**UNITED STATESSECURITIES AND EXCHANGE COMMISSION**

**WASHINGTON, D.C.20549**

 

**FORM 10-Q**

 

**(MARK ONE)**

 

**ý**** QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIESEXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MAY 1, 2004.**

 

**OR**

 

**o**** TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OFTHE SECURITIESEXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM**

 

**                              TO                              **

 

**COMMISSION FILENUMBER 0-50659.**

 

**GANDER MOUNTAIN COMPANY**

(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

 
| **MINNESOTA**                                                                       |   | **41-1990949**                        |
|-------------------------------------------------------------------------------------|--------|---------------------------------------|
| (State or Other Jurisdiction of  Incorporation or Organization)                     |   | (I.R.S. Employer Identification  No.) |
|                                                                                |   |                                  |
| **4567 AMERICAN BOULEVARD WEST****MINNEAPOLIS,  MINNESOTA**                         |   | **55437**                             |
| (Address of Principal Executive  Offices)                                           |   | (Zip Code)                            |
|                                                                                |
| **(952) 830-8700**                                                                  |
| (Registrant’s Telephone Number,  Including Area Code)                          |
|                                                                                |
| **N/A**                                                                             |
| (Former Name, Former Address  and Former Fiscal Year, If Changed Since Last Report) |

 

Indicate bycheck mark whether the registrant (1) has filed all reports required to befiled by Section 13 or 15(d) of the Securities Exchange Act of 1934 during thepreceding 12 months (or for such shorter period that the registrant wasrequired to file such reports), and (2) has been subject to such filingrequirements for the past 90 days. Yes oNo ý

 

Indicate bycheck mark whether the registrant is an accelerated filer (as defined in Rule12b-2 of the Securities Exchange Act of 1934) Yes oNo ý

 

Indicate thenumber of shares outstanding of each of the issuer’s classes of common stock,as of the latest practicable date. Common Stock, $.01 par value – 14,221,925 shares as of June 9, 2004.

 

 

----

 

**GANDER MOUNTAINCOMPANY**

 

**Form 10-QIndex**

 
| PART I. FINANCIAL INFORMATION |     |
|-------------------------------|----------|
|                          | Item 1.  | Financial Statements |   |
|                          |     |   | Condensed Statements of Operations |   |
|                          |     |   | Condensed Balance Sheets |   |
|                          |     |   | Condensed Statements of Cash Flows |   |
|                          |     |   | Notes to Unaudited Condensed Financial  Statements |   |
|                          | Item 2.  | Management’s Discussion and Analysis of  Financial Condition and Results of Operations |   |
|                          | Item 3.  | Quantitative and Qualitative Disclosures  About Market Risks |   |
|                          | Item 4.  | Controls and Procedures |   |
| PART II. OTHER INFORMATION    |     |
|                          | Item 1.  | Legal Proceedings |   |
|                          | Item  2. | Changes  in Securities, Use of Proceeds and Issuer Purchases of Equity Securities |   |
|                          | Item  3. | Defaults  Upon Senior Securities |   |
|                          | Item 4.  | Submission of Matters to a Vote of Security Holders |   |
|                          | Item 5.  | Other Information |   |
|                          | Item  6. | Exhibits  and Reports on Form 8-K |   |
| SIGNATURES                    |     |
| EXHIBITS                      |     |

 

2

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**PART I. FINANCIAL INFORMATION**

 

**ITEM 1. FINANCIAL STATEMENTS**

 

**GanderMountain Company**

**CondensedStatements of Operations****– Unaudited**

**(Inthousands, except per share data)**

 

 
|                                                                |   | **13 Weeks  Ended** |    |
|---------------------------------------------------------------------|--------|---------------------|---------|
|                                                                |   | **May 1,  2004**    |    | **May 3,  2003** |   |
| Sales                                                               |   | $                   | 98,719  |   | $ | 69,427 |   |
| Cost of goods sold                                                  |   | 79,452              |    | 57,304 |   |
| Gross profit                                                        |   | 19,267              |    | 12,123 |   |
|                                                                |   |                |    |   |   |
| Operating expenses:                                                 |   |                |    |   |   |
| Store operating expenses                                            |   | 23,632              |    | 16,160 |   |
| General and administrative expenses                                 |   | 6,498               |    | 5,074 |   |
| Pre-opening expenses                                                |   | 1,230               |    | 1,320 |   |
| Loss from operations                                                |   | (12,093             | )       | (10,431 | ) |
| Interest expense, net                                               |   | 1,503               |    | 816 |   |
| Loss before income taxes                                            |   | (13,596             | )       | (11,247 | ) |
| Income tax provision (benefit)                                      |   | —              |    | — |   |
| Net loss                                                            |   | (13,596             | )       | (11,247 | ) |
|                                                                |   |                |    |   |   |
| Less preferred stock dividends                                      |   | 4,305               |    | 4,131 |   |
|                                                                |   |                |    |   |   |
| Loss applicable to common shareholders                              |   | $                   | (17,901 | ) | $ | (15,378 | ) |
|                                                                |   |                |    |   |   |
| Basic and diluted loss applicable to common  shareholders per share |   | $                   | (10.52  | ) | $ | (15.80 | ) |
|                                                                |   |                |    |   |   |
| Weighted average common shares outstanding                          |   | 1,701               |    | 973 |   |

 

 

 

 

See accompanying notes tounaudited condensed financial statements

 

3

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**GanderMountain Company**

**Condensed BalanceSheets**

**(Inthousands)**

 
|                                            |   | **May 1,  2004** |    | **January 31,**

