Back to GetFilings.com

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

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

     For the quarterly period ended November 30, 2002

     OR

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

     For the transaction period from __________________________ to __________________________

Commission File Number: 0-7277

PIERRE FOODS, INC.
(Exact name of registrant as specified in its charter)

North Carolina
(State or other jurisdiction of incorporation or organization)

56-0945643
(I.R.S. Employer Identification No.)

9990 Princeton Road
Cincinnati, Ohio 45246
(Address of principal executive offices) (zip code)

Registrant’s telephone number, including area code: (513) 874-8741

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

PIERRE FOODS, INC.

INDEX

2

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

PIERRE FOODS, INC. AND SUBSIDIARIES______________________________________

Consolidated Balance Sheets

See accompanying notes to unaudited consolidated financial statements.

3

PIERRE FOODS, INC. AND SUBSIDIARIES______________________________________

See accompanying notes to unaudited consolidated financial statements.

4

PIERRE FOODS, INC. AND SUBSIDIARIES______________________________________

Consolidated Statements of Operations and Retained Earnings

(Unaudited)

See accompanying notes to unaudited consolidated financial statements.

5

See accompanying notes to unaudited consolidated financial statements.

6

PIERRE FOODS, INC. AND SUBSIDIARIES______________________________________

Consolidated Statements of Operations and Retained Earnings

(Unaudited)

See accompanying notes to unaudited consolidated financial statements.

7

See accompanying notes to unaudited consolidated financial statements.

8

PIERRE FOODS, INC. AND SUBSIDIARIES______________________________________

Consolidated Statements of Cash Flows

(Unaudited)

See accompanying notes to unaudited consolidated financial statements.

9

See accompanying notes to unaudited consolidated financial statements.

10

PIERRE FOODS, INC. AND SUBSIDIARIES______________________________________

Notes to Consolidated Financial Statements
(Unaudited)

1. Basis of Presentation

     In the opinion of the Company, the accompanying unaudited consolidated financial statements contain all adjustments necessary to present fairly the financial position of the Company as of November 30, 2002 and March 2, 2002, the results of operations for the thirteen weeks and thirty-nine weeks ended November 30, 2002 and December 1, 2001, and the cash flows of the Company for the thirty-nine weeks ended November 30, 2002 and December 1, 2001. Financial statements for the year-to-date period ended December 1, 2001 (“fiscal 2002”) have been reclassified, where applicable, to conform to financial statement presentation used for the year-to-date period ended November 30, 2002 (“fiscal 2003”). The thirteen week period ended November 30, 2002 is referred to as “third quarter 2003” and the thirteen week period ended December 1, 2001 is referred to as “third quarter 2002.”

     The Company reports the results of its operations using a 52-53 week basis. In line with this, each quarter of the fiscal year will contain 13 weeks except for the infrequent fiscal years with 53 weeks.

     The results of interim operations for fiscal 2003 are not necessarily indicative of the results to be expected for the full fiscal year. These interim unaudited consolidated financial statements should be read in conjunction with the Company’s March 2, 2002 audited consolidated financial statements and notes thereto.

2. Inventories

     A summary of inventories, by major classifications, follows:

3. Intangible Assets

     The Company adopted FASB Statement of Financial Accounting Standards No. 142 (“SFAS 142”), “Goodwill and Other Intangible Assets,” effective March 3, 2002. SFAS 142 requires, among other things, the discontinuance of goodwill amortization. In addition, the standard includes provisions for the reclassification of certain existing recognized intangibles as goodwill, reassessment of the useful lives of existing recognized intangibles, reclassification of certain intangibles out of previously reported goodwill and the identification of reporting units for purposes of assessing potential future impairments of goodwill. As a result, during first quarter 2002, the assembled work force with an amortized balance of $2,171,067 was reclassified as goodwill. In addition, the intangible asset established for trade name is deemed to have an indefinite life because the trade name is expected to generate cashflows indefinitely. Accordingly, amortization of both goodwill and tradename has been discontinued.

     As required by FAS 142, during second quarter 2002, the Company completed its first step transitional goodwill impairment test. The results of the first step transitional impairment test indicate that the revised goodwill amount of $29,019,571 may be impaired. Since the first step transitional test indicates that goodwill may be impaired, a second step

11

transitional test is required to be completed by March 1, 2003. Any impairment loss resulting from the second step transitional impairment test would be recorded as a cumulative effect of a change in accounting principle effective March 3, 2002. Accordingly, the financial statements for interim quarters of fiscal 2003 would be restated for any such impairment loss. The reason for the potential impairment loss is the result of the change (effective March 3, 2002) in the evaluation criteria for goodwill from an undiscounted cash flow approach, which was previously utilized under the guidance in Accounting Principles Board Opinion No. 17, to the fair value approach which is stipulated in SFAS 142.

