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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
Quarterly Report Under Section 13 or 15(d) of the
Securities Exchange Act of 1934
(Mark One)
|X| Quarterly report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended March 31, 2003 or
|_| Transition report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from ___________________ to ___________________
Commission File Number 1-6844
CALPROP CORPORATION
(Exact name of registrant as specified in its charter)
California 95-4044835
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
13160 Mindanao Way, Suite 180, Marina Del Rey, California 90292
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code) (310) 306-4314
Not Applicable
(Former name, former address and former
fiscal year, if changed since last report.)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES |X| NO |_|
Number of shares outstanding of each of Registrant's classes of common stock, as
of January 13, 2003:
Number of Shares Outstanding Title of Each Class
10,239,105 Common Stock, no par value
CALPROP CORPORATION
Part I
Item I - Financial Information
Set forth is the unaudited quarterly report for the quarters ended March
31, 2003 and 2002, for Calprop Corporation. The information set forth reflects
all adjustments which were, in the opinion of management, necessary for a fair
presentation.
CALPROP CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
ASSETS
March 31, December 31,
2003 2002
----------- -----------
Investment in Real Estate (Notes 5 and 6)
Real estate under development $22,504,195 $24,166,829
Rental property, (net of accumulated depreciation
of $195,000 and $121,875, respectively) 11,115,149 11,182,886
----------- -----------
Total investment in real estate 33,619,344 35,349,715
Other Assets:
Cash and cash equivalents 1,945,792 3,444,541
Deferred tax assets (Note 2) 6,324,174 6,535,343
Other assets 745,485 745,347
----------- -----------
Total other assets 9,015,451 10,725,231
----------- -----------
Total assets $42,634,795 $46,074,946
=========== ===========
(Continued)
The accompanying notes are an integral part of these financial statements.
2
CALPROP CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
March 31, December 31,
2003 2002
------------ ------------
Liabilites:
Trust deeds and notes payable $ 18,269,295 $ 19,726,186
Related-party notes 13,987,634 13,987,634
------------ ------------
Total trust deeds, notes payable and related-party notes 32,256,929 33,713,820
Accounts payable and accrued liabilities 2,329,337 2,724,856
Deposit 2,000,000
Warranty reserves 756,569 757,550
------------ ------------
Total liabilities 35,342,835 39,196,226
------------ ------------
Stockholders' equity:
Common stock, no par value
Authorized - 20,000,000 shares
Issued and outstanding - 10,239,105 and 10,239,305
shares at March 31, 2003 and December 31, 2002,
respectively 10,239,105 10,235,305
Additional paid-in capital 25,850,776 25,849,446
Deferred compensation (28,600) (28,600)
Stock purchase loans (533,092) (527,858)
Accumulated deficit (28,236,229) (28,649,573)
------------ ------------
Total stockholders' equity 7,291,960 6,878,720
------------ ------------
$ 42,634,795 $ 46,074,946
============ ============
(Concluded)
The accompanying notes are an integral part of these financial statements.
3
CALPROP CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
March 31,
----------------------------
2003 2002
------------ ------------
Development operations:
Real estate sales $ 4,572,279 $ 21,292,270
Cost of real estate sales 5,102,958 21,197,496
------------ ------------
(Loss) income from development operations (530,679) 94,774
Loss from investment in real estate venture (Note 5) (75,769)
Other income:
Rental (Note 6) 253,782
Gain on sale of land (Note 5) 2,000,000
Interest and miscellaneous 19,040 62,048
Management fee (Note 5) 207,182
------------ ------------
Total other income 2,272,822 269,230
Other expenses:
Rental operating (Note 6) 112,090
General and administrative 485,043 555,446
Depreciation 71,137
Interest 384,740
------------ ------------
Total other expenses 1,053,010 555,446
Minority interests (Note 4) 764 235
------------ ------------
Income (loss) before provision for income taxes 688,369 (267,446)
Provision for income taxes (Note 2) 275,025
------------ ------------
Net income (loss) $ 413,344 ($ 267,446)
============ ============
Basic net income (loss) per share (Note 3) $ 0.04 ($ 0.03)
============ ============
Diluted net income (loss) per share (Note 3) $ 0.04 ($ 0.03)
============ ============
The accompanying notes are an integral part of these financial statements.
