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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Quarterly Period Ended 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 001-12986
INTERLOTT TECHNOLOGIES, INC.
(Exact name of Registrant as specified in its charter)
Delaware 31-1297916
(State of Incorporation) (I.R.S. Employer
Identification No.)
7697 Innovation Way, Mason, Ohio 45040
(Address of principal executive offices, including zip code)
(513) 701-7000
(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 twelve 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 Rule 12b-2 of the Exchange Act). Yes No x
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
Common Stock as of the latest practicable date.
Class Outstanding at May 9, 2003
- ---------------------------- --------------------------
Common Stock, $.01 Par Value 6,462,994 shares
INTERLOTT TECHNOLOGIES, INC.
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 2003
TABLE OF CONTENTS
ITEM PAGE
NUMBER PART I. FINANCIAL INFORMATION NUMBER
------ ------
1 Financial Statements:
Condensed Balance Sheets as of March 31, 2003
and December 31, 2002 3
Condensed Statements of Income
for the three months ended March 31, 2003 and 2002 4
Condensed Statements of Cash Flows for the three
months ended March 31, 2003 and 2002 5
Notes to Condensed Financial Statements 6 - 7
2 Management's Discussion and Analysis of
Financial Condition and Results of Operations 8 - 10
3 Quantitative and Qualitative Disclosures About
Market Risk 10
4 Controls and Procedures 10
PART II. OTHER INFORMATION
6 Exhibits and Reports on Form 8-K 11
SIGNATURES AND CERTIFICATIONS 12 - 14
2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
INTERLOTT TECHNOLOGIES, INC.
CONDENSED BALANCE SHEETS
MARCH 31, 2003 AND DECEMBER 31, 2002
ASSETS March 31, 2003 December 31, 2002
-------------- -----------------
Current assets:
Cash $ 371,982 $ 419,492
Accounts receivable, less allowance for doubtful accounts of $98,332
in 2003 and $53,332 in 2002 8,711,530 6,646,988
Investment in sales type leases, current portion 2,653,347 2,588,005
Inventories 7,701,628 8,440,471
Deferred tax asset 489,806 508,600
Prepaid expenses 492,893 639,307
------------ ------------
Total current assets 20,421,186 19,242,863
Property and Equipment:
Leased machines 35,211,192 35,113,524
Machinery and equipment 784,219 784,219
Building and improvements 688,234 688,234
Furniture and fixtures 182,717 182,717
------------ ------------
36,866,362 36,768,694
Less accumulated depreciation and amortization 24,178,188 22,963,442
------------ ------------
12,688,174 13,805,252
Other assets 279,102 238,176
Goodwill net of accumulated amortization of $166,581 in 2003 and 2002 4,572,655 4,572,655
Value of leases acquired net of accumulated amortization of $1,569,700 in
2003 and $1,355,650 in 2002 2,711,305 2,925,355
Investment in sales type leases, less current portion 9,651,661 10,154,855
Product development rights, net of accumulated amortization of $898,333 in 2003
and $880,000 in 2002 201,667 220,000
------------ ------------
$ 50,525,750 $ 51,159,156
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable to financial institutions $ 19,863,714 $ 21,310,417
Accounts payable 2,354,490 2,663,405
Accounts payable - related party 282,102 380,855
Accrued expenses 1,883,403 1,117,536
------------ ------------
Total current liabilities 24,383,709 25,472,213
Deferred tax liability 2,151,450 2,009,600
------------ ------------
Total liabilities 26,535,159 27,481,813
Commitments and contingent liabilities:
Interest rate swap agreements 417,337 453,484
Notes payable - related parties -- 24,124
Stockholders' equity:
Treasury Stock (63,298) (63,298)
Common stock, $.01 par value; 20,000,000 shares authorized, 6,459,718
shares issued and outstanding in 2003 and 6,455,826 shares issued
and outstanding in 2002 64,558 64,558
Additional paid-in capital 10,568,907 10,568,907
Accumulated comprehensive income (loss) (263,152) (299,299)
Retained earnings 13,266,239 12,928,867
------------ ------------
Total stockholders' equity 23,573,254 23,223,859
------------ ------------
$ 50,525,750 $ 51,159,156
============ ============
See accompanying notes to condensed financial statements.
3
INTERLOTT TECHNOLOGIES, INC.
