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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
[x] Quarterly report under Section 13 or 15(d) of the Securities Exchange Act
of 1934 for the quarterly period ended March 31, 2003
[_] Transition report under Section 13 or 15(d) of the Exchange Act
For the transition period from ___________ to ___________
Commission file number 001-12127
EMPIRE RESOURCES, INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware 22-3136782
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
One Parker Plaza
Fort Lee, NJ 07024
(Address of Principal Executive Offices)
201 944-2200
(Registrant's Telephone Number, Including Area Code)
Check whether the Registrant: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes [X] No [_]
Indicate by check mark whether the registrant is an accelerated filer(as defined
in Rule 12b-2 of the Exchange Act
Yes [_] No [X]
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: 9,432,251 shares of common
stock outstanding as of April 30, 2003.
1
EMPIRE RESOURCES, INC.
FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2003
INDEX
Page
----
PART I FINANCIAL INFORMATION
Item 1 Financial Statements
Condensed Consolidated Balance Sheets as of March 31, 2003 (unaudited)
and December 31, 2002..........................................................4
Condensed Consolidated Statements of Income for the
Three Months Ended March 31, 2003 and 2002 (unaudited).........................5
Condensed Consolidated Statements of Cash Flows for the
Three Months Ended March 31, 2003 and 2002 (unaudited) ........................6
Notes to Condensed Consolidated Financial Statements (unaudited)...............7
Item 2 Management's Discussion and Analysis of Financial Condition
and Results of Operations......................................................9
Item 3 Quantitative and Qualitative Disclosure of Market Risk........................12
Item 4 Controls and Procedures.......................................................12
PART II OTHER INFORMATION.............................................................12
Item 1 Legal Proceedings.............................................................12
Item 2 Changes in Securities.........................................................13
Item 3 Defaults Upon Senior Securities...............................................13
Item 4 Submission of Matters to a Vote of Security Holders...........................13
Item 5 Other Information.............................................................13
Item 6 Exhibits and Reports on Form 8-K..............................................13
Signatures....................................................................13
Certifications ...............................................................14
Introduction
The condensed consolidated interim financial statements included herein
have been prepared by the Company, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission with respect to Form 10-Q.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been omitted pursuant to such rules and regulations. In the opinion of
management, such financial statements reflect all adjustments necessary for a
fair presentation of the results for the interim periods presented and to make
such financial statements not misleading. The results of operations of the
Company for the three months ended March 31, 2003 are not necessarily indicative
of the results to be expected for the full year. It is suggested that these
interim financial statements be read in conjunction with the consolidated
financial statements and the notes thereto included in the Company's Form 10-K
for the year ended December 31, 2002.
EMPIRE RESOURCES, INC.
Condensed Consolidated Balance Sheets
In thousands, except shares and per share amounts
March 31, December 31,
-------------------------------
2003 2002
-------------------------------
(Unaudited)
ASSETS
Current assets:
Cash $ 1,514 $ 1,072
Trade accounts receivable (net) 29,723 24,255
Inventories 28,935 27,832
Other current assets 186 1,259
--------- ---------
Total current assets 60,358 54,418
Furniture and equipment (less accumulated depreciation of $350 and $347) 26 24
Deferred financing costs, net 13 27
$ 60,397 $ 54,469
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable - banks $ 25,700 $ 25,600
Trade accounts payable 18,794 13,036
Accrued expenses 2,124 2,911
--------- ---------
Total current liabilities 46,618 41,547
--------- ---------
Commitments and contingencies
Stockholders' equity:
Preferred stock $.01 par value, 5,000,000 shares authorized;
none issued
Common stock $.01 par value, 20,000,000 shares authorized; 117 117
11,749,651 shares issued
Additional paid-in capital 10,727 10,727
Retained earnings 5,694 4,824
Accumulated other comprehensive income-- 22 21
cumulative translation adjustment
Treasury stock (2,317,400 and 2,307,400 shares) (2,781) (2,767)
--------- ---------
Total stockholders' equity 13,779 12,922
--------- ---------
$ 60,397 $ 54,469
========= =========
See notes to condensed consolidated financial statements
EMPIRE RESOURCES, INC.
