# Bloomia Holdings, Inc.: Form 10-K for the period ended Dec 31, 2010 - Company: [Bloomia Holdings, Inc.](/companies/tulp.md) (CIK 875355) - Form: 10-K - Filed: 2011-03-16 - Accepted by EDGAR: Mar 16, 2011, 19:56 ET - Period: 2010-12-31 - Accession: 0000897101-11-000415 - Inline XBRL: no - Main document: https://www.sec.gov/Archives/edgar/data/875355/000089710111000415/insignia111300_10k.htm - All documents and exhibits: https://www.sec.gov/Archives/edgar/data/875355/000089710111000415/ ## Business As filed, 17,339 characters. ### General Insignia Systems, Inc., (the “Company”) markets in-store advertising products, programs and services to consumer packaged goods manufacturers (customers) and retailers. The Company has been in business since 1990. Since 1998, the Company has been focusing on providing in-store services through the Insignia Point-Of-Purchase Services (POPS) in-store advertising program. Insignia POPS® includes the Insignia POPSign® program. Insignia’s POPSign is a national, account-specific, in-store, shelf-edge advertising program that has been shown to deliver significant sales increases. Funded by consumer packaged goods manufacturers, the program allows manufacturers to deliver vital product information to consumers at the point-of-purchase. The brand information is combined with each retailer’s store-specific prices and is displayed on the retailer’s unique sign format. The combining of manufacturer and retailer information produces a complete “call to action” that gets consumers the information they want and need to make purchasing decisions, while building store and brand equity. For retailers, Insignia’s POPSign program is a source of incremental revenue and is the first in-store advertising program that delivers a complete “call to action” on a product-specific and store-specific basis, with all participating retail stores updated weekly. For consumer packaged goods manufacturers, Insignia’s POPSign program provides access to the optimum retail advertising site for their products – the retail shelf-edge. In addition, manufacturers benefit from significant sales increases, short lead times, micro-marketing capabilities, such as store-specific and multiple language options, and a wide variety of program features and enhancements that provide unique advertising advantages. The Company’s Internet address is www.insigniasystems.com. The Company has made available on its Web site all of the reports it files with the SEC. The Company’s Web site is not incorporated by reference into this Report on Form 10-K. Copies of reports can also be obtained free of charge by requesting them from Insignia Systems, Inc., 8799 Brooklyn Boulevard, Minneapolis, Minnesota 55445; Attention: CFO; telephone 763-392-6200. ### Industry and Market Background According to Point-Of-Purchase Advertising International (POPAI), an industry non-profit trade association, more than 70% of brand purchase decisions are being made in-store. As a result, product manufacturers are constantly seeking in-store vehicles to motivate consumers to buy their branded products. The Company’s market studies indicate that the shelf-edge sign represents the final and best opportunity for manufacturers to convince the consumer to buy. In fact, a 2005 industry study concluded that shelf signs are the most effective type of in-store advertising vehicle after end-aisle displays and in-store leaflets. Many consumers seek product information beyond price in order to make educated buying decisions. The Company’s marketing studies indicate the most effective sign contains information supplied by the product manufacturer in combination with the retailer’s price and design look. ### Company Products ### Insignia’s POPSign Program Insignia’s POPSign program is an in-store, shelf-edge, point-of-purchase advertising program that enables manufacturers to deliver product-specific messages quickly and accurately – in designs and formats that have been pre-approved and supported by participating retailers. Insignia POPSign delivers vital product selling information from manufacturers, such as product uses and features, nutritional information, advertising tag lines and product images. The brand information is combined with the retailer’s store-specific prices and is displayed on the retailer’s unique sign format that includes its logo, headline and store colors. Each sign is displayed directly in front of the manufacturer’s product in the participating retailer’s stores. The Company’s POPSign program offers special features and enhancements, such as Advantage and Custom Advantage headers that allow manufacturers to add visibility and highlight their brand message at-shelf. The Company offers Color POPSigns with customizable, image-building full-color graphics. Insignia UltraColor® POPSigns offer 75% more area for the full-color creative than Color POPSigns. The Company sells its POPSign programs directly to consumer packaged goods manufacturers and to Valassis Sales and Marketing Services, Inc. (“Valassis”) for resale to consumer packaged goods manufacturers. POPSign programs are delivered to retailers participating in the Company’s POPSign retail network and to retailers under contract with Valassis. Utilizing proprietary technology, the Company collects and organizes the data from manufacturers and retailers, then formats, prints and delivers the signs to its POPSign retailers and/or Valassis’ contracted retailers for distribution and display. Store personnel place the signs at the shelf for two-week display cycles in participating stores in Insignia’s contracted network of retailers. Personnel from a contracted third-party merchandising company place the signs at the shelf for two-week display cycles in participating retail stores in Valassis’ contracted network of retailers. The Company charges manufacturers for the signs placed in stores for each cycle. Retailers are paid a fee to display the signs and for product movement data provided to Insignia. The Company pays a fee to Valassis for each program provided to retailers under contract with Valassis. ### The Impulse Retail System and SIGNright Sign System Prior to 1996, the Company’s primary product offering was the Impulse Retail System, a system developed by an independent product design and development firm. In 1996, the Company replaced the Impulse Retail System with the SIGNright Sign System. In 1998, the Company ceased the active domestic sales of the SIGNright Sign System. Cardstock for the two systems is sold by the Company in a variety of sizes and colors that can be customized to include pre-printed custom artwork, such as a retailer’s logo. Approximately 2% of 2010 revenues came from the sale of cardstock. The Company expects this percentage to be comparable in the future. ### Stylus Software In late 1993, the Company introduced Stylus, a PC-based software application used by retailers to produce signs, labels, and posters. The Stylus software allows retailers to create signs, labels and posters by manually entering the information or by importing information from a database. Approximately 1% of 2010 revenues came from the sale of Stylus products and maintenance. The Company expects this percentage to be comparable in the future. ### Laser Printer and Vinyl Label Supplies The Company provides a comprehensive offering of laser printable cardstock and vinyl labels to retailers for their in-store signage and shelf-edge product information needs. Products include adhesive and non-adhesive supplies in a variety of colors, sizes and weights. Approximately 5% of 2010 revenues came from the sale of laser printer and vinyl label supplies. The Company expects this percentage to be comparable in the future. ### Marketing and Sales The Company directly markets the Insignia POPSign program to food and drug manufacturers and retailers. By utilizing the Insignia POPSign program, these manufacturers