1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
F O R M 10 - Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 27, 1996
Commission file no. 1-10299
WOOLWORTH CORPORATION
(Exact name of registrant as specified in its charter)
New York 13-3513936
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
233 Broadway, New York, New York 10279-0003
(Address of principal executive offices) (Zip Code)
Registrant's telephone number: (212) 553-2000
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
--- ---
Number of shares of Common Stock outstanding at May 24, 1996: 133,091,871.
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WOOLWORTH CORPORATION
INDEX
Page No.
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Part I. Financial Information
Item 1. Financial Statements
Condensed Consolidated Balance Sheets 3
Condensed Consolidated Statement
of Operations 4
Condensed Consolidated Statement
of Retained Earnings 5
Condensed Consolidated Statement
of Cash Flows 6
Notes to Condensed Consolidated
Financial Statements 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
Part II. Other Information
Item 1. Legal Proceedings 12
Item 6. Exhibits and Reports on Form 8-K 12
Signature 13
Index to Exhibits 14
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PART I - FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
WOOLWORTH CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions)
April 27, April 29, Jan. 27,
1996 1995 1996
(Unaudited) (Unaudited)
----------- ----------- -----------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 46 $ 76 $ 13
Merchandise inventories 1,497 1,864 1,364
Other current assets 232 392 241
------- ------- -------
1,775 2,332 1,618
PROPERTY AND EQUIPMENT, net 1,182 1,558 1,225
DEFERRED CHARGES AND OTHER ASSETS 650 682 663
------- ------- -------
$ 3,607 $ 4,572 $ 3,506
======= ======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Short-term debt $ 247 $ 966 $ 69
Accounts payable 372 447 321
Accrued liabilities 356 367 426
Current portion of long-term debt and obligations
under capital leases 19 25 25
------- ------- -------
994 1,805 841
LONG-TERM DEBT AND OBLIGATIONS
UNDER CAPITAL LEASES 616 571 619
DEFERRED TAXES AND OTHER LIABILITIES 797 831 817
SHAREHOLDERS' EQUITY
Preferred stock -- -- --
Common stock and paid-in capital 291 282 290
Retained earnings 869 975 891
Foreign currency translation adjustment 75 118 83
Minimum pension liability adjustment (35) (10) (35)
------- ------- -------
Total shareholders' equity 1,200 1,365 1,229
CONTINGENCIES (Legal Proceedings)
------- ------- -------
$ 3,607 $ 4,572 $ 3,506
======= ======= =======
Certain prior year amounts have been reclassified for comparative purposes.
See accompanying Notes to Condensed Consolidated Financial Statements.
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WOOLWORTH CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(in millions, except per share amounts)
(Unaudited) Thirteen weeks ended
----------------------------
April 27, April 29,
1996 1995
---------- ----------
SALES $ 1,820 $ 1,794
COSTS AND EXPENSES
Costs of sales 1,295 1,305
Selling, general and administrative expenses 492 546
Depreciation and amortization 50 59
Interest expense 20 32
Other income -- (15)
------- -------
1,857 1,927
------- -------
LOSS BEFORE INCOME TAXES (37) (133)
Income tax benefit (15) (53)
------- -------
NET LOSS $ (22) $ (80)
======= =======
Net Loss Per Common Share $ (0.17) $ (0.60)
Weighted-average Common Shares outstanding 133.1 132.5
See accompanying Notes to Condensed Consolidated Financial Statements.
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WOOLWORTH CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF RETAINED EARNINGS
(in millions)
(Unaudited) Thirteen weeks ended
--------------------
April 27, April 29,
1996 1995
--------- ---------
RETAINED EARNINGS AT BEGINNING OF YEAR $ 891 $ 1,055
Net Loss (22) (80)
Cash dividends declared:
Preferred Stock - $0.55 per share -- --
----- -------
RETAINED EARNINGS AT END OF INTERIM PERIOD $ 869 $ 975
===== =======
See accompanying Notes to Condensed Consolidated Financial Statements.