Condensed Consolidated Statement of Income (Unaudited)
In thousands, except shares and per share data
Three Months Ended
March 31,
----------------------------
2003 2002
----------------------------
Net sales $ 44,937 $ 40,417
Cost of goods sold 41,741 37,579
---------- ---------
Gross profit 3,196 2,838
Selling, general and administrative expenses 1,522 1,378
---------- ---------
Operating income 1,674 1,460
Interest expense 226 267
---------- ---------
Income before income taxes 1,448 1,193
Income taxes 578 459
---------- ---------
Net income $ 870 $ 734
========= =========
Weighted average shares outstanding:
Basic 9,435 10,569
========= =========
Diluted 9,541 10,699
========= =========
Earnings per share:
Basic $0.09 $0.07
========= =========
Diluted $0.09 $0.07
========= =========
See notes to condensed consolidated financial statements
EMPIRE RESOURCES, INC.
Condensed Consolidated Statement of Cash Flows (Unaudited)
In thousands
Three Months Ended
March 31,
----------------------------
2003 2002
----------------------------
Cash flows from operating activities:
Net income $ 870 $ 734
Adjustments to reconcile net income to net cash provided by
(used in) operating activities:
Depreciation and amortization 17 21
Translation adjustment 1 1
Transfer of restricted shares to key employee 16
Changes in:
Trade accounts receivable (5,468) (7,631)
Inventories (1,103) 6,067
Other current assets 1,073 (123)
Trade accounts payable 5,758 (382)
Accrued expenses (787) 171
--------- ---------
Net cash provided by (used in) operating activities 361 (1,126)
--------- ---------
Cash flows used in investing activities:
Additions to fixed assets (5) (3)
--------- ---------
Cash flows from financing activities:
Net proceeds from notes payable - banks 100 800
Purchase of treasury stock (14)
--------- ---------
Net cash provided by financing activities 86 800
--------- ---------
Net increase (decrease) in cash 442 (329)
Cash at beginning of period 1,072 1,147
--------- ---------
Cash at end of period $ 1,514 $ 818
========= =========
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 277 $ 273
Income taxes $ 205 $ 3
See notes to consolidated financial statements
EMPIRE RESOURCES, INC.
Notes to Condensed Consolidated Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
1. The Company
Empire Resources, Inc. (the "Company" or "Empire") is engaged principally in the
purchase, sale and distribution of value added semi finished aluminum products
to a diverse customer base located throughout North America and Australia. The
Company sells its products through its own marketing and sales personnel and
through its independent sales agents located in the U.S. who receive commissions
on sales. The Company purchases from an array of suppliers located throughout
the world.
The condensed consolidated financial statements include the accounts of Empire
Resources, Inc. and its wholly-owned subsidiary, Empire Resources Pacific Ltd.,
which acts as a sales agent of the Company in Australia. All significant
intercompany transactions and accounts have been eliminated in consolidation.
2. Use of Estimates
The preparation of financial statements in accordance with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amount of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amount of income and expenses during
the reported period. The principal assumptions made involve the allowance for
doubtful accounts and claims relating to defective materials. Actual results
could differ from these estimates.
3. Concentrations
While the Company maintains long-term supply relationships with several foreign
mills, one such supplier presently accounts for approximately 60% of the
Company's purchases. The loss of this supplier could have a material adverse
effect on the Company.
4. Stock Options
The Company accounts for stock-based employee compensation under the
recognitions and measurement principles of Accounting Principles Board ("APB")
Opinion No. 25, "Accounting for Stock Issued to Employees", and related
interpretations. No stock-based employee compensation cost is reflected in net
income as all options granted under the Plan had an exercise price equal to the
market value of the underlying common stock on the date of grant. The Company
has adopted the disclosure-only provisions of Statement of Financial Accounting
Standards ("SFAS") No. 123, "Accounting for Stock-Based Compensation." The
following table illustrates the effect on net income and earnings per share if
the fair value based method had been applied to all awards.
