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 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 0-17691
Krupp Insured Plus-III Limited Partnership
Massachusetts 04-3007489
(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 in Exchange Act Rule 12b-2).
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, 2002, 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-III LIMITED PARTNERSHIP
BALANCE SHEETS
ASSETS
March 31, December 31,
2003 2002
------------ ------------
Participating Insured Mortgages ("PIMs")(Note 2) $ 12,866,265 $ 12,893,859
Mortgage-Backed Securities and insured
mortgage ("MBS")(Note 3) 9,854,771 10,157,171
------------ ------------
Total mortgage investments 22,721,036 23,051,030
Cash and cash equivalents 1,342,279 1,209,070
Interest receivable and other assets 153,500 156,686
------------ ------------
Total assets $ 24,216,815 24,416,786
============ ============
LIABILITIES AND PARTNERS' EQUITY
Liabilities $ 35,380 $ 40,505
------------ ------------
Partners' equity (deficit) (Note 4):
Limited Partners 24,222,995 24,429,938
(12,770,261 Limited Partner interests outstanding)
General Partners (200,839) (196,121)
Accumulated comprehensive income 159,279 142,464
------------ ------------
Total Partners' equity 24,181,435 24,376,281
------------ ------------
Total liabilities and Partners' equity $ 24,216,815 $ 24,416,786
============ ============
The accompanying notes are an integral
part of the financial statements.
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KRUPP INSURED PLUS-III LIMITED PARTNERSHIP
STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
For the Three Months
Ended March 31,
-------------------------
2003 2002
----------- -----------
Revenues:
Interest income - PIMs:
Basic interest $ 257,510 $ 362,677
Participation interest -- 1,339,172
Interest income - MBS 183,978 208,235
Other interest income 15,585 32,307
----------- -----------
Total revenues 457,073 1,942,391
----------- -----------
Expenses:
Asset management fee to an affiliate 41,949 53,878
Expense reimbursements to affiliates 58,161 19,264
Amortization of prepaid fees and expenses -- 30,447
General and administrative 43,701 19,565
----------- -----------
Total expenses 143,811 123,154
----------- -----------
Net income 313,262 1,819,237
Other comprehensive income:
Net change in unrealized gain on MBS 16,815 (2,113)
----------- -----------
Total comprehensive income $ 330,077 $ 1,817,124
=========== ===========
Allocation of net income (Note 4):
Limited Partners $ 303,864 $ 1,764,660
=========== ===========
Average net income per Limited Partner
interest (12,770,261 Limited Partner
interests outstanding) $ 0.02 $ 0.14
=========== ===========
General Partners $ 9,398 $ 54,577
=========== ===========
The accompanying notes are an integral
part of the financial statements.
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KRUPP INSURED PLUS-III LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
For the Three Months
Ended March 31,
---------------------------
2003 2002
----------- ------------
Operating activities:
Net income $ 313,262 $ 1,819,237
Adjustments to reconcile net income to net cash
provided by operating activities:
Amortization of prepaid fees and expenses -- 30,447
Shared Appreciation Interest -- (1,004,379)
Changes in assets and liabilities:
Decrease in interest receivable and other assets 3,186 108,792
Increase (decrease) in liabilities (5,125) 5,713
----------- ------------
Net cash provided by operating activities 311,323 959,810
----------- ------------
Investing activities:
Principal collections on PIMs including Shared Appreciation
Interest of $1,004,379 in 2002 27,594 15,793,857
Principal collections on MBS 319,215 323,031
----------- ------------
Net cash provided by investing activities 346,809 16,116,888
----------- ------------
Financing activities:
Quarterly distributions (524,923) (1,041,985)
Special distributions -- (15,835,000)
----------- ------------
Net cash used for financing activities (524,923) (16,876,985)
----------- ------------
Net increase in cash and cash equivalents 133,209 199,713
Cash and cash equivalents, beginning of period 1,209,070 1,900,744
----------- ------------
Cash and cash equivalents, end of period $ 1,342,279 $ 2,100,457
=========== ============
Non cash activities:
Increase (decrease) in unrealized gain on MBS $ 16,815 $ (2,113)
=========== ============
The accompanying notes are an integral
part of the financial statements.
