Item 7. Management’s Discussion and Analysis
Item 7.
Management's Discussion and Analysis of Financial Condition and Results
of Operations:
Management’s
Discussion and
Analysis of
Financial Condition
and Results
of Operations
is intended
to provide information to assist readers in better
understanding and evaluating our financial condition and
results
of
operations.
The
following
information
should
be
read
in
conjunction
with
the
Consolidated
Financial Statements, including the accompanying Notes appearing in
Part II, Item 8 of this
annual report
on Form 10-K.
This section of the annual report
on Form 10-K generally discusses fiscal 2024
and fiscal
2023
and
year-to-year
comparisons
between
fiscal
2024
and
fiscal
2023,
as
well
as
certain
fiscal
2022
items.
Discussions
of
fiscal
2022
items
and
year-to-year
comparisons
between
fiscal
2023
and
fiscal
2022 that are not included
in this Form 10-K can
be found in “Management’s
Discussion and Analysis of
Financial
Condition
and
Results
of
Operations”
in
Part
II,
Item
7
of
the
Company’s
annual
report
on
Form 10-K for the fiscal year ended February 3, 2024.
Recent Developments
Inflationary Cost Pressure and High Interest Rates
The
pressure
on
our
customers’
disposable
income
continued
in
fiscal
2024,
due
to
prolonged
and
persistently high prices caused by high inflation
rates, especially related to housing, groceries and
fuel, as
well as
high interest
rates.
These high
interest rates
have adversely
affected the
availability and
cost of
credit for our customers, including
revolving credit and auto loans,
and continue to negatively impact
our
customers’ disposable income.
Our customers’
willingness to purchase
our products may
continue to
be
negatively impacted by these inflationary pressures and high interest
rates.
Although
interest
rates
and
inflation
have
decreased,
we
believe
the
pressure
on
our
customers’
disposable income
adversely impacted
fiscal 2024
and will
likely continue
to have
a negative
impact on
consumer behavior and, by extension, our results of operations and financial condition during
at least part
of fiscal 2025.
Merchandise Supply Chain and Tariff Pressures
A significant amount of
our merchandise is manufactured
overseas, principally in Southeast
Asia, and
traverses
through
the
Panama
Canal
or
the
Suez
Canal.
In
the
first
quarter
of
2024,
the
drought
conditions
experienced
in
the
region
surrounding
the
Panama
Canal
reduced
the
number
of
transits
by
approximately 37% and
also reduced the
permissible draft of
vessels transiting the
Panama Canal, which
reduced the volume
and number of
containers carried by container
ships and increased
our costs.
These
conditions improved as
the Panama
Canal authority
increased the
daily transits
and the
permissible draft
of vessels, raising the number of
transits to 95% of pre-drought operations in the
second quarter and back
to pre-drought
levels in
the third
and fourth
quarters. The
hostilities affecting
the region
surrounding the
Suez Canal are causing container ships to travel longer distances around the Cape of Good Hope, which is
increasing lead times for merchandise and
our costs to ship these
goods, as well as decreasing the
pool of
containers
available.
The
combination
of
these
situations
has
negatively
impacted
fiscal
2024.
In
addition,
the
third
and
fourth
quarters
were
impacted
by
later
shipments
in
part
due
to
congestion
at
certain Asian
ports. In
the third
quarter,
our shipments
were negatively
impacted by
the U.S.
port strike
on
the
east coast
and civil
unrest in
some Asian
countries that
caused
merchandise to
miss its
shipping
windows.
Though
conditions
incrementally
improved
in
the
fourth
quarter,
we
believe
the
totality
of
these conditions
will likely
continue to
have a
negative impact on
our results
of operations
and financial
condition for the foreseeable future.
In
addition
to
the
supply
chain
issues,
the
newly
implemented
additional
provisional
tariffs
on
Chinese products may have several impacts on the results
of our financial operations. Our costs associated
with products made in China are likely to increase. These cost increases will negatively impact our results
of
operations
and
financial
condition
unless
we
are
able
to
mitigate
these
costs
by
having
our
vendors
31
share
the
costs
of
tariffs,
increase
retail
pricing
or
move
production
to
another
county.
Certain
product
categories
such
as
shoes
and
handbags
will
be
difficult
to
source
in
other
countries.
These
provisional
tariffs
may also
cause supply
chain issues,
as companies
move production
from China.
