APPLIANCE RECYCLING CENTERS OF AMERICA, INC. 7400 Excelsior Blvd. Minneapolis, MN 55426-4517
	TELEPHONE: (952) 930-9000		FACSIMILE: (952) 930-1800

 

January 8, 2008

 

Mr. Michael Moran

Accounting Branch Chief

Securities and Exchange Commission

Mail Stop 3561

Washington, DC  20549

 

Re:		Appliance Recycling Centers of America, Inc.
		Comment Letter dated November 21, 2007
		Form 10-K for Fiscal Year Ended December 30, 2006
		File No. 000-19621

 

Dear Mr. Moran:

 

We have received your comment letter dated November 21, 2007, with respect to the above-referenced filing by Appliance Recycling Centers of America, Inc.

 

As requested, we are providing the following responses and supplemental information.  To facilitate your review of our responses, we have set forth below the full text of each comment, followed by our response thereto.

 

Report of Independent Registered Public Accounting Firm, page 31

 

1.  Please have your independent accounting firm tell us what consideration was given to the fact that you were in violation of your debt covenants at the time they opined on your financial statements on March 16, 2007.  We note the waiver was not obtained from your lender until March 28, 2007 subsequent to the audit report date of March 16, 2007.

 

Response from our accounting firm:  The existence of the covenant violation was considered at the time we opined on the Company’s financial statements but had no impact on the dating of the audit report due to the existing demand feature of the instrument.

 

Report of Independent Registered Public Accounting Firm, page 32

 

2.  Please clarify which audit report provides assurance for each individual period included in Schedule II on page 52.  The McGladrey & Pullen audit report refers to the year ended January 1, 2005 while the Virchow, Krause & Company, LLP does not refer to any periods presented.

 

 

Also, please tell us why the schedule does not include an annual balance as of December 31, 2005.

 

Response:  Virchow, Krause & Company, LLP audited both the 2005 and 2006 fiscal years.  Data from both 2005 and 2006 should have been included in Schedule II on page 52, and will be included in future filings.

 

Consolidated Balance Sheets, page 33

 

3.  Please add a line item to correspond with Note 5.  See Rule 5-02.25 of Regulation S-X.

 

Response:  In future filings, the company will add a line to the balance sheet corresponding to Note 5, “Commitments and Contingencies.”

 

Consolidated Statement of Income, page 34

 

4.  Please separately present cost of revenue to be consistent with revenues.  See Rule 5-03(b)2 of Regulation S-X.  Alternatively, please tell us why it is impracticable to separate, identify or reasonably allocate a significant amount of the costs disclosed as cost of revenues.

 

Response:  Many of the company’s employees and assets are used in both retail and recycling activities.  This makes it impractical for the company to identify costs associated with each activity.  Byproduct revenue, for example, is generated from both retail and recycling activities as the company’s retail stores offer free removal and recycling of the customer’s replaced appliances. The company does not generate separate financial statements reporting on the different activities.

 

Consolidated Statement of Cash Flows, page 36

 

5.  Please revise your disclosure to clarify why the line of credit cash flows are eligible for net reporting.  You disclose this line of credit has a stated maturity date of one year and requires minimum monthly interest payments.  In your response please include your consideration of the net reporting requirement that debt be due on demand or have a stated maturity of three months or less to be reported net.  See paragraph 13 of SFAS No. 95.  Alternatively, please tell us you will present the cash flows on a gross basis in future filings.

 

Response:  As stated in Note 2, the lender may demand payment in full of the entire outstanding balance of the loan at any time, therefore we determined it qualifies for net reporting under FAS 95 paragraph 13, footnote 3.

 

6.  The cash flow statement shows long-term obligation payments of $260,000 yet the balance sheet shows no net change between periods.  Help us understand the reason for these changes between periods and how the changes are reflected in cash flows.  In your response please also explain the net change of $180,000 between the mortgage balances and capital leases shown in Note 3.

