SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
---------------------------
FORM 10-Q
[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 no. 0-10546
LAWSON PRODUCTS, INC.
---------------------
(Exact name of registrant as specified in its charter)
Delaware 36-2229304
- ---------------------------------------- -----------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1666 East Touhy Avenue, Des Plaines, Illinois 60018
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone no., including area code: (847) 827-9666
--------------
Not applicable
- --------------------------------------------------------------------------------
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 X No ----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date. 9,490,111 Shares, $1 par value,
as of April 14, 2003.
TABLE OF CONTENTS
Page
Number
------
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheet at March 31, 2003 (unaudited)
and December 31, 2002 3
Condensed Consolidated Statement of Income for the three months ended
March 31, 2003 and 2002 (unaudited) 5
Condensed Consolidated Statement of Cash Flows for the three months
ended March 31, 2003 and 2002 (unaudited) 6
Notes to Condensed Consolidated Unaudited Financial Statements 7
Independent Accountants' Review Report 11
Item 2. Management's Discussion and Analysis of Financial Condition and
Operating Results 12
Item 3. Quantitative and Qualitative Disclosures About Market Risk 12
Item 4. Controls and Procedures 13
Part II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 13
Signatures 14
Certifications 15
-2-
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
- -----------------------------
LAWSON PRODUCTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
March 31, December 31,
(Amounts in thousands, except share data) 2003 2002
------------------------ ------------------------
(UNAUDITED)
ASSETS
Current Assets:
Cash and cash equivalents $ 6,897 $ 7,591
Marketable securities 540 696
Accounts receivable, less
allowance for doubtful accounts 44,680 42,990
Inventories (Note B) 62,193 63,851
Miscellaneous receivables and
prepaid expenses 9,230 11,170
Deferred income taxes 3,381 3,463
------------------------ ------------------------
Total Current Assets 126,921 129,761
Property, plant and equipment, less
allowances for depreciation and amortization 39,569 39,519
Investments in real estate 1,485 1,305
Deferred income taxes 11,828 11,987
Goodwill, less accumulated amortization 28,649 28,649
Other assets 14,895 14,610
------------------------ ------------------------
Total Assets $223,347 $225,831
======================== ========================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 6,592 $ 8,085
Accrued expenses and other liabilities 18,909 23,638
Income taxes 1,485 ---
------------------------ ------------------------
Total Current Liabilities 26,986 31,723
------------------------ ------------------------
Accrued liability under security
bonus plans 20,518 20,614
Other 11,170 11,151
------------------------ ------------------------
31,688 31,765
------------------------ ------------------------
-3-
Stockholders' Equity:
Preferred Stock, $1 par value:
Authorized - 500,000 shares
Issued and outstanding - None --- ---
Common Stock, $1 par value:
Authorized - 35,000,000 shares
Issued and outstanding-(2003-9,490,111
shares; 2002-9,494,011 shares) 9,490 9,494
Capital in excess of par value 2,262 2,387
Retained earnings 154,613 152,495
Accumulated other comprehensive income (1,692) (2,033)
------------------------ ------------------------
Total Stockholders' Equity 164,673 162,343
------------------------ ------------------------
Total Liabilities and Stockholders'
Equity $223,347 $225,831
======================== ========================
See notes to condensed consolidated financial statements.
-4-
LAWSON PRODUCTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(Amounts in thousands, except per share data)
For the
Three Months Ended
March 31,
2003 2002
------------------ -----------------
Net sales $96,075 $95,746
Cost of goods sold (Note B) 34,548 33,704
------------------ -----------------
Gross profit 61,527 62,042
Selling, general and
administrative expenses 55,265 56,042
------------------ -----------------
Operating income 6,262 6,000
------------------ -----------------
Investment and other income 359 483
Interest expense --- 73
------------------ -----------------
Income before income taxes 6,621 6,410
Provision for income taxes 2,863 2,578
------------------ -----------------
Net income $3,758 $3,832
================== =================
Net income per share
of common stock:
Basic $0.40 $0.40
================== =================
Diluted $0.40 $0.40
================== =================
Cash dividends declared per
share of common stock $0.16 $0.16
================== =================
Weighted average shares
outstanding:
Basic 9,492 9,627
================== =================
Diluted 9,511 9,657
================== =================
See notes to condensed consolidated financial statements.
