CASEY'S GENERAL STORES, INC. Overview
Casey's and its direct and indirect wholly-owned subsidiaries operate convenience stores under the names "Casey's" and "Casey's General Store " (hereinafter referred to as the "Company", "Casey's Store " or "Stores") in 16 Midwestern states, primarilyIowa ,Missouri andIllinois . The Company also operates two stores selling primarily tobacco products, one grocery store, and one liquor store. As ofOctober 31, 2019 , there were a total of 2,181 stores in operation. All convenience stores offer fuel for sale on a self-serve basis and most stores carry a broad selection of food (including freshly prepared foods such as pizza, donuts and sandwiches), beverages, tobacco products, health and beauty aids, automotive products and other non-food items. The Company derives its revenue primarily from the retail sale of fuel and the products offered in its stores. Approximately 56% of our stores were opened in areas with populations of fewer than 5,000 persons, while approximately 19% of all stores were opened in communities with populations exceeding 20,000 persons. Two distribution centers are in operation, which supply grocery and general merchandise items to stores. One is adjacent to the Store Support Center facility inAnkeny, Iowa , and the other is located inTerre Haute, Indiana . As ofOctober 31, 2019 , the Company owned the land at 2,155 locations and the buildings at 2,160 locations, and leased the land at 26 locations and the buildings at 21 locations. The Company reported diluted earnings per common share of$2.21 for the second quarter of fiscal 2020. For the same quarter a year-ago, diluted earnings per common share was$1.80 . The following table represents the roll forward of store growth through the second quarter of fiscal 2020: Store Count Stores at4/30/19 2,146 New store construction 36 Acquisitions 5 Prior acquisitions opened 3 Closed (9) Stores at10/31/19 2,181 The Company had 12 acquisition stores under agreement to purchase and a new store pipeline of 97 sites, including 31 under construction, as ofOctober 31, 2019 . Same-store sales is a common metric used in the convenience store industry.
We
define same-store sales as the total sales increase (or decrease) for stores open during the full time of both periods being presented. We exclude from the calculation any acquired stores and any stores that have been replaced with a new store, until such stores have been open during the full time of both periods being presented. Stores that have undergone a major remodel, had adjustments in hours of operation, added pizza delivery, or had other revisions to their operating format remain in the calculation. The second quarter results reflected a 1.8% decrease in same-store fuel gallons sold, with an average fuel revenue less related cost of goods sold (exclusive of depreciation and amortization) of22.9 cents per gallon, compared to20.0 cents per gallon in the same quarter a year ago. Historically, our retail fuel strategy has been to price to the competition, where the timing of retail price changes was driven by local competitive conditions. Over the course of the last year, the Company, as part of its evolving strategy around fuel price optimization, has been more proactive and balanced to grow profitability, which has in-part contributed to a higher fuel margin and lower same-store fuel gallons sold. In addition, softer demand in the Midwest adversely impacted same-store fuel gallons sold in the quarter. The Company sold 18.7 million renewable fuel credits for$3.8 million during the quarter, compared to 16.6 million renewable fuel credits in the second quarter of the prior year, which generated$3.4 million . Same-store sales of grocery and other merchandise increased 3.2% and prepared food and fountain increased 1.9% during the second quarter. Operating expenses increased 8.5% in the quarter primarily due to operating 84 more stores compared to the same period a year ago. 14
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Three Months Ended October 31, 2019 Compared to
Three Months Ended October 31, 2018
(Dollars and Amounts in Thousands)
Grocery & Prepared
Other Food &
Three months ended 10/31/2019 Fuel Merchandise Fountain Other Total
Revenue $ 1,514,474 $ 660,562 $ 297,846 $ 14,704 $ 2,487,586
Revenue less cost of goods sold
(excluding depreciation and
amortization) $ 140,798 $ 220,134 $ 181,452 $ 14,681 $ 557,065
9.3 % 33.3 % 60.9 % 99.8 % 22.4 %
Fuel gallons 614,071
Grocery & Prepared
Other Food &
Three months ended
Other Total
Revenue $ 1,621,868 $ 618,250 $ 283,062 $ 14,825 $ 2,538,005
Revenue less cost of goods sold
(excluding depreciation and
amortization) $ 118,656 $ 200,193 $ 176,675 $ 14,797 $ 510,321
7.3 % 32.4 % 62.4 % 99.8 % 20.1 %
Fuel gallons 593,750
Total revenue for the second quarter of fiscal 2020 decreased by $50,419
(2.0%) over the comparable period in fiscal 2019. Retail fuel sales decreased by
$107,394 (6.6%) as the average retail price per gallon decreased 9.7% (amounting
to a $157,511 decrease), and the number of gallons sold increased by 20,321
(3.4%). During this same period, retail sales of grocery and other merchandise
increased by $42,312 (6.8%), and prepared food and fountain sales increased by
$14,784 (5.2%), both primarily due to operating 84 more stores than a year ago.
