Third Quarter Filing on Form 10-Q
UNITED STATES
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 QUARTERLY PERIOD
ENDED OCTOBER 31, 1998
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT FOR THE TRANSITION PERIOD FROM
............ TO ............
COMMISSION FILE NUMBER: 0-14818
TRANS WORLD ENTERTAINMENT CORPORATION
-------------------------------------
(Exact name of registrant as specified in its charter)
New York 14-1541629
-------- ----------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
38 Corporate Circle
Albany, New York 12203
----------------------
(Address of principal executive offices, including zip code)
(518) 452-1242
--------------
(Registrant's telephone number, including area code)
Indicate by a check mark whether the Registrant (1) has filed all
reports required to be filed by Sections 13 or 15 (d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for 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.
Common Stock, $.01 par value,
32,723,572 shares outstanding as of December 4, 1998
TRANS WORLD ENTERTAINMENT CORPORATION AND SUBSIDIARIES
QUARTERLY REPORT ON FORM 10-Q
INDEX TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Form 10-Q
Page No.
PART 1. FINANCIAL INFORMATION
Item 1 - Financial Statements (unaudited)
Condensed Consolidated Balance Sheets at
October 31, 1998, January 31, 1998 and
November 1, 1997 3
Condensed Consolidated Statements of Income -
Thirteen Weeks Ended October 31, 1998 and November
1, 1997 and Thirty-Nine Weeks Ended October 31,
1998 and November 1, 1997 5
Condensed Consolidated Statements of Cash Flows -
Thirty-Nine Weeks Ended October 31, 1998 and
November 1, 1997 6
Notes to Condensed Consolidated Financial Statements 7
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations 10
PART II. OTHER INFORMATION
Item 6 - Exhibits and Reports on Form 8-K 16
Signatures 16
TRANS WORLD ENTERTAINMENT CORPORATION AND SUBSIDIARIES
PART 1. FINANCIAL INFORMATION
Item 1 - Financial Statements (unaudited)
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
(unaudited)
October 31, January 31, November 1,
1998 1998 1997
---------------------------------------
Assets
CURRENT ASSETS:
Cash and cash equivalents $33,164 $94,732 $4,590
Merchandise Inventory 228,514 189,394 216,659
Refundable income taxes --- --- 2,338
Other current assets 5,181 6,224 9,844
---------------------------------------
Total current assets 266,859 290,350 233,431
---------------------------------------
VIDEOCASSETTE RENTAL INVENTORY,net 3,672 4,099 4,060
DEFERRED TAX ASSET 4,666 4,726 3,926
FIXED ASSETS:
Property, plant and equipment 193,820 175,506 176,738
Less: Fixed asset write-off
reserve 3,372 4,279 5,924
Allowances for depreciation
and amortization 106,335 101,595 101,070
---------------------------------------
84,113 69,632 69,744
---------------------------------------
OTHER ASSETS 2,928 2,776 4,111
---------------------------------------
TOTAL ASSETS $362,238 $371,583 $315,272
=======================================
See Notes to Condensed Consolidated Financial Statements.
TRANS WORLD ENTERTAINMENT CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
(unaudited)
October 31, January 31, November 1,
1998 1998 1997
--------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $144,471 $162,981 $135,454
Notes payable --- --- 10,707
Income taxes payable 911 11,155 ---
Accrued expenses and other 10,915 17,347 9,970
Store closing reserve 6,580 8,691 9,874
Current deferred taxes 2,062 224 ---
Current portion of long-term
debt and capital lease
obligations 2,279 99 96
--------------------------------------
Total current liablities 167,218 200,497 166,101
--------------------------------------
LONG-TERM DEBT,
less current portion --- 35,000 35,000
CAPITAL LEASE OBLIGATIONS,
less current portion 15,938 6,409 6,435
OTHER LIABILITIES 6,982 6,712 6,554
--------------------------------------
TOTAL LIABILITIES 190,138 248,618 214,090
--------------------------------------
SHAREHOLDERS' EQUITY:
Preferred stock ($.01 par value;
5,000,000 shares authorized;
none issued) --- --- ---
Common stock ($.01 par value;
50,000,000 shares authorized
32,825,552 shares, 29,723,036
shares, and 29,695,434 shares
issued respectively) 328 297 297
Additional paid-capital 64,773 25,287 24,812
Treasury stock, at cost (105,432
shares, 106,182 shares and 106,182
shares, respectively) (390) (394) (394)
Unearned compensation-
restricted stock (142) (175) (193)
Retained Earnings 107,531 97,950 76,660
---------------------------------------
TOTAL SHAREHOLDERS' EQUITY 172,100 122,965 101,182
---------------------------------------
TOTAL LIABILITES AND
SHAREHOLDERS' EQUITY $362,238 $371,583 $315,272
=======================================
See Notes to Condensed Consolidated Financial Statements.
