The bond market experienced sharp, rapid adjustment in the second quarter — arguably the greatest since the fall of 2008. The 10-year Treasury bond yielded 1.63% in early May and finished June yielding 2.49%. As of June 28, year-to-date it had lost 2.57% of its value.

The 10-year, “AAA” rated Municipal Market Data (MMD) municipal bond index reacted similarly during this two-month period ending June with a yield of 2.56% compared to 1.90% as of May 28. The recent rise in bond yields translate into significant price declines sparing few, if any, bond investors. For some, forced to sell during the tumult, it was a bloodbath reminiscent of Q4 2008 and Q1 2009.

The Great Rotation debate 

Certain pundits claim the increasing bond yields of the last few months mark the beginning of the “Great Rotation” from bonds into equities and record amounts of cash coming off the sidelines. No one can be certain at this point if the cycle has turned. It is too early to tell in our view as we keep in mind several times post Q3 2008 when Treasury bond yields increased by 50-60 basis points only to subsequently see bond prices rally and yields fall. Certainly we are wary bond investors, but we have seen this before.

A case can be made perhaps that the recent bond sell-off presents a short-term, attractive buying opportunity. Some of the best investments we made for our clients in recent years occurred when we invested client cash in the last quarter of 2008, the first quarter of 2009 and in 2010 following the airing of the well-known “60 Minutes” municipal bond market segment. If the Fed does not sell in quantity, prices will stop falling and may reverse their recent trend. 

Separate account, laddered portfolios vs. municipal bond funds

Almost universally, our client’s separate account, laddered portfolios handled last quarter’s turmoil much better than the broader bond market. This is a similar storyline to what our clients’ portfolios experienced during the 2008-2009 financial crises. These portfolios avoided much of the damage resulting from the panicked selling of many bond funds, bond ETFs and hedge funds. In contrast, the June experience of many bond fund and ETF investors was bad. Fund investors unloaded shares at a record pace — $6 billion worth in two weeks — forcing some funds to sell bond holdings to dealers at a time when prices were plummeting. These funds recorded significant losses.

One thing we know with certainty after three decades specializing in this business: it is difficult to hedge or effectively short the municipal market and when municipal bond funds are forced en masse to sell bonds to meet redemptions, losses for shareholders are magnified. For example, the iShares S&P National AMT- Free Muni Bond (MUB) lost 1.76% in value in ONE week (June 13-20) and the Pimco Total Return Fund lost 2.59% in June. Certain “inflation protected” funds lost more than 6% of their value in the second quarter. Many investors learned in June share sale prices can veer significantly from NAV in a market rout because the funds’ advertised liquidity feature tends to disappear. 

Here is an excerpt from our November 2008 market update

“This financial crisis has reinforced in our minds the significant advantage enjoyed by investors who use a SEPARATELY MANAGED, NON LEVERAGED bond portfolio strategy. This approach to bond investing lessens your volatility and increases your liquidity……..Among other things, separate account management allows for quality investments to be held when the market moves sharply downward. There are no forced sales in a separately managed bond portfolio unlike what often occurs in bond funds when prices plummet. When the general market recovers, so does the paper value of your investment………Additionally, if you need to raise capital you simply request bids for a portion of the bond portfolio; even in this market, you will find bidders for smaller blocks of quality, shorter maturity, fixed rate bond issues. This simple strategy has worked well for decades and we expect that won’t change anytime soon.”

We are not downplaying the reality that separate account portfolios lost value over the past two months. We remind you investing in the bond market entails risk, which can result in losses.

Importantly, recently incurred portfolio paper losses for the most part will be offset over time as income and maturity proceeds are reinvested into higher yielding bonds. For income-oriented investors, adhering to a disciplined strategy of investing in quality bonds laddered over an intermediate time frame remains the soundest way to invest in the municipal bond market. 

Separate account, laddered portfolios vs. money markets

We have had many conversations recently with concerned clients about the recent decline in portfolio valuations. Some fear what will happen if interest rates continue to rise and bond prices decline further. Some have asked, “Would I be better off selling my bonds and just holding cash until bond prices stop falling?” After all, as yields increase, the yield on cash should grow in tandem, while existing bond prices would decline in value as yields rise. This would lead one to reasonably wonder if a simple money market fund investment would outperform a fixed maturity, laddered bond portfolio. One of our portfolio managers, Scott Rausch, CFA, recently prepared a couple of scenario analyses that look at this very issue.

