10-Q 1 g70737e10-q.txt SUPERIOR UNIFORM GROUP, INC. 1 FORM 10-Q -------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarter ended June 30, 2001 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 1-5869-1 SUPERIOR UNIFORM GROUP, INC. Incorporated - Florida Employer Identification No. 11-1385670 10099 Seminole Boulevard Post Office Box 4002 Seminole, Florida 33775-0002 Telephone No.: 727-397-9611 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 [ ] As of July 26, 2001, the registrant had 7,124,327 common shares outstanding. Page 1 2 PART I - FINANCIAL INFORMATION ITEM 1. Financial Statements SUPERIOR UNIFORM GROUP, INC. AND SUBSIDIARY CONDENSED CONSOLIDATED SUMMARY OF OPERATIONS
Three Months Ended June 30, --------------------------- 2001 2000 ----------- ----------- (Unaudited) Net sales $38,368,931 $44,732,763 ----------- ----------- Costs and expenses: Cost of goods sold 25,136,222 29,523,720 Selling and administrative expenses 9,697,745 11,569,230 Interest expense 396,168 548,472 ----------- ----------- 35,230,135 41,641,422 ----------- ----------- Earnings before taxes on income 3,138,796 3,091,341 Taxes on income 1,150,000 1,130,000 ----------- ----------- Net earnings $ 1,988,796 $ 1,961,341 =========== =========== Weighted average number of shares out- standing during the period (Basic) 7,124,327 Shs. 7,123,327 Shs. (Diluted) 7,153,121 Shs. 7,127,588 Shs. Basic earnings per common share $ 0.28 $ 0.28 =========== =========== Diluted earnings per common share $ 0.28 $ 0.28 =========== =========== Cash dividends declared per common share $ 0.135 $ 0.135 =========== ===========
Six Months Ended June 30, --------------------------- 2001 2000 ----------- ----------- (Unaudited) Net sales $77,304,546 $83,554,033 ----------- ----------- Costs and expenses: Cost of goods sold 50,541,711 55,145,662 Selling and administrative expenses 20,505,013 22,316,827 Interest expense 923,757 908,858 ----------- ----------- 71,970,481 78,371,347 ----------- ----------- Earnings before taxes on income 5,334,065 5,182,686 Taxes on income 1,950,000 1,890,000 ----------- ----------- Net earnings $ 3,384,065 $ 3,292,686 =========== =========== Weighted average number of shares out- standing during the period (Basic) 7,123,994 Shs. 7,294,585 Shs. (Diluted) 7,141,522 Shs. 7,300,897 Shs. Basic earnings per common share $ 0.48 $ 0.45 =========== =========== Diluted earnings per common share $ 0.47 $ 0.45 =========== =========== Cash dividends declared per common share $ 0.27 $ 0.27 =========== ===========
The results of the six months ended June 30, 2001 are not necessarily indicative of results to be expected for the full year ending December 31, 2001. See accompanying notes to condensed consolidated interim financial statements. Page 2 3 SUPERIOR UNIFORM GROUP, INC. AND SUBSIDIARY CONDENSED CONSOLIDATED BALANCE SHEETS ASSETS
June 30, 2001 December 31, (Unaudited) 2000(1) ------------ ------------- CURRENT ASSETS: Cash and cash equivalents $ 186,507 $ 188,288 Accounts receivable and other current assets 27,782,327 32,829,093 Inventories* 53,731,491 57,910,294 ------------ ------------- TOTAL CURRENT ASSETS 81,700,325 90,927,675 PROPERTY, PLANT AND EQUIPMENT, NET 23,650,931 27,648,843 EXCESS OF COST OVER FAIR VALUE OF ASSETS ACQUIRED 8,015,795 8,225,098 OTHER ASSETS 3,332,778 3,237,588 ------------ ------------- $116,699,829 $ 130,039,204 ============ ============= LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $ 7,403,077 $ 8,970,663 Other current liabilities 4,116,611 3,371,489 Current portion of long-term debt 2,958,407 4,224,950 ------------ ------------- TOTAL CURRENT LIABILITIES 14,478,095 16,567,102 LONG-TERM DEBT 16,904,114 29,530,239 DEFERRED INCOME TAXES 2,370,000 2,300,000 SHAREHOLDERS' EQUITY 82,947,620 81,641,863 ------------ ------------- $116,699,829 $ 130,039,204 ============ =============
* Inventories consist of the following:
June 30, 2001 December 31, (Unaudited) 2000 ------------ ------------- Finished goods $ 40,586,194 $ 41,958,283 Work in process 3,669,879 4,331,287 Raw materials 9,475,418 11,620,724 ------------ ------------- $ 53,731,491 $ 57,910,294 ============ =============