and retailers can easily accomplish what had previously been either impossible or extremely difficult: tailoring national in-store advertising programs to regional and local needs with minimal effort. In addition to the benefits provided to manufacturers and retailers, Insignia’s POPSign program provides consumers more information and clearer messages to aid in purchasing decisions. The Company believes its POPSign program is the most complete in-store advertising sign program available, benefiting consumer, retailer, and manufacturer. On June 12, 2006, the Company entered into an Exclusive Reseller Agreement with Valassis Sales and Marketing Services, Inc. (“Valassis”). The agreement had an initial term of one year with the objective of increasing the Company’s sales of Insignia POPSigns. On December 6, 2006, the Company and Valassis executed Amendment No. 1 to the agreement which finalized certain appendices, made certain other modifications to the agreement and extended the initial term through December 31, 2007. On July 2, 2007 the Company and Valassis executed Amendment No. 2 to the agreement which extended the term of the agreement to December 31, 2017 and expanded the strategic alliance to increase the role of Valassis to include developing and expanding the Company’s participating retailer network. In conjunction with Amendment No. 2, Valassis received a five-year warrant to acquire 800,000 shares of Insignia’s common stock at a price of $4.04 and will be paid cash commissions by the Company on the revenue the Company realizes from POPS programs the consumer packaged goods manufacturers conduct in the new retail chains. The Company recorded $1,521,000 of expense during the year ended December 31, 2007 related to the fair value of the warrant. On September 1, 2010, the entire warrant was exercised using the cashless exercise alternative provided for in the warrant and 281,511 shares were issued to Valassis. On June 17, 2010, the Company signed a letter of understanding with Valassis regarding Valassis’ In-Store Marketing Initiative. The letter memorialized that Valassis and the Company would collaborate in Valassis’ in-store marketing initiatives, that the Company would provide signs with price programs in SUPERVALU INC. and other retailers, and certain details regarding future retailer network development by both parties. On June 17, 2010, the Company signed an agreement with Valassis to provide signs with price content for Winn-Dixie Stores, Inc. for the term of Valassis’ agreement with Winn-Dixie. On December 29, 2010, the Company signed an agreement with Valassis to provide signs with price content for the Great Atlantic and Pacific Tea Company (A&P) for the term of Valassis’ agreement with A&P. On February 7, 2011, trial in the Company’s lawsuit against News America Marketing In-Store, LLC (News America) commenced in U.S. District Court for the District of Minnesota. On February 9, 2011, the Company and News America entered into a Settlement Agreement to settle the lawsuit. Pursuant to the Settlement Agreement, News America paid the Company $125,000,000, and the Company paid News America $4,000,000 in exchange for a 10-year arrangement to sell signs with price into News America’s network of retailers as News America’s exclusive agent. As of the date of this filing, the definitive agreement for the 10-year arrangement was still being negotiated, and had not yet been signed. If the parties cannot reach agreement, the Magistrate Judge of the U.S. District Court, District of Minnesota, will resolve any remaining issues. The Settlement Agreement included the dismissal with prejudice of the Company’s lawsuit against News America. Prior to April 1998, the Company marketed the Impulse Retail System and the SIGNright Sign System through telemarketing by in-house sales personnel and independent sales representatives. In May 1998, the Company discontinued the active marketing of the systems. The Company sells cardstock and supplies related to these systems to U.S. and international customers. The Company markets its Stylus software in the United States and internationally primarily through resellers that integrate Stylus as an Open Database Connectivity design and publishing component into their retail data and information management software applications. During 2010, 2009 and 2008, foreign sales accounted for less than 1% of total net sales each year. The Company expects sales to foreign distributors will be less than 1% of total net sales in 2011. ### Competition ### Insignia’s POPSign Program The Insignia POPSign program is competing for the marketing expenditures of branded product manufacturers for at-shelf advertising-related signage. We face significant competition from News America and Valassis, which provide at-shelf advertising and promotional signage, plus other smaller competitors. Although the settlement with News America gives the Company additional opportunities to compete by offering signs with price in News America’s network, the Company will continue to compete for advertising dollars with News America’s other at-shelf advertising and promotional signage offerings. News America offers a network for in-store advertising, promotion and sales merchandising services. News America has branded its in-store shelf signage products as SmartSource Shelftalksm, SmartSource Shelfvisionsm and SmartSource Price Pop®. Pursuant to the confidential Settlement Agreement of the litigation against News America, the Company paid News America $4,000,000 in exchange for a 10-year arrangement to sell signs with price into News America’s network of retailers as News America’s exclusive agent. Final terms of the definitive agreement are still being negotiated. We believe the main strengths of the Insignia POPSign program in relation to its competitors are: - the linking of manufacturers to retailers at a central coordination point - providing a complete “call to action” - supplying product-specific and store-specific messages at the retail shelf - delivering vital product information and store-specific prices - short lead times - significant sales increases ### Patents and Trademarks The Company has developed and is using a number of trademarks, service marks, slogans, logos and other commercial symbols to advertise and sell its products. The Company owns U.S. registered trademarks for Insignia Systems, Inc.® (and Design), Insignia POPS®, POPS Select®, Insignia POPSign®, Insignia ShelfPOPS®, UltraColor®, Stylus®, Stylus Work Center®, SIGNright®, Impulse®, DuraSign®, I-Care®, and Check This Out.® The Company is in the process of obtaining trademark registrations in the United States for the trademark “Insignia E-POPS” and “Color POPSign.” The Company licenses the right to use a patented barcode on the sign cards for the Company’s Impulse and SIGNright Sign Systems. Neither revenues from this product line, nor royalties paid under the license agreement, are considered material. Key employees are required to enter into nondisclosure and invention assignment agreements, and customers, vendors and other third parties also must agree to nondisclosure restrictions prior to disclosure of our trade secrets or other confidential or proprietary information. ### Product Development Product development for Insignia’s POPSign program has been conducted internally and includes the proprietary data management and operations system, as well as the current offering of point-of-purchase and other advertising products. Ongoing internal systems enhancements, as well as the development of point-of-purchase and other advertising or promotional products, will be conducted utilizing both internal and external resources as appropriate. Product development on the SIGNright Sign System was primarily conducted by a developer on a contract basis. The Stylus software product line remains a viable application for the Company’s retail customers. The