The first is a simplified scenario consisting of a $1.2 million, equally laddered municipal bond portfolio spread over six years (i.e. $200,000 par maturing in each year). Bond quality is split 40% to 60% between “AAA” and “A” rated bonds, respectively, and initial yields are based off of actual Municipal Market Data (MMD) levels for bonds settling August 1st of this year. This portfolio is compared to a tax-exempt money market fund, which currently yields zero percent. 

These portfolios were then exposed to a 100 basis point increase in interest rates, applied to all maturity dates, at the end of each twelve-month period. Maturing bonds and income from the bond portfolio were rolled over at the new, higher six-year rate each year. 
Even in this extreme rising rate environment, the bond portfolio only trails the performance of the money market fund by 26 basis points on an annualized basis (2.23% for the bonds versus 2.49% for all cash). However, tax-exempt income for the bond portfolio is greater — $217,248 versus the money market’s income of $190,473. The laddered portfolio delivers higher income. 

This is an interesting exercise in bond math, but a six-year run of yearly 100 basis point rate increases across the entire yield curve is unlikely to actually occur. Thus, we looked at recent history for a more realistic scenario, and focused on the period from June 2003 to June 2009.

The burst Internet stock bubble fed into a recession that started in March 2001, and was exacerbated by the economic shock resulting from the September 11th attacks. In reaction, the Federal Reserve embarked on a series of cuts in the Federal funds rate, reaching a then unheard-of 1.00% in June 2003. As the economy improved, the Fed gradually raised short-term interest rates over a two-year period from 2004 to 2006. This rate then stabilized for 15 months, and dropped precipitously over the next 15 months.  
 

We used municipal bond yield data from this period to create a $1 million tax-exempt portfolio. The model portfolio has $200,000 par value maturing each June over a five-year ladder. Our kickoff date is June 2003, when the Fed funds rate bottomed out. Each June, maturing bonds and all income are reinvested at the new five-year bond yield. The model assumes a 40% to 60% weighting of “AAA” rated and “A-“ rated general obligation bonds, respectively. Spot bond yields for our 2003 kickoff and each succeeding year are based directly on the Bloomberg fair market curve indexes for the relevant maturity dates. The results of the tax-exempt money market fund are based on actual returns of the Vanguard Tax-Exempt Money Market Fund during this period. Here are the results:
  

As you can see, the laddered bond portfolio lags behind the money market fund in two of the first three years, but as each tranche of the bond portfolio matures, the proceeds and all interest are reinvested at the new five-year yield. In all years over the actual five-year reinvestment period, the $200,000 par value maturity proceeds are reinvested at higher rates than that tranche’s original yield. 

As an example, three years into this model as June 2006 arrives, the $200,000 that had been producing cash flow at a 1.66% yield is reinvested in June 2011 bonds yielding 4.10%. This is a 244 basis point increase. As you can see, as time progresses the laddered portfolio outperforms, as more and more of its assets are locked into higher yielding bonds.

The outperformance of the laddered bond portfolio, in part, reflects the power of compounding interest from higher yielding bonds found at different points of the historically upward-sloping yield curve. This dynamic helps to cushion the lesser paper value of some bonds held at lower yields. Additionally, any unrealized paper losses on lower yielding securities diminish as maturity approaches, becoming zero at payoff.

The average U.S. economic expansion lasts three and one quarter years, per the National Bureau of Economic Research. Eventually, interest rates and bond yields decline, as they have always done. When this begins to occur, the higher yields captured in the laddered portfolio will significantly outperform cash.

Finally, the tax-exempt income for the bond portfolio is $177,377 — versus the money market’s income of $142,074. The laddered portfolio delivers higher income and higher total return.

Opportunistic investing in imperfect markets

This brings us to a critical point — our model does not take into account any sort of competent, active management. It makes no allowance for opportunistically capitalizing on market mispricings, or for superior credit analysis, or for any other value-added feature of our bond portfolio research and management process. The municipal bond market is, by its vast and disparate nature, inherently less efficient than the U.S. Treasury or high-grade corporate markets. Our clients’ portfolios benefit from this dynamic.