-5-
LAWSON PRODUCTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(Amounts in thousands)
For the
Three Months Ended
March 31,
2003 2002
------------------ ------------------
Operating activities:
Net income $3,758 $3,832
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 1,644 1,695
Changes in operating assets and liabilities (3,855) 1,628
Other 707 538
------------------ ------------------
Net Cash Provided by Operating Activities 2,254 7,693
------------------ ------------------
Investing activities:
Additions to property, plant and equipment (1,333) (1,322)
Purchases of marketable securities (1,654) (2,883)
Proceeds from sale of marketable securities 1,809 4,122
Other --- 176
------------------ ------------------
Net Cash Provided by (Used in) Investing Activities (1,178) 93
------------------ ------------------
Financing activities:
Proceeds from revolving line of credit --- 14,000
Payments on revolving line of credit --- (23,000)
Dividends paid (1,519) (1,541)
Other (251) (315)
------------------ ------------------
Net Cash Used in Financing Activities (1,770) (10,856)
------------------ ------------------
Decrease in Cash and Cash Equivalents (694) (3,070)
Cash and Cash Equivalents at Beginning of Period 7,591 6,987
------------------ ------------------
Cash and Cash Equivalents at End of Period $6,897 $3,917
================== ==================
See notes to condensed consolidated financial statements.
-6-
NOTES TO CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS
A) As contemplated by the Securities and Exchange Commission, the accompanying
consolidated financial statements and footnotes have been condensed and
therefore, do not contain all disclosures required by generally accepted
accounting principles. Reference should be made to Lawson Products, Inc.'s (the
"Company") Annual Report on Form 10-K for the year ended December 31, 2002. The
Condensed Consolidated Balance Sheet as of March 31, 2003, the Condensed
Consolidated Statements of Income for the three month periods ended March 31,
2003 and 2002 and the Condensed Consolidated Statements of Cash Flows for the
three month periods ended March 31, 2003 and 2002 are unaudited. In the opinion
of the Company, all adjustments (consisting only of normal recurring accruals)
have been made, which are necessary to present fairly the results of operations
for the interim periods. Operating results for the quarter ended March 31, 2003
are not necessarily indicative of the results that may be expected for the year
ending December 31, 2003.
B) Inventories (consisting of primarily finished goods) at March 31, 2003 and
cost of goods sold for the three month period ending March 31, 2003 were based
on perpetual inventory records. Inventories (consisting of primarily finished
goods) at March 31, 2002 and cost of goods sold for the three month period ended
March 31, 2002 were determined through the use of estimated gross profit rates.
The difference between actual and estimated gross profit in 2002 was adjusted in
the fourth quarter. In 2002, this adjustment increased net income by
approximately $1,955,000.
C) Total comprehensive income and its components, net of related tax, for the
first quarter of 2003 and 2002 are as follows (in thousands):
2003 2002
---- ----
Net income $3,758 $3,832
Foreign currency translation adjustments 341 (117)
-------------------------------
Comprehensive income $4,099 $3,715
===============================
The components of accumulated other comprehensive income, net of related tax, at
March 31, 2003 and December 31, 2002 are as follows (in thousands):
2003 2002
---- ----
Foreign currency translation adjustments $(1,692) $(2,033)
-------------------------------
Accumulated other comprehensive income $(1,692) $(2,033)
===============================
D) Earnings per Share
The calculation of dilutive weighted average shares outstanding at March 31,
2003 and 2002 are as follows (in thousands):
2003 2002
---- ----
Basic weighted average shares outstanding 9,492 9,627
Dilutive impact of options outstanding 19 30
-------------------------------
Dilutive weighted average shares outstanding 9,511 9,657
===============================
-7-
E) Revolving Line of Credit
In March 2001 the Company entered into a $50 million revolving line of credit.
