UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly report pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended September 30, 2002
Commission File No. 000-32633
Belmar Capital Fund LLC
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(Exact name of registrant as specified in its charter)
Delaware 04-3508106
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(State of organization) (I.R.S. Employer Identification No.)
The Eaton Vance Building
255 State Street, Boston, Massachusetts 02109
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number: 617-482-8260
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None
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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 and 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
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Belmar Capital Fund LLC
Index to Form 10Q
PART I - FINANCIAL INFORMATION Page
Item 1. Condensed Consolidated Financial Statements 3
Condensed Consolidated Statements of Assets and
Liabilities as of September 30, 2002 (Unaudited)
and December 31, 2001 3
Condensed Consolidated Statements of Operations (Unaudited)
for the Three Months Ended September 30, 2002 and
2001 and for the Nine Months Ended September 30,
2002 and 2001 4
Condensed Consolidated Statements of Changes in Net Assets
(Unaudited) for the Nine Months Ended September 30,
2002 and 2001 6
Condensed Consolidated Statements of Cash Flows (Unaudited)
for the Nine Months Ended September 30, 2002 and 2001 7
Financial Highlights (Unaudited) for the Nine Months
Ended September 30, 2002 9
Notes to Condensed Consolidated Financial Statements as of
September 30, 2002 (Unaudited) 10
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 13
Item 3. Quantitative and Qualitative Disclosures About Market Risks 16
Item 4. Controls and Procedures 17
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 18
Item 2. Changes in Securities and Use of Proceeds 18
Item 3. Defaults Upon Senior Securities 18
Item 4. Submission of Matters to a Vote of Security Holders 18
Item 5. Other Information 18
Item 6. Exhibits and Reports 18
SIGNATURES 19
2
PART I. FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
- ---------------------------------------------------
BELMAR CAPITAL FUND LLC
Condensed Consolidated Statements of Assets and Liabilities
September 30,
2002 December 31,
(Unaudited) 2001
--------------------- -------------------
Assets:
Investment in Belvedere Capital Fund Company LLC $ 1,539,506,478 $ 2,129,845,069
Investment in Partnership Preference Units 558,915,785 587,551,880
Investment in other real estate 206,061,557 229,061,223
Short-term investments - 3,919,805
--------------------- -------------------
Total investments $ 2,304,483,820 $ 2,950,377,977
Cash 5,212,543 1,658,511
Escrow deposits - restricted 4,768,004 6,140,804
Dividends and interest receivable 3,565,809 4,935,259
Other assets 3,172,167 4,318,106
--------------------- -------------------
Total assets $ 2,321,202,343 $ 2,967,430,657
--------------------- -------------------
Liabilities:
Loan payable - Credit Facility $ 535,500,000 $ 613,500,000
Mortgages payable 162,779,816 175,470,843
Open interest rate swap contracts, at value 52,378,092 44,239,310
Swap interest payable 1,436,407 1,447,644
Payable for Fund Shares redeemed 265,050 -
Notes payable to minority shareholder 565,972 700,000
Security deposits 776,588 679,655
Accrued expenses:
Interest expense 2,394,960 2,782,673
Property taxes 2,319,665 3,121,214
Other expenses and liabilities 1,678,107 3,894,230
Minority interests in controlled subsidiaries 10,685,622 12,910,955
--------------------- -------------------
Total liabilities $ 770,780,279 $ 858,746,524
--------------------- -------------------
Net assets $ 1,550,422,064 $ 2,108,684,133
-------------------- -------------------
Shareholders' Capital
Shareholders' capital $ 1,550,422,064 $ 2,108,684,133
--------------------- -------------------
Shares Outstanding 23,466,460 24,134,504
--------------------- -------------------
Net Asset Value and Redemption Price Per Share $ 66.07 $ 87.37
--------------------- -------------------
See notes to condensed consolidated financial statements
3
BELMAR CAPITAL FUND LLC
Condensed Consolidated Statements of Operations (Unaudited)
Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
September 30, September 30, September 30, September 30,
2002 2001 2002 2001
------------------ ----------------- ---------------- -------------------
Investment Income:
Dividends allocated from Belvedere Capital
(net of foreign taxes of $51,132, $50,619,
$191,468 and $121,099, respectively) $ 5,639,402 $ 5,568,575 $ 17,311,192 $ 16,376,524
Interest allocated from Belvedere Capital 128,715 348,045 456,239 1,616,004
Expenses allocated from Belvedere Capital (2,607,604) (3,165,935) (8,792,381) (10,089,200)
------------------ ----------------- ---------------- -------------------
Net investment income allocated from
Belvedere Capital $ 3,160,513 $ 2,750,685 $ 8,975,050 $ 7,903,328
Dividends from Partnership Preference Units 12,483,972 14,357,713 39,587,818 33,708,166
Rental income 8,710,898 8,730,936 26,224,436 26,374,868
Interest 2,993 91,404 61,382 506,238
------------------ ----------------- ---------------- -------------------
Total investment income $ 24,358,376 $ 25,930,738 $ 74,848,686 $ 68,492,600
------------------ ----------------- ---------------- -------------------
Expenses:
Investment advisory and administrative fees $ 1,790,762 $ 1,792,803 $ 5,891,697 $ 5,648,053
Property management fees 346,211 347,308 1,041,032 1,040,203
Distribution and servicing fees 818,175 1,031,845 2,858,261 3,339,596
Interest expense on Credit Facility 3,343,724 5,734,510 10,567,576 25,309,092
Interest expense on swap contracts 10,118,324 6,732,767 30,156,297 16,721,512
Interest expense on mortgages 3,631,000 3,895,241 11,257,983 11,593,019