 

Response:  The Company reported non-cash financing for new capital leases in the amount of $260,000, which in 2006 coincidentally offset the other debt payments in the same amount.

 

 

Notes to Consolidated Financial Statements, page 37

Note 1. Nature of Business and Significant Accounting Policies, page 37

Revenue Recognition, page 38

Product Warranty, page 38

 

7.  Please tell us why you combine extended warranty agreement sales with retail product sales.  See rule 5-03(b) of Regulation S-X.

 

Response:  Extended warranty sales amounted to less then 1.5% of total retail sales in 2006 and the amount was deemed immaterial and therefore not split out on the income statement.

 

8.  In future filings please disclose the basis for recognizing revenue over the term of the contract.  We refer you to the discussion of 12 month contracts with retained service obligations in the fourth paragraph on page 22.  Please include an example of your revised disclosure.

 

Response:  Here is the proposed disclosure for future filings:  The company recognizes revenue on extended warranties with retained service obligations on a straight-line basis over the period of the warranty in accordance with FASB Technical Bulletin 90-1, “Accounting for Separately Priced Extended Warranty and Product Maintenance Contracts.

 

9.  Please tell us If the third party service provider or the company is the named legal obligor for extended warranty agreements where the service provider is responsible for risk of loss or service costs.  In either scenario, please tell us your basis for revenue recognition for these agreements and the applicable accounting guidance.  Specifically please confirm you recognize the price of the extended warranty agreement, less commission, at inception and the basis for this treatment.

 

Response:  The third party service provider is the named legal obligor for extended warranty agreements where the service provider is legally responsible for risk of loss or service costs.  The company has no obligation under these agreements and the amount the Company earns is fixed per the agreement with the service provider, so we recognize revenue net of cost and commissions immediately per Emerging Issues Task Force No. 99-19, Reporting Revenue Gross as a Principal vs. Net as an Agent.

 

Property and Equipment, page 39

 

10.  Please tell us if retirement obligations exist, and if so how you have accounted for these costs and how you satisfy the disclosure requirements in 22 of SFAS No. 143.

 

Response:  The Company has no contractual asset retirement obligations.

 

Software development costs, page 39

 

11.  Please disclose the total amount of capitalized software developed for internal use included in each balance sheet and identify the line item that includes capitalized software.

 

Response:  The total amount of unamortized capitalized software was $609,000 and $611,000 respectively for the years 2006 and 2005.  These amounts are included in the line item “equipment” under the Property and Equipment section of the balance sheet.  The Company

 

 

plans to present this as a separate line item in with Property and Equipment per the requirements of SFAS 86 paragraph 11a in future filings.

 

Segment Information, page 41

 

12.  We observe the filing contains many disclosures indicating the company has various unrelated business activities and that these activities could be viewed as operating segments which may not satisfy all of the aggregating criteria in paragraph 17 of SFAS No. 131.  Please tell us how management concluded the company has one reportable segment.  In your response please provide us with the financial information available to your chief operating decision maker (CODM) as well as an organizational chart that describes the titles and functions of managers within the company.  In your response please also specifically address the following:

 

·                  the dissimilarities of your operations includes retail appliance outlets, providing recycling , reverse logistics and byproduct activities services;

·                  the regulatory environment that exists for recycling and byproduct activities but not retail stores, and

·                  customer dissimilarities where retail stores serve the general public, recycling activities serves electric utilities, reverse logistics serves appliance manufacturers and retailers and byproduct activities serves waste haulers.

 

Response:  The company is managed as a single operating unit as referenced by the attached organizational chart.  The CEO is the sole chief operating decision maker and he is not furnished with financial statements that separate the assets, revenues, and associated costs by business activity.  Revenues from recycling and by-product activities are generated from both retail and recycling activities through recycling services provided by the company and the free removal and recycling of appliances through our retail stores.  Assets and staff are used in both activities and the Company does not separate the use of these resources by activity.  Financial information provided to our CEO and management does not separate results by activity due to the multi-use nature each location.   Copies of the income statement and balance sheet provided to the CEO and management are attached.