(1) The balance sheet as of December 31, 2000 has been derived from the audited balance sheet as of that date and has been condensed. See accompanying notes to condensed consolidated interim financial statements. Page 3 4 SUPERIOR UNIFORM GROUP, INC. AND SUBSIDIARY CONDENSED CONSOLIDATED SUMMARY OF CASH FLOWS
Six Months Ended June 30, --------------------------- 2001 2000 ------------ ------------ (Unaudited) CASH FLOWS FROM OPERATING ACTIVITIES Net earnings $ 3,384,065 $ 3,292,686 Adjustments to reconcile net earnings to net cash provided by (used in) operating activities: Depreciation and amortization 2,480,432 2,428,273 Deferred income tax provision (benefit) 70,000 (15,000) Changes in assets and liabilities Accounts receivable and other current assets 5,046,766 (3,880,809) Inventories 4,178,803 (5,560,942) Accounts payable (1,567,586) 332,653 Other current liabilities 582,122 (926,082) ------------ ------------ Net cash flows provided by (used in) operating activities 14,174,602 (4,329,221) ------------ ------------ CASH FLOWS FROM INVESTING ACTIVITIES Additions to property, plant and equipment (604,625) (1,535,599) Reduction in property, plant & equipment 2,331,408 430 Other assets (95,190) (102,864) ------------ ------------ Net cash provided by (used in) investing activities 1,631,593 (1,638,033) ------------ ------------ CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from long-term borrowings -- 11,192,000 Repayments of long-term borrowings (13,892,668) (1,573,804) Declaration of cash dividends (1,923,433) (1,984,049) Proceeds received on exercised stock options 8,125 -- Common stock reacquired and retired -- (4,571,954) ------------ ------------ Net cash (used in) provided by financing activities (15,807,976) 3,062,193 ------------ ------------ Net decrease in cash and cash equivalents (1,781) (2,905,061) Cash and cash equivalents balance, beginning of period 188,288 3,021,376 ------------ ------------ Cash and cash equivalents balance, end of period $ 186,507 $ 116,315 ============ ============ SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Interest paid $ 1,076,804 $ 900,077 ============ ============ Income taxes paid $ 1,814,963 $ 3,170,000 ============ ============
See accompanying notes to condensed consolidated interim financial statements. Page 4 5 SUPERIOR UNIFORM GROUP, INC. AND SUBSIDIARY NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS Note 1 - Summary of Significant Interim Accounting Policies: a) Basis of presentation The consolidated financial statements include the accounts of Superior Uniform Group, Inc. and its wholly-owned subsidiary, formed by contribution of assets in April 2001. Intercompany items have been eliminated in consolidation. b) Recognition of costs and expenses Costs and expenses other than product costs are charged to income in interim periods as incurred, or allocated among interim periods based on an estimate of time expired, benefit received or activity associated with the periods. Procedures adopted for assigning specific cost and expense items to an interim period are consistent with the basis followed by the Company in reporting results of operations at annual reporting dates. However, when a specific cost or expense item charged to expense for annual reporting purposes benefits more than one interim period, the cost or expense item is allocated to the interim periods. c) Inventories Inventories at interim dates are carried at the lower of cost or market and are determined by using both perpetual records and gross profit calculations, which is designed to approximate the first-in, first-out method. d) Accounting for income taxes The provision for income taxes is calculated by using the effective tax rate anticipated for the full year. e) Earnings per share Historical basic per share data is based on the weighted average number of shares outstanding. Historical diluted per share data is reconciled by adding to weighted average shares outstanding the dilutive impact of the exercise of outstanding stock options.
