|
x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
Delaware
|
|
13-1920657
|
(State or other jurisdiction of
incorporation or organization)
|
|
(I.R.S. Employer
Identification No.)
|
450 Plymouth Road, Suite 300, Plymouth Meeting, PA
|
|
19462
|
(Address of principal executive offices)
|
|
(Zip Code)
|
Large accelerated filer
|
¨
|
Accelerated filer
|
x
|
Non-accelerated filer
|
¨
|
Smaller reporting company
|
¨
|
|
|
Emerging growth company
|
¨
|
|
|
PAGE NO.
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
||||||
|
2017
|
|
2016
|
||||
|
|
|
|
||||
Net sales
|
$
|
48,324
|
|
|
$
|
45,318
|
|
Cost of sales
|
36,512
|
|
|
33,021
|
|
||
Gross profit
|
11,812
|
|
|
12,297
|
|
||
Selling, general and administrative expenses
|
20,696
|
|
|
17,574
|
|
||
Operating income (loss)
|
(8,884
|
)
|
|
(5,277
|
)
|
||
Interest expense (income), net
|
(54
|
)
|
|
(89
|
)
|
||
Other expense (income), net
|
(159
|
)
|
|
(91
|
)
|
||
Income (loss) before income taxes
|
(8,671
|
)
|
|
(5,097
|
)
|
||
Income tax expense (benefit)
|
(1,607
|
)
|
|
(1,811
|
)
|
||
Net income (loss)
|
$
|
(7,064
|
)
|
|
$
|
(3,286
|
)
|
|
|
|
|
||||
Weighted average basic and diluted shares outstanding
|
9,089
|
|
|
9,053
|
|
||
|
|
|
|
||||
Basic and diluted net income (loss) per common share
|
$
|
(0.78
|
)
|
|
$
|
(0.36
|
)
|
|
|
|
|
||||
Cash dividends per share of common stock
|
$
|
0.20
|
|
|
$
|
0.20
|
|
|
|
|
|
||||
Comprehensive income (loss):
|
|
|
|
||||
Net income (loss)
|
$
|
(7,064
|
)
|
|
$
|
(3,286
|
)
|
Currency translation adjustment
|
308
|
|
|
—
|
|
||
Comprehensive income (loss)
|
$
|
(6,756
|
)
|
|
$
|
(3,286
|
)
|
|
June 30,
2017 |
|
March 31,
2017 |
|
June 30,
2016 |
||||||
Assets
|
|
|
|
|
|
||||||
Current assets
|
|
|
|
|
|
||||||
Cash and cash equivalents
|
$
|
49,695
|
|
|
$
|
47,693
|
|
|
$
|
10,111
|
|
Short-term investments
|
—
|
|
|
19,931
|
|
|
44,926
|
|
|||
Accounts receivable, net of allowances of $1,124, $1,283 and $1,245
|
42,753
|
|
|
48,814
|
|
|
42,395
|
|
|||
Inventories
|
115,348
|
|
|
105,258
|
|
|
91,109
|
|
|||
Prepaid expenses and other current assets
|
14,099
|
|
|
10,793
|
|
|
16,105
|
|
|||
Total current assets
|
221,895
|
|
|
232,489
|
|
|
204,646
|
|
|||
Property, plant and equipment, net
|
35,474
|
|
|
35,764
|
|
|
27,089
|
|
|||
Deferred income taxes
|
—
|
|
|
—
|
|
|
2,680
|
|
|||
Other assets
|
|
|
|
|
|
||||||
Goodwill
|
19,916
|
|
|
19,916
|
|
|
19,974
|
|
|||
Intangible assets, net
|
43,038
|
|
|
43,879
|
|
|
41,380
|
|
|||
Other
|
8,172
|
|
|
7,146
|
|
|
7,160
|
|
|||
Total other assets
|
71,126
|
|
|
70,941
|
|
|
68,514
|
|
|||
Total assets
|
$
|
328,495
|
|
|
$
|
339,194
|
|
|
$
|
302,929
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
|
|
||||||
Current liabilities
|
|
|
|
|
|
||||||
Current portion of long-term debt
|
$
|
223
|
|
|
$
|
220
|
|
|
$
|
—
|
|
Accounts payable
|
14,076
|
|
|
14,223
|
|
|
16,556
|
|
|||
Accrued payroll and other compensation
|
7,107
|
|
|
7,884
|
|
|
4,907
|
|
|||
Accrued customer programs
|
4,934
|
|
|
5,030
|
|
|
3,045
|
|
|||
Other current liabilities
|
7,638
|
|
|
9,026
|
|
|
7,212
|
|
|||
Total current liabilities
|
33,978
|
|
|
36,383
|
|
|
31,720
|
|
|||
Long-term debt, net of current portion
|
399
|
|
|
456
|
|
|
—
|
|
|||
Deferred income taxes
|
4,413
|
|
|
4,430
|
|
|
—
|
|
|||
Other long-term obligations
|
3,809
|
|
|
3,771
|
|
|
4,650
|
|
|||
Stockholders’ equity
|
|
|
|
|
|
||||||
Preferred stock
|
—
|
|
|
—
|
|
|
—
|
|
|||
Common stock, $.10 par, 25,000,000 shares authorized, 14,703,084 shares issued at June 30, 2017, March 31, 2017 and June 30, 2016
|
1,470
|
|
|
1,470
|
|
|
1,470
|
|
|||
Additional paid-in capital
|
57,221
|
|
|
57,997
|
|
|
56,845
|
|
|||
Retained earnings
|
374,750
|
