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Date: December 19, 2011
Vol. XIV, No. 24, #340

Printer Version

TABLE OF CONTENTS

bulletCommentary: Another Eventful Year
bulletNew Columns This Issue
bulletTake the CLN Poll: Co-Locating Shows
bulletCLN Poll: Predicting Holiday Sales
bulletThe Chains' Trade Show Letter
bulletComment: Co-Locating Trade Shows
bulletThe Top News Stories of 2011
bulletCHA Awards Announced
bulletScrapbooking Consolidation Continues
bulletThe Industry Loses More Pioneers
bulletHancock: Sales Down, But ...
bulletScenes from the Post-Thanksgiving Season
bulletNew Service Supplier Firms
bulletNovices and Enthusiasts: Another Point of View
bulletRandom Notes, Random Thoughts
bulletMiscellaneous News: Retail
bulletMiscellaneous News
bulletThe Creative Network: Job Openings
bulletMemo from Santa
bulletReminders

COMMENTARY: ANOTHER EVENTFUL YEAR

Every year I wade through the year's 23 issues to pick out items for my annual "Big News Stories of the Year," and every year I'm shocked at how much change had occurred in 11 and a half months. This year we've seen three chains have new owners, two trade association leaders leave, and there were major changes at key industry companies such as Delta, Caron, Making Memories, Plaid, Blue Moon Beads, DCWV, and Design Originals, to name a few.

All in less than a year.

And if you go back through the old CLN  end-of-the-year issues (they're all in CLN Archives) the number of changes is absolutely astonishing.

So what should you make of all this? Take a moment, crank up Elton John's "I'm Still Standing," and pat yourself on the back.

Then go back to work.

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NEW COLUMNS THIS ISSUE

Kizer & Bender. Ten simple but important things to do to prepare your store for a strong new year.

Memory, Paper & Stamps. CLN asked readers what should be done to return scrapbooking to its former glory. Peter Curran of WorldWin Papers responded with a thought-provoking strategy to do just that. Now others are weighing in on the subject, including Torrie Nelson, Editor of Creative Retailer, and Kim Schofield, an experienced marketing pro with an insider's view of an independent scrapbook shop.

(Note: If you click on the column and it's not the column you expected, click the Reload or Refresh button of your browser.)

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TAKE THE CLN POLL: CO-LOCATING SHOWS

Below is a letter from chain store execs asking show sponsors and associations to work together to co-locate shows (two or more events held at the same time in the same convention center). Is this a good idea? Might it make a difference in your exhibition or attendance plans if there were two industry-related shows at the same time/place?

To vote, click on Industry Polls in the right-hand column or click HERE.

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THE CLN POLL: PREDICTING HOLIDAY SALES

CLN voters were not as optimistic about the season as the National Retail Federation, which had predicted sales would be 2.8% higher than a year ago. Only 18.8% of the voters in this unscientific poll thought sales would be higher than 2.8%, while 31.3% thought the NRF's prediction was too optimistic. The rest thought the prediction was about right.

Late last week the strong start to the season prompted the NRF to raise its estimate to 3.8%. "The strong numbers are impossible to ignore and show a certain optimism," said NRF VP Ellen Davis.

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THE CHAINS' TRADE SHOW LETTER

(Note: The following letter was written by John Menzer, CEO of Michaels; Philo Pappas, Exec VP/Category Management of Michaels; Travis Smith, CEO of Jo-Ann; Joe Jeffries, CEO of A.C. Moore; and David Green, CEO of Hobby Lobby.)

Dear Trade Association and/or Trade Show Organizer:

As you know, industry trade shows are under varying degrees of financial duress. While many have just gone away, we still have many associations that conduct trade shows.

We feel, however, there is an opportunity to be even stronger and more relevant to our industry by combining resources. We are not talking about mergers and acquisitions. We firmly believe that the trade show concept of face-to-face business is a viable concept for us personally for many reasons.

With that being said, we, the chain retailers, and you, the association community, need to leverage our investments in the shows if we are to grow our industry. We have to attend anywhere from five to 20 trade shows per year in order to be able to purchase all of the merchandise that we carry.

