NATIONAL OILWELL INC - 10-Q Quarterly Report

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FORM 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

(MARK ONE)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTER ENDED JUNE 30, 2002 OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Commission file number 1-12317

NATIONAL-OILWELL, INC.
(Exact name of registrant as specified in its charter)

DELAWARE 76-0475875
- --------------------------------- ---------------------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)

10000 RICHMOND AVENUE
4TH FLOOR
HOUSTON, TEXAS
77042-4200
----------------------------------------
(Address of principal executive offices)

(713) 346-7500
----------------------------------------------------
(Registrant's telephone number, including area code)

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
--- ---

As of August 1, 2002, 80,988,764 common shares were outstanding, assuming the
exchange on a one-for-one basis of all Exchangeable Shares of Dreco Energy
Services Ltd. into shares of National-Oilwell, Inc. common stock.

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

NATIONAL-OILWELL, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)

The accompanying notes are an integral part of these statements.

2

NATIONAL-OILWELL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)

The accompanying notes are an integral part of these statements.

3

NATIONAL-OILWELL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(IN THOUSANDS)

The accompanying notes are an integral part of these statements.

4

NATIONAL-OILWELL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1. BASIS OF PRESENTATION

Information concerning common stock and per share data assumes the exchange of
all Exchangeable Shares issued in connection with the combination with Dreco
Energy Services Ltd. effective September 25, 1997. Each Exchangeable Share is
intended to have substantially identical economic and legal rights as, and are
expected to be exchanged during 2002 on a one-for-one basis for, a share of
National Oilwell common stock. The preparation of financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect reported and contingent amounts of
assets and liabilities as of the date of the financial statements and reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates.

The accompanying unaudited consolidated financial statements present information
in accordance with accounting principles generally accepted in the United States
for interim financial information and the instructions to Form 10-Q and
applicable rules of Regulation S-X. They do not include all information or
footnotes required by accounting principles generally accepted in the United
States for complete financial statements and should be read in conjunction with
our 2001 Annual Report on Form 10-K.

In our opinion, the consolidated financial statements include all adjustments,
all of which are of a normal, recurring nature, necessary for a fair
presentation of the results for the interim periods. The results of operations
for the three months and six months ended June 30, 2002 and 2001 may not be
indicative of results for the full year.

2. ACQUISITIONS

On January 10, 2002, we completed the acquisition of the assets and business of
HAL Oilfield Pump & Equipment Company ("Halco") for $15.4 million. This
business, which designs, manufactures and distributes centrifugal pumps, pump
packages and expendable parts, is complementary to our Mission pump product
line. The acquisition was accounted for as a purchase with goodwill
approximating $10.0 million.

We made nine acquisitions in 2001, ranging in value from $600,000 to a high of
$16.5 million, for a total cash outlay of $51.5 million. All of these
acquisitions were accounted for under the purchase method of accounting and
generated approximately $30 million in goodwill. Two of the larger acquisitions,
Integrated Power Systems and Maritime Hydraulics (Canada) Ltd., were acquired in
early January 2001 and their financial results were included in our consolidated
financial results for substantially the entire year. Pro-forma information
related to acquisitions has not been provided as such amounts are not material
individually or in the aggregate.

3. INVENTORIES

Inventories consist of (in thousands):

5

4. COMPREHENSIVE INCOME

The components of comprehensive income are as follows (in thousands):

5. BUSINESS SEGMENTS

Segment information (unaudited) follows (in thousands):

6

6. DEBT

Debt consists of (in thousands):

On July 30, 2002, we replaced the existing credit facility with a new three-year
unsecured $175 million revolving credit facility. It is available for
acquisitions and general corporate purposes and provides up to $50 million for
letters of credit. Interest is based upon prime or Libor plus 0.5% subject to a
ratings based grid. In securing this new credit facility we incurred
approximately $0.9 million in fees which will be amortized to expense over the
term of the facility.

