The accompanying Notes to Consolidated Financial Statements are an integral part of these financial statements.

Included in fixed assets and accounts payable are accrued fixed assets invoices amounting to $2,539,000 and $381,000 at April 10, 2004 and April 12, 2003, respectively.

 The accompanying Notes to Consolidated Financial Statements are an integral part of these financial statements.

1. Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information, the instructions to Form 10-Q, and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete consolidated financial statements.

In the opinion of management, all adjustments considered necessary for a fair presentation of the interim financial data have been included. Results from operations for the twelve and twenty-eight week period ended April 10, 2004 are not necessarily indicative of the results that may be expected for the fiscal year ending September 25, 2004.

For further information, refer to the consolidated financial statements and the footnotes included in the annual report on Form 10-K for Green Mountain Coffee Roasters, Inc. for the fiscal year ended September 27, 2003.

2. Inventories

Inventories consisted of the following at:

Inventory values above are presented net of $162,000 and $148,000 of obsolescence reserves at April 10, 2004 and September 27, 2003, respectively.

At April 10, 2004, the Company had approximately $17,316,000 in green coffee purchase commitments, of which approximately 73% had a fixed price. These commitments extend through 2009. The value of the variable portion of these commitments was calculated using an average "C" price of coffee of $0.73 per pound and a price of $11 per pound for Kona Mountain Estate^TM coffee. The Company believes, based on relationships established with its suppliers, that the risk of non-delivery on such purchase commitments is remote.

 

3. Earnings Per Share

The following table illustrates the reconciliation of the numerator and denominator of basic and diluted earnings per share computations as required by SFAS No. 128 (dollars in thousands, except per share data):

For the twelve weeks ended April 10, 2004 and April 12, 2003 options to purchase 108,000 and 287,810 respectively, were outstanding but were not included in the computation of diluted income per share because the options' exercise price was greater than the market price of the common shares.

 

The Company accounts for stock-based compensation using the intrinsic value method prescribed by Accounting Principles Board Opinion No. 25 "Accounting for Stock Issued to Employees." Accordingly, except for a grant to outside consultants and one grant to an officer at an exercise price below fair market value, no compensation expense has been recognized for its stock option awards and its stock purchase plan because the exercise price of the Company's stock options equals or exceeds the market price of the underlying stock on the date of the grant. The Company has adopted the disclosure-only provision of Statement of Accounting Standards No. 123 "Accounting for Stock Based Compensation" ("SFAS 123"), as amended by SFAS No. 148, "Accounting for Stock-Based Compensation - Transition and Disclosure." Had compensation cost for the Company's stock option awards and the stock purchase plan been determined based on the fair value at the grant dates for the awards under those plans, consistent with the provisions of SFAS 123, the Company's net income and net income per share for the twelve and twenty-eight weeks ended April 10, 2004 and April 12, 2003 would have decreased to the pro forma amounts indicated below:

The fair value of each stock option is estimated on the date of the grant using the Black-Scholes option-pricing model with the following assumptions: an expected life averaging 4 years and 5 years; an average volatility of 71% and 61%; no dividend yield; and a risk-free interest rate averaging 2.65% and 2.97%, for the grants issued during the twenty-eight weeks ended April 10, 2004 and April 12, 2003, respectively. The weighted-average fair values of options granted during the twenty-eight weeks ended April 10, 2004 and April 12, 2003 are $11.41 and $8.20, respectively.

The fair value of the employees' purchase rights under the Company's Employee Stock Purchase Plan was estimated using the Black-Scholes model with the following assumptions for the twenty-eight weeks ended April 10, 2004 and April 12, 2003: an expected life of six months; expected volatility of 72% and 63% respectively; and an average risk-free interest rate of 0.93%, and 1.00%, respectively. The weighted average fair value of those purchase rights granted were $7.59 and $9.16 for the twenty-eight weeks ended April 10, 2004 and April 12, 2003, respectively

The Company maintains an Employee Stock Ownership Plan (the "ESOP"). The ESOP is qualified under sections 401(a) and 4975(e)(7) of the Internal Revenue Code. In each of the twenty-eight week periods ended April 10, 2004 and April 12, 2003, the Company recorded compensation costs of $108,000, to accrue for anticipated stock distributions under the ESOP. On April 10, 2004, the ESOP held 31,181 unearned shares at an average cost of $27.10.