CONDENSED STATEMENTS OF INCOME
THREE MONTHS ENDED MARCH 31, 2003 AND 2002
Three Months Ended
March 31,
2003 2002
------------ ------------
Revenues
Machine and parts sales $ 5,761,709 $ 4,775,682
Machine leases 4,455,556 4,657,720
Other 1,464,758 1,708,780
------------ ------------
11,682,023 11,142,182
Cost of revenues 8,494,328 7,935,561
------------ ------------
Gross profit 3,187,695 3,206,621
Operating expenses:
Selling, general, and administrative
expenses 1,754,916 1,609,159
Research and development costs 120,640 79,610
------------ ------------
Total operating expenses 1,875,556 1,688,769
------------ ------------
1,312,139 1,517,852
Operating income
Other (expense) income
Interest expense (270,649) (673,727)
Other (496,469) (2,606)
------------ ------------
(767,118) (676,333)
Income before income taxes 545,021 841,519
Income taxes 207,650 319,740
------------ ------------
Net income $ 337,371 $ 521,779
============ ============
Basic and diluted net income per share $.05 $.08
==== ====
See accompanying notes to condensed financial statements
4
INTERLOTT TECHNOLOGIES, INC.
CONDENSED STATEMENT OF CASH FLOWS (UNAUDITED)
THREE MONTHS ENDED MARCH 31, 2003 AND 2002
Three months ended March 31,
-----------------------------------
2003 2002
---- ----
Cash flows from operating activities:
Net income $ 337,371 $ 521,779
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation & amortization 1,634,776 1,835,997
Principal portion of sales type lease received 829,824 606,950
Deferred income taxes 141,850 4,936
Gain on sale of equipment under sales type lease (181,978) (602,500)
(Increase) decrease in accounts receivable (2,064,542) 483,602
Decrease in inventories net of leased equipment returned 738,843 832,987
Decrease in prepaid expenses 105,488 201,300
Decrease in deferred tax asset 18,794 --
(Decrease) in accounts payable (308,915) (293,811)
(Decrease) in accounts payable - related parties (98,753) (264,712)
Increase in accrued expenses 431,562 318,784
Increase in income taxes payable 334,306 264,599
----------- -----------
Net cash provided by operating activities 1,918,626 3,909,911
----------- -----------
Cash flows from investing activites:
Cost of leased machines (495,309) (1,772,722)
Purchases of property & equipment -- (3,939)
----------- -----------
Net cash used in investing activites (495,309) (1,776,661)
----------- -----------
Cash flows from financing activites:
Payments to credit facility (1,446,703) (1,831,437)
Proceeds from exercise of stock options -- 18,913
Repayment of long-term debt (1,348) (27,227)
Payment of notes payable - related parties (22,776) (460,100)
----------- -----------
Net cash used in financing activities (1,470,827) (2,299,851)
----------- -----------
(Decrease) in cash (47,510) (166,601)
Cash, at beginning of year 419,492 537,332
----------- -----------
Cash, at end of period $ 371,982 $ 370,731
=========== ===========
Supplemental Disclosures of Cash Flow Information:
Interest paid $ 159,251 $ 616,002
Income taxes paid (refunded) (228,610) 93,291
Net book value of capitalized leased ITVMs returned from field and 0 13,215
transferred to inventory
Interest rate swap reduction net of deferred tax of $22,411 in 2003 and 36,147 115,185
$59,337 in 2002
See accompanying notes to condensed financial statements.
5
INTERLOTT TECHNOLOGIES, INC.
Notes to Condensed Financial Statements
1. Basis of Presentation
The accounting and reporting policies of Interlott Technologies, Inc.
conform to generally accepted accounting principles in the United States of
America. The financial statements for the three months ended March 31, 2003 and
2002 are unaudited and do not include all information or footnotes necessary for
a complete presentation of financial condition, results of operations and cash
flows. The interim financial statements include all adjustments, consisting only
of normal recurring accruals, which in the opinion of management are necessary
for a fair presentation. The financial statements should be read in conjunction
with the financial statements and notes which appear in the Company's 2002
Annual Report on Form 10-K. The results of operations for the three months ended
March 31, 2003 are not necessarily indicative of the results to be expected for
the entire year ending December 31, 2003.
2. Inventories
Inventories at March 31, 2003 and December 31, 2002 consisted of the
following:
2003 2002
---- ----
Finished goods $1,730,216 $1,721,996
Work in process 536,897 396,719
Raw materials and supplies 5,434,515 6,321,756
---------- ----------
$7,701,628 $8,440,471
3. Merger Agreement
The Company has entered into an Amended and Restated Agreement and Plan
of Merger dated as of March 17, 2003 with GTECH Holdings Corporation and
subsidiaries of GTECH, pursuant to which the Company will merge into and become
a wholly-owned subsidiary of GTECH. Upon the merger, each share of the Company's
Common Stock will be changed into the right to receive $9.00 in cash, GTECH
common shares or a combination of the two, with 51.5% of the aggregate merger
consideration to be paid in GTECH common shares and the balance in cash.