Wouldn't it be great if we could reduce that number and the inherent costs involved and go to a few large shows, yet still do justice to all of the departments in our stores?

Our point is we need you, our trade show organizers and associations, to help change the current paradigm. We are reaching out to relevant associations and shows to try to achieve this by co-location, cooperation and cross education programs. We encourage you, and ask for your help to achieve this.

We will continue to support you as best we can, and thank you in advance for your consideration. We encourage you to be proactive and take positive action in reaching out to other associations and trade shows in this very important industry initiative.

We would like to see a concerted, concentrated industry-wide effort to unite in common sites and times for our shows.

Let’s see what we can achieve together for the sake of our industry.

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COMMENT: CO-LOCATING TRADE SHOWS

Independent retailers who carry a broad range of categories feel the same way as the chain stores. One independent told CLN his store had to attend 11 shows in the first three months of the year.

Also, associations co-locating their shows is not a new idea. Years ago TNNA and CHA's predecessor, HIA, co-located their winter shows; either association badge allowed buyers entrance to both shows, and everyone seemed pleased with the effort.

In recent years, CLN has attended trade shows in Los Angeles, Anaheim, Indianapolis, Phoenix, Orlando, Rosemont, and Chicago. Many cities built convention centers much, much larger than the market needs today, and these centers and others could easily handle three or four shows going on simultaneously, let alone two.

Finally, attendance would probably increase for each co-located show. Buyers would see more product, have access to more workshops and seminars, and see a broader array of color and design trends.

Vote in the Industry Poll and send your comments on the issue to CLN. Call 309-925-5593 or email mike@clnonline.com.

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THE TOP NEWS STORIES OF 2011

Mergers & Acquisitions. Sbar's acquired A.C. Moore …The investment firm Leonard Green took Jo-Ann private and a private equity firm in Europe did the same with the U.K.'s largest chain, HobbyCraft  … Spinrite acquired Caron Int. … ANW/Crestwood and Making Memories merged … DCWV acquired Blue Moon Beads … Plaid signed a licensing deal with Delta and will now produce and sell all Delta products … American Crafts agreed to sell and distribute Studio Calico products and purchased Crate Paper. … Advantus acquired Cosmo Cricket. … Colonial Needle bought Presencia … Design Originals was sold to Fox Chapel … Teters Floral Products acquired the assets of Napa Home & Garden … Finally, (see details below) Canvas Corp. acquired 7gypsies.

Personnel changes. CEO Jane Aggers left Hancock. … CEO Steve Berger and VP Sandy Ghezzi left CHA. … Reggie Hall was named Exec Director of NAMTA … CEO Chris Crombie left HobbyCraft … Heather Corvey left Sierra Pacific Crafts. … Travis Smith was promoted to CEO of Jo-Ann, replacing Darrell Webb who retains his position as board chair.

Condolences. We lost four wonderful industry veterans. Jean Leinhauser and Bob "Mr. Fiskars" Arend passed away months ago, and just recently (see article below) we lost Hazel Pearson and Erica Wilson. … And dear friends Larry Kennie and Pat Koziol lost their spouses. … Former Michaels Board Chair billionaire Charles Wyly died in a car crash.

Legislation. Congress made the CPSIA more realistic, eliminated some of the paperwork that had been mandated by the health reform law, and is considering sales tax legislation for e-commerce sites.

Imports/Exports. The mess in Europe has complicated exports, and the U.S. Senate passed the Currency Exchange Rate Oversight Act, a bipartisan bill intended to pressure China to accelerate the appreciation of its currency against the dollar, but may just complicate importing.

Miscellaneous. CHA gave up on the idea of sponsoring separate consumer shows and made arrangements for craft pavilions at established consumer shows. The trade magazine Creative Retailer debuted, the first craft trade magazine since the demise of Craftrends and Craft & Needlework Age.… Hancock continued to roll out its craft department, but the stock price has been hovering at or below $1 for months. … Many keep thinking Michaels' owners, Bain Capital and The Blackstone Group, will launch an initial public offering (IPO), but no sign of it yet. … TNNA announced it was moving its 2012 winter show to Phoenix after years in California. The Spinning and Weaving Assn. joined forces with TNNA. 

