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 filing requirements for the past 90 days.

Yes      X           No            

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (Section 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K      X        

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).

                                                                                                    Yes ____ No    X      

Certain portions of the following documents are incorporated by reference into Part III of this Annual Report on Form 10-K: the Registrant's definitive Proxy Statement to be filed with the Commission not later than 120 days after the end of the fiscal year covered hereby.

1

NOTE: Copies of the exhibits may be obtained by stockholders upon written request directed to the Secretary, Moore-Handley, Inc., P. O. Box 2607, Birmingham, Alabama 35202, and payment of processing and mailing costs or on the Internet at www.moorehandley.com.

2

Moore-Handley, Inc. is a full-service distributor of plumbing and electrical supplies, power and hand tools, paint and paint sundries, lawn and garden equipment and other hardware and building materials products. Our customers include retail home centers, hardware stores, building materials dealers, paint stores, combination stores, a limited number of mass merchandisers, businesses and institutions. We have approximately 2,100 active customers located throughout the Southeast and approximately 200 customers elsewhere in the country, which we service from a 488,000 square foot distribution center located in Pelham, Alabama.

In connection with our distribution activities, we offer a wide range of marketing, advertising and other support services designed to assist customers in maintaining and improving their market positions. These support services include computer-generated systems for the control of inventory, pricing and gross margin, as well as advertising and store installation and design services.

Home centers and hardware and building supply retailers have a continuing need for a wide variety of items produced by a number of different manufacturers. Purchasing from us rather than directly from manufacturers allows independent retailers to simplify the purchasing process and to place smaller orders on an as-needed basis, thereby reducing their inventory carrying costs and excess stock risks. Moreover, we purchase products in quantities that enable us to obtain favorable prices and payment terms, which are reflected in prices and payment terms to our customers. Finally, the support services we offer to customers are generally not available from manufacturers, nor can most customers afford to develop them independently. We believe that our ability to provide a broad range of merchandise from a single source on a timely basis and at competitive prices, together with support services, offers our customers a substantial advantage over purchasing directly from manufacturers.

In recent years there has been a trend toward consolidation in many wholesale industries, including the grocery, drug and hard goods distribution businesses. This trend also is apparent in the building supply and hardware business.

We believe this consolidating trend is attributable to, among other things, the inability of small distributors to provide a full range of advertising, store layout and computer-generated pricing and inventory control services offered by larger entities. We have benefited from this consolidating trend by increasing our customer base.

We closely monitor our items in stock, maintaining a full range of products while concentrating our efforts on carrying quantities of stock designed to achieve high inventory turns. The following table indicates the percentage of net sales by class of merchandise sold by us in the past three years:

The table above also includes sales through our direct shipment program.

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Our customers are independent hardware and building supply stores. Primarily they are single unit operations or small, family owned chains with units in neighboring markets or towns. Our customers are separated into two divisions, Core and National. Our Core division is made up of customers in our traditional 10 Southeastern states trading area and our National division includes customers across the U.S. that are outside the Southeast. We currently service over 2,300 Core and National customers. No customer or affiliated group of customers accounted for more than 2% of our net sales in 2002, 2001, and 2000.

Sales Force. Our marketing program for the Core division is implemented primarily by our sales force of territory managers, each of whom is responsible for specific customers within a particular geographic area. Territory managers generally call on customers weekly to check inventories, take orders and perform various in-store services. In addition, they promote our support services to our customers. Sales assistants work with certain of the more senior territory managers. At December 31, 2002, we employed 50 territory managers and assistants.

At December 31, 2002, we also employed 5 district managers, each responsible for supervising and monitoring the activities of territory managers located in their assigned areas. To supplement our primary sales force, we maintain a telemarketing group that solicits and accepts orders from customers between regular visits by territory managers.

At December 31, 2002 we employed 4 National division territory managers, 2 telephone sales agents, and a district manager. Additionally, we employed 2 customer development agents who support both the Core and National divisions.