TRANS WORLD ENTERTAINMENT CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
(unaudited)
Thirteen Weeks Thirty-Nine Weeks
Ended Ended
October 31, November 1, October 31, November 1,
1998 1997 1998 1997
-------------------------------------------------
Sales $143,398 $114,737 $430,658 $329,273
Cost of sales 88,193 71,075 269,532 206,821
-------------------------------------------------
Gross profit 55,205 43,662 161,126 122,452
Selling, general and
administrative expenses 43,009 37,193 130,412 108,249
Depreciation and
amortization 4,661 3,807 13,282 11,035
-------------------------------------------------
Income from operations 7,535 2,662 17,432 3,168
Interest expense 465 1,069 1,723 4,354
-------------------------------------------------
Income (loss) before
income taxes 7,070 1,593 15,709 (1,186)
Income tax expense (benefit) 2,757 614 6,126 (470)
------------------------------------------------
NET INCOME (LOSS) $4,313 $979 $9,583 ($716)
================================================
BASIC EARNINGS (LOSS)
PER SHARE $0.13 $0.03 $0.30 ($0.02)
================================================
Weighted average number of
common shares outstanding 32,703 29,570 31,653 29,443
================================================
DILUTED EARNINGS (LOSS)
PER SHARE $0.13 $0.03 $0.29 ($0.02)
================================================
Adjusted weighted average
number of common shares
outstanding 34,245 31,881 33,565 29,443
================================================
See Notes to Condensed Consolidated Financial Statements.
TRANS WORLD ENTERTAINMENT AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Thirty-Nine Weeks Ended
October 31 November 1,
1998 1997
-------------------------
NET CASH USED BY OPERATING ACTIVITIES ($47,423) ($27,016)
-------------------------
INVESTING ACTIVITIES:
Acquisition of property and equipment (30,873) (16,616)
Disposals of rental inventory, net 427 724
-------------------------
Net cash used by investing activities (30,446) (15,892)
-------------------------
FINANCING ACTIVITIES:
Proceeds from the issuance of long-term debt --- 35,000
Proceeds from capital lease 12,608 ---
Payments of long-term debt and
capital lease obigations (35,899) (53,516)
Net increase in revolving line of credit --- 10,707
Proceeds from the issuance of common stock 36,772 ---
Exercise of stock options 2,783 471
Decrease in treasury stock due to reissuance
of shares 4 13
Unearned compensation from issuance of shares
of restricted stock 33 52
--------------------------
Net cash provided (used) by financing
activities 16,301 (7,273)
--------------------------
Net decrease in cash and cash equivalents (61,568) (50,181)
Cash and cash equivalents, beginning of pe 94,732 54,771
--------------------------
Cash and cash equivalents, end of period $33,164 $4,590
==========================
See Notes to Condensed Consolidated Financial Statements.
TRANS WORLD ENTERTAINMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Note 1. Basis of Presentation
The accompanying unaudited financial statements consist of Trans
World Entertainment Corporation and its subsidiaries, (the
"Company"), all of which are wholly-owned. All significant
inter-company accounts and transactions have been eliminated.
The interim condensed consolidated financial statements have been
prepared pursuant to the rules and regulations of the Securities and
Exchange Commission. The information furnished in these condensed
consolidated financial statements reflect all normal, recurring
adjustments which, in the opinion of management, are necessary for a
fair presentation of such financial statements. Certain information
and footnote disclosures normally included in the financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to rules and
regulations applicable to interim financial statements.
These unaudited condensed consolidated financial statements should
be read in conjunction with the audited financial statements
included in the Company's Annual Report on Form 10-K for the fiscal
year ended January 31, 1998.
Note 2. Restructuring Charge
In order to streamline operations and close unprofitable store
locations, the Company recorded pre-tax restructuring charges of $35
million in 1995 and $21 million 1994. An analysis of the amounts
comprising the restructuring reserve and the charges against the
reserve for the period from January 31, 1998 through October 31,
1998 are outlined below (in thousands):
Balance Charges against the Reserve Balance
as of Y-T-D as of
1/31/98 2nd Qtr 3rd Qtr 10/31/98
------------------------------------------------
Total non cash
write-offs $4,126 $739 $168 $3,219
Cash out 8,844 1,324 787 6,733
------------------------------------------------
Total $12,970 $2,063 $955 $9,952
=================================================
TRANS WORLD ENTERTAINMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Note 3. Seasonality
The Company's business is seasonal in nature, with the highest sales
and earnings occurring in the fourth fiscal quarter.
