FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the quarterly period ended May 4, 2002.
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the transition period from to .
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Commission file number 001-14565
FRED'S, INC.
(Exact name of registrant as specified in its charter)
Tennessee 62-0634010
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4300 New Getwell Rd., Memphis, Tennessee 38118
(Address of principal executive offices) (zip code)
(901) 365-8880
(Registrant's telephone number, including area code)
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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The registrant had 25,550,172 shares of Class A voting, no par value common
stock outstanding as of June 7, 2002.
FRED'S, INC.
INDEX
Page No.
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Part I - Financial Information
Item 1 - Financial Statements (unaudited):
Consolidated Balance Sheets as of
May 4, 2002 and February 2, 2002 3
Consolidated Statements of Income
for the Thirteen Weeks Ended May 4, 2002
and May 5, 2001 4
Consolidated Statements of Cash Flows
for the Thirteen Weeks Ended May 4, 2002
and May 5, 2001 5
Notes to Consolidated Financial Statements 6
Item 2 - Management's Discussion and
Analysis of Financial Condition and
Results of Operations 7 - 10
Item 3 - Quantitative and Qualitative Disclosure
about Market Risk 9
Part II - Other Information 11
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Signatures 12
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FRED'S, INC.
CONSOLIDATED BALANCE SHEETS
(unaudited)
(in thousands, except for number of shares)
May 4, February 2,
2002 2002
---- ----
ASSETS:
Current assets:
Cash and cash equivalents $19,424 $15,906
Receivables, less allowance for doubtful
Accounts of $663 ($657 at February 2, 2002) 16,072 15,705
Inventories 169,675 163,560
Deferred income taxes 1,316 1,790
Other current assets 3,866 2,499
----- -----
Total current assets 210,353 199,460
Property and equipment, at depreciated cost 82,791 78,225
Equipment under capital leases, less accumulated
amortization of $1,990 ($1,849 at February 2,2002) 1,392 1,533
Other noncurrent assets 4,652 4,841
----- -----
Total assets $299,188 $284,059
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $48,048 $43,747
Current portion of indebtedness 563 562
Current portion of capital lease obligations 667 678
Accrued liabilities 13,941 14,228
Income taxes payable 2,914 1,866
----- -----
Total current liabilities 66,133 61,081
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Long term portion of indebtedness - 141
Deferred tax liability 696 696
Capital lease obligations 1,030 1,179
Other noncurrent liabilities 2,155 2,055
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Total liabilities 70,014 65,152
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Shareholders' equity:
Common stock, Class A voting, no par value,
25,539,313 shares issued and outstanding
(25,361,112 shares at February 2, 2002) 115,280 110,508
Retained earnings 113,953 108,462
Deferred compensation on restricted
Stock incentive plan (59) (63)
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Total shareholders' equity 229,174 218,907
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Total liabilities and shareholders equity $299,188 $284,059
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See accompanying notes to consolidated financial statements.
FRED'S, INC.
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
(in thousands, except per share amounts)
Thirteen Weeks Ended
May 4, May 5,
2002 2001
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Net Sales $258,427 $207,359
Cost of goods sold 189,002 149,601
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Gross Profit 69,425 57,758
Selling, general and administrative
Expenses 60,012 50,721
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Operating income 9,413 7,037
Interest (income) expense (74) 630
------ -----
Income before income taxes 9,487 6,407
Provision for income taxes 3,212 2,248
----- -----
Net income $6,275 $4,159
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Net income per share:
Basic $ .25 $ .18
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Diluted $ .24 $ .18
===== =====
Weighed average shares outstanding:
Basic 25,358 22,530
Effect of diluted stock options 747 540
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Diluted 26,105 23,070
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* All share and per share amounts have been adjusted to reflect the
distributions of a five-for-four stock split on June 18, 2001 and a
three-for-two stock split on February 1, 2002.
See accompanying notes to consolidated financial statements.
