UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
------ EXCHANGE ACT OF 1934
For the quarterly period ended May 25, 2003
-------------------------------------------------
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
------ EXCHANGE ACT OF 1934
For the transition period from to
-------------------- ---------------------
Commission File Number 0-619
--------------------------
WSI Industries, Inc.
--------------------------------------------------------------------------------
(Exact name of registrant, as specified in its charter)
Minnesota 41-0691607
--------------------------------------------------------------------------------
(State or other jurisdiction of (I. R. S. Employer
incorporation of organization) Identification No.)
Osseo, Minnesota 55369
--------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(763) 428-4308
--------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Wayzata, Minnesota
--------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
--------- -------
Indicate by check mark whether the registrant is an accelerated filer
(as defined in Rule 12b-2 of the Exchange Act).
Yes No X
--------- -------
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
2,451,129 Common Shares were outstanding as of June 27, 2003.
WSI INDUSTRIES, INC.
AND SUBSIDIARIES
INDEX
Page No.
-------
PART I. FINANCIAL INFORMATION:
Item 1. Financial Statements
Condensed Consolidated Balance Sheets May 25, 2003(Unaudited)
and August 25, 2002 3
Condensed Consolidated Statements of Operations
Thirteen and Thirty-Nine weeks ended May 25, 2003
and May 26, 2002 (Unaudited) 4
Condensed Consolidated Statements of Cash Flows
Thirty-Nine weeks ended May 25, 2003
and May 26, 2002 (Unaudited) 5
Notes to Condensed Consolidated Financial Statements (Unaudited) 6, 7
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 8, 9, 10
Item 4. Controls and Procedures 11
PART II. OTHER INFORMATION:
Item 6. Exhibits and Reports on Form 8-K 11
Signatures 11
Certifications 12, 13, 14
2
Part I. Financial Information
Item I. Financial Statements
WSI INDUSTRIES, INC
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
MAY 25, AUGUST 25,
ASSETS 2003 2002
------ ---- ----
(Unaudited)
CURRENT ASSETS:
Cash and cash equivalents $ 1,023,081 $ 1,115,922
Accounts receivable 1,224,817 1,154,587
Inventories 593,127 763,323
Prepaid and other current assets 53,446 33,990
Deferred tax assets 155,601 184,925
------------- -------------
Total Current Assets 3,050,072 3,252,747
------------- -------------
Property, Plant and Equipment -- Net 1,883,650 2,201,692
------------- -------------
Deferred tax assets 1,863,351 1,976,254
------------- -------------
Intangible assets, net 2,368,452 2,368,452
------------- -------------
$ 9,165,525 $ 9,799,145
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Trade accounts payable $ 378,204 $ 465,286
Accrued compensation and employee withholdings 291,389 171,025
Miscellaneous accrued expenses 144,905 90,439
Current portion of long-term debt 469,013 735,143
------------- -------------
Total Current Liabilities 1,283,511 1,461,893
------------- -------------
Long term debt, less current portion 698,387 1,397,915
------------- -------------
STOCKHOLDERS' EQUITY:
Common stock, par value $.10 a share; authorized
10,000,000 shares; issued and outstanding
2,458,429 and 2,465,229 shares, respectively 245,843 246,523
Capital in excess of par value 1,633,386 1,640,934
Retained earnings 5,304,398 5,051,880
------------- -------------
Total Stockholders' Equity 7,183,627 6,939,337
------------- -------------
$ 9,165,525 $ 9,799,145
============= =============
See notes to condensed consolidated financial statements
3
WSI INDUSTRIES, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
13 weeks ended 39 weeks ended
--------------------------------- -------------------------------
May 25, May 26, May 25, May 26,
2003 2002 2003 2002
-------------- ------------- ------------- ------------
Net sales $ 3,051,583 $ 2,144,586 $ 7,844,985 $ 10,608,962
Cost of products sold 2,435,876 1,873,100 6,355,981 9,362,968
-------------- ------------- ------------- --------------
Gross margin 615,707 271,486 1,489,004 1,245,994
Selling and administrative expense 375,950 366,052 1,065,201 1,563,075
Loss on sale of subsidiary - - - 2,505,918
Interest and other income (11,441) (5,665) (73,790) (14,169)
Interest and other expense 23,164 45,809 102,848 321,228
-------------- ------------- ------------- --------------
Earnings (loss) from operations
before income taxes 228,034 (134,710) 394,745 (3,130,058)
Income tax expense 82,092 - 142,227 -
-------------- ------------- ------------- --------------
Net earnings (loss) $ 145,942 $ (134,710) $ 252,518 $ (3,130,058)
============== ============== ============= ===============
Basic and diluted loss per share $ .06 $ (.05) $ .10 $ (1.27)
============== ============= ============= ==============
Weighted average number of
common shares 2,462,165 2,465,229 2,464,208 2,465,229
============== ============= ============= ==============
See notes to condensed consolidated financial statements.
