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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
for the quarterly period ended June 29, 2002
or
[_] Transition Report pursuant Section 13 or 15 (d)
of the Securities Exchange Act of 1934
for the transition period from __________ to __________
Commission File No. 33-9875
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BOSTON ACOUSTICS, INC.
(Exact name of registrant as specified in its charter)
Massachusetts 04-2662473
(State or other jurisdiction (I.R.S. employer
of incorporation or identification no.)
organization)
300 Jubilee Drive
Peabody, Massachusetts 01960
(Address of Principal Executive Offices) (Zip Code)
(978) 538-5000
(Registrant's telephone number, including area code)
Indicate by check mark 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 the past 90 days.
Yes [X] No [_]
There were 4,595,595 shares of Common Stock issued and outstanding as of August
13, 2002.
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Boston Acoustics, Inc.
Index
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Page
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Part I: Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets (Unaudited)-
March 30, 2002 and June 29, 2002 4
Consolidated Statements of Income (Unaudited)-
Three months ended June 30, 2001 and June 29, 2002 6
Consolidated Statements of Cash Flows (Unaudited)-
Three months ended June 30, 2001 and June 29, 2002 7
Notes to Unaudited Consolidated Financial Statements 8
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 11
Part II: Other Information
Items 1 through 6 15
Signatures 16
2
PART I: FINANCIAL INFORMATION
Item 1: Financial Statements
3
Boston Acoustics, Inc. and Subsidiaries
Consolidated Balance Sheets
(Unaudited)
Assets
------
March 30, 2002 June 29, 2002
-------------- -------------
Current Assets:
Cash and cash equivalents $ 5,134,558 $ 4,779,845
Accounts receivable, net of allowance for
doubtful accounts of approximately $366,000
and $357,000 at March 30, 2002 and
June 29, 2002, respectively 10,830,538 11,110,685
Inventories 14,370,308 14,567,342
Deferred income taxes 1,724,000 1,724,000
Prepaid expenses and other current assets 1,010,792 1,078,529
----------- -----------
Total current assets 33,070,196 33,260,401
----------- -----------
Property and Equipment, at Cost:
Machinery and equipment 16,833,179 17,010,553
Building and improvements 8,795,567 8,795,567
Office equipment and furniture 5,067,810 5,138,787
Land 1,815,755 1,815,755
Motor vehicles 255,956 255,956
----------- -----------
32,768,267 33,016,618
Less-Accumulated depreciation
and amortization 18,848,303 19,649,788
----------- -----------
13,919,964 13,366,830
----------- -----------
Other Assets, Net 1,428,286 1,427,444
----------- -----------
$48,418,446 $48,054,675
=========== ===========
The accompanying notes are an integral part of these consolidated financial
statements.
4
Boston Acoustics, Inc. and Subsidiaries
Consolidated Balance Sheets
(Unaudited)
Liabilities and Shareholders' Equity
------------------------------------
March 30, 2002 June 29, 2002
-------------- -------------
Current Liabilities:
Accounts payable $ 5,230,684 $ 6,163,954
Accrued payroll and payroll-
related expenses 1,185,529 1,228,858
Dividends payable 390,626 390,626
Other accrued expenses 1,095,369 1,113,660
Current maturity of line of credit 2,500,000 1,250,000
----------- -----------
Total current liabilities 10,402,208 10,147,098
----------- -----------
Minority Interest in Joint Venture 18,265 23,620
----------- -----------
Shareholders' Equity:
Common stock, $.01 par value -
Authorized -- 8,000,000 shares
Issued -- 5,100,314 shares 51,003 51,003
Additional paid-in capital 1,191,988 1,191,988
Subscriptions receivable (272,917) (272,917)
Retained earnings 42,648,558 42,534,542
----------- -----------
43,618,632 43,504,616
Less-Treasury stock, 504,700 shares, at cost 5,620,659 5,620,659
----------- -----------
Total shareholders' equity 37,997,973 37,883,957
----------- -----------
$48,418,446 $48,054,675
=========== ===========
The accompanying notes are an integral part of these consolidated financial
statements.