Our analysis also excludes the issue of tax loss harvesting swaps by which the bond manager takes losses in carefully selected, lower coupon bonds so that the client can shield income from another source. Sales proceeds can then be invested at new, higher-yielding tax-exempt securities. This can benefit investors seeking maximum tax efficiency and the further enhancement of portfolio returns.

For income oriented investors with a mid- or long-term perspective, we see a notable benefit to rapidly rising yields and an imperfect market — the opportunity to take advantage of heavy selling by bond fund and ETF managers who are forced to sell bonds to meet the redemptions of panicked investors. We have seen this many times over several decades managing bond portfolios. We recently saw this in June, as multiple investors tried to sell similar bond holdings at the same time, with sellers greatly outnumbering buyers, leading to a significant decline in prices.

When these markets occur, we try to avoid selling and try mightily to add quality credits at attractive yields to client portfolios. We did this two months ago. We did this in 2010. We did this in 2008-2009. And we will do it again in the years ahead.

Periods when bond prices drop significantly and yields increase in a short period of time present wonderful investment opportunities for a committed fixed income investor.

This is not the end

The market events of the past few months give us a glimpse into our bond market future. It has been quite a stretch, no doubt, and we expect more future volatility.

Today, market liquidity is more tenuous than in past years. This is the result of dealers holding less inventory, increasing regulatory requirements, a smaller investor base and more retail ownership through mutual funds and ETFs rather than direct holdings. This liquidity dynamic may cause problems and anxiety for ephemeral bond investors. For committed investors with separate account management, laddered portfolios this dynamic are less problematical. In fact, a market like we are currently experiencing can offer wonderful investment opportunities. 

A silver lining in June’s storm cloud: when a bond investor is selling at distressed prices there usually is another investor buying. Expect more price volatility and remember that volatility often brings opportunity.

The current state of the bond market reminds me of Sir Winston Churchill’s observation in November of 1942, “Now this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.”

Opportunity in muniland — remembering, why bonds?

We believe last quarter’s disorderly secondary market with its diminished level of liquidity portends one bit of good news for income oriented bond investors: higher nominal and relative yields and therefore better incomes.

In our view here are the reasons for investing in bonds: income, safety, and the stability of principal over an intermediate time period. Despite the sell-off of recent weeks, quality municipal bonds still hold the characteristics that make them alluring to investors. They offer a cushion against stock market volatility, security of principal and a steady income stream exempt from federal income taxes. 

Clearly, today’s market requires a high degree of credit discrimination. We have long stated that “municipal bonds are not all created equal” and focused our credit research expertise on the “three pillars”: underlying credit quality, deal purpose and deal structure. This credit discipline is critical in today’s market.

The municipal bond market is arcane and idiosyncratic and that is not going to change anytime soon. This dynamic provides excellent investment opportunities for the committed, income oriented investor. Generally speaking, today’s current market offers excellent value.

Examine Bernardi Securities, Inc. composite portfolios’ 12 year performance numbers and you see consistent, increasing value over many different market cycles. As disquieting as it is to see a 6/30/2013 portfolio valuation down from its earlier year value, the paper losses will be partially offset in the coming months by greater monthly cash flows as reinvestment occurs. Over time this changing dynamic is a positive for income oriented bond portfolios. If you are not convinced, review the value of your bond portfolio as of 10/31/2008 and then again its value 7 to 9 months later. Additionally, some of the best performing bonds in your portfolio today are those bought in late 2008 and early 2009 when bond prices declined significantly.

The bond market sell-off last quarter reminded us again — a separate account, quality, laddered bond portfolio strategy works very well for income-oriented investors who do not have a short-term perspective.

Thank you for your continued confidence in our bond portfolio research and management process. Please call us if you would like to review the portfolio or if you have any questions.

Sincerely,
Ronald P. Bernardi
President and CEO
August 14, 2013
 
 

STOCKTON’S APRIL FOOLS’ RULING
 “….and it is apparent to me that the City will not be able to perform its obligations to its citizens relating to such fundamental matters as public safety, as well as other basic governmental services, without the ability to have the muscle of the contract impairing power of federal bankruptcy law. Therefore, I am persuaded that the petition was filed in good faith.”
(excerpted from transcript of Judge Christopher M. Klein’s ruling in favor of City of Stockton, California)

This past Monday, April 1, the Honorable Christopher M. Klein, presented a thorough, fifty-four pages “FINDINGS OF FACT AND CONCLUSIONS OF LAW” affirming Stockton, California meets all the requirements to file Chapter 9 status.

