-----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, T2/abiKBz6Kk6kHy4By/CHJnPJx1rJqKMI5tUwVqy7z9xwfIt6JXQS6e//4tBrQm HHM3tkP0qSTT4i7hSa4i5g== /in/edgar/work/20000814/0000887730-00-000007/0000887730-00-000007.txt : 20000921 0000887730-00-000007.hdr.sgml : 20000921 ACCESSION NUMBER: 0000887730-00-000007 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000630 FILED AS OF DATE: 20000814 FILER: COMPANY DATA: COMPANY CONFORMED NAME: KEMET CORP CENTRAL INDEX KEY: 0000887730 STANDARD INDUSTRIAL CLASSIFICATION: [3670 ] IRS NUMBER: 570923789 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-15491 FILM NUMBER: 699521 BUSINESS ADDRESS: STREET 1: 2835 KEMET WAY CITY: SIMPSONVILLE STATE: SC ZIP: 29681 BUSINESS PHONE: 8039636300 MAIL ADDRESS: STREET 1: P O BOX 5928 STREET 2: 2835 KEMET WAY CITY: SIMPSONVILLE STATE: SC ZIP: 29681 10-Q 1 0001.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q (Mark One) [X] Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934. For the period ended June 30, 2000. [ ] Transition Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934. Commission File Number: 0-20289 KEMET Corporation Exact name of registrant as specified in its charter DELAWARE 57-0923789 (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) 2835 KEMET Way, Simpsonville, South Carolina 29681 - ---------------------------------------------------------------- (Address of principal executive offices, zip code) (864) 963-6300 - ---------------------------------------------------------------- (Registrant's telephone number, including area code) Former name, former address and former fiscal year, if changed since last report: N/A 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 [ ] Common Stock Outstanding at: August 8, 2000 Title of Each Class Number of Shares Outstanding - ---------------------------------------------------------------- Common Stock, $.01 Par Value 87,420,004 Part I - FINANCIAL INFORMATION ITEM 1 - Financial Statements KEMET CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Dollars in Thousands Except Per Share Data)
June 30, March 31, 2000 2000 ----------- ----------- (unaudited) ASSETS Current assets: Cash and cash equivalents $ 76,596 $ 75,735 Short-term investments 137,299 123,687 Accounts receivable (less allowance of $19,794 and $15,779 at June 30, 2000, and March 31, 2000, respectively) 123,240 94,127 Inventories: Raw materials and supplies 57,430 53,532 Work in process 57,687 58,220 Finished goods 19,873 19,207 ----------- ----------- Total inventories 134,990 130,959 Prepaid expenses 3,948 4,688 Deferred income taxes 21,165 20,099 ----------- ----------- Total current assets 497,238 449,295 Property and equipment (less accumulated depreciation of $278,495 and $276,841 at June 30, 2000, and March 31, 2000, respectively) 470,982 423,399 Intangible assets (less accumulated amortization of $19,620 and $17,654 at June 30, 2000, and March 31, 2000, respectively) 45,656 46,198 Other assets 8,066 8,364 ----------- ----------- Total assets $1,021,942 $ 927,256 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable, trade $ 119,680 $ 123,708 Accrued expenses 35,568 42,045 Income taxes 39,847 23,388 ----------- ----------- Total current liabilities 195,095 189,141 Long-term debt 100,000 100,000 Other non-current obligations 54,754 54,757 Deferred income taxes 37,946 35,902 ----------- ----------- Total liabilities 387,795 379,800 Stockholders' equity: Common stock, par value $.01, authorized 100,000,000 shares, issued and outstanding 88,915,971 and 87,025,908 shares at June 30, 2000, and March 31, 2000, respectively 874 870 Additional paid-in capital 315,173 308,724 Retained earnings 318,043 237,846 Accumulated other comprehensive income 57 16 ----------- ----------- Total stockholders' equity 634,147 547,456 ----------- ----------- Total liabilities and stockholders' equity $1,021,942 $ 927,256 =========== ===========
See accompanying notes to consolidated financial statements KEMET CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS (Dollars in Thousands Except Per Share Data)
