<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: June 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to ____________.
Commission File Number: 0-17458
WRP Corporation
(Exact name of registrant as specified in its charter)
Maryland 73-1326131
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
500 Park Boulevard, Suite 1260
Itasca, IL 60143
(Address of principal executive office)
(630) 285-9191
(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 [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
The number of shares of the issuer's Common Stock, par value $.01 per
share, and issuer's Series A Convertible Common Stock, par value $.01 per share,
outstanding as of August 13, 1999 was 5,673,692 and 1,252,538, respectively.
<PAGE> 2
WRP Corporation
INDEX
PART I - FINANCIAL INFORMATION
<TABLE>
<S> <C> <C>
Item 1.
Consolidated Balance Sheets
June 30, 1999 (unaudited) and December 31, 1998 (audited).................... pg. 1
Consolidated Statements of Operations (unaudited) for the
Three Months Ended June 30, 1999 and 1998.................................... pg. 3
Consolidated Statements of Operations (unaudited) for the
Six Months Ended June 30, 1999 and 1998...................................... pg. 4
Consolidated Statements of Cash Flows (unaudited) for the
Six Months Ended June 30, 1999 and 1998...................................... pg. 5
Notes to Interim Consolidated Financial Statements (unaudited)............... pg. 6
Item 2.
Management's Discussion and Analysis of Financial Condition and
Results of Operations........................................................ pg. 13
Item 3.
Quantitative and Qualitative Disclosure About Market Risk.................... pg. 21
PART II - OTHER INFORMATION
Item 6.
Exhibits and Reports on Form 8-K............................................. pg. 22
</TABLE>
<PAGE> 3
WRP CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
June 30, 1999 December 31, 1998
---------------- ------------------
(Unaudited) (Audited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 48,898 $ 679,725
Accounts receivable - trade, net of allowance for
doubtful accounts of $265,000 in 1999 and
$240,000 in 1998 6,123,654 5,532,405
Due from affiliate 1,768,566 1,340,261
Inventories, net 17,230,119 11,860,855
Prepaid expenses 1,143,104 958,318
Deferred tax assets 465,160 962,190
Other receivables 311,933 509,003
---------------- ----------------
Total current assets 27,091,434 21,842,757
---------------- ----------------
PROPERTY, PLANT AND EQUIPMENT:
Land rights and land improvements 736,535 736,535
Construction in progress 213,666 1,275,667
Equipment, furniture and fixtures 14,498,846 11,357,924
Building improvements 2,022,865 1,689,878
Vehicles 166,273 149,958
---------------- ----------------
Total property, plant and equipment 17,638,185 15,209,962
Less - Accumulated depreciation and amortization (3,547,064) (2,733,225)
---------------- ----------------
Property, plant and equipment, net 14,091,121 12,476,737
---------------- ----------------
OTHER ASSETS:
Goodwill, net of accumulated amortization of $506,211
in 1999 and $472,595 in 1998 1,243,789 1,277,405
Other assets 204,762 203,040
---------------- ----------------
Total other assets 1,448,551 1,480,445
---------------- ----------------
$ 42,631,106 $ 35,799,939
================ ================
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these balance sheets.
1
<PAGE> 4
WRP CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
June 30, 1999 December 31, 1998
--------------- -----------------
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable - trade $ 2,871,964 $ 2,504,225
Trade notes payable to banks 1,636,978 3,322,882
Notes payable and current portion of
long-term obligations 9,672,992 2,086,833
Due to affiliate 4,599,152 3,891,944
Accrued expenses 2,225,848 3,507,487
--------------- ----------------
Total current liabilities 21,006,934 15,313,371
--------------- ----------------
LONG-TERM DEBT 1,476,967 1,668,982
--------------- ----------------
DEFERRED TAX LIABILITY 205,022 152,037
--------------- ----------------
MINORITY INTEREST IN SUBSIDIARY 1,595,845 1,724,113
--------------- ----------------
SHAREHOLDERS' EQUITY:
Series A common stock, $.01 par value, 1,252,538 shares
authorized; 1,252,538 shares issued and outstanding 12,525 12,525
Common stock, $.01 par value, 10,000,000 shares
authorized; 5,803,692 and 5,785,525 shares issued and
outstanding in 1999 and 1998, respectively 58,037 57,855
Additional paid-in capital 17,942,471 17,862,021
Retained earnings 1,656,341 332,071
Less - Common stock in treasury, at cost,
130,000 shares in 1999 and 1998 (1,323,036) (1,323,036)
--------------- ----------------
Total shareholders' equity 18,346,338 16,941,436
--------------- ----------------
$ 42,631,106 $ 35,799,939
=============== ================
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these balance sheets.
