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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2002
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _________________ to _________________
Commission file number 0-15815
Krupp Insured Plus Limited Partnership
Massachusetts 04-2915281
(State or other jurisdiction of (IRS employer
incorporation or organization) identification no.)
One Beacon Street, Boston, Massachusetts 02108
(Address of principal executive offices) (Zip Code)
(617) 523-0066
(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 |_|
Indicate by check mark whether the registrant is an accelerated filer (as
defined by Rule 12b-2 of the Exchange Act).
Yes |_| No |X|
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
This Form 10-Q contains forward-looking statements within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act
of 1934. When used in this Form 10-Q, the words "believes," "anticipates,"
"expects," "plans," "intends," "estimates," "continue," "may" or "will" (or the
negative of such words) and similar expressions are intended to identify
forward-looking statements. Such statements are subject to a number of risks and
uncertainties, including but not limited to the following: federal, state or
local regulations; adverse changes in general economic or local conditions;
prepayments of mortgages; failure of borrowers to pay participation interests
due to poor operating results of properties underlying the mortgages; uninsured
losses and potential conflicts of interest between the Partnership and its
Affiliates, including the General Partners. The Company's filings with the
Securities and Exchange Commission, including its Annual Report on Form 10-K for
the year ended December 31, 2001, contain additional information concerning such
risk factors. Actual results in the future could differ materially from those
described in any forward-looking statements as a result of the risk factors set
forth above, and the risk factors described in the Annual Report.
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KRUPP INSURED PLUS LIMITED PARTNERSHIP
BALANCE SHEETS
------
ASSETS
September 30, December 31,
2002 2001
------------ ------------
Participating Insured Mortgages ("PIMs")(Note 2) $ 13,139,269 $ 18,779,477
Mortgage-Backed Securities ("MBS") (Note 3) 9,213,781 9,410,920
------------ ------------
Total mortgage investments 22,353,050 28,190,397
Cash and cash equivalents 788,379 1,422,582
Interest receivable and other assets 144,319 190,282
Prepaid acquisition fees and expenses, net of
accumulated amortization of $829,462 and
$785,095, respectively 14,790 59,157
Prepaid participation servicing fees, net of
accumulated amortization of $321,396 and
$292,428, respectively 9,656 38,624
------------ ------------
Total assets $ 23,310,194 $ 29,901,042
============ ============
LIABILITIES AND PARTNERS' EQUITY
Liabilities $ 15,939 $ 17,877
------------ ------------
Partners' equity (deficit)(Note 4):
Limited Partners
(7,500,099 Limited Partner interests outstanding) 22,873,795 29,633,496
General Partners (243,960) (249,219)
Accumulated comprehensive income 664,420 498,888
------------ ------------
Total Partners' equity 23,294,255 29,883,165
------------ ------------
Total liabilities and Partners' equity $ 23,310,194 $ 29,901,042
============ ============
The accompanying notes are an integral
part of the financial statements.
-3-
KRUPP INSURED PLUS LIMITED PARTNERSHIP
STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
------
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
------------------- -----------------------
2002 2001 2002 2001
-------- -------- ---------- ----------
Revenues:
Interest income - PIMs:
Basic interest $242,416 $360,758 $ 767,500 $1,085,913
Participation interest -- 306,000 504,639 306,000
Interest income - MBS 181,184 191,875 548,922 980,443
Other interest income 4,601 48,650 26,985 89,268
-------- -------- ---------- ----------
Total revenues 428,201 907,283 1,848,046 2,461,624
-------- -------- ---------- ----------
Expenses:
Asset management fee to an affiliate 41,076 52,763 126,125 191,178
Expense reimbursements to affiliates 15,003 14,163 40,728 39,827
Amortization of prepaid fees and expenses 24,444 23,065 73,335 69,197
General and administrative 21,893 41,814 71,353 77,917
-------- -------- ---------- ----------
Total expenses 102,416 131,805 311,541 378,119
-------- -------- ---------- ----------
Net income 325,785 775,478 1,536,505 2,083,505
Other comprehensive income:
Net change in unrealized gain on MBS 126,657 94,589 165,532 171,531
-------- -------- ---------- ----------
Total comprehensive income $452,442 $870,067 $1,702,037 $2,255,036
======== ======== ========== ==========
Allocation of net income (Note 4):
Limited Partners $316,012 $752,214 $1,490,410 $2,021,000
======== ======== ========== ==========
Average net income per Limited
Partner interest (7,500,099 Limited Partner
interests outstanding) $ .04 $ .10 $ .20 $ .27
======== ======== ========== ==========
General Partners $ 9,773 $ 23,264 $ 46,095 $ 62,505
======== ======== ========== ==========
The accompanying notes are an integral
part of the financial statements.
