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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
----------------
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2003
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM__________TO__________
COMMISSION FILE NUMBER 1-11953
WILLBROS GROUP, INC.
(Exact name of registrant as specified in its charter)
REPUBLIC OF PANAMA 98-0160660
(Jurisdiction of incorporation) (I.R.S. Employer Identification Number)
PLAZA 2000 BUILDING
50TH STREET, 8TH FLOOR
APARTADO 6307
PANAMA 5, REPUBLIC OF PANAMA
TELEPHONE NO.: (507) 213-0947
(Address, including zip code, and telephone number, including
area code, of principal executive offices of registrant)
NOT APPLICABLE
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark whether the registrant is an accelerated filer
(as defined in Exchange Act Rule 12b-2). Yes [X] No [ ]
The number of shares of the registrant's Common Stock, $.05 par value,
outstanding as of May 14, 2003 was 20,644,842.
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
WILLBROS GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
MARCH 31, DECEMBER 31,
2003 2002
-------- -----------
(UNAUDITED)
ASSETS
Current assets:
Cash and cash equivalents ........................................... $ 21,934 $ 49,457
Accounts receivable, net............................................. 90,829 94,552
Contract cost and recognized income not yet billed................... 33,705 27,880
Prepaid expenses..................................................... 11,535 6,424
--------- ---------
Total current assets........................................... 158,003 178,313
Spare parts, net........................................................... 6,534 6,657
Property, plant and equipment, net......................................... 77,001 77,261
Investments in joint ventures.............................................. 12,340 16,745
Other assets............................................................... 21,694 19,217
--------- ---------
Total assets................................................... $ 275,572 $ 298,193
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable and current portion of long-term debt.................. $ 785 $ 1,171
Accounts payable and accrued liabilities............................. 54,354 66,582
Accrued income taxes................................................. 3,765 8,567
Contract billings in excess of cost and recognized income............ 9,555 11,093
--------- ---------
Total current liabilities...................................... 68,459 87,413
Stockholders' equity:
Class A preferred stock, par value $.01 per share,
1,000,000 shares authorized, none issued........................... - -
Common stock, par value $.05 per share, 35,000,000 shares
authorized; 20,680,185 shares issued at March 31, 2003
(20,615,875 at December 31, 2002).................................. 1,034 1,031
Capital in excess of par value....................................... 152,185 151,784
Retained earnings.................................................... 56,381 60,954
Treasury stock at cost, 46,196 shares................................ (345) (345)
Notes receivable for stock purchases................................. (1,315) (1,315)
Accumulated other comprehensive income (loss)........................ (827) (1,329)
--------- ---------
Total stockholders' equity..................................... 207,113 210,780
--------- ---------
Total liabilities and stockholders' equity..................... $ 275,572 $ 298,193
========= =========
See accompanying notes to condensed consolidated financial statements.
2
WILLBROS GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
(UNAUDITED)
THREE MONTHS
ENDED MARCH 31,
----------------------------
2003 2002
------------ ------------
Contract revenue .................................... $ 98,936 $ 147,497
Operating expenses:
Contract ...................................... 89,139 122,751
Depreciation and amortization ................. 5,668 5,412
General and administrative .................... 8,980 8,786
------------ ------------
103,787 136,949
------------ ------------
Operating income (loss) ................. (4,851) 10,548
Other expense:
Interest - net ................................ (399) (330)
Other - net ................................... (354) (796)
------------ ------------
(753) (1,126)
------------ ------------
Income (loss) before income taxes ....... (5,604) 9,422
Provision (benefit) for income taxes ................ (1,031) 4,809
------------ ------------
Net income (loss) ....................... $ (4,573) $ 4,613
============ ============
Income (loss) per common share:
Basic ......................................... $ (.22) $ .31
============ ============
Diluted ....................................... $ (.22) $ .30
============ ============
Weighted average number of common shares outstanding:
Basic ......................................... 20,613,157 14,878,717
============ ============
Diluted ....................................... 20,613,157 15,502,406
============ ============
See accompanying notes to condensed consolidated financial statements.
3
WILLBROS GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
AND COMPREHENSIVE INCOME
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
(UNAUDITED)
ACCUMULATED
NOTES OTHER
CAPITAL RECEIVABLE COMPRE- TOTAL
IN EXCESS FOR HENSIVE STOCK-
COMMON STOCK OF PAR RETAINED TREASURY STOCK INCOME HOLDERS'
SHARES PAR VALUE VALUE EARNINGS STOCK PURCHASES (LOSS) EQUITY
------ --------- ----- -------- ----- --------- ------ ------
Balance,
January 1, 2003.......... 20,615,875 $ 1,031 $ 151,784 $ 60,954 $ (345) $(1,315) $ (1,329) $ 210,780
Comprehensive
income (loss):
Net loss............. - - - (4,573) - - - (4,573)
Foreign currency
translation
adjustment........ - - - - - - 502 502
----------
Total
comprehensive
loss........... (4,071)
Issuance of common
stock under
employee
benefit plan......... 13,310 1 103 - - - - 104
Exercise of stock
options................ 51,000 2 298 - - - - 300
------------ ---------- ----------- ---------- ---------- -------- --------- ----------
Balance,
March 31, 2003........... 20,680,185 $ 1,034 $ 152,185 $ 56,381 $ (345) $ (1,315) $ (827) $ 207,113
============ ========== =========== ========== ========== ======== ========= ==========
See accompanying notes to condensed consolidated financial statements.
