10-Q 1 rimage025446_10q.txt RIMAGE CORPORATION FORM 10Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 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 QUARTERLY PERIOD ENDED SEPTEMBER 30, 2002; ------------------ 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: 0-20728 ------- RIMAGE CORPORATION ----------------------------------- (Exact name of Registrant as specified in its charter) Minnesota 41-1577970 ------------------------------- ------------------------------------ (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 7725 Washington Avenue South, Edina, MN 55439 --------------------------------------------- (Address of principal executive offices) 952-944-8144 ---------------------------------------------------- (Registrant's telephone number, including area code) NA -------------------------------------------------- (Former name, former address, and former fiscal year, if changed since last report.) Common Stock outstanding at October 29, 2002 - 8,713,111 shares of $.01 par value Common Stock. 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 ___ RIMAGE CORPORATION FORM 10-Q TABLE OF CONTENTS FOR THE QUARTER ENDED SEPTEMBER 30, 2002 Description Page ----------- ---- PART I. FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Balance Sheets (unaudited) as of September 30, 2002 and December 31, 2001.................................... 3 Consolidated Statements of Operations (unaudited) for the Three and Nine Months Ended September 30, 2002 and 2001.................... 4 Consolidated Statements of Cash Flows (unaudited) for the Three and Nine Months Ended September 30, 2002 and 2001.................... 5 Condensed Notes to Consolidated Financial Statements (unaudited)..................... 6-7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations........ 8-10 Item 3. Quantitative and Qualitative Disclosures about Market Risk.......................................... 10 Item 4. Controls and Procedures................................. 11 PART II OTHER INFORMATION.......................................... 12 Item 1-5. None Item 6. Exhibits SIGNATURES.............................................................. 13 CERTIFICATION........................................................... 14 2 RIMAGE CORPORATION AND SUBSIDIARIES Consolidated Balance Sheets September 30, 2002 and December 31, 2001 (Unaudited)
September 30, December 31, Assets 2002 2001 -------------------------------------------------------------------------------------------------------- Current assets: Cash and cash equivalents $ 10,549,274 $ 14,767,126 Marketable securities 23,536,536 13,343,138 Trade accounts receivable, net of allowance for doubtful accounts and sales returns of $680,000 and $715,000, respectively 7,098,724 5,008,176 Inventories 2,965,597 3,624,701 Prepaid expenses and other current assets 269,331 211,941 Prepaid income taxes -- 764,523 Deferred income taxes-current 1,063,108 1,063,108 -------------------------------------------------------------------------------------------------------- Total current assets 45,482,570 38,782,713 Property and equipment, net 1,373,189 1,608,197 Deferred income taxes-noncurrent 57,468 57,468 Other noncurrent assets 3,537 6,004 -------------------------------------------------------------------------------------------------------- Total assets $ 46,916,764 $ 40,454,382 ======================================================================================================== Liabilities and Stockholders' Equity -------------------------------------------------------------------------------------------------------- Current liabilities: Trade accounts payable $ 2,365,302 $ 2,102,178 Accrued compensation 1,396,842 1,054,572 Accrued other 982,804 962,379 Income tax payable 490,945 -- Deferred income and customer deposits 1,297,860 1,031,862 -------------------------------------------------------------------------------------------------------- Total current liabilities 6,533,753 5,150,991 Long-term liabilities -- 68,750 -------------------------------------------------------------------------------------------------------- Total liabilities $ 6,533,753 $ 5,219,741 Stockholders' equity: Common stock, $.01 par value, authorized 30,000,000 shares, issued and outstanding 8,713,111 and 8,635,537, respectively 87,131 86,355 Additional paid-in capital 16,114,392 15,779,533 Retained earnings 24,484,503 19,670,369 Accumulated other comprehensive loss (303,015) (301,616) -------------------------------------------------------------------------------------------------------- Total stockholders' equity 40,383,011 35,234,641 -------------------------------------------------------------------------------------------------------- Commitments and contingencies Total liabilities and stockholders' equity $ 46,916,764 $ 40,454,382 ========================================================================================================