     As of November 30, 2002, the Company had the following acquired intangible assets recorded:

     As required by SFAS 142, the results for first, second and third quarters 2002 have not been restated. The table below presents the effect on net loss and loss per share as if SFAS 142 had been in effect for first, second and third quarters 2002:

12

4. Long-Term Debt

     Effective May 29, 2002, the Company terminated its $25 million credit facility, and obtained a new five-year variable rate secured credit facility in an aggregate amount up to $50 million. The new facility includes a $16 million term loan subline, a $10 million capital expenditures subline and a $7 million letter of credit subfacility. The collateral for the facility includes substantially all of the Company’s assets. As of November 30, 2002, the Company had borrowings under this new facility of $6.6 million and borrowing availability of approximately $8.6 million. As of December 1, 2001, the Company had no borrowings under its former $25 million credit facility and borrowing availability of approximately $20.9 million. In addition, at November 30, 2002 and December 1, 2001, the Company was in compliance with the financial covenants under each facility. (see —Item 5 “Other Information”)

     The Company’s Chairman and Vice Chairman agreed to guarantee payment of the new $50 million facility in exchange for guarantee fees to be paid annually in advance, equal to 1.5% each of the amount committed for lending under the facility. During the fiscal period ended November 30, 2002, $750,000 was paid to each of the Company’s Chairman and Vice Chairman, and as of November 30, 2002, $375,000 each had been amortized.

5. Common Stock

     On July 26, 2002, PF Management, Inc. closed its management buyout of the Company. This going-private transaction resulted in the exchange of each share of common stock owned by a person other than PF Management for the right to receive $2.50 in cash. There were 5,781,480 shares issued and outstanding immediately before the closing. Of that amount, 2,151,268 shares were owned by persons other than PF Management. After the closing, the Company amended and restated its Articles of Incorporation to authorize the issuance of up to 100,000 shares of Class A common stock as the only authorized class of capital stock of the Company. All 100,000 shares of authorized common stock have been issued to PF Management.

6. Comprehensive Income

     Total comprehensive income (loss) is comprised solely of net income (loss) in fiscal 2003 and fiscal 2002. Comprehensive income (loss) was $2,160,880 and $887,587 for the third quarter 2003 and the third quarter 2002, respectively; and $1,376,140 and $(124,219) for fiscal 2003 and fiscal 2002, respectively.

7. Supplemental cash flow disclosures — cash paid (received) during the period

8. Recently Issued Accounting Guidance.

     In June 2001, the FASB issued Statement of Financial Accounting Standards No. 142 (“SFAS 142”), Goodwill and Other Intangible Assets.” See Note 3 for discussion of the Company’s adoption of SFAS 142.

     In June 2001, the FASB issued Statement of Financial Accounting Standards No. 143 (“SFAS 143”), “Accounting for Asset Retirement Obligations,” which is effective for the Company beginning March 3, 2002. SFAS 143 addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the

13

associated asset retirement cost. The adoption of SFAS 143 did not have a material impact on the Company’s financial position and results of operations.

     In August 2001, the FASB issued Statement of Financial Accounting Standards No. 144 (“SFAS 144”), “Accounting for the Impairment or Disposal of Long-Lived Assets,” which is effective for the Company’s fiscal year beginning March 3, 2002. SFAS 144 addresses the financial accounting and reporting for the impairment or disposal of long-lived assets. The adoption of SFAS 144 did not have a material impact on the Company’s financial position and results of operations.

9. Related Party Transactions

     Effective March 3, 2002, the Company entered into a one-year logistics agreement with PF Distribution, LLC (“PF Distribution”), owned 50% each by the Company’s Chairman and Vice Chairman. Under the agreement, PF Distribution will serve as an exclusive logistics agent for the Company, and will provide all warehousing, fulfillment and transportation services to the Company. In the third quarter 2003, distribution expense recorded in selling, general and administrative expense was approximately $4.7 million. In fiscal 2003, distribution expense recorded in selling, general and administrative expense was approximately $16.9 million, of which approximately $16.0 million had been paid to PF Distribution as of November 30, 2002.

