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 October 31, 1998
Commission file number 333-42427
J. CREW GROUP, INC.
(Exact name of registrant as specified in its charter)
New York 22-2894486
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
770 Broadway, New York, New York 10003
(Address of principal executive offices)
(Zip code)
(212) 209-2500
(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
---- ----
As of November 17, 1998, there were outstanding 60,745 shares of Common Stock,
par value $.01 per share.
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
J. CREW GROUP INC. AND SUBSIDIARIES
-----------------------------------
CONSOLIDATED BALANCE SHEETS
---------------------------
October 31, January 31,
1998 1998
----------- -----------
(unaudited)
(in thousands)
ASSETS
- ------
CURRENT ASSETS:
Cash and cash equivalents $ 22,069 $ 12,166
Accounts receivable (net of allowance for
doubtful accounts of $5,579 and $5,438) 15,175 16,834
Merchandise inventories 277,207 202,763
Prepaid expenses and other current assets 62,403 62,399
Federal and state income taxes 12,319 --
-------- --------
Total current assets 389,173 294,162
-------- --------
PROPERTY AND EQUIPMENT--AT COST: 195,166 166,276
Less accumulated depreciation and amortization (69,236) (55,613)
-------- --------
125,930 110,663
OTHER ASSETS 19,446 17,053
-------- --------
TOTAL ASSETS $534,549 $421,878
-------- --------
LIABILITIES AND STOCKHOLDERS' DEFICIT
- -------------------------------------
CURRENT LIABILITIES:
Notes payable--bank $101,000 $ --
Accounts payable 112,984 65,553
Other current liabilities 53,291 77,700
Deferred income taxes 7,981 7,981
Federal and state income taxes -- 251
-------- --------
Total current liabilities 275,256 151,485
-------- --------
LONG-TERM DEBT 305,921 298,161
DEFERRED CREDITS AND OTHER LONG TERM
LIABILITIES 44,991 43,578
REDEEMABLE PREFERRED STOCK 143,715 130,296
STOCKHOLDERS' DEFICIT (235,334) (201,642)
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $534,549 $421,878
-------- --------
See notes to consolidated financial statements.
1
J. CREW GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Thirty-nine weeks ended
October 31, 1998 November 1, 1997
---------------- ----------------
(unaudited)
(in thousands)
Net Sales $554,249 $536,384
Other revenues 7,403 8,567
----- -----
Revenues 561,652 544,951
Cost of goods sold including buying
and occupancy costs 319,652 302,135
------- -------
Gross profit 242,000 242,816
Selling, general and administrative expenses 246,580 244,566
------- -------
Loss from operations (4,580) (1,750)
Interest expense - net 30,543 11,089
Expenses incurred in connection
with recapitalization --- 19,851
--- ------
Loss before income taxes and
extraordinary item (35,123) (32,690)
Income tax benefit 14,100 5,100
------ -----
Net loss before extraordinary item (21,023) (27,590)
Extraordinary item - loss on refinancing
of debt ($7,627 net of income tax benefit of $3,127) --- (4,500)
--- -------
Net loss $(21,023) $(32,090)
========= =========
See notes to consolidated financial statements
2
J. CREW GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Thirteen weeks ended
October 31, 1998 November 1, 1997
---------------- ----------------
(unaudited)
(in thousands)
Net Sales $216,600 $214,639
Other revenues 3,069 3,107
----- -----
Revenues 219,669 217,746
Cost of goods sold including buying
and occupancy costs 121,702 118,331
------- -------
Gross profit 97,967 99,415
Selling, general and administrative expenses 81,216 86,653
------ ------
Income from operations 16,751 12,762
Interest expense - net 10,962 4,461
Expenses incurred in connection
with recapitalization --- 19,851
--- ------
Income (loss) before income taxes
and extraordinary item 5,789 (11,550)
Provision for income taxes 2,260 3,350
----- -----
Net income (loss) before extraordinary item 3,529 (14,900)
Extraordinary item - loss on refinancing of
debt ($7,627 net of income tax benefit of $3,127) --- (4,500)
--- -------
Net income (loss) $3,529 $(19,400)
====== =========
See notes to consolidated financial statements
3
J. CREW GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Thirty-nine weeks ended
October 31, 1998 November 1, 1997