2
<PAGE> 5
WRP CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the Three Months
Ended June 30,
-----------------------------------------
1999 1998
---------------- -----------------
(Unaudited) (Unaudited)
<S> <C> <C>
NET SALES $ 13,864,729 $ 15,684,594
COST OF GOODS SOLD 10,160,346 10,970,728
---------------- -----------------
GROSS PROFIT 3,704,383 4,713,866
OPERATING EXPENSES:
Selling, general and administrative 2,831,197 2,510,220
---------------- -----------------
INCOME FROM OPERATIONS 873,186 2,203,646
INTEREST EXPENSE 240,400 320,566
OTHER INCOME 62,838 65,465
---------------- -----------------
Income before provision for income taxes
and minority interest 695,624 1,948,545
PROVISION FOR INCOME TAXES 752,797 350,000
---------------- -----------------
Net (loss) income before minority interest (57,173) 1,598,545
MINORITY INTEREST IN (INCOME) LOSS OF SUBSIDIARY 167,796 (259,488)
---------------- -----------------
Net income $ 110,623 $ 1,339,057
================ =================
BASIC NET INCOME PER COMMON SHARE: $ 0.02 $ 0.20
================ =================
DILUTED NET INCOME PER COMMON SHARE: $ 0.02 $ 0.19
================ =================
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
3
<PAGE> 6
WRP CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the Six Months
Ended June 30,
----------------------------------
1999 1998
--------------- --------------
(Unaudited) (Unaudited)
<S> <C> <C>
NET SALES $ 30,946,476 $ 30,897,932
COST OF GOODS SOLD 22,858,509 21,724,289
--------------- --------------
GROSS PROFIT 8,087,967 9,173,643
OPERATING EXPENSES:
Selling, general and administrative 5,484,190 5,444,040
--------------- --------------
INCOME FROM OPERATIONS 2,603,777 3,729,603
INTEREST EXPENSE 374,692 730,629
OTHER INCOME 125,969 288,817
--------------- --------------
Income before provision for income taxes
and minority interest 2,355,054 3,287,791
PROVISION FOR INCOME TAXES 1,159,051 400,000
--------------- --------------
Net income before minority interest 1,196,003 2,887,791
MINORITY INTEREST IN (INCOME) LOSS OF SUBSIDIARY 128,267 (447,244)
--------------- --------------
Net income $ 1,324,270 $ 2,440,547
=============== ==============
BASIC NET INCOME PER COMMON SHARE: $ 0.19 $ 0.43
=============== ==============
DILUTED NET INCOME PER COMMON SHARE: $ 0.19 $ 0.43
=============== ==============
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
4
<PAGE> 7
WRP CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION> For the Six Months
Ended June 30,
--------------------------------
1999 1998
-------------- ---------------
(Unaudited) (Unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,324,270 $ 2,440,547
Adjustments to reconcile net income to net cash (used in) provided by
operating activities:
Depreciation 813,839 603,803
Amortization 33,616 33,616
Deferred income taxes 550,015 -
Gain on sale of LSAI common stock - (168,375)
Changes in operating assets and liabilities:
Accounts receivable - trade, net (591,249) (11,850)
Inventories, net (5,369,264) (2,704,794)
Prepaid expenses (184,786) 327,409
Other assets 195,348 (18,040)
Accounts payable - trade 367,739 (1,163,227)
Accrued expenses (1,281,639) 1,319,805
Amounts due to (from) affiliate 278,903 3,082,482
Net assets of condom discontinued operations - 19,212
-------------- ---------------
Net cash (used in) provided by operating activities (3,863,208) 3,760,588
-------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (2,428,223) (693,125)
Proceeds on sales of LSAI common stock - 982,892
Minority interest in subsidiary (128,268) 447,245
-------------- ---------------
Net cash (used in) provided by investing activities (2,556,491) 737,012
-------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net payments on trade notes payable to banks (1,685,904) (2,633,076)
Net proceeds from stock option exercises 80,632 245,606
Proceeds from issuance of stock - 6,750,000
Net borrowings (payments) on notes payable 7,394,144 (5,603,005)
Payments to Indonesian minority interest shareholders - (349,900)
-------------- ---------------
Net cash provided by (used in) financing activities 5,788,872 (1,590,375)
-------------- ---------------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (630,827) 2,907,225
CASH AND CASH EQUIVALENTS, beginning of period 679,725 161,981
-------------- ---------------
CASH AND CASH EQUIVALENTS, end of period $ 48,898 $ 3,069,206
============== ===============
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
5
<PAGE> 8
WRP CORPORATION
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1999
1. DESCRIPTION OF BUSINESS:
WRP Corporation (together with its subsidiaries, the "Company") markets
medical examination gloves in the United States through its wholly owned
subsidiary, American Health Products Corporation ("AHPC") and is a manufacturer
of high quality, disposable, powdered and powder-free latex examination gloves
through its 70% owned Indonesian subsidiary, PT WRP Buana Multicorpora ("PT
Buana"). The Company sells its examination gloves primarily to the medical, food
service, dental and retail markets.
2. BASIS OF PRESENTATION:
The unaudited consolidated financial statements have been prepared for
interim periods only and do not include all of the information and note
disclosures required by generally accepted accounting principles. These
consolidated statements should be read in conjunction with the consolidated
financial statements and notes thereto included in the Company's Annual Report
on Form 10-K for the year ended December 31, 1998. The accompanying consolidated
financial statements have not been audited by independent accountants in
accordance with generally accepted accounting standards, but in the opinion of
management, such consolidated financial statements include all adjustments
(consisting solely of normal recurring adjustments) necessary to fairly present
the Company's financial position, results of operations and cash flows. The
results of operations for the six month period ended June 30, 1999 may not be
indicative of the results that may be expected for the year ended December 31,
1999.
3. PRINCIPLES OF CONSOLIDATION:
The accompanying consolidated financial statements include the accounts
of the Company, its wholly owned subsidiary, AHPC, and its 70% owned subsidiary,
PT Buana. Accordingly, PT Buana's assets, liabilities, equity and minority
interest are included in the consolidated financial statements of the Company.
During the first six months of 1999 and 1998, PT Buana sold approximately 16%
and 61%, respectively, of its production of gloves to AHPC. All significant
intercompany transactions have been eliminated in consolidation.
WRP Asia Pacific Sdn. Bhd. (formerly known as Wembley Rubber Products
(M) Sdn. Bhd.), a Malaysian corporation ("WRP Asia"), owns the Series A Common
Stock of the Company and is the majority shareholder of the Company.
<PAGE> 9
4. MAJORITY SHAREHOLDER TRANSACTION:
On March 31, 1998, WRP Asia closed the following two agreements, which
transferred majority ownership in the Company to WRP Asia:
a. MBf International, Ltd. ("MBf International") sold all of the
Company's Series A Common Stock (1,252,538 shares), which was
owned by MBf International to WRP Asia for $5.00 per share or
$6,262,690; and
b. WRP Asia purchased 2,500,000 shares of the Company's
unregistered Common Stock for $2.70 per share for a total of
$6,750,000.
