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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
/x/ |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the thirteen week period ended March 31, 2001
OR
| / / | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number 0-8514
LIQUI-BOX CORPORATION
(Exact name of registrant as specified in its charter)
| OHIO | | 31-0628033 |
(State or other jurisdiction of
incorporation or organization) | | (I.R.S. Employer Identification No.) |
6950 Worthington-Galena Road, Worthington, |
|
Ohio 43085 |
| (Address of principal executive offices) | | (Zip Code) |
Registrant's telephone number, including area code(614) 888-9280
Not Applicable
(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 the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.
Class
| | Outstanding at May 11, 2001
|
|---|
| Common Stock, no par value | | 4,354,252 shares |
Exhibit Index at Page 11
LIQUI-BOX CORPORATION
INDEX
| |
| | Page No.
|
|---|
| Part I—Financial Information: | | |
Item 1. |
|
Financial Statements |
|
|
|
|
Condensed Consolidated Balance Sheets (unaudited)
March 31, 2001 and December 30, 2000 |
|
3-4 |
|
|
Condensed Consolidated Statements of Income and
Comprehensive Income (unaudited)
For the thirteen week periods ended
March 31, 2001 and April 1, 2000 |
|
5 |
|
|
Condensed Consolidated Statements of Cash Flows (unaudited)
For the thirteen week periods ended
March 31, 2001 and April 1, 2000 |
|
6 |
|
|
Notes to Unaudited Condensed Consolidated Financial Statements |
|
7 |
Item 2. |
|
Management's Discussion and Analysis of Financial Condition and Results of Operations |
|
8-9 |
Item 3. |
|
Quantitative and Qualitative Disclosure About Market Risk |
|
10 |
Part II—Other Information—Items 1-6 |
|
11 |
|
|
Signatures |
|
12 |
2
Liqui-Box Corporation and Subsidiaries
Condensed Consolidated Balance Sheets
| | March 31, 2001
| | December 30, 2000
| |
|---|
| | Unaudited
| |
| |
|---|
| Assets | | | | | | | |
| Current Assets | | | | | | | |
Cash and cash equivalents |
|
$ |
19,741,000 |
|
$ |
13,274,000 |
|
| Accounts receivable: | | | | | | | |
| | Trade, net of allowance for doubtful accounts of $603,000 and $756,000, respectively | | | 13,957,000 | | | 13,800,000 | |
| | Other | | | 847,000 | | | 682,000 | |
| | |
| |
| |
| Total receivables | | | 14,804,000 | | | 14,482,000 | |
Inventories: |
|
|
|
|
|
|
|
| | Raw materials and supplies | | | 10,260,000 | | | 9,173,000 | |
| | Work in process | | | 2,135,000 | | | 2,421,000 | |
| | Finished goods | | | 3,909,000 | | | 4,355,000 | |
| | |
| |
| |
| Total Inventories | | | 16,304,000 | | | 15,949,000 | |
Deferred tax assets |
|
|
1,705,000 |
|
|
1,668,000 |
|
| Other current assets | | | 602,000 | | | 724,000 | |
| | |
| |
| |
| Total Current Assets | | | 53,156,000 | | | 46,097,000 | |
| | |
| |
| |
Property, Plant and Equipment—at Cost |
|
|
|
|
|
|
|
Land, buildings and leasehold improvements |
|
|
18,075,000 |
|
|
18,066,000 |
|
| Equipment and vehicles | | | 84,631,000 | | | 82,602,000 | |
| Equipment leased to customers | | | 17,015,000 | | | 16,266,000 | |
| Construction in process | | | 6,936,000 | | | 6,432,000 | |
| | |
| |
| |
| Total | | | 126,657,000 | | | 123,366,000 | |
| Less accumulated depreciation and amortization | | | (86,334,000 | ) | | (84,718,000 | ) |
| | |
| |
| |
Property, plant and equipment—net |
|
|
40,323,000 |
|
|
38,648,000 |
|
| Other Assets | | | | | | | |
Goodwill, net of amortization |
|
|
6,827,000 |
|
|
7,065,000 |
|
| Deferred charges and other assets, net | | | 4,327,000 | | | 4,364,000 | |
| | |
| |
| |
| Total other assets | | | 11,154,000 | | | 11,429,000 | |
Total Assets |
|
$ |
104,633,000 |
|
$ |
96,174,000 |
|
| | |
| |
| |
The accompanying notes are an integral part of the financial statements.