FRED'S, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands)
Thirteen Weeks Ended
May 4, May 5,
2002 2001
---- ----
Cash flows from operating activities:
Net income $6,275 $4,159
Adjustments to reconcile net income
to net cash flows from operating activities:
Depreciation and amortization 4,958 4,110
Provision for uncollectible receivables 6 (165)
Lifo reserve 300 200
Deferred income taxes 474 320
Amortization of deferred compensation on
restricted stock incentive plan 4 34
Tax benefit upon exercise of stock options 690 --
(Increase)decrease in assets:
Receivables (373) 991
Inventories (6,415) (10,207)
Other assets (1,367) (103)
Increase (decrease) in liabilities:
Accounts payable and accrued liabilities 4,014 (973)
Income taxes payable 1,048 (1,243)
Other noncurrent liabilities 100 19
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Net cash provided by (used in) operating
activities 9,714 (2,858)
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Cash flows from investing activities:
Capital expenditures (8,896) (4,682)
Asset acquisition, net of cash acquired
(primarily intangibles) (298) (383)
---- ----
Net cash used in investing activities (9,194) (5,065)
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Cash flows from financing activities:
Reduction of indebtedness and capital lease
obligations (300) (662)
Proceeds from revolving line of credit,
net of payments -- 8,931
Proceeds from exercise of options 545 293
Proceeds from sale of additional shares 3,537 --
Cash dividends paid (784) (603)
Net cash provided by financing activities 2,998 7,959
----- -----
Increase in cash and cash equivalents 3,518 36
Beginning of period cash and cash equivalents 15,906 2,569
------ -----
End of period cash and cash equivalents $19,424 $2,605
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Supplemental disclosures of cash flow information:
Interest (received) paid ($ 81) $361
===== ====
Income taxes paid $3,500 $---
====== ====
Non cash investing and financing activities:
Assets acquired through capital lease obligations $--- $344
==== ====
See accompanying notes to consolidated financial statements.
FRED'S, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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NOTE 1: BASIS OF PRESENTATION
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Fred's, Inc. ("We", "Our" or "Us") operates 373 discount general
merchandise stores, including 26 franchised Fred's stores, in thirteen states in
the southeastern United States. Two hundred and three of the stores have full
service pharmacies.
The accompanying unaudited consolidated financial statements have been
prepared in accordance with the instructions to Form 10-Q and therefore do not
include all information and notes necessary for a fair presentation of financial
position, results of operations and cash flows in conformity with generally
accepted accounting principles. The statements do reflect all adjustments
(consisting of only normal recurring accruals) which are, in the opinion of
management, necessary for a fair presentation of financial position in
conformity with generally accepted accounting principles. The statements should
be read in conjunction with the Notes to the Consolidated Financial Statements
for the fiscal year ended February 2, 2002 incorporated into Our Annual Report
on Form 10-K.
The results of operations for the thirteen-week period ended May 4,
2002 are not necessarily indicative of the results to be expected for the full
fiscal year.
Certain prior quarter amounts have been reclassified to conform to the
2002 presentation.
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NOTE 2: INVENTORIES
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Wholesale inventories are stated at the lower of cost or market using
the FIFO (first-in, first-out) method. Retail inventories are stated at the
lower of cost or market as determined by the retail inventory method. For
pharmacy inventories, which comprise approximately 18% of the retail inventories
at May 4, 2002, cost was determined using the LIFO (last-in, first-out) method.
The current cost of pharmacy inventories exceeded the LIFO cost by approximately
$4,903,000 and $4,603,000 at May 4, 2002 and February 2, 2002, respectively.
LIFO pharmacy inventory costs can only be determined annually when
inflation rates and inventory levels are finalized; therefore, LIFO
pharmacy inventory costs for interim financial statements are
estimated.
Management's Discussion and Analysis of Financial
Condition and Results of Operations
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GENERAL
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Our business is subject to seasonal influences, but has tended to
experience less seasonal fluctuation than many other retailers due to
the mix of everyday basic merchandise and pharmacy business. The fourth
quarter is typically the most profitable quarter because it includes the
Christmas selling season. The overall strength of the fourth quarter is
partially mitigated, however, by the inclusion of the month of January,
which is generally the least profitable month of the year.