4
WILLBROS GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
THREE MONTHS
ENDED MARCH 31,
--------------------
2003 2002
-------- --------
Cash flows from operating activities:
Net income (loss) ............................................... $ (4,573) $ 4,613
Reconciliation of net income (loss) to net cash provided
by (used in) operating activities:
Change in equity in joint ventures, net ..................... 4,405 (6,528)
Depreciation and amortization ............................... 5,668 5,412
Amortization of debt issue costs ............................ 389 112
Loss (gain) on retirements of property, plant and equipment . (174) 543
Non-cash compensation expense ............................... - 553
Deferred income tax benefit ................................. (1,862) 169
Changes in operating assets and liabilities:
Accounts receivable ..................................... 3,803 (9,964)
Contract cost and recognized income not yet billed ...... (5,825) 1,556
Prepaid expenses and other assets ....................... (5,777) (3,867)
Accounts payable and accrued liabilities ................ (12,345) 14,857
Accrued income taxes .................................... (4,862) 1,176
Contract billings in excess of cost and recognized income (1,538) (10,793)
-------- --------
Cash used in operating activities .................. (22,691) (2,161)
Cash flows from investing activities:
Proceeds from sale of equipment ................................. 390 -
Purchase of property, plant and equipment ....................... (3,772) (4,860)
Purchase of spare parts ......................................... (1,504) (2,138)
-------- --------
Cash used in investing activities .................. (4,886) (6,998)
Cash flows from financing activities:
Proceeds from long-term debt .................................... - 21,000
Proceeds from notes payable ..................................... 624 2,192
Proceeds from common stock ...................................... 404 1,381
Repayments of long-term debt .................................... - (23,000)
Repayment of notes payable to banks ............................. (1,026) (176)
-------- --------
Cash provided by financing activities .............. 2 1,397
Effect of exchange rate changes on cash & cash equivalents ............ 52 (129)
-------- --------
Cash used in all activities ........................................... (27,523) (7,891)
Cash and cash equivalents, beginning of period ........................ 49,457 19,289
-------- --------
Cash and cash equivalents, end of period .............................. $ 21,934 $ 11,398
======== ========
Non-cash financing activities:
Non-cash compensation expense ................................... $ - $ 553
Issuance of notes receivable for stock purchases ................ $ - $ 1,307
Cash payments made during the period:
Interest ........................................................ $ 105 $ 458
Income taxes .................................................... $ 5,645 $ 3,464
See accompanying notes to condensed consolidated financial statements.
5
WILLBROS GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
(UNAUDITED)
1. BASIS OF PRESENTATION
The condensed consolidated financial statements of Willbros Group, Inc.
and its majority-owned subsidiaries (the "Company") reflect all adjustments
which are, in the opinion of management, necessary to present fairly the
financial position, results of operations and cash flows of the Company as of
March 31, 2003, and for all interim periods presented. All adjustments are
normal recurring accruals.
Certain information and disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. These condensed consolidated financial
statements should be read in conjunction with the Company's December 31, 2002
audited consolidated financial statements and notes thereto contained in the
Company's Annual Report on Form 10-K for the year ended December 31, 2002. The
results of operations for the period ended March 31, 2003, are not necessarily
indicative of the operating results to be achieved for the full year.
Certain reclassifications have been made to the 2002 balances in order
to conform with the 2003 presentation.
2. STOCK-BASED COMPENSATION
The Company measures stock-based employee compensation using the
intrinsic value method of accounting prescribed by Accounting Principles Board
Opinion No. 25, "Accounting for Stock Issued to Employees" and related
interpretations, and provides pro-forma disclosure as required by Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation." As such, compensation cost for stock options is measured as the
excess, if any, of the quoted market price of the Company's stock at the date of
grant over the exercise price.
If compensation cost for the Company's stock options plans had been
determined using the fair value method in SFAS No. 123, the Company's net income
(loss) and income (loss) per share for the three months ended March 31, 2003 and
2002 would have been as shown in the pro forma amounts below:
2003 2002
----------- ----------
Net income (loss) as reported $ (4,573) $ 4,613
Add stock-based employee compensation
included in net income, after tax - 553
Less stock-based employee compensation
determined under fair value method, after tax (257) (1,008)
----------- ----------
Pro forma net income (loss) $ (4,830) $ 4,158
=========== ==========
Income (loss) per share:
Basic, as reported $ (0.22) $ 0.31
=========== ==========
Basic, pro forma $ (0.23) $ 0.28
=========== ==========
Diluted, as reported $ (0.22) $ 0.30
=========== ==========
Diluted, pro forma $ (0.23) $ 0.27
=========== ==========
In March 2002, certain officers of the Company borrowed a total of
$1,307 under the Employee Stock Purchase Program, which permits selected
executives and officers to borrow from the Company up to 100% of the funds
required to exercise vested stock options. The loans are full recourse,
noninterest-bearing for a period of up to 5 years and are collateralized by the
related stock. The difference of $553 between the discounted value of the loans
and the fair market value of the stock on the date of exercise was recorded as
compensation expense. The loan receivable is presented as a reduction of
stockholders' equity.
6
WILLBROS GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
(UNAUDITED)
3. NEW ACCOUNTING PRINCIPLES
In June 2001, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 143, "Accounting for Asset Retirement Obligations." SFAS No. 143
requires that an asset retirement cost should be capitalized as part of the cost
of the related long-lived asset and subsequently allocated to expense using a
systematic and rational method. The Company adopted SFAS No. 143 effective
January 1, 2003. The adoption of this statement did not have a material impact
on the Company's financial position or results of operations.
