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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 DECEMBER 31, 2002
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: 0-18933
ROCHESTER MEDICAL CORPORATION
(Exact name of registrant as specified in its charter)
MINNESOTA 41-1613227
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
ONE ROCHESTER MEDICAL DRIVE,
STEWARTVILLE, MN 55976
(Address of principal executive offices) (Zip Code)
(507) 533-9600
(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 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 the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.
5,338,000 Common Shares as of February 7, 2003.
TABLE OF CONTENTS
ROCHESTER MEDICAL CORPORATION
REPORT ON FORM 10-Q
FOR QUARTER ENDED
DECEMBER 31, 2002
PAGE
----
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Balance Sheets -- December 31, 2002 and September 30, 2002............................................... 3
Statements of Operations -- Three months ended December 31, 2002 and 2001.................................4
Statements of Cash Flows -- Three months ended December 31, 2002 and 2001.................................5
Notes to Financial Statements ............................................................................6
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations ..................................................................................8
Item 3. Quantitative and Qualitative Disclosures about Market Risk .....................................10
Item 4. Controls and Procedures ........................................................................11
PART II. OTHER INFORMATION .......................................................................................11
2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ROCHESTER MEDICAL CORPORATION
BALANCE SHEETS
DECEMBER 31, SEPTEMBER 30,
2002 2002
------------ -------------
ASSETS: (UNAUDITED)
Current assets:
Cash and cash equivalents ............................ $ 389,070 $ 411,618
Marketable securities ................................ 3,913,491 4,052,389
Accounts receivable .................................. 2,224,460 1,905,442
Inventories .......................................... 3,690,007 3,577,931
Prepaid expenses and other assets .................... 312,716 218,183
------------ ------------
Total current assets ........................... 10,529,744 10,165,563
Property and equipment:
Land and buildings ................................... 5,513,755 5,509,135
Equipment and fixtures ............................... 10,791,862 10,680,442
------------ ------------
16,305,617 16,189,577
Less accumulated depreciation ........................ (7,226,529) (6,928,052)
------------ ------------
Total property and equipment ................... 9,079,088 9,261,525
Intangible assets:
Patents, less accumulated amortization ............... 212,519 209,078
------------ ------------
Total assets ............................................ $ 19,821,351 $ 19,636,166
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current liabilities:
Accounts payable ..................................... $ 888,772 $ 633,934
Accrued expenses ..................................... 542,663 908,301
Short-term debt ...................................... 200,000 --
Deferred revenue ..................................... 100,000 100,000
Current maturities of capital leases ................. 4,711 --
------------ ------------
Total current liabilities ...................... 1,736,146 1,642,235
Long-term liabilities:
Deferred revenue ..................................... 825,000 850,000
Long-term portion of capital leases .................. 23,708 --
Shareholders' equity:
Common Stock, no par value:
Authorized -- 20,000,000
Issued and outstanding shares -- 5,335,750 .. 41,291,890 41,253,128
Accumulated deficit .................................. (23,994,635) (24,055,793)
Unrealized loss on available-for-sale securities ..... (60,758) (53,404)
------------ ------------
Total shareholders' equity ..................... 17,236,497 17,143,931
Total liabilities and shareholders' equity .............. $ 19,821,351 $ 19,636,166
============ ============
Note -- The Balance Sheet at September 30, 2002 was derived from the audited
financial statements at that date, but does not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements.