See accompanying condensed notes to consolidated financial statements 3 RIMAGE CORPORATION AND SUBSIDIARIES Consolidated Statements of Operations (unaudited)
Three Months Ended Nine Months Ended September 30, September 30, 2002 2001 2002 2001 ----------------------------------------------------------------------------------------------------------- Revenues $ 12,555,084 $ 10,296,163 $ 34,750,982 $ 29,496,278 Cost of revenues 6,406,799 5,373,514 17,748,763 14,765,140 ----------------------------------------------------------------------------------------------------------- Gross profit 6,148,285 4,922,649 17,002,219 14,731,138 ----------------------------------------------------------------------------------------------------------- Operating expenses: Research and development 851,679 741,288 2,741,926 3,090,469 Selling, general and administrative 2,502,621 2,421,806 7,303,888 7,078,926 ----------------------------------------------------------------------------------------------------------- Total operating expenses 3,354,300 3,163,094 10,045,814 10,169,395 ----------------------------------------------------------------------------------------------------------- Operating income 2,793,985 1,759,555 6,956,405 4,561,743 ----------------------------------------------------------------------------------------------------------- Other income (expense): Interest 189,330 253,384 625,152 876,913 Gain (loss) on currency exchange (29,023) 197,113 (7,865) (76,429) Other, net 4,931 4,404 7,622 (1,984) ----------------------------------------------------------------------------------------------------------- Total other income, net 165,238 454,901 624,909 798,500 ----------------------------------------------------------------------------------------------------------- Income before income taxes 2,959,223 2,214,456 7,581,314 5,360,243 Income taxes 1,080,117 819,349 2,767,180 1,983,290 ----------------------------------------------------------------------------------------------------------- Net income $ 1,879,106 $ 1,395,107 $ 4,814,134 $ 3,376,953 =========================================================================================================== Net income per basic share $ 0.22 $ 0.16 $ 0.55 $ 0.39 =========================================================================================================== Net income per diluted share $ 0.20 $ 0.15 $ 0.51 $ 0.35 =========================================================================================================== Basic weighted average shares outstanding 8,712,285 8,734,692 8,698,020 8,720,018 =========================================================================================================== Diluted weighted average shares and assumed conversion shares 9,521,289 9,478,563 9,495,190 9,535,091 ===========================================================================================================
See accompanying condensed notes to the consolidated financial statements 4
Nine months ended September 30, 2002 2001 --------------------------------------------------------------------------------------------------------------- Cash flows from operating activities: Net income $ 4,814,134 $ 3,376,953 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 576,363 417,256 Provision for excess and obsolete inventories 370,172 175,000 Provision for doubtful accounts 48,562 52,134 Gain on sale of property and equipment 1,622 22,434 Changes in operating assets and liabilities: Trade accounts receivable (2,139,110) 2,956,956 Inventories 288,932 (923,214) Prepaid income taxes 764,523 916,404 Prepaid expenses and other current assets (57,390) 4,357 Trade accounts payable 263,124 194,230 Accrued compensation 301,288 (50,193) Accrued other 61,407 507,962 Income taxes payable 490,945 -- Other current liabilities -- 29,717 Deferred income and customer deposits 265,998 (49,532) --------------------------------------------------------------------------------------------------------------- Net cash provided by operating activities 6,050,570 7,630,464 --------------------------------------------------------------------------------------------------------------- Cash flows from investing activities: Purchases of marketable securities (10,193,398) (9,741,150) Purchase of property and equipment (340,510) (1,438,709) Other noncurrent assets (64,172) 49,180 --------------------------------------------------------------------------------------------------------------- Net cash used in investing activities (10,598,080) (11,130,679) --------------------------------------------------------------------------------------------------------------- Cash flows from financing activities: Proceeds