Company performs development to keep Stylus current and updated to meet industry requirements. ### Customers Valassis, Nestle Co., General Mills, Inc. accounted for 20%, 19%, and 15%, respectively, of the Company’s total net sales for the year ended December 31, 2010. Valassis and General Mills, Inc. each accounted for 20% of the Company’s total net sales for the year ended December 31, 2009. General Mills, Inc., Nestle Co., Kellogg Sales Company and Valassis accounted for 19%, 13%, 11% and 10%, respectively, of the Company’s total net sales for the year ended December 31, 2008. Valassis is a reseller of the Company’s POPSign program to consumer packaged goods manufacturers. ### Backlog Sales backlog on March 7, 2011 was approximately $5.8 million, all of which is for delivery during the remainder of 2011. The orders are believed to be firm, but there is no assurance that all of the backlog will actually result in revenues. Sales backlog on March 8, 2010 was approximately $7.5 million. ### Seasonality The Company’s results of operations have fluctuated from quarter to quarter due to variations in net sales and operating expenses. There is no seasonal pattern to these fluctuations. The results of operations fluctuate from quarter to quarter as a result of the following: - The timing of seasonal events for customers; - Variations in the specific products which customers choose to advertise; - Fluctuations in advertising budgets of customers and the amounts they commit to in-store advertising; - Variations in the number of retailers in the Company’s network; - Sales incentives to sales staff and strategic partners; - Minimum program level commitments to retailers; and - Professional fees related to litigation. ### Employees As of February 28, 2011, the Company had 114 employees, including all full-time and part-time employees. ### Segment Reporting The Company operates in a single reportable segment. ## Risk factors As filed, 13,306 characters. Our business faces significant risks, including the risks described below. If any of the events or circumstances described in the following risks occurs, our business, financial condition or results of operations could suffer, and the trading price of our common stock could decline. ### Our Customers And Retailers May Be Susceptible To Changes In General Economic Conditions Our revenues are affected by our customers’ marketing and advertising spending and our revenues and results of operations may be subject to fluctuations based upon general economic conditions. Another economic downturn may reduce demand for our products and services or depress pricing of those products and services and have an adverse effect on our results of operations. Retailers may be impacted by changes in consumer spending as well, which may adversely impact our ability to renew contracts with our existing retailers as well as contract with new retailers on terms which are acceptable. In addition, if we are unable to successfully anticipate changing economic conditions, we may be unable to effectively plan for and respond to those changes, and our business could be negatively affected. ### We Have Had Significant Losses In Prior Periods Although we had net income of $7,626,000, $3,716,000, and $2,343,000 for the years ended December 31, 2010, 2009, and 2007, respectively, we had a net loss of $(2,257,000) for the year ended December 31, 2008, and significant net losses for a number of years prior to December 31, 2006. There can be no assurance that we will be profitable on a quarterly or annual basis. If we are unable to generate net income from operations, our business will be adversely affected and our stock price will likely decline. ### We Have Been Involved In Major Litigation On September 23, 2004, the Company brought suit against News America and Albertson’s Inc. (Albertson’s) in Federal District Court in Minneapolis, Minnesota, for violations of federal and state antitrust and false advertising laws, alleging that News America has acquired and maintained monopoly power through various wrongful acts designed to harm the Company in the in-store advertising and promotion products and services market. The suit sought injunctive relief sufficient to prevent further antitrust injury and an award of treble damages for the harm caused to the Company. On September 20, 2006, the State of Minnesota through its Attorney General intervened as a co-plaintiff in the business disparagement portion of the case. In December 2006, News America filed counterclaims in the case that included claims of alleged interference with contracts and alleged libel and slander against Insignia and one of its officers. On February 4, 2008, the Court approved a consent decree entered into by News America and the State of Minnesota under which News America agreed to not violate Minnesota’s statutes prohibiting commercial disparagement. On July 29, 2008, the Company and Albertson’s entered into a settlement agreement and mutual release, in which they each agreed to release all claims against the other, and the Company agreed to dismiss its lawsuit against Albertson’s. On February 7, 2011, trial in the Company’s lawsuit against News America commenced in U.S. District Court for the District of Minnesota. On February 9, 2011, the Company and News America entered into a Settlement Agreement to settle the lawsuit. Pursuant to the Settlement Agreement, News America paid the Company $125,000,000, and the Company paid News America $4,000,000 in exchange for a 10-year arrangement to sell signs with price into News America’s network of retailers as News America’s exclusive agent. As of the date of this filing, the definitive agreement for the 10-year arrangement was still being negotiated, and had not yet been signed. If the parties cannot reach agreement, the Magistrate Judge of the U.S. District Court, District of Minnesota, will resolve any remaining issues. The Settlement Agreement included the dismissal with prejudice of the Company’s lawsuit against News America. The Company filed claims in December 2006 and January 2007 with its director’s and officer’s liability and general liability insurers related to the defense costs and insurance coverage for claims asserted against the Company and one of its officers in News America’s counterclaims. On August 9, 2007, the Company filed a complaint against the insurers in Hennepin County District Court, State of Minnesota requesting a declaratory judgment that the insurers owed the Company and its officer such defense costs and insurance coverage. In December 2007, the Company settled its claim against one of the insurers. In March 2009, the Company settled with the other insurer and received a payment of $1,387,000 as part of the settlement. The Company recorded the payment in general and administrative expenses for the quarter ended March 31, 2009, and the litigation with the insurers is finished. During the year ended December 31, 2010, the Company incurred legal fees of $1,851,000 related to the News America litigation. Management expects the amount of legal fees and expenses that will be incurred in connection with the lawsuit against News America will be significant throughout the first quarter of 2011 due to trial preparation, start of the trial and settlement activities. Legal fees and expenses are expensed as incurred and are included in general and administrative expenses in the statements of operations. The Company is subject to various other legal proceedings in the normal course of business. Management believes the outcome of these proceedings will not have a material adverse effect on the Company’s financial position or results of operations. ### We Are Dependent On Our Contracts with Retailers And Our Ability To Renew Those Contracts When Their Terms Expire On an ongoing basis, we negotiate renewals of various retailer contracts. Some of our retailer contracts require