SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the Quarter June 30, 2001 Commission File No. 0-3681
MERCURY GENERAL CORPORATION
(Exact name of registrant as specified in its charter)
California 95-221-1612
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
4484 Wilshire Boulevard, Los Angeles, California 90010
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(323) 937-1060
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_____
-----
At July 31, 2001, the Registrant had issued and outstanding an aggregate of
54,208,598 shares of its Common Stock.
PART 1 - FINANCIAL INFORMATION
Item 1. - Financial Statements
MERCURY GENERAL CORPORATION
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
Amounts Expressed in Thousands, except share amounts
A S S E T S
June 30, December 31,
2001 2000
---------- ----------
(Unaudited)
Investments:
Fixed maturities available for sale (amortized cost
$1,479,198 in 2001 and $1,463,897 in 2000).......... $1,528,012 $ 1,509,474
Equity securities available for sale (cost $260,098
in 2001 and $250,593 in 2000)....................... 261,998 252,510
Short-term cash investments, at cost, which
approximates market................................. 63,753 32,977
---------- ------------
Total investments......................... 1,853,763 1,794,961
Cash.................................................... 7,126 5,935
Receivables:
Premiums receivable.................................. 130,199 123,070
Premium notes........................................ 16,481 14,205
Accrued investment income............................ 27,036 25,707
Other................................................ 27,943 36,410
---------- ------------
201,659 199,392
Deferred policy acquisition costs....................... 77,442 71,126
Fixed assets, net....................................... 38,571 35,208
Other assets............................................ 30,483 35,641
---------- ------------
Total assets $2,209,044 $ 2,142,263
========== ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Losses and loss adjustment expenses..................... $ 497,039 $ 492,220
Unearned premiums....................................... 391,905 365,579
Notes payable........................................... 107,672 107,889
Loss drafts payable..................................... 49,370 49,954
Accounts payable and accrued expenses................... 44,612 39,715
Current income taxes.................................... 4,106 3,471
Deferred income taxes................................... 9,086 8,336
Other liabilities....................................... 47,105 42,194
---------- ------------
Total liabilities......................... 1,150,895 1,109,358
---------- ------------
Shareholders' equity:
Common stock without par value or stated value.
Authorized 70,000,000 shares; issued and outstanding
54,208,598 shares in 2001 and 54,193,423 shares in
2000............................................... 52,342 52,162
Accumulated other comprehensive income............... 32,964 30,871
Unearned ESOP compensation........................... (1,500) (2,000)
Retained earnings.................................... 974,343 951,872
---------- ------------
Total shareholders' equity................. 1,058,149 1,032,905
---------- ------------
Commitments and contingencies........................
$2,209,044 $ 2,142,263
========== ============
2
MERCURY GENERAL CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended June 30,
Amounts expressed in thousands, except per share data
2001 2000
---- ----
Revenues:
Earned premiums $338,171 $312,187
Net investment income 27,941 26,187
Net realized investment gains (losses) (91) 677
Other 438 2,088
-------- --------
Total revenues 366,459 341,139
-------- --------
Expenses:
Losses and loss adjustment expenses 243,421 224,259
Policy acquisition costs 74,256 69,660
Other operating expenses 15,498 15,277
Interest 1,486 1,711
-------- --------
Total expenses 334,661 310,907
-------- --------
Income before income taxes 31,798 30,232
Income taxes 5,333 4,230
-------- --------
Net income $ 26,465 $ 26,002
======== ========
BASIC EARNINGS PER SHARE (average shares outstanding
54,167,143 in 2001 and 54,062,288 in 2000) $ 0.49 $ 0.48
======== ========