Three months ended June 30, --------------------------- 2000 1999 (unaudited) (unaudited) ------------ ---------- Net Sales $ 329,169 $ 162,649 Operating costs and expenses: Cost of goods sold, exclusive of depreciation 169,836 122,984 Selling, general and administrative expenses 12,861 10,944 Research, development and engineering 5,622 4,388 Depreciation and amortization 15,264 13,040 ---------- ---------- Total operating costs and expenses 203,583 151,356 ---------- ---------- Operating income 125,586 11,293 Other expense: Interest income (3,039) - Interest expense 1,836 2,734 Other 3,352 1,656 ---------- ---------- Total other expense 2,149 4,390 ---------- ---------- Earnings before income taxes 123,437 6,903 Income tax expense 43,203 2,209 ---------- ---------- Net earnings $ 80,234 $ 4,694 ========== ========== Per Share Information: Net earnings per share: Basic $0.92 $0.06 Diluted $0.90 $0.06 Weighted average shares outstanding: Basic 87,324,021 78,571,116 Diluted 88,915,974 79,778,122
See accompanying notes to consolidated financial statements. KEMET CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in Thousands Except Per Share Data)
Three months ended June 30, --------------------------- 2000 1999 (unaudited) (unaudited) ------------ ----------- Sources (uses) of cash: Net cash from operating activities $ 70,645 $ 23,676 Investing activities: Purchases of short-term investment (23,407) - Proceeds from maturity of short-term investment 9,794 - Additions to property and equipment (62,664) (17,132) Other 42 (20) ---------- ---------- Net cash used by investing activities (76,235) (17,152) Financing activities: Proceeds from employees savings plan 379 328 Proceeds from exercise of stock options including related tax benefit 6,072 208 Net proceeds/(repayments) from revolving/ swingline loan - 2,000 ---------- ---------- Net cash provided by financing activities 6,451 2,536 ---------- ---------- Net increase in cash 861 9,060 Cash at beginning of period 75,735 3,914 ---------- ---------- Cash at end of period $ 76,596 $ 12,974 ========== ==========
See accompanying notes to consolidated financial statements. Note 1. Basis of Financial Statement Preparation The consolidated financial statements contained herein are unaudited and have been prepared from the books and records of KEMET Corporation and Subsidiaries (KEMET or the Company). In the opinion of management, the consolidated financial statements reflect all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the results for the interim periods. The consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and, therefore, do not include all information and footnotes necessary for a complete presentation of financial position, results of operations and cash flows in conformity with generally accepted accounting principles. Although the Company believes that the disclosures are adequate to make the information presented not misleading, it is suggested that these consolidated financial statements be read in conjunction with the audited financial statements and notes thereto included in the Company's fiscal year ending March 31, 2000, Form 10-K. Net sales and operating results for the three months ended June 30, 2000, are not necessarily indicative of the results to be expected for the full year. The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. In consolidation all significant intercompany amounts and transactions have been eliminated. Note 2. Reconciliation of basic earnings per common share to diluted earnings per common share. In accordance with FASB Statement No. 128, the Company has included the following table presenting a reconciliation of basic EPS to diluted EPS fully displaying the effect of dilutive securities. Computation of Basic and Diluted Earnings Per Share (Dollars in Thousands Except Per share Data)
For the three months ended June 30, 2000 1999 ------------------------------------ ---------------------------------- Per- Per- Income Shares Share Income Shares Share (numerator) (denominator) Amount (numerator) (denominator) Amount ----------- ------------ ------ ---------- ------------ ------- Basic EPS $80,234 87,324,021 $0.92 $ 4,694 78,571,116 $0.06 Effect of diluted securities: Stock options - 1,591,953 $0.02 - 1,207,006 - Diluted EPS $80,234 88,915,974 $0.90 $ 4,694 79,778,122 $0.06