The other revenue category primarily consists of lottery, car wash, and prepaid
phone cards, which are presented net of applicable costs. These revenues
decreased $121 (0.8%) for the second quarter of fiscal 2020.
Revenue less cost of goods sold (excluding depreciation and amortization) was
22.4% of revenue for the second quarter of fiscal 2020, compared to 20.1% for
the comparable period in the prior year. Fuel revenue less related cost of goods
sold (exclusive of depreciation and amortization) was 9.3% of fuel revenue
during the second quarter of fiscal 2020 compared to 7.3% in the second quarter
of the prior year. Revenue per gallon less cost of goods sold per gallon
(exclusive of depreciation and amortization) was 22.9 cents in the second
quarter of fiscal 2020 compared to 20.0 cents in the prior year. Grocery and
other merchandise revenue less related cost of goods sold (exclusive of
depreciation and amortization) increased to 33.3% of grocery and other
merchandise revenue, compared to 32.4% in the prior year, partially due to a
favorable shift in product mix to higher margin items. Prepared food and
fountain revenue less related cost of goods sold (exclusive of depreciation and
amortization) decreased to 60.9% of revenue, from a 62.4% rate in the prior
year, primarily due to higher commodity costs.
Operating expenses increased $29,197 (8.5%) in the second quarter of fiscal 2020
from the comparable period in the prior year, primarily due to operating 84 more
stores than a year ago. Same store operating expenses excluding credit card fees
were up 3.4% for the quarter. Operating expenses for the quarter were positively
impacted by advancements in store labor management and lower insurance costs.
Depreciation and amortization expense increased 2.5% to $62,888 in the second
quarter of fiscal 2020 from $61,356 for the comparable period in the prior year.
The increase was due primarily to capital expenditures during the previous
twelve months.
The effective tax rate decreased to 24.2% in the second quarter of fiscal 2020
compared to 26.5% in the second quarter of fiscal 2019. The decrease in the
effective tax rate was primarily due to a reduction in unfavorable permanent
differences.
Net income increased by $15,366 (23.1%) to $81,981 from $66,615 in the prior
year. The increase in net income was primarily due to continued strong growth in
fuel gross profit dollars, operating 84 more stores than a year ago, and an
ongoing focus on operating efficiencies.
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Six Months Ended October 31, 2019 Compared to
Six Months Ended October 31, 2018
Prepared
Grocery & Food &
Six months ended
Total
Revenue $ 3,142,042 $ 1,348,480 $ 593,723 $ 29,970 $ 5,114,215
Revenue less cost of goods
sold (excluding
depreciation and
amortization) $ 291,787 $ 435,587 $ 365,464 $ 29,913 $ 1,122,751
9.3 % 32.3 % 61.6 % 99.8 % 22.0 %
Fuel gallons 1,233,155
Six months ended 10/31/2018
Revenue $ 3,269,285 $ 1,263,050 $ 564,065 $ 30,037 $ 5,126,437
Revenue less cost of goods
sold (excluding
depreciation and
amortization) $ 242,132 $ 409,119 $ 350,859 $ 29,979 $ 1,032,089
7.4 % 32.4 % 62.2 % 99.8 % 20.1 %
Fuel gallons 1,195,545
Total revenue for the first six months of fiscal 2020 decreased by $12,222
(0.2%) over the comparable period in fiscal 2019. Retail fuel sales decreased by
$127,243 (3.9%) as the average retail price per gallon decreased 6.8% (amounting
to a $223,072 decrease), and the number of gallons sold increased by 37,610
(3.1%). During this same period, retail sales of grocery and other merchandise
increased by $85,430 (6.8%), and prepared food and fountain sales increased by
$29,658 (5.3%), both primarily due to operating 84 more stores than a year ago.