4
WSI INDUSTRIES, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
39 weeks ended
------------------------------
May 25, May 26,
2003 2002
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 252,518 $ (3,130,058)
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Loss on sale of subsidiary - 2,505,919
Depreciation 473,986 1,123,162
Deferred taxes 142,227 -
Changes in assets and liabilities:
(Increase) decrease in accounts receivable (70,230) (457,101)
(Increase) decrease in inventories 170,196 295,456
(Increase) decrease in prepaid expenses (19,456) 58,741
Increase (decrease) in accounts payable and
accrued expenses 87,748 (931,591)
------------- -------------
Net cash provided by (used in) operations 1,036,989 (535,472)
------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of equipment - 6,550
Purchase of property, plant and equipment (155,944) (1,096)
Sale of subsidiary - 3,235,262
------------- ------------
Net cash provided by (used in) investing activities (155,944) 3,240,716
-------------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Purchase of Company stock (8,228) -
Payments of long-term debt (965,658) (2,011,498)
-------------- -------------
Net cash used in financing activities (973,886) (2,011,498)
-------------- -------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (92,841) 693,746
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 1,115,922 8,292
------------- ------------
CASH AND CASH EQUIVALENTS AT END OF REPORTING PERIOD $ 1,023,081 $ 702,038
============= ============
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ 107,260 $ 343,605
Income taxes $ 4,300 $ -
Noncash investing and financing activities:
Acquisition of machinery through capital lease $ - $ 606,618
See notes to condensed consolidated financial statements.
5
WSI INDUSTRIES, INC.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. CONSOLIDATED FINANCIAL STATEMENTS:
The condensed consolidated balance sheet as of May 25, 2003,
the condensed consolidated statements of operations for the thirty-nine
weeks ended May 25, 2003 and May 26, 2002 and the condensed
consolidated statements of cash flows for the thirty-nine weeks then
ended, respectively, have been prepared by the Company without audit.
In the opinion of management, all adjustments (which include normal
recurring adjustments) necessary to present fairly the financial
position, results of operations and cash flows for all periods
presented have been made.
The condensed consolidated balance sheet at August 25, 2002 is
derived from the audited consolidated balance sheet as of that date.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. Therefore, these
condensed consolidated financial statements should be read in
conjunction with the financial statements and notes thereto included in
the Company's 2002 annual report to shareholders. The results of
operations for interim periods are not necessarily indicative of the
operating results for the full year.
2. SALE OF SUBSIDIARY
On February 22, 2002, the Company completed the asset sale of
one of its subsidiaries, Bowman Tool & Machining, Inc. ("Bowman"), to
W. Bowman Consulting Company, an affiliate of the prior owner of
Bowman. The Company received approximately $3.1 million in cash from
the sale, with the buyer also assuming another $3.4 million in
long-term debt and purchasing $1.2 million in accounts receivable and
inventory. The buyer also assumed any remaining liabilities associated
with amounts due on the non-compete and employment agreements that were
a result of the Company's original acquisition of Bowman in 1999. The
sale included substantially all of the assets of Bowman. The Company
retained approximately $629,000 in Bowman-related accounts payable and
accrued liabilities.
The Bowman sale was completed at the close of the last working
day of the second quarter of fiscal 2002. Correspondingly, the
Condensed Consolidated Statements of Operations and Condensed
Consolidated Statements of Cash Flows for the thirty-nine weeks ended
May 26, 2002 reflect twenty-six weeks of Bowman operations during that
period.