Potential supply
chain
issues
such
as
products being
late
due
to
port congestion,
longer
transit times
and
dwell
times
at
port,
and
container
availability
may
impact
the
costs
we
pay
for
ocean
freight
or
the
timeliness
of
our
product deliveries, any of which may
negatively impact our results of operations
and financial condition.
Results of Operations
The table below sets forth certain financial data of the Company
expressed as a percentage of
retail sales for the years indicated:
Fiscal Year Ended
February 1, 2025
February 3, 2024
Retail sales …………………………………………………………..
100.0
%
100.0
%
Other revenue…………………………………………………………
1.2
1.1
Total revenues ……………………………………………………….
101.2
101.1
Cost of goods sold …………………………………………………..
68.0
66.3
Selling, general and administrative………………………………….
36.1
36.1
Depreciation …………………………………………………………
1.5
1.4
Interest and other income ……………………………………………
1.8
0.7
Loss before income taxes …………………………………………
(2.5)
(2.0)
Net loss…………………………………………………………..
(2.8)
%
(3.4)
%
Fiscal 2024 Compared to Fiscal 2023
Retail sales
decreased by
8.3% to
$642.1 million
in fiscal
2024 compared
to $700.3
million in
fiscal
2023. Fiscal 2024 had 52 weeks versus 53 weeks in fiscal 2023. The decrease in retail sales
in fiscal 2024
was
primarily
due
to
a
3.2%
decrease
in
same-store sales,
from closed stores in
2023
and
an
additional
week
of
sales
in
2023.
Same-store
sales
for
the
fiscal
year
2024
decreased
primarily
due
to
lower
transactions, partially offset by fewer returns and slightly higher average sales per transaction. Same-store
sales
includes
stores
that
have
been
open
more
than
15
months.
Stores
that
have
been
relocated
or
expanded
are
also
included in
the
same-store sales
calculation
after
they
have
been
open
more
than
15
months.
In fiscal 2024 and fiscal 2023, e-commerce sales were less than 5%
of total sales and same-store
sales. The
method of
calculating same-store sales
varies across the
retail industry.
As a
result, our same-
store sales
calculation may
not be
comparable to
similarly titled
measures reported
by other
companies.
Total
revenues, comprised of
retail sales
and other
revenue (principally finance
charges and
late fees
on
customer accounts receivable,
gift card breakage, shipping
charges for e-commerce purchases
and layaway
fees), decreased by 8.2% to
$649.8 million in
fiscal 2024 compared to
$708.1 million in
fiscal 2023. The
Company
operated
1,117
stores
at
February
1,
2025
compared
to
1,178
stores
operated
at
February
3,
2024.
In fiscal 2024, the Company opened five new stores and closed 66
stores.
Other revenue,
a component
of total
revenues, remained
flat at
$7.7 million
in fiscal
2024 compared
to fiscal 2023.
Credit
revenue
of
$2.7
million
represented
0.4%
of
total
revenue
in
fiscal
2024,
a
$0.1
million
increase compared to fiscal 2023 credit
revenue of $2.6 million or 0.4% of
total revenue.
The increase in
credit revenue was
primarily due to
increases in finance
charges and late
fee income as
a result of
higher
accounts
receivable
balances.
Credit
revenue
is
comprised
of
interest
earned
on
the
Company’s
private
label credit
card portfolio
and related
fee income.
Related expenses
include
principally payroll,
postage
and
other
administrative
expenses
and
totaled
$1.6
million
in
fiscal
2024
compared
to
$1.6
million
in
fiscal 2023.
Total credit
segment income before taxes was $2.2 million in fiscal
2024 and $1.7 million in
32
fiscal 2023.
Cost
of
goods sold
was $436.4
million, or
68.0% of
retail
sales, in
fiscal
2024 compared
to
$464.3
million, or 66.3% of retail sales, in fiscal 2023. The increase in cost of goods sold as a percentage of sales
resulted primarily
from higher
distribution and
freight costs,
increased sales
of markdown
priced goods,
and deleveraging
of occupancy
and buying
costs. Cost
of goods
sold includes
merchandise costs,
net of
discounts
and
allowances,
buying
costs,
distribution
costs,
occupancy
costs,
and
freight
and
inventory
shrinkage.
Net
merchandise
costs
and
in-bound
freight
are
capitalized
as
inventory
costs.
Buying
and
distribution costs include payroll, payroll-related costs and operating expenses for the buying departments
and
distribution
center.