DILUTED EARNINGS PER SHARE (adjusted weighted average
shares 54,353,257 in 2001 and 54,205,423 in 2000) $ 0.49 $ 0.48
======== ========
Dividends declared per share $ 0.265 $ 0.24
======== ========
3
MERCURY GENERAL CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
Six Months Ended June 30,
Amounts expressed in thousands, except per share data
2001 2000
---- ----
Revenues:
Earned premiums $661,943 $616,842
Net investment income 55,960 51,671
Net realized investment gains 4,293 2,159
Other 1,712 3,845
-------- --------
Total revenues 723,908 674,517
-------- --------
Expenses:
Losses and loss adjustment expenses 483,638 437,903
Policy acquisition costs 145,757 136,766
Other operating expenses 30,769 30,196
Interest 3,349 3,382
-------- --------
Total expenses 663,513 608,247
-------- --------
Income before income taxes 60,395 66,270
Income taxes 9,222 10,330
-------- --------
Net income $ 51,173 $ 55,940
======== ========
BASIC EARNINGS PER SHARE (average shares outstanding
54,160,716 in 2001 and 54,111,360 in 2000) $ 0.94 $ 1.03
======== ========
DILUTED EARNINGS PER SHARE (adjusted weighted average
shares 54,352,126 in 2001 and 54,234,333 in 2000) $ 0.94 $ 1.03
======== ========
Dividends declared per share $ 0.53 $ 0.48
======== ========
4
MERCURY GENERAL CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
Three Months Ended June 30
Amounts expressed in thousands
2001 2000
---- ----
Net income $26,465 $26,002
Other comprehensive loss, before tax:
Unrealized losses on securities:
Unrealized holding losses arising
during period (1,054) (180)
Less: reclassification adjustment for net
(gains) losses included in net income 729 (129)
------- -------
Other comprehensive loss, before tax (325) (309)
Income tax expense (benefit) related to unrealized
holding losses arising during the period (369) (63)
Income tax expense (benefit) related to reclassification
adjustment for gains (losses) included in
net income 255 (45)
------- -------
Comprehensive income, net of tax $26,254 $25,801
======= =======
5
MERCURY GENERAL CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
Six Months Ended June 30,
Amounts expressed in thousands
2001 2000
---- ----
Net income $51,173 $55,940
Other comprehensive income, before tax:
Unrealized gains on securities:
Unrealized holding gains arising
during period 6,556 26,722
Less: reclassification adjustment for net
gains included in net income (3,336) (1,196)
------- -------
Other comprehensive income, before tax 3,220 25,526
Income tax expense related to unrealized
holding gains arising during period 2,295 9,353
Income tax benefit related to reclassification
adjustment for gains included in net income (1,168) (419)
------- -------
Comprehensive income, net of tax $53,266 $72,532
======= =======
6
MERCURY GENERAL CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended June 30,
Amounts expressed in thousands
2001 2000
---- ----
Cash flows from operating activities:
Net income $ 51,173 $ 55,940
Adjustments to reconcile net income to net cash
provided from operating activities:
Increase in unpaid losses and loss
adjustment expenses 4,819 10,555
Increase in unearned premiums 26,326 17,096
Increase in premium notes receivable (2,276) (1,296)
Increase in premiums receivable (7,129) (1,999)
Increase in deferred policy acquisition costs (6,316) (3,345)
(Decrease) increase in loss drafts payable (584) 5,323
Increase in accrued income taxes, excluding deferred
tax on change in unrealized gain 257 1,224
Increase (decrease) in accounts payable and
accrued expenses 4,897 (3,025)
Depreciation 3,087 3,273
Net realized investment gains (4,293) (2,159)
Bond accretion, net (4,279) (3,271)
Other, net 19,179 5,919
-------- --------
Net cash provided from operating activities 84,861 84,235
Cash flows from investing activities:
Fixed maturities available for sale:
Purchases (131,272) (132,772)
Sales 98,066 40,812
Calls or maturities 24,386 28,755
Equity securities available for sale:
Purchases (48,702) (32,166)
Sales 41,285 35,734
Receivable from securities (778) -0-
Payable from securities 159 7,535
Increase in short-term cash investments, net (30,776) (3,294)
Purchase of fixed assets (7,477) (3,529)
Sale of fixed assets 1,117 728
-------- --------
Net cash used in investing activities $ (53,992) $ (58,197)