Consummation of the merger is subject to satisfaction of various
conditions, including the approval of the Company's stockholders, the making of
various regulatory filings, the absence of any injunction or certain litigation
challenging the merger, the receipt of tax and other legal opinions, the
accuracy of the parties' representations and warranties and performance of their
agreements, and the receipt of consents to the merger from customers
representing 85% of the Company's projected business for 2003 and certain other
parties to material contacts. GTECH may terminate the merger agreement if its
average stock price for purpose of calculating the number of common shares to be
issued in the merger is less than $25.12, unless the Company elects to convert
the merger consideration into all cash.
The Company has agreed not to solicit a competing offer, but may
terminate the merger agreement to accept an unsolicited superior proposal. If it
does so, the Company will be required to pay GTECH a termination fee of $2.75
million and reimburse GTECH's expenses up to $750,000.
In connection with the Merger Agreement, GTECH also entered into a
Stockholder Voting and Option Agreement and a Noncompetition Agreement with L.
Rogers Wells, Jr. Under the Voting and Option Agreement, Mr. Wells agreed to
vote in favor of the merger and granted GTECH the
6
option to purchase his Company Common Stock at $9.00 per share if the Merger
Agreement terminates for specified reasons. The Voting and Option Agreement
terminates if the Company terminates the Merger Agreement to accept a superior
proposal. If GTECH exercises the option, it is required to make a cash tender
offer for the remaining Common Stock of the Company at $9.00 per share.
Pursuant to the Noncompetition Agreement, Mr. Wells has agreed not to
engage in the lottery business for five years after consummation of the merger.
As compensation for this agreement, GTECH will pay him $250,000 per year during
that five-year period.
4. Goodwill
On July 20, 2001, the Financial Accounting Standards Board (FASB)
issued SFAS No. 141, Business Combinations and SFAS No. 142, Goodwill and Other
Intangible Assets. SFAS No. 141 requires that the purchase method of accounting
be used for all business combinations initiated after June 30, 2001. The Company
adopted SFAS No. 141 on July 1, 2001. The change had no material effect on the
Company's financial position or results of operations.
SFAS No. 142 requires that goodwill and intangible assets with
indefinite useful lives no longer be amortized, but instead tested for
impairment at least annually in accordance with the provisions of SFAS No. 142.
SFAS No. 142 also requires that intangible assets with definite useful lives be
amortized over their respective estimated useful lives to their estimated
residual values, and reviewed for impairment.
The Company adopted SFAS No. 142 on January 1, 2002, as required. At
this time, the Company believes that no impairment exists.
5. Comprehensive Income
Comprehensive income reflects the change in the estimated fair market
value of the Company's interest rate swap agreements. The estimated fair value
is based upon appropriate market information and projected interest rate changes
obtained from a reputable financial institution. Total comprehensive income is
summarized as follows:
Three Months Ended March 31
---------------------------
2003
----
Net income $337,371
Other comprehensive income 36,147
--------
Total comprehensive income $373,518
========
7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
GENERAL
Interlott Technologies, Inc. (the "Company") manufactures instant
ticket vending machines ("ITVMs") and prepaid phone card dispensing machines
("PCDMs") that dispense instant lottery tickets and prepaid telephone calling
cards without the assistance of an employee of the lottery or the telephone card
vendor. The Company derives its revenues from (1) the lease of ITVMs and PCDMs,
(2) the sale of ITVMs and PCDMs, and (3) to a lesser extent, service agreements
and the sale of parts for ITVMs and PCDMs.
The Company has entered into an Amended and Restated Agreement and Plan
of Merger dated as of March 17, 2003 with GTECH Holdings Corporation and
subsidiaries of GTECH, pursuant to which the Company will merge into and become
a wholly-owned subsidiary of GTECH. Upon the merger, each share of the Company's
Common Stock will be changed into the right to receive $9.00 in cash, GTECH
common shares or a combination of the two, with 51.5% of the aggregate merger
consideration to be paid in GTECH common shares and the balance in cash. For
additional information, see note 3 of the Notes to Condensed Financial
Statements in Part I above.
