SEC Company Response from Oil-Dri Corp of America (ODC) (CIK 0000074046) (ODC) — Feb 3, 2006
Oil-Dri Corp of America (ODC) (CIK 0000074046)
Date: Feb. 3, 2006 · CIK: 0000074046 · Accession: 0001275287-06-000617
AI Filing Summary & Sentiment
Reasoning
Referenced dates: January 10, 2005
Letter
Form 10-K for the fiscal year ended July 31, 2005 Form 10-Q for the fiscal quarter ended October 31, 2005 File No. 0-23897
RE:
Dear Mr. Decker:
We have received your letter dated January 10, 2005 requesting information related to the above reports. We have prepared detailed responses to the Staff’s comments in the following pages. The Staff’s comments are restated below in bold italics type, and are followed by the Company’s responses.
FORM 10-K FOR THE YEAR ENDED JULY 31, 2005
General
1.
Where a comment below requests additional disclosures or other revisions please show us in your supplemental response what the revisions will look like. These revisions should be included in your future filings.
Response: For those responses in which revised disclosure is provided in response to the Staff’s comments the changes have been italicized in bold type for your benefit. The Company believes that it has provided adequate disclosure in our past filings. However, as described in more detail below, we plan in several of the items listed below to continue to further enhance our disclosures in future filings as appropriate.
Mr. Rufus Decker Accounting Branch Chief Division of Corporation Finance Page Two
Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations, page 15
Results of Operations, page 15
Fiscal 2005 Compared to Fiscal 2004, page 15
2.
Please discuss the business reasons for the changes between periods in net sales and operating income from operations of each of your segments. In doing so, please disclose the amount of each significant change in line items between periods and the business reasons for it. In circumstances where there is more than one business reason for the change, attempt to quantify the incremental impact of each individual business reason discussed on the overall change in the line item. Please show us what your revised MD&A for 2005 as compared to 2004 will look like. See Item 303(a)(3) of Regulation S-K and Financial Reporting Codification 501.04.
Response: A revised MD&A excerpt is set out below.
We have reviewed regulation S-K 303(a)(3) in formulating our response. The Company believes that it has provided adequate disclosure in our past filings, but we will continue to refine our MD&A disclosure in the future. Revisions like those seen below will be incorporated into our second quarter form 10-Q and future filings.
RESULTS OF OPERATIONS FISCAL 2005 COMPARED TO FISCAL 2004
Net sales of the Consumer Products Group for fiscal 2005 were $115,455,000, an increase of 1.3% from net sales of $114,027,000 in fiscal 2004. The small sales increase was obtained by a 9.3% increase in sales in the Canadian operation and a 4.8% increase in sales in the Co-manufactured products business. The increase in the Canadian business was driven by private label products, while the increase in the Co-manufactured business came from a new customer. The core consumer business was consistent compared to fiscal 2004. Branded cat litter sales were up 1.6% due to the introduction of new products, but private label sales were down 4.6% due to competitive market pressure. This Group’s operating income decreased 2.9% from $17,532,000 in fiscal 2004 to $17,027,000 in fiscal 2005. Driving the profit decline was a 4.2% increase in material costs, a 7.1% increase in packaging costs and a 4.7% increase in freight costs. Transportation and manufacturing fuel costs, along with resin prices have increased as the cost of oil has continued to spiral upward. Bag stock costs have also increased as the price of paper has increased. Offsetting part of the operating income decline were both price increases, which helped both operating income and sales and selling expense reductions in the advertising and bad debts expense areas.
Mr. Rufus Decker Accounting Branch Chief Division of Corporation Finance Page Three
Net sales of the Specialty Products Group for fiscal 2005 were $30,810,000, an increase of 11.0% from net sales of $27,759,000 in fiscal 2004. Throughout fiscal 2005 the Group reported strong sales growth in bleaching earth and animal health and nutrition products. Bleaching earth product sales were up approximately 13% for the year, while animal health and nutrition product sales were up approximately 20%. The growth was experienced both domestically and in the international market place. The Group experienced solid volume growth, but pricing was relatively flat due to contracts with international edible oil processors, who were able to leverage their global buying power. The segment’s operating income increased 11.9% from $6,058,000 in fiscal 2004 to $6,781,000 in fiscal 2005. The profit increase was driven by the strong sales performance.