3. DEBT AND LINE OF CREDIT:
On December 4, 2002, the Company closed on a new revolving
credit agreement in the maximum amount of $1 million with a bank.
Interest is at prime plus .25%. The credit agreement is secured by all
assets of the Company and expires December 31, 2003. The revolver was
not accessed during the current quarter and, correspondingly, no amount
was owed at the end of the current quarter.
The Company issued a Subordinated Promissory Note in the
original amount of $1.7 million on February 15, 1999 in connection with
its acquisition of Taurus Numeric Tool, Inc. ("Taurus"). The note
issued in the Taurus acquisition has been assigned in part such that
there are currently two holders of the original Note. The note bears
interest at 7.75% payable quarterly. Principal payments are due in
three annual installments commencing February 15, 2002. The Company has
made the first two scheduled annual payments. In addition to the
scheduled payments, the Company reached agreement with one of the note
holders to prepay that holder's portion of the 2004 payment. In
exchange for the
6
prepayment, the note holder agreed to reduce the final payment by 10%
or $27,700. The other note holder's final payment of $277,000 is
scheduled to be paid February 15, 2004.
The seller was able to earn an additional amount based on the
profitability of Taurus for the period February 15, 1999 to February
15, 2000. No amount was earned. The contingent payment terms were
detailed in the purchase agreement and did not require continued
employment of the former principal to be earned.
WSI Industries also had a Subordinated Promissory Note in
connection with the original 1999 Bowman acquisition in the amount of
$1.9 million. With the completion of the sale of Bowman to an affiliate
of the prior owner as described in Note 2 of the Condensed Consolidated
Financial Statements, the Subordinated Promissory Note was assumed by
the affiliate of the prior owner, and no further amounts are due.
The Company also has capitalized lease debt of approximately
$890,000, with monthly payments due of $21,000 expiring between 2005
and 2008.
4. GOODWILL AND INTANGIBLE ASSETS
In June 2001, the Financial Accounting Standards Board issued
Statements of Financial Accounting Standards No. 141, Business
Combinations, and No. 142, Goodwill and Other Intangible Assets,
effective for fiscal years beginning after December 15, 2001 with early
adoption permitted for companies with fiscal years beginning after
March 15, 2001. Under the new rules, goodwill and intangible assets
deemed to have indefinite lives will no longer be amortized but will be
subject to annual impairment tests in accordance with the statements.
Other intangible assets will continue to be amortized over their useful
lives.
The Company adopted the new rules on accounting for goodwill
and other intangible assets beginning in the first quarter of fiscal
2002. Effective with the August 27, 2001 adoption of FAS 142, goodwill
is no longer amortized but is instead subject to an annual impairment
test. The Company has performed its transitional impairment test in
conjunction with the adoption of FAS 142 and has determined no charge
is warranted.
Goodwill and other intangible assets resulting from
acquisitions of business and the formation of the Company consist of
the following:
May 25, August 25,
2003 2002
-------------------------------------
Goodwill $ 2,428,264 $ 2,428,264
Less accumulated amortization 308,595 308,595
-------------------------------------
$ 2,119,669 $ 2,119,669
=====================================
Other identifiable intangibles:
Organization Costs $ 285,000 $ 285,000
Less accumulated amortization 36,217 36,217
-------------------------------------
$ 248,783 $ 248,783
=====================================
7
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
and
RESULTS OF OPERATIONS
Critical Accounting Policies and Estimates
Management's Discussion and Analysis of Financial Condition and Results
of Operations discusses our condensed consolidated financial statements, which
have been prepared in accordance with accounting principles generally accepted
in the United States. The preparation of these financial statements requires
management to make estimates and judgments that affect the reported amounts of
assets, liabilities, revenues and expenses and related disclosure of contingent
assets and liabilities.
We believe that the estimates, assumptions and judgments involved in
the accounting policies described below have the greatest potential impact on
our financial statements, so we consider these to be our critical accounting
policies. Because of the uncertainty inherent in these matters, actual results
could differ from the estimates we used in applying the critical accounting
policies. Within the context of these critical accounting policies, we are not
currently aware of any reasonably likely event that would result in materially
different amounts being reported.