**2004 (1)** |   |
|-------------------------------------------------|--------|------------------|---------|-------------------------------|--------|
|                                            |   | **(unaudited)**  |    |                          |   |
| **Assets**                                      |   |             |    |                          |   |
| Current assets:                                 |   |             |    |                          |   |
| Cash and cash equivalents                       |   | $                | 1,069   |                          | $      | 970 |   |
| Accounts receivable, net                        |   | 11,989           |    | 6,610                         |   |
| Inventories                                     |   | 226,039          |    | 180,361                       |   |
| Prepaids and other current assets               |   | 5,244            |    | 3,599                         |   |
|                                            |   |             |    |                          |   |
| Total current assets                            |   | 244,341          |    | 191,540                       |   |
|                                            |   |             |    |                          |   |
| Property and equipment, net                     |   | 59,748           |    | 54,421                        |   |
| Other assets                                    |   | 4,203            |    | 4,307                         |   |
|                                            |   |             |    |                          |   |
| Total assets                                    |   | $                | 308,292 |                          | $      | 250,268 |   |
|                                            |   |             |    |                          |   |
| **Liabilities and shareholders’ equity**   |   |             |    |                          |   |
| Current liabilities:                            |   |             |    |                          |   |
| Borrowings under credit facility                |   | $                | 55,280  |                          | $      | 102,058 |   |
| Accounts payable                                |   | 70,369           |    | 35,957                        |   |
| Accrued and other current liabilities           |   | 26,873           |    | 29,892                        |   |
|                                            |   |             |    |                          |   |
| Total current liabilities                       |   | 152,522          |    | 167,907                       |   |
|                                            |   |             |    |                          |   |
| Long term liabilities                           |   | 3,359            |    | 12,570                        |   |
|                                            |   |             |    |                          |   |
| Shareholders’ equity                       |   | 152,411          |    | 69,791                        |   |
|                                            |   |             |    |                          |   |
| Total liabilities and shareholders’ equity |   | $                | 308,292 |                          | $      | 250,268 |   |

 

 

 

 

----

(1)          Theconsolidated balance sheet as of January 31, 2004 has been condensed from theaudited financial statements.

 

See accompanying notes to unaudited condensed financial statements.

 

4

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**GanderMountain Company**

**CondensedStatements of Cash Flows****– Unaudited**

**(Inthousands)**

 

 
|                                                                         |   | **13 Weeks  Ended** |    |
|------------------------------------------------------------------------------|--------|---------------------|---------|
|                                                                         |   | **May 1,  2004**    |    | **May 3,  2003** |   |
| **Operating activities**                                                     |   |                |    |   |   |
| Net loss                                                                     |   | $                   | (13,596 | ) | $ | (11,247 | ) |
| Adjustments to reconcile net loss to net  cash used in operating activities: |   |                |    |   |   |
| Depreciation and amortization                                                |   | 2,483               |    | 1,813 |   |
| Change in operating assets and liabilities:                                  |   |                |    |   |   |
| Accounts receivable                                                          |   | (5,380              | )       | (1,998 | ) |
| Inventories                                                                  |   | (45,678             | )       | (48,000 | ) |
| Prepaid expenses and other assets                                            |   | (1,680              | )       | (486 | ) |
| Accounts payable and other liabilities                                       |   | 32,023              |    | 21,404 |   |
| Net cash used in operating activities                                        |   | (31,828             | )       | (38,514 | ) |
|                                                                         |   |                |    |   |   |
| **Investing activities**                                                     |   |                |    |   |   |
| Purchase of property and equipment                                           |   | (7,671              | )       | (3,572 | ) |
| Net cash used in investing activities                                        |   | (7,671              | )       | (3,572 | ) |
|                                                                         |   |                |    |   |   |
| **Financing activities**                                                     |   |                |    |   |   |
| Proceeds from sale of common stock, net of  expenses                         |   | 96,216              |    | — |   |
| (Repayments of) proceeds from notes with  affiliates                         |   | (9,839              | )       | 3,224 |   |
| (Repayments of) borrowings under credit  facility, net                       |   | (46,779             | )       | 38,948 |   |
| Net cash provided by financing activities                                    |   | 39,598              |    | 42,172 |   |
|                                                                         |   |                |    |   |   |
| Net increase in cash                                                         |   | 99                  |    | 86 |   |
| Cash, beginning of period                                                    |   | 970                 |    | 591 |   |
|                                                                         |   |                |    |   |   |
| Cash, end of period                                                          |   | $                   | 1,069   |   | $ | 677 |   |

 

 

 

 

See accompanying notes tounaudited condensed financial statements

 

5

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**Gander MountainCompany**

**Notes to UnauditedCondensed Financial Statements**

 

**1. Basis of Presentation**

 

Theaccompanying unaudited condensed financial statements of Gander MountainCompany (“we” or “us”) have been prepared in accordance with the requirementsfor Form 10-Q and do not include all the disclosures normally required inannual financial statements prepared in accordance with accounting principlesgenerally accepted in the United States of America. The interim financialinformation as of May 1, 2004 and for the 13 weeks ended May 1, 2004 and May 3,2003 is unaudited and has been prepared on the same basis as the audited annualfinancial statements. In the opinion of management, such unaudited informationincludes all adjustments necessary for a fair presentation of the interimfinancial information. All such adjustments are of a normal recurring nature.These interim financials statements and the related notes should be read inconjunction with the annual financial statements and notes included in the finalprospectus relating to our initial public offering, as filed with theSecurities and Exchange Commission, which includes audited financial statementsfor our three fiscal years ended January 31, 2004.

 

Our businessis seasonal in nature and interim results may not be indicative of results fora full year. Historically, we have realized more of our sales in the latterhalf of our fiscal year, which includes hunting and holiday seasons. Ourbusiness is also impacted by the timing of new store openings. Both seasonalityand new store openings impact the analysis of the results of operations andfinancial condition for comparable periods.

 

**2. Initial Public Offering and Capital Stock**

 

On April 26,2004 we completed our initial public offering of 6,583,750 shares of commonstock, including the underwriters’ over-allotment, resulting in proceeds to usof $96.2 million, net of transaction costs of $9.1 million.  We used $9.8 million of the net proceeds torepay all of our debt to Holiday Companies and the remaining $86.4 million toreduce outstanding indebtedness under our credit facility with Fleet RetailFinance.

 

Uponcompletion of our initial public offering and the filing of our Amended andRestated Articles of Incorporation in connection therewith, the authorizedcapital stock of our company consists of 100,000,000 shares of common stock,par value $.01 per share, and 5,000,000 shares of preferred stock, par value$.01 per share.  Our previouslyoutstanding Class A, B and C convertible preferred stock was converted into6,664,927 shares of common stock and our outstanding Class A and B common stockwas recapitalized into 973,248 shares of common stock.  As of May 1, 2004, there were 14,221,925shares of common stock outstanding.

 

**3. Stock-Based Compensation**

 

We continue toapply Accounting Principles Board (APB) No. 25, *Accounting for Stock Issued toEmployees*, and related interpretations in accounting for stock-basedcompensation plans.  Accordingly,compensation expense has not been recognized for employee stock options as theexercise price for options granted is greater than or equal to our stock priceon the date of grant.