-4-
KRUPP INSURED PLUS LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
------
For the Nine Months
Ended September 30,
2002 2001
----------- ------------
Operating activities:
Net income $ 1,536,505 $ 2,083,505
Adjustments to reconcile net income to net cash
provided by operating activities:
Amortization of prepaid fees and expenses 73,335 69,197
Shared Appreciation Interest and prepayment premium income (378,480) (306,000)
Changes in assets and liabilities:
Decrease in interest receivable and other assets 45,963 70,862
Increase (decrease) in liabilities (1,938) 84,652
----------- ------------
Net cash provided by operating activities 1,275,385 2,002,216
----------- ------------
Investing activities:
Principal collections on MBS including prepayment premium
income of $306,000 in 2001 362,671 9,788,712
Principal collections on PIMs including Shared Appreciation
Interest of $378,480 in 2002 6,018,688 71,154
----------- ------------
Net cash provided by investing activities 6,381,359 9,859,866
----------- ------------
Financing activities:
Quarterly distributions (2,290,868) (2,313,474)
Special distributions (6,000,079) (9,375,124)
----------- ------------
Net cash used for financing activities (8,290,947) (11,688,598)
----------- ------------
Net increase (decrease) in cash and cash equivalents (634,203) 173,484
Cash and cash equivalents, beginning of period 1,422,582 1,460,786
----------- ------------
Cash and cash equivalents, end of period $ 788,379 $ 1,634,270
=========== ============
Non cash activities:
Increase in fair value of MBS $ 165,532 $ 171,531
=========== ============
The accompanying notes are an integral
part of the financial statements.
-5-
KRUPP INSURED PLUS LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
------
1. Accounting Policies
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with accounting principles
generally accepted in the United States of America have been condensed or
omitted in this report on Form 10-Q pursuant to the Rules and Regulations
of the Securities and Exchange Commission. However, in the opinion of the
general partners, The Krupp Corporation and The Krupp Company Limited
Partnership-IV (collectively the "General Partners"), of Krupp Insured
Plus Limited Partnership (the "Partnership") the disclosures contained in
this report are adequate to make the information presented not misleading.
See Notes to Financial Statements included in the Partnership's Form 10-K
for the year ended December 31, 2001 for additional information relevant
to significant accounting policies followed by the Partnership.
In the opinion of the General Partners of the Partnership, the
accompanying unaudited financial statements reflect all adjustments
(consisting of only normal recurring accruals) necessary to present fairly
the Partnership's financial position as of September 30, 2002, its results
of operations for the three and nine months ended September 30, 2002 and
2001 and its cash flows for the nine months ended September 30, 2002 and
2001.
The results of operations for the three and nine months ended September
30, 2002 are not necessarily indicative of the results which may be
expected for the full year. See Management's Discussion and Analysis of
Financial Condition and Results of Operations included in this report.
2. PIMs
At September 30, 2002, the FHA insured first mortgage portion of the
Partnership's remaining PIM had a fair market value of $13,929,859 and
gross unrealized gains of $790,590. Fair value assumes that the FHA
insured first mortgage could be sold at a price that MBS with similar
interest rates are currently being sold at. The PIM matures in 2033.