In April 2002, the FASB issued SFAS No. 145, "Rescission of SFAS No. 4,
44, and 64, Amendment of SFAS No. 13 and Technical Corrections". SFAS No. 145
provides guidance for income statement classification of gains and losses on
extinguishment of debt and accounting for certain lease modifications that have
economic effects that are similar to sale-leaseback transactions. The Company
adopted SFAS No. 145 in January 2003. The adoption of this statement did not
have a material impact on the Company's financial position or results of
operations.
In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities", which addresses accounting for
restructuring and similar costs. SFAS No. 146 supersedes previous accounting
guidance, principally Emerging Issues Task Force Issue No. 94-3. The Company
adopted the provisions of SFAS No. 146 for restructuring activities initiated
after December 31, 2002. SFAS No. 146 requires that the liability for costs
associated with an exit or disposal activity be recognized when the liability is
incurred. Under Issue 94-3, a liability for an exit cost is recognized at the
date of the Company's commitment to an exit plan. SFAS No. 146 also establishes
that the liability should initially be measured and recorded at fair value.
Accordingly, SFAS No. 146 may affect the timing of recognizing future
restructuring costs as well as the amounts recognized.
In November 2002, the FASB issued Interpretation No. 45, "Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness to Others, an interpretation of FASB Statements No.
5, 57 and 107 and a rescission of FASB Interpretation No. 34." This
Interpretation elaborates on the disclosures to be made by a guarantor in its
interim and annual financial statements about its obligations under guarantees
issued. The Interpretation also clarifies that a guarantor is required to
recognize, at inception of a guarantee, a liability for the fair value of the
obligation undertaken. The initial recognition and measurement provisions of the
Interpretation are applicable to guarantees issued or modified after December
31, 2002 and are not expected to have a material effect on the Company's
financial statements.
In December 2002, the FASB issued SFAS No. 148, "Accounting for
Stock-Based Compensation - Transition and Disclosure, an amendment of FASB
Statement No. 123." This Statement amends FASB Statement No. 123, "Accounting
for Stock-Based Compensation", to provide alternative methods of transition for
a voluntary change to the fair value method of accounting for stock-based
employee compensation. In addition, this Statement amends the disclosure
requirements of Statement No. 123 to require prominent disclosures in both
annual and interim financial statements. Certain of the disclosure modifications
are required for fiscal years ending after December 15, 2002 and are included in
these notes to the consolidated financial statements. As described in Note 2,
the Company measures stock-based employee compensation using the instrinsic
value method rather than the fair value method.
7
WILLBROS GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
(UNAUDITED)
4. FOREIGN EXCHANGE RISK
The Company attempts to negotiate contracts which provide for payment
in U.S. dollars, but it may be required to take all or a portion of payment
under a contract in another currency. To mitigate non-U.S. currency exchange
risk, the Company seeks to match anticipated non-U.S. currency revenue with
expenses in the same currency whenever possible. To the extent it is unable to
match non-U.S. currency revenue with expenses in the same currency, the Company
may use forward contracts, options or other common hedging techniques in the
same non-U.S. currencies. The Company had no derivative financial instruments to
hedge currency risk at March 31, 2003, or December 31, 2002.
5. DEBT
On June 14, 2002, the Company entered into a new $125,000 credit
agreement with a syndicated bank group. The facility may be used for standby and
commercial letters of credit, borrowings or a combination thereof. Borrowings
are limited to the lesser of 40% of the borrowing base or $50,000 and are
payable at termination on June 14, 2005. Interest is payable quarterly at a Base
Rate plus a margin ranging from 0.75% to 2.00% or a Eurodollar Rate plus a
margin ranging from 1.75% to 3.00%. A commitment fee on the unused portion of
the credit agreement is payable quarterly ranging from 0.50% to 0.75%. The
credit agreement is collateralized by substantially all of the Company's assets,
including stock of the principal subsidiaries, restricts the payment of cash
dividends and requires the Company to maintain certain financial ratios. The
borrowing base is calculated using varying percentages of cash, accounts
receivable, accrued revenue, contract cost and recognized income not yet billed,
property, plant and equipment, and spare parts. Debt issue costs of $3,048, net
of accumulated amortization of $1,270, associated with the new credit agreement
are included in other assets at March 31, 2003 and are being amortized over a 24
month period ending June 2004.
8
WILLBROS GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
(UNAUDITED)
6. EARNINGS PER SHARE
Basic and diluted earnings per common share for the three months ended
March 31, 2003 and 2002, are computed as follows:
2003 2002
------------- --------------
Net income (loss) applicable to common shares.......................... $ (4,573) $ 4,613
============= ==============
Weighted average number of common shares out-
standing for basic earnings per share................................ 20,613,157 14,878,717
Effect of dilutive potential common shares from
stock options........................................................ - 623,689
------------- --------------
Weighted average number of common shares out-
standing for diluted earnings per share.............................. 20,613,157 15,502,406
============= ==============
Earnings (loss) per common share:
Basic............................................................. $ (.22) $ .31
============= ==============
Diluted........................................................... $ (.22) $ .30
============= ==============
At March 31, 2003, there were 1,505,732 potential common shares (17,500
at March 31, 2002) excluded from the computation of diluted earnings per share
because of their anti-dilutive effect.