---------------- ----------------
(unaudited)
(in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(21,023) $(32,090)
Adjustments to reconcile net loss to net cash
used in operating activities:
Loss on early retirement of debt --- 7,627
Depreciation and amortization 11,556 10,191
Amortization of deferred financing costs 1,852 2,268
Amortization of restricted stock 1,479 ---
Non cash interest expense 7,760 ---
Provision for losses on accounts receivable 5,627 4,946
Changes in assets and liabilities providing/(using) cash:
Accounts receivable (3,968) 35,640
Merchandise inventories (74,444) (62,849)
Prepaid expenses and other current assets (4) (11,149)
Income taxes receivable (12,570) (14,436)
Other assets (6,019) (464)
Account payable 47,431 12,369
Other liabilities (22,932) (8,218)
--------- ---------
Net cash used in operating activities (65,255) (56,165)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (27,924) (38,426)
Proceeds from construction allowances 4,014 8,745
--------- ---------
Net cash used in investing activities (23,910) (29,681)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in notes payable, bank 101,000 47,000
Issuance of long-term debt --- 295,257
Costs incurred in connection with
the issuance of debt --- (16,429)
Repayment of long-term debt --- (92,863)
Issuance of preferred stock --- 125,000
Issuance of common stock --- 63,891
Cost incurred in connection with the
repurchase of capital stock --- (13,462)
Distribution to stockholders --- (316,688)
--------- ---------
Net cash provided by financing activities 101,000 91,706
--------- ---------
INCREASE IN CASH AND CASH EQUIVALENTS 9,903 5,860
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 12,166 7,132
--------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD 22,069 12,992
========= =========
NON-CASH FINANCING ACTIVITIES
Dividends on preferred stock $ 13,419 $ ---
========= =========
See notes to consolidated financial statements
4
J. CREW GROUP, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
THIRTY-NINE WEEKS ENDED NOVEMBER 1, 1997 AND OCTOBER 31, 1998
1. BASIS OF PRESENTATION
---------------------
The accompanying unaudited condensed consolidated financial statements include
the accounts of J.Crew Group, Inc. and its wholly-owned subsidiaries (the
"Company"). All significant intercompany balances and transactions have been
eliminated in consolidation.
The consolidated balance sheet as of October 31, 1998 and the consolidated
statements of operations and cash flows for the thirteen and thirty nine week
periods ended November 1, 1997 and October 31, 1998 have been prepared by the
Company and have not been audited. In the opinion of management, all
adjustments, consisting of only normal recurring adjustments necessary for a
fair presentation of the financial position of the Company, the results of its
operations and cash flows, have been made.
Certain information and footnote disclosure normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. These financial statements should be read in
conjunction with the financial statements and notes thereto included in the
Company's consolidated financial statements for the fiscal year ended January
31, 1998.
The results of operations for the thirteen and thirty nine week periods ended
October 31, 1998 are not necessarily indicative of the operating results for the
full fiscal year.
Effective January 31, 1998, the Company changed its fiscal year-end from the
Friday closest to January 31 to the Saturday closest to January 31. The Company
also changed its quarterly reporting periods to four thirteen week reporting
periods from 12-16-12-12 week reporting periods. Prior year amounts have been
restated to conform to a thirteen week period.
2. SUBSEQUENT EVENT
----------------
On November 24, 1998 the Company closed on the sale of its Popular Club Plan,
Inc. ("PCP") subsidiary to Fingerhut, Inc. for proceeds of $42.0 million plus
the assumption of $41.0 million under a securitization arrangement by a wholly-
owned subsidiary of PCP. Under the terms of its credit agreement, the Company is
required to use 80% of the proceeds (after related expenses) from the sale of
assets to pay down the $70.0 million term loan.
