FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2001
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM
TO
---------------- --------------------
COMMISSION FILE NUMBER 001-13195
INDUSTRIAL DISTRIBUTION GROUP, INC.
-----------------------------------
(Exact name of registrant as specified in its charter)
Delaware 58-2299339
-------- ----------
(State or other jurisdiction of (I.R.S.Employer
incorporation or organization) Identification No.)
950 East Paces Ferry Road, Suite 1575 Atlanta, Georgia 30326
------------------------------------------------------------
(Address of principal executive offices and zip code)
(404) 949-2100
--------------
(Registrant's telephone number, including area code)
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 the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
Class Outstanding at October 31, 2001
--------------------------------- -------------------------------
Common Stock, $.01 par value 8,749,184
INDUSTRIAL DISTRIBUTION GROUP, INC.
INDEX
PART I. Financial Information
ITEM 1. Financial Statements
Consolidated Balance Sheets at September 30, 2001 (Unaudited) and December 31, 2000
Consolidated Statements of Operations for the three months ended September 30, 2001 and 2000 (Unaudited)
Consolidated Statements of Operations for the nine months ended September 30, 2001 and 2000 (Unaudited)
Consolidated Statements of Cash Flows for the nine months ended September 30, 2001 and 2000 (Unaudited)
Notes to Consolidated Financial Statements - September 30, 2001 (Unaudited)
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
PART II. Other Information
ITEM 1. Legal Proceedings
ITEM 6. Exhibits and Reports on Form 8-K
2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
INDUSTRIAL DISTRIBUTION GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
SEPTEMBER 30, DECEMBER 31,
2001 2000
--------------- ------------
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and Cash Equivalents..................................... $ 976 $ 3,690
Accounts Receivable, net...................................... 64,768 64,705
Inventory, net................................................ 64,826 68,518
Deferred Tax Assets........................................... 6,313 7,586
Prepaid and Other Current Assets.............................. 12,050 9,923
----------- ----------
TOTAL CURRENT ASSETS....................................... 148,933 154,422
Property and Equipment, net................................... 13,538 15,446
Intangible Assets, net........................................ 51,128 52,204
Other Assets.................................................. 2,017 1,886
----------- ----------
TOTAL ASSETS................................................. $ 215,616 $ 223,958
=========== ==========
LIABILITIES & STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current Maturities of Long-Term Debt.......................... $ 738 $ 789
Book Overdraft................................................ 5,901 8,230
Accounts Payable.............................................. 40,488 38,536
Accrued Compensation.......................................... 1,989 2,419
Current Portion of Management Liability Insurance............. 3,718 3,718
Other Accrued Liabilities..................................... 6,333 6,465
----------- ----------
TOTAL CURRENT LIABILITIES.................................... 59,167 60,157
Long-Term Debt................................................ 49,591 52,516
Other Long-Term Liabilities................................... 5,832 9,170
----------- ----------
TOTAL LIABILITIES........................................... 114,590 121,843
STOCKHOLDERS' EQUITY:
Common Stock, par value $.01 per share, 50,000,000
shares authorized; 8,693,294 shares issued and 8,686,521
shares outstanding in 2001; 8,493,360 shares issued and
8,486,587 shares outstanding in 2000......................... 87 85
Additional Paid-In Capital.................................... 97,636 97,293
Retained Earnings............................................. 3,393 4,827
Treasury Stock................................................ (90) (90)
----------- ----------
TOTAL STOCKHOLDERS' EQUITY.................................... 101,026 102,115
----------- ----------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY.................... $ 215,616 $ 223,958
=========== ==========
The accompanying notes are an integral part of these consolidated financial
statements.
3
INDUSTRIAL DISTRIBUTION GROUP, INC
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share data)
(Unaudited)
THREE MONTHS ENDED SEPTEMBER 30,
2000
(restated -
2001 see note 1)
------------ ------------
NET SALES..................................................................... $ 123,883 $ 133,723
COST OF SALES................................................................. 96,420 103,492
------------ ------------
Gross profit................................................................ 27,463 30,231
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES.................................. 26,225 28,677
------------ ------------
Income from operations...................................................... 1,238 1,554
INTEREST EXPENSE.............................................................. 1,042 1,142
OTHER INCOME, NET............................................................. 31 58
------------ ------------
INCOME BEFORE INCOME TAXES.................................................... 227 470
PROVISION FOR INCOME TAXES.................................................... 340 178
------------ ------------
NET (LOSS) INCOME............................................................. $ (113) $ 292
============= ============
BASIC AND DILUTED (LOSS) EARNINGS PER SHARE................................... $ (.01) $ .03
============= ============
WEIGHTED AVERAGE SHARES OUTSTANDING (Basic and Diluted)....................... 8,686,521 8,547,130
============ ============
The accompanying notes are an integral part of these consolidated financial
statements.