7. CONTINGENCIES, COMMITMENTS AND OTHER CIRCUMSTANCES
The Company provides construction, engineering and specialty services
to the oil, gas and power industries. The Company's principal markets are
currently Africa, the Middle East, South America and North America. Operations
outside the United States may be subject to certain risks which ordinarily would
not be expected to exist in the United States, including foreign currency
restrictions, extreme exchange rate fluctuations, expropriation of assets, civil
uprisings and riots, war and government instability. Management is not presently
aware of any events of the type described in the countries in which it operates
that have not been provided for in the accompanying consolidated financial
statements. The Company insures substantially all of its equipment, subject to
20 percent copayments, in countries outside North America against certain
political risks and terrorism.
The Company has the usual liability of contractors for the completion
of contracts and the warranty of its work. Where work is performed through a
joint venture, the Company also has possible liability for the contract
completion and warranty responsibilities of its joint venturers. Management is
not aware of any material exposure related thereto which has not been provided
for in the accompanying consolidated financial statements.
During the course of performing its contractual duties, the Company may
incur additional contract costs due to delays and changes caused by the
customers. The Company recognizes these additional costs as they are incurred.
In such cases, the Company has filed claims, or intends to file claims, with
these customers seeking additional contract revenue amounts. Management believes
that the contracts provide a legal and/or contractual basis for the claims;
however, due to the inherent uncertainties associated with the resolution of
such claims the Company has not recognized any of these amounts as income. The
Company will continue to seek amicable resolutions with the customers and pursue
recovery of amounts claimed. Any amounts related to claims will be recorded in
the periods in which the claims are agreed to by the customers.
9
In connection with the Company's 10% interest in a joint venture in
Venezuela, the Company issued a corporate guarantee equal to 10% of the joint
venture's outstanding borrowings with two banks. The guarantee reduces as
borrowings are repaid, and expires in March 2004. The commitment as of March 31,
2003 totals approximately $3,500, the maximum amount of future payments the
Company could be required to make.
From time to time the Company enters into commercial commitments,
usually in the form of commercial and standby letters of credit, insurance bonds
and financial guarantees. Contracts with the Company's customers may require the
Company to provide letters of credit or insurance bonds with regard to the
Company's performance of contracted services. In such cases, the commitments can
be called upon in the event of failure to perform contracted services. Likewise,
contracts may allow the Company to issue letters of credit or insurance bonds in
lieu of contract retention provisions, in which the client withholds a
percentage of the contract value until project completion or expiration of a
warranty period. Retention commitments can be called upon in the event of
warranty or project completion issues, as prescribed in the contracts. In
connection with the Chad-Cameroon Pipeline Project joint venture, the Company
issued a letter of credit to an equipment leasing company equal to 50% of total
lease payments, the Company's share of the joint venture. The letter of credit
reduces as lease payments are made and expires in June 2003. The commitment can
be called upon as a result of failure to make lease payments. At March 31, 2003,
the Company had $55,855 of letters of credit and insurance bonds outstanding,
representing the maximum amount of future payments the Company could be required
to make. The Company had no liability recorded as of March 31, 2003, related to
these commitments.
In connection with the Company's 50% interest in a joint venture
related to the Chad-Cameroon Pipeline Project, the Company is joint and
severally liable for the performance of the Company's joint venturer. In the
event the joint venturer were unable to fulfill its responsibilities associated
with the project, the Company would be required to fulfill its duties. In doing
so, the Company would recognize the income or losses, if any, associated with
the Company fulfilling the duties of its joint venturer. At March 31, 2003, the
project is approximately 87% complete and is estimated to produce contract
income. However, there is no limitation to the maximum future potential payments
the Company could be required to make in the event the project were to result in
contract losses. The Company has no liability recorded as of March 31, 2003,
related to this commitment.
The Company is a party to a number of legal proceedings. Management
believes that the nature and number of these proceedings are typical for a firm
of similar size engaged in a similar type of business and that none of these
proceedings is material to the Company's financial position.
10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion should be read in conjunction with the
unaudited condensed consolidated financial statements for the periods ended
March 31, 2003 and 2002, included in Item 1 of this report, and the consolidated
financial statements and Management's Discussion and Analysis of Financial
Condition and Results of Operations, including Critical Accounting Policies,
included in our Annual Report on Form 10-K for the year ended December 31, 2002.
GENERAL
We derive our revenue from providing construction, engineering and
specialty services to the oil, gas and power industries and government entities
worldwide. We obtain contracts for our work primarily by competitive bidding or
through negotiations with long-standing clients or prospective clients. Bidding
activity, backlog and revenue resulting from the award of contracts to us may
vary significantly from period to period. Contracts have durations from a few
weeks to several months or in some cases more than a year.
A number of factors relating to our business affect the recognition of
contract revenue. Revenue from fixed-price construction and engineering
contracts is recognized on the percentage-of-completion method. Under this
method, estimated contract income and resulting revenue is generally accrued
based on costs incurred to date as a percentage of total estimated costs, taking
into consideration physical completion. Total estimated costs, and thus contract
income, are impacted by changes in productivity, scheduling, and the unit cost
of labor, subcontractors, materials and equipment. Additionally, external
factors such as weather, client needs, client delays in providing materials,
permits and approvals, labor availability, governmental regulation and politics,
may affect the progress of a project's completion and thus the timing of revenue
recognition. Generally, we do not recognize income on a fixed-price contract
until the contract is approximately 5% to 10% complete, depending upon the
nature of the contract. Costs which are considered to be reimbursable are
excluded from the percentage-of-completion calculation. Accrued revenue
pertaining to reimbursables is limited to the cost of the reimbursables. If a
current estimate of total contract cost indicates a loss on a contract, the
projected loss is recognized in full when determined. Revenue from change
orders, extra work and variations in the scope of work is recognized when
agreement is reached with clients as to both the scope of work and price.
