FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark one)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE
ACT OF 1934 For the quarterly period ended March 31, 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 I-91
----
Furniture Brands International, Inc.
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 43-0337683
- ---------------------------------- ------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
101 South Hanley Road, St. Louis, Missouri 63105
- -------------------------------------------- ------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (314) 863-1100
------------------
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 requirement for the past 90 days.
Yes X No
------- ------
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12 b-2 of the Exchange Act).
Yes X No
-------- ------
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.
55,656,182 shares as of April 30, 2003
--------------------------------------
PART I FINANCIAL INFORMATION
----------------------------
Item 1. Financial Statements
Consolidated Financial Statements for the quarter ended March 31, 2003.
Consolidated Balance Sheets
Consolidated Statements of Operations:
Three Months Ended March 31, 2003
Three Months Ended March 31, 2002
Consolidated Statements of Cash Flows:
Three Months Ended March 31, 2003
Three Months Ended March 31, 2002
Notes to Consolidated Financial Statements
The financial statements are unaudited, but include all adjustments (consisting
of normal recurring adjustments) which the management of the Company considers
necessary for a fair presentation of the results of the period. The results for
the three months ended March 31, 2003 are not necessarily indicative of the
results to be expected for the full year.
FURNITURE BRANDS INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(Unaudited)
March 31, December 31,
2003 2002
---------- -----------
ASSETS
Current assets:
Cash and cash equivalents....................... $ 12,897 $ 15,074
Receivables, less allowances of $22,249
($20,751 at December 31, 2002)................ 401,173 375,050
Inventories...(Note 1).......................... 436,888 432,104
Deferred income taxes........................... 17,699 17,768
Prepaid expenses and other current assets....... 8,155 9,463
---------- -----------
Total current assets.......................... 876,812 849,459
---------- -----------
Property, plant and equipment..................... 668,486 660,937
Less accumulated depreciation................... 340,338 327,566
---------- -----------
Net property, plant and equipment............. 328,148 333,371
---------- -----------
Goodwill.......................................... 184,480 184,480
Other intangible assets........................... 171,008 171,008
Other assets...................................... 32,393 29,084
---------- -----------
$1,592,841 $ 1,567,402
========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accrued interest expense........................ $ 2,817 $ 3,018
Accounts payable and other accrued expenses..... 207,384 194,346
---------- -----------
Total current liabilities..................... 210,201 197,364
---------- -----------
Long-term debt.................................... 354,800 374,800
Deferred income taxes............................. 59,146 58,850
Other long-term liabilities....................... 68,925 66,873
Shareholders' equity:
Preferred stock, authorized 10,000,000
shares, no par value - issued, none........... - -
Common stock, authorized 200,000,000 shares,
$1.00 stated value - issued 56,277,066
shares at March 31, 2003 and
December 31, 2002............................. 56,277 56,277
Paid-in capital................................. 221,759 221,696
Retained earnings............................... 668,375 639,334
Accumulated other comprehensive income (Note 3). (34,919) (35,917)
Treasury stock at cost (619,884 shares at
March 31, 2003 and 627,884 shares at
December 31, 2002)............................ (11,723) (11,875)
---------- -----------
Total shareholders' equity.................... 899,769 869,515
---------- -----------
$1,592,841 $ 1,567,402
========== ===========
See accompanying notes to consolidated financial statements.
FURNITURE BRANDS INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands except per share data)
(Unaudited)
Three Months Three Months
Ended Ended
March 31, March 31,
2003 2002
------------ ------------
Net sales...................................... $ 613,844 $ 634,461
Costs and expenses:
Cost of operations........................... 436,499 456,251
Selling, general and administrative expenses. 114,188 110,298
Depreciation and amortization................ 12,904 12,556
------------ ------------
Earnings from operations....................... 50,253 55,356
Interest expense............................... 5,057 5,602
Other income, net.............................. 769 1,074
------------ ------------
Earnings before income tax expense............. 45,965 50,828
Income tax expense............................. 16,924 18,057
------------ ------------
Net earnings................................... $ 29,041 $ 32,771
============ ============
Net earnings per common share:
Basic........................................ $ 0.52 $ 0.59
====== ======
Diluted...................................... $ 0.52 $ 0.58
====== ======
Weighted average common shares outstanding (Note 2):
Basic........................................ 55,653,893 55,195,160
========== ==========
Diluted...................................... 56,019,341 56,438,315
========== ==========
See accompanying notes to consolidated financial statements.
