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 June 30, 2000
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 NO. 0-7843
4KIDS ENTERTAINMENT, INC.
(Exact name of registrant as specified in its Charter)
NEW YORK
(State of Incorporation)
13-2691380
(I.R.S. Employer Identification Number)
1414 Avenue of the Americas, New York, New York
(Address of Principal Executive Offices)
10019
(Zip Code)
(212) 758-7666
(Registrant's Telephone Number, Including Area Code)
NOT APPLICABLE
(Former Name, Former Address and Former Fiscal Year if changed
since last report)
Indicate by a check mark whether the registrant: (1) has filed all annual,
quarterly and other reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or 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
-- --
Indicate the number of shares outstanding of each of the Registrant's classes of
common stock, as of the close of the latest practicable date.
Class Outstanding at August 14, 2000
---------------------------- ------------------------------
Common Stock, $.01 Par Value 11,966,855
<PAGE>
4KIDS ENTERTAINMENT, INC.
AND SUBSIDIARIES
INDEX
PAGE NUMBER
PART I: FINANCIAL INFORMATION
Item 1: Financial Statements
Consolidated Balance Sheets 1
June 30, 2000 (Unaudited) and
December 31, 1999.
Consolidated Statements of Income 2
Six Months Ended June 30, 2000 and 1999 (Unaudited)
Consolidated Statements of Cash Flows 3
Six Months Ended
June 30, 2000 and 1999 (Unaudited)
Notes to Consolidated Financial 4
Statements (Unaudited)
Item 2: Management's Discussion and Analysis 8
of Financial Condition and Results of Operations
PART II: OTHER INFORMATION 11
<PAGE>
4KIDS ENTERTAINMENT, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
2000 1999
------------ ------------
(UNAUDITED)
<S> <C> <C>
ASSETS
------
CURRENT ASSETS:
Cash and cash equivalents $141,421,897 $ 74,427,126
Accounts receivable - net 20,630,790 45,543,575
Film inventory - net 788,567 155,353
Prepaid/refundable income taxes -- 1,815,434
Prepaid expenses and other current assets 2,549,034 1,201,390
------------ ------------
Total current assets 165,390,288 123,142,878
------------ ------------
FURNITURE, EQUIPMENT AND LEASEHOLD IMPROVEMENTS -
Net of accumulated depreciation and amortization
of $1,584,283 and $1,484,020 1,052,857 217,025
ACCOUNTS RECEIVABLE - Noncurrent, net 1,609,607 1,785,810
FILM INVENTORY - Noncurrent, net 760,582 760,582
DEFERRED INCOME TAXES - Noncurrent 535,553 535,553
SECURITY DEPOSITS AND OTHER ASSETS 639,299 661,799
------------ ------------
TOTAL ASSETS $169,988,186 $127,103,647
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Due to licensors $ 64,682,456 $ 57,034,991
Media payable 1,994,066 2,353,732
Accounts payable and accrued expenses 6,272,343 5,564,361
Income taxes payable 3,409,109 34,841
Deferred revenue (Note 6) 10,791,454 --
Deferred tax liability 1,172,806 1,172,806
------------ ------------
Total current liabilities 88,322,234 66,160,731
------------ ------------
STOCKHOLDERS' EQUITY
Preferred stock, $01 par value - authorized,
3,000,000 shares; none issued
Common stock, $01 par value - authorized, 40,000,000 shares;
issued, 11,966,855 and 11,857,755 shares 119,669 118,578
Additional paid-in capital 27,987,813 26,773,458
Retained earnings 53,558,470 34,050,880
------------ ------------
Total stockholders' equity 81,665,952 60,942,916
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $169,988,186 $127,103,647
============ ============
</TABLE>
See notes to consolidated financial statements
-1-
<PAGE>
4KIDS ENTERTAINMENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
2000 1999 2000 1999
----------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
NET REVENUES: $23,398,277 5,506,954 $44,097,796 $8,758,895
COST AND EXPENSES:
Selling, general and administrative cost 6,649,105 2,298,619 12,167,074 4,389,505
Amortization of capitalized film cost 833,694 -- 834,452 --
----------- ---------- ----------- ----------
TOTAL COST AND EXPENSES 7,482,799 2,298,619 13,001,526 4,389,505
----------- ---------- ----------- ----------
15,915,478 3,208,335 31,096,270 4,369,390
INTEREST INCOME 1,746,113 172,802 2,787,320 318,377
----------- ---------- ----------- ----------
INCOME BEFORE INCOME
TAX PROVISION 17,661,591 3,381,137 33,883,590 4,687,767
INCOME TAX PROVISION 7,484,000 1,453,000 14,376,000 2,015,000
----------- ---------- ----------- ----------
NET INCOME $10,177,591 $1,928,137 $19,507,590 $2,672,767
=========== ========== =========== ==========
PER SHARE AMOUNTS
Basic Earnings per share $0.86 $0.18 $1.64 $0.27
=========== ========== =========== ==========
Diluted Earnings per share $0.78 $0.16 $1.49 $0.23
=========== ========== =========== ==========
Weighted average common shares
outstanding - basic 11,877,860 10,574,026 11,867,808 10,057,228
=========== ========== =========== ==========
Weighted average common share
outstanding - diluted 13,071,556 12,315,092 13,079,634 11,836,702
=========== ========== =========== ==========
</TABLE>
See notes to consolidated financial statements.