Revenue from claims is recognized when agreement is reached with clients as to
the value of the claims, which in some instances may not occur until after
completion of work under the contract. Revenue from unit-price contracts is
recognized as earned. Management believes that our operating results should be
evaluated over a relatively long time horizon during which major contracts in
progress are completed and change orders, extra work, variations in the scope of
work and cost recoveries and other claims are negotiated and realized.
All U.S. government contracts and many of our other contracts provide
for termination of the contract for the convenience of the client. In the event
a contract would be terminated at the convenience of the client prior to
completion, we will typically be compensated for progress up to the time of
termination and any termination costs. In addition, many contracts are subject
to certain completion schedule requirements with liquidated damages in the event
schedules are not met as the result of circumstances within our control.
In our report on Form 10-K for the year ended December 31, 2002, we
identified and disclosed three critical accounting policies: (a) Revenue
Recognition: Percentage-of-Completion Method; (b) Income Taxes; and (c) Joint
Venture Accounting. There have been no changes to our critical accounting
policies during the three month period ended March 31, 2003.
We use EBITDA (earnings before net interest, income taxes, depreciation
and amortization) as part of our overall assessment of financial performance by
comparing EBITDA between accounting periods. We believe that EBITDA is used by
the financial community as a method of measuring performance and of evaluating
the market value of companies considered to be in businesses similar to ours.
EBITDA decreased to $0.5 million for the three month period ended March 31,
2003, a decrease of $14.6 million compared to the three month period ended March
31, 2002. However, EBITDA is not a calculation based on generally accepted
11
accounting principles and should not be considered as an alternative to net
earnings or operating income as an indication of our financial performance.
A reconciliation of EBITDA to net income for the three months ended
March 31, 2003 and 2002, is as follows:
($ MILLIONS) 2003 2002
------------- --------------
Net income (loss)...................................................... $ (4.6) $ 4.6
Interest - net......................................................... 0.4 0.3
Income taxes .......................................................... (1.0) 4.8
Depreciation and amortization.......................................... 5.7 5.4
------------- --------------
EBITDA............................................................ $ 0.5 $ 15.1
============= ==============
We recognize anticipated contract revenue as backlog when the award of
a contract is assured, generally upon the execution of a definitive agreement or
contract. Anticipated revenue from post-contract award processes, including
change orders, extra work, variations in the scope of work and the effect of
escalation or currency fluctuation formulas, is not added to backlog until
realization is assured. New contract awards totaled $101.2 million during the
quarter ended March 31, 2003. Additions to backlog during the period were as
follows: construction, $58.5 million; engineering, $5.2 million; and specialty
services, $37.5 million. Backlog decreases by type of service as a result of
services performed during the period were as follows: construction, $65.6
million; engineering, $13.8 million; and specialty services, $19.5 million.
Backlog at the end of the quarter was up $2.3 million (1%) from December 31,
2002, to $218.3 million and consisted of the following: (a) construction, $125.1
million, down $7.1 million; (b) engineering, $15.4 million, down $8.5 million;
and (c) specialty services, $77.8 million, up $17.9 million. Construction
backlog consists primarily of the Chad-Cameroon Pipeline Project (see below) as
well as construction projects in Offshore West Africa, Venezuela, Oman and the
United States. Engineering backlog consists primarily of engineering projects in
the United States. Specialty services backlog is primarily attributable to a
16-year water injection contract awarded in 1998 to a consortium in which the
Company has a 10 percent interest in Venezuela, a ten-year contracted gas
processing fee at the natural gas processing plant in Opal, Wyoming and other
service contracts in the United States and Canada.
In September 2000, through a joint venture led by a subsidiary of ours,
we were awarded a significant project, the scope of which includes the
engineering, procurement and construction ("EPC") of a 665-mile (1,070
kilometer), 30-inch crude oil pipeline from the Doba Fields in Chad to an export
terminal on the coast of Cameroon in Africa (the "Chad-Cameroon Pipeline
Project"). Pipeline construction activities were nearing completion and
demobilization of project equipment and personnel was underway by March 2003.
The project is expected to be completed during 2003.
During 2001, our engineering group executed an alliance agreement with
Explorer Pipeline Company to provide project management, engineering,
procurement and construction services for their Mainline Expansion Project in
Texas, Oklahoma, Missouri, Illinois, and Indiana (the "Explorer Pipeline
Project"). This project includes construction of 12 grassroots pump stations,
modifications at 13 existing pump stations, the addition of 500,000 barrels of
storage at the Wood River, Illinois terminal and modifications at two other
terminals. The project is scheduled for completion in 2003.
On May 14, 2002, we completed a public offering of our common shares at
$17.75 per share; 4,356,750 shares were sold by us. The underwriters exercised
options to purchase all shares available for over-allotments. We received $71.9
million in proceeds, after the underwriting discount and offering costs, which
were used to repay indebtedness under the prior credit agreement and for working
capital and general corporate purposes.