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KRUPP INSURED PLUS-III 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, Krupp Plus Corporation and Mortgage Services Partners
Limited Partnership (collectively the "General Partners"), of Krupp
Insured Plus-III 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, 2002 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 March 31, 2003, and its results
of operations for the three months ended March 31, 2003 and 2002 and its
cash flows for the three months ended March 31, 2003 and 2002.
The results of operations for the three months ended March 31, 2003 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 March 31, 2003, the Partnership's remaining PIM had a fair value of
approximately $13,839,341 including a gross unrealized gain of $973,076.
Fair value assumes that the GNMA MBS portion of the PIM could be sold at
prices that MBS with similar interest rates are currently being sold at.
Fair value does not include any value for the participation features. The
PIM matures in 2031.
3. MBS
At March 31, 2003, the Partnership's MBS portfolio had an amortized cost
of $1,831,960 and gross unrealized gains of $159,279. At March 31, 2003,
the Partnership's insured mortgage loan had an amortized cost of
$7,863,532. The portfolio has maturities ranging from 2016 to 2035.
4. Changes in Partners' Equity
A summary of changes in Partners' Equity for the three months ended March
31, 2003 is as follows:
Accumulated Total
Limited General Comprehensive Partners'
Partners Partners Income Equity
-------- -------- ------ ------
Balance at December 31, 2002 $ 24,429,938 $ (196,121) $ 142,464 $ 24,376,281
Net income 303,864 9,398 -- 313,262
Quarterly distributions (510,807) (14,116) (524,923)
Change in unrealized gain on MBS -- -- 16,815 16,815
------------ ------------ ------------ ------------
Balance at March 31, 2003 $ 24,222,995 $ (200,839) $ 159,279 $ 24,181,435
============ ============ ============ ============
Continued
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KRUPP INSURED PLUS-III LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS, Continued
5. Subsequent Event
On April 10, 2003, the Partnership received a prepayment of the Signature
Point insured mortgage. The Partnership received $7,863,532 representing
the principal proceeds on the first mortgage and a prepayment premium of
$235,918. On May 5, 2003, the Partnership paid a special distribution of
$0.64 per Limited Partner interest from the principal proceeds and
prepayment premium received.
-7-
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 2002
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; pre-payments 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 March 31, 2003, the Partnership had liquidity consisting of cash and cash
equivalents of approximately $1.3 million as well as the cash flow provided by
its investments in the 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 demands on the Partnership's liquidity is the quarterly
distributions paid to investors, which are approximately $511,000 per quarter.
Funds for quarterly distributions come from the monthly principal and basic
interest payments received on the remaining PIM and MBS, the principal
prepayments of MBS and interest earned on the Partnership's cash and cash
equivalents. 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 funds through a special distribution. Based
on current projections, the General Partners expect that the Partnership will
reduce the distribution rate of $0.04 per Limited Partner interest per quarter
to $0.03 per Limited Partner interest per quarter with the August 2003
distribution.
In addition to providing insured and guaranteed monthly principal and basic
interest payments from the GNMA MBS portion of the PIM, the Partnership's
remaining PIM investment 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 participation is neither guaranteed nor insured,
and it 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 Harbor Club. Presently, the General Partners do not expect the property
to be sold or refinanced during 2003. However, if favorable market conditions
were to provide the borrower an opportunity to sell the property, there are no
contractual obligations remaining that would prevent a repayment of the first
mortgage loan. In response to more competitive market conditions brought on by
low interest rates and low unemployment, which encourages more home ownership,
Harbor Club began offering generous concessions to attract residents. Although
physical occupancy has remained steady in the high 80% range, the economic
occupancy has dropped to the mid 80% range as a result of the concessions.
The Partnership has the option to call its remaining PIM by accelerating the
maturity of the loan. If the call feature is exercised then the insurance
feature of the loan would be canceled. 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, the interest
rate environment and availability of financing will affect this decision.
On April 10, 2003, the Partnership received a prepayment of the Signature Point
insured mortgage. The Partnership received $7,863,532 representing the principal
proceeds on the first mortgage and a prepayment premium of $235,918. On May 5,
-8-
2003, the Partnership paid a special distribution of $0.64 per Limited Partner
interest from the principal proceeds and prepayment premium received.
