U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended JUNE 30, 1995
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[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from _____________ to ______________
Commission file number 0 - 7 0 9 3
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MOD-U-KRAF HOMES, INC.
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(Exact name of small business issurer as
specified in its charter)
VIRGINIA 54-0893908
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(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
P. O. BOX 573, ROCKY MOUNT, VIRGINIA 24151
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(Address of principal executive offices)
(540) 483-0291
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(Issuer's telephone number)
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(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issure (1) filed all reports required to be filed
by Section 13 or 15(d) of the Exchange Act during the past 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 _____
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date: 825,649
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1
MOD-U-KRAF HOMES, INC.
INDEX
PART I - FINANCIAL INFORMATION
Balance Sheets 2 & 3
Statements of Income 4 & 5
Statements of Cash Flows 6 & 7
Management's Discussion and Analysis 8
Notes to Financial Information 9 & 10
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of
Security Holders 11
2
MOD-U-KRAF HOMES, INC.
Consolidated Balance Sheets
June 30, 1995 and 1994
ASSETS 1995 1994
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CURRENT ASSETS
Cash and cash equivalents $ 1,045,162 $ 1,001,633
Certificates of deposit 500,000 500,000
Trade receivables 174,659 120,453
Inventories (Note 2) 1,697,884 1,682,885
Notes receivable, current portion (Note 3) 981,240 877,323
Accrued interest receivable 3,234 7,683
Prepaid expenses 46,728 135,276
Income taxes receivable 0 46,350
Deferred income taxes, current protion 56,898 57,480
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Total current assets 4,505,805 4,429,083
LONG-TERM NOTES RECEIVABLE (Note 3) 171,294 164,170
PROPERTY AND EQUIPMENT, at cost less
accumulated depreciation
1995 $1,729,346; 1994 $1,634,649. (Note 4) 1,010,992 907,895
OTHER ASSETS
Deferred income taxes 429,931 469,385
Cash surrender value of life insurance 91,824 76,484
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$ 6,209,846 $ 6,047,017
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current portion of long-term liabilities 60,547 56,015
Accounts payable and other liabilities 328,554 385,631
Accrued compensation 188,285 194,705
Customer deposits 40,598 113,042
Income taxes payable 3,676 0
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Total current liabilities 621,660 749,393
LONG-TERM DEFERRED COMPENSATION (Note 5) 1,029,655 1,082,136
POST RETIREMENT BENEFITS (Note 6) 134,738 142,804
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Total liabilities 1,786,053 1,974,333
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STOCKHOLDERS' EQUITY
Common stock, $1 par value, 2,000,000
shares authorized: shares issued and
outstanding 1995 825,649, 1994 813,649 825,649 813,649
Additional Paid in Capital 459,671 440,420
Retained earnings 3,138,473 2,818,615
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4,423,793 4,072,684
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$ 6,209,846 $ 6,047,017
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Accompanying notes are an integral part of these financial statements.
3
MOD-U-KRAF HOMES, INC.
Consolidated Balance Sheets
June 30, 1995 and December 31, 1994
ASSETS 1995 1994
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CURRENT ASSETS
Cash and cash equivalents $ 1,045,162 $ 1,226,736
Certificates of deposit 500,000 504,935
Trade receivables 174,659 207,110
Inventories (Note 2) 1,697,884 1,206,955
Notes receivable, current portion (Note 3) 981,240 1,472,979
Accrued interest receivable 3,234 5,411
Prepaid expenses 46,728 71,314
Income taxes receivable 0 0
Deferred income taxes, current protion 56,898 49,809
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Total current assets 4,505,805 4,745,249
LONG-TERM NOTES RECEIVABLE (Note 3) 171,294 157,708
PROPERTY AND EQUIPMENT, at cost less
accumulated depreciation
1995 $1,729,346; 1994 $1,652,419. (Note 4) 1,010,992 897,798
OTHER ASSETS
Deferred income taxes 429,931 448,799
Cash surrender value of life insurance 91,824 79,922
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$ 6,209,846 $ 6,329,476
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current portion of long-term liabilities 60,547 58,234
Accounts payable and other liabilities 328,554 384,565
Accrued compensation 188,285 234,795
Customer deposits 40,598 148,549
Income taxes payable 3,676 37,042
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Total current liabilities 621,660 863,185
LONG-TERM DEFERRED COMPENSATION (Note 5) 1,029,655 1,056,451
POST RETIREMENT BENEFITS (Note 6) 134,738 138,806
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Total liabilities 1,786,053 2,058,442
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STOCKHOLDERS' EQUITY
Common stock, $1 par value, 2,000,000
shares authorized: shares issued and
outstanding 1995 825,649, 1994 813,649 825,649 813,649
Additional Paid in Capital 459,671 440,420
Retained earnings 3,138,473 3,016,965
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4,423,793 4,271,034
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$ 6,209,846 $ 6,329,476
========== ==========
Accompanying notes are an integral part of these financial statements.