3
Liqui-Box Corporation and Subsidiaries
Condensed Consolidated Balance Sheets
| | March 31, 2001
| | December 30, 2000
| |
|---|
| | Unaudited
| |
| |
|---|
| Liabilities and Stockholders' Equity | | | | | | | |
| Current Liabilities | | | | | | | |
Accounts payable |
|
$ |
8,746,000 |
|
$ |
4,901,000 |
|
| Short-term borrowings | | | 5,954,000 | | | 4,577,000 | |
| Dividends payable | | | 873,000 | | | 878,000 | |
| Salaries, wages and related liabilities | | | 3,762,000 | | | 2,114,000 | |
| Federal, state and local taxes | | | 2,457,000 | | | 351,000 | |
| Deposits | | | 380,000 | | | 1,166,000 | |
| Other accrued liabilities | | | 1,810,000 | | | 2,343,000 | |
| | |
| |
| |
Total Current Liabilities |
|
|
23,982,000 |
|
|
16,330,000 |
|
| Other Noncurrent Liabilities | | | | | | | |
Deferred income taxes |
|
|
247,000 |
|
|
228,000 |
|
| Stockholders' Equity | | | | | | | |
Preferred stock, without par value,
2,000,000 shares authorized; none issued |
|
|
— |
|
|
— |
|
Common stock, $.1667 stated value,
20,000,000 shares authorized,
7,262,598 shares issued | | | 1,210,000 | | | 1,210,000 | |
| Additional paid-in capital | | | 10,991,000 | | | 10,593,000 | |
| Accumulated other comprehensive income | | | 795,000 | | | 649,000 | |
| Retained earnings | | | 167,248,000 | | | 164,499,000 | |
| Less: | | | | | | | |
| | Treasury stock, at cost—2,908,685
and 2,871,061 shares, respectively | | | (99,840,000 | ) | | (97,335,000 | ) |
| Total Stockholders' Equity | | | 80,404,000 | | | 79,616,000 | |
| | |
| |
| |
Total Liabilities and Stockholders' Equity |
|
$ |
104,633,000 |
|
$ |
96,174,000 |
|
| | |
| |
| |
The accompanying notes are an integral part of the financial statements.
4
Condensed Consolidated Statements of Income
and Comprehensive Income
| | Thirteen Weeks Ended
| |
|---|
| | March 31, 2001
| | April 1, 2000
| |
|---|
| | Unaudited
| |
| |
|---|
Net Sales |
|
$ |
33,858,000 |
|
$ |
36,554,000 |
|
| Cost of Sales | | | 21,807,000 | | | 22,446,000 | |
| | |
| |
| |
| | Gross Margin | | | 12,051,000 | | | 14,108,000 | |
| Selling, administrative and development expenses | | | 6,156,000 | | | 6,526,000 | |
| | |
| |
| |
| | Operating income | | | 5,895,000 | | | 7,582,000 | |
Other Income (Expense): |
|
|
|
|
|
|
|
| Interest and dividend income | | | 161,000 | | | 161,000 | |
| Interest expense | | | 0 | | | (29,000 | ) |
| Other, net | | | (69,000 | ) | | (165,000 | ) |
| | |
| |
| |
Income Before Income Taxes |
|
|
5,987,000 |
|
|
7,549,000 |
|
Taxes on income |
|
|
2,365,000 |
|
|
2,982,000 |
|
| | |
| |
| |
Net Income |
|
|
3,622,000 |
|
|
4,567,000 |
|
Other Comprehensive Income (Expense),
Net of Tax: |
|
|
|
|
|
|
|
Foreign currency translation gain (loss) |
|
|
117,000 |
|
|
(95,000 |
) |
| Unrealized gain (loss) on marketable securities | | | 29,000 | | | (248,000 | ) |
| | |
| |
| |
| | Other comprehensive income (expense) | | | 146,000 | | | (343,000 | ) |
| | |
| |
| |
Comprehensive Income |
|
$ |
3,768,000 |
|
$ |
4,224,000 |
|
| | |
| |
| |
| Earnings per share | | | | | | | |
| |
Basic |
|
$ |
0.83 |
|
$ |
1.02 |
|
| | Diluted | | $ | 0.80 | | $ | 0.98 | |
| Cash dividends per common share | | $ | 0.20 | | $ | 0.20 | |
| Weighted average number of shares used in computing earnings per share: | | | | | | | |
| |
Basic |
|
|
4,376,081 |
|
|
4,473,992 |
|
| | Diluted | | | 4,527,777 | | | 4,667,007 | |
The accompanying notes are an integral part of the financial statements.