The financial position and results of operations of PCP will be included in the
consolidated financial statements of J. Crew Group, Inc. through November 1,
1998. Revenues were $49.2 million and $125.7 million for the three month and
nine month periods ended October 31, 1998.
3. OTHER
-----
In May 1998 the Company announced that it had retained an investment banking
firm to find a buyer for its Clifford & Wills mail order and factory outlet
divisions. The decision to sell this business reflects the Company's strategy to
focus on building the J.Crew brand. Revenues from Clifford & Wills were $20.3
million and $53.0 million for the three month and nine month periods ended
October 31, 1998.
5
Forward-Looking Statements
Certain statements in this Report on Form 10Q under the caption "Management's
Discussion and Analysis of Financial Condition and Results of Operations",
constitute "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Such forward-looking statements
involve known and unknown risks, uncertainties and other important factors that
could cause the actual results, performances or achievements of the Company, or
industry results to differ materially from historical results, any future
results, performances or achievements expressed or implied by such forward-
looking statements. Such risks and uncertainties include, but are not limited
to, competitive pressures in the apparel industry, changes in levels of consumer
spending or preferences in apparel and acceptance by customers of the Company's
products, overall economic conditions, governmental regulations and trade
restrictions, political or financial instability in the countries where the
Company's goods are manufactured, postal rate increases, paper and printing
costs, Year 2000 issues, the level of the Company's indebtedness and exposure to
interest rate fluctuations, and other risks and uncertainties described in the
Company's other reports and documents filed or which may be filed, from time to
time, with the Securities and Exchange Commission. The Company expressly
disclaims any obligation or undertaking to disseminate any updates or revisions
to any forward-looking statement contained herein to reflect any change in the
Company's expectations with regard thereto or any change in events, conditions
or circumstances on which any such statement is based.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations - Nine months ended October 31, 1998 versus nine months
ended November 1, 1997
Revenues for the nine months ended October 31, 1998 increased to $561.7 million
from $545.0 million in the nine months ended November 1, 1997, an increase of
3.1%. This increase resulted primarily from an increase in J.Crew Retail net
sales of $39.2 million from $136.0 million in the first nine months of 1997 to
$175.2 million in the first nine months of 1998, offset by a decrease in J.Crew
Mail Order net sales of $13.3 million from $150.7 million in the first nine
months of 1997, to $137.4 million in the first nine months of 1998. Other
revenues decreased by $1.2 million due to a decrease in service charge income as
a result of the sales of accounts receivable.
The increase in J.Crew Retail revenues was due primarily to the sales in the
first nine months of 1998 from the 12 stores opened in fiscal 1997. Comparable
store sales in the first nine months of 1998 increased by 7.8%. The number of
stores opened at October 31, 1998 increased to 63 from 51 at January 31, 1998.
The decrease in J.Crew Mail Order revenues resulted from the elimination of a
sale book in the first and third quarters of 1998 and a decrease in pages
circulated from 5.5 billion in the first nine monthes of 1997 to 4.6 billion in
the first nine months of 1998. The decrease in pages circulated resulted from a
change in circulation strategy to increase the customer segmentation of catalog
mailings. This reduction in pages circulated resulted in a decrease in paper and
postage expense and an increase in productivity or sales per page circulated.
The gross margin for the nine months ended October 31, 1998 was $242.0 million
or 43.1% of revenues compared to $242.8 million or 44.6% of revenues for the
nine months ended November 1, 1997. The decrease in gross margin was due to a
lower initial markup on spring merchandise in J.Crew Retail and J.Crew Mail
Order and increased markdowns to dispose of inventory overstocks.