On March 31, 1998, the Company received $6,750,000 from WRP Asia for
the sale of Common Stock and recorded an increase in its Common Stock and
additional paid-in capital for the amount of cash received. These transactions
provided WRP Asia with a 55% ownership interest in the Company at March 31,
1998. At June 30, 1999, WRP Asia had a 54.2% ownership interest in the Company.
At December 31, 1998 MBf International owned 1,682,275 shares of the
Company's Common Stock which represented a 24.4% ownership interest in the
Company. In addition, WRP Asia entered into an agreement on March 31, 1998, with
MBf International (the "Call and Put Option Agreement") which provided WRP Asia
with the right to purchase 50% of the remaining shares owned by MBf
International at $6.00 per share during the one year period beginning March 31,
1999, and provided MBf International with the right to sell up to 1,682,275
shares to WRP Asia at $5.00 per share during that same one year period. In
January, 1999, MBf International sold its 1,682,275 shares to several U.S.
institutional investors, thus eliminating its entire ownership interest in the
Company and terminating the Call and Put Option Agreement with WRP Asia.
WRP Asia is one of the world's leading manufacturers of high quality
disposable gloves, primarily for use by healthcare professionals in the acute
care and alternative care markets and for critical environments in the
electronics industries, scientific laboratories, pharmaceutical industries, food
service industry and other related industries. AHPC has been purchasing the
majority of its powder-free latex exam gloves from WRP Asia for several years.
5. COMMON STOCK:
The terms of the Series A Common Stock owned by WRP Asia are
substantially the same as the Company's Common Stock except:
a. Each share of Series A Common Stock is convertible into one
share of the Company's Common Stock, $.01 par value. The
Company has reserved 1,252,538 shares of Common Stock for
issuance upon conversion of the Series A Common Stock.
b. Series A Common Stock entitles WRP Asia to elect all Class A
directors, who represent a majority of the Company's Board of
Directors and to vote with the
<PAGE> 10
holders of Common Stock as a single class with respect to all
other matters subject to a vote of the shareholders.
6. FOREIGN CURRENCY TRANSACTIONS:
PT Buana's financial statements have been prepared from the records
maintained in the Republic of Indonesia, the country in which PT Buana was
established and operates. PT Buana's functional currency, for U.S. financial
reporting purposes, is the United States dollar, primarily since operations are
heavily dependent on U.S. dollar denominated transactions and economic trends.
Gains and losses from foreign currency exchange transactions are
included in net income in the period in which they occur. During the second
quarters ended June 30, 1999 and 1998, the foreign exchange gains included in
the determination of net income were $28,248 and $145,616, respectively. During
the six months ended June 30, 1999 and 1998, the Company recorded foreign
exchange gains (losses) of $9,021 and ($98,639), respectively.
7. ASIAN ECONOMIC EVENTS:
In the past, the Asian Pacific region experienced an economic situation
that was characterized by reduced activity, illiquidity in certain sectors,
volatile foreign currency exchange, interest rates and stock markets. Recently,
the Asian Pacific region has been recovering from its economic downturn.
During the second quarter of 1999, the Indonesian Rupiah has
strengthened against the U.S. dollar by 23% from 8700 to 6705 Rupiah to the U.S.
dollar. Due to the Company's ownership interest in PT Buana, an Indonesian
factory, and due to the Company's purchase of product from the Asian Pacific
region, the Company can be affected by economic conditions in the region. The
financial statements do not include any adjustment that might result from these
uncertainties and any related effects will be reported in the financial
statements as they become known and estimable.
8. INVESTMENT IN LSAI:
During the first half of 1998, the Company had disposed of its entire
investment in Laboratory Specialists of America, Inc. ("LSAI") and sold 156,405
shares of LSAI and discounted its note receivable from LSAI for $315,000. These
combined transactions resulted in proceeds of $982,892 and a gain on sales of
its investment in LSAI of $168,375 for the six months ended June 30, 1998.
9. NET INCOME PER SHARE:
The Company follows Statement of Financial Accounting Standards No.
128, "Earnings Per Share (EPS)" ("SFAS 128"), which requires dual presentation
of basic and diluted earnings per share for all periods presented. Basic EPS
amounts are based on the weighted-average number of shares of common stock
outstanding during each year while diluted EPS amounts are based on the
weighted-average number of shares of common stock outstanding during the year
and the effect of dilutive stock options and warrants. The weighted-average
number of common shares and common share equivalents outstanding for the three
months ended June 30 are as follows:
<PAGE> 11
THREE MONTHS ENDED THREE MONTHS ENDED
JUNE 30, 1999 JUNE 30, 1998
------------- -------------
Basic weighted-average number of
common shares outstanding 6,926,230 6,866,183
Dilutive effect of common share
equivalents 55,755 66,802
--------- ---------
Diluted weighted-average number of
common shares outstanding 6,981,985 6,932,985
========= =========
The weighted-average number of common shares and common share
equivalents outstanding for the six months ended June 30 are as follows:
SIX MONTHS ENDED SIX MONTHS ENDED
JUNE 30, 1999 JUNE 30, 1998
------------- -------------
Basic weighted-average number of
common shares outstanding 6,921,877 5,613,469
Dilutive effect of common share
equivalents 63,277 66,802
--------- ---------
Diluted weighted-average number of
common shares outstanding 6,985,154 5,680,271
========= =========
At June 30, 1999, there were 6,926,230 shares of the Company's Common
Stock and Series A Common Stock outstanding.
10. ACCOUNTING FOR INCOME TAXES:
The Company records income taxes in accordance with Statement of
Financial Accounting Standards No. 109 ("SFAS 109"). SFAS 109 utilizes the
liability method and deferred taxes are determined based on the estimated future
tax effects of differences between the financial statement and tax basis of
assets and liabilities given the provisions of enacted tax laws. Deferred income
tax provisions and benefits are based on the changes in the deferred tax asset
or tax liability from period to period.
