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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 10-Q

Commission file number: 0-22187

RENAISSANCE LEARNING, INC.
(Exact name of Registrant as Specified in its Charter)

2911 Peach Street
P.O. Box 8036
Wisconsin Rapids, Wisconsin
(Address of principal executive offices)

54495-8036
(Zip Code)

(715) 424-3636
(Registrant’s telephone number, including area code)

     Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

     Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes x No o

     Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

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RENAISSANCE LEARNING, INC.

INDEX TO FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2003

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PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

RENAISSANCE LEARNING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)

See accompanying notes to condensed consolidated financial statements.

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RENAISSANCE LEARNING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited)

See accompanying notes to condensed consolidated financial statements.

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RENAISSANCE LEARNING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)

See accompanying notes to condensed consolidated financial statements.

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RENAISSANCE LEARNING, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

1.     Consolidation

     The condensed consolidated financial statements include the financial results of Renaissance Learning, Inc. (“Renaissance Learning”) and our subsidiaries. Our significant subsidiaries include Renaissance Corporate Services, Inc. and Generation21 Learning Systems, LLC (“Generation21”). All significant intercompany transactions have been eliminated in the condensed consolidated financial statements.

2.     Basis of Presentation

     The condensed consolidated financial statements reflect all adjustments (consisting only of normal recurring adjustments) which are, in our opinion, necessary for a fair presentation of the results of the interim periods, and are presented on an unaudited basis. These financial statements should be read in conjunction with the financial information contained in our Annual Report on Form 10-K for the year ended December 31, 2002, which is on file with the U.S. Securities and Exchange Commission.

     The results of operations for the three-month periods ended March 31, 2003 and 2002 are not necessarily indicative of the results to be expected for the full year.

3.     Earnings Per Common Share

     Basic earnings per common share is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding during the period. Shares issued and shares reacquired during the period are weighted for the portion of the period they were outstanding. Diluted earnings per common share has been computed based on the weighted average number of common shares outstanding, increased by the number of additional common shares that would have been outstanding if the dilutive potential common shares had been issued.

     On April 17, 2002, our Board of Directors authorized a new repurchase program which provides for the repurchase of up to 5,000,000 shares of our common stock. No time limit was placed on the duration of the repurchase program. Repurchased shares will become treasury shares and will be used for stock-based employee benefit plans and for other general corporate purposes. During the period of January 1, 2003 through March 31, 2003, we repurchased 868,000 shares at a cost of $15.4 million under the current repurchase program. Through March 31, 2003, the cumulative shares repurchased under the current program were 3,581,000 at a cost of $64.5 million.

     The weighted average shares outstanding are as follows:

4.     Comprehensive Income

     Total comprehensive income was $7,589,000 and $7,604,000 in the first quarter of 2003 and 2002, respectively. Our comprehensive income includes foreign currency translation adjustments. In 2002, our comprehensive income also included the remaining unamortized balance of unrealized gains and losses on our held-to-maturity securities that were previously classified as available-for-sale.

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5.     Goodwill and Other Intangible Assets

     In accordance with SFAS No. 142 “Goodwill and Other Intangible Assets”, goodwill is not amortized but is tested at least annually for impairment. Our other intangible assets have finite lives and are amortized over their estimated useful lives of four years for algorithms and software code, and five years for the non-compete agreement.

     For the three months ended March 31, 2003 and 2002, we recognized amortization expense on other intangibles of $134,000 and $135,000, respectively. No goodwill or other intangibles were acquired or impaired during the first quarter of 2003. Other intangibles consisted of the following (in thousands):

     Other intangibles are scheduled to be fully amortized by 2006 with corresponding amortization estimated to be $261,000, $286,000, and $193,000, for the remainder of 2003 and the years ended 2004, and 2005, respectively.

6.     Stock Option Plan

     We have established the 1997 Stock Incentive Plan for our officers, key employees, non-employee directors and consultants. Had compensation cost been determined for our stock option portion of the plan based on the fair value at the grant dates for awards consistent with the alternative method set forth under SFAS 123, our net income and earnings per share would have been adjusted to the pro forma amounts indicated below:

     The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions for the first quarters of 2003 and 2002 respectively: dividend yield of 0% and 0%, expected volatility of 77.39% and 81.64%, risk-free interest rates of 2.97% and 4.63%, and expected lives of 6 years and 6 years for the options.

