-----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, B2NiN8XthqBz2Oe+mtzG6RmMh92WWldi7MgQbbCZ1f1AViBEaUjToH/MasiXDcrM hj4aVQ6VE1PAe5i+gE/f9A== 0001125282-05-003807.txt : 20050722 0001125282-05-003807.hdr.sgml : 20050722 20050722092711 ACCESSION NUMBER: 0001125282-05-003807 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20050718 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Termination of a Material Definitive Agreement ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20050722 DATE AS OF CHANGE: 20050722 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GREAT ATLANTIC & PACIFIC TEA CO INC CENTRAL INDEX KEY: 0000043300 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-GROCERY STORES [5411] IRS NUMBER: 131890974 STATE OF INCORPORATION: MD FISCAL YEAR END: 0226 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-04141 FILM NUMBER: 05967532 BUSINESS ADDRESS: STREET 1: 2 PARAGON DR CITY: MONTVALE STATE: NJ ZIP: 07645 BUSINESS PHONE: 2015739700 MAIL ADDRESS: STREET 1: 2 PARAGON DRIVE CITY: MONTVALE STATE: NJ ZIP: 07645 8-K 1 b407849_8k.txt CURRENT RELEASE UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 JULY 22, 2005 (JULY 18, 2005) DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) ------------------------------------- THE GREAT ATLANTIC & PACIFIC TEA COMPANY, INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) MARYLAND 1-4141 13-1890974 (STATE OR OTHER JURISDICTION OF (COMMISSION FILE NUMBER) (I.R.S. EMPLOYER INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.) TWO PARAGON DRIVE MONTVALE, NEW JERSEY 07645 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (201) 573-9700 (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE) NOT APPLICABLE (FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT) - -------------------------------------------------------------------------------- Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: /_/ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) /_/ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) /_/ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) /_/ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ITEM 1.01. ENTRY INTO A MATERIAL DEFINITE AGREEMENT. On July 18, 2005, the Board of Directors of The Great Atlantic & Pacific Tea Company, Inc. (the "Company") approved the promotion of Mr. Eric Claus, currently President of The Great Atlantic & Pacific Tea Company of Canada Limited ("A&P Canada"), to the role of President and Chief Executive Officer of the Company, effective August 15, 2005. The Company will enter into an employment agreement with Mr. Claus, which will replace Mr. Claus' current employment agreement with A&P Canada, made and entered into as of November 11, 2002. Under the proposed employment agreement, Mr. Claus will serve as President and Chief Executive Officer of the Company and will report to Christian Haub, currently Chairman and Chief Executive Officer, who will become Executive Chairman of the Company, effective August 15, 2005. The Company will pay Mr. Claus a base salary of $550,000 and Mr. Claus will be eligible for a management incentive performance-based cash bonus, where the target award is 100% of base salary. The Company will also grant, under its 2005 Turnaround Incentive Compensation Plan ("Plan"), 150,000 Restricted Share Units (as defined in the Plan) to Mr. Claus. ITEM 1.02. TERMINATION OF A MATERIAL DEFINITIVE AGREEMENT. On July 18, 2005, Mr. Brian Piwek notified the Company that he will resign, effective July 31, 2005, from his position as President and Chief Operating Officer of the Company, and in conjunction therewith, terminate his employment agreement with the Company, made and entered into as of October 28, 2002, as amended February 4, 2005 ("Employment Agreement"). Mr. Piwek will terminate his Employment Agreement for Good Reason (as defined in the Employment Agreement), and therefore, will be entitled to receive, as further detailed in his Employment Agreement, (i) a pro rata bonus for the calendar year in which the termination occurred, (ii) continued insurance coverage for a period of twenty-four (24) months, and (iii) severance for a period of twenty-four (24) months, equal to one-twelfth of annual base salary plus the average of the three (3) highest bonuses in the five (5) calendar years preceding resignation. In addition, the Company will immediately vest (i) all of Mr. Piwek's outstanding but unvested options, which will become exercisable for a period of one (1) year from the date of his departure, and (ii) Mr. Piwek's SERP benefits at the ten (10) year benefit level. The foregoing description of the Employment Agreement is qualified in its entirety by reference to the full text of the Employment Agreement, filed as Exhibit 10.14 to the Company's Form 10-Q filed on January 10, 2003, and