7
For the Three Months Ended
March 31,
(in thousands, except per share amounts)
-------------------------------------------
2003 2002
----------------- -------------------
Reported net income $ 870 $ 734
Stock-based employee compensation determined
under the fair value based method - -
--------- ---------
Pro forma net income $ 870 $ 734
========= =========
Earnings per share:
As reported
Basic $.09 $.07
Diluted $.09 $.07
Pro-forma
Basic $.09 $.07
Diluted $.09 $.07
5. Inventories
Inventories are stated at the lower of cost or market. Cost is determined by the
specific identification method. Inventory consists primarily of semi-finished
aluminum products.
6. Notes Payable--Banks
The Company operates under a $60 million revolving line of credit, including a
commitment to issue letters of credit with three commercial banks. Borrowings by
the Company under this line of credit are collateralized by security interests
in substantially all assets of Empire. Under the agreement, Empire is required
to maintain working capital and net worth ratios, as defined by the loan
agreement. These facilities expire on June 30, 2003. The Company is currently
negotiating a new facility and believes it will be in place prior to the
expiration date.
7. Earnings Per Share
Three months ended
March 31,
(in thousands)
------------------
2003 2002
---- ----
Weighted average shares outstanding-basic 9,435 10,569
Dilutive effect of stock options 106 130
----- ------
Weighted average shares outstanding-diluted 9,541 10,699
===== ======
Basic earnings per share are based upon the Company's weighted average number of
common shares outstanding during each period. Diluted earnings per share are
based upon the weighted average number of common shares outstanding during each
period, assuming
8
EMPIRE RESOURCES, INC.
the issuance of common shares for all dilutive potential common shares
outstanding during the period.
8. Commitments and Contingencies
Empire has contingent liabilities in the form of letters of credit to
certain of its suppliers, which at March 31, 2003 amounted to approximately $8.5
million.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Forward Looking Statements
The discussions set forth below and elsewhere herein contain certain
statements that may be considered forward-looking statements under the Private
Securities Litigation Reform Act of 1995. The Company may make written or oral
forward-looking statements in other documents we file with the SEC, in our
annual reports to stockholders, in press releases and other written materials,
and in oral statements made by our officers, directors or employees.
You can identify forward-looking statements by the use of the words
"believe," "expect," "anticipate," "intend," estimate," "assume," "will,"
"should," and other expressions which predict or indicate future events or
trends and which do not relate to historical matters. You should not rely on
forward-looking statements, because they involve known and unknown risks,
uncertainties and other factors, some of which are beyond the control of the
Company. These risks, uncertainties and other factors may cause the actual
results, performance or achievements of the Company to be materially different
from the anticipated future results, performance or achievements expressed or
implied by the forward-looking statements.
Some of the factors that might cause these differences include the
following: changes in general, national or regional economic conditions; an act
of war or terrorism that disrupts international shipping; changes in laws,
regulations and tariffs; changes in the size and nature of the Company's
competition; changes in interest rates, foreign currencies or spot prices of
aluminum; loss of one or more foreign suppliers or key executives; increased
credit risk from customers; failure of the Company to grow internally or by
acquisition and to integrate acquired businesses; failure to improve operating
margins and efficiencies; and changes in the assumptions used in making such
forward-looking statements. You should carefully review all of these factors,
and you should be aware that there may be other factors that could cause these
differences, including, among others, the factors listed under "Risk Factors,"
beginning on page 14 of our Annual Report on Form 10-K for the year ended
December 31, 2002. Readers should carefully review the factors described under
"Risk Factors" and should not place undue reliance on our forward-looking
statements.
These forward-looking statements were based on information, plans and
estimates at the date of this report, and we do not promise to update any
forward-looking statements to reflect changes in underlying assumptions or
factors, new information, future events or other changes.
9
EMPIRE RESOURCES, INC.
General
Empire is a distributor of value added, semi-finished aluminum products.
Consequently, Empire's sales volume has been, and will continue to be, a
function of its ongoing ability to secure quality aluminum products from its
suppliers. While the Company maintains long-term supply relationships with
several foreign mills, one such supplier presently accounts for approximately
60% of the Company's purchases. The loss of this supplier could have a material
adverse effect on the Company.