4
INDUSTRIAL DISTRIBUTION GROUP, INC
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share data)
(Unaudited)
NINE MONTHS ENDED SEPTEMBER 30,
2000
(restated -
2001 see note 1)
------------- ------------
NET SALES..................................................................... $ 391,416 $ 414,187
COST OF SALES................................................................. 303,969 320,743
------------ ------------
Gross profit................................................................ 87,447 93,444
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES.................................. 85,354 87,736
------------ ------------
Income from operations...................................................... 2,093 5,708
INTEREST EXPENSE.............................................................. 3,566 3,539
OTHER INCOME, NET............................................................. 82 77
------------ ------------
(LOSS) INCOME BEFORE INCOME TAXES............................................. (1,391) 2,246
PROVISION FOR INCOME TAXES.................................................... 43 1,118
------------ ------------
NET (LOSS) INCOME............................................................. $ (1,434) $ 1,128
============ ============
BASIC AND DILUTED (LOSS) EARNINGS PER SHARE................................... $ (.17) $ .13
============ ============
WEIGHTED AVERAGE SHARES OUTSTANDING (Basic and Diluted)....................... 8,621,818 8,703,548
============ ============
The accompanying notes are an integral part of these consolidated financial
statements.
5
INDUSTRIAL DISTRIBUTION GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
NINE MONTHS ENDED SEPTEMBER 30,
2000
(restated -
2001 see note 1)
--------- ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income..................................................... $ (1,434) $ 1,128
---------- ---------
Adjustments to reconcile net (loss) income to net cash provided
by operating activities:
Depreciation and amortization...................................... 3,641 3,830
Deferred taxes..................................................... 1,294 0
Gain on disposal of equipment...................................... (43) (133)
Changes in operating assets and liabilities:
Accounts receivable, net......................................... (63) (6,605)
Inventories, net................................................. 3,692 (2,557)
Prepaid assets and other assets.................................. (2,471) (1,505)
Accounts payable................................................. 1,952 5,211
Accrued compensation............................................. (367) 351
Other accrued liabilities........................................ (663) 300
--------- ---------
Total adjustments.............................................. 6,972 (1,108)
--------- ---------
Net cash provided by operating activities...................... 5,538 20
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment, net........................... (694) (4,406)
Proceeds from the sale of property and equipment................... 283 9,685
Deposits........................................................... 54 (115)
Payment to dissenting shareholder.................................. 0 (10,750)
Cash surrender value of life insurance............................. 0 437
Proceeds from sale of investments.................................. 0 88
--------- ---------
Net cash used in investing activities..................... (357) (5,061)
---------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock............................. 282 355
Net (repayments) borrowings on credit facilities and other lines... (2,429) (2,000)
Long-term debt repayments.......................................... (547) (320)
Change in book overdraft........................................... (2,329) (1,056)
Purchase and retirement of treasury stock.......................... 0 (1,105)
Proceeds from management liability insurance, net of fees.......... 0 10,750
Premium payments on management liability insurance................. (2,807) (1,858)
Deferred loan costs and other...................................... (65) (53)
--------- ---------
Net cash (used in) provided by financing activities.......... (7,895) 4,713
NET CHANGE IN CASH AND CASH EQUIVALENTS............................... (2,714) (328)
CASH AND CASH EQUIVALENTS, beginning of period........................ $ 3,690 $ 851
========= =========
CASH AND CASH EQUIVALENTS, end of period.............................. $ 976 $ 523
========= =========
Supplemental Cash Flow Information:
Cash Paid for Interest............................................. $ 2,788 $ 3,206
========= =========
Cash Paid for Income Taxes......................................... $ 642 $ 1,273
========= =========
The accompanying notes are an integral part of these consolidated financial
statements.
6
INDUSTRIAL DISTRIBUTION GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2001
Industrial Distribution Group, Inc. ("IDG" or the "Company"), a Delaware
corporation, was formed on February 12, 1997 to create a nationwide supplier of
cost-effective, flexible procurement solutions for manufacturers and other users
of maintenance, repair, operating, and production (MROP) products. The Company
conducts business in 37 states and two foreign countries, providing product
expertise in the procurement and application of MROP products to a wide range of
industries.
