and safety
products segment due to the seasonal nature of business activity at Galaxy. The
Company historically operates at a loss during the coming warm weather months in
the work gloves and protective wear segment. However, operational losses in the
coming warmer quarters should be reduced by expected profitability from Galaxy.
Other Income and (Expense)
The Company incurred $88,000 in interest expense during the first quarter of
2005, an increase of $42 from the comparable period in 2004 due to increased
borrowings in connection with the acquisition of Galaxy and higher interest
rates.
Taxes
In the first quarter of 2005, the Company recorded income tax expense of $60,000
based on current federal and estimated average state income tax rates. The
federal income tax portion of the tax provision is a non-cash expense, because
the Company has substantial net operating loss carryforwards for federal income
tax purposes resulting from losses in prior years.
Liquidity and Capital Resources
Operating activities used $433,000 in cash during the first quarter of 2005,
compared to a use of $137,000 in 2003. This change was primarily attributable to
the payment of certain accrued liabilities during the quarter such as year-end
customer rebates and professional fees. In addition, accounts receivable
increased from year-end due to seasonal sales fluctuations at Galaxy and
increased sales in the Company's other segments compared to 2004.
Investing activities used $44,000 in the first quarter of 2005, compared to
$157,000 during the comparable period in 2004. The reduced level of capital
expenditures in 2005 consisted primarily of information technology enhancements.
The Company expects to make warehouse improvements during the second quarter to
reduce energy consumption at a cost of approximately $65,000. The Company
currently has no other material commitments for capital expenditures.
Cash flows provided by financing activities totaled $604,000 for the
first quarter of 2005. The Company paid down long-term term loans by $169,000
and borrowed $773,000 under its revolving line of credit to meet working capital
needs.
9
At April 2, 2005, the Company had $1,219,000 in cash with borrowings of $871,000
under its $6,000,000 revolving line of credit with availability under this line
of $5,129,000. The Company's credit facility includes certain restrictive
covenants and expires in May 2006. The Company was in compliance with such
covenants as of April 2, 2005. Management expects to renew the credit facility
prior to expiration and believes the Company's cash on hand and availability
under the credit facility should provide ample liquidity for the Company's
expected working capital and operating needs.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISKS
The Company has minimal exposure to market risks such as changes in foreign
currency exchange rates and interest rates. The value of the Company's financial
instruments is generally not materially impacted by changes in interest rates.
The Company has entered into two interest rate swap agreements. The first
effectively fixes at 5.83% the interest rate on its mortgage note with a current
value of approximately $940,000 related to Kewanee warehouse facilities. The
second swap fixes at 6.32% the rate on approximately $915,000 of the Company's
term loan related to the Galaxy acquisition. Fluctuations in interest rates are
not expected to have a material impact on the interest expense incurred under
the Company's revolving credit facility.
Item 4. CONTROLS AND PROCEDURES
As of the end of the period covered by this report, the Company conducted an
evaluation, under the supervision and with the participation of the principal
executive officer and principal financial officer, of the Company's disclosure
controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the
Securities Exchange Act of 1934 (the "Exchange Act")). Based on this evaluation,
the principal executive officer and principal financial officer concluded that
the Company's disclosure controls and procedures are effective to ensure that
information required to be disclosed by the Company in reports that it files or
submits under the Exchange Act is recorded, processed, summarized and reported
within the time periods specified in Securities and Exchange Commission rules
and forms. There was no change in the Company's internal control over financial
reporting during the Company's most recently completed fiscal quarter that has
materially affected, or is reasonably likely to materially affect, the Company's
internal control over financial reporting.
10
PART II. --OTHER INFORMATION
Item 1. Legal Proceedings
The Company is a party to various legal actions incident to the normal operation
of its business. These lawsuits primarily involve claims for damages arising out
of commercial disputes. The Company has been named as a defendant in several
lawsuits alleging past exposure to asbestos contained in gloves sold by one of
the Company's predecessors-in-interest, all of which actions are being defended
by one or more of the Company's products liability insurers. Management believes
the ultimate disposition of these matters should not materially impact the
Company's consolidated financial position or liquidity.
Item 2. Unregistered Sale of Equity Securities and Use of Proceeds
Not applicable.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
Item 5. Other Information
Not applicable.
Item 6. Exhibits
(a) Exhibits
31.1 Certification of Principal Executive Officer pursuant to section
302 of the Sarbanes-Oxley Act of 2002.
31.2 Certification of Principal Financial Officer pursuant to section
302 of the Sarbanes-Oxley Act of 2002.
32 Certification of Chief Executive Officer and Chief Financial
Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to section 906 of the Sarbanes-Oxley Act of 2002.
11
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BOSS HOLDINGS, INC.
Dated: May 16, 2005 By: /s/ J. Bruce Lancaster
------------ -----------------------------
J. Bruce Lancaster
Chief Financial Officer
(principal financial officer)
12