-2-
<PAGE>
4KIDS ENTERTAINMENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
SIX SIX
MONTHS ENDED MONTHS ENDED
JUNE 30, JUNE 30,
2000 1999
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $19,507,590 $ 2,672,767
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 132,114 44,514
Amortization of capitalized film cost 834,452 --
Changes in operating assets and liabilities:
Accounts receivable - net 25,088,988 9,515,870
Film inventory (1,467,666) (422,055)
Prepaid/ refundable income taxes 1,815,434 (3,412,463)
Prepaid expenses and other current assets (1,347,644) 11,337
Security deposits and other assets 22,500 (24,996)
Due to licensors 7,647,465 4,629,108
Media payable (359,666) (8,641 957)
Accounts payable and accrued expenses 707,982 (102,805)
Income Taxes payable 3,374,268 (1,626,771)
Deferred revenue 10,791 454 --
------------ -----------
Net cash provided by operating activities 66,747,271 2,642,549
------------ -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (967,946) (36,255)
------------ -----------
Net cash used in investing activities (967,946) (36,255)
------------ -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options
and related tax benefit 1,215,446 6,903,464
------------ -----------
Net cash provided by financing activities 1,215,446 6,903,464
------------ -----------
NET INCREASE IN CASH AND CASH EQUIVALENTS 66,994,771 9,509,758
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 74,427,126 9,749,956
------------ -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $141,421,897 $19,259,714
============ ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
CASH PAID DURING THE PERIOD FOR:
Income Taxes $ 8,729,125 $ 2,707,990
============ ===========
</TABLE>
See notes to consolidated financial statements.
-3-
<PAGE>
4KIDS ENTERTAINMENT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
June 30, 2000
Note 1
The accompanying unaudited 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 Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes as required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
only of normal recurring adjustments) considered necessary for a fair
presentation of the interim financial information have been included. Operating
results for six months ended June 30, 2000 are not necessarily indicative of the
results that may be expected for the year ending December 31, 2000. For further
information, refer to the consolidated financial statements and footnotes
thereto included in 4Kids Entertainment, Inc.'s (the "Company") Form 10-K for
the year ended December 31, 1999.
Note 2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
For a summary of significant accounting policies reference is made to the
Company's report on Form 10-K previously filed for the year ended December 31,
1999.
In November 1999, the SEC issued Staff Accounting Bulletin (SAB) 101, "Revenue
Recognition". This Bulletin sets forth the SEC Staff's position regarding the
point at which it is appropriate for a Registrant to recognize revenue. The
Staff believes that revenue is realizable and earned when all of the following
criteria are met:
.Persuasive evidence of an arrangement exists;
.Delivery has occurred or service has been rendered;
.The seller's price to the buyer is fixed or determinable; and
.Collectibility is reasonably assured.
The Company uses the above criteria to determine whether revenue can be
recognized, and therefore believes that the issuance of this Bulletin does not
have a material impact on these financial statements.
-4-
<PAGE>
Note 3
NET INCOME PER SHARE:
The Company applies Statement of Accounting Standards ("SFAS") No. 128 "Earnings
per Share" which requires the computation and presentation of earnings per share
("EPS") to include basic and diluted EPS. Basic EPS is computed based solely on
the weighted average number of common shares outstanding during the period.
Diluted EPS reflects all potential dilution of common stock. The weighted
average number of common shares outstanding for basic EPS was 11,877,860 and
11,867,808 for the three and six months ended June 30, 2000. The weighted
average number of common shares outstanding for diluted EPS was 13,071,556 and
13,079,634 for the three and six months ended June 30, 2000. For the three and
six months ended June 30,1999, the weighted average number of common shares
outstanding for basic EPS was 10,574,026 and 10,057,228 respectively. For the
three and six months ended June 30,1999, the weighted average number of common
shares outstanding for diluted EPS was 12,315,092 and 11,836,702 respectively.