In 1997, we entered into a five-year unsecured $125 million revolving credit
facility that expires in September 2002. The credit facility is available for
acquisitions and general corporate purposes and provides up to $50 million for
letters of credit, of which $20.7 million were outstanding at June 30, 2002 and
December 31, 2001. The credit facility provides for interest at prime or LIBOR
plus 0.5% (4.75% and 2.375% at June 30, 2002) subject to adjustment based on
National Oilwell's Capitalization Ratio, as defined.

We also have additional credit facilities totaling $62.5 million that are used
primarily for letters of credit. Borrowings against these credit facilities
totaled $9.0 million at June 30, 2002, of which $5.8 million were applicable to
letters of credit.

The senior notes contain reporting covenants and the credit facility contains
financial covenants and ratios regarding minimum tangible net worth, maximum
debt to capital and minimum interest coverage. At June 30, 2002 and December 31,
2001, the Company was in compliance with all covenants governing these
facilities.

7

7. RECENTLY ISSUED ACCOUNTING STANDARDS

On January 1, 2002, we adopted Statement of Financial Accounting Standards No.
142, Goodwill and Other Intangible Assets ("SFAS No. 142"). Under the new rules,
goodwill and intangible assets deemed to have indefinite lives will no longer be
amortized but will be subject to annual impairment tests in accordance with SFAS
No. 142. Other intangible assets will continue to be amortized over their useful
lives. During the second quarter of 2002, we completed the first of the required
impairment tests of goodwill and indefinite lived assets, which indicated no
impairment was required as of January 1, 2002. The following information
provides net income for the three-month and six-month period ended June 30, 2001
adjusted to exclude amortization expense recognized in this period related to
goodwill (in thousands):

In August 2001, the Financial Accounting Standards Board issued SFAS No. 144,
Accounting for the Impairment or Disposal of Long-Lived Assets. This statement
supercedes SFAS No. 121, Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to be Disposed Of, and the accounting and reporting
provisions of Accounting Principles Board Opinion ("APB") No. 30, Reporting the
Results of Extraordinary, Unusual, and Infrequently Occurring Events and
Transactions. This statement retains the fundamental provisions of SFAS No. 121
and the basic requirements of APB No. 30; however, it establishes a single
accounting model to be used for long-lived assets to be disposed of by sale and
it expands the presentation of discontinued operations to include more disposal
transactions. The provisions of this statement are effective for financial
statements issued for fiscal years beginning after December 15, 2001. Adoption
of this statement did not have a material impact on our financial position or
results of operations.

In July, 2002, the Financial Accounting Standards Board issued SFAS No. 146,
Accounting for Costs Associated with Exit or Disposal Activities. This statement
addresses financial accounting and reporting for costs associated with exit or
disposal activities, such as restructuring, involuntarily terminating employees,
and consolidating facilities, initiated after December 31, 2002. We do not
believe the adoption of this new statement will have a material impact on our
consolidated financial statements.

8

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

INTRODUCTION

National Oilwell is a worldwide leader in the design, manufacture and sale of
drilling systems, drilling equipment and downhole products as well as the
distribution to the oil and gas industry of maintenance, repair and operating
products. Our revenues are directly related to the level of worldwide oil and
gas drilling and production activities and the profitability and cash flow of
oil and gas companies and drilling contractors, which in turn are affected by
current and anticipated prices of oil and gas. Oil and gas prices have been
volatile over the last ten years, ranging from $10 - $40 per barrel. Oil prices
were low in 1998, generally ranging from $11 to $16 per barrel. In 1999, oil
prices recovered to more normal historical levels, and were generally in the
$25-$30 per barrel range during 2000. Prices once again declined in the second
half of 2001, generally ranging between $18 and $22. During 2002, oil prices
have increased and have remained in the $24-$28 per barrel range during the 2nd
quarter of 2002. Spot gas prices have also been volatile over the last ten
years, ranging from less than $1.00 per mmbtu to above $10.00. Gas prices were
moderate in 1998 and 1999, generally ranging from $1.80 to $2.50 per mmbtu. Gas
prices strengthened throughout 2000, generally ranging from $4-$8 per mmbtu. In
the second half of 2001, gas prices were under pressure again, and generally
ranged from $2.20 to $3.00 per mmbtu. Gas prices have increased in 2002 and
averaged around $3.40 per mmbtu during the 2nd quarter of 2002 but softened
during July, 2002 to an average of $2.95 per mmbtu. We expect our revenues to
increase if our customers gain confidence in sustained commodity prices at
recent levels and in the overall economic climate, and as their cash flows from
operations improve.

