Back to GetFilings.com
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2002 Commission file number 1-878
BLAIR CORPORATION
Incorporated in Delaware I.R.S. Employer Identification Number:
220 Hickory Street 25-0691670
Warren, Pennsylvania 16366
(814) 723-3600
Securities registered pursuant to Section 12(b) of the Act:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
Common Stock, without nominal or par value American Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
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 | |
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. | |
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act). Yes |X| No | |
The aggregate market value of the voting stock held by nonaffiliates of
the registrant as of June 28, 2002 was approximately $185,070,379. The aggregate
market value of the voting stock held by nonaffiliates of the registrant as of
February 21, 2003 was $166,114,699. There were 8,042,080 shares of common stock
outstanding as of February 21, 2003, which amount represents the figure reported
outstanding by the Company's transfer agent as of the record date.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Annual Report to Stockholders for the fiscal year ended
December 31, 2002 (the "Annual Report") are incorporated by reference into Part
II and Part IV of this Form 10-K. Portions of the Proxy Statement for the 2003
Annual Meeting of Stockholders (the "Proxy Statement") are incorporated by
reference into Part III of this Form 10-K.
PART I
ITEM 1. BUSINESS
(a) GENERAL.
Blair Corporation (the "Company") was founded in 1910 by John L. Blair,
Sr., and was incorporated in 1924 under the laws of the State of Delaware. The
Company's business consists of the sale of fashion apparel for men and women,
plus a wide range of home products. Although the Company's revenues are
generated primarily through direct mail merchandising, the Company has
transitioned into a multi-channel direct marketer, as an increasing amount of
total revenue, approximately 9% in 2002, is being generated through its
e-commerce website which was launched in 2000. The Company operates three retail
stores, two in Pennsylvania and one in Delaware, and two outlet stores in
Pennsylvania. The Company employs approximately 2,700 people. None of the
Company's employees are subject to collective bargaining agreements.
(b) INFORMATION REGARDING INDUSTRY SEGMENTS.
The Company's business consists of only one industry segment, which is the
direct mail, e-commerce and retail merchandising of men's and women's fashion
apparel and home products.
(c) DESCRIPTION OF BUSINESS.
The Company markets a wide range of merchandise, manufactured by a number
of independent suppliers, both domestic and foreign. Most of these suppliers
have been associated with the Company for many years and manufacture products
based upon the Company's specifications. Suppliers are selected in accordance
with their ability to produce high quality products in a cost-effective manner.
The Company markets its products mainly by direct mail. Catalogs and
letters containing color folders, depict the current styles of womenswear (such
as coordinates, dresses, tops, pants, skirts, lingerie, sportswear, suits,
jackets, outerwear and shoes), menswear (such as suits, shirts, outerwear,
active wear, slacks, shoes, and accessories), and home products (such as
bedspread ensembles, draperies, furniture covers, area rugs, bath accessories,
kitchenware, gifts, collectibles and personal care items) and are mailed
directly to existing and prospective customers. Sales of the menswear and
womenswear products, including the Crossing Pointe product line which was
introduced in 2000, accounted for approximately 90% of the Company's total sales
in 2002, and sales of home products accounted for the remaining 10%
(approximately). Media and co-op prospect advertising programs continue to be
used as components of the Company's customer acquisition strategy. The Company
continued to expand its Internet presence in 2002 generating nearly $58 million
in sales demand, approximately 9% of the Company's total gross sales, as
compared to approximately $35 million in sales demand in 2001. The Company
launched its own e-commerce website (www.blair.com) in the fall of 2000,
redesigned the site at the beginning of 2001 and has continued to expand its
affiliate partnerships to extend the reach of the website. The Company's website
is also becoming an effective way to help liquidate excess inventory.