The other revenue category primarily consists of lottery, car wash, and prepaid
phone cards, which are presented net of applicable costs. These revenues
decreased $67 (0.2%) through the second quarter of fiscal 2020.
Revenue less cost of goods sold (excluding depreciation and amortization) was
22.0% of revenue for the first six months of fiscal 2020, compared to 20.1% for
the comparable period in the prior year. Fuel revenue less related cost of goods
sold (exclusive of depreciation and amortization) was 9.3% of fuel revenue for
the first six months of fiscal 2020 compared to 7.4% for the first six months of
the prior year. Revenue per gallon less cost of goods sold per gallon (exclusive
of depreciation and amortization) was 23.7 cents for the first six months fiscal
2020 compared to 20.3 cents in the prior year. Grocery and other merchandise
revenue less related cost of goods sold (exclusive of depreciation and
amortization) was consistent compared to the prior year at 32.3% of grocery and
other merchandise revenue, compared to 32.4% in the prior year. Prepared food
and fountain revenue less related cost of goods sold (exclusive of depreciation
and amortization) decreased to 61.6% of revenue, compared to 62.2% in the prior
year, due to higher commodity costs.
Operating expenses increased $49,646 (7.1%) in the first six months of fiscal
2020 from the comparable period in the prior year, primarily due to operating 84
more stores than a year ago. Same store operating expenses excluding credit card
fees were up 3.0% for the first six months of fiscal 2020. Operating expenses
for the first six months were positively impacted by advancements in store labor
management and lower insurance costs.
Depreciation and amortization expense increased 2.1% to $122,696 for the first
six months of fiscal 2020 from $120,196 for the comparable period in the prior
year. The increase was due primarily to capital expenditures during the previous
twelve months. The expense for the first six months of fiscal 2020 was lower
than expected, due to an approximately $5 millon adjustment related to the
useful lives of underground storage tanks.
The effective tax rate was 23.9% for both the first six months of fiscal year
2020 and the same period of fiscal 2019.
Net income increased by $30,957 (22.6%) to $167,796 from $136,839 in the prior
year. The increase in net income was primarily due to continued strong growth in
fuel gross profit dollars, operating 84 more stores than a year ago, and an
ongoing focus on operating efficiencies.
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Use of Non-GAAP Measures We define EBITDA as net income before net interest expense, income taxes, depreciation and amortization. Adjusted EBITDA further adjusts EBITDA by excluding the gain or loss on disposal of assets as well as impairment charges. Neither EBITDA nor Adjusted EBITDA are considered GAAP measures, and should not be considered as a substitute for net income, cash flows from operating activities or other income or cash flow statement data. These measures have limitations as analytical tools, and should not be considered in isolation or as substitutes for analysis of our results as reported under GAAP. We strongly encourage investors to review our financial statements and publicly filed reports in their entirety and not to rely on any single financial measure. We believe EBITDA and Adjusted EBITDA are useful to investors in evaluating our operating performance because securities analysts and other interested parties use such calculations as a measure of financial performance and debt service capabilities, and they are regularly used by management for internal purposes including our capital budgeting process, evaluating acquisition targets, and assessing performance. Because non-GAAP financial measures are not standardized, EBITDA and Adjusted EBITDA, as defined by us, may not be comparable to similarly titled measures reported by other companies. It therefore may not be possible to compare our use of these non-GAAP financial measures with those used by other companies. The following table contains a reconciliation of net income to EBITDA and Adjusted EBITDA for the three and six months endedOctober 31, 2019 and 2018: Three months ended Six months ended October 31, 2019 October 31, 2018 October 31, 2019 October 31, 2018 Net income $ 81,981 66,615 $ 167,796 136,839 Interest, net 12,683 14,191 26,404 28,597 Federal and state income taxes 26,130 23,973 52,631 42,879 Depreciation and amortization 62,888 61,356 122,696 120,196 EBITDA $ 183,682 166,135 $ 369,527 328,511 Loss on disposal of assets and impairment charges 730 785 1,257 1,130 Adjusted EBITDA $ 184,412 166,920 $ 370,784 329,641 For the three months endedOctober 31, 2019 , EBITDA and Adjusted EBITDA increased 10.6% and 10.5%, respectively, when compared to the same period a year ago. For the six months endedOctober 31, 2019 , EBITDA and Adjusted EBITDA increased 12.5% and 12.5%, respectively, when compared to the same period a year ago. The increases are primarily due to continued strong growth in fuel gross profit dollars, operating 84 more stores than a year ago, and an ongoing focus on operating efficiencies. Critical Accounting Policies Critical accounting policies are those accounting policies that management believes are important to the portrayal of the Company's financial condition and results of operations. The Company's critical accounting policies are described in the Form 10-K for the year endedApril 