us to guarantee minimum payments. If we are unable to offer guarantees at the required levels in the new contracts, and the contracts are not renewed because of that or because of other reasons, it will have a material adverse effect on our operations and financial condition. Our POPS business and results of operations could be adversely affected if the number of retailer partners decreases significantly or if the retailer partners fail to continue to perform their duties in placing and maintaining POPSigns at the shelf in their stores and providing product movement data to us. Our contract with The Kroger Co. expired on December 31, 2010, which could have a material adverse impact on our business. ### Our Results Of Operations May Be Subject To Significant Fluctuations Which May Result In A Decrease In Our Stock Price Our quarterly and annual operating results have fluctuated in the past and may vary in the future due to a wide variety of factors including: - the loss of contracts with retailers; - the timing of seasonal events for customers or the loss of customers; - the timing of new retail stores being added; - the timing of additional selling, marketing and general and administrative expenses; and - competitive conditions in our industry. Due to these factors, our quarterly and annual net sales, expenses and results of operations could vary significantly in the future and this could adversely affect the market price of our common stock. ### We Have Significant Competition We face significant competition from News America and Valassis, which provide at-shelf advertising and promotional signage. Although the settlement with News America gives the Company additional opportunities to compete by offering signs with price in News America’s network, the Company will continue to compete for advertising dollars with News America’s other at-shelf advertising and promotional signage offerings. News America and Valassis have significantly greater financial resources that can be used to market their products. Should our competitors succeed in obtaining more of the at-shelf advertising business from our current customers, our revenues and related operations would be adversely affected. ### Our Results Are Dependent On The Success Of Our Insignia POPS Program Which Represents A Significant Part Of Our Business We are largely dependent on our POPS program, which represented approximately 91%, 93% and 92% of total net sales for fiscal 2010, 2009 and 2008, respectively. We expect the POPS program to represent a higher percentage in fiscal 2011 and future periods. Should brand manufacturers no longer perceive value in the POPS program, our business and results of operations would be adversely affected due to our heavy dependence on this program. ### Our Results Are Dependent On The Level Of Spending By Branded Product Manufacturers For Advertising And Promotional Expenditures We are largely dependent on the net sales from our POPSigns, which are purchased by branded product manufacturers. Changes in economic conditions could result in reductions in advertising and promotional expenditures by branded product manufacturers. Should these reductions occur, our revenues and related results of operations would be adversely affected. ### Our Results Are Dependent On Our Manufacturer Partners Continuing To Achieve Sales Increases Our product manufacturer customers use our POPS program to motivate consumers to buy their branded products. Use of our POPS program has historically resulted in sales increases for that particular product. If our POPS program does not continue to result in these product sales increases, our marketing success and sales levels could be adversely affected. ### Our Results Are Dependent On The Success Of Our Partnership With Our Strategic Partner On June 12, 2006, the Company entered into an Exclusive Reseller Agreement with Valassis Sales and Marketing Services, Inc. (“Valassis”). The agreement had an initial term of one year with the objective of increasing the Company’s sales of Insignia POPSigns. On December 6, 2006, the Company and Valassis executed Amendment No. 1 to the agreement which finalized certain appendices, made certain other modifications to the agreement and extended the initial term through December 31, 2007. On July 2, 2007 the Company and Valassis executed Amendment No. 2 to the agreement which extended the term of the agreement to December 31, 2017 and expanded the strategic alliance to increase the role of Valassis to include developing and expanding the Company’s participating retailer network. On June 17, 2010, the Company signed a letter of understanding with Valassis regarding Valassis’ In-Store Marketing Initiative. The letter memorialized that the Company would provide signs with price programs in SUPERVALU INC. and other retailers, and certain details regarding future retailer network development by both parties. Our partnership thus far has resulted in increased revenues for the Company. If our partnership with Valassis is terminated for any reason, our revenue levels and our participating retailer network could be adversely affected. ### Our Results Are Dependent On The Success Of Our Arrangement With News America Our results will depend on the success of our sales and marketing efforts for signs with price into the News America network of retailers as News America’s exclusive agent and upon our ability to successfully integrate the operational aspects of the programs. ### Our Stock Price Has Been And May Continue To Be Volatile During 2010 our common stock has traded between $7.54 and $3.81 per share. The market price of our common stock may continue to be volatile and may be significantly affected by: - the loss or addition of contracts with major consumer packaged goods manufacturers and retailers; - actual or anticipated fluctuations in our operating results; - announcements of new services by us or our competitors; - developments with respect to conditions and trends in our industry or in the industries we serve; - general market conditions; and - other factors, many of which are beyond our control. ### A Failure To Maintain Effective Internal Controls Could Adversely Affect Our Business Although we have completed the documentation and testing of the effectiveness of our internal control over financial reporting for fiscal 2010, as required by Section 404 of the Sarbanes-Oxley Act of 2002, we expect to incur continuing costs, which may include increased accounting fees and increased staffing levels, in order to maintain compliance with the Sarbanes-Oxley Act. In addition, our ability to integrate the operations of other companies that we may acquire in the future could impact our compliance with Section 404. In the future, if we fail to complete the Sarbanes-Oxley 404 evaluation in a timely manner, or if our independent registered public accounting firm cannot attest in a timely manner to the effectiveness of our internal controls, we could be subject to regulatory scrutiny and a loss of public confidence in our internal controls. In addition, any failure to implement required new or improved controls, or difficulties encountered in their implementation, could harm our operating results or cause us to fail to meet our reporting obligations. ## Properties As filed, 255 characters. The Company currently leases approximately 41,000 square feet of office and warehouse space in suburban Minneapolis, Minnesota, through February 29, 2016. The Company believes that the 41,000 square feet of space will meet the Company’s foreseeable needs. ## Legal proceedings As filed, 3,995 characters. On September 23, 2004, the Company brought suit against News America Marketing In-Store, LLC (News America) and Albertson’s Inc. (Albertson’s) in Federal District Court in Minneapolis, Minnesota, for violations of federal and state antitrust and false advertising laws, alleging that News