Customer Services. An important component of our marketing strategy is the range of support services we offer to our customers. These services, which we believe not only strengthen our relationship with existing customers but also attract new customers, are designed to enable customers to improve their marketing efforts and compete more effectively, thereby increasing our sales.

Our support services include advertising and promotional services, some costs of which are shared by our suppliers; store installation and design services, and computer-generated systems for control of inventory, pricing and gross margin.

We have developed a personal computer-based system for use by our customers, which includes a color-digitized catalog, electronic ordering and order editing capabilities and additional software programs to enable the dealer to increase profitability.

Operations. Our ability to fill and deliver small quantity orders for many different items enables customers to place orders on an as-needed basis, which in turn reduces our customers' inventory investment and storage costs. Our "fill-rate" - the percentage of items shipped within 48 hours of receipt of an order - is a measure of the efficiency of our order processing, inventory control and warehouse operations. Our fill-rate was approximately 95% for each of the last three years.

Deliveries are made on a regular basis by common and contract carriers for National division customers and our fleet of approximately 32 tractors and 62 trailers for Core division customers. Deliveries of merchandise are normally made within two or three business days after placement of an order.

Direct Shipment Program. As an additional service to our customers, we maintain a direct shipment program where customers order and receive shipments of some products directly from suppliers but are invoiced through us. We act as principal in the direct sales transactions, pay the supplier for the goods shipped and assume the risk of loss for the collection of payment from our customer. This program enables us to distribute products that would be inconvenient or expensive to stock in our warehouse, such as commodity building materials, and allows customers to receive discounts that otherwise might not be available to them. Approximately 36%, 35% and 33% of our net sales were attributable to purchases under the direct shipment program for 2002, 2001 and 2000, respectively.

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We distribute approximately 36,000 items purchased from approximately 950 manufacturers. Our ten largest vendors in 2002 accounted for approximately 21.5% of our total purchases, but no single manufacturer accounted for more than 4.3% of our total purchases during the year. We have no long-term supply or distribution agreements with our vendors. Substantially all products of the type distributed by us are available from a number of manufacturers.

Because inventory constitutes a substantial portion of our total assets, efficient control of inventory is an important management priority. Our inventory turns (determined by dividing cost of stocked goods sold by average monthly inventory) were 4.4 in 2002 and 4.5 in 2001. Turns were lower in 2002 due to a slight decrease in warehouse shipments and an increase in imported products, which have longer delivery times and require higher stocking levels.

Our markets and those of our customers are highly competitive. We compete directly with other national and regional wholesalers (including co-ops), direct-selling manufacturers and specialty distributors on the basis of fill-rate, delivery time, price, breadth of product lines, marketing programs and support services. A number of these competitors are larger and have greater financial resources than us. The success of our business depends on our ability to distribute a large volume and variety of products efficiently and at competitive prices and to provide high quality support services.

As of December 31, 2002, we employed 393 persons, of whom 176 are subject to a collective bargaining agreement expiring in December 2004. We have not experienced any strikes or work stoppages and consider our relationship with our employees to be good.

Such over-the-counter quotations reflect inter-dealer quotations, without retail mark-up, markdown or commissions and may not necessarily represent actual transactions.

On March 10, 2003, there were 165 holders of record of our common stock. Since a large number of these holders are nominees, we believe beneficial holders represent a substantially larger number.

We have not paid cash dividends on our common stock as it has been the policy of the Board of Directors to retain all available earnings to support the growth and expansion of our business. The payment of dividends on common stock in the future and the rate of such dividends, if any, will be determined by the Board of Directors based on our earnings, financial condition and capital requirements and subject to certain restrictions under our credit agreement.

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The executive officers as of March 1, 2003, their ages and their present positions with us and their principal occupations since 1998 are as follows:

1. Mr. Mercer was employed by The Young & Vann Supply Company, an industrial distributor, from 1988 to 2000.
2. Mr. Seifert was employed by Marvin's, a home center and building materials chain, from 1994 to 2001.
3. Mr. Grear was owner and manager of SMB Trading Group, an internet trading and distribution consulting company, from 1998 to 1999; he was employed by Caldor, Inc., a mass merchandise retailer, from 1994 to 1997.