Exhibit 10.15 to the Company's Form 10-K filed on May 10, 2005, and such Employment Agreement is incorporated herein by reference. ITEM 2.02. REGULATION FD DISCLOSURE. On July 22, 2005, the Company issued a press release announcing its financial results for the fiscal 2005 first quarter ended June 18, 2005. A copy of the press release is attached as Exhibit 99.1 to this Current Report. -2- In accordance with General Instruction B.2 of Form 8-K, the information furnished in this Item 2.02 shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing. To supplement the consolidated financial results as determined in accordance with generally accepted accounting principles ("GAAP"), the press release presents non-GAAP financial measures for "EBITDA." EBITDA is defined as earnings before interest, taxes, depreciation, amortization, minority interest, discontinued operations and cumulative effect of change in accounting principles. Management believes that the use of such non-GAAP financial measures enables the Company to convey a useful and informative financial picture to investors. The non-GAAP measure "EBITDA" reflects a measure that the Company believes is of interest to investors. As required by the Securities and Exchange Commission, EBITDA is reconciled to Net Cash provided by Operating Activities on Schedule 1 of the release. ITEM 5.02 DEPARTURE OF DIRECTORS OR PRINCIPAL OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT OF PRINCIPAL OFFICERS. The Company announced on July 20, 2005, that Mr. Brian Piwek, the Company's President and Chief Operating Officer, will resign effective July 31, 2005. The Company also announced on July 20, 2005, that Mr. Christian Haub, currently Chairman and Chief Executive Officer, will become Executive Chairman of the Company, effective August 15, 2005, and that Mr. Eric Claus, currently President of A&P Canada, will assume the role of President and Chief Executive Officer of the Company, effective August 15, 2005. A copy of the press release announcing these organizational changes is attached hereto as Exhibit 99.1 and incorporated herein by reference. Information regarding the material terms of the employment agreement, pursuant to which Mr. Claus will serve as President and Chief Executive Officer of the Company, are disclosed in Item 1.01 of this Current Report. The biographical and other information with respect to Mr. Haub and Mr. Claus required by Item 5.02(c) of Form 8-K is contained in the Company's definitive proxy statement on Schedule 14A filed with the Securities and Exchange Commission on May 27, 2005, and such information is incorporated herein by reference. -3- ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS. (c) Exhibits Exhibit Number Exhibit Description - ------- ------------------- 99.1 Press Release of The Great Atlantic & Pacific Tea Company, dated July 22, 2005. 99.2 Press Release, dated July 20, 2005, announcing The Great Atlantic & Pacific Tea Company's New Executive Management Following the Sale of Canadian Business. -4- 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 hereunto duly authorized. Dated: July 22, 2005 THE GREAT ATLANTIC & PACIFIC TEA COMPANY, INC. By: /s/ Mitchell P. Goldstein ------------------------------------------------ Mitchell P. Goldstein, Executive Vice President, Chief Financial Officer & Secretary -5- INDEX TO EXHIBITS Exhibit Number Exhibit Description - ------- ------------------- 99.1 Press Release of The Great Atlantic & Pacific Tea Company, dated July 22, 2005. 99.2 Press Release, dated July 20, 2005, announcing The Great Atlantic & Pacific Tea Company's New Executive Management Following the Sale of Canadian Business. -6- EX-99.1 2 b407849_ex99-1.txt PRESS RELEASE EXHIBIT 99.1 [A&P LOGO] News The Great Atlantic & Pacific Tea Company, Inc. 2 Paragon Drive Montvale, NJ 07645 INVESTOR CONTACT: William J. Moss Vice President, Treasurer (201) 571-4019 PRESS CONTACT: Richard P. De Santa Vice President, Corporate Affairs (201) 571-4495 THE GREAT ATLANTIC & PACIFIC TEA COMPANY, INC. ANNOUNCES RESULTS FOR FIRST QUARTER 2005 --------- COMPANY REPORTS EBITDA, ADJUSTED FOR NON-OPERATING ITEMS, OF $101 MILLION, UP FROM $81 MILLION IN PRIOR YEAR MONTVALE, NJ - July 22, 2005 - The Great Atlantic & Pacific Tea Company, Inc. (A&P, NYSE Symbol: GAP) announced unaudited fiscal 2005 first quarter results for the 16 weeks ended June 18, 2005. Sales for the first quarter were $3.4 billion, compared with $3.3 billion in the first quarter of fiscal 2004. Comparable store sales decreased 0.3% vs. year-ago. The loss for the quarter was $2.28 per share this year versus a loss of $1.11 per share last year. Results from continuing operations, as shown on Schedule 1, were a loss of $89 million or $2.27 per share this quarter versus a loss of $41 million or $1.08 per