The Company historically has experienced fluctuations in its financial
results due to the variable nature, timing and results of the lotteries'
contract bid and award process. The Company's revenues and capital expenditures
can vary significantly from period to period because the Company's sales cycle
may be relatively long and because the amount and timing of revenues and capital
expenditures depend on factors such as the amount and timing of awarded
contracts and changes in customer budgets and demands. Operating results may be
affected by the lead-time sometimes required for business opportunities to
result in signed lease or sales agreements, working capital requirements
associated with manufacturing ITVMs pursuant to new orders, competitive bidding
for contract awards and the extended time that may elapse between the award of a
contract and the receipt of revenues from the sale or lease of ITVMs. The
Company's decision to lease a significant portion of its ITVMs generally offers
the Company better gross margins than direct sales agreements. However, leasing
inherently requires more capital and a longer-term payout than sales.
At March 31, 2003, the Company had a total of 11,806 ITVMs and PCDMs
deployed under operating and sales type leases as compared to 11,484 at December
31, 2002. In the aggregate, the Company has sold or leased over 31,000 ITVMs and
PCDMs under agreements with 29 domestic and 14 international lotteries and their
licensees or contractors, as well as to both domestic and international vendors
of prepaid telephone calling cards.
RESULTS OF OPERATIONS
The Company's revenues increased 5% to $11,682,023 from $11,142,183 for
the three months ended March 31, 2003 and 2002, respectively. Revenues from
sales of ITVMs increased 21% to $5,761,709 from $4,775,682 for the three months
ended March 31, 2003 and 2002, respectively. The increase in revenues from sales
for the three months ended March 31, 2003 resulted from new sales and sales-
type lease contracts with four state lotteries and one international lottery.
Revenues from operating leases decreased 4% to $4,455,556 from $4,657,720 for
the three months ended March 31, 2003 and 2002, respectively. This decline in
lease revenue was due to older
8
machines reaching the end of the lease term and newly deployed machines
qualifying as sales-type leases instead of operating leases. Lease revenues
represented 38% and 42% of total revenues for the three months ended March 31,
2003 and 2002, respectively.
Cost of revenues increased 7% to $8,494,328 from $7,935,561 for the
three months ended March 31, 2003 and 2002, respectively. Depreciation charged
to cost of revenues decreased 3% to $1,518,585 from $1,573,078 for the
respective three month periods. The decrease in depreciation for the three
months ended March 31, 2003 was due to leased equipment being removed from the
field. Service and installation costs decreased 2% to $2,762,421 from $2,819,128
for the three months ended March 31, 2003 and 2002, respectively. The decrease
for the quarter was due primarily to the expiration of the Virginia maintenance
contract which expired on October 1, 2002. Overall, cost of revenues as a
percentage of sales increased 2% from 71% to 73% for the three months ended
March 31, 2003 due to shipment of a mix of machines with lower gross margins.
As a result of the previously described changes, gross profit decreased
1% to $3,187,695 from $3,206,622 for the three months ended March 31, 2003 and
2002, respectively.
Selling, general, and administrative expenses increased 9% to
$1,754,916 from $1,609,159 for the three months ended March 31, 2003 and 2002,
respectively. Increases in legal and professional fees, property and casualty
insurance and wages and benefits were the primary factors related to the
increase in costs.
Interest expense decreased 60% to $270,649 from $673,727 for the three
months ended March 31, 2003 and 2002, respectively. The decrease reflects lower
overall borrowing needs under the Company's credit facility and lower overall
interest rates resulting from the retirement of the $5 million dollar
subordinated term note on August 14, 2002.
Other expense increased by $493,863 to $496,469 primarily due to costs
associated with the merger agreement between Interlott and GTECH. These costs
included fairness opinion fees, merger related legal fees and Special Committee
compensation.
Income before income taxes decreased 35% to $545,021 from $841,519 for
the three months ended March 31, 2003 and 2002, respectively.
Income taxes were $207,650 for the three months ended March 31, 2003
compared to $319,740 for the three months ended March 31, 2002. The Company's
effective tax rate was 38% for both periods.
As a result of the foregoing factors, net income after tax decreased
35% to $337,371 from $521,779 for the three months ended March 31, 2003 and
2002, respectively.
9
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operations for the three months ended March 31,
2003 and 2002 was $1,918,626 and $3,909,911, respectively. The decrease for the
first three months of 2003 as compared to the same period in 2002 resulted
primarily from a decrease in net income and an increase in accounts receivable.
