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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter ended September 30, 2001 Commission File Number 1-9335
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SCHAWK, INC.
(Exact name of Registrant
as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation or organization)
36-2545354
(I.R.S. Employer Identification No.)
1695 RIVER ROAD
DES PLAINES, ILLINOIS
(Address of principal executive office)
60018
(Zip Code)
847-827-9494
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12 (b) of the Act:
Title of Each Class Name of Exchange on Which Registered
- --------------------------------- ---------------------------------------
CLASS A COMMON STOCK, NEW YORK STOCK EXCHANGE
$.008 PAR VALUE
Indicated 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
--- ---
The number of shares outstanding of each of the issuer's classes of common stock
as of September 30, 2001, is: 21,420,180 shares, Common Stock, $.008 par value
DOCUMENTS INCORPORATED BY REFERENCE
Pursuant to the Securities Exchange Act of 1934 Release 15502 and Rule
240.03(b), the pages of this document have been numbered sequentially. The total
number of pages contained herein is 13.
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PART I
Schawk, Inc.
Consolidated Balance Sheets
(In Thousands)
SEPTEMBER 30, DECEMBER 31,
2001 2000
(UNAUDITED)
---------------------------
ASSETS
Current assets:
Cash and cash equivalents $ 235 $ 357
Trade accounts receivable, less allowance for doubtful accounts
of $944 at September 30, 2001 and $807 at December 31, 2000 41,432 40,420
Inventories 8,721 7,930
Prepaid expenses and other 5,316 4,986
Refundable income taxes 747 747
Deferred income taxes 1,236 1,236
---------------------------
Total current assets 57,687 55,676
Property and equipment less accumulated depreciation and amortization
of $73,558 at September 30, 2001 and $69,879 at December 31, 2000 47,151 44,197
Excess of cost over net assets acquired, less accumulated amortization
of $10,951 at September 30, 2001 and $9,335 at December 31, 2000 60,597 62,302
Other assets 4,229 5,688
---------------------------
Total assets $ 169,664 $ 167,863
===========================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable $ 3,565 $ 6,170
Accrued expenses 13,261 13,520
Income taxes payable 3,725 927
Notes payable to banks 7,574 13,220
Current portion of long-term debt and capital lease obligations 6,118 6,260
---------------------------
Total current liabilities 34,243 40,097
Long-term debt 53,000 48,000
Capital lease obligations -- 20
Other 1,536 1,687
Deferred income taxes 2,401 2,420
Minority interest in consolidated subsidiary 1,014 1,131
STOCKHOLDERS' EQUITY:
Common stock, $0.008 par value, 40,000,000 shares authorized, 23,259,681 and
23,062,811 shares issued at September 30, 2001 and December 31, 2000,
respectively; 21,420,180 and 21,362,993 shares outstanding at September 30,
2001 and December 31, 2000,
respectively 185 183
Additional paid-in capital 84,711 83,057
Retained earnings 14,769 11,276
Accumulated comprehensive loss, net (1,201) (415)
---------------------------
98,464 94,101
Treasury stock, at cost, 1,839,501 and 1,699,818 shares of Common
stock at September 30, 2001 and December 31, 2000, respectively (20,994) (19,593)
---------------------------
Total stockholders' equity 77,470 74,508
---------------------------
Total liabilities and stockholders' equity $ 169,664 $ 167,863
===========================
See accompanying notes.
2
Schawk, Inc.
Consolidated Statements of Operations
Three Months Ended September 30, 2001 and 2000
(Unaudited)
(In Thousands, Except Per Share Amounts)
2001 2000
--------------------
Net sales $ 47,182 $ 50,631
Cost of sales 28,339 29,975
Selling, general, and administrative expenses 13,507 13,110
Goodwill amortization 538 579
Restructuring and other charges 332 880
--------------------
Operating income 4,466 6,087
Other income (expense)
Interest and dividend income 1 5
Interest expense (1,033) (1,421)
Other income 37 1,209
--------------------
(995) (207)
--------------------
Income before income taxes and minority interest 3,471 5,880
Income tax provision 1,446 2,305
--------------------
Income before minority interest 2,025 3,575
Minority interest in net loss of subsidiary 86 --
--------------------
Net income $ 2,111 $ 3,575
====================
Earnings per share:
Basic $ 0.10 $ 0.17
Diluted $ 0.10 $ 0.17
Weighted average number of common and common
Equivalent shares outstanding 21,698 21,441
Dividends per common share $ 0.0325 $ 0.0325
See accompanying notes
3
Schawk, Inc.