 

13.  Please tell us why you do not present the geographic segment information required by paragraph 38 of SFAS No. 131.  We note you disclose opening ARCA Canada, Inc. in 2006.  To the extent your response states the information is not material to your annual report; please tell us your consideration of materiality with respect to subsequent  interim periodic filings.

 

Response:  The results of operations from ARCA Canada were less than 1% of total revenues and assets for the fiscal year 2006.  The company evaluates the impact of this operation as a percent of total revenues and assets during each interim period to determine if reporting as a separate segment is appropriate.  During the first two quarters of 2007, the results from ARCA Canada remained less than 1% of total revenues.  The third quarter results were less than 8% of total revenues.

 

Note 5. Commitments and Contingencies, page 44

 

14.  We note your recycling centers are registered as hazardous waste generators with the EPA.  Please tell us if there are any environmental costs or obligations associated with

 

 

compliance with environmental laws for this business activity.  Tell us whether you use a third party to dispose of hazardous waste.  Revise your disclosure here and/or MD&A as appropriate.  See item 101 of Regulation S-K.

 

Response:  The Company uses internally developed equipment at each of our centers to recover refrigerants before any units are recycled.  The company uses only licensed hazardous waste companies to transport, recycle or dispose of any hazardous materials we generate. As of the balance sheet date, the company has no environmental remediation liabilities or contingencies.  We have not had any required environmental remediation at any of our locations in the past and based on the safety programs ARCA employs, as well as the use of only licensed companies to handle our hazardous waste, we do not anticipate any liability associated with environmental laws.

 

Note 2. Line of Credit, page 42

 

15.  We note from your disclosure that the payment of dividends is limited.  Please expand your disclosure to state the amount of income or retained earnings restricted and free of restrictions, as applicable.  See Rule 4-08(e) of Regulation S-X.

 

Response:  The agreement with our lender provides that the company may not declare or pay any dividends, or make any distributions to stockholders of any assets of the company.  In future filings, the company will revise its disclosure to indicate that the agreement with our lender prohibits (rather than limits) payments of dividends and distributions to stockholders.

 

Note 4.  Accrued Expenses, page 44.

 

16.  Please explain the facts and circumstances surrounding the accrual for recycling incentive checks.  In addition, we note the amount of the accrual has remained the same for several periods.  Please tell us when you anticipate paying the amounts accrued.

 

Response:  The amount accrued for incentive checks reflects the amount of checks written in connection with our recycling program that have not been cashed. These amounts are cleared as the checks are presented for payment. After a period of time, these amounts will become escheat property and be payable to the state associated with the program.

 

Note 7. Shareholders’ Equity, page 47

 

17.  Please explain the discrepancy of 500 stock options between the note and the statement of shareholders’ equity.  For example, we note 21,500 stock options presented in this note and 21,000 in the statement of equity for 2006.

 

Response:  This discrepancy is due to rounding on the equity statement.  In future filings we will present the actual number of shares throughout our filing, rather than rounding to the nearest thousand as is done with dollar amounts.

 

In connection with these responses, the Company hereby acknowledges that:

 

·                  The company is responsible for the adequacy and accuracy of the disclosure in the filing;

 

 

·                  staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the filing; and

·                  the company may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.

 

Please contact Patrick Winters at 952-930-1782 if you have any questions about these responses.

 

Sincerely,

 

Appliance Recycling Centers of America, Inc.

 

By

 

Controller/Primary Accounting Officer

 

 

Appliance Recycling Centers of America, Inc.