Property and maintenance expenses 2,977,014 3,378,233 8,535,151 9,593,472
Property taxes and insurance 1,057,132 1,023,401 3,535,698 2,964,591
Miscellaneous 248,364 521,273 752,492 1,393,037
------------------ ----------------- ---------------- -------------------
Total expenses $ 24,330,706 $ 24,457,381 $ 74,596,187 $ 77,602,575
Deduct -
Reduction of investment adviser and
administrative fees 419,814 521,117 1,435,666 1,669,419
------------------ ----------------- ---------------- -------------------
Net expenses $ 23,910,892 $ 23,936,264 $ 73,160,521 $ 75,933,156
------------------ ----------------- ---------------- -------------------
Net investment income (loss) before minority
interest in net (income) loss of controlled
subsidiary $ 447,484 $ 1,994,474 $ 1,688,165 $ (7,440,556)
Minority interest in net (income) loss of
controlled subsidiary (155,365) 61,619 (367,297) (295,269)
------------------ ----------------- ---------------- -------------------
Net investment income (loss) $ 292,119 $ 2,056,093 $ 1,320,868 $ (7,735,825)
------------------ ----------------- ---------------- -------------------
See notes to condensed consolidated financial statements
4
BELMAR CAPITAL FUND LLC
Condensed Consolidated Statements of Operations (Unaudited) (Continued)
Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
September 30, September 30, September 30, September 30,
2002 2001 2002 2001
----------------- ------------------ ----------------- -----------------
Realized and Unrealized Gain (Loss)
Net realized gain (loss) -
Investment transactions from Belvedere
Capital (identified cost basis) $ (33,410,557) $(25,715,901) $(164,133,745) $ (27,098,182)
Investment transactions in Partnership
Preference Units (identified cost basis) 2,830,974 - 5,116,279 -
Investment transactions in other real estate
investments (net of minority interest
in realized gain (loss) of
controlled subsidiary of $7,434, $0,
$(476,023), and $0, respectively) 19,062 - (1,777,939) 428,905
----------------- ------------------ ----------------- -----------------
Net realized loss $ (30,560,521) $(25,715,901) $(160,795,405) $ (26,669,277)
----------------- ------------------ ----------------- -----------------
Change in unrealized appreciation
(depreciation) -
Investment in Belvedere Capital (identified
cost basis) $(247,988,924) $(293,367,277) $(356,435,613) $(456,547,178)
Investments in Partnership Preference Units
(identified cost basis) 5,251,055 (7,546,924) 26,324,228 32,389,352
Investment in other real estate investments
(net of minority interest in unrealized loss
of controlled subsidiary of $1,906,217,
$6,443,516, $2,116,617, and $10,740,873,
respectively) (10,230,200) (3,486,773) (7,556,925) (1,449,129)
Interest rate swap contracts (7,299,674) (24,597,142) (8,138,782) (24,790,154)
----------------- ------------------ ----------------- -----------------
Net change in unrealized appreciation
(depreciation) $(260,267,743) $(328,998,116) $(345,807,092) $(450,397,109)
----------------- ------------------ ----------------- -----------------
Net realized and unrealized loss $(290,828,264) $(354,714,017) $(506,602,497) $(477,066,386)
----------------- ------------------ ----------------- -----------------
Net decrease in net assets from operations $(290,536,145) $(352,657,924) $(505,281,629) $(484,802,211)
================= ================== ================= =================
See notes to condensed consolidated financial statements
5
BELMAR CAPITAL FUND LLC
Condensed Consolidated Statements of Changes in Net Assets (Unaudited)
Nine Months Nine Months
Ended Ended
September 30, 2002 September 30, 2001
----------------------- -----------------------
Increase (Decrease) in Net Assets:
Net investment income (loss) $ 1,320,868 $ (7,735,825)
Net realized loss from investment transactions (160,795,405) (26,669,277)
Net change in unrealized appreciation (depreciation) of
investments (345,807,092) (450,397,109)
----------------------- -----------------------
Net decrease in net assets from operations $ (505,281,629) $ (484,802,211)
Transactions in Fund Shares -
Net asset value of Fund Shares redeemed $ (52,980,440) $ (67,266,788)
----------------------- -----------------------
Net decrease in net assets from Fund Share transactions $ (52,980,440) $ (67,266,788)
Distributions -
Special Distributions to Belmar Capital
Fund LLC Shareholders $ - $ (1,788,773)
----------------------- -----------------------
Total distributions $ - $ (1,788,773)
----------------------- -----------------------
Net decrease in net assets $ (558,262,069) $ (553,857,772)
----------------------- -----------------------
Net assets
At beginning of period $ 2,108,684,133 $ 2,457,715,428
----------------------- -----------------------
At end of period $ 1,550,422,064 $ 1,903,857,656
======================= =======================
See notes to condensed consolidated financial statements
6
BELMAR CAPITAL FUND LLC
Condensed Consolidated Statements of Cash Flows (Unaudited)
Nine Months Nine Months
Ended Ended
September 30, September 30,
2002 2001
----------------- ------------------
Cash Flows From Operating Activities -
Net decrease in net assets from operations $(505,281,629) $(484,802,211)
Adjustments to reconcile net decrease in net assets from operations to
net cash flows from operating activities -
Amortization of debt issuance costs 262,048 239,284
Net investment income allocated from Belvedere Capital (8,975,050) (7,903,328)
Decrease in dividends and interest receivable 1,369,450 5,337,003
Increase (decrease) in interest payable for open swap contracts (11,237) 835,141
Decrease in escrow deposits 1,066,824 5,864,201
Decrease in other assets 546,904 1,482,501
Decrease in accrued property taxes (714,987) (356,712)
Decrease in security deposits, accrued expenses and other liabilities (1,120,425) (621,201)
Increase in minority interest - 210,000