During the first quarter of 2002, the Partnership received a prepayment of
the Royal Palm Place PIM. On January 2, 2002, the Partnership received
$378,480 of Shared Appreciation Interest and $126,159 of Minimum
Additional Interest. On February 27, 2002, the Partnership received
$5,563,531 representing the principal proceeds on the first mortgage. On
March 19, 2002, the Partnership paid a special distribution of $0.80 per
Limited Partner interest from the principal proceeds and Shared
Appreciation Interest received.
3. MBS
At September 30, 2002, the Partnership's MBS portfolio had an amortized
cost of $8,549,361 and gross unrealized gains of $664,420. The portfolio
had maturities ranging from 2006 to 2033.
Continued
-6-
KRUPP INSURED PLUS LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS, Continued
------
4. Changes in Partners' Equity
A summary of changes in Partners' Equity for the nine months ended
September 30, 2002 is as follows:
Accumulated Total
Limited General Comprehensive Partners'
Partners Partners Income Equity
------------ --------- -------- ------------
Balance at December 31, 2001 $ 29,633,496 $(249,219) $498,888 $ 29,883,165
Net income 1,490,410 46,095 -- 1,536,505
Quarterly distributions (2,250,032) (40,836) -- (2,290,868)
Special distribution (6,000,079) -- -- (6,000,079)
Change in unrealized gain on MBS -- -- 165,532 165,532
------------ --------- -------- ------------
Balance at September 30, 2002 $ 22,873,795 $(243,960) $664,420 $ 23,294,255
============ ========= ======== ============
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Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion and analysis should be read in conjunction with the
financial statements and accompanying notes contained in the Partnership's 2001
Annual Report on Form 10-K and in this Form 10-Q.
Certain statements in this Management's Discussion and Analysis of Financial
Condition and Results of Operations and elsewhere in this Form 10-Q constitute
"forward-looking statements" within the meaning of the Federal Private
Securities Litigation Reform Act of 1995. These forward-looking statements
involve known and unknown risks, uncertainties and other factors which may cause
the Partnership's actual results, performance or achievements to be materially
different from any future results, performance or achievements expressed or
implied by these forward-looking statements. These factors include, among other
things, federal, state or local regulations; adverse changes in general economic
or local conditions; prepayments of mortgages; failure of borrowers to pay
participation interests due to poor operating results at properties underlying
the mortgages; uninsured losses and potential conflicts of interest between the
Partnership and its Affiliates, including the General Partners.
Liquidity and Capital Resources
At September 30, 2002, the Partnership had liquidity consisting of cash and cash
equivalents of approximately $800,000 as well as the cash flow provided by its
investments in its remaining PIM and MBS. The Partnership anticipates that these
sources will be adequate to provide the Partnership with sufficient liquidity to
meet its obligations as well as to provide distributions to its investors.
The most significant demand on the Partnership's liquidity is the quarterly
distributions paid to investors, which are approximately $750,000 per quarter.
Funds for the quarterly distributions come from the monthly principal and basic
interest payments received on the remaining PIM and MBS, the principal
prepayments of the PIM and MBS, interest earned on the Partnership's cash and
cash equivalents and cash reserves. The portion of distributions attributable to
the principal collections and cash reserves reduces the capital resources of the
Partnership. As the capital resources decrease, the total cash flows to the
Partnership also will decrease and over time will result in periodic adjustments
to the distributions paid to investors. The General Partners periodically review
the distribution rate to determine whether an adjustment is necessary based on
projected future cash flows. In general, the General Partners try to set a
distribution rate that provides for level quarterly distributions. To the extent
that quarterly distributions do not fully utilize the cash available for
distributions and cash balances increase, the General Partners may adjust the
distribution rate or distribute such cash through a special distribution. Based
on current projections, the General Partners have determined that the
Partnership will reduce its distribution rate from $0.10 per Limited Partner
interest per quarter to $0.05 per Limited Partner interest per quarter
commencing with the February 2003 distribution.