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7.     Segment Reporting

     Our reportable segments are strategic business units that offer different products and services. We have two reportable segments: software and training.

     Summarized financial information concerning our reportable segments is shown in the following table:

     At this time, revenues derived outside the United States are not material.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Results of Operations

     The following table sets forth certain consolidated income statement data in dollars and as a percentage of net sales, except that individual components of costs of sales and gross profit are shown as a percentage of their corresponding component of net sales:

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Three Months Ended March 31, 2003 and 2002

     Net Sales. Our net sales decreased by $463,000, or 1.3%, to $34.2 million in the first quarter of 2003 from $34.7 million in the first quarter of 2002. Product sales decreased by $1.7 million, or 5.9%, to $27.2 million in the first quarter of 2003 from $28.9 million in the first quarter of 2002. Revenues decreased for nearly all of our established products due to the continued negative trend in the school funding environment which has resulted in lowered demand for our products. Sales of our six new products, which were introduced in 2002, were not sufficient to fully offset the decline in revenues from our established products.

     Service revenue, which consists of revenue from sales of training sessions, our annual National Conference, and software support agreements, for the first quarter of 2003 was $7.0 million, an increase of $1.2 million from the first quarter 2002 revenues of $5.8 million. Both software support agreement revenues, and revenues from training sessions (which include the National Conference), grew by slightly more than 20% over the first quarter 2002. Our training business benefited from increased levels of school districts under contract for professional development services. Additionally, software support revenues have remained strong despite the market downturn as our customers continue to renew support plans on products they have previously purchased.

     We are expecting second quarter sales to be approximately flat compared to our prior year sales as school funding pressures are anticipated to continue. For the full year 2003, we continue to expect slight growth in sales and earnings with the growth in the second half of the year coming from new products and the expansion of our field sales force. Accelerated Grammar and Spelling is expected to be ready to ship by the beginning of the 2003-2004 school year. Accelerated Grammar and Spelling, which replaces our Perfect Copy software product, provides teachers with information to closely monitor student’s progress in writing skills, including grammar, usage, mechanics, and spelling.

     Cost of Sales. The cost of sales of products increased by $305,000, or 10.6%, to $3.2 million in the first quarter of 2003 from $2.9 million in the first quarter of 2002. As a percentage of product sales, the cost of sales of products increased to 11.7% in the first quarter of 2003 from 9.9% in the first quarter of 2002. This increase is partly due to a slight reduction in scanner profitability. We reduced the pricing on our new scanner model twice during 2002. The cost of sales of services increased by $124,000, or 3.8%, to $3.4 million in the first quarter of 2003 from $3.2 million in the first quarter of 2002. As a percentage of sales of services, the cost of sales of services decreased to 47.7% in the first quarter of 2003 from 55.7% in the first quarter of 2002. This decrease is mainly attributable to lower costs at our annual National Renaissance Conference held in Nashville versus costs in San Antonio last year. Our overall gross profit margin was 80.9% in the first quarter of 2003, compared to 82.4% in the first quarter of 2002. This decline in gross profit margin is primarily related to services making up a larger portion of the total sales for the first quarter in 2003 as compared to 2002.

     Product Development. Product development expenses were $4.5 million in the first quarter of 2003, which was essentially flat compared to the first quarter of 2002. We continue to invest in product development related to (i) the development of additional Accelerated Reader quizzes, StandardsMaster content, and content libraries for our other software products, (ii) enhanced versions of our existing products, (iii) new products at various stages of development which we expect to announce in the future, and (iv) the development of tools to increase the efficiency of product development. As a percentage of net sales, product development costs increased to 13.0% in the first quarter of 2003 from 12.8% in the first quarter of 2002 primarily due to the decline in sales. We expect product development costs to continue at approximately the same level as first quarter 2003 for the near-term.

