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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
ÈAnnual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the fiscal year ended January 28, 2012
or
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the Transition period from to
Commission File No. 1-11084
KOHL’S CORPORATION
(Exact name of registrant as specified in its charter)
WISCONSIN 39-1630919
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer Identification No.)
N56 W17000 Ridgewood Drive,
Menomonee Falls, Wisconsin 53051
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code (262) 703-7000
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
Common Stock, $.01 Par Value New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: NONE
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes X No .
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes No X .
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No .
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every
Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulations S-T (232.405 of this chapter) during
the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes X No .
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and
will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference
in Part III of this Form 10-K or any amendment to this Form 10-K. X .
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a
smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule
12b-2 of the Exchange Act. (Check one):
Large accelerated filer X Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company)
Smaller reporting company
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes No X .
At July 31, 2011, the aggregate market value of the voting stock of the Registrant held by stockholders who were not affiliates
of the Registrant was approximately $14.7 billion (based upon the closing price of Registrant’s Common Stock on the New York
Stock Exchange on such date). At March 7, 2012, the Registrant had outstanding an aggregate of 243,251,944 shares of its Common
Stock.
Documents Incorporated by Reference:
Portions of the Proxy Statement for the Registrant’s Annual Meeting of Shareholders to be held on May 10, 2012 are incorporated
into Parts II and III.

Table of contents

  • Page 1
    ... closing price of Registrant's Common Stock on the New York Stock Exchange on such date). At March 7, 2012, the Registrant had outstanding an aggregate of 243,251,944 shares of its Common Stock. Documents Incorporated by Reference: Portions of the Proxy Statement for the Registrant's Annual Meeting...

  • Page 2
    ... and Financial Disclosures ...Item 9A. Controls and Procedures ...Item 9B. Other Information ...PART III ...Item 10. Directors, Executive Officers and Corporate Governance ...Item 11. Executive Compensation ...Item 12. Security Ownership of Certain Beneficial Owners and Management and Related...

  • Page 3
    ... brands. Our apparel and home fashions appeal to classic, modern classic and contemporary customers. As of January 28, 2012, we operated 1,127 stores in 49 states. Our merchandise mix over the last three years is reflected in the table below: 2011 2010 2009 Women's ...Men's ...Home ...Children...

  • Page 4
    ... Kohl's is the exclusive US retailer of Rock & Republic apparel, accessories and all other merchandise. Van Heusen was introduced into our men's sportswear, dress shirt and accessories departments in February 2012. Two of our most successful brands-ELLE and Simply Vera Vera Wang-will expand into new...

  • Page 5
    ... merchandise to each store by contract carrier several times a week. We also operate fulfillment centers in Monroe, Ohio; San Bernardino, California; and Edgewood, Maryland that service our E-Commerce business. We expect to open a fourth E-Commerce fulfillment center in Texas in the summer of 2012...

  • Page 6
    ..., trade names and service marks, most of which are used in our private label program. Available Information Our internet website is www.Kohls.com. Through the "Investor Relations" portion of this website, we make available, free of charge, our proxy statements, Annual Reports on Form 10-K, Quarterly...

  • Page 7
    .... The retail business is highly competitive. We compete for customers, associates, locations, merchandise, services and other important aspects of our business with many other local, regional and national retailers. Those competitors, some of which have a greater market presence than Kohl's, include...

  • Page 8
    ...holiday seasons. This seasonality causes our operating results to vary considerably from quarter to quarter and could materially adversely affect the market price of our common stock. We may be unable to source merchandise in a timely and cost-effective manner, which could adversely affect our sales...

  • Page 9
    ... or business relationships on terms as favorable as current terms, which could adversely affect our sales and operating results. Increases in the price of merchandise, raw materials, fuel and labor or their reduced availability could increase our cost of goods and negatively impact our financial...

  • Page 10
    ... systems to effectively manage sales, distribution, merchandise planning and allocation functions. We also generate sales though the operations of our Kohls.com website. The failure of our information systems to perform as designed could disrupt our business and harm sales and profitability...

  • Page 11
    ... key information about our stores. Number of Stores Net 2010 Additions 2011 Selling Square Footage 2011 (In thousands) Mid-Atlantic Region: Delaware ...Maryland ...Pennsylvania ...Virginia ...West Virginia ...Total Mid-Atlantic ...Midwest Region: Illinois ...Indiana ...Iowa ...Michigan ...Minnesota...

