FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] Quarterly report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934 For the fiscal quarter 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 0-8773
CRESTED CORP.
- --------------------------------------------------------------------------------
(Exact Name of Company as Specified in its Charter)
Colorado 84-0608126
- ------------------------------------- -----------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
877 North 8th West, Riverton, WY 82501
- ------------------------------------- -----------------------------
(Address of principal executive offices) (Zip Code)
Company's telephone number, including area code: (307) 856-9271
-----------------------------
NONE
- --------------------------------------------------------------------------------
(Former name, address and fiscal year, if changed since last report)
Indicate by check mark whether the Company (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 Company
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
--- ---
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 13, 2003
- ---------------------------------- -------------------------------------
Common stock, $.01 par value 17,133,098 Shares
CRESTED CORP.
INDEX
Page No.
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements.
Condensed Balance Sheets
March 31, 2003 and December 31, 2002. . . . . . . . . . . 3
Condensed Statements of Operations
Three Months Ended March 31, 2003 and 2002. . . . . . . .4
Condensed Statements of Cash Flows
Three Months Ended March 31, 2003 and 2002. . . . . . . .5
Notes to Condensed Financial Statements. . . . . . . . . . .6-7
ITEM 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations. . . . . .8-10
ITEM 4. Controls and Procedures. . . . . . . . . . . . . . . . . . .10-11
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . .12
ITEM 2. Changes in Securities and Use of Proceeds. . . . . . . . . 12
ITEM 6. Exhibits and Reports on Form 8-K. . . . . . . . . . . . . . 12
Signatures. . . . . . . . . . . . . . . . . . . . . . . . . . . .13
Certifications. . . . . . . . . . . . . . . . . . . . . . . . 14-15
2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CRESTED CORP.
CONDENSED BALANCE SHEETS
ASSETS
March 31, December 31,
2003 2002
----------- --------------
(Unaudited)
CURRENT ASSETS:
Cash and cash equivalents $ 3,300 $ 3,300
INVESTMENTS IN AFFILIATES 5,673,800 5,876,600
PROPERTIES AND EQUIPMENT 896,800 896,800
Less accumulated depreciation
depletion and amortization (886,800) (886,800)
------------- ----------------
10,000 10,000
------------- ----------------
$ 5,687,100 $ 5,889,900
============= ================
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt to affiliate $ 8,751,500 $ 8,553,900
COMMITMENT TO FUND EQUITY INVESTEES 215,600 215,600
ASSET RETIREMENT OBLIGATION 1,064,900 748,400
COMMITMENTS AND CONTINGENCIES
FORFEITABLE COMMON STOCK, $.001 par value
15,000 shares issued, forfeitable until earned 10,100 10,100
SHAREHOLDERS' EQUITY
Common stock, $.001 par value; unlimited shares
authorized
17,115,137 and 17,099,276 issued and outstanding 17,200 17,200
Additional paid-in capital 11,804,800 11,795,200
Accumulated deficit (16,177,000) (15,450,500)
------------- ----------------
TOTAL SHAREHOLDERS' EQUITY (4,355,000) (3,638,100)
------------- ----------------
$ 5,687,100 $ 5,889,900
============= ================
See accompanying notes to condensed financial statements.
3
CRESTED CORP.
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended
March 31,
--------------------------
2003 2002
------ ------
REVENUES: $ -- $ --
COSTS AND EXPENSES:
Accretion of asset retirement obligations 22,700 --
General and administrative 36,500 36,300
------------ ------------
59,200 36,300
------------ ------------
LOSS BEFORE EQUITY LOSS, PROVISION
FOR INCOME TAXES AND CUMMULATIVE
EFFECT OF ACCOUNTING CHANGE (59,200) (36,300)
EQUITY IN LOSS OF AFFILIATES (373,500) (628,600)
------------ ------------
LOSS BEFORE PROVISION FOR INCOME
TAXES AND CUMMULATIVE
EFFECT OF ACCOUNTING CHANGE (432,700) (664,900)
PROVISION FOR INCOME TAXES -- --
------------ ------------
LOSS BEFORE CUMMULATIVE EFFECT
OF ACCOUNTING CHANGE (432,700) (664,900)
CUMMULATIVE EFFECT OF ACCOUNTING CHANGE (293,800) --
------------ ------------
NET LOSS $ (726,500) $ (664,900)
============ ============
PER SHARE DATA:
NET LOSS PER SHARE, BASIC AND DILUTED
FROM CONTINUED OPERATIONS $ (0.02) $ (0.04)
FROM EFFECT OF ACCOUNTING CHANGE (0.02) --
------------ ------------
$ (0.04) $ (0.04)
============ ============
BASIC WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING 17,115,137 17,073,330
============ ============
DILUTED WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING 17,115,137 17,073,330
============ ============
See accompanying notes to condensed financial statements.