The Company also maintains a Deferred Compensation Plan, which is not subject to the qualification requirements of Section 401(a) of the Internal Revenue Code and which allows participants to defer compensation until a future date. Only non-employee directors and certain highly compensated employees of the Company selected by the Company's Board of Directors are eligible to participate in the Plan. In each of the twenty-eight week periods ended April 10, 2004 and April 12, 2003, $8,000 of compensation expense has been recorded under this Plan.

 

The Company has credit facilities with Fleet Bank N.A. and Banknorth N.A. The credit facilities contain minimum quarterly profitability, maximum funded debt to EBITDA, and minimum fixed charge coverage ratio covenants. As of April 10, 2004, the Company was not in compliance with the minimum fixed charge coverage ratio, primarily as a result of its capital expenditures made during the quarter related to the construction of the new distribution center. The Company's non-compliance with this covenant was waived effective April 10, 2004 by the lenders.

On May 24, 2004 the Company received a letter of commitment from its lenders to modify its existing credit facilities. The modified facilities provide for the existing term loan to be increased to a maximum of $17 million, and an advance and readvance under such term loan aggregating approximately $8,250,000, to be amortized over 5 years. The availability under the Company's line of credit would decrease to $10 million and the availability under its equipment line of credit would remain at $5 million with a term out of 5 years per amount drawn. The letter of commitment is valid for a period of 12 months ending May 24, 2005. The modified credit facilities are expected to close in the third fiscal quarter of 2004. The modified credit facilities will be used to finance the Company's new distribution center and related equipment, purchase other needed equipment, as well as for working capital purposes. The Company expects that it will be in compliance with all financial covenants with respect to its modified credit facilities throughout the next twelve months.

 

Note: Certain prior year customer channel classifications were reclassified to conform to current year classifications.

Note: Certain prior year regional classifications were reclassified to conform to current year classifications.

Twelve weeks ended April 10, 2004 versus twelve weeks ended April 12, 2003

Net sales increased by $4,747,000 or 18.0%, to $31,058,000 for the twelve weeks ended April 10, 2004 (the "2004 period"), as compared to the twelve weeks ended April 12, 2003 (the "2003 period"). Coffee pounds shipped increased by approximately 457,000 pounds, or 13.1%, to approximately 3,940,000 pounds in the 2004 period. The difference between the dollar sales and pounds shipped growth rates is due to significantly higher sales of Keurig K-Cups^® which carry a higher sales price per pound, and sales of Celestial Seasonings^® Teas in K-Cups, which are not included in the coffee pounds shipped data. The pounds increase was strongest in the Supermarkets channel with an increase of 209,000 pounds due primarily to new distribution with Publix supermarkets. Sales to the Office Coffee Service ("OCS") channel were also very strong, with a quarter-over-quarter growth of 173,000 pounds driven by growth in K-Cup sales. Key contributors to growth in K-Cup sales were strong sales to existing OCS distributors in conjunction with the roll-out of the new B-100 Keurig brewer for the home and small offices and sales of Celestial Seasoning teas in K-Cups.

Gross profit increased by $851,000 or 7.7%, to $11,946,000 for the 2004 period. As a percentage of net sales, gross profit decreased 3.7 percentage points to 38.5% for the 2004 period. This decline is primarily due to higher sales to certain channels with lower gross margins, higher coffee prices and higher delivery and labor expenses while certain new production equipment is being installed.

Selling, general and administrative expenses increased by $993,000, or 11.8%, to $9,443,000 for the 2004 period. As a percentage of sales, selling, general and administrative expenses decreased 1.7 percentage points to 30.4% of sales. This improvement was the result of leveraging selling and organizational resources on a higher sales base and lower severance costs related to management changes in the 2003 period, partially offset by an increase in employee benefits costs.

As a result of the foregoing, operating income decreased by $142,000, or 5.4%, to $2,503,000 for the 2004 period.

Interest expense decreased by $88,000 to $38,000 for the 2004 period. This decrease is due to lower debt balances, as the Company used its operating cash flows to pay down its debt over the course of the last year. In the 2004 period and the 2003 period, the Company capitalized $65,000 and $30,000 respectively, of interest expense associated with investments in production equipment currently classified as construction in progress.