4
CALPROP CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended
March 31,
----------------------------
2003 2002
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 413,344 ($ 267,446)
Adjustments to reconcile net income (loss) to net cash
(used) provided by operating activities:
Gain on sale of joint venture interest (2,000,000)
Minority interests 764 325
Loss from investment in real estate venture 75,769
Loss on sale of property and equipment 1,312
Depreciation and amortization 83,699 10,680
Provision for warranty reserves 12,000 58,000
Deferred income taxes 211,169 650,402
Change in assets and liabilities:
Other assets (13,024) (186,812)
Receivable from affiliates (257,696)
Accounts payable and accrued liabilities (395,519) (1,255,312)
Warranty reserves (12,981) (69,873)
Additions to real estate under development (3,441,088) (12,872,909)
Cost of real estate sales 5,102,958 20,990,314
Accrued interest for executive stock purchase loans (5,234) (5,395)
------------ ------------
Net cash (used) provided by operating activities (42,600) 6,869,957
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in rental property (5,388)
Proceeds from sale of property and equipment 1,000
------------ ------------
(4,388)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under related-party notes 1,562,776
Payments under related-party notes (4,166,878)
Borrowings under trust deeds and notes payable 2,146,271 12,540,565
Payments under trust deeds and notes payable (3,603,162) (16,946,169)
Repayment of stock purchase loans 5,130
Purchase of common stock 26,535
------------ ------------
Net cash used in financing activities (1,451,761) (6,983,171)
------------ ------------
Net decrease in cash and cash equivalents (1,498,749) (113,214)
Cash and cash equivalents at beginning of period 3,444,541 2,079,471
------------ ------------
Cash and cash equivalents at end of period $ 1,945,792 $ 1,966,257
============ ============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid (refunded) during the period for:
Interest, net of amount capitalized $ 384,740
Income taxes $ (73,486) $ 20,000
The accompanying notes are an integral part of these financial statements
5
CALPROP CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
PERIODS ENDED MARCH 30, 2003 AND 2002
(Unaudited)
Note 1: Basis of presentation and significant accounting policies
The unaudited, condensed, consolidated financial statements included
herein have been prepared by the registrant pursuant to the instructions
to Quarterly Report on Form 10-Q required to be filed with the Securities
and Exchange Commission and do not include all information and footnote
disclosure required by accounting principles generally accepted in the
United States of America for complete financial statements. The
accompanying financial statements have not been audited by independent
auditors in accordance with auditing standards generally accepted in the
United States of America, but in the opinion of management, such financial
statements include all adjustments, consisting only of normal recurring
adjustments necessary to present fairly the financial position of Calprop
Corporation ("the Company") and its results of operations. The condensed
financial statements should be read in conjunction with the financial
statements and the notes thereto included in the registrant's latest
Annual Report on Form 10-K, particularly with regard to disclosures
relating to major accounting policies.
The results of operations for the three months ended March 31, 2003 may
not be indicative of the operating results for the year ending December
31, 2003.
Note 2: Income taxes
As of March 31, 2003, the Company had gross deferred tax assets of
$11,065,083 offset by a deferred tax asset valuation allowance of $4,740,909.
The Company has assessed its past earnings history and trends, sales backlog,
budgeted sales, and expiration dates of net operating loss carryforwards and has
determined that it is more likely than not that the $6,324,174 of deferred tax
assets will be realized.
As of March 31, 2003, the Company had net operating loss carryforwards for
federal and state income tax purposes of approximately $23,776,000 and
$9,301,000, respectively. For federal tax purposes, net operating loss
carryforwards expire from 2013 through 2022. For state tax purposes, net
operating loss carryforwards expire from 2005 through 2008.
