FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended October 27, 2002
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 0-12145
AMARILLO MESQUITE GRILL, INC.
(Exact name of registrant as specified in its charter)
Kansas 48-0936946
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) identification No.)
Suite 200
302 North Rock Road
Wichita, Kansas 67206
(Address of principal executive offices)
(Zip Code)
(316) 685-7286
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to
such filing requirements for the past 90 days.
Yes x No ___.
As of October 27, 2002, 8,241,137 shares of common stock $.01 par value were
outstanding.
Item 1. Financial Statements
Amarillo Mesquite Grill, Inc.
Balance Sheets
(Unaudited)
ASSETS
October 27, 2002 January 27, 2002
Current Assets:
Cash $ 181,767 $ 259,050
Accounts Receivable $ 4,063 $ 20,381
Note Receivable $ 16,741 $ 13,047
Advances to affiliate $ 26,975 $ 13,364
Inventories $ 118,496 $ 150,867
Prepaid expenses and other current assets $ 201,916 $ 152,533
Total current assets $ 549,958 $ 609,242
Property & Equipment:
Buildings $ 682,829 $ 682,829
Leasehold improvements $ 1,874,618 $ 2,193,445
Equipment & fixtures $ 3,501,735 $ 4,030,661
Transportation Equipment $ - $ 18,999
Property under capital leases $ 848,822 $ 848,822
$ 6,908,004 $ 7,774,756
Less: accumulated depreciation & amort $ (3,239,457) $ (3,279,540)
Total property and equipment $ 3,668,547 $ 4,495,216
Other Assets:
Cost in excess of net tangible assets
of purchased business, net of
amortization of $406,644 $ 540,367 $ 540,367
Deposits and other $ 53,735 $ 35,123
Note Receivable $ - $ 14,448
Total other assets $ 594,102 $ 589,938
Total assets $ 4,812,607 $ 5,694,396
LIABILITIES & STOCKHOLDERS EQUITY (DEFICIT)
Current Liabilities:
Notes payable $ 6,187,481 $ 241,299
Current portion of obligation under
capital lease $ 50,231 $ 56,024
Accounts Payable $ 1,223,000 $ 1,202,836
Accrued payroll $ 124,648 $ 180,076
Accrual for Gift Certificates $ 278,414 $ 402,754
Other Accrued liabilities $ 406,125 $ 449,003
Accrual for Restaurant Closing $ 183,489 $ 91,887
Total current liabilities $ 8,453,388 $ 2,623,879
Long term liabilities:
Long-term debt, less current portion $ - $ 5,904,586
Obligation under capital lease, less
current portion $ 835,205 $ 860,011
Total Liabilities $ 9,288,593 $ 9,388,476
Stockholders' equity (deficit):
Preferred stock, $.01 par value,
authorized 10,000,000 shares, none
issued
Common stock, $.01 par value, authorized
20,000,000 shares issued 8,301,137
shares at July 28, 2002 and at
January 27, 2002 $ 83,011 $ 83,011
Additional paid- in capital $ 8,086,432 $ 7,954,302
Accumulated deficit $(12,375,429) $(11,461,393)
Treasury stock, 60,000 shares of common
stock at cost $ (270,000) $ (270,000)
Total stockholders' equity (deficit) $ (4,475,986) $ (3,694,080)
Total liabilities and stockholders'
deficit $ 4,812,607 $ 5,694,396
Amarillo Mesquite Grill, Inc.