Three months Ended June 30, ------------------------- 2001 2000 ---------- ---------- Net Income used in the computation of basic and diluted earnings per share $1,988,796 $1,961,341 ---------- ---------- Weighted average shares outstanding 7,124,327 7,123,327 Common stock equivalents 28,794 4,261 ---------- ---------- Total weighted average shares outstanding 7,153,121 7,127,588 ---------- ---------- Earnings per share: Basic $ 0.28 $ 0.28 ========== ========== Diluted $ 0.28 $ 0.28 ========== ==========
Six months Ended June 30, ------------------------- 2001 2000 ---------- ---------- Net Income used in the computation of basic and diluted earnings per share $3,384,065 $3,292,686 ---------- ---------- Weighted average shares outstanding 7,123,994 7,294,585 Common stock equivalents 17,528 6,312 ---------- ---------- Total weighted average shares outstanding 7,141,522 7,300,897 ---------- ---------- Earnings per share: Basic $ 0.48 $ 0.45 ========== ========== Diluted $ 0.47 $ 0.45 ========== ==========
Page 5 6 f) Use of Estimates 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 and disclosure of contingent 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. g) Comprehensive Income (Loss) The Company adopted the provisions of FAS 130, "Reporting Comprehensive Income" in the first quarter of 1998. FAS No. 130 requires disclosures of comprehensive income including per-share amounts in addition to the existing income statement. Comprehensive income is defined as the change in equity during a period, from transactions and other events, excluding changes resulting from investments by owners (e.g., supplemental stock offering) and distributions to owners (e.g., dividends). As of June 30, 2001, accumulated comprehensive income (loss) consisted of the following: Balance on December 31, 2000 $ -- Transition adjustment for SFAS 133 (48,000) Net change during the period related to cash flow hedges (115,000) ---------- Balance on June 30, 2001 $ (163,000) ==========
h) Operating Segments FAS No. 131 "Disclosures about Segments of an Enterprise and Related Information" requires disclosures of certain information about operating segments and about products and services, geographic areas in which the Company operates, and their major customers. The Company has evaluated the effect of this new standard and has determined that currently it operates in one segment, as defined in this statement. i) Derivative Financial Instruments The Company has only limited involvement with derivative financial instruments. The Company has one interest rate swap agreement to hedge against the potential impact on earnings from increases in market interest rates of a variable rate term loan. Under the interest rate swap agreement, the Company receives or makes payments on a monthly basis, based on the differential between a specified interest rate and one month LIBOR. A term loan of $10,065,329 is designated as a hedged item for interest rate swaps at June 30, 2001. This interest rate swap is accounted for as a cash flow hedge in accordance with FAS 133 and FAS 138 which were implemented as of the beginning of the fiscal year. As of the report date, the swap met the effectiveness test, and as such no gains or losses were included in net income during the quarter related to hedge ineffectiveness and there was no income adjustment related to any portion excluded from the assessment of hedge effectiveness. A loss of $115,000 was included in other comprehensive income (loss) for the six months ended June 30, 2001. The original term of the contract is ten years. j) Reclassifications Certain reclassifications to the 2000 financial information have been made to conform to the 2001 presentation. k) New Accounting Standards In June 2001, the Financial Accounting Standards Board ("FASB") concluded the voting process on its business combinations project and will issue Statement of Financial Accounting Standard ("SFAS") No. 141, Business Combinations, and SFAS No. 142, Goodwill and Other Intangible Assets in July 2001. SFAS No. 141 requires that the purchase method of accounting be used for all business combinations initiated after June 30, 2001. Use of the pooling-of-interests method will be prohibited. SFAS No. 142 changes the accounting for goodwill from an amortization method to an impairment-only approach. Thus, amortization of goodwill, including goodwill recorded in past business combinations, will cease upon adoption of SFAS No. 142, which is effective for the Company on January 1, 2002. The Company has not evaluated the effect, if any, that the adoption of SFAS No. 141 and SFAS No. 142 will have on the Company's consolidated financial statements. Page 6 7 NOTE 2 - Long-Term Debt:
June 30 December 31, 2001 2000 ----------- ----------- Note payable to First Union, pursuant to revolving credit agreement, maturing March 26, 2004 $ 1,997,000 $ 9,365,944 6.75% term loan payable to First Union, with monthly payments of principal and interest, maturing April 1, 2009 10,065,329 10,539,246 6.65% note payable to MassMutual Life Insurance Company, due $1,666,667 annually through 2005 7,500,192 8,333,333 Variable rate term loan payable to First Union, with monthly principal payments of $83,333, plus interest, maturing November 1, 2005 -- 4,916,666 9.9% note payable to MassMutual Life Insurance Company, due $600,000 annually through 2001 300,000 600,000 ----------- ----------- 19,862,521 33,755,189 Less payments due within one year included in current liabilities 2,958,407 4,224,950 ----------- ----------- $16,904,114 $29,530,239 =========== ===========
On March 26, 1999, the Company entered into a 3-year credit agreement with First Union that made available to the Company up to $15,000,000 on a revolving credit basis. Interest is payable at LIBOR plus 0.60% based upon the one-month LIBOR rate for U.S. dollar based borrowings (4.5% at June 30, 2001). The Company pays an annual commitment fee of 0.15% on the average unused portion of the commitment. The available balance under the credit agreement is reduced by outstanding letters of credit. As of June 30, 2001, approximately $850,000 was outstanding under letters of credit. On March 27, 2001, the Company entered into an agreement with First Union to extend the maturity of the revolving credit agreement. The revolving credit agreement matures on March 26, 2004. At the option of the Company, any outstanding balance on the agreement at that date will convert to a one-year term loan. The remaining terms of the original revolving credit agreement remain unchanged. The Company also entered into a $12,000,000 10-year term loan on March 26, 1999 with the same bank. The term loan is an amortizing loan, with monthly payments of principal and interest, maturing on April 1, 2009. The term loan carries a variable interest rate of LIBOR plus 0.80% based upon the one-month LIBOR rate for U.S.dollar based borrowings. Concurrent with the execution of the term loan agreement, the Company entered into an interest rate swap with the bank under which the Company receives a variable rate of interest on a notional amount equal to the outstanding balance of the term loan from the bank and the Company pays a fixed rate of 6.75% on a notional amount equal to the outstanding balance of the term loan to the bank. On October 16, 2000, the Company entered into a 5-year term loan with First Union. The term loan is an amortizing loan, with monthly payments of principal in the amount of $83,333 plus interest, maturing on November 1, 2005. The term loan carried a variable interest rate of LIBOR plus 0.80% based upon the one-month LIBOR rate for U.S. dollar based borrowings. The proceeds of this term loan were utilized to reduce the outstanding balance on the Company's revolving credit agreement. Concurrent with the execution of the new term loan agreement, First Union and the Company amended the March 26, 1999 term loan and the revolving credit agreement to revise the net worth requirements. The net worth requirements included below reflect this amendment. This term loan was paid in full in June 2001. The credit agreement and the term loans with First Union and the agreements with MassMutual Life Insurance Company contain restrictive provisions concerning debt to net worth ratios, other borrowings, capital expenditures, rental commitments, tangible net worth ($64,474,000 at June 30, 2001); working capital ratio (2.5:1), fixed charges coverage ratio (2.5:1), stock repurchases and payment of dividends. At June 30, 2001, under the most restrictive terms of the debt agreements, retained earnings of approximately $10,621,000 were available for declaration of dividends. The Company is in full compliance with all terms, conditions and covenants of the various credit agreements. Page 7 8 NOTE 3 - Vendor Settlement: On April 23, 2001, the Company received a one-time payment of $4.0 million in connection with the resolution