Occupancy
expenses
include
rent,
real
estate
taxes,
insurance,
common
area
maintenance,
utilities
and
maintenance
for
stores
and
distribution
facilities.
Total
gross
margin
dollars
(retail sales
less cost
of goods
sold and excluding
depreciation) decreased by
12.8% to
$205.7 million in
fiscal 2024 from $236.0
million in fiscal
2023. Gross margin as
presented may not
be comparable to
that
of other companies.
Selling, general
and administrative expenses
(“SG&A”), which
primarily include corporate
and store
payroll,
related
payroll
taxes
and
benefits,
insurance,
supplies,
advertising,
bank
and
credit
card
processing fees were
$231.5 million in
fiscal 2024 compared
to $252.8 million
in fiscal 2023,
a decrease
of
8.4%.
As
a
percent
of
retail
sales,
SG&A
was
36.1%
compared
to
36.1%
in
the
prior
year.
The
decrease in SG&A expense in fiscal 2024 was primarily attributable to decreased incentive compensation,
insurance, closed store and impairment expenses, partially offset by increased professional
fees.
Depreciation
expense
was
$9.8
million
in
fiscal
2024
compared
to
$9.9
million
in
fiscal
2023.
Depreciation expense
decreased slightly
from fiscal
2023 due
to fully
depreciated older
stores and
prior
period impairments of leasehold improvements and fixtures,
partially offset by the distribution
center and
information technology expenditures.
Interest and other
income increased to
$11.8 million
in fiscal 2024
compared to $5.1
million in fiscal
2023. The increase is
primarily attributable to a $3.2
million net gain on
sale of land held
for investment,
gains on
the disposal
of the
Company’s
corporate aircraft
and certain
equity securities,
as well
as higher
interest earned on the Company’s investments.
Income tax
expense was
$1.9 million,
or 0.3%
of retail
sales in
fiscal 2024
compared to
income tax
expense
of
$10.1
million, or
1.4%
of
retail
sales
in
fiscal
2023.
The
income
tax
expense
decrease
was
primarily due
to a
valuation allowance
recorded against
U.S. federal
and state
deferred tax
assets in
the
prior
fiscal
year
due to
a
pre-tax loss,
partially offset
by foreign
rate
differential. The
effective
tax
rate
was (12.1%)
(Expense) in fiscal
2024 compared to
(73.5%)
(Expense) in fiscal
2023. See Note
12 to
the
Consolidated Financial Statements, “Income Taxes,” for further details.
Off-Balance Sheet Arrangements
None.
Critical Accounting Policies and Estimates
The Company’s
accounting policies are
more fully described
in Note
1 to the
Consolidated Financial
Statements.
As
disclosed
in
Note
1
to
the
Consolidated
Financial
Statements,
the
preparation
of
the
Company’s
financial
statements
in
conformity
with
generally
accepted
accounting
principles
in
the
United
States
(“GAAP”)
requires
management
to
make
estimates
and
assumptions
about
future
events
that
affect
the
amounts reported
in
the
financial statements
and
accompanying notes.
Future events
and
their
effects
cannot
be
determined
with
absolute
certainty.
Therefore,
the
determination
of
estimates
requires
the
exercise
of
judgment.
Actual
results
inevitably
will
differ
from
those
estimates,
and
such
differences
may
be
material
to
the
financial
statements.
The
most
significant
accounting
estimates
33
inherent in the preparation of the Company’s financial statements include the calculation of potential asset
impairment, income tax
valuation allowances, reserves relating
to self-insured health
insurance, workers’
compensation, general
and auto
insurance liabilities,
uncertain tax
positions, the
allowance for
customer
credit losses, and inventory shrinkage.
The Company’s critical accounting policies and estimates are discussed with the Audit Committee.
Allowance for Customer Credit Losses
The Company evaluates
the collectability
of customer
accounts receivable
and records
an allowance
for customer
credit losses
based on
the accounts
receivable aging and
estimates of
actual write-offs.
The
allowance is
reviewed for
adequacy and
adjusted, as
necessary,
on a
quarterly basis.
The Company
also
provides
for
estimated
uncollectible
late
fees
charged
based
on
historical
write-offs.
The
Company’s
financial results
can be
impacted by
changes in
customer loss
write-off experience
and the
aging of
the
accounts receivable portfolio.