See Notes to Financial Statements
3
ROCHESTER MEDICAL CORPORATION
STATEMENTS OF OPERATIONS (UNAUDITED)
THREE MONTHS ENDED
DECEMBER 31,
-------------------------
2002 2001
----------- -----------
Net sales .......................................................... $ 3,538,657 $ 2,326,433
Cost of sales ...................................................... 2,339,839 1,751,059
----------- -----------
Gross profit ....................................................... 1,198,818 575,374
Costs and expenses:
Marketing and selling ............................................ 551,038 536,054
Research and development ......................................... 206,883 190,495
General and administrative ....................................... 422,364 451,298
----------- -----------
Total operating expenses ...................................... 1,180,285 1,177,847
Income (loss) from operations ...................................... 18,533 (602,473)
----------- -----------
Other income (expense):
Interest income, net ............................................. 42,625 58,061
----------- -----------
Net income (loss) .................................................. $ 61,158 $ (544,412)
=========== ===========
Earnings per common share -- (basic and diluted) ................... $ 0.01 $ (0.10)
=========== ===========
Weighted average number of common shares outstanding -- basic ...... 5,330,973 5,328,500
=========== ===========
Weighted average number of common shares outstanding -- diluted .... 5,525,923 5,328,500
=========== ===========
See Notes to Financial Statements
4
ROCHESTER MEDICAL CORPORATION
STATEMENTS OF CASH FLOWS (UNAUDITED)
THREE MONTHS ENDED
DECEMBER 31,
-------------------------------
2002 2001
------------- --------------
OPERATING ACTIVITIES:
Net income (loss) ......................................................... $ 61,158 $ (544,412)
Adjustments to reconcile net income (loss) to net cash used in operating
activities:
Depreciation and amortization ............................................. 310,841 313,809
Changes in assets and liabilities:
Accounts receivable ................................................... (319,018) (122,020)
Inventories ........................................................... (112,076) (487,598)
Other current assets .................................................. (94,533) (108,799)
Accounts payable ...................................................... 254,839 140,755
Deferred revenue ...................................................... (25,000) --
Other current liabilities ............................................. (337,219) (402,498)
------------- --------------
Net cash provided by (used in) operating activities ....................... (261,008) (1,210,763)
INVESTING ACTIVITIES:
Capital expenditures ...................................................... (116,041) (107,189)
Patents ................................................................... (15,804) (5,483)
Sales (purchases) of marketable securities, net ........................... 131,544 (9,812)
------------- --------------
Net cash provided by (used in) investing activities ....................... (301) (122,484)
FINANCING ACTIVITIES:
Proceeds from sales (purchases) of common stock ........................... 38,761 --
Net borrowing on short-term debt .......................................... 200,000 --
------------- --------------
Net cash provided by (used in) financing activities ....................... 238,761 --
Increase (decrease) in cash and cash equivalents (22,548) (1,333,247)
Cash and cash equivalents at beginning of period 411,618 1,842,796
Cash and cash equivalents at end of period $ 389,070 $ 509,549
============= ==============
See Notes to Financial Statements
5
ROCHESTER MEDICAL CORPORATION
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
DECEMBER 31, 2002
NOTE A -- BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q. Accordingly, they do not
include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. These financial
statements should be read in conjunction with the financial statements and
related notes included in the Company's 2002 Form 10-K. In the opinion of
management, all adjustments (consisting only of normal recurring accruals)
considered necessary for a fair presentation have been included. Operating
results for the three month period ended December 31, 2002 are not necessarily
indicative of the results that may be expected for the year ending September 30,
2003.
NOTE B -- NET INCOME (LOSS) PER COMMON SHARE
Earnings per share are calculated in accordance with Financial
Accounting Standards Board Statement No. 128, "Earnings Per Share." Potential
common shares are included in the diluted net income calculation when dilutive.
Potential common shares consisting of common stock issuable upon exercise of
outstanding common stock options are computed using the treasury stock method.
The Company's basic net income per share is computed by dividing income by the
weighted average number of common shares outstanding during the period. Diluted
net income per share is computed by dividing income by the weighted average
number of common shares outstanding during the period, increased to include
dilutive potential common shares issuable upon the exercise of stock options
that were outstanding during the period. A reconciliation of the numerator and
denominator in the basic and diluted earnings per share calculation is as
follows:
THREE MONTHS ENDED
----------------------------------
DECEMBER 31, DECEMBER 31,
2002 2001
----------- ------------
(in thousands, except per share data)
Numerator
Net income (loss)........................................ $ 61 $ (544)
Denominator
Denominator for basic net income per share --
weighted average shares outstanding................... 5,331 5,329
Effect of dilutive stock options......................... 195 --
Denominator for diluted net income per share --
weighted average shares outstanding................... 5,526 5,329
Basic and diluted net income per share...................... $ 0.01 $ (0.10)
========== =========
6
Employee stock options of 394,125 for the first quarter of fiscal year 2003 have
been excluded from the diluted net income per share calculation because their
exercise prices were greater than the average market price of the Company's
common stock.