5
Boston Acoustics, Inc. and Subsidiaries
Consolidated Statements of Income
(Unaudited)
Three Months Ended
------------------
June 30, 2001 June 29, 2002
------------- -------------
Net sales $20,442,904 $ 18,257,277
Cost of goods sold 14,932,474 12,448,444
----------- ------------
Gross profit 5,510,430 5,808,833
----------- ------------
Selling and marketing expenses 2,530,046 2,626,924
General and administrative expenses 1,155,093 1,231,520
Engineering and development expenses 1,324,256 1,554,583
----------- ------------
Total operating expenses 5,009,395 5,413,027
----------- ------------
Income from operations 501,035 395,806
Interest income 43,741 31,137
Interest expense (160,028) (19,165)
Other income (expense) (11,094) 18,831
----------- ------------
Income before provision
for income taxes 373,654 426,609
Provision for income taxes 203,000 150,000
----------- ------------
Net income $ 170,654 $ 276,609
=========== ============
Net income per share
Basic $ .03 $ .06
=========== ============
Diluted $ .03 $ .06
=========== ============
Weighted average common shares outstanding (Note 3):
Basic 4,929,114 4,595,595
Diluted 4,941,282 4,673,688
Dividends per share $ .085 $ .085
=========== ============
The accompanying notes are an integral part of these consolidated financial
statements.
6
Boston Acoustics, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
Three Months Ended
------------------
June 30, 2001 June 29, 2002
------------- -------------
Cash flows from operating activities:
Net income $ 170,654 $ 276,609
Adjustments to reconcile net income to net cash
provided by operating activities -
Depreciation and amortization 671,973 801,485
Changes in assets and liabilities -
Accounts receivable 148,588 (280,147)
Inventories 5,445,141 (197,034)
Prepaid expenses and other current assets (60,031) (67,737)
Accounts payable 560,674 933,270
Accrued payroll and other accrued expenses (1,068,284) 61,621
Accrued income taxes 73,365 -
----------- -----------
Net cash provided by operating activities 5,942,080 1,528,067
----------- -----------
Cash flows from investing activities:
Purchases of property and equipment (210,997) (248,351)
Decrease in other assets 11,582 6,197
----------- -----------
Net cash used in investing activities (199,415) (242,154)
----------- -----------
Cash flows from financing activities:
Dividends paid (418,990) (390,626)
Repayments on line of credit (4,000,000) (1,250,000)
----------- -----------
Net cash used in financing activities (4,418,990) (1,640,626)
----------- -----------
Net increase (decrease) in cash and cash equivalents 1,323,675 (354,713)
Cash and cash equivalents, beginning of period 2,785,846 5,134,558
----------- -----------
Cash and cash equivalents, end of period $ 4,109,521 $ 4,779,845
=========== ===========
Supplemental Disclosure of Non-cash Financing and
Investing Activities:
Dividends payable $ 418,863 $ 390,626
=========== ===========
Forgiveness of subscription receivable $ 19,500 $ -
=========== ===========
Minority interest in foreign subsidiary $ 14,080 $ 5,355
=========== ===========
Supplemental Disclosure of Cash Flow Information:
Cash paid for income taxes $ 39,000 $ 22,000
=========== ===========
Cash paid for interest $ 157,629 $ 19,557
=========== ===========
The accompanying notes are an integral part of these consolidated financial
statements.
7
Boston Acoustics, Inc. and Subsidiaries
Notes to Unaudited Consolidated Financial Statements
(1) Basis of Presentation
The unaudited consolidated financial statements included herein have been
prepared by the Company, without audit, pursuant to the rules and regulations of
the Securities and Exchange Commission and include, in the opinion of
management, all adjustments (consisting only of normal recurring adjustments)
necessary for a fair presentation of interim period results. Certain information
and footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to such rules and regulations. The Company believes, however,
that its disclosures are adequate to make the information presented not
misleading. The results for the three-month period ended June 29, 2002 are not
necessarily indicative of results to be expected for the full fiscal year. These
financial statements should be read in conjunction with the Company's Annual
Report included in its Form 10-K for fiscal year ended March 30, 2002.