Proceeds from sales of Partnership Preference Units 60,076,602 -
Payments for investments in other real estate - (48,651,593)
Proceeds from sales of investments in other real estate - 49,080,499
Improvements to rental property (1,511,479) (9,890,177)
Decrease in cash due to sale of one multifamily real estate property (17,946) -
Net decrease in investment in Belvedere Capital 28,719,502 16,990,093
Decrease (increase) in short-term investments 3,919,805 (530,750)
Minority interest in net income of controlled subsidiary 367,297 295,269
Net realized loss from investment transactions 160,795,405 26,669,277
Net change in unrealized (appreciation) depreciation of investments 345,807,092 450,397,109
------------------ ------------------
Net cash flows from operating activities $ 85,298,176 $ 4,644,405
Cash Flows For Financing Activities -
Payments on Credit Facility $ (78,000,000) $ -
Payments on mortgages (919,507) (860,582)
Payment on notes payable to minority shareholder (134,028) -
Payments for Fund Shares redeemed (2,690,609) (4,780,366)
------------------ ------------------
Net cash flows for financing activities $ (81,744,144) $ (5,640,948)
Net increase (decrease) in cash $ 3,554,032 $ (996,543)
Cash at beginning of period $ 1,658,511 $ 2,256,168
------------------ ------------------
Cash at end of period $ 5,212,543 $ 1,259,625
================== ==================
See notes to condensed consolidated financial statements
7
BELMAR CAPITAL FUND LLC
Condensed Consolidated Statements of Cash Flows (Unaudited) (Continued)
Nine Months Nine Months
Ended Ended
September 30, September 30,
2002 2001
------------------- ------------------
Supplemental Disclosure and Non-cash Investing and
Financing Activities-
Interest paid for loan - Credit Facility $ 8,815,879 $ 24,073,532
Interest paid for mortgages $ 11,057,820 $ 11,398,247
Interest paid for swap contracts $ 30,167,534 $ 15,886,371
Market value of securities distributed in payment of redemptions $ 50,024,781 $ 65,704,506
Market value of real property and other assets, net of current
liabilities, disposed of in conjunction with the sale of one
multifamily property in other real estate investments $ 10,276,498 $ -
Mortgage disposed of in conjunction with the sale of one multifamily
property in other real estate investments $ 11,771,520 $ -
See notes to condensed consolidated financial statements
8
BELMAR CAPITAL FUND LLC as of September 30, 2002
Condensed Consolidated Financial Statements (Continued)
FINANCIAL HIGHLIGHTS (UNAUDITED)
For the Nine Months Ended September 30, 2002
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value - Beginning of period $ 87.370
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM OPERATIONS
Net investment income(6) $ 0.055
Net realized and unrealized loss (21.355)
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL LOSS FROM OPERATIONS $ (21.300)
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE - END OF PERIOD $ 66.070
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN(1) (24.38)%
- ------------------------------------------------------------------------------------------------------------------------------------
AS A PERCENTAGE AS A PERCENTAGE
OF AVERAGE NET OF AVERAGE GROSS
RATIOS ASSETS (5) ASSETS (4)(5)
- ------------------------------------------------------------------------------------------------------------------------------------
Expenses of Consolidated Real Property Subsidiaries
Interest and other borrowing costs (7) 0.61%(9) 0.43%(9)
Operating expenses(7) 0.72%(9) 0.51%(9)
Belmar Capital Fund LLC Expenses
Interest and other borrowing costs(8) 2.83%(9) 2.00%(9)
Investment advisory and administrative fees,
servicing fees and other Fund operating
expenses(2)(8) 1.16%(9) 0.82%(9)
--------------------------------------------
Total expenses(3) 5.32%(9) 3.76%(9)
Net investment income 0.09%(9) 0.06%(9)
- ------------------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period (000's omitted) $1,550,422
Portfolio Turnover of Tax-Managed Growth Portfolio 16%
- ------------------------------------------------------------------------------------------------------------------------------------
(1) Total return is calculated assuming a purchase at the net asset value on
the first day and a sale at the net asset value on the last day of the
period. Distributions, if any, are assumed reinvested at the net asset
value on the reinvestment date.
(2) Ratio includes Belmar Capital Fund LLC's share of Belvedere Capital's
allocated expenses, including those expenses allocated from the Portfolio.
(3) The expenses reflect a reduction of the investment advisory and
administrative fees. Had such action not been taken, the ratios of total
expenses to average net assets and average gross assets would have been
5.42% and 3.83%, respectively, and the ratios of net investment loss to
average net assets and average gross assets would have been (0.01)% and
(0.01)%, respectively.
(4) Average Gross Assets is defined as the average daily amount of all assets
of Belmar Capital Fund LLC (not including its investment in Belmar Realty
Corporation (BRC)) plus all assets of BRC, without reduction by any
liabilities. For this purpose, the assets of BRC's controlled subsidiary is
reduced by the proportionate interests therein of investors other than BRC.
(5) For the purpose of calculating ratios, the income and expenses of BRC's
controlled subsidiary is reduced by the proportionate interests therein of
investors other than BRC.
(6) Calculated using average shares outstanding.
(7) Ratio includes BRC's proportional share of expenses incurred by its
majority-owned subsidiary.
(8) Ratio includes the expenses of Belmar Capital Fund LLC and BRC, for which
Belmar Capital Fund LLC owns 100% of the outstanding common stock. The
ratio does not include expenses of BRC's real estate subsidiary.
(9) Annualized.