from stock option and warrant exercises 335,635 198,338 Cash payments for stock buyback -- (552,785) Other noncurrent liabilities (68,750) 137,500 --------------------------------------------------------------------------------------------------------------- Net cash provided (used) by financing activities 266,885 (216,947) --------------------------------------------------------------------------------------------------------------- Effect of exchange rate changes on cash 62,773 (18,113) --------------------------------------------------------------------------------------------------------------- Net increase (decrease) in cash and cash equivalents (4,217,852) (3,735,275) Cash and cash equivalents, beginning of period 14,767,126 21,225,452 --------------------------------------------------------------------------------------------------------------- Cash and cash equivalents, end of period $ 10,549,274 $ 17,490,177 =============================================================================================================== Supplemental disclosures of net cash paid during the period for- Income taxes $ 1,394,381 $ 1,003,690 ============ ============
See accompanying condensed notes to the consolidated financial statements 5 RIMAGE CORPORATION AND SUBSIDIARIES CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (1) BASIS OF PRESENTATION AND NATURE OF BUSINESS Rimage Corporation (the Company) develops, manufactures and distributes high performance CD-Recordable (CD-R) and DVD-Recordable (DVD-R) publishing and duplication systems. The accompanying unaudited consolidated financial statements of the Company have been prepared pursuant to the rules of the Securities and Exchange Commission. These financial statements should be read in conjunction with the more detailed financial statements and notes thereto included in the Company's most recent annual report on Form 10-K. The Company extends unsecured credit to its customers as well as credit to a limited number of authorized distributor wholesalers, who in turn provide warehousing, distribution, and credit to a network of authorized value added resellers. These distributors and value added resellers sell and service a variety of hardware and software products. In the opinion of management, the accompanying consolidated financial statements reflect all adjustments, consisting of only normal recurring adjustments, necessary for a fair presentation of the financial position and results of operations and cash flows of the Company for the periods presented. Certain previously reported amounts have been reclassified to conform with the current presentation. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. (2) INVENTORIES Inventories consist of the following as of: September 30, December 31, 2002 2001 -------------------------------------------------------------------- Finished goods and demonstration equipment $ 901,249 $1,179,963 Work-in-process 474,144 379,215 Purchased parts and subassemblies 1,590,204 2,065,523 -------------------------------------------------------------------- $2,965,597 $3,624,701 ==================================================================== (Continued) 6 (3) COMPREHENSIVE INCOME Comprehensive income is defined as the change in equity of a business during a period from transactions and other events from sources other than from shareholders. The components of and changes in other comprehensive income (loss) are as follows (in 000's):
Three Months Ended Nine Months Ended September 30, September 30, --------------------- --------------------- 2002 2001 2002 2001 ------- ------- ------- ------- Net income $ 1,879 $ 1,395 $ 4,814 $ 3,377 Other comprehensive income (loss): Foreign currency translation adjustment (10) 44 90 (33) Net unrealized gains (losses) on securities (19) 64 (91) 64 ------- ------- ------- ------- Total comprehensive income $ 1,850 $ 1,503 $ 4,813 $ 3,408 ======= ======= ======= =======
(4) FOREIGN CURRENCY CONTRACTS The Company enters into forward foreign exchange contracts to hedge inter-company receivables denominated in Euros arising from sales to its subsidiary in Germany. Gains or losses on forward foreign exchange contracts are recognized in net earnings on a current basis over the term of the contracts. As of September 30, 2002, the Company had thirty-nine outstanding foreign currency contracts totaling $2,774,000. These contracts mature in 2002 and 2003 and bear rates between .9076 and 1.0002 U.S. Dollars per Euro. As of September 30, 2002, the fair value of foreign currency contracts is $66,000 and is recorded in other current liabilities. (Continued) 7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following table sets forth, for the periods indicated, selected items from the Company's consolidated statements of operations.