Both catalog mailings and letter mailings are mailed from commercial
printers engaged by the Company. Prior to the second quarter of 2001, letter
mailings originated from the Company's former Mailing Center in nearby Irvine,
Pennsylvania. In the second quarter of 2001, the mailing operations were
outsourced and in the third quarter of 2001, the merchandise returns operations
that were located in the former Mailing Center were relocated to the Company's
new Returns Center in Erie, Pennsylvania. Orders for merchandise are processed
at the Company's corporate offices in Warren, Pennsylvania (telephone orders via
the call centers) and orders are filled and mailed from the Company's
Distribution Center in Irvine, Pennsylvania. The Distribution Center is being
expanded to include the former Mailing Center, and enhanced to improve customer
service levels and to support the Company's growth plans. The Company serves
customers throughout the fifty states.
The Company's outlet stores, along with the website, enable it to more
efficiently promote and liquidate discontinued, overstocked and returned
merchandise. The Delaware retail store is the only Company retail facility
located outside of the Company's home state of Pennsylvania.
The Company considers its merchandise to be low/medium-priced and competes
for sales with other direct marketers, retail department stores, specialty
shops, discount store chains and e-commerce and multi-channel marketers. The
Company competes based on its sales expertise - its unique combination of
product, quality, price, credit, guarantee and service.
During 2002, the Company continued to broaden its customer information
database systems. The marketing and credit departments are continually updated
in order to enhance the Company's ability to market to both customers and
prospects.
In October 2001, the Company announced a partnership with accomplished
actress, artist, author and mother, Jane Seymour, to launch the "Jane Seymour
Signature Collection" of women's apparel. The Jane Seymour inspired fashions are
being sold exclusively through the Company's Crossing Pointe catalog and website
(www.crossingpointe.com). The first "Jane Seymour Signature Collection" fashions
previewed in early January 2002 on the Crossing Pointe website and debuted in
the Crossing Pointe Spring 2002 catalog mailed at the end of January 2002.
(d) FOREIGN OPERATIONS AND EXPORT SALES.
The Company does not derive any revenue from sales of merchandise outside
of the United States.
The Company's International Trade Offices, the Company's only foreign
operations, directly source more than 30% of the Company's merchandise from
foreign suppliers. All activity is intercompany and the foreign offices have
insignificant amounts of cash and fixed assets.
(e) AVAILABLE INFORMATION.
The Company makes available free of charge copies of its Annual Reports on
Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, and
any amendments made to these reports pursuant to Section 13(a) and 15(d) of the
Exchange Act, on its website at www.blair.com. Such reports are posted as soon
as reasonably practicable after being filed with the SEC.
ITEM 2. PROPERTIES
The Company owns the following properties:
1. Blair Headquarters (220 Hickory Street, Warren, Pennsylvania).
2. Blair Distribution Center South (Route 62, Irvine, Pennsylvania).
3. Blair Distribution Center North (former Mailing Center) (Route 62,
Irvine, Pennsylvania).
4. Blair Warehouse Outlet (Route 62, Starbrick, Pennsylvania).
5. Blair Warehouse Outlet (Millcreek Mall, Erie, Pennsylvania).
6. Bell Warehouse Building (Liberty Street, Warren, Pennsylvania).
7. Starbrick Warehouse Building (Route 62, Starbrick, Pennsylvania).
The Company leases the following properties:
1. Blair Retail Store (Wilmington, Delaware).
2. Telephone Call Center (Erie, Pennsylvania).
3. Telephone Call Center (Franklin, Pennsylvania).
4. Blair Retail Store (Grove City, Pennsylvania).
5. Blair Returns Center (Erie, Pennsylvania).
6. International Trade Offices (Hong Kong, Taiwan, Singapore and
India).
In addition, three of the Company's wholly-owned subsidiaries lease office
space in the Wilmington, Delaware area, which they use as their principal
offices.
Management believes that these properties are capable of meeting the
Company's anticipated needs for the near future once the previously announced
modernization and expansion of the Company's merchandise fulfillment
capabilities are completed, which is projected to be by mid-year 2003. However,
the Company's marketing strategy and potential sales growth may require
expansion of the Company's customer service and call center capabilities.