Results of Operations (in thousands)
Net sales increased $4,520, or 11.2%, from $40,417 in the first quarter of
2002 to $44,937 in the first quarter of 2003. During the first quarter of 2003,
one of the Company's suppliers shipped a substantial backlog of material at one
time. This backlog shipment represented the bulk of the increase in sales.
Gross profit increased $358, or 12.6%, from the first quarter of 2002 to
the first quarter of 2003. Gross profit as a percentage of sales increased from
7.0% to 7.1% as a result of favorable purchasing terms on some orders.
Selling, general and administrative expenses increased by $144 or 10.4%
from the first quarter of 2002 as compared to the first quarter of 2003. The
increases were primarily the result of increases in salaries, legal expenses,
and travel costs related to supplier and customer development.
Interest expense decreased $41, or 15.4%, from $267 during the first
quarter of 2002 to $226 during the first quarter of 2003. The decrease in
interest expense is related to lower average levels of outstanding bank
indebtedness and lower interest rate environment.
The Company reported net income of $870 for the first quarter of 2003
compared to net income of $734 for the first quarter of 2002, or an increase of
$136 from the same period in 2002.
Liquidity and Capital Resources (in thousands)
The Company's cash balance increased $442, to $1,514 in the three month
period ended March 31, 2003. Net cash of $361 was provided by operating
activities, augmented by $100 of net cash provided by bank debt. The Company's
cash balance fluctuates in relation to its receivables and inventory.
At December 31, 2002, net unrealized gains on the Company's foreign
exchange forward contracts amounted to approximately $1,067 as compared to $84
at March 31, 2003. These unrealized amounts were offset by like amounts on the
underlying commitments which were hedged, and are reflected in the accompanying
December 31, 2002 and March 31, 2003 balance sheets in other current assets and
accrued expenses. The reduction in other current assets from $1,259 at December
31, 2002 to $186 at March 31, 2003 is attributable primarily to this reduction
in net unrealized gains.
10
EMPIRE RESOURCES, INC.
Empire currently operates under a $60 million revolving line of credit,
including a commitment to issue letters of credit, with three commercial banks.
Borrowings under these lines of credit are collateralized by security interests
in substantially all of Empire's assets.
Empire is required to maintain working capital and net worth ratios under
these credit agreements. These facilities expire on June 30, 2003. The Company
is currently negotiating a new facility and believes it will be in place prior
to the expiration date.
Management believes that cash from operations, together with funds
available under its credit facility, will be sufficient to fund the cash
requirements relating to the Company's existing operations for the next twelve
months. Empire may require additional debt or equity financing in connection
with the future expansion of its operations.
Application of Critical Accounting Policies
The Company's condensed consolidated financial statements have been
prepared in accordance with accounting principles generally accepted in the
United States of America. Certain accounting policies have a significant impact
on amounts reported in the financial statements. A summary of those significant
accounting policies can be found in Note B to the Company's financial statements
included in the Company's 2002 Annual Report on Form 10-K. The Company has not
adopted any significant new accounting policies during the three months ended
March 31, 2003.
Among the significant judgments made by management in the preparation of
the Company's financial statements are the determination of the allowance for
doubtful accounts and accruals for inventory claims. These adjustments are made
each quarter in the ordinary course of accounting.
As of March 31, 2003 the Company had $29.9 million in trade receivables.
Additionally, the Company had recorded an allowance for doubtful accounts of
$191,000. The Company reports accounts receivable, net of an allowance for
doubtful accounts, to represent its estimate of the amount that ultimately will
be realized in cash. The Company reviews the adequacy of its allowance for
doubtful accounts on an ongoing basis, using historical collection trends, aging
of receivables, as well as review of specific accounts, and makes adjustments in
the allowance as it believes necessary. The Company maintains a credit insurance
policy on the majority of its customers. This policy has a 10% co-insurance.
Changes in economic conditions could have an impact on the collection of
existing receivable balances or future allowance considerations.