Statement of Operations
(Unaudited)
Thirteen Weeks Ended Thirty-Nine Weeks Ended
10/27/2002 10/28/2001 10/27/2002 10/28/2001
Sales $3,314,013 $4,634,634 $11,421,055 $14,313,456
Costs and expenses
Cost of goods sold $1,223,142 $1,800,080 $ 4,154,113 $ 5,346,656
Operating expenses $1,825,711 $2,559,604 $ 6,089,690 $ 7,721,252
Depreciation and
amortization $ 103,216 $ 231,993 $ 446,695 $ 707,393
General and administrative$ 210,315 $ 267,478 $ 732,133 $ 816,800
Asset impairment $ - $ - $ 126,046 $ -
Provision for restaurant
closings $ - $ 370,694 $ 422,016 $ 418,464
$3,362,384 $5,229,849 $11,970,694 $15,010,565
Operating income $ (48,371) $ (595,215) $ (549,638) $ (697,109)
Other income (expense)
Interest expense $ (92,789) $ (124,745) $ (291,018) $ (410,999)
Non cash expense from
issuance of stock
options to related
parties pursuant to
debt guarantees $ (24,460) $ (24,460) $ (73,380) $ (73,380)
Loss on disposal of
property and equipment $ - $ (121,265) $ - $ (121,265)
Total other expense $ (117,249) $ (270,470) $ (364,398) $ (605,644)
Loss before income taxes $ (165,620) $ (865,685) $ (914,036) $(1,302,753)
Net loss per common share-
basic & diluted $ (0.02) $ (0.10) $ (0.11) $ (0.16)
Average shares outstanding-
basic and diluted 8,241,137 8,241,137 8,241,137 8,241,137
Amarillo Mesquite Grill, Inc
Statement of Cash Flows
(Unaudited)
Thirty Nine Weeks Ending
October 27, 2002 October 28, 2001
Cash flows from operating activities
Net loss $ (914,036) $(1,302,753)
Adjustments to reconcile net loss
to net cash provided by operating
activities:
Depreciation and amortization $ 446,695 $ 707,393
Asset impairment $ 126,046 $ -
Non cash expense from issuance of stock
options to related parties pursuant
to debt guarantees $ 73,380 $ 73,380
Non cash compensation expense $ 8,750 $ -
Non cash provision for restaurant
closings $ 422,016 $ 418,464
Loss on sale of equipment $ - $ 121,265
Changes in assets and liabilities
(increase) decrease in accounts
receivable $ 16,318 $ 10,642
(increase) decrease in notes
receivable $ 10,754 $ -
(increase) decrease in inventories $ 32,371 $ 15,007
(Increase) decrease in prepaid
expenses and other assets $ (67,995) $ (67,462)
Advances to affiliate $ (13,611) $ 8,692
Increase (decrease) in accounts payable $ 20,164 $ 385,045
Increase (decrease) in accrued expenses $ (257,090) $ (196,679)
Cash (used in) provided by operating
activities $ (96,238) $ 172,994
Cash flows from investing activities:
Purchase of property and equipment $ (42,042) $ (266,475)
Proceeds from sale of equipment $ - $ 8,650
Cash used in investing activities $ (42,042) $ (257,825)
Cash flows from financing activities:
Proceeds from long term debt $ 200,000 $ -
Repayment of notes payable and
note payable related party $ - $ (104,618)
Repayment of long-term borrowings
and capital lease obligations $ (189,003) $ (33,802)
Proceeds from additional capital
contributions-related party $ 50,000 $ 200,000
Cash provided by financing activities $ 60,997 $ 61,580
Increase (decrease) in cash $ (77,283) $ (23,251)
Cash at beginning of period $ 259,050 $ 348,182
Cash at the end of period $ 181,767 $ 324,931
Supplemental schedule of non-cash
investing and financing activities:
Sale of assets in exchange of a note
receivable $ - $ 30,000
Asset purchase financed with a note
payable $ - $ 187,165
Supplemental disclosure of cash flow
information
Cash paid for interest $ 291,018 $ 410,999
Cash paid for income taxes 0 0
AMARILLO MESQUITE GRILL, INC.
Notes to Consolidated Financial Statements
(Unaudited)
(1) Basis of Presentation
The accompanying unaudited consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q
and Rule 10-01 of Regulation S-X. 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 thirty-nine week period
ended October 27, 2002 are not necessarily indicative of the results
that may be expected for the year ended January 26, 2003. For
further information, refer to the consolidated financial statements
and footnotes thereto included in the Company's 10-K and Annual
Report to Stockholders as filed on April 25, 2002.
(2) Going Concern Assumption
The Company's financial statements have been prepared assuming the
company will continue as a going concern. As indicated in Note 10 to the
company's most recent annual report, "Uncertainties and Estimates
Related to Liquidity," a substantial amount of the Company's
liquidity requirements were previously met by increases in operating
accounts payable, and there was no assurance that this source of
liquidity would continue to be available. That Note goes on to
indicate that in connection with its annual budgeting process,
management estimated that the restaurants would generate sufficient
cash flow from operations to enable the Company to meet its financial
obligations during the subsequent year. As indicated in the
accompanying statement of cash flows, for the thirty-nine weeks
ending October 27, 2002, the Company's cash flow from operations was
negative despite the liquidity provided from additional capital
contributions by related parties. These factors, combined with the
other, ongoing adverse factors as set forth in the accompanying and
prior financial statements, raise doubt about the Company's ability
to continue as a going concern. Management's plans in regard to
these matters are discussed in the Liquidity and Capital Resources
section of Management's Discussion and Analysis. The financial
statements do not include any adjustments that might result from the
outcome of this uncertainty.
