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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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 June 30, 1996
or
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
------- -------
Commission file number 0-28256
OUTDOOR SYSTEMS, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 86-0736400
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(State or other jurisdiction of incorporation) (I.R.S. Employer Identification No.)
2502 N. BLACK CANYON HIGHWAY, PHOENIX, ARIZONA 85009
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (602) 246-9569
--------------
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
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Number of Common Shares outstanding at July 16, 1995: 12,053,598 SHARES.
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CONTENTS
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheets June 30, 1996 (unaudited) and
December 31, 1995.................................................................. 1
Condensed Consolidated Statements of Operations for the Three and Six Months ended
June 30, 1996 and 1995 (unaudited)................................................. 2
Condensed Consolidated Statements of Cash Flows Six Months ended
June 30, 1996 and 1995 (unaudited)................................................. 3
Notes to Condensed Consolidated Financial Statements..................................... 4
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.......................................... 6
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K................................................... 9
SIGNATURES ................................................................................. 10
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PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
OUTDOOR SYSTEMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
JUNE 30, DECEMBER 31,
1996 1995
--------- -----------
(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents $ 2,655 $ 1,739
Accounts receivable, net 9,649 10,971
Prepaid expenses and other 2,766 2,719
--------- ---------
Total current assets 15,070 15,429
--------- ---------
Property and Equipment, net 112,457 111,729
Perpetual Land Easement 23,674
Prepaid Land Leases and Other 1,597 1,525
Deferred Financing Costs 3,920 4,275
Deferred Income Taxes 3,827 5,255
--------- ---------
$ 160,545 $ 138,213
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
Current Liabilities:
Accounts payable $ 193 $ 642
Accrued interest 4,714 4,843
Accrued commissions 413 483
Accrued expenses and other liabilities 956 690
Unearned revenue 739
Current maturities of long-term debt 173 550
--------- ---------
Total current liabilities 7,188 7,208
Long-term Debt 138,460 141,719
Other Long-term Obligations 4,473 984
--------- ---------
Total liabilities 150,121 149,911
--------- ---------
Common Stock - Subject to Put Option 3,420
---------
Redeemable Preferred Stock:
Exchangeable preferred stock 3,504
Class A preferred stock 5,526
Class B preferred stock 4,619
---------
Total redeemable preferred stock 13,649
---------
Common Stockholders' Equity (Deficiency) 10,424 (28,767)
--------- ---------
$ 160,545 $ 138,213
========= =========
See notes to condensed consolidated financial statements.
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OUTDOOR SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
THREE MONTHS SIX MONTHS
ENDED ENDED
JUNE 30 JUNE 30,
------------------------------- -------------------------------
1996 1995 1996 1995
------------ ------------ ------------ ------------
REVENUES:
Outdoor advertising $ 22,207 $ 18,315 $ 41,929 $ 34,209
Less agency commissions and discounts 2,923 2,336 5,700 4,471
------------ ------------ ------------ ------------
19,284 15,979 36,229 29,738
Other income 298 298
------------ ------------ ------------ ------------
Net Revenues 19,582 15,979 36,527 29,738
------------ ------------ ------------ ------------
OPERATING EXPENSES:
Direct advertising 8,292 7,354 16,151 14,596
General and administrative 1,135 1,016 2,213 2,007
Depreciation and amortization 2,698 2,481 5,259 4,958
------------ ------------ ------------ ------------
12,125 10,851 23,623 21,561
------------ ------------ ------------ ------------
Operating income 7,457 5,128 12,904 8,177
INTEREST EXPENSE 3,777 4,703 7,929 9,017
------------ ------------ ------------ ------------
Income (loss) before items set forth below 3,680 425 4,975 (840)
INCOME TAX PROVISION 1,472 1,990
------------ ------------ ------------ ------------
Income (loss) before extraordinary loss 2,208 425 2,985 (840)
EXTRAORDINARY LOSS 844 844
------------ ------------ ------------ ------------
Net income (loss) $ 1,364 $ 425 $ 2,141 $ (840)
============ ============ ============ ============
LESS STOCK DIVIDENDS,
ACCRETIONS AND DISCOUNTS
ON REDEMPTIONS 2,554 608 3,461 1,195
------------ ------------ ------------ ------------
NET LOSS ATTRIBUTABLE TO
COMMON SHAREHOLDERS $ (1,190) $ (183) $ (1,320) $ (2,035)
============ ============ ============ ============
NET LOSS PER COMMON AND
EQUIVALENT SHARE:
Loss before extraordinary loss $ (.03) $ (.02) $ (.05) $ (.18)
Extraordinary loss (.07) (.08)
------------ ------------ ------------ ------------
Net loss per common share $ (.10) $ (.02) $ (.13) $ (.18)
============ ============ ============ ============
Weighted average number of shares 11,376,895 11,222,976 10,382,078 11,222,976
============ ============ ============ ============
See notes to condensed consolidated financial statements.