America has acquired and maintained monopoly power through various wrongful acts designed to harm the Company in the in-store advertising and promotion products and services market. The suit sought injunctive relief sufficient to prevent further antitrust injury and an award of treble damages for the harm caused to the Company. On September 20, 2006, the State of Minnesota through its Attorney General intervened as a co-plaintiff in the business disparagement portion of the case. In December 2006, News America filed counterclaims in the case that included claims of alleged interference with contracts and alleged libel and slander against Insignia and one of its officers. On February 4, 2008, the Court approved a consent decree entered into by News America and the State of Minnesota under which News America agreed to not violate Minnesota’s statutes prohibiting commercial disparagement. On July 29, 2008, the Company and Albertson’s entered into a settlement agreement and mutual release, in which they each agreed to release all claims against the other, and the Company agreed to dismiss its lawsuit against Albertson’s. On February 7, 2011, trial in the Company’s lawsuit against News America commenced in U.S. District Court for the District of Minnesota. On February 9, 2011, the Company and News America entered into a Settlement Agreement to settle the lawsuit. Pursuant to the Settlement Agreement, News America paid the Company $125,000,000, and the Company paid News America $4,000,000 in exchange for a 10-year arrangement to sell signs with price into News America’s network of retailers as News America’s exclusive agent. As of the date of this filing, the definitive agreement for the 10-year arrangement was still being negotiated, and had not yet been signed. If the parties cannot reach agreement, the Magistrate Judge of the U.S. District Court, District of Minnesota, will resolve any remaining issues. The Settlement Agreement included the dismissal with prejudice of the Company’s lawsuit against News America. The Company filed claims in December 2006 and January 2007 with its director’s and officer’s liability and general liability insurers related to the defense costs and insurance coverage for claims asserted against the Company and one of its officers in News America’s counterclaims. On August 9, 2007, the Company filed a complaint against the insurers in Hennepin County District Court, State of Minnesota requesting a declaratory judgment that the insurers owed the Company and its officer such defense costs and insurance coverage. In December 2007, the Company settled its claim against one of the insurers. In March 2009, the Company settled with the other insurer and received a payment of $1,387,000 as part of the settlement. The Company recorded the payment in general and administrative expenses for the quarter ended March 31, 2009, and the litigation with the insurers is finished. During the year ended December 31, 2010, the Company incurred legal fees of $1,851,000 related to the News America litigation. Management expects the amount of legal fees and expenses to be incurred in connection with the lawsuit against News America will be significant throughout the first quarter of 2011 due to trial preparation, start of the trial and settlement activities. Legal fees and expenses are expensed as incurred and are included in general and administrative expenses in the statements of operations. The Company is subject to various other legal proceedings in the normal course of business. Management believes the outcome of these proceedings will not have a material adverse effect on the Company’s financial position or results of operations. ## Management's discussion and analysis As filed, 26,606 characters. The following discussion should be read in conjunction with the financial statements and the related notes included in this Report. This Report contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those in such forward-looking statements as a result of many factors, including those discussed in “Forward-Looking Statements” and elsewhere in this Report. ### Impact Of The Current Economic Environment The Company does not believe that the recession during 2007 to 2009 and the subsequent slow pace of recovery has had a significant effect on its results of operations for the year ended December 31, 2010. The Company may be adversely affected by the economic environment in the future if spending levels of its customers are reduced or it is unable to renew contracts with existing retailers or contract with new retailers on terms which are acceptable. ### Critical Accounting Policies Our discussion of our financial condition and results of operations is based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. During the preparation of these financial statements, we are required to make estimates and assumptions that affect the reported amounts of assets, liabilities, net revenues, costs and expenses and related disclosures. On an ongoing basis, we evaluate our estimates and assumptions, including those related to revenue recognition, allowance for doubtful accounts, income taxes, and stock-based compensation expense. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances. The results of our analysis form the basis for making assumptions about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions, and the impact of such differences may be material to our consolidated financial statements. We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our financial statements: ***Revenue Recognition***. The Company recognizes revenue from Insignia POPSigns ratably over the period of service, which is typically a two-week display cycle. We recognize revenue related to equipment, software and sign card sales at the time the products are shipped to customers. Revenue associated with maintenance agreements is recognized ratably over the life of the contract. Revenue that has been billed and not yet recognized is reflected as deferred revenue on our balance sheet. ***Allowance for Doubtful Accounts.*** An allowance is established for estimated uncollectible accounts receivable. The Company determines its allowance by considering a number of factors, including the length of time trade accounts receivable are past due, the Company’s previous loss history, the customer’s current ability to pay its obligation to the Company, the condition of the general economy and the industry as a whole and other relevant facts and circumstances. Unexpected changes in the aforementioned factors could result in materially different amounts. ***Income Taxes***. Deferred income taxes are determined based on the estimated future tax effects of differences between the financial statement and tax basis of assets and liabilities given the provisions of enacted tax laws. Deferred income tax provisions and benefits are based on changes to the assets or liabilities from year to year. In providing for deferred taxes, we consider tax regulations of the jurisdictions in which we operate, estimates of future taxable income, and available tax planning strategies. If tax regulations, operating results or the ability to implement tax-planning strategies vary, adjustments to the carrying value of deferred tax assets and liabilities may be required. Valuation allowances are recorded related to deferred tax assets based on the “more likely than not” criteria. We recognize the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority. During the year ended December 31, 2010 the Company recorded a $7,913,000 net release of the valuation allowance. The release is due to the expectation of future taxable income as a result of the News America Marketing lawsuit settlement on February 9, 2011. In light of the settlement the Company believes it is more likely than not that its deferred tax assets will be realized in 2011and thereafter. ***Stock-Based Compensation.