share in last year's first quarter. The current year's results include charges totaling $68 million related to certain items that the Company believes are of a non-operating nature. These items include $50 million in restructuring costs, primarily related to the sale of the U.S. distribution operations to C&S, $15 million related to Midwest exit costs, and $3 million related to a Canadian dollar hedge. Last year's results included a $1 million restructuring charge. Excluding these items, EBITDA was $101 million for first quarter of fiscal 2005 versus $81 million for the same period of fiscal 2004. Christian Haub, Chairman of the Board and Chief Executive Officer, said, "Our Company's improvement continued in the first quarter. A&P Canada's fresh marketing initiatives, improving discount Food Basics operation and cost controls contributed to excellent results in Ontario. In the U.S., our fresh store development continued to generate excellent customer response, while the Food Basics stores produced a good sales trend as our improvement of that format continued. "We now look forward to the formation and development of The New A&P, as augmented by our major strategic accomplishments since the end of the quarter; namely the recently announced transfer of distribution operations, the pending sale of A&P Canada to METRO INC., and our executive leadership change going forward in the U.S. "Our objectives for the second quarter and beyond are to: o accelerate the improvement of our operating trends; o close our Canadian transaction and realize the de-leveraging of our balance sheet; o complete the remainder of our divestiture initiative; o continue rolling out our U.S. fresh stores and improving our discount operations; o and continue pursuing significant cost reduction opportunities, and shaping the organization of the New A&P." Founded in 1859, A&P, one of the nation's first supermarket chains, is today among North America's largest. The Company operates 637 stores in 10 states, the District of Columbia and Ontario, Canada under the following trade names: A&P, Waldbaum's, The Food Emporium, Super Foodmart, Super Fresh, Farmer Jack, Sav-A-Center, Dominion, The Barn Markets, Food Basics and Ultra Food & Drug. The Company invites investors and other interested parties to listen to a live audio Webcast to be held at 11:00 AM Eastern Time today, at which members of the Company's senior management team will discuss the Company's first quarter financial results. The Webcast may be accessed through a link on the "Investors" page of the Company's Website, www.aptea.com. Listeners who cannot participate in the live broadcast will be able to hear a recorded replay of the broadcast beginning this afternoon and available until August 19, 2005. Effective March 28, 2003, the Securities and Exchange Commission ("SEC") adopted new rules related to disclosure of certain financial measures not calculated in accordance with Generally Accepted Accounting Principles ("GAAP"). Such new rules require all public companies to provide certain disclosures in press release and SEC filings related to non-GAAP financial measures. We use the non-GAAP measure "EBITDA" to evaluate the Company's liquidity and it is among the primary measures used by management for planning and forecasting of future periods. EBITDA is defined as earnings before interest, taxes, depreciation, amortization, minority interest, discontinued operations and cumulative effect of change in accounting principle. The Company believes the presentation of this measure is relevant and useful for investors because it allows investors to view results in a manner similar to the method used by the Company's management and makes it easier to compare the Company's results with other companies that have different financing and capital structures or tax rates. In addition, this measure is also among the primary measures used externally by the Company's investors, analysts and peers in its industry for purposes of valuation and comparing the results of the Company to other companies in its industry. EBITDA is reconciled to Net Cash provided by Operating Activities on Schedule 1 of this release. 2 THIS RELEASE CONTAINS FORWARD-LOOKING STATEMENTS ABOUT THE FUTURE PERFORMANCE OF THE COMPANY, WHICH ARE BASED ON MANAGEMENT'S ASSUMPTIONS AND BELIEFS IN LIGHT OF THE INFORMATION CURRENTLY AVAILABLE TO IT. THE COMPANY ASSUMES NO OBLIGATION TO UPDATE THE INFORMATION CONTAINED HEREIN. THESE FORWARD-LOOKING STATEMENTS ARE SUBJECT TO UNCERTAINTIES AND OTHER FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM SUCH STATEMENTS INCLUDING, BUT NOT LIMITED TO: COMPETITIVE PRACTICES AND PRICING IN THE FOOD INDUSTRY GENERALLY AND PARTICULARLY IN THE COMPANY'S PRINCIPAL MARKETS; THE COMPANY'S RELATIONSHIPS WITH ITS EMPLOYEES AND THE TERMS OF FUTURE COLLECTIVE BARGAINING AGREEMENTS; THE COSTS AND OTHER EFFECTS OF LEGAL AND ADMINISTRATIVE CASES AND PROCEEDINGS; THE NATURE AND EXTENT OF CONTINUED CONSOLIDATION IN THE FOOD INDUSTRY; CHANGES IN THE FINANCIAL MARKETS WHICH MAY AFFECT THE COMPANY'S COST OF CAPITAL AND THE ABILITY OF THE COMPANY TO ACCESS CAPITAL; SUPPLY OR QUALITY CONTROL PROBLEMS WITH THE COMPANY'S VENDORS; AND CHANGES IN ECONOMIC CONDITIONS WHICH AFFECT THE BUYING PATTERNS OF THE COMPANY'S CUSTOMERS. ### 3 THE GREAT ATLANTIC & PACIFIC TEA COMPANY, INC. SCHEDULE 1 - GAAP EARNINGS FOR THE 16 WEEKS ENDED JUNE 18, 2005 AND JUNE 19, 2004 (UNAUDITED) (IN THOUSANDS, EXCEPT SHARE AMOUNTS AND STORE DATA)