Consolidated Income Statement

For the Month Ending November 24, 2007

		JAN			FEB			MAR			APR			MAY			JUN			JUL			AUG			SEP			OCT			NOV			DEC			TOTAL
SALES
Boxed-New		$	2,754,729		$	2,974,453		$	3,925,281		$	2,723,917		$	2,733,779		$	3,976,075		$	2,774,185		$	2,790,284		$	2,778,128		$	2,115,721		$	1,863,925		$	0		$	31,410,477
Unboxed - Special Buy		1,946,324			2,289,011			3,069,934			2,618,916			2,815,947			3,228,047			2,799,520			2,783,096			3,087,000			2,791,402			4,689,116			0			32,118,313
Wholesale - Fixed		235			48,791			32,550			0			0			0			56,000			2,997			800			0			33,904			0			175,277
Net Appl. Sales		$	4,701,288		$	5,312,255		$	7,027,765		$	5,342,833		$	5,549,726		$	7,204,122		$	5,629,705		$	5,576,377		$	5,865,928		$	4,907,123		$	6,586,945		$	0		$	63,704,067
Wholesale-Unfixed		10,090			3,655			9,160			5,540			7,265			6,810			9,580			5,280			9,725			6,415			9,314			0			82,834
Warranty Income		68,562			86,525			118,414			81,461			80,653			106,007			91,955			47,638			(28,072		)	73,685			122,298			0			849,126
Service & Labor Income		2,454			2,796			2,514			2,805			4,312			4,185			2,577			2,184			3,466			587			1,393			0			29,273
Parts S Accessories Income		29,018			47,890			59,474			42,597			44,008			53,579			44,189			45,911			47,034			40,903			45,750			0			500,353
Delivery Income		53,029			62,830			90,980			64,471			61,186			81,428			82,738			58,945			66,085			58,670			81,039			0			761,401
Net Retail Revenue		$	4,864,441		$	5,515,951		$	7,308,307		$	5,539,707		$	5,747,150		$	7,456,131		$	5,860,744		$	5,736,335		$	5,964,166		$	5,087,383		$	6,846,739		$	0		$	65,927,054
Recycling Revenue		471,510			534,745			887,641			723,041			820,566			1,809,809			1,817,725			2,911,087			4,305,784			4,551,659			3,492,365			0			22,325,932
By-Product Revenue		111,399			101,087			136,649			179,304			121,886			184,374			172,711			217,669			384,115			320,199			359,798			0			2,289,191
TOTAL REVENUE		$	5,447,350		$	6,151,783		$	8,332,597		$	6,442,052		$	6,689,602		$	9,450,314		$	7,851,180		$	8,865,091		$	10,654,065		$	9,959,241		$	10,698,902		$	0		$	90,542,177
COST OF SALES
Boxed-New		2,081,733			2,205,919			2,912,680			2,014,417			2,043,318			2,971,612			2,125,994			2,173,030			2,130,879			1,610,020			1,404,151			0			23,673,753
COGS Percent		75.6		%	74.2		%	74.2		%	74.0		%	74.7		%	74.7		%	76.6		%	77.9		%	76.7		%	76.1		%	75.3		%	0.0		%	75.4		%
Unboxed - Special Buy		1,246,693			1,441,252			1,886,450			1,554,134			1,668,643			1,950,776			1,780,555			1,744,177			1,960,214			1,781,262			3,120,087			0			20,134,243
COGS Percent		64.1		%	63.0		%	61.4		%	59.3		%	59.3		%	60.4		%	63.6		%	62.7		%	63.5		%	63.8		%	66.5		%	0.0		%	62.7		%
Wholesale - Fixed		0			0			0			0			0			0			55,901			2,997			800			0			15,359			0			75,057
Manufacturer Allowances’		(96,315		)	(44,614		)	(189,615		)	(62,363		)	(81,547		)	(364,569		)	(64,005		)	(49,824		)	(298,376		)	(128,403		)	(109,236		)	0			(1,488,867		)
Early Payment Discounts		(45,348		)	(50,060		)	(69,144		)	(76,974		)	(60,261		)	(98,528		)	(85,912		)	(91,203		)	(100,097		)	(114,299		)	(111,245		)	0			(903,071		)
Total Loaded Product Cost		$	3,186,764		$	3,552,498		$	4,540,372		$	3,429,215		$	3,570,154		$	4,459,292		$	3,812,534		$	3,779,178		$	3,693,421		$	3,148,581		$	4,319,117		$	0		$	41,491,116