Note 4
COMMITMENTS AND CONTINGENCIES:
A. CREDIT FACILITY: The Company renegotiated the terms of its Credit Facility
with Chase Manhattan Bank in June 2000. Under the renegotiated terms, the
Company may borrow, from time to time on an unsecured basis, up to $5
million for general working capital purposes. The Credit Facility, which
requires annual renewal, provides for an interest rate equal to the bank's
prime rate and an annual commitment fee of 1/4%. The Credit Facility
expires on June 30, 2001. As of August 14, 2000, the Company had no
borrowings under the facility. The prior terms provided for an interest
rate at the bank's prime rate and an annual commitment fee of 1/2%.
B. LITIGATION:
(i) Imber v. Nintendo, et al. In September 1999, the Company was named as a
defendant in a lawsuit filed in the United States District Court for the
Southern District of California. Also named as defendants in this lawsuit are
Nintendo of America Inc. and Wizards of the Coast, Inc. The lawsuit (purportedly
brought on behalf of a class of all persons who purchased a package of Pokemon
trading cards), seeks to challenge longstanding practices in the trading card
industry, including the practice of randomly inserting premium cards in packages
of Pokemon cards. The lawsuit claims that these practices constitute illegal
gambling activity in violation of California and federal law, including the
Federal Racketeer Influenced and Corrupt Organization Act ("RICO"), and seeks an
award of treble damages.
-5-
<PAGE>
The lawsuit has not specified the amount of damages sought. On April 18, 2000,
the District Court issued an Order to Show Cause in the lawsuit (and in a number
of other lawsuits making similar allegations concerning other types of trading
cards) requiring the plaintiffs in all of the cases to show cause why the cases
should not be dismissed for lack of standing. On June 21, 2000, the Court
dismissed the RICO claims with prejudice and all other claims without prejudice.
Plaintiffs have filed a notice of appeal from the District Court's June 21, 2000
dismissal.
(ii) Paige v. Nintendo, et al. On March 28, 2000, Jason Paige filed suit in
Supreme Court of the State of New York against Nintendo of America Inc., the
Company, Paradise Music and Entertainment, Inc. ("Paradise") and various other
defendants. The suit alleged that Plaintiff's voice was used for advertising,
trade and commercial purposes without Plaintiff's written consent in violation
of Sections 50 and 51 of the Civil Rights Law of the State of New York and
California Civil Code Section 3344 (a). Plaintiff was a singer used by Paradise
(a music company hired by the Company to produce Pokemon musical recordings), to
sing one or more songs for the Pokemon television series.
Plaintiff alleged that his written agreement with Paradise did not permit the
various defendants to allegedly use a Pokemon song containing Plaintiff's voice
in connection with other Pokemon related products.
Although Plaintiff was paid $1,000.00 for his original performance, Plaintiff
claimed that he was due tens of millions of dollars for the allegedly
unauthorized additional uses of Plaintiff's voice. Under the terms of the
Company's agreement with a subsidiary of Paradise, the Company is indemnified
against the Paige claim. This suit was settled in July 2000 at no cost to the
Company beyond the royalty that had previously been accrued for the plaintiff.
(iii) Morrison v. Nintendo, et al. On March 29, 2000, Morrison Entertainment
Group, Inc., filed suit in the United States District Court for the Central
District of California against Nintendo of America Inc., 4 Kids Entertainment,
Inc., and Leisure Concepts, Inc. The suit alleges that the Pokemon trademark
infringes upon the Plaintiff's "Monster in my Pocket" trademark. The complaint
also alleges trademark dilution, unfair competition, and a breach of implied
contract. The complaint seeks injunctive relief as well as monetary damages.
While it is impossible to predict the eventual outcome of these litigations, the
Company believes these litigations will not have a material adverse effect on
the Company's financial condition.
Note 5
STOCK SPLIT
The June 1999 financial statements have been restated to give effect to the 2
for 1 stock split effective for shareholders of record on September 1, 1999.
-6-
<PAGE>
Note 6
DEFERRED REVENUE
The master toy licensee ("Licensee") agreement ("Agreement") for Nintendo's
Pokemon property, calls for, among other things, Licensee to pay a minimum
royalty for the period starting January 1, 2000 and ending December 31, 2001.