Net sales of the Crop Production and Horticulture Products Group for fiscal 2005 were $18,032,000, a decrease of 14.2% from net sales of $21,006,000 in fiscal 2004. The net sales decrease resulted from reduced orders from the three major agricultural chemical formulators, primarily those formulating chemicals to combat corn rootworm. These formulators delayed their production start-ups in the first quarter of fiscal 2005 due to inventory carryover from last season and they continued to order less product due to the increasing acceptance of genetically modified and treated seed in the market. Overall the sales of agricultural products were down approximately 23% as compared to fiscal 2004. The significant decrease in agricultural carrier production also reduced the availability of the Group’s Flo-Fre product line, which in turn caused a further reduction of sales. Flo-Fre product sales were down approximately 15% as compared to fiscal 2004. Partially offsetting some of the sales decline was growth in the Group’s sports field business. The sports field product sales were up approximately 8% for the year. The Group’s operating income decreased by 56.5% from $3,092,000 in fiscal 2004 to $1,346,000 in fiscal 2005. The decrease in operating income was driven by the decline in agricultural carrier sales described above. The Group also experienced increased manufacturing and freight costs, which could not be fully recovered by price increases. The volume reduction drove approximately 37% of the decline in income. Cost increases for materials reduced the Group’s income by approximately 28%. Packaging and freight cost increases accounted for about 31% of the income reduction. While general expense increases accounted for about a 4% of the reduction.
Net sales of the Industrial and Automotive Products Group for fiscal 2005 were $23,571,000, an increase of 3.8% from net sales of $22,719,000 in fiscal 2004. Most of the sales increase was driven by improved sales of generic floor absorbent products. The sales of branded floor absorbent in fiscal 2005 were flat as compared to fiscal 2004. The Group reported an operating loss of $267,000 for fiscal 2005 compared to a loss of $452,000 for fiscal 2004. Selling price increases were partially offset by increased manufacturing and freight costs. Transportation and manufacturing fuel costs and resin prices have increased with the cost of oil.
Mr. Rufus Decker Accounting Branch Chief Division of Corporation Finance Page Four
Liquidity and Capital Resources, page 17
3.
You disclose that you accounted for $1.2 million in cash grants on a “net” grant accounting basis, thus showing no cash inflow or capital expenditure outflow. Please tell us what accounting literature you relied on in determining your presentation.
Response: To our knowledge there are currently no U.S. accounting pronouncements that specifically address government grants. In absence of an authoritative pronouncement, the Company looked to other sources for analogous standards to our circumstances. IAS 20 – Accounting for Government Grants and Disclosure of Government Assistance and Government Grants specifies in paragraph 27 a net approach to account for and disclose assets that have been impacted by government grants. This net approach recognizes the income statement impact over the depreciable life of the asset. We have elected the method that allows for the deduction of the grant in determining the carrying amount of the asset(s).
We have also considered paragraph 28 of the guidance. As you have noted, we have disclosed on page 17 in the Liquidity and Capital Resources section of the 2005 10-K, a discussion of the grant and the accounting (see below):
“During fiscal 2005, the Company received approximately $1,200,000 in cash grants from the State of Illinois, so that it could enhance is processing capabilities at the Mounds, Illinois production facility. These funds were accounted for on a “net” grant accounting basis, therefore they were not shown as a cash in-flow, or a capital expenditure outflow. As of July 31, 2005, the grant funds were completely utilized.”
We do not believe that the value of the grant and its use, which generally happened in the same year, to be a “major movement” as discussed in paragraph 28 of IAS 20. However we disclosed the amount to aid the understanding of the grant and the cash flows of the Company.
4.
Please revise your liquidity section to discuss the changes in your operating, investing, and financing cash flows as depicted in your statement of cash flows. Your discussion should focus on the primary drivers of and other material factors necessary to an understanding of your cash flows and the indicative value of historical cash flows. Please refer to the SEC Interpretive Release No. 33-8350.
Mr. Rufus Decker Accounting Branch Chief Division of Corporation Finance Page Five
Response: The Company has reviewed SEC interpretive release No. 33-8350. Typically the Company does not have major business changes that create liquidity disclosure considerations. We have in the past highlighted the major items that impact this area. However we have not broken those comments out into the major categories as described in the release. Beginning with the second quarter Form 10-Q we will highlight the major sections to provide further clarity for the readers of the reports.