Model 63%		67.8		%	66.9		%	64.6		%	64.2		%	64.3		%	61.9		%	67.7		%	67.8		%	63.0		%	64.2		%	65.6		%	0.0		%	65.1		%
Service Expense		34,702			69,871			59,023			49,336			44,730			63,187			49,536			51,134			75,243			54,201			54,155			0			605,118
Delivery Expense		82,130			70,853			80,602			81,313			89,256			140,762			89,916			94,938			118,487			57,557			86,001			0			991,815
Shipping & Receiving		95,398			110,282			119,115			106,003			108,209			129,435			114,359			123,522			150,718			156,379			183,233			0			1,396,653
Freight - Transfers		41,726			54,487			56,943			77,665			40,803			48,180			65,681			52,017			55,917			67,709			78,899			0			640,027
Warranty Expense (Not Ext.		(4,464		)	(9,005		)	(9,201		)	8,133			(1,324		)	(6		)	(846		)	(313		)	(313		)	(29		)	199			0			(17,169		)
Warranty Claims (Reimburse		3,817			(13,280		)	(15,858		)	(17,544		)	(13,420		)	(29,696		)	(20,405		)	(19,966		)	(31,652		)	(50,487		)	(63,538		)	0			(272,029		)
Production (Gain) Loss		(36,549		)	17,141			17,033			(33,820		)	34,891			(110,733		)	(123,875		)	(48,009		)	(66,855		)	(64,357		)	(60,382		)	0			(475,515		)
Total Cost of Other Sales		216,760			300,349			307,657			271,086			303,145			241,129			174,366			253,323			301,545			220,973			278,567			0			2,868,900
Inventory Reserves		0			0			(54,299		)	(2,193		)	(15,112		)	(25		)	(3,969		)	(12,265		)	(3,679		)	2,107			(2,835		)	0			(92,270		)
Inventory Adjustments		(200,668		)	49,656			112,114			(21,892		)	(2,938		)	238,974			(85,665		)	(156,207		)	17,762			14,453			6,136			0			(28,275		)
Total Inventory Adjustments		(200,668		)	49,656			57,815			(24,085		)	(18,050		)	238,949			(89,634		)	(168,472		)	14,083			16,560			3,301			0			(120,545		)
Total Cost of Other Sales & Inventory Adjustments		$	16,092		$	350,005		$	365,472		$	247,001		$	285,095		$	480,078		$	84,732		$	84,851		$	315,628		$	237,533		$	281,868		$	0		$	2,748,355
Model 5%		0.3		%	5.7		%	4.4		%	3.8		%	4.3		%	5.1		%	1.1		%	1.0		%	3.0		%	2.4		%	2.6		%	0.0		%	3.0		%
Total cost of retail		$	3,202,856		$	3,902,503		$	4,905,844		$	3,676,216		$	3,855,249		$	4,939,370		$	3,897,266		$	3,864,029		$	4,009,049		$	3,386,114		$	4,600,985		$	0		$	44,239,471
Processing Costs		176,998			151,881			169,822			136,389			130,002			175,176			169,602			224,228			342,768			276,969			287,447			0			2,241,282
Transportation Costs		226,291			210,155			372,463			269,266			307,174			594,106			581,739			847,251			1,441,854			1,487,530			1,170,307			0			7,508,136
Cost of Utility Change Out Uni		0			0			136,224			7,709			96,703			508,333			593,567			897,075			1,273,410			1,835,117			1,383,593			0			6,731,731
Total Recycling Costs		$	403,289		$	362,036		$	678,509		$	413,364		$	533,879		$	1,277,615		$	1,344,908		$	1,968,554		$	3,058,032		$	3,599,616		$	2,841,347		$	0		$	16,481,149
Facilities		(28,239		)	(30,155		)	(30,053		)	(30,081		)	(30,175		)	(28,800		)	(29,069		)	(21,973		)	(13,492		)	6,902			11,937			0			(223,198		)
TOTAL COST OF REVENUE		3,577,906			4,234,384			5,554,300			4,059,499			4,358,953			6,188,185			5,213,105			5,810,610			7,053,589			6,992,632			7,454,269			0			60,497,422
GROSS PROFIT		$	1,869,444		$	1,917,399		$	2,778,297		$	2,382,553		$	2,330,649		$	3,262,129		$	2,638,075		$	3,054,481		$	3,600,476		$	2,966,609		$	3,244,633		$	0		$	30,044,755
Model 32%		34.3		%	31.2		%	33.3		%	37.0		%	34.8		%	34.5		%	33.6		%	34.5		%	33.8		%	29.8		%	30.3		%	0.0		%	33.2		%