Officers are elected annually and serve at the discretion of the Board of Directors.

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Typically, sales in the 1st, 2nd and 3rd quarters are higher than in the 4th quarter due to additional sales generated by Dealers' Marts. In 2002, we held these Marts during the months of February, May and August. The majority of the additional sales are factory direct shipments that carry a lower gross margin than warehouse shipments but contribute to our profitability. Sales in the 4th quarter are also negatively impacted by the effect of seasonal holidays.

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Our discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. We evaluate these estimates on an on-going basis using historical experience and various other assumptions believed to be reasonable under the circumstances. The results of these evaluations form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates under different assumptions or conditions.

We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our financial statements.

Revenue Recognition

We recognize revenues, net of estimated sales returns, discounts and allowances, when goods are shipped, title has passed, the sales price is fixed and the collectibility is reasonably assured. We assume no significant obligations after goods are shipped. Regarding our direct shipment program, sales are recorded gross in our statements of operations since we act as principal in the sales transaction and assume the credit risk.

We record provisions for estimated sales returns and allowances on sales in the same period as the related sales are recorded. These estimates are based on historical sales returns and analyses of credit memo data and other known factors. If the historic data we use to calculate these estimates does not properly reflect future returns and allowances, net sales could either be understated or overstated.

In September 2000, the Emerging Issues Task Force issued EITF 00-10, Accounting for Shipping and Handling Fees and Costs (EITF 00-10). EITF 00-10 requires shipping and handling fees billed to customers to be classified as revenue and shipping and handling costs to be either classified as cost of sales or disclosed in the notes to the consolidated financial statements. Shipping and handling costs associated with inbound freight are included in cost of sales. Shipping and handling fees billed to customers are included in delivery, selling, general and administrative expenses.

Statement of Position 93-7, Reporting on Advertising Costs, requires the disclosure of advertising costs. We expense the cost of advertising when incurred. Advertising expense was immaterial and did not have a significant impact on expenses for the years 2002, 2001 and 2000.

We maintain an allowance for doubtful accounts to reflect expected credit losses. We provide for bad debts based on collection history and specific risks identified on a customer-by-customer basis. A considerable amount of judgment is required to assess the ultimate realization of accounts receivable and the credit worthiness of each customer. Furthermore, these judgments must be continually evaluated and updated. If the financial condition of our customers were to deteriorate, resulting in impairment in their ability to make payments, additional allowances may be required in future periods.

We state our inventory at the lower of average cost or market. An allowance for obsolete or excess inventory is maintained to reflect the estimated net realizable value of the inventory based on current market conditions and the inventory's recent historical movement and future demands. If actual market conditions and future demand are less favorable than we project, additional inventory provisions may be required.

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Deferred income taxes are provided for temporary differences between financial and income tax reporting, primarily related to depreciation, inventory valuation and certain accrued costs. We continuously assess the need for valuation allowances on recorded deferred tax assets and establish an allowance when we believe it is more likely than not that the asset will not be realized.

We have pension benefit costs and credits that are developed from actuarial valuations. Inherent in these valuations are key assumptions including discount rates and expected return on plan assets. We are required to consider current market conditions, including changes in interest rates, in selecting these assumptions. Periodic changes in these key assumptions, along with changes in head count, could have a significant impact on future pension costs and recorded pension liabilities.

We estimate the depreciable lives of property and equipment when purchased and evaluate those lives when facts and circumstances change. In regards to impairment, we have adopted Statement of Financial Accounting Standards (SFAS) No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, which supercedes SFAS No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of. Under SFAS No. 144, when events and circumstances indicate that long-lived assets used in operations may be impaired and the undiscounted cash flows estimated to be generated from those assets are less than their carrying values, we record an impairment loss equal to the excess of the carrying value over the fair value. Long-lived assets held for disposal are valued at the lower of the carrying value or fair value less disposal costs. The adoption of SFAS 144 had no significant impact on our financial condition or results of operations.