Consolidated Statements of Operations
Nine Months Ended September 30, 2001 and 2000
(Unaudited)
(In Thousands, Except Per Share Amounts)
2001 2000
----------------------
Net sales $ 140,606 $ 158,228
Cost of sales 83,922 93,297
Selling, general, and administrative expenses 41,720 41,587
Goodwill amortization 1,616 1,736
Restructuring and other charges 1,017 880
----------------------
Operating income 12,331 20,728
Other income (expense)
Interest and dividend income 20 34
Interest expense (3,397) (4,307)
Other income 351 1,303
----------------------
(3,026) (2,970)
----------------------
Income before income taxes and minority interest 9,305 17,758
Income tax provision 3,848 7,443
----------------------
Income before minority interest 5,457 10,315
Minority interest in net loss of subsidiary 117 55
----------------------
Net income $ 5,574 $ 10,370
======================
Earnings per share:
Basic $ 0.26 $ 0.49
Diluted $ 0.26 $ 0.49
Weighted average number of common and common
equivalent shares outstanding 21,556 21,358
Dividends per common share $ 0.0975 $ 0.0975
See accompanying notes.
4
Schawk, Inc.
Consolidated Statements of Cash Flows
Nine Months Ended September 30, 2001 and 2000
(In Thousands)
2001 2000
--------------------
OPERATING ACTIVITIES
Net income $ 5,574 $ 10,370
Adjustments to reconcile net income to cash provided by (used in)
operating activities:
Depreciation and amortization 10,734 10,894
Deferred income taxes (19) (4)
Loss realized on sale of marketable securities -- 2
Gain realized on sale of equipment (491) (930)
Minority interest (117) (55)
Changes in operating assets and liabilities, net of effects from
acquisitions:
Trade accounts receivable (1,012) (3,290)
Inventories (791) (1,965)
Prepaid expenses and other (330) (473)
Trade accounts payable and accrued expenses (2,864) (3,174)
Income taxes refundable/payable 2,798 1,491
--------------------
Net cash provided by operating activities 13,482 12,866
INVESTING ACTIVITIES
Proceeds from sale of short term investments -- 3,602
Proceeds from sale of equipment 491 2,130
Proceeds from sale of divisions -- 1,332
Capital expenditures (11,508) (8,956)
Acquisitions, net of cash acquired (124) (1,127)
Other 401 (899)
--------------------
Net cash used in investing activities (10,740) (3,918)
FINANCING ACTIVITIES
Proceeds (payments) on short-term borrowings, net (5,788) 6,605
Proceeds from long term debt 11,000 --
Principal payments on debt (6,000) (14,370)
Principal payments on capital lease obligations (20) (445)
Common stock dividends (2,081) (2,067)
Purchase of treasury stock (1,419) --
Issuance of common stock 1,674 456
Other -- 98
--------------------
Net cash used in financing activities (2,634) (9,723)
--------------------
Effect of foreign currency exchange rate changes (230) --
--------------------
Net decrease in cash and cash equivalents (122) (775)
Cash and cash equivalents beginning of period 357 2,893
--------------------
Cash and cash equivalents end of period $ 235 $ 2,118
====================
SUPPLEMENTARY DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest $ 3,561 $ 3,640
Cash paid for income taxes 1,381 7,030
See accompanying notes.
5
Schawk, Inc.