 

In February2004, we granted options to purchase 109,728 shares of common stock to certainofficers with an exercise price of $16.00 per share, the price to the public ofour shares in our initial public offering. These options will vest in three equal increments on July 31, 2004 andthe two subsequent anniversaries thereafter. These options are exercisable for a period of nine years from the dateof grant.

 

In February2004, we adopted the Gander Mountain Company 2004 Omnibus Stock Plan whichauthorizes the granting of stock based awards up to 2,144,000 shares of commonstock. This plan was approved by shareholders in March 2004.  Under this plan, awards may be made toemployees, directors, and consultants. The types of awards that may be granted under the plan includerestricted and unrestricted stock, incentive and nonstatutory stock options,stock appreciation rights and other stock awards.

 

Concurrentwith the pricing of our initial public offering, we granted options to purchase841,750 shares of common stock, with an exercise price of $16.00 per share, toour employees under the 2004 Omnibus Stock Plan.  These options will vest in equal increments over three years fromdate of issuance and are exercisable for a period of ten years from the date ofgrant.

 

6

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The tablebelow illustrates the effect on net loss and net loss per share applicable tocommon shareholders as if we had applied the fair value recognition provisionsof Statement of Financial Accounting Standard (SFAS) No. 123, *Accountingfor Stock-Based Compensation*, to stock based employee compensation(in thousands except per share data):

 
|                                                                                                  |   | **13 Weeks  Ended** |    |
|-------------------------------------------------------------------------------------------------------|--------|---------------------|---------|
|                                                                                                  |   | **May 1,  2004**    |    | **May 3,  2003** |   |
|                                                                                                  |   |                |    |   |   |
| Net loss applicable to common shareholders,  as reported                                              |   | $                   | (17,901 | ) | $ | (15,378 | ) |
| Add:   Stock based employee compensation expense included  in reported net loss                  |   | —              |    | — |   |
|                                                                                                  |   |                |    |   |   |
| Deduct: Stock based employee compensation  expense determined under the fair value method, net of tax |   | (191                | )       | (99 | ) |
|                                                                                                  |   |                |    |   |   |
| Pro forma net loss applicable to common  shareholders                                                 |   | $                   | (18,092 | ) | $ | (15,477 | ) |
|                                                                                                  |   |                |    |   |   |
| Net loss per share                                                                                    |   |                |    |   |   |
| Basic and diluted - as reported                                                                       |   | $                   | (10.52  | ) | $ | (15.80 | ) |
|                                                                                                  |   |                |    |   |   |
| Basic and diluted – pro forma                                                                    |   | $                   | (10.64  | ) | $ | (15.91 | ) |

 

The weighted average fair valueof options granted the quarter ended May 1, 2004 was $7.61 per option share.There were no options granted during the quarter ended May 3, 2003. The fairvalue of each grant is estimated on the date of grant using the Black-Scholesoption pricing model with the following assumptions:

 
|                            |   | **13 Weeks  Ended** |   |
|---------------------------------|--------|---------------------|--------|
|                            |   | **May 1,  2004**    |   | **May 3,  2003** |   |
|                            |   |                |   |   |   |
| Risk-free interest rate         |   | 3.67                | %      | NA |   |
| Expected dividend yield         |   | 0.00                | %      | NA |   |
| Expected stock price volatility |   | 50.00               | %      | NA |   |
| Expected life of stock options  |   | 5 years             |   | NA |   |

 

**4. Earnings Per Share**

 

Basic anddiluted loss applicable to common shareholders per share is based upon theweighted average number of shares outstanding. All potentially dilutive stock options have been excluded from thecalculation of weighted average shares outstanding because their inclusionwould have an anti-dilutive effect on loss per share.  Options to purchase 2,013,315 and 1,061,837 shares of commonstock were outstanding at the end of the fiscal quarters ended May 1, 2004 andMay 3, 2003, respectively.

 

Theaccompanying condensed unaudited financial statements report loss applicable tocommon shareholders and loss applicable to common shareholders per share inaccordance with accounting principles generally accepted in the United Statesof America.  We also disclose thisinformation on a pro forma basis below. We closed the initial public offering of our common stock on April 26,2004.  The pro forma amounts assume thatthe conversion of the convertible preferred shares to common shares, our32-for-1 stock split and our initial public offering took place at thebeginning of the 13 week periods ended May 1, 2004 and May 3, 2003. The proforma amounts exclude the preferred stock dividends that are assumedextinguished and the interest expense on the portions of our debt to HolidayCompanies and our credit facility indebtedness that would have been paid downwith the proceeds from the initial public offering, net of $0 taxes.  We believe the use of pro forma amountsprovides meaningful information due to the significant increase in outstandingshares as a result of our initial public offering and the elimination of ourpreferred stock dividends.

 

7

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|                                                                          |   | **13 Weeks  Ended** |   |
|-------------------------------------------------------------------------------|--------|---------------------|--------|
|                                                                          |   | **May 1,  2004**    |   | **May 3,  2003** |   |
| **Pro Forma Data :**                                                          |   |                |   |   |   |
| Pro forma net loss applicable to common  shareholders                         |   | $(12,654            | )      | $(10,695 | ) |
| Pro forma basic and diluted loss applicable  to common shareholders per share |   | $(0.89              | )      | $(0.89 | ) |
| Pro forma weighted average common shares  outstanding                         |   | 14,222              |   | 12,081 |   |
|                                                                          |   |                |   |   |   |
| **Reconciliation of Pro Forma Data to GAAP:**                                 |   |                |   |   |   |
| Loss applicable to common shareholders                                        |   | $(17,901            | )      | $(15,378 | ) |
| Preferred stock dividends                                                     |   | 4,305               |   | 4,131 |   |
| Interest expense reduction                                                    |   | 942                 |   | 552 |   |
| Pro forma net loss                                                            |   | $(12,654            | )      | $(10,695 | ) |
|                                                                          |   |                |   |   |   |
| Weighted average common shares outstanding                                    |   | 1,701               |   | 973 |   |
| Conversion of preferred shares to common  shares                              |   | 6,299               |   | 6,665 |   |
| Additional shares issued in our initial  public offering                      |   | 6,222               |   | 4,443 |   |
| Pro forma weighted average common shares  outstanding                         |   | 14,222              |   | 12,081 |   |

 

We continued to reflect the accretion ofcumulative unpaid dividends on our previously outstanding Class A, B and Cconvertible preferred stock in accordance with accounting standards until theclosing of our initial public offering. No such dividends were paid and any unpaid cumulative dividends wereextinguished with the changes in capital structure completed in connection withour initial public offering. Accordingly, no such obligation or reduction tonet income/(loss) will be reflected in our quarterly results of operationsafter May 1, 2004.