FURNITURE BRANDS INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
Three Months Three Months
Ended Ended
March 31, March 31,
2003 2002
------------ ------------
Cash flows from operating activities:
Net earnings............................................. $ 29,041 $ 32,771
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization........................ 12,904 12,556
Other noncash items, net............................. 252 (483)
Increase in receivables.............................. (26,123) (40,600)
Increase in inventories.............................. (4,784) (6,496)
Increase in prepaid expenses and other assets........ (1,631) (3,855)
Increase in accounts payable, accrued
interest expense and other accrued expenses........ 12,866 42,533
Increase (decrease)in net deferred tax liabilities... (211) 1,977
Increase in other long-term liabilities.............. 4,095 707
------------ ------------
Net cash provided by operating activities................ 26,409 39,110
------------ ------------
Cash flows from investing activities:
Proceeds from the disposal of assets..................... 52 3
Additions to property, plant and equipment............... (8,721) (5,534)
------------ ------------
Net cash used by investing activities.................... (8,669) (5,531)
------------ ------------
Cash flows from financing activities:
Payments of long-term debt............................... (20,000) (30,800)
Proceeds from the issuance of treasury stock............. 83 11,745
------------- ------------
Net cash used by financing activities.................... (19,917) (19,055)
------------ ------------
Net increase (decrease) in cash and cash equivalents....... (2,177) 14,524
Cash and cash equivalents at beginning of period........... 15,074 15,707
------------ ------------
Cash and cash equivalents at end of period................. $ 12,897 $ 30,231
============ ============
Supplemental Disclosure:
Cash payments for income taxes, net...................... $ 9,107 $ 4,282
============ ============
Cash payments for interest............................... $ 5,039 $ 4,915
============ ============
See accompanying notes to consolidated financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands except per share data)
(Unaudited)
(1) Inventories are summarized as follows:
March 31, December 31,
2003 2002
------------ ------------
Finished products $ 257,565 $ 244,193
Work-in-process 63,942 65,196
Raw materials 115,381 122,715
--------- ---------
$ 436,888 $ 432,104
========= =========
(2) Weighted average shares used in the computation of basic and diluted net
earnings per common share are as follows:
Three Months Three months
Ended Ended
March 31, March 31,
2003 2002
------------ ------------
Weighted average shares used
for basic net earnings per
common share 55,653,893 55,195,160
Effect of dilutive securities:
Stock options 365,448 1,243,155
------------ -------------
Weighted average shares used
for diluted net earnings per
common share 56,019,341 56,438,315
============ ============
(3) Other comprehensive income is as follows:
Three Months Three Months
Ended Ended
March 31, March 31,
2003 2002
------------ ------------
Net earnings $ 29,041 $ 32,771
Other comprehensive income, net
of tax: 1,069 1,842
Financial instruments accounted (71) 171
for as hedges ------------ ------------
Foreign currency translation 998 2,013
------------ ------------
Other comprehensive income $ 30,039 $ 34,784
============ ============
The components of accumulated other comprehensive income, each presented
net of tax benefit, are as follows:
March 31, December 31,
2003 2002
------------ -----------
Market value of financial
instruments accounted
for as hedges $ (7,911) $ (8,980)
Minimum pension liability (26,512) (26,512)
Foreign currency translation (496) (425)
----------- -----------
$ (34,919) $ (35,917)
============ ============
(4) The Company accounts for stock-based employee compensation plans under the
intrinsic value based method. No stock-based employee compensation cost is
reflected in net income, as all options granted had an exercise price equal
to the market value of the underlying common stock on the date of grant.