The Company had net operating loss carry forwards ("NOLs") at December
31, 1998 of approximately $2,700,000 which were available to reduce Federal
taxable income in future periods and would begin expiring in 2004. In accordance
with Federal tax regulations, usage of NOLs is subject to limitations in future
years if certain ownership changes occur. Such ownership changes occurred with
the transactions described in Note 4. Because of this factor, the utilization of
the NOLs became limited on March 31, 1998 and the Company began recording a
provision for income taxes in 1998.
During the second quarter of 1999, the Indonesian Rupiah strengthened
against the U.S. dollar causing PT Buana's tax reporting financial statements
(Rupiah financial statements) to report a significant unrealized gain on foreign
exchange, which is taxable in Indonesia. This resulted in additional income tax
expense of $578,796 on PT Buana's U.S. financial statements, which in turn
affected the Company's tax provision by this amount in the second quarter of
1999.
<PAGE> 12
PT Buana's income tax expense will be affected in the future by fluctuations in
the Rupiah exchange rate, relative to the U.S. dollar. For the three months
ended June 30, 1999 and 1998, the Company recorded a provision for income taxes
of $752,797 and $350,000, respectively. For the first half of 1999 and 1998, the
Company recorded a provision for income taxes of $1,159,051 and $400,000,
respectively.
11. CONTINGENCIES:
Over the last several years, numerous product liability lawsuits have
been filed against suppliers and manufacturers of latex gloves alleging, among
other things, adverse allergic reactions. AHPC is one of numerous defendants
that have been named in such lawsuits. At June 30, 1999, there were twenty-nine
lawsuits outstanding against AHPC, three of which were served in the second
quarter of 1999. None of these lawsuits name AHPC as the sole defendant in these
claims. AHPC carries product liability insurance coverage which, management
believes, adequately provides for all legal claims. However, the actual outcome
of these, or any, lawsuits is not subject to certainty, and there can be no
assurances that the Company's reserves or insurance coverage will be adequate to
cover all of the resultant impact of these lawsuits or that the Company will be
able to renew insurance coverage should these outcomes be adverse. Generally,
any award of compensatory damages would be an obligation of the Company's
insurance carrier to the limits of available insurance coverage, while any
punitive damages and the amounts up to the per claim deductible would be borne
by the Company.
12. RECLASSIFICATIONS:
The Company has revised the format of the consolidated statements of
operations which now includes the presentation of the Company's gross profit.
The consolidated statements of operations for the three and six months ended
June 30, 1998 have been restated to conform to the 1999 presentation.
13. COMPREHENSIVE INCOME:
In 1998, the Company adopted Statement of Financial Accounting
Standards No. 130 (SFAS 130), "Reporting Comprehensive Income," which requires
companies to report all changes in equity during a period, except those
resulting from investments by owners and distributions to owners, in a financial
statement for the period in which they are recognized. Comprehensive income for
the three and six months ended June 30, 1999 and 1998 was equal to net income
and there were no accumulated other comprehensive income items during those
periods.
14. SEGMENT REPORTING:
The Company has two business segments: manufacturing and distribution.
These segments are managed as separate strategic business units due to the
distinct nature of their operations and customer bases. The manufacturing
segment, which represents the operations of PT Buana, manufactures primarily
powdered latex gloves and sells them primarily to the Company and WRP Asia. All
operations of the manufacturing segment are located in Indonesia. The
distribution segment involves the procurement and sale of gloves purchased from
the manufacturing segment and other glove vendors and then sold to national and
regional healthcare,
<PAGE> 13
food service, retail and other distributors. The operations of the distribution
segment are located entirely within the U.S.
The Company evaluates segment performance based on income before
provision for income taxes and minority interest ("Pre-tax income").
Transactions between operating segments are made at prevailing market rates.
The following tables provide financial data for the three and six
months ended June 30, 1999 and 1998 for these segments:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
JUNE 30, 1999 MANUFACTURING DISTRIBUTION ELIMINATIONS CONSOLIDATED
------------- ------------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues from external customers $2,364,538 $11,500,191 $ - $13,864,729
Revenues from other operating
segments 348,900 - (348,900) -
Pre-tax income 3,477 692,147 - 695,624
Total assets 16,025,896 26,605,210 - 42,631,106
THREE MONTHS ENDED
JUNE 30, 1998 MANUFACTURING DISTRIBUTION ELIMINATIONS CONSOLIDATED
------------- ------------- ------------ ------------ ------------
Revenues from external customers $2,096,678 $13,587,916 $ - $15,684,594
Revenues from other operating
segments 1,547,700 - (1,547,700) -
Pre-tax income 954,959 993,586 - 1,948,545
Total assets 14,337,927 21,503,697 - 35,841,624
SIX MONTHS ENDED
JUNE 30, 1999 MANUFACTURING DISTRIBUTION ELIMINATIONS CONSOLIDATED
------------- ------------- ------------ ------------ ------------
Revenues from external customers $4,373,701 $26,572,775 $ - $30,946,476
Revenues from other operating
segments 809,537 - (809,537) -
Pre-tax income 36,493 2,318,561 - 2,355,054
Total assets 16,025,896 26,605,210 - 42,631,106
SIX MONTHS ENDED
JUNE 30, 1998 MANUFACTURING DISTRIBUTION ELIMINATIONS CONSOLIDATED
------------- ------------- ------------ ------------ ------------
Revenues from external customers $2,866,282 $28,031,650 $ - $30,897,932
Revenues from other operating
segments 4,523,250 - (4,523,250) -
Pre-tax income 1,580,812 1,706,979 - 3,287,791
Total assets 14,337,927 21,503,697 - 35,841,624
</TABLE>
15. MERGER PROPOSAL CANCELLATION:
On June 7, 1999, the Company was verbally notified by the majority
shareholder, WRP Asia, of its intent to merge with the Company. The proposal was
subject to, among other things,
<PAGE> 14
the approval of the holders of a majority of the outstanding shares of the
Company not held by WRP Asia. The Company's Board of Directors appointed a
special committee of non-employee directors, who were not affiliated with WRP
Asia, to consider the proposal. This special committee retained legal counsel
and financial advisors for the merger. Subsequently, on August 6, 1999, the
special committee and the Company were notified by WRP Asia that their proposal
to merge had been withdrawn due to certain market conditions.