Note 4. Earnings (Loss) Per Share
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards (SFAS) No. 128,
"Earnings per Share," which was effective for the Company for fiscal
year 1997. This standard requires the Company to disclose basic
earnings per share and diluted earnings per share. Basic earnings
per share is calculated by dividing net income by the weighted
average common shares outstanding. Diluted earnings per share is
calculated by dividing net income by the sum of the weighted average
shares and additional common shares that would have been outstanding
if the dilutive potential common shares had been issued for the
Company's common stock options from the Company's Stock Option
Plans. As required by SFAS No. 128, all outstanding common stock
options were included even though their exercise may be contingent
upon vesting. The 1997 quarterly amounts have been restated to
adopt SFAS No. 128.
Note 5. Recently Issued Accounting Standards
In June 1997, the Financial Accounting Standards Board issued SFAS
No. 130, "Reporting Comprehensive Income," effective for the Company
in fiscal year 1998. SFAS No. 130 establishes standards of
reporting and display of the total net income and the components of
all other non-owner changes in equity or comprehensive income (loss)
in the statement of operations, in a separate statement of
comprehensive income (loss) or within the statement of changes of
stockholder's equity.
Also in June 1997, the Financial Accounting Standards Board issued
SFAS No. 131, "Disclosures about Segments of an Enterprise and
Related Information," effective for the Company in fiscal year 1998.
SFAS No. 131 will change the way companies report selected segment
information in annual financial statements and also requires those
companies to report selected segment information in interim
financial statements.
In June 1998, the Financial Accounting Standards Board issued SFAS
No. 133, "Accounting for Derivative Instruments and Hedging
Activities." SFAS No. 133 is effective for all fiscal quarters of
fiscal years beginning after June 15, 1999, with earlier application
permitted. The Statement
TRANS WORLD ENTERTAINMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Note 5. Recently Issued Accounting Standards (continued)
requires companies to recognize all derivatives as either assets or
liabilities on the balance sheet and measure those instruments at
fair value.
In March 1998, the Accounting Standards Executive Committee issued
Statement of Position 98-1, "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use" ("SOP 98-1"). SOP
98-1 will be effective for the Company in the first quarter of 1999.
SOP 98-1 provides guidance on the accounting for the costs of
computer software developed or obtained for internal use. The
Statement requires that all expenses related to the development of
internal use software, other than those incurred during application
development, be expensed as incurred. Costs incurred during
application development are required to be capitalized and amortized
over the estimated useful life of the software.
In April 1998, the Accounting Standards Executive Committee issued
Statement of Position 98-5, "Reporting on the Costs of Start-Up
Activities" ("SOP 98-5"). SOP 98-5 requires all start-up
activities, including pre-opening and organization costs, to be
expensed as they are incurred. SOP 98-5 will be effective for the
company in the first quarter of 1999.
The Company has determined that the application of these accounting
standards will not have a material effect on the Company's financial
position or results of operations.
TRANS WORLD ENTERTAINMENT CORPORATION AND SUBSIDIARIES
PART 1. FINANCIAL INFORMATION
Item 2 - Management's Discussion and Analysis of Financial Condition
and Results of Operations
The following is an analysis of the Company's results of operations,
liquidity and capital resources. To the extent that such analysis
contains statements which are not of a historical nature, such
statements are forward-looking statements, which involve risks and
uncertainties. These risks include, but are not limited to, changes
in the competitive environment for the Company's products, including
the entry or exit of non-traditional retailers of the Company's
products to or from its markets; the release by the music industry
of an increased or decreased number of "hit releases", general
economic factors in markets where the Company's products are sold;
and other factors discussed in the Company's filings with the
Securities and Exchange Commission.
RESULTS OF OPERATIONS
Thirteen Weeks Ended October 31, 1998
Compared to the Thirteen Weeks Ended November 1, 1997
Sales. The Company's total sales increased 25.0% to $143.4 million
for the thirteen weeks ended October 31, 1998 compared to $114.7
million for the same period last year. The increase was primarily
attributable to a comparable store sales increase of 6%, the
acquisition of 88 Strawberries' stores in October 1997 and the
opening of 57 stores partially offset by the closing of 86 stores
since the third quarter of 1997.
Comparable store sales in the Company's music category increased
3.4% while comparable sales in the video category increased 19.0%.
