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 0-15815
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 in Exchange Act Rule 12b-2).
Yes |_| No |X|
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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 LIMITED PARTNERSHIP
BALANCE SHEETS
ASSETS
March 31, December 31,
2003 2002
------------ ------------
Participating Insured Mortgages ("PIMs") (Note 2) $ 13,085,709 $ 13,112,739
Mortgage-Backed Securities and
insured mortgage ("MBS") (Note 3) 7,034,971 9,164,511
------------ ------------
Total mortgage investments 20,120,680 22,277,250
Cash and cash equivalents 2,539,280 573,389
Interest receivable and other assets 129,262 142,887
------------ ------------
Total assets $ 22,789,222 $ 22,993,526
============ ============
LIABILITIES AND PARTNERS' EQUITY
Liabilities $ 23,152 $ 34,942
------------ ------------
Partners' equity (deficit)(Note 4):
Limited Partners
(7,500,099 Limited Partner interests outstanding) 22,383,452 22,509,510
General Partners (247,502) (242,538)
Accumulated comprehensive income 630,120 691,612
------------ ------------
Total Partners' equity 22,766,070 22,958,584
------------ ------------
Total liabilities and Partners' equity $ 22,789,222 $ 22,993,526
============ ============
The accompanying notes are an integral
part of the financial statements.
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KRUPP INSURED PLUS LIMITED PARTNERSHIP
STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
For the Three Months
Ended March 31,
---------------------
2003 2002
--------- --------
Revenues:
Interest income - PIMs
Basic interest $ 241,435 $282,191
Participation interest -- 504,639
Interest income - MBS 105,820 184,803
Other interest income 11,709 16,040
--------- --------
Total revenues 358,964 987,673
--------- --------
Expenses:
Asset management fee to an affiliate 37,403 44,203
Expense reimbursements to affiliates 32,662 10,722
Amortization of prepaid fees and expenses -- 24,445
General and administrative 32,254 14,465
--------- --------
Total expenses 102,319 93,835
--------- --------
Net income 256,645 893,838
Other comprehensive income:
Net change in unrealized gain on MBS (61,492) 22,640
--------- --------
Total comprehensive income $ 195,153 $916,478
========= ========
Allocation of net income (Note 4):
Limited Partners $ 248,946 $867,023
========= ========
Average net income per Limited Partner
interest (7,500,099 Limited Partner
interests outstanding) $ .03 $ .12
========= ========
General Partners $ 7,699 $ 26,815
========= ========
The accompanying notes are an integral
part of the financial statements.
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KRUPP INSURED PLUS LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
For the Three Months
Ended March 31,
--------------------------
2003 2002
----------- -----------
Operating activities:
Net income $ 256,645 $ 893,838
Adjustments to reconcile net income to net cash
provided by operating activities:
Amortization of prepaid fees and expenses -- 24,445
Premium amortization 42,475 --
Shared Appreciation Interest -- (378,480)
Changes in assets and liabilities:
Decrease in interest receivable and other assets 13,625 42,141
Increase (decrease) in liabilities (11,790) 713
----------- -----------
Net cash provided by operating activities 300,955 582,657
----------- -----------
Investing activities:
Principal collections on MBS 2,025,573 160,068
Principal collections on PIMs including Shared Appreciation
Interest of $378,480 in 2002 27,030 5,967,094
----------- -----------
Net cash provided by investing activities 2,052,603 6,127,162
----------- -----------
Financing activities:
Quarterly distributions (387,667) (764,413)
Special distributions -- (6,000,079)
----------- -----------
Net cash used for financing activities (387,667) (6,764,492)
----------- -----------
Net increase (decrease) in cash and cash equivalents 1,965,891 (54,673)
Cash and cash equivalents, beginning of period 573,389 1,422,582
----------- -----------
Cash and cash equivalents, end of period $ 2,539,280 $ 1,367,909
=========== ===========
Non cash activities:
Increase (decrease) in unrealized gain on MBS $ (61,492) $ 22,640
=========== ===========
The accompanying notes are an integral
part of the financial statements.
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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, 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, the 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 FHA insured mortgage portion of the Partnership's
remaining PIM had a fair value of $13,838,137 including a gross unrealized
gain of $752,428. 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. Fair value does not include any value for the
participation feature. The PIM matures in 2023.
3. MBS
At March 31, 2003, the Partnership's MBS portfolio had an amortized cost
of $6,404,851 and gross unrealized gains of $630,120. The portfolio has
maturities ranging from 2006 to 2032.