Total gross margin for 2002 decreased $540,000 or 2.2% from 2001 on a 1.4% net sales decrease. Total operating expenses increased $576,000 or 2.6%. As a result of the decrease in gross margin and an increase in operating expenses, operating income decreased $1,116,000 or 44.5% to $1,391,000 compared to an operating income of $2,507,000 in 2001.

Total gross margin for 2001 increased $449,000 or 1.9% from 2000 on a 0.8% net sales decrease. Total operating expenses decreased $2,720,000 or 11.0%. As a result of the increase in gross margin and decrease in operating expenses, operating income increased $3,169,000 to $2,507,000 compared to an operating loss of $662,000 in 2000.

Net sales for 2002 decreased $2,169,000 or 1.4% compared to 2001. Most of the decrease was due to a reduction in sales to unprofitable accounts.

We experienced a temporary disruption in operations in the third quarter of 2002 due to storm damage. The estimated effect for the third quarter on diluted earnings per share was $0.02. The storm damage and subsequent expenses related to business disruption were fully insured. Our financial statements reflect the related insurance recoveries due to the disruption caused by the storm damage. These recoveries offset expenses incurred due to related disruptions in operations during 2002 and are expected to be adequate to cover any related expenses incurred during the first half of 2003, when all repairs are scheduled for completion. As of December 31, 2002, we had an amount receivable due from our insurance carrier of $477,000, all of which was collected in March 2003.

Net sales for 2001 decreased $1,275,000 or 0.8% compared to 2000. The majority of the decrease was due to territory consolidations initiated in May 2000. Quarterly comparisons for 2001 compared to 2000 were more favorable after the first quarter due to the effect of the timing of the territory consolidations.

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The following table sets forth quarterly net sales and changes by quarter for the past three years.

The following table sets forth certain financial data as a percentage of net sales for the past three years:

Gross margin percentage decreased slightly to 16.0% of sales compared to 16.1% for 2001, attributable to a slight increase in the mix of factory direct shipments that carry a lower margin rate.

Gross margin percentage increased to 16.1% of sales for 2001 from 15.7% for 2000. The effect of a higher mix of factory direct shipments that carry a lower margin was more than offset by an improved margin rate on a more favorable mix of warehouse shipments.

In 2002 and 2001, there were three Dealers Marts. Most of the sales from the Dealers' Marts in both 2002 and 2001 were shipped in the first, second and third quarters and included a higher proportion of factory direct shipments at lower gross margins. The gross margin rate for the fourth quarter of 2002 was higher than the first three quarters mainly due to a lower mix of lower margin factory direct shipments.

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The following table sets forth gross margin and gross margin percentages and year-to-year changes by quarter for the last three years.

As a percent of warehouse shipments, warehouse and delivery expense increased to 9.8% in 2002 compared to 9.3% in 2001 mainly as a result of increased unit labor costs and contract carrier expense.

As a percent of warehouse shipments, warehouse and delivery expenses decreased to 9.3% in 2001 compared to 9.8% in 2000. Continued warehouse productivity improvements and route consolidations initiated in May of 2000 had a favorable impact on warehouse and delivery expenses.

The following table shows the trend of warehouse and delivery expenses by quarter for the last three years.

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Selling and administrative expenses increased $387,000 or 3.0% in 2002 compared to the previous year primarily as a result of an increase in overall employee benefit expenses and salaries, benefits and other costs associated with our national sales initiative, which includes serving customers outside of our Core (Southeastern) trading area. These increased expenses were partially offset by an increase in vendor allowances.

Selling and administrative expenses decreased $1,818,000 or 12.4% in 2001 compared to the previous year. Reductions were attained during the year due to sales territory consolidations and general and administrative expense reductions initiated in May 2000. We also experienced an increase in vendor allowances.