*** We measure and recognize compensation expense for all stock-based payments at fair value. We use the Black-Scholes option pricing model to determine the weighted average fair value of options and employee stock purchase plan rights. The determination of fair value of share-based payment awards on the date of grant using an option-pricing model is affected by our stock price as well as by assumptions regarding a number of highly complex and subjective variables. These variables include, but are not limited to, the expected stock price volatility over the term of the awards, and actual and projected employee stock option exercise behaviors. The expected terms of the options and employee stock purchase plan rights are based on evaluations of historical and expected future employee exercise behavior. The risk-free interest rate is based on the U.S. Treasury rates at the date of grant with maturity dates approximately equal to the expected life at grant date. Volatility is based on historical and expected future volatility of the Company’s stock. The Company has not historically issued any dividends and does not expect to in the future. Forfeitures are estimated at the time of the grant and revised, if necessary, in subsequent periods if actual forfeitures differ from estimates. If factors change and we employ different assumptions in the valuation of grants in future periods, the compensation expense that we record may differ significantly from what we have recorded in the current periods. ### Results of Operations The following table sets forth, for the periods indicated, certain items in the Company’s Statements of Operations as a percentage of total net sales. | Year Ended December 31 | 2010 | 2009 | 2008 | | --- | ---: | ---: | ---: | | Net sales | 100.0% | 100.0% | 100.0% | | Cost of sales | 49.4 | 46.7 | 46.2 | | Gross profit | 50.6 | 53.3 | 53.8 | | Operating expenses: | | | | | Selling | 23.6 | 23.0 | 27.1 | | Marketing | 5.5 | 5.4 | 5.1 | | General and administrative | 18.5 | 16.7 | 22.6 | | Insurance settlement proceeds | — | (4.8) | — | | Total operating expenses | 47.6 | 40.3 | 54.8 | | Operating income (loss) | 3.0 | 13.0 | (1.0) | | Other income | 0.1 | 0.3 | 0.6 | | Income (loss) before taxes | 3.1 | 13.3 | (0.4) | | Income tax (expense) benefit | 22.3 | (0.4) | (6.8) | | Net income (loss) | 25.4% | 12.9% | (7.2)% | ### Fiscal 2010 Compared to Fiscal 2009 ***Net Sales.*** Net sales for the year ended December 31, 2010 increased 4.3% to $30,007,000 compared to $28,770,000 for the year ended December 31, 2009. Service revenues from our POPSign programs for the year ended December 31, 2010 increased 2.1% to $27,231,000 compared to $26,666,000 for the year ended December 31, 2009. The increase was primarily due to an increase in the average sign price which was partially offset by a decrease in the number of signs placed. The expiration of the retailer contract with The Kroger Co. on December 31, 2010, could have a material adverse impact on service revenues for the 2011 year. The positive impact of the arrangement to sell signs with price into News America’s network of retailers cannot be determined at this time. Product sales for the year ended December 31, 2010 increased 31.9% to $2,776,000 compared to $2,104,000 for the year ended December 31, 2009. The increase was primarily due to increased sales of laser sign card and label supplies based on increased demand for these products from one of our customers, offset by lower sales of thermal sign card supplies and Stylus software based upon decreased demand for these products from our customers. ***Gross Profit.*** Gross profit for the year ended December 31, 2010 decreased 1.1% to $15,171,000 compared to $15,341,000 for the year ended December 31, 2009. Gross profit as a percentage of total net sales decreased to 50.6% for 2010 compared to 53.3% for 2009. Gross profit from our POPSign program revenues for the year ended December 31, 2010 decreased 2.8% to $14,248,000 compared to $14,652,000 for the year ended December 31, 2009. The decrease in gross profit of $404,000 was primarily due to an increase in retailer expenses, which more than offset the effect of increased services revenues. Gross profit as a percentage of POPSign program revenues decreased to 52.3% for 2010 compared to 55.0% for 2009, due primarily to the increase in retailer expenses. Gross profit from our product sales for the year ended December 31, 2010 increased 34.0% to $923,000 compared to $689,000 for the year ended December 31, 2009. Gross profit as a percentage of product sales increased to 33.3% for 2010 compared to 32.8% for 2009. The increases were primarily due to increased sales and the effect of fixed costs. ### Operating Expenses ***Selling.*** Selling expenses for the year ended December 31, 2010 increased 6.8 % to $7,082,000 compared to $6,632,000 for the year ended December 31, 2009, primarily due to increased POPS staffing levels and increased travel related expenses. Selling expenses as a percentage of total net sales increased to 23.6% in 2010 compared to 23.0% in 2009, primarily due to the factors described above. ***Marketing.*** Marketing expenses for the year ended December 31, 2010 increased 6.2% to $1,635,000 compared to $1,540,000 for the year ended December 31, 2009, primarily due to increased staffing related expenses. Marketing expenses as a percentage of total net sales increased to 5.5% in 2010 compared to 5.4% in 2009, primarily due to the factors described above. ***General and Administrative.*** General and administrative expenses for the year ended December 31, 2010 increased 15.3% to $5,549,000 compared to $4,811,000 for the year ended December 31, 2009, primarily due to increased staffing levels, travel related expenses, and increased legal costs related to the News America litigation. General and administrative expenses as a percentage of total net sales increased to 18.5% in 2010 compared to 16.7% in 2009, primarily due to the factors described above. Legal fees were $2,081,000 for the year ended December 31, 2010 compared to $1,838,000 for the year ended December 31, 2009. The legal fees in each year were incurred primarily in connection with the News America litigation described elsewhere herein. Management expects the amount of legal fees and expenses that will be incurred in connection with the lawsuit against News America will be significant throughout the first quarter of 2011in connection with trial preparation, commencement of the trial and settlement activities. ***Insurance Settlement Proceeds.*** The Company received a payment of $1,387,000 in the first quarter of 2009 from an insurer as part of a settlement of the Company’s claim that the insurer owed the Company defense costs for claims asserted against the Company and one of its officers in the News America litigation. ***Other Income (Expense).*** Other income (net) for the year ended December 31, 2010 was $17,000 compared to other income (net) of $86,000 for the year ended December 31, 2009. Included in other income (net) was interest income of $39,000 for the year ended December 31, 2010 compared to interest income of $127,000 for the year ended December 31, 2009. Interest income for the 2010 year was lower due to significantly lower interest rates which more than offset the effect of higher average cash, cash equivalent and short-term investment balances in 2010. Lower interest expense of $22,000 for the year ended December 31, 2010 versus $40,000 for the year ended December 31, 2009 was due to scheduled principal payments made in 2009 to reduce amounts owed to a retailer. ***Income Taxes.*** During the year ended December 31, 2010 the Company recorded a $7,913,000 net release of the valuation allowance. The release is due to the expectation of future taxable income as a result of the News America Marketing lawsuit settlement on February 9, 2011. In light of the settlement the Company believes it is more likely than not that these deferred tax assets will be realized in 2011. The Company recorded income tax expense of $115,000 for the year ended December 31, 2009, related to alternative minimum tax liability. ***Net Income.