The increase in accounts receivable was primarily the result of machine sales to
one lottery which were shipped and billed in March 2003.
Net cash used in investing activities was $495,309 and $1,776,661 for
the three months ended March 31, 2003 and 2002, respectively. This decrease was
primarily due to the lower amount spent on equipment deployed under leases in
the first three months of 2003 as compared to the first three months of 2002.
Net cash used in financing activities was $1,470,827 and $2,299,851 for
the three months ended March 31, 2003 and 2002, respectively. The change was
primarily the result of lower payments made on the Company's revolving credit
facility and lower payments required on related party notes which have now been
paid in full.
The credit facility is a three year credit line, which expires on May
31, 2004, secured by a lien on all of the assets of the Company. The interest
rate on the credit facility is based on the prime rate or LIBOR, adjusted up or
down depending on the Company's funded debt to EBITDA ratio. The current rate is
LIBOR plus 2.00% (3.3 % at May 2, 2003).
On May 9, 2003, the Company was indebted to the Bank in the aggregate
principal amount of $18,000,000 and had $12,000,000 available on the credit
facility.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
The Company entered into an interest rate swap agreement with a total
notional principal amount of $5 million at July 3, 2001 which expires on May 31,
2004 and an interest rate swap agreement with a total notional principal amount
of $10 million at November 7, 2002 which also expires on May 31, 2004. The
objective of these agreements is to convert a portion of the Company's floating
rate revolving credit facility to a fixed rate. The estimated fair value of the
interest rate swap agreements was approximately ($417,337) at March 31, 2003.
The estimated fair value is based upon appropriate market information and
projected interest rate changes obtained from a reputable institution. The
estimated amount of deferred loss on the hedge to be reclassified to earnings in
2003 is $320,000.
ITEM 4. CONTROLS AND PROCEDURES.
As of March 31, 2003, an evaluation was performed under the supervision
and with the participation of the Company's management, including the Chief
Executive Officer and Chief Financial Officer, of the effectiveness of the
design and operation of the Company's disclosure controls and procedures. Based
on that evaluation, the Company's management, including the CEO and CFO,
concluded that the Company's disclosure controls and procedures were effective
as of March 31, 2003. There have been no significant changes in the Company's
internal controls or in other factors that could significantly affect internal
controls subsequent to March 31, 2003.
10
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
2.1 Amended and Restated Agreement and Plan of Merger, dated as of
March 17, 2003, among GTECH Holdings Corporation, GTECH Corporation,
Bengal Acquisition Co. and Interlott Technologies, Inc.*
2.2 Amended and Restated Stockholder Voting and Option Agreement, dated
as of March 17, 2003, among GTECH Holdings Corporation, GTECH
Corporation, Bengal Acquisition Co. and L. Rogers Wells, Jr.*
99.1 Certification under Section 906 of The Sarbanes-Oxley Act of 2002
- furnished herewith.
*Filed as an exhibit to Form S-4 Registration Statement No. 333-104776
of GTECH Holdings Corporation and incorporated by reference herein.
(b) Reports on Form 8-K:
Current Report on Form 8-K, dated and filed March 17, 2003, reporting
the proposed merger in which the Company will become a wholly-owned
subsidiary of GTECH Holdings Corporation (Items 1 and 5).
11
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.
INTERLOTT TECHNOLOGIES, INC.
(Registrant)
Date: May 14, 2003 /s/ David F. Nichols
--------------------
David F. Nichols
President and Chief Executive Officer
/s/ Dennis W. Blazer
----------------------------------------
Dennis W. Blazer
Chief Financial and Accounting Officer
CERTIFICATIONS
I, David F. Nichols, certify that:
1. I have reviewed this quarterly report on Form 10-Q of
Interlott Technologies, Inc.;
2. Based on my knowledge, this quarterly report does not contain
any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other
financial information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash flows
of the registrant as of, and for, the periods presented in this quarterly
report;
4. The registrant's other certifying 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
12
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 14, 2003
/s/ David F. Nichols
- ------------------------------------
Chief Executive Officer
I, Dennis W. Blazer, certify that:
1. I have reviewed this quarterly report on Form 10-Q of
Interlott Technologies, Inc.;
2. Based on my knowledge, this quarterly report does not contain
any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other
financial information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash flows
of the registrant as of, and for, the periods presented in this quarterly
report;
4. The registrant's other certifying 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
13
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 14, 2003
/s/ Dennis W. Blazer
- ------------------------------------
Chief Financial Officer
14