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OUTDOOR SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
SIX MONTHS
ENDED
JUNE 30,
-----------------------
1996 1995
-------- --------
OPERATING ACTIVITIES:
Net (loss) income $ 2,141 $ (840)
Extraordinary loss 844
Decrease in deferred taxes 1,428
Amortization of discounts on notes payable 912 177
Depreciation and amortization 5,259 4,958
Changes in assets and liabilities:
Decrease in accounts receivable 1,322 3,697
Decrease in prepaid expenses and other 210 196
Increase (decrease) in accrued interest (123) 7
Increase (decrease) in accounts payable and other liabilities 566 (1,078)
-------- --------
Net Cash Provided by Operating Activities 12,559 7,117
-------- --------
INVESTING ACTIVITIES:
Investment in bus benches (1,817)
Capital expenditures (2,891) (4,251)
Acquisition of perpetual easements (21,525)
-------- --------
Net Cash Used in Investing Activities (26,233) (4,251)
-------- --------
FINANCING ACTIVITIES:
Proceeds from long-term debt 28,353 5,500
Principal payments on long-term debt and capital leases (33,744) (10,011)
Cash dividends paid on preferred stock (293) (416)
Redemption of preferred and exchangeable preferred stock (16,369)
Initial public offering 36,643
-------- --------
Net Cash Provided by (Used in) Financing Activities 14,590 (4,927)
-------- --------
NET (DECREASE) INCREASE IN CASH AND CASH
EQUIVALENTS 916 (2,061)
CASH AND CASH EQUIVALENTS - BEGINNING 1,739 3,658
-------- --------
CASH AND CASH EQUIVALENTS - ENDING $ 2,655 $ 1,597
======== ========
See notes to condensed consolidated financial statements.
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OUTDOOR SYSTEMS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form 10-Q and
Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the
information and notes required by generally accepted accounting principles for
complete financial statements. In the opinion of Management, all adjustments and
reclassifications considered necessary for a fair and comparable presentation
have been included and are of a normal recurring nature. Operating results for
the three and six months ended June 30, 1996, are not necessarily indicative of
the results that may be expected for the year ending December 31, 1996. The
enclosed financial statements should be read in conjunction with the
consolidated financial statements and notes thereto included in the Company's
Form 10-K/A2 filed with the Securities Exchange Commission on March 31, 1996.
NOTE 2 - NET LOSS PER SHARE
Primary loss per common and common equivalent share is computed on the
weighted average number of common shares outstanding during each year and
includes shares issuable upon exercise of stock options when the effect of such
issuance is dilutive. Such amounts have been adjusted to reflect the
36.4535-for-1 stock split as discussed in Note 4.
NOTE 3 - STOCKHOLDERS' EQUITY (DEFICIENCY)
JUNE DECEMBER
30, 31,
1996 1995
-------- --------
(Dollars in thousands)
Common stock, $.01 par value - authorized, 60,000,000 shares; issued,
17,153,796 and 14,476,377 shares; outstanding, 12,053,598
and 9,376,179 shares $ 120 $ 4
Additional paid in capital 34,047
Accumulated deficit (19,690) (24,718)
Treasury stock at cost, 5,100,198 shares (4,053) (4,053)
-------- --------
$ 10,424 $(28,767)
======== ========
NOTE 4 - INITIAL PUBLIC OFFERING
On April 24, 1996, the Company completed an initial public offering
("IPO") of its common stock. The holders of the Common Stock Subject to Put
Option sold their shares in the IPO, resulting in the removal of the put option.
The removal of the put option resulted in the liability representing the Common
Stock Subject to Put Option being credited to stockholders' equity. The Company
utilized a portion of the net proceeds from the IPO to redeem at par or face
value all of the outstanding Class A Preferred Stock and the 1990 Subordinated
Notes which are also held by these shareholders. The Company utilized the
remaining portion of the net proceeds to redeem at par value all of the
outstanding Class B Preferred Stock, the Junior Subordinated Exchange Notes, and
repay $17.0 million of the Senior Credit Facility.
In connection with the IPO, the Company's Board of Directors adopted a
resolution which on April 17, 1996, increased the authorized number of common
shares to 60,000,000 and split the common stock 36.4535 for 1. In addition, the
Board of Directors authorized the issuance of 12,000,000 shares of preferred
stock, the terms of which will be designated at the time of issuance. All per
share information in these financial statements has been adjusted to give effect
to this split.
