Back to GetFilings.com
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 July 31, 2004
Commission File Number 0-23248
SigmaTron International, Inc.
- --------------------------------------------------------------------------------
(Exact Name of Registrant, as Specified in its Charter)
Delaware 36-3918470
- --------------------------------------------------------------------------------
(State or other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
2201 Landmeier Road, Elk Grove Village, Illinois 60007
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices)
Registrant's Telephone Number, Including Area Code: (847) 956-8000
No Change
- --------------------------------------------------------------------------------
(Former Name, Former Address, and Former Fiscal Year, if Changed Since Last
Report)
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 whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [ X ]
On September 7, 2004 there were 3,752,054 shares of the Registrant's Common
Stock outstanding.
SigmaTron International, Inc.
Index
PART 1. FINANCIAL INFORMATION: Page No.
--------
Item 1. Condensed Consolidated Financial Statements
Condensed Consolidated Balance Sheets - July 31, 2004
and April 30, 2004 3
Condensed Consolidated Statements of Operations -
Three Months Ended July 31, 2004 and July 31, 2003 4
Condensed Consolidated Statements of Cash Flows -
Three Months Ended July 31, 2004 and July 31, 2003 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 9
Item 3. Quantitative and Qualitative Disclosures About Market Risk 12
Item 4. Controls and Procedures 12
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 13
SIGMATRON INTERNATIONAL, INC.
Condensed Consolidated Balance Sheets
JULY 31, April 30,
2004 2004
UNAUDITED Audited
--------------- ---------------
CURRENT ASSETS:
Cash $ 4,140,758 $ 5,145,814
Restricted cash 100,000 100,000
Accounts receivable, less allowance for doubtful
accounts of $508,894 at July 31, 2004 and
April 30, 2004 12,237,569 12,651,272
Inventories 18,475,374 14,168,357
Prepaid and other assets 1,057,449 1,315,127
Refundable taxes 275,583 275,583
Deferred income taxes 2,082,905 1,902,551
Other receivables 109,272 415,253
--------------- ---------------
Total current assets 38,478,910 35,973,957
Property, machinery and equipment, net 25,418,839 25,707,901
Other assets 1,205,442 1,316,814
--------------- ---------------
Total assets $ 65,103,191 $ 62,998,672
=============== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable $ 9,231,402 $ 7,475,026
Accrued expenses 3,137,352 4,540,744
Income taxes payable 632,829 -
Notes payable - other 430,000 430,000
Capital lease obligations 583,207 640,436
--------------- ---------------
Total current liabilities 14,014,790 13,086,206
Notes payable - banks 1,341,266 1,118,514
Notes payable - buildings, less current portion 4,422,415 4,536,159
Capital lease obligations, less current portion 199,381 299,536
Subordinated debenture payable 1,050,000 1,050,000
Deferred income taxes 1,265,714 1,265,714
--------------- ---------------
Total liabilities 22,293,566 21,356,129
MINORITY INTEREST IN AFFILIATE 563,469 439,787
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value; 500,000 shares
authorized, none issued and outstanding - -
Common stock, $.01 par value; 6,000,000 shares
authorized, 3,752,054 and 3,750,954 shares issued 37,521 37,510
and outstanding at July 31, 2004 and April 30, 2004,
respectively
Capital in excess of par value 19,062,945 19,056,525
Retained earnings 23,145,690 22,108,721
--------------- ---------------
Total stockholders' equity 42,246,156 41,202,756
--------------- ---------------
Total liabilities and stockholders' equity $ 65,103,191 $ 62,998,672
=============== ===============
See accompanying notes.
3
SIGMATRON INTERNATIONAL, INC.