  • Page 12
    Number of Stores Net 2010 Additions 2011 Selling Square Footage 2011 (In thousands) Southeast Region: Alabama ...Florida ...Georgia ...Kentucky ...Mississippi ...North Carolina ...South Carolina ...Tennessee ...Total Southeast ...West Region: Alaska ...Arizona ...California ...Colorado ...Idaho ...

  • Page 13
    ... our distribution centers. Location Year Opened Square Footage States Serviced Approximate Store Capacity Retail: Findlay, Ohio ...Winchester, Virginia ...Blue Springs, Missouri ... 1994 1997 1999 Corsicana, Texas ...Mamakating, New York ... 2001 2002 San Bernardino, California ...Macon, Georgia...

  • Page 14
    ... Facilities We own our corporate headquarters in Menomonee Falls, Wisconsin. We also own or lease additional buildings and office space which is used by various corporate departments, including our credit operations. Item 3. Legal Proceedings We are not currently a party to any material legal...

  • Page 15
    ...Related Stockholder Matters and Issuer Purchases of Equity Securities (a) Market information Our Common Stock has been traded on the New York Stock Exchange since May 19, 1992, under the symbol "KSS." The prices in the table set forth below indicate the high and low sales prices of our Common Stock...

  • Page 16
    ... our cumulative five-year stockholder return to that of the Standard & Poor's 500 Index and the S&P 500 Department Stores Index. The S&P 500 Department Stores Index was calculated by Capital IQ, a Standard & Poor's business and includes Kohl's; JCPenney Company, Inc.; Dillard's, Inc.; Macy's, Inc...

  • Page 17
    ...: Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Period Total Number of Shares Purchased During Period Average Price Paid Per Share Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (In millions) Oct. 30 - Nov. 26, 2011...

  • Page 18
    ... and Balance Sheet Data have been derived from our audited consolidated financial statements. 2011 2010 2009 2008 (Dollars in Millions, Except Per Share and Per Square Foot Data) 2007 Statement of Income Data: Net sales ...$18,804 Cost of merchandise sold ...11,625 Gross margin ...Selling, general...

  • Page 19
    ... the Accessories and Home businesses reported the strongest comparable store sales growth. Gross margin was essentially flat to 2010 at 38.2% of sales for 2011. We successfully managed apparel cost inflation throughout the year, but saw lower margins during the fourth quarter holiday season due to...

  • Page 20
    ... 64,000 square feet of retail space. We are temporarily reducing the number of remodels to approximately 50 stores in 2012 as we look at potential changes to our store layout to increase sales productivity and operational efficiency. Results of Operations Net sales. 2011 2010 2009 Net sales (In...

  • Page 21
    ... in cost of merchandise sold. Gross margin increased $147 million, or 2%, in 2011 compared to 2010. Gross margin as a percentage of sales decreased 6 basis points to 38.2 % for 2011. Inventory management, increased penetration of private and exclusive brands (which have a higher gross margin rate...

  • Page 22
    ... business. On April 1, 2011, we commenced a seven-year private label credit card program agreement with Capital One, National Association ("Capital One"). Pursuant to this agreement, Capital One offers private label credit cards to new and existing customers of Kohl's. We handle all customer service...

  • Page 23
    ... of $650 million of debt in October 2011 at a lower interest rate. Net interest expense for 2010 increased $3 million over 2009. The increase was primarily attributed to interest on new financing obligations related to new stores. Income taxes. 2011 2010 2009 (Dollars in Millions) Provision for...

  • Page 24
    ...financing for merchandise inventories. Seasonal cash needs may be met by cash on hand and/or the line of credit available under our revolving credit facility. Our working capital and inventory levels typically build throughout the fall, peaking during the November and December holiday selling season...

  • Page 25
    ... centers and E-Commerce fulfillment centers opened; the mix of owned, leased or acquired stores; and the number of stores remodeled. We do not anticipate that our expansion plans will be limited by any restrictive covenants in our financing agreements. Sales of long-term investments generated cash...

  • Page 26
    ... we issued $1 billion in debt. As of January 28, 2012, our ratings were as follows: Moody's Standard & Poor's Fitch Long-term debt ... Baa1 BBB+ BBB+ We may from time to time seek to retire or purchase our outstanding debt through open market cash purchases, privately negotiated transactions or...