This minimum guaranteed royalty is subject to reduction if certain conditions
are not met. Because of the conditions and contingencies contained in the
Agreement, the Company will only recognize revenue from the Agreement as
royalties are earned and reported by Licensee. If all of the conditions under
the Agreement are met and the full amount of the minimum guaranteed royalties
are paid by Licensee, the Company's share would be approximately $30,000,000,
which would be paid in two advances, one-half of which was received before April
1, 2000 and one-half of which would be received on or before April 1, 2001.
Accordingly, at June 30, 2000, the Company had deferred revenue of approximately
$10,791,000 related to its share of advanced royalties received under the
Agreement.
Note 7
SEGMENT AND RELATED INFORMATION
The Company applies Statement of Financial Accounting Standards No. 131 ("SFAS
No. 131"), "Disclosures About Segments of an Enterprise and Related
Information". The Company has three reportable segments; Licensing, Media Buying
Planning and Television Distribution and Television and Film Production.
The accounting policies of the segments are the same as those described in the
summary of significant accounting policies. The Company does not have any
inter-segment sales or transfers.
The Company's reportable segments are strategic business units which, while
managed separately, work together as a vertically integrated Entertainment
Company.
<TABLE>
<CAPTION>
MEDIA & TV & FILM
LICENSING TV DISTRIBUTION PRODUCTION TOTAL
--------- --------------- ---------- -----
<S> <C> <C> <C> <C>
6 Months Ended
June 30,
2000
Revenues $ 35,514,345 $ 903,590 $ 7,679,861 $ 44,097,796
Segment Profit (Loss) 28,156,585 (271,240) 5,998,245 33,883,590
Segment Assets 160,319,349 3,280,536 6,388,301 169,988,186
1999
Revenues $ 7,441,336 $ 1,183,987 $ 133,572 $ 8,758,895
Segment Profit (Loss) 4,593,039 85,899 8,829 4,687,767
Segment Assets 25,032,035 10,126,719 3,636,207 38,794,961
</TABLE>
-7-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS:
The Company receives revenues from a number of sources, principally licensing,
media buying and television distribution. The Company typically derives a
substantial portion of its licensing revenues from a small number of properties,
which properties usually generate revenues only for a limited period of time.
Because the Company's licensing revenues are highly subject to changing fashion
in the toy and entertainment business, its licensing revenues from year to year
from particular sources are subject to dramatic increases and decreases. It is
not possible to precisely anticipate the length of time a project will be
commercially successful, if at all. Popularity of properties can vary from
months to years. As a result, the Company's revenues and net income may
fluctuate significantly between comparable periods. The Company's revenues have
historically been primarily derived from the license of toy and game concepts.
Thus a substantial portion of the Company's revenues and net income are subject
to the seasonal variations of the toy and game industry. Typically, a majority
of toy orders are shipped in the third and fourth calendar quarters. In
addition, the Company's media buying subsidiary concentrates its activities on
the youth oriented market. As a result, most of its revenue is earned in the
fourth quarter when the majority of toy and video game advertising occurs. Due
to these factors, the Company's net income during the second half of the year
has generally been greater than during the first half of the year, although
there can be no certainty that this trend will continue. Additionally, the
Company has little control over the timing of guarantee and minimum royalty
payments, some of which are made upon the execution and delivery of license
agreements.
Three and Six Months Ended June 30, 2000 Compared to the Three and Six Months
Ended June 30, 1999
Consolidated net revenue increased 325% or $17,891,323 to $23,398,277 for the
three month period ended June 30, 2000 as compared to the same period in 1999.
Consolidated net revenue for the six month period increased 403% or $35,338,901
as compared to the six month period ended June 30, 1999. The increase in net
revenue for the three and six month periods was primarily due to increased
revenue related to licensing activities for the Pokemon property and increased
film revenues from the successful release of "Pokemon, The First Movie" home
video on March 21, 2000.
Selling, general and administrative expenses increased 189% or $4,350,486 to
$6,649,105 and 177% or $7,777,569 to $12,167,074 for the three and six month
periods ended June 30, 2000 when compared to the year ago periods. These
increases were primarily due to bonus accruals, which are based on pre-tax
income levels which were higher in 2000 as a result of higher pre-tax income.
Additionally, higher costs were incurred due to an increase in payroll and
marketing costs related to the Company's expanded licensing activities.
-8-
<PAGE>
At June 30, 2000 there were $1,549,149 of capitalized film production costs
which primarily relate to film production costs associated with "Pokemon The
Movie 2000" which was released in theatres on July 21, 2000, film acquisition
costs for the TV series "Tama and Friends" and 26 episodes of "WMAC Masters". At
June 30, 2000, the percentage of total unamortized film cost expected to be
amortized within the next three years exceeds 70%.