     Selling and Marketing. Selling and marketing expenses of $8.1 million in the first quarter of 2003 were down by $389,000, or 4.6%, from $8.5 million in the first quarter of 2002. As a percentage of net sales, selling and marketing expenses decreased to 23.7% in the first quarter of 2003 from 24.5% in the first quarter of 2002. The reduction in selling and marketing expenses was the result of increased internal efficiencies including the consolidation of our inside sales forces of our K-12 training and software businesses. Second quarter 2003 selling and marketing costs are expected to be at approximately the same level as the second quarter 2002.

     General and Administrative. General and administrative expenses decreased by $500,000, or 12.6%, to $3.5 million in the first quarter of 2003 from $4.0 million in the first quarter of 2002. These costs, which represent the expected approximate level of quarterly general and administrative costs over the near-term, were lower than last year due to some increased wages and related benefit costs, and higher professional fees in the first quarter 2002. As a percentage of net sales, general and administrative costs decreased to 10.1% in the first quarter of 2003 compared to 11.4% in the first quarter of 2002.

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     Operating Income. Operating income remained relatively constant at $11.7 million in the first quarter of 2003, the same as reported in the first quarter of 2002. As a percentage of net sales, operating income increased to 34.1% in the first quarter of 2003 compared to 33.7% in the first quarter of 2002.

     Income Tax Expense. Income tax expense of $4.7 million was recorded in the first quarter of 2003 at an effective income tax rate of 38.3% of pre-tax income, compared to $4.9 million, or 38.7% of pre-tax income in the first quarter of 2002. We expect to maintain our effective tax rate at or below 38.5% for the balance of 2003.

Liquidity and Capital Resources

     As of March 31, 2003, our cash, cash equivalents and investment securities were $94.2 million, down $5.6 million from the December 31, 2002 total of $99.8 million. The decrease of $5.6 million in the first quarter of 2003 is primarily due to $10.6 million in net cash provided by operating activities offset by cash paid for stock repurchases of $15.2 million during the first quarter of 2003. Our operating cash flow during the first quarter of 2003 benefited from exceptionally strong accounts receivable collections and favorable timing of contract payment terms on district contracts. We believe our strong cash position coupled with cash flow from operations will be sufficient to meet both our short-term and long-term working capital requirements.

     At March 31, 2003, we had a $15.0 million unsecured revolving line of credit with a bank that is available until March 31, 2004. The line of credit bears interest at either a floating rate based on the prime rate less 1.0%, or a fixed rate for a period of up to 90 days based on LIBOR plus 1.25%. The rate is at our option and is determined at the time of borrowing. We also have a $2.0 million unsecured revolving line of credit with a bank, which is available until April 30, 2004. The line of credit bears interest based on the prime rate less 1.0%. As of March 31, 2003, the lines of credit had not been used.

     On April 17, 2002, our Board of Directors authorized the repurchase of up to 5,000,000 shares of our common stock. No time limit was placed on the duration of the repurchase program. Repurchased shares will become treasury shares and will be used for stock-based employee benefit plans and for other general corporate purposes. During the period of January 1, 2003 through March 31, 2003, we repurchased 868,000 shares at a cost of $15.4 million under this repurchase program. Subsequently, during the period of April 1 through April 30, 2003, we repurchased 258,000 shares at a cost of $4.7 million.

Off-Balance Sheet Arrangements

     We do not utilize any special purpose entities or other off-balance sheet arrangements.

Critical Accounting Policies and Estimates

     The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make judgments, estimates and assumptions that affect the amounts reported in the financial statements. Actual results could differ from those estimates. We have not made any changes in judgments, estimates or assumptions since December 31, 2002 that had a significant effect on the reported amounts. The following represents a summary of our critical accounting policies defined as those policies that we believe are the most important to the portrayal of our financial condition and results of operations and/or require management’s significant judgments and estimates.

