-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, AhLTn1E5o10lTLaatNiRrWhh4J/A3kfbKSVZegvR+hYcraayCnxM84ZL5YjG88uo +uC+RRtD53wp47vbOZC2/A== 0000912057-02-024591.txt : 20020618 0000912057-02-024591.hdr.sgml : 20020618 20020618153021 ACCESSION NUMBER: 0000912057-02-024591 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20020504 FILED AS OF DATE: 20020618 FILER: COMPANY DATA: COMPANY CONFORMED NAME: EAGLE FOOD CENTERS INC CENTRAL INDEX KEY: 0000030908 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-GROCERY STORES [5411] IRS NUMBER: 363548019 STATE OF INCORPORATION: DE FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-17871 FILM NUMBER: 02681465 BUSINESS ADDRESS: STREET 1: RTE 67 KNOXVILLE RD CITY: MILAN STATE: IL ZIP: 61264 BUSINESS PHONE: 3097877730 MAIL ADDRESS: STREET 1: PO BOX 6700 CITY: ROCK ISLAND STATE: IL ZIP: 61204-6700 10-Q 1 a2082430z10-q.txt FORM 10-Q 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 MAY 4, 2002 ----------- OR / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from Commission File Number 0-17871 -------- EAGLE FOOD CENTERS, INC. ------------------------ (Exact name of registrant as specified in the charter) DELAWARE 36-3548019 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) RT. 67 & Knoxville Rd., Milan, Illinois 61264 -------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (309) 787-7700 -------------- 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 / / Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court: Yes /X/ No / / The number of shares of the Registrant's Common Stock, par value four cents ($0.04) per share, outstanding at June 14, 2002 was 3,110,935. Page 1 of 12 pages PART I - FINANCIAL INFORMATION ITEM 1: FINANCIAL STATEMENTS EAGLE FOOD CENTERS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED)
QUARTER ENDED MAY 4, 2002 MAY 5, 2001 ----------- ----------- (as adjusted, see "Inventories" note) Sales $ 161,709 $ 162,117 Cost of goods sold 117,323 116,448 ----------- ----------- Gross margin 44,386 45,669 Operating expenses: Selling, general and administrative 40,380 39,348 Depreciation and amortization 4,555 4,523 ----------- ----------- Operating income (loss) (549) 1,798 Interest expense 3,108 3,200 ----------- ----------- Loss before extraordinary item (3,657) (1,402) Extraordinary item - gain on extinguishment of debt 478 554 ----------- ----------- Net loss $ (3,179) $ (848) =========== =========== Basic and diluted net loss per share: Net loss before extraordinary item $ (1.17) $ (0.44) Extraordinary item 0.15 0.17 ----------- ----------- Net loss $ (1.02) $ (0.27) =========== =========== Weighted average basic shares outstanding 3,118,652 3,197,971
See notes to the unaudited consolidated financial statements. 2 EAGLE FOOD CENTERS, INC. CONSOLIDATED BALANCE SHEETS (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED)
MAY 4, 2002 FEBRUARY 2, 2002 ----------- ---------------- (as adjusted, see "Inventories" note) ASSETS Current assets: Cash and cash equivalents $ 1,802 $ 4,667 Restricted assets 6,859 7,901 Accounts receivable, net of allowance for doubtful accounts of $1.2 million in fiscal 2002 and fiscal 2001 9,355 9,553 Inventories 62,697 65,016 Prepaid expenses and other 3,137 2,870 --------- --------- Total current assets 83,850 90,007 Property and equipment, net 105,741 107,307 Other assets: Deferred software costs, net 5,796 6,740 Property held for resale, net 3,034 3,056 Other 1,167 1,352 --------- --------- Total other assets 9,997 11,148 --------- --------- Total assets $ 199,588 $ 208,462 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 25,369 $ 29,236 Payroll and associate benefits 11,508 12,441 Accrued liabilities 10,179 14,536 Reserve for closed stores 128 364 Accrued taxes 6,105 5,647 Current portion of long term debt 852 833 --------- --------- Total current liabilities 54,141 63,057 Long term debt: Senior Notes, net 63,723 64,659 Capital lease obligations 32,863 33,037 Loan and Security Agreement 27,971 23,325 Other 420 466 --------- --------- Total long term debt 124,977 121,487 Other liabilities: Reserve for closed stores 1,262 1,302 Other deferred liabilities 7,843 7,995 --------- --------- Total other liabilities 9,105 9,297 --------- --------- Total liabilities 188,223 193,841 --------- --------- Shareholders' equity: Preferred stock, $.01 par value, 100,000 shares authorized -- -- Common stock, $.04 par value, 4,500,000 shares authorized, 3,357,605 shares issued 134 134 Capital in excess of par value 55,464 55,464 Common stock in treasury, at cost, 246,044 and 229,351 shares (2,382) (2,369) Accumulated other comprehensive income(loss) (1,960) (1,896) Accumulated deficit (39,891) (36,712) --------- --------- Total shareholders' equity 11,365 14,621 --------- --------- Commitments and contingencies Total liabilities and shareholders' equity $ 199,588 $ 208,462 ========= =========