4
CRESTED CORP.
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Ended
March 31,
---------
2003 2002
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (726,500) $ (664,900)
Adjustments to reconcile net loss to net cash
used in operating activities:
Equity in loss of affiliates 373,500 628,600
Accretion of asset retirement obligation 22,700 --
Noncash cummulative effect
of accounting change 293,800 --
Noncash compensation 9,600 --
------------ -----------
NET CASH USED IN OPERATING ACTIVITIES (26,900) (36,300)
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in affiliates (170,700) (295,700)
CASH FLOWS FROM FINANCING ACTIVITES:
Net activity on debt to affiliate 197,600 332,000
------------ -----------
NET DECREASE IN CASH
AND CASH EQUIVALENTS -- --
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 3,300 3,300
------------ -----------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 3,300 $ 3,300
============ ===========
SUPPLEMENTAL DISCLOSURES:
Interest paid $ -- $ --
============ ===========
Income tax paid $ -- $ --
============ ===========
NONCASH INVESTING AND FINANCING ACTIVITIES:
Issuance of stock to outside directors $ 9,600 $ --
============ ===========
See accompanying notes to condensed financial statements.
5
CRESTED CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
1) The Condensed Balance Sheet as of March 31, 2003 and the Condensed
Statements of Operations and Cash Flows for the three months ended March 31,
2003 and 2002, have been prepared by the Company without audit. The Condensed
Balance Sheet at December 31, 2002, has been derived from the audited financial
statements included in the Company's Annual Report on Form 10-K/A for the period
then ended. In the opinion of the Company, the accompanying financial statements
contain all adjustments (consisting of only normal recurring accruals except for
the cumulative effect of a change in accounting principle in 2003) necessary to
fairly present the financial position of the Company as of March 31, 2003 and
the results of operations and cash flows for the three months ended March 31,
2003 and 2002.
2) 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. It is
suggested that these financial statements be read in conjunction with the
Company's December 31, 2002 Form 10-K/A. The results of operations for the
periods ended March 31, 2003 and 2002 are not necessarily indicative of the
operating results for the full year.
3) Debt at March 31, 2003 and December 31, 2002, consists of debt payable
to the Company's parent U.S. Energy Corp. ("USE") of $8,751,500 and $8,553,900,
respectively
4) The asset retirement obligation of $1,064,900 represents the Company's
share of the liability at the Sheep Mountain Mines in the Crooks Gap Mining
District. This reclamation work will be performed over several years. The
Company has pledged its interest in certain real estate that it jointly owns
with USE to bond this reclamation obligation.
5) The Company presents basic and diluted earnings per share in accordance
with the provisions of Statement of Financial Accounting Standards No. 128,
"Earnings per Share". Basic earnings per common share, is based on the weighted
average number of common shares outstanding during the period. Diluted earnings
per share does not include the dilutive effect of common stock equivalents for
the three months ended March 31, 2003 and 2002 because stock options and
warrants which comprised common stock equivalents would have been anti-dilutive.
6) Certain reclassifications have been made in the December 31, 2002
financial statements to conform to the classifications used in March 31, 2003.
7) The Company has mine properties that are in a shut down mode in central
Wyoming for which it is responsible for one half of the reclamation expense.
These reclamation activities are scheduled to be completed over the next seven
years. The Company cannot predict the exact amount of such future asset
retirement obligations. Estimated future reclamation costs are based upon the
Company's best engineering estimates considering legal and regulatory
requirements.