We conduct our operations through the following segments:

Products and Technology

The Products and Technology segment designs and manufactures a large line of
proprietary products, including drawworks, mud pumps, top drives, automated pipe
handling, electrical control systems, as well as complete land drilling and well
servicing rigs, and structural components such as cranes, masts, derricks and
substructures for offshore rigs. A substantial installed base of these products
results in a recurring replacement parts and maintenance business. Sales of new
capital equipment can result in large fluctuations in volume between periods
depending on the size and timing of the shipment of orders. In addition, the
segment provides drilling motors and downhole tools, as well as drilling pump
expendable products for maintenance of National Oilwell's and other
manufacturers' equipment.

Distribution Services

Distribution Services revenues result primarily from the sale of maintenance,
repair and operating supplies ("MRO") from our network of approximately 150
distribution service centers worldwide. These products are purchased from
numerous manufacturers and vendors, including our Products and Technology
segment.

9

RESULTS OF OPERATIONS

Operating results by segment are as follows (in thousands):

Products and Technology

Q2 2002 versus Q2 2001

Revenues for the Products and Technology segment decreased by $51 million (18%)
in the second quarter of 2002 as compared to the same quarter in 2001 as lower
drilling activity in the Western Hemisphere markets impacted all product lines.
Capital equipment revenues fell $12 million and drilling spare part sales were
down $7 million, reflecting the lower number of rigs operating in the United
States. Sales of Mission expendable pump parts and centrifugal pumps and
packages declined $8 million (20%) in the quarter when compared to the same
quarter in the prior year. The downhole motors and tools business experienced a
23% decline in revenue, reflecting in particular the reduced activity in the
Canadian marketplace.

Operating income decreased by $12 million in the second quarter of 2002 compared
to the same quarter in 2001 due principally to the lower revenue volume, offset
in part by the exclusion of goodwill amortization ($2.6 million in the second
quarter of 2001), as required by the new accounting standard "SFAS No. 142".

1st six months 2002 versus 1st six months 2001

Products and Technology segment revenues declined $31 million in the first six
months of 2002 as compared to the same period in 2001. This 6% decrease was a
direct result of lower rig activity in North America, a key driver of sales of
drilling spare parts, pump expendable parts and downhole tools and motors. All
product lines reported lower revenues during the first half of 2002 when
compared to 2001 with the exception of capital equipment which increased $30
million.

Operating income decreased $9 million in the first six months of 2002 compared
to 2001 due principally to the lower revenue volume and increases in selling
expenses, agent commissions and certain fixed costs. Reductions of $5.2 million
and $0.9 million in goodwill amortization (amortization is no longer required by
the new accounting standard "SFAS No. 142") and depreciation, respectively,
offset a portion of the margin shortfall.

Backlog of the Products and Technology capital products was $278 million at June
30, 2002 compared to $385 million at December 31, 2001 and $441 million at June
30, 2001. Approximately 60% of the product in current backlog will be delivered
during 2002 with the remainder during 2003.

