UNITED STATES
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 May 3, 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 0-20052
STEIN MART, INC.
(Exact name of registrant as specified in its charter)
Florida 64-0466198
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1200 Riverplace Blvd., Jacksonville, Florida 32207
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (904) 346-1500
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 Rule 12b-2 of the Exchange Act).
Yes [X] No [ ]
At May 31, 2003, the latest practicable date, there were 41,640,704 shares
outstanding of Common Stock, $.01 par value.
STEIN MART, INC.
TABLE OF CONTENTS
PAGE
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements:
Balance Sheets at May 3, 2003, February 1, 2003 3
and May 4, 2002
Statements of Income for the 13 Weeks Ended 4
May 3, 2003 and May 4, 2002
Statements of Cash Flows for the 13 Weeks Ended 5
May 3, 2003 and May 4, 2002
Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial 8
Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk 10
Item 4. Controls and Procedures 10
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 11
Item 6. Exhibits and Reports on Form 8-K 11
SIGNATURES 12
CERTIFICATIONS 13
2
Stein Mart, Inc.
Balance Sheets
(In thousands)
May 3, February 1, May 4,
2003 2003 2002
-------------- -------------- --------------
ASSETS (Unaudited) (Unaudited)
Current assets:
Cash and cash equivalents $ 17,052 $ 9,859 $ 18,653
Trade and other receivables 3,700 4,919 3,390
Inventories 329,838 297,230 345,532
Prepaid expenses and other current assets 5,783 4,361 5,940
-------------- -------------- --------------
Total current assets 356,373 316,369 373,515
Property and equipment, net 86,133 86,351 91,321
Other assets 7,755 7,497 5,761
-------------- -------------- --------------
Total assets $450,261 $410,217 $470,597
============== ============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 96,802 $ 70,472 $126,964
Accrued liabilities 52,945 53,407 48,864
Income taxes payable 907 5,353 1,741
Notes payable to banks 56,300 41,350 -
-------------- -------------- --------------
Total current liabilities 206,954 170,582 177,569
Notes payable to banks - - 63,700
Other liabilities 18,699 16,328 15,074
-------------- -------------- --------------
Total liabilities 225,653 186,910 256,343
COMMITMENTS AND CONTINGENCIES
Stockholders' equity:
Preferred stock - $.01 par value; 1,000,000 shares
authorized; no shares outstanding
Common stock - $.01 par value; 100,000,000 shares
authorized; 41,568,678; 41,618,678 and 41,646,151
shares issued and outstanding, respectively 416 416 416
Paid-in capital 509 721 -
Retained earnings 223,683 222,170 213,838
-------------- -------------- --------------
Total stockholders' equity 224,608 223,307 214,254
-------------- -------------- --------------
Total liabilities and stockholders' equity $450,261 $410,217 $470,597
============== ============== ==============
The accompanying notes are an integral part of these financial statements.
3
Stein Mart, Inc.
Statements of Income
(Unaudited)
(In thousands except per share amounts)
For The 13 Weeks Ended
---------------------------------
May 3, May 4,
2003 2002
-------------- --------------
Net sales $330,557 $355,979
Cost of merchandise sold 246,861 259,448
-------------- --------------
Gross profit 83,696 96,531
Selling, general and administrative expenses 84,503 81,281
Other income, net 3,653 3,700
-------------- --------------
Income from operations 2,846 18,950
Interest expense 405 614
-------------- --------------
Income before income taxes 2,441 18,336
Income tax provision 928 6,968
-------------- --------------
Net income $ 1,513 $ 11,368
============== ==============
Earnings per share - Basic $0.04 $0.27
============== ==============
Earnings per share - Diluted $0.04 $0.27
============== ==============
Weighted-average shares outstanding - Basic 41,587 41,554
============== ==============
Weighted-average shares outstanding -Diluted 41,587 41,930
============== ==============
The accompanying notes are an integral part of these financial statements.
4
Stein Mart, Inc.