Income tax expense decreased $133,000, or 12.6%, to $922,000 for the 2004 period. The effective tax rate for the 2004 period was 37.4%, down from 41.5% in the 2003 period due to the favorable impact of recently awarded state tax incentives under the Vermont Economic Advancement Tax Incentive Program.

The Company adopted the equity method of accounting for its investment in Keurig, Incorporated ("Keurig") in the third fiscal quarter of 2002 as the Company's Common Stock ownership percentage grew from under 10% to 49.93% in the course of that period. Green Mountain's percentage ownership of the total common stock equivalent shares of Keurig was 41.8% at April 10, 2004 and April 12, 2003. Keurig is effectively controlled by MD Co. (controlled by MDT Advisors, a division of Harris Bretall Sullivan and Smith, an institutional investment company), which owns approximately 23% of Keurig's capital stock, as a result of contractual limitations and restrictions agreed to by Green Mountain.

The equity in the net loss of Keurig in the 2004 period was $227,000 or $0.03 per diluted share. This Keurig loss is primarily due to the sales and marketing expenditures related to the Keurig^® Single-Cup Brewer for the home. In the 2003 period, the equity in Keurig's net earnings was a loss of $289,000.

Net income increased by $117,000, or 9.8%, to $1,315,000 in the 2004 period. Earnings per diluted share were $0.18 in the 2004 period as compared to $0.17 in the 2003 period.

Because the Company is highly dependent on consumer demand for specialty coffee, a shift in consumer preferences away from specialty coffee would harm the Company's business more than if the Company had more diversified product offerings. If customer demand for specialty coffee decreases, the Company's sales would decrease accordingly.

Because the Company relies heavily on common carriers to deliver its coffee any disruption in their services or increase in shipping costs could adversely affect the Company's business.

The Company relies on a number of common carriers to deliver coffee to the Company's customers and distribution centers. The Company has no control over these common carriers and the services provided by them may be interrupted as a result of labor shortages, contract disputes or other factors. If the Company experiences an interruption in these services, it may be unable to ship its coffee in a timely manner. A delay in shipping could:

- Have an adverse impact on the quality of the coffee shipped, and thereby adversely affect the Company's brand and reputation;

- Require the Company to contract with alternative, and possibly more expensive, common carriers.

Any significant increase in shipping costs could lower the Company's profit margins or force the Company to raise prices, which could cause the Company's revenue and profits to suffer.

The Company depends on the expertise of key personnel. If these individuals leave or change their role within the Company without effective replacements, the Company's operations may suffer.

The success of the Company's business is dependent to a large degree on its management and its coffee roasters and purchasers. If members of the Company's management leave without effective replacements, the Company's ability to implement its business strategy could be impaired. If the Company lost the services of its coffee roasters and purchasers, its ability to source and purchase a sufficient supply of specialty coffee beans and roast coffee beans consistent with the Company's quality standards could suffer. In either case, the Company's business and operations could be adversely affected.

The Company may not be able to hire or retain additional management and other personnel and the Company's recruiting and compensation costs may increase as a result of turnover, both of which may increase the Company's costs and reduce its profits and may adversely impact its ability to implement its business strategy.

The success of the Company's business depends upon its ability to attract and retain highly motivated, well-qualified management and other personnel. The Company faces significant competition in the recruitment of qualified employees. The Company's ability to execute its business strategy may suffer if:

Recently the Company has experienced significant turnover with respect to certain key management positions in the Company, including the position of Chief Financial Officer. This turnover increases expenses incurred as a result of severance arrangements, up-front hiring expenses and recruiting expenses. In addition, the lack of continuity among members of the Company's management team may result in frequent changes to its business strategy or may delay or hinder the effective implementation of the Company's business strategy.

Because the Company has only one roasting facility, a significant interruption in the operation of this facility could potentially disrupt its operations.

The Company has only one coffee roasting facility. A significant interruption in the operation of this facility, whether as a result of a natural disaster or other causes, could significantly impair its ability to operate its business on a day-to-day basis. In addition, because the Company's coffee roasting facility is located in Vermont, its ability to ship coffee and receive shipments or raw materials may be adversely affected during winter months as a result of severe winter conditions and storms.