     All other related party transactions are consistent with those described at March 2, 2002.

14

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

Results of Operations

Third Quarter 2003 Compared to Third Quarter 2002

     Revenues, net. Net revenues increased by $10.7 million, or 15.8%. The increase in net revenues was primarily due to the substantial development of new customers, to the introduction of a new sandwich line within the foodservice distribution channel, and to increased revenues in existing product lines.

     Cost of goods sold. Cost of goods sold increased by $7.3 million, or 16.1%. As a percentage of revenues, cost of goods sold increased from 66.6% to 66.9%. This increase primarily was due to a change in product mix to lower margin products and unfavorable insurance and utilities expense, offset by a decrease in beef raw material prices. Production efficiencies remained consistent with third quarter 2002, as did the cost of labor.

     Selling, general and administrative. Selling, general and administrative expenses increased by $2.1 million, or 12.8%, primarily due to an increase in costs to support the increase in sales volume. As a percentage of revenues, selling, general and administrative expenses decreased from 23.6% to 23.0%.

     Depreciation and amortization. Depreciation and amortization expense decreased by $0.5 million, or 34.6%, due primarily to the adoption of SFAS 142 in fiscal 2003 which discontinued amortization of goodwill and intangibles with indefinite lives.

     Other expense, net. The primary component of net other expense for third quarter 2003 and third quarter 2002 is interest expense. Interest expense consists primarily of interest on fixed rate long-term debt (see -— “Liquidity and Capital Resources” below). Net other expense increased by $0.3 million or 9.7% in fiscal year 2003.

     Income taxes. The effective tax rate for third quarter 2003 was 36.1% compared to 50.0% for third quarter 2002. The decrease in the effective tax rate is due primarily to the effects of permanent timing differences and compensation deduction limitations in fiscal 2002.

15

Fiscal 2003 Compared to Fiscal 2002

     Revenues, net. Net revenues increased by $25.4 million, or 14.4%. The increase in net revenues was primarily due to the substantial development of new customers, to the introduction of a new sandwich line within the foodservice distribution channel, and to increased revenues in existing product lines.

     Cost of goods sold. Cost of goods sold increased by $16.8 million, or 14.4%. As a percentage of revenues, cost of goods sold increased from 66.2% to 66.3%. This increase primarily was due to a change in product mix to lower margin products and unfavorable insurance and utilities expense, offset by a decrease in beef raw material prices. The cost of labor for fiscal 2003 was consistent with fiscal 2002.

     Selling, general and administrative. Selling, general and administrative expenses increased by $7.2 million, or 15.8%, primarily due to an increase in costs to support the increase in sales volume. As a percentage of revenues, selling, general and administrative expenses increased from 25.7% to 26.0%.

     Depreciation and amortization. Depreciation and amortization expense decreased by $1.7 million, or 36.4%, due primarily to the adoption of SFAS 142 in fiscal 2003 which discontinued amortization of goodwill and intangibles with indefinite lives.

     Other expense, net. The primary component of net other expense for fiscal 2003 and fiscal 2002 is interest expense. Interest expense consists primarily of interest on fixed rate long-term debt (see -— “Liquidity and Capital Resources” below). Net other expense increased by $0.4 million or 4.6%.

     Income taxes. The effective tax rate for fiscal 2003 was 42.7% compared to 50.0% for fiscal 2002. The decrease in the effective tax rate is due primarily to the effects of permanent timing differences and compensation deduction limitations in fiscal 2002.

16

Liquidity and Capital Resources

     Net cash provided by operating activities was $4.4 million for fiscal 2003, as compared to $6.4 million for fiscal 2002. The primary components of the change in net cash provided by operating activities were 1) an increase in inventory of $3.7 million due to the seasonal building of inventories; 2) an increase in accounts receivable of $3.6 million; and 3) an increase in refundable income taxes, prepaid expenses and other current assets of $1.2 million; offset by 4) an increase in accounts payable and other accrued liabilities of $5.1 million; 5) an increase in accrued interest of $3.1 million; and 6) a decrease in depreciation and amortization expense of $1.7 million primarily due to the discontinuance of amortization of goodwill under FAS 142.

     Net cash used in investing activities was $12.6 million for fiscal 2003, compared to $3.6 million for fiscal 2002, due to an increase in capital expenditures for plant improvements and a plant expansion.