The ruling was significant but just the beginning of the battle for the decision leaves many undecided issues. Immediate questions that come to mind, post ruling, include:

“How does the decision impact the municipal bond market?” and “Should investors be worried?”

Our short answer to the first question: “To be determined” and to the second, “some, more than others”. These responses are partly based on a read of the Judge’s transcript as well as the City of Stockton’s “Debt Proposal”, a document it submitted to the court.

Clearly, the decision directly impacts Stockton and some of its creditors immediately. Additionally, the ruling potentially affects municipalities across the State of California: certain investors will look warily at general fund and other unsecured debt issued by California municipalities.

More importantly, the final reorganization plan approved by Judge Klein will determine how “capital market creditors” are treated and will greatly influence investor and market maker views of debt issued by California municipalities and, potentially, communities across the country. The manner in which the plan treats “capital market creditors” will be a defining moment, in our view. 

SOME RULING DETAILS

Judge Klein ruled Stockton has the right to file for Chapter 9 because its situation satisfies all of the requirements. The ruling also states the “capital market creditors” (Assured Guaranty, National Public Finance Guarantee, Wells -Fargo and Franklin Funds) must negotiate “in good faith” with Stockton.

The Judge’s ruling is quite clear on these two points.

The ruling is a short term victory for Stockton and a setback for debt holders. It allows Stockton to use general fund monies to cover operating expenses rather than principal and interest payments and it forces capital market creditors back to the negotiating table to try and work out a “plan of adjustment” with Stockton.

The named creditors, other than Franklin Funds, removed themselves from negotiations when the City informed them it was not asking CalPERS to make any concessions. California Public Employees Retirement System, or CalPERS, is the provider of Stockton’s employees’ defined benefit pension system. The creditor’s action did not sit well with Judge Klein who stated the City’s refusal to ask CalPERS for concessions did not justify the creditors ending their negotiations.

On other important issues the Judge’s ruling is unclear and questions remain.

Here is our interpretation of the ruling and how it relates to some of the unresolved issues:

1. The ruling does not mean capital market creditors will lose all of their money, although it certainly increases the possibility a haircut is forthcoming.

2. The ruling does not mean the Judge accepts the City’s proposed debt reorganization plan. The plan calls for, on average, a 46% discount on net present value basis for debt holders and treats various debt holders differently. For example, the plan calls for 2007 pension bond debt holders to take an 83% haircut (17% is secured by non-general fund monies, i.e. water fund), while 2003 Certificate of Participation debt holders and the City agreed debt holders will take no more than a 19% haircut with a possibility the haircut may be erased entirely over time.

The Judge realizes a give and take negotiation must occur between the City and debt holders and states so in his ruling:

“The City intended the “Ask” to be the opening of negotiation. And this is a very typical thing in reorganization practice or in workout practice before the filing of reorganization….And that’s exactly what the “Ask” was, was just an opening position that formed the basis for conversation with the parties, with a view toward give and take, to the extent of the goal of getting the City in a spot where it would be able to pay its bills as they come due year in/year out could be achieved.”

3. Importantly, the ruling does not state CalPERS is free and clear of having to make concessions. The City did not ask CalPERS to make any concessions and therefore, CalPERS offered none. The Judge did not rule on this issue and the issue remains unresolved. He did state there may be an issue with CalPERS and that any confirmation plan must be fair and equitable with respect to each class of claims that has been impaired or has not accepted a plan. He accklowledged he may have to “GET DOWN INTO THE NITTY-GRITTY OF THE CalPERS SITUATION.”

Here is an excerpted quote taken directly from Judge Klein’s transcript:

“This does not mean that there’s not potentially a serious issue involving CalPERS. But at this point, I do not know what it is. I do not know whether spiked pensions can be reeled back in. There are very complex and difficult questions of law that I could see out there on the horizon….but no plan of adjustment can be confirmed ……unless that plan does not discriminate unfairly and is fair and equitable with respect to each class of claims that is impaired under or has not accepted a plan”
TIME FOR STOCKTON TO “INVITE” CalPERS TO THE TABLE?