30, 2019 , and such discussion is incorporated herein by reference. There have been no changes to these policies in the six months endedOctober 31, 2019 . Liquidity and Capital Resources (Dollars in Thousands) Due to the nature of the Company's business, cash provided by operations is the Company's primary source of liquidity. The Company finances its inventory purchases primarily from normal trade credit aided by the relatively rapid turnover of inventory. This turnover allows the Company to conduct its operations without large amounts of cash and working capital. As ofOctober 31, 2019 , the Company's ratio of current assets to current liabilities was 0.36 to 1. The ratio atOctober 31, 2018 andApril 30, 2019 was 0.81 to 1 and 0.69 to 1, respectively. The decrease in the ratio is primarily attributable to the reclassification of$569,000 5.22% Senior notes to current liabilities as they are due onAugust 9, 2020 . Management intends to refinance the 5.22% Senior notes. 17
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Management believes that the Company's currentBank Line of$25,000 , its Credit Facility of$300,000 , combined with the current cash and cash equivalents and the future cash flow from operations will be sufficient to satisfy the working capital needs of our business. Net cash provided by operations increased$7,120 (2.3%) in the six months endedOctober 31, 2019 from the comparable period in the prior year. Cash used in investing in the six months endedOctober 31, 2019 increased$47,580 (24.0%) over prior year, in line with projected annual expenditures. Cash used in financing decreased$22,932 (21.2%), primarily due to reductions in share buyback activity. Capital expenditures represent the single largest use of Company funds. Management believes that by acquiring, building, and reinvesting in stores, the Company will be better able to respond to competitive challenges and increase operating efficiencies. During the first six months of fiscal 2020, the Company expended$248,364 , primarily for property and equipment, resulting from the construction, remodeling, and acquisition of stores, compared to$200,999 for the comparable period in the prior year. The Company anticipates spending$516 million in fiscal 2020, primarily for construction, acquisition and remodeling of stores, sourced primarily from existing cash, funds generated by operations, and the prior year issuance of senior notes. As ofOctober 31, 2019 , the Company had long-term debt of$715,060 , (net of current maturities and debt issuance costs of$577,698 ),$150,000 in principal amount of 3.67% Senior Notes, Series A,$50,000 in principal amount of 3.75% Senior Notes Series B,$50,000 in principal amount of 3.65% Senior Notes Series C,$50,000 in principal amount of 3.72% Senior Notes Series D,$150,000 in principal amount of 3.51% Senior Notes Series E,$250,000 in principal amount of 3.77% Senior Notes Series F, and$15,060 of finance lease obligations. The Company also has a$25,000 bank line of credit with$0 outstanding atOctober 31, 2019 , and a$300,000 credit facility with$25,000 outstanding atOctober 31, 2019 . Current maturities of long-term debt is primarily comprised of$569,000 in principal amount of 5.22% Senior notes due onAugust 9, 2020 and$7,500 in principal amount of 5.72% Senior notes due onMarch 30, 2020 . To date, the Company has funded capital expenditures primarily from the proceeds of the sale of Common Stock, issuance of debt, existing cash, and funds generated from operations. Future capital needs required to finance operations, improvements and the anticipated growth in the number of stores are expected to be met from cash generated by operations, the Bank Line and the Credit Facility, and additional long-term debt or other securities as circumstances may dictate, and are not expected to adversely affect liquidity. Cautionary Statements (Dollars in Thousands) This Form 10-Q, including the foregoing Management's Discussion and Analysis of Financial Condition and Results of Operations, contains various "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements represent the Company's expectations or beliefs concerning future events, including (i) any statements regarding future sales and gross profit percentages, (ii) any statements regarding the continuation of historical trends and (iii) any statements regarding the sufficiency of the Company's cash balances and cash generated from operations and financing activities for the Company's future liquidity and capital resource needs. The words "believe," "expect," "anticipate," "intend," "estimate," "project" and similar expressions are used to identify forward-looking statements. The Company cautions that these statements are further qualified by important factors that could cause actual results to differ materially from those in the forward-looking statements, including, without limitations, the following factors described more completely in the Form 10-K for the fiscal year endedApril 30, 2019 : Competition. The Company's business is highly competitive, and marked by ease of entry and constant change in terms of the numbers and type of retailers offering the products and services found in stores. Many of the food (including prepared foods) and non-food items similar or identical to those sold by the Company are generally available from a variety of competitors in the communities served by stores, and the Company competes with other convenience store chains, gasoline stations, supermarkets, drug