Increases in the cost of high quality arabica coffee beans could reduce the Company's gross margin and profit.

Green coffee commodity prices are subject to substantial price fluctuations, generally caused by multiple factors including weather, political and economic conditions in certain coffee-producing countries and other supply-related concerns. In recent years, green coffee prices have been under considerable downward pressures due to oversupply, and this situation is likely to persist. Management believes that the "C" price of coffee (the price per pound quoted by the Coffee, Sugar and Cocoa Exchange) will remain highly volatile in future fiscal years. In addition to the "C" price, coffee of the quality sought by Green Mountain tends to trade on a negotiated basis at a substantial premium or "differential" above the "C" price. These differentials also are subject to significant variations. In recent years, while the "C" price has been at or near historic lows, differentials have generally been on the rise.

In the past, the Company generally has been able to pass increases in green coffee costs to its customers. However, there can be no assurance that it will be successful in passing such fluctuations on to the customers without losses in sales volume or gross margin in the future. Similarly, rapid sharp decreases in the cost of green coffee could also force Green Mountain to lower sales prices before realizing cost reductions in its green coffee inventory. Because Green Mountain roasts over 40 different types of green coffee beans to produce its more than 100 coffee selections, if one type of green coffee bean were to become unavailable or prohibitively expensive, management believes Green Mountain could substitute another type of coffee of equal or better quality, meeting a similar taste profile. However, frequent substitutions could lead to cost increases and fluctuations in gross margins. Furthermore, a worldwide supply shortage of the high-quality arabica coffees the Company purchases could have an adverse impact on Green Mountain and its profitability.

The Company enters into fixed coffee purchase commitments in an attempt to secure an adequate supply of quality coffees. To further reduce its exposure to rising coffee costs, Green Mountain enters into futures contracts to hedge price-to-be-established coffee purchase commitments. The specific risks associated with these hedging activities are described in Item 3 "Quantitative and Qualitative Disclosures about Market Risk."

Decreased availability of high quality arabica coffee beans could result in a decrease in revenue and jeopardize the Company's ability to maintain or expand its business.

Arabica coffee beans of the quality the Company purchases are not readily available on the commodity markets. The Company depends on its relationships with coffee brokers, exporters and growers for the supply of its primary raw material, high quality arabica coffee beans.

Green Mountain purchases an increasing amount of green coffee from specifically identified farms, estates, cooperatives and cooperative groups. In fiscal 2003, close to 42% of green coffee purchases were "farm-identified," up from 34% in fiscal 2002. The timing of these purchases is dictated by when the coffee becomes available (after the annual crop), which does not always coincide with the period the Company needs this green coffee to fulfill customer demand. This can lead to higher and more variable inventory levels.

If the Company's relationships with coffee brokers, exporters and growers deteriorate, the Company may be unable to procure a sufficient quantity of high quality coffee beans. In such case, the Company may not be able to fulfill the demand of its existing customers, supply new customers or expand other channels of distribution. A raw material shortage could result in decreased revenue or could impair the Company's ability to maintain or expand the Company's business.

Political instability in coffee growing regions could result in a decrease in the availability of high quality arabica coffee beans needed for the continued operation and growth of the Company's business and an increase in its operating costs.

The Company roasts Arabica coffee beans from many different regions to produce over 100 types and blends of coffee. The political situation in many of those regions, including Africa, Indonesia and Central and South America, can be unstable, and such instability could affect the Company's ability to purchase coffee from those regions. If Arabica coffee beans from a region become unavailable or prohibitively expensive, the Company may be forced to discontinue particular coffee types and blends or substitute coffee beans from other regions in its blends. Frequent substitutions and changes in the Company's coffee product lines may lead to cost increases, customer alienation and fluctuations in its gross margins. Furthermore, a worldwide supply shortage of the high quality Arabica coffee beans the Company purchases could have a material adverse effect on its business.

The Company's roasting methods are not proprietary, so competitors may be able to duplicate them, which could harm the Company's competitive position.

The Company considers its roasting methods essential to the flavor and richness of its coffee and, therefore, essential to its brand. Because the Company's roasting methods cannot be patented, the Company would be unable to prevent competitors from copying its roasting methods if such methods became known. If the Company's competitors copy its roasting methods, the value of the Company's brand may be diminished, and the Company may lose customers to its competitors. In addition, competitors may be able to develop roasting methods that are more advanced than the Company's roasting methods, which may also harm its competitive position.