Statements of Cash Flows
(Unaudited)
(In thousands)
For The 13 Weeks Ended
---------------------------------
May 3, May 4,
2003 2002
-------------- --------------
Cash flows from operating activities:
Net income $ 1,513 $11,368
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 4,824 4,536
Impairment of property and other assets 765 -
Deferred income taxes (46) 7,100
Tax benefit from exercise of stock options - 377
Changes in assets and liabilities:
Trade and other receivables 1,219 1,811
Inventories (32,608) (49,374)
Prepaid expenses and other current assets (891) (863)
Other assets (354) 351
Accounts payable 26,330 33,289
Accrued liabilities (462) 2,863
Income taxes payable (4,446) (2,330)
Other liabilities 1,886 (59)
-------------- --------------
Net cash (used in) provided by operating activities (2,270) 9,069
Cash flows used in investing activities:
Capital expenditures (5,275) (7,256)
Cash flows from financing activities:
Net borrowings under notes payable to banks 14,950 5,950
Proceeds from exercise of stock options - 726
Purchase of common stock (212) (112)
-------------- --------------
Net cash provided by financing activities 14,738 6,564
-------------- --------------
Net increase in cash and cash equivalents 7,193 8,377
Cash and cash equivalents at beginning of year 9,859 10,276
-------------- --------------
Cash and cash equivalents at end of period $17,052 $18,653
============== ==============
Supplemental disclosures of cash flow information:
Interest paid $ 407 $ 629
Income taxes paid 5,412 1,783
The accompanying notes are an integral part of these financial statements.
5
STEIN MART, INC.
NOTES TO FINANCIAL STATEMENTS
May 3, 2003
(Unaudited)
1. Basis of Presentation
The accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial information
and with the instructions to Form 10-Q. Accordingly, they do not include all of
the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation have been included. Operating results for the 13-week periods
are not necessarily indicative of the results that may be expected for the
entire year. For further information, refer to the financial statements and
footnotes thereto included in the Stein Mart, Inc. annual report on Form 10-K
for the year ended February 1, 2003.
2. Store Closings
The Company regularly reviews under-performing stores and implements strategies
designed to improve their performance. In Spring 2003, following more than two
years of retail economic weakness, it was determined that a group of these
under-performing stores would be unlikely to achieve profitability despite the
Company's concerted efforts to stimulate sales. In order to improve the quality
of the Company's portfolio of stores, management decided in April to close 13
stores in addition to the three already planned for closure in 2003. Three of
these stores have been closed, incurring minimal lease exit costs. Nine began
their going out of business process in May and the remaining four will close by
the end of the year. In accordance with Statement of Financial Accounting
Standards ("SFAS") No. 146, "Accounting for Costs Associated with Exit or
Disposal Activities," the estimated charges that will be recorded at the store
closing dates during the last three quarters of 2003 are approximately $19
million to recognize the present value of store closing costs. In addition,
approximately $10 million in markdowns will be required to liquidate inventory
in those stores.
During the fourth quarter of 2002, the Company recorded a pre-tax non-cash asset
impairment charge of $2.7 million to reduce the carrying value of property and
equipment of certain closing and/or under-performing stores to their respective
estimated fair value. During the first quarter of 2003, the Company recorded an
additional asset impairment charge of $0.8 million to further reduce the
carrying value of property and equipment of four of the stores closing in 2003.
The charge is included in Selling, general and administrative expenses in the
Statement of Income for the 13 weeks ended May 3, 2003.
The store closing reserve at May 3, 2003 includes the remaining lease obligation
for one store closed in December 1999 ($3.0 million) and the estimated cost of
lease terminations for four stores closed during 2002 ($1.6 million). Payments
include ongoing lease costs for previously closed stores. Activity in the store
closing reserve is as follows (000's):
13 Weeks Ended
---------------------------
May 3, May 4,
2003 2002
------------ ------------
Balance at beginning of period $4,982 $5,680
Payments (418) (110)
------------ ------------
Balance at end of period $4,564 $5,570
============ ============
The store closing reserve at May 3, 2003 and May 4, 2002 has a current portion
(included in Accrued liabilities) of $1.2 million and $0.9 million,
respectively, and a long-term portion (included in Other liabilities) of $3.4
million and $4.7 million, respectively.