|
|
382,807
|
|
|
356,798
|
|
|||
Accumulated other comprehensive income (loss)
|
245
|
|
|
(63
|
)
|
|
(62
|
)
|
|||
Common stock in treasury
|
(147,790
|
)
|
|
(148,057
|
)
|
|
(148,492
|
)
|
|||
Total stockholders' equity
|
285,896
|
|
|
294,154
|
|
|
266,559
|
|
|||
Total liabilities and stockholders’ equity
|
$
|
328,495
|
|
|
$
|
339,194
|
|
|
$
|
302,929
|
|
|
Three Months Ended June 30,
|
||||||
|
2017
|
|
2016
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net income (loss)
|
$
|
(7,064
|
)
|
|
$
|
(3,286
|
)
|
Adjustments to reconcile net income (loss) to net cash used for operating activities:
|
|
|
|
||||
Depreciation and amortization
|
2,126
|
|
|
2,160
|
|
||
Amortization of inventory step-up
|
3,185
|
|
|
—
|
|
||
Accretion of investment discount
|
(69
|
)
|
|
(120
|
)
|
||
Provision for accounts receivable allowances
|
526
|
|
|
590
|
|
||
Deferred tax (benefit) provision
|
(56
|
)
|
|
790
|
|
||
Share-based compensation expense
|
283
|
|
|
410
|
|
||
Changes in assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
5,562
|
|
|
2,158
|
|
||
Inventory
|
(13,156
|
)
|
|
(18,087
|
)
|
||
Prepaid expenses and other assets
|
(4,323
|
)
|
|
(3,917
|
)
|
||
Accounts payable
|
(99
|
)
|
|
2,667
|
|
||
Other accrued liabilities and long-term obligations
|
(2,239
|
)
|
|
(4,159
|
)
|
||
Total adjustments
|
(8,260
|
)
|
|
(17,508
|
)
|
||
Net cash used for operating activities
|
(15,324
|
)
|
|
(20,794
|
)
|
||
Cash flows from investing activities:
|
|
|
|
||||
Maturities of investment securities
|
20,000
|
|
|
15,000
|
|
||
Purchase of property, plant and equipment
|
(901
|
)
|
|
(1,967
|
)
|
||
Net cash provided by investing activities
|
19,099
|
|
|
13,033
|
|
||
Cash flows from financing activities:
|
|
|
|
||||
Payments on long-term debt
|
(54
|
)
|
|
—
|
|
||
Dividends paid
|
(1,819
|
)
|
|
(1,815
|
)
|
||
Exercise of stock options, net of tax withholdings
|
37
|
|
|
9
|
|
||
Payments for tax withholding on net restricted stock settlements
|
—
|
|
|
(526
|
)
|
||
Tax effect on stock awards
|
—
|
|
|
277
|
|
||
Net cash used for financing activities
|
(1,836
|
)
|
|
(2,055
|
)
|
||
Effect of exchange rate changes on cash
|
63
|
|
|
—
|
|
||
Net increase (decrease) in cash and cash equivalents
|
2,002
|
|
|
(9,816
|
)
|
||
Cash and cash equivalents at beginning of period
|
47,693
|
|
|
19,927
|
|
||
Cash and cash equivalents at end of period
|
$
|
49,695
|
|
|
$
|
10,111
|
|
(1)
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
|
June 30, 2017
|
|
March 31, 2017
|
|
June 30, 2016
|
||||||
Raw material
|
$
|
12,129
|
|
|
$
|
11,210
|
|
|
$
|
12,509
|
|
Work-in-process
|
19,198
|
|
|
18,316
|
|
|
17,835
|
|
|||
Finished goods
|
84,021
|
|
|
75,732
|
|
|
60,765
|
|
|||
|
$
|
115,348
|
|
|
$
|
105,258
|
|
|
$
|
91,109
|
|
|
June 30, 2017
|
|
March 31, 2017
|
|
June 30, 2016
|
||||||
Land
|
$
|
5,882
|
|
|
$
|
5,838
|
|
|
$
|
2,508
|
|
Buildings, leasehold interests and improvements
|
40,798
|
|
|
40,661
|
|
|
34,610
|
|
|||
Machinery, equipment and other
|
90,713
|
|
|
89,917
|
|
|
88,667
|
|
|||
|
137,393
|
|
|
136,416
|
|
|
125,785
|
|
|||
Less - Accumulated depreciation and amortization
|
(101,919
|
)
|
|
(100,652
|
)
|
|
(98,696
|
)
|
|||
Net property, plant and equipment
|
$
|
35,474
|
|
|
$
|
35,764
|
|
|
$
|
27,089
|
|
(2)
|
SHARE-BASED COMPENSATION
|
|
Three Months Ended June 30,
|
||||
|
2017
|
|
2016
|
||
Risk-free interest rate
|
2.21
|
%
|
|
1.66
|
%
|
Volatility
|
34.45
|
%
|
|
35.12
|
%
|
Dividend yield
|
2.90
|
%
|
|
2.91
|
%
|
Expected life of option (in years)
|
6.25
|
|
|
4.75
|
|
(3)
|
DERIVATIVE FINANCIAL INSTRUMENTS
|
(4)
|
INTANGIBLE ASSETS
|
|
June 30, 2017
|
|
March 31, 2017
|
|
June 30, 2016
|
||||||||||||||||||