<PAGE> 15
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.(1)
The Company's wholly owned subsidiary, American Health Products
Corporation ("AHPC"), is engaged in the marketing and distribution of high
quality, disposable, medical examination gloves in the United States and has
been in the glove business since its incorporation in January 1989.
The Company's 70% owned subsidiary, PT WRP Buana Multicorpora ("PT
Buana"), owns an Indonesian glove manufacturing plant, which commenced
operations in April 1996. PT Buana manufactures high quality, powdered latex
exam gloves and has recently installed manufacturing equipment to produce
powder-free latex exam gloves.
PT Buana sold approximately 16% of its production to AHPC in the first six
months of 1999 as compared to 61% during the same period in 1998. PT Buana
recorded primarily powdered latex exam glove sales totaling $5.2 million and
$7.4 million during the six months ended June 30, 1999 and 1998, respectively.
AHPC reduced its purchases from PT Buana as a result of the Company's
fulfillment of certain glove purchase obligations with an independent supplier
pursuant to a preexisting contract requirement. PT Buana's remaining production
was primarily sold to WRP Asia. All significant intercompany transactions and
sales have been eliminated in consolidation.
The Company faced several issues in the second quarter of 1999. First,
the price of latex has dropped to its lowest levels in five years, which has
caused pricing instability in the marketplace. As previously announced, the
Company changed to a consignment inventory arrangement with a key customer which
reduced sales in the second quarter by $2.3 million dollars, as such customer
eliminated its prior inventory of gloves. The Company anticipates this to be a
one-time event, with subsequent quarterly sales to be more in line with
traditional volumes. The strengthened Indonesian Rupiah against the U.S. dollar
impacted PT Buana with a $578,796 income tax expense adjustment which
significantly affected the Company's second quarter performance.
The Company was pleased to announce that it was awarded an exclusive
five-year contract to supply the Amerinet, Inc. membership with its glove
products. Amerinet is the largest membership-based group purchasing organization
in the U.S., representing 9,100 member facilities in all 50 states including
hospitals, medical group practices, nursing homes, surgery centers, managed care
organizations, pharmacies and integrated delivery networks. This membership
represents more than 326,000 healthcare beds. The launch of the Amerinet Choice
private label glove products took place in late July 1999.
- --------------------------
(1) Forward looking statements in the Notes to the Company's financial
statements and in this Item 2, Management's Discussion and Analysis of Financial
Condition and Results of Operations, including statements regarding new products
and markets, gross margins, selling, general and administrative expenses,
liquidity and cash needs, and the Company's plans and strategies, are all based
on current expectations and the Company assumes no obligation to update this
information. Numerous factors could cause actual results to differ from those
described in the forward-looking statements. The Company cautions investors that
its business is subject to significant risks and uncertainties. See the risk
factors as disclosed in the Company's Annual Report on Form 10-K for the year
ended December 31, 1998 under the heading "Risks Affecting Forward Looking
Statements and Stock Prices."
<PAGE> 16
The Company began offering a medical examination glove made of nitrile,
a non-latex material. As of the close of the second quarter of 1999, the Company
has stocked a full range of nitrile glove products, which will begin selling in
the third quarter of 1999. The Company has plans to develop and introduce other
new products in the near future as well.
The Company announced on June 7, 1999 that WRP Asia, the Company's
majority shareholder, had proposed to merge with the Company. The Company's
Board appointed a special committee comprised of non-employee and non-WRP Asia
Board Members to evaluate the proposal. Subsequently, on August 6, 1999, the
Company was notified that WRP Asia has withdrawn its merger proposal, citing
certain unfavorable market conditions.
THREE MONTHS ENDED JUNE 30, 1999 COMPARED TO THE THREE MONTHS ENDED JUNE 30,
1998
Net sales for the three months ended June 30, 1999 were $13,864,729
versus net sales of $15,684,594 for the same period in 1998. The predominant
cause for the sales reduction was a one-time switch to an inventory consignment
arrangement with a major customer, which resulted in a reduction of sales in the
amount of approximately $2.3 million, which was publicly announced earlier.
Excluding the sales to this customer, the Company experienced an increase in
unit case volumes sold of 15.9% in the second quarter of 1999 over the same
period in 1998. AHPC's net sales during the second quarter of 1999 reflected
lower average selling prices compared to 1998 by approximately 13.0%, due to
increased pricing pressure in the U.S. marketplace; PT Buana's selling prices
were reduced by over 20.0% in the second quarter of 1999 compared to the same
period in 1998.
Cost of goods sold decreased by 7.4% from $10,970,728 for the three
months ended June 30, 1998 to $10,160,346 for the three months ended June 30,
1999. As a percentage of net sales, cost of goods sold increased from 69.9% for
the three months ended June 30, 1998 to 73.3% for the same period in 1999. The
primary factors associated with the increase in cost of goods sold as a
percentage of net sales were attributable to lower average selling prices by
AHPC and PT Buana and the negative effects of foreign currency in the current
period due to the strengthening of the Indonesian Rupiah. These factors were
partially offset by an increased mix of higher margin powder-free glove sales
and reductions in glove purchase prices from manufacturers.
AHPC is seeking to obtain reduced glove purchase prices from its
suppliers to counteract the impact of its reductions in its sell prices. The
Company believes that the existing sell prices in the U.S. will not remain at
their low levels for an extended period of time due to the low price of latex.
Currently, raw material latex prices are just above the cost to harvest the
commodity, and the Company believes sell prices will begin to increase in the
next twelve months from their current low levels.
As a result of the above factors, the Company's gross profit decreased
21.4% from $4,713,866 for the three months ended June 30, 1998 to $3,704,383 for
the three months ended June 30, 1999. The gross profit percentage decreased from
30.1% in the second quarter of 1998 to 26.7% in the same period of 1999. The
Company expects its gross margins to be affected by changes in product mix,
competition, the price of latex and other factors.