16 Weeks Ended ------------------------------------ June 18, 2005 June 19, 2004 ------------- ------------- AS RESTATED (1) Sales $ 3,383,633 $ 3,280,299 Cost of merchandise sold (2,445,675) (2,360,303) ------------ ------------ Gross margin 937,958 919,996 Store operating, general and administrative expense (976,687) (921,074) ------------ ------------ Loss from operations (2) (38,729) (1,078) Interest expense (36,123) (34,392) Interest income 1,186 841 Minority interest in earnings of consolidated franchisees (1,536) (1,376) ------------ ------------ Loss from continuing operations before income taxes (75,202) (36,005) Provision for income taxes (13,865) (5,458) ------------ ------------ Loss from continuing operations (89,067) (41,463) Discontinued operations: Loss from operations of discontinued businesses, net of tax (168) (1,383) Gain on disposal of discontinued operations, net of tax - - ------------ ------------ Loss from discontinued operations (168) (1,383) ------------ ------------ Net loss $ (89,235) $ (42,846) ============ ============ Net loss per share - basic and diluted: Continuing operations $ (2.27) $ (1.08) Discontinued operations (0.01) (0.03) ------------ ------------ Net loss per share - basic and diluted $ (2.28) $ (1.11) ============ ============ Weighted average common shares outstanding: Basic 39,201,114 38,520,018 ============ ============ Diluted 39,201,114 38,520,018 ============ ============ Gross margin rate 27.72% 28.05% ============ ============ Store operating, general and administrative expense rate 28.87% 28.08% ============ ============ Depreciation and amortization $ 71,875 $ 80,846 ============ ============ Reconciliation of GAAP cash flow measure to EBITDA: Net cash provided by operating activities $ 1,231 $ 38,846 Net interest expense 34,937 33,551 Restructuring charge (48,549) 0 Deferred income taxes (5,430) (1,012) Working capital changes Accounts receivable (16,477) (24,840) Inventories 20,747 22,822 Prepaid expenses and other current assets 2,779 14,887 Accounts payable (6,824) (55,635) Accrued salaries, wages, benefits and taxes 19,054 6,813 Other accruals 7,277 27,899 Other assets 434 (362) Other non-current liabilities 11,689 12,415 Other, net 12,278 4,384 ------------ ------------ EBITDA $ 33,146 $ 79,768 ============ ============ Number of stores operated at end of quarter 637 628 ============ ============ Number of franchised stores served at end of quarter 42 66 ============ ============
(1) As previously reported, prior year results have been restated for changes in our accounting for leases primarily to correct the Company's accounting for landlord allowances. (2) Loss from operations includes charges totaling $68 million related to certain items that the Company believes are of a non-operating nature. These items include $50 million in restructuring costs, primarily related to the sale of the U.S. distribution operations to C&S, $15 million related to Midwest exit costs, and $3 million related to the Canadian dollar hedge. THE GREAT ATLANTIC & PACIFIC TEA COMPANY, INC. Schedule 2 - Condensed Balance Sheet Data (Unaudited) (In millions, except per share and store data)
June 18, 2005 February 26, 2005 ------------- ----------------- Cash and short-term investments $ 171 $ 258 Other current assets 1,543 907 -------- -------- Total current assets 1,714 1,165 Property-net 1,003 1,516 Other assets 56 121 -------- -------- Total assets $ 2,773 $ 2,802 ======== ======== Total current liabilities $ 1,230 $ 1,078 Total non-current liabilities 1,388 1,490 Stockholders' equity 155 234 -------- -------- Total liabilities and stockholders' equity $ 2,773 $ 2,802 ======== ======== Other Statistical Data Total Debt and Capital Leases $ 689 $ 697 Total Long Term Real Estate Liabilities 330 328 Temporary Investments (74) (104) -------- -------- Net Debt $ 945 $ 921 Total Retail Square Footage (in thousands) 25,257 25,583 Book Value Per Share $ 3.86 $ 6.03 For the 16 For the 16 weeks ended weeks ended June 18, 2005 June 19, 2004 ------------- ------------- Capital Expenditures $ 70 $ 61