1. BASIS OF PRESENTATION
The accompanying unaudited interim consolidated financial statements are
prepared pursuant to the Securities and Exchange Commission's rules and
regulations for reporting on Form 10-Q. Accordingly, certain information and
footnotes required by accounting principles generally accepted in the United
States for complete financial statements are not included herein. The Company
believes all adjustments necessary for a fair presentation of these interim
statements have been included and are of a normal and recurring nature.
Certain reclassifications have been made to prior year amounts to conform to the
current year presentation.
The quarterly and year-to-date results for the period ended September 30, 2000
were restated as discussed in note 13 of the Company's financial statements and
notes thereto, included in its Annual Report on Form 10-K, for the fiscal year
ended December 31, 2000, Commission File Number 001-13195.
The interim statements should be read in conjunction with the Company's
financial statements and notes thereto, included in its Annual Report on Form
10-K, for the fiscal year ended December 31, 2000.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard ("SFAS") No. 133, Accounting for Derivative
Instruments and Hedging Activities, as amended by SFAS Nos. 137 and 138, which
addresses the accounting for derivative instruments. SFAS No. 133 is effective
for financial statements for the Company's fiscal quarters beginning on January
1, 2001. The Company's adoption of SFAS No. 133 has not had a significant effect
on the Company's financial position or results of operations.
In June 2001, the Financial Accounting Standards Board issued SFAS No. 142,
Goodwill and Other Intangible Assets, effective for fiscal years beginning after
December 15, 2001. Under the new rules, goodwill and intangible assets deemed to
have indefinite lives will no longer be amortized but will be subject to annual
impairment tests in accordance with the Statement. Other intangible assets will
continue to be amortized over their useful lives.
The Company will apply the new rules on accounting for goodwill and other
intangible assets beginning in the first quarter of 2002. During 2002, the
Company will apply the non-amortization provisions and perform the first of the
required impairment tests of goodwill and indefinite lived intangible assets as
of January 1, 2002. The Company has not yet determined what the effect the
statement will have on the earnings and financial position of the Company.
In October 2001, the Financial Accounting Standards Board issued SFAS No. 144,
Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of, effective for fiscal years beginning after December 15, 2001.
The statement provides a single accounting model for long-lived assets to be
disposed of. The Company is still evaluating what effect the new standard will
have on the financial statements.
7
3. CREDIT FACILITY
In December 2000, the Company entered into a $100,000,000 revolving credit
facility with a five financial institution syndicate. The facility expires on
March 31, 2004 and has a first security interest in the assets of the Company's
business units. The agreement provides that the facility may be used for
operations and acquisitions, and provides $5,000,000 for swinglines and
$10,000,000 for letters of credit. Amounts outstanding under the credit facility
bear interest at either the lead bank's corporate rate or LIBOR, as selected by
the Company from time to time, plus applicable margins. This rate was 6.8% at
September 30, 2001.
The amounts outstanding under the current facility at September 30, 2001 and
December 31, 2000 were $47,000,000 and $49,429,000, respectively, which have
been classified as long-term liabilities. Additionally, the Company had
outstanding letters of credit for $2,654,000 at September 30, 2001. The
revolving credit facility contains various covenants pertaining to the
maintenance of certain financial ratios. These covenants include requirements
for interest coverage, net worth, and capital expenditures, among other
restrictions. The covenants also prohibit the payment of cash dividends. The
Company was in compliance with these covenants as of September 30, 2001 and
December 31, 2000.
4. CAPITAL STOCK
During the third quarter of 2001, the Company issued 43,854 shares of its common
stock through its employee stock purchase plan.
Options are to be included in the computation of diluted earnings per share
("EPS") where the options' exercise price is less than the average market price
of the common shares during the period. There was no dilutive effect of the
options outstanding during the three months ended September 30, 2001 and 2000 to
the weighted average common shares outstanding for purposes of calculating
diluted EPS. During the three months ended September 30, 2001 and 2000, options
where the exercise price exceeded the average market price of the common shares
totaled 1,376,978 and 1,299,515, respectively.
5. COMMITMENTS AND CONTINGENCIES
The Company is subject to various claims and legal actions which arise in the
ordinary course of business. The Company believes that the ultimate resolution
of such matters will not have a material adverse effect on the Company's
financial position or results of operations.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion is based upon the historical financial results of the
Company. In this discussion, most percentages and dollar amounts have been
rounded to aid presentation; as a result, all such figures are approximations.
References to such approximations have generally been omitted.