ITEM 3. LEGAL PROCEEDINGS
The Company is not involved in any pending legal proceedings other than
legal proceedings occurring in the ordinary course of business. Management
believes that none of these legal proceedings, individually or in the aggregate,
will have a material adverse impact on the results of operations or financial
condition of the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders, through the
solicitation of proxies or otherwise, during the fourth quarter of the fiscal
year covered by this report.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The information required by this item is incorporated by reference to page
14 of the Company's 2002 Annual Report to Stockholders.
ITEM 6. SELECTED FINANCIAL DATA
The information required by this item is incorporated by reference to page
14 of the Company's 2002 Annual Report to Stockholders.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The information required by this item is incorporated by reference to
pages 15 through 19 of the Company's 2002 Annual Report to Stockholders.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is subject to market interest rate risk from exposure to
changes in interest rates based upon its financing, investing and cash
management activities. The Company utilizes variable-rate debt to manage its
exposure to changes in interest rates. The Company does not expect changes in
interest rates to have a material adverse effect on its income or cash flow in
2003. A change of one percent in the interest rate would cause a change in
interest expense, based on the Company's current level of debt, for the year
2003 of approximately $150,000.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this item is incorporated by reference to
pages 7 through 13 of the Company's 2002 Annual Report to Stockholders.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
Information regarding directors and executive officers of the Company
appearing under the caption "Election of Directors" in the Company's Proxy
Statement for the 2003 Annual Meeting of Stockholders filed with the Securities
and Exchange Commission on March 14, 2003 (the "2003 Proxy Statement") is hereby
incorporated by reference.
ITEM 11. EXECUTIVE COMPENSATION
Information appearing under the caption "Executive Compensation" in the
2003 Proxy Statement is hereby incorporated by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information setting forth the security ownership of certain beneficial
owners and management appearing under the captions "Security Ownership of
Certain Beneficial Owners" and "Security Ownership of Management" in the 2003
Proxy Statement is hereby incorporated by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Not applicable.
ITEM 14. CONTROLS AND PROCEDURES
As of a date within 90 days of the filing date of this report, based on an
evaluation of the Company's disclosure controls and procedures (as defined in
Rules 13a-14(c) and 15d-14(c) under the Securities Exchange Act of 1934) each of
the chief executive officer and the chief financial officer of the Company has
concluded that the Company's disclosure controls and procedures are effective to
ensure that information required to be disclosed by the Company in its Exchange
Act reports is recorded, processed, summarized and reported within the
applicable time periods specified by the SEC's rules and forms.
There were no significant changes in the Company's internal controls or in
any other factors that could significantly affect those controls subsequent to
the date of the most recent evaluation of the Company's internal controls by the
Company, including any corrective actions with regard to any significant
deficiencies or material weaknesses.
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) EXHIBITS AND FINANCIAL STATEMENTS AND SCHEDULES.
(1) Financial Statements. The Company's consolidated financial statements
to be included in Part II, Item 8 are incorporated herein by reference to the
Company's 2002 Annual Report to Stockholders, a copy of which accompanies this
report on Form 10-K.
(2) Financial Statement Schedules. SCHEDULE II -- VALUATION AND QUALIFYING
ACCOUNTS is being filed as part of this report on Form 10-K, and should be read
in conjunction with the consolidated financial statements of the Company
described in Item 15(a)(1) above.
All other schedules set forth in the applicable accounting regulations of
the Securities and Exchange Commission either are not required under the related
instructions or are not applicable and, therefore, have been omitted.
(3) List of Exhibits.
The exhibits filed as a part of this Form 10-K are as follows (filed
herewith unless otherwise noted):
3.1 Restated Certificate of Incorporation of the
Company(1)
3.2 Bylaws of the Company(2)
4 Form of Specimen Common Stock Certificate of Blair
Corporation(3)
10.1 Stock Accumulation and Deferred Compensation Plan
for Directors(4)
10.2 Blair Corporation 2000 Omnibus Stock Plan(5)
10.3 Blair Credit Agreement(6)
11 Computation of Earnings per Share (incorporated by
reference to page 13 of the 2002 Annual Report to
Stockholders)
13 2002 Annual Report to Stockholders
21 Subsidiaries of Blair Corporation
23 Consent of Independent Auditors
99.1 CEO Certification pursuant to Section 906 of
Sarbanes-Oxley Act
99.2 CFO Certification pursuant to Section 906 of
Sarbanes-Oxley Act
- ----------
(1) Incorporated herein by reference to Exhibit A to the Company's Quarterly
Report on Form 10-Q filed with the SEC on August 10, 1995 (SEC File No.
