Report of the Compensation Committee

     During the fiscal year ended December 31, 2003, the Committee was composed of a majority of independent directors. The Board designates the members and the Chairman of the Committee. The Committee oversees the general compensation plan of the Company, sets the specific compensation of the Company’s chief executive officer, the chief financial officer, the chief operating officer, and the vice president, corporate controller (the “Senior Executives”), reviews the chief executive officer’s annual compensation plan for levels other than the Senior Executives, and oversees the Company’s stock incentive plans. The Committee also oversees the development processes for Senior Executives and future Senior Executive candidates.

     In determining Senior Executive compensation, the Committee employs compensation goals designed to align compensation with the Company’s overall business strategy, values, management initiatives and performance. These goals are intended to: (i) attract and retain key Senior Executives whose abilities are considered essential to the long-term success and competitiveness of the Company; (ii) support a performance oriented environment that rewards achievement of internal Company goals and recognizes Company performance compared to the performance of similar situated companies; and (iii) motivate key Senior Executives for long-term strategic management and the enhancement of shareholder value through stock option awards.

     The Company’s Senior Executive compensation package is comprised of three components: base salary, incentive bonuses and stock options.

     Base salaries are the fixed component of the Senior Executive officers’ compensation package. For fiscal year 2003, the Committee approved the base salaries of the Senior Executives based on (i) salaries paid to Senior Executive officers with comparable responsibilities and employed by companies with comparable businesses, (ii) performance of the Company in fiscal 2002, and (iii) individual performance in fiscal 2002. The Committee reviews Senior Executives’ salaries annually and exercises its judgment based on all of the factors described above in making its decisions. No specific formula is applied to determine the weight of each criteria. In addition, the Company developed an incentive bonus program appropriately based upon business performance.

     A portion of the compensation of Senior Executive’s may from time to time consist of the award of stock options based primarily on the executive’s ability to influence the Company’s long-term growth and profitability. Stock options are granted under the Company’s Amended and Restated Stock Option Plan at the fair market value price of the Company’s Common Stock on the day of grant. The Committee believes that option grants afford a desirable long-term compensation method because they closely ally the interests of management with shareholder value and motivate Senior Executive officers to improve long-term stock market performance. Eligible Senior Executives may also participate in the Company’s Amended and Restated Employee Stock Purchase Plan.

     The Company’s compensation program described above closely links pay with performance and the creation of shareholder value. The Committee believes that the program has been and will continue to be successful in supporting the Company’s financial, growth and other business objections.

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