Condensed Consolidated Statements Of Operations
Unaudited
THREE MONTHS Three Months
ENDED Ended
JULY 31, 2004 July 31, 2003
--------------- ---------------
Net sales $ 25,078,167 $ 24,833,796
Cost of products sold 20,452,469 20,119,854
--------------- ---------------
Gross profit 4,625,698 4,713,942
Selling and administrative expenses 2,712,075 2,507,924
--------------- ---------------
Operating income 1,913,623 2,206,018
Interest expense - Banks and capital lease obligations 66,683 80,066
--------------- ---------------
Income before income tax expense and minority
interest of affiliate 1,846,940 2,125,952
Income tax expense 686,291 785,362
--------------- ---------------
Income before minority interest of affiliate 1,160,649 1,340,590
Minority interest in income of affiliate 123,680 70,611
--------------- ---------------
Net income $ 1,036,969 $ 1,269,979
=============== ===============
Net income per common share - Basic $ 0.28 $ 0.43
=============== ===============
Net income per common share - Assuming dilution $ 0.27 $ 0.37
=============== ===============
Weighted average shares of common stock outstanding
Basic 3,751,014 2,961,515
=============== ===============
Diluted 3,787,597 3,425,499
=============== ===============
See accompanying notes.
4
SIGMATRON INTERNATIONAL, INC.
Condensed Consolidated Statements of Cash Flows
Unaudited
THREE MONTHS Three Months
ENDED Ended
07/31/04 07/31/03
--------------- ---------------
OPERATING ACTIVITIES:
Net income $ 1,036,969 $ 1,269,979
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization 839,730 735,263
Changes in operating assets and liabilities:
Accounts receivable 413,702 2,530,265
Inventories (4,307,017) 1,491,102
Prepaid expenses and other assets 478,365 (140,390)
Minority interest in affiliate 123,682 70,610
Trade accounts payable 1,756,376 (1,352,774)
Income taxes payable 632,829 (270,264)
Accrued expenses (1,403,389) (1,972,276)
--------------- ---------------
Net cash (used in) provided by operating activities (428,753) 2,361,515
INVESTING ACTIVITIES:
Purchases of machinery and equipment (534,354) (265,698)
--------------- ---------------
Net cash used in investing activities (534,354) (265,698)
FINANCING ACTIVITIES:
Proceeds from exercise of options 6,431 970,601
Net payments under note payable obligation (113,747) (1,718,074)
Net payments under capital lease obligations (157,385) (290,441)
Net (borrowings) payments under line of credit 222,752 (745,272)
--------------- ---------------
Net cash used in financing activities (41,949) (1,783,186)
--------------- ---------------
Change in cash (1,005,056) 312,631
Cash at beginning of period 5,145,814 424,844
--------------- ---------------
Cash at end of period $ 4,140,758 $ 727,475
=============== ===============
Supplementary disclosures of cash flow information
Cash paid for interest $ 92,411 $ 97,574
Cash paid for income taxes, net of (refunds) 171,931 971,424
See accompanying notes.
5
SigmaTron International, Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
July 31, 2004
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements of
SigmaTron International, Inc., its wholly owned subsidiary Standard Components
de Mexico S.A., its wholly owned foreign enterprise Wujiang SigmaTron
Electronics Co., Ltd., SMT Unlimited L.P. and its procurement branch SigmaTron
Taiwan (collectively, the "Company") have been prepared in accordance with
accounting principles generally accepted in the United States of America for
interim financial information and with the instructions to Form 10-Q and Article
10 of Regulation S-X. The Company adopted the provisions of FASB Interpretation
No. 46, ("FIN 46R") Consolidation of Variable Interest Entities as of November
1, 2003 as it relates to its affiliate SMT Unlimited L.P. ("SMTU") and
consolidated SMTU from the earliest date reported.
Accordingly, the condensed consolidated financial statements do not include all
of the information and footnotes required by accounting principles generally
accepted in the United States for complete financial statements. In the opinion
of management, all adjustments (consisting of normal recurring adjustments)
considered necessary for a fair presentation have been included. Operating
results for the three month period ended July 31, 2004 are not necessarily
indicative of the results that may be expected for the year ending April 30,
2005. For further information, refer to the consolidated financial statements
and footnotes thereto included in the Company's Annual Report on Form 10-K for
the year ended April 30, 2004.