     Revenue Recognition. We recognize revenue in accordance with Statement of Position No. 97-2 “Software Revenue Recognition” issued by the Accounting Standards Executive Committee of the AICPA. Under this accounting standard, revenue is recognized when the following have occurred: persuasive evidence of an arrangement exists, product delivery and acceptance has occurred or a service has been performed, pricing is fixed and determinable, and collectibility is probable. Revenue is recognized as follows: (i) at the time of shipment to customers for off-the-shelf software products and related telephone support with a duration of 12 months or less sold with the product, (ii) on the percentage of completion basis for software products which require significant customization or modification, (iii) as seminars are performed for training, (iv) straight-line over the term of the support agreement for separately sold software support agreements, and (v) as the service is performed or on a straight-line basis over the contractual period for consulting services, and (vi) straight-line over the subscription period for subscription based products. Accordingly, management is required to make judgments as to whether pricing is fixed and determinable, whether collectibility is reasonably assured and the percentage of completion as of the financial reporting date.

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     Expenses are recognized and matched against revenues for the reporting period presented in the financial statements. We record accruals for sales returns and doubtful accounts at the time of revenue recognition based upon historical experience. Changes in such allowances may be required if future returns or bad debt activity differs from historical experience.

     Impairment of Long-Lived Assets. We evaluate the recoverability of the carrying amount of long-lived assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be fully recoverable. We evaluate the recoverability of goodwill and other intangible assets with indefinite useful lives annually or more frequently if events or circumstances indicate that an asset may be impaired. Management uses judgement when applying impairment rules to determine when an impairment test is necessary. Examples of factors which could trigger an impairment review include a significant decrease in the market value of an asset, a significant change in the extent or manner in which an asset is used, and significant adverse changes in legal factors or the business climate that impact the value of an asset.

     Impairment losses are measured as the amount by which the carrying value of an asset exceeds its estimated fair value. We are required to make estimates of future cash flows related to the asset subject to review. These forecasts require assumptions about demand for our products and services, future market conditions and technological developments. Other assumptions include determining the discount rate and future growth rates. Changes to these assumptions could result in an impairment charge in future periods.

     Software Support and Warranty Obligations. We record a liability for the estimated cost of software support and warranty obligations at the time of sale. Estimated costs are based upon our historical cost experience of fulfilling these obligations as well as other factors that in our judgment could reasonably be expected to affect those costs, such as trends in the cost of providing telephone support and anticipated hardware warranty claim rates. If the actual costs of fulfilling these obligations differ from our estimates, it could result in additional charges to cost of sales in future periods.

     Software Development Costs. We capitalize certain software development costs incurred after technological feasibility is achieved. Capitalized software development costs are amortized on a product-by-product basis using the straight-line method over the estimated economic life of the products, which is generally estimated to be 24 months. Amortization begins when the products are available for general release to customers. If the actual economic life of our products is shorter than our estimates, it could result in an impairment charge in future periods.

     Taxes. At the end of each interim reporting period, we estimate the effective income tax rate expected to be applicable for the full fiscal year. The estimated effective income tax rate contemplates the expected jurisdiction where income is earned (e.g., United States compared to non-United States) as well as tax planning strategies. If the actual distribution of taxable income by jurisdiction varies from our expectations or if the results of tax planning strategies are different from our estimates, adjustments to the effective income tax rate may be required in the period such determination is made.

     We record a liability for potential tax assessments based on our estimate of the potential exposure. Due to the subjectivity and complex nature of the underlying issues, actual payments or assessments may differ from estimates and require tax provision adjustments in future periods.

Forward-Looking Statements

     In accordance with the Private Securities Litigation Reform Act of 1995, we can obtain a “safe-harbor” for forward-looking statements by identifying those statements and by accompanying those statements with cautionary statements which identify factors that could cause actual results to differ materially from those in the forward-looking statements. Accordingly, the foregoing “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contains certain forward-looking statements relating to growth plans, projected sales, revenues, earnings and costs, and product development schedules and plans. Our actual results may differ materially from those contained in the forward-looking statements herein. Factors which may cause such a difference to occur include (i) a delay or reduction in school purchases of our products due to state budgetary constraints resulting in a reduction in the funds available to schools and (ii) those factors identified in Item 1, Business, Forward-Looking Statements, contained in our Form 10-K for the year ended December 31, 2002, which factors are incorporated herein by reference to such Form 10-K.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

     Interest Rate Risk. Our exposure to market interest rate risk consists of: (i) the increase or decrease in the amount of interest income we can earn on our investment portfolio, and (ii) the decrease or increase in value of our investment security portfolio if market interest rates increase or decrease, respectively. We anticipate that we will have sufficient liquidity to hold our investments to maturity, therefore, we do not expect to recognize any material losses or gains related to an increase or decrease in market interest rates.