5
Liqui-Box Corporation and Subsidiaries
Condensed Consolidated Statements of Cash Flows
| | March 31, 2001
| | April 1, 2000
| |
|---|
| | Unaudited
| |
| |
|---|
| Cash Flows from Operating Activities: | | | | | | | |
Net income |
|
$ |
3,622,000 |
|
$ |
4,567,000 |
|
Adjustments to reconcile net income to net
cash provided by operating activities: | | | | | | | |
| | Depreciation and amortization | | | 1,816,000 | | | 2,040,000 | |
| | Provision for (collection of) loss on accounts receivable | | | (153,000 | ) | | 20,000 | |
| | Amortization of other noncurrent assets | | | 221,000 | | | 229,000 | |
| | Loss on disposal of property, plant and equipment | | | 120,000 | | | 5,000 | |
| | Deferred compensation | | | 47,000 | | | 47,000 | |
| | Changes in deferred income tax accounts | | | (18,000 | ) | | (165,000 | ) |
| | Changes in operating assets and liabilities: | | | | | | | |
| | | Accounts receivable | | | (169,000 | ) | | 2,610,000 | |
| | | Inventories | | | (321,000 | ) | | (4,371,000 | ) |
| | | Other current assets | | | 120,000 | | | 393,000 | |
| | | Accounts payable | | | 3,794,000 | | | (338,000 | ) |
| | | Salaries, wages and related liabilities | | | 1,648,000 | | | 3,082,000 | |
| | | Other accrued liabilities | | | 791,000 | | | 3,169,000 | |
| | |
| |
| |
Net cash provided by operating activities |
|
|
11,518,000 |
|
|
11,288,000 |
|
| Cash Flows from Investing Activities: | | | | | | | |
Purchase of property, plant and equipment |
|
|
(3,533,000 |
) |
|
(5,569,000 |
) |
| Proceeds from sale of property, plant and equipment | | | 0 | | | 203,000 | |
| Other changes, net | | | 83,000 | | | 202,000 | |
| | |
| |
| |
Net cash used in investing activities |
|
|
(3,450,000 |
) |
|
(5,164,000 |
) |
| Cash Flows from Financing Activities: | | | | | | | |
Acquisition of treasury shares |
|
|
(3,179,000 |
) |
|
(2,901,000 |
) |
| Sale of treasury shares | | | 8,000 | | | 3,000 | |
| Exercise of stock options, including tax benefit | | | 1,017,000 | | | 111,000 | |
| Cash dividends | | | (878,000 | ) | | (903,000 | ) |
| Proceeds from short-term borrowings | | | 1,377,000 | | | 295,000 | |
| | |
| |
| |
Net cash used in financing activities |
|
|
(1,655,000 |
) |
|
(3,395,000 |
) |
| Effect of Exchange Rate Changes on Cash | | | 54,000 | | | (93,000 | ) |
Increase (Decrease) in cash and cash equivalents |
|
|
6,467,000 |
|
|
2,636,000 |
|
Cash and cash equivalents,Beginning of year |
|
|
13,274,000 |
|
|
11,635,000 |
|
| | |
| |
| |
Cash and cash equivalents,End of first quarter |
|
$ |
19,741,000 |
|
$ |
14,271,000 |
|
| | |
| |
| |
The accompanying notes are an integral part of the financial statements.