EX-99.2 3 b407849_ex99-2.txt PRESS RELEASE EXHIBIT 99.2 [A&P LOGO] NEWS The Great Atlantic & Pacific Tea Company, Inc. 2 Paragon Drive Montvale, NJ 07645 INVESTOR CONTACT: William J. Moss Vice President, Treasurer (201) 571-4019 PRESS CONTACT: Richard P. De Santa Vice President, Corporate Affairs (201) 571-4495 For Immediate Release A&P NAMES NEW EXECUTIVE MANAGEMENT FOLLOWING SALE OF CANADIAN BUSINESS MONTVALE, N.J. - JULY 20 - THE GREAT ATLANTIC & PACIFIC TEA COMPANY, INC. (NYSE:GAP) today announced changes in senior executive management responsibility for its ongoing business in the U.S. The actions are aligned with the new Company structure to result from the sale of A&P Canada, announced yesterday and expected to be finalized in mid-August. A&P's Board of Directors this week approved the following changes: o Christian Haub, currently Chairman and Chief Executive Officer, will become Executive Chairman of the Company, effective August 15. o Eric Claus, currently President of A&P Canada, will become President and Chief Executive Officer of A&P reporting directly to Mr. Haub. o The Company also announced that Brian Piwek, President and Chief Operating Officer of A&P, will retire effective July 31. In his ongoing role, Mr. Haub, who is also Co-CEO of Tengelmann, majority shareholder of A&P, will lead the long-range strategic direction and public aspects of the Corporation. Mr. Claus will assume full responsibility for the operation of the New A&P and all support functions. Commenting on the changes, Mr. Haub said, "I am delighted that Eric has agreed to assume this key position with us, following his strong leadership of A&P Canada over the past two years. His efforts were instrumental in maximizing the value that we will now realize and apply to the renewal of our core northeast U.S. operations. I look forward to working with Eric as we continue the progress already underway in those operations. Mr. Claus said, "After a very rewarding experience at A&P Canada, I am delighted to be joining the New A&P team and leading the U.S. rebuilding process already underway. I see this as a challenging and exciting assignment, working with a dedicated and talented team, and executing strategies similar to those responsible for our success in Canada. I look forward to building on the foundation established by my respected colleague Brian Piwek, and achieving our ultimate goal of sustainable profitability." Mr. Haub added, "It is with deep respect and appreciation that I also observe the retirement of Brian Piwek, whose distinguished career in our industry, in Canada and more recently in the U.S., reflects his outstanding expertise, leadership and character. After leading the turnaround of our Canadian business, Brian accepted the challenge of reversing the decline of our U.S. operations, by instilling operating discipline and identifying distinct retail strategies for development. Having fulfilled those objectives, he leaves a core business poised to resume profitability and drive long-term growth. "I've deeply enjoyed our association, and I am grateful for his many contributions. I wish Brian all the best in the future, and personally look forward to his continued advice and counsel as we begin this next phase in the development of the New A&P," Mr. Haub said. Founded in 1859, A&P, one of the nation's first supermarket chains, is today among North America's largest. The Company operates 637 stores in 10 states, the District of Columbia and Ontario, Canada under the following trade names: A&P, Waldbaum's, The Food Emporium, Super Foodmart, Super Fresh, Farmer Jack, Sav-A-Center, Dominion, The Barn Markets, Food Basics and Ultra Food & Drug. This release contains forward-looking statements about the future performance of the Company, which are based on Management's assumptions and beliefs in light of the information currently available to it. The Company assumes no obligation to update the information contained herein. These forward-looking statements are subject to uncertainties and other factors that could cause actual results to differ materially from such statements including, but not limited to: competitive practices and pricing in the food industry generally and particularly in the Company's principal markets; the Company's relationships with its employees and the terms of future collective bargaining agreements; the costs and other effects of legal and administrative cases and proceedings; the nature and extent of continued consolidation in the food industry; changes in the financial markets which may affect the Company's cost of capital and the ability of the Company to access capital; supply or quality control problems with the Company's vendors; and changes in economic conditions which affect the buying patterns of the Company's customers. *************** 2 -----END PRIVACY-ENHANCED MESSAGE-----