Had compensation cost for the Company's stock-based compensation plan been
determined consistent with SFAS No. 123, net earnings and net earnings per
common share would have been as follows:
Three Months Three Months
Ended Ended
March 31, March 31,
2003 2002
------------ ------------
Net Earnings:
As Reported $29,041 $32,771
Pro forma $27,670 $31,448
Earnings per share - basic:
As Reported $0.52 $0.59
Pro forma $0.50 $0.57
Earnings per share - diluted:
As Reported $0.52 $0.58
Pro forma $0.50 $0.56
(5) In November 2002, the FASB issued Interpretation No. 45 (FIN 45),
Guarantor's Accounting and Disclosure Requirements for Guarantees,
Including Indirect Guarantees of Indebtedness of Others. This
interpretation expands the disclosure requirements to be made by a
guarantor about its obligations under certain guarantees that it has
issued. The disclosure requirements are effective for periods ending after
December 15, 2002. FIN 45 also requires a guarantor to recognize, at the
inception of a guarantee, a liability for the fair value of the obligation
for guarantees issued or modified after December 31, 2002.
The Company has provided guarantees related to store leases for certain
independent dealers opening Thomasville Home Furnishings Stores and Drexel
Heritage Home Inspiration Stores. The guarantees range from one to fifteen
years and generally require the Company to make lease payments in the event
of default by the dealer. In the event of default, the Company has the
right to assign or assume the lease. The total future lease payments
guaranteed at March 31, 2003 were $89,200. The Company believes the risk of
significant loss from these lease guarantees is remote.
Item 2. Management's Discussion and Analysis of Results of Operations and
Financial Condition
RESULTS OF OPERATIONS
Furniture Brands International, Inc. (referred to herein as the "Company") is
one of the largest manufacturers of residential furniture in the United States.
The Company has four primary operating subsidiaries: Broyhill Furniture
Industries, Inc.; Lane Furniture Industries, Inc.; Thomasville Furniture
Industries, Inc., and HDM Furniture Industries, Inc. (which includes the
operations of Henredon, Drexel Heritage and Maitland-Smith).
Comparison of Three Months Ended March 31, 2003 and 2002
Selected financial information for the three months ended March 31, 2003 and
March 31, 2002 is presented below:
(Dollars in millions except per share data)
Three Months Ended
-----------------------------------------
March 31, 2003 March 31, 2002
------------------- --------------------
% of % of
Dollars Net Sales Dollars Net Sales
------- --------- ------- ---------
Net sales $ 613.8 100.0% $634.5 100.0%
Earnings from operations 50.3 8.2% 55.4 8.7%
Interest expense 5.1 0.8% 5.6 0.9%
Income tax expense 16.9 2.8% 18.0 2.8%
Net earnings 29.0 4.7% 32.8 5.2%
Net earnings per common share-diluted 0.52 - 0.58 -
Gross profit (1) $ 166.6 27.1% $167.1 26.3%
(1) The Company believes that gross profit provides useful information
regarding a company's financial performance. Gross profit has been
calculated by subtracting cost of operations and the portion of
depreciation associated with cost of goods sold from net sales.
Three Months Ended
March 31,
----------------------
2003 2002
--------- ---------
Net sales $613.8 $634.5
Cost of operations 436.5 456.3
Depreciation (associated with
cost of goods sold) 10.7 11.1
------ ------
Gross profit $166.6 $167.1
====== ======
Net sales for the three months ended March 31, 2003 were $613.8 million,
compared to $634.5 million in the three months ended March 31, 2002, a decrease
of $20.7 million or 3.2%. Business conditions in the first quarter of 2003
continued to be challenging. The soft business environment was exacerbated by
the adverse weather conditions that negatively affected both manufacturing and
retailing efforts. The performance of operations in the middle-price point
category exceeded those operations offering higher-end products.
Earnings from operations for the three months ended March 31, 2003 decreased by
$5.1 million or 9.2% from the comparable prior year period. Earnings from
operations for the three months ended March 31, 2003 and March 31, 2002 were
8.2% and 8.7% of net sales, respectively. Operating profitability reflected the
beneficial results of the Company's cost control efforts and the positive impact
of its offshore sourcing programs. However, this was more than offset by the
negative impact of lower sales volume and increased selling, general and
administrative expenses. A large portion of the increase in these operating
expenses resulted from higher pension expense of $2.0 million in the quarter,
arising out of the change in certain defined benefit plan pension assumptions
year-over-year.