6
LIQUI-BOX CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
- 1.
- The accompanying consolidated financial statements include the accounts of Liqui-Box Corporation (the "Company") and its subsidiaries.
The information furnished reflects all adjustments (all of which were of a normal recurring nature) which are, in the opinion of management, necessary to fairly present the consolidated financial position, results of operations and changes in cash flows on a consistent basis.
- 2.
- In June 1998, the FASB (Financial Accounting Standards Board) issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities". The statement establishes accounting and reporting standards requiring that all derivative instruments (including certain derivative instruments imbedded in other contracts) be recorded in the balance sheet as either an asset or a liability measured at its fair market value. The statement requires that changes in the derivative's fair market value be recognized currently in earnings unless specific hedge accounting criteria are met. The accounting provisions for qualifying hedges allow a derivative's gains and losses to offset related results on the hedged item in the income statement, and requires that the Company formally document, designate and assess the effectiveness of transactions that qualify for hedge accounting. The adoption of this statement did not have a material effect on the consolidated financial statements of the Company.
- 3.
- The Company adopted FASB Statement No. 131, "Disclosures about Segments of a Business Enterprise and Related Information." The Company is managed in two operating segments, United States and Foreign. Inter-segment transactions are accounted for on the same basis as sales to unaffiliated parties. Identifiable assets are those assets associated with a specific segment. There were no significant inter-segment sales. Substantially all sales were derived from plastic packaging products for year to date 2001 and 2000. Net sales for the United States and Foreign were $30,058,000 and $3,799,000 for the First Quarter 2001 and $31,762,000 and $4,792,000 for the First Quarter 2000. Operating income (loss) for the United States and Foreign were $6,244,000 and ($349,000) for the First Quarter 2001 and $7,308,000 and $273,000 for the First Quarter 2000.
- 4.
- The accompanying unaudited consolidated financial statements are presented in accordance with the requirements for Form 10-Q and Article 10 of Regulation S-X for interim reporting purposes. Accordingly, they do not include all information and footnotes required by generally accepted accounting principles for complete financial statements. These financial statements should be read in conjunction with the year ended December 30, 2000 consolidated financial statements of Liqui-Box Corporation and its subsidiaries contained in the Company's Annual Report on Form 10-K for the fiscal year ended December 30, 2000 (Commission File No. 0-8514). Reference should be made to the Company's aforementioned Form 10-K for additional disclosures including a summary of the Company's accounting policies, which have not significantly changed.
7
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
During the First Quarter 2001, Liqui-Box Corporation and its subsidiaries (the "Company") experienced a decrease in sales dollars and units compared to the First Quarter 2000. This reduction can be attributed to the downturn in the economy.
Gross margin, as a percentage of net sales, was 35.6% for the First Quarter 2001 and 38.6% for the First Quarter 2000. The decrease in gross margin is the result of the general economic conditions coupled with increases in the cost of raw materials, which the company has not been able to pass on to its customers in a timely manner.
For the First Quarter of 2001, selling, administrative, and development expenses were $6,156,000 as compared to $6,526,000 in the First Quarter of 2000, a decrease of 5.7%. This planned decrease is due to the company continuing to reduce costs to a level that the current state of the economy will support.
Income before taxes as a percentage of net sales was 17.7% in the First Quarter 2001 and 20.7% in the First Quarter 2000. This decrease is due to the decrease in gross margin, offset in part by the decrease in selling, administrative, and development expenses.
The provision for income taxes was 39.5% of before taxable income for the First Quarter of 2001 and 39.5% for the First Quarter 2000. The effective tax rate for the First Quarter 2001 is based on the Company's anticipated tax rate for the 2001 fiscal year.