NOTE C -- INVESTMENTS IN MARKETABLE SECURITIES
As of December 31, 2002, the carrying value of the Company's marketable
securities, which consisted primarily of corporate bonds and commercial paper,
was $3,913,000. This total includes a corporate bond from Pacific Gas & Electric
("PG&E") with a carrying value of $920,000 on December 31, 2002. This bond
matured December 24, 2001 and, although PG&E remains current on its interest
payment obligations, the principal amount of this bond has not yet been paid. On
April 6, 2001, PG&E filed for Chapter 11 bankruptcy protection. In 2002, PG&E
and the State of California asked PG&E's creditors to vote on two separate
reorganization proposals. A certification of the results of voting was filed
with the U.S. Bankruptcy Court for the Northern District of California on
September 9, 2002. However, as of December 31, 2002, the bankruptcy court had
not confirmed either plan of reorganization. While PG&E's management has stated
their intent to pay their creditors, the numerous political and economic factors
influencing the California utility market coupled with PG&E's bankruptcy filing
could potentially impact the timing and/or actuality of payments. However, the
Company currently believes that it will realize the full value of this
investment.
NOTE D -- INVENTORIES
Inventories consist of the following:
DECEMBER 31, SEPTEMBER 30,
2002 2002
------------ ----------
Raw materials ........................................... 725,618 595,971
Work-in progress ........................................ 2,053,537 1,881,150
Finished goods .......................................... 1,010,852 1,200,810
Reserve for inventory obsolescence ...................... (100,000) (100,000)
------------ ----------
$ 3,690,007 $3,577,931
============ ==========
NOTE E -- COMPREHENSIVE INCOME (LOSS)
Comprehensive income (loss) includes net income (loss) and all other
nonowner changes in shareholders' equity during a period.
The comprehensive income (loss) for the first quarter ended December
31, 2002 and 2001 consists of the following:
THREE MONTHS ENDED
DECEMBER 31,
----------------------------
2002 2001
--------- ---------
Net income (loss)............................................. $ 61,158 $(544,412)
Unrealized gain (loss) on securities held, net ............... (7,354) 101,785
--------- ---------
$ 53,804 $(442,627)
7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
The following table sets forth, for the fiscal periods indicated,
certain items from the statements of operations of the Company expressed as a
percentage of net sales.
THREE MONTHS
ENDED
DECEMBER 31,
------------------------
2002 2001
---- ----
Total Net Sales ............................. 100% 100%
Costs of Sales .............................. 66% 75%
---- ----
Gross Margin ................................ 34% 25%
Operating Expenses ..........................
Marketing and Selling .............. 15% 23%
Research and Development ........... 6% 8%
General and Administrative ......... 12% 19%
---- ----
Total Operating Expenses .................... 33% 50%
Income (Loss) From Operations ............... 1% (25%)
Interest Income (Expense) Net ............... 1% 2%
---- ----
Net Income (Loss) ........................... 2% (23%)
---- ----
Three Month Periods Ended December 31, 2002 and December 31, 2001
Net Sales. Net sales for the first quarter of fiscal 2003 increased 52%
to $3,539,000 from $2,326,000 for the comparable quarter of last fiscal year.
The sales increase primarily resulted from an increase in private label sales,
as well as an increase in branded sales. In particular, the current quarter's
net sales were affected by the timing of a large shipment of products to one
private label customer.
Gross Margin. The Company's gross margin as a percentage of net sales
for the first quarter of fiscal 2003 was 34% compared to 25% for the comparable
quarter of last fiscal year. The increase in the current quarter's margin
primarily reflects the Company's increased level of net sales offset against a
relatively flat level of fixed overhead expense.
Marketing and Selling. Marketing and selling expenses for the first
quarter of fiscal 2003 were up 3% to $551,000 from $536,000 for the comparable
quarter of last fiscal year. The increase in marketing and selling expense is
primarily due to increased advertising costs for the Company's new hydrophilic
intermittent catheters and costs associated with the recruitment of sales
personnel, offset by lower marketing costs associated with the FemSoft(R) Insert
in the current quarter.