Competition in the specialty coffee market ,including the sale of home coffee brewers, is increasingly intense and could affect the Company's profitability.

The specialty coffee market is highly fragmented. The Company's primary competitors in specialty coffee sales include Gevalia Kaffe (Kraft Foods), Dunkin' Donuts (a subsidiary of Allied Domecq), Peet's Coffee & Tea, Millstone (Procter & Gamble), New England Coffee Company and Starbucks. There are numerous smaller, regional brands that also compete in this category. In addition, the Company competes indirectly against all other coffee brands on the market. A number of nationwide coffee marketers, such as Kraft Foods, Procter & Gamble, Sara Lee and Nestle, are distributing premium coffee brands in supermarkets. These premium coffee brands may serve as substitutes for the Company's coffee.

In recent months, several consumer appliance and consumer goods companies entered the single-cup brewer for the home market, the majority with brewers using individual one-serving packets of coffee, which compete with the Keurig^® Single-Cup Brewing system marketed by Green Mountain and Keurig. This increased competition in the home market may have a negative impact on the sales of Keurig K-cups and brewers in future periods.

If the Company does not succeed in effectively differentiating itself from its competitors or its competitors adopt the Company's strategies, then its competitive position will be weakened. Competition in the specialty coffee market is becoming increasingly intense as relatively low barriers to entry encourage new competitors to enter the specialty coffee market. Many of these new market entrants may have greater financial, marketing and operating resources than the Company. In addition, many of the Company's existing competitors have substantially greater financial, marketing and operating resources.

Because a substantial portion of the Company's revenue is related to sales to certain major customers, the loss of one or more of these customers could materially harm the Company's business.

The Company receives a significant portion of its revenues in each fiscal period from a relatively limited number of customers, and that trend is likely to continue. Coffee pounds shipped to the Company's ten largest customers accounted for approximately 41% of its total coffee pounds shipped in fiscal 2003. The loss of one or more of these major customers or a decrease in orders from one of these customers could materially affect its revenue, business and reputation.

In addition, a significant percentage of the Company's total revenues in fiscal 2003 came from sales of K-Cups^®. If the Company was no longer permitted to manufacture K-Cups or if competitive, business or economic factors had a material negative impact on sales of the Keurig Single-Cup Brewing system, the Company's business would be adversely affected.

The Company's substantial equity investment in Keurig, Incorporated, a small, privately-held company, could have a material ongoing negative effect on the Company's net income.

The Company has a substantial equity investment in Keurig, Incorporated, a small private company. Keurig can have significant quarterly operating income/loss fluctuations and its results can differ materially from expectations set forth in forward-looking statements. Keurig is currently operating at a loss and its negative earnings have a direct effect on the Company's net income because the Company's investment in Keurig is accounted for under the equity method of accounting. Further, there is a high degree of uncertainty with respect to Keurig's spending for the continuing roll-out of the Keurig^® Single-Cup Brewer for the home and results could materially vary depending on Keurig's success in entering the home brewer market and its ability to secure adequate financing to support its growth. Keurig faces intense competition in the home brewer market as does the Company. Due to contractual agreements between the Company and the other stockholders of Keurig, Incorporated, the Company has very little control over the management, operation or strategic direction of Keurig, Incorporated.

The Company is constructing a new large manufacturing and distribution facility. This project could have an adverse effect on the Company as a result of increased capital needs, possible construction delays and cost overruns, implementation and coordination problems and other unforeseen difficulties associated with a large capital project.

The Company has begun to construct a new 52,000 square foot facility designated solely for warehousing and distribution. The cost of this project is currently estimated at $9 million. The Company anticipates financing a large portion of the project through long-term debt. The increased debt could have a negative impact on the Company and could limit the Company's ability to have access to additional capital sources in the future to pursue other opportunities or make additional capital expenditures. In addition, the increased expense associated with servicing this debt could have an adverse effect on the Company's current cash flow.

As a large-scale construction project, there are inherent risks such as changes in materials costs or availability, inclement weather or other unforeseen events or conditions, that may substantially delay the project's completion or increase its cost. In either case this could have a material adverse effect on the Company and negatively impact its ability to meet its growth expectations.