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Additionally, in connection with the IPO, effective January 1, 1996,
the Company ceased allocating amounts to the accounts maintained under the
Incentive Plan. The Company offered to each current employee who was a
participant in the Incentive Plan the alternative of having their account
settled upon completion of the IPO in cash, in shares of the Common Stock of the
Company, or both, with actual distributions of cash or Common Stock to be made
over a period of four years upon termination of the participant's employment by
reason of the participant's death, disability, reaching 65 years of age or for
any other reason. All participants elected to settle their accounts in shares of
common stock, and the Company has reserved 104,531 shares of common stock to be
distributed as discussed above. Those portions of accounts under the Incentive
Plan that were not accrued as a liability as of January 1, 1996, aggregating $.6
million, will be charged to expense over a four-year period following
settlement.
Upon completion of the IPO, the Company issued options for 807,516
common shares to key employees at an exercise price equal to the IPO price. Such
options will vest over a four year period.
NOTE 5 - STOCK SPLIT
On June 27, 1996, the Board of Directors authorized a three-for-two
stock split in the form of a stock dividend payable on July 22, 1996 to holders
of record July 8, 1996.
NOTE 6 - ACQUISITIONS
On May 22, 1996, the Company completed the acquisition of perpetual
easements from CSX Realty Development Corporation for $21.6 million in cash and
certain future payments in an aggregate amount not to exceed $10.0 million
payable over a period of ten years beginning no later than the year 2006 with
the exact amount and timing to be determined based upon the results of the
Company's operations of the easements. The perpetual easements are located on
real property interests of CSX for the purpose of licensing rights to operate
outdoor advertising displays which are leased to independent outdoor advertising
companies and will be amortized on a straight line basis over 40 years.
NOTE 7 - SUBSEQUENT EVENT
On July 9, 1996, the Company entered into an Asset Purchase Agreement
(the "Asset Purchase Agreement") with Gannett Co., Inc. and certain of its
subsidiaries (collectively, "Gannett"), providing for the purchase (the
"Acquisition") by the Company of substantially all of the assets of the Outdoor
Division (the "Division") of Gannett for a purchase price of $640 million in
cash, plus the net book value of working capital and certain other specified
assets of the Division (which net book value is estimated to increase the
purchase price by approximately $50 million). In addition, pursuant to the Asset
Purchase Agreement, Gannett Outdoor Co. of Texas, Inc. ("Gannett of Texas") will
grant to the Company an option (the "Option"), to purchase, within 120 days
after the closing of the Acquisition, Gannett of Texas' outdoor operations in
Houston, Texas, for a purchase price of $10 million, plus a net book value
adjustment similar to the adjustment to the purchase price of the Division.
Pursuant to the Asset Purchase Agreement, the Company made a deposit to Gannett
consisting of $12 million cash and a promissory note in the principal amount of
$3 million payable on July 29, 1996, and guaranteed by William S. Levine,
Chairman of the Board and principal shareholder of the Company. The deposit will
be credited against the purchase price if the Acquisition is consummated,
returned to the Company if the Acquisition is not consummated as a result of a
breach by Gannett, retained by Gannett if the transaction is not consummated as
a result of a breach by the Company, and split equally between the Company and
Gannett if the Acquisition is not completed because of the action of a third
party outside of either party's control. The consummation of the transactions
contemplated by the Asset Purchase Agreement is subject to certain conditions
including the expiration or early termination of the waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. The Company
will finance the purchase price of the Acquisition, the fees and expenses
associated with the Acquisition and the related financing and the retirement or
refinancing of certain existing indebtedness through (i) revolving credit and
term loans of up to $530 million under a senior credit facility, (ii) bridge
loans of up to $240 million under a senior subordinated facility, and (iii) up
to $165 million in proceeds from a private placement of preferred stock and
warrants, all pursuant to agreements entered into on July 9, 1996.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
RESULTS OF OPERATIONS
COMPARISON OF THREE MONTHS ENDED JUNE 30, 1996 AND
JUNE 30, 1995
Gross revenues increased 21.3% to $22.2 million during the second
quarter of 1996 compared to $18.3 million in the second quarter of 1995. This
increase was attributable primarily to a general increase in revenues and
partially to revenues from the acquisition of bus benches and to revenues from
license fees from the acquisition of perpetual easements.
Agency commissions were 13.2% and 12.8% of gross revenues in the second
quarter of 1996 and the second quarter of 1995, respectively, primarily as a
result of a slightly higher proportion of revenues generated through advertising
agencies.