Allowance for Excess and Obsolete Inventory:
Inventories, which are composed of raw materials, work in process and
finished goods, are valued at the lower of cost or market. On a periodic basis,
the Company analyzes the level of inventory on hand, its cost in relation to
market value and estimated customer requirements to determine whether
write-downs for excess or obsolete inventory are required. Actual customer
requirements in any future periods are inherently uncertain and thus may differ
from our estimates. If actual or expected requirements were significantly
greater or lower than the established reserves, we would record a reduction or
increase to the obsolescence allowance in the period in which we made such a
determination.
Goodwill Impairment:
The Company evaluates the valuation of its goodwill according to the
provisions of SFAS 142 to determine if the current value of goodwill has been
impaired. To do this the Company determines the discounted present value of
anticipated cash flows based on anticipated results of operations for the coming
years. If we have changes in events or circumstances, including reductions in
anticipated cash flows generated by our operations, goodwill could become
impaired which would result in a charge to earnings.
Deferred Taxes:
The Company accounts for income taxes using the liability method.
Deferred income taxes are provided for temporary difference between the
financial reporting and tax bases of assets and liabilities. A valuation
allowance would be set up should the realization of any deferred taxes become
less likely than not to occur. The valuation allowance is analyzed periodically
by the Company and may result in income tax expense different than statutory
rates.
Results of Operations:
As discussed in Note 2 of the Condensed Consolidated Financial
Statements, the Company sold substantially all of the assets of its
subsidiary, Bowman Tool & Machinery, Inc. ("Bowman"), on February 22,
2002. Correspondingly, the effects of the Bowman operation are included
in the results of operations for the first two quarters of fiscal 2002,
and not included in 2003.
8
Net sales were $3,052,000 for the quarter ending May 25, 2003,
an increase of 42% or $907,000 from the same period of the prior year.
The increase was due to higher sales in the Company's recreational
vehicle market.
Year to date sales were $7,845,000 compared to $10,609,000 in
the prior year. The drop was due to the absence of Bowman sales. Sales
for the Company's remaining division, Taurus Numeric Tool, Inc. are up
28% in fiscal 2003 versus 2002 for the same reason described above.
Gross margin increased to 20% for the quarter ending May 25,
2003 versus 13% in the year ago period. The gross margin improvement
was primarily related to efficiencies created from increased volume.
Year to date gross margins of 19% were an increase of 7% over
the prior year. The increase in margins were again due to volume
efficiencies as well as the absence of Bowman in fiscal 2003.
Selling and administrative expense of $376,000 for the quarter
ending May 25, 2003 was $10,000 higher than in the prior year. Year to
date selling and administrative expense of $1,065,000 was $498,000
lower than the prior year due primarily to the absence of Bowman.
Current year selling and administrative expense was negatively affected
by $60,000 of costs associated with a proxy contest that the Company
was involved in. The proxy contest was resolved with all costs incurred
by the end of the first quarter.
As described in Note 2 of the Notes to Consolidated Financial
Statements, the Company completed the asset sale of Bowman Tool and
Machining. The sale generated a loss of $2.5 million which was
recognized in the prior year's second quarter.
Interest expense in the third quarter of fiscal 2003 was
$23,000, which was $23,000 less than the fiscal 2002 amount of $46,000.
The decrease is attributable to the reduced levels of debt in fiscal
2003. Year to date interest expense is also down for the same reason.
Year to date interest and other income includes a $27,700
reduction in the final payment of the subordinated promissory note as
described in Note 3 of the Notes to Consolidated Financial Statements,
as well as other miscellaneous income.
The Company recorded income tax expense at an effective tax
rate of 36% for the quarter and nine months ended May 25, 2003.
Liquidity and Capital Resources:
On May 25, 2003, working capital was $1,767,000 compared to
$1,791,000 at August 25, 2002. The ratio of current assets to current
liabilities at May 25, 2003 was 2.38 to 1.0 compared to 2.23 to 1.0 at
August 25, 2002. The Company generated $1,037,000 in cash from
operations in the first three quarters of fiscal 2003 which is used to
pay down $966,000 of its long term debt.