(3) Net Earnings Per Share
The Company, as required under FASB Statement no. 128, Earnings Per
Share, calculates and presents both a basic and diluted earnings per share
in the financial statements. Earnings per common share is computed on the
basis of the weighted-average number of common shares outstanding
during each period presented. The Company has granted options to
employees to purchase 1,196,300 shares of common stock at a weighted
average exercise price of $1.91 per share. These options were not
included in the computation of diluted earnings per share because the
exercise price of those options exceeded the average market price of
the common shares during the quarter. Also since the Company had a
net loss available to common stockholders, inclusion of these options
would be antidilutive to earnings per share.
(4) Goodwill
As of January 28, 2002, the company adopted Financial Accounting
Standards Board Statement No. 142, "Goodwill and Other Intangible
Assets." Statement 142: (a) eliminates the amortization of goodwill and other
intangibles that are determined to have an indefinite life, and (b)
requires, at a minimum, annual impairment tests for goodwill and
other intangible assets, through a comparison of the fair value of
the assets to their carrying values. In the first quarter of fiscal
2003, the Company ceased amortization of goodwill. The first step of
the transitional impairment test was completed during the second
quarter of fiscal 2003, which required a comparison of the fair value
of each reporting unit to its carrying value to determine whether
there was an indication that an impairment may exist.
A reporting unit was defined as an individual restaurant. Fair
values of the reporting units were estimated using a multiple of each
unit's cash flow for the fiscal year ended January 27, 2002. Based
on those valuations, the Company determined that two restaurants had
estimated fair values below their carrying values, indicating an
impairment of the goodwill associated with those units may exist. In
addition, one restaurant associated with the acquisition of the
goodwill has been closed, and goodwill allocated to that unit will be
impaired. The total amount of goodwill related to these three units
is approximately $385,000. The Company will be measuring the
impairment loss required by the second step of the transitional
impairment test during its fourth quarter ended January 26, 2003. Any
adjustments will be made during that quarter.
The effect of adopting statement No. 142 on net income and earnings per share
is as follows:
Thirteen Weeks Ended Thirty-nine Weeks Ended
10/27/02 10/28/01 10/27/02 10/28/01
Net loss, as reported $(165,620) $(865,685) $(914,036) $(1,302,753)
Add goodwill amortization - 18,205 - 54,615
Net loss, as adjusted $(165,620) $(847,480) $(914,036) $(1,248,138)
Net loss per common share-
basic & diluted, as reported $ (0.02) $ (0.10) $ (0.11) $ (0.16)
Goodwill amortization - 0.00 - 0.01
Net loss per common share-
basic & diluted as reported $ (0.02) $ (0.10) $ (0.11) $ (0.15)
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operation.
Critical Accounting Policies
Management's discussion and Analysis of Financial Condition and Results of
Operations is based upon our consolidated financial statements, which were
prepared in accordance with accounting principles generally accepted in the
United States of America. These principles require us to make estimates and
assumptions that affect the reported amounts in the consolidated financial
statements and notes thereto. Actual results may differ from these
estimates, and such differences may be material to the consolidated financial
statements. We believe that the following significant accounting policies
involve a significant degree of subjectivity of complexity (see Note 2 of our
consolidated Financial Statements in our Annual Report on Form 10-K for the
fiscal year ended January 27, 2002 for a complete discussion of our
significant accounting policies).
Impairment of Long-lived Assets:
Property and equipment is reviewed for impairment whenever events or changes
in circumstances indicate the carrying amount of an asset may not be
recoverable. A two-year history of restaurant operating losses is used as a
primary indicator of potential impairment. Recoverability of assets to be
held and used is measured on a restaurant-by-restaurant basis through
comparison of the carrying amount of the assets to the future net cash flows
expected to be generated by the assets. Assets to be disposed of are
reported at the lower of the carrying amount or fair value, less costs to
sell. The assessment process for determining future cash flows and fair
value requires the use of estimates and assumptions which are subject to a
high degree of judgment. If these assumptions change in the future, we may
be required to record additional impairment charges for these assets.
Historically, the Company has had restaurants reach the two-year operating
loss indicator in the fourth quarter of their fiscal year. Management
anticipates this may occur again in fiscal 2003, with additional non-cash
write-offs being recognized in the quarter ending January 26, 2003.