Note 3: Earnings per share
The following table sets forth the computation of basic and diluted net
income (loss) income per share:
Three Months Ended
March 31,
---------------------------
2003 2002
------------ ------------
Net income (loss) $ 413,344 ($ 267,446)
------------ ------------
Numerator for basic and diluted net income
(loss) per share $ 413,344 ($ 267,446)
============ ============
Denominator for basic net income (loss) per share 10,239,105 10,254,005
(weighted average outstanding shares)
Effect of dilutive stock options 18,228
------------ ------------
Weighted average shares for dilutive net income per share 10,257,333 10,254,005
============ ============
Basic net income (loss) per share $ 0.04 ($ 0.03)
============ ============
Diluted net income (loss) per share $ 0.04 ($ 0.03)
============ ============
6
Note 4: Consolidation
The Company has consolidated the financial statements of the following
entities:
- --------------------------------------------------------------------------------------------------------------------------
Entity Ownership interest at Development
March 31, 2003
- --------------------------------------------------------------------------------------------------------------------------
Colorado Pacific Homes, Inc. 100% Real estate in the state of Colorado
DMM Development, LLC ("DMM") 67% Cierra del Lago and Antares projects, California
Parkland Farms Development Co.,
LLC ("Parkland") 99% 115 lots in Healdsburg, California
RGCCLPO Development Co., LLC
("RGCCLPO") 100% 382 lots in Milpitas, California
PWA Associates, LLC 100% 68-unit apartment project in Milpitas, California
- --------------------------------------------------------------------------------------------------------------------------
DMM: The Company is entitled to receive two-thirds of the profits of
DMM, and the other owner, RGC Courthomes, Inc. ("RGC"), is entitled to
receive the remaining one-third of the profits.
Parkland: Pursuant to the operating agreement of Parkland, the
Company is entitled to receive ninety-nine percent of the profits of
Parkland, and the other member, an officer of the Company, is entitled to
receive the remaining one percent of the profits.
During the three months ended March 31, 2003, $136 of the total loss of
$900 incurred by the entities related to the minority interest was not allocated
to the minority interest because the minority interest had a deficit interest in
those entities. The Company does not reflect the deficit for the minority
interest because the minority owners are not responsible for losses incurred
beyond their equity. The unrecognized minority interest in deficit of the
Company as of March 31, 2003 and December 31, 2002 was $68,495 and $68,359,
respectively. As a result, the Company has no minority interest as of March, 31,
2003 and December 31, 2002.
7
Note 5: Real estate under development
Investment of real estate venture-In 1999, the Company formed RGC
Carmel Country Associates, LLC, a California limited liability company,
("RGC Carmel") with RGC to develop, construct and lease a 181 townhome
project. The profits and losses of RGC Carmel were distributed between the
members as follows: 50% to RGC and 50% to the Company. During 2000, RGC
Carmel admitted additional members in the following proportions: The John
L. Curci Trust as to a 12.5% interest, The Janet Curci Living Trust No. Il
as to a 12.5% interest, and an officer of the Company as to a 25% interest
in exchange for financing for the project as follows: $2,000,000 in equity
and $2,000,000 in notes payable. As a result, the Company's interest in
RGC Carmel was reduced to 25%, which is accounted for under the equity
method of accounting. During 2002, the Company transferred .5% of its
interest in RGC Carmel to Calprop Andalucia, a 100% wholly owned
subsidiary of the Company. In January 2003, the Company sold the remaining
24.5% of its interest in RGC Carmel to related parties in the following
proportions: The Janet Curci Living Trust No. II as to a 6.125%, JAMS
Management as to a 6,125%, and an officer of the Company as to a 12.25%.
The Company's interest was sold for $2,000,000 in cash, which was received
in 2002 and resulted in recording a deposit of $2,000,000 as of December
31, 2002. The gain on sale of investment in joint venture is recognized in
the first quarter of 2003. The gain equals the proceeds received of
$2,000,000 as the Company had no basis in the investment sold. As a
result, the Company's interest in RGC Carmel was reduced to .5%.
The Company recognized management fees of $0 and $207,182 for the
three months ended March 31, 2003 and 2002, respectively, related to the
joint venture.