Net revenues, including recurring revenues from use licenses acquired
with perpetual easements in May, 1996, increased by 22.5% to $19.6 million
compared to $16.0 million in the second quarter of 1996 and 1995, respectively,
primarily as a result of the increase in gross revenues.
Direct advertising expenses decreased by 3.7% as a percentage of net
revenues to 42.3% compared to 46.0% in the second quarter of 1996 compared to
the second quarter of 1995. This was primarily a result of increased net revenue
coverage of fixed costs included in direct advertising expenses.
General and administrative expenses decreased to 5.9% compared to 6.4%
as a percentage of net revenues for the second quarter of 1996 as compared to
the second quarter of 1995. This decrease was due primarily to increased net
revenue coverage of fixed costs included in general and administrative expenses.
Operating Cash Flow increased by 33.5% to $10.2 million compared to
$7.6 million for the second quarter of 1996 and 1995, respectively, as a result
of the above factors. Management believes Operating Cash Flow, which is
operating income before depreciation and amortization, is a measure commonly
reported and widely used by analysts, investors and other interested parties in
the media industry as a measure of a media company's operating performance
because it assists in comparing media company performance on a consistent basis
without regard to depreciation and amortization, which can vary significantly
depending upon accounting methods and the capitalization of individual
companies.
Depreciation and amortization expense increased by 8.7% to $2.7 million
compared to $2.5 million in the second quarter of 1996 and 1995, respectively,
primarily due to depreciation expense associated with a small acquisition in the
Denver market in April 1996, and amortization expense associated with the May
1996 acquisition of perpetual easements in the Atlanta market.
Interest expense decreased by 19.7% to $3.8 million in the second
quarter of 1996 from $4.7 million in the second quarter of 1995, primarily
because of the repayment of subordinated notes and the repayment of borrowings
under the Senior Credit Facility as a result of the initial public offering
completed in April 1996.
Income before income taxes and extraordinary loss increased to $3.7
million in the second quarter of 1996 compared to $.4 million in the second
quarter of 1995, primarily due to increased revenues and decreased interest
expense.
The Company recorded an income tax provision of approximately $1.5
million in the second quarter of 1996 compared to no income tax provision for
the second quarter of 1995. The Company reported a $.8 million extraordinary
loss, net of $.6 million tax benefit, in the second quarter of 1996 resulting
from the redemption of subordinated notes.
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The foregoing factors contributed to the Company's $1.4 million net
income in the second quarter of 1996 compared to $.4 million in the second
quarter of 1995.
COMPARISON OF SIX MONTHS ENDED JUNE 30, 1996 AND
JUNE 30, 1995
Gross revenues increased 22.6% to $41.9 million during the first six
months of 1996 compared to $34.2 million in the first six months of 1995. This
increase was attributable to increased revenue in all markets, particularly in
Atlanta where the Company has experienced continued growth since its acquisition
of the Atlanta operation in late December 1994, and partially to revenues from
the acquisition of bus benches and to revenues from license fees from the
acquisition of perpetual easements.
Agency commissions were 13.6% and 13.1% of gross revenues in the first
six months of 1996 and the first six months of 1995, respectively, primarily as
a result of a slightly higher proportion of revenues generated through
advertising agencies.
Net revenues, including recurring revenues from use licenses acquired
with perpetual easements in May, 1996, increased by 22.8% to $36.5 million
compared to $29.7 million in the first six months of 1996 and 1995,
respectively, primarily as a result of the increase in gross revenues.
Direct advertising expenses decreased by 4.9% as a percentage of net
revenues to 44.2% compared to 49.1% in the first six months of 1996 compared to
the first six months of 1995. This was primarily a result of increased net
revenue coverage of fixed costs included in direct advertising expenses.
General and administrative expenses decreased to 6.1% compared to 6.7%
as a percentage of net revenues for the first six months of 1996 as compared to
the first six months of 1995. This decrease was due primarily to increased net
revenue coverage of fixed costs included in general and administrative expenses.
Operating Cash Flow increased by 38.3% to $18.2 million compared to
$13.1 million for the first six months of 1996 and 1995, respectively, as a
result of the above factors. Management believes Operating Cash Flow, which is
operating income before depreciation and amortization, is a measure commonly
reported and widely used by analysts, investors and other interested parties in
the media industry as a measure of a media company's operating performance
because it assists in comparing media company performance on a consistent basis
without regard to depreciation and amortization, which can vary significantly
depending upon accounting methods and the capitalization of individual
companies.