This discussion may contain certain forward-looking statements concerning the
Company's operations, performance, and financial condition, including, in
particular, the likelihood of the Company's success in developing and expanding
its business. These statements are based upon a number of assumptions and
estimates that are inherently subject to significant uncertainties and
contingencies, many of which are beyond the control of the Company. Actual
results may differ materially from those expressed or implied by such
forward-looking statements. Factors that could cause actual results to differ
include, but are not limited to, the successful integration and profitable
management of acquired businesses, improvement of operating efficiencies, the
availability of working capital, the Company's ability to grow internally
through expansion of services and customer bases, the Company's ability to
reduce overhead, the continuation of key supplier relationships, the Company's
ability to compete successfully in the highly competitive and diverse MROP
market, the Company's ability to maintain key personnel, the availability of key
personnel for employment by the Company, and other factors discussed in more
detail under "Item 1-Business" of the Company's Annual Report on Form 10-K for
fiscal 2000.
8
RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000
The following table sets forth certain historical financial data for IDG and
shows such data as a percentage of net sales for the periods indicated (dollars
in thousands):
THREE MONTHS ENDED SEPTEMBER 30
--------------------------------------------------------------
2001 2000
------------------------------ ------------------------------
Net Sales $ 123,883 100.0% $ 133,723 100.0%
Cost of Sales 96,420 77.8 103,492 77.4
---------- ----- ---------- -----
Gross Profit 27,463 22.2 30,231 22.6
Selling, General and Administrative 26,225 21.2 28,677 21.4
---------- ----- ---------- -----
Operating Income $ 1,238 1.0% $ 1,554 1.2%
========== ===== ========== =====
Net sales decreased $9.8 million or 7.4% from $133.7 million for the three
months ended September 30, 2000 to $123.9 million for the three months ended
September 30, 2001. The sales decrease is due to production curtailments,
layoffs, and plant closures at customer sites across the Company's broad
customer base that are occurring as customers adapt to the continuing softness
in the economy. The Company believes sales lost due to the events of September
11, 2001 were approximately $0.7 million.
Cost of sales decreased $7.1 million or 6.8% from $103.5 million for the three
months ended September 30, 2000 to $96.4 million for the three months ended
September 30, 2001. As a percentage of net sales, cost of sales increased from
77.4% in 2000 to 77.8% in 2001. The increase in cost of sales as a percentage of
sales is attributable to a change in total company sales mix, competitive
pricing pressures, and lower vendor rebates due to lower purchasing volume.
Selling, general, and administrative expenses decreased $2.5 million or 8.6%
from $28.7 million for the three months ended September 30, 2000 to $26.2
million for the three months ended September 30, 2001. As a percentage of net
sales, selling, general and administrative expenses decreased from 21.4% to
21.2%. The decrease in selling, general, and administrative expense is due to
the impact of the Company's ongoing headcount and cost reduction initiatives
undertaken during the first three quarters of 2001. Personnel costs decreased
for the three months ended September 30, 2001 by $2.1 million from the prior
year, after severance charges of $.3 million. The $2.1 million decrease was
driven by the Company reducing total headcount by 7.8% from September 30, 2000
to September 30, 2001, and furloughs in September, which accounted for $.5
million of the $2.1 million reduction. The remaining costs savings were
partially offset by a $.5 million increase in bad debt expense over the prior
period.
Operating income decreased $0.3 million or 20.3% from $1.6 million for the three
months ended September 30, 2000 to $1.2 million for the three months ended
September 30, 2001. As a percentage of net sales, operating income decreased
from 1.2% in 2000 to 1.0% in 2001.
NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000
The following table sets forth certain historical financial data for IDG and
shows such data as a percentage of net sales for the periods indicated (dollars
in thousands):
NINE MONTHS ENDED SEPTEMBER 30
----------------------------------------------------------
2001 2000
-------------------------- ------------------------------
Net Sales $ 391,416 100.0% $ 414,187 100.0%
Cost of Sales 303,969 77.7 320,743 77.4
---------- ----- ---------- -----
Gross Profit 87,447 22.3 93,444 22.6
Selling, General and Administrative 85,354 21.8 87,736 21.2
---------- ----- ---------- -----
Operating Income $ 2,093 0.5% $ 5,708 1.4%
========== ===== ========== =====
Net sales decreased $22.8 million or 5.5% from $414.2 million for the nine
months ended September 30, 2000 to $391.4 million for the nine months ended
September 30, 2001. The sales decrease is due to production curtailments,
layoffs, and plant closures at customer sites across the Company's broad
customer base that are occurring as customers adapt to the continuing softness
in the economy.