stores, discount stores, club stores, mass merchants and "fast-food" outlets (with respect to the sale of prepared foods). Sales of such non-fuel items (particularly prepared food items) have contributed substantially to the Company's gross profits from retail sales in recent years. Fuel sales are also intensely competitive. The Company competes with both independent and national brand gasoline stations in the sale of fuel, other convenience store chains and several non-traditional fuel retailers such as supermarkets in specific markets. Some of these other fuel retailers may have access to more favorable arrangements for fuel supply then do the Company or the firms that supply its stores. Some of the Company's competitors have greater financial, marketing and other resources than the Company, and, as a result, may be able to respond better to changes in the economy and new opportunities within the industry. 18
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Fuel operations. Fuel sales are an important part of the Company's sales and earnings, and retail fuel profit margins have a substantial impact on the Company's net earnings. Profit margins on fuel sales can be adversely affected by factors beyond the control of the Company, including the supply of fuel available in the retail fuel market, uncertainty or volatility in the wholesale fuel market, increases in wholesale fuel costs generally during a period, and price competition from other fuel marketers. The market for crude oil and domestic wholesale petroleum products is marked by significant volatility, and is affected by general political conditions and instability in oil producing regions such as theMiddle East andSouth America . The volatility of the wholesale fuel market makes it extremely difficult to predict the impact of future wholesale cost fluctuation on the Company's operating results and financial conditions. These factors could materially impact the Company's fuel gallon volume, fuel gross profit, and overall customer traffic levels at stores. Any substantial decrease in profit margins on fuel sales or in the number of gallons sold by stores could have a material adverse effect on the Company's earnings. Fuel is purchased from a variety of independent national and regional petroleum distributors and the fuel is loaded onto both Casey's fuel trucks and 3rd party fuel trucks. Purchase agreements exist for a portion of our fuel which includes varying pricing structures and volume commitments. Although in recent years suppliers have not experienced difficulties in obtaining sufficient amounts of fuel to meet the Company's needs, unanticipated national and international events, such as threatened or actual acts of war or terrorism, natural disasters, and instability in oil producing regions could result in a reduction of fuel supplies available for distribution. Any substantial curtailment in the availability of fuel could adversely affect the Company by reducing its fuel sales. Further, management believes that a significant amount of the Company's business results from the patronage of customers primarily desiring to purchase fuel and, accordingly, reduced fuel supplies could adversely affect the sale of non-fuel items. Such factors could have a material adverse impact upon the Company's earnings and operations. Tobacco and Nicotine Products. Sales of tobacco and nicotine products, including vapor products and e-cigarettes, represent a significant portion of the Company's grocery and other merchandise category. Significant increases in wholesale cigarette costs and tax increases on tobacco and nicotine products, as well as national and local campaigns to further regulate and discourage smoking and the use of other tobacco and nicotine products inthe United States , have had, and are expected to continue having, an adverse effect on the demand for cigarettes and other tobacco and nicotine products sold in our stores. Also, increasing regulations related to, and restricting the sale of, vapor products and e-cigarettes, may offset some of the recent gains we have experienced from selling these types of products. The Company attempts to pass price increases through to its customers, but competitive pressures in specific markets may prevent it from doing so. These factors could materially impact the product mix of tobacco and nicotine products, the retail price and margins of cigarettes and other tobacco and nicotine products, the volume of cigarettes and other tobacco and nicotine products sold by stores and overall customer traffic, any of which may have a material adverse impact on the grocery and other merchandise category and the Company's earnings and profits. Environmental Compliance Costs.The United States Environmental Protection Agency and several states, includingIowa , have established requirements for owners and operators of underground gasoline storage tanks (USTs) with regard to (i) maintenance of leak detection, corrosion protection and overfill/spill protection systems; (ii) upgrade of existing tanks; (iii) actions required in the event of a detected leak; (iv) prevention of leakage through tank closings; and (v) required gasoline inventory recordkeeping. Since 1984, new Company stores have been equipped with non-corroding fiberglass USTs, including many with double-wall construction, over-fill protection and electronic tank monitoring. The Company currently has 4,953 USTs, of which 4,076 are fiberglass and 877 are steel. Management believes