12
In June 2002, we completed a new $125.0 million credit agreement with a
syndicated bank group. The terms of the new facility are discussed in the
Liquidity and Capital Resources section of Item 2 of this Form 10-Q.
On October 23, 2002, we completed the acquisition of four companies
(collectively, "Mt. West Group"). Mt. West Group provides design-build
services, including engineering, procurement and construction services to the
energy industry, primarily in the western United States, and contributed $11.1
million of revenue during the first quarter ended March 31, 2003.
The government of Venezuela, under Presidente Hugo Chavez, has
experienced extreme civil unrest culminating in a national labor strike
beginning in December 2002. We suspended all work in Venezuela in December 2002
and resumed work in February 2003 when the impact of the strike had moderated.
Although business and commercial activity has not yet returned to pre-strike
levels, it has continued to improve.
RESULTS OF OPERATIONS
Our contract revenue and contract costs are primarily related to the
timing and location of development projects in the oil, gas and power industries
worldwide. Contract revenue and cost variations by country from year to year are
the result of (a) entering and exiting work countries; (b) the execution of new
contract awards; (c) the completion of contracts; and (d) the overall level of
activity in our services.
Our ability to be successful in obtaining and executing contracts can
be affected by the relative strength or weakness of the U.S. dollar compared to
the currencies of our competitors, our clients and our work locations. During
2002, as a result of economic and political events in Venezuela, the Venezuela
Bolivar experienced significant devaluation relative to the U.S. dollar. Early
in 2003, after additional devaluation, the Venezuelan government froze the rate
of currency exchange at 1,600 Bolivars to one U.S. Dollar. Included in other
expense for the three month period ended March 31, 2003, is a $0.5 million loss
resulting from the translation of our Venezuelan Bolivar denominated monetary
assets and liabilities into U.S. dollars. We do not believe that our revenue or
results of operations in other areas were adversely affected in this regard
during the three month periods ended March 31, 2003 or 2002.
Three Months Ended March 31, 2003, Compared to Three Months Ended March
31, 2002
Contract revenue decreased $48.6 million (33%) to $98.9 million due to
(a) $17.8 million (21%) of reduced construction revenue due primarily to lower
levels of construction on the Chad-Cameroon Pipeline Project and lower activity
in Offshore West Africa and the United States, partially offset by revenue from
Mt. West Group, which was acquired in October 2002; (b) decreased engineering
revenue of $36.1 million (72%) due primarily to a number of significant
engineer, procure and construct projects in progress in the United States during
the first quarter of 2002 that were not duplicated during the same period in
2003; offset by (c) an increase of $5.3 million (37%) in specialty services
revenue principally from operations in Nigeria and Canada. Revenue in the United
States decreased $36.2 million (53%) due to a decrease in construction,
engineering, and procurement services, partially offset by revenue from Mt. West
Group. Revenue from Offshore West Africa decreased $9.4 million (40%) as a
result of lower vessel utilization. Chad-Cameroon revenue decreased $7.1 million
(24%) resulting from lower levels of construction work as the pipeline project
in that area neared completion. Work that began in 2002 on a project in Bolivia
resulted in $2.1 million (47%) less revenue in that country in 2003 as the
project neared completion. Revenue in Venezuela increased $3.2 million primarily
as a result of a larger project in that area that commenced during the third
quarter of 2002. Revenue in Canada increased $1.6 million (55%). Nigeria revenue
increased $1.5 million (13%). The combined revenue in all other areas decreased
$0.1 million (3%).
Contract costs decreased $33.7 million (27%) to $89.1 million due to a
decrease of $10.4 million (15%) in construction services cost and $26.5 million
(62%) in engineering services cost, net of a $3.2 million (28%) increase in
specialty services cost. Contract costs in three areas were impacted by various
factors. In Bolivia, client-supplied defective valves delayed completion of the
project resulting in additional costs. The Chad-Cameroon Pipeline Project
experienced higher than budgeted demobilization costs in the first quarter of
2003 due in part to the lack of available suitable ships to transport equipment
as a result of the conflict in Iraq. In the United States, weather delays and
contract variations resulted in additional costs in the area. These combined
factors accounted for approximately $8.7 million of additional and unforeseen
contract costs, with no corresponding increase in revenue at this time.
Variations in contract cost in all other areas were closely related to the
variations in contract revenue.
13
Depreciation and amortization increased $0.3 million (5%) due to the
acquisition of Mt. West Group in October 2002.
General and administrative expense increased $0.2 million (2%) to $9.0
million. Mt. West Group accounted for $0.8 million of total general and
administrative expense during the period. Excluding Mt. West Group, general and
administrative expense declined $0.6 million primarily as a result of lower
staff compensation and administrative services associated with the reduction in
revenue. As a percent of revenue, general and administrative expense increased
from 6.0% in 2002 to 9.1% in 2003.
Operating income decreased $15.4 million (146%) from $10.5 million in
2002 to an operating loss of $4.9 million in 2003, largely as a result of
increased contract costs caused by project delays on several projects as
discussed above.
Interest expense increased $0.1 million to $0.4 million. Interest
expense in 2003 relates primarily to amortization of debt issue cost resulting
from our new credit agreement that was signed in June 2002. Borrowings under our
prior credit agreement were paid in full in May 2002, and we have not had any
borrowings under the credit facilities since that time.
Other expense decreased $0.4 million to $0.4 million due primarily to
changes in the disposals of older assets in Venezuela and Oman in 2002.