NOTE B - INVENTORIES
The components of inventory consist of the following:
July 31, April 30,
2004 2004
--------------- ---------------
Finished products $ 3,436,668 $ 3,400,742
Work-in-process 1,926,663 1,221,160
Raw materials 13,112,043 9,546,455
--------------- ---------------
$ 18,475,374 $ 14,168,357
=============== ===============
NOTE C - PURCHASE OF AFFILIATE
On August 2, 2004 the Company acquired the interest of outside investors in its
affiliate SMTU and the general partner of SMTU, SMT Unlimited, Inc. bringing the
Company's interest in its affiliate SMTU to approximately 80%. On September 2,
2004 the Company
6
acquired the remaining interest in its affiliate SMTU. The acquisition has
resulted in SMTU becoming a wholly-owned subsidiary of the Company. The
Company's current intention is to merge SMTU into the Company and SMTU will
become an operating division of the Company.
NOTE D - STOCK INCENTIVE PLANS
The Company maintains various stock incentive plans. The Company accounts for
these plans under the recognition and measurement principles of APB Opinion No.
25, "Accounting for Stock Issued to Employees," and related interpretations. The
Company recognizes compensation cost for restricted shares and restricted stock
units to employees. As of July 31, 2004 there are no issued restricted shares or
restricted stock units issued. No compensation cost is recognized for stock
option grants. All options granted under the Company's plans had an exercise
price equal to the market value of the underlying common stock on the date of
grant. The following table illustrates the effect on net earnings and earnings
per share if the Company had applied the fair value recognition provisions of
SFAS No. 123, "Accounting for Stock-Based Compensation," to stock-based
compensation. The following table also provides the amount of stock-based
compensation cost included in net earnings as reported.
Three Months Ended
---------------------------------------
July 31, July 31,
2004 2003
--------------- ---------------
Net Income, as reported $ 1,036,969 $ 1,269,979
Deduct: total stock-based
employee compensation
expense determined under
fair based method for
awards granted, modified,
or settled, net of related
tax effects (66,632) (66,632)
--------------- ---------------
Pro forma net income $ 970,337 $ 1,203,347
=============== ===============
7
Three Months Ended
------------------------------------
July 31, July 31,
2004 2003
--------------- -----------------
Earnings per share
Basic - as reported $ .28 $ .43
Basic - pro forma .26 .39
Diluted - as reported .27 .37
Diluted - pro forma .26 .34
=============== ===============
Options to purchase stock at exercise prices greater than the average fair
market value of the Company's stock for periods presented are excluded from the
calculation of diluted income because their inclusion would be anti-dilutive.
For the three month period ended July 31, 2004, all options were dilutive and
included in the diluted income per share calculations.
CRITICAL ACCOUNTING POLICES
Management Estimates and Uncertainties - The preparation of consolidated
financial statements in conformity with accounting principles generally accepted
in the United States of America requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the consolidated
financial statements and the reported amounts of revenues and expenses during
the reporting period. Significant estimates made in preparing the consolidated
financial statements include depreciation and amortization periods, the
allowance for doubtful accounts and reserves for inventory. Actual results could
materially differ from these estimates.
Revenue Recognition - Revenues from sales of product including the Company's
electronic manufacturing service business are recognized when the product is
shipped. In general it is the Company's policy to recognize revenue and related
costs when the order has been shipped from our facilities, which is also usually
the same point that title passes under the terms of the purchase order.
Periodically inventory is held on consignment and revenue is recognized when the
product is consumed by the Company's customer. Based on the Company's history of
providing contract manufacturing services, we believe that collectibility is
reasonably assured.