---------------------------------------------------------------------------- ------------------------------------------- Percent (%) Percent (%) Percent (%) Percent (%) of Revenues Incr/(Decr) of Revenues Incr/(Decr) Three Months Ended Between Nine Months Ended Between September 30, Periods September 30, Periods ---------------------------------------------------------------------------- ------------------------------------------- 2002 2001 2002 vs. 2001 2002 2001 2002 vs. 2001 ---------------------------------------------------------------------------- ------------------------------------------- Revenues 100.0 100.0 21.9 100.0 100.0 17.8 Cost of revenues (51.0) (52.2) 19.2 (51.1) (50.0) 20.2 ---------------------------------------------------------------------------- ------------------------------------------- Gross profit 49.0 47.8 24.9 48.9 50.0 15.4 Operating expenses: Research and development (6.8) (7.2) 14.9 (7.9) (10.5) (11.3) Selling, general and admin (19.9) (23.5) 3.3 (21.0) (24.0) 3.2 ---------------------------------------------------------------------------- ------------------------------------------- Operating income 22.3 17.1 58.8 20.0 15.5 52.5 Other income, net 1.3 4.4 (63.7) 1.8 2.7 (21.7) ---------------------------------------------------------------------------- ------------------------------------------- Income before income taxes 23.6 21.5 33.6 21.8 18.2 41.4 Income tax expense (8.6) (8.0) 31.8 (7.9) (6.7) 39.5 ---------------------------------------------------------------------------- ------------------------------------------- Net income 15.0 13.5 34.7 13.9 11.5 42.6 ============================================================================ ===========================================
RESULTS OF OPERATIONS REVENUES. Revenues increased 21.9% to $12.6 million for the three-month period ended September 30, 2002 from $10.3 million for the same prior-year period. The increase in revenues was primarily due to strong U.S. and European channel sales and an increased demand for DVD-R publishing systems. Revenues increased 17.8% to $34.8 million for the nine-month period ended September 30, 2002 from $29.5 million for the same prior-year period. The increase in revenues was primarily due to the increase in sales within the photography industry, an increase in U.S. and European channel sales and the positive impact of a strengthened Euro on our European operations. As of and for the nine months ended September 30, 2002, foreign revenues from unaffiliated customers, operating income, and net identifiable assets were $10,050,000, $342,000 and $4,014,000, respectively. As of and for the nine months ended September 30, 2001, foreign revenues from unaffiliated customers, operating earnings, and net identifiable assets were $9,218,000, $6,000 and $3,633,000, respectively. The growth is due to increasing penetration in the foreign markets of sales of CD-R and DVD-R products. 8 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) GROSS PROFIT. Gross profit as a percent of revenues was 49.0% and 48.9% for the three- and nine- month periods ended September 30, 2002, respectively, compared to 47.8% and 50.0% for the same prior-year periods. The decrease in gross profit as a percent of revenues during the nine-month period ended September 30, 2002 was primarily due to the increased sales of Desktop CD/DVD publishing systems which carry a lower margin than our Producer Line of Products and increased depreciation during the year 2002 related to tooling for the Everest color printer. OPERATING EXPENSES. Operating expenses during the three- and nine-month periods ended September 30, 2002 were $3.4 million or 26.7% of revenues and $10.0 million or 28.9% of revenues, respectively compared to $3.2 million or 30.7% of revenues and $10.2 million or 34.5% of revenues during the same prior year periods. The increase during the three-month period ended September 30, 2002 was primarily a result of an increase in research and development expenses due to enhancements made to our Everest printer. The decrease in percent during the nine-month period ended September 30, 2002 was primarily a result of the increased sales volume and lower overall research and development expenses associated with current projects. Research and development expense during the three- and nine-month periods ended September 30, 2002 were $852,000 or 6.8% of revenues and $2.7 million or 7.9% of revenues, respectively compared to $741,000 or 7.2% of revenues and $3.1 million or 10.5% of revenues during the same periods of 2001. OTHER INCOME/(EXPENSE). The Company recognized interest income on cash investments of $189,000 and $625,000 during the three- and nine-month periods ended September 30, 2002 compared to $253,000 and $877,000 during the same prior year periods. Also included in other income, the Company recognized a gain/(loss) on currency exchange of $(29,000) and $(8,000) during the three- and nine-month periods ended September 30, 2002 compared to $197,000 and $(76,000) during the same prior year periods. INCOME BEFORE INCOME TAXES. Income before income taxes during the three- and nine-month periods ended September 30, 2002 were $3.0 million or 23.6% of revenues and $7.6 million or 21.8% of revenues, respectively compared to $2.2 million or 21.5% of revenues and $5.4 million or 18.2% of revenues during the same prior year periods. The increase during the three-month period ended September 30, 2002 was primarily due to increased U.S. and European channel sales and increased demand for DVD-R publishing equipment. The increase during the nine-month period ended September 30, 2002 is the result of the increased sales into the wholesale photography market and increased U.S. and European channel sales. INCOME TAXES. The provision for income taxes represents federal, state, and foreign income taxes on earnings before income taxes. Income tax expense for the three- and nine-month periods ended September 30, 2002 amounted to $1.1 million and $2.8 million, respectively or 36.5% of income before income taxes. The Company anticipates an effective tax rate of 36.5% for the remainder of 2002. Income tax expense for the three- and nine-month periods ended September 30, 2001 amounted to $819,000 and $2.0 million, respectively or 37% of income before income taxes. 