10

Distribution Services

Q2 2002 versus Q2 2001

Distribution Services revenues decreased during the second quarter of 2002 over
the comparable 2001 period by $6 million. This 3% decrease is driven primarily
by the lower market activity in North America. Revenues from the sale of parts
manufactured by the Products & Technology segment were flat while the tubular
revenues, generated principally in Canada, were $4 million lower when compared
to the second quarter of 2001. Maintenance, repair and operating supplies
revenues declined approximately $2 million.

Operating income in the second quarter of 2002 of $5 million was approximately
$3 million lower when compared to the second quarter of 2001, principally due to
the lower revenue volume, a 5% reduction in gross margin percent and higher
infrastructure expenses to cover our expanded international market.

1st six months 2002 versus 1st six months 2001

Revenues for the Distribution Services segment decreased $2 million in the first
half of 2002 when compared to the prior year. Revenue increases in the
international market were offset by decreases in both the U.S. and Canadian
operations. Revenues from the sale of parts manufactured by the Products &
Technology segment were up $6 million (12%) while the maintenance, repair and
operating supplies revenues reflected a 1% decline from the first six months of
2001. Tubular revenues were lower by approximately $4 million, or 35%.

Operating income in the first half of 2002 of $9 million was approximately $5
million lower than the comparable period in 2001. Gross margin accounted for
roughly half of the decline due to the lower sales volume and a decline in base
margin percent, due in part to intense project bidding in the U.S. Significant
infrastructure growth and ongoing e-commerce initiatives previously managed at
the corporate level account for the remaining decline in operating profit in the
first six months of 2002 when compared to 2001. Excluding goodwill amortization,
as required under the new accounting standard "SFAS No. 142", operating income
in the second quarter and first six months of 2001 would have increased $0.2
million and $0.5 million, respectively.

Corporate

Corporate charges represent the unallocated portion of centralized and executive
management costs. These costs remained virtually flat during the quarter and six
months ending June 30, 2002 when compared to the same time periods in the prior
year.

Interest Expense

Interest expense decreased slightly during the three months ended June 30, 2002
as compared to the prior year due to a lower average debt level during the
period. For the first six months of 2002, interest expense was slightly higher
than the previous year as the March, 2001 issuance of the $150 million in senior
notes were outstanding for the entire period, more than offsetting the reduced
costs associated with borrowings on the revolving credit facility.

Other financial costs, primarily bank fees related to letters of credit and
performance bonds, increased slightly during the three and six month periods
ending June 30, 2002 when compared to the same period of the prior year,
reflecting our increased international activity.

11

LIQUIDITY AND CAPITAL RESOURCES

At June 30, 2002 we had working capital of $667 million, an increase of $36
million from December 31, 2001 primarily due to income from operations and a $40
million decrease in accounts receivable. Inventory increased approximately $5
million as decreases in both raw material and finished goods were offset by
increases in work-in-process resulting from the 2nd quarter increase in capital
equipment orders. A reduction in accounts payable of $34 million, the $15
million acquisition of Halco in January, 2002, income tax payments of $30
million reflected in the reduction of other accrued liabilities and payment of
the 2001 company-wide incentive plan offset a portion of the positive increases
in working capital.

Total capital expenditures were $9 million during the first half of 2002
compared to $15 million in the first six months of the prior year. Enhancements
to information management systems and additions to the downhole rental tool
fleet represent the majority of these capital expenditures. We believe we have
sufficient existing manufacturing capacity to meet currently anticipated demand
through 2002 for our products and services.

On July 30, 2002, we replaced the existing credit facility with a new three-year
unsecured $175 million revolving credit facility. It is available for
acquisitions and general corporate purposes and provides up to $50 million for
letters of credit. Interest is based upon prime or Libor plus 0.5% subject to a
ratings based grid. In securing this new credit facility we incurred
approximately $0.9 million in fees which will be amortized to expense over the
term of the facility.