On February 18, 2003, the Partnership received a prepayment of the Mission
Terrace Apartments MBS. The Partnership received $1,873,040 representing
the principal proceeds on the first mortgage. A prepayment premium was not
required from the payoff of the MBS as the prepayment provisions expired
five years after the issuance of the loan. On May 5, 2003, the Partnership
paid a special distribution of $0.25 per Limited Partner interest from the
proceeds received.
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 $ 22,509,510 $ (242,538) $ 691,612 $ 22,958,584
Net income 248,946 7,699 -- 256,645
Quarterly distributions (375,004) (12,663) -- (387,667)
Change in unrealized gain on MBS -- -- (61,492) (61,492)
------------- ------------- ------------- -------------
Balance at March 31, 2003 $ 22,383,452 $ (247,502) $ 630,120 $ 22,766,070
============= ============= ============= =============
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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 2002
Annual Report 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 $2.5 million 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 $375,000 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 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 cash through a special distribution. Based
on current projections, the General Partners expect that the Partnership will
reduce the distribution rate of $0.05 per Limited Partner interest per quarter
to $0.04 per Limited Partner interest per quarter with the August 2003
distribution.
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.
On February 18, 2003, the Partnership received a prepayment of the Mission
Terrace Apartments MBS. The Partnership received $1,873,040 representing the
principal proceeds on the first mortgage. A prepayment premium was not required
from the payoff of the MBS as the prepayment provisions of the MBS expired five
years after the issuance of the loan. On May 5, 2003, the Partnership paid a
special distribution of $0.25 per Limited Partner interest from the proceeds
received.
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 during 2003. The
borrower has indicated that they are considering refinancing the property in
2003. 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, Arizona sub-market, the occupancy
rate at the property is currently 87%. The owner has lowered rents and is
offering move-in concessions in an effort to increase occupancy.
The Partnership has the option to call its remaining PIM by accelerating the
maturity date of the loan. If the call feature is exercised for the whole PIM
then the insurance feature of the loan would be canceled. Therefore, the
Partnership will
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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 Policies
The Partnership's critical accounting policies relate primarily 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 accounted for its MBS portion of its PIM investment in
accordance with the 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 the investment had a
participation feature. As a result, the Partnership would not sell or otherwise
dispose of the MBS. Accordingly, the Partnership had both the intention and
ability to hold the investment to expected maturity. The Partnership carried the
MBS at amortized cost. The Partnership holds the insured mortgage portion of the
Federal Housing Administration PIM (FHA PIM) at amortized cost and does not
establish loan loss reserves as this investment is fully insured by the FHA.
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 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.
The Partnership, in accordance with FAS 115 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.
Prepaid fees and expenses represented 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 the prepaid participation servicing fees using a
method that approximated the effective interest method over a ten year period
beginning from the acquisition of the Fannie Mae MBS or final endorsement of the
FHA 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, basic
interest income on PIMs and interest income on MBS and increases in expense
reimbursements to affiliates and general and administrative expense. This is
partially offset by a decrease in amortization expense. Participation interest
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 payoff of the Royal
Palm Place PIM mentioned above. Interest income on MBS decreased due to the
accelerated recognition of the Mission Terrace Apartments MBS purchase premium
as a reduction in income upon the prepayment of the MBS in February 2003 and due
to lower single family MBS balances generating interest income. The lower
balances resulted from on-going principal collections. General and
administrative expenses and expense reimbursements to affiliates increased for
the period ended March 31, 2002 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
Vista Montana PIM payoff in 2002.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Assessment of Credit Risk
The Partnership's investments in its insured mortgage portion of its PIM and its
MBS are guaranteed or insured by the Government National Mortgage Association
("GNMA"), Fannie Mae, the Federal Home Loan Mortgage Corporation
-8-
("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 March 31, 2003, the Partnership includes in cash and cash equivalents
approximately $2.3 million 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 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.
-9-
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
-10-
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/ Alan Reese
--------------------------------------------
Alan Reese
Vice-President (Chief Accounting Officer) of
The Krupp Corporation, a General Partner of
the Registrant.
DATE: April 28, 2003
-11-
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: April 28, 2003
/s/ Douglas Krupp
---------------------------
Douglas Krupp
Principal Executive Officer
-12-
Certifications
I, Alan Reese, 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: April 28, 2003
/s/ Alan Reese
------------------------------------
Alan Reese
Chief Accounting Officer
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