(2) Inventories
Inventories are stated at the lower of cost (first-in, first-out) or market
and consist of the following:
March 30, 2002 June 29, 2002
-------------- -------------
Raw materials $ 4,345,760 $ 4,997,623
Work-in-process 1,317,223 1,168,787
Finished goods 8,707,325 8,400,932
----------- -----------
$14,370,308 $14,567,342
=========== ===========
Work-in-process and finished goods inventories consist of materials, labor
and manufacturing overhead.
(3) Net Income Per Common Share
The Company follows the provisions of Statement of Financial Accounting
Standards (SFAS) No. 128, Earnings per Share. SFAS No. 128 establishes standards
for computing and presenting earnings per share (EPS) and applies to entities
with publicly held common stock or potential common stock. Basic EPS is computed
by dividing net income by the weighted average number of common shares
outstanding for the period. Diluted EPS reflects the potential dilution from
common stock equivalents (stock options). This standard requires presentation of
both basic and diluted earnings per share on the face of the consolidated
statements of income. These financial statements have been prepared and
presented based on this standard. For the three-month periods ended June 29,
2002 and June 30, 2001, there were 190,800 and 412,600 options respectively,
that have been excluded from the weighted average number of common and dilutive
potential shares outstanding, as their effect would be antidilutive.
8
The computation of basic and diluted shares outstanding, as required by
SFAS No. 128, is as follows:
For the three months ended
June 30, 2001 June 29, 2002
------------- -------------
Basic weighted average common
shares outstanding 4,929,114 4,595,595
Dilutive effect of assumed exercise
of stock options 12,168 78,093
--------- ---------
Weighted average common shares
outstanding assuming dilution 4,941,282 4,673,688
========= =========
(4) Revenue Recognition
The Company recognizes revenue in accordance with the Securities and
Exchange Commission's Staff Accounting Bulletin 101 (SAB 101), Revenue
Recognition.
Revenue is recognized when products are shipped to customers, provided that
there are no uncertainties regarding customer acceptance, there is persuasive
evidence of an arrangement, the sales price is fixed or determinable and
collection of the related receivable is probable. The Company's standard sales
terms provide that shipping terms are FOB shipping point, and that title and
risk of loss or damage pass to customer upon delivery of products to the
carrier.
At the time of revenue recognition, the Company provides reserves for sales
returns and rebates, timely pay discounts, and freight reserves.
The Company charges many of its customers shipping and freight costs
related to the delivery of its products. Accordingly, the Company follows the
provisions of Emerging Issues Task Force Issue No. 00-10, Accounting for
Shipping and Handling Fees and Costs. Amounts charged to customers for shipping
and handling costs are included in net sales in the accompanying consolidated
statements of income. The related shipping and handling costs are recorded in
cost of sales in the accompanying consolidated statements of income.
(5) Segment Reporting
The Company has determined that it has two reportable segments: 1) core,
and 2) original equipment manufacturer (OEM) and multimedia.
The accounting policies of the segments are the same as those described in
the summary of significant accounting policies. The Company does not allocate
operating expenses between its two reportable segments. Accordingly, the
Company's measure of profit for each reportable segment is based on gross
profit.
9
OEM and
Three months ended June 29, 2002 Core Multimedia Total
-------------------------------- ---- ---------- -----------
Net Sales $12,800,078 $ 5,457,199 $18,257,277
=========== =========== ===========
Gross profit $ 4,968,339 $ 840,494 $ 5,808,833
=========== =========== ===========
OEM and
Three months ended June 30, 2001 Core Multimedia Total
-------------------------------- ---- ---------- -----------
Net Sales $13,336,052 $ 7,106,852 $20,442,904
=========== =========== ===========
Gross profit $ 4,584,778 $ 925,652 $ 5,510,430
=========== =========== ===========
(6) Significant Customers and Concentration of Credit Risk
For the three-month periods ended June 29, 2002 and June 30, 2001, one
OEM/Multimedia customer represented approximately 29% and 32% of the Company's
net sales, respectively, and one core customer represented approximately 13% of
net sales for both reporting periods. One OEM/Multimedia customer represented
approximately 16% of net accounts receivable and two core customers represented
approximately 22% and 12% of net accounts receivable at June 29, 2002,
respectively.