Note 3. At June 30, 2000, the Company had outstanding forward exchange contracts to purchase Mexican pesos with notional amounts totaling $88.3 million. The carrying value and fair value of the contracts is a liability of $1.0 million. All contracts mature within one year. Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition RESULTS OF OPERATIONS Three Month Period Ended June 30, 2000, and Three Month Period Ended June 30, 1999 Net sales for the three months ended June 30, 2000, increased 102% to $329.1 million from $162.6 million for the three months ended June 30, 1999. The increase in net sales resulted from higher unit volume and increased selling prices in both tantalum and ceramic capacitors. The strong demand in the computer, telecommunications, automotive, and internet infrastructure market segments resulted in the higher unit volume, and the demand for capacitors exceeding the industry capacity led to increased selling prices. Sales of surface-mount capacitors were $294.1 million for the first quarter of fiscal 2000, an increase of 119% from $134.2 million in the prior year's first quarter. Globally, domestic sales increased 77% to $154.4 million during the quarter. Export sales, led by strong sales in both Europe and Asia, increased 132% to $174.8 million, compared to $75.2 million in the prior year's first quarter. Cost of sales, exclusive of depreciation, for the three months ended June 30, 2000, was $169.8 million, compared to $123.0 million for the three months ended June 30, 1999. As a percentage of net sales, cost of sales, exclusive of depreciation, decreased to 52%, compared to 76% for the prior year quarter. The decrease in cost of goods sold as a percentage of sales is primarily the result of increased sales (as explained above) and improved manufacturing margins achieved through operating efficiencies and cost reduction programs. Selling, general and administrative expenses for the three months ended June 30, 2000, were $12.9 million, or 4% of net sales, as compared to $10.9 million, or 7% of net sales, for the three months ended June 30, 1999. Selling, general and administrative expenses as a percent of sales decreased primarily as a result of increased sales. Research, development, and engineering expenses for the three months ended June 30, 2000, were $5.6 million, as compared to $4.4 million for the prior year period. The increase is the result of the Company's continuing efforts to invest in the development of new products and technologies. Depreciation and amortization expense was $15.3 million for the three months ended June 30, 2000, as compared to $13.0 million for the prior year period. This increase was primarily due to the increase in capital expenditures as the Company continues to invest in additional capacity to support existing and new product expansions. Operating income for the three months ended June 30, 2000, was $125.6 million compared to $11.3 million for the three months ended June 30, 1999. The increase resulted primarily from the increase in net sales as discussed above. Income tax expense was 35.0% and 32.0% of earnings for the three month periods ended June 30, 2000 and 1999, respectively. The difference from the statutory income tax rate was primarily the result of increased foreign sales corporation benefits and the implementation of various state tax savings strategies. Liquidity and Capital Resources The Company's liquidity needs arise primarily from working capital requirements, capital expenditures and interest payments on its indebtedness. The Company intends to satisfy its liquidity requirements primarily with funds provided by operations, borrowings under its revolving credit facility and amounts advanced under its foreign accounts receivable discounting arrangements. Cash flows from operating activities for the three months ended June 30, 2000, amounted to a surplus of $70.6 million compared to $23.7 million for the three months ended June 30, 1999. The increase in cash flow was primarily a result of the increase in net income and the timing of cash flows from current assets and liabilities such as accounts receivables, inventories, accounts payable, accrued liabilities and income taxes payable. Capital expenditures were $62.7 million for the three months ended June 30, 2000, compared to $17.1 million for the three months ended June 30, 1999. The first quarter's expenditures reflect the completion of projects initiated during fiscal year 2000. The Company estimates its capital expenditures for fiscal year 2001 to be approximately $240.0 million. During the three months ended June 30, 2000, the Company's indebtedness did not change. As of June 30, 2000, the