In 1997, we entered into a five-year unsecured $125 million revolving credit
facility that expires in September 2002. The credit facility is available for
acquisitions and general corporate purposes and provides up to $50 million for
letters of credit, of which $20.7 million were outstanding at June 30, 2002 and
December 31, 2001. The credit facility provides for interest at prime or LIBOR
plus 0.5% (4.75% and 2.375% at June 30, 2002) subject to adjustment based on
National Oilwell's Capitalization Ratio, as defined.

We also have additional credit facilities totaling $62.5 million that are used
primarily for letters of credit. Borrowings against these credit facilities
totaled $9.0 million at June 30, 2002, of which $5.8 million were applicable to
letters of credit.

The senior notes contain reporting covenants and the credit facility contains
financial covenants and ratios regarding minimum tangible net worth, maximum
debt to capital and minimum interest coverage. At June 30, 2002 and December 31,
2001, the Company was in compliance with all covenants governing these
facilities.

We believe cash generated from operations and amounts available under the credit
facilities and from other sources of debt will be sufficient to fund operations,
working capital needs, capital expenditure requirements and financing
obligations. We also believe any significant increase in capital expenditures
caused by any need to increase manufacturing capacity can be funded from
operations or through debt financing.

We have not entered into any transactions, arrangements, or relationships with
unconsolidated entities or other persons which would materially affect
liquidity, or the availability of or requirements for capital resources.

We intend to pursue additional acquisition candidates, but the timing, size or
success of any acquisition effort and the related potential capital commitments
cannot be predicted. We expect to fund future cash acquisitions primarily with
cash flow from operations and borrowings, including the unborrowed portion of
the credit facility or new debt issuances, but may also issue additional equity
either directly or in connection with acquisitions. There can be no assurance
that additional financing for acquisitions will be available at terms acceptable
to us.

12

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The preparation of our financial statements requires us to make certain
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Our estimation process generally relates to
potential bad debts, obsolete and slow moving inventory, value of intangible
assets, and deferred income tax accounting. Our estimates are based on
historical experience and on our future expectations that we believe to be
reasonable under the circumstances. The combination of these factors result in
the amounts shown as carrying values of assets and liabilities in the financial
statements and accompanying notes. Actual results could differ from our current
estimates and those differences may be material.

We believe the following accounting policies are the most critical in the
preparation of our consolidated financial statements:

We maintain an allowance for doubtful accounts for accounts receivables by
providing for specifically identified accounts where collectibility is doubtful
and a general allowance based on the aging of the receivables compared to past
experience and current trends. A majority of our revenues come from drilling
contractors, independent oil companies, international oil companies and
government-owned or government-controlled oil companies, and we have
receivables, some denominated in local currency, in many foreign countries. If,
due to changes in worldwide oil and gas drilling activity or changes in economic
conditions in certain foreign countries, our customers were unable to repay
these receivables, additional allowances would be required.

Reserves for inventory obsolescence are determined based on our historical usage
of inventory on-hand as well as our future expectations related to our
substantial installed base and the development of new products. The amount
reserved is the recorded cost of the inventory minus its estimated realizable
value. Changes in worldwide oil and gas drilling activity and the development of
new technologies associated with the drilling industry could require additional
allowances to reduce the value of inventory to the lower of its cost or net
realizable value.

Business acquisitions are accounted for using the purchase method of accounting.
The cost of the acquired company is allocated to identifiable tangible and
intangible assets based on estimated fair value, with the excess allocated to
goodwill. The determination of impairment on long-lived assets, including
goodwill, is conducted as indicators of impairment are present. If such
indicators were present, the determination of the amount of impairment would be
based on our judgments as to the future operating cash flows to be generated
from these assets throughout their estimated useful lives. Our industry is
highly cyclical and our estimates of the period over which future cash flows
will be generated, as well as the predictability of these cash flows, can have a
significant impact on the carrying value of these assets. In periods of
prolonged down cycles, impairment charges may result.