(7) International Operations
The Company maintains sales concentrations in Europe, Asia, and Canada in
addition to distributing product through three foreign subsidiaries. Export
sales accounted for approximately 15% and 19% of net sales for the three-month
periods ended June 29, 2002 and June 30, 2001, respectively.
(8) Accounting for Customer Consideration
The Company adopted the provisions of Emerging Issues Task Force Issue No.
00-25, Vendor Income Statement Characterization of Consideration Paid to a
Reseller of the Vendor's Products, (EITF 00-25), as codified by EITF 01-09
beginning January 1, 2002. EITF 00-25 addresses whether consideration given to a
customer from a vendor should be classified as an adjustment to the selling
price of the product sold or as a cost of the product sold. The task force
reached a consensus that cash consideration given by a vendor to a customer is
presumed to be a reduction of the selling price of the vendor's products or
services and therefore, should be characterized as a reduction of revenue when
recognized in the vendor's income statement. The Company offers cooperative
advertising programs to its largest customers whereby the customers can earn
sales credits for approved advertisements involving the Company's products. The
Company has historically recorded these credits as an adjustment to the selling
price of its products. For the three-month periods ending June 29, 2002 and June
30, 2001, cooperative advertising credits included as sales adjustments were
approximately $633,000 and $436,000, respectively.
(9) Reclassifications
Certain amounts in the prior-period consolidated financial statements have
been reclassified to conform to the current period's presentation.
10
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Results of Operations
The following table sets forth the results of operations for the three-month
period ended June 30, 2001 and June 29, 2002 expressed as percentages of net
sales.
Three Months Ended
------------------
June 30, 2001 June 29, 2002
------------- -------------
Net sales 100.0 % 100.0 %
Cost of goods sold 73.0 68.2
----- -----
Gross profit 27.0 31.8
----- -----
Selling and marketing expenses 12.4 14.4
General and administrative expenses 5.6 6.8
Engineering and development expenses 6.5 8.5
----- -----
Total operating expenses 24.5 29.7
----- -----
Income from operations 2.5 2.1
Interest income (expense), net (0.6) 0.1
Other income (expense) (0.1) 0.1
----- -----
Income before provision for
income taxes 1.8 2.3
Provision for income taxes 1.0 0.8
----- -----
Net income 0.8 % 1.5 %
===== =====
Net sales decreased 11 percent, from approximately $20,443,000 during the first
quarter of fiscal 2002 to approximately $18,257,000 during the first quarter of
fiscal 2003. The overall reduction in net sales is the result of the continued
difficult economic environment and its impact on the Company's business
segments, particularly OEM and multimedia speaker sales. Net sales of the
Company's core products decreased approximately 4 percent or approximately
$536,000 compared to the same three-month period a year ago, while net sales of
the OEM and Multimedia Retail segment were down 23 percent or approximately
$1,650,000.
During the three-month period ended June 29, 2002, the Company introduced
upgraded versions of its in-wall/in-ceiling speaker systems. The DSi Series of
speaker systems consist of nine models; 4 in-wall models and 5
in-wall/in-ceiling round speakers which can be used for stereo, home theater or,
whole-house music applications and range in price from $150 to $600 per pair.
Introductions of upgraded versions of existing product offerings, while
permitting the Company to remain competitive, are not likely to result in
significant increases in revenue over the long term. During the last week of
June 2002, the Company launched one of its new high performance after-market
component speakers. The Z6 has a suggested retail of $1,000 and has a highly
stylized design that minimizes installation effort and cost. Although sales of
this new automotive product did not have a material effect on the Core segment
sales during the quarter (primarily because of the timing of the introduction
late during the quarter), the Z component speakers are expected to enhance the
Company's leadership in the premium after-market component speaker business and
may result in additional revenues in subsequent periods.
11
Expenses included in the cost of goods sold line item are raw material, direct
labor, freight, and indirect costs associated with the Company's manufacturing
operations.