Merchandise Inventories
The Company’s
inventory is
valued using
the weighted-average
cost method
and is
stated at
the net
realizable value. Physical inventories
are conducted throughout the
year to calculate actual
shrinkage and
inventory on hand. Actual shrinkage results are used to estimate inventory shrinkage, which is accrued for
the
period between
the
last physical
inventory and
the
financial reporting
date. The
Company regularly
reviews
its
inventory
levels
to
identify
slow
moving
merchandise
and
uses
markdowns
to
clear
slow
moving inventory.
Lease Accounting
The Company determines whether an arrangement is a lease at inception. The Company has operating
leases for
stores,
offices,
warehouse space
and equipment.
Its leases
have remaining
lease terms
of
one
year to 10 years, some of which
include options to extend the lease term for
up to five years, and some of
which
include
options
to
terminate
the
lease
within
one
year.
The
Company considers
these
options
in
determining
the
lease term
used
to
establish its
right-of-use assets
and lease
liabilities. The
Company’s
lease agreements do not contain any material residual value guarantees or material
restrictive covenants.
As
most
of
the
Company’s
leases
do
not
provide
an
implicit
rate,
the
Company
uses
its
estimated
incremental
borrowing
rate
based
on
the
information
available
at
commencement
date
of
the
lease
in
determining the present
value of lease
payments.
See Note
11 to
the Consolidated Financial
Statements,
“Leases,” for further information.
Impairment of Long-Lived Assets
The
Company invests
in
leaseholds,
right-of use
assets
and
equipment primarily
in
connection
with
the opening and remodeling of stores
and in computer software and hardware. The
Company periodically
reviews its store
locations and estimates
the recoverability of
its long-lived assets,
which primarily relate
to
Fixtures
and
equipment,
Leasehold
improvements,
Right-of-use
assets
net
of
Lease
liabilities
and
Information
technology
equipment
and
software.
An
impairment
charge
is
recorded
for
the
amount
by
which the
carrying value
exceeds the
estimated fair
value when
the Company
determines that
projected
cash flows associated with those long-lived assets will not be sufficient to recover
the carrying value. This
determination is based on a
number of factors, including the store’s
historical operating results and future
projected cash flows, which include contribution margin projections.
The Company assesses the fair value
of each lease
by considering market
rents and
any lease terms
that may adjust
market rents under
certain
conditions, such as the loss of
an anchor tenant or a leased
space in a shopping center not
meeting certain
criteria. Further,
in determining when
to close a
store, the Company considers
real estate development
in
34
the
area and
perceived local
market conditions,
which can
be difficult
to
predict and
may be
subject
to
change.
Insurance Liabilities
The
Company
is
primarily
self-insured
for
healthcare,
workers’
compensation
and
general
liability
costs. These costs are
significant primarily due to the
large number of the
Company’s retail locations
and
associates. The Company’s
self-insurance liabilities are
based on the
total estimated costs
of claims filed
and
estimates
of
claims
incurred
but
not
reported,
less
amounts
paid
against
such
claims,
and
are
not
discounted.
Management
reviews
current
and
historical
claims
data
in
developing
its
estimates.
The
Company
also
uses
information
provided
by
outside
actuaries
with
respect
to
healthcare,
workers’
compensation and general liability claims.
If the underlying facts and
circumstances of the claims change
or
the
historical
experience
upon
which
insurance
provisions
are
recorded
is
not
indicative
of
future
trends, then
the Company
may be
required to
make adjustments
to the
provision for
insurance costs
that
could
be
material
to
the
Company’s
reported
financial condition
and
results
of
operations.
Historically,
actual results have not significantly deviated from estimates.
Uncertain Tax Positions
The Company records
liabilities for
uncertain tax
positions primarily
related to
state income
taxes as
of the balance sheet
date.
These liabilities reflect the
Company’s best
estimate of its ultimate
income tax
liability
based
on
the
tax
codes,
regulations,
and
pronouncements
of
the
jurisdictions
in
which
we
do
business.
Estimating our ultimate tax liability involves significant judgments regarding the
application of
complex tax
regulations across
many jurisdictions.
Despite the
Company’s
belief that
the estimates
and
judgments
are
reasonable,
differences
between
the
estimated
and
actual
tax
liabilities
can
and
do
exist
from time to time.
These differences may arise from settlements
of tax audits, expiration of the statute of
limitations, and the evolution and application of the
various jurisdictional tax codes and regulations.