1-878).
(2) Incorporated herein by reference to Exhibit 4.3 to the Company's
Registration Statement on Form S-8 filed with the SEC on July 19, 2000
(SEC File No. 333-41772).
(3) Incorporated herein by reference to Exhibit 4.1 to the Company's
Registration Statement on Form S-8 filed with the SEC on July 19, 2000
(SEC File No. 333-41772).
(4) Incorporated herein by reference to Exhibit A to the Company's Proxy
Statement filed with the SEC on March 20, 1998 (SEC File No. 1-878).
(5) Incorporated herein by reference to Appendix A to the Company's Proxy
Statement filed with the SEC on March 14, 2003 (SEC File No. 1-878).
(6) Incorporated herein by reference to Exhibit 99.1 to the Company's Form 8-K
filed with the SEC on January 9, 2002 (SEC File No. 1-878).
(b) REPORTS ON FORM 8-K.
The registrant has filed no Forms 8-K during the quarter ended December
31, 2002.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
BLAIR CORPORATION (Registrant)
Date: March 14, 2003 By: /s/ BRYAN J. FLANAGAN
------------------------------------
Bryan J. Flanagan
Senior Vice President and Chief
Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this report has been signed below by the following persons on behalf of
the registrant and in the capacities and on the date indicated.
Date: March 14, 2003 By: /s/ MURRAY K. MCCOMAS
----------------------------------------------
Murray K. McComas
Chairman of the Board of Directors
Date: March 14, 2003 By: /s/ JOHN E. ZAWACKI
----------------------------------------------
John E. Zawacki
President, Chief Executive Officer
and Director
(Principal Executive Officer)
Date: March 14, 2003 By: /s/BRYAN J. FLANAGAN
----------------------------------------------
Bryan J. Flanagan
Senior Vice President, Chief Financial Officer
and Director
(Chief Financial Officer)
Date: March 14, 2003 By: /s/ STEVEN M. BLAIR
----------------------------------------------
Steven M. Blair
Vice President, Customer
Services and Director
Date: March 14, 2003 By: /s/ DAVID A. BLAIR
----------------------------------------------
David A. Blair
Secretary and Director
Date: March 14, 2003 By: /s/ KENT R. SIVILLO
----------------------------------------------
Kent R. Sivillo
Vice President, Finance
and Director
(Principal Accounting Officer)
Date: March 14, 2003 By: /s/ ROBERT D. CROWLEY
----------------------------------------------
Robert D. Crowley
Senior Vice President, Menswear, Home and
Marketing Services
and Director
Date: March 14, 2003 By: /s/ THOMAS P. MCKEEVER
----------------------------------------------
Thomas P. McKeever
Senior Vice President, Operations and
Administration
and Director
CERTIFICATIONS
I, John E. Zawacki, certify that:
1. I have reviewed this annual report on Form 10-K of Blair Corporation;
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this annual report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this annual
report (the "Evaluation Date"); and
c) presented in this annual report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
functions):
a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in this
annual report whether there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
Date: March 14, 2003 /s/ JOHN E. ZAWACKI
----------------------------------------
John E. Zawacki
President, Chief Executive Officer and
Director
(Principal Executive Officer)
I, Bryan J. Flanagan, certify that:
1. I have reviewed this annual report on Form 10-K of Blair Corporation;
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this annual report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this annual
report (the "Evaluation Date"); and
c) presented in this annual report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
functions):
a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in this
annual report whether there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
Date: March 14, 2003 /s/BRYAN J. FLANAGAN
----------------------------------------
Bryan J. Flanagan
Senior Vice President, Chief Financial