The Company's gross margin for the three-month period ended June 29, 2002
increased as a percentage of net sales from 27.0% to 31.8% due primarily to
improved margins from the Core segment of sales. The Core segment of products
have higher gross margins and have also benefited from the continued
improvements in manufacturing efficiencies. Gross margin for the OEM/Multimedia
segment sales increased slightly as a result of a changing product mix as
compared to the same three-month period a year ago.
Selling and marketing expenses include payroll and payroll-related costs as well
as corporate advertising and literature costs associated with the sale and
marketing of the Company's products. Expenses included in the general and
administrative expenses line item are management and administrative payroll and
other expenses associated with the Company's operations outside of
manufacturing, research and development and sales and marketing, and include
professional services, consulting arrangements, and investor relations
expenditures. Engineering and development expenses include payroll and
payroll-related expenses attributed to the design and enhancement of existing
products along with the creation of new products; associated expenses include
supplies, samples, test equipment, and inventory consumed.
Total operating expenses increased in both absolute dollars and as a percentage
of net sales during the three-month period ended June 29, 2002. This increase
was anticipated and resulted from the Company's investment in personnel and
process (approximately $300,000 as compared to the corresponding three-month
period a year ago) to meet new business opportunities in new markets,
particularly the OEM automotive market. Selling and marketing expenses have
increased in absolute dollars (approximately $97,000) and as a percentage of
sales primarily due to increased corporate advertising and literature expenses
compared to the same period a year ago. General and administrative expenses
increased in absolute dollars (approximately $76,000) and as a percentage of
sales due to the value of donations contributed to charitable organizations as
compared to the same three-month period a year ago. Engineering and development
expenses have increased in absolute dollars (approximately $230,000) and as a
percentage of sales in preparation to meet new business challenges particularly
the OEM automotive market. This has resulted in increased personnel expenses and
consulting fees for the first quarter of fiscal 2003 as compared to the
corresponding period in fiscal 2002.
The Company posted net interest income of approximately $12,000 for the
three-month period ended June 29, 2002 compared to net interest expense of
approximately $116,000 for the corresponding period last year. The turnaround is
due to a reduction in the Company's outstanding line of credit balance for the
period ended June 29, 2002 as compared to the period ended June 30, 2001. At
June 29, 2002, there was $1,250,000 outstanding on the Company's line of credit
as compared to $7,500,000 at June 30, 2001.
The Company's effective income tax rate decreased to 35.2% for the three-month
period ended June 29, 2002 from 54.3% for the three-month period ended June 30,
2001. The effective income tax rate for the three-month period ended June 30,
2001 was unusually high as a result of operating losses at the Company's
foreign subsidiaries that could not be benefited.
Net income for the three-month period ended June 29, 2002 increased from
approximately $171,000 to $277,000 while diluted earnings per share doubled from
$.03 to $.06 per share. The increase is primarily attributable to improved
margins in the Core segment, a shift in the product mix towards higher margin
Core products, lower interest expense and a lower effective income tax rate.
12
Liquidity and Capital Resources
As of June 29, 2002, the Company's working capital was approximately
$23,113,000, an increase of $445,000 since the end of fiscal 2002. The increase
in working capital was due to increases in accounts receivable, inventory and
payments made on the Company's line of credit borrowings partially offset by
increased accounts payable. The Company's cash and cash equivalents were
approximately $4,780,000 at June 29, 2002, a decrease of $355,000 since March
30, 2002. Current liabilities decreased by approximately $255,000 due to
repayments on the line of credit offset by an increase in accounts payable. The
Company has two lines of credit with two banking institutions totaling
$26,500,000. At June 29, 2002, the Company had borrowings totaling $1,250,000
under its $25 million revolving credit agreement, and $0 outstanding under its
$1.5 million revolving credit agreement.
Based on current market prices, management believes that the Company's stock is
undervalued and that the current Company stock repurchase program is a good
investment of available funds. Repurchases are made from time to time on the
open market at prevailing market prices and in negotiated transactions off the
market. The repurchase program is expected to continue through the end of the
current fiscal year unless extended or shortened by the Board of Directors.