Research and Development. Research and development expense for the
first quarter of fiscal 2003 increased 9% to $207,000 from $191,000 for the
comparable quarter of last fiscal year. The
8
increase in research and development expense primarily related to increased
costs associated with development of the Company's hydrophilic intermittent
catheters.
General and Administrative. General and administrative expense for the
first quarter of fiscal 2003 decreased 6% to $422,000 from $451,000 for the
comparable quarter of last fiscal year. The decrease in general and
administrative expense is primarily related to higher severance costs in the
comparable quarter of last fiscal year.
Interest Income. Interest income for the first quarter of fiscal 2003
decreased 26% to $43,000 from $58,000 for the comparable quarter of last fiscal
year. The decrease in interest income reflects the comparatively lower average
level of invested cash balances in the current quarter due to the utilization of
cash for operations and capital expenditures, as well as generally lower
interest rates on short-term investments.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash, cash equivalents and marketable securities were
$4.3 million at December 31, 2002 compared with $4.5 million at September 30,
2002. The December 31, 2002 total includes a corporate bond from Pacific Gas &
Electric ("PG&E") with a carrying value of $920,000 on December 31, 2002. This
bond matured December 24, 2001 and, although PG&E remains current on its
interest payment obligations, the principal amount of this bond has not yet been
paid. On April 6, 2001, PG&E filed for Chapter 11 bankruptcy protection. In
2002, PG&E and the State of California asked PG&E's creditors to vote on two
separate reorganization proposals. A certification of the results of voting was
filed with the U.S. Bankruptcy Court for the Northern District of California on
September 9, 2002. However, as of December 31, 2002, the bankruptcy court had
not confirmed either plan of reorganization. While PG&E's management has stated
their intent to pay their creditors, the numerous political and economic factors
influencing the California utility market coupled with PG&E's bankruptcy filing
could potentially impact the timing and/or actuality of payments. However, the
Company currently believes that it will realize the full value of this
investment.
The Company used $261,000 of cash from operating activities during the
quarter, primarily reflecting increased accounts receivable and payment of
accrued liabilities and accounts payable.
During the fiscal quarter ended June 30, 2002, the Company entered into
an agreement with Coloplast granting Coloplast exclusive marketing and
distribution rights with respect to the Company's Release-NF Foley catheters in
certain geographic areas. Coloplast paid the Company $1,000,000 for these
exclusive rights. In accordance with generally accepted accounting principles,
the Company recognized $25,000 of this amount as revenue in the first quarter of
fiscal 2003 and the remaining amount not recognized in prior periods constitutes
deferred revenue which will be recognized over the term of the agreement.
During the fiscal quarter ended March 31, 2002, the Company entered
into a $1,000,000 revolving line of credit with U.S. Bank National Association.
As of December 31, 2002, the Company had $200,000 outstanding under this line of
credit.
During the fiscal quarter ended December 31, 2002, the Company's
working capital position, excluding cash and marketable securities, increased by
a net $432,000. Accounts receivable balances during this period increased 17% or
$319,000 primarily as a result of increased sales and the timing of orders.
Inventories increased 3% or $112,000 primarily as a result of the Company
expanding its
9
product lines, and increasing its production of finished goods to meet customer
demand. Other current assets increased 43% or $95,000 during the recent
three-month period primarily as a result of prepaid insurance premiums. Current
liabilities increased 6% or $94,000 during the recent three-month period,
primarily reflecting borrowings under the Company's line of credit offset by
payments of accrued compensation after the Company's fiscal year end. In
addition, capital expenditures during this period were $116,000, representing an
increase of 8% from the prior fiscal year's period.
The Company believes that its capital resources on hand at December 31,
2002, together with revenues from sales, will be sufficient to satisfy its
working capital requirements for the foreseeable future as described in the
Liquidity and Capital Resources portion of Management's Discussion and Analysis
of Financial Condition and Results of Operations in the Company's Annual Report
on Form 10-K (Part II, Item 6) for the fiscal year ended September 30, 2002.