During the first quarter of 2002, the Partnership received a prepayment of the
Royal Palm Place PIM. On January 2, 2002, the Partnership received $378,480 of
Shared Appreciation Interest and $126,159 of Minimum Additional Interest. On
February 27, 2002, the Partnership received $5,563,531 representing the
principal proceeds on the first mortgage. On March 19, 2002, the Partnership
paid a special distribution of $0.80 per Limited Partner interest from the
principal proceeds and Shared Appreciation Interest received.
In addition to providing insured monthly principal and basic interest payments
from the insured first mortgage portion of the PIM, the Partnership's investment
in the remaining PIM also may provide additional income through a participation
interest in the underlying property. The Partnership may receive a share in any
operating cash flow that exceeds debt service obligations and capital needs or a
share in any appreciation in value when the property is sold or refinanced.
However, this payment is not insured and is dependent upon whether property
operations or its terminal value meet certain criteria.
The Partnership's only remaining PIM investment is backed by the first mortgage
loan on Vista Montana. Presently, the General Partners do not expect Vista
Montana to pay the Partnership any participation interest or to be sold or
refinanced during 2002. However, if favorable market conditions provide the
borrower an opportunity to sell the property, there are no contractual
obligations remaining that would prevent a prepayment of the underlying first
mortgage. Due to the declining economic conditions currently affecting the
Phoenix sub-market, the occupancy rate at the property is currently 82%. The
owner has lowered rents and is offering move-in concessions in an effort to
increase occupancy. The repairs to
-8-
the damaged units caused by a fire were completed in December 2001 and are fully
operational.
The Partnership has the option to call its remaining PIM by accelerating the
maturity date of the loan. If the call feature is exercised then the insurance
feature of the loan would be cancelled. Therefore, the Partnership will
determine the merits of exercising the call option as economic conditions
warrant. Such factors as the condition of the asset, local market conditions,
interest rates and available financing will have an impact on this decision.
Critical Accounting Policy
The Partnership's critical accounting policy relates primarily to revenue
recognition related to the participation feature of the Partnership's PIM
investments. The Partnership's policy is as follows:
Basic interest on PIMs is recognized at the stated rate of the Federal Housing
Administration insured mortgage (less the servicer's fee). The Partnership
recognizes interest related to the participation features when the amount
becomes fixed and the transaction that gives rise to such amount is consummated.
Consummation of a transaction could be the sale or refinancing of the underlying
real estate, which results in a cash payment to the Partnership or a cash
payment made to the Partnership from surplus cash relative to the participation
feature.
Results of Operations
Net income decreased during the three months ended September 30, 2002 when
compared to the same period in 2001 due primarily to decreases in basic interest
income on PIMs, participation income and other interest income net of a decrease
in general and administrative expenses. Basic interest income on PIMs decreased
due to the payoff of the Royal Palm Place PIM in the first quarter of 2002.
Participation income was greater in 2001 due to the collection of a prepayment
premium from the Boulders Apartments MBS in July of 2001. Other interest income
decreased due to lower average cash balances available for short-term investing
and lower interest rates earned on those balances in the three month period when
compared to the same period in 2001. The decrease in general and administrative
expenses was due to a delay in the billing of the third quarter 2001 processing
costs. As a result, an estimate of this cost was recorded at the end of the
quarter. This estimate was approximately $8,000 too high and was adjusted in the
fourth quarter of 2001.
Net income decreased during the nine months ended September 30, 2002 when
compared to the same period in 2001 due to decreases in basic interest income on
PIMs and interest income on MBS. This was partially offset by an increase in
participation income. Participation income increased and basic interest income
on PIMs decreased due to the payoff of the Royal Palm Place PIM in the first
quarter of 2002. Interest income on MBS decreased due to the payoff of the
Boulders Apartments MBS in July of 2001.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Assessment of Credit Risk
The Partnership's investments in its insured mortgage and MBS are guaranteed
and/or insured by the Government National Mortgage Association ("GNMA"), Fannie
Mae, the Federal Home Loan Mortgage Corporation ("FHLMC") or the United States
Department of Housing and Urban Development ("HUD") and therefore the certainty
of their cash flows and the risk of material loss of the amounts invested
depends on the creditworthiness of these entities.