Notes to Consolidated Interim Financial Statements
(Thousands of dollars, except per share data)
NOTE 1. BASIS OF PRESENTATION
The consolidated financial statements have been prepared pursuant to the rules
and regulations of the Securities and Exchange Commission. Certain information
and footnote disclosures normally included in annual financial statements
prepared in accordance with accounting principles generally accepted in the
United States have been condensed or omitted pursuant to such rules and
regulations, although Schawk, Inc. (the Company) believes the disclosures
included are adequate to make the information presented not misleading. In
addition, certain prior year amounts have been reclassified to conform to the
current year presentation. In the opinion of management, all adjustments
necessary for a fair presentation for the periods presented have been reflected
and are of a normal recurring nature. These financial statements should be read
in conjunction with the Company's consolidated financial statements and the
notes thereto for the three years ended December 31, 2000.
NOTE 2. INTERIM RESULTS
Results of operations for the interim periods are not necessarily indicative of
the results to be expected for the full year.
NOTE 3. DESCRIPTION OF BUSINESS
The Company is a leading provider of digital imaging prepress services for the
consumer products industry. The Company focuses on providing these services to
multi-national clients in three primary markets: consumer products packaging,
advertising agencies and promotion.
NOTE 4. RESTRUCTURING AND OTHER CHARGES
In the fourth quarter of the year ended December 31, 2000 the Company carried
out a restructuring plan (the 2000 Restructuring). The plan included the closing
of a small start-up in North Carolina, as well as staffing reductions at a
number of the Company's facilities. In the first and second quarters of 2001,
additional restructuring efforts were undertaken, including staff reduction and
the termination of a lease on a closed facility that resulted in restructuring
charges of $265 and $420, in the first and second quarters, respectively. In the
third quarter of 2001, an additional $332 restructuring charge was recorded
which consisted of $235 for severance payments to 34 employees whose positions
were eliminated and $97 for additional costs relating to a previously closed
facility. The $332 charge in the third quarter is classified as Restructuring
and other charges on the consolidated statement of operations.
The Company anticipates that additional restructuring and other charges will
occur in 2001 as the Company continues to restructure its operations. During the
first three quarters of 2001, $1,719 was charged against the restructuring
reserves established in 1999, 2000, and the first three quarters of 2001.
NOTE 5. INVENTORIES
Inventories consist of the following:
September 30 December 31
2001 2000
---- ----
Raw materials $2,454 $2,147
Work in process 7,255 6,771
------ ------
9,709 8,918
Less: LIFO reserve (988) (988)
------ ------
$8,721 $7,930
====== ======
6
NOTE 6. EARNINGS PER SHARE
Basic earnings per share and diluted earnings per share are shown on the face of
the statement of operations. Basic earnings per share is computed by dividing
net income by the weighted average shares outstanding for the period. Diluted
earnings per share is computed by dividing net income by the weighted average
number of common shares and common stock equivalent shares outstanding (stock
options) for the period.
The following table sets forth the computation of basic and diluted earnings per
share:
Three months ended September 30
-------------------------------
2001 2000
---------- -------------
Income available for common shareholders $ 2,111 $ 3,575
======= =======
Weighted average shares 21,405 21,323
Effect of dilutive stock options 293 118
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Adjusted weighted average shares and
assumed conversions 21,698 21,441
======= =======
Basic earnings per share $ 0.10 $ 0.17
======= =======
Diluted earnings per share $ 0.10 $ 0.17
======= =======
Nine months ended September 30
------------------------------
2001 2000
------------------------------
Income available for common shareholders $ 5,574 $10,370
======= =======
Weighted average shares 21,381 21,301
Effect of dilutive stock options 175 57
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Adjusted weighted average shares and
assumed conversions 21,556 21,358
======= =======
Basic earnings per share $ 0.26 $ 0.49
======= =======
Diluted earnings per share $ 0.26 $ 0.49
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NOTE 7. SEGMENT REPORTING
The Company operates in a single business segment, Imaging and Information
Technologies. The Company operates primarily in two geographic areas, the United
States and Canada. Summary financial information by geographic area is as
follows:
Three months ended September 30
--------------------------------------------------------
2001 United States Canada Other Foreign Total
- ---- ------------- -------- ------------- --------
Sales $ 38,887 $ 6,190 $ 2,105 $ 47,182
Long-lived assets 87,570 16,213 8,194 111,977
Three months ended September 30
--------------------------------------------------------
2000 United States Canada Other Foreign Total
- ---- ------------- ------ ------------- ---------
Sales $ 40,037 $ 8,496 $ 2,098 $ 50,631
Long-lived assets 89,897 17,136 6,487 113,520
7
Nine months ended September 30
--------------------------------------------------------
2001 United States Canada Other Foreign Total
- ---- ------------- ------ ------------- ---------
Sales $112,534 $21,188 $ 6,884 $140,606
Long-lived assets 87,570 16,213 8,194 111,977
Nine months ended September 30
--------------------------------------------------------
2000 United States Canada Other Foreign Total
- ---- ------------- ------ ------------- ---------
Sales $121,925 $30,918 $ 5,385 $158,228
Long-lived assets 89,897 17,136 6,487 113,520
NOTE 8. COMPREHENSIVE INCOME
Statement of Financial Accounting Standards 130 (SFAS 130) requires unrealized
gains and losses on the Company's available-for-sale securities and foreign
currency translation adjustments to be included in comprehensive income. During
the nine months ended September 30, 2000, the Company liquidated all of its
remaining available-for-sale securities.