9
Cost of sales decreased $16.8 million or 5.2% from $320.7 million for the nine
months ended September 30, 2000 to $304.0 million for the nine months ended
September 30, 2001. As a percentage of net sales, cost of sales increased from
77.4% in 2000 to 77.7% in 2001. The increase in cost of sales as a percentage of
sales is attributable to a change in total company sales mix, competitive
pricing pressures, and lower vendor rebates due to lower purchasing volume.
Selling, general, and administrative expenses decreased $2.4 million or 2.7%
from $87.7 million for the nine months ended September 30, 2000 to $85.4 million
for the nine months ended September 30, 2001. As a percentage of net sales,
selling, general and administrative expenses increased from 21.2% to 21.8%. As
of September 30, 2001, the Company's total headcount was reduced by 7.8% as
compared to September 30, 2000, resulting in net savings of $2.0 million, after
incurring $.8 million of severance expense, during the nine months ended
September 30, 2001. Excluding these severance costs, selling, general, and
administrative expenses were $84.6 million or 21.6% of sales for the nine months
ended September 30, 2001. The remainder of the selling, general, and
administrative expense reduction is the result of cost reduction initiatives in
the areas of travel and entertainment, telephone, and other miscellaneous
expenses.
Operating income decreased $3.6 million or 63.3% from $5.7 million for the nine
months ended September 30, 2000 to $2.1 million for the nine months ended
September 30, 2001. As a percentage of net sales, operating income decreased
from 1.4% in 2000 to 0.5% in 2001.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 2001, the Company had $1.0 million in cash, an additional $88.8
million of working capital, and availability of $50.3 million under the master
agreement of its $100 million revolving credit facility. Based upon the
Company's current asset base and outstanding borrowings under the credit
facility, the Company has an additional borrowing capacity of $17.2 million. The
Company's liquidity position continues to be sufficient to enable the Company to
fund its current operations and to fund anticipated internal expansion.
Net cash provided by operating activities for the nine months ended September
30, 2001 and 2000 was $5.5 million and $0.0 million, respectively. The change
was principally due to improved management of accounts receivable and inventory.
Net cash used in investing activities for the nine months ended September 30,
2001 and 2000 was $0.4 million and $5.1 million, respectively. In 2001, the
Company reduced property and equipment expenditures by $3.7 million as compared
to 2000. In June 2000, the Company sold one of its buildings in a transaction
accounted for as a sale-leaseback. Proceeds from the sale are included in
investing activities for the nine months ended September 30, 2000. Also, in 2000
the Company made a $10.8 million payment to a dissenting shareholder as
disclosed in the Company's Annual Report (Note 10 to the Consolidated Financial
Statements) on Form 10-K for the year ended December 31, 2000.
Net cash (used in) provided by financing activities for the nine months ended
September 30, 2001 and 2000 was ($7.9 million) and $4.7 million, respectively.
In 2000, the Company arranged through one of its insurance carriers to purchase
management liability insurance to cover the $10.8 million payment made to the
dissenting shareholder. Proceeds received from this policy, net of fees, were
$10.8 million in 2000. Total premiums payments made on the management liability
insurance policy were $2.8 million and $1.9 million in 2001 and 2000,
respectively.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There has been no significant change in the disclosure concerning this item made
in the Company's Annual Report on Form 10-K for the year ended December 31,
2000.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is subject to various claims and legal actions, which arise in the
ordinary course of business. The Company believes that the ultimate resolution
of such matters will not have a material adverse effect on the Company's
financial position or results of operations. There has been no significant
change in the disclosure concerning this item made in the Company's Annual
Report on Form 10-K for the year ended December 31, 2000.
10
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
a) Exhibits filed as part of this Form 10-Q:
Exhibit 10.1 - First Amendment to Credit Agreement dated August 1, 2001
b) Reports on Form 8-K filed during the quarter to which this Form 10-Q
relates:
Form 8-K filed July 27, 2001 Reporting under Item 4 a change in
registrant's certifying accountant
Form 8-K filed August 15, 2001 Reporting under Item 5 the appointment of
the registrant's new President and CEO
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
INDUSTRIAL DISTRIBUTION GROUP, INC.
(Registrant)
Date: November 13, 2001 By: /s/ Jack P. Healey
---------------------------------------
Jack P. Healey Senior Vice President
and Chief Financial Officer (Duly
Authorized Officer and Principal
Accounting and Financial Officer)
11