Contractual Obligations, page 17
5.
Please revise your table of contractual obligations to include payments you are obligated to make under your interest rate swap agreements. Because the table is aimed at increasing transparency of cash flow, we believe these payments should be included in the table. Please also disclose any assumptions you made to derive these amounts.
Response: Because the contractual obligations associated with the interest rate swaps were less than $50,000, at July 31, 2005 the Company believes that inclusion of the interest rate swaps is not necessary for the transparent presentation of its contractual obligations for the organization. The Company will consider future disclosure if the amounts become material.
Item 7a – Quantitative and Qualitative Disclosures about Market Risk, page 24
6.
Please provide us with additional information to help us understand why you believe quantitative disclosures for both your foreign currency and interest rate risks are not required, or provide the disclosure required by Item 305 of Regulation S-K. Please refer to the appendices to Item 305 for suggested formats for presentation of the information.
Response: The Company believes that it has addressed both items appropriately in Items 7a and also has addressed these items as part of its debt disclosures in Note 4 of the Notes to the Consolidated Financial Statements in the fiscal 2005 Form 10-K.
We believe that our currency risk is immaterial as it relates to its foreign receivables given the fact that the foreign receivables held by the Company, but not its foreign subsidiaries, which were denominated in foreign currency at July 31, 2005 were only approximately $740,000. Also, as disclosed in the Foreign Operations section of the MD&A, the Company’s foreign subsidiaries generate only a small portion of the consolidated sales and an even smaller portion of the consolidated income. The Company will consider future disclosures if the size of the operations expand and the amounts become material.
Mr. Rufus Decker Accounting Branch Chief Division of Corporation Finance Page Six
In analyzing the interest rate risk factors of the organization, the Company first looked at the composition of its long-term debt. The Company has very little variable interest rate debt. At July 31, 2005, approximately $20,500,000 of the $23,320,000 of long-term debt was stated at a fixed interest rate. Much of the remaining variable rate long-term debt is industrial revenue development bonds that have carried very low interest rates in the past. For example, the fiscal 2005 interest rate was only 2.15%. In addition, the Company had a $7,500,000 revolving credit facility available for use at July 31, but none of that facility was utilized. The Company will consider providing additional Item 7a disclosures in the future as appropriate.
Item 8 – Financial Statements
Consolidated Statements of Stockholders’ Equity, page 28
7.
Please revise your statement of stockholders’ equity to include columns disclosing the changes in the number of shares outstanding and held as treasury stock.
Response: While the Company believes the statement of stockholders’ equity currently reflects sufficient information for the changes in the balances to be understood, we will add new columns in our fiscal 2006 10-K that depicts the changes in the number of shares associated with the shares outstanding and treasury stock.
8.
Please disclose the amount of income tax expense or benefit allocated to each component of other comprehensive income in accordance with paragraph 25 of SFAS 130.
Response: The Company believes that the current disclosure accurately presents the tax implications of Other Comprehensive Income, because most of the comprehensive income is related to currency translation adjustments for permanently reinvested foreign earnings for which no deferred taxes are provided. Therefore, no tax effect was required on these amounts in fiscal 2005. In fiscal 2005 there was $38,000 of comprehensive income associated with unrealized gains on investments. The Company believes that the tax implication of this item was immaterial. The Company will consider additional disclosure in the future as appropriate.
Consolidated Statement of Cash Flows, page 29
9.
Please present the effect of exchange rate changes on cash balances held in foreign currencies as a separate part of the reconciliation of the change in cash and cash equivalents during the period. See paragraph 25 of SFAS 95.
Mr. Rufus Decker Accounting Branch Chief Division of Corporation Finance Page Seven
Response: The Company has reviewed SFAS 95, paragraph 25 to determine the presentation requirements. We believe that the effect of exchange rates changes on the cash balances held in foreign currencies to be immaterial. We have calculated the currency average impact on cash flow for the fiscal years of 2003 to 2005 to be approximately $228,000. However, beginning with the second quarter Form 10-Q in fiscal 2006 we will present an additional disclosure for the foreign currency impact on the Company’s Consolidated Cash Flow Statement.
Note 1 – Summary of Significant Accounting Policies, page 30
General
10.