Company had unused availability under its revolving credit facility and swingline loan of approximately $150.0 million and $10.0 million, respectively. KEMET believes its strong financial position will permit the financing of its business needs and opportunities in an orderly manner. It is anticipated that ongoing operations will be financed primarily by internally generated funds. In addition, the Company has the flexibility to meet short-term working capital and other temporary requirements through utilization of its borrowings under its bank credit facilities. From time to time, information provided by the Company, including but not limited to statements in this report, or other statements made by or on behalf of the Company, may contain "forward-looking" information within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities and Exchange Act of 1934. Such statements involve a number of risks and uncertainties. The Company's actual results could differ materially from those discussed in the forward-looking statements. The cautionary statements set forth in the Company's 2000 Annual Report under the heading Safe Harbor Statement identify important factors that could cause actual results to differ materially from those in any forward-looking statements made by or on behalf of the Company. Item 3. Market Risk Market risk disclosure included in the Company's fiscal year ending March 31, 2000, Form 10-K, Part II, Item 7 A, is still applicable as of June 30, 2000. We have updated the disclosure concerning our Mexican peso forward exchange contracts, which is included in Note 3 in this Form 10-Q. Part II - OTHER INFORMATION Item 1. Legal Proceedings. Other than as reported above and in the Company's fiscal year ending March 31, 2000, Form 10-K under the caption "Item 3. Legal Proceedings", the Company is not currently a party to any material pending legal proceedings other than routine litigation incidental to the business of the Company. Item 2. Change in Securities. None. Item 3. Defaults Upon Senior Securities. None. Item 4. Submission of Matters to a Vote of Security Holders. (a) The Company held its Annual Meeting of Stockholders on July 26, 2000. (b) Proxies for the meeting were solicited pursuant to Regulation 14A of the Securities Exchange Act of 1934, as amended. There was no solicitation in opposition to management's nominees for directors as listed in the definitive proxy statement of the Company dated as of June 26, 2000, and such nominees were elected. c) Briefly described below is each matter voted upon at the Annual Meeting of Stockholders. (i) Election of Directors of the Company. All proxy nominees for directors as listed in the proxy statement were elected (Messrs. Volpe and Schorr to serve three year terms and Mr. Culbertson to serve a two year term) with the following vote: Nominee In Favor Against Abstained - ------- ---------- --------- --------- Charles M. Culbertson II 58,692,615 - 344,945 Charles E. Volpe 58,781,750 - 255,810 Paul C. Schorr IV 58,782,702 - 254,858 (ii) Amendment of the Corporation's Restated Certificate of Incorporation: In Favor Against Abstained ---------- --------- --------- 52,684,764 6,138,752 214,044 (iii) The ratification of the appointment of KPMG LLP as independent public accountants for the year ending March 31, 2001: In Favor Against Abstained ---------- --------- --------- 58,924,580 12,376 100,604 Item 5. Other Information. None Item 6. Exhibits and Reports on Form 8-K (a) Exhibits. 10.1 Seventh Amendment to Credit Agreement between KEMET Corporation, Wachovia Bank, N.A. as Agent, and the Banks named in the Credit Agreement dated as of June 30, 2000. (b) Reports on Form 8-K. None. Signatures Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Date: August 11, 2000 KEMET Corporation /S/ D. R. Cash D. R. Cash Senior Vice President of Administration, Treasurer and Assistant Secretary (Principal Accounting and Financial Officer)