  • Page 27
    ...400 million of debt maturing in 2011 from long-term to short-term and the repurchase of $1.0 billion of Kohl's common stock. The debt/capitalization ratio was comparable to 2009, as share repurchases offset earnings in equity. The increase in the 2010 ratio of earnings to fixed charges was primarily...

  • Page 28
    ... business operations. The following table reconciles net cash provided by operating activities (a GAAP measure) to free cash flow (a non-GAAP measure). 2011 2010 2009 (Dollars in Millions) Net cash provided by operating activities ...Acquisition of property & equipment ...Capital lease & financing...

  • Page 29
    ... legally binding minimum lease and interest payments for stores opening in 2012 or later, as well as payments associated with technology agreements. We have not included $118 million of long-term liabilities for unrecognized tax benefits and the related interest and penalties in the contractual...

  • Page 30
    ... centers and E-Commerce fulfillment centers. The shrink reserve is based on sales and actual shrink results from previous inventories. We did not make any material changes in the methodologies used to value our inventory or to estimate the markdown and shrink reserves during 2011, 2010 or 2009...

  • Page 31
    ... self-insured for employee-related health care benefits, a portion of which is paid by our associates. We use a third-party actuary to estimate the liability for incurred, but not reported, health care claims. This estimate uses historical claims information as well as estimated health care trends...

  • Page 32
    ... general economic conditions, changes in competitive landscape and our ability to effectively manage the operations of the store. We have not historically experienced any significant impairment of long-lived assets. Additionally, impairment of an individual building and related improvements, net of...

  • Page 33
    ...increases in interest rates. The reduced profitability, if any, will be impacted by various factors, including our ability to pass higher funding costs on to the credit card holders and the outstanding receivable balance, and can not be reasonably estimated at this time. Item 8. Financial Statements...

  • Page 34
    ... without limitation, controls and procedures designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely...

  • Page 35
    ... are operating effectively. We currently expect that the necessary testing of the controls over accounting for leases will be completed in fiscal 2012 and will indicate that the material weakness related to these controls has been remediated. (c) Changes in Internal Control Over Financial Reporting...

  • Page 36
    ... with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of the Company as of January 28, 2012 and January 29, 2011, and the related consolidated statements of income, comprehensive income, changes in shareholders' equity, and cash flows...

  • Page 37
    ... on the achievement of the objectives of the control criteria, Kohl's Corporation has not maintained effective internal control over financial reporting as of January 28, 2012, based on the COSO criteria. /s/ ERNST & YOUNG LLP Milwaukee, Wisconsin March 16, 2012 Item 9B. Other Information None 37

  • Page 38
    ... Mr. Worthington was promoted to Chief Administrative Officer in November 2010 and is responsible for store operations, store administration, merchandise presentation, loss prevention, real estate, information systems and purchasing. Previously, he had served as Senior Executive Vice President since...

  • Page 39
    ... November 2010 and is responsible for financial planning and analysis, investor relations, financial reporting, accounting operations, tax, treasury, credit and capital investment. Previously, he had served as Executive Vice President, Chief Financial Officer since August 2003. Prior to joining Kohl...

  • Page 40
    ... Certain Beneficial Owners and Management and Related Stockholder Matters See the information provided in the "Security Ownership of Certain Beneficial Owners, Directors and Management" and "Equity Compensation Plan Information" sections of our 2012 Proxy, which information is incorporated herein by...

  • Page 41
    ... F-1, the Report of Independent Registered Public Accounting Firm on page F-2 and the Consolidated Financial Statements beginning on page F-3, all of which are incorporated herein by reference. 2. Financial Statement Schedule: All schedules have been omitted as they are not applicable. 3. Exhibits...

  • Page 42
    ... WESLEY S. MCDONALD Wesley S. McDonald Senior Executive Vice President, Chief Financial Officer (Principal Financial and Accounting Officer) Dated: March 16, 2012 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf...

  • Page 43
    ... long-term debt described in Note 2 and not filed herewith. Private Label Credit Card Program Agreement dated as of August 11, 2010 by and between Kohl's Department Stores, Inc and Capital One, National Association, incorporated herein by reference to Exhibit 10.1 of the Company's Quarterly Report...