See notes to condensed consolidated financial statements
9
BELMAR CAPITAL FUND LLC as of September 30, 2002
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1 Basis of Presentation
The condensed consolidated interim financial statements of Belmar Capital Fund
LLC (Belmar Capital) and its subsidiaries (collectively, the Fund) have been
prepared by the Fund, without audit, in accordance with accounting principles
generally accepted in the United States of America for interim financial
information and with the instructions to Form 10-Q and Article 10 of Regulation
S-X. Accordingly, certain information and footnote disclosures normally included
in annual financial statements prepared in accordance with accounting principles
generally accepted in the United States of America have been condensed or
omitted as permitted by such rules and regulations. All adjustments, consisting
of normal recurring adjustments, have been included. Management believes that
the disclosures are adequate to present fairly the financial position, results
of operations, cash flows and financial highlights at the dates and for the
periods presented. It is suggested that these interim financial statements be
read in conjunction with the financial statements and the notes thereto included
in the Fund's latest annual report on Form 10-K. Results for interim periods are
not necessarily indicative of those to be expected for the full fiscal year.
The balance sheet at December 31, 2001, has been derived from the December 31,
2001 audited financial statements but does not include all of the information
and footnotes required by accounting principles generally accepted in the United
States of America for complete financial statements as permitted by the
instructions to Form 10-Q and Article 10 of Regulation S-X.
Certain amounts in the prior period's condensed consolidated financial
statements have been reclassified to conform with the current period
presentation.
2 Estate Freeze
Shareholders in Belmar Capital are entitled to restructure their Fund Share
interests under what is termed an Estate Freeze Election. Under this election,
Fund Shares are divided into Preferred Shares and Common Shares. Preferred
Shares have a preferential right over the corresponding Common Shares equal to
(i) 95% of the original capital contribution made in respect of the undivided
Shares from which the Preferred Shares and Common Shares were derived, plus (ii)
an annuity priority return equal to 8.5% of the Preferred Shares' preferential
interest in the original capital contribution of the undivided Fund Shares. The
associated Common Shares are entitled to the remaining 5% of the original
capital contribution in respect of the undivided Shares, plus any returns
thereon in excess of the fixed annual priority of the Preferred Shares. At
September 30, 2002 and December 31, 2001, the Preferred Shares were valued at
$66.07 and $87.37, respectively, and the Common Shares had no value. The
existence of restructured Fund Shares does not adversely affect Shareholders who
do not participate in the election nor do the restructured Fund Shares have
preferential rights to Fund Shares that have not been restructured. Shareholders
who subdivide Fund Shares under this election sacrifice certain rights and
privileges that they would otherwise have with respect to the Fund Shares so
divided, including redemption rights and voting and consent rights. Upon the
twentieth anniversary of the issuance of the associated undivided Fund Shares to
the original holders thereof, Preferred and Common Shares will automatically
convert into full and fractional undivided Fund Shares.
10
3 Investment Transactions
Increases and decreases of the Fund's investment in Belvedere Capital Fund
Company LLC (Belvedere Capital) for the nine months ended September 30, 2002
aggregated $98,233,579 and $176,977,862 respectively, and for the nine months
ended September 30, 2001 aggregated $39,375,146 and $121,994,466, respectively.
Purchases and sales of Partnership Preference Units for the nine months ended
September 30, 2002 aggregated $0 and $60,076,602, respectively. There were no
purchases and sales of Partnership Preference Units for the nine months ended
September 30, 2001. For the nine months ended September 30, 2002, there were no
acquisitions of other real property and for the nine months ended September 30,
2001, acquisitions and sales of other real property aggregated $48,651,593 and
$49,080,499, respectively.
In June 2002, one of the multifamily residential properties owned by Bel
Alliance Apartments, LLC (Bel Apartments) was sold to an affiliate of the
minority shareholder in Bel Apartments for which a loss of $1,777,939 was
recognized.
Sales of Partnership Preference Units for the nine months ended September 30,
2002 represent amounts sold to other funds sponsored by Eaton Vance Management.
Sales of other real estate property during the nine months ended September 30,
2001 represent amounts sold to other funds sponsored by Eaton Vance Management.
4 Indirect Investment in Portfolio
Belvedere Capital's interest in Tax-Managed Growth Portfolio (the Portfolio) at
September 30, 2002, was $8,043,904,602 representing 58.6% of the Portfolio's net
assets and at September 30, 2001 was $8,914,385,448 representing 55.5% of the
Portfolio's net assets. The Fund's investment in Belvedere Capital at September
30, 2002 was $1,539,506,478, representing 19.1% of Belvedere Capital's net
assets and at September 30, 2001 was $1,927,372,259, representing 21.6% of
Belvedere Capital's net assets. Investment income allocated to Belvedere Capital
from the Portfolio for the nine months ended September 30, 2002 totaled
$88,799,143, of which $17,767,431 was allocated to the Fund. Investment income
allocated to Belvedere Capital from the Portfolio for the nine months ended
September 30, 2001 totaled $77,460,677, of which $17,992,528 was allocated to
the Fund. Expenses allocated to Belvedere Capital from the Portfolio for the
nine months ended September 30, 2002 totaled $32,657,939, of which $6,555,028
was allocated to the Fund. Expenses allocated to Belvedere Capital from the
Portfolio for the nine months ended September 30, 2001 totaled $32,264,414, of
which $7,497,753 was allocated to the Fund. Belvedere Capital allocated
additional expenses to the Fund of $2,237,353 for the nine months ended
September 30, 2002, representing $59,520 of operating expenses and $2,177,833 of
service fees. Belvedere Capital allocated additional expenses to the Fund of
$2,591,447 for the nine months ended September 30, 2001, representing $61,007 of
operating expenses and $2,530,440 of service fees.