of outstanding vendor matters. This resulted in a one time gain of $1,683,000 that is recorded as a reduction of selling and administrative expenses in the quarter ended June 30, 2001. The remaining amount of $2,317,000 was recorded as a reduction in the basis of certain property, plant and equipment. The interim information contained above is not certified or audited; it reflects all adjustments (consisting of normal recurring accruals) which are, in the opinion of management, necessary to a fair statement of the operating results for the periods presented, stated on a basis consistent with that of the audited financial statements. The financial information included in this form has been reviewed by Deloitte & Touche LLP, independent certified public accountants; such review was made in accordance with established professional standards and procedures for such a review. All financial information has been prepared in accordance with the accounting principles or practices reflected in the financial statements for the year ended December 31, 2000, filed with the Securities and Exchange Commission. Reference is hereby made to registrant's Financial Statements for 2000, heretofore filed with registrant's Form 10-K. Page 8 9 INDEPENDENT ACCOUNTANTS' REPORT Board of Directors Superior Uniform Group, Inc. Seminole, Florida We have reviewed the accompanying condensed consolidated balance sheet of Superior Uniform Group, Inc. and subsidiary as of June 30, 2001 and the related condensed consolidated summaries of operations for the three-month and six-month periods ended June 30, 2001 and 2000 and of cash flows for the six-month periods ended June 30, 2001 and 2000. These financial statements are the responsibility of the Company's management. We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and of making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with auditing standards generally accepted in the United States of America, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to such condensed consolidated financial statements for them to be in conformity with accounting principles generally accepted in the United States of America. We have previously audited, in accordance with auditing standards generally accepted in the United States of America, the balance sheet of Superior Uniform Group, Inc. as of December 31, 2000, and the related statements of earnings, shareholders' equity, and cash flows for the year then ended (not presented herein); and in our report dated February 22, 2001, we expressed an unqualified opinion on those financial statements. In our opinion, the information set forth in the accompanying condensed balance sheet as of December 31, 2000 is fairly stated, in all material respects, in relation to the balance sheet from which it has been derived. /s/ Deloitte & Touche, LLP Tampa, Florida July 18, 2001 Page 9 10 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations RESULTS OF OPERATIONS Net sales decreased from $44,732,763 for the three months ended June 30, 2000 to $38,368,931 for the three months ended June 30, 2001. Net sales decreased from $83,554,033 for the six months ended June 30, 2000 to $77,304,546 for the six months ended June 30, 2001. These decreases are attributed to lower purchasing levels by existing customers and a reduction in the number of new uniform programs in the current periods. Cost of goods sold, as a percentage of sales, approximated 65.4% for the six months ended June 30, 2001 compared to 66.0% for the six months ended June 30, 2000. Selling and administrative expenses, as a percentage of sales, were approximately 26.5% and 26.7%, respectively, for the first six months of 2001 and 2000. On April 23, 2001, the Company received a one-time payment of $4.0 million in connection with the resolution of outstanding vendor matters. This resulted in a one time gain of $1,683,000 that is recorded as a reduction of selling and administrative expenses in the quarter ended June 30, 2001. Without this gain, selling and administrative expenses, as a percentage of sales, were approximately 28.7%. This increase is due primarily to the reduction in sales in the current period. Interest expense of $923,757 for the six month period ended June 30, 2001 increased 1.6% from $908,858 for the similar period ended June 30, 2000 due to higher average outstanding borrowings in the current period. Net earnings increased 1.4% to $1,988,796 for the three months ended June 30, 