The impact of inflation on labor and occupancy costs can significantly
affect our operations. Many of our employees are paid hourly rates
related to the federal minimum wage and, accordingly, any increase
affects us. In addition, payroll taxes, employee benefits and other
employee-related costs continue to increase. Occupancy costs, including
rent, maintenance, taxes and insurance, also continue to rise. We
believe that maintaining adequate operating margins through a
combination of price adjustments and cost controls, careful evaluation
of occupancy needs, and efficient purchasing practices is the most
effective tool for coping with increasing costs and expenses.
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RESULTS OF OPERATIONS
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Thirteen Weeks Ended May 4, 2002 and May 5, 2001
Net sales increased to $258.4 million in 2002 from $207.4 million in
2001, an increase of $51.0 million or 24.6%. The increase was
attributable to comparable store sales increases of 14.5% ($28.6
million) and sales by stores not yet included as comparable stores
($21.8 million). Sales to franchisees increased $.6 million in 2002.
The sales mix for the period was 48.0% Hardlines, 35.2% Pharmacy, 13.3%
Softlines, and 3.5% Franchise. This compares with 48.2% Hardlines,
36.2% Pharmacy, 11.9% Softlines, and 3.7% Franchise for the same period
last year.
Gross profit decreased to 26.9% of sales in 2002 compared with 27.9% of
sales in the prior-year period. Gross profit margins decreased as a
result of increased promotions to drive higher customer traffic
together with greater pricing pressure on the pharmacy department
sales.
Selling, general and administrative expenses increased to $60.0 million
in 2002 from $50.7 million in 2001. As a percentage of sales, expenses
decreased to 23.2% of sales compared to 24.5% of sales last year.
Selling, general and administrative expenses were improved primarily by
leveraging the higher sales to improved productivity, stabilization of
utility prices when compared to last year and control of labor costs.
In the first quarter, we increased reserves for insurance claims to
reflect rising insurance cost and internal growth causing an additional
30 basis points increase in selling, general, and administrative
expenses as a percent of sales. We do not anticipate additional
increases in insurance reserves that would affect earnings in future
quarters beyond amounts currently projected.
For the first quarter of 2002 we earned interest income of $.1 million
as compared to interest expense of $.6 million last year. The
difference is primarily resulting from the benefit of our public
offering of stock in September 2001.
For the first quarter, the effective income tax rate was 33.9% as a
result of the income tax benefits received from the Economic Stimulus
Act that was passed after September 11, 2001. The majority of the
benefit was a cash flow versus income statement effect but the effect
on income for the quarter was approximately $120,000.
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LIQUIDITY AND CAPITAL RESOURCES
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Due to the seasonality of our business and the continued increase in
the number of stores and pharmacies, inventories are generally lower at
year-end than at each quarter-end of the following year.
Cash flows provided by operating activities totaled $9.7 million during
the thirteen-week period ended May 4, 2002. Cash was primarily used to
increase inventories by approximately $6.4 million in the first quarter
of 2002. This increase was primarily attributable to 20 new stores in
the first quarter of 2002. Accounts payable increased approximately
$4.0 million during the first quarter of 2002.
Cash flows used in investing activities totaled $9.2 million, and
consisted primarily of capital expenditures associated with the store
and pharmacy expansion program ($7.4 million) and expenditures for the
new distribution center to be constructed in Dublin, Georgia ($1.8
million). During the first quarter, we opened 20 stores and 2
pharmacies. We expect to open 10 to 15 stores in the second quarter and
approximately 55 to 60 stores for the year. Our capital expenditure
plan for 2002 is in the $20 million dollar range for store and pharmacy
expansion and will approximate depreciation expense for the year. Our
capital expenditure plans for the new distribution center is in the $25
million dollar range.
Cash flows provided by financing activities totaled $3.0 million and
included $3.5 million from proceeds of additional shares sold to fund
the accelerated store and pharmacy growth and the new distribution
center.