Effective January 1, 2003, the Company adopted SFAS No. 143, "Accounting
for Asset Retirement Obligation." The statement requires the Company to record
the fair value of the reclamation liability on its shut down mining properties
as of the date that the liability is incurred with a corresponding increase in
the properties. The statement further requires that the Company review the
liability each quarter to determine whether its estimates of timing or cash
flows have changed as well as accrete the total liability on a quarterly basis
for the passage of time.
6
The Company will also deduct from the accrued liability any actual funds
expended for reclamation during the quarter in which it is expended. As a result
of the Company taking impairment allowances in prior periods on its shut down
mining properties, it has no remaining book value for the properties. All
accretion amounts will therefore be expensed in the quarter in which they are
recorded.
The following is a reconciliation of the total liability for asset
retirement obligations (unaudited)
Balance December 31, 2002 $ 748,400
Impact of adoption of SFAS No. 143 293,800
Addition to Liability
Liability Settled
Accretion Expense - 8% discount rate 22,700
-----------
Balance March 31, 2003 $1,064,900
The following table shows what the Company's net loss and net loss per
share would have been in the first quarter of 2002 if the provisions of SFAS No.
143 had been applied in that period, compared with net loss and net loss per
share recorded in the first quarter of 2003.
Three months ended March 31,
----------------------------------
2003 2002
---- ----
NET LOSS:
Reported net loss $ (726,500) $ (664,900)
Cummulative effect of adoption
of SFAS No. 143 293,800 --
Pro-Forma SFAS No. 143 accretion -- (22,300)
------------- -------------
Adjusted net loss: $ (432,700) $ (687,200)
============= =============
PER SHARE OF COMMON STOCK:
Reported net loss $ (0.04) $ (0.04)
Cummulative effect of adoption
of SFAS No. 143 0.02 --
Pro-Forma SFAS No. 143 accretion -- --
Adjusted net loss: $ (0.02) $ (0.04)
============= =============
The Company has reviewed other current outstanding statements from the
Financial Accounting Standards Board and does not believe that any of those
statements will have a material adverse affect on the financial statements of
the Company when adopted.
7
CRESTED CORP.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
-----------------------------------------------------------------------
The following is Management's Discussion and Analysis of significant
factors, which have affected the Company's liquidity, capital resources and
results of operations during the periods included in the accompanying financial
statements. For a detailed explanation of the Company's Business Overview, it
is suggested that Management's Discussion and Analysis of Financial Condition
and Results of Operations for the quarter ended March 31, 2003 be read in
conjunction with the Company's Form 10-K for the year ended December 31, 2002.
OVERVIEW OF BUSINESS
The Company has interests in a uranium mine and mill in Southern Utah;
uranium mines in central Wyoming; a gold property in California; coalbed methane
properties in the Powder River Basin in Wyoming and Montana, and various real
estate including a townsite near Lake Powell, Utah. The mine properties are all
in a shut down mode. All these businesses are operated in conjunction with the
Company's parent, U.S. Energy Corp. ("USE") through a joint venture between the
two companies, the USECB Joint Venture ("USECB"). The Company accounts for
USECB using the equity method of accounting.
CRITICAL ACCOUNTING POLICIES
- ------------------------------
RECLAMATION LIABILITIES - The Company's policy is to accrue the liability
for future reclamation costs of its mineral properties based on the current
estimate of the future reclamation costs as determined by internal and external
experts.
RECENT ACCOUNTING PRONOUNCEMENTS
- ----------------------------------
SFAS NO. 143 - The Company has implemented the Financial Accounting
Standards Board issued SFAS No. 143 "Accounting for Asset Retirement
Obligations" effective January 1, 2003. The statement requires the Company to
record the fair value of a liability for legal obligations associated with the
retirement of obligations of tangible long-lived assets in the period in which
it is incurred. The Company's reclamation liabilities on its mining properties
are subject to SFAS No. 143. See note 7 of the interim financial statements
for details of the adoption.