6
Selling, general and administrative expenses increased to $246.6 million for the
nine months ended October 31, 1998 from $244.6 million for the nine months ended
November 1, 1997. As a percentage of revenues, selling, general and
administrative expenses were 43.9% of revenues in the first nine months of 1998
and 44.9% in the first nine months of 1997.
Selling expenses decreased from $79.0 million or 14.5% of revenues in the first
nine months of 1997 to $77.7 million or 13.8% of revenues in the first nine
months of 1998. Selling expenses in J.Crew Mail Order decreased by $3.5 million
primarily as a result of the decrease in the number of pages circulated in 1998.
This decrease was partially offset by an increase of $2.0 million at Clifford &
Wills, resulting from an increase in circulation in 1998.
General and administrative expenses increased from $165.6 million or 30.4% of
revenues in the first nine months of 1997 to $168.9 million or 30.1% of revenues
in the first nine months of 1998. The dollar increase was attributed primarily
to an increase in store-related expenses at J.Crew Retail resulting from the 12
stores opened in 1998 which offset a decrease attributable to the implementation
of cost reduction programs.
The increase in interest expense from $11.1 million in the first nine months of
1997 to $30.5 million in the first nine months of 1998 resulted from the
additional debt outstanding in the first nine months of 1998 as a result of the
recapitalization transaction consummated in October 1997. Average borrowings
under revolving credit arrangements were $49.3 million in the first nine months
of 1998 compared to $67.3 million in the first nine months of 1997.
The increase in the loss before income taxes and extraordinary item from $32.7
million in the first nine months of 1997 to $35.1 million in the first nine
months of 1998 resulted primarily from the increase in interest expense of $19.5
million and an increase in general and administrative expenses of $3.3 million.
The loss in the 1997 period included $19.9 million of expenses incurred in
connection with the recapitalization of the Company in October 1997.
The disproportionate tax rate in the nine month period ended November 1, 1997
resulted from the non-deductibility of certain expenses incurred in connection
with the recapitalization.
Results of Operations - Three months ended October 31, 1998 versus three
months ended Novemeber 1, 1997
Revenues for the three months ended October 31, 1998 increased to $219.7 million
from $217.7 million in the three months ended November 1, 1997, an increase of
.9%. This increase resulted primarily from an increase in J.Crew Retail net
sales of $12.3 million from $54.8 million in the third quarter of 1997 to $67.1
million in the third quarter of 1998, offset by a decrease in J.Crew Mail Order
net sales of $5.7 million from $59.8 million in the third quarter of 1997 to
$54.1 million in the third quarter of 1998. Revenues in the third quarter of
1998 were also adversely impacted by a decrease in net sales in the Popular Club
Plan division of $6.6 million compared to the third quarter of 1997.
The increase in J.Crew Retail revenues was due primarily to the sales in the
third quarter of 1998 from the 12 stores opened in fiscal 1998. Comparable store
sales in the third quarter of 1998 increased by 7.7%.
The decrease in J.Crew Mail Order revenues resulted primarily from the
elimination of a sale book and a decrease in pages circulated in the third
quarter of 1998 compared to the third quarter of 1997. Pages circulated in the
third quarter of 1998 were 1.7 billion compared to 2.1 billion in the third
quarter of 1997.
The gross margin for the three months ended October 31, 1998 was $98.0 million
or 44.6% of revenues compared to $99.4 million or 45.7% of revenues for the
three months ended November 1, 1997. The decrease in gross margin was due to
increased markdowns to dispose of inventory overstocks.
Selling, general and administrative expenses decreased to $81.2 million for the
three months ended October 31, 1998 from $86.7 million for the three months
ended November 1, 1997. As a percentage of
7
revenues, selling, general and administrative expenses were 37.0% of revenues in
the third quarter of 1998 and 39.8% in the third quarter of 1997.