Fannie Mae is a federally chartered private corporation that guarantees
obligations originated under its programs. FHLMC is a federally chartered
corporation that guarantees obligations originated under its programs. These
obligations are not guaranteed by the U.S. Government or the Federal Home Loan
Bank Board. However, Fannie Mae and FHLMC are two of the largest corporations in
the United States with significant experience in mortgage securitizations. In
addition, their MBS instruments carry the highest credit rating given to
financial instruments. GNMA guarantees the full and timely payment of principal
and basic interest on the securities it issues, which represents interest in
pooled mortgages insured by HUD. Obligations insured by HUD, an agency of the
U.S. Government, are backed by the full faith and credit of the U.S. Government.
At September 30, 2002 the Partnership included in cash and cash equivalents
approximately $500,000 of commercial paper, which is issued by entities with a
credit rating equal to one of the top two rating categories of a nationally
-9-
recognized statistical rating organization.
Interest Rate Risk
The Partnership's primary market risk exposure is to interest rate risk, which
can be defined as the exposure of the Partnership's net income, comprehensive
income or financial condition to adverse movements in interest rates. At
September 30, 2002, the Partnership's PIM and MBS comprise the majority of the
Partnership's assets. Decreases in interest rates may accelerate the prepayment
of the Partnership's investments. The Partnership does not utilize any
derivatives or other instruments to manage this risk as the Partnership plans to
hold its PIM investment to expected maturity while it is expected that
substantially all of the MBS will prepay over the same time period, thereby
mitigating any potential interest rate risk to the disposition value of any
remaining MBS.
The Partnership monitors prepayments and considers prepayment trends, as well as
distribution requirements of the Partnership, when setting regular distribution
policy. For MBS, the fund forecasts prepayments based on trends in similar
securities as reported by statistical reporting entities such as Bloomberg. For
its remaining PIM, the Partnership continues to monitor the borrower for any
indication of a prepayment.
Item 4. CONTROLS AND PROCEDURES
(a) Evaluation of Disclosure Controls and Procedures
Within the 90 days prior to the date of this Quarterly Report on Form 10-Q, the
Principal Executive Officer and Chief Accounting Officer of Krupp Corporation, a
general partner of the Partnership, carried out an evaluation of the
effectiveness of the design and operation of the Partnership's disclosure
controls and procedures. Based upon that evaluation, the Principal Executive
Officer and the Chief Accounting Officer concluded that the Partnership's
disclosure controls and procedures were effective as of the date of their
evaluation in timely alerting them to material information relating to the
Partnership required to be included in this Quarterly Report on Form 10-Q.
(b) Changes in Internal Controls
There were no significant changes in the Partnership's internal controls or in
other factors that could significantly affect such internal controls subsequent
to the date of the evaluation described in paragraph (a) above.
-10-
KRUPP INSURED PLUS LIMITED PARTNERSHIP
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(99.1) Principal Executive Officer Certification pursuant to
18 U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.
(99.2) Chief Accounting Officer Certification pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.
(b) Reports on Form 8-K
None
-11-
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Krupp Insured Plus Limited Partnership
(Registrant)
BY: /s/ Robert A. Barrows
---------------------------------------------
Robert A. Barrows
Vice-President (Chief Accounting Officer) of
The Krupp Corporation, a General Partner of
the Registrant.
DATE: November 11, 2002
-12-
Certifications
I, Douglas Krupp, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Krupp Insured Plus
Limited Partnership;
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: November 11, 2002
/s/ Douglas Krupp
--------------------------------
Douglas Krupp
Principal Executive Officer
-13-
Certifications
I, Robert A. Barrows, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Krupp Insured Plus
Limited Partnership;
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: November 11, 2002
/s/ Robert A. Barrows
----------------------------
Robert A. Barrows
Chief Accounting Officer
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