The following table sets forth the components of comprehensive income, net of
related tax:
Three months ended September 30
-----------------------------------
2001 2000
---------- ----------
Net income $ 2,111 $ 3,575
Foreign currency translation adjustments (803) 53
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Comprehensive income $ 1,308 $ 3,628
======= =======
Nine months ended September 30
-----------------------------------
2001 2000
---------- ----------
Net income $5,574 $10,370
Foreign currency translation adjustments (786) 54
------- ---------
Comprehensive income $4,788 $10,424
======= =========
The components of accumulated comprehensive loss, net of related tax as of
September 30, 2001 and September 30, 2000 consisted entirely of foreign currency
translation adjustments.
NOTE 9. GOODWILL AND OTHER INTANGIBLE ASSETS
In June 2001, the Financial Accounting Standards Board issued Statements of
Financial Accounting Standards No. 141, Business Combination, and No. 142
Goodwill and Other Tangible Assets, effective for fiscal years beginning after
December 15, 2001. Under the new rules, goodwill [and intangible assets deemed
to have indefinite lives] will no longer be amortized but will be subject to
annual impairment tests in accordance with the Statements. Other intangible
assets will continue to be amortized over their useful lives.
The Company will apply the new rules on accounting for goodwill and other
intangible assets beginning in the first quarter of 2002. Application of the
nonamoritization provisions of the Statement is expected to result in an
increase in net income of approximately $1,225 ($0.06 per share) per year.
During 2002, the Company will perform the first of the required impairment tests
of goodwill and indefinite lived intangible assets as of January 1, 2002 and has
not yet determined what the effect of these tests will be on the earnings and
financial position of the Company.
8
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
(Thousands of dollars, except per share amounts)
Certain statements contained herein that relate to the Company's beliefs or
expectations as to future events relating to, among other things, an improvement
in operating results as a result of the Company's restructuring efforts and an
improvement in the market for the Company's services in the future, are not
statements of historical fact and are forward-looking statements within the
meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act
and are subject to the "Safe Harbor" created thereby. Although the Company
believes that the assumptions upon which such forward-looking statements are
based are reasonable within the bounds of its knowledge of the market for its
services and its business and operations, it can give no assurance the
assumptions will prove to have been correct. Important factors that could cause
actual results to differ materially and adversely from the Company's
expectations and beliefs include, among other things, weakness in demand for
graphics design changes and advertisements in the consumer products industry,
the continued demand for Schawk's services, retention of key management and
operational personnel, the ability of the Company to implement its growth
strategy, the stability of state, federal and foreign tax laws, the ability of
the Company to identify and exploit industry trends and to exploit technological
advances in the imaging industry, as well as other factors detailed in the
Company's filings with the Securities and Exchange Commission.
THREE MONTHS ENDED SEPTEMBER 30, 2001 DISCUSSION
NET SALES of $47,182 for the third quarter of 2001 decreased 6.8% from net sales
of $50,631 in the third quarter of 2000. The decrease in revenues reflected the
soft economy both in consumer products packaging spending and advertising
spending.