6
STEIN MART, INC.
NOTES TO FINANCIAL STATEMENTS
May 3, 2003
(Unaudited)
3. Notes Payable to Banks
The Company has a revolving credit agreement with a group of banks which extends
through June 2004. The agreement, which was amended in April 2002, provides a
$135 million senior revolving credit facility, including a $10 million letter of
credit sub-facility. Borrowings are secured by trade and other receivables and
inventories. Interest is payable at rates based on spreads over the London
Interbank Offering Rate (LIBOR) or the Prime Rate. A quarterly commitment fee
ranging from 0.375% to 0.50% per annum is paid on the unused portion of the
commitment. The agreement requires the Company to maintain certain financial
ratios and indebtedness tests. Notes payable to banks is classified as current
at May 3, 2003 because the Company was not in compliance with certain of the
financial covenants at the end of the quarter. The Company is in the process of
negotiating a new credit agreement which is expected to close in June 2003.
4. Accounting For Stock-Based Compensation
The Company has adopted the disclosure-only provisions of SFAS No. 123, as
amended by SFAS No. 148, "Accounting for Stock-Based Compensation," and intends
to retain the intrinsic value method of accounting for stock-based compensation
which it currently uses. Accordingly, no compensation cost has been recognized
for the stock option plans. Had compensation cost of the Company's stock option
plans been determined consistent with the provisions of SFAS No. 123, the
Company's net income and earnings per share would have been reduced to the
following pro forma amounts:
13 Weeks Ended
---------------------------
May 3, May 4,
2003 2002
------------ ------------
Net income - as reported $1,513 $11,368
Stock option compensation - net of tax 377 456
------------ -----------
Net income - pro forma $1,136 $10,912
============ ===========
Basic earnings per share - as reported $0.04 $0.27
Diluted earnings per share - as reported 0.04 0.27
Basic earnings per share - pro forma $0.03 $0.26
Diluted earnings per share - pro forma 0.03 0.26
5. Earnings Per Share and Stockholders' Equity
Basic earnings per share is computed by dividing net income by the
weighted-average number of common shares outstanding for the period. Diluted
earnings per share is computed by dividing net income by the weighted-average
number of common shares outstanding plus common stock equivalents related to
stock options for each period.
A reconciliation of weighted-average number of common shares to weighted-average
number of common shares plus common stock equivalents is as follows (000's):
13 Weeks Ended
---------------------------
May 3, May 4,
2003 2002
------------ ------------
Weighted-average number of common shares 41,587 41,554
Stock options - 376
------------ ------------
Weighted-average number of common shares
plus common stock equivalents 41,587 41,930
============ ============
During the first quarter of 2003 and 2002, the Company repurchased 50,000 shares
and 10,000 shares for $212,000 and $112,000, respectively.
7
Stein Mart, Inc.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
This document includes a number of forward-looking statements which reflect the
Company's current views with respect to future events and financial performance.
Wherever used, the words "plan", "expect", "anticipate", "believe", "estimate"
and similar expressions identify forward looking statements.
Any such forward-looking statements contained in this document are subject to
risks and uncertainties that could cause the Company's actual results of
operations to differ materially from historical results or current expectations.
These risks include, without limitation, ongoing competition from other
retailers many of whom are larger and have greater financial and marketing
resources, the availability of suitable new store sites at acceptable lease
terms, ability to successfully implement strategies to exit or improve
under-performing stores, changes in store closings, changing preferences in
apparel, changes in the level of consumer spending due to current events and/or
general economic conditions, continued decreases in comparable stores sales,
adequate sources of designer and brand-name merchandise at acceptable prices,
and the Company's ability to attract and retain qualified employees to support
planned growth.
The Company does not undertake to publicly update or revise its forward-looking
statements even if experience or future changes make clear that any projected
results expressed or implied therein will not be realized.