A summary of the Portfolio's Statement of Assets and Liabilities, at September
30, 2002, December 31, 2001 and September 30, 2001 and its operations for the
nine months ended September 30, 2002, the year ended December 31, 2001 and for
the nine months ended September 30, 2001 follows:
11
September 30, December 31, September 30,
2002 2001 2001
---------------------- ---------------------- ---------------------
Investments, at value $13,713,440,772 $ 18,312,992,768 $ 15,879,363,685
Other assets 59,906,476 23,229,223 247,862,763
- ----------------------------------- ---------------------- ---------------------- ---------------------
Total Assets $13,773,347,248 $ 18,336,221,991 $ 16,127,226,448
Total Liabilities 35,785,860 357,011 63,436,483
- ----------------------------------- ---------------------- ---------------------- ---------------------
Net Assets $13,737,561,388 $ 18,335,864,980 $ 16,063,789,965
=================================== ====================== ====================== =====================
Dividends and interest $ 155,639,717 $ 192,367,081 $ 141,895,798
- ----------------------------------- ---------------------- ---------------------- ---------------------
Investment adviser fee $ 55,373,624 $ 76,812,367 $ 57,512,662
Other expenses 1,956,361 2,161,015 1,602,705
- ----------------------------------- ---------------------- ---------------------- ---------------------
Total expenses $ 57,329,985 $ 78,973,382 $ 59,115,367
- ----------------------------------- ---------------------- ---------------------- ---------------------
Net investment income $ 98,309,732 $ 113,393,699 $ 82,780,431
Net realized loss (503,906,340) (360,120,300) (226,406,730)
Net change in unrealized
appreciation (depreciation) (4,125,048,140) (1,605,211,090) (3,614,091,583)
- ----------------------------------- ---------------------- ---------------------- ---------------------
Net decrease in net assets from
operations $(4,530,644,748) $ (1,851,937,691) $ (3,757,717,882)
- ----------------------------------- ---------------------- ---------------------- ---------------------
5 Cancelable Interest Rate Swap Agreements
Belmar Capital has entered into cancelable interest rate swap agreements in
connection with its real estate investments and the associated borrowings. Under
such agreements Belmar Capital has agreed to make periodic payments at fixed
rates in exchange for payments at floating rates. The notional or contractual
amounts of these instruments may not necessarily represent the amounts
potentially subject to risk. The measurement of the risks associated with these
investments is meaningful only when considered in conjunction with all related
assets, liabilities and agreements. As of September 30, 2002 and December 31,
2001, Belmar Capital has entered into cancelable interest rate swap agreements
with Merrill Lynch Capital Services, Inc., as listed below.
Notional Initial Unrealized Unrealized
Amount Optional Final Depreciation Depreciation
Effective (000's Fixed Floating Termination Termination At September 30, At December 31,
Date omitted) Rate Rate Date Date 2002 2001
- --------------- ----------- --------- ----------------- ---------------- --------------- --------------------- ---------------------
3/00 $27,500 8.96% Libor + 0.40% 3/05 3/30 $ 3,585,039 $ 2,436,531
3/00 19,146 9.09% Libor + 0.40% 4/04 3/30 1,848,908 1,532,942
3/00 43,181 9.20% Libor + 0.40% 6/03 3/30 2,203,328 2,837,702
3/00 21,766 9.24% Libor + 0.40% 4/03 3/30 857,401 1,342,028
3/00 38,102 9.11% Libor + 0.40% 2/04 3/30 3,349,413 2,949,577
3/00 20,659 9.13% Libor + 0.40% 11/03 3/30 1,551,133 1,511,706
3/00 23,027 9.05% Libor + 0.40% 7/04 3/30 2,465,666 1,907,179
5/00 10,773 9.54% Libor + 0.40% 4/03 3/30 442,141 751,770
5/00 12,984 9.50% Libor + 0.40% 6/03 3/30 694,914 970,355
5/00 9,608 9.46% Libor + 0.40% 11/03 3/30 769,465 816,822
5/00 13,274 9.42% Libor + 0.40% 2/04 3/30 1,245,084 1,187,688
5/00 12,063 9.38% Libor + 0.40% 4/04 3/30 1,241,650 1,110,698
5/00 10,799 9.35% Libor + 0.40% 7/04 3/30 1,239,620 1,037,073
5/00 41,185 9.31% Libor + 0.40% 9/04 3/30 5,016,211 4,018,391
5/00 7,255 9.26% Libor + 0.40% 3/05 3/30 1,024,145 752,849
12
7/00 22,982 9.17% Libor + 0.40% 2/03 3/30 558,834 1,221,975
7/00 28,305 9.15% Libor + 0.40% 4/03 3/30 1,086,069 1,671,727
7/00 32,404 9.13% Libor + 0.40% 6/03 3/30 1,617,344 2,056,481
7/00 3,383 9.08% Libor + 0.40% 11/03 3/30 249,757 241,109
7/00 12,062 9.00% Libor + 0.40% 2/04 3/30 1,026,836 878,731
7/00 24,622 8.98% Libor + 0.40% 4/04 3/30 2,304,705 1,859,986
7/00 9,184 8.97% Libor + 0.40% 7/04 3/30 958,896 726,630
7/00 13,454 8.93% Libor + 0.40% 9/04 3/30 1,485,771 1,075,119
7/00 17,888 8.87% Libor + 0.40% 3/05 3/30 2,271,218 1,500,071
9/00 39,407 7.46% Libor + 0.40% - 9/10 8,591,310 3,940,610
11/00 11,776 8.34% Libor + 0.40% 3/05 3/30 1,242,657 635,430
11/00 2,338 8.41% Libor + 0.40% 9/04 3/30 217,263 123,704
11/00 23,636 8.48% Libor + 0.40% 2/04 3/30 1,716,373 1,161,401
11/00 20,265 8.60% Libor + 0.40% 6/03 3/30 885,013 894,183
11/00 28,629 8.66% Libor + 0.40% 2/03 3/30 631,928 1,088,842
- --------------- ----------- --------- ----------------- ---------------- --------------- --------------------- ---------------------
Total $52,378,092 $44,239,310
- --------------- ----------- --------- ----------------- ---------------- --------------- --------------------- ---------------------
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS FOR THE QUARTER ENDED SEPTEMBER 30, 2002, COMPARED TO THE
QUARTER ENDED SEPTEMBER 30, 2001
The total return of Belmar Capital Fund LLC and its subsidiaries (collectively,
the Fund) for the quarter ended September 30, 2002 was -15.7%. This return
reflects a decrease in the Fund's net asset value per share from $78.35 to
$66.07 during the period. For comparison, the Standard & Poor's 500 Index (the
S&P 500), an unmanaged index of large capitalization stocks commonly used as a
benchmark for the U.S. equity market, had a total return of -17.3% over the same
period. Investors cannot invest directly in an Index. For the quarter ended
September 30, 2001, the Fund's total return was -15.6%. This return reflected a
decrease in the Fund's net asset value per share from $92.48 to $78.07. For
comparison, the S&P 500 had a total return of -14.7% over the same period.