The provision for income taxes decreased $5.8 million (121%) to a
benefit of $1.0 million due to the loss before income taxes. The provision for
income taxes is also impacted by income taxes in certain countries being based
on deemed profit rather than taxable income and the fact that losses in one
country cannot be used to offset taxable income in another country.
LIQUIDITY AND CAPITAL RESOURCES
Our primary requirements for capital are to acquire, upgrade and
maintain our equipment, provide working capital for current projects, finance
the mobilization of employees and equipment to new projects, establish a
presence in countries where we perceive growth opportunities and finance the
possible acquisition of new businesses and equity investments. Historically, we
have met our capital requirements primarily from operating cash flows,
borrowings under our credit facility and more recently from the net proceeds of
the common stock offering in May 2002.
Cash and cash equivalents decreased $27.6 million (56%) to $21.9
million at March 31, 2003, from $49.5 million at December 31, 2002. The decrease
was due to cash outflows of $22.7 million for operating activities and $4.9
million used for investing activities (the purchase of equipment and spare
parts, net of cash receipts on sales of equipment).
On May 14, 2002, we completed a public offering of our common shares at
$17.75 per share; 4,356,750 shares were sold by us and 985,000 shares were sold
by certain selling shareholders. We received approximately $71.9 million in net
proceeds, which were used to repay indebtedness under our credit facility and
for working capital and general corporate purposes.
On June 14, 2002, we completed a new $125.0 million credit agreement
with a syndicated bank group, replacing the existing facility that was due to
expire in February 2003. The facility may be used for standby and commercial
letters of credit, borrowings or a combination thereof. Borrowings are limited
to the lesser of 40% of the borrowing base or $50.0 million and are payable at
termination on June 14, 2005. Interest is payable quarterly at a Base Rate plus
a margin ranging from 0.75% to 2.00% or a Eurodollar Rate plus a margin ranging
from 1.75% to 3.00%. A commitment fee on the unused portion of the credit
agreement is payable quarterly ranging from 0.50% to 0.75%. The credit agreement
is collateralized by substantially all of our assets, including stock of our
principal subsidiaries, restricts the payment of cash dividends and requires us
to maintain certain financial ratios. The borrowing base is calculated using
varying percentages of cash, accounts receivable, accrued revenue, contract cost
and recognized income not yet billed, property, plant and equipment, and spare
parts. Debt issue costs of $1.8 million, net of accumulated amortization,
associated with the new credit agreement are included in other assets at March
31, 2003, and are being amortized over a 24 month period ending in June 2004.
14
At March 31, 2003, there were no amounts borrowed under the credit
agreement. We had $46.9 million of letters of credit outstanding leaving $78.1
million available for letters of credit of which up to $37.3 million was
available for borrowings as a result of borrowing base limitations.
We have various other obligations totaling $0.8 million, including
notes payable, generally related to equipment financing, and revolving credit
facilities. All are at market rates, are collateralized by certain vehicles,
equipment or real estate, and mature in 2003.
We have unsecured credit facilities with banks in certain countries
outside the United States. Borrowings under these lines, in the form of
short-term notes and overdrafts, are made at competitive local interest rates.
Generally, each line is available only for borrowings related to operations in a
specific country. Credit available under these facilities is approximately $6.1
million at March 31, 2003. There were no outstanding borrowings at March 31,
2003.
We do not anticipate any significant collection problems with our
customers with regard to contract revenue that has been recognized and the
related receivables, including those in countries that may be experiencing
economic and/or currency difficulties. Since our customers generally are major
oil companies and government entities, and the terms for billing and collecting
for work performed are generally established by contracts, we historically have
a very low incidence of collectability problems.
We believe that cash flows from operations and borrowing capacity under
existing credit facilities will be sufficient to finance working capital and
capital expenditures for ongoing operations through March 31, 2004. We estimate
capital expenditures for equipment and spare parts to be approximately $25.0 to
$35.0 million in 2003. We believe that while there are numerous factors that
could and will have an impact on our cash flow, both positively and negatively;
there is not one or two events that should they occur could not be funded from
our operations or borrowing capacity. For a list of events which could cause
actual results to differ from our expectations and a discussion of risk factors
that could impact cash flow, please refer to the section entitled "Political and
Economic Risks; Operational Risks" contained in our report on Form 10-K for the
year ended December 31, 2002.
NEW ACCOUNTING PRONOUNCEMENTS
In December 2002, the FASB issued SFAS No. 148, "Accounting for
Stock-Based Compensation - Transition and Disclosure, an amendment of FASB
Statement No. 123." This Statement amends FASB Statement No. 123, "Accounting
for Stock-Based Compensation", to provide alternative methods of transition for
a voluntary change to the fair value method of accounting for stock-based
employee compensation. In addition, this Statement amends the disclosure
requirements of Statement No. 123 to require prominent disclosures in both
annual and interim financial statements. Certain of the disclosure modifications
are required for fiscal years ending after December 15, 2002 and are included in
the notes to our condensed consolidated financial statements included in Item 1
of this Form 10-Q.