Please disclose how you are treating the restricted shares you have issued in computing both your basic and diluted earnings per share
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CORRESP
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filename1.htm
February 3, 2006
Mr. Rufus Decker
Accounting Branch Chief
Division of Corporation Finance
United States Securities and Exchange Commission
100 F Street, N.E., Stop 7010
Washington, D.C. 20549
RE:
Form 10-K for the fiscal year ended July 31, 2005
Form 10-Q for the fiscal quarter ended October 31, 2005
File No. 0-23897
Dear Mr. Decker:
We have received your letter dated January 10, 2005 requesting information related to the above reports. We have prepared detailed responses to the Staff’s comments in the following pages. The Staff’s comments are restated below in bold italics type, and are followed by the Company’s responses.
FORM 10-K FOR THE YEAR ENDED JULY 31, 2005
General
1.
Where a comment below requests additional disclosures or other revisions please show us in your supplemental response what the revisions will look like. These revisions should be included in your future filings.
Response: For those responses in which revised disclosure is provided in response to the Staff’s comments the changes have been italicized in bold type for your benefit. The Company believes that it has provided adequate disclosure in our past filings. However, as described in more detail below, we plan in several of the items listed below to continue to further enhance our disclosures in future filings as appropriate.
Mr. Rufus Decker
Accounting Branch Chief
Division of Corporation Finance
Page Two
Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations, page 15
Results of Operations, page 15
Fiscal 2005 Compared to Fiscal 2004, page 15
2.
Please discuss the business reasons for the changes between periods in net sales and operating income from operations of each of your segments. In doing so, please disclose the amount of each significant change in line items between periods and the business reasons for it. In circumstances where there is more than one business reason for the change, attempt to quantify the incremental impact of each individual business reason discussed on the overall change in the line item. Please show us what your revised MD&A for 2005 as compared to 2004 will look like. See Item 303(a)(3) of Regulation S-K and Financial Reporting Codification 501.04.
Response: A revised MD&A excerpt is set out below.
We have reviewed regulation S-K 303(a)(3) in formulating our response. The Company believes that it has provided adequate disclosure in our past filings, but we will continue to refine our MD&A disclosure in the future. Revisions like those seen below will be incorporated into our second quarter form 10-Q and future filings.
RESULTS OF OPERATIONS
FISCAL 2005 COMPARED TO FISCAL 2004
Net sales of the Consumer Products Group for fiscal 2005 were $115,455,000, an increase of 1.3% from net sales of $114,027,000 in fiscal 2004. The small sales increase was obtained by a 9.3% increase in sales in the Canadian operation and a 4.8% increase in sales in the Co-manufactured products business. The increase in the Canadian business was driven by private label products, while the increase in the Co-manufactured business came from a new customer. The core consumer business was consistent compared to fiscal 2004. Branded cat litter sales were up 1.6% due to the introduction of new products, but private label sales were down 4.6% due to competitive market pressure. This Group’s operating income decreased 2.9% from $17,532,000 in fiscal 2004 to $17,027,000 in fiscal
2005. Driving the profit decline was a 4.2% increase in material costs, a 7.1% increase in packaging costs and a 4.7% increase in freight costs. Transportation and manufacturing fuel costs, along with resin prices have increased as the cost of oil has continued to spiral upward. Bag stock costs have also increased as the price of paper has increased. Offsetting part of the operating income decline were both price increases, which helped both operating income and sales and selling expense reductions in the advertising and bad debts expense areas.
Mr. Rufus Decker
Accounting Branch Chief
Division of Corporation Finance
Page Three
Net sales of the Specialty Products Group for fiscal 2005 were $30,810,000, an increase of 11.0% from net sales of $27,759,000 in fiscal 2004. Throughout fiscal 2005 the Group reported strong sales growth in bleaching earth and animal health and nutrition products. Bleaching earth product sales were up approximately 13% for the year, while animal health and nutrition product sales were up approximately 20%. The growth was experienced both domestically and in the international market place. The Group experienced solid volume growth, but pricing was relatively flat due to contracts with international edible oil processors, who were able to leverage their global buying power. The segment’s operating income increased 11.9% from $6,058,000 in fiscal 2004 to $6,781,000 in fiscal 2005. The profit increase was driven by the strong sales
performance.