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
||||||||||||
Tradenames and trademarks
|
$
|
19,953
|
|
|
$
|
—
|
|
|
$
|
19,953
|
|
|
$
|
—
|
|
|
$
|
15,553
|
|
|
$
|
—
|
|
Customer relationships
|
39,757
|
|
|
17,273
|
|
|
39,757
|
|
|
16,495
|
|
|
39,157
|
|
|
14,184
|
|
||||||
Patents
|
1,164
|
|
|
855
|
|
|
1,164
|
|
|
825
|
|
|
1,164
|
|
|
738
|
|
||||||
Trademarks
|
403
|
|
|
370
|
|
|
403
|
|
|
363
|
|
|
403
|
|
|
340
|
|
||||||
Non-compete
|
530
|
|
|
271
|
|
|
530
|
|
|
245
|
|
|
530
|
|
|
165
|
|
||||||
|
$
|
61,807
|
|
|
$
|
18,769
|
|
|
$
|
61,807
|
|
|
$
|
17,928
|
|
|
$
|
56,807
|
|
|
$
|
15,427
|
|
Remainder of fiscal 2018
|
$
|
2,521
|
|
Fiscal 2019
|
3,305
|
|
|
Fiscal 2020
|
3,244
|
|
|
Fiscal 2021
|
3,056
|
|
|
Fiscal 2022
|
2,960
|
|
(5)
|
LONG-TERM DEBT
|
(6)
|
COMMITMENTS AND CONTINGENCIES
|
(7)
|
FAIR VALUE MEASUREMENTS
|
|
|
|
Fair Value Measurements at June 30, 2017 Using
|
||||||||||||
|
June 30, 2017
|
|
Quoted Prices In
Active Markets
for Identical
Assets (Level 1)
|
|
Significant Other
Observable
Inputs (Level 2)
|
|
Significant
Unobservable
Inputs (Level 3)
|
||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Marketable securities
|
$
|
329
|
|
|
$
|
329
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Cash surrender value of life insurance policies
|
1,194
|
|
|
—
|
|
|
1,194
|
|
|
—
|
|
||||
Total assets
|
$
|
1,523
|
|
|
$
|
329
|
|
|
$
|
1,194
|
|
|
$
|
—
|
|
Liabilities
|
|
|
|
|
|
|
|
||||||||
Deferred compensation plans
|
$
|
472
|
|
|
$
|
472
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Foreign exchange contracts
|
35
|
|
|
—
|
|
|
35
|
|
|
—
|
|
||||
Total liabilities
|
$
|
507
|
|
|
$
|
472
|
|
|
$
|
35
|
|
|
$
|
—
|
|
|
|
|
Fair Value Measurements at March 31, 2017 Using
|
||||||||||||
|
March 31, 2017
|
|
Quoted Prices In
Active Markets
for Identical
Assets (Level 1)
|
|
Significant Other
Observable
Inputs (Level 2)
|
|
Significant
Unobservable
Inputs (Level 3)
|
||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Marketable securities
|
$
|
319
|
|
|
$
|
319
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Cash surrender value of life insurance policies
|
1,187
|
|
|
—
|
|
|
1,187
|
|
|
—
|
|
||||
Total assets
|
$
|
1,506
|
|
|
$
|
319
|
|
|
$
|
1,187
|
|
|
$
|
—
|
|
Liabilities
|
|
|
|
|
|
|
|
||||||||
Deferred compensation plans
|
$
|
364
|
|
|
$
|
364
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Total liabilities
|
$
|
364
|
|
|
$
|
364
|
|
|
$
|
—
|
|
|
$
|
—
|
|
(8)
|
RECENT ACCOUNTING PRONOUNCEMENTS
|
|
Less than 1
Year
|
|
1-3
Years
|
|
4-5
Years
|
|
After 5
Years
|
|
Total
|
|||||||
Letters of credit
|
$
|
1,338
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
$
|
1,338
|
|
(a)
|
Evaluation of Disclosure Controls and Procedures
. As of the end of the period covered by this report, the Company’s management, with the participation of the Company’s President and Chief Executive Officer and Executive Vice President – Finance and Chief Financial Officer, evaluated the effectiveness of the Company’s disclosure controls and procedures in accordance with Rule 13a-15 of the Securities Exchange Act of 1934 (the “Exchange Act”). Based upon that evaluation, the President and Chief Executive Officer and Executive Vice President – Finance and Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective in providing reasonable assurance that information required to be disclosed by the Company in reports that it files under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and (ii) accumulated and communicated to our management, including the President and Chief Executive Officer and Executive Vice President – Finance and Chief Financial Officer, as appropriate to allow timely decisions regarding disclosure.