Selling expenses decreased from $25.9 million or 11.9% of revenues in the third
quarter of 1997 to $23.0 million or 10.5% of revenues in the third quarter of
1998. This decrease was due primarily to an decrease of $2.7 million at J.Crew
Mail Order, which resulted from a decrease in pages circulated in the third
quarter of 1998 compared to the third quarter of 1997.
General and administrative expenses decreased from $60.8 million or 27.9% of
revenues in the third quarter of 1997 to $58.2 million or 26.5% of revenues in
the third quarter of 1998. This decrease of $2.6 million was attributed
primarily to the effect of cost reductions programs offset by an increase in
store-related expenses from the 12 additional retail stores opened in 1998.
The increase in interest expense from $4.5 million in the third quarter of 1997
to $11.0 million in the third quarter of 1998 resulted from the additional debt
outstanding in the third quarter of 1998 as a result of the recapitalization
transaction consummated in October 1997. Average borrowings under revolving
credit arrangements were $80.1 million in the third quarter of 1998 compared to
$86.0 million in the third quarter of 1997.
The increase in income before income taxes from a loss of $11.6 million in the
third quarter of 1997 to income of $5.8 million in the third quarter of 1998 was
due to the incurrence of $19.9 million of expenses in connection with the
recapitalization of the Company in October 1997.
The disproportionate tax rate in the three month period ended November 1, 1997
resulted from the non-deductibility of certain expenses incurred in connection
with the recapitalization.
Liquidity and Capital Resources
The Company's primary cash needs are for opening new stores, information
technology, and working capital. The Company's sources of liquidity are cash
flow from operations and borrowings under a $200.0 million revolving credit
facility. Cash flow used in operations increased from a use of $56.2 million in
the first nine months of 1997 to a use of $65.3 million in the first nine months
of 1998. This increase was primarily due to the sale of $40.0 million of
accounts receivable in October 1997 which was used in part to fund working
capital requirements.
Borrowings under the revolving credit line increased to $101.0 million at
October 31, 1998 from $47.0 million at November 1, 1997. Borrowings at November
1, 1997 were reduced as a result of the funds received from the sale of accounts
receivable in October 1997.
Capital expenditures for the nine months ended October 31, 1998 were incurred
primarily to fund the opening of 12 new retail stores.
Inventories at October 31, 1998 were $277.3 million compared to $260.5 million
at November 1, 1997. This increase is attributable primarily to the increase in
the number of retail stores in operation at the end of the third quarter of 1998
compared to the third quarter of 1997.
On November 24, 1998 the Company closed on the sale of its Popular Club Plan,
Inc. ("PCP") subsidiary to Fingerhut Companies, Inc. for proceeds of $42.0
million plus the assumption of $41.0 million under a securitization arrangement
by a wholly-owned subsidiary of PCP. Under the terms of its credit agreement,
the Company is required to use 80% of the proceeds (after related expenses) from
the sale of assets to pay down the $70.0 million term loan.
Management believes that cash flow from operations and availability under its
revolving credit facility will provide adequate funds for the Company's working
capital needs, planned capital expenditures and debt service obligations. The
Company's ability to fund its operations and make planned capital expenditures,
scheduled debt payments, refinance indebtedness and remain in compliance with
the financial covenants under its debt agreements depends on its future
operating performance and
8
cash flow, which are subject to prevailing economic conditions and to financial,
business and other factors, some of which are beyond its control.
Seasonality
The Company's retail and mail order businesses experience two distinct selling
seasons, spring and fall. The spring season is comprised of the first and second
quarters and the fall season is comprised of the third and fourth quarters. Net
sales are usually substantially higher in the fall season and selling, general
and administrative expenses as a percentage of net sales are usually higher in
the spring season. Approximately 35% of annual net sales in fiscal 1997 occurred
in the fourth quarter. The Company's working capital requirements also fluctuate
throughout the year, increasing substantially in September and October in
anticipation of the holiday season inventory requirements.