COST OF SALES as a percentage of net sales for the third quarter of 2001
increased to 60.0% from 59.2% for the comparable period in the prior year. Given
the fact that net sales dropped 6.8%, a small increase in cost of sales is a
positive result relative to the sales drop. The small increase in the cost of
sales percentage indicates that the cost cutting moves through its
restructurings over the past two years are having a positive effect.
OPERATING INCOME before restructuring charges of $332 and the loss at
InterchangeDigital of $537 in the third quarter of 2001 decreased 28% to $5,335
from $7,415 on a comparable basis for the same period in 2000. The decrease
primarily resulted from lower net sales and losses at start-up operations other
than InterchangeDigital. Sequentially, operating income before restructuring
charges and the loss at InterchangeDigital, in the third quarter of 2001,
increased $46 or 0.8% from $5,289 in the second quarter of 2001 on the same
basis.
Selling, general and administrative (SG&A) expenses for the third quarter of
2001 increased by $397 as compared to the prior year third quarter. The increase
was primarily due to higher expenses at the corporate office to support the
growth of the company and the centralizing of computer systems, including
computer hardware and software depreciation and amortization, telecommunication
costs, and higher advertising and promotion costs. In addition, start-up costs
of $285 were incurred to establish a state-of-the-art studio in downtown Chicago
to support the packaging, advertising agency and promotional markets. Excluding
increased costs at corporate and start-up costs at the Chicago facility, SG&A
would have actually decreased approximately $900 or 6.9% versus the prior year
third quarter. SG&A expenses as a percentage of net sales increased to 28.6% of
sales for the third quarter of 2001 from 25.9% for the comparable prior year
period. The increased percentage was a function of lower net sales and higher
SG&A as described above.
RESTRUCTURING CHARGES:
Included in operating income for the three months ended September 30, 2001 is a
restructuring charge of $332. This charge consisted of severance costs for
positions eliminated in the third quarter of 2001 of $235 and a $97 charge
related to a previously closed facility. The layoffs were in connection with the
Company's continuing restructuring efforts to adjust the size of its workforce
to a level that will increase productivity rates in the future. In the prior
year period there was $880 of net restructuring charges for the primarily for
the relocation and downsizing of one operation into another in Toronto.
OTHER INCOME (EXPENSE) - NET increased to $995 of net expense for the third
quarter of 2001 compared with $207 of net expense for the same period of 2000.
The increase consisted of $1,172 of lower other income, primarily from lower net
gains on the sale of equipment as compared to the prior year period offset by
$384 of lower
9
interest expense (net of interest income) for the third quarter of 2001 as
compared to the prior year period. The decrease in interest expense primarily
resulted from lower interest rates in 2001 as approximately 64% of the Company's
debt was at floating rates during the third quarter of 2001.
INCOME BEFORE INCOME TAXES AND MINORITY INTEREST, restructuring charges and the
pretax loss from InterchangeDigital decreased to $4,340 for the third quarter of
2001 from $7,208 for the same period of 2000 on a comparable basis for the
reasons previously discussed.
INCOME TAX PROVISION increased to 41.7% of pretax income during the third
quarter of 2001 versus 39.2% for the comparable prior year period. The increase
in the effective tax rate is primarily attributable to a lower than normal rate
in 2000 that was necessary to adjust the year to date rate for the nine months
ended September 30, 2000.
NET INCOME decreased to $2,111 for the third quarter of 2001 from $3,575 for the
same period of 2000 for the reasons previously discussed. Sequentially, net
income increased from $2,060 in the second quarter of 2001 to $2,111 in the
third quarter of 2001 for reasons previously mentioned.
BASIC AND DILUTED EARNINGS PER SHARE was $0.10 for the third quarter of 2001
compared with $0.17 for the same period in 2000. Excluding the restructuring
charges and the net loss at InterchangeDigital, earnings per share was $0.12 for
the third quarter of 2001 versus $0.20 for the prior year third quarter on a
comparable basis.
NINE MONTHS ENDED SEPTEMBER 30, 2001 DISCUSSION
NET SALES of $140,606 for the nine-month period ended September 30, 2001
decreased 11.1% from net sales of $158,228 in the comparable prior year period.