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WOOLWORTH CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(in millions)
(Unaudited) Thirteen weeks ended
--------------------
April 27, April 29,
1996 1995
----------- ----------
FROM OPERATING ACTIVITIES
Net Loss $ (22) $ (80)
Adjustments to reconcile net loss to net cash used
in operating activities:
Depreciation and amortization 50 59
Gain on sales of real estate -- (15)
Change in assets and liabilities, net of acquisitions:
Increase in merchandise inventories (137) (188)
Increase in accounts payable 52 78
Other, net (71) (143)
----- -----
Net cash used in operating activities (128) (289)
----- -----
FROM INVESTING ACTIVITIES
Proceeds from sale of real estate -- 25
Capital expenditures (16) (30)
Purchase of investments -- (74)
Proceeds from sale of assets 7 24
----- -----
Net cash used in investing activities (9) (55)
----- -----
FROM FINANCING ACTIVITIES
Increase in short-term debt 179 108
Increase in long-term debt -- 261
Reduction in long-term debt and capital lease obligations (8) (9)
Dividends paid -- (20)
----- -----
Net cash provided by financing activities 171 340
----- -----
EFFECT OF EXCHANGE RATE CHANGES ON CASH
AND CASH EQUIVALENTS (1) 8
----- -----
NET CHANGE IN CASH AND CASH EQUIVALENTS 33 4
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 13 72
----- -----
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 46 $ 76
===== =====
Cash Paid During the Period:
Interest $ 9 $ 25
Income Taxes $ 4 $ 3
See accompanying Notes to Condensed Consolidated Financial Statements.
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WOOLWORTH CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements
should be read in conjunction with the Notes to Consolidated Financial
Statements contained in the 1995 Annual Report to Shareholders of Woolworth
Corporation (the "Registrant"), portions of which Annual Report are incorporated
by reference in the Registrant's Annual Report on Form 10-K for the year ended
January 27, 1996, as filed with the Securities and Exchange Commission (the
"SEC"). Certain items included in these statements are based on management's
estimates. In the opinion of management, all adjustments necessary for a fair
statement of the results for the interim period have been included, and all such
adjustments were of a normal recurring nature.
Merchandise Inventories
Domestic merchandise inventories valued on the last-in, first-out basis
at April 27, 1996, April 29, 1995, and January 27, 1996 are stated,
respectively, at $102 million, $99 million and $102 million less than the
amounts that would have been determined on the first-in, first-out basis.
Legal Proceedings
Between March 30, 1994, and April 18, 1994, the Registrant and certain
of its present and former directors and officers were named as defendants in
lawsuits brought by certain shareholders claiming to represent classes of
shareholders that purchased shares of the Registrant's Common Stock during
different periods between January 1992 and March 1994.
These class action complaints purport to present claims under the
federal securities and other laws and seek unspecified damages based on alleged
misleading disclosures during the class periods.
On April 29, 1994, United States Senior District Judge Richard Owen
entered an order consolidating 25 actions, purportedly brought as class actions,
commenced against the Registrant and certain officers and directors of the
Registrant in the United States District Court for the Southern District of New
York, under the caption In re Woolworth Corporation Securities Class Action
Litigation. Plaintiffs served an Amended and Consolidated Class Action
Complaint, to which the defendants responded. On February 17, 1995, Judge Owen
entered an order for certification of the action as a class action on behalf of
all persons who purchased the Registrant's Common Stock or options on the
Registrant's Common Stock from May 12, 1993 to March 29, 1994 inclusive,
pursuant to a stipulation among the parties.