Net sales of the Crop Production and Horticulture Products Group for fiscal 2005 were $18,032,000, a decrease of 14.2% from net sales of $21,006,000 in fiscal 2004. The net sales decrease resulted from reduced orders from the three major agricultural chemical formulators, primarily those formulating chemicals to combat corn rootworm. These formulators delayed their production start-ups in the first quarter of fiscal 2005 due to inventory carryover from last season and they continued to order less product due to the increasing acceptance of genetically modified and treated seed in the market. Overall the sales of agricultural products were down approximately 23% as compared to fiscal 2004. The significant decrease in agricultural carrier production also reduced the availability of the Group’s Flo-Fre product line, which in turn caused a further reduction of
sales. Flo-Fre product sales were down approximately 15% as compared to fiscal 2004. Partially offsetting some of the sales decline was growth in the Group’s sports field business. The sports field product sales were up approximately 8% for the year. The Group’s operating income decreased by 56.5% from $3,092,000 in fiscal 2004 to $1,346,000 in fiscal 2005. The decrease in operating income was driven by the decline in agricultural carrier sales described above. The Group also experienced increased manufacturing and freight costs, which could not be fully recovered by price increases. The volume reduction drove approximately 37% of the decline in income. Cost increases for materials reduced the Group’s income by approximately 28%. Packaging and freight cost increases accounted for about 31% of the income reduction. While general expense increases accounted for about a 4% of
the reduction.
Net sales of the Industrial and Automotive Products Group for fiscal 2005 were $23,571,000, an increase of 3.8% from net sales of $22,719,000 in fiscal 2004. Most of the sales increase was driven by improved sales of generic floor absorbent products. The sales of branded floor absorbent in fiscal 2005 were flat as compared to fiscal 2004. The Group reported an operating loss of $267,000 for fiscal 2005 compared to a loss of $452,000 for fiscal 2004. Selling price increases were partially offset by increased manufacturing and freight costs. Transportation and manufacturing fuel costs and resin prices have increased with the cost of oil.
Mr. Rufus Decker
Accounting Branch Chief
Division of Corporation Finance
Page Four
Liquidity and Capital Resources, page 17
3.
You disclose that you accounted for $1.2 million in cash grants on a “net” grant accounting basis, thus showing no cash inflow or capital expenditure outflow. Please tell us what accounting literature you relied on in determining your presentation.
Response: To our knowledge there are currently no U.S. accounting pronouncements that specifically address government grants. In absence of an authoritative pronouncement, the Company looked to other sources for analogous standards to our circumstances. IAS 20 – Accounting for Government Grants and Disclosure of Government Assistance and Government Grants specifies in paragraph 27 a net approach to account for and disclose assets that have been impacted by government grants. This net approach recognizes the income statement impact over the depreciable life of the asset. We have elected the method that allows for the deduction of the grant in determining the carrying amount of the asset(s).
We have also considered paragraph 28 of the guidance. As you have noted, we have disclosed on page 17 in the Liquidity and Capital Resources section of the 2005 10-K, a discussion of the grant and the accounting (see below):
“During fiscal 2005, the Company received approximately $1,200,000 in cash grants from the State of Illinois, so that it could enhance is processing capabilities at the Mounds, Illinois production facility. These funds were accounted for on a “net” grant accounting basis, therefore they were not shown as a cash in-flow, or a capital expenditure outflow. As of July 31, 2005, the grant funds were completely utilized.”
We do not believe that the value of the grant and its use, which generally happened in the same year, to be a “major movement” as discussed in paragraph 28 of IAS 20. However we disclosed the amount to aid the understanding of the grant and the cash flows of the Company.
4.
Please revise your liquidity section to discuss the changes in your operating, investing, and financing cash flows as depicted in your statement of cash flows. Your discussion should focus on the primary drivers of and other material factors necessary to an understanding of your cash flows and the indicative value of historical cash flows. Please refer to the SEC Interpretive Release No. 33-8350.
Mr. Rufus Decker
Accounting Branch Chief
Division of Corporation Finance
Page Five
Response: The Company has reviewed SEC interpretive release No. 33-8350. Typically the Company does not have major business changes that create liquidity disclosure considerations. We have in the past highlighted the major items that impact this area. However we have not broken those comments out into the major categories as described in the release. Beginning with the second quarter Form 10-Q we will highlight the major sections to provide further clarity for the readers of the reports.