CalPERS is the city’s largest creditor. We are not attorneys, but common sense leads us to conclude any reasonable solution to Stockton’s financial problems requires CalPERS involvement. Stockton has not reduced or suspended payments to its employees’ defined benefits pension unlike San Bernardino, CA during its Chapter 9 odyssey. It is difficult to imagine a solvent Stockton in the near future absent adjusting its annual payment to CalPERS which last year collected nearly $30 million (and rising) from the City.

CalPERS claims it cannot authorize a reduction in the City’s retirement contribution and that it has no place at the table. Judge Klein may view the issue differently. The “capital market creditors” argued it is unfair discrimination for them to take a haircut while CalPERS takes none. Judge Klein offered them some hope when he said:

“So if the City makes inappropriate compromises, the day of reckoning will be the day of plan confirmation. And that’s precisely my analysis with respect to the CalPERS situation and the omission of dealing with CalPERS in the City’s “Ask”…….”

So how is a disinterested CalPERS “invited” to the table if Stockton remains unwilling to engage it?

Debt holders should begin negotiating with Stockton “in good faith” as required by law, making concessions and proposing a deal similar to what the City and Ambac Assurance have agreed to with the previously mentioned 2003 Certificate of Participation issue. The City has already agreed to this restructuring so it is reasonable to assume it could serve as a template for other impaired issues.

Perhaps as a tactic, certain concessions offered by debt holders could be made contingent upon CalPERS taking a haircut of some sort. If debt holders offer something substantive and the offer is made in good faith, it may provide the City with a reason to approach CalPERS.

This, of course, is conjecture, but it seems Judge Klein recognizes the City needs to involve CalPERS in its discussions. He understands the final plan of adjustment must be comprehensive, non-discriminatory and equitable to all creditors. He stated clauses in the state constitution must give way to the Federal Bankruptcy Code under the Supremacy Clause of the Constitution because the ability to impair contracts while in Chapter 9 is sometimes the only way to arrive at the desired point of solvency. IN OTHER WORDS, U. S. BANKRUPTCY LAW OVERRIDES CALIFORNIA PENSION LAWS.

In his opening remarks, while enumerating the many circumstances contributing to Stockton’s insolvency, Judge Klein said this:

“And some of the problems were also the incrustation of a multi-decade, largely invisible or nontransparent pattern of above-market compensation for public employees. Among other things, the City offered generous health care benefits, to which employees did not contribute. Retirees had their entire health care benefits paid for by the City. The City permitted, to an unusual degree, so-called “Add Pays” for various jobs that allowed nominal salaries to be increased to totals greater than those prevailing for other municipalities. Some so-called “Add- Pays” are perfectly legitimate and standard features……..and some were regarded as really not what one would find elsewhere, and, therefore, overly generous.”

The key phrases providing a possible clue as to what Judge Klein is thinking are: “multi-decade”, “nontransparent pattern of above market compensation”, “overly generous”. It is notable to us Judge Klein does not use similar phraseology when characterizing (and criticizing) the genesis of some of the City’s outstanding, impaired debt issues.

Judge Klein continues:

“And some of the problems were also rooted in generous retirement practices. The pensions, of course, are themselves a form of implicit compensation. Pensions were allowed to be based on the final year of compensation, and only the final year of compensation, and that compensation could include essentially an unlimited accrued vacation and sick leave. So it was possible to engage in the phenomenon that’s become known as “pension spiking,” in which a pension can wind up being substantially greater than the annual salary that retirees ever had…..In any event, pension spiking was an issue in Stockton because Stockton’s obligations to CalPERS were based on the amount of pensions that were having to be paid out. So projected pension expenses in particular were soaring.”

The City of Stockton itself recognizes altered retirement benefits are a contributing factor to its financial demise and states this in its reorganization plan:

“In addition, the City issued Pension Obligation Bonds (POBs) in 2007 to reduce the cost of the City’s unfunded liabilities largely created by the enhanced PERS retirement benefits.”

In short, the City issued pension bonds, now in default, to cover a portion of the cost of increased benefits; some of the same benefits the Judge belittles.

Payment terms due to debt holders never increased after issuance; the contract never changed to favor debt holders at the expense of the City. The same point cannot be made about a portion of retirement and health benefits that cost Stockton nearly $30 million last year.