Critical Accounting Policies
The Partnership's critical accounting policies relate to revenue recognition
related to the Partnership's remaining PIM investment, the amortization of
Prepaid Fees and Expenses and the carrying value of the MBS. The Partnership's
policies are as follows:
The Partnership accounts for its MBS portion of its PIM investment in accordance
with Financial Accounting Standards Board's Statement 115, "Accounting for
Certain Investments in Debt and Equity Securities" ("FAS 115"), under the
classification of held to maturity as this investment has a participation
feature. As a result, the Partnership would not sell or otherwise dispose of the
MBS. Accordingly, the Partnership has both the intention and ability to hold
this investment to expected maturity. The Partnership carries this MBS at
amortized cost. The Partnership, in accordance with FAS115, classifies its MBS
portfolio as available-for-sale. The Partnership classifies its MBS portfolio as
available-for-sale as a portion of the MBS portfolio may remain after all of the
PIMs pay off and that it will be necessary to then sell the remaining MBS
portfolio at that time in order to close out the Partnership. In addition, other
situations such as liquidity needs could arise which would necessitate the sale
of a portion of the MBS portfolio. As such, the Partnership carries its MBS at
fair market value and reflects any unrealized gains (losses) as a separate
component of Partners' Equity. The Partnership amortizes purchase premiums or
discounts over the life of the underlying mortgages using the effective interest
method. The Partnership also holds a Federal Housing Administration ("FHA")
insured mortgage which is classified as MBS. The Partnership holds this loan at
amortized cost and does not establish loan loss reserves on this investment as
it is fully insured by the FHA.
Basic interest on PIMs is recognized based on the stated coupon rate of the GNMA
MBS. The Partnership recognizes interest related to the participation features
when the amount becomes fixed and the transaction that gives rise to such amount
is finalized, cash is received and all contingencies are resolved. This 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.
Prepaid fees and expenses consisted of prepaid acquisition fees and expenses and
prepaid participation servicing fees paid for the acquisition and servicing of
PIMs. The Partnership amortized the prepaid acquisition fees and expenses using
a method that approximated the effective interest method over a period of ten to
twelve years, which represented the estimated life of the underlying mortgage.
The Partnership amortized prepaid participation servicing fees using a method
that approximated the effective interest method over a ten year period beginning
at final endorsement of the GNMA loan and at closing if a Fannie Mae loan. Upon
the repayment of a PIM, any unamortized acquisition fees and expenses and
unamortized participation servicing fees related to such loan were expensed.
Results of Operations
Net income decreased for the first quarter of 2003 as compared to the same
period in 2002 due primarily to decreases in participation interest and basic
interest income on PIMs and increases in general and administrative expense,
expense reimbursements to affiliates and amortization expense. Participation
income was greater in 2002 due to the collection of shared appreciation interest
and minimum additional interest from the Royal Palm Place PIM payoff in February
2002. Basic interest income on PIMs decreased due to the Royal Palm Place PIM
payoff mentioned above. General and administrative expenses and expense
reimbursements to affiliates increased for the period ended March 31, 2003
primarily due to a change in the estimated cost of services provided to the
Partnership in 2002. Amortization expense decreased due to the full recognition
of prepaid fees and expenses associated with the Harbor Club PIM in 2002.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Assessment of Credit Risk
The Partnership's investments in its MBS portion of its PIM and its MBS are
guaranteed and/or insured by the Government National Mortgage Association
("GNMA"), Fannie Mae, the Federal Home Loan Mortgage Corporation ("FHLMC") or
the 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.
-9-
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 represent interests 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 March 31, 2003, the Partnership includes in cash and cash equivalents
approximately $999,000 of commercial paper, which is issued by entities with a
credit rating equal to one of the top two rating categories of a nationally
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 March
31, 2003, the Partnership's remaining 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 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 Partnership 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 Plus
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-III 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-III Limited Partnership
(Registrant)
BY: /s/ Alan Reese
------------------------------------------
Alan Reese
Treasurer and Chief Accounting Officer of
Krupp Plus Corporation, a General Partner.
DATE: April 28, 2003
-12-
Certifications
I, Douglas Krupp, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Krupp Insured
Plus - III 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: April 28, 2003
/s/ Douglas Krupp
------------------------------
Douglas Krupp
Principal Executive Officer
-13-
Certifications
I, Alan Reese, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Krupp Insured
Plus - III 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: April 28, 2003
/s/ Alan Reese
--------------------------------
Alan Reese
Chief Accounting Officer
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