Chain Stores. Michaels, Hobby Lobby, and Jo-Ann appear to have had a good year, while Hancock's and A.C. Moore's quarterly reports indicate they're in a struggle. Wal-Mart runs so many tests and has changed its mind regarding our industry so often, it's hard to say, exactly, what is going on. (Comment: There are six Wal-Marts in a 40-mile radius of CLN, and every one is different regarding the size and location of crafts, and fabric departments.)

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CHA AWARDS ANNOUNCED

The Meritorious Award of Honor (service to the association): Mike McCooey, President/CEO of Plaid Ent. Mike served on the ACCI and HIA boards, chaired the merger task force that merged HIA and ACCI into CHA, and then served as the CHA board's vice chair and then chair.

The Industry Achievement award (service to the industry): Suzanne McNeill, founder of Design Originals, now an affiliate of Fox Chapel Publishing. Suzanne has published a countless number of instruction books in almost every craft category, and is currently leading the effort for the Zentangleฎ phenomenon.

The Special Recognition award (service to humanity): Nikki Sivils for her craft relief efforts for the tornado victims in Joplin, MO. Sivils and her team delivered 50 tubs of scrapbook supplies to local schools, the local art center, and the "Healing Through Art" program for children.

A second Special Recognition award: A group working under the name "Clara's Calling," in honor of U.S. Army Master Sgt. Clara Vargas: Lisa Steele of Bella Fabrics, Rob Krieger of Checker Distributors, Laurie Harsh of The Fabric Shop Network, and Jan and John Bradley of The Lamia Afghan Foundation, for their work in providing sewing and quilting supplies to thousands of women in Afghanistan. "Clara's Calling" is recognized for securing, shipping, and distributing sewing/quilting supplies to 4,000 widows.

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SCRAPBOOKING CONSOLIDATION CONTINUES

Canvas Corp. has acquired 7gypsies from Ultra-Pro and Ultra-Pro's other, now-defunct paper craft divisions, Chatterbox and Around the Block, Scrapbook Update reported.

Canvas Corp.'s owners/founders, Randy and Christine Meier, are industry veterans. Christine, a former Wal-Mart buyer, and Randy founded DMD Industries and later sold it to Westrim/Creativity before launching Canvas Corp.

"Our focus is to bring creative ideas and people back together," Christine told Scrapbook Update, "and the fit could not be more perfect with the 7gypsies team, design esthetic and core philosophy."

7gypsies' operations will move to Canvas Corp's facilities in Springdale, AR. The 7gypsies' Utah sales office will remain open.

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THE INDUSTRY LOSES MORE PIONEERS

1. CLN just learned of the passing of Hazel Pearson, who, along with Aleene Jackson and Jim Gick, really laid the foundation for the modern craft industry in the 1940s, shortly after the end of World War II. Hazel Pearson Handicrafts was one of the first true companies in our industry. To see some of her products and books, which are still being sold on Etsy,  and Amazon is still selling one of her books, Stuffed Novelties.

Aleene Jackson's daughter, Tiffany Windsor of Cool2Craft, wrote, "Hazel was, of course, an integral player in the launch of the craft industry with Mom when she participated in the Aleene’s Craft Caravan in 1967/68/69. Hazel and Aleene were always friendly business rivals but close friends for over 65 years. Many years ago, Hazel, Aleene, and I met and I agreed to take on the rights to all of her published books so that I could continue to share her inspired ideas with the craft community. We have over 50 boxes of her original craft projects, books, catalogs, and instructions stored to re-introduce to the industry in the years ahead so her legacy will never be forgotten."

Was there a more gracious, dignified person in this industry than Hazel? CLN doesn't know of any. Next month Hazel would have celebrated her 98th birthday.

2. Erica Wilson died of a stroke last week at age 83. The New York Times called her "the Julia Child of needlework, who brought the gentle art of crewel -- as well as cross-stitch, needlepoint, and other traditional embroidery techniques -- to an international audience through her books, television shows, correspondence courses, syndicated column, and retail shops." To read The New York Times obituary, click HERE.