The revolving line of credit matures five years from the closing date and
carries an interest rate of prime minus 150 basis points floating or LIBOR plus
75 basis points, at the Company's option. Interest is payable quarterly on prime
borrowings and at the earlier of quarterly or maturity with respect to the LIBOR
contracts. The line of credit contains certain financial covenants regarding
interest coverage, minimum stockholders' equity and working capital, all of
which the Company was in compliance with at March 31, 2003. The Company had
nothing outstanding under the line at March 31, 2003, and December 31, 2002.
F) Special Charges
The table below shows an analysis of the Company's reserves for severance and
related expenses for the first quarter of 2003 and 2002:
Three Months Ended
In thousands March 31,
- ------------------------------------------------------------------------------------------------
2003 2002
---- ----
Balance at December 31 $ 876 $1,458
Cash paid in the quarter (140) (246)
-------------------------------
Balance at March 31 $ 736 $1,212
===============================
G) Intangible Assets
Intangible assets subject to amortization, included within other assets, were as
follows (in thousands):
March 31, 2003
Gross Accumulated Net Carrying
Balance Amortization Amount
------- ------------ ------
Trademarks and tradenames $1,747 $714 $1,033
Customer Lists 953 101 852
-------------------------------------------
$2,700 $815 $1,885
-------------------------------------------
December 31, 2002
Gross Accumulated Net Carrying
Balance Amortization Amount
------- ------------ ------
Trademarks and tradenames $1,747 $668 $1,079
Customer Lists 953 33 920
-------------------------------------------
$2,700 $701 $1,999
-------------------------------------------
Trademarks and tradenames are being amortized over a weighted average 15.1
years. Customer lists are being amortized over 15.2 years. Amortization expense
for intangible assets is expected to be $322,000, $176,000, $143,000, $143,000
and $98,000 for 2003 and the next four years, respectively.
H) Accounting for Stock-Based Compensation
The Company adopted FASB Statement No. 148, "Accounting for Stock Based
Compensation - Transition and Disclosure." This Statement requires additional
disclosure within interim financial statements. The following table shows the
effect on net income and earnings per share as required by FASB Statement No.
123, "Accounting for Stock-Based Compensation."
-8-
Three Months Ended March 31,
----------------------------
In thousands 2003 2002
- ------------------------------------------------------------------------------------------
Net income-as reported $3,758 $3,832
Deduct: Total stock based employee compensation expense
determined under fair value method, net of tax (7) (9)
- ------------------------------------------------------------------------------------------
Net income-pro forma 3,751 3,823
Basic and diluted earnings per share
- -as reported .40 .40
Basic earnings per share-pro forma .40 .40
Diluted earnings per share-pro forma .39 .40
A $243,000 reversal of a compensation expense accrual relative to stock
performance rights was recorded in the first quarter of 2003. The first quarter
of 2002 includes $33,000 in compensation expense relative to stock performance
rights.
I) Segment Reporting
The Company has four reportable segments: Maintenance, Repair and Replacement
(MRO) distribution, Original Equipment Manufacturer (OEM) distribution and
manufacturing, International Maintenance, Repair and Replacement (INTLMRO)
distribution in Canada and International Original Equipment Manufacturer
(INTLOEM) distribution in Mexico and the United Kingdom.