Any
differences will
be recorded
in the
period in
which they become
known and
could have
a material
effect
on the results of operations in the period the adjustment is recorded.
Deferred Tax Valuation
Allowance
The
Company
assesses
the
likelihood
that
deferred
tax
assets
will
be
realized
in
light
of
the
Company’s
current
financial
performance
and
projected
future
financial
performance.
Based
on
this
assessment, the
Company then
determines if
a valuation
allowance should
be recorded.
If the
Company
concludes
that
it
is
more
likely
than
not
that
the
Company
will
not
be
able
to
realize
its
tax
deferred
assets, a valuation allowance is recorded for the proportion of the deferred tax asset it determines may not
be realized.
This evaluation
requires significant
judgment and
involves the
consideration of
all available
positive
and
negative
evidence,
including
our
historical
operating
results,
the
existence
of
cumulative
losses
in
recent
years,
ongoing
prudent
and
feasible
tax
planning
strategies,
and
projections
of
future
taxable income.
Liquidity, Capital Resources and Market Risk
The Company
believes that
its cash,
cash equivalents
and short-term
investments, together
with cash
flows from
operations and
its new
asset-backed revolving line
of credit
(see below),
will be
adequate to
fund
the
Company’s
regular
operating
requirements,
including
$64.6
million
of
lease
obligations
and
planned investments of $7.3 million of capital expenditures,
for the next twelve months from the issuance
of this report.
Cash
used
in
operating
activities
during
fiscal
2024
was
$19.7
million
as
compared
to
$0.5 million
provided in fiscal 2023 and $13.4 million provided in fiscal 2022. Cash used in operating activities during
2024 was
primarily attributable
to net
income adjusted
for depreciation,
changes in
working capital
and
35
subtraction of
net income
for non-operating
gains on
sale of
assets held
for investment.
The decrease
of
$20.2
million
for
fiscal
2024
compared
to
fiscal
2023
is
primarily due
to
an
increase in
merchandise
inventories
and
gains
on
sale
of
assets
held
for
investments,
partially
offset
by
an
increase
in
accounts
payable.
At
February 1,
2025,
the
Company had
working
capital
of
$34.9 million compared
to
$55.1 million
and $74.7 million at February 3,
2024 and January 28, 2023, respectively.
The decrease
in working
capital
compared to the prior
year is primarily due
to lower short-term investments and
accounts receivables, higher
accounts payable and accrued expenses, partially offset
by higher inventory and lower current
lease liability.
At February 1,
2025, the Company
had an
unsecured revolving credit
agreement, which provided
for
borrowings of
up to
$35.0 million less
the
balance of
any revocable
letters of
credit related
to
purchase
commitments, and
was committed
through May
2027.
The credit
agreement contained
various financial
covenants and limitations, including the maintenance of specific financial
ratios with which the Company
was not in compliance as of
February 1, 2025. There were no
borrowings outstanding,
or any outstanding
letters of
credit,
under this
credit facility
as
of the
fiscal year
ended February
1, 2025
or
the fiscal
year
ended
February 3,
2024.
On
March
13,
2025,
the
Company terminated
the
unsecured revolving
line
of
credit when it entered into a
new $35.0 million asset-backed revolving line
of credit (the “ABL Facility”)
secured primarily by
inventory and third-party
credit card receivables.
As of March
31, 2025 there
were
no
borrowings
under
the
ABL
Facility
and
availability
under
the
ABL
Facility
was
$30.0
million.
For
additional information regarding the ABL Facility, see Note 1 to the Consolidated Financial Statements.
The
Company
had
no
outstanding
revocable
letters
of
credit
relating
to
purchase
commitments
at
February 1, 2025 or at February 3, 2024.
On April 25,
2024, the Company amended
the now terminated
unsecured revolving credit agreement
to modify a definition used in calculating the Company’s
minimum EBITDAR coverage ratio to add back
certain
income
tax
receivables
included
in
the
calculation
of
the
ratio.
On
November
1,
2024,
the
Company
amended
the
now
terminated
unsecured
revolving
credit
agreement
to
lower
the
minimum
EBITDAR
coverage
ratio
and
the
corresponding minimum
cash
and
investments
used
to
determine the
EBITDAR coverage ratio in exchange for a secured position in any
future borrowings.
Expenditures
for
property
and
equipment
totaled
$7.9
million,
$12.5
million
and
$19.4
million
in
fiscal 2024, 2023
and
2022, respectively.