     Market Risk. Our exposure to market risk relates to the quality of the holdings in our investment security portfolio. The fair market value of our investments is subject to increases or decreases in value resulting from the performance of the securities issuer and from upgrades or downgrades in the credit worthiness of the securities issuer. We seek to manage our exposure to market risk by investing according to our board-approved investment policy which has the following goals: (i) preservation of capital, (ii) provision of adequate liquidity to meet projected cash requirements, (iii) minimization of risk of principal loss through diversified short and medium term investments, and (iv) maximization of yields in relationship to the guidelines, risk, market conditions and tax considerations.

     Our investment policy specifically defines that our investments (i) have a maximum maturity of 36 months or less, (ii) meet a minimum portfolio liquidity requirement that 10% of the portfolio shall be available on 30 days notice and not more than 30% of the portfolio will have a maturity in excess of 24 months, (iii) meet minimum credit quality requirements specified in the plan based on the type of investment, (iv) meet the concentration limit of not more than 10% in any one issuer other than the US Treasury or its agencies, or money market funds, and (v) meet certain maximum maturity or tender option limits based on the issuer’s credit rating. As of March 31, 2003 our investment securities had a market value of approximately $76,020,000 and a carrying value of $75,519,000.

     Our investment policy parameters preclude investment in equity securities and require that the Board of Directors review the policy annually and on an interim basis as required.

     Foreign Currency Exchange Rate Risk. The financial position and results of operations of our foreign subsidiaries are measured using local currency. Revenues and expenses of such subsidiaries have been translated into U.S. dollars at average exchange rates prevailing during the period. Assets and liabilities have been translated at the rates of exchange at the balance sheet date. Translation gains or losses are deferred as a separate component of shareholders’ equity. Aggregate foreign currency transaction gains and losses are included in determining net income. As such, our operating results are affected by fluctuations in the value of the U.S. dollar compared to the Australian dollar, British pound, Canadian dollar, and Indian Rupee. At this time, foreign operations are not material.

Item 4. Controls and Procedures

     We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission, and that such information is accumulated and communicated to our management, including our Chief Executive Officer (CEO) and Chief Financial Officer (CFO), as appropriate, to allow timely decisions regarding required disclosures. In designing and evaluating the company’s disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control procedures and management was necessarily required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

     Within 90 days prior to the filing date of this report, an evaluation was performed under the supervision and with the participation of management, including our CEO and CFO, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on that evaluation, management, including the CEO and CFO, concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in reports that we file or submit under the Securities Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission. There have been no significant changes in our internal controls or in other factors that could significantly affect these controls subsequent to the evaluation, including any corrective actions with regard to significant deficiencies or material weaknesses.

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Part II — OTHER INFORMATION

Item 6. Exhibits and Reports on Form 8-K

(a)  Exhibits.

(b)  Forms 8-K. The following Form 8-K filing was made during the three months ended March 31, 2003:

     1.     Form 8-K dated January 29, 2003 (filed on January 30, 2003). Press release regarding financial results for the fourth quarter and year ended December 31, 2002.

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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.

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Section 302 Certification of Periodic Report

I, Terrance D. Paul, certify that:

1.     I have reviewed this quarterly report on Form 10-Q of Renaissance Learning, Inc.;

2.     Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3.     Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4.     The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5.     The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

6.     The registrant’s other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: May 12, 2003

/s/ Terrance D. Paul Terrance D. Paul Chief Executive Officer

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Section 302 Certification of Periodic Report

I, Steven A. Schmidt, certify that:

1.     I have reviewed this quarterly report on Form 10-Q of Renaissance Learning, Inc.;

2.     Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3.     Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4.     The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5.     The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

6.     The registrant’s other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: May 12, 2003

/s/ Steven A. Schmidt Steven A. Schmidt Chief Financial Officer, Secretary and Vice President

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Index to Exhibits

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