The following table shows the quarterly trend of selling and administrative expenses in the last three years. The fourth quarter expense in 2001 was favorably affected by the recording of an increase in vendor allowances and in 2000 was affected adversely by an increase in employee benefit expense.

In 2002, net interest expense decreased $423,000 or 33.1% compared to 2001 primarily due to a lower interest rate environment compared to 2001. The weighted average interest rate was 4.65% in 2002 compared to 7.03% in 2001.

In 2001, net interest expense decreased $374,000 or 22.7% compared to 2000. The decrease was primarily due to a decrease in the prime lending and LIBOR based rates in 2001. The weighted average interest rate was 7.03% for 2001 compared to 9.45% in 2000.

For information concerning income tax provisions for 2002, 2001 and 2000, as well as information regarding differences between effective tax rates and statutory tax rates, see Note 6 of our financial statements.

13

In 2002, we purchased 7,850 shares of our common stock. In 2001, we purchased 58,200 shares of our common stock and issued 13,500 shares under the employee stock purchase plan.

In 2002, we financed our working capital requirements with a line of credit under which we may borrow up to 85% of eligible receivables and 50% of eligible inventory up to $6,000,000 that was annually renewable beginning in April 2003. In February 2002, we executed a working capital line increase and extension. This new line allows for a maximum borrowing of $28,000,000 and is based on 85% of eligible receivables and 50% (60% during the months of December, January and February) of eligible inventory up to $11,000,000. This new line has a maturity date of April 30, 2005. The borrowings bear interest at the prime interest rate or, at our option, 2 1/2% over LIBOR (2 1/4% for the 2nd, 3rd, and 4th quarters of 2002 since we met certain requirements). Our trade receivables and inventory secure the borrowings.

In November 2002, we received a $7,000,000 term loan secured by a real estate mortgage on our Pelham facility and a security interest in certain equipment. The loan bears a fixed interest rate of 5.03% payable in monthly installments based on a fifteen (15) year amortization schedule and has a maturity date of December 1, 2008. The net proceeds of this term loan were used to pay off an existing term note and reduce the outstandings under the existing revolving line of credit.

Actual borrowings under lines of credit and the average interest rate were as follows during the past three years:

The following table summarizes information about our contractual obligations as of December 31, 2002:

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In February 2002, we negotiated an amendment to our working capital line that extended the maturity date to April 2005. We believe our new credit facility is adequate to finance our current working capital needs. We believe that we will have sufficient cash flow from operations and available capacity under the Credit Facility, to fund both our current operations and anticipated internal expansion, for the current year and for the additional period remaining under the Credit Facility.

On an historical basis, net cash provided by (used in) operating activities for fiscal years 2002, 2001 and 2000 was ($1,682,000), $5,743,000, and ($1,680,000), respectively.

The change from 2001 to 2002 was mainly due to a decrease in current liabilities, mainly trade accounts payable which decreased $3,087,000 compared to prior year. Trade payables decreased mainly because of increased purchases of merchandise with accelerated payment terms. This increase was partially offset by a reduction in other receivables

The change from 2000 to 2001 was due to the increase in net income and a significant decrease in current assets partially offset by a decrease in accounts payable and accrued expenses. Trade receivables decreased $6,503,000 or 29.1% and decreased $801,000 or 3.5% at December 31, 2001 and 2000, respectively, compared to the prior year. Although fourth quarter sales were 2.9% above the same quarter in 2000, trade receivables were down significantly due to the effect of aggressive promotions offered to our customers in the fourth quarter of 2001. These promotions helped increase sales by offering incentive rebates to customers instead of extended dating terms provided in prior years.

The change from 1999 to 2000 was mainly due to the net loss in 2000. Fourth quarter sales in 2000 were lower than the same quarter in 1999 and consequently trade receivables were also lower.

The following are the number of inventory items carried and average inventory turns for the last three years.