Interest expense totaled $5.1 million for the three months ended March 31, 2003,
compared to $5.6 million in the prior year comparable period. The decrease in
interest expense in the three months ended March 31, 2003 resulted from both
lower long-term debt levels and lower interest rates.
The effective income tax rate was 36.8% and 35.5% for the three months ended
March 31, 2003 and March 31, 2002, respectively. The effective tax rate for the
three months ended March 31, 2003 was adversely impacted by higher provisions
for state and local income taxes compared to the prior year period.
Net earnings per common share for basic and diluted were $0.52 and $0.52,
respectively, for the three months ended March 31, 2003, compared with $0.59 and
$0.58, respectively, for the same period last year. Average common and common
equivalent shares outstanding used in the calculation of net earnings per common
share on a basic and diluted basis were 55,654,000 and 56,019,000, respectively,
for the three months ended March 31, 2003 and 55,195,000 and 56,438,000,
respectively, for the three months ended March 31, 2002.
FINANCIAL CONDITION
Working Capital
Cash and cash equivalents at March 31, 2003 amounted to $12.9 million, compared
with $15.1 million at December 31, 2002. During the three months ended March 31,
2003, net cash provided by operating activities totaled $26.4 million, net cash
used by investing activities totaled $8.7 million and net cash used by financing
activities totaled $19.9 million.
Working capital was $666.6 million at March 31, 2003, compared with $652.1
million at December 31, 2002. The current ratio was 4.2-to-1 at March 31, 2003,
compared to 4.3-to-1 at December 31, 2002.
Financing Arrangements
As of March 31, 2003, long-term debt consisted of the following, in millions:
Revolving credit facility (unsecured) $350.8
Other 4.0
------
$354.8
======
To meet short-term capital and other financial requirements, the Company
maintains a $630.0 million revolving credit facility with a group of financial
institutions. The revolving credit facility allows for the issuance of letters
of credit and cash borrowings. Letter of credit outstandings are limited to no
more than $150.0 million, with cash borrowings limited only by the facility's
maximum availability less letters of credit outstanding. On March 31, 2003,
there were $350.8 million in cash borrowings and $32.2 million in letters of
credit outstanding.
The facility requires the Company to meet certain financial covenants including
a minimum consolidated net worth and maximum leverage ratio. As of March 31,
2003, the Company was in compliance with all financial covenants.
Cash borrowings under the revolving credit facility bear interest at a base rate
or at an adjusted Eurodollar rate plus an applicable margin which varies,
depending upon the type of loan the Company executes. The applicable margin over
the base rate and Eurodollar rate is subject to adjustment based upon achieving
certain credit ratings. At March 31, 2003, loans outstanding under the revolving
credit facility consisted of $350.0 million based on the adjusted Eurodollar
rate and $0.8 million based upon the base rate, which in conjunction with the
interest rate swaps (used to hedge $300.0 million of the floating rate debt),
have a weighted average interest rate of 5.20%.
The Company believes that cash generated from operations, together with its
revolving credit facility, will be adequate to meet liquidity requirements for
the foreseeable future.
Recently Issued Statements of Financial Accounting Standards
In December 2002, the Financial Accounting Standard Board issued Statement of
Financial Accounting Standards (SFAS) No. 148 Accounting for Stock-Based
Compensation - Transition and Disclosure, an amendment of Statement of Financial
Accounting Standards No. 123. SFAS No. 148 provides alternative methods of
transition for a voluntary change to the fair value based method of accounting
for stock-based employee compensation. In addition, SFAS No. 148 requires
prominent disclosures in interim as well as annual financial statements about
the method of accounting for stock-based employee compensation and the effect of
the method used on reported net income. SFAS No. 148 is effective for fiscal
years ending after December 15, 2002. The Company plans to continue to account
for stock-based employee compensation under the intrinsic value based method and
to provide disclosure of the impact of the fair value based method on reported
earnings.
OUTLOOK
Based on incoming order trends and discussions with retail partners, the Company
currently sees no signs of improvement in the current business climate for the
near term. Although the Company had generally favorable reports from all of its
operating companies at the April International Home Furnishings Market, order
patterns to date do not support a conclusion that a positive trend is
developing. The Company is currently projecting earnings per share of $0.47 to
$0.50 for the second quarter and $2.00 - $2.05 for the full year.