(Continued)
7
MERCURY GENERAL CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Continued)
2001 2000
---- ----
Cash flows from financing activities:
Additions to notes payable $ 283 $ 3,000
Principal payments on notes payable (500) -0-
Dividends paid to shareholders (28,704) (25,946)
Proceeds from stock options exercised 243 345
Purchase and retirement of common stock -0- (6,979)
Net decrease in ESOP loan (1,000) (1,000)
-------- --------
Net cash used in financing activities (29,678) (30,580)
-------- --------
Net (decrease) increase in cash 1,191 (4,542)
Cash:
Beginning of the year 5,935 8,052
-------- --------
End of the year $ 7,126 $ 3,510
======== ========
Supplemental disclosures of cash flow information and
non cash financing activities:
Interest paid during the period $ 3,880 $ 3,745
Income taxes paid during the period $ 8,880 $ 9,275
MERCURY GENERAL CORPORATION & SUBSIDIARIES
8
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
---------------------
The financial data included herein have been prepared by the Company,
without audit. In the opinion of management, all adjustments of a normal
recurring nature necessary to present fairly the Company's financial position at
June 30, 2001 and the results of operations, comprehensive income and cash flows
for the periods presented have been made. Operating results for the three and
six months ended June 30, 2001, are not necessarily indicative of the results
that may be expected for the year ending December 31, 2001.
2. Recently Issued Accounting Standards
------------------------------------
In July 2001, the Financial Accounting Standard Board issued SFAS No. 141,
Business Combinations (SFAS No. 141), and SFAS No. 142, Goodwill and Other
Intangible Assets (SFAS No. 142). SFAS No. 141 requires companies to apply the
purchase method of accounting for all business combinations initiated after June
30, 2001 and prohibits the use of the pooling-of-interest method. SFAS No. 142
changes the method by which companies may recognize intangible assets in
purchase business combinations and generally requires identifiable intangible
assets to be recognized separately from goodwill. In addition, it eliminates the
amortization of all existing and newly acquired goodwill on a prospective basis
and requires companies to assess goodwill for impairment, at least annually,
based on the fair value of the reporting unit. The Company will be required to
adopt SFAS Nos. 141 and 142 on January 1, 2002. Management is currently
evaluating the impact, if any, that these statements will have on the Company's
financial statements.
This interim information should be read in conjunction with the financial
statements and notes thereto included in the Company's latest annual report on
Form 10-K.
Item 2. Management's Discussion and Analysis of Financial Condition and
---------------------------------------------------------------
Results of Operations
---------------------
General
- -------
The Company is engaged primarily in writing all risk classifications of
automobile insurance in California, which in 2000 accounted for approximately
86% of the Company's direct premiums written. Since 1990, the Company has also
written small amounts of automobile insurance in Georgia and Illinois. In
December 1996 the Company acquired the American Mercury Insurance Group
(formerly named American Fidelity Insurance Group) which was licensed in 36
states but writes automobile and mechanical breakdown insurance predominantly in
Oklahoma and Texas. During 1998, the Company began writing private passenger
automobile coverage in Florida. In January 2000, the Company began assuming
automobile risks in the state of Texas on business produced by Concord Insurance
Services, Inc., a controlled entity. In January 2001, the Company began writing
private passenger automobile coverage in Virginia.
Certain statements in this report on Form 10-Q that are not historical fact
and constitute "forward-looking statements" within the meaning of Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended. These forward-looking statements may address,
among other things, our strategy for growth, business development, regulatory
approvals, market position, expenditures, financial results and reserves.