On April 3, 2000, we entered into a new Revolving Loan and Credit
Agreement (the "Agreement") with a bank to replace the May 15, 1992
Revolving Loan and Credit Agreement, as amended. The Agreement provides
us with an unsecured revolving line of credit commitment of up to $40
million and bears interest at a 1.5% below prime rate or a LIBOR-based
rate. Under the most restrictive covenants of the Agreement, we are
required to maintain specified shareholders' equity and net income
levels. We are required to pay a commitment fee to the bank at a rate
per annum equal to .18% on the unutilized portion of the revolving line
commitment over the term of the Agreement. The term of the Agreement
extends to March 31, 2004. There were no borrowings outstanding under
the Agreement at May 4, 2002 and the borrowings outstanding under the
Agreement at May 5, 2001 totaled $31,554,000.
On April 23, 1999, we entered into a Loan Agreement (the "Loan
Agreement") with a bank. The Loan Agreement provided us with a
four-year unsecured term loan of $2.3 million to finance the
replacement of our mainframe computer system. The Loan Agreement bears
interest of 6.15% per annum and matures on April 15, 2003. Under the
most restrictive covenants of the Loan Agreement, we are required to
maintain specified debt service levels. There were $562,500 and
$1,125,000 borrowings outstanding under the Loan Agreement at May 4,
2002 and May 5, 2001, respectively.
On May 5, 1998, we entered into a Loan Agreement (the "Term Loan
Agreement") with a bank. The Term Loan Agreement provided us with an
unsecured term loan of $12 million to finance the modernization and
automation of our distribution center and corporate facilities. The
Term Loan Agreement bore interest of 6.82% per annum and would have
matured on November 1, 2005. We used the proceeds of our September 2001
public offering to pay off the Term Loan Agreement and the borrowings
outstanding under the Term Loan Agreement at May 5, 2001 totaled
$8,365,000.
We believe that sufficient capital resources are available in both the
short-term and long-term through currently available cash and cash
generated from future operations and, if necessary, the ability to
obtain additional financing.
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RECENT ACCOUNTING PRONOUNCEMENTS
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Beginning fiscal year 2002, we adopted SFAS No. 144, Accounting for the
Impairment or Disposal of long-lived Assets. This Statement supersedes
SFAS No. 121,Accounting for the Impairment of long-lived Assets to Be
Disposed of, but retains the fundamental provision of SFAS 121 for
recognition and measurement of the impairment of long-lived assets to
be held and used and measurement of long-lived assets to be held for
sale. The statement requires that whenever events or changes in
circumstances indicate that a long-lived asset's carrying value may not
be recoverable, the asset should be tested for recoverability. The
statement also requires that a long-lived asset classified as held for
sale should be carried at the lower of its carrying value or fair
value, less cost to sell. The adoption of SFAS No. 144 did not have a
material impact on our financial statements.
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QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
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We have no holdings of derivative financial or commodity instruments as
of May 4, 2002. We are exposed to financial market risks, including
changes in interest rates. All borrowings under our Revolving Credit
Agreement bear interest at 1.5% below prime rate or a LIBOR-based rate.
An increase in interest rates of 100 basis points would not
significantly affect our income. All of our business is transacted in
U.S. dollars and, accordingly, foreign exchange rate fluctuations have
never had a significant impact on us, and they are not expected to in
the foreseeable future.
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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
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Statements, other than those based on historical facts that the we
expect or anticipate may occur in the future are forward-looking
statements which are based upon a number of assumptions concerning
future conditions that may ultimately prove to be inaccurate. Actual
events and results may materially differ from anticipated results
described in such statements. Our ability to achieve such results is
subject to certain risks and uncertainties, including:
o Economic and weather conditions which affect buying patterns
of our customers;
o Changes in consumer spending and our ability to anticipate
buying patterns and implement appropriate inventory
strategies;
o Continued availability of capital and financing;
o Competitive factors;
o Changes in reimbursement practices for pharmaceuticals;
o Governmental regulation;
o Increases in fuel and utility rates; and
o Other factors affecting business beyond our control.