As discussed in the Notes to Consolidated Financial
Statements, the Company has closed on a new $1,000,000 revolving credit
facility with a new bank with interest at prime plus .25%. No amounts
have been borrowed during the first three quarters of fiscal 2003.
As also described in the Notes, on February 15, 1999, in
connection with the Company's acquisition of its Taurus subsidiary, the
Company issued a subordinated promissory note to the seller in an
initial amount of $1.7 million. Interest is accrued at a rate of 7.75%
paid quarterly. Principal payments are due in three equal annual
installments commencing on February 15, 2002. The Company
9
has made the first two scheduled annual payments. In addition to the
scheduled payments, the Company reached an agreement with one of the
note holders to prepay that holders' 2004 payment. In exchange for the
payment, the note holder agreed to reduce the final payment by 10% or
$27,700. The other note holder's final payment is scheduled to be paid
February 15, 2004.
It is the Company's belief that its internally generated
funds, as well as its line of credit, will be sufficient to enable the
Company to meet its working capital requirements through the end of
fiscal 2004.
Cautionary Statement:
Statements included in this Management's Discussion and
Analysis of Financial Condition and Results of Operations, in future
filings by the Company with the Securities and Exchange Commission, in
the Company's press releases and in oral statements made with the
approval of an authorized executive officer which are not historical or
current facts are "forward-looking statements." These statements are
made pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995 and are subject to certain risks and
uncertainties that could cause actual results to differ materially from
historical earnings and those presently anticipated or projected. The
Company wishes to caution readers not to place undue reliance on any
such forward-looking statements, which speak only as of the date made.
The following important factors, among others, in some cases have
affected and in the future could affect the Company's actual results
and could cause the Company's actual financial performance to differ
materially from that expressed in any forward-looking statement: (i)
the Company's ability to obtain additional manufacturing programs and
retain current programs; (ii) the loss of significant business from any
one of its current customers could have a material adverse effect on
the Company; (iii) a significant downturn in the industries in which
the Company participates could have an adverse effect on the demand for
Company services. The foregoing list should not be construed as
exhaustive and the Company disclaims any obligation subsequently to
revise any forward-looking statements to reflect events or
circumstances after the date of such statements or to reflect the
occurrence of anticipated or unanticipated events.
10
ITEM 4. CONTROLS AND PROCEDURES
(a) Evaluation of Disclosure Controls and Procedures.
The Company's Chief Executive Officer, Michael J. Pudil, and Chief
Financial Officer, Paul D. Sheely, have reviewed the Company's disclosure
controls and procedures within 90 days prior to the filing of this report. Based
upon this review, these officers believe that the Company's disclosure controls
and procedures are effective in ensuring that material information related to
the Company is made known to them by others within the Company.
(b) Changes in Internal Controls.
There were no significant changes in the Company's internal controls or
in other factors that could significantly affect these controls during the
quarter covered by this report or from the end of the reporting period to the
date of this Form 10-Q.
PART II. OTHER INFORMATION:
Item 6. Exhibits and Reports on Form 8-K:
A. The following exhibits are included herein:
Exhibit 99.1 Certificate pursuant to 18 U.S.C. Section
1350.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WSI INDUSTRIES, INC.
Date: June 27, 2003 /s/ Michael J. Pudil
------------- ---------------------------------------------
Michael J. Pudil, President & CEO
Date: June 27, 2003 /s/ Paul D. Sheely
------------- ---------------------------------------------
Paul D. Sheely, Vice President, Finance & CFO
11
CERTIFICATIONS
I, Michael J. Pudil, certify that:
1. I have reviewed this quarterly report on Form 10-Q of WSI Industries, Inc.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors:
a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: June 27, 2003 /s/ Michael J. Pudil
------------- ------------------------------
President and Chief Executive Officer
12
I, Paul D. Sheely, certify that:
1. I have reviewed this quarterly report on Form 10-Q of WSI Industries, Inc.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors:
a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: June 27, 2003 /s/ Paul D. Sheely
------------- ------------------------
Chief Financial Officer
13