 

1

 

Appliance Recycling Centers of America, Inc.

Consolidated Income Statement

For the Month Ending November 24, 2007

		JAN			FEB			MAR			APR			MAY			JUN			JUL			AUG			SEP			OCT			NOV			DEC			TOTAL
GROSS PROFIT		1,869,444			1,917,399			2,778,297			2,382,553			2,330,649			3,262,129			2,638,075			3,054,481			3,600,476			2,966,609			3,244,633			0			30,044,755
Model 32%		34.3		%	31.2		%	33.3		%	37.0		%	34.8		%	34.5		%	33.6		%	34.5		%	33.8		%	29.8		%	30.3		%	0.0		%	33.2		%
Advertising Expense		329,284			408,774			355,334			394,240			415,191			429,884			411,563			381,898			343,306			321,432			376,169			0			4,167,075
Advertising Rebate		(10,000		)	(4,047		)	(20,000		)	0			0			(25,979		)	(30,000		)	0			0			(5,500		)	0			0			(95,526		)
Net Advertising Expense		$	319,284		$	404,727		$	335,334		$	394,240		$	415,191		$	403,905		$	381,563		$	381,898		$	343,306		$	315,932		$	376,169		$	0		$	4,071,549
Model 3%		5.9		%	6.6		%	4.0		%	6.1		%	6.2		%	4.3		%	4.9		%	4.3		%	3.2		%	3.2		%	3.5		%	0.0		%	4.5		%
Occupancy Expenses		354,452			365,921			390,492			373,746			380,920			368,457			333,821			307,930			369,934			302,933			338,423			0			3,887,029
Model 6%		6.5		%	5.9		%	4.7		%	5.8		%	5.7		%	3.9		%	4.3		%	3.5		%	3.5		%	3.0		%	3.2		%	0.0		%	4.3		%
Retail Store Selling Expenses		889,207			756,207			998,647			659,536			571,682			1,041,734			829,080			879,991			904,665			788,753			788,001			0			9,107,503
Model 10%		16.3		%	12.3		%	12.0		%	10.2		%	8.5		%	11.0		%	10.6		%	9.9		%	8.5		%	7.9		%	7.4		%	00		%	10.1		%
Total Retail Store Expenses		$	1,243,659		$	1,122,128		$	1,389,139		$	1,033,282		$	952,602		$	1,410,191		$	1,162,901		$	1,187,921		$	1,274,599		$	1.091.686		$	1.126.424		$	0		$	12.994.532
TOTAL SELLING EXPENSES		$	1,562,943		$	1,526,855		$	1,724,473		$	1,427,522		$	1,367,793		$	1,814,096		$	1,544,464		$	1,569,819		$	1,617,905		$	1,407,618		$	1,502,593		$	0		$	17,066,081
Model 19%		28.7		%	24.8		%	20.7		%	22.2		%	20.4		%	19.2		%	19.7		%	17.7		%	15.2		%	14.1		%	14.0		%	0.0		%	18.8		%
Center G&A Expenses		139,118			196,916			431,774			292,849			314,503			365,884			324,373			441,583			601,628			518,554			425,702			0			4,052,884
Alloc IN CTR G&A Expenses		22,991			36,342			62,288			72,288			59,844			67,920			93,493			101,604			89,304			62,060			66,215			0			734,349
Alloc OUT CTRG&A Expense		(22,991		)	(36,342		)	(62,288		)	(72,288		)	(59,844		)	(67,920		)	(93,493		)	(101,604		)	(89,304		)	(62,060		)	(66,215		)	0			(734,349		)
TOTAL CENTER G&A EXPE		$	139,118		$	196,916		$	431,774		$	292,849		$	314,503		$	365,884		$	324,373		$	441,583		$	601,628		$	518,554		$	425,702		$	0		$	4,052,884