Consequently, all of the forward-looking statements are qualified by
this cautionary statement and there can be no assurance that the
results or developments anticipated by us will be realized or that they
will have the expected effects on our business or operations. Actual
results, performance or achievements can differ materially from results
suggested by this forward-looking statement because of a variety of
factors. We undertake no obligation to update any forward-looking
statement to reflect events or circumstances arising after the date on
which it was made.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Not Applicable.
Item 2. Changes in Securities
Not Applicable.
Item 3. Defaults Upon Senior Securities
Not Applicable.
Item 4. Submission of Matters to a Vote of Securities Holders
Not Applicable.
Item 5. Other Information
On May 29, 2002, a portion of the Company's workers in its
Memphis distribution center voted for the Union of
Needletrades, Industrial and Textile Employees ("UNITE") as
its representative, which is under appeal at this time. The
Company does not anticipate this representation will have a
material effect upon the Company's results of operations.
Item 6. Exhibits and Reports on Form 8-K/A
Exhibits:
10.24 Second Loan modification agreement
dated April 30, 2002 (modifies The Revolving
Loan and Credit Agreement dated April 3,
2000)
Reports on Form 8-K:
Current report on Form 8-K dated May 14, 2002
announcing changes in certifying accountants.
Amended report on Form 8-K dated May 15, 2002
announcing changes in certifying accountants.
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.
FRED'S, INC.
Date: June 14, 2002 /s/ Michael J. Hayes
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Michael J. Hayes
Chief Executive Officer
Date: June 14, 2002 /s/ Jerry A. Shore
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Jerry A. Shore
Chief Financial Officer
Exhibit 10.24
SECOND MODIFICATION AGREEMENT
OF THE REVOLVING LOAN AND CREDIT AGREEMENT
THIS SECOND MODIFICATION AGREEMENT OF THE REVOLVING LOAN AND CREDIT
AGREEMENT (hereafter the "Second Modification") made and entered into this 30th
day of April, 2002, to be effective as of the 30th day of April, 2002, by and
between UNION PLANTERS BANK NATIONAL ASSOCIATION, a national banking association
with its principal office at 6200 Poplar Avenue, Memphis, Tennessee ("Lender"),
SUNTRUST BANK, a Georgia banking corporation with its principal office at 6410
Poplar Avenue, Suite 320, Memphis, Tennessee (the "Documentation Agent"), and
FRED'S, INC., a Tennessee corporation having its principal offices at 4300 New
Getwell Road, Memphis, Tennessee (the "Borrower").
WHEREAS, Borrower is justly indebted to Lender for Advances made to
Borrower evidenced by that certain Promissory Note dated April 3, 2000 (the
"Note"), in the original principal amount of Forty Million Dollars ($40,000,000)
and that Certain Agreement dated March 28, 2000 effective April 3, 2000 (herein
the "Credit Agreement") providing for advances up to a maximum of Forty Million
Dollars ($40,000,000); and
WHEREAS, Borrower and Lender entered into a Modification Agreement (the
"First Modification") dated May 26, 2000, providing, among other things, that
the Note, originally payable on demand, would mature and be due and payable on
April 3, 2003; and
WHEREAS, Borrower has requested Lender and Documentation Agent to
extend the Maturity Date, as defined in Section 2.1 of the Credit Agreement, by
one (1) year calendar year; and
WHEREAS, Borrower has requested Lender and Documentation Agent to
extend the maturity date of the Note by one (1) calendar year.
NOW THEREFORE, in consideration of the premises and of other good and
valuable consideration, the adequacy and receipt of which are hereby
acknowledged, the parties hereto agree as follows:
1. Modification of Credit Facility: Borrower, Lender and Documentation
Agent each agree that the phrase "`Maturity Date' means March 31, 2003"
is hereby stricken from the Credit Agreement and the Credit Agreement
is hereby amended and restated to insert in place of the above stricken
phrase the following: "`Maturity Date' means March 31, 2004."
2. Modification of Note: Borrower, Lender and Documentation Agent each
agree that the outstanding principal balance of the Note and accrued
but unpaid interest shall be due and payable on March 31, 2004.
Interest on the outstanding principal balance shall accrue and be
payable as provided in the Credit Agreement.