Gross Profit. Gross profit, as a percentage of sales improved to
38.5% from 38.1% in the thirteen week period ended October 31, 1998
compared to the same period in 1997. This improvement is due to the
continued leveraging of expenses in the Company's distribution
center, an increase in the initial mark on, and an improvement in
inventory shrinkage.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses ("S,G&A"), as a percentage of sales,
decreased from 32.4% to 30.0% in the thirteen week period ended
October 31, 1998 compared to the same period in 1997. The
improvement is primarily
TRANS WORLD ENTERTAINMENT CORPORATION AND SUBSIDIARIES
Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
due to a reduction of store occupancy costs as a percentage of
sales, and the continued leveraging of operating expenses against
sales.
Interest Expense. Net interest expense was reduced from $1.1
million in the thirteen week period ended November 1, 1997 to $0.5
million for the thirteen week period ending October 31, 1998. The
decrease is due to a reduction in long-term debt, offset by an
increase in capital lease obligations.
Net Income. The Company increased its net income to $4.3 million in
the thirteen weeks ended October 31, 1998 from net income of $1.0
million during the same period last year. The improved bottom line
performance is attributable to the comparable store sales increase,
improved gross margin rates, leverage of S,G&A expenses and lower
interest expense.
Thirty-Nine Weeks Ended October 31, 1998
Compared to the Thirty-Nine Weeks Ended November 1, 1997
Sales. The Company's total sales increased 30.8% to $430.7 million
for the thirty-nine weeks ended October 31, 1998 compared to $329.3
million for the same period last year. The increase in sales is due
to an overall improvement in the music and video specialty retail
industry, a comparable store sales increase of 9%, and the
acquisition of 88 Strawberries stores in October 1997. Management
attributes the comparable store sales increase primarily to its
focus on customer service, superior retail locations, inventory
management and merchandise presentation.
Comparable store sales in the Company's music category increased
8.3% while comparable sales in the video category increased 12.3%.
Gross Profit. Gross profit as a percentage of sales improved to
37.4% from 37.2% in the thirty-nine week period ended October 31,
1998 compared to the same period in 1997. Management attributes the
increase to an improved competitive environment and the leveraging
of expenses in the Company's distribution center.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses ("S,G&A"), as a percentage of sales,
decreased from 32.9% to 30.3% in the thirty-nine week period ended
October 31, 1998 compared to the same period in 1997. The
improvement is
TRANS WORLD ENTERTAINMENT CORPORATION AND SUBSIDIARIES
Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
primarily due to a reduction of store occupancy costs as a
percentage of sales and the continued leveraging of operating
expenses against sales.
Interest Expense. Net interest expense was reduced from $4.4
million in the thirty-nine week period ended November 1, 1997 to
$1.7 million for the thirty-nine week period ending October 31,
1998. The decrease is due to a reduction in long-term debt, offset
by an increase in capital lease obligations.
Net Income. The Company increased its net income to $9.6 million in
the thirty-nine weeks ended October 31, 1998 from a net loss of $0.7
million during the same period last year. The improved bottom line
performance can be attributed to the comparable store sales
increase, improved gross margin rates, leverage of S,G&A expenses
and lower interest expense.
TRANS WORLD ENTERTAINMENT CORPORATION AND SUBSIDIARIES
Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
LIQUIDITY AND CAPITAL RESOURCES
Liquidity and Sources of Capital
Cash generated from earnings continued to be the Company's primary
source of liquidity during the first nine months of the fiscal year.
The Company had unused lines of credit aggregating $100 million at
October 31, 1998.
The Company's working capital at October 31, 1998 was $99.7 million
and its ratio of current assets to current liabilities was 1.6 to 1.
During the first nine months of 1998, the Company's net cash used by
operations was $47.4 million, compared to $27.0 million used in the
first nine months of 1997. The most significant use of cash during
the period was $34.1 million in the normal reduction of accounts
payable.
On September 15, 1998, the Company split its common stock
three-for-two in the form of a stock dividend to shareholders of
record on September 1, 1998. All references throughout this report
to the number of shares or per share amounts of the Company's common
stock have been restated to reflect the stock split.
CAPITAL EXPENDITURES
During the thirty-nine weeks ended October 31, 1998, the Company had
capital expenditures of $30.9 million. Included in the total for
the year is $10.5 million for a new Point of Sale register system
and $2.9 million for the expansion of the Company's home office in
Albany, New York. Also during the thirty-nine weeks ended October
31, 1998, the Company opened or relocated 42 stores and closed 59
stores while total retail selling space increased slightly.