The decrease in
expenditures for fiscal
2024 was primarily
due
to finishing projects related to
investments in the distribution center and
information technology.
Net
cash
provided
by
investing
activities
totaled
$29.0
million
for
fiscal
2024
compared
to
$19.8
million provided in
fiscal 2023 and
$16.0 million provided
in fiscal
2022.
In fiscal 2024,
the increase in
cash
provided
was
primarily
attributable
to
sales
of
other
assets
and
the
net
sales
of
short-term
investments and other assets, partially offset by expenditures for property and equipment.
Net cash used in financing activities totaled
$14.1 million in fiscal 2024 compared to
net cash used of
$16.1
million
for
fiscal
2023
and
$29.3
million
for
fiscal
2022.
The decrease in
cash used during
fiscal
2024
was
primarily
due
to
reduction
in
dividends
paid,
partially
offset
by
an
increase
in
share
repurchase
amounts.
The Company does not use derivative financial instruments.
See
Note
4
to
the
Consolidated
Financial
Statements,
“Fair
Value
Measurements,”
for
information
regarding the Company’s financial assets that are measured at fair value.
The
Company’s
investment
portfolio
was
primarily
invested
in
corporate
bonds
and
taxable
governmental debt securities held in managed accounts
with underlying ratings of A or
better at February
36
1, 2025. The state,
municipal and corporate bonds and
asset-backed securities have contractual maturities
which range from nine days to 2.8 years.
The U.S. Treasury notes have contractual maturities which range
from 13 days to 2.5 years. These securities are classified as available-for-sale and are recorded as Short-term
investments and Other
assets on the
accompanying Consolidated Balance
Sheets. These assets
are carried at
fair
value
with
unrealized
gains
and
losses
reported
net
of
taxes
in
Accumulated
other
comprehensive
income.
Additionally,
at
February
1,
2025
and
February
3,
2024,
the
Company
had
$0.0
million
and
$1.1
million of
corporate equities,
respectively,
which are
recorded
within Other
assets in
the
accompanying
Consolidated Balance Sheets.
Level
1
category
securities
are
measured
at
fair
value
using
quoted
active
market
prices.
Level
2
investment
securities
include
corporate,
state
and
municipal
bonds
for
which
quoted
prices
may
not
be
available on active exchanges for identical
instruments.
Their fair value is principally based on market
values
determined by management with the assistance
of a third-party pricing service.
Since quoted prices in active
markets
for
identical
assets
are
not
available,
these
prices
are
determined
by
the
pricing
service
using
observable market information such as quotes from less active markets and/or quoted prices of securities with
similar characteristics, among other factors.
Deferred
compensation plan
assets
consist
primarily of
life
insurance
policies. These
life
insurance
policies are valued based on the cash surrender value of the insurance contract, which is determined based
on
such
factors
as
the
fair
value
of
the
underlying
assets
and
discounted
cash
flow
and
are
therefore
classified
within
Level
3
of
the
valuation
hierarchy.
The
Level
3
liability
associated
with
the
life
insurance
policies
represents
a
deferred
compensation
obligation,
the
value
of
which
is
tracked
via
underlying
insurance
funds’
net
asset
values,
as
recorded
in
Other
noncurrent
liabilities
in
the
Consolidated Balance Sheets. These
funds are designed
to mirror the
return of existing
mutual funds and
money market funds that are observable and actively traded.
Contractual Obligations
Contractual
obligations
for
future
payments
at
February
1,
2025
relate
primarily
to
operating
lease
commitments for
store leases.
Operating leases
represent minimum
required lease
payments under
non-
cancellable
lease
terms.
Most
store
leases
also
require
payment
of
related
operating
expenses
such
as
taxes, utilities, insurance and maintenance, which are not included in our estimated lease obligations.
See
Note
11
to
the
Consolidated
Financial
Statements,
“Leases”
for
the
maturities
of
our
operating
lease
obligations.
Recent Accounting Pronouncements
See
Note 1
to
the
Consolidated Financial
Statements,
“Summary of
Significant Accounting
Policies,
Recently Adopted Accounting Policies and Recently Issued Accounting
Pronouncements.”
Item 7A.
Quantitative and Qualitative Disclosures About Market Risk:
The
Company
is
subject
to
market
rate
risk
from
exposure
to
changes
in
interest
rates
based
on
its
financing, investing and
cash management activities,
but the Company
does not
believe such exposure
is
material.
37