<PAGE> 17
During the second quarter of 1999, the Indonesia factory, PT Buana,
purchased and installed chlorination equipment used for the manufacturing of
powder-free gloves, which produce a higher gross profit margin than powdered
gloves. PT Buana produced only a small quantity of powder-free gloves in the
second quarter, as it will begin shipments of its products in the European
market before sales to the U.S. are made. PT Buana's gross profit percentage was
reduced from 33.8% in the second quarter of 1998 to 14.4% in the same period of
1999 primarily due to the reduction in powdered glove sell prices in the
marketplace and the impact of under utilized capacity at its manufacturing
facility.
The domestic market for exam gloves is converting rapidly from latex
powdered to latex powder-free gloves and to non-latex gloves. This move is a
result of greater user receptivity to powder-free gloves. The chlorination
process used to make powder-free gloves reduces the sensitivity to latex and
eliminates powder levels, which could carry latex particles in the air. Due to
customer demand, the Company is providing and selling more latex powder-free
exam gloves and non-latex gloves. AHPC's sales of latex powder-free exam gloves
were approximately 59.8% of net sales in the three months ended June 30, 1999
versus 43.2% in the comparable period in 1998. The Company expects that this
trend will continue in the remainder of 1999.
Selling, general and administrative expenses increased 12.8% from
$2,510,220 for the three months ended June 30, 1998 to $2,831,197 for the three
months ended June 30, 1999. As a percentage of net sales, selling, general and
administrative expenses increased from 16.0% during the second quarter ended
June 30, 1998 to 20.4% for the same period in 1999. The Company experienced
increased selling expenses related to its efforts to expand its medical and
telesales sales force and prepare for the introduction of the Amerinet and
nitrile product launches, which occurred in July 1999. Additionally, the Company
recorded a one time $120,000 management fee expense in the second quarter of
1999 for services provided by WRP Asia and incurred increased depreciation
expense and consulting and training fees in connection with AHPC's recently
implemented enterprise wide computer systems.
Income from operations decreased 60.4% from $2,203,646 for the three
months ended June 30, 1998 to $873,186 for the three months ended June 30, 1999.
Operating margins decreased from 14.0% in the 1998 period to 6.3% in the 1999
period.
Interest expense decreased in the second quarter of 1999 to $240,400
compared to $320,566 in the second quarter of 1998. This 25% decrease is due to
the fact that U.S. interest rates have decreased in 1999 versus 1998, the
Company's new U.S. debt facility carries a significantly lower interest rate
than the previous debt facility, and due to the fact that PT Buana's debt was
reduced significantly (by $3.75 million) in the second quarter of 1998 when
Indonesian interest rates were at very high rates.
Provision for income taxes increased 115.1% from $350,000 for the three months
ended June 30, 1998 to $752,797 for the three months ended June 30, 1999. The
income tax provision recorded in 1998 is less than the U.S. statutory rate due
to net operating losses available to the Company. During the second quarter of
1999, the Indonesian Rupiah strengthened against the U.S. dollar by 23%,
creating a significant unrealized foreign currency gain on PT Buana's tax
reporting financial statements, which are in Rupiahs. This unrealized gain for
tax reporting purposes caused an additional $578,796 of income tax expense to PT
Buana's U.S. financial statements in the second quarter of 1999. Due to this
additional income tax expense, the effective tax rate in the second quarter of
1999 is significantly greater than U.S. statutory corporate income tax rates.
<PAGE> 18
The minority interest in subsidiary represents the non-owned 30% profit
or loss in PT Buana. For the three months ended June 30, 1999, PT Buana recorded
a significant net loss attributable to its income tax expense recorded in the
second quarter of 1999.
Net income decreased by 91.7% from $1,339,057 for the three months
ended June 30, 1998 to $110,623 in the same period of 1999. Due to the
aforementioned factors, net income as a percentage of net sales decreased from
8.5% in 1998 to 0.89% in 1999.
SIX MONTHS ENDED JUNE 30, 1999 COMPARED TO THE SIX MONTHS ENDED JUNE 30, 1998
Net sales for the six months ended June 30, 1999 were $30,946,476, which
represents flat sales growth over the comparable 1998 period with net sales of
$30,897,932. The predominant cause for the flat sales growth was the one-time
inventory consignment arrangement that occurred in the second quarter of 1999.
Cost of goods sold increased 5.2% from $21,724,289 for the six month
period ended June 30, 1998 to $22,858,509 for comparable 1999 period. As a
percentage of net sales, cost of goods sold increased from 70.3% for the six
months ended June 30, 1998 to 73.9% for the same period in 1999. The Company's
gross profit margin was unfavorably impacted by PT Buana's reduced sell prices
on its powdered exam gloves and the negative effects of foreign currency in this
period of a strengthened Indonesian Rupiah. Due to market conditions for
powdered gloves, PT Buana's powdered glove sell prices declined by approximately
20% in the first half of 1999 versus the same period in 1998; PT Buana's gross
profit margin was reduced from 36.3% in the first six months of 1998 to 16.6% in
the comparable period in 1999. In addition, the increase in cost of goods sold
as a percentage of net sales was attributed to lower average sell prices in 1999
offset by a shift of product mix to higher margin powder-free gloves in 1999 as
well as reduced glove purchase prices. The Company's gross profit percentage
declined from 29.7% for the six months ended June 30, 1998 to 26.1% for the six
months ended June 30, 1999.
Selling, general and administrative expenses increased by 0.7% from
$5,444,040 for the six months ended June 30, 1998 to $5,484,190 for the six
months ended June 30, 1999. As a percentage of net sales, selling, general and
administrative expenses increased from 17.6% for the six months ended June 30,
1998 to 17.7% for the six months ended June 30, 1999. This increase of $40,150
in selling, general and administrative expenses is attributable to an increase
in selling compensation costs of $351,600 due to the planned expansion of the
Company's telesales and medical sales force, the one-time management fee of
$120,000 charged by WRP Asia in the second quarter of 1999, and an increase in
depreciation expense of $86,900, offset by reductions in administrative salary
and related costs at AHPC of $164,400, reduced freight delivery expenses of
$195,300, and reduced foreign currency exchange losses. The Company expects to
make additional investments in sales and marketing personnel to further develop
and penetrate established markets and to introduce new products to the
marketplace. Accordingly, the Company expects that its selling, general and
administrative expenses will continue to increase in absolute dollars, but may
decline as a percentage of net sales in the future.