2001 as compared to net earnings of $1,961,341 for the same period in 2000. Net earnings for the six months ended June 30, 2001 increased 2.8% to $3,384,065 as compared to net earnings of $3,292,686 for the same period in 2000. Accounts receivable and other current assets decreased 15.4% from $32,829,093 on December 31, 2000 to $27,782,327 as of June 30, 2001. Inventories decreased 7.2% from $57,910,294 on December 31, 2000 to $53,731,491 as of June 30, 2001. Accounts payable decreased 17.5% from $8,970,663 on December 31, 2000 to $7,403,077 on June 30, 2001 primarily due to decreases in purchases of raw material inventories. LIQUIDITY AND CAPITAL RESOURCES Cash and cash equivalents decreased by $1,781 from $188,288 on December 31, 2000 to $186,507 as of June 30, 2001. Total borrowings under long-term debt agreements decreased by $13,892,668 from $33,755,189 on December 31, 2000 to $19,862,521 as of June 30, 2001. The Company has operated without hindrance or restraint with its present working capital, as income generated from operations and outside sources of credit, both trade and institutional, have been more than adequate. In the foreseeable future, the Company will continue its ongoing capital expenditure program designed to maintain and improve its facilities. The Company at all times evaluates its capital expenditure program in light of prevailing economic conditions. The Company believes that its cash flow from operating activities together with other capital resources and funds from credit sources will be adequate to meet all of its funding requirements for the remainder of the year and for the foreseeable future. During the six months ended June 30, 2001 and 2000, respectively, the Company paid cash dividends of $1,923,433 and $1,984,049. During those same periods, the Company reacquired and retired - 0 - and 471,500 shares, respectively, with costs of $- 0 - and $4,571,954. The Company anticipates that it will continue to pay dividends and that it will reacquire and retire additional shares of its common stock in the future as financial conditions permit. This quarterly report contains certain forward-looking statements that involve a number of risks and uncertainties. Among the factors that could cause actual results to differ materially are the following - general economic conditions in the areas of the United States in which the Company's customers are located; changes in the healthcare, resort and commercial industries where uniforms and service apparel are worn; the impact of competition; and the availability of manufacturing materials. Page 10 11 PART II - OTHER INFORMATION ITEM 1. Legal Proceedings None. ITEM 2. Changes in Securities None. ITEM 3. Defaults Upon Senior Securities Inapplicable. ITEM 4. Submission of Matters to a Vote of Security-holders The Annual Meeting of Shareholders was held on May 4, 2001. Of the 7,124,327 shares outstanding and entitled to vote at the meeting, 6,365,469 shares were present at the meeting, in person or by proxy. At the meeting the shareholders: a) Voted for the nomination of all proposed Directors being, Messrs. G. M. Benstock, A. D. Schwartz, M. Benstock, S. Schechter, P. Benstock, M. Gaetan, PhD, S. Kirschner, and R. Hensley. The votes on all directors nominated were as follows:
NOMINEE VOTES FOR: VOTES WITHHELD: ------- ---------- --------------- Gerald M. Benstock 5,557,844 807,625 Saul Schechter 5,557,844 807,625 Alan D. Schwartz 5,557,844 807,625 Michael Benstock 5,556,444 809,025 Peter Benstock 5,557,744 807,725 Manuel Gaetan 6,324,944 40,525 Sidney Kirschner 6,324,944 40,525 Robin Hensley 6,323,579 41,890
b) Ratified the appointment of Deloitte & Touche LLP, independent certified public accountants, as auditors for the Company's financial statements for the year ending December 31, 2001 with 6,341,281 votes for the motion, 22,438 votes against and 1,750 votes abstaining. ITEM 5. None ITEM 6. Exhibits and Reports on Form 8-K a) Exhibits 15 Letter re: Unaudited Interim Financial Information. b) Reports on Form 8-K None. Page 11 12 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. Date: July 30, 2001 SUPERIOR UNIFORM GROUP, INC. By /s/ Gerald M. Benstock ----------------------------------------- Gerald M. Benstock Chairman and Chief Executive Officer By /s/ Andrew D. Demott, Jr. ----------------------------------------- Andrew D. Demott, Jr. Vice President, Chief Financial Officer and Treasurer (Principal Accounting Officer) Page 12