The Year 2000 Issue
The Year 2000 issue affecting most companies, including the Company, is caused
by the inability of internal and external computer systems to recognize and
process more than two digit entries in the date code field. Beginning with dates
later than December 31, 1999, these date code fields will need to accept four
digit entries to identify 21st century dates from 20th century dates.
The Company has adopted a Year 2000 plan consisting of the following four
phases: identifying and prioritizing the components of the Company's internal
systems, equipment and related programs that are impacted by the Year 2000
problem; remediation or replacement of non-compliant systems; testing to
determine the success of remediation efforts; and development of contingency
plans. The Company is also attempting to contact key vendors and third parties
on whom it relies to obtain assurances that their systems will be Year 2000
compliant. The Company has substantially completed the first phase, expects to
complete the second phase by the end of the third quarter of fiscal year 1999
and anticipates that the third phase would continue through December 1999.
The Company plans to prepare any necessary contingency plans by Fall of 1999.
The Company is using internal programming resources, outside consulting
services, system upgrades from existing vendors and replacement of existing
packages with packages that are Year 2000 compliant. Certain of the key systems
are being replaced to modernize existing systems, not just for Year 2000
compliance. Total expenditures relating to implementing the plan are currently
estimated to be $11.0 million for fiscal years 1997 through 2000, a substantial
portion of which will be capitalized expenditures relating to acquistion and
implementation of new package systems. This cost estimate does not include time
and costs that may be incurred by the Company as a result of failure of any
third parties to become Year 2000 ready or costs to implement contingency plans.
As of October 31, 1998, the Company has incurred costs of approximately $3.0
million relating to the Company's Year 2000 initiatives.
The Company believes that its Year 2000 compliance program is designed to
identify and address Year 2000 issues that are subject to the Company's control.
However, there can be no assurance that the Company's efforts will be fully
effective and there are significant risks that are beyond the Company's control,
including, without limitation, failure of (a) vendors to produce merchandise or
perform services required by the Company, (b) utilities to deliver electricity,
(c) shippers (including the U.S. Postal Service) to deliver merchandise, and (d)
landlords to have the malls or buildings in which the Company has stores be Year
2000 compliant.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company's principal market risk relates to interest rate sensitivity, which
is the risk that future changes in interest rates will reduce net income or the
net assets of the Company. The Company's variable rate debt consists of
borrowings under the Revolving Credit Facility and the $70.0 million Term Loan
Facility. In order to manage this interest rate risk, the Company entered into
an interest rate swap
9
agreement in October 1997 for $70.0 million notional principal amount, which
decreased to $50.0 million as of October 21, 1998. This agreement, which has a
term of three years, converts the interest rate on $50.0 million notional
principal amount of debt to a fixed rate of 6.23%. If this interest rate swap
agreement was settled on October 31, 1998, the Company would be required to pay
an additional $1.6 million.
The Company enters into letters of credit to facilitate the international
purchase of merchandise. The letters of credit are primarily denominated in U.S.
dollars. Outstanding letters of credit at October 31, 1998 were approximately
$58.9 million.
Furthermore, the Company has a licensing agreement in Japan which provides for
royalty payments based on sales of J.Crew merchandise as denominated in yen. The
Company has from time to time entered into forward foreign exchange contracts to
minimize this risk. At October 31, 1998, there were two forward foreign exchange
contracts outstanding which provide for the conversion of 130 million yen into
U.S. dollars at rates of $1 = 135.3 Yen and $1 = 114.5 Yen.
10
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
27. Financial Data Schedule.
(b) Reports on Form 8-K.
The Company did not file any reports on Form 8-K during the
quarter for which this report is filed.
11
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.
J. CREW GROUP, INC.
(Registrant)
Date: December 11, 1998 By: /s/ Howard Socol
----------------------------------
Howard Socol
Chief Executive Officer
Date: December 11, 1998 By: /s/ Scott Rosen
-----------------------------------
Scott Rosen
Chief Financial Officer
12
5