<PAGE> 19
Income from operations decreased by 23.9% from $3,729,603 for the six
months ended June 30, 1998 to $2,603,777 for the six months ended June 30, 1999.
Operating margins decreased from 12.1% in the 1998 period to 8.4% in the 1999
period.
Interest expense decreased from $730,629 during the six months ended
June 30, 1998 to $374,692 in the comparable period in 1999. This decrease in
interest expense of $355,937 is due to (i) $3.75 million of PT Buana's debt
(representing approximately 50% of its outstanding debt) having been repaid in
the second quarter of 1998 as Indonesian rates were excessively high; (ii) the
Company's new debt agreement entered into on December 1, 1998 carries a lower
rate than the previous debt facility; (iii) the prime rate and commercial paper
rates are lower in the first half of 1999 than the same period in 1998, and to a
lesser extent; (iv) the Company paid off $100,000 of its $2,000,000 unsecured
debenture in the first half of 1999. The 1998 PT Buana debt repayments were made
with the Company's proceeds from the sale of Common Stock to WRP Asia on March
31, 1998. All intercompany interest income and interest expense is eliminated in
consolidation.
Other income consists of rental income, interest income and
miscellaneous income. Other income for the six months ended June 30, 1999 was
$125,969 compared to $288,817 for the comparable period in 1998. This decrease
in other income of $162,848 is due to the disposal of the investment in LSAI in
1998, which generated a gain of $168,375.
The provision for income taxes increased from $400,000 for the six
months ended June 30, 1998 to $1,159,051 for the six months ended June 30, 1999.
The 1998 income tax provision is less than the U.S. statutory rates due to net
operating losses, which were available to the Company. At December 31, 1998, the
Company's U.S. operations had net operating loss carry forwards of $2.7 million,
limited to approximately $1.3 million per year. The 1999 provision for income
taxes is greater than U.S. statutory rates as a result of the income tax expense
associated with PT Buana in the second quarter of 1999.
The minority interest in subsidiary represents the non-owned 30% profit
or loss in PT Buana. For the six months ended June 30, 1999, PT Buana recorded a
significant loss attributed to its income tax expense incurred in the second
quarter of 1999. PT Buana reported a profit during the six months ended June 30,
1998 of which the minority interest portion represented $447,244.
Net income decreased by $1,116,277 or 45.7% from $2,440,547 for the six
months ended June 30, 1998 to $1,324,270 in the 1999 period due to the
previously mentioned factors.
LIQUIDITY AND CAPITAL RESOURCES:
Cash and cash equivalents at June 30, 1999 were $48,898 and decreased
$630,827 from $679,725 at December 31, 1998. The Company experienced a decrease
in cash flows in the first half of 1999 primarily from cash used in operating
and investing activities, offset by cash provided by financing activities. The
Company generated cash from financing activities of $5,788,872 principally from
additional borrowings on its line of credit in the amount of $7,394,144. These
borrowings were made to build up inventory levels primarily for the Amerinet and
nitrile product launches, as well as to make its capital asset acquisitions.
<PAGE> 20
The Company's operations used cash of $3,863,208 as a result of
increases in accounts receivable of $591,249 and inventories of $5,369,264 and a
reduction in accrued expenses of $1,281,639, offset by net income of $1,324,270
and non-cash depreciation expense of $813,839. Trade accounts receivable at June
30, 1999 increased to $6,123,654 compared with $5,532,405 at December 31, 1998.
This increase is due to increased sales volume for the month of June 1999 and
due to a strong collection effort during the month of December 1998, which
reduced the Company's outstanding accounts receivable.
The Company's inventory levels at June 30, 1999 were $17.2 millions
versus $11.9 million at December 31, 1999. This represents an increase of 45.3%
and is attributed to (i) inventory returns of approximately $2.3 million in the
second quarter of 1999 for the switch to consignment; (ii) an inventory build-up
of almost $2.2 million of Amerinet private label, nitrile and other products for
the July 1999 launches; and (iii) the fulfillment of certain glove purchase
obligations with an independent supplier pursuant to a preexisting contract
requirement.
The Company used cash in investing activities of $2,556,491 primarily
for capital expenditures totaling $2,428,223 in the first half of 1999. The
Company purchased manufacturing equipment at PT Buana in the amount of
$1,830,824, primarily for chlorination machinery and equipment used for the
production of powder-free gloves. PT Buana has produced minimal quantities of
powder-free latex exam gloves in the second quarter of 1999 and will preview its
product in the European market before it is sold to the U.S. AHPC made capital
expenditures of $597,399 in the first half of 1999, primarily for the
implementation of its new enterprise wide computer system, which was
successfully implemented in the second quarter of 1999.
On December 1, 1998, AHPC obtained a domestic two-year credit facility
from a large commercial credit company, GE Capital. This asset based lending
loan and security agreement included a $10,000,000 revolving line of credit with
a $7,000,000 letter of credit subfacility. The line of credit borrowings carry
an interest rate of commercial paper plus 2.75% (7.8% at June 30, 1999). On
March 31, 1999, AHPC amended its loan and security agreement by increasing the
maximum credit loan limit from $10,000,000 to $15,000,000. As part of the
amendment, the letter of credit subfacility was increased from $7,000,000 to
$11,000,000. At June 30, 1999, AHPC had outstanding $8,705,684 on the revolving
line of credit and $1,636,978 of letter of credit liabilities under the credit
facility.