A multitude of factors contributed to the disconnect between the economic
recovery and the dismal performance of the equity markets. A combination of
geopolitical uncertainties, negative investor sentiment, and fears of double dip
recession pressured equity returns. The third quarter of 2002 marked the worst
broad market decline, as measured by the S&P 500, since the fourth quarter of
1987. Looking back a year ago during the same period, the U.S. equity market
fell sharply as well, but mostly in response to the tragic events of September
11th coupled with the deteriorating domestic economic conditions. Every major
domestic benchmark experienced negative returns during the September 2002
quarter, and none of the S&P 500 sectors or industry groups had gains. A subtle
change in leadership to growth and large caps emerged, but volatility and the
pace of sector rotation remained at high levels.
The best performing sector of the S&P 500 was health care, while information
technology and telecommunications services continued to trail the benchmark.
Market leading groups in the third quarter of 2002 included casinos and gaming
stocks, agricultural equipment, as well as defensive plays such as household
products, generic pharmaceuticals and utilities. Defensive leadership was
evident during the third quarter of 2001 as well, resulting from cautious
investor sentiment due to September 11th. Last year's leading industries
included consumer products, pharmaceuticals, packaged foods and utilities
groups. Higher beta and more aggressive groups were the worst performers for the
quarter ending in September 2002, a continued theme from the same period in
2001. Some of the weakest performers were semiconductors, airlines,
entertainment, catalog retail and steel stocks.
13
In this challenging environment, the performance of Tax-Managed Growth Portfolio
(the Portfolio) surpassed that of the overall market. The Portfolio maintained
an overweight position in the industrials and consumer staples sectors, a slight
directional increase from the levels held at the end of the third quarter of
2001. The Portfolio's emphasis in the areas of food and drug products,
airfreight logistics, machinery and defense sub-groups contributed positively to
its performance. The Portfolio's neutral weight in the energy group, a relative
increase from last year, particularly in the oil and gas industry, proved to be
constructive for the overall returns. The Portfolio's underweight in health care
and an overweight of the consumer discretionary stocks detracted from returns.
While the Portfolio had gradually reduced its position in the financial sector
from last year's level, this sector was overweighted, weakening absolute
returns, mainly due to insurance and bank industry holdings. Lack of earnings
visibility and fundamental uncertainty resulted in the Portfolio's de-emphasis
of information technology and telecommunications, which were the worst
performing sectors in the quarter ended September 30, 2002.
The combined impact on performance of the Fund's investment activities outside
of the Portfolio was modestly negative for the quarters ended September 30, 2002
and 2001. The performance of the Fund trailed that of the Portfolio by
approximately -0.6% and -1.9% for the quarters ended September 30, 2002 and
2001, respectively. The Fund's investments in real estate Partnership Preference
Units generally benefited from declining interest rates and tightening spreads
in income-oriented securities, particularly in real estate-related securities,
for the quarter ended September 30, 2002, but suffered modestly from rising
credit spreads impacting the value of the Fund's real estate investments during
the quarter ended September 30, 2001. During both periods, the Fund's
investments in real estate joint ventures experienced weakness in multifamily
fundamentals in many U.S. markets, which resulted in declines in value, and
interest rate swap valuations declined as interest rates fell. During both
periods, dividends received from the Fund's Partnership Preference Units,
modestly added to performance.
RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002, COMPARED TO
THE NINE MONTHS ENDED SEPTEMBER 30, 2001
The Fund's total return for the nine months ended September 30, 2002 was -24.4%.
This return reflects a decrease in the Fund's net asset value per share from
$87.37 to $66.07 during the period. For comparison, the S&P 500, had a total
return of -28.2% over the same period. For the nine months ended September 30,
2001, the Fund's total return was -20.2%. This return reflected a decrease in
the Fund's net asset value per share from $97.83 to $78.07. For comparison, the
S&P 500 had a total return of -20.4% over the same period.
Investors awaiting earnings and economic solidification were troubled by
political uncertainties, possibility of a double dip recession, lackluster
corporate growth prospects, and weakening consumer resilience. Heightened risk
sensitivity translated into negative investor sentiment, which has prolonged the
bear market. The first nine months of 2002 repeated another volatile market
pattern seen during the same period in 2001, rising gradually through mid-March
and retreating to the lowest levels of the year at the end of September.
Investor behavior however proved different during 2002 in that U.S. equity fund
net outflows were at peak levels, sharply contrasting net inflow activity seen
during the first nine months of 2001. Most major indices posted multi-year lows,
with none achieving positive returns year-to-date in 2002. All ten of the S&P
500 sectors declined during this period. The best performing sectors during
these nine months included consumer staples, materials, and energy. The weakest
performing groups included fiber optics, semiconductor equipment, unregulated
power producers and information technology consulting and services groups.