4
MOD-U-KRAF HOMES, INC.
Consolidated Statement of Income
Quarters Ended June 30, 1995 and June 30, 1994
1995 1994
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Net Sales $ 2,206,217 $ 2,314,571
Cost of Sales 1,567,144 1,722,205
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639,073 592,366
Selling, General and Administrative
Expenses 494,023 477,464
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Income/<Loss> from Operations 145,050 114,902
Deferred Compensation Expense 23,171 24,182
Post Retirement Benefits Expense 4,773 (1,910)
Non-operating Income/<Expenses> 52,794 43,364
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Income/<Loss> Before Income Taxes 169,900 135,994
Federal and State Income Taxes 57,981 38,550
Deferred Income Tax Adjustment 9,728 15,003
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Income Taxes 67,709 53,553
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Net Income / <Loss> $ 102,191 $ 82,441
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Earnings per share:
Net Income / <Loss> 0.12 0.10
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Depreciation Included in Above Cost 39,786 37,366
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Accompanying notes are an integral part of these financial statements.
5
MOD-U-KRAF HOMES, INC.
Consolidated Statement of Income
Six Months Ended June 30, 1995 and June 30, 1994
1995 1994
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Net Sales $ 4,223,100 $ 3,722,156
Cost of Sales 3,023,933 2,739,207
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1,199,167 982,949
Selling, General and Administrative
Expenses 976,570 897,096
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Income/<Loss> from Operations 222,597 85,853
Deferred Compensation Expense 46,605 48,604
Post Retirement Benefits Expense 7,723 (3,804)
Non-operating Income/<Expenses> 104,112 78,682
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Income/<Loss> Before Income Taxes 272,381 119,735
Federal and State Income Taxes 89,814 34,551
Deferred Income Tax Adjustment 11,779 24,151
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Income Taxes 101,593 58,702
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Net Income / <Loss> $ 170,788 $ 61,033
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Earnings per share:
Net Income / <Loss> 0.21 0.08
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Depreciation Included in Above Cost 76,927 77,506
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Accompanying notes are an integral part of these financial statements.
6
MOD-U-KRAF HOMES, INC.
Consolidated Statement of Cash Flows
Quarters Ended June 30, 1995 and 1994
1995 1994
OPERATING ACTIVITIES ---------- ----------
Net Income/<Loss> $ 102,191 $ 82,441
Noncash <income> expenses included
in income or <loss>:
Depreciation 39,786 37,637
Deferred income taxes 9,728 15,003
Gain on sale of property and equipment (3,205) 0
Increase in cash value of life insurance (14,410) (16,506)
Accrued interest receivable 328 2,731
Adjustments to deferred compensation (12,441) (11,430)
Adjustments to post retirement benefits (1,972) (1,910)
<Increase> decrease in:
Trade receivables 27,188 (36,012)
Inventories (9,861) 44,069
Prepaid Expenses 8,695 (90,329)
Income taxes receivable 0 (37,880)
<Decrease> increase in:
Accounts payable and other Liabilities (25,926) (43,815)
Accrued compensation 18,015 59,736
Customer deposits (3,120) 76,580
Income taxes payable (29,727) 0
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Net cash provided by (used in)
operations 105,269 80,315
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INVESTING ACTIVITIES
Proceeds from sale of property & equipment 3,205 0
Purchase of plant & equipment (151,475) (31,040)
<Increase> decrease in notes receivable 361,457 152,202
<Increase> decrease in certificates
of deposit (192,047) 0
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Net cash provided by (used in)
investing activities 21,140 121,162
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FINANCING ACTIVITIES
Proceeds from stock option sale 31,251 0
Cash dividends paid (24,769) (24,410)
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Net cash provided by (used in)
financing activities 6,482 (24,410)
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Net increase (decrease) in cash 132,891 177,067
CASH
Beginning 912,271 824,566
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Ending $ 1,045,162 $ 1,001,633
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SUPPLEMENTAL DISCOLOSRES OF CASH FLOW INFORMATION
Cash payments for:
Interest $ 0 $ 0
Income taxes $ 91,750 $ 76,430
Accompanying notes are an integral part of these financial statements.