 

8

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**ITEM2****.  MANAGEMENT’SDISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS**

 

**Forward Looking Statements**

 

The followingdiscussion may contain forward-looking statements regarding us, our business,prospects and our results of operations that are subject to certain risks anduncertainties posed by many factors and events that could cause our actualbusiness, prospects and results of operations to differ materially from thosethat may be anticipated by such forward-looking statements.  Factors that could cause or contribute tosuch differences include, but are not limited to, those described in the “RiskFactors” section of the final prospectus relating to our initial publicoffering, as filed with the Securities and Exchange Commission.  Readers are cautioned not to place unduereliance on these forward-looking statements, which speak only as of the dateof this report.  We undertake noobligation to revise any forward-looking statements in order to reflect eventsor circumstances that may subsequently arise. Readers are urged to carefully review and consider the variousdisclosures made by us in this report and in our other reports filed with theSecurities and Exchange Commission that advise interested parties of the risksand factors that may affect our business.

 

These interimfinancials statements filed on this Form 10-Q and the discussions containedherein should be read in conjunction with the annual financial statements andnotes included in the final prospectus relating to our initial public offering,as filed with the Securities and Exchange Commission, which includes auditedfinancial statements for our three fiscal years ended January 31, 2004.

 

**Overview**

 

The GanderMountain brand name has a long heritage and strong appeal to outdoor lifestylecustomers given the brand’s 36 year history as a nationwide catalog operationfrom 1960 to 1996, which by 1996 was augmented with 17 retail stores.  In 1996 and 1997 Holiday Companies, which atthe time owned and operated a group of retail sporting goods stores, acquiredthese Gander Mountain retail stores, formed our company and began to build anew outdoor lifestyle business.  We haveexpanded our store base from 26 stores in 1997 to 67 Gander Mountain stores innine states as of May 1, 2004.

 

We have builtour business by offering our customers a broad and deep assortment of national,regional and owned brand hunting, fishing and camping equipment, accessoriesand related technical apparel and footwear at low prices, accompanied byknowledgeable customer service.  Oursuccess will depend on our ability to grow our business by building new storesand by increasing sales in our existing stores.

 

We haveembarked on a series of strategic and operating initiatives aimed at improvingour merchandise offerings, enhancing profitability and accelerating new storeopenings.  We are transforming ourmarket position from a traditional specialty store to a larger format,category-focused store by opening new larger format stores and increasing theselling space within our existing stores. The larger format strategy has allowed us to offer our customers abroader and deeper assortment of merchandise. These improvements, along with our “every day low price” policy on keyequipment and accessories, have driven sales at new stores and had a positiveimpact on comparable store sales in recent quarters.

 

We measureperformance using such key operating statistics as comparable store sales,sales per square foot, gross margin percentage and store operating expenses, witha focus on labor, as a percentage of sales. These results translate into store operating contribution which we useto evaluate overall performance on an individual store basis.  Store operating contribution is calculatedby deducting a store’s operating expenses from its gross margin.  In addition, general and administrativeexpenses are monitored in absolute amount, as well as on a percentage of salesbasis. Pre-opening expenses are analyzed based on the number of store openings,market attributes and store size.

 

We alsomeasure and evaluate investments in our retail locations, including inventoryand property and equipment.  Inventoryperformance is primarily measured by inventory turns, or the number of timesstore inventory turns over in a given period, and amounts of owned inventory atvarious times based on payment terms from our vendors.  The most significant investments in propertyand equipment are made at the time a store is opened by us.

 

Overall, weexpect our retail locations to equal or exceed national retail averages forcomparable store sales changes and, accordingly, we expect our sales per squarefoot to increase gradually over time. However, we cannot assure you that we will be able to equal or exceednational retail averages for comparable store sales or improve our sales persquare foot.

 

9

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We believethat the overall growth of our business will allow us to maintain or increaseour gross margins.  Increasedmerchandise volumes enable us to improve our purchasing leverage and achievegreater support throughout the supply chain. Our gross margins are also influenced by the mix of merchandise in ourtotal sales.  As we continue sales andstore growth, a number of other factors may impact, positively or negatively,our gross margin percentage, including:

 

•                  the introductionof new product categories with varying gross margin percentage characteristics,

 

•                  changes in themerchandise mix at our current locations,

 

•                  differences inmerchandise mix by geographic location,

 

•                  pricecompetition,

 

•                  sourcing ofproducts from locations outside the United States,

 

•                  vendor programs,and

 

•                  supply chainenhancements.

 

The mostsignificant store operating expenses are labor and related employee benefitsand advertising.  We believe thecombination of increased sales volume and improved labor management within ourstores will allow us to better leverage payroll expenses over time.  Our employee benefits include healthinsurance, the cost of which continues to increase faster than the general rateof inflation.  We continually monitorthis cost and review strategies to effectively control increases but we aresubject to the overall trend of increases in health care costs.  Advertising costs are monitored as apercentage of sales.  These costs arelargely variable which allows us to actively manage them to facilitateachieving our sales, gross margin percentage and store operating contributionobjectives.

 

Storeoperating contribution is measured as a percentage of sales.  It gives us an overall measure as to whetheror not individual locations and markets are meeting our financial objectives.

 

General andadministrative expenses are controlled in absolute amounts and monitored as apercentage of sales.  In anticipation ofour accelerated growth plans, we have made significant investments ininfrastructure, including our information systems, distribution capabilitiesand management ranks.  These investmentsincluded an enterprise-wide merchandising and distribution system from Retekand a financial system from Oracle implemented in fiscal 2000.  Our current infrastructure facilitates theopening of stores at a greater rate, which we believe enables us to leverageour expenses.  Accordingly, we expectsuch expenses to decrease as a percentage of sales over time.

 

Pre-openingexpenses will continue to be related to store openings, including relocations.These expenses will fluctuate as we open additional stores.

 

Inventoryturns are based on sales and average inventory for the applicable period.  We recognize that our inventory turns may belower than those of other retailers, which we believe is due to the categoriesof merchandise we carry, including firearms, and the large quantities ofmerchandise we use in our in-store displays. We believe we have the opportunity to enhance our supply chain toimprove our inventory turns. Additionally, in merchandise categories that experience slower inventoryturns, we continue to work with vendors to increase our trade credit terms toreduce our investment in owned inventory. We cannot assure you that we will be able to improve our inventory turnsor inventory investment.