Forward-looking statements are not guarantees of performance and are subject to
important factors and events that could cause our actual business, prospects and
results of operations to differ materially from the historical information
contained in this Form 10-Q and from those that may be expressed or implied by
the forward-looking statements. Factors that could cause or contribute to such
differences include, among others: the intense competition currently existing in
the California automobile insurance markets, our success in expanding our
business in states outside of California, the impact of potential third party
"bad-faith" legislation, changes in laws or regulations, third party relations
and approvals, and decisions of courts, regulators and governmental bodies,
particularly in California, our ability to obtain the approval of the California
Insurance Commissioner for premium rate changes for private passenger automobile
policies issued in California and similar rate approvals in other states where
we do business, our success in
9
integrating and profitably operating the businesses we have acquired, the level
of investment yields we are able to obtain with our investments in comparison to
recent yields, the cyclical and general competitive nature of the property and
casualty insurance industry and general uncertainties regarding loss reserve
estimates, and other uncertainties, all of which are difficult to predict and
many of which are beyond our control. We assume no obligation to update any
forward-looking statements as a result of new information or future events or
developments. Investors are cautioned not to place undue reliance on any
forward-looking statements, which speak only as of the date of this Form 10-Q
or, in the case of any document we incorporate by reference, the date of that
document. Investors also should understand that it is not possible to predict or
identify all factors and should not consider the risks set forth above to be a
complete statement of all potential risks and uncertainties. If the expectations
or assumptions underlying our forward-looking statements prove inaccurate or if
risks or uncertainties arise, actual results could differ materially from those
predicted in any forward-looking statements.
Results of Operations
- ---------------------
Three Months Ended June 30, 2001 compared to Three Months Ended June 30, 2000
Premiums earned in the second quarter of 2001 increased 8.3% from the
corresponding period in 2000. Net premiums written in the second quarter of
2001 increased 12.0% from the corresponding period in 2000. Contributing to the
overall second quarter 2001 premiums written growth were increased policy sales
in the California automobile insurance lines as well as increased production in
California homeowners, Florida automobile insurance and Texas automobile
insurance lines.
California premiums written, representing 88% of the Company's total
premiums, grew approximately 10.5% in the second quarter of 2001 compared to an
increase of 2.7% for the comparative period of 2000.
The loss ratio in the second quarter (loss and loss adjustment expenses
related to premiums earned) was 72.0%, compared with 71.8% in 2000.
The expense ratio (policy acquisition costs and other expenses related to
premiums earned) in 2001 was 26.5% compared to 27.2% in 2000.
The combined ratio of losses and expenses (GAAP basis) was 98.5% in 2001
compared with 99.0% in 2000, resulting in an underwriting gain for the period of
$5.0 million, compared with $3.0 million in 2000.
Investment income for the second quarter was $27.9 million, compared with
$26.2 million in the second quarter of 2000. The after-tax yield on average
investments of $1,787.6 million (fixed maturities and equities valued at cost)
was 5.43% compared with 5.58% on average investments of $1,686.6 million in the
second quarter of 2000.
Realized investment losses before income taxes were $0.1 million compared
with realized gains of $0.7 million in the second quarter of 2000.
The income tax provision in the second quarter of 2001 of $5.3 million
represented an effective tax rate of 16.8%, compared with an effective rate of
14.0% in 2000. The higher
10
effective rate is principally attributable to the larger proportion of pre-tax
income derived from fully taxable underwriting gain and taxable investment
income compared to tax exempt investment income.
Net income for the second quarter of $26.5 million, or $.49 per share
(diluted), compares with $26.0 million or $.48 per share (diluted) in 2000.
Basic net income per share was $.49 in 2001 and $.48 in 2000.
Other comprehensive loss, before tax for the second quarter was $0.3
million in both 2001 and 2000 which represents the change in the unrealized
gains and losses on the Company's investments occurring during the period.
Six Months ended June 30, 2001 compared to Six Months ended June 30, 2000
Premiums earned in the first six months of 2001 increased 7.3% from the
corresponding period in 2000. Net premiums written in the first six months of
2001 increased 9.1% from the corresponding period in 2000. Contributing to the
overall first six months of 2001 premiums written growth were increased policy
sales in the California automobile insurance lines as well as increased
production in California homeowners, Florida automobile insurance and Texas
automobile insurance lines.