9 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) LIQUIDITY AND CAPITAL RESOURCES The Company expects to fund its anticipated cash requirements (including the anticipated cash requirements of its capital expenditures) with internally generated funds and, if required, from the Company's existing credit agreement. Current assets are $45.5 million as of September 30, 2002 compared to $38.8 million as of December 31, 2001. The allowance for doubtful accounts as a percentage of receivables was 9% and 12% as of September 30, 2002 and December 31, 2001, respectively. This decrease in percentage is due to the timing of sales in the quarter resulting in a higher accounts receivable balance as of September 30, 2002. Current liabilities are $6.5 million as of September 30, 2002 compared to $5.2 million as of December 31, 2001. This increase primarily reflects increased activity with our vendors. Net cash provided by operating activities was $6.1 million and $7.6 million for the nine months ended September 30, 2002 and 2001, respectively. This decrease was primarily the result of timing of collection of trade accounts receivables. Net cash used in investing activities was $6.4 million and $11.1 million for the nine months ended September 30, 2002 and 2001, respectively. This decrease was primarily due to increased purchases of marketable securities during the third quarter 2001 compared to third quarter 2002 combined with payments made for tooling associated with new products introduced during 2001. Net cash provided by financing activities during the nine months ended September 30, 2002 was $267,000. This amount primarily reflected proceeds from stock option and warrant exercises. Net cash used in financing activities during the nine months ended September 30, 2001 was $217,000. This amount primarily reflected payments to purchase treasury stock, partially offset by proceeds from stock option and warrant exercises. The Company believes that inflation has not had a material impact on its operations or liquidity to date. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Company has a policy of using forward exchange contracts to hedge net exposures related to its foreign currency-denominated monetary assets and liabilities. The primary objective of these hedging activities is to maintain an approximately balanced position in foreign currencies so that exchange gains and losses resulting from exchange rate changes, net of related tax effects, are minimized. (See footnote 4.) 10 ITEM 4. CONTROLS AND PROCEDURES Bernard P. Aldrich, the Company's Chief Executive Officer and Chief Financial Officer, has reviewed the Company's disclosure controls and procedures within 90 days prior to the filing of this report. Based upon such review, Mr. Aldrich believes the disclosure controls and procedures to be effective in ensuring that material information is made known to him by others within the Company. There were no significant changes in the Company's internal controls or in other factors that could significantly affect these controls during the quarter covered by this report or from the end of the reporting period to the date of this Form 10-Q. CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS This report contains forward-looking statements that involve risks and uncertainties. For this purpose, any statements contained in report that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, words such as "may," "will," "expect," "believe," "anticipate," "estimate" or "continue" or comparable terminology are intended to identify forward-looking statements. These statements by their nature involve substantial risks and uncertainties. The Company's actual results could differ significantly from those discussed in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, changes in media or method used for distribution of software, technological changes in products offered by the Company or its competitors and changes in general conditions in the computer market, as well as other factors not now identified. These forward-looking statements are made as of the date of this report and the Company assumes no obligation to update such forward-looking statements, or to update the reasons why actual results could differ materially from those anticipated in such forward-looking statements. 11 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. Submission of Matters to a Vote of Securities Holders Not Applicable. Item 5. Other Information Not Applicable. Item 6. Exhibits and Reports on Form 8-K (a) The following exhibits are included herein: 11.1 Calculation of Earnings Per Share 99.1 Certificate pursuant to 18 U.S.C.ss.1350 (b) Reports on Form 8-K: Not applicable. 12 SIGNATURES ---------- In accordance with the Exchange Act, this report has been signed below by following persons on behalf of the registrant and on the dates indicated. RIMAGE CORPORATION ------------------ Registrant Date: November 12, 2002 By: /s/ Bernard P. Aldrich ----------------- ---------------------- Bernard P. Aldrich Director, Chief Executive Officer, and President (Principal Executive Officer) (Principal Financial Officer) Date: November 12, 2002 By: /s/ Robert M. Wolf ----------------- ------------------ Robert M. Wolf Treasurer (Principal Accounting Officer) 13 CERTIFICATION I, Bernard P. Aldrich, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Rimage Corporation; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. I am responsible for establishing and maintaining the disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and I have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. I have disclosed, based on my most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of my most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: November 12, 2002 /s/ Bernard P. Aldrich ----------------- ---------------------- President, Chief Executive Officer and Chief Financial Officer 14