that its existing fuel procedures and planned capital expenditures will continue to keep the Company in substantial compliance with all current federal and state UST regulations. Several of the states in which the Company does business have trust fund programs with provisions for sharing or reimbursing corrective action or remediation costs incurred by UST owners, including the Company. In the years endedApril 30, 2019 and 2018, the Company spent approximately$774 and$1,255 , respectively, for assessments and remediation. During the six months endedOctober 31, 2019 , the Company expended approximately$359 for such purposes. Substantially all of these expenditures have been submitted for reimbursement from state-sponsored trust fund programs and as ofOctober 31, 2019 , approximately$23,417 has been received from such programs since their inception. Such amounts are typically subject to statutory provisions requiring repayment of the reimbursed funds for non-compliance with upgrade provisions or other applicable laws. No amounts are currently expected to be repaid. The Company has an accrued liability atOctober 31, 2019 of approximately$376 for estimated expenses related to anticipated corrective actions or remediation efforts, including relevant legal and consulting costs. Management believes the Company has no material joint and several environmental liability with other parties. Although the Company regularly accrues expenses for the estimated costs related to its future corrective action or remediation efforts, there can be no assurance that such accrued amounts will be sufficient to pay such costs, or that the 19
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Company has identified all environmental liabilities at all of its current store locations. In addition, there can be no assurance that the Company will not incur substantial expenditures in the future for remediation of contamination or related claims that have not been discovered or asserted with respect to existing store locations or locations that the Company may acquire in the future, or that the Company will not be subject to any claims for reimbursement of funds disbursed to the Company under the various state programs or that additional regulations, or amendments to existing regulations, will not require additional expenditures beyond those presently anticipated. Other Factors. Other factors and risks that may cause actual results to differ materially from those in the forward-looking statements include the risk that our cash balances and cash generated from operations and financing activities will not be sufficient for our future liquidity and capital resource needs, tax increases, potential liabilities and expenditures related to compliance with environmental and other laws and regulations, the seasonality of demand patterns, and weather conditions; and the other risks and uncertainties included from time to time in our filings with theSEC . We further caution you that other factors we have not identified may in the future prove to be important in affecting our business and results of operations. We ask you not to place undue reliance on any forward-looking statements because they speak only of our views as of the statement dates. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. Item 3. Quantitative and Qualitative Disclosures about Market Risk. The Company's exposure to market risk for changes in interest rates relates primarily to our investment portfolio and long-term debt obligations. We place our investments with high-quality credit issuers and, by policy, limit the amount of credit exposure to any one issuer. Our first priority is to attempt to reduce the risk of principal loss. Consequently, we seek to preserve our invested funds by limiting default risk, market risk, and reinvestment risk. We attempt to mitigate default risk by investing in only high-quality credit securities that we believe to be low risk and by positioning our portfolio to respond appropriately to a significant reduction in a credit rating of any investment issuer or guarantor. The portfolio includes only marketable securities with active secondary or resale markets to ensure portfolio liquidity. We believe an immediate 100-basis-point move in interest rates affecting our floating and fixed rate financial instruments as ofOctober 31, 2019 would have no material effect on pretax earnings. We do from time to time, participate in a forward buy of certain commodities, primarily cheese and coffee. These contracts are not accounted for as derivatives as they meet the normal purchases exclusion under derivative accounting. Item 4. Controls and Procedures. Evaluation of Disclosure Controls and Procedures As of the end of the period covered by this report, an evaluation was performed under the supervision and with the participation of the Company's Chief Executive Officer and Chief Financial Officer of the effectiveness of the Company's disclosure controls and procedures (as defined in Exchange Act Rule 240.13a-15(e)). Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer have concluded that the Company's current disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in theSEC's rules and forms and such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosures.
Changes in Internal Controls Over Financial Reporting
There have been no changes in the Company's internal control over financial
reporting during the quarter ended
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