California premiums written, representing 88% of the Company's total
premiums, grew approximately 8.4% in the first six months of 2001 compared to an
increase of 3.4% for the comparative period of 2000.
The loss ratio in the first six months of 2001 (loss and loss adjustment
expenses related to premiums earned) was 73.1%, compared with 71.0% in 2000.
The expense ratio (policy acquisition costs and other expenses related to
premiums earned) in 2001 was 26.7% compared to 27.1% in 2000.
The combined ratio of losses and expenses (GAAP basis) was 99.7% in 2001
compared with 98.1% in 2000, resulting in an underwriting gain for the period of
$1.8 million, compared with $12.0 million in 2000.
Investment income for the six months of 2001 was $56.0 million, compared
with $51.7 million in the six months of 2000. The after-tax yield on average
investments of $1,779.9 million (fixed maturities and equities valued at cost),
was 5.47% compared with 5.67% on average investments of $1,678.1 million in
2000.
Realized investment gains before income taxes were $4.3 million compared
with $2.2 million in the six months of 2000.
The income tax provision in the six months of 2001 of $9.2 million
represented an effective tax rate of 15.3%, compared with an effective rate of
15.6% in 2000.
Net income for the six months of $51.2 million, or $0.94 per share
(diluted), compares with $55.9 million or $1.03 per share (diluted) in 2000.
Basic net income per share was $0.94 in 2001 and $1.03 in 2000.
Other comprehensive income represents the change in the unrealized gains
and losses on
11
the Company's investments occurring during the period. Other comprehensive
income, before tax for the first six months of 2001 of $3.2 million compares
with $25.5 million in 2000. The gains were primarily the result of decreased
market interest rates which increased the value of the Company's investment
portfolio.
Liquidity and Capital Resources
- -------------------------------
Net cash provided from operating activities during the six months of 2001
was $84.9 million, while funds derived from the sale, call or maturity of
investments was $163.7 million, of which approximately 25% was represented by
the sale of equities. Fixed-maturity investments, at amortized cost, increased
by $15.3 million during the period. Equity investments, including perpetual
preferred stocks, increased by $9.5 million at cost, and short-term cash
investments increased by $30.8 million. The amortized cost of fixed-maturities
available for sale which were sold or called during the period was $119.8
million.
The market value of all investments (fixed-maturities and equities) held at
market as "Available for Sale" exceeded amortized cost of $1,739.3 million at
June 30, 2001 by $50.7 million. That unrealized gain, reflected as accumulated
other comprehensive gain in shareholders' equity net of applicable tax effects,
was $33.0 million at June 30, 2001 compared with an unrealized gain of $30.9
million at December 31, 2000.
The Company's cash and short term investments totaled $70.9 million at June
30, 2001, of which $3 million is restricted. Together with funds generated
internally, such liquid assets are more than adequate to pay claims without the
forced sale of investments.
Less than 1% of total assets at June 30, 2001 were bonds rated below
investment grade. The average rating of the $1,461.9 million bond portfolio (at
amortized cost) was AA. Bond holdings are broadly diversified geographically,
within the tax exempt sector. Holdings in the taxable sector consist
principally of investment grade issues. Fixed-maturity investments of $1,479.2
million (at cost) include $17.3 million of sinking fund preferreds, principally
utility issues.
Except for Company-occupied buildings, the Company has no direct
investments in real estate and no holdings of mortgages secured by commercial
real estate.
Equity holdings of $262.0 million at market (cost $260.1 million),
including perpetual preferred issues, are largely confined to the public
utility, financial and banking sectors and represent 24.8% (at cost) of total
shareholders' equity.
As of June 30, 2001, the Company had no material commitments for capital
expenditures.