In November 2002, the FASB issued FASB Interpretation No. 45, "Guarantor's
Accounting and Disclosure Requirements for Guarantees, including indirect
Guarantees of Indebtedness of Others" ("FIN 45"). FIN 45 expands the
information disclosures required by guarantors for obligations under certain
types of guarantees. It also requires initial recognition at fair value of a
liability for such guarantees. The initial recognition and initial measurement
provisions of this Interpretation are applicable on a prospective basis to
guarantees issued or modified after December 31, 2002, irrespective of the
guarantor's fiscal year-end. The disclosure requirements in the Interpretation
are effective for financial statements of interim or annual periods ending after
December 15, 2002. The adoption of this statement did not have a material
impact on the Company's financial condition or results of operations.
In January 2003, the FASB issued FASB Interpretation No. 46, "Consolidation
of Variable Interest Entities" ("FIN 46"), which addresses consolidation by
business enterprises where equity investors do not bear the residual economic
risks and rewards. These entities have been commonly referred to as
"special-purpose entities." Companies are required to apply the provision of
FIN 46
8
prospectively for all variable interest entities created after January 31, 2003.
For public companies, all interest acquired before February 1, 2003 must follow
the new rules in accounting periods beginning after June 15, 2003. The Company
is currently evaluating the impact FIN 46 is expected to have on the Company's
financial condition or results of operations.
The Company has reviewed other current outstanding statements from the
Financial Accounting Standards Board and does not believe that any of those
statements will have a material adverse affect on the financial statements of
the Company when adopted.
LIQUIDITY AND CAPITAL RESOURCES
The Company's working capital deficit at December 31, 2002 of $8,550,600
increased to a working capital deficit of $8,748,200 at March 31, 2003. This
decrease of $197,600 in working capital was caused by increased debt to USE as a
result of USE funding the Company's obligations for the various ventures in
which they operate jointly.
Operations during the three months ended March 31, 2003 and 2002 consumed
$26,800 and $36,300, respectively. Financing activities during the three months
ended March 31, 2003 and 2002 generated $197,600 and 332,000, respectively.
Cash consumed in investing activities of $170,700 at March 31, 2003 and $295,700
at December 31, 2002 was as a result of Crested using the cash provided by USE
to fund its portion of operating costs in investments jointly owned with USE.
CAPITAL RESOURCES
The Company and USE have a $750,000 line of credit with a commercial bank.
The line of credit is secured by various real estate holdings and equipment
belonging to the Company and USE. At March 31, 2003, the total amount of the
line of credit was available to the Company and USE. The line of credit is
being used for short term working capital needs associated with operations.
The Company's cash resources at March 31, 2003 will not be sufficient to
sustain operations during 2003. The Company will continue to rely upon funding
from USE to meet its operating and administration capital requirements. The
Company may receive funds from a settlement of the Sheep Mountain Partners
("SMP") legal issues with Nukem, Inc. and its affiliates. Additionally, the
Company may sell additional equipment or an interest in its various mineral
properties, which are jointly owned with USE to fund its capital requirements.
CAPITAL REQUIREMENTS
The Company and USE jointly fund the holding costs of the Sheep Mountain
uranium mines; the Plateau uranium mine and mill; costs associated with their
joint real estate; commercial operations and the development of the Rocky
Mountain Gas, Inc. ("RMG") natural gas properties.
The Company and USE, through RMG, have obligations to make delay rental
payments on RMG's portion of natural gas leases. RMG has entered into various
agreements with industry partners where a portion or all of its drilling
commitments on the natural gas properties are carried. The Company and USE
through RMG continue to seek additional funding sources to expand the natural
gas business.
The Company owes USE $8,751,500 as a result of USE funding operations and
capital expansion expenses. The Company does not have the resources to repay
this debt and must negotiate continued
9
terms with USE or find some other means of retiring the debt. To date, USE has
not called the debt and has agreed not to call the debt.
It is not anticipated that any of the Company's working capital will be
used for the reclamation of any of its interests in mineral properties. The
future reclamation costs on the Sheep Mountain properties are covered by a
reclamation bond, which is secured by a pledge of certain of the Company and
USE's real estate assets. The reclamation bond amount is reviewed annually by
State regulatory agencies.
RESULTS OF OPERATIONS
The Company had no revenues during the three months ended March 31, 2003
and 2002.