14
For the first nine months of 2002, the performance of the Portfolio was above
that of the overall market. The outperformance relative to the benchmark can be
attributed to the Portfolio sector allocation and stock selection. The most
important decision was to underweight information technology and telecom
services groups, a continued theme from 2001. The Portfolio underweighted
computers, semiconductor equipment, and diversified and wireless services. The
Portfolio's positioning in the banks, insurance, food products, and defense
sub-groups was also beneficial. The Portfolio gradually reduced holdings in the
health care sector, a directional shift from the same period last year, but
participation in the pharmaceutical and biotechnology names nevertheless hurt
returns. The only other notable difference in the Portfolio's current
composition relative to last year was evident in the reduced underweight in the
energy and utilities sectors.
The combined impact on performance of the Fund's investment activities outside
of the Portfolio was modestly positive for the nine months ended September 30,
2002 and modestly negative for the nine months ended September 30, 2001. The
performance of the Fund equaled that of the Portfolio for the nine months ended
September 30, 2002 and trailed that of the Portfolio by approximately -1.1% for
the nine months ended September 30, 2001. During both periods, the Fund's
investments in real estate Partnership Preference Units generally benefited from
declining interest rates and tightening spreads in income-oriented securities,
particularly in real estate-related securities, while the Fund's investments in
real estate joint ventures experienced weakness in multifamily fundamentals in
many U.S. markets, which resulted in declines in value, and interest rate swap
valuations declined as interest rates fell. During both periods, dividends
received from the Fund's Partnership Preference Units, modestly added to
performance.
LIQUIDITY AND CAPITAL RESOURCES
The Fund has entered into interest rate swap agreements with respect to its
borrowings and real estate investments. Pursuant to these agreements, the Fund
makes periodic payments to the counterparty at predetermined fixed rates, in
exchange for floating-rate payments from the counterparty that fluctuate with
one-month LIBOR. During the terms of the outstanding swap agreements, changes in
the underlying values of the swaps are recorded as unrealized gains or losses.
As of September 30, 2002 and 2001, the unrealized depreciation related to the
interest rate swap agreements was $52,378,092 and $60,229,312, respectively.
CRITICAL ACCOUNTING POLICIES
The Fund's discussion and analysis of its financial condition and results of
operations are based upon the Fund's condensed consolidated financial
statements, which have been prepared in accordance with accounting principles
generally accepted in the United States of America. The preparation of these
financial statements requires the Fund to make estimates, judgments and
assumptions that affect the reported amounts of assets, liabilities, revenues
and expenses. The Fund bases these estimates, judgments and assumptions on
historical experience and on other various factors that are believed to be
reasonable under the circumstances. Actual results may differ from these
estimates under different assumptions or conditions.
The Fund's critical accounting policies affect the Fund's more significant
estimates and assumptions used in valuing the Fund's real estate investments and
interest rate swap contracts. Prices are not readily available for these types
of investments and therefore are valued on an ongoing basis by Boston Management
and Research (BMR), in its capacity as Manager of Belmar Realty Corporation
(BRC), in the case of real estate investments, and in its capacity as the Fund's
investment adviser, in the case of interest rate swap contracts.
15
In estimating the value of the Fund's investments in real estate, BMR takes into
account relevant factors, data and information, including with respect to
investments in Partnership Preference Units, information from dealers and
similar firms with knowledge of such issues and the prices of comparable
preferred equity securities and other fixed or adjustable rate instruments
having similar investment characteristics. Real estate investments other than
Partnership Preference Units are generally stated at estimated market values
based upon independent valuations assuming an orderly disposition of assets.
Detailed investment valuations are performed at least annually and reviewed
periodically. Interim valuations reflect results of operations and
distributions, and may be adjusted if there has been a significant change in
economic circumstances since the most recent independent valuation. Given that
such valuations include many assumptions, including but not limited to an
orderly disposition of assets, values may differ from amounts ultimately
realized. BMR as the Fund's investment adviser, determines the value of interest
rate swaps and, in so doing, may consider among other things, dealer and
counter-party quotes and pricing models.
The policies for valuing real estate investments involve significant judgments
that are based upon, without limitation, general economic conditions, the supply
and demand for different types of real properties, the financial health of
tenants, the timing of lease expirations and terminations, fluctuations in
rental rates and operating costs, exposure to adverse environmental conditions
and losses from casualty or condemnation, interest rates, availability of
financing, managerial performance and government rules and regulations. The
valuations of Partnership Preference Units held by the Fund through its
investment in BRC fluctuate over time to reflect, among other factors, changes
in interest rates, changes in perceived riskiness of such units (including call
risk), changes in the perceived riskiness of comparable or similar securities
trading in the public market and the relationship between supply and demand for
comparable or similar securities trading in the public market. The value of
interest rate swaps may be subject to wide swings in valuation caused by changes
in interest rates and in the prices of the underlying instrument and the
interest rate swap may be difficult to value since such instrument may be
considered illiquid.
Fluctuations in the value of Partnership Preference Units derived from changes
in general interest rates can be expected to be offset in part (but not
entirely) by changes in the value of interest rate swap agreements or other
interest rate hedges entered into by the Fund with respect to its borrowings.