*** The net income for the year ended December 31, 2010 was $7,626,000 compared to $3,716,000 for the year ended December 31, 2009. ### Fiscal 2009 Compared to Fiscal 2008 ***Net Sales.*** Net sales for the year ended December 31, 2009 decreased 8.4% to $28,770,000 compared to $31,406,000 for the year ended December 31, 2008. Service revenues from our POPSign programs for the year ended December 31, 2009 decreased 7.8% to $26,666,000 compared to $28,931,000 for the year ended December 31, 2008. The decrease was primarily due to a decrease in the number of POPSign programs executed for customers (consumer packaged goods manufacturers) during the 2009 period as a result of the loss of Safeway, Inc. from our network of retailers at December 31, 2008 when the contract with Safeway, Inc. expired. Product sales for the year ended December 31, 2009 decreased 15.0% to $2,104,000 compared to $2,475,000 for the year ended December 31, 2008. The decrease was primarily due to decreased sales of thermal sign card supplies, laser sign card and label supplies, and Stylus software based upon decreased demand for these products from our customers. ***Gross Profit.*** Gross profit for the year ended December 31, 2009 decreased 9.1% to $15,341,000 compared to $16,884,000 for the year ended December 31, 2008. Gross profit as a percentage of total net sales decreased to 53.3% for 2009 compared to 53.8% for 2008. Gross profit from our POPSign program revenues for the year ended December 31, 2009 decreased 8.4% to $14,652,000 compared to $16,002,000 for the year ended December 31, 2008. The decrease in gross profit of $1,350,000 was primarily due to decreased sales which was partially offset by decreased retailer expenses and printing expenses. Gross profit as a percentage of POPSign program revenues decreased to 55.0% for 2009 compared to 55.3% for 2008, due primarily to the effect of fixed costs and the effect of retailer expenses which did not decrease as significantly as sales. Gross profit from our product sales for the year ended December 31, 2009 decreased 21.9% to $689,000 compared to $882,000 for the year ended December 31, 2008. Gross profit as a percentage of product sales decreased to 32.8% for 2009 compared to 35.6% for 2008. The decreases were primarily due to decreased sales and the effect of fixed costs. ### Operating Expenses ***Selling.*** Selling expenses for the year ended December 31, 2009 decreased 22.2% to $6,632,000 compared to $8,521,000 for the year ended December 31, 2008, primarily due to decreased sales commissions. The decreased sales commissions were due to decreased POPSign program sales and a sales incentive to our strategic partner (Valassis) present only in 2008 which was triggered by a year-over-year increase in sales to specific customers. Selling expenses as a percentage of total net sales decreased to 23.0% in 2009 compared to 27.1% in 2008, primarily due to the factors described above. ***Marketing.*** Marketing expenses for the year ended December 31, 2009 decreased 3.9% to $1,540,000 compared to $1,602,000 for the year ended December 31, 2008, primarily due to decreased data acquisition expense. Marketing expenses as a percentage of total net sales increased to 5.4% in 2009 compared to 5.1% in 2008, primarily due to the factors described combined with the effect of decreased sales in 2009. ***General and Administrative.*** General and administrative expenses for the year ended December 31, 2009 decreased 31.9% to $4,811,000 compared to $7,060,000 for the year ended December 31, 2008, primarily due to decreased legal costs related to the News America litigation and decreased facility related expenses which were partially offset by additional staff expenses. General and administrative expenses as a percentage of total net sales decreased to 16.7% in 2009 compared to 22.5% in 2008, primarily due to the factors described above in relation to decreased sales. Legal fees were $1,838,000 for the year ended December 31, 2009 compared to $4,234,000 for the year ended December 31, 2008. The legal fees in each year were incurred primarily in connection with the News America litigation described elsewhere herein. ***Insurance Settlement Proceeds.*** The Company received a payment of $1,387,000 in the first quarter of 2009 from an insurer as part of a settlement of the Company’s claim that the insurer owed the Company defense costs for claims asserted against the Company and one of its officers in the News America litigation. ***Other Income (Expense).*** Other income (net) for the year ended December 31, 2009 was $86,000 compared to other income (net) of $180,000 for the year ended December 31, 2008. Included in other income (net) was interest income of $127,000 for the year ended December 31, 2009 compared to interest income of $234,000 for the year ended December 31, 2008. Interest income for the 2009 year was lower due to lower interest rates which more than offset the effect of higher average cash balances in 2009. Lower interest expense of $40,000 for the year ended December 31, 2009 versus $57,000 for the year ended December 31, 2008 was due to scheduled principal payments made in 2009 to reduce amounts owed to a retailer. ***Income Taxes.*** The Company recorded income tax expense for the year ended December 31, 2009 of $115,000 compared to $2,138,000 for the year ended December 31, 2008. The Company continued to carry a full valuation allowance against its net deferred tax asset at December 31, 2009, and had therefore recorded income tax expense of $115,000 for 2009 which was related to alternative minimum taxes. The Company recorded income tax expense for the year ended December 31, 2008, of $2,138,000 as a result of increasing the valuation allowance against the deferred tax assets by $1,930,000, recording expense of $201,000 from changes in the deferred tax assets and recognizing $7,000 of current income tax expense related to state tax liabilities. ***Net Income (Loss).*** The net income for the year ended December 31, 2009 was $3,716,000 compared to a net loss of $(2,257,000) for the year ended December 31, 2008. ### Liquidity and Capital Resources The Company has financed its operations with proceeds from public and private stock sales and sales of its services and products. At December 31, 2010, working capital was $12,505,000 compared to $10,716,000 at December 31, 2009. During the year ended December 31, 2010, cash, cash equivalents, and short-term investments increased by $499,000 from $13,197,000 at December 31, 2009 to $13,696,000 at December 31, 2010. Net cash provided by operating activities during the year ended December 31, 2010, was $839,000. Net income of $7,626,000 minus net non-cash income of $5,682,000 totaling $1,944,000 for the year ended December 31, 2010, more than offset changes in operating assets and liabilities which used cash of $1,105,000. The net non-cash income of $5,682,000 consisted of stock-based compensation expense and depreciation which was more than offset by an income tax benefit. The most significant component of the $1,105,000 change in operating assets and liabilities was deferred revenue. Deferred revenue decreased by $971,000 primarily due to programs which had been invoiced on December 31, 2009 and which executed in 2010. The Company expects accounts receivable, accounts payable, accrued liabilities and deferred revenue to fluctuate during future periods depending on the level of POPSign revenues and related business activity as well as billing arrangements with customers and payment terms with retailers. Net cash of $3,513,000 was provided by investing activities during the year ended December 