See notes to the unaudited consolidated financial statements. 3 EAGLE FOOD CENTERS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (DOLLARS IN THOUSANDS) (UNAUDITED)
QUARTER ENDED -------------------------- MAY 4, 2002 MAY 5, 2001 ----------- ----------- (as adjusted, see "Inventories" note) CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $(3,179) $ (848) Adjustments to reconcile net loss to net cash flows from operating activities: Extraordinary gain on extinguishment of debt (478) (554) Depreciation and amortization 4,555 4,523 Deferred charges and credits 172 208 Gain on disposal of assets 1 15 Changes in assets and liabilities: Receivables and other assets 44 440 Inventories 2,319 (2,736) Accounts payable (3,867) 2,503 Accrued and other liabilities (4,904) (4,727) Principal payments on reserve for closed stores (302) (3,032) ------- ------- Net cash flows from operating activities (5,639) (4,208) ------- ------- CASH FLOWS FROM INVESTING ACTIVITIES: Sales (purchases) of marketable securities, net 978 (518) Additions to property and equipment (2,119) (1,322) Cash proceeds from sale/leasebacks or dispositions of property and equipment 46 28 ------- ------- Net cash flows from investing activities (1,095) (1,812) ------- ------- CASH FLOWS FROM FINANCING ACTIVITIES: Deferred financing costs -- (35) Principal payments on capital lease obligations (201) (226) Principal payments on senior notes (563) (782) Net revolving loans 4,646 8,264 Purchase of treasury stock (13) -- ------- ------- Net cash flows from financing activities 3,869 7,221 ------- ------- NET CHANGE IN CASH AND CASH EQUIVALENTS (2,865) 1,201 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 4,667 263 ------- ------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,802 $ 1,464 ======= ======= Supplemental disclosures of cash flow information: Cash paid for interest $ 4,758 $ 5,031 Noncash investing and financing activities: Unrealized loss on securities $ (64) $ (141)
See notes to the consolidated financial statements. 4 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) ACCOUNTING POLICIES The accompanying unaudited financial statements have been prepared in accordance with the summary of significant accounting policies set forth in the notes to the audited financial statements contained in the Company's Form 10-K filed with the Securities and Exchange Commission on May 3, 2002, except as described under the notes entitled "New Accounting Standards" and "Inventories" below. In the opinion of management, the accompanying unaudited financial statements reflect all adjustments of a normal recurring nature necessary for a fair statement of the results of operations and financial position for the interim periods presented. Operating results for the thirteen weeks ended May 4, 2002 are not necessarily indicative of the results that may be expected for the fiscal year ending February 1, 2003. RECLASSIFICATIONS - Certain reclassifications were made to balances for the prior year to conform to current year presentation. NEW ACCOUNTING STANDARDS - In June 2001, the FASB issued SFAS No. 143, Accounting for Asset Retirement Obligations. SFAS No.143 requires a company to record the fair value of an asset retirement obligation as a liability in the period in which it incurs a legal obligation associated with the retirement of tangible long-lived assets that result from the acquisition, construction, development and/or normal use of the assets. A corresponding asset is also recorded, which is depreciated over the life of the asset. Subsequent to the initial measurement of the asset retirement obligation, the obligation is adjusted at the end of each period to reflect the passage of time and changes in the estimated future cash flows underlying the obligation. The Company is required to adopt SFAS No. 143 for fiscal years beginning after June 15, 2002. The Company does not expect this statement to have a material effect on its consolidated financial statements. In August, 2001, the FASB issued SFAS No. 144, ACCOUNTING FOR THE IMPAIRMENT OR DISPOSAL OF LONG-LIVED Assets. SFAS No. 144 supersedes SFAS No. 121 and the accounting and reporting provision of APB Opinion No 30 for the disposal of a segment of a business. SFAS No. 144 addresses financial accounting and reporting for the impairment or disposal of long-lived assets and requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset. SFAS No. 144 requires companies to separately report discontinued operations and extends that reporting to a component of an entity that either has been disposed of (by sale, abandonment, or in a distribution to owners) or is classified as held for sale. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. The Company implemented the statement on February 3, 2002 and as of May 4, 2002 there was no impact on the Company's financial statements as a result of the implementation. 5 The Company adopted the Financial Accounting Standards Board ("FASB") Emerging Issues Task Force (EITF) Issue Number 00-14, "Accounting for Certain Sales Incentives," in the first quarter of fiscal 2002, which requires the recording of certain customer discounts as a reduction in sales. The adoption of this accounting standard did not have an effect on reported operating income (loss) or net loss. In accordance with the adoption, the impact on Sales, Cost of Goods Sold and Selling, General and Administrative Expenses was as follows:
QUARTER ENDED QUARTER ENDED (Dollars in thousands) May 4, 2002 May 5, 2001 -------------------- -------------------- Sales Decrease $ 14,992 $ 14,323 Cost of Goods Sold Decrease $ 14,625 $ 14,274 Selling, General and Administrative Decrease $ 367 $ 49
INVENTORIES - During the first quarter of fiscal 2002, the Company implemented a change in accounting principle from valuing substantially all inventories at the lower of cost or market utilizing the last-in, first-out ("LIFO") method to valuing all inventories at the lower of cost or market utilizing the first-in, first-out ("FIFO") method. This change was adopted because the FIFO method more clearly follows the actual flow of inventory, due to its perishable nature, and more closely matches actual costs and revenues. The February 2, 2002 Consolidated Balance Sheet and quarter ended May 5, 2001 Consolidated Statement of Operations and Consolidated Statement of Cash Flows have been restated to apply the new method retroactively. Due to the change in accounting principle, inventory previously reported as of February 2, 2002 increased $8.4 million. The balance of accumulated deficit has been restated by the same amount to reflect retroactive application of this new accounting method. Also as a result of this change, the effect on the net loss previously reported for the first quarter of fiscal 2001 was as follows:
QUARTER ENDED MAY 5, 2001 ---------------------------- AS PREVIOUSLY REPORTED AS RESTATED ----------- ----------- (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) Loss before extraordinary item $ (1,552) $ (1,402) Extraordinary item - gain on extinguishment of debt 554 554 ----------- ----------- Net loss $ (998) $ (848) =========== =========== Basic and diluted net loss per share: Loss before extraordinary item $ (0.49) $ (0.44) Extraordinary item - gain on extinguishment of debt 0.17 0.17 ----------- ----------- Net loss $ (0.32) $ (0.27) =========== =========== Weighted average basic shares outstanding 3,197,971 3,197,971
EXTRAORDINARY ITEM - GAIN ON EXTINGUISHMENT OF DEBT An extraordinary gain of $478 thousand was recorded in the first quarter of fiscal 2002 relating to the repurchase of senior notes. Senior notes with a face value of $1.0 million were purchased for $563 thousand plus accrued interest. In the first quarter of fiscal 2001 an extraordinary gain of $554 thousand was recorded relating to the repurchase of senior notes. Senior notes with a face value of $1.3 million were purchased for $782 thousand plus accrued interest. 6 COMPREHENSIVE INCOME (LOSS) Comprehensive income (loss) includes all changes in the Company's equity during the period, except transactions with stockholders of the Company. Comprehensive loss consisted of the following:
QUARTER ENDED QUARTER ENDED (Dollars in thousands) May 4, 2002 May 5, 2001 --------------- ---------------- (as adjusted, see "Inventories" note) Net loss $(3,179) $ (848) Other comprehensive loss: Unrealized loss on marketable securities (64) (141) ------- ------- Comprehensive loss $(3,243) $ (989) ======= =======
LITIGATION The Company is subject to various unresolved legal actions that arise in the normal course of its business. It is not possible to predict with certainty the outcome of these unresolved legal actions or the range of the possible loss. 7 ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Sales for the Company's first fiscal quarter ended May 4, 2002 were $161.7 million, a decrease of $408 thousand or .3% compared with the prior year on both a total and same store basis, due primarily to continued competitive activity. Since the beginning of fiscal 2001, 19 new stores have opened that are in direct competition with the Company, including three new store openings by competitors in the first quarter of fiscal 2002. The Company operated 64 stores at the end of the first quarter of fiscal 2002 and fiscal 2001. The gross margin rate for the first quarter of fiscal 2002 was 27.4% of sales compared to 28.2% for the same quarter of fiscal 2001. This rate decline includes the impact of the lower gross margin rate in stores converted to the Eagle Discount Foods and Foodco formats. The gross margin declined $1.3 million primarily