     Net cash provided by financing activities was $4.0 million for fiscal 2003, compared to net cash used in financing activities of $0.1 million for fiscal 2002. The increase in cash provided by financing activities was due primarily to an increase in borrowings under the revolving credit facility of $6.6 million for fiscal 2003 compared to fiscal 2002, offset by loan origination fees of $1.6 million incurred in fiscal 2003 that did not occur in fiscal 2002 and special purpose entity member distributions of $0.8 million incurred in fiscal 2003 that did not occur in fiscal 2002.

     Effective May 29, 2002, the Company terminated its $25 million credit facility. Also, effective May 29, 2002, the Company obtained a five-year variable-rate $50 million revolving credit facility from a new lender, which includes a $16 million term loan subline, a $10 million capital expenditures subline and a $7 million letter of credit subfacility. Funds available under this facility are available for working capital requirements, permitted investments and general corporate purposes. Borrowings under the facility bear interest at floating rates based upon the interest rate option selected from time to time by the Company and are secured by a first-priority security interest in substantially all of the Company’s assets. In addition, the Company is required to satisfy certain financial covenants regarding cash flow and capital expenditures.

     As of November 30, 2002, the Company had borrowings under this new facility of $6.6 million and borrowing availability of approximately $8.6 million. As of December 1, 2001, the Company had no borrowings under its former $25 million credit facility and borrowing availability of approximately $20.9 million. In addition, at November 30, 2002 and December 1, 2001, the Company was in compliance with the financial covenants under each of the facilities. (see —Item 5 “Other Information”)

     The Company has budgeted approximately $0.6 million for capital expenditures for the remainder of fiscal 2003. These expenditures are primarily for routine food processing capital improvement projects and other miscellaneous expenditures. The Company believes that funds from operations and funds from the $50 million credit facility, as well as the Company’s ability to enter into capital or operating leases, will be adequate to finance these capital expenditures.

     If the Company continues its historical revenue growth trend as expected, then the Company will be required to raise and invest additional capital for additional plant expansion projects to provide operating capacity to satisfy increased demand. Management believes that future cash requirements for these plant expansion projects would need to be met through other long-term financing sources, such as an increase in borrowing availability under the $50 million credit facility, the issuance of industrial revenue bonds or equity investment. The incurrence of additional long-term debt is governed and restricted by the Company’s existing debt instruments. Furthermore, there can be no assurance that additional long-term financing will be available on advantageous terms (or any terms) when needed by the Company.

     The Company anticipates continued sales growth in key market areas. As noted above, however, this growth will require future capital expansion projects to increase existing plant capacity to satisfy increased demand. Sales growth, improved operating performance and expanded plant capacity — none of which is assured — will be necessary for the Company to continue to service existing debt.

17

Logistics Agreement

     Effective March 3, 2002, the Company entered into a one-year logistics agreement with PF Distribution, LLC (“PF Distribution”), owned 50% each by the Company’s Chairman and Vice Chairman. Under the agreement, PF Distribution will serve as an exclusive logistics agent for the Company, and will provide all warehousing, fulfillment and transportation services to the Company. The cost of PF Distribution’s services is based on flat rates per pound, which are calculated based on weight and volume characteristics of products, inventory pounds maintained and inventory pounds shipped. Rates were determined based on historical costs and industry standards. In the third quarter 2003, distribution expense recorded in selling, general and administrative expense was approximately $4.7 million. In fiscal 2003, distribution expense recorded in selling, general and administrative expense was approximately $16.9 million, of which approximately $16.0 million had been paid to PF Distribution as of November 30, 2002.

Seasonality

     Except for sales to school districts, which represent approximately 26% of total sales and which decline during the early spring and summer and early January, there is no significant seasonal variation in sales.

Management Buyout

     On July 26, 2002, the Company’s shareholders approved the Amended and Restated Agreement and Plan of Share Exchange dated as of December 20, 2001, and amended as of June 20, 2002 and the management buyout of the Company was completed on July 26, 2002. The Company is now a wholly-owned subsidiary of PF Management, Inc.

18

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     As discussed in its annual report for the fiscal year ended March 2, 2002, the Company is exposed to market risks stemming from changes in interest rates, foreign exchange rates and commodity prices. Changes in these factors could cause fluctuations in the Company’s financial condition, results of operations and cash flows. The Company owned no derivative financial instruments or nonderivative financial instruments held for trading purposes at November 30, 2002 or March 2, 2002. Certain of the Company’s outstanding nonderivative financial instruments at November 30, 2002 are subject to interest rate risk, but not subject to foreign currency or commodity price risk.