Retired industry veteran Wolfie Rauner said, "If I remember Hazel, she's probably teaching St. Peter how to do decoupage. She'll be competing for attention with Erica Wilson who'll be teaching him needlecrafts.

"May they both craft in heaven."

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HANCOCK: SALES DOWN, BUT …

Net sales for the quarter dropped 3.7% to $70.8 million, and same-store sales decreased 3.5%. Operating income fell to $1.2 million from $2.8 million a year ago. Net income was zero ($0.00/basic share) compared to a net income of $1.4 million ($0.07) in the third quarter of fiscal 2010.

For the first three quarters of the year, net sales are down to $190.6 million from $197.0 million and same-store sales declined 3.0%. Operating loss was $2.5 million compared to $3.4 million of operating income a year ago. Net loss was $6.1 million ($0.31) compared to a net loss of $0.7 million ($0.04) a year ago.

President/CEO Steve Morgan said, "Notwithstanding our third quarter results, we are encouraged by the results of the fourth quarter and holiday season thus far. Our comp store sales are up for the first 5 weeks of the fourth quarter and have trended similarly since Black Friday. November is the first month in over a year that we had an increase in same store sales. We will seek to continue this momentum through the fourth quarter and into next year now that the missed merchandise issues have been resolved."

Sales on Hancock's e-commerce site declined 13.8% in the third quarter and have decreased 5.2% year to date. Gross margin for the quarter declined by 40 basis points to 43.5% and for the first three quarters, it's down 130 basis points to 43.8%.

During the quarter, Hancock relocated two stores. The current store count is 265.

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SCENES FROM THE POST-THANKSGIVING SEASON

1. New research indicates holiday shoppers are in two camps: one group pounced on the Thanksgiving weekend doorbusters and are virtually finished. The other group is waiting for the last minute sales.

By the end of the first December weekend, about 38% of consumers surveyed by the America's Research Group said they'd finished a majority of their Christmas shopping, Reuters reported. The same survey indicated almost six in 10 are waiting for last minute deals.  "There is very little retailers can do unless they really have some incredible sales that force that consumer to reconsider if they want to make an extra purchase now," America's Research Group President Britt Beemer told Reuters.

2. The Associated Press reported consumers are becoming blas้ about retailers' holiday sales and discounts. "People have been shopping more than ever this holiday season, largely because of a flood of sales," the AP reported, "but Americans have become so used to deep discounts in the weak economy that they expect each sale to be bigger and better than the last. That means retailers will likely have to keep slashing prices, which could hurt their bottom line." To read the article, visit HERE.

3. An interesting, thought-provoking article claiming the Thanksgiving weekend was not the success it appeared to be. Read it HERE.

4. To see Macy's amazing, high-tech, high-craft Christmas window, visit Elaine Schmidt's blog HERE.

5. U.S. consumers will spend $6 billion on holiday decorations this year, more than in at least seven years, according to a National Retail Federation survey, Bloomberg reported.

6. The Associated Press reported there is an increase in the number of returns – already – this season. "For every dollar stores take in this holiday season, they'll have to give back 9.9 cents in returns, up from 9.8 last year, according to the National Retail Federation's survey of 110 retailers. In better economic times, it's about 7 cents."

7. A Chicago strip club offered free lap dances to patrons who donate Christmas presents to poor kids. Last year the club's "Lap Dances for the Needy" resulted in five car loads of toys which were given to local churches to be distributed.
 
8. In the two weeks since Thanksgiving, the Las Cruces, NM police have responded to 50+ incidents of shoplifting, including six at the local Wal-Mart and four at the town's Hobby Lobby, the Las Cruces Sun News reported.

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NEW SERVICE SUPPLIER FIRMS

1. Diversified Marketing is a professional marketing services firm founded to assist companies with the management, implementation, and execution of programs that are critical to key corporate marketing and sales initiatives. The firm is led by Kim Schofield who has 20+ years of experience expertise in the creation, management, and implementation of various marketing communications projects, including collateral development, advertising, corporate events, and customer outreach, direct mail, web marketing, and speaking programs. 16 Beach St., Fremont, NH 03044. Email ksdm@comcast.net. (Note: She wrote an excellent analysis of what needs to be done to reverse the sales slide of scrapbooking for Memory, Paper & Stamps.)