Note 6: Rental property
During the third quarter of 2002, the Company completed construction of a
68-unit apartment project it intended to sell. The Company has decided not to
sell the apartment project and the related cost recorded as real estate under
development were transferred to rental property. The Company started leasing the
apartment during the third quarter of 2002.
Rental property at March 31 is summarized as follows:
Land $ 1,500,000
Building and improvements 9,810,149
------------
Total rental property 11,310,149
Accumulated depreciation (195,000)
------------
Rental property, net
$ 11,115,149
============
8
Depreciation expense for building and improvements for the three months
ended March 31, 2003 was $73,125.
Note 7: Segment Disclosure
The Company's reportable segments consist of two types of real estate
properties for which management internally evaluates operating performance and
financial results: residental homes for sale and residental rental property for
lease. The Company also has certain corporate level activities including
accounting, finance, and management information systems, which are not
considered separate segments.
The Company evaluates the performance of its segments based upon
contribution to income.
The following table provides financial information regarding revenues from
customers, loss and total assets for the Company's business segments and also
provides a reconciliation to the Company's consolidated total:
Three Months Ended March 31, 2003
----------------------------------------------
Contribution
Revenues to Loss Assets
------------ ------------ ------------
Residential homes $ 4,572,279 ($ 1,016,486) $ 31,519,646
Rental property 253,782 141,692 11,115,149
------------ ------------ ------------
4,826,061 (874,794) 42,845,964
Interest and other, net 2,019,040 1,288,138
------------ ------------ ------------
$ 6,845,101 $ 413,344 $ 42,845,964
============ ============ ============
During the first quarter of 2002, the Company operated under one
reportable segment of residential homes for sale.
9
Item 2 Management's Discussion and Analysis of Financial Condition and Results
of Operations
The following discussion relates to the consolidated financial statements
of the Company and should be read in conjunction with the financial statements
and notes thereto appearing elsewhere in this report. Statements contained in
this "Management's Discussion and Analysis of Financial Condition and Results of
Operations" that are not historical facts may be forward-looking statements.
Such statements are subject to certain risks and uncertainties, which could
cause actual results to differ materially from those projected. You are
cautioned not to place undue reliance on these forward-looking statements.
Liquidity and capital resources
As of March 31, 2003, the Company had remaining loan commitments from
financial institutions of approximately $3,835,000, which may be drawn down by
the Company upon the satisfaction of certain conditions. The Company continues
to seek joint venture partners and additional financing to fund its operations.
As of March 31, 2003, the Company had three remaining projects in various
stages of development. During 2003, the Company had three projects producing
revenues from completed homes and townhomes: Parc Metropolitan, High Ridge Court
and Saddlerock. As of March 31, 2003, the Company has 55 homes under
construction, of which 16 are in escrow to be sold, and 4 model units.
Additionally, the Company has an inventory of 84 lots under development. In
addition, the Company has a 68-unit apartment building that is substantially
leased as of March 31, 2003.
As of March 31, 2003, the Company had 16 units in escrow ("backlog")
compared with a backlog of 119 units as of March 31, 2002. The gross revenues of
such backlog was $5,375,000 and $45,470,000 as of March 31, 2003 and 2002,
respectively.
Based on its agreements with its lenders, the Company believes that it
will have sufficient liquidity to finance its construction projects in 2003
through funds generated from operations, funds available under its existing bank
commitments, funds generated from new lending institutions, and, if necessary,
funds that could be obtained by using its internally financed real estate
development in process as collateral for additional loans.
Management's plan, with respect to managing cash flow includes the
following components: pay off debt that is coming due in 2003, minimize
operating expenses, and maintain control over costs. With regard to the debt
coming due in 2003, management expects to extend the maturity dates of various
loans and pay the remaining loans off through cashflow from operations, prior to
their maturity date. With regard to minimizing operating expenses, management
plans to achieve this by continuing to closely examine overhead items.
Management anticipates that the funds generated from operations, including
borrowings from existing loan commitments, will be adequate to allow the Company
to continue operations throughout 2003.