Five separate state-court derivative actions filed in April 1994 were
consolidated under the caption In re Woolworth Corporation Derivative Litigation
in the Supreme Court of the State of New York, County of New York. Plaintiffs
served a Consolidated Complaint on behalf of the plaintiffs in these five
actions together with the plaintiff in the former federal derivative action
Sternberg v. Woolworth Corp., which has been dismissed. Defendants moved to
dismiss the Consolidated Complaint, and on April 27, 1995, the court granted
defendants' motion, with leave to the plaintiffs to replead. On June 7, 1995,
plaintiffs served a Consolidated Amended Derivative Complaint. On June 27, 1995,
defendants moved to dismiss the Consolidated Amended Derivative Complaint with
prejudice. On April 10, 1996, the court granted defendants' motion with
prejudice. Plaintiffs have filed a notice of appeal from the dismissal
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to the Appellate Division, First Department.
There is one federal derivative action pending in the United States
District Court for the Southern District of New York under the caption Rosenbaum
v. Sells et al. There have been no material developments in this action.
These actions are all at a preliminary stage of proceedings.
Accordingly, the outcomes cannot be predicted with any degree of certainty. As a
result, the Registrant cannot determine if the results of the litigation will
have a material adverse effect on the Registrant's results of operations,
liquidity or financial position.
During 1994, the staff of the SEC initiated an inquiry related to the
matters that were reviewed by the Special Committee of the Board of Directors as
well as in connection with trading in the Registrant's securities by certain
directors and officers of the Registrant. The SEC staff has advised that its
inquiry should not be construed as an indication by the SEC or its staff that
any violations of law have occurred. There have been no material developments in
the inquiry to date.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Total sales for the 1996 first quarter increased 1.4 percent to $1,820
million compared to $1,794 million for the 1995 first quarter despite
unseasonably cooler weather in certain markets and 156 fewer stores. Excluding
the effect of foreign currency fluctuations and sales from disposed operations,
sales increased $25 million, or 1.4 percent. Comparable-store sales increased
0.7 percent during the period. Total Specialty segment's sales increased 4.2
percent in the first quarter and comparable-store sales increased 3.5 percent.
General Merchandise sales decreased 2.5 percent for the first quarter of 1996,
compared to the first quarter of 1995. The decrease in the General Merchandise
segment primarily relates to lower sales in the United States. Comparable-store
sales in the General Merchandise segment decreased 3.6 percent during the
period.
The improvement in the 1996 first quarter operating results stems
directly from the implementation of the Registrant's strategic plan including
reducing inventory levels, lowering expenses and eliminating non-strategic
assets. Selling, general and administrative expenses were reduced by $54 million
in the first quarter of 1996 compared to first quarter 1995 which reflects the
cost reduction initiatives undertaken. In the first quarter 1995, a $38 million
charge was recorded as the inventory improvement program was implemented to
lower inventory levels and clear stores of aged and discontinued merchandise for
new product assortments.
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The Registrant reported a net loss of $22 million, or $0.17 per share,
for the thirteen weeks ended April 27, 1996, compared to a net loss of $80
million, or $0.60 per share, in the corresponding year-earlier period.
During the first quarter of 1996 the Registrant announced the closing
of its 20-store Rx Place Drug Mart chain. The first quarter loss on disposed
operations of $13 million relates primarily to the closure of this chain. On May
21, 1996, the Registrant announced the closing of the Accessory Lady chain and
will redeploy a number of stores into other existing formats. The decision to
close the Accessory Lady chain is in line with the Registrant's strategic plan
to dispose of underperforming businesses. The Accessory Lady chain is expected
to be closed in the third quarter of 1996. Any loss incurred is not anticipated
to be material to the Registrant's annual results of operations.
In the first quarter of 1995 the Registrant completed the sale of The
Rx Place deep-discount drug chain and signed an agreement to sell the Little
Folk/Kids Mart operations.