     The Company’s major market risk exposure is potential loss arising from changing interest rates and its impact on long-term debt. The Company’s policy is to manage interest rate risk by maintaining a combination of fixed and variable rate financial instruments in amounts and with maturities that management considers appropriate. The risks associated with long-term debt at November 30, 2002 have not changed materially since March 2, 2002. Of the long-term debt outstanding at November 30, 2002, the $115.0 million of Senior Notes accrued interest at a fixed rate, while the $6.6 million of outstanding borrowings under the revolving credit facility and the $5.7 million of obligation of special purpose entity accrued interest at variable rates. A rise in prevailing interest rates could have adverse effects on the Company’s financial condition and results of operations. A 25 basis point increase in the reference rates for the Company’s average variable rate debt outstanding during fiscal 2003 would have decreased net income for that period by approximately $40,000.

Cautionary Statement As To Forward Looking Information

     Certain statements made in this document are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from expected results. These risks and uncertainties include: substantial leverage and insufficient cash flow from operations; restrictions imposed by the Company’s debt instruments; management control; restriction of payment of dividends; competitive considerations; government regulation; general risks of the food industry; adverse changes in food costs and availability of supplies; dependence on key personnel and potential labor disruptions. This list of risks and uncertainties is not exhaustive. Also, new risk factors emerge over time. Investors should not place undue reliance on the predictive value of forward-looking statements.

ITEM 4. CONTROLS AND PROCEDURES

     Within the 90 days prior to the date of this report, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s President and Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures, as defined in Exchange Act Rule 15d-14(c). Based upon that evaluation, the Company’s President and Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective in enabling the Company to record, process, summarize and report information required to be included in the Company’s periodic SEC filings within the required time period. There have been no significant changes in the Company’s internal controls or in other factors that could significantly affect internal controls subsequent to the date the Company carried out its evaluation.

19

PART II. OTHER INFORMATION

ITEM 5. OTHER INFORMATION

     On November 6, 2002, the Company received a notice of default from Cede & Co., a nominee for the Depository Trust Company (“DTC”), as the recordholder for the beneficial owners of $50,480,000 million in principal amount of the Company’s 10-3/4% Senior Notes due 2006 (the “Notes”). This notice alleged that the Company was in non-financial default of the Indenture governing the Notes. The Company disagrees that it has violated any Indenture covenants.

     On November 21, 2002, the Company received a letter from its lender, Foothill Capital Corporation (“Foothill”), stating that the Company was in technical default of its Loan and Security Agreement with Foothill due to the alleged default under the Indenture. However, Foothill has continued to provide funds to the Company under the Agreement, including providing the Company with the funds necessary to make the interest payment due to the Noteholders under the Indenture on December 2, 2002.

     On or about December 27, 2002, the Company received an acceleration notice given by DTC on behalf of the beneficial owners of $44,980,000 million in principal amount of the Notes. This notice said that the due date of the Notes was being accelerated based on the Company’s failure to cure the alleged defaults described in the November 6 letter. On December 31, 2002, the Company sent a letter to all Noteholders, in care of U.S. Bank, N.A., the Indenture trustee (the “Trustee”), reiterating its position that the Company had violated no Indenture covenants and that there was therefore no basis for accelerating the Notes.

     On January 6, 2003, the Company received a letter from counsel to the Trustee requesting instructions from the Company with respect to action the Trustee should take in light of the alleged default under the Indenture, and has asked the Company to provide information in response to the alleged default. The Company expects to provide this information to the Trustee on or about the date of this report.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

20

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.

21

CERTIFICATIONS

I, Norbert E. Woodhams, certify that:

     1.     I have reviewed this quarterly report on Form 10-Q of Pierre Foods, 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 officer 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 officer and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the 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 officer 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.

22

I, Pamela M. Witters, certify that:

     1.     I have reviewed this quarterly report on Form 10-Q of Pierre Foods, 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 officer 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 officer and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the 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 officer 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.

23

INDEX TO EXHIBITS

24

     The Company hereby agrees to provide to the Commission, upon request, copies of long-term debt instruments omitted from this report pursuant to Item 601(b)(4)(iii)(A) of Regulation S-K under the Securities Act.

25