|
(b)
|
Changes in Internal Controls
. There was no change in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) as promulgated by the Securities and Exchange Commission under the Exchange Act) during the
first
quarter of fiscal year
2018
that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
|
*Exhibit 10.1
|
Form of Grant Instrument for Service-Based Non-Qualified Stock Options issued under the 2013 Equity Compensation Plan.
|
*Exhibit 10.2
|
Form of Grant Instrument for Service-Based Restricted Stock Units issued under the 2013 Equity Compensation Plan.
|
*Exhibit 31.1
|
Certification of the Chief Executive Officer of CSS Industries, Inc. required by Rule 13a-14(a) under the Securities Exchange Act of 1934.
|
*Exhibit 31.2
|
Certification of the Chief Financial Officer of CSS Industries, Inc. required by Rule 13a-14(a) under the Securities Exchange Act of 1934.
|
*Exhibit 32.1
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Certification of the Chief Executive Officer of CSS Industries, Inc. required by Rule 13a-14(b) under the Securities Exchange Act of 1934 and 18 U. S. C. Section 1350.
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*Exhibit 32.2
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Certification of the Chief Financial Officer of CSS Industries, Inc. required by Rule 13a-14(b) under the Securities Exchange Act of 1934 and 18 U. S. C. Section 1350.
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*101.INS
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XBRL Instance Document.
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*101.SCH
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XBRL Schema Document.
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*101.CAL
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XBRL Taxonomy Extension Calculation Linkbase Document.
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*101.LAB
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XBRL Taxonomy Extension Label Linkbase Document.
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*101.PRE
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XBRL Taxonomy Extension Presentation Linkbase Document.
|
*101.DEF
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XBRL Taxonomy Extension Definition Linkbase Document.
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CSS INDUSTRIES, INC.
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(Registrant)
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Date: August 1, 2017
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By:
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/s/ Christopher J. Munyan
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Christopher J. Munyan
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President and Chief Executive Officer
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(principal executive officer)
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Date: August 1, 2017
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By:
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/s/ John M. Roselli
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John M. Roselli
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Executive Vice President – Finance and Chief Financial Officer
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(principal financial and accounting officer)
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Vesting Date
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Shares for Which the Option is
Exercisable on the Vesting Date
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[_________________________]
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[__]%
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[_________________________]
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[__]%
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[_________________________]
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[__]%
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[_________________________]
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[__]%
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ATTEST
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CSS INDUSTRIES, INC.
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(Corporate Seal)
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________________________
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By:____________________________________
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ACCEPTED:
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______________________________________________
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________________________________(Grantee)
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ATTEST
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CSS INDUSTRIES, INC.
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(Corporate Seal)
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____________________________
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By: __________________________________
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ACCEPTED:
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_______________________________________
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______________________________ (Grantee)
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/s/ Christopher J. Munyan
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Christopher J. Munyan,
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President and Chief Executive Officer
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(principal executive officer)
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/s/ John M. Roselli
|
John M. Roselli
|
Executive Vice President – Finance and Chief Financial Officer
|
(principal financial officer)
|
/s/ Christopher J. Munyan
|
Christopher J. Munyan
|
President and Chief Executive Officer
|
(principal executive officer)
|
/s/ John M. Roselli
|
John M. Roselli
|
Executive Vice President – Finance and Chief Financial Officer
|
(principal financial officer)
|