At the end of the First Quarter 2001 and 2000, respectively, the Company had no significant backlog of orders, which is industry typical.
Liquidity and Capital Resources
Total working capital at March 31, 2001, was $29,174,000 compared to $29,767,000 at December 30, 2000. These changes reflect the seasonal needs of the Company. The ratio of current assets to current liabilities was 2.2 to 1 at the end of the First Quarter 2001 and 2.8 to 1 at year-end 2000. Net cash provided by operations was $11,518,000 for the three months ended March 31, 2001, compared to $11,288,000 for the three months ended April 1, 2000. Net cash used in investing activities was $3,450,000 for the three months ended March 31, 2001 compared to $5,164,000 for the three months ended April 1, 2000. During both periods, the cash was used primarily for purchases of new plant equipment and improvements to existing property and plant equipment. Cash used in financing activities was $1,655,000 for the three months ended March 30, 2001, compared to cash used of $3,395,000 for the three months ended April 1, 2000. The cash used in financing activities was primarily for the repurchase of outstanding shares and payment of cash dividends, offset by Foreign short-term borrowing.
The Company's major commitments for capital expenditures as of March 31, 2001 were, as they have been in the past, primarily for increased capacity at existing locations, building filler machines for lease and tooling for new projects. Funds required to fulfill these commitments will be provided principally by operations with any additional funding needed coming from credit facilities that aggregate $30,000,000 with The Huntington National Bank. No amounts were outstanding under these credit facilities as of March 31, 2001. Barclays Bank PLC provides a secured credit facility to the Company's European subsidiary. This facility was fully utilized and the amount outstanding under this facility was $5,264,000 at March 31, 2001.
Longer-term cash requirements, other than normal operating expenses, are needed for financing anticipated growth; increasing capacity at existing plants; development of new products and
8
enhancement of existing products; dividend payments and possible continued repurchases of the Company's common shares. The Company believes that its existing cash and cash equivalents, available credit facilities and anticipated cash generated from operations will be sufficient to satisfy its currently anticipated cash requirements for the fiscal year 2001.
There have been no significant changes in capitalization during the first three months of 2001, except for the repurchase of outstanding common shares in the aggregate amount of $3,163,000 which were acquired throughout the First Quarter 2001 on the open market. The common shares were bought at a price considered fair by management and there was cash available for these purchases. The Company felt the purchases represented a good investment and would secure common shares for issuance under the Company's employee benefit plans. The Company has not entered into any significant financing arrangements not reflected in the financial statements.
Comprehensive Income
Comprehensive income is based on revenues, expenses, gains and losses, which under generally accepted accounting principles, are excluded from net income and reflected as a component of equity, such as currency translation and unrealized gain or loss on securities adjustments. Comprehensive income, net of tax, was $3,767,000 and $4,224,000 in First Quarter 2001 and First Quarter 2000, respectively. Comprehensive income differs from net income per the Consolidated Statements of Income partially due to foreign currency translation gains in First Quarter 2001 and foreign currency translation losses in First Quarter 2000. Comprehensive income also differs due to unrealized gains on marketable securities in the First Quarter 2001 and unrealized losses on marketable securities in the First Quarter 2000.
New Accounting Standard
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities". The statement establishes accounting and reporting standards requiring that all derivative instruments (including certain derivative instruments imbedded in other contracts) be recorded in the balance sheet as either an asset or a liability measured at its fair market value. The statement requires that changes in the derivative's fair market value be recognized currently in earnings unless specific hedge accounting criteria are met. The accounting provisions for qualifying hedges allow a derivative's gains and losses to offset related results on the hedged item in the income statement, and requires that the Company formally document, designate and assess the effectiveness of transactions that qualify for hedge accounting. The adoption of this statement did not have a material effect on the consolidated financial statements of the Company.