 

Identificationof appropriate new store sites is essential to our growth strategy.  We believe our focus on our larger storesize and our flexible real estate strategy provides us with increasedopportunities to find optimal real estate locations on attractive terms. Weevaluate and invest in new stores based on site specific projected returns oninvestment. During fiscal 2001, fiscal 2002 and fiscal 2003, we openedseventeen, two and ten stores, respectively, including new stores and storerelocations.  In the first quarter offiscal 2004, we opened two stores.

 

**Critical Accounting Policies and Use of Estimates**

 

Our financialstatements are prepared in accordance with generally accepted accountingprinciples.  In connection with thepreparation of the financial statements, we are required to make assumptions,make estimates and apply judgment that affect the reported amounts of assets,liabilities, revenue, expenses and the related disclosures.  We base our assumptions, estimates andjudgments on historical experience, current trends and other factors that webelieve to be relevant at the time the consolidated financial statements areprepared.  On a regular basis, we reviewthe accounting policies, assumptions, estimates and judgments to ensure thatour financial statements are presented fairly and in accordance with generallyaccepted accounting principles.

 

10

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However, because future events and their effects cannot be determinedwith certainty, actual results could differ from our assumptions and estimates,and such differences could be material.

 

Our criticalaccounting policies and use of estimates are discussed in and should be read inconjunction with the annual financial statements and notes included in thefinal prospectus relating to our initial public offering, as filed with theSecurities and Exchange Commission, which includes audited financial statementsfor our three fiscal years ended January 31, 2004.

 

**Results of Operations**

 

The followingtable represents the selected items in the Condensed Statements of Operationsreflected as a percentage of sales: 

 
|                                                            |   | **13 Weeks  Ended** |   |
|-----------------------------------------------------------------|--------|---------------------|--------|
|                                                            |   | **May 1,  2004**    |   | **May 3,  2003** |   |
| Sales                                                           |   | 100.0%              |   | 100.0% |   |
| Cost of goods sold, including occupancy and  distribution costs |   | 80.5%               |   | 82.5% |   |
| Gross profit                                                    |   | 19.5%               |   | 17.5% |   |
|                                                            |   |                |   |   |   |
| Operating expenses:                                             |   |                |   |   |   |
| Store operating expenses                                        |   | 23.9%               |   | 23.3% |   |
| General and administrative expenses                             |   | 6.6%                |   | 7.3% |   |
| Pre-opening expenses                                            |   | 1.2%                |   | 1.9% |   |
| Loss from operations                                            |   | (12.2)%             |   | (15.0)% |   |
| Interest expense, net                                           |   | 1.6%                |   | 1.2% |   |
| Loss before income taxes                                        |   | (13.8)%             |   | (16.2)% |   |
| Income tax provision (benefit)                                  |   | —              |   | — |   |
| Net loss                                                        |   | (13.8)%             |   | (16.2)% |   |

 

Sales consist of sales from comparablestores, new stores and non-comparable stores. A store is included in the comparable store base in its fourteenth fullmonth of operations.  A relocated storereturns to the comparable store base in its fourteenth full month afterrelocation. New store sales include sales from stores we opened during thecurrent period. Non-comparable store sales include sales in the current periodfrom our stores opened during the previous fiscal year before they have beguntheir fourteenth month of operation.

 

Cost of goodssold includes the cost of merchandise, freight, distribution, inventoryshrinkage and store occupancy costs. Store occupancy costs include rent, realestate taxes and common area maintenance charges.

 

Storeoperating expenses include store associate payroll, taxes and fringe benefits,advertising, maintenance, utilities, depreciation, insurance, bank and creditcard charges and other store level expenses.

 

General andadministrative expenses include all expenses associated with operating ourcorporate headquarters.

 

Pre-openingexpenses consist primarily of payroll, recruiting, advertising and other costsincurred prior to a new store opening.

 

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***ThirteenWeeks Ended May 1, 2004 and Thirteen Weeks Ended May 3, 2003***

 

*Sales.*  Sales increased by $29.3 million, or 42.2%,to $98.7 million for the 13 weeks ended May 1, 2004, from $69.4 million for the13 weeks ended May 3, 2003. This increase resulted from a comparable storesales increase of $5.5 million, or 8.7%, and sales of $24.8 million from tenadditional stores opened subsequent to the first quarter of fiscal 2003, offsetby closed and non-comparable store sales. The increase in comparable storesales was attributable to sales increases in our hunting category, particularlyfirearms, both new and used. Our apparel and footwear categories alsocontributed significantly to comparable stores sales.  The new store sales mix for the first quarter of fiscal 2004 wasrelatively consistent with the comparable store sales mix, except for salesfrom new products introduced into new larger format stores.

 

Firearms saleswere enhanced by our co-branded credit card launched in September 2003, whichprovides customers with a 5% discount and a new financing option onfirearms.  The hunting categoryperformance was also positively impacted by a February 2004 advertisingpromotion.  New or expanded productcategories, including ATVs and accessories, paintball and cabin décor, showedstrong results as well. These increases were partially offset by decreases insales mix for the fishing and camping categories.  Fishing season openings occur later this fiscal year as comparedto our last fiscal year and there has been some shift in consumer patternstoward a later and more dispersed purchasing period for fishing equipment andsupplies.  Camping sales trends wereconsistent with current industry trends.

 

*Gross Profit.* Grossprofit increased by $7.1 million, or 58.9%, to $19.3 million in the firstquarter of fiscal 2004 from $12.1 million in the first quarter of fiscal 2003.As a percentage of sales, gross profit increased to 19.5% from 17.5%. Theincrease was primarily due to:

 

•                  a 1.4% increaseas a percentage of sales in distribution and occupancy costs from leveragingcomparable store sales increases and distribution center initiatives thatimproved product handling efficiency,

•                  a 0.6% increaseas a percentage of sales from certain vendor allowances which in prior yearswere reductions in advertising expense because proof of performance inadvertising programs had been required prior to fiscal 2004, and

•                  a 0.4% increaseas a percentage of sales in net revenues from our co-branded credit cardprogram.

 

These improvements werepartially offset by higher sales levels in the relatively lower margin huntingcatergory.