EX-1 2 0002.txt SEVENTH AMENDMENT TO CREDIT AGREEMENT THIS SEVENTH AMENDMENT TO CREDIT AGREEMENT (this "Amendment") is made as of the 1st day of June, 2000, among KEMET CORPORATION, a Delaware corporation (the "Borrower"); WACHOVIA BANK, N.A. as Agent (successor by merger to Wachovia Bank of Georgia, N.A. and hereinafter referred to as the "Agent") under the Credit Agreement (as herein defined) and the BANKS named in the Credit Agreement. Background: The Borrower, the Agent and the Banks have entered into a certain Credit Agreement dated as of October 18, 1996, as amended by a First Amendment to Credit Agreement dated as of August 30, 1997, as further amended by a Second Amendment to Credit Agreement dated as of March 31, 1998, as further amended by a Third Amendment to Credit Agreement dated as of September 9, 1998 and as further amended by a Fourth Amendment to Credit Agreement dated as of December 31, 1998 and as further amended by a Fifth Amendment to Credit Agreement dated as of June 30, 1999 and further amended by a Sixth Amendment to Credit Agreement dated as of July 1, 1999 (as amended, the "Credit Agreement") The Borrower, the Agent and the Banks wish to further amend The Credit Agreement in certain respects, as hereinafter provided. NOW, THEREFORE, the parties hereto agree as follows: SECTION 1. Definitions. Capitalized terms used herein which are not otherwise defined herein shall have the respective meanings assigned to them in the Credit Agreement. SECTION 2. Amendment. Section 1.01 of the Credit Agreement is hereby amended as follows: (a) Section 1.01 of the Credit Agreement is hereby amended by: (i) deleting the definition of "Year 2000 Compliant and Ready" in its entirety; (ii) amending and restating the definition of "Permitted Investments" in its entirety to read as follows: "Permitted Investments" shall mean Investments which are either (i) cash and Cash Equivalents, (ii) receivables created, acquired or made in the ordinary course of business and payable or dischargeable in accordance with customary trade terms, (iii) investments existing as of the Closing Date and set forth in Schedule 5.07 (but without additional acquisitions thereof except as otherwise permitted hereby), (iv) investments by the Borrower, the Pledgor or any other Guarantor in industrial revenue bonds issued from time to time by Greenville County, South Carolina and/or Greenwood County, South Carolina pursuant to the Bond Issuance and Purchase Agreement, (v) capital stock or other securities received by the Borrower or any Subsidiary in payment of an account receivable where such capital stock or other securities are issued in connection with a bankruptcy reorganization of the Person obligated to pay such account receivable, and (vi) any other Investment made pursuant to the Investment Policy. (iii) adding a definition of the term "Investment Policy" which shall read in its entirety as follows: "Investment Policy" means the Investment Policy of the Borrower in the form attached hereto as Exhibit L, as the same may be amended from time to time with the consent of the Agent. (b) Section 4.19 of the Credit Agreement is hereby deleted in its entirety. (c) Section 5.01 of the Credit Agreement is hereby amended by deleting therefrom paragraphs (k) and (l), by adding an "and" at the end of paragraph (i) thereof and by changing the ";" a the end of paragraph (j) thereof to a ".". (d) Section 5.07 of the Credit Agreement is hereby amended by deleting the "and" appearing immediately before clause (g) thereof and by adding at the end of such Section the word "and" and a new clause (h) which shall read "(h) Guarantees by the Borrower or a Subsidiary of an obligation of a Subsidiary which is not a Guarantor, provided that (A) the underlying obligation of such Subsidiary is otherwise permitted under the terms of this Agreement, and (B)the aggregate outstanding principal amount of obligations so Guaranteed shall not at any time exceed an amount equal to 10% of Consolidated Tangible Net Worth." (e) There is hereby added to the Credit Agreement a new Exhibit L which shall be in the form attached to this Amendment as Annex 1. SECTION 3. Conditions to Effectiveness. The effectiveness of this Amendment is subject to the following conditions, unless the Banks waive such conditions: (a) receipt by the Agent from each of the parties hereto of either (i) a duly executed counterpart of this Amendment signed by such party or (ii) a facsimile transmission stating that such party has duly executed a counterpart of this Amendment and sent such counterpart to the Agent; (b) the fact that the representations and warranties of the Borrower contained in Section 5 of this Amendment shall be true in all material respects on and as of the date hereof. SECTION 4. No Other