The Company periodically evaluates its anticipated revenue from film production
and, consequently, amortization rates may change as a result of such estimates.
Interest income increased by $1,573,311 and $2,468,943 for the three and six
month periods ending June 30, 2000 as compared to the same periods in 1999. This
increase is attributable to higher levels of invested cash during the first
three and six months of the current year as compared to the same period in 1999.
LIQUIDITY AND CAPITAL RESOURCES:
At June 30, 2000 the Company had working capital of $77,068,054 as compared to
working capital of $56,982,147 at December 31, 1999, an increase in working
capital of $20,085,907. Cash and cash equivalents increased by $66,994,771 to
$141,421,897 from December 31, 1999. The increase in cash equivalents is
primarily due to the increased levels of royalties collected from the Company's
licensing business. The increased royalty collections also increase the amounts
due to licensors as described below.
Accounts receivable, net (current and non-current) decreased to $22,240,397 at
June 30, 2000 from 47,329,385 at December 31, 1999. This decrease is primarily
due to the collection by the Company in the first quarter of 2000 of royalties
representing the Company's share of royalties due for the fourth quarter of
1999.
Amounts due to licensors, which represent the owners' share of royalties
collected at June 30, 2000, increased by $7,647,465 to $64,682,456 from December
31, 1999. The increase is primarily due to higher cash payments received on
royalties collected during the second quarter of 2000 as compared to the fourth
quarter of 1999 which are paid to licensors in the third quarter of 2000.
In the opinion of management, the Company will be able to finance its business
as currently conducted from its current working capital and the $5,000,000
credit facility with The Chase Manhattan Bank, discussed in Note 4 to the
financial statements. As of August 14, 2000 there were no amounts outstanding
under this facility. As the Company explores new and expanded opportunities in
the youth oriented entertainment market, including television production, it may
seek additional financing alternatives.
-9-
<PAGE>
Forward-looking Statements
Sections of this Quarterly Report contain forward-looking statements, including,
without limitation, statements concerning possible or assumed future results of
operations of the Company preceded by, followed by or that include the words
"believes, " "expects, " "anticipates, " "estimates, " "intends, " "plans" or
similar expressions. For those statements, we claim the protection of the safe
harbor for forward-looking statements contained in the U.S. Private Securities
Litigation Reform Act of 1995.
Forward-looking statements are not guarantees of future performance. They
involve risks, uncertainties and assumptions. Due to the fact that the Company
faces competition from toy companies, motion picture studios and other licensing
companies, and the uncertainty of the public's response to the Company's
properties, actual results or outcomes may differ materially from any such
forward-looking statements.
-10-
<PAGE>
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
On May 17, 2000, the Company held its annual meeting of stockholders, at which
there were 11,255,149 votes represented in person or by proxy, which constituted
a quorum. At the annual meeting, the following matters were approved by more
than the requisite number of stockholders.
All of the persons nominated to become directors of the Company were elected.
The number of votes cast for and withheld for each director were as follows:
Nominee Votes For Votes Withheld
------- --------- --------------
Alfred R. Kahn 11,066,667 188,482
Joseph P Garrity 11,039,555 215,594
Joel I. Cohen 10,897,941 357,208
Jay Emmett 10,952,037 303,112
A proposal to approve an amendment to the Company's Certificate of Incorporation
to increase the number of shares of authorized 4Kids common stock from
20,000,000 to 40,000,000 shares was approved, with 10,876,954 voted for, 282,473
voted against, 95,722 abstained and 0 broker non-votes.
A proposal to adopt the 4Kids Entertainment, Inc. 2000 Stock Option Plan was
approved, with 10,110,023 voted for, 1,031,831 voted against, 113,245 abstained
and 0 broker non-votes.
A proposal to ratify the appointment of Deloitte & Touche LLP as auditors of the
Company for the fiscal year ending December 31, 2000 was approved, with
11,127,628 voted for, 35,748 voted against, 91,773 abstained and 0 broker
non-votes.
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
27 Financial Data Schedule
b. Reports on Form 8-K
None
-11-
<PAGE>
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.
Dated: August 14, 2000
4KIDS ENTERTAINMENT, INC.
By: /s/ Alfred R. Kahn
---------------------------
Alfred R. Kahn
Chairman of the Board and
Chief Executive Officer
By: /s/ Joseph P. Garrity
---------------------------
Joseph P. Garrity
Executive Vice President
Chief Financial Officer
-12-