  • Page 44
    ... Statement on Schedule 14A filed on March 26, 2010 in connection with the Company's 2010 Annual Meeting.* Form of Executive Stock Option Agreement pursuant to the Kohl's Corporation 2010 Long Term Compensation Plan, incorporated herein by reference to Exhibit 10.1 of the Company's Quarterly Report...

  • Page 45
    Exhibit Number Description 31.1 31.2 32.1 32.2 101.INS 101.SCH 101.CAL 101.DEF 101.LAB 101.PRE Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of ...

  • Page 46
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  • Page 47
    ... Financial Statements Report of Independent Registered Public Accounting Firm ...Consolidated Balance Sheets ...Consolidated Statements of Income ...Consolidated Statements of Comprehensive Income ...Consolidated Statements of Changes in Shareholders' Equity ...Consolidated Statements of Cash...

  • Page 48
    ... We have audited the accompanying consolidated balance sheets of Kohl's Corporation (the Company) as of January 28, 2012 and January 29, 2011, and the related consolidated statements of income, comprehensive income, changes in shareholders' equity, and cash flows for each of the three years...

  • Page 49
    KOHL'S CORPORATION CONSOLIDATED BALANCE SHEETS (Dollars In Millions) January 28, 2012 January 29, 2011 Assets Current assets: Cash and cash equivalents ...Merchandise inventories ...Deferred income taxes ...Other ...Total current assets ...Property and equipment, net ...Long-term investments ......

  • Page 50
    KOHL'S CORPORATION CONSOLIDATED STATEMENTS OF INCOME (In Millions, Except Per Share Data) 2011 2010 2009 Net sales ...$18,804 Cost of merchandise sold (exclusive of depreciation shown separately below) ...11,625 Gross margin ...Operating expenses: Selling, general, and administrative ......

  • Page 51
    KOHL'S CORPORATION CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In Millions) 2011 2010 2009 Net income ...Other comprehensive (loss) income, net of tax: Unrealized gains (losses) on investments ...Interest rate derivatives: Unrealized loss arising during period ...Reclassification adjustment ...

  • Page 52
    KOHL'S CORPORATION CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (In Millions, Except Per Share Data) Common Stock Shares Amount Treasury Stock Shares Amount Accumulated Other Comprehensive Gain (Loss) Paid-In Capital Retained Earnings Total Balance at January 31, 2009 . . ...

  • Page 53
    ... ...Net cash used in investing activities ...Financing activities Treasury stock purchases ...Long-term debt payments ...Capital lease and financing obligation payments ...Proceeds from financing obligations ...Proceeds from issuance of debt ...Interest rate hedge payment ...Deferred financing costs...

  • Page 54
    ... that feature exclusive and national brand apparel, footwear, accessories, soft home products and housewares targeted to middle-income customers. Our stores are located in 49 states. Our authorized capital stock consists of 800 million shares of $0.01 par value common stock and 10 million shares of...

  • Page 55
    ... are currently taken as a reduction of the retail value of inventory. We record an additional reserve when the future estimated selling price is less than cost. Property and Equipment Property and equipment consist of the following: Jan. 29, Jan. 28, 2011 2012 (In Millions) Land ...Buildings and...

  • Page 56
    ... to customers include gift cards and merchandise return cards that have been issued but not presented for redemption. Self-Insurance We use a combination of insurance and self-insurance for a number of risks including workers' compensation, general liability and employee-related health care benefits...

  • Page 57
    KOHL'S CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) 1. Business and Summary of Accounting Policies (continued) Long-term Liabilities Other long-term liabilities consist of the following: Jan. 28, Jan. 29, 2012 2011 (In Millions) Property-related liabilities (straight-line ...

  • Page 58
    ... of E-Commerce sales Terms cash discount • Compensation and benefit costs including Stores Corporate headquarters, including buying and merchandising Distribution centers • • • • • • Occupancy and operating costs of our retail, distribution and corporate facilities Net revenues...

  • Page 59
    ...or Selling, General and Administrative ("SG&A") expenses based on the application of Accounting Standards Codification ("ASC") No. 605, Subtopic 50, "Customer Payments and Incentives." Promotional and advertising allowances are intended to offset our advertising costs to promote vendors' merchandise...