Generally, the Company's exposure on claims for defective material is small
as the company refers all claims on defects back to the mill supplying the
material. In the event that the Company does not believe the mill will honor a
claim, the Company will record an allowance for inventory adjustments.
Commitments and Contingencies
Empire has contingent liabilities in the form of letters of credit totaling
$8.5 million to certain of its suppliers. There have been no material changes to
the Company's commitments
11
EMPIRE RESOURCES, INC.
and contingencies from that disclosed in our Annual Report on Form 10-K for the
year ended December 31, 2002.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE OF MARKET RISK
The Company uses financial instruments designated as fair value hedges to
manage its exposure to commodity price risk and foreign currency exchange risk
inherent in its operations. It is the Company's policy to hedge such risks, to
the extent practicable. The Company enters into high-grade aluminum futures
contracts to limit its gross margin exposure by hedging the metals content
element of firmly committed purchase and sales commitments. The Company also
enters into foreign exchange forward contracts to hedge its exposure related to
commitments to purchase or sell non-ferrous metals denominated in international
currencies. The Company records "mark-to-market" adjustments on these futures
and forward positions, and on the underlying firm purchase and sales commitments
which they hedge, and reflects the net gains and losses currently in earnings.
There have been no material changes to the Company's market risk from that
disclosed in our Annual Report on Form 10-K for the year ended December 31,
2002.
ITEM 4. CONTROLS AND PROCEDURES
(a) Evaluation of disclosure controls and procedures.
As required by new Rule 13a-15 under the Securities Exchange Act of 1934 (the
"Exchange Act"), within the 90 days prior to the date of this 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 and Chief Financial Officer, of the effectiveness of the
design and operation of the Company's disclosure controls and procedures. Based
upon that evaluation, the Chief Executive Officer and Chief Financial Officer
concluded that the Company's disclosure controls and procedures are effective to
ensure that information required to be disclosed by the Company in the reports
it files or submits under the Exchange Act is recorded, processed, summarized
and reported, within the time periods specified in the Securities and Exchange
Commission's rules and forms. In connection with the new rules, we currently are
in the process of further reviewing and documenting our disclosure controls and
procedures, including our internal controls and procedures for financial
reporting, and may from time to time make changes aimed at enhancing their
effectiveness and to ensure that our systems evolve with our business.
(b) Changes in internal controls.
None.
PART II OTHER INFORMATION
Item 1. Legal Proceedings
12
EMPIRE RESOURCES, INC.
The Company is party from time to time to ordinary litigation incidental to its
business. The Company does not presently believe that any such litigation would
have a material adverse effect on its results of operation or financial
condition.
Item 2. Changes in Securities.
None.
Item 3. Defaults upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Item 5. Other Information.
None.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
10.20 Credit Agreement Amendment Number 2 dated May 8, 2003.*
- ----------
* filed herewith
(b) Reports on Form 8-K
The Company filed a current report on Form 8-K on March 31, 2003 containing CEO
and CFO certifications pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934,
the registrant caused this report to be signed on its behalf by the undersigned
hereunto duly authorized.
EMPIRE RESOURCES, INC.
By: /s/ Sandra Kahn
------------------------
Sandra Kahn
Chief Financial Officer
(signing both on behalf of the registrant and in her capacity as Principal
Financial and Principal Accounting Officer)
Dated: May 12, 2003
13
EMPIRE RESOURCES, INC.
CERTIFICATION PURSUANT TO SECTION 302(a)
OF THE SARBANES-OXLEY ACT OF 2002
I, Nathan Kahn, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Empire Resources,
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
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 12, 2003
By: /s/ Nathan Kahn
-----------------------------
Nathan Kahn
Chief Executive Officer
14
EMPIRE RESOURCES, INC.
CERTIFICATION PURSUANT TO SECTION 302(a)
OF THE SARBANES-OXLEY ACT OF 2002
I, Sandra Kahn, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Empire Resources,
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 12, 2003
By: /s/ Sandra Kahn
-----------------------------
Sandra Kahn
Chief Financial Officer
15