2. Matus Consulting Group. "We offer hands-on experience and a strong record of success with extensive connections in China, sourcing since 1986 in all manufacturing sectors. We also provide the training and demonstration skills to your sourcing staff/purchasing  agents to help you get the best prices and quality in the changing China." Services include creative product concepts, in-depth product development, product resourcing, direct marketing, mass market retail placements, and turn-key projects. For a free 30-minute consultation, email CEO Barry Matus at bmmatus@gmail.com.

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NOVICES & ENTHUSIASTS, ANOTHER POINT OF VIEW

For years people insisted on calling needlepoint worked on plastic canvas just plastic canvas (actually making it a separate category), even though it is still "needlepoint." I finally moved beyond that and have called it needlepoint ever since.

But then I've also spent plenty of time apologizing (explaining) that I don't do "fine" needlepoint with wool yarns, etc., although it rankles me to have to say that! I know that many people do not consider me a really "good" designer because I have concentrated my efforts in this field (although I spent many years doing counted cross stitch as well). However, I am comforted by the wonderful comments of my customers to whom I truly believe I have brought much joy over the years.

I agree with those who have said that there is a real "art" to designing simpler projects -- when people can complete something and still be proud of the results and achieve that sense of accomplishment which comes from making something beautiful or just whimsical and fun, Then the designer has done his or her work.

I have always been able to create very elegant and upscale pieces, but it didn't take me long to realize that 95% of the market wanted something simpler and less expensive, so I opted to design for that customer and stay in business! – Joan Green, Joan Green Designs (Note: To see Joan's work, visit www.joangreendesigns.com.)

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RANDOM NOTES, RANDOM THOUGHTS

While writing about the passing of Hazel Pearson, I came across "The Birth and Growth of the Craft Industry," an article I published in the December, 1984 issue of Profitable Craft Merchandising as part of PCM's 20th anniversary celebration.

The author, Gayle McDowell, quoted Hazel and many others about how the industry began. Years later CHA digitized the article. To read it, visit Here.

Gayle ended the article with this comment in 1984 from Hazel: "Never in my wildest dreams could I have perceived what the craft industry would be like today."

Gayle called Hazel "the Grandmother of crafts," and Gayle predicted, "Many will probably echo her words in another 20 years."

Gayle ended her wonderful history by saying "the industry is growing up by refusing to grow old."

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MISCELLANEOUS NEWS: RETAIL

LAWSUIT. Jo-Ann is trying to move into a shopping mall in Bismarck, ND and the local Hancock store doesn't like it. Hancock filed a complaint that the mall breached a Hancock lease by allowing Jo-Ann to move to a larger space in the mall, the Bismarck Tribune reported.

CHINA. The U.S. Christmas season may be going ok, but it's not a good time for Chinese manufacturers, Industry Week reports, thanks to lower demand from Europe and the U.S. "The fall-off in demand has hit firms already reeling from rising costs, a stronger Chinese currency that makes their exports more expensive, and labor unrest as workers in the vast region demand better pay and conditions." To read the article, visit HERE.

YARN. Registration is now open for Yarn Market News' annual Small Business Conference in Boston Mar. 11-13. For details and saving $100 with an early-bird registration, visit HERE.

CRIME. A clerk at the Hobby Lobby store in Cookeville, TN was arrested for shoplifting $30 worth of merchandise – from Hobby Lobby, the Herald Citizen reported.

EXPANSION. Hobby Lobby continues to expand in Florida. HL signed a lease to build a new store in Orange City, in the Daytona Beach area.

STOCKS. Hancock: $1.00, up $0.04 ... Wal‑Mart: $58.27, up $0.18 ... Dow Jones: 11,866.39, down 1.3%. (Note: All changes in price are since 12/2 and are exclusive of dividends.)

