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 September 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 November 14, 2000
----- --------------------------------
Common Stock, $.01 Par Value 12,080,493
<PAGE>
4KIDS ENTERTAINMENT, INC.
AND SUBSIDIARIES
INDEX
PAGE NUMBER
PART I: FINANCIAL INFORMATION
Item 1: Financial Statements
Consolidated Balance Sheets 1
September 30, 2000 (Unaudited) and
December 31, 1999.
Consolidated Statements of Income 2
Nine Months Ended September 30, 2000 and 1999 (Unaudited)
Consolidated Statements of Cash Flows 3
Nine Months Ended
September 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
SEPTEMBER 30, DECEMBER 31,
2000 1999
------------- ------------
ASSETS (UNAUDITED)
CURRENT ASSETS:
Cash and cash equivalents $152,323,526 $ 74,427,126
Short-term investments: commercial paper 11,388,473 --
Accounts receivable - net 21,125,030 45,543,575
Film inventory - net 2,136,322 155,353
Prepaid/refundable income taxes -- 1,815,434
Prepaid expenses and other current assets 2,629,466 1,201,390
------------ ------------
Total current assets 189,602,817 123,142,878
------------ ------------
FURNITURE, EQUIPMENT AND LEASEHOLD IMPROVEMENTS -
Net of accumulated depreciation
and amortization of
$1,663,574 and $1,484,020 1,191,326 217,025
ACCOUNTS RECEIVABLE - Noncurrent, net 1,933,420 1,785,810
FILM INVENTORY - Noncurrent, net 428,278 760,582
DEFERRED INCOME TAXES - Noncurrent 535,553 535,553
SECURITY DEPOSITS AND OTHER ASSETS 639,299 661,799
------------ ------------
TOTAL ASSETS $194,330,693 $127,103,647
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Due to licensors $ 79,974,424 $ 57,034,991
Media payable 1,880,102 2,353,732
Accounts payable and accrued expenses 10,623,202 5,564,361
Income taxes payable 1,380,024 34,841
Deferred revenue 6,031,713 --
Deferred tax liability 1,172,806 1,172,806
------------ ------------
Total current liabilities 101,062,271 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,
12,063,105 and 11,857,755 shares 120,631 118,578
Additional paid-in capital 28,866,701 26,773,458
Retained earnings 64,281,090 34,050,880
------------ ------------
Total stockholders' equity 93,268,422 60,942,916
------------ ------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $194,330,693 $127,103,647
============ ============
See notes to consolidated financial statements
-1-
<PAGE>
4KIDS ENTERTAINMENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
2000 1999 2000 1999
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
NET REVENUES: $24,740,549 $16,833,357 $68,838,345 $25,592,252
COST AND EXPENSES:
Selling, general and administrative cost 6,347,604 4,034,272 18,514,678 8,423,777
Amortization of capitalized TV,
film and theater costs 1,595,584 1,112,500 2,430,036 1,112,500
----------- ----------- ----------- -----------
TOTAL COST AND EXPENSES 7,943,188 5,146,772 20,944,714 9,536,277
----------- ----------- ----------- -----------
16,797,361 11,686,585 47,893,631 16,055,975
INTEREST INCOME 1,849,259 297,554 4,636,579 615,931
----------- ----------- ----------- -----------
INCOME BEFORE INCOME
TAX PROVISION 18,646,620 11,984,139 52,530,210 16,671,906
INCOME TAX PROVISION 7,924,000 5,154,000 22,300,000 7,169,000
----------- ----------- ----------- -----------
NET INCOME $10,722,620 $ 6,830,139 $30,230,210 $ 9,502,906
=========== =========== =========== ===========
PER SHARE AMOUNTS
Basic Earnings per share $ 0.90 $ 0.61 $ 2.54 $ 0.91
=========== =========== =========== ===========
Diluted Earnings per share $ 0.82 $ 0.54 $ 2.31 $ 0.78
=========== =========== =========== ===========
Weighted average common shares
outstanding - basic 11,979,760 11,148,828 11,905,125 10,421,094
=========== =========== =========== ===========
Weighted average common share
outstanding - diluted 13,119,506 12,684,357 13,092,925 12,119,254
=========== =========== =========== ===========
</TABLE>
See notes to consolidated financial statements.
-2-
<PAGE>
4KIDS ENTERTAINMENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
NINE NINE
MONTHS ENDED MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
2000 1999
------------- --------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 30,230,210 $ 9,502,906
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 210,500 71,865
Amortization of capitalized film cost 2,430,036 1,112,500
Changes in operating
assets and liabilities:
Accounts receivable - net 24,270,935 (1,646,229)
Film inventory - net (4,078,701) (1,429,957)
Prepaid/refundable income taxes 1,815,434 (7,255,403)
Prepaid expenses and other current assets (1,428,076) (95,547)
Security deposits and other assets 22,500 (49,996)
Due to licensors 22,939,433 13,759,239
Media payable (473,630) (9,122,815)
Accounts payable and accrued expenses 5,058,841 4,460,340
Income taxes payable 1,345,183 (1,750,799)
Deferred revenue 6,031,713 --
------------- -------------
Net cash provided by operating activities 88,374,378 7,556,104
------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Increase in short-term investments (11,388,473) --
Purchase of property and equipment (1,184,801) (80,470)
------------- -------------
Net cash used in investing activities (12,573,274) (80,470)
------------- -------------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds from exercise
of stock options and
related tax benefit 2,095,296 16,330,252
------------- -------------
Net cash provided by
financing activities 2,095,296 16,330,252
------------- -------------
NET INCREASE IN CASH AND
CASH EQUIVALENTS 77,896,400 23,805,886
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 74,427,126 9,749,956
------------- -------------
CASH AND CASH EQUIVALENTS,
END OF PERIOD $ 152,323,526 $ 33,555,842
============= =============
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION:
CASH PAID DURING THE PERIOD FOR:
Income Taxes $ 8,641,000 $ 3,003,721
============= =============
See notes to consolidated financial statements.