Forward-Looking Statements
The Private Securities Litigation Reform Act of 1995 provides a safe-harbor for forward-looking statements made by or on behalf of the Company. The Company and its representatives may from time to time make written or verbal forward-looking statements, including statements contained in the Company's filings with the Securities and Exchange Commission and in its reports to shareholders. All such statements which are not historical fact are forward-looking statements based upon the Company's current plans and strategies, and reflect the Company's current assessment of the risks and uncertainties related to its business, including such things as product demand and market acceptance; the economic and business environment and the impact of governmental regulations, both in the United States and abroad; the effects of competitive products and pricing pressures; the impact of fluctuations in foreign currency exchange rates and the implementation of the EURO; capacity; efficiency and supply constraints; weather conditions; and other risks detailed in the Company's press releases, shareholder communications and Securities and Exchange Commission filings. Actual events affecting the Company and the impact of such events on the Company's operations may vary from those currently anticipated. The Company is not obligated to update or revise forward-looking statements relating to the Company to reflect new events or circumstances.
9
ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURE
ABOUT MARKET RISK
The Company, in the normal course of business, is exposed to market risks associated with foreign currency exchange rates, fluctuations in the market value of equity securities available for sale, and changes in interest rates. The Company is also exposed to changes in the price of commodities used in its manufacturing operations. However, commodity price risk is not material as price changes are customarily passed along to the customer.
Foreign Currency Exchange Risk
In the First Quarter 2001, Foreign operations accounted for approximately 11% of the Company's net sales. As a result, there is exposure to foreign exchange risk on transactions that are denominated in a currency other than the business unit's functional currency. The Company borrows from a bank the amounts of its foreign currency sales in that foreign currency. Upon collection of the related accounts receivable, the corresponding bank loan is repaid in that foreign currency. Reference is made to Note 1 -Accounting Policies- Foreign Currency Translation, in the Notes to Consolidated Financial Statements in the Company's 2000 Annual Report to shareholders for further information with respect to foreign currency exchanges. These borrowing activities provide only limited protection against currency exchange risks, however, a hypothetical 10% foreign exchange fluctuation would not materially impact operating results or cash flow.
Marketable Securities Risk
The Company maintains a portfolio of marketable equity securities available for sale. The fair market value of these securities at March 31, 2001 was approximately $1,240,000 with the corresponding unrealized gain included as a component of stockholders' equity. A hypothetical 10% decrease in the quoted market price of the marketable securities would not materially impact operating results or cash flow.
Interest Rate Risk
The interest payable for the Company's revolving credit facilities is principally 50 basis points above the London Interbank Offered Rate and therefore affected by changes in market interest rates. A hypothetical 10% increase in the interest rate would not materially impact operating results or cash flow.
10
PART II. OTHER INFORMATION
Item 1. Legal Proceedings:Not applicable
Item 2. Changes in Securities: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 and Reports on Form 8-K
Exhibit 3A. Amended Articles of Incorporation of the Registrant incorporated herein by reference to Exhibit 3A to the Registrants Form 10-K for the fiscal year ended December 30, 1995.
Exhibit 3B. Code of Regulations as amended of the Registrant incorporated herein by reference to Exhibit 3B to the Registrant's Form 10-Q for the fiscal Quarter ended July 1, 1995.
Exhibit 3C. Amendment to Code of Regulations, as amended, incorporated herein by reference to Exhibit 3C to the Registrant's Form 10-K for the fiscal year ended December 30, 2000.
- (b)
- No reports on Form 8-K were filed during the quarter ended March 31, 2001.
11
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.
|
LIQUI-BOX CORPORATION
(Registrant) |
Date May 11, 2000 |
By |
/s/ STEWART M. GRAVES
Stewart M. Graves
President and Chief Operating Officer
(Duly Authorized Officer) |
Date May 11, 2000 |
By |
/s/ PETER J. LINN
Peter J. Linn
(Principal Accounting Officer) |
12
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LIQUI-BOX CORPORATION INDEXLIQUI-BOX CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTSITEM 2.ITEM 3.SIGNATURES