Financial information for the Company's reportable segments consisted of the
following:
Three Months Ended
March 31,
------------------------
In Thousands 2003 2002
- -----------------------------------------------------------------------------------------
Net sales
MRO distribution $ 75,047 $75,781
OEM distribution 14,271 14,484
International MRO distribution 4,386 3,875
International OEM distribution 2,371 1,606
------------------------
Consolidated total $ 96,075 $95,746
------------------------
Operating income(loss)
MRO distribution $ 6,104 $ 5,491
OEM distribution 475 1,068
International MRO distribution 324
(50)
International OEM distribution (509)
(641)
------------------------
Consolidated total $ 6,262 $ 6,000
------------------------
The reconciliation of segment profit to consolidated income before income taxes
consisted of the following:
Three Months Ended
March 31,
------------------------
In Thousands 2003 2002
- -----------------------------------------------------------------------------------------
Total operating income from reportable segments $ 6,262 $ 6,000
Investment and other income 359 483
Interest expense --- (73)
------------------------
Income before income taxes $ 6,621 $ 6,410
------------------------
Asset information related to the Company's reportable segments consisted of the
following:
-9-
March 31, December 31,
In Thousands 2003 2002
- --------------------------------------------------------------------------------------------
Total Assets
MRO distribution $151,471 $155,439
OEM distribution 33,665 32,574
International MRO distribution 14,633 13,989
International OEM distribution 8,369 8,379
-----------------------------
Total for reportable segments 208,138 210,381
Corporate 15,209 15,450
-----------------------------
Consolidated Total $223,347 $225,831
-----------------------------
At December 31, 2002, the carrying value of goodwill within each reportable
segment was as follows (in thousands):
MRO distribution $ 22,104
OEM distribution 2,251
International MRO distribution 4,294
International OEM distribution ---
--------
Consolidated total $ 28,649
--------
-10-
Independent Accountants' Review Report
Board of Directors and Stockholders of Lawson Products, Inc.
We have reviewed the accompanying condensed consolidated balance sheet
of Lawson Products, Inc. and subsidiaries as of March 31, 2003 and the related
condensed consolidated statements of income and cash flows for the three-month
periods ended March 31, 2003 and 2002. These financial statements are the
responsibility of the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data, and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit in
accordance with auditing standards generally accepted in the United States,
which will be performed for the full year with the objective of expressing an
opinion regarding the financial statements taken as a whole. Accordingly, we do
not express such an opinion.
Based on our review, we are not aware of any material modifications
that should be made to the accompanying condensed consolidated financial
statements referred to above for them to be in conformity with accounting
principles generally accepted in the United States.
We have previously audited, in accordance with auditing standards
generally accepted in the United States, the consolidated balance sheet of
Lawson Products, Inc. as of December 31, 2002, and the related consolidated
statements of income, changes in stockholders' equity and cash flows for the
year then ended, not presented herein, and in our report dated February 20,
2003, we expressed an unqualified opinion on those consolidated financial
statements. In our opinion, the information set forth in the accompanying
condensed consolidated balance sheet as of December 31, 2002, is fairly stated,
in all material respects, in relation to the consolidated balance sheet from
which it has been derived.
/s/ ERNST & YOUNG LLP
April 14, 2003
-11-
This Quarterly Report on Form 10-Q for the quarter ended March 31,
2003, contains certain forward-looking statements pertaining to the ability of
the Company to finance future growth, cash dividends and capital expenditures,
the ability to successfully integrate acquired businesses and certain other
matters. These statements are subject to uncertainties and other factors which
could cause actual events or results to vary materially from those anticipated.
The Company does not undertake any obligation to revise these forward-looking
statements to reflect future events or circumstances.
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
-----------------------------------------------------------------------
OF OPERATIONS
-------------
Net sales for the three-month period ended March 31, 2003 increased
0.3% to $96,075,000 relative to the similar period of 2002. Combined
Maintenance, Repair and Replacement (MRO and INTLMRO) distribution net sales
decreased $0.3 million in the first quarter to $79.4 million from $79.7 million
in the first quarter of 2002. Combined Original Equipment Manufacturer (OEM and
INTLOEM) net sales increased $0.5 million to $16.6 million from $16.1 million
for the same period in 2002. Increased sales in the INTLOEM segment, resulting
primarily from increased penetration of existing accounts, more than offset a
slight decline in the OEM segment.
Operating income for the three-month period ended March 31, 2003 rose
$0.3 million, a 4.4% increase over the comparable period of 2002. The combined
MRO segments experienced an increase of $1.0 million, an 18.1% gain over the
first quarter of 2002. This increase resulted primarily from the expiration of a
special promotional program at the end of March, 2002 that was provided to
certain outside sales agents and from the Company's continuing efforts to
contain and reduce costs. The combined OEM segments had an operating loss of
$0.2 million for the three month period ended March 31, 2003 compared to
operating income of $0.6 million for the similar period of 2002. This decline is
primarily attributable to lower gross margins, which more than offset the sales
gain noted above, and higher selling, general and administrative (S,G&A)
expenses.