YEAR 2000 COMPLIANCE
The Company has completed an assessment of the business risks
related to the "Year 2000 Issue". The results of the assessment
indicate that: (1) awareness of Year 2000 issues is well known
throughout the Company; (2) the assessment of Year 2000 sensitive
items is complete; (3) a list of items and business relationships
sensitive to the Year 2000 Issue has been compiled; (4) renovation
of the core information technology ("IT") systems has been
completed; (5) third-party
TRANS WORLD ENTERTAINMENT CORPORATION AND SUBSIDIARIES
Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
YEAR 2000 COMPLIANCE (continued)
compliance tracking is ready to begin; and (6) verification of
embedded chip ("Non-IT") system readiness for Year 2000 compliance
is ready to begin .
The Company's Year 2000 Issue remediation process includes the
following phases: Awareness, Assessment, Renovation, and Validation
and Implementation. As indicated above, the Awareness and
Assessment phases are complete. Renovation and Validation and
Implementation efforts are underway. For the Renovation phases, all
core IT system programming modifications have been completed, and
replacements for the other (non-core) IT systems are being
implemented on schedule. For the Validation and Implementation
phase, formal systems testing for both IT an non-IT systems is
expected to be completed by the end of the second quarter of fiscal
1999.
The Company is exposed to both internal and external Year 2000
risks. Internal risks exist due to the Company's dependence on its
IT and non-IT systems. The Company utilizes a variety of vendors
for its system needs. Although the majority of these vendors
represent that their products are Year 2000 compliant, the Company
will perform testing to validate the vendor representations no later
than the second quarter of fiscal 1999. In the normal course of
business, the Company replaced its Point-of-Sale register system
with a Year 2000 compliant system during fiscal 1998. Additionally,
the Company plans to replace its product return center's processing
system no later than the end of the second quarter of fiscal 1999.
The replacement system will be Year 2000 compliant. Preliminary
contingency plans for failure of internal systems include
implementing manual procedures such as the use of manual merchandise
picking and shipping to replace automated distribution center
equipment.
External risks are represented by the fact that the Company utilizes
approximately 2,500 different suppliers in the normal course of its
business. Six major merchandise vendors account for more than 60%
of all purchases. Additionally, 50 other merchandise vendors
account for nearly 15% of purchases. The Company is also dependent
on financial institutions for consolidation of cash collections, and
for cash payments. Although the Company uses its own trucks for
shipment of product to approximately 36% of its stores, the Company
does rely on a number of trucking companies for the remainder of its
product distribution. Evaluation of the Company's vendors' Year 2000
readiness began in the fourth quarter of fiscal 1998, and is
expected to be completed by the end of the first quarter of fiscal
1999. Upon completion of the assessment of vendor readiness,
contingency plans will be developed for all third-parties where Year
2000 compliance appears to be at risk. Preliminary contingency
plans, for the worst case scenario, include replacing electronic
purchase orders and vendor invoices with paper documents, seeking
TRANS WORLD ENTERTAINMENT CORPORATION AND SUBSIDIARIES
Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
YEAR 2000 COMPLIANCE (continued)
alternative sources of supply to replace vendors where Year 2000
compliance appears to be at risk, and selecting alternative trucking
companies to replace the Company's non-compliant primary carriers or
expanding the use of the Company's own truck fleet.
The Company's direct costs for its Year 2000 remediation efforts
total $757,000 to date. Anticipated future costs include an
additional $1 million to address Year 2000 issues identified as a
result of remediation testing and a new product return center
processing system.
TRANS WORLD ENTERTAINMENT CORPORATION AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 6 - Exhibits and Reports on Form 8-K
(A) Exhibits -
Exhibit No Description Page No.
---------- ----------- --------
10.1 Lease between 17
Trans World
Entertainment
Corporation, tenant
and Robert J. Higgins,
landlord, for
additional office space
at 38 Corporate Circle
27 Financial Data
Schedule N/A
(electronic
filing only)
(B) Reports on Form 8-K -
The Company filed a report on form 8-K announcing its Merger with
Camelot Music Holdings, Inc., a mall-based music retailer.
Omitted from this part II are items which are not applicable or to
which the answer is negative to the periods covered.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
TRANS WORLD ENTERTAINMENT CORPORATION
December 15, 1998 By /s/ ROBERT J. HIGGINS
-------------------------
Robert J. Higgins
Chairman, President and Chief
Executive Officer
(Principal Executive Officer)
December 15, 1998 By: /s/ JOHN J. SULLIVAN
------------------------
John J. Sullivan
Senior Vice President-Finance
and Chief Financial Officer
(Chief Financial and Accounting Officer)