In October 1994, pursuant to two debenture and warrant purchase
agreements between the Company and two trusts affiliated with a director of the
Company, the Company issued, and each trust purchased, a convertible
subordinated debenture in the amount of $1,000,000 payable in seven years with
interest at 1.5% over the prime rate. Each debenture is convertible into Common
Stock of the Company at a conversion price of $25.00 per share. In addition,
each trust received a warrant exercisable over five years to purchase 3,750
shares of Common Stock of the Company at an exercise price of $22.20 per share.
At June 30, 1999 and December 31, 1998, total debt of $1,900,000 and $2,000,000,
respectively, was outstanding. During the first quarter of 1999, the Company
repaid $100,000 against this debt. The Company anticipates additional repayments
of this debt in 1999 and has classified $1,400,000 of this debt as long-term at
June 30, 1999 and December 31, 1998.
<PAGE> 21
The Company expects to have cash needs during the remainder of 1999 and
beyond, in addition to funding the expected growth in the glove business. These
cash needs may arise in connection with various events such as for: (i) the
expansion into new glove products; (ii) paying off debt obligations,
particularly the remaining long-term debt; (iii) the continued hiring of
additional full time members of its sales force; (iv) the hiring of additional
support staff; (v) the possible funding of Indonesian income taxes created by
foreign currency fluctuations; and (vi) for possible acquisitions. The Company
believes that its cash and cash to be generated from future operations plus its
credit facility will be sufficient to fund the Company's ongoing operations.
YEAR 2000 OVERVIEW
The crux of the Year 2000 ("Y2K") issue is whether information
technology (I.T.) systems and non-I.T. systems will be able to recognize and
process date-sensitive information before and after the Year 2000. The Company
relies, directly and indirectly, on I.T. systems, such as desktop computers,
network hardware equipment and applications software to manage its business
data. The Company also relies on non-I.T. systems including office equipment,
security systems and telephone systems, to carry out its day-to-day operations.
In addition, third party suppliers and customers rely on I.T. and non-I.T.
systems to manage their businesses. The Y2K issue could potentially affect all
of their systems. In order to minimize the exposure of Y2K related risks, the
Company completed a comprehensive assessment of its Y2K issues and identified
its non-Y2K compliant I.T. and non-I.T. systems that are material to the
Company's operations.
The Company has identified four stages for its Y2K compliance effort:
(i) Assessment; (ii) Planning; (iii) Implementation; and (iv) Testing. The
Assessment stage involved the determination of the readiness status of all I.T.
and non-I.T. systems. The Planning stage identified the actions required to
achieve a ready state. During the Implementation stage, any identified deficient
components are replaced or upgraded. The replacements and upgrades are verified
during the Testing stage.
The Company's Y2K assessment focuses primarily on four areas: (i)
information technology equipment; (ii) applications software; (iii)
non-information technology systems and infrastructure; and (iv) third party
suppliers and customers. The assessment phase involved analyzing all I.T.
equipment, applications software, and non-I.T. systems used by the Company. The
Company has also identified and evaluated third parties critical to the
Company's operations on their Y2K preparedness. The readiness status of third
parties has been determined through certifications requested from, or
questionnaires sent to, all suppliers and customers material to its operations.
The Company's Assessment stage is completed, including the analysis of
the PT Buana manufacturing facility, located in Indonesia. The Planning stage is
completed and to date, the Implementation stage is about 90% complete, with
additional testing needed on the I.T. systems only; the Implementation stage
will be finalized in August 1999. The Testing stage is now 60% complete; the
Testing stage is in progress and is anticipated to be completed in September
1999.
YEAR 2000 COSTS
<PAGE> 22
The total costs associated with becoming Y2K compliant are estimated to
be $1,500,000, of which approximately $1,400,000 was spent on upgrading and
installing the new enterprise wide business applications hardware and software.
YEAR 2000 RISKS
The failure to address a material Y2K problem increases the possibility
of interruption or failure of certain normal business activities of the Company.
Such failures could have a material adverse effect on the Company's results of
operations and financial condition. The likely "worst case scenario" for the
Company with respect to the Year 2000 Issue is the failure of suppliers,
particularly a glove supplier, to be compliant such that the supply of products
or services to the Company is temporarily interrupted. Additionally, ocean
freight carriers, port authorities and transportation companies may not be Y2K
compliant. This could result in the Company not being able to supply product to
meet the full demands of its customers, which in turn could result in lost sales
and profits.
Due to the general uncertainty inherent in the Y2K problem resulting in
part from the uncertainty of the readiness of third parties and of the
infrastructure in those countries in which the Company operates, there can be no
assurance that the Year 2000 Issue will not have a material adverse impact on
the Company's results of operations or financial condition. However, the Company
expects its Y2K remediation efforts to significantly reduce the Company's risks
regarding the Year 2000 Issue. Furthermore, the Company believes that, with the
implementation of new business systems and the completion of its Y2K remediation
plan as scheduled, the possibility of significant interruptions of normal
operations should be minimal.
<PAGE> 23
ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.
The Company is exposed to the impact of interest rate changes, foreign
currency fluctuations and changes in the market value of investments. The
Company has not entered into interest rate caps or collars or other hedging
instruments.
Exposure to changes in interest rates is limited to borrowings under
revolving credit and debt agreements, which have variable interest rates tied to
the prime and commercial paper rates. The Company estimates that the fair value
of each debt instrument approximated its market value at June 30, 1999.
The Company is subject to fluctuations in the value of the Indonesian
Rupiah vis-a-vis the U.S. dollar. The investment in the Indonesian subsidiary is
remeasured into the U.S. dollar and the book value of the assets and liabilities
of this operation at June 30, 1999 approximated its fair value.
<PAGE> 24
ITEM 6.
EXHIBIT AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K
The Company did not file any Reports on Form 8-K during the quarter
covered by this Form 10-Q.
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.
WRP Corporation
(Registrant)
Date: August 13, 1999 By: /s/ Edward J. Marteka
---------------------
Name: Edward J. Marteka
Title: President
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