Costs and expenses for the quarter ended March 31, 2003, increased by
$22,900 from those reported during the same quarter of the previous year. The
main reason for the increase was the accretion of reclamation costs of $22,700
during the quarter ended March 31, 2003. This expense was as a result of the
Company adopting SFAS No. 143 on January 1, 2003. The Company recorded equity
losses from USECB and RMG of $373,500 and $628,600 for the three months ended
March 31, 2003 and 2002, respectively.
Operations for the three months ended March 31, 2003, resulted in a loss of
$726,500 as compared to a loss of $664,900 for the three months ended March 31,
2002.
ITEM 4. CONTROLS AND PROCEDURES
-------------------------
In the 90 day period before the filing of this Report, the chief executive
and chief financial officers of the Company have evaluated the effectiveness of
the Company's disclosure controls and procedures. These disclosure controls and
procedures are those controls and other procedures we maintain, which are
designed to insure that all of the information required to be disclosed by the
Company in all its periodic reports filed with the SEC is recorded, processed,
summarized and reported, within the time periods specified in the SEC's rules
and forms. Disclosure controls and procedures include, without limitation,
controls and procedures designed to ensure that information required to be
disclosed by the Company in its reports filed or submitted under the Securities
Exchange Act of 1934 is accumulated and communicated to Company management,
including the chief executive and chief financial officers of the Company, as
appropriate to allow those person to make timely decisions regarding required
disclosure.
Subsequent to the date when the disclosure controls and procedures were
evaluated, there have not been any significant changes in the Company's
disclosure controls or procedures or in other factors that could significantly
affect such controls or procedures. No significant deficiencies or material
weaknesses in the controls or procedures were detected, so no corrective actions
needed to be taken.
10
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
------------------
There have been no material developments in the Legal Proceedings since
they were last reported by the Company in Item 3 of its December 31, 2002 Form
10-K except in the Sheep Mountain Partners Arbitration litigation. On May 1,
2003, the Special Master filed under seal his Report of the Results of
Accounting ordered by the U.S. District Court of Colorado. The details of the
Report will not be made public until permitted by the Court.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
-----------------------------------------------
During the quarter ended March 31, 2003, the Company issued 18,822 shares
of restricted common stock to outside directors.
The dollar value of the issuance was $9,600. No commissions were paid in
connection with any of the issuances.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
-------------------------------------
(a) Exhibits.
99.1 Certification Pursuant to Section 1350 of Chapter 63
of title 18 of the United States Code
(b) REPORTS ON FORM 8-K. The Company filed three reports on Form 8-K
for the quarter ended March 31, 2003. The events reported
were as follows:
1. The report filed on January 7, 2003, under Item 5, referenced the
Company's subsidiary, Rocky Mountain Gas, Inc. (RMG) entering
into an Option Agreement to acquire in excess of 10,000 gross
acres of proven and undeveloped coalbed methane (CBM) properties
in the Power River Basin of Wyoming;
2. The report filed on February 7, 2003, under Item 5, referenced
RMG entering into an option to acquire some 40,000 acres of CBM
properties in the Powder River Basin of Wyoming, and
3. The report filed on February 19, 2003, under Item 5, referenced
the U.S. District Court of Colorado granting the Special Master
in the Nukem accounting case an extension of time to file his
report to April 11, 2003.
11
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Company has duly caused this report to be signed on its behalf by the
undersigned, there unto duly authorized.
CRESTED CORP.
(Company)
Date: May 13, 2003 By:/s/ John L. Larsen
------------------------------
JOHN L. LARSEN,
CHAIRMAN and CEO
Date: May 13, 2003 By:/s/ Robert Scott Lorimer
------------------------------
ROBERT SCOTT LORIMER
Principal Financial Officer and
Chief Accounting Officer
12
CERTIFICATION
I, Robert Scott Lorimer, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Crested Corp.;
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 know to use 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
weakness 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.
DATED this 13th day of May, 2003.
/s/ Robert Scott Lorimer
---------------------------------
Robert Scott Lorimer,
Chief Financial Officer
13
CERTIFICATION
I, John L. Larsen, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Crested Corp.;
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 know to use 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
weakness 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.
DATED this 13th day of May, 2003.
/s/ John L. Larsen
---------------------------------
John L. Larsen,
Chief Executive Officer
14