Repurchased shares will be held in treasury and, at the present, the Company has
no plans for their reissuance.
Given the company's historical profitability and its ability to manage expenses,
the Company believes that its current resources are adequate to meet its
requirements for working capital and capital expenditures through the
foreseeable future.
Significant Customers
The Company's financial results for the three-month period ending June 29, 2002
include significant OEM sales of multimedia speaker systems to Gateway, Inc.
("Gateway"). For the three-month period ended June 29, 2002, Gateway accounted
for 29.4% of the Company's net sales. The terms of these sales are governed by a
Master Supply Agreement between Gateway and the Company which defines such
issues as ordering and invoicing procedures, shipping charges, warranties,
repair service support, product safety requirements, etc. This Master Supply
Agreement with Gateway does not contain minimum or scheduled purchase
requirements; therefore, purchase orders by Gateway may fluctuate significantly
from quarter to quarter.
Based on information currently available from our OEM customer, the Company
anticipates that our OEM sales should decrease during fiscal 2003 as compared to
fiscal 2002. Although the loss of Gateway as a customer or the loss of any
significant portion of orders from Gateway could have a material adverse effect
on the Company's business, results of operations and financial condition, the
Company's management has taken steps (including pursuit of additional OEM
customers, expansion of the Company's automotive products offerings and renewed
efforts to increase sales of the Company's Core products) which it believes will
mitigate the adverse consequences of the expected decline in orders from
Gateway.
Cautionary Statements
The Private Securities Litigation Reform Act of 1995 contains certain safe
harbors regarding forward-looking statements. From time to time, information
provided by the Company or statements made by its directors, officers, or
employees may contain "forward-looking" information which involve risk and
uncertainties. Any statements in this report that are not statements of
historical fact are forward-looking statements (including, but not limited to,
statements concerning the characteristics and growth of the Company's market and
customers, the Company's objectives and plans for future operations, and the
Company's expected liquidity and capital resources). Such forward-looking
statements are based on a number of assumptions and involve a number of risks
and uncertainties, and accordingly, actual results could differ materially.
Factors that may cause such differences include, but are not limited to: the
continued and future acceptance of the Company's products, the rate of growth in
the audio industry; the presence of competitors with greater technical,
marketing and financial resources; the Company's ability to promptly and
effectively respond to technological change to meet evolving consumer demands;
capacity and supply constraints or difficulties; and the Company's ability to
successfully integrate new operations.
13
The words "believe," "expect," "anticipate," "intend" and "plan" and similar
expressions identify forward-looking statements. Readers are cautioned not to
place undue reliance on these forward-looking statements, which speak only as of
the date the statement was made. For a further discussion of these and other
significant factors to consider in connection with forward-looking statements
concerning the Company, reference is made to Exhibit 99 of the Company's Form
8-K filed on July 18, 1996.
14
PART II: OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
The following exhibits are filed herewith:
Exhibit 99.1 Certification Pursuant to 18 U.S.C. Section 1350
Exhibit 99.2 Certification Pursuant to 18 U.S.C. Section 1350
The following reports on Form 8-K were filed during the quarter ended June
29, 2002:
a.) Item 5. Announcement of the Company's entry into the automotive
audio systems OEM market.
b.) Item 4. Reporting the dismissal of Arthur Andersen LLP as the
Company's independent auditor.
15
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 thereunto duly authorized.
Boston Acoustics, Inc.
----------------------
Registrant
Date: August 13, 2002 By: /s/ Andrew G. Kotsatos
----------------------
Andrew G. Kotsatos
Director, Chairman of the Board
and Treasurer
Date: August 13, 2002 By: /s/ Moses A. Gabbay
-------------------
Moses A. Gabbay
Director and Chief Executive
Officer
Date: August 13, 2002 By: /s/ Allan J. Evelyn
-------------------
Allan J. Evelyn
Director and President
Date: August 13, 2002 By: /s/ Debra A. Ricker-Rosato
--------------------------
Debra A. Ricker-Rosato
Vice President and
Chief Accounting Officer
16