Model 2%		2.6		%	3.2		%	5.2		%	4.5		%	4.7		%	3.9		%	4.1		%	5.0		%	5.6		%	5.2		%	4.0		%	0.0		%	4.5		%
INCOME BEFORE CORPOR		167,383			193,628			622,050			662,182			648,353			1,082,149			769,238			1,043,079			1,380,943			1,040,437			1,316,338			0			8,925,790
CORPORATE ALLOCATIONS
Corporate G&A Expenses		326,900			343,019			488,462			340,633			365,552			480,592			402,861			413,353			543,463			398,575			534,373			0			4,637,783
Alloc IN IS Expenses		86,029			93,350			115,623			99,666			104,519			138,814			115,009			129,316			125,296			109,033			122,906			0			1,239,561
Alloc OUT IS Expenses		(85,926		)	(93,350		)	(115,623		)	(99,666		)	(104,519		)	(138,814		)	(115,009		)	(129,316		)	(125,296		)	(109,033		)	(122,906		)	0			(1,239,458		)
Alloc IN HR Expenses		27,766			20,170			31,537			26,444			29,238			46,953			29,850			18,866			32,378			26,305			23,079			0			312,586
Alloc OUT HR Expenses		(27,869		)	(20,170		)	(31,537		)	(26,444		)	(29,238		)	(46,953		)	(29,850		)	(18,866		)	(32,378		)	(26,305		)	(23,079		)	0			(312,689		)
Alloc IN Retail Sales Exp		10,290			15,862			18,830			15,948			15,512			17,414			13,924			20,013			27,983			14,238			13,786			0			183,800
Alloc OUT Retail Sales Exp		(10,290		)	(15,862		)	(18,830		)	(15,948		)	(15,512		)	(17,414		)	(13,924		)	(20,013		)	(27,983		)	(14,238		)	(13,786		)	0			(183,800		)
Alloc IN Retail Operations Exp		14,582			15,416			2,231			0			0			0			0			0			0			0			0			0			32,229
Alloc OUT Retail Operations		(14,582		)	(15,416		)	(2,231		)	0			0			0			0			0			0			0			0			0			(32,229		)
Alloc IN Corp. Admin Expens		100,473			110,050			135,945			110,329			118,135			197,411			117,618			110,197			204,984			111,047			133,699			0			1,449,888
Alloc OUT Corp. Admin. Expe		(100,473		)	(110,050		)	(135,945		)	(110,329		)	(118,135		)	(197,411		)	(117,618		)	(110,197		)	(204,984		)	(111,047		)	(133,699		)	0			(1,449,888		)
Alloc IN Accounting Expenses		39,689			58,529			70,452			54,049			44,304			49,586			61,545			58,801			64,360			50,270			47,010			0			598,595
Alloc OUT Accounting Expen		(39,689		)	(58,529		)	(70,452		)	(54,049		)	(44,304		)	(49,586		)	(61,545		)	(58,801		)	(64,360		)	(50,270		)	(47,010		)	0			(598,595		)
Alloc IN Program Coordination		0			0			0			0			13,694			14,024			12,073			17,381			20,158			20,081			20,769			0			118,180
Alloc OUT Program Coordinat		0			0			0			0			(13,694		)	(14,024		)	(12,073		)	(17,381		)	(20,158		)	(20,081		)	(20,769		)	0			(118,180		)