 

*Store Operating Expenses.*  Store operating expenses increased by $7.5million, or 46.2%, to $23.6 million in fiscal 2004 from $16.2 million in fiscal2003. Store operating expenses as a percentage of sales increased to 23.9% inthe first quarter of fiscal 2004 from 23.3% in the first quarter of fiscal2003. Net advertising expense increased 0.4 % reflecting an emphasis onmarketing consistency year round as well as 1.8% due to the change in vendorallowance requirements discussed above. For the first quarter of fiscal 2004,such vendor allowances are reflected as a reduction in cost of sales andinventory versus as a reduction in advertising expense in the first quarter offiscal 2003.  The increase in netadvertising expense was offset by a 1.4% reduction in payroll expenses as apercentage of sales due to improved labor scheduling and comparable store salesincreases.

 

*General and Administrative Expenses.*  General and administrative expensesincreased by $1.4 million, or 28.1%, to $6.5 million in the first quarter offiscal 2004 from $5.1 million in the first quarter of fiscal 2003.  General and administrative expensesdecreased as a percentage of sales to 6.6% in the first quarter of fiscal 2004from 7.3% in the first quarter of fiscal 2003 primarily due to leveragingadministrative and technology infrastructure expenses while increasinginvestments in merchandising and store operations functions.

 

*Pre-opening Expenses.*  Pre-opening expenses were approximatelysimilar in the comparable periods, decreasing by $0.1 million to $1.2 millionin the first quarter of fiscal 2004 from $1.3 million in the first quarter offiscal 2003.  We opened two stores inthe first quarter of each year.

 

*Interest Expense.*  Interest expense increased by $0.7 million,or 84.2%, to $1.5 million in the first quarter of fiscal 2004 from $0.8 millionin the first quarter of fiscal 2003. The increase in interest expense resulted from substantially higheraverage borrowings used to fund our growth. The proceeds from our initial public offering were used to repay debtfive days prior to the end of the quarter. With this reduction in outstanding indebtedness, the level of interestexpense for the remaining quarters of fiscal 2004 is anticipated to be lessthan the first quarter of fiscal 2004, based on current interest rate levels.

 

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*Income Tax Provision (Benefit).*  We have determined the realization of thetax benefit related to our net deferred tax asset is uncertain at this time anda valuation allowance was recorded for the entire balance of our net deferredtax asset.

 

*Preferred Stock Dividend. *We continued toreflect the accretion of cumulative unpaid dividends on our previouslyoutstanding Class A, B and C convertible preferred stock in accordance withaccounting standards until the closing of our initial public offering.  No such dividends were paid and any unpaidcumulative dividends were extinguished with the changes in capital structureassociated with the closing of our initial public offering.  No such obligation or reduction to netincome/(loss) will be reflected in our quarterly results of operations afterMay 1, 2004.

 

**Liquidity and Capital Resources**

 

Our primarycapital requirements are for inventory, capital improvements, pre-openingexpenses to support our new store growth plans, and, to the extent of thehighly seasonal nature of our business, operating losses.  Until the completion of our initial publicoffering, our main sources of liquidity were equity investments by, andadvances from, Holiday Companies and its affiliated entities, and borrowingsunder our credit facility.

 

On April 26,2004, we closed the initial public offering of our common stock, selling6,583,750 shares of common stock, including the underwriters’ over-allotment,at a price of $16.00 per share, resulting in net proceeds to us of $96.2million.  Transaction costs were $9.1million and have been reflected as a reduction of paid-in-capital.  The proceeds were used to eliminate ouroutstanding note payable to Holiday Companies in the amount of $9.8 million andreduce $86.4 million of outstanding indebtedness on our credit facility withFleet Retail Finance.  As of May 1,2004, the availability on our credit facility was $87.1 million.

 

*Operating Activities. *Net cash used inoperating activities was $31.8 million in the first quarter of fiscal 2004,compared to $38.5 million of net cash used in operating activities in the samequarter of fiscal 2003.  The decrease innet cash used in operating activities in the first quarter of fiscal 2004compared to the first quarter of fiscal 2003 reflects a $10.6 million increasein accounts payable levels as a result of improved payment terms as well as thetiming of vendor payments. The change in accounts payable is offset by theincrease in cash used in operations of $3.4 million related to increasedaccounts receivables, resulting primarily from an increase of $1.3 million duefrom landlords for agreed upon reimbursements for tenant improvements inconnection with the development of new stores and the co-branded credit cardprogram initiated in September 2003.

 

*Investing Activities*.  Net cash used in investing activities was$7.7 million in the first quarter of fiscal 2004 and $3.5 million in thecomparable prior year period.  Net cashused in investing activities consists of purchases of property and equipment.  We use cash primarily for tenantimprovements and equipment to open new and relocated stores and to remodel andupgrade existing stores.  There were twonew stores opened in the first quarter of fiscal 2004, adding approximately204,000 additional square feet compared to two new stores in the first quarterof fiscal 2003, with approximately 141,000 square feet being added. Capitalexpenditures in the first quarter of fiscal 2004 also included investments infive stores under development. The first quarter of fiscal 2003 included threestores under development.

 

*Financing Activities*.* *Net cash provided by financingactivities was $39.6 million in the first quarter of fiscal 2004, as comparedto $42.1 million in the first quarter of fiscal 2003.  During the first quarter of fiscal 2004, we received net proceedsfrom our initial public offering of $96.2 million, reduced debt by $96.2million in total, and borrowed $39.6 million under our credit facility.  We borrowed $38.9 million under our creditfacility during the first quarter of fiscal 2003. The borrowings during theseperiods were primarily related to financing the increased inventory levels,property and equipment purchases for store opening, and to the extent of thehighly seasonal nature of our business, operating losses.

 

To meet ourliquidity and capital needs, we entered into a credit facility with FleetRetail Finance in fiscal 2001.  Thiscredit facility currently provides for revolving loans in an aggregate amountof up to $175.0 million including up to $35.0 million in the form of letters ofcredit.  The facility can be increasedto $200.0 million if we are not in default under the agreement.  The actual availability under our creditfacility is limited to the lesser of, on average, 65% of our eligible inventoryor 85% of our inventory’s liquidation value, in each case net of specifiedreserves and less any letters of credit outstanding.  Outstanding borrowings under the credit facility as of May 1,2004 were $55.3 million.  Our totalremaining borrowing capacity under the credit facility, after subtractingletters of credit, as of May 1, 2004 was $87.1 million.  Interest on the outstanding indebtednessunder the credit facility currently accrues at the lender’s prime commerciallending rate plus 0% to 1% depending on our earnings before interest, taxes, depreciationand amortization (EBITDA), as defined in the credit agreement, or, if we elect,at the one, two, three or six month LIBOR plus 1.75% to 2.5% depending on suchEBITDA.