SALES
- -----
The following table summarizes sales by segment and by geographic area:
Thirteen weeks ended
-------------------------------
(in millions) April 27, April 29,
1996 1995
------------- -----------
By segment:
Specialty:
Athletic Group $ 840 $ 784
Specialty Footwear 153 161
Other Specialty 94 106
Northern Group 66 55
------ ------
Specialty total 1,153 1,106
------ ------
General Merchandise:
Germany 370 361
United States 244 264
Other 46 52
------ ------
General Merchandise total 660 677
------ ------
Disposed operations 7 11
------ ------
$1,820 $1,794
====== ======
By geographic area:
Domestic $1,182 $1,164
International 638 630
------ ------
$1,820 $1,794
====== ======
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Specialty Segment
The Athletic Group and Northern Group turned in strong first quarter
performances. Athletic footwear and apparel sales increased by 7.1 percent over
the prior year period and comparable-store sales increased by 6.4 percent.
Northern Group sales increased by 20 percent which was attributable to a
combination of store openings and comparable-store growth of 2.0 percent.
Specialty Footwear sales decreased by 5.0 percent compared to the prior
year period and comparable-store sales decreased by 4.8 percent. These declines
were mainly attributable to the closure of 88 stores, principally in the Kinney
format. Other Specialty sales, adjusted for the disposal of the Rx Place Drug
Mart chain, decreased by 11.3 percent while comparable-store sales declined by
5.7 percent. This decline in Other Specialty sales was mainly due to the closure
of 157 underperforming stores offset by 47 store openings.
General Merchandise
German general merchandise sales increased by 2.5 percent. This was
principally due to the inclusion of a full quarter's results for the Austrian
department stores acquired February 1, 1995. However, German stores
produced only marginally improved sales results due to the continued poor
economic conditions, including high unemployment and a poor retail environment.
United States general merchandise sales decreased by $20 million or 7.6
percent. This was caused by the closure of 15 stores under the Registrant's
store closing program and a decline in comparable-store sales of 5.0 percent.
A slight decline in sales was experienced by both Mexican and
Canadian operations. Sales in this group fell by $6 million, or 11.5 percent,
and comparable-store sales declined by 8.8 percent. Cooler weather conditions in
Canada was the major factor causing this decline.
OPERATING RESULTS
Operating results (before corporate expense, interest, and income taxes) are as
follows:
Thirteen weeks ended
----------------------------
(in millions) April 27, April 29,
1996 1995
By segment: ------------ -----------
Specialty $ 34 $ (22)
General Merchandise (21) (47)
Disposed operations (13) (25)
Net gain on sales of real estate - 15
----- ------
$ - $ (79)
===== ======
By geographic area:
Domestic $ 42 $ (30)
International (29) (39)
Disposed operations (13) (25)
Net gain on sales of real estate - 15
----- ------
$ - $ (79)
====== ======
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Specialty Segment
Specialty operating profits improved by $56 million over the 1995 first
quarter. This was primarily due to higher sales and cost reductions by the
Athletic Group. All other specialty businesses reported lower operating expenses
as a result of the strategic plan. Specialty operating results for 1995 include
a $16 million charge to reduce aged and discontinued merchandise, which was part
of the Registrant's inventory improvement program.
General Merchandise
Each country's general merchandise businesses produced an improvement
in operating results from the first quarter of 1995. General Merchandise
operating results for 1995 include a $22 million charge to reduce aged and
discontinued merchandise. In addition, the General Merchandise segment reported
lower operating expenses in 1996 as a result of the strategic plan.
SEASONALITY
The Registrant's businesses are highly seasonal in nature.
Historically, the greatest proportion of sales and net income is generated in
the fourth quarter and the lowest proportion of sales and net income is
generated in the first quarter, reflecting seasonal buying patterns.
LIQUIDITY AND CAPITAL RESOURCES
Net cash used in operating activities was $128 million for the thirteen
weeks ended April 27, 1996, compared to $289 million in the comparable
prior-year period. The decrease in utilization of cash during 1996 primarily
reflects lower inventory levels and improved operating results.
Net cash used in investing activities amounted to $9 million for the
thirteen weeks ended April 27, 1996, compared to cash used in investing
activities of $55 million during the corresponding period in 1995. The reduced
utilization of cash in 1996 reflects the overall reduction in capital spending.
Capital expenditures of approximately $148 million are planned for the full year
1996.