Results of Operations
Thirteen Weeks Ended October 27, 2002 Compared to Thirteen Weeks Ended
October 28, 2001.
For the thirteen weeks ended October 27, 2002, sales decreased 28.5% to
$3,314,013 as compared to $4,634,634 for the third quarter of the prior year.
As of October 27, 2002 the Company operated nine Amarillo Mesquite Grills as
compared to thirteen restaurants at the same period last year.
Cost of sales, as a percentage of total sales, was 36.9% for the thirteen
weeks ended October 27, 2002 as compared to 38.8% for the third quarter of
the prior year. The cost of sales as a percentage of total sales was down
due to the lower cost of meat and groceries.
Operating expenses, as a percentage of total sales, were 55.1% and 55.2% for
the 2002 and 2001 periods respectively. Operating expenses as a percentage
of sales were down slightly as compared to the same quarter ended October 28,
2001.
General and Administrative expenses, as a percentage of sales, was 6.3% for
the thirteen weeks ended October 27, 2002 as compared to 5.8% for the third
quarter of the prior year. The increase in general and administrative
expense, as a percentage of sales, is the result of the decrease in sales.
The dollars spent were actually lower this period as compared to the same
period last year.
Depreciation and amortization is directly related to the acquisition and
disposition of fixed assets. The investment in fixed assets decreased
approximately $2,350,000 from the end of the third quarter last year to the
end of the third quarter of the current year. Depreciation and amortization
decreased due to the closing of stores as well as items becoming fully
depreciated.
Interest expense was $92,789 for the quarter ended October 27, 2002 as
compared to $124,745 for the same period a year ago. Interest expense is a
function of the interest rate and the amount of debt. The interest rate has
decreased over the past few months as well as a reduction in the short term
and long term debt. Consequently interest expense is lower this quarter as
compared to the same quarter last year.
The Company incurred noncash expenses of $24,460 for both 2002 and 2001
periods, relating to the issuance of stock options pursuant to debt
guarantees.
Thirty-nine Weeks Ended October 27, 2002 Compared to Thirty-nine Weeks Ended
October 28, 2001.
For the thirty-nine weeks ended October 27, 2002, sales decreased 20.2% to
$11,421,055 as compared to sales of $14,313,456 for the first thirty-nine
weeks of the prior year. The Company operated nine Amarillo Mesquite Grills
as of October 27, 2002 as compared to thirteen in the same period last year.
Cost of sales, as a percentage of total sales, was 36.4% and 37.4% for the
2002 and 2001 periods respectively. The cost of sales as a percentage of
total sales was down due to the lower cost of meat and groceries.
Operating expenses, as a percentage of total sales, were 53.3% and 53.9% for
the 2002 and 2001 periods respectively. Operating expenses as a percentage
of sales were down slightly as compared to the same thirty-nine week period
ended October 28, 2001.
General and Administrative expenses, as a percentage of total sales, was 6.4%
for the thirty-nine week period ended October 27, 2002 as compared to 5.7%
for the first thirty-nine weeks of the prior year. The increase in general
and administrative expense, as a percentage of sales, is the result of the
decrease in sales. The dollars spent were actually lower this period as
compared to the same period last year.
Depreciation and amortization is directly related to the acquisition and
disposition of fixed assets. Depreciation and amortization decreased due to
the closing of stores as well as items becoming fully depreciated.
Interest expense was $291,018 for the thirty-nine week period ended October
27, 2002 as compared to $410,999 for the same period a year ago. Interest
expense is a function of the interest rate and the amount of debt. The
interest rate has decreased over the past few months; consequently interest
expense is lower this quarter as compared to the same quarter last year.
The provision for restaurant closings and asset impairment expenses included
the effects of closing three underperforming units for the period in 2002
compared to one during the same time period for 2001. These expenses include
the non-cash write-off of certain leasehold improvements and equipment, as
well as estimates accrued for future costs to be incurred prior to finding
sublessees for the facilities.