10
Results of operations
Real estate sales for the three months ended March 31, 2003 decreased 366%
to $4,572,279 from $21,292,270 for the three months ended March 31, 2002. The
decrease in real estate sales for the three months ended March 31, 2003 was
primarily due to the low volume of inventory of completed homes available for
sale in 2003 compared to completed homes available for sale in 2002. In the
first quarter of 2003, the Company sold 12 homes with an average sales price of
$381,000, a 383% decrease in the volume of home sales compared to 58 homes with
an average sales price of $367,100 for the first quarter of 2002.
The Company had a loss from development operations of $530,679 as of March
31, 2003 as compared to income from development operations of $94,774 as of
March 31, 2002. The significant decrease of income from development operations
during the first quarter of 2003 resulted from the Company selling homes with
previous impairment write-downs.
The Company developed and constructed a 68-unit affordable apartment, the
Parc West Apartment Homes located in Milpitas, California, adjacent to the Parc
Metropolitan project. Construction was completed in August 2002 and the 68 units
were available for lease. As of March 31, 2003, the apartment building was
substantially leased. For the period ended March 31, 2003, the apartment
generated $253,782 of rental income and $112,090 of rental operating expenses.
In January 2003, the Company sold its 24.5% interest in RGC Carmel
Country, LLC, the ("Joint Venture") to related parties. The Joint Venture
consisted of 181 townhomes available for lease in San Diego. The Company's basis
in the Joint Venture was $0. The proceeds from the sale, in the amount of
$2,000,000, was received in 2002 and was recorded as a deposit at December 31,
2002. The gain was recorded in January 2003.
General and administrative expenses decreased to $483,043 in the three
months ended March 31, 2003 from $555,446 in the corresponding period. The
decrease is due to the focus efforts to decrease corporate overhead costs and a
decrease in sales volume.
Item 3 Quantitative and Qualitative Disclosure about Market Risk
The Company's exposure to market risk has not materially changed from what
was reported on the Company's Form 10-K for the year ended December 31, 2002.
Item 4 Controls and Procedures
The Company maintains disclosure controls and procedures that are designed
to ensure that information required to be disclosed in the Company's reports
required to be filed under the Securities Exchange Act of 1934, as amended, is
recorded, processed, summarized and reported within the time periods specified
in the Securities and Exchange Commission's rules and forms, and that such
information is accumulated and communicated to the Company's management,
including its Chief Executive Officer and Chief Financial Officer, as
appropriate, to allow timely decisions regarding required disclosure. In
designing and evaluating the disclosure controls and procedures, management
recognizes that any controls and procedures, no matter how well designed and
operated, can provide only reasonable assurance of achieving the desired control
objectives, and management is required to apply its judgment in evaluating the
cost-benefit relationship of possible controls and procedures.
Within 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 Chief Executive Officer and the Company's
Chief Financial Officer, of the effectiveness of the design and operation of the
Company's disclosure controls and procedures. Based on the foregoing, the
Company's Chief Executive Officer and Chief Financial Officer concluded that the
Company's disclosure controls and procedures were effective.
There have been no significant changes in the Company's internal controls
or in other factors that could significantly affect the internal controls
subsequent to the date the Company completed its evaluation.
11
Part II
6 Exhibits and Reports on Form 8-K
(a) Exhibits -
None
(b) Reports on Form 8-K
None
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.
CALPROP CORPORATION
By: /s/ Mark F. Spiro
----------------------------------------
Mark F. Spiro
Vice President/Secretary/Treasurer
(Chief Financial and Accounting Officer)
May 30, 2003
12
CERTIFICATIONS
I, Victor Zaccaglin, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Calprop
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
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 30, 2003
/s/ Victor Zaccaglin
Victor Zaccaglin
Chairman of the Board
Chief Executive Officer
13
CERTIFICATIONS
I, Mark F. Spiro, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Calprop
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
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 30, 2003
/s/ Mark F. Spiro
Mark F. Spiro
Vice President/Secretary/Treasurer
(Chief Financial and Accounting Officer)
14