Perhaps a starting point of discussion between Stockton and CalPERS should be “the generous retirement practices” cited by Judge Klein.
SOME TAKEAWAYS FROM JUDGE KLEIN’S APRIL RULING

Here are a few thoughts:
1. If Stockton’s re-organization plan, as currently proposed, is approved by Judge Klein, most municipalities across California will see borrowing costs increase for general fund secured debt issues. Certain issuers will lose general market access altogether for these types of loans and it is highly probable more onerous debt security covenants will be required even for secured debt issued by certain municipalities.

2. The national impact of the ruling, at this point, is minimal. Certain states prohibit Chapter 9 filings and many approach the Chapter 9 process differently. A number of states, when confronted with similar situations, have acted differently than California. From our perspective, there are Chapter 9 situations occurring in other parts of the country that have been handled much better than the State of California’s laissez- faire approach.

A review of the Central Falls, Rhode Island Chapter 9 experience and its speedy resolution (it took only 13 months) and, to date, the State of Michigan’s current approach to solving Detroit’s serious financial problems make the point. In both cases, the governors and state legislatures involved themselves. In the Central Falls bankruptcy, bond obligations were honored. This approach benefits Central Falls and municipalities across the state today. A similar approach, if employed, will help Detroit, and in the end, communities across Michigan.

3. California, to date, has approached Chapter 9 filings differently and this damages nearly all California municipalities. We understand some of this is political reality and some of it is California legal reality. But many investors really do not care much for all of that. The point is not to raise a parade of horribles that will befall Stockton and municipalities across California if debt holders are treated unfairly. This is an unknown at this point. Stockton’s residents and current employees have suffered much in recent years so a degree of compassion is due them, no doubt. But Stockton needs to settle with debt holders quickly and equitably. The State of California and CalPERS can help with this. Once broken, trust is difficult to regain and if Stockton debt holders are treated unfairly a segment of the investing public will invest their capital in other places.

4. A final take way is confirmation of a favorite theme of ours:
ADHERENCE TO THE THREE PILLARS OF MUNICIPAL BOND CREDIT RESEARCH

1. ESSENTIAL DEAL PURPOSE

2. SOUND DEAL STRUCTURE

3. SOLID UNDERLYING CREDIT QUALITY

We believe the three should work in tandem. Ideally, a credit is strong in all three areas. This situation occasionally occurs. More realistically, is the situation where a particular issue is lacking in one or perhaps two areas. In this situation if one is to invest, the third pillar needs to be at its highest level, in our view.

Here is a brief description of Stockton’s outstanding, troubled debt issues:

1. 2003 Housing Certificates of Participation issued for library, main police station and fire stations 1,5,14- restructured with continued general fund backstop
2. 2004 Arena, Ed Coy, Market Street Parking Garages- impaired, city no longer has possessory interest in garages and intends to pay nothing from the general fund
3. 2006 Lease Rental Revenue Bonds for Eberhardt Office Building and SEB garage-restructured, eliminating general fund payments as a backstop
4. 2007 Pension Obligation Bonds- 83% percent impaired, 17% secured by various revenue streams
5. 2007 Variable Rate Demand Obligations for office building- restructured and continued general fund backstop
6. 2009 Lease rental Revenue Bonds for golf courses and parks-restructured with no general fund payments, pledge, backstop, PFF revenue only pledge
7. 2006 Department of Boating and Waterway Loan- impaired with no general fund payments, pledge, backstop

Bernardi Securities, Inc. portfolio managed client accounts never owned any of these debt issues and here’s why:

– All issues exhibited average to below average underlying credit quality at time of issuance.

– Only #1 and #4 possess essential deal purpose, as we define the term.

– Only #2, #3, #5 exhibit sound deal structure.

In summary, none of the issues possess all three pillars, two possess none, and five possess only one pillar which we do not view is at a high level.

What was our conclusion from our analysis? Do not invest in any
 of these issues.
There are plenty of quality municipal bonds available to investors today. Fewer than in years past, no doubt, but a healthy supply still exists. Analyzing and understanding municipal bond credit is a process and often it is a tedious one. For that reason, we remain municipal bond specialists.

I hope you find this letter helpful. Thank you for your continued confidence.

Sincerely,
Ronald P. Bernardi
President and CEO
Bernardi Securities, Inc.
April 10, 2013