Amendment. Except for the amendments set forth above, the text of the Credit Agreement shall remain unchanged and in full force and effect. This Amendment is not intended to effect, nor shall it be construed as, a novation. The Credit Agreement and this Amendment shall be construed together as a single instrument and any reference to the "Agreement" or any other defined term for the Credit Agreement in the Credit Agreement, the Notes or any certificate, instrument or other document delivered pursuant thereto shall mean the Credit Agreement as amended hereby and as it may be amended, supplemented or otherwise modified hereafter. SECTION 5. Representations and Warranties. The Borrower hereby represents and warrants in favor of the Agent and the Banks as follows: (a) Following the effectiveness of this Amendment, no Default or Event of Default under the Credit Agreement has occurred and is continuing on the date hereof; (b) The Borrower has the corporate power and authority to enter into this Amendment and do all acts and things as are required or contemplated hereunder to be done, observed and performed by it; (c) This Amendment has been duly authorized, validly executed and delivered by one or more authorized officers of the Borrower and each of this Amendment and the Credit Agreement as amended hereby constitutes the legal, valid and binding obligation of the Borrower enforceable against it in accordance with its terms; provided, that the enforceability of each of this Amendment and the Credit Agreement as amended hereby is subject to general principles of equity and to bankruptcy, insolvency and similar laws affecting the enforcement of creditors' rights generally; and (d) The execution and delivery of this Amendment and the Borrower's performance hereunder and under the Credit Agreement as amended hereby do not and will not require the consent or approval of any regulatory authority or governmental authority or agency having jurisdiction over the Borrower other than those which have already been obtained or given, nor be in contravention of or in conflict with the Articles of Incorporation or Bylaws of the Borrower, or the provision of any statute, or any judgment, order or indenture, instrument, agreement or undertaking, to which the Borrower is a party or by which its assets or properties are or may become bound. SECTION 6. Counterparts. This Amendment may be executed in multiple counterparts, each of which shall be deemed to be an original and all of which, taken together, shall constitute one and the same agreement. SECTION 7. Governing Law. This Amendment shall be deemed to be made pursuant to the laws of the State of Georgia with respect to agreements made and to be performed wholly in the State of Georgia and shall be construed, interpreted, performed and enforced in accordance therewith. SECTION 8. Effective Date. This Amendment shall become effective as of the date first set forth above, upon receipt by the Agent from each of the parties hereto of either a duly executed signature page from a counterpart of this Amendment or a facsimile transmission of a duly executed signature page from a counterpart of this Amendment, signed by such party. [Remainder of this page intentionally left blank] WACHOVIA BANK, N.A. (successor by merger to Wachovia Bank of Georgia, N.A. and Wachovia Bank of South Carolina, N.A. and formerly known as Wachovia Bank of North Carolina, N.A.), as Agent and as a Bank By: /S/Christopher L. Fincher[SEAL] Title: Senior Vice President Remainder of this page intentionally left blank] ABN AMRO BANK N.V. ATLANTA AGENCY, as Co-Agent and Bank By: /S/ James S. Adelsheim [SEAL] Title: Group Vice President and By: /S/ Natalie M. Smith [SEAL] Title: Assistant Vice President [Remainder of this page intentionally left blank] SUNTRUST BANK, ATLANTA By: /S/ Nathan Bickford [SEAL] Title: Assistant Vice President and By: /S/ Brian K. Peters Title: Managing Director [Remainder of this page intentionally left blank] FIRST UNION NATIONAL BANK (formally known as First Union National Bank of South Carolina) By: /S/ Frank R. Wrenn, III [SEAL] Title: Senior Vice President [Remainder of this page intentionally left blank] BANK OF AMERICA, N.A. By: /S/ Kevin McMahon [SEAL] Title: Managing Director [Remainder of this page intentionally left blank]
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