Alloc IN Business Developme		0			0			0			0			8,336			8,669			17,107			26,897			33,066			23,551			23,808			0			141,434
Alloc OUT Business Develop		0			0			0			0			(8,336		)	(8,669		)	(17,107		)	(26,897		)	(33,066		)	(23,551		)	(23,808		)	0			(141,434		)
Alloc IN Logistics		0			0			0			0			0			12,474			13,871			11,874			15,490			13,011			13,239			0			79,959
Alloc OUT Logistics		0			0			0			0			0			(12,474		)	(13,871		)	(11,874		)	(15,490		)	(13,011		)	(13,239		)	0			(79,959		)
TOTAL CORP G&A EXPENS		$	326,900		$	343,019		$	488,462		$	340,633		$	365,552		$	480,592		$	402,861		$	413,353		$	543,463		$	398,575		$	534,373		$	0		$	4,637,783
Model 4%		6.0		%	5.6		%	5.9		%	5.3		%	5.5		%	5.1		%	5.1		%	4.7		%	5.1		%	4.0		%	5.0		%	0.0		%	5.1		%
OPERATING INCOME		$	(159,517	)	$	(149,391	)	$	133,588		$	321,549		$	282,801		$	601,557		$	366,377		$	629,726		$	837,480		$	641,862		$	781,965		$	0		$	4,288,007
Model 7%		-2.9		%	-2.4		%	1.6		%	5.0		%	4.2		%	6.4		%	4.7		%	7.1		%	7.9		%	6.4		%	7.3		%	0.0		%	4.7		%
Other Income (Expenses)		(8,364		)	44			10,006			(17,510		)	8,258			(36,799		)	(3,120		)	(5,361		)	20,419			(876		)	(3,581		)	0			(36,884		)
Interest Income		0			0			0			0			0			0			0			16,606			1,383			0			1,715			0			19,704
Interest Expense		(103,282		)	(96,438		)	(98,491		)	(98,101		)	(110,496		)	(115,103		)	(128,406		)	(136,061		)	(129,781		)	(151,585		)	(154,069		)	0			(1,321,813		)
Model 1%		-1.9		%	-1.6		%	-1.2		%	-1.5		%	-1.7		%	-1.2		%	-1.6		%	-1.5		%	-1.2		%	-1.5		%	-1.4		%	00		%	-1.5		%
INC BEFORE MGMT FEE, IN		$	(271,163	)	$	(245,785	)	$	45,103		$	205,938		$	180,563		$	449,655		$	234,851		$	504,910		$	729,501		$	489,401		$	626,030		$	0		$	2,949,014
INC BEFORE INCOME TAX		$	(271,163	)	$	(245,785	)	$	45,103		$	205,938		$	180,563		$	449,655		$	234,851		$	504,910		$	729,501		$	489,401		$	626,030		$	0		$	2,949,014
Model 6%		-5.0		%	-4.0		%	0.5		%	3.2		%	2.7		%	4.8		%	3.0		%	5.7		%	6.8		%	4.9		%	5.9		%	0.0		%	3.3		%
Provision for (Benefit of) lnco		0			0			0			0			0			0			0			873			64,719			0			0			0			65,592
Model 2.4%		0.0		%	0.0		%	0.0		%	0.0		%	0.0		%	0.0		%	0.0		%	0.0		%	0.6		%	0.0		%	0.0		%	0.0		%	0.1		%
NET INCOME		$	(271,163	)	$	(245,785	)	$	45,103		$	205,938		$	180,563		$	449,655		$	234,851		$	504,037		$	664,782		$	489,401		$	626,030		$	0		$	2,883,422
Model 3.6%		-5.0		%	-4.0		%	0.5		%	3.2		%	2.7		%	4.8		%	3.0		%	5.7		%	6.2		%	4.9		%	5.9		%	0.0		%	3.2		%
Computer check net profit		(271,162		)	(245,783		)	45,104			205,944			180,565			449,654			234,853			504,036			664,782			489,402			626,030			0			2,883,425

 

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