Inventories - Inventories are valued at the lower of cost or market. Cost is
determined by the first-in, first-out method. The Company establishes inventory
reserves for valuation, shrinkage, and excess and obsolete inventory. The
Company records provisions for inventory shrinkage based on historical
experience to account for unmeasured usage or loss. Actual results differing
from these estimates could significantly affect the Company's inventories and
cost of products sold. The Company records provisions for excess and obsolete
inventories for the difference between the cost of inventory and its estimated
realizable value based on
8
assumptions about future product demand and market conditions. Actual product
demand or market conditions could be different than projected by management.
Impairment of Long-Lived Assets - The Company reviews long-lived assets for
impairment, including its investment and assets related to its affiliate SMTU
whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable. An asset is considered impaired if its carrying
amount exceeds the future net cash flow the asset is expected to generate. If
such asset is considered to be impaired, the impairment to be recognized is
measured by the amount by which the carrying amount of the asset, if any,
exceeds its fair market value. The Company has adopted SFAS No. 144, which
establishes a single accounting model for the impairment or disposal of
long-lived assets, including discontinued operations.
NEW ACCOUNTING STANDARDS
Consolidation of variable interest entities - FIN 46R is an interpretation of
Accounting Research Bulletin No. 51 and revises the requirements for
consolidation by business enterprises of variable interest entities. FIN 46R
applies immediately to variable interest entities created after January 31, 2003
and to variable interest entities in which an enterprise obtains an interest
after that date. It applies in the first fiscal year or interim period ending
after December 15, 2003, to variable interest entities in which an enterprise
holds a variable interest acquired before February 1, 2003. FIN 46R applies to
public enterprises as of the beginning of the applicable interim or annual
period and to nonpublic enterprises as of the end of the applicable annual
period. It may be applied prospectively with a cumulative-effect adjustment as
of the date on which it is first applied or by restating previously issued
financial statements for one or more years with a cumulative-effect adjustment
as of the beginning of the first year restated. The Company adopted FIN 46R as
of November 1, 2003 as it relates to its affiliate SMTU.
The accompanying financial statements include the financial position and results
of operations and cash flows for SMTU, with the remaining 57.5% reflected as a
"minority interest." Previously the Company had reflected such investment on the
equity method. The Company adopted the provisions of FIN 46R for its investment
in SMTU and has restated all periods presented in the accompanying financial
statements and footnotes to the financial statements.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
NOTE: To the extent any statements in this quarterly statement may be deemed to
be forward looking, such statements should be evaluated in the context of the
risks and uncertainties inherent in the Company's business, including the
Company's continued dependence on certain significant customers; the continued
market acceptance of products and services offered by the Company and its
customers; the activities of competitors, some of which may have greater
financial or other resources than the Company; the variability of the Company's
operating results; the availability and cost of necessary components; regulatory
compliance; the continued availability and sufficiency of the Company's credit
arrangements; changes in U.S., Mexican, Chinese or Taiwanese regulations
affecting the Company's business; the
9
continued stability of the Mexican and Chinese economic systems, labor and
political conditions; and the ability of the Company to manage its growth;
including its recent expansion into China. These and other factors which may
affect the Company's future business and results of operations are identified
throughout the Company's Annual Report on Form 10-K and risk factors contained
therein and may be detailed from time to time in the Company's filings with the
Securities and Exchange Commission. These statements speak as of the date of
this report and the Company undertakes no obligation to update such statements
in light of future events or otherwise.
OVERVIEW:
The Company operates in one business segment as an independent provider of
electronic manufacturing services ("EMS"), which includes printed circuit board
assemblies and completely assembled (boxbuild) electronic products. In
connection with the production of assembled products the Company also provides
services to its customers including (1) automatic and manual assembly and
testing of products; (2) material sourcing and procurement; (3) design,
manufacturing and test engineering support; (4) warehousing and shipment
services; and (5) assistance in obtaining product approval from governmental and
other regulatory bodies. The Company provides these manufacturing services
through an international network of facilities located in North America, China
and Taiwan.