7
MOD-U-KRAF HOMES, INC.
Consolidated Statement of Cash Flows
Six Months Ended June 30, 1995 and 1994
1995 1994
OPERATING ACTIVITIES ---------- ----------
Net Income/<Loss> $ 170,788 $ 61,033
Noncash <income> expenses included
in income or <loss>:
Depreciation 76,927 77,778
Deferred income taxes 11,779 24,151
Gain on sale of property and equipment (3,205) 0
Increase in cash value of life insurance (11,902) (19,122)
Accrued interest receivable 2,177 1,312
Adjustments to deferred compensation (24,620) (22,621)
Adjustments to post retirement benefits (3,931) (3,804)
<Increase> decrease in:
Trade receivables 32,451 (43,765)
Inventories (490,928) (209,457)
Prepaid Expenses 24,585 (90,163)
Income taxes receivable 0 (46,350)
<Decrease> increase in:
Accounts payable and other Liabilities (50,663) 103,713
Accrued compensation (51,860) 16,621
Customer deposits (107,951) 64,094
Income taxes payable (33,366) (5,851)
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Net cash provided by (used in)
operations (459,719) (92,431)
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INVESTING ACTIVITIES
Proceeds from sale of property & equipment 3,205 0
Purchase of plant & equipment (190,220) (74,308)
<Increase> decrease in notes receivable 478,152 7,174
<Increase> decrease in certificates
of deposit 4,935 100,000
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Net cash provided by (used in)
investing activities 296,072 32,866
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FINANCING ACTIVITIES
Proceeds from stock option sale 31,251 0
Cash dividends paid (49,178) (49,316)
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Net cash provided by (used in)
financing activities (17,927) (49,316)
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Net increase (decrease) in cash (181,574) (108,881)
CASH
Beginning 1,226,736 1,110,513
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Ending $ 1,045,162 $ 1,001,632
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SUPPLEMENTAL DISCOLOSRES OF CASH FLOW INFORMATION
Cash payments for:
Interest $ 0 $ 445
Income taxes $ 127,453 $ 94,095
Accompanying notes are an integral part of these financial statements.
8
MOD-U-KRAF HOMES, INC
Management's Discussion and Analysis
of the Second Quarter Statements
Net sales for the second quarter of 1995 were $2,206,217 as compared
to $2,314,571 for the second quarter of 1994, a 5% decrease. Sales for
the first six months of 1995 were $4,223,100 as compared to $3,722,156
in 1994 for an increase in sales volume of 13%.
Cost of Sales was 71.03% of net sales for the second quarter of 1995
and 74.41% for the second quarter of 1994. For the first six months
cost of sales was 71.60% for 1995 compared to 73.59% for 1994. Although
we are still experiencing unfavorable variances in our production labor,
our cost of materials has stablized giving us better control in pricing
and purchasing. As a result, our gross profit margin is up 22% for the
first six months.
Selling, General and Administrative expenses was 22.39% of net sales
for the second quarter of 1995 and 20.63% for the same quarter of 1994.
They were 23.12% for the first six months of 1995 compared to 24.10% for
the same period in 1994.
The net income for the second quarter of 1995 is $102,191 compared
to net income of $82,441 for the second quarter of 1994. This is $.12
per share for the second quarter of 1995 and $.10 per share for the same
period in 1994. Net income for the first six months is $170,788, $.21
common share, for 1995, compared to $61,033, $.08 per common share, for
1994.
There are no other significant variances.