-3-
<PAGE>
4KIDS ENTERTAINMENT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
September 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 the nine months ended September 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>
Investments
Management determines the appropriate classification of its debt securities at
the time of purchase. Debt securities for which the Company has both the intent
and ability to hold to maturity are classified as held to maturity. These
securities are carried at amortized cost. At September 30, 2000, the Company had
no investments that qualified as trading or available for sale.
At September 30, 2000 the Company's investments in debt securities were
classified as short-term investments. The Company maintains these balances
principally in commercial paper with various financial institutions. These
financial institutions are located in different areas of the U.S. and Company
policy is designed to limit exposure to any one institution. The Company
performs periodic evaluations of the relative standing of those financial
institutions that participate in the Company's investment strategy.
The estimated fair value of each investment approximated the amortized cost and
therefore, there are no unrealized gains or losses as of September 30, 2000.
Fair Value of Financial Instruments
Carrying amounts of certain of the Company's financial instruments, including
cash and equivalents, accrued payroll, and other accrued liabilities,
approximate fair value because of their short maturities. The fair values of
investments are determined using quoted market prices for those securities or
similar financial instruments.
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 11,979,760 and
11,905,125 for the three and nine months ended September 30, 2000. The weighted
average number of common shares outstanding for diluted EPS was 13,119,506 and
13,092,925 for the three and nine months ended September 30, 2000. For the three
and nine months ended September 30,1999, the weighted average number of common
shares outstanding for basic EPS was 11,148,828 and 10,421,094 respectively. For
the three and nine months ended September 30,1999, the weighted average number
of common shares outstanding for diluted EPS was 12,684,357 and 12,119,254
respectively.
-5-
<PAGE>
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 November 14, 2000, the Company had no
borrowings under this 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.
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, and the appeal is pending.
(ii) 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.
-6-
<PAGE>
Note 5
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 September 30, 2000, the Company had deferred revenue of
$6,031,713, of which $5,693,849 related to its share of advanced royalties
received under the Agreement.
Note 6
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>
9 Months Ended
September 30,
2000
Revenues $ 53,887,989 $ 1,859,712 $ 13,090,644 $ 68,838,345
Amortization -- -- -- --
Segment Profit (Loss) 42,987,353 157,898 9,384,959 52,530,210
Segment Assets 178,233,935 5,631,023 10,465,735 194,330,693
1999
Revenues $ 23,274,356 $ 1,861,697 $ 456,199 $ 25,592,252
Amortization -- -- 1,112,500 1,112,500
Segment Profit (Loss) 17,421,811 111,438 (861,343) 16,671,906
Segment Assets 59,165,631 5,825,032 3,149,615 68,140,278
</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 Nine Months Ended September 30, 2000 Compared to the Three
and Nine Months Ended September 30, 1999
Consolidated net revenue increased 47% or $7,907,192 to $24,740,549 for the
three month period ended September 30, 2000 as compared to the same period in
1999. Consolidated net revenue for the nine month period increased 169% or
$43,246,093 as compared to the nine month period ended September 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 57% or $2,313,332 to
$6,347,604 and 120% or $10,090,901 to $18,514,678 for the three and nine month
periods ended September 30, 2000 when compared to the same periods last year.
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 September 30, 2000 there were $2,564,600 of capitalized film production costs
which primarily relate to movie production costs associated with "Pokemon The
Movie 2000" which was released in theatres on July 21, 2000, as well as film
acquisition costs for the TV series "Tama and Friends", Cubix and 26 episodes of
"WMAC Masters". At September 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 $1,551,705 and $4,020,648 for the three and nine
month periods ending September 30, 2000 as compared to the same periods in 1999.
These increases are attributable to higher levels of invested cash during the
first three and nine months of the current year as compared to the same period
in 1999.
LIQUIDITY AND CAPITAL RESOURCES:
At September 30, 2000 the Company had working capital of $88,540,546 as compared
to working capital of $56,982,147 at December 31, 1999, an increase in working
capital of $31,558,399. Cash and cash equivalents increased by $77,896,400 to
$152,323,526 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 $23,058,450 at
September 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 September 30, 2000, increased by $22,939,433 to $79,974,424 from
December 31, 1999. The increase is primarily due to higher cash payments
received on royalties collected during the third quarter of 2000 as compared to
the fourth quarter of 1999 which are paid to licensors in the fourth 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 November 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 2000 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: November 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-