On August 7, 2001, the Company completed a public debt offering issuing
$125 million of senior notes payable under a $300 million shelf registration
filed with the SEC in July 2001. The notes are unsecured, senior obligations of
the Company that mature on August 15, 2011 and bear interest at 7.25% per annum,
payable semi-annually on August 15 and February 15 each year, commencing
February 15, 2002. The Company incurred debt issuance costs of approximately
$1.3 million, inclusive of underwriter's fees. These costs are deferred and
then amortized as a component of interest expense over the term of the notes.
The notes were issued at a slight discount at 99.723%, making the effective
annualized interest rate including debt issuance costs, approximately 7.44%.
12
The Company had outstanding debt at June 30, 2001 of $107.7 million.
Included in this amount is $75 million payable under a revolving credit facility
due November 21, 2001 and $27 million payable under a $30 million revolving
credit facility due October 26, 2001. The interest on these two loans is
variable and during the first six months of 2001 was priced off of the
Eurodollar London Interbank Rate (LIBOR) making the effective interest rate
6.03% and 6.09%, respectively. On August 7, 2001, the Company repaid the entire
balance of both the $75 million and $27 million borrowings with proceeds
received from the $125 million senior note issuance. The Company also terminated
the $75 million revolving credit facility.
Prior to the issuance of the senior notes, the Company used short-term
floating rate debt as part of its capital structure. The Company is currently
evaluating the possibility of entering into an agreement to swap its fixed
interest rate on the senior notes to a variable interest rate. See Item 3.
Quantitative and Qualitative Disclosures About Market Risk.
- ---------------------------- ------------------------------
Industry and regulatory guidelines suggest that the ratio of a property and
casualty insurer's annual net premiums written to statutory policyholders'
surplus should not exceed 3 to 1. Based on the combined surplus of all of the
licensed insurance subsidiaries of $1,003.9 million at June 30, 2001 and net
written premiums for the twelve months ended on that date of $1,330.8 million,
the ratio of writings to surplus was approximately 1.3 to 1.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
----------------------------------------------------------
As of June 30, 2001, there have been no material changes in the Company's
investment strategies, types of financial instruments held or the risks
associated with such instruments which would materially alter the market risk
disclosures made in the Company's Annual Statement or Form 10-K for the year
ended December 31, 2000.
As discussed in the Liquidity and Capital Resources section, on August 7,
2001 the Company repaid total short-term floating rate bank debt of $102 million
with the proceeds from the $125 million fixed-rate senior notes maturing on
August 15, 2011. To the extent market interest rates fluctuate, the fair value
of the fixed rate debt will fluctuate in the opposite direction.
A common measure of the market rate interest sensitivity of fixed maturity
debt is modified duration, a calculation that takes maturity, coupon rate, yield
and call terms to calculate an average age of expected cash flows. The modified
duration of the senior notes is calculated to be approximately 6.7 years. This
compares to the modified duration of the Company's $1.5 billion investment in
bonds (at market) of approximately 5.9 years, at June 30, 2001. Given a
hypothetical decrease of 100 basis points in market interest rates, the fair
value of the $1.5 billion investment in bonds would increase by approximately
$89 million. A similar 100 basis points decrease in market interest rates would
result in an increase in the fair value of the senior notes of approximately $8
million. The converse would hold true for a hypothetical 100 basis point
increase in market interest rates.
The Company is currently evaluating the possibility of entering into an
agreement to swap its fixed interest rate on the senior notes to a variable
interest rate. A swap would have the effect of lowering the current borrowing
costs compared to the interest rate on the senior notes but could expose the
Company to higher borrowing costs in the future, if short-term market interest
rates increase.
A decrease in market interest rates during the six months of the year
positively impacted the value of the Company's investments. The impact is
described in the Liquidity and Capital
13
Resources section above.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) None
(b) None
14
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.
MERCURY GENERAL CORPORATION
Date: August 10, 2001 By: /s/ GEORGE JOSEPH
------------------------------------
George Joseph
Chairman and Chief Executive Officer
Date: August 10, 2001 By: /s/ GABRIEL TIRADOR
------------------------------------
Gabriel Tirador
Vice President and Chief Financial
Officer
15