Results of Operations
The following table sets forth, for the periods indicated, the percentage of the
Company's net sales represented by each line item presented:
13 Weeks Ended
---------------------------
May 3, May 4,
2003 2002
------------ ------------
Net sales 100.0% 100.0%
Cost of merchandise sold 74.7 72.9
------------ ------------
Gross profit 25.3 27.1
Selling, general and administrative expenses 25.6 22.8
Other income, net 1.1 1.0
------------ ------------
Income from operations 0.8 5.3
Interest expense 0.1 0.2
------------ ------------
Income before income taxes 0.7% 5.1%
============ ============
Store Closings
In April 2003, management decided to close 13 stores in addition to three
already planned for closure in 2003 (see Note 2 to the Financial Statements). In
accordance with SFAS No. 146 the estimated pretax charges that will be recorded
at the store closing dates during the last three quarters of 2003 are
approximately $19 million to recognize the present value of store closing costs.
In addition, approximately $10 million in markdowns will be required to
liquidate inventory in those stores.
For the 13 weeks ended May 3, 2003 compared to the 13 weeks ended May 4, 2002
Seven stores were opened and two were closed during the first quarter this year,
bringing to 270 the number of stores in operation this year compared to 261
stores in operation at the end of the first quarter of 2002.
Net sales for the 13 weeks ended May 3, 2003 were $330.6 million, a 7.1 percent
decrease from net sales of $356.0 million for the same period of 2002.
Comparable store net sales decreased 9.3 percent from the first quarter of 2002.
8
Stein Mart, Inc.
Gross profit for the 13 weeks ended May 3, 2003 was $83.7 million or 25.3
percent of net sales compared to $96.5 million or 27.1 percent of net sales for
the first quarter of 2002. The 1.8 percent decrease in the gross profit
percentage resulted primarily from higher markdowns and a lack of occupancy
leverage, somewhat offset by higher mark-up and reduced shrinkage in the first
quarter this year compared to last year.
Selling, general and administrative expenses were $84.5 million or 25.6 percent
of net sales for the 13 weeks ended May 3, 2003, as compared to $81.3 million or
22.8 percent of net sales for the same 2002 quarter. The 2.8% increase in
selling, general and administrative expenses as a percent of sales is primarily
due to a lack of sales leverage resulting from the 9.3 percent decrease in
comparable store sales. Included in Selling, general and administrative expenses
for the first quarter of 2003 is a pre-tax asset impairment charge of $0.8
million related to 2003 store closings (see Note 2 to the Financial Statements).
Other income, primarily from in-store leased shoe departments grew slightly as a
percent of net sales due to the completed transition to a new shoe lessee in
half of the leased shoe departments.
Interest expense was $0.4 million for the first quarter of 2003 and $0.6 million
for the first quarter of 2002. The decrease resulted from lower average
borrowings as a result of decreased inventory levels on a per store basis, as
well as lower interest rates during the first quarter this year compared to last
year.
Net income for the first quarter of 2003 was $1.5 million or $0.04 diluted
earnings per share compared to net income of $11.4 million or $0.27 diluted
earnings per share for the first quarter of 2002.
Liquidity and Capital Resources
Net cash used in operating activities was $2.3 million for the 13 weeks ended
May 3, 2003 compared to net cash provided by operating activities of $9.1
million for the comparable period in 2002. The primary differences in cash flows
from operating activities between the first quarter of 2003 and 2002 were
decreased net income and decreased cash required for the procurement of
merchandise due to the Company's continued inventory control management.
During the first 13 weeks of 2003 and 2002, cash flows used in investing
activities amounted to $5.3 million and $7.3 million, respectively, primarily
for acquisition of fixtures, equipment, and leasehold improvements for new and
existing stores. Total capital expenditures for 2003 are anticipated to be
approximately $17 million.
Cash flows from financing activities were $14.7 million and $6.6 million for the
13 weeks ended May 3, 2003 and May 4, 2002, respectively, which reflected in
both periods net borrowing under the Company's revolving credit agreement to
meet seasonal working capital requirements. During the 13 weeks ended May 3,
2003, cash was used to repurchase 50,000 shares of the Company's common stock
for $212,000 compared with 10,000 shares repurchased for $112,000 in same 2002
period.