3. Notation: Lender and Documentation Agent covenant and agree to make a
notation upon their respective records showing that the Note and
Agreement has been modified as set forth herein.
4. Continuation of Terms. All of the terms, covenants and conditions of
the Note, as modified by the First Modification, and the Credit
Agreement or any other document executed in connection therewith, are,
to the extent not inconsistent with the terms herein, hereby
incorporated herein by reference. It is expressly understood and agreed
that the terms, covenants and conditions of all instruments evidencing
or securing the indebtedness evidenced by the Note shall remain in full
force and effect, and shall in no manner be affected by the execution
of this Second Modification except as the same are expressly modified
herein.
5. No Discharge. The execution and delivery of this Second Modification
does not discharge the obligors, sureties, endorsers or guarantors of
the Note, and all rights of the Lender against any and all of same are
expressly reserved.
6. Successors in Interest. This Second Modification shall be binding upon
and inure to the benefit of the parties hereto, their respective
successors and assigns, transferrees and grantees.
7. Governing Law: This Second Modification shall be construed in
accordance with the laws of the State of Tennessee and the parties
hereto subject themselves to the jurisdiction of Tennessee and venue of
the Courts of Shelby County, Tennessee for the resolution of any
dispute hereunder.
8. Undefined Terms: All capitalized terms not defined herein shall have
the same definitions as set forth in the Agreement.
IN WITNESS WHEREOF, the parties have executed this Second Modification
Agreement of the Revolving Loan and Credit Agreement as of the day and
year first above written.
BORROWER:
FRED'S INC., a Tennessee corporation
By:/s/ Jerry A. Shore
---------------------
Name:Jerry A. Shore
Title:Chief Finanical Officer
LENDER:
UNION PLANTERS BANK NATIONAL ASSOCIATION
By: /s/ B. Gordin McMurtry
--------------------------
Name: B. Gordin Murtry
Title: Senior Vice President
DOCUMENTATION AGENT:
SUNTRUST BANK, a Georgia banking corporation
By:/s/ Bryan W. Ford
--------------------
Name: Bryan W. Ford
Title: Director
STATE OF Tennessee
COUNTY OF Shelby
Before me personally appeared B. Gordin McMurtry, with whom I am
personally acquainted (or proved to me on the basis of satisfactory evidence),
and who, upon oath acknowledged himself to be an officer of UNION PLANTERS BANK
NATIONAL ASSOCIATION, and that he as such officer being duly authorized so to
do, executed the foregoing instrument for the purposes therein contained by
signing the name of the bank by himself as such officer.
WITNESS MY HAND AND OFFICIAL SEAL at office, on this 30th day of April,
2002.
/s/ Shernice Churry
-------------------
Notary Public
My Commission Expires:
Oct. 26, 2004
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STATE OF Tennessee
COUNTY OF Shelby
Before me personally appeared Jerry A. Shore, with whom I am personally
acquainted (or proved to me on the basis of satisfactory evidence), and who,
upon oath acknowledged himself to be the Chief Financial Officer of FRED'S,
INC., a Tennessee corporation, and that he as such officer being duly authorized
so to do, executed the foregoing instrument for the purposes therein contained
by signing the name of the bank by himself as such officer.
WITNESS MY HAND AND OFFICIAL SEAL at office, on this 3rd day of May,
2002.
/s/ Merle S. McGruder
---------------------
Notary Public
My Commission Expires:
April 13, 2004
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STATE OF Tennessee
COUNTY OF Shelby
Before me personally appeared Bryan W. Ford, with whom I am personally
acquainted (or proved to me on the basis of satisfactory evidence), and who,
upon oath acknowledged himself to be an Director of SUNTRUST BANK, a Georgia
banking corporation, and that he as such officer being duly authorized so to do,
executed the foregoing instrument for the purposes therein contained by signing
the name of the bank by himself as such officer.
WITNESS MY HAND AND OFFICIAL SEAL at office, on this 30th day of April,
2002.
/s/ Shernice Churry
-------------------
Notary Public
My Commission Expires:
Oct. 26, 2004
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