Contractual Obligations, page 17
5.
Please revise your table of contractual obligations to include payments you are obligated to make under your interest rate swap agreements. Because the table is aimed at increasing transparency of cash flow, we believe these payments should be included in the table. Please also disclose any assumptions you made to derive these amounts.
Response: Because the contractual obligations associated with the interest rate swaps were less than $50,000, at July 31, 2005 the Company believes that inclusion of the interest rate swaps is not necessary for the transparent presentation of its contractual obligations for the organization. The Company will consider future disclosure if the amounts become material.
Item 7a – Quantitative and Qualitative Disclosures about Market Risk, page 24
6.
Please provide us with additional information to help us understand why you believe quantitative disclosures for both your foreign currency and interest rate risks are not required, or provide the disclosure required by Item 305 of Regulation S-K. Please refer to the appendices to Item 305 for suggested formats for presentation of the information.
Response: The Company believes that it has addressed both items appropriately in Items 7a and also has addressed these items as part of its debt disclosures in Note 4 of the Notes to the Consolidated Financial Statements in the fiscal 2005 Form 10-K.
We believe that our currency risk is immaterial as it relates to its foreign receivables given the fact that the foreign receivables held by the Company, but not its foreign subsidiaries, which were denominated in foreign currency at July 31, 2005 were only approximately $740,000. Also, as disclosed in the Foreign Operations section of the MD&A, the Company’s foreign subsidiaries generate only a small portion of the consolidated sales and an even smaller portion of the consolidated income. The Company will consider future disclosures if the size of the operations expand and the amounts become material.
Mr. Rufus Decker
Accounting Branch Chief
Division of Corporation Finance
Page Six
In analyzing the interest rate risk factors of the organization, the Company first looked at the composition of its long-term debt. The Company has very little variable interest rate debt. At July 31, 2005, approximately $20,500,000 of the $23,320,000 of long-term debt was stated at a fixed interest rate. Much of the remaining variable rate long-term debt is industrial revenue development bonds that have carried very low interest rates in the past. For example, the fiscal 2005 interest rate was only 2.15%. In addition, the Company had a $7,500,000 revolving credit facility available for use at July 31, but none of that facility was utilized. The Company will consider providing additional Item 7a disclosures in the future as appropriate.
Item 8 – Financial Statements
Consolidated Statements of Stockholders’ Equity, page 28
7.
Please revise your statement of stockholders’ equity to include columns disclosing the changes in the number of shares outstanding and held as treasury stock.
Response: While the Company believes the statement of stockholders’ equity currently reflects sufficient information for the changes in the balances to be understood, we will add new columns in our fiscal 2006 10-K that depicts the changes in the number of shares associated with the shares outstanding and treasury stock.
8.
Please disclose the amount of income tax expense or benefit allocated to each component of other comprehensive income in accordance with paragraph 25 of SFAS 130.
Response: The Company believes that the current disclosure accurately presents the tax implications of Other Comprehensive Income, because most of the comprehensive income is related to currency translation adjustments for permanently reinvested foreign earnings for which no deferred taxes are provided. Therefore, no tax effect was required on these amounts in fiscal 2005. In fiscal 2005 there was $38,000 of comprehensive income associated with unrealized gains on investments. The Company believes that the tax implication of this item was immaterial. The Company will consider additional disclosure in the future as appropriate.
Consolidated Statement of Cash Flows, page 29
9.
Please present the effect of exchange rate changes on cash balances held in foreign currencies as a separate part of the reconciliation of the change in cash and cash equivalents during the period. See paragraph 25 of SFAS 95.
Mr. Rufus Decker
Accounting Branch Chief
Division of Corporation Finance
Page Seven
Response: The Company has reviewed SFAS 95, paragraph 25 to determine the presentation requirements. We believe that the effect of exchange rates changes on the cash balances held in foreign currencies to be immaterial. We have calculated the currency average impact on cash flow for the fiscal years of 2003 to 2005 to be approximately $228,000. However, beginning with the second quarter Form 10-Q in fiscal 2006 we will present an additional disclosure for the foreign currency impact on the Company’s Consolidated Cash Flow Statement.
Note 1 – Summary of Significant Accounting Policies, page 30
General
10.
Please disclose how you are treating the restricted shares you have issued in computing both your basic and diluted earnings per share