The Company has a revolving credit agreement with a group of banks which
requires the Company to maintain certain financial ratios and meet required net
worth and indebtedness tests. The Company was not in compliance with certain of
the financial covenants at May 3, 2003. The Company is in the process of
negotiating a new credit agreement which is expected to close in June 2003. The
Company believes that cash flow generated from operating activities, bank
borrowings and vendor credit will be sufficient to fund current and long-term
capital expenditures and working capital requirements.
Seasonality
The Company's business is seasonal in nature with a higher percentage of the
Company's merchandise sales and earnings generated in the fall and holiday
selling seasons. Accordingly, selling, general and administrative expenses are
typically higher as a percent of net sales during the first three quarters of
each year.
9
Stein Mart, Inc.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Interest on the Company's borrowings under its revolving credit agreement is
based on variable interest rates and is, therefore, affected by changes in
market interest rates. The Company does not use derivative financial instruments
to hedge the interest rate exposure and does not engage in financial
transactions for trading or speculative purposes.
ITEM 4. DISCLOSURE CONTROLS AND PROCEDURES
The Company's management, including the Chief Executive Officer and Chief
Financial Officer, have evaluated the effectiveness of the Company's disclosure
controls and procedures, as defined in Exchange Act Rules 13a-14 and 15d-14,
within 90 days prior to the filing date of this Quarterly Report on Form 10-Q.
Based upon this evaluation, the Chief Executive Officer and Chief Financial
Officer have concluded that the Company's disclosure controls and procedures are
effective in ensuring that material information relating to the Company is made
known to them by Company employees, particularly during the period in which this
Quarterly Report was being prepared. There were no significant changes in the
Company's internal controls or in other factors that could significantly affect
these controls subsequent to the date of evaluation.
10
Stein Mart, Inc.
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
The Annual Meeting of Stockholders of Stein Mart, Inc. was held on
June 9, 2003. At the meeting all of the Company's directors were
elected to serve for one-year terms. The vote for each nominee for
director was as follows:
Votes
Name of Director Votes For Withheld
---------------------------- -------------- --------------
Alvin R. Carpenter 40,386,598 159,258
Linda McFarland Farthing 40,007,640 538,216
Michael D. Fisher 40,381,086 164,770
Mitchell W. Legler 39,678,116 867,740
Gwen K. Manto 40,378,879 166,977
Michael D. Rose 40,006,440 539,416
Richard L. Sisisky 40,385,199 160,657
Jay Stein 40,387,088 158,768
Martin E. Stein, Jr. 40,038,525 507,331
J. Wayne Weaver 40,384,648 161,208
John H. Williams, Jr. 40,385,284 160,572
James H. Winston 40,006,540 539,316
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
99.1 Certification of the Chief Executive Officer Pursuant to 18
U.S.C. Section 1350
99.2 Certification of the Chief Financial Officer Pursuant to 18
U.S.C. Section 1350
(b) Reports on Form 8-K:
A press release dated May 8, 2003 was filed in a Form 8-K on
May 14, 2003.
A press release dated May 22, 2003 was filed in a Form 8-K on
May 29, 2003.
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.
Stein Mart, Inc.
Date: June 16, 2003 /s/ Michael D. Fisher
-------------------------------------
Michael D. Fisher
President and Chief Executive Officer
/s/ James G. Delfs
-------------------------------------
James G. Delfs
Senior Vice President and Chief
Financial Officer
12
CERTIFICATIONS
I, Michael D. Fisher, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Stein Mart, 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 Stein Mart, Inc. 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: June 16, 2003 /s/ Michael D. Fisher
-------------------------------------
Michael D. Fisher
President and Chief Executive Officer
13
I, James G. Delfs, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Stein Mart, 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 Stein Mart, Inc. 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: June 16, 2003 /s/ James G. Delfs
-------------------------------------
James G. Delfs
Chief Financial Officer
14