due to a reduction in vendor funding during the quarter. Selling, general and administrative expenses for the first quarter of fiscal 2002 were $40.4 million or 25.0% of sales compared to $39.3 million or 24.3% of sales in the same quarter of fiscal 2001. This increase is primarily due to increases of $465 thousand in advertising expense, $283 thousand in severance costs and $175 thousand in store associate benefits. The first quarter of fiscal 2002 also included an increase of $218 thousand in store opening expense primarily relating to the conversion of seven stores to the Company's new Eagle Discount Foods format. Depreciation and amortization expense was $4.6 million or 2.8% of sales in the first quarter of fiscal 2002 compared to $4.5 million or 2.8% of sales in the prior year. Interest expense, net of interest income, decreased to $3.1 million or 1.9% of sales in the first quarter of fiscal 2002 compared to $3.2 million or 2.0% of sales in the prior year due primarily to lower interest on the senior notes due to redemptions that have taken place, partially offset by increased interest expense on loan and security agreement ("Revolver") borrowings. An extraordinary gain of $478 thousand was recorded in the first quarter of fiscal 2002 relating to the repurchase of senior notes. Senior notes with a face value of $1.0 million were purchased for $563 thousand plus accrued interest. In the first quarter of fiscal 2001 an extraordinary gain of $554 thousand was recorded relating to the repurchase of senior notes. Senior notes with a face value of $1.3 million were purchased for $782 thousand plus accrued interest. The net loss for the first quarter of fiscal 2002 was $3.2 million or $1.02 per share compared to an adjusted net loss of $848 thousand or $0.27 per share in the same quarter of fiscal 2001. The stores converted to the Eagle Discount Foods format experienced an incremental loss of $1.1 million during the first quarter of fiscal 2002. No tax benefit was recognized in fiscal 2002 or 2001 as the Company is in a net operating loss carryforward position. Valuation allowances have been established for the entire amount of net deferred tax assets due to the uncertainty of future recoverability. 8 LIQUIDITY AND CAPITAL RESOURCES Cash used by operating activities was $5.6 million for the quarter ended May 4, 2002 compared to cash used of $4.2 million in the comparable quarter of fiscal 2001. The net loss and non-cash charges generated $1.1 million of cash. Working capital changes used $6.7 million, due primarily to decreases in accounts payable, accrued liabilities and the reserve for closed stores, partially offset by a decrease in inventories and a decrease in accounts receivable and other assets. Working capital at May 4, 2002 was $29.7 million and the ratio of current assets to current liabilities was 1.55 to 1 compared to $27.0 million and 1.43 to 1 as of February 2, 2002. Additions to property and equipment for the first quarter of fiscal 2002 were $2.1 million compared to $1.3 million in the first quarter of fiscal 2001. During the first quarter of fiscal 2002 the Company converted seven Eagle Country Markets to the Eagle Discount Foods format. Also the Company had one major remodel in progress at the end of the first quarter of fiscal 2002. The Company repurchased $1.0 million of its senior notes during the first quarter of fiscal 2002 at a cost of $563 thousand, recording an extraordinary gain of $478 thousand. Payments related to lease rejection costs were $302 thousand during the first quarter of fiscal 2002. The repurchase of the senior notes and the lease rejection payments were primarily funded from loans against the Revolver. On May 4, 2002 the Company had $28.0 million in loans against the Revolver, no letters of credit outstanding and additional Revolver availability of $14.5 million. Cash on hand, operating cash flows and other sources of funds, including loans against the Revolver, are expected to be adequate to meet the Company's liquidity requirements for the coming twelve months. CHANGES IN CRITICAL ACCOUNTING POLICIES The Company implemented a change in accounting principle, effective February 3, 2002, from valuing substantially all inventories at the lower of cost or market utilizing the last-in, first-out ("LIFO") method to valuing all inventories at the lower of cost or market utilizing the first-in, first-out ("FIFO") method. This change was adopted because the FIFO method more clearly follows the actual flow of inventory, due to its perishable nature, and more closely matches actual costs and revenues. Financial statements have been restated to apply the change in accounting principle retroactively, resulting in a decrease of $150 thousand in the loss reported for the first quarter of fiscal 2001. In addition, the inventory previously reported