FORWARD-LOOKING STATEMENTS
This Form 10-Q includes "forward-looking statements" within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. All statements, other than
statements of historical facts, included in this Form 10-Q which address
activities, events or developments which we expect or anticipate will or may
occur in the future, including such things as future capital expenditures
(including the amount and nature thereof), oil, gas, gas liquids and power
prices, demand for our services, the amount and nature of future investments by
governments, expansion and other development trends of the oil, gas and power
industries, business strategy, expansion and growth of our business and
operations, and other such matters are forward-looking statements. These
statements are based on certain assumptions and analyses we made in light of our
experience and our perception of historical trends, current conditions and
expected future developments as well as other factors we believe are appropriate
in the circumstances. However, whether actual results and developments will
conform to our
15
expectations and predictions is subject to a number of risks and uncertainties,
which could cause actual results to differ materially from our expectations
including:
- Curtailment of capital expenditures in the oil, gas, and power
industries
- Political circumstances impeding the progress of work
- The timely award of one or more projects
- Cancellation of projects
- Inclement weather
- Project cost overruns and unforeseen schedule delays
- Failing to realize cost recoveries from projects completed or in
progress within a reasonable period after completion of the relevant
project
- Identifying and acquiring suitable acquisition targets on reasonable
terms o Obtaining adequate financing
- The demand for energy diminishing
- Downturns in general economic, market or business conditions in our
target markets
- Changes in the effective tax rate in countries where the work is
performed
- Changes in laws or regulations
- The risk factors listed in this Form 10-Q and listed in our filings
with the Securities and Exchange Commission from time to time
- Other factors, most of which are beyond our control.
Consequently, all of the forward-looking statements made in this Form
10-Q are qualified by these cautionary statements and there can be no assurance
that the actual results or developments we anticipated will be realized or, even
if substantially realized, that they will have the expected consequences to or
effects on our business or operations. We assume no obligation to update
publicly any such forward-looking statements, whether as a result of new
information, future events or otherwise.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Our primary market risk is our exposure to changes in non-U.S. currency
exchange rates. We attempt to negotiate contracts which provide for payment in
U.S. dollars, but we may be required to take all or a portion of payment under a
contract in another currency. To mitigate non-U.S. currency exchange risk, we
seek to match anticipated non-U.S. currency revenue with expenses in the same
currency whenever possible. To the extent we are unable to match non-U.S.
currency revenue with expenses in the same currency, we may use forward
contracts, options or other common hedging techniques in the same non-U.S.
currencies. We had no forward contracts or options at March 31, 2003.
The carrying amounts for cash and cash equivalents, accounts
receivable, notes payable and accounts payable and accrued liabilities shown in
the consolidated balance sheets approximate fair value at March 31, 2003 due to
the generally short maturities of these items. We invest primarily in short-term
dollar denominated bank deposits, and at March 31, 2003 did not have any
investment in instruments with a maturity of more than 90 days or in any equity
securities. We have the ability and expect to hold our investments to maturity.
Our exposure to market risk for changes in interest rates relates
primarily to our long-term debt. In May 2002, subsequent to completing our
public offering of common shares, we paid all borrowings on our credit facility
and as such at March 31, 2003, none of our indebtedness was subject to variable
interest rates. At March 31, 2003, our fixed rate debt approximated fair value
based upon discounted future cash flows using current market rates.
ITEM 4. CONTROLS AND PROCEDURES
Within the 90 days prior to the filing date of this report, we carried
out an evaluation, under the supervision and with the participation of our
management, including our Chief Executive Officer and Chief Financial Officer,
of the effectiveness of the design and operation of our disclosure controls and
procedures.
16
Based upon that evaluation, our Chief Executive Officer and Chief Financial
Officer concluded that our disclosure controls and procedures are effective.
Disclosure controls and procedures are designed to ensure that information
required to be disclosed in our reports filed or submitted under the Securities
Exchange Act of 1934 is recorded, processed, summarized and reported within the
time periods specified in Securities and Exchange Commission rules and forms.
Subsequent to the date of their evaluation, there were no significant changes in
our internal controls or in other factors that could significantly affect these
controls.
17
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Not applicable
Item 2. Changes in Securities and Use of Proceeds
Not applicable
Item 3. Defaults upon Senior Securities
Not applicable
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable
Item 5. Other Information
Not applicable
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
The following documents are included as exhibits to this Form 10-Q.
Those exhibits below incorporated by reference herein are indicated as such by
the information supplied in the parenthetical thereafter. If no parenthetical
appears after an exhibit, such exhibit is filed herewith.
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.
(b) Reports on Form 8-K
Form 8-K dated December 23, 2002, filed on January 10, 2003, reporting
under Item 5 delay of projects in Venezuela.
18
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.
WILLBROS GROUP, INC.
Date: May 15, 2003 By: /s/ Warren L. Williams
----------------------------------
Warren L. Williams
Senior Vice President, Chief Financial Officer
And Treasurer
(Principal Financial Officer and
Principal Accounting Officer)
19
CERTIFICATIONS
I, Michael F. Curran, certifiy that:
1. I have reviewed this quarterly report on Form 10-Q of Willbros
Group, 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 15, 2003
By /s/ Michael F. Curran, Chief Executive Officer
----------------------------------------------
20
I, Warren L. Williams, certifiy that:
1. I have reviewed this quarterly report on Form 10-Q of Willbros
Group, 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 15, 2003
By /s/ Warren L. Williams, Chief Financial Officer
-----------------------------------------------
21
EXHIBIT INDEX
The following documents are included as exhibits to this Form 10-Q.
Those exhibits below incorporated by reference herein are indicated as such by
the information supplied in the parenthetical thereafter. If no parenthetical
appears after an exhibit, such exhibit is filed herewith.
Exhibit
Number Description
- ----------- ------------------------------------------------------------
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