There have been no material changes in liquidity and capital
resources for the first six months of 1995. On July 12, 1995 Mod-U-Kraf
Homes, Inc. executed a financing agreement for the construction of our
new manufacturing facility. This agreement consists of $3,000,000
Industrial Development Authority of Franklin County, Virginia Industrial
Development Revenue Bonds (MOD-U-KRAF HOMES, INC. Project), Series 1995.
These bonds will be payable over a 20 year period and are tax-exempt
obligations that carry short-term floating interest rates. The average
rates for the first four months of 1995 and for 1994 have been 4.05%
and 3.07% respectively.
9
MOD-U-KRAF HOMES, INC.
NOTES TO FINANCIAL INFORMATION
1. The financial information furnished herein is not certified, but re-
flects all adjustments, consisting only of normal recurring adjust-
ments which are, in the opinion of management, necessary to a fair
statement of the results for the quarter ended June 30, 1995. The
results for the quarter ended June 30, 1995 are not necessarily in-
dicative of results to be expected for the entire year. The housing
industry is seasonal in nature and revenues to the Company during
the period April 1 to September 30 are normally greater than revenue
during the balance of the year.
Both primary & fully diluted net income per common share are based
on the weighted average number of shares of common stock outstanding
during each year and common stock equivalents of dilutive stock
options.
2. Inventories
The components of inventories are as follows 1995 1994
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Raw Materials $ 671,005 $ 628,524
Work-In-Progress 65,225 105,954
Finished Goods 674,906 348,974
Land and Units held for sale 286,748 599,433
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$ 1,697,884 $ 1,682,885
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3. Notes Receivable 1995 1994
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Various mortgage notes receivable secured by
deeds of trust $ 141,505 $ 140,392
Demand note receivabe with interest payable
quarterly at 9%, unsecured 14,375 16,975
Life insurance note receivable from an
officer of the Company (non-interest bearing) 6,670 7,403
Installment notes receivable from various
shareholders secured by shares of common
stock of the Company 28,125 0
Various construction loans(all current) 961,859 876,723
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1,152,534 1,041,493
Less current portion 981,240 877,323
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$ 171,294 $ 164,170
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4. Property and Equipment 1995 1994
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Land and improvements $ 347,120 $ 269,983
Buildings 1,073,835 1,068,850
Manufacturing equipment 992,478 864,687
Other furniture, fixtures and equipment 326,905 339,024
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2,740,338 2,542,544
Less accumulated depreciation (1,729,346) (1,634,649)
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$ 1,010,992 $ 907,895
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10
MOD-U-KRAF HOMES, INC.
NOTES TO FINANCIAL INFORMATION (continued)
5. Deferred Compensation, Related Parties 1995 1994
---- ----
Present Value of deferred compensation
benefits payable to the widow of O.Z. Oliver
at $6,311 monthly until the earlier of her
death or Sept. 2006, discounted at 8.50% in
1995 and 1994. $ 547,339 $ 575,240
Present Value of deferred compensation
benefits payable to Robert K. Fitts at $5,560
monthly until his death after which the
benefits are payable to his spouse until the
earlier of her death or July 2007, discounted
at 8.50% in 1995 and 1994. 534,797 555,115
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1,082,136 1,130,355
Less Current Maturities 52,481 48,219
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$ 1,029,655 $ 1,082,136
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6. Post Retirement Benefits 1995 1994
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Present value of estimated future benefits $ 142,804 $ 150,600
Less Current Maturities 8,066 7,796
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$ 134,738 $ 142,804
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7. The Board Of Directors of Mod-U-Kraf Homes, Inc. on August 2, 1995
declared a $.03 per share cash dividend on all shares outstanding
on August 18, 1995 and to be paid on September 1, 1995.
8. The Company uses the annualized method in its computation of Federal
Income Taxes.
9. Revenues are recorded when the houses are delivered for sales made
on account. Cash sales paid in advance are recorded when produced.
11
MOD-U-KRAF HOMES, INC.
OTHER INFORMATION
NONE
12
MOD-U-KRAF HOMES, INC.
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.
MOD-U-KRAF HOMES, INC.
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(Registrant)
Date: August 9, 1995
s/Dale H. Powell
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Dale H. Powell
President and Chairman of the Board
s/Jeffrey L. Boudreaux
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Jeffrey L. Boudreaux
Controller