Net income was $3.8 million ($.40 per diluted share) for the three
month periods ended March 31, 2003 and 2002. A slight increase in pre-tax income
resulted primarily from the March, 2002 expiration of the special promotional
program discussed above, and continuing cost containment efforts that more than
offset a lower gross margin percentage. This slight improvement in pre-tax
income was more than offset by a higher effective income tax rate. Per share net
income for 2003 and 2002 was positively impacted by the Company's share
repurchase program.
Cash flows provided by operations for the three months ended March 31,
2003 and March 31, 2002 were $2.3 million and $7.7 million, respectively. The
decrease was due primarily to the net decrease in operating liabilities,
primarily accrued expenses and accounts payable. In 2002, cash flows provided
from operating activities were positively impacted by decreases in inventories
and other assets. Additions to property, plant and equipment were $1.3 million
for both the three months ended March 31, 2003 and 2002. Capital expenditures
for 2003 and 2002 were incurred primarily for improvement of existing facilities
and for the purchase of related equipment. In 2002, capital expenditures also
include improvements of new leased facilities.
During the first quarter of 2003, the Company purchased 4,600 shares of
its own common stock for approximately $127,000 pursuant to the 2000 Board
authorization to purchase up to 500,000 shares. In the first three months of
2002, the Company purchased 11,600 shares of its own common stock for
approximately $325,000. Of these purchases, 8,765 shares were acquired pursuant
to the 2000 Board authorization to purchase up to 500,000 shares and 2,835
shares represented the remaining shares authorized for purchase under the 1999
Board authorization to purchase up to 500,000 shares. All shares purchased as of
March 31, 2003 have been retired. Funds to purchase these shares were provided
by investments and cash flows from operations.
Current investments, cash flows from operations and the $50,000,000
unsecured line of credit are expected to be sufficient to finance the Company's
future growth, cash dividends and capital expenditures.
-12-
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
----------------------------------------------------------
There have been no material changes in market risk at March 31, 2003 from that
reported in the Company's Annual Report on Form 10-K for the year ended December
31, 2002.
ITEM 4. CONTROLS AND PROCEDURES
-----------------------
Our Chief Executive Officer and Chief Financial Officer have concluded, based on
their evaluation within 90 days of the filing date of this report, that our
disclosure controls and procedures (as defined in Rules 13a-14(c) and 15d-14(c)
under the Securities Exchange Act of 1934) are effective for gathering,
analyzing and disclosing the information we are required to disclose in our
reports filed under the Securities Exchange Act of 1934. There have been no
significant changes in our internal controls or in other factors that could
significantly affect these controls subsequent to the date of the previously
mentioned evaluation.
PART II
OTHER INFORMATION
Items 1, 2, 3, 4 and 5 are inapplicable and have been omitted from this report.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) 15 Letter from Ernst & Young LLP Regarding Unaudited
Interim Financial Information
99.1 Certification pursuant to 18 U.S.C. Section 1350 as
adopted pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002
(b) The Registrant did not file any Current Reports on
Form 8-K for the three months ended March 31, 2003.
-13-
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.
LAWSON PRODUCTS, INC.
(Registrant)
Dated: May 7, 2003 /s/ Robert J. Washlow
-------------- -------------------------------------------
Robert J. Washlow
Chairman of the Board
(principal executive officer)
Dated May 7, 2003 /s/ Joseph L. Pawlick
------------- -------------------------------------------
Joseph L. Pawlick
Chief Financial Officer
(principal financial officer)
-14
CERTIFICATIONS
--------------
I, Robert J. Washlow, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Lawson Products, 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 (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 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: May 7, 2003
/s/ Robert J. Washlow
- -------------------------------
Robert J. Washlow
Chief Executive Officer
-15-
CERTIFICATIONS
--------------
I, Joseph L. Pawlick, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Lawson Products, 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 (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 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: May 7, 2003
/s/ Joseph L. Pawlick
- ----------------------------------
Joseph L. Pawlick
Chief Financial Officer
-16-