 

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Our obligations under the credit facility are secured by interests insubstantially all of our assets.  Thecredit facility expires June 30, 2007. As of May 1, 2004, we were in compliance with all covenants under ourcredit facility.

 

Our futurecapital requirements will primarily depend on the number of new stores we openand the timing of those openings within a given fiscal year.  These requirements will include costsdirectly related to opening new stores and may also include costs necessary toensure that our infrastructure, including distribution capabilities, is able tosupport a larger store base. We have opened two stores, and plan to open atleast 13 additional stores, in fiscal 2004, including at least one relocatedstore. In the final three quarters of fiscal 2004, we expect our capitalexpenditures to be approximately $22 million to $27 million, substantially allof which will relate to planned store openings, store relocations and storeremodels in fiscal 2004.  Additional needsfor capital include funding seasonal inventory levels and, potentially,seasonal losses from operations.  Weintend to satisfy our capital requirements over the next twelve months withcash flows from operations and funds available under our credit facility.

 

**Contractual Obligations and Other Commitments**

 

Our materialoff-balance sheet arrangements are operating lease obligations and letters ofcredit.  We excluded these items fromthe balance sheet in accordance with generally accepted accounting principles.  As of May 1, 2004 and January 31, 2004, theminimum lease obligations due within one year were $28.1 million and $25.7million, respectively.  Issued andoutstanding letters of credit amounted to $2.2 million at May 1, 2004 and arerelated to the importing of merchandise.

 

**Seasonality**

 

Our businessis seasonal in nature and interim results may not be indicative of results fora full year.  Our highest sales activitynormally occurs during the third and fourth quarters of our fiscal year, whichare primarily associated with the fall hunting seasons and the holidayseason.  The first quarters of ourfiscal years have averaged 15% of our annual sales, including new store sales,over the past two years, however, this factor can not be used as an indicatorof future results.  Our customers’ demandfor our products and therefore our sales, can be significantly impacted byunseasonable weather conditions that affect outdoor activities and the demandfor related apparel and equipment.  Thisseasonality also impacts our inventory levels, which tend to rise beginningapproximately in April, reach a peak in November, and decline to lower levelsafter the December holiday season.

 

In the past,our pre-opening expenses have varied significantly from quarter to quarterprimarily due to the timing of store openings. We typically incur most pre-opening expenses for a new store up to sixmonths preceding, and the month of, its opening.  In addition, our labor and operating costs for a newly openedstore can be greater during the first one to two months of operation than whatcan be expected after that time, both in aggregate dollars and as a percentageof sales.  Accordingly, the volume andtiming of new store openings in any quarter has had and is expected to continueto have a significant impact on quarterly pre-opening costs and store labor andoperating expenses.  Due to thesefactors, results for any particular quarter may not be indicative of results tobe expected for any other quarter or for a full fiscal year.

 

**ITEM3****.  QUANTITATIVEAND QUALITATIVE DISCLOSURES ABOUT MARKET RISK**

 

We are exposedto market risk from changes in interest rates on borrowings under our creditfacility with Fleet Retail Finance that bears interest at the lower of thelender’s prime commercial lending rate plus 0% to 1% depending on our EBITDA,as defined in the credit agreement, or the adjusted LIBOR rate for one, two,three or six months plus 1.75% to 2.50% depending on such EBITDA. At May 1,2004, we had $55.3 million in outstanding borrowings under our credit facility.If interest rates increased by 100 basis points during our first quarter offiscal 2004, our interest expense would have increased by approximately $0.3million based upon average borrowings under our credit facility during thefirst quarter of fiscal 2004.

 

We have noderivative financial instruments or derivative commodity instruments in ourcash and cash equivalents.

 

We have nointernational stores, however, we import certain items for sale in ourstores.  Substantially all of ourpurchases are denominated in U.S. dollars and are paid under normal tradeterms.

 

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**ITEM4****.  CONTROLS ANDPROCEDURES**

 

As of the endof the period covered by this report, we conducted an evaluation, under thesupervision and with the participation of the principal executive officer andprincipal financial officer, of our disclosure controls and procedures (asdefined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of1934 (the “Exchange Act”)).  Based onthis evaluation, the principal executive officer and principal financialofficer concluded that our disclosure controls and procedures are effective toensure that information required to be disclosed by us in reports that we fileor submit under the Exchange Act is recorded, processed, summarized andreported within the time periods specified in Securities and ExchangeCommission rules and forms.  There wasno change in our internal control over financial reporting identified inconnection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of theExchange Act that occurred during the period covered by this report that hasmaterially affected, or is reasonably likely to materially affect, our internalcontrol over financial reporting.

 

**PARTII. OTHER INFORMATION**

 

**ITEM1.  LEGAL PROCEEDINGS**

 

Not applicable.

 

**ITEM2.  CHANGES****INSECURITIES, USE OF PROCEEDS AND ISSUER PURCHASES OF EQUITY SECURITIES**

 

On April 26,2004, we completed an initial public offering of our common stock pursuant to aregistration statement on Form S-1 (File No. 333-112494) that was declaredeffective by the Securities and Exchange Commission on April 20, 2004.  A total of 6,583,750 shares of common stockwere offered under the final prospectus, all of which were sold at a price pershare of $16.00.  The managingunderwriters of our offering were Banc of America Securities LLC, William Blair& Company, L.L.C. and Piper Jaffray & Co.  The aggregate gross proceeds of the shares offered and sold were$105.3 million.  In connection with theoffering, we paid an aggregate of $7.3 million in underwriting discounts andcommissions to the underwriters.  Inaddition, the following table sets forth the other material expenses incurredin connection with the offering:

 

| SEC registration fee               |   | $       | 13,347    |   |
|------------------------------------|--------|---------|-----------|--------|
| NASD filing fee                    |   | 11,034  |      |
| Nasdaq National Market listing fee |   | 100,000 |      |
| Legal fees and expenses            |   | 555,000 |      |
| Accounting fees and expenses       |   | 538,000 |      |
| Printing and engraving expenses    |   | 268,431 |      |
| Blue sky fees and expenses         |   | 5,000   |      |
| Transfer agent fees and expenses   |   | 5,000   |      |
| Miscellaneous expenses             |   | 253,839 |      |
| Total                              |   | $       | 1,749,651 |   |

 

After deducting the underwriting discountsand commissions and the offering expenses described above, we received netproceeds from our initial public offering of approximately $96.2 million.  Prior to May 1, 2004, $9.8 million of thenet proceeds of the offering were used to repay all of our outstanding debt toHoliday Companies, and the remaining net proceeds were used to repayapproximately $86.4 million of outstanding indebtedness under our creditfacility with Fleet Retail Finance. Holiday Companies is our affiliate and is wholly owned by members of theErickson family, the family whose members either directly or indirectly own themajority of our outstanding capital stock. Members of the Erickson family with significant ownership interests inHoliday Companies include Ronald and Gerald Erickson, who are members of ourboard of directors, and Donovan, Neal and Richard Erickson and Marjorie Pihl,who are former members of our board of directors.