as of February 2, 2002 increased $8.4 million. The new accounting policy for inventories is as follows: INVENTORY- Inventories are stated at the lower of cost or market. Cost is determined through use of the first-in, first-out ("FIFO") method, for all inventories, applied to inventory values determined primarily by the retail inventory method ("RIM") for store inventories and the weighted average method for warehouse inventories. Under RIM the valuation of inventories are at cost and the resulting gross margins are calculated by applying a cost-to-retail ratio to sales. Inherent in the RIM calculations are certain management judgments and estimates, including shrinkage, which could impact the ending inventory valuation at cost, as well as the resulting gross margins. RIM is an averaging method that has been widely used in the retail industry due to its practicality. 9 SAFE HARBOR STATEMENTS UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 The statements under Management's Discussion and Analysis of Financial Condition and Results of Operations and the other statements in this Form 10-Q which are not historical facts are forward looking statements. These forward looking statements involve risks and uncertainties that could render them materially different, including, but not limited to, the effect of economic conditions, the impact of competitive stores, competitive pricing, availability and costs of inventory, employee costs and availability, the rate of technology change, the cost and uncertain outcomes of pending and unforeseen litigation, the availability and costs of capital, supply constraints or difficulties, the effect of the Company's accounting policies, the effect of regulatory and legal developments and other risks detailed in the Company's Securities and Exchange Commission filings. 10 PART II : OTHER INFORMATION: ITEM 1 : LEGAL PROCEEDINGS Not Applicable ITEM 2 : CHANGE IN SECURITIES AND USE OF PROCEEDS Not Applicable ITEM 3 : DEFAULTS UPON SENIOR SECURITIES Not Applicable ITEM 4 : SUBMITTED MATTERS TO A VOTE OF SECURITY HOLDERS Not Applicable ITEM 5 : OTHER Not Applicable ITEM 6 : EXHIBITS AND REPORTS ON FORM 8K Exhibit 18.2 Letter from KPMG LLP regarding preferability of change in accounting principle for inventories. No reports are applicable. 11 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized: EAGLE FOOD CENTERS, INC. Dated: June 18, 2002 /s/ Robert J. Kelly --------------------------------- Robert J. Kelly Chairman, Chief Executive Officer and President Dated: June 18, 2002 /s/ S. Patric Plumley ----------------------------- S. Patric Plumley Senior Vice President-Chief Financial Officer and Secretary 12 EX-18.2 3 a2082430zex-18_2.txt EXHIBIT 18.2 Exhibit 18.2 June 18, 2002 Eagle Food Centers, Inc. Route 67 and Knoxville Road Milan, IL Ladies and Gentlemen: We have been furnished with a copy of the quarterly report on Form 10-Q of Eagle Food Centers, Inc. (the Company) for the fiscal quarter ended May 4, 2002, and have read the Company's statements contained in the note entitled "Inventories" to the consolidated financial statements included therein. The note entitled "Inventories" states that the Company implemented a change in accounting principle from valuing substantially all inventories utilizing the last-in, first-out (LIFO) method to valuing all inventories utilizing the first-in, first-out (FIFO) method and states that the newly adopted accounting principle is preferable in the circumstances because the FIFO method of valuing inventories more clearly follows the actual flow of inventory, due to its perishable nature, and more closely matches actual costs and revenues. In accordance with your request, we have reviewed and discussed with Company officials the circumstances and business judgment and planning upon which the decision to make this change in the method of accounting was based. We have not audited any financial statements of the Company as of any date or for any period subsequent to February 2, 2002, nor have we audited the information set forth in the aforementioned note entitled "Inventories" to the consolidated financial statements; accordingly, we do not express an opinion concerning the factual information contained therein. With regard to the aforementioned accounting change, authoritative criteria have not been established for evaluating the preferability of one acceptable method of accounting over another acceptable method. However, for purposes of the Company's compliance with the requirements of the Securities and Exchange Commission, we are furnishing this letter. Based on our review and discussion, with reliance on management's business judgment and planning, we concur that the newly adopted method of accounting is preferable in the Company's circumstances. /s/ KPMG LLP -----END PRIVACY-ENHANCED MESSAGE-----