31, 2010, due to short-term investment activity which was partially offset by purchases of property and equipment. Purchases of short-term investments of $3,800,000 and proceeds of $7,700,000 during the year consisted entirely of purchases and redemptions of twenty-six week certificates of deposit. Net purchases of property and equipment totaled $387,000 during the year ended December 31, 2010, and consisted of information technology equipment, software and digital printing equipment as well as leasehold modifications. The Company expects to make capital expenditures of approximately $2,078,000 in 2011 consisting primarily of additional printing technologies and information technology equipment. Net cash of $47,000 was provided by financing activities during the year ended December 31, 2010. Proceeds (net) of $735,000 resulting from the issuance of common stock from the employee stock purchase plan and the employee stock option plans were partially offset by the repurchase of common stock of $469,000 (net) pursuant to a plan adopted on February 23, 2010, and the payment of $219,000 of principal on long-term liabilities. On February 9, 2011, the Company entered into a settlement agreement in its lawsuit against News America. As part of the settlement agreement News America paid the Company $125,000,000 less $4,000,000 related to a ten year business arrangement. Litigation counsel for the Company received a contingent fee payment of $31,250,000 which resulted in a net cash payment to the Company of $89,750,000. After performance bonus plan payments of $3,987,500 and estimated federal and state income taxes of $27,762,500 (utilizing the Company’s net operating loss carry forwards), net settlement proceeds are approximately $58,000,000. The Board of Directors on February 22, 2011 approved a series of actions. First, the Board of Directors authorized a special $2.00 per common share dividend which will result in an estimated payment of $35,000,000. Second, the Board approved a Performance Bonus Plan, providing for the payment of $3,987,500 to certain employees of the Company. Third, the Board authorized the repurchase of up to $15,000,000 of the Company’s common stock on or before January 31, 2012. The plan does not obligate the Company to repurchase any particular number of shares, and may be suspended at any time at the Company’s discretion. The Company believes that based upon current business conditions, its existing cash balance (including proceeds from the settlement) and future cash from operations will be sufficient for its cash requirements in the foreseeable future. However, there can be no assurances that this will occur or that the Company will be able to secure additional financing from public or private stock sales or from other financing agreements if needed. ### New Accounting Pronouncements In December 2009, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2010-06, *Fair Value Measurements and Disclosures Topic 820 “Improving Disclosures about Fair Value Measurements”.* This ASU requires some new disclosures and clarifies some existing disclosure requirements about fair value measurement as set forth in Codification Subtopic 820-10. The FASB’s objective is to improve these disclosures and, thus, increase the transparency in financial reporting. Some of the new disclosures are effective for reporting periods beginning after December 15, 2009, with the remaining new disclosures effective for reporting periods beginning after December 15, 2010. The adoption of this ASU will not have a material impact on our financial statements. In July 2010, the FASB issued ASU No. 2010-20, *Receivables Topic 310 “Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses,”* to enhance the disclosures required for financing receivables (for example, loans, trade accounts receivable, notes receivable, and receivables relating to a lessor’s leveraged, direct financing, and sales-type leases) and allowances for credit losses. The amended disclosures are designed to provide more information to financial statement users regarding the credit quality of a creditor’s financing receivables and the adequacy of its allowance for credit losses. The amended guidance is effective for period-end balances beginning with the first interim or annual reporting period ending on or after December 15, 2010. The amended guidance is effective for activity during a reporting period beginning on or after December 15, 2010. The Company adopted the amended guidance and it did not have a significant impact on the Company’s financial statements. ### Contractual Obligations The following table summarizes the Company’s contractual obligations and commercial commitments as of December 31, 2010: ### Payments due by Period | Contractual Obligations: | Total | Less than 1 Year | 2-3 Years | 4-5 Years | After 5 Years | | --- | ---: | ---: | ---: | ---: | ---: | | Operating leases, excluding operating costs | $2,452,000 | $455,000 | $939,000 | $976,000 | $82,000 | | Payments to retailers\* | 1,288,000 | 624,000 | 569,000 | 95,000 | — | | Purchase commitments | 395,000 | 336,000 | 59,000 | — | — | | Total contractual obligations | $4,135,000 | $1,415,000 | $1,567,000 | $1,071,000 | $82,000 | \*On an ongoing basis, the Company negotiates renewals of various retailer agreements, some of which provide for fixed or store-based payments rather than sign placement-based payments. Upon the completion of renewals, the annual commitment amounts could be in excess of the amounts above. ### Off-Balance Sheet Transactions None. ## Controls and procedures As filed, 2,838 characters. ### Disclosure Controls and Procedures The Company’s management carried out an evaluation, under the supervision and with the participation of the Company’s Chief Executive Officer (principal executive officer) and the Company’s Chief Financial Officer (principal financial officer), of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of December 31, 2010, pursuant to Exchange Act Rule 13a-15. Based upon that evaluation, the Company’s Chief Executive Officer and the Company’s Chief Financial Officer concluded that the Company’s disclosure controls and procedures as of December 31, 2010 were effective. Disclosure controls and procedures ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and are designed to ensure that information required to be disclosed by us in these reports is accumulated and communicated to our management, as appropriate to allow timely decisions regarding disclosures. ### Management’s Annual Report on Internal Control Over Financial Reporting Our management is responsible for establishing and maintaining adequate control over financial reporting, as such term is defined in Rule 13a-15(f) of the Exchange Act. Under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2010. In conducting its evaluation, our management used the criteria set forth by the framework in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on that evaluation, management believes our internal control over financial reporting was effective as of December 31, 2010. Grant Thornton LLP, an independent registered public accounting firm, has issued an attestation report on our internal control over financial reporting as of December 31, 2010. The attestation report of Grant Thornton LLP, on our internal control over financial reporting as of December 31, 2010 is included in Part II, Item 8 under Reports of Independent Registered Public Accounting Firm and is incorporated by reference herein. ### Changes in Internal Control Over Financial Reporting No changes in the Company’s internal control over financial reporting have occurred during the fourth quarter of 2010 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. Filed Mar 16, 2011. Source: SEC EDGAR, the filing index for accession 0000897101-11-000415. Last ingested by Listed: Oct 24, 2026, 14:58 ET. No prices; not investment advice.