Liquidity and Capital Resources
The Company's primary sources of funding to finance its business have been
its cash flow from operations, and proceeds from bank debt. On October 27,
2002 and January 27, 2002, the Company had an excess of current liabilities
over current assets of $7,903,430, and $2,014,637 respectively. Included as
a current liability as of October 27, 2002 is a bank note payable in the
amount of $5,904,586 which is due April 15, 2003. Cash flow from operations
was $(96,238) and $172,994 for 2002 and 2001 respectively. Particularly
given the negative cash flow from operations for 2002, there may be periods
during the remainder of the year when cash flow is insufficient and
additional debt or equity investment may be necessary. On October 11, 2002,
two majority stockholders of the Company contributed an aggregate amount of
$50,000 to the Company. This contribution was recorded as additional paid-in
capital on the company's balance sheet and no additional shares of stock were
issued. There is no assurance that additional contributions will be made by
these individuals in the future. There is no assurance that such additional
debt or equity will be available to the Company. If additional debt or
equity is not available, there is no assurance that the Company will be able
to continue without restructuring its obligations, or selling operating
assets. Management has financial as well as operational restructuring plans
under consideration, and is evaluating its options. As reflected on the
Company's balance sheet, and as further reflected by recent and expected
future asset impairment provisions, the estimated fair value of the Company's
assets is less than the Company's liabilities, and that value has been
declining. Accordingly, there can be no assurance that the Company will be
able to fully satisfy all its obligations, either through future operations
or through a future financial restructuring, should that be deemed necessary.
Management evaluates store performance and cash flows weekly. On a long-term
basis, if cash flows from operations are not sufficient to meet working
capital needs, management will consider menu modifications and price
adjustments to increase margins. Management will also take actions to reduce
store-level operating costs where possible. Additionally, management would
consider closing underperforming locations where it believes the long term
prospect of obtaining positive cash flow would not be possible.
Substantially all of the company's revenues are derived from cash sales. The
Company does not maintain significant receivables and inventories: therefore,
working capital requirement for receivables and inventories are not
significant.
The Company has renewed its bank debt that provides for interest only
payments through April 15, 2003. The Company took out a new note in the
amount of $200,000 on June 27, 2002 with a variable interest rate of Prime
Rate as published in the Wall Street Journal, currently at 4.75% with a
maturity date of June 27, 2004. This new note is guaranteed by two of the
directors. The Company also renewed the current note of $124,257 on June 18,
2002 with a variable interest rate of 4.75%. The Company intends to use its
cash flow from operations in 2003 to make a partial reduction in its $324,257
notes payable to a bank.
Pronouncements Issued, Not Yet Adopted
In June 2002, the Financial Accounting Standards Board issued SFAS No. 146,
"Accounting for Costs Associated with Exit or Disposal Activities." This
Statement requires that a liability for a cost associated with an exit or
disposal activity be recognized only when the liability is incurred and
measured at fair value. SFAS No. 146 is effective for exit or disposal
activities that are initiated after December 31, 2002. The Company is in the
process of evaluating the impact this Statement may have on the Company's
results of operations or financial position.
This report contains certain forward-looking statements, including those
relating to expected future cash flow from operations. Although the Company
believes that the assumptions underlying the forward-looking statements
contained herein are reasonable, actual results could differ materially from
such forward-looking statements. In light of the significant uncertainties
inherent in the forward-looking statements included herein, the inclusion of
such information should not be regarded as a representation by the Company
that objectives and plans of the Company will be achieved.
Item 4. Controls and Procedures
Within ninety days prior to the filing of this report, we have evaluated the
effectiveness of the design and operation of our disclosure controls and
procedures under the supervision and with the participation of the President,
Executive Vice President, and financial officers. Based on this evaluation,
our management, including the above listed officers, concluded that our
disclosure controls and procedures were effective. There have been no
significant changes in our internal controls or in other factors that could
significantly affect internal controls subsequent to the date of their
evaluation.
Part II - OTHER INFORMATION
Item 1. Legal Proceedings
Not applicable
Item 2. Changes in Securities
Not Applicable
Item 3. Defaults Upon Senior Securities
Not applicable
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable
Item 5. Other Information
Not applicable
Item 6. Exhibits and Reports of Form 8-K
Not Applicable
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.
Amarillo Mesquite Grill, Inc.
(Registrant)
Date: December 9, 2002 /s/CHRIS F. HOTZE
Chris F. Hotze - President
CERTIFICATIONS
I, Chris F. Hotze, certify that:
1) I have reviewed this quarterly report on Form 10-Q of Amarillo Mesquite
Grill, 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 "Evaluations 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
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: December 9, 2002 /s/ Chris F. Hotze
(Signature)
President
I, Alan L. Bundy, certify that:
1) I have reviewed this quarterly report on Form 10-Q of Amarillo Mesquite
Grill, 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 "Evaluations 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
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: December 9, 2002 /s/ Alan L. Bundy
(Signature)
Executive Vice President