At December 31, 2002, inventories increased $1,408,000 or 8.4% compared to the prior year end, because of increased purchases in preparation for a vendor price increase and our upcoming Mart.

At December 31, 2001, inventories decreased $245,000 or 1.4% compared to the prior year end, mainly due to fewer year-end purchases made to reach annual vendor incentive requirements. At December 31, 2000 inventories decreased $687,000 or 3.8% compared to 1999. The decrease in 2000 was at a rate less than the annual decrease in sales due to lower than average inventory turns.

Capital expenditures in 2002 were $1,054,000. Depreciation and amortization for 2002 was $1,356,000. We presently anticipate that capital expenditures in 2003 will not exceed the rate of depreciation and amortization.

The following discussion about our interest rate risk includes "forward-looking statements" that involve risks and uncertainties. Actual results could differ materially from those projected in the forward-looking statements.

Our principal revolving credit agreement bears a floating interest rate based on the prime rate or, at our option, 2 1/2% over LIBOR. Accordingly, we are subject to market risk associated with changes in interest rates. At December 31, 2002, $13,755,000 was outstanding under the credit agreement. For 2002, the average principal amount outstanding under the credit agreement was $19,693,000. Assuming the average amount outstanding under the credit agreement during 2003 is equal to such average amount outstanding during 2002 less the average outstanding under our fixed rate term loan of approximately $6,800,000, a 1% increase in the applicable interest rate during 2003 would result in additional interest expense of approximately $128,930, which would reduce cash flow and pre-tax earnings dollar for dollar.

At December 31, 2002 the prime rate was 4.25% and currently it is 4.25%. Our LIBOR based rate was 3.67% at December 31, 2002 and currently it is 3.82%.

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The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company's Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission, and that such information is accumulated and communicated to the Company's management, including its Chief Executive Officer, Chief Operating Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Within 90 days prior to the date of this Annual Report, the Company carried out an evaluation, under the supervision and with the participation of the Company's management, including the Company's Chief Executive Officer, Chief Operating Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures. Based on the foregoing, the Company's Chief Executive Officer, Chief Operating Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective.

There have been no significant changes in the Company's internal controls or in other factors that could significantly affect the internal controls subsequent to the date the Company completed its evaluation.

For information concerning the impact of recently issued accounting standards, see Note 1 to the financial statements.

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Information Concerning Forward-Looking Statements

Certain of the statements contained in this report (other than the financial statements and other statements of historical fact) are forward-looking statements. Use of words such as "expects" and "believes" indicates the presence of forward-looking statements. There can be no assurance that future developments will be in accordance with management's expectations or that the effect of future developments on us will be those anticipated by management. Among the factors that could cause actual results to differ materially from estimates reflected in such forward-looking statements are the following:

• competitive pressures on sales and pricing, including those from other wholesale distributors and those from retailers in competition with our customers;

• our ability to achieve projected cost savings from our warehouse modernization program and ongoing cost reduction efforts;

• changes in cost of goods and the effect of differential terms and conditions available to our larger competitors;

• uncertainties associated with our national sales initiative or any acquisition we may seek to implement; and

• changes in general economic conditions, including increases in interest rates.

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Board of Directors
Moore-Handley, Inc.

We have audited the accompanying balance sheets of Moore-Handley, Inc. as of December 31, 2002 and 2001, and the related statements of operations, changes in stockholders' equity and cash flows for each of the three years in the period ended December 31, 2002. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Moore-Handley, Inc. at December 31, 2002 and 2001, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2002, in conformity with accounting principles generally accepted in the United States

                                                                                                                /s/ Ernst & Young, LLP

Birmingham, Alabama
March 7, 2003

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For the Years Ended December 31, 2002, 2001 and 2000

19

For the Years Ended December 31, 2002, 2001 and 2000.

See accompanying notes.

20

December 31, 2002 and 2001

See accompanying notes.

21

See accompanying notes.

22

For the Years Ended December 31, 2002, 2001, and 2000

See accompanying notes.

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