  • Page 60
    ...are expensed when the advertisement is first seen. Advertising costs, net of related vendor allowances, were as follows: 2011 2010 (In Millions) 2009 Gross advertising costs ...Vendor allowances ...Net advertising costs ...Net advertising costs as a percent of net sales ...Income Taxes $1,123 (161...

  • Page 61
    ... period based on the fair value of awards which are expected to vest. The fair value of all share-based awards is estimated on the date of grant. 2. Debt Long-term debt consists of the following: January 28, 2012 January 29, 2011 Effective OutEffective OutRate standing Rate standing ($ in Millions...

  • Page 62
    ... at January 29, 2011. As of January 28, 2012, the par value of our long-term investments was $193 million and the estimated fair value was $153 million. Our long-term investments consist primarily of investments in auction rate securities, ("ARS"), which are long-term debt instruments with interest...

  • Page 63
    ...using the closest match available for other insured asset backed securities. A market failure scenario was employed as recent successful auctions of these securities were very limited. The following table presents a rollforward of our long-term investments, all of which are measured at fair value on...

  • Page 64
    ... 2011, $20 million for 2010 and $17 million for 2009. Shares of our stock held by the ESOP are included as shares outstanding for purposes of the net income per share computations. We also have a defined contribution savings plan covering all full-time and certain part-time associates. Participants...

  • Page 65
    ... in a material change in our financial position. A reconciliation of the beginning and ending gross amount of unrecognized tax benefits is as follows: 2011 2010 (In Millions) Balance at beginning of year ...Increases due to: Tax positions taken in prior years ...Tax positions taken in current year...

  • Page 66
    ... pursuant to the Kohl's Corporation 2010 Long-Term Compensation Plan, which provides for the granting of various forms of equity-based awards, including nonvested stock and options to purchase shares of our common stock, to officers, key employees and directors. As of January 28, 2012, there were 18...

  • Page 67
    ...of our stock price at the time the option was exercised over the exercise price and was $16 million in 2011, $25 million in 2010 and $20 million in 2009. Additional information related to stock options outstanding and exercisable at January 28, 2012, segregated by exercise price range, is summarized...

  • Page 68
    ... of management, the outcome of such proceedings and litigation will not have a material impact on our financial position or results of operations. 9. Quarterly Financial Information (Unaudited) 2011 First Second Third Fourth (In Millions, Except Per Share Data) Net sales ...Gross margin ...Net...

  • Page 69
    KOHL'S CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) 9. Quarterly Financial Information (Unaudited) (continued) 2010 First Second Third Fourth (In Millions, Except Per Share Data) Net sales ...Gross margin ...Net income ...Basic shares ...Basic net income per share ...Diluted ...

  • Page 70
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  • Page 71
    ...Charges (Dollars in Millions) 2011 2010 2009 Earnings Income before income taxes ...Fixed charges ...Less: interest capitalized during period ...Fixed Charges Interest (expensed or capitalized) ...Portion of rent expense representative of interest ...Amortization of deferred financing fees ...Ratio...

  • Page 72
    ... Kohl's Department Stores, Inc. Kohl's Illinois, Inc.* Kohl's Indiana, Inc.* Kohl's Indiana, L.P. Kohl's Michigan, L.P. Kohl's Value Services, Inc.* Kohl's Cares, LLC* KWAL, LLC KCA, LLC* KCA Holdings Delaware Nevada Delaware Delaware Delaware Virginia Wisconsin Wisconsin Wisconsin British...

  • Page 73
    ...-177252) of Kohl's Corporation and in the related prospectuses, of our reports dated March 16, 2012, with respect to the consolidated financial statements of Kohl's Corporation and the effectiveness of internal control over financial reporting of Kohl's Corporation (which report expresses an adverse...

  • Page 74
    ... information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: March 16, 2012 /s/ Kevin Mansell Kevin Mansell Chairman, President and Chief Executive Officer...

  • Page 75
    ...process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: March 16, 2012 /s/ Wesley S. McDonald Wesley S. McDonald Chief...

  • Page 76
    ... Securities Exchange Act of 1934, and That the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. 2. Dated: March 16, 2012 /s/ Kevin Mansell Kevin Mansell Chairman, President and Chief Executive Officer...

  • Page 77
    ... or 15(d) of the Securities Exchange Act of 1934, and That the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. 2. Dated: March 16, 2012 /s/ Wesley S. McDonald Wesley S. McDonald Chief Financial Officer

  • Page 78
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