Fluctuations in the value of real estate investments derived from other factors
besides general interest rate movements (including issuer-specific and
sector-specific credit concerns, property-specific concerns and changes in
interest rate spread relationships) will not be offset by changes in the value
of interest rate swap agreements or other interest rate hedges entered into by
the Fund. Changes in the valuation of Partnership Preference Units not offset by
changes in the valuation of interest rate swap agreements or other interest rate
hedges entered into by the Fund and changes in the value of other real estate
investments will cause the performance of the Fund to deviate from the
performance of the Portfolio.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
The Fund's primary exposure to interest rate risk arises from investments in
real estate that are financed using floating rate bank borrowings under a
revolving credit facility (the Credit Facility). The interest rate on borrowings
under the Fund's Credit Facility is reset at regular intervals based on the
Issuer's cost of financing plus a margin or one-month LIBOR plus a premium. The
Fund utilizes cancelable interest rate swap agreements to fix the cost of its
borrowings under the Credit Facility and to mitigate the impact of interest rate
changes on the Fund's net asset value. Under the terms of the interest rate swap
agreements, the Fund makes cash payments at fixed rates in exchange for floating
rate payments that fluctuate with one-month LIBOR. The interest rate swap
agreements are valued on an ongoing basis by BMR, in capacity as the Fund's
16
investment adviser. In the future, the Fund may use other interest rate hedging
arrangements (such as caps, floors and collars) to fix or limit borrowing costs.
The use of interest rate hedging arrangements is a specialized activity that may
be considered speculative and which can expose the Fund to significant loss.
The following table summarizes the contractual maturities and weighted-average
interest rates associated with the Fund's significant non-trading financial
instruments. The Fund has no market risk sensitive instruments held for trading
purposes. This information should be read in conjunction with Note 5 to the
condensed consolidated financial statements.
Interest Rate Sensitivity
Principal (Notional) Amount by Contractual Maturity
For the Twelve Months Ended September 30,
2003-2006 2007 Thereafter Total Fair Value
-------------- ----------------- ---------------- ----------------- ----------------
Rate sensitive
liabilities:
- -------------------------
Long term debt -
variable rate Credit
Facility $535,500,000 $535,500,000 $535,500,000
Average interest rate 1.74% 1.74%
Rate sensitive
derivative financial
instruments:
- -------------------------
Pay fixed/receive
variable interest rate $601,657,000 $601,657,000 $(52,378,092)
swap contracts
Average pay rate 8.96% 8.96%
Average receive rate 1.74% 1.74%
ITEM 4. CONTROLS AND PROCEDURES
Eaton Vance Management, as the Fund's Manager ("Eaton Vance"), and the Fund's
Chief Executive Officer and Chief Financial Officer have conducted an evaluation
of the effectiveness of disclosure controls and procedures pursuant to Rule
13a-14 under the Securities Exchange Act of 1934. Based on that evaluation, the
Chief Executive Officer and Chief Financial Officer concluded that the
disclosure controls and procedures are effective in ensuring that all material
information required to be filed in this quarterly report has been made known to
them in a timely fashion. There have been no significant changes in internal
controls, or in factors that could significantly affect internal controls,
subsequent to the date the Chief Executive Officer and Chief Financial Officer
completed their evaluation.
The complete and entire management, control and operation of the Fund are vested
in the Fund's Manager, Eaton Vance. The Fund's organizational structure does not
provide for a board of directors or a board audit committee. As such, the Fund's
Chief Executive Officer and Chief Financial Officer intend to report any
significant deficiency in the design or operation of internal controls which
could adversely affect the Fund's ability to record, process, summarize and
report financial data, and any fraud, whether or not material, that involves
management or other employees who have a significant role in the Fund's internal
controls, to Eaton Vance.
17
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
Although in the ordinary course of business, the Fund, BRC or the real estate
investments in which BRC has equity interests may become involved in legal
proceedings, the Fund is not aware of any material pending legal proceedings to
which the Fund or BRC is a party or of which any of BRC's real estate
investments is the subject.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
ITEM 5. OTHER INFORMATION.
On October 16, 2002, Eaton Vance as the Fund's Manager, elected Thomas E. Faust
Jr. and Michelle A. Alexander as the Fund's Chief Executive Officer and Chief
Financial Officer, respectively. Mr. Faust is Executive Vice President of Eaton
Vance and BMR and their corporate parent and trustee, Eaton Vance Corp. and
Eaton Vance Inc. He is also the Chief Investment Officer of Eaton Vance and BMR,
and a Director of Eaton Vance Corp. Ms. Alexander is a Vice President of Eaton
Vance and BMR. Mr. Faust and Ms. Alexander also serve as officers of various
investment companies managed or advised by Eaton Vance or BMR.
ITEM 6. THE FOLLOWING IS A LIST OF ALL EXHIBITS FILED AS PART OF THIS FORM 10Q:
(a) Exhibits
21 List of subsidiaries
99.1 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002
99.2 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002
18
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 duly authorized officer on November 14, 2002.
BELMAR CAPITAL FUND LLC
(Registrant)
By: /s/ Michelle A. Alexander
----------------------------------------
Michelle A. Alexander
Duly Authorized Officer and
Principal Accounting Officer
19
CERTIFICATIONS PURSUANT TO
SECTION 302 OF
THE SARBANES-OXLEY ACT OF 2002
CERTIFICATION
- -------------
I, Thomas E. Faust Jr., certify that:
1. I have reviewed this quarterly report on Form 10-Q of Belmar Capital Fund
LLC;
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: November 14, 2002 /s/ Thomas E. Faust Jr.
------------------------------------
Thomas E. Faust Jr.
Chief Executive Officer
20
CERTIFICATIONS PURSUANT TO
SECTION 302 OF
THE SARBANES-OXLEY ACT OF 2002
CERTIFICATION
- -------------
I, Michelle A. Alexander, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Belmar Capital Fund
LLC;
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: November 14, 2002 /s/ Michelle A. Alexander
-----------------------------------
Michelle A. Alexander
Chief Financial Officer
21
EXHIBIT INDEX
21 List of subsidiaries
99.1 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
99.2 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
22