Excluding $1,898 sales from 2000's results for the Montreal operations, which
were sold June 1, 2000, and excluding $3,571 of print sales from 2000's results
that did not recur as a result of the sale of all printing presses in Toronto in
August 2000, sales actually dropped 7.9% on a comparable basis.
NET INCOME for the nine months ended September 30, 2001 was $5,574 as compared
to $10,370 for the comparable period of the prior year. The decrease in net
income was from a combination of lower sales, higher SG&A expenses, increased
restructuring charges and lower one-time gains on the sale of equipment than in
the prior year to date period. The explanations for these items are included
above in the third quarter discussion.
BASIC AND DILUTED EARNINGS PER SHARE was $0.26 per share for the nine months
ended September 30, 2001 as compared to $0.49 per share for the comparable prior
year period. The decrease in earnings per share was due to the lower sales and
other factors described above in the third quarter discussion.
LIQUIDITY AND CAPITAL RESOURCES
The Company presently finances its business from available cash held by the
Company and from cash generated from operations. The Company maintains a $65,000
unsecured credit facility, which expires in May 2004, of which approximately
$30,000 was available for borrowings at September 30, 2001. This facility is
subject to certain financial covenants that require the Company to maintain
certain levels of net worth, working capital, and certain other financial
ratios. In addition, the Company maintains a $15,000 unsecured line of credit to
provide financing and working capital flexibility. The line of credit is due on
demand. As of September 30, 2001, approximately $8,400 was available under the
line of credit. The Company also maintains working capital demand lines of
credit in Canada (US $3,500) and Malaysia (US $800).
Cash from operating activities of $13,482 increased by approximately $616 for
the nine month period ended September 30, 2001 versus the comparable period of
the prior year primarily due to lower net sales and profits as discussed above.
At September 30, 2001, outstanding debt of the Company consisted of: (i)
unsecured notes issued pursuant to a Note Purchase Agreement dated August 18,
1995, with $24,000 remaining to be paid in $6,000 annual installments from 2002
through 2005 at an interest rate of 6.98%; and (iii) $35,000 of borrowings under
the Company's unsecured credit facility; and (ii) approximately US $6,600 of
borrowings under the Company's US line of credit and zero and US $974
outstanding on the Canadian and Malaysian lines of credit, respectively.
10
Capital expenditures of $2,703 were made during the third quarter of 2001.
Depreciation and amortization for the third quarter of 2001 totaled $3,451.
During the nine months ended September 30th, pursuant to an existing
authorization from the Board of Directors, the Company purchased $1,419 of
treasury stock.
Management believes that the level of working capital and the cash generated
from operations is adequate for the Company's liquidity needs related to normal
operations, both currently and in the foreseeable future, and that the Company
has sufficient resources to support its moderate near-term growth, either
through cash generated from future operations or through availability under its
financing arrangements. Company management also believes that if additional
financing is required to take advantage of growth opportunities, such financing
could be achieved at reasonable cost given the Company's historically strong
cash flows.
SEASONALITY
With respect to consumer products packaging, the prepress market is not
currently seasonal. On the other hand, there is generally a three to four year
cycle for major design changes that the Company has experienced in the last six
years resulting in greater volumes in certain years followed by more modest
volumes in subsequent years.
With respect to the advertising and promotional markets, some seasonality exists
in that the months of December and January are typically the slowest of the year
because advertising agencies and their clients typically finish their work by
mid-December and don't start up again until mid-January. In addition,
advertising and promotion is generally cyclical as the consumer economy is
cyclical. In general, when consumer spending and GDP decreases ad pages decline.
Consequently, when ad pages decline the Company's advertising and promotion
business declines.
IMPACT OF INFLATION
The Company believes that over the past three years inflation has not had a
significant impact on the Company's results of operations.
11
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities indicated on the 2nd day of November, 2001.
SCHAWK, INC.
- ---------------------------------------------
(Registrant)
/s/ David A. Schawk
- ---------------------------------------------
President, Chief Executive Officer and
Director
/s/ James J. Patterson
- ---------------------------------------------
Senior Vice President and Chief Financial
Officer
12