After the anticipated completion of this facility in September 2004, the Company will have to shift portions of its warehousing and distribution operation to the new facility. Problems implementing and coordinating the new facility into the Company's current operations could cause the Company to fail to realize the expected returns on this project and focus management's attention away from implementing other aspects of the Company's business strategy.

The Company relies on a single third party supplier for its integrated software management system that is integral to the success and operation of the Company.

The Company relies on PeopleSoft and its employees and subcontractors in connection with its software management system that is essential to the Company's operations, including without limitation accounting, inventory, and sales. If PeopleSoft was to experience financial, operational, or quality assurance difficulties, or if there is any other disruption in the Company's relationship with PeopleSoft, the Company may decide to purchase and/or implement a new software management system, which could have a material adverse effect on the Company.

Because a substantial portion of the Company's business is based in New England, a worsening of the regional New England economy, a decrease in consumer spending or a change in the competitive conditions in this market may substantially decrease the Company's revenue and may adversely impact the Company's ability to implement its business strategy.

Coffee pounds shipped to customers in New England accounted for 49% of the Company's total pounds shipped in 2003. The Company expects that its New England operations will continue to generate a substantial portion of its revenue. In addition, the Company's market share and visibility in New England provides the Company with a means for increasing brand awareness, building customer loyalty and strengthening its premium specialty coffee brand. As a result, an economic downturn or other decrease in consumer spending in New England may not only lead to a substantial decrease in revenue, but may also adversely impact the Company's ability to market its brand, build customer loyalty, or otherwise implement its business strategy and further diversify the geographical concentration of its operations.

 

Factors Affecting Quarterly Performance

Historically, the Company has experienced variations in sales and earnings from quarter to quarter due to the holiday season and a variety of other factors, including, but not limited to, general economic trends, the cost of green coffee, competition, marketing programs, weather and special or unusual events. Because of the seasonality of the Company's business, results for any quarter are not necessarily indicative of the results that may be achieved for the full fiscal year.

The table below provides information about Green Mountain's debt obligations that are sensitive to changes in interest rates. The table presents principal cash flows and related weighted average interest rates by expected maturity dates.

Within 90 days of the filing of this report, the Company's Chief Executive Officer and Chief Financial Officer have conducted an evaluation of the effectiveness of the design and operation of the Company's disclosure controls and procedures pursuant to Exchange Act Rule 13a-14 and 15d-14. Based on that evaluation, the Company's Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures are effective to make known to them in a timely fashion material information related to the Company required to be filed in this report. There have been no significant changes in the Company's internal controls or in other factors that could significantly affect internal controls subsequent to the date of their evaluation.

While the Company believes the present design of its disclosure controls and procedures is effective to make known to its senior management in a timely fashion all material information concerning its business, the Company will continue to improve the design and effectiveness of its disclosure controls and procedures to the extent necessary in the future to provide its senior management with timely access to such material information, and to correct any deficiencies that the Company may discover in the future.

3.1 Certificate of Incorporation, as Amended¹

3.2 Bylaws²

31.1 Principal Executive Officer Certification Pursuant to Securities Exchange Act Rules 13a-14 and 15d-14 as Adopted Pursuant to the Section 302 of the Sarbanes-Oxley Act of 2002.

31.2 Principal Financial Officer Certification Pursuant to Securities Exchange Act Rules 13a-14 and 15d-14 as Adopted Pursuant to the Section 302 of the Sarbanes-Oxley Act of 2002.

32.1 Principal Executive Officer Certification Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2 Principal Financial Officer Certification Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 10.1 Second Amendment to Amended and Restated Credit Agreement and Loan Documents.

(b) The Company filed a Form 8-K on February 19, 2004. The Company furnished its first quarter 2004 earnings press release as an exhibit under Item 7(c) "Financial Statements, Pro Forma Financial Information and Exhibits" and furnished the information contained in the earnings press release under Item 12 "Results of Operations and Financial Condition."

The Company also filed a Form 8-K on January 23, 2004. The Company furnished under Item 9 -- Regulation FD disclosure-- the information contained in the press release dated January 23, 2004 concerning factual inaccuracies contained in an analyst's research note issued on January 23, 2004.