Inventories decreased by $367 million compared to the level at April
29, 1995 but rose $133 million from the level at January 27, 1996, to $1,497
million at the end of the first quarter 1996. The decrease from the first
quarter of 1995 reflects the success of the Registrant's inventory improvement
efforts.
Accounts payable decreased by $75 million compared to the first quarter
1995 and increased by $51 million to $372 million at April 27, 1996, compared to
the year-end level. The decrease from April 29, 1995 coincides with the decrease
in inventory.
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Short-term debt decreased $719 million compared to the level at April
29, 1995 and increased $178 million to $247 million from the year-end level. The
Registrant was able to reduce short-term debt by lowering inventory levels by
$367 million, reducing capital expenditures, selling non-strategic assets and
continuing cost reduction programs. In addition, during the third quarter of
1995, short-term debt levels were reduced by refinancing $90 million to longer
term notes.
On April 7, 1995 the Registrant negotiated a revolving credit agreement
to provide $1.5 billion of credit lines which included a $1.0 billion three-year
facility available through May 1998.
Interest expense for the thirteen weeks ended April 27, 1996, decreased
$12 million over the comparable 1995 period. This was attributable to the
reduction in total debt levels of $680 million, compared to the prior year
period as well as lower borrowing rates associated with such borrowings.
Shareholders' equity at April 27, 1996 decreased $165 million from the
level at April 29, 1995. The decrease reflects a non-cash pre-tax
charge of $241 million ($165 million after-tax) for the adoption of Statement of
Financial Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of" in the fourth
quarter of 1995.
On April 12, 1995, the Registrant announced the elimination of
dividends on shares of common stock and reduced capital expenditures as part of
management's plans to improve the Registrant's cash flow.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
This information is incorporated by reference to the Legal Proceedings
section of the Notes to Condensed Consolidated Financial Statements on pages 7
through 8 of Part I, Item 1.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
An index of the exhibits that are required by this item, and which are
furnished in accordance with Item 601 of Regulation S-K, appears on pages 14
through 16. The exhibits which are in this report immediately follow the index.
(b) Reports on Form 8-K
The Registrant filed a Form 8-K dated April 2, 1996 (date of earliest
event reported), which reported the Board of Directors' recommendation that
shareholders vote against the proposal made by Greenway Partners, L.P. that the
Registrant spin off its Athletic Footwear and Apparel Division. It also
announced its 1995 operating results by segment.
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SIGNATURE
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.
WOOLWORTH CORPORATION
(Registrant)
Date: June 11, 1996 /s/ Andrew P. Hines
------------- -------------------
ANDREW P. HINES
Senior Vice President
and Chief Financial Officer
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WOOLWORTH CORPORATION
INDEX OF EXHIBITS REQUIRED BY ITEM 6(a) OF FORM 10-Q
AND FURNISHED IN ACCORDANCE WITH ITEM 601 OF REGULATION S-K
Exhibit No. in Item 601
of Regulation S-K Description
----------------- -----------
1 *
2 *
3(i)(a) Certificate of Incorporation of the Registrant, as filed by the
Department of State of the State of New York on April 7, 1989
(incorporated herein by reference to Exhibit 3(a) to the
Registration Statement on Form S-4 filed by the Registrant
with the Securities and Exchange Commission ("SEC")
on May 9, 1989 (Registration No. 33-28469)(the "S-4 Registration
Statement").
3(i)(b) Certificates of Amendment of the Certificate of Incorporation of
the Registrant, as filed by the Department of State of the State of
New York on (a) July 20, 1989 (incorporated herein by reference
to Exhibit 3(b) to the Registration Statement on Form 8-B filed by
the Registrant with the SEC on August 7, 1989 (Registration No.
1-10299) (the "8-B Registration Statement")) and (b) July 24,
1990 (incorporated herein by reference to Exhibit 4(a) to the
Quarterly Report on Form 10-Q for the quarterly period ended
July 28, 1990, filed by the Registrant with the SEC on September
7,1990 (the "Form 10-Q")).