However, the Company may be required to seek additional funding sources, such as
additional borrowings under the Company's revolving line of credit or equity or
debt financings, to fund the Company's working capital requirements. If the
Company decides to seek additional financing, there can be no assurance as to
the outcome of such efforts, including whether financing will be available to
the Company, or if available, whether it would be on terms favorable to the
Company and its shareholders. Failure by the Company to secure additional
financing could result in significant cash constraints and financial issues for
the Company.
FORWARD-LOOKING STATEMENTS
Statements other than historical information contained herein
constitute "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Such forward-looking statements may be
identified by the use of terminology such as "believe," "may," "will," "expect,"
"anticipate," "predict," "intend," "designed," "estimate," "should" or
"continue" or the negatives thereof or other variations thereon or comparable
terminology. Such forward-looking statements involve known or unknown risks,
uncertainties and other factors which may cause the actual results, performance
or achievements of the Company, or industry results, to be materially different
from any future results, performance or achievements expressed or implied by
such forward-looking statements. Such factors include, among other things, the
following: the uncertainty of gaining acceptance of the hydrophilic intermittent
catheters, the Release-NF Foley catheters and the FemSoft Insert in the
marketplace; the uncertainty of gaining new strategic relationships; the
uncertainty of timing of revenues from private label sales (particularly with
respect to international customers); FDA and other regulatory review and
response times; manufacturing capacities for both current products and new
products; the uncertainty of insurance coverage of the FemSoft Insert by
additional insurers; the uncertainty that initial consumer interest in the
FemSoft Insert may not result in significant sales of the product or continued
sales of the product after trial; the results of product evaluations; the
securing of Group Purchasing Organization contract participation; results of
clinical tests; the timing of clinical preference testing and product
introductions; and other risk factors listed from time to time in the Company's
SEC reports, including, without limitation, the section entitled "Risk Factors"
in the Company's Annual Report on Form 10-K (Part II, Item 6) for the year ended
September 30, 2002.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
The Company does not believe that there is any material market risk
exposure with respect to derivative or other financial instruments which would
require disclosure under this item. However, as disclosed under Note C to the
Company's financial statements that appears on page 6, the bankruptcy of
10
PG&E could potentially impact the timing and/or actuality of payment of our $1.0
million PG&E corporate bond.
ITEM 4. CONTROLS AND PROCEDURES
The Company's Chief Executive Officer and Chief Financial Officer have
concluded, based on their evaluation within 90 days of the filing date of this
report, that the Company's disclosure controls and procedures are adequately
designed to ensure that information required to be disclosed by the Company in
the reports that it files or submits under the Securities and Exchange Act of
1934, as amended, is recorded, processed, summarized and reported, within the
time periods specified in applicable rules and forms. There have not been any
significant changes in the Company's internal controls or in other factors that
could significantly affect those controls, subsequent to the date of such
evaluation, including any corrective actions taken with regard to significant
deficiencies and material weaknesses.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is not a party to any material legal proceedings.
ITEM 2. CHANGES IN SECURITIES
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
None.
11
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
99.1 Certification of Chief Executive Officer pursuant to
18 U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.
99.2 Certification of Chief Financial Officer 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:
None.
12
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ROCHESTER MEDICAL CORPORATION
Date: February 14, 2003 By: /s/ Anthony J. Conway
--------------------------------------
Anthony J. Conway
Chief Executive Officer
Date: February 14, 2003 By: /s/ David A. Jonas
--------------------------------------
David A. Jonas
Chief Financial Officer and Treasurer
CERTIFICATIONS
I, Anthony J. Conway, Chief Executive Officer of Rochester Medical Corporation,
certify that:
1. I have reviewed this quarterly report on Form 10-Q of Rochester Medical
Corporation;
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 annual 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;
13
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: February 14, 2003 /s/ Anthony J. Conway
--------------------------------
Chief Executive Officer
I, David A. Jonas, Chief Financial Officer of Rochester Medical Corporation,
certify that:
1. I have reviewed this quarterly report on Form 10-Q of Rochester Medical
Corporation;
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 annual 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
14
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: February 14, 2003 /s/ David A. Jonas
---------------------------------
Chief Financial Officer
15
INDEX TO EXHIBITS
EXHIBIT PAGE
99.1 Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002........................................
99.2 Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002........................................