As services provided by the EMS industry have continued to increase over the
past several months lead-time for components have increased. Pricing for
components and related commodities has escalated and may continue to increase in
the future periods. The impact of these price increases could have a negative
material effect on the Company's gross margins and operating results.
The Company relies on numerous third-party suppliers for components used in the
Company's production process. Certain of these components are available only
from single sources or a limited number of suppliers. In addition, a customer's
specifications may require the Company to obtain components from a single source
or a small number of suppliers. The loss of any such suppliers could have a
material impact on the Company's results of operations, and the Company may be
required to operate at a cost disadvantage compared to competitors who have
greater direct buying power from suppliers.
As a manufacturing company, the Company includes all fixed manufacturing
overhead in cost of products sold. The inclusion of fixed manufacturing overhead
in cost of goods sold magnifies the fluctuations in gross profit margin
percentages caused by fluctuations in net sales and capital expenditures.
Specifically, fluctuations in the mix of consignment and turnkey contracts could
have an effect on the cost of goods sold and the resulting gross profit as a
percentage of net sales. Consignment orders require the Company to perform
manufacturing services on components and other materials supplied by a customer,
and the Company charges only for its labor, overhead and manufacturing costs,
plus a profit. In the case of turnkey orders, the Company provides, in addition
to manufacturing services, the components and other materials used in assembly.
Turnkey contracts, in general, have a higher dollar volume of sales for each
given assembly, owing to inclusion of the cost of components and other materials
in net sales and cost of goods sold. However, turnkey
10
contracts typically have lower gross margins due to the large material content.
Historically, more than 90% of the Company's sales have been from turnkey
orders.
In the past, the timing and rescheduling of orders has caused the Company to
experience significant quarterly fluctuations in its revenues and earnings, and
the Company expects such fluctuations to continue.
RESULTS OF OPERATIONS:
Net sales increased for the three month period ended July 31, 2004 to
$25,078,167 from $24,833,796 for the three month period ended July 31, 2003.
Sales increased for the three month period ended July 31, 2004 as compared to
the same period in the prior year in the telecommunications, fitness and
consumer electronics industries. Sales weakened in the gaming and appliance
marketplace for the quarter ended July 31, 2004 as compared to the quarter ended
July 31, 2003.
Sales can be misleading as an indication of the Company's financial performance.
Gross profit margins can vary considerably among customers and products
depending on the type of services rendered by the Company, specifically the
variation of orders for turnkey services versus consignment services. Variations
in the number of turnkey orders compared to consignment orders can lead to
significant fluctuations in the Company's revenue levels and margins. Further,
customers' orders can be delayed, rescheduled or canceled at any time, which can
significantly impact the operating results of the Company. In addition, the
ability to replace such delayed or lost sales in a short period of time cannot
be assured.
Gross profit decreased during the three month period ended July 31, 2004 to
$4,625,698 compared to $4,713,942 for the same period in the prior fiscal year.
Gross profits decreased as a percentage of net sales to 18.5% for the three
month period ended July 31, 2004 from 19.0% for the same period in the prior
fiscal year. The decrease in the Company's gross margin for the three month
period is the result of price erosion within the EMS industry, product life
cycle issues and component pricing. The Company's focus remains on expanding its
customer base and increasing gross margins, while there can be no assurance that
gross margins will remain stable or increase in future quarters.
Selling and administrative expenses increased to $2,712,075 for the three month
period ended July 31, 2004 compared to $2,507,904 in the same period last year.
The increase for the three month period ended July 31, 2004 is primarily due to
increases in commission and material procurement overhead expenses.
Interest expense for bank debt and capital lease obligations for the three month
period ended July 31, 2004 was $66,683 compared to $80,066 for the same period
in the prior year. This decrease was attributable to a decrease in the amount
outstanding under the Company's credit facility and reduced interest rates.