3(ii) By-laws of the Registrant, as amended (incorporated herein by
reference to Exhibit 3(ii) to the Registrant's Annual Report on
Form 10-K for the year ended January 28, 1995, filed by the
Registrant with the SEC on April 24, 1995 (the "1994 10-K")).
4(a) The rights of holders of the Registrant's equity securities are
defined in the Registrant's Certificate of Incorporation, as
amended (incorporated herein by reference to: (a) Exhibit 3(a)
to the S-4 Registration Statement, (b) Exhibit 3(b) to the 8-B
Registration Statement and (c) Exhibit 4(a) to the Form 10-Q).
4(b) Rights Agreement dated as of April 4, 1988, as amended January
11, 1989, between F.W. Woolworth Co. ("FWW") and Morgan
Shareholder Services Trust Company (now, First Chicago Trust
Company of New York), as Rights Agent (incorporated herein by
reference to (a) Exhibit 1 to the Registration Statement on Form
8-A filed by FWW with the SEC on April 12, 1988 (Registration
No. 1-238) and (b) the Form 8 Amendment to such Form 8-A filed
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by FWW with the SEC on January 13, 1989). The rights and
obligations of FWW under said Rights Agreement were assumed by
the Registrant pursuant to an Agreement and Plan of Share
Exchange dated as of May 4, 1989, by and between FWW and the
Registrant (incorporated herein by reference to Exhibit 2 to the
S-4 Registration Statement).
4(c) Indenture dated as of October 10, 1991 (incorporated herein by
reference to Exhibit 4.1 to the Registration Statement on Form S-3
(Registration No. 33-43334) previously filed with the SEC).
4(d) Forms of Medium-Term Notes (Fixed Rate and Floating Rate)
(incorporated herein by reference to Exhibits 4.4 and 4.5 to the
Registration Statement on Form S-3 (Registration No. 33-43334)
previously filed with the SEC).
4(e) Form of 8-1/2% Debentures due 2022 (incorporated herein by
reference to Exhibit 4 to Registrant's Form 8-K dated January
16, 1992).
4(f) Purchase Agreement dated June 1, 1995 and Form of 7% Notes due
2000 (incorporated herein by reference to Exhibits 1 and 4,
respectively, to Registrant's Form 8-K dated June 7, 1995).
4(g) Distribution Agreement dated July 13, 1995 and Forms of Fixed
Rate and Floating Rate Notes (incorporated herein by reference
to Exhibits 1, 4.1 and 4.2, respectively, to Registrant's Form
8-K dated July 13, 1995).
5 *
6 *
7 *
8 *
9 *
10(a) $1 Billion Three-Year Credit Agreement dated as of May 26,
1995.
10(b) Amendment No. 1, dated as of March 21, 1996, to $1 Billion
Three-Year Credit Agreement dated as of May 26, 1995.
11 Computation of Net Income (Loss) Per Common Share.
12 Computation of Ratio of Earnings to Fixed Charges.
13 *
14 *
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16
15 Letter re: Unaudited Interim Financial Statements.
16 *
17 *
18 *
19 *
20 *
21 *
22 *
23 *
24 *
25 *
26 *
27 Financial Data Schedule, which is submitted electronically
to the SEC for information only and not filed.
28 *
99 Independent Accountants' Review Report.
- ------------------------
* Not applicable
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Exhibits filed with this Form 10-Q:
Exhibit No.
10(a) $1 Billion Three-Year Credit Agreement dated as of May 26,
1995.
10(b) Amendment No. 1, dated as of March 21, 1996, to $1 Billion
Three-Year Credit Agreement dated as of May 26, 1995.
11 Computation of Net Income (Loss) Per Common Share.
12 Computation of Ratio of Earnings to Fixed Charges.
15 Letter re: Unaudited Interim Financial Statements.
27 Financial Data Schedule.
99 Independent Accountants' Review Report.