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MISCELLANEOUS NEWS

ACQUISITION UPDATE. As CLN reported in the previous issue, National Spinning sold its Caron International division to Spinrite. However, National Spinning continues to own the Hampton Art division. Because of the acquisition, about 120 of Caron's employees will lose their jobs as of Jan. 2, the Triangle Business Journal reported.

TNNA. If you register by Dec. 29 for the TNNA winter show in Phoenix, you can save $20 per class. Visit HERE. … The Fall 2012 Market will be Sept. 8-9 in Linthicum (Baltimore). For travel/hotel info, visit HERE.

PROMOTIONS. FabScraps is featuring "FabFriday" to thank their fans. Each Friday, FabScraps will post something new, from inspirational paper project ideas and how-to videos to gifts for five randomly chosen fans every Friday. Visit HERE.

PATENT. The U.S. Patent and Trademark Office upheld Spellbinders' patent for its "Apertured Media Embellishing Template and System and Method Using the Same." The reexamination was initiated by attorneys for QuicKutz.

BEADS. The class schedule for the Bead & Button Show in Milwaukee June 1-10 is now available and it is remarkable: 750+ classes. Visit www.beadandbuttonshow.com.

BEADS. Cousin has unveiled an updated website: www.cousin.com. Cousin's Jewelry Class in a Box made MSN's list of "Top Gifts for Teens." To see it, visit HERE.

TOOLS. Walnut Hollowฎ has launched a new and improved Creative Versa-Tool™ which features an adjustable temperature control that will allow the user to more accurately select the right temperature for a wide range of techniques.

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THE CREATIVE NETWORK: JOB OPENINGS

To read the latest listings click on Jobs in the left-hand column or click HERE.

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 MEMO FROM SANTA

(Reprinted by popular demand.)

The recent announcement that Donner and Blitzen have taken the early retirement package has triggered concern about other restructuring decisions at the North Pole. Streamlining was appropriate considering the North Pole no longer dominates the season's gift distribution business. Wal-Mart and home shopping channels have diminished Santa's market share, and he could not sit idly by and permit further erosion of the profit picture.

The reindeer downsizing was made possible through the purchase of an imported sled for the CEO's annual trip, plus anticipated productivity from Dasher and Dancer should take up the slack. Reduction in reindeer will also lessen airborne environmental emissions for which the North Pole has received unfavorable press.

Rudolph's role will not be disturbed. Tradition still counts for something at the North Pole. Management denies, in the strongest possible language, the earlier leak that Rudolph's nose became that way not from the cold but from substance abuse. Calling Rudolph "a lush" was an unfortunate comment made by one of Santa's helpers and taken out of context at a time of year when he is known to be under executive stress.

Today's global challenges require the North Pole to continue to be more competitive. Effective immediately, the following economy measures will be implemented in the Twelve Days of Christmas subsidiary: The partridge will be retained, but the pear tree never turned out to be the cash crop forecasted. It will be replaced by a plastic hanging plant, providing considerable savings in maintenance. The two turtle doves represent a redundancy that is simply not cost efficient. Eleven pipers piping and twelve drummers drumming is a simple case of the band getting too large. Replacing them with an outsourced string quartet will produce savings which will drop to the bottom line.

Furthermore, retailers are insisting we drop-ship; after all, stretching deliveries over twelve days was inefficient.

Regarding the lawsuit filed by the attorneys' association seeking expansion to include the legal profession ("thirteen lawyers a-suing"), action is pending.

Finally, deeper cuts may be necessary to stay competitive. Should that happen, management will scrutinize the Snow White division to see if seven dwarfs is the right number.

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 REMINDERS

1. If you want a hard-copy of this issue, click on "Printer Friendly version."

2. If your company is a paid subscriber, everyone in the main office is welcome to register, free. Just click on "Work for a paid subscriber? Click Here to register" (center column, near the top).

3. If you ever have trouble with your password, click on "Trouble with your password?" in the right-hand column of the main page. The computer will then email the correct information to you.

4. CLN is published the first and third Mondays of each month. Your next issue will be Monday, January 2. Our very best wishes that you have a wonderful holiday season and a great new year!

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