Our net deferred tax assets and liabilities are recorded at the amount that is
more likely than not to be realized or paid. Should we determine that we would
not be able to realize all or part of the net deferred tax asset in the future,
an adjustment to the deferred tax assets would be charged to income in the
period of such determination.

RECENTLY ISSUED ACCOUNTING STANDARDS

On January 1, 2002, we adopted Statement of Financial Accounting Standards No.
142, Goodwill and Other Intangible Assets ("SFAS No. 142"). Under the new rules,
goodwill and intangible assets deemed to have indefinite lives will no longer be
amortized but will be subject to annual impairment tests in accordance with SFAS
No. 142. Other intangible assets will continue to be amortized over their useful
lives. During the second quarter of 2002, we completed the first of the required
impairment tests of goodwill and indefinite lived assets, which indicated no
impairment was required as of January 1, 2002. The following information
provides net income for the three-month and six-

13

month period ended June 30, 2001 adjusted to exclude amortization expense
recognized in this period related to goodwill (in thousands):

In August 2001, the FASB issued SFAS No. 144, Accounting for the Impairment or
Disposal of Long-Lived Assets. This statement supercedes SFAS No. 121,
Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of , and the accounting and reporting provisions of Accounting
Principles Board Opinion ("APB") No. 30, Reporting the Results of Extraordinary,
Unusual, and Infrequently Occurring Events and Transactions. This statement
retains the fundamental provisions of SFAS No. 121 and the basic requirements of
APB No. 30; however, it establishes a single accounting model to be used for
long-lived assets to be disposed of by sale and it expands the presentation of
discontinued operations to include more disposal transactions. The provisions of
this statement are effective for financial statements issued for fiscal years
beginning after December 15, 2001. Adoption of this statement did not have a
material impact on our financial position or results of operations.

In July, 2002, the Financial Accounting Standards Board issued SFAS No. 146,
Accounting for Costs Associated with Exit or Disposal Activities. This statement
addresses financial accounting and reporting for costs associated with exit or
disposal activities, such as restructuring, involuntarily terminating employees,
and consolidating facilities, initiated after December 31, 2002. We do not
believe the adoption of this new statement will have a material impact on our
consolidated financial statements.

FORWARD-LOOKING STATEMENTS

This document, other than historical financial information, contains
forward-looking statements that involve risks and uncertainties. Such statements
relate to our revenues, sales of capital equipment, backlog, capacity, liquidity
and capital resources and plans for acquisitions and any related financings.
Readers are referred to documents filed by us with the Securities and Exchange
Commission which identify significant risk factors which could cause actual
results to differ from those contained in the forward-looking statements,
including "Risk Factors" at Item 1 of the Annual Report on Form 10-K. Given
these uncertainties, current or prospective investors are cautioned not to place
undue reliance on any such forward-looking statements. We disclaim any
obligation or intent to update any such factors or forward-looking statements to
reflect future events or developments.

14

PART II - OTHER INFORMATION

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

The annual meeting of stockholders was held on May 15, 2002. Stockholders
elected two directors nominated by the board of directors for terms expiring in
2005 by the following votes: Joel V. Staff - 65,066,615 votes for and 2,584,135
votes withheld, and William E. Macaulay - 65,339,675 votes for and 2,311,075
votes withheld. There were no nominees to office other than the directors
elected.

Stockholders also approved an increase in the number of shares of common stock
available for the issuance of stock options grants under the National Oilwell,
Inc. Amended and Restated Stock Award and Long-Term Incentive Plan from
4,500,000 to 8,400,000 by the following vote: 60,549,456 votes for, 6,207,905
votes against and 893,389 votes abstained.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

99.1 Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
99.2 Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(b) Reports on Form 8-K

The Company has not filed any report on Form 8-K during the quarter for
which this report is filed.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

Date: August 12, 2002 /s/ Steven W. Krablin
----------------------- -----------------------
Steven W. Krablin
Principal Financial and Accounting Officer
and Duly Authorized Signatory

15

INDEX TO EXHIBITS