Depreciation and amortization expense increased by 6.1% to $5.3 million
compared to $5.0 million in the first six months of 1996 and 1995, respectively,
primarily due to depreciation expense associated with small acquisitions in New
Orleans and Atlanta in the last half of 1995 and in Denver in April 1996, and
amortization expense associated with the May 1996 acquisition of perpetual
easements in the Atlanta market.
Interest expense decreased by 12.1% to $7.9 million in the first six
months of 1996 from $9.0 million in the first six months of 1995, primarily
because of the repayment of subordinated notes and the repayment of borrowings
under the Senior Credit Facility as a result of the initial public offering
completed in April 1996.
Income before income taxes and extraordinary loss increased to $5.0
million in the first six months of 1996 compared to a loss of $.8 million in the
first six months of 1995, primarily due to increased revenues and decreased
interest expense.
The Company recorded an income tax provision of approximately $2.0
million in the first six months of 1996 compared to no income tax benefit for
the first six months of 1995. The Company reported a $.8 million extraordinary
loss, net of $.6 million tax benefit, in the first six months of 1996 resulting
from the redemption of subordinated notes.
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The foregoing factors contributed to the Company's $2.1 million net
income in the first six months of 1996 compared to a net loss of $.8 million in
the first six months of 1995.
LIQUIDITY AND CAPITAL RESOURCES
The Company's working capital decreased $.3 million to $7.9 million at
June 30, 1996 compared to $8.2 million at December 31, 1995. This decrease
resulted primarily from a reduction in accounts receivable as a result of
improved collection efforts, the proceeds of which were used to reduce the
amount outstanding under the Senior Credit Facility.
Net cash provided by operating activities increased by $5.5 million to
$12.6 million for the six months ended June 30, 1996, compared to $7.1 million
for the six months ended June 30, 1995, primarily due to higher income in the
first six months of 1996. Net cash used in investing activities increased to
$26.2 million in the first six months of 1996 from $4.3 million in the first six
months of 1995, primarily because of the investment in bus benches in Denver and
the acquisition of perpetual easements in Atlanta in 1996. Net cash provided by
financing activities was $14.6 million for the first six months of 1996 compared
to net cash used in financing activities of $4.9 million for the first six
months of 1995, primarily because of borrowings under the Senior Credit Facility
used to finance the acquisition of perpetual easements and because of the
completion of an initial public offering in April 1996.
The Company made approximately $2.9 million of capital expenditures
during the first six months of 1996, a decrease from approximately $4.3 million
during the first six months of 1995. Currently, the Company has no material
commitments for capital expenditures, although it expects ongoing capital
expenditures in the ordinary course of business to continue in amounts not
materially greater than the amounts of such capital expenditures in prior
periods.
The Company completed an initial public offering ("IPO") of 2,677,392
shares of its common stock on April 24, 1996, resulting in net proceeds to the
Company of $37.3 million. The holders of the Common Stock Subject to Put Option
sold their shares with the completion of the IPO, resulting in the removal of
the put option. The removal of the put option resulted in the liability
representing the Common Stock Subject to Put Option being credited to
stockholders' equity. The Company utilized a portion of the net proceeds from
the IPO to redeem at par or face value all of the outstanding Class A Preferred
Stock and the 1990 Subordinated Notes which were also held by these
shareholders. The Company utilized the remaining portion of the net proceeds to
redeem at par value all of the outstanding Class B Preferred Stock, the Junior
Subordinated Exchange Notes, and repay $17.0 million of the Senior Credit
Facility.
The Company believes that the net proceeds from its IPO, internally
generated funds, and available borrowings under the Senior Credit Facility will
be sufficient to satisfy its operating cash requirements for at least the next
twelve to twenty-four months. The Company also expects that it will be able to
renew its Senior Credit Facility when it comes due. The Company may, however,
require additional capital to consummate significant acquisitions in the future
and there can be no assurance that such capital will be available.
SUBSEQUENT EVENT
See Note 7 to Financial Statements for information concerning the
agreement to acquire substantially all of the assets of the Outdoor Division of
Gannett Co., Inc. and related financing.
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PART II
OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibits are filed herewith:
Exhibit No. Document
----------- --------
27. Financial Data Schedule
(b) Reports on Form 8-K.
The Company filed a Form 8-K dated May 22, 1996, reporting the
acquisition of perpetual easements from CSX Realty Development
Corporation.
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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.
OUTDOOR SYSTEMS, INC.
DATED: July 16, 1996 By /S/ Bill Beverage
---------------------------------------------------
Bill Beverage,Chief Financial Officer/
Secretary/Treasurer
(Principal Accounting Officer)
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