Capital expenditures are forecasted at $40.0 - $50.0 million for 2003, with
depreciation expense anticipated to be approximately $55.0 million. Selling,
general and administrative expenses for the year are expected to be 18.00% -
18.50% of net sales. Based upon current interest rates and budgeted long-term
debt reduction, interest expense is expected to be approximately $21.0 million
for 2003. The Company expects to generate in excess of $100.0 million in cash
flow from operations, the majority of which will be used to reduce long-term
debt.
FORWARD-LOOKING STATEMENTS
The Company herein has made forward-looking statements within the meaning of the
"safe harbor" provisions of the Private Securities Litigation Reform Act of
1995. These forward-looking statements include the Company's expected sales,
earnings per share, profit margins, and cash flows, the effects of certain
manufacturing realignments and other business strategies, the prospects for the
overall business environment, and other statements containing the words
"expects," "anticipates," "estimates," "believes," and words of similar import.
The Company cautions investors that any such forward-looking statements are not
guarantees of future performance and that certain factors may cause actual
results to differ materially from those in the forward-looking statements. Such
factors include, but are not limited to: changes in economic conditions; loss of
market share due to competition; failure to anticipate or respond to changes in
consumer taste and fashion trends; failure to achieve projected sales; business
failures of large customers; distribution and manufacturing realignments and
cost savings programs; increased reliance on offshore (import) sourcing of
various products; fluctuations in the cost, availability and quality of raw
materials; product liability uncertainty; and impairment of goodwill and other
intangible assets. Other risk factors may be listed from time to time in the
Company's future public releases and SEC reports. Please refer to the Company's
Annual Report on Form 10-K for a more detailed explanation of the Company's risk
factors.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
The Company is exposed to market risk from changes in interest rates. The
Company's exposure to interest rate risk consists of its floating rate revolving
credit agreement. This risk is managed using interest rate swaps to fix a
portion of the Company's floating rate long-term debt. Based upon a hypothetical
ten percent increase in interest rates the potential impact to the Company's net
earnings would be $0.1 million.
Item 4. Controls and Procedures
(a) The Company's chief executive officer and chief financial officer have
concluded that the Company's disclosure controls and procedures are
effective based on their evaluation on these controls and procedures within
90 days of the date of this report.
(b) There have been no significant changes in the Company's internal controls
or in other factors that could significantly affect these controls
subsequent to the date of their evaluation.
PART II OTHER INFORMAITON
Item 5. Other Information
On April 16, 2003, the Company announced the appointment of Tom Tilley as
President and Chief Executive Officer of Thomasville Furniture Industries,
Inc., a subsidiary of the Company.
Item 6. Exhibits and Reports on Form 8-K
(a) 99.2 Certification of W.G. Holliman, Chief Executive Officer of the
Company, Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002.
99.3 Certification of David P. Howard, Chief Financial Officer of the
Company, Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002
(b) A Form 8-K was filed on January 28, 2003 announcing fourth quarter and
full year operating results and projections for the first quarter and
full year 2003. A Form 8-K was filed on March 4, 2003 revising
projections for the first quarter and full year 2003. A Form 8-K was
filed on April 29, 2003 announcing first quarter operating results and
projections of second quarter and full year earnings per share.
SIGNATURE
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.
Furniture Brands International, Inc.
(Registrant)
By /s/ Steven W. Alstadt
------------------------------
Steven W. Alstadt
Controller and
Chief Accounting Officer
Date: May 13, 2003
CERTIFICATIONS
I, Wilbert G. Holliman, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Furniture Brands
International, 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 officer 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 officer 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 (or persons performing the
equivalent function):
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 officer 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.
May 13, 2003
By /s/ Wilbert G. Holliman
----------------------------------
Wilbert G. Holliman
Chairman of the Board, President
and Chief Executive Officer
I, David P. Howard, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Furniture Brands
International, 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 officer 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 officer 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 (or persons performing the
equivalent function):
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 officer 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.
May 13, 2003
By /s/ David P. Howard
-----------------------------
David P. Howard
Vice President, Treasurer
and Chief Financial Officer