Officer and Director
(Principal Financial Officer)
Annual Report on Form 10-K
Item 15(a) (1) and (2), and (d)
List of Financial Statements and Financial Statement Schedules
Blair Corporation and Subsidiaries
Warren, Pennsylvania
Year ended December 31, 2002
Blair Corporation and Subsidiaries
List of Financial Statements and Financial Statement Schedules
Form 10-K -- Item 15(a)(1) and (2), and (d)
The following consolidated financial statements of Blair Corporation,
included in the annual report of the registrant to its stockholders for the year
ended December 31, 2002, are incorporated by reference in Item 8:
-- Consolidated Balance Sheets -- December 31, 2002 and 2001
-- Consolidated Statements of Income -- Years ended December 31, 2002,
2001 and 2000
-- Consolidated Statements of Stockholders' Equity -- Years ended
December 31, 2002, 2001 and 2000
-- Consolidated Statements of Cash Flows -- Years ended December 31,
2002, 2001 and 2000
-- Notes to Consolidated Financial Statements -- December 31, 2002
The following financial statement schedule of Blair Corporation is included in
Item 15(d):
-- Schedule II -- Valuation and Qualifying Accounts
All other schedules for which provision is made in the applicable
accounting regulation of the Securities and Exchange Commission are not required
under the related instructions or are inapplicable, and therefore have been
omitted.
Blair Corporation and Subsidiaries
Schedule II
Valuation and Qualifying Accounts
December 31, 2002
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
-----------------------------------------------------------------------------------------------------------------------------
ADDITIONS-
BALANCE AT CHARGED TO BALANCE
BEGINNING COSTS AND DEDUCTIONS- AT END
Description OF PERIOD EXPENSES DESCRIBE OF PERIOD
----------- ------------ ------------ -----------
Year ended December 31, 2002:
Allowance deducted from asset account
(customer accounts receivable):
For doubtful accounts $39,088,189 $ 29,986,973(A) $ 28,936,899(B) $40,138,263
For estimated loss on returns 6,878,971 85,734,678 85,545,684(C) 7,067,965
----------- ------------ ------------ -----------
Total 45,967,160 115,721,651 114,482,583 47,206,228
Allowance deducted from asset account
(merchandise inventories)
For obsolete inventory 4,150,000 5,562,834 5,712,834(D) 4,000,000
----------- ------------ ------------ -----------
Total $50,117,160 $121,284,485 $120,195,417 $51,206,228
=========== ============ ============ ===========
Year ended December 31, 2001:
Allowance deducted from asset account
(customer accounts receivable):
For doubtful accounts $39,771,673 $ 31,333,326(A) $ 32,016,810(B) $39,088,189
For estimated loss on returns 6,993,000 89,930,958 90,044,987(C) 6,878,971
----------- ------------ ------------ -----------
Total 46,764,673 121,264,284 122,061,797 45,967,160
Allowance deducted from asset account
(merchandise inventories)
For obsolete inventory 6,250,000 9,123,081 11,223,081(D) 4,150,000
----------- ------------ ------------ -----------
Total $53,014,673 $130,387,365 $133,284,878 $50,117,160
=========== ============ ============ ===========
Year ended December 31, 2000:
Allowance deducted from asset account
(customer accounts receivable):
For doubtful accounts $31,489,153 $ 35,932,526(A) $ 27,650,006(B) $39,771,673
For estimated loss on returns 6,431,673 84,955,671 84,394,344(C) 6,993,000
----------- ------------ ------------ -----------
Total 37,920,826 120,888,197 112,044,350 46,764,673
Allowance deducted from asset account
(merchandise inventories)
For obsolete inventory 4,000,000 6,596,611 4,346,611(D) 6,250,000
----------- ------------ ------------ -----------
Total $41,920,826 $127,484,808 $116,390,961 $53,014,673
=========== ============ ============ ===========
Note (A) -- Current year provision for doubtful accounts, charged against
income.
Note (B) -- Accounts charged off, net of recoveries.
Note (C) -- Sales value of merchandise returned.
Note (D) -- Inventory reductions to below cost.