As a result of the factors described above, net income decreased to $1,036,969
for the three month period ended July 31, 2004 compared to $1,269,979 for the
same period in the prior year. Basic and dilutive earnings per share for the
first fiscal quarter of 2005 were $0.28 and
11
$0.27, respectively, compared to basic and dilutive earnings per share of $0.43
and $0.37, respectively, for the same period in the prior year.
LIQUIDITY AND CAPITAL RESOURCES:
In the first quarter of fiscal 2005 cash used in operating activities was
primarily related to net income of $1,307,497 and an increase in trade payables.
The cash used in operations was offset by a significant increase of $4,307,017
in inventory, which resulted in $428,753 of cash used in operating activities
for the quarter ended July 31, 2004.
The Company used $534,354 in cash for investing activities in the first quarter
of fiscal 2005 to purchase machinery and equipment. The Company anticipates
additional machinery and equipment will be purchased during fiscal 2005.
The Company anticipates its credit facility, cash flow from operations and
leasing resources will be adequate to meet its working capital requirements in
fiscal 2005. In the event the business grows rapidly or the Company considers an
acquisition, additional financing resources could be necessary. There is no
assurance that the Company will be able to obtain equity or debt financing at
acceptable terms in the future.
On August 2, 2004 the Company acquired the interest of outside investors in its
affiliate SMTU and the general partner of SMTU, SMT Unlimited, Inc. bringing the
Company's interest in its affiliate SMTU to approximately 80%. On September 2,
2004 the Company acquired the remaining interest in its affiliate SMTU. The
acquisition has resulted in SMTU becoming a wholly-owned subsidiary of the
Company. The Company's current intention is to merge SMTU into the Company and
SMTU will become a manufacturing division of the Company.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable
ITEM 4. CONTROLS AND PROCEDURES
(a) Evaluation of Disclosure Controls and Procedures
The Company maintains a set of disclosure controls and procedures that are
designed to ensure that information required to be disclosed by the Company in
the reports filed by the Company under the Securities Exchange Act of 1934, as
amended ("Exchange Act"), is recorded, processed, summarized and reported within
the time periods specified in the rules and forms of the Securities and Exchange
Commission. Within the 90 days prior to the date of this report, the Company
carried out an evaluation, under the supervision of the President and Chief
Executive Officer and the Chief Financial Officer, of the effectiveness of the
design and operation of the Company's disclosure controls and procedures
pursuant to Rule 13a-15 of the Exchange Act. Based on that evaluation, the
President and Chief Executive Officer and the Chief Financial Officer concluded
that the Company's disclosure controls and procedures are effective.
12
(b) Changes in Internal Controls
There have been no significant changes in the Company's internal controls or
other factors that could significantly affect those controls subsequent to the
date of their evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
PART II
OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
Exhibit 31.1 - Certification of Principal Executive Officer of
SigmaTron International, Inc. Pursuant to Rule 13a-14(a) under the
Exchange Act, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.
Exhibit 31.2 - Certification of Principal Financial Officer of
SigmaTron International, Inc. Pursuant to Rule 13a-14(a) under the
Exchange Act, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.
Exhibit 32.1 - Certification by the Principal Executive Officer of
SigmaTron International, Inc. Pursuant to Rule 13a-14(b) under the
Exchange Act and Section 906 of the Sarbanes-Oxley Act of 2002 (18
U.S.C. 1350).
Exhibit 32.2 - Certification by the Principal Financial Officer of
SigmaTron International, Inc. Pursuant to Rule 13a-14(b) under the
Exchange Act and Section 906 of the Sarbanes-Oxley Act of 2002 (18
U.S.C. 1350).
13
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.
SIGMATRON INTERNATIONAL, INC.
/s/ Gary R. Fairhead 9/10/04
- ---------------------------------------------- ----------------------
Gary R. Fairhead Date
President and CEO (Principal Executive Officer)
/s/ Linda K. Blake 9/10/04
- ---------------------------------------------- ----------------------
Linda K. Blake Date
Chief Financial Officer, Secretary and Treasurer
(Principal Financial Officer and Principal
Accounting Officer)