 

**ITEM3.  DEFAULTS****UPON SENIORSECURITIES**

 

Not applicable.

 

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**ITEM4.  SUBMISSION****OF MATTERSTO A VOTE OF SECURITY HOLDERS**

 

EffectiveMarch 12, 2004, our shareholders unanimously approved the following items bywritten action in lieu of a meeting:

 

•                  the ratificationof the election of our directors and the actions the directors took for fiscal2000, fiscal 2001, fiscal 2002 and fiscal 2003;

 

•                  the election ofDonovan Erickson, Gerald Erickson, Neal Erickson, Richard Erickson, RonaldErickson and Marjorie Pihl to our board of directors (Donovan, Neal and RichardErickson and Marjorie Pihl resigned as directors on April 26, 2004);

 

•                  in connectionwith the closing of our initial public offering, an amendment and restatementof our Articles of Incorporation to delete all references to the prior classesof capital stock, authorize 100,000,000 shares of common stock and 5,000,000shares of undesignated preferred stock and provide for certain other matters;

 

•                  in connectionwith the closing of our initial public offering, an amendment and restatementof our Bylaws;

 

•                  the renaming ofour “class A voting common stock” to “common stock”;

 

•                  the ratificationof our 2002 Stock Option Plan;

 

•                  the adoption ofour 2004 Omnibus Stock Plan; and

 

•                  the ratificationof the issuance of options to purchase 948,352 shares of our common stock (on asplit-adjusted basis) to certain of our current and former executive officers.

 

**ITEM5.  OTHER INFORMATION**

 

Not applicable.

 

**ITEM6.  EXHIBITS****AND REPORTSON FORM 8-K**

 

**(a)  *Exhibitsfiled with this report***

 
| **Exhibit No.** |   | **Description**                                                                        |   | **Method of  Filing**          |
|-----------------|--------|----------------------------------------------------------------------------------------|--------|--------------------------------|
| 3.1             |   | Amended and  Restated Articles of Incorporation of the Registrant                      |   | Incorporated  By Reference (1) |
|            |   |                                                                                   |   |                           |
| 3.2             |   | Amended and  Restated Bylaws of the Registrant                                         |   | Incorporated  By Reference (2) |
|            |   |                                                                                   |   |                           |
| 31.1            |   | Rule  13a-14(a)/15d-14(a) Certification by Principal Executive Officer                 |   | Filed  Electronically          |
|            |   |                                                                                   |   |                           |
| 31.2            |   | Rule  13a-14(a)/15d-14(a) Certification by Principal Financial and Accounting  Officer |   | Filed  Electronically          |
|            |   |                                                                                   |   |                           |
| 32              |   | Section 1350  Certifications                                                           |   | Filed  Electronically          |

 

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(1)          Incorporatedby reference to Exhibit 3.3 to Amendment No. 1 to the Registrant’s RegistrationStatement on Form S-1 (Registration No. 333-112494), filed with the Commissionon March 15, 2004.

(2)          Incorporatedby reference to Exhibit 3.4 to Amendment No. 1 to the Registrant’s RegistrationStatement on Form S-1 (Registration No. 333-112494), filed with the Commissionon March 15, 2004.

 

**(b)  *Reports onForm 8-K***

 

No reports onForm 8-K were filed during the fiscal quarter ended May 1, 2004. 

 

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**SIGNATURES**

 

Pursuant tothe requirements of the Securities Exchange Act of 1934, the registrant hasduly caused this report to be signed on its behalf by the undersigned thereuntoduly authorized.

 

 
|                 | GANDER MOUNTAIN COMPANY                                                                                                                       |
|----------------------|-----------------------------------------------------------------------------------------------------------------------------------------------|
|                 |                                                                                                                                          |
|                 |                                                                                                                                          |
| Date: June  10, 2004 | By: /s/ Mark R. Baker                                                                                                                         |
|                 | Mark R. Baker*President  and Chief Executive Officer*  (Principal Executive Officer)                                                     |
|                 |                                                                                                                                          |
|                 |                                                                                                                                          |
|                 | By: /s/ Dennis M. Lindahl                                                                                                                     |
| Date: June  10, 2004 | Dennis M. Lindahl*Executive  Vice President, Chief Financial Officer,  Secretary and Treasurer*  (Principal Financial and Accounting Officer) |

 

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**EXHIBIT INDEX**

 
| **Exhibit No.** |   | **Description**                                                                        |   | **Method of  Filing**          |
|-----------------|--------|----------------------------------------------------------------------------------------|--------|--------------------------------|
| 3.1             |   | Amended and  Restated Articles of Incorporation of the Registrant                      |   | Incorporated  By Reference (1) |
|            |   |                                                                                   |   |                           |
| 3.2             |   | Amended and  Restated Bylaws of the Registrant                                         |   | Incorporated  By Reference (2) |
|            |   |                                                                                   |   |                           |
| 31.1            |   | Rule  13a-14(a)/15d-14(a) Certification by Principal Executive Officer                 |   | Filed  Electronically          |
|            |   |                                                                                   |   |                           |
| 31.2            |   | Rule  13a-14(a)/15d-14(a) Certification by Principal Financial and Accounting  Officer |   | Filed  Electronically          |
|            |   |                                                                                   |   |                           |
| 32              |   | Section 1350  Certifications                                                           |   | Filed  Electronically          |

 

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(1)          Incorporatedby reference to Exhibit 3.3 to Amendment No. 1 to the Registrant’s RegistrationStatement on Form S-1 (Registration No. 333-112494), filed with the Commissionon March 15, 2004.

(2)          Incorporatedby reference to Exhibit 3.4 to Amendment No. 1 to the Registrant’s RegistrationStatement on Form S-1 (Registration No. 333-112494), filed with the Commissionon March 15, 2004.

 

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